(Benedictine University Project) Series 2013A

NEW ISSUE – BOOK-ENTRY ONLY RATING: Standard & Poor’s: BBB (stable) See “RATING” herein

In the opinion of Ice Miller LLP, Chicago, Illinois, Bond Counsel, under federal statutes, decisions, regulations and rulings, interest on the Series 2013A Bonds is excludable for federal income tax purposes from gross income pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”). Interest on the Series 2013A Bonds is not treated as an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, but is taken into account in determining adjusted current earnings for the purpose of computing the federal alternative minimum tax imposed on certain corporations. Such exclusion is conditioned on continuing compliance with the Tax Covenants (as defined herein). Failure to comply with the Tax Covenants could cause interest on the Series 2013A Bonds to lose the exclusion from gross income for federal income tax purposes retroactive to the date of issue. Interest on the Series 2013A Bonds is not exempt from income taxation in the State of Illinois. See “TAX MATTERS” and APPENDIX D herein.

$28,645,000 ILLINOIS FINANCE AUTHORITY Revenue Bonds (Benedictine University Project) Series 2013A

Dated: Date of Delivery Due: October 1, as shown on the inside cover The Illinois Finance Authority Revenue Bonds (Benedictine University Project) Series 2013A (the “Series 2013A Bonds”) are being issued by the Illinois Finance Authority (the “Authority”), a body politic and corporate created and existing under the laws of the State of Illinois, pursuant to a Trust Indenture dated as of November 1, 2013 (the “Indenture”) between the Authority and U.S. Bank National Association, as trustee (the “Trustee”). The Series 2013A Bonds are being issued to provide Benedictine University, an Illinois not-for-profit corporation (the “University”) and Founders Woods, Ltd., an Illinois not-for-profit corporation (“Founders Woods” and, together with the University, the “Borrowers”) with a loan to (a) finance a portion of the costs of the construction of a new academic building on the University’s main campus located at 5700 College Road, Lisle, Illinois (the “Capital Project”), (b) finance the current refunding in whole of the Refunded Bonds (as defined herein) (the “Refunding Project”), (c) fund a debt service reserve fund for the benefit of the Series 2013A Bonds, and (d) pay certain expenses incurred in connection with the issuance of the Series 2013A Bonds (collectively, the “Project”).

The Series 2013A Bonds will be issued in fully registered form, registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York (“DTC”), which will act as securities depository for the Series 2013A Bonds. Individual purchases of beneficial ownership interests in the Series 2013A Bonds will be made in global book-entry form only in principal denominations of $5,000 and any integral multiple of $5,000 in excess thereof, and individual purchasers will not receive physical delivery of bond certificates. Payments of the principal of, and interest on, the Series 2013A Bonds will be made by the Trustee, to Cede & Co., as nominee for DTC, for disbursement to DTC participants and subsequent disbursement to the beneficial owners of the Series 2013A Bonds.

The Series 2013A Bonds will bear interest from their date of delivery, payable semiannually on each April 1 and October 1, commencing April 1, 2014.

The Series 2013A Bonds are subject to mandatory sinking fund redemption and optional redemption prior to maturity as described herein. See “THE SERIES 2013A BONDS” herein.

SEE “CERTAIN BONDHOLDERS’ RISKS” HEREIN FOR A DISCUSSION OF CERTAIN RISK FACTORS WHICH SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SERIES 2013A BONDS. EACH PROSPECTIVE INVESTOR SHOULD CONSIDER THE RISKS INVOLVED TO DETERMINE THE SUITABILITY OF INVESTING IN THE SERIES 2013A BONDS.

THE AUTHORITY IS OBLIGATED TO PAY THE PRINCIPAL OF AND INTEREST ON THE SERIES 2013A BONDS AND OTHER COSTS INCIDENTAL THERETO ONLY FROM THE SOURCES SPECIFIED IN THE INDENTURE, AND EXCEPT TO SUCH LIMITED EXTENT, THE SERIES 2013A BONDS AND THE INTEREST THEREON DO NOT CONSTITUTE AN INDEBTEDNESS OR AN OBLIGATION, GENERAL OR MORAL, OR A PLEDGE OF THE FULL FAITH OR A LOAN OF CREDIT OF THE AUTHORITY, THE STATE OF ILLINOIS OR ANY POLITICAL SUBDIVISION THEREOF, WITHIN THE PURVIEW OF ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR PROVISION. THE SERIES 2013A BONDS AND THE INTEREST THEREON ARE SPECIAL, LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY OUT OF THE RECEIPTS, REVENUES AND INCOME SPECIFIED IN THE INDENTURE. NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWERS OF THE STATE OF ILLINOIS OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE SERIES 2013A BONDS OR OTHER COSTS INCIDENTAL THERETO. NO OWNER OF ANY SERIES 2013A BOND SHALL HAVE THE RIGHT TO COMPEL THE TAXING POWER, IF ANY, OF THE AUTHORITY, THE STATE OF ILLINOIS OR ANY POLITICAL SUBDIVISION THEREOF TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2013A BONDS. THE AUTHORITY DOES NOT HAVE THE POWER TO LEVY TAXES FOR ANY PURPOSES WHATSOEVER.

This cover page is for quick reference only. It is not a summary of this Official Statement. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision.

The Series 2013A Bonds are offered when, as, and if issued by the Authority and accepted by George K. Baum & Company, as underwriter (the “Underwriter”), subject to prior sale, withdrawal or modification of the offer without notice, and to the approval of legality by Ice Miller LLP, Chicago, Illinois, Bond Counsel, and to certain other conditions. Certain legal matters will be passed upon for the Authority by Schiff Hardin LLP, Chicago, Illinois, for the Borrowers by Cahill Law Office, Chicago, Illinois, and for the Underwriter by Ballard Spahr LLP, Philadelphia, Pennsylvania. Delivery of the beneficial interests in the Series 2013A Bonds through the facilities of DTC against payment therefor is expected on or about November 20, 2013.

Dated: October 30, 2013 MATURITY DATES, AMOUNTS, INTEREST RATES, YIELDS, PRICES AND CUSIPS

$28,645,000 ILLINOIS FINANCE AUTHORITY REVENUE BONDS (BENEDICTINE UNIVERSITY PROJECT) SERIES 2013A

$13,330,000 Serial Bonds Maturity Date (October 1) Principal Amount Interest Rate Yield Price CUSIP† 2014 $ 865,000 3.000% 0.960% 101.750 45203HVX7 2015 1,040,000 3.000 1.470 102.801 45203HVY5 2016 1,145,000 4.000 1.870 105.910 45203HVZ2 2017 1,185,000 4.000 2.370 105.982 45203HWA6 2018 1,220,000 4.000 2.970 104.629 45203HWB4 2019 1,175,000 5.000 3.420 108.326 45203HWC2 2020 1,235,000 5.000 3.800 107.185 45203HWD0 2021 1,280,000 5.375 4.100 107.555 45203HWE8 2022 1,380,000 5.375 4.310* 106.264 45203HWF5 2023 1,355,000 5.375 4.480* 105.232 45203HWG3 2024 1,450,000 5.375 4.640* 104.272 45203HWH1

$4,700,000 6.000% Term Bond due October 1, 2028; Yield 5.070%**; Price 103.957; CUSIP† 45203HWJ7 $10,615,000 6.250% Term Bond due October 1, 2033; Yield 5.720%*; Price 102.965; CUSIP† 45203HWK4

† Copyright 2013, American Bankers Association. CUSIP data herein are provided by Standard & Poor’s CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. The CUSIP numbers listed above are being provided solely for the convenience of Bondholders only at the time of issuance of the Series 2013A Bonds and none of the Authority, the Borrowers or the Underwriter makes any representation with respect to such numbers or undertake any responsibility for their accuracy now or at any time in the future. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Series 2013A Bonds 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 certain maturities of the Series 2013A Bonds.  Yield calculated to the first optional redemption date of October 1, 2020. **Yield calculated to the first optional redemption date of October 1, 2018.

This Official Statement does not constitute an offer to sell the Series 2013A Bonds or the solicitation of an offer to buy, nor shall there be any sale of the Series 2013A 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. No dealer, salesman or any other person has been authorized to give any information or to make any representation other than those contained in this Official Statement in connection with the reoffering of the Series 2013A Bonds and, if given or made, that information or representation must not be relied upon.

The information set forth herein relating to the Authority under the headings “THE AUTHORITY” and “LITIGATION - The Authority” has been obtained from the Authority. All other information herein has been obtained from the Borrowers and other sources deemed to be reliable, and is not to be construed as a representation by the Authority or the Underwriter. The Authority has not reviewed or approved any information in this Official Statement except information relating to the Authority under the headings “THE AUTHORITY” and “LITIGATION - The Authority”. The information herein is 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 or the Borrowers since the date hereof.

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 Borrowers since the date of this Official Statement.

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

IN CONNECTION WITH THE OFFERING OF THE SERIES 2013A BONDS, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2013A BONDS REOFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

______

CAUTIONARY STATEMENTS 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

ii include, among others, the information under the caption “CERTAIN BONDHOLDERS’ RISKS” in the forepart of this Official Statement and certain information included in APPENDIX A to this Official Statement, including without limitation information under the caption “Management’s Discussion of Financial Performance.”

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

TABLE OF CONTENTS Page

INTRODUCTORY STATEMENT ...... 1 PLAN OF FINANCE ...... 6 ESTIMATED SOURCES AND USES OF FUNDS ...... 7 THE SERIES 2013A BONDS ...... 7 ANNUAL DEBT SERVICE REQUIREMENT ...... 13 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2013A BONDS...... 13 THE AUTHORITY ...... 17 THE CAPITAL PROJECT ...... 18 THE BORROWERS ...... 18 CERTAIN BONDHOLDERS’ RISKS ...... 19 LITIGATION ...... 25 TAX MATTERS ...... 26 UNDERWRITING ...... 28 RATING ...... 28 CERTAIN LEGAL MATTERS ...... 29 RELATIONSHIPS AMONG PARTIES ...... 29 FINANCIAL STATEMENTS ...... 30 CONTINUING DISCLOSURE AGREEMENT ...... 30 MISCELLANEOUS ...... 32

APPENDIX A BENEDICTINE UNIVERSITY AND FOUNDERS WOODS, LTD. APPENDIX B CONSOLIDATED FINANCIAL STATEMENTS APPENDIX C DEFINITIONS OF CERTAIN TERMS; SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE AND THE LOAN AGREEMENT APPENDIX D PROPOSED FORM OF BOND COUNSEL OPINION APPENDIX E FORM OF CONTINUING DISCLOSURE AGREEMENT APPENDIX F BOOK-ENTRY ONLY SYSTEM

iii

OFFICIAL STATEMENT

$28,645,000 ILLINOIS FINANCE AUTHORITY REVENUE BONDS (BENEDICTINE UNIVERSITY PROJECT) SERIES 2013A

INTRODUCTORY STATEMENT

Purpose of this Official Statement

This Official Statement, including the cover page and the Appendices hereto, is provided to furnish certain information in connection with the issuance and sale by the Illinois Finance Authority (the “Authority”), a body politic and corporate duly created and validly existing under and by virtue of the Illinois Finance Authority Act, 20 ILCS 3501/801-1 et seq., as supplemented and amended (the “Act”), of its Illinois Finance Authority Revenue Bonds (Benedictine University Project) Series 2013A (the “Series 2013A Bonds”) pursuant to a Trust Indenture dated as of November 1, 2013 (the “Indenture”), between the Authority and U.S. Bank National Association, as trustee (the “Trustee”), for the purpose of providing Benedictine University, an Illinois not-for-profit corporation (the “University”) and Founders Woods, Ltd., an Illinois not- for-profit corporation (“Founders Woods” and, together with the University, the “Borrowers”) with a loan to (a) finance a portion of the costs of the construction of a new academic building on the University's main campus located at 5700 College Road, Lisle, Illinois (the “Capital Project”), (b) finance the current refunding in whole of the Refunded Bonds (as defined herein) (the “Refunding Project”), (c) fund a debt service reserve fund for the benefit of the Series 2013A Bonds, and (d) pay certain expenses incurred in connection with the issuance of the Series 2013A Bonds (collectively, the “Project”).

The Authority will lend the proceeds from the sale of the Series 2013A Bonds to the Borrowers under the terms of the Loan Agreement dated as of November 1, 2013 (the “Loan Agreement”), between the Borrowers and the Authority, through the purchase of the Borrowers’ Promissory Note, Series 2013A (the “Series 2013A Note”), in the aggregate principal amount of the Series 2013A Bonds, issued under and pursuant to the Loan Agreement.

A description of the Borrowers, the Authority and the Series 2013A Bonds, and summaries of the Indenture and the Loan Agreement are included in this Official Statement, including the Appendices attached hereto. Such information, summaries and descriptions do not purport to be comprehensive or definitive.

All references in this Official Statement, including the Appendices attached hereto, to the specified documents are qualified in their entirety by reference to each such document, copies of which are available from the Trustee, and all references to the Series 2013A Bonds are qualified in their entirety by reference to the definitive forms thereof and the information with respect thereto included in the aforesaid documents. Definitions of certain terms used in this Official Statement are set forth in APPENDIX C hereto.

This Official Statement is intended to be used for Series 2013A Bonds that are registered in the name of a nominee of The Depository Trust Company (“DTC”).

Benedictine University

The University, which was founded in 1887, is a co-educational, undergraduate institution committed to a broad liberal arts tradition and to leadership among private colleges. The University’s main campus is located 25 miles west of downtown Chicago in Lisle, Illinois on approximately 108 acres of land. The University is an organization described under section 501(c)(3) of the Internal Revenue Code.

The student body now numbers 3,830 undergraduate students hailing from all 50 states and 24 countries. The student to faculty ratio is 14:1 with approximately 45% of the fulltime faculty holding terminal degrees. The University’s planned small size encourages interaction between students and faculty, and its location in Lisle gives students the advantages of a suburban location with exposure to the cultural and academic opportunities available in a major metropolitan area. See APPENDIX A herein for additional information concerning the University.

Founders Woods

Founders Woods, an Illinois nonprofit entity, was formed in June 2000 primarily to provide housing for the students of the University. The present board of Founders Woods is comprised of individuals who are all members of the University's board. It is under consideration to dissolve Founders Woods as a separate legal entity and fully absorb the operations into the University. If and when this occurs, it is the expectation that all of Founders Woods assets will be transferred to the University. For additional information with respect to Founders Woods, see APPENDIX A.

The Capital Project

The Capital Project comprises the development of an approximately 130,000 square foot academic building located on the University’s campus, in Lisle, Illinois. Construction of the Capital Project is expected to be completed in the summer of 2015, to facilitate a Fall Semester 2015 opening. Maintaining the renowned aesthetic of the campus, the new building will upgrade the University’s academic building inventory and will provide students with state-of-the-art academic facilities and amenities that are critical in student recruitment and retention. See APPENDIX A hereto under the heading “THE CAPITAL PROJECT” for additional information regarding the Capital Project.

The Refunding Project

The Refunding Project consists of the current refunding of all of the outstanding (i) County of DuPage, Illinois, Variable Rate Demand Revenue Bonds (Benedictine University Building Project) Series 1999 issued on July 22, 1999 in the original aggregate principal amount of $28,000,000, $17,050,000 of which are currently outstanding (the “Series 1999 Bonds”), and (ii) the Illinois Finance Authority (successor to Illinois Educational Facilities Authority) Variable Rate Demand Revenue Bonds, Founders Woods, Ltd. – Benedictine University Project, Series 2000 issued on August 30, 2000 in the original aggregate principal amount of $14,350,000, $9,200,000 of which are currently outstanding (the “Series 2000 Bonds” and, together with the Series 1999 Bonds, the “Refunded Bonds”). The Refunded Bonds will be called for redemption

on the date of closing of the Series 2013A Bonds (the “Redemption Date”) at a redemption price equal to 100% of the par amount of the Refunded Bonds to be redeemed, plus accrued interest to the Redemption Date.

Simultaneous Issuance of Series 2013B Bonds

Concurrently with the issuance of the Series 2013A Bonds, the Authority will issue $30,000,000 in aggregate principal amount of its Revenue Bonds (Benedictine University Project) Series 2013B (the “Series 2013B Bonds” and, together with the Series 2013A Bonds, the “Series 2013 Bonds”) under a separate bond and loan agreement (the “Bond and Loan Agreement”), which together with the related Additional Covenant Agreement contains covenants different from those contained in the Loan Agreement. The Series 2013B Bonds, which will be purchased by certain financial institutions, will bear interest at a variable rate and are subject to tender at the option of the holders thereof beginning in November 2020. The proceeds of the Series 2013B Bonds will be loaned by the Authority to the Borrowers and used to (i) pay a portion of the costs of the Capital Project, (ii) refund the County of DuPage, Illinois, Educational Facility Revenue Bonds (Benedictine University Project) Recovery Zone – Series 2010A issued on June 30, 2010 in the original aggregate principal amount of $10,438,000, $10,107,000 of which are currently outstanding (the “Series 2010A Bonds”), and (iii) pay certain costs incurred in connection with the issuance of the Series 2013B Bonds.

The funds and accounts established for the benefit of the Series 2013A Bonds under the Indenture are not available to pay debt service on the Series 2013B Bonds and the funds and accounts established for the benefit of the Series 2013B Bonds under the Bond and Loan Agreement are not available to pay debt service on the Series 2013A Bonds. The Series 2013B Bonds are not being offered pursuant to this Official Statement.

Outstanding Indebtedness; Additional Bonds and Additional Indebtedness

Concurrently with the issuance of the Series 2013 Bonds, the University will use its own funds to redeem in full (i) the Illinois Finance Authority Variable Rate Demand Revenue Bonds (Benedictine University Project), Series 2006 issued on January 23, 2006 in the original aggregate principal amount of $6,500,000, $5,210,000 of which are currently outstanding (the “Series 2006 Bonds”) and (ii) the County of DuPage, Illinois, Educational Facility Revenue Bonds (Benedictine University Project) Recovery Zone –Series 2010B issued on June 30, 2010 in the original aggregate principal amount of $2,857,000, $2,107,000 of which are currently outstanding (the “Series 2010B Bonds”). Following the issuance of the Series 2013 Bonds and the refunding of the indebtedness expected to occur simultaneously with the issuance of the Series 2013 Bonds, the only long-term indebtedness that the Borrowers will have outstanding is the Series 2013 Bonds.

Springfield College in Illinois (“Springfield”) is an Illinois not-for-profit corporation and an affiliate of the University. Beginning with the fiscal year ended May 31, 2013, it was determined that the University had a controlling economic interest in Springfield. As a result, the financial statements of Springfield were consolidated with those of the University. The University will be reviewing the present structure and organizational arrangements between the two organizations. Springfield will continue to so exist unless and until the implementation of its

dissolution as a corporate entity in accordance with applicable law (including but not limited to the disposition of all assets and liabilities). Springfield currently has three long-term notes outstanding with an aggregate principal balance of $1,935,179 (the “Springfield Notes”). Should a determination be made to dissolve Springfield and transfer its assets to the University, the University would assume the liabilities of Springfield, including the obligations under the Springfield Notes. See APPENDIX A hereto for further information regarding Springfield and its relationship to the University.

The Indenture permits the issuance of additional bonds on a parity with the Series 2013A Bonds (the “Additional Bonds” and, together with the Series 2013A Bonds, the “Bonds”) if certain conditions are met. See APPENDIX C under the heading “THE INDENTURE – Issuance of Additional Bonds.” Because the Additional Bonds, if issued, will be on a parity with the Series 2013A Bonds, the holders of the Additional Bonds may be entitled to an equal and ratable claim to the trust estate established under the Indenture.

In addition, the Loan Agreement permits the Borrowers to incur additional Indebtedness if certain conditions are met. See APPENDIX C under the heading “THE LOAN AGREEMENT – Additional Indebtedness.”

Debt Service Reserve Fund for Series 2013A Bonds

The Trustee will establish and maintain so long as any of the Series 2013A Bonds are Outstanding a separate debt service reserve fund for the benefit of the Series 2013A Bonds (the “Debt Service Reserve Fund”). The Debt Service Reserve Fund will be initially funded with proceeds of the Series 2013A Bonds in an amount equal to the Debt Service Reserve Fund Requirement. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2013A BONDS – Debt Service Reserve Fund for the Series 2013A Bonds” herein.

Financial Covenants

The Borrowers have made certain financial and reporting covenants in the Loan Agreement in connection with the issuance of the Series 2013A Bonds. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2013A BONDS – Certain Financial Covenants” herein.

State of Illinois Not Liable on the Series 2013A Bonds

The Series 2013A Bonds, together with all principal and interest thereon and premium, if any, with respect thereto, are special limited obligations of the Authority secured by the Loan Agreement and the Series 2013A Note and shall always be payable solely from the payments and prepayments to be made on the Series 2013A Note from amounts payable under the Loan Agreement (other than Unassigned Rights) and from moneys and investments on deposit in certain funds and accounts pledged to the Trustee under the Indenture, except funds held, or required to be deposited, in the Rebate Fund, are and shall always be a valid claim of the respective Owners thereof only against the moneys held by the Trustee, the payments and prepayments to be made on the Series 2013A Note and such other sources, which are pledged and assigned pursuant to the Indenture for the equal and ratable payment of the Series 2013A Bonds, and shall be used for no other purpose than to pay the principal of, premium, if any, and

interest on the Series 2013A Bonds, except as may be otherwise expressly authorized in the Indenture and the Loan Agreement. The State of Illinois (the “State”) shall not in any event be liable for the payment of the principal of, premium, if any, or interest on any of the Series 2013A Bonds or for the performance of any pledge, mortgage, obligation or agreement undertaken by the Authority.

The Series 2013A Bonds are issued pursuant to the Act and a resolution duly adopted by the Authority (the “Bond Resolution”) and the Series 2013A Bonds and the obligation to pay principal and interest thereon and any premium with respect thereto do not and shall never constitute an indebtedness or obligation, general or moral, or a pledge of the faith and credit of the Authority, the State or any political subdivision thereof within the purview of any constitutional or statutory limitation or provision or a charge against its general credit or the taxing powers, if any, of the State, the Authority, or any other political subdivision thereof, and shall never give rise to any pecuniary liability of the Authority, but shall be secured as aforesaid and neither the Authority, the State nor any other political subdivision thereof shall be liable for the payments of principal of and premium, if any, and interest on the Series 2013A Bonds and the Series 2013A Bonds are payable from no other source, but are special, limited obligations of the Authority, payable solely out of the trust estate and receipts of the Authority derived pursuant to the Series 2013A Note and the Loan Agreement. No owner of the Series 2013A Bonds shall have the right to compel any exercise of the taxing power, if any, of the Authority, the State or any other political subdivision thereof to pay the Series 2013A Bonds or the interest or premium, if any, thereon. The Authority does not have the power to levy taxes for any purpose whatsoever.

No recourse shall be had for the payment of the principal of, premium, if any, and interest on any of the Series 2013A Bonds or for any claim based thereon or upon any obligation, covenant or agreement contained in the Indenture, the Loan Agreement, the Series 2013A Note or the Bond Purchase Agreement against any past, present or future member, officer, agent or employee of the Authority, or any incorporator, member, officer, employee, director or trustee of any successor corporation, as such, either directly or through the Authority or any successor corporation, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such incorporator, member, officer, employee, director, agent or trustee as such has been expressly waived and released as a condition of and consideration for the execution of the Indenture or the Loan Agreement and the issuance of the Series 2013A Bonds.

Bondholders’ Risks

Certain risks are inherent in the purchase of the Series 2013A Bonds. See the information herein under the caption, “CERTAIN BONDHOLDERS’ RISKS” for a discussion of certain of these risks.

Book-Entry Only

The Series 2013A Bonds are being initially issued and will be reoffered in book-entry form through The Depository Trust Company (“DTC”). See APPENDIX F – “BOOK-ENTRY ONLY SYSTEM.”

Continuing Disclosure

The Borrowers will enter into a continuing disclosure undertaking which implements the provisions of the Securities and Exchange Commission Rule 15c2-12(b)(5) (the “Rule”). The Borrowers will undertake all responsibilities for any continuing disclosure to beneficial owners of the Series 2013A Bonds as described below, and the Authority shall have no liability to the beneficial owners or any other person with respect to such disclosures. See “CONTINUING DISCLOSURE AGREEMENT” herein and “APPENDIX E – FORM OF CONTINUING DISCLOSURE AGREEMENT.”

Availability of Documents

The descriptions and summaries of various documents set forth in this Official Statement do not purport to be conclusive or definitive and reference is made to each such document for the complete details of all terms and conditions thereof. Further descriptions of the Indenture and the Loan Agreement are set forth in APPENDIX C hereto. All references herein to the Series 2013A Bonds, the Indenture, the Loan Agreement and Series 2013A Note are qualified in their entirety by such documents, copies of which are available from the Underwriter during the initial offering period and thereafter may be examined or obtained at the expense of the person requesting the same at the corporate trust office of the Trustee in Chicago, Illinois.

A summary of certain provisions of the Indenture and the Loan Agreement, including definitions of certain terms relating to the Series 2013A Bonds, is attached hereto as APPENDIX C.

U.S. Bank National Association, by acceptance of its duties as Trustee under the Indenture, has not reviewed this Official Statement and has made no representations as to the information contained herein, including, but not limited to, any representations as to the financial feasibility or related activities.

PLAN OF FINANCE

The proceeds of the Series 2013A Bonds will be loaned to the Borrowers and used to (i) finance a portion of the costs of the Capital Project, including reimbursement for funds previously expended, (ii) refund all of the Series 1999 Bonds and Series 2000 Bonds (collectively, the “Refunded Bonds”), (iii) fund a debt service reserve fund for the benefit of the Series 2013A Bonds; and (iv) pay certain expenses incurred in connection with the issuance of the Series 2013A Bonds. The Refunded Bonds will be called for redemption on the date of closing of the Series 2013A Bonds (the “Redemption Date”) at a redemption price equal to 100% of the par amount of the Refunded Bonds to be redeemed, plus accrued interest to the Redemption Date.

Simultaneously with the issuance of the Series 2013A Bonds, (i) the Authority will issue the Series 2013B Bonds, the proceeds of which will be applied to pay a portion of the costs of the Capital Project, to redeem in full the Series 2010A Bonds and to pay certain costs incurred in connection with the issuance of the Series 2013B Bonds, and (ii) the University will use its own funds to redeem in full the Series 2006 Bonds and the Series 2010B Bonds.

ESTIMATED SOURCES AND USES OF FUNDS

The schedule below contains the estimated sources and uses of funds resulting from the sale of the Series 2013A Bonds (exclusive of investment earnings):

Sources of Funds:

Par Amount of Series 2013A Bonds $28,645,000.00 Original Issue Premium 1,242,561.70

Total Sources of Funds $29,887,561.70

Uses of Funds:

Deposit to Construction Account of Project Fund(1) $549,859.94 Deposit to Refunding Account of Project Fund 26,250,000.00 Deposit to Debt Service Reserve Fund 2,646,681.26 Costs of Issuance(2) 441,020.50

Total Uses of Funds $29,887,561.70

(1) The remaining costs of the Capital Project will be paid from proceeds of the Series 2013B Bonds and funds provided by the University. (2) Includes the Underwriter’s discount, various legal fees, Authority fees, printing costs, Trustee fees, rating agency fees and other miscellaneous costs relating to the issuance of the Series 2013A Bonds.

THE SERIES 2013A BONDS

The following is a summary of certain provisions of the Series 2013A Bonds while such Series 2013A Bonds are registered in the name of a nominee of DTC. Reference is made to the Series 2013A Bonds for the complete text thereof and to the Indenture for a more detailed description of such provisions. Reference is made hereby to APPENDIX C attached hereto for the definitions of certain capitalized terms used under this caption and for a brief description of certain provisions of the Indenture and the Loan Agreement. The discussion herein is qualified by such reference.

General

The Series 2013A Bonds will be dated their date of issuance, will bear interest at the respective rates set forth on the inside cover page hereof, and will mature, subject to prior maturity or redemption, on October 1 of each of the years and in the principal amounts set forth on the inside cover page hereof. Each Series 2013A Bond will bear interest from the interest payment date to which interest has been paid as of the date on which it is authenticated, or if it is authenticated prior to the first date on which interest is to be paid, from the date of issuance. Interest on the Series 2013A Bonds will be payable semiannually on April 1 and October 1 of each year, commencing on April 1, 2014. Interest on the Series 2013A Bonds will be calculated on the basis of a 360-day year consisting of twelve 30-day months. The Series 2013A Bonds

will be available only in fully registered form in authorized denominations of $5,000 and any integral multiple of $5,000 in excess thereof (the “Authorized Denominations”).

The principal of, premium, if any, and interest on the Series 2013A Bonds shall be payable in any coin or currency of the United States of America which, at the respective dates of payment thereof, is legal tender for the payment of public and private debts, and such principal and premium, if any, shall be payable at the designated corporate trust office of the Trustee, or of any alternate Paying Agent named in such Series 2013A Bonds or subsequently appointed. Payment of the interest on the Series 2013A Bonds on any interest payment date will be made to the person appearing on the Series 2013A Bond registration books of the Authority as the Owner as of the close of business of the Trustee on the Record Date and shall be paid by (a) check or draft mailed on the applicable interest payment date to the Owner at such Owner’s address as it appears on such registration books or at such other address as is furnished the Trustee in writing by such Owner, or (b) in the case of an interest payment to any Owner of $1,000,000 or more in aggregate principal amount of Series 2013A Bonds as of the close of business of the Trustee on the Record Date for a particular interest payment date, by wire transfer to such Owner upon written request from such Owner, which written request shall contain the wire transfer address (which shall be in the continental United States of America) to which such Owner wishes to have such wire directed and which written request is received not less than 15 days prior to such interest payment date (it being understood that such request may refer to multiple interest payments), except, in each case, that, if and to the extent that there shall be a default in the payment of the interest due on such interest payment date, such defaulted interest shall be paid to the Owners in whose name any such Series 2013A Bonds are registered at the close of business on the fifth Business Day immediately preceding the date of payment of such defaulted interest.

So long as the Series 2013A Bonds are registered in the name of Cede & Co. as nominee of DTC, the initial securities depository for the Series 2013A Bonds, principal of, premium, if any, and interest on the Series 2013A Bonds will be paid in accordance with the customary procedures of DTC. See APPENDIX F – “BOOK-ENTRY ONLY SYSTEM” to this Official Statement.

As to any Series 2013A Bond, the person in whose name the ownership of such Series 2013A Bond shall be registered on the registration books maintained by the Trustee shall be deemed and regarded as the absolute Owner of such Series 2013A Bond for all purposes, and payment of the principal of, premium, if any, and interest on any such Series 2013A Bond shall be made only to or upon the order of the Owner of such Series 2013A Bond or its legal representative. All such payments shall be valid and effective to satisfy and discharge the liability upon such Series 2013A Bond, including the premium, if any, and interest on such Series 2013A Bond, to the extent of the sum or sums so paid.

The Trustee shall keep the registration books for the Series 2013A Bonds at its designated corporate trust office, initially located at Chicago, Illinois. Subject to the conditions contained in the Indenture, the Series 2013A Bonds may be transferred or exchanged for a like aggregate amount of one or more Series 2013A Bonds of the same series in different Authorized Denominations. While the Series 2013A Bonds are held in a book-entry only system, transfers and exchanges of beneficial interests in the Series 2013A Bonds shall be made in accordance with the customary procedures of DTC. In the event that the Series 2013A Bonds are not held in

a book-entry only system, transfers and exchanges shall be made in accordance with terms set forth in the Indenture.

No service charge shall be made to the Owner of any Series 2013A Bond requesting an exchange, registration or transfer of any Series 2013A Bond but the Authority and the Trustee may require payment of a sum sufficient to cover any tax, fee or other governmental charge required to be paid with respect to such exchange, registration or transfer.

Mandatory Sinking Fund Redemption of Series 2013A Bonds

The Trustee shall, on October 1 of each of the years 2025 through 2028, apply moneys then on deposit in the Bond Sinking Fund to the payment at maturity or to the mandatory sinking fund redemption of the Series 2013A Bonds maturing on October 1, 2028, selected by lot in such manner as may be determined by the Trustee to be fair and equitable, at a redemption price of 100% of the principal amount of such Series 2013A Bonds being redeemed plus accrued interest to the redemption date and without premium.

DATE AMOUNT OF (OCTOBER 1) BOND SINKING FUND REQUIREMENT 2025 $1,035,000 2026 1,125,000 2027 1,220,000 2028* 1,320,000 ______* Maturity.

The Trustee shall, on October 1 of each of the years 2029 through 2033, apply moneys then on deposit in the Bond Sinking Fund to the payment at maturity or to the mandatory sinking fund redemption of the Series 2013A Bonds maturing on October 1, 2033, selected by lot in such manner as may be determined by the Trustee to be fair and equitable, at a redemption price of 100% of the principal amount of such Series 2013A Bonds being redeemed plus accrued interest to the redemption date and without premium.

DATE AMOUNT OF (OCTOBER 1) BOND SINKING FUND REQUIREMENT 2029 $1,430,000 2030 1,550,000 2031 1,525,000 2032 1,655,000 2033* 4,455,000 ______* Maturity.

Moneys on deposit in the Bond Sinking Fund on October 1 of each year specified above shall be applied to the payment of the Series 2013A Bonds as described in the Indenture. Payment of Series 2013A Bonds through the Bond Sinking Fund shall be without premium.

The Authority shall receive a credit against its obligation to have moneys on deposit in the Bond Sinking Fund in an amount sufficient to pay the Series 2013A Bonds (at maturity or upon mandatory sinking fund redemption) on any date (a) to the extent that the Borrowers deliver to the Trustee for cancellation on or prior to any such date one or more Series 2013A Bonds maturing or subject to mandatory sinking fund redemption on such date or (b) to the extent Series 2013A Bonds maturing or subject to mandatory sinking fund redemption on such date are optionally redeemed as described below and, in the case of a Series 2013A Bond so cancelled by the Trustee or redeemed pursuant to this section, in such order of the mandatory sinking fund installments for such Series 2013A Bond as the Borrowers shall designate or, if the Borrowers do not so designate, in such order of mandatory sinking fund installments as may be determined by the Trustee to be fair and equitable.

Optional Redemption of Series 2013A Bonds

The Series 2013A Bonds maturing on and after October 1, 2021 (except for the term bond maturing on October 1, 2028) shall be subject to redemption prior to maturity, in whole or in part (and if in part, in Authorized Denominations and by maturities or portions thereof designated by the Borrowers, or if not so designated, then in the inverse order of their maturities, and by lot within a maturity in such manner as shall be determined by the Trustee to be fair and equitable), on any date occurring on or after October 1, 2020, by the Authority at the direction of the Borrowers at a redemption price equal to 100% (expressed as a percentage of the principal amount of such Series 2013A Bonds to be redeemed) plus accrued interest thereon to the redemption date, without premium, to the extent of optional prepayments of the Series 2013A Note in accordance with the Loan Agreement.

The Series 2013A Bonds maturing on October 1, 2028 shall be subject to redemption prior to maturity, in whole or in part (and if in part, in Authorized Denominations and by maturities or portions thereof designated by the Borrowers, or if not so designated, then in the inverse order of their maturities, and by lot within a maturity in such manner as shall be determined by the Trustee to be fair and equitable), on any date occurring on or after October 1, 2018, by the Authority at the direction of the Borrowers at a redemption price equal to 100% (expressed as a percentage of the principal amount of such Series 2013A Bonds to be redeemed) plus accrued interest thereon to the redemption date, without premium, to the extent of optional prepayments of the Series 2013A Note in accordance with the Loan Agreement.

Notice of Redemption; Effect

Not less than 30 days nor more than 60 days prior to any redemption date, the Trustee shall cause notice of the call for redemption, identifying each Series 2013A Bond or portion thereof to be redeemed, given in the name of the Authority, to be sent by first class mail, postage prepaid, to the Owner of each Series 2013A Bond to be redeemed at the address of such Owner shown on the Bond Register; provided, however, that neither the failure to give any such notice nor any defect in any notice so given with respect to any Series 2013A Bond shall affect the validity of the redemption of any other Series 2013A Bonds as to which proper notice was given.

All notices of redemption shall be dated and shall state: (i) the redemption date; (ii) the redemption price; (iii) if less than all outstanding Series 2013A Bonds are to be redeemed, the

identification (and, in the case of partial redemption, the respective principal installment amounts) of the Series 2013A Bonds to be redeemed; (iv) that on the redemption date the redemption price will become due and payable upon each such Series 2013A Bond or portion thereof called for redemption, and that interest thereon shall cease to accrue from and after such date; (v) the place where such Series 2013A Bonds are to be surrendered for payment of the redemption price, which place of payment shall be the designated corporate trust office of the Trustee; and (vi) the CUSIP number and the bond certificate number of the Series 2013A Bonds to be redeemed.

Prior to the date that any notice of optional redemption (except any notice that refers to Series 2013A Bonds that are the subject of an advance refunding or a current refunding) is first mailed, as a condition precedent to the mailing of such notice, the Borrowers will deposit with the Trustee an amount of money sufficient to pay the redemption price of all the Series 2013A Bonds or portions of Series 2013A Bonds which are to be redeemed pursuant to such notice, or such notice shall state that any redemption is conditional upon such funds being deposited with the Trustee on or prior to such redemption date and that failure to so deposit such funds shall not constitute an event of default under the Indenture. The Trustee shall immediately notify the applicable Owners of Series 2013A Bonds of the failure to satisfy any such condition and of the resulting cancellation of any such redemption.

If notice of redemption has been given and all conditions described in such notice, if any, have been satisfied, the Series 2013A Bonds (or portions of the Series 2013A Bonds) so called for redemption will cease to bear interest, will no longer be protected by the Indenture and will not be deemed to be Outstanding under the provisions of the Indenture, and the Owners of such Series 2013A Bonds will have the right only to receive the redemption price of such Series 2013A Bonds plus accrued interest through the date fixed for redemption.

State of Illinois Not Liable on the Series 2013A Bonds

The Series 2013A Bonds are issued pursuant to the Act and the Bond Resolution and the Series 2013A Bonds and the obligation to pay principal and interest thereon and any premium

with respect thereto do not and shall never constitute an indebtedness or obligation, general or moral, or a pledge of the faith and credit of the Authority, the State or any political subdivision thereof, within the purview of any constitutional or statutory limitation or provision or a charge against its general credit or the taxing powers, if any, of the State, the Authority, or any other political subdivision thereof, and shall never give rise to any pecuniary liability of the Authority, but shall be secured as aforesaid and neither the Authority, the State nor any other political subdivision thereof shall be liable for the payments of principal of and premium, if any, and interest on the Series 2013A Bonds and the Series 2013A Bonds are payable from no other source, but are special, limited obligations of the Authority, payable solely out of the trust estate and receipts of the Authority derived pursuant to the Series 2013A Note and the Loan Agreement. No owner of the Series 2013A Bonds shall have the right to compel any exercise of the taxing power, if any, of the Authority, the State or any other political subdivision thereof to pay the Series 2013A Bonds or the interest or premium, if any, thereon. The Authority does not have the power to levy taxes for any purpose whatsoever.

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ANNUAL DEBT SERVICE REQUIREMENT

The following table sets forth, for each fiscal year ending May 31, the amounts required for the payment of principal and interest due on the Series 2013A Bonds and the Series 2013B Bonds.

Fiscal Year Ended Series 2013A Series 2013B May 31 Bonds Bonds Total(1) 2014 $567,241 $320,222 $887,464 2015 2,410,856 880,000 3,290,856 2016 2,557,281 880,000 3,437,281 2017 2,623,781 880,000 3,503,781 2018 2,617,181 980,000 3,597,181 2019 2,604,081 1,080,000 3,684,081 2020 2,505,306 1,178,280 3,683,586 2021 2,505,056 1,174,840 3,679,896 2022 2,484,781 1,196,540 3,681,321 2023 2,513,294 1,167,380 3,680,674 2024 2,414,791 1,260,500 3,675,291 2025 2,434,406 1,251,900 3,686,306 2026 1,949,388 1,734,700 3,684,088 2027 1,974,588 1,708,900 3,683,488 2028 1,999,238 1,683,100 3,682,338 2029 2,023,038 1,657,300 3,680,338 2030 2,048,750 1,631,500 3,680,250 2031 2,075,625 1,605,700 3,681,325 2032 1,954,531 1,727,320 3,681,851 2033 1,985,156 1,696,360 3,681,516 2034 4,594,219 1,665,400 6,259,619 2035 - 2,577,928 2,577,928 2036 - 2,577,826 2,577,826 2037 - 2,575,488 2,575,488 2038 - 2,575,828 2,575,828 2039 - 2,573,760 2,573,760 2040 - 2,574,198 2,574,198 2041 - 2,576,970 2,576,970 2042 - 2,576,990 2,576,990 2043 - 2,574,258 2,574,258 2044 - 2,578,602 2,578,602 Total (1) $48,842,588 $53,121,790 $101,964,379

(1) Certain totals may not add due to rounding.

SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2013A BONDS

The Series 2013A Bonds are special limited obligations of the Authority and are payable solely from (i) payments or prepayments to be made by the Borrowers on the Series 2013A Note pledged under the Indenture; (ii) payments made by the Borrowers under the Loan Agreement (other than payments relating to Unassigned Rights); and (iii) certain funds and accounts pledged to the Trustee under the Indenture. The Series 2013A Bonds will constitute a valid claim of the respective Owners thereof against the moneys held by the Trustee under the Indenture, the payments and prepayments on the Series 2013A Note and such other sources which are pledged

and assigned under the Indenture for the equal and ratable payment of the Series 2013A Bonds and may be used for no purpose other than to pay principal of, premium, if any, and interest on the Series 2013A Bonds, except as otherwise authorized in the Indenture.

The Series 2013A Bonds are secured by a pledge and assignment of the Series 2013A Note and an assignment by the Authority of its rights under the Loan Agreement (other than Unassigned Rights) to the Trustee pursuant to the Indenture. The payments on the Series 2013A Note are required to be sufficient to pay the principal of, premium, if any, and interest on the Series 2013A Bonds when due.

As of the date of issuance, no portion of the Borrowers’ buildings or other property is mortgaged or pledged as security for its obligations under the Series 2013A Note or the Loan Agreement.

The Borrowers’ obligation to make payments under the Loan Agreement and the Series 2013A Note is an unsecured general obligation of each Borrower, and requires the Borrowers to make payments thereunder in amounts sufficient to pay when due, the principal of, premium, if any, and interest on all Series 2013A Bonds issued under the Indenture.

THE SERIES 2013A BONDS, ANY PREMIUM THEREON AND THE INTEREST THEREON CONSTITUTE SPECIAL, LIMITED OBLIGATIONS OF THE AUTHORITY AND, EXCEPT TO SUCH LIMITED EXTENT, DO NOT CONSTITUTE INDEBTEDNESS OR AN OBLIGATION, GENERAL OR MORAL, OR A PLEDGE OF THE FULL FAITH OR A LOAN OF CREDIT OF THE AUTHORITY, THE STATE OF ILLINOIS OR ANY POLITICAL SUBDIVISION THEREOF, WITHIN THE PURVIEW OF ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR PROVISION. THE AUTHORITY IS OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE SERIES 2013A BONDS AND OTHER COSTS INCIDENTAL THERETO ONLY FROM THE SOURCES SPECIFIED IN THE INDENTURE. NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWERS OF THE AUTHORITY, THE STATE OF ILLINOIS OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE SERIES 2013A BONDS. NO OWNER OF ANY SERIES 2013A BOND SHALL HAVE THE RIGHT TO COMPEL THE TAXING POWER OF THE STATE OF ILLINOIS OR ANY POLITICAL SUBDIVISION THEREOF TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2013A BONDS. THE AUTHORITY DOES NOT HAVE THE POWER TO LEVY TAXES FOR ANY PURPOSE WHATSOEVER.

Debt Service Reserve Fund

The “Debt Service Reserve Fund Requirement” means (a) the lesser of $2,646,681.26 or (b) the sum of (i) the least of (A) the maximum amount of principal and interest which shall be payable during the current or any succeeding Bond Year on all Series 2013A Bonds then outstanding, (B) an amount equal to 10% of the proceeds of the Series 2013A Bonds or (C) an amount equal to 125% of the average annual debt service with respect to the Series 2013A Bonds, plus (ii) for each series of Additional Bonds then outstanding under the Indenture which is entitled to the benefits and security of the Debt Service Reserve Fund (determined in

accordance with the provisions of the Indenture), the least of (A) the maximum amount of principal and interest which shall be payable during the current or any succeeding Bond Year on such series of Additional Bonds, (B) an amount equal to 10% of the proceeds of such series of Additional Bonds, or (C) an amount equal to 125% of the average annual debt service with respect to such Additional Bonds in each Bond Year calculated on the date of issuance of the Additional Bonds; provided, however, that the Debt Service Reserve Fund Requirement shall never be in excess of the amount equal to the maximum amount of principal and interest which shall be payable during the current or any succeeding Bond Year on all Bonds outstanding which are entitled to the benefits and security of the Debt Service Reserve Fund.

Except as provided in the Indenture, moneys on deposit in the Debt Service Reserve Fund shall be used only to make up any deficiencies in the Interest Fund and the Bond Sinking Fund (in that order).

Moneys on deposit in the Debt Service Reserve Fund shall be invested in Qualified Investments subject to compliance with the provisions of the Indenture. Investments in the Debt Service Reserve Fund shall be valued by the Trustee on the first Business Day of April and October of each year, on the basis of fair market value and marked to market (which valuation shall take into account any accrued and unpaid interest). Guaranteed investment contracts, letters of credit, surety bonds and other investment agreements constituting “Qualified Investments” in the Debt Service Reserve Fund shall be valued at the amount which is available to be drawn thereunder. If on any valuation date there is less than 95% of the Debt Service Reserve Fund Requirement on deposit in the Debt Service Reserve Fund established by the Indenture by reason of a change in the value of any securities in the Debt Service Reserve Fund, the Borrowers have agreed in the Loan Agreement to deliver to the Trustee, within 60 days of the date of determination of such deficiency, an amount sufficient to restore the amount in the Debt Service Reserve Fund to 100% of the Debt Service Reserve Fund Requirement. Prior to making any such deposit with the Trustee, the Borrowers (so long as a Borrower is not in default under the Series 2013A Note or under the Loan Agreement) may request the Trustee to determine the then existing market value of investments in the Debt Service Reserve Fund for the purpose of determining the amount of deposit, if any, then needed to be made to restore the amount then on deposit in the Debt Service Reserve Fund to the Debt Service Reserve Requirement. If at any time any amount on deposit in the Debt Service Reserve Fund is transferred to the Interest Fund or the Bond Sinking Fund (other than deposits of income pursuant to the Indenture), the Borrowers have agreed in the Loan Agreement to deliver directly to the Trustee an amount at least equal to the amount of such transfer as soon as reasonably possible and in any event in not more than 12 substantially equal consecutive monthly installments beginning with the first day of the first month after the month in which such transfer was made.

See APPENDIX C under the headings “THE INDENTURE – Disposition of Revenues - Debt Service Reserve Fund” and “THE LOAN AGREEMENT - Deposits to Debt Service Reserve Fund.”

Certain Financial Covenants

Pursuant to the Loan Agreement, the Borrowers have agreed to comply with certain financial covenants. A complete summary of the covenants and certain related definitions are contained in APPENDIX C herein.

Debt Service Coverage Ratio. The Borrowers covenant and agree in the Loan Agreement that, as of the end of each Fiscal Year, they will have a Debt Service Coverage Ratio of not less than 1.10:1 (the “Required Level”). Within 150 days after the last day of each Fiscal Year of the Borrower, the Borrowers shall, concurrently with the delivery of their annual audited financial statements, provide to the Authority and the Trustee, a written certificate of an Authorized Officer of the Borrowers evidencing that the Borrowers’ Debt Service Coverage Ratio is at least the Required Level.

If the Borrowers are unable to evidence compliance with the Debt Service Coverage Ratio summarized above, the Borrowers shall within 60 days furnish a written certificate of an Authorized Officer of the Borrowers evidencing that the Borrowers have achieved a Debt Service Coverage Ratio at least equal to the Required Level in the period subsequent to the end of the prior Fiscal Year. If the Borrowers are unable to provide such evidence within such time, they will promptly retain an Independent Consultant to make a report and recommendations (the “Consultant Report”) with respect to increasing the Borrowers’ Debt Service Coverage Ratio to at least the Required Level. Such recommendations shall be made no later than sixty (60) days following the date of engagement of such Consultant, by which date the Borrowers shall file a copy of the Consultant Report with the Trustee. If the Consultant Report states that governmental restrictions are applicable or have been imposed which make it impossible to achieve the Required Level, the Required Level shall be reduced to the maximum coverage permitted by such governmental restrictions but in no event to less than 1.00:1. Within thirty (30) days of receipt of such Consultant Report, the Borrowers shall deliver to the Trustee a written report (the “Borrowers Report”) setting forth in detail the Borrowers’ response to the Consultant Report and the proposed steps that the Borrowers intend to take to increase the Debt Service Coverage Ratio to the Required Level. Thereafter, the Borrowers shall file a report at the end of each Fiscal Year and at the end of each sixth month of each Fiscal Year of the Borrowers demonstrating the progress made in implementing the Borrowers Report, until such time as the Borrowers achieve the Required Level.

The Borrowers further covenant in the Loan Agreement that they will cause copies of the Consultant Report and the Borrowers Report to be filed with the Municipal Securities Rulemaking Board (the “MSRB”) through its Electronic Municipal Market Access system for municipal securities disclosure (“EMMA”) (or through any other electronic format or system prescribed by the MSRB).

No event of default under the Loan Agreement with respect to the Debt Service Coverage Ratio covenant described above shall be deemed to have occurred so long as (x) the Borrowers engage the Independent Consultant, deliver the Borrowers Report, and in good faith implement the Borrowers Report and (y) the Debt Service Coverage Ratio in each Fiscal Year is at least 1.00:1.

If the Borrowers fail to achieve a Debt Service Coverage Ratio of at least 1.00:1, such failure shall constitute an event of default under the Loan Agreement.

Negative Pledge. Except for Permitted Encumbrances, the Borrowers will not grant, convey or create or permit to be granted, conveyed or created or remain, and will at its sole cost and expense promptly discharge, any Lien on any portion of the Core Campus.

Additional Indebtedness. The Borrowers covenant and agree that they will not incur or assume any additional Indebtedness except as provided in the Loan Agreement. See APPENDIX C under the heading “THE LOAN AGREEMENT –Additional Indebtedness.”

THE AUTHORITY

The Authority is a body politic and corporate of the State of Illinois. The Authority was created under the Illinois Finance Authority Act, as amended from time to time (the “Act”), which consolidated seven of the State’s previously existing financing authorities (the “Predecessor Authorities”). All bonds, notes or other evidences of indebtedness of the Predecessor Authorities were assumed by the Authority effective January 1, 2004. Under the Act, the Authority may not have outstanding at any one time bonds for any of its corporate purposes in an aggregate principal amount exceeding $28,150,000,000 (subject to change, from time to time, by acts of the State Legislature), excluding bonds issued to refund the bonds of the Authority or bonds of the Predecessor Authorities. Pursuant to the Act, the Authority is governed by a 15-member board appointed by the Governor of the State of Illinois with the advice and consent of the State Senate. Presently, 15 members have been duly appointed and no vacancies exist. The members receive no compensation for the performance of their duties but are entitled to reimbursement for all necessary expenses incurred in connection with the performance of such duties.

The Authority may from time to time issue bonds as provided in the Act for the purposes set forth in the Act. The Series 2013A Bonds of the Authority as described herein are special, limited obligations of the Authority payable solely from the specific sources and revenues of the Authority specified in the Bond Resolution and Indenture authorizing the issuance of such bonds. Any bonds issued by the Authority (and any premium thereon and the interest thereon) do not constitute indebtedness or an obligation, general or moral, or a pledge of the full faith or a loan of credit of the State of Illinois or any political subdivision thereof, within the purview of any constitutional or statutory limitation or provision. No Owner of any Series 2013A Bond shall have the right to compel any taxing power of the State of Illinois or any political subdivision thereof to pay the principal of, premium, if any or interest on the Series 2013A Bonds. The Authority has no taxing power.

The Authority makes no warranty or representation, whether express or implied, with respect to the Project or the use thereof. Further, the Authority has not prepared any material for inclusion in this Official Statement, except that material under the headings “THE AUTHORITY” and “LITIGATION - The Authority.” The distribution of this Official Statement has been duly approved and authorized by the Authority. Such approval and authorization does not, however, constitute a representation or approval by the Authority of the accuracy or

sufficiency of any information contained herein except to the extent of the material under the headings referenced in this paragraph.

The offices of the Authority are located at Two Prudential Plaza, 180 North Stetson Avenue, Suite 2555, Chicago, Illinois 60601, and its telephone number is (312) 651-1300.

Certain legal matters with respect to the Bonds will be passed upon for the Authority by its special counsel Schiff Hardin LLP, Chicago, Illinois.

THE CAPITAL PROJECT

The Capital Project will consist of an approximately 130,000 square foot, academic building located on the University’s campus in Lisle, Illinois. Construction of the Capital Project is expected to be completed in the Summer of 2015 to facilitate a Fall Semester opening.

Subject to the rights reserved to the Borrowers in the Loan Agreement to not complete the Capital Project or a portion thereof, in the event the money in the Construction Account of the Project Fund available for payment of the costs of the Capital Project, together with proceeds of the Series 2013B Bonds and other available funds of the University, shall not be sufficient to make such payment in full, the Borrowers agree to pay directly, or to deposit moneys in the Construction Account of the Project Fund for the payment of, such costs of completing the Capital Project as may be in excess of the moneys available therefor in the Construction Account of the Project Fund.

The Authority makes no warranty or representation, whether express or implied, with respect to the Capital Project or the location, use, operation, design, workmanship, merchantability, fitness, suitability or use for particular purpose, condition or durability thereof or title thereto.

THE BORROWERS

The University

The University is a co-educational, undergraduate institution, committed to a broad liberal arts tradition. The University is located 25 miles west of downtown Chicago in Lisle, Illinois on approximately 108 acres. The University is an organization described under section 501(c)(3) of the Internal Revenue Code. The student body now numbers 3,830 undergraduate students hailing from all 50 states and 24 countries. For additional information with respect to the University, see APPENDIX A.

Founders Woods

be transferred to the University. For additional information with respect to Founders Woods, see APPENDIX A.

Borrowers’ Obligations Under the Series 2013A Note

The Borrowers’ obligations under the Series 2013A Note are unsecured general obligations of each of the Borrowers, on a parity with other unsecured contractual obligations of each of the Borrowers, payable from all legally available revenues of each of the Borrowers. For certain financial information with respect to the Borrowers, see APPENDIX B – “CONSOLIDATED FINANCIAL STATEMENTS.”

CERTAIN BONDHOLDERS’ RISKS

General

EACH INVESTOR SHOULD CONSIDER THE RISKS INVOLVED TO DETERMINE THE SUITABILITY OF INVESTING IN THE SERIES 2013A BONDS. Each prospective investor should carefully examine this Official Statement, including the Appendices hereto, and his or her own financial condition (including the diversification of his or her investment portfolio) in order to make a judgment as to whether the Series 2013A Bonds are an appropriate investment.

The Borrowers have identified and summarized below certain “Bondholders’ Risks” that could adversely affect the operations of the Borrowers or the Series 2013A Bonds which should be considered by prospective investors. The following discussion is not intended to be exhaustive, but includes certain major factors which should be considered along with other factors set forth elsewhere in this Official Statement, including the Appendices hereto.

The Borrowers are subject to a wide variety of federal and state regulatory actions and legislative and policy changes by those governmental and private agencies that administer college funding. The future financial condition of the Borrowers could be adversely affected by, among other things, changes in the method and amount of payments to the Borrowers, the financial viability of the costs of a college education, increased competition from other colleges and universities, the costs associated with providing a college education, demand for such programs, future changes in the economy and demographic changes. These factors and others may adversely affect payment by the Borrowers under the Loan Agreement and, consequently, on the Series 2013A Bonds. In addition, the tax-exempt status of the Borrowers and, therefore, of the Series 2013A Bonds, could be adversely affected by, among other things, an adverse determination by a governmental entity, non-compliance with governmental regulations or legislative changes.

Special Limited Obligations of the Authority

The Series 2013A Bonds constitute special limited obligations of the Authority. The Authority will pay the Series 2013A Bonds from amounts pledged therefor under the Indenture, including payments derived from the Loan Agreement (other than Unassigned Rights). None of the State or any other political subdivision of the State, including, without limitation, the Authority, shall be obligated to pay the Series 2013A Bonds or the interest thereon except from

amounts pledged for such payment under the Indenture, and neither the faith and credit nor the taxing power, if any, of the State, or any other political subdivision of the State, including, without limitation, the Authority, is pledged to the payment of the principal of or the interest or premium, if any, on the Series 2013A Bonds, except to the extent of the Borrowers’ obligations under the Loan Agreement and the Series 2013A Note (other than Unassigned Rights). Under the Loan Agreement, the Borrowers will be required to make payments upon the Series 2013A Note and to be liable therefor at times and in amounts sufficient to pay when due all principal (whether at maturity, by mandatory sinking fund redemption or otherwise) of and interest and premium, if any, on all Series 2013A Bonds from time to time Outstanding under the Indenture.

Revenue Adequacy; Reliance on Tuition

Timely payment of principal of, premium, if any, and interest on the Series 2013A Bonds will be dependent upon the Borrowers’ ability to make such payments and the availability of other assets. Payments on the Series 2013A Bonds from amounts on deposit under the Indenture will depend solely on the amount and timing of payments from the Borrowers under the Series 2013A Note and interest paid or earnings on the various funds and accounts held pursuant to the Indenture.

The adequacy of the Borrowers’ revenues will largely depend on the amount of future tuition revenue the University receives. Such revenue, in sum, will depend primarily on the University’s ability to charge sufficient rates for tuition and to maintain enrollment levels. Future enrollment levels will depend on the number of students applying to the University and accepting offers of admission. A number of factors including, without limitation, levels of tuition rates and other fees, competition from other colleges and universities, a change in the number of college age students and general economic conditions will influence the number of applicants to the University.

Insurance and Legal Proceedings

The Borrowers will carry property and general liability insurance in amounts deemed adequate by the Borrowers and consistent with industry practices. However, there can be no assurance that any current or future claims will be covered by or not exceed applicable insurance coverage. The Borrowers’ obligation to make payments on the Series 2013A Note will not, however, be impacted by any casualty.

Competition

Competition among institutions of higher education is intense nationally and within the Midwestern United States. Colleges and universities compete primarily based on location, tuition rates, financial aid, degree offerings and academic reputation. To the extent that competitors have or achieve an advantage with respect to any of these factors, the Borrowers could be adversely affected. In addition, competitive pressures could result in tuition reductions or the inability to raise tuition, which could adversely affect the Borrowers’ financial results. There can be no assurance that the Borrowers will continue to attract and retain the numbers of students that are needed to generate revenues sufficient to pay the Series 2013A Note and thus to

make payments of debt service on the Series 2013A Bonds or other bonds issued for the benefit of the Borrowers.

Facility Damage

Colleges and universities are highly dependent on the condition and functionality of their physical facilities. Damage from earthquakes, floods, fires, other natural causes, deliberate acts of destruction, or various facilities system failures may have a material adverse impact on operations, financial conditions and results of operations.

Market for the Series 2013A Bonds

There can be no assurance that a secondary market exists, or that the Series 2013A Bonds can be sold for any particular price. Accordingly, a purchaser of the Series 2013A Bonds should recognize that an investment in the Series 2013A Bonds may be illiquid and be prepared to have his or her funds committed until the Series 2013A Bonds mature or are redeemed.

Unless the conditions set forth in the following sentence are satisfied, a purchaser of the Series 2013A Bonds should recognize that by its acquisition of such Series 2013A Bond or a beneficial interest therein, the purchaser is agreeing that it will not resell or otherwise transfer its Series 2013A Bond and, in each case, in accordance with the applicable securities laws of any state of the United States or any other applicable jurisdiction.

Potential Environmental Risks

The Borrowers are not aware of any environmental problems on the university’s campus. The value of the University’s property could be reduced by environmental problems, including environmental problems discovered in the future. There are other potential risks relating to environmental liability associated with the ownership or operation of, or secured lending with respect to, any real property. If hazardous substances are found to be located on real property, owners or operators of, or secured lenders regarding, such property may be held liable for costs and other liabilities relating to such hazardous substances on a strict liability basis.

Enforceability of Remedies

The Series 2013A Bonds are payable from payments to be made under the Loan Agreement. The Series 2013A Bonds and the Borrowers’ obligations with respect thereto are secured by the Series 2013A Note. Pursuant to the Indenture, the Series 2013A Bonds are secured by the trust estate established thereunder. The practical realization of value upon any default will depend upon the exercise of various remedies specified by the Loan Agreement and the Indenture. These and other remedies may, in many respects, require judicial actions, which are often subject to discretion and delay. Moreover, the lien and security interest in the trust estate established under the Indenture is subject to a prior lien to secure the payment of all fees and expenses of the Trustee. Under existing law (including, particularly, federal bankruptcy law), the remedies specified by the Indenture and the Loan Agreement may not be readily available or may be limited. A court may decide not to order the specific performance of the covenants contained in the Indenture and the Loan Agreement. The various legal opinions to be delivered concurrently with the delivery of the Series 2013A Bonds will be qualified as to the

enforceability of the various legal instruments by limitations imposed by state and federal laws, rulings, and decisions affecting remedies, including judicial discretion in the application of the principles of equity, and by bankruptcy, reorganization, or other laws affecting the enforcement of creditors’ rights generally.

Issuance of Additional Notes; Incurrence of Additional Indebtedness

The Borrowers may, pursuant to the provisions of the Indenture, authenticate and deliver from time to time Additional Notes. The Indenture permits the issuance of additional bonds on a parity with the Series 2013A Bonds (the “Additional Bonds” and, together with the Series 2013A Bonds, the “Bonds”) if certain conditions are met. See APPENDIX C under the heading “THE INDENTURE – Issuance of Additional Bonds.” Because the Additional Bonds, if issued, will be on a parity with the Series 2013A Bonds, the holders of the Additional Bonds may be entitled to an equal and ratable claim to the trust estate established under the Indenture.

Tax-Exempt Status and Other Tax Matters

Maintenance of the Tax-Exempt Status of the Borrowers. The tax-exempt status of the Series 2013A Bonds depends, among other things, upon maintenance by each Borrower of its status as an organization described in Section 501(c)(3) of the Code. The maintenance of such status is contingent on compliance with general rules promulgated under the Code and related regulations regarding the organization and operation of tax-exempt entities, including their operation for charitable and other permissible purposes and their avoidance of transactions that may cause their earnings or assets to inure to the benefit of private individuals.

The Internal Revenue Service (the “IRS”) has periodically conducted audit and other enforcement activity regarding tax-exempt organizations. Such 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 targeted organizations. These audits examine a wide range of possible issues, including tax- exempt bond financing of partnerships and joint ventures, retirement plans, employee benefits, employment taxes, political contributions and other matters.

If the IRS were to find that either of the Borrowers has participated in activities in violation of certain regulations or rulings, the tax-exempt status of the Borrowers could be jeopardized. Although the IRS has not frequently revoked the 501(c)(3) tax-exempt status of nonprofit educational corporations, it could do so in the future. Loss of tax-exempt status by the Borrowers potentially could result in loss of tax-exemption of the Series 2013A Bonds.

In some cases, the IRS has imposed substantial monetary penalties on tax-exempt organizations in lieu of revoking their tax-exempt status. In those cases, the IRS and exempt organizations entered into settlement agreements requiring the organization to make substantial payments to the IRS.

In lieu of revocation of exempt status, the IRS may impose penalty excise taxes on certain “excess benefit transactions” involving 501(c)(3) organizations and “disqualified persons.” An excess benefit transaction is one in which a disqualified person or entity receives more than fair market value from the exempt organization, pays the exempt organization less than fair market value for property or services, or shares the net revenues of the tax-exempt entity. A disqualified person is a person (or an entity) who is in a position to exercise substantial influence over the affairs of the exempt organization during the five years preceding an excess benefit transaction. The statute imposes excise taxes on the disqualified person and any “organization manager” who knowingly participates in an excess benefit transaction. These rules do not penalize the exempt organization itself, so there would be no direct impact on the Borrowers or the tax status of the Series 2013A Bonds if an excess benefit transaction were subject to IRS enforcement, pursuant to these “intermediate sanctions” rules.

State and Federal Legislation. In recent years, the activities of non-profit tax-exempt corporations have been subject to increasing scrutiny by federal, state, and local legislatures and administrative agencies. Proposals have been made from time to time that would restrict the definition of tax-exempt or non-profit status, impose new restrictions on the activities of tax- exempt corporations, and/or tax or otherwise burden the activities of such corporations. There can be no assurance that future changes in the law, rules, regulations, interpretations, and policies relating to the definition, activities, and/or taxation of nonprofit corporations will not have a material adverse effect on the future operations of the Borrowers.

Real Property Tax-Exemption. State, county and local taxing authorities undertake audits and reviews of the operations of tax-exempt organizations with respect to their real property tax- exemptions. In some cases, particularly where authorities are dissatisfied with the level of charitable activity provided by a nonprofit organization, the real property tax-exempt status of the organization has been questioned. The majority of the real property of the Borrowers is currently treated as exempt from real property taxation. The real property tax- exemptions of the Borrowers have not been and, to the knowledge of management, are not under challenge or investigation.

However, it is not possible to predict the scope or effect of future legislative or regulatory actions with respect to taxation of nonprofit corporations or their assets. There can be no assurance that future changes in the laws and regulations of state or local governments will not materially adversely affect the financial condition of the Borrowers by requiring payment of income, local property or other taxes.

Maintenance of Tax-Exempt Status of Interest on the Series 2013A Bonds. The Code imposes a number of requirements that must be satisfied for interest on state and local obligations, such as the Series 2013A Bonds, to be excludable from gross income for federal income tax purposes. These requirements include limitations on the use of bond proceeds, limitations on the investment earnings of bond proceeds prior to expenditure, a requirement that certain investment earnings on bond proceeds be paid periodically to the United States Treasury, and a requirement that issuers file an information report with the IRS. The Borrowers have covenanted in certain of the documents referred to herein that they will comply with such requirements. Future failure by the Borrowers to comply with the requirements stated in the Code and related regulations, rulings and policies may result in the treatment of interest on the

Series 2013A Bonds as taxable, retroactively to the date of issuance. The Authority also has covenanted that it will not take any action or refrain from taking any action that would cause the interest on the Series 2013A Bonds to be included in gross income for federal income tax purposes.

IRS officials have recently indicated that more resources will be invested in audits of tax- exempt bonds, including the use of bond proceeds, in the charitable organization sector, with specific reviews of private use.

In addition, under its compliance check program initiated in 2007, the IRS has from time to time sent post-issuance compliance questionnaires to several hundred nonprofit corporations that have borrowed on a tax-exempt basis regarding their post-issuance compliance with various requirements for maintaining the federal tax-exemption of interest on their bonds. 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. IRS representatives indicate that questionnaires will be sent to additional nonprofit organizations.

There can be no assurance that responses by the Borrowers to a questionnaire or Form 990 will not lead to an IRS review that could adversely affect the market value of the Series 2013A Bonds or of other outstanding tax-exempt indebtedness issued for the benefit of the Borrowers. Additionally, the Series 2013A Bonds or such other tax-exempt obligations may, from time to time, be subject to examinations or audits by the IRS.

Management of each of the Borrowers believe that the Series 2013A Bonds properly comply with the tax laws. In addition, Bond Counsel will render an opinion with respect to the tax-exempt status of the Series 2013A Bonds, as described under the caption “TAX MATTERS.” No ruling with respect to the Series 2013A Bonds has been or will be sought from the IRS, however, and the opinions of counsel are not binding on the IRS or the courts. There can be no assurance that an examination of the Series 2013A Bonds will not adversely affect the Series 2013A Bonds or the market value of the Series 2013A Bonds. See “TAX MATTERS” herein.

Proposed Legislation Regarding Limitations or Elimination of Tax-Exempt Status of Interest on the Series 2013A Bonds. Tax legislation (either proposed or future), 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 Series 2013A Bonds under federal or state law or otherwise prevent beneficial owners of the Series 2013A Bonds from realizing the full current benefit of the tax status of such interest and could affect the market prices or marketability of the Series 2013A Bonds.

Prospective investors should consult with their tax advisors on the foregoing matters as they consider an investment in the Series 2013A Bonds.

Book-Entry Only System

The Series 2013A Bonds will be represented by one or more certificates registered in the name of Cede & Co., the nominee for DTC, and will not be registered in the names of the beneficial owners of such Series 2013A Bonds or their nominees. Because of this, unless and until definitive securities are issued, Beneficial Owners of such Series 2013A Bonds will not be recognized by the Trustee as “registered owners”. Hence, unless definitive securities are issued, Beneficial Owners of such Series 2013A Bonds will only be able to exercise the rights of Registered Owners indirectly through DTC and its participating organizations.

Other Risk Factors

In the future, the following factors, among others, may adversely affect the operations of the Borrowers to an extent that cannot be determined at this time: (1) employee strikes and other adverse labor actions that could result in a substantial reduction in revenues without corresponding decreases in costs; (2) increased cost and decreased availability of public liability insurance; (3) changes in demand for higher education in general or programs offered by the University in particular; (4) the cost and availability of energy; (5) high interest rates, which could prevent borrowing for needed capital expenditures; (6) a decrease in student loan funds or other aid that permits many students to pursue higher education; (7) an increase in the costs of health care benefits, retirement plan, or other benefit packages offered by the University to its employees and retirees; (8) a significant decrease in the value of the Borrowers’ investments caused by financial market or other external factors; (9) unknown litigation; (10) reductions of funding support from donors or other external sources; (11) reduced future University net tuition revenues as a result of a need to increase tuition discounting to attract students; and (12) the occurrence of natural disasters that might damage the facilities of the Borrowers, interrupt service to the facilities, or otherwise impair the operation of the Borrowers and ability of the facilities to produce revenue.

LITIGATION

The Authority

There is not now pending (as to which the Authority has received service of process) or, to the actual knowledge of the Authority, threatened, any litigation against the Authority restraining or enjoining the issuance or delivery of the Series 2013A Bonds or questioning or affecting the validity of the Series 2013A Bonds or the proceedings or authority under which the Series 2013A Bonds are to be issued. Neither the creation, organization or existence of the Authority nor the title of any of the present members or other officers of the Authority to their respective offices is being contested. There is no litigation against the Authority pending (as to which the Authority has received service of process) or, to the actual knowledge of the Authority, threatened, which in any manner questions the right of the Authority to enter into the Indenture, the Loan Agreement or the Bond Purchase Agreement or to secure the Series 2013A Bonds in the manner provided in the Indenture, the Bond Resolution and the Act.

The Borrowers

There is no action, suit or proceeding, at law or in equity before any court, public board or body pending or, to the knowledge of either of the Borrowers, threatened (or to the knowledge of either of the Borrowers any meritorious basis for such an action, suit, proceeding, inquiry or investigation) as of the date of this Official Statement to restrain or enjoin the issuance, sale, execution or delivery of the Series 2013A Bonds or any proceedings of the Borrowers taken with respect thereto, or wherein an unfavorable decision, ruling or finding (i) would adversely affect the transactions contemplated by this Official Statement or the validity or enforceability of the Series 2013A Bonds, the Indenture, the Loan Agreement or any other agreement or instrument which is used or contemplated for use in the consummation of the transactions contemplated by this Official Statement or (ii) would materially adversely affect the financial condition or operations of either of the Borrowers.

Neither of the Borrowers is a party to legal proceedings which would have a material adverse effect on the Capital Project or the security for the Series 2013A Bonds.

TAX MATTERS

Federal Income Tax Opinion of Bond Counsel

In the opinion of Ice Miller LLP, Chicago, Illinois, Bond Counsel, under federal statutes, decisions, regulations and rulings, interest on the Series 2013A Bonds is excludable for federal income tax purposes from gross income pursuant to Section 103 of the Internal Revenue Code of 1986, as amended and in effect on the issue date of the Bonds (the “Code”). Interest on the Series 2013A Bonds is not treated as an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, but is taken into account in determining adjusted current earnings for the purpose of computing the federal alternative minimum tax imposed on certain corporations. This opinion is conditioned on continuing compliance by the Authority and the Borrowers with the Tax Covenants (as hereinafter defined). Failure to comply with the Tax Covenants could cause interest on the Series 2013A Bonds to lose the exclusion from gross income for federal income tax purposes retroactive to the date of issue. The proposed form of opinion of Bond Counsel is attached hereto as Appendix E.

The Code imposes certain requirements which must be met subsequent to the issuance of the Series 2013A Bonds as a condition to the exclusion from gross income of interest on the Series 2013A Bonds for federal income tax purposes. The Authority and the Borrowers will covenant not to take any action within their respective power and control, nor fail to take any action within their respective power and control, with respect to the Series 2013A Bonds that would result in the loss of the exclusion from gross income for federal income tax purposes of interest on the Series 2013A Bonds pursuant to Section 103 of the Code (collectively, the “Tax Covenants”). The Indenture and certain certificates and agreements to be delivered on the date of delivery of the Series 2013A Bonds establish procedures under which compliance with the requirements of the Code can be met. It is not an event of default under the Indenture if interest on the Series 2013A Bonds is not excludable from gross income for federal tax purposes or otherwise pursuant to any provision of the Code which is not in effect on the issue date of the Series 2013A Bonds.

Original Issue Premium

The issue price (the “Issue Price”) for each maturity of the Series 2013A Bonds is the price at which a substantial amount of such maturity of the Series 2013A Bonds is first sold to the public. The Issue Price of a maturity of the Series 2013A Bonds may be different from the price set forth, or the price corresponding to the yield set forth, on the inside cover page hereof.

Owners of Series 2013A Bonds who dispose of Series 2013A Bonds prior to the stated maturity (whether by sale, redemption or otherwise), purchase Series 2013A Bonds in the initial public offering, but at a price different from the Issue Price, or purchase Series 2013A Bonds subsequent to the initial public offering should consult their own tax advisors.

An investor may purchase a Series 2013A Bond at a price in excess of its stated principal amount. Such excess is characterized for federal income tax purposes as “bond premium” and must be amortized by an investor on a constant yield basis over the remaining term of the Series 2013A Bond in a manner that takes into account potential call dates and call prices. An investor cannot deduct amortized bond premium relating to a tax-exempt bond. The amortized bond premium is treated as a reduction in the tax-exempt interest received. As bond premium is amortized, it reduces the investor's basis in the Series 2013A Bond. Investors who purchase a Series 2013A Bond at a premium should consult their own tax advisors regarding the amortization of bond premium and its effect on the Series 2013A Bond's basis for purposes of computing gain or loss in connection with the sale, exchange, redemption or early retirement of the Series 2013A Bond.

Other Federal Income Tax Considerations

Although Bond Counsel will render an opinion that interest on the Series 2013A Bonds is excluded from federal gross income, the accrual or receipt of interest on the Series 2013A Bonds may otherwise affect a Bondholder’s federal income tax or state tax liability with respect to the Series 2013A Bonds. The nature and extent of these other tax consequences will depend upon a Bondholder’s particular tax status and a Bondholder’s other items of income or deduction. Taxpayers who may be affected by such other tax consequences include, without limitation, financial institutions, certain insurance companies, S corporations, certain foreign corporations, individual recipients of Social Security or railroad retirement benefits and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry the Series 2013A Bonds. Bond Counsel expresses no opinion regarding any other such tax consequences. Prospective purchasers of the Series 2013A Bonds should consult their own tax advisors with regard to the other tax consequences of owning the Series 2013A Bonds.

There are or may be pending in the Congress of the United States legislative proposals, including some that carry retroactive effective dates, that, if enacted, could alter or amend the federal tax matters referred to above or affect the market value of the Series 2013A Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, it would apply to Series 2013A Bonds issued prior to enactment. Prospective purchasers of the Series 2013A Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation. Bond Counsel expresses no opinion regarding any pending or proposed federal tax legislation.

Illinois Income Tax

Interest on the Series 2013A Bonds is not exempt from income taxation under the laws of the State of Illinois.

INVESTORS SHOULD CONSULT WITH THEIR TAX ADVISORS AS TO THE TAX CONSEQUENCES OF THEIR ACQUISITION, HOLDING, OR DISPOSITION OF THE SERIES 2013A BONDS.

UNDERWRITING

The Underwriter, George K. Baum & Company, has agreed to purchase all of the Series 2013A Bonds, subject to certain conditions, pursuant to a Bond Purchase Agreement (the “Bond Purchase Agreement”) among the Borrowers, the Authority and the Underwriter at a purchase price of $29,672,724.20 representing the par amount of $28,645,000.00, plus an original issue premium of $1,242,561.70, less an underwriting discount of $214,837.50. The Series 2013A Bonds are offered subject to receipt and acceptance by the Underwriter and to certain other conditions. The Bond Purchase Agreement provides that the obligations of the Underwriter thereunder are subject to certain conditions precedent. The Underwriter is committed to purchase all of the Series 2013A Bonds if any are purchased.

The Underwriter intends to offer the Series 2013A Bonds for resale in transactions not requiring registration under the Securities Act of 1933, as amended (the “Securities Act”) or applicable state securities laws. The Underwriter intends to offer the Series 2013A Bonds for resale initially at the offering prices set forth on the inside front cover hereof. After the initial offering, the offering price and other selling terms may be changed at any time without notice.

The Series 2013A Bonds have not been registered under the Securities Act. The Series 2013A Bonds will constitute a new series of securities and have no established trading market.

RATING

The Series 2013A Bonds have received a long-term rating of “BBB” by Standard & Poor’s Ratings Services (“S&P”) with a stable outlook. An explanation of the significance of such rating and outlook may be obtained from S&P. S&P was furnished with the information contained in a preliminary form of this Official Statement and other information furnished by the Borrowers concerning the Series 2013A Bonds and each of the Borrowers. Generally, rating agencies base their ratings on such materials and information, as well as their own investigation, studies and assumptions. The rating reflects only the view of S&P, and none of the Authority, the Borrowers, or the Underwriter makes any representation as to the appropriateness of the rating.

Any explanation of the significance of ratings may only be obtained from the rating agency.

There is no assurance that a particular rating will be maintained for any given period of time or that it will not be lowered or withdrawn entirely if, in the judgment of the appropriate rating agency, circumstances so warrant. Neither the Underwriter nor the Authority has

undertaken any responsibility either to bring to the attention of the owners of the Series 2013A Bonds any proposed revision or withdrawal of a rating of the Series 2013A Bonds or to oppose any such proposed revision or withdrawal. The Borrowers have undertaken no responsibility to oppose any such proposed revision or withdrawal. Any such revision or withdrawal of such rating could have an adverse effect on the market price for and the marketability of the Series 2013A Bonds.

CERTAIN LEGAL MATTERS

Certain legal matters incident to the authorization, issuance and sale of the Series 2013A Bonds are subject to the approving legal opinion of Ice Miller LLP, Chicago, Illinois, as Bond Counsel (“Bond Counsel”), who has been retained by, and acts as, Bond Counsel to the Authority. Bond Counsel has not been retained or consulted on disclosure matters and has not undertaken to review or verify the accuracy, completeness or sufficiency of this Official Statement or other offering material relating to the Series 2013A Bonds and assumes no responsibility for the statements or information contained in or incorporated by reference in this Official Statement, except that in its capacity as Bond Counsel, Ice Miller LLP has, at the request of the Authority, reviewed the information under the headings “THE SERIES 2013A BONDS”, “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2013A BONDS,” “TAX MATTERS,” and APPENDIX C “DEFINITIONS OF CERTAIN TERMS; SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE AND THE LOAN AGREEMENT” and has supplied a form of its proposed opinion for the Series 2013A Bonds in APPENDIX D hereto. This review was undertaken solely at the request and for the benefit of the Authority and did not include any obligation to establish or confirm factual matters set forth herein.

Certain legal matters with respect to the Series 2013A Bonds will also be passed on for the Authority by its special counsel, Schiff Hardin LLP, Chicago, Illinois, for the Borrowers by their counsel, Cahill Law Office, Chicago, Illinois, and for the Underwriter by its counsel, Ballard Spahr LLP, Philadelphia, Pennsylvania.

RELATIONSHIPS AMONG PARTIES

In connection with the issuance of the Series 2013A Bonds, the Authority, the Borrowers, and the Underwriter are being represented by the attorneys or law firms identified above under the heading “CERTAIN LEGAL MATTERS”. In other transactions not related to the Series 2013A Bonds, each of these attorneys or law firms may have acted as bond counsel or represented the Authority, the Borrowers, the Trustee, or the Underwriter or their affiliates, in capacities different from those described under “CERTAIN LEGAL MATTERS,” and there will be no limitations imposed as a result of the issuance of the Series 2013A Bonds on the ability of any of these firms or attorneys to act as bond counsel or represent any of these parties in any future transactions.

Potential purchasers of the Series 2013A Bonds should not assume that the Authority, the Borrowers, the Trustee, the Underwriter, their respective counsel or Bond Counsel has not previously engaged in, is not currently engaged in or will not, after the issuance of the Series 2013A Bonds, engage in other transactions with each other or with any affiliates of any of them,

and no assurances can be given that there are or will be no past or future relationship or transactions between or among any of these parties or these attorneys or law firms.

FINANCIAL STATEMENTS

The audited consolidated financial statements of the University and Affiliates for the Fiscal Year ended May 31, 2013 are set forth in APPENDIX B hereto. Those financial statements have been audited by Wolf & Company, LLP, independent auditors, as stated in their report appearing therein. Wolf & Company, LLP has consented to the attachment of the Borrowers audited consolidated financial statements hereto.

CONTINUING DISCLOSURE AGREEMENT

The Borrowers

The Borrowers will agree, for the benefit of the holders and beneficial owners of the Series 2013A Bonds, in accordance with SEC Rule 15c2-12 (the “Rule”), as an obligated person, to provide or cause to be provided such financial information and operating data (“Annual Report”), audited financial statements and notices, in such manner, as may be required for purposes of paragraph (b)(5)(i) of the Rule (the “Continuing Disclosure Agreement”), including specifically the following:

 To the MSRB, through EMMA, the Borrowers will provide or cause to be provided:

 Annual Report for each Fiscal Year (beginning with Fiscal Year 2013) including (a) audited financial statements of the Borrowers for the prior Fiscal Year, prepared in accordance with generally accepted accounting principles for nonprofit corporations as promulgated from time to time by the Financial Accounting Standards Board, which shall be filed not later than 150 days following the end of the Fiscal Year, and (b) annual financial information and operating data of the type included in APPENDIX A to this Official Statement in Tables 2, 3, 5, 6, 7, 8 and 13, which shall be filed not later than 180 days following the end of the Fiscal Year. The Borrowers expect that the Annual Report will be provided directly by it and in part by cross-reference to other documents, such as its Annual Consolidated Financial Statements.

 To EMMA, in a timely manner not in excess of ten business days after the occurrence of the event, the Borrowers will provide (or cause to be provided) notice of the occurrence of:

 Principal and interest payment delinquencies; unscheduled draws on debt service reserves reflecting financial difficulties; unscheduled draws on credit enhancements reflecting financial difficulties; substitution of credit or liquidity providers, or their failure to perform; adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Series 2013A Bonds, or other

material events affecting the tax-exempt status of the Series 2013A Bonds; tender offers; defeasances; rating changes; or bankruptcy, insolvency or similar event of an obligated person; and

 If material, non-payment-related defaults; modifications to rights of holders or beneficial owners of the Series 2013A Bonds; calls for redemption of the Series 2013A Bonds; release, substitution or sale of property securing repayment of the Series 2013A Bonds; the consummation of a merger, consolidation or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms; or the appointment of a successor or additional trustee or the change of name of the trustee.

 The failure to provide the Annual Report within the time specified above.

 Any change in the accounting principles applied in the preparation of its annual financial statements, any change in fiscal year, failure to appropriate funds to meet costs to be incurred to perform the Continuing Disclosure Agreement and termination of the Continuing Disclosure Agreement.

The Borrowers will reserve the right to amend the Continuing Disclosure Agreement, and to obtain the waiver of noncompliance with any provision of the Continuing Disclosure Agreement, as may be necessary or appropriate to achieve its compliance with any applicable federal securities law or rule, to cure any ambiguity, inconsistency or formal defect or omission, and to address any change in circumstances arising from a change in legal requirements, change in law or change in the identity, nature or status of the obligated persons, or the type of business conducted by the Borrowers. Any such amendment or waiver will not be effective unless the Continuing Disclosure Agreement (as amended or taking into account such waiver) would have complied with the requirements of the Rule at the time of the primary offering of the Series 2013A Bonds, after taking into account any applicable amendments to or official interpretations of the Rule, as well as any change in circumstances, and until the Borrowers have received either (a) a written opinion of bond or other qualified independent special counsel selected by the Borrowers that the amendment or waiver would not materially impair the interests of holders or beneficial owners of the Series 2013A Bonds or (b) the written consent to the amendment or waiver by the holders of at least a majority of the principal amount of the Series 2013A Bonds then outstanding.

The Continuing Disclosure Agreement will be solely for the benefit of the holders and beneficial owners from time to time of the Series 2013A Bonds. The exclusive remedy for any breach of the Continuing Disclosure Agreement by the obligated persons is limited, to the extent permitted by law, to a right of holders and beneficial owners to institute and maintain, or to cause to be instituted and maintained, such proceedings as may be authorized at law or in equity to obtain the specific performance by the obligated persons of their obligations under the Continuing Disclosure Agreement.

The Continuing Disclosure Agreement will remain in effect only for the period that the Series 2013A Bonds are outstanding in accordance with their terms and the Borrowers remain “obligated persons” with respect to the Series 2013A Bonds within the meaning of the Rule. Any noncompliance with the Continuing Disclosure Agreement will not be a default or failure to comply for purposes of the default provisions of the Indenture. The form of the Continuing Disclosure Agreement is attached hereto as APPENDIX E.

The Authority

Because the Series 2013A Bonds are limited obligations of the Authority, the Authority shall not provide any additional information regarding itself or the Series 2013A Bonds after the date of delivery of the Series 2013A Bonds. Likewise, the Authority has not made and will not make any provision to provide any annual financial statements or other credit information of the Borrowers to investors on a periodic basis.

MISCELLANEOUS

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 references to and summaries or descriptions of provisions of the Series 2013A Bonds, the Indenture and the Loan Agreement, and all references to other materials not stated to be quoted in full are only brief outlines of some of the provisions thereof and do not purport to summarize or describe all of the provisions thereof.

The information set forth in this Official Statement and in the: Appendices hereto should not be construed as representing all of the conditions affecting the Authority, the Borrowers or the Series 2013A Bonds.

Any statements made in this Official Statement involving estimates or matters of opinion, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates or matters of opinion will be realized. Neither this Official Statement nor any statement which may have been made orally or in writing is to be construed as a contract with the owners of the Series 2013A Bonds.

BENEDICTINE UNIVERSITY

By: /s/ Charles Gregory Name: Charles Gregory Title: Executive Vice President

FOUNDERS WOODS, LTD.

By: /s/ William Carroll Name: William Carroll Title: Secretary

APPENDIX A

BENEDICTINE UNIVERSITY AND FOUNDERS WOODS, LTD.

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BENEDICTINE UNIVERSITY and FOUNDERS WOODS, LTD.

TABLE OF CONTENTS

INTRODUCTION 1 Benedictine University 1 Founders Woods, Ltd. 1

HISTORY AND MISSION 1 History 1 Mission 2

GOVERNANCE 3 Founders Woods Ltd. Governance 5

ADMINISTRATION 5

CURRICULUM 7 College of Business 8 College of Education and Health Services 9 College of Liberal Arts 10 College of Science 11 Moser College of Adult and Professional Studies 11 Global College 11 Springfield Branch Campus 11 Asia Programs 11 Mesa Branch Campus 12 Student Life 12 Athletics 13

FACULTY AND STAFF 14

STUDENT ENROLLMENT 14 Student Characteristics 19

TUITION 20

GEOGRAPHIC AREA AND FACILITIES 21

FINANCIAL MATTERS 23 Accounting Matters 23 Management’s Discussion of Financial Performance 24

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Springfield Branch Campus 25 Budget Procedures 26 Investments 26 Endowment Fund 27 Physical Plant 28

ADVANCEMENT PROGRAM 29

THE PROJECT 29

EMPLOYEE BENEFITS AND RETIREMENT PLANS 31

INSURANCE 31

LITIGATION 32

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INTRODUCTION

Benedictine University Benedictine University (“Benedictine” or the “University”) is a Roman Catholic private, co-educational institution of higher education that offers cooperative baccalaureate, masters, and doctoral programs, as well as continuing education programs in a variety of fields including but not limited to: accounting, biology, business administration, chemistry, clinical psychology, engineering, finance, marketing, and theology. Benedictine is located on a 108-acre campus in Lisle, a suburb of Chicago, Illinois. The University is organized as a nonprofit corporation and is exempt from federal income taxation under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended.

Benedictine has four locations: Lisle, IL (main campus), Naperville, IL, Springfield, IL, and Mesa, AZ. For fall 2013, the University had a full-time equivalent (“FTE”) enrollment of 4,498 students and a total headcount enrollment of 6,318 students. Benedictine offers 55 undergraduate majors, 17 graduate and four doctoral programs, as well as 32 graduate certificate programs. In 2013-14, approximately 3,830 students are currently enrolled in the undergraduate program and an additional 2,488 students are enrolled in graduate programs.

In 2012, The Chronicle of Higher Education ranked Benedictine as the No. 1 fastest-growing campus in the country among private nonprofit research universities from 2000 to 2010. Forbes magazine named Benedictine among “America’s Top Colleges” for the third consecutive year in 2013. Benedictine’s Master of Business Administration (M.B.A.) program is listed by Crain’s Chicago Business as the fifth largest in the Chicago area in 2013. StateUniversity.com ranks Benedictine University as the second safest four-year school in Illinois based on a scale that accounts for the severity and frequency of on- campus crime in 2012. Benedictine is also listed as a 2014 “Military Friendly School” by G.I. Jobs, a veteran-owned publication focusing on post-military education and employment.

Founders Woods, Ltd. Founders Woods, Ltd. (“Founders”), an Illinois nonprofit entity, was formed in June 2000 primarily to provide housing for the students of the University. Founders offers apartment-style living in one, two, and four bedroom apartment homes situated on the University's main campus. The University retains ownership of the underlying land upon which the apartments were built and receives annual rental income of $1 from Founders for its use. The University’s Office of Residence Life oversees the housing operation at Founders together with the more traditional residence halls on the main campus, which ensures a consistent and integrated approach to marketing all housing and the delivery of services. The University’s accounting staff performs the accounting function, collects housing payments from the students, and remits payment to Founders based on the actual housing charges to students. The present board of Founders is comprised of individuals who are all members of the University's board. It is under consideration to dissolve Founders Woods as a separate legal entity and fully absorb the operations into the University. If and when this occurs, it is the expectation that all of Founders Woods assets will be transferred to the University. HISTORY AND MISSION History Benedictine University was founded in Chicago as St. Procopius College (the “College”) by the Benedictine monks of St. Procopius Abbey in 1887. The College secured a charter from the state of Illinois in 1890. In 1901, the College moved to its current location in Lisle, Illinois. The first building, Benedictine Hall, was dedicated in September 1901. The construction was completed in 1921 and additional buildings were added after 1926. The College became co-educational in 1968 and was renamed Illinois Benedictine College in 1971. Finally, the College became Benedictine University in 1996, adding graduate, doctorate, and adult learner programs in response to community needs.

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On April 1, 1896, with their $6,240 signed deed in hand, the first Benedictine monks had an epiphany that the 104 acres, including cornfields, the Neff farmhouse, all of its furniture, 40 hens and a top buggy, purchased in Lisle, Illinois would transform into something far greater than the sum of its parts. More than a century later, their vision has grown into a University consistently listed in the U.S. News and World Report among top universities in the country based on its academic offerings and student body diversity. By 1968, the University had 800 full-time and 110 part-time students, pursuing B.A. and B.S. degrees in 17 majors, as well as teacher education and pre-professional courses in the fields of dental, medical, engineering, legal, veterinary, and podiatry.

Mission Benedictine University is a Catholic institution in the Benedictine tradition that provides a values- centered liberal arts education enriched by its excellence in science. The University is grounded in the spirit of the founders who based their lives and work on St. Benedict’s Rule for Monks, written in the early sixth century. Benedictine is driven by the same values which Benedictine men and women espouse:

 Search for God by oneself and with others  Tradition of hospitality  Appreciation for living and working in community  Concern for the development of each person  Emphasis on a life lived in balance  Dedication to responsible stewardship of the Earth  Commitment to academic excellence

Central to the Benedictine tradition is the celebration of community as a gathering of people who share a commitment to a common mission. The University strives to develop an academic community that supports each person in the pursuit of knowledge and personal development. This undertaking is achieved through a life enriched by the collegiate community in which the individual is tempered by concern for the common good.

The mission and vision of Benedictine reflects its Catholic and Benedictine traditions and provide the University community with a sense of continuity with the past and a direction for the future. In fidelity to these traditions, the University is committed to investigating questions that address the ultimate purpose of life, the dialogue between faith and culture, and the promotion of ecumenical, inter-religious, and cross-cultural understanding. Benedictine encourages openness to all reality, acceptance of truth wherever it is found, and the personal effort to integrate learning as a basis of wisdom for life. Benedictine upholds the academic freedom of faculty and students in inquiry and research, while insisting on ethical responsibility. Preference is given to research and activities that promote human betterment, peace, justice, the common good, and that use interdisciplinary and collaborative methods.

Benedictine University is committed to assist all students in the acquisition of knowledge and cultivation of skills in six major areas. Graduates of the University's degree programs are expected to develop:

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Disciplinary Knowledge:  Acquire, understand, and synthesize discipline-based knowledge  Apply disciplinary methodologies in their qualitative and quantitative dimensions  Understand the content and interrelationships of specific areas of study  Communicate effectively within and across the disciplines

Communication Skills:  Express oneself clearly and concisely in multiple forms  Appreciate and develop creative expression

Problem-Solving Skills:  Reason and communicate informed judgments  Identify and solve problems, independently and cooperatively  Understand the nature of and evaluate evidence

Social Responsibility:  Confront and resolve ethical issues and contribute to the work of peace and social justice  Exhibit stewardship of self and environment  Develop good citizenship

Global Perspectives:  Benefit from diversity of opinion, abilities, and culture  Recognize the importance of the interdependence of cultures and nations  Communicate effectively within and across cultural boundaries

Self-Direction and Personal Growth:  Develop a sense of intellectual curiosity and a desire for lifelong learning  Strive for a life lived in balance  Develop leadership potential  Foster spiritual growth

GOVERNANCE

The Board of Trustees is the governing body of Benedictine University. Benedictine’s Board is made up of no less than twenty-one, and no more than fifty voting Trustees, each elected for a term of three years. Trustees are elected by a majority vote of the Board and may serve successive terms.

The officers of the Board of Trustees are the Chair, Vice Chair, President, the Abbot of St. Procopius Abbey, Secretary, and Treasurer. The Chair and Vice Chair may serve for terms of two years until their successors are appointed and qualified. The other officers serve terms that are determined by the Board of Trustees. All officers are approved by the Trustees annually, except in those cases where the position is ex officio. Unless a vacancy in an office occurs at another time, appointment of officers is held at the annual meeting of the Board. Any vacancy in the Board of Trustees may be filled by the remaining Trustees by election at any regular meeting of the Board. In the event of a vacancy in the office of the President, the Board will appoint a special Presidential Search Committee to submit nominations for candidates for that office.

Standing committees of the Board include the Executive, Mission Integration, Advancement, Buildings and Grounds, Finance and Audit, Student Affairs, Academic, and Compensation. Members of standing committees are appointed by the Chair, after consulting with the Board, annually, at or following the annual meeting of the Board of Trustees.

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The Executive Committee is comprised of the Chair, immediate past Chair of the Board, Vice Chair, President of St. Procopius Abbey, President of the University, Secretary, and chairs of the regular committees of the Board. The Chair of the Board, President of St. Procopius Abbey, and President of the University may jointly add additional members to the committee. If any chair of a regular committee is unable to attend a meeting of the Executive Committee (or if he/she is impeded), the Chair of the Board of Trustees may appoint any member of his/her committee.

Willis M. Gillett has served as Chair of the Board since 1999. The current members of the Board, the year of their initial appointment as trustee, the year their appointment expires, and their principal business affiliations are as follows:

Year Year Term Trustee Elected Expires Principal Business Affiliation Abbot Hugh Anderson, O.S.B. 2006 2015 American Cassinese Congregation, President James H. Beatty 1991 2015 Merrill Lynch, Former Vice President; Retired Michael J. Birck 1988 2015 Tellabs Inc., Founder and Chairman Mack C. Gaston 1997 2015 US Navy, Former Rear Admiral; Retired Paul R. Gauvreau 1997 2015 Pittway Corporation, Former Financial VP and CFO; Retired Daniel L. Goodwin 1991 2015 The Inland Real Estate Group of Companies Inc., CEO Carolyn Graham 2009 2015 Diocese of Springfield, Bishop’s Special Panel on Priestly Misconduct Br. Charles Hlava, O.S.B. 1994 2015 Benet Academy, Former Assistant Principal; Retired Robert E. King 2006 2015 Rasmussen College Inc., Chairman Arthur S. Littlefield 2006 2015 Financial Strategies and Solutions Group, Founder and Managing Director Leonard S. Piazza, M.D. 2006 2015 Naperville Ear, Nose, and Throat Associates, President Roberto Ramirez 2006 2015 UPG Services, LLC, Founder, President, CEO Peter J. Wrenn 2000 2015 Hudson Screw Machine Products Company, President Maureen Beal 2003 2016 National Van Lines, Chair and CEO Paul J. Lehman 1986 2016 Macom Corporation, President Daniel F. Rigby 2001 2016 Human Resource Management Systems LLC, Founder and President Michael S. Siurek 2007 2016 ROC Inc., President Charles A. Thurston 2001 2016 Nicor Gas, Former VP of Regulatory and Governmental Affairs; Retired Norman Beles 2011 2014 Belcorp Financial Services, President and CEO John P. Calamos 2002 2014 Calamos Investment Management, Founder, Chairman and CEO Claudia J. Colalillo 2008 2014 Nicor Inc., Senior VP of Corporate Communications and HR Katherine A. Donofrio 2003 2014 Integrys Business Support LLC, Former Senior VP; Retired Greg Elliot 2011 2014 Navistar Inc., Senior Vice President for HR and Administration Willis M. Gillett 1991 2014 First DuPage Bank, Chairman of the Board; Retired Judith Ann Heble, O.S.B. 1995 2014 Conference of American Benedictine Prioresses, President James L. Melsa 2008 2014 College of Engineering at Iowa State University, Dean Emeritus Tasneem A. Osmani 2008 2014 Northern Trust Company, Vice President and Project Manager Daniel M. Romano 2003 2014 Romano Brothers, Executive Vice President Rosemary Macko Wisnosky 1993 2014 Wizdom Systems, President Rev. Edward J. Kucera, O.S.B. 2011 2014 US Air Force, Colonel, Retired; Chaplain, Benet Academy

Ex Officio Abbot Austin G. Murphy, O.S.B. 2010 St. Procopius Abbey, Abbot William J. Carroll 1995 Benedictine University, President

Officers of the Board Willis M. Gillett, Chair Daniel L. Goodwin, Vice Chair Allan Gozum, Treasurer (VP Finance of Benedictine, not a Board member) Abbot Hugh Anderson, O.S.B., Secretary

From time to time, the University does business with firms with which a Trustee is affiliated. University management believes that such transactions are on terms no less favorable to the University than could be obtained from unrelated parties. The University's conflict of interest policy permits such transactions only if the Trustee discloses the conflict and abstains from voting on any matters related thereto.

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Founders Woods Ltd. Governance Willis Gillett was elected Chair of the Founders Board in 2000. The current members of the Founders Board, the year of their initial appointment as trustee, the year their appointment expires, and their principal business affiliations are as follows:

Year Year Term Trustee Elected Expires Principal Business Affiliation Daniel Goodwin 2000 2014 The Inland Real Estate Group of Companies Inc., CEO Dr. William Carroll 2000 2014 Benedictine University, President Willis M. Gillett 2000 2014 First DuPage Bank, Chairman of the Board; Retired

ADMINISTRATION

William J. Carroll, Ph.D., President. Dr. Carroll was named the University’s 10th president in July of 1995. Prior to his tenure at Benedictine, Dr. Carroll held several positions at Ohio Dominican College, including Vice President for Academic Affairs, Acting President, and Executive Vice President. Under Dr. Carroll’s leadership, the University has begun a variety of initiatives, including the Great Issues-Great Ideas lecture series, the addition of master’s and doctoral degree programs, and the construction of several campus facilities. New facilities include the Kindlon Hall of Learning, Birck Hall of Science, Founders Woods apartments, the Village of Lisle-Benedictine University Sports Complex, and the recently- renovated Dan and Ada Rice Athletic Center.

In 2003, Benedictine formed a partnership with Springfield College in Illinois to provide junior- and senior-level classes and graduate programs in the state’s capital. The program expanded, culminating in the establishment of Benedictine University at Springfield in 2009.

In 2004, Dr. Carroll was named “Educator of the Year” by the Illinois State Crime Commission, which annually honors state leaders in law, government, labor, and education. He was named to the Board of Directors of the Lincoln Foundation for Performance Excellence, and was a recipient of The Business Ledger’s “Mover and Shaker” award.

Dr. Carroll earned his Bachelor of Arts in Philosophy from the University of Scranton, Scranton, Pennsylvania, and master’s and doctorate degrees from the Catholic University of America, Washington, D.C.

Charles Gregory, Executive Vice President. Mr. Gregory has been employed by the University since 1997, currently serving as Executive Vice President. He is responsible for overseeing admissions and enrollment, athletics, public safety, student life, marketing and communications, development, business and finance, office services, and contract services. Mr. Gregory began his career in higher education at Cumberland University as an admissions counselor, and was later named Director of Admissions and Financial Aid. He also served Nashville State Technical Community College as Director of Financial Aid, Director of Enrollment Management, and Dean of Students. He then returned to Cumberland University in the role of Dean of Enrollment Management. Prior to joining Benedictine, he also served as Dean of Enrollment Management at Siena Heights University in Adrian, Michigan.

Mr. Gregory served the University as Vice President of Enrollment Management and Vice President for University Services before assuming his current position. In 2004, Mr. Gregory was named the recipient of the Benedictine Life Award, the highest honor the University can bestow. Mr. Gregory has served as an enrollment consultant to numerous institutions of higher education, and was a member of the accreditation team of the Southern Association of Colleges and Schools.

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Mr. Gregory earned his bachelor’s degree from Austin Peay State University in Clarksville, Tennessee and his master’s degree from Cumberland University in Lebanon, Tennessee.

Donald B. Taylor, Ph.D., Provost and Vice President for Academic Affairs. Dr. Taylor began his role as Provost and Vice President for Academic Affairs in June of 2008, after having served the University as Dean of the College of Science for three years. Dr. Taylor began his tenure at Benedictine in 1992 as an assistant professor and coordinator of the molecular biology program. In 1995, Dr. Taylor was promoted to associate professor and two years later was named the William M. Scholl Endowed Professor in Health Sciences. He was named a full professor in 2000, served as chair of the Department of Biology from 2002-05, and was named Dean of the College of Science in 2005.

Dr. Taylor earned his Ph.D. in Molecular Biology and his B.S. in Secondary Education from Memphis State University in Memphis, Tennessee.

Patricia Ariano, Executive Director of University Development. Mrs. Ariano joined Benedictine in 1996, as Assistant to the Provost. After eight years in the Office of the Provost, she transitioned to Assistant to the President and Executive Vice President. She currently serves as the Executive Director of University Development and is responsible for Alumni Development, Annual Fund, Research and Development, University Development Events and Stewardship. Ms. Ariano has served in this role for the past six years. Under her reign, a strategic plan has been implemented to increase alumni engagement in order to build a sustainable constituency base of support into the future. Ms. Ariano has also been responsible for a number of initiatives that have resulted in an increase in the overall fundraising efforts of the University, especially as it pertains to scholarship dollars.

Allan D. Gozum, Ed.D., Vice President of Finance. Dr. Gozum arrived at Benedictine in November 2000 as its Director of Finance. He currently serves as the University’s Vice President of Finance and oversees the offices of business and finance, information technology, personnel resources, auxiliary enterprises, and compliance and internal audit. Earlier in his career, Dr. Gozum held supervisory positions at KPMG Peat Marwick, Trans Union Corporation, and Deloitte & Touche. In 2008, the University honored him with the prestigious Benedictine Life Award.

Dr. Gozum earned his doctorate from the University of Pennsylvania and an M.B.A. from the University of Chicago. He is a registered CPA in the state of Illinois.

Kari Gibbons, Vice President of Enrollment Services. Ms. Gibbons has been with the University since 1999. She is the Vice President of Enrollment Services and manages all admissions processing, financial aid, new student advising, and is responsible for main campus recruitment. Ms. Gibbons also works closely to oversee recruitment at the Mesa branch campus. She is a member of the National Association for College Admission Counseling, Illinois Associate for College Admission Counseling and the National Association of Graduate Admissions Professionals, as well as the National Association of Student Financial Aid Administrators. She worked at a private college in Arizona before joining the Benedictine family.

Ms. Gibbons earned a Bachelor of Arts degree from Arizona State University and a Master of Business Administration degree from the University.

Marco Masini, Vice President for Student Life. Mr. Masini joined the Benedictine community as Dean of Students in 1997 and became the Vice President for Student Life in 2012. Mr. Masini is responsible for the Student Life areas of Student Development, Athletics, the Student Success Center, Health Services, Parent Programs, University Ministry, and Dining Services. He has worked at North Central College, Loyola University at Chicago, and Michigan State University.

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Mr. Masini earned a Bachelor of Science degree from University of Illinois, Urbana-Champaign and a Master of Education degree from Loyola University.

CURRICULUM

Benedictine has constructed its curriculum to meet the goals articulated in its mission and by its faculty. The University believes that a strong classroom education coupled with real world experience produces the skills needed to succeed in today’s competitive employment marketplace. The University provides every student a rich environment for serious study in business, education, health services, and liberal arts and sciences that will enable them to cultivate an awareness of today’s world and prepare for a lifetime of service, leadership, and social contribution. Benedictine’s programs are divided into six different colleges. Program lengths range from one to four years.

A listing of the academic degree programs offered by the University is shown below. Benedictine’s newest college is the Global College and its academic programming is in development.

Benedictine Academic Programs

College of Business Accountancy International Business and Economics Accounting Management Information Systems Business Administration Management and Organizational Behavior Business Analytics Marketing Business and Economics Organization Development Business with Science Applications Taxation Economics Values Driven Leadership Finance

College of Education and Health Services Education Nursing Elementary Education Physical Education Exercise and Sports Studies Public Health Higher Education and Organizational Change Secondary Education Nutrition Special Education Nutrition and Wellness

College of Liberal Arts Bilingual Journalism Music Clinical Psychology Music Education Communication Arts Philosophy Criminal Justice Political Science English Language and Literature Psychology Fine Arts Social Science Global Studies Sociology Graphic Arts and Design Spanish History Studio Art International Studies Theology Linguistics Writing and Publishing Medical Humanities

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College of Science Biology Engineering Science Biochemistry/Molecular Biology Environmental Science Chemistry Diagnostic Medical Sonography Clinical Exercise Physiology Health Science Clinical Laboratory Science Mathematics Clinical Life Science - Perfusion Technology Nuclear Medicine Technology Clinical Life Science - Respiratory Care Physics Computer Information Science Radiation Therapy Computer Science Science Content and Process

Moser College of Adult and Professional Studies Business Administration Management and Organizational Behavior Education Nutrition Leadership Public Health Management Organizational Leadership

College of Business The College of Business is committed to preparing global business leaders through a values-centered approach to business education, incorporating the development of skills in ethical and socially responsible leadership. The College encourages students to develop their team and leadership skills through active participation in on-campus clubs/organizations, internships and study abroad opportunities.

The Department of Undergraduate Business offers the Bachelor of Business Administration (B.B.A.) with majors in Accounting, Business Analytics, Business and Economics, Business with Science Applications, Economics, Finance, International Business and Economics, Management and Organizational Behavior, and Marketing.

The Business with Science Applications major combines the B.B.A. undergraduate business degree core with the Undergraduate Science core, plus major specialization courses in science management, legal and ethical aspects, innovation and product development, quality systems, product team management, with internship and culminating capstone experience.

The Master of Business Administration (M.B.A.) was initiated in 1976 and provides business professionals with the analytical and theoretical tools essential to make sound business decisions. Widely recognized as a powerful professional credential, the Benedictine M.B.A. is available through four delivery options to suit each student’s personal and professional needs.

The Master of Science (M.S.) in Accountancy program, created in 2005, is well-suited to individuals who have a business related undergraduate degree, but little previous study or experience in accounting.

The Master of Science (M.S.) in Business Analytics program is a new program that leverages the decades-long expertise of the University’s faculty members. It focuses on the skills, technologies, applications and practices for iterative exploration and investigation of past business performance in order to gain valuable insights that drive business planning. It makes extensive use of data, statistical and quantitative analysis, explanatory and predictive modeling, and fact-based management to drive decision- making.

The Master of Science (M.S.) in Taxation is a new discipline designed to prepare students for managerial roles in the tax departments of corporations, service organizations and public accounting firms.

In 1986, the University initiated the Master of Science in Management Information Systems program. This program is designed to provide business professionals with a strong background in both information systems and business.

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The award-winning Master of Science (M.S.) in Management and Organizational Behavior program is recognized both locally and nationally as a leader in providing education toward managing the human side of organizations.

The Doctor of Philosophy (Ph.D.) in Organization Development is dedicated to better understanding the work of the OD professional within the context of global trends and emerging problems. It prepares management professionals with state-of-the-art education in the field. The coursework is designed for organization development professionals who perceive the management of change and the creation of high-performance organizations as central parts of their careers.

The Doctor of Philosophy/Doctor of Business Administration in Values-Driven Leadership is the first of its kind, specifically designed for senior leaders committed to using the creativity and discipline of business to create short-term and long-term shareholder value, enrich people's lives, produce products and services that benefit society, and contribute to the health and sustainability of the planet.

At all levels, Benedictine aims to graduate leaders that possess the capabilities of identifying and solving problems in the workforce, using their diverse background to incorporate the social, political, and economic aspects of problems in their solution, and pursuing ways of lifelong contribution in their communities.

College of Education and Health Services The College of Education and Health Services, while diverse in its offerings, is united in the spirit of service and professionalism. Throughout these programs, students learn to be self-starting learners, planners, and doers. They are guided by professional ethics and a commitment to the people they serve.

All Benedictine University programs are well connected to the communities they serve and the ideals of each profession. The College of Education and Health Services is home to most of the University’s service professions. Through the School of Education and the School of Health Services, the College offers undergraduate programs in Exercise and Sports Studies, Nursing, Nutrition, Physical Education and Teacher Education, master's programs in Education, Public Health, Nursing, Nutrition and Wellness, and a doctoral program in Higher Education and Organizational Change.

School of Education Benedictine University has a long history of preparing teachers for careers in public, parochial, and private schools in Illinois and across the nation. The Teacher Education Program at Benedictine University dates back to 1963, when approval was received from the Illinois State Board of Education to prepare elementary and secondary teachers. Today the University prepares individuals for three different licensures: Elementary, Special Education and Secondary, which spans eight subject areas. In 1998 the entire Teacher Education Program was approved by the Illinois State Board of Education.

In Illinois, the most recent statistics suggest that the state is experiencing an increase in total teacher demand. Areas of teacher shortage include mathematics, biological and physical science, reading, early childhood education, bilingual education, social and emotional disorders, speech, language impaired, English as a Second Language (“ESL”), and languages. The overall placement profile for teacher education graduates from Benedictine for the past decade indicates that a high percentage of those graduates who desire to teach have been successful.

Benedictine is a teacher accredited institution. Having initially received approval by the Illinois State Board of Education in 1963, the program was most recently approved in 1998. During 1992-93 the program underwent its regular review. As an accredited institution, the University is approved to provide programs leading to teaching licensure in elementary school, junior high/middle school, secondary school, and special education subject areas. When a student successfully completes one of the eight

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available programs, the University recommends to the State that the individual is "entitled" to receive a teaching certificate (pending passage of the Illinois tests in basic skills and subject matter competency). This recommendation is referred to as "Licensure via entitlement."

School of Health Services Benedictine offers an accelerated Registered Nurse (“RN”) to Bachelor of Science in Nursing Degree Completion Program and an accelerated, fully online, Master of Science in Nursing (“M.S.N.”) Program. The University also offers a Master of Public Health (“M.P.H.”) degree, and both undergraduate and master’s degree programs in Nutrition.

At both the undergraduate and graduate levels, the University’s Nursing program provides a private education at tuition competitive with state schools. For more than 25 years, Benedictine has offered cutting-edge education programs for working nurses. Accredited by the Commission on Collegiate Nursing Education (CCNE), Benedictine’s Online M.S.N. is designed to meet the challenges facing the nursing profession by transforming its students’ nursing careers and raising them to the demands of healthcare in the 21st century.

The University’s generalist M.P.H. degree prepares students to be public health practitioners who draw on knowledge and skills from a variety of disciplines. The foundational coursework in biostatistics, epidemiology, management, policy, behavioral and social aspects of public health, environmental health, and biology, provides a scientific and practical base for public health practice. The M.P.H. degree can be applied in a variety of settings and positions, including administration of private health organizations, social service, and public health agencies at the local, state, national, and international levels.

The M.S. in Nutrition and Wellness program at Benedictine provides a foundation in nutrition and health risk assessment, motivation, intervention and evaluation. This degree serves as a portal to careers in health promotion and risk reduction, therapeutic intervention, and community education. In addition to professional preparation, the program also provides an excellent background for those who plan to pursue a doctorate. This master’s degree program is unique in providing a life science-based foundational core, as well as an opportunity to select a concentration to best meet one’s own learning needs.

College of Liberal Arts Situated at the heart of the University, the College of Liberal Arts is home to 39 full-time faculty and six departments. In addition to a variety of minors, concentrations, and interdisciplinary programs, the College offers students a choice of 21 distinct majors.

With programs of study ranging from literature, philosophy, and music to psychology, political science, and many more, the College of Liberal Arts provides Benedictine students with unparalleled access to innovative, in-depth instruction in the humanities and social sciences. It also houses the University's Writing Program, Scholars Program, and Core Program; all of which contribute significantly to the Benedictine undergraduate experience.

The College of Liberal Arts offers a variety of undergraduate programs in the Humanities and Social Sciences, as well as graduate programs in Clinical Psychology and Linguistics. Students are engaged in undergraduate research, study abroad, internships, and a variety of creative endeavors. The University strives to design innovative programs that meet current academic and professional demands. Benedictine’s programs in Graphic Arts and Design and Music Education expand the range of professional opportunities for art and music students, while its Criminal Justice major responds to an increased demand for liberally-educated professionals in the area of law enforcement.

Ninety percent of the College of Liberal Arts faculty holds terminal degrees in their fields. In addition to their teaching duties, faculty members continue to develop their professional skills through active participation in research, publishing, and conference presentations.

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College of Science When students choose the University's College of Science, they will choose from a broad range of academic opportunities and earn sought-after undergraduate degrees set in the tradition of Benedictine excellence in education. Students preparing for medical school and pre-professional school admission have the opportunity to get ready for the continuing education admissions process. The University’s Health Science Recommendation Committee prepares students for interviews and later stage admissions processes.

Benedictine’s science programs are known for their research opportunities for students of all levels. Year-long and summer research programs offer students the chance to work directly with faculty on their ongoing research projects. Students have the opportunity to present research at national conferences as well as publish their work in science journals. The Mathematics department and Computer Information Systems/Computer Science faculty offer smaller class sizes and a computer cluster to students interested in pursuing math or programming degrees.

Moser College of Adult and Professional Studies Moser College of Adult and Professional Studies (“Moser College”) offers academic programs and course delivery options that allow students to pursue their academic goals along with their professional and personal lives. Moser College has designed all its programs with the adult learner at the core. The programs are delivered in an accelerated format and provide the adult learner with relevant, practical, and immediately applicable knowledge. Live instruction, fully online courses, or a “blended” format, provide students with options to fit their needs.

Moser College’s programs range from associate through master’s degrees. In addition to these degree programs, Benedictine created a Center for Lifelong Learning (“CLL” or the “Center”). The Center’s mission is to provide opportunities for adults 55 years and older to engage in intellectual, enriching, and social experiences offered through Moser College.

Global College Benedictine added a sixth college in 2013 to serve its growing overseas community. Benedictine’s Global College will coordinate and develop its many programs and services abroad, including administration of master’s programs in China and Vietnam and partnerships with colleges and universities throughout the world.

Springfield Branch Campus After serving the Springfield community as a two-year institution for nearly 75 years, Springfield College in Illinois (“SCI”) entered into a “permanent partnership” with the University in 2003 to bring Benedictine programs and services to the Springfield area. The partnership between SCI and the University evolved and expanded, eventually leading to a decision in 2009 to establish Benedictine University at Springfield (“BenUS”), a four-year institution offering a full range of academic programs. With the University’s formation of the Springfield branch campus on SCI’s site, SCI subsequently terminated its academic offerings. Beginning with the 2013 fiscal year, the University was deemed to have a controlling economic interest in SCI and SCI was included in the consolidated financial statements of the University and Affiliates.

Asia Programs The Asia Institute is focused on three primary initiatives: (1) offering degree programs in Asia (currently China and Vietnam) with partner institutions; (2) attracting foreign students to attend the University in the U.S. and promoting Benedictine programs in Asia; and (3) establishing relationships with Chinese universities to provide opportunities for faculty/student exchanges, and study abroad programs. The University offers graduate level cohort based programs at partner universities in China and Vietnam. Students reside in and are citizens of the countries in which the programs are offered. In general, the

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programs are structured so that a portion of the courses are taught by the faculty of the partner university and a portion is taught by University faculty who travel to the partner university. In fiscal 2014, the University will hold programs with four partner universities in China and two in Vietnam. Additionally, Asian nationals are recruited to enroll in and study at the University in the United States, primarily at the main campus in Lisle, IL and to a lesser extent at the branch campus in Springfield, IL.

Mesa Branch Campus In March of 2011, Benedictine University was approached by the City of Mesa to respond to a “Request for Information” for the purpose of establishing a campus in Mesa, Arizona. The Mayor of the city and members of the City Council were seeking an established university to serve as the lead institution for bringing higher education to their community. Market research by the Office of Economic Development in Mesa provided information pointing to an underserved population of traditional and adult students desiring an established liberal arts institution, specifically faith-based. After many meetings with Mesa community leaders, various business executives as well as with educational leaders, in January 2012, Benedictine was named the lead institution for the City of Mesa.

On September 3, 2013, Benedictine opened its doors to its newest branch campus welcoming an enrollment of approximately 100 students. In the number of enrolled students there were high school leaders, community college transfers, those active in their parishes and churches, and social activists. The use of market research was instrumental in the decisions made by Benedictine but the first class of students surpassed all expectations in many respects. In an effort to focus on market needs and demands, the University began with a limited curriculum targeting those areas of greatest interest. With an eye toward fiscal responsibility and best practices, staffing the branch campus in Mesa has been strategic and methodical.

As the State of Arizona's only four-year Catholic University campus, Benedictine views the Mesa branch campus as an investment into long term growth. From the many inquiries from prospective students and parents, it appears the demand for a Catholic, Benedictine, liberal arts education is of great interest from within the state of Arizona as well as from various areas in the southwestern region of the United States.

The City of Mesa has been and continues to be very supportive of the partnership with the University. Gillett Hall, the main campus building, is situated at 225 Main Street. The University leases this facility. Although in its infancy as a branch campus, Benedictine at Mesa was recognized as an institution on the cutting edge in its use of technology in learning. The University has hired a President and a number of creative faculty and qualified staff to develop, promote and implement academic programs and student services. The University has a strong history of offering "market demand", affordable adult education programs which will be forthcoming in Mesa. These selected programs will serve to meet the needs of adults as well as compliment the traditional academic offerings.

Student Life Benedictine offers a variety of programs and offerings for its student body so as to better enhance the student experience. The University is dedicated to the education of undergraduate and graduate students from diverse ethnic, racial, and religious backgrounds. The University’s Office of Student Life is committed to the enhancement of student learning and personal development. Emphasis is placed on the values of community responsibility, diversity, social justice, human dignity, and Benedictine heritage by modeling and providing programs that foster fairness, wellness, cooperation, and leadership. The Office is responsible for student services, educational programming, and learning experiences gained through out of classroom activities.

In addition to its various academic programs, Benedictine provides students with a multitude of academic, social, and athletic opportunities outside of the classroom. These opportunities are designed to promote interaction amongst students as well as to promote general student welfare. A listing of the programs offered by Benedictine is set forth below:

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Benedictine Clubs and Organizations (Lisle Campus Only)

Academic Organizations American Chemical Society/Society of Physics Marketing Club Students Math Club American Dental Student Association Nutrition Club American Medical Student Association Optometry Club Arts Club Pharmacy Club Business Club Pre-Law Society Candor Newspaper Psychology/Sociology Club Human Resources Club Tri-Beta Biology Honors Society Investment Club

Service Organizations American Red Cross Rotaract BenU Unicef Soldiers, Sailors, Airmen, Marines, and Coast Guard Best Buddies Student Senate Care to Cure Students for Ecological and Environmental Kiva Club Development

Social Student Organizations and Clubs Science-Fiction and Fantasy Club Yoga Club

Spiritual and Cultural Student Organizations and Clubs Association of Latin American Students Hindu Student Association Black Student Union Intercultural Club Campus Crusade for Christ Knights of Columbus Chinese Students and Scholars Association Muslim Student Association Everybody Loves Everybody Students for Justice in Palestine Order of Daughters of Isabella Students for Life Thaakat

Athletics The philosophy of the Benedictine Athletics Department is grounded in a strong belief that athletics are a useful facet of the total educational experience provided by the University. The Athletics Department believes student-athletes develop skills for success in life through a quality athletic program, one which provides an opportunity for the student-athlete to develop as a whole person. Student-athletes take the intercollegiate experience gained and successfully transfer it to their chosen career when they complete their education.

The University offers 21 intercollegiate athletic programs, most of which compete in the Northern Athletics Collegiate Conference at the NCAA Division III level. With a strong desire to enhance recruitment and retention, the athletic coaches and staff at the University have developed a balanced, competitive intercollegiate program where student athletes strive for excellence. The following table lists Benedictine’s intercollegiate athletic teams:

Intercollegiate Athletic Teams (Lisle Campus Only) Men's Women's Baseball Golf Basketball Soccer Basketball Lacrosse Cheerleading Softball Cross Country Soccer Cross Country Tennis Football Track & Field Dance Team Track & Field Golf Volleyball Lacrosse

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FACULTY AND STAFF

As of fall 2013, the University employed a total of 620 faculty members: 166 full-time and 454 part-time. Of the full-time faculty, 74% are classified as tenured or on tenure-track, with 84% on the Lisle campus. Approximately 45% of all faculty for all Benedictine campuses hold terminal degrees, with 87% full-time faculty holding terminal degrees on the Lisle campus. For the 2013-14 academic year, the average student to faculty ratio at the University was 14:1. Benedictine strives to attract and retain dedicated faculty who are practicing industry professionals in their field and who provide individualized attention to their students. Depicted below is a listing of Benedictine faculty and staff members by years of service:

Table 1: Benedictine Faculty and Staff Years of Service

Years of Service Number of Employees 0 to 5 377 6 to 10 105 11 to 15 62 16 to 20 26 21 to 25 15 26 to 30 11 30+ years 18

The University recognizes the value of tenure in promoting not only academic freedom, but also the stability of a community of teachers and scholars dedicated to these ideals. Tenure is granted by the Board of Trustees on the recommendation of the President, Provost and Vice President for Academic Affairs. Tenure may be granted, with the approval of the Board of Trustees, on appointment to a faculty member who has been tenured or has held equivalent rank elsewhere. Ordinarily, however, tenure is granted after a probationary period of teaching at Benedictine. Faculty members having a probationary appointment are eligible for tenure provided they have completed six years of college teaching and ordinarily have compiled at least three years of service as a regular faculty member at Benedictine.

In fiscal year 2014, the University made available a new planned retirement incentive program to its faculty. The program’s main purpose is to reward individuals who have been members of the institution’s faculty for an extended period of time and whose aggregate compensation over the course of their academic careers has not kept pace with salaries in private sector businesses and organizations. Faculty members who are selected for the program will work the first year of participation in the program and then receive payouts the next two successive academic years based on a percentage of their base salaries. The program will enable the University to refresh its academic workforce and align future revenues with expenses. It is anticipated that the University will be accruing a liability as of May 31, 2014 for those faculty members participating in the program. A final figure is not yet available; however, early estimates for up to six faculty members could result in an accrued liability of approximately $1 million representing the value of potential payouts in fiscal years 2015 and 2016.

STUDENT ENROLLMENT

The University’s enrollment-related revenue growth is attributable to the President’s philosophy of “adding legs to the table”. When one leg fails, another leg is in place to keep the table from falling. In essence, it is a tuition diversification strategy, which helps explain the various sources of enrollment revenue. Geographically, the University produces tuition revenue in China, Vietnam, Mesa, AZ, (which will also serve as a platform for the Southwest U.S.), Springfield, IL, multiple sites in the Chicago area through its adult evening cohort programs, and its main campus in Lisle, Illinois. The University also provides online education across the U.S. and partners with community colleges (College of DuPage, Triton College) to provide programs at tuition rates comparable to those offered by public universities.

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Through the University’s consistent growth in enrollment related revenue and its ability to manage its expenses and invest in strategic opportunities, the University has been able to produce year-to-year operating surpluses and grow its total net assets.

In the fall of 2012, the Office of the Vice President of Enrollment reported its largest traditional freshman class (497) and one of its highest transfer classes (440) of all time (traditional freshman and transfer matriculants were 430 and 411, respectively, for Fall 2011). For fall 2013, the number of traditional freshman enrollments declined to 466 while the number of transfer matriculations remained about the same at 442. The fall 2013 freshman class still represented the second highest freshman enrollment in the University’s history. It should be noted that the Office of Enrollment experienced significant turnover in the majority of its freshman recruiter positions, which is believed to have resulted in missed opportunities. A more stable staff is in place and ready for the fall 2014 recruiting season.

Overall enrollment at the University declined from 7,013 students in fall 2011, to 6,516 in fall 2012, and to 6,318 in fall 2013. While the number of bachelor’s degree seeking students grew between fall 2011 and fall 2013 (by five students from 3,825 in fall 2011 to 3,830 in fall 2013), the number of students seeking graduate degrees decreased (by 700 students from 3,188 in fall 2011 to 2,488 in fall 2013). Enrollment in the University’s graduate degree program in education has been negatively impacted by the uncertainty surrounding the Principal Preparation Program (Type 75 Certificate), a certificate which enables students to become eligible for principal positions in the state. The College of Education and Health Services has been moving forward with an application to the Illinois State Board of Education for a new Principal Certification Program as a replacement to the former Type 75 Certificate. The new program, if approved, could open the door for future graduate education programming.

Fiscal years 2012 and 2013 were also transition years for the University’s adult accelerated evening program, which offers Associate of Arts in Business Administration, Bachelor of Arts in Management, Master of Business Administration, and Master of Education degree programs. After years of outsourcing the marketing, recruiting, and accounting functions to an outside service provider, these functions were brought in-house during fiscal year 2012. The tuition sharing arrangement was also discontinued with the outside service provider at the beginning of that year. The University assumed the student billing and collection functions and accordingly recognized the full tuition revenue. The insourcing transition considerably affected the University’s student recruiting given the challenge of hiring and organizing a full recruiting and supporting staff as well as dealing with start-up lead generation. The effects of the transition continued through fiscal year 2013. Just recently (fiscal year 2014), a newly created Vice President position was added to the management team that focuses solely on the adult market in Lisle, IL, Springfield, IL, Mesa, AZ, and other geographical locations deemed viable. The individual comes to the University with years of experience in the adult education market and is expected to give this area of the University’s enrollment some revitalization. Management is also currently in discussions about offering a low cost Master of Business Administration alternative in Mesa, AZ and Springfield, IL in response to affordability concerns by consumers and market demand in those locales.

The following table depicts student demand statistics for Benedictine’s programs for the current and previous four academic years:

Table 2: Undergraduate Applications, Acceptances, and Matriculants (Lisle Campus Only) 2009-10 2010-11 2011-12 2012-13 2013-14 Traditional Freshman Applications 1,644 1,575 1,531 1,818 2,109 Acceptances 1,311 1,212 1,153 1,359 1,466 Acceptance Rate (%) 79.7% 77.0% 75.3% 74.8% 69.5% Matriculations 445 443 430 497 466 Matriculation Rate (%) 33.9% 36.6% 37.3% 36.6% 31.7%

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Transfers Applications 840 998 961 1,078 1,117 Acceptances 725 693 775 773 784 Acceptance Rate (%) 86.3% 69.4% 80.6% 71.7% 70.1% Matriculations 391 424 411 440 442 Matriculation Rate (%) 53.9% 61.2% 53.0% 56.9% 56.3%

Total Applications 2,484 2,573 2,492 2,896 3,226 Acceptances 2,036 1,905 1,928 2,132 2,250 Acceptance Rate (%) 82.0% 74.0% 77.4% 73.6% 69.7% Matriculations 836 867 841 937 908 Matriculation Rate (%) 41.1% 45.5% 43.6% 43.9% 40.3%

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The following table depicts the University’s total enrollment of students broken down by degrees for the current and last seven academic years:

Table 3: Benedictine Total Headcount and FTE Enrollment (All Locations) Headcount 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

Undergraduate Lisle Campus 2,433 2,660 2,901 2,958 2,948 2,921 2,918 2,960 Mesa Campus n/a n/a n/a n/a n/a n/a n/a 82 SCI Campus _224 333 381 397 783 904 806 788 Total UG Headcount 2,657 2,993 3,282 3,355 3,731 3,825 3,724 3,830

Graduate Lisle Campus 1,200 1,439 1,865 2,359 3,058 3,069 2,698 2,408 Mesa Campus n/a n/a n/a n/a n/a n/a n/a n/a SCI Campus _67 141 132 122 103 119 _94 _80 Total Graduate 1,267 1,580 1,997 2,488 2,481 3,161 3,188 2,792 Headcount

Total Headcount 3,924 4,573 5,279 5,836 6,892 7,013 6,516 6,318

FTE*

Undergraduate Lisle Campus 1,893 2,123 2,298 2,373 2,508 2,517 2,555 2,607 Mesa Campus n/a n/a n/a n/a n/a n/a n/a 70 SCI Campus _121 _180 _237 253 573 739 630 637 Total UG FTE 2,014 2,303 2,535 2,626 3,081 3,256 3,185 3,314

Graduate Lisle Campus 546 756 985 1,213 1,675 1,548 1,274 1,121 Mesa Campus n/a n/a n/a n/a n/a n/a n/a n/a SCI Campus _ 60 _111 _ 78 _91 _71 _78 _59 _63 Total Graduate FTE 606 867 1,063 1,304 1,746 1,626 1,333 1,184

Total FTE 2,620 3,170 3,598 3,930 4,827 4,882 4,518 4,498

*FTE represents the number of full-time students plus one third of part-time students

The University’s undergraduate enrollment is divided into Benedictine’s four colleges of traditional undergraduate study: the College of Business; the College of Education and Health Services; the College of Liberal Arts; and the College of Science. The following table depicts Benedictine’s undergraduate new student enrollment by degree program for the 2012-13 academic year:

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Table 4: 2012-13 Traditional Undergraduate New Student Enrollment by Degree Program (Lisle Campus Only) Headcount Percentage College of Business Accounting 33 5.0% Business and Economics 14 2.1% Business with Science Applications 5 0.8% Economics 4 0.6% International Business 6 0.9% Management and Organizational Behavior 21 3.2% Finance 11 1.7% Marketing 14 2.1% Total 108 16.5%

College of Education and Health Services Elementary Education 25 3.8% Physical Education 8 1.2% Special Education 10 1.5% Nutrition 30 4.6% Nursing 22 3.4% Total 95 14.5%

College of Liberal Arts Bilingual Journalism 3 0.5% Communication Arts 9 1.4% Criminal Justice 25 3.8% English Language and Literature 2 0.3% Fine Arts 2 0.3% Global Studies Graphic Arts and Design 2 0.3% History 3 0.5% International Studies 2 0.3% Medical Humanities 1 0.2% Music Music Education 2 0.3% Philosophy Political Science 12 1.8% Psychology 51 7.8% Social Science 8 1.2% Sociology 6 0.9% Spanish 2 0.3% Studio Art 1 0.2% Theology 3 0.5% Writing and Publishing 3 0.5% Total 137 20.9%

College of Science Biology 119 18.2% Clinical Life Science - Perfusion Technology Clinical Life Science - Respiratory Care Engineering Science 17 2.6% Biochemistry/Molecular Biology 24 3.7% Chemistry 17 2.6% Clinical Laboratory Science 5 0.8% Computer Information Systems 5 0.8% Computer Science 12 1.8%

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Diagnostic Medical Sonography 5 0.8% Environmental Science 4 0.6% Health Science 89 13.6% Mathematics 4 0.6% Nuclear Medicine Technology 2 0.3% Physics Pre-Professional Health - Chiropractic Pre-Professional Health - Occupational Therapy Pre-Professional Health - Optometry Pre-Professional Health - Pharmacy 8 1.2% Pre-Professional Health - Veterinary Medicine Pre-Professional Health - Dentistry Pre-Professional Health - Medicine Pre-Professional Health - Physical Therapy Pre-Professional Health - Podiatry Radiation Therapy 4 0.6% Total 315 48.1%

Total Undergraduate Headcount Enrollment 655 100.0%

Note: Only includes students that have declared his/her major(s).

Student Characteristics The following table shows the mean ACT scores of Benedictine’s matriculating freshman for the current and past four fiscal years.

Table 5: Mean ACT Scores of Matriculating Freshmen (All Locations) 2009-10 2010-11 2011-12 2012-13 2013-14 Class Size 453 550 537 612 635 Mean ACT Composite 23 22 23 22 22 25th Percentile ACT Composite 20 19 19 19 19 75th Percentile ACT Composite 26 25 25 24 25 Percent in top 10% of high school class 15% 13% 13% 14% 16% Percent in top 50% of high school class 70% 65% 65% 71% 72%

The University’s undergraduate student population is primarily drawn from Illinois, although that percentage has dropped from 96% to 76% over the last 10 years. For the 2012-13 academic year, Benedictine drew students from all 50 states, up from 25 states 10 years ago.

Table 6: Student Geographic Profile (All Locations) 2009-10 2010-11 2011-12 2012-13 2013-14 Number of States Represented 49 48 50 50 50 Percent Students from Illinois 85% 78% 77% 75% 76% Number of Foreign Countries Represented 16 15 15 16 24 Number of Non-Resident Aliens 92 116 132 140 119

Benedictine enrolled 119 international students for the 2013-14 academic year, representing over sixteen countries. Benedictine draws its largest population of international students from China.

Benedictine has averaged a freshman to sophomore retention rate of approximately 75% over the past five academic years. The University has focused on improving student retention through a variety of efforts, such as enhancing student programming and expanding on-campus student housing options. As a result of these strategic efforts to improve retention, freshman to sophomore retention has remained stable. The following table depicts the University’s retention trends from freshman to sophomore year for the past five academic years:

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Table 7: Freshman to Sophomore Undergraduate Student Retention (All Locations) 2009-10 2010-11 2011-12 2012-13 2013-14 Retention (%) 76% 81% 73% 73% 74%

TUITION

The University’s total tuition, room, and board charges are highly competitive with those of the private colleges and technical universities with which it regularly competes for students. The following table details Benedictine’s undergraduate tuition, room, and board charges for the current and past four academic years:

Table 8: Benedictine University Tuition, Room and Board (Lisle Campus Only) 2009-10 2010-11 2011-12 2012-13 2013-14 Tuition $ 21,600 $ 22,500 $ 23,650 $ 24,850 $ 25,840 Room and Board 6,963 7,257 7,627 7,927 8,280 Total $ 28,563 $ 29,757 $ 31,277 $ 32,777 $ 34,120

Benedictine considers University of Illinois at Chicago and Loyola University (for science programs) and North Central College and Elmhurst College (for business programs) to be its primary competitors for students. The table below includes tuition of the institutions that Benedictine considers to be its primary competitors for the years 2010-11 through 2012-13.

Table 9: Comparable Tuition and Fees Institution Name 2010-11 2011-12 2012-13 Northwestern University $ 40,223 $ 41,983 $ 43,779 Loyola University-Chicago 32,114 33,294 34,578 Marquette University 30,462 31,822 33,244 DePaul University 28,858 30,618 32,295 Elmhurst College 28,660 30,054 31,650 North Central College 28,224 29,733 31,071 Wheaton College 27,580 28,960 30,120 Saint Xavier University 25,520 27,060 28,110 Dominican University 25,710 26,610 27,730 Concordia University-Chicago 24,396 25,456 26,476 Lewis University 23,780 24,770 25,770 Benedictine University (Lisle campus) 23,240 24,650 25,850 Aurora University 18,700 19,450 20,100 University of Illinois at Urbana-Champaign 13,096 13,838 14,522 University of Illinois at Chicago 12,056 12,656 13,122 College of DuPage 4,128 4,224 4,352

Source: Integrated Postsecondary Education Data System (“IPEDS”) Data Center. Ranking Report for: Price of attendance for full-time, first time undergraduate students (academic year programs). Fiscal year 2013-14 data is not available from IPEDS at this time.

FINANCIAL AID

The University’s Office of Financial Aid administers a variety of federal, state, and institutional programs of student financial assistance. Federal Title IV participation includes the following programs: Direct Loan, Pell Grant, Federal Work-Study, Supplemental Educational Opportunity Grant, and Perkins Loan. The state of Illinois provides funding through the Illinois Monetary Award Program, and the University

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offers a number of scholarship and grant programs based on both student merit and entitlement.

The University’s Lisle campus operates its federal Title IV student financial aid assistance programs under a Program Participation Agreement with the Department of Education. Financial aid programs offered for students at the Springfield and Mesa branch campuses, as well as numerous off-site program locations operate as additional locations of the Lisle campus and financial aid oversight is provided by the Lisle campus.

Table 10: Institutional Financial Aid 2008-09 2009-10 2010-11 2011-12 2012-13 Scholarship and grants $ 12,391,881 $ 14,413,682 $ 17,053,985 $ 18,671,850 $ 21,981,613 Number of students 1,737 1,969 2,492 2,446 2,600 Average amount of aid received $ 7,134 $ 7,320 $ 6,843 $ 7,634 $ 8,454

GEOGRAPHIC AREA AND FACILITIES

Benedictine has four primary locations with its main campus located in Lisle, Illinois. Branch campuses are located in Springfield, Illinois, and Mesa, Arizona and a satellite location is in Naperville, Illinois.

The main campus is located in the small suburban village of Lisle, in the far western suburbs of Chicago and DuPage County. The campus is situated on 108 acres, which houses 22 buildings, including a parking garage, and sports complex with various athletic fields. Benedictine has made great efforts to improve the campus and facilities over the last few years. These improvement projects include a $2.5 million renovation in August 2012 for the Kindlon Hall of Learning that repurposed the second and third floor as a new ‘Learning Commons’ and transformed the lower level of the building into the new location for the Library Resource Center; a $1.7 million locker room addition in August 2012 to the Dan and Ada Rice Center known as the Borsellino Family Football Center and $2.5 million renovation in September 2012 for the Neff Welcome Center that houses various offices, a conference room, plaza, and patio that hosts prospective students and their families. The following table identifies the University’s Lisle campus facilities, the type of each facility, the year they were constructed, the year of the most recent renovation, if applicable, and the approximate square footage:

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Table 11: Lisle Campus Facilities

Year Year Building Type Built Renovated Size (ft2) Birck Hall of Science Academic 2000 93,137 Dan and Ada Rice Center Athletic 1977 2011-12 80,053 Founders Woods Apartments Residential 1999 123,825 Maintenance and Grounds Shop Support 1935 5,678 Jaeger Residence Hall Residential 1950 24,421 Kindlon Hall of Learning Academic 2000 111,749 Krasa Center Support 1988 2004 (Partial) 66,000 Lownik Hall Support 1963 2003 / 2004 29,459 Neuzil Residence Hall Residential 1968 34,797 Ondrak Residence Hall Residential 1969 31,014 Power House & Coal Ben Support 1921 2007 13,030 Scholl Hall Academic 1968 2003 55,375 Sports Complex Athletic 2004 63,777 Parking Garage Support 2011 153,860 Neff Welcome Center Support 1852 2012 2,665 Total Gross Sq. Footage 888,840

The Naperville location houses the Moser Center for Adult and Professional Studies. Located just a few minutes from the University's main campus in Lisle, the Moser Center in Naperville offers six classrooms equipped with flex seating or nova workstations ideal for workshops, conferences, and presentations for smaller groups. Classrooms can accommodate 20 to 100 students.

The Springfield branch campus is situated on 25 acres, which houses 16 buildings, parking lots, and a softball field. Along with the improvement projects on the primary Lisle campus, the Springfield branch campus has had many facility improvements over the last few years. These improvements include two sets of renovations on the Becker Library of $80,000 in June 2010 and $98,000 in July 2013 to improve space for student study and tutoring activities; a $100,000 renovation in August 2010 of Dawson Hall to remove the University bookstore and install a campus store; a $1.1 million renovation in August 2012 of Angela Hall to install a new microbiology lab for science majors, new faculty offices, and reclaim space to centralize campus police services; and a $186,000 renovation in August 2013 of Weaver Hall to split outdated lab space into a multipurpose general lab and physics lab. The following table identifies the University’s Springfield branch campus facilities, the type of each facility, the year they were constructed, the year of the most recent renovation, if applicable, and the approximate square footage:

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Table 12: Springfield Branch Campus Facilities

Year Year Building Type Built Renovated Size (ft2) Brinkerhoff Home Office 1869 7,400 Becker Library Library/Class 1965 2010 20,000 Dawson Hall Class/Office 1929 2010 31,000 Angela Hall Class/Lab 1958 2012 32,000 Beata Hall Office 1904 9,600 Weaver Hall Labs 1961 2013 8,200 Hanlon Hall Res Hall 1970 7,600 Mueth Hall Res Hall 1965 2013 3,876 Mueller Hall Res Hall 1870 13,500 Dockson Plaza Apartments 1993 6,800 8th Street Gym Unoccupied 1935 10,700 Sacred Heart Chapel Chapel 1891 4,980 Boiler Building Maintenance 1900 3,950 Shop Maintenance 1976 1,200 Ursula Hall Unoccupied 1895 15,500 Academy Building Unoccupied 1875 35,904 Total Gross Sq. Footage 212,210

The Mesa branch campus is located on Main Street in downtown Mesa, Arizona. The University has two primary facilities; the Gregory Enrollment Center (51 East Main Street, Suite 105) and Gillett Hall (225 East Main Street). The Gregory Enrollment Center is a 3,682 square foot office space defined as the enrollment launch point for the new branch campus. Gillett Hall is the primary educational facility. The building recently underwent a 2 year, $10.8 million renovation of 34,000 square feet of the nearly 70,000 square foot building. The building contains 4 classrooms, 1 nutrition lab, café, spirit store, lounge space, student study areas, student life offices, services offices, and faculty offices.

FINANCIAL MATTERS

Accounting Matters The following summaries and discussions of financial matters should be read in conjunction with the consolidated financial statements of the University and Affiliates, related notes, and the accountants' report included in Appendix B to this Official Statement. Benedictine and Affiliates operate on a fiscal year ending May 31. The financial statements of the University and Affiliates have been prepared on an accrual basis in accordance with generally accepted accounting principles for educational institutions.

Benedictine has three affiliates as follows:

Affiliate Primary Purpose Founders Woods A nonprofit corporation established to acquire a student housing facility developed on University land. Springfield College in Illinois A nonprofit corporation that operates as a higher educational institution. Benedictine (Guangzhou) A wholly foreign owned enterprise established to support the Education Consulting Co., Ltd. University’s mission and activities in China.

The information presented in the following tables has been extracted from the University and Affiliates’ financial statements for the respective years, as audited by Wolf & Company LLP. The following table

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summarizes the Unrestricted Statement of Activities of the University and Founders Woods for the fiscal years ended May 31, 2009 through May 31, 2013.

Table 13: Unrestricted Statement of Activities

Fiscal Year Ended May 31, 2009 2010 2011 2012 2013 Revenue and other support: Tuition and Fees $ 72,945,837 $ 81,424,741 $ 94,010,890 $ 103,138,614 $106,390,857 less scholarships and grants (25,246,556) (29,205,838) (33,638,169) (36,591,922) (38,587,572) Net tuition and fees 47,699,281 52,218,903 60,372,721 66,546,692 67,803,285 Private gifts and grants 1,158,169 815,490 876,776 971,811 751,463 Government grants and contracts 8,573,261 10,820,999 15,074,991 15,030,122 14,848,970 Investment income (loss) (4,818,525) 1,694,139 2,935,490 (985,143) 2,427,701 Other income 941,023 823,671 1,296,001 1,191,390 1,022,135 Auxiliary enterprises 5,387,535 5,654,584 6,084,156 5,879,440 6,363,522 Net assets released from restrictions 900,502 950,193 635,369 1,471,166 1,401,146 Total revenue and other support 59,841,246 72,977,979 87,275,504 90,105,478 94,618,222 Expenses: Compensation: Salaries 25,807,571 29,385,012 32,609,886 36,734,967 39,321,283 Benefits 5,787,519 6,236,721 7,362,709 9,347,502 10,320,475 Total compensation 31,595,090 35,621,733 39,972,595 46,082,469 49,641,758 Utilities 2,197,832 1,930,116 2,013,867 2,079,255 2,211,816 Depreciation and amortization 3,404,354 3,464,080 3,455,925 3,767,985 4,148,860 Interest 1,306,728 1,057,476 1,095,471 1,255,674 1,257,698 Bad debts 500,000 510,992 606,000 724,857 642,973 Supplies and services 20,058,086 22,239,401 27,447,413 32,971,460 31,148,434 Total expenses 59,062,090 64,823,798 74,591,271 86,881,700 89,051,539 Increase (decrease) in net assets 779,156 8,154,181 12,684,233 3,223,778 5,566,683 Other changes in net assets: Change in fair value of interest rate swap (801,508) (599,043) (801,650) (983,762) 867,060 agreements Change in net assets (22,352) 7,555,138 11,882,583 2,240,016 6,433,743 Net assets, beginning of year 41,861,200 41,838,848 49,393,986 61,276,569 63,516,585 Transfers Net assets, end of year $ 41,838,848 $ 49,393,986 $ 61,276,569 $ 63,516,585 $69,950,328

Management’s Discussion of Financial Performance The University has been able to produce sound financial results over the past five years driven primarily by enrollment growth and in part, by moderate tuition rate increases. The University’s modus operandi is “adding legs to the table,” a tuition diversification strategy, and keeping tuition priced at low to moderate levels. For example, the traditional undergraduate tuition for fiscal 2010 was frozen at fiscal 2009 levels to help families and their children cope with the economic crisis at the time. The University has experienced growing demand for institutional aid over the years as the competition for traditional students becomes more intense. Even though the University’s institutional discount rate is less than the national average, management is committed to reversing this trend by refocusing its efforts on more data driven strategic enrollment management practices and to marketing and communicating the value of the University’s degrees. Together with the complementary array of nontraditional sources of tuition revenue and the application of prudent budget management and expense controls, the University has been able to enjoy a history of positive operating surpluses over the years and is dedicated to continuing this trend into the future.

The Mesa branch campus opened its doors to students in fiscal year 2014. The University has projected a net cash outlay of approximately $3 million to cover operating costs and capital expenditures in fiscal year 2014. The expected deficiency in operating the branch campus will be a drag to the University’s results in fiscal year 2014. The cumulative start-up investments are not expected to be recouped until fiscal year 2016 and thereafter. While a final figure is not yet available, the new faculty retirement

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incentive program, if early estimates for up to six faculty members are realized, could result in an accrued liability of approximately $1 million as of May 31, 2014 for payouts in fiscal years 2015 and 2016.

Management remains confident that the University will be able to deliver on its mission and is cautiously optimistic about its future in large part because of its committed and talented board, faculty, staff, and study body.

The total net assets for the University and Founders Woods are as follows for the previous five fiscal years ended May 31:

Table 14: Total Net Assets

2009 2010 2011 2012 2013 Unrestricted $ 41,838,848 $ 49,393,986 $ 61,276,569 $ 63,516,585 $ 69,950,328 Temporarily restricted 4,261,990 6,375,720 9,409,994 8,462,823 13,439,410 Permanently restricted 8,176,566 10,096,289 12,699,785 11,198,198 12,342,436 Total net assets $ 54,277,404 $ 65,865,995 $ 83,386,348 $ 83,177,606 $ 95,732,174

Springfield Branch Campus For fiscal 2013, SCI’s financial statements were consolidated for financial reporting purposes with Benedictine’s. In the fall of 2009, the staff of SCI was added to the University’s payroll (approximately $2 million in total salaries) followed by the faculty in the fall of 2011 (approximately $1.1 million in total salaries). The faculty remained at SCI to complete the “teach-out” of the students that were still enrolled in SCI’s academic programs. SCI continues to retain ownership of the real property. The University pays rent to SCI for academic and administrative purposes (classrooms, laboratories, offices, library, meeting rooms, and other similar purposes). BenUS and SCI reduced the inter-entity rent in fiscal year 2013 by one-half to align the revenues closer to actual expenditures. Staff members on BenUS’s payroll provide value to SCI – they manage the physical plant and student housing, handle the accounting records and bookkeeping, and provide general oversight through the branch campus president. These personnel costs are borne by BenUS. SCI also receives room and board income from the University’s students. SCI’s primary expenses pertain to the operation of the physical plant (such as utilities and maintenance) and room and board. SCI and the University share the same president, and SCI’s Board Chair and Vice Chair are also trustees of the University. It is this composition (a majority of the remaining SCI trustees are principal officials of the University) and economic interest that prompted the consolidation of SCI’s financial statements with those of the University, beginning with the 2013 fiscal year.

During fiscal year 2013, BenUS generated approximately $8.5 million in gross tuition and fees, and SCI added another $4,000. On a pro forma basis, consolidating BenUS and SCI over the 4 years prior to fiscal 2013 would have resulted in gross tuition revenue and fees as follows:

Table 15: Breakdown of Gross Tuition and Fees

Year BenUS SCI Total FY 2012 $8.6M $0.0M $8.6M FY 2011 $7.3M $1.1M $8.4M FY 2010 $3.5M $3.7M $7.2M FY 2009 $3.6M $3.2M $6.8M

During fiscal year 2013, Springfield on a consolidated basis (BenUS and SCI) generated a decrease in unrestricted net assets of $834,000. On a pro forma basis, consolidating BenUS and SCI over the 4 years prior to fiscal 2013 would have resulted in increases/(decreases) in unrestricted net assets as follows:

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Table 16: Breakdown of Change in Unrestricted Net Assets

Year BenUS SCI Total FY 2012 ($231K) ($47K) ($278K) FY 2011 $136K $279K $415K FY 2010 ($920K) $638K ($282K) FY 2009 ($35K) $43K $8K

Moving forward, the University and SCI will review the present structure and organizational arrangements between the two entities, including possibly dissolving the SCI corporation and transferring SCI’s assets and liabilities to the University.

Budget Procedures The University’s budgeting process has two primary objectives: to support the University’s strategic plan and to provide controls that ensure resources are expended as planned. The budgeting process must produce a budget for each fiscal year that ensures the University will be in compliance with its obligations under financial covenants with its lenders. Prior to the start of each fiscal year, the budget is presented to and approved by the Board of Trustees.

The budgeting process is a collaborative effort involving input from all areas of the University. The process is designed to ensure that information received from different areas is reviewed and approved by the heads of those areas before it is submitted for consideration and inclusion in the budget. The budget is anchored on expectations concerning University programs and activities. These projections, based on an analysis of current performance, current trends and initiatives, and other developments in the macro environment, form the basis for budgeted revenues and expenses. Budgeted revenues are derived directly from projected enrollments in the University’s academic programs and from projected activities and results in its Auxiliary Services and Advancement areas. Budgeted expenditures are correlated with the assumptions concerning programs and activities.

At the departmental level, the University uses an incremental budgeting approach, which rolls over the prior year’s budget and expects departments to justify new expenditures where material. Each year, the Director of Planning and Analysis assembles the University’s departmental operating budgets, which include requests from academic and administrative departmental units. The director works closely with budget administrators to ensure that an appropriate level of funding is available to meet their fiscal year needs. Comparisons are made with prior year budgets, prior year actual results, year to date actual results, financial trajectories, and new information that might require the budget to be adjusted up or down.

The Executive Director of Business Services and Systems (the position oversees payroll) also supports the budget process by gathering the necessary payroll budgets from the budget administrators after they have been reviewed and approved by the appropriate division leaders. The director performs analytical reviews, including trend analysis using budgets and actual figures over the last three years. The position works closely with the Deans, Associate Provost, and Administrative Senior Staff to ensure that the area payroll budgets are reasonable.

On an ongoing basis, the individual departments with budgetary control are supported by the Director of Departmental (and Grant) Accounting. The position serves the role of financial advisor to the budget administrators and assists with current and new budgetary needs and requests. The position works closely with the Director of Planning and Analysis.

Investments Benedictine has seen significant increases in its investments balance over the last five years largely due to operating surpluses, large one-time gifts, and net investment gains. Total cash and investments increased

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by approximately $29 million from $19.7 million in fiscal year 2008-09 to $48.7 million in fiscal year 2012-13. The following table depicts the allocation of investment by asset class for the previous five fiscal years for Benedictine and Founders Woods.

Table 17: Allocation of Investment Assets

2009 2010 2011 2012 2013* Cash equivalents $ 3,178,804 $ 4,583,041 $ 5,080,730 $19,141,825 $14,202,622 Equity securities 7,718,475 12,706,725 Corporate and government bonds and notes 1,903,548 2,662,120 Commodities futures 501,705 Margin loan payable (1,131,473) (748,838) Common stocks 2,011,322 1,337,227 1,023,280 Preferred stocks 1,436,762 1,754,030 3,281,837 Fixed income mutual funds 2,693,900 3,196,154 4,137,170 Commodity mutual funds 6,833 6,291 Real estate investment trusts 3,043,645 2,622,089 3,464,303 Energy trusts 2,057,458 1,543,323 1,103,800 Equity mutual funds 8,724,923 7,684,472 8,101,998 Managed futures funds 540,148 503,954 Pooled investments: Cash and cash equivalents 10,320 17,832 268 26,910 973,202 Equities Corporate and government bonds and notes Mutual funds

Common stocks 78,832 90,826 136,870 115,363 179,324 Corporate bonds 38,469 45,058 17,195 12,542 Municipal bonds 9,673 10,693 10,957 Equity mutual funds 6,634,516 8,803,469 11,739,615 10,705,204 12,090,651 Fixed income mutual funds 15,252 26,094 Precious metals mutual funds 778 Limited partnership 1,175 9,740 Assets held by trustee - bonds and cash equiv. 31,784 Cash surrender value - life insurance policies 95,598 88,875 93,762 99,067 104,411 $19,690,346 $29,499,651 $36,454,798 $48,028,053 $48,715,680

*Includes SCI investments totaling $1,011,837

Endowment Fund The University’s endowment consists of individual funds for a variety of purposes, which include both donor-restricted funds and funds designated by the Board of Trustees to function as endowments. As required by generally accepted accounting principles, net assets associated with endowment funds, including funds designated by the Board of Trustees to function as endowments, are classified and reported on the existence or absence of donor-imposed restrictions.

Investment Return Objectives, Risk Parameters, and Strategies The University has adopted investment and spending policies, approved by the Board of Trustees, for endowment assets that will provide a dependable and growing source of funding support and financial distributions for the University, while preserving the principal of the funds and protecting their value from the impact of inflation. Accordingly, the investment process seeks to achieve an after-cost total real rate of return, including investment income as well as capital appreciation, over a full market cycle, which exceeds the assumed spending rate plus the rate of inflation with acceptable levels of risk. Endowment assets are invested in a well-diversified asset mix, which includes equity and debt securities, that is intended to result in a consistent inflation-protected rate of return that has sufficient liquidity to make annual distributions, while growing the funds if possible. Therefore, Benedictine expects its endowment assets, over time, to produce an average rate of return in excess of amounts distributed annually. Actual returns in any given year may vary. Investment risk is measured in terms of the total endowment fund; investment assets and allocation between asset classes and strategies are managed to not expose the fund to unacceptable levels of risk.

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Spending Policy. Benedictine University has a policy of appropriating for distribution each year a portion of its permanently restricted endowment funds fair value as of the last day of the year preceding the fiscal year in which the distribution is planned. Distributions from other endowments are made on the basis of prudent application of the funds in furtherance of the University’s strategic plan in accordance with donor-imposed restrictions, when and if applicable, on the use of the funds. In establishing this policy, Benedictine considered the long-term expected return on its investment assets, the nature and duration of the individual endowments funds, many of which must be maintained indefinitely because of donor imposed restrictions, and the possible effect of inflation. The University expects the current spending policy to allow its endowment funds to grow at a nominal average annual rate, which is consistent with the University’s objective to maintain the purchasing power of the endowment assets as well as to provide additional real growth through investment return.

The endowment fund of the University and Founders Woods as of May 31 for the previous five fiscal years are as follows.

Table 18: Endowment Fund

2009 2010 2011 2012 2013* Donor-restricted endowment fund Temporarily restricted $ 2,105,355 $ 3,056,272 $ 4,030,106 $ 3,676,371 $ 7,797,301 Permanently restricted 8,176,566 10,096,289 12,699,785 11,198,198 12,966,650 Board-designated endowment funds Unrestricted 10,060,274 11,754,450 14,668,458 13,670,866 16,089,806 Total funds $ 20,342,195 $ 24,907,011 $ 31,398,349 $ 28,545,435 $ 36,853,757

*Includes SCI endowment funds

Physical Plant The University has invested consistently in its physical plant over the past five years. The total plant assets of Benedictine and Founders Woods as of May 31 for the previous five fiscal years are as follows:

Table 19: Total Plant Assets

2009 2010 2011 2012 2013* Land and improvements $ 7,721,115 $ 7,721,115 $ 8,065,228 $ 8,043,012 $ 9,234,228 Buildings and improvements 71,514,611 72,682,724 80,915,029 87,229,197 101,671,838 Equipment and furnishings 9,034,667 9,546,850 10,700,328 11,207,997 13,533,831 Equipment under capital lease 1,165,746 1,230,086 1,109,369 1,336,757 1,555,526 Books 2,117,116 2,117,116 2,117,116 2,056,020 2,457,316 Artifacts and collections 2,418,422 2,418,421 2,418,422 2,418,422 2,440,008 Software 2,139,061 2,146,456 2,323,380 2,263,300 2,316,668 96,110,738 97,862,768 107,648,872 114,554,705 133,209,415 Less: accumulated depreciation 32,513,193 35,684,917 38,822,199 40,893,175 48,709,648 and amortization Construction in progress 79,812 443,505 2,303,879 3,871,308 2,111,686 $ 63,677,357 $ 62,621,356 $ 71,130,552 $ 77,532,838 $ 86,611,453

*Includes SCI plant assets of $4,711,930

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ADVANCEMENT PROGRAM

Benedictine’s capital campaign has established a goal of $10-$15 million and is currently in the silent phase. In fiscal year 2013, the University received two major donations totaling approximately $3.7 million to be used toward a new academic building for the College of Business on the main campus in Lisle, Illinois. Along with $10 million of its own operating funds, approximately $18 million has already been earmarked for this capital project. The University was also allocated approximately $1 million in grant funding through the Illinois Independent Colleges Capital Program, which was used to partially fund among other things, the build out of the Kindlon Hall basement and library resource center during fiscal year 2013. The University anticipates going public with the capital campaign in spring 2014.

The following table depicts total annual philanthropic support by purpose for the previous four fiscal years:

Table 20: Annual Philanthropic Support by Purpose

2010 2011 2012 2013 Athletics $ 85,154 $ 420,489 $ 463,369 $ 195,745 College of Business 281,895 251,858 171,114 223,596 College of Education 609,604 39,852 132,461 9,830 College of Liberal Arts 258,293 202,929 28,108 46,733 College of Science 86,493 96,039 123,395 126,503 Grants 904,031 1,644,626 1,203,806 689,836 Moser College of Adult & Prof Studies 6,950 1,805 15,278 8,418 Other University Funds 574,986 2,587,278 1,049,905 4,250,103 Scholarships and Awards 451,652 499,418 614,395 480,756 Total $ 3,259,058 $ 5,744,294 $ 3,801,831 $ 6,031,520

The following table depicts total annual philanthropic support by donor group in dollars for the previous four fiscal years:

Table 21: Annual Philanthropic Support by Donor Group

2010 2011 2012 2013 Alumni $ 315,138 $ 288,923 $ 374,389 $ 486,611 Corporations or Businesses 495,601 382,860 432,246 409,777 Estate 1,000 1,948,605 574,859 10,254 Foundations 699,667 413,666 387,683 153,954 Friends 121,063 129,805 154,323 264,029 Government Agencies 1,059,090 1,734,816 1,295,020 723,284 Matching Gift Corporations 21,038 19,860 20,032 18,387 Other Organizations 16,113 196,016 32,809 16,862 Parents 32,889 40,390 29,193 41,186 Religious Organizations 300,275 300,375 301,010 1,050 Trustees 197,184 288,980 200,267 3,906,126 Total $ 3,259,058 $ 5,744,296 $ 3,801,831 $ 6,031,520

THE PROJECT

The proceeds of the Series 2013A Bonds and Series 2013B Bonds, along with an equity contribution of the University of approximately $18 million, will be used to refund all of the University's outstanding long-term debt (currently totaling $43,674,000), and to construct a new academic building on the University's main campus in Lisle, IL. Additionally, the University has secured a $10 million bridge line of credit in anticipation of capital gifts for the new building. Pending receipt of such gifts, the line of credit will be drawn if necessary to complete the new building.

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Currently, the Lisle campus instructional facilities are at capacity. Due to enrollment growth during the past decade the University has had to teach general education and humanities classes in science laboratories. The new academic building will provide the University with 20 new state-of-the-art instructional spaces with an additional 11 spaces that can be finished at a later date to meet future enrollment growth. During the past 20 years, every major investment the University has made in the Lisle campus physical plant was followed by a notable increase in enrollment. The University’s academic facilities are a significant factor to prospective students and their parents.

During the planning phase for the new academic building, the faculty in the College of Business embarked on a program review to examine future curricular development and what type of facilities would be needed to meet the demands of the new business offerings. The primary objective identified during multiple innovation summits was to ensure that future students majoring in business will be prepared to not only be global citizens but also have the information fluency and technology literacy in data mining and business analytics to be competitive in the global enterprise.

To address the emerging area of “big data”, the University has made strategic faculty hires in recent years bringing on board three core faculty in the College of Business (including the current Chair of Undergraduate Business) with expertise in business analytics. This fall, the College of Business launched a master’s degree in Business Analytics. The new academic building will house the College of Business, and will include a Bloomberg Trading Lab integrated with dedicated instructional spaces for modeling and simulation, game theory, and computational facilities to teach analytics and data mining as key competencies in the business curriculum. The facility will allow the University to further differentiate itself from the other business schools located in the suburbs of Chicago. Benedictine has an opportunity to position itself as a leader in higher education in the Chicago area for business technology. Future plans could include an Institute for Business Technology that would provide internships, graduate fellowships and scholarships, summer research opportunities for students and faculty, endowed chair(s), and visiting scholars-in-residence to help grow the brand of the College of Business. Future programming opportunities include certificate(s), undergraduate degree(s), and exploration of the possibility of offering a new doctorate degree in Business Analytics with potential concentrations in Financial Analytics and/or Global Enterprise Technology.

The new academic building will consist of approximately 130,000 square feet and will be situated adjacent to the Krasa Student Center. In addition to labs and other special use classrooms, the building will provide an auditorium, a dining facility, and a variety of student collaborative areas. It will also contain event space, the office of the President and other key administrative staff, and a board room. The building will be connected via pedestrian bridge to the Kindlon Hall of Learning (another of the University's premier academic facilities) and a parking garage.

The University intends to break ground on the project in early spring 2014, with an expected completion in time for occupancy in fall 2015. The architect is DLR Group. The construction manager has not yet been officially named, but the University expects to make its selection in November 2013. The design development phase is complete and the University estimates the project cost to be approximately $40 million. Firm bidding for the project is expected to begin in early December 2013. The University is using a "cost-plus" contract whereby the construction manager is paid for all of the project build expenses, general conditions, and insurance plus a fixed fee as profit.

ACCREDITATION AND MEMBERSHIP

Benedictine is accredited by the Higher Learning Commission and a member of the North Central Association; the Illinois State Board of Education, Teacher Certification Section; the Commission on Accreditation for Dietetics Education of the American Dietetic Association; the Commission on Collegiate Nursing Education and is approved by the Illinois Board of Higher Education. Benedictine is

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approved by the American Chemical Society to award ACS certified B.S. degrees in chemistry and biochemistry.

The undergraduate Didactic Program in Dietetics (DPD) and graduate Dietetic Internship program are accredited by the Commission on Accreditation for Dietetics Education of the American Dietetic Association.

The University is also a member of the following organizations:

 The American Council on Education  The Council for Independent Colleges  The Association of Governing Boards  The National Association of Independent Colleges and Universities  The Association of Catholic Colleges and Universities  The National Catholic Education Association  The North Central Association of Colleges and Schools  The College Entrance Examination Board  The National Association of College and University Business Officers  The East-West Corporate Corridor Association  The Federation of Independent Illinois Colleges and Universities  The Associated Colleges of Illinois  The Associated Colleges of the Chicago Area  The Illinois Council on Continuing Higher Education  The Corporate Partnership for Excellence in Education  The National Collegiate Athletic Association  The Illinois Association of College Admissions Counselors  The National Association of College Admissions Counselors  The Association for Gerontology in Higher Education  The National League for Nursing, the Institute of International Education, Inc.  The American Council on Education's Internationalization Collaborative  The National Association of International Educators  The Institute of International Education  The Forum on Education Abroad

EMPLOYEE BENEFITS AND RETIREMENT PLANS

The University sponsors a retirement plan administered by the Teachers Insurance and Annuity Association – College Retirement Equities Fund (TIAA-CREF), a national organization used to fund retirement benefits for employees of educational, research, not-for-profit, and governmental institutions. The University and eligible plan participants make periodic contributions to TIAA-CREF to purchase individual annuities and mutual funds equivalent to retirement benefits earned. The University’s contributions to the plan, which are based on a percentage of each participant’s salary, totaled approximately $1,505,029 for the year ended May 31, 2013.

INSURANCE

Benedictine carries standard industry insurance policies, including real and personal property, general comprehensive liability, educator’s legal liability, workers’ compensation and employer’s liability, automobile liability, umbrella liability, limited professional liability and athletics insurance.

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LITIGATION

Currently, the University is not involved in any pending, or to its knowledge threatened, litigation matters or disputes which, if determined adversely to the University, would have a material adverse effect on its operations or financial condition.

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APPENDIX B

CONSOLIDATED FINANCIAL STATEMENTS

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Benedictine University and Affiliates

Consolidated Financial Statements, Supplementary Information and Independent Auditor's Report For the Year Ended May 31,2013

Wolf & Company LLP Certified Public Accountants CONTENTS

Independent Auditor's Report 1-2

Consolidated Financial Statements: Statement of Financial Position 3

Statement of Activities 4

Statement of Cash Flows 5-6

Notes to Consolidated Financial Statements 7-24

Supplementary Information: Independent Auditor's Report on Supplementary Information 25

Consolidating Statement of Financial Position 26

Consolidating Statement of Activities 27

Statements of Financial Position - University Only 28

Statements of Activities - University Only 29

Statements of Cash Flows - University Only 30-31 Wolf 1\, Wolf&Company LLP Company Oakbrook Terrace Chicago

INDEPENDENT AUDITOR'S REPORT

Board of Trustees Benedictine University and Affiliates

We have audited the accompanying consolidated financial statements of BENEDICTINE UNIVERSITY AND AFFILIATES (a nonprofit organization), which comprise the consolidated statements of financial position as of May 31, 2013, and the related consolidated statements of activities and cash flows for the year then ended, and the related notes to the consolidated financial statements.

Management's Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these 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.

Auditor's Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Governmental Auditing Standards, issued by the Comptroller General of the United States. 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 the auditor's 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, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

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

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Benedictine University and Affiliates as of May 31, 2013, and the 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.

1901 S. Meyers Road, Suite 500 Oakbrook Terrace, Illinois 60181-5209

PKFA PKF International Member Firm 630.545.4500 main 630.574.7818/ax www.wolfcpa.com Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated September 24, 2013 on our consideration of Benedictine University and Affiliates' internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Benedictine University and Affiliates' internal control over financial reporting and compliance.

Oakbrook Terrace, Illinois September 24, 2013

2 BENEDICTINE UNIVERSITY AND AFFILIATES CONSOLIDATED STATEMENT OF FINANCIAL POSITION May 31,2013

ASSETS

Current assets: Cash and cash equivalents $ 15,394,121 Cash restricted 237,445 Receivables: Students, less allowance of$1,274,445 8,182,998 Other 4,151,652 Promises to give 34,282 Prepaid expenses and other assets 314,958

Total current assets 28,315,456

Loans receivable from students 2,201,210 Investments 48,715,680 Bond proceeds held in trust 3,084 Bond issue costs, net of accumulated amortization of$507,285 751,352 Property and equipment, net 86,611,453 Promises to give 176,911

$ 166,775,146

LIABILITIES AND NET ASSETS

Current liabilities: Deferred revenue $ 5,655,838 Accounts payable and accrued expenses 7,383,083 Current portion of bonds and notes payable 3,632,076 Current portion of capital lease payable 305,477 Deposits held in custody for others 1,720,427

Total current liabilities 18,696,901

Bonds and notes payable, less current portion 43,977,103 Refundable U.S. Government grants for student loans 1,935,312 Interest rate swap agreements 2,318,902 Deferred lease incentive 243,967 Deferred rent liability 287,324 Capital leases payable 531,932

Total liabilities 67,991,441

Net assets: Unrestricted 71,668,744 Temporarily restricted 14,148,311 Permanently restricted 12,966,650

Total net assets 98,783,705

$ 166,775,146 See accompanying notes to consolidated financial statements.

3 BENEDICTINE UNIVERSITY AND AFFILIATES CONSOLIDATED STATEMENT OF ACTIVITIES For the Year Ended May 31,2013

Temporarily Permanently Unrestricted Restricted Restricted Total Revenue and other support: Tuition and fees $106,394,867 $ $ $ 106,394,867 Less scholarships and grants (38,587,619) (38,587,619)

Net tuition and fees 67,807,248 67,807,248

Private gifts and grants 816,339 4,918,022 122,659 5,857,020 Government grants and contracts 14,848,970 14,848,970 Investment income 2,428,857 1,165,910 1,396,265 4,991,032 Other income 1,027,848 1,027,848 Auxiliary enterprises 7,058,030 7,058,030 Net assets released from restrictions 1,429,916 (1,055,230) (374,686)

Total revenue and other support 95,417,208 5,028,702 1,144,238 101,590,148

Expenses: Compensation: Salaries 39,354,718 39,354,718 Benefits 10,318,120 10,318,120

Total compensation 49,672,838 49,672,838 Utilities 2,353,363 2,353,363 Depreciation and amortization 4,415,429 4,415,429 Interest 1,348,393 1,348,393 Bad debts 646,014 646,014 Supplies and services 31,173,461 31,173,461

Total expenses 89,609,498 89,609,498

Increase in net assets 5,807,710 5,028,702 1,144,238 11,980,650

Other changes in net assets: Change in fair value of interest rate swap agreements 867,060 867,060

Change in net assets 6,674,770 5,028,702 1,144,238 12,847,710

Net assets, beginning of year 64,993,974 9,119,609 11,822,412 85,935,995

Net assets, end of year $ 71,668,744 $ 14,148,311 $ 12,966,650 $ 98,783,705

See accompanying notes to consolidated financial statements.

4 BENEDICTINE UNIVERSITY AND AFFILIATES CONSOLIDATED STATEMENT OF CASH FLOWS For the Year Ended May 31, 2013

Cash flows from operating activities: Change in net assets $ 12,847,710 Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation and amortization 4,415,429 Net gain on investments ( 4,213,935) Change in fair value of interest rate swap agreement (867,060) Changes in assets and liabilities: Receivables, net and promises to give ( 4,383,552) Prepaid expenses and other assets (24,807) Deferred revenue 2,199,955 Accounts payable and accrued expenses (1 ,803 ,319) Deferred lease incentive (73,191) Deferred rent liability (32,994) Deposits held in custody for others (290,834)

Net cash provided by operating activities 7,773,402

Cash flows from investing activities: Purchases of investments (14,467,943) Sales of investments 19,406,716 Purchases of property and equipment (8,898,093) Proceeds from disposition of property and equipment 905 Principal collected on loans 264,723 Loans disbursed (398,378)

Net cash used in investing activities ( 4,092,070)

Cash flows from financing activities: Proceeds from notes payable 824,123 Payment on capital lease obligations (269,620) Payments on line of credit (832,665) Principal payments on bonds and notes payable (2,642,923) Increase in U.S. Government grants for student loans (13,685) Annuity payments (25,006)

Net cash used in financing activities (2,959,776)

Net increase in cash and cash equivalents 721,556

Cash and cash equivalents, beginning of year 14,910,010

Cash and cash equivalents, end of year $ 15,631,566

See accompanying notes to consolidated financial statements.

5 BENEDICTINE UNIVERSITY AND AFFILIATES CONSOLIDATED STATEMENT OF CASH FLOWS For the Year Ended May 31,2013

Supplemental disclosure of cash flow information: Interest paid $ 1,315,193

Disclosure of significant non-cash investing and financing transactions: Equipment acquired through capital leases $ 218,770

Construction payables $ 343,080

See accompanying notes to consolidated financial statements.

6 BENEDICTINE UNIVERSITY AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization

Benedictine University (the University) dedicates itself to the education of undergraduate and graduate students from diverse ethnic, racial and religious backgrounds. As an academic community committed to liberal arts and professional education distinguished and guided by its Roman Catholic tradition and Benedictine heritage, the University prepares its students for a lifetime as active, informed, and responsible citizens and leaders in the world community. The University's main campus is located in Lisle, Illinois and branch campuses are located in Springfield, Illinois and Mesa, Arizona. In addition to 42 Illinois class sites and online offerings, programs are also offered in China and Vietnam. The main campus draws its student body primarily from the Midwestern United States.

Founders' Woods (Founders'), an Illinois not-for-profit corporation, was established to acquire a student housing facility developed on University land. The University entered into a long-term land lease with Founders' at an annual rental of $1 and guaranteed payment of Founders' bonds used to finance the acquisition of the facility. At May 31, 2013, the Founders' bonds had an outstanding balance of $9,700,000. Certain members of the University's board of trustees are on Founders' board.

Effective June 1, 2005, the University took over management of Founders' housing complex as part of the University housing program. The University collects rents directly from the students and remits the rent to Founders'.

Springfield College in Illinois (the College), is an Illinois not-for-profit corporation. From its founding in 1929 until August 2011, the College operated as private, two-year institution of higher learning. In fiscal 2010, the University obtained regulatory approvals to operate a branch campus of the University in Springfield on the College's campus, known as Benedictine University at Springfield. The College subsequently terminated its academic offerings but continues to exist as an Illinois not-for-profit corporation. The College has a lease agreement with the University pursuant to which the University utilizes certain buildings on the College's campus for academic and administrative purposes (classrooms, laboratories, offices, library, meeting rooms, and other similar purposes) for rent payments and subject to pertinent terms and conditions. The College will continue so to exist unless and until the implementation of its dissolution as a corporate entity in accordance with applicable law (including but not limited to the requirements of the Illinois Not For Profit Corporation Act). Certain members of the University's board of trustees are on the College's board.

Benedictine (Guangzhou) Education Consulting Co., Ltd. (BECC), was established as a wholly foreign owned enterprise (WFOE) under the laws of the People's Republic of China in fiscal 2013. BECC is dedicated to supporting the University's mission and activities in China. The University transfers funds to BECC to be used to cover local expenditures.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the University, Founders', the College, and BECC (collectively, the Organization). All intra-organizational transactions have been eliminated in consolidation.

It was determined that the University had a controlling economic interest in Founders', BECC, and the College. As a result, the accounts of Founders' Woods, Ltd., Springfield College in Illinois, and Benedictine (Guangzhou) Education and Consulting Co., Ltd. have been included in these consolidated financial statements as permitted by Accounting Standards Codification No. 958, Not-for-Profit Entities - Presentation ofFinancial Statements (ASC No. 958).

7 BENEDICTINE UNIVERSITY AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies (Cont.)

Basis of Accounting

The consolidated financial statements of the Organization have been prepared on the accrual basis of accounting. The significant accounting policies followed are described below to enhance the usefulness of the consolidated financial statements to the user.

Basis of Presentation

The consolidated financial statement presentation follows the recommendations of Accounting Standards Codification No. 958, Not-for-Profit Entities (ASC No. 958). Under those provisions, net assets and revenues, gains and losses are classified based on the absence or existence and nature of donor-imposed restrictions as follows:

• Unrestricted net assets- Net assets that are not subject to donor-imposed restrictions. Such assets are available for any purpose consistent with the Organization's mission. Unrestricted net assets may be further classified into designated and undesignated, with designated assets representing funds set aside at the discretion of the Board for certain purposes.

• Temporarily restricted net assets- Net assets that are subject to specific donor-imposed restrictions that will be met by actions of the Organization and/or passage of time. Temporarily restricted net assets consist of gifts and other unexpended resources available for capital expenditures, support of education programs, and annuity and life income funds.

• Permanently restricted net assets - Net assets that are subject to donor-imposed restrictions to be maintained indefinitely by the Organization. Permanently restricted net assets consist of endowment funds. The income earned on the investment of permanently restricted endowment assets is generally available for use in providing scholarships and supporting the Organization's educational program.

Cash and Cash Equivalents

For purposes of the consolidated statement of cash flows, the Organization considers all highly liquid investments purchased with an initial maturity of three months or less to be cash equivalents, with the exception of such investments purchased with endowment, annuities and life income assets which are classified as investments, and cash held in brokerage accounts with the intention to invest such funds in securities.

Investments

Investments are stated at fair value, primarily based on quoted market prices for such investments.

Fair Value Measurements

In May 2011, the Financial Accounting Standards Board (FASB) issued guidance in Accounting Standards Update No. 2011-04, Fair Value Measurements (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in US. GAAP and IFRSs (ASU No. 2011-04). ASU No. 2011-04 was issued to improve comparability of fair value application, measurements and disclosures

8 BENEDICTINE UNIVERSITY AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies (Cont.)

Fair Value Measurements (Cont.)

between U.S. GAAP reporting and IFRS reporting. ASU No. 2011-04 clarifies fair value definitions and enhances fair value measurement guidance with respect to highest and best use measurements, equity instrument measurements, and measurement of financial instruments that are managed within a portfolio. Additionally, ASU No. 2011-04 expands disclosures for unobservable inputs used in Level3 fair value measurements. ASU No. 2011-04 is effective for annual periods beginning after December 15, 2011. The Organization has adopted the provisions of ASU No. 2011-04 in fiscal year 2013.

Use ofEstimates

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, expenses, gains and losses during the reporting period. Actual results could differ from those estimates.

Property and Equipment

All acquisitions of property and equipment in excess of $5,000 are capitalized. Property and equipment are stated at cost, with the exception of donated property which is recorded at fair market value on the date of donation. Depreciation is computed on the straight-line method over the estimated useful lives of the assets as follows:

Useful Life

Buildings and improvements 5-60 years Land improvements 5-25 years Equipment and furnishings 3-50 years Books 5- 10 years Software 3- 10 years Equipment under capital lease 7-20 years

Maintenance and repair costs are expensed as incurred.

Donations of property are reported as unrestricted support unless the donor has restricted the donated asset to a specific purpose. Assets donated with explicit restrictions regarding their use and contributions of cash that must be used to acquire property and equipment are reported as restricted support. Absent donor stipulations regarding how long those donated assets must be maintained, the Organization reports expirations of donor restrictions when the donated or acquired assets are placed in service as instructed by the donor. The Organization reclassifies temporarily restricted net assets to unrestricted net assets at that time.

The Organization has capitalized its artifacts and collections since its inception. Accessions are capitalized at cost if purchased and at appraised or fair value at date of accession if received by donation. Gains or losses on the deaccessions of donated collection items are recorded based on the presence or absence of donor restrictions placed on items at the date of donation.

9 BENEDICTINE UNIVERSITY AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies (Cont.)

Endowments

In August 2008, the FASB issued guidance in ASC No. 958 related to endowment fund presentation and disclosures. ASC No. 958 provides guidance on the net asset classification of donor-restricted endowment funds for a not-for-profit organization that is subject to an enacted version of the Uniform Prudent Management of Institutional Funds Act of 2006 (UPMIFA). The pronouncement also improves disclosures about an organization's endowment funds (both donor-restricted endowment funds and board designated endowment funds) whether or not the organization is subject to UPMIF A.

On June 30, 2009, the State of Illinois adopted UPMIF A. Under Illinois law, UPMIF A affects only decisions made or actions taken on or after June 30, 2009. The 'organization adopted and implemented UPMIF A requirements.

Contributions

The Organization accounts for contributions in accordance with the revenue recognition recommendations of ASC No. 958. Contributions, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional; that is, when the conditions on which they depend are substantially met.

All contributions are considered to be available for unrestricted use unless specifically restricted by the donor. Amounts received that are designated for future periods or restricted by the donor for specific purposes are reported as temporarily restricted or permanently restricted support that increases those net asset classes. When a temporary restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Additionally, contributions received with donor-imposed restrictions which are met in the same period are recorded as unrestricted net assets.

Contributed Services

Contributions of services are recognized as revenue by the Organization when the services received either create or enhance nonfinancial assets or require specialized skills, are provided by individuals possessing these skills, and would typically need to be purchased if not provided by donation. Contributions of teaching and administrative services were provided by the Monks of St. Procopius Abbey and have been recorded at their estimated fair value within the consolidated financial statements. For the year ended May 31, 2013, this amount totaled approximately $89,962.

Numerous alumni and other volunteers provide services to the Organization throughout the year. No amounts have been reflected in the consolidated financial statements for these services since these services do not create or enhance assets, are not provided by entities that normally provide such services for compensation, and are not substantially the same as services normally purchased by the University.

Promises to Give

Unconditional promises to give are recognized as revenues or gains in the period received and as assets, decreases of liabilities or expenses depending on the form of the benefits received. Conditional promises to give are recognized only when the conditions on which they depend are substantially met and the promises become unconditional.

10 BENEDICTINE UNIVERSITY AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of Significant Accounting Policies (Cont.)

Deferred Revenue

Deferred revenue, consisting principally of revenue from on-line programs, is recognized as income in the succeeding fiscal year when the programs are held.

Concentrations

The Organization routinely maintains balances at financial institutions in excess of federally insured amounts.

Tax Status

The Organization is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code. However, income from certain activities not directly related to the Organization's tax-exempt purpose is subject to taxation as unrelated business income.

Accounting for Uncertain Tax Positions

The Organization recognizes the financial statement impact of a tax position when it is more likely than not that the position will be sustained upon examination. The Organization is no longer subject to federal and state income tax examinations by tax authorities for years before the 2009 tax year.

Bond Issuance Costs

Bond issuance costs resulting from the 2010, 2006, 2000 and 1999 Series Bonds are being amortized over the terms of the bonds.

Accounts Receivable

Student accounts receivable are valued at management's estimate of the amount that will ultimately be collected. The allowance for doubtful accounts is based on specific identification of uncollectible accounts and the Organization's historical collection experience. Amounts are written off when they are deemed to be uncollectible and the Organization is no longer attempting to collect the outstanding balances.

11 BENEDICTINE UNIVERSITY AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. Investments

The cost and fair value of investments held by the Organization as of May 31, 2013 consist of the following: Cost Market

Cash equivalents $ 14,202,622 $ 14,202,622 Common stocks 1,401,454 1,023,280 Preferred stocks 3,031,206 3,281,837 Fixed income mutual funds 4,274,683 4,137,170 Commodity mutual funds 11,111 6,291 Real estate investment trusts 2,795,603 3,464,303 Energy trusts 1,242,304 1,103,800 Equity mutual funds 7,179,512 8,101,998 Pooled investments: Cash and cash equivalents 973,202 973,202 Common stocks 148,494 179,324 Municipal bonds 10,175 10,957 Equity mutual funds 9,712,833 12,090,651 Fixed income mutual funds 26,063 26,094 Limited partnership 1,175 9,740 Cash surrender value- life insurance policies 104,411 104,411

$ 45,114,848 $ 48,715,680

The following schedule summarizes the investment return for the year ended May 31, 2013:

Realized gain on sale of investments $ 1,148,799 Unrealized loss on investments 3,065,136

4,213,935

Interest and dividends 931,066 Investment expense (153,969)

$ 4,991,032

12 BENEDICTINE UNIVERSITY AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. Property and Equipment

The Organization's property and equipment at May 31, 2013 consists of the following:

Land and improvements $ 9,234,228 Buildings and improvements 101,671,838 Equipment and furnishings 13,533,831 Equipment under capital lease 1,555,526 Books 2,457,316 Artifacts and collections 2,440,008 Software 2,316,668

133,209,415 Less: accumulated depreciation and amortization 48,709,648

84,499,767 Construction in progress 2,111,686

$ 86,611,453

5. Bonds and Notes Payable

The Organization's bonds and notes payable as of May 31, 2013 consist of the following:

20 1OA Series Bonds on a parking garage, substantial renovation of the Rice Center excluding the fitness center, and related site development and capital expenditures, bearing interest at variable rates, payable monthly, annual principal installments beginning 2023 through 2036, secured by an irrevocable letter of credit, subject to financial covenants that require minimum liquidity and debt to net assets and earnings ratios among other covenants. The letter of credit is unsecured with a negative pledge on the University's assets. $ 10,107,000

201 OB Series Bonds on a fitness center in the Rice Center, bearing interest at variable rates, payable monthly, annual principal installments through 2023, secured by an irrevocable letter of credit, subject to financial covenants that require minimum liquidity and debt to net assets and earnings ratios among other covenants. The letter of credit is unsecured with a negative pledge on the University's assets. 2,357,000

2006 Series Bonds on athletic facilities and other capital improvements, bearing interest at variable rates, payable monthly, annual principal installments through 2026, secured by an irrevocable letter of credit, subject to financial covenants that require minimum liquidity and debt to net assets and earnings ratios among other covenants. The letter of credit is unsecured with a negative pledge on the University's assets. 5,210,000

13 BENEDICTINE UNIVERSITY AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. Bonds and Notes Payable (Cont.)

2000 Series Bonds on a student housing facility, bearing interest at variable rates, payable monthly, annual principal installments through 2026, secured by an irrevocable letter of credit, subject to financial covenants that require minimum liquidity and debt to net assets and earnings ratios among other covenants. The letter of credit is secured by a leasehold mortgage on Founders' property and equipment. 9,700,000

1999 Series Bonds on Science Hall and Library, bearing interest at variable rates, payable monthly, annual principal installments through 2025, secured by an irrevocable letter of credit, subject to financial covenants that require minimum liquidity and debt to net assets and earnings ratios among other covenants. The letter of credit is unsecured with a negative pledge on the University's assets. 18,300,000

Unsecured note payable to an unrelated religious organization payable by the College in monthly installments of $2,024, including interest at 2.00%, beginning January 2, 2002, due January 1, 2022. 193,700

Unsecured note payable to Ursuline Provincialate, Central Province of the United States, payable by the College in annual installments of $100,000 with no interest, beginning February 8, 2008, due February 8, 2018. 500,000

Note payable to bank, payable by the College in monthly installments beginning January 5, 2013, of $9,264 including interest at the Prime rate with a minimum rate of 4.0% (4.0% at May 31, 2013), and one final principal and interest payment due on October 5, 2013. The note is secured by a mortgage on the College's property, including an assignment of rents received by the College and a security interest in the rents and personal 1,241,479 property of the College. 47,609,179 Less: current portion 3,632,076

$ 43.977.103

14 BENEDICTINE UNIVERSITY AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. Bonds and Notes Payable (Cont.)

The future minimum principal requirements of the bonds and notes as ofMay 31,2013 are as follows:

Year Ended May 31, Amount

2014 $ 3,632,076 2015 2,511,012 2016 2,631,436 2017 2,751,869 2018 2,822,310 Thereafter 33,260,476

$ 47,609,179

The University has an unsecured line of credit dated December 17, 2008, as amended pursuant to the fourth amendment in March of 2013, in the amount of $4,500,000. The line of credit is due on demand, bears interest at LIBOR plus 175 basis points, and expires March 30, 2014. There was no outstanding balance at May 31,2013.

At May 31, 2012, the College had used $841,208 on a line of credit of $1,037,928. The line expired October 1, 2012. Amounts outstanding on the line as of October 1, 2012 were refinanced into a note payable, as described above.

Certain debt agreements include a negative pledge on the Organization's assets which precludes them from granting a security interest or permitting any lien to exist other than permitted exceptions.

Effective February 2, 2009, the Organization entered into three five-year interest rate swap agreements with a financial institution. In fiscal 2012, the Organization extended the maturity of one of these agreements by seven years. Effective July 1, 2010, the Organization also entered into a ten-year interest rate swap agreement with the same financial institution. The Organization entered into these agreements in order to minimize the effect of interest rate fluctuations. Under the agreements, the Organization pays a fixed rate on a notional amount to the financial institution and receives interest at a floating rate. The five year agreements bears fixed rates of 2.58% and are based on notional amounts of $9,700,000 and $5,210,000 as of May 31, 2013. The agreement extended in fiscal2012 by seven years bears a fixed rate of2.55% and is based on a notional amount of$18,300,000 as of May 31, 2013. The ten-year agreement bears a fixed rate of2.59% and is based on a notional amount of$12,795,000 as of May 31, 2013. The net interest differential paid by the Organization for the year ended May 31, 2013 on the interest rate swaps approximated $1,127,033. The fair value of these swap agreements was an accrued liability of$2,318,902 as ofMay 31,2013.

6. Capital Leases

The University leases equipment under capital leases expiring through fiscal 2018. The assets and liabilities under capital leases are recorded at the lesser of the present value of these lease payments or the fair value of the equipment. The assets are being amortized over seven to twenty years. Amortization of the assets under capital leases was $150,352 for the year ended May 31, 2013. Accumulated amortization of assets under capital leases was $379,479 as of May 31, 2013. Interest rates on capitalized leases range from 3.00% to 7.49%.

15 BENEDICTINE UNIVERSITY AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. Capital Leases (Cont.)

The following is a schedule by years of future minimum payments required under the leases, together with their present value as of May 31, 20 13:

Year Ended May 31, Amount

2014 $ 334,220 2015 277,404 2016 144,599 2017 92,242 2018 43,132

Total minimum lease payments 891,597 Less: amount representing interest 54,188

Present value of minimum lease payments $ 837,409

7. Retirement Plan

The Organization sponsors a retirement plan administered by the Teachers Insurance and Annuity Association College Retirement Equities Fund (TIAA-CREF), a national organization used to fund retirement benefits for employees of educational, research, not-for-profit, and governmental institutions. The Organization and eligible plan participants make periodic contributions to TIAA-CREF to purchase individual annuities and mutual funds equivalent to retirement benefits earned. The Organization's contributions to the plan, which are based on a percentage of each participant's salary, totaled approximately $1,505,029 for the year ended May 31, 2013.

8. Commitments and Contingencies

The Organization is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material effect on the Organization's consolidated financial position.

Financial awards from federal, state, and local governmental entities in the form of grants are subject to special audit. Such audits could result in claims against the Organization for disallowed costs or noncompliance with grantor restrictions. No provision has been made for any liabilities that may arise from such audits since the amounts, if any, cannot be determined at this date.

The University entered into an agreement in 2004 with the Village of Lisle, Illinois to develop and manage a sports complex on the campus of the University. Under this agreement, the Village contributed approximately $5.8 million of the cost of construction, with the University providing the remaining funds required of approximately $5.75 million. The term of the agreement is twenty-five years, during which period, the parties have agreed that the facility will be co-owned by the Village and the University. After twenty-five years, the agreement provides for the transfer of the facility to the University. The agreement provides that the University manage the facility and advance funds, as necessary, in the event costs exceed revenues.

16 BENEDICTINE UNIVERSITY AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Commitments and Contingencies (Cont.)

Additionally, the University had various construction projects in process at May 31, 2013. Outstanding commitments for these projects were as follows:

Mesa Arizona Branch Campus - 225 E. Main Street Furniture $ 404,592 Academic Business Building 2,424,376

$ 2,828,968

9. Operating Leases

The Organization, as lessee, has various noncancelable leases for certain equipment and property, all of which are classified as operating leases. Rent expense under these noncancelable leases was approximately $394,861 for the year ended May 31, 2013.

The approximate remaining annual minimum payments under the noncancelable operating leases as of May 31, 2013 are:

Year Ended May 31, Amount

2014 $ 488,820 2015 857,765 2016 878,349 2017 656,591 2018 544,000 Thereafter 7,570,667

$ 10,996,192

10. Split-Interest Agreements

The Organization administers various charitable remainder trusts and charitable annuities. A charitable remainder trust provides for the payment of distributions to the grantor or other designated beneficiaries over the trust's term (usually the designated beneficiary's lifetime). At the end of the trust's term, the remaining assets are available for the Organization's use. The portion of the trust attributable to the present value of the future benefits to be received by the Organization is recorded in the consolidated statements of activities as a temporarily restricted contribution in the period the trust is established. Such contributions were $0 in 2013. Assets held in the charitable remainder trusts and charitable annuities investment funds are recorded at fair market value in the Organization's consolidated statement of financial position and totaled $371,678 at May 31, 2013. On an annual basis, the Organization revalues the liability to make distributions to the designated beneficiaries based on actuarial assumptions. The present value of the estimated future payments ($275,198 at May 31, 2013) is calculated using discount rates of 1.4% - 4.5% and applicable mortality tables, and is included as liabilities in the consolidated statement of financial position.

17 BENEDICTINE UNIVERSITY AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10. Split-Interest Agreements (Cont.)

The Organization is not the trustee of assets for certain other charitable remainder interests. These assets are invested and controlled by banks acting as trustees. The amounts receivable under the arrangements are measured at the present value of the expected future cash flows from the trusts.

11. Promises to Give

Promises to give at May 31, 2013 include the following:

Pledge receivable $ 251,195 Less: Discount to present value (40,002)

$ 211,193

The future expected collections of pledges receivable are as follows (net of discounts):

Within one year $ 34,282 One to five years 112,778 Over five years 64,133

$ 211,193

12. Fair Value of Financial Instruments

The following assumptions were used in estimating the fair values of financial instruments reported in the consolidated statement of financial position at May 31, 2013.

The carrying values for cash and cash equivalents, receivables, accounts payable and accrued liabilities approximate their fair values due to the short-term nature of these financial instruments. Contributions receivable from split-interest arrangements and pledges receivable are based on discounted cash flows. Liabilities under split-interest arrangements are based on discounted cash flows.

Investments and Assets Held Under Split-Interest Arrangements

The fair value of investments and assets held under split-interest arrangements are based on quoted market prices, if available, or estimated using market prices for similar securities.

Interest Rate Swap Agreements

The interest rate swap agreements are valued by a major financial institution using an income valuation approach by calculating the present value of future expected cash flows using discount factors based on market interest rates.

Bonds Payable

Due to the variable rate nature of the debt, the carrying amount approximates its fair value.

18 BENEDICTINE UNIVERSITY AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. Fair Value of Financial Instruments (Cont.)

Fair Value Measurements

Generally accepted accounting principles provide a uniform framework for the definition, measurement and disclosure of fair value measurements. Fair value is defined 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. Generally accepted accounting principles also establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Levell: Quoted prices (unadjusted) of identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect an entity's own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The asset's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

19 BENEDICTINE UNIVERSITY AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. Fair Value of Financial Instruments (Cont.)

Fair Value Measurements (cont.)

Fair values of assets and liabilities measured on a recurring basis at May 31, 2013 are as follows:

Fair Value Measurement at Re12ortin~ Date U sin~ Quoted Prices in Active Markets for Significant Identical Other Significant Assets/ Observable Unobservable Liabilities Inputs Inputs Fair Value ~Level12 (Level2) ~Level32

Cash equivalents $ 14,202,622 $ $ 14,202,622 $ Common stocks 1,023,280 1,023,280 Preferred stocks 3,281,837 3,281,837 Fixed income mutual funds 4,137,170 4,137,170 Commodity mutual funds 6,291 6,291 Real estate investment trusts 3,464,303 3,464,303 Energy trusts 1,103,800 1,103,800 Equity mutual funds 8,101,998 8,101,998 Pooled investments: Cash and cash equivalents 973,202 973,202 Common stocks 179,324 179,324 Municipal bonds 10,957 10,957 Equity mutual funds 12,090,651 12,090,651 Fixed income mutual fund 26,094 26,094 Limited partnership 9,740 9,740 Cash surrender value - life insurance policies 104,411 104,411

$ 48,715,680 $ 33,424,488 $ 15,186,781 $ 104,411

Changes in fair value of assets and liabilities measured on a recurring basis using significant unobservable inputs (Level 3) for the year ended May 31, 2013 are as follows:

Balance at beginning of year $ 99,067 Interest income 5,344

Balance at end of year $ 104,411

The fair value of the interest rate swap agreements of $2,318,902, as determined by Level 2 inputs, is presented as a liability in the consolidated statement of financial position. The swap is valued using the Bank's proprietary models.

20 BENEDICTINE UNIVERSITY AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13. Loans to Students

U.S. Government loan funds refundable under the Perkins loan program are distributable to the federal government upon liquidation of the loan program and thus are reflected as a liability in the accompanying consolidated statement of financial position.

14. Restricted Cash

Restricted cash at May 31, 2013 includes the following:

Perkins funds $ 237.445

15. Restrictions on Net Assets

Temporarily restricted net assets consist of various grants (state, local and private), capital campaign funds and other private gifts. These assets are to be used to fund the purchase of property and equipment and subsequent years' scholarships.

Temporarily restricted net assets at May 31, 2013 are as follows:

Capital campaign fund $ 7,559,680 Grants and private gifts 6,588,631

$ 14,148,311

Permanently restricted net assets consist of endowment funds to be held indefinitely. The income from these assets is to be used for scholarships as well as to support the unrestricted general activities.

16. Related Party Transactions

A portion of the Organization's investment portfolio is managed by a firm in which a trustee of the University is Founder, Chairman, CEO, & Co-CIO. Fees paid to this firm on a quarterly basis are equal to an annual rate of .2%- .5% (with the rate of .5% applied to the first $2M in assets with a reduced rate on successive tranches culminating in a rate .2% on assets in excess of $1OM) of the asset value of the portfolio at quarter end. Fees paid were $46,238 in 2013.

Certain other investments were managed by a firm substantially owned by another trustee of the University. Fees paid to this firm on a monthly basis are equal to 1% per annum of the average daily value ofthe portfolio. Fees paid to this firm amounted to $85,841 in 2013.

The Organization's online program is supported by a company owned by a trustee of the University during a portion of fiscal 2013. The company provides marketing, recruitment, student services, and program development in exchange for a percentage share of net tuition revenue. Payments to the company totaled approximately $9.6 million during 2013.

21 BENEDICTINE UNIVERSITY AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

17. Affiliation Agreement

On June 1, 2010, the University entered into a property lease agreement with Springfield College in Illinois (the College), whereby the University pays rent to the College for providing classrooms and office space for the University's programs. The use of the property is required to be consistent with the mission and identity of the College as a not-for-profit Catholic institution of higher education. The University has also made certain advances to the College.

As of May 31,2013, $1,141,073 was due from the College and has been eliminated on the accompanying consolidated statement of financial position as part of the consolidation process.

18. Functional Classification of Expenses

Expenses by functional classification for the year ended May 31, 2013 consisted of the following:

Instruction $ 31,644,927 Research 229,207 Public service 1,132,334 Academic support 6,990,930 Student services 21,867,189 Institutional support 14,806,395 Operation and maintenance of plant 10,994,134 Auxiliary enterprise 1,944,382

$ 89,609,498

19. Endowment

The Organization's endowment consists of individual funds for a variety of purposes, which include both donor-restricted funds and funds designated by the Board of Trustees to function as endowments. As required by generally accepted accounting principles, net assets associated with endowment funds, including funds designated by the Board of Trustees to function as endowments, are classified and reported on the existence or absence of donor-imposed restrictions.

Investment Return Objectives, Risk Parameters and Strategies. The Organization has adopted investment and spending policies, approved by the Board of Trustees, for endowment assets that will provide a dependable and growing source of funding support and financial distributions for the University, while preserving the principal of the funds and protecting their value from the impact of inflation. Accordingly, the investment process seeks to achieve an after-cost total real rate of return, including investment income as well as capital appreciation, over a full market cycle, which exceeds the assumed spending rate plus the rate of inflation with acceptable levels of risk. Endowment assets are invested in a well diversified asset mix, which includes equity and debt securities, that is intended to result in a consistent inflation-protected rate of return that has sufficient liquidity to make annual distributions, while growing the funds if possible.

Therefore, the Organization expects its endowment assets, over time, to produce an average rate of return in excess of amounts distributed annually. Actual returns in any given year may vary. Investment risk is measured in terms of the total endowment fund; investment assets and allocation between asset classes and strategies are managed to not expose the fund to unacceptable levels of risk.

22 BENEDICTINE UNIVERSITY AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

19. Endowment (Cont.)

Spending Policy. The Organization has a policy of appropriating for distribution each year a portion of its permanently restricted endowment funds fair value as of the last day of the year preceding the fiscal year in which the distribution is planned. Distributions from other endowments are made on the basis of prudent application of the funds in furtherance of the Organization's strategic plan in accordance with donor-imposed restrictions, when and if applicable, on the use of the funds. In establishing this policy, the Organization considered the long-term expected return on its investment assets, the nature and duration of the individual endowments funds, many of which must be maintained indefinitely because of donor imposed restrictions, and the possible effect of inflation. The Organization expects the current spending policy to allow its endowment funds to grow at a nominal average annual rate, which is consistent with the Organization's objective to maintain the purchasing power of the endowment assets as well as to provide additional real growth through investment return.

Endowment net asset composition by type of fund as of May 31, 2013 is as follows:

Total Net Temporarily Permanently Endowment Unrestricted Restricted Restricted Assets

Donor-restricted endowment fund $ $ 7,797,301 $ 12,966,650 $ 20,763,951 Board-designated endowment funds 16,089,806 16,089,806

Total funds $ 16,089,806 $ 7,797,301 $ 12,966,650 $ 36,853,757

Changes in endowment net assets for the year ended May 31, 20 13 are as follows:

Total Net Temporarily Permanently Endowment Unrestricted Restricted Restricted Assets Endowment net assets, beginning of year $ 13,670,866 $ 3,909,412 $ 11,822,412 $ 29,402,690

Contributions 3,707,294 122,659 3,829,953 Investment gain 1,479,652 53,987 351,821 1,885,460 Net appreciation 939,288 1,017,188 1,044,443 3,000,919 Amount appropriated for expenditures (890,580) (374,685) ( 1,265 ,265)

Endowment net assets, end of year $ 16,089,806 $ 7,797,301 $ 12,966,650 $ 36,853,757

23 BENEDICTINE UNIVERSITY AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

20. Adjustment of Beginning Net Assets Due to Consolidation

In the year ending May 31, 2013, the University began consolidating the net assets and activities of the College into these consolidated financial statements. As a result of this consolidation, the consolidated net assets at the beginning of the year as previously reported have been adjusted to include the beginning of the year net assets of the College as follows:

Net assets, beginning of the year $ 83,177,606

Springfield College of Illinois Net assets beginning of year 2,758,389

Adjusted net assets, beginning of the year $ 85.935.995

21. Subsequent Events

The University plans to begin offering classes in August 2013 at 225 E. Main Street, Mesa, Arizona. Initial degree offerings will include a Bachelor of Fine Arts, Bachelor of Arts in Criminal Justice, Bachelor of Arts in Communication Arts, Bachelor of Arts in Psychology, Bachelor of Arts in Theology, Bachelor of Science in Nutrition and Bachelor of Business Administration in Management and Organizational Behavior, in addition to a minor in Religious Studies.

Subsequent to year end, in accordance with action taken by the Board of Trustees on April25, 2013, the University was authorized by its Board to finance with bonds and bank loans not to exceed the principal amount of $70 million all or a portion of the costs of a project consisting of: (i) the refinancing of all or a portion of its outstanding debt and any accrued interest or interest rate hedge or credit facility termination payments related to such debt; (ii) the construction, furnishing and equipping of a new academic building on the University's campus; (iii) certain additional miscellaneous capital expenditures; (iv) a debt service reserve fund; and (v) the payment of certain costs of issuing the bonds.

In July 2013, the University became party to a noncancelable operating lease for the acquisition of furniture valued at $600,000 for its dormitories on the main campus in Lisle, Illinois. The lease term, to begin October 1, 2013, is for three years. Scheduled payments under the lease total approximately $586,703 over the lease term.

Management has evaluated subsequent events through September 24, 2013, the date which the consolidated financial statements were available to be issued.

24 Wolf ~,, Wolfc3lCompany LLP Company Oakbrook Terrace Chicago

INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTARY INFORMATION

Board of Trustees Benedictine University and Affiliates

We have audited the consolidated financial statements of Benedictine University and Affiliates as of and for the year ended May 31, 2013, and have issued our report thereon dated September 24, 2013, which contained an unmodified opinion on those consolidated financial statements. Our audit was perfom1ed for the purpose of forming an opinion on the consolidated financial statements as a whole. The supplementary information listed in the table of contents is presented for purposes of additional analysis and is not a required part of the consolidated financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consoiidated financial statements. The 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 information is fairly stated in all material respects in relation to the consolidated financial statements as a whole.

The 2012 Benedictine University only financial statements included within the supplementary information were included in the consolidated financial statements of Benedictine University and Affiliates as of and for the year ended May 31, 2012. In our report dated August 31, 2012, we expressed an unmodified opinion on the 2012 consolidated financial statements. The 2012 audit was performed for the purpose of forming an opinion on the consolidated financial statements as a whole. The 2012 supplementary information listed in the table of contents is presented for purposes of additional analysis and is not a required part of the consolidated financial statements. Such 2012 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 2012 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 2012 information is fairly stated in all material respects in relation to the consolidated financial statements as a whole.

Oakbrook Terrace, Illinois September 24, 2013

1901 S. Meyers Road, Suite 500 Oakbrook Terrace, Illinois 60181-5209 PKFA PKF International Member Firm 630.545.4500 rruzin 630.574.7818/ax www.wolfcpa.com BENEDICTINE UNIVERSITY AND AFFILIATES CONSOLIDATING STATEMENT OF FINANCIAL POSITION May 31,2013

Benedictine Springfield (Guangzhou) Benedictine Founders' College Education Universi~ Woods, Ltd in Illinois Consulting Eliminations Consolidated

ASSETS

Current assets: Cash and cash equivalents $ 11,530,071 $ 3,539,030 $ 260,385 $ 64,635 $ $ 15,394,121 Cash restricted 237,445 237,445 Receivables: Students, less allowance of$1,274,445 8,181,283 1,715 8,182,998 Affiliate 1,141,073 200,921 (1 ,341 ,994) Other 4,145,465 6,187 4,151,652 Promises to give 10,000 24,282 34,282 Prepaid expenses and other assets 303,549 3,579 7,830 314,958

Total current assets 25,548,886 3,743,530 294,212 70,822 (1,341,994) 28,315,456

Loans receivable from students 2,201,210 2,201,210 Investments 47,703,843 1,011,837 48,715,680 Bond proceeds held in trust 954 2,130 3,084 Bond issue costs, net of accumulated amortization of $507,285 517,966 233,386 751,352 Property and equipment, net 74,033,451 7,864,198 4,711,930 1,874 86,611,453 Promises to give 29,579 147,332 176,911

$ 150,035,889 $ 6,165,311 $ 72,696 $ ~1,341,994) $ 166,775,146

LIABILITIES AND NET ASSETS

Current liabilities: Deferred revenue $ 5,655,838 $ $ $ $ $ 5,655,838 Accounts payable and accrued expenses 7,189,845 83,014 110,101 123 7,383,083 Due to affiliate 200,921 1,141,073 (1,341,994) Current portion of bonds and notes payable 1,770,000 500,000 1,362,076 3,632,076 Current portion of capital lease payable 305,477 305,477 Deposits held in custody for others 1,719,277 1,150 1,720,427

Total current liabilities 16,841,358 584,164 2,613,250 123 (1,341,994) 18,696,901

Bonds and notes payable, less current portion 34,204,000 9,200,000 573,103 43,977,103 Refundable U.S. Government grants for student loans 1,935,312 1,935,312 Interest rate swap agreements 2,147,364 171,538 2,318,902 Deferred lease incentive 243,967 243,967 Deferred rent liability 287,324 287,324 Capital leases payable 531,932 531,932

Total liabilities 56,191,257 9,955,702 3,186,353 123 {1,341,994) 67,991,441

Net assets: Unrestricted 68,062,786 1,887,542 1,645,843 72,573 71,668,744 Temporarily restricted 13,439,410 708,901 14,148,311 Permanently restricted 12,342,436 624,214 12,966,650

Total net assets 93,844,632 1,887,542 2,978,958 72,573 98,783,705

$ 150,035,889 $ 11,843,244 $ 6,165,311 $ 72,696 $ {1,341,994~ $ 166,775,146

26 BENEDICTINE UNIVERSITY AND AFFILIATES CONSOLIDATING STATEMENT OF ACTIVITIES For the Year Ended May 31, 2013

Benedictine Springfield (Guangzhou) Benedictine Founders' College Education Universi~ Woods, Ltd in Illinois Consulting Eliminations Consolidated Revenue and other support: Tuition and fees $ 106,390,857 $ $ 4,010 $ $ $ 106,394,867 Less: scholarships and grants {38,587,572) {47) {38,587,619)

Net tuition and fees 67,803,285 3,963 67,807,248

Private gifts and grants 5,732,955 124,065 101,000 (101,000) 5,857,020 Government grants and contracts 14,848,970 14,848,970 Investment income 4,968,172 8 22,852 4,991,032 Other income 1,022,135 5,713 1,027,848 Auxiliary enterprises 4,346,798 2,016,724 1,412,370 {717,862) 7,058,030

Total revenue and other support 98,722,315 2,016,732 1,568,963 101,000 {818,862) 101,590,148

Expenses: Compensation: Salaries 39,321,283 23,300 10,135 39,354,718 Benefits 10,320,475 {2,355) 10,318,120 Total compensation 49,641,758 20,945 10,135 49,672,838 Utilities 2,005,938 205,878 141,547 2,353,363 Depreciation and amortization 3,830,688 318,172 266,408 161 4,415,429 Interest 991,154 266,544 90,695 1,348,393 Bad debts 642,973 3,041 646,014 Supplies and services 30,529,913 618,521 825,758 18,131 (818,862) 31,173,461

Total expenses 87,642,424 1,409,115 1,348,394 28,427 {818,862) 89,609,498

Increase in net assets 11,079,891 607,617 220,569 72,573 11,980,650

Other changes in net assets: Change in fair value of interest rate swap agreements 661,740 205,320 867,060

Change in net assets 11,741,631 812,937 220,569 72,573 12,847,710

Net assets, beginning of year 82,103,001 1,074,605 2,758,389 85,935,995

Net assets, end of year $ 93,844,632 $ 1,887,542 $ 2,978,958 $ 72,573 $ 98,783,705

27 BENEDICTINE UNIVERSITY STATEMENTS OF FINANCIAL POSITION UNIVERSITY ONLY

May 31, 2013 2012 ASSETS

Current assets: Cash and cash equivalents $ 11,530,071 $ 9,927,220 Cash restricted 237,445 1,295,570 Receivables: Students, less allowance of$1,274,445 in 2013 8,181,283 5,553,336 and $1,257,249 in 2012 Affiliate 1,141,073 635,666 Other 4,145,465 2,275,370 Promises to give 10,000 125,000 Prepaid expenses and other assets 303,549 279,783

Total current assets 25,548,886 20,091,945

Loans receivable from students 2,201,210 2,067,555 Investments 47,703,843 48,028,053 Bond proceeds held in trust 954 381,499 Bond issue costs, net of accumulated amortization 517,966 553,557 Property and equipment, net 74,033,451 69,369,650 Promises to give 29,579

$ 150,035,889 $ 140,492,259

LIABILITIES AND NET ASSETS

Current liabilities: Deferred revenue $ 5,655,838 $ 3,455,883 Accounts payable and accrued expenses 7,189,845 8,634,428 Due to affiliate 200,921 Current portion of bonds and notes payable 1,770,000 1,700,000 Current portion of capital lease payable 305,477 269,619 Deposits held in custody for others 1,719,277 2,010,111

Total current liabilities 16,841,358 16,070,041

Bonds and notes payable, less current portion 34,204,000 36,305,000 Refundable U.S. Government grants for student loans 1,935,312 1,948,997 Interest rate swap agreements 2,147,364 2,809,104 Deferred lease incentive 243,967 317,158 Deferred rent liability 287,324 320,318 Capital leases payable 531,932 618,640

Total liabilities 56,191,257 58,389,258

Net assets: Unrestricted 68,062,786 62,441,980 Temporarily restricted 13,439,410 8,462,823 Permanently restricted 12,342,436 11,198,198

Total net assets 93,844,632 82,103,001

$ 150,035,889 $ 140,492,259

28 BENEDICTINE UNIVERSITY STATEMENTS OF ACTIVITIES- UNIVERSITY ONLY

For the Year Ended May 31,2013 Temporarily Permanently 2012 Unrestricted Restricted Restricted Total Total Revenue and other support: Tuition and fees $ 106,390,857 $ $ $ 106,390,857 $ 103,138,614 Less: scholarships and grants (38,587,572) (38,587,572) (36,591 ,922)

Net tuition and fees 67,803,285 67,803,285 66,546,692

Private gifts and grants 751,463 4,858,833 122,659 5,732,955 1,681,202 Government grants and contracts 14,848,970 14,848,970 15,030,122 Investment income (loss) 2,427,693 1,144,214 1,396,265 4,968,172 (2,672,126) Other income 1,022,135 1,022,135 1,191,390 Auxiliary enterprises 4,346,798 4,346,798 4,012,245 Net assets released from restrictions 1,401,146 (1,026,460) (374,686)

Total revenue and other support 92,601,490 4,976,587 1,144,238 98,722,315 85,789,525

Expenses: Compensation: Salaries 39,321,283 39,321,283 36,734,967 Benefits 10,320,475 10,320,475 9,347,502

Total compensation 49,641,758 49,641,758 46,082,469 Utilities 2,005,938 2,005,938 1,897,122 Depreciation and amortization 3,830,688 3,830,688 3,449,813 Interest 991 '154 991,154 979,155 Bad debts 642,973 642,973 722,827 Supplies and services 30,529,913 30,529,913 32,389,259

Total expenses 87,642,424 87,642,424 85,520,645

Increase in net assets 4,959,066 4,976,587 1,144,238 11,079,891 268,880

Other changes in net assets: Change in fair value of interest rate swap agreement 661,740 661,740 ( 1' 107 ,425)

Change in net assets 5,620,806 4,976,587 1,144,238 11,741,631 (838,545)

Net assets, beginning of year 62,441,980 8,462,823 11,198,198 82,103,001 82,941,546

Net assets, end of year $ 68,062,786 $ 13,439,410 $ 12,342,436 $ 93,844,632 $ 82,103,001

29 BENEDICTINE UNIVERSITY STATEMENTS OF CASH FLOWS UNIVERSITY ONLY

For the Year Ended May 31, 2013 2012 Cash flows from operating activities: Change in net assets $ 11,741,631 $ (838,545) Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation and amortization 3,830,688 3,449,813 Gain on disposal of property, plant and equipment (66,462) Net loss (gain) on investments ( 4,205 ,316) 3,226,767 Change in fair value of interest rate swap agreement (661,740) 1,107,425 Changes in assets and liabilities: Receivables, net (4,918,028) 935,277 Prepaid expenses and other assets (23,766) (6,803) Deferred revenue 2,199,955 1,443,568 Accounts payable and accrued expenses (1,787,663) 997,956 Due to affiliate 200,921 Deferred lease incentive (73,191) (73,190) Deferred rent liability (32,994) 5,872 Deposits held in custody for others (290,834) (176,003)

Net cash provided by operating activities 5,979,663 10,005,675

Cash flows from investing activities: Purchases of investments (14,467,184) (18,152,167) Sales of investments 19,402,261 8,351,545 Purchases of property and equipment (7,899,988) (9,604,709) Proceeds from disposition of property and equipment 2,940 428,713 Principal collected on loans 264,723 333,829 Loans disbursed (398,378) (323,502)

Net cash used in investing activities (3,095,626) ( 18,966,291)

Cash flows from financing activities: Principal payment capital leases (269,620) (215,565) Principal payments on bonds and notes payable (2,031 ,000) (1 ,631 ,602) Decrease in U.S. Government grants for student loans (13,685) (23,851) Annuity payments (25,006) (31 ,073)

Net cash used in financing activities (2,339,311) (1,902,091)

Net increase (decrease) in cash and cash equivalents 544,726 (1 0,862, 707)

Cash and cash equivalents, beginning of year 11,222,790 22,085,497

Cash and cash equivalents, end of year $ 11,767,516 $ 11,222,790

30 BENEDICTINE UNIVERSITY STATEMENTS OF CASH FLOWS UNIVERSITY ONLY

For the Year Ended May 31, 2013 2012

Supplemental disclosure of cash flow information: Interest paid $ 988,469 $ 980,765

Disclosure of significant non-cash investing and financing transactions: Equipment acquired through capital leases or installment notes payable $ 218,770 $ 227,388

Construction payables $ 343,080 $ 2,278,273

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APPENDIX C

DEFINITIONS OF CERTAIN TERMS; SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE AND THE LOAN AGREEMENT

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DEFINITIONS OF CERTAIN TERMS; SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE AND THE LOAN AGREEMENT

TABLE OF CONTENTS

HEADING PAGE

DEFINITIONS OF CERTAIN TERMS ...... C-1

THE INDENTURE ...... C-8 Pledge and Assignment to Trustee ...... C-9 The Bonds Are Limited Obligations ...... C-9 Payment of Principal, Premium and Interest ...... C-10 Performance of Covenants; Legal Authorization ...... C-10 Cost of Issuance Fund ...... C-11 Project Fund ...... C-11 Disposition of Revenues ...... C-13 Additional Accounts and Subaccounts ...... C-15 Investment of Funds ...... C-16 Moneys Held in Trust ...... C-16 Arbitrage and Tax Covenants ...... C-17 Issuance of Additional Bonds ...... C-17 Defaults and Remedies ...... C-19 Right of Bondholders to Direct Proceedings ...... C-21 Rights and Remedies of Bondholders ...... C-22 Waivers of Events of Default ...... C-22 Supplemental Indentures ...... C-23 Amendments to the Loan Agreement ...... C-25 Satisfaction and Discharge of the Indenture ...... C-26

THE LOAN AGREEMENT ...... C-28 Payment of Principal, Premium and Interest ...... C-28 Assignment of Loan Agreement and the Notes ...... C-28 Maintenance of Corporate Existence and Tax Status ...... C-28 Maintenance of Corporate Existence and Qualification ...... C-29 Financial Statements ...... C-30 Taxes, Charges and Assessments ...... C-31 Compliance with Orders, Ordinances, Etc ...... C-31 Permitted Contests ...... C-31 Use of the Project ...... C-32 Maintenance of Properties ...... C-32 Insurance ...... C-33 Trustee's Right to Perform Borrowers' Covenants; Advances ...... C-33 Additional Indebtedness ...... C-33 Security Interest in Funds ...... C-38 Deposits to Debt Service Reserve Fund ...... C-38 Tax Covenant ...... C-39 Application of Certain Gifts ...... C-39 Limited Obligation; No Recourse ...... C-40 Issuance of Additional Notes ...... C-40 Defaults and Remedies ...... C-41 Waiver of Extension, Appraisement, Stay Laws ...... C-44 Supplements and Amendments to the Loan Agreement ...... C-45 Defeasance ...... C-45 The definitions of certain words and terms used in this APPENDIX C are set forth below under the caption “DEFINITIONS OF CERTAIN TERMS.” Reference is hereby made to the Indenture for the definition of any capitalized term used, but not otherwise defined, in this APPENDIX C.

DEFINITIONS OF CERTAIN TERMS

“Act” means the Illinois Finance Authority Act, 20 ILCS 3501/801-1 et seq., as supplemented and amended.

“Additional Bonds” means any additional bonds authorized to be issued by the Authority pursuant to the terms and conditions of the Indenture in addition to the Series 2013A Bonds.

“Additional Notes” means any additional notes authorized to be issued by the Borrowers pursuant to the provisions of the Loan Agreement in addition to the Series 2013A Note.

“Authority” means the Illinois Finance Authority, a body politic and corporate created and existing under and by virtue of the Act, and its successors and assigns.

“Authorized Denomination” means $5,000 and any integral multiple of $5,000 in excess thereof.

“Authorized Officer” means (a) in the case of the Authority, its Chairperson, Vice Chairperson, Executive Director or any other member or officer of the Authority designated by the Authority to act on behalf of the Authority under resolution of the Authority; (b) (i) in the case of Benedictine, the Chairman or President, the Executive Vice President, or the Vice President of Finance and (ii) in the case of Founders, any of the Directors, the President, the Treasurer or Secretary or any other representative of the Borrowers duly authorized by the Borrowers; and (c) in the case of the Trustee, any person authorized by or pursuant to the by-laws of the Trustee or a resolution of the Board of Directors of the Trustee.

“Benedictine” means Benedictine University, an Illinois not-for-profit corporation, and any successor thereto permitted by the Loan Agreement.

“Bond Counsel” means Ice Miller LLP, Chicago, Illinois, or any other nationally recognized municipal bond attorney or firm of municipal bond attorneys approved by the Authority and acceptable to the Trustee.

“Bond Purchase Agreement” means the Bond Purchase Agreement among the Authority, the Borrowers and the Underwriter, including all amendments thereof and supplements thereto, providing for the sale of the Series 2013A Bonds, and, with respect to any series of Additional Bonds, one or more similar agreements executed and delivered in connection with the sale of such series of Additional Bonds.

C-1

“Bond Register” means the registration records of the Authority, maintained by the Trustee, as registrar for the Bonds.

“Bond Registrar” means the Trustee.

“Bond Resolution” means the Resolution adopted by the members of the Authority on October 8, 2013, authorizing the issuance, delivery and sale of the Series 2013A Bonds and the Series 2013B Bonds.

“Bond Sinking Fund” means the Fund by that name established by the Indenture.

“Bond Year” means, the twelve month period beginning on January 1 of each calendar year and ending on December 31 of the immediately succeeding calendar year.

“Bondholder” or “Owner” or “owner” or “Owner of the Bonds,” when used with respect to a Bond, means the person or entity in whose name such Bond will be registered on the Bond Register.

“Bonds” means the Series 2013A Bonds and any Additional Bonds.

“Borrowers” means, collectively, Benedictine and Founders.

“Borrowers Agreements” means the Loan Agreement, the Tax Certificate, the Official Statement and the Bond Purchase Agreement.

“Business Day” means any day which is not (a) a Saturday, a Sunday or, a day on which banking institutions in the City of Chicago, Illinois (or, if different, in the city in which the designated corporate trust office of the Trustee is located), are authorized or required by law or executive order to close or (b) a day on which the New York Stock Exchange is closed.

“Closing Date” means the date of issuance of the Series 2013A Bonds.

“Code” means the Internal Revenue Code of 1986, as amended, or any successor sections of a subsequent income tax statute or code, including the regulations, rulings and proclamations promulgated and proposed thereunder or under the predecessor code.

“Completion Certificate” means the certificate delivered by an Authorized Officer of the Borrowers pursuant to the Indenture.

“Construction Account” means Construction Account of the Project Fund established pursuant to the Indenture.

“Cost of Issuance Fund” means the Fund by that name established by the Indenture.

C-2

“Counsel” means an attorney duly admitted to practice law before the highest court of any state of the United States of America and, without limitation, may include legal counsel for the Authority, the Borrowers or the Trustee.

“Debt Service Reserve Fund” means the Fund by that name established by the Indenture.

“Debt Service Reserve Fund Requirement” means (a) the lesser of $2,646,681.26 or (b) the sum of (i) the least of (A) the maximum amount of principal and interest which shall be payable during the current or any succeeding Bond Year on all Series 2013A Bonds then outstanding, (B) an amount equal to 10% of the proceeds of the Series, 2013A Bonds or (C) an amount equal to 125% of the average annual debt service with respect to the Series 2013A Bonds, plus (ii) for each series of Additional Bonds then outstanding under the Indenture which is entitled to the benefits and security of the Debt Service Reserve Fund (determined in accordance with the provisions of the Indenture), the least of (A) the maximum amount of principal and interest which shall be payable during the current or any succeeding Bond Year on such series of Additional Bonds, (B) an amount equal to 10% of the proceeds of such series of Additional Bonds, or (C) an amount equal to 125% of the average annual debt service with respect to such Additional Bonds in each Bond Year calculated on the date of issuance of the Additional Bonds; provided, however, that the Debt Service Reserve Fund Requirement shall never be in excess of the amount equal to the maximum amount of principal and interest which shall be payable during the current or any succeeding Bond Year on all Bonds outstanding which are entitled to the benefits and security of the Debt Service Reserve Fund.

“Default” or “event of default” means (a) with respect to the Indenture, any of those events described herein under the caption “THE INDENTURE - Default and Remedies,” and (b) with respect to the Loan Agreement, any of those events described herein under the caption “THE LOAN AGREEMENT -- Defaults and Remedies.”

“Determination of Taxability” means a determination that the interest payable on any Bond is includible for federal income tax purposes in the gross income of the Owner thereof by reason of such Bond being an “arbitrage bond” within the meaning of Section 148 of the Code, which determination will be deemed to have been made with respect to a Bond upon the occurrence of the first of the following events: (a) the date on which the Borrowers determine that the interest payable on such Bond is includible for federal income tax purposes in the gross income of the owners thereof by reason of such Bond being an “arbitrage bond” within the meaning of Section 148 of the Code; (b) the date on which the Internal Revenue Service issues any private ruling, technical advice or any other substantially equivalent written communication to the effect that the interest payable on such Bond is includible for federal income tax purposes in the gross income of the owners thereof by reason of such Bond being an “arbitrage bond” within the meaning of Section 148 of the Code; (c) the date on which the Borrowers shall receive notice from the Trustee in writing that the Trustee has been advised in writing by the owner of such Bond that the Internal Revenue Service has issued a 30-day letter or other formal written determination (a copy of which will have been provided by such owner to the Trustee) which asserts that the interest payable on such Bond is includible for federal income tax purposes in the gross income

C-3

of the owners thereof by reason of such Bond being an “arbitrage bond” within the meaning of Section 148 of the Code; or (d) the date on which the Trustee receives written notice that the Borrowers have taken any action or has failed to take any action the effect of which is to cause the interest payable on such Bond to become includible for federal income tax purposes in the gross income of the owners thereof by reason of such Bond being an “arbitrage bond” within the meaning of Section 148 of the Code; provided, however, that in the event of a good faith appeal, contest or the filing with the Internal Revenue Service of a request for ruling or other advice initiated by the Borrowers within 60 days after the earlier of the dates referred to in clauses (b), (c) or (d) of this definition, no Determination of Taxability shall be deemed to have occurred until the date upon which all such appeals, contests, or requests pursued with due diligence by the Borrowers have been exhausted.

“DTC Participant” means a participant in DTC's book-entry only system that deposits its securities with DTC.

“ERISA” means the Employee Retirement Income Security Act of 1974, as in effect from time to time.

“Fiscal Year” means any twelve-month period beginning on June 1 of any calendar year and ending on May 31 of the following calendar year, or any other twelve month period selected by the Borrowers as the fiscal year of the Borrowers.

“Fitch” means Fitch, Inc., a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “Fitch” will be deemed to refer to any other nationally recognized securities rating agency designated by the Trustee, at the written direction of the Borrowers, and acceptable to the Authority.

“Founders” means Founders Woods, Ltd., an Illinois not-for-profit corporation, and any successor thereto permitted by the Loan Agreement.

“Fund” means any of the funds established pursuant to the Indenture.

“Government Obligations” means (a) direct obligations of the United States of America or any agency or instrumentality of the United States of America, (b) obligations on which the timely payment of principal and interest is fully guaranteed by the United States of America or any agency or instrumentality of the United States of America, (c) evidences of a direct ownership interest in amounts payable upon any of the obligations set forth in (a) or (b) of this definition, (d) certificates of deposit of, time deposits in, or any other investments constituting direct obligations of any bank as defined by the Illinois Banking Act, which certificates of deposit, time deposits, or obligations are fully insured by the Federal Deposit Insurance Corporation or a similar federal agency or (e) shares or other forms of securities legally issuable by savings and loan associations incorporated under the laws of the State or any other state or under the laws of the United States of America, provided those shares or securities are fully insured by the Federal Deposit Insurance Corporation or a similar federal agency.

“Interest Fund” means the Fund by that name established under the Indenture.

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“Moody's” means Moody's Investors Service Inc., a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, and, if such corporation will be dissolved or liquidated or will no longer perform the functions of a securities rating agency, “Moody's” will be deemed to refer to any other nationally recognized securities rating agency designated by the Trustee, at the written direction of the Borrowers, and acceptable to the Authority.

“Note” or “Notes” means the Series 2013A Note and any Additional Notes issued pursuant to the Loan Agreement.

“Official Statement” means this Official Statement, together with any amendments and supplements thereto.

“Opinion of Bond Counsel” means an opinion of Ice Miller LLP, Chicago, Illinois, or of any other firm of nationally recognized municipal bond attorneys acceptable to the Authority and the Trustee.

“Optional Redemption Fund” means the Fund by that name established pursuant to the Indenture.

“Outstanding” or “Bonds Outstanding” means at the time in question, all Bonds that have been executed and delivered by the Authority and authenticated by the Trustee under the Indenture, except:

(a) Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation in accordance with the provisions of the Indenture;

(b) Bonds paid or deemed to be paid as provided in the Indenture and as described herein under the caption “THE INDENTURE - Satisfaction and Discharge of Indenture”; and

(c) Bonds in lieu of or in exchange for which other Bonds have been executed and delivered by the Authority and authenticated by the Trustee under the Indenture.

“Paying Agent” means the bank or banks, if any, designated pursuant to the Indenture to receive and disburse the principal of and interest on any Bonds.

“Project” means the financing of a portion of the cost of the design, development, construction and equipping of a new academic building, as more fully described in Exhibit A to the Loan Agreement (which Exhibit A may be amended, supplemented or restated from time to time), including capitalized interest, if any, with proceeds from the sale of the Series 2013A Bonds.

“Project Fund” means the Fund by that name established pursuant to the Indenture.

“Property” means any and all rights, title and interests in and to any and all assets, whether real or personal, tangible or intangible and wherever situated.

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“Qualified Investments” means any of the following which at the time of investment are legal investments under the Act and the laws of the State of Illinois for the moneys proposed to be invested therein: (a) bonds, notes, certificates of indebtedness, treasury bills or other securities now or hereafter issued that are fully guaranteed by the full faith and credit of the United States of America as to the timely payment of principal and interest; (b) bonds, notes, debentures or other similar obligations of the United States of America that are fully guaranteed by the full faith and credit of the United States of America as to the timely payment of principal and interest and that are rated in the highest rating category by each Rating Agency; (c) bonds, notes, debentures or other similar obligations of the Export-Import Bank, the Farm Credit System Financial Assistance Corporation, the Rural Economic Community Development Administration, the General Services Administration, the U.S. Maritime Administration, the Small Business Administration, the Government National Mortgage Association, the U.S. Department of Housing & Urban Development, the Federal Housing Administration and the Federal Financing Bank that are fully guaranteed by the full faith and credit of the United States of America as to the timely payment of principal and interest and that are rated in the highest rating category by each Rating Agency; (d) senior debt obligations of the Federal National Mortgage Association so long as such obligations are rated “Aa” by Moody's and “AA” by S&P; (e) senior debt obligations of the Federal Home Loan Banks; (f) obligations of the Resolution Funding Corporation; (g) interests in money market mutual funds registered under the Investment Company Act of 1940, as amended, and rated “AAAm,” “AAAm-G” or “AA-m” or better by S&P and if rated by Moody's, rated “Aaa,” “Al” or “Aa2,” including money market mutual funds of the Trustee or its affiliates (including those for which the Trustee or an affiliate performs a service for a fee); provided that the portfolio of such money market mutual fund is limited to obligations of the type described in (a) or (b) of this definition and to agreements to repurchase such obligations; (h) bonds, notes or other obligations of any state of the United States of America with a rating of at least “A2/A” or higher by both Moody's and S&P or of any unit of local government of any state which are rated at least “Aa/AA” or higher by Moody's and S&P; (i) interest-bearing savings accounts, certificates of deposit or time deposits constituting direct obligations of any domestic commercial bank, as defined by the Illinois Banking Act, 205 ILCS 1996, 5/1 et seq., as amended (including the Trustee and its affiliates), that has a rating on its short term certificates of deposit on the date of purchase of “P-1” by Moody's and “A-1+” or “A-1” by S&P; provided that investments may be made only in savings accounts, certificates of deposit or time deposits of banks that are insured by the Federal Deposit Insurance Corporation or similar federal agency or which are fully collateralized by obligations described in (a) or (b) of this definition and any such investments shall mature no more than 360 calendar days after the date of purchase; (j) repurchase agreements of government securities having the meaning set out in the Government Securities Act of 1986, Pub.L. No. 99-571, 100 Stat 3208, subject to the provisions of said Government Securities Act and the regulations issued thereunder (which securities include obligations of the type described in clauses (a) and (b) of this sentence, securities which are issued or guaranteed by corporations in which the United States of America has a direct or indirect interest and which are designated by the Secretary of the Treasury for exemption as necessary or appropriate in the public interest or for the protection of investors and securities issued or guaranteed as to principal or interest by any corporation the securities of which are designated, by statute specifically

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naming such corporation, to constitute exempt securities within the meaning of the laws administered by the Securities and Exchange Commission), and, unless registered or inscribed in the name of the Authority, that are purchased through banks or trust companies authorized to do business in the State; (k) commercial paper of corporations organized in the United States of America with assets exceeding $550,000,000 if such obligations are rated at the time of purchase “P-1- by Moody's and “A-1” by S&P; and no more than one-third of the moneys relating to the Bonds are so invested; (1) bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of “Prime-1” or “A3” or better by Moody's and “A-1” or “A” or better by S&P; (m) investment agreements with providers with secured or unsecured long-term debt ratings of at least “AA-” and “Aa3” by S&P and Moody's, with the provision that (1) if the provider's secured or unsecured long-term debt rating is downgraded below “AA-” or “Aa3” by S&P or Moody's, the provider must deliver collateral of the type described in (a) above at a margin percentage of 104%, or that described in (b) or (c) above at a margin percentage of 105%, and such collateral will be held in a separate, segregated account by either the Trustee or tri-party custodian for the benefit of the Authority, and the Authority or the Trustee must have a perfected security interest in all collateral, and the Trustee or tri-party custodian must mark collateral to market weekly and (2) if the provider's secured or unsecured long-term debt ratings are further downgraded below “A-” or “A3” by S&P or Moody's, the Authority will have the right to terminate the agreement and receive all invested amounts plus accrued but unpaid interest without penalty; (n) deposit accounts constituting direct obligations of any commercial bank whose long term debt is rated at least “Aa3” by Moody's and “AA-” by S&P; or (o) any other type of investment approved by the Authority and the Borrowers.

Ratings of Qualified Investments referred to in the Indenture will be determined at the time of purchase of such Qualified Investments and without regard to ratings subcategories. The Trustee will have no responsibility to monitor the ratings of Qualified Investments after the initial purchase of such Qualified Investments.

“Rating Agency” means Fitch, Moody's or S&P.

“Rebate Fund” means the Rebate Fund established by the Indenture.

“Record Date” means the 15th day (whether or not a Business Day) of the calendar month next preceding the month in which an interest payment on the Bonds is due.

“Refunding Account” means Refunding Account of the Project Fund established pursuant to the Indenture.

“Restricted Gifts” means all gifts, grants, donations, bequests or other charitable contributions, regardless of the form or the source thereof, the proceeds of which when received by the Borrowers are legally restricted for the payment of costs of all or a portion of the Project.

“S&P” means Standard & Poor's Ratings Services, its successors and assigns, and if such corporation shall be dissolved or liquidated or shall no longer perform the functions of

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a securities rating agency, “S&P” will be deemed to refer to any other nationally recognized securities rating agency designated by the Trustee, at the written direction of the Borrowers, and acceptable to the Authority.

“Tax Certificate” means the Tax Compliance Certificate dated the date of issuance of the Series 2013A Bonds and delivered by the Borrowers with respect to certain tax matters relating to the Series 2013A Bonds, including all amendments thereof and supplements thereto, and, with respect to any series of Additional Bonds, any similar agreement executed and delivered with respect to tax matters relating to such series of Additional Bonds.

“Tax-Exempt Organization” means a Person organized under the laws of the United States of America or any state thereof (a) which is an organization described in Section 501(c)(3) of the Code, (b) which is exempt from federal income taxes under Section 501(a) of the Code and (c) which is not a “private foundation” within the meaning of Section 509(a) of the Code unless there is delivered to the Authority and the Trustee an Opinion of Bond Counsel to the effect that the status of such Person as a private foundation will not adversely affect the exclusion of interest on the Bonds from gross income of the owners thereof for federal income tax purposes.

“Trustee's Prime Rate” means the corporate base rate or prime rate of interest announced by the Trustee (or its primary commercial banking affiliate) from time to time, changing when and as such corporate base rate or prime rate changes.

“Unassigned Rights” means the Authority's right to receive fees and expenses payable to the Authority under the Loan Agreement, the Authority's right to be indemnified and held harmless under the Loan Agreement, the Authority's right to execute and deliver supplements and amendments to the Loan Agreement pursuant to the provisions of the Loan Agreement, the Authority's right to receive financial information under the Loan Agreement and the Authority's right to make determinations and receive notices as provided in the Loan Agreement.

“Unrelated Trade or Business” means an unrelated trade or business of the entity under consideration within the meaning of Section 513(a) of the Code, without regard to whether such activities generate unrelated business taxable income under Section 512(a) of the Code.

“Written Request” means, with reference to the Authority, a request in writing signed by an Authorized Officer of the Authority and, with reference to the Borrowers, a request in writing signed by an Authorized Officer of the Borrowers, or in the either case, any other officer or officers designated by the Authority or the Borrowers, as the case may be, which will be satisfactory to the Trustee.

THE INDENTURE

The following is a summary of certain provisions of the Indenture. All references to the Indenture in this Official Statement are qualified in their entirety by reference to the Indenture, copies of which are available from the Trustee.

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PLEDGE AND ASSIGNMENT TO TRUSTEE

In order to secure the payment of the principal of, premium, if any, and interest on the Bonds according to their tenor, purport and effect, and in order to secure the performance and observance of all the covenants and conditions in the Indenture and in the Bonds, the Authority will convey, assign and pledge to the Trustee, with the power of sale, and will grant to the Trustee a security interest in the following (collectively, the “Trust Estate”):

(a) The Series 2013A Note, which will be endorsed by the Authority to the order of the Trustee, and any Additional Notes pledged and assigned for the payment of the Bonds, and all sums payable in respect of the indebtedness evidenced thereby;

(b) All right, title and interest of the Authority (a) in, to and under the Loan Agreement (except its Unassigned Rights), and all extensions and renewals of the term thereof, if any; (b) in and to the amounts payable to the Authority under the Loan Agreement (excluding Unassigned Rights); and (c) to do any and all other things which the Authority is or may become entitled to do under the Loan Agreement; provided, however, that such assignment made pursuant to the Indenture will not impair or diminish any obligations of the Authority under the Loan Agreement or alter the rights, duties and obligations of the Trustee under the remaining terms of the Indenture;

(c) All right, title and interest of the Authority in and to all moneys and securities from time to time held by the Trustee under the terms of the Indenture and all other property, if any, pledged to the Trustee as security under the Indenture; and

(d) Any and all property, rights and interests of every kind or description which, from time to time, may be sold, transferred, conveyed, assigned, pledged, mortgaged or delivered to the Trustee as additional security under the Indenture which the Trustee is authorized under the Indenture to receive at any time and to hold and apply, subject to the terms of the Indenture.

There is, however, expressly excepted and excluded from the lien of the Indenture amounts held by the Trustee in the Rebate Fund.

THE BONDS ARE LIMITED OBLIGATIONS

The Bonds, together with all principal and interest thereon and premium, if any, with respect thereto, are special limited obligations of the Authority secured by the Loan Agreement and the Notes and will always be payable solely from the revenues and income derived from the Loan Agreement and the Notes (except to the extent paid out of moneys attributable to proceeds of the Bonds, the income from the temporary investment thereof or payments made pursuant to or derived from a mortgage or assignment of leases and rents or credit enhancement device), are and shall always be a valid claim of the respective owners thereof only against the revenues and income derived from the Loan Agreement and the Notes, which revenues and income shall be used for no other purpose than to pay the principal installments of, premium, if any, and interest on the Bonds, except as may be

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expressly otherwise authorized in the Indenture or the Bond Resolution and in the Loan Agreement.

The Bonds are issued pursuant to the Act and the Bond Resolution and the Bonds and the obligation to pay principal and interest thereon and any premium with respect thereto do not and will never constitute an indebtedness or an obligation of the State of Illinois or any political subdivision thereof, within the purview of any constitutional or statutory limitation or provision or a charge against the general credit or taxing powers, if any, of any of them, but will be secured as aforesaid, and shall be payable solely out of revenues and income derived from the Notes and the Loan Agreement. No owner of the Bonds will have the right to compel any exercise of the taxing power, if any, of the Authority, the State or any other political subdivision thereof to pay the Bonds or the interest or premium, if any, thereon. The Authority does not have the power to levy taxes for any purpose whatsoever.

No recourse will be had for the payment of the principal of, premium, if any, and interest on any of the Bonds or for any claim based thereon or upon any obligation, covenant or agreement contained in the Indenture, the Loan Agreement, the Notes or the Bond Purchase Agreement against any past, present or future member, officer, agent or employee of the Authority, or any incorporator, member, officer, employee, director or trustee of any successor corporation, as such, either directly or through the Authority or any successor corporation, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such incorporator, member, officer, employee, director, agent or trustee as such is hereby expressly waived and released as a condition of and consideration for the execution of the Indenture or the Loan Agreement and the issuance of the Bonds.

PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST

The Authority covenants under the Indenture that it will promptly pay the principal of, premium, if any, and interest on every Bond at the place, on the dates and in the manner provided in the Indenture and the Bonds according to the true intent and meaning of the Indenture and of the Bonds.

PERFORMANCE OF COVENANTS; LEGAL AUTHORIZATION

The Authority covenants under the Indenture that it will faithfully perform on its part at all times any and all covenants, undertakings, stipulations and provisions contained in the Indenture, in any and every Bond executed, authenticated and delivered under the Indenture and in all of its proceedings pertaining thereto; provided, however, that except for the matters set forth in any documents relating to payment of the Bonds, the Authority will not be obligated to take any action or execute any instrument pursuant to any provision of the Indenture until it has been requested to do so by the Borrowers or by the Trustee, or it has received the instrument to be executed and at the option of the Authority it has received from the party requesting such action or execution assurance satisfactory to the Authority that the Authority will be reimbursed for its reasonable expenses, including legal counsel fees, incurred or to be incurred in connection with taking such action or executing such instrument. The Authority represents in the Indenture that it is duly authorized under

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the Constitution and laws of the State, including particularly the Act and the Bond Resolution, to issue the Bonds and to execute the Indenture, to grant the security interest provided herein, to assign and pledge the Loan Agreement and the Notes (except as otherwise provided herein) and to assign and pledge the amounts hereby assigned and pledged in the manner and to the extent set forth in the Indenture; that all action on its part for the issuance of the Bonds and the execution and delivery of the Indenture has been duly and effectively taken or, if Additional Bonds are issued pursuant to the Indenture, will be duly taken as provided in the Indenture; and that the Bonds in the hands of the owners thereof are and will be valid and enforceable obligations of the Authority according to the import thereof and in the Indenture. Anything contained in the Indenture to the contrary notwithstanding, it is understood and agreed under the Indenture that none of the covenants of the Authority contained in the Indenture are intended to or will create a general or primary obligation of the Authority.

COST OF ISSUANCE FUND

The Trustee will establish and maintain under the Indenture a separate Fund to be known as the “Cost of Issuance Fund - Benedictine University” to the credit of which a portion of the net proceeds of the Series 2013A Bonds will be deposited, as described in the Indenture. Moneys on deposit in the Cost of Issuance Fund will be applied to pay the fees, costs and expenses of issuing the Bonds, including, without limitation, all printing expenses in connection with the Indenture, the Loan Agreement, the Series 2013A Note, the Series 2013A Bonds, the Preliminary Official Statement and the Official Statement; Rating Agency fees; legal fees; the administrative charge of the Authority; fees of the Authority's financial advisor; the initial fees and expenses of the Trustee and any Paying Agent; and all other fees and expenses of the Trustee and any Paying Agent; and all other fees and expenses incurred in connection with the issuance of the Bonds. The costs referred to above will be payable upon submission of a Written Request from the Borrowers stating that the amount indicated thereon is justly due and owing, has not been the subject of another Written Request which has been paid, and is a proper cost of issuing the Bonds. Any moneys remaining in the Cost of Issuance Fund on the earlier of the date on which all costs of issuance of the Series 2013A Bonds have been paid or December 31, 2013, will be transferred to the Construction Account of the Project Fund prior to the delivery of the Completion Certificate and, after the delivery of such Completion Certificate, to the Interest Fund and applied as provided in the Indenture.

PROJECT FUND

The Authority will establish and maintain with the Trustee under the Indenture a trust fund in the name of the Authority to be designated the “Project Fund — Benedictine University, Series 2013A Bond Issue,” which shall include separate subaccounts to be known as the Refunding Account (the “Refunding Account”) and the Construction Account (the “Construction Account”). Proceeds received by the Authority upon the sale of the Series 2013A Bonds will be deposited in the Project Fund, as described in the Indenture. Any moneys received by the Trustee from any source for the Project will be deposited in the Project Fund. The moneys in the Project Fund will be held in trust by the Trustee, will he applied to the payment of the costs of the Project, except to the extent required to be

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transferred to the Rebate Fund in accordance with the Tax Certificate, and, pending such application, will be held as trust funds under the Indenture until paid out or transferred as provided therein. The Trustee may, in its discretion, establish additional accounts within the Project Fund, and subaccounts within any of such accounts, as the Trustee may deem necessary or useful for the purpose of identifying more precisely the sources of payments into and disbursements from the Project Fund and its accounts, or, at the direction of the Borrowers, for the purpose of complying with the requirements of the Code relating to arbitrage, but the establishment of any such account or subaccount will not alter or modify any of the requirements of the Indenture with respect to the deposit or use of money in the Project Fund, or result in commingling of funds not permitted thereunder. In establishing such additional accounts or subaccounts, the Trustee may at any time request, receive and rely with full authority upon an Opinion of Bond Counsel, addressed to the Trustee, that the establishment of such accounts or subaccounts will not adversely affect any exclusion of interest on the Bonds from gross income of the owners thereof for federal income tax purposes.

Moneys deposited into the Project Fund will be held in the Project Fund and disbursed as provided in the Indenture upon receipt by the Trustee of the Written Request of the Borrowers setting forth certain representations with respect to the amounts to be so paid or reimbursed. The Borrowers will cause to be submitted to the Trustee within 90 days after the Borrowers makes the final drawing of moneys from the Construction Account of the Project Fund to pay costs of the Project, a Completion Certificate signed by an Authorized Officer of the Borrowers.

On the date on which the Trustee receives the Completion Certificate with respect to the Project and the Trustee has paid all Written Requests theretofore tendered by the Borrowers to the Trustee under the provisions of the Indenture with respect to such Project, any balance of moneys in the Construction Account of the Project Fund for such Project will, at the option of the Borrowers, be (a) applied to pay the costs of other “educational facilities” or “cultural facilities” (as such terms are defined in the Act) of the Borrowers, provided that the Borrowers will have received an Opinion of Bond Counsel to the effect that such application will not adversely affect the validity or enforceability of the Series 2013A Bonds in accordance with their terms or any exclusion of interest on the Bonds from gross income of the owners thereof for federal income tax purposes, (b) withdrawn by the Trustee from the Construction Account of the Project Fund and deposited into the Bond Sinking Fund on behalf of and for the benefit of the Borrowers and/or (c) applied in any other lawful manner, provided that there will be delivered to the Trustee and the Authority an Opinion of Bond Counsel to the effect that such application will not adversely affect the validity of the Series 2013A Bonds or any exemption exclusion of interest on the Bonds from gross income of the owners thereof for federal income tax purposes. If the Borrowers determine not to complete any part of the Project for which moneys on deposit in the Construction Account of the Project Fund for such Project (including investment earnings thereon) are available, or if the Borrowers elect to fund any component of such Project from other sources, such moneys (including investment earnings thereon) must be used (a) to pay costs of the remaining components of such Project; provided that the Borrowers certify to the Authority and the Trustee that such use will not violate the covenants in the Tax Certificate, (b) to pay the costs of other educational or cultural facilities qualifying

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under the Act, provided that the Borrowers comply with the provisions set forth in the Loan Agreement, (c) to prepay principal on the Series 2013A Note and to pay principal on the Series 2013A Bonds upon maturity or redemption prior to maturity in accordance with the payment and redemption provisions of the Loan Agreement and the Indenture and subject to compliance with the Tax Certificate or (d) in any other lawful manner; provided that there will be delivered to the Trustee and the Authority an Opinion of Bond Counsel to the effect that such application will not adversely affect the validity or enforceability of the Series 2013A Bonds in accordance with their terms or any exclusion of interest on the Series 2013A Bonds from gross income of the owners thereof for federal income tax purposes.

DISPOSITION OF REVENUES

The following special funds and accounts are created by the Indenture:

Interest Fund. The Trustee will establish and maintain under the Indenture so long as any of the Bonds are Outstanding a separate Fund to be known as the “Interest Fund – Benedictine University.” All payments of interest on the Notes (other than prepayments), as and when received by the Trustee, will be deposited in the Interest Fund. In addition, there may be deposited into the Interest Fund investment earnings on moneys held in the Funds established under the Indenture, as provided in the Indenture.

On or before the 1st day of each April and October (or, if such day is not a Business Day, then on or before the first Business Day thereafter), beginning on April 1, 2014, the Trustee will deposit in the Interest Fund from any moneys received by the Trustee for that purpose, an amount equal to the difference between (a) the amount of interest then payable on the Bonds and (b) the amount of moneys, if any, then on deposit in the Interest Fund and not allocated to the payment of interest on the Bonds previously due and payable. Moneys in the Interest Fund will be used by the Trustee to pay interest on the Bonds as it becomes due. No such deposit need be made, however, if on any such day there are moneys on deposit in the Interest Fund sufficient to pay the interest then due on the Bonds.

Bond Sinking Fund. The Trustee will establish and maintain so long as any of the Bonds are Outstanding a separate Fund to be known as the “Bond Sinking Fund – Benedictine University.” All payments of principal on the Notes (other than prepayments) will be deposited as and when received by the Trustee in the Bond Sinking Fund and will be applied by the Trustee to pay principal of the Bonds as such principal becomes due, whether at maturity or by mandatory sinking fund redemption, in accordance with the provisions of the Indenture. In addition, there may be deposited into the Bond Sinking Fund investment earnings on moneys held in the Funds established under the Indenture, as provided in the Indenture.

Optional Redemption Fund. The Trustee will establish and maintain so long as any of the Bonds are Outstanding a separate Fund to be known as the “Optional Redemption Fund – Benedictine University.” In the event that (a) the Authority deposits moneys with the Trustee from governmental sources referred to in the Indenture for the purpose of redeeming all or a portion of the Bonds Outstanding, or (b) funds from any source are deposited by the

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Borrowers with the Trustee pursuant to the Loan Agreement for the purpose of redeeming Bonds, all such moneys will be deposited into the Optional Redemption Fund. Funds on deposit in the Optional Redemption Fund will be used first, to make up any deficiencies existing in the Interest Fund, the Bond Sinking Fund and the Debt Service Reserve Fund (in the order listed) and, secondly, to the purchase or redemption of Bonds in accordance with the provisions of the Indenture.

Debt Service Reserve Fund. The Trustee will establish and maintain under the Indenture so long as any of the Series 2013A Bonds are Outstanding a separate Fund to be known as the “Debt Service Reserve Fund – Benedictine University. “ An initial deposit to the credit of the Debt Service Reserve Fund from the proceeds of the Series 2013A l3onds will be made in the manner provided in the Indenture. If, on the third Business Day prior to any date on which principal of or interest on the Bonds entitled to the benefits of the Debt Service Reserve Fund is to be paid to the owners thereof, moneys on deposit in the Bond Sinking Fund or the Interest Fund are insufficient to pay the principal of or interest on such Bonds, respectively, the Trustee will use moneys on deposit in the Debt Service Reserve Fund to make up any deficiencies in the Interest Fund and the Bond Sinking Fund, in the order listed. In the event moneys are so withdrawn from the Debt Service Reserve Fund to make up any such deficiencies, the Trustee will notify the Borrowers of the amount so used. In the case of any such withdrawal of moneys, the Borrowers agree in the Loan Agreement to restore the amount on deposit in the Debt Service Reserve Fund to an amount equal to the Debt Service Reserve Fund Requirement in accordance with the terms of the Indenture and the Loan Agreement.

In the event Additional Bonds are issued, the supplement to the Indenture creating such Additional Bonds will provide whether such bonds will be entitled to the benefit of the Debt Service Reserve Fund. If so entitled, such supplement will provide for the deposit of such amount of the proceeds from the sale thereof or fund from other sources as may be necessary to cause the amount on deposit in the Debt Service Reserve Fund to equal the Debt Service Reserve Fund Requirement on all Bonds outstanding under the Indenture after the issuance of such Additional Bonds which are so entitled to the benefit of such Fund.

Moneys on deposit in the Debt Service Reserve Fund will be invested in Qualified Investments subject to compliance with the provisions of the Indenture as summarized under this caption and under the caption “THE INDENTURE -- Investment of Funds.” Investments in the Debt Service Reserve Fund will be valued by the Trustee on the first Business Day of April and October of each year, on the basis of fair market value and marked to market (which valuation shall take into account any accrued and unpaid interest). Guaranteed investment contracts, letters of credit, surety bonds and other investment agreements constituting “Qualified Investments” in the Debt Service Reserve Fund shall be valued at the amount which is available to be drawn thereunder. If on any such valuation date the Trustee determines there is a deficiency in the amount on deposit in the Debt Service Reserve Fund, the Trustee will immediately notify the Borrowers of such deficiency. If on any valuation date the amount on deposit in the Debt Service Reserve Fund is less than 95% of the Debt Service Reserve Fund Requirement as a result of a decline in the market value of investments in the Debt Service Reserve Fund, the Loan Agreement requires the Borrowers to deposit in the Debt Service Reserve Fund the amount

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necessary to restore the amount on deposit in the Debt Service Reserve Fund to the Debt Service Reserve Fund Requirement within not more than 60 days following the date of determination of such deficiency. At the request of the Borrowers (so long as a Borrower is not in default under any Note or the Loan Agreement), immediately prior to the date the Borrowers deposit such amounts with the Trustee, the Trustee will determine the then existing market value of investments in the Debt Service Reserve Fund for the purpose of determining the amount of such deposit, if any, then needed to be made to restore the amount then on deposit in the Debt Service Reserve Fund to the Debt Service Reserve Requirement. If the amount on deposit in the Debt Service Reserve Fund is less than 100% of the Debt Service Reserve Fund Requirement as a result of the Debt Service Reserve Fund having been drawn upon to make up a deficiency in the Bond Sinking Fund or the Interest Fund as provided in the Indenture, the Loan Agreement requires the Borrowers to pay the amount which was withdrawn to the Trustee as soon as reasonably possible and in any event in not more than 12 substantially equal consecutive monthly installments beginning with the first day of the first month after the month in which withdrawal occurred.

If on any valuation date as described in the preceding paragraph the amount on deposit in the Debt Service Reserve Fund is more than the Debt Service Reserve Fund Requirement, the amount of such excess will (a) be transferred to the Interest Fund or the Bond Sinking Fund (in the order listed) to the extent of the amounts required to be deposited therein on the next required principal or interest payment dates on the Bonds occurring within 13 months of such transfer or (b) used for any other corporate purpose, including, but not limited to, the financing of costs of a “project” as defined in, and permitted under, the Act; provided, however, the Trustee shall have received an Opinion of Bond Counsel (which Opinion, including the scope, form, substance and other aspects thereof are acceptable to the Trustee) to the effect that the foregoing will not adversely affect the validity of the Bonds or any exclusion of interest on the Bonds from gross income of the owners thereof for federal income tax purposes.

In connection with any partial redemption or defeasance prior to maturity of the Bonds, the Trustee may, at the request of the Borrowers, use any amounts on deposit in the Debt Service Reserve Fund in excess of the Debt Service Reserve Fund Requirement after such redemption to (a) pay principal of, or the principal portion of the redemption price, of said Bonds to be redeemed or defeased, or (b) for any other corporate purpose, including, but not limited to the financing of costs of a “project” as defined in, and permitted under, the Act provided, however, the Trustee shall have received an Opinion of Bond Counsel (which Opinion, including the scope, form, substance and other aspects thereof are acceptable to the Trustee) to the effect that the foregoing will not adversely affect the validity of the Bonds or any exclusion of interest on the Bonds from gross income of the owners thereof for federal income tax purposes.

ADDITIONAL ACCOUNTS AND SUBACCOUNTS

The Trustee may, in its discretion, establish such additional accounts within the Interest Fund, the Bond Sinking Fund, the Project Fund and the Optional Redemption Fund, and subaccounts within any of such accounts, as the Trustee may deem necessary or

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useful for the purpose of identifying more precisely the sources of payments into and disbursements from such Funds and their respective accounts, or for the purpose of complying with the requirements of the Code relating to arbitrage, but the establishment of any such account or subaccount will not alter or modify any of the requirements of the Indenture with respect to the deposit or use of moneys in such Funds or result in commingling of funds not permitted thereunder. In establishing such accounts or subaccounts, the Trustee may at any time request, receive and rely with full authority upon an Opinion of Bond Counsel, addressed to the Trustee, to the effect that the establishment of such accounts or subaccounts will not adversely affect any exclusion of interest on the Bonds from gross income for federal income tax purposes.

INVESTMENT OF FUNDS

Subject to the restrictions set forth in the Indenture and in the Tax Certificate, moneys in the Project Fund, the Interest Fund, the Bond Sinking Fund, the Cost of Issuance Fund, the Debt Service Reserve Fund and the Optional Redemption Fund will be invested by the Trustee at the written direction of the Borrowers only in Qualified Investments, to the extent and in the manner provided for in the Loan Agreement. The Trustee may conclusively rely upon the Borrowers' written instructions as to both the suitability and legality of the directed investments. Such Qualified Investments must mature or be redeemable or marketable on or before the date or dates that moneys therefrom are anticipated to be required. The Trustee is authorized under the Indenture to trade with itself, or with any bank affiliated with it, in the purchase and sale of securities for such investments, and may charge its ordinary and customary fees for such trades, including cash sweep account fees, and may invest moneys in its own certificates of deposit or time deposits so long as the same constitute Qualified Investments. Notwithstanding anything in the Indenture to the contrary, in no case will any investment be otherwise than in accordance with the investment limitations contained in the Indenture and the Tax Certificate. The Trustee will not be liable or responsible for any loss resulting from any such investment so long as such investment was made in accordance with the fiduciary duties imposed on the Trustee pursuant to the Indenture. Except as otherwise provided in the Tax Certificate, all income derived from the investment of moneys on deposit in any such Fund will be deposited into the Debt Service Reserve Fund, to the extent that the amount of moneys therein is less than the Debt Service Reserve Fund Requirement, and then, subject to the provisions of the Indenture, be deposited into the Project Fund prior to the delivery of the Completion Certificate and applied to pay costs of the Project in accordance with the Indenture and, after the delivery of the Completion Certificate, into the Interest Fund or the Bond Sinking Fund (in the order listed).

MONEYS HELD IN TRUST

All moneys required to be deposited with or paid to the Trustee for the account of any Fund or account under any provisions of the Indenture will be held by the Trustee in trust under the terms of the Indenture and will not be subject to lien or attachment of any creditor of the Authority or the Borrowers.

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ARBITRAGE AND TAX COVENANTS

Subject to the Borrowers' direction of the investment of moneys on deposit in certain Funds pursuant to the Indenture, the Authority covenants that it will not take any action, or fail to take any action within its control, to the extent permitted by applicable law, with respect to the investment of the proceeds of any Bonds or with respect to the payments derived from the Notes and under the Loan Agreement or any other amounts, regardless of the source or where held, which may result in any Bond being treated as an “arbitrage bond” within the meaning of such term as used in Section 148 of the Code. The Authority further covenants in the Indenture that it will comply with and take all actions required of it by the Tax Certificate. Subject to the Borrowers' direction of the investment of moneys on deposit in certain Funds pursuant to the Indenture, the Authority further covenants in the Indenture that it will not take any action, or fail to take any action within its control, to the extent permitted by applicable law, with respect to the investment of the proceeds of any Bonds, with respect to the payments derived from the Notes and under the Loan Agreement, or any other amounts, regardless of the source or where held, which may cause the interest on the Bonds to be includible in the gross income of the owners thereof for purposes of federal income taxation. The Authority will be deemed to have complied with the requirements of this paragraph so long as the Authority acts on the written direction of the Borrowers and so long as the Authority has no reason to believe, without any due investigation on the part of the Authority, that such direction from the Borrowers would cause the Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code or would cause interest on any Bond to be includible in the gross income of the owners thereof for purposes of federal income taxation. The Trustee covenants in the Indenture that it will not take any action, permit any action to be taken or fail to take any action with respect to investments of any amounts held by the Trustee relating to the Bonds, to the extent the Trustee has investment discretion under the Indenture, that may result in any Bond being treated as an “arbitrage bond” within the meaning of such term as used in Section 148 of the Code.

ISSUANCE OF ADDITIONAL BONDS

At the request of the Borrowers, the Authority may issue Additional Bonds from time to time for any purpose permitted by the Act. The proceeds of any such Additional Bonds will be lent to the Borrowers as evidenced by one or more Additional Notes of the Borrowers issued to the Authority. Each series of Additional Bonds issued under the Indenture will be equal in aggregate principal amount to the principal amount of the Additional Note or Notes evidencing the loan of the proceeds thereof to the Borrowers.

Before the Trustee authenticates and delivers any Additional Bonds, the Trustee must receive the following items:

(a) Original executed counterparts of any amendments or supplements to the Loan Agreement and the Indenture entered into in connection with the issuance of the Additional Bonds, which are necessary or advisable, in the Opinion of Bond Counsel, to provide that the Additional Bonds will be issued in compliance with the Indenture, or that the Additional Notes will be issued in compliance with the Loan

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Agreement, including provisions providing for a deposit to the Debt Service Reserve Fund sufficient to increase the amount on deposit therein to an amount equal to the Debt Service Reserve Fund Requirement applicable to such Additional Bonds, if any;

(b) A certified copy of all resolutions adopted and proceedings had by the Borrowers authorizing execution and delivery of the Additional Notes and any amendments to the Loan Agreement referred to in paragraph (a) above, and further approving any amendment to the Indenture referred to in paragraph (a) above and the issuance and sale of the Additional Bonds;

(c) One or more Additional Notes to evidence the loan of the proceeds of the Additional Bonds to the Borrowers and the obligation of the Borrowers to make such additional payments;

(d) A certified copy of all resolutions adopted and proceedings had by the Authority authorizing execution and delivery of any amendments to the Indenture and the Loan Agreement referred to in paragraph (a) above and the issuance of the Additional Bonds;

(e) A request and authorization to the Trustee on behalf of the Authority, signed by an Authorized Officer of the Authority, to authenticate and deliver the Additional Bonds to, or on the order of, the purchaser thereof on payment to the Trustee of the amount specified therein (including without limitation, any accrued interest), which amount will be deposited as provided in the applicable resolution or supplemental indenture;

(f) An Opinion of Bond Counsel to the effect that: (i) the documents submitted to the Trustee in connection with the request then being made comply with the requirements of the Indenture; (ii) the issuance of the Additional Bonds has been duly authorized; and (iii) all conditions precedent to the delivery of the Additional Bonds have been fulfilled;

(g) An Opinion of Bond Counsel, to the effect that: (i) when executed for and in the name and on behalf of the Authority and when authenticated and delivered by the Trustee, those Additional Bonds will be valid and legal limited obligations of the Authority payable in accordance with their terms and will be secured under the Indenture equally and on a parity with all other Bonds at the time outstanding under the Indenture as to the assignment to the Trustee of the Authority's right, title and interest in the Trust Estate to provide for payment of principal, premium, if any, and interest on the Bonds, except to the extent otherwise provided in any amendments to the Indenture or the Loan Agreement referred to in paragraph (a) above applicable to such Additional Bonds; and (ii) the issuance of the Additional Bonds will not result in the interest on the Bonds outstanding immediately before that issuance becoming included in gross income for federal income tax purposes;

(h) A written opinion of Counsel to the Borrowers, satisfactory to the Trustee, to the effect that the amendments or supplements to the Loan Agreement, if

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any, and the issuance of the Additional Note or Notes have been duly authorized, executed and delivered by the Borrowers, and such amendments or supplements to the Loan Agreement and the Additional Note or Notes constitute the legal, valid and binding obligations of the Borrowers, enforceable in accordance with their terms, subject to exceptions reasonably satisfactory to the Trustee for bankruptcy, insolvency and similar laws and the application of equitable principles;

(i) Written evidence in form and substance satisfactory to the Trustee that the Borrowers have complied with the provisions of the Loan Agreement summarized under the caption “THE LOAN AGREEMENT - Issuance of Additional Notes”; and

(j) Such further documents, certificates and opinions as may be reasonably required by the Authority or Bond Counsel, including without limitation the execution and delivery by the Borrowers of any necessary tax documentation, the satisfaction of such requirements to be conclusively evidenced by the delivery of such Additional Bonds by the Authority.

When (a) the documents listed above have been received by the Trustee, and (b) the Additional Bonds have been executed and authenticated, the Trustee will deliver the Additional Bonds to or on the order of the purchaser thereof, but only on payment to the Trustee of the specified amount (including without limitation, any accrued interest) set forth in the request and authorization to which reference is made in paragraph (e) above.

DEFAULTS AND REMEDIES

Each of the following events is defined as, and declared to constitute, an “event of default” under the Indenture:

(a) payment of any installment of interest on any of the Bonds is not made when the same becomes due and payable; or

(b) payment of the principal of any of the Bonds is not made when the same becomes due and payable, either at maturity or by proceedings for redemption or through failure to fulfill any payment to any Fund under the Indenture or otherwise; or

(c) the Authority shall for any reason be rendered incapable of fulfilling its obligations under the Indenture in such manner as may be material to the Bondholders; or

(d) an order or decree shall be entered, with the consent or acquiescence of the Authority, appointing a receiver or custodian for any of the revenues of the Authority, or approving a petition filed against the Authority seeking reorganization of the Authority under the Federal bankruptcy laws or any other similar law or statute of the United States of America or any state thereof, or if any such order or decree, having been entered without the consent or acquiescence of the Authority will not be vacated or discharged or stayed on appeal within 30 days after the entry thereof; or

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(e) any proceeding shall be instituted, with the consent or acquiescence of the Authority, for the purpose of effecting a composition between the Authority and its creditors or for the purpose of adjusting the claims of such creditors pursuant to any federal or state statute now or hereafter enacted, if the claims of such creditors are under any circumstances payable from the revenues and other moneys derived by the Authority from the Notes or the Loan Agreement; or

(f) the Authority makes an assignment for the benefit of its creditors or consents to the appointment of a receiver, custodian or trustee for itself or for the whole or any part of the revenues and other moneys derived by the Authority from the Notes or the Loan Agreement; or

(g) (i) the Authority is adjudged insolvent by a court of competent jurisdiction, or (ii) an order, judgment or decree be entered by any court of competent jurisdiction appointing, without the consent of the Authority, a receiver, custodian or trustee of the Authority or of the whole or any part of its property and any of the aforesaid adjudications, orders, judgments or decrees will not be vacated or set aside or stayed within 30 days from the date of entry thereof; or

(h) the Authority files a petition or answer seeking reorganization or any arrangement under the Federal bankruptcy laws or any other applicable law or statute of the United States of America or any state thereof; or

(i) under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction will assume custody or control of the Authority or of the whole or any substantial part of its property, and such custody or control will not be terminated within 30 days from the date of assumption of such custody or control; or

(j) any event of default under the Loan Agreement occurs and is continuing;

(k) the Authority defaults in any material respect in the due and punctual performance of any of its other covenants, conditions, agreements and provisions contained in the Bonds or in the Indenture or any agreement supplemental thereof on the part of the Authority to be performed, and such default continues for 30 days after written notice specifying such default and requiring the same to be remedied shall have been given to the Authority and the Borrowers by the Trustee or the owners of not less than 25% in aggregate principal amount of all Bonds then outstanding; provided that, if such default cannot with due diligence and dispatch be wholly cured within 30 days but can be wholly cured, the failure of the Authority to remedy such default within such 30-day period shall not constitute a default under the Indenture if the Authority shall use commercially reasonable efforts after 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 so that such default is cured within 60 days after the original written notice thereof.

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Upon the occurrence and continuance of any event of default specified above the Trustee may, without any action on the part of the Bondholders, and will, upon the written request of the owners of not less than a majority in principal amount of the Bonds then Outstanding under the Indenture, but exclusive of Bonds then owned by the Authority or the Borrowers, by notice in writing delivered to the Authority, declare the entire principal amount of the Bonds then Outstanding under the Indenture and the interest accrued thereon, immediately due and payable, and the said entire principal and interest will thereupon become and be immediately due and payable, subject, however, to the provisions of the Indenture with respect to waivers of events of defaults.

Upon the occurrence of an event of default under the Indenture the Trustee may pursue any available remedy by suit at law or in equity to enforce the payment of the principal of, premium, if any, and interest on the Bonds then Outstanding or to enforce any obligations of the Authority under the Indenture. If an event of default will have occurred, and if requested so to do by the owners of a majority in aggregate principal amount of Bonds then Outstanding and indemnified as provided in the Indenture, the Trustee will be obliged to exercise such one or more of the rights and powers conferred pursuant to the Indenture as the Trustee, being advised by counsel, will deem most expedient in the interests of the Bondholders.

No remedy by the terms of the Indenture conferred upon or reserved to the Trustee or to the Bondholders is intended to be exclusive of any other remedy, but each and every such remedy will be cumulative and will be in addition to any other remedy given to the Trustee or to the Bondholders thereunder or now or hereafter existing at law or in equity or by statute. If the Trustee or the Bondholders elect, as the case may be, to act upon any remedy conferred under the Indenture and subsequently discontinue or abandon such remedial action, the Trustee or the Bondholders, as the case may be, will be restored to their previous positions.

No delay or omission to exercise any right or power accruing upon any event of default will impair any such right or power or will be construed to be a waiver of any event of default or acquiescence therein; and every such right and power may be exercised from time to time and as often as may be deemed expedient.

No waiver of any event of default under the Indenture, whether by the Trustee or the Bondholders, will extend to or will affect any subsequent event of default or will impair any rights or remedies consequent thereon.

RIGHT OF BONDHOLDERS TO DIRECT PROCEEDINGS

The owners of not less than a majority in aggregate principal amount of Bonds then Outstanding will have the right, at any time, by an instrument or instruments in writing executed and delivered to the Trustee, to direct the time, the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of the Indenture or for the appointment of a receiver or any other proceedings thereunder; provided that such direction will not be otherwise than in accordance with the provisions of law and the Indenture.

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RIGHTS AND REMEDIES OF BONDHOLDERS

No Owner of any Bond will have any right to institute any suit, action or proceeding in equity or at law for the enforcement of the Indenture or for the execution of any trust thereof or for the appointment of a receiver or any other remedy thereunder, unless (a) a default has occurred of which the Trustee has been notified or of which it is deemed to have notice as provided in the Indenture, and such default will have become an event of default; (b) the owners of a majority in aggregate principal amount of Bonds then Outstanding have made written request to the Trustee, have offered reasonable opportunity either to proceed to exercise the powers therein granted or to institute such action, suit or proceeding in its own name and have offered to the Trustee indemnity as provided in the Indenture; and (c) the Trustee thereafter fails or refuses to exercise the powers therein granted or to institute such action, suit or proceeding in its, his, her or their own name or names. Such notification, request and offer of indemnity are declared under the Indenture in every case at the option of the Trustee to be conditions precedent to the execution of the powers and trusts of the Indenture, and to any action or cause of action for the enforcement: of the indenture, or for the appointment of a receiver or for any other remedy thereunder; it being understood and intended that no one or more owners of the Bonds will have any right in any manner whatsoever to affect, disturb or prejudice the lien of the Indenture by its, his, her or their action or to enforce any right under the Indenture except in the manner therein provided, and that all proceedings at law or in equity will be instituted, had and maintained in the manner therein provided and for the equal benefit of the owners of all Bonds then Outstanding. Nothing in the Indenture contained will, however, affect or impair the right of any Bondholder to enforce the covenants of the Authority to pay the principal of and interest on each of the Bonds to the respective owners thereof at the time, place, from the source and in the manner expressed in the Bonds.

WAIVERS OF EVENTS OF DEFAULT

The Trustee may in its discretion waive any event of default under the Indenture and its consequences and rescind any declaration of maturity of principal of and interest on the Bonds, and will do so upon being indemnified to its satisfaction in the manner described in the Indenture and upon the written request of the owners of (a) a majority in aggregate principal amount of all the Bonds then Outstanding in respect of which a default in the payment of principal and/or premium, if any, and/or interest exists, or (b) a majority in aggregate principal amount of all Bonds then Outstanding in the case of any other default; provided, however, that there will not be waived (i) any event of default in the payment of the principal of any Outstanding Bonds at the date of maturity specified therein, or (ii) any default in the payment when due of the interest on any such Bond unless, prior to such waiver or rescission, all arrears of interest, with interest (to the extent permitted by law) at the rate borne by the Bonds in respect of which such default will have occurred on overdue installments of interest, and all arrears of payments of principal and premium, if any, when due, as the case may be, and all expenses of the Trustee, in connection with such default will have been paid or provided for, and in case of any such waiver or rescission, or in case any proceeding taken by the Trustee on account of any such default will have been discontinued or abandoned or determined adversely, then and in every such case the Authority, the Trustee and the Bondholders will be restored to their former positions and rights under

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the Indenture, but no such waiver or rescission will extend to any subsequent or other default or impair any right consequent thereon.

SUPPLEMENTAL INDENTURES

The Authority and the Trustee may, without the consent of, or notice to, any of the Bondholders, enter into an indenture or indentures supplemental to the Indenture, as will not be inconsistent with the terms and provisions thereof, for any one or more of the following purposes:

(a) to cure any ambiguity, formal defect or omission in the Indenture;

(b) to grant to or confer upon the Trustee for the benefit of the Bondholders any additional rights, remedies, powers or authority that may lawfully be granted to or conferred upon the Bondholders or the Trustee or either of them;

(d) to modify, amend or supplement the Indenture or any indenture supplemental thereto in such manner as to permit continued compliance with the arbitrage requirements of the Code, including, without limitation, continued compliance with the Tax Certificate;

(e) to modify, amend or supplement the Indenture or any indenture supplemental thereto in such manner as to permit the qualification of the Indenture under the Trust Indenture Act of 1939, as then amended, or any similar federal statute hereafter in effect, or to permit the qualification of the Bonds for sale under the securities laws of any state of the United States of America;

(f) to modify, amend or supplement the Indenture or any indenture supplemental thereto in such manner as to permit the issuance of coupon Bonds thereunder and to permit the exchange of Bonds from fully registered form to coupon form and vice versa;

(g) to provide for certificated Bonds;

(h) to provide for changes in the components of the Project and the Prior Projects, to the extent permitted by the Indenture and the Loan Agreement;

(i) to conform provisions of the Indenture to provide for Additional Bonds to the extent permitted by the Indenture;

(j) to provide for the refunding, advance refunding or provision for payment of all or a portion of one or more series of the Bonds;

(k) to evidence the succession of a new Trustee or the appointment by the Trustee or the Authority of a co-trustee;

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(l) to provide for any other change to the Indenture which, in the judgment of the Trustee, is not materially prejudicial to the interests of the Bondholders or of the Trustee; and

(m) to modify the Indenture or any indenture supplemental thereto in such manner as may be necessary to reflect the transfer or conveyance by Founders of its Property to Benedictine, the assignment to and assumption by Benedictine of the obligations of Founders and the dissolution of Founders, as provided in Section 2.32 of the Loan Agreement.

The Authority and the Trustee may not enter into an indenture or indentures supplemental to the Indenture pursuant to or for the purposes described in paragraph (f) above unless they will have received an Opinion of Bond Counsel to the effect that the issuance of coupon Bonds will not adversely affect the validity of such Bonds or the exclusion from federal gross income of the owners of the interest paid on the Bonds to the extent otherwise afforded under Section 103(a) of the Code.

Exclusive of supplemental indentures described above and subject to the terms and provisions contained in the Indenture, and not otherwise, the owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding will have the right, from time to time, anything contained in the Indenture to the contrary notwithstanding, to (i) consent to and approve the execution by the Authority and the Trustee of such other indenture or indentures supplemental thereto as will be deemed necessary and desirable by the Authority for the purpose of modifying, altering, amending, adding to or rescinding, in any particular manner, any of the terms or provisions contained in the Indenture or in any supplemental indenture, or (ii) waive or consent to the taking by the Authority of any action prohibited, or the omission by the Authority of the taking of any action required, by any of the provisions of the Indenture or of any indenture supplemental thereto; provided, however, that nothing contained under this subcaption will permit or be construed as permitting:

(a) an extension of the stated maturity or reduction in the principal amount of, or reduction in the rate or extension of the time of paying of interest on, or reduction of any premium payable on the payment or redemption of any Bond, without the consent of the Owner of such Bond; or

(b) a reduction in the amount of, or extension of the time of, any payment required by any sinking fund applicable to any Bonds without the consent of the owners of all the Bonds which would be affected by the action to be taken; or

(c) the creation of any lien prior to the lien of the Indenture with respect to any particular series of Bonds (or on parity to such liens, other than with respect to Additional Bonds), without the consent of the owners of all the Bonds at the time Outstanding; or

(d) a reduction in the aforesaid aggregate principal amount of Bonds, the owners of which are required to consent to any such waiver or supplemental indenture,

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without the consent of the owners of all the Bonds at the time Outstanding which would be affected by the action to be taken; or

(e) a modification of the rights, duties or immunities of the Trustee, without the written consent of the Trustee; or

(f) the loss of the exclusion from federal gross income of the owners of the interest paid on the Bonds held by a non-consenting Bondholder to the extent otherwise afforded under Section 103(a) of the Code.

Anything under the Indenture to the contrary notwithstanding, a waiver, consent or supplemental indenture described in the Indenture that affects any rights of the Borrowers will not become effective unless and until the Borrowers have consented in writing to such waiver or consent or to the execution and delivery of such supplemental indenture.

In connection with a supplemental indenture as described under this caption, the Trustee may request that the Authority or the Borrowers deliver to the Trustee an opinion of counsel to the effect that such supplemental indenture is authorized and permitted pursuant to the terms of the Indenture.

AMENDMENTS TO THE LOAN AGREEMENT

Subject to the terms and provisions of the Indenture, the Authority and the Borrowers may amend or modify the Loan Agreement, or any provision thereof, or may consent to the amendment or modification thereof, in any manner not inconsistent with the terms and provisions of the Indenture, for any one or more of the following purposes: (a) to cure any ambiguity or formal defect in the Loan Agreement; (b) to grant to or confer upon the Authority or Trustee, for the benefit of the owners of the Bonds, any additional rights, remedies, powers or authorities that lawfully may be granted to or conferred upon the Authority or the Trustee; (c) to amend or modify the Loan Agreement, or any part thereof, in any manner specifically required or permitted by the terms thereof, including, without limitation, as may be necessary to maintain the exclusion from gross income for purposes of federal income taxation of the interest on the Bonds; (d) to provide that the Bonds may be secured by a credit facility or other additional security not otherwise provided for in the Indenture or the Loan Agreement; (e) to modify, amend or supplement the Loan Agreement, or any part thereof, or any supplement thereto, in such manner as the Trustee and the Borrowers deem necessary in order to comply with any statute, regulation, judicial decision or other law relating to secondary market disclosure requirements with respect to tax exempt obligations of the type that includes the Bonds; (f) to provide for the appointment of a successor securities depository; (g) to provide for the availability of certificated Bonds; (h) to provide for changes in the components of the Project, to the extent permitted by the Indenture and the Loan Agreement; (i) to provide for the addition of any interest rate mode, including, without limitation, an auction rate mode, or to provide for the modification or deletion of any interest rate mode so long as no Bonds will be operating in the interest rate mode when it is to be so modified or deleted, or to amend, modify or alter the interest rate setting provisions, tender provision or conversion provisions for any then existing interest rate mode so long as no Bonds will be operating in the interest mode when such provisions are to be so amended, modified or altered; provided that, in each case,

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there is delivered to the Trustee an opinion of Bond Counsel stating that any such addition, deletion, amendment, modification or alteration will not adversely affect any exclusion from gross income for purposes of federal income taxation of interest on the Bonds; (j) to reflect the transfer or conveyance by Founders of its Property to Benedictine, the assignment to and assumption by Benedictine of the obligations of Founders and the dissolution of Founders, as provided in the Loan Agreement; and (k) to make any other change which does not, in the opinion of the Trustee, have a material adverse effect upon the interests of the Bondholders. In addition, subject to the terms and provisions contained in the Indenture, the Trustee may grant such waivers of compliance by the Borrowers with the provisions of the Loan Agreement as to which the Trustee may deem necessary or desirable to effectuate the purposes of the intent of the Loan Agreement and which, in the opinion of the Trustee, do not have a material adverse effect upon the interests of the Bondholders; provided that the Trustee shall file with the Authority any and all such waivers granted by the Trustee within three Business Days thereof.

Except as described above, neither the Authority nor the Trustee will consent to any amendment, change or modification of the Loan Agreement, nor waive compliance by the Borrowers with any provision of the Loan Agreement, without the written approval or consent of the owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding given and procured as in the Indenture provided. Under no circumstances will any amendment to the Loan Agreement alter the payments of principal and premium, if any, and interest on the Notes, without the consent of the owners of all the Bonds at the time Outstanding.

SATISFACTION AND DISCHARGE OF THE INDENTURE

(a) All rights and obligations of the Trustee, the Authority and the Borrowers under the Loan Agreement, the Notes and the Indenture will terminate and such instruments will cease to be of further effect, and the Trustee will cancel the Notes and deliver them to the Borrowers, will execute and deliver all appropriate instruments evidencing and acknowledging the satisfaction of the Indenture, and will assign and deliver to the Borrowers any moneys and investments in all of the Funds established under the Indenture (except moneys or investments held by the Trustee in the Rebate Fund or for the payment of principal of, interest on, or premium, if any, on the Bonds) when

(i) all fees and expenses of the Trustee and any Paying Agent will have been paid, or payment thereof will be provided for, to the satisfaction of the Trustee or such Paying Agent, respectively;

(ii) the Authority and the Borrowers will have performed all of their covenants and promises in the Loan Agreement, the Notes and the Indenture; and

(iii) all Bonds theretofore authenticated and delivered (A) have become due and payable, or (B) are to be called for redemption under arrangements reasonably satisfactory to the Trustee for the giving of notice of redemption by the Trustee at the expense of the Borrowers, or (C) have

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been delivered to the Trustee cancelled or for cancellation; and, in the case of (A) and (B) above, there will have been deposited with the Trustee either moneys in an amount which will be sufficient, or non-callable Government Obligations, if then permitted under the Act, the principal of and the interest on which, or the principal of which, when due, will provide moneys which will be sufficient to pay when due the principal or redemption price, if applicable, and interest due and to become due on the Bonds on and prior to the redemption date or maturity date thereof, as the case may be; provided that no such deposit may be made if in the Opinion of Bond Counsel the interest on the Bonds would become subject to inclusion in the federal gross income of the owners as a result thereof.

(b) Any series of the Bonds or any portion thereof (but only in Authorized Denominations) may be deemed paid and no longer secured by the Indenture if there is deposited with the Trustee either moneys in an amount which will be sufficient, or non-callable Government Obligations, if then permitted under the Act, the principal of and the interest on which, when due, or the principal of which, when due, will provide moneys which will be sufficient, to pay when due the principal or redemption price, if applicable, and interest due and to become due on such portion of the Bonds on and prior to the redemption date or maturity date thereof, as the case may be, provided that no such deposit will be made if in the Opinion of Bond Counsel the interest on the Bonds would become subject to inclusion in the federal gross income of the owners thereof as a result thereof.

(c) Any series of the Bonds or portions thereof the payment of which has been provided for in accordance with paragraph (a) or (b) above will no longer be deemed Outstanding under the Indenture or secured thereby. The obligation of the Authority with respect to such Bonds will nevertheless continue, but the owners thereof will thereafter be entitled to payment only from the moneys or Government Obligations deposited with the Trustee to provide for the payment of such Bonds.

(d) In the event of a proposed defeasance of all or a portion of any series of the Bonds in the manner described in subparagraph (a)(iii) or (b) above, (i) the Authority will cause to be delivered to the Authority and the Trustee a report of an independent firm of nationally recognized certified public accountants or verification experts addressed to the Authority and the Trustee and in form and substance acceptable to the Authority and the Trustee, verifying the sufficiency of the escrow established to pay such Bonds in full (a “Verification Report”), (ii) the escrow agreement relating thereto will provide that no substitution of a Government Obligation will be permitted except with cash or one or more other Government Obligations and upon delivery of a new Verification Report verifying the sufficiency of the escrow to pay such Bonds in full after giving effect to such substitution, and (iii) the Authority will cause to be delivered an Opinion of Bond Counsel addressed to the Authority and the Trustee to the effect that such Bonds are no longer Outstanding under the Indenture. In the case of a gross defeasance of all or a portion of any series of the Bonds in the manner described in subparagraph (a)(iii) or (b) above, the requirement for a Verification Report will be at the option of the Trustee.

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(e) None of the Bonds Outstanding under the Indenture may be defeased as aforesaid nor may the Indenture be discharged if under any circumstances the interest on such defeased Bonds is thereby made subject to inclusion in the federal gross income of the owners. In determining the foregoing, the Trustee may rely upon an Opinion of Bond Counsel (which opinion may be based upon a ruling or rulings of the Internal Revenue Service) to the effect that the interest on the Bonds being defeased will not be subject to inclusion in the federal gross income of the owners, notwithstanding the satisfaction and discharge of the Indenture.

THE LOAN AGREEMENT

The following is a summary of certain provisions of the Loan Agreement. All references to the Loan Agreement in this Official Statement are qualified in their entirety by reference to the Loan Agreement, copies of which are available from the Trustee.

PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST

The Borrowers will, jointly and severally, duly and punctually pay the principal of, premium, if any, and interest on the Notes at the dates and the places and in the manner mentioned in the Notes and the Loan Agreement, according to the true intent and meaning in the Notes and the Loan Agreement. Notwithstanding any schedule of payments upon the Notes set forth in the Loan Agreement or in the Notes, the Borrowers agree under the Loan Agreement to, jointly and severally, make payments upon the Notes and to be liable therefor at times and in amounts sufficient to pay when due all principal (whether at maturity, by mandatory sinking fund redemption or otherwise) of, premium, if any, and interest on all Bonds from time to time Outstanding under the Indenture.

The foregoing notwithstanding, the Borrowers agree that the moneys and securities, if any, on deposit in the Rebate Fund or to be deposited in the Rebate Fund are not part of the “trust estate” and are not available to make payments of principal and interest on the Bonds.

ASSIGNMENT OF LOAN AGREEMENT AND THE NOTES

Under the Loan Agreement, the Borrowers acknowledge and consent to the pledge and assignment of the Notes and the assignment of the Authority's rights under the Loan Agreement, other than Unassigned Rights, to the Trustee pursuant to the Indenture, and the Borrowers agree that the Trustee may enforce such rights, remedies and privileges granted to the Authority under the Loan Agreement.

MAINTENANCE OF CORPORATE EXISTENCE AND TAX STATUS

Each Borrower agrees in the Loan Agreement that, except as described herein under the caption “THE LOAN AGREEMENT – Maintenance of Corporate Existence and Qualification” in this APPENDIX C, it at all times will maintain its corporate existence and that it intentionally will take no action or suffer any action to be taken by others which will alter, change or destroy its status as a Tax-Exempt Organization provided that at any time, pursuant to the direction of Benedictine and Founders, all of the assets of Founders may be transferred to Benedictine with assumption by Benedictine all of the liabilities of Founders

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and liquidation of Founders. In the event of such transfer, “Borrowers” in the Loan Agreement will mean “Benedictine.” The Borrowers further covenant in the Loan Agreement that none of their revenues, income or profits, whether realized or unrealized, will be distributed to any of their officers, directors or members or inure to the benefit of any private Person, other than for the lawful corporate purposes of the Borrowers, including but not limited to the Borrowers' ability to pay to any Person the reasonable value of any service or product performed for or supplied to the Borrowers by such Person.

The Borrowers further agree in the Loan Agreement that they will take such actions as are necessary or appropriate to comply with the provisions of the Code and the regulations promulgated thereunder in order to preserve any exclusion from federal gross income of the owners thereof of the interest paid on the Bonds, and will not act or fail to act in any other manner which would adversely affect such exclusion. The Borrowers further acknowledge in the Loan Agreement that in the event of an examination by the Internal Revenue Service of any exclusion of interest on the Bonds from gross income of the owners thereof for federal income tax purposes, the Authority is likely to be treated as the “taxpayer” in such examination and agree in the Loan Agreement that they will respond, and will direct the Authority to respond, in a commercially reasonable manner to any inquiries from the Internal Revenue Service in connection with such an examination. The Authority covenants in the Loan Agreement that it will cooperate with the Borrowers, at the Borrowers' expense and at the Borrowers' direction, in connection with such examination.

MAINTENANCE OF CORPORATE EXISTENCE AND QUALIFICATION

Each Borrower covenants in the Loan Agreement that any dissolution, liquidation, disposition of (in a single transaction or a series of related transactions) all or substantially all of its assets, consolidation or merger of a Borrower shall be subject to the following conditions: (a) no event of default exists under the Loan Agreement, the Indenture or the Borrowers Agreements and no event of default thereunder will be caused by the dissolution, liquidation, disposition, consolidation or merger; (b) the entity surviving the dissolution, liquidation, disposition, consolidation or merger assumes (or if the surviving entity is one of the Borrowers, affirms) in writing and without condition or qualification the obligations of the Borrower under each of the Borrowers Agreements; (c) neither the validity nor the enforceability of the Series 2013A Bonds, Indenture or the Borrowers Agreements is adversely affected by the dissolution, liquidation, disposition, consolidation or merger; (d) the exclusion of the interest on the Series 2013A Bonds from gross income for federal income tax purposes is not adversely affected by the dissolution, liquidation, disposition, consolidation or merger, and the provisions of the Act and the Indenture are complied with concerning the dissolution, liquidation, disposition, consolidation or merger; (e) the Project and the Prior Project continue to be as described herein; (f) any successor to the Borrowers shall be qualified to do business in the State and shall continue to be qualified to do business in the State throughout the term hereof; and (g) the Authority has executed a certificate acknowledging receipt and approval of all documents, information and materials required by this paragraph.

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As of the effective date of the dissolution, liquidation, disposition, consolidation or merger, the Borrowers (at their cost) will furnish to the Authority (i) an Opinion of Bond Counsel, in form and substance satisfactory to the Authority as to item (d) above, (ii) an opinion of counsel (of high reputation and expertise as determined by the Authority), in form and substance satisfactory to the Authority, as to the legal, valid and binding nature of items (b) and (c) above, (iii) a certificate of the Borrowers, in form an substance satisfactory to the Authority, as to items (a), (e) and (f), and (iv) a true and complete copy of the instrument of dissolution, liquidation, disposition, consolidation or merger.

FINANCIAL STATEMENTS

Each Borrowers covenants under the Loan Agreement that it will keep proper books of records and accounts in which full, true and correct entries will be made of all dealings or transactions of or in relation to the business and affairs of the Borrowers in accordance with generally accepted accounting principles; provided, that internal interim books of records and accounts of the Borrowers need not be kept in accordance with generally accepted accounting principles. In addition, the Borrowers will furnish the following items:

(a) to the Trustee, within 150 days after the last day of each Fiscal Year of the Borrowers, audited financial statements prepared in accordance with generally accepted accounting principles and certified by a firm of independent certified public accountants of recognized standing; and

(b) to the Trustee, such additional information as the Trustee reasonably requests concerning the Borrowers in order to enable the Trustee to reasonably determine whether the covenants, terms and provisions of the Loan Agreement have been complied with by the Borrowers and for that purpose all pertinent financial books, documents and vouchers (other than personnel records) relating to their business, affairs and properties will at all reasonable times upon reasonable prior written notice be open to the inspection of the accountants or other agents (who may make copies of all or any part thereof) who will from time to time be designated by the Trustee.

Without limiting the foregoing the Borrowers will permit the Trustee (or such persons as the Trustee may designate) and the Authority (or such persons as the Authority may designate) to visit and inspect any of the properties of the Borrowers and to discuss the affairs, finances and accounts of the Borrowers with their officers and independent accountants, all upon reasonable prior written notice and at such reasonable times during normal business hours and as often as the Trustee or the Authority may reasonably require.

The Trustee will have no duty to review or analyze the financial statements delivered pursuant to the Loan Agreement and will hold such financial statements solely as a repository for the benefit of the Bondholders; the Trustee will not be deemed to have notice of any information contained therein or event of default which may be disclosed therein in any manner.

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TAXES, CHARGES AND ASSESSMENTS

Subject to the provisions of the Loan Agreement summarized below under the caption “THE LOAN AGREEMENT - Permitted Contests” in this APPENDIX C, to the extent that the Borrowers or their properties are or become liable to taxation, the Borrowers covenant and agree under the Loan Agreement to pay or cause to be paid (when the same will become due and payable) all lawful taxes, charges, assessments and other governmental levies against the Borrowers or their properties. If under applicable law any such tax, charge, fee, rate, imposition or assessment may at the option of the taxpayer be paid in installments, the Borrowers may exercise such option. Nothing contained in this subcaption will be deemed to constitute an admission by either the Authority or the Borrowers that either the Authority or the Borrowers are liable for any tax, charge, fee, rate, imposition or assessment.

COMPLIANCE WITH ORDERS, ORDINANCES, ETC.

Subject to the provisions of the Loan Agreement summarized below under the caption “THE LOAN AGREEMENT --- Permitted Contests” in this APPENDIX C, the Borrowers will, at their sole cost and expense, comply with all present and future laws, ordinances, orders, decrees, rules, regulations and requirements of every duly constituted governmental authority, commission and court and the officers thereof which are applicable to the Project or to the repair and alteration thereof, or to the use or manner of use of the Project, which may include, but are not limited to, the Americans with Disabilities Act, the Illinois Accessibility Code, all federal, state and local environmental and health and safety laws, rules, regulations and orders applicable to or pertaining to the Project, the Federal Worker Adjustment and Retraining Notification Act and, if applicable, the Illinois Prevailing Wage Act. The Borrowers have any and all necessary licenses and permits to occupy and operate their existing facilities and have obtained, will obtain or will cause to be obtained all necessary licenses and permits to acquire, occupy and operate the Project, as they become required.

PERMITTED CONTESTS

The Borrowers will not be required to pay any tax, charge, assessment, imposition or other governmental levy required to be paid under the Loan Agreement summarized above under the caption “THE LOAN AGREEMENT - Taxes, Charges and Assessments” in this APPENDIX C, or to comply with any law, ordinance, rule, order, decree, regulation or requirement referred to in the provisions of the Loan Agreement summarized above under the caption “THE LOAN AGREEMENT - Compliance with Orders, Ordinances, Etc.” in this APPENDIX C, so long as the Borrowers contest or take other appropriate action in good faith and at their cost and expense with respect to the amount or validity thereof in an appropriate manner or by appropriate proceedings which will operate during the pendency thereof to prevent the collection of or other realization upon the tax, assessment, imposition or charge so contested, the sale, forfeiture or loss of their Property or any part thereof to satisfy the same or any materially adverse effect on their Property or on the use, occupancy or condition of the Borrowers' educational facilities taken as a whole; provided that no such contest or action will subject the Authority or the Trustee to any liability unless the Borrowers properly

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indemnify the Authority or the Trustee, as the case may be. While any such matters are pending, the Borrowers will have the right to pay, remove or cause to be discharged or marked exempt the tax, assessment, imposition, charge, lien or encumbrance being contested. Each such contest will be promptly prosecuted to final conclusion or settlement, and the Borrowers will pay, and save the Authority and the Trustee harmless against, all losses, judgments, decrees and costs (including attorneys' fees and expenses in connection therewith) and will, promptly after the final determination or settlement of such contest or action, pay and discharge the amounts levied, assessed, imposed or determined to be payable thereon, together with all penalties, fines, interests, costs and expenses thereon or in connection therewith.

USE OF THE PROJECT

The Borrowers covenant in the Loan Agreement that it will use the Project and Prior Projects only in furtherance of the lawful corporate purposes of the Borrowers, and only as educational facilities, as defined in the Act.

The Borrowers further agree in the Loan Agreement that they will not use the Project and Prior Projects or any part thereof in a manner which is prohibited by the Establishment of Religion Clause of the First Amendment to the Constitution of the United States of America and the decisions of the United States Supreme Court interpreting the same or by any comparable provisions of the Constitution of the State of Illinois and the decisions of the Supreme Court of the State interpreting the same. Notwithstanding the payment of the Notes and the termination of the Loan Agreement, the Borrowers agree in the Loan Agreement that they will continue to comply with the restrictions stated in the preceding sentence. To the extent required by law, the Borrowers will permit the Authority to inspect the Project and Prior Projects solely in order to determine whether the Borrowers have complied with the provisions of this paragraph, and such right of inspection will survive the termination of the Loan Agreement.

The Borrowers further agree in the Loan Agreement that they will not use the Project and Prior Projects, or permit the Project or Prior Projects to be used, in such manner as would jeopardize the exclusion from federal gross income of the owners thereof of the interest paid on the Bonds otherwise afforded under Section 103(a) of the Code, as more specifically described in the Tax Certificate.

The foregoing notwithstanding, the Borrowers need not comply with any covenant set forth in this subcaption if the Borrowers deliver to the Trustee and the Authority an Opinion of Bond Counsel to the effect that such noncompliance will not adversely affect the validity of the Bonds or any exclusion of interest on the Bonds from gross income of the owners thereof for federal income tax purposes.

MAINTENANCE OF PROPERTIES

The Borrowers covenant under the Loan Agreement that they will, at its own cost and expense, preserve and keep their properties in good repair and order and from time to time will make all repairs, replacements, renewals and additions necessary for the efficient

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functioning thereof; provided, however, that the foregoing will not prevent the Borrowers from selling, removing, demolishing or not using any building or buildings, or any portion thereof, not considered by the Borrowers to be necessary or useful for the efficient conduct of its activities, so long as such act or acts are consistent with and not in violation of any terms, covenants or provisions of the Tax Certificate. The Borrowers agree under the Loan Agreement that they will maintain the Project and Prior Projects in a safe and sound operating condition, making from time to time all needed material repairs thereto, and will maintain reasonable amounts of insurance coverage with respect to the Project and will pay all costs of such maintenance, repair and insurance.

INSURANCE

Each Borrower agrees in the Loan Agreement to insure itself or maintain insurance coverage by reputable insurance companies or associations in such forms and amounts and against such hazards as are customary for institutions of similar size and scope of activities. Upon request, the Borrowers will supply evidence or such insurance to the Trustee. The Borrowers will pay all costs of such insurance.

TRUSTEE'S RIGHT TO PERFORM BORROWERS' COVENANTS; ADVANCES

In the event the Borrowers fail to (i) perform any covenant contained in the provisions of the Loan Agreement summarized above under the caption “THE LOAN AGREEMENT - Taxes, Charges and Assessments” in this APPENDIX C, (ii) maintain their properties in repair required by the provisions of the Loan Agreement summarized above under the caption “THE LOAN AGREEMENT - Maintenance of Properties” in this APPENDIX C, (iii) procure the insurance required by the provisions of the Loan Agreement summarized above under the caption “THE LOAN AGREEMENT - Insurance” in this APPENDIX C, or (iv) make any other payment or perform any other act required to be performed under the Loan Agreement, then and in each such case (unless the same is being contested or other appropriate action is being taken with respect thereto in accordance with the provisions of the Loan Agreement summarized above under the caption “THE LOAN AGREEMENT - Permitted Contests” in this APPENDIX C), the Trustee, upon not less than 5 days' prior written notice to the Borrowers, may (but will not be obligated to) remedy such default for the account of the Borrowers and make advances for that purpose. No such performance or advance will operate to release the Borrowers from any such default, and any sums so advanced by the Trustee will be repayable by the Borrowers on demand and will bear interest at the Trustee's Prime Rate from the date of the advance until repaid.

ADDITIONAL INDEBTEDNESS

Each Borrower covenants and agrees in the Loan Agreement that it will not incur or assume (the terms “incur” and “assume”, for the purposes hereof, mean and include the guaranteeing of or the direct or indirect assumption of liability for the debts of others) any Indebtedness other than (A) the Series 2013B Bonds, (B) the Loan Agreement dated November 20, 2013 between the Borrowers and RBS Citizens, N.A. for a bridge loan related to the Project in an amount not to exceed $10,000,000.00; (C) the Revolving Loan Agreement dated as of November 20, 2013 between the Borrowers and RBS Citizens, N.A.

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for a revolving loan in an amount not to exceed $5,000,000 and (D) Long Term Indebtedness and Short-Term Indebtedness permitted as otherwise provided in the Loan Agreement.

If no Event of Default hereunder shall have occurred and be continuing, the Borrowers may hereafter incur or assume Long Term Indebtedness for any lawful purpose of the Borrowers upon delivery to the Issuer and the Trustee of a certificate of an Authorized Officer of the Borrowers demonstrating in reasonable detail that:

(A) For the Fiscal Year immediately preceding the incurring or assumption of the Long Term Indebtedness as the case may be, the Borrowers were in compliance with the covenant set forth in Section 2.31(b) of the Loan Agreement; and

(B) The Maximum Annual Debt Service Requirement for all Long Term Indebtedness to be outstanding after the incurrence or assumption of such Indebtedness will be less than 12% of the operating expenses of the Borrowers as shown in the most recently available audited financial statements of the Borrowers.

If no Event of Default hereunder shall have occurred and be continuing, the Borrowers may hereafter incur or assume Long Term Indebtedness without complying with the debt incurring tests provided in the paragraph above:

(A) if such Long Term Indebtedness (a) is issued for the purpose of refunding, defeasing or otherwise retiring other Long Term Indebtedness, and either (b) will not increase the Maximum Annual Debt Service Requirement of all Long Term Indebtedness by more than 10%, or (c) is incurred for the purpose of replacing any Long Term Indebtedness bearing interest at a variable interest rate with Long Term Indebtedness bearing interest at a fixed rate of interest; or

(B) if such Long Term Indebtedness is issued to finance the acquisition of property or equipment and such Long Term Indebtedness is either unsecured or secured solely by a mortgage or purchase money security interest in the property or equipment acquired or is evidenced by a capital lease; or

(C) otherwise, if the principal amount of such Long Term Indebtedness incurred in accordance with this clause (C) shall not exceed the greater of $2,000,000 or 5% of the total Borrowers' Unrestricted Revenues for the most recent Fiscal Year for which audited financial statements are available. If, at any time, any Long Term Indebtedness previously incurred under this paragraph is included in the calculations used to demonstrate compliance with the paragraph above, such Long Term Indebtedness shall no longer be considered incurred under this subsection.

The Borrowers may enter into any Hedge Agreement, without complying with the debt incurring tests provided in the Loan Agreement, provided that, in the case of any Hedge Agreement entered into for the purpose of limiting interest rate risk with respect to Long Term Indebtedness either proposed to be incurred or then Outstanding, the Debt Service Requirements of the Borrowers shall be adjusted for the related Long Term Indebtedness to give effect to the Hedge Agreement in such manner, and to such extent, if any, as may be required by generally accepted accounting principles or, in the absence of any such

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requirements under generally accepted accounting principles, as may be stated in a certificate of an Authorized Officer of the Borrowers (which certificate shall be delivered concurrently with, or included in, any certificate required in connection with the incurrence of the related Long Term Indebtedness) as necessary to present fairly the reasonably expected Debt Service Requirements of the Borrowers taking into account the Hedge Agreement; provided, however, that Long Term Indebtedness under this paragraph shall not include any net mark- to-market exposure with respect to such Hedging Agreements.

The Borrowers may, from time to time, incur or assume Short-Term Indebtedness in an amount not exceeding at any time 20% of the Borrowers' Unrestricted Revenues for the most recent Fiscal Year for which audited financial statements are available; provided that, for a period of twenty consecutive days in every Fiscal Year, the Borrowers shall have no outstanding Short-Term Indebtedness.

As used in this section, the following terms have the following meanings:

“Balloon Indebtedness” means Indebtedness 25% or more of the principal amount of which matures during any consecutive 12-month period if such maturing principal amount is not required to be amortized by mandatory redemption or prepayment prior to such period.

“Debt Service Requirement,” with reference to a specified period, shall mean:

(i) interest payable on Long Term Indebtedness during the period, excluding (A) interest funded from the proceeds thereof and (B) interest on Long Term Indebtedness to be redeemed during such period through any sinking fund account which would otherwise accrue after the redemption date;

(ii) amounts required to be paid into any mandatory sinking fund account for Long Term Indebtedness during the period;

(iii) amounts required to pay the principal of Long Term Indebtedness maturing during the period and not to be redeemed prior to maturity through any mandatory sinking fund account; and

(iv) in the case of Long Term Indebtedness in the form of a lease capitalized under generally accepted accounting principles, the lease rentals payable during the period;

provided, however, that

(i) in the case of Variable Rate Indebtedness, interest shall be calculated, in any projection of Debt Service Requirement for a future period, (A) if the debt has been outstanding for at least 24 months, at 120% of the average interest rate on such debt during the most recent 24-month period, (B) if such debt has been outstanding for at least 12 months but less than 24 months at the higher of 120% of the average interest rate on such debt for the most recent 12-month period or the rate in effect on the date of calculation, and (C) if such debt has been outstanding for less than 12 months, at a rate equal to 120% of (x) the average SIFMA Municipal Index for the

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preceding 24 months, if such debt is tax-exempt debt, and (y) the average rate for one-month LIBOR for the preceding 24 months, if such debt is taxable debt,

(ii) in the case of Balloon Indebtedness, such debt shall be assumed to amortize, at the election of the Borrowers either (A) on a level debt service basis over a period of 20 years or (B) on a level debt service basis over the actual remaining term to the final maturity, unless a binding commitment to refinance such debt upon maturity has been provided by a financial institution rated at least “Aa” from Moody's or “AA” from S&P, in which case such debt will be assumed to mature in accordance with the terms of such binding commitment,

(iii) interest payable shall be reduced by the amount of any interest subsidy which a federal, state or local government is irrevocably committed to pay for the period in question,

(iv) the Debt Service Requirement on any Long Term Indebtedness in the form of a guaranty shall be deemed equal to (A) 25% of the annual principal and interest requirements on the indebtedness being guaranteed during each Fiscal Year if the guaranteed entity had Income Available for Debt Service at least equal to 150% of the annual debt service on its Long Term Indebtedness in its latest fiscal year, (B) 50% of the annual principal and interest requirements on the indebtedness being guaranteed during each Fiscal Year if the guaranteed entity had Income Available for Debt Service at least equal to 125% but less than 150% of the annual debt service on its Long Term Indebtedness in its latest fiscal year, (C) 75% of the annual principal and interest requirements on the indebtedness being guaranteed during each Fiscal Year if the guaranteed entity had Income Available for Debt Service at least equal to 110% but less than 125% of the annual debt service on its Long Term Indebtedness in its latest fiscal year, and (D) 100% of the annual principal and interest requirements on the indebtedness being guaranteed during each Fiscal Year if the guaranteed entity had Income Available for Debt Service below 110% of the annual debt service on its Long Term Indebtedness in its latest fiscal year or if the Borrowers have made a payment on the guaranteed entity's debt during any of the last three Fiscal Years, and

(v) the Debt Service Requirement during the last year of any Indebtedness shall be disregarded to the extent that funds held in a debt service reserve fund established for such Indebtedness are expected to be applied to the payment of such Debt Service Requirement.

“Hedge Agreement” means an agreement providing for any interest rate swap, cap, floor, futures contract or a similar financial product incurred for the purpose of limiting interest rate risk with respect to specific Long Term Indebtedness which is proposed to be incurred or which is then outstanding.

“Income Available for Debt Service” means, for any period of time, with respect to the operations of the Borrowers, without duplication, the sum of (i) the increase/decrease in unrestricted net assets from operations, plus (ii) depreciation and interest expense (including any remarketing fees and any fees related to any outstanding letters of credit for

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any bonds issued for the benefit of a Borrower or one of the Borrowers), and excluding (iii) all unrestricted realized and unrealized gains or losses on investments, all unrestricted extraordinary gains or losses, and all unrestricted non-cash items. For the fiscal years ending May 31, 2014 and 2015, any net decrease in net assets from Benedictine's Mesa, Arizona campus operating activities or capital expenditures may be added back to clause (i) in this definition in an aggregate amount not to exceed $3,000,000 for the fiscal year ending May 31, 2014 and $500,000 for the fiscal year ending May 31, 2015.

“Indebtedness” means (a) all indebtedness of the Borrowers for borrowed money or that has been incurred in connection with the acquisition of assets and (b) the capitalized value of the liability under any lease of real or personal property which is properly capitalized on the balance sheet of the Borrowers in accordance with generally accepted accounting principles consistently applied, excluding any net mark-to-market exposure in connection with any Hedging Agreements.

“Long Term Indebtedness” means (i) all indebtedness created, assumed or incurred in any manner by the Borrowers representing money borrowed (including the issuance of debt securities, and excluding any net mark-to-market exposure on Hedging Agreements), (ii) all obligations for the deferred purchase price of property or services (other than trade accounts payable arising in the ordinary course of business), (iii) all obligations secured by any lien upon property of any Borrower, whether or not any Borrower has assumed or become liable for the payment of such indebtedness, (iv) all capitalized lease obligations of the Borrowers, (v) all obligations of the Borrowers on or with respect to letters of credit, banker's acceptances and other evidences of indebtedness representing extensions of credit whether or not representing obligations for borrowed money, and (vi) all guarantees, except:

(a) Short Term Indebtedness;

(b) Current obligations payable out of current revenues, including current payments for the funding of pension plans and contributions to self-insurance programs;

(c) Obligations under contracts for supplies, services and pensions, allocable to the current operating expenses of future years in which the supplies are to be furnished, the services rendered or the pensions paid; and

(d) Rentals payable under leases which are properly not capitalized under generally accepted accounting principles.

“Maximum Annual Debt Service Requirement” means, at any given time of determination and with respect to Long Term Indebtedness, the maximum Debt Service Requirement coming due thereon in the current or any succeeding Fiscal Year of the Borrowers.

“Short-Term Indebtedness” shall mean all obligations of the Borrowers for the repayment of borrowed money payable upon demand or having a final maturity of less than one year from the date incurred, excluding the current portion of any Long Term Indebtedness. Such term shall not include debt having a stated maturity in excess of one-year but which is subject to payment upon demand within one year if the payment of such debt is

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secured by a letter of credit or standby take-out or credit agreement that provides for repayment by the Borrowers to the issuer of such facility not less than one year after such facility is drawn upon.

“Unrestricted Revenues” means, for any Fiscal Year of the Borrowers, the “Total Operating Revenues and Other Support” under the “Unrestricted” column as reflected in the Consolidated Statements of Activities included in the Borrowers' audited financial statements for such Fiscal Year (or a comparable provision thereof as may be determined by then existing generally accepted accounting principles), including net tuition revenue, auxiliary enterprises, gifts and grants and other income; provided that Unrestricted Revenues shall exclude all unrestricted realized and unrealized gains or losses on investments, all unrestricted extraordinary gains or losses, and all unrestricted non-cash items.

“Variable Rate Indebtedness” means any Indebtedness which does not bear interest at a fixed rate of interest to maturity and which provides for interest to be payable thereon at a rate per annum that may vary from time to time over the term thereof in accordance with procedures provided in the instrument creating such Indebtedness.

SECURITY INTEREST IN FUNDS

To secure the payment of the principal of premium, if any, and interest payable on the Notes, and the performance of all the other covenants of the Borrowers contained in the Loan Agreement, the Borrowers grant to the Authority pursuant to the Loan Agreement a security interest in the Borrowers' right, title and interest in any and all moneys, securities and other property from time to time on deposit in any Fund established under the Indenture (other than amounts held by the Trustee in the Rebate Fund), together with all income thereon and proceeds thereof and all substitutions thereof and additions thereto.

DEPOSITS TO DEBT SERVICE RESERVE FUND

If on any valuation date there shall be less than 95% of the Debt Service Reserve Fund Requirement on deposit in the Debt Service Reserve Fund established by the Indenture by reason of a change in the value of any securities in the Debt Service Reserve Fund, the Borrowers agree in the Loan Agreement to deliver to the Trustee, within 60 days of the date of determination of such deficiency, an amount sufficient to restore the amount in the Debt Service Reserve Fund to 100% of the Debt Service Reserve Fund Requirement. Prior to making any such deposit with the Trustee, the Borrowers (so long as the Borrowers are not in default under the Notes or under the Loan Agreement) may request the Trustee to determine the then existing market value of investments in the Debt Service Reserve Fund for the purpose of determining the amount of deposit, if any, then needed to be made to restore the amount then on deposit in the Debt Service Reserve Fund to the Debt Service Reserve Requirement. If at any time any amount on deposit in the Debt Service Reserve Fund is transferred to the Interest Fund or the Bond Sinking Fund (other than deposits of income pursuant to the Indenture), the Borrowers agree in the Loan Agreement to deliver directly to the Trustee an amount at least equal to the amount of such transfer as soon as reasonably possible and in any event in not more than 12 substantially equal

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consecutive monthly installments beginning with the first day of the first month after the month in which such transfer was made.

TAX COVENANT

The Borrowers agree in the Loan Agreement that it will not take any action, permit any action to be taken or fail to take any action, including without limitation any action with respect to the investment of the proceeds of any Bonds, with respect to any other moneys or securities deposited with the Trustee pursuant to the Indenture, with respect to the payments derived from the Notes or the Loan Agreement, with respect to the purchase of other Authority obligations, or with respect to any actions or payments required under the Tax Certificate, or with respect to any other amounts regardless of the source where held which gives rise to a reasonable possibility of constituting the Bonds “arbitrage bonds” within the meaning of Section 148 of the Code. The Borrowers covenant in the Loan Agreement that neither of them nor any “related person,” as defined in Sections 144(a)(3) and 147(a) of the Code, will, pursuant to an arrangement, formal or informal, purchase obligations of the Authority in an amount related to the amount of the Notes.

APPLICATION OF CERTAIN GIFTS

The Borrowers acknowledge in the Loan Agreement that they may receive from time to time Restricted Gifts. Subject to the provisions of the following paragraph, the Borrowers covenant and agree in the Loan Agreement that if and when the Borrowers receive any Restricted Gifts prior to the delivery of the Completion Certificate, the Borrowers will transfer the Excess (as defined in the Loan Agreement), if any, to the Trustee as soon as practicable after such Excess becomes available to the Borrowers for such purposes, for deposit into the Construction Account of the Project Fund to be used to pay costs of the Project. The Borrowers further covenant and agree in the Loan Agreement that if and when the Borrowers receive any Restricted Gifts after delivery of the Completion Certificate, the Borrowers will transfer the Excess (as defined in the Loan Agreement) to the Trustee for the redemption of Series 2013A Bonds in accordance with the terms of the Indenture (the “Redemption”); provided, however, that in connection with such Redemption the Borrowers may direct the Trustee to deposit the Excess into the Debt Service Fund and invest such Excess at a rate not in excess of the Yield (as defined in the Tax Certificate) on the Series 2013A Bonds until such time as the Series 2013A Bonds may be redeemed in accordance with the Indenture. The proceeds of any such Restricted Gifts need not be so applied until the aggregate amount thereof held by the Borrowers at any time and not previously so applied is at least $100,000.

The Borrowers will transfer any Excess received prior to delivery of the Completion Certificate to the Trustee for deposit into the Construction Account of the Project Fund only if the Borrowers provide the Trustee with a certification prior to such transfer stating that such Excess is being deposited and retained in the Construction Account of the Project Fund to pay potential cost overruns on the portion of the Project expected to be financed with the Series 2013A Bond proceeds that are not then known but which the Borrowers reasonably believe could arise prior to the completion of the Project. Any

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Restricted Gifts constituting an Excess with respect to which such a certification cannot be so provided to the Trustee will be used to effect a Redemption of Bonds.

The Borrowers may apply the proceeds of Restricted Gifts in a manner that varies from the requirements set forth above under this subcaption if the Borrowers deliver to the Authority and the Trustee an Opinion of Bond Counsel to the effect that such application will not adversely affect the validity of the Series 2013A Bonds or the exclusion of interest on the Series 2013A Bonds from gross income of the owners thereof for federal income tax purposes.

LIMITED OBLIGATION; NO RECOURSE

The obligations of the Authority under the Loan Agreement are special, limited obligations of the Authority, payable solely out of the revenues and income derived under the Loan Agreement, the Notes and the Indenture. The obligations of the Authority under the Loan Agreement will not be deemed to constitute an indebtedness or an obligation of the State of Illinois or any political subdivision thereof within the purview of any constitutional limitation or statutory provision, or a charge against the credit or general taxing powers, if any, of any of them. The Authority does not have the power to levy taxes for any purpose whatsoever. Neither the Authority nor any member, director, officer, employee or agent of the Authority nor any person executing the Bonds will be liable personally for the Bonds or be subject to any personal liability or accountability by reason of the issuance of the Bonds. No recourse will be had for the payment of the principal of, redemption premium, if any, interest on, or purchase price for any of the Bonds or for any claim based thereon or upon any obligation, covenant or agreement contained in the Indenture, the Loan Agreement or the Bond Purchase Agreement against any past, present or future member, officer, agent or employee of the Authority, or any incorporator, member, officer, employee, director or trustee of any successor corporation, as such, either directly or through the Authority or any successor corporation, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such incorporator, member, officer, employee, director, agent or trustee as such is expressly waived and released as a condition of and consideration for the execution of the Indenture and the Loan Agreement and the issuance of the Bonds.

ISSUANCE OF ADDITIONAL NOTES

So long as no event of default under the Loan Agreement has occurred and is continuing, the Borrowers may, with the consent of the Authority, execute and deliver to the Authority (but only to the Authority) one or more Notes pursuant to the Loan Agreement in addition to the Series 2013A Note for any purpose permitted by the Act. Any such Additional Note will (a) be substantially in the form of the Series 2013A Note (with appropriate variations and insertions) and (b) be pledged and assigned by the Authority to the Trustee as security for a corresponding series of Additional Bonds concurrently issued and sold under the Indenture for the purpose of obtaining funds to loan to the Borrowers in exchange for such Additional Note. Upon the issuance and sale of any Additional Note, the

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same will, together with any other Notes then outstanding under the Loan Agreement, be equally and ratably secured by the lien and security interest of the Loan Agreement.

Prior to the issuance and sale of any Additional Note, and as a condition precedent thereto, the following documents and showings will be executed and delivered.

(a) If necessary, a supplement to the Loan Agreement, executed by the Borrowers and the Authority, (i) specifying the principal amount, rate or rates of interest, maturity, terms of optional prepayment, if any, and form of such Additional Note, and (ii) if additional collateral is to be subjected to the lien and security interest hereof, providing for the subjection of such collateral to the lien and security interest of the Loan Agreement;

(b) A certificate of the Borrowers, executed by an Authorized Officer, stating that no event of default under the Loan Agreement has occurred and is continuing and that no event has occurred and is continuing which, with the lapse of time or giving of notice, or both, would constitute such an event of default;

(c) If necessary, a supplement to the Indenture, executed by the Authority and the Trustee, creating the Additional Bonds being issued and sold, the proceeds of which will be lent to the Borrowers in exchange for such Additional Note, specifying the terms thereof, pledging and assigning such Additional Note as security therefor and providing for the disposition of the proceeds of the sale thereof;

(d) The requirements of the Indenture relating to the issuance of Additional Bonds will have been satisfied; and

(e) Such further documents, certificates and opinions as the Authority or Bond Counsel may reasonably request.

Nothing contained in the Loan Agreement will be interpreted as creating any obligation on the part of the Authority to make additional loans to the Borrowers, it being the intent of the Loan Agreement to reserve to the Authority full and complete discretion to decline to make such loans in the performance of its duties under the laws of the State.

DEFAULTS AND REMEDIES

The occurrence and continuance of any of the following events will constitute an “event of default” under the Loan Agreement:

(a) failure of a Borrower to pay any installment of interest or of principal, or any premium, on the Notes when due and payable, whether at maturity, upon any date fixed for prepayment, by acceleration or otherwise; or

(b) failure of a Borrower to observe or perform any of the covenants or conditions summarized above under the captions “THE LOAN AGREEMENT - Maintenance of Corporate Existence and Tax Status” and “THE LOAN

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AGREEMENT – Maintenance of Corporate Existence and Qualification” in this APPENDIX C; or

(c) failure of a Borrower to perform any other covenant, condition or provision of the Loan Agreement or if any representation or warranty made by a Borrower in any statement or certificate furnished in connection with the issuance and sale of the Bonds proves untrue in any material respect as of the date of the making thereof, and the failure of the Borrowers to remedy such default within 60 days after notice thereof from the Trustee to the Borrowers, unless the nature of the default is such that it cannot be remedied within the 60-day period and the Trustee agrees in writing to an extension of time and the Borrowers institute corrective action within the period agreed upon and diligently pursues such action until the default is remedied; or

(d) default in any payment of principal of or of premium, if any, on, or of interest on any other obligation of a Borrower for borrowed money in excess of $500,000 continuing beyond the expiration of the applicable grace period, if any, provided for therein or in the performance of any other agreement, term or condition contained in any agreement under which any such obligation is created or secured and continuing beyond the expiration of the applicable grace period, if any, provided for therein, which default will result in or permit the declaring due and payable of such obligation for borrowed money in excess of $500,000 prior to the date on which it would otherwise have become due and payable; provided, however, that if such default is remedied or cured by the Borrowers or waived by the holders of such obligation, and any such declaration is rescinded or annulled, then the event of default under the Loan Agreement by reason thereof will be deemed cured; or

(e) any judgment, writ or warrant of attachment or of any similar process in an amount in excess of $500,000 not covered by insurance will be entered or filed against a Borrower or against any of its property and remains unvacated, unpaid, unbonded, uninsured, unstayed or uncontested in good faith for a period of 90 days; provided, however, that such event will not constitute an “event of default” under the Loan Agreement until the Authority has delivered written notice to the Borrowers stating that the Authority has determined that it has a reasonable basis for declaring such default an “event of default” under the Loan Agreement and has declared such default to be an “event of default” under the Loan Agreement; or

(f) a Borrower admits insolvency or bankruptcy or its inability to pay its debts as they mature, or makes an assignment for the benefit of creditors or applies for or consents to the appointment of a trustee, custodian or receiver for a Borrower or for the substantial part of its property; or

(g) a trustee, custodian or receiver is appointed for a Borrower or for the substantial part of its property and is not discharged within 120 days after such appointment; or

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(h) any event of default as defined in the Indenture and summarized under the caption “THE INDENTURE - Default and Remedies” in this APPENDIX C occurs and is continuing; or

(i) bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings for relief under any bankruptcy law or similar law for the relief of debtors are instituted by or against a Borrower (other than bankruptcy proceedings instituted by a Borrower against third parties) and, if instituted against a Borrower, are allowed against a Borrower or are consented to or are not dismissed, stayed or otherwise nullified within 120 days after such institution; or

(j) if a Borrower fails to perform any of its obligations contained in the Tax Certificate, the effect of which is to cause a Determination of Taxability.

During the continuance of an event of default under the Loan Agreement, the Authority may pursue the following remedies, in addition to any other remedies provided for by law:

(a) The Authority may, by written notice to the Borrowers, declare the principal of the Notes (if not then due and payable) and the interest accrued thereon to be due and payable immediately, and upon any such declaration, the principal of the Notes and the interest accrued thereon will become and be immediately due and payable, notwithstanding anything in the Notes or the Loan Agreement to the contrary; provided, however, that if, at any time after the principal of the Notes and the interest accrued thereon will have been so declared and become due and payable, all arrears of principal of and interest, if any, upon the Notes and the expenses of the Authority will be paid by the Borrowers, and every other default in the observance or performance of any covenant, condition or agreement in the Notes or the Loan Agreement will be made good or be secured to the satisfaction of the Authority or provision deemed by the Authority to be adequate will be made therefor, the Authority, by written notice to the Borrowers, may, at its option, waive the event of default by reason of which the principal of the Notes will have been so declared and become due and payable and may rescind and annul such declaration and its consequences, but no such waiver, rescission or annulment will extend to or affect any subsequent event of default or impair any right consequent thereon.

(b) The Authority, personally or by attorney, may, in its discretion, proceed to protect and enforce its rights by suit or suits in equity or at law, whether for the specific performance of any covenant or agreement contained in the Notes or the Loan Agreement, or in aid of the execution of any power granted therein, or for any foreclosure under the Loan Agreement, or for the enforcement of any other appropriate legal or equitable remedy as the Authority deems most effectual to protect and enforce any of its rights or duties under the Loan Agreement.

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In case the Authority has proceeded to enforce any right under the Loan Agreement, and such proceedings have been discontinued or abandoned for any reason or have been determined adversely, then and in every such case the Authority, the Borrowers and the Trustee will be restored to their former positions and rights under the Loan Agreement, and all rights, remedies and powers of the Authority will continue as if no such proceedings had been taken. To the extent that the Authority waives or rescinds any event of default under the Loan Agreement, or in case any proceeding taken by the Authority on account of any such default will have been discontinued or abandoned or determined adversely, then and in every such case, the Authority, the Trustee and the Borrowers will be restored to their former positions and rights under the Loan Agreement, respectively, but no such waiver or rescission will extend to any subsequent or other default or impair any right consequent thereon.

No remedy conferred upon or reserved to the Authority or the Trustee under the Loan Agreement is intended to be exclusive of any other remedy or remedies, and each and every such remedy will be cumulative and in addition to every other remedy given thereunder and under the Indenture or now or hereafter existing at law or in equity or by statute.

No delay or omission of the Authority or the Trustee to exercise any right or power accruing upon any event of default will impair any such right or power, or will be construed to be a waiver of any such event of default or an acquiescence therein; and every power and remedy given by the Loan Agreement to the Authority or the Trustee may be exercised from time to time and as often as may be deemed expedient by the Authority or the Trustee.

WAIVER OF EXTENSION, APPRAISEMENT, STAY LAWS

To the extent permitted by law, the Borrowers will not during the continuance of any event of default under the Loan Agreement, insist upon, plead or in any manner whatever claim or take any benefit or advantage of any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants and terms of the performance of the Loan Agreement; nor claim, take or insist upon any benefit or advantage of any law now or hereafter in force providing for the valuation or appraisement of any of the Borrowers' Property, prior to any sale or sales thereof which may be made pursuant to the Loan Agreement or pursuant to the decree, judgment or order of any court of competent jurisdiction; nor, after any such sale or sales, claim or exercise any right under any statute heretofore or hereafter enacted by the United States of America or by any state or territory, or otherwise, to redeem the property so sold or any part thereof. Under the Loan Agreement, the Borrowers expressly waives all benefits or advantages of any such law or laws and covenants not to hinder, delay or impede the execution of any power in the Loan Agreement granted or delegated to the Authority, but to suffer and permit the execution of every power as though no such law or laws had been made or enacted.

SUPPLEMENTS AND AMENDMENTS TO THE LOAN AGREEMENT

Subject to the terms, conditions and provisions of the Indenture, (a) the Borrowers and the Authority, with the consent of the Trustee, may from time to time enter into such supplements and amendments to the Loan Agreement, and (b) the Trustee may grant

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such waivers of compliance by the Borrowers with provisions of the Loan Agreement as to the Trustee may deem necessary or desirable to effectuate the purposes or intent thereof and which, in the opinion of the Trustee, do not have a material adverse effect upon the interests of the Bondholders; provided that the Trustee will file an original of any and all such waivers that it grants with the Authority within three Business Days thereof.

DEFEASANCE

If (a) the Borrowers will pay and discharge or provide, in a manner reasonably satisfactory to the Authority, for the payment and discharge of the whole amount of the principal of, premium, if any, and interest on the Notes at the time outstanding, and will pay or cause to be paid all other sums payable thereunder, or will make arrangements reasonably satisfactory to the Authority for such payment and discharge, (b) the Borrowers will (i) have paid or caused to be paid all other sums then accrued and unpaid under the Loan Agreement, the Notes and the Indenture, (ii) not be in default of any covenant which has resulted or, with the passage of time or the giving of notice, or both, gives rise to a reasonable possibility of resulting in the loss of the exclusion from federal gross income of the owners thereof of interest paid on the Bonds otherwise afforded under Section 103(a) of the Code and (iii) have kept, performed and observed all and singular the covenants and promises in the Notes and the Loan. Agreement expressed to be kept, performed and observed by the Borrowers, (c) the Bonds will have been paid in full or provision therefor will have been made as provided in the Indenture and (d) provision has been made for the satisfaction and discharge of the Indenture, then and in that case all property, rights and interest thereby conveyed or assigned or pledged will revert to the Borrowers and the estate, right, title and interest of the Authority therein will thereupon cease, terminate and become void; and, except to the extent necessary, in the Opinion of Bond Counsel acceptable to the Authority, to assure the maintenance of the exclusion of interest on the Bonds from the gross income of the owners thereof, the Loan Agreement and the covenants of the Borrowers contained therein will, except as otherwise provided therein, be discharged and the Authority will, on demand of the Borrowers and at the Borrowers' cost and expense, execute and deliver to the Borrowers a proper instrument or proper instruments acknowledging the satisfaction and termination of the Loan Agreement and will convey, assign and transfer or cause to be conveyed, assigned or transferred, and will deliver or cause to be delivered, to the Borrowers all property, including money, then held by the Authority, other than moneys held in the Rebate Fund or deposited with the Trustee for the payment of the principal of, premium, if any, or interest on the Notes, together with the Notes marked paid or cancelled.

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APPENDIX D

PROPOSED FORM OF BOND COUNSEL OPINION

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November 20, 2013

Illinois Finance Authority Benedictine University Chicago, Illinois Lisle, Illinois

U.S. Bank National Association, as Trustee Founders Woods, Ltd. Chicago, Illinois Lisle, Illinois

George K. Baum & Company Pittsburgh, Pennsylvania

Re: Illinois Finance Authority Revenue Bonds (Benedictine University Project) Series 2013A issued in the aggregate principal amount of $28,645,000 (the “Bonds”); Issued pursuant to a Trust Indenture (the “Indenture”) dated as of November 1, 2013, between the Illinois Finance Authority (the “Issuer”) and U.S. Bank National Association, as Trustee (the “Trustee”); Fully registered Bonds in the denominations as set forth in the Indenture.

Ladies and Gentlemen:

We have examined (a) a certified transcript containing the proceedings of the Issuer relating to the authorization, issuance and sale of the Bonds pursuant to the Indenture and the approval and execution of the Indenture and the Loan Agreement dated as of November 1, 2013 (“Loan Agreement”) among the Issuer, Benedictine University, an Illinois not for profit corporation (“Benedictine”) and Founders Woods, Ltd., an Illinois not for profit corporation (“Founders” and, together with Benedictine, the “Borrowers”); (b) an executed counterpart of the Loan Agreement; (c) an executed counterpart of the Indenture; (d) a certificate of the Issuer showing execution, authentication and delivery of Bonds and no litigation pending as of said date of delivery; (e) the Certificate of the Issuer re: Arbitrage and Other Federal Tax Matters dated the date hereof; (f) the Certificates of the Borrowers dated the date hereof; (g) the Tax Compliance Certificate of the Borrowers dated the date hereof; (h) the Information Return for Private Activity Bond Issues of the Issuer dated the date hereof; (i) a letter from the Internal Revenue Service and other information evidencing that each of the Borrowers is exempt from taxation as an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as in effect on the date hereof (the “Code”); (j) an opinion of Schiff Hardin LLP, Chicago, Illinois, special counsel to the Issuer (without any reliance thereon); and (k) an opinion of Kevin M. Cahill, Chicago, Illinois, counsel for the Borrowers.

In delivering our opinion, we have also examined the Illinois Finance Authority Act, 20 ILCS 3501/801-1 et seq., as amended, and such other provisions of the

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To the Addressees Listed Above November 20, 2013 Page 2

Constitution and the laws of the State of Illinois (the “State”) and the United States as we have deemed relevant and necessary as a basis for the opinions set forth herein. We have relied upon a certified transcript of proceedings and other certificates and representations of the Borrowers and the Issuer as set forth in the Bond transcript and the Loan Agreement, including but not limited to the Certificate of the Issuer re: Arbitrage and Other Federal Tax Matters and the Tax Compliance Certificate (collectively, the “Tax Covenants”), and have not undertaken to verify any facts by independent investigation.

Based upon the foregoing and our review of such other information, papers, documents and statutes, regulations, rulings and decisions as we believe necessary or advisable, we are of the opinion that:

1. The Loan Agreement has been duly authorized, executed and delivered by the Issuer and, assuming due authorization, execution and delivery thereof by the Borrowers, is a valid and binding agreement of the Issuer, enforceable against the Issuer in accordance with its terms.

2. The Indenture has been duly authorized, executed and delivered by the Issuer and, assuming due authorization, execution and delivery thereof by the Trustee, is a valid and binding agreement of the Issuer, enforceable against the Issuer in accordance with its terms.

3. The Bonds have been duly authorized, executed and issued and are valid and binding obligations of the Issuer, enforceable in accordance with their terms.

4. Under statutes, decisions, regulations and rulings existing on this date, the interest on the Bonds is not exempt from income taxation in the State of Illinois.

5. Under federal statutes, decisions, regulations and rulings existing on this date, the interest on the Bonds is excludable from gross income for purposes of federal income taxation pursuant to Section 103 of the Code, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, but is taken into account in determining adjusted current earnings for the purpose of computing the federal alternative minimum tax imposed on certain corporations. This opinion is conditioned on continuing compliance by the Borrowers and the Issuer with the Tax Covenants. Failure to comply with the Tax Covenants could cause interest on the Bonds to lose the exclusion from gross income for purposes of federal income taxation retroactive to the Bonds' date of issue.

It is to be understood that the rights of the owners of the Bonds, the Issuer, the Borrowers and the Trustee and the enforceability of the Bonds, the Loan Agreement and the Indenture may be subject to the valid exercise of the constitutional powers of the State of Illinois and the United States of America. It is to be further understood that the rights of the owners of the Bonds, the Issuer, the Trustee and the Borrowers and the enforceability of the terms of the Loan Agreement, the Indenture and the Bonds are

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To the Addressees Listed Above November 20, 2013 Page 3

subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and that the enforcement thereof may be subject to the exercise of judicial discretion in accordance with the general principles of equity.

We express no opinion herein with respect to matters of title in the facilities financed or refinanced with the proceeds of the Bonds or the Trustee's interest therein.

Very truly yours,

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APPENDIX E

FORM OF CONTINUING DISCLOSURE AGREEMENT

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CONTINUING DISCLOSURE AGREEMENT

This Continuing Disclosure Agreement (this “Agreement”) dated November ___, 2013, is executed and delivered by Benedictine University (the “University”) and Founders Woods, Ltd. (“Founders Woods” and, together with the University, the “Borrowers”), and U.S. Bank National Association (the “Dissemination Agent”), in connection with the issuance by the Illinois Finance Authority (the “Authority”) of its $29,285,000 Illinois Finance Authority Revenue Bonds (Benedictine University Project) Series 2013A (the “Series 2013A Bonds”). The Series 2013A Bonds are being issued pursuant to the Indenture described below.

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1. Purpose of the Disclosure Agreement. This Agreement is being executed and delivered by the Borrowers and the Dissemination Agent for the benefit of the holders and Beneficial Owners (defined below) of the Series 2013A Bonds and in order to assist George K. Baum & Company (the “Participating Underwriter”), in complying with the Rule (defined below). The Borrowers and the Dissemination Agent each acknowledge that the Authority has undertaken no responsibility with respect to any reports, notices or disclosures provided or required to be provided under this Agreement, and has no liability to any Person, including (without limitation) any holder or Beneficial Owner of the Series 2013A Bonds, with respect to any such reports, notices or disclosures.

SECTION 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Agreement unless otherwise defined herein, the following capitalized terms shall have the following meanings:

“Annual Report” shall mean any Annual Report provided by the Borrowers pursuant to, and as described in, Sections 3 and 4 of this Agreement.

“Beneficial Owner” shall mean any Person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Series 2013A Bonds (including Persons holding Series 2013A Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Series 2013A Bonds for federal income tax purposes.

“Dissemination Agent” shall mean the Trustee, acting in its capacity as dissemination agent hereunder, and its successors and assigns, and the dissemination agent under any successor agreement.

“EMMA” shall mean the Electronic Municipal Market Access system of the Municipal Securities Rulemaking Board as provided at http://www.emma.msrb.org, or any similar system that is acceptable to or as may be specified by the Securities and Exchange Commission from time to time. A current list of such systems may be obtained from the Securities and Exchange Commission at http://www.sec.gov/info/municipal/nrmsir.htm.

 Preliminary, subject to change.

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“Indenture” shall mean the Trust Indenture dated as of November 1, 2013, by and between the Authority and the Trustee.

“Listed Events” shall mean any of the events listed in Section 5(a) of this Agreement.

“Loan Agreement” shall mean the Loan Agreement dated as of November 1, 2013, by and between the Authority and the Borrowers.

“Participating Underwriter” shall mean George K. Baum & Company, as the original Participating Underwriter of the Series 2013A Bonds required to comply with the Rule in connection with the offering of the Series 2013A Bonds.

“Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

“State” means the State of Illinois.

“Trustee” shall mean the trustee and any co-trustee at the time serving as such under the Indenture. U.S. Bank National Association is the initial Trustee.

SECTION 3. Provision of Annual Reports; Other Reporting Requirements.

(a) The Borrowers shall provide, or shall cause the Dissemination Agent to provide, commencing with the report for the Fiscal Year ending May 31, 2014, to EMMA, an Annual Report which is consistent with the requirements of Section 4 of this Agreement. The audited financial statements referred to in Section 4(a) shall be filed not later than 150 days after the end of each Fiscal Year and the financial information and operating data referred to in Section 4(b) shall be filed not later than 180 days after the end of each Fiscal Year. In each case, the Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Agreement. If the Fiscal Year of the Borrowers changes, the Borrowers shall notify the Dissemination Agent and the Trustee in writing of such change.

(b) Not later than fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Annual Reports to EMMA, the Borrowers shall provide the Annual Report to the Dissemination Agent. If, by such date, the Dissemination Agent has not received a copy of an Annual Report, the Dissemination Agent shall contact the Borrowers to determine if the Borrowers are in compliance with subsection (a) above.

(c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to EMMA by the date required in subsection (a) above, the Dissemination Agent shall send a notice to EMMA in substantially the form attached hereto as Exhibit A, with a copy to the Borrowers.

(d) The Dissemination Agent shall, if and to the extent the Borrowers have provided the Annual Report to the Dissemination Agent, file a report with the Borrowers and the Authority and (if the Dissemination Agent is not the Trustee) the Trustee certifying that

E-2 the Annual Report has been provided pursuant to this Agreement and stating the date it was provided.

(e) Additionally, the Dissemination Agent shall provide to EMMA, no later than 15 days after the receipt thereof, any Consultant Report (as defined in the Loan Agreement) as described in the Loan Agreement.

SECTION 4. Content of Annual Report. The Annual Report of the Borrowers shall contain or include by reference the following information:

(a) The audited financial statements of the Borrowers for the prior Fiscal Year, prepared in accordance with generally accepted accounting principles for nonprofit corporations as promulgated from time to time by the Financial Accounting Standards Board.

(b) Annual financial information and operating data of the type included in APPENDIX A to the Official Statement in Tables 2, 3, 5, 6, 7, 8 and 13.

The audited financial statements described above may be included by specific reference to other documents, including official statements of debt issues with respect to which the Borrowers are an “obligated person” (as defined by the Rule), which have been filed with EMMA. If the document included by reference is a final limited offering memorandum, it must be available from the Municipal Securities Rulemaking Board. The Borrowers shall clearly identify each such other document so included by reference.

SECTION 5. Reporting of Listed Events.

(a) This Section 5 shall govern the giving of notices of the occurrence of any of the following events (each, a “Listed Event”) with respect to the Series 2013A Bonds, it being acknowledged by the parties that the listing of these events is required by the Securities and Exchange Commission even though some of such events may not be applicable to the Series 2013A Bonds:

(i) Principal and interest payment delinquencies;

(ii) Non-payment related defaults, if material;

(iii) Unscheduled draws on debt service reserves reflecting financial difficulty;

(iv) Unscheduled draws on credit enhancements reflecting financial difficulty;

(v) Substitution of credit or liquidity providers, or their failure to perform;

(vi) 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

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or determinations with respect to the tax status of the Series 2013A Bonds, or other Listed Events affecting the tax status of the Series 2013A Bonds;

(vii) Modifications to rights of Bondholders, if material;

(viii) Bond calls, if material, and tender offers;

(ix) Defeasances;

(x) Release, substitution or sale of property securing repayment of the Series 2013A Bonds, if material;

(xi) Rating changes;

(xii) Bankruptcy, insolvency, receivership or similar event of the Borrowers. For purposes of this clause (xii), any such event shall be considered to have occurred when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the Borrowers 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 Borrowers, 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 Borrowers;

(xiii) The consummation of a merger, consolidation, or acquisition involving the Borrowers or the sale of all or substantially all of the assets of the Borrowers, 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;

(xiv) Appointment of a successor or additional trustee or paying agent or the change of the name of a trustee or paying agent, if material; and

(xv) Failure to provide an Annual Report, as required by the Rule.

(b) The Dissemination Agent shall, within three (3) Business Days of obtaining actual knowledge of the occurrence of a Listed Event or an event that might constitute

E-4 a Listed Event, provide the Borrowers with written notice. The Dissemination Agent shall not be deemed to have actual knowledge of those items listed in clauses (ii), (vi), (vii), (x), (xi), (xii) or (xiii) without the Dissemination Agent having received written notice of such event.

(c) Whenever the Borrowers obtain knowledge of the occurrence of a Listed Event or an event that might constitute a Listed Event, because of a notice from the Dissemination Agent pursuant to subsection (b) or otherwise, the Borrowers, as appropriate, shall, within five (5) Business Days after obtaining such knowledge and in any event no more than seven (7) Business Days after the occurrence of such event, determine if such event is in fact a Listed Event and provide the Dissemination Agent with written notice pursuant to subsections (d) or (e) below, as applicable.

(d) If the Borrowers determine that an event is a Listed Event, the Borrowers shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent to report the occurrence pursuant to subsection (f). Such notice shall include sufficient information concerning the Listed Event to enable the Dissemination Agent to report the occurrence.

(e) If the Borrowers determine that an event is not a Listed Event, the Borrowers shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence pursuant to subsection (f).

(f) If the Dissemination Agent has been instructed to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the MSRB within three (3) Business Days of its receipt of such instructions from the Borrowers and in any event no more than ten (10) Business Days after the occurrence of such event or as soon as practicable after receiving instruction from the Borrowers. Notwithstanding the foregoing, notice of Listed Events described in clauses (a)(viii) and (ix) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to the holders of affected Series 2013A Bonds pursuant to the Indenture.

SECTION 6. Termination of Reporting Obligation. Except as otherwise provided herein, the obligations under this Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Series 2013A Bonds. If the Borrowers’ obligations under the Loan Agreement are assumed in full by another Person, such other Person shall be responsible for compliance with this Agreement in the same manner as if it were the Borrowers and the Borrowers shall have no further responsibility hereunder (except with respect to obligations of the Borrowers which survive the termination hereof pursuant to Section 11 hereof). In addition, all obligations under this Agreement shall terminate upon delivery to the Dissemination Agent and the Trustee (if the Trustee is not also the Dissemination Agent) of an opinion of counsel having recognized experience and skill in the issuance of municipal securities and federal securities law, to the effect that as a result of a change in law, including a change in the Rule, the Rule is not applicable to the Series 2013A Bonds and the termination of this Agreement will not cause the Participating Underwriter to be in violation of the Rule or other applicable requirements of the Securities Exchange Act of 1934, as amended. If such termination or substitution occurs prior to the final maturity of the Series 2013A Bonds, the Borrowers shall give notice of such termination or substitution in the same manner as for a

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Listed Event under Section 5(f) hereof. Additionally, any provision hereof and any provision relating to the Rule as set forth in the Loan Agreement shall be null and void in the event that the Borrowers deliver to the Trustee an opinion of nationally recognized bond counsel to the effect that those portions of the Rule which require this Agreement, or any such provision, are invalid, have been repealed retroactively or otherwise do not apply to the Series 2013A Bonds; provided that the Borrowers shall have provided notice of such delivery and the cancelation of this Agreement and that portion of the Loan Agreement relating to the Rule to EMMA.

SECTION 7. Dissemination Agent. The Borrowers may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Borrowers pursuant to this Agreement. The initial Dissemination Agent shall be U.S. Bank National Association. The Dissemination Agent may resign at any time by providing at least 30 days’ written notice to the Borrowers, and such resignation shall be effective as of the date of the appointment of a designated Dissemination Agent.

SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Agreement, the Dissemination Agent and the Borrowers may amend this Agreement (and the Dissemination Agent shall agree to any amendment so requested by the Borrowers other than amendments increasing or affecting the obligations or duties of the Dissemination Agent, which amendments shall require the consent of the Dissemination Agent, as applicable) and any provision of this Agreement may be waived if such amendment or waiver would not, in the opinion of nationally recognized federal securities law counsel, cause the undertakings herein to violate the Rule as in effect at the time of the original issuance of the Series 2013A Bonds, after taking into account any amendments or interpretations of the Rule.

In the event of any amendment or waiver of a provision of this Agreement, the Borrowers shall describe such amendment in the next Annual Report of the Borrowers, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of the accounting principles required by Section 4(a), on the presentation) of financial information or operating data being presented by the Borrowers. In addition, if the amendment relates to the accounting principles required by Section 4(a) for the preparation of Annual Reports, (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5(f), and (ii) the Annual Reports for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.

SECTION 9. Additional Information. Nothing in this Agreement shall be deemed to prevent the Borrowers from disseminating any other information, using the means of dissemination set forth in this Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Agreement. If the Borrowers choose to include any information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is specifically required by this Agreement, the Borrowers shall not have any obligation

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under this Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

SECTION 10. Default. In the event of a failure of the Borrowers to comply with any provision of this Agreement, the Dissemination Agent, at the written direction of the Participating Underwriter, or the holders or Beneficial Owners of at least 25% of the aggregate principal amount of the Series 2013A Bonds outstanding (but only if and to the extent the Dissemination Agent is indemnified to its satisfaction from any costs, liability, or expense including, without limitation, fees and expenses of its attorneys, as provided in the Indenture) may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by order of a court of competent jurisdiction, to cause the Borrowers to comply with their obligations under this Agreement. A default under this Agreement shall not be deemed an Event of Default under the Indenture or the Loan Agreement, and the sole remedy under this Agreement in the event of a failure of the Borrowers to comply with this Agreement shall be an action to compel performance; provided, however that nothing in this Agreement shall limit any holder’s rights under applicable federal securities laws.

SECTION 11. Duties, Immunities and Liabilities of Dissemination Agent.

The Dissemination Agent shall have only such duties as are specifically set forth in this Agreement, and no further duties or responsibilities shall be implied. Any corporation or association into which the Dissemination Agent in its individual capacity may be merged or converted or with which it may be consolidated, or any corporation or association resulting from any merger, conversion or consolidation to which the Dissemination Agent in its individual capacity shall be a party, or any corporation or association to which all or substantially all the corporate trust business of the Dissemination Agent in its individual capacity may be sold or otherwise transferred, shall be the Dissemination Agent under this Agreement without further act. The Borrowers covenant and agree to indemnify and hold the Dissemination Agent and its directors, officers, agents and employees (collectively, the “Indemnitees”) harmless from and against any and all liabilities, losses, damages, fines, suits, actions, demands, penalties, costs and expenses, including out-of-pocket, incidental expenses, legal fees and expenses, and the costs and expenses of defending or preparing to defend against any claim (“Losses”) that may be imposed on, incurred by, or asserted against, the Indemnitees or any of them for following any instruction or other direction upon which the Dissemination Agent’s authorized to rely pursuant to the terms of this Agreement. Provided the Dissemination Agent has not acted negligently, the Borrowers also covenant and agree to indemnify and hold the Indemnitees and each of them harmless from and against any and all Losses that may be imposed on, incurred by, or asserted against the Indemnitees or any of them in connection with or arising out of the Dissemination Agent’s performance under this Agreement. The provisions of this Section 11 shall survive the termination of this Agreement and the resignation or removal of the Dissemination Agent for any reason. Anything in this Agreement to the contrary notwithstanding, in no event shall the Dissemination Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to loss profits), even if the Dissemination Agent has been advised of such loss or damage and regardless of the form of action. The obligations of the Borrowers under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Series 2013A Bonds or the termination hereof.

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SECTION 12. Notices. Any notices or communications to or among any of the parties to this Agreement may be given as follows:

To the Dissemination Agent: U.S. Bank National Association 190 South LaSalle Street, 10th Floor Mail Code: MK-IL-SLTR Chicago, Illinois 60603 Attention: Grace Gorka, Corp Trust Services Telephone: (312) 332-6772

U.S. Bank National Association West Side Flats Operations Center 60 Livingston Ave – EP-MN-WS3C St. Paul, Minnesota 55107 Attention: Ken Brandt, Trust Review Telephone: (651) 466-6298

To the University: Benedictine University 5700 College Road Lisle, Illinois 60532 Attention: Executive Vice President Telephone: (630) 829-6000

To Founders Woods: Founders Woods, Ltd. 5700 College Road Lisle, Illinois 60532 Attention: Secretary Telephone: (630) 829-6000

Any person may, by written notice to the other persons listed above, designate a different address to which subsequent notices or communications should be sent.

SECTION 13. Beneficiaries. This Agreement shall inure solely to the benefit of the Dissemination Agent, the Borrowers, the Participating Underwriter, and the holders and Beneficial Owners from time to time of the Series 2013A Bonds, and shall create no rights in any other person or entity.

SECTION 14. Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

SECTION 15. Applicable Law. This Agreement shall be construed under the laws of the State.

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SECTION 16. No Liability of Borrowers’ Officers. No recourse under or upon any obligation, covenant, or agreement contained in this Agreement or in any other documents delivered in connection with the issuance of the Series 2013A Bonds, or for any claim based thereon, or under any judgment obtained against the Borrowers, or by the enforcement of any assessment or penalty or otherwise or by any legal or equitable proceeding by virtue of any constitution, rule of law or equity, or statute or otherwise or under any other circumstances, under or independent hereof, shall be had against any incorporator, director, member, or officer, as such, past, present, or future of the Borrowers, or any incorporator, director, member, or officer of any successor entity, as such, either directly or through the Borrowers or any successor entities, or otherwise, for the payment for or to the Borrowers or any receiver thereof, of any sum that may be due and unpaid by the Borrowers under this Agreement or any other documents delivered in connection with the issuance of the Series 2013A Bonds.

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

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IN WITNESS WHEREOF, the Borrowers and the Dissemination Agent have executed this Agreement under seal on the date and year first written above.

BENEDICTINE UNIVERSITY

(SEAL) By:______Name: Charles Gregory Title: Executive Vice President

FOUNDERS WOODS, LTD.

(SEAL) By:______Name: William Carroll Title: Secretary

U.S. BANK NATIONAL ASSOCIATION, as Dissemination Agent

By:______Name: Grace A. Gorka Title: Vice President

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EXHIBIT A

NOTICE TO EMMA OF FAILURE TO FILE REPORT

Name of Authority: Illinois Finance Authority

Name of Bond Issue: $______Illinois Finance Authority Revenue Bonds (Benedictine University Project) Series 2013A

Name of Borrowers: Benedictine University and Founders Woods, Ltd.

Date of Issuance: November ___, 2013

NOTICE IS HEREBY GIVEN that the Borrower has not provided an Annual Report with respect to the above-named Series 2013A Bonds.

Dated:______

U.S. BANK NATIONAL ASSOCIATION., on behalf of the Borrowers

By:______Name: Title:

cc: Illinois Finance Authority Benedictine University Founders Woods, Ltd.

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[ THIS PAGE INTENTIONALLY LEFT BLANK ]

APPENDIX F

BOOK-ENTRY ONLY SYSTEM

This section describes how ownership of the Series 2013A Bonds is to be transferred and how the principal of, premium, if any, and interest on the Series 2013A Bonds are to be paid to and credited by DTC while the Series 2013A Bonds are registered in its nominee name. The information in this section concerning DTC and the book-entry only system has been provided by DTC for use in disclosure documents such as this Official Statement. The Authority believes the source of such information to be reliable, but takes no responsibility for the accuracy or completeness thereof.

The Authority cannot and does not give any assurance that (1) DTC will distribute payments of debt service on the Series 2013A Bonds, or redemption or other notices, to DTC Participants, (2) DTC Participants or others will distribute debt service payments paid to DTC or its nominee (as the registered owner of the Series 2013A Bonds), or redemption or other notices, to the Beneficial Owners, or that they will do so on a timely basis, or (3) DTC will serve and 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.

DTC will act as securities depository for the Series 2013A Bonds. The Series 2013A Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Series 2013A Bond will be issued for each maturity of the Series 2013A Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC.

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 3.6 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,

F-1 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 is rated AA+ by Standard & Poor’s. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of Series 2013A Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2013A Bonds on DTC’s records. The ownership interest of each actual purchaser of each Series 2013A Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2013A 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 Series 2013A Bonds, except in the event that use of the book-entry system for the Series 2013A Bonds is discontinued.

To facilitate subsequent transfers, all Series 2013A Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2013A Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2013A Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Series 2013A Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Series 2013A Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2013A Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Indenture. For example, Beneficial Owners of Series 2013A Bonds may wish to ascertain that the nominee holding the Series 2013A 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 Trustee and request that copies of notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the Series 2013A 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.

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Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Series 2013A Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Authority as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Series 2013A Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Principal and interest payments and redemption proceeds on the Series 2013A Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Authority or the Trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC nor its nominee, the Trustee, or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

DTC may discontinue providing its services as depository with respect to the Series 2013A Bonds at any time by giving reasonable notice to the Authority or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Series 2013A Bond certificates are required to be printed and delivered.

Use of Certain Terms in Other Sections of this Official Statement

In reading this Official Statement it should be understood that while the Series 2013A Bonds are in the book-entry only system, references in other sections of this Official Statement to registered owners should be read to include the person for which the Participant acquires an interest in the Series 2013A Bonds, but (i) all rights of ownership must be exercised through DTC and the book-entry only system, and (ii) except as described above, notices that are to be given to registered owners under the Bond Indenture will be given only to DTC.

Information concerning DTC and the book-entry only system has been obtained from DTC and is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by the Authority or the Underwriter.

Effect of Termination of Book-Entry Only System

The Authority may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Series 2013A Bond certificates will be printed and delivered to DTC.

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Limitations

For so long as the Series 2013A Bonds are registered in the name of DTC or its nominee, Cede & Co., the Authority, the Borrowers and the Trustee will recognize only DTC or its nominee, Cede & Co., as the registered owner of the Series 2013A Bonds for all purposes, including payments, notices and voting.

Under the Indenture, payments made by the Trustee to DTC or its nominee will satisfy the Authority’s respective obligations under the Indenture and the Borrowers’ respective obligations under the Loan Agreement to the extent of the payments so made.

None of the Authority, the Underwriter, the Borrowers nor the 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 Series 2013A 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 Series 2013A Bond including, without limitation, any notice of redemption, tender, purchase or any event that would or could give rise to a tender or purchase right or option with respect to any Series 2013A 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 Series 2013A 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 Trustee may treat DTC as, and deem DTC to be, the absolute owner of the Series 2013A Bonds for all purposes whatsoever, including, without limitation, (i) the payment of principal of, premium, if any, and interest on the Series 2013A Bonds, (ii) giving notices of redemption and other matters with respect to the Series 2013A Bonds, (iii) registering transfers with respect to the Series 2013A Bonds, and (iv) the selection of Series 2013A Bonds for redemption. The Authority and the Trustee cannot give any assurances that DTC or the Participants will distribute payments of the principal or redemption price of and interest on the Series 2013A Bonds, paid to DTC or its nominee, as the registered owner of the Series 2013A Bonds, or any redemption or other notices, to the Beneficial Owners or that they will do so on a timely basis or that DTC will serve and act in the manner described in this Official Statement.

So long as Cede & Co. is the registered owner of the Series 2013A Bonds, as nominee of DTC, references in this Official Statement to the Holders of the Series 2013A Bonds shall mean Cede & Co. and shall not mean the Beneficial Owners, and Cede & Co. will be treated as the only Bondholder of the Series 2013A Bonds for all purposes under the Indenture.

The Authority may enter into amendments to the agreement with DTC or successor agreements with a successor securities depository relating to the book-entry system to be maintained with respect to the Series 2013A Bonds without the consent of Beneficial Owners or Bondholders.

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