This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration, qualification or filing under the securities laws of any such jurisdiction. N by their counsel, Hawkins Delafield & Wood LLP. It is anticipated that the Bonds will be available for delivery to DTC in New York, New York, on or about or February ___,2020. on York, New York, New in DTC to delivery for available be will Bonds the the that anticipated for is It upon LLP. Wood passed Delafield & Hawkins be counsel, their by will matters Underwriters legal the for Certain and LLP; Rothschild Fox counsel, their Counsel. by Members Group Bond Obligated the for LLP, LLP; Corroon & Spahr Anderson Potter counsel, Ballard its by Authority of opinion legal approving unqualified an of receipt to and notice, State ofDelawarefranchisetaxorestatetax.See“TAXMATTERS”herein. the StateofDelawareandbymunicipalitiesotherpoliticalsubdivisionsinDelaware.BondCounselwillexpressnoopinionregarding tax purposes.BondCounselisalsooftheopinionthatSeries2020Bonds,theirtransfer,andincometherefrom,arefreefromtaxationby for purposesofindividualfederalalternativeminimumtax.InterestontheSeries2020BBondsisnotexcludablefromgrossincome income tax,assumingcontinuingcompliancewiththerequirementsoffederaltaxlaw.InterestonSeries2020ABondsisnotanitempreference Dated: DateofDelivery NE * The dateofthisOfficial StatementisJanuary__,2020. D to obtaininformationessentialmakinganinformedinvestmentdecision. herein. TheFixedRateBondsaresubjecttomandatorytenderforpurchase uponConversiontoanewInterestRatePeriod. A AUT record asoftheclosebusinessonfifteenthdaymonthimmediatelyprecedingsuchInterestPaymentDate. “Interest PaymentDate”),totheregisteredownerof an (each year each of 1 October and 1 April on thereafter semiannually and 2020 1, April on payable be will Participants, asmorefullydescribedherein. Participants is the responsibility of DTC and disbursements of such payments to the beneficial ownersDTC isthe theto responsibilitypayments ofsuch theof DTCDisbursement Participants andTrustee. theBond Indirect the by nominee such or DTC to or directly made principal be will of Bonds the payments on interest Bonds, and of the Price Redemption of owner registered the is Co., Cede & nominee, its or DTC as long So Bonds. the in interests beneficial their representing be made in book‑entry form, initially in denominations of $5,000 and integral multiples thereof. Except as herein described, purchasers will not receive certificates Depository Trust Company (“DTC”), New York, New York. DTC will act as securities depository for the Bonds. Purchases of beneficial interests in the Bonds will or supplementtothisOfficialStatementotherdisclosuredocumentwillbepreparedinconnectionwithanysuchConversion. circular reoffering new a and Date, Conversion the on purchase for tender mandatory to subject be will Bonds Rate Fixed the Period, Fixed new a Rate to or Mode Interest different a to Bonds Rate Fixed the convert to elects Corporation the If Period. Fixed new a to or Mode Rate Interest different a to Bonds Rate on the inside cover hereof. During the period in which the Fixed Rate Bonds are subject to optional redemption, the Corporation may elect to convert the Fixed Bond Indenture. This Official Statement summarizes the Fixedthe Ratein provided Bondsas inPeriod Fixed thenew a Initialin Fixedor Mode PeriodRate whileInterest different thea in Bondsinterest bearbear and interestoperate atto converted thebe may FixedBonds RatesRate Fixed setThe forth Bonds”). February 1,2020,betweentheCorporationandMasterTrustee(asamendedsupplementedfromtimetotime,“Indenture”). National Association, as Master Trustee (the “Master Trustee”). The Supplemental Master Indentures supplement that certain Master Trust Indenture, dated as of Trust, Wilmington and Representative, Group Credit as Corporation, the between “Supplemental Master Indentures”), (the respectively, Bonds, 2020B Series the pursuant to a First Supplemental Indenture, and a Second Supplemental Indenture each dated as issued of February Notes 1, 2020 Master corresponding to the 2020 Series 2020A Series Bonds and Inc. System, Health Care Christiana the by secured and evidenced are Agreement Loan the under made be to Payments Fund). (the “Corporation” or “Health System”), and any other amounts held in the funds and accounts established under the Bond Indenture (other than the Rebate “Loan Agreement”),betweentheAuthorityandChristianaCareHealthSystem,Inc. (the 2020 February 1, of as dated Agreement Loan a under Authority the by Redemption Price or Purchase Price of and interest on the Bonds will be payable from, and will be secured by, Loan Repayments and other Revenues to be received (the “BondIndenture”)betweentheAuthorityandWilmingtonTrust,NationalAssociation,asTrustee”). 2020 February 1, of as dated Indenture Bond a by secured and under issued be will and obligations oftheDelawareHealthFacilitiesAuthority(the“”) Series 2020A(the“Bonds”)and$17,615,000*Taxable2020Bcollectivelythe”).Thewillbelimited

G O ELA ENCY Preliminary, subjecttochange. W TA HO The Bonds are offered when, as and if issued and received by the Underwriter, subject to prior sale, to withdrawal or modification of the offer without offer the of modification or withdrawal to sale, prior to subject Underwriter, the by received and issued if and as when, offered are Bonds The In theopinionofBallardSpahrLLP,BondCounsel,interestonSeries2020ABondsisexcludablefromgrossincomeforpurposesfederal T appendices, all including Statement, Official entire the read must Investors only. reference general for information contain cover inside the and cover This described as maturity to prior redemption of lieu in purchase and redemption extraordinary and fund sinking optional, to subject are Bonds Rate Fixed The The Fixed Rate Bonds will bear interest at the interest rates set forth on the inside front cover of this Official Statement. Interest on the Fixed Rate Bonds Rate Fixed the on Interest Statement. Official this of cover front inside the on forth set rates interest the at interest bear will Bonds Rate Fixed The The Bonds are issuable only as fully registered bonds and, when initially issued, will be registered in the name of and held by Cede & Co., as nominee for The Rate “Fixed the as to referred sometimes (hereinafter Period Fixed Initial the for Mode Fixed the in bonds rate fixed as issued being are Bonds The Defined terms used herein and not otherwise defined herein shall have the meanings set forth in APPENDIX C and APPENDIX D, as applicable. The principal, The DelawareHealthFacilitiesAuthorityRevenueandRefundingBonds(ChristianaCareSystem),Series2020areissuedintwoseries,$258,620,000* I W H X SS RITY ARE IN E

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$258,620,000* Delaware Health Facilities Authority Revenue and Refunding Bonds (Christiana Care Health System) Series 2020A MATURITIES, AMOUNTS, INTEREST RATES, PRICES OR YIELDS AND CUSIPS† Due Principal Interest October 1, Amount Rate Yield CUSIP† 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 $______% Term Bonds Due October 1, 2044 Yield: ______%* CUSIP† ______$______% Term Bonds Due October 1, 2048 Yield: ______%* CUSIP† ______

$17,615,000* Delaware Health Facilities Authority Revenue and Refunding Bonds (Christiana Care Health System) Taxable Series 2020B MATURITIES, AMOUNTS, INTEREST RATES, PRICES OR YIELDS AND CUSIPS†

$17,615,000* ___% Term Bonds Due October 1, 2049 Yield: ______%* CUSIP† ______

* Preliminary, subject to change. † A registered trademark of the American Bankers Association. CUSIP data herein is provided to the CUSIP Service Bureau, managed on behalf of the American Bankers Association by S&P Global. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services Bureau. CUSIP numbers have been assigned by an independent company not affiliated with the Authority, the Underwriters, or the Obligated Group and are included solely for the convenience of the registered owners of the applicable Bonds. None of the Authority, the Underwriters or the Obligated Group is responsible for the selection or uses of those CUSIP numbers, and no representation is made as to their correctness on the applicable Bonds or as included herein. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of the Bonds.

3406963.6 043801 OS

REGARDING USE OF THIS OFFICIAL STATEMENT

No dealer, broker, salesperson or other person has been authorized by the Authority, the Corporation or the Underwriters to give any information or to make any representations, other than those contained in this Official Statement, in connection with the offering of the Bonds and, if given or made, that information or representation must not be relied upon as having been authorized by any of them. This Official Statement does not constitute an offer to sell the Bonds or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person, in any state or other jurisdiction to any person to whom it is unlawful to make an offer, solicitation or sale in that state or jurisdiction.

The Underwriters have provided the following sentence for inclusion in this Official Statement: The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. This Official Statement has been approved by the Credit Group Representative, and the use and distribution of this Official Statement for the purposes described in this Official Statement have been authorized by the Authority and by the Obligated Group Members. The information in APPENDIX G has been furnished by DTC. Such information is believed to be reliable but is not guaranteed as to accuracy or completeness and is not to be construed as a representation by the Underwriters or the Obligated Group Members. All other information in this Official Statement (other than certain information furnished by the Authority under the captions “INTRODUCTORY STATEMENT – The Authority,” “THE AUTHORITY” and “LITIGATION” (insofar as such statement applies to the Authority)) has been furnished by the Obligated Group Members and other sources identified herein that are believed to be reliable, but is not to be construed as a representation of the Underwriters or the Authority and is not guaranteed as to accuracy or completeness by the Authority. The information and expressions of opinion in this Official Statement are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall under any circumstances create any implication that there has been no change in the affairs of the Authority, DTC or the Obligated Group Members since the date of this Official Statement.

CUSIP numbers are included on the inside cover page of this Official Statement for the convenience of the holders and potential holders of the Bonds. None of the Authority, the Obligated Group Members, the Bond Trustee or the Underwriters take any responsibility for the accuracy of such numbers. No assurance can be given that the CUSIP numbers for the Bonds will remain the same after the date of issuance and delivery of the Bonds.

A wide variety of other information, including financial information, concerning the Obligated Group Members is available from publications and the website of the Obligated Group Members and other sources. Any such information that is inconsistent with the information set forth in this Official Statement should be disregarded. No such information is a part of or incorporated into this Official Statement, except as expressly noted herein.

THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND NEITHER THE BOND INDENTURE NOR THE MASTER TRUST INDENTURE HAS BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS. THE REGISTRATION OR QUALIFICATION OF THE BONDS IN ACCORDANCE WITH APPLICABLE PROVISIONS OF LAWS OF THE STATES IN WHICH BONDS HAVE BEEN REGISTERED OR QUALIFIED AND THE EXEMPTION FROM REGISTRATION OR QUALIFICATION IN OTHER

3406963.6 043801 OS

STATES CANNOT BE REGARDED AS A RECOMMENDATION THEREOF. NONE OF THESE STATES OR ANY OF THEIR AGENCIES HAS PASSED UPON THE MERITS OF THE BONDS OR THE ACCURACY OR COMPLETENESS OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE.

IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

In making an investment decision, investors must rely upon their own examination of the Corporation and the Obligated Group and the terms of the offering, including the merits and risks involved.

______

CAUTIONARY STATEMENT REGARDING PROJECTIONS, ESTIMATES AND OTHER FORWARD-LOOKING STATEMENTS IN THIS OFFICIAL STATEMENT

Certain statements included or incorporated by reference in this Official Statement constitute projections or estimates of future events, generally known as forward-looking statements. These statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “budget” or other similar words. These forward-looking statements include, but are not limited to, the information under the captions “PLAN OF FINANCE”, “BONDHOLDERS’ RISKS” and “REGULATION OF THE HEALTH CARE INDUSTRY” in the forepart of this Official Statement and in APPENDIX A – “INFORMATION CONCERNING CHRISTIANA CARE HEALTH SYSTEM” to this Official Statement.

The achievement of certain results or other expectations contained in such forward-looking statements involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Other than as may be required by law, the Obligated Group Members do not plan to issue any updates or revisions to those forward-looking statements if or when changes in their expectations, or events, conditions or circumstances on which such statements are based occur.

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TABLE OF CONTENTS

Page

INTRODUCTORY STATEMENT ...... 1 THE AUTHORITY ...... 5 CHRISTIANA CARE HEALTH SYSTEM AND THE OBLIGATED GROUP ...... 6 THE BONDS ...... 7 SOURCE OF PAYMENT AND SECURITY FOR THE BONDS ...... 14 PLAN OF FINANCE ...... 20 ESTIMATED SOURCES AND USES OF FUNDS ...... 21 ESTIMATED ANNUAL DEBT SERVICE REQUIREMENTS ...... 22 BONDHOLDERS’ RISKS ...... 23 REGULATION OF THE HEALTH CARE INDUSTRY ...... 48 LITIGATION ...... 69 TAX MATTERS ...... 69 CONTINUING DISCLOSURE ...... 70 UNDERWRITING ...... 71 FINANCIAL ADVISOR ...... 72 INDEPENDENT ACCOUNTANTS ...... 72 RATINGS ...... 73 LEGAL MATTERS ...... 73 OTHER MATTERS ...... 73

APPENDIX A INFORMATION CONCERNING CHRISTIANA CARE HEALTH SYSTEM ...... A-1 APPENDIX B AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF CHRISTIANA CARE HEALTH SYSTEM FOR THE YEARS ENDED JUNE 30, B-1 2019 AND 2018 ...... APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE AND SUPPLEMENTAL MASTER INDENTURES ...... C-1 APPENDIX D SUMMARY OF CERTAIN PROVISIONS OF THE BOND INDENTURE AND THE LOAN AGREEMENT ...... D-1 APPENDIX E FORM OF BOND COUNSEL OPINION ...... E-1 APPENDIX F FORM OF CONTINUING DISCLOSURE AGREEMENT ...... F-1 APPENDIX G INFORMATION REGARDING BOOK-ENTRY ONLY SYSTEM ...... G-1

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OFFICIAL STATEMENT relating to $276,235,000* Delaware Health Facilities Authority Revenue and Refunding Bonds (Christiana Care Health System) Series 2020 consisting of: $258,620,000* $17,615,000* Series 2020A Taxable Series 2020B

INTRODUCTORY STATEMENT

This Introductory Statement is subject in all respects to more complete information contained in this Official Statement. This entire Official Statement, including its Appendices, should be read by any prospective purchaser of the Bonds. No person is authorized to detach this Introductory Statement from this Official Statement or otherwise to use it without this entire Official Statement, including the Appendices.

Purpose

This Official Statement provides information in connection with the issuance by the Delaware Health Facilities Authority (the “Authority”) of $276,235,000* aggregate principal amount of its Revenue and Refunding Bonds (Christiana Care Health System), Series 2020 Bonds issued in two series $258,620,000* Series 2020A (the “Series 2020A Bonds”) and $17,615,000* Taxable Series 2020B (the “Series 2020B Bonds” and collectively, the “Bonds”). The Bonds will be issued under and secured by a Bond Indenture dated as of February 1, 2020 (the “Bond Indenture”) between the Authority and Wilmington Trust, National Association, as Bond Trustee (the “Bond Trustee”). The Authority will lend the proceeds of the Bonds to Christiana Care Health System, Inc. (the “Corporation” or “Health System”) pursuant to a Loan Agreement dated as of February 1, 2020 (the “Loan Agreement”), the terms of which will require payment by the Corporation which, together with other monies available for such purposes, if any, will be sufficient to provide for the timely payment of the principal, Redemption Price or Purchase Price of, and interest on, the Bonds.

Defined Terms

All terms used and not otherwise defined herein shall have the respective meanings set forth in APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE AND SUPPLEMENTAL MASTER INDENTURES – DEFINITIONS OF CERTAIN TERMS” and APPENDIX D – “SUMMARY OF CERTAIN PROVISIONS OF THE BOND INDENTURE AND THE LOAN AGREEMENT – DEFINITIONS OF CERTAIN TERMS” hereto.

The Authority

The Authority is a body politic and corporate constituting a public instrumentality of The State of Delaware (the “State”) created under and existing by virtue of the Delaware Health Facilities Act (16 Del Code Ann. § § 9201 et seq.) (the “Act”) for the purpose of assisting in the acquisition financing and

* Preliminary, subject to change.

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refinancing of projects for health care, hospital and other related facilities. See “THE AUTHORITY” herein.

The Corporation and the Obligated Group

Health System is a Delaware nonprofit corporation, which is the parent corporation of Christiana Care Health Services, Inc. (“Services” or “Health Services”) and several other healthcare related affiliates described herein. The Health System’s primary activity is to collect gifts and bequests and engage in fundraising activities on behalf of Services and the other healthcare-related affiliates and to provide strategic planning and risk management for all of the healthcare operations. Services is a Delaware nonprofit corporation, which owns and operates Christiana Hospital, Wilmington Hospital, Eugene DuPont Preventative Medicine and Rehabilitation Institute, a free-standing emergency department, a physician network, residency training programs and numerous ambulatory care centers and physician offices. Services primary activity is to provide healthcare services to residents of Delaware, and surrounding counties located in Maryland, Pennsylvania and New Jersey.

As of the date of issuance of the Bonds, the Obligated Group Members will consist solely of the Corporation and Services. The Obligated Group and Designated Affiliates, if any, are referred to collectively as the “Credit Group”. The Corporation, as Credit Group Representative, is required to cause any future Designated Affiliate to pay, loan or otherwise transfer to it such amounts as are necessary to enable the Obligated Group to comply with the Master Indenture, including the payment obligations thereunder. No other affiliates or entities of Christiana Care will be Members of the Obligated Group on the date of issuance of the Bonds.

For the fiscal year ended June 30, 2019, the Obligated Group represented approximately 98.0% of total consolidated operating revenues of the Corporation and affiliates as set forth in the audited financial statements set forth in Appendix B.

See APPENDIX A – “INFORMATION CONCERNING CHRISTIANA CARE HEALTH SYSTEM” for a more detailed description of the Corporation, Services and other affiliates.

The financial information presented in this Official Statement, including the Appendices, includes the results of operations and financial position of the Obligated Group Members and other entities that are consolidated with the Corporation for purposes of generally accepted accounting principles. Only the Corporation and Health Services are obligated under the terms of the Master Indenture. See “SOURCE OF PAYMENT AND SECURITY FOR THE BONDS” herein. See also APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE AND SUPPLEMENTAL MASTER INDENTURES,” and APPENDIX A – “INFORMATION CONCERNING CHRISTIANA CARE HEALTH SYSTEM.”

Plan of Finance

The issuance of the Bonds is a component of the Obligated Group’s overall plan of finance to provide funds for capital projects and other general corporate purposes of the Corporation and the Obligated Group, as described herein. The Obligated Group will use the proceeds of the Series 2020 Bonds to finance (i) the capital improvements to certain facilities of the Corporation, including the construction and equipping of a Women and Children’s hospital building and construction of a parking garage and reimbursement of costs related thereto; (ii) refunding the following outstanding prior bonds of the Authority (collectively, the “Prior Bonds”): (a) Variable Rate Revenue Bonds, Christiana Care Health Services, Series 2008A (the “Series 2008A Bonds”); (b) Variable Rate Revenue Bonds, Christiana Care Health Services, Series 2008B (the “Series 2008B Bonds”); (c) Variable Rate Revenue Bonds,

2 3406963.6 043801 OS

Christiana Care Health Services, Series 2010B (the “Series 2010B Bonds”); (d) Variable Rate Revenue Bonds, Christiana Care Health Services, Series 2010C (the “Series 2010C Bonds”); (e) Revenue Bonds, Christiana Care Health Services, Series 2010D (the “Series 2010D Bonds”); and (f) Revenue Bonds, Christiana Care Health Services, Series 2010E (the “Series 2010E Bonds” and collectively with the Series 2008A Bonds, the Series 2008B Bonds, the Series 2010B Bonds, the Series 2010C Bonds, and the Series 2010D Bonds, the “Prior Bonds”); and (iii) payment of certain costs of issuance relating to the Bonds. For a more detailed description of the application of proceeds of the Series 2020 Bonds and the Corporation’s plan of finance, see “PLAN OF FINANCE” and “ESTIMATED SOURCES AND USES OF FUNDS” herein.

Pursuant to an Escrow Deposit Agreement, dated January 3, 2020, among the Authority, Health Services and Wilmington Trust, National Association, as escrow agent, the Authority’s Revenue Bonds, Christiana Care Health Services, Series 2010A were defeased by virtue of an equity contribution from the Corporation. Upon the refunding of the Prior Bonds, on the date of issuance of the Bonds, the Bonds will constitute the only outstanding bonds of the Corporation.

Payment of the Bonds

The Bonds are and will be limited obligations of the Authority payable solely from the Revenues and any other amounts held in any fund or account established pursuant to the Bond Indenture (other than the Rebate Fund). The Revenues include certain payments to be made by the Corporation under the Loan Agreement or to be made by the Obligated Group under the Master Indenture (as such term is defined below), which payments are pledged and assigned to the Bond Trustee. The contract and commitment of the Obligated Group with respect to the Bonds is evidenced by notes under the Master Indenture corresponding to each series of the Bonds. Christiana Care Health System, Inc. Series 2020A Master Note Obligation (Delaware Health Facilities Authority) will be issued by the Obligated Group in the aggregate principal amount of the Series 2020A Bonds (“Obligation No. 1”) and Christiana Care Health System, Inc. Series 2020B Master Note Obligation (Delaware Health Facilities Authority) will be issued by the Obligated Group in the aggregate principal amount of the Series 2020B Bonds (“Obligation No. 2” and collectively with Obligation No. 1, the “2020 Obligations” or “Obligations”). The Corporation’s payment obligations under the Loan Agreement with respect to the Bonds are general obligations of the Corporation secured by the respective 2020 Obligation issued under the Master Indenture. The 2020 Obligations are joint and several obligations of the Obligated Group Members (currently consisting of the Corporation and Services) that is secured by a pledge, assignment, and grant to the Master Trustee of a security interest in the Gross Receivables of the Obligated Group Members on a parity with all other Obligations issued and outstanding from time to time under the Master Indenture (the “Parity Obligations”). See “SOURCE OF PAYMENT AND SECURITY FOR THE BONDS” below and APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE AND SUPPLEMENTAL MASTER INDENTURES.”

The Master Indenture

Obligation No. 1 and Obligation No. 2 will be issued pursuant to a First Supplemental Indenture, and the Second Supplemental Indenture, respectively, each dated as of February 1, 2020, (collectively the “Supplemental Master Indentures”), between the Corporation, as Credit Group Representative, and Wilmington Trust, National Association, as Master Trustee (the “Master Trustee”). The Supplemental Master Indentures supplement the Master Trust Indenture, dated as of February 1, 2020 between the Corporation and the Master Trustee (as amended and supplemented from time to time, the “Master Indenture”). The terms of the Loan Agreement will require payment by the Corporation, and the terms of the 2020 Obligations will require payment by the Obligated Group, which, together with other monies

3 3406963.6 043801 OS

available for such purposes, if any, will be sufficient to provide for the timely payment of the principal, Redemption Price or Purchase Price of, and interest on, the Bonds.

The Master Indenture creates a Credit Group consisting of the Obligated Group Members and Designated Affiliates. As of the date of issuance of the Bonds, the Obligated Group will consist solely of the Corporation and Services. No entities are designated as Designated Affiliates. Only the Members of the Obligated Group, and to the extent provided in the Master Indenture, other Members of the Credit Group, are obligated to make payments on Obligations, including the 2020 Obligations. The Master Indenture provides that the Corporation may not remove Services as a Member of the Obligated Group for so long as any Obligations are Outstanding.

The obligations of the Corporation and the other Obligated Group Members, if any, to make payments on any Obligation issued from time to time by the Credit Group Representative under the Master Indenture, including the 2020 Obligations, will be joint and several obligations of the Obligated Group Members (currently consisting of the Corporation and Services) that are secured by a pledge, assignment and grant to the Master Trustee by each Obligated Group Member of a security interest in all of its right, title and interest in and to the Gross Receivables of such Obligated Group Member on a parity with all other Obligations issued and Outstanding from time to time under the Master Indenture. As of the date of issuance of the Bonds, it is anticipated that the 2020 Obligations will be the only Obligations Outstanding under the Master Indenture. Obligations in addition to the 2020 Obligations may be issued from time to time in the future pursuant to the Master Indenture, and such Obligations will be secured on a parity with the 2020 Obligations. See APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE AND SUPPLEMENTAL MASTER INDENTURES – THE BOND INDENTURE.”

The Obligated Group Members, upon compliance with the terms and conditions and for the purposes described in the Master Indenture, may incur additional Indebtedness. Such Indebtedness, if secured by a Master Indenture Obligation, would be secured on a parity with the 2020 Obligations. See APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE AND SUPPLEMENTAL MASTER INDENTURES.” Such other Indebtedness, if not so secured by a Master Indenture Obligation, would constitute a debt solely of the individual Member of the Obligated Group incurring such Indebtedness (not a joint and several obligation of the entire Obligated Group) and, therefore, would not be entitled to the benefits of the Master Indenture. See “SOURCE OF PAYMENT AND SECURITY FOR THE BONDS” below and APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE AND SUPPLEMENTAL MASTER INDENTURES.”

Bondholders’ Risks and Regulation of the Health Care Industry

There are risks associated with the purchase of the Bonds. For a discussion of certain risks associated with the purchase of the Bonds, see “BONDHOLDERS’ RISKS” and “REGULATION OF THE HEALTH CARE INDUSTRY” herein.

Book-Entry Only

The Bonds, when issued, will be payable solely in book-entry form through The Depository Trust Company. See APPENDIX G – “INFORMATION REGARDING BOOK-ENTRY ONLY SYSTEM.”

Continuing Disclosure

The Obligated Group has entered into a Continuing Disclosure Agreement (as defined below) with Digital Assurance Certification, L.L.C., as dissemination agent (the “Dissemination Agent”), to

4 3406963.6 043801 OS

provide certain financial and operating data. See the information under the caption “CONTINUING DISCLOSURE” and APPENDIX F – “FORM OF CONTINUING DISCLOSURE AGREEMENT.”

Underlying Documents

The descriptions and summaries of various documents set forth in this Official Statement (including the Appendices hereto) do not purport to be comprehensive or definitive, and reference is made to each document for the complete details, terms and conditions thereof. All statements herein are qualified in their entirety by reference to each such document, copies of which may be obtained, in limited quantities, from the Bond Trustee.

THE AUTHORITY

The Authority is a body politic and corporate constituting a public instrumentality of the State created under the Act for the purposes of assisting in the acquisition, construction, financing and refinancing of projects for hospitals and other health-care related facilities located in the State. The Authority is empowered, among other things, to make loans to any participating facility to pay the costs of a project or to refund outstanding obligations, mortgages or advances issued, and to fund and refund health care projects through the issuance of bonds, notes, and other obligations of the Authority. The Authority has no taxing power and no source of funds other than from the contractual obligations of participating healthcare facilities.

The Bonds are authorized and issued by the Authority pursuant to the provisions of the Constitution and statutes of the State, particularly the Act. A Resolution authorizing the Bonds has been adopted by the Board of the Authority.

The Act provides for seven members of the Authority, each of whom is appointed by the Governor of the State to a five-year term. Under the Act, at least two of the members must be trustees, directors, officers or employees of a health care facility, at least one must have a favorable reputation for skill, knowledge and experience in the field of state and municipal finances, and at least one must be a person having a favorable reputation for skill, knowledge and experience in the building construction field. The Authority has no full-time staff, and Authority members receive no compensation for the performance of their duties under the Act. The present members of the Authority are listed in the following table:

MEMBER OFFICE Rolf F. Eriksen Chairman Desmond A. Baker Vice Chairman, Secretary, Treasurer William J. Riddle Vice President, Assistant Secretary, Assistant Treasurer Lisa More Vice President, Member Howard A. Palley, Ph.D. Vice President, Member

There are currently two vacancies on the board of the Authority.

The Authority does not and will not in the future monitor the financial condition of the Corporation or any other Obligated Group Member or otherwise monitor the payment of the Bonds or compliance with the documents relating thereto. The Authority will rely entirely upon the Bond Trustee and the Corporation to carry out their respective responsibilities under the Bond Indenture and the Loan Agreement. The Authority currently has no assets. If the Authority were to obtain any assets, such assets

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would not be pledged to secure payment of the Bonds, and the Authority has no obligation nor expectation of making such assets subject to the lien of the Bond Indenture.

Neither the Authority nor its independent contractors have furnished, reviewed, investigated or verified the information contained in this Official Statement other than the information contained in this section. The Authority has determined that no financial or operating data concerning the Authority is material to any decision to purchase, hold or sell the Bonds, and the Authority will not provide any such information. The Authority has not, and will not, undertake any responsibilities to provide continuing disclosure with respect to the Bonds or the security therefor, and the Authority will have no liability to holders of the Bonds with respect to any such disclosures.

The Authority has previously issued bonds to finance other projects authorized under the Act and expects to continue issuing bonds to finance such projects. Each of the Authority's bond offerings are separately secured by a pledge of revenues derived from the applicable project and other collateral, if any, pledged as security by the owner of the project so financed.

There is not now pending or, to the knowledge of the Authority, threatened any litigation restraining or enjoining or seeking to restrain or enjoin the issuance or delivery of the Bonds or questioning or affecting the validity of the Bonds or the proceedings or authority under which the Bonds are to be issued. Neither the creation, organization or existence of the Authority nor the title of any of the present members of the Board or other officials of the Authority is being contested. There is no litigation pending or, to the knowledge of the Authority, threatened, which in any manner questions the right of the Authority to enter into the Bond Indenture or the Loan Agreement or to secure the Bonds in the manner provided in the Bond Indenture and the Act.

Neither the principal, Redemption Price or Purchase Price of the Bonds, nor the interest accruing thereon, shall ever constitute a general indebtedness of the Authority or the indebtedness of the State or any political subdivision thereof within the meaning of any constitutional or statutory provision whatsoever or shall ever constitute or give rise to a pecuniary liability of the State or any political subdivision thereof, nor will the Bonds be, or be deemed to be, an obligation of the State or any political subdivision thereof. The Authority has no taxing power.

The Authority has not prepared or assisted in the preparation of this Official Statement except for the statements in respect of the Authority under this section and under the section entitled “LITIGATION,” and except as aforesaid, the Authority is not responsible for any statements made herein and will not participate in, or otherwise be responsible for, the offer, sale or distribution of the Bonds. Accordingly, except as aforesaid, the Authority disclaims responsibility for the disclosure set forth herein made in connection with the offer, sale and distribution of the Bonds.

CHRISTIANA CARE HEALTH SYSTEM AND THE OBLIGATED GROUP

The Health System is a Delaware nonprofit corporation, which is the parent corporation of Services and several other healthcare related affiliates described herein. The Health System’s primary activity is to collect gifts and bequests and engage in fundraising activities on behalf of Health Services and the other healthcare-related affiliates and to provide strategic planning and risk management for all of the healthcare operations. Health Services is a Delaware nonprofit corporation, which owns and operates Christiana Hospital, Wilmington Hospital, Eugene DuPont Preventative Medicine and Rehabilitation Institute, a free-standing emergency department, a physician network, residency training programs and numerous ambulatory care centers and physician offices. Health Services primary activity is to provide healthcare services to residents of Delaware, and surrounding counties located in Maryland, Pennsylvania and New Jersey.

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For information regarding the Corporation, the Obligated Group, see the information in APPENDIX A – “INFORMATION CONCERNING CHRISTIANA CARE HEALTH SYSTEM” to this Official Statement.

THE BONDS

THE PRINCIPAL, PURCHASE PRICE, OR REDEMPTION PRICE OF, AND INTEREST ON THE BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY AND DO NOT CONSTITUTE A DEBT OR LIABILITY OF THE STATE OF DELAWARE OR OF ANY POLITICAL SUBDIVISION OR AGENCY THEREOF, OTHER THAN THE AUTHORITY, OR A PLEDGE OF THE FAITH AND CREDIT OR TAXING POWERS OF THE STATE OF DELAWARE OR OF ANY POLITICAL SUBDIVISION THEREOF OR AGENCT THEREOF, INCLUDING THE AUTHORITY. THE AUTHORITY HAS NO TAXING POWER.

The following is a summary of certain provisions of the Series 2020A Bonds and the Series 2020B Bonds as Fixed Rate Bonds in the Initial Fixed Period. Reference is made to the Bonds and to the Bond Indenture for a more detailed description of such provisions. The discussion herein is qualified by such reference. See APPENDIX D – “SUMMARY OF CERTAIN PROVISIONS OF THE BOND INDENTURE AND THE LOAN AGREEMENT.” Any reference herein to the Bonds or to the Bond Indenture or other similar documents shall be deemed to mean the Bonds or the documents related thereto, unless the context or use clearly indicates otherwise. All capitalized terms used herein but not otherwise defined shall have the meanings given to them in APPENDIX D – “SUMMARY OF CERTAIN PROVISIONS OF THE BOND INDENTURE AND THE LOAN AGREEMENT” hereto.

This Official Statement summarizes certain terms of the Fixed Rate Bonds only while the Fixed Rate Bonds bear interest in the Initial Fixed Period. The Initial Fixed Period will commence on the date of issuance of the Fixed Rate Bonds and will end on the earlier of the Maturity Date or the date, if any, on which the Fixed Rate Bonds are converted, at the election of the Corporation, to operate in a different Interest Rate Mode or a new Fixed Period. Should the Fixed Rate Bonds be converted to operate in a different Interest Rate Mode or a new Fixed Period, the Fixed Rate Bonds will be subject to mandatory tender and purchase on the Conversion Date and, at that time, it is expected that a reoffering circular or a supplement to this Official Statement or other disclosure document will be prepared for the Bonds in connection with any such Conversion.

General

Each of the Series 2020A Bonds and Series 2020B Bonds that are Fixed Rate Bonds will be dated the date of delivery and will mature as shown on the inside cover of this Official Statement. The Fixed Rate Bonds are being issued in a Fixed Period at the rates indicated on the inside cover of this Official Statement. The Fixed Rate Bonds, or portions thereof, may be converted, at the Corporation’s election, to a Daily Mode, a Two Day Mode, a Weekly Mode, a Short-Term Mode, a Long-Term Mode, a Flexible Mode, an FRN Mode, a VRO Mode, a Window Mode, a Direct Purchase Mode or a new Fixed Period, all as defined in the Bond Indenture. Any such Conversion may occur only during the period in which such Fixed Rate Bonds are subject to optional redemption pursuant to the provisions of the Bond Indenture as described under “THE BONDS – Redemption and Purchase – Optional Redemption” below. See “THE BONDS – Mandatory Tender of Fixed Rate Bonds for Purchase on or After Optional Redemption Date; Conversions” herein.

Interest on the Fixed Rate Bonds (based on a 360-day year of twelve 30-day months) will be payable each April 1 and October 1 (each, an “Interest Payment Date”), commencing April 1, 2020, or if any April 1 and October 1 is not a Business Day, the next succeeding Business Day. The day next succeeding the last day of a Fixed Period and any Conversion Date is also an Interest Payment Date with respect to the Fixed Rate Bonds.

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The Fixed Rate Bonds will be subject to sinking fund, optional and extraordinary optional redemption, and purchase in lieu of optional redemption prior to maturity as described under “The Fixed Rate Bonds—Redemption and Purchase” herein.

The Fixed Rate Bonds will be made available to Beneficial Owners in book-entry form only, in Authorized Denominations of $5,000 and any integral multiple thereof. Beneficial Owners of the Fixed Rate Bonds will not receive certificates representing their interests in the Fixed Rate Bonds, except as described below. So long as Cede & Co. is the registered owner of the Fixed Rate Bonds, the principal of, and the interest on, the Fixed Rate Bonds are payable by wire transfer by the Bond Trustee to Cede & Co., as nominee for DTC which, in turn, will remit such amounts to DTC Participants for subsequent disbursement to the Beneficial Owners. So long as all records of ownership of the Fixed Rate Bonds are maintained through the book-entry only system, all payments to the Beneficial Owners of the Fixed Rate Bonds will be made in accordance with the procedures described herein in APPENDIX G – “INFORMATION REGARDING BOOK-ENTRY ONLY SYSTEM.”

The principal, Redemption Price or Purchase Price of, and interest on, the Fixed Rate Bonds shall be payable in lawful money of the United States of America. Such principal, Redemption Price or Purchase Price shall be payable at the designated corporate trust office of the Bond Trustee upon surrender for cancellation. Interest on the Fixed Rate Bonds shall be payable on each Interest Payment Date by the Bond Trustee by check mailed on the date on which due to the Holders of Fixed Rate Bonds at the close of business on the fifteenth day of the month preceding the month in which such Interest Payment Date occurs, whether or not such day is a Business Day (each, a “Record Date”) in respect of such Interest Payment Date at the registered addresses of Holders as shall appear on the registration books of the Bond Trustee as of the close of business as of such Record Date. In the case of any Holder of Fixed Rate Bonds in an aggregate principal amount in excess of $1,000,000 as shown on the registration books of the Bond Trustee who, prior to the Record Date next preceding any Interest Payment Date, shall have provided the Bond Trustee with written wire transfer instructions containing the wire transfer address within the continental United States, interest payable on such Fixed Rate Bonds shall be paid in accordance with the wire transfer instructions provided by the Holder of such Fixed Rate Bond.

Mandatory Tender of Fixed Rate Bonds for Purchase on or After Optional Redemption Date; Conversions

At the option of the Corporation, the Fixed Rate Bonds may be converted, in whole or in part, to operate in a Daily Mode, a Two Day Mode, a Weekly Mode, a Short-Term Mode, a Long-Term Mode, a Flexible Mode, an FRN Mode, a VRO Mode, a Window Mode, a Direct Purchase Mode or a new Fixed Period on any date during the period such Fixed Bonds are subject to optional redemption pursuant to the provisions of the Bond Indenture as described under “THE BONDS – Redemption and Purchase – Optional Redemption” below. Any Conversion of the Fixed Rate Bonds shall be in Authorized Denominations in a minimum aggregate principal amount of $5,000,000. The Bond Trustee shall give Electronic Notice, confirmed by first class mail, of the Conversion to the holders of the Fixed Rate Bonds, not less than 20 days prior to the Conversion Date.

Such notice shall state, among other things: (i) the Conversion Date; (ii) that such Fixed Rate Bonds shall be subject to mandatory tender for purchase on such Conversion Date (herein also referred to as the “Mandatory Purchase Date”); (iii) that Holders may not elect to retain such Fixed Rate Bonds subject to mandatory tender; (iv) that all such Fixed Rate Bonds subject to mandatory tender shall be required to be delivered to the designated corporate trust office of the Bond Trustee on the Mandatory Purchase Date; (v) that if the Holder of any Fixed Rate Bond subject to mandatory tender fails to deliver such Fixed Rate Bond to the Bond Trustee for purchase on the Mandatory Purchase Date, and if the Bond Trustee is in receipt of funds sufficient to pay the Purchase Price thereof, such Fixed Rate Bond (or

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portion thereof) shall nevertheless be deemed purchased on the Mandatory Purchase Date and ownership of such Fixed Rate Bond (or portion thereof) shall be transferred to the purchaser thereof; (vi) that any Holder that fails to deliver any Fixed Rate Bond for purchase shall have no further rights thereunder or under the Bond Indenture except the right to receive the Purchase Price thereof upon presentation and surrender of such Fixed Rate Bond to the Bond Trustee and that the Bond Trustee will place a stop transfer against the Fixed Rate Bonds subject to mandatory tender registered in the name of such Holder(s) on the registration books; (vii) that if moneys sufficient to effect such purchase shall have been provided through (A) the remarketing of such Fixed Rate Bonds by the Remarketing Agent, or (B) funds provided by the Corporation, all such Fixed Rate Bonds shall be purchased, and (viii) in the case of mandatory tender upon any proposed Conversion of Fixed Rate Bonds, that such Conversion and such mandatory tender will not occur in the event any of the conditions to Conversion specified in the Bond Indenture are not satisfied, and that any such failure to effect the Conversion shall not constitute an Event of Default.

Such Conversion from the Initial Fixed Period and mandatory tender of the Fixed Rate Bonds will not occur unless the following shall occur (i) a Favorable Opinion of Bond Counsel shall be provided with respect to such Conversion; (ii) the remarketing proceeds and funds transferred by the Corporation to the Bond Trustee and available on the Conversion Date shall not be less than the amount required to purchase all of such Fixed Rate Bonds to be converted at the applicable Purchase Price; (iii) in the case of any Conversion of Fixed Rate Bonds to any Interest Rate Mode (except a Direct Purchase Mode), prior to the Conversion Date, the Corporation shall have appointed a remarketing agent and there shall have been executed and delivered a remarketing agreement; and (iv) for a Conversion of less than all of the Fixed Rate Bonds, the Fixed Rate Bonds shall be designated into separate sub-series as provided in the Bond Indenture. In addition to the conditions set forth above and notwithstanding the Corporation’s delivery of notice of the exercise of its option to effect a Conversion for the Fixed Rate Bonds, such Conversion to the new Interest Rate Mode shall not take effect if: (a) the Remarketing Agent fails to determine, when required, the interest rate for the new Interest Rate Mode or Interest Rate Period, as applicable; (b) the notice of Conversion to the Holders of such Fixed Rate Bonds is not given when required; (c) sufficient funds are not available by the time specified in the Bond Indenture on the Conversion Date to purchase all of such Fixed Rate Bonds required to be purchased on such Conversion Date, or (d) not all of the Fixed Rate Bonds are remarketed in the new Interest Rate Mode or Interest Rate Period, as applicable, on the Conversion Date.

In connection with any proposed Conversion of Fixed Rate Bonds from the Fixed Mode to a different Interest Rate Period, the Corporation has the right to deliver to the Bond Trustee and the Authority on or prior to 10:00 a.m., New York City time, on the effective date of any such proposed Conversion, a notice to the effect that the Corporation elects to rescind its election to implement any such Conversion. If the Corporation rescinds its election to implement any such Conversion, then such Conversion shall not occur, the mandatory tender shall not occur and the Fixed Rate Bonds will continue to bear interest at the current interest rates for the Fixed Period in effect immediately prior to such proposed Conversion Date.

Payment of the Purchase Price; Failed Conversion. Funds for the payment of the Purchase Price of the Fixed Rate Bonds shall be received by the Bond Trustee from the following sources and used in the order of priority indicated: (A) proceeds of the sale of the Fixed Rate Bonds remarketed and furnished to the Bond Trustee by the Remarketing Agent; and (B) moneys required to be provided by the Corporation to the Bond Trustee. If any condition precedent to the Conversion of the Interest Rate Mode on the Fixed Rate Bonds required under the Bond Indenture and more specifically described above shall not be satisfied, including delivery of the required Favorable Opinion of Bond Counsel, no purchase shall be consummated. Failure of the Corporation to provide sufficient funds for the purchase of all tendered Fixed Rate Bonds on a Conversion Date shall not constitute an Event of Default under the

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Bond Indenture and the Loan Agreement. If such Fixed Rate Bonds are not purchased when required, then such Conversion of the Interest Rate Mode shall not occur and such Fixed Rate Bonds shall continue to bear interest at the current interest rate as in effect immediately prior to such proposed Conversion Date.

Redemption and Purchase

Optional Redemption. Series 2020A. During the Initial Fixed Rate Period, the Series 2020A Bonds maturing on or after October 1, 20__ are subject to redemption prior to their Maturity Date on any date on or after [______1, 20__], at the option of the Corporation, in whole or in part, at any time, in such amounts as may be designated by the Corporation, at a Redemption Price equal to the principal amount of the Series 2020A Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium.

Series 2020B. During the Initial Fixed Rate Period, the Series 2020B Bonds are subject to redemption prior to their Maturity Date, at the option of the Corporation, in whole or in part, at any time at the Make-Whole Redemption Price.

“Make-Whole Adjustment” means [______] basis points with respect to the Series 2020B Bonds.

With respect to the optional redemption of the Series 2020B Bonds, “Make-Whole Redemption Price” means the greater of (i) 100% of the principal amount of a Series 2020B Bond to be redeemed and (ii) the sum of the present value of the remaining scheduled payments of principal and interest to the Maturity Date of such Series 2020B Bond, not including any portion of those payments of interest accrued and unpaid as of the date on which such Series 2020B Bond is to be redeemed, discounted to the date on which such Series 2020B Bond is to be redeemed on a semi-annual basis assuming a 360- day year consisting of twelve 30-day months at the adjusted Treasury Rate plus the Make-Whole Adjustment, plus, in each case, accrued and unpaid interest on such Series 2020B Bond to the redemption date.

For purposes of the paragraph above, “Treasury Rate” means the yield to maturity, as of the redemption date of a Series 2020B Bond 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, but no more than 45 days calendar days, prior to delivery of the notice of redemption of such Series 2020B Bond (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 such redemption date to the Maturity Date of such Series 2020B Bond; provided, however, that if the period from such 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 redemption price of the principal amount redeemed plus interest accrued to the redemption date.

Extraordinary Optional Redemption. The Fixed Rate Bonds are subject to extraordinary optional redemption prior to their Maturity Date, at the option of the Corporation, in whole or in part in Authorized Denominations (in such amounts as may be specified by the Corporation) on any Business Day from hazard insurance or condemnation proceeds received with respect to the facilities of any of the Credit Group Members and deposited in the Optional Redemption Fund, at a Redemption Price equal to

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the principal amount of the Fixed Rate Bonds to be redeemed, plus accrued interest to the redemption date, without premium.

Mandatory Bond Sinking Fund Redemption. Series 2020A. The Series 2020A Bonds maturing on October 1, 20__ are subject to redemption in part prior to their stated maturity from Sinking Fund Installments on any Sinking Fund Installment Date at the Redemption Price equal to the principal amount of the Series 2020A Bonds to be redeemed plus accrued interest, if any, to the redemption date and without premium at the following amounts and on the following dates:

Sinking Fund Installment Date (October 1) Sinking Fund Installments

______* Maturity

The Series 2020A Bonds maturing on October 1, 20__ are subject to redemption in part prior to their stated maturity from Sinking Fund Installments on any Sinking Fund Installment Date at the Redemption Price equal to the principal amount of the Series 2020A Bonds to be redeemed plus accrued interest, if any, to the redemption date and without premium at the following amounts and on the following dates:

Sinking Fund Installment Date (October 1) Sinking Fund Installments

______* Maturity

Series 2020B. The Series 2020B maturing on October 1, 20__ are subject to redemption in part prior to their stated maturity from Sinking Fund Installments on any Sinking Fund Installment Date at the Redemption Price equal to the principal amount of the Series 2020B Bonds to be redeemed plus accrued interest, if any, to the redemption date and without premium at the following amounts and on the following dates:

Sinking Fund Installment Date (October 1) Sinking Fund Installments

* ______* Maturity

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In lieu of such mandatory sinking fund redemption, the Bond Trustee shall, at the written request of the Corporation, purchase for cancellation an equal principal amount of Fixed Rate Bonds of the maturity to be redeemed in the open market identified by the Corporation at prices specified by the Corporation not exceeding the principal amount of the Fixed Rate Bonds being purchased plus accrued interest with such interest portion of the purchase price to be paid from the Interest Fund and the principal portion of such purchase price to be paid from the Bond Sinking Fund. In addition, the amount of Fixed Rate Bonds to be redeemed on any date pursuant to the mandatory sinking fund redemption schedule shall be reduced by the principal amount of Fixed Rate Bonds of the maturity required to be redeemed which are acquired by the Corporation or any other Obligated Group Member and delivered to the Bond Trustee for cancellation.

In connection with any partial redemption or defeasance prior to maturity of the Fixed Rate Bonds, the Bond Trustee may, at the written request of the Corporation, use any amounts on deposit in the Bond Sinking Fund in excess of the amount needed to pay principal on the Fixed Rate Bonds remaining outstanding on the first principal or Sinking Fund Installment Date occurring on or after the date of such redemption or defeasance to pay or provide for the payment of the principal or Redemption Price of and interest on the Fixed Rate Bonds to be redeemed or defeased or as otherwise directed by the Corporation if the Bond Trustee shall have received a Favorable Opinion of Bond Counsel.

Purchase in Lieu of Optional Redemption

Notwithstanding the redemption provisions of the Bond Indenture, any Fixed Rate Bonds subject to optional redemption and cancellation pursuant to the provisions of the Bond Indenture summarized under the heading “Redemption and Purchase – Optional Redemption” above, shall also be subject to optional call for purchase and, at the option of the Corporation, holding, resale or cancellation by the Corporation, at the same times as are applicable to the optional redemption of Fixed Rate Bonds and at a Purchase Price equal to the applicable Redemption Price of such Fixed Rate Bonds. To exercise such option, the Corporation shall give the Bond Trustee a Written Request exercising such option as though such Written Request were a written request for redemption, and the Bond Trustee shall thereupon give the holders of the Fixed Rate Bonds to be purchased notice of such purchase in the manner specified, and within the time period specified, under the heading “THE BONDS – Notice of Redemption” and the purchase of such Fixed Rate Bonds shall be mandatory and enforceable against the Bondholders. On the date fixed for purchase pursuant to any exercise of such option, the Corporation or its assignee shall pay the purchase price of the Fixed Rate Bonds then being purchased to the Bond Trustee in immediately available funds on the purchase date, and the Bond Trustee shall pay the same to the sellers of such Fixed Rate Bonds against delivery thereof. Following such purchase, the Bond Trustee shall cause such Fixed Rate Bonds to be registered in the name of the Corporation or its assignee and shall deliver them to the Corporation or its assignee. In the case of the purchase of less than all of the Fixed Rate Bonds, the particular Fixed Rate Bonds to be purchased shall be selected in accordance with the provisions summarized under the heading “THE BONDS – Selection of Fixed Rate Bonds for Redemption” below. No purchase of the Fixed Rate Bonds pursuant to the provisions of the Bond Indenture summarized in this paragraph shall operate to extinguish the indebtedness of the Authority evidenced thereby (subject to all the terms and limitations contained in the Bond Indenture). Notwithstanding the foregoing, no purchase shall be made pursuant to the provisions of the Bond Indenture summarized in this paragraph unless the Corporation shall have delivered to the Bond Trustee and the Authority concurrently therewith a Favorable Opinion of Bond Counsel.

Selection of Fixed Rate Bonds for Redemption

Whenever provision is made in the Bond Indenture for the redemption of less than all of the Fixed Rate Bonds or any given portion thereof, the Bond Trustee shall select the Fixed Rate Bonds to be

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redeemed, from all Fixed Rate Bonds subject to redemption or such given portion thereof not previously called for redemption, as directed in writing by the Corporation or in the absence of direction by lot.

Notice of Redemption

Notice of redemption shall be mailed by the Bond Trustee, not less than twenty (20) days nor more than sixty (60) days prior to the redemption date to the Holders of Fixed Rate Bonds called for redemption at their addresses appearing on the bond registration books of the Bond Trustee as of the date of the giving of such notice. Each notice of redemption shall state the date of such notice, the Series designation and date of issue of the Fixed Rate Bonds, the redemption date, the Redemption Price, the place or places of redemption (including the name and appropriate address or addresses of the Bond Trustee), the maturity date, the CUSIP numbers, if any, and, in the case of Fixed Rate Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice shall also state that, subject to the deposit of sufficient funds with the Bond Trustee on or prior to the redemption date to effect the redemption and to prior rescission as provided in the next paragraph, on that date there will become due and payable on each of the Fixed Rate Bonds, the Redemption Price thereof or of the specified portion of the principal amount thereof in the case of a Fixed Rate Bond to be redeemed in part only, together with interest accrued thereon to the redemption date, and that from and after such redemption date interest thereon shall cease to accrue, and shall require that such Fixed Rate Bonds be then surrendered.

Any notice of optional redemption shall state (i) that it is conditioned upon the deposit with the Bond Trustee on or prior to the redemption date of moneys in an amount equal to the amount necessary to effect the redemption and (ii) that the notice may be rescinded by written notice given to the Bond Trustee by the Corporation on or prior to the date specified for redemption, and in either of such cases such notice and redemption shall be of no effect if such moneys are not so deposited or if the notice is rescinded as described in the Bond Indenture. Any Fixed Rate Bond for which a notice of redemption has been rescinded or for which sufficient funds to pay the Redemption Price thereof have not been deposited with the Bond Trustee on or prior to the redemption date shall remain outstanding and neither the rescission of the notice nor the failure to fund the Redemption Price shall constitute an Event of Default under the Bond Indenture. The Bond Trustee shall give notice of such rescission or failure to fund the Redemption Price as soon thereafter as practicable in the same manner, and to the same Persons, as notice of such optional redemption was given.

Failure by the Bond Trustee to mail a notice of redemption to any one or more of the respective Holders of any Fixed Rate Bonds designated for redemption shall not affect the sufficiency of the proceedings for redemption with respect to the Holders to whom such notice was mailed.

Registration, Transfer and Exchange

For a description of the procedure to transfer ownership of a Bond while in the book-entry only system, see APPENDIX G – “INFORMATION REGARDING BOOK-ENTRY ONLY SYSTEM.” The Fixed Rate Bonds, if not then in book-entry only registration, are subject to the limitations described below.

Upon surrender for transfer or exchange of any Fixed Rate Bond at the designated corporate trust office of the Bond Trustee, the Authority shall execute and the Bond Trustee shall authenticate and deliver in the name of the transferee or transferees, one or more new Fixed Rate Bond or Fixed Rate Bonds of the same maturity and of any Authorized Denominations and of a like aggregate principal amount.

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All Fixed Rate Bonds presented or surrendered for transfer or exchange shall (if so required by the Bond Trustee) be duly endorsed, or be accompanied by a written instrument of transfer or authorization for exchange, in form satisfactory to the Bond Trustee, duly executed by the registered owner or by such owner’s attorney or legal representative duly authorized in writing.

No service charge shall be imposed for any registration, exchange or transfer of Fixed Rate Bonds. The Bond Trustee may, however, require payment by the person requesting an exchange or transfer of Fixed Rate Bonds of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto, except in the case of the issuance of a Fixed Rate Bond or Fixed Rate Bonds for the unredeemed portion of a Fixed Rate Bond surrendered for redemption.

The Bond Trustee shall not be required to (a) transfer or exchange any Fixed Rate Bond during the 15-day period preceding the mailing of such notice of redemption of Fixed Rate Bonds, or (b) transfer or exchange any Fixed Rate Bond so selected for redemption in whole or in part during a period beginning at the opening of business on any Record Date for such Fixed Rate Bond and ending at the close of business on the relevant Interest Payment Date.

Additional Bonds

At the request of the Corporation, upon compliance by the Corporation with the requirements of the Bond Indenture, the Authority may issue Additional Bonds from time to time for any purpose or combination of purposes permitted under the Act. See APPENDIX D – “SUMMARY OF CERTAIN PROVISIONS OF THE BOND INDENTURE AND THE LOAN AGREEMENT – Additional Bonds.” The Members of the Obligated Group may incur additional indebtedness under the Master Indenture without limitation.

SOURCE OF PAYMENT AND SECURITY FOR THE BONDS

Set forth below is a narrative description of certain contractual provisions relating to the source of payment of and security for the Bonds. These provisions have been summarized and this description does not purport to be complete. Reference should be made to the Bond Indenture, the Loan Agreement, the Master Indenture, the Supplemental Master Indentures and the 2020 Obligations. Copies of the Bond Indenture, the Loan Agreement, the Master Indenture, the Supplemental Master Indentures and the 2020 Obligations are on file with the Bond Trustee. See also APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE AND SUPPLEMENTAL MASTER INDENTURES” and APPENDIX D – “SUMMARY OF CERTAIN PROVISIONS OF THE BOND INDENTURE AND THE LOAN AGREEMENT” for a more complete statement of the rights, duties and obligations of the parties thereto.

Bond Indenture, Loan Agreement and the 2020 Obligations

The Bonds are limited obligations of the Authority, payable solely from Revenues (as defined below) and certain other amounts pledged under the Bond Indenture for such payment. “Revenues” consist primarily of payments required to be made by the Corporation under the Loan Agreement, payments required to be made by the Obligated Group on the Obligations and from other funds held under the Bond Indenture.

In the Loan Agreement, the Corporation agrees to make payments, or cause payments to be made, at the times and in the amounts required to be paid as principal, Redemption Price or Purchase Price of, and interest on, the Bonds from time to time Outstanding under the Bond Indenture and other amounts

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required to be paid under the Bond Indenture, as the same shall become due whether at maturity, upon mandatory sinking fund redemption, by declaration of acceleration or otherwise.

The Authority will assign its right, title and interest in the 2020 Obligations and the Loan Agreement to the Bond Trustee, except for (i) the right to receive Additional Payments or Administrative Fees and Expenses to the extent payable to the Authority and (ii) any other Unassigned Rights of the Authority, including, but not limited to, certain consent rights of the Authority and rights of the Authority to be indemnified by the Corporation.

Under certain circumstances and upon satisfaction of the requirements of the Master Indenture, the 2020 Obligations may be replaced, without the consent of any of the Holders of the Bonds, by an obligation of a different obligated group or different credit group. Under certain circumstances, this could lead to the substitution of different security in the form of an obligation backed by an obligated group or credit group that is financially and operationally different from the then-existing Obligated Group or Credit Group. That new obligated group or credit group could have substantial debt outstanding that would rank on a parity basis with the obligation substituted for the 2020 Obligations. See “SOURCE OF PAYMENT AND SECURITY FOR THE BONDS – Master Indenture – Replacement of 2020 Obligations with Obligations Issued Under a Separate Master Indenture” below.

The Bond Indenture and the Loan Agreement may be amended from time to time in certain circumstances without the consent of the Bondholders, and in certain circumstances with the consent of the Holders of at least a majority in aggregate principal amount of the Bonds then Outstanding. Such amendments could be substantial and result in the modification, waiver or removal of existing covenants or restrictions contained in the Bond Indenture or the Loan Agreement. See APPENDIX D – “SUMMARY OF CERTAIN PROVISIONS OF THE BOND INDENTURE AND THE LOAN AGREEMENT – THE BOND INDENTURE – Amendments to the Bond Indenture” and “ – Amendment of Loan Agreement; Other Covenants.”

Master Indenture

The following is a brief summary of certain of the security provisions of the Master Indenture. For a more detailed summary of certain provisions of the Master Indenture and the Supplemental Master Indentures, see APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE AND SUPPLEMENTAL MASTER INDENTURES.”

The Master Indenture may be amended from time to time in certain circumstances without the consent of the holders of Outstanding Obligations, and in certain circumstances, with the consent of the holders of not less than a majority in aggregate principal amount of the Obligations then Outstanding. Such amendments could be substantial and result in the modification, waiver or removal of existing covenants or restrictions contained in the Master Indenture. The Master Indenture may also be replaced by a replacement master indenture of a new credit group, without the consent of the Holders of the Bonds, and upon satisfaction of the requirements set forth in the Master Indenture. See APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE AND SUPPLEMENTAL MASTER INDENTURES.”

The Obligated Group and the Credit Group. The Master Indenture creates the Credit Group, which is comprised of the Obligated Group Members and Designated Affiliates. As of the date of issuance of the Bonds, the Corporation and Services will be the only Members of the Obligated Group and no entities are designated as Designated Affiliates. No other entities, or affiliates of the Corporation are obligated to make payments with respect to the Bonds or the Master Indenture

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Obligations. The Master Indenture provides that the Corporation may not remove Services as a Member of the Obligated Group for so long as any Obligations are Outstanding.

All Obligated Group Members are jointly and severally obligated for the amounts due on Obligations. Designated Affiliates are not obligated to make payments on Obligations. However, they may be required to transfer funds to the Obligated Group Members acting as their Controlling Members under the Master Indenture, in amounts necessary to enable such Obligated Group Members to comply with the provisions of the Master Indenture, including to make payments due on Obligations. Although Designated Affiliates are not obligated to make payments on Obligations, such entities, if any are so designated under the Master Indenture, are Credit Group Members and are subject to certain covenants under the Master Indenture and certain financial covenants and ratios under the Master Indenture, including the Debt Service Coverage Ratio, are based on the consolidated financial statements of the Corporation, which may include entities that are not members of the Credit Group. See APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE AND SUPPLEMENTAL MASTER INDENTURES – THE MASTER INDENTURE.” See also “Designated Affiliates” below.

For the fiscal year ended June 30, 2019, the Obligated Group represented approximately 98.0% of total consolidated operating revenues of the Corporation and affiliates as set forth in the audited financial statements set forth in Appendix B.

Issuance of Obligations; Joint and Several Obligations. Under the Master Indenture, each Member of the Obligated Group authorizes to be issued from time to time Obligations, without limitation as to amount, except as provided in the Master Indenture or as may be limited by law, and subject to the terms, conditions and limitations established in the Master Indenture and in any Related Supplement. Obligations may be in any form set forth in a Related Supplement, including, but not limited to, bonds, notes, obligations, debentures, reimbursement agreements, loan agreements, Financial Product Agreements or leases. Each Obligated Group Member jointly and severally covenants to promptly pay, or cause to be paid, all Required Payments at the place, on or before the dates and in the manner provided in the Master Indenture or in any Related Supplement or Master Indenture Obligation. Each Obligated Group Member further covenants to faithfully observe and perform all of the conditions, covenants and requirements of the Master Indenture, any Related Supplement and any Master Indenture Obligation.

Changes to the Members of the Credit Group. Entities may be added to and withdrawn from the Credit Group from time to time. The Master Indenture imposes minimum conditions on the right of any Member of the Obligated Group or Credit Group Member to enter or withdraw from the Obligated Group or the Credit Group, respectively, at any time, or to change the status of a Member of the Obligated Group to that of a Designated Affiliate. For a description of the Obligated Group, see APPENDIX A – “INFORMATION CONCERNING CHRISTIANA CARE HEALTH SYSTEM.” For a more detailed discussion of entry into or withdrawal from the Obligated Group or Credit Group, respectively, see APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE AND SUPPLEMENTAL MASTER INDENTURES – THE MASTER INDENTURE – Credit Group Membership – Membership in Obligated Group,” and “– Withdrawal from Obligated Group.” The Master Indenture provides that the Corporation may not remove Services as a Member of the Obligated Group for so long as Obligations are Outstanding.

Designated Affiliates. Under the Master Indenture, the Corporation, as the Credit Group Representative, may designate “Designated Affiliates,” from time to time, and may rescind any such designation at any time on the conditions set forth in the Master Indenture. In connection with such designation, the Credit Group Representative shall designate for each Designated Affiliate, an Obligated Group Member to serve as the Controlling Member for such Designated Affiliate. So long as such Person is designated as a Designated Affiliate, the Controlling Member of such Designated Affiliate shall either

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(i) maintain, directly or indirectly, control of such Designated Affiliate to the extent necessary to cause such Designated Affiliate to comply with the terms of the Master Indenture, whether through the ownership of voting securities, by contract, corporate membership, reserved powers or the power to appoint corporate members, trustees or directors, or otherwise or (ii) execute and have in effect such contracts or other agreements which the Credit Group Representative and the Controlling Member, in the judgment of their respective Governing Bodies, deem sufficient for the Controlling Member to cause such Designated Affiliate to comply with the terms of the Master Indenture. See APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE AND SUPPLEMENTAL MASTER INDENTURES – THE MASTER INDENTURE – Credit Group Membership.” As of the date of issuance of the Bonds, there will be no Designated Affiliates under the Master Indenture.

Designated Affiliates are not obligated to make payments on any Master Indenture Obligation. Each Controlling Member agrees, however, that it shall cause each of its Designated Affiliates to transfer to such Controlling Member such amounts as are necessary to enable the Obligated Group Members to comply with the provisions of the Master Indenture; provided, however, that nothing in the Master Indenture shall be construed to require any Controlling Member to cause its Designated Affiliates, to transfer to such Controlling Member any amounts that constitute Restricted Moneys. Restricted Moneys is defined in the Master Indenture as the proceeds of any grant (including without limitation any government grant), gift, bequest, contribution or other donation (and, to the extent subject to the applicable restrictions, the investment income derived from the investment of such proceeds) specifically restricted by the donor or grantor to an object or purpose inconsistent with their use for the payment under the Master Indenture.

Security for Obligations. All Obligations Outstanding from time to time under the Master Indenture, including the 2020 Obligations, will be secured by a pledge, assignment and grant by each Obligated Group Member to the Master Trustee of a security interest in all of such Obligated Group Member’s right, title and interest in its Gross Receivables and in all monies and securities held from time to time by the Master Trustee under the Master Indenture. See “SOURCE OF PAYMENT AND SECURITY FOR THE BONDS − Security and Enforceability – Perfection of a Security Interest.” See also APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE AND SUPPLEMENTAL MASTER INDENTURES – THE MASTER INDENTURE – Credit Group Membership,” “– Gross Receivables Pledge,” “–Membership in the Obligated Group,” and “–Withdrawal from the Obligated Group.”

Security Interests in Gross Receivables for Obligations. Each Obligated Group Member has pledged, assigned and granted to the Master Trustee a security interest in all of its right, title and interest, whether now owned or hereafter acquired, in and to its Gross Receivables and all monies and securities held from time to time by the Master Trustee under the Master Indenture. Any future Obligated Group Members will also be required to grant a security interest in their Gross Receivables. For purposes of the Master Indenture, “Gross Receivables” is defined to mean all of the accounts, chattel paper, instruments and payment intangibles (all as defined in the UCC) of each Obligated Group Member, as are now in existence or as may be hereafter acquired and the proceeds thereof. “Gross Receivables” shall not include (i) Restricted Moneys and (ii) all accounts or payment intangibles consisting of or arising from patents and royalties.

The security interest of the Master Trustee in the Gross Receivables is subject to certain limitations as described below in this section under the heading “Security and Enforceability – Perfection of Security Interest.”

Permitted Liens Under the Master Indenture. Pursuant to the Master Indenture, each Obligated Group Member agrees that it will not, and each Controlling Member agrees that it will not permit any

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Designated Affiliate it controls, to create or suffer to be created or permit the existence of any Lien upon Property, now owned or hereafter acquired by it, other than Permitted Liens. Permitted Liens include, but are not limited to, Liens that may be granted to secure additional Obligations and other Indebtedness. The Obligated Group may incur substantial liabilities secured by Permitted Liens.

Other Master Indenture Covenants; Debt Service Coverage Ratio. In addition to the security and other provisions described above, the Master Indenture contains provisions, covenants and restrictions related to incurrence of indebtedness, mergers and other corporate combinations and divestitures, sales, leases or other dispositions or assets and other matters. The Master Indenture requires the Credit Group to maintain a Debt Service Coverage Ratio of at least 1.1 to 1.0 for each Fiscal Year. The Credit Group has agreed in the Master Indenture to retain an Independent Consultant if the Debt Service Coverage Ratio is less than 1.1 to 1.0 for any Fiscal Year. Failure to achieve a Debt Service Coverage Ratio of at least 1.0 to 1.0 for any two consecutive Fiscal Years shall constitute an Event of Default under the Master Indenture. In calculating any financial test, restriction, or covenant under the Master Indenture, including the Debt Service Coverage Ratio, the Credit Group shall be permitted to include in such calculations, the results of operations and financial performance of entities that are not Credit Group Members and whose consolidated net assets, without donor restrictions, are consolidated with the Corporation for generally accepted accounting principles. See APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE AND SUPPLEMENTAL MASTER INDENTURES – THE MASTER INDENTURE –Debt Service Coverage Ratio,” “– Merger, Consolidation, Sale or Conveyance,” “– Limitation on Disposition of Assets” and “– Limitation on Additional Indebtedness.”

Other Outstanding Indebtedness and Master Indenture Obligations. On the date of issuance of the Bonds, the 2020 Obligations will be the only Outstanding Master Indenture Obligations. The Obligated Group Members have outstanding indebtedness and other obligations that are not secured by Obligations. See Note 12 and 13 to the financial statements included in this Official Statement as APPENDIX B – “AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF CHRISTIANA CARE HEALTH SYSTEM FOR THE YEARS ENDED JUNE 30, 2019 AND 2018” with respect to certain information concerning outstanding indebtedness.

Replacement of the 2020 Obligations with Obligations Issued Under a Separate Master Indenture. Upon the written request of the Credit Group Representative and delivery of a master indenture that provides (i) that all Outstanding Obligations shall be deemed to be a note or obligation issued thereunder and entitled to the security and benefits thereof, without the necessity of any amendment, exchange or replacement of such Obligation(s); or (ii) provides for the exchange or replacement of all Outstanding Obligations with notes or obligations issued under and entitled to the benefits thereof (the “Replacement Master Indenture”) to the Master Trustee: (i) the Master Trustee shall acknowledge the substitution of such Replacement Master Indenture and the liens, rights and interests created under the current Master Indenture shall cease, terminate and become null and void; (ii) the Master Trustee shall, at the expense of the Obligated Group Members, execute proper instruments acknowledging satisfaction of and discharging the current Master Indenture and authorizing the Credit Group Representative to file such terminations and releases as may be necessary to evidence the termination of the Master Trustee's security interest in the Gross Receivables; and (iii) an Opinion of Counsel shall be provided to the Master Trustee to the effect that (a) such Replacement Master Indenture has been duly authorized, executed and delivered by, and constitutes the legal, valid, binding and enforceable obligation of, the New Group, subject to customary exceptions; (b) the acknowledgement of such Replacement Master Indenture and the release of the current Master

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Indenture will not adversely affect any exemption from federal income taxation of interest on Indebtedness secured by an Outstanding Obligation and otherwise entitled to such exemption; and (c ) all requirements and conditions to the release of the current Master Indenture, including those set forth in any Related Supplement or Related Indenture, have been complied with and satisfied.

Upon the acceptance of a Replacement Master Indenture and the release of the current Master Indenture, all Outstanding Obligations shall be deemed to be a note or obligation issued under and entitled to the security and benefits of such Replacement Master Indenture, without the necessity of any amendment, exchange or replacement of such Obligations, unless and until such Obligations are exchanged for or replaced with a note or obligation issued under and entitled to the security and benefits of such Replacement Master Indenture in accordance with the terms thereof. Upon the acknowledgment of a Replacement Master Indenture and the release of the Master Indenture, the Master Trustee shall provide written notice thereof to the Holders of all Obligations. Within ten days of receipt by the Bond Trustee of notice from the Master Trustee, the Bond Trustee shall surrender the Obligations to the Master Trustee upon presentation to the Bond Trustee of (i) a replacement note or similar obligation issued under and pursuant to the Replacement Master Indenture, (ii) an opinion of counsel, as required under the Bond Indenture, (iii) an officer’s certificate, as required under the Bond Indenture, (iv) either (a) evidence of written notice of the intent to issue substitute obligations has been provided to each Rating Agency and the then current rating will not be withdrawn or lowered as a result of such substitution, or (b) the Bond Trustee shall have received an officer’s certificate, as required under the Bond Indenture satisfying the covenant requirements therein, (v) a favorable opinion of Bond Counsel with respect to the Bonds, (vi) an executed copy of the Replacement Master Trust Indenture and (vii) such reasonable indemnities as the Bond Trustee may request. See APPENDIX D – “SUMMARY OF CERTAIN PROVISIONS OF THE BOND INDENTURE AND LOAN AGREEMENT – Release and Substitution of the Obligations Upon Delivery of Replacement Master Indenture.”

Security and Enforceability

Perfection of a Security Interest. Each Obligated Group Member has granted a security interest in all of its right, title, and interest, whether now owned or hereafter acquired, in and to its Gross Receivables. The Master Indenture provides that the Master Trustee’s security interest in the Gross Receivables shall be perfected, to the extent that such security interest may be so perfected, by the Obligated Group Members or the Credit Group Representative filing of financing statements which comply with the requirements of the UCC. Each Obligated Group Member shall file, in accordance with the requirements of the UCC, financing statements; and, from time to time thereafter, shall deliver such other documents (including, but not limited to, continuation statements as required by the UCC) as may be necessary or reasonably requested by the Credit Group Representative in order to perfect or maintain such security interests or give public notice thereof. It may not be possible to perfect a security interest in any manner whatsoever in certain types of Gross Receivables (e.g., gifts, donations, certain insurance proceeds and payments under the Medicare and Medicaid programs) prior to actual receipt by any Member. See APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE AND SUPPLEMENTAL MASTER INDENTURES – THE MASTER INDENTURES – Gross Receivables Pledge.” See also “BONDHOLDERS’ RISKS – Security and Enforceability – Revenues Pledge.”

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Enforceability of the Master Indenture, the Loan Agreement and the 2020 Obligations. The state of the insolvency, fraudulent conveyance and bankruptcy laws relating to the enforceability of guaranties or obligations issued by one corporation in favor of the creditors of another or the obligations of an Obligated Group Member to make debt service payments on behalf of another Obligated Group Member is unsettled, and the ability to enforce the Master Indenture and the Obligations against any Obligated Group Member that would be rendered insolvent thereby could be subject to challenge.

The legal right and practical ability of the Bond Trustee to enforce its rights and remedies against the Corporation and the Obligated Group under the Loan Agreement and related documents and of the Master Trustee to enforce its rights and remedies against the Obligated Group Members under the 2020 Obligations may be limited by laws relating to bankruptcy, insolvency, reorganization, fraudulent conveyance or moratorium and by other similar laws affecting creditors’ rights. In addition, the Bond Trustee’s and the Master Trustee’s ability to enforce such rights will depend upon the exercise of various remedies specified by such documents which may in many instances require judicial actions that are often subject to discretion and delay or that otherwise may not be readily available or may be limited. See “BONDHOLDERS’ RISKS – Security and Enforceability – Enforceability of the Master Indenture and Obligations.”

Other Indebtedness

Any Credit Group Member may incur Indebtedness, including, with respect to Obligated Group Members, Indebtedness evidence by an Obligation, without restriction. The Obligated Group Members may issue additional Obligations under the Master Indenture that are secured on a parity with the 2020 Obligations and the Parity Obligations by the pledge of Gross Receivables. See APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE AND SUPPLEMENTAL MASTER INDENTURES – THE MASTER INDENTURE – Limitation on Additional Indebtedness” for a description of the conditions under which the Obligated Group Members may issue additional Obligations under the Master Indenture.

Under certain conditions set forth in the Master Indenture, in addition to incurring indebtedness represented by a Master Indenture Obligation, the Obligated Group Members may incur debt in the form of indebtedness incurred by the Obligated Group Members individually that is not secured by a Master Indenture Obligation issued under the Master Indenture. Such borrowing may be secured by Permitted Liens. See APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE AND SUPPLEMENTAL MASTER INDENTURES” for a description of various financial covenants applicable to the Corporation and any other Obligated Group Members.

PLAN OF FINANCE

The Obligated Group will use the proceeds of the Series 2020 Bonds as follows: to finance (i) the capital improvements to certain facilities of the Corporation, including the construction and equipping of a Women and Children’s hospital building and construction of a parking garage and reimbursement of costs related thereto; (ii) refunding the Prior Bonds; and (iii) payment of certain costs of issuance relating to the Bonds.

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ESTIMATED SOURCES AND USES OF FUNDS

The sources and uses of funds relating to the issuance of the Bonds are estimated below.

Estimated Sources of Funds 2020A Bonds 2020B Bonds Total† Par Amount ...... Net Original Issue [Premium/Discount]...... Equity Contribution Total Estimated Sources of Funds† ......

Estimated Uses of Funds

Deposit to Project Fund ...... Redemption of Prior Bonds ...... Costs of Issuance‡ ...... Total Estimated Uses of Funds† ...... ______‡ Includes estimated costs of issuance, including Underwriters’ discount, certain fees and expenses of various legal counsel, accountants, the Obligated Group’s Financial Advisor, the Bond Trustee, the Master Trustee, the rating agencies and costs of printing. † Totals do not sum due to rounding.

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ESTIMATED ANNUAL DEBT SERVICE REQUIREMENTS

The following table sets forth, for each fiscal year ending June 30, the amounts (rounded to the nearest whole dollar) required to be paid in such fiscal year for the payment of principal of (whether at maturity or pursuant to mandatory redemption) and interest on the Series 2020.

Fiscal Year Ending Series 2020A Series 2020B Total Debt Service June 30 Principal Interest Principal Interest Requirements

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050

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BONDHOLDERS’ RISKS

Some of the identifiable risks which should be considered when making an investment decision regarding the Bonds are discussed below. The discussion herein of risks to the Owners (including the Beneficial Owners) of the Bonds is not intended as dispositive, comprehensive or definitive, but rather is intended to summarize certain matters which could affect payment on the Bonds. The risks discussed below should be read in conjunction with APPENDIX A – “INFORMATION CONCERNING CHRISTIANA CARE HEALTH SYSTEM” and the discussion set forth under the caption “REGULATION OF THE HEALTH CARE INDUSTRY” below. Other sections of this Official Statement, as cited herein, should be referred to for a more detailed description of risks described in this section, which descriptions are qualified by reference to any documents discussed therein. Copies of all such documents are available for inspection at the designated corporate trust office of the Bond Trustee. The operations and financial condition of the Obligated Group Member (and any future Obligated Group Members) may be affected by factors other than those described in this section and “REGULATION OF THE HEALTH CARE INDUSTRY” below and elsewhere in this Official Statement. No assurance can be given as to the nature of such factors or the potential effects thereof on the Obligated Group Members.

General

As set forth under “SOURCE OF PAYMENT AND SECURITY FOR THE BONDS,” the Bonds will constitute special fund revenue bonds of the Authority and will be payable solely from Revenues and certain other amounts pledged under the Bond Indenture for such payment. “Revenues” consist primarily of payments required to be made by the Corporation under the Loan Agreement, payments required to be made by the Obligated Group on the 2020 Obligations and from other funds held under the Bond Indenture. The 2020 Obligations are joint and several obligations of the Obligated Group Members. No representation or assurance can be made that the Obligated Group Members will realize Revenues in amounts sufficient to pay principal of and interest on the Bonds when due. The revenues and expenses of the Obligated Group Members (and any future Obligated Group Members) are subject to, among other things, the capabilities of the management of the Obligated Group Members, the confidence of physicians in management, the availability of physicians and trained support staff, changes in the population or the economic condition of the Obligated Group’s service area, the level of and restrictions on federal funding of Medicare and federal and state funding of Medicaid, the imposition of government wage and price controls, the demand for the Obligated Group Members’ services, increased competition, reduced third- party reimbursement rates or delays in payment, government regulations and licensing requirements, continued funding by the State of Delaware (the “State”), future economic conditions and other conditions which are unpredictable and may not be quantifiable or determinable at this time.

The discussion herein describes risks related to certain existing federal and state laws, regulations, rules and governmental administrative policies and determinations to which the Obligated Group Members and the health care industry are subject. Several of the federal statutes and regulations described herein may be substantially modified or repealed in whole or in part. Key elements of the legislative agenda of President Trump’s administration include the repeal or replacement of the Patient Protection and Affordable Care Act, as subsequently amended by the Health Care and Education Reconciliation Act of 2010 (collectively, referred to herein as the “ACA” and described under the heading “REGULATION OF THE HEALTH CARE INDUSTRY”), tax reform and financial services reform. As defined and described under the subheading “Tax Reform” below, tax reform legislation known as the Tax Cuts and Jobs Act was signed into law in late 2017. While attempts to repeal the entirety of the ACA have not been successful to date, a key provision of the ACA was effectively repealed as part of the Tax Cuts and Jobs Act, and on December 14, 2018, a federal U.S. District Court judge in Texas ruled the entire ACA is unconstitutional. While that ruling has been appealed to the Fifth Circuit Court of Appeals, it has caused greater uncertainty regarding the future status of the ACA. Also additional legislative

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attempts to repeal or piecemeal dismantle the ACA may be introduced in the future. The scope and effect of future legislation cannot be predicted and such future legislation could have a material adverse impact on the Obligated Group. In addition to statutory changes, regulatory changes and executive actions implemented by the Trump administration could have a material adverse impact on the Obligated Group. Accordingly, it is possible that the significant risk areas summarized under this caption “BONDHOLDERS’ RISKS” will undergo significant change in the near term.

ADVERSE CONSEQUENCES ARISING FROM ONE OR MORE OF THE FOLLOWING RISKS, OR THE OCCURRENCE OF OTHER UNANTICIPATED EVENTS, COULD ADVERSELY AFFECT THE OPERATIONS OR FINANCIAL PERFORMANCE OF THE OBLIGATED GROUP MEMBERS. THIS DISCUSSION IS NOT, AND IS NOT INTENDED TO BE, EXHAUSTIVE. THE RISKS DISCUSSED BELOW SHOULD BE READ IN CONJUNCTION WITH THE DISCUSSION SET FORTH IN APPENDIX A – “INFORMATION CONCERNING CHRISTIANA HEALTH CARE SERVICES,” THE DISCUSSION APPEARING UNDER THE CAPTION “REGULATION OF THE HEALTH CARE INDUSTRY” BELOW AND THE INFORMATION APPEARING ELSEWHERE IN THIS OFFICIAL STATEMENT.

Nonprofit Health Care Environment

Each Obligated Group Member, is a nonprofit corporation, and is exempt from federal income taxation as an organization described in Section 501(c)(3) of the Code. As nonprofit tax-exempt organizations, the Obligated Group Members are subject to federal, state and local laws, regulations, rulings and court decisions relating to their organization and operation, including their operations for charitable purposes. At the same time, certain of the Obligated Group Members conduct large-scale complex business transactions and are large employers. There can often be a tension between the rules designed to regulate a wide range of charitable organizations and the day-to-day operations of a complex, large health care organization. Hospitals or other health care providers, such as the Obligated Group Members, may be forced to forego otherwise favorable opportunities for certain joint ventures, recruitment and other arrangements in order to maintain their tax-exempt status.

The operations and practices of nonprofit, tax-exempt health care providers are routinely challenged or criticized for inconsistency or inadequate compliance with regulatory requirements for, and societal expectations of, nonprofit tax-exempt organizations. These challenges in some cases are broader than concerns about compliance with federal and state statutes and regulations, such as Medicare and Medicaid compliance, and instead are examinations of core business practices of the health care organizations. A common theme of these challenges is that nonprofit hospitals may not confer community benefits that exceed or equal the benefit received from their tax-exempt status. Areas that have come under examination have included pricing practices, billing and collection practices, charitable care, methods of providing and reporting community benefit, executive compensation, exemption of property from real property taxation, private use of facilities financed with tax-exempt bonds and others. These challenges and questions have come from a variety of sources, including state attorneys general, the Internal Revenue Service (the “IRS”), labor unions, Congress, state legislatures, and patients, and in a variety of forums, including hearings, audits and litigation.

The following are some examples of the challenges and examinations facing nonprofit health care organizations. They are indicative of a greater scrutiny of the billing, collection and other business practices of these organizations, and may indicate an increasingly more difficult operating environment for health care organizations, including the Obligated Group. The challenges and examinations, and any resulting legislation, regulations, judgments, or penalties, could have a material adverse effect on the Obligated Group.

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Congressional Hearings

A number of House and Senate Committees, including the House Committee on Energy and Commerce, the House Committee on Ways and Means and the Senate Finance Committee, have conducted hearings and/or investigations into issues related to nonprofit tax-exempt health care organizations. These hearings and investigations have included a nationwide investigation of hospital billing and collection practices, drug pricing programs that recognize health care systems that disproportionately serve populations requiring charity care, charity care and community benefit practices, prices charged to uninsured patients and possible reforms to the nonprofit sector. Additionally, Senate Finance Committee Chairman Chuck Grassley has recently renewed his scrutiny of tax-exempt hospitals, requesting in a February 2019 letter to the IRS that the agency provide data with respect to its examinations of non-profit hospital compliance with Internal Revenue Code community benefit regulations. The effect of these hearings and investigations cannot be predicted, but may result in new legislation or regulatory action.

Bond Examinations

The IRS has active programs auditing both the qualification of hospital organizations as Section 501(c)(3) organizations and the qualification of bonds issued for the benefit of such organizations as tax-exempt. The IRS may use detailed information required to be reported on IRS Form 990 - Return of Organizations Exempt From Income Tax (“IRS Form 990”) for this purpose.

IRS Examination of Compensation Practices and Community Benefit

For more than a decade, the IRS has been concerned about executive compensation practices of tax-exempt hospitals. In 2004, the IRS began a program to measure compliance by tax-exempt organizations with requirements that they not pay excessive compensation. In February 2009, the IRS issued its Hospital Compliance Project Final Report (the “IRS Final Report”) that examined tax-exempt organizations’ practices and procedures with regard to compensation and benefits paid to their officers and other defined “insiders.” The IRS Final Report indicated that the IRS (1) will continue to heavily scrutinize executive compensation arrangements, practices and procedures and (2) in certain circumstances, may conduct further investigations or impose fines on tax-exempt organizations.

The IRS has also undertaken a community benefit initiative directed at hospitals. The IRS Final Report determined that the reporting of community benefit by nonprofit hospitals varied widely, both as to types of programs and expenditures classified as community benefit and the measurement of community benefits. As a result, IRS Form 990 requires detailed disclosure of compensation practices, corporate governance, loans to management and others, joint ventures and other types of transactions, political campaign activities, and other areas the IRS deems to be a compliance risk. IRS Form 990 also requires the disclosure of information on community benefit as well as reporting of information related to tax-exempt bonds, including compliance with the arbitrage rules and rules limiting private-use of bond- financed facilities, and compliance with the safe harbor guidance in connection with management contracts and research contracts. IRS Form 990 is intended to provide enhanced transparency as to the operations of exempt organizations. It is likely that the IRS will use detailed information from IRS Form 990 to assist in its enhanced enforcement efforts. See “Risks Related to Tax-Exempt Status of Obligated Group Members – Maintenance of Tax-Exempt Status” below.

Schedule H of IRS Form 990, which hospitals and health systems must use to report their community benefit activities, has been revised to require details related to compliance with Section 501(r) of the Code, including whether and to what extent a hospital maintains a financial assistance policy, and how a hospital determines eligibility for free or discounted care and amounts generally billed to patients

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eligible for such financial assistance. Also pursuant to Section 501(r), Schedule H requires hospitals to describe billing and collection practices permitted under the hospital facility’s policies, as well as information about the hospital’s emergency medical care policy.

Litigation Relating to Billing and Collection Practices

Over the past several years, lawsuits have been filed in both federal and state courts alleging, among other things, that hospitals have failed to fulfill their obligations to provide charity care to uninsured patients, have overcharged uninsured patients, and have engaged in aggressive billing and collection practices. Other cases have alleged that charging patients more for services furnished in a hospital-based setting is a wrongful or deceptive practice. Some of these cases have since been dismissed by the courts and some hospitals and health systems have entered into substantial settlements. A number of cases are still pending in various courts around the country with inconsistent results, and others could be filed.

Charity Care

The legislatures of some states have attempted to pass legislation mandating charity care levels or imposing other requirements relating to charity care. From time to time Congress proposes new laws and the IRS proposes new regulations concerning the manner in which charity care is calculated or issues guidance concerning the provision of charity care by an organization exempt from tax under section 501(c)(3) of the Code. Management of the Corporation cannot predict whether legislation, regulations, or guidance will be implemented in the future and cannot predict the affect it may have on the Obligated Group’s financial condition, though such effect may be material.

Risks Related to Tax-Exempt Status of the Obligated Group Members

Maintenance of Tax-Exempt Status

Loss of tax-exempt status by an Obligated Group Member could result in loss of tax exemption of interest on the Series 2020A Bonds and/or other bonds (see “Tax-Exempt Status of Interest on the Bonds” below) and defaults in covenants regarding the Bonds or such other bonds would likely result. Such an event could also have other material adverse consequences for the Obligated Group. Management is not aware of any transactions or activities currently ongoing that are likely to result in the revocation of the tax-exempt status of any Obligated Group Member.

The maintenance by an entity of its status as an organization described in Section 501(c)(3) of the Code is contingent upon compliance with general rules promulgated in the Code and related regulations regarding the organization and operation of tax-exempt entities, including their operation for charitable and educational purposes and their avoidance of transactions that may cause their assets to inure to the benefit of private individuals.

The IRS has announced that it intends to closely scrutinize transactions between not-for-profit corporations and for-profit entities, and in particular has issued audit guidelines for tax-exempt hospitals. As these general principles were developed primarily for public charities that do not conduct large-scale technical operations and business activities, they often do not adequately address the myriad of operations and transactions entered into by a modern health care organization. Although traditional activities of hospitals, such as medical office building leases and compensation arrangements and other contracts with physicians, have been the subject of interpretations by the IRS in the form of Private Letter Rulings, many activities have not been addressed in any official opinion, interpretation or policy of the IRS. Because the Obligated Group Members conduct large-scale and diverse operations involving private parties, there can

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be no assurances that certain of their transactions would not be challenged by the IRS. The Obligated Group Members participate in a variety of transactions and joint ventures with physicians either directly or indirectly. Management believes that the transactions and joint ventures to which the Obligated Group Members are a party are consistent with the requirements of the Code as to tax-exempt status, but, as noted above, there is uncertainty as to the state of the law.

The IRS has taken the position that hospitals which are in violation of the federal Anti-Kickback Law may also be subject to revocation of their tax-exempt status. See “REGULATION OF THE HEALTH CARE INDUSTRY – Federal and State Legislation; National Health Care Reform – Medicare/Medicaid Anti-Kickback Laws” below. As a result, tax-exempt hospitals, such as those of the Obligated Group, which have, and will continue to have, extensive transactions with health providers and suppliers are subject to an increased degree of scrutiny and perhaps enforcement by the IRS.

The ACA also contains requirements for tax-exempt hospitals through Section 501(r) of the Code. Final regulations under Section 501(r) of the Code provide detailed guidance relating to requirements for community health needs assessments, financial assistance policies, emergency medical care policies, limitations on charges, and billing and collection practices, and also provide guidance on consequences of failure to satisfy Section 501(r) requirements. These final regulations are complex and administratively burdensome. An organization’s failure to meet one or more Section 501(r) requirements could endanger the organization’s Section 501(c)(3) status as of the first day of the tax year in which a failure occurs. In addition, an organization may be subject to certain excise taxes if a hospital facility fails to maintain the requirements concerning community health needs assessments.

In certain cases, the IRS has imposed substantial monetary penalties and future charity care or public benefit obligations on tax-exempt hospitals in lieu of revoking their tax-exempt status, as well as requiring that certain transactions be altered, terminated or avoided in the future and/or requiring governance or management changes. These penalties and obligations are typically imposed on the tax- exempt hospital pursuant to a “closing agreement” with respect to the hospital’s alleged violation of Section 501(c)(3) exemption requirements. Given the uncertainty regarding how tax-exemption requirements may be applied by the IRS, the Obligated Group Members are, and will be, at risk for potentially incurring monetary and other liabilities which could be imposed by the IRS through this “closing agreement” or similar process in the event of scrutiny.

The IRS has periodically conducted audit and other enforcement activity regarding tax-exempt health care organizations. Certain audits are conducted by teams of revenue agents, often take years to complete and require the expenditure of significant staff time by both the IRS and the audited organization. These audits examine a wide range of possible issues, including tax-exempt bond financings, partnerships and joint ventures, unrelated business income tax, retirement plans and employee benefits, employment taxes, political contributions and other matters.

In recent years, the IRS has increased the frequency and scope of its audit and other enforcement activity regarding tax-exempt organizations. If the IRS were to find that a Member of the Obligated Group has participated in activities in violation of certain regulations or rulings, the tax-exempt status of such entity could be in jeopardy. Although the IRS has not frequently revoked the 501(c)(3) tax-exempt status of nonprofit corporations, it could do so in the future. Loss of tax-exempt status by an Obligated Group Member potentially could result in loss of tax exemption of the tax-exempt debt of the Obligated Group, and defaults in covenants regarding the tax-exempt debt and other obligations likely would be triggered. Loss of tax-exempt status also could result in substantial tax liabilities on income of the Obligated Group.

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State and Local Tax Exemption

Local government in many states have significantly increase efforts to challenge the exempt status of nonprofit corporations’ real property. These challenges generally have been based on either nonuse of real property for charitable purposes of the tax-exempt organization or inadequate levels of public benefit or uncompensated care. It is not possible to predict the scope or effect of future legislation or regulatory actions with respect to taxation of nonprofit corporations, since such actions and proposals have been vigorously challenged and contested. There can be no assurance these types of challenges will not occur in the future or that changes in the laws and regulations of state or local governments will not materially adversely affect the Obligated Group by requiring payment of income, local property or other taxes.

Tax-Exempt Status of Interest on the Series 2020A Bonds

The Code and related regulations, rulings and policies impose a number of requirements that must be satisfied for interest on state and local obligations, such as the Series 2020A Bonds, to be excludable from gross income for federal income tax purposes. These requirements include limitations on the use of proceeds of the Bonds, limitations on the investment earnings of proceeds of the Series 2020A Bonds prior to expenditure, a requirement that certain investment earnings on proceeds of the Series 2020A Bonds be paid periodically to the United States, and a requirement that the Authority file an information report with the IRS. In the Tax Certificate pertaining to the issuance of the Series 2020A Bonds (the “Tax Agreement”), the Authority and the Corporation have covenanted to comply with such requirements. However, future failure by the Authority and the Corporation to fulfill their respective obligations under the Tax Agreement in connection with the Series 2020A Bonds may result in the inclusion of interest on such obligations and any or all of the other Series 2020A Bonds in gross income for federal income tax purposes, retroactively to their date of issuance. In such event, the Bond Indenture neither contains any specific provision for mandatory acceleration of the Bonds nor provides that any additional interest will be paid to the holders of the Series 2020A Bonds. See APPENDIX D – “SUMMARY OF CERTAIN PROVISIONS OF THE BOND INDENTURE AND THE LOAN AGREEMENT – BOND INDENTURE – Events of Default,” “– Acceleration; Annulment of Acceleration” and “– Application of Revenues and Other Funds After Default.”

IRS officials have indicated that more resources will be invested in audits of tax-exempt obligations, including the use of tax-exempt obligation proceeds, in the charitable organization sector, with specific review of private use. In addition, the IRS has from time to time sent questionnaires to several hundred nonprofit corporations that have borrowed on a tax-exempt basis, inquiring about post- issuance compliance with various requirements for maintaining the federal tax exemption of interest on their tax-exempt obligations. The questionnaire includes questions relating to the borrower’s (i) record retention, which the IRS has particularly emphasized, (ii) qualified use of bond-financed property, (iii) arbitrage yield restriction and rebate requirements, (iv) debt management policies, and (v) voluntary compliance and education.

The IRS has also added schedules to IRS Form 990 that create additional reporting responsibilities. On Schedule H, hospitals and health systems must report how they provide community benefit and specify certain billing and collection practices. Schedule K requires detailed information related to all outstanding bond issues of tax-exempt borrowers, including information regarding operating, management and research contracts as well as private use compliance. Tax-exempt organizations must also complete Schedule J, which requires reporting of compensation information for the organizations’ officers, directors, trustees, key employees, and other highly compensated employees. IRS reviews and audits could and may adversely affect the marketability of or the market value for the Bonds.

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The opinion of Bond Counsel delivered on the date the Bonds are issued is not binding on the IRS or the courts, and such opinion speaks only as of its date of delivery. There is no assurance that an IRS examination of the Bonds will not adversely affect the market price for, or the marketability of, such Bonds and any such examination may cause the Obligated Group and/or the holders of the Bonds to incur significant expense.

Future Legislation Regarding Limitations or Elimination of Tax-Exempt Status

Future tax legislation, administrative actions taken by tax authorities or court decisions, whether at the federal or state level, may adversely affect the tax-exempt status of interest on the Bonds under federal or state law or otherwise prevent beneficial owners of the Series 2020A Bonds from realizing the full current benefit of the tax status of such interest. In addition, such legislation, administrative actions and court decisions could affect the market price or marketability of the Series 2020A Bonds. Prospective investors should consult with their tax advisors on the foregoing matters as they consider an investment in the Series 2020A Bonds.

Unrelated Business Income

In recent years, the IRS and state, county and local tax authorities have audited the operations of tax-exempt hospitals and health care systems with respect to their exempt activities and the generation of unrelated business taxable income, or “UBTI.” Most hospitals and health care systems participate in activities that may generate UBTI. An investigation or audit could result in assessment of taxes, interest and penalties with respect to unreported UBTI and in some cases ultimately could affect the tax-exempt status of such entity, as well as the exclusion from gross income for federal income tax purposes of the interest payable on the Series 2020A Bonds.

Limitations on Contractual and Other Arrangements Imposed by the Internal Revenue Code

As tax-exempt organizations, the Obligated Group Members are limited with respect to the use of practice income guarantees, reduced rent on medical office space, low interest loans, joint venture programs and other means of recruiting and retaining physicians. The IRS scrutinizes a broad variety of contractual relationships commonly entered into by hospitals and has issued a detailed audit guide suggesting that field agents scrutinize numerous activities of the hospitals in an effort to determine whether any action should be taken with respect to limitations on or revocation of their tax-exempt status or assessment of additional tax. Any suspension, limitation, or revocation of the tax-exempt status of a Member of the Obligated Group or assessment of significant tax liability could have a materially adverse effect on the Obligated Group and might lead to loss of tax exemption of interest on the Series 2020A Bonds.

Cost of Capital

From time to time, Congress has considered and is considering revisions to the Code that may prevent or limit access to the tax-exempt debt market by borrowers such as the Obligated Group Members. Such legislation, if enacted into law, may materially increase the cost of capital to the Obligated Group Members. See “Tax Reform” below.

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Security and Enforceability

Enforceability of the Master Indenture and the 2020 Obligations

Each Obligated Group Member has made a covenant in the Master Indenture to make payments when due under the Master Indenture and on the Obligations, including the 2020 Obligations. The 2020 Obligations are joint and several obligations of each Obligated Group Member. The enforceability of the joint and several obligations of each Obligated Group Member is uncertain. As a consequence, the property of the Obligated Group Members that are not the beneficiaries of the proceeds of the Bonds may not be available to make such payments.

Counsel to the Obligated Group Members will deliver an opinion concurrently with the delivery of the Bonds to the effect that the 2020 Obligations are enforceable in accordance with its terms. However, such opinion will be qualified as to the joint and several obligation of the Obligated Group Members to make payments of debt service on the 2020 Obligations. Such joint and several obligation may not be enforceable against an Obligated Group Member for a variety of reasons, including:

• To the extent payments on the 2020 Obligations are requested to be made from assets of such Obligated Group Member which are donor-restricted or which are subject to a direct, express or charitable trust which does not permit the use of such assets for such payments.

• If the purpose of the debt created and secured by the 2020 Obligations is not consistent with the charitable purposes of such Obligated Group Member, or if the debt was incurred by or issued for the benefit of an entity other than a nonprofit corporation which is exempt from federal income taxes under Sections 501(a) and 501(c)(3) of the Code and is not a “private foundation” as defined in Section 509(a) of the Code.

• To the extent payments on the 2020 Obligations would result in the cessation or discontinuation of any material portion of the health care or related services previously provided by such Obligated Group Member.

• If and to the extent payments are requested to be made pursuant to any loan violating applicable usury laws.

If the obligation of a particular Obligated Group Member to make payment on a Master Indenture Obligation is not enforceable, and payment is not made on such Master Indenture Obligation in full when due, then an Event of Default will arise under the Master Indenture.

An Obligated Group Member may not be required to make payments on or provide amounts for the payment of a Master Indenture Obligation, including the 2020 Obligations, issued by or for the benefit of another entity if and to the extent that any such payment or transfer would render such Obligated Group Member insolvent or would conflict with or not be permitted by or would be subject to recovery for the benefit of other creditors of such Obligated Group Member under applicable fraudulent conveyance, bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights. There is no clear legal precedent as to whether payments on Obligations (including the 2020 Obligations) by an Obligated Group Member may be voided by a trustee in bankruptcy in the event of a bankruptcy of such Obligated Group Member, or by third party creditors in an action brought pursuant to state fraudulent conveyances statutes. Under the United States Bankruptcy Code, a trustee in bankruptcy, and under state fraudulent conveyance statutes a creditor of a related guarantor, may avoid any obligation incurred by a related guarantor if, among other bases therefor, (1) the guarantor has not

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received fair consideration or reasonably equivalent value in exchange for the guaranty, and (2) the guaranty renders the guarantor insolvent, as defined in the United States Bankruptcy Code or state fraudulent conveyances statutes, or the guarantor is undercapitalized. Under such principles, the obligation of an Obligated Group Member to make payments on Obligations (including the 2020 Obligations) that secures Related Bonds (including the Bonds) not issued for the direct benefit of such Obligated Group Member may be considered a guaranty.

Application by courts of the tests of “insolvency,” “reasonably equivalent value” and “fair consideration” has resulted in a conflicting body of case law. If judicial action were brought to compel an Obligated Group Member to make a payment on a Master Indenture Obligation (including the 2020 Obligations), a court might not enforce such payment in the event it is determined that sufficient consideration for the Member’s obligation was not received, or that the incurrence of such obligation has rendered or will render the Member insolvent, or the Member is or will thereby become undercapitalized.

In addition, state courts have common law authority and authority under state statutes to terminate the existence of a nonprofit corporation or undertake supervision of its affairs on various grounds, including a finding that such corporation has insufficient assets to carry out its stated charitable purposes or has taken some action which renders it unable to carry out such purposes. Such action may arise on the court’s own motion or pursuant to a petition of the state attorney general or such other persons who have interests different from those of the general public, pursuant to the common law and statutory power to enforce charitable trusts and to see to the application of their funds to their intended charitable uses.

An action to enforce a charitable trust and to see to the application of its funds could also arise if an action to enforce the obligation to make payments on a Master Indenture Obligation would result in the cessation or discontinuation of any material portion of the health care or related service previously provided by the Obligated Group Member from which payment is requested.

Gross Receivables Pledge

The Master Indenture provides that each Obligated Group Member shall grant to the Master Trustee a security interest in all of its Gross Receivables and to perfect the grant of a security interest in the Gross Receivables to the extent that a security interest may be granted therein under the UCC. The Master Trustee’s security interest in the Gross Receivables shall be perfected, to the extent that such security interest may be so perfected, by the filing of financing statements which comply with the requirements of the UCC. It may not be possible to perfect a security interest in any manner whatsoever in certain types of Gross Receivables (e.g., certain insurance proceeds and payments under the Medicare and Medicaid programs) prior to actual receipt of funds by any Member. The grant of a security interest in Gross Receivables may be subordinated to the interest and claims of others in several instances. Some examples of cases of subordination of prior interests and claims are (i) statutory liens, (ii) rights arising in favor of the United States of America or any agency thereof, (iii) present or future prohibitions against assignment in any federal statutes or regulations, (iv) constructive trusts, equitable liens or other rights impressed or conferred by any state or federal court in the exercise of its equitable jurisdiction, and (v) federal or state bankruptcy laws that may affect the enforceability of the Master Indenture or grant of a security interest in the Gross Receivables.

Amendments to Master Indenture, Bond Indenture and Loan Agreement; Replacement Obligations

Certain amendments to the Master Indenture may be made without the consent of the owners of the Obligations. Certain other amendments to the Master Indenture may be made with the consent of the

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owners of not less than a majority of the aggregate principal amount of the Outstanding Obligations. Amendments to the Master Indenture may be obtained with the consent of the owners of Obligations other than the 2020 Obligations. The Bond Trustee is considered the holder of the 2020 Obligations. Certain amendments to the Bond Indenture and the Loan Agreement may be made with the consent of the owners of not less than a majority of the outstanding principal amount of the Bonds. Such amendments may adversely affect the security of owners of the Bonds or other provision of the Master Indenture. Under certain circumstances and upon satisfaction of the requirements of the Master Indenture, the 2020 Obligations may be exchanged, without the consent of any of the Holders of the Bonds, for an obligation of a different obligated group or different credit group. Under certain circumstances, this could lead to the substitution of different security in the form of an obligation backed by an obligated group or credit group that is financially and operationally different from the then-existing Obligated Group or Credit Group. That new obligated group or credit group could have substantial debt outstanding that would rank on a parity basis with the obligation substituted for the 2020 Obligations. See APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE AND SUPPLEMENTAL MASTER INDENTURES – THE MASTER INDENTURE – Supplements Not Requiring Consent of Holders” and “– Supplements Requiring Consent of Holders” and APPENDIX D – “SUMMARY OF CERTAIN PROVISIONS OF THE BOND INDENTURE AND LOAN AGREEMENT – THE BOND INDENTURE – Amendments to Bond Indenture” and “– Amendment of Loan Agreement; Other Covenants.”

Enforceability of Remedies

The remedies available to the Bond Trustee, on behalf of the beneficial owners of the Bonds, and to the beneficial owners of the Bonds upon an event of default under the Bond Indenture or the Loan Agreement or available to the Master Trustee on behalf of holders of Obligations, including the Bond Trustee, under the Master Indenture, 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, the Bankruptcy Code, the remedies provided in the Bond Indenture, the Master Indenture and the Loan 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 general principles of equity and by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors’ generally and laws relating to fraudulent conveyances.

Bankruptcy

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

A bankruptcy filing would operate as an automatic stay of the commencement or continuation of any judicial or other proceeding against such Obligated Group Member and its property and as an automatic stay of any act or proceeding to enforce a lien upon or to otherwise exercise control over its

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property as well as various other actions to enforce, maintain or enhance the rights of the Bond Trustee and the Master Trustee. If the bankruptcy court so ordered, the property of such Obligated Group Member could be used for the financial rehabilitation of such Obligated Group Member despite any security interest of the Bond Trustee or the Master Trustee therein. The rights of the Bond Trustee and the Master Trustee to enforce their respective interests and other liens could be delayed during the pendency of the rehabilitation proceeding.

An Obligated Group Member could also file a plan for the adjustment of its debts in any such proceeding which could include provisions modifying or altering the rights of creditors generally, or any class of them, secured or unsecured. The plan, when confirmed by a court, binds all creditors who had notice or knowledge of the plan and, with certain exceptions, discharges all claims against the debtor to the extent provided for in the plan. No plan may be confirmed unless certain conditions are met, among which are conditions that the plan be feasible and that it shall have been accepted by each class of claims impaired thereunder. Each class of claims has accepted the plan if at least two-thirds in dollar amount and more than one-half in number of the class cast votes in its favor. Even if the plan is not so accepted, it may be confirmed if the court finds that the plan is fair and equitable with respect to each class of non- accepting creditors impaired thereunder and does not discriminate unfairly. Any such plan could adversely affect the beneficial owners of the Bonds.

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

Under the United States Bankruptcy Code, a bankruptcy court could appoint a patient advocate, the cost of which would be an administrative expense of the estate and certain reimbursements from federal agencies could be discontinued.

In addition, the bankruptcy of a health plan or physician group that is a party to a significant managed care arrangement with one or more Obligated Group Members, or that of any significant contract payer obligated to any one or more Obligated Group Members, could have material adverse effects on the Obligated Group.

Patient Service Revenues

Net patient service revenues realized by the Obligated Group Members are derived from a variety of sources and will vary among the individual facilities owned and operated by the Obligated Group Members and also among the various market areas and regions in which such facilities are located.

A substantial portion of the net patient service revenues of the Obligated Group Members is derived from third-party payers that pay for the services provided to patients covered by third parties. These third-party payers include the federal Medicare program, the Delaware Division of Medicaid and Medical Assistance program (“Medicaid”), commercial health plans and insurers, including managed care organizations such as health maintenance organizations (“HMOs”) and preferred provider organizations (“PPOs”), and self-funded employer benefit plans. Many third-party payers make payments to Obligated Group Members in amounts that may not reflect the direct and indirect costs of the Obligated Group Members providing services to patients. See APPENDIX A – “INFORMATION CONCERNING CHRISTIANA CARE HEALTH SYSTEM” for a full breakdown of payment sources.

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The financial performance of the Obligated Group has been and could be in the future adversely affected by the financial position or the insolvency or bankruptcy of or other delay in receipt of payments from third-party payers that pay for services provided to their insured members.

Health care providers have been and continue to be affected significantly by changes made in the last several years in federal and state health care laws and regulations, particularly those pertaining to Medicare and Medicaid. The purpose of much of this statutory and regulatory activity has been to reduce the rate of increase in health care costs, particularly costs paid under the Medicare and Medicaid programs.

Dependence upon Commercial Third-Party Payers

The Obligated Group’s ability to develop and expand its services and, therefore, operating margins, is dependent upon its ability to enter into contracts with commercial third-party payers, such as managed care organizations, at competitive rates. There can be no assurance that it will be able to attract third-party payers, and where it does, no assurance that it will be able to contract with such payers on advantageous terms. The inability of the Obligated Group to contract with a sufficient number of such payers on advantageous terms would have a material adverse effect on the Obligated Group. Further, while the Obligated Group intends to effectively manage health care service utilization and increase quality, the Obligated Group cannot predict changes in utilization patterns or on health care providers. Additionally, commercial third-party payers are increasingly attempting to control health care costs through increased utilization reviews, greater enrollment in managed care programs, such as HMOs and PPOs, and directly contracting with health care facilities to provide services on a discounted basis. The trend toward consolidation among private managed care payers tends to increase their bargaining power over prices and fee structures. Other health care providers, including some with greater financial resources, greater geographic coverage or a wider range of services, may compete with the Obligated Group for opportunities with commercial insurers. For example, competitors may negotiate exclusivity provisions with certain managed care plans or otherwise restrict the ability of managed care companies to contract with Obligated Group providers.

The ACA imposes, over time, increased regulation of the health care industry, the use and availability of state-based exchanges in which health insurance can be purchased by certain groups and segments of the population, the extension of subsidies and tax credits for premium payments by some consumers and employers, and the imposition upon commercial insurers of certain terms and conditions that must be included in contracts with providers. Delaware has opted to allow the federal government to run its health insurance exchange. In addition, the ACA imposes many new obligations on states related to health insurance. Health care providers have been and continue to be affected significantly by changes made in the last several years in federal and state health care laws and regulations, particularly those pertaining to Medicare and Medicaid. The purpose of much of this statutory and regulatory activity has been to reduce the rate of increase in health care costs, particularly costs paid under the Medicare and Medicaid programs.

It is unclear how the increased federal oversight of health care may affect future state oversight or affect the Obligated Group. The effects of these changes upon the financial condition of any third-party payer that offers health care insurance, rates paid by third-party payers to providers and, thus, the revenues of the Obligated Group, and upon the operations, results of operations and financial condition of the Obligated Group cannot be predicted.

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Government Regulation of the Health Care Industry

A significant portion of the revenues of the Obligated Group is derived from government reimbursement programs including, in particular, the Medicare and Medicaid programs. See APPENDIX A – “INFORMATION CONCERNING CHRISTIANA CARE HEALTH SYSTEM” for a breakdown of payment sources including Medicare and Medicaid. As a result, the Obligated Group Members are subject to a multitude of federal, state and local laws and regulations related to the Medicare and Medicaid programs. In addition to the Medicare and Medicaid programs, the Obligated Group Members and the health care industry in general are subject to regulation by a number of governmental agencies which affects the provision, administration and payment of health care services on both a national and local basis. Health care providers, including the Obligated Group Members, have been and will be affected significantly by changes that have occurred in the last several years in federal and state health care laws and regulations, particularly those pertaining to Medicare and Medicaid. See “REGULATION OF THE HEALTH CARE INDUSTRY” below for more information regarding the Medicare and Medicaid programs and regulations relating thereto.

Value Based Care

The health care industry is under pressure from the federal and state governments and managed care plans to transition from fee-for-service methods of payment to “value based care.” See “REGULATION OF THE HEALTH CARE INDUSTRY.” As law and policy related to value based care continue to evolve, there can be no assurance that management of the Obligated Group Members will be able to reduce the Obligated Group’s cost structure sufficiently quickly enough to align with potentially decreased revenues from a value based care model, or that the Obligated Group will otherwise adapt to value based care incentives sufficiently quickly to maintain positive financial results. See APPENDIX A “INFORMATION CONCERNING CHRISTIANA CARE HEALTH SYSTEM – STRATEGIC INITITATIVES AND RECENT DEVELOPMENTS” herein.

Managed Care Organizations

Health maintenance organizations, preferred provider organizations and other managed health care systems (collectively, “Managed Care Organizations”) are providers of health care coverage significantly different from traditional commercial insurers. Managed Care Organizations represent a broad continuum of systems generally designed to favorably affect the cost, the site and/or the utilization of health care services from a patient standpoint. As such, they include HMOs, which generally accept uniform per-member payments from employers and/or employees and, in return, agree to provide all, or substantially all, of an enrollee’s health care needs, and PPOs, which generally negotiate favorable prices with providers and thus create preferred provider arrangements. Managed Care Organizations often rely upon case management analysis to reduce utilization of health care services, including pre-approving a member’s admission to a hospital to assure such admission is absolutely necessary. As Managed Care Organizations’ enrollment increases, such entities also become significant purchasers of health care services from hospitals and other providers, enabling negotiation of separate pricing terms and selection of health providers offering the most cost-effective services. Such case and cost management efforts on behalf of Managed Care Organizations may adversely affect utilization of the facilities and/or patient revenues of the Obligated Group.

Most Managed Care Organizations pay health care facilities or other providers, as applicable, on a discounted fee-for-service basis or on a discounted fixed rate per day of inpatient care. The discounts offered to Managed Care Organizations may result in payment at less than actual cost and the volume of patients directed to a health care facility under a Managed Care Organization’s contract may vary significantly from projections. In cases where a Managed Care Organization is a major purchaser of

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services from a particular health care facility operated by a Member of the Obligated Group (or any future Obligated Group Members), contract rate reductions, contract cancellations, inability to pay, failure to make prompt payment, difficulty in meeting solvency thresholds, business failure or bankruptcy of the Managed Care Organization may have a substantial negative effect on the Obligated Group’s financial condition.

Some Managed Care Organizations employ a “capitation” payment method under which health care providers are paid a predetermined periodic rate for each enrollee in the Managed Care Organization who is “assigned” or otherwise directed to receive care from a particular health care provider. The health care provider may assume financial risk for the cost and scope of institutional care provided. If payment is insufficient to meet the health care provider’s actual cost of care, or if utilization by such enrollees materially exceeds projections, the financial condition of the health care provider could erode rapidly and significantly. In addition to the standard Managed Care Organization risk sharing approach, private health insurance companies are increasingly adopting various additional risk sharing/cost containing measures, sometimes similar to those introduced by government payers. Health care providers may expect health care cost containment and its associated risk sharing to continue to increase in the coming years among all payers.

In recent years, a number of Managed Care Organizations have become insolvent or experienced financial pressure or cash flow issues. Such plans range in size from smaller local provider-based plans to some of the largest plans in the United States. These plans include traditional commercial insurers, as well as health maintenance organizations and preferred provider organizations. Managed Care Organizations that experience financial pressure may slow payment to providers, withhold pay entirely, or utilize claims payment methodology that systematically reduces compensation on a per claim basis. Managed Care Organizations that become insolvent may seek either federal bankruptcy or state insurance insolvency protection. Such bankruptcy or insurance insolvency protection may require that providers repay certain claims to the Managed Care Organization, or result in certain claims becoming uncollectible. It is not possible at this time to predict the future of the managed care industry in general or of specific Managed Care Organizations, or to predict what impact the state of the financial health of such organizations might have on the Obligated Group.

Often, managed care contracts are enforceable for a stated term, regardless of health care provider losses and may require health care providers to care for enrollees for a certain time period, regardless of whether the payer is able to pay the health care provider. Health care providers from time to time have disputes with Managed Care Organizations concerning payment and contract interpretation issues. Such disputes may result in mediation, arbitration or litigation.

Failure to maintain contracts could have the effect of reducing a health care provider’s market share and net patient services revenues. Conversely, participation may result in lower net income if participating health care providers are unable to adequately contain their costs. In part to reduce costs, health plans are increasingly implementing, and offering to purchasing employers, tiered provider networks, which involve classification of a plan’s network providers into different tiers based on care quality and cost. With tiered benefit designs, plan enrollees are generally encouraged, through incentives or reductions in copayments or deductibles, to seek care from providers in the top tier. Classification of a health care provider in a non-preferred or lower tier by a significant payer may result in a material loss of volume for such provider.

In addition to tiered provider networks, Managed Care Organizations are also implementing narrow provider networks in which only a select group of providers participate as in-network providers. Managed Care Organizations often look at quality performance and cost in selecting providers to participate in their narrow networks. A provider’s exclusion from a narrow network may result in a

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material loss of volume for such provider. Managed Care Organizations may offer lower reimbursement for providers in their narrow networks in exchange for additional volume expected from being one of a select group of network providers. This reimbursement may be insufficient to cover a network provider’s cost in providing the services. The new demands of dominant health plans and other shifts in the managed care industry may also reduce patient volume and revenue.

In addition, the current trend of consolidation in the health insurance industry is likely to increase the leverage of commercial insurers when negotiating rates with health care providers. Large health insurers that assume dominant positions in local markets threaten to increase health insurer concentration, reduce competition and decrease choice. If a Member of the Obligated Group were to terminate its agreement with any of the major managed care payers or not agree to terms proposed by such payers, or if the payers were to exit the regional marketplace in some or all of their product lines, it could have a significant material adverse impact on the financial condition of the Obligated Group.

Federal Budget

Federal deficit reduction efforts have slowed the growth of federal Medicare and Medicaid spending.

The Budget Control Act of 2011 (the “Budget Control Act”) mandated significant reductions in federal spending for fiscal years 2012-2021, including a reduction of 2% on all Medicare payments during this period. Subsequent legislation enacted by Congress extended these reductions through 2027. There is a substantial risk that Congress could act to extend or increase these across-the-board reductions. President Trump’s 2020 budget proposal calls for an $845 billion reduction in Medicare spending and a $1.5 trillion reduction in Medicaid spending over the next decade. It is impossible to predict what portion, if any, of these proposed federal health care spending reductions will be included in a Congressionally approved budget.

It is possible that Congress will take action to eliminate some or all of the reductions in the future, and any Congressional action could be made retroactive to eliminate some or all of the cuts that were imposed. However, there is no certainty that Congress will take any action. Absent further Congressional action, these automatic spending cuts become permanent. Because Congress may make changes to the budget in the future, it is impossible to predict the impact any spending cuts may have on the Obligated Group. Similarly, it is impossible to predict whether any automatic reductions to Medicare reimbursement rates may be triggered in lieu of other spending cuts that may be proposed by Congress. Any further reduction in Medicare and/or Medicaid spending under either scenario, may have a material adverse effect upon the operations, financial condition and financial performance of the Obligated Group. Ultimately, these reimbursement reductions or alternatives could have a disproportionate impact on hospital providers and could have an adverse effect on the operations, financial condition and financial performance of the Obligated Group, which could be material.

Federal Debt Ceiling

The federal government is subject to a debt “ceiling” established by Congress. In the past several years political disputes concerning authorization of a federal debt ceiling increase have led to shutdowns of substantial portions of the federal government and other federal budget authorization delays have occurred. Federal budget delays and federal government shutdowns are unpredictable and may occur in the future. Failure by Congress to increase the federal debt ceiling, federal budget authorization delays, federal government shutdowns, or other political challenges may cause Medicare or Medicaid reimbursements to be further reduced or paid late, which effects may have a material adverse effect on the Credit Group’s business or financial condition.

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On August 2, 2019, the Bipartisan Budget Act of 2019 was signed into law, which suspended the debt ceiling until July 31, 2021. Any future failure to increase the federal debt limit could have a material adverse effect on the operations, financial condition, and financial performance of the health care industry and the Obligated Group. In addition, the market price or marketability of the Bonds in the secondary market could be materially adversely affected by any failure to increase the federal debt limit.

State and Local Budgets

The State of Delaware faces financial challenges, including erosion of general fund tax revenues, falling real estate values, slowing economic growth, and relatively high unemployment, each of which may continue to worsen or resist improvement over the coming years. These factors have resulted in a shortfall between revenue and spending demands.

The financial challenges facing the State may negatively affect hospitals in a number of ways, including elimination or reduction of health care safety net programs (causing a greater number of indigent, uninsured or underinsured patients), reductions in Medicaid reimbursement rates or delays in Medicaid reimbursement payments. The financial challenges may also result in a greater number of indigent, uninsured or underinsured patients who are unable to pay for their care or access primary care facilities.

General Economic Factors and Credit Market Disruptions

The United States economy is unpredictable. Previous disruptions of the credit and financial markets have led to volatility in the securities markets, significant losses in investment portfolios, increased business failures and consumer and business bankruptcies and economic recession. In response to the 2008 recession, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd- Frank Act”) was enacted in 2010. The Dodd-Frank Act included broad changes to the existing financial regulatory structure, including the creation of new federal agencies to identify and respond to the financial stability of the United States. On June 5, 2018, President Trump signed into law the Economic Growth, Regulatory Relief and Consumer Protection Act, which relaxes restrictions on large parts of the banking industry. The effects of the new law are unclear.

In the past, a recessed economic climate has adversely affected the health care sector generally, resulting in patient service revenues and inpatient volumes that did not increase consistent with historic trends. As unemployment rates increased nationally, the health care sector generally saw increases in self-pay admissions, increased levels of bad debt and uncompensated care, reduced demand for elective procedures, and reduced availability and affordability of health insurance. The strained economic climate also increased stresses on state budgets, contributing to the prevalence of reductions in Medicaid payment rates or Medicaid eligibility standards and delays in payment of amounts due under Medicaid and other state or local payment programs. Any similar economic recession in the future could have similar or worse effects.

Tax Reform

On December 22, 2017, President Trump signed into law an act entitled, “H.R. 1: An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018,” known as the Tax Cuts and Jobs Act (the “Tax Cuts and Jobs Act”). The Tax Cuts and Jobs Act lowered corporate and individual tax rates and eliminated certain tax preferences and other tax expenditures. The Tax Cuts and Jobs Act also effectively repealed (effective 2019) a key provision of the ACA known as the “individual mandate” or the “individual shared responsibility payment,” which imposes a tax on individuals who do not obtain health care insurance. Such repeal of the individual

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mandate may result in a higher uninsured rate, which could have a materially adverse effect on the Obligated Group. In addition, the Tax Cuts and Jobs Act precludes the issuance of tax-exempt bonds to advance refund outstanding tax-exempt bonds. The Tax Cuts and Jobs Act could materially adversely effect the market price or marketability of the Bonds (and outstanding bonds of the Obligated Group) and/or availability of borrowed funds for the Obligated Group Members, particularly for capital expenditures, as well as the operations, financial position and cash flows of the Obligated Group Members.

Licensing, Certification and Accreditation Requirements

The health care facilities of the Obligated Group Members are subject to numerous legal, regulatory, professional and private licensing, certification and accreditation requirements. These may be affected by regulatory action and policy changes by governmental and private agencies that administer Medicare, Medicaid and other third-party payment programs, as well as action by, among others, accrediting bodies such as The Joint Commission, and federal, state and local government agencies. Renewal and continuation of certain of these licenses, certifications and accreditations are based on inspections or other reviews generally conducted in the normal course of business of health care facilities. Actions in any of these areas could result in a reduction in utilization, revenues or both, or the inability of the Obligated Group Members (or future Obligated Group Members) to operate all or a portion of such facilities or to bill various third-party payers, and, consequently, could materially adversely affect the Obligated Group.

Possible Staffing Shortages

In recent years, the health care industry has suffered from a scarcity of physicians in certain specialties, nurses and other qualified health care technicians and personnel. Factors underlying this trend include increased demand for trained personnel combined with an insufficient number of qualified graduates to meet the growing need, and the aging of the workforce generally. Any of these factors may continue and increase in the future, aggravating the shortage of physicians, nursing personnel or other qualified health care technicians and personnel. This trend could force the Obligated Group Members to pay higher than anticipated salaries to personnel as competition for such employees intensifies and, in an extreme situation, could lead to difficulty maintaining licenses to provide health care services for the facilities of the Obligated Group Members and, as a result, maintaining eligibility for reimbursement under Medicare and the various state Medicaid programs. In the event of a shortage or difficulty in the direct hire of health care personnel, the Obligated Group Members could be required to seek indirect hire of such professionals through an increased use of third-party staffing, at higher costs.

Malpractice and General Liability Insurance

In recent years, the number of malpractice and general liability suits and the dollar amount of damage recoveries have increased nationwide, resulting in substantial increases in insurance premiums. Actions alleging wrongful conduct and seeking punitive damages are often filed against hospitals. Litigation may also arise from the corporate and business activities of the Obligated Group Members, including employee-related matters, medical staff and provider network matters and denials of medical staff and provider network membership and privileges. As with professional liability, many of these risks are covered by insurance, but some are not. For example, some antitrust claims, business disputes and workers’ compensation claims are not covered by insurance or other sources and, in whole or in part, may be a liability of the Obligated Group if determined or settled adversely. Claims for punitive damages may not be covered in all instances by insurance under certain state laws. Although the Obligated Group currently maintains self-insurance reserves and carries malpractice and general liability insurance that

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management considers adequate, management is unable to predict the availability, cost or adequacy of such insurance in the future.

The Centers for Medicare & Medicaid Services (“CMS”) and certain private insurers and HMOs will not reimburse hospitals for medical costs arising from certain “never events,” which include specific preventable medical errors. The occurrence of “never events” or “serious reportable events” is more likely to be publicized and may negatively affect a hospital’s reputation, reducing future utilization and potentially increasing the possibility of liability claims.

Any judgments or settlements that exceed insurance coverages or self-insurance reserves could have a material adverse effect on the Obligated Group. Moreover, the Corporation is not able to predict the cost or availability of any such insurance in the future.

Facility Damage

Hospitals are highly dependent on the condition and functionality of their physical facilities. Damage from natural causes, fire, deliberate acts of destruction, terrorism or various facility system failures may have a material adverse impact on hospital operations, financial conditions and results of operations, especially if insurance is inadequate to cover resulting property and business losses. The occurrences of natural disasters, including floods, earthquakes and fires may damage Obligated Group Member’s facilities, interrupt utility service to facilities or otherwise impair the operation of some Obligated Group Member’s facilities or the generation of revenues beyond existing insurance coverage.

Increased Competition

The health care business is highly competitive. The Obligated Group will likely face increased competition from other providers of health care that offer health care services to the population that the Obligated Group services. This could include the construction of new, or the renovation of existing, hospitals, specialty hospitals, ambulatory surgical centers and other ambulatory care facilities and private laboratory and radiological services. There are also some service lines that other types of providers or entities could begin to provide, which could decrease utilization of some of the revenue generating services offered by the Obligated Group Members.

Quality measures and future trends toward clinical transparency may have an unanticipated impact on the Obligated Group’s competitive position and patient volumes. Health care consumers are now able to access hospital performance data on quality measures and patient satisfaction, as well as standard charges for services, to compare competing providers. If any of the Obligated Group’s health care facilities achieve poor results (or results that are lower than their competitors’) on quality measures or patient satisfaction surveys, or if patients perceive the Obligated Group Members’ standard charges as being higher than their competitors’ charges, the Obligated Group may attract fewer patients.

Future competition may arise from new sources not currently anticipated or prevalent. Additionally, scientific and technological advances, new procedures, drugs and devices, preventive medicine and outpatient health care delivery may reduce utilization and revenues of hospitals in the future or otherwise lead the way to new avenues of competition. In some cases, hospital investment in facilities and equipment for capital-intensive services may be lost as a result of rapid changes in diagnosis, treatment or clinical practice brought about by new technology or new pharmacology.

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Uncompensated Care

Hospital providers across the country continue to see a rise in the overall cost of uncompensated care as a result of increased unemployment or other adverse economic conditions that further increase the proportion of patients who are unable to pay fully for their cost of care. The Tax Cuts and Jobs Act’s effective repeal of the ACA’s individual mandate is likely to increase the number of uninsured. Increases in contracted reimbursement rates may not be sufficient to fully offset the increased cost of uncompensated care.

Physician Relationships

The success of the Obligated Group Members’ business depends in significant part on the number, quality, specialties, and admitting and scheduling practices of admitting physicians. Accordingly, it is essential to the Obligated Group Members’ ongoing business that it attract an appropriate number of quality physicians in the specialties required to support its services and maintains good relationships with those physicians. A shortage of physicians, especially in primary care, could become a significant issue for health providers in the coming years.

The primary relationship between a hospital and physicians who practice in the hospital is through the hospital’s organized medical staff. Medical staff bylaws, rules and policies establish the criteria and procedures by which a physician may have his or her privileges or membership curtailed, denied or revoked. Physicians who are denied medical staff membership or certain clinical privileges, or who have membership or privileges curtailed, denied or revoked, often file legal actions against hospitals. Such action may include a wide variety of claims, some of which could result in substantial uninsured damages to a hospital. In addition, failure of the hospital governing body to adequately oversee and ensure compliance with policies and procedures governing care provided in the Obligated Group Member facilities, or failure of the medical staff to adequately oversee the professional conduct of physicians providing professional services in the Obligated Member facilities may result in hospital liability to third parties. All hospitals, including those owned and operated by the Obligated Group Members, are subject to such risk.

Labor Relations and Collective Bargaining

Hospitals are large employers with a wide diversity of employees. Increasingly, employees of hospitals are becoming unionized, and many hospitals have collective bargaining agreements with one or more labor organizations. Employees subject to collective bargaining agreements may include essential nursing and technical personnel, as well as food service, maintenance and other trade personnel. Renegotiation of such agreements upon expiration may result in significant cost increases to hospitals. Employee strikes or other adverse labor actions may have an adverse impact on operations, revenue and hospital reputation. For information on the Obligated Group’s unionized employees, see APPENDIX A – “INFORMATION CONCERNING CHRISTIANA HEALTH CARE SERVICES.”

Class Actions

Hospitals, health systems and other health care providers have long been subject to a wide variety of litigation risks, including liability for care outcomes, employer liability, property and premises liability, and peer review litigation with physicians, among others. In recent years, consumer class action litigation has emerged as a potentially significant source of litigation liability for hospitals, health systems and other health care providers. These class action suits have most recently focused on hospital billing and collections practices and breaches of privacy, and they may be used for a variety of currently unanticipated causes of action. Since the subject matter of class action suits may involve uninsured risks,

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and since such actions often involve alleged large classes of plaintiffs, they may have material adverse consequences on hospitals and health systems in the future. See “– Wage and Hour Class Actions and Litigation” below.

Wage and Hour Class Actions and Litigation

Federal law and many states, including Delaware, impose standards related to worker classification, payment of the minimum wage, eligibility and payment for overtime, liability for providing rest periods and similar requirements. Large employers with complex workforces, such as hospitals, are susceptible to actual and alleged violations of these standards. In recent years there has been a proliferation of lawsuits over these “wage and hour” issues, often in the form of large class actions. For large employers, such as the Obligated Group Members, such class actions can involve multi-million dollar claims, judgments and/or settlements. A major class action decided or settled adversely to the Obligated Group Members could have a material adverse effect.

Action by Consumers and Purchasers of Health Care Services

Major purchasers of health care services also could take action to restrain hospital or other provider charges or charge increases. As a result of increased public scrutiny, it is also possible that the pricing strategies of hospitals may be perceived negatively by consumers, and hospitals may be forced to reduce fees for their services. Decreased utilization could result, and health care revenues may be negatively impacted. In addition, consumers and groups on behalf of consumers are increasing pressure for hospitals and other health care providers to be transparent and provide information about cost and quality of services that may affect future consumer choices about where to receive health care services. In fact, as of January 1, 2019, hospitals are required to publicize online a list of their standard changes for all items and services that the hospital provides.

Pension and Benefit Funds

As large employers, hospitals and health care providers may incur significant expenses to fund pension and benefit plans for employees and former employees, and to fund required workers’ compensation benefits. Plans are often underfunded, or may become underfunded and funding obligations in some cases may be erratic or unanticipated and may require significant commitments of available cash needed for other purposes. In addition, to the extent investment returns are lower than anticipated or losses on investments occur, the Obligated Group Members may also be required to make additional deposits in connection with pension fund liabilities.

Audits, Exclusions, Fines, Withholds and Enforcement Actions

Health care providers participating in Medicare and Medicaid are subject to audits and retroactive audit adjustments by fiscal intermediaries under the Medicare and Medicaid programs. From an audit, a fiscal intermediary may conclude that the health care provider did not comply with one of the applicable conditions of payment or participation in the Medicare or Medicaid program, such as, for example finding that services provided were not medically necessary, that services provided prior to admission as an inpatient should not have been billed as outpatient services, that certain required procedures or processes were not satisfied, or that certain costs were unreasonable, not allowable, not incurred or incorrectly classified. As a consequence, reimbursement for such services may be retroactively disallowed or recouped. Regulations also provide for withholding of reimbursement in certain circumstances, and such withholdings could have a material adverse effect on the Obligated Group. Under certain circumstances, reimbursement made may be determined to have been made as a consequence of improper claims subject

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to federal and state statutes, civil or criminal sanctions against health care providers. See the information under the heading “REGULATION OF THE HEALTH CARE INDUSTRY.”

Information Systems and Technology

The ability to adequately price and bill health care services and to accurately report financial results depends in part on the integrity of the data stored within information systems, as well as the operability of such systems. Information systems require an ongoing commitment of significant resources to maintain, protect and enhance existing systems and develop new systems to keep pace with continuing changes in information processing technology, evolving systems and regulatory standards. There can be no assurance that efforts to upgrade and expand information systems capabilities, protect and enhance these systems, and develop new systems to keep pace with continuing changes in information processing technology will be successful or that additional systems issues will not arise in the future.

The use of electronic media is standard for clinical operations, medical records and order entry functions. The reliance on information technology for these purposes imposes new expectations on physicians and other workforce members to be adept in using and managing electronic systems. It also introduces risks related to patient safety, and to the privacy, accessibility and preservation of health information. Technology malfunctions or failure to understand and use information systems properly could result in the dissemination of or reliance on inaccurate information, as well as in disputes with patients, physicians and other health care professionals. Health information systems may also be subject to different or higher standards or greater regulation than other information technology or the paper-based systems previously used by health care providers, which may increase the cost, complexity and risks of operations. All of these risks may have adverse consequences on hospitals and health care providers.

Future government regulation and adherence to technological advances could result in an increased need of the Obligated Group Members to implement new technology. Such implementation could be costly and the Obligated Group could encounter delays in application and cost overruns, which could have a material adverse effect on the Obligated Group.

Technological advances in recent years have forced hospitals to acquire sophisticated and costly equipment to remain technologically current. Moreover, the growth of e-commerce and the increased capabilities of telehealth may also result in a shift in the way that health care is delivered, such as from remote locations. For example, physicians are able to provide certain services remotely, using enhanced technology that allows real-time access using video-conferencing technology over the internet, and patients can purchase pharmaceuticals, devices, and other health services online through telehealth providers, subscription services, and other new and innovative models. If, due to financial constraints, the Obligated Group were unable to acquire new equipment required to remain technologically current, the operations and financial condition of the Obligated Group could be materially adversely affected.

Cyber-Attacks

Despite the implementation of network security measures by the Obligated Group Members, their information technology systems may be vulnerable to breaches, hacker attacks, computer viruses, physical or electronic break-ins and other similar events or issues. The Federal Bureau of Investigation has expressed concern that health care systems are a prime target for such cyber-attacks due to the mandatory transition from paper records to electronic health records and a higher financial payout for medical records in the black market. Health care systems have recently been subject to such attacks. Such events or issues could lead to the inadvertent disclosure of protected health information or other confidential information, ransom attacks holding critical information hostage, or could have an adverse

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effect on the ability of the Obligated Group Members to provide health care services. Any breach or cyber-attack that comprises patient data could result in negative press and substantial fines or penalties for violation of HIPAA (defined below) or similar state privacy laws. See “REGULATION OF THE HEALTH CARE INDUSTRY” below. See also APPENDIX A “INFORMATION CONCERNING CHRISTIANA CARE HEALTH SYSTEM – STRATEGIC INITIATIVES AND RECENT DEVELOPMENTS – Information Technology” herein.

Antitrust

Antitrust liability may arise in a wide variety of circumstances, including medical staff privilege disputes, contracting with commercial insurers, Managed Care Organizations and other third-party payers, physician relations, joint ventures, merger, affiliation and acquisition activities and certain pricing or salary setting activities, as well as other areas of activity. The application of the federal and state antitrust laws to health care is still evolving, and enforcement activity by federal and state agencies appears to be increasing. Violators of the antitrust laws may be subject to criminal and/or civil enforcement by federal and state agencies, as well as by private litigants in certain instances. At various times, an Obligated Group Member may be subject to an investigation or inquiry by a governmental agency charged with the enforcement of the antitrust laws, or may be subject to administrative or judicial action by a federal or state agency or a private party. Common areas of potential liability are joint action among providers with respect to third-party payer contracting and medical staff credentialing. With respect to third-party payer contracting, an Obligated Group Member (and any future Obligated Group Members) may, from time to time, be involved in joint contracting activity with hospitals, physicians or other providers. The precise degree, if any, to which this or similar joint contracting activities may expose the participants to antitrust risk is dependent on a myriad of factual matters. Physicians who are subject to adverse peer review proceedings may file federal antitrust actions against hospitals and seek treble damages. Health care providers, including the Obligated Group Members, regularly have disputes regarding credentialing and peer review, and therefore may be subject to liability in this area. In addition, health care providers occasionally indemnify medical staff members who are involved in such credentialing or peer review activities, and may, therefore, also be liable with respect to such indemnity.

Market Risk and Interest Rate Swaps

The Obligated Group Members have significant holdings in a broad range of investments. Market fluctuations have affected and will continue to affect the value of those investments and those fluctuations may be, and historically have been, material. Occasional market disruptions have exacerbated the market fluctuations and have negatively affected the investment performance over certain time periods and in some cases materially diminished the liquidity of those investments. Investment income (including both realized and unrealized gains on investments) has contributed significantly to the Obligated Group’s financial results over recent years. Any diminution of liquidity of the Obligated Group’s investments could also have a material adverse effect on the Obligated Group.

Market for the Bonds

Subject to prevailing market conditions, the Underwriters intend, but is not obligated, to make a market in the Bonds. There is presently no secondary market for the Bonds, and no assurance can be given that a secondary market will develop. Consequently, investors may not be able to resell the Bonds purchased should they need or wish to do so.

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Ratings

There can be no assurance that the ratings assigned to the Bonds at the time of issuance 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 the information under the heading “RATINGS.”

Future Legislation Regarding Limitations or Elimination of Tax-Exempt Status

Future tax legislation, administrative actions taken by tax authorities or court decisions, whether at the federal or state level, may adversely affect the tax-exempt status of interest on the Bonds under federal or state law or otherwise prevent beneficial owners of the Bonds from realizing the full current benefit of the tax status of such interest. In addition, such legislation, administrative actions and court decisions could affect the market price or marketability of the Bonds. Prospective investors should consult with their tax advisors on the foregoing matters as they consider an investment in the Bonds.

Interest Rate Swaps

Certain Obligated Group Members may utilize interest rate hedges, or swap agreements, to manage exposure to interest rate fluctuations. Swap agreements are subject to periodic “mark-to-market” valuations and may, at any time, have a negative value (which could be substantial) to the applicable Obligated Group Member. Changes in the market value of such swap agreements could negatively or positively impact the operating results and financial condition of the applicable Obligated Group Member, and such impact could be material. Any of the swap agreements to which an Obligated Group Member is a party may be subject to early termination upon the occurrence of certain specified events. If either the applicable Obligated Group Member or the counterparty terminates such an agreement when the agreement has a negative value to the applicable Obligated Group Member, the applicable Obligated Group Member could be obligated to make a termination payment to the applicable swap counterparty in the amount of such negative value, and such payment could be substantial and potentially materially adverse to the financial condition of the applicable Obligated Group Member. In the event of an early termination of a swap agreement, there can be no assurance that (i) the applicable Obligated Group Member will receive any termination payment payable to it by the respective swap provider, (ii) the applicable Obligated Group Member will not be obligated to or will have sufficient monies to make a termination payment payable by it to the applicable swap provider, or (iii) the applicable Obligated Group Member will be able to obtain a replacement swap agreement with comparable terms.

Termination of LIBOR and Alternate Indices

The Financial Conduct Authority (“FCA”), a regulator of financial services firms and financial markets in the United Kingdom, has stated that they will plan for a phase out of LIBOR with a target end to the indices in 2021. It is not possible to predict the effect of the FCA announcement or any changes in the method in which LIBOR rates are determined, and any other reforms to LIBOR that will be enacted in the United Kingdom and elsewhere, which may adversely affect the trading market for LIBOR based securities, or result in the phasing out of LIBOR as a reference rate for securities. In addition, changes announced by the FCA in the method pursuant to which LIBOR rates are determined may result in a sudden or prolonged increase or decrease in LIBOR rates, may affect the level of interest payments, and may affect the value of LIBOR indexed bonds. Furthermore, uncertainty about LIBOR and the timing of adoption of LIBOR alternatives by the market may adversely impact the current trading market for LIBOR indexed bonds. Such market dislocation may affect price and may also affect liquidity for LIBOR indexed bonds.

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Environmental Laws and Regulations

Health care providers are subject to a wide variety of federal, state and local environmental and occupational health and safety laws and regulations which address, among other things, hospital operations, facilities and properties owned or operated by hospitals. Among the type of regulatory requirements faced by hospitals are (i) air and water quality control requirements, (ii) waste management requirements, (iii) specific regulatory requirements applicable to asbestos, polychlorinated biphenyls and radioactive substances, (iv) requirements for providing notice to employees and members of the public about hazardous materials handled by or located at hospitals and (v) requirements for training employees in the proper handling and management of hazardous materials and wastes.

As the owner and operator of properties and facilities, Obligated Group Members may be subject to liability for hazardous substances that may have migrated off its properties, including remediation thereof. Typical hospital operations include, but are not limited to, in various combinations, the handling, use, storage, transportation, disposal and discharge of hazardous, infectious, toxic, radioactive, flammable and other materials, wastes, pollutants or contaminants. As such, hospital operations are particularly susceptible to the practical, financial and legal risks associated with compliance with such laws and regulations. Such risks may (i) result in damage to individuals, property or the environment, (ii) interrupt operations and increase their cost, (iii) result in legal liability, damages, injunctions or fines and (iv) result in investigations, administrative proceedings, penalties or other governmental agency actions. Obligated Group Members could encounter such risks in the future, and such risks could have a material adverse effect on the results of operations or financial condition of the Obligated Group.

At the present time, management is not aware of any pending or threatened claim, investigation or enforcement action regarding such environmental issues that, if determined adversely to an Obligated Group Member, would have a material adverse effect on the results of operations or financial condition of the Obligated Group as a whole.

Risks Relating to Significant Construction/Expansion Projects

The Obligated Group’s strategic plans include expansion of access to its services, including construction and equipping of a women’s and children’s hospital, as well as a parking garage. Construction projects are subject to a variety of risks, including, but not limited to, delays in the issuance of required permits and approvals, including environmental approvals, strikes, shortages of qualified labor and adverse weather conditions. Cost overruns may occur due to change orders, delays in construction schedules, scarcity of materials and labor, tariffs on materials and other factors.

Affiliations, Merger, Acquisition and Divestiture

The Corporation evaluates and pursues potential acquisition, merger and affiliation candidates as part of the overall strategic planning and development process. As part of its ongoing planning and property management functions, the Corporation reviews the use, compatibility and business viability of many of the operations of the Obligated Group, and from time to time may pursue changes in the use of, or disposition of, its facilities. Likewise, the Corporation occasionally receives offers from, or conducts discussions with, third parties about the potential acquisition of operations and properties which may become subsidiaries or affiliates of the Obligated Group Members in the future, or about the potential sale of some of the operations or property which are currently conducted or owned by the Obligated Group. As a result, it is possible that the current organization and assets of the Obligated Group may change from time to time. Subject to the limitations contained in the Master Indenture, the operating assets of the Obligated Group could change from time to time, and it is possible that new entities could be added to the Obligated Group in the future. See APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF

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THE MASTER INDENTURE AND SUPPLEMENTAL MASTER INDENTURES – THE MASTER INDENTURE – Merger, Consolidation, Sale or Conveyance.”

Additions to and Withdrawals from the Obligated Group

Upon satisfaction of certain conditions in the Master Indenture, other entities may become Obligated Group Members and any or all of the current Obligated Group Members may withdraw from the Obligated Group. If and when new Members are added to the Obligated Group or any Obligated Group Member withdraws from the Obligated Group, such changes to the Obligated Group membership could result in changes to the Obligated Group’s financial situation and operations.

Replacement Master Indenture

Master Indenture Obligations may be replaced by payment obligations issued under a Replacement Master Indenture upon delivery of such Replacement Master Indenture to the Master Trustee upon the terms and conditions provided in the Master Indenture. The new obligated group may be different from the Obligated Group or Credit Group under the Master Indenture, and the financial condition or results of operations of the new obligated group may be materially different. Further, the Replacement Master Indenture may contain covenants and security that are different from the Master Indenture.

Other Bondholders’ Risks

In the future, the following factors, among others, may adversely affect the operations of health care providers, including the Obligated Group Members, or the market value of the Bonds, to an extent that cannot be determined at this time:

1. Hospitals are major employers, combining a complex mix of professional, quasi-professional, technical, clerical, housekeeping, maintenance, dietary and other types of workers in a single operation. As with all large employers, the Obligated Group bears a wide variety of risks in connection with their employees. These risks include strikes and other related work actions, contract disputes, discrimination claims, personal tort actions, work-related injuries, exposure to hazardous materials, interpersonal torts (such as between employees, between physicians or management and employees, or between employees and patients), and other risks that may flow from the relationships between employer and employee or between physicians, patients and employees. Many of these risks are not covered by insurance, and certain of them cannot be anticipated or prevented in advance. The Obligated Group Members are subject to all of the risks listed above, and such risks, alone or in combination, could have material adverse effects on the Obligated Group.

2. Scientific and technological advances, new procedures, drugs and appliances, preventive medicine, occupational health and safety and outpatient health care delivery may reduce utilization and revenues of the facilities. Technological advances in recent years have accelerated the trend toward the use by hospitals of sophisticated and costly equipment and services for diagnosis and treatment. The acquisition and operation of certain equipment or services may continue to be a significant factor in hospital utilization, but the ability of the Obligated Group Members to offer the equipment or services may be subject to the availability of equipment and specialists, governmental approval, and the ability to finance these acquisitions or operations.

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3. Reduced demand for the services of the Obligated Group Members that might result from decreases in population in their service area or from increased competition by other health care providers.

4. Increased unemployment or other adverse economic conditions in the service area of the Obligated Group Members, which could increase the proportion of patients who are unable to pay fully, or at all, for the cost of their care.

5. Medical expense inflation, which may include increased costs for staff, supplies (including pharmaceuticals), utilities, or other necessary elements of care delivery that exceed payments available to the Obligated Group.

6. Any increase in the quantity or overall cost of indigent care provided that is mandated by law or required due to increased needs of the community in order to maintain the charitable status and real estate tax exemption of the Obligated Group Members.

7. Regulatory actions that might limit the ability of the Obligated Group to undertake capital improvements to their respective facilities or to develop new institutional health services.

8. The occurrence of a flood, earthquake, or other natural disaster, or a large-scale terrorist attack that disrupts operations of the Obligated Group’s facilities or increases the proportion of patients who are unable to pay fully for the cost of their care.

9. Instability in the stock market, which may adversely affect both the principal value of, and income from, the Obligated Group’s investment portfolio.

10. A national or localized outbreak of a highly contagious or epidemic disease.

REGULATION OF THE HEALTH CARE INDUSTRY

General Health Care Industry Factors

The Obligated Group, and the health care industry in general, are subject to regulation by a number of governmental agencies, including those which administer the Medicare and Medicaid programs, federal, state and local agencies responsible for administration of health planning programs and other federal, state and local governmental agencies. The health care industry is also affected by federal, state and local policies developed to regulate the manner in which health care is provided, administered and paid for nationally and locally. As a result, the health care industry is sensitive to legislative and regulatory changes in such programs and is affected by reductions and limitations in government spending for such programs as well as changing health care policies. The pressure to curb the rate of increase in federal spending in health care programs overall and on a per beneficiary basis is expected to increase as the U.S. population ages. Among other effects, this pressure may result in further reductions in reimbursement rates for hospital services and an intensified focus on shifting to value-based care (and transitioning away from fee-for service care) in the Medicare and Medicaid programs. In addition, Congress and other governmental agencies have focused on the provision of care to indigent and uninsured or underinsured patients, and the prevention of “dumping” such patients on other hospitals in order to avoid provision of unreimbursed care. Adoption of additional regulations in these areas could have an adverse effect on the operations and financial condition of the Obligated Group Members. Furthermore, laws promulgated by Congress and state legislatures, which regulate the manner in which health care services are provided and billed for, are increasing. As a result, the costs of complying with

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these laws and regulations are increasing. Some of the legislation and regulations affecting the health care industry are discussed in this section.

Federal and State Legislation; National Health Care Reform

General. A significant portion of the revenues of the Obligated Group is derived from Medicare, Medicaid and other third-party payers. For a breakdown of the sources of payment for services provided by the Obligated Group Members, see APPENDIX A – “INFORMATION RELATING TO CHRISTIANA CARE HEALTH SYSTEM” hereto.

Medicare is a federal program administered by the U.S. Department of Human Services, Center for Medicare & Medicaid Services (“CMS”), through Medicare Administrative Contractors. Medicare provides certain health care benefits to beneficiaries who are 65 years of age or older and other classes of individuals. Medicare Part A generally covers health services provided by institutional entities, including hospital, home health, nursing home care, and certain other providers. Medicare Part B covers outpatient services, certain physician services, medical supplies and durable medical equipment.

Medicaid is a federally assisted, state administered program of medical assistance that provides reimbursement for a portion of the cost of caring for certain indigent persons including: parents and caretakers, relatives of children, children, pregnant women, former foster care individuals, non-citizens with medical emergencies, aged or disabled individuals not currently receiving Supplemental Security Income, and other individuals that qualify for a state’s Medicaid program. Under the Affordable Care Act (“ACA”), states have the option to expand Medicaid to cover individuals under the age of 65 with incomes up to 138% of the federal poverty level; the federal government pays 93% in 2019 and 90% in 2020 and beyond. Medical benefits are available under each participating state’s Medicaid program, within prescribed limits, to persons meeting certain minimum income or other need requirements. The Medicaid program provides payments for medical items and services for any person who is determined to be eligible for Medicaid assistance on the date of service. Federal and state funds support the Medicaid program. Medicaid benefits are available, within prescribed limits, to persons meeting certain minimum income or other need requirements. Payment for medical and health services is made to providers in amounts determined in accordance with procedures and standards established by state law under federal guidelines, and providers are eligible to receive Medicaid payments up to, but not in excess of, the cost of providing such care. However, because the state is required to contribute funding prior to federal investment, most states’ Medicaid programs reimburse providers for significantly less than the amount that would cover costs for treating this population. Fiscal considerations of state governments in establishing their budgets will directly affect the funds available to the providers for payment of services rendered to Medicaid beneficiaries. Delays in appropriations and state budget deficits which may occur from time to time create a risk that payment for services to Medicaid patients will be withheld or delayed. CMS regulations can also impact services and facilities that are eligible for reimbursement. Payments under the Medicaid program represent a significant portion of the Obligated Group’s gross patient service revenue.

Significant changes have been and will likely continue to be made in these programs, which changes could have an adverse impact on the financial condition of the Obligated Group. In addition, bills have in the past and may in the future be introduced in Congress which, if enacted, could adversely affect the operations of the Obligated Group by, for example, decreasing payment by Medicare and Medicaid and other third-party payers or limiting the ability of the physicians on the medical staff of the Obligated Group to provide services or increase services provided to patients.

Participation in any federal health care program is heavily regulated. Providers and suppliers that participate in the Medicare and Medicaid programs must agree to be bound by the terms and conditions of

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the programs, such as meeting quality standards for rendering covered services, adopting and enforcing policies to protect patients from certain discriminatory practices, and disclosing certain ownership interests and/or managing control information. If a health care entity fails to substantially comply with any applicable conditions of participation in the Medicare and Medicaid programs or performs certain prohibited acts, the entity’s participation in these programs may be terminated, and civil and/or criminal penalties may be imposed.

The discussion herein describes risks associated with certain existing federal and state laws, regulations, rules, and governmental administrative policies and determinations to which the Obligated Group Members and the health care industry are subject. These are regularly subject to change. Additionally, because health care regulations are particularly complex, such regulations may be interpreted and enforced in a manner that is inconsistent with management’s interpretation. The Obligated Group’s business or financial condition could be harmed if it is alleged to have violated existing health care regulations or if it fails to comply with new or changed health care regulations. Furthermore, health care, as one of the largest industries in the United States, continues to attract much legislative interest and public attention. Further changes in the health care regulatory framework which increase the burdens on health care providers could have a material adverse effect on the Obligated Group’s business or financial condition.

Also, there can be no assurances that any current health care laws and regulations, including the ACA, will remain in effect in their current form. There can be no assurances that any potential changes to the laws and regulations governing health care would not have a material adverse financial effect on the Obligated Group. Therefore, the following discussion should be read with the understanding that significant changes could occur in the foreseeable future in many of the statutory and regulatory matters discussed.

The Affordable Care Act

The ACA has significantly changed, and continues to change, how health care services are covered, delivered, and financed in the United States. One of the primary goals of the ACA – extending health coverage to millions of uninsured legal U.S. residents – has taken place through a combination of private sector health insurance reforms and Medicaid program expansion (discussed below). To fund Medicaid expansion, the ACA includes a broad array of quality improvement programs, cost-efficiency incentives, and enhanced fraud and abuse enforcement measures, each designed to generate savings within the Medicare and Medicaid programs. Additionally, the ACA created health insurance exchanges – competitive markets for individuals and small employers to purchase health insurance – and financial programs designed to encourage insurance companies to offer plans on the health insurance exchanges.

The ACA and its implementation have been, and remain, politically controversial. The ACA has continually faced, and continues to face, legal and legislative challenges, including repeal efforts. President Trump and Republican leaders of Congress have repeatedly cited health care reform, and particularly repeal and replacement of the ACA, as a key goal. To that end, Congressional leaders have introduced various ACA repeal bills. While no bills wholly repealing the ACA have passed both chambers of Congress, the Tax Cuts and Jobs Act (discussed above) effectively eliminated a key provision of the ACA – a tax penalty associated with failing to maintain health coverage (the “Individual Mandate Tax Penalty”) by reducing the penalty to zero dollars effective January 1, 2019. Additionally, on December 14, 2018, a Texas Federal District Court judge, in the case of Texas v. Azar declared the ACA unconstitutional, reasoning that the Individual Mandate Tax Penalty was essential to and not severable from the remainder of the ACA. The case has been appealed to the U.S. Court of Appeals for the Fifth Circuit. In a letter dated March 25, 2019, the U.S. Department of Justice stated that it “has determined that the district court’s judgment should be affirmed.” The ACA will remain law while the

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case proceeds through the appeals process; however, the case creates additional uncertainty as to whether any or all of the ACA could be struck down, which creates operational risk for the health care industry. Management cannot predict the effect of the elimination of the Individual Mandate Tax Penalty, the final result and effect of the Texas v. Azar case, the likelihood of any future ACA repeal bills or other health care reform bills becoming law, or the subsequent effects of any such laws or legal decisions, though such effects could materially impact the Obligated Group’s business or financial condition. In particular, any legal, legislative or executive action that (1) reduces federal health care program spending, (2) increases the number of individuals without health insurance, (3) reduces the number of people seeking health care, or (4) otherwise significantly alters the health care delivery system or insurance markets, could have a material adverse effect on the Obligated Group’s business or financial condition.

Executive branch actions can also have a significant impact on the viability of the ACA. President Trump has issued two broad executive orders aimed at de-regulation: (1) one requiring federal agencies to repeal two previously implemented regulations for every new regulation added, and (2) one directing each federal agency to set up a “regulatory reform task force” to review existing regulations and eliminate those that are costly or unnecessary. President Trump has also issued executive actions directly aimed at the ACA: (1) one requiring federal agencies with authorities and responsibilities under the ACA to “exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay” parts of the law that place “unwarranted economic and regulatory burdens” on states, individuals or health care providers, (2) a second instructing federal agencies to make new rules allowing the proliferation of “association health plans” and short-term health insurance, which plans have fewer benefit requirements than those sold through ACA insurance exchanges, and (3) a third order regarding health care price and quality transparency that directs federal rulemaking by executive agencies to increase transparency of healthcare price and quality information. Additional executive branch actions include: (i) the issuance of a final rule in June 2018 by the Department of Labor to enable the formation of health plans that would be exempt from certain ACA essential health benefits requirements; (ii) the issuance of a final rule in August 2018 by the Departments of Labor, Treasury, and Health and Human Services to expand the availability of short-term, limited duration health insurance; (iii) eliminating cost- sharing reduction payments to insurers that would otherwise offset deductibles and other out-of-pocket expenses for health plan enrollees at or below 250 percent of the federal poverty level; (iv) relaxing requirements for state innovation waivers that could reduce enrollment in the individual and small group markets and lead to additional enrollment in short-term, limited duration insurance and association health plans; and (v) the issuance of a final rule by the Departments of Labor, Treasury, and Health and Human Services that would incentivize the use of health reimbursement arrangements by employers to permit employees to purchase health insurance in the individual market. The uncertainty resulting from these executive branch policies likely contributed to reduced exchange enrollment in 2018 with final CMS reported data for 2019 indicating further decline, and with enrollment expected to further worsen the individual and small group market risk pools in future years. It is also anticipated that these and future policies may create additional cost and reimbursement pressures on hospitals.

These executive actions have the potential to significantly impact the insurance exchange market by causing a reduction in the number of healthy individuals in the ACA health insurance exchanges, a reduction in the number of plans available on the health insurance exchanges, and/or an increase in insurance premiums. Management cannot predict the likelihood or effect of any current or future executive actions on the Obligated Group’s business or financial condition, though such effects could be material.

The majority of the ACA remains law. Certain key provisions of the law are briefly described below:

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1. Private Health Insurance Coverage Expansion/Insurance Market Reforms. One key provision of the ACA was the Individual Mandate Tax Penalty (discussed above) which required most Americans to maintain “minimum essential” health coverage or pay a tax penalty to the federal government. Individuals who were not deemed exempt from the Individual Mandate Tax Penalty and otherwise did not obtain health coverage through an employer or government program were expected to satisfy the mandate by purchasing insurance from a private company or through a “health insurance exchange.” The health insurance exchanges are government-established organizations that provide competitive markets for buying health insurance by offering individuals and small employers a choice of different health plans, certifying plans that participate, and providing information to help consumers better understand their options. The Tax Cuts and Jobs Act effectively eliminated the Individual Mandate Tax Penalty by reducing the penalty to zero dollars effective January 1, 2019. While the effect of the elimination of the Individual Mandate Tax Penalty remains uncertain, it has been predicted that it will result in fewer healthy individuals purchasing insurance (through the exchanges or otherwise) and increase the number of uninsured individuals.

The health insurance exchanges may have a positive impact for health care facilities to the extent they increase the number of individuals with health insurance. Conversely, health insurance exchanges may have a negative financial impact on health care providers to the extent (1) insurance plans purchased on the exchanges reimburse providers at lower rates or (2) high-deductible plans offered on the exchanges become more prevalent and lead to lower inpatient volumes as patients choose to forgo medical treatment.

The ACA also includes an “employer mandate.” The “employer mandate” provisions require the imposition of penalties on employers having 50 or more employees that do not offer qualifying health insurance coverage to those working 30 or more hours per week or 130 hours of service per month. The ACA also established a number of other health insurance market reforms, including bans on lifetime limits and pre-existing condition exclusions, new benefit mandates, and increased dependent coverage (until the age of 26).

Management cannot predict the future of the health insurance markets or the effects of current and future health reform efforts on such markets, though such effects may materially affect the Obligated Group’s business or financial condition.

2. Medicaid Expansion. Another key provision of the ACA is the expansion of Medicaid coverage. Prior to the passage of the ACA, the Medicaid program offered federal funding to states to assist limited categories of low-income individuals (including children, pregnant women, the blind and the disabled) in obtaining medical care. The ACA permits states to expand Medicaid program eligibility to virtually all individuals under 65-years old with incomes up to 138% of the federal poverty level, and provides enhanced federal funding to states that opt to expand such eligibility. There is no deadline for a state to undertake expansion and qualify for the enhanced federal funding available under the ACA. For states that choose not to participate in the federally funded Medicaid expansion, the net positive effect of ACA reforms has been significantly reduced. See “State Medicaid Program” below.

3. Spending Reductions. The ACA contains a number of provisions designed to significantly reduce Medicare and Medicaid program spending, including: (1) negative adjustments to the “market basket” updates for Medicare’s inpatient, outpatient, long-term acute and inpatient rehabilitation prospective payment systems, and (2) reductions to Medicare and Medicaid disproportionate share hospital (“DSH”) payments. Any reductions to reimbursement under the Medicare and Medicaid programs could have a material adverse impact on the Obligated Group’s business or financial condition to the extent such reductions are not offset by increased revenues from providing care to previously uninsured individuals or from other sources.

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4. Quality Improvement and Clinical Integration Initiatives. The ACA mandated the creation of a number of payment reform measures designed to incentivize or penalize hospitals based on quality, efficiency and clinical integration measures and authorizes the Center for Medicare & Medicaid Innovation within CMS to develop and test new payment methodologies designed to improve quality of care and lower costs. Current programs include (1) the “Readmission Reduction Program,” which reduces Medicare payments by specified percentages to hospitals with excess or preventable hospital admissions based on historical discharge data, (2) the “Hospital Value-Based Purchasing Program,” which imposes an across-the-board reduction in inpatient reimbursement and then reallocates and redistributes those funds to hospitals based on quality, efficiency, and patient experience measures, and (3) the “Hospital-Acquired Condition Reduction Program,” which negatively adjusts payments to applicable hospitals that rank in the worst-performing quartile for risk-adjusted hospital-acquired condition measures. Management is not currently aware of any situation in which an ACA quality, efficiency, or clinical integration program is materially adversely affecting the business or financial condition of the Obligated Group. However, the Obligated Group’s business or financial condition may be adversely affected by such programs in the future.

5. Fraud and Abuse Enforcement Enhancements. In an attempt to reduce unnecessary health care spending, the ACA includes a number of provisions aimed at combating fraud and abuse within the Medicare and Medicaid programs. Such provisions provide increased federal funding to fight health care fraud and abuse, provide government agencies with additional enforcement tools and investigation flexibility, facilitate cooperation between agencies by establishing mechanisms for information sharing, and enhance criminal and administrative penalties for non-compliance with the federal fraud and abuse laws (e.g., the Anti-Kickback Law, the Stark Law and the FCA, each as defined and discussed below). Management is not currently aware of any pending recovery audit which, if determined adversely to the Obligated Group, would materially adversely affect the business or financial condition of the Obligated Group.

To the extent the ACA remains law, it is difficult to predict the full impact of the ACA on the Obligated Group’s future revenues and operations due to uncertainty regarding a number of material factors, including: (1) the number of uninsured individuals to ultimately obtain and retain insurance coverage as a result of the ACA, (2) the percentage of any newly insured patients covered by Medicaid versus a commercial plan, (3) the pace at which insurance coverage expands, (4) future changes in the reimbursement rates and methods, (5) the percentage of individuals in the exchanges who select the high-deductible plans, (6) the extent to which the enhanced program integrity and fraud and abuse provisions lead to a greater number of civil or criminal actions, (7) the extent to which the ACA tightens health insurers’ profits, causing the plans to reduce reimbursement rates, (8) the extent of lost revenues, if any, resulting from ACA quality initiatives, and (9) the success of any clinical integration efforts or programs in which the Obligated Group participates.

Medicare Reimbursement

Hospitals generally are paid for inpatient and outpatient services provided to Medicare beneficiaries under a prospective payment system (“PPS”). Under PPS, a fixed payment is made to hospitals based on the average cost of care incurred in providing various kinds of services. Additionally, under PPS, the amount paid to the provider for an episode of care is established by federal regulation and is not directly related to the provider’s charges or costs of providing that care. Presently, inpatient and outpatient services, skilled nursing care, and home health care are paid on the basis of PPS.

Value-based purchasing and other alternative payment model initiatives tying health care provider reimbursement to quality, efficiency, or patient outcome measures will increasingly affect health care provider operations and may negatively impact revenues if the provider is unable to meet targeted

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measures. CMS had set a goal of tying 50% of traditional Medicare payments to quality or value through alternative payment models such as accountable care organizations, bundled payment arrangements or integrated care demonstrations by the end of 2018, and it continues to focus on moving the health care system towards paying for value. In 2016, CMS released final regulations for implementation of the Medicare Access and CHIP Reauthorization Act (“MACRA”) and its physician Quality Payment Program (“QPP”), which dramatically alter the way physicians and other clinicians are reimbursed by Medicare. The QPP and other federal delivery reform initiatives evidence a rapid volume-value shift within Medicare and could present challenges for the Obligated Group and the employed or contracted clinicians with whom the Obligated Group partners to deliver care. It is generally anticipated that CMS will continue to experiment with additional alternative payment models. Additionally, private payers are moving toward value-based purchasing and alternative payment models.

Hospital Inpatient Reimbursement

Under PPS, acute care hospitals generally are paid for inpatient services provided to Medicare beneficiaries based on established categories of treatments or conditions known as diagnosis related groups (“DRGs”). Hospitals are generally paid a fixed amount per inpatient discharged based on the DRG, regardless of how long the patient was admitted or the volume or specific services provided to the inpatient, though hospitals also may receive outlier payments for extraordinarily costly cases that exceed a federally established condition-based threshold. DRG rates and outlier thresholds are subject to adjustment by CMS. There is no guarantee that hospital inpatient reimbursement will cover actual costs of providing services to Medicare patients.

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Hospital Outpatient Reimbursement

Hospitals generally are paid for outpatient services provided to Medicare beneficiaries based on established categories of treatments or conditions known as ambulatory payment classifications (“APC”). The actual cost of care, including capital costs, may be more or less than the reimbursements based on APCs. There is no guarantee that hospital outpatient reimbursement will cover actual costs of providing services to Medicare patients.

Bipartisan Budget Act of 2015

The Bipartisan Budget Act of 2015 (the “BBA 2015”) changed the reimbursement methodology for items and services furnished in certain off-campus hospital outpatient departments (“HOPDs”). Beginning January 1, 2017, off-campus HOPDs established on or after November 2, 2015 (“non-excepted HOPDs”) are no longer eligible for payment under the hospital outpatient prospective payment system (“OPPS”) for non-emergency services. A hospital outpatient department is considered to be “off- campus” if it is located more than 250 yards from a main provider hospital or a remote location of a hospital. Instead, non-emergency services performed at these facilities will be paid under the Medicare Physician Fee Schedule (“PFS”) at a set of PFS payment rates that are specific to hospitals. Effective January 1, 2018, these hospital specific PFS rates are based on 40% of the comparable OPPS rate. Beginning January 1, 2019, CMS began applying the PFS equivalent pay rate for certain evaluation and management services when provided at an off-campus HOPD that is paid under the OPPS, including at those HOPDs grandfathered under BBA 2015, stepping down from 70% of OPPS rates in 2019 and 40% of OPPS rates in 2020 and thereafter. The reimbursement changes implemented under the BBA 2015 and the recent CMS reimbursement policies for calendar year 2019 threaten to further reduce revenues to off- campus HOPDs. While CMS’s adoption of this payment policy with respect to grandfathered HOPDs is currently being challenged in court, there can be no assurance that CMS’s policy will not become permanent.

Section 340B Drug Pricing Program

Certain hospitals that serve a high percentage of low income patients are eligible for reduced pricing on certain covered outpatient drugs through the 340B program (“340B Program”).

CMS’s calendar year 2018 final OPPS rule, published on November 13, 2017, substantially reduced Medicare Part B reimbursement for 340B Program drugs paid to hospitals and ASCs. Beginning January 1, 2018, CMS reimbursement for certain separately payable drugs or biologicals that are acquired through the 340B Program by a hospital paid under the OPPS (and not excepted from the payment adjustment policy) is the average sales price (“ASP”) of the drug or biological minus 22.5 percent, an effective reduction of 26.89% in payments for 340B program drugs. In calendar year 2019, rural sole community hospitals, children’s hospitals, and PPS-exempt cancer hospitals are exempted from the 340B payment adjustment. In the calendar year 2019 OPPS final rule, CMS extended the policy to pay ASP minus 22.5% for 340B-acquired drugs when those drugs are furnished by non-excepted off-campus HOPDs. In December 2018, the U.S. District Court for the District of Columbia ruled that DHHS did not have statutory authority to implement the 2018 Medicare OPPS rate reduction related to hospitals that qualify for drug discounts under the 340B Program and granted a permanent injunction against the payment reduction. The hospitals subsequently asked the court for a permanent injunction on the 2019 OPPS final rule. On May 6, 2019, the court held that the 2018 and 2019 rate reductions were unlawful and remanded the rules back to DHHS. The case has been appealed by DHHS. Management is unable to predict the ultimate outcome of any appeal and the type of relief that may be ordered by the courts.

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A decrease in reimbursement for 340B Program drugs or loss of discount procurement opportunities could have an adverse effect on the Obligated Group. Congress is considering further changes to the 340B Program and the regulatory environment for the 340B Program remains uncertain. Any reduction in eligibility for, or other further changes to, the 340B Program generally could have a materially adverse effect on the Obligated Group.

Medical Education Payments

Medicare currently pays for a portion of the costs of medical education at hospitals that have teaching programs. These payments are vulnerable to reduction or elimination. The direct and indirect medical education reimbursement programs have repeatedly emerged as targets in the legislative efforts to reduce the federal budget deficit. There can be no assurance that medical education payments will remain at current levels.

Medicare DSH Payments

The Medicare DSH payment is a percentage add-on to the standardized payment per discharge under the Medicare PPS for the operating costs of inpatient hospital services. There are two methods for determining qualification for Medicare DSH payments and the amount of payments. The first, most common, method is based on a hospitals disproportionate patient percentage, which considers the proportion of patients eligible for Medicaid but not Medicare Part A and the proportion of Medicare Part A patients who are also entitled to supplemental security (“SSI”) benefits. The second method is based on a hospital’s percentage of revenues attributable to state and local funding (excluding Medicaid and Medicare revenues) for low-income patient care.

The ACA provides for a reduction in Medicare DSH payments, which took effect on October 1, 2013. Instead of the amount that would otherwise be paid as the DSH adjustment, hospitals receive 25% of the amount they would have previously received. The remainder, equal to 75% of what otherwise would have been paid as Medicare DSH, becomes available for an uncompensated care payment after the amount is reduced for changes in the percentage of individuals who are uninsured. CMS is currently using uncompensated care costs reported on Worksheet S-10 in combination with insured low income days (the sum of Medicaid days and Medicare SSI days) to develop hospital uncompensated care payments. Each hospital eligible for Medicare DSH payments receives an uncompensated care payment based on its relative share of total uncompensated care costs and low income days reported by Medicare DSHs.

Medicare DSH payments will decrease as the number of uninsured patients decreases. Congress may make changes to the budget in the future and CMS may change its methodology for calculating uncompensated care costs and other elements of the DSH payment in the future. There can be no assurance that the current level of Medicare DSH reimbursement will continue in the future.

Value-Based Payments

The ACA has increased the use of value-based payments to incentivize providers to control costs and provide better quality care. These models can seek both vertical and longitudinal alignment of health care providers and payers and can require providers to share in upside and/or downside financial risk. Current models include bundled payment models and accountable care/population health models. To align incentives for providers across care settings, bundled payment models establish a budgeted payment to cover the entire cost of an episode of care (e.g., a hip or knee replacement). Examples of bundled payment models include, among others, Bundled Payments for Care Improvement (“BPCI”) Initiative models 2, 3 and 4 (which expired September 30, 2018); BPCI-Advanced; Comprehensive Care for Joint Replacement; and the Oncology Care Model. Population health models incentivize providers to maintain

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or improve quality while reducing cost through shared savings or shared loss arrangements. Population health models usually involve a form of capitated payment, which is a per-patient payment for the cost of care over a set period of time. Population health models include the Medicare Shared Savings Program (“MSSP”) and Next Generation Accountable Care Organization (“ACO”) model.

CMS has encouraged the use of alternative payment models and it is generally anticipated that CMS will continue to experiment with additional alternative payment models. Additionally, private payers are moving toward value-based purchasing and alternative payment models. Value-based and other alternative payment model initiatives tying health care provider reimbursement to quality, efficiency, or patient outcome measures will increasingly affect health care provider operations and may negatively impact revenues if the provider is unable to meet targeted measures.

In 2015, CMS set a goal of tying 50% of traditional Medicare payments to quality or value through alternative payment models such as accountable care organizations, bundled payment arrangements or integrated care demonstrations by the end of 2018. While CMS has since stated that it is no longer aiming for these Obama-era goals, it continues to propose new payment models and evaluate the impact of existing ones, which has led to some confusion in the industry.

Physician Payments

Payment for physician fees is covered under Medicare Part B. Under Part B, physician services are reimbursed in an amount equal to the lesser of actual charges or the amount determined under a fee schedule known as the “resource-based relative value scale” (“RBRVS”). RBRVS sets a relative value for each physician service; that value is then multiplied by a geographic adjustment factor and a nationally- uniform conversion factor to determine the amount Medicare will pay for each service.

In April 2015, MACRA established the Qualified Payment Program (“QPP”), which repealed the sustainable growth rate methodology for updates to the PFS, changed the way that Medicare rewards clinicians for services, streamlined existing quality and value programs, and provided for bonus payments to physicians and other clinicians for participating in certain payment models. The QPP provides incentive payments to eligible clinicians participating in Medicare Part B through two tracks: the Merit- based Incentive Payment System (“MIPS”) and Advanced Alternative Payment Models (“Advanced APMs”). In 2016, CMS released final regulations implementing the QPP. The 2020 PFS proposed rule budget neutrality factor would adjust reimbursement levels upward by 0.14% in 2020; otherwise PFS would then remain at the same reimbursement level (0.0% increase) through 2025. Beginning in 2026, the PFS will be increased either by (i) 0.25% annually for providers participating in MIPS, or (ii) 0.75% annually for providers participating in Advanced APMs.

MIPS, which is the “default track” under MACRA, provides eligible clinicians with an adjustment to their Medicare Part B reimbursement based on performance in four categories: Quality, Promoting Interoperability, Improvement Activities, and Cost. MIPS combines into a single program aspects of CMS’s prior quality and value programs, including the Physician Quality Reporting System, Medicare Electronic Health Records Incentive Program, and the Physician Value-Based Payment Modifier. MIPS eligible clinicians include physicians, physician assistants, nurse practitioners, clinical nurse specialists and certified registered nurse anesthetists. 2017 was the first MIPS performance period. CMS scored and weighted the data reported for performance year 2017 and is applying a performance adjustment in the 2019 payment year.

Advanced APMs are alternative payment models (“APMs”) that use certified electronic health record technology, provide for payment for covered professional services based on quality measures comparable to those in the quality performance category under MIPS, and either require that participating

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APM entities bear risk for financial losses of more than a nominal amount under the APM or be a type of Medical Home Model. Eligible clinicians who meet threshold Medicare participation levels in their Advanced APMs may be entitled to incentive payments.

The QPP and other federal delivery reform initiatives evidence a rapid volume-value shift within Medicare and could present challenges for the Obligated Group and the employed or contracted clinicians with whom the Obligated Group Members partner to deliver care. The new quality reporting programs may negatively impact the reimbursement amounts received by the Obligated Group for the cost of providing physician services.

Current or new legislation that reduces Medicare payments could adversely affect the Obligated Group. There is no assurance that the Obligated Group will be paid amounts that will reflect adequately its costs incurred in providing inpatient hospital services to Medicare beneficiaries, as well as any changes in the cost of providing health care or in the cost of health care technology being made available to Medicare beneficiaries. The ultimate effect on the Obligated Group will depend on its ability to control costs involved in providing inpatient hospital services.

Medicare Trust Funds

Two trust funds are maintained as part of the Medicare Program. Hospital Insurance (“HI”) or Medicare Part A, helps to pay for hospital, home health, skilled nursing facility, and hospice care for the aged and disabled and is financed primarily by payroll taxes paid by workers and employers. The Medicare Board of Trustees’ annual report in April 2019 indicated that the HI Trust Fund is not financed adequately and is projected to be exhausted in 2026. The other trust fund and various other components of the Medicare Program also have significant funding challenges. The trustees recommended that Congress and the executive branch work together with a sense of urgency to address the depletion of the HI Trust Fund and the projected growth in hospital and other expenditures. Accordingly, it is likely that statutory and regulatory attempts to contain increases in Medicare costs will continue in the future.

Medicaid Reimbursement

Payments made to health care providers under the Medicaid program are subject to changes as a result of federal or state legislative and administrative actions, including further changes in the methods for calculating payments, the amount of payments that will be made for covered services and the types of services that will be covered under the program. Such changes have occurred in the past and may continue to occur in the future, particularly in response to federal and state budgetary constraints coupled with increased costs for covered services.

Hospitals participating in the Medicaid program are subject to numerous requirements and regulations under the program. Failure to remain in compliance with any program requirements may subject the Medicaid provider to civil and/or criminal penalties, including fines and suspension or expulsion from the program, preventing the provider from receiving any funds under the Medicaid program. Noncompliance with Medicaid requirements, and suspension or exclusion from the Medicaid program, can also be a basis for mandatory or permissive suspension or exclusion from the Medicare program.

Significant changes have been and may be made in the Medicaid program which could have a material adverse effect on the financial condition of the Obligated Group. For example, under Medicaid, the federal government provides limited funding to states that have medical assistance programs that meet federal standards, and the ACA provides significantly enhanced federal funding for states to expand their Medicaid program to virtually all non-elderly, non-disabled adults with incomes up to 138% of the federal

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poverty level. Attempts to balance or reduce the federal and state budgets by decreasing funding of Medicaid may negatively impact spending for Medicaid and other state health care programs spending. Health care providers have been affected significantly in the last several years by changes to federal and state health care laws and regulations, particularly those pertaining to Medicaid. The purpose of much of this statutory and regulatory activity has been to contain the rate of increase in health care costs, particularly costs paid under the Medicaid program. Diverse and complex mechanisms to limit the amount of money paid to health care providers under the Medicaid program have been enacted, and may have a material adverse effect on the operations or financial condition of the Obligated Group.

State Medicaid Programs

While state Medicaid programs are rarely as important as the Medicare program to the operations, financial condition and financial performance of hospitals and other health care providers, state Medicaid programs nevertheless constitute an important payor source for many hospitals and other health care providers. These programs often pay hospitals and other health care providers at levels that are substantially below the actual cost of the care provided. Medicaid is jointly funded by states and the federal government, and adverse economic conditions that reduce state revenues or changes to the federal government’s methodology for funding state Medicaid programs may result in lower funding levels and/or payment delays. This could have a material adverse effect on operations, financial condition and financial performance of hospitals and other health care providers, including the Obligated Group.

Delaware Medicaid Program

Through the ACA, Delaware expanded Medicaid eligibility to adults without dependents with incomes up to 138 percent of the federal poverty level. The coverage effective dates for those qualifying for Delaware’s Medicaid expansion started January 1, 2014.

Since the U.S. Supreme Court’s ruling on the ACA allowed states to opt out of the law’s Medicaid expansion, Delaware is one of the states that have expanded Medicaid under the ACA. Medicaid expansion remains uncertain amid the debate over whether to repeal and replace the ACA. Management is unable to predict the ramification on operations if legislation is adopted that changes the current Medicaid program in Delaware.

Children’s Health Insurance Program

The Children’s Health Insurance Program (“CHIP”) is a federally funded insurance program for families that are financially ineligible for Medicaid, but cannot afford commercial health insurance. CMS administers CHIP, but each state creates its own program based upon minimum federal guidelines. CHIP insurance is provided through private health plans contracting with the state. Each state must periodically submit its CHIP plan to CMS for review to determine if it meets the federal requirements. If it does not meet the federal requirements, a state can lose its federal funding for the program.

From time to time, Congress and/or the President may seek to expand, reduce or fail to authorize CHIP. The ACA authorized an extension of the CHIP program through September 30, 2015. MACRA extended the CHIP program through September 30, 2017. President Trump signed a six-year reauthorization of CHIP into law on January 22, 2018. On February 9, 2018, Congress voted to extend CHIP for an additional four years, effectively extending CHIP through 2027.

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Medicare/Medicaid Conditions of Participation

Certain health care facilities must comply with standards called “Conditions of Participation” in order to be eligible for Medicare and Medicaid reimbursement. Under Medicare rules, hospitals accredited by an approved accrediting organization (such as The Joint Commission) are deemed to meet most of the Conditions of Participation. However, CMS may request that the state agency responsible for licensing hospitals, on behalf of CMS, conduct a “sample validation survey” of a hospital to determine whether it is complying with the Medicare or Medicaid Conditions of Participation. Failure to maintain The Joint Commission accreditation or to otherwise comply with the Conditions of Participation could have a material adverse effect on the Obligated Group.

Fines, Withholds and Enforcement Actions

The Department of Justice (“DOJ”), the Federal Bureau of Investigation and the Office of the Inspector General (“OIG”) of DHHS have been conducting investigations and audits of the billing practices of many health care providers in relation to Medicare conditions of payment set forth in federal regulations, as well as the federal False Claims Act, described below. Violations and alleged violations may be deliberate, but also frequently occur in circumstances where management is unaware of the conduct in question, as a result of mistake, or where the individual participants do not know that their conduct is in violation of law. Violations may occur and be prosecuted in circumstances that do not have the traditional elements of fraud, and enforcement actions may extend to conduct that occurred in the past. Violations carry significant sanctions. The government periodically conducts widespread investigations and audits, covering various categories of services, or certain accounting or billing practices. The Obligated Group may be required to undergo such audits by one or more of these agencies and may be required to make payments to resolve any such audits. It is possible that any such payments may be substantial and could have a material adverse effect on the Obligated Group.

In addition, the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) includes provisions that prohibit certain types of manipulative Medicare billing practices. These include improperly coding services rendered as part of the billing process to claim a higher level of reimbursement and billing for the provision of services or items that were not medically necessary. HIPAA’s requirements related to medical billing and coding and the processing of claims increase the legal risks associated with provider coding and billing and is another mechanism that can subject Medicare providers to government investigation.

The federal Medicaid Integrity Program was created by the Deficit Reduction Act in 2005. The Medicaid Integrity Program was the first federal program established to combat fraud and abuse in the state Medicaid programs. Congress determined a federal program was necessary due to the substantial variations in state Medicaid enforcement efforts. The Medicaid Integrity Program’s enforcement efforts support existing state Medicaid Fraud Control Units. Federal Medicaid Integrity Contractors (“MICs”) are classified into Review MICs, Audit MICs and Educational MICs. Review MICs perform review audits generally to determine trends and patterns of aberrant Medicaid billing practices through data mining. Audit MICs perform post-payment reviews of individual providers through desk and field audits. The Educational MICs are responsible for developing and carrying out a variety of education activities to increase and improve Medicaid enforcement efforts by state government. Once a Medicaid overpayment is identified, the state has one year to recover or attempt to recover the overpayment from the provider before adjustment is made in the federal payment to the state on account of such overpayment; provided, however , in the case of fraud, if the state is unable to recover the overpayment from the provider within the one year period because there has not been a final determination of the amount of the overpayment under an administrative or judicial process (as applicable), including as a result of judgment being under

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appeal, no adjustment shall be made in the federal payment to the state before the date that is 30 days after the final judgment is made.

Medicare and Medicaid audits may result in reduced reimbursement or repayment obligations related to past alleged overpayments and may also delay Medicare or Medicaid payments to providers pending resolution of the appeals process. The ACA explicitly gives DHHS the authority to suspend Medicare and Medicaid payments to a provider or supplier during a pending investigation of fraud. The ACA also amended certain provisions of the FCA (as defined below) to include retention of overpayments as a false claim. A provider or supplier must report and return an overpayment by the later of 60 days after the overpayment was identified, or the date the corresponding cost report is due, if applicable. The provider or supplier is also required to describe in writing the reason for the overpayment. Overpayments must be reported and returned if a provider or supplier identifies the overpayment within six years of the date the overpayment was received.

RAC Audits

CMS has implemented a Recovery Audit Contractor (“RAC”) program on a nationwide basis pursuant to which CMS contracts with private contractors to conduct pre- and post-payment reviews to detect and correct improper payments in the fee-for service Medicare program. The RACs use their own software and independent knowledge of Medicare to determine areas to review. Once a RAC identifies a potentially improper claim as a result of an audit, it makes an assessment from the provider’s Medicare reimbursement in an amount estimated to equal the overpayment from the provider pending resolution of the audit. The ACA expanded the RAC program’s scope to include managed Medicare plans and Medicaid claims. CMS also employs contractors to perform post-payment audits of Medicaid claims and identify overpayments. These programs tend to result in retroactively reduced payment and higher administration costs to hospitals.

Exclusions from Medicare or Medicaid Participation

The government must exclude from Medicare/Medicaid program participation a health care provider that is convicted of a criminal offense relating to the delivery of any item or service reimbursed under Medicare or a state health care program, any criminal offense relating to patient neglect or abuse in connection with the delivery of health care, fraud against any federal, state or locally financed health care program or an offense relating to the illegal manufacture, distribution, prescription or dispensing of a controlled substance. The government also may exclude individuals or entities under certain other circumstances, such as an unrelated conviction of fraud or other financial misconduct relating either to the delivery of health care in general or to participation in a federal, state or local government program. Exclusion from the Medicare/Medicaid program means that a health care provider would be decertified and no program payments can be made. Any exclusion of an Obligated Group Member could be a materially adverse event, as well as exclusion of any employee or contracted party of an Obligated Group Member, given that federal law also prohibits a health care provider participating in Medicare from contracting with excluded individuals or entities. Substantial penalties and fines may be imposed in the event a Member of the Obligated Group employs or contracts with an excluded individual or entity.

Review of Outlier Payments

In certain cases where patient costs are extraordinarily high, Medicare-participating hospitals may be eligible to receive additional payments. In order to receive an “outlier” payment, costs must exceed a fixed-loss cost threshold amount. The OIG has reviewed Medicare contractor reviews of outlier payments and issued multiple reports regarding outlier payment reconciliation, most recently in September 2017. OIG recommended that CMS ensure Medicare contractors are continuing to take

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corrective actions previously recommended by the OIG, such as collecting overpayments and returning funds to either Medicare or hospitals; determining whether any cost reports that exceeded the three-year reopening limit may be reopened as a result of hospital fault or fraud; and ensuring Medicare contractors review all cost reports submitted following earlier OIG audit periods and ensure that hospitals whose outlier payments qualified for reconciliation are correctly identified, referred, and reconciled. CMS is reviewing health care providers that are receiving large proportions of their Medicare revenues from outlier payments. Health care providers found to have obtained inappropriately high outlier payments will be subject to further investigation by the CMS Program Integrity Unit and potentially the OIG.

Patient Records and Confidentiality

HIPAA, as amended by the HITECH Act (defined and discussed below), protects the privacy and security of individually identifiable health information through regulations on Standards for Privacy of Individually Identifiable Health Information (the “Privacy Rule”), Security Standards for the Protection of Electronic Protected Health Information (the “Security Rule”), Standards for Notification in the Case of Breach of Unsecured Protected Health Information (the “Breach Notification Rule”), and Rules for Compliance and Investigations, Impositions of Civil Monetary Penalties, and Procedures for Hearings (the “Enforcement Rule”), (the Privacy Rule, the Security Rule, the Breach Notification Rule and the Enforcement Rule are collectively referred to as the “HIPAA Rules”).

The HIPAA Rules, developed through successive waves of the administrative rulemaking process, are extensive and complex. Violations of HIPAA can result in civil monetary penalties and criminal penalties. Provisions of the Health Information Technology for Economic and Clinical Health Act (the “HITECH Act”) amend HIPAA by (i) increasing the maximum civil monetary penalties for violations of HIPAA, (ii) granting limited enforcement authority of HIPAA to state attorneys general, (iii) extending the reach of HIPAA beyond “covered entities,” to include “business associates” of covered entities, (iv) imposing a breach notification requirement on HIPAA covered entities and business associates, (v) limiting certain uses and disclosures of individually identifiable health information, (vi) restricting covered entities’ marketing communications, and (vii) permitting the imposition of civil monetary penalties for a HIPAA violation even if an entity did not know and would not, by exercising reasonable diligence, have known of a violation. Civil monetary penalties for violations of HIPAA now range to a maximum $57,051 per violation and/or imprisonment, depending on the violator’s degree of intent, the extent of the harm resulting from the violation, and whether the violation was timely corrected. The maximum civil monetary penalty for violations of the same HIPAA provision in a calendar year cannot exceed a certain dollar amount, depending on the level of culpability and whether the violation was timely corrected, capping out at $1.71 million for instances of willful neglect where the violation is not corrected in a timely manner. A state attorney general may bring civil action to protect the interests of one or more residents of the state who have been or are threatened or adversely affected by any person who violates HIPAA. A state attorney general may enjoin further violations by a defendant or obtain potential damages of up to $25,000, in addition to an award of attorney fees. The HITECH Act also requires the DHHS Office for Civil Rights (“OCR”) to conduct periodic audits of covered entity and business associate compliance with the HIPAA Rules.

The Breach Notification Rule requires the notification of each individual whose unsecured protected health information has been, or is reasonably believed to have been accessed, acquired, used, or disclosed as a result of such breach. If a breach involves more than 500 residents, prominent media outlets must be notified. In addition, the Secretary of DHHS must be notified promptly following the discovery of a breach involving 500 or more individuals and annually for breaches involving fewer than 500 individuals. The reporting of such breaches may lead to an investigation by OCR during which OCR could discover other HIPAA violations that may result in potential fines.

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In recent years, OCR has enhanced its enforcement efforts that include civil monetary penalties and settlement agreements with some related payments reaching into the multimillion dollar range. Further, OCR is initiating an auditing process to evaluate compliance with HIPAA. It is expected that the audits will expose many health care providers and their vendors to enforcement actions under HIPAA.

Security Breaches and Unauthorized Releases of Personal Information

Federal, state and local authorities are increasingly focused on the importance of protecting the confidentiality of individuals’ personal information, including protected health information. In addition to the data breach disclosure requirements of HIPAA, many states have enacted laws requiring businesses to notify individuals of security breaches that result in the unauthorized release of personal information. In some states, notification requirements may be triggered even where information has not been used or disclosed, but rather has been inappropriately accessed. State consumer protection laws may also provide the basis for legal action for privacy and security breaches as well as for the failure to provide certain consumer facing notices and consumer rights, and frequently, unlike HIPAA, authorize a private right of action. In particular, the public nature of security breaches exposes health organizations to increased risk of individual or class action lawsuits from patients or other affected persons, in addition to government enforcement. Failure to comply with restrictions on patient privacy or to maintain robust information security safeguards, including taking steps to ensure that contractors who have access to sensitive patient information maintain the confidentiality of such information, could consequently damage a health care provider’s reputation and materially adversely affect business operations.

Civil and Criminal Fraud and Abuse Laws and Enforcement

The federal Civil Monetary Penalties Law (“CMP Law”) provides for administrative sanctions against health care providers for a broad range of billing and other abuses. For example, penalties may be imposed for the knowing presentation of claims that are (i) incorrectly coded for payment, (ii) for services that are known to be medically unnecessary, (iii) for services furnished by an excluded party, or (iv) otherwise false. An entity that offers remuneration to an individual that the entity knows, or should know, is likely to induce the individual to receive care from a particular provider may also be fined under the CMP Law. Under the ACA, Congress amended the CMP Law to authorize civil monetary penalties for a number of additional activities, including (i) knowingly making or using a false record or statement material to a false or fraudulent claim for payment, (ii) failing to grant the OIG timely access for audits, investigations, or evaluations, and (iii) failing to report and return a known overpayment within statutory time limits. The CMP Law authorizes potential imposition of civil monetary penalties, adjusted yearly for inflation, currently ranging from $20,000 to $100,000 for each item or service improperly claimed and each instance of prohibited conduct. Health care providers may be found liable under the CMP Law even when they did not have actual knowledge of the impropriety of the claim. It is sufficient that the provider “should have known” that the claim was false, and ignorance of the Medicare regulations is not a defense.

False Claims Act

The federal False Claims Act (“FCA”) makes it illegal to knowingly submit or present a false, fictitious or fraudulent claim to the federal government (e.g., the Medicare or Medicaid programs) for payment or approval for payment for which the federal government provides, or reimburses at least some portion of the requested money or property. Because the term “knowingly” is defined broadly under the law to include not only actual knowledge but also deliberate ignorance or reckless disregard of the facts, the FCA can be used to punish a wide range of conduct. The ACA amended the FCA by expanding the number of activities that are subject to civil monetary penalties to include, among other things, failure to report and return known overpayments within statutory limits. FCA investigations and cases have become common in the health care field and cover a range of activity from submission of intentionally

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inflated billings, to highly technical billing infractions, to allegations of inadequate care. The FCA provides for potentially severe penalties. In June 2016, the DOJ issued a rule that more than doubled civil monetary penalties under the FCA. These increases took effect on August 1, 2016 and apply to FCA violations after November 2, 2015. The penalty amounts are adjusted no later than January 15 of each year to reflect changes in the inflation rate. As of the date of this Official Statement, any person who acts in violation of the FCA is potentially liable for a civil penalty ranging from $10,781 to $21,563 per claim, plus three times the amount of damages sustained by the government. As a result, violation or alleged violation of the FCA frequently results in settlements that require multi-million dollar payments and costly corporate integrity agreements.

The FCA also permits individuals to initiate civil actions on behalf of the government in lawsuits called “qui tam” actions. Qui tam plaintiffs, or “whistleblowers,” can share in the damages recovered by the federal government or recover independently if the government does not participate. The FCA has become one of the federal government’s primary weapons against health care fraud and suspected fraud. FCA violations or alleged violations could lead to settlements, fines, exclusion or reputation damage that could have a material adverse effect on a hospital and other health care providers. Some regulators and whistleblowers have asserted that claims submitted to governmental payers that do not comply fully with regulations or guidelines come within the scope of the FCA.

In June 2016, the United States Supreme Court announced its decision in Universal Health Services, Inc. v. United States ex rel. Escobar, No. 15-7 (I.S. June 16, 2016). Prior to Escobar, lower courts had split on the issue of whether the FCA extended to so-called “implied certification” of compliance with laws, and whether such compliance was limited to express conditions of payment or extended to conditions of participation. The United States Supreme Court affirmed the theory of “implied certification” and rejected the distinction between conditions of payment and conditions of participation for these purposes, ruling that the relevant inquiry is whether the alleged noncompliance, if known to the government, would have in fact been material to the government’s determination as to whether to pay the claim. There is considerable uncertainty as to the application of the Escobar holding, but depending on how it is interpreted by the lower courts, it could result in an expanded scope of potential FCA liability for noncompliance with applicable laws, regulations and subregulatory guidance.

Under the ACA, the FCA has been expanded to include overpayments that are discovered by a health care provider and are not promptly refunded to the applicable federal health care program, even if the claims relating to the overpayment were initially submitted without any knowledge that they were false. The 2016 Medicare Overpayments Final Rule, which took effect on March 14, 2016, requires that providers report and return identified overpayments by the later of 60 days after identification, or the date the corresponding cost report is due, if applicable. If the overpayment is not so reported and returned, it becomes an “obligation” under the FCA. This expansion of the FCA exposes hospitals and other health care providers to liability under the FCA for a considerably broader range of claims than in the past. CMS clarified that the 60-day timeframe to report and return an overpayment begins when either reasonable diligence is completed (including determination of the overpayment amount) or on the day the person received credible information of a potential overpayment (if the person failed to conduct reasonable diligence and the person in fact received an overpayment). Failure to report and return overpayments as described herein may result in false claims liability. That same final rule also established a six-year lookback period, meaning overpayments must be reported and returned if a person identifies the overpayment within six years of the date the overpayment was received.

Medicare/Medicaid Anti-Kickback Laws

The federal “Anti-Kickback Law” is a criminal statute that prohibits anyone from knowingly and willfully soliciting, receiving, offering or paying any remuneration, directly or indirectly, overtly or

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covertly, in cash or in kind, to induce, or in return for a referral of a patient or the ordering or recommending of the purchase (or lease) of any item or service that is paid by any federal or state health care program. The Anti-Kickback Law applies to many common health care transactions between persons and entities with which a hospital does business, including hospital-physician joint ventures, medical director agreements, physician recruitment agreements, physician office leases, purchases and leases from health care suppliers and vendors and other transactions. There are a number of statutory exceptions and regulatory safe harbors protecting certain common activities from prosecution or other regulatory sanctions; however, the exceptions and safe harbors are drawn narrowly, and practices that do not fit squarely within an exception or safe harbor may be subject to scrutiny. The ACA amended the Anti- Kickback Law to provide explicitly that a claim that includes items or services resulting from a violation of the Anti-Kickback Law constitutes a false or fraudulent claim for purposes of the FCA. Another amendment provides that an Anti-Kickback Law violation may be established without showing that an individual knew of the statute’s proscriptions or acted with specific intent to violate the Anti-Kickback Law, but only that the conduct was generally unlawful. The new standards have significantly expanded criminal and civil fraud exposure for transactions and arrangements.

The Anti-Kickback Law can be prosecuted either criminally or civilly. Violations of the AKS may result in substantial civil or criminal penalties, including criminal fines of up to $100,000, imprisonment of up to ten years, civil penalties under the federal CMP Law of up to $100,000 for each violation, plus three times the remuneration involved, civil penalties under the federal False Claims Act for each claim submitted, plus three times the amounts paid for such claims and exclusion from participation in the Medicare and Medicaid programs. However, under 18 U.S.C. Section 3571, the CMP fine may be increased to $250,000 for individuals and $500,000 for organizations.

Increasingly, the federal government and qui tam relators are prosecuting violations of the Anti- Kickback Law under the FCA, based on the argument that claims resulting from an illegal kickback arrangement are also false claims for FCA purposes. Any claims for items or services that violate the federal Anti-Kickback Statute are also considered false claims for purposes of the FCA. See the discussion under the subheading “False Claims Act” above.

Courts have interpreted this law broadly and held that the Anti-Kickback Law is violated if just one purpose of the remuneration is to generate or induce referrals, even if there are other lawful purposes. Federal regulations describe certain arrangements (i.e., safe harbors) that are exempt from prosecution under the federal Anti-Kickback Law. Because the law is broadly applied and safe harbors are narrowly drawn, it remains a potential risk that Obligated Group Members may be found in violation of the federal Anti-Kickback Law in the future. The IRS has taken the position in a few narrow cases that hospitals that are in violation of the Anti-Kickback Law may also be subject to revocation of their tax-exempt status.

Medicare/Medicaid Anti-Referral Laws

The federal physician self-referral law (the “Stark Law”), prohibits the referral of Medicare patients for certain designated health services (including inpatient and outpatient hospital services, clinical laboratory services, and radiology and other imaging services) to entities with which the referring physician (or an immediate family member) has a financial relationship unless that relationship fits within an exception to the Stark Law. It also prohibits a hospital, or other provider, furnishing the designated health services from billing Medicare, or any other government health care program for services performed pursuant to a prohibited referral. The Stark Law is a strict liability statute, and as such, the government does not need to prove that the entity knew that the referral was prohibited to establish a Stark Law violation. If every substantive and technical requirement of an applicable Stark Law exception are not satisfied, an ordinary business arrangement or contract between hospitals and physicians can

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violate the Stark Law, thus triggering the prohibition on referrals and billing. All providers of designated health services with physician relationships have some exposure to liability under the Stark Law.

Penalties for violation of the Stark Law include denial of payment, recoupment, refunds of amounts paid in violation of the law, potential exclusion from the Medicare or Medicaid program, and potentially substantial civil monetary penalties (which are inflation-adjusted and, as of the most recent adjustment, are up to $24,748 per service, $164,992 for each arrangement or scheme intended to circumvent or to violate the statute, or $19,639 per day for false reporting or failure to report certain information required under the law). Violation of the Stark Law may also provide the basis for a claim under the FCA.

Medicare may deny payment for all services performed by a provider based on a prohibited referral, and a hospital that has billed for prohibited services is obligated to refund the amounts collected from the Medicare program or to make a self-disclosure to CMS under its Self-Referral Disclosure Protocol. As a result, even relatively minor, technical violations of the Stark Law may trigger substantial refund obligations. Moreover, where there are “knowing” violations of the Stark Law, the government may seek substantial civil monetary penalties under FCA, and in some cases, a hospital may be excluded from the Medicare and Medicaid programs. Potential repayments to CMS, settlements, fines or exclusion for a Stark Law violation or alleged violation could have a material adverse effect on a hospital and other health care providers. Increasingly, the federal government is prosecuting Stark Law violations under the FCA, based on the argument that claims resulting from an illegal referral arrangement are also false claims for FCA purposes. See the discussion under the subheading “False Claims Act” above. The DOJ and others have asserted that Medicaid referrals in which a non-excepted financial arrangement exists under the Stark Law also create FCA exposure, and have had some success with these arguments in certain courts.

State “Fraud” and “False Claims” Laws

Although the Stark Law only applies to Medicare, a number of states have passed similar statutes pursuant to which similar types of prohibitions are made applicable to all other health plans or third-party payers. Delaware has parallel criminal and civil health care fraud and abuse laws that prohibit kickbacks, self-referrals and false claims by providers of medical care covered by its public assistance programs and are enforced by the State Attorney General. Violations of these laws can result in substantial financial penalties, exclusion of the Medicaid program and loss of licensure. The Delaware Whistleblowers’ Protection Act protects employees of private employers from adverse actions against an employee in retaliation for a report to a public body of a violation of law.

EMTALA

The Emergency Medical Treatment and Labor Act (“EMTALA”) is a federal civil statute that requires Medicare-participating hospitals with an emergency department to conduct a medical screening examination to determine the presence or absence of an emergency medical condition, and to provide treatment sufficient to stabilize such emergency medical condition before discharging or transferring the patient. A hospital that violates EMTALA is subject to potential civil penalties of up to $106,965 per offense and potential termination of its Medicare provider agreement. EMTALA also provides for a limited private right of action against hospitals, and as a result a hospital could be subject to claims for personal injury where an individual suffers harm as result of an EMTALA violation.

Over the last few years, the federal government has increased its enforcement of EMTALA. Failure to comply with the law can potentially result in exclusion from the Medicare and/or Medicaid programs, as well as civil and criminal penalties. In addition, a hospital may be held liable to a patient

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who suffered injuries as a result of a violation of EMTALA and may be liable to the receiving hospital for financial losses suffered as a result of a transfer in violation of EMTALA. Outpatient facilities that are included as part of a hospital by virtue of a provider-based status designation are required to adhere to EMTALA’s requirements, regardless of whether they are located on or away from the hospital’s main campus. Substantial failure of an Obligated Group Member to meet its responsibilities under EMTALA could have a materially adverse effect on the Obligated Group.

Any potential sanctions imposed as a result of an EMTALA violation could have a material adverse effect on the Obligated Group.

Administrative Enforcement

Administrative regulations may require less proof of a violation than do criminal laws and thus, health care providers may have a higher risk of imposition of monetary penalties as a result of an administrative enforcement action.

Enforcement Activity

Enforcement activity against health care providers has increased and enforcement authorities have adopted aggressive approaches. In the current regulatory climate, it is anticipated that many hospitals and physician groups could be subject to an audit, investigation or other enforcement action regarding the health care fraud laws mentioned above.

Enforcement actions may pertain to not only deliberate violations, but also frequently relate to violations resulting from actions of which management is unaware, from mistakes or from circumstances where the individual participants do not know that their conduct is in violation of law. Enforcement actions may extend to conduct that occurred in the past. The government may seek a wide array of penalties, including withholding essential payments under the Medicare or Medicaid programs or exclusion from those programs.

Enforcement authorities are often in a position to compel settlements by providers charged with or being investigated for false claims violations by withholding or threatening to withhold Medicare, Medicaid and/or similar payments and/or by instituting criminal action. In addition, the cost of defending such an action, the time and management attention consumed, and the facts of a case may dictate settlement. Therefore, regardless of the merits of a particular case, a hospital could experience materially adverse settlement costs, as well as materially adverse costs associated with implementation of any settlement agreement. Prolonged and publicized investigations could be damaging to the reputation and business of a hospital, regardless of outcome.

Certain acts or transactions may result in a violation or alleged violation of a number of the federal health care fraud laws described above and, therefore, penalties or settlement amounts often are compounded. Generally, these risks are not covered by insurance. Enforcement actions may involve multiple hospitals in a health system, as the government often extends enforcement actions regarding health care fraud to other hospitals and other providers in the same organization. Therefore, Medicare fraud related risks identified as being materially adverse as to a hospital could potentially have materially adverse consequences to a health system taken as a whole.

Increased Enforcement Affecting Academic Research

In addition to increasing enforcement of laws governing payment and reimbursement, the federal government has also stepped up enforcement of laws and regulations governing the conduct of clinical

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trials at hospitals. DHHS elevated and strengthened its Office for Human Research Protections, one of the agencies with the responsibility for monitoring federally funded research. The Food and Drug Administration (“FDA”) also has authority over the conduct of clinical trials performed in hospitals when these trials are conducted on behalf of sponsors seeking FDA approval to market the drug or device that is the subject of the research. These agencies’ enforcement powers range from substantial fines and penalties to exclusion of researchers and suspension or termination of entire research programs.

Additional State Regulation

State Children’s Health Insurance Program

The State Children’s Health Insurance Program (“SCHIP”) provides federal matching funds to states that cover 65% to 84% of the costs of health care coverage, primarily for low-income children. CMS administers SCHIP, but each state creates its own program based on minimum federal guidelines, or the state may apply for a waiver, which allows the state to create its own program using the federal funds, but often with different criteria for eligibility.

Delaware’s SCHIP program subsidizes insurance coverage in households with income levels up to 212% of the FPL.

While generally considered to be beneficial for both patients and providers because it reduces the number of uninsured children, it is difficult to assess the fiscal impact of SCHIP payments on the Corporation and its affiliates. Moreover, each state must periodically submit its SCHIP plan to CMS for review to determine if it meets the federal requirements. If a state does not meet the federal requirements, it may lose its federal funding for its program. The Keeping Kids’ Insurance Dependable and Secure Act (the “Kids Act”) and the HEALTHY KIDS Act extended funding for SCHIP through fiscal year 2023.

The loss of federal approval for a state’s program or a reduction in the amounts available under SCHIP could have an adverse impact on the financial condition of the Corporation and its affiliates.

State Fraud and Abuse Laws

Delaware has parallel criminal and civil health care fraud and abuse laws that prohibit kickbacks, self-referrals and false claims by providers of medical care covered by its public assistance programs and are enforced by the State Attorney General. Violations of these laws can result in substantial financial penalties, exclusion of the Medicaid program and loss of licensure. The Delaware Whistleblowers’ Protection Act protects employees of private employers from adverse actions against an employee in retaliation for a report to a public body of a violation of law.

The State of Delaware has the authority to require hospitals to provide charity care as part of its Certificate of Public Review approval, at the Delaware Health Resources Board’s discretion. See “Certificate of Public Review Restrictions” below.

Health-Care Associated Infections Disclosure Act

Delaware physicians are required to report patients whom they have diagnosed and treated as having a health-care associated infection related to a clinical procedure to the health care facility where the clinical procedure was performed. The health care facility must report to the Delaware Department of Health those infections required to be reported under the National Healthcare Safety Network definitions. Such a report could adversely affect the operations of the Corporation.

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Certificate of Public Review Restrictions

In 1999, the State replaced its Certificate of Need program with the Certificate of Public Review (“COPR”) program. Although the application and procedural review process remain the same, the capital expenditure limit was increased to $5,800,000 and replacement of previously-reviewed capital equipment and construction of medical office buildings was deregulated. Under the COPR program, a COPR must be obtained if an entity wishes to construct a new facility, acquire an existing facility or add new beds or services. Failure to obtain a COPR for a proposed transaction could result in the inability to complete the proposed transaction, loss of the Corporation’s license, or imposition of a fine.

LITIGATION

There is no litigation of any nature pending or threatened against the Authority, the Corporation or any member of the Obligated Group at the date of this Official Statement to restrain or enjoin the issuance, sale, execution or delivery of the Bonds, or in any way contesting or affecting the validity of the Bonds or any proceedings of the Authority, the Corporation or the other Obligated Group Members taken with respect to the issuance or sale thereof, or the pledge or application of any moneys or the security provided for the payment of the Bonds or the existing powers of the Authority, the Corporation or the other Obligated Group Members. For a discussion of pending self-disclosures affecting the Obligated Group Members, see APPENDIX A – “INFORMATION CONCERNING CHRISTIANA CARE HEALTH SYSTEM – LITIGATION.”

TAX MATTERS

Federal Tax Exemption – Series 2020A Bonds

In the opinion of Ballard Spahr LLP, Bond Counsel, interest on the Series 2020A Bonds is excludable from gross income for purposes of federal income tax under existing laws as enacted and construed on the date of initial delivery of the Series 2020A Bonds, assuming the accuracy of the certifications of the Authority and the Corporation and continuing compliance by the Authority and the Corporation with the requirements of the Internal Revenue Code of 1986, as amended (the “Code”). Interest on the Series 2020A Bonds is not an item of preference for purposes of individual federal alternative minimum tax. Bond Counsel expresses no opinion regarding other federal tax consequences relating to ownership or disposition of, or the accrual or receipt of interest on, the Series 2020A Bonds.

Original Issue Discount. Certain of the Series 2020A Bonds may be offered at a discount (“original issue discount”) equal generally to the difference between the public offering price and the principal amount. For federal income tax purposes, original issue discount on a Series 2020A Bond accrues periodically over the term of such Series 2020A Bond as interest with the same tax exemption and alternative minimum tax status as stated interest. The accrual of original issue discount increases the bondholder’s tax basis in the Series 2020A Bond for determining taxable gain or loss upon sale or redemption prior to maturity. Bondholders should consult their tax advisers for an explanation of the accrual rules.

Original Issue Premium. Certain of the Series 2020A Bonds may be offered at a premium (“original issue premium”) over their principal amount. For federal income tax purposes, original issue premium is amortizable periodically over the term of a Series 2020A Bond through reductions in the bondholder’s tax basis for the Series 2020A Bond for determining taxable gain or loss upon sale or redemption prior to maturity. Amortization of premium does not create a deductible expense or loss. Bondholders should consult their tax advisers for an explanation of the amortization rules.

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Taxable Bonds - Series 2020B Bonds

In the opinion of Bond Counsel to the Authority, interest on the Series 2020B Bonds is not excludable from gross income for federal income tax purposes.

Interest on the Series 2020B is taxable as ordinary income for federal tax purposes at the time the interest accrues or is received in accordance with a bond owner’s method of accounting for federal income tax purposes. Prospective purchasers of the Series 2020B Bonds who are not United States persons, as defined for federal income tax purposes, may be subject to special rules and should consult their tax advisors.

State Tax Exemption

Bond Counsel is also of the opinion that the Series 2020 Bonds, their transfer, and the income therefrom, are free from income taxation by the State of Delaware and by the municipalities and other political subdivisions in the State of Delaware. Bond Counsel will express no opinion regarding State of Delaware franchise tax or estate tax.

Bond Counsel will express no opinion regarding other state or local tax consequences arising with respect to the Series 2020 Bonds, including whether interest on the Series 2020 Bonds is exempt from taxation under the laws of any jurisdiction other than the State of Delaware.

General

The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the Series 2020 Bonds, and Bond Counsel will not express any opinion as of the any date subsequent thereto or with respect to any proposed or pending legislation, regulatory initiatives or litigation.

The foregoing is only a general summary of certain provisions of the Code as enacted and in effect on the date hereof and does not purport to be complete; holders of the Series 2020 Bonds should consult their own tax advisors as to the effects, if any of the Code in their particular circumstances.

CONTINUING DISCLOSURE

In connection with the issuance of the Bonds, the Corporation, on behalf of the Obligated Group, will enter into a continuing disclosure agreement (the “Continuing Disclosure Agreement”) with Digital Assurance Certification, L.L.C., acting as dissemination agent (the “Dissemination Agent”). Pursuant to the Continuing Disclosure Agreement, the Corporation, on behalf of the Obligated Group, for the benefit of Holders and Beneficial Owners of the Bonds, will agree to provide (1) certain financial information and operating data relating to the Corporation not later than 150 days following the end of each Fiscal Year (the “Annual Report”), commencing with the Fiscal Year ending June 30, 2020, (2) not later than 60 days after the end of each of the Corporation’s first three fiscal quarters, commencing with the report for the fiscal quarter ending March 31, 2020, the unaudited quarterly financial statements of the Corporation for such fiscal quarter (a “Quarterly Report”), and (3) notices of the occurrence of certain enumerated events. The Annual Reports, the Quarterly Reports and the notices of enumerated events will be filed by the Dissemination Agent, on behalf of the Corporation, with the Electronic Municipal Market Access System (“EMMA”) of the Municipal Securities Rulemaking Board. See APPENDIX F – “FORM OF CONTINUING DISCLOSURE AGREEMENT.”

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The Corporation, on behalf of the Obligated Group, has undertaken all responsibilities for any continuing disclosure to Holders of the Bonds, as described above, and the Authority shall have no liability to the Holders of the Bonds or any other Person with respect to Rule 15c2-12 (the “Rule”) promulgated under the Securities Exchange Act of 1934, as amended. Additionally, the covenants described above have been made in order to assist the Underwriters in complying with the Rule.

Failure by the Obligated Group to comply with the provisions of the Continuing Disclosure Agreement will not constitute an event of default under the Master Indenture, the Bond Indenture or the Loan Agreement and Holders and beneficial owners of the Bonds are limited to the remedies described in APPENDIX F – “FORM OF CONTINUING DISCLOSURE AGREEMENT.” Any failure by the Obligated Group to comply with the provisions of the Continuing Disclosure Agreement are required to be reported in accordance with the Rule and are required to be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Bonds in the secondary market. Consequently, any such failure may adversely affect the transferability and liquidity of the Bonds and their market price.

UNDERWRITING

J.P. Morgan Securities LLC, on behalf of themselves and the other underwriters set forth on the cover hereof (the “Underwriters”), has agreed to purchase the Bonds at a price equal to $______(which is the aggregate principal amount of Bonds, plus a net original issue premium of $______less any Underwriter’s discount of $______) pursuant to a Bond Purchase Agreement entered into by and among the Authority, the Underwriters and the Corporation, on behalf of the Obligated Group (the “Bond Purchase Agreement”). The Bond Purchase Agreement provides that the Underwriters will purchase all of the Bonds, if any are purchased.

The Bonds are being offered for sale to the public at the initial offering prices shown on the inside cover page hereof. The Underwriters may offer and sell the Bonds to certain dealers (including dealers depositing the Bonds into investment trusts) and others at prices lower than the initial public offering price or prices set forth on the inside cover of the Official Statement. The Underwriters reserve the right to join with dealers and other underwriters in offering the Bonds to the public. The obligation of the Underwriters to accept delivery of the Bonds is subject to the terms and conditions set forth in the Bond Purchase Agreement, the approval of legal matters by counsel and other conditions. The Underwriters may over-allot or effect transactions which stabilize or maintain the market price of the Bonds at levels above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time.

The Underwriters and their affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage services. The Underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for the Authority or the Members of the Obligated Group, for which they received or will receive customary fees and expenses.

In the ordinary course of their various business activities, the Underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities, which may include credit default swaps) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of the Authority or the Obligated Group. The Underwriters and their affiliates may also communicate independent investment recommendations, market color or trading ideas and/or

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publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.

J.P. Morgan Securities LLC (“JPMS”), an underwriter of the Bonds, has entered into negotiated dealer agreements (each, a “Dealer Agreement”) with each of Charles Schwab & Co., Inc. (“CS&Co.”) and LPL Financial LLC (“LPL”) for the retail distribution of certain securities offerings at the original issue prices. Pursuant to each Dealer Agreement, each of CS&Co. and LPL may purchase Bonds from JPMS at the original issue price less a negotiated portion of the selling concession applicable to any Bonds that such firm sells.

BofA Securities, Inc., an underwriter of the Bonds, has entered into a distribution agreement with its affiliate Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”). As part of this arrangement, BofA Securities, Inc. may distribute securities to MLPF&S, which may in turn distribute such securities to investors through the financial advisor network of MLPF&S. As part of this arrangement, BofA Securities, Inc. may compensate MLPF&S as a dealer for their selling efforts with respect to the Bonds.

Citigroup Global Markets Inc., an underwriter of the Bonds, has entered into a retail distribution agreement with Fidelity Capital Markets, a division of National Financial Services LLC (together with its affiliates, “Fidelity”). Under this distribution agreement, Citigroup Global Markets Inc. may distribute municipal securities to retail investors at the original issue price through Fidelity. As part of this arrangement, Citigroup Global Markets Inc. will compensate Fidelity for its selling efforts with respect to the Bonds.

PNC Capital Markets LLC, one of the underwriters of the Bonds, may offer to sell to its affiliate, PNC Investments, LLC (“PNCI”), securities in PNC Capital Markets LLC's inventory for resale to PNCI's customers, including securities such as the Bonds. PNC Capital Markets LLC may share with PNCI a portion of the fee or commission paid to PNC Capital Markets LLC if any Bonds are sold to customers of PNCI.

PNC Bank, National Association, an affiliate of an underwriter, will receive a portion of the bond proceeds from the repayment of the Series 2010D and Series 2010E Bonds in connection with the issuance of the Bonds.

FINANCIAL ADVISOR

PFM Financial Advisors LLC (“PFM”) has acted as independent financial advisor to the Corporation with respect to the Bonds. PFM is not obligated to undertake, and has not undertaken, either to make an independent verification of or to assume responsibility for, the accuracy, completeness, or fairness of the information contained in this Official Statement and the appendices hereto. PFM is an independent financial advisory firm and is not engaged in the business of undertaking, trading or distributing securities.

INDEPENDENT ACCOUNTANTS

The consolidated financial statements as of June 30, 2019 and 2018 and for the years then ended, included in this Official Statement, have been audited by PricewaterhouseCoopers LLP, independent accountants, as stated in their report appearing herein.

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RATINGS

The Bonds have been assigned a rating of “AA+” (stable outlook) by S&P Global Ratings, a division of S&P Global Inc. (“S&P”). Any explanation of such rating may only be obtained from S&P. The Bonds have been assigned a rating of “Aa2” (stable outlook) by Moody’s Investor Services (“Moody’s”). Any explanation of such rating may only be obtained from Moody’s.

A rating is not a recommendation to buy, sell or hold the Bonds and any rating should be evaluated independently. Generally, rating agencies base their ratings on such information and materials and on investigations, studies and assumptions made by the rating agencies themselves. There is no assurance that any individual rating mentioned above will remain in effect for any given period of time or that any individual rating might not be lowered, suspended or withdrawn entirely by a rating agency, if in its judgment circumstances so warrant. Neither the Authority nor the Underwriters have undertaken any responsibility to bring to the attention of either the Holders or Beneficial Owners of the Bonds any proposed change in, suspension or withdrawal of any rating or to oppose any such proposed revision, suspension or withdrawal. The Corporation has not undertaken any responsibility to oppose any such proposed revision, suspension or withdrawal. Any such downward change in, suspension or withdrawal of any rating might have an adverse effect on the market price for or marketability of the Bonds.

LEGAL MATTERS

The validity of the Bonds and certain other legal matters are subject to the approving opinion of Ballard Spahr LLP, Bond Counsel to the Authority. A complete copy of the proposed form of Bond Counsel opinion is contained in APPENDIX E hereto. Bond Counsel undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Certain legal matters will be passed upon for the Authority by its counsel, Potter Anderson & Corroon LLP; for the Obligated Group Members by their counsel, Fox Rothschild LLP; and for the Underwriters by its counsel, Hawkins Delafield & Wood LLP.

OTHER MATTERS

The Corporation has furnished all information herein relating to the Corporation. The Authority has furnished only the information included herein under the captions “INTRODUCTORY STATEMENT – The Authority,” “THE AUTHORITY” and “LITIGATION” (insofar as such statement applies to the Authority). The Depository Trust Company has furnished only the information included in APPENDIX G – “INFORMATION REGARDING BOOK-ENTRY ONLY SYSTEM”. Any statements herein involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact.

The foregoing descriptions of provisions of the Bonds, the Bond Indenture, the Loan Agreement, the Master Indenture, the Supplemental Master Indentures and 2020 Obligations, the summaries of certain provisions of certain documents included in APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE AND SUPPLEMENTAL MASTER INDENTURES” and APPENDIX D – “SUMMARY OF CERTAIN PROVISIONS OF THE BOND INDENTURE AND THE LOAN AGREEMENT” hereto, and all references to other materials not purported to be quoted in full, are only brief outlines of some of the provisions thereof and do not purport to summarize or describe all other provisions thereof. For a complete statement of the provisions of the Bond Indenture, the Loan Agreement, the Master Indenture, the Supplemental Master Indentures and 2020 Obligations, reference is made to the documents in their entireties, copies of which are available for inspection at the principal corporate trust office in Wilmington, Delaware of the Bond Trustee.

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The attached Appendices A through G are integral parts of this Official Statement and should be read in their entirety together with the foregoing.

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The circulation of this Official Statement has been duly authorized by the Authority and the execution, delivery and circulation of this Official Statement has been approved by the Corporation for itself and on behalf of the other Obligated Group Members.

CHRISTIANA CARE HEALTH SYSTEM

By: Senior Vice President and Chief Financial Officer

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APPENDIX A

INFORMATION CONCERNING CHRISTIANA CARE HEALTH SYSTEM

3406963.6 043801 OS [THIS PAGE INTENTIONALLY LEFT BLANK] INTRODUCTION TO CHRISTIANACARE

Organizational Overview and Structure

Christiana Care Health System, Inc. (the “Health System”) is a Delaware nonprofit corporation, which is the parent corporation of Christiana Care Health Services, Inc. (“Health Services”) and several other healthcare related affiliates described herein. The Health System’s primary activity is to collect gifts and bequests and engage in fundraising activities on behalf of Health Services and the other healthcare-related affiliates. The Health System also provides strategic planning and risk management for all of the healthcare operations. The Health System, along with Health Services and their healthcare-related affiliates are sometimes collectively referred to herein as “ChristianaCare”.

ChristianaCare considers its core strengths to be the following:

• Largest private employer in Delaware and one of the largest of the Philadelphia region;

• Continually ranked as a Best Hospital by U.S News & World Report, and recently listed by Newsweek among the World’s Best Hospitals;

• Serving Delaware and communities in the surrounding areas of Maryland, New Jersey and Pennsylvania for more than 100 years;

• A major teaching hospital affiliated with six universities throughout the region;

• Delaware’s only Level I trauma center and only Level III neonatal intensive care unit;

• In fiscal 2019, ChristianaCare reported more than $2.0 billion in revenue and captured over 53,000 admissions;

• Consistent financial performance;

• Positioned for continued growth and success with value-based reimbursement models as guided by the 2021 strategic plan.

Health Services is a Delaware nonprofit corporation, which owns and operates Christiana Hospital, Wilmington Hospital, a free-standing emergency department, a physician network, residency training programs and numerous ambulatory care centers and physician offices. Health Services primary activity is to provide healthcare services to residents of Delaware, and surrounding counties located in Maryland, Pennsylvania and New Jersey.

With more than 12,000 employees, ChristianaCare is the largest private employer in Delaware and among the top 10 in the Philadelphia region. The organization features a Medical-Dental Staff of more than 1,600 physicians, surgeons and dentists with 600 full-time and part-time employed physicians through The Medical Group of ChristianaCare, a department within Health Services (the “Medical Group”).

3414186.8 043801 OS The organizational structure of ChristianaCare is designed to minimize complexity and to support growth. The below organizational chart highlights the core services provided by ChristianaCare.

Health Services

Health Services was formed in 1965 as The Wilmington Medical Center, the result of the merger of the three largest acute care hospital organizations in Wilmington: Wilmington General, founded in 1910; Delaware Hospital, founded in 1890; and Memorial Hospital, founded in 1888. As a result of the merger, the staffs and services of the three hospital organizations were consolidated into a single entity with operating divisions. In 1985, Wilmington General and Memorial Hospital were both closed, Christiana Hospital was opened in Newark, Delaware, and the organization was renamed The Medical Center of Delaware, Inc. Later in 1997, The Medical Center of Delaware, Inc. changed its name to Christiana Care Health Services, Inc.

Health Services now comprises an extensive network of outpatient services, medical aid units, two hospitals (1,227 beds), the State’s only Level I trauma center and a Level III neonatal intensive care unit, a comprehensive stroke center and regional centers of excellence in heart and vascular care, cancer care and women’s health.

Health Services serves as the parent entity for several healthcare related affiliates. Health Services, directly or indirectly, owns or controls the following entities:

• The Delaware Center for Maternal and Fetal Medicine of Christiana Care Inc., a physician practice of maternal fetal medicine specialists that cares for women with high-risk pregnancies.

• Christiana Care Quality Partners ACO LLC d/b/a eBrightHealth ACO, an accountable care organization that comprises the Christiana Care, Bayhealth, Nanticoke, and Beebe entities and their employed and affiliated physicians.

• Christiana Care Care Link LLC, NKA CareVio, an information technology-enabled network of care coordination support services that works with providers and patients to optimize outcomes.

• Christiana Care Insurance Company, LTD, a captive insurance company domiciled in the Cayman Islands that houses ChristianaCare’s professional and general liability coverages.

Christiana Care Health Initiatives Inc. is a Delaware nonprofit corporation. It currently houses the Independence at Home Demonstration project (a CMS Innovation Center model in which primary care services are delivered at home to Medicare beneficiaries with multiple chronic

A-2 3414186.8 043801 OS conditions), employs the ChristianaCare physicians who practice in New Jersey and is a part owner of the Glasgow Medical Center, an ambulatory surgery center located in Glasgow, Delaware.

Christiana Care Home Health & Community Services Inc. is a Delaware nonprofit corporation. It is a full-service skilled home health care agency doing business as the Christiana Care Visiting Nurse Association (VNA). It has more than 800 employees and makes 288,000 home visits each year. The VNA also operates ChristianaCare’s Evergreen Center, the only Alzheimer’s specific adult day care program in Delaware.

Christiana Care Health Plans, Inc. is a Delaware nonprofit corporation. It holds a Delaware insurance license.

The Junior Board of Christiana Care is a nonprofit corporation with its own board and volunteer membership. Its members raise money for ChristianaCare by reaching out into the community and by operating the gift shops in both hospitals.

Christiana Care Strategic Initiatives, Inc. is a Delaware for profit corporation. It is currently a part owner in the joint venture recently established between ChristianaCare and GoHealth Urgent Care in November 2019. GoHealth Urgent Care partners with innovative and integrated health systems to develop and manage urgent care centers with a focus on driving value.

MISSION AND VALUES

ChristianaCare’s vision is to encourage a healthier community that has access to the very best care and is embodied by its mission statement, The ChristianaCare Way:

“We serve our neighbors as respectful, expert, caring partners in their health. We do this by creating innovative, effective, affordable systems of care that our neighbors value.”

ChristianaCare’s mission is supported by its values and behaviors, which guide the work of the organization and its caregivers every day. They are embodied in the statement: “We serve together, guided by our values, Love and Excellence.”

A-3 3414186.8 043801 OS The ChristianaCare Way is illustrated by the following graphic:

A-4 3414186.8 043801 OS STRATEGY

ChristianaCare’s overall strategic framework is represented in the ChristianaCare Diamond.

ChristianaCare’s strategic aims for the 2019-2021 fiscal years, Optimal Health, Exceptional Experience and Organizational Vitality are reflected in the top half of the Diamond. The areas of focus represented in the bottom half of the Diamond, Extraordinary People, Innovative Tools and Strategic Partnerships, are essential to ChristianaCare’s ability to achieve those aims. The Diamond is reflective of ChristianaCare’s pursuit of health care’s Quadruple Aim, which strives to improve health, provide a better experience of care and reduce costs, while ensuring a positive experience for our workforce.

A-5 3414186.8 043801 OS These strategic aims were developed by senior leadership and adopted by the Board of Directors in March 2018. The principal elements of the strategic aims contain the following, which includes aspirational statements and focus areas:

Optimal Health. Partnering with those we serve and each other to achieve personal health goals and create healthier communities.

We will deliver high value care founded on a clinical system design that uses high reliability and relationship-centered approaches.

Areas of Focus:

• Zero preventable patient harm: reducing preventable patient harm.

• Health equity: reducing avoidable health disparities in diabetes, hypertension and perinatal care.

• Care standards: reducing unnecessary variation in care for congestive heart failure, chronic obstructive pulmonary disease, diabetes, hypertension and substance abuse disorder.

• Primary care: reimagining primary care to achieve significant improvement in health outcomes, cost of care and patient experience scores.

Exceptional Experience. Engaging our extraordinary caregivers and anticipating the needs of those we serve.

We will create partnerships with the people we serve through personalized communication and radically convenient interactions.

Areas of Focus:

• Engagement: top performance for caregiver and patient engagement.

• Radical convenience: greater access to primary and specialty care.

• Transparency: Digital access to cost and quality transparency.

Organizational Vitality. Achieving ongoing financial stability and execution of mission.

We will create value and affordability by meeting or exceeding our financial goals.

Areas of Focus:

• Organizational sustainability.

• Profitable revenue streams.

A-6 3414186.8 043801 OS • Waste reduction and value creation.

• New contracting options for value-based payment.

• Clinically integrated network.

STRATEGIC INTIATIVES

Recognizing the inevitable changes impacting the health care industry and the pace of those changes, during the 2019 fiscal year, the Board of Directors and senior leadership of ChristianaCare made a significant commitment to population health which complements the 2019- 2021 strategic aims and will guide the development of a new strategic plan commencing in the 2022 fiscal year. The definition of population health developed by senior leadership and supported by the Board of Directors is: “Assuming responsibility and risk for the health, well-being and total cost of care of a defined population.” It is a strategy that relies heavily on ChristianaCare’s ability to build population health capabilities and grow the number of lives under risk-based contracting, while also diversifying ChristianaCare’s revenue stream to ensure stability under a risk-based model. Since the time that the commitment was made, ChristianaCare has developed the below strategic imperatives and, with the support of its Board of Directors, is aggressively pursuing the identified initiatives.

Population Health Initiatives

ChristianaCare practices value-based care, with more than 100,000 covered lives in total cost of care contracts. In July 2019, ChristianaCare announced value-based care agreements with Highmark Health Options and AmeriHealth Caritas Delaware in which ChristianaCare and payors assume upside and downside risk for a combined 15,900 Medicaid patients.

At the forefront of ChristianaCare’s population health strategy is its nationally recognized CareVio platform, currently managing more than 100,000 lives. CareVio is an information technology platform that harnesses real-time health data from available sources. It uses a prediction analytics engine to coordinate care, identify populations most at-risk and help prevent the need for hospitalizations and emergency department visits through preventive care and, when appropriate, home care. This data-driven approach to care coordination incorporates artificial intelligence and machine learning to assist real-time delivery of services. eBrightHealth ACO

ChristianaCare is a founding partner of eBrightHealth ACO, an accountable care organization that includes more than 1,200 primary and specialty care clinicians from four regional health systems, Bayhealth, Beebe Healthcare, ChristianaCare, and Nanticoke Health Services, as well as eight private primary care practices and two federally qualified health centers, Westside Family Healthcare and La Red Health Center. This statewide collaboration helps clinicians address the overall health needs of Medicare beneficiaries, including behavioral health and non-medical needs that impact health, through highly coordinated care that focuses on primary care and careful management of chronic conditions to prevent the need for emergency care and hospitalization. eBrightHealth ACO serves approximately 40,000 Medicare beneficiaries from Delaware,

A-7 3414186.8 043801 OS Pennsylvania and Maryland. Care coordination is provided by ChristianaCare’s award-winning care coordination program, CareVio.

Since its founding, eBrightHealth ACO has achieved three consecutive years of savings that total $13 million.

Mergers and Affiliations

ChristianaCare’s population health commitment drives its merger and acquisition strategy. ChristianaCare periodically pursues targeted opportunities for growth that are intended to increase the number of individuals it can impact with a view towards expanding its integrated healthcare delivery network.

Affinity Health Alliance, Inc.

Effective January 1, 2020, Health Services became the sole member of Affinity Health Alliance, Inc. (“AHA”) located in Cecil County, Maryland. AHA is the sole member of the Union Hospital of Cecil County, Inc. (“Union Hospital”).

Union Hospital is a 72 licensed bed acute care hospital facility in Elkton, Maryland, with 1,200 employees and 375 physicians, serves residents from Cecil County and the surrounding area, and other affiliated organizations that include physician practices and management services, imaging services, radiation oncology and a foundation.

AHA has annual revenue of approximately $170 million with net assets of approximately $130 million. As part of the affiliation agreement with AHA, ChristianaCare committed $11 million for patient care related construction needs. AHA’s financial and statistical information is not reflected in the historical information for ChristianaCare contained herein.

STRATEGIC PARTNERSHIPS, JOINT VENTURES AND COLLABORATIONS

To effectively execute the strategic aims of ChristianaCare, Management believes it is important to form partnerships and collaboration arrangements with other healthcare related organizations to help us rapidly transform key aspects of the healthcare experience. A few recently formed relationships include the following:

In January 2020, ChristianaCare announced an agreement with Cedar, a patient experience and technology platform, to modernize and personalize the financial experience for its patients.

In January 2020, ChristianaCare and GoHealth Urgent Care, one of the nation’s fastest-growing urgent care companies, announced that they have entered into a new partnership to operate ChristianaCare’s five medical aid units and establish a network of new urgent care centers throughout Delaware and the surrounding areas.

In December 2019, ChristianaCare and Medtronic executed a five-year arrangement designed to develop value-based initiatives that apply the right medical technologies and therapies to patients who may benefit most, with shared financial accountability between ChristianaCare and Medtronic to improve outcomes while reducing the cost of care.

A-8 3414186.8 043801 OS In 2019, Cerner announced a strategic collaboration with ChristianaCare to provide a weight loss surgery program designed to help members of Cerner’s health plan achieve their health goals. Cerner health plan members who are in need of weight loss surgery now travel to ChristianaCare for their procedure, receiving high-quality, safe care with personalized support through each stage of the weight loss process.

QUALITY AND PATIENT SAFETY

Quality Initiatives

ChristianaCare is committed to making a positive impact on the health of its community. The Serving with Excellence and Love principles guide how ChristianaCare approaches quality and safety at every level of the organization.

ChristianaCare’s leadership team has a strong commitment to adopting high reliability principles, leveraging data driven tools and cultivating a culture of safety to sustain performance and safety practices. ChristianaCare’s quality improvement program is comprehensive and multifaceted and includes care standardization efforts in multiple clinical service areas.

ChristianaCare is also reimagining primary care as the foundation for a new regional model of health care delivery that integrates clinical resources across the continuum. ChristianaCare aims to expand primary care services to serve New Castle County and beyond, exploring innovative methods of delivering care.

Quality Recognition

ChristianaCare has been honored with some of the highest designations, recognition and awards from leading independent health care quality ratings systems.

Healthgrades named ChristianaCare among America’s 100 Best Hospitals for Joint Replacement, Spine Surgery, Gastrointestinal Care, and General Surgery. In addition, ChristianaCare received Excellence Awards™ in Joint Replacement, Spine Surgery, Pulmonary Care, Gastrointestinal Care, and General Surgery.

For four years in a row, ChristianaCare has been rated a Best Hospital and recognized for high performance in all nine surgical procedures and chronic conditions evaluated by U.S. News & World Report. Out of more than 4,500 hospitals across the nation, ChristianaCare was one of only 57 to achieve the highest ratings in every common adult condition or procedure in 2019. ChristianaCare was also recognized as the best hospital in Delaware and was ranked No. 3 among the 90-plus hospitals in the Philadelphia region.

Accreditations and Memberships

Health Services is licensed by the Delaware Department of Health and Social Services Division of Public Health and is fully accredited by the Joint Commission. Periodically, the Joint Commission reviews Health Services for compliance under the standards of the Joint Commission. Health Services had a full Joint Commission acute care survey in September 2019.

A-9 3414186.8 043801 OS The comprehensive Inpatient Rehabilitation Program and the Stroke Specialty Program at ChristianaCare’s Center for Rehabilitation at Wilmington Hospital received a three-year accreditation from Commission for Accreditation of Rehabilitation Facilities (CARF), an internationally acknowledged, leading independent accreditor of rehabilitation facilities.

ChristianaCare Wilmington campus has achieved Level III Trauma Center by the American College of Surgeons and the State of Delaware designation, and the Newark campus remains the only Level 1 Trauma Center in the state.

THE PROJECT

Center for Women’s and Children’s Health. The Center for Women’s and Children’s Health project, scheduled to be completed in Spring 2020, is a multi-year, multi-phase project that includes a replacement patient room tower, a visitor parking garage for the Christiana Hospital campus, and renovation of vacated units to increase the availability of private rooms throughout the hospital.

The visitor parking garage for the Christiana Hospital campus, paid with equity capital was required to provide a safer and more accessible parking structure for the campus that allows for the expansion of patient services. The patient room tower includes the following:

• Administrative offices, dedicated pharmacy space, and a satellite kitchen;

• Ambulatory, high risk obstetrics, 25-room OB triage unit, small retail food/supplies area;

• 4 additional LDR rooms (in addition to those in existing space); 26-bed high risk OB rooms;

• 70-bed NICU and 10-bed critical care nursery;

• Shell space for future growth and expansion; and

• 72-bed mom/baby rooms.

Rooms vacated by the building of this new tower will allow the Christiana Hospital campus to increase private rooms from 55% to greater than 80% of all patient rooms. These vacated rooms will receive cosmetic upgrades and any renovations required to update ADA compliance prior to occupancy.

The total cost of the Women’s and Children’s Health project is approximately $260 million, which encompasses all portions of the project, of which approximately $115 million will be financed through the issuance of the Series 2020 bonds and the remainder funded from equity.

Wilmington Hospital Parking Garage. The parking garage replacement project consists of deconstructing, designing, constructing and equipping a new, six-story patient and visitor parking garage at the Wilmington Hospital campus, which significantly increases the parking capacity for patients and visitors, and includes approximately 25,000 square feet of potential retail space.

A-10 3414186.8 043801 OS The total cost of the Wilmington Hospital garage project is approximately $43 million, of which approximately $30 million will be financed through the issuance of the Series 2020 bonds and the remainder funded from equity.

Site construction commenced in July 2019 and is scheduled to be completed in late calendar year 2020 or early calendar year 2021.

FUTURE CAPITAL EXPENDITURES

ChristianaCare completes a multi-year capital expenditure plan as part of its annual budgeting process. Throughout the year, the capital plan is updated as more current information becomes available related to the cost, content, and timing of various projects. The proceeds of the Series 2020 Bonds may fund some of the future capital costs associated with Christiana Hospital.

Management of ChristianaCare estimates capital expenditures, not including the projects financed through the Series 2020 Bonds, will be approximately $695,000,000 for the five-year period through 2024, including expenditures for information systems technology, medical technology, equipment, and facilities. Management expects to fund these expenditures to the extent available, from cash flows from operations. Management continually monitors the allocation of capital to projects with consideration to operational and strategic priorities.

GOVERNANCE AND MANAGEMENT

THE HEALTH SYSTEM AND HEALTH SERVICES ARE THE SOLE MEMBERS OF THE OBLIGATED GROUP AND ARE THE ONLY ENTITIES LIABLE FOR PAYMENT OF THE PRINCIPAL, REDEMPTION PRICE OR PURCHASE PRICE OF, OR INTEREST ON, THE BONDS.

The Health System and Health Services are governed by mirror boards, currently comprised of 19 Directors. The Board also exercises its oversight responsibilities through seven primary committees and two subcommittees described below.

The names of the members of the Board of Directors, the officer position, if any, and their occupations and term limits are set forth below:

Name Affiliation Board Term Expires Phyllis Adams (ex officio – President Retired Technical Writer, DuPont N/A of the Junior Board) Environmental Engineering Joseph Bennett, M.D. (ex officio – Past Physician, ChristianaCare General N/A Medical-Dental Staff President) Surgery & Oncology Betty J. Caffo, Ph. D., Vice Chair Retired, Provost & VP for Academic 2020 Affairs, Wilmington University Doneene K. Damon, Esq., Chair President, Richards, Layton & Finger 2021 Tara D. Elliott, Esq. Attorney, Latham & Watkins, LLP 2022 George Foutrakis Associate, W.L. Gore & Associates, Inc. 2026 A-11 3414186.8 043801 OS Megan S. Greenberg Retired Attorney & Manager of Associate 2028 Development, Richards, Layton & Finger Frederic Todd Harad, M.D. (ex officio Physician, ChristianaCare Vascular N/A – Current Medical-Dental Staff Specialists President) Eric T. Johnson, M.D. Private Physician, First State Orthopedics 2024 Paul J. Kaniefski Digital Business Transformation, W.L. 2024 Gore & Associates, Inc. Lolita A. Lopez President & CEO, Westside Family 2025 Healthcare Andrew M. Lubin President, Delaware Financial Group 2025 Nicholas M. Marsini, Jr. Retired, Regional President, PNC 2025 Delaware Kathleen Furey McDonough, Esq. Chair, Potter Anderson & Carroon, LLP 2024 Janice E. Nevin, M.D., MPH (ex President & CEO, ChristianaCare N/A officio – President & CEO) Frank “Skip” Pennella Senior Business Consultant, Computer 2020 Aid, Inc. Penelope T. Saridakis (ex officio – Retired Vice President, MasterCard N/A Chair of the Trustees) International David B. Stratton, Esq. (ex officio – Partner, Pepper Hamilton, LLP N/A Chair of the Board of Directors of the Christiana Care Home Health and Community Services, Inc.) Mark A. Turner Executive Chairman, WSFS Bank 2027

Committees

The Board has several committees, including, but not limited to, an Executive Committee, a Finance Committee, an Investment Sub-Committee and an Audit and Compliance Committee. The members of all such committees are appointed by the Board.

The Executive Committee, which is chaired by the Chairperson of the Board, is composed exclusively of Board Members and has the full authority of the Board to act when the Board is not in session, subject to limitations established by law, resolution or the Bylaws.

The Finance Committee, which is chaired by a Board Member and must include at least one physician, is responsible for making recommendations to the Board with respect to the financial affairs of ChristianaCare including, but not limited to, recommending annual capital and operating budgets for all ChristianaCare, establishing cash management, investment, and spending limits policies and providing financial statements.

The primary function of the Audit and Compliance Committee is to assist the Board in fulfilling its oversight responsibilities with respect to the systems of internal control, the general auditing, accounting and financial reporting processes, compliance with legal and regulatory requirements, and the performance of the Corporate Audit Department and independent auditors. The Audit and Compliance Committee is required to meet semiannually, but typically meets quarterly, or more A-12 3414186.8 043801 OS frequently as may be necessary, or at the request of the independent auditors of ChristianaCare or the Chair of the Committee.

Executive Leadership

The following is a brief biographical sketch of members of the executive leadership team.

Janice E. Nevin, M.D., MPH, President and Chief Executive Officer

Janice E. Nevin, M.D., MPH, age 59, joined ChristianaCare in 2002 and has been serving as president and chief executive officer of ChristianaCare since 2015.

Dr. Nevin served as chief medical officer and chief patient safety officer. Prior to that she served as chief academic officer; senior vice president, executive director, Wilmington campus; associate chief medical officer; vice president of medical affairs and chair of the department of family and community medicine.

Dr. Nevin earned her medical degree from Sidney Kimmel Medical College at Thomas Jefferson University. She completed her Master of Public Health degree at the University of Pittsburgh. She serves on multiple boards and committees, including the Strategic Planning Committee of America’s Essential Hospitals, the United States of Care Founder’s Council, the Federal Reserve Bank of Philadelphia Economic and Community Advisory Council and the boards of directors of the Delaware State Chamber of Commerce, and the Delaware Center for Health Innovation.

Richard G. Cuming, Ed.D., MSN, RN, NEA-BC, FAAN, Chief Nurse Executive and Interim President, VNA

Richard G. Cuming, age 56, is the chief nurse executive at ChristianaCare and interim president at ChristianaCare’s Visiting Nurse Association. In these roles he leads both the nursing and home health enterprise.

Prior to joining ChristianaCare in 2016, Mr. Cuming previously served as chief nurse executive and vice president for health care services at the Philadelphia-based Einstein Healthcare Network. Prior to joining Einstein Healthcare Network, he served as senior vice president and chief nursing executive at the Jackson Health System in Miami.

Mr. Cuming earned his diploma of collegial studies in nursing at John Abbott College in Montreal, his bachelor’s degree in nursing from the University of Ottawa, his Master of Science in nursing at the University of Miami and his Doctorate in adult education and human resource development from Florida International University. He is board-certified as an Advanced Nurse Executive by the American Nurses Credentialing Center and was inducted into the American Academy of Nursing in 2016. He is an alumnus of the Robert Wood Johnson Foundation Executive Nurse Fellowship Program.

Drew Fennell, Chief Communications and Experience Officer

Drew Fennell, age 59, is chief communications and experience officer. In this role, Ms. Fennell is responsible for short and long-term communication and development strategies, as well as

A-13 3414186.8 043801 OS ensuring patients are equipped with the necessary tools and knowledge to have an accurate understanding of their care.

Prior to joining ChristianaCare in 2017, Ms. Fennell served as chief of staff to former Delaware Governor Jack Markell. As a Delaware attorney, she has more than 15 years of senior management experience within government and non-profit agencies, guiding policy positions, communications strategies and fundraising initiatives.

She received her law degree from Rutgers School of Law in Camden, New Jersey.

Randall P. Gaboriault, MS, Senior Vice President, Chief Digital and Information Officer

Randall Gaboriault, MS, age 50, is the senior vice president and chief digital information officer of ChristianaCare. In this role, he provides strategic leadership and direction for information technology, innovation, transformation, cyber security, data & analytics and organizational excellence.

His prior experience includes serving as chief information officer and senior vice president, innovation and strategic development at ChristianaCare. Before joining ChristianaCare in 2010, he served as senior vice president, chief information and strategic development officer for global medical device manufacturer, Teleflex, and advisor and senior fellow for NYSE-listed venture capital firm, Safeguard Scientifics.

Mr. Gaboriault earned a Master of Science degree from Dartmouth College. He serves as board chair for the Delaware Health Information Network and is a board director and treasurer for the non-profit, Tech Impact.

Neil Jasani, M.D., MBA, FACEP, Chief People Officer

Neil Jasani, M.D., MBA, FACEP, age 59, joined ChristianaCare in 2013 and is the chief people officer, providing oversight for both iLEAD (Institute for Learning, Leadership and Development) and human resources and medical affairs.

Dr. Jasani has an extensive background in graduate medical education, having served both as the associate and then the program director for emergency medicine. He is an associate professor of emergency medicine at Sidney Kimmel Medical College at Thomas Jefferson University. He serves as a national examiner for the renowned Malcolm Baldrige National Quality Award.

Dr. Jasani graduated from Georgetown University School of Medicine. He received a physician executive MBA from the Haslam College of Business at the University of Tennessee, Knoxville.

Sharon Kurfuerst, Ed.D., OTR/L, FACHE, FAOTA, FABC, Chief Operating Officer

Sharon Kurfuerst, Ed.D., OTR/L, FACHE, FAOTA, FABC, age 52, is chief operating officer for ChristianaCare. In this role, she is responsible for all facilities and daily operations for the health system including all hospital and administrative campuses, ambulatory essential services, compliance and urgent care. She joined ChristianaCare in 2007.

A-14 3414186.8 043801 OS Ms. Kurfuerst earned her doctoral degree in educational leadership and professional development and a master’s degree in adult education from Widener University. She serves on multiple community boards and advisory committees including chair of the Delaware Military Academy, director of the HOPE Commission and director of Brandywine Counseling and Community Services.

Rob McMurray, Chief Financial Officer

Rob McMurray, age 53, is chief financial officer and is responsible for the direction and oversight of all financial operations at ChristianaCare. He also has oversight of supply chain operations. He joined ChristianaCare in 2008 as vice president and controller.

Prior to joining ChristianaCare, Mr. McMurray was a senior manager in the assurance practice in EY’s Philadelphia office, specializing in health care.

Mr. McMurray received a master’s degree in business administration from Drexel University. He is the board chair of the Delaware Center for Maternal Fetal Medicine, Inc., a ChristianaCare subsidiary, and is on the boards of eBrightHealth ACO, The Committee of 100 and is a member of the Audit Visiting Committee of the University of Delaware. He is also a Certified Public Accountant.

Jennifer L. Schwartz, Chief Strategy Officer and General Counsel

Jennifer L. Schwartz, age 47, is the chief strategy officer and general counsel of ChristianaCare. In this role, she is responsible for the strategy and planning and business development functions of the organization, including mergers and acquisitions. Ms. Schwartz is also responsible for the legal affairs across the organization and provides counsel to the senior leadership team and the board of directors.

Prior to joining ChristianaCare in 2018, Ms. Schwartz was the general counsel of Lourdes Health System and St. Francis Medical Center, both part of Trinity Health, and was also president of the LHS Health Network, an organization overseeing both Medicare and commercial value-based programs on behalf of its participating providers.

She earned her law degree from Widener University School of Law and is a licensed attorney in New Jersey and Pennsylvania with registration as in-house counsel in Delaware. She is the vice- chairperson of the board of directors of the MS Association of America.

Kenneth L. Silverstein, M.D., MBA, Executive Vice President and Chief Clinical Officer

Kenneth L. Silverstein, M.D., MBA, age 60, joined ChristianaCare in 2015, and is currently executive vice president and chief clinical officer of ChristianaCare. In this role, he oversees the clinical enterprises of ChristianaCare, including ChristianaCare’s Medical-Dental Staff and the Medical Group. He has been instrumental in developing ChristianaCare’s service line structure, clinical pathways and health care services.

Dr. Silverstein previously served as chair of ChristianaCare’s department of anesthesiology, medical director of perioperative services and as chief medical officer.

A-15 3414186.8 043801 OS Dr. Silverstein earned his medical degree from New York University School of Medicine and was a resident and fellow in anesthesiology at Brigham and Women’s Hospital in Boston. He completed his clinical fellowship in anesthesiology at Harvard Medical School and his MBA from the University of Delaware. He is a clinical instructor at Sidney Kimmel Medical College of Thomas Jefferson University. Dr. Silverstein is a member of the Chief Medical Officer Forum of The Health Management Academy, the Advisory Board and The Leadership Institute’s Founding Group and a member of the Board, Jobs for Delaware Grads.

Bettina Tweardy Riveros, Chief Health Equity Officer and Senior Vice President of Government Affairs

As chief health equity officer and senior vice president of government affairs and community engagement, Bettina Tweardy Riveros, age 56, is responsible for developing and leading strategies to eliminate health disparities, leading government affairs to influence and impact health policy development and the legislative and regulatory environment, supporting population health and value-based strategies and engaging the diverse communities around health and the factors that impact the health of the community.

Prior to joining ChristianaCare, Ms. Riveros served as senior adviser for health policy in the office of Delaware Governor Jack Markell and as chair of the Delaware Health Care Commission. She also served as deputy counsel to Senator Thomas R. Carper during his terms as governor of Delaware. Ms. Riveros has extensive legal and business experience in the private sector, with nearly 20 years in private practice and in in-house legal and business leadership roles.

She received her law degree from Villanova University in 1988 and her undergraduate degree from Juniata College in 1985.

FACILITIES AND OPERATIONS

ChristianaCare includes two hospitals (1,227 beds), operating under a single provider number, that together rank among the top in volume in the U.S.

Christiana Hospital

Christiana Hospital is a 906-bed, 1.3 million-square-foot hospital in Newark, Delaware that is the only Level I Trauma Center on the East Coast corridor between Baltimore and Philadelphia. Christiana Hospital is the only high-risk delivering hospital in Delaware with a Level III neonatal intensive care unit. Christiana Hospital is a comprehensive stroke center, treating the most complex stroke cases as part of Delaware’s statewide stroke system of care. It also includes the Kidney Transplant Program, Spine Surgery and the Center for Hearth & Vascular Health, which offers cardiology and cardiovascular surgery, cardiac rehabilitation and preventive medicine. Each year, the medical team at the Center for Heart & Vascular Health performs more than 1,000 open-heart surgical procedures, plus thousands of diagnostic and interventional procedures in Christiana Hospital’s cardiac catheterization and electrophysiology labs. The Center for Heart and Vascular Health is involved in nearly 50 clinical trials each year.

A-16 3414186.8 043801 OS Wilmington Hospital

Wilmington Hospital is a 321-bed, 622,100-square-foot facility in the heart of Wilmington, Delaware. It is a Level III Trauma Center and includes the Center for Advanced Joint Replacement, the Swank Memory Care Center and the 40-bed, CARF-accredited Center for Rehabilitation. Wilmington Hospital is also the site of ChristianaCare’s Wilmington Hospital Health Center, which provides a wide array of primary care and outpatient services, especially to Wilmington’s underserved populations. Other services include the Center for Special Health Care Needs, the Center for Hope and Healing and First State School, a partnership with Red Clay School District that provides K-12 education for children with chronic illness. Wilmington Hospital is also the site of the ChristianaCare Health & Technology Innovation Center, which develops health care technology solutions to address today’s challenges and tomorrows opportunities.

Middletown Freestanding Emergency Department

ChristianaCare’s freestanding Emergency Department in Middletown, Delaware, includes eighteen treatment rooms, dedicated imaging services and an on-site laboratory. In fiscal 2019, the Middletown Emergency Department provided more than 28,000 patient visits.

Helen F. Graham Cancer Center & Research Institute

The Helen F. Graham Cancer Center & Research Institute, a National Cancer Institute Community Oncology Research Program, is a 200,000 square foot facility located on the campus of Christina Hospital. With more than 239,000 patient visits during the fiscal 2019 year, the Graham Cancer Center is recognized as a national model for multidisciplinary cancer care and a top enroller in U.S. clinical research trials.

Gene Editing Institute

The Gene Editing Institute at ChristianaCare is the only research institute of its kind in the nation based within a community health care system. Based in ChristianaCare’s Helen F. Graham Cancer Center & Research Institute, the Gene Editing Institute is a worldwide leader in gene editing biomedical research in cancer and other inherited diseases, and the only one working in the same space with oncologists, genetic counselors and patients, bringing translational research from basic science to patient treatment to an entirely new level.

Ambulatory Care

ChristianaCare operates more than 100 ambulatory practices throughout Delaware, Eastern Maryland, Southeastern Pennsylvania and Southwest New Jersey. In addition to the hospital campuses in Wilmington and Newark, ChristianaCare has major campuses for satellite services in Greenville, Smyrna and Middletown, Delaware, and in Chadds Ford, Pennsylvania.

Primary care is a key area of ongoing expansion for ChristianaCare, which currently owns 19 primary care practices and five medical aid units that provided a combined 246,834 patient visits during the 2019 fiscal year. ChristianaCare’s primary care practices are expanding virtual access to care in the community through telehealth and virtual visits. Additionally, ChristianaCare’s Home Visit Program provides primary care and care management for homebound adults.

A-17 3414186.8 043801 OS Other ambulatory and community services include two surgery centers, the Sleep Disorders Center, School-Based Health Centers, William J. Holloway Community Program (for HIV and Hepatitis C), Wound Care & Hyperbaric Medicine Center, Eye Care, Imaging, Rehabilitation, Behavioral Health and Weight Management.

Home Health Care

The Visiting Nurse Association of ChristianaCare is the largest accredited home-health agency in Delaware, providing skilled nursing care, rehabilitation, mother-baby and pediatric care and a range of other services to patients at home. The VNA annually provides more than 288,000 home health visits.

PHYSICIANS AND EMPLOYEES

Medical-Dental Staff

Health Services recognizes the need to engage physicians in all aspects of health care delivery. To work more closely with the physicians, Health Services engages physicians in a variety of arrangements, including direct employment, arrangements through wholly-owned subsidiaries, joint ventures and exclusive contracts, to provide key health care services. As of June 30, 2019 Health Services directly employs approximately 598 physicians. All such physicians are Board certified and members of the active Medical-Dental Staff. The Medical Group is comprised of more than 169 primary care physicians and advance practice clinicians (e.g. NP, PA, etc.) that are geographically dispersed in approximately 114 physician practices located throughout Health Services’ primary and secondary service areas. The Medical Group specialty practices are made up of the following specialties: Behavioral Medicine, Hospitalists (Pediatric and Adult hospitalist physicians), Dermatology, Neurology, Endocrinology, Physiatry, Pulmonary, Rheumatology, Neonatology, Nuclear Medicine, Cancer Services, Cardiology, Gyn Oncology, Obstetrics & Gynecology, Radiology, Surgery, Urogynecology, Palliative Care, Vascular Health, Sports Medicine, Pain, and Eye Care physicians to meet community access and demand. Additionally, Nurse Practitioners and Physician Assistants support the Medical Group inpatient and outpatient practices and services. Health Services’ wholly-owned subsidiary employs 6 physicians specializing in maternal and fetal medicine. The Medical Group continues to grow organically and through acquisitions, in an effort to provide needed care to our community.

As a regional health care facility offering a comprehensive range of services with a developed teaching focus, Health Services has been able to attract a Medical-Dental Staff with expertise in a spectrum of specialty and sub-specialty services. As of June 30, 2019, Health Services had 1,629 members of its active Medical-Dental Staff. In addition, as of that date, there were 729 Specified Health Practitioners (consisting of Nurse Practitioners, Physician Assistants, Certified Nurse Midwives, Certified Registered Nurse Anesthetists, and Clinical Nurse Specialists), approved through the credentialing process of the Medical-Dental Staff, to provide patient care at Health Services.

Employee Relations

As the largest private employer in the state of Delaware, ChristianaCare employs more than 12,000 caregivers. Caregivers provide care in a variety of settings including patients’ homes, physician

A-18 3414186.8 043801 OS offices, medical aid units, community organizations, and hospitals as well as span a variety of occupations: service, clerical, therapists, technicians, nurses, and physicians.

ChristianaCare’s employee population is comprised of 36% people of color and 80% female. ChristianaCare is recognized as a leader in LGBTQ health care equality in the 2019 LGBTQ Healthcare Equality Index from the Human Rights Campaign Foundation.

ChristianaCare has consistently demonstrated the ability to attract and retain top talent as evidenced by full-time November 2019 turnover of 8.6%. National healthcare benchmarks report greater than double that turnover experience. Recent retirees’ median years of service trend at 26 years of experience.

In 2010, ChristianaCare achieved Magnet® recognition for excellence in nursing from the American Nurses Credentialing Center (ANCC). Only 8% of the nation’s hospitals have earned this honor, the highest level of national recognition awarded to health care organizations in nursing care. ChristianaCare was the first hospital in Delaware to achieve Magnet status.

ChristianaCare has consistently earned best-workplace honors. In June 2019, Forbes magazine ranked ChristianaCare as the number one Employer in Delaware in its inaugural list of “America’s Best Employers by State” and IDG’s Computerworld ranked ChristianaCare among the nation’s “Best Places to Work in IT.”

In August 2019, ChristianaCare was recognized as one of the Top Workplaces in Delaware for the 16th consecutive year in a Wilmington News Journal survey. Earlier in 2019, ChristianaCare was ranked for the first time as a best employer in the Philadelphia region in the Philadelphia Inquirer’s 2019 Top Workplace survey.

No ChristianaCare employees are represented by a labor union.

RESEARCH AND CLINICAL TRAINING

Educational Programs and Medical School Affiliations

Within Academic Affairs under the Institute for Leadership, Learning and Development, ChristianaCare has 31 residency and fellowship programs. At present, ChristianaCare has 18 programs accredited by the Accreditation Council for Graduate Medical Education (ACGME). These include Emergency Medicine, Family Medicine, Sports Medicine, Obstetrics and Gynecology, Psychiatry, Interventional Radiology, Diagnostic Radiology, Vascular and Interventional Radiology, Surgery, Surgical Critical Care and Transitional Year. In partnership with Sidney Kimmel Medical College (SKMC) of Thomas Jefferson University, additional programs include Clinical Informatics, Internal Medicine, Cardiovascular Disease, Interventional Cardiology, Advanced Heart Failure, Hospice and Palliative Medicine and Internal Medicine- Pediatrics. ChristianaCare also has non-accredited residencies in General Practice Dentistry, Medical Physics, Oral Maxillofacial Surgery, Pharmacy and Podiatry. Each of these programs provides education, clinical experience and preparation for the board examination in the separate specialty. Annually, there are approximately 280 residents and fellows in training.

ChristianaCare also provides fellowship programs in Advanced Heart Failure & Transplant, Cardiovascular Disease, Hospice & Palliative Care, Interventional Cardiology, Minimally A-19 3414186.8 043801 OS Invasive Gynecologic Surgery, Otolaryngology, Quality & Safety, Sports Medicine, Surgical Breast Oncology, Surgical Critical Care and Vascular Interventional Radiology.

ChristianaCare has nursing, research and allied health training services in partnership with the Delaware Health Sciences Alliance and local universities such as the University of Delaware, Delaware Technical & Community College, Wilmington College and numerous other regional colleges and universities. At any time, up to 75 medical students, 50 physician assistant students, 100 allied health students and 400 nursing students may be receiving education at ChristianaCare.

ChristianaCare also accepts residents from other hospitals or universities for specialized training for shorter periods of time. At present, ChristianaCare has ongoing affiliation agreements with Jefferson, PCOM, Temple University, Aria Health, Delaware Psychiatric Center, A. I. DuPont Children’s Hospital (Nemours), Inspira, St. Francis Hospital, Drexel University, University of Pennsylvania and Rowan University.

In 2009, Jefferson, Nemours, the University of Delaware and ChristianaCare signed a Memorandum of Understanding creating the Delaware Health Sciences Alliance (DHSA). DHSA is committed to ensuring education for health care professionals and biomedical researchers using the combined strengths of the four founding partners. DHSA signed an affiliation agreement with PCOM and will continue to seek further affiliations with other health care providers and educational institutions in the region.

Research & Sponsored Programs

ChristianaCare is involved in a broad array of research. The extramural research portfolio includes clinical and translational research through a significant National Institutes of Health (NIH) multi- year grant; clinical trials; population-based outcomes research; and areas of health sciences inquiry of most value to the ChristianaCare community. Intramural research includes many of these same areas and extends the opportunity to residents and students to participate in research as part of their educational programs.

Many clinical trials are conducted at ChristianaCare and at other patient care facilities, drawing on the specialized services and expertise in ChristianaCare’s medical system and the diverse patient populations in Delaware. Therapeutic and preventive clinical trials are offered in cooperation with the National Institutes of Health, the National Cancer Institute, private foundations, and pharmaceutical/device sponsors. While trials are conducted in many areas, there are several areas of particular focus: cancer, cardiovascular disease, primary care and general medicine, and trauma/surgery/critical care. ChristianaCare has participated in over 3,700 clinical trials and there are currently more than 900 active protocols running.

ChristianaCare has been dedicated to cancer research for more than 43 years. Over the last 30 years, ChristianaCare has enrolled more than 3,500 patients from Delaware and surrounding areas in Phase I, II and III cancer clinical trials The program is funded by the National Cancer Institute as an NCI Community Oncology Research Program (NCORP). Many of these trials involve hematology/oncology, radiation oncology, bone marrow transplant, preventive protocols and chemotherapy, and include pharmaceutical oncology industry trials. There are significant strengths in terms of research and value in the areas of the Gene Editing Institute and cancer translational research including use of CRISPR technology.

A-20 3414186.8 043801 OS Cardiovascular research projects in progress address possible new treatments for heart attacks, congestive heart failure, blocked arteries, irregular heartbeats and high cholesterol. Studies include new techniques in cardiac catheterization and cardiac surgery, arrhythmia management, new therapies to reduce the damaging effects of heart disease, and the search for new ways to reduce pain and promote healing for heart patients. In many nationwide studies, ChristianaCare has been a recognized leader, both in enrolling significant numbers of study participants and in having research results published by cardiovascular physicians on the ChristianaCare staff in world- renowned medical journals.

The area of maternal and child health research is particularly strong at ChristianaCare. ChristianaCare faculty are active participants in international networks and frequently present new trial findings at renowned conferences. ChristianaCare’s commitment to research in trauma/surgery/critical care supports a “best practices” approach to trauma management and surgical critical care that enables ChristianaCare to offer the very latest treatment protocols and medications to patients in many areas, including prehospital care, emergency medicine, neurotrauma care, orthopedic trauma and trauma surgery.

The ChristianaCare Center Value Institute extends the reach of research through engagement with the local community and external partner organizations. These include patient advocacy groups, industry and academic institutions, as well as other health care systems nationally and internationally. The Value Institute participates in a broad range of internal, regional and national studies on clinical and public health areas for the community.

SERVICE AREA

ChristianaCare serves those who live and work throughout the state of Delaware, as well as those from neighboring states of Maryland, Pennsylvania and New Jersey.

ChristianaCare’s primary service area is New Castle County, Delaware (population approximately 556,000), which includes the urban core of Wilmington surrounded by populous suburbs. ChristianaCare’s acute care facilities and medical aid units are all physically located in New Castle County.

A-21 3414186.8 043801 OS

ChristianaCare’s secondary market (population approximately 760,000) includes Kent and Sussex counties in Delaware, southern Delaware and Chester counties in Pennsylvania to the north, Cecil County, Maryland to the west and Salem County, New Jersey to the east.

More than 4,500 of ChristianaCare’s annual inpatient discharges come from Kent and Sussex counties. ChristianaCare’s largest ambulatory care center located in Delaware County, Pennsylvania serves residents of both Delaware and Pennsylvania. ChristianaCare maintains several physician practices in Salem County, New Jersey, including primary care and cardiology. Each year about 1,500 people from New Jersey come to ChristianaCare for inpatient care. More than 3,300 residents of Maryland, including more than 2,600 residents from Cecil County, sought inpatient care at ChristianaCare last year. ChristianaCare also provides radiation oncology services at Union Hospital in Elkton, Maryland.

ChristianaCare’s Bariatric Surgery program was selected by Cerner, an international health care technology company based in Missouri with 28,000 employees, as a destination center for bariatric surgery for its health plan members.

ChristianaCare’s Visiting Nurse Association provides home health care services to patients throughout all three counties in Delaware.

ChristianaCare is engaged in exploring opportunities to expand into markets beyond its traditional footprint.

The following analysis shows Health Services’ percentage of total in-patient discharges for the fiscal years 2017 through 2019 by place of residence.

A-22 3414186.8 043801 OS Health Services Patient Discharges – Place of Residence* Fiscal Years Ended June 30

State 2017 2018 2019 Delaware Kent County 4.4% 4.6% 4.7% New Castle County 79.4 79.0 78.4 Sussex County 3.2 3.4 3.6 Subtotal 87.0 87.0 86.7 Maryland 5.6 5.7 6.0 New Jersey 2.6 2.6 2.6 Pennsylvania 4.1 4.0 4.0 Other .7 .7 .7 TOTAL 100% 100% 100% *Note: Excludes Normal Newborns

ChristianaCare is the largest provider of health care services in the State of Delaware, currently accounting for approximately 50% of all private, acute care hospital beds in Delaware. The following table reflects Health Services’ discharges for the fiscal years ended June 30, 2017 through 2019. As depicted for 2019, Health Services reported discharges at 73.2% of total discharges for New Castle County hospitals and 48.5% of total discharges for the Regional Hospitals for which data is available.

Health Services – Discharges Fiscal Years Ended June 30

2017 2018 2019 Health Services Total 53,078 52,550 53,286 St. Francis Hospital 5,018 5,987 5,817 Nemours/A.I. DuPont 9,452 9,077 8,880 Rockford Center 4,605 4,910 4,840

New Castle Total 72,153 72,524 72,823

Beebe Hospital 11,082 10,534 10,655 Bayhealth Medical Center 19,056 19,935 20,729 Nanticoke Memorial Hospital 5,397 5,691 5,550

-Regional Hospitals’ Total 107,688 108,684 109,757

Health Services as a % of: New Castle County Hospitals 73.6% 72.5% 73.2% Regional Hospitals 49.3% 48.4% 48.5%

Data for other New Jersey, Pennsylvania, and Maryland hospitals is not available.

A-23 3414186.8 043801 OS UTILIZATION AND PAYOR MIX

The following table summarizes selected utilization and patient service statistics for ChristianaCare for the fiscal years ended June 30, 2017 through 2019 and the three months ended September 30, 2018 and 2019.

Three Months Ended Fiscal Year Ended June 30 Sept 30 2017 2018 2019 2018 2019 Admissions 52,928 52,339 53,121 13,115 13,703 Available Beds 957 969 983 978 987 Licensed Beds 1,196 1,214 1,227 1,227 1,227 Births 6,374 6,115 6,035 1,590 1,644 Average Length of Stay (Days) 5.46 5.65 5.73 5.71 5.66 Average Daily Census 794 814 836 815 838 Occupancy on Available Beds 83% 84% 85% 83% 85% Patient Days 289,965 297,069 305,124 75,001 77,067 Surgical Procedures 39,155 37,634 37,390 9,067 9,249 Emergency Department Visits 196,656 195,998 195,602 49,331 49,590 Outpatient Cases 602,339 603,922 620,939 144,311 151,071 Primary Care Office Visits 199,260 183,761 200,997 42,627 54,661 Home Health Visits 299,815 288,685 288,817 69,035 71,241 Case Mix Index for Medicare 1.76 1.77 1.74 1.77 1.72

Sources of Patient Revenue

More than 90% of the net patient service revenues of ChristianaCare are derived from third-party payors. Revenue from patients’ deductibles and coinsurance is included based on the primary payor and is transferred to self-pay after consideration is received from the primary payor. The table below lists the approximate percentages of net patient service revenue by category for the three fiscal years ended June 30, 2017 through June 30, 2019

Percentage of Net Patient Service Revenue by Payor Fiscal Years Ended June 30

2017 2018 2019 Commercial Insurance 50% 49% 49% Medicare including Medicare Managed Care 32 32 32 Medicaid including Medicaid Managed Care 13 14 14 Self-Pay/Other 5 5 5 TOTAL 100% 100% 100%

A-24 3414186.8 043801 OS FINANCIAL INFORMATION

Summary Financial & Operating Information

The information set forth in the following tables titled "Consolidated Balance Sheets" and "Consolidated Statements of Operations" for fiscal years 2017, 2018, and 2019 have been derived from the consolidated financial statements of the Health System and its affiliates. Consolidated financial statements at June 30, 2019 and 2018, audited by PricewaterhouseCoopers LLP, independent accountants, appear in Appendix B. Data for the three-month period ended September 30, 2019 and 2018 has been derived from unaudited consolidated financial statements including adjustments of a normal recurring nature that management believes are necessary to present a fair picture of the financial position and operating results for this period. The following data should be read in conjunction with the consolidated audited financial statements and notes thereto presented in Appendix B.

The total operating revenues and other support of Health Services and Health System at June 30, 2019 represented 98.0% of the total consolidated operating revenues. In addition, the total assets of Health Services and Health System at June 30, 2019 represented 99.8% of the consolidated total ChristianaCare assets.

ChristianaCare adopted Accounting Standards Codification (“ASC”) Topic 842, Leases using a modified retrospective approach as of July 1, 2019, for leases which existed on that date. Prior comparative periods were not adjusted and continue to be reported in accordance with ASC Topic 840, Leases. ChristianaCare elected the package of practical expedients, which permitted the organization not to reassess under ASC Topic 842 the organization's prior conclusions about lease identification, lease classification, and initial direct costs. ChristianaCare did not elect the use-of- hindsight or the practical expedient pertaining to land easements; the latter not being applicable to the organization.

The adoption of the standard resulted in the recognition of operating lease right-of-use assets of $25,010,676 and corresponding operating lease liabilities at July 1, 2019.

A-25 3414186.8 043801 OS Consolidated Balance Sheets

September 30, 2017 2018 2019 2019(1) Assets Current Assets Cash and cash equivalents $ 85,462,307 $ 122,249,094 $ 114,487,107 $ 74,111,498 Short-term investments 182,606,435 184,648,494 188,510,758 189,530,776 Patient accounts receivable, net 242,939,205 287,857,900 309,251,789 323,036,494 Other current assets 63,198,003 61,323,120 65,445,909 81,008,561 Total current assets 574,205,950 656,078,608 677,695,563 667,687,329

Assets limited as to use 67,490,424 31,431,438 30,023,062 29,359,987 Long-term investments 1,443,898,181 1,625,798,728 1,726,043,742 1,712,789,610 Property and equipment, net 845,610,565 902,459,583 1,103,104,695 1,110,416,740 Other assets 29,333,086 27,311,745 33,316,527 58,121,767 Total assets $ 2,960,538,206 $ 3,243,080,102 $ 3,570,183,589 $ 3,578,375,433

Liabilities and Net Assets Current Liabilities Current portion of long-term debt $ 176,450,000 $ 170,670,000 $ 164,735,000 $ 164,735,000 Accounts payable and accrued expenses 242,976,590 266,805,248 309,198,816 264,591,974 Total current liabilities 419,426,590 437,475,248 473,933,816 429,326,974 Long-term debt, net of current portion 80,004,888 77,887,244 75,717,898 75,729,205 Pension and postretirement benefits 73,654,007 77,463,786 87,038,576 95,722,666 Other liabilities 44,945,132 59,173,780 182,320,612 212,088,661 Total liabilities 618,030,617 652,000,058 819,010,902 812,867,506

Net assets Without donor restrictions 2,286,232,353 2,532,204,904 2,689,784,650 2,709,351,863 With donor restrictions Purpose and time restricted 28,898,694 29,680,442 30,745,682 24,280,831 Perpetual in nature 27,376,542 29,194,698 30,642,355 31,875,233 Total net assets with donor restrictions 56,275,236 58,875,140 61,388,037 56,156,064 Total net assets 2,342,507,589 2,591,080,044 2,751,172,687 2,765,507,927 Total liabilities and net assets $ 2,960,538,206 $ 3,243,080,102 $ 3,570,183,589 $ 3,578,375,433 (1) Reflects adoption of Topic 842, Leases.

A-26 3414186.8 043801 OS Consolidated Statement of Operations (1)

Fiscal Year Ended June 30, Three Months Ended September 30, September 30, 2017 2018 2019 2018 2019 Operating revenues and other support Net patient service revenue $ 1,822,761,778 $ 1,925,829,563 $2,021,886,977 $489,025,636 $510,211,740 Other revenue 51,232,081 58,214,611 57,510,824 16,875,142 13,401,920 Net assets released from donor restrictions used for operations 2,324,991 3,246,272 3,772,706 828,900 1,493,434 Total operating revenues and other support 1,876,318,850 1,987,290,446 2,083,170,507 506,729,678 525,107,094 Operating expenses Salaries and employee benefits 1,117,770,372 1,169,710,886 1,248,772,699 308,087,964 322,854,691 Supplies and other expenses 530,713,243 607,103,515 616,412,346 146,687,414 155,289,936 Interest expense 4,378,450 3,634,393 3,621,366 766,014 1,252,498 Depreciation expense 96,129,863 98,455,342 102,110,732 25,006,529 26,381,490 Total operating expenses 1,748,991,928 1,878,904,136 1,970,917,143 480,547,921 505,778,615 Operating income 127,326,922 108,386,310 112,253,364 26,181,757 19,328,479

Nonoperating revenues, gains, and losses Investment return, net 151,324,755 143,804,089 100,154,884 48,304,000 (2,205,978) Other nonoperating (losses), revenues, and gains 2,656,534 894,156 (3,413,397) 423,132 (3,176,053) Total nonoperating revenues, gains, and losses 153,981,289 144,698,245 96,741,487 48,727,132 (5,382,031) Excess of revenues over expenses $ 281,308,211 $ 253,084,555 $ 208,994,851 $74,908,889 $13,946,448

(1) Consolidated Statement of Operations has been condensed and does not reflect the changes in net assets without donor restriction.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Three Months Ended September 30, 2019 compared to September 30, 2018

For the three months ended September 30, 2019, ChristianaCare reported operating income of $19,328,479 compared to operating income of $26,181,757 for the three months ended September 30, 2018. After giving effect to nonoperating revenue, gains, and losses, ChristianaCare reported an excess of revenues over expenses of $13,946,448 for the three months ended September 30, 2019 and $74,908,889 for September 30, 2018.

Net patient service revenue increased by $21,186,104 for the three months ended September 30, 2019 compared to the three months ended September 30, 2018 and can be attributed to the July 1st rate increase coupled with increased patient utilization and physician revenue growth. For the first three months ended September 30, 2019, patient days increased by 2.8% and Outpatient cases increased by 4.7% over the comparative period in 2018.

Operating expenses increased by $25,230,694 for the first three months ended September 30, 2019 compared to the same period in 2018, or 5.3%. The increases in operating expenses are primarily attributable to increases in salaries, wages and benefits, supplies, and services.

Non-operating revenue, gains, and losses consist primarily of investment return, net and decreased approximately $50,509,978 from the first three months ended September 30, 2018 to the first three months ended 2019 due to a decrease in net unrealized gains of $54,844,954. Investment return,

A-27 3414186.8 043801 OS net represents net realized and unrealized gains and losses on investments and interest and dividend income.

Year Ended June 30, 2019 compared to June 30, 2018 and June 30, 2017

Operating Results

For the fiscal year ended June 30, 2019 (“Fiscal 2019”), ChristianaCare reported operating income of $112,253,364 compared to operating income of $108,386,310 for the fiscal year ended June 30, 2018 (“Fiscal 2018”) and $127,326,922 for the fiscal year ended June 30, 2017 (“Fiscal 2017”). After giving effect to nonoperating revenue, gains, and losses, ChristianaCare reported an excess of revenues over expenses of $208,994,851, $253,084,555, and $281,308,211, for Fiscal 2019, Fiscal 2018, and Fiscal 2017, respectively.

Net patient service revenue increased by $96,057,414 in Fiscal 2019 compared to Fiscal 2018 or 5.0%, with Fiscal 2018 increasing $103,067,785 compared to Fiscal 2017 or 5.7%. The growth in Net Patient Service Revenue for each fiscal year is primarily due to increases in patient utilization and rates. Between Fiscal 2017 and Fiscal 2019, patient days increased by 5.2% and Outpatient cases increased by 3.1%. Demand for outpatient services remains strong, particularly in the emergency, cancer center, pharmacy, and operating room departments. In addition, inpatient average length of stay was 5.73 days in Fiscal 2019 compared to 5.65 days in Fiscal 2018 and 5.46 days in Fiscal 2017.

Operating expenses increased by $92,013,007 in Fiscal 2019 compared to Fiscal 2018, or 4.9%, and by $129,912,208 in Fiscal 2018 compared to Fiscal 2017, or 7.4%. The increases in operating expenses are primarily attributable to increases in salaries, wages and benefits, supplies, and professional liability costs.

Salaries, wages, and benefits increased by $79,061,813 in Fiscal 2019 compared to Fiscal 2018, or 6.8% and by $51,940,514 in Fiscal 2018 compared to Fiscal 2017, or 4.6%. These increases are the result of volume growth, annual merit increases, market rate adjustments to salaries and wages, and higher benefit costs related to employee health insurance utilization experience.

Supplies and other expenses increased by $9,308,831 in Fiscal 2019 compared to Fiscal 2018, or 1.5%, and increased by $76,390,272 in Fiscal 2018 compared to Fiscal 2017, or 14.4%. In Fiscal 2018 the increases were in volume driven supply costs coupled with an increase in professional liability cost.

Non-operating Activity

Non-operating revenue, gains, and losses consist primarily of investment return, net decreased approximately $43,649,205 from Fiscal 2018 to Fiscal 2019 due to a decrease in net unrealized gains of $68,300,604. Investment return, net decreased approximately $7,520,666 from Fiscal 2017 to Fiscal 2018. Investment return, net represents net realized and unrealized gains and losses on investments and interest and dividend income.

A-28 3414186.8 043801 OS Balance Sheet

Cash and investments increased by $94,936,915 from Fiscal 2018 to Fiscal 2019 and increased by $184,670,407 from Fiscal 2017 to Fiscal 2018. This fluctuation is the result of cash flows from operations and investment return activity as noted previously.

Net property and equipment increased by approximately $200,645,112 or 22.2% in Fiscal 2019 from Fiscal 2018 and increased $56,849,018, or 6.7% in Fiscal 2018 from Fiscal 2017. Significant additions include Christiana Hospital campus improvements, the construction of the women and children’s building, information technology initiatives, and other strategic routine capital expenditures. Also included in property and equipment for 2019 is $125,284,638 for the long term capital lease of office facilities and a corresponding noncurrent lease liability of $120,920,674. Cash expenditures for property and equipment were $170,471,836, $143,624,215, and $120,337,944 in Fiscal Years 2019, 2018, and 2017, respectively.

Other Financial Information

Historical and Pro Forma Debt Service Coverage

The table appearing below sets forth a breakdown of historical and pro forma debt service coverage of ChristianaCare for the fiscal years ended June 30, 2017, 2018, and 2019.

Fiscal Years Ended June 30, (dollars in thousands)

2017 2018 2019 Excess of revenues over expenses $281,308 $253,085 $208,995 Change in unrealized losses (gains) (87,237) (89,137) (20,836) Depreciation expense 96,130 98,455 102,111 Interest expense 4,378 3,634 3,621 Total funds available for debt service $294,579 $266,037 $293,891 Historical annual debt service(1) $12,877 $13,623 $14,302 Historical debt service coverage ratio 22.9x 19.5x 20.5x Historical pro forma maximum annual debt service(2)* $16,524 $16,524 $16,524 Historical pro forma maximum annual debt service coverage* 17.8x 16.1x 17.8x

(1) Includes actual debt service principal payments and cash paid for interest on the long-term indebtedness of Health Services during such fiscal years. (2) Represents the maximum annual debt service on the Series 2020 Bonds. * Preliminary, subject to change.

A-29 3414186.8 043801 OS Capitalization

The following table sets forth the debt to capitalization ratio for ChristianaCare for the fiscal years ended June 30, 2017, 2018, and 2019.

Fiscal Years Ended June 30, (dollars in thousands)

2017 2018 2019 Existing long-term debt $249,155 $241,005 $232,645 Long-term debt plus unrestricted net assets(1) $2,535,387 $2,773,210 $2,922,430 Historical debt to capitalization 9.8% 8.7% 8.0%

(1) Not subject to donor restrictions.

Liquidity and Days of Unrestricted Cash and Investments on Hand

The following table sets forth the days of unrestricted cash and investments on hand for ChristianaCare for the fiscal years ended June 30, 2017, 2018, and 2019.

Fiscal Years Ended June 30,

2017 2018 2019(1) Cash and cash equivalents $ 85,462,307 $ 122,249,094 $ 114,487,107 Short term investments 182,606,435 184,648,494 188,510,758 Board designated investments(2) 67,490,424 31,431,438 30,023,062 Unrestricted long-term investments(3) 1,393,127,902 1,573,025,924 1,672,857,093

Total unrestricted cash and investments(3) $1,728,687,068 $1,911,354,950 $2,005,878,020

Days of unrestricted cash and investments on hand 382 392 392

(1) Investments of Health System are subject to various market risks and have and may decline in value in the future. See Bondholders Risks. (2) Certain unrestricted investments internally designated by the Board were undesignated by the Board in Fiscal 2017 and subsequently reclassified as Long Term Investments. (3) Does not include Donor Restricted Assets.

Investment Policy/Strategy

ChristianaCare invests available funds under a Board-approved investment policy that seeks to preserve capital, obtain a reasonable rate of return, and avoid high risk investments. The investment process includes monitoring ChristianaCare’s operational and capital funding needs and maintaining investment horizons commensurate with these requirements. In addition to current operating cash, cash equivalents, and short-term investments, ChristianaCare has assets managed through a long-term investment fund. The portfolio consists of cash equivalents, domestic, international and global equities, including both large and small cap, fixed income securities, and hedge funds. The assets in the portfolio, along with donor restricted assets, are recorded on

A-30 3414186.8 043801 OS ChristianaCare’s financial statements as follows: Purpose Restricted, Perpetual in Nature, Long- Term Investments without donor restrictions, and Assets Limited as to Use.

The goal of the Purpose Restricted and Perpetual in Nature Assets is to support the various directives of the donors. The goal of the Long-Term Investments without donor restrictions is to support the overall operations of ChristianaCare. The goal of the Assets Limited as to Use, internally designated by the Board of Directors, is to support the Infant Mortality program, the Cancer Center and the Value Institute.

Diversification of assets is employed to seek to ensure that adverse or unexpected results from one security or security class will not have a detrimental effect on the entire portfolio. Diversification is interpreted to include diversification by type, by characteristic, and by number of investments, as well as by investment style of management organizations.

Consistent with prudent standards for preservation of capital and maintenance of liquidity, the goal of ChristianaCare’s investment policy is to obtain a reasonable rate of return. All of the investment managers are monitored against their respective unmanaged market indexes and compared against the results achieved by other managers who manage similar assets using similar styles.

Investment guidelines are reviewed and approved by the Board Investment Subcommittee at least annually. In order to comply with the guidelines, ChristianaCare employs an investment consultant to monitor the performance of the various investment managers and ensure they are complying with the overall guidelines of the portfolio. The investment consultant prepares quarterly reports for the Long-Term Investment Fund and makes quarterly presentations to the Board Investment Subcommittee.

The target allocations for the portfolio are as follows:

Long-Term Investment Fund

Asset Allocation Ranges Asset Allocation Targets Equities • Core 25% to 35% 30% • Small cap 5% to 10% 8% • International and Emerging Markets 0% to 10% 7% • Global 10% to 20% 15% Fixed Income 15% to 55% 35% Hedge Funds 0% to 10% 5% Total 100%

Defined Benefit Pension Plan

ChristianaCare sponsors two noncontributory defined benefit pension plans (DB Plans); one that covers substantially all Health Services employees hired on or before August 13, 2006, and one that covers substantially all ChristianaCare Visiting Nurse Association (“VNA”) employees hired on or before August 26, 2007. Employees hired after those dates participate in a defined contribution plan.

A-31 3414186.8 043801 OS It is the strategy of ChristianaCare to fund the DB Plans at a level that is consistent with the projected benefit obligations (PBO) of the DB Plans. Contributions are made based on an estimated PBO in advance of the annual measurement date. Funded status of the DB Plans at June 30, 2017, 2018, and 2019 is as follows:

Fiscal Years Ended June 30, (dollars in thousands)

2017 2018 2019 Fair value of Plan assets $922,595 $877,911 $1,021,108 Projected benefit obligation $920,768 $885,006 $1,029,156 Funded status 100.2% 99.2% 99.2%

The investment policy of the Plan assets incorporates a liability driven investment strategy with a focus on the funded status of the Plans and seeks to match the duration of Plan assets with that of Plan liabilities. As such, the target investment portfolio allocation of the Plans is 100% long duration fixed income securities.

Investment guidelines supporting the liability driven investment strategy for the assets of the DB Plans are reviewed and approved by the Board Investment Subcommittee at least annually. In order to comply with the guidelines, ChristianaCare employs an investment consultant to monitor the performance of the various investment managers and ensure they are complying with the overall guidelines of the liability driven investment strategy. The investment consultant prepares quarterly reports for the assets of the DB Plans and makes quarterly presentations to the Board Investment Subcommittee.

Fundraising

ChristianaCare’s Office of Development seeks private support from individuals, foundations and corporations to strengthen ChristianaCare’s commitment to patient care, critical research and clinical training, and to provide resources to improve access to care for the communities that the organization serves.

Prior to 2016, philanthropic efforts largely centered around large capital campaigns to expand capacity and services at Wilmington and Christiana hospitals. Since 2016, development efforts have focused on a series of “micro-campaigns” including the Endowed Fund for Translational Cancer Research ($10 million), The Center for Women & Children’s Health ($1.8 million), Oral and Maxillofacial Surgery/Hospital Dentistry clinic renovation and expansion ($1 million), Heart & Vascular Hybrid Operating Room ($1.5 million), among others. In addition, fundraising has focused on attracting new donors, with more than 2,000 new donors since 2016.

Insurance Portfolio, Risk Management, Litigation and Compliance

ChristianaCare uses different types of insurance depending upon the risk being mitigated. The system is self-insured for employee health and effective May 1, 2019 established a captive insurance company, Christiana Care Insurance Company, LTD, domiciled in the Cayman Islands, insuring ChristianaCare’s general and professional liability risk. ChristianaCare also established A-32 3414186.8 043801 OS an owner’s controlled insurance program (OCIP), designed to significantly reduce exposure to losses incurred from the construction of the new Women’ and Children’s building.

ChristianaCare’s risk management strategy is committed to promoting a culture of safety and organizational commitment to quality health care and works to reduce or eliminate the risk of injury to patients, staff, visitors and others and to improve the delivery of health care and strengthen the organization. Part of this is done through CANDOR: Communication and Optimal Resolution. CANDOR enables ChristianaCare to advance its culture of patient safety by further supporting patients through open communication and optimal resolution when an analysis and event review confirms unexpected patient harm.

ChristianaCare is currently involved in litigation which arose in the ordinary course of business. In addition, in September of 2018, Health System, Health Services, and certain of their affiliates were served with a whistleblower complaint filed by Ronald Sherman, the former Chief Compliance Officer of ChristianaCare on behalf of the United States (“Plaintiffs”). The Complaint alleges that ChristianaCare provided the services of physician assistants and nurse practitioners to independent physicians in order to induce those physicians to send referrals to ChristianaCare. The United States declined to intervene in the matter. ChristianaCare filed a motion to dismiss the complaint in lieu of filing an answer to the complaint. Plaintiffs opposed ChristianaCare’s motion to dismiss and ChristianaCare filed a reply brief and requested oral argument. Other than this case, there is no litigation pending or, to the knowledge of ChristianaCare, threatened against ChristianaCare or its affiliates which, if determined adversely to ChristianaCare, would individually or in the aggregate, have a material adverse effect on the financial position of ChristianaCare.

The ChristianaCare Office of Compliance is responsible for implementing a program designed to perpetuate a culture within the organization that promotes prevention, detection, and resolution of instances of conduct that do not conform to federal, state, and local laws and federal, state, and private payer health care program requirements. The Office of Compliance and its program are designed and administered consistent with the elements and objectives of the Office of Inspector General (“OIG”) Compliance Program Guidance and the U.S. Federal Sentencing Guidelines. The program includes, among other things, measures to voluntarily and proactively identify and audit potential risk areas highlighted both internally and externally.

Information Technology

ChristianaCare partnered with Cerner in 2017, as a strategic partner to advance the standard of care through the co-development and use of its electronic medical record platform. Today, the majority of ChristianaCare’s facilities are on, or plan to migrate to the Cerner platform, creating a one-patient, one-chart approach to care across the organization.

Cybersecurity

ChristianaCare has a cybersecurity program designed to maintain the confidentiality, integrity and availability of its information assets and the systems and networks that the house and transmit that information. ChristianaCare governs cybersecurity through a Board designated Information Technology and Cybersecurity Sub-Committee that is chaired by a Board member, and populated with the chair of the Audit and Compliance Committee and industry experts on cybersecurity,

A-33 3414186.8 043801 OS including peer CISOs. The cybersecurity experts provide guidance to management, the committee and the full board in order to maintain a cybersecurity posture that is consistent with industry standards. The organization employees a full-time Chief Information Security Officer that is responsible leading the cybersecurity strategy, updating the committee, and for ensuring the implementation if an enterprise-wide cybersecurity plan.

ChristianaCare maintains a formal, comprehensive Risk Management Program to manage the risk associated with the use of information assets to an acceptable level and employs a third party risk management function with the purpose of governing security risks of third party organizations that have access to enterprise data and information assets, or provide products or services for ChristianaCare. In support of its cybersecurity risk management functions, ChristianaCare evaluates and invests in technologies that serve to improve its cybersecurity posture and forms strategic partnerships with third parties that can enhance the overall risk posture.

A-34 3414186.8 043801 OS

APPENDIX B

AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF CHRISTIANA CARE HEALTH SYSTEM FOR THE YEARS ENDED JUNE 30, 2019 AND 2018

3406963.6 043801 OS [THIS PAGE INTENTIONALLY LEFT BLANK] Christiana Care Health System and Affiliates Consolidated Financial Statements and Consolidating Supplemental Schedules June 30, 2019 and 2018

Christiana Care Health System and Affiliates Index June 30, 2019 and 2018

Page(s)

Report of Independent Auditors ...... 1–2

Consolidated Financial Statements

Balance Sheets ...... 3

Statements of Operations and Changes in Net Assets ...... 4–5

Statements of Cash Flows ...... 6

Notes to Financial Statements ...... 7–37

Condensed Consolidating Supplemental Schedules

Balance Sheets ...... 38–39

Statements of Operations ...... 40–41

Notes to Condensed Consolidating Supplemental Schedules ...... 42

Report of Independent Auditors

To the Board of Directors of Christiana Care Health System and Affiliates

We have audited the accompanying consolidated financial statements of Christiana Care Health System and Affiliates (the “System”), which comprise the consolidated balance sheets as of June 30, 2019 and 2018, and the related consolidated statements of operations and changes in net assets and of cash flows for the years then ended.

Management’s Responsibility for the Consolidated Financial Statements

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

Auditors’ Responsibility

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

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

PricewaterhouseCoopers LLP, 100 East Pratt Street, Suite 2600, Balitmore, Maryland 21202-1096 T: (410) 783 7600, F: (410) 783 7680, www.pwc.com/us

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Christiana Care Health System and Affiliates at June 30, 2019 and 2018, and the results of their operations, changes in their net assets, and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matter

Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements taken as a whole. The condensed consolidating information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The condensed consolidating information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves and other additional procedures, in accordance with auditing standards generally accepted in the United States of America. In our opinion, the condensed consolidating information is fairly stated, in all material respects, in relation to the consolidated financial statements taken as a whole. The condensed consolidating information is presented for purposes of additional analysis of the consolidated financial statements rather than to present the financial position, results of operations and changes in net assets and cash flows of the individual entities and is not a required part of the consolidated financial statements. Accordingly, we do not express an opinion on the financial position, results of operations and changes in net assets and cash flows of the individual entities.

Baltimore, Maryland August 22, 2019

2 Christiana Care Health System and Affiliates Consolidated Balance Sheets June 30, 2019 and 2018

2019 2018

Assets Current assets Cash and cash equivalents $ 114,487,107 $ 122,249,094 Short-term investments 188,510,758 184,648,494 Patient accounts receivable, net 309,251,789 287,857,900 Other current assets 65,445,909 61,323,120 Total current assets 677,695,563 656,078,608 Assets limited as to use 30,023,062 31,431,438 Long-term investments 1,726,043,742 1,625,798,728 Property and equipment, net 1,103,104,695 902,459,583 Other assets 33,316,527 27,311,745 Total assets $ 3,570,183,589 $ 3,243,080,102 Liabilities and Net Assets Current liabilities Current portion of long-term debt $ 164,735,000 $ 170,670,000 Accounts payable and accrued expenses 309,198,816 266,805,248 Total current liabilities 473,933,816 437,475,248 Long-term debt, net of current portion 75,717,898 77,887,244 Pension and postretirement benefits 87,038,576 77,463,786 Other liabilities 182,320,612 59,173,780 Total liabilities 819,010,902 652,000,058 Net assets Without donor restrictions 2,689,784,650 2,532,204,904 With donor restrictions Purpose and time restricted 30,745,682 29,680,442 Perpetual in nature 30,642,355 29,194,698 Total net assets with donor restrictions 61,388,037 58,875,140 Total net assets 2,751,172,687 2,591,080,044 Total liabilities and net assets $ 3,570,183,589 $ 3,243,080,102

The accompanying notes are an integral part of these consolidated financial statements.

3 Christiana Care Health System and Affiliates Consolidated Statements of Operations and Changes in Net Assets Years Ended June 30, 2019 and 2018

2019 2018

Operating revenues and other support Net patient service revenue $ 2,021,886,977 $ 1,925,829,563 Other revenue 57,510,824 58,214,611 Net assets released from donor restrictions used for operations 3,772,706 3,246,272 Total operating revenues and other support 2,083,170,507 1,987,290,446 Operating expenses Salaries and employee benefits 1,248,772,699 1,169,710,886 Supplies and other expenses 616,412,346 607,103,515 Interest expense 3,621,366 3,634,393 Depreciation expense 102,110,732 98,455,342 Total operating expenses 1,970,917,143 1,878,904,136 Operating income 112,253,364 108,386,310 Nonoperating revenues, gains, and losses Investment return, net 100,154,884 143,804,089 Other nonoperating (losses), revenues, and gains (3,413,397) 894,156 Total nonoperating revenues, gains, and losses 96,741,487 144,698,245 Excess of revenues over expenses $ 208,994,851 $ 253,084,555

(continued on next page)

The accompanying notes are an integral part of these consolidated financial statements.

4

Christiana Care Health System and Affiliates Consolidated Statement of Operations and Changes in Net Assets Years Ended June 30, 2019 and 2018

2019 2018

Change in net assets without donor restrictions Excess of revenues over expenses $ 208,994,851 $ 253,084,555 Net assets released from donor restrictions used for purchase of property and equipment 6,241,247 829,394 Other changes in pension and postretirement liabilities (57,656,352) (7,941,398) Increase in net assets without donor restrictions 157,579,746 245,972,551 Change in net assets with donor restrictions Contributions 11,011,834 3,273,536 Investment return, net 1,551,791 3,148,677 Net assets released from donor restrictions (10,013,953) (4,075,666) Change in value of assets (36,775) 253,357 Increase in net assets with donor restrictions 2,512,897 2,599,904 Increase in net assets 160,092,643 248,572,455 Net assets Beginning of year 2,591,080,044 2,342,507,589 End of year $ 2,751,172,687 $ 2,591,080,044

The accompanying notes are an integral part of these consolidated financial statements.

5 Christiana Care Health System and Affiliates Consolidated Statements of Cash Flows Years Ended June 30, 2019 and 2018

2019 2018

Cash flows from operating activities Change in net assets $ 160,092,643 $ 248,572,455 Adjustments to reconcile change in net assets to net cash provided by operating activities Depreciation and amortization 102,156,386 98,389,606 Net realized and unrealized (gains) losses on investments (69,341,157) (119,159,201) Restricted contributions and investment income received (1,798,037) (3,831,858) Other changes in pension and postretirement benefits 57,656,352 7,941,398 (Increase) decrease in Patient accounts receivable (21,393,889) (44,918,695) Other current assets (4,122,789) 1,874,883 Other assets (6,004,782) 1,917,764 Increase (decrease) in Accounts payable, accrued salaries, and other accrued expenses 23,982,387 11,805,452 Pension and postretirement benefits (47,428,304) (3,909,494) Other liabilities 7,443,410 14,341,739 Net cash provided by operating activities 201,242,220 213,024,049 Cash flows from investing activities Purchase of property and equipment (170,471,836) (143,624,215) Proceeds from sale of investments and assets limited as to use 823,384,551 849,365,597 Purchase of investments and assets limited as to use (856,545,056) (877,986,439) Net cash used in investing activities (203,632,341) (172,245,057) Cash flows from financing activities Repayment of long-term debt (8,150,000) (7,945,000) Restricted contributions and investment income received 1,798,037 3,831,858 Securities lending 980,097 120,937 Net cash used in financing activities (5,371,866) (3,992,205) Net (decrease) increase in cash and cash equivalents (7,761,987) 36,786,787 Cash and cash equivalents Beginning of year 122,249,094 85,462,307 End of year $ 114,487,107 $ 122,249,094 Supplemental disclosure of cash flow information Cash paid for interest, net of amounts capitalized $ 2,665,961 $ 3,777,861 Accrued property and equipment acquisitions 13,227,518 11,680,145 Assets acquired under capital leases 119,056,489 -

The accompanying notes are an integral part of these consolidated financial statements.

6 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

1. Description of the Organization

Christiana Care Health System (the “System”) is the parent organization of Christiana Care Health Services, Inc. (“Health Services”), Christiana Care Health Initiatives (“Health Initiatives”), Christiana Care Home Health and Community Services, Inc. (“CCHHCS”) and Christiana Care Health Plans, Inc. (“Health Plans”).

The System is a not-for-profit Delaware corporation whose primary activity is to accept gifts and bequests and engage in fund raising activities for the benefit of the Christiana Care affiliates.

Health Services, a Delaware not-for-profit corporation, owns and operates: Christiana Hospital, Wilmington Hospital, Eugene duPont Preventive Medicine and Rehabilitation Institute, a free- standing emergency department, a physician network, residency training programs, and numerous ambulatory and physician office locations. Health Services’ primary activity is to provide healthcare services to the residents of Delaware and the surrounding counties in Maryland, Pennsylvania, and New Jersey.

On May 1, 2019, Health Services created a wholly owned subsidiary, Christiana Care Insurance Company, Ltd (“Captive”), which is incorporated under the laws of the Cayman Islands. The primary purpose of the Captive is to direct issue primary medical professional liability and primary general liability insurance coverage to Health Services. The Captive also reinsures excess umbrella liability coverage to Health Services. The activities of the Captive are more fully described in Note 13.

Health Initiatives, a nonprofit corporation, provides health services primarily in physician office locations.

CCHHCS is a nonprofit health care agency which provides professional healthcare and other services in the home and community.

Health Plans, a Delaware not-for-profit corporation, offered managed care products for the Medicaid and commercial markets, until its exit from the insurance business in 2005. Although Health Plans continues to maintain its status as a licensed insurance company, it remains an inactive subsidiary.

2. Summary of Significant Accounting Policies

Basis of Presentation The System’s financial statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America.

Principles of Consolidation The consolidated financial statements include the assets, liabilities, net assets, revenues, and expenses of the System and all wholly owned subsidiaries after the elimination of all significant intercompany transactions and balances.

7 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

Use of Estimates The preparation of consolidated 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Future events and their effects cannot be predicted with certainty; accordingly, the accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of the System’s consolidated financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the operating environment changes. The System evaluates and updates its assumptions and estimates on an ongoing basis and may employ outside experts to assist in its evaluation, as considered necessary. Actual results could differ from those estimates.

Significant estimates include, but are not limited to, net realizable value of patient accounts receivables, useful lives of property and equipment, the valuation of certain investments, actuarially determined pension and postretirement benefits, and medical and professional liability and other self-insurance reserves.

Cash and Cash Equivalents Cash and cash equivalents include investments in highly liquid instruments with original maturities of three months or less. At June 30, 2019 and 2018, the System had cash balances in financial institutions which exceed federal depository insurance limits and therefore, bears a risk of loss. However, management believes that the credit risk related to these deposits is minimal, as it has not experienced such losses on these funds.

Patient Accounts Receivable Patient accounts receivable are reported at the amounts that reflect the consideration to which the System expects to be entitled in exchange for providing patient care, as further described in Note 3. Patient accounts receivable consists of amounts owed by various governmental agencies, insurance companies, and patients. The System manages these receivables by regularly reviewing the accounts and contracts and by recording appropriate price concessions. Amounts that the System receives for the treatment of patients covered by governmental programs and third-party payors, as well as directly from patients, are subject to both explicit and implicit price concessions. The System estimates these price concessions using contractual agreements, discount policies, and historical experience. The System writes off amounts that have been deemed uncollectible because of circumstances that affect the ability of payors to make payments as they occur.

Inventories Inventories primarily consist of medical and surgical supplies and pharmaceuticals. Inventories are valued at the lower of cost (determined by the first-in, first-out method) or market (defined as net realizable value).

8 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

Investments and Assets Limited as to Use Investments and assets limited as to use are measured at fair value in the balance sheets based on the methodology described in Note 5. Investment income or loss (consisting of realized and unrealized gains and losses on investments, interest, and dividends) are included in the excess of revenues over expenses unless the income or loss is restricted by donors.

Managed funds represent subscriptions in funds-of-funds and managed equity common funds utilized to diversify the portfolio of the System. As a practical expedient, the System estimates the fair value of managed funds using the reported net asset value (NAV). The System has assessed factors such as the managed funds’ compliance with fair value reporting standards, price transparencies and valuation procedures, the ability to redeem at NAV at the measurement date, and existence of redemption restrictions at the measurement dates. The System is required to provide written notice of at least 90 calendar days prior to a calendar quarter-end to redeem managed funds-of-funds. Managed equity common funds are subject to redemption on a monthly basis. Requests accepted in the prior month, subject to terms, are redeemed on the first of the subsequent month. There are no lock-up provisions.

The System classifies investments as trading securities. Investment income or loss generated by trading securities is classified within nonoperating revenues, gains, and losses within the statement of operations and changes in net assets. The System considers the activity of the investment portfolio and the associated cash receipts and cash purchases resulting from purchases and sales of investments classified as trading securities as an investing activity and classifies this activity accordingly within the consolidated statements of cash flows.

Assets limited as to use include designated assets set aside by the System’s Board of Directors (“Board”). During 2018, the Board designated $5 million to support the Center for Translational Cancer Research (CTCR) at the Helen F. Graham Cancer Center, and these assets are classified as assets limited as to use in the June 30, 2019 and June 30, 2018 consolidated balance sheets.

Property, Equipment, and Depreciation Property and equipment acquisitions are recorded at cost. Expenditures which substantially increase the useful lives of existing assets are capitalized. Routine maintenance and repairs are expensed as incurred. Depreciation is computed using the straight-line method based on the following estimated useful lives: Buildings and building improvements 5-40 years, equipment 3-20 years. Leasehold improvements are depreciated using the lesser of the lease term or the useful life of the improvement. Gains and losses from retirement or disposition of fixed assets are recognized in the consolidated statement of operations and changes in net assets as a nonoperating activity. There were no significant disposals of property and equipment for the years ended June 30, 2019 and 2018. Interest cost incurred on borrowed funds during the period of construction of capital assets is capitalized as a component of the cost of acquiring those assets.

Gifts of long-lived assets such as land, buildings, or equipment are reported as net assets without donor restrictions at fair value as of the date of the gift, and are excluded from the excess of revenues over expenses, unless explicit donor stipulations specify how the donated assets must be used. Gifts of long-lived assets with explicit restrictions that specify how the assets are to be used and gifts of cash or other assets that must be used to acquire long-lived assets are reported as net assets with donor restrictions. Absent explicit donor stipulations about how long those long-lived assets must be maintained, expirations of donor restrictions are reported when the donated or acquired long-lived assets are placed in service.

9 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

Leases Lease agreements, which primarily include the System’s rental of office facilities, are evaluated to determine whether they are capital or operating leases in accordance with Accounting Standards Codification 840, Leases (“ASC 840”). If substantially all of the risks and benefits of property ownership have been transferred to the System, as determined by the criteria in ASC 840, the lease then qualifies as a capital lease. Capital leases are capitalized at the lower of the net present value of the total amount of rent payments under the lease agreement or the fair market value of the leased asset. Capital lease assets are depreciated on a straight-line basis over a period consistent with the System’s depreciation policy for property and equipment. Interest charges are expensed over the period of the lease in relation to the carrying value of the capital lease obligation.

Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment when events and circumstances indicate that the carrying amount of an asset may not be recoverable. The System’s policy is to record an impairment loss when it is determined that the carrying amount of the asset exceeds the sum of the expected undiscounted future cash flows resulting from use of the asset and its eventual disposition. Impairment losses are measured as the amount by which the carrying amount of the asset exceeds its fair value. Long-lived assets to be disposed of are reported at the lower of the carrying amount or fair value less cost to sell. No significant impairment charges were recorded in the years ended June 30, 2019 and June 30, 2018.

Securities Lending The System engages in securities lending whereby certain securities in its portfolio are loaned to other parties generally for a short period of time. The System receives collateral equal to 100% of the market value of securities borrowed. The System records the fair value of the collateral received as a component of both other current assets and other current liabilities as the System is obligated to return the collateral upon the return of the borrowed securities. Other current assets and liabilities include $1,131,236 and $151,139 of collateral investments at June 30, 2019 and 2018, respectively.

Bond Issuance Costs Bond Issuance costs are recorded as a direct deduction from long-term debt and represent the cost of issuing long-term debt. Such costs are being amortized over the life of the applicable indebtedness using the interest method.

Investments Held in Trust The System is entitled to beneficial interests in perpetual trusts at various percentages, which are maintained by outside trustees. The System’s share of the market value of the trusts is recorded in in net assets with donor restrictions and is updated on an annual basis. The change in value of the assets is recorded within net assets with donor restrictions. The periodic income distributions received from the trustees are recorded as increases in either net assets without restrictions or net assets with donor restrictions, based on the donors’ intentions.

Compensated Paid Leave The System records a liability in accounts payable and accrued expenses for amounts due to employees for future paid leave which are attributable to services performed in the current and prior periods.

10 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

Net Assets The System reports its net assets as either net assets without donor restrictions or net assets with donor restrictions. Net assets without donor restrictions include undesignated amounts as well as amounts designated by the Board for a specific purpose. Net assets with donor restrictions are those assets whose use has been limited by donors to a specific purpose or maintained by the System in perpetuity.

Net assets that are perpetual in nature include gifts, trusts, pledges, income, and gains that are required by donor imposed restrictions to be maintained in perpetuity. Investment return derived from net assets that are perpetual in nature may be spent for general or specific purposes in accordance to donor imposed restrictions, based on the amounts appropriated for expenditure annually by Health Services’ endowment spending policy.

Net assets that are donor restricted for a purpose include gifts, pledges, income, and gains for which donor imposed restrictions have not yet been met. Such restrictions are purpose restrictions imposed by donors, which are normally released upon the incurrence of expenditures that fulfill those donor specified purposes.

Donor Restricted Contributions Unconditional promises to give cash and other assets to the System are reported at fair value at the date the promise is received. Contributions are reported as net assets with donor restrictions 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, net assets with donor restrictions are reclassified as net assets without donor restrictions and reported in the consolidated statement of operations and changes in net assets as net assets released from donor restrictions. Donor restricted contributions whose restrictions are met within the same year as received are reported as net assets without donor restrictions in the accompanying consolidated financial statements.

Excess of Revenues Over Expenses The consolidated statement of operations and changes in net assets includes excess of revenues over expenses. Changes in net assets without donor restrictions which are excluded from excess of revenues over expenses, consistent with industry practice, include permanent transfers of assets to and from affiliates for other than goods and services, contributions of long-lived assets (including assets acquired using contributions which by donor restriction were to be used for the purposes of acquiring such assets), and other changes in pension and postretirement liabilities.

Tax Status The System and its affiliates, except for Health Plans, are exempt from Federal income taxes under Section 501(c)(3) of the Internal Revenue Code. In 1999, Health Plans reorganized, forming a taxable entity under the Internal Revenue Code.

Recently Issued Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2016-02 on Leases, which amends the accounting for leases, requiring lessees to recognize most leases on their balance sheet with a right-of-use asset and corresponding lease liability. The liability will be equal to the present value of future minimum lease payments, and the asset will be based on the liability, subject to adjustment for certain costs. Leases will be classified as either finance or operating leases, which will impact the manner and timing of expense recognition of such leases over the lease term. Leases will be classified based on criteria similar to those applied in current lease accounting. The accounting by lessors remains largely unchanged.

11 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

This standard is effective for the System beginning in fiscal year 2020. The System expects this standard to impact its balance sheet as it will have to recognize a right-of-use asset and corresponding lease liability for each operating lease. The System does not expect the standard to significantly impact its consolidated statement of operations and changes in net assets, its liquidity, or debt covenants.

Recently Adopted Accounting Pronouncements In August 2016, the FASB issued ASU 2016-14, Presentation of Financial Statements for Not-for- Profit Entities. The new guidance requires improved presentation and disclosures to help not-for- profit entities provide more relevant information about their resources to donors, grantors, creditors, and other users of the consolidated financial statements. The System adopted this new standard in fiscal year 2019. The primary changes affecting the System include: presentation of two classes of net assets versus the previously required three; liquidity and availability; and disclosure of expenses by both their natural and functional classification in a matrix format. These changes have been reflected within the consolidated financial statements and notes herein.

In March 2017, the FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. Previously, net benefit cost was reported as an employee cost within excess of revenues over expenses from operations (or capitalized into assets when appropriate). This standard requires the bifurcation of net benefit cost, as follows: service cost will continue to be reported in employee benefits, while the remaining components of net benefit cost will be reported in nonoperating revenue, gains, and losses. Although this standard is not effective until fiscal year 2020, the System elected to early adopt the new guidance beginning in fiscal year 2019. As a result of implementing this standard, $1,411,839 was reclassified from salaries and employee benefits within operating expenses to non-operating revenues, gains, and losses on the consolidated statement of operations and changes in net assets for the year ended June 30, 2018.

In June 2018, the FASB issued ASU 2018-08, Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made. The new standard applies to all entities that receive or make contributions. The new guidance shifts the accounting for revenue recognition for most federal and state grants from an exchange model to the contribution accounting model. Thus, grants are referred to as “contributions” and granting agencies are referred to as “donors.” Further, the guidance provides criteria for evaluating whether contributions are unconditional or conditional. Conditional contributions must specify a barrier that the recipient must overcome and a right of return that releases the donor from its obligation if the barrier is not achieved, otherwise the contribution is unconditional. The System adopted this new accounting standard in fiscal year 2019. There was no significant impact to the consolidated financial statements.

The System receives grants from various agencies, including Federal and State Governments, for the purpose of furthering its mission. The grants are carried out for research and other activities that benefit the general public and not for the sole purpose of the awarding agencies. The majority of grants are cost reimbursable, meaning that research and grant revenue is recognized when the related costs are incurred. Thus, at any point in time, the System has government grants that are considered conditional under the new standard. These grants are considered conditional due to the need to first spend the awarded funds on qualifying expenses and a right of return exists for unexpended awards. As of June 30, 2019, the System had $8,741,013 of conditional contributions for which the conditions have not been met.

12 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

3. Revenue Recognition and Accounts Receivable In May 2014, the FASB issued several ASUs which established Topic 606, Revenue from Contracts with Customers. This standard supersedes existing revenue recognition guidance and creates a single framework for revenue recognition. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. Qualitative and quantitative disclosures are required to enable users of consolidated financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The applicable disclosures are described in this note.

The System adopted the new standard on July 1, 2018, using the full retrospective transition method. Adoption of the standard impacted the System reported results as follows:

Year Ended June 30, 2018 As Reported Reclassifications As Adjusted Adoption Impact Consolidated Statement of Operations and Changes in Net Assets Net patient service revenue $ 1,976,324,464 $ (50,494,901) $ 1,925,829,563 $ (50,494,901) Provision for bad debts (50,494,901) 50,494,901 - 50,494,901 Other revenue 58,214,611 58,214,611 Net assets released from donor restrictions used for operations 3,246,272 3,246,272 Total operating revenues and other support $ 1,987,290,446 $ - $ 1,987,290,446 $ -

Consolidated Statement of Cash Flows Provision for bad debts 50,494,901 (50,494,901) - (50,494,901) Change in patient accounts receivable (95,413,596) 50,494,901 (44,918,695) 50,494,901

Adoption of the standard had no impact on the System’s opening net assets.

Net Patient Service Revenue The System’s revenues generally relate to contracts with patients in which The System’s performance obligations are to provide health care services to the patients. Net patient service revenue is reported at the amount that reflects the consideration to which The System expects to be entitled in exchange for providing patient care. These amounts are due from patients, third-party payors (including government programs and commercial insurance companies), and others and include variable consideration for retroactive revenue adjustments due to settlement of audits, reviews, and investigations. Generally, the System bills the patient and third-party payors several days after the services are performed and/or the patient is discharged from a facility. Revenue is recognized as performance obligations are satisfied. Performance obligations are determined based on the nature of the services provided by the System. Revenue for performance obligations satisfied over time is recognized based on actual charges incurred. The System believes that this method provides a faithful depiction of the transfer of services over the term of the performance obligation based on the inputs needed to satisfy the obligation.

13 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

Generally, performance obligations satisfied over time relate to patients in our hospitals or physician practices receiving health care services. The System measures the performance obligation from admission into the hospital, or the commencement of an outpatient service, to the point when there are no further services required for the patient, which is generally at the time of discharge or completion of the outpatient services. Revenue for performance obligations satisfied at a point in time is generally recognized when goods or services are provided to our patients and customers in a retail setting (for example, pharmaceuticals), and the System does not believe it is required to provide additional goods or services to the patient. Because all of its performance obligations relate to contracts with a duration of less than one year, the System has elected to apply the practical expedient provided in FASB ASC 606-10-50-14(a) and, therefore, is not required to disclose the aggregate amounts of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period. The unsatisfied or partially satisfied performance obligations referred to above are primarily related to inpatient acute care services at the end of the reporting period. The performance obligations for these contracts are generally completed when the patients are discharged, which generally occurs within days or weeks of the end of the reporting period.

The System determines the transaction price based on standard charges for the services provided, reduced by contractual adjustments provided to third-party payors, discounts provided to uninsured or underinsured patients in accordance with the System’s policies, and/or implicit price concessions provided to uninsured or underinsured patients. The System determines its estimates of contractual adjustments and discounts based on contractual agreements, its discount policies, and historical experience. The System determines its estimate of implicit price concessions based on its historical collection experience with these classes of patients using a portfolio approach as a practical expedient. The portfolio approach is being used as the System has a large volume of similar contracts with similar classes of patients. Management’s judgement to group the contracts by portfolio is based on the payment behavior expected in each portfolio category. The System reasonably expects that the effect of applying a portfolio approach to a group of contracts would not differ materially from considering each contract separately.

Agreements with third-party payors typically provide for payments at amounts less than established charges. For services provided under Medicare, inpatient acute care services rendered to program beneficiaries are paid at prospectively determined rates per diagnosis. These rates vary according to a patient classification system that is based on clinical, diagnostic and other factors. Medicare outpatient services are paid at a prospectively determined rate. Medicare physician services are paid based upon established fee schedules. Additionally, Medicare provides reimbursement for direct graduate medical education, certain allied health professional training, and organ procurement on the basis of cost. This cost, and data influencing add-on payments for uncompensated care and indirect medical education, is determined based upon information contained in the annual Medicare cost report submission. The System is reimbursed for these cost related items and the applicable add-ons included in the Medicare cost report at a tentative rate. Final settlements are determined after audits of the cost report data by the fiscal intermediary. For services provided under Medicaid, inpatient acute services are paid prospectively based upon two primary case rates, with adjustment for outliers. Medicaid outpatient services are paid at a prospectively determined rate. Payment arrangements with commercial insurance carriers include prospectively determined rates per discharge and discounts from established charges.

14 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

Laws and regulations governing the Medicare and Medicaid programs are extremely complex and subject to interpretation. As a result, there is at least a reasonable possibility that recorded estimates will change by a material amount in the near term. Cost report settlements under reimbursement agreements with Medicare that result in retroactive adjustments due to audits, reviews or investigations are considered variable and are included in the determination of the estimated transaction price for providing patient care. These settlements are estimated based on the terms of the payment agreement with the payor, correspondence from the payor, and the System’s historical experience. Estimated settlements are adjusted in future periods as final settlements are determined. The 2019 and 2018 net patient service revenue increased $1,926,176 and $1,346,964, respectively, because of tentative settlements, final settlements, and final appeals for years that are no longer subject to audits, reviews, and investigations, as well as other changes in estimates. In addition, the contracts the System has with commercial payors also provide for retroactive audit and review of claims.

Generally, patients who are covered by third-party payors are responsible for related deductibles and coinsurance, which vary in amount. The System also provides services to uninsured and underinsured patients. The transaction price for both uninsured patients as well as insured patients with deductibles and coinsurance is estimated based on historical experience and current market conditions. The initial estimate of the transaction price is determined by reducing the standard charge by any contractual adjustments, discounts, and implicit price concessions. Subsequent changes to the estimate of the transaction price are generally recorded as adjustments to patient service revenue in the period of the change. Subsequent changes that are determined to be the results of an adverse change in the patient’s ability to pay are recorded as bad debt expense. Bad debt expense is reported in operating expenses in the statements of operations and changes in net assets and was not significant for the years ended June 30, 2019 and 2018.

The composition of net patient service revenues by payor for the years ended June 30, 2019 and June 30, 2018 are as follows:

2019 2018 Medicare $ 651,749,148 $ 622,988,846 Medicaid 283,866,390 266,394,544 Commercial insurance 997,208,665 948,084,910 Self-pay and other 89,062,774 88,361,263 Total $ 2,021,886,977 $ 1,925,829,563

Revenue from patients’ deductibles and coinsurance is included in the preceding categories based on the primary payor and is transferred to self-pay after consideration is received from the primary payor. Self-pay and other, which includes auto insurance, worker’s compensation, pending Medicaid, and other commercial insurance payers, are grouped together because they share similar historical collection patterns.

The System has elected the practical expedient allowed under FASB ASC 606-10-32-18 and does not adjust the promised amount of consideration from patients and third-party payors for the effects of a significant financing component due to the System’s expectation that the period between the time the service is provided to a patient and the time that the patient or a third-party payor pays for that service will be one year or less. However, the System does, in certain instances, enter into payment agreements with patients that allow payments in excess of one year. For those cases, the financing component is not deemed to be significant to the contract.

15 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

Other Revenue Other revenue consists primarily of research and grant revenue, retail pharmacy revenue, revenue from services agreements, rental revenue, and cafeteria revenue. For the majority of its grants, the System has determined that there is not exchange back to the granting agency. Therefore, the System accounts for these grants under the contribution model of accounting in ASC Topic 958, Not-for-Profit Entities, which is outside the scope of ASC 606, and revenue is recognized as expenses for these grants are incurred. The System’s retail pharmacies offer a full inventory of standard, specialty, and over-the-counter medications, and retail pharmacy revenue is recognized as prescriptions are filled. Revenue from service agreements with third parties is recognized when performance obligations under the terms of the respective contract are satisfied. The System recognizes rental income on a straight-line basis over the lease term in accordance with ASC Topic 840, Leases. The System’ cafeterias offer food and beverage products to our visitors and employees, and revenue is recognized when the goods are exchanged. The composition of other revenue for the years ended June 30, 2019 and June 30, 2018 are as follows:

2019 2018

Research and grant revenue$ 18,671,742 32.5% $ 20,004,000 34.4% Retail pharmacy revenue 15,266,062 26.5% 14,556,629 25.0% Service agreements 13,398,523 23.3% 13,057,880 22.4% Rental revenue 3,463,528 6.0% 3,772,248 6.5% Cafeteria revenue 3,951,059 6.9% 3,760,543 6.5% Other 2,759,910 4.8% 3,063,311 5.2% Other Revenue $ 57,510,824 100.0% $ 58,214,611 100.0%

4. Charity Care and Community Benefit

In accordance with the System’s mission to improve the health of Delaware and the surrounding counties of Maryland, Pennsylvania, and New Jersey, the System provides care to patients regardless of their ability to pay. The System provides care to these patients, who meet certain criteria under the System’s charity care policy, without charge or at amounts less than its established rates. Criteria for charity care considers the patient’s family income, net worth, and other factors. Because the System does not pursue collections of amounts determined to qualify as charity care, they are not reported as revenue.

Direct and indirect costs for charity care services amounted to $15.7 million and $22.6 million in 2019 and 2018, respectively. The costs of providing charity care services are based on a calculation which applies a ratio of costs to charges to the gross uncompensated charges associated with providing care to charity patients.

The System also offers discounts for uninsured patients who do not qualify for the charity care program and provides flexible, long-term payment plans for patients. In addition, the System also provides services to beneficiaries of public programs and various other community health services intended to improve the health of communities in which it operates.

The System uses the following four categories to identify the resources utilized for the care of persons who are underserved and for providing community benefit programs to the needy:

 Traditional charity care, which includes the cost of services provided to persons who cannot afford health care because of inadequate resources and who are uninsured.

16 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

 Unpaid cost of Medicare, which represents the unpaid cost of services provided to persons through the government program for individuals age 65 and older as well as those that qualify for federal disability benefits.

 Unpaid cost of Medicaid, which represents the unpaid cost of services provided to persons covered by the government program for medically indigent patients.

 Community benefit programs consist of the unreimbursed costs of certain programs and services for the general community, mainly for indigent patients but also for people with chronic health risks. Examples of these programs include health promotion and education, free clinics and screenings, and other community services.

5. Investments, Assets Limited as to Use, and Investment Income

The composition of investments and assets limited as to use at June 30, 2019 and 2018 is set forth in the following table. Investments and assets limited as to use are stated at fair value.

2019 2018

Short-term investments $ 188,510,758 $ 184,648,494 Assets limited as to use Internally designated by Board of Directors Infant mortality 13,461,771 14,537,698 Harrington VIP/VICP fund 11,231,384 11,648,345 Translational Cancer Research 5,329,907 5,245,395 Total assets limited as to use 30,023,062 31,431,438

Long-term investments Without donor restrictions 1,672,857,093 1,573,025,924 Purpose restricted 23,373,295 23,859,157 Perpetual in nature 29,813,354 28,913,647 Total long-term investments 1,726,043,742 1,625,798,728 Total investments and assets limited as to use$ 1,944,577,562 $ 1,841,878,660

Within the consolidated statement of operations and changes in net assets, investment return without donor restrictions for June 30, 2019 and 2018 is comprised of the following:

2019 2018

Interest and dividend income $ 31,914,919 $ 27,641,415 Net realized gains 47,403,745 27,025,850 Net unrealized gains 20,836,220 89,136,824 $ 100,154,884 $ 143,804,089

17 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

Similarly, investment return with donor restrictions for June 30, 2019 and 2018 is comprised of the following:

2019 2018

Interest and dividend income $ 413,825 $ 405,507 Net realized gains 853,354 574,680 Net unrealized gains 284,612 2,168,490 $ 1,551,791 $ 3,148,677

Investment return is shown net of the related expenses on the consolidated statement of operations and changes in net assets.

The System adheres to applicable accounting guidance for fair value measurements and defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The System applies the following fair value hierarchy:

Level 1 Quoted prices in active markets for identical assets or liabilities. Level 1 assets include money market funds, debt and equity securities that are traded in an active exchange market, as well as certain U.S. Treasury and other U.S. Governments and agency securities that are highly liquid and are actively traded in over-the-counter markets.

Level 2 Observable inputs other than Level 1 such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the same term of the assets or liabilities. Level 2 assets include equity and debt securities with quoted prices that are traded less frequently than exchange-traded instruments whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data.

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets include investments held in trust by others whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

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

Transfers between leveled assets are based on the actual date of the event which caused the transfer. As of June 30, 2019 and 2018 there were no transfers between Levels 1, 2, and 3.

18 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

The following table presents the financial instruments carried at fair value as of June 30, 2019 in accordance with the fair value hierarchy:

Level 1 Level 2 Level 3 Total

Investments and assets limited as to use Money market funds $ 278,622,223 $ - $ - $ 278,622,223 U.S. Government and agency securities 96,118,979 - - 96,118,979 Corporate and other debt securities - 466,556,509 - 466,556,509 Equity securities 633,909,952 185,579,875 - 819,489,827 Investment held by others - - 8,460,320 8,460,320 Total investments and assets limited as to use 1,008,651,154 652,136,384 8,460,320 1,669,247,858 Total assets at fair value $ 1,008,651,154 $ 652,136,384 $ 8,460,320 1,669,247,858

Other investments measured at net asset value 275,329,704 Total assets at fair value $ 1,944,577,562

The following table illustrates the change in Level 3 assets:

Investments Held by Others

Fair value at June 30, 2018 $ 8,497,095 Change in value of assets (36,775) Fair value at June 30, 2019 $ 8,460,320

The following table presents the financial instruments carried at fair value as of June 30, 2018 in accordance with the fair value hierarchy:

Level 1 Level 2 Level 3 Total

Investments and assets limited as to use Money market funds $ 238,659,429 $ - $ - $ 238,659,429 U.S. Government and agency securities 115,276,954 - - 115,276,954 Corporate and other debt securities - 436,582,422 - 436,582,422 Equity securities 606,428,857 175,752,414 - 782,181,271 Investment held by others - - 8,497,095 8,497,095 Total investments and assets limited as to use 960,365,240 612,334,836 8,497,095 1,581,197,171 Total assets at fair value $ 960,365,240 $ 612,334,836 $ 8,497,095 1,581,197,171 Other investments measured at net asset value 260,681,489 Total assets at fair value $ 1,841,878,660

19 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

The following table illustrates the change in Level 3 assets:

Investments Held by Others

Fair value at June 30, 2017 $ 7,821,873 Contribution 421,865 Change in value of assets 253,357 Fair value at June 30, 2018 $ 8,497,095

6. Property and Equipment

A summary of property and equipment at June 30, 2019 and 2018 is as follows:

2019 2018

Land and land improvements $ 69,965,646 $ 69,016,752 Buildings and building improvements 1,376,928,252 1,191,682,198 Equipment 744,599,836 694,366,931 2,191,493,734 1,955,065,881 Accumulated depreciation (1,290,720,941) (1,188,833,258) 900,772,793 766,232,623 Construction-in-progress 202,331,902 136,226,960 $ 1,103,104,695 $ 902,459,583

Depreciation expense amounted to $102,110,732 and $98,455,342 in 2019 and 2018, respectively. In 2019 and 2018, the System incurred total interest costs of $6,152,000 and $5,678,414, respectively, of which $3,841,863 in 2019 and $2,091,376 in 2018 has been capitalized. At June 30, 2019 construction contracts of $265,284,827 exist primarily for various expansion and other facility improvements. The remaining commitment on these contracts was $104,093,354.

Capital Leases On March 1, 2019, the System entered into a lease agreement with an unrelated party for the lease of an office facility in Wilmington, Delaware. The lease term is 21 years, and the lease has been recorded as a capital lease. The System also leases an office facility in New Castle, Delaware, which was classified as a capital lease and is included in the table below. The total leased property of $125,284,638 and $7,473,779 is reflected in property and equipment as of June 30, 2019 and 2018, respectively. Accumulated depreciation on the leased assets was $1,889,786 as of June 30, 2019. Depreciation expense on these leased assets is included within depreciation expense in the consolidated statements of operations and changes in net assets.

20 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

Future minimum lease payments under capital leases are as follows:

2020 $ 3,786,247 2021 8,582,726 2022 8,613,507 2023 8,644,928 2024 8,677,633 Thereafter 134,945,391

Less: Amount representing interest $ 46,870,112 Present value of minimum lease payments $ 126,380,320

The amount necessary to reduce minimum lease payments to present value is calculated at the System’s incremental borrowing rate at lease inception. The System reflects a noncurrent lease liability in the consolidated balance sheet of $120,920,674 and $6,228,149 in 2019 and 2018, respectively.

7. Other Current Assets and Other Assets

Other Current Assets at June 30, 2019 and 2018 consist of the following:

2019 2018

Inventories $ 32,314,006 $ 27,443,400 Prepaid expenses 17,930,356 17,382,579 Other 15,201,547 16,497,141 $ 65,445,909 $ 61,323,120

Other Assets at June 30, 2019 and 2018 consist of the following:

2019 2018

Goodwill $ 1,015,805 $ 1,015,805 Other receivables 15,941,437 15,804,982 Other 16,359,285 10,490,958 $ 33,316,527 $ 27,311,745

21 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

8. Net Assets with Donor Restrictions

Net assets with donor restrictions and funds limited by donors to a specific purpose or maintained by the System in perpetuity.

Net assets with donor restrictions are available for the following purposes at June 30, 2019 and 2018:

2019 2018

Health care services $ 3,410,069 $ 3,397,932 Purchases of buildings and equipment 11,966,932 10,851,152 Education, research and other operational needs 15,368,681 15,431,358 $ 30,745,682 $ 29,680,442

Net assets with donor restrictions that are perpetual in nature consist of the following at June 30, 2019 and 2018:

2019 2018

Investments held in perpetuity $ 22,182,035 $ 20,697,603 Investments held in trust by others 8,460,320 8,497,095 $ 30,642,355 $ 29,194,698

9. Endowments

The Systems’ endowment consists of twenty-three individual donor restricted endowment funds and three board-designated endowment funds for a variety of purposes. The endowment includes both donor restricted endowment funds and funds designated by the Board to function as endowments. The net assets associated with endowment funds including funds designated by the Board to function as endowments, are classified and reported based on the existence or absence of donor imposed restrictions. In accordance with the Systems’ spending policy, annual distributions are 5% of the fiscal year-end value of the endowment pool calculated on a 36-month trailing average of the market value.

The System has interpreted the Uniform Prudent Management of Institutional Funds Act (“UPMIFA”) as requiring the preservation of the original gift as of the gift date of the donor restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the System classifies as net assets that are perpetual in nature, (a) the original value of gifts donated to the endowment, (b) the original value of subsequent gifts to the endowment, and (c) accumulations to the 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 as net assets that are perpetual in nature is classified as net assets that are purpose restricted until those amounts are appropriated for expenditure on an annual basis by the Board of the System in a manner consistent with the standard of prudence prescribed by UPMIFA.

22 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

Endowment net asset composition by type of fund as of June 30, 2019 and 2018:

2019 Without Donor With Donor Restrictions Restrictions Total

Endowment funds Donor restricted $ - $ 38,142,788 $ 38,142,788 Board designated 30,023,062 - 30,023,062 Total endowment funds $ 30,023,062 $ 38,142,788 $ 68,165,850

2018 Without Donor With Donor Restrictions Restrictions Total

Endowment funds Donor restricted $ - $ 37,890,697 $ 37,890,697 Board designated 31,431,438 - 31,431,438 Total endowment funds $ 31,431,438 $ 37,890,697 $ 69,322,135

Changes in endowment net assets for the year ended June 30, 2019 and 2018:

Without Donor With Donor Restrictions Restrictions Total

Endowment net assets at June 30, 2018 $ 31,431,438 $ 37,890,697 $ 69,322,135 Investment return, net 293,770 1,551,791 1,845,561 Contributions 1,157,673 1,157,673 Appropriation of endowment assets for expenditure (1,702,146) (2,457,373) (4,159,519) Endowment net assets at June 30, 2019 $ 30,023,062 $ 38,142,788 $ 68,165,850

Without Donor With Donor Restrictions Restrictions Total

Endowment net assets at June 30, 2017 $ 67,490,424 $ 36,101,862 $ 103,592,286 Investment return, net 4,028,872 3,148,677 7,177,549 Contributions - 532,644 532,644 Removal of board designation (39,129,436) - (39,129,436) Appropriation of endowment assets for expenditure (958,422) (1,892,486) (2,850,908) Endowment net assets at June 30, 2018 $ 31,431,438 $ 37,890,697 $ 69,322,135

23 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

Description of amounts classified as net assets with donor restrictions (endowments only):

2019 2018

Endowment funds restricted for specific purpose Restricted for health care services $ 3,219,851 $ 3,206,507 Restricted for building and maintenance 6,140,868 7,223,183 Restricted for program support 6,600,034 6,763,404

Endowment funds held in perpetuity Restricted for salary support $ 11,574,173 $ 11,227,414 Restricted for program support 10,607,862 9,470,189 Total endowment funds classified as net assets with donor restrictions$ 38,142,788 $ 37,890,697

Endowment Funds With Deficits From time to time, the fair value of assets associated with individual donor restricted endowment funds may fall below the value of the initial and subsequent donor gift amounts (deficit). When donor restricted endowment deficits exist, they are classified as a reduction of net assets with donor restrictions. There were no deficits of this nature reported in net assets with donor restrictions as of June 30, 2019 and June 30, 2018.

Strategies Employed for Achieving Investment Objectives To achieve its long-term rate of return objectives, the System relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized gains) and current yield (interest and dividends). The System targets a diversified asset allocation that places greater emphasis on equity-based investments to achieve its long-term objectives within prudent risk constraints.

24 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

10. Debt

Long-term debt at June 30, 2019 and 2018 consisted of the following:

Interest Final Rates Maturity 2019 2018

Series 2010 Revenue Bonds 2010A 4.00% to 5.00% 2040$ 57,640,000 $ 57,640,000 2010B variable 2040 67,300,000 69,925,000 2010C variable 2040 22,430,000 23,305,000 2010D 2.44% 2020 4,285,000 6,350,000 2010E 3.01% 2025 16,560,000 16,660,000 Series 2008 Revenue Bonds 2008A variable 2038 50,020,000 51,735,000 2008B variable 2038 22,770,000 23,540,000 241,005,000 249,155,000 Unamortized premium 731,169 794,962 Debt issuance costs (1,283,271) (1,392,718) Current maturities (8,360,000) (8,150,000) Long-term variable rate debt classified as current (156,375,000) (162,520,000) $ 75,717,898 $ 77,887,244

In 2010, Health Services issued $73,000,000 aggregate principal amount of Series 2010A fixed rate revenue bonds, $75,000,000 aggregate principal amount of Series 2010B variable rate revenue bonds, $25,000,000 aggregate principal amount of Series 2010C variable rate revenue bonds, $10,335,000 aggregate principal amount of Series 2010D fixed rate revenue bonds, and $16,860,000 aggregate principal amount of Series 2010E fixed rate revenue bonds through the Delaware Health Facilities Authority (DHFA). The proceeds were used to fund various capital projects and capital expenditures.

The 2010B Bonds and 2010C Bonds bear interest at a variable rate as determined by a remarketing agent, reset on a weekly and monthly basis, respectively. At the time of the bond issuance, interest was assumed at a rate of 2.71% annually for both the 2010B Bonds and the 2010C Bonds. During 2019 and 2018, respectively, interest rates ranged from 0.90% to 2.28% and 0.76% to 1.85% for the 2010B bonds and from 1.32% to 1.85% and 0.85% to 1.72% for the 2010C Bonds.

In 2008, Health Services issued $55,000,000 aggregate principal of Series 2008A variable rate revenue bonds and $25,000,000 aggregate principal of Series 2008B variable rate revenue bonds through the DHFA. The proceeds were used for the repayment of a short term loan and to acquire land. The Series 2008A Bonds bear interest at a variable rate, as determined by a remarketing agent, reset on a daily basis. The Series 2008B Bonds bear interest at a variable rate, as determined by a remarketing agent, reset on a weekly basis. At the time of the bond issuance, interest was assumed at a rate of 3.50% annually for both the 2008A Bonds and the 2008B bonds. During 2019 and 2018, respectively, the rates for the Series 2008 Bonds ranged from 0.57% to 2.37% and 0.58% to 1.93%.

25 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

Health Services is obligated to purchase any Series 2010B Bonds, Series 2010C Bonds, and Series 2008 Bonds not remarketed. The Series 2010B Bonds, Series 2010C Bonds, and Series 2008 Bonds are classified as a current liability on the June 30, 2019 and June 30, 2018 balance sheets. In the event the Series 2010B Bonds, Series 2010C Bonds, and Series 2008 Bonds are not remarketed, Health Services would use available cash and investments to meet the obligations. Assuming the remarketing of the Series 2010B Bonds, Series 2010C Bonds and Series 2008 Bonds scheduled maturities are as follows:

2020 $ 8,360,000 2021 8,580,000 2022 8,805,000 2023 9,050,000 2024 9,300,000 Thereafter 196,910,000 $ 241,005,000

11. Interest Rate Swap Agreement

In conjunction with the issuance of the Series 2008 Bonds, Health Services entered into an interest rate swap agreement for a notional amount of $25,000,000 with a financial institution to reduce Health Services’ overall interest expense. Under the interest rate swap agreement, Health Services receives payments from the financial institution in the amount of 67% of one month LIBOR. In exchange, Health Services will pay the financial institution a fixed rate. The fair value of the interest rate swap represented a liability of $2,289,752 and $1,012,012 at June 30, 2019 and 2018, respectively, recorded within other liabilities. The change in the fair value of the interest rate swap is recorded as a component of other nonoperating revenues, gains, and losses within the consolidated statements of operations and changes in net assets. The change in the fair value of the interest rate swap was $1,277,740 and $1,052,929 as of June 30, 2019 and 2018, respectively.

12. Employee Benefit Plans

Pension Plan Health Services sponsors a noncontributory defined benefit pension plan covering substantially all eligible employees hired on or before August 13, 2006. Employees hired after that date are participants in a defined contribution plan. Contributions to the pension plan are based on the minimum amount required by the Employee Retirement Income Security Act of 1974.

Retirement benefits are paid based principally on years of service and salary. Pension plan assets consist primarily of corporate bonds, notes, U.S. government obligations, and common stocks. As purchases and sales of pension plan assets take place, cash may sit overnight in money market funds.

26 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

Postretirement Benefits Health Services provides postretirement health care benefits to eligible employees and their dependents. The following table sets forth the components of the benefit obligations, plan assets, and funding status of the Plans based on actuarial valuations performed as of June 30, 2019 and June 30, 2018:

Pension Benefits Postretirement Benefits 2019 2018 2019 2018

Change in benefit obligation Benefit obligation at beginning of year $ 848,843,908 $ 882,968,089 $ 74,389,592 $ 76,834,173 Service cost 27,413,130 30,212,493 1,137,562 1,229,544 Interest cost 32,921,889 31,056,222 2,895,182 2,716,401 Actuarial loss (gain) 134,818,205 (34,578,994) 8,594,165 (3,528,723) Retiree contributions - - 405,599 456,101 Benefits paid (55,075,468) (60,813,902) (3,757,956) (3,317,904) Benefit obligation at end of year $ 988,921,664 $ 848,843,908 $ 83,664,144 $ 74,389,592 Change in Plan assets Fair value of Plan assets at beginning of year $ 841,891,820 $ 885,413,440 $ - $ - Actual return on Plan assets (net of expenses) 123,428,993 (14,207,718) - - Employer contributions 71,200,000 31,500,000 3,352,357 2,861,803 Retiree contributions - - 405,599 456,101 Benefits paid (55,075,468) (60,813,902) (3,757,956) (3,317,904) Fair value of Plan assets at end of year $ 981,445,345 $ 841,891,820 $ - $ - Reconciliation of funded status to net amount recognized in the balance sheet Amounts recorded as accrued liabilities Funded status $ (7,476,319) $ (6,952,088) $ (83,664,144) $ (74,389,592) Current liabilities - - (4,673,319) (4,020,061) Noncurrent liabilities (7,476,319) (6,952,088) (78,990,825) (70,369,531) Accrued liability (7,476,319) (6,952,088) (83,664,144) (74,389,592) Amounts recorded within net assets without donor restrictions Net prior service (credit) - - (17,029,745) (23,026,134) Actuarial loss 204,131,778 162,353,110 17,115,957 8,720,113 Net amount recognized at year end $ 196,655,459 $ 155,401,022 $ (83,577,932) $ (88,695,613) Accumulated benefit obligation $ 858,378,232 $ 734,739,342 $ - $ -

Pension Benefits Postretirement Benefits 2019 2018 2019 2018

Weighted-average assumptions used to determine benefit obligations at June 30 Discount rate 3.250 % 4.000 % 3.250 % 4.000 % Rate of compensation increase 3.000 % 3.000 %

27 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

Pension Benefits Postretirement Benefits 2019 2018 2019 2018

Components of net periodic benefit cost Service cost $ 27,413,130 $ 30,212,493 $ 1,137,562 $ 1,229,544 Interest cost 32,921,889 31,056,222 2,895,182 2,716,401 Expected return on plan assets (35,789,650) (35,862,938) - - Amortization of prior service cost (credit) - - (5,996,389) (6,030,362) Recognized actuarial loss 5,400,194 8,558,056 198,321 803,771 Net periodic benefit cost 29,945,563 33,963,833 (1,765,324) (1,280,646) Other changes in pension liability recognized in net assets without donor restrictions Net actuarial loss (gain) 47,178,862 15,491,662 8,594,165 (3,528,723) Amortization of (gain) (5,400,194) (8,558,056) (198,321) (803,771) Amortization of prior service credit - - 5,996,389 6,030,362 Total recognized in net assets without donor restrictions 41,778,668 6,933,606 14,392,233 1,697,868 Total recognized in net benefit cost and net assets without donor restrictions $ 71,724,231 $ 40,897,439 $ 12,626,909 $ 417,222

Pension Benefits Postretirement Benefits 2019 2018 2019 2018

Weighted-average assumptions used to determine net periodic benefit cost at beginning of fiscal year Discount rate 4.000 % 3.625 % 4.000 % 3.625 % Expected return on plan assets 4.250 % 4.250 % Rate of compensation increase 3.000 % 3.000 %

Health Services expects to recognize $15,830,272 of loss amortization, no prior service cost amortization and no amortization of transition asset or obligation as components of net pension cost during the year ending June 30, 2020, and expects to recognize $1,420,380 of loss amortization, $(5,996,389) of prior service (credit) amortization and no amortization of transition asset or obligation as components of net postretirement benefit cost during the year ending June 30, 2020. Other components of net periodic pension cost, which are presented in other non- operating losses, revenues, and gains on the consolidated statement of operations and changes in net assets, were ($370,453) and $1,241,150 as of June 30, 2019 and 2018, respectively.

The expected rate of return on plan assets assumption was developed based on historical returns for the major asset classes. This review also considered both current market conditions and projected future contributions.

Health Services utilizes published long-term high quality corporate bond indices to determine the discount rate at measurement date. Where commonly available, Health Services considers indices of various durations to reflect the timing of future benefit payments.

28 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

Plan Assets Pension plan weighted target and actual average asset allocations at June 30, 2019 and 2018 by asset category are as follows:

Asset Category 2019 2018

Fixed income 100 % 100 % 100 % 100 %

The investment policy incorporates a liability-driven investment approach that focuses on the funded status of the Plan and seeks to match the duration of the assets with that of the liabilities. As such, the investment portfolio allocation is comprised of 100% long duration fixed income securities. The Plan’s financial condition is monitored on an ongoing basis by means of an annual funding review, an annual independent actuarial valuation, and quarterly investment portfolio reviews.

The following table represents the Plan’s financial instruments as of June 30, 2019, measured at fair value on a recurring basis using the fair value hierarchy defined in Note 5:

Level 1 Level 2 Level 3 Total

Money market funds $ 17,415,752 $ - $ - $ 17,415,752 U.S.Government and agency securities 176,582,902 26,126,937 - 202,709,839 Corporate and other debt securities - 761,315,781 - 761,315,781 Equity securities 3,973 - - 3,973 Total assets at fair value$ 194,002,627 $ 787,442,718 $ - $ 981,445,345

The following table represents the Plan’s financial instruments as of June 30, 2018, measured at fair value on a recurring basis using the fair value hierarchy defined in Note 5:

Level 1 Level 2 Level 3 Total

Money market funds $ 22,690,992 $ - $ - $ 22,690,992 U.S.Government and agency securities 196,010,677 21,575,554 - 217,586,231 Corporate and other debt securities - 601,610,020 - 601,610,020 Equity securities 4,577 - - 4,577 Total assets at fair value$ 218,706,246 $ 623,185,574 $ - $ 841,891,820

Contributions During Fiscal 2019, Health Services contributed $71,200,000 to the pension plan in advance of the expected September, 2019 required contribution. Health Services expects to contribute approximately $30,200,000 to the pension plan and $4,673,318 to the postretirement benefit plan during the fiscal year ending June 30, 2020. The actual pension plan contribution may be higher or lower depending on interest rates, pension plan asset values, and legislated funding requirements.

29 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

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

Pension Postretirement Benefits Benefits

2020$ 59,073,333 $ 4,673,318 2021 57,357,726 4,610,139 2022 59,820,278 4,763,866 2023 61,178,154 4,845,575 2024 62,671,310 4,935,604 2025 - 2029 333,597,512 25,593,126

The annual rate of increase assumed in the per capita cost of covered health care benefits was 6.75% and 7.50% for the Pre 65 and Post 64 participants, respectively, for June 30, 2019; the rates are assumed to decrease gradually to 5% for the fiscal year 2026 and remain at that level thereafter.

1-Percentage 1-Percentage Point Point Increase Decrease

Effect on total service and interest cost$ 39,695 $ (37,091) Effect on postretirement benefit obligation 575,904 (540,531)

Defined Contribution Retirement Plan Health Services sponsors a defined contribution retirement plan for all employees hired after August 13, 2006. Under the plan, Health Services contributes a percent of compensation quarterly based on an employee’s years of vesting service. The employees vest in the employer contributions over a three-year period beginning on the employee’s hire date. The expense incurred by Health Services for the year ended June 30, 2019 and 2018 was $17,337,669 and $15,388,540, respectively.

Deferred Compensation Plan Health Services maintains a Tax-Deferred Annuity Plan for all employees. Under the Plan, Health Services accumulates employee contributions which are transferred to and invested by various trustees. Health Services contributes 50% of the employee contributions up to a maximum of 3% of an employee’s salary. Contributions for the years ended June 30, 2019 and 2018 were $17,765,599 and $16,494,256, respectively.

CCHHCS Pension Plan CCHHCS sponsors a noncontributory defined benefit pension plan covering substantially all eligible employees hired on or before August 26, 2007. Employees hired after that date are participants in a defined contribution plan. Generally, benefits under the Plan are based on the employee’s compensation and years of service. Contributions to the Plan are designed to meet the minimum funding requirements of the Employee Retirement Income Security Act of 1974. Employees are on a graduated vesting scale and become fully vested after seven years of service.

30 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

The following tables set forth the components of the benefit obligation, plan assets, and funding status of the plan based on actuarial valuations performed as of June 30, 2019 and June 30, 2018:

2019 2018

Change in benefit obligation Benefit obligation at beginning of year $ 36,161,599 $ 37,799,771 Service cost 1,078,610 1,243,781 Interest cost 1,409,254 1,336,136 Actuarial loss (gains) 4,228,711 (2,169,800) Benefits paid (2,643,840) (2,048,289) Benefit obligation at end of year $ 40,234,334 $ 36,161,599 Change in Plan assets Fair value of plan assets at beginning of year $ 36,019,431 $ 37,181,999 Actual return on plan assets (net of expenses) 4,087,311 (314,279) Employer contributions 2,200,000 1,200,000 Benefits paid (2,643,840) (2,048,289) Fair value of plan assets at end of year $ 39,662,902 $ 36,019,431 Reconciliation of funded status to net amount recognized in the balance sheet Amounts recorded as accrued liabilities Noncurrent liabilities $ (571,432) $ (142,168) Accrued liability (571,432) (142,168) Amounts recorded within net assets without donor restrictions Actuarial loss 10,031,729 8,546,278 Net amount recognized at year end $ 9,460,297 $ 8,404,110 Accumulated benefit obligation $ 36,208,428 $ 32,394,660

Pension Benefits 2019 2018

Weighted-average assumptions used to determine benefit obligations at June 30 Discount rate 3.250% 4.000 % Rate of compensation increase 3.000% 3.000 %

31 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

2019 2018

Components of net periodic benefit cost Service cost $ 1,078,610 $ 1,243,781 Interest cost 1,409,254 1,336,136 Expected return on plan assets (1,553,697) (1,564,035) Recognized actuarial loss 452,742 641,684 Amortization of prior service (credit) (243,096) (243,096) Net periodic benefit cost 1,143,813 1,414,470 Other changes in pension liability recognized in net assets without donor restrictions Net actuarial (gain) 1,275,805 (291,486) Amortization of (gain) 452,742 (641,684) Amortization of prior service credit (243,096) 243,096 Total recognized in net assets without donor restrictions 1,485,451 (690,074) Total recognized in net benefit cost and net assets without donor restrictions $ 2,629,264 $ 724,396

Pension Benefits 2019 2018

Weighted-average assumptions used to determine net periodic benefit cost at beginning of fiscal year Discount rate 4.000% 3.625 % Expected return on plan assets 4.250% 4.250 % Rate of compensation increase 3.000% 3.000 %

CCHHCS expects to recognize $892,081 of loss amortization, $(170,167) of prior service (credit) amortization and no amortization of transition asset or obligation as components of net pension cost during the year ending June 30, 2020. Other components of net periodic pension cost, which are presented in other non-operating losses, revenues, and gains on the CCHHCS statement of operations and changes in net assets, were $65,203 and $170,689 as of June 30, 2019 and 2018, respectively.

The expected rate of return on plan assets assumption was developed based on historical returns for the major asset classes. This review also considered both current market conditions and projected future contributions.

CCHHCS utilizes published long-term high quality corporate bond indices to determine the discount rate at measurement date. Where commonly available, CCHHCS considers indices of various durations to reflect the timing of future benefit payments.

32 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

Plan Assets Pension plan weighted target and actual average asset allocations at June 30, 2019 and June 30, 2018 by asset category are as follows:

2019 2018

Asset category Equities 0 % 4 % Fixed income 100 % 96 % 100 % 100 %

The investment policy incorporates a liability-driven investment approach that focuses on the funded status of the Plan and seeks to match the duration of the assets with that of the liabilities. As such, the investment portfolio allocation is comprised of 100% long duration fixed income securities. The Plan’s financial condition is monitored on an ongoing basis by means of an annual funding review, an annual independent actuarial valuation, and quarterly investment portfolio reviews.

The following table represents the Plan’s financial instruments as of June 30, 2019, measured at fair value on a recurring basis using the fair value hierarchy defined in Note 5:

Level 1 Level 2 Level 3 Total

Money market funds $ 620,901 $ - $ 620,901 U.S. Government and agency securities 9,388,016 9,388,016 Corporate and other debt securities 29,653,985 29,653,985 $ 10,008,917 $ 29,653,985 $ - 39,662,902 Equity managed funds measured at net asset value Total assets at fair value $ 39,662,902

The following table represents the Plan’s financial instruments as of June 30, 2018, measured at fair value on a recurring basis using the fair value hierarchy defined in Note 5:

Level 1 Level 2 Level 3 Total

Money market funds $ 499,399 $ - $ - $ 499,399 U.S. Government and agency securities 7,757,360 - - 7,757,360 Corporate and other debt securities - 26,484,029 - 26,484,029 $ 8,256,759 $ 26,484,029 $ - 34,740,788 Equity managed funds measured at net asset value 1,278,643 Total assets at fair value $ 36,019,431

Contributions CCHHCS expects to contribute approximately $1,400,000 to the pension plan during the fiscal year ending June 30, 2020. The actual pension plan contribution may be higher or lower depending on interest rates, pension plan asset values, and legislated funding requirements.

33 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

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

2020 $ 1,980,117 2021 2,061,698 2022 2,090,032 2023 2,226,983 2024 2,406,244 Thereafter 12,958,255

Defined Contribution Retirement Plan CCHHCS began a defined contribution plan for all employees hired on or after August 26, 2007. Eligible employees in CCHHCS’s noncontributory defined benefit pension plan also had the one-time choice to switch to the defined contribution retirement plan effective January 1, 2008. Under the plan, CCHHCS contributes a percent of compensation quarterly based on an employee’s years of vesting service. The employees vest in the employer contributions over a three-year period beginning on the employee’s hire date. The expense incurred by CCHHCS for the year ended June 30, 2019 and 2018 was $633,015 and $734,225, respectively.

Deferred Compensation Plan CCHHCS maintains a Tax-Deferred Annuity Plan (the “Plan”) for all employees. Under the Plan, CCHHCS accumulates employee contributions which are transferred to and invested by the trustee. CCHHCS is not required to make additional contributions on behalf of employees and did not make any contributions in 2019 or 2018.

13. Self-Insurance Liabilities

The System maintains self-insurance programs for worker's compensation, medical professional liability, and general liability claims coverage. Risk retention for the primary medical professional and primary general liabilities are maintained through an alternative risk finance program via the Captive, which provides for indemnification to the System resulting from medical malpractice and general liability exposures in Delaware, Maryland, New Jersey, and Pennsylvania. The Captive's policy provides for a self-insured retention of $3,500,000 per medical incident or occurrence and $20,000,000 in annual aggregate. In addition, an excess umbrella liability coverage was established through full reinsurance with commercial carriers providing a total of $60,000,000 in excess coverage.

Actuarially determined undiscounted projections for medical malpractice and worker’s compensation claims at June 30, 2019 and 2018 amounted to $56,658,073 and $51,209,192, respectively and represent the value of claims that will be settled in the future based on anticipated payout patterns. The current portion of the accruals of $17,506,000 and $16,515,268 at June 30, 2019 and 2018, respectively, is recorded as a component of other accrued expenses and current liabilities on the balance sheet. Total expenses incurred for medical malpractice and worker’s compensation costs were $23,093,486 in 2019 and $28,604,592 in 2018.

34 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

14. Commitments and Contingencies

Operating Leases Commitments for leases that do not meet the criteria for capitalization are classified as operating leases with rent expense charged to operations as incurred. The System has various leases for office facilities and equipment under cancelable and noncancelable operating leases, with initial terms in excess of one year. Total related lease expense amounted to $10,584,933 and $10,655,168 in 2019 and 2018, respectively.

Future minimum lease payments under noncancelable operating leases are as follows:

2020 $ 8,431,093 2021 6,605,774 2022 5,487,630 2023 4,450,515 2024 1,976,016 Thereafter 563,549

Litigation Health Services and CCHHCS are defendants in several matters of litigation all in the ordinary course of conducting business. Management believes the ultimate outcome of these matters will not have a material effect on Health Services or CCHHCS’s financial position or the results of operations.

Commitments In fiscal 2017, Health Services entered into a seven-year agreement with a vendor to provide healthcare IT software and solutions. Payments under this commitment will total $163,674,466. At June 30, 2019, the remaining commitment is $107,554,426, of which $25,121,091 will be paid in fiscal 2020.

15. Concentrations of Credit Risk

The Financial instruments which potentially subject the System to concentrations of credit risk consist principally of cash, cash equivalents, investments, and accounts receivable.

Included in accounts receivable are amounts related to the services performed for individuals, as well as under various contractual agreements with several third-party payors. Management believes its concentration of credit risk, with respect to accounts receivable, is limited by a large customer base.

35 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

16. Liquidity and Availability

As of June 30, 2019, the System has the following financial assets available for general expenditure within one year of the balance sheet date:

2019 Cash and cash equivalents $ 114,487,107 Short-term investments 188,510,758 Patient accounts receivable, net 309,251,789 Other current assets 12,320,398 Assets limited as to use 30,023,062 Investments 1,672,857,093 $ 2,327,450,207

The above assets are available for general expenditure within one year in the normal course of operations. The System defines general expenditure as an operating expense. Other current assets in the table above relate to non-patient accounts receivables that the System expects to collect within one year. Assets limited as to use are comprised of board designated funds, which can be released by the Board and become available for general expenditure. The System has long- term investments that could be made available for general expenditure within the next year, if needed.

The System invests cash in excess of daily requirements in either money market funds, short-term investments, or long-term investments. Investment decisions are made based on anticipated liquidity needs, such that financial assets are available as general expenditures, liabilities, and other obligations come due.

As of June 30, 2019, the System was in compliance with financial bond covenants.

17. Functional Expenses

The System provides general health care services to patients within its geographic region. Expenses related to providing these services for the year ended June 30, 2019 consisted of the following:

Healthcare General and Services Administrative Fundraising Total

Operating Expenses Salaries and employee benefits$ 1,067,957,793 $ 180,814,906 $ - $ 1,248,772,699 Supplies and other expenses 499,974,167 113,060,995 3,377,184 616,412,346 Interest Expense 3,252,850 368,516 - 3,621,366 Depreciation 76,507,862 25,602,870 - 102,110,732

Total Operating Expenses $ 1,647,692,672 $ 319,847,287 $ 3,377,184 $ 1,970,917,143

36 Christiana Care Health System and Affiliates Notes to Consolidated Financial Statements June 30, 2019 and 2018

The consolidated statement of operations and changes in net assets reports certain expense categories that are attributable to more than one health care service or support function. Therefore, these expenses require an allocation on a reasonable basis that is consistently applied. Costs not directly attributable to a function, including depreciation, amortization and interest and other occupancy costs, are allocated to a function based on a square footage. IT expenses are allocated based on a percentage of services provided to each function.

For the year ended June 30, 2018, functional expenses were $1,619,291,088 for providing health care services and $259,613,048 for general and administrative items, totalling $1,878,904,136.

18. Subsequent Events

The System has performed an evaluation of subsequent events through August 22, 2019, which is the date the consolidated financial statements were issued. There were no events that require adjustment to the audited consolidated financial statements or disclosure in the notes to the audited consolidated financial statements.

37

Condensed Consolidating Supplemental Schedules

Christiana Care Health System and Affiliates Condensed Consolidating Balance Sheet June 30, 2019

Christiana Christiana Christiana Christiana Care Home Care Care Care Health & Christiana Health Health Health Community Care System Services Initiatives Services Health Plans Eliminations Total

Assets Current assets Cash and cash equivalents $ 1,837,610 $ 102,516,275 $ 1,710,558 $ 8,395,507 $ 27,157 $ - $ 114,487,107 Short-term investments - 188,510,758 - - - - 188,510,758 Patient accounts receivable, net - 304,981,613 401,392 3,868,784 - - 309,251,789 Other current assets 1,515,199 77,610,325 277,522 353,169 - (14,310,3 06) 65,445,909 Total current assets 3,352,809 673,618,971 2,389,472 12,617,460 27,157 (14,310,306) 677,695,563 Assets limited as to use - 30,023,062 - - - - 30,023,062 Long-term investments 28,054 1,726,015,688 - 10,909,829 - (10,909,829 ) 1,726,043,742 Property and equipment, net - 1,102,948,508 52,702 103,485 - - 1,103,104,695 Other assets 7,140,467 33,958,607 336,637 (92) - (8,119,092) 33,316,52 7 Total assets $ 10,521,329 $ 3,566,564,836 $ 2,778,812 $ 23,630,682 $ 27,157 $ (33,339,227) $ 3,570,183,589 Liabilities and Net Assets Current liabilities Current portion of long-term debt $ - $ 164,735,000 $ - $ - $ - $ - $ 164,735,000 Accounts payable and accrued expenses 6,527,241 303,775,501 7,735,571 5,461,523 9,287 (14,310,306) 309,198,816 Total current liabilities 6,527,241 468,510,501 7,735,571 5,461,523 9,287 (14,310,306) 473,933,816 Long-term debt, net of current portion - 75,717,898 - - - - 75,717,898 Pension and postretirement benefits - 86,467,144 - 571,432 - - 87,038, 576 Other liabilities 2,380 190,616,708 - 2,611,353 - (10,909,829) 182,320 ,612 Total liabilities 6,529,621 821,312,250 7,735,571 8,644,308 9,287 (25 ,220,135) 819,010,902 Net assets Without donor restrictions (4,127,384) 2,683,951,067 (4,956,759) 14 ,899,856 17,870 - 2,689,784,650 With donor restrictions Purpose and time restricted 7,290,092 30,659,164 - 86,518 - (7,290,09 2) 30,745,682 Perpetual in nature 829,000 30,642,355 - - - (829,000) 30,642,355 Total net assets with donor restrictions 8,119,092 61,301,519 - 86,518 - (8,119,092) 61,388,037 Total net assets 3,991,708 2,745,252,586 (4,956,759) 14,986,374 17,870 (8,119,092) 2,751,172,687 Total liabilities and net assets $ 10,521,329 $ 3,566,564,836 $ 2,778,812 $ 23,630,682 $ 27,157 $ (33,339,227) $ 3,570,183,589

The accompanying notes are an integral part of these condensed consolidating financial statements.

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Christiana Care Health System and Affiliates Condensed Consolidating Balance Sheet June 30, 2018

Christiana Christiana Christiana Christiana Care Home Care Care Care Health & Christiana Health Health Health Community Care System Services Initiatives Services Health Plans Eliminations Total

Assets Current assets Cash and cash equivalents $ 1,695,044 $ 109,239,932 $ 739,517 $ 10,533,312 $ 41,289 $ - $ 122,249,094 Short-term investments - 184,648,494 ----184,648,494 Patient accounts receivable, net - 284,783,184 405,456 2,669,260 - - 287,857,900 Other current assets 2,941,626 65,797,001 81,940 366,457 - (7,863,904) 61,323,120 Total current assets 4,636,670 644,468,611 1,226,913 13,569,029 41,289 (7,863,904) 656,078,608

Assets limited as to use - 31,431,438 - - - - 31,431,438 Long-term investments 301,023 1,625,497,705 - 10,318,078 - (10,318,078) 1,625,798,728 Property and equipment, net - 902,263,865 75,804 119,914 - - 902,459,583 Other assets 3,612,833 29,204,296 529,961 - - (6,035,345) 27,311,745 Total assets $ 8,550,526 $ 3,232,865,915 $ 1,832,678 $ 24,007,021 $ 41,289 $ (24,217,327) $ 3,243,080,102

Liabilities and Net Assets Current liabilities Current portion of long-term debt $ - $ 170,670,000 $ - $ - $ - $ - $ 170,670,000 Accounts payable and accrued expenses 4,783,876 261,997,500 2,793,816 5,090,856 3,104 (7,863,904) 266,805,248 Total current liabilities 4,783,876 432,667,500 2,793,816 5,090,856 3,104 (7,863,904) 437,475,248

Long-term debt, net of current portion - 77,887,244 ----77,887,244 Pension and postretirement benefits - 77,321,618 - 142,168 - - 77,463,786 Other liabilities 11,180 66,999,759 - 2,480,919 - (10,318,078) 59,173,780 Total liabilities 4,795,056 654,876,121 2,793,816 7,713,943 3,104 (18,181,982) 652,000,058

Net assets Without donor restrictions (2,279,875) 2,519,198,396 (961,138) 16,209,336 38,185 - 2,532,204,904 With donor restrictions Purpose and time restricted 5,845,345 29,596,700 - 83,742 - (5,845,345) 29,680,442 Perpetual in nature 190,000 29,194,698 - - - (190,000) 29,194,698 Total net assets with donor restrictions 6,035,345 58,791,398 - 83,742 - (6,035,345) 58,875,140 Total net assets 3,755,470 2,577,989,794 (961,138) 16,293,078 38,185 (6,035,345) 2,591,080,044 Total liabilities andnet assets $ 8,550,526 $ 3,232,865,915 $ 1,832,678 $ 24,007,021 $ 41,289 $ (24,217,327) $ 3,243,080,102

The accompanying notes are an integral part of these condensed consolidating financial statements.

39

Christiana Care Health System and Affiliates Condensed Consolidating Statement of Operations Year Ended June 30, 2019

Christiana Christiana Christiana Christiana Care Home Care Care Care Health & Christiana Health Health Health Community Care System Services Initiatives Services Health Plans Eliminations Total

Operating revenues and other support Net patient service revenue $ - $ 1,973,908,782 $ 2,265,635 $ 45,712,560 $ - $ - $ 2,021,886,977 Other revenue 436,205 64,352,591 222,521 1,042,897 - (8,543,390) 57,510,824 Net assets released from donor restrictions used for operations 1,641,896 2,125,515 - 5,295 - - 3,772,706 Total operating revenues and other support 2,078,101 2,040,386,888 2,488,156 46,760,752 - (8,543,390) 2,083,170,507 Operating expenses Salaries and employee benefits - 1,207,870,374 1,297,516 39,621,823 - (17,014) 1,248,772,699 Supplies and other expenses 3,575,726 608,875,670 4,969,835 7,497,175 20,316 (8,526,376) 616,412,346 Interest expense - 3,621,366 - - - - 3,621,366 Depreciation expense - 102,060,631 23,102 26,999 - - 102,110,732 Total operating expenses 3,575,726 1,922,428,041 6,290,453 47,145,997 20,316 (8,543,390) 1,970,917,143 Operating income (1,497,625) 117,958,847 (3,802,297) (385,245) (20,316) - 112,253,364 Nonoperating revenues, gains, and losses Investment return, net 3,535 99,524,924 - 626,425 - - 100,154,884 Other nonoperating (losses), revenues, and gains - (3,154,865) (193,324) (65,208) - - (3,413,397) Total nonoperating revenue, gains, and losses 3,535 96,370,059 (193,324) 561,217 - - 96,741,487 Excess of revenues over expenses $ (1,494,090) $ 214,328,906 $ (3,995,621) $ 175,972 $ (20,316) $ - $ 208,994,851

The accompanying notes are an integral part of these condensed consolidating financial statements.

40

Christiana Care Health System and Affiliates Condensed Consolidating Statement of Operations Year Ended June 30, 2018

Christiana Christiana Christiana Christiana Care Home Care Care Care Health & Christiana Health Health Health Community Care System Services Initiatives Services Health Plans Eliminations Total

Operating revenues and other support Net patient service revenue $ - $ 1,878,902,576 $ 767,716 $ 46,159,271 $ - $ - $ 1,925,829,563 Other revenue 2,365,656 61,696,620 141,663 823,304 - (6,812,632) 58,21 4,611 Net assets released from donor restrictions used for operations - 3,242,083 - 4,189 - - 3,246,272 Total operating revenues and other support 2,365,656 1,943,841,279 909,379 46,986,764 - (6,812,632) 1,987,290,446 Operating expenses Salaries and employee benefits - 1,132,391,117 275,606 38,238,911 -(1,194,748) 1,169,710,886 Supplies and other expenses 3,347,569 600,528,185 1,904,578 6,930,103 10,964 (5,617,884) 607,103,515 Interest expense -3,634,393----3,634,393 Depreciation expense - 98,411,493 7,462 36,387 - - 98,455,342 Total operating expenses 3,347,569 1,834,965,188 2,187,646 45,205,401 10,964 (6,812,632) 1,878,904,136 Operating income (981,913) 108,876,091 (1,278,267) 1,781,363 (10,964) - 108,386,310 Nonoperating revenues, gains, and losses Investment return, net 15,214 142,653,187 29,007 1,106,681 - - 143,804,089 Other nonoperating (losses), revenues, and gains - 889,396 - 4,760 - - 894,156 Total nonoperating revenue, gains, and losses 15,214 143,542,583 29,007 1,111,441 - - 144,698,245 Excess of revenues over expenses $ (966,699) $ 252,418,674 $ (1,249,260) $ 2,892,804 $ (10,964) $ - $ 253,084,555

The accompanying notes are an integral part of these condensed consolidating financial statements.

41

Christiana Care Health System and Affiliates Notes to Condensed Consolidating Supplemental Schedules Years Ended June 30, 2019 and 2018

Basis of Presentation The accompanying supplemental condensed consolidating information includes the condensed consolidating balance sheets and the condensed consolidating statements of operations of the individual entities of Christiana Care Health System and Affiliates (the “System”). The condensed consolidating information is prepared on the accrual basis of accounting. All intercompany accounts and transactions between entities have been eliminated. The condensed consolidating information is presented for purposes of additional analysis of the consolidated financial statements and is not required as part of the basic financial statements. The supplemental condensed consolidating balance sheets are presented in accordance with accounting principles generally accepted in the United States of America consistent with the consolidated financial statements.

The supplemental condensed consolidating statements of operations are not intended to be a presentation in accordance with accounting principles generally accepted in the United States of America as a result of the exclusion of the changes in net assets.

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APPENDIX C

SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE AND SUPPLEMENTAL MASTER INDENTURES

3406963.6 043801 OS [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX C

SUMMARY OF CERTAIN PROVISIONS OF THE MASTER INDENTURE AND SUPPLEMENTAL MASTER INDENTURES

A brief description of certain of the provisions of each of the Master Indenture, First Supplemental Indenture and Second Supplemental Indenture is set forth below. Such descriptions do not purport to be comprehensive or definitive. All references herein to the Master Indenture, First Supplemental Indenture and Second Supplemental Indenture are qualified in their entirety by reference to provisions of each such document, copies of which will be available for review following the issuance and delivery of the Bonds at the office of the Bond Trustee.

DEFINITIONS OF CERTAIN TERMS USED IN THE MASTER INDENTURE

The following are definitions of certain terms used in the Master Indenture and in the Summary of Certain Provisions of the Master Indenture herein:

“Affiliate” means a corporation, limited liability company, partnership, joint venture, association, business trust or similar entity organized under the laws of the United States of America or any state thereof which directly, or indirectly through one or more intermediaries, controls, is controlled by (or is under common control with) any Credit Group Member.

“Annual Debt Service” means for each Fiscal Year the sum (without duplication) of the aggregate amount of principal and interest scheduled to become due and payable in such Fiscal Year on all Long-Term Indebtedness of the Credit Group then Outstanding (by scheduled maturity, acceleration, mandatory redemption or otherwise, but not including purchase price becoming due as a result of mandatory or optional tender or put), less any amounts of such principal or interest to be paid during such Fiscal Year from (a) the proceeds of Indebtedness or (b) moneys or Government Obligations subject to an Irrevocable Deposit for the purpose of paying such principal or interest; provided, however, that if an Identified Financial Product Agreement has been entered into by any Credit Group Member with respect to Long-Term Indebtedness and the counterparty thereto has not defaulted in the payment obligations thereunder, interest on such Long-Term Indebtedness shall be included in the calculation of Annual Debt Service by including for each Fiscal Year an amount equal to the amount of interest payable on such Long-Term Indebtedness in such Fiscal Year at the rate or rates stated in such Long-Term Indebtedness plus any Financial Product Payments under an Identified Financial Product Agreement payable in such Fiscal Year minus any Financial Product Receipts under an Identified Financial Product Agreement receivable in such Fiscal Year.

“Authorized Representative” means with respect to each Credit Group Member, its chief executive officer, president, chief financial officer, chief legal officer, secretary, assistant secretary, treasurer or any other person designated as an Authorized Representative of such Credit Group Member by a Certificate of that Credit Group Member signed by its chief executive officer, president, or chief financial officer and filed with the Master Trustee.

“Balloon Indebtedness” means Long-Term Indebtedness, 20% or more of the principal of which (calculated as of the date of issuance) becomes due during any period of 12 consecutive

C-1 months, absent acceleration, if such maturing principal amount is not required to be amortized below such percentage by mandatory redemption prior to such 12-month period.

“Book Value” means, when used in connection with Property, Plant and Equipment or other Property of any Credit Group Member, the value of such property, net of accumulated depreciation, as it is carried on the books of the Credit Group Member in conformity with GAAP, and when used in connection with Property, Plant and Equipment or other Property of the Credit Group, means the aggregate of the values so determined with respect to such Property of each Credit Group Member determined in such a way that no portion of such value of Property of any Credit Group Member is included more than once.

“Certificate,” “Statement,” “Request,” “Consent” or “Order” of any Credit Group Member or of the Master Trustee means, respectively, a written certificate, statement, request, consent or order signed in the name of such Credit Group Member by its Authorized Representative or in the name of the Master Trustee by its Responsible Officer. Any such instrument and supporting opinions or certificates, if any, may, but need not, be combined in a single instrument with any other instrument, opinion or certificate and the two or more so combined shall be read and construed as a single instrument. If and to the extent required by the Master Indenture, each such instrument shall include the statements provided for in the Master Indenture.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated thereunder.

“Controlling Member” means the Obligated Group Member designated by the Credit Group Representative to establish and maintain control over a Designated Affiliate.

“Corporation” means Christiana Care Health System, Inc., a Delaware nonprofit corporation, and its successors and assignees.

“Credit Group” or “Credit Group Members” means all Obligated Group Members and Designated Affiliates.

“Credit Group Financial Statements” has the meaning set forth in the Master Indenture.

“Credit Group Representative” means the Corporation or such other Credit Group Member (or Credit Group Members acting jointly) as may have been designated pursuant to written notice to the Master Trustee executed by all of the Obligated Group Members.

“Debt Service Coverage Ratio” means, for any period of time, the ratio determined by dividing Income Available for Debt Service by Annual Debt Service.

“Default” means an event that, with the passage of time or the giving of notice or both, would become an Event of Default.

“Designated Affiliate” means any Person which has been so designated by the Credit Group Representative in accordance with the Master Indenture so long as such Person has not been further designated by the Credit Group Representative as no longer being a Designated Affiliate in accordance with the Master Indenture.

C-2 “Effective Date” means February [11], 2020.

“Event of Default” means any of the events specified in the Master Indenture.

“Fair Market Value,” when used in connection with Property, means the fair market value of such Property as determined by either:

(a) an appraisal of the portion of such Property which is real property and the permanent improvements thereof made within five years of the date of determination by a “Member of the Appraisal Institute” and an appraisal of any material portion of such Property which is not real property made within five years of the date of determination by any expert qualified in relation to the subject matter, provided that any such appraisal shall be performed by an Independent Consultant, adjusted for the period, not in excess of five years, from the date of the last such appraisal for changes in the implicit price deflator for the gross national product as reported by the United States Department of Commerce or its successor agency, or if such index is no longer published, such other index certified to be comparable and appropriate in an Officer’s Certificate delivered to the Master Trustee;

(b) a bona fide offer for the purchase of such Property made on an arm’s- length basis within six months of the date of determination, as established by an Officer’s Certificate; or

(c) an Authorized Representative of the Credit Group Representative (whose determination shall be made in good faith and set forth in an Officer’s Certificate filed with the Master Trustee) if the fair market value of such Property is less than or equal to the greater of ten million dollars ($10,000,000) or 10% of cash and equivalents as shown on the Credit Group Financial Statements.

“Financial Product Agreement” means any interest rate exchange agreement, hedge or similar arrangement, including, inter alia, an interest rate swap, asset swap, a constant maturity swap, a forward or futures contract, cap, collar, option, floor, forward or other hedging agreement, arrangement or security, direct funding transaction or other derivative, however denominated and whether entered into on a current or forward basis, excluding however commodity (including power) forward purchase agreements.

“Financial Product Extraordinary Payments” means any payments required to be paid to a counterparty by a Credit Group Member pursuant to a Financial Product Agreement in connection with the termination thereof, tax gross-up payments, expenses, default interest, and any other payments or indemnification obligations to be paid to a counterparty by a Credit Group Member under a Financial Product Agreement, which payments are not Financial Product Payments.

“Financial Product Payments” means regularly scheduled payments required to be paid to a counterparty by a Credit Group Member pursuant to a Financial Product Agreement and excluding Financial Product Extraordinary Payments.

“Financial Product Receipts” means regularly scheduled payments required to be paid to a Credit Group Member by a counterparty pursuant to a Financial Product Agreement.

C-3 “Fiscal Year” means the period beginning on July 1 of each year and ending on the next succeeding June 30, or any other twelve-month period hereafter designated by the Credit Group Representative as the fiscal year of the Credit Group.

“GAAP” means accounting principles generally accepted in the United States of America, consistently applied.

“Governing Body” means, when used with respect to any Credit Group Member, its board of directors, board of trustees or other board or group of individuals in which all of the powers of such Credit Group Member are vested, except for those powers reserved to the corporate membership of such Credit Group Member by the articles of incorporation or bylaws of such Credit Group Member.

“Government Issuer” means any municipal corporation, political subdivision, state, territory or possession of the United States, or any constituted authority or agency or instrumentality of any of the foregoing empowered to issue obligations on behalf thereof, which obligations would constitute Related Bonds under the Master Indenture.

“Government Obligations” means: (1) direct obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury of the United States of America) or obligations the timely payment of the principal of and interest on which are fully and unconditionally guaranteed by the United States of America; (2) obligations issued or guaranteed by any state or any agency, department or instrumentality of the United States of America or any state if the obligations issued or guaranteed by such entity are rated in one of the two highest Rating Categories of a Rating Agency; (3) certificates which evidence ownership of the right to the payment of the principal of and interest on obligations described in clauses (1) and/or (2), provided that such obligations are held in the custody of a bank or trust company in a special account separate from the general assets of such custodian; and (4) obligations the interest on which is excluded from gross income for purposes of federal income taxation pursuant to Section 103 of the Internal Revenue Code of 1986, and the timely payment of the principal of and interest on which is fully provided for by the deposit in trust of cash and/or obligations described in clauses (1), (2) and/or (3).

“Government and Industry Restrictions” means any federal, state or other applicable governmental law or regulations (including income tax limitations which must be respected to preserve the exempt status of the applicable Person, eligibility of a Person for benefits under any state, local or federal subsidy or exemption program, or conditions imposed specifically on the Credit Group Members of the Credit Group Members’ facilities), or any general industry standards or general industry conditions affecting any Credit Group Member and its health care or research facilities or other licensed facilities placing restrictions and limitations on the (i) rates, fees, research funding and charges to be fixed, charged or collected by any Credit Group Member, (ii) rates, fees, research funding and charges to be fixed, charged and collected by the Credit Group Members, or (iii) the amount or timing of the receipt of such revenues.

“Gross Receivables” means all of the accounts, chattel paper, instruments and payment intangibles (all as defined in the UCC) of each Obligated Group Member as are now in existence or as may be hereafter acquired and the proceeds thereof; excluding, however, (1) all Restricted

C-4 Moneys and (2) all accounts or payment intangibles consisting of or arising from patents and royalties.

“Guaranty” means any obligation of any Credit Group Member guaranteeing, directly or indirectly, any obligation of any other Person which would, if such other Person were a Credit Group Member, constitute Indebtedness.

“Holder” means the registered owner of any Obligation in registered form or the bearer of any Obligation in coupon form which is not registered or is registered to bearer or the party or parties to any contractual obligation designated to be an Obligation set forth in a related Supplement and identified therein as the party to whom payment is due thereunder or the “holder” thereof.

“Identified Financial Product Agreement” means one or more Financial Product Agreements identified to the Master Trustee in a Certificate of the Credit Group Representative as having been entered into by a Credit Group Member with a Qualified Provider with respect to Indebtedness (which is either then-Outstanding or to be issued after the date of such Certificate) identified in such Certificate, with a notional amount not in excess of the principal amount of such Indebtedness.

“Immaterial Affiliates” means Persons (i) that are not Members of the Credit Group; and (ii) whose total revenues or net assets, without donor restrictions (or net worth, as applicable), as shown in their financial statements for their most recent fiscal year, represented, in the aggregate, less than 20% of the combined or consolidated total revenues or net assets, without donor restrictions of the Credit Group, as shown on the Credit Group Financial Statements, plus the total revenues or net assets, without donor restrictions, of such Persons (as if they were Members of the Credit Group for such period), for the most recently completed Fiscal Year of the Credit Group.

“Income Available for Debt Service” means, with respect to the Credit Group as to any period of time, excess of revenues over expenses before depreciation, amortization, and interest expense (including Financial Product Payments and Financial Product Receipts on Identified Financial Product Agreements), as determined in accordance with GAAP and as shown on the Credit Group Financial Statements, provided that no determination thereof shall take into account:

(a) gifts, grants, bequests, donations or contributions, to the extent (i) temporarily restricted by the donor specifically for capital purposes or (ii) permanently restricted by the donor specifically to a particular purpose other than (1) payment of principal of, redemption premium and interest on Indebtedness, (2) release into unrestricted funds, or (3) payment of operating expenses;

(b) the net proceeds of casualty insurance and condemnation awards;

(c) any gain or loss resulting from the extinguishment of Indebtedness;

(d) any gain or loss resulting from the sale, exchange or other disposition of assets not in the ordinary course of business;

(e) any gain or loss resulting from any discontinued operations;

C-5 (f) any gain or loss resulting from pension terminations, settlements or curtailments;

(g) any unusual charges for employee severance;

(h) non-cash adjustments to the value of assets or liabilities resulting from changes in GAAP;

(i) unrealized gains or losses on investments, including “other than temporary” declines in Book Value;

(j) gains or losses resulting from changes in valuation of any hedging, derivative, interest rate exchange or similar contract (including Financial Product Agreements);

(k) any Financial Product Extraordinary Payments or similar payments on any hedging, derivative, interest rate exchange or similar contract that does not constitute a Financial Product Agreement;

(l) unrealized gains or losses from the write-down, reappraisal or revaluation of assets;

(m) other nonrecurring items of any extraordinary nature which do not involve the receipt, expenditure or transfer of assets; or

(n) any gains or losses or revenues or expenses attributable to transactions between any Credit Group Member or any other Credit Group Member; provided, however, at the option of the Credit Group Representative, net realized gains and losses from the sale of investments may be included in the computation of Income Available for Debt Service on the basis of the average annual amount of those gains and losses for the three Fiscal Years immediately preceding the computation date (rather than including the actual amount of net realized gains and losses from the sale of investments for the period for which a computation is being made).

“Indebtedness” means any Guaranty (other than any Guaranty by any Credit Group Member of Indebtedness of any other Credit Group Member) and any obligation of any Credit Group Member (a) for repayment of borrowed money, (b) with respect to capital or finance leases or (c) under installment sale agreements; provided, however, that if more than one Credit Group Member shall have incurred or assumed a Guaranty of a Person other than a Credit Group Member, or if more than one Credit Group Member shall be obligated to pay any obligation, for purposes of any computations or calculations under the Master Indenture such Guaranty or obligation shall be included only one time. Financial Product Agreements, trade payables, accrued expenses in the normal course of business, physician income guaranties or other credit/funding extension, any obligation to reimburse a bond insurer, financial institution or other Person which has guaranteed or otherwise assured the performance of a Member’s obligations under a Financial Products Agreement, or any obligation to repay moneys deposited by patients or others with a Obligated Group Member as security for or as prepayment of the cost of patient care, or any rights of residents

C-6 of life care, elderly housing or similar facilities to endowment or similar funds deposited by or on behalf of such residents, shall not constitute Indebtedness.

“Independent Consultant” means a firm (but not an individual) selected by a Credit Group Member which (i) does not have any direct financial interest or any material indirect financial interest in any Credit Group Member (other than the agreement or agreements pursuant to which such firm is retained), (ii) is not connected with any Credit Group Member as an officer or employee, and (iii) in the good faith opinion of the Credit Group Member making such selection, is qualified to pass upon questions relating to the financial affairs of organizations similar to the Credit Group or facilities of the type or types operated by the Credit Group and has the skill and experience necessary to render the particular opinion or report required by the provision in the Master Indenture in which such requirement appears.

“Initial Obligated Group Members” means the corporations listed on Schedule B attached to the Master Indenture.

“Interim Indebtedness” means Indebtedness with an original maturity not in excess of five years, the proceeds of which are to be used to provide interim financing for capital improvements in anticipation of the issuance of Long-Term Indebtedness.

“Irrevocable Deposit” means the irrevocable deposit in trust of cash in an amount, or Government Obligations or other securities permitted for such purpose pursuant to the terms of the documents governing the payment of or discharge of Indebtedness, the principal of and interest on which will be an amount, and under terms sufficient to pay all or a portion of the principal of, premium, if any, and interest on, as the same shall become due, any such Indebtedness which would otherwise be considered Outstanding. The trustee of such deposit may be the Master Trustee, a Related Bond Trustee or any other trustee or escrow agent authorized to act in such capacity.

“Lien” means any mortgage or pledge of, or security interest in, or lien or encumbrance on, any Property of a Credit Group Member (i) which secures any Indebtedness or any other obligation of such Credit Group Member or (ii) which secures any obligation of any Person other than a Credit Group Member, and excluding liens applicable to Property in which a Credit Group Member has only a leasehold interest unless the lien secures Indebtedness of that Credit Group Member.

“Limited Designated Affiliate” means a Designated Affiliate which has been identified by the Credit Group Representative as a Limited Designated Affiliate pursuant to the Master Indenture.

“Long-Term Indebtedness” means Indebtedness having an original stated maturity of greater than one year (for avoidance of doubt, classification of Indebtedness under GAAP shall not be controlling for purposes of determining whether Indebtedness is Long-Term Indebtedness).

“Master Indenture” means the Master Indenture, as the same may from time to time hereafter be further amended or supplemented in accordance with the terms of the Master Indenture.

C-7 “Master Trustee” means Wilmington Trust, National Association, a national banking association organized under the laws of the United States of America, and, subject to the limitations contained in the Master Indenture, any other corporation or association that may be co- trustee with the Master Trustee, and any successor or successors to said trustee or co-trustee in the trusts created under the Master Indenture.

“Material Credit Group Members” means the Credit Group Members whose total revenues or net assets, without donor restrictions, in the aggregate, as shown on their financial statements for their most recently completed fiscal year, were, in the aggregate, equal to or greater than 80% of the total revenues or net assets, without donor restrictions, of the entire Credit Group, as shown on the Credit Group Financial Statements for the most recently completed Fiscal Year of the Credit Group.

“Merger Transaction” has the meaning set forth in the Master Indenture.

“New Group” means such Persons who agree to (i) become jointly and severally obligated under a Replacement Master Indenture for any obligations thereunder, and (ii) otherwise comply with the provisions of such Replacement Master Indenture.

“Nonrecourse Indebtedness” means any Indebtedness which is not a general obligation of the obligor of such Indebtedness and which is secured by a Lien on Property, Plant and Equipment acquired or constructed with the proceeds of such Indebtedness, liability for which is effectively limited to the Property, Plant and Equipment subject to such Lien with no recourse, absent extraordinary events such as fraud, insolvency or waste, directly or indirectly, to any other Property of any Credit Group Member.

“Obligated Group” means all Obligated Group Members.

“Obligated Group Member” or “Member” means each Person that is obligated under the Master Indenture from and after the date upon which such Person joins the Obligated Group, but excluding any Person which withdraws from the Obligated Group to the extent and in accordance with the provisions of the Master Indenture, from and after the date of such withdrawal.

“Obligation” means any obligation of the Obligated Group issued pursuant to the Master Indenture, as a joint and several obligation of each Obligated Group Member, which may be in any form set forth in a Related Supplement, including, but not limited to, bonds, notes, obligations, debentures, reimbursement agreements, loan agreements, guarantees, Financial Product Agreements or leases. Reference to a Series of Obligations or to Obligations of a Series means Obligations or Series of Obligations issued pursuant to a single Related Supplement.

“Officer’s Certificate” means a certificate signed by an Authorized Representative of the Credit Group Representative.

“Opinion of Bond Counsel” means a written opinion signed by an attorney or firm of attorneys experienced in the field of public finance whose opinions are generally accepted by purchasers of bonds issued by or on behalf of a Government Issuer.

C-8 “Opinion of Counsel” means a written opinion signed by a reputable and qualified attorney or firm of attorneys who may be counsel for (including the internal legal department of) the Credit Group Representative or any Member of the Credit Group.

“Outstanding,” when used with reference to Indebtedness or Obligations, means, as of any date of determination, all Indebtedness or Obligations theretofore issued or incurred and not paid and discharged other than (i) Obligations theretofore cancelled by the Master Trustee or delivered to the Master Trustee for cancellation or otherwise deemed paid in accordance with the terms of the Master Indenture, (ii) Obligations in lieu of which other Obligations have been authenticated and delivered or which have been paid pursuant to the provisions of a Related Supplement regarding mutilated, destroyed, lost or stolen Obligations unless proof satisfactory to the Master Trustee has been received that any such Obligation is held by a bona fide purchaser, (iii) any Obligation held by any Credit Group Member and (iv) Indebtedness deemed paid and no longer outstanding pursuant to the terms thereof; provided, however, that if two or more obligations which constitute Indebtedness represent the same underlying obligation (as when an Obligation secures an issue of Related Bonds and another Obligation secures repayment obligations to a bank under a letter of credit which secures such Related Bonds) for purposes of calculating compliance with the various financial covenants contained therein, but only for such purposes, only one of such Obligations shall be deemed Outstanding and the Obligation so deemed to be Outstanding shall be that Obligation which produces the greatest amount of Annual Debt Service to be included in the calculation of such covenants.

“Parity Financial Product Extraordinary Payments” means Financial Product Extraordinary Payments that (i) are with respect to a Financial Product Agreement secured or evidenced by an Obligation and (ii) have been specified to be payable on a parity with Financial Product Payments in the Related Supplement authorizing the issuance of such Obligation.

“Permitted Liens” means and include:

(a) Any judgment lien or notice of pending action against any Credit Group Member so long as the judgment or pending action is being contested and execution thereon is stayed or while the period for responsive pleading has not lapsed;

(b) (i) Rights reserved to or vested in any municipality or public authority by the terms of any right, power, franchise, grant, license, permit or provision of law, affecting any Property, to (A) terminate such right, power, franchise, grant, license or permit, provided that the exercise of such right would not materially impair the use of such Property or materially and adversely affect the Value thereof, or (B) purchase, condemn, appropriate or recapture, or designate a purchase of, such Property; (ii) any liens on any Property for taxes, assessments, levies, fees, water and sewer charges, and other governmental and similar charges and any liens of mechanics, materialmen, laborers, suppliers or vendors for work or services performed or materials furnished in connection with such Property, which are not delinquent, or the amount or validity of which are being contested and execution thereon is stayed or, with respect to liens of mechanics, materialmen and laborers, have been due and payable or which are not delinquent, or the amount or validity of which, are being contested or, with respect to liens of mechanics, materialmen and laborers, have been due for less than 60 days, or the amount or validity

C-9 of which are being contested; (iii) easements, rights-of-way, servitudes, restrictions and other minor defects, encumbrances, and irregularities in the title to any Property which do not materially impair the use of such Property or materially and adversely affect the Value thereof; (iv) easements, exceptions or reservations for the purpose of ingress and egress, parking, pipelines, telephone lines, telegraph lines, power lines and substations, roads, streets, alleys, highways, railroad purposes, drainage, sewerage, dikes, canals, laterals, ditches, removal of oil, gas, coal or other minerals, and other similar matters, including joint use agreements, which do not materially interfere with the use or operation of the subject Property for its intended purpose; and (v) rights reserved to or vested in any municipality or public authority to control or regulate any Property or to use such Property in any manner, which rights do not materially impair the use of such Property in any manner, or materially and adversely affect the Value thereof;

(c) Any Lien described in APPENDIX A to the Master Indenture which is existing on the date of execution of the Master Indenture or as APPENDIX A may be supplemented upon addition of a Credit Group Member with respect to Liens existing on the Property of such additional Credit Group Member, provided that no such Lien (or the amount of Indebtedness or other obligations secured thereby) may be increased, extended, renewed or modified to apply to any Property of any Credit Group Member not subject to such Lien on such date, unless such Lien as so extended, renewed or modified otherwise qualifies as a Permitted Lien;

(d) Any Lien in favor of the Master Trustee securing all Outstanding Obligations equally and ratably;

(e) Liens arising by reason of good faith deposits with any Credit Group Member in connection with leases of real estate, bids or contracts (other than contracts for the payment of money), deposits by any Credit Group Member to secure public or statutory obligations, or to secure, or in lieu of, surety, stay or appeal bonds, and deposits as security for the payment of taxes or assessments or other similar charges;

(f) Any Lien arising by reason of deposits with, or the giving of any form of security to, any governmental agency or body created or approved by law or governmental regulation as a condition to the transaction of any business or the exercise of any privilege or license, or to enable any Credit Group Member to maintain self-insurance or to participate in any funds established to cover any insurance risks or in connection with workers’ compensation, unemployment insurance, pension or profit sharing plans or other similar social security plans, or to share in the privileges or benefits required for companies participating in such arrangements;

(g) Any Lien arising by reason of any escrow or reserve fund established to pay debt service or the redemption price or purchase price of Indebtedness;

(h) Any Lien in favor of a trustee on the proceeds of Indebtedness prior to the application of such proceeds;

C-10 (i) Liens on moneys deposited by patients or others with any Credit Group Member as security for or as prepayment for the cost of patient care;

(j) Liens on Property received by any Credit Group Member through gifts, grants, bequests or research grants, such Liens being due to restrictions or rights reserved on such gifts, grants, bequests or research grants or the income thereon, up to the Fair Market Value of such Property;

(k) Rights of the United States of America, including, without limitation, the Federal Emergency Management Agency (“FEMA”) or the State of Delaware, by reason of FEMA and other federal and State of Delaware funds made available to any Credit Group Member of the Credit Group under federal or State of Delaware statutes;

(l) Liens on Property securing Indebtedness incurred to refinance Indebtedness previously secured by a Lien on such Property, provided that (i) the amount of such new Indebtedness does not exceed the amount of such refinanced Indebtedness, (ii) the Property securing such Indebtedness is not materially increased, and (iii) the obligor with respect to such Indebtedness, whether direct or contingent, is not changed;

(m) Liens granted by a Credit Group Member to another Credit Group Member;

(n) Liens securing Nonrecourse Indebtedness;

(o) Liens consisting of purchase money security interests (as defined in the UCC) and lessors’ interest in capitalized leases;

(p) Liens on the Credit Group Members’ accounts receivable securing Indebtedness in an amount not to exceed 30% of the Credit Group Members’ aggregate net patient accounts receivable and grant and other receivables, as shown on the Credit Group Financial Statements for the most recent year for which such financial statements are available immediately prior to the incurrence of such Indebtedness;

(q) Liens on revenues constituting rentals in connection with any other Lien permitted under the Master Indenture on the Property from which such rentals are derived;

(r) The lease or license of the use of a part of the Credit Group Members’ facilities for use in performing professional or other services necessary for the proper and economical operation of such facilities in accordance with customary business practices in the industry;

(s) Liens created on amounts deposited by a Credit Group Member pursuant to a security annex or similar document to collateralize obligations of such Member under a Financial Product Agreement;

(t) Liens junior to Liens in favor of the Master Trustee;

(u) Liens in favor of banking or other depository institutions arising as a matter of law encumbering the deposits of any Credit Group Member held in the ordinary course

C-11 of business by such banking institution (including any right of setoff or statutory bankers’ liens) so long as such deposit account is not established or maintained for the purpose of providing such Lien, right of setoff or bankers’ lien;

(v) UCC financing statements filed with the Secretary of State of the State (or such other office maintaining such records) in connection with an operating lease entered into by any Credit Group Member in the ordinary course of business so long as such financing statement does not evidence the grant of any Lien other than a Permitted Lien;

(w) Rights of tenants under leases or rental agreements pertaining to Property, Plant and Equipment owned by any Credit Group Member so long as the lease arrangement is in the ordinary course of business of the Member, including without limitation rentals of housing to graduate and other students and rooms rented to hospice patients and families;

(x) Deposits of Property by any Credit Group Member to meet regulatory requirements for a governmental workers’ compensation, unemployment insurance or social security program, including any Lien imposed by ERISA;

(y) Deposits to secure the performance of another party with respect to a bid, trade contract, statutory obligation, surety bond, appeal bond, performance bond or lease, and other similar obligations incurred in the ordinary course of business of a Member;

(z) Liens resulting from deposits to secure bids from or the performance of another party with respect to contracts incurred in the ordinary course of business of a Member (other than contracts creating or evidencing an extension of credit to the depositor or otherwise for the payment of Indebtedness);

(aa) Present or future zoning laws, ordinances or other laws or regulations restricting the occupancy, use or enjoyment of Property, Plant and Equipment of any Credit Group Member which, in the aggregate, are not substantial in amount, and which do not in any case materially impair the use of such Property, Plant and Equipment for the purposes for which it is used or could reasonably be expected to be held or used;

(bb) Any Lien on Property due to the rights of third-party payors for recoupment of amounts paid to any Credit Group Member;

(cc) Any Lien existing for not more than 30 days after the Credit Group Member shall have received notice thereof unless the Credit Group Member is contesting such Lien in good faith;

(dd) Any other Lien on Property provided that the Value of all Property encumbered by all Liens permitted as described in this clause (dd) does not exceed 30% of the Value of all Property of the Credit Group Members, calculated at the time of creation of such Lien; and

(ee) Restrictions imposed in connection with the incurrence of Indebtedness permitted under the Master Indenture required to be imposed under applicable law in connection with such indebtedness such as regulatory agreements required under the Code

C-12 for multifamily rental bonds or required in connection with mortgage insurance provided by state or federal governmental entities.

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

“Property” means any and all rights, titles and interests in and to any and all assets of any Credit Group Member, whether real or personal, tangible or intangible and wherever situated, other than Restricted Moneys.

“Property, Plant and Equipment” means all Property of any Credit Group Member which is considered property, plant and equipment of such Credit Group Member.

“Qualified Provider” means any financial institution or insurance company or corporation which is a party to a Financial Product Agreement if (i) the unsecured long-term debt obligations of such provider (or of the parent or a subsidiary of such provider if such parent or subsidiary guarantees or otherwise assures the performance of such provider under such Financial Product Agreement), or (ii) obligations secured or supported by a letter of credit, contract, guarantee, agreement, insurance policy or surety bond issued by such provider (or such guarantor or assuring parent or subsidiary), are rated in one of the three highest Rating Categories of a Rating Agency at the time of the execution and delivery of the Financial Product Agreement (or on the Effective Date in the case of Financial Product Agreements entered into prior to the Effective Date).

“Rating Agency” means Fitch Inc., Moody’s Investors Service, Inc., S&P Global Ratings, and any other national rating agency then rating Obligations or Related Bonds.

“Rating Category” means a generic securities rating category, without regard to any refinement or gradation of such rating category by a numerical modifier, outlook or otherwise.

“Related Bond Indenture” means any indenture, bond resolution, trust agreement or other comparable instrument pursuant to which a series of Related Bonds are issued.

“Related Bond Issuer” means the Government Issuer of any issue of Related Bonds.

“Related Bonds” means the revenue bonds or other obligations (including, without limitation, installment sale or lease obligations evidenced by certificates of participation) issued by any Government Issuer, the proceeds of which are loaned or otherwise made available to a Credit Group Member in consideration of the execution, authentication and delivery of an Obligation or Obligations to or for the order of such Government Issuer.

“Related Bond Trustee” means the trustee and its successors in the trusts created under any Related Bond Indenture, and if there is no such trustee, means the Related Bond Issuer.

“Related Supplement” means an indenture supplemental to, and authorized and executed pursuant to the terms of, the Master Indenture.

C-13 “Replacement Master Indenture” means a master trust indenture entered into by a New Group and a master trustee that, inter alia, (i) provides that all Outstanding Obligations shall be deemed to be a note or obligation issued under and entitled to the security and benefits of such Replacement Master Indenture, without the necessity of any amendment, exchange or replacement of such Obligation(s); or (ii) provides for the exchange or replacement of all Outstanding Obligations with notes or obligations issued under and entitled to the benefits of such Replacement Master Indenture.

“Required Payment” means any payment, whether at maturity, by acceleration, upon proceeding for redemption or otherwise, including without limitation, Financial Product Payments, Financial Product Extraordinary Payments and the purchase price of Related Bonds tendered or deemed tendered for purchase pursuant to the terms of a Related Bond Indenture, required to be made by any Obligated Group Member pursuant to any Related Supplement or any Obligation.

“Responsible Officer” means, when used with respect to the Master Trustee, any vice president, assistant vice president, senior associate, associate or authorized representative in its Public Finance Group or similar group administering the trusts under the Master Indenture or any other officer of the Master Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person’s knowledge of and familiarity with the particular subject.

“Restricted Moneys” means the proceeds of any grant (including without limitation any government grant), gift, bequest, contribution or other donation (and, to the extent subject to the applicable restrictions, the investment income derived from the investment of such proceeds) specifically restricted by the donor or grantor to an object or purpose inconsistent with their use for the payment of Required Payments and for which the restriction has not been met.

“Services” means Christiana Care Health Services, Inc.

“State” means the State of Delaware.

“Subordinated Indebtedness” means Long-Term Indebtedness specifically subordinated as to payment and security to the payment of all Required Payments and other obligations of the Credit Group Members under the Master Indenture.

“Surviving Entity” has the meaning set forth in the Master Indenture.

“Tax Exempt Organization” means a Person organized under the laws of the United States of America or any state thereof which is an organization described in Section 501(c)(3) of the Code and exempt from federal income taxes under Section 501(a) of the Code (other than the tax on unrelated business income under Section 511 of the Code), or corresponding provisions of federal income tax laws from time to time in effect.

“Total Revenues” means, for the period of calculation in question, the sum of operating revenue (including net patient service revenue, premium revenue and other revenue and nonoperating gains (losses), but excluding realized and unrealized gains on investments), as shown on the Credit Group Financial Statements for the most recent Fiscal Year.

C-14 “Transaction Test” means, with respect to any specified transaction, that (i) no Event of Default or Default then exists; and (ii) the ratio determined by dividing Income Available for Debt Service by Annual Debt Service for the most recent Fiscal Year, giving effect to the proposed transaction on a pro forma basis as though the same were effective as of the first day of such Fiscal Year, would be not less than 1.1:1.0 (based upon Credit Group Financial Statements for the most recent Fiscal Year and other financial statements necessary or appropriate to prepare the pro forma calculations referenced above).

“UCC” means the Uniform Commercial Code of the State, as amended from time to time.

“Value,” when used with respect to Property, means the aggregate value of all such Property, with each component of such Property valued, at the option of the Credit Group Representative, at either its Fair Market Value or its Book Value.

THE FIRST SUPPLEMENTAL INDENTURE AND SECOND SUPPLEMENTAL INDENTURE

In connection with the issuance of the Series 2020 Bonds, the Obligated Group and the Master Trustee will enter into the (a) First Supplemental Indenture authorizing the issuance of Obligation No. 1 securing the Series 2020A Bonds and (b) Second Supplemental Indenture authorizing the issuance of Obligation No. 2 securing the Series 2020B Bonds. The 2020 Obligations to be issued by the Obligated Group bear interest at such times and at such rates and mature on such dates as set forth in the Supplemental Master Indentures. The Supplemental Master Indentures supplement the Master Trust Indenture dated as of February 1, 2020, among the Obligated Group Members, and Wilmington Trust, National Association, as Master Trustee.

THE MASTER INDENTURE

Authorization of Obligations.

Each Obligated Group Member under the Master Indenture authorizes to be issued from time to time Obligations or Series of Obligations, without limitation as to amount, except as provided in the Master Indenture or as may be limited by law, and subject to the terms, conditions and limitations established in the Master Indenture and in any Related Supplement.

Issuance of Obligations.

From time to time when authorized by the Master Indenture and subject to the terms, limitations and conditions established in the Master Indenture or in a Related Supplement, the Credit Group Representative may authorize the issuance of an Obligation or a Series of Obligations by entering into a Related Supplement. The Obligation or the Obligations of any such Series may be issued and delivered to the Master Trustee for authentication upon compliance with the provisions of the Master Indenture and of any Related Supplement.

Each Related Supplement authorizing the issuance of an Obligation or a Series of Obligations shall specify the purposes for which such Obligation or Series of Obligations are being issued; the form, title, designation, manner of numbering or denominations, if applicable, of such Obligations; the date or dates of maturity or other final expiration of the term of such Obligations;

C-15 the date of issuance of such Obligations; and any other provisions deemed advisable or necessary by the Credit Group Representative. Each Related Supplement authorizing the issuance of an Obligation shall also specify and determine the principal amount of such Obligation (if any) for purposes of calculating the percentage of Holders of Obligations required to take actions or give consents pursuant to the Master Indenture (which, if such Obligation does not evidence or secure Indebtedness, shall be equal to zero, except with respect to Events of Default or any action which requires the consent of all of the Holders of Obligations). The designation of zero as a principal amount of an Obligation shall not in any manner affect the obligation of the Obligated Group Members to make Required Payments with respect to such Obligation.

Appointment of Credit Group Representative.

Each Obligated Group Member, by becoming an Obligated Group Member, irrevocably appoints the Credit Group Representative as its agent and attorney-in-fact and grants full power to the Credit Group Representative to execute (a) Related Supplements authorizing the issuance of Obligations or Series of Obligations and (b) Obligations.

Execution and Authentication of Obligations.

All Obligations shall be executed by an Authorized Representative of the Credit Group Representative for and on behalf of the Obligated Group as provided in the Related Supplement authorizing such Obligation. The signatures of such Authorized Representative may be mechanically or photographically reproduced on the Obligations. If any Authorized Representative whose signature appears on any Obligation ceases to be such Authorized Representative before delivery thereof, such signature shall remain valid and sufficient for all purposes as if such Authorized Representative had remained in office until such delivery. Each Obligation shall be manually authenticated by an authorized signatory of the Master Trustee, and no Obligation shall be entitled to the benefits of the Master Indenture without such authentication.

Conditions to the Issuance of Obligations.

The issuance, authentication and delivery of any Obligation or Series of Obligations shall be subject to the following specific conditions:

(a) The Credit Group Representative and the Master Trustee shall have entered into a Related Supplement providing for the terms and conditions of such Obligations and the repayment thereof;

(b) The Master Trustee receives an Officer’s Certificate to the effect that:

(i) each Obligated Group Member is in full compliance with all warranties, covenants and agreements set forth in the Master Indenture and in any Related Supplement;

(ii) neither an Event of Default, nor to the best of its knowledge, any event which with the passage of time or the giving of notice or both would become an Event of Default has occurred and is continuing or would occur upon issuance of such Obligations under the Master Indenture or any Related Supplement; and

C-16 (iii) all requirements and conditions, if any, to the issuance of such Obligations set forth in the Related Supplement have been satisfied;

(c) The Master Trustee receives an Opinion of Counsel, subject to customary qualifications and exceptions, to the effect that:

(i) such Obligations and Related Supplement have been duly authorized, executed and delivered by the Credit Group Representative on behalf of the Obligated Group and constitute valid and binding obligations of the Obligated Group, enforceable in accordance with their terms; and

(ii) such Obligations (or the placement thereof) are not subject to registration under the Securities Act of 1933, as amended, and such Related Supplement is not subject to registration under the Trust Indenture Act of 1939, as amended (or that such registration, if required, has occurred); and

(iii) The Credit Group Representative shall have delivered or caused to be delivered to the Master Trustee such opinions, certificates, proceedings, instruments and other documents as the Master Trustee may (but is not obligated to) reasonably request.

Payment of Required Payments.

Each Obligated Group Member jointly and severally covenants to promptly pay, or cause to be paid, all Required Payments at the place, on or before the dates and in the manner provided in the Master Indenture or in any Related Supplement or Obligation. Each Obligated Group Member acknowledges that the time of such payment and performance is of the essence for the Obligations under the Master Indenture. Each Obligated Group Member further covenants to faithfully observe and perform all of the conditions, covenants and requirements of the Master Indenture, any Related Supplement and any Obligation.

The obligation of each Obligated Group Member with respect to Required Payments shall not be abrogated, prejudiced or affected by:

(a) the granting of any extension, waiver or other concession given to any Obligated Group Member by the Master Trustee or any Holder or by any compromise, release, abandonment, variation, relinquishment or renewal of any of the rights of the Master Trustee or any Holder or anything done or omitted or neglected to be done by the Master Trustee or any Holder in exercise of the authority, power and discretion vested in them by the Master Indenture, or by any other dealing or thing which, but for this provision, might operate to abrogate, prejudice or affect such obligation;

(b) the liability of any other Obligated Group Member under the Master Indenture ceasing for any cause whatsoever, including the release of any other Obligated Group Member pursuant to the provisions of the Master Indenture or any Related Supplement;

(c) any Obligated Group Member failing to become liable as, or losing eligibility to become, an Obligated Group Member with respect to an Obligation whether before or after the incurrence of an Obligation for the benefit of such Obligated Group Member; or

C-17 (d) the validity or sufficiency (or any contest with respect thereto) of the consideration given to support the obligations of the Obligated Group Members under the Master Indenture.

Subject to the provisions of the Master Indenture permitting withdrawal from the Obligated Group, the obligation of each Obligated Group Member to make Required Payments is a continuing one and is to remain in effect until all Required Payments have been paid or deemed paid in full in accordance with the Master Indenture. All moneys from time to time received by the Credit Group Representative or the Master Trustee to reduce liability on Obligations, whether from or on account of the Obligated Group Members or otherwise, shall be regarded as payments in gross without any right on the part of any one or more of the Obligated Group Members to claim the benefit of any moneys so received until the whole of the amounts owing on Obligations has been paid or satisfied and so that in the event of any such Obligated Group Member filing a bankruptcy petition, the Credit Group Representative or the Master Trustee shall be entitled to prove up the total indebtedness or other liability on Obligations Outstanding as to which the liability of such Obligated Group Member has become fixed.

Each Obligation shall be a primary obligation of the Obligated Group Members and shall not be treated as ancillary to or collateral with any other obligation and shall be independent of any other security so that the covenants and agreements of each Obligated Group Member under the Master Indenture shall be enforceable without first having recourse to any such security or source of payment and without first taking any steps or proceedings against any other Person. The Credit Group Representative and the Master Trustee are each empowered to enforce each covenant and agreement of each Obligated Group Member under the Master Indenture and to enforce the making of Required Payments. Each Obligated Group Member under the Master Indenture authorizes each of the Credit Group Representative and the Master Trustee to enforce or refrain from enforcing any covenant or agreement of the Obligated Group Members under the Master Indenture and to make any arrangement or compromise with any Obligated Group Member or Obligated Group Members as the Credit Group Representative or the Master Trustee may deem appropriate, consistent with the Master Indenture and any Related Supplement. Each Obligated Group Member under the Master Indenture waives in favor of the Credit Group Representative and the Master Trustee all rights against the Credit Group Representative, the Master Trustee and any other Obligated Group Member, insofar as is necessary to give effect to any of the provisions of the Master Indenture.

Transfers from Designated Affiliates.

Each Controlling Member under the Master Indenture covenants and agrees that it shall cause each of its Designated Affiliates to pay, loan or otherwise transfer to the Credit Group Representative such amounts as are necessary to enable the Obligated Group Members to comply with the provisions of the Master Indenture including without limitation the provisions of the Master Indenture; provided, however, that nothing in the Master Indenture shall be construed to require any Controlling Member to cause its Designated Affiliate to pay, loan or otherwise transfer to the Credit Group Representative any amounts that constitute Restricted Moneys.

C-18 Designation of Designated Affiliates.

(a) The Credit Group Representative by resolution of its Governing Body may from time to time designate Persons as Designated Affiliates. In connection with such designation, the Credit Group Representative shall designate for each Designated Affiliate an Obligated Group Member to serve as the Controlling Member for such Designated Affiliate. The Credit Group Representative shall at all times maintain an accurate and complete list of all Persons designated as Designated Affiliates (and of the Controlling Members for such Designated Affiliates). When, as and if the complement of Designated Affiliates changes, the Credit Group Representative shall file written notice thereof with the Master Trustee (and any Related Bond Issuer that shall request such list in writing) within 30 days of such change.

(b) Each Controlling Member shall cause each of its Designated Affiliates to provide to the Credit Group Representative a resolution of its Governing Body accepting such Person’s designation as a Designated Affiliate and acknowledging the provisions of the Master Indenture which affect the Designated Affiliates. So long as such Person is designated as a Designated Affiliate, the Controlling Member of such Designated Affiliate shall either (i) maintain, directly or indirectly, control of such Designated Affiliate to the extent necessary to cause such Designated Affiliate to comply with the terms of the Master Indenture, whether through the ownership of voting securities, by contract, corporate membership, reserved powers or the power to appoint corporate members, trustees or directors, or otherwise or (ii) execute and have in effect such contracts or other agreements which the Credit Group Representative and the Controlling Member, in the judgment of their respective Governing Bodies, deem sufficient for the Controlling Member to cause such Designated Affiliate to comply with the terms of the Master Indenture.

(c) Each Controlling Member under the Master Indenture covenants and agrees that it will cause each of its Designated Affiliates to comply with any and all directives of the Controlling Member given pursuant to the provisions of the Master Indenture.

(d) Any Person may cease to be a Designated Affiliate (and thus not subject to the terms of the Master Indenture) provided that prior to such Person ceasing to be a Designated Affiliate the Master Trustee receives:

(i) a resolution of the Governing Body of the Credit Group Representative declaring such Person no longer a Designated Affiliate; and

(ii) an Officer’s Certificate to the effect that immediately following such Person ceasing to be a Designated Affiliate neither a Default nor an Event of Default would exist.

Membership in Obligated Group.

Additional Obligated Group Members may be added to the Obligated Group from time to time, provided that prior to such addition the Master Trustee receives:

(a) a copy of a resolution of the Governing Body of the proposed new Obligated Group Member which authorizes the execution and delivery of a Related Supplement and compliance with the terms of the Master Indenture;

C-19 (b) a Related Supplement executed by the Credit Group Representative, the new Obligated Group Member and the Master Trustee pursuant to which the proposed new Obligated Group Member:

(i) agrees to become an Obligated Group Member,

(ii) agrees to be bound by the terms of the Master Indenture, the Related Supplements and the Obligations, and

(iii) irrevocably appoints the Credit Group Representative as its agent and attorney-in-fact and grants to the Credit Group Representative the requisite power and authority to execute Related Supplements authorizing the issuance of Obligations or Series of Obligations and to execute and deliver Obligations;

(c) an Opinion of Counsel to the effect that (i) the proposed new Obligated Group Member has taken all necessary action to become an Obligated Group Member, and upon execution of the Related Supplement, such proposed new Obligated Group Member will be bound by the terms of the Master Indenture, (ii) the addition of such Obligated Group Member would not adversely affect the validity of any Obligation then Outstanding and (iii) (A) the addition of such Obligated Group Member will not cause any Obligations then Outstanding to be subject to registration under the Securities Act of 1933, as amended, or require the qualification of any Related Bond Indenture, loan document or the Master Indenture or any Supplement under the Trust Indenture Act of 1939, as amended, or any state securities law, or (B) that such Related Bond or Obligation has been so registered and such Related Bond Indenture, loan document or Master Indenture or Supplement has been so qualified;

(d) an Officer’s Certificate to the effect that immediately after the addition of the proposed new Obligated Group Member, the Transaction Test would be satisfied; and

(e) so long as any Related Bonds that are tax-exempt obligations are Outstanding, an Opinion of Bond Counsel to the effect that the addition of the proposed new Obligated Group Member will not, in and of itself, result in the inclusion of interest on any Related Bonds in gross income for purposes of federal income taxation.

Withdrawal from Obligated Group.

Any Obligated Group Member may withdraw from the Obligated Group and be released from further liability or obligation under the provisions of the Master Indenture, provided that prior to such withdrawal the Master Trustee receives:

(a) an Officer’s Certificate to the effect that the Credit Group Representative has approved the withdrawal of such Obligated Group Member;

(b) an Officer’s Certificate to the effect that immediately following the withdrawal of such Obligated Group Member, the Transaction Test would be satisfied;

(c) an Opinion of Counsel to the effect that (i) the withdrawal of such Obligated Group Member would not adversely affect the validity of any Obligation then Outstanding, (ii) the

C-20 withdrawal of such Credit Group Member will not cause the Master Indenture or any Obligations then Outstanding to be subject to registration under the Securities Act of 1933, as amended, or the Trust Indenture Act of 1939, as amended (or that any such registration, if required, has occurred) and (iii) that any applicable requirements relating to Related Bonds have been satisfied or otherwise provided for; and

(d) so long as any Related Bonds that are tax-exempt obligations are Outstanding, an Opinion of Bond Counsel to the effect that the removal of such Obligated Group Member will not, in and of itself, result in the inclusion of interest on any Related Bonds in gross income for purposes of federal income taxation.

Upon compliance with the conditions contained in the Master Indenture, at the written request of the Credit Group Representative, the Master Trustee shall execute any documents reasonably requested by the withdrawing Obligated Group Member to evidence the termination of such Obligated Group Member’s obligations under the Master Indenture, under all Related Supplements and under all Obligations. So long as Related Bonds are outstanding, Services may not withdraw from the Obligated Group.

Covenants of Corporate Existence, Maintenance of Properties, Etc.

Each Obligated Group Member agrees, and each Controlling Member agrees to cause each of its Designated Affiliates:

(a) Except as otherwise expressly provided in the Master Indenture, to preserve its corporate or other legal existence and all its material rights and licenses to the extent necessary in the operation of its business and affairs and to be qualified to do business in each jurisdiction where its ownership of Property or the conduct of its business requires such qualification; provided, however, that nothing contained in the Master Indenture shall be construed to obligate it to retain or preserve any of its material rights or licenses no longer used or useful in the conduct of its business or affairs.

(b) At all times to cause its material Property, Plant and Equipment to be maintained, preserved and kept in good repair, working order and condition, reasonable wear and tear, condemnation and casualty excepted, and all needed and proper repairs, renewals and replacements thereof to be made; provided, however, that nothing contained in this subsection shall be construed to (i) prevent it from ceasing to operate any immaterial portion of its Property, Plant and Equipment, (ii) prevent it from ceasing to operate any material portion of its Property, Plant and Equipment if in its judgment it is advisable or desirable not to operate the same, or (iii) obligate it to retain, preserve, repair, renew or replace any Property, Plant and Equipment no longer used or useful in the conduct of its business or which has been condemned or substantially damaged by casualty, whether or not insured.

(c) Not take any action that would result in the alteration or loss of its status as a Tax- Exempt Organization (if it is a Tax-Exempt Organization). The foregoing notwithstanding, any Credit Group Member that is a Tax-Exempt Organization may take actions which could result in the alteration or loss of its status as a Tax Exempt Organization if (i) prior thereto there is delivered to the Master Trustee an Opinion of Bond Counsel to the effect that such action would not

C-21 adversely affect the validity of any Related Bond, would not adversely affect the exclusion of interest on any Related Bond from gross income for federal income tax purposes and would not adversely affect the enforceability in accordance with its terms of the Master Indenture against any Credit Group Member and (ii) prior thereto there is delivered to the Master Trustee either (A) an Opinion of Counsel for such Credit Group Member to the effect that such actions would not subject any Related Bond or any Obligation then Outstanding to registration under the Securities Act of 1933, as amended, or require the qualification of any Related Bond Indenture, loan document or the Master Indenture or any Supplement under the Trust Indenture Act of 1939, as amended, or any state securities law, or (B) an Opinion of Counsel that such Related Bond or Obligation has been so registered and such Related Bond Indenture, loan document or Master Indenture or Supplement has been so qualified.

Gross Receivables Pledge.

(a) To secure its obligation to make Required Payments under the Master Indenture and its other obligations, agreements and covenants to be performed and observed under the Master Indenture, each Obligated Group Member under the Master Indenture grants to the Master Trustee security interests in the Gross Receivables to the extent the same may be pledged and a security interest granted therein under the UCC. In order to further secure the Obligations, each Obligated Group Member pledges for the benefit of Holders all monies and securities held from time to time by the Master Trustee under the Master Indenture, including without limitation, monies and securities held in any fund or account established under the Master Indenture, subject to any requirement that such monies or securities be applied only to specific purposes or assigned particular preference or priority.

(b) The Master Indenture shall be deemed a “security agreement” for purposes of the UCC.

(c) The Master Trustee’s security interest in the Gross Receivables shall be perfected, to the extent that such security interest may be so perfected, by the filing by the Obligated Group Member or the Credit Group Representative of financing statements which comply with the requirements of the UCC. Each Obligated Group Member shall execute and cause to be filed, in accordance with the requirements of the UCC, financing statements; and, from time to time thereafter, shall execute and cause to be filed such other documents (including, but not limited to, continuation statements as required by the UCC) as may be necessary or reasonably requested by the Credit Group Representative in order to perfect or maintain perfected such security interests or give public notice thereof.

(d) Upon written request from the Credit Group Representative, the Master Trustee shall execute any document necessary to effect the subordination of its security interest in the Gross Receivables granted in the Master Indenture to security interests constituting Permitted Liens (other than with respect to any Lien referenced in subparts (m) or (t) of the definition of Permitted Liens).

(e) Each Obligated Group Member shall notify the Credit Group Representative and the Master Trustee of any change of name and change of address of its chief executive office and each Obligated Group Member shall execute and cause to be filed a new appropriate financing

C-22 statement or an amendment in accordance with the requirements of the UCC, in order to maintain the perfected security interest granted therein.

Covenant Against Encumbrances.

(a) Each Obligated Group Member agrees that it will not, and each Controlling Member agrees that it will not permit its Designated Affiliates to, create or suffer to be created or permit the existence of any Lien upon Property, now owned or hereafter acquired by it, other than Permitted Liens. Each Obligated Group Member, respectively, further covenants and agrees that if such a Lien (other than a Permitted Lien) is nonetheless created by someone other than a Credit Group Member and is assumed by any Credit Group Member, the Obligated Group Member will make or cause to be made, or the Controlling Member will cause its Designated Affiliate to make or cause to be made, effective a provision whereby all Obligations will be secured prior to any such Indebtedness or other obligation secured by such Lien.

(b) Upon written request of the Credit Group Representative, the Master Trustee shall execute and deliver such releases, subordinations, requests for reconveyance, termination statements or other instruments as may be reasonably requested by the Credit Group Representative in connection with (1) the disposition of Property in accordance with the provisions of the Master Indenture and the applicable provisions of any Related Supplement, (2) the withdrawal of a Member pursuant to the Master Indenture and the applicable provisions of any Related Supplement, and (3) the granting by a Credit Group Member of any Lien which constitutes a Permitted Lien under the Master Indenture, as certified to the Master Trustee in writing by the Credit Group Representative upon which certification the Master Trustee may conclusively rely without independent investigation.

Debt Service Coverage.

(a) Each Obligated Group Member agrees to manage its business such that the Debt Service Coverage Ratio, calculated at the end of each Fiscal Year, commencing with the first full Fiscal Year following the execution of the Master Indenture, shall not be less than 1.1:1.0.

(b) If for any Fiscal Year the Income Available for Debt Service is not sufficient to satisfy subsection (a) hereof, the Credit Group Representative covenants to retain, within six months of the filing of the financial statements, an Independent Consultant to make recommendations to increase Income Available for Debt Service in the following Fiscal Year to the level required or, if in the opinion of the Independent Consultant the attainment of such level is impracticable, to the highest level attainable.

(c) The Credit Group Representative agrees to transmit a copy of the report of the Independent Consultant to the Master Trustee within 20 days of the receipt of such recommendations. Each Obligated Group Member shall, promptly upon its receipt of such recommendations, subject to applicable requirements or restrictions imposed by law and to a good faith determination by the Governing Body of the Credit Group Representative that such recommendations are in the best interest of the Credit Group, take such action as shall be in substantial conformity with such recommendations.

C-23 (d) If the Obligated Group retains and substantially complies with the recommendations of the Independent Consultant, the Obligated Group Members will be deemed to have complied with the covenants set forth in this section for such Fiscal Year, notwithstanding that the Debt Service Coverage Ratio shall be less than 1.1:1.0; provided, however, that an Event of Default shall exist if the Debt Service Coverage Ratio shall be less than 1.0:1.0 for any two consecutive Fiscal Years. Notwithstanding the foregoing, the Obligated Group Members shall not be excused from taking any action or performing any duty required under the Master Indenture and no other Event of Default shall be waived by the operation of the provisions of this subsection (d).

(e) If a report of an Independent Consultant is delivered to the Master Trustee that states that any Government and Industry Restrictions have been imposed which make it impossible for the Income Available for Debt Service to satisfy the requirement of subsection (a) hereof, then the required amount of Income Available for Debt Service shall be reduced to the maximum coverage permitted by such Government and Industry Restrictions.

(f) Notwithstanding the foregoing, a Credit Group Member may permit the rendering of services or the use of its Property without charge or at reduced charges, at the discretion of the Governing Body of such Credit Group Member, to the extent necessary for maintaining its tax- exempt status or the tax-exempt status of its Property, Plant and Equipment or its eligibility for grants, loans, subsidies or payments from governmental entities, or in compliance with any recommendation for free services that may be made by an Independent Consultant.

Merger, Consolidation, Sale or Conveyance.

Each Credit Group Member covenants that it will not, and each Controlling Member agrees that it will not permit its Designated Affiliates to, merge or consolidate with any other Person that is not a Credit Group Member or sell or convey all or substantially all of its assets to any Person that is not a Credit Group Member (a “Merger Transaction”) unless:

(a) After giving effect to the Merger Transaction,

(i) the successor, purchaser or surviving entity (hereinafter, the “Surviving Entity”) is a Credit Group Member, or

(ii) the Surviving Entity shall

(A) be a corporation or other entity organized and existing under the laws of the United States of America or any state thereof, and

(B) become a Credit Group Member pursuant to the Master Indenture and, pursuant to the Related Supplement required by the Master Indenture, shall expressly assume in writing the due and punctual payment of all Required Payments of the disappearing Credit Group Member under the Master Indenture;

(b) The Master Trustee receives an Officer’s Certificate to the effect that the Transaction Test is satisfied in connection with the Merger Transaction;

C-24 (c) So long as any Related Bonds that are tax-exempt obligations are Outstanding, the Master Trustee receives an Opinion of Bond Counsel to the effect that, under the existing law, the consummation of the Merger Transaction, in and of itself, would not result in the inclusion of interest on such Related Bonds in gross income for purposes of federal income taxation;

(d) The Master Trustee receives an Opinion of Counsel to the effect that (i) all conditions in the Master Indenture relating to the Merger Transaction have been complied with and the Master Trustee is authorized to join in the execution of any instrument required to be executed and delivered; (ii) the Surviving Entity meets the conditions set forth in the Master Indenture; (iii) the Merger Transaction will not adversely affect the validity of any Obligations then Outstanding and such Obligations then Outstanding are enforceable against the Surviving Entity in accordance with their respective terms; and (iv) (A) the Merger Transaction would not subject any Obligations then Outstanding to registration under the Securities Act of 1933, as amended, or require the qualification of the Master Indenture or any Supplement under the Trust Indenture Act of 1939, as amended, or any state securities law, or (B) that such Obligation has been so registered and such Master Indenture or Supplement has been so qualified; and

(e) The Surviving Entity shall be substituted for its predecessor in interest in all Obligations and agreements then in effect which affect or relate to any Obligation, and the Surviving Entity shall execute and deliver to the Master Trustee appropriate documents in order to effect the substitution.

From and after the effective date of such substitution (as set forth in the above-mentioned documents), the Surviving Entity shall be treated as a Credit Group Member and shall thereafter have the right to participate in transactions under the Master Indenture relating to Obligations to the same extent as the other Credit Group Members. All Obligations issued under the Master Indenture on behalf of a Surviving Entity shall have the same legal rank and benefit under the Master Indenture as Obligations issued on behalf of any other Credit Group Member.

Limitation on Disposition of Assets.

Except with respect to the sale, lease or other disposition of assets that is part of a disposition of all or substantially all assets of an Obligated Group Member, which shall be governed by the Master Indenture, any Credit Group Member may make dispositions of any Property in any manner, without restriction.

Limitation on Indebtedness.

Any Credit Group Member may incur Indebtedness, including, with respect to Obligated Group Members, Indebtedness evidenced by an Obligation, without restriction.

Filing of Financial Statements, Certificate of No Default, Other Information.

(a) Each Obligated Group Member covenants that it will keep, and each Controlling Member covenants that it will cause its Designated Affiliates to keep, adequate records and books of accounts in which complete and correct entries shall be made (said books shall be subject to the

C-25 inspection of the Master Trustee during regular business hours after reasonable notice and under reasonable circumstances, provided the Master Trustee shall have no duty to so inspect).

(b) The Credit Group Representative covenants and agrees that it will furnish to the Master Trustee and any Related Bond Issuer that shall request the same in writing (i) the information provided to the Municipal Securities Rulemaking Board through the Electronic Municipal Market Access Portal, or a subsequent repository, under the Continuing Disclosure Undertaking of the Credit Group Representative with respect to Related Bonds and (ii) the unaudited financial statements of the Credit Group, which shall be prepared as follows (the “Credit Group Financial Statements”):

(i) shall include all Material Credit Group Members;

(ii) at the option of the Credit Group Representative, may, but need not, include one or more Immaterial Affiliates as provided below; and

(iii) shall exclude all combined or consolidated entities that are neither Credit Group Members nor Immaterial Affiliates.

Notwithstanding the foregoing, the results of operation and financial position of Immaterial Affiliates need not be excluded from financial statements delivered to the Master Trustee, and such results of operation and financial position may be considered as if they were a portion of the results of operation and financial position of the Credit Group Members for all purposes of the Master Indenture notwithstanding the inclusion of the results of operation and financial position of such Immaterial Affiliates.

The Master Trustee shall have no duty to review, verify or analyze such financial statements mentioned above and shall hold such financial statements solely as a repository for the benefit of the Holders. The Master Trustee shall not be deemed to have notice of any information contained in such financial statements or event of default which may be disclosed therein in any manner.

Insurance.

Each Member of the Obligated Group shall, and each Controlling Member covenants to cause each of its Designated Affiliates to, maintain or cause to be maintained at its sole cost and expense, insurance (which may be self-insurance) with respect to its Property, the operation thereof and its business against such casualties, contingencies and risks (including but not limited to public liability and employee dishonesty) and in amounts not less than is customary in the case of corporations engaged in the same or similar activities and similarly situated and as it determines, in good faith, to be adequate to protect its Property and operations.

C-26 Events of Default.

Each of the following events shall be an Event of Default under the Master Indenture:

(a) Failure on the part of the Obligated Group Members to make due and punctual payment of the principal of, redemption premium, if any, interest on or any other Required Payment on any Obligation after applicable grace, notice and/or cure periods, if any.

(b) Failure to attain a Debt Service Coverage Ratio of at least 1.0:1.0 for any two consecutive Fiscal Years.

(c) Any Obligated Group Member shall fail to observe or perform any other covenant or agreement under the Master Indenture (including covenants or agreements contained in any Related Supplement or Obligation) and shall not have cured such failure within 60 days after the date on which written notice of such failure, requiring the failure to be remedied, shall have been given to the Credit Group Representative by the Master Trustee or to the Credit Group Representative and the Master Trustee by the Holders of 25% in aggregate principal amount of Outstanding Obligations (provided that if such failure can be remedied but not within such 60 day period, such failure shall not become an Event of Default for so long as the Credit Group Representative shall diligently proceed to remedy the failure).

(d) Any Obligated Group Member shall default in the payment of Indebtedness (other than (1) Subordinated Indebtedness, (2) Nonrecourse Indebtedness, and (3) Indebtedness secured by an Obligation, which shall be governed by subsection (a) of this section) in an aggregate outstanding principal amount greater than 5% of the Total Revenues of the Credit Group, and any grace, notice and/or cure period for such payment shall have expired; provided, however, that such default shall not constitute an Event of Default within the meaning of this section if, within 60 days (or such longer period as the Master Trustee approves in writing) or within the time allowed for service of a responsive pleading if any proceeding to enforce payment of the Indebtedness is commenced, (1) any Obligated Group Member in good faith commences proceedings to contest the existence or payment of such Indebtedness, and (2) sufficient moneys are deposited in escrow with a bank or trust company or a bond acceptable to the Master Trustee is posted for the payment of such Indebtedness.

(e) A court having jurisdiction shall enter a decree or order for relief in respect of any Obligated Group Member in an involuntary case under any applicable federal or state bankruptcy, insolvency or other similar law, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of any Obligated Group Member or for any substantial part of the Property of any Obligated Group Member, or ordering the winding up or liquidation of its affairs, and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days.

(f) Any Obligated Group Member shall commence a voluntary case under any applicable federal or state bankruptcy, insolvency or other similar law, or shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or similar official) of any Obligated Group Member or for any substantial part of their Property, or

C-27 shall make any general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due or shall take any corporate action in furtherance of the foregoing.

The Credit Group Representative agrees that, as soon as practicable, and in any event within ten days after discovery of such event, the Credit Group Representative shall provide written notification to a Responsible Officer of the Master Trustee of any event which is an Event of Default under the Master Indenture which has occurred and is continuing, which notice shall state the nature of such event and the action which the Obligated Group Members propose to take with respect thereto.

Acceleration; Annulment of Acceleration.

Upon the occurrence and during the continuation of an Event of Default, the Master Trustee may, and upon the written request of (i) the Holders of not less than a majority in aggregate principal amount of Outstanding Obligations, or (ii) the Holder of an Obligation expressly authorized to accelerate such Obligation pursuant to the Related Supplement shall, by notice to the Credit Group Representative, declare all Outstanding Obligations immediately due and payable. Upon such declaration of acceleration, all Outstanding Obligations shall be immediately due and payable. If the terms of any Related Supplement give a Person the right to consent to acceleration of the Obligations issued pursuant to such Related Supplement, the Obligations issued pursuant to such Related Supplement may not be accelerated by the Master Trustee unless such consent is properly obtained pursuant to the terms of such Related Supplement. In the event of acceleration, an amount equal to the aggregate principal amount of all Outstanding Obligations, plus all interest accrued thereon and, to the extent permitted by applicable law, which accrues on such principal and interest to the date of payment, and all other amounts due thereunder, shall be due and payable on the Obligations.

(a) At any time after the Obligations have been declared to be due and payable, and before the entry of a final judgment or decree in any proceeding instituted with respect to the Event of Default that resulted in the declaration of acceleration, the Master Trustee may annul such declaration and its consequences if:

(b) the Obligated Group Members have paid (or caused to be paid or deposited with the Master Trustee moneys sufficient to pay) all payments then due on all Outstanding Obligations (other than payments then due only because of such declaration);

(c) the Obligated Group Members have paid (or caused to be paid or deposited with the Master Trustee moneys sufficient to pay) all fees and expenses of the Master Trustee then due;

(d) the Obligated Group Members have paid (or caused to be paid or deposited with the Master Trustee moneys sufficient to pay) all other amounts then payable by the Obligated Group under the Master Indenture; and

(e) every Event of Default (other than a default in the payment of the principal or other payments of such Obligations then due only because of such declaration) has been remedied.

No such annulment shall extend to or affect any subsequent Event of Default or impair any right with respect to any subsequent Event of Default.

C-28 Additional Remedies and Enforcement of Remedies.

(a) Upon the occurrence and continuance of any Event of Default, the Master Trustee may, and upon the written request of the Holders of not less than a majority in aggregate principal amount of the Outstanding Obligations (and upon indemnification of the Master Trustee to its satisfaction for any such request), shall, proceed to protect and enforce its rights and the rights of the Holders under the Master Indenture by such proceedings as may be deemed expedient, including but not limited to:

(i) Enforcement of the right of the Holders to collect amounts due or becoming due under the Obligations;

(ii) Civil action upon all or any part of the Obligations;

(iii) Civil action to require any Person holding moneys, documents or other property pledged to secure payment of amounts due or to become due on the Obligations to account as if it were the trustee of an express trust for the Holders of Obligations;

(iv) Civil action to enjoin any acts which may be unlawful or in violation of the rights of the Holders of Obligations;

(v) Civil action to obtain a writ of mandate against any Obligated Group Member or Controlling Member, or against any officer or member of the Governing Body of any Obligated Group Member or Controlling Member to compel performance of any act specifically required by the Master Indenture or any Obligation; and

(vi) Enforcement of any other right or remedy of the Holders conferred by law or the Master Indenture.

(b) Regardless of the occurrence of an Event of Default, if requested in writing by the Holders of not less than a majority in aggregate principal amount of the Outstanding Obligations (and upon indemnification of the Master Trustee to its satisfaction for such request), the Master Trustee shall institute and maintain such proceedings as it may be advised shall be necessary or expedient (1) to prevent any impairment of the security under the Master Indenture by any acts which may be unlawful or in violation of the Master Indenture, or (2) to preserve or protect the interests of the Holders. However, the Master Trustee shall not be required to comply with any such request or institute and maintain any such proceeding that is in conflict with any applicable law or the provisions of the Master Indenture or (in the sole good faith judgment of the Master Trustee) is unduly prejudicial to the interests of the Holders not making such request. Nothing in the Master Indenture shall be deemed to authorize the Master Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment, or composition affecting the Obligations or the rights of any Holder thereof, or to authorize the Master Trustee to vote in respect of the claim of any Holder in any such proceeding without the approval of the Holders so affected.

C-29 Application of Moneys After Default.

During the continuance of an Event of Default, all moneys received by the Master Trustee pursuant to any right given or action taken under the provisions of this section (after payment of the costs of the proceedings resulting in the collection of such moneys and payment of all fees, expenses, then-currently payable indemnities and other amounts owed to the Master Trustee) shall be applied as follows:

(a) Unless all Outstanding Obligations have become or have been declared due and payable (or if any such declaration is annulled in accordance with the terms of this section):

First: To the payment of all Required Payments then due on the Obligations (including Financial Product Payments to the extent made pursuant to a Financial Product Agreement secured or evidenced by an Obligation and Parity Financial Product Extraordinary Payments), in the order of their due dates, and, if the amount available is not sufficient to pay in full all Required Payments due on the same date, then to the payment thereof ratably, according to the amount Required Payments due on such date, without any discrimination or preference;

Second: To the payment of all Financial Product Extraordinary Payments made pursuant to a Financial Product Agreement secured or evidenced by an Obligation (other than Parity Financial Product Extraordinary Payments), in the order of their due dates, and, if the amount available is not sufficient to pay in full all Financial Product Extraordinary Payments due on the same date, then to the payment thereof ratably, according to the amounts of Financial Product Extraordinary Payments due on such date, without any discrimination or preference.

(b) If all Outstanding Obligations have become or have been declared due and payable (and such declaration has not been annulled under the terms of this section):

First: To the payment of all Required Payments then due on the Obligations (including (i) Financial Product Payments to the extent made pursuant to a Financial Product Agreement secured or evidenced by an Obligation and (ii) Parity Financial Product Extraordinary Payments), and, if the amount available is not sufficient to pay in full the whole amount then due and unpaid, then to the payment thereof ratably, without preference or priority, according to the amounts due respectively, without any discrimination or preference; and

Second: To the payment of all Financial Product Extraordinary Payments made pursuant to a Financial Product Agreement secured or evidenced by an Obligation (other than Parity Financial Product Extraordinary Payments), and, if the amount available is not sufficient to pay in full all such Financial Product Extraordinary Payments, then to the payment thereof ratably, without any discrimination or preference.

Such moneys shall be applied at such times as the Master Trustee shall determine, having due regard for the amount of moneys available and the likelihood of additional moneys becoming

C-30 available in the future. Upon any date fixed by the Master Trustee for the application of such moneys to the payment of principal, interest on the amounts of principal to be paid on such date shall cease to accrue. The Master Trustee shall give such notices as it may deem appropriate of the deposit with it of such moneys or of the fixing of such dates. The Master Trustee shall not be required to make payment to the Holder of any unpaid Obligation until such Obligation (and all unmatured interest coupons, if any) is presented to the Master Trustee for appropriate endorsement of any partial payment or for cancellation if fully paid.

Whenever all Obligations have been paid under the terms of this section and all fees, expenses and then-currently payable indemnities of the Master Trustee have been paid, any balance remaining shall be paid to the Person entitled to receive such balance. If no other Person is entitled thereto, then the balance shall be paid to the Members of the Obligated Group or such Person as a court of competent jurisdiction may direct.

Remedies Not Exclusive.

No remedy granted by the terms of the Master Indenture is intended to be exclusive of any other remedy. Each remedy shall be cumulative and shall be in addition to every other remedy given under the Master Indenture or existing at law or in equity.

Remedies Vested in the Master Trustee.

All rights of action (including the right to file proof of claims) under the Master Indenture or under any of the Obligations may be enforced by the Master Trustee without the possession of any of the Obligations or the production thereof in any proceeding relating thereto. Any proceeding instituted by the Master Trustee may be brought in its name as the Master Trustee without the necessity of joining any Holders as plaintiffs or defendants. Subject to the provisions of the Master Indenture, any recovery or judgment shall be for the equal benefit of the Holders of the Outstanding Obligations.

(a) Master Trustee to Represent Holders. The Master Trustee is under the Master Indenture irrevocably appointed as trustee and attorney in fact for the Holders for the purpose of exercising on their behalf the rights and remedies available to the Holders under the provisions of the Master Indenture, the Obligations, any Related Supplement and applicable provisions of law, in each case subject to the provisions of the Master Indenture. The Holders, by taking and holding the Obligations, shall be conclusively deemed to have so appointed the Master Trustee.

(b) Holders’ Control of Proceedings. If an Event of Default has occurred and is continuing, notwithstanding anything in the Master Indenture to the contrary, the Holders of at least a majority in aggregate principal amount of Outstanding Obligations shall have the right (upon the indemnification of the Master Trustee to its satisfaction) to direct the method and/or place of conducting any proceeding to be taken in connection with the enforcement of the terms of the Master Indenture. Such direction must be in writing, signed by such Holders and delivered to the Master Trustee. However, the Master Trustee shall not be required to follow any such direction that is in conflict with any applicable law or the provisions of the Master Indenture or (in the good faith judgment of the Master Trustee) is unduly prejudicial to the interests of the Holders not joining in such direction. Nothing in this section shall impair the right of the Master Trustee to

C-31 take any other action authorized by the Master Indenture which it may deem proper and which is not inconsistent with such direction by Holders.

(c) Termination of Proceedings. In case any proceeding instituted by the Master Trustee with respect to any Event of Default is discontinued or abandoned for any reason or is determined adversely to the Master Trustee or the Holders, then the Obligated Group Members, the Master Trustee and the Holders shall be restored to their former positions and rights under the Master Indenture. All rights, remedies and powers of the Master Trustee and the Holders shall continue as if no such proceeding had been taken.

(d) Waiver of Event of Default.

(i) No delay or omission of the Master Trustee or of any Holder to exercise any right with respect to any Event of Default shall impair such right or shall be construed to be a waiver of or acquiescence to such Event of Default. Every right and remedy given by this section to the Master Trustee and the Holders may be exercised from time to time and as often as may be deemed expedient by them.

(ii) The Master Trustee may waive any Event of Default which in its opinion has been remedied before the entry of a final judgment or decree in any proceeding instituted by it under the provisions of the Master Indenture, or before the completion of the enforcement of any other remedy under the Master Indenture.

(iii) Upon the written request of the Holders of at least a majority in aggregate principal amount of Outstanding Obligations, the Master Trustee shall waive any Event of Default under the Master Indenture and its consequences; provided, however, that, except under the circumstances set forth in the Master Indenture, the failure to pay the principal of, premium, if any, or interest on any Obligation when due may not be waived without the written consent of the Holders of all Outstanding Obligations.

(iv) In case of any waiver by the Master Trustee of an Event of Default, the Obligated Group Members, the Master Trustee and the Holders shall be restored to their former positions and rights. No waiver shall extend to, or impair any right with respect to, any other Event of Default.

Appointment of Receiver.

Upon the occurrence and continuance of any Event of Default, the Master Trustee shall be entitled (a) without declaring the Obligations to be due and payable, (b) after declaring the Obligations to be due and payable, or (c) upon the commencement of any proceeding to enforce any right of the Master Trustee or the Holders, to the appointment of a receiver or receivers of any or all of the Property of the Obligated Group Members (without the necessity of notice to any Holder, Obligated Group Member or any other Person), with such powers as the court making such appointment shall confer. Each Obligated Group Member consents, subject to the imposition on the receiver of any applicable Government and Industry Restrictions, and will if requested by the Master Trustee, consent at the time of application by the Master Trustee for appointment of a receiver, to the appointment of such receiver and agrees that such receiver may be given the right, to the extent the right may lawfully be given, to take possession of, operate and deal with such

C-32 Property and the revenues, profits and proceeds therefrom, with the same effect as the Obligated Group Member could, and to borrow money and issue evidences of indebtedness as such receiver.

Remedies Subject to Provisions of Law.

All rights, remedies and powers provided by this section may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law and any Government and Industry Restrictions. All the provisions of this section are intended to be limited to the extent necessary so that they will not render any provision of the Master Indenture invalid or unenforceable under the provisions of any applicable law or inconsistent with any Government and Industry Restrictions.

Removal and Resignation of the Master Trustee.

(a) The Master Trustee may be removed at any time by an instrument or instruments in writing signed by (1) the Holders of not less than a majority of the principal amount of Outstanding Obligations or (2) (unless an Event of Default has occurred and is then continuing) the Credit Group Representative.

(b) The Master Trustee may at any time resign by giving written notice of such resignation to the Credit Group Representative.

(c) No such resignation or removal shall become effective unless and until a successor Master Trustee has been appointed and has assumed the trusts created by the Master Indenture. Written notice of removal of the predecessor Master Trustee and/or appointment of the successor Master Trustee shall be given by the successor Master Trustee within ten days of the successor’s acceptance of appointment to the Obligated Group Members and to each Holder at the addresses shown on the books of the Master Trustee. A successor Master Trustee may be appointed at the direction of the Holders of not less than a majority in aggregate principal amount of Outstanding Obligations, or, if the Master Trustee has resigned or has been removed by the Credit Group Representative, by the Credit Group Representative. In the event a successor Master Trustee has not been appointed and qualified within 60 days of the date notice of resignation or removal is given, the Master Trustee, any Obligated Group Member or any Holder may apply at the expense of the Obligated Group Members to any court of competent jurisdiction for the appointment of an interim successor Master Trustee to act until such time as a permanent successor is appointed.

(d) Unless otherwise ordered by a court or regulatory body having competent jurisdiction, or unless required by law, any successor Master Trustee shall be a national banking association, trust company or bank having the powers of a trust company as to trusts, qualified to do and doing trust business in one or more states of the United States of America and having an officially reported combined capital, surplus, undivided profits and reserves aggregating at least $50,000,000, if there is such an institution willing, qualified and able to accept the trust upon reasonable or customary terms.

(e) Every successor Master Trustee shall execute and deliver to its predecessor and to each Obligated Group Member a written instrument accepting such appointment. Upon the delivery of such acceptance, the successor Master Trustee shall become fully vested with all the rights, immunities, powers, trusts, duties and obligations of its predecessor. The predecessor shall

C-33 execute and deliver to the successor Master Trustee a written instrument transferring to the successor Master Trustee all the rights, powers and trusts of the predecessor. The predecessor Master Trustee (upon payment of all amounts owed to it) shall execute any documents necessary or appropriate to convey all interest it may have to the successor Master Trustee. The predecessor Master Trustee shall promptly deliver all records relating to the trust or copies thereof and communicate all material information it may have obtained concerning the trust to the successor Master Trustee.

Supplements Not Requiring Consent of Holders.

The Credit Group Representative (acting for itself and as agent for each Obligated Group Member) and the Master Trustee may, without the consent of or notice to any of the Holders, enter into one or more Related Supplements for any of the following purposes:

(a) To correct any ambiguity or formal defect or omission in the Master Indenture;

(b) To correct or supplement any provision which may be inconsistent with any other provision, or to make any other provision with respect to matters or questions arising under the Master Indenture and which does not materially and adversely affect the interests of the Holders;

(c) To grant or confer ratably upon all of the Holders any additional rights, remedies, powers or authority, or to add to the covenants of and restrictions on the Obligated Group Members;

(d) To qualify the Master Indenture under the Trust Indenture Act of 1939, as amended, or corresponding provisions of federal law from time to time in effect;

(e) To create and provide for the issuance of an Obligation or Series of Obligations as permitted under the Master Indenture;

(f) To obligate a successor to any Obligated Group Member as provided in the Master Indenture;

(g) To add a new Obligated Group Member as provided in the Master Indenture; or

(h) To make any other change which does not materially and adversely affect the interests of the Holders.

The Master Trustee may in its discretion, but shall not be obligated to, enter into any such Related Supplement authorized by the Master Indenture which materially adversely affects the Master Trustee’s own rights, duties or immunities under the Master Indenture or otherwise.

In entering into any Related Supplement, the Master Trustee may rely on an Opinion of Counsel as described in the Master Indenture.

C-34 Supplements Requiring Consent of Holders.

(a) Other than Related Supplements referred to in the Master Indenture and subject to the terms contained in this section, the Holders of not less than a majority in aggregate principal amount of the Outstanding Obligations shall have the right to consent to and approve the execution by the Credit Group Representative (acting for itself and as agent for each Credit Group Member) and the Master Trustee of such Related Supplements as shall be deemed necessary or desirable for the purpose of modifying, altering, amending, adding to or rescinding any of the terms contained in the Master Indenture; provided, however, that nothing in this section shall permit or be construed as permitting a Related Supplement which would:

(i) Extend the stated maturity of or time for paying interest on any Obligation or reduce the principal amount of or the redemption premium or rate of interest or change the method of calculating interest payable on or reduce or defer any other Required Payment on any Obligation without the consent of the Holder of such Obligation;

(ii) Modify, alter, amend, add to or rescind any of the terms or provisions contained in the Master Indenture so as to affect the right of the Holders of any Obligations in default to compel the Master Trustee to declare the principal of all Obligations to be due and payable, or the priority of payment of Obligations set forth in the Master Indenture, without the consent of the Holders of all Outstanding Obligations; or

(iii) Reduce the aggregate principal amount of Outstanding Obligations the consent of the Holders of which is required to authorize such Related Supplement without the consent of the Holders of all Obligations then Outstanding.

(b) The Master Trustee may execute a Related Supplement (in substantially the form delivered to it as described below) without liability or responsibility to any Holder (whether or not such Holder has consented to the execution of such Related Supplement) if the Master Trustee receives:

(i) a Request of the Credit Group Representative to enter into such Related Supplement;

(ii) a certified copy of the resolution of the Governing Body of the Credit Group Representative approving the execution of such Related Supplement;

(iii) the proposed Related Supplement; and

(iv) an instrument or instruments executed by the Holders of not less than the aggregate principal amount or number of Obligations specified in subsection (a) for the Related Supplement in question which instrument or instruments shall refer to the proposed Related Supplement and shall specifically consent to and approve the execution thereof in substantially the form of the copy thereof as on file with the Master Trustee.

(c) Any such consent shall be binding upon the Holder of the Obligation giving such consent and upon any subsequent Holder of such Obligation and of any Obligation issued in exchange therefor (whether or not such subsequent Holder thereof has notice thereof), unless such

C-35 consent is revoked in writing by the Holder of such Obligation giving such consent or by a subsequent Holder thereof by filing with the Master Trustee, prior to the execution by the Master Trustee of such Related Supplement, such revocation and, if such Obligation or Obligations are transferable by delivery, proof that such Obligations are held by the signer of such revocation. At any time after the Holders of the required principal amount or number of Obligations shall have filed their consents to the Related Supplement, the Master Trustee shall file a written statement to that effect with the Credit Group Representative. Such written statement shall be conclusive evidence that such consents have been so filed.

(d) A Related Supplement may provide that the holders of Related Bonds being issued in connection therewith shall be deemed to have consented to modifications or amendments to the Master Indenture, as set forth in such Related Supplement, by their purchase of such Related Bonds. Such deemed consent shall satisfy the requirement set forth in the Master Indenture for executed written consent of Holders with respect to the Obligation issued pursuant to the Related Supplement and shall be binding on all subsequent holders of such Related Bonds.

(e) If the Holders of the required principal amount or number of the Outstanding Obligations have consented to the execution of such Related Supplement, no Holder shall have any right to object to the execution thereof, to object to any of the terms and provisions contained therein or the operation thereof, to question the propriety of the execution thereof or to enjoin or restrain the Master Trustee or the Credit Group Representative from executing such Related Supplement or from taking any action pursuant to the provisions thereof.

Execution and Effect of Supplements.

(a) In executing any Related Supplement permitted by the Master Indenture, the Master Trustee shall be entitled to receive and to rely upon an Opinion of Counsel stating that the execution of such Related Supplement is authorized or permitted by the Master Indenture. The Master Trustee may (but shall not be obligated to) enter into any Related Supplement that materially and adversely affects the Master Trustee’s own rights, duties or immunities.

(b) Upon the execution and delivery of any Related Supplement in accordance with this section, the provisions of the Master Indenture shall be deemed modified in accordance therewith. Such Related Supplement shall form a part thereof for all purposes and every Holder shall be bound thereby.

(c) Any Obligation authenticated and delivered after the execution and delivery of any Related Supplement in accordance with this section may, and, if required by the Credit Group Representative or the Master Trustee shall, bear a notation in form approved by the Master Trustee as to any matter provided for in such Related Supplement. If the Credit Group Representative or the Master Trustee shall so determine, new Obligations so modified as to conform in the opinion of the Master Trustee and the Governing Body of the Credit Group Representative to any such Related Supplement may be prepared and executed by the Credit Group Representative and authenticated and delivered by the Master Trustee in exchange for and upon surrender of Obligations then Outstanding.

C-36 Amendment of Related Supplements.

Any Related Supplement may provide that the provisions thereof may be amended without the consent of or notice to any of the Holders, or pursuant to such terms and conditions as may be specified in such Related Supplement. If a Related Supplement does not contain provisions relating to the amendment thereof, the amendment of such Related Supplement shall by governed by the provisions of the Master Indenture.

Satisfaction and Discharge of Master Indenture.

The Master Indenture shall cease to be of further effect if:

(a) all Obligations previously authenticated (other than any Obligations which have been mutilated, destroyed, lost or stolen and which have been replaced or paid as provided in any Related Supplement) and not cancelled are delivered to the Master Trustee for cancellation;

(b) all Obligations not previously cancelled or delivered to the Master Trustee for cancellation are paid; or

(c) an Irrevocable Deposit is made in trust with the Master Trustee (or with one or more banks, national banking associations or trust companies acceptable to the Master Trustee pursuant to one or more agreements between an Obligated Group Member and such national banking associations or trust companies in form acceptable to the Master Trustee) in cash or Government Obligations or both, sufficient to pay at maturity or upon redemption all Obligations not previously cancelled or delivered to the Master Trustee for cancellation, including principal and interest or other payments (including Financial Product Payments and Financial Product Extraordinary Payments) due or to become due to such date of maturity, redemption date or payment date, as the case may be; and all other sums payable under the Master Indenture by the Obligated Group Members are also paid. The Master Trustee, on demand of the Credit Group Representative and at the cost and expense of the Obligated Group Members, shall execute proper instruments acknowledging satisfaction of and discharging the Master Indenture and authorizing the Credit Group Representative to file such terminations and releases as may be necessary to evidence the termination of the Master Trustee’s security interest in the Gross Receivables. Unless the deposit(s) pursuant to clause (c) above is made solely with cash, the Credit Group Representative shall cause a report to be prepared by a firm nationally recognized for providing verification services regarding the sufficiency of funds for such discharge and satisfaction provided pursuant to clause (c) above, upon which report the Master Trustee may rely.

Payment of Obligations After Discharge of Lien.

Notwithstanding the discharge of the lien of the Master Indenture as provided in the Master Indenture, the Master Trustee shall retain such rights, powers and duties as may be necessary and convenient for the payment of amounts due or to become due on the Obligations and for the registration, transfer, exchange and replacement of Obligations. Any moneys held by the Master Trustee for the payment of the principal of, premium, if any, or interest or other Required Payment on any Obligation remaining unclaimed for one year after the principal of all Obligations has

C-37 become due and payable, whether at maturity, upon proceedings for redemption or by declaration as provided in the Master Indenture, shall then be paid to the Obligated Group Members subject to applicable escheat laws. The Holders of any Obligations or coupons not previously presented for payment shall thereafter be entitled to look only to the Obligated Group Members for payment thereof as unsecured creditors and all liability of the Master Trustee with respect to such moneys shall thereupon cease.

Replacement Master Indenture.

Upon the written request of the Credit Group Representative and delivery of a Replacement Master Indenture to the Master Trustee: (i) the Master Trustee shall acknowledge the substitution of such Replacement Master Indenture and the liens, rights and interests created under the Master Indenture shall cease, terminate and become null and void; (ii) the Master Trustee shall, at the expense of the Obligated Group Members, execute proper instruments acknowledging satisfaction of and discharging the Master Indenture and authorizing the Credit Group Representative to file such terminations and releases as may be necessary to evidence the termination of the Master Trustee’s security interest in the Gross Receivables; and (iii) an Opinion of Counsel shall be provided to the Master Trustee to the effect that:

(a) Such Replacement Master Indenture has been duly authorized, executed and delivered by, and constitutes the legal, valid, binding and enforceable obligation of, the New Group, subject to customary exceptions;

(b) The acknowledgement of such Replacement Master Indenture and the release of the Master Indenture will not adversely affect any exemption from federal income taxation of interest on Indebtedness secured by an Outstanding Obligation and otherwise entitled to such exemption; and

(c) All requirements and conditions to the release of the Master Indenture, including those set forth in any Related Supplement or Related Bond Indenture, have been complied with and satisfied.

Upon the acceptance of a Replacement Master Indenture and the release of the Master Indenture, all Outstanding Obligations shall be deemed to be a note or obligation issued under and entitled to the security and benefits of such Replacement Master Indenture, without the necessity of any amendment, exchange or replacement of such Obligations, unless and until such Obligations are exchanged for or replaced with a note or obligation issued under and entitled to the security and benefits of such Replacement Master Indenture in accordance with the terms thereof. Upon the acknowledgement of a Replacement Master Indenture and the release of the Master Indenture, the Master Trustee shall provide written notice thereof to the Holders of all Obligations.

Limitation of Rights.

With the exception of rights expressly conferred in the Master Indenture, nothing expressed or mentioned in or to be implied from the Master Indenture or the Obligations is intended or shall be construed to give to any Person other than each Obligated Group Member, the Master Trustee and the Holders any legal or equitable right, remedy or claim under or with respect to the Master Indenture. The Master Indenture and all of the covenants, conditions and provisions of the Master

C-38 Indenture are intended to be and are for the sole and exclusive benefit of the parties mentioned in this section.

Credit Enhancer Deemed Holder of Obligation.

Except to the extent a Related Supplement or an Obligation provides otherwise, any credit enhancer of Related Bonds shall be deemed the Holder of the related Obligation for purposes of the Master Indenture for so long as the credit enhancement is in effect and the credit enhancer is not in default thereunder. If the credit enhancement is applicable to a portion of Related Bonds, such related Obligation shall be treated as if such related Obligation were two Obligations, one in the principal amount of the Related Bonds for which the credit enhancement is applicable and another in the principal amount of the remainder of the Related Bonds.

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APPENDIX D

SUMMARY OF CERTAIN PROVISIONS OF THE BOND INDENTURE AND THE LOAN AGREEMENT

3406963.6 043801 OS [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX D

SUMMARY OF CERTAIN PROVISIONS OF THE BOND INDENTURE AND THE LOAN AGREEMENT

A brief description of certain of the provisions of each of the Bond Indenture and Loan Agreement is set forth below in connection with the issuance of the Series 2020 Bonds. Such descriptions do not purport to be final, comprehensive or definitive. All references herein to the Bond Indenture and Loan Agreement are qualified in their entirety by reference to provisions of each such document in their entirety for the final, complete and actual terms, provisions and covenants thereof.

DEFINITIONS OF CERTAIN TERMS USED IN THE BOND INDENTURE AND THE LOAN AGREEMENT

The following definitions of certain words and terms used in under this caption “Appendix D – Summary of Certain Provisions of the Bond Indenture and the Loan Agreement,” will have the meaning as set forth below. Any capitalized terms not defined below will have the same meaning as set forth in the Bond Indenture and the Loan Agreement, as applicable, copies of which can be obtained by contacting the Bond Trustee.

“Act” means the Delaware Health Facilities Act (16 Del. Code Ann. Section 9201 et seq.), as now in effect and as from time to time hereafter amended or supplemented.

“Additional Bonds” means any Bonds issued pursuant to the Bond Indenture. Additional Bonds shall not include bonds issued under any other indenture.

“Additional Funding Amount” has the meaning ascribed thereto in the Bond Indenture.

“Additional Payments” means the payments so designated and required to be made by the Corporation pursuant to the Loan Agreement.

“Administrative Fees and Expenses” means any application, commitment, financing or similar fee charged, or reimbursement for administrative or other expenses incurred, by the Authority or the Bond Trustee.

“Alternate Credit Facility” means a Credit Facility issued to replace an existing Credit Facility in accordance with the Bond Indenture; provided, however, that any amendment, extension, renewal or substitution of the Credit Facility then in effect for the purpose of extending the Expiration Date of such Credit Facility or modifying such Credit Facility pursuant to its terms shall not be deemed to be an Alternate Credit Facility for purposes of the Bond Indenture.

“Alternate Liquidity Facility” means a Liquidity Facility issued to replace an existing Liquidity Facility in accordance with the Bond Indenture and any amendment or assignment of a Liquidity Facility which results in a change in the Liquidity Facility Provider; provided, however, that any amendment or extension of the Liquidity Facility for the purpose of extending the Expiration Date of such Liquidity Facility or modifying such Liquidity Facility shall not constitute an Alternate Liquidity Facility for purposes of the Bond Indenture.

D-1 “Authority” has the meaning attributed to it in the initial paragraph of the Bond Indenture.

“Authorized Denominations” means with respect to any (a) Long Term Period, FRN Period or Fixed Period, $5,000 and any integral multiple thereof; (b) Direct Purchase Period, $250,000 and any integral multiple of $5,000 in excess of $250,000; and (c) Short Term Period, Two Day Period, VRO Interest Rate Period, Window Period, Weekly Period, Daily Period or Flexible Rate Period, $100,000 and any integral multiple of $5,000 in excess of $100,000.

“Authority Indemnified Parties” means, individually and collectively, the Authority, the State, and each of their past, present, and future directors, members, officers, employees, counsel, advisors, contractors, consultants and agents, individually and collectively.

“Authorized Representative” means, (a) with respect to the Authority, the Chairman, the Vice Chairman or Secretary, or any other person at the time designated to act on behalf of the Authority by written certificate furnished to the Bond Trustee and signed on behalf of the Authority by one of its authorized signatories, which certificate may designate an alternate or alternates, and, when used with reference to the performance of any act, the discharge of any duty or the execution of any certificate or other document, any officer, employee or other person authorized to perform such act, discharge such duty or execute such certificate or other document, and (b) with respect to the Corporation, the president, chief executive officer, chief financial officer or any other person designated as an Authorized Representative of the Corporation by an Officer’s Certificate signed by the chair of its Governing Body, chief executive officer or chief financial officer and filed with the Bond Trustee.

“Bank Bonds” means any Credit Facility Bonds or Liquidity Facility Bonds.

“Beneficial Owner” means any Person which (a) has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any of the Bonds (including any Person holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bond for federal income tax purposes.

“Bond Counsel” means a firm of attorneys selected by the Corporation and reasonably acceptable to the Authority, of nationally recognized standing in matters pertaining to the tax- exempt nature of interest on obligations issued by states and their political subdivisions and duly admitted to practice law before the highest court of any state of the United States of America.

“Bond Indenture” means the Bond Indenture, as originally executed or as it may from time to time be supplemented, modified or amended by any Supplemental Bond Indenture or otherwise in accordance with the terms thereof.

“Bond Purchase Agreement” means the Contract of Purchase, dated [______], 2020, between the Authority and J.P. Morgan Securities, as representative of the underwriters of the Series 2020 Bonds, and approved by the Corporation, on behalf of the Obligated Group.

“Bond Purchase Fund” means the fund by that name established pursuant to the Bond Indenture.

D-2 “Bond Sinking Fund” means the fund by that name established pursuant to the Bond Indenture.

“Bond Trustee” means Wilmington Trust, National Association, a national banking association organized under the laws of the United States of America, and, subject to the limitations contained in the Bond Indenture, any successor or successors to said trustee in the trusts created under the Bond Indenture.

“Bondholder Agreement” means during any Direct Purchase Period, any continuing covenant agreement, bondholder agreement or similar agreement between the Corporation and a Direct Purchaser that is designated in writing by the Corporation and delivered to the Bond Trustee and the Authority as the Bondholder Agreement.

“Bonds” means the Series 2020 Bonds and any Additional Bonds authorized by, and at any time Outstanding pursuant to, the Bond Indenture and includes all Bank Bonds.

“Business Day” means any day on which banks located in the city in which draws on any Credit Facility or Liquidity Facility are to be presented, the city in which the Corporate Trust Office of the Bond Trustee is located or, with respect to Bonds in the Direct Purchase Mode, the FRN Mode or the Window Mode, the city in which the Calculation Agent is located, are not required or authorized to be closed and on which The New York Stock Exchange or the Federal Reserve Bank is open.

“Calculation Agent” means (a) during the Direct Purchase Period, the Direct Purchaser or any affiliate thereof during any Direct Purchase Period, or any Person, financial institution or financial advisory firm appointed by the Corporation, with the consent of the Direct Purchaser to serve as Calculation Agent for the Bonds, and (b) during the FRN Mode or the Window Mode, any Person, financial institution or financial advisory firm appointed by the Corporation prior to a Conversion to any such interest rate mode to serve as Calculation Agent for the Bonds.

“Certificate,” “Statement,” “Request” and “Requisition” of the Authority or the Corporation means, respectively, a written certificate, statement, request or requisition signed in the name of the Authority or the Corporation by an Authorized Representative. Any such instrument and supporting opinions or representations, if any, may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument. If and to the extent required by the Bond Indenture, each such instrument shall include the statements provided for in the Bond Indenture.

“Code” means the Internal Revenue Code of 1986, as amended from time to time. Each reference to a section of the Code in either the Bond Indenture or Loan Agreement shall be deemed to include the United States Treasury Regulations relating to such section, including temporary and proposed regulations, relating to such section which are applicable to the Bonds or the use of the proceeds thereof.

“Continuing Disclosure Agreement” means any continuing disclosure agreement or certificate executed by the Corporation with respect to the Bonds and which complies with Securities and Exchange Commission Rule 15c2-12.

D-3 “Conversion” means a conversion of all or a portion of the Bonds from one Interest Rate Mode to one or more other Interest Rate Modes in accordance with the terms and provisions of the Bond Indenture and shall also include (a) a conversion from any Direct Purchase Period to the next Direct Purchase Period; (b) a conversion of the FRN Bonds into a new FRN Interest Rate Period; (c) a conversion from one Fixed Period to a new Fixed Period; (d) a conversion from any Short Term Interest Rate Period to a new Short Term Interest Rate Period; and (e) a conversion from any Long Term Interest Rate Period to a new Long Term Interest Rate Period.

“Conversion Date” means the effective date of a Conversion of the Bonds or a portion of the Bonds.

“Corporate Trust Office” means the office of the Bond Trustee at which its corporate trust business is conducted, which at the date hereof is located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890, Attention: Corporate Trust Administration, provided, however, that for purposes of the surrender or presentation of Bonds for payment, transfer or exchange, the Corporate Trust Office shall be the designated corporate trust or operations office of the Bond Trustee.

“Corporation” means Christiana Care Health System, Inc., a nonprofit corporation organized under the law of the State, or any corporation that is the surviving, resulting, or transferee corporation in any merger, consolidation or transfer of all or substantially all assets permitted under the Master Indenture.

“Corporation Elective Purchase Date” means the date designated by the Corporation for the purchase of Daily Bonds, Two Day Bonds, Weekly Bonds or Window Bonds pursuant to the Bond Indenture.

“Corporation Purchase Account” means the account by that name in the Bond Purchase Fund established pursuant to the Bond Indenture.

“Costs of Issuance Fund” means the fund so designated and established pursuant to the Bond Indenture.

“Credit Facility” means a letter of credit, loan, guarantee, bond insurance policy, or similar credit facility issued by a Credit Facility Provider which, by its terms, shall secure the payment of principal of and interest on the Bonds, and delivered to the Bond Trustee in accordance with the Loan Agreement or, in the event of the delivery of an Alternate Credit Facility, such Alternate Credit Facility. A Credit Facility may also serve the function of a Liquidity Facility. The initial Credit Facility shall be the irrevocable direct pay letter of credit issued by the Initial Credit Facility Provider and shall serve the function of both a Credit Facility and a Liquidity Facility.

“Credit Facility Account” means the account by that name in the Bond Purchase Fund established pursuant to the Bond Indenture.

“Credit Facility Agreement” means any reimbursement or similar agreement pursuant to which a Credit Facility Provider issues or provides a Credit Facility.

D-4 “Credit Facility Bonds” means Bonds purchased with moneys drawn under (or otherwise obtained pursuant to the terms of) a Credit Facility, but excluding Bonds no longer considered to be Credit Facility Bonds in accordance with the terms of the applicable Credit Facility.

“Credit Facility Provider” means the commercial bank, bond insurer, or other financial institution issuing (or having primary obligation, or acting as agent for the financial institutions obligated, under) a Credit Facility then in effect.

“Credit Facility Rate” means the rate per annum, if any, specified in a Credit Facility as applicable to Credit Facility Bonds, which shall not exceed the Maximum Interest Rate for Credit Facility Bonds.

“Credit Group” means the Credit Group created by the Master Indenture.

“Credit Group Representative” means the Corporation, or such other Credit Group Representative designated under the Master Indenture.

“Date of Issuance” means, with respect to the Series 2020 Bonds, February [__], 2020, and with respect to any Additional Bonds, the date of delivery of such Additional Bonds.

“Default Rate” means, with respect to Direct Purchase Bonds, during any Direct Purchase Period, the Default Rate, if any, as defined in the applicable Supplemental Bond Indenture or Bondholder Agreement.

“Determination of Taxability” means, with respect to Direct Purchase Bonds, during any Direct Purchase Period, a Determination of Taxability, if any, as defined in the applicable Supplemental Bond Indenture or Bondholder Agreement.

“Differential Interest Amount” means, upon remarketing of a Liquidity Facility Bond or a Credit Facility Bond by the Remarketing Agent pursuant to the Bond Indenture, the excess of (a) interest which has accrued at the Liquidity Facility Rate or the Credit Facility Rate, as applicable, up to but excluding the remarketing date of the Bond, over (b) the interest accrued on such Bond which is received by the Liquidity Facility Provider or the Credit Facility Provider, as applicable, from the Remarketing Agent as part of the Purchase Price.

“DTC” means The Depository Trust Company.

“Electronic Means” means the following communications methods: e-mail as a portable document format (“pdf”) or other replicating image attached to an 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 under the Bond Indenture.

“Electronic Notice” means a notice transmitted through Electronic Means.

“Eligible Bonds” means any Bonds other than Liquidity Facility Bonds, Credit Facility Bonds or Bonds owned by, for the account of, or on behalf of, the Authority or the Corporation or any other Member of the Obligated Group.

D-5 “Eligible Moneys” means:

(a) Bond proceeds deposited with the Bond Trustee contemporaneously with the issuance and sale of the Bonds and which are continuously thereafter held subject to the lien of the Bond Indenture in a separate and segregated fund, account or subaccount established under the Bond Indenture in which no moneys which are not Eligible Moneys are at any time held;

(b) moneys (i) paid or deposited by the Corporation or any other Member of the Obligated Group to or with the Bond Trustee, (ii) held in any fund, account or subaccount established under the Bond Indenture in which no other moneys which are not Eligible Moneys are held and (iii) which have so been on deposit with the Bond Trustee for at least 124 consecutive days from their receipt by the Bond Trustee if the Corporation is the sole Member of the Obligated Group or at least 367 consecutive days from their receipt by the Bond Trustee if there is more than one Member of the Obligated Group, or if such funds are provided by an Insider (within the meaning of Title 11 of the United States Bankruptcy Code), with respect to the Corporation, during and prior to which period no petition by or against the Authority, the Corporation or any other Member of the Obligated Group or any such Insider under any bankruptcy or similar law now or hereafter in effect shall have been filed and no bankruptcy or similar proceeding otherwise initiated (unless such petition or proceeding shall have been dismissed and such dismissal be final and not subject to appeal), together with investment earnings on such moneys;

(c) moneys received by the Bond Trustee from any payment under a Credit Facility or a Liquidity Facility which are held in any fund, account or subaccount established under the Bond Indenture in which no other moneys which are not Eligible Moneys are held, together with investment earnings on such moneys;

(d) proceeds from the remarketing of any Bonds pursuant to the provisions of the Bond Indenture to any person other than the Authority, the Corporation, any other Member of the Obligated Group or any Insider;

(e) proceeds from the issuance and sale of refunding bonds, together with the investment earnings on such proceeds, if there is delivered to the Bond Trustee and Moody’s (if Moody’s is then a Rating Agency for the Bonds) at the time of issuance and sale of such refunding bonds an opinion of nationally recognized bankruptcy counsel experienced in bankruptcy matters (which opinion may assume that no holder of a Bond is an Insider) to the effect that the use of such proceeds and investment earnings to pay the principal or Redemption Price of or interest on the Bonds would not be avoidable as preferential payments under Section 547 of the Bankruptcy Code recoverable under Section 550 of the Bankruptcy Code should the Authority, the Corporation or any other Member of the Obligated Group become a debtor in a proceeding commenced thereunder; and

(f) moneys which are derived from any source, including without limitation moneys from the Corporation or any other Member of the Obligated Group, together with the investment earnings on such moneys, if the Bond Trustee and Moody’s (if Moody’s is

D-6 then a Rating Agency for the Bonds) has received an unqualified opinion of nationally recognized bankruptcy counsel experienced in bankruptcy matters (which opinion may assume that no holder of a Bonds is an Insider) to the effect that payment of such amounts to a holder of a Bond would not be avoidable as preferential payments under Section 547 of the Bankruptcy Code recoverable under Section 550 of the Bankruptcy Code should the Authority, the Corporation or any other Member of the Obligated Group become a debtor in a proceeding commenced thereunder; provided that such proceeds, moneys or income shall not be deemed to be Eligible Moneys or available for payment of the Bonds if, among other things, an injunction, restraining order or stay is in effect preventing such proceeds, moneys or income from being applied to make such payment. For the purposes of this definition, the term “moneys” shall include cash and any Qualified Investments including, without limitation, United States Government Obligations.

“EMMA” means the Electronic Municipal Market Access internet website maintained by the Municipal Securities Rulemaking Board, or any successor designated by the Municipal Securities Rulemaking Board.

“Event of Default” means any of the events specified in the Bond Indenture.

“Event of Taxability” means any act, omission or event that results in the interest paid or payable on any Bond being includable for federal income tax purposes in the gross income of any owner.

“Expiration Date” means (i) the date upon which a Liquidity Facility or Credit Facility is scheduled to expire (taking into account any extensions of such Expiration Date by virtue of extensions of a particular Liquidity Facility or Credit Facility, from time to time) in accordance with its terms, including without limitation termination upon delivery of a Liquidity Facility, an Alternate Liquidity Facility, a Credit Facility or an Alternate Credit Facility to the Bond Trustee and (ii) the date upon which a Liquidity Facility terminates following voluntary termination by the Corporation pursuant to the Loan Agreement and the terms of the related Liquidity Facility or Credit Facility.

“Favorable Opinion of Bond Counsel” means an opinion of Bond Counsel, addressed to the Authority, the Remarketing Agent, if any, the Direct Purchaser, if any, the Corporation and the Bond Trustee, to the effect that the action proposed to be taken is authorized or permitted or not prohibited by or in contravention of the Bond Indenture and will not, in and of itself, result in the inclusion of interest on the Series 2020A Bonds in gross income of the Holders thereof for federal income tax purposes.

“Final Bond Resolution” means the Resolution adopted by the Authority or any committee thereof authorizing the issuance, delivery and sale of the Series 2020 Bonds, and with respect to any Additional Bonds, the Resolution adopted by the Authority or any committee thereof authorizing the issuance, delivery and sale of such Additional Bonds.

“First Supplemental Indenture” means the First Supplemental Indenture, dated as of February 1, 2020, between the Corporation and the Master Trustee, supplementing the Master Indenture, entered into pursuant to the Master Indenture.

D-7 “Fitch” means Fitch Ratings, a corporation organized and existing under the laws of the State of New York, its successors and their assigns, or, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, any other nationally recognized securities rating agency designated by the Corporation by notice in writing to the Authority and the Bond Trustee and the Direct Purchaser, if any.

“Fixed Bonds” means Bonds that bear interest at Fixed Rates.

“Fixed Mode” means the Interest Rate Mode during which the Bonds bear interest at a Fixed Rate or Fixed Rates to their Maturity Date.

“Fixed Period” means the period to the Maturity Date during which Bonds constitute Fixed Bonds.

“Fixed Rate” means the interest rates per annum on Fixed Bonds set forth in the Bond Indenture to their Maturity Date or until the Fixed Rate Conversion Date, if any, and after any Fixed Rate Conversion Date, the fixed interest rate or rates per annum determined prior to such Fixed Rate Conversion Date as provided in the Bond Indenture.

“Fixed Rate Conversion Date” means the effective date of a Conversion of the Bonds or a portion of the Bonds into a Fixed Period or from one Fixed Period to a new Fixed Period or another Interest Rate Period pursuant to the provisions of the Bond Indenture.

“Funding Amount” has the meaning set forth in the Bond Indenture.

“Governing Body” means, with respect to the Corporation, the board of directors or similar group in which the right to exercise the powers of corporate directors is vested.

“Government Obligations” means (a) noncallable United States Government Obligations, (b) evidences of a direct ownership of a proportionate or individual interest in future interest or principal payments on noncallable United States Government Obligations, which United States Government Obligations are held in a custodial account by a custodian on behalf of the Bond Trustee pursuant to the terms of a custody agreement; provided, however, that if such Government Obligations consist of obligations for which the principal and interest payments have been “stripped” into separate securities, such custodian shall be a Federal Reserve Bank, and (c) senior debt obligations issued by Fannie Mae, Freddie Mac, the Federal Home Loan Bank System, the Federal Farm Credit System or senior debt obligations of other government-sponsored enterprises, federal agencies, or federal corporations established pursuant to an act of Congress.

“Holder,” “Bondholder,” “Owner,” “Registered Owner” or “holder” whenever used in the Bond Indenture or Loan Agreement with respect to a Bond, means the Person in whose name such Bond is registered; provided, however, that any time the Bonds are held in a book-entry system, “Holder” or “Bondholder” shall mean Beneficial Owner of the Bonds.

“Immediate Termination Date” means, with respect to Bonds secured by a Liquidity Facility in the form of a standby bond purchase agreement or other standby liquidity agreement, the date, if any, on which the Liquidity Facility Provider’s obligation to advance funds or purchase Bonds under such Liquidity Facility terminates immediately in accordance with its terms.

D-8 “Index Reset Date” means the first Business Day of each calendar month.

“Initial Fixed Period” means the Fixed Period commencing on the Date of Issuance and ending on the earlier of the applicable Maturity Date or Conversion Date.

“Initial Window Rate Spread” means with respect to any Conversion to a Window Period, the spread determined by the Remarketing Agent on the applicable Window Rate Determination Date pursuant to the Bond Indenture.

“Interest Accrual Date” means:

(a) with respect to any Weekly Period, any Daily Period, any Two Day Period, any Window Period, any FRN Period, any VRO Interest Rate Period, any Fixed Period or any Long Term Period, the first day thereof and, thereafter, each Interest Payment Date during such period, other than the last such Interest Payment Date;

(b) with respect to any Short Term Interest Rate Period, the first day thereof;

(c) with respect to any Flexible Rate Period, the first day thereof; and

(d) with respect to any Direct Purchase Interest Rate Period, either the first calendar day of each month or the first Business Day of each calendar month, as set forth in the applicable Supplemental Bond Indenture or Bondholder Agreement.

“Interest Accrual Period” means, during any Direct Purchase Period, the Interest Accrual Period established in the applicable Supplemental Bond Indenture or Bondholder Agreement.

“Interest Fund” means the fund by that name established pursuant to the Bond Indenture.

“Interest Payment Date” means:

(a) with respect to any Fixed Period or Long Term Period, each [April 1] and [October 1], which for the Initial Fixed Period with respect to the Series 2020 Bonds shall commence [April 1], 2020;

(b) with respect to any Liquidity Facility Bonds or Credit Facility Bonds, as provided in the applicable Liquidity Facility or Credit Facility Agreement; and

(c) with respect to any Direct Purchase Period, the first Business Day of each calendar month, or as may otherwise be established in the applicable Supplemental Bond Indenture or Bondholder Agreement.

“Interest Rate Mode” means a Daily Mode, a Two Day Mode, a Weekly Mode, a Short Term Mode, a Long Term Mode, an FRN Mode, a VRO Mode, a Window Mode, a Flexible Mode, a Direct Purchase Mode or a Fixed Mode.

D-9 “Interest Rate Period” means a Daily Interest Rate Period, a Two Day Interest Rate Period, a Weekly Interest Rate Period, a Short Term Interest Rate Period, a Long Term Interest Rate Period, a Flexible Rate Period, a FRN Interest Rate Period, a VRO Interest Rate Period, a Window Interest Rate Period, a Direct Purchase Interest Rate Period or a Fixed Period.

“Letter of Representations” means the Blanket Issuer Letter of Representations between the Authority and DTC.

“Liquidity Facility” means a line of credit, letter of credit, standby purchase agreement, loan, guarantee, or similar liquidity facility for a Series of Bonds issued by a commercial bank or other financial institution which, by its terms, provides for the payment of the Purchase Price of Bonds tendered and not remarketed, and delivered to the Bond Trustee in accordance with the Loan Agreement or, in the event of the delivery of an Alternate Liquidity Facility, such Alternate Liquidity Facility. To the extent a Credit Facility provides for such payment, it shall also be deemed a Liquidity Facility.

“Liquidity Facility Account” means the account by that name in the Bond Purchase Fund established pursuant to the Bond Indenture.

“Liquidity Facility Bonds” means Bonds purchased with moneys drawn under (or otherwise obtained pursuant to the terms of) a Liquidity Facility, but excluding Bonds no longer considered to be Liquidity Facility Bonds in accordance with the terms of such Liquidity Facility.

“Liquidity Facility Provider” means the commercial bank or other financial institution issuing (or having primary obligation, or acting as agent for the financial institutions obligated, under) a Liquidity Facility then in effect.

“Liquidity Facility Rate” means the rate per annum, if any, specified in a Liquidity Facility as applicable to Liquidity Facility Bonds, which shall not exceed the Maximum Interest Rate for Liquidity Facility Bonds.

“Loan” means the loan made by the Authority to the Corporation under the Loan Agreement.

“Loan Agreement” means the Loan Agreement dated as of February 1, 2020 between the Authority and the Corporation, for itself and as Credit Group Representative on behalf of the Obligated Group, as it may from time to time be amended in accordance with the terms thereof or thereof, initially providing for the loan to the Corporation of the proceeds of the Bonds.

“Loan Default Event” means any of the events specified in the Loan Agreement.

“Loan Repayments” means the payments of principal of and interest on the Loan referred to in the Loan Agreement.

“London Banking Day” means any day on which commercial banks are open for general business, including dealings in U.S. dollars and foreign exchange and foreign currency, in London, England.

D-10 “Make-Whole Adjustment” means [____] basis points with respect to the Series 2020B Bonds.

“Make-Whole Redemption Price” means the greater of (i) 100% of the principal amount of a Series 2020B Bond to be redeemed and (ii) the sum of the present value of the remaining scheduled payments of principal and interest to the Maturity Date of such Series 2020B Bond, not including any portion of those payments of interest accrued and unpaid as of the date on which such Series 2020B Bond is to be redeemed, discounted to the date on which such Series 2020B Bond is to be redeemed on a semi-annual basis assuming a 360-day year consisting of twelve 30- day months at the adjusted Treasury Rate plus the Make-Whole Adjustment, plus, in each case, accrued and unpaid interest on such Series 2020B Bond to the redemption date.

“Mandatory Purchase Date” means any Purchase Date on which Bonds are subject to mandatory purchase pursuant to the Bond Indenture, including as set forth in the applicable Supplemental Bond Indenture or Bondholder Agreement.

“Mandatory Purchase Window” means, during a Window Period, (a) 210 days or (b) such other number of days specified by the Remarketing Agent prior to the commencement of the Window Period, with the consent of the Corporation, in a written notice to the Bond Trustee, the Credit Facility Provider, if any, and the Liquidity Facility Provider, if any. Any change in the Mandatory Purchase Window shall become effective only at the commencement of a Window Period, on a Window Rate Mandatory Purchase Date or any other mandatory tender for purchase for Window Bonds that occurs pursuant to the Bond Indenture during such Window Period.

“Market Agent” means the Person, if any, appointed by the Corporation to serve as market agent in connection with any Direct Purchase Period.

“Master Indenture” means the Master Trust Indenture, dated as of February 1, 2020, between the Corporation and the Master Trustee, as it may from time to time be amended or supplemented in accordance with its terms.

“Master Trustee” means Wilmington Trust, National Association, a national banking association, as Master Trustee under the Master Indenture, or its successor.

“Maturity Date” means, (i) with respect to the Series 2020 Bonds, during any Interest Rate Period other than a Fixed Period, [______], 20[__] all as more fully described in the Bond Indenture; with respect to the Series 2020 Bonds in the Initial Fixed Period, the maturities set forth in the Bond Indenture; or, with respect to a Series 2020 Bond upon change to a Fixed Period (including any Conversion from a Fixed Period to a new Fixed Period), such maturities as are determined pursuant to the Bond Indenture; and (ii) with respect to any Additional Bonds, the Maturity Date as set forth in the Supplemental Bond Indenture delivered in connection with such Additional Bonds.

“Maximum Interest Rate” means 12% per annum for all Bonds except Direct Purchase Bonds, Liquidity Facility Bonds and Credit Facility Bonds, for which the Maximum Interest Rate shall be the Maximum Lawful Rate; provided, however, that in any case the Maximum Interest Rate on any Bonds shall not exceed the Maximum Lawful Rate.

D-11 “Maximum Lawful Rate” means the maximum nonusurious rate of interest on the relevant obligation permitted by applicable law.

“Member,” “Member of the Obligated Group” or “Obligated Group Member” has the meaning set forth in the Master Indenture.

“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, or, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, any other nationally recognized securities rating agency designated by the Corporation by notice in writing to the Authority and the Bond Trustee and the Direct Purchaser, if any.

“Noticed Termination Date” means, with respect to Bonds secured by a Liquidity Facility in the form of a standby bond purchase agreement or other standby liquidity agreement or a Credit Facility, the date on which a Liquidity Facility Provider’s or Credit Facility Provider’s obligation to advance funds or purchase Bonds under a Liquidity Facility or Credit Facility terminates or has not been reinstated as stated in the Liquidity Facility Provider’s or Credit Facility Provider’s notice of termination delivered pursuant to the Liquidity Facility or Credit Facility and related Credit Facility Agreement due to a non-reimbursement of the Credit Facility Provider or Liquidity Facility Provider or default under specified sections of the Liquidity Facility or Credit Facility Agreement, as applicable, which date of termination shall be fifteen (15) days (or such other period as is specified in the Liquidity Facility or Credit Facility Agreement) after the date of receipt by the Bond Trustee of such notice.

“Obligated Group” means the Obligated Group created by the Master Indenture.

“Obligation No. 1” means the Christiana Care Health System, Inc. Series 2020A Master Note Obligation (Delaware Health Facilities Authority) issued, authenticated and delivered under the First Supplemental Indenture, which secures the obligations of the Obligated Group under the Loan Agreement, and any subsequent Obligations issued, authenticated and delivered under a supplement to the Master Indenture.

“Obligation No. 2” means the Christiana Care Health System, Inc. Series 2020B Master Note Obligation (Delaware Health Facilities Authority) issued, authenticated and delivered under the Second Supplemental Indenture, which secures the obligations of the Obligated Group under the Loan Agreement, and any subsequent Obligations issued, authenticated and delivered under a supplement to the Master Indenture.

“Obligations” means, collectively, Obligation No. 1 and Obligation No. 2.

“Officer’s Certificate” means a written certificate of the Corporation signed by the Corporation’s Authorized Representative, with certificate shall be deemed to constitute a representation of and shall be binding upon the corporation with respect to matters set forth therein, and which certificate in each instance, including the scope, form, substance and other aspects thereof, is acceptable to the Bond Trustee.

“Official Statement” means the official statement relating to the Series 2020 Bonds dated [______], 2020.

D-12 “Opinion of Bond Counsel” means a written Opinion of Counsel, which shall be Bond Counsel.

“Opinion of Counsel” means a written opinion of counsel (who may be Bond Counsel or counsel for the Corporation or the Authority) selected by the Corporation and not objected to by the Authority, the Bond Trustee or the Direct Purchaser, if any.

“Optional Redemption Fund” means the account by that name established pursuant to the Bond Indenture.

“Outstanding” when used as of any particular time with reference to Bonds, means (subject to the provisions of the Bond Indenture) all Bonds theretofore, or thereupon being, authenticated and delivered by the Bond Trustee under the Bond Indenture except (a) Bonds theretofore canceled by the Bond Trustee or surrendered to the Bond Trustee for cancellation; (b) Bonds with respect to which all liability of the Authority shall have been discharged in accordance with the Bond Indenture, including Bonds (or portions of Bonds) referred to in the Bond Indenture; (c) Bonds for the transfer or exchange of or in lieu of or in substitution for which other Bonds shall have been authenticated and delivered by the Bond Trustee pursuant to the Bond Indenture; (d) Bonds alleged to have been mutilated, destroyed, lost or stolen and for which security or indemnity has been provided, as provided in the Bond Indenture; and (e) any Undelivered Bond.

“Paying Agent” means the bank or banks, if any, designated pursuant to the Bond Indenture to receive and disburse the principal of and interest on the Bonds. Initially, the Bond Trustee will act as the Paying Agent.

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

“Prime Rate” means, during any Direct Purchase Period, the Prime Rate set forth in the applicable Supplemental Bond Indenture or Bondholder Agreement.

“Principal Office” of a Remarketing Agent, a Calculation Agent or a Market Agent means the address for such Remarketing Agent, Calculation Agent or Market Agent designated in writing to the Bond Trustee and the Corporation.

“Prior Bonds” means, individually and collectively, the (a) $55,000,000 Variable Rate Revenue Bonds, Christiana Care Health Services, Series 2008A (the “Series 2008A Bonds”); (b) $25,000,000 Variable Rate Revenue Bonds, Christiana Care Health Services, Series 2008B (the “Series 2008B Bonds”); (c) $73,000,000 Revenue Bonds, Christiana Care Health Services, Series 2010A (the “Series 2010A Bonds”); (d) $75,000,000 Variable Rate Revenue Bonds, Christiana Care Health Services, Series 2010B (the “Series 2010B Bonds”); (e) $25,000,000 Variable Rate Revenue Bonds, Christiana Care Health Services, Series 2010C (the “Series 2010C Bonds”); (f) $10,335,000 Revenue Bonds, Christiana Care Health Services, Series 2010D (the “Series 2010D Bonds”); and (g) $16,860,000 Revenue Bonds, Christiana Care Health Services, Series 2010E (the “Series 2010E Bonds”).

“Project” has the meaning set forth in the Recitals to the Bond Indenture.

D-13 “Project Fund” means the fund so designated and established pursuant to the Bond Indenture.

“Purchase Date” means each date on which Bonds are subject to optional or mandatory purchase pursuant to the Bond Indenture and shall include each Mandatory Purchase Date and each date on which the Corporation provides funds pursuant to the proviso contained in the Bond Indenture following return of the Bonds to the Holders pursuant to the Bond Indenture.

“Purchase Price” means, with respect to a Bond subject to purchase on a Purchase Date, an amount equal to the principal amount thereof plus accrued interest to, but not including, the Purchase Date; provided, however, that:

(a) if the Purchase Date for any Purchased Bond is an Interest Payment Date, the Purchase Price thereof shall be the principal amount thereof, and interest on such Bond shall be paid to the Holder of such Bond pursuant to the Bond Indenture; and

(b) in the case of a purchase on the first day of an Interest Rate Period which is preceded by a Long Term Period and which commences prior to the day originally established as the last day of such preceding Long Term Period, “Purchase Price” of any Purchased Bonds means the optional Redemption Price set forth in the Bond Indenture which would have been applicable to such Bond if the preceding Long Term Period had continued to the day originally established as its last day, plus accrued interest, if any.

“Purchased Bonds” means the Bonds to be purchased on a Purchase Date pursuant to the Bond Indenture.

“Purchaser” means the initial purchaser(s) of the Bonds, whether one or more, as identified in the Bond Purchase Agreement.

“Qualified Investments” means such of the following as shall mature, or shall be subject to redemption by the holder thereof at the option of such holder, not later than the respective dates when the moneys will be required for the purposes intended: (i) Government Obligations or obligations of the State, if the State has ratings from Moody’s or S&P equal to or higher than the rating of “A,” (ii) certificates of deposit issued by any bank or trust company (including the Bond Trustee) which is insured by the Federal Deposit Insurance Corporation, and which, so long as required by the Act, is a member of the Federal Reserve System, and in which the excess of the principal amount of such certificates of deposit over the amount guaranteed by the Federal Deposit Insurance Corporation shall be continuously secured for the benefit of the Authority and the holders of the Outstanding Bonds by United States Government Obligations, provided that: (a) the obligations which secure such excess shall be held in the possession of the Bond Trustee or a third party acting solely as agent for the Bond Trustee; (b) the Bond Trustee (or third party acting solely as agent for the Bond Trustee) must have a perfected security interest in such obligations; and (c) such obligations must be free and clear of all claims, liens or encumbrances in favor of any party other than the Bond Trustee (or third party acting solely as agent for the Bond Trustee), (iii) certificates of deposit issued by any bank or trust company which has ratings from Moody’s and S&P, equal to or higher than the rating of “A,” and which, so long as required by the Act, is a

D-14 member of the Federal Reserve System, (iv) money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating of “AAAm”, AAAm-G”, or “AAm” or equivalent by Moody’s and S&P, (v) commercial paper (having original maturities of not more than 270 days) rated, at the time of purchase, “Prime-2” or better by Moody’s and “A-2” or better by S&P, (vi) Repurchase Agreements, as defined herein, (vii) mortgage pass-through securities, collateralized mortgage obligations, or mortgage-backed or other pay-through bonds rated “A” or better by Moody’s and “A” or better by S&P, (viii) asset-backed securities whose underlying collateral consists of loans, leases or receivables, including but not limited to auto loans/leases, credit card receivables, student loans, equipment loans/leases, or home-equity loans with minimum ratings of “Aaa” or “P-1” by Moody’s and “AAA” or “A-1” by S&P, and (ix) other instruments and investments authorized by state law.

“Rating Agency” means S&P, Moody’s or Fitch.

“Rating Category” means a generic securities rating category, without regard, in the case of a long term rating category, to any refinement or gradation of such long term rating category by a numerical modifier or otherwise.

“Rebate Amount” means the Rebate Requirement (as defined in the Tax Certificate) with respect to the Bonds determined in accordance with the Bond Indenture and the Tax Certificate.

“Rebate Analyst” means an independent certified public accountant, financial analyst or Bond Counsel, or any firm of the foregoing, or financial institution, experienced in making the arbitrage and rebate calculations required pursuant to Section 148(f) of the Code, selected and compensated by the Corporation to make the computations and give the directions required under the Bond Indenture and the Tax Certificate.

“Rebate Fund” means the fund by that name created under the Bond Indenture.

“Record Date” means, with respect to any Interest Payment Date, (a) with respect to any Bonds other than Long Term Bonds or Fixed Bonds, the Business Day immediately preceding such Interest Payment Date, and (b) with respect to Long Term Bonds or Fixed Bonds, the first day of the month in which such Interest Payment Date occurs, whether or not such day is a Business Day.

“Redemption Price” means, with respect to any Bond (or portion thereof), the principal amount of such Bond (or portion) plus the applicable premium, if any, payable upon redemption thereof pursuant to the provisions of such Bond and the Bond Indenture.

“Registration Books” means books maintained by the Bond Trustee on behalf of the Authority at the Corporate Trust Office of the Bond Trustee for the purpose of recording the registration, transfer, exchange or replacement of any of the Bonds.

“Reimbursement Obligations” means those amounts required to be reimbursed to a Credit Facility Provider or Liquidity Facility Provider upon payment under a Credit Facility or Liquidity Facility.

D-15 “Remarketing Agent” means, with respect to the Bonds, the financial institution or institutions as may be designated by the Corporation as the Remarketing Agent, if any, for such Bonds, or any other Remarketing Agent or successor or additional Remarketing Agent appointed in accordance with the Bond Indenture. No Remarketing Agent shall be required during any Fixed Period, during any Direct Purchase Period until the applicable Direct Purchase Rate Mandatory Purchase Date or during any Long Term Rate Period until the applicable Long Term Rate Mandatory Purchase Date.

“Remarketing Agreement” means any agreement between the Corporation and a Remarketing Agent whereby the Remarketing Agent undertakes to perform the duties of the Remarketing Agent under the Bond Indenture.

“Remarketing Proceeds Account” means the account by that name within the Bond Purchase Fund established pursuant to the Bond Indenture.

“Repurchase Agreement” means written repurchase agreements collateralized by obligations described in Government Obligations (the “Collateral Securities”) with any registered broker/dealer subject to the jurisdiction of the Securities Investors’ Protection Corporation or any commercial bank whose deposits are insured by the FDIC (including any broker/dealer affiliated with the Bond Trustee), if such broker/dealer or bank has an uninsured, unsecured and unguaranteed obligation, at the time of purchase, rated “Prime-1” or “A3” or better by Moody’s, and “A-1” or “A-” or better by S&P, provided that:

(a) a master repurchase agreement or other specific written repurchase agreement governs the transaction;

(b) the Collateral Securities are held free and clear of any lien by an independent third party acting solely as agent for the Bond Trustee (as may be evidenced by an opinion of counsel acceptable to the Bond Trustee) or an independent third party acting solely as agent (“Agent”) for the Bond Trustee, and such third party is (1) a Federal Reserve Bank or (2) a bank that is a member of the FDIC and that has combined capital, surplus and undivided profits of not less than $50,000,000, and the Bond Trustee shall have received written confirmation from such third party that it holds such securities, free and clear of any lien, as agent for the Bond Trustee;

(c) the Agent will value the Collateral Securities no less frequently than weekly and will liquidate the Collateral Securities if any deficiency in the required collateral percentage is not restored within two Business Days of such valuation; and

(d) the fair market value of the Collateral Securities in relation to the amount of the repurchase obligation, including principal and interest, is equal to at least 102%.

“Required Stated Amount” means with respect to a Liquidity Facility or a Credit Facility, at any time of calculation, an amount equal to the aggregate principal amount of all Bonds then Outstanding secured by such Liquidity Facility or Credit Facility together with interest accruing thereon (assuming an annual rate of interest equal to the Maximum Interest Rate) for the period as shall be specified in a Certificate of the Corporation to be the minimum period specified by the

D-16 Rating Agencies then rating such Bonds as necessary to obtain (or maintain) a specified short term rating of such Bonds.

“Responsible Officer” means any officer within the corporate trust department of the Bond Trustee, including any vice president, assistant vice president, senior associate, associate or any other officer of the Bond Trustee who customarily performs functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person’s knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of the Bond Indenture.

“Revenue Fund” means the fund by that name established pursuant to the Bond Indenture.

“Revenues” means all amounts received by the Authority or the Bond Trustee pursuant or with respect to the Loan Agreement or the Obligations, including, without limiting the generality of the foregoing, Loan Repayments (including both timely and delinquent payments and any late charges, and whether paid from any source), prepayments, insurance proceeds, condemnation proceeds, and all interest, profits or other income derived from the investment of amounts in any fund or account established pursuant to the Bond Indenture (other than the Rebate Fund and the Bond Purchase Fund), but not including the Authority’s Unassigned Rights, any Administrative Fees and Expenses, Additional Payments, any moneys required to be deposited in the Rebate Fund or the Bond Purchase Fund or any interest, profits or other income required to be retained in the Rebate Fund or the Bond Purchase Fund.

“S&P” means S&P Global Ratings, its successors and their assigns, or, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, any other nationally recognized securities rating agency designated by the Corporation by notice in writing to the Authority and the Bond Trustee and the Direct Purchaser, if any.

“Second Supplemental Indenture” means the Second Supplemental Indenture, dated as of February 1, 2020, between the Corporation and the Master Trustee, supplementing the Master Indenture, entered into pursuant to the Master Indenture.

“Securities Act” means the Securities Act of 1933, as amended.

“Securities Depository” means The Depository Trust Company and its successors and assigns, or any other securities depository selected as set forth in the Bond Indenture.

“Self Liquidity Arrangement” means an agreement or other arrangement from the Corporation to pay the Purchase Price of the Bonds.

“Series,” when used with respect to the Bonds, means all the Bonds designated as being of the same Series or sub-Series, whether upon initial issuance thereof or upon any Conversion of a portion of a Series and redesignation thereof into one or more sub-Series, authenticated and delivered in a simultaneous transaction, and any Bonds thereafter authenticated and delivered upon a transfer or exchange or in lieu of or in substitution for such Bonds of such Series or sub-Series, or upon a Conversion of a portion of any Series or sub-Series of the Bonds, as provided in the Bond Indenture. In the event that the Bonds or a portion of the Bonds have been so designated as being in more than a single Series or sub-Series, references in the Bond Indenture and in the Loan

D-17 Agreement to the Bonds shall, as the context may require, refer to only the Bonds of the particular Series or sub-Series in question. “Short Term Bonds” means Bonds that bear interest at Short Term Rates.

“Series 2020 Bonds” means, collectively, the Series 2020A Bonds and the Series 2020B Bonds.

“Series 2020A Bonds” means $[______] Delaware Health Facilities Authority Revenue and Refunding Bonds (Christiana Care Health System), Series 2020A.

“Series 2020B Bonds” means $[______] Delaware Health Facilities Authority Revenue and Refunding Bonds (Christiana Care Health System), Taxable Series 2020B.

“Sinking Fund Installment” means the amount required by the Bond Indenture to be paid on any single date for the retirement of Bonds of a Series.

“Special Record Date” means the date established by the Bond Trustee pursuant to the Bond Indenture as the record date for the payment of defaulted interest on Bonds.

“State” means the State of Delaware.

“Substitute Obligation” has the meaning set forth in the Bond Indenture.

“Supplemental Bond Indenture” means any indenture hereafter duly authorized and entered into between the Authority and the Bond Trustee, supplementing, modifying or amending the Bond Indenture; but only if and to the extent that such Supplemental Bond Indenture is specifically authorized under the Bond Indenture.

“Tax Certificate” means the Tax Compliance Certificate relating to the Series 2020A Bonds, dated the Date of Issuance, and delivered by the Authority and the Corporation, as Credit Group Representative.

“Tax Exempt Organization” means a Person organized under the laws of the United States of America or any state thereof which is an organization described in Section 501(c)(3) of the Code, which is exempt from federal income taxation under Section 501(a) of the Code, or corresponding provisions of federal income tax laws from time to time in effect.

“Treasury Rate” means the yield to maturity, as of the redemption date of a Series 2020B Bond, 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, but no more than 45 calendar days, prior to delivery of the notice of redemption of such Series 2020B Bond (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 such redemption date to the Maturity Date of such Series 2020B Bond; provided, however, that if the period from such 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 redemption price of the principal amount redeemed plus interest accrued to the redemption date.

D-18 “Unassigned Rights” means the rights of the Authority expressly granted to the Authority in the Bond Indenture or in the Loan Agreement to (a) inspect books and records, (b) give or receive notices, approvals, consents, requests, and other communications, (c) receive payment or reimbursement for expenses or fees, (d) the benefit of all provisions providing the Authority immunity from and limitation of liability, (e) indemnification from liability by the Corporation, (f) security for the Corporation’s indemnification obligation and (g) decide whether to issue Additional Bonds or to execute and deliver supplements and amendments to the Bond Indenture or the Loan Agreement.

“Undelivered Bond” means any Bond that constitutes an Undelivered Bond under the provisions of the Bond Indenture.

“Undelivered Bond Payment Account” means the account by that name within the Bond Purchase Fund established pursuant to the Bond Indenture.

“United States Government Obligations” means obligations that are direct, full faith and credit obligations of the United States of America or are obligations with respect to which the United States of America has fully and unconditionally guaranteed the timely payment of all principal or interest or both, but only to the extent of the principal or interest so guaranteed, including United States Agency for International Development Bonds and Resolution Funding Corporation Interest STRIPS.

“Unremarketed Bonds” means Direct Purchase Bonds for which the Holders have not received the full Purchase Price of all of their Bonds on the applicable Direct Purchase Rate Mandatory Purchase Date.

“Written Request” means with reference to the Authority, a request in writing signed by an Authorized Representative of the Authority and, with reference to the Corporation, means a request in writing signed by an Authorized Representative of the Corporation.

D-19 THE BOND INDENTURE

The following is a summary of certain provisions of the Bond Indenture. Reference is made to the Bond Indenture for the detailed provisions thereof. This summary does not purport to be final, complete or definitive, and is qualified by reference to the Bond Indenture in its entirety for the final, complete and actual terms, provisions and covenants thereof.

The Bonds are being issued as fixed rate bonds in the Fixed Mode for the Initial Fixed Period (hereinafter sometimes referred to as the “Fixed Rate Bonds”). The Fixed Rate Bonds may be converted to operate and bear interest in a different Interest Rate Mode or in a new Fixed Period as provided in the Bond Indenture. This Official Statement summarizes the Fixed Rate Bonds in the Initial Fixed Period while the Bonds bear interest at the Fixed Rates set forth on the inside cover hereof. During the period in which the Fixed Rate Bonds are subject to optional redemption, the Corporation may elect to convert the Fixed Rate Bonds to a different Interest Rate Mode or to a new Fixed Period. If the Corporation elects to convert the Fixed Rate Bonds to a different Interest Rate Mode or to a new Fixed Period, the Fixed Rate Bonds will be subject to mandatory tender for purchase on the Conversion Date, and a new reoffering circular or supplement to this Official Statement or other disclosure document will be prepared in connection with any such Conversion.

Authorization of Bonds.

The Series 2020A Bonds to be designated as “Delaware Health Facilities Authority Revenue and Refunding Bonds (Christiana Care Health System), Series 2020A” and the Series 2020B Bonds to be designated as “Delaware Health Facilities Authority Revenue and Refunding Bonds (Christiana Care Health System), Taxable Series 2020B” are authorized to be issued under the Bond Indenture. In connection with any Conversion of Bonds (in whole or in part) or any mandatory tender and remarketing of Bonds (in whole or in part) on any Purchase Date, at the direction of the Corporation any such Bonds or portions of the Bonds may be reconfigured, combined or re-designated or divided to create sub-Series or to combine any such sub-Series. All of such Bonds shall be equally and ratably secured by the Bond Indenture. The Bond Indenture constitutes a continuing agreement with the Holders from time to time of the Bonds to secure the full payment of the principal, Redemption Price and Purchase Price of and interest on all such Bonds subject to the covenants, provisions and conditions therein contained.

Additional Bonds may be issued as provided in the Bond Indenture.

Terms of the Bonds; Registration; Denominations; Payment of Principal and Interest.

The Bonds shall be issued as fully registered Bonds without coupons in Authorized Denominations. The Bonds shall be registered in the name of “Cede & Co.,” as nominee of the Securities Depository, and shall be evidenced by one Bond certificate for each interest rate and Maturity Date (upon a future Conversion to a new Fixed Period, which, if serialized, may be evidenced by a Bond certificate for each interest rate and Maturity Date as provided in the Bond Indenture). Registered ownership of the Bonds, or any portion thereof, may not thereafter be transferred except as set forth in the Bond Indenture.

D-20 The Bonds, as initially issued, shall be dated their Date of Issuance. Subsequently issued Bonds will be dated as of the most recent Interest Payment Date to which interest has been paid on or prior to the date on which it is authenticated or, if authenticated prior to the first Interest Payment Date, as of the date of their initial issuance. The Bonds shall be numbered in consecutive numerical order from R-1 upwards.

The Bonds shall bear interest, payable on each Interest Payment Date in lawful money of the United States of America, at the rates for the applicable Interest Rate Mode and Maturity Date, as applicable, determined pursuant to the Bond Indenture from the date thereof, and shall mature on the Maturity Date.

Interest on the Bonds shall be payable to the date on which the respective Bonds shall have been paid in full. Interest shall be computed, in the case of Fixed Bonds, on the basis of a 360 day year consisting of twelve 30 day months.

Except as provided in the following sentence and in the Bond Indenture, interest on the Bonds shall be payable on each Interest Payment Date by the Bond Trustee to the Holder of Bonds who, prior to the Record Date next preceding any Interest Payment Date, shall have provided the Bond Trustee with written payment instructions.

If available funds are insufficient on any Interest Payment Date to pay the interest then due on the Bonds, interest shall continue to accrue thereon but shall cease to be payable to the Holder on such Record Date. If sufficient funds for the payment of such overdue interest thereafter become available, the Bond Trustee shall (A) establish a “special interest payment date” for the payment of the overdue interest and a Special Record Date (which shall be a Business Day) for determining the Bondholders entitled to such payment and (B) mail notices by first class mail of such dates as soon as practicable. Notice of each such date so established shall be mailed to each Bondholder at least ten (10) days prior to the Special Record Date but not more than thirty (30) days prior to the special interest payment date. The overdue interest shall be paid on the special interest payment date to the Holders, as shown on the Registration Books as of the close of business on the Special Record Date.

The Bonds shall mature on their respective Maturity Dates.

The full principal or Redemption Price of the Bonds shall be payable in lawful money of the United States of America at the Corporate Trust Office of the Bond Trustee upon surrender of the Bonds to the Bond Trustee for cancellation; provided that the Bond Trustee may agree with the Holder of any Bond that such Holder may, in lieu of surrendering the same for a new Bond, endorse on such Bond a record of partial payment of the principal of such Bond.

The Bond Trustee shall maintain a record of each such partial payment made in accordance with the foregoing agreement and such record of the Bond Trustee shall be conclusive. Such partial payment shall be valid upon payment of the amount thereof to the Holder of such Bond, and the Authority and the Bond Trustee shall be fully released and discharged from all liability to the extent of such payment regardless of whether such endorsement shall or shall not have been made upon such Bond by the Holder thereof and regardless of any error or omission in such endorsement.

D-21 The Bonds shall be subject to redemption as provided in the Bond Indenture.

Except during any period when the Bonds are not required or permitted to have CUSIP numbers as specified in a Bondholder Agreement, the Bond Trustee shall identify all payments (whether made by check or by wire transfer) of interest, principal and Redemption Price by CUSIP number of the Bonds.

Fixed Rates.

(a) Interest Rate Period. Interest on the Bonds in the Initial Fixed Period shall be effective from the Date of Issuance to their Maturity Date or until the Fixed Rate Conversion Date, if any. Thereafter, whenever Bonds are to bear interest accruing at a Fixed Rate, the Fixed Rate shall commence on a Fixed Rate Conversion Date and any Fixed Period shall extend to the Maturity Date subject to the ability of the Corporation to designate a Conversion Date for such Fixed Bonds pursuant to the provisions of the Bond Indenture.

(b) Determination Time. Interest on the Bonds in the Initial Fixed Period is set forth in the Bond Indenture. Thereafter, in a Fixed Period, each Fixed Rate shall be determined by the Remarketing Agent by 4:00 p.m., New York City time, on or before the Business Day immediately preceding the Fixed Rate Conversion Date. Notice of each Fixed Rate shall be given by the Remarketing Agent to the Bond Trustee and the Corporation by Electronic Notice not later than 5:00 p.m., New York City time, on the date of determination. The Bond Trustee shall inform the Holders of each Fixed Rate determined by the Remarketing Agent upon request of any such Holder.

(c) Remarketing. Other than the Initial Fixed Period, the Fixed Rate for the Bonds in a Fixed Period shall be the rate or rates of interest per annum borne by the Bonds which shall be the lowest rate or rates of interest that, in the judgment of the Remarketing Agent, would cause such Bonds to have a purchase price equal to the principal amount thereof plus accrued interest, if any, under prevailing market conditions and based on the market for and the relative yields of the Bonds and other securities that bear interest at a fixed rate, that, in the judgment of the Remarketing Agent, are otherwise comparable to the Bonds as of the date of determination. Notwithstanding the foregoing, the Fixed Rate may be the rate of interest per annum determined by the Remarketing Agent to be the interest rate which, if borne by the Bonds, would enable the Remarketing Agent to sell such Bonds on the date and at the time of such determination at a price which will result in the lowest net interest cost for such Bonds, after taking into account any premium or discount at which such Bonds are sold by the Remarketing Agent.

Issuance of Additional Bonds.

Subsequent to the authentication, issuance and delivery of the Series 2020 Bonds, Additional Bonds of one or more series may be authenticated by the Bond Trustee and delivered upon original issuance from time to time for of the following purposes: (i) paying all or part of any refunding and advance refunding and prepaying all or part of any series of Bonds Outstanding, including any redemption premium thereon and interest to accrue to the redemption or prepayment date; and (ii) obtaining funds for the Corporation for any purpose permitted under the Act.

D-22 Each series of Additional Bonds shall be authenticated and delivered from time to time when authorized by a Supplemental Bond Indenture, and shall be on a parity and equally and ratably secured under the Bond Indenture as to Loan Repayments made by the Corporation under the Loan Agreement with the Series 2020 Bonds and any other Additional Bonds previously delivered, without preference, priority or distinction of any Bonds over any other Bonds.

If the Corporation requests that Additional Bonds be issued, the Corporation shall file with the Authority and the Bond Trustee an estimate indicating the amount of costs to be incurred for the purposes for which Additional Bonds may be issued. Thereupon, the Authority and the Corporation may from time to time agree upon and approve the issuance and delivery of Additional Bonds; provided, however, that there shall be no obligation on the part of the Authority to issue Additional Bonds, and any decision to issue such Additional Bonds remains in the sole and absolute discretion of the Authority.

The Additional Bonds shall be issuable in Authorized Denominations and substantially in the Form of Bond attached to the Bond Indenture as Exhibit A, with such variations, insertions or omissions as are appropriate and not inconsistent therewith and shall conform generally to the rules and regulations of any governmental authority or usage or requirement of law with respect thereto. The Additional Bonds shall be numbered and lettered from one upward preceded by the letter “R” prefixed to the number and may bear such additional letters, numbers, legends or designations as the Bond Registrar determines are desirable; provided that, in all events, each series of Additional Bonds shall bear a designation that distinguishes them from any other series of Bonds issued under the Bond Indenture.

Upon the execution and delivery in each instance of appropriate supplements or amendments to the Bond Indenture and the Loan Agreement, the Authority shall execute and deliver to the Bond Trustee, and the Bond Trustee shall authenticate, such Additional Bonds and thereafter the Bond Trustee shall deliver such Bonds to the purchasers thereof as directed by the Authority

Issuance of Series 2020 Bonds

The Series 2020A Bonds in the aggregate principal amount of $[______] and the Series 2020B Bonds in the aggregate principal amount of $[______] shall forthwith be executed by the Authority and delivered to the Bond Trustee for authentication.

Establishment and Application of Costs of Issuance Fund

The Bond Trustee shall establish, maintain and hold in trust a separate fund designated as the “Costs of Issuance Fund,” and within such fund, a separate subaccount for each Series and sub- Series of Bonds, as applicable. Moneys deposited in said fund shall be used and withdrawn by the Bond Trustee to pay Costs of Issuance of the Bonds upon Requisition of the Corporation in substantially the form attached to the Bond Indenture as Exhibit B stating the Person to whom payment is to be made, the amount to be paid, the purpose for which the obligation was incurred and that such payment is a proper charge against said fund. Each Requisition of the Corporation shall be sufficient evidence to the Bond Trustee of the facts stated therein and the Bond Trustee shall have no duty to confirm the accuracy of such facts. No later than the date that is six months

D-23 after the Date of Issuance, or earlier upon Request of the Corporation, amounts, if any, remaining in the Costs of Issuance Fund shall be transferred to the Project Fund and the Costs of Issuance Fund shall thereafter be closed.

Establishment and Application of Project Fund

The Bond Trustee shall establish, maintain and hold in trust a separate fund designated as the “Project Fund,” and within such fund, a separate subaccount for each Series and sub-Series of Bonds, as applicable. The moneys in the Project Fund shall be used and withdrawn by the Bond Trustee in accordance with the Bond Indenture to pay or reimburse the costs of the Project. No moneys in the Project Fund shall be used to pay Costs of Issuance.

For purposes of the Bond Indenture and the Loan Agreement, the costs of the Project shall consist of all costs and expenses of the Project that are within the purview of the definition of “project costs” in the Act.

When the Project shall have been completed, there shall be delivered to the Bond Trustee a Certificate of the Corporation stating the fact and date of such completion and stating that all of the costs thereof have been determined and paid (or that all of such costs have been paid less specified claims that are subject to dispute and for which a retention in the Project Fund is to be maintained in the full amount of such claims until such dispute is resolved). Upon the receipt of such Certificate, the Bond Trustee shall, as directed by said Certificate, transfer any remaining balance in such Project Fund to the Optional Redemption Fund. Upon such transfer and the payment or direction of the payment of any retained amounts, the Project Fund shall be closed.

Terms of Redemption

(a) Extraordinary Optional Redemption. The Bonds are subject to redemption prior to their stated maturity, at the option of the Authority (which option shall be exercised upon Request of the Corporation given to the Bond Trustee at least two Business Days prior to the date notice of redemption needs to be sent by the Bond Trustee to the Holders (or such shorter period as may be acceptable to the Bond Trustee)) in whole or in part on any Business Day, from hazard insurance or condemnation proceeds received with respect to the facilities of any of the Credit Group Members and deposited in the Optional Redemption Fund, at a Redemption Price equal to the principal amount thereof, plus accrued interest thereon (if any) to the date fixed for redemption, without premium but only with Eligible Moneys at any time at which there is a Credit Facility that is a direct-pay letter of credit in effect with respect to such Bonds.

(b) Optional Redemption of Fixed Bonds.

(i) During the Initial Fixed Period, the Series 2020A Bonds maturing on or after [October 1], 20[30] are subject to redemption prior to their Maturity Date on any date on or after [April 1], 20[30], at the option of the Corporation, in whole or in part at any time, in such amounts as may be designated by the Corporation, at a Redemption Price equal to the principal amount thereof, plus interest accrued thereon, if any, to the date fixed for redemption, without premium.

D-24 (ii) During the Initial Fixed Period, the Series 2020B Bonds are subject to redemption prior to their Maturity Date on any date, at the option of the Corporation, in whole or in part at any time, at the Make-Whole Redemption Price.

(c) Sinking Fund Redemption. During the Initial Fixed Period and subject to the Bond Indenture, the Series 2020A Bonds maturing on [October 1], 20[44] and bearing interest at [__]% per annum, the Series 2020A Bonds maturing on [October 1], 20[49] and bearing interest at [__]% per annum, and the Series 2020B Bonds maturing on [October 1], 20[49] and bearing interest at [__]% per annum are also subject to redemption in part prior to their stated maturity from Sinking Fund Installments established pursuant to the Bond Indenture on the date that any Sinking Fund Installment is due at a Redemption Price equal to the principal amount thereof, plus interest accrued thereon, if any, to the date fixed for redemption, without premium.

(d) Purchase in Lieu of Optional Redemption. Notwithstanding the above provisions in the Bond Indenture, any Bonds subject to optional redemption and cancellation pursuant to the Bond Indenture shall also be subject to optional call for purchase and, at the option of the Corporation, holding, resale or cancellation by the Corporation (i.e., a so called purchase in lieu of redemption) at the same times and at the same Redemption Prices as are applicable to the optional redemption of such Bonds as provided in such paragraphs. No purchase of the Bonds pursuant to these provisions shall operate to extinguish the indebtedness of the Authority evidenced thereby (subject to all the terms and limitations contained in the Bond Indenture). Notwithstanding the foregoing, no purchase shall be made pursuant to this section with respect to the Series 2020A Bonds unless the Corporation shall have delivered to the Bond Trustee and the Authority concurrently therewith a Favorable Opinion of Bond Counsel.

(e) Denominations. All redemptions of less than all Bonds shall be in Authorized Denominations.

(f) Sinking Fund Adjustments. If there shall be any redemptions of Bonds other than sinking fund redemptions, the Corporation shall provide the Bond Trustee a revised Sinking Fund Installment schedule in order to reflect any such other redemptions.

Selection of Bonds for Redemption

Whenever provision is made in the Bond Indenture for the redemption of less than all of the Bonds or any given portion thereof, the Bond Trustee shall select the Bonds to be redeemed, from all Bonds subject to redemption or such given portion thereof not previously called for redemption, as directed in writing by the Corporation or in the absence of direction by lot; provided, however, that Bonds shall be redeemed in the following order of priority (and randomly within each priority):

FIRST: Any Bonds which are Bank Bonds; and

SECOND: Any other Bonds.

D-25 Notice of Redemption

Notice of redemption shall be mailed by the Bond Trustee, not less than 20 days nor more than 60 days prior to the redemption date to the Holders of Bonds called for redemption at their addresses appearing on the Registration Books as of the date of the giving of such notice. The Bond Trustee shall also give notice of redemption by Electronic Notice to the Remarketing Agent, if any, the Liquidity Facility Provider, if any, the Credit Facility Provider, if any, the Direct Purchaser, if any, and the Securities Depository. Each notice of redemption shall state the date of such notice, the date of issue of the Bonds, the redemption date, the Redemption Price, the place or places of redemption (including the name and appropriate address or addresses of the Bond Trustee), the Maturity Date, the CUSIP numbers, if any, and, in the case of Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice shall also state that, subject to the deposit of sufficient funds with the Bond Trustee on or prior to the redemption date to effect the redemption and to prior rescission as provided in the Bond Indenture, on that date there will become due and payable on each of the Bonds the Redemption Price thereof or of the specified portion of the principal amount thereof in the case of a Bond to be redeemed in part only, together with interest accrued thereon to the redemption date, and that from and after such redemption date interest thereon shall cease to accrue, and shall require that such Bonds be then surrendered.

Any notice given pursuant to the Bond Indenture shall state (i) that it is conditioned upon the deposit with the Bond Trustee on or prior to the redemption date of moneys in an amount equal to the amount necessary to effect the redemption and (ii) that the notice may be rescinded by written notice given to the Bond Trustee by the Corporation on or prior to the date specified for redemption, and in either of such cases such notice and redemption shall be of no effect if such moneys are not so deposited or if the notice is rescinded as described in the Bond Indenture. Any Bond for which a notice of redemption has been rescinded or for which sufficient funds to pay the Redemption Price thereof have not been deposited with the Bond Trustee on or prior to the redemption date shall remain outstanding and neither the rescission of the notice nor the failure to fund the Redemption Price shall constitute an Event of Default under the Bond Indenture. The Bond Trustee shall give notice of such rescission or failure to fund the Redemption Price as soon thereafter as practicable in the same manner, and to the same Persons, as notice of such redemption was given pursuant to the Bond Indenture.

Failure by the Bond Trustee to give notice pursuant to the Bond Indenture to any one or more of the securities information services or depositories, or the insufficiency of any such notice shall not affect the sufficiency of the proceedings for redemption. Failure by the Bond Trustee to mail notice of redemption pursuant to the Bond Indenture to any one or more of the respective Holders of any Bonds designated for redemption shall not affect the sufficiency of the proceedings for redemption with respect to the Holders to whom such notice was mailed.

Notice of redemption of Bonds shall be given by the Bond Trustee, at the direction and expense of the Corporation, for and on behalf of the Authority.

D-26 Partial Redemption of Bonds

Upon surrender of any Bond redeemed in part only, the Authority shall execute (but need not prepare) and the Bond Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Corporation, a new Bond or Bonds of Authorized Denominations, and of the same maturity, equal in aggregate principal amount to the unredeemed portion of the Bond surrendered; provided, however, that during any Direct Purchase Period, there shall be no requirement for the Holder to present the Bonds for surrender in connection with a partial redemption of the Bonds.

Effect of Redemption

Notice of redemption having been duly given as aforesaid, and moneys for payment of the Redemption Price of, together with interest accrued to the redemption date on, the Bonds (or portions thereof) so called for redemption being held by the Bond Trustee, on the redemption date designated in such notice, the Bonds (or portions thereof) so called for redemption shall become due and payable at the Redemption Price specified in such notice together with interest accrued thereon to the redemption date, interest on the Bonds so called for redemption shall cease to accrue, said Bonds (or portions thereof) shall cease to be entitled to any benefit or security under the Bond Indenture and the Holders of said Bonds shall have no rights in respect thereof except to receive payment of said Redemption Price and accrued interest to the date fixed for redemption from funds held by the Bond Trustee for such payment.

All Bonds redeemed pursuant to the provisions of the Bond Indenture shall be canceled upon surrender thereof (and if applicable credited against Sinking Fund Installments), unless resold at the direction of the Corporation in accordance with the Bond Indenture.

Liquidity Facility; Self Liquidity Arrangement; Alternate Liquidity Facility

The Corporation may provide for delivery to the Bond Trustee of a Liquidity Facility pursuant to the provisions of the Loan Agreement or a Self Liquidity Arrangement pursuant to the Loan Agreement.

Prior to the expiration or termination of a Liquidity Facility in accordance with the terms of that Liquidity Facility, the Corporation may provide for the delivery to the Bond Trustee of an Alternate Liquidity Facility pursuant to the Loan Agreement or a Self Liquidity Arrangement pursuant to the Loan Agreement. Any Alternate Liquidity Facility or Self Liquidity Arrangement delivered to the Bond Trustee pursuant to the Bond Indenture shall meet the requirements of the Loan Agreement and shall be delivered as provided in the Loan Agreement and shall contain administrative provisions reasonably acceptable to the Bond Trustee and the Remarketing Agent.

If at any time there is delivered to the Bond Trustee (i) an Alternate Liquidity Facility or Self Liquidity Arrangement, (ii) the information, opinions and data required by the Loan Agreement, as the case may be, and (iii) all information required to give the notice of mandatory tender for purchase of the Bonds, then the Bond Trustee shall accept such Alternate Liquidity Facility or Self Liquidity Arrangement. The Bond Trustee shall surrender the Liquidity Facility pursuant to the Bond Indenture.

D-27 If an Alternate Liquidity Facility or a Self Liquidity Arrangement is delivered to the Bond Trustee and accepted pursuant to the Bond Indenture, then the Bond Trustee shall surrender the existing Liquidity Facility for cancellation; provided that no Liquidity Facility shall be surrendered until after the date on which Purchased Bonds have been purchased or deemed purchased in accordance with the provisions of the Bond Indenture. If a Liquidity Facility terminates or is no longer required to be maintained under the Bond Indenture, the Bond Trustee shall surrender such Liquidity Facility to the Liquidity Facility Provider for cancellation in accordance with the terms of the Liquidity Facility. Upon the defeasance of the Bonds pursuant to the Bond Indenture and if, at such time, the Bonds are no longer subject to tender for purchase, the Bond Trustee shall surrender the Liquidity Facility, if any, to the Liquidity Facility Provider for cancellation in accordance with the terms of the Liquidity Facility. The Bond Trustee shall comply with the procedures set forth in each Liquidity Facility relating to the termination thereof and shall deliver any certificates reducing the stated amount of the Liquidity Facility in accordance with the provisions thereof.

Credit Facility; Self Liquidity Arrangement; Alternate Credit Facility; Delivery of Credit Facility to Replace Liquidity Facility or Self Liquidity Arrangement; Surrender of Credit Facility

The Corporation may provide for the delivery to the Bond Trustee a Credit Facility pursuant to the Loan Agreement or a Self Liquidity Arrangement pursuant to the Loan Agreement.

If there is delivered to the Bond Trustee (i) an Alternate Credit Facility covering the Bonds in accordance with the Loan Agreement, (ii) a Favorable Opinion of Bond Counsel with respect to the Series 2020A Bonds, and (iii) if the Credit Facility then in effect with respect to the Bonds does not cover premiums due on the Bonds, and the Bonds would be subject to mandatory tender for purchase at a Purchase Price in excess of the principal amount thereof plus accrued and unpaid interest thereon to but not including the date of purchase, Eligible Moneys in an amount sufficient to pay the premium due on the Bonds, then the Bond Trustee shall accept such Alternate Credit Facility.

If a Liquidity Facility or a Self Liquidity Arrangement is in effect with respect to the Bonds, a Credit Facility covering the Bonds may be delivered to the Bond Trustee if all of the conditions set forth in the immediately preceding paragraph regarding the delivery of an Alternate Credit Facility for the Bonds are satisfied.

If an Alternate Credit Facility or Self Liquidity Arrangement is delivered to the Bond Trustee and accepted pursuant to the Bond Indenture, then the Bond Trustee shall surrender the existing Credit Facility for cancellation; provided that no Credit Facility shall be surrendered until after the date on which Purchased Bonds have been purchased or deemed purchased in accordance with the provisions of the Bond Indenture. If a Credit Facility terminates or is no longer required to be maintained under the Bond Indenture, the Bond Trustee shall surrender such Credit Facility to the Credit Facility Provider for cancellation in accordance with the terms of the Credit Facility. Upon the defeasance of the Bonds pursuant to the Bond Indenture and if, at such time, the Bonds are no longer subject to tender for purchase, the Bond Trustee shall surrender the Credit Facility, if any, to the Credit Facility Provider for cancellation in accordance with the terms of the Credit Facility. The Bond Trustee shall comply with the procedures set forth in each Credit Facility

D-28 relating to the termination thereof and shall deliver any certificates reducing the stated amount of the Credit Facility in accordance with the provisions thereof.

Pledge and Assignment

Subject only to the provisions of the Bond Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Bond Indenture, the Authority thereby pledges and assigns to the Bond Trustee all of the Revenues and any other amounts (including proceeds of the sale of the Bonds) held in any fund or account established pursuant to the Bond Indenture (except the Rebate Fund and the Bond Purchase Fund) to secure, first, the payment of the principal, Redemption Price and Purchase Price of and interest on the Bonds in accordance with their terms and the provisions of the Bond Indenture and, second, the payment of Reimbursement Obligations and the performance and observance of the obligations of the Corporation under any Credit Facility or Liquidity Facility.

The Authority thereby transfers in trust, grants a security interest in and assigns to the Bond Trustee, for the benefit of the Owners from time to time of the Bonds and for the benefit of any Credit Facility Provider or any Liquidity Facility Provider with respect to Reimbursement Obligations, all of the Revenues and other assets pledged and all of the right, title and interest of the Authority in the Loan Agreement (except for the right to receive any Administrative Fees and Expenses to the extent payable to the Authority and the Unassigned Rights) and the Obligations. The Authority will also cause the Obligations to be registered in the name of the Bond Trustee. The Bond Trustee shall be entitled to and shall collect and receive all of the Revenues, and any Revenues collected or received by the Authority shall be deemed to be held, and to have been collected or received, by the Authority as the agent of the Bond Trustee and shall forthwith be paid by the Authority to the Bond Trustee. The Bond Trustee also shall be entitled to and may take all steps, actions and proceedings reasonably necessary in its good faith judgment to enforce all of the rights of the Authority and all of the obligations of the Corporation under the Loan Agreement and the Obligations. Notwithstanding the foregoing, any Revenues transferred by the Corporation directly to a Credit Facility Provider pursuant to a Credit Facility or to a Liquidity Facility Provider pursuant to a Liquidity Facility shall not be required to be collected and received by the Bond Trustee and the Bond Trustee shall have no duty to collect and receive such Revenues.

Revenue Fund

All Revenues shall be promptly deposited by the Bond Trustee upon receipt thereof in a special fund designated as the “Revenue Fund,” which the Bond Trustee shall establish, maintain and hold in trust. The Bond Trustee shall also establish and maintain a separate subaccount for each series of Bonds within the Revenue Fund. All Revenues deposited with the Bond Trustee shall be held, disbursed, allocated and applied by the Bond Trustee only as provided in the Bond Indenture.

If, on the date any Loan Repayment or payment upon the Obligations is due, the Bond Trustee does not receive such payment, the Bond Trustee immediately shall request the Master Trustee to give immediate Electronic Notice or telephonic notice promptly confirmed in writing to the Corporation of the nonpayment.

D-29 During the period that any of the Bonds are secured by a Credit Facility, all payments on the Eligible Bonds shall be made, to the extent available, first from draws on the Credit Facility, which shall be deposited directly in the Credit Facility Interest Account of the Interest Fund, the Credit Facility Principal Account of the Bond Sinking Fund or the Credit Facility Redemption Account of the Optional Redemption Fund, as the case may be. Principal or Redemption Price of and interest on non-Eligible Bonds may be paid from moneys other than Eligible Moneys. The Bond Trustee is thereby instructed to draw amounts under the Credit Facility at such times set forth in the Bond Indenture and pursuant to draw requests submitted at such times so as to assure that Eligible Moneys will be available to make when due all payments of principal of and interest on the Eligible Bonds. The foregoing notwithstanding, Loan Repayments or payments on the Obligations to be applied to pay interest on, principal of or the redemption price of non-Eligible Bonds shall be transferred when received to the Interest Fund, Bond Sinking Fund or Optional Redemption Fund, respectively, provided that no such payments shall be deposited in the Credit Facility Interest Account of the Interest Fund, the Credit Facility Principal Account of the Bond Sinking Fund or the Credit Facility Redemption Account of the Optional Redemption Fund.

Interest Fund

The Bond Trustee shall establish and maintain so long as any of the Bonds are outstanding a fund to be known as the “Interest Fund — Christiana Care Health System — Series 2020” (the “Interest Fund”), and within such fund, a separate subaccount for each Series and sub-Series of Bonds, as applicable; provided, however, that while the Bonds are in a Direct Purchase Period and if the Corporation is making all payments of principal of and interest on the Bonds directly to the Direct Purchaser, the Bond Trustee is not required to establish the Interest Fund. The Bond Trustee shall also establish and maintain a separate and segregated account in the Interest Fund designated the “Credit Facility Interest Account — Christiana Care Health System — Series 2020” (the “Credit Facility Interest Account”).

With respect only to Bonds that have the benefit of a Credit Facility, the Bond Trustee shall take such actions as are necessary to receive funds under the Credit Facility on each Interest Payment Date or redemption date or upon acceleration in an amount equal to the amount of interest due and payable on the Eligible Bonds on such Interest Payment Date or redemption date or upon acceleration. All proceeds of such interest drawings drawn under the Credit Facility received in connection with the scheduled payment of interest on the Bonds, redemption of the Bonds or the acceleration of the Bonds prior to maturity shall be deposited in the Credit Facility Interest Account and shall be held by the Bond Trustee as agent and bailee for the sole benefit and security of the owners of the Bonds and until applied as provided in the Bond Indenture.

On each Interest Payment Date, the Bond Trustee shall deposit in the Interest Fund from the Revenue Fund moneys in an amount which, together with the amounts already on deposit therein and available to make such payment, other than in the Credit Facility Interest Account, is not less than the interest becoming due on the Bonds on such date.

With respect to Bonds that have the benefit of a Credit Facility, payments of interest on the Eligible Bonds (other than interest payable on Bonds to be paid out of the Optional Redemption Fund as described in the Bond Indenture) shall be made, to the extent available, from Eligible Moneys on deposit in the Credit Facility Interest Account of the Interest Fund. Interest on non-

D-30 Eligible Bonds shall be paid from amounts deposited in the Interest Fund (other than in the Credit Facility Interest Account thereof) which represent Loan Repayments or payments on the Obligations. Any funds remaining on deposit in the Interest Fund (exclusive of the Credit Facility Interest Account) on any Interest Payment Date after payment in full of all interest due on the Bonds on such date shall be promptly transferred by the Bond Trustee to the Credit Facility Provider, but not in excess of the amount necessary to reimburse the Credit Facility Provider for the interest portion of the draw on the Credit Facility on such date.

In connection with any partial redemption or defeasance prior to maturity of the Bonds, the Bond Trustee may, at the written request of the Corporation, use any amounts on deposit in the Interest Fund in excess of the amount needed to pay the interest on the Bonds remaining outstanding on the first Interest Payment Date occurring on or after the date of such redemption or defeasance to pay or provide for the payment of the principal of and interest on the Bonds to be redeemed or defeased (or to reimburse the Credit Facility Provider for a draw on the Credit Facility) or as otherwise directed by the Corporation if the Bond Trustee shall have received a Favorable Opinion of Bond Counsel.

Bond Sinking Fund

The Bond Trustee shall establish and maintain so long as any of the Bonds are outstanding a fund to be known as the “Bond Sinking Fund — Christiana Care Health System — Series 2020” (the “Bond Sinking Fund”), and within such fund, a separate subaccount for each Series and sub- Series of Bonds, as applicable; provided, however, that during a Direct Purchase Period and if the Corporation is making all payments of principal of and interest on the Bonds directly to the Direct Purchaser, the Bond Trustee is not required to establish the Bond Sinking Fund. The Bond Trustee shall also establish a separate account within the Bond Sinking Fund to be known as the “Credit Facility Principal Account — Christiana Care Health System — Series 2020” (the “Credit Facility Principal Account”).

With respect to Bonds that have the benefit of a Credit Facility, the Bond Trustee shall take such actions as are necessary to receive funds under the Credit Facility on the payment date of each Sinking Fund Installment established pursuant to the Bond Indenture and on maturity or acceleration of the Bonds in an amount equal to the amount of principal due and payable on such dates on the Eligible Bonds that have the benefit of a Credit Facility. All proceeds of drafts drawn under the Credit Facility to pay the principal of the Bonds shall be deposited in the Credit Facility Principal Account and shall be held by the Bond Trustee as agent and bailee for the sole benefit and security of the owners of the Eligible Bonds until applied as provided in the Bond Indenture.

On each Sinking Fund Installment date established pursuant to the Bond Indenture and each Maturity Date, after making the deposit required by the Bond Indenture, the Bond Trustee shall deposit in the Bond Sinking Fund from the Revenue Fund moneys in an amount which, together with any moneys already on deposit in the Bond Sinking Fund and available to make such payment (other than in the Credit Facility Principal Account) is not less than the principal becoming due on the Bonds on such dates.

With respect to Bonds that have the benefit of a Credit Facility, payments of principal on the related Eligible Bonds shall be made, to the extent available, from Eligible Moneys on deposit

D-31 in the Credit Facility Principal Account. The principal of non-Eligible Bonds shall be paid from amounts deposited in the Bond Sinking Fund (other than in the Credit Facility Principal Account) which represent Loan Repayments and payments on the Obligations. Any funds remaining on deposit in the Bond Sinking Fund (exclusive of the Credit Facility Principal Account) on such Sinking Fund Installment date after payment in full of all principal due on the Bonds on such date shall be promptly transferred by the Bond Trustee to the Credit Facility Provider, but not in excess of the amount necessary to reimburse the Credit Facility Provider for the principal portion of the draw on the Credit Facility on such date.

In lieu of such mandatory Bond Sinking Fund redemption, the Bond Trustee shall, at the Written Request of the Corporation, purchase for cancellation an equal principal amount of Bonds of the maturity to be redeemed in the open market identified by the Corporation at prices specified by the Corporation not exceeding the principal amount of the Bonds being purchased plus accrued interest with such interest portion of the purchase price to be paid from the Interest Fund and the principal portion of such purchase price to be paid from the Bond Sinking Fund. In addition, the amount of Bonds to be redeemed on any date pursuant to the mandatory Bond Sinking Fund redemption schedule shall be reduced by the principal amount of Bonds of the maturity required to be redeemed which are acquired by the Corporation or any other Member and delivered to the Bond Trustee for cancellation.

In connection with any partial redemption or defeasance prior to maturity of the Bonds, the Bond Trustee may, at the written request of the Corporation, use any amounts on deposit in the Bond Sinking Fund in excess of the amount needed to pay principal on the Bonds remaining outstanding on the first principal or Sinking Fund Installment date occurring on or after the date of such redemption or defeasance to pay or provide for the payment of the principal or Redemption Price of and interest on the Bonds to be redeemed or defeased (or to reimburse the Credit Facility Provider for a draw on the Credit Facility) or as otherwise directed by the Corporation if the Bond Trustee shall have received a Favorable Opinion of Bond Counsel.

Optional Redemption Fund

There is established with the Bond Trustee and maintained so long as any of the Bonds are outstanding a separate fund to be known as the “Optional Redemption Fund — Christiana Care Health System — Series 2020” (the “Optional Redemption Fund”), and within such fund, a separate subaccount for each Series and sub-Series of Bonds, as applicable. The Bond Trustee shall also establish a separate account within the Optional Redemption Fund to be known as the “Credit Facility Redemption Account — Christiana Care Health System — Series 2020” (the “Credit Facility Redemption Account”). In the event of (i) prepayment by or on behalf of the Corporation or any other Member of Loan Prepayments or amounts payable on the Obligations, including prepayment with condemnation or insurance proceeds or proceeds of a sale consummated under threat of condemnation, or (ii) deposit with the Bond Trustee by the Corporation, any other Member or the Authority of moneys from any other source for redeeming Bonds or purchasing Bonds for cancellation, such moneys shall, except as otherwise provided in the Bond Indenture, be deposited in the Optional Redemption Fund. Moneys on deposit in the Optional Redemption Fund shall be used, first, to make up any deficiencies existing in the Interest Fund and the Bond Sinking Fund (in the order listed) and, second, for the redemption or purchase of Bonds in accordance with the provisions of the Bond Indenture; provided, however, that with

D-32 respect to Bonds that have the benefit of a Credit Facility, the Bond Trustee shall redeem the Bonds to be redeemed in accordance with the following paragraph (b) and any funds remaining on deposit in the Optional Redemption Fund (exclusive of the Credit Facility Redemption Account) on any date on which Bonds are optionally redeemed, after payment in full of the redemption price of all Bonds redeemed on such date from amounts on deposit in the Credit Facility Redemption Account of the Optional Redemption Fund, shall be transferred by the Bond Trustee to the Credit Facility Provider, but not in excess of the amount necessary to reimburse the Credit Facility Provider for the draw made on the Credit Facility on such date to pay such redemption price.

The Bond Trustee shall with respect only to Bonds that have the benefit of a Credit Facility which are to be optionally redeemed in accordance with the provisions of the Bond Indenture take such actions as are necessary to receive funds under the Credit Facility in (i) an amount which is equal to the principal amount of the Eligible Bonds to be so redeemed and (ii) an amount equal to the amount of interest due and owing on the Eligible Bonds to be so redeemed to the redemption date. Notwithstanding the foregoing, the Bond Trustee need not draw funds under the Credit Facility in order to optionally redeem Bonds, if an unqualified opinion of nationally recognized bankruptcy counsel is delivered to the Bond Trustee and Moody’s (if Moody’s is then a Rating Agency for the Bonds) to the effect that such condemnation, sale or insurance proceeds, as the case may be, are Eligible Moneys. All proceeds of drawings under the Credit Facility to make timely redemption or maturity payments (including payments of interest accruing on such Bonds to the redemption date) shall be deposited in the Credit Facility Redemption Account or Credit Facility Principal Account, as applicable, and shall be held by the Bond Trustee as agent and bailee for the sole benefit and security of the owners of the Eligible Bonds until applied as provided in the Bond Indenture. With respect to Bonds that have the benefit of a Credit Facility, payments of the redemption price of Eligible Bonds to be redeemed pursuant to the Bond Indenture (including interest accrued on such Bonds to the redemption date) shall be made, to the extent available, from Eligible Moneys on deposit in the Credit Facility Redemption Account.

Investment of Funds

Upon a Written Request of the Corporation to the Bond Trustee, moneys in the Project Fund, the Revenue Fund, the Interest Fund, the Bond Sinking Fund, the Optional Redemption Fund and the Rebate Fund shall be invested in Qualified Investments specified by the Corporation. The Bond Trustee may conclusively rely upon the Corporation’s written instructions as to both the suitability and legality of the directed investments and such written instructions shall be deemed to be a certification that such directed investments constitute Qualified Investments. The Bond Trustee may make any and all such investments through its own investment department or that of its affiliates or subsidiaries, and may charge its ordinary and customary fees for such trades, including cash sweep account fees. Qualified Investments shall be purchased at such prices as the Corporation may direct. All Qualified Investments shall be acquired subject to the limitations as to maturities set forth in the Bond Indenture and such additional limitations or requirements consistent with the foregoing as may be established by the written request of the Corporation. No such request of the Corporation shall impose any duty on the Bond Trustee inconsistent with its fiduciary responsibilities. In the absence of written directions from the Corporation, the Bond Trustee shall hold such amounts uninvested in cash, without liability for interest. The Bond Trustee shall not be obligated in the money market fund to seek or obtain the highest interest rate available. The Bond Trustee shall be entitled to rely on any written investment direction it receives

D-33 as to the legality and suitability of such investment. Notwithstanding anything else in the Bond Indenture, (i) any such crediting of funds or assets shall be provisional in nature, and the Bond Trustee shall be authorized to reverse any such transactions or advances of funds in the event that it does not receive good funds with respect thereto, and (ii) nothing in the Bond Indenture shall constitute a waiver of any of the Bond Trustee’s rights as a securities intermediary under Uniform Commercial Code Section 9-206. To the extent permitted by law, the Corporation and the Authority specifically waive compliance with 12 C.F.R. 12 and thereby notify the Bond Trustee that no brokerage confirmations need to be sent relating to the security transactions as they occur. Notwithstanding the foregoing, to the extent the Bond Trustee receives and invests amounts under the Bond Indenture, the Bond Trustee shall provide the Corporation and the Authority with periodic cash transactions statements which shall include details for all investment transactions made by the Bond Trustee under the Bond Indenture. In the event that any fund or account holds more than one type of investment, and a situation requires the sale of an investment to create the necessary liquidity, the Corporation will provide written direction to the Bond Trustee regarding the sale of the investments.

Unless otherwise specifically provided in the Bond Indenture, all interest, profits and other income received from the investment of moneys in any fund or account established pursuant to the Bond Indenture shall be deposited when received in such fund or account.

All proceeds of remarketing of Bonds and all proceeds of a drawing upon the Credit Facility or the Liquidity Facility shall be held by the Bond Trustee uninvested in an Eligible Account (as defined in the Bond Indenture) and shall not be commingled and shall be applied to the payment of Eligible Bonds only. Eligible Moneys held for the redemption or payment of Bonds shall not be commingled with any other funds held under the Bond Indenture. In the event that an account required to be an Eligible Account no longer complies with the requirement, the Bond Trustee should promptly upon having notice of such event (and in any case, within not more than 30 calendar days of such notice) move such account to another financial institution such that the Eligible Account requirement will again be satisfied.

All income from investments on deposit in the Rebate Fund shall be retained therein.

The Bond Trustee shall have no responsibility or liability for any loss which may result from any investment or sale of investment made pursuant to the Bond Indenture. The Bond Trustee is thereby authorized, in making or disposing of any investment permitted by the Bond Indenture, to deal with itself (in its individual capacity) or with any one or more of its affiliates, whether it or any such affiliate is acting as agent of the Bond Trustee or for any third person or dealing as principal for its own account. The Parties acknowledge that the Bond Trustee is not providing investment supervision, recommendations, or advice.

Draws Upon Credit Facility

If a Credit Facility is in effect with respect to the Bonds, prior to using any other funds, if the Credit Facility is a letter of credit, the Bond Trustee shall, prior to 2:00 p.m., New York City time, on the Business Day immediately prior to each Interest Payment Date or each date on which principal or a Sinking Fund Installment is due, draw upon such Credit Facility in accordance with its terms in the amount necessary to fully provide for payments due on the Eligible Bonds on each

D-34 such Interest Payment Date and on each date on which principal or a Sinking Fund Installment is due, as the case may be (for deposit in the Credit Facility Interest Account or the Credit Facility Principal Account, as applicable). In the event that the Credit Facility Provider fails to honor the drawing on the Credit Facility or the Credit Facility is repudiated with respect to the regularly scheduled payment of the principal of and interest on the Bonds, the Bond Trustee shall apply amounts on deposit in the Revenue Fund to pay principal of or interest on the Bonds, and shall make immediate demand upon the Corporation for payment of such amounts in the event of any deficiency or shortfall in the Revenue Fund.

Trust Funds

All moneys received by the Bond Trustee under the provisions of the Bond Indenture shall, except as provided in the Bond Indenture, be trust funds under the terms thereof for the benefit of all Bonds outstanding under the Bond Indenture (except as otherwise provided) and shall not be subject to lien or attachment of any creditor of the Authority or the Corporation. Such moneys shall be held in trust and applied in accordance with the provisions of the Bond Indenture. The Bond Trustee is thereby authorized to establish such additional funds, accounts or subaccounts as are necessary or advisable to carry out its duties under the Bond Indenture.

Rebate Fund

The Bond Trustee shall establish and maintain a separate account to be known as the “Rebate Fund — Christiana Care Health System — Series 2020A” (the “Rebate Fund”). The Bond Trustee shall make information regarding the Series 2020A Bonds and investments under the Bond Indenture available to the Corporation and shall deposit income from such investments immediately upon receipt thereof in the Rebate Fund and shall maintain records for each investment relating to the purchase price thereof.

If a deposit to the Rebate Fund is required as a result of the computations made by the Corporation pursuant to the Tax Certificate, the Bond Trustee shall, upon receipt of written direction from the Corporation, accept such payment and deposit such payment in the Rebate Fund for the benefit of the Corporation. Records of the actions required by the Bond Indenture shall be retained by the Bond Trustee until six years after the Series 2020A Bonds have matured or have been redeemed or such longer period as required by the Bond Trustee’s policies and procedures.

If at any time the Corporation is required to retain the Rebate Analyst to calculate the Rebate Amount but fails to deliver a report to the Bond Trustee in a timely manner, then the Authority shall retain a Rebate Analyst, at the expense of the Corporation, to calculate the Rebate Amount.

Establishment of Subaccounts

The Bond Trustee may, from time to time, create one or more subaccounts under any fund or account established under the Bond Indenture as it may deem necessary, administratively desirable or prudent in carrying out its duties under the Bond Indenture.

D-35 Payment of Principal, Redemption Price, Purchase Price and Interest

Subject to the limited source of payment referred to in the Bond Indenture, the Authority covenants that it will promptly pay or cause to be paid the principal, Redemption Price and Purchase Price of and interest on the Bonds issued under the Bond Indenture at the place, on the dates and in the manner provided in the Bond Indenture and in said Bonds according to the true intent and meaning thereof. The principal, Redemption Price and Purchase Price of and interest on the Bonds are payable solely from Revenues and any other amounts (including proceeds of the sale of the Bonds) held in any fund or account established pursuant to the Bond Indenture (other than the Rebate Fund and the Bond Purchase Fund), including certain funds drawn or advanced under the Credit Facility, if any, or the Liquidity Facility, if any, which is specifically pledged under the Bond Indenture to the payment thereof in the manner and to the extent specified in the Bond Indenture. Nothing in the Bonds or in the Bond Indenture shall be considered or construed as pledging any funds or assets of the Authority, other than those pledged thereby, or creating any liability of the Authority’s Indemnified Parties.

Performance of Covenants; Legal Authorization

The Authority covenants that it will faithfully observe and perform at all times any and all covenants, undertakings, stipulations and provisions on its part to be observed or performed contained in the Bond Indenture, in any and every Bond executed, authenticated and delivered thereunder and in all proceedings of its members pertaining thereto required on its part to be performed or observed. The Authority represents that it is duly authorized under the Constitution and laws of the State to issue the Bonds authorized hereby, to execute the Bond Indenture, to assign the Loan Agreement (other than the right to receive any Administrative Fees and Expenses to the extent payable to the Authority and the Unassigned Rights) and the Obligations, and to pledge and assign the Revenues and the other assets purported to be pledged and assigned in the manner and to the extent therein set forth; that all action on its part for the issuance of the Bonds and the execution and delivery of the Bond Indenture has been duly and effectively taken; and that following due authentication by the Bond Trustee, the Bonds in the hands of the owners thereof, as shown on the register maintained by the Bond Trustee, are and will be valid and enforceable obligations of the Authority according to the import thereof.

Rights under the Loan Agreement and the Obligations

The Bond Trustee shall promptly collect all amounts due from the Obligated Group pursuant to the Loan Agreement and the Obligations, and shall, subject to the provisions of the Bond Indenture, exercise all rights assigned to it pursuant to the Loan Agreement and, in the case of an Event of Default, shall, subject to the provisions of the Bond Indenture, enforce and take all steps, actions and proceedings reasonably necessary for the enforcement of all of the rights of the Authority, whether or not the Authority has undertaken to enforce such rights, and all of the obligations of the Obligated Group under the Loan Agreement and the Obligations.

Tax Covenants

The Authority shall at all times do and perform all acts and things reasonably within its control which are necessary or desirable in order to assure that interest paid on the Bonds will be

D-36 excluded from gross income for federal income tax purposes and shall take no action reasonably within its control that would result in such interest not being so excluded. Without limiting the generality of the foregoing, the Authority agrees to comply with the provisions of the Tax Certificate. This covenant shall survive payment in full or defeasance of the Bonds.

Amendment of Loan Agreement; Other Covenants

The Authority shall not amend, modify or terminate any of the terms of the Loan Agreement or consent to any such amendment, modification or termination without the written consent of the Bond Trustee and, while a Credit Facility or Liquidity Facility is in effect, of the Credit Facility Provider or Liquidity Facility Provider. The Bond Trustee shall give such written consent only if (1) in the opinion of Bond Counsel, such amendment is necessary to preserve the exclusion of interest on the Series 2020A Bonds from gross income for purposes of federal income taxation or the exemption of interest on the Bonds from State income taxation; (2) in the Opinion of Counsel, such amendment, modification or termination will not materially adversely affect the interests of the Bondowners or result in any material impairment of the security thereby given for the payment of the Bonds; or (3) the Owners of a majority in principal amount of the Bonds then Outstanding consent in writing to such amendment, modification or termination. No amendment, modification or termination of the Loan Agreement shall reduce the amount of Loan Repayments to be made to the Authority or the Bond Trustee by the Corporation pursuant to the Loan Agreement, or extend the time for making such payments, without the written consent of all of the Owners of Bonds then Outstanding. The Bond Trustee shall be entitled to receive, and shall be fully protected in relying upon an Opinion of Counsel to the effect that the amendment is authorized and permitted by the terms of the Loan Agreement and complies with the terms thereof. The Bond Trustee may, but shall not be obligated to, consent to any amendment that affects the Bond Trustee’s own rights, duties, liabilities or immunities.

The Bond Trustee shall promptly collect all amounts due from the Corporation pursuant to the Loan Agreement and the Obligations, will perform all duties imposed upon it pursuant to the Loan Agreement and may diligently enforce, and take all steps, actions, and proceedings reasonably necessary for the enforcement of all of the rights of the Authority (except for the right of the Authority to receive any Administrative Fees and Expenses to the extent payable to the Authority and the Unassigned Rights) and all of the obligations of the Corporation under the Loan Agreement and the Obligations.

Release and Substitution of the Obligations upon Delivery of Replacement Master Indenture.

The Bond Trustee shall, within ten days of receipt of notice from the Master Trustee, surrender the Obligations to the Master Trustee upon presentation to the Bond Trustee of the following:

(1) An original replacement note or similar obligation (the “Substitute Obligation”) issued under and pursuant to and secured by a master trust indenture (the “Replacement Master Indenture”) executed by one or more entities (collectively, the “New Group”) and an independent corporate trustee (the “New Trustee”), which Substitute Obligation has been duly authenticated by the New Trustee under the terms of the

D-37 Replacement Master Indenture and is in a principal amount, bears interest, has prepayment terms and is otherwise of similar tenor to the Obligations;

(2) An Opinion of Counsel addressed to the Bond Trustee to the effect that: (1) the Replacement Master Indenture has been duly authorized, executed and delivered by each member of the New Group, the Substitute Obligation has been duly authorized, executed and delivered by the Obligated Group and the Replacement Master Indenture and the Substitute Obligation are each a legal, valid and binding obligation of each member of the New Group, subject in each case (A) to customary exceptions for bankruptcy, insolvency and other laws generally affecting enforcement of creditors’ rights and application of general principles of equity; (B) to the qualification that the provisions of the Replacement Master Indenture and the Substitute Obligation requiring payments to be made thereunder may not be enforceable if such payments (i) are requested with respect to payments on any Substitute Obligation which was issued for a purpose which is not consistent with the charitable purposes of the Members of the Obligated Group as expressed in the Articles of Incorporation and Bylaws of the Members of the Obligated Group or which was incurred or issued for the benefit of any entity other than a nonprofit corporation which is exempt from federal income taxes under Sections 501(a) and 501(c)(3) of the Code; (ii) are requested to be made from any assets which are donor restricted or which are subject to a direct, express or charitable trust which does not permit the use of such assets for such payments; (iii) would result in the cessation or discontinuation of any material portion of the health care or related services previously provided by the Members of the Obligated Group; or (iv) are requested to be made pursuant to any loan which violates applicable usury laws; and (C) to the qualification that the enforcement of any indemnification provisions of the Replacement Master Indenture may be limited by applicable securities laws or public policy; (2) all requirements and conditions to the issuance of the Substitute Obligation set forth in the Replacement Master Indenture have been complied with and satisfied, including, but not limited to, the perfection of any security interest created thereunder; and (3) registration of the Substitute Obligation under the Securities Act of 1933, as amended, is not required, or such registration has occurred;

(3) An Officer’s Certificate certifying that, after giving effect to such Substitute Obligation and assuming that the New Group constituted the Obligated Group under the original Master Indenture and that the Substitute Obligation was issued under the original Master Indenture, the New Group would not be in default under the provisions of the Master Indenture;

(4) Either (i) the Bond Trustee shall have received evidence that (A) written notice of the intent to issue the Substitute Obligation for the existing Obligations has been provided to each Rating Agency then maintaining a rating on the Bonds, and (B) the then- current rating on the Bonds will not be withdrawn or lowered (without regard to any refinement or gradation of rating category by numerical modifier or otherwise or any related ratings outlook) by any Rating Agency as a result of such substitution; or (ii) the Bond Trustee shall have received an Officer’s Certificate of the Credit Group Representative confirming that (A) the Debt Service Coverage Ratio for the most recent fiscal year of the New Group is not less than 1.50:1.00 (calculated as contemplated by the

D-38 Master Indenture, but on a pro forma basis for the New Group, taking into consideration: (x) revenues in excess of expenses of the New Group which would be considered Income Available for Debt Service as defined in the Master Indenture, and (y) all indebtedness of the New Group that would be considered Long-Term Indebtedness as defined in the Master Indenture and that is to be outstanding following the issuance of the Substitute Obligation), and (B) the unrestricted net assets of the New Group at the end of the most recent fiscal year of the New Group for which audited financial statement information is available is not less than 70% of the unrestricted net assets of the Credit Group for the most recent Fiscal Year of the Credit Group for which audited financial statements are available;

(5) A Favorable Opinion of Bond Counsel with respect to the Series 2020A Bonds;

(6) An original or fully executed copy of the Replacement Master Indenture; and

(7) Such reasonable indemnities as the Bond Trustee may request.

Upon satisfaction of such conditions, all references herein and in the Loan Agreement to the Obligations shall be deemed to be references to the Substitute Obligation, all references to the Master Indenture shall be deemed to be references to the Replacement Master Indenture, all references to the Master Trustee shall be deemed to be references to the master trustee under the Replacement Master Indenture, all references to the Obligated Group, the Members of the Obligated Group and the Credit Group Representative shall be deemed to be references to the New Group and the obligated group agent for the New Group and all references to the First Supplemental Indenture shall be deemed to be references to the supplemental master indenture pursuant to which the Replacement Obligation is issued. The Bond Trustee has no duty or obligation to review the any such Replacement Master Indenture and is fully protected in delivering the Obligations for cancellation and replacement upon receipt of the items set forth herein.

Events of Default

The following events shall be Events of Default:

(a) default in the due and punctual payment of the principal or Redemption Price of any Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption, by acceleration or otherwise, or default in the redemption of any Bonds from Sinking Fund Installments in the amount and at the times provided therefor;

(b) default in the due and punctual payment of any installment of interest on any Bond when and as such interest installment shall become due and payable;

(c) subject to the provisions of the Bond Indenture, failure to pay the Purchase Price of any Bond tendered pursuant to the Bond Indenture when such payment is due;

(d) a Loan Default Event;

D-39 (e) the Authority shall default in the due and punctual performance of any other of the covenants, conditions, agreements and provisions contained in the Bonds or in the Bond Indenture or any agreement supplemental thereto to be performed on the part of the Authority, and such default shall continue for the period of 60 days after written notice specifying such default and requiring the same to be remedied shall have been given to the Authority and the Corporation by the Bond Trustee which notice the Bond Trustee may give in its discretion and must give at the written request of the owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding under the Bond Indenture exclusive of Bonds then owned by the Authority or any Member; provided that, if such default cannot with due diligence and dispatch be cured within 60 days but can be cured, the failure of the Authority to remedy such default within such 60 day period shall not constitute a default under the Bond Indenture if the Bond Trustee is provided with a certification from the Authority or the Corporation, as the case may be, to the effect that such default cannot with due diligence and dispatch be cured within 60 days but can be cured and the Authority or the Corporation, as the case may be, shall as soon as practicable upon receipt of such notice commence with due diligence and dispatch the curing of such default and, having so commenced the curing of such default, shall thereafter prosecute and complete the same with due diligence and dispatch within 180 days of the delivery of such default notice;

(f) receipt by the Bond Trustee of written notice from the Credit Facility Provider stating that an event of default has occurred under the Credit Facility Agreement and directing the Bond Trustee to declare the principal of the outstanding Bonds secured by such Credit Facility immediately due and payable;

(g) receipt by the Bond Trustee of a written notice from the Credit Facility Provider that amounts available to pay interest under the Credit Facility will not be reinstated following a drawing thereunder to pay interest and directing the Bond Trustee to declare the principal of the outstanding Bonds secured by such Credit Facility immediately due and payable;

(h) during a Direct Purchase Period, receipt by the Bond Trustee of written notice from the Direct Purchaser that an event of default has occurred under the Bondholder Agreement, which notice may in addition instruct the Bond Trustee to accelerate the Bonds pursuant to the Bond Indenture or instruct the Bond Trustee to subject the Bonds to mandatory tender pursuant to the Bond Indenture; or

(i) a declaration by the Master Trustee of the entire principal amount of all Outstanding Obligations (as defined in the Master Indenture) and the interest accrued thereon to be immediately due and payable.

Upon a Responsible Officer of the Bond Trustee having actual knowledge of the existence of any Event of Default, the Bond Trustee shall notify the Corporation, the Authority, the Liquidity Facility Provider, if any, the Credit Facility Provider, if any, the Remarketing Agent, if any, the Direct Purchaser, if any, and the Master Trustee in writing as soon as practicable; provided, however, that the Bond Trustee need not provide notice of any Event of Default pursuant to paragraph (d) if the Corporation has expressly acknowledged the existence of such default in a writing delivered to the Bond Trustee, the Authority, the Liquidity Facility Provider, if any, the Credit Facility Provider, if any, the Direct Purchaser, if any, and the Master Trustee.

D-40 Acceleration; Annulment of Acceleration

(a) If an Event of Default described in the Bond Indenture shall occur, then the Bond Trustee, at the direction of or with the written consent of the Credit Facility Provider, if any (and if the Credit Facility Provider has not failed to honor a properly presented and conforming draw under the Credit Facility), or, during a Direct Purchase Period, at the direction of or with the written consent of the Direct Purchaser, shall declare the principal of all the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately.

(b) If an Event of Default described in the Bond Indenture shall occur, the Bond Trustee may take whatever action the Authority would be required to take pursuant to the Loan Agreement in order to remedy the Loan Default Event. In addition, if an Event of Default described in the Bond Indenture shall occur, the Bond Trustee, at the direction of or with the written consent of the Credit Facility Provider, if any (and if the Credit Facility Provider has not failed to honor a properly presented and conforming draw under the Credit Facility), or, during a Direct Purchase Period, at the direction of or with the written consent of the Direct Purchaser may and, upon the written request of Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding, shall declare the principal of all the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately.

(c) If an Event of Default described in the Bond Indenture shall occur, the Bond Trustee may take whatever action at law or in equity is necessary or desirable to enforce the performance, observance or compliance by the Authority with any covenant, agreement or condition by the Authority under the Bond Indenture. In addition, if an Event of Default described in the Bond Indenture shall occur, the Bond Trustee, at the direction of or with the written consent of the Credit Facility Provider, if any (and if the Credit Facility Provider has not failed to honor a properly presented and conforming draw under the Credit Facility), or, during a Direct Purchase Period, at the direction of or with the written consent of the Direct Purchaser, may and, upon the written request of Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding, shall declare the principal of all the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately.

(d) Upon the declaration by the Bond Trustee of the principal of all Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately, the principal of all the Bonds then Outstanding, and the interest accrued thereon, shall become and shall be immediately due and payable, anything in the Bond Indenture to the contrary notwithstanding. The Bond Trustee shall give or cause to be given notice of acceleration of the Bonds by first class mail to the Bondowners and of such date for payment upon acceleration at least eight days before such date for payment. Notice of such declaration having been given as aforesaid, anything to the contrary contained in the Bond Indenture or in the Bonds, interest shall cease to accrue on such Bonds from and after the date set forth in such notice (which date shall be no more than eight days from the date of such declaration). The Bond Trustee shall not be required to make payment to any Bondowner until the Bonds shall be presented to the Bond Trustee for appropriate endorsement or for cancellation if fully paid. Any such declaration, however, is subject to the condition that if, at any time after such declaration and before any judgment or decree for the payment of the moneys due shall have been obtained or entered, the Authority (but only out of Revenues received from or on behalf of the Corporation) or the Corporation shall deposit with the

D-41 Bond Trustee a sum sufficient to pay all the principal, Redemption Price and Purchase Price of and installments of interest on the Bonds payment of which is overdue, with interest on such overdue principal at the rate borne by the respective Bonds, and the reasonable charges and expenses of the Bond Trustee, and if the Bond Trustee has received notification from the Master Trustee that any declaration of acceleration of the Obligations has been annulled pursuant to the Master Indenture and any and all other defaults known to the Bond Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Bond Trustee or provision deemed by the Bond Trustee to be adequate shall have been made therefor, then the Bond Trustee shall, with the written consent of the Credit Facility Provider, if a Credit Facility is then in effect and the Credit Facility Provider has not failed to honor a properly presented and conforming draw under the Credit Facility, and upon receipt by the Bond Trustee of written confirmation that the Credit Facility has been reinstated, by written notice to the Authority, the Corporation and the Bond Trustee, on behalf of the Owners of all of the Bonds, rescind and annul such declaration and its consequences and waive such default; but no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon.

(e) Immediately after any acceleration under the Bond Indenture, the Bond Trustee, to the extent it has not already done so, shall notify in writing the Authority and the Corporation of the occurrence of such acceleration.

(f) In the event that the Master Trustee has accelerated the Obligations and is pursuing its available remedies under the Master Indenture, the Bond Trustee, without waiving any Event of Default under the Bond Indenture, agrees not to pursue its available remedies under the Bond Indenture or the Loan Agreement in a manner that would hinder or frustrate the pursuit by the Master Trustee of its remedies under the Master Indenture provided that the Bond Trustee may take any action permitted of an Obligation holder under the Master Indenture.

(g) Notwithstanding anything contained to the contrary in the Bond Indenture, however, while a Credit Facility is in effect or with respect to Direct Purchase Bonds, the Bonds shall not be declared immediately due and payable, nor shall they be subject to acceleration, nor shall any Event of Default be waived without the prior written consent or direction to such action by the Credit Facility Provider or the Direct Purchaser, as applicable.

Rights of the Bond Trustee and the Authority Concerning the Obligations

The Bond Trustee, as pledgee and assignee of certain of the right, title and interest of the Authority in and to the Loan Agreement and all of its right, title and interest as assignee of the Obligations shall, upon compliance with applicable requirements of law and except as otherwise set forth in the Bond Indenture, be the real party in interest with standing to enforce each and every right granted to the Authority under the Loan Agreement (other than the Authority’s right to receive any Administrative Fees and Expenses to the extent payable to the Authority, or with respect to its Unassigned Rights) and under the Obligations which have been assigned to the Bond Trustee by the Bond Indenture. The Authority and the Bond Trustee thereby agree, without in any way limiting the effect and scope thereof, that the pledge and assignment thereunder to the Bond Trustee of rights of the Authority in and to the Obligations and certain rights of the Authority under

D-42 the Loan Agreement shall constitute an agency appointment coupled with an interest on the part of the Bond Trustee which, for all purposes of the Bond Indenture, shall be irrevocable and shall survive and continue in full force and effect notwithstanding the bankruptcy or insolvency of the Authority or its default under the Bond Indenture or on the Bonds. In exercising such rights and the rights given the Bond Trustee under the Bond Indenture, the Bond Trustee shall take such action as, in the good faith judgment of the Bond Trustee, would best serve the interests of the Bondholders, taking into account the provisions of the Master Indenture, together with the security and remedies afforded to Holders of Obligations thereunder.

Additional Remedies and Enforcement of Remedies

(a) Upon the occurrence and continuance of any Event of Default, the Bond Trustee shall, upon the written request of the Credit Facility Provider, if any, or, during a Direct Purchase Period, the Direct Purchaser (subject to the Bond Indenture), and may, upon the written request of the Holders of a majority in principal amount of the Bonds Outstanding, with the consent of the Credit Facility Provider, if any, together with indemnification of the Bond Trustee to its satisfaction therefor, proceed forthwith to protect and enforce its rights and the rights of the Bondholders under the Bond Indenture and under the Act and the Bonds by such suits, actions or proceedings as the Bond Trustee, being advised by counsel, shall deem expedient, including but not limited to:

(i) civil action to recover money or damages due and owing;

(ii) civil action to enjoin any acts or things, which may be unlawful or in violation of the rights of the Holders of Bonds;

(iii) enforcement of any other right of the Authority and the Bondholders conferred by law or by the Bond Indenture; and

(iv) enforcement of any other right conferred by the Loan Agreement, the Obligations or the Master Indenture.

(b) Regardless of the happening of an Event of Default, the Bond Trustee, if requested in writing by the Credit Facility Provider or the Holders of a majority in aggregate principal amount of the Bonds then Outstanding, shall, upon being indemnified to its satisfaction therefor, institute and maintain such suits and proceedings as it may be advised shall be necessary or expedient (i) to prevent any impairment of the security under the Bond Indenture by any acts which may be unlawful or in violation thereof, or (ii) to preserve or protect the interests of the Holders; provided that such request is in accordance with law and the provisions thereof.

Application of Revenues and Other Funds After Default

If an Event of Default shall occur and be continuing, all moneys received by the Bond Trustee pursuant to any right given or action taken under the provisions of the Bond Indenture, after payment of Administrative Fees and Expenses, and the cost and expenses of the proceedings resulting in the collection of such moneys and of the outstanding fees, expenses, liabilities and advances incurred or made by the Bond Trustee (subject to the Bond Indenture and other than

D-43 moneys required to be deposited in the Bond Purchase Fund) shall be applied by the Bond Trustee as specified in and in the order specified in the Bond Indenture.

Remedies Not Exclusive

No remedy by the terms of the Bond Indenture conferred upon or reserved to the Bond Trustee or the Bondholders is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under the Bond Indenture or existing at law or in equity or by statute (including the Act) on or after the date hereof.

Remedies Vested in Bond Trustee

All rights of action (including the right to file proof of claims) under the Bond Indenture or under any of the Bonds may be enforced by the Bond Trustee, without the possession of any of the Bonds or the production thereof in any trial or other proceedings relating thereto. Any such suit or proceeding may be brought without the necessity of joining as plaintiffs or defendants any Holders of the Bonds. Subject to the provisions of the Bond Indenture, any recovery or judgment shall be for the equal benefit of the Holders of the Outstanding Bonds. Nothing in the Bond Indenture shall be deemed to authorize the Bond Trustee to authorize or consent to or accept or adopt on behalf of any Owner any plan of reorganization, arrangement, adjustment, or composition affecting the Bonds or the rights of any Owner thereof, or to authorize the Bond Trustee to vote in respect of the claim of any Owner in any such proceeding without the approval of the Owner so affected.

Bondholders’ Control of Proceedings

If an Event of Default shall have occurred and be continuing, the Holders of a majority in principal amount of all Bonds then Outstanding shall have the right, at any time, by an instrument or instruments in writing executed and delivered to the Bond Trustee, to direct the method and place of conducting any proceeding to be taken in connection with the enforcement of the terms and conditions of the Bond Indenture, provided that such direction is in accordance with law and the provisions thereof (including indemnity to the Bond Trustee as provided in the Bond Indenture). Nothing in the Bond Indenture shall impair the right of the Bond Trustee in its discretion to take any other action under the Bond Indenture which it may deem proper and which is not inconsistent with such direction by Bondholders.

Individual Bondholder Action Restricted

(a) No Holder of any Bond shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement thereof or for the execution of any trust under the Bond Indenture or for any remedy under the Bond Indenture except upon the occurrence of all of the following events:

(i) the Credit Facility Provider or the Holders of at least a majority in aggregate principal amount of Bonds Outstanding shall have made written request to the Bond Trustee to proceed to exercise the powers granted in the Bond Indenture; and

D-44 (ii) the Credit Facility Provider or such Bondholders shall have offered the Bond Trustee indemnity as provided in the Bond Indenture; and

(iii) the Bond Trustee shall have failed or refused to exercise the duties or powers granted in the Bond Indenture for a period of 60 days after receipt by it of such request and offer of indemnity; and

(iv) during such 60 day period no direction inconsistent with such written request has been delivered to the Bond Trustee by the Credit Facility Provider or the Holders of a majority in principal amount of Bonds then Outstanding.

(b) No one or more Holders of Bonds shall have any right in any manner whatsoever to affect, disturb or prejudice the security thereof or to enforce any right under the Bond Indenture except in the manner provided in the Bond Indenture and for the equal benefit of the Holders of all Bonds Outstanding.

(c) Nothing contained in the Bond Indenture shall affect or impair, or be construed to affect or impair, the right of the Holder of any Bond (i) to receive payment of the principal of or interest on such Bond, as the case may be, on or after the due date thereof or (ii) to institute suit for the enforcement of any such payment on or after such due date; provided, however, no Holder of any Bond may institute or prosecute any such suit or enter judgment therein if, and to the extent that, the judgment therein would, under applicable law, result in the surrender, impairment, waiver or loss of the lien thereof on the money, funds and properties pledged under the Bond Indenture for the equal and ratable benefit of all Holders of Bonds.

Termination of Proceedings

In case any proceedings taken on account of an Event of Default shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Bond Trustee, the Liquidity Facility Provider, the Credit Facility Provider, or the Bondholders, then the Authority, the Bond Trustee, the Liquidity Facility Provider, if any, the Credit Facility Provider, if any, the Direct Purchaser, if any, and the Bondholders shall be restored to their former positions and rights under the Bond Indenture, and all rights and powers of the Bond Trustee, the Liquidity Facility Provider, if any, the Credit Facility Provider, if any, the Direct Purchaser, if any, and the Bondholders shall continue as if no such proceeding had been taken.

Waiver of Event of Default

No delay or omission of the Bond Trustee or of any Holder of the Bonds to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or in acquiescence therein. Every power and remedy given by the Bond Indenture may be exercised from time to time and as often as may be deemed expedient.

The Bond Trustee may waive any Event of Default which in its opinion shall have been remedied before the entry of final judgment or decree in any suit, action or proceeding instituted by it under the provisions of the Bond Indenture, on or before the completion of the enforcement of any other remedy under the Bond Indenture.

D-45 The Bond Trustee, upon the written request of the Credit Facility Provider or the Holders of a majority in principal amount of the Bonds then Outstanding, shall waive any Event of Default under the Bond Indenture and its consequences; provided, however, that a default in the payment of the principal or Redemption Price of or interest on any Bond, when the same shall become due and payable by the terms thereof or upon call for redemption, may not be waived without the written consent of the Holders of all the Bonds at the time Outstanding, for which payment of the principal or Redemption Price of or interest on has not been made.

In case of any waiver by the Bond Trustee of an Event of Default under the Bond Indenture, the Authority, the Bond Trustee and the Bondholders shall be restored to their former positions and rights under the Bond Indenture, respectively, but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon. The Bond Trustee shall not be responsible to anyone for waiving or refraining from waiving any Event of Default in accordance with the Bond Indenture.

Notwithstanding anything to the contrary in the Bond Indenture, while a Credit Facility is in effect, the Bond Trustee shall not waive any Event of Default unless the Credit Facility Provider shall have rescinded in writing any default notice given by it and the Credit Facility shall have been reinstated in full. Notwithstanding anything to the contrary in the Bond Indenture, with respect to Direct Purchase Bonds, the Bond Trustee shall not waive any Event of Default unless the Direct Purchaser, if any, shall have consented to such waiver in writing and all amounts due and owing under the Bondholder Agreement have been paid.

Limitations on Remedies

It is the purpose and intention of the Bond Indenture to provide rights and remedies to the Bond Trustee, the Liquidity Facility Providers, the Credit Facility Providers, the Direct Purchaser, if any, and Bondholders which may be lawfully granted, but should any right or remedy granted in the Bond Indenture be held to be unlawful, the Bond Trustee, the Liquidity Facility Providers, the Credit Facility Providers, and the Bondholders shall be entitled, as above set forth, to every other right and remedy provided in the Bond Indenture and by law.

Consent of the Credit Facility Provider; Action at Direction of the Credit Facility Provider

If a Credit Facility is in effect, unless the rights of the Credit Facility Provider are not in effect as provided in the Bond Indenture, the written consent of the Credit Facility Provider shall be required (a) for the initiation by Bondholders of any action to be undertaken by the Bond Trustee at the Bondholders’ request, which under the Bond Indenture or the Loan Agreement or the Master Indenture requires the written approval or consent of or can be initiated by the holders of Bonds, (b) for the purposes of consents and directing action under the Loan Agreement or the Master Indenture, and (c) for the purpose of acceleration of the principal of the Bonds or the Obligations, the annulment of any declaration of acceleration, and waivers of Events of Default. If a Credit Facility is in effect, unless the rights of the Credit Facility Provider are not in effect as provided in the Bond Indenture, the Bond Trustee shall, upon the written direction of the Credit Facility Provider and upon being indemnified as provided in the Bond Indenture, take any action available to the Bond Trustee under the Bond Indenture or under the Loan Agreement or the Master Indenture.

D-46 Unless otherwise provided in the Bond Indenture, the granting of the Credit Facility Provider’s consent shall be in lieu of Bondholder consent, whenever the Bond Indenture otherwise requires Bondholder consent, including without limitation, (i) the execution and delivery of any Supplemental Bond Indenture or any amendment, supplement or change to or modification of the Loan Agreement, the Obligations or the Master Indenture; (ii) the removal of the Bond Trustee and the selection and appointment of any successor Bond Trustee; and (iii) the initiation or approval of any action not described in (i) or (ii) above which requires the consent of the Holders.

The Bond Trustee.

The Authority shall remove the Bond Trustee (i) upon written request of the Corporation at any time unless an Event of Default shall have occurred and then be continuing, (ii) upon the occurrence and continuation of an Event of Default, if at any time requested to do so by an instrument or concurrent instruments in writing signed by the Holders of not less than a majority in aggregate principal amount of the Bonds then Outstanding (or their attorneys duly authorized in writing), or (iii) if at any time the Bond Trustee shall cease to be eligible in accordance with the Bond Indenture, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Bond Trustee or its property shall be appointed, or any public officer shall take control or charge of the Bond Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, in each case by giving 30 days’ prior written notice of such removal to the Bond Trustee, and thereupon shall appoint, with the written consent of the Corporation, a successor Trustee by an instrument in writing.

The Bond Trustee may at any time resign by giving written notice of such resignation to the Authority and the Authorized Representative of the Corporation and by giving the Bondholders notice of such resignation by mail at the addresses shown on the registration books maintained by the Bond Trustee. Upon receiving such notice of resignation, the Authority, at and in accordance with the written direction of the Authorized Representative of the Corporation, shall promptly appoint a successor Trustee by an instrument in writing.

The Bond Trustee shall not be relieved of its duties until a successor Trustee has accepted appointment and assumed the duties of Trustee under the Bond Indenture. Any removal or resignation of the Bond Trustee and appointment of a successor Trustee shall only become effective upon acceptance of appointment by the successor Trustee. If no successor Trustee shall have been appointed and have accepted appointment within 30 days of giving notice of removal or notice of resignation as aforesaid, the retiring Trustee at the expense of the Corporation, the Corporation or any Holder (on behalf of such Holder and all other Holders) may petition any court of competent jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee. Any successor Trustee appointed under the Bond Indenture shall signify its acceptance of such appointment by executing and delivering to the Authority, the Authorized Representative of the Corporation and its predecessor Trustee a written acceptance thereof, and thereupon such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee in the Bond Indenture; but, nevertheless at the request of the Authority, the Authorized Representative of the Corporation or the request of the successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments

D-47 of conveyance or further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under the Bond Indenture and shall pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions set forth in the Bond Indenture. Upon request of the successor Trustee, the Authority shall execute and deliver any and all instruments as may be reasonably required for more fully and certainly vesting in and confirming to such successor Trustee all such moneys, estates, properties, rights, powers, trusts, duties and obligations. Upon acceptance of appointment by a successor Trustee as provided in this section, the Authority shall cause such successor Trustee to mail a notice of the succession of such Trustee to the trusts under the Bond Indenture to the Holders at the addresses shown on the registration books maintained by the Bond Trustee.

Amendments to Bond Indenture

The Bond Indenture and the rights and obligations of the Authority and of the Holders of the Bonds and of the Bond Trustee may be modified or amended from time to time and at any time by an indenture or indentures supplemental thereto, which the Authority and the Bond Trustee may enter into with the written consent of (i) the Credit Facility Provider (provided that the Credit Facility is then in effect with respect to all Bonds then Outstanding and the Credit Facility Provider has not lost its rights pursuant to the provisions of the Bond Indenture) and the Corporation or (ii) the Holders of a majority in aggregate principal amount of the Bonds then Outstanding (if no Credit Facility is in effect or the Credit Facility Provider has lost its rights pursuant to the provisions of the Bond Indenture) and the Corporation shall have been filed with the Bond Trustee. No such modification or amendment shall (1) extend the Maturity Date of any Bond, or reduce the amount of principal thereof, or extend the time of payment or change the method of computing the rate of interest thereon, or extend the time of payment of interest thereon, or reduce any premium payable upon the redemption thereof, without the consent of the Holder of each Bond so affected, or (2) reduce the aforesaid percentage of Bonds, the consent of the Holders of which is required to effect any such modification or amendment, or permit the creation of any lien prior to or on a parity with the lien created by the Bond Indenture, or deprive the Holders of the Bonds of the lien created by the Bond Indenture (except as expressly provided in the Bond Indenture), without the consent of the Holders of all Bonds then Outstanding. It shall not be necessary for the consent of the Bondholders to approve the particular form of any Supplemental Bond Indenture, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Authority and the Bond Trustee of any Supplemental Bond Indenture pursuant to the Bond Indenture, the Bond Trustee shall mail a notice, setting forth in general terms the substance of such Supplemental Bond Indenture to the Bondholders at the addresses shown on the registration books maintained by the Bond Trustee. Any failure to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such Supplemental Bond Indenture.

The Bond Indenture and the rights and obligations of the Authority, of the Bond Trustee and of the Holders of the Bonds may also be modified or amended from time to time and at any time by an indenture or indentures supplemental thereto, which the Authority and the Bond Trustee may enter into with the consent of the Corporation, but without the necessity of obtaining the consent of any Bondholders or Credit Facility Provider, only to the extent permitted by law and only for any one or more of the following purposes:

D-48 (a) to add to the covenants and agreements of the Authority contained in the Bond Indenture other covenants and agreements thereafter to be observed, to pledge or assign additional security for the Bonds (or any portion thereof), or to surrender any right or power reserved to or conferred upon the Authority in the Bond Indenture; provided, that no such covenant, agreement, pledge, assignment or surrender shall materially adversely affect the interests of the Holders of the Bonds, as evidenced by the Opinion of Counsel delivered pursuant to the Bond Indenture;

(b) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision, contained in the Bond Indenture, or in regard to matters or questions arising under the Bond Indenture, including but not limited to reflecting the creation of separate sub-Series for the Bonds, reflecting the serialization of the Bonds upon their Conversion to a Fixed Mode or reflecting the conversion of serial Bonds to term Bonds or other adjustments to the amortization and payment schedule in connection with their Conversion from a Fixed Mode, as the Authority or the Bond Trustee may deem necessary or desirable and not inconsistent with the Bond Indenture, and which shall not materially adversely affect the interests of the Holders of the Bonds;

(c) to modify, amend or supplement the Bond Indenture in such manner as to permit the qualification thereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute, and which shall not materially adversely affect the interests of the Holders of the Bonds, as evidenced by the Opinion of Counsel delivered pursuant to the Bond Indenture;

(d) to evidence or give effect to, or to conform to the terms and provisions of, any Liquidity Facility or any Credit Facility, including a Self Liquidity Arrangement;

(e) to facilitate and implement any book-entry system (or any termination of a book- entry system) with respect to the Bonds in accordance with the terms of the Bond Indenture;

(f) to maintain the exclusion from gross income of interest payable with respect to the Bonds;

(g) to make any modification or amendment to the Bond Indenture which will be effective upon the Conversion and/or remarketing of Bonds following the mandatory tender of the Bonds pursuant to the Bond Indenture;

(h) to provide for the appointment of a successor bond trustee or co-trustee pursuant to the terms of the Bond Indenture; or

(i) to make any modification or amendment to the Bond Indenture which shall not materially adversely affect the interests of the Holders of the Bonds, as evidenced by the Opinion of Counsel delivered pursuant to the Bond Indenture.

The Bond Trustee may in its discretion, but shall not be obligated to, enter into any such Supplemental Bond Indenture authorized by the Bond Indenture which materially adversely affects the Bond Trustee’s own rights, duties or immunities under the Bond Indenture or otherwise.

D-49 In executing, or accepting the additional trusts created by, any Supplemental Bond Indenture permitted by the Bond Indenture or the modification thereby of the trusts created by the Bond Indenture, the Bond Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such Supplemental Bond Indenture is authorized or permitted by the Bond Indenture and complies with the terms thereof.

Effect of Supplemental Bond Indenture

Upon the execution of any Supplemental Bond Indenture pursuant to the Bond Indenture, the Bond Indenture shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under the Bond Indenture of the Authority, the Bond Trustee and all Holders of Bonds Outstanding shall thereafter be determined, exercised and enforced under the Bond Indenture subject in all respects to such modification and amendment, and all the terms and conditions of any such Supplemental Bond Indenture shall be deemed to be part of the terms and conditions of the Bond Indenture for any and all purposes.

Discharge of Bond Indenture

If the Authority, the Corporation or the Bond Trustee shall also pay or cause to be paid all other sums payable under the Bond Indenture by the Authority, and if the Corporation shall have paid all expenses payable to the Authority and the Bond Trustee, and any indemnification owed to the Authority, then and in that case, at the election of the Corporation (evidenced by a Certificate of the Corporation, filed with the Bond Trustee, signifying the intention of the Corporation to discharge all such indebtedness and the Bond Indenture), and notwithstanding that any Bonds shall not have been surrendered for payment, the Bond Indenture and the pledge of Revenues and other assets made under the Bond Indenture and all covenants, agreements and other obligations of the Authority under the Bond Indenture shall cease, terminate, become void and be completely discharged and satisfied (except with respect to the transfer or exchange of Bonds provided for in the Bond Indenture or therein, the payment of principal of and interest on the Bonds when due, the redemption of Bonds provided for in the Bond Indenture and the payment of or the provision for any rebate payments then due and payable to the United States Treasury as specified in the Tax Certificate). In such event, upon Written Request of the Corporation, the Bond Trustee shall execute and deliver to the Authority and the Corporation all such instruments as may be necessary or desirable (and prepared by or on behalf of the Authority or the Corporation) to evidence such discharge and satisfaction, and the Bond Trustee shall pay over, transfer, assign or deliver to the Corporation all moneys or securities or other property held by it pursuant to the Bond Indenture which are not required for the payment or redemption of Bonds not theretofore surrendered for such payment or redemption. The release of the obligations of the Authority under the Bond Indenture shall be without prejudice to the right of the Bond Trustee to be paid reasonable compensation for all services rendered under the Bond Indenture by it and all reasonable expenses, charges and other disbursements (from any money in its possession under the provisions of the Bond Indenture, subject only to the prior lien of the Bonds for the payment of the principal thereof and the interest thereon) incurred on or about the administration of the trust thereby created and the performance of its duties under the Bond Indenture, nor its right to indemnification under the Bond Indenture and under the Loan Agreement.

D-50 Effect of Defeasance

Upon the deposit with the Bond Trustee, in trust, at or before maturity, of money or securities in the amount necessary (as provided in the Bond Indenture) to pay or redeem any Outstanding Bond (whether upon or prior to its maturity or the redemption date of such Bond) and, if such Bond is to be redeemed prior to maturity, notice of such redemption shall have been given as provided in the Bond Indenture or provision satisfactory to the Bond Trustee shall have been made for the giving of such notice, the Bond Indenture may be released and discharged in accordance with the provisions thereof and in the Bond Indenture, but the liability of the Authority in respect of such Bonds shall continue but only to the extent that the Holder thereof shall thereafter be entitled only to payment out of such money or securities deposited with the Bond Trustee as aforesaid for their payment; and, provided, further, that the provisions in the Bond Indenture shall apply in any event.

Deposit of Money or Securities with Bond Trustee

Whenever in the Bond Indenture it is provided or permitted that there be deposited with or held in trust by the Bond Trustee money or securities in the amount necessary to pay or redeem any Bonds, the money or securities so to be deposited or held may include money or securities held by the Bond Trustee in the funds and accounts established pursuant to the Bond Indenture.

Payment of Bonds After Discharge of Bond Indenture

Notwithstanding the discharge of the lien thereof as provided in the Bond Indenture, the Bond Trustee shall nevertheless retain such rights, powers and duties under the Bond Indenture as may be necessary and convenient for the payment of amounts due or to become due on the Bonds and the registration, transfer, exchange and replacement of Bonds as provided in the Bond Indenture. Subject to any applicable escheat law, any money held by the Bond Trustee for the payment of the principal, Redemption Price or Purchase Price of or interest on any Bond remaining unclaimed for three years after the principal or Purchase Price of all Bonds has become due and payable, whether at maturity or proceedings for redemption or tender for purchase or by declaration as provided in the Bond Indenture, shall then be paid to the Corporation and the Holders of any Bonds not theretofore presented for payment shall thereafter be entitled to look only to the Corporation for payment thereof and all liability of the Bond Trustee and the Authority with respect to such moneys shall thereupon cease.

D-51 THE LOAN AGREEMENT

The following is a summary of certain provisions of the Loan Agreement. Reference is made to the Loan Agreement for the detailed provisions thereof. This summary does not purport to be final, complete or definitive, and is qualified by reference to the Loan Agreement in its entirety for the final, complete and actual terms, provisions and covenants thereof.

Issuance of the Bonds; Application of Proceeds of Bonds; Issuance of Obligations.

Pursuant to the Bond Indenture, the Authority has authorized the issuance of the Series 2020A Bonds in the aggregate principal amount of $[______] and the Series 2020B Bonds in the aggregate principal amount of $[______]. The proceeds of the Bonds shall be applied under the terms and conditions of the Loan Agreement and the Bond Indenture. The Corporation thereby approves the Bond Indenture and the issuance of the Bonds thereunder by the Authority, and the assignment thereunder to the Bond Trustee of the right, title and interest (but none of the obligations) of the Authority in the Loan Agreement (except for the Authority’s right to receive any Administrative Fees and Expenses to the extent payable to the Authority and the Authority’s Unassigned Rights) and the Obligations.

In consideration of the issuance of the Bonds by the Authority and the application of the proceeds thereof as provided in the Bond Indenture, the Corporation agrees to issue, or cause to be issued, and to cause to be authenticated and delivered to the Authority or its designee, pursuant to the Master Indenture, the First Supplemental Indenture and the Second Supplemental Indenture, concurrently with the issuance and delivery of the Bonds, Obligation No. 1 in substantially the form set forth in the First Supplemental Indenture and Obligation No. 2 in substantially the form set forth in the Second Supplemental Indenture. The Authority agrees that the Obligations shall be registered in the name of the Bond Trustee. The Corporation agrees that the aggregate principal amount of Obligation No. 1 shall be limited to $[______] and Obligation No. 2 shall be limited to $[______], except for any Obligation authenticated and delivered in lieu of another Obligation as provided in the First Supplemental Indenture or the Second Supplemental Indenture with respect to the mutilation, destruction, loss or theft of the Obligations or, subject to the provisions of the Loan Agreement, upon registration of transfer of the Obligations. Issuance and delivery of the Bonds by the Authority shall be a condition of the issuance and delivery of the Obligations.

The Corporation agrees that, except as provided in the Loan Agreement, so long as any Bond remains Outstanding, the Obligations shall be issuable only as a single obligation without coupons, registered as to principal and interest in the name of the Bond Trustee, and no transfer of the Obligations shall be registered under the Master Indenture or be recognized by the Corporation except for transfers to a successor Bond Trustee.

Upon the principal of all Master Indenture Obligations Outstanding (within the meaning of that term as used in the Master Indenture) being declared immediately due and payable, the Obligations may be transferred if and to the extent that the Bond Trustee requests that the restrictions of the Loan Agreement on transfers be terminated.

D-52 Additional Bonds.

The Authority and the Corporation acknowledge that the Authority may issue Additional Bonds pursuant to the Bond Indenture for the purpose, among others, of obtaining funds for the Corporation for any purpose permitted under the Act. The Corporation thereby acknowledges and agrees that nothing in the Bond Indenture or the Loan Agreement shall require or be construed to require that the Authority issue Additional Bonds. In the event that any such Additional Bonds shall be issued (with the consent of the Corporation), the Authority and the Corporation shall enter into a supplement to the Loan Agreement pursuant to the Loan Agreement, and execute and deliver such other documents as shall be necessary or appropriate in connection therewith, and the term “Bonds” as used in the Loan Agreement shall mean collectively, the Series 2020 Bonds and any such Additional Bonds.

Loan of Bond Proceeds; Loan Repayments.

Pursuant to the Bond Indenture, the Authority has authorized the issuance of the Bonds and thereby loans and advances to the Corporation, and the Corporation thereby borrows and accepts from the Authority (solely from the proceeds of the sale of such Bonds), the proceeds of the Bonds to be applied under the terms and conditions of the Loan Agreement and the Bond Indenture. In consideration of the loan of such proceeds to the Corporation, the Corporation, for itself and as the Credit Group Representative on behalf of the Obligated Group, agrees to pay, or cause to be paid, “Loan Repayments” in an amount sufficient to enable the Bond Trustee to make the transfers and deposits required at the times and in the amounts pursuant to the Bond Indenture. Each Loan Repayment shall be made in immediately available funds. Notwithstanding the foregoing, the Corporation agrees to make payments, or cause payments to be made, at the times and in the amounts required to be paid as principal or Redemption Price of and interest on the Bonds from time to time Outstanding under the Bond Indenture and other amounts required to be paid under the Bond Indenture, as the same shall become due whether at maturity, upon redemption, by declaration of acceleration or otherwise.

Except as otherwise expressly provided in the Loan Agreement, all amounts payable under the Loan Agreement by the Corporation and other Members to the Authority shall be paid to the Bond Trustee as assignee of the Authority and the Loan Agreement and all right, title and interest of the Authority in any such payments are thereby assigned and pledged to the Bond Trustee so long as any Bonds remain Outstanding.

Notwithstanding the foregoing provisions, the Corporation shall receive credit against Loan Repayments required to be made under the Loan Agreement on any Interest Payment Date, Sinking Fund Installment date, or Maturity Date to the extent that payments are received by the Bond Trustee in an amount sufficient to pay the interest on or principal of the Bonds becoming due and payable on such Interest Payment Date, Sinking Fund Installment date, or Maturity Date, respectively, from a drawing on the Credit Facility (if any) pursuant to the Bond Indenture.

D-53 Additional Payments.

In addition to Loan Repayments, the Corporation, for itself and as the Credit Group Representative on behalf of the Obligated Group, agrees to pay to the Authority, the Bond Trustee, the Remarketing Agent (if any), the Liquidity Facility Provider (if any), the Credit Facility Provider (if any) or the designated agent of either of them, as the case may be, “Additional Payments,” as follows:

(a) All taxes and assessments of any type or character charged to the Authority or to the Bond Trustee affecting the amount available to the Authority or the Bond Trustee from payments to be received under the Loan Agreement or in any way arising due to the transactions contemplated thereby (including taxes and assessments assessed or levied by any public agency or governmental authority of whatsoever character having power to levy taxes or assessments) but excluding franchise taxes based upon the capital and/or income of the Bond Trustee and taxes based upon or measured by the net income of the Bond Trustee; provided, however, that the Corporation and other Members shall have the right to protest any such taxes or assessments and to require the Authority or the Bond Trustee, at the Corporation’s and other Members’ expense, to protest and contest any such taxes or assessments levied upon them and that the Corporation and other Members shall have the right to withhold payment of any such taxes or assessments pending disposition of any such protest or contest unless such withholding, protest or contest would adversely affect the rights or interests of the Authority or the Bond Trustee;

(b) All reasonable fees, charges and expenses of the Bond Trustee under the Loan Agreement and under the Bond Indenture, the reasonable fees, charges, expenses and indemnities of the Remarketing Agent (if any) under the Remarketing Agreement, the Liquidity Facility Provider (if any) under the Liquidity Facility (if any), and the Credit Facility Provider (if any) under the Credit Facility (if any), as and when the same become due and payable;

(c) The reasonable fees and expenses of such accountants, consultants, attorneys and other experts as may be engaged by the Authority or the Bond Trustee to prepare audits, financial statements, reports, opinions or provide such other services required under the Corporation Documents, the Bonds or the Bond Indenture;

(d) The Administrative Fees and Expenses (as defined in the Bond Indenture) and the reasonable fees and expenses of the Authority or any agent or attorney selected by the Authority to act on its behalf in connection with the Corporation Documents, the Bonds or the Bond Indenture, including, without limitation, any and all reasonable expenses incurred in connection with the authorization, issuance, sale and delivery of any such Bonds or in connection with any litigation, investigation, inquiry or other proceeding which may at any time be instituted involving the Corporation Documents, the Bonds or the Bond Indenture or any of the other documents contemplated thereby, or in connection with the reasonable supervision or inspection of the Corporation, its properties, assets or operations or otherwise in connection with the administration of the Corporation Documents; and

(e) All amounts required to be paid pursuant to the Loan Agreement.

D-54 (f) Such Additional Payments shall be billed to the Corporation by the Authority, the Bond Trustee, the Remarketing Agent (if any), the Liquidity Facility Provider (if any) or the Credit Facility Provider (if any) from time to time, together with a statement certifying that the amount billed has been incurred or paid for one or more of the above items. After such a demand, amounts so billed shall be paid by the Corporation or other Members within thirty (30) days after receipt of the bill by the Corporation. The obligations of the Corporation and other Members under this section shall survive the resignation or removal of the Bond Trustee under the Bond Indenture and payment of the Bonds and discharge of the Bond Indenture.

Credits for Payments.

The Obligated Group shall receive credit against its payments required to be made under the Loan Agreement, in addition to any credits resulting from payment or repayment from other sources, as follows:

(a) on installments of interest in an amount equal to moneys deposited in the Interest Fund, which amounts are available to pay interest on the Bonds, to the extent such amounts have not previously been credited against such payments;

(b) on installments of principal in an amount equal to moneys deposited in the Bond Sinking Fund, which amounts are available to pay principal of the Bonds, to the extent such amounts have not previously been credited against such payments;

(c) on installments of principal and interest in an amount equal to the principal amount of Bonds which have been called by the Bond Trustee for redemption prior to maturity and for the redemption of which sufficient amounts (as determined by the Bond Indenture) in cash or United States Government Obligations are on deposit as provided in the Bond Indenture to the extent such amounts have not previously been credited against such payments, and the interest on such Bonds from and after the date fixed for redemption thereof. Such credits shall be made against the installments of principal and interest which would have been used, but for such call for redemption, to pay principal of and interest on such Bonds when due or called for mandatory redemption; and

(d) on installments of principal and interest in an amount equal to the principal amount of Bonds acquired by the Corporation and delivered to the Bond Trustee for cancellation or purchased by the Bond Trustee and cancelled, and the interest on such Bonds from and after the date interest thereon has been paid prior to cancellation. Such credits shall be made against the installments of principal and interest which would have been used, but for such cancellation, to pay principal of and interest on such Bonds when due, and with respect to Bonds called for mandatory redemption, against principal installments which would have been used to pay Bonds of the same date.

Prepayment.

The Corporation shall have the right at any time or from time to time to prepay all or any part of the Loan Repayments and the Authority agrees that the Bond Trustee shall accept such prepayments when the same are tendered by the Corporation, and the Bond Trustee shall call for redemption Bonds as directed by the Corporation. The Corporation and other Members shall be required to prepay Loan Repayments in the amounts and at the times that Bonds are subject to

D-55 optional or mandatory redemption pursuant to the Bond Indenture. All such prepayments (and the additional payment of any amount necessary to pay the Redemption Price payable upon the redemption of Bonds) shall be deposited upon receipt at the Corporation’s direction in (i) the Bond Sinking Fund or (ii) the Optional Redemption Fund if the Bonds are to be redeemed pursuant to the Bond Indenture (or in such other Bond Trustee escrow account as may be specified by the Corporation) and, at the request of and as determined by the Corporation, credited against payments due under the Loan Agreement or used for the redemption or purchase of Outstanding Bonds in the manner and subject to the terms and conditions set forth in the Bond Indenture.

Payment of Purchase Price.

The Corporation agrees that, if a Liquidity Facility or a Credit Facility is not in effect with respect to the Bonds or if the Liquidity Facility Provider or Credit Facility Provider, as applicable, has not paid the full amount required by the Bond Indenture at the times required under the Bond Indenture, it shall pay to the Bond Trustee the Additional Funding Amount, to the extent required pursuant to the Bond Indenture. Each such payment by the Corporation to the Bond Trustee pursuant to this section shall be in immediately available funds and paid to the Bond Trustee at its Corporate Trust Office by 2:45 p.m., New York City time, on each date upon which a payment is to be made pursuant to the Bond Indenture.

Obligations of the Corporation and Obligated Group Unconditional; Net Contract.

The obligations of the Corporation and Obligated Group to make the Loan Repayments, Additional Payments required and other payments under the Loan Agreement and to perform and observe the other agreements on its part contained in the Loan Agreement shall be absolute and unconditional, and shall not be abated, rebated, setoff, reduced, abrogated, terminated, waived, diminished, postponed or otherwise modified in any manner or to any extent whatsoever, while any Bonds remain Outstanding or any Additional Payments or other payments remain unpaid, regardless of any contingency, event or cause whatsoever, including, without limiting the generality of the foregoing, any natural disaster, acts or circumstances that may constitute failure of consideration, eviction or constructive eviction, the taking by eminent domain or destruction of or damage to its facilities, commercial frustration of purpose, any changes in the laws of the United States of America or of the State or any political subdivision of either or in the rules or regulations of any governmental authority, or any failure of the Authority or the Bond Trustee to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with the Loan Agreement or the Bond Indenture. The Loan Agreement shall be deemed and construed to be a “net contract,” and the Corporation and other Members shall pay absolutely net the Loan Repayments, Additional Payments and all other payments required under the Loan Agreement, regardless of any rights of setoff, recoupment, abatement or counterclaim that the Corporation and other Members might otherwise have against the Authority or the Bond Trustee or any other party or parties.

Modifications to the Project.

The Corporation may make any changes in or modifications of the plans and specifications for the Project and may make any deletions from or substitutions or additions to the Project, without the prior consent of the Authority, so long as such changes or modifications in the plans

D-56 and specifications for the Project, or deletions from or substitutions or additions to the Project, do not materially alter the size, scope or character of the Project, impair the structural integrity and utility of the Project, violate the requirements of any licensing or zoning authority, or violate the requirements of the certificate(s) of need for the Project. If any such changes or modifications in the plans and specifications for the Project, or if any such deletions from or substitutions or additions to the Project, materially alter the size, scope or character of the Project or impair the structural integrity and utility of the Project, such changes or modifications, or substitutions, deletions or additions shall be made only with the approval of the Authority and the receipt by the Bond Trustee and the Authority of a Favorable Opinion of Bond Counsel. The Credit Group Representative thereby covenants and agrees that no changes or modifications, or substitutions, deletions or additions shall be made with respect to the Project (a) if they disqualify the Project as a hospital facility permitted to be financed under the Act, and (b) unless the Obligated Group has adequate moneys available to pay any additional costs resulting therefrom.

Particular Covenants.

Prohibited Uses. No portion of the proceeds of the Series 2020A Bonds shall be used to finance or refinance any facility, place or building to be used (1) primarily for sectarian instruction or study or as a place for devotional activities or religious worship or (2) by a Person that is not an organization described in Section 501(c)(3) of the Code or a state or local governmental unit (as defined in Treasury Regulations Section 1.103-1) or any instrumentality thereof, excluding the United States or any agency or instrumentality thereof, or by an organization described in Section 501(c)(3) of the Code (including the Corporation) in an “unrelated trade or business” (as set forth in Section 513(a) of the Code), in such a manner or to such extent as would result in any of the Series 2020A Bonds being treated as an obligation not described in Section 103(a) of the Code. The covenant in clause (1) of this section shall survive payment in full or defeasance of the Series 2020A Bonds.

Tax Covenant. The Corporation, for itself and as the Credit Group Representative on behalf of the Obligated Group, covenants and agrees that it will at all times do and perform all acts and things permitted by law and the Loan Agreement which are necessary in order to assure that interest paid on the Series 2020A Bonds will be excluded from gross income for federal income tax purposes and will take no action that would result in such interest not being so excluded. Without limiting the generality of the foregoing, the Corporation agrees to comply with the provisions of the Tax Certificate. This covenant shall survive payment in full or defeasance of the Series 2020A Bonds.

Indemnification by Corporation.

(a) To the extent permitted by law, the Corporation, for itself and as the Credit Group Representative on behalf of the Obligated Group, agrees to pay, defend, protect, indemnify, and hold each of the Authority Indemnified Parties and the Bond Trustee, including costs and reasonable attorneys’ fees and expenses incurred in the enforcement of the Corporation’s obligations under the Loan Agreement, its officers, directors, agents and employees (the “Bond Trustee Indemnified Parties”) harmless for, from and against any and all liabilities losses, damages, taxes, penalties, costs and expenses (including reasonable attorneys’ fees and expenses of the Authority and the Bond Trustee), causes of action, suits, proceedings, claims, demands, tax

D-57 reviews, investigations and judgments of whatsoever kind and nature (including, but not limited to, those arising or resulting from any injury to or death of any person or damage to property) arising from or in any manner directly or indirectly growing out of or connected with the following:

(i) Any injury to or death of any person or damage to property in or upon the Project or the facilities refinanced with proceeds of the Bonds or growing out of or connected with the use, non-use, condition, or occupancy of the Project or the facilities refinanced with proceeds of the Bonds or any part thereof;

(ii) Violation by the Corporation or any Member of any agreement, covenant, or condition of any of the Corporation Documents;

(iii) Violation by the Corporation or any Member of any agreement, contract, or restriction relating to the Project or the facilities refinanced with proceeds of the Bonds;

(iv) Violation of any law, ordinance, rule, regulation or court order affecting the Project, the facilities refinanced with proceeds of the Bonds or the ownership, occupancy, use thereof or the Bonds or the use thereof;

(v) The offering, issuance, sale or any resale or remarketing of the Bonds or performance of any duties under any of the documents relating to the Bonds, or a violation of any agreement, warranty, covenant or condition of the Loan Agreement or any other agreement executed in connection with the Loan Agreement;

(vi) the use, financing, non-use, condition or occupancy of the Project or the facilities refinanced with proceeds of the Bonds, any repairs, construction, alterations, renovation, relocation, remodeling and equipping thereof or thereto or the condition of any such Project or refinanced facilities including adjoining sidewalks, streets or alleys and any equipment or facilities at any time located on or connected with such Project or refinanced facilities or used in connection therewith but which are not the result of the gross negligence or willful misconduct of the Authority or the Bond Trustee; and

(vii) Any statement, information, or certificate furnished by the Corporation or any Member to the Authority that was misleading, untrue, incomplete, or incorrect in any respect when made.

(b) The Corporation, for itself and as the Credit Group Representative on behalf of the Obligated Group, also agrees to pay, defend, protect, indemnify, and hold each of the Authority Indemnified Parties and the Bond Trustee Indemnified Parties harmless for, from, and against any and all liabilities directly or indirectly arising from or relating to (a) any errors or omissions of any nature whatsoever contained in any legal proceedings or other official representation or inducement made by or to the Authority pertaining to the Bonds (provided, however, nothing in this subsection shall be deemed to provide the Authority with indemnification for the Authority’s omissions or misstatements contained in the Official Statement under the captions “THE AUTHORITY” or “LITIGATION — The Authority”), and (b) any fraud or misrepresentations or omissions contained in the proceedings of the Authority relating to the issuance of the Bonds or pertaining to the financial condition of the Corporation which, if known to the underwriter and the

D-58 investors initially purchasing the Bonds from the underwriter, might be considered a factor in such Person’s decision to purchase the Bonds.

(c) Provided, however, that nothing in paragraphs (a) and (b) of this section shall be deemed to provide indemnification to any Authority Indemnified Party or the Bond Trustee Indemnified Party, as applicable, with respect to any liabilities arising from the fraud or willful misconduct of such Authority Indemnified Party or the Bond Trustee Indemnified Party, as applicable.

(d) Any party entitled to indemnification under the Loan Agreement shall notify the Corporation of the existence of any claim, demand, or other matter to which the Corporation’s and Obligated Group’s indemnification obligation applies, and shall give the Corporation a reasonable opportunity to defend the same at its own expense and with counsel reasonably satisfactory to the Authority Indemnified Party or the Bond Trustee Indemnified Party, as applicable; provided that the Authority Indemnified Party or the Bond Trustee Indemnified Party, as applicable, shall at all times also have the right to fully participate in the defense. If the Authority Indemnified Party and/or the Bond Trustee Indemnified Party is advised in an opinion of counsel that there may be legal defenses available to it which are different from or in addition to those available to the Corporation and the Obligated Group and if the Corporation shall, after this notice and within a period of time necessary to preserve any and all defenses to any claim asserted, fails to assume the defense or to employ counsel for that purpose reasonably satisfactory to the Authority Indemnified Party or the Bond Trustee Indemnified Party, as applicable, the Authority Indemnified Party or the Bond Trustee Indemnified Party, as applicable shall have the right, but not the obligation, to undertake the defense of, and to compromise or settle the claim or other matter on behalf of, for the account of, and at the risk of, the Corporation and other Members, and the Corporation shall be responsible for the reasonable counsel fees, costs, and expenses of the Authority Indemnified Party and/ or the Bond Trustee Indemnified Party, as applicable in conducting its defense. In addition, each of the Authority and the Bond Trustee may, however, retain its own counsel and still be indemnified against the cost of employing counsel and all other expenses despite an assumption of the defense by the Corporation if the Authority or the Bond Trustee believes in good faith that (i) there are defenses available to it that are not available to the Corporation or other Members or that are adverse to or in conflict with those available to the Corporation or other Members or (ii) cannot be effectively asserted by common counsel. The Authority and the Bond Trustee always have the right to employ separate Counsel but, subject to the preceding two sentences, the fees and expenses of its separate Counsel must be paid by the Authority or the Bond Trustee unless the Corporation and the Authority or the Bond Trustee have mutually agreed to the employment of the Authority’s or the Bond Trustee’s separate Counsel. This section shall survive the termination of the Loan Agreement and the earlier removal or resignation of the Bond Trustee.

(e) All amounts payable to the Authority under this section shall be deemed to be Administrative Fees and Expenses payable to the Authority for the purposes of the provisions thereof and of the Bond Indenture dealing with assignment of the Authority’s rights under the Loan Agreement.

(f) Any provision of the Loan Agreement or any other instrument or document executed and delivered in connection therewith to the contrary notwithstanding, the Authority retains the right to (i) enforce any applicable Federal or State law or regulation or resolution of the

D-59 Authority, and (ii) enforce any rights accorded to the Authority by Federal or State law or regulation of the Authority, and nothing in the Loan Agreement shall be construed as an express or implied waiver thereof.

Continuing Disclosure.

The Corporation, for itself and as the Credit Group Representative on behalf of the Obligated Group, thereby covenants and agrees that it will enter into, comply with and carry out all of the provisions of the Continuing Disclosure Agreement with respect to the Bonds that complies with the provisions of Rule 15c2-12, in form and substance satisfactory to the Participating Underwriter (as defined in Rule 15c2-12). Notwithstanding any other provision of the Loan Agreement or the Bond Indenture, failure of the Corporation to enter into and comply with such a disclosure agreement shall not be considered a Loan Default Event or an Event of Default; however, the Bond Trustee may, and, at the request of any Participating Underwriter (as defined in such Continuing Disclosure Agreement) or the Holders of at least 25% in aggregate principal amount of Outstanding Bonds after receiving indemnification to its satisfaction, shall or any Bondholder or Beneficial Owner may, take such actions as may be necessary and appropriate, including seeking specific performance by court order, to cause the Corporation to comply with its obligations under this section.

Liquidity Facility; Alternate Liquidity Facility.

(a) The Corporation may, at any time at its sole option, deliver to the Bond Trustee a Liquidity Facility or an Alternate Liquidity Facility in substitution for a Liquidity Facility, or may, at any time at its sole option (subject to the notice and mandatory tender provisions set out in the Bond Indenture) proceed without a Liquidity Facility with respect to the Bonds available for use by the Bond Trustee to provide for the purchase of Bonds upon their optional or mandatory tender in accordance with the Bond Indenture. Any Alternate Liquidity Facility shall be in an amount equal to the Required Stated Amount.

(b) Any Alternate Liquidity Facility delivered to the Bond Trustee pursuant to this section shall contain administrative provisions reasonably acceptable to the Bond Trustee and the Remarketing Agent. On or prior to the date of the delivery of the Alternate Liquidity Facility to the Bond Trustee, the Corporation shall furnish to the Bond Trustee (i) if the Alternate Liquidity Facility is issued by a Liquidity Facility Provider other than a domestic commercial bank, an Opinion of Counsel addressed to the Authority, the Corporation, the Bond Trustee and the Remarketing Agent and satisfactory to the Bond Trustee and the Remarketing Agent that no registration of the Alternate Liquidity Facility is required under the Securities Act of 1933, as amended (the “Securities Act”), and no qualification of the Bond Indenture is required under the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”), or that all applicable registration or qualification requirements have been fulfilled; and (ii) an Opinion of Counsel addressed to the Authority, the Corporation, the Bond Trustee and the Remarketing Agent to the effect that such Alternate Liquidity Facility is a valid and enforceable obligation of the issuer thereof and that such Alternate Liquidity Facility complies with the terms under the Loan Agreement and under the Bond Indenture.

D-60 (c) In lieu of the Opinion of Counsel required by the Loan Agreement, there may be delivered an Opinion of Counsel addressed to the Authority, the Corporation, the Bond Trustee and the Remarketing Agent and satisfactory to the Bond Trustee and the Remarketing Agent to the effect that either (i) at all times during the term of the Alternate Liquidity Facility, the Bonds will be offered, sold and held by Holders in transactions not constituting a public offering of the Bonds or the Alternate Liquidity Facility under the Securities Act and, accordingly, no registration of the Alternate Liquidity Facility under the Securities Act nor qualification of the Bond Indenture under the Trust Indenture Act will be required in connection with the issuance and delivery of the Alternate Liquidity Facility or the remarketing of the Bonds with the benefits thereof, or (ii) the offering and sale of the Bonds, to the extent evidencing the Alternate Liquidity Facility, has been registered under the Securities Act and any indenture required to be qualified with respect thereto under the Trust Indenture Act has been so qualified. If the aforementioned opinion is given, the Bonds and any transfer records relating to the Bonds shall be noted indicating the restrictions on sale and transferability described in the Loan Agreement.

(d) If Liquidity Facility Bonds are Outstanding as of the date of delivery of an Alternate Liquidity Facility and held for the benefit of the Liquidity Facility Provider obligated under the Liquidity Facility then in effect, such Alternate Liquidity Facility shall provide for the purchase of such Liquidity Facility Bonds by the new Liquidity Facility Provider as a condition of the effectiveness of such Alternate Liquidity Facility.

Self-Liquidity Arrangements.

The Corporation, at its sole option, may maintain a Self-Liquidity Arrangement in lieu of a Liquidity Facility. Not less than 30 days prior to the expiration or termination of any existing Liquidity Facility or Credit Facility, the Corporation shall notify the Bond Trustee and the Authority of its intention to provide a Self-Liquidity Arrangement, and the amendments, if any, to the Loan Agreement and the Bond Indenture reasonably necessary to accommodate such self- liquidity. The notice will be accompanied by a Favorable Opinion of Bond Counsel, including to the effect that such changes will not require the Bonds to be registered under the Securities Act, or the Bond Indenture to be qualified under the Trust Indenture Act of 1939 or, if such registration or qualification is required, that it has been accomplished. The notice will also be accompanied by written evidence from each Rating Agency then rating the Bonds of the rating to be assigned to the Bonds by such Rating Agency on and after the date such Self-Liquidity Arrangement becomes effective.

Credit Facility; Alternate Credit Facility.

(a) The Corporation may, at any time at its sole option (subject to the provisions of the Bond Indenture), furnish a Credit Facility or an Alternate Credit Facility in substitution for a Credit Facility, or may, at any time at its sole option (subject to the notice and mandatory tender provisions set out in the Bond Indenture) proceed without a Credit Facility with respect to the Bonds.

(b) Any Alternate Credit Facility delivered to the Bond Trustee pursuant to this section shall contain administrative provisions reasonably acceptable to the Bond Trustee and the Remarketing Agent. On or prior to the date of the delivery of the Alternate Credit Facility to the

D-61 Bond Trustee, the Corporation shall furnish to the Bond Trustee (i) if the Alternate Credit Facility is issued by a Credit Facility Provider other than a domestic commercial bank, an Opinion of Counsel addressed to the Authority, the Corporation, the Bond Trustee and the Remarketing Agent and satisfactory to the Bond Trustee and the Remarketing Agent that no registration of the Alternate Credit Facility is required under the Securities Act, and no qualification of the Bond Indenture is required under the Trust Indenture Act, or that all applicable registration or qualification requirements have been fulfilled and (ii) an Opinion of Counsel addressed to the Authority, the Corporation, the Bond Trustee, and the Remarketing Agent and satisfactory to the Bond Trustee to the effect that such Alternate Credit Facility is a valid and enforceable obligation of the issuer thereof and such Alternate Credit Facility complies with the terms under the Loan Agreement and under the Bond Indenture.

(c) In lieu of the opinion of Counsel required above, there may be delivered an Opinion of Counsel addressed to the Authority, the Corporation, the Bond Trustee and the Remarketing Agent and satisfactory to the Bond Trustee and the Remarketing Agent to the effect that either (i) at all times during the term of the Alternate Credit Facility, the Bonds will be offered, sold and held by Holders in transactions not constituting a public offering of the Bonds or the Alternate Credit Facility under the Securities Act and, accordingly, no registration of the Alternate Credit Facility under the Securities Act nor qualification of the Bond Indenture under the Trust Indenture Act will be required in connection with the issuance and delivery of the Alternate Credit Facility or the remarketing of the Bonds with the benefits thereof, or (ii) the offering and sale of the Bonds, to the extent evidencing the Alternate Credit Facility, has been registered under the Securities Act and any indenture required to be qualified with respect thereto under the Trust Indenture Act has been so qualified. If the aforementioned opinion is given, the Bonds and any transfer records relating to the Bonds shall be noted indicating the restrictions on sale and transferability described in the Loan Agreement.

(d) If Credit Facility Bonds are Outstanding as of the date of delivery of an Alternate Credit Facility and held for the benefit of the Credit Facility Provider obligated under the Credit Facility then in effect, such Alternate Credit Facility shall provide for the purchase of such Credit Facility Bonds by the new Credit Facility Provider as a condition of the effectiveness of such Alternate Credit Facility.

Non-Discrimination.

The Corporation agrees that the facilities financed or refinanced with the proceeds of the Bonds will be open to all regardless of race, religion, sex or creed. Contractors and subcontractors engaged in the construction or alteration of such facilities shall provide an equal opportunity for employment without unlawful discrimination as to race, religion, sex or creed. The Corporation, for itself and as the Credit Group Representative on behalf of the Obligated Group, covenants and agrees that it shall enforce such non-discrimination requirements.

Loan Default Events.

The following events shall be “Loan Default Events:”

D-62 (a) Failure by the Obligated Group to pay in full any payment required under the Loan Agreement or under the Obligations when due, whether on an interest payment date at maturity, upon a date fixed for prepayment, by declaration, or otherwise pursuant to the terms thereof;

(b) Failure by (or, if made by the Corporation, on behalf of) any Member of the Obligated Group to observe and perform any other covenant, condition or agreement on its part to be observed or performed in the Loan Agreement for a period of sixty (60) days after written notice, specifying such failure and requesting that it be remedied, shall have been given to the Corporation by the Authority, the Credit Facility Provider or the Bond Trustee; provided, however, that if the failure is such that it can be corrected but not within such 60-day period, and corrective action is instituted by the Corporation or other Member of the Obligated Group within such period and diligently pursued until such failure is corrected, then such period shall be increased to 180 days after the delivery of such notice of default;

(c) Any material representation or warranty made by (or, if made by the Corporation, on behalf of) any Member of the Obligated Group in any document delivered by the Corporation or other Member to the Bond Trustee or the Authority in connection with the sale and delivery of the Bonds or the Obligations proves to be untrue when made in any material respect;

(d) An Event of Default under the Bond Indenture or under the Master Indenture; or

(e) Any Member of the Obligated Group (i) shall admit in writing its inability to pay its debts generally, (ii) shall make a general assignment for the benefit of creditors, (iii) shall institute any proceeding or voluntary case (A) seeking to adjudicate it a bankrupt or insolvent or (B) seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief or protection of debtors or (C) seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property, (iv) shall take any action to authorize any of the actions described above in this subsection (e), or (v) shall have instituted against it any proceeding (A) seeking to adjudicate it a bankrupt or insolvent or (B) seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief or protection of debtors or (C) seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property, and, if such proceeding is being contested by the Corporation or other Member of the Obligated Group in good faith, such proceeding shall remain undismissed or unstayed for a period of 60 days.

Upon a Responsible Officer of the Bond Trustee having actual knowledge or written notice of the existence of a Loan Default Event, the Bond Trustee shall give written notice thereof to the Corporation unless the Corporation has expressly acknowledged the existence of such Loan Default Event in a writing delivered by the Corporation to the Bond Trustee or filed by the Corporation in any court.

D-63 Remedies on Default.

If a Loan Default Event shall occur, then, and in each and every such case during the continuance of such Loan Default Event, the Bond Trustee on behalf of the Authority, subject to the limitations and its protections in the Bond Indenture as to the enforcement of remedies, may take such action as it deems necessary or appropriate to collect amounts due under the Loan Agreement, to enforce performance and observance of any obligation or agreement of the Corporation and Obligated Group under the Loan Agreement or to protect the interests securing the same, and may, without limiting the generality of the foregoing:

(a) Exercise any or all rights and remedies given thereby or available under the Loan Agreement or given by or available under any other instrument of any kind securing the Corporation’s or Obligated Group’s performance under the Loan Agreement (including, without limitation, the Obligations and the Master Indenture);

(b) By written notice to the Corporation, declare an amount equal to all amounts then due and payable on the Bonds, whether by acceleration of maturity or otherwise, to be immediately due and payable under the Loan Agreement, whereupon the same shall become immediately due and payable; and

(c) Take any action at law or in equity to collect the payment required under the Loan Agreement then due, whether on the stated due date or by declaration of acceleration or otherwise, for damages or for specific performance or otherwise to enforce performance and observance of any obligation, agreement or covenant of the Corporation or Obligated Group under the Loan Agreement.

(d) Notwithstanding any other provision of the Loan Agreement or any right, power or remedy existing at law or in equity or by statute, the Bond Trustee shall not under any circumstances declare the entire unpaid aggregate amount of the payment due under the Loan Agreement to be immediately due and payable except in accordance with the directions of the Master Trustee if the Master Trustee shall have declared the aggregate principal amount of the Obligations and all interest thereon immediately due and payable in accordance with the Master Indenture.

Remedies Not Exclusive; No Waiver of Rights.

No remedy conferred upon or reserved to the Authority or the Bond Trustee in the Loan Agreement is intended to be exclusive of any other available remedy or remedies, but each and every such remedy, to the extent permitted by law, shall be cumulative and shall be in addition to every other remedy given under the Loan Agreement or now or hereafter existing at law or in equity or otherwise. In order to entitle the Authority or the Bond Trustee to exercise any remedy, to the extent permitted by law, reserved to it contained in the Loan Agreement, it shall not be necessary to give any notice, other than such notice as may be expressly required in the Loan Agreement. Such rights and remedies as are given to the Authority under the Loan Agreement shall also extend to the Bond Trustee, and the Bond Trustee may exercise any rights of the Authority under the Loan Agreement, and the Bond Trustee and the Holders of the Bonds shall be deemed third-party beneficiaries of all covenants and conditions contained in the Loan Agreement.

D-64 No delay in exercising or omitting to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein, and every such right and power may be exercised from time to time and as often as may be deemed expedient.

Expenses on Default.

In the event the Corporation or Obligated Group should default under any of the provisions of the Loan Agreement and the Authority or the Bond Trustee should employ attorneys or incur other expenses for the collection of the payments due under the Loan Agreement, the Corporation agrees that it will on demand therefor pay to the Authority or the Bond Trustee the fees and expenses of such attorneys and such other expenses so incurred by the Authority or the Bond Trustee.

Notice of Default.

The Corporation agrees that, as soon as is practicable, and in any event within ten (10) days of a Loan Default Event, the Corporation will furnish the Bond Trustee notice of any event which is a Loan Default Event pursuant to the Loan Agreement which has occurred and is continuing on the date of such notice, which notice shall set forth the nature of such event and the action which the Corporation or Obligated Group Member proposes to take with respect thereto; provided, however, that with respect to a Loan Default Event pursuant to the Loan Agreement, the Bond Trustee shall give the Corporation immediate telephonic notice on the date such default occurs. If the Authority, the Credit Facility Provider or the Bond Trustee delivers a notice to the Corporation that the Corporation or Obligated Group has failed to observe and perform any covenant, condition or agreement on its part to be observed or performed under the terms of the Loan Agreement other than under the Loan Agreement then, upon request, the Corporation shall furnish to the Bond Trustee a certificate stating that such default is such that it can be corrected but not within the period set forth in the Loan Agreement and that corrective action capable of remedying such default has been instituted and is being diligently pursued and will be diligently pursued until the default is corrected. The Corporation shall notify the Bond Trustee when such default has been corrected. The Bond Trustee shall be entitled to conclusively rely upon any such certificate given pursuant to this section.

Assignment by Authority or Bond Trustee.

The Loan Agreement, including the right to receive payments required to be made by the Corporation and other Members under the Loan Agreement and to compel or otherwise enforce performance by the Corporation or other Member of its other obligations under the Loan Agreement and thereunder, may be assigned and reassigned in whole or in part to one or more assignees or subassignees by the Authority or the Bond Trustee at any time subsequent to its execution without the necessity of obtaining the consent of the Corporation. The Authority expressly acknowledges that all right, title and interest of the Authority in and to the Loan Agreement (excluding Unassigned Rights) have been assigned to the Bond Trustee, as security for the Bonds under and as provided in the Bond Indenture, and that if any Loan Default Event shall occur, the Bond Trustee shall be entitled to act under the Loan Agreement in the place and stead of the Authority.

D-65 Application of Moneys Collected.

Any amounts collected pursuant to action taken under the Loan Agreement shall be applied in accordance with the provisions of the Bond Indenture, and to the extent applied to the payment of amounts due on the Series 2020A Bonds shall be credited against amounts due on Obligation No.1 and to the extent applied to the payment of amounts due on the Series 2020B Bonds shall be credited against amounts due on Obligation No.2.

Loan Agreement Represents Complete Agreement; Amendments; Supplements.

The Loan Agreement represents the entire agreement between the parties. The Corporation, with the written consent of the Authority and the Bond Trustee given in accordance with the provisions of the Bond Indenture, may from time to time enter into such amendments or supplements to the Loan Agreement as to them may seem necessary or desirable to effectuate the purposes or intent thereof.

Term of Loan Agreement.

The Loan Agreement shall be in full force and effect from the date hereof and shall continue in effect as long as any of the Bonds is Outstanding or the Bond Trustee holds any moneys under the Bond Indenture, whichever is later.

Bond Indenture Provisions.

The Bond Indenture provisions concerning the Bonds and the other matters therein are an integral part of the terms and conditions of the Loan made by the Authority to the Corporation pursuant to the Loan Agreement, and the execution of the Loan Agreement shall constitute conclusive evidence of approval of the Bond Indenture by the Corporation to the extent it relates to the Corporation and the Obligated Group. Additionally, the Corporation agrees that, whenever the Bond Indenture by its terms imposes a duty or obligation upon the Corporation or the Obligated Group, such duty or obligation shall be binding upon the Corporation and the Obligated Group to the same extent as if the Corporation and Obligated Group were an express party to the Bond Indenture, and the Corporation thereby agrees to carry out and perform all of its obligations under the Bond Indenture as fully as if the Corporation and other Members were a party to the Bond Indenture.

D-66

APPENDIX E

FORM OF BOND COUNSEL OPINION

3406963.6 043801 OS [THIS PAGE INTENTIONALLY LEFT BLANK] [PROPOSED FORM OF BOND COUNSEL OPINION]

[______], 2020

Delaware Health Facilities Authority P.O. Box 951 1313 N. Market St., 6th Floor Wilmington, Delaware 19899

Wilmington Trust, National Association, as Trustee Rodney Square N, 1100 N. Market Street Wilmington, Delaware 19801

Re: $[______] Delaware Health Facilities Authority Revenue and Refunding Bonds (Christiana Care Health System) Series 2020, consisting of $[______] Series 2020A and $[______] Taxable Series 2020B

Ladies and Gentlemen:

We have acted as Bond Counsel to the Delaware Health Facilities Authority (the “Authority”) in connection with the issuance of its $[______] Revenue and Refunding Bonds (Christiana Care Health System), Series 2020, in the combined aggregate principal amount of $[______] (the “Series 2020 Bonds”), consisting of a tax-exempt Series 2020A in the principal amount of $[______] (the “Series 2020A Bonds”) and a taxable Series 2020B in the principal amount of $[______] (the “Series 2020B Bonds”). The Series 2020 Bonds are authorized to be issued pursuant to: (i) the Delaware Health Facilities Act, being Title 16, Section 9201 et. seq. of the Delaware Code (the “Act”); (ii) the resolutions adopted by the Authority on January 6, 2020, as supplemented by the Bond Committee Resolution adopted by the Authority’s Bond Committee on January [___], 2020 (together, the “Resolutions”); and (iii) a Bond Indenture dated as of February 1, 2020 (the “Bond Indenture”) by and between the Authority and Wilmington Trust, National Association, as bond trustee (the “Bond Trustee”).

Defined terms used herein, indicated by initial capital letters and not otherwise defined herein, shall have the meanings herein which are assigned to them in the Bond Indenture.

The proceeds of the Series 2020 Bonds will be applied to make a loan to Christiana Care Health System, Inc., a Delaware corporation (the “Hospital”), for purposes of (1) financing capital improvements to certain of the Hospital’s facilities, including the construction and equipping of a Women and Children’s building and other capital costs associated with Christiana Hospital and construction of a parking garage and reimbursement of costs related thereto; (2) refunding the currently outstanding amounts of the following prior bonds of the Authority: (a) $55,000,000 Variable Rate Revenue Bonds, Christiana Care Health Services, Series 2008A (the “Series 2008A Bonds”); (b) $25,000,000 Variable Rate Revenue Bonds, Christiana Care Health Services, Series 2008B (the “Series 2008B Bonds”); (c) $75,000,000 Variable Rate Revenue

E-1 Delaware Health Facilities Authority Wilmington Trust, National Association, as Trustee [______], 2020 Page 2

Bonds, Christiana Care Health Services, Series 2010B (the “Series 2010B Bonds”); (d) $25,000,000 Variable Rate Revenue Bonds, Christiana Care Health Services, Series 2010C (the “Series 2010C Bonds”); (e) $10,335,000 Revenue Bonds, Christiana Care Health Services, Series 2010D (the “Series 2010D Bonds”); and (f) $16,860,000 Revenue Bonds, Christiana Care Health Services, Series 2010E (the “Series 2010E Bonds”); and (3) payment of certain costs of issuance relating to the Series 2020 Bonds (collectively, the “Project”), all pursuant to the Loan Agreement dated as of February 1, 2020 (the “Loan Agreement”), between the Authority and the Hospital, and the Bond Indenture.

The Series 2020 Bonds are secured by the Bond Indenture, an assignment to the Bond Trustee of certain rights of the Authority under the Loan Agreement, Christiana Care Health System, Inc. Series 2020A Master Note Obligation (Delaware Health Facilities Authority) (“Note Obligation No. 1”) and Christiana Care Health System, Inc. Series 2020B Master Note Obligation (Delaware Health Facilities Authority) (“Note Obligation No. 2,” and together with Note Obligation No. 1, the “Note Obligations”), by the Hospital, as Credit Group Representative, in favor of the Master Trustee. The Note Obligations are being issued under a Master Trust Indenture dated as of February 1, 2020 (as supplemented by the First Supplemental Indenture and the Second Supplemental Indenture, each dated as of February 1, 2020, collectively, the “Master Trust Indenture”) between the Hospital, as Credit Group Representative, and Wilmington Trust, National Association, as master trustee (the “Master Trustee”). Payments by the Hospital under the Note Obligations will be credited against the obligations of the Hospital under the Loan Agreement and applied to the principal or redemption price of and interest on the Series 2020 Bonds.

The Internal Revenue Code of 1986, as amended (the “Code”) sets forth certain requirements which must be met subsequent to the issuance and delivery of the Series 2020A Bonds for interest thereon to remain excludable from the gross income of the owners of the Series 2020A Bonds for federal income tax purposes. The Authority and the Hospital have covenanted to comply with such requirements in the Bond Indenture and the Loan Agreement. Noncompliance with such requirements may cause the interest on the Series 2020A Bonds to be includable in the gross income of the owners of the Series 2020A Bonds for federal income tax purposes, retroactive to the date of issue of the Series 2020A Bonds or as of some later date. The Hospital has also covenanted in the Tax Certificate that it will comply with the requirements of Section 148(f) of the Code which provides for the rebate of certain arbitrage profits to the United States. For the purpose of the opinions set forth below, we have assumed that the Authority and Hospital will comply with the covenants set forth in the Bond Indenture and the Loan Agreement relating to the tax-exempt status of the Series 2020A Bonds.

The Authority will cause to be filed with the Internal Revenue Service a report of the issuance of the Series 2020A Bonds as required by the Code as a condition of the exclusion from gross income of the interest on the Series 2020A Bonds for federal income tax purposes. In addition, an officer of the Authority responsible for issuing the Series 2020A Bonds has executed a certificate stating the reasonable expectations of the Authority on the date of issue of the Series 2020A Bonds as to future events that are material for the purposes of Section 148 of the Code pertaining to arbitrage

E-2 DMEAST #39747366 v6 Delaware Health Facilities Authority Wilmington Trust, National Association, as Trustee [______], 2020 Page 3 bonds. We have reviewed such certificate and, in our opinion, the Series 2020A Bonds are not “arbitrage bonds” within the meaning of Section 148 of the Code.

In our capacity as bond counsel, we have examined originals (or copies certified or otherwise identified to our satisfaction) of the Bond Indenture, the Loan Agreement, the Master Trust Indenture, the Resolutions and forms of the Series 2020 Bonds and Note Obligations. In addition, we have examined the opinion of Fox Rothschild LLP, counsel to the Hospital, dated the date hereof, to the effect that, among other things, that the Hospital qualifies as an organization described in Section 501(c)(3) of the Code and that the Loan Agreement has been duly authorized, executed and delivered by the Hospital and is valid and legally binding upon the Hospital according to its terms. We have also examined originals (or copies certified or otherwise identified to our satisfaction) of such other instruments, certificates and documents and we have reviewed such questions of law as we have deemed necessary or appropriate for the purpose of the opinions rendered below. In such examination we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to the original documents of all documents submitted to us as copies.

We have relied on a certificate of the Authority as to the due execution and delivery of, and payment for, the Series 2020 Bonds. In addition, we have relied upon the opinion of Potter Anderson & Corroon LLP, counsel to the Authority, dated the date hereof, to the effect that, among other things, the Bond Indenture, the Loan Agreement and the Series 2020 Bonds have been duly authorized, executed and delivered by the Authority and are valid and legally binding upon the Authority according to their terms. As to any facts material to our opinion, we have relied upon the aforesaid instruments, certificates and documents, including the Tax Certificate relating to the Series 2020A Bonds and the statement of reasonable expectations of future events set forth in such certificates, without undertaking to verify the same by independent investigation.

In reliance on the foregoing, we are of the opinion that:

1. By the terms of the Act, the Series 2020 Bonds, the transfer thereof and the income therefrom are free from income taxation by the State of Delaware and by the municipalities and other political subdivisions in the State of Delaware. We express no opinion regarding franchise or estate taxes.

2. Interest on the Series 2020A Bonds is excludable from gross income for purposes of federal income tax under existing laws as enacted and construed on the date of initial delivery of the Series 2020A Bonds, assuming the accuracy of the certifications of the Authority and the Hospital and continuing compliance by the Authority and the Hospital with the requirements of the Code. Interest on the Series 2020A Bonds is exempt from individual federal alternative minimum tax. We express no opinion regarding other federal tax consequences relating to ownership or disposition of, or the accrual or receipt of interest on, the Series 2020A Bonds.

3. Interest on the Series 2020B Bonds is not excludable from gross income for purposes of federal income tax.

E-3 DMEAST #39747366 v6 Delaware Health Facilities Authority Wilmington Trust, National Association, as Trustee [______], 2020 Page 4

We express no opinion regarding the accuracy, completeness, sufficiency or fairness of the information set forth in the Official Statement or other offering documents of the Authority or Hospital delivered to purchasers of the Series 2020 Bonds and we take no responsibility therefor. Further, we express no opinion regarding tax consequences arising with respect to the Series 2020 Bonds other than as expressly set forth herein. In addition, we express no opinion as to the accuracy of any “CUSIP identification number” which may be inserted on any Series 2020 Bond.

Very truly yours,

Bond Counsel Opinion

E-4 DMEAST #39747366 v6

APPENDIX F

FORM OF CONTINUING DISCLOSURE AGREEMENT

3406963.6 043801 OS [THIS PAGE INTENTIONALLY LEFT BLANK] FORM OF CONTINUING DISCLOSURE AGREEMENT

This AGREEMENT TO PROVIDE CONTINUING DISCLOSURE (the “Disclosure Agreement”), dated as of February 1, 2020, is executed and delivered by Christiana Care Health System, Inc. (the “Borrower”) and Digital Assurance Certification, L.L.C. (“DAC”), as exclusive Disclosure Dissemination Agent (the “Disclosure Dissemination Agent”) for the benefit of the Holders (hereinafter defined) of the Bonds (hereinafter defined) and in order to provide certain continuing disclosure with respect to the Bonds in accordance with Rule 15c2-12 of the United States Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time (the “Rule”).

The services provided under this Disclosure Agreement solely relate to the execution of instructions received from the parties hereto through use of the DAC system and are not intended to constitute “advice” within the meaning of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”). DAC will not provide any advice or recommendation to the Borrower regarding the “issuance of municipal securities” or any “municipal financial product” as defined in the Act and nothing in this Disclosure Agreement shall be interpreted to the contrary.

SECTION 1. Definitions. Capitalized terms not otherwise defined in this Disclosure Agreement shall have the meaning assigned in the Rule or, to the extent not in conflict with the Rule, in the Indenture. The capitalized terms listed below shall have the following meanings:

“Annual Filing Date” means the date, set in Sections 2(a)(i) and 2(d), by which the Annual Report is to be filed with the MSRB.

“Annual Financial Information” means annual financial information as such term is used in paragraph (b)(5)(i) of the Rule and specified in Section 3(a) of this Disclosure Agreement.

“Annual Report” means an Annual Report described in and consistent with Section 3(a) of this Disclosure Agreement.

“Audited Financial Statements” means the financial statements the Borrower for the prior fiscal year, certified by an independent auditor as prepared in accordance with generally accepted accounting principles or otherwise, as such term is used in paragraph (b)(5)(i) of the Rule and specified in Section 3(a)(ii) of this Disclosure Agreement.

“Bonds” means the bonds as listed on the attached Exhibit A, with the 9-digit CUSIP numbers relating thereto.

“Borrower” means Christiana Care Health System, Inc., a Delaware nonprofit corporation.

“Certification” means a written certification of compliance signed by the Disclosure Representative stating that the Annual Report, Quarterly Report, Audited Financial Statements, Voluntary Financial Disclosure, Notice Event notice, Failure to File Event notice or Voluntary Event Disclosure delivered to the Disclosure Dissemination Agent is

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the Annual Report, Quarterly Report, Audited Financial Statements, Voluntary Financial Disclosure, Notice Event notice, Failure to File Event notice or Voluntary Event Disclosure required to be or voluntarily submitted to the MSRB under this Disclosure Agreement. A Certification shall accompany each such document submitted to the Disclosure Dissemination Agent by the Borrower and include the full name of the Bonds and the 9-digit CUSIP numbers for all Bonds to which the document applies.

“Disclosure Dissemination Agent” means Digital Assurance Certification, L.L.C., acting in its capacity as Disclosure Dissemination Agent hereunder.

“Disclosure Representative” means the Chief Financial Officer of the Borrower or his or her designee, or such other person as the Borrower shall designate in writing to the Disclosure Dissemination Agent from time to time as the person responsible for providing Information to the Disclosure Dissemination Agent.

“EMMA” means the Electronic Municipal Market Access System maintained by the MSRB, or such other system designated by the MSRB or the SEC.

“Failure to File Event” means the Borrower’s failure to file a Quarterly Report or Annual Report on or before the respective Quarterly Filing Date or Annual Filing Date.

“Force Majeure Event” means: (i) acts of God, war or terrorist action; (ii) failure or shut- down of EMMA; or (iii) to the extent beyond the Disclosure Dissemination Agent’s reasonable control, interruptions in telecommunications or utilities services, failure, malfunction or error of any telecommunications, computer or other electrical, mechanical or technological application, service or system, computer virus, interruptions in internet service or telephone service (including due to a virus, electrical delivery problem or similar occurrence) that affect internet users generally, or in the local area in which the Disclosure Dissemination Agent or the MSRB is located, or acts of any government, regulatory or any other competent authority the effect of which is to prohibit the Disclosure Dissemination Agent from performance of its obligations under this Disclosure Agreement.

“Holder” means any person (a) having the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries) or (b) treated as the owner of any Bonds for federal income tax purposes.

“Indenture” means the Bond Indenture dated as of February 1, 2020, by and between the Issuer and the Trustee, as it may be supplemented, amended or otherwise modified from time to time.

“Information” means collectively, the Quarterly Reports, Annual Reports, the Audited Financial Statements (if any), the Notice Event notices, the Failure to File Event Notices, the Voluntary Event Disclosures and the Voluntary Financial Disclosures.

“Issuer” means the Delaware Health Facilities Authority, as issuer of the Bonds.

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“MSRB” means the Municipal Securities Rulemaking Board established pursuant to Section 15B(b)(1) of the Securities Exchange Act of 1934.

“Notice Event” means any of the events enumerated in paragraph (b)(5)(i)(C) of the Rule and listed in Section 4(a) of this Disclosure Agreement.

“Official Statement” means the Official Statement prepared by the Issuer and the Borrower in connection with the Bonds, as listed on Exhibit A.

“Quarterly Filing Date” means the date, set in Sections 2(b)(i) and 2(d), by which the Quarterly Report is to be filed with the MSRB.

“Quarterly Financial Information” means quarterly financial information as specified in Section 3(b) of this Disclosure Agreement.

“Quarterly Report” means a Quarterly Report described in and consistent with Section 3(b) of this Disclosure Agreement.

“Trustee” means Wilmington Trust National Association.

“Voluntary Event Disclosure” means information of the category specified in any of subsections (c)(vi)(1) through (c)(vi)(10) of Section 2 of this Disclosure Agreement that is accompanied by a Certification of the Disclosure Representative containing the information prescribed by Section 7(a) of this Disclosure Agreement.

“Voluntary Financial Disclosure” means information of the category specified in any of subsections (c)(vii)(1) through (c)(vii)(9) of Section 2 of this Disclosure Agreement that is accompanied by a Certification of the Disclosure Representative containing the information prescribed by Section 7(b) of this Disclosure Agreement.

SECTION 2. Provision of Quarterly and Annual Reports.

(a) Annual Reports.

(i) The Borrower shall provide, annually, an electronic copy of the Annual Report and Certification to the Disclosure Dissemination Agent, no later than 150 days after the end of each fiscal year of the Borrower, commencing with the fiscal year ending June 30, 2020, such date and each anniversary thereof, the “Annual Filing Date.” Promptly upon receipt of an electronic copy of the Annual Report and the Certification, the Disclosure Dissemination Agent shall provide an Annual Report to the MSRB through EMMA for municipal securities disclosures. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 3 of this Disclosure Agreement.

(ii) If on the fifteenth (15th) day prior to the Annual Filing Date, the Disclosure Dissemination Agent has not received a copy of the Annual

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Report and Certification, the Disclosure Dissemination Agent shall contact the Disclosure Representative by telephone and in writing (which may be by e-mail) to remind the Borrower of its undertaking to provide the Annual Report. Upon such reminder, the Disclosure Representative shall, not later than two (2) business days prior to the Annual Filing Date, either: (i) provide the Disclosure Dissemination Agent with an electronic copy of the Annual Report and the Certification, or (ii) instruct the Disclosure Dissemination Agent that a Failure to File Event has occurred and to send a notice to the MSRB in substantially the form attached as Exhibit B, accompanied by a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-1. The Disclosure Dissemination Agent shall not file the notice of the Failure to File Event with the MSRB on EMMA unless the required information has not been received by 6:00 p.m. Eastern time on the Annual Filing Date as provided in paragraph (a)(iv) below.

(iii) If the Disclosure Dissemination Agent has not received an Annual Report and Certification by 6:00 p.m. Eastern time on the Annual Filing Date (or, if such Annual Filing Date falls on a Saturday, Sunday or holiday, then the first business day thereafter) for the Annual Report, a Failure to File Event shall have occurred and the Borrower irrevocably directs the Disclosure Dissemination Agent to immediately file a notice with the MSRB on EMMA in substantially the form attached as Exhibit B without reference to the anticipated filing date for the Annual Report, accompanied by a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-1.

(iv) If Audited Financial Statements of the Borrower are prepared but not available prior to the Annual Filing Date, the Borrower shall, when the Audited Financial Statements are available, provide in a timely manner an electronic copy to the Disclosure Dissemination Agent, accompanied by a Certification, for filing with the MSRB on EMMA.

(b) Quarterly Reports.

(i) The Borrower shall provide an electronic copy of the Quarterly Report and Certification to the Disclosure Dissemination Agent, not later than 60 days after the end of the first three fiscal quarters of the Borrower, commencing with the fiscal quarter ending March 31, 2020, and each September 30th, December 31st, and March 31st thereafter. As such, a Quarterly Report and Certification shall be due commencing on June 1, 2020 (which initial Quarterly Report and Certification shall address the fiscal quarter ending March 31, 2020, and reflecting May 31, 2020 is not a business day) and each March 1st, May 30th and November 29th thereafter, such dates being the “Quarterly Filing Dates.” Promptly upon receipt of an electronic copy of the Quarterly Report and Certification, the Disclosure Dissemination Agent shall provide such Quarterly Report to the MSRB through EMMA.

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The Quarterly Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 3 of this Disclosure Agreement.

(ii) If on the fifteenth (15th) day prior to the Quarterly Filing Date, the Disclosure Dissemination Agent has not received a copy of the Quarterly Report and Certification, the Disclosure Dissemination Agent shall contact the Disclosure Representative by telephone and in writing (which may be by e-mail) to remind the Borrower of its undertaking to provide the Quarterly Report pursuant to Section 2(b). Upon such reminder, the Disclosure Representative shall, not later than two (2) business days prior to the Quarterly Filing Date, either: (i) provide the Disclosure Dissemination Agent with an electronic copy of the Quarterly Report and Certification, or (ii) instruct the Disclosure Dissemination Agent that a Failure to File Event has occurred and to file a notice with the MSRB through EMMA in substantially the form attached as Exhibit B, accompanied by a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-1. The Disclosure Dissemination Agent shall not file the notice of the Failure to File Event with the MSRB to EMMA unless the required information has not been received by 6:00 p.m. Eastern time on the Quarterly Filing Date as provided in paragraph (b)(iii) below.

(iii) If the Disclosure Dissemination Agent has not received a Quarterly Report and Certification by 6:00 p.m. Eastern time on the Quarterly Filing Date (or, if such Quarterly Filing Date falls on a Saturday, Sunday or holiday, then the first business day thereafter), a Failure to File Event shall have occurred and the Borrower irrevocably directs the Disclosure Dissemination Agent to immediately file a notice with the MSRB through EMMA in substantially the form attached as Exhibit B without reference to the anticipated filing date for the Quarterly Report, accompanied by a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-1.

(c) The Disclosure Dissemination Agent shall:

(i) verify the filing specifications of the MSRB each year prior to each Quarterly Filing Date and Annual Filing Date;

(ii) upon receipt, promptly file each Quarterly Report and Annual Report received under Section 2(a) and 2(b) with the MSRB;

(iii) upon receipt, promptly file each Audited Financial Statement received under Section 2(a) with the MSRB;

(iv) Upon receipt, promptly file the text of each Notice Event received under Sections 4(a) and 4(b) with the MSRB, identifying the Notice Event as

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instructed by the Borrower pursuant to Section 4(a) or 4(b) (being any of the categories set forth below) when filing pursuant to Section 4(c) of this Disclosure Agreement:

1. Principal and interest payment delinquencies;

2. Non-payment related defaults, if material;

3. Unscheduled draws on debt service reserves reflecting financial difficulties;

4. Unscheduled draws on credit enhancements reflecting financial difficulties;

5. Substitution of credit or liquidity providers, or their failure to perform;

6. Adverse tax opinions, IRS notices or events affecting the tax status of the securities;

7. Modifications to rights of securities holders, if material;

8. Bond calls, if material;

9. Defeasances;

10. Release, substitution, or sale of property securing repayment of the securities, if material;

11. Ratings changes;

12. Tender offers;

13. Bankruptcy, insolvency, receivership or similar event of the Borrower;

14. Merger, consolidation, or acquisition of the Borrower, if material;

15. Appointment of a successor or additional trustee, or the change of name of a trustee, if material;

16. Incurrence of a Financial Obligation (as such term is defined in the Rule) of the Issuer or any other Material Obligated Person, if material, or agreement to covenants, events of default , remedies, priority rights, or other similar terms of a Financial Obligation of the Issuer or any other Material Obligated Person, any of which affect Bondholders, if material; and

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17. Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the Issuer or any other Material Obligated Person, any of which reflect financial difficulties; and such other material information as the Issuer determines should be disclosed or is required to be disclosed under the Rule.

(v) upon receipt (or irrevocable direction pursuant to Section 2(a)(iii) or Section 2(b)(iii) of this Disclosure Agreement, as applicable), promptly file a completed copy of Exhibit B to this Disclosure Agreement with the MSRB through EMMA, identifying the filing as “Failure to provide [annual/quarterly] financial information as required” when filing pursuant to Section 2(a) or Section 2(b) of this Disclosure Agreement;

(vi) upon receipt, promptly file the text of each Voluntary Event Disclosure received under Section 7(a) with the MSRB through EMMA, identifying the Voluntary Event Disclosure as instructed by the Borrower pursuant to Section 7(a) (being any of the categories set forth below) when filing pursuant to Section 7(a) of this Disclosure Agreement:

1. “amendment to continuing disclosure undertaking;”

2. “notice to investors pursuant to bond documents;”

3. “certain communications from the Internal Revenue Service;”

4. “secondary market purchases;”

5. “bid for auction rate or other securities;”

6. “capital or other financing plan;”

7. “litigation/enforcement action;”

8. “change of tender agent, remarketing agent, or other on-going party;”

9. “derivative or other similar transaction;” and

10. “other event-based disclosures;”

(vii) upon receipt, promptly file the text of each Voluntary Financial Disclosure received under Section 7(b) with the MSRB, identifying the Voluntary Financial Disclosure as instructed by the Borrower pursuant to Section 7(b) (being any of the categories set forth below) when filing pursuant to Section 7(b) of this Disclosure Agreement:

1. “monthly financial information;”

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2. “change in fiscal year/timing of annual disclosure;”

3. “change in accounting standard;”

4. “interim/additional financial information/operating data;”

5. “budget;”

6. “investment/debt/financial policy;”

7. “information provided to rating agency, credit/liquidity provider or other third party;”

8. “consultant reports;” and

9. “other financial/operating data;”

(viii) provide the Borrower evidence of the filings of each of the above when made, which shall be by means of the DAC system, for so long as DAC is the Disclosure Dissemination Agent under this Disclosure Agreement.

(d) The Borrower may adjust the Quarterly Filing Dates and Annual Filing Date upon change of its fiscal year by providing written notice of such change and the new Quarterly Filing Dates and Annual Filing Date to the Disclosure Dissemination Agent and request the Disclosure Dissemination Agent to provide such notice to the MSRB through EMMA, provided that the period between the existing Annual Filing Date and new Annual Filing Date shall not exceed one year.

(e) Any Information received by the Disclosure Dissemination Agent before 6:00 p.m. Eastern time on any business day that it is required to file with the MSRB pursuant to the terms of this Agreement and that is accompanied by a Certification and all other information required by the terms of this Agreement will be filed by the Disclosure Dissemination Agent with the MSRB no later than 11:59 p.m. Eastern time on the same business day; provided, however, the Disclosure Dissemination Agent shall have no liability for any delay in filing with the MSRB if such delay is caused by a Force Majeure Event provided that the Disclosure Dissemination Agent uses reasonable efforts to make any such filing as soon as possible.

SECTION 3. Content of Reports.

(a) Annual Reports. Each Annual Report shall contain the “Annual Financial Information” with respect to the Borrower which shall consist of operating data and financial information of the type included in Appendix A to the Official Statement as follows:

(i) Statistics and data of the type set forth under the captions “UTILIZATION AND PAYOR MIX”, but solely related to “Admissions”, “Patient Days”, “Emergency Department Visits” and “Outpatient Cases”, “UTILIZATION AND PAYOR MIX – Source of Patient Revenue”, “FINANCIAL

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INFORMATION – Summary Financial & Operating Information”, “FINANCIAL INFORMATION – Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “FINANCIAL INFORMATION – Other Financial Information – Historic and Pro Forma Debt Service Coverage” (for historic coverage only)”; and

(ii) Audited Financial Statements prepared in accordance with generally accepted accounting principles (“GAAP”) or alternate accounting principles as described in the Annual Report will, if available, be included in the Annual Report. If Audited Financial Statements are not available, unaudited financial statements, prepared in accordance with GAAP or alternate accounting principles as described in the Annual Report, will be included in the Annual Report.

(b) Quarterly Reports. Each Quarterly Report shall contain statistics and data of the type included in Appendix A to the Official Statement set forth under the captions “FINANCIAL INFORMATION – Summary Financial & Operating Information – Consolidated Balance Sheets and Statement of Operations (including changes in net assets), “FINANCIAL INFORMATION – Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “UTILIZATION AND PAYOR MIX”, but solely related to “Admissions”, “Patient Days”, “Emergency Department Visits” and “Outpatient Cases”, “UTILIZATION AND PAYOR MIX – Source of Patient Revenue”. The information provided in the Quarterly Report shall reflect fiscal year to date information as of the end of each fiscal quarter specified in Section 2(b)(i) hereof.

Any or all of the items listed above may be included by specific reference from other documents, including official statements of debt issues with respect to which the Borrower is an “obligated person” (as defined by the Rule), which have been previously filed the Securities and Exchange Commission or available from the MSRB through EMMA. If the document incorporated by reference is a Final Official Statement, it must be available from the MSRB. The Borrower will clearly identify each such document so incorporated by reference.

If the Annual Financial Information contains modified operating data or financial information different from the Annual Financial Information agreed to in this Disclosure Agreement, the Borrower is required to explain, in narrative form, the reasons for the modification and the impact of the change in the type of operating data or financial information being provided.

SECTION 4. Reporting of Notice Events.

(a) The occurrence of any of the following events with respect to the Bonds constitutes a Notice Event:

1. Principal and interest payment delinquencies;

2. Non-payment related defaults, if material;

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3. Unscheduled draws on debt service reserves reflecting financial difficulties;

4. Unscheduled draws on credit enhancements reflecting financial difficulties;

5. Substitution of credit or liquidity providers, or their failure to perform;

6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701- TEB) or other material notices and determinations with respect to the tax status of the securities or other material events affecting the tax status of the securities;

7. Modification to rights of the security holders, if material;

8. Bond calls, if material;

9. Defeasances;

10. Release, substitution, or sale of property securing repayment of the Bonds, if material;

11. Rating changes;

12. Tender Offers;

13. Bankruptcy, insolvency, receivership or similar event of the Borrower;

Note to subsection (a)(13) of this Section 4: For the purposes of the event described in subsection (a)(13) of this Section 4, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an Borrower member in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Borrower member, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Borrower member.

14. The consummation of a merger, consolidation or acquisition involving an Borrower member, or the sale of all or substantially all of the assets of the Borrower member, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material;

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15. Appointment of a successor or additional trustee or the change of name of a trustee, if material;

16. Incurrence of a Financial Obligation of the Borrower, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the Borrower, any of which affect Bondholders, if material; and

17. Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the Borrower, any of which reflect financial difficulties.

The Borrower shall, in a timely manner not in excess of ten business days after its occurrence, notify the Disclosure Dissemination Agent in writing upon the occurrence of a Notice Event. Such notice shall instruct the Disclosure Dissemination Agent to report the occurrence pursuant to subsection (c) and shall be accompanied by a Certification. Such notice or Certification shall identify the Notice Event that has occurred (which shall be any of the categories set forth in Section 2(c)(iv) of this Disclosure Agreement), include the text of the disclosure that the Borrower desires to make, contain the written authorization of the Borrower for the Disclosure Dissemination Agent to disseminate such information, and identify the date the Borrower desires for the Disclosure Dissemination Agent to disseminate the information (provided that such date is not later than the tenth business day after the occurrence of the Notice Event).

(b) The Disclosure Dissemination Agent is under no obligation to notify the Borrower or the Disclosure Representative of an event that may constitute a Notice Event. In the event the Disclosure Dissemination Agent so notifies the Borrower or the Disclosure Representative, such notified party will, by no later than the tenth business day after the occurrence of the Notice Event, if the Borrower determines that a Notice Event has occurred, instruct the Disclosure Dissemination Agent that (i) a Notice Event has not occurred and no filing is to be made or (ii) a Notice Event has occurred and the Disclosure Dissemination Agent is to report the occurrence pursuant to subsection (c) of this Section 4, together with a Certification. Such Certification shall identify the Notice Event that has occurred (which shall be any of the categories set forth in Section 2(c)(iv) of this Disclosure Agreement), include the text of the disclosure that the Borrower desires to make, contain the written authorization of the Borrower for the Disclosure Dissemination Agent to disseminate such information, and identify the date the Borrower desires for the Disclosure Dissemination Agent to disseminate the information (provided that such date is not later than the tenth business day after the occurrence of the Notice Event).

(c) If the Disclosure Dissemination Agent has been instructed by the Borrower as prescribed in subsection (a) or by the Borrower as prescribed in subsection (b) of this Section 4 to report the occurrence of a Notice Event, the Disclosure Dissemination Agent shall promptly file a notice of such occurrence with MSRB, in accordance with Section 2(c)(iv) hereof. This notice will be filed with a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-1.

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SECTION 5. CUSIP Numbers.

Whenever providing information to the Disclosure Dissemination Agent, including but not limited to Annual Reports, documents incorporated by reference in the Annual Reports, Audited Financial Statements, Notice Event notices, Voluntary Event Disclosure and Voluntary Financial Disclosure, the Borrower shall indicate the full name of the Bonds and the 9-digit CUSIP numbers for the Bonds as to which the provided information relates.

SECTION 6. Additional Disclosure Obligations.

The Borrower acknowledges and understands that other state and federal laws, including but not limited to the Securities Act of 1933 and Rule 10b-5 promulgated under the Securities Exchange Act of 1934, may apply to the Borrower, and that the duties and responsibilities of the Disclosure Dissemination Agent under this Disclosure Agreement do not extend to providing legal advice regarding such laws. The Borrower acknowledges and understands that the duties of the Disclosure Dissemination Agent relate exclusively to execution of the mechanical tasks of disseminating information as described in this Disclosure Agreement.

SECTION 7. Voluntary Filing.

(a) The Borrower may instruct the Disclosure Dissemination Agent to file a Voluntary Event Disclosure with the MSRB through EMMA from time to time pursuant to a Certification of the Disclosure Representative. Such Certification shall identify the Voluntary Event Disclosure (which shall be any of the categories set forth in Section 2(c)(vi) of this Disclosure Agreement), include the text of the disclosure that the Borrower desires to make and identify the date the Borrower desires for the Disclosure Dissemination Agent to disseminate the information. If the Disclosure Dissemination Agent has been instructed by the Borrower as prescribed in this Section 7(a) to file a Voluntary Event Disclosure, the Disclosure Dissemination Agent shall promptly file such Voluntary Event Disclosure with the MSRB in accordance with Section 2(c)(vi) hereof. This notice will be filed with a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-2.

(b) The Borrower may instruct the Disclosure Dissemination Agent to file a Voluntary Financial Disclosure with the MSRB through EMMA from time to time pursuant to a Certification of the Disclosure Representative. Such Certification shall identify the Voluntary Financial Disclosure (which shall be any of the categories set forth in Section 2(c)(vii) of this Disclosure Agreement), include the text of the disclosure that the Borrower desires to make, contain the written authorization of the Disclosure Dissemination Agent to disseminate such information, if applicable, and identify the date the Borrower desires for the Disclosure Dissemination Agent to disseminate the information. If the Disclosure Dissemination Agent has been instructed by the Borrower as prescribed in this Section 7(b) to file a Voluntary Financial Disclosure, the Disclosure Dissemination Agent shall promptly file such Voluntary Financial Disclosure with the MSRB in accordance with Section 2(c)(vii) hereof. This notice will be filed with a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-3.

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(c) The parties hereto acknowledge that the Borrower is not obligated pursuant to the terms of this Disclosure Agreement to file any Voluntary Event Disclosure pursuant to Section 7(a) hereof or any Voluntary Financial Disclosure pursuant to Section 7(b) hereof.

(d) Nothing in this Disclosure Agreement shall be deemed to prevent the Borrower from disseminating any other information through the Disclosure Dissemination Agent using the means of dissemination set forth in this Section 7, or including any other information in any Annual Report, Audited Financial Statements, Failure to File Event Notice or Notice Event notice in addition to that which is specifically required by this Disclosure Agreement. If the Borrower chooses to include any information in any Annual Report, Audited Financial Statements, Failure to File Event Notice or Notice Event notice in addition to that which is specifically required by this Disclosure Agreement or to file Voluntary Event Disclosure or Voluntary Financial Disclosure, the Borrower shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report, Audited Financial Statement, Voluntary Financial Disclosure, Voluntary Event Disclosure, Failure to File Event Notice or Notice Event notice.

SECTION 8. Termination of Reporting Obligation.

The obligations of the Borrower and the Disclosure Dissemination Agent under this Disclosure Agreement shall terminate with respect to the Bonds upon the legal defeasance, prior redemption or payment in full of all of the Bonds or when the Borrower is no longer an obligated person with respect to the Bonds.

SECTION 9. Remedies in Event of Default.

In the event of a failure of the Borrower or the Disclosure Dissemination Agent to comply with any provision of this Disclosure Agreement, the Holders’ rights to enforce the provisions of this Disclosure Agreement shall be limited solely to a right, by action in mandamus or for specific performance, to compel performance of the parties' obligation under this Disclosure Agreement. Any failure by a party to perform in accordance with this Disclosure Agreement shall not constitute a default on the Bonds or under any other document relating to the Bonds, and all rights and remedies shall be limited to those expressly stated herein.

SECTION 10. Duties, Immunities and Liabilities of Disclosure Dissemination Agent.

(a) The Disclosure Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement. The Disclosure Dissemination Agent’s obligation to deliver the information at the times and with the contents described herein shall be limited to the extent the Borrower has provided such information to the Disclosure Dissemination Agent as provided in this Disclosure Agreement. The Disclosure Dissemination Agent shall have no duty with respect to the content of any disclosures or notice made pursuant to the terms hereof. The Disclosure Dissemination Agent shall have no duty or obligation to review or verify any Information, or any other information, disclosures or notices provided to it by the Borrower and shall not be deemed to be acting in any fiduciary capacity for the Borrower, the Holders of the Bonds or any other party. The Disclosure Dissemination Agent shall have no responsibility for the Borrower’s failure to report to the Disclosure Dissemination Agent a

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Notice Event or a duty to determine the materiality thereof. The Disclosure Dissemination Agent shall have no duty to determine or liability for failing to determine whether the Borrower has complied with this Disclosure Agreement. The Disclosure Dissemination Agent may conclusively rely upon certifications of the Borrower at all times.

THE BORROWER AGREES TO INDEMNIFY AND SAVE THE DISCLOSURE DISSEMINATION AGENT AND ITS RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS, HARMLESS AGAINST ANY LOSS, EXPENSE AND LIABILITIES WHICH IT MAY INCUR ARISING OUT OF OR IN THE EXERCISE OR PERFORMANCE OF ITS POWERS AND DUTIES HEREUNDER, INCLUDING THE COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEYS FEES) OF DEFENDING AGAINST ANY CLAIM OF LIABILITY, BUT EXCLUDING LIABILITIES DUE TO THE DISCLOSURE DISSEMINATION AGENT’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

The obligations of the Borrower under this Section shall survive resignation or removal of the Disclosure Dissemination Agent and defeasance, redemption or payment of the Bonds.

(b) The Disclosure Dissemination Agent may, from time to time, consult with legal counsel (either in-house or external) of its own choosing in the event of any disagreement or controversy, or question or doubt as to the construction of any of the provisions hereof or its respective duties hereunder, and neither of them shall incur any liability and shall be fully protected in acting in good faith upon the advice of such legal counsel. The reasonable fees and expenses of such counsel shall be payable by the Borrower.

(c) All documents, reports, notices, statements, information and other materials provided to the MSRB under this Disclosure Agreement shall be provided in an electronic format through EMMA and accompanied by identifying information as prescribed by the MSRB.

SECTION 11. Amendment; Waiver.

Notwithstanding any other provision of this Disclosure Agreement, the Borrower and the Disclosure Dissemination Agent may amend this Agreement and any provision of this Agreement may be waived, if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws acceptable to each of the Borrower and the Disclosure Dissemination Agent to the effect that such amendment or waiver does not materially impair the interests of Holders of the Bonds and would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule; provided neither the Borrower nor the Disclosure Dissemination Agent shall be obligated to agree to any amendment modifying their respective duties or obligations without their consent thereto.

Notwithstanding the preceding paragraph, the Borrower and the Disclosure Dissemination Agent shall have the right to adopt amendments to this Disclosure Agreement necessary to comply with modifications to and interpretations of the provisions of the Rule as announced by the Securities and Exchange Commission from time to time.

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SECTION 12. Beneficiaries.

This Disclosure Agreement shall inure solely to the benefit of the Borrower, the Disclosure Dissemination Agent, the underwriter, and the Holders from time to time of the Bonds, and shall create no rights in any other person or entity.

SECTION 13. Governing Law.

This Disclosure Agreement shall be governed by the laws of the State of Delaware (without regard to conflicts of laws).

SECTION 14. Counterparts.

This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

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The Disclosure Dissemination Agent and the Borrower have caused this Disclosure Agreement to be executed, on the date first written above, by their respective officers duly authorized.

DIGITAL ASSURANCE CERTIFICATION, L.L.C., as Disclosure Dissemination Agent

By:______Name: Title:

CHRISTIANA CARE HEALTH SYSTEM, INC., as Borrower

By:______Name: Title:

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EXHIBIT A

NAME AND CUSIP NUMBERS OF BONDS

Name of Issuer: Delaware Health Facilities Authority Borrower: Christiana Care Health System, Inc. Name of Bond Issue: Revenue Bonds, Series 2020 (Christiana Care Health System) Date of Issuance: February __, 2020 Date of Official Statement: February __, 2020

Principal Due (______1) Amount CUSIP

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EXHIBIT B

NOTICE TO MSRB OF FAILURE TO FILE [QUARTERLY/ANNUAL] REPORT

Name of Issuer: Delaware Health Facilities Authority Borrower: Christiana Care Health System, Inc. Name of Bond Issue: Revenue Bonds, Series 2020 (Christiana Care Health System) Date of Issuance: February __, 2020 Date of Official Statement: February __, 2020 CUSIP Numbers:

NOTICE IS HEREBY GIVEN that the Borrower has not provided a [Quarterly/Annual] Report with respect to the above-named Bonds as required by the Agreement to Provide Continuing Disclosure, dated as of February 1, 2020, by and between the Borrower and Digital Assurance Certification, L.L.C., as Disclosure Dissemination Agent. The Borrower has notified the Disclosure Dissemination Agent that it anticipates that the [Quarterly/Annual] Report will be filed by ______.

Dated:______

Digital Assurance Certification, L.L.C., as Disclosure Dissemination Agent, on behalf of the Borrower

______

cc: Borrower

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EXHIBIT C-1 EVENT NOTICE COVER SHEET

This cover sheet and accompanying “event notice” will be sent to the MSRB, pursuant to Securities and Exchange Commission Rule 15c2-12(b)(5)(i)(C) and (D).

Issuer’s and Borrower’s Names: ______Issuer’s Six-Digit CUSIP Number: ______or Nine-Digit CUSIP Number(s) of the bonds to which this event notice relates: ______Number of pages attached: ______Description of Notice Events (Check One):

1. “Principal and interest payment delinquencies;” 2. “Non-Payment related defaults, if material;” 3. “Unscheduled draws on debt service reserves reflecting financial difficulties;” 4. “Unscheduled draws on credit enhancements reflecting financial difficulties;” 5. “Substitution of credit or liquidity providers, or their failure to perform;” 6. “Adverse tax opinions, IRS notices or events affecting the tax status of the security;” 7. “Modifications to rights of securities holders, if material;” 8. “Bond calls, if material;” 9. “Defeasances;” 10. “Release, substitution, or sale of property securing repayment of the securities, if material;” 11. “Rating changes;” 12. “Tender offers;” 13. “Bankruptcy, insolvency, receivership or similar event of the obligated person;” 14. “Merger, consolidation, or acquisition of the obligated person, if material;” and 15. “Appointment of a successor or additional trustee, or the change of name of a trustee, if material.”

____ Failure to provide [quarterly/annual] financial information as required.

I hereby represent that I am authorized by the issuer or its agent to distribute this information publicly: Signature: ______Name: ______Title: ______

Digital Assurance Certification, L.L.C. 315 E. Robinson Street Suite. 300 Orlando, FL 32801 407-515-1100

Date:

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EXHIBIT C-2 VOLUNTARY EVENT DISCLOSURE COVER SHEET

This cover sheet and accompanying “voluntary event disclosure” will be sent to the MSRB, pursuant to the Agreement to Provide Continuing Disclosure dated as of February 1, 2020 by and between the Borrower and DAC.

Issuer’s and Borrower’s Names: ______Issuer’s Six-Digit CUSIP Number: ______or Nine-Digit CUSIP Number(s) of the bonds to which this notice relates: ______Number of pages attached: ______Description of Voluntary Event Disclosure (Check One):

1. “amendment to continuing disclosure undertaking;” 2. “change in obligated person;” 3. “notice to investors pursuant to bond documents;” 4. “certain communications from the Internal Revenue Service;” 5. “secondary market purchases;” 6. “bid for auction rate or other securities;” 7. “capital or other financing plan;” 8. “litigation/enforcement action;” 9. “change of tender agent, remarketing agent, or other on-going party;” 10. “derivative or other similar transaction;” and 11. “other event-based disclosures.”

I hereby represent that I am authorized by the issuer or its agent to distribute this information publicly: Signature: ______Name: ______Title: ______

Digital Assurance Certification, L.L.C. 315 E. Robinson Street Suite. 300 Orlando, FL 32801 407-515-1100

Date:

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EXHIBIT C-3 VOLUNTARY FINANCIAL DISCLOSURE COVER SHEET

This cover sheet and accompanying “voluntary financial disclosure” will be sent to the MSRB, pursuant to the Agreement to Provide Continuing Disclosure dated as of February 1, 2020 by and between the Borrower and DAC.

Issuer’s and Borrower’s Names: ______Issuer’s Six-Digit CUSIP Number: ______or Nine-Digit CUSIP Number(s) of the bonds to which this notice relates: ______Number of pages attached: _____

____ Description of Voluntary Financial Disclosure (Check One): 1. “quarterly/monthly financial information;” 2. “change in fiscal year/timing of annual disclosure;” 3. “change in accounting standard;” 4. “interim/additional financial information/operating data;” 5. “budget;” 6. “investment/debt/financial policy;” 7. “information provided to rating agency, credit/liquidity provider or other third party;” 8. “consultant reports;” and 9. “other financial/operating data.”

I hereby represent that I am authorized by the issuer or its agent to distribute this information publicly: Signature: ______Name: ______Title: ______

Digital Assurance Certification, L.L.C. 315 E. Robinson Street Suite. 300 Orlando, FL 32801 407-515-1100

Date:

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APPENDIX G

INFORMATION REGARDING BOOK-ENTRY ONLY SYSTEM

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APPENDIX G

INFORMATION REGARDING BOOK-ENTRY SYSTEM

The information in the following section has been prepared from information made available by DTC for use in securities offering documents, and the Authority, the Bond Trustee, the Underwriters and the Corporation take no responsibility for the accuracy or completeness thereof. The Authority, the Bond Trustee, the Underwriters and the Corporation cannot and do not give any assurances that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners either (a) payments of interest, principal or premium, if any, with respect to the Bonds or (b) certificates representing ownership interest in or other confirmation of ownership interest in the Bonds, or that they will so do on a timely basis or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Official Statement. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC.

When the Bonds are issued, ownership interests will be available to purchasers only through a book-entry-only system (the “Book-Entry System”) maintained by DTC. DTC will act as initial securities depository for the Bonds. Initially, the Bonds will be issued as fully-registered bonds, registered in the name of Cede & Co. (DTC’s partnership nominee). One fully-registered bond will be issued for each maturity of the Bonds, each in the aggregate original principal amount of such maturity of the Bonds and will be deposited with DTC. The following discussion will not apply to the Bonds if issued in certificate form due to the discontinuance of the DTC Book-Entry system, as described below.

General

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. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a S&P Global Ratings rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Neither the information on DTC’s websites, nor any links from those websites, is part of this Official Statement, and such information cannot be relied upon to be accurate as of the date of this Official Statement, nor should any such information be relied upon to make investment decisions regarding the Bonds.

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

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

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. The Obligated Group Members will not have any responsibility or obligation to such Direct Participants and Indirect Participants or the persons for whom they act as nominees with respect to the Bonds. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of the notices be provided directly to them.

Redemption notices shall be sent 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 any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Authority 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 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Principal of, Redemption Price and interest payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Bond Trustee or other paying agent, if any, on payable dates in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant

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and not of DTC nor its nominee, or the Bond Trustee or other paying agent, if any, the Obligated Group Members or the Authority, subject to any statutory, or regulatory requirements as may be in effect from time to time. Payment of principal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority 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 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 Authority and 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 Authority and the Bond Trustee may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository) for the Bonds. In that event, Bond certificates will be printed and delivered.

Limitations

For so long as the Bonds of a series are registered in the name of DTC or its nominee, Cede & Co., or such other nominee as may be required by an authorized representative of DTC, the Authority and the Bond Trustee will recognize only DTC or its nominee, Cede & Co., as the registered owner of such series of the Bonds for all purposes, including payments, notices and voting.

Under the Bond Indenture, payments made by the Bond Trustee to DTC or its nominee will satisfy the Authority’s obligations under the Bond Indenture and the Corporation’s obligations under the Loan Agreement and on the 2020 Obligations to the extent of the payments so made.

Neither the Authority, the Underwriter, the Corporation nor the Bond Trustee will have any responsibility or obligation with respect to (i) the accuracy of the records of DTC, its nominee or any DTC Participant or Indirect Participant with respect to any beneficial ownership interest in any Bond, (ii) the delivery to any DTC Participant or Indirect Participant or any other Person, other than an owner, as shown in the Bond Register, of any notice with respect to any Bond including, without limitation, any notice of redemption, tender, purchase or any event which would or could give rise to a tender or purchase right or option with respect to any Bond, (iii) the payment to any DTC Participant or Indirect Participant or any other Person, other than an owner, as shown in the Bond Register, of any amount with respect to the principal of, premium, if any, or interest on, or the Purchase Price of, any Bond or (iv) any consent given by DTC as registered owner.

Prior to any discontinuation of the book-entry-only system described above, the Authority and the Bond Trustee may treat DTC as, and deem DTC to be, the absolute owner of the Bonds for all purposes whatsoever, including, without limitation, (i) the payment of principal of, premium, if any, and interest on the Bonds, (ii) giving notices of redemption and other matters with respect to the Bonds, (iii) registering transfers with respect to the Bonds and (iv) the selection of Bonds for redemption.

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DELAWARE HEALTH FACILITIES AUTHORITY • Revenue and Refunding Bonds (Christiana Care Health System), Series 2020A and Taxable Series 2020B