NEW ISSUE-BOOK-ENTRY ONLY

Transcription

1 NEW ISSUE-BOOK-ENTRY ONLY NOT RATED In the opinion of Spilman Thomas & Battle, PLLC ( Bond Counsel ), based upon analysis of existing laws, regulations, rulings and court judicial decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Tax Exempt Bonds (as defined below) is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the Code ), except when such Tax Exempt Bonds are owned by a member of the Obligated Group (as defined below). Bond Counsel is of the further opinion that interest on the Tax Exempt Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is taken into account in determining the adjusted current earnings of certain corporations for purposes of calculating the corporate alternative minimum taxable income. In the further opinion of Bond Counsel, interest on the 2012 Series C Bonds will be included in gross income of the owners thereof for purposes of federal income taxation. In addition, under the Act, the Bonds (as defined below), together with the interest thereon, shall be exempt from all taxation by the State of West Virginia, or by any county or municipality or political subdivision thereof. See TAX MATTERS herein for a description of certain provisions of the Code which may affect the tax treatment of interest on the Bonds for certain bondholders. $34,275,000 THE PHILIPPI MUNICIPAL BUILDING COMMISSION $2,510,000 THE PHILIPPI MUNICIPAL BUILDING COMMISSION $680,000 THE PHILIPPI MUNICIPAL BUILDING COMMISSION COLLEGE FACILITIES REFUNDING AND IMPROVEMENT REVENUE BONDS (Alderson-Broaddus College, Inc.) 2012 Series A COLLEGE FACILITIES SUBORDINATE LIEN REFUNDING REVENUE BONDS (Alderson-Broaddus College, Inc.) 2012 Series B COLLEGE FACILITIES SUBORDINATE LIEN REFUNDING AND IMPROVEMENT REVENUE BONDS (Alderson-Broaddus College, Inc.) 2012 Series C (Taxable) Maturity Dates, Principal Amounts, Interest Rates, Prices and CUSIPs Shown on the Inside Cover The Philippi Municipal Building Commission (the Issuer ) will issue its College Facilities Refunding and Improvement Revenue Bonds (Alderson-Broaddus College, Inc.), 2012 Series A (the 2012 Series A Bonds ), its College Facilities Subordinate Lien Refunding Revenue Bonds (Alderson-Broaddus College, Inc.), 2012 Series B (the 2012 Series B Bonds, and together with the 2012 Series A Bonds, the Tax Exempt Bonds ) and its College Facilities Subordinate Lien Refunding and Improvement Revenue Bonds (Alderson-Broaddus College, Inc.), 2012 Series C ( Taxable) (the 2012 Series C Bonds or the Taxable Bonds, and together with the 2012 Series A Bonds and the 2012 Series B Bonds, the Bonds ), in the aggregate principal amount of $37,465,000, as fully registered Bonds in denominations of $5, or any integral multiple thereof. The 2012 Series B Bonds and the 2012 Series C Bonds, together, are referred to herein as the 2012 Subordinate Bonds. The Bonds are issued pursuant to and secured by a Bond Trust Indenture dated as of November 1, 2012 (the Bond Indenture or Indenture ) between the Issuer and Wells Fargo Bank, N.A., Philadelphia, Pennsylvania (the Trustee ). The proceeds of the Bonds will be used by Alderson-Broaddus College, Inc. (the College or Obligated Group Agent ), a West Virginia not-forprofit corporation, to: (a) finance the costs of designing, acquiring, constructing, renovating and equipping certain capital improvements, (the Construction Projects ) to the campus of the College, including the construction of (i) a new multi-sport stadium, locker room facilities, stadium seating, concessions, President s box, media boxes, turf field, lights to accommodate night games and practices, site improvements and walkways, (ii) new student housing consisting of a 144-bed apartment style student housing building and a 240-bed suite-style student housing building, and (iii) the renovation and improvement of Benedum Hall, Priestley Hall and Kincaid Hall, and any other capital improvement project approved by the board of the College as permitted by the Act (as defined in the Bond Indenture), together with all other necessary appurtenances and related facilities, (b) fund a capitalized interest account for the Construction Projects, (c) currently refund the Issuer s College Facilities Revenue Bonds, Series 2010 A (Alderson-Broaddus College, Inc.) (the Bonds to be Refunded ), (d) to fund a debt service reserve fund for the 2012 Series A Bonds, and (e) pay costs of issuance for the Bonds (hereinafter, collectively, the Project ). The Depository Trust Company ( DTC ) will act as securities depository for the Bonds. The Bonds will be dated the date of issuance and are issuable as book-entry-only bonds registered in the name of Cede & Co., or such other name as may be requested by an authorized representative of DTC, in the denominations of $5,000 or any integral multiple thereof. Principal is payable at maturity upon presentation and surrender of a Bond at the principal office of the Trustee. Semiannual interest (due April 1 and October 1, with the first such payment due on April 1, 2013) is payable by check or bank draft mailed to the respective addresses of the Bondholders as they appear on the registration books of the Trustee on the Record Date (as defined herein). THE BONDS AND THE INTEREST THEREON ARE SPECIAL, LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM AND SECURED BY A PLEDGE OF REVENUES AND FUNDS PROVIDED THEREFOR UNDER THE BOND INDENTURE. THE BONDS SHALL NOT CONSTITUTE A DEBT OR A PLEDGE OF THE FAITH AND CREDIT OR TAXING POWER OF THE ISSUER, THE CITY OF PHILIPPI OR THE STATE OF WEST VIRGINIA OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL PROVISION OR STATUTORY LIMITATION AND SHALL NEVER CONSTITUTE OR GIVE RISE TO PECUNIARY LIABILITY OF THE ISSUER, THE CITY OF PHILIPPI, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF. The Bonds are secured by the terms of the Bond Indenture and the Trust Estate and are payable solely from the rentals and revenues derived from, or in connection with, a Lease Agreement between the Issuer, as lessor, and the College, as lessee, dated as of November 1, 2012 (the Lease ) and the debt service reserve fund. The obligations of the College under the Lease are evidenced and secured by the A Note, the B Subordinate Note, and the C Subordinate Note (collectively, the Lease Notes ) issued by the College, in its capacity as Obligated Group Agent for the Obligated Group (defined below) under a Master Trust Indenture among the College, Alderson-Broaddus Endowment Corporation, a West Virginia not-for-profit corporation ( ABEC ), and Wells Fargo Bank, N.A., as Master Trustee, dated as of November 1, 2012 (the Master Trust Indenture ), as supplemented by a Supplemental Master Trust Indenture between the Obligated Group Agent and the Master Trustee, dated as of November 1, 2012 (the Supplemental Master Indenture, and, with the Master Trust Indenture, the Master Indenture ). At the time of this Private Placement Memorandum, the Obligated Group is composed of the College and ABEC. As additional security for the Bonds, the Obligated Group shall guarantee the payment of the debt service on the Bonds pursuant to a Guaranty Agreement dated as of November 1, 2012 (the Guaranty Agreement ), made by the College, as Obligated Group Agent, to the Trustee, which Guaranty Agreement shall be evidenced by the D Note (the Guaranty Note ) issued by the Obligated Group Agent, under the Master Indenture (the Lease Notes and the Guaranty Note shall collectively be referred to as the Notes ). Furthermore, the Notes, and other obligations under the Master Indenture, are secured by one or more deeds of trust of the College and ABEC, respectively, each of which is dated as of November 1, 2012 (collectively, the Deeds of Trust ), and which will be on, among other things, certain real and personal property and mineral interest of the College and ABEC, as applicable, all as further described herein and in the Deeds of Trust. As provided in the Master Indenture, the Notes, as Obligations thereunder, are also secured by a security interest in and pledge of (a) all Gross Revenues (as defined in the Master Trust Indenture), gross receipts, accounts, bank accounts, general intangibles, contract rights and all related rights; (b) except as specifically provided in the Master Indenture, all moneys and securities held from time to time by the Master Trustee under the Master Indenture, including, without limitation, moneys and securities held in the funds and accounts established under the Master Indenture; and (c) all proceeds, cash proceeds, cash equivalents, products, replacements, additions and improvements to substitutions for, and accessions of any and all property described in subsections (a) and (b) above, of the members of the Obligated Group, subject to certain limitations or restrictions pursuant to donor instructions, law, rule, regulation or agreement; as well as (d) a collateral assignment of a life insurance policy issued on the life of Richard A. Creehan, president of the College. The B Note and the C Note are Subordinated Indebtedness, as defined in the Master Indenture, and are subordinate to and not on a parity with the A Note or the D Note and any other senior Obligations issued under the Master Indenture, except that each of the B Note and the C Note issued under the Supplemental Trust Indenture is on a parity with the other. The Notes are subject to certain payment priority as set forth in the Supplemental Indenture and discussed herein. The Trust Estate is composed of (1) all right, title and interest of the Issuer in and to the Notes (as hereinafter described) pledged and assigned under the Bond Indenture for payment of the Bonds and all sums payable in respect to the indebtedness secured thereby; (2) all right, title and interest of the Issuer in and to the Lease Agreements (as hereinafter described), excluding Unassigned Rights (as defined in the Bond Indenture); and (3) any and all property of every kind and nature conveyed, pledged assigned or transferred as and for additional security under the Bond Indenture by the Issuer or the Obligated Group or by anyone on their behalf to the Trustee, including, but not limited to, funds of the Obligated Group held by Trustee under the Bond Indenture as security for the Bonds. The Trust Estate does not include amounts held in the Rebate Fund and the Unassigned Rights. The lien on the Trust Estate of the Registered Owners of the 2012 Series B Bonds and the 2012 Series C Bonds is subordinate in all respects to the lien on the Trust Estate of the Registered Owners of the 2012 Series A Bonds. INVESTMENT IN THE BONDS IS HIGHLY SPECULATIVE AND INVOLVES A SIGNIFICANT AMOUNT OF RISK. (SEE BONDHOLDERS RISKS HEREIN). THE BONDS HAVE NOT BEEN QUALIFIED UNDER THE SECURITIES OR BLUE SKY LAWS OF THE UNITED STATES OR OF ANY STATE OF THE UNITED STATES. THE BONDS MAY OR MAY NOT BE EXEMPT FROM QUALIFICATION OR REGISTRATION UNDER THE LAWS OF ANY PARTICULAR STATE, AND NO REPRESENTATION IS MADE THAT THE BONDS, OR ANY TRANSACTION IN WHICH THEY MAY BE OFFERED OR SOLD, ARE EXEMPT. NO RATINGS HAVE BEEN OBTAINED FOR THE BONDS. THE BONDS ARE INTENDED ONLY FOR PURCHASE BY SOPHISTICATED INVESTORS CAPABLE OF BEARING THE ECONOMIC RISKS OF THE PURCHASE OF THE BONDS AND HAVING SUCH KNOWLEDGE AND EXPERIENCE IN BUSINESS AND FINANCIAL MATTERS AS TO BE CAPABLE OF EVALUATING THE MERITS AND RISKS INVOLVED TO DETERMINE THE SUITABILITY OF INVESTING IN THE BONDS. PROSPECTIVE INVESTORS IN THE BONDS SHOULD REVIEW ALL OF THE INFORMATION IN THIS PRIVATE PLACEMENT MEMORANDUM AND THE APPENDICES ATTACHED HERETO CAREFULLY PRIOR TO PURCHASING ANY OF THE BONDS. INITIAL INVESTORS IN THE 2012 SUBORDINATE BONDS SHALL BE REQUIRED TO EXECUTE AN INVESTOR LETTER SUBSTANTIALLY IN THE FORM ATTACHED HERETO. The Bonds, as applicable, are subject to optional redemption, optional redemption as a result of sale of certain Bond Financed Property (as further defined in the Bond Indenture and herein), optional redemption for insurance and condemnation proceeds, mandatory redemption and mandatory redemption upon determination of taxability, and mandatory redemption from excess funds in the Project Fund following completion of construction period, all prior to maturity, as described herein. The Bonds are offered when, as and if issued by the Issuer, subject to prior sale, withdrawal or modifications of the offer without notice, and the approval of legality by Spilman Thomas & Battle, PLLC, Charleston, West Virginia, Bond Counsel and Issuer s Counsel. Certain legal matters will be passed upon for the Placement Agent by its counsel, Hill Wallack LLP, Princeton, New Jersey, and for the College by its counsel, Jackson Kelly PLLC, Morgantown, West Virginia. The Bonds are expected to be available for delivery in New York, New York on or about November 30, This cover page contains limited information for reference only. It is not a summary of the issue. The entire Private Placement Memorandum, including the Appendices, must be read to make an informed investment decision. a Division of Scott & Stringfellow, LLC Dated: November 29, 2012

2 MATURITIES, AMOUNTS, INTEREST RATES, PRICES AND CUSIP NUMBERS 1, 2, 3, 4, 5 $34,275, SERIES A BONDS Maturity Date Principal Amount Interest Rate Price CUSIP Number October 1, 2044 $34,275, % 100% AA3 1, 2, 3, 4 $2,510, SERIES B BONDS Maturity Date Principal Amount Interest Rate Price CUSIP Number October 1, 2044 $2,510, % 100% AB1 1, 2, 3 $680, SERIES C BONDS Maturity Date Principal Amount Interest Rate Price CUSIP Number October 1, 2044 $680, % 100% AC9 1 CUSIP numbers are included solely for the convenience of the owners of the Bonds. CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by Standard & Poor s Financial Services LLC on behalf of The American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. Neither the Placement Agent, the Issuer, nor the Borrower is responsible for the selection or correctness of the CUSIP numbers set forth herein. 2 The Bonds are term bonds. 3 The Bonds are subject to: Optional Redemption prior to stated maturity as provided in the Indenture and DESCRIPTION OF THE BONDS Optional Redemption herein ; Optional Redemption as a Result of the Sale of Bond Financed Property prior to their maturity as provided in the Indenture and DESCRIPTION OF THE BONDS Optional Redemption as a Result of the Sale of Bond Financed Property herein; Optional Redemption for Insurance and Condemnation Proceeds prior to their maturity as provided in the Indenture and DESCRIPTION OF THE BONDS Optional Redemption for Insurance and Condemnation Proceeds ; and Mandatory Redemption, as provided in the Indenture and DESCRIPTION OF THE BONDS Mandatory Redemption herein. 4 The Tax-Exempt Bonds are also subject to: Mandatory Redemption upon a Determination of Taxability, as provided in the Indenture and DESCRIPTION OF THE BONDS Mandatory Redemption upon a Determination of Taxability herein. 5 The 2012 Series A Bonds are also subject to: Mandatory Redemption from Excess Funds in Project Fund following Completion of Construction Period as provided in the Indenture and DESCRIPTION OF THE BONDS Mandatory Redemption from Excess Funds in Project Fund following Completion of Construction Period herein.

3 USE OF INFORMATION IN PRIVATE PLACEMENT MEMORANDUM FOR PURPOSES OF COMPLIANCE WITH RULE 15c2-12 OF THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, AS AMENDED (THE RULE ), THIS DOCUMENT CONSTITUTES A PRIVATE PLACEMENT MEMORANDUM OF THE ISSUER AND THE COLLEGE WITH RESPECT TO THE BONDS. THIS PRIVATE PLACEMENT MEMORANDUM IS INTENDED SOLELY FOR USE BY THE INITIAL PURCHASERS OF ALL OF THE BONDS IN THE INITIAL PRIMARY SALE THEREOF, AND IS NOT INTENDED FOR USE IN CONNECTION WITH ANY REOFFERING OR ANY SUBSEQUENT SALE OR TRANSFER OF THE BONDS. NO DEALER, BROKER, SALESMAN, OR OTHER PERSON HAS BEEN AUTHORIZED BY THE PLACEMENT AGENT, THE COLLEGE OR THE ISSUER TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION WITH RESPECT TO THE BONDS, OTHER THAN AS CONTAINED IN THIS PRIVATE PLACEMENT MEMORANDUM, AND IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY ANY OF THE FOREGOING. THIS PRIVATE PLACEMENT MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THE BONDS BY ANY PERSON, IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH OFFER, SOLICITATION, OR SALE. THE INFORMATION SET FORTH HEREIN HAS BEEN OBTAINED FROM THE COLLEGE AND OTHER SOURCES WHICH ARE BELIEVED TO BE RELIABLE BUT SUCH INFORMATION IS NOT GUARANTEED AS TO ACCURACY OR COMPLETENESS AND IS NOT TO BE CONSTRUED AS A REPRESENTATION, PROMISE, OR GUARANTEE OF THE COLLEGE, PLACEMENT AGENT, OR THE ISSUER. THIS PRIVATE PLACEMENT MEMORANDUM CONTAINS, IN PART, ESTIMATES AND MATTERS OF OPINION WHICH ARE NOT INTENDED AS STATEMENT OF FACT, AND NO REPRESENTATION IS MADE AS TO THE CORRECTNESS OF SUCH ESTIMATES AND OPINIONS, OR THAT THEY WILL BE REALIZED. THE INFORMATION REGARDING DTC HAS BEEN OBTAINED FROM DTC, BUT IS NOT GUARANTEED AS TO ACCURACY OR COMPLETENESS BY THE COLLEGE, ISSUER OR PLACEMENT AGENT. NEITHER THE ISSUER NOR THE COLLEGE MAKE REPRESENTATIONS OR WARRANTY WITH RESPECT TO THE INFORMATION CONTAINED IN THIS PRIVATE PLACEMENT MEMORANDUM REGARDING DTC OR ITS BOOK-ENTRY-ONLY SYSTEM. THE PLACEMENT AGENT HAS PROVIDED THE FOLLOWING SENTENCE FOR INCLUSION IN THIS PRIVATE PLACEMENT MEMORANDUM: THE PLACEMENT AGENT HAS REVIEWED THE INFORMATION IN THIS PRIVATE PLACEMENT MEMORANDUM IN ACCORDANCE WITH, AND AS PART OF, ITS RESPONSIBILITIES TO INVESTORS UNDER THE FEDERAL SECURITIES LAWS AS APPLIED TO THE FACTS AND CIRCUMSTANCES OF THIS TRANSACTION, BUT THE PLACEMENT AGENT DOES NOT GUARANTEE THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION. THIS PRIVATE PLACEMENT MEMORANDUM IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE BONDS IN ANY CIRCUMSTANCES OR IN ANY JURISDICTION IN WHICH THE OFFER OR SOLICITATION IS UNLAWFUL. THE INFORMATION AND EXPRESSIONS OF OPINION HEREIN ARE SUBJECT TO CHANGE WITHOUT NOTICE, AND NEITHER THE DELIVERY OF THIS PRIVATE PLACEMENT MEMORANDUM NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION OR OPINIONS SET FORTH HEREIN AFTER THE DATE OF THIS PRIVATE PLACEMENT MEMORANDUM. THIS PRIVATE PLACEMENT MEMORANDUM DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUER, THE COLLEGE OR THE PLACEMENT AGENT AND ANY ONE OR MORE OF THE PURCHASERS OR REGISTERED HOLDERS OF THE BONDS. IN CONNECTION WITH THIS OFFERING, THE PLACEMENT AGENT MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME, AND IF CONTINUED, MAY BE RECOMMENCED AT ANY TIME.

4 IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE COLLEGE AND THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS PRIVATE PLACEMENT MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. YOU SHOULD MAKE YOUR OWN DECISION WHETHER THIS OFFERING MEETS YOUR INVESTMENT OBJECTIVES AND RISK TOLERANCE LEVEL. NO FEDERAL OR STATE SECURITIES COMMISSION HAS APPROVED, DISAPPROVED, ENDORSED OR RECOMMENDED THIS OFFERING. NO INDEPENDENT PERSON HAS CONFIRMED THE ACCURACY OR TRUTHFULNESS OF THIS DISCLOSURE, NOR WHETHER IT IS COMPLETE. THE WEST VIRGINIA SECURITIES COMMISSION HAS NOT REVIEWED THE DISCLOSURE CONTAINED HEREIN AND THE ISSUER IS RELYING ON AN EXEMPTION FROM REGISTRATION BY QUALIFICATION UNDER THE WEST VIRGINIA SECURITIES ACT. CERTAIN STATEMENTS INCLUDED OR INCORPORATED BY REFERENCE IN THIS PRIVATE PLACEMENT MEMORANDUM CONSTITUTE FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS ARE GENERALLY IDENTIFIABLE BY THE TERMINOLOGY USED SUCH AS PLAN, EXPECT, ANTICIPATE, ESTIMATE, BUDGET OR SIMILAR WORDS. THIS PRIVATE PLACEMENT MEMORANDUM CONTAINS FORWARD-LOOKING INFORMATION WITHIN THE MEANING OF THE FEDERAL SECURITIES LAWS. THE FORWARD-LOOKING INFORMATION INCLUDES STATEMENTS CONCERNING THE COLLEGE S OUTLOOK FOR THE FUTURE, AS WELL AS OTHER STATEMENTS OF BELIEFS, FUTURE PLANS AND STRATEGIES OR ANTICIPATED EVENTS, AND SIMILAR EXPRESSIONS CONCERNING MATTERS THAT ARE NOT HISTORICAL FACTS. FORWARD-LOOKING INFORMATION AND STATEMENTS ARE SUBJECT TO MANY RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN, OR IMPLIED BY, THE STATEMENTS. THESE RISKS AND UNCERTAINTIES INCLUDE THE AVAILABILITY AND AMOUNT OF GOVERNMENTAL REIMBURSEMENTS, APPROPRIATIONS, THE COMPETITIVE ENVIRONMENT AND RELATED MARKET CONDITIONS, OPERATING EFFICIENCIES, ACCESS TO CAPITAL, THE COST OF COMPLIANCE WITH ENVIRONMENTAL AND HEALTH STANDARDS, LITIGATION AND OTHER RISKS AND UNCERTAINTIES DESCRIBED HEREIN UNDER BONDHOLDERS RISKS. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS BECAUSE ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED IN, OR IMPLIED BY, THE STATEMENTS. ANY FORWARD-LOOKING STATEMENT MADE IN THIS PRIVATE PLACEMENT MEMORANDUM SPEAKS ONLY AS OF THE DATE OF SUCH STATEMENT, AND THE COLLEGE, THE PLACEMENT AGENT, AND THE ISSUER UNDERTAKE NO OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE. INVESTORS SHOULD READ THE ENTIRE PRIVATE PLACEMENT MEMORANDUM, INCLUDING ALL APPENDICES ATTACHED HERETO, TO OBTAIN INFORMATION ESSENTIAL TO MAKING AN INFORMED INVESTMENT DECISION. NO SALES MAY BE MADE UNTIL A COPY OF THE FINAL PRIVATE PLACEMENT MEMORANDUM HAS BEEN DELIVERED TO AND REVIEWED BY THE PROSPECTIVE INVESTOR. INDICATIONS OF INTEREST IN AN INVESTMENT ARE TENTATIVE AND NOT BINDING ON THE CUSTOMER PRIOR TO HIS OR HER RECEIPT AND REVIEW OF THE FINAL PRIVATE PLACEMENT MEMORANDUM. THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, NOR HAS THE BOND INDENTURE BEEN QUALIFIED UNDER THE TRUST ACT OF 1939, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PRIVATE PLACEMENT MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

5 FOR PROSPECTIVE INITIAL PURCHASERS OF BONDS THE BONDS ARE INITIALLY OFFERED ONLY TO ACCREDITED INVESTORS, AS DEFINED IN RULE 501 OF REGULATION D PROMULGATED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE 1933 ACT ) OR QUALIFIED INSTITUTIONAL BUYER, AS DEFINED IN RULE 144A PROMULGATED PURSUANT TO THE 1933 ACT OR AN INVESTOR WHO, EITHER ALONE OR WITH HIS PURCHASER REPRESENTATIVE(S), HAS SUCH KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT HE IS CAPABLE OF EVALUATING THE MERITS AND RISKS OF THE PROSPECTIVE INVESTMENT IN THE BONDS, ALL AS FURTHER DESCRIBED IN THE 1933 ACT AND/OR ITS RELATED REGULATIONS. THE BONDS HAVE NOT BEEN REGISTERED UNDER THE 1933 ACT OR ANY OTHER STATE OR FEDERAL LAW. EACH INITIAL PURCHASER OF THE 2012 SUBORDINATE BONDS WILL BE REQUIRED TO DELIVER AN INVESTOR LETTER SUBSTANTIALLY IN THE FORM ATTACHED TO THIS PRIVATE PLACEMENT MEMORANDUM AS APPENDIX O CERTIFYING THAT IT IS AN ACCREDITED INVESTOR OR A QUALIFIED INSTITUTIONAL BUYER OR AN INVESTOR WHO, EITHER ALONE OR WITH HIS PURCHASER REPRESENTATIVE(S), HAS SUCH KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT HE IS CAPABLE OF EVALUATING THE MERITS AND RISKS OF THE PROSPECTIVE INVESTMENT IN THE BONDS. THERE ARE RESTRICTIONS ON THE FUTURE TRANSFER OR SALE OF THE BONDS. See DESCRIPTION OF THE BONDS HEREIN. THE ISSUER HAS NOT REVIEWED OR APPROVED, AND DOES NOT REPRESENT OR WARRANT IN ANY WAY, THE ACCURACY OR COMPLETENESS OF ANY OF THE INFORMATION SET FORTH IN THIS PRIVATE PLACEMENT MEMORANDUM, INCLUDING THE APPENDICES, (OTHER THAN THE STATEMENTS AND INFORMATION SET FORTH UNDER THE SECTIONS ENTITLED THE ISSUER AND LITIGATION ISSUER, AS IT PERTAINS TO THE ISSUER). THIS PRIVATE PLACEMENT MEMORANDUM MAY BE AMENDED OR SUPPLEMENTED TO INDICATE MATERIAL CHANGES. CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE BONDS.

6 FINANCING PARTICIPANTS ISSUER The Philippi Municipal Building Commission Philippi, West Virginia BORROWER Alderson-Broaddus College, Inc. Philippi, West Virginia BOND COUNSEL AND ISSUER S COUNSEL Spilman Thomas & Battle, PLLC Charleston, West Virginia BORROWER S COUNSEL Jackson Kelly PLLC Morgantown, West Virginia TRUSTEE Wells Fargo Bank, N.A. Philadelphia, Pennsylvania TRUSTEE S COUNSEL Greenberg Traurig, LLP Philadelphia, Pennsylvania PLACEMENT AGENT BB&T Capital Markets, a division of Scott & Stringfellow, LLC Hasbrouck Heights, New Jersey PLACEMENT AGENT S COUNSEL Hill Wallack LLP Princeton, New Jersey DEVELOPER Partners Development Knoxville, Tennessee

7 TABLE OF CONTENTS INTRODUCTION... 1 RATES, CHARGES AND DEBT SERVICE COVERAGE... 4 DAYS CASH ON HAND... 4 MARKET STUDY... 5 MANAGEMENT PREPARED FINANCIAL FORECAST... 5 PLAN OF FINANCING... 6 THE ISSUER... 6 THE COLLEGE AND THE ALDERSON-BROADDUS ENDOWMENT CORPORATION... 7 THE CONSTRUCTION PROJECTS/THE FACILITIES The Construction Project The Initial Lease The Lease Phase I Environmental Assessment THE CONTRACTORS Stadium Construction and Stadium Contractor Housing Construction and Housing Contractor The Construction Monitor THE ARCHITECT THE DEVELOPER Development Agreement TRUSTEE DESCRIPTION OF BONDS General 33 Optional Redemption Optional Redemption as a Result of the Sale of Bond Financed Property Optional Redemption for Insurance and Condemnation Proceeds Mandatory Redemption Mandatory Redemption Upon Determination of Taxability Page

8 Mandatory Redemption from Excess Funds Transferred from Project Fund following Completion of Construction Period Redemption Requests with Regard to Section 4.03 or Section 4.04 of the Bond Indenture Selection of Bonds for Redemption Notice of Redemption Partial Redemption of Bonds Effect of Redemption of Bonds Limitation on Sale or Transfer of Bonds Transfer and Exchange of Bonds Mutilated, Lost, Destroyed or Stolen Bonds Limited Obligations; No Liability of the State The DTC Book-Entry-Only System Use of Securities Depository Rebate Fund SECURITY FOR AND SOURCES OF PAYMENT OF THE BONDS Limited Obligations Pledge Under the Bond Indenture; Trust Estate Master Trust Indenture and Supplemental Master Indenture Initial Lease Agreement Lease 49 Notes 50 Guaranty Agreement Deeds of Trust Costs of Issuance Fund Project Fund and Capitalized Interest Fund Interest Fund Principal Fund Redemption Fund Debt Service Reserve Fund Operating Reserve Fund Revenue Fund Tax Covenant Supplemental Bond Indentures Events of Default Under the Bond Indenture... 59

9 Acceleration of Maturities Application of Revenues and Other Funds Following Default No Direction by Holders of 2012 Subordinate Bonds Other Covenants of the Obligated Group, College and Issuer SOURCES AND USES OF FUNDS ANNUAL DEBT SERVICE REQUIREMENT BONDHOLDERS RISKS Limited Liability Limited Assets of the Issuer Unique Nature of the Project Competition Tuition 66 Market Study and Enrollment Projections Updated Enrollment Projections of College Management Prepared Financial Forecast Construction Risks Surety Bonds Operation of the College Facilities Real Estate Economic Risks Accreditation of the College Going-Concern Issues for the College The College s Enrollment Future Results Must Improve from Historical Results to Meet or Exceed Projected Results College Has Defaulted Under Other Obligations No Rating; Secondary Market Available Assets of Alderson-Broaddus Endowment Corporation May Not Be Sufficient Members of the Obligated Group may Withdraw or Enter into the Obligated Group Liquidation of Security May Not Be Sufficient Possible Claims of Third-Party Creditors Interests of Holders of 2012 Subordinate Bonds Taxation of the Bonds... 74

10 Sequestration Environmental Risks Liability Insurance Damage, Destruction or Condemnation Limitations on Enforceability of Remedies Enforceability of Security Interests Additional Obligations Acceleration of Maturities Limitations on Direction of Trustee by Holders of 2012 Subordinate Bonds Resale Value of the Facilities Upon Default Effect of Bankruptcy Limited Transferability of Bonds Other Risk Factors Summary TAX MATTERS General Series A Bonds and 2012 Series B Bonds Tax Exempt Bonds Series C Bonds Taxable Bonds RATING FORWARD-LOOKING STATEMENTS PRIVATE PLACEMENT CONTINUING DISCLOSURE UNDERTAKING WEST VIRGINIA SECURITIES ACT DISCLOSURE STATEMENT LEGAL MATTERS LITIGATION OTHER MATTERS... 92

11 APPENDICES Appendix A: Form of the Bond Indenture Appendix B: Form of the Master Trust Indenture Appendix C: Form of the Supplemental Indenture Appendix D: Form of the Initial Lease Appendix E: Form of the Lease Appendix F: Form of the Guaranty Agreement Appendix G: Forms of the Deeds of Trust Appendix H: Forms of the Notes Appendix I: Market Study Appendix J: Phase I Environmental Site Assessment (w/o Appendices) Appendix K: Management Prepared Financial Forecast Appendix L: Proposed Form of Opinion of Bond Counsel Appendix M: Consolidated Financial Statements for College and Alderson-Broaddus Endowment Corporation for Years Ended June 30, 2011 and 2010 Appendix N: College Strategic Plan Summary Appendix O: Form of Investor Letter

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13 PRIVATE PLACEMENT MEMORANDUM relating to the original issuance of $34,275,000 THE PHILIPPI MUNICIPAL BUILDING COMMISSION COLLEGE FACILITIES REFUNDING AND IMPROVEMENT REVENUE BONDS (Alderson-Broaddus College, Inc.) 2012 Series A $2,510,000 THE PHILIPPI MUNICIPAL BUILDING COMMISSION COLLEGE FACILITIES SUBORDINATE LIEN REFUNDING REVENUE BONDS (Alderson-Broaddus College, Inc.) 2012 Series B $680,000 THE PHILIPPI MUNICIPAL BUILDING COMMISSION COLLEGE FACILITIES SUBORDINATE LIEN REFUNDING AND IMPROVEMENT REVENUE BONDS (Alderson-Broaddus College, Inc.) 2012 Series C (Taxable) INTRODUCTION This Private Placement Memorandum (the Private Placement Memorandum ) including the cover hereof and the Appendices hereto, set forth certain information in connection with the issuance and sale of the $37,465,000 aggregate principal amount of The Philippi Municipal Building Commission College Facilities Refunding and Improvement Revenue Bonds (Alderson-Broaddus College, Inc.) 2012 Series A (the 2012 Series A Bonds ), The Philippi Municipal Building Commission College Facilities Subordinate Lien Refunding Revenue Bonds (Alderson-Broaddus College, Inc.) 2012 Series B (the 2012 Series B Bonds, and together with the 2012 Series A Bonds, the Tax Exempt Bonds ) and The Philippi Municipal Building Commission College Facilities Subordinate Lien Refunding and Improvement Revenue Bonds (Alderson-Broaddus College, Inc.) 2012 Series C (Taxable) (the 2012 Series C Bonds, and, together with the 2012 Series A Bonds and the 2012 Series B Bonds, the Bonds ) by The Philippi Municipal Building Commission (the Issuer ), a public corporation and governmental instrumentality organized and existing under the laws of the State of West Virginia (the State ) for the benefit of Alderson-Broaddus College, Inc. (the College ), a West Virginia not-for-profit corporation duly created and existing under the Constitution and laws of the State. The proceeds of the Bonds will be used by the College to: (a) finance the costs of designing, acquiring, constructing, renovating and equipping certain capital improvements, (the Construction Projects ) to the campus of the College, including the construction of (i) a new multi-sport stadium, locker room facilities, stadium seating, concessions, President s box, media boxes, turf field, lights to accommodate night games and practices, site improvements and walkways, (ii) new student housing consisting of a 144-bed apartment style student housing building and a 240-bed suite-style student housing building, and (iii) the renovation and improvement of Benedum Hall, Priestley Hall and Kincaid Hall, and any other capital improvement project approved by the board of the College as permitted by the Act (as defined in the Bond Indenture), together with all other necessary appurtenances and related facilities, (b) fund a capitalized interest account for the Construction Projects, (c) currently refund the Issuer s College Facilities Revenue Bonds, Series 2010 A (Alderson-Broaddus College, Inc.)(the Bonds to be Refunded ), (d) to fund a debt service reserve fund for the 2012 Series A Bonds, and (e) pay costs of issuance for the Bonds (hereinafter, collectively, the Project ). The Bonds are issued pursuant to and secured by a Bond Trust Indenture dated as of November 1, 2012 (the Bond Indenture ) between the Issuer and Wells Fargo Bank, N.A., Philadelphia, Pennsylvania, as Trustee (the Trustee ) and pursuant to an Ordinance of the Issuer enacted on July 26, 2012 ( Ordinance ). Under the Bond Indenture and to secure the payment of the Bonds and the performance and observance of the covenants and conditions set forth in the Bond Indenture, the Issuer pledges, assigns and grants a security interest to the Trustee, it successor and assigns, for the benefit of the Holders

14 from time to time of the Bonds, all and singular the property, real and personal described in the Bond Indenture as the Trust Estate, which is constituted by: (1) all right, title and interest of the Issuer in and to the Notes (as hereinafter described) pledged and assigned under the Bond Indenture for payment of the Bonds and all sums payable in respect to the indebtedness secured thereby; (2) all right, title and interest of the Issuer in and to the Lease Agreements (as hereinafter described), excluding Unassigned Rights (as defined in the Bond Indenture); and (3) any and all property of every kind and nature conveyed, pledged assigned or transferred as and for additional security under the Bond Indenture by the Issuer or the Obligated Group or by anyone on their behalf to the Trustee, including, but not limited to, funds of the Obligated Group held by Trustee under the Bond Indenture as security for the Bonds. The Trust Estate does not include amounts held in the Rebate Fund and the Unassigned Rights. The Trust Estate and the rights and privileges conveyed, assigned and pledged by the Issuer under the Bond Indenture to the Trustee and its successors is conveyed, assigned and pledged for the equal and pro rata benefit and security of each and every Registered Owner (as defined in the Bond Indenture) of the Bonds issued under the Bond Indenture, with respect to such senior lien, without preference, priority or distinction as to participation in the lien, benefit and protection of the Bond Indenture of the Bonds over or from the others, by reason of priority in the issue or negotiation or maturity thereof, or for any other reason whatsoever, except as otherwise expressly provided in the Bond Indenture, so that each and all of the Bonds shall, except as otherwise expressly provided in the Bond Indenture, have the same right, lien and privilege under the Bond Indenture and shall be equally secured hereby with the same effect as if the same had all been made, issued and negotiated simultaneously with the delivery hereof and were expressed to mature on one and the same date. However, the lien on the Trust Estate in favor of the Registered Owners of the 2012 Series B Bonds and/or the 2012 Series C Bonds is subordinate and junior in all respects to the lien on the Trust Estate in favor of the Registered Owners of the 2012 Series A Bonds. Pursuant to an initial lease dated as of November 1, 2012 (the Initial Lease ), the College, as lessor, will lease to the Issuer, as lessee, certain real property, together with all improvements, tangible personal property, and all fixtures, furniture, equipment, furnishings and other necessary appurtenant facilities and personal property on or to be thereon, as further described in the Initial Lease. Furthermore, the College and the Issuer will enter into a lease agreement dated as of November 1, 2012 (the Lease, and together with the Initial Lease, the Lease Agreements ) under which the Issuer, as lessor, leases to the College, as lessee, such certain real property and the Facilities, as defined in the Lease. The College, Alderson-Broaddus Endowment Corporation ( ABEC ), and Wells Fargo Bank, N.A. (the Master Trustee ) will enter into a Master Trust Indenture dated as of November 1, 2012 (the Master Trust Indenture ), supplemented by a Supplemental Master Trust Indenture , dated as of November 1, 2012 (the Supplemental Master Indenture and together with the Master Trust Indenture, the Master Indenture ). Pursuant to the Master Indenture, the Obligated Group Agent will issue the A Note, B Note, C Note (collectively, the Lease Notes ) and a D Note (the Guaranty Note and, together with the Lease Notes, the Notes ) on behalf of the Obligated Group. The Lease Notes evidence and secure the obligations of the College under the Lease to, among other things, make payments to the Issuer in amounts necessary to pay the principal of and interest on their respective Bonds as further described therein. The B Note and the C Note are together known as the Subordinated Notes. The B Note and the C Note are Subordinated Indebtedness, as defined in the Master Indenture, and are subordinate to and not on a parity with the A Note or the D Note and any other senior Obligations issued under the Master Indenture, except that each of the B Note and the C Note issued under the Supplemental Master Indenture is on a parity with the other. The Notes are subject to certain payment priority as set forth in the Supplemental Master Indenture and discussed hereinbelow. The Guaranty Note evidences and secures the obligations of the Obligated Group (as defined in the Bond Indenture) under a Guaranty Agreement dated as of November 1, 2012, (the Guaranty Agreement ) between the Obligated 2

15 Group Agent and the Trustee, to absolutely and unconditionally guarantee the full and prompt payment and performance by the Issuer of its obligations to make payments in respect of the Bonds in accordance with the Bond Indenture. As of the date of this Private Placement Memorandum, the Obligated Group currently is comprised of the College and ABEC. Furthermore, each of the College and ABEC, respectively, shall enter into one or more two types of credit line deeds of trust to secure, among other things, the Notes. The first type, which will be entered into by the College, is the credit line deed of trust, security agreement, assignment of leases and rents and fixture filing, dated as of November 1, 2012 ( College Property Deed of Trust ), granting to a trustee or trustees therein for the benefit of the Master Trustee and to secure, among other things, the Notes issued under the Master Indenture, and a lien on and security interest in certain real and tangible personal property of the grantor. The second type, which College and ABEC both will enter into, is the credit line deed of trust, mineral financing statement, as-extracted collateral filing and fixture filing also dated as of November 1, 2012 ( College Mineral Deed of Trust and ABEC Mineral Deed of Trust, respectively, and together with the College Property Deed of Trust, the Deeds of Trust ) which shall grant to the trustee or trustees therein for the benefit of the Master Trustee and to secure, among other things, the Notes issued under the Master Indenture, and a lien on and security interest in certain property of the grantor of that Mineral Deed of Trust, including, but not limited to, certain Mineral Rights, Personalty, Servitudes and Rent (each, as defined therein) of the grantor. In the Master Indenture, the Obligated Group secures payment of the principal of, premium on, if any, and interest on the Obligations, including the Notes, and its performance and observance of the covenants and conditions set forth in the Master Indenture for the equal and proportionate benefit of the Holders of the Obligations, except with respect to the Subordinated Notes, and grants the Master Trustee a security interest in certain revenues, moneys and funds of the Members of the Obligated Group and certain real and personal property of the Members of the Obligated Group. Capitalized terms not otherwise defined herein shall have the same definitions as are set forth in the Bond Indenture or the Master Indenture, as applicable. THE BONDS AND THE INTEREST THEREON ARE SPECIAL, LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE TRUST ESTATE PLEDGED THEREFOR UNDER THE BOND INDENTURE. THE BONDS SHALL NOT CONSTITUTE A DEBT OR A PLEDGE OF THE FAITH AND CREDIT OR TAXING POWER OF THE ISSUER, THE CITY OF PHILIPPI OR THE STATE OF WEST VIRGINIA OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL PROVISION OR STATUTORY LIMITATION AND SHALL NEVER CONSTITUTE OR GIVE RISE TO PECUNIARY LIABILITY OF THE ISSUER, THE CITY OF PHILIPPI, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF. The Bonds are secured as provided in the Bond Indenture, by the Notes, and the Guaranty Agreement and are payable from the Trust Estate as set forth herein under SECURITY FOR AND SOURCES OF PAYMENT OF THE BONDS. Bondholder Risk. INVESTMENT IN THE BONDS INVOLVES A SIGNIFICANT AMOUNT OF RISK. See THE COLLEGE AND THE ALDERSON-BROADDUS ENDOWMENT CORPORATION, BONDHOLDERS RISK and SECURITY FOR AND SOURCES OF PAYMENT OF THE BONDS herein. Brief descriptions of the Issuer, the College, the Bonds, the security for the Bonds and forms of the Bond Indenture, the Notes, the Master Trust Indenture, the Supplemental Master Indenture, the Initial 3

16 Lease, the Lease, the Deeds of Trust and the Guaranty Agreement are set forth below. Such descriptions do not purport to be complete or definitive, and each such description is qualified in its entirety by reference to each such document. RATES, CHARGES AND DEBT SERVICE COVERAGE Each Member of the Obligated Group covenants and agrees in the Master Indenture to operate all of its Facilities on a revenue producing basis and to charge such fees and rates for its Facilities and its services and to exercise such skill and diligence as to provide income from its Property together with other available funds sufficient to promptly pay all payments of principal and interest on its Indebtedness, all expenses of operation, maintenance and repair of its Property and all other payments required to be made by it under the Master Indenture to the extent permitted by law. Under the Supplemental Master Indenture, the Obligated Group covenants to maintain a Historical Debt Service Coverage Ratio of at least 1.20:1 at the end of each fiscal year, which is tested annually, beginning with the Obligated Group s Fiscal Year ended June 30, The Obligated Group s failure to maintain a Historical Debt Service Coverage Ratio of a least 1.20:1 at the end of any fiscal year shall constitute an event of default under the Master Indenture unless the Obligated Group retains a Consultant as required by the Supplemental Master Indenture and follows its recommendations. The Obligated Group Agent shall deliver a certificate to the Master Trustee under the Master Indenture as soon as practicable, but in no event not later than 180 days after the end of each fiscal year containing a calculation of the Obligated Group s Historical Debt Service Coverage Ratio for said fiscal year. On each testing date, the Obligated Group must maintain a Historical Debt Service Coverage Ratio of not less than 1.20:1. However, in the event that the Historical Debt Service Coverage Ratio on any covenant testing date is less than 1.20:1, but greater than 1.0:1, then it shall not be an Event of Default under the Master Indenture, the Bond Indenture or the Lease, provided that the Obligated Group shall, at its own expense, retain a Consultant to make recommendations with respect to the rates, fees and charges of the Obligated Group and the Obligated Group s methods of operation and other facts affecting its financial condition in order to increase the Projected Debt Service Coverage Ratio to at least 1.20:1. A copy of the Consultant s report and recommendations, if any, shall be filed with the Master Trustee and the Trustee under the Bond Indenture. Each Member agrees that it shall promptly and fully follow each recommendation of the Consultant applicable to it to the extent permitted by law including, without limitation, any recommendation by the Consultant that a manager be retained by the Obligated Group to manage the Facilities. See APPENDIX B FORM OF THE MASTER TRUST INDENTURE and APPENDIX C FORM OF THE SUPPLEMENTAL INDENTURE. DAYS CASH ON HAND Pursuant to the Supplemental Master Indenture and beginning on June 30, 2015, the Obligated Group shall maintain Days Cash on Hand (defined herein), calculated as of the last day of each quarter, as follows: (i) tested on and after June 30, 2015, a minimum of 20 days; (ii) tested on and after June 30, 2016, a minimum of 45 days; (iii) tested on and after June 30, 2017, a minimum of 60 days; (iv) tested on and after June 30, 2018, a minimum of 75 days; (v) tested on and after June 30, 2019, a minimum of 90 days; (vi) tested on and after June 30, 2020, a minimum of 105 days; and (vi) tested on and after June 30, 2021, a minimum of 120 days. Days Cash on Hand means, as of any applicable determination date, the product obtained by multiplying (A) a fraction, the numerator of which is the Cash Amount and the amounts on deposit in the Operating Reserve Fund created under the Bond Indenture relating to the Bonds approved by Supplemental Master Trust Indenture , on such date and the denominator of which is the operating expenses of the College (excluding (a) depreciation and amortization, (b) extraordinary expenses, and (c) any other non-cash expenses) for the period beginning on the first day of the fiscal year in which such determination date occurs and ending on the determination date, by (B) the number of calendar days in such period. The Obligated Group Agent shall deliver a certificate to the Master Trustee 4

17 under the Master Indenture as soon as practicable, but in no event not later than 30 days after the last day of each fiscal quarter and in no event not later than 180 days after the last day of each fiscal year end containing a calculation of the Obligated Group s Days Cash on Hand as of the last day of such quarter. On each covenant testing date, the Obligated Group shall maintain Days Cash on Hand on such covenant testing date of at least the amount set forth above and in the Supplemental Master Indenture. However, in the event that the Days Cash on Hand is less than 60 days, but greater than 45 days, beginning with the June 15, 2017 covenant testing date and every covenant testing date thereafter, then it shall not be an Event of Default under the Master Indenture, the Bond Indenture or the Lease, provided that the Obligated Group shall, at its own expense, retain a Consultant, acceptable to the holders of a majority of the 2012 Series A Bonds outstanding, to make recommendations with respect to the rates, fees and charges of the Obligated Group and the Obligated Group s methods of operation and other facts affecting its financial condition in order to increase its Days Cash on Hand to the levels required in the Supplemental Master Indenture. A copy of the Consultant s report and recommendations, if any, shall be filed with the Master Trustee and the Trustee under the Bond Indenture. Each Member agrees that it shall promptly and fully follow each recommendation of the Consultant applicable to it to the extent permitted by law including, without limitation, any recommendation by the Consultant that a manager be retained by the Obligated Group to manage the Facilities. See APPENDIX C FORM OF THE SUPPLEMENTAL INDENTURE and APPENDIX E FORM OF THE LEASE. MARKET STUDY An On Campus Housing Market Study relating to the Project and dated May 3, 2012 ( Market Study ) was prepared by Alvarez & Marsal Real Estate Advisory Services, LLC ( Alvarez & Marsal ). The Market Study notes that in 2011, the College approved a Strategic Plan which featured enrollment growth as a top priority of the College. Alvarez & Marsal conducted a performed the Market Study related to the development of multiple on-campus housing facilities to accommodate new student growth at the College. During its analysis of the potential housing development at the College, Alvarez & Marsal (1) performed a competitive context analysis which evaluated student response to similar enrollment initiatives that have been instituted; (2) completed an overview of the current development plan to evaluate current student options and the new prospective student housing options to be completed in 2013; (3) conducted focus group interviews and surveys to gain qualitative information regarding student housing preferences, student perceptions of the current plans for new student housing facilities, and student willingness to pay the expected premiums for the new student housing facilities; and (4) devised a demand analysis to assess demand for on campus at the proposed price points. The Market Study is attached hereto as APPENDIX I - MARKET STUDY. THE MARKET STUDY HAS NOT BEEN REVISED, UPDATED, SUPPLEMENTED OR OTHERWISE MODIFIED BY ALVAREZ & MARSAL OR ANY OTHER INDEPENDENT THIRD PARTY CONSULTANT OR PROFESSIONAL SINCE THE DATE OF SUCH STUDY. ALVAREZ & MARSAL HAS AUTHORIZED USE OF THE MARKET STUDY IN THIS PRIVATE PLACEMENT MEMORANDUM. See BONDHOLDERS RISKS Market Study herein MANAGEMENT PREPARED FINANCIAL FORECAST INCLUDED AS APPENDIX K IS A FINANCIAL FORECAST PREPARED BY MANAGEMENT OF THE COLLEGE. THE MANAGEMENT PREPARED FINANCIAL FORECAST HAS NOT BEEN REVISED, UPDATED, SUPPLEMENTED OR OTHERWISE MODIFIED BY THE COLLEGE OR ANY OTHER INDEPENDENT THIRD PARTY CONSULTANT OR PROFESSIONAL SINCE THE DATE OF SUCH MANAGEMENT PREPARED FINANCIAL FORECAST. NO 5

18 INDEPENDENT THIRD PARTY CONSULTANT OR PROFESSIONAL HAS REVIEWED, CONFIRMED OR VERIFIED THE MANAGEMENT PREPARED FINANCIAL FORECAST SUPPLIED BY COLLEGE. The Management Prepared Financial Forecast is based upon assumptions which may or may not occur. As a forward-looking statement it is subject to uncertainty and risks that could cause actual results to differ, possibly materially, from those contemplated in such forward-looking statements. Inevitably, some assumptions used to develop forward-looking statements will not be realized or anticipated events and circumstances may not occur. Therefore, investors should be aware that there are likely to be differences between the forward-looking statements and actual results; those differences could be material. ACCORDINGLY, NO PERSON CAN MAKE REPRESENTATIONS OR WARRANTIES AS TO THE FUTURE RESULTS OF OPERATIONS OF THE COLLEGE. See BONDHOLDERS RISKS Management Prepared Financial Forecast herein. See also APPENDIX K MANAGEMENT PREPARED FINANCIAL FORECAST. PLAN OF FINANCING The proceeds of the Bonds will be used by the College to: (a) finance the costs of designing, acquiring, constructing, renovating and equipping certain capital improvements, (the Construction Projects ) to the campus of the College, including the construction of (i) a new multi-sport stadium, locker room facilities, stadium seating, concessions, President s box, media boxes, turf field, lights to accommodate night games and practices, site improvements and walkways, (ii) new student housing consisting of a 144-bed apartment style student housing building and a 240-bed suite-style student housing building, and (iii) the renovation and improvement of Benedum Hall, Priestley Hall and Kincaid Hall, and any other capital improvement project approved by the board of the College as permitted by the Act (as defined in the Bond Indenture), together with all other necessary appurtenances and related facilities, (b) fund a capitalized interest account for the Construction Projects, (c) currently refund the Bonds to be Refunded, (d) to fund a debt service reserve fund for the 2012 Series A Bonds, and (e) pay costs of issuance for the Bonds (hereinafter, collectively, the Project ). THE ISSUER The Philippi Municipal Building Commission (the Issuer ) is a public corporation and governmental instrumentality organized and existing under the laws of the State. The Issuer is authorized by Article 33, Section 1, et. seq., of Chapter 8 of the West Virginia Code of 1931, as amended, (the Act ), to issue revenue bonds for the purpose of, among other things, financing the acquisition, construction, equipping, maintenance and operation of public buildings, structures, projects and appurtenant facilities for a public purpose, the funds from said financing to be used for the acquisition, construction, renovation and equipping of such facilities which are financed by a loan made by the Issuer of the bond proceeds to a private entity or where such facilities are acquired by the Issuer with the proceeds of such bonds and leased to a private entity. By an ordinance enacted on July 26, 2012, Issuer agreed to issue its College Facilities Refunding and Improvement Revenue Bonds, 2012 Series (Alderson-Broaddus College, Inc.), in one or more series, in an aggregate principal amount not to exceed $40,000,000.00, on a tax-exempt and/or taxable basis to (i) finance the costs of the planning, design, acquisition, construction, renovation and equipping of the Construction Projects, (ii) refinance and repay the BNY Loan, (iii) currently refund the Bonds to be Refunded, (iv) finance capitalized interest on the Construction Projects, (v) fund a debt service reserve fund for the 2012 Series A Bonds and (vi) pay costs of issuance for the Bonds. 6

19 The current members of the Issuer are: Name/Title Expiration of Term Howard Swick, Chairman April, 2013 Larry Jett, Vice Chairman April, 2014 David Runion April, 2015 Christian Stull June, 2016 Presently, there is one vacancy on the Board of the Issuer. Karen Weaver is the duly elected and acting Secretary of the Issuer. The Issuer s address is 108 North Main Street, Philippi, West Virginia. The Issuer s members are not and will not be liable for any payments on the Bonds. THE BONDS AND THE INTEREST THEREON ARE SPECIAL, LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE TRUST ESTATE PLEDGED THEREFOR UNDER THE BOND INDENTURE. THE BONDS SHALL NOT CONSTITUTE A DEBT OR A PLEDGE OF THE FAITH AND CREDIT OR TAXING POWER OF THE ISSUER, THE CITY OF PHILIPPI OR THE STATE OF WEST VIRGINIA OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL PROVISION OR STATUTORY LIMITATION AND SHALL NEVER CONSTITUTE OR GIVE RISE TO PECUNIARY LIABILITY OF THE ISSUER, THE CITY OF PHILIPPI, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF. THE COLLEGE AND THE ALDERSON-BROADDUS ENDOWMENT CORPORATION The College Alderson-Broaddus College (the College or the Obligated Group Agent ) was created in 1932 through the merger of two institutions, each of which passed on a rich Christian heritage. The older of the two, Broaddus College, was founded in Winchester, Virginia in 1871 by Edward Jefferson Willis, a Baptist minister who named the new college after Rev. William Francis Ferguson Broaddus, a prominent Baptist minister at the time of the Civil War. In response to economic hard times, Broaddus College was moved across the Allegheny Mountain range to Clarksburg, West Virginia, in Broaddus College was moved again to the small town of Philippi, West Virginia in The other institution, Alderson Academy and Junior College, was founded in Alderson, West Virginia in 1901 by Emma Alderson, a committed Baptist laywoman. As the years passed, Broaddus College became a junior college, then a senior college, and Alderson Academy added junior college status. Financial hardship in the late 1920's led to the decision to merge the two colleges, both of which shared a common identity as Baptist and liberal arts institutions. The College derives its hyphenated name from the joining of these two institutions. Since its founding, the College has been committed to a strong liberal arts education. As such, the College seeks to imbue students with an appreciation of literature and the arts, Christian faith, music and the sciences. In more recent times the College has focused on developing programs in the natural and applied sciences as well. In 1945, the College developed the first four-year nursing and the first radiologic technology programs in West Virginia. In 1968, the College pioneered the nation's first four-year physician assistant program, an innovation that has had enormous influence on the development of the 7

20 physician assistant profession nationwide. From this program emerged in 1991 the College's first graduate degree offering, the Physician Assistant Master's program. Today, the College is a health-related and professional educational institution firmly rooted in the liberal arts. The College is affiliated with the American Baptist Churches, USA, and the West Virginia Baptist Convention, and the Council for Christian Colleges and Universities. More information regarding the College may be found at or by directing requests to the College. 1. Surrounding Area The College is located in Philippi, the county seat of Barbour County, West Virginia. Philippi is situated in a predominately rural area in north-central West Virginia, approximately 125 miles from Pittsburgh, Pennsylvania, and approximately 250 miles from both the Washington-Baltimore area and Columbus, Ohio. It is a town of significant history, with the site of the first land battle of the Civil War and the only covered bridge (1852) serving a federal highway. The County s 2010 population was 16,589, with 2,225 between the ages of 15 and 24 and a median age of The County s 2010 per capita income was $25,229. In addition to the College, major employers in the County include Broaddus Hospital, the Barbour County Board of Education and Wolf Run Mining Company. The County s unemployment rate for July 2012 was 6.9%, compared to a State unemployment rate of 7.4% and a national unemployment rate of 8.6% (not seasonally adjusted). Source: West Virginia Department of Commerce; Financial, Mineral Rights and Enrollment Matters of College and ABEC The College has experienced financial challenges over the past several years. The College s financial statements contains a going concern notation (See APPENDIX M CONSOLIDATED FINANCIAL STATEMENTS FOR COLLEGE AND ALDERSON-BROADDUS ENDOWMENT CORPORATION FOR YEARS ENDED JUNE 30, 2011 AND 2010; see also the historical information included in APPENDIX K MANAGEMENT PREPARED FINANCIAL FORECAST). This notation prompted the United States Department of Education in May, 2012, to require the College to secure a letter of credit of $796,000 in favor of the United States Department of Education in order to continue to participate in Title IV, HEA programs for its students. The College has fully complied with this requirement. As security for repayment of any draw under the letter of credit, the College has granted a deed of trust lien on the former hospital building located on its campus, which deed of trust lien on that facility will be prior to the lien granted by one or more of the College s Property Deeds of Trust. The College was obligated to substitute cash collateral for the deed of trust lien by September 1, The College failed to make such payment and, pursuant to the terms of the related documentation, is subject to a $2,000 penalty each month thereafter until the cash collateral is substituted. The College has communicated with the lender in connection with this matter and anticipates that such cash collateral shall be satisfied following the issuance of the Bonds. The College has been invoiced monthly penalty amounts of $2,000 beginning in September 2012 and has made payment thereon. The College s recurring losses and outstanding construction commitments have required the College to borrow from its restricted endowment funds and accounts to meet obligations. In addition, the College entered into a forbearance agreement with one of its lenders, Bank of New York Mellon ( BNY ). The College maintained a demand line of credit with BNY, dated December 2, 2009, which was primarily used to provide cash flow for capital projects and to bridge cash flow through the months immediately preceding student enrollment periods (the BNY Loan ). The BNY Loan was secured with the College s restricted endowment assets and was guaranteed by ABEC, which guaranty was secured by a lien on certain mineral rights owned by ABEC. In October 2011, BNY capped the BNY Loan at 8

21 $4,225,000 and began negotiating a forbearance agreement with the College to afford the College time to refinance or raise unrestricted cash assets to pay off the BNY Loan. The original forbearance agreement was completed in March 2012, extended until June 2012 and extended again by an amendment dated June 30, On November 26, 2012, the College, ABEC and BNY entered into a Partial Loan Repayment, Settlement Agreement and Release (the Settlement Agreement ), pursuant to which BNY agreed to accept 90% of the outstanding principal amount plus accrued interest and legal fees, subject to certain requirements set forth in the Settlement Agreement, including that the agreed-upon payment be made by December 27, NO REPRESENTATION AS TO ANY OF THE TERMS, CONDITIONS, COVENANTS AND AGREEMENTS MADE IN THE SETTLEMENT AGREEMENT IS MADE HEREIN. INTERESTED PARTIES AND PROSPECTIVE INVESTORS SHOULD CONTACT THE COLLEGE TO OBTAIN A COPY OF THE SETTLEMENT AGREEMENT. As authorized by a resolution of the board of trustees of the College adopted August 13, 2012, the College borrowed funds (the Endowment Loan ) from its endowment funds to make the payments required by the Settlement Agreement. The Endowment Loan is to be evidenced by an internal note made by the College to the endowment funds, bearing interest at a variable rate equal to the authorized spend rate from the endowment funds. The principal of the Endowment Loan shall be paid by applying 25% of the funds remaining at the end of each fiscal year after payment of operating expenses of the College and of the payments required under the documents relating to the Bonds to reduction of the principal amount of the Endowment Loan. The Endowment Loan allows prepayment without penalty, which the College could choose to do if it received appropriately designated contributions. The College has paid the amounts required by the Settlement Agreement as of the date hereof, resulting in the release of the liens in favor of BNY described above. With incurrence of the Endowment Loan, approximately $1,700,000 remains in the endowment funds. The Bonds to be Refunded were issued pursuant to an indenture and deed of trust dated June 30, 2010, between the Issuer and WesBanco Bank, Inc., as trustee. WesBanco Bank, Inc. ( WesBanco ), in its commercial capacity, was the purchaser and is the owner of the Bonds to be Refunded. By letter dated December 20, 2011, WesBanco waived two covenant defaults by the College, contingent upon the BNY forbearance agreement extension to June 30, 2012, described above, which covenant defaults are: (i) failure to obtain WesBanco s approval for the incurrence of new debt or the purchase of fixed assets in excess of $200,000 during a fiscal year, which was violated by the College s entering into capital leases for technology equipment and software, and (ii) failure to provide audited financial statements within 120 days after the end of the fiscal year. The Bonds to be Refunded are secured by, among other things, a deed of trust lien on certain buildings located on the campus of the College. The Bonds to be Refunded are subject to optional redemption at any time at the redemption price of par plus interest accrued to the redemption date. Upon redemption of the Bonds to be Refunded with a portion of the proceeds of the Bonds, the liens securing WesBanco will be released. With respect to mineral rights, the College and ABEC each owns or has an interest in certain mineral rights in West Virginia which interests will constitute a portion of the security in connection with the issuance of the Bonds. The College and ABEC, as applicable, each intends to use property descriptions of the College and ABEC, respectively, related to such interest and use them to grant deed of trust liens, without verification of title. The College and ABEC have been in the process of identifying and reviewing its various mineral rights but such project has not yet been completed. There are certain risks related to such interests. For further information, please see BONDHOLDERS RISKS - Real Property. As set forth in the chart below, the College has experienced declining enrollment in recent years. The decrease in enrollment can be attributed in part to problems with accreditation of the College s physician assistant program, which combined undergraduate and graduate education, resulting in a fiveyear degree. The College gave up accreditation of the program in 2009 and now provides only a 9

22 graduate-level physician assistant program, which is provisionally accredited. The changes in the physician assistant program led to a decrease in enrollment and resulting decrease in revenues. a. Select Enrollment History and Projections from Market Study The College s historical enrollment data for the past five (5) academic years, and enrollment projections for the next four (4) academic years, as included in the Market Study, are set forth in the chart below: Source: Market Study, Table I.2. See APPENDIX I MARKET STUDY. b. Select Management Prepared Enrollment and Financial Information The College has brought on new administrators over the past several years in an effort to guide the College to sounder enrollment and financial footing. The current College administration is working to increase enrollment and improve the College s finances through, in part, the expansion of athletic offerings and improvement of the College s athletic and housing facilities, which expansion and improvement will be financed through the issuance of the Bonds. The College adopted a new strategic plan of growth and direction with three priorities: (i) growing enrollment; (ii) growing a vibrant campus; and (iii) growing the academic experience. Since the date of the Market Study, the College commenced its 2012 fall semester. On or about October 1, 2012, the College conducted an analysis of its actual 2012 fall enrollment and has further developed revised enrollment projections for the 2013, 2014 and 2015 fall semesters. The College prepared a table which shows new student enrollment, undergraduate student enrollment and graduate student enrollment, as well as total enrollment figures, all of which information is set forth in the table below: 10

23 New Student Enrollment Fall 2012 Fall 2013 Fall 2014 Fall 2015 New Freshmen New Transfers Total New Students Undergraduate Student Enrollment Fall 2012 Fall 2013 Fall 2014 Fall 2015 Freshmen Sophomore Junior Senior Total Undergraduates Total Non-Degree Seeking Undergraduates Graduate Student Enrollment Fall 2012 Fall 2013 Fall 2014 Fall 2015 Graduates PA Students On-Campus PA Students Off-Campus Part-time Total Graduates Total Enrollment % Change in Enrollment from Previous Year 39.4% 22.6% 6.0% 9.7% Source: Alderson-Broaddus College Notwithstanding the foregoing tables and related discussion, success of the College s plans to expand enrollment and improve its financial condition cannot be assured. See Bondholder s Risks herein. NEITHER ALVAREZ & MARSAL NOR ANY OTHER INDEPENDENT THIRD PARTY CONSULTANT OR PROFESSIONAL HAS REVIEWED, CONFIRMED OR VERIFIED THE COLLEGE PREPARED 2012 FALL ENROLLMENT FIGURES OR THE COLLEGE S 2013, 2014 OR 2015 FALL ENROLLMENT PROJECTIONS IDENTIFIED IN THE CHART SET FORTH IMMEDIATELY ABOVE AND SUPPLIED BY COLLEGE. THE INFORMATION IN 11

24 THE TABLE IMMEDIATELY ABOVE HAS NOT BEEN MODIFIED OR UPDATED SINCE OCTOBER 1, The audited financial statements of the College for Fiscal Year ended 2011 and 2010 are set forth in APPENDIX M CONSOLIDATED FINANCIAL STATEMENTS FOR COLLEGE AND ALDERSON-BROADDUS ENDOWMENT CORPORATION FOR YEARS ENDED JUNE 30, 2011 AND The College s plan to increase enrollment and improve the financial status of the College is dependent in part upon increasing the athletic programs at the College. The College has been a member of the West Virginia Intercollegiate Athletic Conference ( WVIAC ). A number (originally nine of the 15 members) of the members of the WVIAC have indicated that they intend to withdraw from the WVIAC to form a new conference. The College, which was not included in the group withdrawing, after considering various options for dealing with the conference realignment, accepted an invitation to join the Great Midwest Athletic Conference (G-MAC) effective beginning September, The G-MAC is a new NCAA Division II conference of like-minded, predominantly private institutions currently including members in four states (West Virginia, Tennessee, Kentucky, and Ohio) with solid plans for growth under very committed leadership. Existing conference members include an 8 time NCAA Division II national champion in men s basketball and a 3 time NAIA national champion in football. The College is actively pursuing affiliate membership for football in other conferences while the G-MAC continues its plan to add football as one of its sponsored athletic programs. The geographic diversity presented by the G-MAC and any football affiliation offers the opportunity for the College to significantly broaden its market. The enrollment projection included in the chart set forth above reflects the initial growth plan as presented by the College and approved by the Board of Trustees of the College. The College has outperformed its year one projections resulting in revisions to the upcoming enrollment projections, as reflected in the Management Prepared Financial Forecast, attached hereto as APPENDIX K. Accordingly, the revised enrollment projections as outlined in said Management Prepared Financial Forecast result in enrollment growth plan leveling after year two. NEITHER ALVAREZ & MARSAL NOR ANY OTHER INDEPENDENT THIRD PARTY ACCOUNTANT, CONSULTANT OR PROFESSIONAL HAS REVIEWED, CONFIRMED OR VERIFIED THE COLLEGE S MANAGEMENT PREPARED FINANCIAL FORECAST, WHICH HAS BEEN SUPPLIED BY COLLEGE. THE INFORMATION IN THE MANAGEMENT PREPARED FINANCIAL FORECAST HAS NOT BEEN MODIFIED OR UPDATED SINCE OCTOBER 16, c. Management Prepared Admission Application Information The College has also evaluated its past application, campus visit, admission and deposit information for applying students for whom enrollment would constitute their respective first time in any college or FTIAC. This information was evaluated as of the week beginning September 24, 2012 and is set forth in the following table: 12

25 Year to Date Year to Date Year to Date Year to Date FTIAC 2012/ / / /2010 Applications Received Total On Campus Visits Total Admits Total Denials Total Deposits Total Lost Deposits Total Active Deposits NEITHER ALVAREZ & MARSAL NOR ANY OTHER INDEPENDENT THIRD PARTY ACCOUNTANT, CONSULTANT OR PROFESSIONAL HAS REVIEWED, CONFIRMED OR VERIFIED THE COLLEGE S APPLICATION AND ADMISSION INFORMATION, WHICH HAS BEEN SUPPLIED BY COLLEGE. THE INFORMATION IN THE TABLE IMMEDIATELY ABOVE HAS NOT BEEN MODIFIED OR UPDATED SINCE SEPTEMBER 27, d. College Prepared Strategic Plan Summary The College also has prepared a Strategic Plan Summary attached hereto as APPENDIX N. 3. Board of Trustees of College The College is governed by a Board of Trustees. The current members of the College s Board of Trustees are: Name/Executive Committee Title Expiration of Term Name/Executive Committee Title Expiration of Term Mr. Matthew G. Ballard 2013 Mr. Richard Beardsley 2012 Mr. Ronald L. Burbick, Chairman Rev. Dr. David L. Carrico, Liaison Representative Mr. Philip E. Cline, Past Chairman 2013 Mr. Arthur Campbell 2014 N/A Mr. Bill S. Childers Mr. Vincent Collins 2014 Mr. John P. Cox 2013 Ms. Jean Cunningham, Board Orientation Committee

26 Name/Executive Committee Title Expiration of Term Name/Executive Committee Title Expiration of Term Ms. Sarah N. Denman 2013 Mrs. Jane Harkins 2014 Mr. Thomas Heckman 2013 Mrs. Rebecca Hooman, Vice-Chair 2014 Mr. Michael H. Hudnall, Chair, Audit Committee 2013 Rev. Dr. James B. Johnson 2013 Dr. Nancy Johnson 2012 Mr. James C. Justice II, Executive Committee Member 2014 Mr. Thomas C. Litwiler, Chair, Advancement Committee 2013 Rev. Richard D. McClure 2013 Mr. Joe E. Miller 2012 Mr. James J. Morris, Chair, Properties & Grounds Committee 2014 Mr. Scott L. Northcott, Chair, Enrollment Committee 2014 Mr. Mike O Dell 2014 Mrs. Annette Oeser, Liaison Representative N/A Mr. John Plante, Chair, Business & Finance Committee 2012 Hon. Mary M. Poling, Chair, Office of Student Affairs 2014 Mr. Jeffrey A. Powelson, Treasurer 2012 Mrs. Dorothy Santrock 2014 Mr. Harry G. Shaffer III, Chair, Investment Committee Secretary 2013 Rev. Dr. Archie R. Snedegar 2013 Rev. Dr. Lawrence O. Swain 2012 Mr. Gary White 2014 Ms. Pamela L. Wilt 2012 Mrs. Valerie Woodruff, Chair, Educational Programming 2013 Mr. Kenneth Dean Wright 2012 Mr. Richard A. Creehan, President N/A 14

27 4. Officers of College Following are the officers of the College: Richard Creehan, President. Rick Creehan is the 9 th President of the College, taking office on June 1, He earned a Bachelor of Science degree in Education from California University of Pennsylvania in 1976 and a master s degree in Educational Administration from The University of Dayton in Upon graduating from California University of Pennsylvania, President Creehan taught in the public schools in eastern Ohio for seven years. He then moved on to Allegheny College in Pennsylvania in 1984, where he coached baseball for 13 years and served as the Director of Athletics for 12 years. In the spring of 2002, Rick took the Director of Athletics position at Washington & Jefferson College in Washington, Pa., where he also served on the president s senior cabinet. While at Washington & Jefferson, President Creehan developed and refined an enrollment model he titled Admissions Yield. Based on his experience with this model, President Creehan was hired by several colleges and universities in a consulting capacity to help formulate enrollment planning on their respective campuses. President Creehan is the Principal of Rick Creehan Consulting, LLC. In 2005, President Creehan assumed the Executive Vice President role at Adrian College. His immediate goal at Adrian College was to continue to contribute to the strategic plan at Adrian College by growing enrollment. The overall enrollment he inherited fell to 840 students in the spring of His plan proved to be successful as; just four years later, Adrian College s enrollment had nearly doubled and in the first time in the school s history had surpassed the 1600 barrier. While at Adrian College, President Creehan conducted significant fundraising for athletic facilities, various programs, upgrades, and renovations and aided in the establishment of The George Romney Institute of Law and Public Policy. Dr. Joan Propst, Executive Vice President and Provost. Dr. Joan Propst is the Provost and Executive Vice President for Academic Affairs at Alderson-Broaddus College, serving the College in this capacity since Dr. Propst is an alumnus of Alderson-Broaddus College, having earned a Bachelor of Science degree with a major in nursing in She began her teaching career in higher education in 1982 as an instructor at the College. Continuing her education, she earned the Master s of Science degree in nursing from West Virginia University in Dr. Propst left the College in 1988 to work at West Virginia University Hospitals (WVUH) as the Director of Nursing Staff Development. During her tenure at WVUH, she earned the Doctor of Education with an emphasis in higher education administration from West Virginia University in Returning to the College in 1994 as an Associate Professor in Nursing, she returned to the classroom to teaching nursing. Her teaching expertise is in the areas of adult health, medical-surgical care modalities and hospice/end-of-life care. Dr. Propst completed the Parish Nurse program, sponsored by West Virginia University School of Nursing in In 2000, she was appointed as the Director of the RN-BSN Degree Completion Program and in 2006, she became the Director of the International Nursing Partnership; a new educational venture partnering with a foreign school of nursing (Arellano University) in Manila, Philippines. Working closely with colleagues in Manila, the Alderson-Broaddus College Department of Nursing curriculum was implemented at Arellano University for students who would receive an Americanized nursing education and become eligible to transfer to the United States to complete their baccalaureate degree in nursing from the College. As the Provost at the College, she provides leadership to all academic divisions, departments and services. Bruce Blankenship, Vice President for Administration and Finance. Bruce Blankenship assumed the position of VP for Administration and Finance in October, 2011 following 16 years in executive leadership at the College, including chief institutional advancement officer and vice 15

28 president for institutional assessment, planning, research and technology. Under his leadership, the College developed a planned giving program, implemented a new institution-wide administrative software system through the development of a consortium of colleges and universities, instituted an institutional research program, developed the foundation for a student learning assessment program, and revised all of its mission documents. In his planning responsibilities, he worked closely with the business and finance office to develop a comprehensive financial planning model used to project financial results of strategic decisions and perform what-if analysis. The model considers factors such as new student enrollment, retention rates, tuition increases, on-campus residency rates, financial aid discount rates, studentto-faculty ratios, salary changes, and key capital and other investments. Blankenship is a graduate of West Virginia University with a B.A. degree in Biology. He earned his Master of Divinity degree from Midwestern Baptist Theological Seminary. In his current role, he oversees the business and finance operations, facilities management and development, food services, campus services (bookstore, post office, and copy center), and technology. Tanya Shelton, Vice President for Enrollment. Tanya Shelton became VPEM in June, 2011, after 18 years in fund-raising, serving as vice president for institutional advancement at both Alderson- Broaddus College and at West Virginia Wesleyan College, where her range of responsibilities included annual fund, alumni relations, marketing and communications, church relations, foundation relations, and planned giving. She currently oversees admissions, financial aid, athletics, marketing and communications, and student affairs. At the College, she successfully led the Renewing the Promise Campaign past its $15M goal, and it ultimately concluded with $26M raised. Shelton is a graduate of Davis & Elkins College with a B.A. degree in English Composition. Her master s degree is in higher education administration. She is currently a candidate for the doctorate in educational leadership studies at WVU, and is expected to finish in December, She was recently nominated and chosen for participation in the Council for Independent Colleges Executive Leadership Academy, intended to prepare cabinet-level administrators for future academic presidencies. J. Nicole Luna, Vice President for Advancement. J. Nicole Luna, from Parkersburg, West Virginia, is the current vice president for institutional advancement at Alderson-Broaddus College. She graduated with honors from Alderson-Broaddus (A-B) College in May 2005, receiving a Bachelor of Arts degree in communications and applied music. In May 2012, she will receive her Master of Science degree in integrated marketing communications from West Virginia University. From , Nikky worked as an admissions counselor at A-B College. Immediately following, she spent one year in Hattiesburg, Mississippi, completing graduate coursework at the University of Southern Mississippi (USM). During her time in Hattiesburg, she served as the director of music ministries at Richton United Methodist Church in Richton, MS, while also fulfilling her duties and coursework requirements as a graduate assistant in the choral activities department at USM. She returned to West Virginia in the summer of 2008 to assume the role as director of annual giving at West Virginia Wesleyan College in Buckhannon. In 2009, Nikky eagerly returned to her Alma Mater as director of alumni relations. Since that time, she has fulfilled various roles within the advancement office, including major gifts officer and director of foundation and government relations. In June 2011, she assumed the role of vice president for institutional advancement. Sarah Ward, Dean of Students. Sarah Ward serves as the Dean of Student Affairs at Alderson- Broaddus College in Philippi, WV. She has held this position since August 2011, focusing on student engagement, campus housing and culture, advisement and coordination of student organizations, the head of judicial affairs, as well as close work with religious life and campus safety. Prior to her employment at the College, Dean Ward worked as a domestic and 16

29 international recruiter for Adrian College in Adrian, MI from She is a 2009 graduate of Central Michigan University with a B.A.A. in Communication and minors in Music and Leadership. She will complete her M.A. in Higher, Adult, and Lifelong Education from Michigan State University in May Dennis Creehan, Director of Athletics. Dennis Creehan is the current Athletic Director and Head Football Coach at the College and is in his first year in his current job working on many major projects including the starting of 11 new sports teams as well as designing and constructing a new multi-purpose stadium. Mr. Creehan, a 40-year veteran of the football coaching profession, has coaching experience at both the collegiate and professional (Canada) levels. Mr. Creehan came to the College from West Virginia Wesleyan College where in only two years he turned a 1-10 program to a 9-2 and nationally ranked football team. His 2010 Wesleyan success earned him his fifth Coach of the Year award in three different NCAA conferences. Mr. Creehan holds a degree from Edinboro University in Math Education as well as two Masters Degrees from Duquesne University in Guidance and Counseling and from the University of Pittsburgh in HPER. He has been elected as a member of the Halls of Fame at both his high school, Bethel Park High School in Pennsylvania, and his college, Edinboro University of Pennsylvania. He has authored five books, produced twenty-two instructional videos and is rated as one of the top clinic speakers in the country by the Frank Glazier clinic organization. Mr. Creehan is the brother of the College s president. 5. Authorizing Resolutions of College By a resolution dated April 20, 2012, the board of directors of the College agreed, among other things, to grant and delegate to the executive committee of the board of directors all power and authority to determine and approve (i) the form and parameters of the Bonds, up to a maximum aggregate principal amount of $40,000,000, and (ii) the form and content of all documents, agreements, certificates and instruments to be prepared, delivered and executed in connection with the issuance and sale of the Bonds, upon such terms and conditions as the executive committee shall deem to be fair and reasonable to the College. The executive committee of the board of directors of the College also passed a resolution dated August 13, 2012 (the August 13 Resolution ), as supplemented by a supplemental resolution adopted by the executive committee on or about November 14, 2012 (the November 14 Supplemental Resolution ), which, among other things, approved the planning, design, acquisition, construction, renovation and equipping of the Construction Projects, the current refunding of the Bonds to be Refunded, the payment of capitalized interest on the Construction Projects, the funding of a debt service reserve fund in connection with the Bonds, and the payment of costs of issuance and the use of proceeds of the Bonds by the College for such purposes, approves the issuance of the Bonds by the Issuer, the final terms of which will be will be established by a certificate of determinations executed by an authorized officer, which may include, without limitation, provisions (i) fixing the aggregate principal amount of Bonds to be issued, not to exceed $40,000,000, (ii) determining whether the Bond shall be issued in one or more series and assigning a designation to each such series, (iii) determining whether the Bonds shall be issued as conventional tax-exempt bonds or taxable bonds, or a combination of both, (iv) determining the lien priority of each series of Bonds, (v) fixing the maturity schedule for the Bonds including the amounts of serial bonds and term bonds, such maturities not to be longer than thirty-two (32) years from the date of issuance of the Bonds, (vi) prescribing the interest rates or yields for the Bonds, such rates or yields not to exceed twelve percent (12%) per annum, (vii) fixing the amounts and times for mandatory redemption for the Bonds including, without limitation, mandatory redemption caused by a determination of taxability of any series of tax-exempt bonds, (viii) fixing optional redemption provisions for the Bonds, including times and redemption prices (not to exceed 102% of the principal amount), and extraordinary optional redemption provisions relating to any series of bonds, and (ix) fixing the purchase price for each series of Bonds, which may include an underwriting and an original issue discount or premium. The August 13 17

30 Resolution, as supplemented by the November 14 Supplemental Resolution, also approved the forms of various documents related to the issuance of the Bonds, including, but not limited to, the form of the Bonds, the Bond Indenture, the Lease Agreements, the Master Trust Indenture and the Supplemental Master Indenture, and approved the execution and delivery by an authorized officer of the documents, instruments and agreements necessary or desirable to effect the transactions contemplated therein. NO REPRESENTATION AS TO ANY OF THE TERMS, CONDITIONS, COVENANTS AND AGREEMENTS MADE IN ANY OF THE RESOLUTIONS OF THE COLLEGE REFERENCED HEREIN. INTERESTED PARTIES AND PROSPECTIVE INVESTORS SHOULD CONTACT THE COLLEGE TO OBTAIN A COPY OF ANY OF THE RESOLUTIONS OF THE COLLEGE. Alderson-Broaddus Endowment Corporation Alderson-Broaddus Endowment Corporation ( ABEC, and together with the College, the Obligated Group ) is a non-profit corporation organized under the laws of the State of West Virginia. ABEC was organized in 1979 as a charitable educational corporation. ABEC is organized and operates exclusively for the benefit of the College and is authorized to accept, hold, administer, invest, and disburse such funds and properties of any kind or character as may from time to time be given to it by any persons or corporations, absolutely or in trust. While ABEC can hold any assets to benefit College, it currently primarily serves to hold and execute split interest agreements, such as charitable trusts and charitable gift annuities, on behalf of donors and College as well as certain real estate interests unrelated to the College campus. ABEC currently holds assets amounting to approximately $1,211,690 in total market value, including, but not limited to, investments, real estate interests and cash deposits. As provided in the by-laws of ABEC, the membership of ABEC shall consist of the elected members of the board of trustees of the College. See THE COLLEGE AND THE ALDERSON- BROADDUS ENDOWMENT CORPORATION The College for biographical information for the members of the board of trustees of the College. 1. Board of Directors of ABEC The members of the board of directors of ABEC, who, according to the ABEC bylaws, each serve terms of one year, are: Name/Title Expiration of Term Name/Title Expiration of Term Mr. Ronald L. Burbick, Chairman Richard Creehan, Vice Chairman 2013 Becky Hooman John Plant 2013 Vince Collins 2013 Jeff Powelson 2013 Worth Helms, Treasurer 2013 Harry Shaffer, Secretary 2013 Nikky Luna, Assistant Treasurer 2013 Rev. Bruce Blankenship, Assistant Secretary

31 2. Officers of ABEC Following are the Officers of ABEC: Mr. Ronald Burbick, President. Mr. Burbick is a 1967 graduate of the College and received an honorary doctorate from the College in He is currently retired. He is a member of the board of trustees of the College, having joined the board in 2005, and currently holds the position of Chairman. Mr. Burbick assumed the role of president of ABEC in January, Richard Creehan, Vice President. See THE COLLEGE AND THE ALDERSON-BROADDUS ENDOWMENT CORPORATION The College for full biography of Mr. Creehan. Worth Helms, Treasurer. Mr. Helms is a retired financial and sales consultant. He has degrees from the University of North Carolina, Duquesne University and American College. He has served the College continuously since 1984 as either a member of the board of trustees or the board of governors and assumed the title of Treasurer of ABEC in October, Bruce Blankenship, Assistant Treasurer. See THE COLLEGE AND THE ALDERSON- BROADDUS ENDOWMENT CORPORATION The College for full biography of Rev. Blankenship. 3. Authorizing Resolution of ABEC By a resolution dated July 21, 2012 ( ABEC Resolution ), the board of directors of ABEC agreed, among other things, that it is in the best interest of ABEC for ABEC to become part of the Obligated Group and become subject to compliance with all provisions of the Master Trust Indenture including, but not limited to, performance of all covenants thereunder and to become unconditionally and irrevocably jointly and severally liable with the members of the Obligated Group to make payments upon each obligation under the Master Trust Indenture, in accordance therewith. In connection with the financing of the Project, the ABEC Resolution also provides, among other things, that the Corporation may grant a security interest in its personal property including, without limitation, its Unrestricted Funds (as described below), and to convey, grant, transfer or assign a lien on its real property or any interest therein and any royalties, revenues or rentals derived therefrom, to secure the obligations and the performance of the Obligated Group under the Master Trust Indenture, all in accordance with relevant documentation. The ABEC Resolution describes Unrestricted Funds as ABEC s personal property including, without limitation, its donations, endowment funds and investment income which are not subject to any restriction and may be used for any purpose that furthers ABEC s objectives. NO REPRESENTATION AS TO ANY OF THE TERMS, CONDITIONS, COVENANTS AND AGREEMENTS MADE IN THE ABEC RESOLUTION IS MADE HEREIN. INTERESTED PARTIES AND PROSPECTIVE INVESTORS SHOULD CONTACT ABEC TO OBTAIN A COPY OF THE ABEC RESOLUTION. The Obligated Group The Obligated Group consists of the College, ABEC and any Person listed in Exhibit B to the Master Indenture after designation as a Member pursuant to the terms of the Master Indenture and any other Person which has fulfilled the requirements for entry into the Obligated Group as set forth in the Master Indenture and which has not ceased such status pursuant to the Master Trust Indenture. Among other things, Members of the Obligated Group are required to comply with all provisions of the Master Indenture, to agree to unconditionally and irrevocably, subject to certain Member cessation rights, jointly 19

32 and severally make payments upon each Obligation at the times and in the amounts provided in each such Obligation and to make representations and warranties as provided in the Master Trust Indenture. All of the Members of the Obligated Group are, among other things: (i) West Virginia nonprofit corporations and (ii) exempt from federal income tax under Section 501(a) of the Code as organizations described in Section 501(c)(3) of the Code. The Members of the Obligated Group will designate the College to act as the Obligated Group Agent on behalf of the Obligated Group. The Members of the Obligated Group will enter into the Master Indenture in order to be able to issue Obligations of several series in order to secure the financing of the acquisition, construction or improvement of educational facilities of the Obligated Group and for other lawful purposes. Pursuant to the Master Trust Indenture, Obligations may be issued by the Obligated Group Agent which are equally and ratably secured by the liens granted pursuant to the Master Trust Indenture and the Deeds of Trust. Each Member of the Obligated Group covenants that it will not take any action, corporate or otherwise, which would cause it or any successor thereto into which it is merged or consolidated to cease to be a Member under the terms of the Master Trust Indenture, unless: (a) the Member proposing to withdraw from the Obligated Group is not a party to any Outstanding Obligation; (b) prior to cessation of such status, there is delivered to the Master Trustee an opinion of nationally recognized municipal bond counsel (which opinion, including, without limitation, the scope, form, substance and other aspects thereof, are acceptable to the Master Trustee) to the effect that, under then existing law, the cessation by the Member of its status as a Member will not adversely affect the validity of any Related Bond or any exemption from federal income taxation of interest payable thereon to which such Bond would otherwise be entitled; (c) when it is assumed that such cessation results in a transfer of Property owned by the Member proposing to cease such status to a Person who is not a Member, the conditions precedent to such a transfer to an unrelated entity set forth in the Master Trust Indenture have been complied with; (d) prior to and immediately after such cessation, no event of default exists under the Master Trust Indenture and no event shall have occurred which with the passage of time or the giving of notice, or both, would become such an event of default; (e) prior to such cessation there is delivered to the Master Trustee an opinion of Independent Counsel (which Counsel and opinion, including, without limitation, the scope, form, substance and other aspects thereof, are acceptable to the Master Trustee) to the effect that the cessation by such Member of its status as a Member will not adversely affect the status as a Tax Exempt Organization of any Member which otherwise has such status; and (f) prior to cessation of such status, each Member consents in writing to the withdrawal by such Member. Upon such cessation in accordance with the Master Trust Indenture and as described above, Exhibit B to the Master Trust Indenture shall be amended to delete therefrom the name of such Person. Notwithstanding the foregoing, the Obligated Group Agent shall not be permitted to cease to be a Member without the consent of a majority of the Holders of the Obligations Outstanding at such time. For additional information regarding the Obligated Group, please see APPENDIX B - FORM OF THE MASTER TRUST INDENTURE. 20

33 The Construction Project Stadium Component THE CONSTRUCTION PROJECTS/THE FACILITIES The College will use the Bond proceeds to finance a variety of construction projects which align with the introduction of five athletic teams to its current roster. The addition of new athletic teams and programs has created demand for additional facilities. Football, men s and women s lacrosse, men s and women s soccer, a marching band, color guard and cheerleading squad will all call the new Multi-Purpose Stadium ( Stadium ) home. The Stadium will feature state-of-the-art artificial turf, double-deck stands, concessions, restrooms, party suites, a pavilion, press boxes, coaches boxes, filming platforms and a 10,000 sq.ft. locker/therapy building. The field has also been designed with a foundation & mechanical/electrical infrastructure in-place to accommodate a future pneumatic dome (to accommodate winter use). Collectively, the foregoing description is the Stadium Component of the Construction Project. See THE CONTRACTORS Stadium Construction and Stadium Contractor for further information regarding the Construction Project, the Stadium Component of the Construction Project and descriptions of the Stadium Construction Contract. Student Housing Component Accompanying the anticipated expansion in athletics offerings, the College also anticipates a growth in enrollment, which will necessitate the addition of new student housing. Approximately one hundred and forty-four new beds of apartment-style housing, in roughly 46,080 square feet; and approximately two hundred forty beds of suite-style housing, in roughly 49,200 square feet, are being added to the current inventory of student housing on campus. The apartment-style housing will feature four private bedrooms surrounding a common area living room, two bathrooms and kitchenette in each unit. The suite-style housing will provide two shared bedrooms and a bathroom per unit. Community laundry facilities, lounge space and quiet study areas will be available on each floor. In addition to the new housing, existing campus residence halls will receive renovations and upgrades. Benedum Hall will receive new air conditioning, interior ceilings, lighting fixtures, electrical upgrades, interior wall repair/paint, and new furniture. Priestley Hall will receive a new stair/catwalk, interior wall and ceiling repair/paint, and new furniture. Kincaid Hall will receive new exterior doors and hardware, interior wall and ceiling repairs/paint, and new furniture. Collectively, the descriptions contained in the preceding two paragraphs is the Student Housing Component of the Construction Project. See THE CONTRACTORS Housing Construction and Housing Contractor for further information regarding the Construction Project, the Student Housing Component of the Construction Project and descriptions of the Housing Construction Contract. The College s historical enrollment data and enrollment projections for the next four academic years are set forth above under the heading THE COLLEGE AND THE ALDERSON-BROADDUS ENDOWMENT CORPORATION. The College does not pay property taxes on the property used for its tax exempt purposes. The Initial Lease In connection with the issuance of Bonds, the College, as the lessor, and the Issuer, as the lessee, will enter into an initial lease dated as of November 1, 2012 (the Initial Lease ). The term of the Initial Lease begins on the date of delivery of executed counterparts of the Initial Lease by the parties thereto 21

34 and will continue until the maturity of the Bonds or until such later date as the entire principal of and interest on the Bonds have been paid in full. If the Bonds are earlier paid, by prepayment or redemption prior to maturity, the Initial Lease shall terminate as of the date of such payment. Rent payable under the Initial Lease is the consideration provided by the Issuer s issuance of the Bonds and the mutual agreements and covenants of the parties to the Initial Lease. Under the Initial Lease, the College indemnifies the Issuer from any claims arising from or caused by the negligence or omission of the College, its agents, servants and employees. College must provide and maintain adequate insurance on the premises against loss or damage occurring on said premises. Furthermore, the Property (as defined in the Initial Lease) may not be sold, transferred or disposed during the lease term, except certain property may be subject to sale, transfer or disposition as provided in the Master Indenture. The Initial Lease is junior and subordinate to the Deeds of Trust (as defined in the Bond Indenture). For additional information regarding the Initial Lease, see SECURITY FOR AND SOURCES OF PAYMENT OF THE BONDS Initial Lease and APPENDIX D FORM OF THE INITIAL LEASE. The Lease In connection with the issuance of the Bonds, the Issuer, as lessor, and the College, as lessee, will enter into a lease dated as of November 1, 2012 (the Lease ). The term of the Lease begins on the date of the Lease and shall extend unless sooner terminated in accordance with the provisions of the Lease, until October 1, 2044, which is the term of the Bonds or until such later date as the entire principal of and interest on the Bonds have been paid in full. If the Bonds are earlier paid, by prepayment or redemption prior to maturity, the Lease shall terminate as of said date of payment. Under the Lease, College shall pay on a monthly basis, commencing on April 1, 2014, amounts necessary to pay principal of and interest on the Bonds, all as set forth in Exhibit B Debt Service Schedule attached to and incorporated into the Lease. Rentals payable under the Lease (the Lease Payments ) will be applied by the Issuer to pay principal of and interest on the Bonds as such become due and payable. The proceeds of the Bonds shall in turn be applied to finance costs of the Project. The Lease also provides that, after initial funding with proceeds of the Bonds, the Debt Service Reserve Fund created under the Indenture will be maintained and restored by the College in such manner as discussed in the Lease and the Indenture. As long as 2012 Series A Bonds are outstanding, the College must fund and maintain the Debt Service Reserve Fund as provided in the Indenture. The Debt Service Reserve Fund secures only the 2012 Series A Bonds. Under the Lease, the College will pay all taxes, assessments, utility fees and charges. College is also responsible to, among other things, maintain the Facilities (as defined in the Lease) and other related items in good and tenantable condition equal to the condition of the premises as of the date of the Lease or the first date of occupancy, as applicable, of any part of the Facilities, normal wear and tear excepted. The College covenants in the Lease to, among other things, comply with and carry out the continuing disclosure obligation set forth in the Rule (as defined hereinbelow), maintain all insurance coverages as required under the terms of the Master Indenture with Master Trustee names as additional insured, maintain College s tax exempt status under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, and take all actions necessary to maintain the tax exempt status of the Tax Exempt Bonds, except for Permitted Encumbrances (as defined in and allowed under the Master Indenture) and as allowed by Sections 413 and 417 of the Master Trust Indenture, not sell, transfer, lease, pledge, mortgage, encumber, convey or assign any of the Lessee s assets, other than in the ordinary course of business, without Trustee s prior written consent, comply with all arbitrage/rebate requirements set forth in Article V of the Indenture and the Tax Compliance Certificate, complete construction of the Construction Project 22

35 so that College and its students can occupy the same and promptly pay all administrative fees and expenses associated with the issuance of the Bonds and the creation and maintenance of all funds and accounts created under the Bond Indenture. For additional information regarding the Lease, see SECURITY FOR AND SOURCES OF PAYMENT OF THE BONDS Lease and APPENDIX E FORM OF THE LEASE. Phase I Environmental Assessment The College retained Boggs Environmental Consultants, Inc. ( BEC ) to conduct an environmental Phase I Site Assessment ( Environmental Study ) of the College s site (approximately 120 acres) (the Subject Site ). BEC conducted such study and prepared a report dated March 29, Based on the conclusions of BEC, readily accessible and visible recognized environmental concerns exist at the Subject Site as follows: (1) three underground storage tanks ( USTs ) are known to be present at the Subject Site and, absent documentation indicating the status of such tanks, BEC concludes that the potential for a petroleum product historical, ongoing and/or future release exists; (2) based on historical information, two USTs were removed from the site in 1989; (3) illegal surface dumping and burning of refuse was observed at the Physical Plant Building; and (4) the College does not possess an effective Hazardous Waste Management Program (specifically, hazardous waste storage, handling and disposal within Kemper Red Hall are not in compliance with Federal, State and Local requirements for managing hazardous and other regulated wastes. BEC provided corrective actions for the College to undertake to maintain and/or return to compliance with Federal, State and Local requirements. Specifically, BEC recommends securing documentation indicating the status of the existing three USTs and the two removed underground storage tanks. If the documentation is unavailable BEC highly recommends confirming that all heating fuel has been removed from the USTs. Should any of the USTs contain heating fuel oil College should recover and dispose of any and all waste, oil or sludge present in the tank in accordance with US EPA and WV DEP guidelines. Thereafter each tank which documentation is not present the UST(s) should be evaluated to determine if a petroleum release has or has not occurred. BEC advises that this can be accomplished by performing integrity testing or soil sampling around the bottom perimeter of the USTs. BEC recommends, based upon interviews, record documents review, physical site inspection of facilities, a formal and written Hazardous Waste Management Program is not only needed but typically required at facilities which handle and dispose hazardous waste BEC recommends disposing all existing hazardous waste immediately in accordance with US EPA and State of West Virginia hazardous waste regulations BEC recommends, based upon site reconnaissance the following actions should be taken to address the surface dumping at the Physical Plant Building: Collection, packaging, and shipment of scrap steel, drums, tires, waste automotive oils, coolants, lubricants, fluids and compressed refrigerant gas cylinders to an approved recycling/reclamation facility. Study. A comprehensive list of conclusions and recommendations is included in the full Environmental THE ENVIRONMENTAL STUDY HAS NOT BEEN REVISED, UPDATED, SUPPLEMENTED OR OTHERWISE MODIFIED BY BEC OR ANY OTHER INDEPENDENT THIRD PARTY CONSULTANT OR PROFESSIONAL SINCE THE DATE OF SUCH 23

36 ENVIRONMENTAL STUDY. BEC HAS AUTHORIZED USE OF THE ENVIRONMENTAL STUDY IN THIS PRIVATE PLACEMENT MEMORANDUM. See APPENDIX J PHASE I ENVIRONMENTAL SITE ASSESSMENT (W/O APPENDICES). See also BONDHOLDERS RISKS Environmental Study. Stadium Construction and Stadium Contractor Stadium Contractor THE CONTRACTORS The contractor for the portion of the Project related to construction of the stadium will be High Point Construction Group, LLC, Buckhannon, West Virginia (the Stadium Contractor ). The Stadium Contractor is a West Virginia limited liability company and was formed on January 16, The Stadium Contractor has two members: Timothy B. Shaw and Timothy B. Critchfield. The Stadium Contractor constructed 140,000 square feet of space during 2011 and reported revenues totaling $18.5 million. Its scope of services ranges from pre-construction through construction to post-construction. Listed below are examples of the projects recently completed by the Stadium Contractor: Category Project Location Educational Pickens School Pickens, WV Wirt County Primary/Middle School (Addition) Wirt Co., WV Mooreville Elementary School Mooreville, WV (Additions/Renovations) Glenville State College Louis Bennett Hall Glenville, WV Glenville State College Science Hall (Addition) Glenville, WV Philippi Elementary School Philippi, WV Government Retail/ Manufacturing Hospital Buckhannon City Hall Wirt County Courthouse Buckhannon Auto Mall Corsi Manufacturing United Hospital Suite 310 Buckhannon, WV Elizabeth, WV Buckhannon, WV Elkins, WV Clarksburg, WV The key personnel of the Contractor for the Project are: Timothy B. Critchfield, Member. Mr. Critchfield is a member in High Point Construction with 26 years of experience in the construction industry. His career began at Breckenridge Corporation from 1986 to 1990 as an estimator for excavation and building contracts. He became vicepresident of TMARO Corporation in 1990 estimating and managing many school projects including the new Robert C. Byrd High School in Clarksburg, WV and the new dining hall at West Virginia Wesleyan College, Tim Critchfield and Tim Shaw decided to start High Point Construction Group, LLC in 1997 working primarily on public works projects. The company has expanded over the years to include oil and gas operations, multi-family housing and earthwork. 24

37 Timothy B. Shaw, Member. Tim Shaw has many years of construction supervision experience. Mr. Shaw began his career at Shaw Construction in 1981 and worked there until March of He then went to Louisiana and worked for Wayne Mullens Construction for one year. He returned home in 1985 to work for Breckenridge Corporation until November 1988 at which time he went to work for TMARO Corporation until In January of 1997 he partnered with Tim Critchfield to start High Point Construction. Laura Chewning, Project Manager. Mrs. Chewning worked accounting for various construction companies from 1979 to Then she went to work at Breckenridge Corporation as project manager from 1991 to 1995 including the project manager for the Upshur County Courthouse Annex. Mrs. Chewning was hired in 1999 by High Point Construction as an estimator and project manager. Laura has managed several school projects such as the $7 million dollar Hacker Valley School and the new Academy Elementary School in Buckhannon. She also managed an $8 million PWP manufacturing facility which was a difficult fast track, phased project in Mineral Wells, WV. Todd Brockleman, Supervisor. Mr. Brockleman received a degree in Forestry and Surveying from Glenville State College in His career began as a concrete foreman for Grandview Construction from 1996 to He then went to work for Polino Construction as road construction supervisor from 1998 to 2003 and for C.L. Belt Construction as a bridge superintendent from 2003 to High Point Construction hired Mr. Brockleman in 2008 as superintendent and placed him in charge of all construction layouts. Stadium Construction Contract There shall be two phases of the Stadium Construction. As a result, there shall be two separate construction contracts related to such portion of the Construction Project. 1. Phase I The Stadium Contactor entered into a construction contract with the College dated as of March 19, 2012 (the Stadium Construction Contract I ) to provide all materials and labor necessary to complete the Stadium Component of the Construction Project in a timely fashion. The Stadium Construction Contract I is for a guaranteed maximum price not to exceed $2,914,586, subject to changes as provided therein. The Project is complete. 2. Phase 2 The Stadium Contactor entered into a construction contract with the College dated as of October 15, 2012 (the Stadium Construction Contract II ) to provide, among other things, all materials and labor necessary to complete the Stadium Component of the Construction Project in a timely fashion. The Stadium Construction Contract II is for a guaranteed maximum price not to exceed $3,763,470, with a contingency of $100,000 available for use as needed during the construction process. NO REPRESENTATION AS TO ANY OF THE TERMS, CONDITIONS, COVENANTS AND AGREEMENTS MADE IN THE STADIUM CONSTRUCTION CONTRACT I OR THE STADIUM CONSTRUCTION CONTRACT II IS MADE HEREIN. INTERESTED PARTIES AND PROSPECTIVE INVESTORS SHOULD CONTACT THE COLLEGE TO OBTAIN A COPY OF THE STADIUM CONSTRUCTION CONTRACT I OR THE STADIUM CONSTRUCTION CONTRACT II. Stadium Contractor Payment and Performance Bond College received a letter from Mountain State Insurance Agency, Inc. ( MSIA ) dated August 10, 2012 in connection with Stadium Contractor and its construction of the Stadium portion of the 25

38 Construction Project. In the letter, MSIA states that MSIA has a twelve year relationship providing surety bonds for the Stadium Contractor. SCS advises that if the Stadium Contractor is awarded the New Athletic Complex Phase II project in the amount of $3,810,000, MSIA is ready and willing to execute contract performance and payment bonds for such project within 48 hours or receipt of a draft copy of the contract. The letter states that the surety for the Stadium Contractor is Travelers Casualty and Surety Company of America. Subsequently, the Stadium Contractor provided a Payment and Performance Bond which bond guarantees completion of Stadium Contractor s obligations under the Stadium Construction Contract II and payment in full of all contractors, material suppliers and others who contribute to the design or construction of the stadium component performed under the Stadium Construction Contract II of the Construction Project. This payment and performance bond, with Travelers Casualty and Surety Company of America listed as surety, is dated October 15, 2012 in the Stadium Construction Contract II amount of $3,763,470. The Trustee, on behalf of the Bondholders, is added to the payment and performance bond as an additional obligee. NO REPRESENTATION AS TO ANY OF THE TERMS, CONDITIONS, COVENANTS AND AGREEMENTS MADE IN THE STADIUM CONTRACTOR PAYMENT AND PERFORMANCE BOND IS MADE HEREIN. INTERESTED PARTIES AND PROSPECTIVE INVESTORS SHOULD CONTACT THE COLLEGE TO OBTAIN A COPY OF THE STADIUM CONTRACTOR PAYMENT AND PERFORMANCE BOND. Housing Construction and Housing Contractor Housing Contractor The contractor for the portion of the Project related to construction of the student housing facility will be Construction Enterprises, Inc., Nashville, TN (the Housing Contractor, and together with the Stadium Contractor, the Contractors ). The Housing Contractor is a Tennessee corporation and was formed in The Housing Contractor constructed 1,390,000 square feet of space during 2011 and reported revenues totaling $103 million. Its scope of services ranges from pre-construction through construction to post-construction. Listed below are examples of the projects recently completed by the Housing Contractor: Category Project Location Units Student Housing Campus Suites (Murray State) Murray, KY 140 The District at Morgantown Renovation Morgantown, WV N/A The District on Apache Tempe, AZ 279 Town Village at Kennesaw Kennesaw, GA 217 The District of U of A Tucson Tucson, AZ Twenty Student Housing Lubbock, TX University Garage Lubbock, TX 1481 The District at ODU Norfolk, VA 308 Jarvis Christian Residence Hall Hawkins, TX 149 The Domain at Fayetteville Fayetteville, AR 228 The Domain at Town Centre Granville, WV 336 The Cambridge at Tyler Tyler, TX 205 Garden Style Apartments Allensville Square Apartments Sevierville, TN 144 West M. Apartments Lake Charles, LA 222 Centennial Village Apartments Oak Ridge, TN 252 Waterstone at Springfield Panama City, FL

39 LIHTC Other Orchard View Apartments McMinnville, TN 64 Hooper Point Residences Baton Rouge, LA 176 Swiss View Apartments Nashville, TN 32 Stonebridge Apartments Columbia, TN 64 Tapestry at Brentwood Brentwood, TN 393 Maplecrest Senior Apartments Ft. Meyers, FL 118 The key personnel of the Housing Contractor for the Project are: John W. (Bill) Landers, CEO and President: Bill Landers has managed and owned the Housing Contractor for most of its life. After graduating from Auburn University in 1967 with a degree in Construction Engineering, Mr. Landers spent 21 years working his way up in the construction industry and took over Housing Contractor in At that time, Housing Contractor was a small company licensed in Tennessee and Alabama, specializing in garden apartments, with an annual volume of $40 million. By 2000 the company had branched out to include skilled nursing, assisted living and retirement living, while their annual volume had more than doubled. As the market changed in early 2000, Housing Contractor's operations began to focus more on urban mid-rise developments, HUD insured and market-rate garden apartments, affordable housing, and student housing projects. Today, under Mr. Lander's leadership, Housing Contractor is licensed in 32 states and has become one of the Country's top multi-family builders with an annual volume exceeding $150 million and completed multi-family construction projects totaling over $1 billion in volume from Coast to Coast. Gary A. Myers, Executive Vice President: Gary Myers has been with Housing Contractor since 1981, while it was still operating under the corporate structure of Harold Moore and Associates, Inc. He remained with the company after new ownership changed the name to Housing Contractor. Mr. Myers oversees the Estimating Department as well as Subcontractor Administration for Housing Contractor's multi-family construction projects. His expertise in budgeting, estimating, subcontract negotiation, and coordination of cost through all phases of construction has played a major role in Housing Contractor's completion of multi-family projects totaling over $1 billion in volume from Coast to Coast. Myers graduated with a Bachelor of Science degree from Ball State University; and prior to joining Housing Contractor, he served as Vice President of Construction for ADC Construction Company. Giny Knudsen, Executive Vice President: With over 18 years of experience in the construction industry, Giny Knudsen has spent the past 8 years in the multi-family market with Housing Contractor. Headquartered in Nashville, TN, Housing Contractor is a third-party General Contracting firm specializing in all areas of production style, multi-family construction including Garden style, Urban Mid-rise, Student Housing, and Senior living. Serving as Executive Vice President for Housing Contractor, Giny develops and manages new and existing accounts; manages contract negotiations, corporate legal matters and administrative issues within the company; executes a national business plan that expands the existing customer base and expands revenue opportunities and growth targets; and interacts at all levels to ensure open flow of communication throughout construction for project success. Prior to joining Housing Contractor, Ms. Knudsen served as Director of Business Development, Retail Division, for DooleyMack Constructors of Sarasota, FL. She received her Bachelor's degree in Business at Auburn University. Housing Construction Contract The Housing Contactor entered into a construction contract dated as of October 8, 2012 (the Housing Construction Contract ) with the College to provide, among other things, all materials and 27

40 labor necessary to complete the student housing components of the Construction Project in a timely fashion. The Housing Construction Contract is for a sum of $9,744,769.00, subject to changes as provided therein. The maximum amount of liquidated damages payable to the Housing Contractor shall not exceed $50, NO REPRESENTATION AS TO ANY OF THE TERMS, CONDITIONS, COVENANTS AND AGREEMENTS MADE IN THE HOUSING CONSTRUCTION CONTRACT IS MADE HEREIN. INTERESTED PARTIES AND PROSPECTIVE INVESTORS SHOULD CONTACT THE COLLEGE TO OBTAIN A COPY OF THE HOUSING CONSTRUCTION CONTRACT. Housing Contractor Payment and Performance Bond College received a letter from Scott Construction Services ( SCS ) dated March 30, 2012 in connection with the Construction Enterprises, Inc. and its construction of the Construction Project. Under the letter, SCS states that SCS has a ten-plus year relationship providing Construction Enterprises, Inc. s surety bond program. SCS advises that Construction Enterprises, Inc. has completed many multi-million dollar projects and has available bonding capacity up to $75,000,000 for single projects and an aggregate bonding capacity in excess of $200,000,000, subject to normal contract terms, conditions and standard underwriting guidelines. The letter states that the surety bonds are provided by Liberty Mutual Insurance Company, which is listed in the United States Department of the Treasury s Listing of Certified Companies (Updated 03/12/2012) and has an A.M. Best Rating of A (Excellent) and a financial size of XV. Subsequently, the Housing Contractor provided a Payment and Performance Bond to guarantee completion of Housing Contractor s obligations under the Housing Construction Contract and payment in full of all contractors, material suppliers and others who contribute to the design or construction of the student housing components of the Construction Project. This payment and performance bond, with Liberty Mutual Insurance Company listed as surety, is dated October 8, 2012 in the Housing Construction Contract amount of $9,744,769. The Trustee, on behalf of the Bondholders, is added to the payment and performance bond as an additional obligee. NO REPRESENTATION AS TO ANY OF THE TERMS, CONDITIONS, COVENANTS AND AGREEMENTS MADE IN THE HOUSING CONTRACTOR PAYMENT AND PERFORMANCE BOND IS MADE HEREIN. INTERESTED PARTIES AND PROSPECTIVE INVESTORS SHOULD CONTACT THE COLLEGE TO OBTAIN A COPY OF THE HOUSING CONTRACTOR PAYMENT AND PERFORMANCE BOND. The Construction Monitor The Indenture provides for a construction monitor. Partners and Associates, Inc. shall acts as the Construction Monitor, in addition to its role as Developer (as defined below). As used in the Indenture, a Construction Monitor is a construction monitor selected by the holders of a majority of the aggregate principal amount of the 2012 Series A Bonds then outstanding to provide construction monitoring services, including review and approval of requisitions in accordance with the Indenture, through final completion of the Construction Projects. Under a Construction Management Agreement dated as of November 1, 2012, by and among the College, the Trustee and the Construction Monitor, the Construction Monitor shall, among other things, perform site inspections for each of the Construction Contracts, review and approve all Requisitions, provide monthly construction progress reports to the College and the Trustee, and review each contractor s application for payment. Compensation for the Construction Monitor s services is included in the compensation set forth in the Development Agreement (as defined below). NO REPRESENTATION AS TO ANY OF THE TERMS, CONDITIONS, COVENANTS AND AGREEMENTS MADE IN THE CONSTRUCTION MONITOR AGREEMENT IS MADE HEREIN. INTERESTED PARTIES AND PROSPECTIVE INVESTORS SHOULD CONTACT THE COLLEGE OR THE TRUSTEE TO OBTAIN A COPY OF THE CONSTRUCTION MONITOR AGREEMENT. 28

41 THE ARCHITECT The architect for the Construction Project is The Collaborative Inc., Toledo, Ohio (the Architect ). The Architect is a private corporation, incorporated in the State of Ohio on or about December 18, 1972, and is owned by six Principals and five associates and senior associates. The Architect maintains a 44-person staff and its services include, but are not limited to, master planning, design and construction observation. Pursuant to an AIA Document B , as amended (the Stadium Architect Agreement ) dated as of September 9, 2011, by and between the College and the Architect, the Architect will provide certain design, design development, construction documentation and other services for the Project during various phases thereof, as it relates to the proposed stadium. Pursuant to an AIA Document B , as amended (the Housing Architect Agreement, and together with the Stadium Architect Agreement, the Architect Agreements ) dated as of February 24, 2012, by and between the College and the Architect, the Architect will provide certain design, design development, construction documentation and other services for the Project during various phases thereof, as it relates to the proposed housing facilities. NO REPRESENTATION AS TO ANY OF THE TERMS, CONDITIONS, COVENANTS AND AGREEMENTS MADE IN EITHER OF THE ARCHITECT AGREEMENTS IS MADE HEREIN. INTERESTED PARTIES AND PROSPECTIVE INVESTORS SHOULD CONTACT THE COLLEGE TO OBTAIN A COPY OF ONE OR BOTH OF THE ARCHITECT AGREEMENTS. THE DEVELOPER Partners and Associates, Inc. d/b/a Partners Development, Knoxville, Tennessee, will serve as developer for the Construction Project (the Developer ). Following are student housing and higher education projects developed by Partners Development: Project Name Project Type School Location Opened Hines & Moye Science Center Renovation Barton College Wilson, NC 2004 Hilley Residence Hall Renovation Barton College Wilson, NC 2004 East Campus Suites New Construction Barton College Wilson, NC 2005 East Campus Apartments New Construction Georgetown College Georgetown, KY 1999 Football Stadium and Press Box New Construction Georgetown College Georgetown, KY 1999 Residence Village Phase I New Construction Campbellsville Campbellsville, KY 2000 University Residence Village Phase II New Construction Campbellsville Campbellsville, KY 2004 University Residence Village Phase III New Construction Campbellsville Campbellsville, KY 2005 University LeConte Student Apartments New Construction Carson Newman Jefferson City, TN 2003 College Young Residence Hall New Construction Brescia University Owensboro, KY 2002 Giles Residence Hall Renovation Regents Park Oxford, England 1999 College New Football Training Facility LaGrange College LaGrange, GA 2008 Complex New Tennis Center Complex LaGrange College LaGrange, GA 2005 Lloyd Residence Hall New Construction Maryville College Maryville, TN 2003 John, Charles & Susanna Halls New Construction Millsaps College Jackson, TN 2010 Paul Jones Hall Adaptive Re-Use Alderson-Broaddus Philippi, WV 2009 Heiner/Hamer Campus Center and Renovation Expansion, Reconfiguration and Renovation College Alderson-Broaddus College Burford Residence Hall Renovation Central Methodist College Philippi, WV 2010 Fayette, MO

42 The key personnel of the Developer for the Project are: Russ Watkins, President and Chief Operating Officer. Russ Watkins is the President and Chief Operating Officer of Developer. Mr. Watkins earned his Bachelor of Science degree in Business Administration from the University of Tennessee. From 1993 until 1995, Mr. Watkins was employed with First Tennessee Bank and in 1995, he joined Developer. Mr. Watkins has experience in a number of development projects, including the following: Whirlpool Mexico and Whirlpool Europe, Nuevo Leon and Coahuila, Mexico and in Wroclaw, Poland; LaGrange College, LaGrange, Georgia; Oak Ridge Associated Universities, Oak Ridge, Tennessee; Whirlpool Corporation Engineering and R & D Facility, St. Joseph, Michigan. Stephen H. Whitehead, Executive Vice President, Business Development. Steven H. Whitehead serves as Executive Vice President in charge of Business Development for Partners Development. Mr. Whitehead began his professional career direct sales for consumer goods and pharmaceuticals. In 1981, Mr. Whitehead moved into general business management for hospital systems for Albers Drug Company, a regional pharmaceutical distribution company, and in 1995 was named President of the firm. For the past several years, he has focused his efforts in real estate property management and business development. He has managed numerous multi-family properties and worked with a variety higher education institutions in the analysis and development of facilities including residence halls, student centers, libraries, academic buildings and mixed-use facilities. Mr. Whitehead earned his Bachelor of Science degree from the University of Tennessee. Mr. Whitehead has experience in a variety of projects including Jarvis Christian College, Hawkins, TX; Flagler College, St. Augustine, FL; Asbury College, Wilmore, KY; Milsaps College, Jackson, MS; Wesleyan College, Macon GA; Hilltop Apartments, University of Connecticut, Storrs, CT; Millenium Hall, Towson University, Towson, MD, Blount Hall, University of Alabama Birmingham, Birmingham, AL. Randy D. Jenkins, Chief Financial Officer. Randy D. Jenkins serves as Chief Financial Officer for Partners Development. His professional career began in accounting and finance related to the wholesale foodservice industry. In 1987, Mr. Jenkins oversaw the construction of a new distribution center in Knoxville, Tennessee and performed other finance related matters for US Foodservice. In the early nineties, Mr. Jenkins began work in real estate finance, accounting, property management and business development with Partners Development and its affiliates. He obtained his securities license as Financial and Operations Principal. He has been involved in the development and financing of numerous multi-family properties, commercial properties, residential projects as well as working with a variety of higher education institutions in the analysis and development of facilities including residence halls, student centers, libraries, academic buildings and mixed-use facilities. He has experience in financial structuring, modeling and financial feasibility. Mr. Jenkins earned his Associates Degree in Applied Science, Accounting from Central Piedmont Community College, his Bachelor of Science in Finance from the University of North Carolina-Charlotte and his Bachelor of Science, Business Administration, University of Tennessee. Mr. Jenkins has a wide range of experience in higher education, commercial and residential/multi-family projects, including: Carson-Newman College, Jefferson City, TN; Georgetown College, Georgetown, KY; Campbellsville University, Campbellsville, KY; Union College, Barboursville, KY; Bennett Galleries, Knoxville, TN; Cherokee Plaza, Knoxville, TN; Whirlpool Distribution Center, San Marcos, TX; Whirlpool Technology Center, St. Joseph, MI; Mountain Park Villas, Powell, TN; Waterford Village Apartments, Knoxville, TN. 30

43 Christi W. Branscom, Esquire, Chief Administrative Officer, General Counsel and Managing Broker. Christi W. Branscom serves as Legal Counsel and Managing Broker for the Developer. Ms. Branscom is an attorney, licensed to practice law in State of Tennessee. She also holds an affiliate broker license, as well as a Principal Broker's license. She is a CCIM candidate. Prior to joining Developer in 1991, Ms. Branscom was employed with Memphis Area Legal Services from 1988 until 1990, and Mayer and Newton from 1990 until Ms. Branscom earned her Bachelor of Science degree in Finance with Honors from the University of Tennessee, and received her Doctor of Jurisprudence degree from the University of Memphis. Ms. Branscom has experience in a variety of projects, including Carson Newman College, Jefferson City, TN; William Jewell College, Missouri; Weisgarber Medical Park, Knoxville, TN; Jarvis Christian College, Tyler, TX; Parkside Plazas I and II, Farragut, TN. Orlando Diaz, Director of Operations. In his capacity as Director of Operations, Orlando Diaz is responsible to ensure projects achieve desired quality, and are completed on-time and within budget. Mr. Diaz s responsibilities include budgeting, design, construction, contract negotiations and project management. He obtained his degree in Business Administration from the University of Tennessee and maintains a contractor s license in Tennessee, North Carolina and West Virginia. Prior to joining Developer in 2001, Mr. Diaz was employed by Rouse Construction Company from 1981 until During his time with Developer, Mr. Diaz has participated on projects for LaGrange College, LaGrange, GA; Webb School of Nursing and Midwifery, Hyden, KY; Kentucky Wesleyan College, Owensboro, KY; Pikeville College, Pikeville, KY; Hood College, Frederick, MD; Aurora University, Aurora, IL; Cherokee Plaza, Knoxville, TN; Whirlpool Conference and Training Center, Brandywine Creek, MI; Lovell Crossing Apartments, Knoxville, TN; and KCDC Montgomery Village Apartments, among other projects. Kevin Matherly, Vice President of Project Management. Kevin Materhly joined Developer in 1998 and has over 15 years of project management experience. He obtained his Bachelor of Science degree from Bethany College in 1991 and a Master of Science in Sports Administration from Georgia State University in Projects in which Mr. Matherly has participated include, but are not limited to, the following: Georgetown College, Georgetown, Kentucky (70,000 sq.ft. library; 30,000 sq.ft. athletic complex/leadership training center with 5,000 seat, 55,000 sq.ft. football/soccer stadium; baseball and soccer fields; tennis court); LaGrange College, LaGrange, Georgia; Brescia University, Brescia, Kentucky; Maryville College, Maryville, Tennessee. Patrick Ham, Project Manager. Mr. Ham provides management oversight for several phases of construction projects, including coordination with the design team members, contractors and owners. He has over 15 years of multi-site property management, construction project management and facilities management experience, as well as property maintenance experience. Mr. Ham earned his Bachelor of Science degree from the University of Tennessee in 1994 and is licensed by the state of Tennessee as a real estate commission affiliate broker. His construction and project management experience includes, but is not limited to, the following: Turkey Creek Development, Knoxville, TN; Turkey Creek Public Market, Knoxville, TN; and Enterprise Renta-Car Company of Tennessee: Corporate Headquarters, West TN Regional Headquarters, Middle TN Regional Headquarters, and East TN Regional Headquarters. Development Agreement The Developer entered into a Development Agreement with the College on or about February 15, 2012 (the Development Agreement ) and the term of the Development Agreement shall expire at such time as substantial completion of the project has been achieved, subject to provisions of the Development Agreement. 31

44 Under the Development Agreement and subject to specific limitations, the Developer agrees to provide certain development management services which include, but are not limited to: coordinate activities of the architect for the project and negotiate terms and conditions of the contract, as well as site evaluation services including engineering and environmental assessments and negotiate terms and conditions of the contract(s); develop project budgets which are satisfactory to the College; assist as needed in closing of the construction and permanent loans; recommend any engineers and other consultants for the project, subject to College approval, and negotiate any contracts between engineers and other consultants for the project and College; review program(s) furnished by the College and any evaluations by the College s architect to ascertain requirements of the project; coordinate the architect(s) and engineers in production of preliminary designs for the project and production of final working drawings, plans, and specifications for the project; provide a detailed construction schedule for the project and advise the College with respect thereto and coordinate and integrate the Developer s services, architect s services, other consultant s services and the College s responsibilities in the schedule; update the schedule to include components of the work, including phases of construction and times of commencement and completion required of each contractor(s); provide a detailed construction cost budget to be reviewed and approved by the College and, as the architect(s) progress with the preparation of the schematic design, design development and construction documents, update the construction cost budget with increasing detail and refinement, monitor and evaluate actual costs for activities in progress and estimates for uncompleted tasks and advise the College; coordinate application and approval process in connection with the issuance of building permits, any partial building permits, temporary and final certificates of occupancy and periodic inspections conducted by governmental officials and assist with any necessary zoning changes to the project, except for permits required to be obtained directly by the various contractors; review all proposed changes and change orders to the project; provide general coordinate and evaluation of the activities of the project contractors, subcontractors, architects and engineers; inspect progress of the work on the project site and notify the College of defects and deficiencies in the work, reject the work and cause the corrective action of any defective work and any other default under the construction contract(s) of which Developer becomes aware; coordinate building start-up and initial systems operation and coordinate modification of such systems as required for the project. Compensation of the Developer under the Development Agreement shall be payment of a fee of 4.2% of the total project budget (the Development Fee ), subject to revision of the project budget from time to time and provided that a final project budget is approved by the College prior to the beginning of project construction. As of the date of the financing, the total project budget is $31,666, The Developer will also be compensated for services rendered from the date of the execution of the Development Agreement to the closing of the financing of the project in the amount of $118, The Developer is also to submit reasonable reimbursable expenses. NO REPRESENTATION AS TO ANY OF THE TERMS, CONDITIONS, COVENANTS AND AGREEMENTS MADE IN THE DEVELOPMENT AGREEMENT IS MADE HEREIN. INTERESTED PARTIES AND PROSPECTIVE INVESTORS SHOULD CONTACT THE COLLEGE TO OBTAIN A COPY OF THE DEVELOPMENT AGREEMENT. TRUSTEE Wells Fargo Bank, N.A. shall serve as Trustee (the Trustee ). The Trustee did not participate in the preparation of this Private Placement Memorandum and makes no representations concerning the Bonds, the security therefor or any other matter stated in this Private Placement Memorandum. The Trustee has no duty or obligation to pay the Bonds from its own funds, assets or corporate capital or to make inquiry regarding, or investigate the use of, amounts disbursed from the accounts held under the Bond Indenture. 32

45 DESCRIPTION OF BONDS General The Bonds are issuable in the form of fully registered bonds in authorized denominations of $5,000 or any integral multiple thereof. The Depository Trust Company ( DTC ) will act as Securities Depository for the Bonds. The Bonds will be registered in the name of Cede & Co. or such other name as may be requested by an authorized representative of DTC. The Bonds will be evidenced by one Bond for each series and maturity of the Bonds in the total aggregate principal amount of the Bonds of each such series. The Bonds will be dated the date of their initial issuance, with interest accruing from such date and will be numbered in such manner as determined by the Trustee. The Bonds will bear interest at the rates and will mature on the dates and in the amounts stated on the cover page hereof. Interest will be payable semi-annually on April 1 and October 1 each year (each an Interest Payment Date ), beginning on April 1, 2013 until the final maturity of the Bonds. Interest shall be calculated on a basis of a 360-day year of twelve 30-day months. Principal and the redemption price of the Bonds is payable by check or wire transfer in lawful money of the United States of America at the principal corporate trust office of the Trustee, except as otherwise provided below. Interest on the Bonds is paid on each Interest Payment Date to the person whose name appears on the bond registration books maintained by the Trustee as the holder thereof as of the close of business on the 15 th day (whether or not a Business Day) of the month immediately preceding each Interest Payment Date (a Record Date ). Payment of interest on a series of Bonds will be made by check mailed via first class mail to the Holder at its address as such appears on the registration books, or, upon the written request of any Holder of at least $1,000,000 in aggregate principal amount of such series of Bonds, submitted to the Trustee at least one Business Day prior to the Record Date, by wire transfer in immediately available funds to an account within the United States of America designated by such Holder. For so long as Cede & Co. (or other nominee of DTC) is the Holder of the Bonds, the principal, redemption price and interest shall be made via wire transfer in immediately available funds. The Trustee is the Registrar and Paying Agent for the Bonds. If there is a default in the due and punctual payment of interest of any Bond when and as the same shall be due and payable ( Defaulted Interest ), such Defaulted Interest shall cease to be payable to the Holder of the Bond on the relevant Record Date and will be payable to the Holder in whose name the such Bond is registered at the close of business on a Special Record Date for the payment of the Defaulted Interest. The Issuer shall notify the Trustee in writing or by Electronic Means of the amount of Defaulted Interest proposed to be paid on each Bond and the date of the proposed payment (as discussed below), and shall deposit with the Trustee at the time of such notice an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment. Money deposited with the Trustee shall be held in trust for the benefit of the Holders of the Bonds entitled to such Defaulted Interest as provided in this paragraph and the Bond Indenture. Upon receipt of such funds equal to the aggregate amount proposed by Issuer to pay such Defaulted Interest, the Trustee shall fix a Defaulted Interest Payment Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Issuer of such Defaulted Interest Payment Date and, in the name and at the expense of the Obligated Group Agent, shall cause notice of the proposed payment of such Defaulted Interest and the Defaulted Interest Payment Date therefor to be mailed, first-class postage prepaid, or distributed via Electronic Means not less than 10 days prior to such Defaulted Interest Payment Date, to each Holder of a Bond at the address of such holder as it appears on the bond register pursuant to the Bond Indenture. Defaulted Interest on the Bonds shall be paid on the Defaulted Interest Payment Date for the person whose name appears on the 33

46 bond registration books, maintained by the Trustee as the Holder thereof as of the close of business on the Special Record Date. THE BONDS AND THE INTEREST THEREON ARE SPECIAL, LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE TRUST ESTATE PLEDGED THEREFOR UNDER THE BOND INDENTURE. THE BONDS SHALL NOT CONSTITUTE A DEBT OR A PLEDGE OF THE FAITH AND CREDIT OR TAXING POWER OF THE ISSUER, THE CITY OF PHILIPPI OR THE STATE OF WEST VIRGINIA OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL PROVISION OR STATUTORY LIMITATION AND SHALL NEVER CONSTITUTE OR GIVE RISE TO PECUNIARY LIABILITY OF THE ISSUER, THE CITY OF PHILIPPI, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF. Optional Redemption The Bonds maturing on or after October 1, 2023 are subject to redemption, prior to their maturity, at the option of the Obligated Group Agent, on or after October 1, 2022, in whole on any date or in part on any Interest Payment Date in such order of maturity as determined by the Obligated Group Agent at a Redemption Price equal to the principal amount of Bonds called for redemption, without premium, together with any interest accrued to the redemption date Optional Redemption as a Result of the Sale of Bond Financed Property The Bonds are subject to redemption by the Issuer, at the option and written direction of the Obligated Group Agent, prior to their maturity, in whole, at the earliest practicable date after (A) the Board of the College determines in good faith that continued operation of the property financed with the proceeds of the Bonds ( Bond Financed Property ) (or portions thereof) is not financially feasible or is otherwise disadvantageous to the College; (B) as a result thereof, College plans to sell, lease or otherwise dispose of all or a portion of the Bonds Financed Property to a person or entity unrelated to the College; and (C) there is delivered to the Issuer and the Trustee a written statement of Bond Counsel to the effect that, unless the Bonds are redeemed or retired in the amount specified either prior to or concurrently with such sale, lease or other disposition, or on a subsequent date prior to the first date on which the Bonds are subject to redemption at the option of the Issuer at the direction of the Obligated Group Agent, such Bond Counsel will be unable, absent payment by the Obligated Group Agent or the Issuer to the Internal Revenue Service, to render an unqualified opinion that such sale, lease or other disposition of all or a portion of the Bond Financed Property will not adversely affect the validity of any Bonds or any or any exemption from federal income taxation to which the interest on such Bonds would otherwise be entitled. Any such redemption shall be at a Redemption Price equal to 100% of the principal amount thereof plus accrued interest to the redemption date. Optional Redemption for Insurance and Condemnation Proceeds Outstanding Bonds are also subject to redemption prior to the stated Maturity Date, by the Issuer, at the option and direction of the Obligated Group Agent, or as otherwise required under the Master Indenture, as a whole or in parts on any day from moneys required to be deposited in the Special Redemption Account pursuant to the Bond Indenture, at a Redemption Price equal to the principal amount of such Bonds. 34

47 Mandatory Redemption The Bonds are subject to mandatory redemption prior to the stated Maturity Date, in part, from Mandatory Sinking Fund Payments deposited in the Principal Fund, on October 1 in the years set forth below and in the Bond Indenture, at Redemption Prices equal to 100% of the principal amount of such Bonds to be redeemed plus accrued interest, if any, to the redemption date without premium. On the following dates, the Bonds shall be redeemed or paid in the amounts set forth opposite each such dated, each of which is a Mandatory Sinking Account Payment Date : * Denotes Final Maturity * Denotes Final Maturity 2012 Series A Date Amount Date Amount 300, , , , , , , , , , , , , , , * 2012 Series B 955, ,035, ,115, ,205, ,305, ,410, ,525, ,645, ,775, ,925, ,080, ,445, ,425, ,620, ,835, Date Amount Date Amount , , , , , , , , , , , , , , * 75, , , , , , , , , , , , , ,

48 * Denotes Final Maturity 2012 Series C Date Amount Date Amount , , , , , , , , , , , , , , * 20, , , , , , , , , , , , , , Mandatory Redemption Upon Determination of Taxability The Tax Exempt Bonds are subject to mandatory redemption prior to their maturity upon a Determination of Taxability. If so called for redemption upon a Determination of Taxability, the Tax Exempt Bonds shall be redeemed by the Issuer in whole at any time within forty (40) days after such Determination of Taxability, at one hundred five percent (105%) of the aggregate principal amount of such Bonds then Outstanding, plus accrued interest to the redemption date. A Determination of Taxability is defined in the Bond Indenture as interest on the Tax Exempt Bonds, in whole or in part, is included in the gross income of a Holder (or former Holder) for federal income tax purposes for any reason, the determination of which is manifested by (a) a statutory Notice of Deficiency (90-day letter) from the Internal Revenue Service ( Service ) proposing to include such interest in the income of a holder (or former holder), or (b) delivery to the Trustee of an opinion of Bond Counsel acceptable to the Trustee to the effect that (i) as a result of a change in the federal tax laws after the date of the issuance of the Tax Exempt such interest on obligations of the general character of the Tax Exempt Bonds will be included, in whole or in part, in the gross income of the Holders thereof (for the purposes of this paragraph, such interest becomes subject to federal income taxation when the President of the United States of America signs such legislation) or (ii) that for any other reason, interest on the Tax Exempt Bonds, in whole or in part, is included in the gross income of a Holder or former Holder of such bonds; provided, however, no Determination of Taxability shall be deemed to exist if the Obligated Group Agent shall, within twenty (20) days after such assertion of taxability, cause to be delivered to the Trustee an unqualified opinion of Bond Counsel reasonably acceptable to the Holder or former Holder to the effect that interest on Tax Exempt Bonds has been and continues to be excluded from gross income for federal income tax purposes, then such Holder or former Holder shall at the expense of the Obligated Group Agent contest such assertion of taxability by appropriate administrative proceedings through the Service Appeals Office, whose determination as to taxability shall be final and binding and upon such determination by the Service Appeals Office a Determination of Taxability shall be deemed to exist. In any such contest the Holder or former Holder shall cooperate with the Obligated Group Agent and toward that end shall (a) give prompt notice of any such assertion and (b) permit the Obligated Group Agent or its representatives to meet with the representatives of the Holder or former Holder dealing with the Service to discuss the issues involved. 36

49 Mandatory Redemption from Excess Funds Transferred from Project Fund following Completion of Construction Period In accordance with the Bond Indenture, any remaining balance in the Project Fund upon completion of the Construction Projects will be transferred to the Principal Fund and thereafter applied toward the redemption of the 2012 Series A Bonds on the next ensuing Interest Payment Date, at a Redemption Price equal to the principal amount of the 2012 Series A Bonds being redeemed plus interest accrued to the redemption date. Redemption Requests with Regard to Section 4.03 or Section 4.04 of the Bond Indenture Redemption shall be made on an authorized date selected by the Obligated Group Agent, which date shall not be less than 30 days nor more than 120 days after receipt by the Trustee of a certificate of an Authorized Representative of the Obligated Group Agent (i) requesting that the Bonds be redeemed, (ii) stating the principal amount of the Bonds to be so redeemed and the authorized date upon which the same will be redeemed and (iii) if appropriate, stating that an event described in Section 4.03 or Section 4.04 of the Bond Indenture has occurred and identifying such event. Selection of Bonds for Redemption Whenever provision is made in the Bond Indenture for the redemption of less than all of the Bonds or any given series thereof, the Obligated Group Agent shall select the series and maturity of the Bonds to be redeemed and within a series and a maturity, the Trustee shall select the Bonds to be redeemed, in Authorized Denominations, by lot. The Trustee shall promptly notify the Issuer and the Obligated Group Agent in writing of any redemption of the Bonds Outstanding or portions thereof so selected for redemption. The selection of Bonds shall be at such time as determined by the Trustee. Notice of Redemption Notice of redemption of Bonds shall be mailed by first class mail or distributed via Electronic Means by the Trustee, not less than 30 days nor more than 60 days prior to the date fixed for redemption. Each such notice shall be shall be provided to the respective Holder of any Bonds designated for redemption at his/her address set forth in the bond registration books of the Trustee. Notices of redemption must set forth the date of the notice, date of delivery, date fixed for redemption, the Redemption Price, the place or places of redemption (including the name and appropriate address or addresses of the Trustee), the CUSIP number of the series of the Bonds to be redeemed and, in the case of Bonds to be redeemed only in part, the portion of the principal amount thereof to be redeemed. Each such notice shall further state that on said date there will become due and payable on each of said Bonds the Redemption Price thereof, or of said specified portion of the principal amount thereof in the case of a Bond to be redeemed in part only, together with interest accrued thereon to the date fixed for redemption and that from and after such date, interest on such Bond shall cease to accrue and shall require that such Bonds be then surrendered at the address or addresses of Trustee specified in the notice of redemption. Notice of redemption shall be given by Trustee at Obligated Group Agent s expense. If at the time notice of an optional redemption is provided there shall not have been deposited with Trustee money sufficient to redeem all of the series of the Bonds called for redemption, such notice may state that it is subject to deposit with the Trustee on or prior to the redemption date of money sufficient to pay the Redemption price of the Bonds to be redeemed. If such money shall not have been so received, the notice shall be of no force and effect, the series of Bonds shall not be redeemed pursuant thereto and Trustee shall give notice, in the manner in which notice of redemption was given, that such money was not received. 37

50 Trustee s failure to provide notice of redemption as required by Section 4.10 of the Bond Indenture to any one or more of the Holders of any of the Bonds designated for redemption shall not affect the sufficiency of the proceedings for redemption with respect to the Holder or Holders to whom such notice was mailed. Any notice of redemption provided pursuant to Section 4.10 of the Bond Indenture may be rescinded by written notice given to the Trustee by the Issuer with the consent of the Obligated Group Agent no later than 5 Business Days prior to the date specified for redemption. Trustee shall give such rescission notice as soon as thereafter practicable, in the same manner and to the same persons as notice of redemption was given pursuant to Section 4.10 of the Bond Indenture. Partial Redemption of Bonds Subject to provisions of the Bond Indenture, upon surrender of any Bond to be redeemed in part only, Trustee shall authenticate and deliver to the Holder of such Bond, at the expense of Obligated Group Agent, a new Bond in the authorized denomination of $5,000 or any integral multiple thereof equal in aggregate principal amount to the unredeemed portion of the Bond surrendered. Effect of Redemption of Bonds If notice of redemption has been given as provided in the Bond Indenture and, on the date fixed for redemption designated in the notice, Trustee holds sufficient funds for payment of the Redemption Price of, with interest accrued to the date fixed for redemption on, such Bonds or portions thereof so called for redemption, the Bonds, or portions thereof, so called for redemption shall become due and payable at the Redemption Price specified in such notice to the date fixed for redemption, interest on the Bonds so called for redemption shall cease to accrue, said Bonds, or portions thereof, shall cease to be entitled to any benefit or security under the Bond Indenture and the Holders of said Bonds shall have no rights in respect thereof except to receive payment of such Redemption Price. Limitation on Sale or Transfer of Bonds NOTWITHSTANDING ANY OTHER PROVISION CONTAINED HEREIN, THE BONDS MAY BE TRANSFERRED ONLY SUBJECT TO THE TERMS AND CONDITIONS RELATED TO THE TRANSFER OF THE BONDS AS SET FORTH IN THE BOND INDENTURE, AND SUBJECT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE 1933 ACT ), REGULATIONS PROMULGATED THEREUNDER, INCLUDING, BUT NOT LIMITED TO A REGISTRATION REQUIREMENT OR EXEMPTIONS THEREFROM, AND ANY OTHER CONTROLLING LAW. Transfer and Exchange of Bonds Any Bond, in accordance with its terms, may be transferred, upon the bond registration books kept by the Trustee pursuant to the Bond Indenture, by the person in whose name such Bond is registered, in person or by his/her duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a written instrument of transfer, executed in a form approved by the Trustee. When a Bond is surrendered for transfer, the Issuer shall execute and the Trustee shall authenticate and deliver a new Bond for a like aggregate principal amount of the same series. Trustee will require the Bondholder requesting such transfer to pay the costs, taxes or other governmental charges required to be paid in connection with such transfer. 38

51 Bonds may be exchanged at the Trustee s designated corporate trust office for a like aggregate amount of Bonds of the same series of other authorized denominations. Trustee will require the Bondholder requesting such exchange to pay the costs, taxes or other governmental charges required to be paid in connection with such exchange. Trustee is not required to exchange any Bond during the 15 days immediately preceding (1) the date on which the notice of redemption is given or (2) the date on which Bonds will be selected for redemption. Mutilated, Lost, Destroyed or Stolen Bonds If any Bond is mutilated, the Issuer, at such Bondholder s expense, shall execute and Trustee shall thereupon authenticate and deliver a new Bond of like tenor and number in exchange and substitution for the mutilated Bond, provided that the mutilated Bond is surrendered to Trustee. Each mutilated Bond so surrendered shall be cancelled by Trustee and delivered to, or upon the order of, the Issuer. If any Bond is lost, destroyed or stolen, evidence of such event may be submitted to Issuer and Trustee and, if such evidence is satisfactory to both and indemnity satisfactory to them shall be given, the Issuer, at Bondholder s expense, shall execute and Trustee shall authenticate and deliver a new Bond of like tenor in lieu of and in substitution of the lost, destroyed or stolen Bond. If any such Bond has matured or is about to mature, Trustee may pay the same without surrender thereof, rather than issuing a substitute Bond. Issuer may require payment by the Bondholder of a sum not to exceed the actual cost and expense of preparing each new Bond issued pursuant to the Bond Indenture in such manner and of the expenses that may be incurred by the Issuer and the Trustee in the premises. Any Bond issued in accordance with the foregoing and the Bond Indenture in lieu of any Bond alleged to be lost, destroyed or stolen will constitute an original additional contractual obligation on the part of the Issuer whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be entitled to the benefits of the Bond Indenture with all other Bonds secured by the Bond Indenture. Limited Obligations; No Liability of the State The Bonds are special limited obligations of the Issuer. The Bonds and the interest payable thereon and other costs incident thereto will not constitute an indebtedness or an obligation, general or moral, or a pledge of the faith and credit of the State of West Virginia, or any political subdivision thereof, within the purview of any constitutional or statutory limitation or provision and shall never constitute nor give rise to a charge against the general credit or taxing power, if any, of any of them. No owner of the Bonds will have any right to compel any exercise of the taxing power, if any, of the State of West Virginia, or any political subdivision of the State of West Virginia to pay the principal of the Bonds, or the interest or premium, if any, thereon. Payment of the Bonds, including the principal thereof, redemption premium, if any, and the interest thereon, will be made solely from the funds and obligations duly pledged herein. There will be no pledge of any of the credit or the taxing power, if any, of the Issuer, the State of West Virginia, or any political subdivision of the State of West Virginia, to the obligations of the Bonds, and no owner of any of the Bonds can ever submit a claim against such credit or taxing power. The Issuer has no taxing power. The DTC Book-Entry-Only System The following has been provided by DTC (defined below) for use herein. While the information is believed to be reliable, none of the Issuer, the Trustee, the College or the Placement Agent, subject to the standard of review found on the inside cover hereof, nor any of their respective counsel, members, officers or employees, make any representations as to the accuracy or sufficiency of such information. 39

52 The Depository Trust Company ( DTC ), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully registered securities registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered Bond will be issued for each issue of the Bonds, each in the aggregate principal amount of such issue, and will be deposited with DTC. DTC, the world s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has a Standard & Poor s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC s records. The ownership interest of each actual purchaser of each Bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain 40

53 steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices will be sent to DTC. If less than all of the securities within an issue are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts upon DTC s receipt of funds and corresponding detail information from the Issuer 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, the Trustee, or the Issuer, 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 Issuer 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 Bonds at any time by giving reasonable notice to the Issuer or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The Issuer may decide to discontinue use of the system of book entry only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC. The information under this heading concerning DTC and DTC s book entry system has been obtained from sources that the Issuer believes to be reliable, but the Issuer takes no responsibility for the accuracy thereof. NEITHER THE ISSUER, NOR THE COLLEGE, NOR THE PLACEMENT AGENT, NOR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO DTC PARTICIPANTS, OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES, WITH RESPECT TO THE PAYMENTS TO OR THE PROVIDING OF NOTICE TO THE DIRECT PARTICIPANTS, THE INDIRECT PARTICIPANTS OR THE BENEFICIAL OWNERS OF THE BONDS. THE ISSUER, THE COLLEGE, THE PLACEMENT AGENT AND THE TRUSTEE CANNOT AND DO NOT GIVE ANY ASSURANCES THAT DTC, DIRECT PARTICIPANTS OR OTHERS WILL DISTRIBUTE 41

54 PAYMENTS OF PRINCIPAL OF OR INTEREST ON THE BONDS PAID TO DTC OR ITS NOMINEE, AS THE REGISTERED OWNER, OR ANY NOTICES TO THE BENEFICIAL OWNERS OR THAT THEY WILL DO SO ON A TIMELY BASIS, OR THAT DTC WILL ACT IN A MANNER DESCRIBED IN THIS PRIVATE PLACEMENT MEMORANDUM. SO LONG AS CEDE & CO. IS THE REGISTERED OWNER OF THE BONDS, AS NOMINEE OF DTC, REFERENCES HEREIN TO THE BONDHOLDERS OR REGISTERED OWNERS OF THE BONDS SHALL MEAN CEDE & CO. AND SHALL NOT MEAN THE BENEFICIAL OWNERS OF THE BONDS. Use of Securities Depository Registered ownership of the Bonds, or any portion thereof, may not be transferred after initial issuance except: Rebate Fund (1) To any successor of the Securities Depository or its nominee, or to any substitute depository designated pursuant to clause (2) below ( substitute depository ); provided, that any successor of the Securities Depository or substitute depository shall be qualified under any applicable laws to provide the service proposed to be provided by it; (2) To any substitute depository designated by the Issuer upon (a) the resignation of the Securities Depository or its successor (or any substitute depository or its successor) from its functions as depository or (b) a determination by the Issuer that the Securities Depository or its successor (or any substitute depository or its successor) is no longer able to carry out its functions as depository; provided, that any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it; or (3) To any person as provided in the Bond Indenture, upon (a) the resignation of the Securities Depository or its successor (or any substitute depository or its successor) from its functions as depository or (b) a determination by the Issuer that it is in the best interests of the Issuer to remove the Securities Depository or its successor (or any substitute depository or its successor) from its functions as depository; provided, that no substitute depository can be obtained. Under the Bond Indenture, the Trustee will establish, maintain and hold in trust a separate fund designated as the Rebate Fund. Within the Rebate Fund, the Trustee shall maintain such accounts as shall be specified in writing by the Obligated Group Agent in order to comply with the Tax Compliance Certificate. Subject to certain transfer provisions provided below and in the Bond Indenture, all money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the Rebate Amount (as defined in the Tax Compliance Certificate), for payment to the federal government of the United States of America. The Issuer, the College and the Holder of any Bonds shall have no rights in or claim to such money. All amounts deposited into or on deposit in the Rebate Fund shall be governed by Sections 5.09 and 6.06 of the Bond Indenture and by the Tax Compliance Certificate. The Trustee shall be deemed conclusively to have complied with such provisions if it follows the written directions of the Obligated Group Agent including the Obligated Group Agent s supplying all necessary information in the manner provided in the Tax Compliance Certificate, and shall have no liability or responsibility to enforce compliance by the Obligated Group Agent or the Issuer with the terms of the Tax Compliance Certificate. 42

55 Upon the Obligated Group Agent s written direction, an amount shall be deposited to the Rebate Fund by the Trustee from deposits by the Obligated Group Agent, if and to the extent required, so that the balance in the Rebate Fund shall equal the Rebate Amount. Computations of the Rebate Amount shall be furnished by or on behalf of the Obligated Group Agent in accordance with the Tax Compliance Certificate. The Trustee shall have no obligation to rebate any amounts required to be rebated pursuant to Section 5.09 of the Bond Indenture, other than from moneys held in the Rebate Fund or provided to it by the Obligated Group Agent. At the written direction of the Obligated Group Agent, the Trustee shall invest all amounts held in the Rebate Fund in Qualified Investments, subject to the restrictions set forth in the Tax Compliance Certificate. The Trustee shall not be liable for any consequences arising from such investment. Money shall not be transferred from the Rebate Fund except as provided in Section 5.09(e) of the Bond Indenture. As provided in Section 5.09(e) of the Bond Indenture, upon receipt of the Obligated Group Agent s written directions, the Trustee shall remit part or all of the balances in the Rebate Fund to the United States of America, as so directed. In addition, if the Obligated Group Agent so directs, the Trustee will deposit money into or transfer money out of the Rebate Fund from or into such accounts or funds as directed by the Obligated Group Agent s written directions. Any funds remaining in the Rebate Fund after redemption and payment of all of the Bonds and payment and satisfaction of any Rebate Amount, or provision made therefor satisfactory to the Trustee, and payment of any amount then owed to the Trustee, shall be withdrawn and remitted to the Obligated Group Agent. Notwithstanding any other provision of the Bond Indenture, the obligation to remit the Rebate Amounts to the United States of America and to comply with all other requirements of Sections 5.09 and 6.06 of the Bond Indenture and the Tax Compliance Certificate shall survive the defeasance or payment in full of the Tax Exempt Bonds. NEITHER ISSUER NOR COLLEGE NOR THE HOLDERS OF ANY BONDS SHALL HAVE ANY RIGHT IN OR CLAIM TO SUCH MONEYS. Limited Obligations SECURITY FOR AND SOURCES OF PAYMENT OF THE BONDS THE BONDS AND THE INTEREST THEREON ARE SPECIAL, LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE TRUST ESTATE PLEDGED THEREFOR UNDER THE BOND INDENTURE. THE BONDS SHALL NOT CONSTITUTE A DEBT OR A PLEDGE OF THE FAITH AND CREDIT OR TAXING POWER OF THE ISSUER, THE CITY OF PHILIPPI OR THE STATE OF WEST VIRGINIA OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL PROVISION OR STATUTORY LIMITATION AND SHALL NEVER CONSTITUTE OR GIVE RISE TO PECUNIARY LIABILITY OF THE ISSUER, THE CITY OF PHILIPPI, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF. Pledge Under the Bond Indenture; Trust Estate Under the Bond Indenture and subject only to the provisions of the Bond Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein, the Issuer pledged all of the Revenues and any other amounts (including proceeds from the sale of the Bonds) held in any fund or account established under the Bond Indenture, except the Rebate Fund, to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms and the provisions of the Bond Indenture. Such security pledge constitutes a lien on and a security interest in 43

56 such assets and shall attach, be perfected and be valid and binding from and after delivery by the Trustee of the Bonds, without any physical delivery thereof or further act. The Bonds are issued pursuant to and secured by the Bond Indenture and pursuant to an Ordinance enacted by the Issuer. Under the Bond Indenture and to secure the payment of the Bonds and the performance and observance of the covenants and conditions set forth in the Bond Indenture, the Issuer pledges, assigns and grants a security interest to the Trustee, for the benefit of the Holders from time to time of the Bonds, the Trust Estate, which is constituted by: (1) all right, title and interest of the Issuer in and to the Notes and all sums payable in respect to the indebtedness secured thereby; (2) all right, title and interest of the Issuer in and to the Lease Agreements, excluding Unassigned Rights; and (3) any and all property of every kind and nature conveyed, pledged, assigned or transferred as and for additional security under the Bond Indenture by the Issuer or the Obligated Group or by anyone on behalf of the Trustee, including, but not limited to, funds of the Obligated Group held by Trustee under the Bond Indenture as security for the Bonds. The Trust Estate does not include amounts held in the Rebate Fund and the Unassigned Rights. The Trust Estate and the rights and privileges conveyed, assigned and pledged by the Issuer under the Bond Indenture to the Trustee and its successors and assigns is conveyed, assigned and pledged, with power of sale, for the equal and pro rata benefit and security of each and every Registered Owner of the Bonds issued under the Bond Indenture, with respect to such senior lien, without preference, priority or distinction as to participation in the lien, benefit and protection of the Bond Indenture of the Bonds over or from the others, by reason of priority in the issue or negotiation or maturity thereof, or for any other reason whatsoever, except as otherwise expressly provided in the Bond Indenture, so that each and all of the Bonds shall, except as otherwise expressly provided in the Bond Indenture, have the same right, lien and privilege under the Bond Indenture and shall be equally secured thereby with the same effect as if the same had all been made, issued and negotiated simultaneously with the delivery thereof and were expressed to mature on one and the same date. However, notwithstanding the foregoing or anything in the Bond Indenture to the contrary, the lien on the Trust Estate in favor of the Registered Owners of the 2012 Series B Bonds and the 2012 Series C Bonds is subordinate and junior in all respects to the lien on the Trust Estate created in favor of the Registered Owners of the 2012 Series A Bonds. Under the Bond Indenture, the Issuer transfers in trust, grants a security interest in and assigns to the Trustee, for the exclusive benefit of the Holders from time to time of the Bonds in their relative priorities of payment and security, all of the Revenues and other assets pledged in the initial paragraph of this subsection and all of the right, title and interest of the Issuer in the Lease (except for (i) the right to receive any additional payments to the extent payable to the Issuer under the Lease, (ii) the Unassigned Rights as set forth in the preambles of the Bond Indenture, and (iii) the obligation of the Obligated Group Agent to make deposits pursuant to the Tax Compliance Certificate). Trustee is entitled to and shall collect and receive all Revenues and any Revenues collected or received by Issuer shall be deemed to be held and to have been collected or received by the Issuer as the agent of Trustee and shall be paid by Issuer to Trustee. Trustee is also entitled to and shall take all steps, actions and proceedings reasonably necessary in its judgment to enforce, either jointly with Issuer or separately, all of the rights of the Issuer that have been assigned to Trustee and all of the obligations of the College under the Lease other than for those items excepted in items (i), (ii) and (iii) in the immediately preceding sentence. All Revenues deposited with Trustee shall be held, disbursed, allocated and applied by Trustee only in such manner as set forth in the Bond Indenture. The Bond Indenture defines Revenues to include all amounts received by the Issuer or the Trustee for the account of the Issuer pursuant or with respect to the Lease and the Notes, including, without limiting the generality of the foregoing, Lease Payments (including both timely and delinquent payments, any late charges and whether paid from any source), and other income and receipts, in each case derived 44

57 by or for the account of the Issuer or the Trustee, from the Obligated Group including without limitation all interest, profits or other income derived from the investment amounts in any fund or account established pursuant to the Bond Indenture, but not including any administrative fees or expenses or any moneys required to the deposited in the Rebate Fund. In connection with the issuance of the Bonds, in order to provide additional security to the Holders of the Bonds, the Obligated Group Agent will enter into a Guaranty Agreement by which the Obligated Group shall agree to be generally obligated for the payment of the principal and interest on the Bonds and other sums that shall become due and payable on the Bonds. See APPENDIX A - FORM OF BOND INDENTURE. Master Trust Indenture and Supplemental Master Indenture Master Trust Indenture The College and ABEC, as members of the Obligated Group, and Wells Fargo Bank, N.A. (the Master Trustee ) will enter into a Master Trust Indenture, dated as of November 1, 2012 (the Master Trust Indenture ). Members of the Obligated Group may issue Obligations under the Master Trust Indenture. As described in the Master Trust Indenture and with certain exceptions, Obligations are evidence of Indebtedness or of an Interest Rate Agreement by a Member of the Obligated Group, including, but not limited to, Guaranteed Indebtedness, all liabilities (with certain exceptions) recorded or required to be recorded as such on the audited financial statements of such Member in accordance with generally accepted accounting principles and all obligations for the payment of money incurred or assumed by such Member, as described in the Master Trust Indenture. No obligation shall be valid or obligatory for any purpose or entitled to any security or benefit under the Master Trust Indenture unless and until a certificate of authentication on such obligation shall have been duly executed by the Master Trustee. Obligations are issued pursuant to a Supplemental Master Indenture. Any one or more series of Obligations issued under the Master Trust Indenture may, so long as any Liens created in connection therewith constitute Permitted Encumbrances, be secured by security (including, but not limited to, letters or lines of credit, insurance or Liens on Property including Facilities of the Obligated Group, or security interests in depreciation reserve, debt service or interest reserve or debt service or similar funds). Such security need not extend to any other Indebtedness (including any other Obligations or series of Obligations). Consequently, the supplemental master indenture pursuant to which any one or more series of Obligations is issued may provide for such supplements or amendments to the provisions of the Master Trust Indenture, including, without limitation, Articles II and V thereof, as are necessary to provide for such security and to permit realization upon such security solely for the benefit of the Obligations entitled thereto. Among other prepayment or redemption rights set forth therein, the Obligated Group has the right under the Master Trust Indenture to the extent not otherwise provided in the Master Trust Indenture or the Supplemental Master Indenture to prepay or redeem all or a portion of the Obligations of any particular series as is necessary to effect the payment, prepayment, redemption, refunding or advance refunding of the series of Related Bonds secured by such Obligations or any portion thereof in the manner provided in the Related Bond Indenture. The Bond Indenture and the Bonds are, respectively, a Related Bond Indenture and Related Bonds under the Master Trust Indenture. If called for prepayment or redemption as provided in the Related Bond Indenture, the Obligations of such series are subject to prepayment or redemption in such amount and at such times and in the manner and with the premium necessary to effect such refunding, redemption and advance refunding or all or the portion of the series of Related Bonds to be refunded, redeemed or advance refunded. 45

58 Each promissory note issued which evidences Obligations under the Master Trust Indenture is subject to redemption prior to maturity to the same extent and with corresponding payments of principal and at the applicable redemption price that the Related Bonds are subject to in accordance with the terms of the Related Bond Indenture. Notice of redemption, as required by the Related Bond Indenture, of the Related Bonds without further notice or action by the Master Trustee will constitute notice of redemption of the corresponding amounts of principal due on such promissory note evidencing the Obligations under the Master Trust Indenture and the same will be due and payable on the date of redemption of such Related Bonds at a redemption price equal to the redemption price payable with respect to the Related Bonds so redeemed. Each Member of the Obligated Group unconditionally and irrevocably, subject to certain withdrawal rights, jointly and severally covenants to promptly and fully pay the principal or, premium, if any, and interest on every Obligation issued under the Master Indenture, as provided by such Obligation. Furthermore, each such Member unconditionally and irrevocably, subject to certain withdrawal rights, jointly and severally agrees to make payments upon each Obligation and be liable therefor at the time and in the amounts equal to the amounts (including principal, interest and premium, if any) to be paid as interest, principal at maturity or by mandatory sinking fund redemption or premium, if any, upon any Related Bonds from time to time Outstanding. So long as there are any Related Bonds Outstanding under the Master Indenture, as security for its obligations to make payments on the Obligations and other obligations heretofore or hereafter issued under the Master Indenture on a parity with the Obligations, the Obligated Group pledges, assigns, conveys, transfers, grants and ratifies to the Master Trustee a first priority security interest in, general lien upon and the right of set-off against the following described Property of the Members, whether now owned or existing or hereafter acquired or arising and where ever located: (1) All Gross Revenues, gross receipts, accounts, bank accounts, general intangibles, contract rights and all related rights; (2) Except as specifically provided in the Master Indenture, all moneys and securities held from time to time by the Master Trustee under the Master Indenture, including, without limitation, moneys and securities held in the funds and accounts established under the Master Indenture; and (3) All proceeds, cash proceeds, cash equivalents, products, replacements, additions and improvements to substitutions for, and accessions of any and all property described in subsections (1) and (2) above. Anything to the contrary contained in the Master Indenture notwithstanding, no accounts, chattel paper, commercial tort claim, deposit account, general intangible, instrument, investment property, payment intangible or other assets that are restricted in whole or in part or are held in trust for any Member or otherwise pursuant to instructions of the donor or to law, rule, regulation or agreement shall constitute collateral pledged hereunder. Additionally and except for Permitted Encumbrances, no Member will cause or permit any of its revenues (including, but not limited to, Gross Revenues), receipts or other moneys, or right to receive any of the same, including, without limitation, accounts, accounts receivable, contract rights, general intangibles, or any proceeds of any of the foregoing, whether cash or non-cash, to become Encumbered, as such term is defined in the Master Trust Indenture. The Master Trust Indenture defines Gross Revenues as meaning all gross charges, receipts, income (including, without limitation, investment income), revenue, deposits, unrestricted donations and other moneys received by or on behalf of any Member of the Obligated Group, arising from the operation 46

59 or ownership of the Facilities (as defined in the Master Trust Indenture) or from the provision of educational services, or from the leasing, sale or other disposition of the Facilities, including, without limitation, insurance and condemnation proceeds with respect to the Facilities or any part or portion thereof, and all rights to receive the same, whether in the form of accounts, accounts receivable, contract rights or other rights, and the proceeds of the same, and whether now owned or held or hereafter coming into existence. Furthermore, so long as there are any Outstanding Obligations under the Master Indenture, as security for its obligations to make payments on the Obligations and other obligations heretofore or hereafter issued under the Master Indenture on a parity with the Obligations, the Members grant a security interest in the following: (a) All right, title and interest of the Obligated Group in and to the real property on which the college facilities of the Obligated Group is located in the City of Philippi, Barbour County, West Virginia (the Real Property ); (b) All right, title and interest of the Obligated Group in and to all equipment, materials, supplies and other property of every kind or nature whatsoever, now or hereafter owned by the Obligated Group or in which it has or shall have an interest, procured for incorporation in or to be affixed to buildings or other improvements on the Real Property or appurtenant thereto; (c) All right, title and interest of the Obligated Group in and to all furniture, furnishings, equipment and other items of tangible personal property now owned or hereafter acquired by the Obligated Group which are used or useful in the buildings or other improvements on the Real Property; and (d) All right, title and interest of the Obligated Group in and to any coal, oil, gas or other mineral rights or timber, and any and all royalties, rentals or other profits arising therefrom, in which it has or shall have an interest. THE MASTER TRUST INDENTURE, THE FORM OF WHICH IS ATTACHED HERETO AS APPENDIX B, CONTAINS SCHEDULE 1 AND SCHEDULE 2, WHICH SET FORTH EXISTING LIENS AND EXISTING INDEBTEDNESS, RESPECTIVELY, OF MEMBERS OF THE OBLIGATED GROUP. IN ADDITION TO THE OTHER TERMS AND CONDITIONS OF THE MASTER TRUST INDENTURE, PROSPECTIVE INVESTORS SHOULD REVIEW SUCH SCHEDULES. For more information, see APPENDIX B - FORM OF THE MASTER TRUST INDENTURE and APPENDIX C - FORM OF THE SUPPLEMENTAL MASTER INDENTURE. Supplemental Master Indenture The College, in its capacity as Obligated Group Agent, and the Trustee entered into a supplemental master trust indenture , dated as of November 1, 2012 (the Supplemental Master Indenture, and together with the Master Trust Indenture, the Master Indenture ). The Supplemental Master Indenture supplements the Master Trust Indenture. Among other things, the Supplemental Master Indenture creates the A Note, the B Note, the C Note and the D Note, each of which is further described below. The Supplemental Master Indenture also sets forth the Obligated Group s cash maintenance requirements, which is days cash on hand which the Obligated Group must meet on the last day of each quarter, beginning June 30, Furthermore, the Supplemental Master Indenture provides that the Obligated Group must satisfy a historical debt service coverage ratio of at least 1.20:1 on an annual basis, beginning at the end of Fiscal Year

60 The Supplemental Master Indenture also sets forth the rights of the Holders of the 2012 Series A Notes, certain financial reporting requirements to be made by the Members of the Obligated Group and certain payment priorities related to the 2012 Series A Note vis-à-vis the Subordinated Notes. In particular, the Supplemental Master Indenture provides the Obligated Group Agent must obtain the prior written consent or approval of the Holders of a majority of the 2012 Series A Bonds Outstanding, which consent or approval shall not be unreasonably withheld, for, among other things: admission of any new Member to the Obligated Group under the Master Indenture and withdrawal of any Member of the Obligated Group under the Master Indenture. The Supplemental Master Indenture also provides, for so long as the Notes are outstanding, for the amendment to the Master Trust Indenture in relation to permitted indebtedness of members of the Obligated Group, as well as additional provisions related to the prohibition of the Obligated Group incurring balloon indebtedness, put indebtedness or guaranteed indebtedness, all as defined in the Supplemental Master Indenture. As long as any Notes are outstanding, two provisions of the Master Trust Indenture are to be amended or added, respectively, regarding the sale, lease or other disposition of property. Specifically, subsection (g) of Section 417 (related to Sale, Lease or Other Disposition of Property) will be amended to read: (g) (i) Leases of coal, oil, gas or other mineral rights or timber to any Person, (ii) sales or transfers of coal, oil, gas or other mineral rights or timber to any Person where the sales price for such Property to be sold or transferred by the Obligated Group does not exceed $100,000, and (iii) with the prior written consent of the Holders of a majority of the 2012 Series A Bonds Outstanding, sales or transfers of coal, oil, gas or other mineral rights or timber to any Person where the sales price of such Property to be sold or transferred by the Obligated Group exceeds $100,000. Furthermore, the Supplemental Master Indenture states that a new subsection (h) shall be inserted into such Section 417, which shall read as follows: (h) To any Person upon delivery to the Master Trustee of an Officer s Certificate of a Member (i) certifying that during the fiscal year immediately preceding the proposed disposition for which financial statements have been reported upon by independent certified public accountants, (a) the Historical Maximum Annual Debt Service Coverage Ratio of the Obligated Group, taking into account such disposition, would not have been less than 1.20:1 or (b) if the Historical Maximum Annual Debt Service Coverage Ratio is less than 1.20:1, the Historical Maximum Annual Debt Service Coverage Ratio would not have been reduced by more than 10% and (ii) demonstrating that, after taking into account such disposition, the conditions described in Section 304 of the Supplemental Indenture are met for allowing the incurrence of one dollar of additional Funded Indebtedness. For so long as 2012 Series A Bonds are outstanding, the Notes shall be subject to certain payment priority, as described in the Supplemental Master Indenture and discussed below under the section titled SECURITY FOR AND SOURCES OF PAYMENT OF THE BONDS - Notes. The Supplemental Master Indenture also provides that the Notes shall be secured by a collateral assignment of all right, title and interest in a life insurance policy issued to the Obligated Group Agent on the life of Richard A. Creehan, the President of the College, in the amount of $5,000,000 (the Life Insurance Policy ). The Life Insurance Policy shall remain in full force and effect, and shall maintain for a period of two consecutive fiscal quarters, measured as of the last day of each fiscal quarter, (a) a Historical Debt Service Coverage Ratio of at least 1.30:1 and (b) Days Cash on Hand of at least 120 days, at which time the holders of a majority of the outstanding 2012 Series A Bonds shall direct the Trustee as loss-payee and insured to release the collateral assignment of the Life Insurance Policy as security for the Notes. Moreover, the Supplemental Master Indenture provides that, as security for payment in full of the Notes, the College assigns, pledges and grants a security interest to Wells Fargo Bank, N.A., in its capacity as Master Trustee and Bond Trustee, all of the College s right, title and interest in a certain 48

61 deposit account, as defined in a Deposit Account Control Agreement dated as of November 1, 2012 among the College, the depository bank designated therein and the Master Trustee. In the Supplemental Master Indenture, the Obligated Group covenants to establish, not later than November 30, 2016, an Unrestricted Endowment Fund which will consist of at least $1,300,000. The funds in the Unrestricted Endowment Fund must be available for use for any purpose and such funds may not be restricted. The Unrestricted Endowment Fund must be maintained by the Obligated Group for so long as the A Note is outstanding. Furthermore, the Obligated Group Agent must certify as to the amount contained on deposit in such fund as of the last day of each fiscal year, beginning on the fiscal year ending June 30, For so long as the A Note is outstanding, holders of the 2012 Series A Bonds shall be entitled, as provided in the Supplemental Master Indenture, to attend meetings of the Board of Trustees of the Obligated Group Agent, in such manner as is set forth in the Supplemental Master Indenture. See APPENDIX C - FORM OF THE SUPPLEMENTAL INDENTURE. See also DAYS CASH ON HAND and RATES, CHARGES AND DEBT SERVICE COVERAGE above for further information related to the Supplemental Master Indenture. Initial Lease Agreement In connection with the issuance of Bonds, the College, as the lessor, and the Issuer, as the lessee, have entered into an initial lease dated as of November 1, 2012 (the Initial Lease ) of certain property as further described therein. Generally, the term of the Initial Lease begins on the date of delivery of executed counterparts of the Initial Lease and will continue, unless otherwise terminated as provided therein, until the maturity of the Bonds or until such later date as the entire principal of and interest on the Bonds shall have been paid in full. If the Bonds are earlier paid, via prepayment or redemption prior to maturity, the Initial Lease will terminate as of the date of such payment. Rent payable under the Initial Lease is the consideration provided by the Issuer s issuance of the Bonds and the mutual agreements and covenants of the parties to the Initial Lease. Under the Initial Lease, the College indemnifies the Issuer from any claims arising from the negligence or omission of the College. Furthermore, the Property (as defined in the Initial Lease) may not be sold, transferred or otherwise disposed of during the term of the Initial Lease, provided, however, certain property may be subject to sale, transfer or disposition as provided in the Master Trust Indenture. The Initial Lease is subordinate to the Deeds of Trust (as defined in the Indenture). Lease See APPENDIX D FORM OF THE INITIAL LEASE. In connection with the issuance of the Bonds, the Issuer, as lessor, and the College, as lessee, entered into the lease dated as of November 1, 2012 (the Lease ) of certain property defined therein as the Facilities which includes, but is not limited to, the Project improvements financed with a portion of the proceeds of the Bonds. The term of the Lease begins on the date of the Lease and will extend unless earlier terminated, until October 1, 2044, which is the term of the Bonds or until such later date as the entire principal of and interest on the Bonds have been fully paid. If the Bonds are earlier paid, via prepayment or redemption prior to maturity, the Lease will terminate as of the date of such payment. During the Lease Term and beginning November 1, 2012, the College will make monthly rental payments in such amounts as are necessary to pay principal of and interest on the Bonds, all as set forth in Exhibit B Debt Service Schedule attached to and incorporated into the Lease (the Lease Payments ). 49

62 The Lease Payments will, in turn, be applied by Issuer to pay principal of and interest on the Bonds as they become due and payable. Proceeds of the Bonds will be applied to finance the costs of the Project. The Lease also describes certain obligations of College regarding maintenance and restoration of the Debt Service Reserve Fund, indicating, among other things, that for so long as the 2012 Series A Bonds remain outstanding, the College is required to fund and maintain the Debt Service Reserve Fund, which secures only the 2012 Series A Bonds. Additionally, the Lease provides that amounts paid by the College shall be deposited into the Operating Reserve Fund to obtain and maintain the Days Cash on Hand requirement, as set forth in the Supplemental Master Indenture. Furthermore, the Lease states that, on the first day of the month following the Construction Draw Period and continuing until the maturity date, the College is to provide revenues to the Trustee for deposit into the Revenue Fund, sufficient to fund the items set forth in the Lease and described herein under the heading SECURITY FOR AND SOURCES OF PAYMENT OF THE BONDS Revenue Fund, and the Trustee shall apply monies transferred from the Revenue Fund and deposited to the Interest Fund and Principal Fund hereunder in accordance with the order of priority set forth in the Supplemental Master Indenture. Under the Lease, the College will pay all taxes, assessments, utility fees and charges during the term of the Lease. College is also responsible to maintain the Facilities (as defined in the Lease) in good and tenantable condition equal to the condition of the premises as of the date of the Lease or the first date of occupancy, as applicable, of any part of the Facilities, normal wear and tear excepted. The College covenants in the Lease to, among other things, comply with and carry out the continuing disclosure obligation set forth in the Rule (as defined hereinbelow); maintain insurance coverages as required under the terms of the Lease and the Master Trust Indenture; except for Permitted Encumbrances and as allowed by Sections 413 and 417 of the Master Trust Indenture, not to sell, transfer, lease, pledge, mortgage, encumber, convey or assign any of Lessee s assets, other than in the ordinary course of business, without Trustee s prior written consent; maintain College s tax exempt status under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended; comply with all arbitrage/rebate requirements set forth in Article V of the Indenture and the Tax Compliance Certificate; complete construction of the Construction Projects so that College and its students can occupy the same; and promptly pay all administrative fees and expenses associated with the issuance of the Bonds and the creation and maintenance of all funds and accounts created under the Indenture. Notes Lease Notes See APPENDIX E FORM OF THE LEASE. The Obligated Group will issue the A Note, the B Note and the C Note (the Lease Notes ) under the Master Indenture to evidence the obligations of the College under the Lease. The A Note evidences the Obligated Group s obligation to pay the Issuer the sum of $34,275,000, which is the principal amount of the 2012 Series A Bonds, and evidences and secures the obligation of the College under the Lease to make payments in respect to the purchase price of the 2012 Series A Bonds. The B Note evidences the Obligated Group s obligation to pay the Issuer the sum of $2,510,000, which is the principal amount of the 2012 Series B Bonds, and evidences and secures the obligation of the College under the Lease to make payments in respect to the purchase price of the 2012 Series B Bonds. The C Note evidences the Obligated Group s obligation to pay the Issuer the sum of $680,000, which is the principal amount of the 2012 Series C Bonds, and evidences and secures the obligation of the College under the Lease to make payments in respect to the purchase price of the 2012 Series C Bonds. The Lease Notes are Obligations under the Master Indenture, which is evidence of any Indebtedness or of an Interest Rate Agreement issued by a Member pursuant to the Master Indenture in such manner as 50

63 provide therein. The Obligated Group covenants to pay debt service charges on the Lease Notes at the times and amounts as provided in each such note, respectively. Furthermore, the Lease Notes are subject to redemption to the extent, upon the conditions and with respect to the corresponding payments of principal and interest and any applicable redemption premium of their respective Bonds to which they are related. Additional Obligations may be issued pursuant to the Master Indenture which are secured by covenants contained therein and which are of equal rank without preference or priority or distinction of any Obligation of any series over any other Obligation, except as expressly provided in the Master Indenture. Notwithstanding the foregoing, the B Note and the C Note are Subordinated Indebtedness, as defined in the Master Indenture, and are subordinate to and not on a parity with the A Note or the D Note and any other senior Obligations issued under the Master Indenture, except that each of the B Note and the C Note issued under the Supplemental Trust Indenture is on a parity with the other. In the Bond Indenture, the Issuer agrees that the Trustee, in its own name or in the name of the Issuer, may enforce all rights of the Issuer and all obligations of the College under and pursuant to the Lease for and on behalf of the Bondholders (other than the Unassigned Rights), whether or not the Issuer is in default hereunder. The Lease Notes will be assigned to the Trustee and the Trustee shall be considered the holder of the Notes. See APPENDIX C - FORM OF THE SUPPLEMENTAL INDENTURE and APPENDIX H FORM OF THE NOTES. Guaranty Note The Obligated Group Agent, on behalf of the Obligate Group, will issue the D Note (the Guaranty Note ) under the Master Indenture. The Guaranty Note evidences the Obligated Group s obligation to pay the Trustee the sum of $37,465,000, which is the principal amount of the Bonds, and evidences and secures the obligation of the Obligated Group under the Guaranty Agreement to absolutely and unconditionally guarantee to make full and prompt payment and performance by the Issuer of its obligations to make payments in respect of the purchase price of the Bonds that are tendered for purchase in accordance with the Bond Indenture. Principal installments of the Guaranty Note correspond to the maturities and mandatory sinking fund payments of the Bonds. The final maturity of the Guaranty Note is October 1, 2044 and the Guaranty Note bears interest at the same rates as the Bonds, interest payments of which correspond with the Interest Payment Dates of the Bonds. The Guaranty Note is an Obligation under the Master Indenture. The Obligated Group covenants to pay debt service charges on the Guaranty Note at the times and amounts as provided in each such note, respectively. Additional Obligations may be issued pursuant to the Master Indenture which are secured by covenants contained therein and which are of equal rank without preference or priority or distinction of any Obligation of any series over any other Obligation, except as expressly provided in the Master Indenture. See APPENDIX C - FORM OF THE SUPPLEMENTAL INDENTURE and APPENDIX H FORM OF THE NOTES. Priority of Payment of Notes For so long as the 2012 Series A Bonds remain Outstanding, payments on the Notes shall be made by the Trustee in the following order of priority: first, payments shall be made to pay the interest and principal due on the 2012 Series A Note in accordance with the repayment terms thereof; second, payments shall be made to pay the interest and principal due on the 2012 Subordinate Notes in accordance with the repayment terms thereof; provided, however, if an Event of Default shall have occurred and be continuing under the Master Indenture, no payments shall be made on the 2012 Subordinate Notes during the continuance of any Event of Default. Payments on the D Note shall be made by the Trustee in accordance with the priority of payments set 51

64 forth in this Section 5.01 related to the 2012 Series A Note and the 2012 Subordinate Notes. See APPENDIX C - FORM OF THE SUPPLEMENTAL INDENTURE and APPENDIX H FORM OF THE NOTES. Guaranty Agreement The Obligated Group Agent for the Obligated Group and the Trustee entered into a Guaranty Agreement dated as of November 1, 2012 ( Guaranty Agreement ) under which the Members of the Obligated Group, jointly and severally, unconditionally and irrevocably guarantee to the Trustee the full and prompt payment and performance by the Issuer of all of its obligations under the Bonds in their respective payment priority and related documents, including, but not limited to, payment of principal of, redemption premium, if any, and interest, fees, expenses and indemnification amounts when and as due, be it at stated maturity, by acceleration or otherwise. The Guaranty Agreement is a continuing, absolute and unconditional guaranty and shall remain in full force and effect until the entire principal of, redemption premium, if any, and interest on the Bonds in their respective payment priority shall have been paid or provided for according to the terms of the Bonds and certain related documents, until all obligations arising from a Determination of Taxability have been discharged and all obligations of the Issuer under the Bonds and certain related documents have been paid and satisfied in full. The Guaranty Agreement is one of payment not of collection and the Members of the Obligated Group waive any right to require that an action be brought against the Issuer or require that resort be had to security. If the Issuer defaults in paying principal of, redemption premium, if any, fees or interest or any other amount payable under the Bonds or certain related documents, when due by maturity, by acceleration, upon demand or otherwise, or upon an Event of Default under the Guaranty Agreement, the Members, upon demand by Trustee or its successors or assigns, will promptly and fully make such payments. The obligations of the Members under the Guaranty Agreement shall not be impaired, modified, released or limited by any occurrence or condition whatsoever, as further described in the Guaranty Agreement. The obligations of the Members of the Obligated Group under the Guaranty Agreement are evidenced by the D Note. For additional information related to the Guaranty Agreement or the Notes, see APPENDIX F - FORM OF THE GUARANTY AGREEMENT. See also APPENDIX H - FORMS OF NOTES and SECURITY FOR AND SOURCES OF PAYMENT OF THE BONDS - Notes. Deeds of Trust The College and ABEC are each entering one or more certain credit line deeds of trust, each dated as of November 1, (each a Deed of Trust and collectively Deeds of Trust ), with a trustee or trustees named therein. The Deeds of Trust are entered into for the benefit of the Master Trustee and secure the Notes to be issued under the Master Trust Indenture. College s Deeds of Trust a. College Credit Line Deed of Trust Assignment of Rents and Leases, Security Agreement and Fixture Filing Under the College s Credit Line Deed of Trust Assignment of Rents and Leases, Security Agreement and Fixture Filing ( College s Property Deed of Trust ), the College grants and conveys to the trustee or trustees all of the College s estate and other right, title and interest covering certain Property 52

65 as more fully described therein. Such Property includes, but is not limited to, all of the College s real property located in the City of Philippi, Barbour County, West Virginia described in the College s Property Deed of Trust, all buildings, improvements and fixtures of every kind and all machinery, equipment and property which are or shall be attached to or deemed to be fixtures and a part of the real property conveyed by the College, all furniture, furnishings, equipment and other items of intangible personal property now owned or in which the Colleges has an interest or subsequently acquires which are used or useful in the buildings or other improvements on such real property, and all rentals, income, issues and profits that may accrue from the aforementioned land and improvements, provided that for so long as the College is not in default under the Deed of Trust, the College may collect such rents, income, issues and profits. The College s Property Deed of Trust secures payment: of the Notes and any and all extensions, modifications and renewals thereof; of other obligations issued under the Master Trust Indenture on a parity with the A Note and the D Note (the Senior Notes ); of other obligations issued under the Master Trust Indenture on a parity with the B Note and the C Note (the Subordinate Notes ); all other indebtedness of the College to the Master Trustee or the Holders of the Obligations or to the Trustees under the College s Property Deed of Trust at any time arising under the College s Property Deed of Trust or the Master Trust Indenture. To the extent permitted by law, the Senior Notes and any obligations issued under the Master Trust Indenture on a parity therewith are secured on a parity and the Subordinate Notes and any obligations issued under the Master Trust Indenture on a parity therewith are secured on a parity. The lien on the former hospital facility located on the campus of the College granted in connection with the United States Department of Education letter of credit is prior to the lien on the College s Property Deed of Trust. Moreover, the College makes several covenants, representations, warranties and agreements in the College s Property Deed of Trust, including, but not limited to, paying taxes, assessments and other governmental fees and charges when due, and keeping the building and improvements on the Property or later erected thereon, and all other insurable property covered by the College s Property Deed of Trust insured against loss or damage by fire and such other casualties, contingencies or hazards as Master Trustee may require, in such manner as further described in the College s Property Deed of Trust. b. College Credit Line Deed of Trust - Mineral Financing Statement, as-extracted Collateral Filing and Fixture Filing Under the College s Credit Line Deed of Trust - Mineral Financing Statement, as-extracted Collateral Filing and Fixture Filing ( College s Mineral Deed of Trust ), College grants and conveys to the trustee or trustees all of ABEC s estate and other right, title and interest covering, among other things, certain Mineral Rights, Personalty and Servitudes, collectively, Property, all as more fully described therein. Such Mineral Rights include, but are not limited to, all coal, oil, gas, coalbed methane gas and other minerals owned by or leased to the College located upon, under or in the lands described or referred to in College s Mineral Deed of Trust, included within the land in place and as produced and extracted. The Master Indenture allows College to lease or transfer such mineral interests under the conditions described in Section 417 and in the definition of Permitted Encumbrances. A title search has been conducted regarding a portion of the mineral rights subject to the College s Mineral Deed of Trust. The Property subject to the College s Mineral Deed of Trust is described therein. The College s Mineral Deed of Trust secures payment: of the Notes and any and all extensions, modifications and renewals thereof; of other obligations issued under the Master Indenture on a parity with the Senior Notes; of other obligations issued under the Master Indenture on a parity with the Subordinate Notes; all other indebtedness of the College to the Master Trustee or the Holders of the Obligations or to the Trustees under the College s Mineral Deed of Trust at any time arising under the College s Mineral Deed of Trust or the Master Indenture. To the extent permitted by law, the Senior Notes and any obligations issued under the Master Indenture on a parity therewith are secured on a parity and the Subordinate Notes and any obligations issued under the Master Indenture on a parity therewith are secured on a parity. 53

66 Moreover, College makes several covenants, representations, warranties and agreements in College s Mineral Deed of Trust, including but not limited to paying taxes, assessment and other governmental fees and charges when due, as further described in the College s Mineral Deed of Trust. ABEC s Deed of Trust a. ABEC Credit Line Deed of Trust - Mineral Financing Statement, as-extracted Collateral Filing and Fixture Filing Under ABEC s Credit Line Deed of Trust - Mineral Financing Statement, as-extracted Collateral Filing and Fixture Filing ( ABEC s Mineral Deed of Trust ), ABEC grants and conveys to the trustee or trustees all of ABEC s estate and other right, title and interest covering, among other things, certain Mineral Rights, Personalty and Servitudes, collectively, Property, all as more fully described therein. Such Mineral Rights includes, but is not limited to, all coal, oil, gas, coalbed methane gas and other minerals owned by or leased to ABEC located upon, under or in the lands described or referred to in ABEC s Mineral Deed of Trust, included within the land in place and as produced and extracted. The Master Indenture allows ABEC to lease or transfer such mineral interests under the conditions described in Section 417 and in the definition of Permitted Encumbrances. No title search has been conducted regarding the mineral rights subject to the ABEC s Mineral Deed of Trust. The Property subject to ABEC s Mineral Deed of Trust is set forth in the ABEC s Mineral Deed of Trust. ABEC s Mineral Deed of Trust secures payment: of the Notes and any and all extensions, modifications and renewals thereof; of other obligations issued under the Master Indenture on a parity with the Senior Notes; of other obligations issued under the Master Indenture on a parity with the Subordinate Notes; all other indebtedness of ABEC to the Master Trustee or the Holders of the Obligations or to the Trustees under the ABEC s Mineral Deed of Trust at any time arising under ABEC s Mineral Deed of Trust or the Master Indenture. To the extent permitted by law, the Senior Notes and any obligations issued under the Master Indenture on a parity therewith are secured on a parity and the Subordinate Notes and any obligations issued under the Master Indenture on a parity therewith are secured on a parity. Moreover, ABEC makes several covenants, representations, warranties and agreements in ABEC s Mineral Deed of Trust, including but not limited to paying taxes, assessment and other governmental fees and charges when due, as further described in ABEC s Mineral Deed of Trust. For more information related to the Deeds of Trust, the Notes or the Master Trust Indenture, see APPENDIX G - FORM OF THE DEED OF TRUST. See also APPENDIX B - FORM OF MASTER TRUST INDENTURE, APPENDIX H - FORMS OF NOTES, SECURITY FOR AND SOURCES OF PAYMENT OF THE BONDS Master Trust Indenture and SECURITY FOR AND SOURCES OF PAYMENT OF THE BONDS - Notes. Costs of Issuance Fund A Costs of Issuance Fund is created by the Bond Indenture from which Trustee will use and withdraw funds to pay Costs of Issuance upon receipt of a Requisition signed by an authorized representative of the Obligated Group Agent. Such payments shall be made without further authorization of the Issuer. The Costs of Issuance Fund will be funded at the time of closing with a deposit to such fund as provided in the Bond Indenture. On December 31, 2012, or upon earlier request of the Obligated Group Agent, Trustee shall transfer any amounts remaining in the Costs of Issuance Fund to the Interest Fund to pay interest on the Bonds on the next succeeding Interest Payment Date and the Costs of Issuance Fund will be closed. See APPENDIX A - FORM OF BOND INDENTURE. 54

67 Project Fund and Capitalized Interest Fund A Project Fund is created under the Bond Indenture, which will contain a Capitalized Interest Fund. Funds in the Project Fund are used and withdrawn by the Trustee to pay Project Costs upon Requisition by the College, provided in such manner as set forth in the Bond Indenture. Meanwhile, funds in the Capitalized Interest Fund will be withdrawn by the Trustee and transferred to the Interest Fund on or prior to each Interest Payment Date until April 1, 2014 to pay capitalized interest on the portion of the 2012 Series A Bonds used to finance the Construction Projects. $2,996, of the funds in the Project Fund will be expended immediately, pursuant to a Requisition, to reimburse the College for costs of previously incurred capital expenditures. Funds remaining in the Capitalized Interest Fund after April 1, 2014 will be transferred to the Interest Fund to pay interest on the Bonds on the next succeeding Interest Payment Date and the Capitalized Interest Fund shall then be closed. Except for payments discussed in this section immediately above, any payment from the Project Fund, Trustee must receive from the Obligated Group Agent a requisition in the form and containing the information set forth in the Bond Indenture. All such requisitions from the Project Fund must be certified as correct by the Construction Monitor and, upon receipt thereof, the Trustee will make a requisition payment in the amount set forth in the requisition. When the Construction Projects have been completed, the College will deliver to the Trustee a certificate stating as much, well as the date of completion, and that the costs thereof have been determined and paid (or that all such costs have been paid less specified claims that are subject to dispute and for which a retention in the Project Fund is to be maintained in the full amount of such claims until such dispute is resolved). Once it receives such a certificate, the Trustee will transfer the remaining balance in the Project Fund, less the amount of retention, to the Principal Fund, which shall be used to pay principal on the 2012 Series A Bonds in accordance with Section 4.07 of the Bond Indenture. After such transfer or release of the retained amounts, the Project Fund will be closed. See APPENDIX A - FORM OF THE BOND INDENTURE. Interest Fund An Interest Fund is created by the Bond Indenture into which Trustee will deposit certain Revenues when and as such Revenues are received. Such Revenues include: (a) interest component of all Lease Payments, excluding the interest component of all cash prepayments of Lease Payments made by the College pursuant to the Lease, which shall be deposited into the Redemption Fund; (b) all interest, profits and other income received from the investment of moneys in the Interest Fund; and (c) any other Revenues not required to be deposited in any other fund or account established by the Bond Indenture or the Lease. Trustee will deposit to the Interest Fund any remaining balances in the Costs of Issuance Fund and the Capitalized Interest Fund in accordance with the Bond Indenture. In accordance with the order of priority set forth in the Supplemental Master Indenture, the moneys in the Interest Fund will be used and withdrawn by Trustee, pro rata, solely to pay interest on the Bonds as the same becomes due and payable (including accrued interest on the Bonds purchased or redeemed prior to maturity as provided in the Bond Indenture), pursuant to the Bond Indenture. If funds in the Interest Fund on an Interest Payment Date are insufficient to pay such interest in full, the Trustee shall withdraw from the Debt Service Reserve Fund the amounts necessary to pay interest on the 2012 Series A Bonds on such date. See APPENDIX A - FORM OF BOND INDENTURE. Principal Fund A Principal Fund is created by the Bond Indenture, which will contain a separate Mandatory Sinking Account. The Trustee shall deposit certain Revenues when and as such Revenues are received into the Principal Fund. Such Revenues include: (a) principal component of all Lease Payments, excluding the principal component of all cash prepayments of Lease Payments made pursuant to the Lease, which shall be deposited into the Redemption Fund; and (b) all interest, profits and other income 55

68 received from the investment of moneys in the Principal Fund. Furthermore, Trustee shall deposit any remaining balance in the Project Fund into the Principal Fund in accordance with Section 3.04 of the Bond Indenture, to be applied in accordance with Section 4.07 of the Bond Indenture. In accordance with the order of priority set forth in the Supplemental Master Indenture, all moneys in the Principal Fund will be used and withdrawn by Trustee solely to redeem the Bonds or pay the Bonds at maturity, as provided in Section 5.04 of the Bond Indenture. On each Mandatory Sinking Account Payment Date, Trustee will apply Mandatory Sinking Account Payments required on such date to redeem or pay at maturity, as the case may be, of the applicable series of the Bonds, in the amounts and upon notice and in the manner set forth in Article IV of the Bond Indenture, provided that at any time prior to giving the redemption notice, Trustee shall, upon direction of the Obligated Group Agent, apply such moneys to purchase the Bonds at public or private sale, as and when and at such prices, subject to certain inclusions and exclusions, as directed by the Obligated Group Agent and as provided in the Indenture, except that the purchase price, excluding accrued interest, shall not exceed the par amount of such Bond. If, during the 12-month period immediately preceding said Mandatory Sinking Account Payment Date, (a) Trustee has purchased Bonds with money in the Principal Fund; or (b) during said period and prior to giving notice of redemption, the Obligated Group Agent has deposited Bonds with Trustee; or (c) Bonds were at any time purchased or redeemed by the Trustee from the Redemption Fund and allocable to said Mandatory Sinking Account Payments, the Bonds so purchased, deposited or redeemed shall be applied, to the extent of their full principal amount, to reduce said Mandatory Sinking Account Payments. All Bonds purchased or deposited pursuant to Section 5.03 of the Bond Indenture will be cancelled and destroyed by the Trustee to or upon the order of the Obligated Group Agent. Furthermore, all Bonds purchased from the Principal Fund or deposited by the Obligated Group Agent with Trustee shall be first allocated to the next succeeding Mandatory Sinking Account Payments, then to the remaining Mandatory Sinking Account Payments selected by the Obligated Group Agent. If amounts on deposit in the Principal Fund on a Principal Payment Date are insufficient to pay such principal in full, Trustee shall withdraw from the Debt Service Reserve Fund such amounts as are necessary to pay the principal of the 2012 Series A Bonds. See APPENDIX A - FORM OF BOND INDENTURE. Redemption Fund A Redemption Fund is established by the Bond Indenture and will contain an Optional Redemption Account and a Special Redemption Account. When and as received, Trustee will deposit certain Revenues into the Optional Redemption Account, including: (a) except as deposited in the Special Redemption Account and described below and in the Bond Indenture, the principal component of all cash prepayments of Lease Payments made pursuant to the Lease; and (b) all interest, profits and other income received from the investment of moneys in the Optional Redemption Account. When and as received, Trustee also will deposit certain Revenues into the Special Redemption Account, including: (a) the principal component of all cash prepayments of Lease Payments made by the College pursuant to the Lease which are specified in a certificate of the College to have been derived from insurance or condemnation proceeds received with respect to the facilities of the College; and (b) all interest, profits and other income received from the investment of moneys in the Special Redemption Account. All moneys in the Optional Redemption Account and Special Redemption Account will be used and withdrawn by the Trustee solely to redeem the Bonds, as provided in Article IV of the Bond Indenture, at the next succeeding redemption date for which notice has been given and at the Redemption Prices then applicable to redemptions from the use of moneys as appropriate in the Optional Redemption Account to purchase Bonds and the Special Redemption Account. All Bonds redeemed from the 56

69 Redemption Fund will be allocated to applicable Mandatory Sinking Account Payments in inverse order of their payment dates. Notwithstanding anything in the Bond Indenture to the contrary, all amounts on deposit in the Optional Redemption Account and the Special Redemption Account will first be used towards redemption of the 2012 Series A Bonds and then toward the 2012 Subordinate Bonds. See APPENDIX A - FORM OF BOND INDENTURE. Debt Service Reserve Fund So long as any of the 2012 Series A Bonds are outstanding, the Trustee will establish and maintain a Debt Service Reserve Fund, which sill secure only the 2012 Series A Bonds. Initially, $2,947, of bond proceeds shall be deposited into the Debt Service Reserve Fund to fully fund the Debt Service Reserve Fund and, thereafter, amounts paid into the Debt Service Reserve Fund shall be amounts paid by the Obligated Group Agent pursuant to the terms of the Lease to maintain and restore the Debt Service Reserve Fund to the Debt Service Reserve Fund Requirement. The Indenture defines the Debt Service Reserve Fund Requirement to mean the lesser of (i) the maximum amount of principal and interest which shall be payable during the current or any succeeding Bond Year on all 2012 Series A Bonds then outstanding, (ii) an amount equal to 10% of the proceeds of the 2012 Series A Bonds, or (iii) an amount equal to 125% of the average annual debt service on the 2012 Series A Bonds. In the 12-month period preceding the final maturity date of the 2012 Series A Bonds, moneys in the Debt Service Reserve Fund shall be credited against payments otherwise due under the Lease in respect to the principal of and interest on the 2012 Series A Bonds and shall be transferred to the Principal Fund, the Interest Fund or the Redemption Fund, as appropriate, for payment of such principal and interest; provided that no credit will be given and no transfer will be made if and to the extent that, immediately before such crediting and transfer, the amount on deposit in the Debt Service Reserve Fund is not at least equal to the Debt Service Reserve Fund Requirement, less amounts previously transferred from the Debt Service Reserve Fund during the 12-month period as provided in this paragraph. If the Debt Service Reserve Fund balance on an Interest Payment Date exceeds the Debt Service Reserve Requirement, Trustee shall transfer the excess to the Interest Fund for payment of interest on the 2012 Series A Bonds. In the event the balances in the Principal and Interest Funds are sufficient to pay principal of, redemption premium, if any, and interest on the 2012 Series A Bonds on any Principal Payment Date, thereby rendering moneys in the Debt Service Reserve Fund unnecessary to make such payments, such money shall be transferred as directed by the Obligated Group Agent to the Trustee. The Obligated Group Agent is only required to fund and maintain the Debt Service Reserve Fund to the extent required by the Lease. See APPENDIX A - FORM OF BOND INDENTURE. Operating Reserve Fund As long as any of the Bonds are outstanding, Trustee shall establish and maintain an Operating Reserve Fund into which shall be deposited amounts paid by the Obligated Group pursuant to the Lease to obtain and maintain the Days Cash on Hand requirement as set forth therein. Whenever there shall be on deposit in the Operating Reserve Fund an amount which exceeds the amount required to be on deposit therein to satisfy the Days Cash on Hand requirement, the Trustee shall transfer such excess monies to the Obligated Group Agent in accordance with the terms of Section 5.06 of the Bond Indenture. See APPENDIX A - FORM OF BOND INDENTURE and APPENDIX E - FORM OF THE LEASE. 57

70 Revenue Fund As long as any of the Bonds are outstanding, Trustee shall establish and maintain a Revenue Fund into which shall be deposited amounts paid by the College to the Trustee pursuant to the Bond Indenture and as described below. Beginning on the first day of the month following the Construction Draw Period and continuing on the first day of each month thereafter until the Maturity Date, the Obligated Group Agent will deposit with the Trustee for deposit into the Revenue Fund revenues sufficient to fund the following items and the Trustee will apply such deposits in the following descending order of priority: 1. Pay the current and outstanding fees of the Trustee; 2. Deposit to the Interest Fund 1/6 of the next interest payment amount due on the next ensuing Interest Payment Date, less all interest, profits and other income received from the investment of money in the Interest Fund, including any funds transferred to the Interest Fund as provided in Sections 3.04(A) and (C) of the Bond Indenture; 3. Deposit to the Principal Fund 1/12 of the next principal payment amount due on the next ensuing Principal Payment Date, less all interest, profits and other income received from the investment of money in the Principal Fund; 4. If not funded in an amount equal to the Debt Service Reserve Fund Requirement, deposit to the Debt Service Reserve Fund the amounts required as provided in and in accordance with the time periods set forth in the Lease; 5. Payment of any and all fees due to any consultant pursuant to any management agreement entered into by the College pursuant to the Supplemental Master Indenture, in accordance with joint written instructions received by the Trustee from the Obligated Group Agent and the consultant under any management agreement; 6. If not funded in an amount required to meet the Days Cash on Hand requirement, deposit to the Operating Reserve Fund the amounts required to be deposited under the Lease to satisfy the Days Cash on Hand requirement; and 7. Whenever all of the foregoing required transfers and payments have been made by the Trustee and there remains any surplus balance in the Revenue Fund, such surplus balance may be released by the Trustee to the Obligated Group Agent as instructed by the Obligated Group Agent to be used for any lawful purpose. Notwithstanding anything hereinabove to the contrary, for so long as the 2012 Series A Bonds remain Outstanding, deposits made by the Trustee to the Interest Fund, the Principal Fund and the Debt Service Reserve Fund shall be credited first towards the amount necessary to pay in full the interest and principal then due on the 2012 Series A Bonds on their next ensuing Interest Payment Date and Principal Payment Date, respectively, then towards the amount necessary to satisfy the Debt Service Reserve Requirement, and thereafter, so long as no Event of Default has occurred under the Indenture, and is continuing, to the credit of the accounts established for the 2012 Subordinate Bonds. See APPENDIX A - FORM OF BOND INDENTURE, APPENDIX C FORM OF THE SUPPLEMENTAL INDENTURE and APPENDIX E - FORM OF THE LEASE. 58

71 Tax Covenant Issuer agrees to, at all times, do and perform all acts and things required by law and to require the Obligated Group Agent at all times to do and perform all acts and things required by law and the Bond Indenture that are necessary or desirable in order to assure that interest paid on the Tax Exempt Bonds will be excluded from gross income for purposes of federal income tax purposes and shall not take or omit to take action nor permit any other person to take or omit to take any action that such action or omission to act would result in such interest not being excluded from gross income for federal income tax purposes. Issuer also agrees to comply with the provisions of the Tax Compliance Certificate. See APPENDIX A - FORM OF BOND INDENTURE. Supplemental Bond Indentures The Bond Indenture does permit the Issuer and Trustee to enter into supplemental bond indentures. While such an undertaking maybe taken with the consent of the Obligated Group Agent for certain limited purposes, such as, without limitation, curing any ambiguity or defect or omission of the Bond Indenture, providing for the refunding or advance refunding of the Bonds or to secure additional revenues or provide additional security or reserves for payment of the Bonds, the Bond Indenture provides that certain supplemental bond indentures require consent of the Issuer and the holders of a majority of the aggregate principal amount of the outstanding 2012 Series A Bonds as shall be deemed necessary and desirable by the Issuer for the purpose of modifying, altering, amending, adding to or rescinding any of the terms or provisions contained in the Bond Indenture. However, the Bond Indenture does not permit a supplemental bond indenture that would: (i) extend the maturity of or time for paying interest on any series of Outstanding 2012 Bonds or reduce the principal amount of or the Redemption Price or rate of interest payable on any series of Outstanding 2012 Bonds without the consent of the Holders of all Outstanding 2012 Bonds of such series; (ii) prefer or give a priority to any 2012 Bond of any series or any other 2012 Bond of any series without the consent of the Holders of each series of 2012 Bonds then Outstanding not receiving such preference or priority; or (iii) reduce the aggregate principal amount of a series of 2012 Bonds then Outstanding, the consent of the Holders of which is required to authorize such Supplemental Bond Indenture, without the consent of the Holders of all 2012 Bonds then Outstanding of such series. For further information regarding supplemental bond indentures, please see APPENDIX A - FORM OF BOND INDENTURE. Events of Default Under the Bond Indenture The following are events of default under the Bond Indenture: (a) default in the due and punctual payment of the principal, Redemption Price and purchase price of any Bond when and as the same shall become due and payable (except as otherwise provided in Section 5.10 of the Bond Indenture with respect to the 2012 Subordinate Bonds); (b) default in the due and punctual payment of any installment of interest on any Bond when and as the same shall become due and payable (except as otherwise provided in Section 5.10 of the Bond Indenture with respect to the 2012 Subordinate Bonds); (c) default by the Issuer in the observance of any of the other covenants, agreements or conditions on its part in the Bond Indenture or in the Bonds contained, if such default shall have continued for a period of 60 days after 59

72 written notice thereof, specifying such default and requiring the same to be remedied, shall have been given to the Issuer by the Trustee, or to the Issuer and the Trustee by the Holders of not less than 25% in aggregate principal amount of the Bonds at the time Outstanding; (d) a Lease Default Event; (e) an event of default as defined in Section 502 of the Master Indenture; or (f) a default by the Issuer with respect to any payment obligations relating to the Bonds or in the observance of any of the other covenants, agreements or conditions relating to the Bonds. Acceleration of Maturities During the continuance of an Event of Default described in items (a), (b), (c) or (d) in the immediately preceding section hereof titled SECURITY FOR AND SOURCES OF PAYMENT OF THE BONDS Events of Default Under the Bond Indenture, unless the principal of all the Bonds shall have already become due and payable, the Trustee upon the written direction of the Holders of a majority of the aggregate principal amount of then-outstanding Bonds, subject to the Bond Indenture and the section hereof titled SECURITY FOR AND SOURCES OF PAYMENT OF THE BONDS No Direction by Holders of 2012 Subordinate Bonds, or upon the occurrence of an Event of Default described in item (e) in the immediately preceding section, the Trustee shall, promptly upon such occurrence, by notice in writing to the Issuer and the Obligated Group Agent, declare the principal of all the then-outstanding Bonds and the interest accrued thereon, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable and interest shall cease to accrue, notwithstanding anything contained in the Indenture or in the Bonds to the contrary. The discussion in the immediately preceding paragraph is subject to the condition that if, at any time after the principal of the Bonds shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, there shall have been deposited with the Trustee a sum sufficient to pay all the principal of the Bonds matured prior to such declaration and all matured installments of interest upon all the Bonds, with interest on such overdue installments of principal as provided in the Lease, and the reasonable fees and expenses of the Trustee, including reasonable fees and expenses of its attorneys, and any and all other defaults known to the Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor, then, and in every such case, or the Holders of greater than 50% in aggregate principal amount of the the-outstanding Bonds, by written notice to the Issuer and to the Trustee, may, on behalf of the Holders of all the Bonds, rescind and annul such declaration and its consequences and waive such default; but no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon. When the Trustee incurs expenses or renders services after the occurrence of an act of bankruptcy with respect to the Issuer or any member of the Obligated Group, such expenses and the compensation for such services are intended to constitute expenses of administration under any federal or state bankruptcy, insolvency, arrangement, moratorium, reorganization or other debtor relief law. See APPENDIX A FORM OF BOND INDENTURE. Application of Revenues and Other Funds Following Default If an Event of Default shall occur and be continuing, all Revenues and any other funds then held or thereafter received by the Trustee under any of the provisions of the Bond Indenture (other than moneys required to be deposited in the Rebate Fund and subject to the requirements of Section of the Bond Indenture relating to the use of moneys held for particular Bonds) shall be applied by the Trustee as follows and in the following order: 60

73 (A) To the payment of any reasonable charges and expenses of the Trustee (including reasonable fees and disbursements of its counsel) incurred in and about the performance of its powers and duties under the Bond Indenture; (B) To the payment of the principal or Redemption Price of and interest then due on the 2012 Series A Bonds in such manner as provided in and subject to the provisions of the Bond Indenture, as follows: (1) Unless the principal of all of the 2012 Series A Bonds shall have become or have been declared due and payable, First: To the payment to the Persons entitled thereto of all installments of interest then due on the 2012 Series A Bonds in the order of the maturity of such installments, and, if the amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably, according to the amounts due thereon, to the Persons entitled thereto, without any discrimination or preference; and Second: To the payment to the Persons entitled thereto of the unpaid principal or Redemption Price of any 2012 Series A Bonds that shall have become due, whether at maturity or by call for redemption, with interest on the overdue principal at the rate borne by the respective 2012 Series A Bonds, and, if the amount available shall not be sufficient to pay in full all the 2012 Series A Bonds, together with such interest, then to the payment thereof ratably, according to the amounts of principal or Redemption Price due on such date to the Persons entitled thereto, without any discrimination or preference. (2) If the principal of all of the 2012 Series A Bonds shall have become or have been declared due and payable, to the payment of the principal and interest then due and unpaid upon the 2012 Series A Bonds, with interest on the overdue principal at the rate borne by the 2012 Series A Bonds, and if the amount available shall not be sufficient to pay in full the whole amount so due and unpaid, then to the payment thereof ratably, without preference or priority of principal over interest, or of interest over principal, or of any installment of interest over any other installment of interest, or of any 2012 Series A Bond over any other 2012 Series A Bonds, according to the amounts due respectively for principal and interest, to the Persons entitled thereto without any discrimination or preference. (3) If the principal amounts of all 2012 Series A Bonds then Outstanding shall have been declared due and payable, and if such declaration shall thereafter have been rescinded and annulled under the provisions of Article 7 of the Bond Indenture, then, subject to the provisions of paragraph (B) of this Section in the event that the principal amounts of all 2012 Series A Bonds then Outstanding shall later become due or be declared due and payable, the money shall be applied in accordance with the provisions of this Section. (C) For so long as the 2012 Series A Bonds remain Outstanding, at any time during which the Event of Default has occurred and is occurring, no payments shall be made in respect of the 2012 Subordinate Bonds. 61

74 Whenever money is to be applied by the Trustee pursuant to the provisions discussed in this Section, such money shall be applied by it at such times and from time to time as received as set forth in this Section and the Trustee shall fix the date upon which such application is to be made and upon such date interest on the principal amounts to be paid on such date shall cease to accrue. The Trustee shall give such notice as it may deem appropriate of the deposit with it of any such money and of the fixing of any such date, and shall not be required to make payment to the Holder of any 2012 Series A Bond until such 2012 Series A Bond shall be presented to the Trustee for appropriate endorsement of any partial payment or for cancellation if fully paid. See APPENDIX A FORM OF BOND INDENTURE. No Direction by Holders of 2012 Subordinate Bonds Notwithstanding anything to the contrary contained in the Bond Indenture, the Holders of the 2012 Subordinate Bonds shall not be entitled to direct the Trustee to accelerate the Bonds or exercise any of its other rights or remedies under the Bond Indenture without the consent of the Holders of a majority of the aggregate principal amount of the 2012 Series A Bonds then Outstanding. See APPENDIX A FORM OF BOND INDENTURE. Other Covenants of the Obligated Group, College and Issuer Under the Bond Indenture, the Master Trust Indenture, the Supplemental Master Indenture, the Notes, the Deeds of Trust and the Guaranty Agreement, the Obligated Group, College and Issuer, as applicable and as the case may be, are required to comply with certain other covenants, warranties and agreements. See APPENDIX A FORM OF BOND INDENTURE, APPENDIX B - FORM OF MASTER TRUST INDENTURE, APPENDIX C FORM OF SUPPLEMENTAL INDENTURE, APPENDIX H - FORM OF NOTES, APPENDIX G FORM OF DEED OF TRUST AND APPENDIX F - FORM OF GUARANTY AGREEMENT. SOURCES AND USES OF FUNDS The following table shows the estimated sources and uses of funds in connection with the Project: SOURCES: Principal Amount of 2012 Series A Bonds $34,275, Principal Amount of 2012 Series B Bonds 2,510, Principal Amount of 2012 Series C Bonds 680, College Equity Contribution 31, TOTAL SOURCES $37,496, USES: Deposit to Project Fund $29,558, Deposit to Capitalized Interest Fund 3,537, Deposit to Debt Service Reserve Fund 2,947, Costs of Issuance (1) 1,447, Additional Proceeds 5, TOTAL USES $37,496, (1) Includes, but is not limited to, document fees, filing and recording fees, legal fees and charges, including without limitation, fees and charges of counsel to any institutional investor purchasing Bonds, Placement Agent s fees, Trustee s fees, fees and disbursements of consultants and professionals (including Market Study consultant), fees and charges for preparation, execution and safekeeping of the Bonds and printing costs, as well as any other cost, charge or fee in connection with the issuance of the Bonds. 62

75 ANNUAL DEBT SERVICE REQUIREMENT The following tables set forth the annual debt service requirements for the Bonds Series A Bonds 63

76 2012 Series B Bonds 2012 Series C Bonds 64

77 BONDHOLDERS RISKS INVESTMENT IN THE BONDS INVOLVES A SUBSTANTIAL AMOUNT OF RISK. In addition to factors set forth elsewhere in this Private Placement Memorandum, purchasers of the Bonds should carefully consider the following risk factors in connection with investment in the Bonds. The following risk factors represent some, but not all, of the risk factors relating to investment in the Bonds. Limited Liability The Bonds and the interest thereon are special, limited obligations of the Issuer payable solely from the Trust Estate pledged therefor under the Bond Indenture. The Bonds shall not constitute a debt or a pledge of the faith and credit or taxing power of the Issuer, the City of Philippi or the State of West Virginia or any political subdivision thereof within the meaning of any constitutional provision or statutory limitation and shall never constitute or give rise to pecuniary liability of the Issuer, the City of Philippi, the State of West Virginia or any political subdivision thereof. INVESTMENTS IN THE BONDS ARE HIGHLY SPECULATIVE IN NATURE AND INVOLVE A HIGH DEGREE OF RISK. THERE IS NO PUBLIC MARKET FOR THE BONDS AND NO RATINGS HAVE BEEN REQUESTED FOR THE BONDS. THE INITIAL PURCHASERS OF THE 2012 SUBORDINATE BONDS WILL BE REQUIRED TO EXECUTE AN INVESTOR LETTER TO THE EFFECT THAT SUCH PURCHASERS ARE EITHER ACCREDITED INVESTORS OR QUALIFIED INSTITUTIONAL BUYERS UNDER THE SECURITIES ACT. THE BONDS ARE INTENDED ONLY FOR PURCHASE BY SOPHISTICATED INVESTORS CAPABLE OF BEARING THE ECONOMIC RISKS OF THE PURCHASE OF THE BONDS AND HAVING SUCH KNOWLEDGE AND EXPERIENCE IN BUSINESS AND FINANCIAL MATTERS AS TO BE CAPABLE OF EVALUATING THE MERITS AND RISKS OF AN INVESTMENT IN THE BONDS. EACH PROSPECTIVE INVESTOR SHOULD CONSIDER ITS FINANCIAL CONDITION AND THE RISKS INVOLVED TO DETERMINE THE SUITABILITY OF INVESTING IN THE BONDS. Limited Assets of the Issuer Only the Trust Estate under the Bond Indenture is pledged to secure the Bonds. The Trust Estate consists solely of payments and collateral obtained from or through the Obligated Group. The Issuer has no other obligation to pay the Bonds. Accordingly, the Issuer s ability to pay the Bonds depends solely on the Obligated Group. If the College experiences cost over-runs or other problems with the construction projects of its other Facilities, in addition to having no obligation to do so, it is highly unlikely that the College would have the financial resources to inject additional funds into the operation of the Facilities (including the Construction Projects). In addition, because the College has limited sources of income, it may be unable to obtain new sources of funds or financing for the construction projects or tis other Facilities if such additional financing is necessary. If the College continues to experience operating problems or financial difficulties, it may not be able to make the payments under the Lease or on the Notes. Unless the College generates revenue sufficient to make payments due under the Bond Indenture, the Issuer will be unable to make timely payments of principal and interest due on the Bonds. Unique Nature of the Project The Construction Projects are to develop student housing and athletic facilities at the College. As a result, the College anticipates an increase in student enrollment which would support Lease payments 65

78 and, in turn, payment of the Bonds. If the Construction Projects experience delays or problems in achieving completion, enrollment projects might not be achieved in such times or amounts, if at all, thereby adversely affecting the ability of the College to ensure that sufficient funds are available to make timely payments on the Bonds. See BONDHOLDERS RISKS Construction Risks. Additionally, successful completion of the Construction Projects may not necessarily result in an increase in enrollment. If enrollment projections are not achieved, the College may not collect sufficient revenues in order to make timely payments for the Bonds. Insufficient funds or revenues will leave Bondholders with collateral of the pledged assets of the Trust Estate, some of which is limited use property which may be difficult to sell, lease, liquidate or otherwise convert into funds. There is no assurance that the College will successfully attract enough student residents or to generate sufficient income from the athletic facilities to enable the College to be successful and to meet the debt service obligations on the Bonds. The College has no contractual guarantee that any specified number of student residents will be housed in the Construction Projects for any defined period. The College has no contractual guarantee that other entities will not make housing space available to the student residents which housing may be less expensive or more desirable. Competition No assurance can be given that other competitive facilities or services will not be established, or that existing competitive facilities will not be expanded in the College s service area in the future. The College believes that the Facilities including the construction projects can effectively compete with other similar facilities currently located in its area of competition. However, there can be no guarantee that in the future the Facilities, including but not limited to the Construction Projects, will be able to compete with student housing facilities designed and built with the benefit of advanced technology not available at the time the Construction Projects were constructed, or student housing facilities which are able to significantly reduce or contain their costs through economies of scale or other methods not available to the Issuer. Furthermore, the College competes with other colleges and universities throughout the country to attract students. Many of its competitors may receive substantial support from state governments and can therefore be able to charge lower tuition rates. Moreover, other educational facilities may in the future expand their programs in competition with programs offered by the College. Increased competition from other educational operators or facilities or a decrease in the student population interested in pursuing higher education could have an adverse economic impact on the College. In addition, future revenues and expenses of the College will be subject to conditions which may differ from current conditions to an extent that cannot be determined at this time. Tuition A significant portion of the College s operating revenue is provided through tuition and related fees. In the event the College is required to increase tuition and fees related to enrollment, there can be no assurance that such increase will be in amounts sufficient to offset expenses. Future tuition increases and any adverse change in enrollment could adversely affect enrollment, which could adversely affect the College s financial position and results of operations. Market Study and Enrollment Projections The Market Study included in APPENDIX I presents the College s estimate of future results of operations and enrollment of the College and is subject to certain assumptions used in preparing it. The passage of time and current economic conditions should be considered by investors when considering such projections. 66

79 As noted hereinabove, the financial information related to the enrollment and financial projections of the Project were supplied by College based on College s analysis of the College s and the Construction Project s anticipated performance under certain assumptions and expectations. No representation or assurance is given or can be made that such enrollment or financial projections, as presently estimated or otherwise, will be realized by the Construction Project or the College or by any other person in amounts sufficient, together with such other moneys available under the Bond Indenture and pledged to the Bonds, to pay debt service on the Bonds when due and to make other payments necessary to meet the obligations of the Obligated Group. Future revenues and expenses of the Construction Project are subject to conditions which may change. THE MARKET STUDY HAS NOT BEEN REVISED, UPDATED, SUPPLEMENTED OR OTHERWISE MODIFIED BY ALVAREZ & MARSAL OR ANY OTHER INDEPENDENT THIRD PARTY CONSULTANT OR PROFESSIONAL SINCE THE DATE OF SUCH MARKET STUDY. ALVAREZ & MARSAL HAS AUTHORIZED USE OF THE MARKET STUDY IN THIS PRIVATE PLACEMENT MEMORANDUM. SOME ASSUMPTIONS MAY NOT MATERIALIZE AND UNANTICIPATED EVENTS AND CIRCUMSTANCES ARE LIKELY TO OCCUR. THEREFORE, THE ACTUAL RESULTS ATTAINED WILL IN ALL LIKELIHOOD VARY FROM THE PROJECTIONS CONTAINED IN THE MARKET STUDY. ACCORDINGLY, NO PERSON CAN MAKE REPRESENTATIONS OR WARRANTIES AS TO THE FUTURE RESULTS OF OPERATIONS OF THE COLLEGE OR THE CONSTRUCTION PROJECT. Updated Enrollment Projections of College The College has recently conducted an analysis of its 2012 fall enrollment projections, finding that the change in enrollment for fall 2012, as of October 1, 2012, is a 39.4% increase in enrollment from the previous year, which includes a total undergraduate enrollment of 826 students and a total graduate enrollment of 44 students for a total enrollment of 870 students. NO INDEPENDENT THIRD PARTY CONSULTANT OR PROFESSIONAL HAS REVIEWED, CONFIRMED OR VERIFIED THE COLLEGE PREPARED 2012 FALL ENROLLMENT PROJECTIONS IDENTIFIED IN THE IMMEDIATELY PRECEDING SENTENCE AND SUPPLIED BY COLLEGE. There is no guarantee that the increased enrollment will continue or that a sufficient number of students will remain enrolled and provide tuition and fees sufficient to meet the College s obligations under the Lease and the Obligated Group s obligations under the Notes. Management Prepared Financial Forecast The management prepared financial forecast included in APPENDIX K present the College s estimate of future results of operations of the College, including operation of the Construction Projects and are subject to certain assumptions used in preparing them. The passage of time and current economic conditions should be considered by investors when considering such projections. As noted hereinabove, the financial information related to the management prepared financial forecast of the College, including, but not limited to, operation of the Construction Projects, were supplied by College based on College s analysis of the College s anticipated performance under certain assumptions and expectations. No representation or assurance is given or can be made that such management prepared financial forecast, as presently estimated or otherwise, will be realized by the College or by any other person in amounts sufficient, together with such other moneys available under the Bond Indenture and pledged to the Bonds, to pay debt service on the Bonds when due and to make other 67

80 payments necessary to meet the obligations of the College. Future revenues and expenses of College are subject to conditions which may change. THE MANAGEMENT PREPARED FINANCIAL FORECAST HAS NOT BEEN REVISED, UPDATED, SUPPLEMENTED OR OTHERWISE MODIFIED BY THE COLLEGE SINCE THE DATE OF SUCH MANAGEMENT PREPARED FINANCIAL FORECAST. NO INDEPENDENT THIRD PARTY CONSULTANT OR PROFESSIONAL HAS REVIEWED, CONFIRMED OR VERIFIED THE MANAGEMENT PREPARED FINANCIAL FORECAST SUPPLIED BY COLLEGE. SOME ASSUMPTIONS MAY NOT MATERIALIZE AND UNANTICIPATED EVENTS AND CIRCUMSTANCES ARE LIKELY TO OCCUR. THEREFORE, THE ACTUAL RESULTS ATTAINED WILL IN ALL LIKELIHOOD VARY FROM THE PROJECTIONS CONTAINED IN THE MANAGEMENT PREPARED FINANCIAL FORECAST. ACCORDINGLY, NO PERSON CAN MAKE REPRESENTATIONS OR WARRANTIES AS TO THE FUTURE RESULTS OF OPERATIONS OF THE COLLEGE. Construction Risks The failure to complete or a delay in the completion of the construction of the Construction Projects will adversely affect the receipt of Gross Revenues and Revenues and, thus, the payment of Debt Service on the Bonds. Some risks that will be present throughout the period of construction of the Construction Projects are outlined below. There are a number of risks and contingencies associated with the completion of the Construction Projects. Contingencies generally involved in the construction of any facility, such as fire, labor difficulties and problems obtaining materials or routine governmental approvals may cause the actual cost of completion to exceed available funds. Furthermore, delay in completion of the Construction Projects for any reason beyond the anticipated completion date may result in a delay in receipt of Revenues projected for the Construction Project. In the event that the proceeds of the Bonds, together with other moneys of the College, if any, are insufficient to complete the construction of the Construction Projects, there is no assurance the Issuer would have or be able to raise sufficient funds to complete the Construction Projects. If construction of the Construction Project is not completed as contemplated by the Construction Contract, Revenues sufficient to pay Debt Service on the Bonds will not be generated. There will be Surety Bonds from each the Contractors with respect to each of the Contractor s respective obligations to complete their respective portions of the Construction Projects under their respective Construction Contracts. However, there can be no assurance that the construction of any portion or all of the Construction Projects can be accomplished under the allotted budget. Prospective investors may look only to the surety of payment under the Surety Bonds for performance of such obligations, respectively. See THE CONTRACTORS and THE DEVELOPER herein. Surety Bonds College has received a letter from Mountain State Insurance Agency, Inc. ( MSIA ) dated August 10, 2012 in connection with Stadium Contractor and its construction of the Stadium portion of the Construction Project. In the letter, MSIA states that MSIA has a twelve year relationship providing surety bonds for the Stadium Contractor. SCS advises that if the Stadium Contractor is awarded the New Athletic Complex Phase II project in the amount of $3,180,000, MSIA is ready and willing to execute contract performance and payment bonds for such project within 48 hours or receipt of a draft copy of the 68

81 contract. The letter states that the surety for the Stadium Contractor is Travelers Casualty and Surety Company of America. Furthermore, College has received a letter from Scott Construction Services ( SCS ) dated March 30, 2012 in connection with the Construction Enterprises, Inc. and its construction of the Construction Project. Under the letter, SCS states that SCS has a ten-plus year relationship providing Construction Enterprises, Inc. s surety bond program. SCS advises that Construction Enterprises, Inc. has completed many multi-million dollar projects and has available bonding capacity up to $75,000,000 for single projects and an aggregate bonding capacity in excess of $200,000,000, subject to normal contract terms, conditions and standard underwriting guidelines. The letter states that the surety bonds are provided by Liberty Mutual Insurance Company, which is listed in the United States Department of the Treasury s Listing of Certified Companies (Updated 03/12/2012) and has an A.M. Best Rating of A (Excellent) and a financial size of XV. Interested parties should direct inquiries to the College for further information related to this matter. There are no guaranties that both or either surety company will have sufficient resources to meet its bonding obligations or undertakings. In the event one or both of the Contractors fails to perform, inability of a surety company to satisfy its obligations could have a material, adverse impact on the timely completion of the Construction Projects and could further delay or prevent enrollment of new students. As of the date of this Private Placement Memorandum, no surety bond is in effect or has been delivered. Operation of the College Facilities The successful operation of the Facilities will depend, in substantial part, upon the management services provided by the College. The College believes that it is competent to manage the facilities for student housing and athletic facilities and there is no guarantee that the College will operate such Facilities in a manner which provides sufficient revenues to pay debt service payments and to operate and maintain the Facilities, in which case the College may need to identify or install a new manager to oversee or operate such Facilities. Such a result could increase expenses or could have an adverse effect on the costs of attendance or other fees of the College which could impact the revenues generated by the student housing and athletic facilities. Real Estate The Bonds will not be secured by any bond insurance, letter of credit, or other form of direct institutional credit enhancement. Except for amounts on deposit in certain funds and accounts created under the Bond Indenture, including the Debt Service Reserve Fund for the 2012 Series A Bonds, the Revenues derived from the Lease, evidenced and secured by the Lease Notes and guaranteed by the Guaranty Agreement and the Guaranty Note, provide the only security for the timely payment by the Issuer of amounts due on the Bonds. The Notes, in turn, are secured by the Deeds of Trust and a lien on Gross Revenues of the Obligated Group. There are many diverse risks in any real estate management or operation, which may have a substantial bearing on the success of the Construction Projects and the College, and which impact the realizable value of the interest in the real estate and other collateral securing payment of the Bonds. Such risks include possible adverse use of adjoining land, fire or other casualty, condemnation, increased taxes, changes in demand for such facilities, increases in utilities rates, adverse general and local economic conditions, energy shortages, increases in operating costs due to inflation, unfavorable governmental regulation (such as the enactment of rent controls), acts of God, and uninsurable risks (including nuclear war or accident), and construction strikes. Further, if the Issuer defaults on the Bonds, the value of the 69

82 facilities developed by the Construction Project and the other properties subject to the Deeds of Trust, if marketable, may not be equal to the amount of outstanding principal and interest due on the Bonds. With respect to mineral rights, the College and ABEC each owns or has an interest in certain mineral rights in West Virginia which interests will constitute a portion of the security in connection with the issuance of the Bonds. The College and ABEC, as applicable, each intends to use property descriptions of the College and ABEC, respectively, related to such interest and use them to grant deed of trust liens, without verification of title. The College and ABEC have been in the process of identifying and reviewing its various mineral rights but such project has not yet been completed. Adverse claims, unfiled or recorded interests or lack of information, among other things, related to these various interests could adversely affect the value of the College s and/or ABEC s mineral rights and interests. Economic Risks The Bonds represent a long term investment secured by a lien on the Facilities. Not only will the College and the Facilities be subject to the risks inherent in student housing discussed above, the College s ability to operate the Construction Projects and its other Facilities successfully is critical to its ability to make payments under the Lease and, accordingly, to the Issuer s ability to make required payments under the Indenture will also be subject to risks inherent in the operation of any such facilities. Such risks include fluctuations in occupancy rates and operating expenses, variations in occupancy charges, energy shortages, governmental restrictions and regulations, and general economic conditions, including conditions which may affect the successful operation of the Facilities. Furthermore, while such factors may operate to reduce the Facilities income, operating costs, such as utilities, insurance costs and personnel costs could increase, adversely affecting the net income of the College and the College s ability to make payments under the Lease and, accordingly, the ability of the Issuer to pay the Bonds. Accreditation of the College The College is accredited by the Higher Learning Commission of the North Central Association of Colleges and Schools (the HLC ). In granting a facility s accreditation and renewing such accreditation, HLC considers various factors to determine the institution s ability to fulfill its mission. Such factors include, but are not limited to, the quality of its educational programs, the quality of and support for its administration and faculty, the quality of the learning environment and to facilities to support such an environment, and the financial and physical resources required to maintain its mission. The next full evaluation by HLC of the College is scheduled for academic year with a focused visit scheduled for December, 2012 to review the College s enrollment, finances, and graduate culture. The College also maintains accreditation through program specific accrediting organizations for its physician s assistant, nursing, athletic training, and teacher education programs. If College fails to maintain either institutional or program specific accreditations, the College may realize fewer students attending the College and a reduction in revenues, which could have a material adverse impact on the financial condition of the College. On August 10, 2012, the West Virginia Higher Education Policy Commission ( HEPC ) approved the filing of two legislative rules, which are subject to review and approval by the Legislative Oversight Commission on Education Accountability and action by the West Virginia Legislature during its 2013 session, intended to increase oversight and regulation of institutions, including private institutions such as the College, to provide greater advocacy and protection for students. According to HEPC, the Series 20 Rule clarifies HEPC s authority to review and approve requests from higher education institutions for authorization to operate in West Virginia. The Series 52 Rule, entitled Annual Reauthorization of Degree-Granting Institutions, resulted from legislation that delegated to HEPC responsibility and authority for establishing, monitoring and maintaining quality standards of education at 70

83 all institutions, both public and private. The Series 52 Rule establishes a Compliance Review Committee and provides for on-site reviews of institutions. An institution that is found not to meet the generally accepted higher education state standards of quality may be recommended to HEPC for denial of reauthorization. The rule also provides a means for HEPC to revoke the authority of an institution to confer degrees. The loss of accreditation or the failure to be reauthorized or revocation by HEPC would significantly adversely affect the College s enrollment and ability to continue operation and, accordingly, its ability to provide Revenues for payment of the Bonds. Going-Concern Issues for the College The College has experienced financial challenges over the past several years. The College s financial statements contains a going concern notation (See APPENDIX M CONSOLIDATED FINANCIAL STATEMENTS FOR COLLEGE AND ALDERSON-BROADDUS ENDOWMENT CORPORATION FOR YEARS ENDED JUNE 30, 2011 AND 2010). This notation prompted the United States Department of Education in May, 2012, to require the College to secure a letter of credit of $796,000 in favor of the United States Department of Education in order to continue to participate in Title IV, HEA programs for its students. The College has fully complied with this requirement. As security for repayment of any draw under the letter of credit, the College has granted a deed of trust lien on the former hospital building located on its campus, which deed of trust lien on that facility will be prior to the lien granted by the College s Property Deed of Trust. The College was obligated to substitute cash collateral for the deed of trust lien by September 1, The College failed to make such payment and, pursuant to the terms of the related documentation, is subject to a $2,000 penalty each month thereafter until the cash collateral is substituted. The College has communicated with the lender in connection with this matter and anticipates that such cash collateral shall be satisfied following the issuance of the Bonds. The College has been invoiced a penalty amount of $2,000 and has made payment thereon. The College s Enrollment The College s ability to meet its debt service obligations on the Bonds is dependent on its ability to meet its enrollment projections. The College s decreasing enrollment in recent years can be attributed in part to problems with accreditation of the College s physician assistant program, which combined undergraduate and graduate education, resulting in a five-year degree. The College gave up accreditation of the program in 2009 and now provides only a graduate-level physician assistant program, which is provisionally accredited. The changes in physician assistant program led to a decrease in enrollment and resulting decrease in revenues. In addition, the first year s graduate physician assistant class was much smaller than expected. However, the second year s class came close to meeting expected enrollment. Moreover, the College has brought on new administrators over the past several years in an effort to guide the College to sounder enrollment and financial footing. The current College administration is working to increase enrollment and improve the College s finances through, in part, the expansion of athletic offerings and improvement of the College s athletic and housing facilities, which expansion and improvement will be financed through the issuance of the Bonds. The College adopted a new strategic plan of growth and direction with three priorities: (i) growing enrollment; (ii) growing a vibrant campus; and (iii) growing the academic experience. The College has recently conducted an analysis of its 2012 fall enrollment projections, finding that the change in enrollment for fall 2012 as of October 1, 2012, is a 39.4% increase in enrollment from the previous year, which includes a total undergraduate enrollment of 826 students and a total graduate enrollment of 44 students for a total enrollment of 870 students. This is an additional 137 students over initial new student projections, or an increase of 46% above the adopted 71

84 plan for admissions. Nevertheless, success of the College s plans to expand enrollment and improve its financial condition cannot be assured. See APPENDIX I - Market Study. Future Results Must Improve from Historical Results to Meet or Exceed Projected Results Results of operations of the College need to improve from historical results in order to support the payment of debt service on the Bonds. There can be no assurance that the financial results achieved in the future will increase in sufficient amounts to generate revenues in the future for the College to fulfill its obligations under the Lease. See THE COLLEGE AND THE ALDERSON-BROADDUS ENDOWMENT CORPORATION The College Financial and Enrollment Matters of College and APPENDIX M CONSOLIDATED FINANCIAL STATEMENTS FOR COLLEGE AND ALDERSON-BROADDUS ENDOWMENT CORPORATION FOR YEARS ENDED JUNE 30, 2011 AND College Has Defaulted Under Other Obligations The College s recurring losses and outstanding construction commitments that have required the College to borrow from its restricted endowment funds and accounts to meet obligations. In addition, the College has entered into a forbearance agreement with one of its lenders, Bank of New York Mellon ( BNY ). The College maintained a line of credit with BNY, dated December 2, 2009, which was primarily used to provide cash flow for capital projects and to bridge cash flow through the months immediately preceding student enrollment periods ( BNY Loan ). The line of credit is secured with the College s restricted endowment assets. In October 2011, BNY capped the BNY Loan at $4,225,000 and began negotiating a forbearance agreement with the College to afford the College time to refinance or raise unrestricted cash assets to pay off the BNY Loan. The original forbearance agreement was completed in March, 2012 and extended until June 30, The College has negotiated an extension to the forbearance agreement and, as of the date of this Private Placement Memorandum, BNY has presented the College, as borrower, and ABEC, as guarantor, an amendment to forbearance agreement, dated as of June 30, 2012, which provides, among other things, that the parties thereto agree to extend the forbearance period under the forbearance agreement until June 30, NO REPRESENTATION AS TO ANY OF THE TERMS, CONDITIONS, COVENANTS AND AGREEMENTS MADE IN THE FORBEARANCE AGREEMENT OR THE AMENDMENT TO FORBEARANCE AGREEMENT IS MADE HEREIN. INTERESTED PARTIES AND PROSPECTIVE INVESTORS SHOULD CONTACT THE COLLEGE TO OBTAIN A COPY OF THE FORBEARANCE AGREEMENT OR THE AMENDMENT TO FORBEARANCE AGREEMENT. Although the College expects to execute the amendment to forbearance agreement, it anticipates paying the BNY Loan in full with another loan from its endowment funds. By a resolution of the board of trustees of the College dated August 13, 2012, the College is authorized to borrow funds (the Endowment Loan ) from its endowment funds to repay the BNY Loan. The Endowment Loan shall be evidenced by an internal note made by the College to the endowment funds, bearing interest at a variable rate equal to the authorized spend rate from the endowment funds. The principal of the Endowment Loan shall be paid by applying 25% of the funds remaining at the end of each fiscal year after payment of operating expenses of the College and of the payments required under the documents relating to the Bonds to reduction of the principal amount of the Endowment Loan. If the College incurs the Endowment Loan, approximately $1,700,000 will remain in the endowment funds. The BNY Loan allows, and the Endowment Loan would allow, prepayment without penalty, which the College could choose to do if it received appropriately designated contributions. The College will continue to investigate other means by which it might pay the BNY Loan in full, including, but not limited to, the issuance of additional taxable bonds which would be on a parity with the 2012 Series A Bonds. 72

85 The Bonds to be Refunded were issued pursuant to an Indenture and Deed of Trust dated June 30, 2010, between the Issuer and WesBanco Bank, Inc., as trustee. WesBanco Bank, Inc. ( WesBanco ), in its commercial capacity, was the purchaser and is the owner of the Bonds to be Refunded. By letter dated December 20, 2011, WesBanco waived two covenant defaults by the College, contingent upon the BNY forbearance agreement extension to June 30, 2012, described above, which covenant defaults are: (i) failure to obtain WesBanco s approval for the incurrence of new debt or the purchase of fixed assets in excess of $200,000 during a fiscal year, which was violated by the College s entering into capital leases for technology equipment and software, and (ii) failure to provide audited financial statements within 120 days after the end of the fiscal year. The Bonds to be Refunded are secured by, among other things, a deed of trust lien on certain buildings located on the campus of the College. The Bonds to be Refunded are subject to optional redemption at any time at the redemption price of par plus interest accrued to the redemption date. Upon redemption of the Bonds to be Refunded with a portion of the proceeds of the Bonds, the liens securing WesBanco will be released. No Rating; Secondary Market The absence of a rating may adversely affect the market for the Bonds. There can be no assurance that there will be a secondary market for the purchase or sale of the Bonds. The secondary market, if any, for the Bonds will depend upon prevailing market conditions and the financial condition and results of operations of the Obligated Group. The Bonds should therefore be considered long-term investments in which funds are committed to maturity. Available Assets of Alderson-Broaddus Endowment Corporation May Not Be Sufficient ABEC is a Member of the Obligated Group and is a party to the Master Trust Indenture. As such, ABEC is unconditionally and absolutely, jointly and severally liable for payment of the Notes, the proceeds of which shall be used to pay principal, redemption premium, if any, and interest on the Bonds. However, certain of ABEC s funds are restricted for various reasons in connection with its endowment obligations. Such funds would be unavailable to make any payments on the Bonds. Furthermore, ABEC s holdings and revenues are based largely on donations and investment returns. Market fluctuations and lower donations received or committed to ABEC may adversely affect the ABEC assets available to make payments on the Bonds, if necessary. There is no guaranty or assurance that ABEC will have sufficient unrestricted funds available to make any payment on the Bonds. Members of the Obligated Group may Withdraw or Enter into the Obligated Group The Master Indenture authorizes entry of new Obligated Group members, subject to the conditions and terms therein. Additional members of the Obligated Group may have insufficient funds to adequately perform its obligations under the Master Indenture. Furthermore, existing Obligated Group members may seek to withdraw from the Obligated Group. In such an occurrence, Bondholders may be somewhat limited as it relates to security or resources available to make payments of principal, redemption premium, if any or interest on the Bonds. Liquidation of Security May Not Be Sufficient The Trustee must look primarily to the Trust Estate, including, but not limited to, the revenues generated by the College, to pay and satisfy the Bonds in accordance with their terms. The Holders of the Bonds will be dependent, primarily, upon the successful operation of the College and the value thereof for the payment of the principal, premium, if any, and interest on the Bonds. In the event the revenues from the College are insufficient to pay the Bonds, then the only collateral available to the Holders is the property of the College, which is of limited use and may be difficult to sell, lease, transfer or liquidate. 73

86 Furthermore, liquidation of the assets, given their limited use, may ultimately be insufficient to pay the outstanding amount of principal, redemption premium, if any, and interest on the Bonds. Other than the Members of the Obligated Group, which currently includes the College and ABEC, Holders of the Bonds will have no person or entity to pursue for any deficiency which may exist. Possible Claims of Third-Party Creditors On February 2, 1990, the United States District Court for the District of Columbia held in Martens v. Hadley Memorial Hospital that a judgment creditor of a borrower of the proceeds of tax exempt revenue bonds could satisfy its judgment from moneys held by a trustee in a debt service reserve fund pledged to secure the revenue bonds. The Court held that absent a default under the loan documents pursuant to which the revenue bond proceeds were lent to the borrower and the acceleration of the obligations under the loan documents, the trustee bank holding the debt service reserve fund could not prevent attachment of amounts held in the reserve fund to satisfy the judgment. If the principles of this case were applied by the courts having jurisdiction over the Issuer, there is a risk that judgment creditors of the College could attach the Debt Service Reserve Fund or other funds securing the Bonds. Interests of Holders of 2012 Subordinate Bonds The Bond Indenture provides that the interests of the Holders of 2012 Series B Bonds and the 2012 Series C Bonds are subordinate to the interests of Holders of the 2012 Series A Bonds. See APPENDIX A FORM OF THE BOND INDENTURE. Taxation of the Bonds An opinion of Bond Counsel has been obtained to the effect that interest earned on the principal of the Tax Exempt Bonds is excludable from gross income for federal income tax purposes under current provisions of the Internal Revenue Code of 1986 (the Code ), and applicable rules and regulations of the Internal Revenue Service (the IRS ); however, such an opinion it not binding on the IRS. Application for a ruling from the IRS regarding the tax exempt status of the Tax Exempt Bonds has not been, and will not be, made. Such opinion is qualified in regard to certain limitations contained in the Code, under which certain post-closing events can destroy the tax exempt status of the Tax Exempt Bonds. See TAX MATTERS herein. In addition, there can be no guarantee that present advantageous provisions of the Code or the rules and regulations thereunder will not be adversely amended or modified, thereby rendering the interest earned on the Tax Exempt Bonds taxable for Federal income tax purposes. In December, 1999, as part of a larger reorganization of the IRS, the IRS commenced operation of its Tax Exempt and Government Entities Division (the TE/GE Division ), as the successor to its Employee Plans and Exempt Organizations division. The TE/GE Division has a subdivision that is specifically devoted to tax exempt bond compliance. The number of tax exempt bond examinations has increased significantly under the TE/GE Division. There is no assurance that any IRS examination of the Bonds will not adversely affect the market value of the Tax Exempt Bonds. Interest earned on the principal amount of the Bonds may or may not be subject to state or local income taxes under applicable state or local tax laws. Each purchaser of Bonds should consult his or her own tax advisor regarding the taxable status of the Bonds in a particular state or local jurisdiction. 74

87 Sequestration Jobs Act and Debt Reduction Act From time to time, there are Presidential proposals, proposals of various federal committees, and legislative proposals in the Congress and in the states that, if enacted, could alter or amend the federal and state tax matters referred to herein or adversely affect the marketability or market value of the Tax- Exempt Bonds or otherwise prevent holders of the Tax-Exempt Bonds from realizing the full benefit of the tax exemption of interest on the Tax-Exempt Bonds. Further, such proposals may impact the marketability or market value of the Bonds or the Tax-Exempt Bonds simply by being proposed. One such proposal is the American Jobs Act of 2011 (S.1549) (the Jobs Act ) which was introduced in the Senate on September 13, 2011 at the request of President Obama. If enacted in its current form, the Jobs Act could adversely impact the marketability and market value of the Tax-Exempt Bonds and prevent certain bondholders (depending on the financial and tax circumstances of the particular bondholder) from realizing the full benefit of the tax exemption of interest on the Tax-Exempt Bonds. The Jobs Act would be effective for taxable years beginning on or after January 1, In addition, on September 29, 2011, President Obama submitted to Congress a legislative proposal entitled the Debt Reduction Act of 2011 (the Reduction Act ). If enacted, as proposed, the Reduction Act would require the Office of Management and Budget to establish a steadily declining ratio for debt as a percentage of Gross Domestic Product and would impose a penalty in the event that Congress failed to meet the requirements, including automatic sequestration of spending and the reduction in the value of certain tax incentives, including interest on tax-exempt municipal bonds, potentially (in the extreme) eliminating the exemption from taxation that tax-exempt municipal bonds held at the time of issuance. It cannot be predicted whether or in what form any such proposals might be enacted or whether if enacted it would apply to bonds issued prior to enactment. In addition, regulatory actions are from time to time announced or proposed and litigation is threatened or commenced which, if implemented or concluded in a particular manner, could adversely affect the market value, marketability or tax status of the Tax-Exempt Bonds. It cannot be predicted whether any such regulatory action will be implemented, how any particular litigation or judicial action will be resolved, or whether the Tax-Exempt Bonds would be impacted thereby. It is possible that further legislation will be proposed or introduced that could result in changes in the way that tax exemption is calculated, or whether interest on certain securities are exempt from taxation at all. Prospective purchasers should consult with their own tax advisors regarding the Jobs Act and/or the Reduction Act and any other pending or proposed federal income tax legislation. The likelihood of the Jobs Act or the Reduction Act being enacted or whether the currently proposed terms of the Jobs Act and/or the Reduction Act will be altered or removed during the legislative process cannot be reliably predicted. Budget Control Act Furthermore, on or about August 3, 2011, President Obama signed the Budget Control Act of 2011 (the Budget Control Act ). The Budget Control Act limits the federal government s discretionary spending caps at levels necessary to reduce expenditures by $917 billion from the current federal budget baseline for the Fiscal Years 2012 through Certain entitlement programs will not be affected by the limit on discretionary spending caps. The Budget Control Act created a new Joint Select Committee on Deficit Reduction (the Committee ), which was tasked with making recommendations no later than November 23, 2011 to further reduce the federal deficit by $1.5 trillion. Efforts by the Committee to reach a consensus on such recommendations were abandoned on or about November 21,

88 As a result of such failure by the Committee, the Budget Control Act provides that the U.S. debt ceiling will be automatically raised and sequestration (across the board cuts) will be triggered in an amount necessary to achieve $1.2 trillion in savings. A wide range of spending items is exempted from sequestration, while numerous other programs may be subject to sequestration. Student loan or financial assistance programs are among the programs or budget items which could be affected to some extent. A cut in student loans or financial assistance could adversely affect students enrolled or interested in enrolling at the College. Congress is debating potential adjustments to the sequestration required by the Budget Control Act and could take action to modify the way that sequestration is applied, however potential Congressional actions relating to deficit reduction are uncertain at this time. If Congress fails to act, specific budget cuts may become effective January 2, 2013, unless Congress reverses the budget sequestration scheduled to automatically take place next year. Environmental Risks The College retained Boggs Environmental Consultants, Inc. ( BEC ) to conduct an environmental study of the College s site (approximately 120 acres) (the Subject Site ). Based on the conclusions of BEC, readily accessible and visible recognized environmental concerns exist at the Subject Site as follows: (1) three underground storage tanks ( USTs ) are known to be present at the Subject Site and, absent documentation indicating the status of such tanks, BEC concludes that the potential for a petroleum product historical, ongoing and/or future release exists; (2) based on historical information, two USTs were removed from the site in 1989; (3) illegal surface dumping and burning of refuse was observed at the Physical Plant Building; and (4) the College does not possess an effective Hazardous Waste Management Program (specifically, hazardous waste storage, handling and disposal within Kemper Red Hall are not in compliance with Federal, State and Local requirements for managing hazardous and other regulated wastes. BEC provided corrective actions for the College to undertake to maintain and/or return to compliance with Federal, State and Local requirements. Specifically, BEC recommends securing documentation indicating the status of the existing three USTs and the two removed underground storage tanks. If the documentation is unavailable BEC highly recommends confirming that all heating fuel has been removed from the USTs. Should any of the USTs contain heating fuel oil College should recover and dispose of any and all waste, oil or sludge present in the tank in accordance with US EPA and WV DEP guidelines. Thereafter each tank which documentation is not present the UST(s) should be evaluated to determine if a petroleum release has or has not occurred. BEC advises that this can be accomplished by performing integrity testing or soil sampling around the bottom perimeter of the USTs. BEC recommends, based upon interviews, record documents review, physical site inspection of facilities, a formal and written Hazardous Waste Management Program is not only needed but typically required at facilities which handle and dispose hazardous waste BEC recommends disposing all existing hazardous waste immediately in accordance with US EPA and State of West Virginia hazardous waste regulations BEC recommends, based upon site reconnaissance the following actions should be taken to address the surface dumping at the Physical Plant Building: Collection, packaging, and shipment of scrap steel, drums, tires, waste automotive oils, coolants, lubricants, fluids and compressed refrigerant gas cylinders to an approved recycling/reclamation facility. Study. A comprehensive list of conclusions and recommendations is included in the full Environmental 76

89 If the College were unable to continue operations there because of its failure to manage environmental issues, the value of the site at foreclosure would be reduced by the cost of any clean-up. See APPENDIX J - PHASE I ENVIRONMENTAL SITE ASSESSMENT (W/O APPENDICES). THE ENVIRONMENTAL STUDY HAS NOT BEEN REVISED, UPDATED, SUPPLEMENTED OR OTHERWISE MODIFIED BY BEC OR ANY OTHER INDEPENDENT THIRD PARTY CONSULTANT OR PROFESSIONAL SINCE THE DATE OF SUCH ENVIRONMENTAL STUDY. BEC HAS AUTHORIZED USE OF THE ENVIRONMENTAL STUDY IN THIS PRIVATE PLACEMENT MEMORANDUM. Liability Insurance There is no guarantee that liability insurance will be available at reasonable prices. Damage, Destruction or Condemnation Although the College will be required to obtain certain insurance related to its facilities or the Construction Project, there can be no assurance that the College s facilities will not suffer losses for which insurance cannot be or has not been obtained or the amount of any such loss, or the period during which the College s facilities cannot generate revenues will not exceed the coverage of such insurance policies. If the College s facilities or any portion thereof are damaged or destroyed, or are taken in condemnation proceedings, the revenues derived from such proceeds of insurance or any such condemnation award for the College s facilities must be applied as provided in the Master Indenture to restore or rebuild the Facilities or to redeem the Bonds or as otherwise permitted therein. There can be no assurance that the amount of such proceeds available to restore or rebuild the College s facilities or to redeem the Bonds will be sufficient for that purpose, or that any remaining portion will generate revenues sufficient to pay the expenses of the College s facilities and the Debt Service on the Bonds remaining outstanding. See APPENDIX B - FORM OF THE MASTER INDENTURE. Limitations on Enforceability of Remedies The Bonds are secured by the Bond Indenture, the Revenues, the Lease, the Guaranty Agreement and the Notes, which Notes are in turn secured by the Deeds of Trust which creates a lien on and security interest in all of the College s facilities including, without limitation, the Construction Projects as well as a security interest in certain machinery, furnishings, equipment and fixtures in the facilities and in the Obligated Group s Gross Revenues. The realization of any rights upon a default will depend upon the exercise of various remedies specified in the Bond Indenture, the Master Indenture, the Lease, the Deeds of Trust and the Guaranty Agreement. Any attempt by the Trustee or the Master Trustee to enforce such remedies may require judicial action, which is often subject to discretion and delay. Under existing law, certain of the remedies specified by the Bond Indenture, the Master Indenture, the Lease, the Deeds of Trust and the Guaranty Agreement may not be readily available or may be limited. For example, a court may decide not to order the specific performance of the covenants contained in those documents. Accordingly, the ability of the Issuer, the Master Trustee or the Trustee to exercise remedies under those documents upon a default thereunder could be impaired by the need for judicial approval. The various legal opinions to be delivered concurrently with the delivery of the Bonds may be qualified as to the enforceability of the various legal instruments by limitations imposed by state and federal laws, rulings and decisions affecting the enforcement of creditors rights generally. Legislation regarding students 77

90 rights may limit the enforceability of and remedies under, the Bond Indenture, the Master Indenture, the Lease, the Deeds of Trust or the Guaranty Agreement. Defaults under the Bond Indenture may give rise to the redemption of the Bonds. Upon any such redemption, proceeds, including proceeds from the foreclosure or other liquidation of the Construction Projects will be applied as provided in the Bond Indenture, including, to the extent available after payment of certain costs, fees, expenses and indemnification of the Trustee, to pay the Bonds in the order of priority set forth in the Bond Indenture. Such payment or distribution to the owners of the Bonds may not be sufficient to retire in full all of the Bonds. Enforceability of Security Interests Under the Master Indenture, as security for the payments due on the Obligations thereunder, the Obligated Group pledges its Gross Revenues. The enforcement of the pledge of the Obligated Group s Gross Revenues under the Master Indenture may be limited by certain factors including, without limitation, the following: thereof; (i) (ii) statutory liens; rights arising in favor of the United States of America or any agency (iii) constructive trusts, equitable liens or other rights impressed or conferred by any state or federal court in the exercise of its equitable jurisdiction; (iv) state and federal insolvency or bankruptcy laws affecting Gross Revenues earned by any Obligated Group Member within the statutorily prescribed preference period prior to any effectual institution of bankruptcy proceedings by or against such Member of the Obligated Group and thereafter; or (v) the requirement that appropriate financing and continuation statements or similar notices be filed in accordance with the Uniform Commercial Code as in effect from time to time or other applicable laws. Additional Obligations The Members of the Obligated Group may issue additional indebtedness upon compliance with the terms and conditions and for the purposes described in the Master Indenture. Such additional debt obligations could strain available funds or other assets available to pay the Notes and, in turn, the Bonds. See APPENDIX B FORM OF THE MASTER TRUST INDENTURE. Acceleration of Maturities The Bond Indenture provides that, unless the principal of all of the Bonds is already due and payable, Trustee, upon written direction by the Holders of a majority of the aggregate principal amount of the Outstanding Bonds (subject to restrictions set forth in Section 7.12 of the Bond Indenture) and during the continuance of certain events of default, including default in the due and punctual payment of the principal, Redemption Price and purchase price of any Bonds when the same is due and payable, default in the due and punctual payment of an installment of interest on any of the Bonds when such is due and payable, Issuer s default in observance of other covenants, agreements or conditions on its part in the Bond Indenture or in the Bonds, as set forth in the Bond Indenture or a lease default event or upon an 78

91 event of default under the Master Indenture, shall, upon certain notice, declare the principal of all Outstanding Bonds and interest accrued thereon to be due and payable immediately, subject to certain conditions set forth in the Bond Indenture. Such acceleration could have an adverse impact on the investment objectives or goals of an investor. See APPENDIX A FORM OF THE BOND INDENTURE and APPENDIX B FORM OF THE MASTER TRUST INDENTURE. Limitations on Direction of Trustee by Holders of 2012 Subordinate Bonds The Bond Indenture provides that the Holders of the 2012 Subordinate Bonds are not entitled to direct the Trustee to accelerate the Bonds or exercise any of its other rights or remedies under the Bond Indenture without the consent of the Holders of a majority of the aggregate principal amount of the 2012 Series A Bonds then Outstanding. Such Subordinate Bond Holders therefore are limited in their ability to direct the Trustee to take action to pursue such Holders rights under the Bond Indenture. Resale Value of the Facilities Upon Default Upon a default in payment of the Bonds, the Trustee would be entitled to exercise its remedies under the Lease and the Bond Indenture. It is possible that the proceeds of such remedies would not be in an amount sufficient to pay the principal of and accrued interest on the Bonds. Furthermore, if the College seeks to reorganize under Chapter XI or other provisions of the Federal Bankruptcy Code, the Trustee may be prevented by the bankruptcy court from foreclosing on the Construction Projects and the other assets for an extended period of time. The Trustee, before taking any remedial action against the Facilities may have to conduct an environmental investigation of the Facilities even though certain environmental investigations have been made as of this date. The Trustee may conclude as a result of such environmental investigation that taking any action against the Facilities, by foreclosure or otherwise, is not feasible. Effect of Bankruptcy Bankruptcy proceedings and equitable principles may delay or otherwise adversely affect the enforcement of the Bondholders rights. Federal bankruptcy law may have an adverse effect on the ability of the Trustee and the holders of Bonds to enforce their claim to the security granted by the Indenture. Federal bankruptcy law permits adoption of a reorganization plan even though it has not been accepted by the holders of a majority in aggregate principal amount of the Bonds, if the holders are provided with the benefit of their original lien or the indubitable equivalent. In addition, if the bankruptcy court concludes that the holders of the Bonds have adequate protection, it may (i) substitute other securities subject to the lien of the holders, and (ii) subordinate the lien of the holders (a) to claims by persons supplying goods and services to the Issuer after bankruptcy, and (b) to the administrative expenses of the bankruptcy proceedings. If the Issuer becomes bankrupt, the amount realized by the holders of the Bonds may depend on the bankruptcy court s interpretation of indubitable equivalent and adequate protection under the existing circumstances. The bankruptcy court may also have the power to invalidate certain provisions of the Bond Indenture which make bankruptcy and related proceedings by the Issuer an event of default thereunder. Further, if the Issuer becomes bankrupt, payments on the Bonds made by the Issuer (through the Trustee) to the holders of the Bonds within 91 days before the filing of the petition in bankruptcy by or against the Issuer may be determined to be voidable preferences subject to claims by a debtor in possession or a trustee in bankruptcy. The state of insolvency, fraudulent conveyance and bankruptcy laws relating to the enforceability of obligations issued by one corporation in favor of the creditors of another or the obligation of a Member 79

92 to make debt service payments on behalf of another Member is unsettled, and the ability to enforce such obligations under the Master Indenture against any Member which would be rendered insolvent thereby or would thereby become under-capitalized could be subject to challenge. In particular, such obligations may be voidable under the Bankruptcy Code or applicable state fraudulent conveyance statutes (i) if the obligation is incurred without fair and fairly equivalent consideration to the obligor, (ii) if the incurrence of the obligation thereby renders the Member insolvent or (iii) if the Member is undercapitalized or intended to incur or believed or reasonably should have believed that it would incur debts beyond its ability to pay as they become due. The standards for determining the fairness of consideration and the manner of determining insolvency are not clear and may vary under the Bankruptcy Code and state fraudulent conveyance statutes and judicial opinions with respect to them. In determining whether various covenants and tests contained in the Master Indenture are met, the Members will be combined, notwithstanding uncertainties as to the enforceability of certain obligations of the Obligated Group contained in the Master Indenture which bear on the availability of the revenues of the Obligated Group for payment of debt service on the Bonds. Limited Transferability of Bonds The Bonds will not be registered with the Securities and Exchange Commission under the Securities Act of 1933 or under any state securities laws. Absence of a rating may adversely affect the market for Bonds. The Issuer has not obtained municipal bond insurance or other security devices in connection with the issuance of the Bonds. No assurance can be given that a market will exist for the resale of the Bonds. Because of general market conditions or because of adverse history or economic prospects connected with a particular bond issue, secondary marketing practices in connection with a particular issue may be suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price. THERE CAN BE NO GUARANTEE THAT THERE WILL BE A SECONDARY MARKET FOR THE BONDS, OR, IF A SECONDARY MARKET EXISTS, THAT THE BONDS CAN BE SOLD FOR ANY PARTICULAR PRICE. Furthermore, the transfer of the Bonds is further restricted by terms of the 1933 Act and prevailing regulations and may be subject to a registration requirement or exemptions therefrom. Other Risk Factors In the future, the following factors, among others, may adversely affect the operating results of the Project to an extent that cannot be determined at this time: The establishment of mandatory governmental wage or price controls. The occurrence of a natural disaster, including floods, hurricanes, or tornadoes, which might damage the Project or otherwise impair the ability of the Project to generate revenues. Unionization, employee strikes or other adverse labor action which could result in substantial increases in expenditures. Increases in the costs of construction materials. 80

93 Summary The foregoing is intended only as a summary of some of the risk factors attendant to an investment in the Bonds. An investment in the Bonds involves a substantial element of risk and is speculative in nature. The relatively high interest rate borne by the Bonds (as compared to prevailing interest rates on more secure tax exempt bonds such as those which constitute general obligations of fiscally sound municipalities or states) is intended to serve as compensation to the investor for assuming this element of risk. In order to identify risk factors and make an informed investment decision, potential investors should be thoroughly familiar with this entire Private Placement Memorandum (including the Appendices hereto). Purchasers of the Bonds, particularly purchasers that are corporations (including subchapter S corporations and foreign corporations operating branches in the United States of America), property or casualty insurance companies, banks, thrifts or other financial institutions or certain recipients of Social Security benefits, are advised to consult their tax advisors as to the tax consequences of purchasing or holding the Bonds. General TAX MATTERS The following discussion of Tax Matter is a brief discussion of certain income tax matters with respect to the Bonds under existing applicable law. It does not purport to deal with all aspects of taxation that may be relevant to the owner of a bond. Prospective investors, particularly those who may be subject to special rules, are advised to consult their own tax advisors regarding the tax consequences of owning and disposing of the Bonds Series A Bonds and 2012 Series B Bonds Tax Exempt Bonds Federal Income Tax Exemption of the Tax Exempt Bonds In the opinion of Spilman Thomas & Battle, PLLC ( Bond Counsel ), based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Tax Exempt Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the Code ), except when such Tax Exempt Bonds are owned by a member of the Obligated Group. Bond Counsel is of the further opinion that interest on the Tax Exempt Bonds is not a specific preference item for purposes of federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is taken into account in determining the adjusted current earnings of certain corporations for purpose of calculating corporate alternative minimum taxable income. A complete copy of the proposed form of opinion of Bond Counsel is set forth in APPENDIX L - PROPOSED FORM OF OPINION OF BOND COUNSEL hereto. Assumed Compliance with Certain Covenants and Federal Tax Requirements The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Tax Exempt Bonds. The Obligated Group has covenanted to comply with certain restrictions designed to insure that interest on the Tax Exempt Bonds will not be included in federal gross income. Failure to comply with these covenants may result in interest on the Tax Exempt Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Tax Exempt Bonds. The opinion of Bond Counsel assumes compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not 81

94 occurring) after the date of issuance of the Tax Exempt Bonds may adversely affect the value of, or the tax status of interest on, the Tax Exempt Bonds. Further, no assurance can be given that pending or future legislation or amendments to the Code, if enacted into law, or any proposed legislation or amendments to the Code, will not adversely affect the value of, or the tax status of interest on, the Tax Exempt Bonds. Prospective purchasers of Tax Exempt Bonds are urged to consult their own tax advisors with respect to proposals to restructure the federal income tax. Certain requirements and procedures contained or referred to in the General Resolution, the Tax Compliance Certificate, and other relevant documents may be changed and certain actions (including, without limitation, defeasance of the Tax Exempt Bonds) may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents. Bond Counsel expresses no opinion as to any Tax Exempt Bond or the interest thereon if any such change occurs or action is taken or omitted upon the advice or approval of bond counsel other than Spilman Thomas & Battle, PLLC Original Issue Discount and Original Issue Premium To the extent the issue price of any maturity of the Tax Exempt Bonds is less than the amount to be paid at maturity of such Tax Exempt Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Tax Exempt Bonds) (the Discount Bonds ), the difference constitutes original issue discount, the accrual of which, to the extent properly allocable to each beneficial owner thereof, is treated as interest on the Tax Exempt Bonds which is excluded from gross income for federal income tax purposes and State of West Virginia personal income taxes. For this purpose, the issue price of a particular maturity of the Tax Exempt Bonds is the first price at which a substantial amount of such maturity of the Tax Exempt Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the Tax Exempt Bonds accrues daily over the term to maturity of such Tax Exempt Bonds on the basis of a constant interest rate compounded semiannually (or over a shorter permitted compounding interval selected by the owner). The accruing original issue discount is added to the adjusted basis of such Tax Exempt Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Tax Exempt Bonds. A purchaser of a Discount Bond in the initial public offering at a price for that Discount Bond stated on the cover of this Private Placement Memorandum who holds that Discount Bond to maturity will realize no gain or loss upon the retirement of that Discount Bond. Beneficial owners of the Tax Exempt Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Tax Exempt Bonds with original issue discount, including the treatment of beneficial owners who do not purchase such Tax Exempt Bonds in the original offering to the public at the first price at which a substantial amount of such Tax Exempt Bonds is sold to the public. Tax Exempt Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) ( Premium Bonds ) will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax exempt interest received, and a beneficial owner s basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocated to such beneficial owner. For purposes of determining the owner s gain or loss on the sale, redemption (including redemption at maturity) or other disposition of a Premium Bond, the owner s tax basis in the Premium Bond is reduced by the amount of bond premium that is amortized during the period of ownership. As a result, an owner may realize taxable gain for federal income tax purposes from the sale or other disposition of a Premium Bond for an amount equal to or less than the amount paid by the owner for that Premium Bond. A purchaser of a Premium Bond in the 82

95 initial public offering at the price for that Premium Bond stated on the cover of this Private Placement Memorandum who holds that Premium Bond to maturity (or, in the case of a callable Premium Bond, to its earlier call date that results in the lowest yield on that Premium Bond) will realize no gain or loss upon the retirement of that Premium Bond. Beneficial owners of the Tax Exempt Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Tax Exempt Bonds with bond premium, including the treatment of beneficial owners who do not purchase such Tax Exempt Bonds in the original offering to the public at the first price at which a substantial amount of such Tax Exempt Bonds is sold to the public. Information Reporting and Backup Withholding Information reporting requirements apply to interest paid on tax exempt obligations, including the Tax Exempt Bonds. In general, such requirements are satisfied if the interest recipient completes, and provides the payor with, a Form W-9, Request for Taxpayer Identification Number Certification, or unless the recipient is one of a limited class of exempt recipients. A recipient not otherwise exempt from information reporting who fails to satisfy the information reporting requirements will be subject to backup withholding, which means that the payor is required to deduct and withhold a tax from the interest payment, calculated in the manner set forth in the Code. For the foregoing purpose, a payor generally refers to the person or entity from whom a recipient receives its payments of interest or who collects such payments on behalf of the recipient. If an owner purchasing a Tax Exempt Bond through a brokerage account has executed a Form W- 9 in connection with the establishment of such account, as generally can be expected, no backup withholding should occur. In any event, backup withholding does not affect the excludability of the interest on the Tax Exempt Bonds from gross income for federal income tax purposes. Any amounts withheld pursuant to backup withholding should be allowed as a refund or a credit against any owner s federal income tax once the required information is furnished to the Internal Revenue Service ( IRS ). State Income Tax Exemption In the opinion of Bond Counsel, under the Act, as presently written and applied, the Tax Exempt Bonds, together with the interest thereon, shall be exempt from all taxation by the State of West Virginia, or by any county, municipality or political subdivision thereof. Individual Circumstances Although Bond Counsel is of the opinion that interest on the Tax Exempt Bonds is excluded from gross income for federal income tax purposes, the ownership or disposition of, or the accrual or receipt of interest on, the Tax Exempt Bonds may otherwise affect an owner s federal liability. The nature and extent of these other tax consequences will depend upon the particular tax status of the owner or the owner s other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences. Future Tax Changes Future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Tax Exempt Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such future legislative proposals, clarification of the Code or court decisions may also affect the market price for, or marketability of, the Tax Exempt Bonds. Prospective purchasers of the Tax Exempt Bonds 83

96 should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion. The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel s judgment as to the proper treatment of the Bonds for federal income tax purposes. It is not binding on the IRS or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the Obligated Group, or about the effect of future changes in the Code, the application regulations, the interpretation thereof or the enforcement thereof by the IRS. The Obligated Group has covenanted, however, to comply with the requirements of the Code. Bond Counsel Obligations Bond Counsel s engagement with respect to the Tax Exempt Bonds ends with the issuance of the Tax Exempt Bonds, and unless separately engaged, Bond Counsel is not obligated to defend the Obligated Group or the beneficial owners regarding the tax exempt status of the Tax Exempt Bonds in the event of an audit examination by the IRS. Under current procedures, parties other than the Obligated Group and their appointed counsel including the beneficial owners, would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax exempt bonds is difficult, obtaining an independent review of IRS positions with which the Obligated Group Commission legitimately disagrees may not be practicable. Any action of the IRS, including but not limited to selection of the Tax Exempt Bonds for audit, or the course or result of such audit, or an audit of other bonds presenting similar tax issues may affect the market price for, or the marketability of, the Tax Exempt Bonds, and may cause the Obligated Group or the beneficial owners to incur significant expense. Bond Counsel's opinions represent its legal judgment based in part upon the representations and covenants referenced therein and its review of existing law, but are not a guarantee of result or binding on the IRS or the courts. Bond Counsel assumes no duty to update or supplement its opinions to reflect any facts or circumstances that may come to Bond Counsel's attention after the date of its opinions or to reflect any changes in law or the interpretation thereof that may occur or become effective after such date Series C Bonds Taxable Bonds IRS Circular 230 Disclosure: Any discussion of the tax issues relating to the 2010 Series C Bonds, hereafter described as the Taxable Bonds in this Private Placement Memorandum such as contained under the caption 2012 Series C Bonds Taxable Bonds, was written to support the promotion or marketing of the Taxable Bonds. Such discussion was not intended or written to be used, and it cannot be used, by any person for the purpose of avoiding tax penalties that may be imposed on such person. Each investor should seek advice with respect to the tax consequences of the Taxable Bonds to any such investor based on its particular circumstances from an independent tax advisor. Opinion of Bond Counsel In the opinion of Bond Counsel, under the Code interest on the Taxable Bonds will be included in gross income for Federal income tax purposes; however, under the Act, the Taxable Bonds, together with the interest thereon, shall be exempt from all taxation by the State of West Virginia, or by any county, school district, municipality or political subdivision thereof. 84

97 Tax Consequences The following is a discussion of certain material United States federal income tax consequences of the acquisition, ownership and disposition of the Taxable Bonds by original purchasers of the Taxable Bonds who are United States holders, as defined herein. This summary is based on the Code and existing and proposed Treasury regulations, revenue rulings, administrative interpretations and judicial decisions, all as currently in effect and all of which are subject to change, possibly with retroactive effect. Except as specifically set forth in this subsection, this summary deals only with Taxable Bonds purchased by a United States holder, as defined below, at original issuance and held as capital assets within the meaning of Section 1221 of the Code. It does not discuss all of the tax consequences that may be relevant to such a holder in light of his particular circumstances or to holders subject to special rules, such as insurance companies, financial institutions, tax exempt organizations, regulated investment companies, dealers in securities or foreign currencies, traders in securities that elect the mark-to-market accounting method, persons holding the Taxable Bonds as part of a hedging transaction, "straddle," conversion transaction, or other integrated transaction, United States holders whose functional currency, as defined in Section 985 of the Code, is not the United States dollar, holders who acquire Taxable Bonds in the secondary market or individuals, estates and trusts subject to the tax on unearned income imposed by Section 1411 of the Code. This discussion does not address United States estate tax consequences of holding the Taxable Bonds and, except as specifically described, does not address either tax consequences to pension plans or foreign investors or any aspect of state or local taxation with respect to the Taxable Bonds. Persons considering the purchase of the Taxable Bonds should consult with their own tax advisors concerning the application of the United States federal income tax laws to their particular situations as well as any tax consequences arising under the laws of any state, local or foreign jurisdiction. The opinion of Bond Counsel with respect to the Taxable Bonds, the form of which is attached in Appendix L, will not address such matters. If a partnership or other entity classified as a partnership for United States federal income tax purposes holds Taxable Bonds, the tax treatment of the partnership and each partner generally will depend on the activities of the partnership and the status of the partner. Partnerships acquiring Taxable Bonds, and partners in such partnerships, should consult their tax advisors. United States Holder As used in the sections below, the term "United States holder" means a beneficial owner of a Taxable Bond that is for United States federal income tax purposes (a) a citizen or resident of the United States, (b) a corporation (including an entity treated as a corporation for United States federal income tax purposes), partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof, (c) an estate, the income of which is includible in gross income for United States federal income tax purposes, regardless of its source, or (d) a trust if (i) a court within the United States can exercise primary supervision over the administration of such trust and one or more United States persons have the authority to control all substantial decisions of such trust or (ii) the trust has in effect a valid election to be treated as a domestic trust for United States federal income tax purposes. Further, as described below, a non-united States holder is any holder of a Taxable Bond that is not a United States holder. Sale, Exchange or Retirement of the Taxable Bonds Upon the sale, exchange, redemption or other disposition (which would include a legal defeasance) of a Taxable Bond, a United States holder generally will recognize taxable gain or loss equal to the difference between the amount realized (other than amounts representing accrued and unpaid interest) and the United States holder's adjusted tax basis in the Bond. A United States holder's adjusted 85

98 tax basis in a Taxable Bond will equal the cost of the Bond to that holder, increased by the amount of any original issue discount previously included in income by such holder with respect to such Bond and reduced by any principal payments received by the holder or by any amortized premium. Gain or loss recognized on the sale, exchange or retirement of a Taxable Bond generally will be capital gain or loss, and will generally be long-term capital gain or loss if at the time of sale, exchange or retirement the Bond has been held for more than one year. Under present law, non-corporate taxpayers are subject to reduced maximum rates on long-term capital gains and generally are subject to tax at ordinary income rates on short-term capital gains. The deductibility of capital losses is subject to certain limitations. Prospective investors should consult their own tax advisor concerning these tax law provisions. Any amount realized on the sale, exchange or retirement of a Taxable Bond that is attributable to accrued interest will be taxable as interest unless previously taken into account. Defeasance or material modification of the terms of any Taxable Bond may result in a deemed reissuance thereof, in which event a beneficial owner of the defeased Taxable Bond generally will recognize taxable gain or loss equal to the difference between the amount realized from the sale, exchange or retirement (less any accrued qualified stated interest which will be taxable as such) and the beneficial owner's adjusted tax basis in the Taxable Bond. Prospective purchasers of the Taxable Bonds are urged to consult their tax advisors regarding the foregoing matters. Taxation of Tax Exempt Investors Special considerations apply to employee benefit plans and other investors ( Tax Exempt Investors ) that are subject to tax only on their unrelated business taxable income ( UBTI ). A Tax Exempt Investor's income from the Taxable Bonds generally will not be treated as UBTI under current law, so long as such Tax Exempt Investor's acquisition of such Taxable Bonds is not debt-financed. Tax Exempt Investors should consult with their own tax advisors concerning these special considerations. The Employees Retirement Income Security Act of 1974, as amended ( ERISA ), and the Code generally prohibit certain transactions between a qualified employee benefit plan under ERISA or taxqualified retirement plans and individual retirement accounts under the Code (collectively, the "Plans") and persons who, with respect to a Plan, are fiduciaries or other "parties in interest" within the meaning of ERISA or "disqualified persons" within the meaning of the Code. All fiduciaries of Plans, in consultation with their advisors, should carefully consider the impact of ERISA and the Code on an investment in any Taxable Bonds. Medicare Contribution Tax For taxable years beginning after December 31, 2012, certain non-corporate United States holders of Taxable Bonds will be subject to a 3.8% tax, in addition to regular tax on income and gains, on some or all of their net investment income, which generally will include interest on the Taxable Bonds and any net gain recognized upon disposition of a Taxable Bond. Non-United States Holders Under the Code, interest and original issue discount income with respect to Taxable Bonds held by nonresident alien individuals, foreign corporations or other non-united States holders ( Nonresidents ) generally will not be subject to the United States withholding tax (or backup withholding) if the entity who would otherwise be required to withhold tax from such payment is provided with an appropriate statement that the beneficial owner of the Taxable Bond is a Nonresident. Notwithstanding the foregoing, 86

99 if any such payments are effectively connected with a United States trade or business conducted by a Nonresident bondowner, they will be subject to regular United States income tax, but will ordinarily be exempt from United States withholding tax. Non-United States holders should consult their tax advisors with respect to other tax consequences of the ownership of the Taxable Bonds. Information Reporting And Backup Withholding Information returns may be filed with the Internal Revenue Service ("IRS") in connection with payments on the Taxable Bonds and the proceeds from a sale, exchange, or other disposition of the Taxable Bonds. Holders may receive statements containing the information reflected on these returns. If the holder is a United States holder, the holder may be subject to United States backup withholding tax on these payments if it fails to provide its taxpayer identification number to the paying agent and comply with certification procedures or otherwise establish an exemption from backup withholding. If the holder is not a United States holder, it may be subject to United States backup withholding tax on these payments unless the holder complies with certification procedures to establish that the holder is not a United States person. The certification procedures required of the holder to claim the exemption from withholding tax on certain payments on the Taxable Bonds described above will satisfy the certification requirements necessary to avoid the backup withholding tax as well. The amount of any backup withholding made from a payment will be allowable as a credit against the holder's United States federal income tax liability and may entitle the holder to a refund, provided that the holder timely furnishes the required information to the IRS. Certain State and Local Tax Consequences In addition to the United States federal income tax consequences described above, prospective investors should consider the potential state and local tax consequences of an investment in the Taxable Bonds. State income tax law may vary substantially from state to state, and this discussion does not purport to describe any aspect of the income tax laws of any state or locality. Therefore, potential purchasers should consult their own tax advisors with respect to the various state and local tax consequences of an investment in the Taxable Bonds. Notwithstanding the foregoing, under the Act, the Taxable Bonds, together with the interest thereon, shall be exempt from all taxation by the State of West Virginia, or by any county, school district, municipality or political subdivision thereof. General Tax Provisions Prospective purchasers of the Taxable Bonds should consult their own tax advisors as to the status of interest on the Taxable Bonds under the tax laws of any state other than West Virginia. There are many events that could affect the value and liquidity or marketability of the Taxable Bonds after their issuance, including but not limited to a general change in interest rates for comparable securities, a change in federal or state income tax rates, legislative or regulatory proposals affecting state and local government securities and changes in judicial interpretation of existing law. In addition, certain tax considerations relevant to owners of Taxable Bonds who purchase Taxable Bonds after their issuance may be different from those relevant to purchasers upon issuance. Neither the opinions of Bond Counsel nor this Private Placement Memorandum purports to address the likelihood or effect of any such potential events or such other tax considerations and purchasers of the Taxable Bonds should seek advice concerning such matters as they deem prudent in connection with their purchase of Taxable Bonds. 87

100 Bond Counsel Obligations Bond Counsel s engagement with respect to the Taxable Bonds ends with the issuance of the Taxable Bonds. Bond Counsel's opinions represent its legal judgment based in part upon the representations and covenants referenced therein and its review of existing law, but are not a guarantee of result or binding on the IRS or the courts. Bond Counsel assumes no duty to update or supplement its opinions to reflect any facts or circumstances that may come to Bond Counsel's attention after the date of its opinions or to reflect any changes in law or the interpretation thereof that may occur or become effective after such date RATING The Bonds are not rated by any rating agency. FORWARD-LOOKING STATEMENTS Certain statements in this Private Placement Memorandum that relate to the Construction Projects and the College including, but not limited to, statements under the captions THE CONSTRUCTION PROJECT/THE FACILITY, THE ISSUER, THE COLLEGE and SOURCES AND USES OF FUNDS, MANAGEMENT PREPARED FINANCIAL FORECAST and MARKET STUDY attached hereto as APPENDIX I, PHASE I ENVIRONMENTAL SITE ASSESSMENT (W/O APPENDICES) attached hereto as APPENDIX J and MANAGEMENT PREPARED FINANCIAL FORECAST attached hereto as APPENDIX K, are forward-looking statements that are based on the beliefs of, and assumptions made by, the Issuer and the preparers of the reports. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance of the Construction Projects and the Issuer to be materially different from any expected future results or performance. Such factors include, but are not limited to, items described in BONDHOLDERS RISKS. PRIVATE PLACEMENT Under a Bond Placement Agreement entered into by and between the Issuer, the College and BB&T Capital Markets, a division of Scott & Stringfellow, LLC, as Placement Agent, the Bonds are being privately placed by the Placement Agent, on a best-efforts basis, with the purchasers of the Bonds at a price equal to 100% of the principal amount thereof plus accrued interest, net of a placement fee of $1,092, which shall be paid to the Placement Agent on the Closing Date from the proceeds of the Bonds and will pay for certain of Placement Agent s expenses related to this placement. The obligation of the Placement Agent to accept delivery of the Bonds on behalf of the purchasers is subject to various conditions contained in the Bond Placement Agreement including obtaining a sufficient number of purchasers of the Bonds, approval of certain legal matters by Bond Counsel and the existence of no material adverse change in the condition of the Issuer s finances from that set forth in the Private Placement Memorandum. In the Bond Placement Agreement, the College has agreed to indemnify the Placement Agent and the Issuer against certain liabilities, including certain liabilities under Federal securities laws. The initial purchaser(s) of the 2012 Subordinate Bonds will deliver to the Issuer, the Borrower, the Trustee and the Placement Agent letters, in the form of Appendix O attached hereto, stating, among other things, that such purchaser(s) is/are an accredited investor under Section 501 of Regulation D promulgated pursuant to the 1933 Act or a qualified institutional buyer under Rule 144A promulgated 88

101 pursuant to the 1933 Act, or an investor who, either alone or with his purchaser representative(s), has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment in the Purchased Bonds (as defined in Appendix O), the portion of the Bonds so purchased are acquired for investment and not with a view to, or for resale in connection with, any distribution of the Purchased Bonds, that the purchaser intends to hold such purchased Bonds for its own account and for an indefinite period of time, and does not intend at the time of such purchase to dispose of all or any part of such purchased Bonds, that the investor was supplied with and provided with the opportunity to review, among other things, this Private Placement Memorandum with appendices attached hereto, the Bond Indenture, the Master Indenture, the Lease Agreements and the Guaranty Agreement, certain financial information of the College and that such purchaser(s) has/have made its/their own inquiry(ies) and analysis(es) with respect to the Bonds and the security therefor, and other material factors affecting the security and payment of the Bonds. For more information regarding the investor letter, see APPENDIX O FORM OF INVESTOR LETTER. CONTINUING DISCLOSURE UNDERTAKING In accordance with the United States Securities and Exchange Commission Rule 15c2-12, as amended (the Rule ), the College and ABEC have agreed pursuant to a Continuing Disclosure Agreement dated as of November 1, 2012 with the Trustee, as disclosure agent (the Dissemination Agent ), to be delivered on the date of delivery of the Bonds, to cause the following information to be provided through the Dissemination Agent to the Municipal Securities Rulemaking Board (the MSRB ) via the Electronic Municipal Marketing Access ( EMMA ) System: (a) Annual financial information pertaining to the finances and operating data of the Obligated Group; such information shall include, but not be limited to, at a minimum, that financial information and operating data which was included in the final Private Placement Memorandum with respect to the Obligated Group as well as such information which is customarily prepared by the Obligated Group and is publicly available, operating revenues and expenses for the prior fiscal year and the Debt Service Coverage Ratio for the prior fiscal year and a census of the Project; and (b) The Obligated Group s annual financial statement for each Fiscal Year, prepared in accordance with generally accepted accounting principles, and audited in accordance with generally accepted auditing standards, as such principles and standards may be revised and put into in effect from time to time. Not later than December 31 st of each year, commencing with the report for the fiscal year (which fiscal year currently commences on July 1 and ends on June 30 of each year), the Obligated Group shall, or shall cause the Dissemination Agent to provide to EMMA, in an electronic format accompanied by identifying information as prescribed by the MSRB, in an electronic format accompanied by identifying information as prescribed by the MSRB, the Annual Report which is consistent with the requirements set forth in the Disclosure Agreement. If the Dissemination Agent is unable to verify that an Annual Report (as defined in the Disclosure Agreement) has been provided to the MSRB by the date required in the Disclosure Agreement or if Obligated Party does not provide such Annual Report to the MSRB by such date, the Dissemination Agent shall send a notice to the MSRB, via EMMA, of such event. Furthermore, the Obligated Group agrees in the Disclosure Agreement to provide notices of the occurrence of any of the following listed events (the Listed Events ): (1) Without regard to materiality, with respect to the Bonds: 89

102 (a) (b) (c) (d) (e) (f) (g) 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; Defeasances; Rating changes; Tender offers; (h) Bankruptcy, insolvency, receivership, or similar proceedings involving the Obligated Group; and (i) Adverse tax opinions, the issuance by IRS 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 Bonds, or other material events affecting the tax status of the Bonds; (2) If material, with respect to the Bonds: (a) (b) Non-payment related defaults; Modifications to rights of security holders; (c) Bond calls, except for mandatory scheduled redemptions not otherwise contingent upon the occurrence of an event; (d) Release, substitution or sale of property securing repayment of the Bonds; (e) Consummation of a merger, consolidation, or acquisition involving the Obligated Group or the sale of all or substantially all the assets of the Obligated Group, other than in the ordinary course of business, or the entry into a definitive agreement to engage in such transaction, or a termination of such an agreement, other than in accordance with its terms; and (f) Trustee. Appointment of a successor or additional trustee, or a change in the name of the The Obligated Group shall, in a timely manner not in excess of ten (10) business days after the occurrence of a Listed Event, notify the Dissemination Agent in writing with instructions to report the event by promptly filing a notice of such occurrence with the MSRB, via EMMA, in an electronic format accompanied by identifying information as prescribed by the MSRB, which notice filing shall not be made with MSRB via EMMA in excess of ten (10) business days after the occurrence of a Listed Event. Persons desiring the foregoing annual financial information, quarterly financial information and notices of material events may also obtain such information by contacting the Trustee. 90

103 For purposes of this transaction with respect to events as set forth in the Rule: (a) there are no credit enhancements applicable to the Bonds as of the date of initial issuance; and (b) there are no liquidity providers applicable to the Bonds as of the date of initial issuance. No financial or operating data concerning the Issuer is material to any decision to purchase, hold or sell the Bonds and the Issuer will not provide any such information. The Obligated Group has undertaken all responsibilities for any continuing disclosure to Bondholders as described above, and the Issuer shall have no liability to the Bondholders or any other person with respect to such disclosures To the best knowledge of the College, no member of the Obligated Group has failed to comply with any prior Undertaking under the Rule. A failure by a member of the Obligated Group to comply with the Undertaking will not constitute an Event of Default under the Indenture, or the Lease (although the Holders of the Bonds will have available remedies at law or in equity other than the collection of monetary damages). Nevertheless, such a failure must be reported in accordance with the Rule to the EMMA and the SID, if any, and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Bonds and their market price. WEST VIRGINIA SECURITIES ACT DISCLOSURE STATEMENT YOU SHOULD MAKE YOUR OWN DECISION WHETHER THIS OFFERING MEETS YOUR INVESTMENT OBJECTIVES AND RISK TOLERANCE LEVEL. NO FEDERAL OR STATE SECURITIES COMMISSION HAS APPROVED, DISAPPROVED, ENDORSED OR RECOMMENDED THIS OFFERING. NO INDEPENDENT PERSON HAS CONFIRMED THE ACCURACY OR TRUTHFULNESS OF THIS DISCLOSURE, NOR WHETHER IT IS COMPLETE. THE WEST VIRGINIA SECURITIES COMMISSION HAS NOT REVIEWED THE DISCLOSURE CONTAINED HEREIN AND THE ISSUER IS RELYING ON AN EXEMPTION FROM REGISTRATION BY QUALIFICATION UNDER THE WEST VIRGINIA SECURITIES ACT. LEGAL MATTERS Certain legal matters incident to the validity of the Bonds, including their authorization, issuance, and sale by the Issuer are subject to the approval of Spilman Thomas & Battle, PLLC, Charleston, West Virginia, Bond Counsel, whose approving opinion will be delivered with the Bonds. The proposed form of such opinion is attached hereto as APPENDIX L PROPOSED FORM OF OPINION OF BOND COUNSEL. The Bond Counsel Opinion will be limited to matters relating to authorization and validity of the Bonds and to the tax exempt status of interest on the Tax Exempt Bonds as described in the section Tax Matters. Bond Counsel has not been engaged to investigate the financial resources of the Obligated Group or its ability to provide for payment of the Bonds, and the Bond Counsel Opinion will make no statement as to such matters or as to the accuracy or completeness of this Private Placement Memorandum or any other information that may have been relied on by anyone in making the decision to purchase Bonds. The factual information contained herein relating to the Project has been supplied or reviewed by the Issuer. Certain legal matters are being passed upon for the Issuer by its counsel, Spilman Thomas & Battle, PLLC, and the Obligated Group by its counsel, Jackson Kelly PLLC, Morgantown, West Virginia. 91

104 Certain legal matters will be passed upon for the Placement Agent by Hill Wallack LLP, Princeton, New Jersey. Copies of such opinions will be available at the time of delivery of the Bonds. Issuer LITIGATION No litigation or proceedings are pending or, to the knowledge of the Issuer, threatened against the Issuer restraining or enjoining the issuance or delivery of the Bonds, questioning or affecting the validity of the Bonds or the proceedings and authority under which either of them are to be issued, questioning in any manner the right of the Issuer to enter into, or the validity or enforceability of, Bond Indenture, the Initial Lease, or the Lease, or the ability of the Issuer to issue the Bonds in the manner provided in the Bond Indenture. Obligated Group As of April 30, 2012, the College is engaged in litigation as a third-party defendant regarding a traffic accident that occurred on October 19, The accident involved a student who was travelling to a music ensemble performance driving his own vehicle. His vehicle struck a pedestrian who was assisting with another accident that had occurred shortly before his arrival at the scene. The student was following three College vans carrying other students who were travelling to perform at the same event. The allegation is that the College and the drivers of each of the vans were partly responsible for the accident and that the student driving his own vehicle was acting as an agent of the College. This litigation is due to go to court in November, In addition, the Obligated Group is subject to routine litigation, involving among other things, employment matters. Other than the foregoing, no litigation or proceedings are pending or, to the knowledge of the Obligated Group, threatened against any Member of the Obligated Group restraining or enjoining the issuance or delivery of the Bonds or the Notes, questioning or affecting the validity of the Bonds or the Notes or the proceedings and authority under which either of them are to be issued, questioning in any manner the right of any Member of the Obligated Group to enter into, or the validity or enforceability of, the Notes, the Initial Lease, the Lease, or the Guaranty Agreement, or the ability of the Obligated Group to secure the Bonds in the manner provided in the Bond Indenture. OTHER MATTERS The foregoing summaries and explanations do not purport to be comprehensive, and are expressly made subject to the exact provisions of documents referred to herein. Copies of the Bond Indenture, the Initial Lease, the Lease, the Guaranty Agreement, the Deeds of Trust, the Notes, the Master Trust Indenture and the Supplemental Master Indenture may be obtained from the Trustee or, until initial delivery of the Bonds, the Placement Agent. So far as any statements are made in this Private Placement Memorandum involving matters of opinion, whether or not expressly so stated, they are intended merely as such and not as representations of fact. Forecasts of financial information set forth in the Introduction and in APPENDIX K MANAGEMENT PREPARED FINANCIAL FORECAST, while based upon assumptions which the College believes to be reasonable, are not guarantees that such results can be obtained and are subject to change. The Appendices to this Private Placement Memorandum are integral parts of this Private Placement Memorandum and should be read in their entirety. 92

105 The agreement of the Issuer with the Owners of the Bonds is fully set forth in the Bond Indenture, and the Bonds, and this Private Placement Memorandum is not to be construed as constituting an agreement with any purchaser of the Bonds. THE PHILIPPI MUNICIPAL BUILDING COMMISSION By: /s/ Howard Swick Chairman ALDERSON-BROADDUS COLLEGE, INC., as Obligated Group Agent By: /s/ Richard A. Creehan President S-1

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107 Appendix A: Form of the Bond Indenture

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109 TABLE OF CONTENTS BOND TRUST INDENTURE Between THE PHILIPPI MUNICIPAL BUILDING COMMISSION and WELLS FARGO BANK, N.A., Trustee Dated as of November 1, 2012 THE PHILIPPI MUNICIPAL BUILDING COMMISSION COLLEGE FACILITIES REFUNDING AND IMPROVEMENT REVENUE BONDS (ALDERSON-BROADDUS COLLEGE, INC.) 2012 SERIES A and THE PHILIPPI MUNICIPAL BUILDING COMMISSION COLLEGE FACILITIES SUBORDINATE LIEN REFUNDING REVENUE BONDS (ALDERSON-BROADDUS COLLEGE, INC.) 2012 SERIES B and THE PHILIPPI MUNICIPAL BUILDING COMMISSION COLLEGE FACILITIES SUBORDINATE LIEN REFUNDING AND IMPROVEMENT REVENUE BONDS (ALDERSON-BROADDUS COLLEGE, INC.) 2012 SERIES C (TAXABLE) Page ARTICLE I DEFINITIONS, ETC Section Terms Defined... 7 Section Content of Certificates and Opinions Section Interpretation Section Exhibits ARTICLE II THE 2012 BONDS Section Authorization of 2012 Bonds Section Denominations; Date; Maturity; Numbering Section Payment of Principal of and Interest on the 2012 Bonds Section Defaulted Interest Section Delivery of 2012 Bonds Section Execution Section Authentication Section Form of 2012 Bonds Section Bonds Mutilated, Lost, Destroyed or Stolen Section Execution of 2012 Bonds; Limited Obligations; No Liability of State Section Transfer of 2012 Bonds Section Exchange of 2012 Bonds Section Bond Register Section Temporary 2012 Bonds Section Use of Securities Depository ARTICLE III ISSUANCE OF 2012 BONDS; APPLICATION OF PROCEEDS OF 2012 BONDS Section Issuance of the 2012 Bonds Section Application of Proceeds of the 2012 Bonds Section Establishment and Application of Costs of Issuance Fund Section Establishment and Application of Project Fund Section Validity of 2012 Bonds ARTICLE IV REDEMPTION OF 2012 BONDS Section Limitation on Redemption Section Optional Redemption Section Optional Redemption as a Result of the Sale of Bond Financed Property Section Optional Redemption for Insurance and Condemnation Proceeds Section Mandatory Redemption Section Redemption Requests with Regard to Section 4.03 or Section 4.04 hereof Section Selection of 2012 Bonds for Redemption Section Notice of Redemption Section Partial Redemption of 2012 Bonds Section Effect of Redemption ARTICLE V CREATION OF FUNDS AND ACCOUNTS; PRIORITY OF PAYMENTS Section Pledge and Assignment Section Interest Funds Section Principal Fund i Section Redemption Fund Section Debt Service Reserve Fund Section Operating Reserve Fund Section Investment of Moneys Section Rebate Fund Section Priority of Payments ARTICLE VI PARTICULAR COVENANTS Section Punctual Payment Section Extension of Payment of 2012 Bonds Section Prohibition Against Encumbrances Section Power to Issue 2012 Bonds and Make Pledge and Assignment Section Accounting Records and Financial Statements Section Tax Covenants Section Enforcement and Amendment of Agreement and Lease Section Waiver of Laws Section Further Assurances Section Continuing Disclosure ARTICLE VII EVENTS OF DEFAULT AND REMEDIES OF BONDHOLDERS Section Events of Default Section Acceleration of Maturities Section Institution of Legal Proceedings by Trustee Section Application of Revenues and Other Funds After Default Section Trustee to Represent Bondholders Section Limitation on Bondholders Right to Sue Section Absolute Obligation of Issuer Section Termination of Proceedings Section Remedies Not Exclusive Section No Waiver of Default Section Notice to Bondholders of Default ARTICLE VIII THE TRUSTEE Section Duties, Immunities and Liabilities of Trustee Section Merger or Consolidation Section Liability of Trustee Section Right of Trustee to Rely on Documents Section Preservation and Inspection of Documents Section Separate or Co-Trustee Section Compensation and Indemnification Section Notice to Rating Agency Section Trustee and Master Documents Section Trustee s Relationship to the Issuer Section Trustee s Rights and Remedies Under the Agreement and Lease Section College s Rights of Possession and Use of Lease Section Sale of Facilities by Issuer, Subletting ARTICLE IX MODIFICATION OR AMENDMENT OF THIS INDENTURE Section Supplements Not Requiring Consent of Bondholders Section Supplemental Bond Indentures Requiring Consent of Bondholders Section Effect of Supplemental Bond Indenture Section Amendments to Agreement and Lease not Requiring Consent of Bondholders Section 9.05 Amendments to Agreement and Lease Requiring Consent of Bondholders Section No Amendment to Lease May Reduce Rent ARTICLE X DEFEASANCE Section Discharge of Indenture Section Discharge of Liability on 2012 Bonds Section Deposit of Money or Securities with Trustee Section Escheat Section When Refunding is Not Permitted Section Restructuring of Defeasance Escrow ARTICLE XI MISCELLANEOUS Section Liability of Issuer Limited to Revenues Section Successor Is Deemed Included in All References to Predecessor Section Limitation of Rights Section Waiver of Notice Section Destruction of Bonds Section Severability of Invalid Provisions Section Evidence of Rights of Bondholders Section Disqualified Bonds Section Money Held for Particular Bonds Section Funds and Accounts Section Notices Section Counterparts Section Rights Under the Agreement and Lease; Master Trustee as Holder of Series 2012 Notes Section Applicable Law Section Immunity of Officers and Members of Issuer ii A-1 iii

110 BOND TRUST INDENTURE This Bond Trust Indenture (hereinafter called the Indenture ), dated as of November 1, 2012, by and between THE PHILIPPI MUNICIPAL BUILDING COMMISSION, a public corporation and municipal building commission, organized and existing under the laws of the State of West Virginia (the Issuer ), and WELLS FARGO BANK, N.A., a national banking association with a designated corporate trust office in Philadelphia, Pennsylvania, duly established, existing and authorized to accept and execute trusts and covenants of the character herein set out, as trustee (together with its successors and assigns, the Trustee ), WITNESSETH: WHEREAS, pursuant to Chapter 8, Article 33 of the Code of West Virginia of 1931, as amended, The City of Philippi (the City ) enacted an ordinance on December 1, 1970, creating the Issuer, a public corporation with perpetual existence and a municipal building commission within the meaning of the Act, hereinafter defined; WHEREAS, the Issuer, under the Act, has plenary power and authority to contract and be contracted with, acquire, purchase, own and hold any property, real or personal, and acquire, construct, equip, maintain and operate public buildings, structures, projects and appurtenant facilities of any type or types for which the governing body of the City is permitted to expend public funds, sell, encumber or dispose of any property, real or personal, and lease its property or any part thereof, for public purposes, to such persons and upon such terms as the Issuer deems proper; WHEREAS, the City and its council are permitted by Chapter 8, Article 12, Section 5(49) of the Code of West Virginia of 1931, as amended, to expend public funds for establishing, constructing, requiring, maintaining and operating such instrumentalities, other than free public schools, for the instruction, enlightenment, improvement and welfare of the City s inhabitants as the council may deem necessary or appropriate for the public interest, and the Issuer has deemed and does hereby deem the hereinafter described Construction Projects necessary and appropriate for the public interest; WHEREAS, the Issuer, under the Act, has plenary power and authority to issue and sell negotiable bonds, notes, debentures or other evidences of indebtedness and provide for the rights of the Holders (as defined herein) thereof, incur any proper indebtedness and issue any obligations and give any security therefor which it may deem necessary or advisable in connection with exercising powers as provided in the Act; WHEREAS, The Board of Trustees (the Board ) of Alderson-Broaddus College, Inc., a West Virginia non-stock, not-for-profit corporation (the College ), operates a four-year liberal arts college in the City, in Barbour County, West Virginia, known as Alderson-Broaddus College and the Board has determined to undertake the planning, design, acquisition, construction, renovation and equipping of certain capital improvements to the campus of the College, consisting of the construction of a new multi-sport stadium, locker room facilities, stadium seating, concessions, President s box, media boxes, turf field, lights to accommodate night games and practices, site improvements and walkways, new student housing consisting of a 144-bed apartment style student housing building and a 240-bed suite-style student housing building, as well as the renovation and improvement of Benedum Hall, Priestley Hall and Kincaid Hall, and any other capital improvement project approved by the Board as permitted by the Act, together with all other necessary appurtenances and related facilities (the Construction Projects ); WHEREAS, the Issuer has previously issued its College Facilities Revenue Bonds, Series 2010 A (Alderson-Broaddus College, Inc.), dated June 30, 2010, in the original aggregate principal amount of $5,000,000 (the Bonds to be Refunded ) for the purposes of: (i) financing the costs of the planning, design, acquisition, construction, renovation and equipping of certain renovations and improvements to certain classroom buildings of the College, (ii) refinancing loans of the College and currently refunding the Issuer s College Facilities Revenue Bonds, Series 1998 A (Alderson-Broaddus College, Inc.), (iii) paying capitalized interest on such bonds, and (iv) paying costs of issuance of such bonds; WHEREAS, the College, as obligated group agent (the College acting in its capacity as obligated group agent is referred to herein as the Obligated Group Agent ), on behalf of an obligated group (the Obligated Group ), has requested the assistance of the Issuer in financing the planning, design, acquisition, construction, renovation and equipping of the Construction Projects and the current refunding of the Bonds to be Refunded, and the Issuer authorized such assistance and determined that such assistance will maintain or provide gainful employment and improve living conditions for the residents of the City, will serve as the public purpose of the Issuer by contributing to the prosperity, health and general welfare of the residents of the City and will tend to aid and assist in the economic growth and development of the City; WHEREAS, in order to assist the College with its financing needs, contemporaneously with the execution and delivery of this Indenture and pursuant to the terms of this Indenture, the Issuer has issued (a) its bonds designated as The Philippi Municipal Building Commission College Facilities Refunding and Improvement Revenue Bonds (Alderson- Broaddus College, Inc.), 2012 Series A in the original principal amount of $34,275,000 (the 2012 Series A Bonds ), (b) its bonds designated as The Philippi Municipal Building Commission College Facilities Subordinate Lien Refunding Revenue Bonds (Alderson-Broaddus College, Inc.), 2012 Series B in the original principal amount of $2,510,000 (the 2012 Series B Bonds ), and (c) its bonds designated as The Philippi Municipal Building Commission College Facilities Subordinate Lien Refunding and Improvement Revenue Bonds (Alderson-Broaddus College, Inc.), 2012 Series C (Taxable) in the original principal amount of $680,000 (the 2012 Series C Bonds and together with the 2012 Series B Bonds, collectively, the 2012 Subordinate Bonds and together with the 2012 Series A Bonds, collectively, the 2012 Bonds ), for the purposes of (i) financing the planning, design, acquisition, construction, renovation and equipping of the Construction Projects for and on behalf of the College, (ii) financing capitalized interest on the Construction Projects, (iii) currently refunding the Bonds to be Refunded for the benefit of the College, (iv) funding a debt service reserve account for the 2012 Series A Bonds, and (v) paying costs of issuance of the Bonds (collectively, the Projects ); WHEREAS, simultaneously with the execution and delivery of this Indenture, the Obligated Group Agent will issue and deliver the 2012 Notes (as hereinafter defined) under the Master Indenture, dated as of the date hereof, to evidence the obligations under and to secure the 1 2 Lease Agreements (as defined herein) for the 2012 Bonds and the Guaranty Agreement (as defined herein); WHEREAS, under and pursuant to a lease (the Initial Lease ) dated as of the date hereof, the College has heretofore leased to the Issuer certain real estate, situate, lying and being in the City of Philippi, Barbour County, West Virginia, which is more particularly described in Exhibit A - Site Description, attached hereto (the Site ), together with all improvements thereon and to be thereon and all tangible personal property thereon and to be thereon, and all fixtures, furniture, equipment, furnishings and other necessary appurtenant facilities and personal property now or hereafter situate on or used in connection with the Site, including, but not limited to, the Construction Projects to be financed, in part, with a portion of the proceeds of the 2012 Bonds (such real estate, improvements, fixtures, furniture, equipment, furnishings and other necessary appurtenant facilities and personal property, including, without limitation, the Construction Projects, together with any and all additions and improvements thereto and additional or related auxiliary facilities, now or hereafter constructed on the Site or used in connection therewith, are collectively herein called the Facilities ); WHEREAS, the Issuer has leased the Facilities back to the College pursuant to a lease agreement (the Lease ) dated as of the date hereof; WHEREAS, the Initial Lease and Lease are together referred to herein as the Lease Agreements ; WHEREAS, the Issuer and the College have entered into the Lease Agreements in order (i) to provide for and secure the payment of the principal of, premium, if any, and interest on the 2012 Bonds, (ii) to provide for the planning, design, acquisition, construction, renovation and equipping of the Construction Projects, (iii) to provide for the operation, maintenance and administration of the Facilities by the College, (iv) to provide for the current refunding of the Bonds to be Refunded, and (v) to carry out the other transactions contemplated herein and in the Lease Agreements; WHEREAS, in order to provide additional security for the repayment of the 2012 Bonds and the payment by the College of lease rentals which will become due and payable under the Lease (the Lease Payments ), the Board agrees to the execution and delivery by the Obligated Group Agent of a Guaranty Agreement, together with a promissory note issued under the Master Indenture that may be necessary in connection therewith, whereby the Obligated Group Agent agrees that the Obligated Group shall be generally obligated for the payment of the debt service and other sums that shall become due and payable on the 2012 Bonds, and the Obligated Group Agent will undertake such covenants and agreements in such document or documents as may be necessary in connection therewith (the Guaranty Agreement ); WHEREAS, the Issuer has found and determined, and does hereby find and determine, that in order to enhance the health, safety and welfare of and provide educational opportunities to the citizens of the City and the County, it has become necessary and appropriate for the Issuer to provide for the Construction Projects and that the same constitutes public purposes of the Issuer; WHEREAS, the execution and delivery of this Indenture and the issuance of the 2012 Bonds have been in all respects duly and validly authorized by Ordinance duly adopted, enacted and approved by the Issuer following a public hearing thereon (the Ordinance ); WHEREAS, in order to provide for the authentication and delivery of the 2012 Bonds, and declare the terms and conditions upon which the 2012 Bonds are to be issued and secured and to secure the payment of the principal thereof, premium, if any, and interest thereon, the Issuer has authorized the execution and delivery of the 2012 Bonds and the authentication and registration to be endorsed thereon are to be issued in substantially the forms set forth in Exhibit B Form of 2012 Bonds, attached hereto as a part hereof, with necessary and appropriate variations, omissions and insertions as permitted or required by this Indenture pursuant to the Ordinance; WHEREAS, all acts and proceedings to make the 2012 Bonds, when executed by the Issuer, authenticated and delivered by the Trustee and duly issued, the valid, binding and limited obligations of the Issuer according to the import thereof, and to constitute this Indenture as a valid and binding agreement for the uses and purposes herein set forth in accordance with its terms, have been done and taken as a valid assignment and pledge herein made of the Lease Payments and revenues derived from the Lease to the payment of the principal of, premium, if any, and interest on the 2012 Bonds and as a valid assignment of the rights of the Issuer under the Lease Agreements have been done and performed, and the creation, execution and delivery of this Indenture, and the authorization, execution and issuance of the 2012 Bonds, subject to the terms hereof, have in all respects been duly authorized; and WHEREAS, the Trustee has accepted the trusts created by this Indenture, and as evidence thereof has executed this Indenture. NOW, THEREFORE, THIS INDENTURE WITNESSETH: That the Issuer, in consideration of the premises and mutual covenants herein contained and of the purchase of the 2012 Bonds and of other good and lawful consideration, the receipt of which is hereby acknowledged, and to secure the payment of the 2012 Bonds and the performance and observance of all the covenants and conditions herein or therein contained, has executed and delivered this Indenture, and has conveyed, granted, assigned, transferred, pledged, set over and confirmed, mortgaged and granted a security interest and by these presents does hereby convey, grant, assign, transfer, pledge, set over, confirm, mortgage and grant a security interest unto the Trustee, its successor or successors and its or their assigns forever, for the benefit of the Holders from time to time of the 2012 Bonds with power of sale, all and singular the property, real and personal, hereinafter described (said property being herein sometimes referred to as the Trust Estate ) to wit: DIVISION I All right, title and interest of the Issuer in and to the 2012 Notes, pledged and assigned hereunder for the payment of the 2012 Bonds, and all sums payable in respect of the indebtedness secured thereby; 3 A-2 4

111 DIVISION II All right, title and interest of the Issuer in and to the Lease Agreements (other than the right to indemnification, reimbursement and payment of its fees and expenses, to receive notices and to grant approvals, consents and waivers, if any, which are specifically retained by the Issuer (the Unassigned Rights )); DIVISION III Any and all other property of every kind and nature from time to time hereafter, by delivery or by writing of any kind, conveyed, pledged, assigned or transferred as and for additional security hereunder by the Issuer or the Obligated Group or by anyone on their behalf to the Trustee, including, without limitation, funds of the Obligated Group held by the Trustee under the terms of this Indenture as security for the 2012 Bonds; EXCEPTED PROPERTY, There is, however, expressly excepted and excluded from the lien and operation of this Indenture amounts held in the Rebate Fund (as hereinafter defined) and the Unassigned Rights; TO HAVE AND TO HOLD, all and singular, the Trust Estate and the rights and privileges hereby conveyed, assigned and pledged, by the Issuer or so intended, unto the Trustee and its successors and assigns forever, in trust, nevertheless, with power of sale, for the equal and pro rata benefit and security of each and every Registered Owner (as hereinafter defined) of the 2012 Bonds issued hereunder, with respect to such senior lien, without preference, priority or distinction as to participation in the lien, benefit and protection hereof of the 2012 Bonds over or from the others, by reason of priority in the issue or negotiation or maturity thereof, or for any other reason whatsoever, except as herein otherwise expressly provided, so that each and all of the 2012 Bonds shall, except as herein otherwise expressly provided, have the same right, lien and privilege under this Indenture and shall be equally secured hereby with the same effect as if the same had all been made, issued and negotiated simultaneously with the delivery hereof and were expressed to mature on one and the same date; cause to be paid all other sums payable hereunder by the Issuer, then these presents and the estate and rights hereby granted shall cease, determine and become void, except for the rights of the Issuer and the Trustee under the Lease Agreements to indemnification which shall survive the termination or discharge of this Indenture, and thereupon the Trustee, on payment of its lawful charges and disbursements then unpaid, on demand of the Issuer and upon the payment of the costs and expenses thereof, shall duly execute, acknowledge and deliver to the Issuer such instruments of satisfaction or release as may be necessary or proper to discharge this Indenture of record, and if necessary shall grant, reassign and deliver to the Issuer, its successors or assigns, all and singular the property, rights, privileges and interests by them hereby granted, conveyed and assigned, and all substitutes therefor, or any part or portion thereof, not previously disposed of or released as herein provided, otherwise this Indenture shall be and remain in full force; AND IT IS HEREBY COVENANTED, DECLARED AND AGREED by and among the parties hereto that the 2012 Bonds are to be issued, authenticated and delivered, and that all of the Trust Estate is to be held and applied, subject to the further covenants, conditions, releases, uses and trusts hereinafter set forth, and the Issuer, for itself and its successors, does hereby covenant and agree to and with the Trustee and its respective successors in said trust, for the benefit of the Registered Owners of the 2012 Bonds or any of them as follows: [Remainder of Page Intentionally Left Blank] PROVIDED, HOWEVER, notwithstanding anything herein to the contrary, the lien on the Trust Estate created hereunder in favor of the Registered Owners of either series of the 2012 Subordinate Bonds shall be subordinate and junior in all respects to the lien on the Trust Estate created hereunder in favor of the Registered Owners of the 2012 Series A Bonds; SUBJECT, NEVERTHELESS, as to the properties conveyed, assigned, pledged and mortgaged hereby to such reservations and exceptions as are more specifically set forth in Exhibit A - Site Description attached hereto and incorporated herein; PROVIDED, NEVERTHELESS, that these presents are upon the express condition, that if the Issuer or its successors or assigns shall well and truly pay or cause to be paid the principal of such 2012 Bonds with interest, together with any premium due thereon, if any, according to the provisions set forth in the 2012 Bonds and each of them, or shall provide for the payment or redemption of such 2012 Bonds by depositing or causing to be deposited with the Trustee the entire amount of funds or securities required for payment or redemption thereof when and as authorized by the provisions of Article X hereof, and shall also pay or 5 6 ARTICLE I DEFINITIONS, ETC. Section Terms Defined. To the extent not defined herein, the terms used in this Indenture shall have the same meanings provided in the Master Indenture and the Lease Agreements. Unless the context otherwise requires, the terms defined in this Section shall, for all purposes of this Indenture and of any indenture supplemental hereto and of any certificate, opinion or other document herein mentioned, have the meanings herein specified, to be equally applicable to both the singular and plural forms of any of the terms herein defined. Unless otherwise defined in this Indenture, all terms used herein shall have the meanings assigned to such terms in the Act: Act shall mean, collectively, the provisions of Chapter 8, Article 33 of the Code of West Virginia of 1931, as amended and supplemented, and, where appropriate, the applicable provisions of Chapter 8, Article 16 of the Code of West Virginia of 1931, as amended and supplemented. ABEC shall mean Alderson-Broaddus Endowment Corporation, a non-stock, non-profit corporation organized under the laws of the State of West Virginia. Authorized Representative or Authorized Officer shall mean, with reference to the Issuer, the Chairman or Vice-Chairman of the Issuer, or any other officer or officers designated by resolution or ordinance, as appropriate, of the Issuer to execute those documents or perform those acts to which are then being referred, and, with reference to the Trustee, a Vice-President or Senior Trust Officer or any other officer or officers designated by the Bylaws of the Trustee, and with reference to the Obligated Group Agent, its President, its Vice President for Finance and Administration, or any other officer or officers designated by resolution of its Board of Trustees, to execute those documents or perform those acts to which are then being referred. Authorized Denominations shall mean denominations of $5,000 and any integral multiple thereof with respect to the 2012 Bonds. Bond Counsel shall mean legal counsel of recognized national standing in the field of tax-exempt obligations, and means Spilman Thomas & Battle, PLLC, Charleston, West Virginia. Bonds or 2012 Bonds shall mean, collectively, the 2012 Series A Bonds, the 2012 Series B Bonds and the 2012 Series C Bonds, authorized and issued under and at any time Outstanding pursuant to this Indenture as fully set forth in the preambles above. Bonds to be Refunded shall have the meaning set forth in the seventh recital of this Indenture. Bondholder, Holder, Owner of the 2012 Bonds, Registered Owner or any similar term, whenever used herein with respect to an Outstanding 2012 Bond, shall mean the person in whose name such 2012 Bond is registered. 7 A-3 Bond Purchase Agreement shall mean the Bond Purchase Agreement among the Placement Agent, the Issuer and the Obligated Group Agent. Bond Year shall mean the period beginning on the date hereof and ending on October 1, 2013 (or a shorter period selected by the Issuer and the Obligated Group Agent in accordance with Treasury Regulations Section (b)), and each successive one year period thereafter. The last Bond Year will end on the last day on which any 2012 Bonds are outstanding. Business Day shall mean any day on which the Trustee and the business office of the Obligated Group Agent are open for the general transaction of business. Capitalized Interest Fund shall mean the trust fund created in Section 3.04 of this Indenture to pay interest on the portion of the 2012 Bonds issued to fund the costs of Construction Projects for a period of eighteen (18) months from the Closing Date. Certificate, Statement, Requisition and Order of the Issuer or the Obligated Group Agent, shall mean, respectively, a written certificate, statement, request, requisition or order signed in the name of the Issuer by its Authorized Representative, or in the name of the Obligated Group Agent by an Authorized Representative. Any such instrument and supporting opinions or representations, if any, may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument. If and to the extent required by Section 1.02 hereof, each such instrument shall include the statements provided for in Section Closing Date shall mean November 30, Code shall mean the Internal Revenue Code of 1986, as amended, and the Regulations and rulings thereunder from time to time in effect. Reference herein to any specific provision of the Code shall be deemed to refer to any successor provision of the Code. Collateral Document shall mean any written instrument other than the Master Documents, the Lease Agreements, the Deeds of Trust or this Indenture, whereby any property or interest or rights in property of any kind is granted, pledged, conveyed, assigned or transferred to the Issuer or Trustee, or both, as security for payment of the 2012 Bonds, the obligations (as defined in the Master Indenture) or performance by the College of its duties and obligations under the Master Documents. Completion Date shall mean the date specific in the Certificate delivered by the Obligated Group Agent pursuant to Section 3.04(C) hereof. Construction Draw Period shall mean the construction period for the Construction Projects, which shall commence on the Closing Date and continue for eighteen (18) consecutive months thereafter, concluding on May 30, Construction Monitor shall mean a construction monitor selected by the Holders of a majority of the aggregate principal amount of the 2012 Series A Bonds then 8

112 Outstanding, to provide construction monitoring services, including review and approval of Requisitions in accordance with Section 3.04 hereof, through final completion of the Construction Projects. Continuing Disclosure Agreement shall mean any continuing disclosure agreement between the Obligated Group Agent and a dissemination agent, with respect to the 2012 Bonds, as amended or supplemented that is required by, and complies with, the provisions of the Rule promulgated by the Securities and Exchange Commission, entered into pursuant to the terms of Section 6.10 hereof. Costs of Issuance shall mean all items of expense directly or indirectly payable by or reimbursable to the Issuer or the Obligated Group and related to the authorization, issuance, sale and delivery of the 2012 Bonds, including but not limited to costs of preparation and reproduction of documents, printing expenses, filing and recording fees, initial fees and charges of the Trustee and its counsel, legal fees and charges including, without limitation, fees and charges of counsel to any institutional investor purchasing 2012 Bonds, placement agent s fees, fees and disbursements of consultants and professionals, fees and charges for preparation, execution and safekeeping of the 2012 Bonds and any other cost, charge or fee in connection with the original issuance of the 2012 Bonds. Costs of Issuance Fund shall mean the trust fund by that name established pursuant to Section 3.03 hereof to pay costs of issuance for the 2012 Bonds. County shall mean Barbour County, West Virginia. Debt Service Reserve Fund shall mean the trust fund by that name established pursuant to Section 5.05 hereof. Debt Service Reserve Fund Requirement shall mean the lesser of (i) the maximum amount of principal and interest which shall be payable during the current or any succeeding Bond Year on all 2012 Series A Bonds then outstanding, (ii) an amount equal to 10% of the proceeds of the 2012 Series A Bonds, or (iii) an amount equal to 125% of the average annual debt service on the 2012 Series A Bonds. Deeds of Trust shall mean, collectively, each credit line deed of trust, security agreement, assignment of leases and rents and fixture filing, dated as of November 1, 2012, granted by the College or ABEC to the trustee or trustees identified therein for the benefit of the Master Trustee, granting a lien on and security interest in certain tangible and intangible property of the respective grantor and each credit line deed of trust, mineral financing statement, asextracted collateral filing and fixture filing, dated as of November 1, 2012, granted by the College or ABEC to the trustee or trustees identified therein for the benefit of the Master Trustee, granting a lien on and security interest in certain mineral rights, personalty, servitudes and rents of the respective grantor, all of which shall secure all 2012 Notes issued and additional notes to be issued under the Master Indenture. Defaulted Interest shall mean a default in the due and punctual payment of interest of any 2012 Bond when and as the same shall be due and payable. Defaulted Interest Payment Date shall mean the date established by the Trustee pursuant to Section 2.04 hereof on which Defaulted Interest shall be due and payable. Determination of Taxability means the interest on the Tax-Exempt Bonds, in whole or in part, is included in the gross income of a Holder (or former Holder) for federal income tax purposes for any reason, the determination of which is manifested by (a) a statutory Notice of Deficiency (90-day letter) from the Internal Revenue Service proposing to include such interest in the income of a holder (or former holder), or (b) delivery to the Trustee of an opinion of Bond Counsel acceptable to the Trustee to the effect that (i) as a result of a change in the federal tax laws after the date of the issuance of the Tax Exempt such interest on obligations of the general character of the Tax-Exempt Bonds will be included, in whole or in part, in the gross income of the Holders thereof (for the purposes of this paragraph, such interest becomes subject to federal income taxation when the President of the United States of America signs such legislation) or (ii) that for any other reason, interest on the Tax-Exempt Bonds, in whole or in part, is included in the gross income of a Holder or former Holder of such bonds; provided, however, no Determination of Taxability shall be deemed to exist if the Obligated Group Agent shall, within twenty (20) days after such assertion of taxability, cause to be delivered to the Trustee an unqualified opinion of Bond Counsel reasonably acceptable to the Holder or former Holder to the effect that interest on Tax-Exempt Bonds has been and continues to be excluded from gross income for federal income tax purposes, then such Holder or former Holder may at the expense of the Obligated Group Agent contest such assertion of taxability by appropriate administrative proceedings through the Internal Revenue Service Appeals Office, whose determination as to taxability shall be final and binding and upon such determination by the Internal Revenue Service Appeals Office a Determination of Taxability shall be deemed to exist. In any such contest the Holder or former Holder shall cooperate with the Obligated Group Agent and toward that end shall (a) give prompt notice of any such assertion and (b) permit the Obligated Group Agent or its representatives to meet with the representatives of the Holder or former Holder dealing with the Internal Revenue Service to discuss the issues involved. Electronic Means shall mean telecopy, telegraph, telex, facsimile transmission, transmission, or other similar electronic means of communication, including a telephonic communication confirmed by writing or written transmission. Event of Default shall mean any of the events specified in Section 7.01 hereof. Facilities shall mean the Site, all improvements thereon, the Construction Projects, and all fixtures, furniture, furnishings, equipment and other necessary appurtenant facilities and personal property on the Site or within such improvements, including, without limitation, the Construction Projects, and any and all additions and improvements thereto and additional or related auxiliary facilities, now or hereafter constructed on the Site or acquired, all of which have been leased by the College to the Issuer under and pursuant to the Initial Lease and leased by the Issuer back to the College under and pursuant to the Lease. Favorable Opinion of Bond Counsel shall mean, with respect to any action the occurrence of which requires such an opinion, an unqualified Opinion of Counsel, which shall be Bond Counsel, to the effect that such action is permitted under this Indenture and will not, in and of itself, result in the inclusion of interest on the Tax-Exempt Bonds in gross income for 9 10 federal income tax purposes (subject to the inclusion of any exceptions contained in the opinion delivered upon original issuance of the 2012 Bonds). Fiscal Year shall mean the fiscal year of the Obligated Group which, at the time of the original execution and delivery of this Indenture begins on July 1 and ends on the next succeeding June 30. Fitch means Fitch Ratings, a corporation organized and existing under the laws of the State of New York, its successors and their assigns, or, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, any other nationally recognized securities rating agency designated by the Issuer by notice to the Obligated Group Agent and the Trustee. Government Obligations shall mean direct obligations of, or obligations, the principal and interest on which are fully guaranteed by, the United States of America. Governmental Restrictions shall mean any Federal, State or other applicable governmental laws or regulations now or hereafter in effect which place restrictions or limitations on the Lease Payments, fees and charges to be fixed, charged or collected by the Obligated Group for the use of services or the Facilities furnished by the Obligated Group. Guaranty Agreement shall mean the Guaranty Agreement, of even date herewith, between the Obligated Group Agent and the Trustee, and all amendments thereof and supplements thereto. Indenture shall mean this Bond Indenture, as it may from time to time be amended or supplemented. Initial Lease shall mean the Initial Lease, dated as of November 1, 2012, between the College, as lessor, and the Issuer, as lessee, and all amendments thereof and supplements thereto. Interest Fund shall mean the trust fund by that name established pursuant to Section5.02hereof. Interest Payment Dates shall mean the semi-annual interest payment dates on the 2012 Bonds on each April 1 and October 1, commencing on April 1, 2013, until maturity. Investment Property shall mean any security (as said term is defined in Section 165(g)(2)(A) or (B) of the Code), obligation, annuity contract or investment-type property, excluding, however, obligations the interest on which is excluded from gross income, under Section 103 of the Code, for federal income tax purposes other than specified private activity bonds as defined in Section 57(a)(5)(C) of the Code. Issuer, Commission or Lessor shall mean The Philippi Municipal Building Commission, a non-stock, not-for-profit corporation and municipal building commission organized and existing under and by virtue of the provisions of the Constitution and laws of the State, created pursuant to the Act, and any successor in function. Lease shall mean the Lease Agreement, dated as of November 1, 2012, between the Issuer, as lessor, and the College, as lessee, and all amendments thereof and supplements thereto. Lease Agreements shall mean, collectively, the Initial Lease and the Lease. Lease Default Event shall mean any of the events of default in Section 15 of the Lease. Lease Payments shall mean the payments so designated and required to be made by the College pursuant to Section 2 of the Lease. Lease Term shall have the meaning assigned to such term under Section 1 of the Lease. Mandatory Sinking Account Payments shall mean the amount required by Section 4.05 hereof to be paid by the Trustee on any single date for the retirement of any 2012 Bond. Mandatory Sinking Account Payment Date shall mean each payment date set forth in Section 4.05 hereof. Master Documents shall mean the Master Indenture, the Supplemental Master Indenture , the 2012 Notes and all notes hereafter issued under the Master Indenture. Master Indenture shall mean the Master Trust Indenture, dated as of November 1, 2012, as amended and supplemented from time to time, among the College, ABEC and the Master Trustee. Master Trustee shall mean Wells Fargo Bank, N.A., or any successor as trustee under the Master Indenture. Maturity Date shall mean October 1, Moody s shall mean Moody s Investors Service, Inc., a corporation organized and existing under the laws of the State of Delaware, its successors and their assigns, or, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, any other nationally recognized securities rating agency designated by the Obligated Group Agent by notice to the Issuer and the Trustee. Net Proceeds shall mean, when used with respect to any insurance or condemnation award, the gross proceeds from the insurance or condemnation award with respect to which that term is used remaining after payment of all expenses (including attorneys fees and any expenses of the Trustee or the Obligated Group) incurred in the collection of such gross proceeds. No Adverse Effect Opinion means an Opinion of Bond Counsel, addressed to the Issuer and the Trustee to the effect that a certain action or combination of actions, or the 11 A-4 12

113 failure to take a certain action or combination of actions, (i) is authorized or permitted in the case of an action or actions to be taken, or will not constitute a breach of or default in the case of the failure to take an action or actions, under the instrument pursuant to which the opinion is to be delivered, taking into account any consent or waiver provided by a party entitled to give or withhold consent or to grant a waiver, and (ii) will not, in and of itself or themselves, affect adversely either (a) the validity of the 2012 Bonds, or (b) any then applicable exclusion of interest on the Tax-Exempt Bonds from gross income of Bondholders for federal income tax purposes or any then applicable exemption of interest on the Tax-Exempt Bonds from treatment as an item of tax preference for purposes of the alternative minimum tax imposed on individuals and corporations under the Code. Nonpurpose Investment shall mean any Investment Property other than the Lease to the Obligated Group Agent, which is acquired with the gross proceeds of the 2012 Bonds and is not acquired in order to carry out the governmental purpose of the 2012 Bonds. Obligated Group shall mean the College, ABEC and any other entities that become members of the Obligated Group under the Master Indenture, and excluding any members of the Obligated Group that cease such status, as permitted by the Master Indenture. Obligated Group Agent shall mean the College and any permitted successor to the College as Obligated Group Agent. Officer s Certificate shall mean a certificate signed by the Authorized Representative of the Obligated Group Agent or other Person duly appointed to act on behalf of the Obligated Group Agent. Operating Reserve Fund shall mean the trust fund by that name established pursuant to Section 5.06 hereof. Opinion of Counsel shall mean a written opinion of counsel (who may be counsel for the Obligated Group) selected by the Obligated Group Agent and acceptable to the Issuer and not objected to by the Trustee. If and to the extent required by the provisions of Section 1.02, each Opinion of Counsel shall include the statements provided for in Section Optional Redemption Account shall mean the account by that name within the Redemption Fund established pursuant to Section 5.04 hereof. Outstanding, Bonds Outstanding Outstanding 2012 Bonds or any similar term when used as of any particular time with reference to 2012 Bonds, shall mean all 2012 Bonds theretofore, or thereupon being, authenticated and delivered by the Trustee under this Indenture except: (1) 2012 Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation; (2) 2012 Bonds with respect to which all liability of the Issuer shall have been discharged in accordance with Section hereof; and (3) 2012 Bonds for the transfer or exchange of or in lieu of or in substitution for which other 2012 Bonds shall have been authenticated and delivered by the Trustee pursuant to this Indenture. Person shall mean an individual, firms, associations, corporations, partnerships, trusts, limited liability companies or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof. Placement Agent shall mean BB&T Capital Markets, a division of Scott & Stringfellow LLC. Principal Fund shall mean the trust fund by that name established pursuant to Section 5.03 hereof. Principal Payment Date shall mean, with respect to a 2012 Bond, the date on which principal of such 2012 Bond becomes due and payable, either by maturity, redemption, acceleration or otherwise. Projects has the meaning set forth in the preambles of this Indenture. Project Costs shall mean those expenses as may be necessary or incident to the planning, design, acquisition, construction, renovation, equipping, and financing of the Construction Projects (as defined in the preambles above), constituting Qualified Project Costs permitted to be financed under the provisions of the Act and the Code, other than Cost of Issuance. Project Fund shall mean the trust fund by that name established pursuant to Section 3.04 hereto. Qualified Investments shall mean and include any of the following securities, if and to the extent the same are at the time legal investments by the Issuer of the funds to be invested therein, all such securities to be held by the Trustee and in which the Trustee must have a perfected first security interest free of any third party claims: (1) Government Obligations; (2) Bonds, debentures, notes or other evidences of indebtedness issued by any of the following agencies: Bank for Cooperatives; Farmers Home Administration; Federal Intermediate Credit Banks; Federal Home Loan Bank System; Federal Faun Credit Bank; Export- Import Bank of the United States; Federal Financing Bank; Federal Land Banks; Government National Mortgage Association (or any other agency or instrumentality of the United States of America, created by an Act of Congress, substantially similar to the foregoing in its legal relationship to the United States of America); Tennessee Valley Issuer; or Washington Metropolitan Area Transit Issuer; (3) Any bond, debenture, note, participation certificate or other similar obligations issued by the Federal National Mortgage Association to the extent such obligation is guaranteed by the Government National Mortgage Association or issued by any other federal agency and backed by the full faith and credit of the United States of America; (4) Time accounts (including accounts evidenced by time certificates of deposit, time deposits or other similar banking arrangements) which, to the extent not insured by the FDIC or Federal Savings and Loan Insurance Corporation, shall be secured by a pledge of Government Obligations, provided, that said Government Obligations pledged either must mature as nearly as practicable coincident with the maturity of said time accounts or must be replaced or increased so that the market value thereof is always at least equal to the principal amount of said time accounts; (5) Units of participation in a mutual fund managed by an investment company registered under the Investment Advisors Act of 1940, as amended, provided that such units of participation have a maturity of less than 1 year, that such fund is required to maintain a constant net assets value, that the assets of such fund are not less than $10,000,000, and that the securities which may be purchased for the portfolio of such fund are limited to the obligations of the kind described in (1) above; (6) Obligations of states or political subdivisions or agencies thereof, the interest on which is excluded from gross income for Federal income tax purposes, and which are rated at least AA by Moody s Investors Service, Inc. or Standard & Poor s Corporation; (7) Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of AAArn-G; AA.Am, or Aam and if rated by Moody s rated Aaa, Aal or Aa2 including, without limitation, one or more money market mutual fund portfolios of the Wells Fargo Advantage Funds or any other mutual fund for which the Trustee or any of its affiliates serve as an investment manager, administrator, servicing agent, and/or custodian or subcustodian, notwithstanding that (i) the Trustee or an affiliate of the Trustee receives fees from such funds for services rendered, (ii) the Trustee charges and collects fees for services rendered pursuant to this Indenture, which fees are separate from the fees received from such funds, and (iii) services performed for such funds and pursuant to this Indenture may at times duplicate those provided to such funds by the Trustee or its affiliates. Qualified Project Costs shall mean all costs and expenses relating to the acquisition, construction, equipping and financing of the Construction Projects which are permitted under the Code. Rating Agencies shall mean S&P, Moody s and Fitch. Rating Category shall mean one of the general rating categories of the Rating Agencies without regard to any refinement or graduation of such rating category by numerical modifier or otherwise. Rebate Fund shall mean the trust fund by the name established pursuant to Section 5.09 hereof. Record Date shall mean the 15 th day (whether or not a Business Day) of the month immediately preceding each Interest Payment Date. Redemption Price shall mean, with respect to any 2012 Bond (or portion thereof), called for redemption, the principal on, any applicable redemption premium, and interest accrued to the redemption date. Regulations shall mean temporary and permanent regulations promulgated under the Code. Requisition shall mean a document signed by an Authorized Representative or Authorized Officer of the College directing the Trustee to make the payments described herein from the Costs of Issuance Fund or the Project Fund, as the case may be. Revenue Fund shall mean the trust fund by that name established pursuant to Section 5.07 hereof. Revenues shall mean all amounts received by the Issuer or the Trustee for the account of the Issuer pursuant or with respect to the Lease and the 2012 Notes, including, without limiting the generality of the foregoing, Lease Payments (including both timely and delinquent payments, any late charges, and whether paid from any source), and other income and receipts, in each case derived by or for the account of the Issuer or the Trustee, from the Obligated Group including without limitation all interest, profits or other income derived from the investment of amounts in any fund or account established pursuant to this Indenture, but not including any administrative fees or expenses or any moneys required to be deposited in the Rebate Fund. S&P shall mean Standard & Poor s Ratings Services, a Standard & Poor s Financial Services LLC business and its successors and their assigns, or, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, any other nationally recognized securities rating agency designated by the Obligated Group Agent by notice to the Issuer and the Trustee. Securities Depository shall mean The Depository Trust Company and its successors and assigns, or any other securities depository selected as set forth in Section 2.02 and Section 2.15 hereof, which agrees to follow the procedures required to be followed by such securities depository in connection with the 2012 Bonds. Series, or series when used with respect to the 2012 Bonds, shall mean all the 2012 Bonds designated as being of the same series, authenticated and delivered in a simultaneous transaction, and any 2012 Bonds thereafter authenticated and delivered upon a transfer or exchange or in lieu of or in substitution for such 2012 Bonds as herein provided. 15 A-5 16

114 Site shall mean the real estate described in Exhibit A - Site Description, attached hereto, and any additional real property which is made subject to the Lease Agreements and the lien of this Indenture. Special Record Date shall mean the 10 th day (whether or not a Business Day) immediately preceding each Defaulted Interest Payment Date. Special Redemption Account shall mean the account by that name within the Redemption Fund established pursuant to Section 5.04 hereof. State shall mean the State of West Virginia. Supplemental Bond Indenture shall mean supplemental bond indenture hereafter duly authorized and entered into between the Issuer and the Trustee, supplementing, modifying or amending this Indenture, but only if and to the extent that such Supplemental Bond Indenture is specifically authorized hereunder. Supplemental Master Indenture shall mean the Supplemental Master Indenture , dated as of the date hereof, between the Obligated Group Agent and the Master Trustee pursuant to which the 2012 Notes are issued. Supplemental Master Indenture shall mean any supplemental master trust indenture issued pursuant to and for the purpose of amending the Master Indenture, including Supplemental Master Indenture Tax Compliance Certificate shall mean the Tax Compliance Certificate of the Issuer and the Obligated Group Agent, dated the Closing Date and included in the transcript of which this Indenture is a part. Tax-Exempt Bonds shall mean, collectively, the 2012 Series A Bonds and the 2012 Series B Bonds. Trustee shall mean Wells Fargo Bank, N.A., a national banking association with trust powers and with a designated corporate trust office in Philadelphia, Pennsylvania, and any successor thereof, as trustee under this Indenture. Trust Estate has the meaning set forth in the preambles hereof. Unassigned Rights shall mean the rights of the Issuer to indemnification, payment and reimbursement of its fees and expenses, and to receive notices and grant approvals, consents and waivers as set forth in the preambles hereof. Written Request shall mean a request in writing signed by the President of the Obligated Group Agent or the Vice President for Finance and Administration or any other officer or officers designated by the Obligated Group Agent Notes shall mean, collectively, the A Note, the B Note, the C Note and the D Note to be issued under the Supplemental Master Indenture A Note shall mean the A Note issued by the Obligated Group Agent in a principal amount equal to the principal amount of the 2012 Series A Bonds pursuant to Supplemental Master Indenture , which note evidences and secures the obligations of the Obligated Group with respect to the 2012 Series A Bonds under the Lease B Note shall mean the B Note issued by the Obligated Group Agent in a principal amount equal to the principal amount of the 2012 Series B Bonds pursuant to Supplemental Master Indenture , which note evidences and secures the obligations of the Obligated Group with respect to the 2012 Series B Bonds under the Lease C Note shall mean the C Note issued by the Obligated Group Agent in a principal amount equal to the principal amount of the 2012 Series C Bonds pursuant to Supplemental Master Indenture , which note evidences and secures the obligations of the Obligated Group with respect to the 2012 Series C Bonds under the Lease D Note shall mean the D Note issued by the Obligated Group Agent in a principal amount equal to the principal amount of the 2012 Bonds pursuant to Supplemental Master Indenture , which note evidences and secures the obligations of the Obligated Group with respect to the 2012 Bonds under the Guaranty Agreement. Section Content of Certificates and Opinions. Every certificate or opinion provided for in this Indenture with respect to compliance with any provision hereof shall include (1) a statement that the Person making or giving such certificate or opinion has read such provision and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the certificate or opinion is based; (3) a statement that, in the opinion of such Person, such Person has made or caused to be made such examination or investigation as is necessary to enable such Person to express an informed opinion with respect to the subject matter referred to in the instrument to which such Person s signature is affixed; (4) a statement of the assumptions upon which such certificate or opinion is based, and that such assumptions are reasonable; and (5) a statement as to whether, in the opinion of such Person, such provision has been complied with. Any such certificate or opinion made or given by an officer of the Issuer or the Obligated Group Agent may be based, insofar as it relates to legal, accounting or operational matters, upon a certificate, representation of or opinion of counsel, an accountant or a management consultant, unless such officer knows, or in the exercise of reasonable care should have known, that the certificate, opinion or representation with respect to the matters upon which such certificate or statement may be based, as aforesaid, is erroneous. Any such certificate or opinion made or given by counsel, an accountant or a management consultant may be based, insofar as it relates to factual matters (with respect to which information is in the possession of the Issuer or the Obligated Group Agent, as the case may be) upon a certificate or opinion of or representation by an officer of the Issuer or the Obligated Group Agent, unless such counsel, accountant or management consultant knows, or in the exercise of reasonable care should have known, that the certificate or opinion or representation with respect to the matters upon which such Person s certificate or opinion or representation may be based, as aforesaid, is erroneous. The same officer of the Issuer or the Obligated Group Agent, or the same counsel or accountant or management consultant, as the case may be, need not certify to all of the matters required to be certified under any provision of this Indenture, but different officers, counsel, accountants or management consultants may certify to different matters, respectively. Section Interpretation. (A) Unless the context otherwise indicates, words expressed in the singular shall include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and shall be deemed to mean and include the neuter, masculine or feminine gender, as appropriate. (B) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and shall not affect the meaning, construction or effect hereof. (C) All references herein to Articles, Sections and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Indenture; the words herein, hereof, hereby, hereunder and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof. Section Exhibits. The following exhibits are attached to and by reference are hereby made a part of this Indenture: EXHIBIT A SITE DESCRIPTION EXHIBIT B FORMS OF 2012 BONDS EXHIBIT C COSTS OF ISSUANCE REQUISITION FORM EXHIBIT D PROJECT FUND REQUISITION FORM ARTICLE II THE 2012 BONDS Section Authorization of 2012 Bonds. (A) The issuance of the 2012 Bonds in order to obtain moneys for the benefit of the Issuer and the College is hereby authorized. The 2012 Series A Bonds are designated as The Philippi Municipal Building Commission College Facilities Improvement Revenue Bonds (Alderson-Broaddus College, Inc.) 2012 Series A, the 2012 Series B Bonds are designated as The Philippi Municipal Building Commission College Facilities Subordinate Lien Refunding Revenue Bonds (Alderson-Broaddus College, Inc.) 2012 Series B, and the 2012 Series C Bonds are designated as The Philippi Municipal Building Commission College Facilities Subordinate Lien Refunding and Improvement Revenue Bonds (Alderson-Broaddus College, Inc.) 2012 Series C (Taxable). The aggregate principal amount of the 2012 Bonds that may be issued and Outstanding under this Indenture shall not exceed the following amounts: Series Principal Amount 2012 Series A $34,275, Series B $2,510, Series C $680,000 (B) This Indenture constitutes a continuing agreement with the Holders from time to time of the 2012 Bonds to secure the full payment of the principal of and premium (if any) and interest on all the 2012 Bonds, and the payment of all other amounts due under this Indenture, subject to the covenants, provisions and conditions herein contained. Section Denominations; Date; Maturity; Numbering. The 2012 Bonds shall be delivered in the form of fully registered 2012 Bonds in Authorized Denominations. The Depository Trust Company ( DTC ), New York, New York, will act as Securities Depository for the 2012 Bonds. The 2012 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. The 2012 Bonds shall be evidenced by one Bond for each Series and maturity of 2012 Bonds in the total aggregate principal amount of the 2012 Bonds of such Series. Registered ownership of the 2012 Bonds, or any portion thereof, may not thereafter be transferred except as set forth in Section 2.10 hereof. The 2012 Bonds shall be dated the date of their initial issuance, with interest accruing from such date. The 2012 Bonds shall mature (subject to prior redemption) on the Maturity Date. The 2012 Bonds shall be numbered in such manner as shall be determined by the Trustee. Interest shall be calculated on the basis of a 360- day year of twelve 30-day months for any Series of 2012 Bonds. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Bondholder on such Record Date and shall be paid to the person in whose name any 2012 Bond is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee pursuant to Section 2.04 hereof. 19 A-6 20

115 Section Payment of Principal of and Interest on the 2012 Bonds. (A) The principal and Redemption Price of the 2012 Bonds shall be payable by check or wire transfer in lawful money of the United States of America at the designated corporate trust office of the Trustee, except as provided below. Interest on the 2012 Bonds shall be paid on each Interest Payment Date to the Person whose name appears on the bond registration books maintained by the Trustee as the Holder thereof as of the close of business on the Record Date for each Interest Payment Date. Payment of the interest on a Series of 2012 Bonds shall be made by check mailed by first class mail to such Holder at its address as it appears on such registration books, or, upon the written request of any Holder of at least $1,000,000 in aggregate principal amount of such Series of 2012 Bonds, submitted to the Trustee at least one Business Day prior to the Record Date, by wire transfer in immediately available funds to an account within the United States of America designated by such Holder. (B) As long as Cede & Co. (or other nominee of DTC) is the Holder of the 2012 Bonds, said principal, Redemption Price and interest shall be made by wire transfer in immediately available funds. CUSIP number identification shall accompany all payments of principal or Redemption Price and interest whether by check or by wire transfer. Section Defaulted Interest. Defaulted Interest with respect to any Bond shall cease to be payable to the Holder of such 2012 Bond on the relevant Record Date and shall be payable to the Holder in whose name such 2012 Bond is registered at the close of business on the Special Record Date for the payment of such Defaulted Interest, which Special Record Date shall be fixed in the following manner. The Issuer shall notify the Trustee in writing or by Electronic Means of the amount of Defaulted Interest proposed to be paid on each 2012 Bond and the date of the proposed payment (which date shall be such as will enable the Trustee to comply with the penultimate sentence of this Section 2.04), and shall deposit with the Trustee at the time of such notice an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment. Money deposited with the Trustee shall be held in trust for the benefit of the Holders of the 2012 Bonds entitled to such Defaulted Interest as provided in this Section. Following receipt of such funds, the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Issuer of such Defaulted Interest Payment Date and, in the name and at the expense of the Obligated Group Agent, shall cause notice of the proposed payment of such Defaulted Interest and the Defaulted Interest Payment Date therefor to be mailed, first-class postage prepaid, or distributed via Electronic Means not less than 10 days prior to such Defaulted Interest Payment Date, to each Holder of a 2012 Bond at the address of such holder as it appears on the bond register pursuant to Section 2.13 hereof. Defaulted Interest on the 2012 Bonds shall be paid on the Defaulted Interest Payment Date for the person whose name appears on the bond registration books, maintained by the Trustee as the Holder thereof as of the close of business on the Special Record Date. Section Delivery of 2012 Bonds. The Issuer shall execute and the Trustee shall authenticate and deliver the 2012 Bonds, as may be directed by the Issuer, upon the filing with the Trustee of the following: (A) Certified copies of the Ordinance of the Issuer authorizing the issuance of the 2012 Bonds and the execution and delivery of the Initial Lease, the Lease and this Indenture; (B) (C) (D) (E) (F) (G) An executed counterpart of the Initial Lease; An executed counterpart of the Lease; An executed counterpart of this Indenture; An executed counterpart of the Guaranty Agreement; The Deeds of Trust; The executed 2012 Notes; (H) A request and authorization to the Trustee by the Issuer, signed by the Authorized Representative of the Issuer, to authenticate and deliver the 2012 Bonds therein identified, upon payment to the Trustee, for the account of the Issuer, of the purchase price thereof, plus accrued interest thereon to the date of delivery, if any; (I) (J) (K) (L) (M) An executed counterpart of the Tax Compliance Certificate; A Favorable Opinion of Bond Counsel; An Opinion of Counsel to the Obligated Group; An Opinion of Counsel to the Issuer; A pro forma of the title insurance policy; and (N) Such other documents, resolutions or other materials as may be required by the Trustee. Section Execution. The 2012 Bonds shall be executed on behalf of the Issuer with the manual or facsimile signature of its Chairman and attested with the manual or facsimile signature of its Secretary and the Secretary shall have affixed, imprinted or otherwise reproduced thereon a facsimile of the corporate seal of the Issuer. In case any officer whose signature or facsimile signature shall appear on the 2012 Bonds shall cease to be such officer, such signature or such facsimile signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. Upon execution of the 2012 Bonds by the Issuer, the 2012 Bonds shall then be delivered to the Trustee for authentication by it in accordance with Section 2.07 hereof. In case any of the officers who shall have signed or attested any of the 2012 Bonds shall cease to be such officer or officers of the Issuer before the 2012 Bonds so signed or attested shall have been authenticated or delivered by the Trustee or issued by the Issuer, such 2012 Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the Issuer as though those who signed and attested the same had continued to be such officers of the Issuer, and also any 2012 Bonds may be signed and attested on behalf of the Issuer by such persons who at the actual date of execution of such 2012 Bonds shall be the proper officers of the Issuer although at the nominal date of such 2012 Bonds any such person shall not have been such officer of the Issuer. Section Authentication. All 2012 Bonds shall have endorsed thereon a certificate of authentication and registration duly, manually executed by the Trustee. The Trustee s certificate of authentication and registration on any 2012 Bond shall be deemed to have been executed by it if signed by an Authorized Officer, but it shall not be necessary that the same officer sign the certificate of authentication on all of the 2012 Bonds issued hereunder. Only such of the 2012 Bonds as shall bear thereon a certificate of authentication substantially in the form set forth in Exhibit B as to each series of 2012 Bonds, with the manual or facsimile signature of the Trustee as authenticating agent, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee shall be conclusive evidence that the 2012 Bonds so authenticated have been duly executed, authenticated and delivered hereunder and are entitled to the benefits of this Indenture. Section Form of 2012 Bonds. The 2012 Bonds shall be substantially in the forms set forth in Exhibit B - Form of Bonds hereto, with such appropriate variations, omissions and insertions as are permitted or required by this Indenture or any Supplemental Indenture. Section Bonds Mutilated, Lost, Destroyed or Stolen. If any 2012 Bond shall become mutilated, the Issuer, at the expense of the Holder of said 2012 Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new 2012 Bond of like tenor and number in exchange and substitution for the 2012 Bond so mutilated, but only upon surrender to the Trustee of the 2012 Bond so mutilated. Every mutilated 2012 Bond so surrendered to the Trustee shall be cancelled by it and delivered to the Issuer. If any 2012 Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Issuer and the Trustee and, if such evidence shall be satisfactory to both and indemnity satisfactory to them shall be given, the Issuer, at the expense of the Holder, shall execute, and the Trustee shall thereupon authenticate and deliver, a new 2012 Bond of like tenor in lieu of and in substitution for the 2012 Bond so lost, destroyed or stolen (or if any such 2012 Bond shall have matured or shall be about to mature, instead of issuing a substitute Bond, the Trustee may pay the same without surrender thereof). The Issuer may require payment by the Holder of a sum not exceeding the actual cost and expenses of preparing each new 2012 Bond issued under this Section and of the expenses that may be incurred by the Issuer and the Trustee in the premises. Any 2012 Bond issued under the provisions of this Section in lieu of any 2012 Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the Issuer whether or not the 2012 Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be entitled to the benefits of this Indenture with all other 2012 Bonds secured by this Indenture. Section Limited Obligations; No Liability of State. The 2012 Bonds are special limited obligations of the Issuer. The 2012 Bonds and the interest payable thereon and other costs incident thereto will not constitute an indebtedness or an obligation, general or moral, or a pledge of the faith and credit of the State of West Virginia, or any political subdivision thereof, within the purview of any constitutional or statutory limitation or provision and shall never constitute nor give rise to a charge against the general credit or taxing power, if any, of any of them. No owner of the 2012 Bonds will have any right to compel any exercise of the taxing power, if any, of the State of West Virginia, or any political subdivision of the State of West Virginia to pay the principal of the 2012 Bonds, or the interest or premium, if any, thereon. Payment of the 2012 Bonds, including the principal thereof, redemption premium, if any, and the interest thereon, will be made solely from the funds and obligations duly pledged herein. There will be no pledge of any of the credit or the taxing power, if any, of the Issuer, the State of West Virginia, or any political subdivision of the State of West Virginia, to the obligations of the 2012 Bonds, and no owner of any of the 2012 Bonds can ever submit a claim against such credit or taxing power. The Issuer has no taxing power. Section Transfer of 2012 Bonds. Any 2012 Bond may, in accordance with its terms, be transferred, upon the bond registration books required to be kept pursuant to the provisions of Section 2.13 hereof, by the Person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such registered 2012 Bond for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form approved by the Trustee. Whenever any 2012 Bond shall be surrendered for transfer, the Issuer shall execute and the Trustee shall authenticate and deliver a new 2012 Bond for a like aggregate principal amount of the same Series. The Trustee shall require the Bondholder requesting such transfer to pay any cost, tax or other governmental charge required to be paid with respect to such transfer. Section Exchange of 2012 Bonds Bonds may be exchanged at the designated corporate trust office of the Trustee, for a like aggregate principal amount of 2012 Bonds of the same Series of other Authorized Denominations. The Trustee shall require the Bondholder requesting such exchange to pay any cost, tax or other governmental charge required to be paid with respect to such exchange. The Trustee shall not be required to exchange any 2012 Bond during the 15 days immediately preceding (1) the date on which notice of redemption is given or (2) the date on which 2012 Bonds will be selected for redemption. Section Bond Register. The Trustee shall keep, or cause to be kept, sufficient books for the registration and transfer of the 2012 Bonds, which shall at all times be open to inspection during regular business hours by the Issuer and the Obligated Group Agent, and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on such books, 2012 Bonds as hereinbefore provided. Section Temporary 2012 Bonds. The 2012 Bonds may be issued in temporary form exchangeable for definitive 2012 Bonds when ready for delivery. Any temporary 2012 Bond may be printed, lithographed or typewritten, shall be of such denomination 23 A-7 24

116 as may be determined by the Issuer, shall be in fully registered form without coupons and may contain such reference to any of the provisions of this Indenture as may be appropriate. Every temporary Bond shall be executed by the Issuer and shall be authenticated by the Trustee upon the same conditions and in substantially the same manner as the definitive 2012 Bonds. If the Issuer issues temporary 2012 Bonds, it will issue definitive 2012 Bonds as promptly thereafter as practicable, and thereupon, the temporary 2012 Bonds may be surrendered, for cancellation, in exchange therefor at the principal corporate trust office of the Trustee, and the Trustee shall authenticate and deliver in exchange for such temporary 2012 Bonds an equal aggregate principal amount of definitive 2012 Bonds of authorized denominations of the same Series. Until so exchanged, the temporary 2012 Bonds shall be entitled to the same benefits under this Indenture as definitive 2012 Bonds authenticated and delivered hereunder. Section Use of Securities Depository. Notwithstanding any provision of this Indenture to the contrary: (A) The 2012 Bonds shall be initially issued as provided in Section Registered ownership of the 2012 Bonds, or any portion thereof, may not thereafter be transferred except: (1) To any successor of the Securities Depository or its nominee, or to any substitute depository designated pursuant to clause (2) of this subsection (A) ( substitute depository ); provided, that any successor of the Securities Depository or substitute depository shall be qualified under any applicable laws to provide the service proposed to be provided by it; (2) To any substitute depository designated by the Issuer upon (a) the resignation of the Securities Depository or its successor (or any substitute depository or its successor) from its functions as depository or (b) a determination by the Issuer that the Securities Depository or its successor (or any substitute depository or its successor) is no longer able to carry out its functions as depository; provided, that any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it; or (3) To any person as provided below, upon (a) the resignation of the Securities Depository or its successor (or any substitute depository or its successor) from its functions as depository or (b) a determination by the Issuer that it is in the best interests of the Issuer to remove the Securities Depository or its successor (or any substitute depository or its successor) from its functions as depository; provided, that no substitute depository can be obtained. (B) In the case of any transfer pursuant to clause (1) or clause (2) of subsection (A), upon receipt of the Outstanding 2012 Bonds by the Trustee, together with a Certificate of the Issuer to the Trustee, a single new 2012 Bond shall be executed and delivered for each Series of 2012 Bonds in the aggregate principal amount of the 2012 Bonds of such Series then Outstanding, registered in the name of such successor or such substitute depository, or their nominees, as the case may be, all as specified in such Certificate of the Issuer. In the case of any transfer pursuant to clause (3) of subsection (A), upon receipt of the Outstanding 2012 Bonds by the Trustee together with a Certificate of the Issuer to the Trustee, new 2012 Bonds shall be executed and delivered and registered in the names of such persons as are requested in such a Certificate of the Issuer, subject to the limitations of Section 2.02, provided the Trustee shall not be required to deliver such new 2012 Bonds within a period less than 60 days from the date of receipt of such a Certificate of the Issuer. Any reasonable costs incurred pursuant hereto shall be at the Obligated Group Agent s expense. (C) In the case of partial redemption or an advance refunding of the 2012 Bonds evidencing all or a portion of the principal amount Outstanding, the Securities Depository shall make an appropriate notation on the 2012 Bonds indicating the date and amounts of such reduction in principal, in form acceptable to the Trustee. (D) The Issuer and the Trustee shall be entitled to treat the Person in whose name any 2012 Bond is registered as the Bondholder thereof for all purposes of this Indenture and any applicable laws, notwithstanding any notice to the contrary received by the Trustee or the Issuer, and the Issuer and the Trustee shall have no responsibility for transmitting payments to, communicating with, notifying or otherwise dealing with any beneficial owners of the 2012 Bonds. Neither the Issuer nor the Trustee will have any responsibility or obligations, legal or otherwise, to the beneficial owners or to any other party including the Securities Depository or its successor (or any substitute depository or its successor), except for the Holder of any 2012 Bond. (E) So long as the Outstanding 2012 Bonds are registered in the name of Cede & Co. or its registered assigns, or such other nominee as may be requested by an authorized representative of DTC, the Issuer and the Trustee shall cooperate with Cede & Co., as sole registered Bondholder, or such other nominee as may be requested by an authorized representative of DTC, in effecting payment of the principal of and premium, if any, and interest on the 2012 Bonds by arranging for payment in such manner that funds for such payments are properly identified and are made immediately available on the date they are due, all as provided in the blanket letter of representations between the Issuer and the Securities Depository. (F) Notwithstanding anything to the contrary contained in this Indenture, for so long as DTC s partnership nominee, Cede & Co., or such other nominee as may be requested by an authorized representative of DTC, is the sole registered owner of the 2012 Bonds, (i) all tenders and deliveries of 2012 Bonds under the provisions of this Indenture shall be made pursuant to the Securities Depository s procedures as in effect from time to time and neither the Issuer, the Obligated Group Agent, nor the Trustee shall have any responsibility for or liability with respect to the implementation of such procedures and (ii) any requirement for notice contained herein may be satisfied by Electronic Means. [Remainder of Page Intentionally Left Blank] ARTICLE III ISSUANCE OF 2012 BONDS; AND APPLICATION OF PROCEEDS OF 2012 BONDS Section Issuance of the 2012 Bonds. At any time after the execution of this Indenture, the Issuer shall execute, by physical or facsimile signature, and the Trustee shall authenticate and, upon request of the Issuer, deliver the 2012 Bonds for each series in the aggregate principal amount of such series set forth in Section 2.01 hereof. Section Application of Proceeds of the 2012 Bonds. The moneys from time to time on deposit in the Funds and Accounts specified below and created or established under Article V (except for the Rebate Fund) are subject to a lien and charge in favor of the Owners of the 2012 Bonds until expended for the purposes for which such Funds and Accounts are created. The proceeds received from the sale of the 2012 Bonds, together with an equity contribution from the Obligated Group Agent of $31,337.14, shall be deposited in trust with the Trustee and shall be allocated as follows: (a) (b) (c) (d) (e) Deposit $1,447, (consisting of the equity contribution from the Obligated Group Agent of $31,337.14, proceeds from the 2012 Series A Bonds and the 2012 Series B Bonds of $735, and $680, of proceeds from the 2012 Series C Bonds) to the Costs of Issuance Fund established under and to be used as set forth in Section 3.03 hereof; Deposit $5,075, to the credit of the Project Fund to be wired by the Trustee on the Closing Date to WesBanco Bank, Inc., as the trustee for the Bonds to be Refunded, to pay the Bonds to be Refunded in full on the Closing Date, in accordance with written instructions delivered to the Trustee on the Closing Date; Deposit $3,537, to the Capitalized Interest Fund established under and to be used as set forth in Section 3.04 hereof; Deposit $24,489, to the Project Fund established under and to be used as set forth in Section 3.04 hereof; and Deposit $2,947, to the Debt Service Reserve Fund established under and to be used as set forth in Section 5.05 hereof. Section Establishment and Application of Costs of Issuance Fund. The Trustee shall establish, maintain and hold in trust a separate fund designated as the Costs of Issuance Fund. The moneys in the Costs of Issuance Fund shall be used and withdrawn by the Trustee to pay the Costs of Issuance upon receipt of a Requisition signed by an Authorized Representative of the Obligated Group Agent for Costs of Issuance without further authorization from the Issuer in the form attached as Exhibit C - Costs of Issuance Requisition hereto, stating the Person to whom payment is to be made, the amount to be paid, the purpose for which the obligation was incurred and that such payment is a proper charge against said fund. On December 31, 2012, or upon the earlier request of the Obligated Group Agent, amounts, if any, remaining in the Costs of Issuance Fund shall be transferred to the Interest Fund and used to pay interest on the 2012 Bonds on the next ensuing Interest Payment Date, and the Costs of Issuance Fund shall thereafter be closed. Section Establishment and Application of Project Fund. (A) The Trustee shall establish, maintain and hold in trust a separate fund designated as the Project Fund. Within the Project Fund, the Trustee shall establish, hold and maintain in trust a separate fund designated as the Capitalized Interest Fund. The money in the Project Fund shall be used and withdrawn by the Trustee to pay the Project Costs upon Requisition of the College, and the money in the Capitalized Interest Fund shall be withdrawn by the Trustee and transferred to the Interest Fund on or prior to each Interest Payment Date until April 1, 2014 to pay capitalized interest on the portion of the 2012 Series A Bonds used to finance the Construction Projects. $2,996, of the moneys deposited in the Project Fund will be expended immediately pursuant to a Requisition in the form attached hereto as Exhibit D - Project Fund Requisition to reimburse the College for costs of capital expenditures previously made. Any funds remaining in the Capitalized Interest Fund after April 1, 2014 shall be transferred to the Interest Fund and used to pay interest on the 2012 Bonds on the next ensuing Interest Payment Date, and the Capitalized Interest Fund shall thereafter be closed. (B) Except for payments made pursuant to Sections 3.02(b) and 3.04(A) hereof, before any payment from the Project Fund shall be made, the Obligated Group Agent shall file or cause to be filed with the Trustee a Requisition in the form attached as Exhibit D - Project Fund Requisition hereto stating (i) the item number of such payment; (ii) the name of the Person to whom each such payment is due, in the case of reimbursement for capital expenditures previously made by the College; (iii) the respective amounts to be paid; (iv) the purpose for which each obligation to be paid was incurred; (v) that obligations in the stated amounts have been incurred by the College and are presently due and payable and that each item thereof is a proper charge against the Project Fund and has not been previously paid from the Project Fund; and (vi) that there has not been filed with or served upon the College any notice of claim of lien, or attachment upon, or claim affecting the right to receive payment of, any of the amounts payable to any of the persons named in such Requisition, that has not been released or will not be released simultaneously with the payment of such obligation, other than materialmen s or mechanics liens accruing by mere operation of law. All Requisitions for payment from the Project Fund must be certified as correct by the Construction Monitor. Upon receipt of a Requisition from the Obligated Group Agent which has been certified as correct by the Construction Monitor in accordance with the preceding paragraph, the Trustee shall pay the amount set forth in such Requisition as directed by the terms thereof out of the Project Fund. The Trustee shall rely fully on any such Requisition delivered pursuant to this Section 3.04 and shall not be required to make any investigation in connection therewith. The Trustee shall not make any such payment if an officer at the Trustee s corporate trust operation responsible for the administration of its duties hereunder shall have actual knowledge of or the Trustee shall have received written notice at the designated corporate trust office of claim of lien, attachment upon, or claim affecting the right to receive payment of, any of the monies to be so paid, that has not been released or will not be released simultaneously with such payment. 27 A-8 28

117 (C) When the Construction Projects have been completed, there shall be delivered to the Trustee a Certificate of the College stating that fact and date of such completion and stating that all of the costs thereof have been determined and paid (or that all of such costs have been paid less specified claims that are subject to dispute and for which a retention in the Project Fund is to be maintained in the full amount of such claims until such dispute is resolved). Upon the receipt of such Certificate, the Trustee shall, as directed by said Certificate, transfer any remaining balance in such Project Fund, less the amount of any such retention, to the Principal Fund, which shall be used to pay principal on the 2012 Series A Bonds in accordance with Section 4.07 hereof. Upon such transfer or the release of any amounts retained thereunder, as applicable, the Project Fund shall be closed. Section Validity of 2012 Bonds. The validity of the authorization and issuance of the 2012 Bonds is not dependent on and shall not be affected in any way by any proceedings taken by the Issuer or the Trustee with respect to or in connection with the Lease Agreements. The recital contained in the 2012 Bonds that the same are issued pursuant to the Act and the Constitution and laws of the State of West Virginia shall be conclusive evidence of their validity and of compliance with the provisions of law in their issuance. [Remainder of Page Intentionally Left Blank] ARTICLE IV REDEMPTION OF 2012 BONDS Section Limitation on Redemption. The 2012 Bonds shall be subject to redemption in whole or in part as provided in this Article IV. Section Optional Redemption. The 2012 Bonds maturing on or after October 1, 2023 are subject to redemption prior to their maturity, at the option of the Obligated Group Agent on or after October 1, 2022, in whole on any date or in part on any Interest Payment Date in such order of maturity as determined by the Obligated Group Agent at a Redemption Price equal to the principal amount of Bonds called for redemption, without premium, together with any interest accrued to the redemption date. Section Optional Redemption as a Result of the Sale of Bond Financed Property. The 2012 Bonds are also subject to redemption prior to their maturity, in whole, by the Issuer at the option of the Obligated Group Agent and upon its written direction, on the earliest practicable date after (A) the Board of the College determines in good faith that continued operation of the property financed with the proceeds of the 2012 Bonds ( Bond Financed Property ) (or portions thereof) is not financially feasible or is otherwise disadvantageous to the College; (B) as a result thereof, the College plans to sell, lease or otherwise dispose of all or a portion of the Bond Financed Property to a person or entity unrelated to the College; and (C) there is delivered to the Issuer and the Trustee a written statement of Bond Counsel to the effect that, unless the 2012 Bonds are redeemed or retired in the amount specified either prior to or concurrently with such sale, lease or other disposition, or on a subsequent date prior to the first date on which the 2012 Bonds are subject to redemption at the option of the Issuer at the direction of the Obligated Group Agent, such Bond Counsel will be unable, absent payment by the Obligated Group Agent or the Issuer to the IRS, to render an unqualified opinion that such sale, lease or other disposition of all or a portion of the Bond Financed Property will not adversely affect the validity of any 2012 Bonds or any exemption from federal income taxation to which the interest on such 2012 Bonds would otherwise be entitled. Any such redemption shall be at a Redemption Price equal to 100% of the principal amount thereof plus accrued interest to the redemption date. Section Optional Redemption for Insurance and Condemnation Proceeds. Outstanding 2012 Bonds are also subject to redemption prior to the stated Maturity Date, by the Issuer, at the option of the Obligated Group Agent and upon its written direction, or as otherwise required under the Master Indenture, as a whole or in part on any day from moneys required to be deposited in the Special Redemption Account pursuant to this Indenture, at a Redemption Price equal to the principal amount of such 2012 Bonds. Section Mandatory Redemption. The 2012 Bonds are subject to mandatory redemption, prior to the stated Maturity Date, in part, from Mandatory Sinking Account Payments deposited in the Principal Fund, on October 1 in the years set forth below. The Redemption Price will be 100% of the principal amount of the 2012 Bonds to be so redeemed plus accrued interest, if any, to the redemption date, without premium. On the following dates, the 2012 Bonds shall be redeemed or paid in the amounts set forth opposite each such date (each a Mandatory Sinking Account Payment Date ): *Denotes final maturity 2012 Series A Bonds Year Amount ($) , , , , , , , , , , , , , , , , ,035, ,115, ,205, ,305, ,410, ,525, ,645, ,775, ,925, ,080, ,445, ,425, ,620, * 2,835, Series B Bonds Year Amount ($) , , , *Denotes final maturity , , , , , , , , , , , , , , , , , , , , , , , , * 205, Series C Bonds Year Amount ($) , , , , , , , , , , , , , , , , A-9 32

118 *Denotes final maturity , , , , , , , , , , , * 55, Section Notice of Redemption. Notice of redemption shall be mailed by first class mail or distributed via Electronic Means by the Trustee, not less than 30 nor more than 60 days prior to the date fixed for redemption, to the respective Holders of any 2012 Bonds designated for redemption at their addresses appearing on the bond registration books of the Trustee. Each notice of redemption shall state the date of such notice, the date of delivery, the date fixed for redemption, the Redemption Price, the place or places of redemption (including the name and appropriate address or addresses of the Trustee), the CUSIP number of the Series of 2012 Bonds to be redeemed and, in the case of 2012 Bonds to be redeemed in part only, the portion of the principal amount thereof to be redeemed. Each such notice shall also state that on said date there will become due and payable on each of said 2012 Bonds the Redemption Price thereof, or of said specified portion of the principal amount thereof in the case of a 2012 Bond to be redeemed in part only, together with interest accrued thereon to the date fixed for redemption, and that from and after such date, interest on such 2012 Bond shall cease to accrue, and shall require that such 2012 Bonds be then surrendered at the address or addresses of the Trustee specified in the redemption notice. Section Mandatory Redemption upon a Determination of Taxability. The Tax-Exempt Bonds are subject to mandatory redemption prior to their maturity upon a Determination of Taxability. If so called for redemption upon a Determination of Taxability, the Tax-Exempt Bonds shall be redeemed by the Issuer in whole at any time within forty (40) days after such Determination of Taxability, at one hundred five percent (105%) of the aggregate principal amount of such Bonds then Outstanding, plus accrued interest to the redemption date. Section 4.07 Mandatory Redemption from Excess Funds in Project Fund following Completion of Construction Period. In accordance with Section 3.04(C) hereof, any balance remaining in the Project Fund upon completion of the Construction Projects shall be transferred to the Principal Fund and applied towards the redemption of the 2012 Series A Bonds on the next ensuing Interest Payment Date, at a Redemption Price equal to the principal amount 2012 Series A Bonds being redeemed plus interest accrued to the redemption date. Section Redemption Requests with Regard to Section 4.03 or Section 4.04 hereof. Redemption shall be made pursuant to Sections 4.03 or 4.04 hereof on an authorized date selected by the Obligated Group Agent, which date shall be not less than 30 days nor more than 120 days after receipt by the Trustee of a Certificate of an Authorized Representative of the Obligated Group Agent (i) requesting that the 2012 Bonds be redeemed, (ii) stating the principal amount of the 2012 Bonds to be so redeemed and the authorized date upon which the same will be redeemed and (iii), if appropriate, stating that an event described in Section 4.03 or Section 4.04 has occurred and identifying such event. Section Selection of 2012 Bonds for Redemption. Whenever provision is made in this Indenture for the redemption of less than all of the 2012 Bonds or any given series thereof, the Obligated Group Agent shall select the series and maturity of the 2012 Bonds to be redeemed and within a series and a maturity, the Trustee shall select the 2012 Bonds to be redeemed, in Authorized Denominations, by lot. The Trustee shall promptly notify the Issuer and the Obligated Group Agent in writing of any redemption of the 2012 Bonds Outstanding or portions thereof so selected for redemption. The selection of 2012 Bonds shall be at such time as determined by the Trustee. Notice of redemption of 2012 Bonds shall be given by the Trustee, at the expense of the Obligated Group Agent. If at the time of notice of an optional redemption is provided there shall not have been deposited with the Trustee money sufficient to redeem all of the series of 2012 Bonds called for redemption, such notice may state that it is subject to the deposit with the Trustee on or prior to the redemption date of money sufficient to pay the Redemption Price of the 2012 Bonds to be redeemed. If such money shall not have been so received, the notice shall be of no force and effect, the series of 2012 Bonds shall not be redeemed pursuant thereto and the Trustee shall give notice, in the manner in which notice of redemption was given, that such money was not received. Failure by the Trustee to provide notice of redemption pursuant to this Section 4.10 to any one or more of the Holders of any 2012 Bonds designated for redemption shall not affect the sufficiency of the proceedings for redemption with respect to the Holder or Holders to whom such notice was mailed. Any notice given pursuant to this Section 4.10 may be rescinded by written notice given to the Trustee by the Issuer with the consent of the Obligated Group Agent no later than five (5) Business Days prior to the date specified for redemption. The Trustee shall give notice of such rescission, as soon thereafter as practicable, in the same manner, to the same persons, as notice of such redemption was given pursuant to this Section Section Partial Redemption of 2012 Bonds. Subject to the provisions of Section 2.12 hereof, upon surrender of any 2012 Bond to be redeemed in part only, the Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Obligated Group Agent, a new 2012 Bond in Authorized Denominations of the same series equal in aggregate principal amount to the unredeemed portion of the 2012 Bond surrendered. Section Effect of Redemption. Notice of redemption having been duly given as aforesaid, and moneys for payment of the Redemption Price of, together with interest accrued to the date fixed for redemption on, the 2012 Bonds (or portions thereof) so called for redemption being held by the Trustee on the date fixed for redemption designated in such notice, the 2012 Bonds (or portions thereof) so called for redemption shall become due and payable at the Redemption Price specified in such notice to the date fixed for redemption, interest on the 2012 Bonds so called for redemption shall cease to accrue, said 2012 Bonds (or portions thereof) shall cease to be entitled to any benefit or security under this Indenture, and the Holders of said 2012 Bonds shall have no rights in respect thereof except to receive payment of said Redemption Price. [Remainder of Page Intentionally Left Blank] ARTICLE V CREATION OF FUNDS AND ACCOUNTS; PRIORITY OF PAYMENTS Section Pledge and Assignment. (A) Subject only to the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth herein, all of the Revenues and any other amounts (including proceeds of the sale of 2012 Bonds) held in any fund or account established pursuant to this Indenture (other than the Rebate Fund) are hereby pledged to secure the payment of the principal of and premium on, if any, and interest on the 2012 Bonds, in accordance with their terms and the provisions of this Indenture. Said pledge shall constitute a lien on and security interest in such assets and shall attach, be perfected and be valid and binding from and after delivery by the Trustee of the 2012 Bonds, without any physical delivery thereof or further act. (B) The Issuer hereby transfers in trust, grants a security interest in and assigns to the Trustee, for the exclusive benefit of the Holders from time to time of the 2012 Bonds in their relative priorities of payment and security, all of the Revenues and other assets pledged in subsection (A) of this Section and all of the right, title and interest of the Issuer in the Lease (except for (i) the right to receive any additional payments to the extent payable to the Issuer under the Lease, (ii) the Unassigned Rights as set forth in the preambles hereof, and (iii) the obligation of the Obligated Group Agent to make deposits pursuant to the Tax Compliance Certificate). The Trustee shall be entitled to and shall collect and receive all of the Revenues, and any Revenues collected or received by the Issuer shall be deemed to be held, and to have been collected or received, by the Issuer as the agent of the Trustee and shall forthwith be paid by the Issuer to the Trustee. The Trustee also shall be entitled to and shall take all steps, actions and proceedings reasonably necessary in its judgment to enforce, either jointly with the Issuer or separately, all of the rights of the Issuer that have been assigned to the Trustee and all of the obligations of the College under the Lease other than for those items excepted in the parenthetical contained in the first sentence of this subsection. All Revenues deposited with the Trustee shall be held, disbursed, allocated and applied by the Trustee only as provided in this Indenture. (C) If on the first Business Day prior to the day of any month in which a Lease Payment is required to be made, the Trustee has not received the full amount of such Lease Payment, the Trustee shall immediately notify the Issuer and the Obligated Group Agent of such insufficiency by Electronic Means and confirm such notification as soon as possible thereafter by written notice. Section Interest Fund. (a) The Trustee shall establish, maintain and hold in trust a separate fund designated as the Interest Fund. Moneys in the Interest Fund shall be held, disbursed, allocated and applied by the Trustee only as provided in this Indenture. 35 A-10 36

119 (b) The Trustee shall deposit the following Revenues in the Interest Fund when and as such Revenues are received: (i) the interest component of all Lease Payments, but excluding the interest component of any cash prepayments of Lease Payments made by the College pursuant to the Lease, which shall be deposited in the Redemption Fund; (ii) all interest, profits and other income received from the investment of moneys in the Interest Fund; and (iii) any other Revenues not required to be deposited in any other fund or account established pursuant to this Indenture or the Lease. (c) The Trustee shall deposit to the Interest Fund any remaining balances in the Costs of Issuance Fund and the Capitalized Interest Fund in accordance with Section 3.03 hereof. (d) In accordance with the order of priority set forth in Supplemental Master Indenture , all amounts in the Interest Fund shall be used and withdrawn by the Trustee, on a pro rata basis, solely for the purpose of paying the interest on the 2012 Bonds as the same becomes due and payable (including accrued interest on any 2012 Bonds purchased or redeemed prior to maturity pursuant to this Indenture) pursuant to Section 5.04 hereof. (e) In the event the amounts on deposit in the Interest Fund on an Interest Payment Date are insufficient to pay such interest in full, the Trustee shall withdraw from the Debt Service Reserve Fund the amounts necessary to pay interest on the 2012 Series A Bonds on such date. Section Principal Fund. (a) The Trustee shall establish, maintain and hold in trust a separate fund designated as the Principal Fund. The Trustee shall establish, maintain and hold in trust within the Principal Fund a separate Mandatory Sinking Account. Moneys in the Principal Fund shall be held, disbursed, allocated and applied by the Trustee only as provided in this Indenture. (b) The Trustee shall deposit the following Revenues in the Principal Fund when and as such Revenues are received: (i) the principal component of all Lease Payments, but excluding the principal component of any cash prepayments of Lease Payments made by the College pursuant to the Lease, which shall be deposited in the Redemption Fund; and (ii) all interest, profits and other income received from the investment of moneys in the Principal Fund. (c) The Trustee shall deposit to the Principal Fund any remaining balance in the Project Fund in accordance with Section 3.04 hereof, to be applied in accordance with Section 4.07 hereof. (d) In accordance with the order of priority set forth in Supplemental Master Indenture , all amounts in the Principal Fund shall be used and withdrawn by the Trustee solely to redeem the 2012 Bonds, or pay the 2012 Bonds at maturity, as provided herein and as set forth in Section 5.04 hereof. (d) On each Mandatory Sinking Account Payment Date, the Trustee shall apply the Mandatory Sinking Account Payments required on that date to the redemption or payment at maturity, as the case may be, of the applicable Series of 2012 Bonds, in the amounts and upon the notice and in the manner provided in Article IV; provided that, at any time prior to giving such notice of redemption, the Trustee shall, upon direction of the Obligated Group Agent, apply such moneys to the purchase of 2012 Bonds at public or private sale, as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Fund) as the Obligated Group Agent may direct, except that the purchase price (excluding accrued interest) shall not exceed the par amount of such 2012 Bond. If, during the twelve-month period immediately preceding said Mandatory Sinking Account Payment Date, the Trustee has purchased 2012 Bonds with moneys in the Principal Fund, or, during said period and prior to giving said notice of redemption, the Obligated Group Agent has deposited 2012 Bonds with the Trustee, or 2012 Bonds were at any time purchased or redeemed by the Trustee from the Redemption Fund and allocable to said Mandatory Sinking Account Payments, such 2012 Bonds so purchased or deposited or redeemed shall be applied, to the extent of the full principal amount thereof, to reduce said Mandatory Sinking Account Payments. All 2012 Bonds purchased or deposited pursuant to this subsection shall be cancelled and destroyed by the Trustee to or upon the order of the Obligated Group Agent. All 2012 Bonds purchased from the Principal Fund or deposited by the Obligated Group Agent with the Trustee shall be allocated first to the next succeeding Mandatory Sinking Account Payments, then to the remaining Mandatory Sinking Account Payments as selected by the Obligated Group Agent. (e) In the event the amounts on deposit in the Principal Fund on a Principal Payment Date are insufficient to pay such principal in full, the Trustee shall withdraw from the Debt Service Reserve Fund the amounts necessary to pay principal on the 2012 Series A Bonds on such date. Section Redemption Fund. (a) The Trustee shall establish, maintain and hold in trust a separate fund designated as the Redemption Fund. The Trustee shall establish, maintain and hold in trust within the Redemption Fund a separate Optional Redemption Account and a separate Special Redemption Account. (b) The Trustee shall deposit the following Revenues in the Optional Redemption Account when and as such Revenues are received: (i) except as provided in subsection (c) of this Section, the principal component of all cash prepayments of Lease Payments made pursuant to the Lease; and (ii) all interest, profits and other income received from the investment of moneys in the Optional Redemption Account (c) The Trustee shall deposit the following Revenues in the Special Redemption Account when and as such Revenues are received: (i) the principal component of any cash prepayments of Lease Payments made by the College pursuant to the Lease which are specified in a Certificate of the College to have been derived from insurance or condemnation proceeds received with respect to the facilities of the College; and (ii) all interest, profits and other income received from the investment of moneys in the Special Redemption Account. (d) All amounts deposited in the Optional Redemption Account and in the Special Redemption Account shall be used and withdrawn by the Trustee solely for the purpose of redeeming 2012 Bonds, in the manner and upon the terms and conditions specified in Article IV, at the next succeeding date of redemption for which notice has not been given and at the Redemption Prices then applicable to redemptions from the use of moneys in the Optional Redemption Account to purchase 2012 Bonds and the Special Redemption Account. All 2012 Bonds redeemed from the Redemption Fund shall be allocated to applicable Mandatory Sinking Account Payments in inverse order of their payment dates. Notwithstanding anything herein to the contrary, all amounts on deposit in the Optional Redemption Account and the Special Redemption Account shall be used first towards the redemption of the 2012 Series A Bonds and then towards the redemption of the 2012 Subordinate Bonds. Section Debt Service Reserve Fund. (a) So long as any of the 2012 Series A Bonds are outstanding, the Trustee shall establish and maintain a separate account to be known as the Debt Service Reserve Fund (hereinafter the Debt Service Reserve Fund ). There shall be deposited to the credit of the Debt Service Reserve Fund, (i) initially, the amount set forth in Section 3.02(e) hereof to establish the Debt Service Reserve Fund and (ii) thereafter, the amounts paid by the Obligated Group Agent pursuant to the terms of the Section 3 of the Lease to maintain and restore the Debt Service Reserve Fund to the Debt Service Reserve Fund Requirement. (b) In each month during the 12-month period preceding the final maturity date of the 2012 Series A Bonds, moneys held in the Debt Service Reserve Fund shall be credited against the payments otherwise due under the Lease in respect of principal of and interest on the 2012 Series A Bonds and shall be transferred to the Principal Fund, the Interest Fund or the Redemption Fund, as appropriate, for the payment of such principal and interest; provided, however, that no such credit shall be given and no such transfer shall be made if and to the extent that, immediately prior to such crediting and transfer, the amount on deposit in the Debt Service Reserve Fund is not at least equal to the Debt Service Reserve Fund Requirement, less the amounts previously transferred from the Debt Service Reserve Fund during such 12-month period pursuant to this subsection (b). (c) If the balance in the Debt Service Reserve Fund on any Interest Payment Date is greater than the Debt Service Reserve Fund Requirement, the Trustee shall transfer the excess to the Interest Fund for payment of interest on the 2012 Series A Bonds. (d) Anything hereinabove to the contrary notwithstanding, if the balances in the Interest Fund and in the Principal Fund are sufficient to pay the principal of, redemption premium, if any, and interest on the 2012 Series A Bonds on any Principal Payment Date, so that the money in the Debt Service Reserve Fund is not necessary for such payments, such money shall be transferred as instructed in writing by the Obligated Group Agent to the Trustee. (e) Notwithstanding anything else in this Section 5.05 to the contrary, the Obligated Group Agent is only required to fund and maintain the Debt Service Reserve Fund to the extent required by the Lease. Section Operating Reserve Fund. So long as any of the 2012 Bonds are outstanding, the Trustee shall establish and maintain a separate account to be known as the Operating Reserve Fund (hereinafter the Operating Reserve Fund ). There shall be deposited to the credit of the Operating Reserve Fund the amounts paid by the Obligated Group pursuant to the terms of Section 3(b) of the Lease to obtain and maintain the required balance set forth therein. Whenever there shall be on deposit a balance in the Operating Reserve Fund which exceeds the amount required to be on deposit therein in accordance with the terms of the Supplemental Master Indenture to satisfy the Days Cash on Hand requirement (as set forth in Section 301 of the Supplemental Master Indenture ), such excess money shall be transferred by the Trustee to the Obligated Group Agent, as instructed in writing by the Obligated Group Agent, to be used by the Obligated Group for any lawful purpose. Section 5.07 Revenue Fund. So long as any of the 2012 Bonds are outstanding, the Trustee shall establish and maintain a separate account to be known as the Revenue Fund. There shall be deposited to the credit of the Revenue Fund the amounts paid by the Obligated Group Agent to the Trustee pursuant to Section 5.10 hereof. Section Investment of Moneys. All moneys in any of the funds and accounts established pursuant to this Indenture shall be invested by the Trustee, upon the written direction of the Obligated Group Agent (so long as no Event of Default has occurred and is continuing hereunder), given at least 2 days prior to the investment date, solely in Qualified Investments. Qualified Investments shall be purchased at such prices as the Obligated Group Agent may direct. All directions of the Obligated Group Agent to invest in Qualified Investments shall be made subject to the limitations set forth in Section 6.06, the limitations as to maturities hereinafter in this Section set forth and such additional limitations or requirements consistent with the foregoing as may be established by Request of the Obligated Group Agent. No Request of the Obligated Group Agent shall impose any duty on the Trustee inconsistent with its fiduciary responsibilities. In the absence of directions from the Obligated Group Agent, the Trustee shall invest in Qualified Investments specified in subsection (8) of the definition thereof in Section 1.01 hereof. Moneys in all funds and accounts shall be invested in Qualified Investments maturing not later than the date on which it is estimated that such moneys will be required for the purposes specified in this Indenture. Qualified Investments purchased under a repurchase agreement may be deemed to mature on the date or dates on which the Trustee may deliver such Qualified Investments for repurchase under such agreement. 39 A-11 40

120 All interest, profits and other income, including the amount of accrued interest paid as part of the purchase price when received, received from the investment of moneys in any fund or account established pursuant to this Indenture shall be deposited when received into such fund or account. Moneys held in the Redemption Fund for the redemption of the applicable 2012 Bonds shall be invested solely in Qualified Investments specified in subsection (2) of the definition thereof in Section 1.01, maturing in such amounts and at such times as are required for such redemption. If the Obligated Group Agent causes moneys to be deposited with the Trustee as a prepayment of Lease Payments made by the Obligated Group Agent pursuant to the Master Indenture, until such moneys are paid to Holders, such moneys shall be invested solely in Qualified Investments specified in subsection (2) of the definition thereof. Qualified Investments acquired as an investment of moneys in any fund or account established under this Indenture shall be credited to such fund or account. For the purpose of determining the amount in any such fund or account, all Qualified Investments credited to such fund or account shall be valued at the lower of cost (exclusive of accrued interest after the first payment of interest following acquisition) or par value (plus, prior to the first payment of interest following acquisition, the amount of interest paid as part of the purchase price). The Trustee may commingle any of the funds or accounts established pursuant to this Indenture (other than the Rebate Fund) into a separate fund or funds for investment purposes only, provided that all funds or accounts held by the Trustee hereunder shall be accounted for separately as required by this Indenture. The Trustee may act as principal or agent in the making or disposing of any investment. The Trustee may sell at the best price reasonably obtainable, or present for redemption, any Qualified Investments so purchased whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such Investment Property is credited, and, subject to the provisions of Section 8.03, the Trustee shall not be liable or responsible for any loss resulting from any investment made in accordance with provisions of this Section Any Qualified Investments that are registrable securities shall be registered in the name of the Trustee. The Trustee is hereby authorized, in making or disposing of any investment permitted by this Section, to deal with itself (in its individual capacity) or with any one or more of its affiliates, whether it or such affiliate is acting as an agent of the Trustee or for any third person or dealing as principal for its own account. Although the Issuer and the Obligated Group Agent each recognizes that it may obtain a broker confirmation or written statement containing comparable information at no additional cost, the Issuer and the Obligated Group Agent hereby agree that confirmations of permitted investments are not required to be issued by the Trustee for each month in which a monthly statement is rendered. No statement need be rendered for any fund or account if no activity occurred in such fund or account during such month. Section Rebate Fund. (a) The Trustee shall establish, maintain and hold in trust a separate fund designated as the Rebate Fund. Within the Rebate Fund, the Trustee shall maintain such accounts as shall be specified in writing by the Obligated Group Agent in order to comply with the Tax Compliance Certificate. Subject to the transfer provisions provided in paragraph (e) below, all money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the Rebate Amount (as defined in the Tax Compliance Certificate), for payment to the federal government of the United States of America. The Issuer, the College and the Holder of any 2012 Bonds shall have no rights in or claim to such money. All amounts deposited into or on deposit in the Rebate Fund shall be governed by this Section, by Section 6.06 and by the Tax Compliance Certificate (which is incorporated herein by reference). The Trustee shall be deemed conclusively to have complied with such provisions if it follows the written directions of the Obligated Group Agent including the Obligated Group Agent s supplying all necessary information in the manner provided in the Tax Compliance Certificate, and shall have no liability or responsibility to enforce compliance by the Obligated Group Agent or the Issuer with the terms of the Tax Compliance Certificate. (b) Upon the Obligated Group Agent s written direction, an amount shall be deposited to the Rebate Fund by the Trustee from deposits by the Obligated Group Agent, if and to the extent required, so that the balance in the Rebate Fund shall equal the Rebate Amount. Computations of the Rebate Amount shall be furnished by or on behalf of the Obligated Group Agent in accordance with the Tax Compliance Certificate. (c) The Trustee shall have no obligation to rebate any amounts required to be rebated pursuant to this Section, other than from moneys held in the Rebate Fund or provided to it by the Obligated Group Agent. (d) At the written direction of the Obligated Group Agent, the Trustee shall invest all amounts held in the Rebate Fund in Qualified Investments, subject to the restrictions set forth in the Tax Compliance Certificate. The Trustee shall not be liable for any consequences arising from such investment. Money shall not be transferred from the Rebate Fund except as provided in subsection (e) below. (e) Upon receipt of the Obligated Group Agent s written directions, the Trustee shall remit part or all of the balances in the Rebate Fund to the United States of America, as so directed. In addition, if the Obligated Group Agent so directs, the Trustee will deposit money into or transfer money out of the Rebate Fund from or into such accounts or funds as directed by the Obligated Group Agent s written directions. Any funds remaining in the Rebate Fund after redemption and payment of all of the 2012 Bonds and payment and satisfaction of any Rebate Amount, or provision made therefor satisfactory to the Trustee, and payment of any amount then owed to the Trustee, shall be withdrawn and remitted to the Obligated Group Agent. (f) Notwithstanding any other provision of this Indenture, including in particular Article X, the obligation to remit the Rebate Amounts to the United States of America and to comply with all other requirements of this Section, Section 6.06 hereof and the Tax Compliance Certificate shall survive the defeasance or payment in full of the Tax-Exempt Bonds. Section Revenue Fund; Priority of Payments. Commencing on the first day of the month following the Construction Draw Period and continuing on the first day of each month thereafter until the Maturity Date, the Obligated Group Agent will deposit with the Trustee for deposit into the Revenue Fund revenues sufficient to fund the following items, and the Trustee will apply said deposits in the following descending order of priority: (1) Pay the current and outstanding fees of the Trustee; (2) Deposit to the Interest Fund one-sixth (1/6th) of the next interest payment amount due on the next ensuing Interest Payment Date, less all interest, profits and other income received from the investment of money in the Interest Fund, including any funds transferred to the Interest Fund as provided in Section 3.04(A) and (C) herein; (3) Deposit to the Principal Fund one-twelfth (1/12th) of the next principal payment amount due on the next ensuing Principal Payment Date, less all interest, profits and other income received from the investment of money in the Principal Fund; (4) If not funded in an amount equal to the Debt Service Reserve Fund Requirement, deposit to the Debt Service Reserve Fund the amounts required pursuant to the Lease in accordance with the time period prescribed in the Lease; (5) Payment of any and all fees due to any consultant pursuant to any management agreement entered into by the College pursuant to Section 303 of the Supplemental Master Indenture , in accordance with joint written instructions received by the Trustee from the Obligated Group Agent and the consultant under any management agreement; (6) If not funded in an amount required to meet the Days Cash on Hand requirement as set forth in Section 301 of the Supplemental Master Indenture , deposit to the Operating Reserve Fund the amounts required to be deposited pursuant to the Lease to satisfy the Days Cash on Hand requirement; and (7) Whenever all of the foregoing required transfers and payments have been made by the Trustee and there remains any surplus balance in the Revenue Fund, such surplus balance may be transferred by the Trustee to the Obligated Group Agent, as instructed in writing by the Obligated Group Agent to the Trustee, to be used by the Obligated Group for any lawful purpose. Notwithstanding anything hereinabove to the contrary, for so long as the 2012 Series A Bonds remain Outstanding, deposits made by the Trustee to the Interest Fund, the Principal Fund and the Debt Service Reserve Fund shall be credited first towards the amount necessary to pay in full the interest and principal then due on the 2012 Series A Bonds on their next ensuing Interest Payment Date and Principal Payment Date, respectively, then towards the amount necessary to satisfy the Debt Service Reserve Requirement, and thereafter, for so long as no Event of Default has occurred and is continuing, to the credit of the accounts established for the 2012 Subordinate Bonds. ARTICLE VI PARTICULAR COVENANTS Section Punctual Payment. The Issuer shall punctually cause to be paid the principal of, Redemption Price, if any, and interest on the 2012 Bonds, in strict conformity with the terms of the 2012 Bonds and of this Indenture, according to the true intent and meaning thereof, but only out of Revenues and other assets pledged for such payment as provided in this Indenture. Section Extension of Payment of 2012 Bonds. The Issuer shall not directly or indirectly extend or assent to the extension of the maturity of any of the 2012 Bonds or the time of payment of any claims for interest by the purchase or funding of such 2012 Bonds or claims for interest or by any other arrangement. In case the maturity of any of the 2012 Bonds or the time of payment of any such claims for interest shall be extended, such 2012 Bonds or claims for interest shall not be entitled, in case of any default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of the principal of all of the 2012 Bonds then Outstanding and of all claims for interest thereon that shall not have been so extended. Section Prohibition Against Encumbrances. The Issuer shall not create, or permit the creation of, any pledge, lien, charge or other encumbrance upon the Revenues and other assets pledged or assigned under this Indenture while any of the 2012 Bonds are Outstanding, except the pledge and assignment created by this Indenture. Subject to this limitation, the Issuer expressly reserves the right to enter into one or more other indentures for any of its corporate purposes, including other programs under the Act, and reserves the right to issue other obligations for such purposes. Section Power to Issue 2012 Bonds and Make Pledge and Assignment. The Issuer is duly authorized pursuant to law to issue the 2012 Bonds and to enter into this Indenture and to pledge and assign the Trust Estate purported to be pledged and assigned, respectively, under this Indenture in the manner and to the extent provided in this Indenture. The 2012 Bonds and the provisions of this Indenture are and will be the legal, valid and binding limited obligations of the Issuer in accordance with their terms, and the Issuer and Trustee shall at all times, to the extent permitted by law, defend, preserve and protect said pledge and assignment of the Trust Estate and all the rights of the Bondholders under this Indenture against all claims and demands of all persons whomsoever. Section Accounting Records and Financial Statements. (A) The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with the Trustee s accounting practices for books of record and account relating to similar trust accounts, in which complete and accurate entries shall be made of all transactions relating to the proceeds of 2012 Bonds, the Trust Estate, the Lease and all funds and accounts established pursuant to this Indenture. Such books of record and account shall be available for inspection by the Issuer, the Obligated Group Agent and any Bondholder, or his agent or representative duly authorized in writing, at reasonable hours and under reasonable circumstances. 43 A-12 44

121 (B) The Trustee shall file and furnish on or before the 15th day of each month to the Issuer, the Obligated Group Agent and any beneficial owner of a 2012 Series A Bond that makes a written request to the Trustee, monthly statements (which need not be audited) covering receipts, disbursements, allocation and application of Revenues and any other moneys (including proceeds of the 2012 Bonds) in any of the funds and accounts established pursuant to this Indenture for the preceding month; provided, that the Trustee shall not be required to deliver an accounting for any fund or account that (1) has a balance of $0.00 and (2) has not had any activity since the last reporting date. (C) Following its receipt of a copy of any written request, consent or approval which has been furnished to the Trustee by the Obligated Group Agent or by the Holders of a majority of the aggregate principal amount of the 2012 Series A Bonds then Outstanding in accordance with the requirements of the Master Indenture, the Trustee shall promptly furnish a copy thereof to the Holders of the 2012 Subordinate Bonds. Section Tax Covenants. The Issuer agrees that it shall at all times do and perform all acts and things required by law and to require the Obligated Group Agent at all times to do and perform all acts and things required by law and this Indenture that are necessary or desirable in order to assure that interest paid on the Tax-Exempt Bonds will be excluded from gross income for purposes of federal income tax purposes and shall neither take or omit to take action nor permit any other person to take or omit to take any action that such action or omission to act would result in such interest not being excluded from gross income for federal income tax purposes. Without limiting the generality of the foregoing, the Issuer agrees to comply with the provisions of the Tax Compliance Certificate. better assuring and confirming unto the Holders of the 2012 Bonds of the rights and benefits provided in this Indenture. Section Continuing Disclosure. Pursuant to Section 13(a) of the Lease, the College has covenanted to comply with and carry out all of the provisions of the Continuing Disclosure Agreement, as applicable, with respect to the 2012 Bonds that complies with the provisions of Rule 15c2-12 promulgated by the Securities and Exchange Commission (as amended from time to time, the Rule ), in form and substance satisfactory to the Placement Agent. Notwithstanding any other provision of this Indenture, failure of the College to enter into and comply with such Continuing Disclosure Agreement shall not be considered an Event of Default; however, the Issuer may take such actions as may be necessary or desirable, including seeking specific performance by court order, to cause the College to comply with its obligations under this Section. [Remainder of Page Intentionally Left Blank] Section Enforcement and Amendment of Lease. (A) The Trustee shall promptly collect all amounts due from the College pursuant to the Lease, shall comply with all terms of the Lease applicable to it and shall diligently enforce, and take all steps, actions and proceedings reasonably necessary for the enforcement of all of the rights of the Issuer assigned to it hereunder and all of the obligations of the College relating thereto. (B) The Issuer may amend, modify or terminate any of the terms of the Lease, or consent to any such amendment, modification or termination, without the consent of any other interested party or the owners of the 2012 Bonds. Section Waiver of Laws. The Issuer shall not at any time insist upon or plead in any manner whatsoever, or claim or take the benefit or advantage of, any stay or extension law now or at any time hereafter in force that may affect the covenants and agreements contained in this Indenture or in the 2012 Bonds, and all benefit or advantage of any such law or laws is hereby expressly waived by the Issuer to the extent permitted by law. Section Further Assurances. The Issuer will make, execute and deliver any and all such further indentures, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture and for the ARTICLE VII EVENTS OF DEFAULT AND REMEDIES OF BONDHOLDERS Section Events of Default. Any one or more of the following events shall be Events of Default: (A) default in the due and punctual payment of the principal, Redemption Price and purchase price of any 2012 Bond when and as the same shall become due and payable (except as otherwise provided in Section 5.10 hereof with respect to the 2012 Subordinate Bonds); (B) default in the due and punctual payment of any installment of interest on any 2012 Bond when and as the same shall become due and payable (except as otherwise provided in Section 5.10 hereof with respect to the 2012 Subordinate Bonds); (C) default by the Issuer in the observance of any of the other covenants, agreements or conditions on its part in this Indenture or in the 2012 Bonds contained, if such default shall have continued for a period of 60 days after written notice thereof, specifying such default and requiring the same to be remedied, shall have been given to the Issuer by the Trustee, or to the Issuer and the Trustee by the Holders of not less than 25% in aggregate principal amount of the 2012 Bonds at the time Outstanding; (D) a Lease Default Event; (E) an event of default as defined in Section 502 of the Master Indenture; or (F) a default by the Issuer with respect to any payment obligations relating to the 2012 Bonds or in the observance of any of the other covenants, agreements or conditions relating to the 2012 Bonds. Section Acceleration of Maturities. During the continuance of an Event of Default described in Section 7.01 (A), (B), (C) or (D) hereof, unless the principal of all the 2012 Bonds shall have already become due and payable, the Trustee upon the written direction of the Holders of a majority of the aggregate principal amount of the 2012 Bonds at the time Outstanding (subject to Section 7.12 hereof) or upon the occurrence of an Event of Default described in Section 7.01(E) hereof the Trustee shall, promptly upon such occurrence, by notice in writing to the Issuer and the Obligated Group Agent, declare the principal of all the 2012 Bonds then Outstanding and the interest accrued thereon, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable and interest shall cease to accrue, anything in this Indenture or in the 2012 Bonds contained to the contrary notwithstanding. The preceding paragraph, however, is subject to the condition that if, at any time after the principal of the 2012 Bonds shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, there shall have been deposited with the Trustee a sum sufficient to pay all the principal of the 2012 Bonds matured prior to such declaration and all matured installments 47 A-13 of interest upon all the 2012 Bonds, with interest on such overdue installments of principal as provided in the Lease, and the reasonable fees and expenses of the Trustee, including reasonable fees and expenses of its attorneys, and any and all other defaults known to the Trustee (other than in the payment of principal of and interest on the 2012 Bonds due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor, then, and in every such case, or the Holders of a majority of the aggregate principal amount of the 2012 Bonds then Outstanding, by written notice to the Issuer and to the Trustee, may, on behalf of the Holders of all the 2012 Bonds, rescind and annul such declaration and its consequences and waive such default; but no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon. When the Trustee incurs expenses or renders services after the occurrence of an act of bankruptcy with respect to the Issuer or any member of the Obligated Group, such expenses and the compensation for such services are intended to constitute expenses of administration under any federal or state bankruptcy, insolvency, arrangement, moratorium, reorganization or other debtor relief law. Section Institution of Legal Proceedings by Trustee. Subject to the provisions of Section 7.06 hereof, if an Event of Default shall occur and be continuing, the Trustee shall, upon being indemnified to its satisfaction therefor, proceed to protect or enforce its rights or the rights of the Holders of 2012 Bonds under this Indenture and the Lease Agreements by any means permitted by law. Section Application of Revenues and Other Funds After Default. If an Event of Default shall occur and be continuing, all Revenues and any other funds then held or thereafter received by the Trustee under any of the provisions of this Indenture (other than moneys required to be deposited in the Rebate Fund and subject to the requirements of Section relating to the use of moneys held for particular 2012 Bonds) shall be applied by the Trustee as follows and in the following order: (A) To the payment of any reasonable charges and expenses of the Trustee (including reasonable fees and disbursements of its counsel) incurred in and about the performance of its powers and duties under this Indenture; (B) To the payment of the principal or Redemption Price of and interest then due on the 2012 Series A Bonds (upon presentation of the 2012 Series A Bonds to be paid, and stamping thereon of the payment if only partially paid, or surrender thereof if fully paid) subject to the provisions of this Indenture (including Section 6.02), as follows: (1) Unless the principal of all of the 2012 Series A Bonds shall have become or have been declared due and payable, First: To the payment to the Persons entitled thereto of all installments of interest then due on the 2012 Series A Bonds in the order of the maturity of such installments, and, if the amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof 48

122 ratably, according to the amounts due thereon, to the Persons entitled thereto, without any discrimination or preference; and Second: To the payment to the Persons entitled thereto of the unpaid principal or Redemption Price of any 2012 Series A Bonds that shall have become due, whether at maturity or by call for redemption, with interest on the overdue principal at the rate borne by the respective 2012 Series A Bonds, and, if the amount available shall not be sufficient to pay in full all the 2012 Series A Bonds, together with such interest, then to the payment thereof ratably, according to the amounts of principal or Redemption Price due on such date to the Persons entitled thereto, without any discrimination or preference. (2) If the principal of all of the 2012 Series A Bonds shall have become or have been declared due and payable, to the payment of the principal and interest then due and unpaid upon the 2012 Series A Bonds, with interest on the overdue principal at the rate borne by the 2012 Series A Bonds, and if the amount available shall not be sufficient to pay in full the whole amount so due and unpaid, then to the payment thereof ratably, without preference or priority of principal over interest, or of interest over principal, or of any installment of interest over any other installment of interest, or of any 2012 Series A Bond over any other 2012 Series A Bonds, according to the amounts due respectively for principal and interest, to the Persons entitled thereto without any discrimination or preference. (3) If the principal amounts of all 2012 Series A Bonds then Outstanding shall have been declared due and payable, and if such declaration shall thereafter have been rescinded and annulled under the provisions of this Article, then, subject to the provisions of paragraph (B) of this Section in the event that the principal amounts of all 2012 Series A Bonds then Outstanding shall later become due or be declared due and payable, the money shall be applied in accordance with the provisions of this Section. (C) For so long as the 2012 Series A Bonds remain Outstanding, at any time during which an Event of Default has occurred and is continuing, no payments shall be made in respect of the 2012 Subordinate Bonds. Whenever money is to be applied by the Trustee pursuant to the provisions of this Section, such money shall be applied by it at such times and from time to time as received as set forth in this Section and the Trustee shall fix the date upon which such application is to be made and upon such date interest on the principal amounts to be paid on such date shall cease to accrue. The Trustee shall give such notice as it may deem appropriate of the deposit with it of any such money and of the fixing of any such date, and shall not be required to make payment to the Holder of any 2012 Series A Bond until such 2012 Series A Bond shall be presented to the Trustee for appropriate endorsement of any partial payment or for cancellation if fully paid. Section Trustee to Represent Bondholders. The Trustee is hereby irrevocably appointed (and the successive respective Holders of the 2012 Bonds, by taking and holding the same, shall be conclusively deemed to have so appointed the Trustee) as trustee and true and lawful attorney-in-fact of the Holders of the 2012 Bonds for the purpose of exercising and prosecuting on their behalf such rights and remedies as may be available to such Holders under the provisions of the 2012 Bonds, this Indenture, the Lease Agreements and applicable provisions of any other law. Upon the occurrence and continuance of an Event of Default or other occasion giving rise to a right in the Trustee to represent the Bondholders, the Trustee in its discretion may, and upon the written request of the Holders of a majority of the aggregate principal amount of the 2012 Bonds then Outstanding, and upon being indemnified to its satisfaction therefor, shall, proceed to protect or enforce its rights or the rights of such Holders by such appropriate action, suit, mandamus or other proceedings as it shall deem most effectual to protect and enforce any such right, at law or in equity, either for the specific performance of any covenant or agreement contained herein, or in aid of the execution of any power herein granted, or for the enforcement of any other appropriate legal or equitable right or remedy vested in the Trustee, or in such Holders under this Indenture, the Lease Agreements, the Act or any other law, and, upon instituting such proceeding, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver of the Revenues and other assets pledged under this Indenture pending such proceedings. All rights of action under this Indenture or the 2012 Bonds or otherwise may be prosecuted and enforced by the Trustee without the possession of any of the 2012 Bonds or the production thereof in any proceeding relating thereto, and any such suit, action or proceeding instituted by the Trustee shall be brought in the name of the Trustee for the benefit and protection of all the Holders of such 2012 Bonds, subject to the provisions of this Indenture (including Section 6.02). Section Limitation on Bondholders Right to Sue. No Holder of any Bond shall have the right to institute any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or remedy under this Indenture, the Lease Agreements or any other applicable law with respect to such 2012 Bond, unless (1) such Holder shall have given to the Trustee written notice of the occurrence of an Event of Default; (2) the Holders of a majority of the aggregate principal amount of the 2012 Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name; (3) such Holder or said Holders shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; and (4) the Trustee shall have refused or omitted to comply with such request for a period of 60 days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee. Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Holder of 2012 Bonds of any remedy hereunder or under law; it being understood and intended that no one or more Holders of 2012 Bonds shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of this Indenture or the rights of any other Holders of 2012 Bonds, or to enforce any right under this Indenture, the Lease Agreements or other applicable law with respect to the 2012 Bonds, except in the manner herein provided, and that all proceedings at law or in equity to enforce any such right shall be instituted, had and maintained in the manner herein provided and for the benefit and protection of all Holders of the Outstanding 2012 Bonds, subject to the provisions of this Indenture. Section Absolute Obligation of Issuer. Nothing in Section 7.06 or in any other provision of this Indenture, or in the 2012 Bonds, contained shall affect or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal and interest on or Redemption Price of the 2012 Bonds to the respective Holders of the 2012 Bonds at their respective dates of maturity, or upon call for redemption, as herein provided, but only out of the Revenues and other assets herein pledged therefor, or affect or impair the right of such Holders, which is also absolute and unconditional, to enforce such payment by virtue of the contract embodied in the 2012 Bonds. Section Termination of Proceedings. In case any proceedings taken by the Trustee or any one or more Bondholders on account of any Event of Default shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee or the Bondholders, then in every such case the Obligated Group Agent, the Issuer, the Trustee and the Bondholders, subject to any determination in such proceedings, shall be restored to their former positions and rights hereunder, severally and respectively, and all rights, remedies, powers and duties of the Obligated Group Agent, the Issuer, the Trustee and the Bondholders shall continue as though no such proceedings had been taken. Section Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee or to the Holders of the 2012 Bonds is intended to be exclusive of any other remedy or remedies, and each and every such remedy, to the extent permitted by law, shall be cumulative and in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or otherwise. Section No Waiver of Default. No delay or omission of the Trustee or of any Holder of the 2012 Bonds to exercise any right or power arising upon the occurrence of any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein. Section Notice to Bondholders of Default. The Trustee shall promptly give written notice by first class mail to the Bondholders of the occurrence of an Event of Default, if the Trustee has actual knowledge of such Event of Default. Section 7.12 No Direction by Holders of 2012 Subordinate Bonds. Notwithstanding anything to the contrary contained herein, the Holders of the 2012 Subordinate Bonds shall not be entitled to direct the Trustee to accelerate the 2012 Bonds or exercise any of its other rights or remedies hereunder without the consent of the Holders of a majority of the aggregate principal amount of the 2012 Series A Bonds then Outstanding. [Remainder of Page Intentionally Left Blank] ARTICLE VIII THE TRUSTEE Section Duties, Immunities and Liabilities of Trustee. The Trustee accepts and agrees to execute the trusts imposed upon it by this Indenture but only upon the terms and conditions set forth herein. (A) The Trustee shall, prior to an Event of Default, and after the curing of all Events of Default that may have occurred, perform such duties and only such duties as are specifically set forth in this Indenture. The Trustee shall, during the existence of any Event of Default (that has not been cured or waived), exercise such rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent trustee would exercise or use under the circumstances in the conduct of his own affairs. (B) Upon the written request of the Obligated Group Agent, the Issuer shall remove the Trustee at any time unless an Event of Default shall have occurred, and then be continuing, and shall remove the Trustee if at any time requested to do so by an instrument or concurrent instruments in writing signed by the Holders of a majority of the aggregate principal amount of the 2012 Series A Bonds then Outstanding (or their attorneys duly authorized in writing) or if at any time the Trustee shall cease to be eligible in accordance with subsection (E) of this Section, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property shall be appointed, or any public officer shall take control or charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, in each case by giving written notice of such removal to the Trustee, and thereupon shall appoint, with the written consent of the Obligated Group Agent, a successor Trustee by an instrument in writing. (C) The Trustee may at any time resign by giving written notice of such resignation to the Issuer and by giving the Bondholders notice of such resignation by mail at the addresses shown on the bond registration books maintained by the Trustee. Upon receiving such notice of resignation, the Issuer shall promptly appoint, with the written consent of the Obligated Group Agent, a successor Trustee by an instrument in writing. The Trustee shall not be relieved of its duties until such successor Trustee has accepted appointment. (D) Any removal or resignation of the Trustee and appointment of a successor Trustee shall only become effective upon acceptance of appointment by the successor Trustee. If no successor Trustee shall have been appointed and have accepted appointment within 45 days of giving notice of removal or notice of resignation as aforesaid, the resigning Trustee or any Bondholder (on behalf of himself or herself and all other Bondholders) may petition any court of competent jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee. Any successor Trustee appointed under this Indenture, shall signify its acceptance of such appointment by executing and delivering to the Issuer and to its predecessor Trustee a written acceptance thereof, and thereupon such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee 51 A-14 52

123 herein; but, nevertheless at the request of the Issuer or the request of the successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of conveyance or further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under this Indenture and shall pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions herein set forth. Upon request of the successor Trustee, the Issuer shall execute and deliver any and all instruments as may be reasonably required for more fully and certainly vesting in and confirming to such successor Trustee all such moneys, estates, properties, rights, powers, trusts, duties and obligations. The retiring Trustee shall deliver to the successor Trustee any 2012 Bonds and any money held by the retiring Trustee in such capacity. Upon acceptance of appointment by a successor Trustee as provided in this subsection, the Issuer shall mail or send by Electronic Means a notice of the succession of such Trustee to the trusts hereunder to each Rating Agency then rating the 2012 Bonds (if any) and to the Bondholders at the addresses shown on the bond registration books maintained by the Trustee. If the Issuer fails to mail or send by Electronic Means such notice within 15 days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense of the Issuer. (E) Any Trustee appointed under the provisions of this Section in succession to the Trustee shall be a trust company or bank having the powers of a trust company either within or without the State of West Virginia, having (or if such trust company or bank is a member of a bank holding company system, its bank holding company has) a combined capital and surplus of at least $75,000,000, and subject to supervision or examination by federal or state authority. If such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this subsection the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this subsection (E), the Trustee shall resign immediately in the manner and with the effect specified in this Section. Section Merger or Consolidation. Any company, entity or association into which the Trustee may be merged or converted or with which it may be consolidated or any company, entity or association resulting from any merger, conversion or consolidation to which it shall be a party or any company, entity or association to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such company, entity or association shall be eligible under subsection (E) of Section 8.01 shall be the successor to such Trustee without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding. Section Liability of Trustee. (A) The recitals of facts herein and in the 2012 Bonds contained shall be taken as statements of the Issuer, and the Trustee shall assume no responsibility for the correctness of the same, or make any representations as to the validity or sufficiency of this Indenture or of the 2012 Bonds, or shall incur any responsibility in respect thereof, other than in connection with the duties or obligations herein or in the 2012 Bonds assigned to or imposed upon it except for any recital or representation specifically relating to the Trustee or its powers. The Trustee shall, however, be responsible for its representations contained in its certificate of authentication on the 2012 Bonds. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own gross negligence or willful misconduct. The Trustee may become the owner of 2012 Bonds with the same rights it would have if it were not Trustee and, to the extent permitted by law, may act as depositary for and permit any of their officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Bondholders, whether or not such committee shall represent the Holders of a majority of the aggregate principal amount of the 2012 Bonds then Outstanding. (B) The Trustee shall not be liable for any error of judgment made in good faith by a responsible officer, unless it shall be proved that the Trustee was grossly negligent in ascertaining the pertinent facts. (C) The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority of the aggregate principal amount of the 2012 Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture. (D) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Bondholders pursuant to the provisions of this Indenture unless such Bondholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that may be incurred therein or thereby. The Trustee has no obligation or liability to the Holders for the payment of interest on, principal of or premium, if any, with respect to the 2012 Bonds from its own funds; but rather the Trustee s obligations shall be limited to the performance of its duties hereunder. (E) Except with respect to Events of Default specified in Section 7.01(A) or (B) hereof, the Trustee shall not be deemed to have knowledge of any Event of Default unless and until an officer at the Trustee s corporate trust operation responsible for the administration of its duties hereunder shall have actual knowledge thereof or the Trustee shall have received written notice thereof at its principal corporate trust office. The Trustee shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements herein or of any of the documents executed in connection with the 2012 Bonds, or as to the existence of a default or Event of Default thereunder. The Trustee shall not be responsible for the validity or effectiveness of any collateral given to or held by it. (F) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through attorneys-in-fact, agents or receivers, and shall not be answerable for the negligence or misconduct of any such attorney-of-fact, agent or receiver selected by it with due care. The Trustee shall be entitled to advice of counsel and other professionals concerning all matters of trust and its duty hereunder, including verification reports in connection with any defeasance of the 2012 Bonds, but the Trustee shall not be answerable for the professional malpractice of any attorney-in-law or certified public accountant in connection with the rendering of his professional advice in accordance with the terms of this Indenture, if such attorney-in-law or certified public accountant was selected by the Trustee with due care. (G) The Trustee shall not be concerned with or accountable to anyone for the subsequent use or application of any moneys that shall be released or withdrawn in accordance with the provisions hereof. (H) Whether or not therein expressly so provided, every provision of this Indenture, the Lease Agreements or related documents relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provision of this Article. (I) Notwithstanding anything herein to the contrary, the Trustee shall not require or seek indemnity as a condition to sending notices pursuant to the Indenture effecting redemption, or declaring the acceleration of any Bonds. Section Right of Trustee to Rely on Documents. The Trustee shall be protected in acting upon any notice, resolution, request, consent, order, certificate, report, opinion, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Trustee may consult with counsel, who may be counsel of or to the Issuer, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. Whenever in the administration of the trusts imposed upon it by this Indenture, the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a Certificate of the Issuer, and such Certificate shall be full warrant to the Trustee for any action taken or suffered in good faith under the provisions of this Indenture in reliance upon such Certificate, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may deem reasonable. Section Preservation and Inspection of Documents. All documents (other than financial books and records as described in Section 8.10(C) hereof) received by the Trustee under the provisions of this Indenture shall be retained in its possession and shall be subject at all reasonable times to the inspection of the Issuer, the Obligated Group Agent and any Bondholder, and their agents and representatives duly authorized in writing, at reasonable hours and under reasonable conditions. Section Separate or Co-Trustee. At any time or times, for the purpose of meeting any legal requirements of any jurisdiction, the Trustee shall have power to appoint, and upon the request of the Holders of a majority of the aggregate principal amount of Outstanding 2012 Series A Bonds and with the consent of the Obligated Group Agent, shall appoint, one or more Persons approved by the Trustee either to act as co-trustee or co-trustees, jointly with the Trustee, to act as separate trustee or separate trustees, and to vest in such Person or Persons, in such capacity, such rights, powers, duties, trusts or obligations as the Trustee may consider necessary or desirable, subject to the remaining provisions of this Section. 55 A-15 Every co-trustee or separate trustee shall, to the extent permitted by law but to such extent only, be appointed subject to the following terms, namely: (A) The 2012 Bonds shall be authenticated and delivered solely by the Trustee. (B) All rights, powers, trusts, duties and obligations conferred or imposed upon the trustees shall be conferred or imposed upon and exercised or performed by the Trustee, or by the Trustee and such co-trustee or co-trustees or separate trustee or separate trustees jointly, as shall be provided in the instrument appointing such co-trustee or co-trustees or separate trustee or separate trustees, except to the extent that, under the law of any jurisdiction in which any particular act or acts are to be performed, the Trustee shall be incompetent or unqualified to perform such act or acts, in which event such act or acts shall be performed by such co-trustee or co-trustees or separate trustee or separate trustees. (C) Any request in writing by the Trustee to any co-trustee or separate trustee to take or to refrain from taking any action hereunder shall be sufficient warrant for the taking, or the refraining from taking, of such action by such co-trustee or separate trustee. (D) Any co-trustee or separate trustee may, to the extent permitted by law, delegate to the Trustee the exercise of any right, power, trust, duty or obligation, discretionary or otherwise. (E) The Trustee at any time, by any instrument in writing, may accept the resignation of or remove any co-trustee or separate trustee appointed under this Section. (F) No trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder, nor will the act or omission of any trustee hereunder be imputed to any other trustee. (G) Any demand, request, direction, appointment, removal, notice, consent, waiver or other action in writing delivered to the Trustee shall be deemed to have been delivered to each such co-trustee or separate trustee. (H) Any moneys, papers, securities or other items of personal property received by any such co-trustee or separate trustee hereunder shall forthwith, so far as may be permitted by law, be turned over to the Trustee. Upon the acceptance in writing of such appointment by any such co-trustee or separate trustee, it shall be vested with such rights, powers, duties or obligations, as shall be specified in the instrument of appointment jointly with the Trustee (except insofar as local law makes it necessary for any such co-trustee or separate trustee to act alone) subject to all the terms hereof. Every such acceptance shall be filed with the Trustee. To the extent permitted by law, any co-trustee or separate trustee may, at any time by an instrument in writing, constitute the Trustee its or his attorney-in-fact and agent, with full power and authority to do all acts and things and to exercise all discretion on its or his behalf and in its or his name. In case any co-trustee or separate trustee shall die, become incapable of acting, resign or be removed, all rights, powers, trusts, duties and obligations of said co-trustee or separate trustee shall, so far as permitted by law, vest in and be exercised by the Trustee unless 56

124 and until a successor co-trustee or separate trustee shall be appointed in the manner herein provided. Section Compensation and Indemnification. The Issuer shall pay to the Trustee (solely from additional payments) from time to time reasonable compensation for all services rendered under this Indenture, and also all reasonable expenses, charges, legal and consulting fees and other disbursements and those of its attorneys, agents and employees, incurred in and about the performance of its powers and duties under this Indenture. Upon an Event of Default, and only upon an Event of Default, the Trustee shall have a first lien with right of payment prior to payment on account of principal of, premium, if any, and interest on any 2012 Bond, upon the Trust Estate for the foregoing fees, charges and expenses incurred by it. No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of its rights or powers, if it has not received the agreed compensation for such services or, in cases where the Trustee has a right to reimbursement or indemnification for such performance or exercise, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Section Intentionally Omitted. Section Trustee and Master Documents. Reference is hereby made to the Master Documents, wherein it is provided that the Trustee will accept certain duties, perform or consent to certain acts, receive certain documents and exercise certain rights and remedies under such instruments. The Trustee hereby consents to such terms and provisions contained in the Master Documents and covenants and agrees to accept such duties, perform such acts and receive such documents thereunder as is expressly set forth therein on the terms and conditions therein specified. The Trustee hereby covenants and agrees to exercise all rights and remedies set forth in the Master Documents (to the extent provided in such instruments to a holder of an obligation), and any Collateral Document as the Trustee deems necessary and proper, employing the standards set forth in Section 8.01 hereof, in the best interests of the Holders of the 2012 Bonds. Section Trustee s Relationship to the Issuer. default known to the Trustee under the Lease, or the 2012 Notes, and will at the expense of the Obligated Group and upon receipt of a request of the Issuer provide the Issuer with any information reasonably available to the Trustee which the Issuer may reasonably request regarding any Events of Default. (B) The Trustee agrees to provide the Issuer, at the expense of the Obligated Group and within a reasonable time after the receipt of a request of the Issuer, any financial or other information it may reasonably request relating to the Obligated Group or to the Indenture, or the Lease Agreements or the 2012 Notes, which the Issuer finds necessary or desirable and which is reasonably available to the Trustee. (C) The Trustee shall keep, or cause to be kept, proper books of record and account in which complete and accurate entries shall be made of all funds and accounts established by or pursuant to this Indenture, which shall at all reasonable times be subject to the inspection by the Issuer, the Obligated Group Agent or the owners (or a designated representative thereof) of not less than ten percent (10%) in aggregate principal amount of the 2012 Bonds then Outstanding. Section Trustee s Rights and Remedies Under the Lease. The Issuer hereby gives, assigns and pledges to the Trustee and the Holders of the 2012 Bonds, as additional security for the 2012 Bonds, the right and privilege, in addition to all other rights vested in and remedies available to the Trustee and the Bondholders, including, without limitation, the right to enforce, either jointly with the Issuer or separately, the performance of the obligations of the College under the Lease. Section College s Rights of Possession and Use of Lease. So long as the College is in full compliance with the terms and provisions of the Lease, the College shall be permitted and allowed to possess, use and enjoy the properties and appurtenances constituting the Facilities free of claims of the Issuer and the Trustee. Section Sale of Facilities by Issuer; Subletting. In the event of an Event of Default hereunder, the Issuer shall cooperate with the Trustee and use its best efforts to protect the Bondholders, including, without limitation, consenting to the subletting of the Facilities or any part or portion thereof or the assignment of the Lease and/or the sale (if permitted by and subject to applicable laws) of all the estate, right, title and interest, claim and demand, of the Issuer and the Trustee in the Facilities for the benefit of the Bondholders. (A) The Trustee acknowledges that the 2012 Bonds are payable solely from payments to be made by the Obligated Group pursuant to the Lease on the 2012 Notes, that the Issuer is a passive conduit for the payments to be made by the Obligated Group pursuant to the Lease on the 2012 Notes and that the 2012 Bonds are not general obligations of the Issuer. Subject to the terms of this Article, the Trustee, by execution of this Indenture, has accepted the assignment by the Issuer to the Trustee of the payments to be made by the Obligated Group pursuant to the Lease on the 2012 Notes and of rights of the Issuer under the Lease and the 2012 Notes and, to the extent permitted by law and subject to the limiting provisions contained in this Indenture, has assumed any and all responsibilities of the Issuer (other than the Unassigned Rights) under the Lease and the 2012 Notes to enforce those rights. The Trustee will notify the Issuer of any ARTICLE IX MODIFICATION OR AMENDMENT OF THIS INDENTURE Section Supplements Not Requiring Consent of Bondholders. The Issuer and the Trustee may, from time to time, without the consent of or notice to any of the Holders but only with the consent of the Obligated Group Agent enter into one or more Supplemental Indentures for one or more of the following purposes: (A) To cure any ambiguity or formal defect or omission herein; (B) To correct or supplement any provision of this Indenture that may be inconsistent with any other provision, or to make any other provisions with respect to matters or questions arising hereunder that shall not adversely affect the interests of the Holders or the Obligated Group; (C) To grant or confer upon the Trustee any additional rights, remedies, powers or authority that may lawfully be granted or conferred upon it; (D) To provide for the refunding or advance refunding of any 2012 Bonds; (E) To change any times of day specified in this Indenture for the taking of particular actions; (F) To make any amendment, supplement or change to or modification of the Indenture to appoint a separate Trustee or to remove the Trustee and select and appoint any successor trustee; (G) To secure additional revenues or provide additional security or reserves for payment of the 2012 Bonds; (H) To preserve the exclusion of the interest on the Tax-Exempt Bonds from the gross income of Holders thereof for income tax purposes; (I) To qualify this Indenture under the Trust Indenture Act or corresponding provisions of federal laws from time to time in effect; and (J) To discontinue the book entry only system of registration of 2012 Bonds. The Trustee shall give notice of any such modification or amendment to each Rating Agency then rating the 2012 Bonds provided the Trustee shall incur no liability for failure to do so. Section Supplemental Bond Indentures Requiring Consent of Bondholders. (A) Other than Supplemental Bond Indentures to which reference is made in Section 9.01 hereof and subject to the terms and provisions and limitations contained in this Article and not otherwise, the Issuer and the Holders of a majority of the aggregate principal amount of the 2012 Series A Bonds then Outstanding shall have the rights, from time to time, anything contained herein to the contrary notwithstanding, to consent to and approve the execution by the Issuer and the Trustee of such Supplemental Bond Indentures as shall be deemed necessary and desirable by the Issuer for the purpose of modifying, altering, amending, adding to or rescinding any of the terms or provisions contained herein; provided, however, nothing in this Section shall permit or be construed as permitting a Supplemental Bond Indenture that would: (i) extend the maturity of or time for paying interest on any series of Outstanding 2012 Bonds or reduce the principal amount of or the Redemption Price or rate of interest payable on any series of Outstanding 2012 Bonds without the consent of the Holders of all Outstanding 2012 Bonds of such series; (ii) prefer or give a priority to any 2012 Bond of any series or any other 2012 Bond of any series without the consent of the Holders of each series of 2012 Bonds then Outstanding not receiving such preference or priority; or (iii) reduce the aggregate principal amount of a series of 2012 Bonds then Outstanding, the consent of the Holders of which is required to authorize such Supplemental Bond Indenture, without the consent of the Holders of all 2012 Bonds then Outstanding of such series. (B) If at any time the Issuer shall request the Trustee to enter into a Supplemental Bond Indenture pursuant to this Section, the Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of the proposed execution of such Supplemental Bond Indenture to be mailed by first class mail, postage prepaid, or sent by Electronic Means to all Holders of the 2012 Bonds then Outstanding at their addresses as they appear on the registration books herein provided for. The Trustee shall not, however, be subject to any liability to any Bondholder by reason of its failure to mail, or the failure of such Bondholder to receive, the notice required by this Section, and any such failure shall not affect the validity of such Supplemental Bond Indenture when consented to and approved as provided in this Section. Such notice shall briefly set forth the nature of the proposed Supplemental Bond Indenture and shall state that copies thereof are on file at the designated corporate trust office of the Trustee for inspection by all Bondholders. (C) If within such period, as shall be prescribed by the Obligated Group Agent, following the mailing or electronic transmission of such notice, the Trustee shall receive an instrument or instruments purporting to be executed by the Holders of a majority of the aggregate principal amount of the 2012 Series A Bonds Outstanding specified in subsection 9.02(A) hereof for the proposed Supplemental Bond Indenture, which instrument or instruments shall refer to the proposed Supplemental Bond Indenture described in such notice and shall specifically consent to and approve the execution thereof in substantially the form of the copy thereof to which reference is made in such notice as on file with the Trustee, the Trustee may execute the Supplemental Bond Indenture in substantially such form, without liability or responsibility to any Holder of any 2012 Bond, whether or not such Holder shall have consented thereto. 59 A-16 60

125 (D) Any such consent shall be binding upon the Holders of all of the 2012 Bonds and upon any subsequent Holder of any 2012 Bond and of any 2012 Bond issued in exchange therefor (whether or not such subsequent Holder thereof has notice thereof), unless such consent is revoked in writing by the Holders of such 2012 Bonds giving such consent or by a subsequent Holder thereof by filing with the Trustee, prior to the filing with the Trustee of evidence of the consent by Holders of the required aggregate principal amount of 2012 Bonds to the proposed Supplemental Bond Indenture, such revocation. Upon the filing by the Holders of the required aggregate principal amount of 2012 Bonds of their consents to the Supplemental Bond Indenture, the Trustee shall make and file with the Issuer a written statement to that effect. Such written statement shall be conclusive that such consents have been so filed. (E) If the Holders of the required aggregate principal amount of the Outstanding 2012 Bonds shall have consented to and approved the execution of such Supplemental Bond Indenture as herein provided, no Holder of any 2012 Bond shall have any right to object to the execution thereof, or to object to any of the terms and provisions contained therein or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee or the Issuer from executing the same or from taking any action pursuant to the provisions thereof. Section Effect of Supplemental Bond Indenture. (A) In executing any Supplemental Bond Indenture permitted by this Article, the Trustee shall be entitled to receive and to conclusively rely upon an Opinion of Counsel stating that the execution of such Supplemental Bond Indenture is authorized or permitted hereby and will not adversely affect any exemption from federal income taxation to which the interest on any of the Tax-Exempt Bonds would otherwise be entitled. The Trustee may, but shall not be obligated to, enter into any such Supplemental Bond Indenture that adversely affects the Trustee s own rights, duties or immunities. (B) So long as no Event of Default under the Indenture exists and the Obligated Group is not in default under the Lease, the Master Indenture, the Supplemental Indenture or the 2012 Notes, any Supplemental Bond Indenture under this Article that adversely affects the rights of the Obligated Group under the Lease shall not become effective unless and until the Obligated Group Agent shall have consented in writing to the execution and delivery of such Supplemental Bond Indenture. In this regard, the Trustee shall cause notice of the proposed execution and delivery of any such Supplemental Bond Indenture, together with a copy of the proposed Supplemental Bond Indenture, to be delivered to the Obligated Group Agent at least ten (10) days prior to the date of its proposed execution and delivery in the case of a Supplemental Bond Indenture to which reference is made in Section 9.01 hereof and not later than the date of mailing or providing by Electronic Means of the notice of the proposed execution and delivery in the case of a Supplemental Bond Indenture to which reference is made in Section (C) Upon the execution and delivery of any Supplemental Bond Indenture in accordance with this Article, the provisions hereof and in the 2012 Bonds relating thereto shall be modified in accordance therewith and such Supplemental Bond Indenture shall form a part hereof for all purposes, and every Holder of a 2012 Bond theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. (D) Any 2012 Bond authenticated and delivered after the execution and delivery of any Supplemental Bond Indenture in accordance with this Article may, and if required by the Issuer or the Trustee shall, bear a notation in form approved by the Issuer and Trustee as to any matter provided for in such Supplemental Bond Indenture. If the Issuer shall so determine, new bonds so modified as to conform in the Favorable Opinion of Bond Counsel to any such Supplemental Bond Indenture may be prepared and executed by the Issuer and authenticated and delivered by the Trustee, as authenticating agent, in exchange for and upon surrender of 2012 Bonds then Outstanding. Section Amendments to Lease not Requiring Consent of Bondholders. The Trustee, as assignee of the Issuer s rights thereunder, and the College may, without the consent of or notice to any of the Holders, consent to and join in the execution and delivery of any amendment, change or modification of the Lease as may be required (i) to cure any ambiguity or formal defect or omission therein; (ii) to preserve the exclusion of the interest on the Tax- Exempt Bonds from the gross income of Holders thereof for federal income tax purposes; or (iii) in connection with any other change therein as to which there is filed with the Trustee, the College and the Issuer a No Adverse Effect Opinion. Section 9.05 Amendments to Lease Requiring Consent of Bondholders. (A) Except for amendments, changes or modifications to the Lease referred to in Section 9.04 hereof and in Lease, the Issuer and the Trustee may consent to and join in the execution and delivery of any amendment, change or modification to the Lease only upon the consent of the Holders of a majority of the aggregate principal amount of 2012 Series A Bonds then Outstanding given as provided in this Section; provided, however, no such amendment, change or modification may affect the obligation of the Obligated Group to make payments under the 2012 Notes or reduce the amount of or extend the time for making such payments without the consent of the Holders of all 2012 Bonds then Outstanding. (B) If at any time the Issuer and the Obligated Group Agent shall request the consent of the Trustee and the Holders of a majority of the aggregate principal amount of 2012 Series A Bonds to any such amendment, change or modification to the Lease, the Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of the proposed amendment, change or modification to be given in the same manner as provided in Section 9.02 hereof with respect to Supplemental Bond Indentures. Such notice shall briefly set forth the nature of the proposed amendment, change or modification and shall state that copies thereof are on file at the designated corporate trust office of the Trustee for inspection by all Bondholders. (C) If the consent to and approval of the execution of such amendment, change or modification is given by the Holders of not less than the aggregate principal amount of 2012 Series A Bonds specified in subsection (A) of this Section 9.05 in the manner as provided by Section 9.02 hereof with respect to Supplemental Bond Indentures hereto, but not otherwise, such amendment, change or modification may be consented to, executed and delivered upon the terms and conditions and with like binding effect upon the Holders as provided in Sections 9.02 and 9.03 hereof with respect to Supplemental Bond Indentures hereto Section No Amendment to Lease May Reduce Rent. Under no circumstances shall any amendment to the Lease reduce the amount of rent payable thereunder without the consent of the Holders of all the 2012 Bonds outstanding, except in the event of prepayment or redemption of all or a portion of the principal amount of the 2012 Bonds. [Remainder of Page Intentionally Left Blank] ARTICLE X DEFEASANCE Section Discharge of Indenture. The 2012 Bonds may be paid by the Issuer in any of the following ways, provided that the Issuer also pays or causes to be paid any other sums payable hereunder by the Issuer: (A) by paying or causing to be paid the principal or Redemption Price of and interest on the 2012 Bonds, as and when the same become due and payable; (B) by depositing with the Trustee, in trust, at or before maturity, money or securities in the necessary amount (as provided in Section hereof) to pay or redeem all 2012 Bonds then Outstanding; or (C) by delivering to the Trustee, for cancellation by it, all Bonds then Outstanding. If the Issuer shall also pay or cause to be paid all other sums payable hereunder by the Issuer, then and in that case, upon receipt by the Trustee of an Opinion or Opinions of Counsel to the effect that the obligations under this Indenture and the 2012 Bonds have been discharged. Section Discharge of Liability on 2012 Bonds. Upon the deposit with the Trustee, in trust, at or before maturity, of money or securities in the necessary amount (as provided in Section hereof) to pay or redeem any Outstanding 2012 Bond (whether upon or prior to its maturity or the redemption date of such 2012 Bond); provided that, if such 2012 Bond is to be redeemed prior to maturity, notice of such redemption shall have been given as provided in Article IV or provision satisfactory to the Trustee shall have been made for the giving of such notice, then all liability of the Issuer in respect of such 2012 Bond shall cease, terminate, become void and be completely discharged and satisfied, except only that thereafter the Holder thereof shall be entitled to payment of the principal and interest on or Redemption Price of such 2012 Bond by the Issuer and the Issuer shall remain liable for such payment, but only out of such money or securities deposited with the Trustee as aforesaid for its payment, provided further, however, that the provisions of Section hereof shall apply in all events. Section Deposit of Money or Securities with Trustee. Whenever in this Indenture it is provided or permitted that there be deposited with or held in trust by the Trustee money or securities in the necessary amount to pay or redeem any 2012 Bonds, money or securities so to be deposited or held may include money or securities held by the Trustee in the funds and accounts established pursuant to this Indenture (other than the Rebate Fund) and shall be: (A) lawful money of the United States of America in an amount equal to the principal amount of such 2012 Bonds and all unpaid interest thereon to maturity, except that, in the case of Bonds that are to be redeemed prior to maturity and in respect of which notice of such redemption shall have been given as provided in Article IV or provision satisfactory to the Trustee shall have been made for the giving of such notice, the amount to be deposited or held 63 A-17 64

126 shall be the principal amount or Redemption Price of such 2012 Bonds and all unpaid interest thereon to the redemption date; or (B) Qualified Investments described in clause (1) and (2) of the definition thereof in Section 1.01 hereof (not callable by the Issuer thereof prior to maturity, unless with respect to Qualified Investments described in clause (2) such call by the Issuer was anticipated in the verification report relating to the escrow of which such Qualified Investments are a part) the principal of and interest on which when due (without any income from the reinvestment thereof) will provide money sufficient to pay the principal or Redemption Price of and all unpaid interest to maturity, or to the redemption date, as the case may be, on the 2012 Bonds to be paid or redeemed, as such principal and interest or Redemption Price become due, provided that, in the case of 2012 Bonds that are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as provided in Article IV or provision satisfactory to the Trustee shall have been made for the giving of such notice; provided, in each case, that the Trustee shall have been irrevocably instructed (by the terms of this Indenture or by request of the Issuer) to apply such money to the payment of such principal and interest or Redemption Price on such 2012 Bonds. Notwithstanding any provisions of any other Section of this Indenture which may be contrary to this Section, all money or Government Obligations set aside and held in trust pursuant to this Section for the payment of 2012 Bonds (including any redemption premium thereon) shall be held irrevocably in trust for the Holders of such 2012 Bonds and applied to and used solely for the payment of the particular 2012 Bonds (including any redemption premium thereon) with respect to which such money and Government Obligations have been so set aside in trust. optional redemption date provided for in Section 4.02) shall remain available to the Obligated Group unless, in connection with making the deposits referred to in this Article X, the Obligated Group shall have irrevocably elected to waive any future right to call the 2012 Bonds or portions thereof for redemption prior to maturity. No such redemption or restructuring shall occur, however, unless the Obligated Group Agent shall deliver on behalf of the Issuer to the Trustee (a) Government Obligations and/or cash sufficient to discharge such 2012 Bonds (or portion thereof) on the redemption or maturity date or dates selected, (b) an opinion of an independent certified public accountant verifying that such Government Obligations, together with the expected earnings thereon, and/or cash will be sufficient to provide for the payment of such 2012 Bonds to the redemption or maturity dates, and (c) a Favorable Opinion of Bond Counsel to the effect that such earlier redemption or restructuring will not result in the loss of any exclusion from gross income for purposes of federal income taxation to which interest on the Tax-Exempt Bonds would otherwise be entitled. The Trustee will give written notice of any such redemption or restructuring to the owners of the 2012 Bonds affected thereby. [Remainder of Page Intentionally Left Blank] Section Escheat. Notwithstanding any provisions of this Indenture, any moneys held by the Trustee in trust for the payment of Redemption Price or the principal of, or interest on, any 2012 Bonds and remaining unclaimed for two years (or, if less, one day before such moneys would escheat to the State of West Virginia under then applicable West Virginia law) after the maturity date will be repaid to the Obligated Group Agent. Section When Refunding is Not Permitted. None of the Tax-Exempt Bonds outstanding hereunder may be refunded as aforesaid nor may this Indenture be discharged if under any circumstances such refunding would result in the loss of any exclusion from gross income for purposes of federal income taxation to which interest on such Tax-Exempt Bonds would otherwise be entitled. As a condition precedent to the refunding of any Tax-Exempt Bonds outstanding hereunder, the Trustee shall receive a Favorable Opinion of Bond Counsel to the effect that such Tax-Exempt Bonds would not, by reason of such refunding, be made subject to additional federal income taxation to which such interest would not otherwise be subject and that the conditions precedent to the defeasance of such Tax-Exempt Bonds have been satisfied. Section Restructuring of Defeasance Escrow. Notwithstanding anything to the contrary herein, upon the provision for payment of the 2012 Bonds or a portion thereof as specified in this Article X, the optional redemption provisions of Section 4.02 of this Indenture allowing such 2012 Bonds to be called prior to maturity upon proper notice (notwithstanding provision for the payment of such 2012 Bonds having been made through a date after the first ARTICLE XI MISCELLANEOUS Section Liability of Issuer Limited to Revenues. Notwithstanding anything in this Indenture or in the 2012 Bonds, the Issuer shall not be required to advance any money derived from any source other than the Revenues and other assets pledged under this Indenture for any of the purposes in this Indenture mentioned, whether for the payment of the principal or Redemption Price of or interest on the 2012 Bonds or for any other purpose of this Indenture. Nevertheless, the Issuer may, but shall not be required to, advance for any of the purposes hereof any funds of the Issuer that may be made available to it for such purposes. Section Successor Is Deemed Included in All References to Predecessor. Whenever in this Indenture either the Issuer or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Indenture contained by or on behalf of the Issuer or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. Section Limitation of Rights. With the exception of rights herein expressly conferred, nothing expressed or mentioned in or to be implied from this Indenture or the 2012 Bonds is intended or shall be construed to give any person other than the parties hereto and the Holders of the 2012 Bonds any legal or equitable right, remedy or claim under or in respect to this Indenture or any covenants, conditions and provisions herein contained in this Indenture and all of the covenants, conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of the parties hereto and the Holders of the 2012 Bonds as herein provided. Section Waiver of Notice. Whenever in this Indenture the giving of notice by mail, Electronic Means or otherwise is required, the giving of such notice may be waived in writing by the person entitled to receive such notice and in any such case the giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. Section Destruction of Bonds. Whenever in this Indenture provision is made for the cancellation by the Trustee and the delivery to the Issuer of any 2012 Bonds, the Trustee shall, in lieu of such cancellation and delivery, destroy such 2012 Bonds and deliver a certificate of such destruction to the Issuer. Section Severability of Invalid Provisions. If any one or more of the provisions contained in this Indenture or in the 2012 Bonds shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Indenture and such invalidity, illegality or unenforceability shall not affect any other provision of this Indenture, and this Indenture shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The Issuer hereby declares that it would have entered into this Indenture and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized 67 A-18 the issuance of the 2012 Bonds pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses or phrases of this Indenture may be held illegal, invalid or unenforceable. Section Evidence of Rights of Bondholders. Any request, consent or other instrument required or permitted by this Indenture to be signed and executed by Bondholders may be in any number of concurrent instruments of substantially similar tenor and shall be signed or executed by such Bondholders in person or by an agent or agents duly appointed in writing. Proof of the execution of any such request, consent or other instrument or of a writing appointing any such agent, or of the holding by any person of 2012 Bonds transferable by delivery, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the Trustee and of the Issuer if made in the manner provided in this Section. The fact and date of the execution by any person of any such request, consent or other instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying that the person signing such request, consent or other instrument acknowledged to him the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer. The ownership of 2012 Bonds shall be proved by the bond registration books maintained by the Trustee. Any request, consent, or other instrument or writing of the Holder of any 2012 Bond shall bind every future Holder of the same 2012 Bonds and the Holder of every 2012 Bond issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the Issuer in accordance therewith or reliance thereon. Section Disqualified Bonds. In determining whether the Holders of the requisite aggregate principal amount of 2012 Bonds have concurred in any demand, request, direction, consent or waiver under this Indenture, any 2012 Bonds that are held by or for the account of the Issuer or any member of the Obligated Group, or by any other obligor on the 2012 Bonds, or by any person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Issuer, any member of the Obligated Group or any other obligor on the 2012 Bonds (as detailed in a Certificate of the Issuer and the Obligated Group Agent delivered to the Trustee), shall be disregarded and deemed not to be Outstanding for the purpose of any such determination. The 2012 Bonds so owned that have been pledged in good faith may be regarded as Outstanding for the purposes of this Section if the pledgee shall establish to the satisfaction of the Trustee the pledgee s right to vote such 2012 Bonds and that the pledgee is not a person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Issuer, any member of the Obligated Group or any other obligor on the 2012 Bonds. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Section Money Held for Particular Bonds. The money held by the Trustee for the payment of the interest, principal or Redemption Price due on any date with respect to particular 2012 Bonds (or portions of 2012 Bonds in the case of registered 2012 Bonds redeemed 68

127 in part only) shall, on and after such date and pending such payment, be set aside on its books and held in trust by it for the Holders of the 2012 Bonds entitled thereto, subject, however, to the provisions of Section Section Funds and Accounts. Any fund or account required by this Indenture to be established and maintained by the Trustee may be established and maintained in the accounting records of the Trustee, either as a fund or an account, and may, for the purposes of such records, any audits thereof and any reports or statements with respect thereto, be treated either as a fund or as an account; but all such records with respect to all such funds and accounts shall at all times be maintained in accordance with industry standards to the extent practicable, and with due regard for the requirements of Section 6.06 hereof and for the protection of the security of the 2012 Bonds and the rights of every Holder thereof. The Trustee may establish such additional funds and accounts as it deems necessary to perform its obligations hereunder. Section Notices. It shall be sufficient service of any notice, request, complaint, demand or other paper on the Issuer, the Obligated Group Agent or the Trustee if the same shall be duly mailed by first class mail or by Electronic Means and addressed as follows, or at such other address as a party may designate by notice to the other parties: Section Rights Under the Lease; Bond Trustee as Holder of 2012 Notes. The Issuer agrees that the Trustee, in its own name or in the name of the Issuer, may enforce all rights of the Issuer and all obligations of the College under and pursuant to the Lease for and on behalf of the Bondholders (other than the Unassigned Rights), whether or not the Issuer is in default hereunder. The Trustee shall be considered the holder of the 2012 Notes. Section Applicable Law. This Indenture shall be governed exclusively by the applicable laws of the State. Section Immunity of Officers and Members of Issuer. No recourse shall be had for the payment of the principal of or premium or interest on any of the 2012 Bonds or for any claim based thereon or upon any obligation, covenant or agreement in this Indenture or the Lease contained against any past, present or future officer or member of the Issuer, or of any successor public corporation, as such, either directly or through the Issuer or any successor public 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 officers or members as such is hereby expressly waived and released as a condition of and consideration for the execution of this Indenture and the issuance of such 2012 Bonds. ISSUER: OBLIGATED GROUP AGENT: TRUSTEE: The Philippi Municipal Building Commission 108NorthMainStreet P.O. Box 460 Philippi, West Virginia Attention: Chairman Alderson-Broaddus College, Inc. 101 College Hill Drive P.O. Box 2004 Philippi, West Virginia Attention: President Wells Fargo Bank, N.A. 123 South Broad Street 15 th Floor, Suite 1500 MAC: Y Philadelphia, Pennsylvania Attention: Corporate Trust Group Section Rights of Holders of 2012 Series A Bonds. Notwithstanding anything herein to the contrary, upon payment in full of the 2012 Series A Bonds, any provision contained herein which requires the consent of a majority of the Holders of the 2012 Series A Bonds shall thereafter require the consent of the Holders of a majority of the 2012 Subordinate Bonds then Outstanding. [Signature Page Follows] Section Payments Due on Saturdays, Sundays and Holidays. In any case where the date for any payment on or with respect to the 2012 Bonds shall be a Saturday, a Sunday, a legal holiday or a day on which banking institutions in the domicile of the Trustee are authorized by law to close, then payment shall be made on the next succeeding business day not a Saturday, a Sunday, a legal holiday or a day upon which banking institutions are authorized by law to close, and no additional interest on such payment shall accrue for the intervening period. Section Counterparts. This Indenture may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument IN WITNESS WHEREOF, THE PHILIPPI MUNICIPAL BUILDING COMMISSION and to evidence its acceptance of the trusts hereby created WELLS FARGO BANK, N.A., as Trustee, have caused this Indenture to be executed in their respective corporate names and have caused their corporate seals to be hereunto affixed and attested by their respective officers thereunto duly authorized, all as of the day and year first above written. [SEAL] THE PHILIPPI MUNICIPAL BUILDING COMMISSION By: Its: Chairman STATE OF WEST VIRGINIA COUNTY OF BARBOUR, TO-WIT: The foregoing instrument was acknowledged before me this day of November, 2012, by Howard Swick, the Chairman of THE PHILIPPI MUNICIPAL BUILDING COMMISSION, a public corporation and municipal building commission, on behalf of such public corporation. My commission expires:. [NOTARIAL SEAL] Notary Public Attest: Secretary WELLS FARGO BANK, N.A. By: Its: Authorized Officer COMMONWEALTH OF PENNSYLVANIA COUNTY OF PHILADELPHIA, TO-WIT: The foregoing instrument was acknowledged before me this day of November, 2012, by, the Authorized Officer of WELLS FARGO BANK, N.A., a national banking association, on behalf of such national banking association. My commission expires:. [NOTARIAL SEAL] Notary Public 71 A-19 72

128 EXHIBIT A SITE DESCRIPTION EXHIBIT B FORMSOF2012BONDS [To be inserted] FORM OF 2012 SERIES A BOND Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ( DTC ), to the Issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co. has an interest herein. THIS BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ( SECURITIES ACT, OR ANY OTHER FEDERAL OR STATE LAW, REGULATION OR ORDER. FUTURE SALE OR TRANSFER OF THIS BOND BY THE HOLDER HEREOF SHALL BE SUBJECT TO THE TERMS AND CONDITIONS OF, AMONG OTHER THINGS, THE SECURITIES ACT AND ITS RELATED REGULATIONS, WHICH MAY REQUIRE REGISTRATION OR A REGISTRATION EXEMPTION OF THIS BOND PRIOR TO SUBSEQUENT SALE OR TRANSFER HEREOF. PROSPECTIVE HOLDERS OF THIS BOND ARE REFERRED TO THE SECURITIES ACT AND ITS RELATED REGULATIONS FOR FURTHER INFORMATION RELATED TO THE FUTURE SALE OR TRANSFER OF THIS BOND. $34,275,000 THE PHILIPPI MUNICIPAL BUILDING COMMISSION COLLEGE FACILITIES REFUNDING AND IMPROVEMENT REVENUE BONDS (ALDERSON-BROADDUS COLLEGE, INC.) 2012 SERIES A No. AR-1 $34,275,000 DATED: MATURITY DATE: INTEREST RATE: CUSIP NUMBER: November 30, 2012 October 1, % AA3 REGISTERED OWNER: PRINCIPAL AMOUNT: CEDE&CO. THIRTY-FOUR MILLION TWO HUNDRED SEVENTY-FIVE THOUSAND DOLLARS The Philippi Municipal Building Commission (the Issuer ), a public corporation and municipal building commission of the State of West Virginia, promises to pay to the Registered Owner set forth above, or registered assigns, but solely from the sources and in the manner to which reference is made in this Bond, the Principal Amount set forth above on the Maturity Date set forth above, unless this Bond is called for earlier redemption, and interest on the outstanding Principal Amount until payment has been made or duly provided for, at the rates and on the dates determined as described herein and in the Bond Trust Indenture dated as of November 1, 2012 (the Bond Indenture ), between the Issuer and Wells Fargo Bank, N. A., a national banking association, as bond trustee (the Bond Trustee ). Capitalized terms used herein and not defined shall have the meanings assigned in the Bond Indenture. If any payment on or with respect to this Bond is due on a date that is not a Business Day, then payment shall be made on the next succeeding Business Day, without liability for payment of interest thereon for the intervening period. The term Business Day, means a day that is not a Saturday, Sunday or legal holiday on which banking institutions in the State of West Virginia or in any state in which the office of the Bond Trustee is located are authorized by law to close and on which such entity is in fact closed, or a day on which The New York Stock Exchange is closed. Payment of principal of and interest and any premium on this Bond shall be made to Cede & Co., so long as it is the Registered Owner of this Bond, by wire transfer in immediately available funds. Otherwise, payment of principal of and any premium on this Bond shall be payable by check in lawful money of the United States of America at the Principal Corporate Trust Office of the Bond Trustee. Interest on this Bond shall be paid by check mailed by first class mail to the person in whose name ownership of this Bond is registered (the Holder ) on the bond registration books ( Bond Register ) maintained by the Bond Trustee, as registrar (as defined in the Bond Indenture) for each Interest Payment Date at such Holder s address as it appears on the Bond Register; provided that, upon written request of any Holder of at least $1,000,000 in aggregate principal amount of Bonds, submitted to the Bond Trustee at least one Business Day prior to the Record Date by wire transfer in immediately available funds to an account within the United States of America designated by such Holder. This Bond will not be entitled to any security or benefit under the Bond Indenture or be valid or become obligatory for any purpose until the certificate of authentication has been signed. GENERAL PROVISIONS This Bond is one of a duly authorized issue of The Philippi Municipal Building Commission College Facilities Refunding and Improvement Revenue Bonds (Alderson- Broaddus College, Inc.), 2012 Series A (the Bonds ), issued in the aggregate principal amount of $37,465,000 pursuant to the provisions of Chapter 8, Article 33 of the Code of West Virginia, 1931, as amended, for the purposes of (i) financing the planning, design, acquisition, construction, renovation and equipping of certain capital improvements to the campus of the College, consisting of the construction of a new multi-sport stadium, locker room facilities, stadium seating, concessions, President s box, media boxes, turf field, lights to accommodate night games and practices, site improvements and walkways, new student housing consisting of a 144-bed apartment style student housing building and a 240-bed suite-style student housing building, as well as the renovation and improvement of Benedum Hall, Priestley Hall and Kincaid Hall, together with all other necessary appurtenances and related facilities (the Construction Projects ), (ii) currently refunding the Issuer s College Facilities Revenue Bonds, Series 2010 A (Alderson-Broaddus College, Inc.), dated June 30, 2010, in the original principal amount of $5,000,000, (iii) paying capitalized interest on the Construction Projects, (iv) funding a debt service reserve fund for the Bonds, and (v) paying costs of issuance of the Bonds. The Bonds will be payable from lease rentals payable to the Issuer by Alderson-Broaddus College, Inc., a West Virginia not-for-profit corporation (the College ) pursuant to a Lease Agreement A-20

129 dated as of November 1, 2012, between the Issuer and the College (the Lease Agreement ). The obligations of the College under the Lease Agreement are evidenced and secured by a promissory note (the A Note ) of the Obligated Group issued under the Master Trust Indenture dated as of November 1, 2012, among the College, Alderson-Broaddus Endowment Corporation, a West Virginia not-for-profit corporation ( ABEC ), and Wells Fargo Bank, N. A., a national banking association, as Master Trustee (as amended and supplemented, the Master Indenture ), including as amended and supplemented by a Supplemental Master Trust Indenture , dated as of November 1, 2012, between the College, as Obligated Group Agent, and the Master Trustee. In the Bond Indenture, the Issuer has assigned the Trust Estate to the Bond Trustee to provide for the payment of the principal of and interest on the Bonds. THIS BOND AND THE INTEREST HEREON IS A SPECIAL AND LIMITED OBLIGATION OF THE ISSUER AND IS PAYABLE SOLELY OUT OF THE REVENUES AND RENTALS DERIVED FROM, OR IN CONNECTION WITH, THE LEASE AGREEMENT AND THE FUNDS PLEDGED THEREFOR, AND THE ISSUER SHALL NOT BE OBLIGATED TO PAY THE BONDS OR THE INTEREST THEREON, EXCEPT FROM THE SPECIAL FUNDS DERIVED FROM THE BOND INDENTURE. THIS BOND AND ANY OTHER OBLIGATIONS, AGREEMENTS, COVENANTS OR REPRESENTATIONS CONTAINED IN THE BOND INDENTURE, SHALL NEVER CONSTITUTE AN INDEBTEDNESS OF THE ISSUER, THE CITY OF PHILIPPI OR THE STATE OF WEST VIRGINIA WITHIN THE MEANING OF ANY CONSTITUTIONAL PROVISIONS OR STATUTORY LIMITATION AND SHALL NEVER CONSTITUTE OR GIVE RISE TO PECUNIARY LIABILITY OF THE ISSUER, THE CITY OF PHILIPPI OR THE STATE OF WEST VIRGINIA. NEITHER THIS BOND NOR THE INTEREST PAYABLE HEREON SHALL BE A CHARGE AGAINST OR A PLEDGE OF THE FAITH AND CREDIT OR TAXING POWER, IF ANY, OF THE ISSUER, THE CITY OF PHILIPPI OR THE STATE OF WEST VIRGINIA OR ANY POLITICAL SUBDIVISION THEREOF. THE HOLDER OF THIS BOND SHALL HAVE NO RIGHT TO HAVE TAXES LEVIED BY THE LEGISLATURE OF THE STATE OF WEST VIRGINIA OR THE TAXING AUTHORITY, IF ANY, OF THE ISSUER OR THE CITY OF PHILIPPI FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE BOND. No recourse shall be had for the payment of the principal of or interest on this Bond or for any claim based thereon or on the Bond Indenture against any past, present of future member, officer, agent or employee of the Issuer or any person executing this Bond, all such liability, if any, being hereby expressly waived and released by every Holder of this Bond by the acceptance hereof, as provided in the Bond Indenture. All notes issued under the Master Indenture are joint and several obligations of the Members of the Obligated Group. All notes issued under the Master Indenture are secured by a pledge of the Revenues of Obligated Group. The Master Indenture restricts Members of the Obligated Group with respect to the incurrence of additional indebtedness, transferring assets outside of the Obligated Group and encumbering assets of the Obligated Group, requires maintenance of a debt service coverage ratio and contains other business covenants. The principal of and interest and any premium on the Bonds are payable solely from the Revenues and funds derived by the Bond Trustee under or pursuant to the Lease Agreement and the A Note, which Revenues and funds have been pledged and assigned to the Bond Trustee to secure payment of the Bonds and other amounts due under the Bond Indenture, all at the times and subject to the conditions set forth in the Bond Indenture. Reference is made to the Lease Agreement, the Bond Indenture and the Master Indenture, for a more complete description of the facilities financed with proceeds of the Bonds, the provisions, among others, with respect to the nature and extent of the security for the Bonds, the rights, duties and obligations of the Issuer, the Bond Trustee, the Master Trustee and the Holders of the Bonds, and the terms and conditions upon which the Bonds are issued and secured. Each Holder assents, by its acceptance of this Bond, to all of the provisions of the Bond Indenture. ALL PROVISIONS OF THE BOND INDENTURE AND THE LEASE AGREEMENT ARE INCORPORATED HEREIN AS IF SAID PROVISIONS WERE SET FORTH IN FULL HEREIN AND FOR ALL PURPOSES SHALL HAVE THE SAME EFFECT AS IF SET FORTH HEREIN. PROVISIONS OF THE BOND INDENTURE AND THE LEASE AGREEMENT SHALL CONTROL TO THE EXTENT INCONSISTENT WITH PROVISIONS OF THIS BOND. Copies of the Lease Agreement, the Bond Indenture, the Master Indenture and the A Note are on file in the Principal Corporate Trust Office of the Bond Trustee, at 123 South BroadStreet,15 th Floor, Suite 1500, MAC: Y , Philadelphia, Pennsylvania REDEMPTION Optional Redemption The 2012 Bonds maturing on or after October 1, 2023 are subject to redemption prior to their maturity, at the option of the Obligated Group Agent on or after October 1, 2022, in whole on any date or in part on any Interest Payment Date in such order of maturity as determined by the Obligated Group Agent at a Redemption Price equal to the principal amount of Bonds called for redemption, without premium, together with any interest accrued to the redemption date. Optional Redemption as a Result of the Sale of Bond Financed Property The Bonds are also are also subject to redemption prior to their maturity, in whole or in part, by the Issuer at the option of the Obligated Group Agent and upon its written direction, on the earliest practicable date after (A) the Board of the College determines in good faith that continued operation of the property financed with the proceeds of the Bonds ( Bond Financed Property ) (or portions thereof) is not financially feasible or is otherwise disadvantageous to the College; (B) as a result thereof, the College plans to sell, lease or otherwise dispose of all or a portion of the Bond Financed Property to a person or entity unrelated to the College; and (C) there is delivered to the Issuer and the Trustee a written statement of Bond Counsel to the effect that, unless the Bonds are redeemed or retired in the amount specified either prior to or concurrently with such sale, lease or other disposition, or on a subsequent date prior to the first date on which the Bonds are subject to redemption at the option of the Issuer at the direction of the Obligated Group Agent, such Bond Counsel will be unable, absent payment by the Obligated Group Agent or the Issuer to the IRS, to render an unqualified opinion that such sale, lease or other disposition of all or a portion of the Bond Financed Property will not adversely affect the validity of any Bonds or any exemption from federal income taxation to which the interest on such Bonds would otherwise be entitled. Any such redemption shall be at a Redemption Price equal to 100% of the principal amount thereof plus accrued interest to the redemption date. Optional Redemption for Insurance and Condemnation Proceeds Outstanding Bonds are also subject to redemption prior to their respective stated Maturity Date, by the Issuer, at the option of the Obligated Group Agent, as a whole or in part on any day from moneys required to be deposited in the Special Redemption Account pursuant to the Bond Indenture, at a Redemption Price equal to the principal amount of such Bonds. Mandatory Sinking Fund Redemption The Bonds are subject to mandatory redemption, prior to the stated Maturity Date, in part, from Mandatory Sinking Account Payments deposited in the Principal Fund, on October 1 in the years set forth below. The Redemption Price will be 100% of the principal amount of the Bonds to be so redeemed plus accrued interest, if any, to the redemption date, without premium. On the following dates, the Bonds shall be redeemed or paid in the amounts set forth opposite each such date (each a Mandatory Sinking Account Payment Date ): Term Bonds Due October 1, 2044 Year Amount ($) , , , , , , , , , , , , , , , , ,035, ,115, ,205, ,305, *Denotes final maturity ,410, ,525, ,645, ,775, ,925, ,080, ,445, ,425, ,620, * 2,835, Mandatory Redemption from Excess Funds in Project Fund following Completion of Construction Period In accordance with Section 3.04(C) of the Bond Indenture, any balance remaining in the Project Fund upon completion of the Construction Projects shall be transferred to the Principal Fund and applied towards the redemption of the 2012 Series A Bonds on the next ensuing Interest Payment Date, at a Redemption Price equal to the principal amount 2012 Series A Bonds being redeemed plus interest accrued to the redemption date. Mandatory Redemption upon a Determination of Taxability The Bonds are subject to mandatory redemption prior to their maturity upon a Determination of Taxability. If so called for redemption upon a Determination of Taxability, the Bonds shall be redeemed by the Issuer in whole at any time within forty (40) days after such Determination of Taxability, at 105% of the aggregate principal amount of such Bonds then Outstanding, plus accrued interest to the redemption date. If an Event of Default as defined in the Bond Indenture shall occur, the principal of and interest on this Bond may be declared due and payable in the manner and with the effect provided in the Bond Indenture. The Bond Indenture permits a discharge and satisfaction of the pledge of the Revenues and other money and securities pledged pursuant to the Bond Indenture to secure Bonds upon payment to the Bond Trustee of lawful money of the United States or certain Qualified Investments as described in clauses (1) and (2) of the definition of Qualified Investments set forth in the Bond Indenture in an amount that, together with interest thereon, would be sufficient to provide money for the payment when due of the principal of and interest due on those Bonds, whether at maturity or upon prior redemption, on and prior to the redemption or maturity date thereof, as the case may be. The Holder of this Bond shall not have any right to institute any suit, action or proceeding in equity or at law for the execution of any trust under the Bond Indenture, or for any other remedy under the Bond Indenture, except as otherwise expressly provided for in the Bond Indenture. A-21

130 The Bond Indenture contains provisions permitting the Issuer to adopt Supplemental Bond Indentures modifying or amending the Bond Indenture and the rights and obligations of the Issuer and the Holders of the Bonds thereunder, in some cases without the consent of the Holders and in some cases with the written consent of the Holders of a majority of the aggregate principal amount of the 2012 Series A Bonds outstanding thereunder; provided, however, that nothing in this Section shall permit or be construed as permitting a Supplemental Bond Indenture that would: (i) extend the stated maturity of or time for paying interest on any Bond or reduce the principal amount of or the Redemption Price or rate of interest payable on any Bond without the consent of the Holders of all Outstanding Bonds; (ii) prefer or give a priority to any Bond over any other Bond without the consent of the Holder of each Bond then Outstanding not receiving such preference or priority; or (iii) reduce the aggregate principal amount of Bonds then Outstanding, the consent of the Holders of which is required to authorize such Supplemental Bond Indenture, without the consent of the Holders of all Bonds then Outstanding. governmental charge required to be paid with respect to such exchange. The Bond Trustee shall not be required to exchange any Bond during the 15 days immediately preceding (1) the date on which notice of redemption is given or (2) the date on which Bonds will be selected for redemption. It is hereby certified and recited by the Issuer that all conditions, acts, and things required by the statutes of the State of West Virginia and the Bond Indenture to exist, to have happened and to have been performed precedent to or in the issuance of the Bonds and of this Bond in order to make the Bonds and this Bond the legal, valid and binding special obligations of the Issuer, in accordance with their terms, exist, have happened and have been performed in regular and due form as required by law, and that the issuance of the Bonds is within every debt limit and other limit upon the Issuer prescribed by law or by the Bond Indenture for the Issuer. [SIGNATURE PAGE FOLLOWS] This Bond is a negotiable instrument, subject, however, to the provisions for registration and transfer contained in the Bond Indenture and in this Bond. Subject to the provisions of Section 2.13 of the Bond Indenture, any Bond may, in accordance with its terms, be transferred, upon the bond registration books required to be kept pursuant to the provisions of the Bond Indenture, by the Person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such registered Bond for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form approved by the Bond Trustee. Whenever any Bond shall be surrendered for transfer, the Issuer shall execute and the Bond Trustee shall authenticate and deliver a new Bond for a like aggregate principal amount of the same maturity. The Bond Trustee shall require the Bondholder requesting such transfer to pay any cost, tax or other governmental charge required to be paid with respect to such transfer. The Issuer and the Bond Trustee shall be entitled to treat the Person in whose name any Bond is registered as the Holder thereof for all purposes of this Bond Indenture and any applicable laws, notwithstanding any notice to the contrary received by the Bond Trustee or the Issuer; and the Issuer and the Bond Trustee shall have no responsibility for transmitting payments to, communicating with, notifying or otherwise dealing with any beneficial holders of the Bonds. Neither the Issuer nor the Bond Trustee will have any responsibility or obligations, legal or otherwise, to the beneficial holders or to any other party, including the Securities Depository or its successor (or any substitute depository or its successor). The Bonds are issuable as fully registered Bonds in denominations of $5,000 and any integral multiple thereof. Registered Bonds may, at the option of the Holder thereof, be exchanged for a like aggregate principal amount of Bonds of authorized denominations. The Bond Trustee shall require the Bondholder requesting such exchange to pay any cost, tax or other IN WITNESS OF THE ABOVE, the Issuer has caused this Bond to be signed in the name of the Issuer by the manual signature of its Chairman, and its corporate seal to be impressed on this Bond and attested by the manual signature of its Secretary, and has caused this Bond to be dated as of the date shown above. CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds described in the Bond Indenture. THE PHILIPPI MUNICIPAL BUILDING COMMISSION WELLS FARGO BANK, N. A., as Bond Trustee By Its: Chairman By Its: Authorized Officer [SEAL] ATTEST: Secretary Date of Authentication: November 30, 2012 A-22

131 ASSIGNMENT For value received, the undersigned sells, assigns and transfers unto the within Bond, and does hereby irrevocably constitute and appoint attorney to transfer said Bond on the books kept for registration of the within Bond with full power of substitution in the premises. Dated: Signature Guaranteed: Signature: The signature guarantee must be made by a guarantor institution participating in the Securities Transfer Agents Medallion Program or in another guarantee program acceptable to the Registrar. NOTICE: The assignor s signature to this assignment must correspond with the name as it appears upon the face of this Bond in every particular, without alteration or any change whatsoever. FORM OF 2012 SERIES B BOND Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ( DTC ), to the Issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co. has an interest herein. THIS BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ( SECURITIES ACT, OR ANY OTHER FEDERAL OR STATE LAW, REGULATION OR ORDER. FUTURE SALE OR TRANSFER OF THIS BOND BY THE HOLDER HEREOF SHALL BE SUBJECT TO THE TERMS AND CONDITIONS OF, AMONG OTHER THINGS, THE SECURITIES ACT AND ITS RELATED REGULATIONS, WHICH MAY REQUIRE REGISTRATION OR A REGISTRATION EXEMPTION OF THIS BOND PRIOR TO SUBSEQUENT SALE OR TRANSFER HEREOF. PROSPECTIVE HOLDERS OF THIS BOND ARE REFERRED TO THE SECURITIES ACT AND ITS RELATED REGULATIONS FOR FURTHER INFORMATION RELATED TO THE FUTURE SALE OR TRANSFER OF THIS BOND.. $2,510,000 THE PHILIPPI MUNICIPAL BUILDING COMMISSION COLLEGE FACILITIES SUBORDINATE LIEN REFUNDING REVENUE BONDS (ALDERSON-BROADDUS COLLEGE, INC.) 2012 SERIES B No. BR-1 $2,510,000 DATED: MATURITY DATE: INTEREST RATE: CUSIP NUMBER: November 30, 2012 October 1, % AB1 REGISTERED OWNER: CEDE&CO. PRINCIPAL AMOUNT: TWO MILLION FIVE HUNDRED TEN THOUSAND DOLLARS The Philippi Municipal Building Commission (the Issuer ), a public corporation and municipal building commission of the State of West Virginia, promises to pay to the Registered Owner set forth above, or registered assigns, but solely from the sources and in the manner to which reference is made in this Bond, the Principal Amount set forth above on the Maturity Date set forth above, unless this Bond is called for earlier redemption, and interest on the outstanding Principal Amount until payment has been made or duly provided for, at the rates and on the dates determined as described herein and in the Bond Trust Indenture dated as of November 1, 2012 (the Bond Indenture ), between the Issuer and Wells Fargo Bank, N. A., a national banking association, as bond trustee (the Bond Trustee ). Capitalized terms used herein and not defined shall have the meanings assigned in the Bond Indenture. If any payment on or with respect to this Bond is due on a date that is not a Business Day, then payment shall be made on the next succeeding Business Day, without liability for payment of interest thereon for the intervening period. The term Business Day, means a day that is not a Saturday, Sunday or legal holiday on which banking institutions in the State of West Virginia or in any state in which the office of the Bond Trustee is located are authorized by law to close and on which such entity is in fact closed, or a day on which The New York Stock Exchange is closed. Payment of principal of and interest and any premium on this Bond shall be made to Cede & Co., so long as it is the Registered Owner of this Bond, by wire transfer in immediately available funds. Otherwise, payment of principal of and any premium on this Bond shall be payable by check in lawful money of the United States of America at the Principal Corporate Trust Office of the Bond Trustee. Interest on this Bond shall be paid by check mailed by first class mail to the person in whose name ownership of this Bond is registered (the Holder ) on the bond registration books ( Bond Register ) maintained by the Bond Trustee, as registrar (as defined in the Bond Indenture) for each Interest Payment Date at such Holder s address as it appears on the Bond Register; provided that, upon written request of any Holder of at least $1,000,000 in aggregate principal amount of Bonds, submitted to the Bond Trustee at least one Business Day prior to the Record Date by wire transfer in immediately available funds to an account within the United States of America designated by such Holder. This Bond will not be entitled to any security or benefit under the Bond Indenture or be valid or become obligatory for any purpose until the certificate of authentication has been signed. GENERAL PROVISIONS This Bond is one of a duly authorized issue of The Philippi Municipal Building Commission College Facilities Subordinate Lien Refunding Revenue Bonds (Alderson-Broaddus College, Inc.), 2012 Series B (the Bonds ), issued in the aggregate principal amount of $37,465,000 pursuant to the provisions of Chapter 8, Article 33 of the Code of West Virginia, 1931, as amended, for the purposes of (i) financing the planning, design, acquisition, construction, renovation and equipping of certain capital improvements to the campus of the College, consisting of the construction of a new multi-sport stadium, locker room facilities, stadium seating, concessions, President s box, media boxes, turf field, lights to accommodate night games and practices, site improvements and walkways, new student housing consisting of a 144-bed apartment style student housing building and a 240-bed suite-style student housing building, as well as the renovation and improvement of Benedum Hall, Priestley Hall and Kincaid Hall, together with all other necessary appurtenances and related facilities (the Construction Projects ), (ii) currently refunding the Issuer s College Facilities Revenue Bonds, Series 2010 A (Alderson-Broaddus College, Inc.), dated June 30, 2010, in the original principal amount of $5,000,000, (iii) paying capitalized interest on the Construction Projects, (iv) funding a debt service reserve fund for the 2012 Series A Bonds, and (v) paying costs of issuance of the Bonds. The Bonds will be payable from lease rentals payable to the Issuer by Alderson- Broaddus College, Inc., a West Virginia not-for-profit corporation (the College ) pursuant to a Lease Agreement dated as of November 1, 2012, between the Issuer and the College (the Lease Agreement ). The obligations of the College under the Lease Agreement are evidenced and secured by a promissory note (the B Note ) of the Obligated Group issued under the Master Trust Indenture dated as of November 1, 2012, among the College, Alderson-Broaddus Endowment Corporation, a West Virginia not-for-profit corporation ( ABEC ), and Wells Fargo Bank, N. A., a national banking association, as Master Trustee (as amended and supplemented, the Master Indenture ), including as amended and supplemented by a Supplemental Master Trust Indenture , dated as of November 1, 2012, between the College, as Obligated Group Agent, and the Master Trustee. In the Bond Indenture, the Issuer has assigned the Trust Estate to the Bond Trustee to provide for the payment of the principal of and interest on the Bonds. THIS BOND AND THE INTEREST HEREON IS A SPECIAL AND LIMITED OBLIGATION OF THE ISSUER AND IS PAYABLE SOLELY OUT OF THE REVENUES AND RENTALS DERIVED FROM, OR IN CONNECTION WITH, THE LEASE AGREEMENT AND THE FUNDS PLEDGED THEREFOR, AND THE ISSUER SHALL NOT BE OBLIGATED TO PAY THE BONDS OR THE INTEREST THEREON, EXCEPT FROM THE SPECIAL FUNDS DERIVED FROM THE BOND INDENTURE. THIS BOND AND ANY OTHER OBLIGATIONS, AGREEMENTS, COVENANTS OR REPRESENTATIONS CONTAINED IN THE BOND INDENTURE, SHALL NEVER CONSTITUTE AN INDEBTEDNESS OF THE ISSUER, THE CITY OF PHILIPPI OR THE STATE OF WEST VIRGINIA WITHIN THE MEANING OF ANY CONSTITUTIONAL PROVISIONS OR STATUTORY LIMITATION AND SHALL NEVER CONSTITUTE OR GIVE RISE TO PECUNIARY LIABILITY OF THE ISSUER, THE CITY OF PHILIPPI OR THE STATE OF WEST VIRGINIA. NEITHER THIS BOND NOR THE INTEREST PAYABLE HEREON SHALL BE A CHARGE AGAINST OR A PLEDGE OF THE FAITH AND CREDIT OR TAXING POWER, IF ANY, OF THE ISSUER, THE CITY OF PHILIPPI OR THE STATE OF WEST VIRGINIA OR ANY POLITICAL SUBDIVISION THEREOF. THE HOLDER OF THIS BOND SHALL HAVE NO RIGHT TO HAVE TAXES LEVIED BY THE LEGISLATURE OF THE STATE OF WEST VIRGINIA OR THE TAXING AUTHORITY, IF ANY, OF THE ISSUER OR THE CITY OF PHILIPPI FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE BOND. No recourse shall be had for the payment of the principal of or interest on this Bond or for any claim based thereon or on the Bond Indenture against any past, present of future member, officer, agent or employee of the Issuer or any person executing this Bond, all such liability, if any, being hereby expressly waived and released by every Holder of this Bond by the acceptance hereof, as provided in the Bond Indenture. All notes issued under the Master Indenture are joint and several obligations of the Members of the Obligated Group. All notes issued under the Master Indenture are secured by a A-23

132 pledge of the Revenues of Obligated Group. The Master Indenture restricts Members of the Obligated Group with respect to the incurrence of additional indebtedness, transferring assets outside of the Obligated Group and encumbering assets of the Obligated Group, requires maintenance of a debt service coverage ratio and contains other business covenants. The principal of and interest and any premium on the Bonds are payable solely from the Revenues and funds derived by the Bond Trustee under or pursuant to the Lease Agreement and the B Note, which Revenues and funds have been pledged and assigned to the Bond Trustee to secure payment of the Bonds and other amounts due under the Bond Indenture, all at the times and subject to the conditions set forth in the Bond Indenture. THIS BOND IS SECURED BY AND PAYABLE FROM A LIEN ON AND PLEDGE OF THE TRUST ESTATE UNDER THE BOND INDENTURE SUBORDINATE IN PRIORITY TO THE LIEN ON AND PLEDGE OF THE TRUST ESTATE THAT SECURES THE ISSUER S COLLEGE FACILITIES REFUNDING AND IMPROVEMENT REVENUE BONDS, 2012 SERIES A, AND ON PARITY WITH THE ISSUER S COLLEGE FACILITIES SUBORDINATE LIEN REFUNDING AND IMPROVEMENT REVENUE BONDS, 2012 SERIES C. Reference is made to the Lease Agreement, the Bond Indenture and the Master Indenture, for a more complete description of the facilities financed with proceeds of the Bonds, the provisions, among others, with respect to the nature and extent of the security for the Bonds, the rights, duties and obligations of the Issuer, the Bond Trustee, the Master Trustee and the Holders of the Bonds, and the terms and conditions upon which the Bonds are issued and secured. Each Holder assents, by its acceptance of this Bond, to all of the provisions of the Bond Indenture. ALL PROVISIONS OF THE BOND INDENTURE AND THE LEASE AGREEMENT ARE INCORPORATED HEREIN AS IF SAID PROVISIONS WERE SET FORTH IN FULL HEREIN AND FOR ALL PURPOSES SHALL HAVE THE SAME EFFECT AS IF SET FORTH HEREIN. PROVISIONS OF THE BOND INDENTURE AND THE LEASE AGREEMENT SHALL CONTROL TO THE EXTENT INCONSISTENT WITH PROVISIONS OF THIS BOND. Copies of the Lease Agreement, the Bond Indenture, the Master Indenture and the B Note are on file in the Principal Corporate Trust Office of the Bond Trustee, at 123 South BroadStreet,15 th Floor, Suite 1500, MAC: Y , Philadelphia, Pennsylvania REDEMPTION Optional Redemption The 2012 Bonds maturing on or after October 1, 2023 are subject to redemption prior to their maturity, at the option of the Obligated Group Agent on or after October 1, 2022, in whole on any date or in part on any Interest Payment Date in such order of maturity as determined by the Obligated Group Agent at a Redemption Price equal to the principal amount of Bonds called for redemption, without premium, together with any interest accrued to the redemption date. Optional Redemption as a Result of the Sale of Bond Financed Property The Bonds are also are also subject to redemption prior to their maturity, in whole or in part, by the Issuer at the option of the Obligated Group Agent and upon its written direction, on the earliest practicable date after (A) the Board of the College determines in good faith that continued operation of the property financed with the proceeds of the Bonds ( Bond Financed Property ) (or portions thereof) is not financially feasible or is otherwise disadvantageous to the College; (B) as a result thereof, the College plans to sell, lease or otherwise dispose of all or a portion of the Bond Financed Property to a person or entity unrelated to the College; and (C) there is delivered to the Issuer and the Trustee a written statement of Bond Counsel to the effect that, unless the Bonds are redeemed or retired in the amount specified either prior to or concurrently with such sale, lease or other disposition, or on a subsequent date prior to the first date on which the Bonds are subject to redemption at the option of the Issuer at the direction of the Obligated Group Agent, such Bond Counsel will be unable, absent payment by the Obligated Group Agent or the Issuer to the IRS, to render an unqualified opinion that such sale, lease or other disposition of all or a portion of the Bond Financed Property will not adversely affect the validity of any Bonds or any exemption from federal income taxation to which the interest on such Bonds would otherwise be entitled. Any such redemption shall be at a Redemption Price equal to 100% of the principal amount thereof plus accrued interest to the redemption date. Optional Redemption for Insurance and Condemnation Proceeds Outstanding Bonds are also subject to redemption prior to their respective stated Maturity Date, by the Issuer, at the option of the Obligated Group Agent, as a whole or in part on any day from moneys required to be deposited in the Special Redemption Account pursuant to the Bond Indenture, at a Redemption Price equal to the principal amount of such Bonds. Mandatory Sinking Fund Redemption The Bonds are subject to mandatory redemption, prior to the stated Maturity Date, in part, from Mandatory Sinking Account Payments deposited in the Principal Fund, on October 1 in the years set forth below. The Redemption Price will be 100% of the principal amount of the Bonds to be so redeemed plus accrued interest, if any, to the redemption date, without premium. On the following dates, the Bonds shall be redeemed or paid in the amounts set forth opposite each such date (each a Mandatory Sinking Account Payment Date ): Term Bonds Due October 1, 2044 Year Amount ($) , , , , , , , *Denotes final maturity , , , , , , , , , , , , , , , , , , , , * 205, Mandatory Redemption upon a Determination of Taxability The Bonds are subject to mandatory redemption prior to their maturity upon a Determination of Taxability. If so called for redemption upon a Determination of Taxability, the Bonds shall be redeemed by the Issuer in whole at any time within forty (40) days after such Determination of Taxability, at 105% of the aggregate principal amount of such Bonds then Outstanding, plus accrued interest to the redemption date. If an Event of Default as defined in the Bond Indenture shall occur, the principal of and interest on this Bond may be declared due and payable in the manner and with the effect provided in the Bond Indenture. The Bond Indenture permits a discharge and satisfaction of the pledge of the Revenues and other money and securities pledged pursuant to the Bond Indenture to secure Bonds upon payment to the Bond Trustee of lawful money of the United States or certain Qualified Investments as described in clauses (1) and (2) of the definition of Qualified Investments set forth in the Bond Indenture in an amount that, together with interest thereon, would be sufficient to provide money for the payment when due of the principal of and interest due on those Bonds, whether at maturity or upon prior redemption, on and prior to the redemption or maturity date thereof, as the case may be. The Holder of this Bond shall not have any right to institute any suit, action or proceeding in equity or at law for the execution of any trust under the Bond Indenture, or for any other remedy under the Bond Indenture, except as otherwise expressly provided for in the Bond Indenture. The Bond Indenture contains provisions permitting the Issuer to adopt Supplemental Bond Indentures modifying or amending the Bond Indenture and the rights and obligations of the Issuer and the Holders of the Bonds thereunder, in some cases without the consent of the Holders and in some cases with the written consent of the Holders of a majority of the aggregate principal amount of the 2012 Series A Bonds outstanding thereunder; provided, however, that nothing in this Section shall permit or be construed as permitting a Supplemental Bond Indenture that would: (iii) extend the stated maturity of or time for paying interest on any Bond or reduce the principal amount of or the Redemption Price or rate of interest payable on any Bond without the consent of the Holders of all Outstanding Bonds; (iv) prefer or give a priority to any Bond over any other Bond without the consent of the Holder of each Bond then Outstanding not receiving such preference or priority; or (iii) reduce the aggregate principal amount of Bonds then Outstanding, the consent of the Holders of which is required to authorize such Supplemental Bond Indenture, without the consent of the Holders of all Bonds then Outstanding. This Bond is a negotiable instrument, subject, however, to the provisions for registration and transfer contained in the Bond Indenture and in this Bond. Subject to the provisions of Section 2.13 of the Bond Indenture, any Bond may, in accordance with its terms, be transferred, upon the bond registration books required to be kept pursuant to the provisions of the Bond Indenture, by the Person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such registered Bond for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form approved by the Bond Trustee. Whenever any Bond shall be surrendered for transfer, the Issuer shall execute and the Bond Trustee shall authenticate and deliver a new Bond for a like aggregate principal amount of the same maturity. The Bond Trustee shall require the Bondholder requesting such transfer to pay any cost, tax or other governmental charge required to be paid with respect to such transfer. The Issuer and the Bond Trustee shall be entitled to treat the Person in whose name any Bond is registered as the Holder thereof for all purposes of this Bond Indenture and any applicable laws, notwithstanding any notice to the contrary received by the Bond Trustee or the Issuer; and the Issuer and the Bond Trustee shall have no responsibility for transmitting payments to, communicating with, notifying or otherwise dealing with any beneficial holders of the Bonds. Neither the Issuer nor the Bond Trustee will have any responsibility or obligations, legal or otherwise, to the beneficial holders or to any other party, including the Securities Depository or its successor (or any substitute depository or its successor). The Bonds are issuable as fully registered Bonds in denominations of $5,000 and any A-24

133 integral multiple thereof. Registered Bonds may, at the option of the Holder thereof, be exchanged for a like aggregate principal amount of Bonds of authorized denominations. The Bond Trustee shall require the Bondholder requesting such exchange to pay any cost, tax or other governmental charge required to be paid with respect to such exchange. The Bond Trustee shall not be required to exchange any Bond during the 15 days immediately preceding (1) the date on which notice of redemption is given or (2) the date on which Bonds will be selected for redemption. IN WITNESS OF THE ABOVE, the Issuer has caused this Bond to be signed in the name of the Issuer by the manual signature of its Chairman, and its corporate seal to be impressed on this Bond and attested by the manual signature of its Secretary, and has caused this Bond to be dated as of the date shown above. THE PHILIPPI MUNICIPAL BUILDING COMMISSION It is hereby certified and recited by the Issuer that all conditions, acts, and things required by the statutes of the State of West Virginia and the Bond Indenture to exist, to have happened and to have been performed precedent to or in the issuance of the Bonds and of this Bond in order to make the Bonds and this Bond the legal, valid and binding special obligations of the Issuer, in accordance with their terms, exist, have happened and have been performed in regular and due form as required by law, and that the issuance of the Bonds is within every debt limit and other limit upon the Issuer prescribed by law or by the Bond Indenture for the Issuer. [SEAL] ATTEST: By Its: Chairman [SIGNATURE PAGE FOLLOWS] Secretary CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds described in the Bond Indenture. WELLS FARGO BANK, N. A., as Bond Trustee ASSIGNMENT For value received, the undersigned sells, assigns and transfers unto the within Bond, and does hereby irrevocably constitute and appoint attorney to transfer said Bond on the books kept for registration of the within Bond with full power of substitution in By Its: Authorized Officer the premises. Dated: Signature Guaranteed: Signature: Date of Authentication: November 30, 2012 The signature guarantee must be made by a guarantor institution participating in the Securities Transfer Agents Medallion Program or in another guarantee program acceptable to the Registrar. NOTICE: The assignor s signature to this assignment must correspond with the name as it appears upon the face of this Bond in every particular, without alteration or any change whatsoever. A-25

134 FORM OF 2012 SERIES C BOND Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ( DTC ), to the Issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co. has an interest herein. THIS BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ( SECURITIES ACT, OR ANY OTHER FEDERAL OR STATE LAW, REGULATION OR ORDER. FUTURE SALE OR TRANSFER OF THIS BOND BY THE HOLDER HEREOF SHALL BE SUBJECT TO THE TERMS AND CONDITIONS OF, AMONG OTHER THINGS, THE SECURITIES ACT AND ITS RELATED REGULATIONS, WHICH MAY REQUIRE REGISTRATION OR A REGISTRATION EXEMPTION OF THIS BOND PRIOR TO SUBSEQUENT SALE OR TRANSFER HEREOF. PROSPECTIVE HOLDERS OF THIS BOND ARE REFERRED TO THE SECURITIES ACT AND ITS RELATED REGULATIONS FOR FURTHER INFORMATION RELATED TO THE FUTURE SALE OR TRANSFER OF THIS BOND.. $680,000 THE PHILIPPI MUNICIPAL BUILDING COMMISSION COLLEGE FACILITIES SUBORDINATE LIEN REFUNDING AND IMPROVEMENT REVENUE BONDS (ALDERSON-BROADDUS COLLEGE, INC.) 2012 SERIES C (TAXABLE) No. CR-1 $680,000 DATED: MATURITY DATE: INTEREST RATE: CUSIP NUMBER: November 30, 2012 October 1, % AC9 REGISTERED OWNER: PRINCIPAL AMOUNT: CEDE&CO. SIX HUNDRED EIGHTY THOUSAND DOLLARS The Philippi Municipal Building Commission (the Issuer ), a public corporation and municipal building commission of the State of West Virginia, promises to pay to the Registered Owner set forth above, or registered assigns, but solely from the sources and in the manner to which reference is made in this Bond, the Principal Amount set forth above on the Maturity Date set forth above, unless this Bond is called for earlier redemption, and interest on the outstanding Principal Amount until payment has been made or duly provided for, at the rates and on the dates determined as described herein and in the Bond Trust Indenture dated as of November 1, 2012 (the Bond Indenture ), between the Issuer and Wells Fargo Bank, N. A., a national banking association, as bond trustee (the Bond Trustee ). Capitalized terms used herein and not defined shall have the meanings assigned in the Bond Indenture. If any payment on or with respect to this Bond is due on a date that is not a Business Day, then payment shall be made on the next succeeding Business Day, without liability for payment of interest thereon for the intervening period. The term Business Day, means a day that is not a Saturday, Sunday or legal holiday on which banking institutions in the State of West Virginia or in any state in which the office of the Bond Trustee is located are authorized by law to close and on which such entity is in fact closed, or a day on which The New York Stock Exchange is closed. Payment of principal of and interest and any premium on this Bond shall be made to Cede & Co., so long as it is the Registered Owner of this Bond, by wire transfer in immediately available funds. Otherwise, payment of principal of and any premium on this Bond shall be payable by check in lawful money of the United States of America at the Principal Corporate Trust Office of the Bond Trustee. Interest on this Bond shall be paid by check mailed by first class mail to the person in whose name ownership of this Bond is registered (the Holder ) on the bond registration books ( Bond Register ) maintained by the Bond Trustee, as registrar (as defined in the Bond Indenture) for each Interest Payment Date at such Holder s address as it appears on the Bond Register; provided that, upon written request of any Holder of at least $1,000,000 in aggregate principal amount of Bonds, submitted to the Bond Trustee at least one Business Day prior to the Record Date by wire transfer in immediately available funds to an account within the United States of America designated by such Holder. This Bond will not be entitled to any security or benefit under the Bond Indenture or be valid or become obligatory for any purpose until the certificate of authentication has been signed. GENERAL PROVISIONS This Bond is one of a duly authorized issue of The Philippi Municipal Building Commission College Facilities Subordinate Lien Refunding and Improvement Revenue Bonds (Alderson-Broaddus College, Inc.), 2012 Series C (Taxable) (the Bonds ), issued in the aggregate principal amount of $37,465,000 pursuant to the provisions of Chapter 8, Article 33 of the Code of West Virginia, 1931, as amended, for the purposes of (i) financing the planning, design, acquisition, construction, renovation and equipping of certain capital improvements to the campus of the College, consisting of the construction of a new multi-sport stadium, locker room facilities, stadium seating, concessions, President s box, media boxes, turf field, lights to accommodate night games and practices, site improvements and walkways, new student housing consisting of a 144-bed apartment style student housing building and a 240-bed suite-style student housing building, as well as the renovation and improvement of Benedum Hall, Priestley Hall and Kincaid Hall, together with all other necessary appurtenances and related facilities (the Construction Projects ), (ii) currently refunding the Issuer s College Facilities Revenue Bonds, Series 2010 A (Alderson-Broaddus College, Inc.), dated June 30, 2010, in the original principal amount of $5,000,000, (iii) paying capitalized interest on the Construction Projects, (iv) funding a debt service reserve fund for the 2012 Series A Bonds, and (v) paying costs of issuance of the Bonds. The Bonds will be payable from lease rentals payable to the Issuer by Alderson- Broaddus College, Inc., a West Virginia not-for-profit corporation (the College ) pursuant to a Lease Agreement dated as of November 1, 2012, between the Issuer and the College (the Lease Agreement ). The obligations of the College under the Lease Agreement are evidenced and secured by a promissory note (the C Note ) of the Obligated Group issued under the Master Trust Indenture dated as of November 1, 2012, among the College, Alderson-Broaddus Endowment Corporation, a West Virginia not-for-profit corporation ( ABEC ), and Wells Fargo Bank, N. A., a national banking association, as Master Trustee (as amended and supplemented, the Master Indenture ), including as amended and supplemented by a Supplemental Master Trust Indenture , dated as of November 1, 2012, between the College, as Obligated Group Agent, and the Master Trustee. In the Bond Indenture, the Issuer has assigned the Trust Estate to the Bond Trustee to provide for the payment of the principal of and interest on the Bonds. THIS BOND AND THE INTEREST HEREON IS A SPECIAL AND LIMITED OBLIGATION OF THE ISSUER AND IS PAYABLE SOLELY OUT OF THE REVENUES AND RENTALS DERIVED FROM, OR IN CONNECTION WITH, THE LEASE AGREEMENT AND THE FUNDS PLEDGED THEREFOR, AND THE ISSUER SHALL NOT BE OBLIGATED TO PAY THE BONDS OR THE INTEREST THEREON, EXCEPT FROM THE SPECIAL FUNDS DERIVED FROM THE BOND INDENTURE. THIS BOND AND ANY OTHER OBLIGATIONS, AGREEMENTS, COVENANTS OR REPRESENTATIONS CONTAINED IN THE BOND INDENTURE, SHALL NEVER CONSTITUTE AN INDEBTEDNESS OF THE ISSUER, THE CITY OF PHILIPPI OR THE STATE OF WEST VIRGINIA WITHIN THE MEANING OF ANY CONSTITUTIONAL PROVISIONS OR STATUTORY LIMITATION AND SHALL NEVER CONSTITUTE OR GIVE RISE TO PECUNIARY LIABILITY OF THE ISSUER, THE CITY OF PHILIPPI OR THE STATE OF WEST VIRGINIA. NEITHER THIS BOND NOR THE INTEREST PAYABLE HEREON SHALL BE A CHARGE AGAINST OR A PLEDGE OF THE FAITH AND CREDIT OR TAXING POWER, IF ANY, OF THE ISSUER, THE CITY OF PHILIPPI OR THE STATE OF WEST VIRGINIA OR ANY POLITICAL SUBDIVISION THEREOF. THE HOLDER OF THIS BOND SHALL HAVE NO RIGHT TO HAVE TAXES LEVIED BY THE LEGISLATURE OF THE STATE OF WEST VIRGINIA OR THE TAXING AUTHORITY, IF ANY, OF THE ISSUER OR THE CITY OF PHILIPPI FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE BOND. No recourse shall be had for the payment of the principal of or interest on this Bond or for any claim based thereon or on the Bond Indenture against any past, present of future member, officer, agent or employee of the Issuer or any person executing this Bond, all such liability, if any, being hereby expressly waived and released by every Holder of this Bond by the acceptance hereof, as provided in the Bond Indenture. All notes issued under the Master Indenture are joint and several obligations of the Members of the Obligated Group. All notes issued under the Master Indenture are secured by a pledge of the Revenues of Obligated Group. The Master Indenture restricts Members of the Obligated Group with respect to the incurrence of additional indebtedness, transferring assets outside of the Obligated Group and encumbering assets of the Obligated Group, requires maintenance of a debt service coverage ratio and contains other business covenants. The principal of and interest and any premium on the Bonds are payable solely from the Revenues and funds derived by the Bond Trustee under or pursuant to the Lease Agreement and the C Note, which Revenues and funds have been pledged and assigned to the Bond Trustee to secure payment of the Bonds and other amounts due under the Bond Indenture, all at the times and subject to the conditions set forth in the Bond Indenture. THIS BOND IS SECURED BY AND PAYABLE FROM A LIEN ON AND PLEDGE OF THE TRUST ESTATE UNDER THE BOND INDENTURE SUBORDINATE IN PRIORITY TO THE LIEN ON AND PLEDGE OF THE TRUST ESTATE THAT SECURES THE ISSUER S COLLEGE FACILITIES REFUNDING AND IMPROVEMENT REVENUE BONDS, 2012 SERIES A, AND ON PARITY WITH THE ISSUER S COLLEGE FACILITIES SUBORDINATE LIEN REFUNDING REVENUE BONDS, 2012 SERIES B. Reference is made to the Lease Agreement, the Bond Indenture and the Master Indenture, for a more complete description of the facilities financed with proceeds of the Bonds, the provisions, among others, with respect to the nature and extent of the security for the Bonds, the rights, duties and obligations of the Issuer, the Bond Trustee, the Master Trustee and the Holders of the Bonds, and the terms and conditions upon which the Bonds are issued and secured. Each Holder assents, by its acceptance of this Bond, to all of the provisions of the Bond Indenture. ALL PROVISIONS OF THE BOND INDENTURE AND THE LEASE AGREEMENT ARE INCORPORATED HEREIN AS IF SAID PROVISIONS WERE SET FORTH IN FULL HEREIN AND FOR ALL PURPOSES SHALL HAVE THE SAME EFFECT AS IF SET FORTH HEREIN. PROVISIONS OF THE BOND INDENTURE AND THE LEASE AGREEMENT SHALL CONTROL TO THE EXTENT INCONSISTENT WITH PROVISIONS OF THIS BOND. Copies of the Lease Agreement, the Bond Indenture, the Master Indenture and the C Note are on file in the Principal Corporate Trust Office of the Bond Trustee, at 123 South BroadStreet,15 th Floor, Suite 1500, MAC: Y , Philadelphia, Pennsylvania Optional Redemption REDEMPTION The 2012 Bonds maturing on or after October 1, 2023 are subject to redemption prior to their maturity, at the option of the Obligated Group Agent on or after October 1, 2022, in whole on any date or in part on any Interest Payment Date in such order of maturity as determined by the Obligated Group Agent at a Redemption Price equal to the principal amount of Bonds called for redemption, without premium, together with any interest accrued to the redemption date. A-26

135 Optional Redemption as a Result of the Sale of Bond Financed Property The Bonds are also are also subject to redemption prior to their maturity, in whole or in part, by the Issuer at the option of the Obligated Group Agent and upon its written direction, on the earliest practicable date after (A) the Board of the College determines in good faith that continued operation of the property financed with the proceeds of the Bonds ( Bond Financed Property ) (or portions thereof) is not financially feasible or is otherwise disadvantageous to the College; (B) as a result thereof, the College plans to sell, lease or otherwise dispose of all or a portion of the Bond Financed Property to a person or entity unrelated to the College; and (C) there is delivered to the Issuer and the Trustee a written statement of Bond Counsel to the effect that, unless the Bonds are redeemed or retired in the amount specified either prior to or concurrently with such sale, lease or other disposition, or on a subsequent date prior to the first date on which the Bonds are subject to redemption at the option of the Issuer at the direction of the Obligated Group Agent, such Bond Counsel will be unable, absent payment by the Obligated Group Agent or the Issuer to the IRS, to render an unqualified opinion that such sale, lease or other disposition of all or a portion of the Bond Financed Property will not adversely affect the validity of any Bonds or any exemption from federal income taxation to which the interest on such Bonds would otherwise be entitled. Any such redemption shall be at a Redemption Price equal to 100% of the principal amount thereof plus accrued interest to the redemption date. Optional Redemption for Insurance and Condemnation Proceeds Outstanding Bonds are also subject to redemption prior to their respective stated Maturity Date, by the Issuer, at the option of the Obligated Group Agent, as a whole or in part on any day from moneys required to be deposited in the Special Redemption Account pursuant to the Bond Indenture, at a Redemption Price equal to the principal amount of such Bonds. Mandatory Sinking Fund Redemption The Bonds are subject to mandatory redemption, prior to the stated Maturity Date, in part, from Mandatory Sinking Account Payments deposited in the Principal Fund, on October 1 in the years set forth below. The Redemption Price will be 100% of the principal amount of the Bonds to be so redeemed plus accrued interest, if any, to the redemption date, without premium. On the following dates, the Bonds shall be redeemed or paid in the amounts set forth opposite each such date (each a Mandatory Sinking Account Payment Date ): Term Bonds Due October 1, 2044 Year Amount ($) , , , , , , , *Denotes final maturity , , , , , , , , , , , , , , , , , , , , * 55, If an Event of Default as defined in the Bond Indenture shall occur, the principal of and interest on this Bond may be declared due and payable in the manner and with the effect provided in the Bond Indenture. The Bond Indenture permits a discharge and satisfaction of the pledge of the Revenues and other money and securities pledged pursuant to the Bond Indenture to secure Bonds upon payment to the Bond Trustee of lawful money of the United States or certain Qualified Investments as described in clauses (1) and (2) of the definition of Qualified Investments set forth in the Bond Indenture in an amount that, together with interest thereon, would be sufficient to provide money for the payment when due of the principal of and interest due on those Bonds, whether at maturity or upon prior redemption, on and prior to the redemption or maturity date thereof, as the case may be. The Holder of this Bond shall not have any right to institute any suit, action or proceeding in equity or at law for the execution of any trust under the Bond Indenture, or for any other remedy under the Bond Indenture, except as otherwise expressly provided for in the Bond Indenture. The Bond Indenture contains provisions permitting the Issuer to adopt Supplemental Bond Indentures modifying or amending the Bond Indenture and the rights and obligations of the Issuer and the Holders of the Bonds thereunder, in some cases without the consent of the Holders and in some cases with the written consent of the Holders of a majority of the aggregate principal amount of the 2012 Series A Bonds outstanding thereunder; provided, however, that nothing in this Section shall permit or be construed as permitting a Supplemental Bond Indenture that would: (v) extend the stated maturity of or time for paying interest on any Bond or reduce the principal amount of or the Redemption Price or rate of interest payable on any Bond without the consent of the Holders of all Outstanding Bonds; (vi) prefer or give a priority to any Bond over any other Bond without the consent of the Holder of each Bond then Outstanding not receiving such preference or priority; or (iii) reduce the aggregate principal amount of Bonds then Outstanding, the consent of the Holders of which is required to authorize such Supplemental Bond Indenture, without the consent of the Holders of all Bonds then Outstanding. It is hereby certified and recited by the Issuer that all conditions, acts, and things required by the statutes of the State of West Virginia and the Bond Indenture to exist, to have happened and to have been performed precedent to or in the issuance of the Bonds and of this Bond in order to make the Bonds and this Bond the legal, valid and binding special obligations of the Issuer, in accordance with their terms, exist, have happened and have been performed in regular and due form as required by law, and that the issuance of the Bonds is within every debt limit and other limit upon the Issuer prescribed by law or by the Bond Indenture for the Issuer. [SIGNATURE PAGE FOLLOWS] This Bond is a negotiable instrument, subject, however, to the provisions for registration and transfer contained in the Bond Indenture and in this Bond. Subject to the provisions of Section 2.13 of the Bond Indenture, any Bond may, in accordance with its terms, be transferred, upon the bond registration books required to be kept pursuant to the provisions of the Bond Indenture, by the Person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such registered Bond for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form approved by the Bond Trustee. Whenever any Bond shall be surrendered for transfer, the Issuer shall execute and the Bond Trustee shall authenticate and deliver a new Bond for a like aggregate principal amount of the same maturity. The Bond Trustee shall require the Bondholder requesting such transfer to pay any cost, tax or other governmental charge required to be paid with respect to such transfer. The Issuer and the Bond Trustee shall be entitled to treat the Person in whose name any Bond is registered as the Holder thereof for all purposes of this Bond Indenture and any applicable laws, notwithstanding any notice to the contrary received by the Bond Trustee or the Issuer; and the Issuer and the Bond Trustee shall have no responsibility for transmitting payments to, communicating with, notifying or otherwise dealing with any beneficial holders of the Bonds. Neither the Issuer nor the Bond Trustee will have any responsibility or obligations, legal or otherwise, to the beneficial holders or to any other party, including the Securities Depository or its successor (or any substitute depository or its successor). The Bonds are issuable as fully registered Bonds in denominations of $5,000 and any integral multiple thereof. Registered Bonds may, at the option of the Holder thereof, be exchanged for a like aggregate principal amount of Bonds of authorized denominations. The Bond Trustee shall require the Bondholder requesting such exchange to pay any cost, tax or other governmental charge required to be paid with respect to such exchange. The Bond Trustee shall not be required to exchange any Bond during the 15 days immediately preceding (1) the date on which notice of redemption is given or (2) the date on which Bonds will be selected for redemption. A-27

136 IN WITNESS OF THE ABOVE, the Issuer has caused this Bond to be signed in the name of the Issuer by the manual signature of its Chairman, and its corporate seal to be impressed on this Bond and attested by the manual signature of its Secretary, and has caused this Bond to be dated as of the date shown above. CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds described in the Bond Indenture. THE PHILIPPI MUNICIPAL BUILDING COMMISSION WELLS FARGO BANK, N. A., as Bond Trustee By Its: Chairman By Its: Authorized Officer [SEAL] ATTEST: Secretary Date of Authentication: November 30, 2012 ASSIGNMENT For value received, the undersigned sells, assigns and transfers unto EXHIBIT C COSTS OF ISSUANCE REQUISITION FORM the within Bond, and does hereby irrevocably constitute and appoint attorney to transfer said Bond on the books kept for registration of the within Bond with full power of substitution in the premises. Dated: Signature Guaranteed: Signature: The signature guarantee must be made by a guarantor institution participating in the Securities Transfer Agents Medallion Program or in another guarantee program acceptable to the Registrar. NOTICE: The assignor s signature to this assignment must correspond with the name as it appears upon the face of this Bond in every particular, without alteration or any change whatsoever. Wells Fargo Bank, N. A. 123 South Broad Street 15 th Floor, Suite 1500 MAC: Y Philadelphia, Pennsylvania Attention: Corporate Trust Group REQUISITION NO.: COSTS OF ISSUANCE FUND REQUISITION You are hereby directed by the undersigned Authorized Representative of Alderson- Broaddus College, Inc., as the Obligated Group Agent (the Obligated Group Agent ), in accordance with Section 3.03 of the Bond Trust Indenture dated as of November 1, 2012, as supplemented, modified or amended from time to time (the Bond Indenture ), between The Philippi Municipal Building Commission and Wells Fargo Bank, N. A. (the Trustee ), to pay the following persons the following amounts from proceeds of the above-captioned Bonds (the Bonds ) deposited in the Costs of Issuance Fund pursuant to Section 3.03 of the Bond Indenture: PAYEE INVOICE AMOUNT PURPOSE TOTAL: $ The undersigned Authorized Representative hereby certifies as follows: 1. The obligations in the stated amounts have been incurred and are presently due and payable and each item thereof is a proper charge and has not been previously paid from the Costs of Issuance Fund. 2. There has not been filed with or served upon the Obligated Group Agent any notice of claim of lien, or attachment upon, or claim affecting the right to receive A-28

137 payment of, any of the amounts payable to any of the persons named in this Requisition, that has not been released or will not be released simultaneously with the payment of such obligation, other than materialmen s or mechanics liens accruing by mere operation of law. 3. No event has occurred and is continuing which constitutes an Event of Default under the Bond Indenture or Master Indenture. Attached hereto are invoices or other appropriate evidence of each payment request described in this Requisition. Capitalized terms used are not otherwise defined herein shall have the meanings assigned to such terms in the Bond Indenture. Wells Fargo Bank, N. A. 123 South Broad Street 15 th Floor, Suite 1500 MAC: Y Philadelphia, Pennsylvania Attention: Corporate Trust Group REQUISITION NO.: EXHIBIT D PROJECT FUND REQUISITION FORM Dated: Alderson-Broaddus College, Inc., as Obligated Group Agent By: Name: Title: Authorized Representative PROJECT FUND REQUISITION You are hereby directed by the undersigned Authorized Representative of Alderson- Broaddus College, Inc., as Obligated Group Agent (the Obligated Group Agent ), in accordance with Section 3.04(A) of the Bond Trust Indenture dated as of November 1, 2012, as supplemented, modified or amended from time to time (the Bond Indenture ), between The Philippi Municipal Building Commission and Wells Fargo Bank, N. A. (the Trustee ), to pay the following persons the following amounts from proceeds of the above-captioned Bonds (the Bonds ) deposited in the Project Fund pursuant to Section 3.04(A) of the Bond Indenture: PAYEE INVOICE AMOUNT PURPOSE TOTAL: $ The undersigned Authorized Representative hereby certifies as follows: 1. The obligations in the stated amounts have been incurred and are presently due and payable and each item thereof is a proper charge and has not been previously paid from the Project Fund. 2. There has not been filed with or served upon the Obligated Group Agent any notice of claim of lien, or attachment upon, or claim affecting the right to receive payment of, any of the amounts payable to any of the persons named in this Requisition, that has not been released or will not be released simultaneously with the payment of such obligation, other than materialmen s or mechanics liens accruing by mere operation of law. 3. No event has occurred and is continuing which constitutes an Event of Default under the Bond Indenture or Master Indenture. Attached hereto are invoices or other appropriate evidence of each payment request described in this Requisition. Capitalized terms used are not otherwise defined herein shall have the meanings assigned to such terms in the Bond Indenture. Dated: Alderson-Broaddus College, Inc., as Obligated Group Agent By: Name: Title: Authorized Representative [THIS PAGE INTENTIONALLY LEFT BLANK] CERTIFICATION BY CONSTRUCTION MONITOR In accordance with the terms of that certain Construction Monitoring Agreement dated November, 2012, by and among Alderson-Broaddus College, Inc., Partners & Associates, Inc., dba Partners Development, and the Trustee (the Construction Monitoring Agreement ), the undersigned hereby represents that the undersigned has reviewed this Project Fund Requisition and hereby certifies the amounts due the Contractors to be paid hereunder. Based upon the undersigned s evaluation of the Work, the Work has progressed to the point indicated herein and that, to the best of the undersigned s knowledge, information and belief the quality of the Work is in accordance with the Contract Documents. For purposes of this certification, capitalized terms shall have the meaning ascribed thereto in the Construction Monitoring Agreement. PARTNERS & ASSOCIATES, INC. dba PARTNERS DEVELOPMENT By: Its: A-29

138 [THIS PAGE INTENTIONALLY LEFT BLANK]

139 Appendix B: Form of the Master Trust Indenture

140 [THIS PAGE INTENTIONALLY LEFT BLANK]

141 TABLE OF CONTENTS MASTER TRUST INDENTURE among ALDERSON-BROADDUS COLLEGE, INC., and ALDERSON-BROADDUS ENDOWMENT CORPORATION, each as a Member of the Obligated Group and WELLS FARGO BANK, N. A., as Master Trustee Dated as of November 1, 2012 ARTICLE I DEFINITIONS AND CONSTRUCTION...2 Section 101. Definitions...2 Section 102. Gender...17 Section 103. Singular and Plural...18 Section 104. Application of Generally Accepted Accounting Principles...18 Section 105. Headings...18 ARTICLE II THE OBLIGATIONS...19 Section 201. Series, Designation and Amount of Obligations...19 Section 202. Payment of Obligations...19 Section 203. Execution...20 Section 204. Authentication...20 Section 205. Form of Obligations and Temporary Obligations...21 Section 206. Mutilated, Lost, Stolen or Destroyed Obligations...21 Section 207. Registration; Negotiability; Cancellation upon Surrender; Exchange of Obligations...22 Section 208. Security for Obligations...22 Section 209. Issuance of Obligations in Forms Other than Notes...23 ARTICLE III PREPAYMENT OR REDEMPTION OF OBLIGATIONS...23 Section 301. Prepayment or Redemption Dates and Prices...23 Section 302. Notice of Prepayment or Redemption...25 Section 303. Partial Prepayment or Redemption of Obligations...25 Section 304. Effect of Call for Prepayment or Redemption...26 Section 305. Effect of Call on Notes Evidencing Obligations...26 ARTICLE IV GENERAL COVENANTS...27 Section 401. Payment of Principal, Premium, if any, and Interest...27 Section 402. Performance of Covenants...27 Section 403. Representations and Warranties by the Obligated Group...27 Section 404. Entrance Into the Obligated Group Section 405. Cessation of Status as a Member Section 406. Covenants as to Corporate Existence, Maintenance of Properties, and Similar Matters; Right of Contest...30 i Section 407. Insurance...33 Section 408. Right to Perform Members Covenants; Advances...34 Section 409. Rates and Charges...34 Section 410. Damage or Destruction...34 Section 411. Condemnation...36 Section 412. Other Provisions with Respect to Net Proceeds...37 Section 413. Merger, Consolidation, Sale or Conveyance...37 Section 414. Financial Statements...38 Section 415. Permitted Indebtedness...40 Section 416. Calculation of Debt Service...43 Section 417. Sale, Lease or Other Disposition of Property...46 Section 418. Liens on Property...47 Section 419. List of Obligation Holders...47 Section 420. Designation of Additional Paying Agents...47 Section 421. Further Assurances; Additional Property...47 Section 422. Indemnity...48 Section 423. Restriction on Encumbering Gross Revenues...49 Section 424. Gross Revenues Pledge...49 Section 425. Security Interest in Real and Personal Property...50 ARTICLE V EVENTS OF DEFAULT; REMEDIES...51 Section 501. Extension of Payment; Penalty...51 Section 502. Events of Default...51 Section 503. Acceleration...52 Section 504. Remedies; Rights of Obligation Holders...53 Section 505. Direction of Proceedings by Holders...53 Section 506. Appointment of Receivers...54 Section 507. Application of Moneys...54 Section 508. Remedies Vested in Master Trustee...56 Section 509. Rights and Remedies of Obligation Holders...56 Section 510. Termination of Proceedings...57 Section 511. Waiver of Events of Default...57 Section 512. Related Bond Trustee or Bond Holders Deemed To Be Obligation Holders...57 ii B-1 ARTICLE VI THE MASTER TRUSTEE...58 Section 601. Acceptance of the Trusts...58 Section 602. Fees, Charges and Expenses of Master Trustee and any Additional Paying Agent...60 Section 603. Notice to Obligation Holders if Default Occurs...60 Section 604. Intervention by Master Trustee...61 Section 605. Successor Master Trustee...61 Section 606. Corporate Master Trustee Required; Eligibility...61 Section 607. Resignation by the Master Trustee...61 Section 608. Removal of the Master Trustee...62 Section 609. Appointment of Successor Master Trustee by the Obligation Holders; Temporary Master Trustee...62 Section 610. Concerning Any Successor Master Trustee...63 Section 611. Master Trustee Protected in Relying Upon Resolutions, Etc...63 Section 612. Successor Master Trustee as Trustee of Funds, Paying Agent and Obligation Registrar...63 Section 613. Maintenance of Records...63 ARTICLE VII SUPPLEMENTAL MASTER INDENTURES...64 Section 701. Supplemental Master Indentures Not Requiring Consent of Obligation Holders...64 Section 702. Supplemental Master Indentures Requiring Consent of Obligation Holders...65 ARTICLE VIII SATISFACTION OF THE MASTER INDENTURE...67 Section 801. Defeasance...67 Section 802. Provision for Payment of a Particular Series of Obligations or Portion Thereof...68 Section 803. Satisfaction of Related Bonds...69 ARTICLE IX MANNER OF EVIDENCING OWNERSHIP OF OBLIGATIONS...69 Section 901. Proof of Ownership...69 ARTICLE X MISCELLANEOUS...70 Section Limitation of Rights...70 Section Unclaimed Moneys...70 Section Severability...71 Section Notices...71 iii

142 Section Master Trustee as Paying Agent and Registrar...71 Section Counterparts...71 Section Applicable Law...71 Section Immunity of Officers, Employees and Members of Members...72 Section Holidays...72 This MASTER TRUST INDENTURE is made and entered into as of November 1, 2012 ( Master Indenture ), by and between ALDERSON-BROADDUS COLLEGE, INC., a West Virginia non-stock and non-profit corporation (the College ), ALDERSON-BROADDUS ENDOWMENT CORPORATION, a West Virginia non-stock and non-profit corporation ( ABEC ), as Members (as hereinafter defined) of an Obligated Group (as hereinafter defined), and WELLS FARGO BANK, N. A., a national banking association duly established, existing and authorized to accept and execute trusts of the character herein set out under and by virtue of the laws of the United States of America, with a corporate trust office in Philadelphia, Pennsylvania (the Master Trustee ). WITNESSETH: WHEREAS, each Member (as hereinafter defined) of the Obligated Group is authorized by law, and deems it necessary and desirable that it be able to issue direct Obligations (as hereinafter defined) of several series in order to secure the financing or refinancing of necessary, lawful, and proper expenditures for corporate purposes; and WHEREAS, each Member of the Obligated Group desires to provide in this Master Indenture for other legal entities to join with it in the future in pooling credit resources in order to achieve lower borrowing costs and to become jointly and severally liable with the current Members of the Obligated Group and such other entities for the payment of the Obligations and the performance of all covenants contained herein (the Obligated Group and each legal entity, including those entities identified in the introductory paragraph, incurring such joint and several liability in accordance with the terms hereof are herein referred to individually as a Member and collectively as the Members ); and WHEREAS, all acts and things necessary to make this Master Indenture the valid, binding and legal obligation of the Obligated Group according to its terms, have been done and performed and the execution of this Master Indenture has in all respects been duly authorized, and each Member in the exercise of the legal right and power vested in it, executes this Master Indenture and the Obligated Group Agent (as hereinafter defined) and Members of the Obligated Group may make, execute, issue and deliver one or more Obligations of various series in accordance with the terms of this Master Indenture; and WHEREAS, the Master Trustee agrees to accept and administer the trusts created hereby. GRANTING CLAUSE That the Obligated Group, in consideration of the premises and of the acceptance by the Master Trustee of the trusts hereby created and of the giving of consideration for and the acceptance of the Obligations created hereunder, and of other good and lawful consideration, the receipt of which is hereby acknowledged, and to secure the payment of the principal of, premium, if any, and interest on the Obligations issued, authenticated and delivered by the Obligated Group Agent on behalf of the Obligated Group, and the performance and observance of all of the covenants and conditions herein or therein contained, has executed and delivered this Master Indenture and covenants and agrees with the Master Trustee for the equal and proportionate benefit of the Holders from time to time, of Obligations issued hereunder, as iv 1 follows: ARTICLE I DEFINITIONS AND CONSTRUCTION Section 101. Definitions. In addition to the words and terms elsewhere defined in this Master Indenture, the following words and terms as used in this Master Indenture shall have the following meanings unless otherwise defined elsewhere in this Master Indenture or if the context or use indicates another or different meaning or intent: Accelerable Instrument means any Obligation or any mortgage, indenture, loan agreement or other instrument under which there has been issued or incurred, or by which there is secured, any Indebtedness evidenced by an Obligation, which Obligation or instrument provides that, upon the occurrence of an event of default under such Obligation or instrument, the Holder thereof may request that the Master Trustee declare such Obligation or Indebtedness due and payable prior to the date on which it would otherwise become due and payable. ABEC means Alderson-Broaddus Endowment Corporation, a West Virginia non-stock, non-profit corporation. Affiliate means a corporation, limited liability company, partnership, joint venture, association, business trust or similar entity (a) which controls, is controlled by or is under common control with, directly or indirectly, a Member; or (b) a majority of the members of the Directing Body of which are members of the Directing Body of a Member. For the purposes of this definition, control means: (i) with respect to a corporation having stock, the ownership, directly or indirectly, of more than 50% of the securities (as defined in Section 2(1) of the Securities Act of 1933, as amended) of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the Directing Body of such corporation; (ii) with respect to a nonprofit corporation not having stock, having the power to elect or appoint, directly or indirectly, a majority of the members of the Directing Body of such nonprofit corporation; or (iii) with respect to any other entity, the power to direct the management of such entity through the ownership of a majority of its voting securities or the right to designate or elect a majority of the members of its Directing Body of such entity, by contract or otherwise. For the purposes of this definition, Directing Body means, with respect to a Member, the board of directors, board of trustees or similar group in which the right to exercise the powers of corporate directors or trustees is vested, as applicable based on entity form. Balloon Indebtedness means Long-Term Indebtedness, twenty-five percent (25%) or more of the original principal of which matures during any consecutive twelve-month period, if such maturing principal amount is not required to be amortized below such percentage by mandatory redemption or prepayment prior to such twelve-month period. Balloon Indebtedness does not include Indebtedness which otherwise would be classified hereunder as Put Indebtedness. Bondholder, Holder or Owner of the Bonds means the registered owner of any 2 B-2 Related Bond. Book Value, when used with respect to any Property of a Member, means the value of such Property, net of accumulated depreciation and amortization, as reflected in the most recent audited financial statements of such Member which have been prepared in accordance with generally accepted accounting principles, and, when used with respect to Property of all Members, means the aggregate of the values of such Property, net of accumulated depreciation and amortization, as reflected in the most recent audited combined financial statements of the Obligated Group prepared in accordance with generally accepted accounting principles, provided that such aggregate shall be calculated in such a manner that no portion of the value of any Property of any Member is included more than once. Business Day means a day which is not (a) a Saturday, Sunday or legal holiday on which banking institutions in the State of West Virginia or the State of Pennsylvania are authorized by law to close, (b) a day on which the New York Stock Exchange or the Federal Reserve System is closed, or (c) a day in which the offices of the Master Trustee are closed. Capitalized Interest means amounts irrevocably deposited in escrow to pay interest on Funded Indebtedness or Related Bonds and interest earned on amounts irrevocably deposited in escrow to the extent such interest earned is required to be applied to pay interest on Funded Indebtedness or Related Bonds. Capitalized Lease means (i) the liability of a Member of the Obligated Group under a lease of real or personal property but only if the lease is properly capitalized on the balance sheet of such Member of the Obligated Group in accordance with generally accepted accounting principles because it has one or more of the following characteristics: (a) the ownership of the property is transferred to the Member during the lease term, (b) the Member may buy the property at a nominal price at lease expiration, (c) the property will be leased for at least 75% of its economic life or (d) the present value of the minimum lease payments equal at least 90% of the value of the property. Capitalized Rentals means, as of the date of determination, the amount at which the aggregate Net Rentals due and to become due under a Capitalized Lease under which a Person is a lessee would, in accordance with generally accepted accounting principles in effect from time to time, be reflected as a liability on a balance sheet of such Person. Code means the Internal Revenue Code of 1986, as amended from time to time. College means Alderson-Broaddus College, Inc., a West Virginia non-stock, not-forprofit corporation, and its successors, assigns and any surviving, resulting or transferee college. Commitment Indebtedness means (a) the obligation of any Member to repay amounts disbursed pursuant to a commitment from a financial institution to pay, refinance or purchase when due, when tendered or when required to be purchased or to make a loan for any such purpose, (b) other Indebtedness of any Member, or (c) Indebtedness of a Person who is not a Member, which Indebtedness is guaranteed by a guaranty of any Member or secured by or 3

143 payable from amounts paid on Indebtedness of such Person, in either case which Indebtedness or guaranty of such Person was incurred in accordance with the provisions of Section 415 hereof, and the obligation of any Member to pay interest payable on amounts disbursed for such purposes, plus any fees, costs or expenses payable to such financial institution for, under or in connection with such commitment, in the event of disbursement pursuant to such commitment or in connection with enforcement thereof, including, without limitation, any penalties payable in the event of such enforcement. Completion Funded Indebtedness means any Funded Indebtedness for borrowed money of any Member: (a) incurred for the purpose of financing the completion of the acquisition, construction, remodeling, renovation or equipping of Facilities with respect to which Funded Indebtedness for borrowed money has been incurred in accordance with the provisions hereof; and (b) with a principal amount not in excess of the amount required to provide a completed and equipped Facility of substantially the same type and scope as contemplated at the time such prior Funded Indebtedness was originally incurred, to provide for Capitalized Interest during the period of construction, to provide any reserve fund relating to such Completion Funded Indebtedness and to pay the costs and expenses of issuing such Completion Funded Indebtedness. Construction Index means the most recent issue of the Dodge Construction Index for U.S. and Canadian Cities with reference to the city in which the subject property is located (or, if such Index is not available for such city, with reference to the city located closest geographically to the city in which the subject property is located), or, if such Index is no longer published, such other index which is certified to be comparable and appropriate by the Obligated Group Agent in an Officer s Certificate delivered to the Master Trustee and which other index is acceptable to the Master Trustee. Consultant means a professional consulting or banking firm selected by the Obligated Group Agent and acceptable to the Master Trustee, having the skill and experience necessary to render a particular report or reports required hereunder and having a favorable and nationally recognized reputation for such skill and experience, which firm shall have no interest, direct or indirect, in any Member and shall have no partner, member, director, officer or employee who is a partner, member, director, officer or employee of any Member, it being understood that an arm s-length contract between such firm and any Member for the performance of consulting or banking services shall not in and of itself be regarded as creating an interest in or an employee relationship with such entity. The same Consultant need not render all reports required to be delivered hereunder, and the Obligated Group Agent may engage different Consultants to render reports with respect to different matters. Contributions means the aggregate amount of all contributions, grants, gifts, bequests and devises actually received in cash or marketable securities by any Member in the applicable fiscal year of such Member and any such contributions, grants, gifts, bequests and devises originally received in a form other than cash or marketable securities by any Member which are converted in such fiscal year to cash or marketable securities. Current Value means (a) with respect to Property, Plant and Equipment: (i) the aggregate fair market value of such Property, Plant and Equipment as reflected in the most recent written report of an appraiser selected by the Obligated Group Agent and acceptable to the Master Trustee and, in the case of real property, who is a member of the American Institute of Real Estate Appraisers, delivered to the Master Trustee (which report shall be dated not more than three (3) years prior to the date as of which Current Value is to be calculated), increased or decreased by a percentage equal to the aggregate percentage increase or decrease in the Construction Index from the date of such report to the date as of which Current Value is to be calculated; plus (ii) the Book Value of any Property, Plant and Equipment acquired since the last such report, increased or decreased by a percentage equal to the aggregate percentage increase or decrease in the Construction Index from the date of such acquisition to the date as of which Current Value is to be calculated; minus (iii) the greater of the Book Value or the fair market value (as reflected in such most recent appraiser s report) of any Property, Plant and Equipment disposed of since the last such report, increased or decreased by a percentage equal to the aggregate percentage increase or decrease in the Construction Index from the date of such report to the date as of which Current Value is to be calculated, and (b) with respect to any other Property, the fair market value of such Property, which fair market value shall be evidenced in a manner satisfactory to the Master Trustee. Defaulted Interest means interest on any Related Bond of a particular series which is payable but not duly paid on the date due. Enabling Statute means any legislation pursuant to which any series of Related Bonds is issued. Encumbered means, with respect to Property, subject to a Lien described in subsections (b), (d) (other than a Lien securing Non-Recourse Indebtedness), (f) (including only leases whereunder any Member is lessor entered into in accordance with the disposition of Property provisions of the Master Indenture which were not in existence on November 1, 2012, and any successor thereto or replacement thereof), (n)(ii), (r)(ii), (u) and (v) of the definition of Permitted Encumbrances, and all other Liens not described in the definition of Permitted Encumbrances; provided that any amounts on deposit in a construction fund created in connection with the issuance of an Obligation which are held as security for the payment of such Obligation or any Indebtedness incurred to purchase such Obligation or the proceeds of which are advanced or otherwise made available in connection with the issuance of such Obligation, shall not be deemed to be Encumbered if the amounts are to be applied to construct or otherwise acquire Property which is not subject to a Lien. Escrow Obligations means, (a) with respect to any Obligation which secures a series of Related Bonds, the obligations permitted to be used to refund or advance refund such series of Related Bonds under the Related Bond Indenture, or (b) in all other cases (i) United States Government Obligations, (ii) obligations of any agency or instrumentality of the United States Government, (iii) certificates of deposit issued by a bank or trust company which are (A) fully insured by the Federal Deposit Insurance Corporation, Federal Savings and Loan Insurance Corporation or similar corporation chartered by the United States or (B) secured by a pledge of any United States Government Obligations having an aggregate market value, exclusive of accrued interest, equal at least to the principal amount of the certificates so secured, which 4 5 security is held in a custody account by a custodian satisfactory to the Master Trustee, (iv) (A) evidences of a direct ownership in future interest or principal payments on obligations of the type described in (a) above, which obligations are held in a custody account by a custodian satisfactory to the Master Trustee pursuant to the terms of a custody agreement and (B) obligations issued by any state of the United States or any political subdivision, public instrumentality or public authority of any state, which obligations are not callable before the date the principal thereof will be required and which obligations are fully secured by and payable solely from obligations of the type described in (a) above, which securities are held pursuant to an agreement in form and substance acceptable to the Master Trustee, or (v) after thirty (30) days prior written notice to each Rating Agency then maintaining a rating on any Obligations or Related Bonds, shares or certificates in any short-term investment fund which is maintained by the Master Trustee or a Related Bond Trustee. Expenses means, for any period, the aggregate of all expenses calculated under generally accepted accounting principles, including, without limitation, any taxes, incurred by any Member of the Obligated Group during such period, minus (a) interest on Funded Indebtedness, (b) depreciation and amortization, (c) extraordinary expenses (including, without limitation, losses on the sale of assets other than in the ordinary course of business and losses on the extinguishment of debt), (d) any expenses resulting from a forgiveness of or the establishment of reserves against Indebtedness of an Affiliate which does not constitute an extraordinary expense, (e) losses resulting from any reappraisal, revaluation or impairment of assets (including, without limitation, intangibles), (f) any unrealized loss resulting from changes in the value of investment securities or Interest Rate Agreements, (g) other non-cash expenses, and (h) if such calculation is being made with respect to the Obligated Group, excluding any such expenses attributable to transactions between any Member and any other Member. Facilities means all land, leasehold interests and buildings and all fixtures and equipment (as defined in the Uniform Commercial Code or equivalent statute in effect in the state where such fixtures or equipment are located) of each Member. Fiscal Year means any consecutive twelve-month period selected by the Obligated Group Agent as the fiscal year for the Members. Fitch means Fitch Ratings, 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" shall be deemed to refer to any other nationally recognized securities rating agency designated by the Obligated Group Agent by written notice to the Master Trustee. Funded Indebtedness means, with respect to any Member, (a) all Indebtedness of such Member for money borrowed or credit extended which is not Short-Term; (b) all Indebtedness of such Member incurred or assumed in connection with the acquisition or construction of Property which is not Short-Term; (c) all Short-Term Indebtedness incurred by any Member which is of the type described in Section 415(E) hereof; (d) each Member s Guaranteed Indebtedness which are not Short-Term; and (e) Capitalized Rentals under Capitalized Leases entered into by any Member; provided, however, that Indebtedness that could be described by more than one of the foregoing categories shall not in any case be considered more than once for the purpose of any calculation made pursuant to this Master Indenture. 6 B-3 GAAP means generally accepted accounting principles in the United States as in effect from time to time. Governing Body means, with respect to a Member, the board of directors, board of trustees or similar group in which the right to exercise the powers of corporate directors or trustees is vested. Government Obligations means securities which consist of (a) United States Government Obligations or (b) evidences of a direct ownership in future interest or principal payments on obligations of the type described in subparagraph (a) above, which obligations are held in a custody account by a custodian satisfactory to the Master Trustee pursuant to the terms of a custody agreement. Gross Revenues shall mean all gross charges, receipts, income (including, without limitation, investment income), revenue, deposits, unrestricted donations and other moneys received by or on behalf of any Member of the Obligated Group, arising from the operation or ownership of the Facilities or from the provision of educational services, or from the leasing, sale or other disposition of the Facilities, including, without limitation, insurance and condemnation proceeds with respect to the Facilities or any part or portion thereof, and all rights to receive the same, whether in the form of accounts, accounts receivable, contract rights or other rights, and the proceeds of the same, and whether now owned or held or hereafter coming into existence. Guaranteed Indebtedness means any obligation of a Member guaranteeing directly or indirectly any obligation of any Person other than a Member which obligation would, if such other Person were a Member, constitute Indebtedness hereunder. For purposes of the incurrence thereof and hereunder, Guaranteed Indebtedness shall be calculated as set forth in Section 415 hereof. Indebtedness means, for any Member, (a) all Guaranteed Indebtedness, (b) all liabilities (exclusive of reserves such as those established for deferred taxes or litigation) recorded or required to be recorded as such on the audited financial statements of such Member in accordance with GAAP, and (c) all obligations for the payment of money incurred or assumed by such Member (i) due and payable in all events or (ii) if incurred or assumed primarily to assure the repayment of money borrowed or credit extended, due and payable upon the occurrence of a condition precedent or upon the performance of work, possession of Property as lessee, rendering of services by others or otherwise, and shall include, without limitation, Non- Recourse Indebtedness; provided that Indebtedness shall not include (a) indebtedness of one Member to another Member or the joint and several liability of any Member of Indebtedness issued by another Member, and (b) any obligation of a Member under any Interest Rate Agreement, or any obligation to reimburse a bond insurer, financial institution or other Person which has guaranteed or otherwise assured the performance of a Member s obligations under an Interest Rate Agreement. Independent Architect means an architect, engineer or firm of architects or engineers selected by a Member, acceptable to the Master Trustee and licensed by, or permitted to practice in, the state where the construction involved is located, which architect, engineer or firm of 7

144 architects or engineers shall have no interest, direct or indirect, in any Member and, in the case of an individual, shall not be a member, director, officer or employee of any Member and, in the case of a firm, shall not have a partner, member, director, officer or employee who is a member, director, officer or employee of any Member; it being understood that an arm s-length contract with any Member for the performance of architectural or engineering services shall not in and of itself be regarded as creating an interest in or an employee relationship with such entity and that the term Independent Architect may include an architect or engineer or a firm of architects or engineers who otherwise meet the requirements of this definition and who also are under contract to construct the facility which they have designed. Independent Counsel means an attorney duly admitted to practice law before the highest court of any state and, without limitation, may include independent legal counsel for any Related Issuer, any Member, the Master Trustee or any Related Bond Trustee. Interest Payment Date means an Interest Payment Date as defined in a Related Bond Indenture. Interest Rate Agreement means interest or other rate exchange agreements, interest or other rate swap transactions, basis swap transactions, forward rate transactions, commodity swaps, commodity options, bond options, interest rate options, cap transactions, floor transactions, collar transactions, investment agreements, guaranteed investment contracts, debt service deposit agreements, float agreements, hedge agreements, or similar agreements or transactions in any combination thereof, expressly identified in an Officer s Certificate of the Obligated Group Agent delivered to the Master Trustee as being entered into in order to hedge the interest payable on all or a portion of any Indebtedness, and which agreements do not constitute an obligation to repay money borrowed, credit extended or the equivalent thereof. Lien means any mortgage, deed of trust, pledge or lease of, security interest in or lien, charge, restriction or encumbrance on any Property of any Person involved in favor of, or which secures any obligation to, any Person other than any Member, and any Capitalized Lease under which any Member is lessee and the lessor is not another Member. Long-Term Indebtedness means Indebtedness (which also may constitute Balloon Indebtedness or Put Indebtedness) having an original stated maturity or term greater than one year or renewable at the option of the debtor for a period greater than one year from the date of original issuance. Master Indenture means this Master Trust Indenture dated as of November 1, 2012, among the College, ABEC and the Master Trustee, as it may from time to time be amended or supplemented in accordance with the terms hereof. Master Trustee means Wells Fargo Bank, N. A., a national banking association, or any successor trustee under the Master Indenture. Member or Members means the College, ABEC, and any Person who is listed on Exhibit B hereto after designation as a Member pursuant to the terms of this Master Indenture. Moody s means Moody s Investors Service, Inc., and its successors and assigns and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities agency, any other nationally recognized securities rating agency designated by the Obligated Group Agent by written notice to the Master Trustee. Net Proceeds means, when used with respect to any insurance or condemnation award or sale consummated under threat of condemnation, the gross proceeds from the insurance or condemnation award or sale with respect to which that term is used, less all expenses (including attorney s fees, adjuster s fees and any expenses of the Master Trustee), incurred in the collection of such gross proceeds. Net Rentals means all fixed rents (including as such all payments which the lessee is obligated to make to the lessor on termination of the lease or surrender of the Property other than upon termination of the lease for a default thereunder) payable under a lease or sublease of real or personal Property excluding any amounts required to be paid by the lessee (whether or not designated as rents or additional rents) on account of maintenance, repairs, insurance, taxes and similar charges. Net Rentals for any future period under any so-called percentage lease shall be computed on the basis of the amount reasonably estimated to be payable thereunder for such period, but in any event not less than the amount paid or payable thereunder during the immediately preceding period of the same duration as such future period; provided that the amount estimated to be payable under any such percentage lease shall in all cases recognize any change in the applicable percentage called for by the terms of such lease. Non-Recourse Indebtedness means any Indebtedness the liability for which is effectively limited to Property, Plant and Equipment and the income therefrom not less than eighty percent (80%) of the cost of which Property, Plant and Equipment shall have been financed solely with the proceeds of such Indebtedness, with no recourse, directly or indirectly, to the general credit of any Member or to any other Property of any Member. Obligated Group means the Members and any other Person which has fulfilled the requirements for entry into the Obligated Group set forth in Section 404 hereof and which has not ceased such status pursuant to Section 405 hereof. Obligated Group Agent means the College or such other Member as may be designated from time to time pursuant to written notice to the Master Trustee and each Related Bond Trustee and each Related Bond Insurer, executed by the authorized officer of the Governing Body of the College. Obligation means any evidence of Indebtedness or of an Interest Rate Agreement issued by a Member pursuant to this Master Indenture which has been authenticated and delivered by the Master Trustee pursuant to Section 204 hereof. Obligation Holder Holder or Owner of the Obligation means the registered owner of any fully registered or book entry Obligation unless alternative provision is made in the Supplemental Master Indenture pursuant to which such Obligation is issued for establishing 8 9 ownership of such Obligation in which case such alternative provision shall control. Officer s Certificate means a certificate signed by the President, Vice President or any other officer authorized to sign by resolution of the Governing Body of such entity. Outstanding means (a) in the case of Indebtedness a Member other than Related Bonds or Obligations, all such Indebtedness of such Member which has been issued except any such portion thereof canceled after purchase on the open market or surrendered for cancellation or because of payment at or redemption prior to maturity, any such Indebtedness in lieu of which other Indebtedness has been duly issued and any such Indebtedness which is no longer deemed outstanding under its terms and with respect to which such Member is no longer liable under the terms of such Indebtedness, and (b) in the case of Related Bonds Outstanding, Related Bonds and, in the case of Obligations, Outstanding Obligations. Outstanding Obligations, Obligations Outstanding, or Obligations then Outstanding means all Obligations which have been duly authenticated and delivered by the Master Trustee under the Master Indenture, except: (a) Obligations canceled after purchase in the open market or because of payment at maturity or prepayment or redemption prior to maturity; (b) (i) Obligations, for the payment or redemption of which cash or Escrow Obligations shall have been theretofore deposited with the Master Trustee (whether upon or prior to the maturity or redemption date of any such Obligations); provided that, if such Obligations are to be prepaid or redeemed prior to the maturity thereof, notice of such prepayment or redemption shall have been given or irrevocable arrangements satisfactory to the Master Trustee shall have been made therefor, or waiver of such notice satisfactory in form to the Master Trustee shall have been filed with the Master Trustee, and (ii) Obligations securing Related Bonds for the payment or redemption of which cash or Escrow Obligations shall have been theretofore deposited with the Related Bond Trustee (whether upon or prior to the maturity or redemption date of any such Obligations); provided that, if such Obligations are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given or arrangements satisfactory to the Related Bond Trustee shall have been made therefor, or waiver of notice satisfactory in form to the Related Bond Trustee shall have been filed with the Related Bond Trustee; (c) Obligations in lieu of which other Obligations have been authenticated and delivered hereunder; and (d) Obligations held or owned by a Member. Notwithstanding the foregoing, any Obligation securing Related Bonds shall be deemed Outstanding if such Related Bonds are Outstanding. Outstanding Related Bonds or Related Bonds Outstanding means all Related Bonds which have been duly authenticated and delivered by the Related Bond Trustee under the Related Bond Indenture and are deemed outstanding under the terms of such Related Bond Indenture or, if such Related Bond Indenture does not specify when Related Bonds are deemed outstanding thereunder, all such Related Bonds which have been so authenticated and delivered, except: (a) Related Bonds canceled after purchase in the open market or because of payment at maturity or prepayment or redemption prior to maturity; (b) Related Bonds, for the payment or redemption of which cash or Escrow Obligations of the type described in clause (i) of the definition thereof shall have been theretofore deposited with the Related Bond Trustee (whether upon or prior to the maturity or redemption date of any such Bonds) in accordance with the Related Bond Indenture; provided that if such Related Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given or arrangements satisfactory to the Related Bond Trustee shall have been made therefor, or waiver of such notice satisfactory in form to the Related Bond Trustee shall have been filed with the Related Bond Trustee; (c) Related Bonds in lieu of which other bonds have been authenticated and delivered under the Related Bond Indenture; and (d) For the purposes of all covenants, approvals, waivers and notices required to be obtained or given under the Related Bond Indenture, Related Bonds held or owned by a Member. Paying Agent means the bank or banks, if any, designated pursuant to a Related Bond Indenture to receive and disburse the principal of and interest on any Related Bonds or designated pursuant to this Master Indenture to receive and disburse the principal of and interest on any Obligations. Permitted Encumbrances means this Master Indenture, any Related Loan Document, any Related Bond Indenture and, as of any particular time: (a) Liens arising by reason of good faith deposits with a Member in connection with tenders, leases of real estate, bids or contracts (other than contracts for the payment of money), deposits by any Member to secure public or statutory obligations, or to secure, or in lieu of, surety, stay or appeal bonds, and deposits as security for the payment of taxes or assessments or other similar charges; any Lien arising by reason of deposits with, or the giving of any form of security to, any governmental agency or any body created or approved by law or governmental regulation for any purpose at any time as required by law or governmental regulation as a condition to the transaction of any business or the exercise of any privilege or license, or to enable any Member to maintain self-insurance or to participate in any funds established to cover any insurance risks or in connection with workmen s compensation, unemployment insurance, pensions or profit sharing plans or other social security plans or programs, or to share in the privileges or benefits required for corporations participating in such arrangements; (b) any Lien on Property acquired subject to an existing Lien, if at the time of such acquisition, the aggregate amount remaining unpaid on the Indebtedness secured thereby (whether or not assumed by the Member) shall not exceed the fair market value or (if such 10 B-4 11

145 Property has been purchased) the lesser of the acquisition price or the fair market value of the Property subject to such Lien as determined in good faith by the Governing Body of the Member; (c) any Lien on the Property of any Member granted in favor of or securing Indebtedness to any other Member; (d) any Lien on the Property of any Member permitted under the provisions of Section 418 hereof; (e) any Lien on Property if such Lien equally and ratably secures all of the Obligations and only the Obligations; (f) any Lien on Property which secures Subordinated Indebtedness; (g) leases which relate to Property of the Obligated Group which is of a type that is customarily the subject of such leases, such as food service facilities, and book stores; leases of coal, oil, gas or other mineral rights; leases entered into in accordance with the disposition of Property provisions of this Master Indenture; leases, licenses or similar rights to use Property to which any Member is a party existing as of November 1, 2012, and any renewals and extensions thereof and any successors thereto or replacements thereof; and any leases, licenses or similar rights to use Property whereunder a Member is lessee, licensee or the equivalent thereof upon fair and reasonable terms no less favorable to the lessee or licensee than would obtain in a comparable arm s-length transaction; (h) Liens for taxes and special assessments which are not then delinquent, or if then delinquent are being contested in accordance with Section 406 hereof and any Related Loan Documents; (i) utility, access and other easements and rights-of-way, restrictions, encumbrances and exceptions which do not materially interfere with or materially impair the operation of the Property affected thereby (or, if such Property is not being then operated, the operation for which it was designed or last modified); (j) any mechanic s, laborer s, materialman s, supplier s or vendor s Lien or right in respect thereof if payment is not yet due under the contract in question or if such Lien is being contested in accordance with the provisions of this Master Indenture; (k) such Liens, defects, irregularities of title and encroachments on adjoining property as normally exist with respect to property similar in character to the Property involved and which do not materially adversely affect the value of, or materially impair, the Property affected thereby for the purpose for which it was acquired or is held by the owner thereof, including, without limitation, statutory liens granted to banks or other financial institutions, which liens have not been specifically granted to secure Indebtedness and which do not apply to Property which has been deposited as part of a plan to secure Indebtedness; (l) zoning laws and similar restrictions which are not violated by the Property affected thereby; (m) all right, title and interest of the State where the Property involved is located, municipalities and the public in and to tunnels, bridges and passageways over, under or upon a public way; (n) Liens on or in Property given, granted, bequeathed or devised by the owner thereof existing at the time of such gift, grant, bequest or devise, provided that (i) such Liens consist solely of restrictions on the use thereof or the income therefrom, or (ii) such Liens secure Indebtedness which is not assumed by any Member and such Liens attach solely to the Property (including the income therefrom) which is the subject of such gift, grant, bequest or devise; (o) Liens of or resulting from any judgment or award, the time for the appeal or petition for rehearing of which shall not have expired, or in respect of which any Member shall at any time in good faith be prosecuting an appeal or proceeding for a review and in respect of which a stay of execution pending such appeal or proceeding for review shall be in existence; (p) any security interest, to the extent any Member has any rights in such fund, in any rebate fund, any depreciation reserve, debt service or interest reserve, debt service fund or any similar fund established pursuant to the terms of any Supplemental Master Indenture, Related Bond Indenture or Related Loan Document in favor of the Master Trustee, a Related Bond Trustee, a Related Issuer, a Related Bond Insurer or the Holder of the Indebtedness issued pursuant to such Supplemental Master Indenture, Related Bond Indenture or Related Loan Document or the Holder of any related Commitment Indebtedness; (q) any Lien on any Related Bond or any evidence of Indebtedness of any Member acquired by or on behalf of any Member which secures Commitment Indebtedness and only Commitment Indebtedness; (r) such Liens, covenants, conditions and restrictions, if any, which do not secure Indebtedness and which are other than those of the type referred to in the other clauses of this definition, of a Member at the effective date of this Master Indenture or existing at the time any Person becomes a Member, and which (i) in the case of Property owned by any Member on the date of execution of the Master Indenture, do not and will not, so far as can reasonably be foreseen, materially adversely affect the value of the Property currently affected thereby or materially impair the same, and (ii) in the case of any other Property, do not materially impair or materially interfere with the operation or usefulness thereof for the purpose for which such Property was acquired or is held by a Member; (s) Liens on Property of a Person existing at the time such Person is merged into or consolidated with a Member, or at the time of a sale, lease or other disposition of the properties of a Person as an entirety or substantially as an entirety to a Member which becomes part of a Property that secures Indebtedness that is assumed by a Member as a result of any such merger, consolidation or acquisition; provided, that no such Lien may be increased, extended, renewed or modified after such date to apply to any Property of a Member not subject to such lien on such date unless such Lien as so increased, extended, renewed or modified is otherwise permitted under this Master Indenture; (t) (u) Liens which secure Non-Recourse Indebtedness; Any existing Liens listed on Schedule 1 to this Master Indenture; and (v) Liens on any Property of a Member to secure any Indebtedness incurred for the purpose of financing all or any part of the purchase price or the cost of constructing or improving the Property subject to such Liens; provided, that such Liens shall not apply to any Property theretofore owned by a Member, other than any theretofore unimproved real property on which the Property so constructed or improved is located. Permitted Investments shall mean and include any of the following: (1) Government Obligations; (2) Bonds, debentures, notes or other evidences of indebtedness issued by any of the following agencies: Bank for Cooperatives; Farmers Home Administration; Federal Intermediate Credit Banks; Federal Home Loan Bank System; Federal Faun Credit Bank; Export-Import Bank of the United States; Federal Financing Bank; Federal Land Banks; Government National Mortgage Association (or any other agency or instrumentality of the United States of America, created by an Act of Congress, substantially similar to the foregoing in its legal relationship to the United States of America); Tennessee Valley Issuer; or Washington Metropolitan Area Transit Issuer; (3) Any bond, debenture, note, participation certificate or other similar obligations issued by the Federal National Mortgage Association to the extent such obligation is guaranteed by the Government National Mortgage Association or issued by any other federal agency and backed by the full faith and credit of the United States of America; (4) Time accounts (including accounts evidenced by time certificates of deposit, time deposits or other similar banking arrangements) which, to the extent not insured by the FDIC or Federal Savings and Loan Insurance Corporation, shall be secured by a pledge of Government Obligations, provided, that said Government Obligations pledged either must mature as nearly as practicable coincident with the maturity of said time accounts or must be replaced or increased so that the market value thereof is always at least equal to the principal amount of said time accounts; (5) Units of participation in a mutual fund managed by an investment company registered under the Investment Advisors Act of 1940, as amended, provided that such units of participation have a maturity of less than 1 year, that such fund is required to maintain a constant net assets value, that the assets of such fund are not less than $10,000,000, and that the securities which may 14 B-5 be purchased for the portfolio of such fund are limited to the obligations of the kind described in (1) above; and (6) Obligations of states or political subdivisions or agencies thereof, the interest on which is excluded from gross income for Federal income tax purposes, and which are rated at least AA by Moody s or S&P. (7) Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of AAArn-G; AA.Am, or Aam and if rated by Moody s rated Aaa, Aal or Aa2 including, without limitation, one or more money market mutual fund portfolios of the Wells Fargo Advantage Funds or any other mutual fund for which the Master Trustee or any of its affiliates serve as an investment manager, administrator, servicing agent, and/or custodian or subcustodian, notwithstanding that (i) the Master Trustee or an Affiliate of the Master Trustee receives fees from such funds for services rendered, (ii) the Trustee charges and collects fees for services rendered pursuant to this Master Indenture, which fees are separate from the fees received from such funds, and (iii) services performed for such funds and pursuant to this Master Indenture may at times duplicate those provided to such funds by the Master Trustee or its Affiliates. Person means any natural person, firm, joint venture, association, partnership, business trust, corporation, limited liability company, public body, agency or political subdivision thereof or any other similar entity. Primary Obligor means the Person who is primarily obligated on an obligation which is guaranteed by another Person. Projected Rate means the projected yield at par of an obligation as set forth in the report of a Consultant (which Consultant and report, including, without limitation, the scope, form, substance and other aspects thereof, are acceptable to the Master Trustee and each Related Issuer). Such report shall state that in determining the Projected Rate such Consultant reviewed the yield evaluations at par of not less than three (3) obligations selected by such Consultant, the interest on which is entitled to the exemption from federal income tax afforded by Section 103(a) of the Code or any successor thereto (or, if it is not expected that it will be reasonably possible to issue such tax-exempt obligations or if the interest on the Indebtedness for which the Projected Rate is being calculated is not entitled to such exemption, then obligations the interest on which is subject to federal income taxation) which obligations such Consultant states in its report are reasonable comparators for utilizing in developing such Projected Rate and which obligations (a) were Outstanding on a date selected by the Consultant which date so selected occurred during the ninety (90) day period preceding the date of the calculation utilizing the Projected Rate in question, (b) to the extent practicable, are obligations of Persons engaged in operations similar to those of the Obligated Group and having a credit rating similar to that of the Obligated Group, (c) are not entitled to the benefits of any credit enhancement, including, without limitation, any letter or line of credit or insurance policy, and (d) to the extent practicable, have a remaining term and amortization schedule substantially the same as the obligation with respect to which 15

146 such Projected Rate is being developed. Property means any and all rights, titles and interests in and to any and all property, whether real or personal, tangible (including cash) or intangible, wherever situated and whether now owned or hereafter acquired. Property, Plant and Equipment means all Property of a Member which is classified as property, plant and equipment under generally accepted accounting principles. Put Date means (a) any date on which an owner of Put Indebtedness may elect to have such Put Indebtedness paid, purchased or redeemed by or on behalf of the underlying obligor prior to its stated maturity date or (b) any date on which Put Indebtedness is required to be paid, purchased or redeemed from the owner by or on behalf of the underlying obligor (other than at the option of the owner) prior to its stated maturity date, other than pursuant to any mandatory sinking fund or other similar fund or other than by reason of acceleration upon the occurrence of an event of default. Put Indebtedness means Indebtedness which is (a) payable or required to be purchased or redeemed by or on behalf of the underlying obligor, at the option of the owner thereof, prior to its stated maturity date or (b) payable or required to be purchased or redeemed from the owner by or on behalf of the underlying obligor (other than at the option of the owner) prior to its stated maturity date, other than pursuant to any mandatory sinking fund or other similar fund or other than by reason of acceleration upon the occurrence of an event of default. Rating Agency means Fitch, Moody s or Standard & Poor s and their respective successors and assigns. Registrar means the Related Bond Trustee. Related Bond Indenture means the Bond Indenture and any indenture, bond resolution or similar instrument pursuant to which any series of Related Bonds is issued. Related Bond Insurer means the Person issuing a municipal bond insurance or similar policy with respect to Related Bonds. Related Bond Trustee means the Bond Trustee and any other trustee under any Related Bond Indenture and any successor trustee thereunder or, if no trustee is appointed under a Related Bond Indenture, the Related Issuer. Related Bonds means the revenue bonds or similar obligations issued by any state of the United States or any municipal corporation or other political subdivision formed under the laws thereof or any constituted authority, agency or instrumentality of any of the foregoing empowered to issue obligations on behalf thereof, the proceeds of which are loaned or made available to a Member in consideration of the issuance, authentication and delivery of and the pledge of or the guaranty of a security interest in an Obligation or Obligations. Related Issuer means any issuer of a series of Related Bonds. Related Loan Document means any loan or lease document or documents (including, without limitation, any lease, sublease or installment sales contract) pursuant to which any proceeds of any Related Bonds are advanced to any Member (or any Property financed or refinanced with such proceeds is leased, subleased or sold to a Member). Short-Term, when used in connection with Indebtedness, means having an original maturity less than or equal to one year and not renewable at the option of the debtor for a term greater than one year beyond the date of original issuance. Standard & Poor s or S&P means Standard & Poor s Ratings Service, a division of The McGraw Hill Companies Inc., a corporation organized and existing under the laws of the State of New York, 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, Standard & Poor s or S&P shall be deemed to refer to any other nationally recognized securities rating agency designated by the Obligated Group Agent by written notice to the Master Trustee. Subordinated Indebtedness means Indebtedness which meets the requirements set forth in Exhibit C hereto. Supplemental Master Indenture means an indenture amending or supplementing this Master Indenture entered into pursuant to Article VII hereof. Tax-Exempt Organization means a Person organized under the laws of the United States of America or any state thereof which is an organization described in Section 501(c)(3) of the Code, which is exempt from federal income taxes under Section 501(a) of the Code, and which is not a private foundation within the meaning of Section 509(a) of the Code, or corresponding provisions of federal income tax laws from time to time in effect. Trust Estate shall have the meaning set forth in Section 421 hereof. United States Government Obligations means noncallable direct obligations of, or obligations the timely payment of the principal of and interest on which is fully guaranteed by, the United States of America. Written Request means with reference to a Related Issuer, a request in writing signed by the Chairman, Vice-Chairman, Treasurer, Mayor, Clerk, President, Vice President, Executive Director, Associate Executive Director, Secretary or Assistant Secretary of the Related Issuer or any other officers designated by such Related Issuer, with reference to the Obligated Group Agent means a request in writing signed by the President or Vice President of the Obligated Group Agent and with reference to any Member means those officers designated by such Member, or any other officers designated by the Related Issuer or the Obligated Group Agent or Member, as the case may be. Section 102. Gender. Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders. Section 103. Singular and Plural. Unless the context shall otherwise indicate, words importing the singular number shall include the plural and vice versa. Section 104. Application of Generally Accepted Accounting Principles. All accounting terms not specifically defined herein shall be construed in accordance with GAAP; provided, that if the Obligated Group Agent notifies the Master Trustee that the Obligated Group Agent requests an amendment to any provision hereof to eliminate the effect of any accounting change occurring after the date hereof or in the application thereof on the operation of such provision, regardless of whether any such notice is given before or after such accounting change or in the application thereof, then the Obligated Group Agent and the Master Trustee agree that they will negotiate in good faith amendments to the provisions of this Master Indenture that are directly affected by such accounting change with the intent of having the respective positions of the Obligated Group and the Master Trustee after such accounting change conform as nearly as possible to their respective positions prior to such accounting change and, until any such amendments have been agreed upon and agreed to by the Obligated Group Agent and the Master Trustee, the provisions in this Agreement shall be calculated as if no such accounting change had occurred. When used herein, the term financial statements shall include the notes and schedules thereto. Whenever the term Obligated Group is used in respect of a financial covenant or a related definition, it shall be understood to mean all Members of the Obligated Group on a consolidated basis, unless the context clearly requires otherwise. Notwithstanding anything to the contrary contained herein, (a) all financial statements delivered hereunder shall be prepared, and all financial covenants contained herein shall be calculated, without giving effect to any election under the Statement of Financial Accounting Standards No. 159 (or any similar accounting principle) permitting a Person to value its financial liabilities or Indebtedness at the fair value thereof, (b) no effect shall be given to FAS 141R (and any subsequent codification thereof) in respect of earn-outs or other similar contingent consideration and (c) any change in GAAP that would require any leases that were or would have been treated as operating leases in accordance with GAAP in effect immediately prior to the date of this Master Indenture to be classified and accounted for as capital leases after such change shall be disregarded for purposes of the operation of terms and covenants (and the related calculations thereunder) in this Master Indenture, and (d) any opinions or reports to be provided by accountants hereunder shall mean an opinion or report that is unqualified as to scope or going concern. Section 105. Headings. Headings of articles and sections herein and the table of contents hereof are solely for the convenience of reference, do not constitute a part hereof and shall not affect the meaning, construction or effect hereof. 18 B-6 ARTICLE II THE OBLIGATIONS Section 201. Series, Designation and Amount of Obligations. No Obligations may be issued under the provisions of this Master Indenture except in accordance with this Article. Obligations may be issued to: (a) evidence Indebtedness, (b) evidence any repayment obligation under an Interest Rate Agreement, or (c) evidence a reimbursement obligation arising as a result of the issuance of a surety bond or other instrument guaranteeing or in effect guaranteeing any payments under an Interest Rate Agreement, as provided in Section 209 hereof. The total principal amount of Obligations, the number of Obligations and the series of Obligations that may be created under this Master Indenture is not limited except as is set forth herein and in the Supplemental Master Indenture providing for the issuance thereof. Each series of Obligations shall be issued pursuant to a Supplemental Master Indenture. Each series of Obligations shall be designated so as to differentiate the Obligations of such series from the Obligations of any other series. Unless provided to the contrary in a Supplemental Master Indenture, Obligations shall be issued as fully registered Obligations with the Obligations of each series to be lettered and numbered the year of issuance-1 and upward. Section 202. Payment of Obligations. The principal of, premium, if any, and interest on the Obligations shall be payable in any 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, premium, if any, and interest shall be payable at the designated corporate trust office of the Master Trustee in Philadelphia, Pennsylvania, or at the office of any alternate Paying Agent or agents named in any such Obligations or in a Related Bond Indenture. Unless contrary provision is made in the Supplemental Master Indenture pursuant to which such Obligation is issued or the election referred to in the next sentence is made, payment of the interest on the Obligations shall be made to the person appearing on the Obligation registration books of the Obligated Group (kept in the corporate trust office of the Master Trustee as Obligation Registrar) as the registered owner thereof and shall be paid by check or draft mailed to the registered owner at his address as it appears on such registration books or at such other address as is furnished to the Master Trustee in writing by such Holder; provided, however, that any Supplemental Master Indenture creating an Obligation may provide that interest on such Obligation may be paid, upon the request of the Holder of such Obligation, by wire transfer. The foregoing notwithstanding, if a Member so elects and notifies the Master Trustee in writing, payments on such Obligation shall be made directly by such Member, by check or draft hand delivered to the Holder thereof or its designee or shall be made by such Member by wire transfer to such Holder, in either case delivered on or prior to the date on which such payment is due. Such Member shall give written notice of any such payment to the Master Trustee concurrently with the making thereof, specifying the amount paid and identifying the Obligation or Obligations with respect to which such payment was made by series, designation, number and registered Holder. Except with respect to Obligations directly paid, the Members agree to deposit with the Master Trustee prior to each due date of the principal of, premium, if any, or interest on any of the Obligations, a sum sufficient to pay such principal, premium, if any, or interest so becoming due. Any such moneys shall upon Written Request and direction of the Obligated Group Agent be invested in Permitted Investments. The foregoing notwithstanding, amounts deposited with the Master Trustee to provide for the payment of Obligations pledged to 19

147 the payment of Related Bonds shall be invested in accordance with the provisions of the Related Bond Indenture and Related Loan Document. The Master Trustee shall not be liable or responsible for any loss or adverse tax consequences to any Related Bonds resulting from any such investments. Investments in Permitted Investments which are United States Government Obligations may be made through repurchase agreements with banks or other financial institutions, including but not limited to the Master Trustee or any Related Bond Trustee, provided that each such repurchase agreement is in a commercially reasonable form, is for a commercially reasonable period, in the opinion of counsel acceptable to the Master Trustee, and results in the transfer of legal title to identified United States Government Obligations which are segregated in a custodial or trust account for the benefit of the Master Trustee, and further provided that United States Government Obligations acquired pursuant to such repurchase agreements shall be valued at the lower of the then current market value thereof or the repurchase price thereof set forth in the applicable repurchase agreement. Supplemental Master Indentures may create such security, including debt service reserve funds and other funds as are necessary to provide for payment or to hold moneys deposited for payment or as security for a related series of Obligations. Section 203. Execution. Obligations shall be executed on behalf of the Obligated Group Agent on behalf of the Obligated Group by the manual or, if permitted by law, facsimile signature of its Chairman of the Governing Body, President, any Vice President or other authorized officer and shall have impressed or printed by facsimile thereon the corporate seal of the College, if required by law or the initial Obligation Holder, which shall be attested by the manual or, to the extent permitted by law, facsimile signature of its Secretary, any Assistant Secretary or other authorized officer. In case any officer whose signature or facsimile of whose signature shall appear on the Obligations shall cease to be such officer before the delivery of such Obligations, such signature or such facsimile shall nevertheless be valid and sufficient for all purposes, the same as if he had remained in office until delivery. Section 204. Authentication. No Obligation shall be valid or obligatory for any purpose or entitled to any security or benefit under this Master Indenture unless and until a certificate of authentication on such Obligation substantially in the form set forth below shall have been duly executed by the Master Trustee, and such executed certificate of the Master Trustee upon any such Obligation shall be conclusive evidence that such Obligation has been authenticated and delivered under this Master Indenture. The Master Trustee s certificate of authentication on any Obligation shall be deemed to have been executed by it if signed by an authorized officer or signer of the Master Trustee, but it shall not be necessary that the same officer or signer sign the certificate of authentication on all of the Obligations issued hereunder. The Master Trustee s authentication certificate shall be in substantially the following form: MASTER TRUSTEE S AUTHENTICATION CERTIFICATE This Obligation is one of the Obligations described in the within-mentioned Master Indenture. AS MASTER TRUSTEE By: Authorized Officer Section 205. Form of Obligations and Temporary Obligations. Obligations issued under this Master Indenture shall be substantially in the form set forth in Exhibit A hereto or in the Supplemental Master Indenture pursuant to which such Obligations are issued, in each case with such appropriate variations, omissions and insertions as are permitted or required by this Master Indenture or deemed necessary by the Master Trustee to reflect the terms and conditions thereof as established hereby and by any Supplemental Master Indenture. Unless Obligations of a series have been registered under the Securities Act of 1933, as amended, each Obligation of such series shall be endorsed with a legend which shall read substantially as follows: This Obligation has not been registered under the Securities Act of 1933, as amended. Obligations of any series may be initially issued in temporary form exchangeable for definitive Obligations of the same series when ready for delivery. The temporary Obligations shall be of such denomination or denominations as may be determined by the Member executing the same, and may contain such reference to any of the provisions of this Master Indenture as may be appropriate. Every temporary Obligation shall be executed by a Member and be authenticated by the Master Trustee upon the same conditions and in substantially the same manner as the definitive Obligations. If any Member issues temporary Obligations it will execute and furnish definitive Obligations without delay and thereupon the temporary Obligations may be surrendered for cancellation in exchange therefor at the designated corporate trust office of the Master Trustee, and the Master Trustee shall authenticate and deliver in exchange for such temporary Obligations an equal aggregate principal amount of definitive Obligations of the same series and maturity of authorized denominations. Until so exchanged, the temporary Obligations shall be entitled to the same benefits under this Master Indenture as definitive Obligations authenticated and delivered hereunder. Section 206. Mutilated, Lost, Stolen or Destroyed Obligations. In the event any temporary or definitive Obligation is mutilated, lost, stolen or destroyed, the Obligated Group Agent may execute and the Master Trustee may authenticate and deliver a new Obligation of like form, date, maturity and denomination as that mutilated, lost, stolen or destroyed; provided that, in the case of any mutilated Obligation, such mutilated Obligation shall first be surrendered to the Master Trustee, and in the case of any lost, stolen or destroyed Obligation, there shall be first furnished to the Obligated Group Agent and the Master Trustee evidence of such loss, theft or destruction satisfactory to the Obligated Group Agent and the Master Trustee, together with indemnity satisfactory to them. In the event any such Obligation shall have matured, instead of issuing a duplicate Obligation, the Obligated Group may pay the same without surrender thereof. The Obligated Group and the Master Trustee may charge the Holder or owner of such Obligation with their reasonable fees and expenses in this connection Section 207. Registration; Negotiability; Cancellation upon Surrender; Exchange of Obligations. Upon surrender for transfer of any Obligation at the designated corporate trust office of the Master Trustee, the Obligated Group Agent shall execute and the Master Trustee shall authenticate and deliver, in the name of the transferee or transferees, a new fully registered Obligation or Obligations of the same series, designation and maturity without coupons for a like aggregate principal amount. The execution by the Obligated Group Agent of any Obligation of any denomination shall constitute full and due authorization of such denomination and the Master Trustee shall thereby be authorized to authenticate and deliver such Obligation. The Master Trustee shall not be required to transfer or exchange any Obligation during the period of fifteen (15) days next preceding any interest payment date of such Obligation or to transfer or exchange any Obligation after the notice calling such Obligation or portion thereof for redemption has been given as herein provided, or during the period of fifteen (15) days next preceding the mailing of such notice of redemption with respect to any Obligation of the same series and maturity. As to any Obligation, the person in whose name the same shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of the principal of any such Obligation shall be made only to or upon the order of the registered owner thereof or his legal representative, but such registration may be changed as herein provided. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Obligation to the extent of the sum or sums so paid. Any Obligation surrendered for the purpose of payment or retirement or for replacement pursuant to Section 206 hereof shall be canceled upon surrender thereof to the Master Trustee or any Paying Agent. Unless contrary provision is made in the Supplemental Master Indenture pursuant to which such Obligation is issued, if any Member shall acquire any of the Obligations, the Member shall deliver such Obligations to the Master Trustee for cancellation and the Master Trustee shall cancel the same. Any such Obligations canceled by any Paying Agent other than the Master Trustee shall be promptly transmitted by such Paying Agent to the Master Trustee. Certification of Obligations canceled by the Master Trustee and Obligations canceled by a Paying Agent other than the Master Trustee which are transmitted to the Master Trustee shall be made to the Obligated Group Agent. Canceled Obligations may be destroyed by the Master Trustee unless instructions to the contrary are received from the Obligated Group Agent. The Obligated Group and the Master Trustee may charge each Obligation Holder requesting an exchange, registration, change in registration or transfer of an Obligation any tax, fee or other governmental charge required to be paid with respect to such exchange,registration or transfer. Section 208. Security for Obligations. Any one or more series of Obligations issued hereunder may, so long as any Liens created in connection therewith constitute Permitted Encumbrances, be secured by security (including, without limitation, letters or lines of credit, insurance or Liens on Property, including Facilities of the Obligated Group, or security interests 22 B-7 in depreciation reserve, debt service or interest reserve or debt service or similar funds). Such security need not extend to any other Indebtedness (including any other Obligations or series of Obligations). Consequently, the Supplemental Master Indenture pursuant to which any one or more series of Obligations is issued may provide for such supplements or amendments to the provisions hereof, including, without limitation, Articles II and V hereof, as are necessary to provide for such security and to permit realization upon such security solely for the benefit of the Obligations entitled thereto. Section 209. Issuance of Obligations in Forms Other than Notes. Totheextentthatany Indebtedness which is permitted or required to be issued pursuant to this Master Indenture is not in the form of a promissory note, an Obligation in the form of a promissory note may be issued hereunder and pledged as security for the payment of such Indebtedness in lieu of directly issuing such Indebtedness as an Obligation hereunder. Nevertheless, the parties hereto agree that Obligations may be issued hereunder to evidence any type of Indebtedness (other than Non- Recourse Indebtedness), including, without limitation, any Indebtedness in a form other than a promissory note. Consequently, the Supplemental Master Indenture pursuant to which any Obligation is issued may provide for such supplements or amendments to the provisions hereof, including, without limitation, Articles II and V hereof, as are necessary to permit the issuance of such Obligations hereunder as are not inconsistent with the intent hereof; provided that, except as otherwise expressly provided herein, all Obligations issued hereunder shall be equally and ratably secured by any lien created hereunder. Except as otherwise provided in this Master Indenture, any Interest Rate Agreement which is authenticated and delivered as an Obligation under this Master Indenture shall be equally and ratably secured under this Master Indenture with all other Obligations; provided, however, that any such Obligation shall be deemed Outstanding under this Master Indenture solely for the purpose of (a) receiving payment under this Master Indenture, (b) consenting to any amendment requiring the consent of Obligation Holders under Section 702 of this Master Indenture, and (c) exercising the rights and remedies of an Obligation Holder under Section 504 of this Master Indenture, and such Obligation shall not be considered Outstanding for any other purpose under this Master Indenture and the Holder thereof shall not be entitled to exercise any other rights under this Master Indenture. Notwithstanding the foregoing, in the event that an Interest Rate Agreement is insured and the insurer is not in default under the terms of such insurance, the insurer shall be entitled to exercise the rights granted to the Obligation Holder under subsections (b) and (c) of this Section 209. Obligations of a Member under an Interest Rate Agreement do not constitute Indebtedness for any purpose hereunder. ARTICLE III PREPAYMENT OR REDEMPTION OF OBLIGATIONS Section 301. Prepayment or Redemption Dates and Prices. Obligations shall be subject to optional and mandatory prepayment or redemption, in whole or in part, and may be prepaid or redeemed prior to maturity, as provided in this Master Indenture or the Supplemental Master Indenture pertaining to the series of Obligations to be prepaid or redeemed, but not otherwise. Unless contrary provision is made in the Supplemental Master Indenture pursuant to 23

148 which a series of Obligations is issued, the Obligations are callable for redemption prior to maturity in the event of damage to or destruction of the Facilities of any Member or any part thereof or condemnation (or sale consummated under threat of condemnation) of the Facilities of any Member or any part thereof in excess of $1,000,000, but only to the extent provided in Sections 410, 411 and 412 hereof. If called for redemption in such events, the Obligations shall be subject to redemption by the Members at any time,inwholeorinpart,andifinpartthenby series and maturities designated by the Obligated Group Agent (and, if less than all of a maturity is being redeemed, by lot in such manner as determined by the Master Trustee), at the principal amount thereof plus accrued interest to the redemption date and without premium; provided that if the proceeds resulting from any damage to or destruction or condemnation or sale consummated under threat of condemnation of any discrete free standing Facilities financed or refinanced directly or indirectly whether in whole or in part from the proceeds of any series of Obligations, the Obligated Group Agent will designate the Obligations of such series for redemption prior to any other series of Obligations. To the extent not otherwise provided herein or in a Supplemental Master Indenture, the Obligated Group shall have the right to prepay or redeem all or such portion of the Obligations of any particular series as shall be necessary to effect the payment, prepayment, redemption, refunding or advance refunding of the series of Related Bonds secured by such Obligations or any portion thereof in the manner provided in the Related Bond Indenture. If called for prepayment or redemption in such events, the Obligations of such series shall be subject to prepayment or redemption in such amount, and at such times, in the manner and with the premium necessary to effect the refunding, advance refunding or redemption of all or the portion of the series of Related Bonds to be refunded, advance refunded or redeemed. Except for prepayment or redemption made pursuant to the immediately preceding paragraph and except to the extent that contrary provision is made in the Supplemental Master Indenture pursuant to which a series of Obligations is issued, no redemption of less than all of the Obligations of a particular series at the time Outstanding shall be made pursuant hereto unless the aggregate principal amount of such Obligations to be redeemed is equal to or more than One Hundred Thousand Dollars ($100,000). Unless a contrary provision is made in a Supplemental Master Indenture pursuant to which a series of Obligations is issued or in a Related Loan Document, Obligations may be called for optional prepayment or redemption by the Master Trustee pursuant to this Section 301 upon receipt by the Master Trustee at least thirty (30) days prior to the redemption date of a certificate of the Obligated Group Agent requesting such prepayment or redemption and a resolution of a Member designating funds for such prepayment or redemption. Such certificate shall specify the particular series and the principal amount of such series of Obligations so to be called for prepayment or redemption (and if less than all of a series is to be prepaid, the maturities or portions hereof), the applicable prepayment or redemption price or prices and the provision or provisions of this Master Indenture or any Supplemental Master Indenture pursuant to which such Obligations are to be called for prepayment or redemption. Obligations of any series with respect to which a sinking fund has been established shall be redeemed by the Master Trustee pursuant to the provisions of such sinking fund and Obligations to be mandatorily redeemed or paid at maturity shall be redeemed or paid at maturity, as the case may be, in accordance herewith and with any Supplemental Master Indenture pursuant to which such Obligations were issued, in both cases without any notice from or direction of any Member. In lieu of prepaying or redeeming Obligations pursuant to this Section 301, the Master Trustee may, at the request of the Obligated Group Agent, use funds otherwise available hereunder for the redemption of such Obligations to purchase such Obligations in the open market at a price not exceeding the redemption price then applicable hereunder. In addition to the redemptions herein provided which are applicable to all Obligations, each series of Obligations shall be redeemable in the manner, at the time or times, at the premiums, if any, and upon the terms specified in the Supplemental Master Indenture pursuant to which such Obligations were issued or in a Related Loan Document. Section 302. Notice of Prepayment or Redemption. Except as permitted by Section 301 or Section 305, or unless contrary provision is made with respect to a particular series of Obligations in the Supplemental Master Indenture pursuant to which such Obligations are issued, notice of the call for any such prepayment or redemption identifying the Obligations to be prepaid or redeemed shall be given the Master Trustee by mailing a copy of such notice by registered or certified mail to each Related Issuer and to the registered owner of Obligations to be prepaid or redeemed to the address shown on the registration books maintained by the Master Trustee not less than thirty (30) days prior to the prepayment or redemption date; provided, however, that failure to give such notice by mailing or a defect in the notice or the mailing to any particular Obligation Holder will not affect the validity of the prepayment or redemption of any other Obligation. Upon the happening of the above conditions, and if sufficient moneys have been deposited with the Master Trustee and are available to pay the principal of, premium, if any, and interest on the Obligation to be prepaid or redeemed to the prepayment or redemption date, the Obligations, or portions thereof, thus called shall not bear interest after the applicable prepayment or redemption date, shall no longer be protected by this Master Indenture and shall not be deemed to be Outstanding under the provisions of this Master Indenture. The Master Trustee shall prepay or redeem, in the manner provided in this Article, such an aggregate principal amount of such Obligations of the series to be prepaid or redeemed at the principal amount thereof plus accrued interest to the prepayment or redemption date and premium, if any, as will exhaust as nearly as practicable such funds. At the written direction of the Obligated Group Agent, such funds may be invested in Escrow Obligations until needed for prepayment or redemption payout. Section 303. Partial Prepayment or Redemption of Obligations. Upon surrender of any Obligation for prepayment or redemption in part only, the Obligated Group Agent shall execute, and the Master Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Obligated Group, a new registered Obligation or Obligations of the same series and maturity, of authorized denominations, in aggregate principal amount equal to the unpaid portion of the Obligation surrendered. Such Member and the Master Trustee may agree with any Holder of any Obligation that such Holder may, in lieu of surrendering the same for a new registered Obligation, endorse on such Obligation a notice of such partial prepayment or redemption to be made on the following form or similar form which shall be typed or printed on the reverse side of such Obligation: ARTICLE IV GENERAL COVENANTS PAYMENTS ON ACCOUNT OF PRINCIPAL Principal Amount 26 Balance of Prepaid or Principal Payment Date Redeemed Amount Unpaid Signature Such partial prepayment or redemption shall be valid upon payment of the amount thereof to the registered owner of any such registered Obligation and the Obligated Group and the Master Trustee shall be fully released and discharged from all liability to the extent of such payment irrespective of whether such endorsement shall or shall not have been made upon the reverse of such Obligation by the owner thereof andirrespectiveofanyerrororomissioninsuch endorsement. Section 304. Effect of Call for Prepayment or Redemption. On the date designated for prepayment or redemption by notice given as herein provided, the Obligations so called for prepayment or redemption shall become and be due and payable at the prepayment or redemption price provided for prepayment or redemption of such Obligations on such date. If on the date fixed for prepayment or redemption, moneys for payment of the prepayment or redemption price and accrued interest are held by the Master Trustee or any other Paying Agent as provided herein, interest on such Obligations so called for prepayment or redemption shall cease to accrue, such Obligations shall cease to be entitled to any benefit or security hereunder except the right to receive payment from the moneys held by the Master Trustee or the Paying Agents and the amount of such Obligations so called for prepayment or redemption shall be deemed paid and no longer Outstanding. Section 305. Effect of Call on Notes Evidencing Obligations. Each promissory note which evidences Obligations issued hereunder shall be subject to redemption prior to maturity to the same extent, and with respect to the corresponding payments of principal and at the applicable redemption price that the Related Bonds are subject to in accordance with the terms of the Related Bond Indenture. Publication or mailing of notice of redemption, as required by the Related Bond Indenture, of such Related Bonds, without further notice or action by the Master Trustee, shall constitute notice of redemption of the corresponding amounts of principal due on such promissory note evidencing Obligations issued hereunder, and the same thereby shall become due and payable on the date of redemption of such Related Bonds at a redemption price equal to the redemption price payable with respect to the Related Bonds so redeemed. B-8 Section 401. Payment of Principal, Premium, if any, and Interest. Each Member unconditionally and irrevocably (subject to the right of such Member to cease its status as a Member pursuant to the terms and conditions of Section 405 hereof), jointly and severally covenants that it will promptly and fully pay the principal of, premium, if any, and interest on every Obligation issued under this Master Indenture at the place, on the dates and in the manner provided herein and in said Obligations according to the true intent and meaning thereof. Notwithstanding any schedule of payments upon the Obligations set forth herein or in the Obligations, each Member unconditionally and irrevocably (subject to the right of such Member to cease its status as a Member pursuant to the terms and conditions of Section 405 hereof), jointly and severally agrees to make payments upon each Obligation and be liable therefor at the times and in the amounts (including principal, interest and premium, if any) equal to the amounts to be paid as interest, principal at maturity or by mandatory sinking fund redemption, or premium, if any, upon any Related Bonds from time to time Outstanding. Section 402. Performance of Covenants. Each Member unconditionally and irrevocably (subject to the right of such Member to cease its status as a Member pursuant to the terms and conditions of Section 405 hereof), jointly and severally covenants that it will faithfully and fully perform at all times any and all covenants, undertakings, stipulations and provisions contained in this Master Indenture and in each and every Obligation executed, authenticated and delivered hereunder. Section 403. Representations and Warranties by the Obligated Group. Each Member makes the following representations and warranties with respect to itself as the basis for its covenants herein: (a) It is a non-stock, not-for-profit corporation duly incorporated under the laws of West Virginia, is in good standing and duly authorized to conduct its business and affairs in any State in which it currently conducts business, and is duly authorized and has full power under applicable laws and its articles of incorporation and bylaws to create, issue, enter into, execute and deliver this Master Indenture and to take all action on its part necessary for the valid execution and delivery of this Master Indenture. (b) The execution and delivery of this Master Indenture, the consummation of the transactions contemplated hereby, and the fulfillment of the terms and conditions hereof do not and will not conflict with or result in a breach of any of the terms or conditions of any corporate restriction or of any agreement or instrument to which it is now a party, do not and will not conflict with or result in a breach of any law or judicial or administrative decision or order applicable to it, and do not and will not constitute a default under any of the foregoing, or result in the creation or imposition of any Lien of any nature upon any of its Property, except for Permitted Encumbrances. It has good and marketable fee simple title to all of its Property constituting real property and good and marketable title to all of its other Property, in both cases, free and clear of all Liens except for Permitted Encumbrances. The easements, rights-of-way, 27

149 liens, encumbrances, covenants, conditions, restrictions, exceptions, minor defects, irregularities of title and encroachments on adjoining real estate, if any, now existing with respect to its Property do not and will not materially adversely affect the value of the Property currently affected thereby, materially impair the same, or materially impair or materially interfere with the operation and usefulness thereof for the purpose for which it was acquired or is held by it. Its Property does not violate any applicable zoning, land use or similar law or restriction. The recitals of fact and statements contained in this Master Indenture and in each Related Loan Document with respect to the Members of the Obligated Group therein referenced are or, in the case of Related Loan Documents entered into in the future, will be true. Facilities. (c) It has all necessary licenses and permits to occupy and operate its existing (d) It is a Tax-Exempt Organization; has received a determination letter from the Internal Revenue Service to the effect that it is a Tax-Exempt Organization, which letter is still in full force and effect; and has no unrelated business taxable income as defined in Section 512 of the Code which could have a material adverse effect on its status as a Tax-Exempt Organization or which, if such income were subject to federal income taxation, would have a material adverse effect on its condition, financial or otherwise. (e) It has not heretofore engaged in, and the consummation of the transactions herein provided for and compliance by it with the provisions of this Master Indenture and the Obligations issued hereunder will not involve, any prohibited transaction within the meaning of the Employee Retirement Income Security Act of 1974, as amended (herein sometimes referred to as ERISA ) or Section 4975 of the Code. No employee pension benefit plans, as defined in ERISA (herein sometimes referred to as Plans ), maintained by it and no trusts created thereunder, have incurred any accumulated funding deficiency as defined in Section 302 of ERISA and the present value of all benefits vested under all Plans did not exceed, as of the last annual valuation date, the value of the assets of the Plans allocable to such vested benefits. Section 404. Entrance Into the Obligated Group. Any Person may become a Member if: (a) Such Person is a corporation; (b) Such Person shall execute and deliver to the Master Trustee a Supplemental Master Indenture acceptable to the Master Trustee which shall be executed by the Master Trustee and each then current Member, containing (i) the agreement of such Person (A) to become a Member and thereby to become subject to compliance with all provisions of this Master Indenture and (B) unconditionally and irrevocably (subject to the right of such Person to cease its status as a Member pursuant to the terms and conditions of Section 405 hereof) to jointly and severally make payments upon each Obligation at the times and in the amounts provided in each such Obligation and (ii) representations and warranties by such Person substantially similar to those set forth in Section 403 (other than those contained in Section 403(d) if such Person is not a Tax- Exempt Organization), but with such modifications as are acceptable to the Master Trustee; (c) The Obligated Group Agent and each other Member shall, by appropriate action of its Governing Body, have approved the admission of such Person to the Obligated Group; (d) The Master Trustee shall have received (i) a certificate of the Obligated Group Agent which demonstrates that, immediately upon such Person becoming a Member (A) the Members would not, as a result of such transaction, be in default in the performance or observance of any covenant or condition to be performed or observed by them hereunder, and (B) the Obligated Group could meet the conditions described in a Supplemental Master Indenture, if any, for the incurrence of one dollar of additional Funded Indebtedness, (ii) an opinion of Independent Counsel to the effect that (A) the instrument described in paragraph (b) above has been duly authorized, executed and delivered and constitutes a legal, valid and binding agreement of such Person, enforceable in accordance with its terms, subject to customary exceptions for bankruptcy, insolvency, fraudulent conveyance, and other laws generally affecting enforcement of creditors rights and application of general principles of equity and to the exceptions set forth in Exhibit D hereto and (B) the addition of such Person to the Obligated Group will not adversely affect the status as a Tax-Exempt Organization of any Member which otherwise has such status, (iii) either a certificate of the Obligated Group Agent demonstrating that all amounts due or to become due on all Related Bonds have been paid to the holders thereof and provision for such payment has been made in such manner as to have resulted in the defeasance of all Related Bond Indentures, or an opinion of nationally recognized municipal bond counsel (which counsel and opinion, including, without limitation, the scope, form, substance and other aspects thereof, are acceptable to the Master Trustee), to the effect that under then existing law the consummation of such transaction, whether or not contemplated on the date of delivery of any such Related Bond, would not adversely affect the validity of any Related Bond or any exemption from federal income taxation of interest payable on such Related Bond otherwise entitled to such exemption; provided that in making the calculation called for by subsection (d)(i)(b) above, (A) there shall be excluded from Gross Revenues any Gross Revenues generated by Property of such Person transferred or otherwise disposed of by such Person since the beginning of the fiscal year during which such Person s entry into the Obligated Group occurs and (B) there shall be excluded from Expenses any Expenses related to Property of such Person transferred or otherwise disposed of by such Person since the beginning of the fiscal year during which such Person s entry into the Obligated Group occurs and (iv) certified copies of the actions of the Obligated Group Agent and each of the Members described in subsection (c) above; and (e) Exhibit B shall be amended to add such Person as a Member. Each successor, assignee, surviving, resulting or transferee corporation of a Member must agree to become, and satisfy the above-described conditions to becoming, a Member prior to any such succession, assignment or other change in such Member s corporate status. Section 405. Cessation of Status as a Member. Each Member covenants that it will not take any action, corporate or otherwise, which would cause it or any successor thereto into which it is merged or consolidated to cease to be a Member under the terms of this Master Indenture, unless: (a) the Member proposing to withdraw from the Obligated Group is not a party to any Outstanding Obligation (except solely as a joint and several obligor by virtue of its status as a Member); (b) prior to cessation of such status, there is delivered to the Master Trustee an opinion of nationally recognized municipal bond counsel (which opinion, including, without limitation, the scope, form, substance and other aspects thereof, are acceptable to the Master Trustee) to the effect that, under then existing law, the cessation by the Member of its status as a Member will not adversely affect the validity of any Related Bond or any exemption from federal income taxation of interest payable thereon to which such Bond would otherwise be entitled; (c) when it is assumed that such cessation results in a transfer of Property owned by the Member proposing to cease such status to a Person who is not a Member, the conditions precedent to such a transfer to an unrelated entity set forth in Section 417 hereof have been complied with; (d) prior to and immediately after such cessation, no event of default exists hereunder and no event shall have occurred which with the passage of time or the giving of notice, or both, would become such an event of default; (e) prior to such cessation there is delivered to the Master Trustee an opinion of Independent Counsel (which Counsel and opinion, including, without limitation, the scope, form, substance and other aspects thereof, are acceptable to the Master Trustee) to the effect that the cessation by such Member of its status as a Member will not adversely affect the status as a Tax-Exempt Organization of any Member which otherwise has such status; and (f) prior to cessation of such status, each Member consents in writing to the withdrawal by such Member. Upon such cessation in accordance with the foregoing provisions, Exhibit B shall be amended to delete therefrom the name of such Person. Notwithstanding the foregoing, the Obligated Group Agent shall not be permitted to cease to be a Member without the consent of a majority of the Holders of the Obligations Outstanding at such time. Section 406. Covenants as to Corporate Existence, Maintenance of Properties, and Similar Matters; Right of Contest. Each Member hereby covenants to: (a) Except as otherwise expressly provided herein (i) preserve its corporate or other separate legal existence, (ii) preserve all its rights and licenses to the extent necessary or desirable in the operation of its business and affairs and (iii) be qualified to do business and conduct its affairs in each jurisdiction where its ownership of Property or the conduct of its business or affairs requires such qualification; provided, however, that nothing herein contained shall be construed to obligate such Member to retain, preserve or keep in effect the rights, licenses or qualifications no longer used or, in the judgment of its Governing Body, useful in the conduct of its business. (b) Not to change its state of incorporation or formation without first providing the Master Trustee with ninety (90) days advance notice thereof. (c) With respect to any Member which is, on the date it becomes a Member, a non-stock, not-for-profit corporation, maintain its status as a non-stock, not-for-profit corporation throughout the term of this Master Indenture. (d) At all times use its Facilities only in furtherance of its lawful corporate purposes and cause its business to be carried on and conducted and its Property and each part thereof to be maintained, preserved and kept in good repair, working order and condition and in as safe condition as its operations will permit and make all necessary and proper repairs (interior and exterior, structural and non-structural, ordinary as well as extraordinary and foreseen as well as unforeseen), renewals and replacements thereof so that its operations and business shall at all times be conducted in an efficient, proper and advantageous manner; provided, however, that nothing herein contained shall be construed (i) to prevent it from ceasing to operate any portion of its Property, if in its reasonable judgment (evidenced, in the case of such a cessation other than in the ordinary course of business, by a determination by its Governing Body) it is advisable not to operate the same, or if it intends to sell or otherwise dispose of the same and within a reasonable time endeavors to effect such sale or other disposition, or (ii) to obligate it to retain, preserve, repair, renew or replace any Property, leases, rights, privileges or licenses no longer used or, in the judgment of its Governing Body, useful in the conduct of its business. (e) Pay or cause to be paid: (i) all taxes, levies, assessments and charges on account of the use, occupancy or operation of its Property, including but not limited to all sales, use, occupation, real and personal property taxes, all permit and inspection fees, occupation and license fees and all water, gas, electric, light, power or other utility charges assessed or charged on or against its Property or on account of its use or occupancy thereof or the activities conducted thereon or therein; and (ii) all taxes, assessments and impositions, general and special, ordinary and extraordinary, of every name and kind, which shall be taxed, levied, imposed or assessed during the term of this Master Indenture upon all or any part of its Property, or its interest or the interest of any Related Issuer or either of them in and to its Property, or upon its interest or the interest of any Related Issuer or the interest of either of them in this Master Indenture or the amounts payable hereunder or under the Obligations. If under applicable law any such tax, levy, charge, fee, rate, imposition or assessment may at the option of the taxpayer be paid in installments, any Member may exercise such option. (f) Not create or permit to be created or remain and, at its cost and expense, promptly discharge or terminate all Liens on its Property or any part thereof which are not Permitted Encumbrances. (g) At its sole cost and expense, promptly comply with all present and future laws, ordinances, orders, decrees, decisions, rules, regulations and requirements of every duly constituted governmental authority, commission and court and the officers thereof which may be applicable to it or any of its affairs, business, operations and Property, any part thereof, any 30 B-9 31

150 of the streets, alleys, passageways, sidewalks, curbs, gutters, vaults and vault spaces adjoining any of its Property or any part thereof or to the use or manner of use, occupancy or condition of any of its Property or any part thereof. (h) Promptly pay or otherwise satisfy and discharge all of its obligations and Indebtedness and all demands and claims against it as and when the same become due and payable which if not so paid, satisfied or discharged would constitute a default or an event of default under Section 502(d) hereof. (h) At all times comply with all terms, covenants and provisions of any Liens at such time existing upon its Property or any part thereof or securing any of its Indebtedness. (i) Procure and maintain all necessary licenses, accreditations and permits and use its best efforts to maintain the status of its educational Facilities (other than those not currently having such status or not having such status on the date a Person becomes a Member hereunder) and its other accreditations which its Governing Body determines are appropriate. (j) In the case of any Member which is a Tax-Exempt Organization at the time it becomes a Member, so long as this Master Indenture shall remain in force and effect, and so long as all amounts due or to become due on all Related Bonds have not been fully paid to the Holders thereof, or provision for such payment has not been made, to take no action or suffer any action to be taken by others, including any action which would result in the alteration or loss of its status as a Tax-Exempt Organization, which could result in any such Related Bond being declared invalid or result in the interest on any Related Bond, which is otherwise exempt from federal or state income taxation, becoming subject to such taxation. (k) Operate all of its Facilities so as not to discriminate on a legally impermissible basis. (l) In the case of each Member which is a Tax-Exempt Organization at the time it becomes a Member, not distribute any of its revenues, income or profits, whether realized or unrealized, to any of its members, directors or officers or allow the same to inure to the benefit of any private person, association or corporation, other than for the lawful corporate purposes of such Member, as the case may be; provided, further, that no such distribution shall be made which is not permitted by the legislation pursuant to which such Member is governed or which would result in the loss or alteration of its status as a Tax-Exempt Organization. The foregoing notwithstanding, any Member may (i) cease to be a nonprofit corporation, (ii) take actions which could result in the alteration or loss of its status as a Tax-Exempt Organization or (iii) distribute its revenues, income or profits to any of its members, directors or officers or allow the same to inure to the benefit of a private person, association or corporation if (A) prior thereto there is delivered to the Master Trustee an opinion of nationally recognized municipal bond counsel (which counsel and opinion, including, without limitation, the scope, form and other aspects thereof, are acceptable to the Master Trustee) to the effect that such actions would not adversely affect the validity of any Related Bond, the exemption from federal or state income taxation of interest payable on any Related Bond otherwise entitled to such exemption, or adversely affect the enforceability in accordance with its terms of this Master Indenture against any Member and (B) after such action the Obligated Group could meet all conditions described in a Supplemental Master Indenture for the incurrence of one dollar of additional Funded Indebtedness. No Member shall be required to pay any tax, levy, charge, fee, rate, assessment or imposition referred to herein above, to remove any Lien required to be removed under this Section, pay or otherwise satisfy and discharge its obligations, Indebtedness (other than any Obligations), demands and claims against it or to comply with any Lien, law, ordinance, rule, order, decree, decision, regulation or requirement referred to in this Section, so long as such Member shall contest, in good faith and at its cost and expense, in its own name and behalf, the amount or validity thereof, in an appropriate manner or by appropriate proceedings which shall operate during the pendency thereof to prevent the collection of or other realization upon the tax, levy, charge, fee, rate, assessment, imposition, obligation, Indebtedness, demand, claim or Lien so contested, and the sale, forfeiture, or loss of its Property or any part thereof, provided, that no such contest shall subject any Related Issuer, any Obligation Holder or the Master Trustee to the risk of any liability. While any such matters are pending, such Member shall not be required to pay, remove or cause to be discharged the tax, levy, charge, fee, rate, assessment, imposition, obligation, Indebtedness, demand, claim or Lien being contested unless such Member agrees to settle such contest. Each such contest shall be promptly prosecuted to final conclusion (subject to the right of such Member engaging in such contest to settle such contest), and in any event such Member will save all Related Issuers, all Related Bond Trustees, all Obligation Holders and the Master Trustee harmless from and against all losses, judgments, decrees and costs (including attorneys fees and expenses in connection therewith) as a result of such contest and will, promptly after the final determination of such contest or settlement thereof, pay and discharge the amounts which shall be levied, assessed or imposed or determined to be payable therein, together with all penalties, fines, interests, costs and expenses thereon or incurred in connection therewith. The Member engaging in such a contest shall give the Master Trustee prompt written notice of any such contest and of the outcome (including any settlement) thereof. Each Member hereby waives, to the extent permitted by law, any right which it may have to contest (i) any Obligation issued for the benefit of another Member or (ii) any Obligation to secure or in connection with Related Bonds. If the Master Trustee shall notify such Member that, in the opinion of Independent Counsel, by nonpayment of any of the foregoing items the Property of such Member or any substantial part thereof will be subject to imminent loss or forfeiture, then such Member shall promptly pay all such unpaid items and cause them to be satisfied and discharged. Section 407. Insurance. Each Member shall maintain, or cause to be maintained at its sole cost and expense, insurance with respect to its Property, the operation thereof and its business against such casualties, contingencies and risks (including but not limited to public liability and employee dishonesty) and in amounts not less than is customary in the case of corporations engaged in the same or similar activities and similarly situated and as is adequate to protect its Property and operations, naming the Master Trustee as loss payee and an additional insured. The Obligated Group Agent shall annually review the insurance (including selfinsurance) each Member maintains as to whether such insurance is customary and adequate. In addition, the Obligated Group Agent shall at least once every three (3) fiscal years (commencing with its fiscal year beginning July 1, 2013) cause a certificate of an insurance consultant or insurance consultants to be delivered to the Master Trustee which indicates that the insurance then being maintained by the Members is customary in the case of corporations engaged in the same or similar activities and similarly situated and is adequate to protect the Obligated Group s Property and operations. The Obligated Group Agent shall cause copies of its review, or the certificates of the insurance consultant or insurance consultants, as the case may be, to be delivered promptly to the Master Trustee, to each Related Bond Trustee and to each Related Issuer. The Obligated Group or any Member may self-insure if the insurance consultant or insurance consultants determines that such self-insurance meets the standards set forth in the first sentence of this paragraph and is prudent under the circumstances. Section 408. Right to Perform Members Covenants; Advances. In the event any Member shall fail to (a) pay any tax, charge, assessment or imposition to the extent required hereunder, (b) remove any Lien or terminate any lease to the extent required hereunder, (c) maintain its Property in repair to the extent required hereunder, (d) procure the insurance required hereby, in the manner herein described, or (e) fail to make any other payment or perform any other act required to be performed hereunder, and is not contesting the same in accordance with Section 406 hereof, then and in each such case the Master Trustee may (but shall not be obligated to) remedy such failure for the account of such Member and make advances for that purpose. No such performance or advance shall operate to release such Member from any such failure and any sums so advanced by the Master Trustee shall be repayable by such Member on demand and shall bear interest at the Master Trustee s announced prime rate per annum from time to time in effect, from the date of the advance until repaid. The Master Trustee shall have the right of entry on such Member s Property or any portion thereof, in order to effectuate the purposes of this Section, subject to the permission of a court of competent jurisdiction, if required by law. Section 409. Rates and Charges. Each Member covenants and agrees to operate all of its Facilities on a revenue producing basis and to charge such fees and rates for its Facilities and services and to exercise such skill and diligence as to provide income from its Property together with other available funds sufficient to pay promptly all payments of principal and interest on its Indebtedness, all expenses of operation, maintenance and repair of its Property and all other payments required to be made by it hereunder to the extent permitted by law. Section 410. Damage or Destruction. Each Member agrees to notify the Master Trustee immediately in the case of the destruction of its Facilities or any portion thereof as a result of fire or other casualty, or any damage to such Facilities or portion thereof as a result of fire or other casualty, the Net Proceeds of which are estimated to exceed $1,000,000. In the event such Net Proceeds exceeds $1,000,000, the Member suffering such casualty or loss shall within twelve (12) months after the date on which the Net Proceeds are finally determined elect by written notice of such election to the Master Trustee one of the following three (3) options: (i) Option A-Repair and Restoration. Such Member may elect to replace, repair, reconstruct, restore or improve any of the Facilities of the Obligated Group or acquire additional Facilities for the Obligated Group or repay Indebtedness incurred for any such purpose pending the receipt of such Net Proceeds. In such event an amount equal to the Net Proceeds of any insurance relating thereto shall be deposited, when received, with the Master Trustee and such Member shall proceed forthwith to replace, repair, reconstruct, restore or improve Facilities of the Obligated Group or to acquire additional Facilities and will apply the Net Proceeds of any insurance relating to such damage or destruction received from the Master Trustee to the payment or reimbursement of the costs of such replacement, repair, reconstruction, restoration, improvement or acquisition or to the repayment of such Indebtedness. So long as the Members are not in default hereunder, any Net Proceeds of insurance relating to such damage or destruction received by the Master Trustee shall be released from time to time by the Master Trustee to such Member upon the receipt by the Master Trustee of: (A) the Written Request of such Member specifying the expenditures made or to be made or the Indebtedness incurred in connection with such replacement, repair, reconstruction, restoration, improvement or acquisition and stating that such Net Proceeds, together with any other moneys legally available for such purposes, will be sufficient to complete such replacement, repair, reconstruction, restoration, improvement or acquisition; and (B) if such expenditures were or are to be made or such Indebtedness was incurred for the construction or renovation of Facilities, the written approval of such Written Request by an Independent Architect. It is further understood and agreed that in the event such Member shall elect this Option A, such Member shall complete the replacement, repair, reconstruction, restoration, improvement and acquisition of the Facilities, whether or not the Net Proceeds of insurance received for such purposes are sufficient to pay for the same. (ii) Option B-Prepayment of Obligations. Subject to the obligations of the Members under Section 406 hereof, such Member may elect to have all of the Net Proceeds payable as a result of such damage or destruction applied to the prepayment of the Obligations. In such event such Member shall, in its notice of election to the Master Trustee, direct the Master Trustee to apply such Net Proceeds, when and as received, to the prepayment of the Obligations in the manner directed by the Obligated Group Agent. (iii) Option C-Partial Restoration and Partial Prepayment of Obligations. Such Member may elect to have a portion of such Net Proceeds applied to the replacement, repair, reconstruction, restoration and improvement of the Facilities of the Obligated Group or the acquisition of additional Facilities for the Obligated Group or the repayment of Indebtedness incurred for any such purpose pending the receipt of such Net Proceeds with the remainder of such Net Proceeds to be applied to prepay Obligations, in which event such Net Proceeds to be used for replacement, repair, reconstruction, restoration, improvement and acquisition shall be applied as set forth in subparagraph (i) of this Section 410 and such Net Proceeds to be used for prepayment of the Obligations shall be applied as set forth in subparagraph (ii) of this Section. The foregoing notwithstanding, no Member will be required to comply with this Section 410 to the extent that the Facilities damaged or destroyed were pledged as security for Non-Recourse Indebtedness incurred in accordance with Section 412(F) hereof or Indebtedness 34 B-10 35

151 secured by Liens in accordance with Section 416(b) hereof and the documents pursuant to which such Indebtedness was incurred require Net Proceeds to be applied in a manner inconsistent with this Section 410. Section 411. Condemnation. The Master Trustee shall cooperate fully with the Members in the handling and conduct of any prospective or pending condemnation proceedings with respect to its Facilities or any part thereof. Each Member hereby irrevocably assigns to the Master Trustee, as its interests may appear, all right, title and interest of such Member in and to any Net Proceeds of any award, compensation or damages payable in connection with any such condemnation or taking, or payment received in a sale transaction consummated under threat of condemnation (any such award, compensation, damages or payment being hereinafter referred to as an award ), which exceeds $1,000,000. Such Net Proceeds shall be initially paid to the Master Trustee for disbursement or use as hereinafter provided. In the event such Net Proceeds exceeds $1,000,000, the Member in question shall, within twelve (12) months after the date on which the Net Proceeds are finally determined, elect by written notice of such election to the Master Trustee one of the following three (3) options: (i) Option A-Repairs and Improvements. Such Member may elect to use the Net Proceeds of the award for restoration or replacement of, or repairs and improvements to, the Facilities of the Obligated Group or the acquisition of additional Facilities for the Obligated Group or the repayment of Indebtedness incurred for any such purpose pending the receipt of such Net Proceeds. In such event, so long as the Obligated Group is not in default hereunder, such Member shall have the right to receive such Net Proceeds from the Master Trustee from time to time upon the receipt by the Master Trustee of: (A) the Written Request of such Member specifying the expenditures made or to be made or the Indebtedness incurred in connection with such restoration, replacement, repairs, improvements and acquisitions and stating that such Net Proceeds, together with any other moneys legally available for such purposes, will be sufficient to complete such restoration, replacement, repairs, improvements and acquisition; and (B) if such expenditures were or are to be made or such Indebtedness was incurred for the construction or renovation of Facilities, the written approval of such Written Request by an Independent Architect. (ii) Option B-Prepayment of Obligations. Subject to the obligation of such Member under Section 406 hereof, such Member may elect to have such Net Proceeds of the award applied to the prepayment of the Obligations. In such event such Member shall, in its notice of election to the Master Trustee, direct the Master Trustee to apply such Net Proceeds, when and as received, to the prepayment of the Obligations in the manner directed by the Obligated Group Agent. (iii) Option C-Partial Restoration and Partial Prepayment of Obligations. Such Member may elect to have a portion of such Net Proceeds of the award applied to the repair, replacement, restoration and improvement of the Facilities of the Obligated Group or the acquisition of additional Facilities for the Obligated Group or the repayment of Indebtedness incurred for any such purpose pending the receipt of such Net Proceeds, with the remainder of such Net Proceeds to be applied to the prepayment of Obligations, in which event such Net Proceeds to be used for repair, replacement, restoration, improvement and acquisition shall be applied as set forth in subparagraph (i) of this Section 411 and such Net Proceeds to be used for prepayment of the Obligations shall be applied as set forth in subparagraph (ii) of this Section. The foregoing notwithstanding, no Member will be required to comply with this Section 411 to the extent that the Facilities condemned were pledged as security for Non-Recourse Indebtedness incurred in accordance with Section 415(F) or Indebtedness secured by Liens in accordance with Section 418(b) hereof and the documents pursuant to which such Indebtedness was issued require Net Proceeds to be applied in a manner inconsistent with this Section 411. Section 412. Other Provisions with Respect to Net Proceeds. Amounts received by the Master Trustee in respect of any awards shall, at the Written Request of the Obligated Group Agent, be deposited with the Master Trustee in a special trust account and be invested or reinvested by the Master Trustee in Permitted Investments subject to any Member s right to receive the same pursuant to Sections 410 and 411 hereof. If any Member elects to proceed under either Section 410(i) or (iii) or 411(i) or (iii), any amounts in respect of such Net Proceeds not so paid to such Member shall be used to prepay Obligations. Notwithstanding anything herein to the contrary, any moneys on deposit with the Master Trustee shall be invested in accordance with, and subject to the terms of, any applicable tax compliance agreement. Section 413. Merger, Consolidation, Sale or Conveyance. (a) Each Member agrees that it will not merge into, or consolidate with, one or more corporations which are not Members, or allow one or more of such non-member corporations to merge into it, or sell or convey all or substantially all of its Property to any Person who is not a Member, unless: (i) Any successor corporation to such Member (including, without limitation, any purchaser of all or substantially all the Property of such Member) is a corporation organized and existing under the laws of the United States of America or a state thereof and shall execute and deliver to the Master Trustee an appropriate instrument containing the agreement of such successor corporation to assume, jointly and severally, the due and punctual payment of the principal of, premium, if any, and interest on all Obligations according to their tenor and the due and punctual performance and observance of all the covenants and conditions of this Master Indenture to be kept and performed by such Member; (ii) Immediately after such merger or consolidation, or such sale or conveyance, no Member would be in default in the performance or observance of any covenant or condition of any Related Loan Document or this Master Indenture; (iii) Immediately after such merger or consolidation, or such sale or conveyance, the condition described in Section 418(b)(i) would be met for the creation of a Lien on Property and all conditions described in a Supplemental Master Indenture would be met for the incurrence of one dollar of additional Funded Indebtedness, assuming that any Indebtedness of any successor or acquiring corporation is Indebtedness of such Member and that the Gross Revenues and Expenses of the Member for such most recent fiscal year include the Gross Revenues and Expenses of such other corporation; and (iv) If all amounts due or to become due on all Related Bonds have not been fully paid to the Holders thereof or fully provided for, there shall be delivered to the Master Trustee an opinion of nationally recognized municipal bond counsel (which counsel and opinion, including, without limitation, the scope, form, substance and other aspects thereof, are acceptable to the Master Trustee) to the effect that under then existing law, the consummation of such merger, consolidation, sale or conveyance, whether or not contemplated on the original date of delivery of such Related Bonds, would not adversely affect the validity of such Related Bonds or the exemption otherwise available from federal income taxation of interest payable on such Related Bonds. (b) In case of any such consolidation, merger, sale or conveyance and upon any such assumption by the successor corporation of a Member hereunder, such successor corporation shall succeed to and be substituted for its predecessor, with the same effect as if it had been named herein as such Member. Any successor corporation to a Member thereupon may cause to be signed and may issue in its own name Obligations hereunder and the predecessor corporation shall be released from its obligations hereunder and under any Obligations, if such predecessor corporation shall have conveyed all Property owned by it (or all such Property shall be deemed conveyed by operation of law) to such successor corporation. All Obligations so issued by such successor corporation hereunder shall in all respects have the same legal rank and benefit under this Master Indenture as Obligations theretofore or thereafter issued in accordance with the terms of this Master Indenture as though all of such Obligations had been issued hereunder by the corporation without any such consolidation, merger, sale or conveyance having occurred. (c) In case of any such consolidation, merger, sale or conveyance such changes in phraseology and form (but not in substance) may be made in Obligations thereafter to be issued as may be appropriate. (d) The Master Trustee may rely upon an opinion of Independent Counsel as conclusive evidence that any such consolidation, merger, sale or conveyance, and any such assumption, complies with the provisions of this Section and that it is proper for the Master Trustee under the provisions of Article VII and of this Section to join in the execution of any instrument required to be executed and delivered by this Section. Section 414. Financial Statements. The Members covenant that they will keep or cause to be kept 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 Obligated Group in accordance with generally accepted principles of accounting consistently applied (a) except to the extent required by the final paragraph of the definitions section hereof and (b) except as may be disclosed in the notes to the audited financial statements referred to in subparagraph (A) below. To the extent that generally accepted accounting principles would require consolidation of certain financial information of entities which are not Members of the Obligated Group with financial information of one or more Members, consolidated financial statements prepared in accordance with generally accepted accounting principles which include information with respect to entities which are not Members of the Obligated Group may be delivered in satisfaction of the requirements of this Section 414 so long as: (i) supplemental information in sufficient detail to separately identify the information with respect to the Members of the Obligated Group is delivered to the Master Trustee with the audited financial statements; (ii) such supplemental information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements delivered to the Master Trustee and, in the opinion of the accountant, is fairly stated in all material respects in relation to the consolidated financial statements taken as a whole; and (iii) such supplemental information is used for the purposes hereof or for any agreement, document or certificate executed and delivered in connection or pursuant to this Master Indenture. The Members further covenant that they will furnish to the Master Trustee, any Related Issuers and any Related Bond Trustees: (A) As soon as practicable after they are available, but in no event more than one hundred eighty (180) days after the last day of each fiscal year, a financial report for such fiscal year certified by a firm of nationally recognized independent certified public accountants selected by the Obligated Group Agent and satisfactory to each Related Issuer covering the operations of the Obligated Group for such fiscal year and containing a combined and an unaudited combining balance sheet as of the end of such fiscal year and a combined and an unaudited combining statement of changes in fund balances and changes in financial position for such fiscal year and a combined and an unaudited combining statement of revenues and expenses for such fiscal year, showing in each case in comparative form the financial figures for the preceding fiscal year. (B) If an Event of Default shall have occurred and be continuing, (i) file with the Master Trustee, any Related Issuer or any Related Bond Trustee such additional information as such Person may reasonably request concerning any Member, including all pertinent books, documents and vouchers relating to the business, affairs and Property (other than donor and personnel records) of the Members; and (ii) to the extent permitted by law, permit access during regular business hours or as reasonably requested by such Person for the purpose of inspection by such Person (who may make copies of all or any part thereof); and (iii) permit the Master Trustee, any such Related Issuer or any such Related Bond Trustee to visit and inspect, at the expense of such Person, its Property and to discuss the affairs, finances and accounts of the Obligated Group with its officers and independent accountants, all at such reasonable times and as often as the Master Trustee, such Related Issuer or such Related Bond Trustee may reasonably request. The Obligated Group Agent also agrees to provide copies of the information referred to by such Person in subsection (A) above to each Rating Agency then maintaining a rating on any Related Bonds or any Indebtedness of any Member. The Members also agree that, within ten (10) days after its receipt thereof, the Obligated Group Agent will file with the Master Trustee a copy of each Consultant s report or counsel s opinion required to be prepared under the terms of this Master Indenture. The Obligated Group Agent shall give prompt written notice of a change of accountants by the Obligated Group to the Master Trustee and each such Related Issuer and Related Bond 38 B-11 39

152 Trustee. The notice shall state: (i) the effective date of such change; (ii) whether there were any unresolved disagreements with the former accountants on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which the accountants claimed would have caused them to refer to the disagreement in a report on the disputed matter, if it was not resolved to their satisfaction; and (iii) such additional information relating thereto as such Related Issuer, Related Bond Trustee or the Master Trustee may reasonably request. Each Member agrees that, whenever requested by any Related Issuer, it shall provide and certify, or cause to be provided and certified, in form satisfactory to such Related Issuer, such information concerning such Member and the other Members, their property, their operations and finances and other matters that such Related Issuer considers necessary to enable it to complete and publish an official statement relating to its Related Bonds when any of such Related Bonds are to be offered for sale or to enable it to make any reports required by law, governmental regulations or the Related Bond Indenture in connection with any such Related Bonds. Section 415. Permitted Indebtedness. So long as any Obligations are Outstanding, the Obligated Group will not incur any Indebtedness (whether or not incurred through the issuance of Obligations) other than: (A) Funded Indebtedness which satisfies all conditions for the issuance of Funded Indebtedness under a Supplemental Master Indenture. (B) Completion Funded Indebtedness, without limitation. (C) Funded Indebtedness for the purpose of refunding (whether in advance or otherwise) any Outstanding Funded Indebtedness. (D) Short-Term Indebtedness (other than Short-Term Indebtedness incurred in accordance with subsection (E) hereof) in a total principal amount which at the time incurred does not, together with the principal amount of all other such Short-Term Indebtedness of the Obligated Group then Outstanding under this subsection (D) and the principal payable on all Funded Indebtedness during the next succeeding twelve (12) months, excluding such principal to the extent that amounts are on deposit in an irrevocable escrow and such amounts (including, where appropriate, the earnings or other increments to accrue thereon) are required to be applied to pay such principal and such amounts so required to be applied are sufficient to pay such principal, exceed 25% of the Gross Revenues of the Obligated Group for the most recent fiscal year for which combined financial statements reported upon by independent certified public accountants are available; provided, however, that for a period of twenty (20) consecutive calendar days in each fiscal year the total amount of such Short-Term Indebtedness of the Obligated Group Outstanding under this subsection (D) shall be not more than 5% of the Gross Revenues of the Obligated Group during the preceding fiscal year plus such additional amount as the Obligated Group Agent certifies in an Officer s Certificate is (i) attributable to Short- Term Indebtedness incurred to offset a temporary delay in the receipt of funds due from third party payors and (ii) in the minimum amount reasonably practicable taking into account such delay. For the purposes of this subsection, Short-Term Indebtedness shall not include overdrafts to banks to the extent there are immediately available funds of the Obligated Group sufficient to pay such overdrafts and such overdrafts are incurred and corrected in the normal course of business. (E) Short-Term Indebtedness if: (i) There is in effect at the time the Short-Term Indebtedness provided for by this subsection (E) is incurred a binding commitment (including, without limitation, letters or lines of credit or insurance) which may be subject only to commercially reasonable contingencies, by a financial institution generally regarded as responsible, which commitment and institution are acceptable to each Related Issuer, to provide financing sufficient to pay such Short-Term Indebtedness at its maturity; and (ii) All conditions set forth in a Supplemental Master Indenture are met with respect to such Short-Term Indebtedness when it is assumed that such Short-Term Indebtedness is Funded Indebtedness maturing over thirty (30) years from the date of issuance of the Short- Term Indebtedness, bears interest on the unpaid principal balance at the Projected Rate and is payable on a level annual debt service basis over a thirty (30) year period. (F) (G) Non-Recourse Indebtedness, without limitation. Balloon Indebtedness if: (i)(a) there is in effect at the time such Balloon Indebtedness is incurred a binding commitment (including, without limitation, letters or lines of credit) which may be subject only to commercially reasonable contingencies by a financial institution generally regarded as responsible, which commitment and institution are acceptable to each Related Issuer, to provide financing sufficient to pay the principal amount of such Balloon Indebtedness coming due in each consecutive twelve (12) month period in which 25% or more of the original principal amount of such Balloon Indebtedness comes due; and (b) all conditions set forth in a Supplemental Master Indenture for the incurrence of Funded Indebtedness are met with respect to such Balloon Indebtedness when the assumptions set forth in subsection (E)(ii) above are made with respect to the portion of such Balloon Indebtedness becoming due during each such twelve (12) month period; or (ii)(a) a Member establishes in an Officer s Certificate filed with the Master Trustee an amortization schedule for such Balloon Indebtedness, which amortization schedule shall provide for payments of principal and interest for each fiscal year that are not less than the amounts required to make any actual payments required to be made in such fiscal year by the terms of such Balloon Indebtedness; (b) such Member agrees in such Officer s Certificate to deposit for each fiscal year with a bank or trust company (pursuant to an agreement between such Member and such bank or trust company) the amount of principal shown on such amortization schedule net of any amount of principal actually paid on such Balloon Indebtedness during such fiscal year (other than from amounts on deposit with such bank or trust company) which deposit shall be made prior to any such required actual payment during such fiscal year if the amounts so on deposit are intended to be the source of such actual payments; and (c) all conditions set forth in a Supplemental Master Indenture are met with respect to such Balloon Indebtedness when it is assumed that such Balloon Indebtedness is actually payable in accordance with such amortization schedule. (H) Put Indebtedness if all conditions set forth in a Supplemental Master Indenture are met with respect to such Put Indebtedness when it is assumed that such Put Indebtedness bears interest at the Projected Rate and is payable on a level annual debt service basis over a thirty (30) year period commencing with the next succeeding Put Date. (I) Guaranteed Indebtedness by any Member of the payment of a sum certain; provided that all conditions set forth in a Supplemental Master Indenture are satisfied if it is assumed that the Indebtedness guaranteed is Funded Indebtedness of such Member. In making any debt service coverage calculation required by a Supplemental Master Indenture the Obligated Group s income available for debt service shall not be deemed to include any Gross Revenues of the Person with the primary obligation and the debt service payable with respect to the Indebtedness guaranteed shall be calculated in accordance with the assumptions contained in this Master Indenture. (J) Liabilities for contributions to self-insurance or shared or pooled-risk insurance programs required or permitted to be maintained under this Master Indenture. (K) Commitment Indebtedness, without limitation. (L) Indebtedness consisting of accounts payable incurred in the ordinary course of business or other Indebtedness not incurred or assumed primarily to assure the repayment of money borrowed or credit extended which Indebtedness is incurred in the ordinary course of business. (M) Indebtedness the principal amount of which at the time incurred, together with the aggregate principal amount of all other Indebtedness then Outstanding which was issued pursuant to the provisions of this subsection (M) and which has not been subsequently reclassified as having been issued under subsection (A), (E), (G) or (H), does not exceed 10% of the Gross Revenues of the Obligated Group for the latest preceding fiscal year for which combined financial statements reported upon by independent certified public accountants are available. (N) Indebtedness incurred in connection with a sale of accounts receivable with or without recourse on commercially reasonable terms by any Member consisting of an obligation to repurchase all or a portion of such accounts receivable upon certain conditions, provided that the principal amount of such Indebtedness permitted hereby shall not exceed the aggregate face amount of such accounts receivable. (O) Subordinated Indebtedness, without limitation. (P) Indebtedness existing as of the date hereof and described in Schedule 2 to this Master Indenture. It is agreed and understood by the parties hereto that various types of Indebtedness may be incurred under any of the above-referenced subsections with respect to which the tests set forth in such subsection are met and need not be incurred under only a subsection specifically referring to such type of Indebtedness (e.g., Balloon Indebtedness and Put Indebtedness may be incurred under subsection (A) above if any tests set forth in a Supplemental Master Indenture are satisfied). Each Member covenants that Indebtedness of the type permitted to be incurred under subsection (L) above will not be allowed to become overdue for a period in excess of that which is ordinary for similar institutions without being contested in good faith and by appropriate proceedings. Each Member covenants that prior to, or as soon as reasonably practicable after, the incurrence of Indebtedness by such Member for money borrowed or credit extended, or the equivalent thereof, it will deliver to the Master Trustee an Officer s Certificate which identifies the Indebtedness incurred, identifies the subsection of this Section 415 pursuant to which such Indebtedness was incurred, demonstrates compliance with the provisions of such subsection and attaches a copy of the instrument evidencing such Indebtedness; provided, however, that this requirement shall not apply to Indebtedness incurred pursuant to subsection (J) or (L) of this Section 415. Each Member agrees that, prior to incurring Indebtedness for money borrowed from or credit extended to entities other than Related Issuers, sellers of real or personal property for purchase money debt, lessors of such property or banks or other institutional lenders, it will provide the Master Trustee with an opinion of Independent Counsel acceptable to the Master Trustee to the effect that, to such Counsel s knowledge, such Member has complied in all material respects with all applicable state and federal laws regarding the issuance of securities in connection with the incurrence of such Indebtedness (including the issuance of any securities or other evidences of indebtedness in connection therewith) and such Counsel has no reason to believe that a right of rescission under such laws exists on the part of the entities to which such Indebtedness is to be incurred. Section 416. Calculation of Debt Service. The various calculations of the amount of Indebtedness of the Obligated Group, the amortization schedule of such Indebtedness and the debt service payable with respect to such Indebtedness required under certain provisions of this Master Indenture shall be made in a manner consistent with that adopted in any Supplemental Master Indenture and in this Section 416. In the case of Balloon Indebtedness or Put Indebtedness issued pursuant to subsection (B), (G), (H) or (M) of Section 415 hereof, unless 42 B-12 43

153 such Indebtedness is reclassified pursuant to this Section 416 as having been issued pursuant to another subsection of Section 415, the amortization schedule of such Indebtedness and the debt service payable with respect to such Indebtedness for future periods shall be calculated on the assumption that such Indebtedness is being issued simultaneously with such calculation. With respect to Put Indebtedness, if the option of the Holder to require that such Indebtedness be paid, purchased or redeemed prior to its stated maturity date, or if the requirement that such Indebtedness be paid, purchased or redeemed prior to its stated maturity date (other than at the option of such Holder and other than pursuant to any mandatory sinking fund or any similar fund), has expired or lapsed as of the date of calculation, such Put Indebtedness shall be deemed payable in accordance with its terms. In determining the amount of debt service payable on Indebtedness in the course of the various calculations required under certain provisions of this Master Indenture, if the terms of the Indebtedness being considered are such that interest thereon for any future period of time is expressed to be calculated at a varying rate per annum, a formula rate or a fixed rate per annum based on a varying index, then for the purpose of making such determination of debt service, interest on such Indebtedness for such period (the Determination Period ) shall be computed by assuming that the rate of interest applicable to the Determination Period is equal to the average of the rate of interest (calculated in the manner in which the rate of interest for the Determination Period is expressed to be calculated) which was in effect on the last date of each of any six consecutive calendar months occurring in the nine full calendar months immediately preceding the month in which such calculation is made; provided that if the index or other basis for calculating such interest was not in existence for at least six full calendar months next preceding the date of calculation, the rate of interest for such portion of such period shall be deemed to be the rate of interest borne by such Indebtedness when issued. The debt service payable with respect to Outstanding Balloon Indebtedness or Put Indebtedness or Short-Term Indebtedness incurred pursuant to the provisions of Section 415 of the Master Indenture for future periods of time shall be calculated on the assumption that such Indebtedness is incurred on the date of such calculation. Obligations issued to secure Indebtedness permitted to be incurred under Section 415 shall not be treated as Indebtedness. No debt service shall be deemed payable with respect to Commitment Indebtedness until such time as funding occurs under the commitment which gave rise to such Commitment Indebtedness. From and after such funding, the amount of such debt service shall be calculated in accordance with the actual amount required to be repaid on such Commitment Indebtedness and the actual interest rate and amortization schedule applicable thereto. No Indebtedness shall be deemed to arise when any funding occurs under any such commitment or when any such commitment is renewed upon terms which provide for substantially the same terms of repayment of amounts disbursed pursuant to such commitment as obtained prior to such renewal. In addition, no Indebtedness shall be deemed to arise when Indebtedness which bears interest at a variable rate of interest is converted to Indebtedness which bears interest at a fixed rate or the method of computing the variable rate on such Indebtedness is changed or the terms upon which Indebtedness, if Put Indebtedness, may be or is required to be tendered for purchase are changed, if such conversion or change is in accordance with the provisions applicable to such variable rate Indebtedness or Put Indebtedness in effect immediately prior to such conversion or change. Conversion of variable rate Indebtedness to a fixed rate in accordance with its terms or a shift in the method of computing interest or the terms of which Put Indebtedness may be tendered which shift is made in accordance with the terms of such Indebtedness shall not be deemed to constitute the issuance of such Indebtedness for the purposes of applying the various tests under this Master Indenture. Balloon Indebtedness incurred as provided under subsection (B) or (M) of Section 415, unless reclassified pursuant to this Section 416 shall be deemed to be payable in accordance with the assumptions set forth in subsection (G)(i)(b) of Section 415. Put Indebtedness incurred as provided under subsection (B) or (M) of Section 415, unless reclassified pursuant to this Section 416, shall be deemed to be payable in accordance with the assumptions set forth in subsection (H) of Section 415. Except for the purpose of determining whether any Guaranteed Indebtedness may be incurred in which case it shall be assumed that one hundred percent (100%) of the Indebtedness guaranteed is Funded Indebtedness of the Obligated Group under such Guaranteed Indebtedness and except for the purpose of calculating any historical debt service requirements in which case the Obligated Group s debt service requirements under Guaranteed Indebtedness shall be deemed to be the actual amount paid on such Guaranteed Indebtedness by the Obligated Group, the Obligated Group shall not be considered liable for the annual debt service on the Indebtedness guaranteed; provided, however, if the Obligated Group has been required by reason of any Guaranteed Indebtedness to make a payment in respect of such Guaranteed Indebtedness within the immediately preceding twenty-four (24) months, the Obligated Group shall be considered liable for one hundred percent (100%) of the annual debt service payable with respect to the Guaranteed Indebtedness. Each Member may elect to have Indebtedness issued pursuant to one provision of Section 415, including, without limitation, subsection (M) of Section 415, reclassified as having been incurred under another provision of Section 415, by demonstrating compliance with such other provision on the assumption that such Indebtedness is being reissued on the date of delivery of the materials required to be delivered under such other provision including the certification of any applicable Projected Rate. From and after such demonstration, such Indebtedness shall be deemed to have been incurred under the provision with respect to which such compliance has been demonstrated until any subsequent reclassification of such Indebtedness. Anything herein to the contrary notwithstanding, any portion of any Indebtedness of any Member for which an Interest Rate Agreement has been obtained by such Member shall be deemed to bear interest for the period of time that such Interest Rate Agreement is in effect at a net rate which takes into account the interest payments made by such Member on such Indebtedness and the payments made or received by such Member on such Interest Rate Agreement; provided that the long-term credit rating of the provider of such Interest Rate Agreement (or any guarantor thereof) is in one of the three (3) highest rating categories of any Rating Agency (without regard to any refinements of gradation of rating category by numerical modifier or otherwise) or is at least as high as that of the Obligated Group. In addition, so long as any Indebtedness is deemed to bear interest at a rate taking into account an Interest Rate Agreement, any payments made by a Member on such Interest Rate Agreement shall be excluded from Expenses and any payments received by a Member on such Interest Rate Agreement shall be excluded from Gross Revenues, in each case, for all purposes of this Master Indenture. Section 417. Sale, Lease or Other Disposition of Property. Each Member agrees that it will not, in any fiscal year, sell, lease or otherwise dispose (including, without limitation, any involuntary disposition) of Property which, together with all other Property transferred by Members exceeds the greater of $1,000,000 or 5% of the total value of the Property of the Obligated Group (calculated on the basis of the Book Value of the assets shown on the assets side of the balance sheet in the combined financial statements of the Obligated Group for the fiscal year next preceding the date of such sale, lease or other disposition for which combined financial statements of the Obligated Group reported on by independent certified public accountants are available or, if the Obligated Group Agent so elects, on the basis of Current Value), except for transfers or other dispositions in the ordinary course of business and except for transfers, sales or other dispositions of Property: (a) In return for other Property of equal or greater value and usefulness; or (b) To any Person, if prior to such sale, lease or other disposition there is delivered to the Master Trustee an Officer s Certificate of a Member stating that, in the judgment of the signer, such Property has, or within the next succeeding 24 calendar months is reasonably expected to, become inadequate, obsolete, worn out, unsuitable, unprofitable, undesirable or unnecessary and the sale, lease or other disposition thereof will not impair the structural soundness, efficiency or economic value of the remaining Property; or (c) To another Member; or (d) Upon fair and reasonable terms no less favorable to the Member than the Member would obtain in a comparable arm s-length transaction, if following such transfer the proceeds received by the transferor are applied to acquire Property or to repay the principal of Funded Indebtedness of any Member; or (e) To any Person, if such Property consists solely of assets which are specifically restricted by the donor or grantor to a particular purpose which is inconsistent with their use for payment on the Obligations; or (f) To any Person, if such Property consists of assets to be distributed by any Member as scholarships; or (g) To any Person, if such Property consists of coal, oil, gas or other mineral rights or timber and the Member receives fair and reasonable terms no less favorable than would be obtained in a comparable arm s-length transaction. The parties hereto agree that except as otherwise permitted by this Master Indenture (including, without limitation, transfers to other Members and other transfers permitted as described under this Section) and except as otherwise required by law, it will not enter into any transaction, including, without limitation, the purchase, sale, exchange or transfer of Property, the rendering of any service, the making of any loan, the extension of any credit or any other transaction, with any Affiliate except pursuant to the reasonable requirements of such Member s activities and upon fair and reasonable terms no less favorable to it than would obtain in a comparable arm s-length transaction with a person not an Affiliate. Section 418. Liens on Property. Section 406(e) notwithstanding, a Lien on Property of any Member securing Indebtedness shall be classified as a Permitted Encumbrance (as provided in clause (d) of the definition thereof) and therefore be permitted if: (a) such Lien secures Non-Recourse Indebtedness; or (b)(i) after giving effect to such Lien and all other Liens classified as Permitted Encumbrances under this subsection (b)(i), the Book Value or, at the option of the Obligated Group Agent, the Current Value of the Property of the Obligated Group which is Encumbered is not more than 15% of the value of all of the Property of the Obligated Group (calculated to the extent applicable on the same basis as the value of the Encumbered Property); and (ii) all conditions set forth in a Supplemental Master Indenture are met for allowing the incurrence of one dollar of additional Funded Indebtedness. Section 419. List of Obligation Holders. The Master Trustee will keep on file at its corporate trust office a list of the names and addresses of the last known Holders of all Obligations and the numbers assigned to such Obligations in Section 201 hereof held by each of such Holders. At reasonable times and under reasonable regulations established by the Master Trustee, said list may be inspected and copied by any Member, any Obligation Holder or the authorized representative thereof, provided that the ownership of such Holder and the authority of any such designated representative shall be evidenced to the satisfaction of the Master Trustee. Section 420. Designation of Additional Paying Agents. The Obligated Group Agent may, in its discretion, cause the necessary arrangements to be made through the Master Trustee and to be thereafter continued for the designation of alternate Paying Agents, if any, and for the making available of funds hereunder for the payment of such of the Obligations as shall be presented when due at the designated corporate trust office of the Master Trustee, or its successor in trust hereunder, or at the principal corporate trust office of said alternate Paying Agents. Section 421. Further Assurances; Additional Property. (a) The Members will do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged and delivered, all such further acts, deeds, conveyances, mortgages, deeds of trust, assignments, transfers and assurances as the Master Trustee reasonably may require for the better assuring, assigning and confirming unto the Master Trustee, its successors and assigns, all and singular, the trusts granted hereunder, if any (the Trust Estate ). 46 B-13 47

154 (b) All right, title and interest of the Members in and to all improvements, betterments, renewals, substitutions and replacements of the Property constituting the Trust Estate or any part thereof, hereafter acquired by a Member, immediately upon such acquisition, and without any further mortgaging, conveyance or assignment, shall become and be part of the Trust Estate and shall be subject, if applicable to Property of such type, to the security interest of this Master Indenture and/or any subsequently created liens and security interest securing the Obligations as fully and completely and with the same effect as though owned by the Members at the time this Master Indenture was executed or any and all such other liens and security interests were created, but at any and all times the Members will execute and deliver to the Master Trustee any and all such further assurances, mortgages, conveyances or assignments thereof and other instruments with respect thereto as the Master Trustee may reasonably require for the purpose of expressly and specifically subjecting the same to the security interest of the Master Indenture or such other subsequently created liens and security interests. Section 422. Indemnity. Each Member will pay, and will protect, indemnify and save the Master Trustee harmless from and against any and all liabilities, losses, damages, costs and expenses (including attorneys fees and expenses of such Member and the Master Trustee), causes of action, suits, claims, demands and judgments of whatever kind and nature (including those arising or resulting from any injury to or death of any person or damage to Property) arising from or in any manner directly or indirectly growing out of or connected with the following: (a) the use, non-use, condition or occupancy of any of the Property of any Member, any repairs, construction, alterations, renovation, relocation, remodeling and equipping thereof or thereto or the condition of any of such Property including adjoining sidewalks, streets or alleys and any equipment or Facilities at any time located on such Property or used in connection therewith; (b) violation of any agreement, warranty, covenant or condition of this Master Indenture, by any Member; (c) to its Property; violation of any contract, agreement or restriction by any Member relating (d) violation of any law, ordinance, regulation or court order affecting any Property of any Member or the ownership, occupancy or use thereof; (e) any statement or information concerning any Member or its officers and members or its Property, contained in any official statement or other offering document furnished to the Master Trustee or the purchaser of any Obligations or any Related Bonds, that is untrue or incorrect in any material respect, and any omission from such official statement or other offering document of any statement or information which should be contained therein for the purpose for which the same is to be used or which is necessary to make the statements therein concerning any Member, its officers and members and its Property not misleading in any material respect, provided that the official statement or other offering document has been approved by a Member and the indemnified party did not have knowledge of the omission or misstatement or did not use the official statement or other offering document with reckless disregard of or gross negligence in regard to the accuracy or completeness of the official statement or other offering document; and (f) the Master Trustee s acceptance or administration of the Master Indenture, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder (other than costs and expenses as a result of the Master Trustee s gross negligence or willful misconduct). Such indemnity shall extend to each person, if any, who controls the Master Trustee as that term is defined in Section 15 of the Securities Act of 1933, as amended. In the event of settlement of any litigation commenced or threatened, such indemnity shall be limited to the aggregate amount paid under a settlement effected with the written consent of the Obligated Group Agent. The Master Trustee shall promptly notify the Obligated Group Agent in writing of any claim or action brought against the Master Trustee or any controlling person, as the case may be, in respect of which indemnity may be sought against any Member, setting forth the particulars of such claim or action, and the Obligated Group will assume the defense thereof, including the employment of counsel satisfactory to the Master Trustee or such controlling person, as the case may be, and the payment of all expenses. The Master Trustee or any such controlling person, as the case may be, may employ separate counsel in any such action and participate in the defense thereof, and the reasonable fees and expenses of such counsel shall not be payable by the Obligated Group unless such employment has been specifically authorized by the Obligated Group Agent, which authorization shall not be unreasonably withheld. The obligations of the Members set forth in this Section 422 shall survive the termination of this Master Indenture or the resignation or removal of the Master Trustee. Section 423. Restriction on Encumbering Gross Revenues. Except for Permitted Encumbrances, no Member will cause or permit any of its revenues (including, but not limited to, Gross Revenues), receipts or other moneys, or right to receive any of the same, including, without limitation, accounts, accounts receivable, contract rights, general intangibles, or any proceeds of any of the foregoing, whether cash or non-cash, to become Encumbered. Section 424. Gross Revenues Pledge. So long as there are any Related Bonds Outstanding under this Master Indenture, as security for its obligations to make payments on the Obligations and other obligations heretofore or hereafter issued under the Master Indenture on a parity with the Obligations, the Obligated Group hereby pledges, assigns, conveys, transfers, grants and ratifies to the Master Trustee a first priority security interest (subject only to Permitted Encumbrances) in, general lien upon and the right of set-off against the following described Property of the Members, whether now owned or existing or hereafter acquired or arising and where ever located: (1) All Gross Revenues, gross receipts, accounts, bank accounts, general intangibles, contract rights and all related rights; (2) Except as specifically provided in the Master Indenture, all moneys and securities held from time to time by the Master Trustee under the Master Indenture, including, without limitation, moneys and securities held in the funds and accounts established under the Master Indenture; and (3) All proceeds, cash proceeds, cash equivalents, products, replacements, additions and improvements to substitutions for, and accessions of any and all property described in subsections (1) and (2) above. Anything to the contrary contained in this Master Indenture notwithstanding, no accounts, chattel paper, commercial tort claim, deposit account, general intangible, instrument, investment property, payment intangible or other assets that are restricted in whole or in part or are held in trust for any Member or otherwise pursuant to instructions of the donor or to law, rule, regulation or agreement shall constitute collateral pledged hereunder. Section 425. Security Interest in Real and Personal Property. So long as there are any Outstanding Obligations under this Master Indenture, as security for its obligations to make payments on the Obligations and other obligations heretofore or hereafter issued under the Master Indenture on a parity with the Obligations, the Members hereby grant a security interest in the following: (a) All right, title and interest of the Obligated Group in and to the real property on which the college facilities of the Obligated Group is located in the City of Philippi, Barbour County, West Virginia (the Real Property ); (b) All right, title and interest of the Obligated Group in and to all equipment, materials, supplies and other property of every kind or nature whatsoever, now or hereafter owned by the Obligated Group or in which it has or shall have an interest, procured for incorporation in or to be affixed to buildings or other improvements on the Real Property or appurtenant thereto; (c) All right, title and interest of the Obligated Group in and to all furniture, furnishings, equipment and other items of tangible personal property now owned or hereafter acquired by the Obligated Group which are used or useful in the buildings or other improvements on the Real Property; and (d) All right, title and interest of the Obligated Group in and to any coal, oil, gas or other mineral rights or timber, and any and all royalties, rentals or other profits arising therefrom, in which it has or shall have an interest. 50 B-14 ARTICLE V EVENTS OF DEFAULT; REMEDIES Section 501. Extension of Payment; Penalty. In case the time for the payment of principal of or the interest on any Obligation shall be extended, whether or not such extension be by or with the consent of the Master Trustee, such principal or such interest so extended shall not be entitled in case of default hereunder to the benefit or security of this Master Indenture except subject to the prior payment in full of the principal of all Obligations then Outstanding and of all interest thereon, the time for the payment of which shall not have been extended. Section 502. Events of Default. Each of the following events is hereby declared an event of default : (a) failure of the Obligated Group to pay any installment of interest or principal, or any premium, on any Obligation when the same shall become due and payable, whether at maturity, upon any date fixed for prepayment or redemption by acceleration or otherwise and the continuance of such failure for five days; or (b) failure of any Member to comply with, observe or perform any of the covenants, conditions, agreements or provisions hereof and to remedy such default within thirty (30) days after written notice thereof to such Member and the Obligated Group Agent from the Master Trustee or the Holders of at least fifty-one percent (51%) in aggregate principal amount of the Outstanding Obligations; provided, that if such default cannot with due diligence and dispatch be cured within thirty (30) days but can be cured, the failure of the Member to remedy such default within such thirty (30) day period shall not constitute a default hereunder if the Member shall immediately upon receipt of such notice commence with due diligence and dispatch the curing of such default and, having so commenced the curing of such default, shall thereafter prosecute and complete the same with due diligence and dispatch; or (c) any representation or warranty made by any Member herein or in any statement or certificate furnished to the Master Trustee or the purchaser of any Obligation in connection with the sale of any Obligation or furnished by any Member pursuant hereto proves untrue in any material respect as of the date of the issuance or making thereof and shall not be corrected or brought into compliance within thirty (30) days after written notice thereof to the Obligated Group Agent by the Master Trustee or the Holders of at least fifty-one percent (51%) in aggregate principal amount of the Outstanding Obligations; or (d) default in the payment of the principal of, premium, if any, or interest on any Indebtedness for borrowed money (other than Non-Recourse Indebtedness) of any Member, including, without limitation, any Indebtedness created by any Related Loan Document, within 5 days from the date the same shall become due, or an event of default as defined in any mortgage, indenture, loan agreement or other instrument under or pursuant to which there was issued or incurred, or by which there is secured, any such Indebtedness (including any Obligation) of any Member, and which default in payment or event of default entitles the Holder thereof to declare or, in the case of any Obligation, to request that the Master Trustee declare, such Indebtedness 51

155 due and payable prior to the date on which it would otherwise become due and payable; provided, however, that if such Indebtedness is not evidenced by an Obligation or issued, incurred or secured by or under a Related Loan Document, a default in payment thereunder shall not constitute an event of default hereunder unless the unpaid principal amount of such Indebtedness, together with the unpaid principal amount of all other Indebtedness so in default, exceeds five percent (5%) of the unrestricted net assets of the Obligated Group as shown on or derived from the then latest available audited combined financial statements of the Obligated Group; or (e) any judgment, writ or warrant of attachment or of any similar process shall be entered or filed against any Member or against any Property of any Member and remains unvacated, unpaid, unbonded, unstayed or uncontested in good faith for a period of thirty (30) days; provided, however, that none of the foregoing shall constitute an event of default unless the amount of such judgment, writ, warrant of attachment or similar process, together with the amount of all other such judgments, writs, warrants or similar processes so unvacated, unpaid, unbonded, unstayed or uncontested, exceeds five percent (5%) of the unrestricted net assets of the Obligated Group as shown on or derived from the then latest available audited combined financial statements of the Obligated Group; or (f) any Member admits insolvency or bankruptcy or its inability to pay its debts as they mature, or is generally not paying its debts as such debts become due, or makes an assignment for the benefit of creditors or applies for or consents to the appointment of a trustee, custodian or receiver for such Member, or for the major part of its Property; or (g) a trustee, custodian or receiver is appointed for any Member or for the major part of its Property and is not discharged within thirty (30) days after such appointment; or (h) bankruptcy, dissolution, reorganization, arrangement, insolvency or liquidation proceedings, proceedings under Title 11 of the United States Code, as amended, or other proceedings for relief under any bankruptcy law or similar law for the relief of debtors are instituted by or against any Member (other than bankruptcy or similar proceedings instituted by any Member against third parties), and if instituted against such Member are allowed against the College or are consented to or are not dismissed, stayed or otherwise nullified within sixty (60) days after such institution; or (i) payment of any installment of interest or principal, or any premium, on any Related Bond shall not be made when the same shall become due and payable under the provisions of any Related Bond Indenture; or (j) any lien on or security interest in the Trust Estate hereby pledged in favor of the Master Trustee under the terms of this Master Trust Indenture or any Supplemental Master Trust Indenture shall cease to constitute a first priority lien or security interest in the Property of any one or more of the Members, unless otherwise permitted by the terms hereof. Section 503. Acceleration. If an event of default has occurred and is continuing, the Master Trustee may, and if requested by either the Holders of not less than fifty-one percent (51%) in aggregate principal amount of Outstanding Obligations or the Holder of any Accelerable Instrument under which Accelerable Instrument an event of default exists (which event of default permits the Holder thereof to request that the Master Trustee declare such Indebtedness evidenced by an Obligation due and payable prior to the date on which it would otherwise become due and payable), shall, by notice in writing delivered to the Obligated Group Agent, declare the entire principal amount of all Obligations then Outstanding hereunder and the interest accrued thereon immediately due and payable, and the entire principal and such interest shall thereupon become immediately due and payable, subject, however, to the provisions of Section 511 hereof with respect to waivers of events of default. Section 504. Remedies; Rights of Obligation Holders. Upon the occurrence and continuance of any event of default, the Master Trustee may pursue any available remedy including a suit, action or proceeding at law or in equity to enforce the payment of the principal of, premium, if any, and interest on the Obligations Outstanding hereunder and any other sums due hereunder and may collect such sums in the manner provided by law out of the Property of any Member wherever situated. If an event of default shall have occurred, and if it shall have been requested so to do by either the Holders of fifty-one percent (51%) or more in aggregate principal amount of Obligations Outstanding or the Holder of an Accelerable Instrument upon whose request pursuant to Section 503 hereof the Master Trustee has accelerated the Obligations and if it shall have been indemnified as provided in Section 601(k) hereof, the Master Trustee shall be obligated to exercise such one or more of the rights and powers conferred by this Section as the Master Trustee shall deem most expedient in the interests of the Holders of Obligations; provided, however, that the Master Trustee shall have the right to decline to comply with any such request if the Master Trustee shall be advised by counsel (who may be its own counsel) that the action so requested may not lawfully be taken or the Master Trustee in good faith shall determine that such action would be unjustly prejudicial to the Holders of Obligations not parties to such request. No remedy by the terms of this Master Indenture conferred upon or reserved to the Master Trustee (or to the Holders of Obligations) is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to any other remedy given to the Master Trustee or to the Holders of Obligations hereunder now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default or event of default shall impair any such right or power or shall be construed to be a waiver of any such default or 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 default or event of default hereunder, whether by the Master Trustee or by the Holders of Obligations, shall extend to or shall affect any subsequent default or event of default or shall impair any rights or remedies consequent thereon. Section 505. Direction of Proceedings by Holders. The Holders of at least fifty-one percent (51%) in aggregate principal amount of the Obligations then Outstanding which have become due and payable in accordance with their terms or have been declared due and payable pursuant to Section 503 hereof and have not been paid in full in the case of remedies exercised to enforce such payment, or the Holders of a majority in aggregate principal amount of the Obligations then Outstanding in the case of any other remedy, shall have the right, at any time, by an instrument or instruments in writing executed and delivered to the Master Trustee, to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of this Master Indenture or for the appointment of a receiver or any other proceedings hereunder; provided, that such direction shall not be otherwise than in accordance with the provisions of law and of this Master Indenture and that the Master Trustee shall have the right to decline to comply with any such request if the Master Trustee shall be advised by counsel (who may be its own counsel) that the action so directed may not lawfully be taken or the Master Trustee in good faith shall determine that such action would be unjustly prejudicial to the Holders of the Obligations not parties to such direction. Pending such direction from the Holders of a majority in aggregate principal amount of the Obligations Outstanding, such direction may be given in the same manner and with the same effect by the Holder of an Accelerable Instrument upon whose request pursuant to Section 503 hereof the Master Trustee has accelerated the Obligations. The foregoing notwithstanding, the Holders of at least fifty-one percent (51%) in aggregate principal amount of the Obligations then Outstanding which are entitled to the exclusive benefit of certain security in addition to that intended to secure all or other Obligations shall have the right, at any time, by an instrument or instruments in writing executed and delivered to the Master Trustee, to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of this Master Indenture, the Supplemental Master Indenture or Indentures pursuant to which such Obligations were issued or so secured or any separate security document in order to realize on such security; provided, however, that such direction shall not be otherwise than in accordance with the provisions of law and of this Master Indenture. Section 506. Appointment of Receivers. Upon the occurrence of an event of default that has not been waived as provided herein, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Master Trustee and the Holders of Obligations under this Master Indenture, the Master Trustee shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the rights and properties pledged hereunder and of the revenues, issues, payments and profits thereof, pending such proceedings, with such powers as the court making such appointment shall confer. Section 507. Application of Moneys. All moneys received by the Master Trustee pursuant to any right given or action taken under the provisions of this Article (except moneys held for the payment of Obligations called for prepayment or redemption which have become due and payable) shall, after payment of the cost and expenses of the proceedings resulting in the collection of such moneys and of the fees of, expenses, liabilities and advances incurred or made by the Master Trustee be applied as follows: (a) Unless the principal of all the Outstanding Obligations shall have become or shall have been declared due and payable, all such moneys shall be applied: First: To the payment to the persons entitled thereto of all installments of interest then due on the Obligations, in the order of the maturity of the installments of such interest, and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment ratably, according to the amounts due on such installment, to the persons entitled thereto, without any discrimination or preference; and Second: To the payment to the persons entitled thereto of the unpaid principal and premium, if any, on the Obligations which shall have become due (other than Obligations called for redemption or payment for payment of which moneys are held pursuant to the provisions of this Master Indenture), in the order of the scheduled dates of their payment, and, if the amount available shall not be sufficient to pay in full Obligations due on any particular date, then to the payment ratably, according to the amount of principal and premium due on such date, to the persons entitled thereto without any discrimination or preference; and Third: To the payment to the persons entitled thereto of all unpaid principal and interest on Obligations, payment of which was extended by such persons as described in Section 501 hereof. (b) If the principal of all the Outstanding Obligations shall have become due or shall have been declared due and payable, all such moneys shall be applied to the payment of the principal, premium, if any, and interest then due and unpaid upon the Obligations without preference or priority of principal, premium or interest over the others, or of any installment of interest over any other installment of interest, or of any Obligation over any other Obligation, ratably, according to the amounts due respectively for principal, premium, if any, and interest to the persons entitled thereto without any discrimination or preference; provided that no amount shall be paid to any Obligation Holder who has extended the time for payment of either principal or interest as described in Section 501 until all other principal, premium, if any, and interest owing on Obligations has been paid; and (c) If the principal of all the Outstanding Obligations shall have been declared due and payable, and if such declaration shall thereafter have been rescinded and annulled under the provisions of this Article, then, subject to the provisions of paragraph (b) of this Section in the event that the principal of all the Obligations shall later become due or be declared due and payable, the moneys shall be applied in accordance with the provisions of paragraph (a) of this Section. Whenever moneys are to be applied by the Master Trustee pursuant to the provisions of this Section, such moneys shall be applied by it at such times, and from time to time, as the Master Trustee shall determine, having due regard for the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Master Trustee shall apply such moneys, it shall fix the date (which shall be an interest payment date unless it shall deem another date more suitable) upon which such application is to be made and upon such date interest on the amounts of principal to be paid on such date shall cease to accrue. The Master Trustee shall give such notice as it may deem 54 B-15 55

156 appropriate of the deposit with it of any such moneys and of the fixing of any such date, and shall not be required to make payment to the Holder of any unpaid Obligation until such Obligation shall be presented to the Master Trustee for appropriate endorsement or for cancellation if fully paid. Whenever all Obligations and interest thereon have been paid under the provisions of this Section 507 and all expenses and charges of the Master Trustee have been paid, any balance remaining shall be paid to the person entitled to receive the same; if no other person shall be entitled thereto, then the balance shall be paid to the Obligated Group Agent on behalf of the Obligated Group. Section 508. Remedies Vested in Master Trustee. All rights of action including the right to file proof of claims under this Master Indenture or under any of the Obligations may be enforced by the Master Trustee without the possession of any of the Obligations or the production thereof in any trial or other proceedings relating thereto and any such suit or proceeding instituted by the Master Trustee shall be brought in its name as Master Trustee without the necessity of joining as plaintiffs or defendants any Holders of the Obligations, and any recovery of judgment shall be for the equal benefit of the Holders of the Outstanding Obligations. Section 509. Rights and Remedies of Obligation Holders. No Holder of any Obligation shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement of this Master Indenture or for the execution of any trust hereof or for the appointment of a receiver or any other remedy hereunder, unless a default shall have become an event of default and (a) the Holders of twenty-five percent (25%) or more in aggregate principal amount (i) of the Obligations which have become due and payable in accordance with their terms or have been declared due and payable pursuant to Section 503 hereof and have not been paid in full in the case of powers exercised to enforce such payment or (ii) the Obligations then Outstanding in the case of any other exercise of power, or (b) the Holder of an Accelerable Instrument upon whose request pursuant to Section 503 hereof the Master Trustee has accelerated the Obligations, shall have made Written Request to the Master Trustee and shall have offered it reasonable opportunity either to proceed to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name, and unless also, in each case, such Holders have offered to the Master Trustee indemnity as provided in Section 601(k), and unless the Master Trustee shall thereafter fail or refuse to exercise the powers hereinbefore granted, or to institute such action, suit or proceeding in its own name; and such notification, request and offer of indemnity are hereby declared in every case at the option of the Master Trustee to be conditions precedent to the execution of the powers and trusts of this Master Indenture and to any action or cause of action for the enforcement of this Master Indenture, or for the appointment of a receiver or for any other remedy hereunder; it being understood and intended that no one or more Holders of the Obligations shall have any right in any manner whatsoever to affect, disturb or prejudice the lien of this Master Indenture by its, his or their action or to enforce any right hereunder except in the manner herein provided, and that all proceedings at law or in equity shall be instituted, had and maintained in the manner herein provided and for the equal benefit of the Holders of all Obligations Outstanding. Nothing in this Master Indenture contained shall, however, affect or impair the right of any Holder to enforce the payment of the principal of, premium, if any, and interest on any Obligation at and after the maturity thereof, or the obligation of the College to pay the principal, premium, if any, and interest on each of the Obligations issued hereunder to the respective Holders thereof at the time and place, from the source and in the manner in said Obligations expressed. Section 510. Termination of Proceedings. In case the Master Trustee shall have proceeded to enforce any right under this Master Indenture by the appointment of a receiver, or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Master Trustee, then and in every case the Members and the Master Trustee shall, subject to any determination in such proceeding, be restored to their former positions and rights hereunder with respect to the Property pledged and assigned hereunder, and all rights, remedies and powers of the Master Trustee shall continue as if no such proceedings had been taken. Section 511. Waiver of Events of Default. If, at any time after the principal of all Outstanding Obligations shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided and before the acceleration of any Related Bond, the Members shall pay or shall deposit with the Master Trustee a sum sufficient to pay all matured installments of interest upon all such Obligations and the principal and premium, if any, of all such Obligations that shall have become due otherwise than by acceleration (with interest on overdue installments of interest and on such principal and premium, if any, at the rate borne by such Obligations to the date of such payment or deposit, to the extent permitted by law) and the expenses of the Master Trustee, and any and all events of default under this Master Indenture, other than the nonpayment of principal of and accrued interest on such Obligations that shall have become due by acceleration, shall have been remedied, then and in every such case the Holders of a majority in aggregate principal amount of all Obligations then Outstanding and the Holder of each Accelerable Instrument who requested the giving of notice of acceleration, by written notice to the Obligated Group Agent and to the Master Trustee, may waive all events of default and rescind and annul such declaration and its consequences; but no such waiver or rescission and annulment shall extend to or affect any subsequent event of default, or shall impair any right consequent thereon. Section 512. Related Bond Trustee or Bond Holders Deemed To Be Obligation Holders. For the purposes of this Master Indenture, unless a Related Bond Trustee elects to the contrary or contrary provision is made in a Related Bond Indenture, each Related Bond Trustee shall be deemed the Holder of the Obligation or Obligations pledged to secure the Related Bonds with respect to which such Related Bond Trustee is acting as trustee. If such a Related Bond Trustee so elects or the Related Bond Indenture so provides, the Holders of each series of Related Bonds shall be deemed the Holders of the Obligations to the extent of the principal amount of the Obligations to which their Bonds relate. In addition, each Related Issuer is entitled to exercise the rights granted to Obligation Holders under Section 502(d) and Section 503; provided that such rights with respect to Holders of Subordinated Indebtedness shall be subject to the rights of the Holders of Superior Indebtedness ARTICLE VI THE MASTER TRUSTEE Section 601. Acceptance of the Trusts. The Master Trustee accepts and agrees to execute the trusts imposed upon it by this Master Indenture, but only upon the terms and conditions set forth herein. The Master Trustee, prior to the occurrence of an event of default and after the curing of all events of default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Master Indenture and to perform such duties as an ordinarily prudent trustee under a corporate indenture, and no implied covenants or obligations should be read into this Master Indenture against the Master Trustee. If an event of default under this Master Indenture shall have occurred and be continuing, the Master Trustee shall exercise such of the rights and powers vested in it by this Master Indenture and shall use the same degree of care as a prudent man would exercise or use in the circumstances in the conduct of his own affairs. The Master Trustee agrees to perform such trusts only upon and subject to the following express terms and conditions: (a) The Master Trustee may execute any of the trusts or powers hereof and perform any of its duties by or through attorneys, agents, receivers, or employees but shall be answerable for the conduct of the same if appointed in accordance with the standard specified above, and shall be entitled to advice of counsel concerning all matters of trusts hereof and duties hereunder, and may in all cases pay such reasonable compensation to any attorney, agent, receiver or employee retained or employed by it in connection herewith. The Master Trustee may act upon the opinion or advice of an attorney, surveyor, engineer or accountant selected by it in the exercise of reasonable care or, if selected or retained by the any Member and approved by the Master Trustee in the exercise of such care. The Master Trustee shall not be responsible for any loss or damage resulting from any action or nonaction based on its good faith reliance upon such opinion or advice. (b) The Master Trustee shall not be responsible for any recital herein, or in the Obligations (except with respect to the certificate of the Master Trustee endorsed on the Obligations), or for the investment of moneys as herein provided (provided that no investment shallbemadebythemastertrusteeexceptincompliance with the provisions of this Master Indenture applicable to such investment), or for the recording or re-recording, filing or re-filing of this Master Indenture, or any supplement or amendment thereto, or the filing of financing statements or continuation statements, or for the validity of the execution by the Members of the Obligated Group of this Master Indenture, or by any Member of any supplemental indentures or instruments of further assurance, or for the sufficiency of the security for the Obligations issued hereunder or intended to be secured hereby, or for the value or title of the Property herein conveyed or otherwise as to the maintenance of the security hereof. The Master Trustee may (but shall be under no duty to) require of any Member full information and advice as to the performance of the covenants, conditions and agreements in this Master Indenture and shall use its best efforts, but without any obligation, to advise the Members of any impending default known to the Master Trustee. The Master Trustee shall have no obligation to perform any of the duties of the Obligated Group hereunder. (c) The Master Trustee shall not be accountable for the use or application by the College of any of the Obligations or the proceeds thereof or for the use or application of any money paid over by the Master Trustee in accordance with the provisions of this Master Indenture or for the use and application of money received by any Paying Agent. The Master Trustee may become the owner of Obligations secured hereby with the same rights it would have if it were not Master Trustee. (d) The Master Trustee shall be protected in acting upon any notice, order, requisition, request, consent, certificate, order, opinion (including an opinion of Independent Counsel), affidavit, letter, telegram or other paper or document in good faith deemed by it to be genuine and correct and to have been signed or sent by the proper person or persons. Any action taken by the Master Trustee pursuant to this Master Indenture upon the request or authority or consent of any person who at the time of making such request or giving such authority or consent is the owner of any Obligation shall be conclusive and binding upon all future owners of the same Obligation and upon Obligations issued in exchange therefor or in place thereof. (e) As to the existence or non-existence of any fact or as to the sufficiency or validity of any instrument, paper or proceeding, the Master Trustee shall be entitled to rely upon a certificate signed on behalf of the any Member by its President, any Vice-President, its Treasurer or its Secretary as sufficient evidence of the facts therein contained and, prior to the occurrence of a default of which the Master Trustee has been notified as provided in subsection (g) of this Section, or of which by said subsection it is deemed to have notice, shall also be at liberty to accept a similar certificate to the effect that any particular dealing, transaction or action is necessary or expedient, but may at its discretion secure such further evidence deemed necessary or advisable, but shall in no case be bound to secure the same. The Master Trustee may accept a certificate of the President, any Vice President or Secretary of the any Member under its seal to the effect that a resolution in the form therein set forth has been adopted by the Governing Body of such Member as conclusive evidence that such resolution has been duly adopted, and is in full force and effect. (f) The permissive right of the Master Trustee to do things enumerated in this Master Indenture shall not be construed as a duty, and the Master Trustee shall not be answerable for other than its negligence or default. (g) The Master Trustee shall not be required to take notice or be deemed to have notice of any default hereunder except failure by the Obligated Group to cause to be made any of the payments to the Master Trustee required to be made by Section 202 or Section 401 unless the Master Trustee shall be specifically notified in writing of such default by a Member, by the written report of nationally recognized independent certified public accountants required by Section 414(A), by any Related Issuer, by any Related Bond Trustee, by the owner of an Accelerable Instrument or by the Holders of at least twenty-five percent (25%) in aggregate principal amount of all Obligations then Outstanding and all notices or other instruments required by this Master Indenture to be delivered to the Master Trustee must, in order to be effective, be delivered at the principal corporate trust office of the Master Trustee, and in the absence of such notice so delivered, the Master Trustee may conclusively assume there is no 58 B-16 59

157 default except as aforesaid. (h) If any event of default under this Master Indenture shall have occurred and be continuing, the Master Trustee, and its duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall have the right to inspect any and all books, papers and records of any Member pertaining to the Obligations, and to take such memoranda from and in regard thereto as may be reasonably desired. (i) The Master Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises. (j) Notwithstanding anything contained elsewhere in this Master Indenture, the Master Trustee shall have the right, but shall not be required, to demand, in respect of the authentication of any Obligation, the withdrawal of any cash, the release of any property, or any action whatsoever within the purview of this Master Indenture, any showings, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, in addition to that by the terms hereof required as a condition of such action by the Master Trustee deemed desirable for the purpose of establishing the right of any Member to the authentication of any Obligations, the withdrawal of any cash, the release of any property or the taking of any other action by the Master Trustee. (k) Before taking any action under this Master Indenture the Master Trustee may require that indemnification satisfactory to it be furnished for the reimbursement of all expenses to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from its negligence or default in connection with any action so taken. (l) All moneys received by the Master Trustee or any Paying Agent shall, until used or applied or invested as herein provided, be held in trust for the purposes for which they were received but need not be segregated from other funds except to the extent required by law or by this Master Indenture. Neither the Master Trustee nor any Paying Agent shall be under any liability for interest on any moneys received hereunder except such as may be agreed upon. Section 602. Fees, Charges and Expenses of Master Trustee and any Additional Paying Agent. The Master Trustee shall be entitled to payment and/or reimbursement for reasonable fees and for its services rendered hereunder and all advances, counsel fees and other expenses reasonably made or incurred by the Master Trustee in connection with such services. The Master Trustee shall be entitled to payment and reimbursement for the reasonable fees and charges of the Master Trustee as Paying Agent and Obligation Registrar for the Obligations as hereinabove provided. Any additional Paying Agent shall be entitled to payment and reimbursement for its reasonable fees and charges as additional Paying Agent for the Obligations. Upon an event of default, but only upon an event of default, the Master Trustee and any additional Paying Agent shall have a right of payment prior to payment on account of principal of, or premium, if any, or interest on any Obligation for the foregoing advances, fees, costs and expenses incurred. Section 603. Notice to Obligation Holders if Default Occurs. If an event of default occurs of which the Master Trustee is by subsection (g) of Section 601 hereof required to take notice or if notice of default be given as in said subsection (g) provided, then the Master Trustee shall give written notice thereof by mail to the last known owners of all Obligations then Outstanding shown by the list of Obligation Holders required by the terms of this Master Indenture to be kept at the office of the Master Trustee. Section 604. Intervention by Master Trustee. In any judicial proceeding to which any Member is a party and which in the opinion of the Master Trustee and its counsel has a substantial bearing on the interests of owners of the Obligations, the Master Trustee may intervene on behalf of Obligation Holders and, subject to the provisions of Section 601(k), shall do so if requested in writing by the owner of an Accelerable Instrument or the owners of at least twenty-five percent (25%) in aggregate principal amount of all Obligations then Outstanding. The rights and obligations of the Master Trustee under this Section are subject to the approval of a court of competent jurisdiction. Section 605. Successor Master Trustee. Any corporation or association into which the Master Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, ipso facto, shall be and become successor Master Trustee hereunder and vested with all of the title to the whole property or Trust Estate and all the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of and of the parties hereto, anything herein to the contrary notwithstanding. Section 606. Corporate Master Trustee Required; Eligibility. There shall at all times be a Master Trustee hereunder which shall be a bank or trust company organized under the laws of the United State of America or any state thereof, authorized to exercise corporate trust powers, subject to supervision or examination by federal or state authorities, and (except for the Master Trustee initially appointed under this Master Indenture and its successors under Section 605) having (or affiliated with an entity having) a reported combined capital and surplus of at least Twenty-Five Million Dollars ($25,000,000). If at any time the Master Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner provided in Section 607. If the Master Trustee has or shall acquire any conflicting interest, it shall within ninety (90) days after ascertaining that it has such conflicting interest, either eliminate such conflicting interest or resign in the manner specified in Section 607. No resignation or removal of the Master Trustee and no appointment of a successor Trustee shall become effective until the successor Master Trustee has accepted its appointment under Section 610 hereof. Section 607. Resignation by the Master Trustee. The Master Trustee and any successor Master Trustee may at any time resign from the trusts hereby created by giving thirty (30) days written notice to the Obligated Group Agent and by registered or certified mail to each registered owner of Obligations then Outstanding and to each Holder of Obligations as shown by the list of Obligation Holders required by this Master Indenture to be kept at the office of the Master Trustee. Such resignation shall take effect at the end of such thirty days or when a successor Master Trustee has been appointed and has assumed the trusts created hereby, whichever is later, or upon the earlier appointment of a successor Master Trustee by the Obligation Holders or by the Obligated Group. Such notice to the Obligated Group Agent may be served personally or sent by registered or certified mail. Section 608. Removal of the Master Trustee. The Master Trustee may be removed at any time, by an instrument or concurrent instruments in writing delivered to the Master Trustee and to the Obligated Group Agent, and signed by the owners of a majority in aggregate principal amount of Obligations then Outstanding; provided that, if any Related Issuer so elects, it may sign such an instrument as the Holder of the Obligation or Obligations pledged to secure the Related Bonds issued by such Related Issuer. So long as no event of default or event which with the passage of time or giving of notice or both would become such an event of default has occurred and is continuing hereunder, (i) the Master Trustee may be removed with or without cause at any time by an instrument in writing signed by the Obligated Group Agent, delivered to the Master Trustee, and(ii) a successor Master Trustee may be appointed by the Obligated Group Agent in accordance with Section 609 hereof. The foregoing notwithstanding, the Master Trustee may not be removed by the Obligated Group Agent unless written notice of the delivery of such instrument signed by the Obligated Group Agent is mailed to the owners of all Obligations Outstanding under the Master Indenture, which notice indicates the Master Trustee will be removed and replaced by the successor trustee named in such notice, such removal and replacement to become effective on the ninetieth (90 th ) day next succeeding the date of such notice, unless the owners of not less than ten percent (10%) in aggregate principal amount of such Obligations then Outstanding under this Master Indenture shall object in writing to such removal and replacement. Such notice shall be mailed by first class mail, postage prepaid, to the owners of all such Obligations then Outstanding at the address of such owners then shown on the Obligations Register. Section 609. Appointment of Successor Master Trustee by the Obligation Holders; Temporary Master Trustee. In case the Master Trustee hereunder shall resign or be removed, or be dissolved, or shall be in the process of dissolution or liquidation, or otherwise becomes incapable of acting hereunder, or in case it shall be taken under the control of any public officer or officers, or of a receiver appointed by a court, a successor may be appointed by the owners of fifty-one percent (51%) in aggregate principal amount of Obligations then Outstanding, by an instrument or concurrent instruments in writing signed by such owners, or by their attorneys in fact, duly authorized. The foregoing notwithstanding, so long as the Obligated Group is not in default hereunder, the Obligated Group shall have the right to approve any such successor trustee. If a successor trustee shall not have been appointed within thirty (30) days after notice of resignation by or removal of the Master Trustee, the Master Trustee, the Obligated Group Agent on behalf of the Obligated Group or any Holder of an Obligation may apply to any court of competent jurisdiction to appoint a successor to act until such time, if any, as a successor shall have been appointed as above provided. The successor so appointed by such court shall immediately and without further act be superseded by any successor appointed as above provided. Every such successor Master Trustee appointed pursuant to the provisions of this Section shall be a trust company or bank in good standing under the law of the jurisdiction in which it was created and by which it exists, having corporate trust powers and subject to examination by federal or state authorities, and having a reported capital and surplus of not less than Twenty-Five Million Dollars ($25,000,000). Section 610. Concerning Any Successor Master Trustee. Every successor Master Trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor and also to the Obligated Group Agent an instrument in writing accepting such appointment hereunder, and thereupon such successor, without any further act, deed or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessor; but such predecessor shall, nevertheless, on the Written Request of the Obligated Group Agent, or of its successor, execute and deliver an instrument transferring to such successor Master Trustee all the estates, properties, rights, powers and trusts of such predecessor hereunder; and every predecessor Master Trustee shall deliver all securities and moneys held by it as Master Trustee hereunder to its successor upon payment of all Outstanding fees, costs and expenses of the predecessor Master Trustee. Should any instrument in writing from any Member be required by any successor Master Trustee for more fully and certainly vesting in such successor the estate, rights, powers and duties hereby vested or intended to be vested in the predecessor, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by such Member. The resignation of any Master Trustee and the instrument or instruments removing any Master Trustee and appointing a successor hereunder, together with all other instruments provided for in this Article shall be filed and/or recorded by the successor Master Trustee in each recording office, if any, where the Master Indenture shall have been filed and/or recorded. Section 611. Master Trustee Protected in Relying Upon Resolutions, Etc. The resolutions, opinions, certificates and other instruments provided for in this Master Indenture may be accepted by the Master Trustee as conclusive evidence of the facts and conclusions stated therein and shall be full warrant, protection and authority to the Master Trustee for the release of property and the withdrawal of cash hereunder. Section 612. Successor Master Trustee as Trustee of Funds, Paying Agent and Obligation Registrar. In the event of a change in the office of Master Trustee, the predecessor Master Trustee which has resigned or been removed shall cease to be trustee of any funds provided hereunder and Obligation Registrar and Paying Agent for principal of, premium, if any, and interest on the Obligations, and the successor Master Trustee shall become such Master Trustee, Obligation Registrar and Paying Agent unless a separate Paying Agent or Agents are appointed by the Obligated Group Agent in connection with the appointment of any successor Master Trustee. Section 613. Maintenance of Records. The Master Trustee agrees to maintain such records with respect to any and all moneys or investments held by the Master Trustee pursuant to the provisions hereof as are requested by the Obligated Group Agent. The Master Trustee shall be entitled to reasonable compensation for its maintenance of any such records. 62 B-17 63

158 ARTICLE VII SUPPLEMENTAL MASTER INDENTURES Section 701. Supplemental Master Indentures Not Requiring Consent of Obligation Holders. Subject to the limitations set forth in Section 702 hereof with respect to this Section 701, the Obligated Group Agent and the Master Trustee may, without the consent of, or notice to, any of the Obligation Holders, amend or supplement this Master Indenture, for any one or more of the following purposes: (a) To cure any ambiguity or defective provision in or omission from this Master Indenture in such manner as is not inconsistent with and does not impair the security of the Master Indenture or adversely affect the Holder of any Obligation; (b) To grant to or confer upon the Master Trustee for the benefit of the Obligation Holders any additional rights, remedies, powers or authority that may lawfully be granted to or conferred upon the Obligation Holders and the Master Trustee, or either of them, to add to the covenants of the Obligated Group for the benefit of the Obligation Holders or to surrender any right or power conferred hereunder upon the Obligated Group; or collateral; (c) To assign and pledge under this Master Indenture any revenues, properties (d) To evidence the succession of another corporation to the agreements of a Member or the Master Trustee, or the successor of any thereof hereunder; (e) To permit the qualification of this Master Indenture under the Trust Indenture Act of 1939, as then amended, or under any similar federal statute hereafter in effect or to permit the qualification of any Obligations for sale under the securities laws of any state of the United States; (f) (g) To provide for the refunding or advance refunding of any Obligation; To provide for the issuance of Obligations; (h) To reflect the addition to or withdrawal of a Member from the Obligated Group in accordance with the terms of this Master Indenture; (i) To provide for the issuance of Obligations with original issue discount, provided such issuance would not materially adversely affect the Holders of Outstanding Obligations; (j) To permit an Obligation to be secured by security which is not extended to all Obligation Holders; (k) To permit the issuance of Obligations which are not in the form of a promissory note; and (l) To make any other change which, in the opinion of the Master Trustee, does not materially adversely affect the Holders of any of the Obligations and, in the opinion of each Related Bond Trustee, does not materially adversely affect the Holders of the Related Bonds with respect to which it acts as trustee, including, without limitation, any modification, amendment or supplement to this Master Indenture or any indenture supplemental hereto in such a manner as to establish or maintain exemption of interest on any Related Bonds under a Related Bond Indenture from federal income taxation under applicable provisions of the Code. Any Supplemental Master Indenture providing for the issuance of Obligations shall set forth the date thereof, the date or dates upon which principal of, premium, if any, and interest on such Obligations shall be payable, the other terms and conditions of such Obligations, the form of such Obligations and the conditions precedent to the delivery of such Obligations which shall include, among other things: (i) delivery to the Master Trustee of all materials required to be delivered as a condition precedent to the incurrence of the Indebtedness evidenced by such Obligations; (ii) delivery to the Master Trustee of an opinion of Independent Counsel acceptable to the Master Trustee to the effect that all requirements and conditions to the issuance of such Obligations, if any, set forth herein and in the Supplemental Master Indenture have been complied with and satisfied; and (iii) delivery to the Master Trustee of an opinion of Independent Counsel acceptable to the Master Trustee to the effect that registration of such Obligations under the Securities Act of 1933, as amended, is not required, or, if such registration is required, that the Obligated Group has complied with all applicable provisions of said Act. If at any time the Obligated Group Agent shall request the Master Trustee to enter into any Supplemental Master Indenture pursuant to subsection (l) above, the Obligated Group Agent shall cause notice of the proposed execution of such Supplemental Master Indenture to be given to each Rating Agency then maintaining a rating on any Obligations or Related Bonds, in the manner provided in Section 1004 hereof at least fifteen (15) days prior to the execution of such Supplemental Master Indenture, which notice shall include a copy of the proposed Supplemental Master Indenture. If at any time the Obligated Group Agent shall request the Master Trustee to enter into any Supplemental Master Indenture pursuant to which an Obligation is issued in connection with an Interest Rate Agreement, the Obligated Group Agent shall cause notice of the execution of such Supplemental Master Indenture to be given to each Rating Agency then maintaining a rating on any Obligation or Related Bonds, in the manner provided in Section 1004 immediately succeeding the execution of such Supplemental Master Indenture, which notice shall include a copy of the Supplemental Master Indenture. Section 702. Supplemental Master Indentures Requiring Consent of Obligation Holders. In addition to Supplemental Master Indentures covered by Section 701 hereof and subject to the terms and provisions contained in this Section, and not otherwise, the Holders of not less than fifty-one percent (51%) in aggregate principal amount of the Obligations which are Outstanding hereunder at the time of the execution of such Supplemental Master Indenture shall have the right, from time to time, anything contained in this Master Indenture to the contrary notwithstanding, to consent to and approve the execution by the Obligated Group Agent and the Master Trustee of such Supplemental Master Indentures as shall be deemed necessary and desirable by the Obligated Group Agent for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Master Indenture or in any Supplemental Master Indenture; provided, however, that nothing contained in this Section or in Section 701 hereof shall 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 redemption of, any Obligation, without the consent of the Holder of such Obligation, (b) a reduction in the aforesaid aggregate principal amount of Obligations the Holders of which are required to consent to any such Supplemental Master Indenture or any such amending or supplementing instruments, without the consent of the Holders of all the Obligations at the time Outstanding which would be affected by the action to be taken, or (c) modification of the rights, duties or immunities of the Master Trustee, without the written consent of the Master Trustee. If at any time the Obligated Group Agent shall request the Master Trustee to enter into any such Supplemental Master Indenture for any of the purposes of this Section, the Master Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of the proposed execution of such Supplemental Master Indenture to be mailed by first class mail postage prepaid to each Holder of an Obligation. Such notice shall briefly set forth the nature of the proposed Supplemental Master Indenture and shall state that copies thereof are on file at the principal corporate trust office of the Master Trustee for inspection by all Obligation Holders. The Master Trustee shall not, however, be subject to any liability to any Obligation Holder by reason of its failure to mail such notice, and any such failure shall not affect the validity of such Supplemental Master Indenture when consented to and approved as provided in this Section. If the Holders of not less than fifty-one percent (51%) in aggregate principal amount of the Obligations which are Outstanding hereunder at the time of the execution of any such Supplemental Master Indenture shall have consented to and approved the execution thereof as herein provided, no Holder of any Obligation shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Master Trustee or the Obligated Group Agent from executing the same or from taking any action pursuant to the provisions thereof. Upon the execution of any such Supplemental Master Indenture as in this Section permitted and provided, this Master Indenture shall be and be deemed to be modified and amended in accordance therewith. For the purpose of obtaining the foregoing consents, the determination of who is deemed the Holder of an Obligation held by a Related Bond Trustee shall be made in the manner provided in Section 512. If at any time the Obligated Group Agent shall request the Master Trustee to enter into any such Supplemental Master Indenture for any of the purposes of this Section or Section B-18 hereof, the Obligated Group Agent shall have delivered to the Master Trustee an opinion of Independent Counsel stating that such Supplemental Master Indenture has been duly and lawfully entered into by the parties in accordance with the provisions of this Master Indenture, is authorized or permitted by this Master Indenture and, subject to bankruptcy, insolvency or other laws affecting creditors rights generally, is valid and binding upon the Obligated Group. ARTICLE VIII SATISFACTION OF THE MASTER INDENTURE Section 801. Defeasance. If the Members shall pay or provide for the payment of the entire indebtedness on all Obligations (including, for the purposes of this Section 801, any Obligations owned by a Member) Outstanding in any one or more of the following ways: (a) by paying or causing to be paid the principal of (including redemption premium, if any) and interest on all Obligations Outstanding, as and when the same become due and payable; (b) by depositing with the Master Trustee, in trust, at or before maturity, moneys in an amount sufficient to pay or redeem (when redeemable) all Obligations Outstanding (including the payment of premium, if any, and interest payable on such Obligations to the maturity or redemption date thereof), provided that such moneys, if invested, shall be invested at the direction of the Obligated Group Agent in Escrow Obligations, in an amount and maturing at such times, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Obligations Outstanding at or before their respective maturity dates; it being understood that the investment income on such Escrow Obligations may be used at the direction of the Obligated Group Agent for any other purpose permitted by law; (c) Outstanding; or by delivering to the Master Trustee, for cancellation by it, all Obligations (d) by depositing with the Master Trustee, in trust, before maturity, Escrow Obligations in such amount and maturing at such times as will, together with the income or increment to accrue thereon, without consideration of any reinvestment thereof, be fully sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Obligations Outstanding at or before their respective maturity dates; and if the Obligated Group shall also pay or cause to be paid all other sums payable hereunder by the Obligated Group and, if any such Obligations are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given in accordance with the requirements of this Master Indenture or provisions satisfactory to the Master Trustee shall have been made for the giving of such notice, then and in that case (but subject to the provisions of Section 803 hereof) this Master Indenture and the estate and rights granted hereunder shall cease, determine, and become null and void, and thereupon the Master Trustee shall, upon Written Request of the Obligated Group Agent, and upon receipt by the Master Trustee of (i) an Officer s Certificate from the Obligated Group 67

159 Agent and an opinion of Independent Counsel acceptable to the Master Trustee, each stating that in the opinion of the signers all conditions precedent to the satisfaction and discharge of this Master Indenture have been complied with, and (ii) a verification report of a nationally recognized independent certified public accountant or firm of nationally recognized independent certified public accountants (which verification report may be accepted by the Master Trustee as conclusive evidence of the sufficiency of the amount of such deposit) to the effect that the Escrow Obligations together, if applicable, with the income or increment to accrue thereon, without consideration of any reinvestment thereof, and any uninvested cash, will be fully sufficient to pay or redeem (when redeemable) and discharge the indebtedness on such Obligations at or before their respective maturity dates, forthwith execute proper instruments acknowledging satisfaction of and discharging this Master Indenture and the lien hereof. The satisfaction and discharge of this Master Indenture shall be without prejudice to the rights of the Master Trustee to charge and be reimbursed by the Obligated Group for any expenditures which it may thereafter incur in connection herewith. The foregoing notwithstanding, the liability of the Obligated Group in respect of the Obligations shall continue, but the Holders thereof shall thereafter be entitled to payment only out of the moneys or Escrow Obligations deposited with the Master Trustee as aforesaid. Any moneys, funds, securities, or other property remaining on deposit under this Master Indenture (other than said Escrow Obligations or other moneys deposited in trust as above provided) shall, upon the full satisfaction of this Master Indenture, forthwith be transferred, paid over and distributed to the Obligated Group. The Obligated Group may at any time surrender to the Master Trustee for cancellation by it any Obligations previously authenticated and delivered which the Obligated Group may have acquired in any manner whatsoever, and such Obligations, upon such surrender and cancellation, shall be deemed to be paid and retired. Section 802. Provision for Payment of a Particular Series of Obligations or Portion Thereof. If the Obligated Group shall pay or provide for the payment of the entire indebtedness on all Obligations of a particular series or a portion of such a series (including, for the purpose of this Section 802, any such Obligations owned by a Member) in one of the following ways: (a) by paying or causing to be paid the principal of (including redemption premium, if any) and interest on all Obligations of such series or portion thereof Outstanding, as and when the same shall become due and payable; (b) by depositing with the Master Trustee, in trust, at or before maturity, moneys in an amount sufficient to pay or redeem (when redeemable) all Obligations of such series or portion thereof Outstanding (including the payment of premium, if any, and interest payable on such Obligations to the maturity or redemption date), provided that such moneys, if invested, shall be invested at the direction of the Obligated Group Agent in Escrow Obligations in an amount and maturing at such times, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Obligations of such series or portion thereof Outstanding at or before their respective maturity dates; it being understood that the investment income on such Escrow Obligations may be used at the direction of the Obligated Group Agent for any other purpose permitted by law; (c) by delivering to the Master Trustee, for cancellation by it, all Obligations of such series or portion thereof Outstanding; or (d) by depositing with the Master Trustee, in trust, Escrow Obligations in such amount and maturing at such times as will, together with the income or increment to accrue thereon without consideration of any reinvestment thereof, be fully sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Obligations of such series or portion thereof at or before their respective maturity dates; and if the Obligated Group shall also pay or cause to be paid all other sums payable hereunder by the Obligated Group with respect to such series of Obligations or portion thereof, and, if any such Obligations of such series or portion thereof are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given in accordance with the requirements of the Master Indenture or provisions satisfactory to the Master Trustee shall have been made for the giving of such notice, then in that case (but subject to the provisions of Section 803 hereof) such Obligations shall cease to be entitled to any lien, benefit or security under this Master Indenture. In determining whether the Escrow Obligations deposited with it together, if applicable, with the income or increment to accrue thereon, without consideration of any reinvestment thereof, and any uninvested cash, will be fully sufficient to pay or redeem (when redeemable) and discharge the indebtedness on such Obligations or portions thereof at or before their respective maturity dates, the Master Trustee shall be entitled to receive and may conclusively rely on a verification report of a nationally recognized independent certified public accountant or firm of nationally recognized independent certified public accountants. The liability of the Obligated Group in respect of such Obligations shall continue but the Holders thereof shall thereafter be entitled to payment (to the exclusion of all other Obligation Holders) only out of the moneys or Escrow Obligations deposited with the Master Trustee as aforesaid. Section 803. Satisfaction of Related Bonds. The provisions of Section 801 and Section 802 of this Master Indenture notwithstanding, any Obligation which secures a Related Bond (a) shall be deemed paid and shall cease to be entitled to the lien, benefit and security under the Master Indenture in the circumstances described in subsection (b)(ii) of the definition of Outstanding Obligations contained in Article I; and (b) shall not be deemed paid and shall continue to be entitled to the lien, benefit and security under this Master Indenture unless and until such Related Bond shall cease to be entitled to any lien, benefit or security under the Related Bond Indenture pursuant to the provisions thereof. ARTICLE IX MANNER OF EVIDENCING OWNERSHIP OF OBLIGATIONS Section 901. Proof of Ownership. Any request, direction, consent or other instrument provided by this Master Indenture to be signed and executed by the Obligation Holders may be in any number of concurrent writings of similar tenor and may be signed or executed by such Obligation Holders in person or by an agent appointed in writing. Proof of the execution of any such request, direction or other instrument or of the writing appointing any such agent and of the ownership of Obligations, if made in the following manner, shall be sufficient for any of the purposes of this Master Indenture and shall be conclusive in favor of the Master Trustee and the Obligated Group, with regard to any action taken by them, or either of them, under such request or other instrument, namely: (a) The fact and date of the execution by any person of any such writing may be proved by the certificate of any officer in any jurisdiction who by law has power to take acknowledgments in such jurisdiction, that the person signing such writing acknowledged before him the execution thereof, or by the affidavit of a witness of such execution; and Obligations. (b) The ownership of Obligations shall be proved by the registration of such Any action taken or suffered by the Master Trustee pursuant to any provision of this Master Indenture, upon the request or with the assent of any person who at the time is the Holder of any Obligation or Obligations, shall be conclusive and binding upon all future Holders of the same Obligation or Obligations or any Obligation or Obligations issued in exchange therefor. ARTICLE X MISCELLANEOUS Section Limitation of Rights. With the exception of rights herein expressly conferred, nothing expressed or mentioned in or to be implied from this Master Indenture or the Obligations is intended or shall be construed to give to any Person other than the parties hereto, and the Holders of the Obligations, any legal or equitable right, remedy or claim under or in respect to this Master Indenture or any covenants, conditions and provisions herein contained; this Master Indenture and all of the covenants, conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of the parties hereto and the Holders of the Obligations as herein provided. Section Unclaimed Moneys. Any moneys deposited with the Master Trustee by the Obligated Group in accordance with the terms and covenants of this Master Indenture, in order to redeem or pay any Obligation in accordance with the provisions of this Master Indenture, and remaining unclaimed by the owners of the Obligation for six years after the date fixed for redemption or of maturity, as the case may be, shall, if the Obligated Group is not at the time to the knowledge of the Master Trustee in default with respect to any of the terms and conditions of this Master Indenture, or in the Obligations, be repaid by the Master Trustee to the Obligated Group Agent upon its Written Request therefor on behalf of the Obligated Group; and thereafter the registered owners of the Obligation shall be entitled to look only to the Obligated Group for payment thereof. The Obligated Group hereby covenants and agrees to indemnify and save the Master Trustee harmless from any and all losses, costs, liability and expense suffered or incurred by the Master Trustee by reason of having returned any such moneys to the Obligated Group as herein provided. 70 B-19 Section Severability. If any provision of this Master Indenture shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions, or in all cases because it conflicts with any other provision or provisions or any constitution or statute or rule of public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatever. The invalidity of any one or more phrases, sentences, clauses or Sections in this Master Indenture contained, shall not affect the remaining portions of this Master Indenture, or any part thereof. Section Notices. It shall be sufficient service of any notice, complaint, demand or other paper on the Obligated Group Agent if the same shall be delivered in person or duly mailed by registered or certified mail addressed as follows: To the Obligated Group Agent: Alderson-Broaddus College, Inc. 101 College Hill Drive Philippi, West Virginia Attention: President To the Master Trustee: Wells Fargo Bank, N. A. 123 S. Broad Street 15 th Floor, Suite 1500 MAC: Y Philadelphia, Pennsylvania Attention: Corporate Trust Group Section Master Trustee as Paying Agent and Registrar. The Master Trustee is hereby designated and agrees to act as principal Paying Agent and Obligation Registrar for and in respect to the Obligations. The Obligated Group may also appoint one or more other banks as Paying Agent. Section Counterparts. This Master Indenture may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section Applicable Law. This Master Indenture shall be governed exclusively by the applicable laws of the State of West Virginia. 71

160 Section Immunity of Officers, Employees and Members of Members. No recourse shall be had for the payment of the principal of or premium or interest on any of the Obligations or for any claim based thereon or upon any obligation, covenant or agreement in this Master Indenture contained against any past, present or future officer, director, employee, member or agent of any Member, or of any successor corporation, as such, either directly or through any Member 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 officers, directors, employees, members or agents as such is hereby expressly waived and released as a condition of and consideration for the execution of this Master Indenture and the issuance of such Obligations. IN WITNESS WHEREOF, ALDERSON-BROADDUS COLLEGE, INC. has caused these presents to be signed in its name and on its behalf by its President and its corporate seal to be hereunto affixed and attested by its Secretary, and ALDERSON-BROADDUS ENDOWMENT CORPORATION has caused these presents to be signed in its name and on its behalf by its duly authorized officer and its corporate seal to be hereunto affixed, and to evidence its acceptance of the trusts hereby created, WELLS FARGO BANK, N. A. has caused these presents to be signed in its name and on its behalf by its duly authorized officer, its official seal to be hereunto affixed, and the same to be attested by its Secretary, all as of the day and year first above written. ALDERSON-BROADDUS COLLEGE, INC. Section Holidays. If the date for making any payment or the date for performance of any act or the exercising of any right, as provided in this Master Indenture, is not a Business Day, such payment may be made or act performed or right exercised on the next succeeding business day with the same force and effect as if done on the nominal date provided in this Master Indenture. [Remainder of Page Intentionally Left Blank] (SEAL) ATTEST: By: Richard A. Creehan Its: President Secretary ALDERSON-BROADDUS ENDOWMENT CORPORATION (SEAL) By: Richard A. Creehan Its: Authorized Officer ATTEST: Secretary WELLS FARGO BANK, N. A., as Master Trustee EXHIBIT A FORM OF OBLIGATION By: Its: Authorized Officer (See Attached) (SEAL) ATTEST: Secretary ( ) 74 B-20 A-1

161 THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 FORM OF NOTE No $ KNOW ALL MEN BY THESE PRESENTS that ALDERSON-BROADDUS COLLEGE, INC., a nonprofit corporation organized and existing under the laws of the State of West Virginia (the College ), on behalf of itself and the Obligated Group as the Obligated Group Agent (the Obligated Group Agent ), for value received, hereby acknowledges that the Obligated Group is obligated to, and promises to pay to, or registered assigns, the principal sum of DOLLARS ($ ). This Note also evidences and secures the obligation of the Obligated Group under dated as of, 20 (the Agreement ), between and the Obligated Group to make payments in respect of. The principal installments of this Note are payable on, commencing on. The final maturity date of this Note is, 20. The principal of this Note bears interest at. Interest payments on this Note are payable on, commencing on. Principal hereof, interest hereon and any applicable redemption premium (collectively Debt Service Charges ), are payable in any coin or currency of the United States of America which on the payment date is legal tender for the payment of public and private debts. This Note is one of a duly authorized Obligations issued by the Obligated Group under and pursuant to Supplemental Master Trust Indenture 20 -, dated as of, 20 (the Supplemental Indenture ), supplementing and amending the Master Trust Indenture, dated as of November 1, 2012, by and among the College, Alderson-Broaddus Endowment Corporation and Wells Fargo Bank, N. A., as master trustee (the Master Trustee ). The Master Trust Indenture, as supplemented and amended, is hereinafter called the Master Indenture. Capitalized terms used and not otherwise defined in this Note shall have the meaning assigned to such terms in the Master Indenture. The Obligated Group will pay Debt Service Charges on this Note at the times and in the amounts set forth above. The Obligated Group will be entitled to a credit, however, against the Debt Service Charges due on this Note, for amounts paid under the Agreement. Copies of the Master Indenture and the Agreement are on file at the Corporate Trust Office of the Master Trustee and reference is hereby made to the Master Indenture and Agreement for the provisions, among others, with respect to the nature and extent of the rights and obligations of the holders of this Note and other Obligations issued under the Master Indenture, the terms and conditions on which, and the purposes for which Obligations may be issued under the Master Indenture, and the rights, duties and obligations of the Obligated Group and the Master Trustee under the Master Indenture and the Agreement, to all of which the holder of this Note, by acceptance hereof, consents. The Members of the Obligated Group are jointly and severally liable for the performance of the covenants of each Member and of the Obligated Group under the Master Indenture including, without limitation, payment of Debt Service Charges and all obligations under the Master Indenture. As of the date of this Note, Alderson-Broaddus College, Inc. and Alderson-Broaddus Endowment Corporation are the only Members of the Obligated Group. New Members may be added to the Obligated Group and existing Members may withdraw from the Obligated Group upon the conditions set forth in the Master Indenture, but without notice to, or consent of, the holders of Obligations issued under the Master Indenture. The Master Indenture permits the issuance of additional Obligations under the Master Indenture to be secured by the covenants made therein, all of which, regardless of the times of issue or maturity, are to be of equal rank without preference, priority or distinction of any Obligation of any series over any other Obligation, except as expressly provided in the Master Indenture. Upon the occurrence of certain events of default as defined in the Master Indenture, the principal of all Obligations then Outstanding may be declared, and thereupon shall become, due and payable as provided in the Master Indenture. The holder of this Note shall have such rights to enforce the provisions of the Master Indenture, or to institute any action with respect to a default under the Master Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, as are provided in the Master Indenture. The holder of this Note shall have such rights to enforce the provisions of the Agreement, or to institute any action with respect to a default under the Agreement, or to institute, appear in or defend any suit or other proceeding with respect thereto, as are provided in the Agreement. This Note is issuable only as a fully registered note, and, as provided and to the extent authorized in the Master Indenture, this Note may be exchanged for a Note of the same series in an amount equal to the aggregate principal amount Outstanding on this Note, and not otherwise. This Note will be registered on the register to be maintained at the principal office of the Master Trustee and will be transferable only in the manner and subject to the limitations, if any, set forth in the Master Indenture. Upon every exchange or registration of transfer of this Note, the Obligated Group may make a charge sufficient to reimburse it for any tax or taxes or other governmental charge required to be paid by the Master Trustee or the Obligated Group with respect to the exchange or transfer. That charge must be paid by the holder requesting transfer or exchange as a condition precedent to the exercise of that privilege. Upon transfer or exchange, the Obligated Group Agent must execute and the Master Trustee must authenticate A-2 A-3 and deliver, in exchange for this Note, a new registered Note or Notes registered in the name of that holder or the transferee. This Note is a negotiable instrument under the Uniform Commercial Code of West Virginia. The Obligated Group, the Master Trustee, any paying agent and any note registrar may deem and treat the person in whose name this Note is registered as the absolute owner for the purpose of receiving payment of the Debt Service Charges on this Note. Neither the Obligated Group, nor any paying agent, nor the Master Trustee, nor any note registrar will be affected by any notice to the contrary. All payments made to the registered owner of this Note will be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable on this Note. No recourse may be had for the payment of Debt Service Charges on this Note or for any claim based on this Note or upon any obligation, covenant, or agreement contained in the Master Indenture, against any past, present or future officer, director, member or trustee of the Obligated Group Agent or any other Member of the Obligated Group, or any incorporator, officer, director, member or trustee of any successor entity, either directly or through the Obligated Group Agent, any Member of the Obligated Group, or any successor entities, under any rule of law or equity, statute or constitution, or by the enforcement of any assessment or penalty or otherwise, and all liability of any incorporator, officer, director, member or trustee is expressly waived and released as a condition of and consideration for the issuance of this Note and its acceptance by the owner of this Note. IN WITNESS WHEREOF, ALDERSON-BROADDUS COLLEGE, INC., as Obligated Group Agent, has caused this Note to be executed in its name on behalf of itself and the other Members of the Obligated Group by the manual or facsimile signature of its President and its corporate seal to be hereunto affixed and the same to be attested by its Secretary all as of the day of, 20. ALDERSON-BROADDUS COLLEGE, INC., as Obligated Group Agent By: [SEAL] Title: President Attest: By: Its: Secretary This Note will not be entitled to any benefit under the Master Indenture, or become obligatory for any purpose, until this Note has been duly authenticated by execution by an authorized officer of the Master Trustee on the Master Trustee s Authentication Certificate. [Remainder of Page Intentionally Left Blank] A-4 B-21 A-5

162 EXHIBIT B LIST OF OBLIGATED GROUP MEMBERS Alderson-Broaddus College, Inc. Alderson-Broaddus Endowment Corporation A-6 B-1 EXHIBIT C SUBORDINATED INDEBTEDNESS Any issue of Subordinated Indebtedness shall be evidenced by instruments, or issued under an indenture or other document, containing provisions for the subordination of such Indebtedness (to which appropriate reference shall be made in the instruments evidencing such Indebtedness) substantially as follows (the term debentures being, for convenience, used in the provisions set forth below to designate the instruments issued to evidence Subordinated Indenture and the term this Indenture to designate the instrument, indenture or other document containing such provisions): All debentures issued under this Indenture shall be issued subject to the following provisions and each person taking or holding any such debenture whether upon original issue or upon transfer or assignment thereof accepts and agrees to be bound by such provisions. All debentures issued hereunder and any coupons thereto appertaining shall, to the extent and in the manner hereinafter set forth, be subordinated and subject in right to the prior payment of Superior Indebtedness as defined in this Exhibit C. For all purposes of this Exhibit C the term Superior Indebtedness shall mean all Obligations now or hereafter issued under that certain Master Trust Indenture (the Master Indenture ), dated as of November 1, 2012 among Alderson-Broaddus College, Inc., Alderson-Broaddus Endowment Corporation and Wells Fargo Bank, N. A., as master trustee (the Master Trustee ), as supplemented and modified to the date hereof, or as the same may hereafter from time to time be further supplemented and modified. No payment on account of principal, premium, if any, sinking funds or interest on the debentures shall be made, nor shall any property or assets be applied to the purchase or other acquisition or retirement of the debentures, unless full payment of amounts then due and payable for principal, premium, if any, sinking funds and interest on Superior Indebtedness has been made or duly provided for in accordance with the terms of such Superior Indebtedness. No payment on account of principal, premium, if any, sinking funds or interest on the debentures shall be made, nor shall any property or assets be applied to the purchase or other acquisition or retirement of the debentures, if, at the time of such payment or application or immediately after giving effect thereto, (a) there shall exist a default in the payment of principal, premium, if any, sinking funds or interest with respect to any Superior Indebtedness, or (b) there shall have occurred an event of default (other than a default in the payment of principal, premium, if any, sinking funds or interest) with respect to any Superior Indebtedness, as defined therein or in the instrument under which the same is Outstanding, permitting the Holders thereof to accelerate the maturity thereof and such event of default shall not have been cured or waived or shall not have ceased to exist. Upon (a) any acceleration of maturity of the principal amount due on the debentures or (b) any payment of distribution of any kind or character, whether in cash, property or securities, upon any dissolution or winding-up or total or partial liquidation, reorganization or arrangement of any Member (as defined in the Master Indenture), whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all principal, premium, if any, and interest due or to become due upon all Superior Indebtedness shall first be paid in full, or C-1 B-22 payment thereof provided for in accordance with the terms of such Superior Indebtedness, before any payment is made on account of the principal, premium, if any, or interest on the indebtedness evidenced by the debentures, and upon any such dissolution or winding-up or liquidation, reorganization or arrangement, any payment or distribution of any kind or character, whether in cash, property or securities, to which the Holders of the debentures or the Trustee under this Indenture would be entitled, except for the provisions hereof, shall be paid by the Members, or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other person making such payment or distribution, to the Master Trustee to the extent necessary to pay all Superior Indebtedness in full after giving effect to any concurrent payment or distribution to the Master Trustee for the Holders of Superior Indebtedness, before any payment or distribution is made to the Holders of the indebtedness evidenced by the debentures or to the Trustee under this Indenture. In the event that, in violation of any of the foregoing provisions, any payment or distribution of any kind or character, whether in cash, property or securities, shall be received by the Trustee under this Indenture or by the Holders of the debentures before all Superior Indebtedness is paid in full, or provision made for such payment in accordance with the terms of such Superior Indebtedness, such payment or distribution shall be held in trust for the benefit of, and shall be paid over or delivered to the Master Trustee for application to the payment of all Superior Indebtedness remaining unpaid to the extent necessary to pay all such Superior Indebtedness in full in accordance with its terms, after giving effect to any concurrent payment or distribution to the Master Trustee for the Holders of such Superior Indebtedness. No present or future Holder of Superior Indebtedness shall be prejudiced in its, his or her right to enforce subordination of the indebtedness evidenced by the debentures by any act or failure to act on the part of any Member or anyone in custody of its assets or property. The foregoing subordination provisions shall be for the benefit of the Holders of Superior Indebtedness and may be enforced by the Master Trustee against the Holders of debentures or any trustee thereof; provided, however, that the indentures or other instruments creating or evidencing subordinated debt or pursuant to which any subordinated debt is issued shall provide: (a) that the foregoing provisions are solely for the purpose of defining the relative rights of the Holders of Superior Indebtedness (as defined therein) on the one hand and the Holders of the Subordinated Indebtedness on the other hand, and that nothing therein shall impair, as between the Members and the Holders of the Subordinated Indebtedness, the obligation of the Members, which is unconditional and absolute, to pay to the Holders thereof the principal thereof, premium, if any, and interest thereon in accordance with its terms, nor shall anything therein prevent the Holders of the Subordinated Indebtedness or any Trustee on their behalf from exercising all remedies otherwise permitted by applicable law or thereunder upon default thereunder, subject to the rights set forth above of the Holders of Superior Indebtedness to receive cash, property or securities otherwise payable or deliverable to the Holders of the Subordinated Indebtedness, (b) that upon any payment or distribution of assets of any Member of the character referred to in the fourth paragraph of the foregoing provisions, the Trustee under any indenture relating to Subordinated Indebtedness shall be entitled to rely upon any order or decree of a court of competent jurisdiction in which such dissolution, winding-up, liquidation, reorganization or arrangement proceedings are pending, and upon a certificate of the receiver, C-2

163 trustee in bankruptcy, liquidating trustee, agent or other person making any such payment or distribution, delivered to said Trustee for the purpose of ascertaining the persons entitled to participate in such distribution, the Holders of Superior Indebtedness and other indebtedness of such Member, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to the foregoing provisions, and (c) that the Trustee under any indenture relating to Subordinated Indebtedness and any paying agent therefor shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of moneys to or by such Trustee or such paying agent, unless and until such Trustee or such paying agent, as the case may be, shall have received written notice thereof from any Member or from one or more Holders of Superior Indebtedness, or from the Master Trustee. EXHIBIT D LIST OF EXCEPTIONS The provisions of the Master Indenture pursuant to which each Member covenants to jointly and severally pay any Obligation issued by a Member other than itself may not be enforceable if such payment: (a) is to be made on any such Obligation which was issued for a purpose which is not consistent with the charitable purposes of the Member from which such payment is requested or which was issued for the benefit of any entity other than a nonprofit corporation which is exempt from federal income taxes under Sections 501(a) and 501(c)(3) of the Code and which is not a private foundation as defined in Section 509(a) of the Code; (b) is to be made from any monies or assets which are donor restricted or which are subject to a direct or express trust which does not permit the use of such monies or assets for such a payment; (c) would result in the cessation or discontinuation of any material portion of the educational or related services previously provided by a Member from which such payment is requested; or (d) is to be made pursuant to any loan violating any applicable usury laws. C-3 D-1 SCHEDULE 1 EXISTING LIENS 1. Deed of trust lien on the former hospital facility located on the College campus, securing the letter of credit obtained for the benefit of the United States Department of Education, and any extensions or renewals thereof or replacements therefore. [The liens described below include proceeds, products, replacements and ascensions.] 2. Lien on goods, furniture, fixtures, equipment and general intangibles leased by College from UniversityLease, a division of California First National Bank, under Lease Agreement Orders No. BL and No. BL , which property consists primarily of technology equipment. 3. Liens, including on the net revenues and personal property of the College, granted to WesBanco Bank, Inc., as Trustee for the Bonds to be Refunded, which will be released upon the issuance of the Bonds and defeasance of the Bonds to be Refunded (all terms as defined in the Related Bond Indenture). 4. Lien on all of the Colleges right, title and interest in and to property listed on the schedules executed pursuant to the Master Lease Agreement dated as of May 1, 2011, with Key Government Finance, Inc. 5. Lien on all items of equipment, machinery, furniture, fixtures, inventory, software and/or other personal property subject to any equipment schedule between the College, as lessee, and Bank of the West, Trinity Division, as assignee lessor, which property consists primarily of technology hardware and software. 6. Lien on all items of equipment, machinery, furniture, fixtures, inventory, software and/or other personal property subject to any equipment schedule between the College, as lessee, and SG Equipment Finance USA Corp., as assignee lessor, acting through Wells Fargo Bank, National Association, as Agent, which property consists primarily of technology hardware and software. SCHEDULE 2 EXISTING INDEBTEDNESS 1. The Bonds to be Refunded (as defined in the Related Bond Indenture), which will be defeased upon the issuance of the Notes. 2. Line of Credit dated December 2, 2009, in the original maximum principal amount of $4,500,000, from The Bank of New York Mellon, together with all extensions and renewals thereof, modifications thereto and substitutions therefor (the BNY Line ) 3. Internal loan from the College endowment funds to refinance the BNY Line. 4. Letter of Credit in the amount of $796,000 in favor of the United States Department of Education, together with all extensions and renewals thereof, modifications thereto and substitutions therefor, 5. Loans pursuant to agreements dated August 25, 2009, September 7, 2010, July 14, 2011 and August 4, 2011, in aggregate principal amount not exceeding $170,000, with BC Bank, Inc., for the purchase of vehicles. 6. Master Lease Agreement No , and the schedules thereto, between the College and assignees of First American Commercial Bancorp, Inc., relating primarily to technology hardware and software. 7. Master Lease Agreement dated May 1, 2011, and the schedules thereto, in an aggregate principal amount not exceeding $1,000,000, between the College and Key Government Finance, Inc., for computer hardware and software. 8. Lease Agreement Orders No. BL and No. BL with UniversityLease, a division of California First National Bank, relating primarily to technology equipment. 9. Any other indebtedness reflected in the audited financial statements of the Obligated Group for the fiscal year ending June 30, Assignment of a contract between Sodexo and the College, committing to a total aggregate gift amount of $1,500,000, made to Freedom Bank Belington Branch. 8. Liens on certain endowment funds securing the line of credit in the original maximum amount of $4,500,000 from The Bank of New York Mellon. 9. Purchase-money security interests in certain vehicles and pieces of equipment. 10. Easements and other encumbrances set forth in the policy of title insurance delivered in connection with the Notes. B-23

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165 Appendix C: Form of the Supplemental Indenture

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167 SUPPLEMENTAL MASTER TRUST INDENTURE SUPPLEMENTAL MASTER TRUST INDENTURE Dated as of November 1, 2012 between ALDERSON-BROADDUS COLLEGE, INC., as Obligated Group Agent and WELLS FARGO BANK, N. A., as Master Trustee Supplemental to: Master Trust Indenture Dated as of November 1, 2012 and in connection with the issuance of: the A Note, the B Subordinate Note, the C Subordinate Note and the 2012-D Note THIS SUPPLEMENTAL MASTER TRUST INDENTURE NO is dated as of November 1, 2012 (this Supplement ), between ALDERSON-BROADDUS COLLEGE, INC., a nonprofit corporation organized and existing under the laws of the State of West Virginia (the College ), as Obligated Group Agent, and WELLS FARGO BANK, N. A., a national bank association, organized and existing under the laws of the United States of America, and authorized to do business in the State of West Virginia (the Master Trustee ). RECITALS A. This Supplement supplements the Master Trust Indenture, dated as of November 1, 2012, between the College, Alderson-Broaddus Endowment Corporation and the Master Trustee. The Master Trust Indenture, as supplemented and amended by this Supplement, is hereinafter referred to as the Master Indenture. B. The Philippi Municipal Building Commission (the Issuer ) is a public body corporate and municipal building commission organized and existing under the laws of the state of West Virginia, particularly Article 33 of Chapter 8 of the Code of West Virginia, 1931, as amended (the Enabling Act ), and was created by The City of Philippi, West Virginia (the City ) pursuant to an ordinance dated December 1, 1970 for certain purposes set forth in the Enabling Act and certain provisions of Chapter 8, Article 16 of the Code of West Virginia, 1931, as amended (the Bond Act ), including issuing negotiable bonds, notes, debentures or other evidences of indebtedness and providing for the rights of the holders thereof, incurring any proper indebtedness and issuing any obligations and giving any securitytherefor which the Issuer deems it necessary or advisable in connection with exercising its power. C. The College has requested that the Issuer issue its (a) its College Facilities Refunding and Improvement Revenue Bonds (Alderson-Broaddus College, Inc.), 2012 Series A, in the original principal amount of $34,275,000 (the 2012 Series A Bonds ), (b) its College Facilities Subordinate Lien Refunding Revenue Bonds (Alderson-Broaddus College, Inc.), 2012 Series B, in the original principal amount of $2,510,000 (the 2012 Series B Bonds ), and (c) its College Facilities Subordinate Lien Refunding and Improvement Revenue Bonds (Alderson-Broaddus College, Inc.), 2012 Series C (Taxable), in the original principal amount of $680,000 (the 2012 Series C Bonds and together with the 2012 Series B Bonds, collectively, the 2012 Subordinate Bonds and together with the 2012 Series A Bonds, collectively, the Bonds ) to: (i) finance the costs of the planning, design, acquisition, construction, renovation and equipping of certain capital improvements to the campus of the College, including the construction of (A) a new multi-sport stadium, locker room facilities, stadium seating, concessions, President s box, media boxes, turf field, lights to accommodate night games and practices, site improvements and walkways, (B) new student housing consisting of a 144-bed apartment style student housing buildingand a240-bed suite-stylestudent housing building, (C) the renovation and improvement of Benedum Hall, Priestley Hall and Kincaid and (D) all other necessary appurtenances and related facilities for the foregoing (the Construction Projects ); (ii) finance capitalized interest on the Construction Projects; (iii) currently refund the Issuer s College Facilities Revenue Bonds, Series 2010 A (Alderson-Broaddus College, Inc.); (iv) fund a debt service reserve fund for the 2012 Series A Bonds; and (v) pay the costs of issuing the Bonds (collectively, the Projects ). 1 D. As of the date hereof, the Members of the Obligated Group under the Master Indenture include (i) the College and (ii) Alderson-Broaddus Endowment Corporation, a nonprofit corporation organized under the laws of the State of West Virginia ( ABEC ). E. Pursuant to a Lease (the Initial Lease ) dated as of November 1, 2012, the College has heretofore leased to the Issuer certain real estate, situate, lying and being in the City of Philippi, Barbour County, West Virginia, which is more particularly described in Exhibit A-Site Description, attached hereto (the Site ), together with all improvements thereon and to be thereon and all tangible personal property thereon and to be thereon, and all fixtures, furniture, equipment, furnishings and other necessary appurtenant facilities and personal property now or hereafter situate on or used in connection with the Site, including, but not limited to, the Construction Projects to be financed, in part, with a portion of the proceeds of the Bonds (such real estate, improvements, fixtures, furniture, equipment, furnishings and other necessary appurtenant facilities and personal property, including, without limitation, the Construction Projects, together with any and all additions and improvements thereto and additional or related auxiliary facilities, now or hereafter constructed on the Site or used in connection therewith, are collectively herein called the Facilities ). F. The Issuer has leased the Facilities back to the College pursuant to a Lease Agreement (the Lease ) dated as of November 1, G. The Initial Lease and Lease are collectively referred to herein as the Lease Agreements. H. Concurrently with the execution and delivery of this Supplement, the Issuer and Wells Fargo Bank, N. A., as bond trustee (the Trustee ), will enter into a Bond Trust Indenture (the Indenture ) of even date herewith, under which the Issuer will issue the Bonds, which will constitute Related Bonds under the Master Indenture. Also concurrently with the execution and delivery of this Supplement, the Issuer and the College will enter into the Lease Agreements (for purposes of the Master Indenture, the Related Loan Document ), to provide funds for the purposes set forth in the Related Bond Indenture and the Related Loan Document. I. In order to provide additional security for the repayment of the Bonds, the Obligated Group is guaranteeing the payment of the Bonds pursuant to a Guaranty Agreement dated as of November 1, 2012 (the Guaranty ), by and between the Obligated Group Agent and the Trustee. J. The obligations of the College under the Lease will be evidenced by (i) the A Note (the A Note ) of the Obligated Group in the same aggregate principal amount as the 2012 Series A Bonds dated November 28, 2012, issued in favor of the Issuer, (ii) the B Subordinated Note (the B Note ) of the Obligated Group in the same aggregate principal amount of the 2012 Series B Bonds dated November 28, 2012, issued in favor of the Issuer, and (iii) the C Subordinated Note (the C Note ) of the Obligated Group in the same aggregate principal amount as the 2012 Series C Bonds dated November 28, 2012, issued in favor of the Issuer, all in accordance with the Master Indenture and this Supplement C Note, collectively, the 2012 Notes ) of the Obligated Group issued in favor of the Trustee in accordance with the Master Indenture and this Supplement. L. The 2012 Notes are secured by (i) one or more credit line deeds of trust, security agreements, assignments of leases and rents and fixture filings, dated as of November 1, 2012, granted by the College or ABEC to the trustee or trustees identified therein for the benefit of the Master Trustee, granting a lien on and security interest in certain tangible and intangible property of the respective grantor, (ii) by one or more credit line deeds of trust, mineral financing statements, as-extracted collateral filings and fixture filings, dated as of November 1, 2012, granted by the College or ABEC to the trustee or trustees identified therein for the benefit of the Master Trustee, granting a lien on and security interest in certain mineral rights, personalty, servitudes and rents of the respective grantor (collectively, the Deeds of Trust ), (iii) a security interest in the Gross Revenues of the Members of the Obligated Group granted under the Master Trust Indenture, and (iv) a collateral assignment of life insurance issued on the life of Richard A. Creehan, the President of the College. M. The2012-1BNote and the2012-1c Note constitutesubordinated Indebtedness as defined in the Master Indenture. N. This Supplement is executed for the benefit of the holders of the 2012 Notes. O. The Obligated Group and the Master Trustee desire that the Master Indenture be supplemented and amended by this Supplement as permitted under Section 701 of the Master Indenture to provide, among other things, for the issuance of the Obligations in the form of the 2012 Notes. P. The provisions of this Supplement will apply only so long as the 2012 Notes are outstanding. Q. When the Bonds are no longer outstanding and all amounts with respect thereto have been paid in full, any security extended to the 2012 Notes will be terminated, and the Master Trustee shall execute all releases and cancellations necessary to evidence such fact. R. All acts and things necessary to make the 2012 Notes, when executed by the Obligated Group Agent and authenticated and delivered by the Master Trustee as provided in the Master Indenture and this Supplement, the valid, binding and legal obligations of the Members of the Obligated Group, and to constitute these presents, together with the Master Indenture, a valid indenture and agreement according to its terms, have been done and performed, and the College, in the exercise of the legal right and power vested in it, executes this Supplement as Obligated Group Agent. NOW, THEREFORE, in order to declare the covenants and agreements of the Obligated Group for the benefit of the holders of the 2012 Notes, the College as Obligated Group Agent covenants and agrees with the Master Trustee as follows: K. The obligations of the Obligated Group under the Guaranty shall be evidenced by the D Note (the D Note and together with the A Note, the B Note and the 2 C-1 3

168 ARTICLE I DEFINITIONS OF WORDS AND TERMS Section 101. Words and terms used in this Supplement and not otherwise defined herein shall, except as otherwise stated, have the meanings assigned to them in the Master Indenture, the Related Bond Indenture and the Related Loan Document. Cash Amount means, as of any date, the consolidated unrestricted cash, cash equivalents and investments of the Obligated Group. For purposes of this Supplement, Cash Amount shall exclude any cash assets of any Member that are restricted in whole or in part or are held in trust for such Member or otherwise pursuant to instructions of a donor or to law, rule, regulation or agreement. Days Cash on Hand means, as of any applicable determination date, the product obtained by multiplying (a) a fraction, the numerator of which is the Cash Amount and the amounts on deposit in the Operating Reserve Fund created under the Indenture relating to the Bonds approved by this Supplement, on such date and the denominator of which is the operating expenses of the College (excluding (i) depreciation and amortization, (ii) extraordinary expenses, and (iii) any other non-cash expenses) for the period beginning on the first day of the Fiscal Year in which such determination date occurs and ending on the determination date, by (b) the number of calendar days in such period. Debt Service Requirements means, with respect to the period of time for which calculated, the aggregate of the payments required to be made during such period in respect of principal (whether at maturity, as a result of mandatory sinking fund redemption, mandatory prepayment or otherwise) and interest on Outstanding Funded Indebtedness of each Member or a group of Members with respect to which calculated; provided that: (a) the amount of such payments for a future period shall be calculated in accordance with the assumptions contained in Section 416 of the Master Indenture; (b) interest shall be excluded from the determination of the Debt Service Requirements to the extent that Capitalized Interest is availableto paysuch interest; (c) principal of Funded Indebtedness shall be excluded from the determination of Debt Service Requirements to the extent that amounts are on deposit in a trust fund and such amounts (including, where appropriate, the earnings or other increment to accrue thereon) are required to be applied to pay such principal and such amounts so required to be applied are sufficient to pay such principal; (d) principal payments on the amount of any Funded Indebtedness incurred to fund the Debt Service Reserve Fund shall be excluded from the determination of the Debt Service Requirements; (e) with respect to any Funded Indebtedness for which the number of actual payments of principal in any fiscal year is greater than those in the immediately preceding and/or succeeding fiscal years solely by reason of the fact that such principal payments are scheduled to occur other than on a specified date or dates or by reasons of this clause (e), the last principal payment in such fiscal year for which the number of payments is higher shall be deemed to be required to be made in the next preceding or succeeding fiscal year, as appropriate and as designated by the Obligated Group Agent. Fiscal Year means the fiscal year of the Obligated Group which, at the time of the original execution and delivery of this Supplement begins on July 1 and ends on the next succeeding June 30. Funded Indebtedness Ratio means the ratio consisting of (a) a numerator equal to the amount determined by dividing the sum of each Member s total Funded Indebtedness by the sum of (i) such Funded Indebtedness and (ii) the sum of each Member s total unrestricted net assets (as reflected in or derived from the most recent audited combined financial statements of the Obligated Group prepared in accordance with generally accepted accounting principles) and (b) a denominator of one. Historical Debt Service Coverage Ratio means, for anyperiod of time, the ratio consistingof a numerator equal to the amount determined by dividing Income Available for Debt Service for that period by the Debt Service Requirements for such period and a denominator of one; provided, however, that in calculating the Debt Service Requirements for any completed period, the principal amount of any Indebtedness included in such calculation which is paid during such period shall be excluded to the extent such principal amount is paid from the proceeds of other Indebtedness incurred in accordance with the provisions of the Master Indenture or from amounts deposited to provide for such payment pursuant to an amortization schedule established and maintained in accordance with the provisions of Section 415(G)(ii) of the Master Indenture, which amounts were deposited in Fiscal Years prior to the Fiscal Year in which such principal became due. Historical Maximum Annual Debt Service Coverage Ratio means, for any period of time, the ratio consisting of (a) a numerator equal to the amount determined by dividing (i) Income Available for Debt Service for that period by (ii) the Historical Maximum Annual Debt Service Requirements on the Indebtedness of the Member or Members involved during any completed period and (b) a denominator of one; provided, however, that in calculating the Historical Maximum Annual Debt Service Requirements for any completed period, the principal amount of any Indebtedness included in such calculation which is paid during such period shall be excluded to the extent such principal amount is paid from the proceeds of other Indebtedness incurred in compliance with the provisions of this Master Indenture or from amounts deposited to provide for such payment pursuant to an amortization schedule established and maintained in accordance with Section 415(G)(ii)(a) of the Master Indenture, which amounts were deposited in Fiscal Years prior to the Fiscal Year in which such principal became due. Historical Maximum Annual Debt Service Requirements means the largest total Debt Service Requirements for the Fiscal Year with respect to which a Historical Maximum Annual Debt Service Coverage Ratio is being calculated or any subsequent Fiscal Year on the Indebtedness of the Member or Members involved which was simultaneously Outstanding during the Fiscal Year with respect to which a Historical Maximum Annual Debt Service Coverage Ratio is being calculated. Historical Pro Forma Debt Service Coverage Ratio means, for any period of time, the ratio consisting of (a) a numerator equal to the amount determined by dividing (i) Income Available for Debt Service for that period by (ii) the Maximum Annual Debt Service Requirement for the Funded Indebtedness then Outstanding (other than any Funded Indebtedness being refunded with the Funded Indebtedness then proposed to be issued) plus the Funded Indebtedness then proposed to be issued and (b) a denominator of one. Income Available for Debt Service means, for any period, the excess of Gross Revenues over Expenses of the Members of the Obligated Group. Maximum Annual Debt Service Requirement means the largest total Debt Service Requirements for the current or any succeeding Fiscal Year (excluding the last year of debt service for 4 5 any bonds with a debt service reserve fund); provided that, in applying the provisions of Section 303 hereof, the current year shall be deemed to include the Fiscal Year with respect to which historical debt service coverage is being calculated and provided further that in calculating Maximum Annual Debt Service Requirement for the purposes of applying such provisions, the principal amount of any Indebtedness included in such calculation which is paid during the year with respect to which historical debt service coverage is being calculated shall be excluded to the extent such principal amount is paid from the proceeds of other Indebtedness incurred in compliance with the provisions of the Master Indenture or from amounts deposited to provide for such payment pursuant to an amortization schedule established and maintained in accordance with the provisions of Section 415(G)(ii)(a) and (b) of the Master Indenture, which amounts were deposited in Fiscal Years prior to the Fiscal Year in which such principal was paid; provided further that principal and interest payments on Indebtedness due on the first day or first Business Day of a month shall be deemed payable during the preceding month if they are required to be fully deposited with a trustee for such Indebtedness during such preceding month. Operating Reserve Fund means the trust fund by that name established under Section 5.06 of the Indenture. Projected Debt Service Coverage Ratio means, for any future period, the ratio consisting of (a) a numerator equal to the amount determined by dividing (i) the projected Income Available for Debt Service for that period by (ii) the Maximum Annual Debt Service Requirement for the Funded Indebtedness expected to be Outstanding during such period and (b) a denominator of one. ARTICLE II A A NOTE CREATED BY THIS SUPPLEMENTAL INDENTURE Section 201. There is hereby created a promissory note to be known and entitled A Note, the form of which is attached hereto as Exhibit A. The A Note, in an aggregate principal amount of $34,275,000, shall be executed, authenticated and delivered in accordance with Article II of the Master Indenture. Section 202. Principal on the A Note shall be payable in installments in the amounts and on the dates, and the unpaid principal shall bear interest from the date of the A Note, at the rate and payable at the times, as set forth or which reference is made in Exhibit A. Section 203. The A Note shall be subject to redemption prior to maturity to the same extent, and with respect to the corresponding payments of principal and at the applicable redemption price, that the 2012 Series A Bonds are subject to redemption in accordance with the terms of the Indenture. Publication or mailing of notice of redemption, as required by the Indenture, without further notice or action by the Master Trustee or Trustee under the Indenture, shall constitute notice of redemption of the corresponding amounts of principal due on the A Note, and such amount shall become due and payable on the date of redemption of the 2012 Series A Bonds at a redemption price equal to the redemption price payable with respect to the 2012 Series A Bonds. Section 204. All obligations of the College under the Related Loan Document with respect to the 2012 Series A Bonds shall be deemed Obligations of the Obligated Group under the Master Indenture evidenced and secured by the A Note. B B SUBORDINATED NOTE CREATED BY THIS SUPPLEMENTAL INDENTURE Section 205. There is hereby created a promissory note to be known and entitled B Subordinated Note, the form of which is attached hereto as Exhibit B. The B Subordinated Note, in an aggregate principal amount of $2,510,000, shall be executed, authenticated and delivered in accordance with Article II of the Master Indenture. Section 206. Principal on the B Subordinated Note shall be payable in installments in the amounts and on the dates, and the unpaid principal shall bear interest from the date of the B Subordinated Note, at the rate and payable at the times, as set forth or which reference is made in Exhibit B. Section 207. The B Subordinated Note shall be subject to redemption prior to maturity to the same extent, and with respect to the corresponding payments of principal and at the applicable redemption price, that the 2012 Series B Bonds are subject to redemption in accordance with the terms of the Indenture. Publication or mailing of notice of redemption, as required by the Indenture, without further notice or action by the Master Trustee or Trustee under the Indenture, shall constitute notice of redemption of the corresponding amounts of principal due on the B Subordinated Note, and such amount shall become due and payable on the date of redemption of the 2012 Series B Bonds at a redemption price equal to the redemption price payable with respect to the 2012 Series B Bonds. Section 208. All obligations of the College under the Related Loan Document with respect to the 2012 Series B Bonds shall be deemed Obligations of the Obligated Group under the Master Indenture evidenced and secured by the B Subordinated Note. Section 209. The B Subordinated Note shall evidence Subordinated Indebtedness as defined in the Master Indenture. C C SUBORDINATED NOTE CREATED BY THIS SUPPLEMENTAL INDENTURE Section 210. There is hereby created a promissory note to be known and entitled C Subordinated Note, the form of which is attached hereto as Exhibit C. The C Subordinated Note, in an aggregate principal amount of $680,000, shall be executed, authenticated and delivered in accordance with Article II of the Master Indenture. Section 211. Principal on the C Subordinated Note shall be payable in installments in the amounts and on the dates, and the unpaid principal shall bear interest from the date of the C Subordinated Note, at the rate and payable at the times, as set forth or which reference is made in Exhibit C. 6 C-2 7

169 Section 212. The C Subordinated Note shall be subject to redemption prior to maturity to the same extent, and with respect to the corresponding payments of principal and at the applicable redemption price, that the 2012 Series C Bonds are subject to redemption in accordance with the terms of the Indenture. Publication or mailing of notice of redemption, as required by the Indenture, without further notice or action by the Master Trustee or Trustee under the Indenture, shall constitute notice of redemption of the corresponding amounts of principal due on the C Subordinated Note, and such amount shall become due and payable on the date of redemption of the 2012 Series C Bonds at a redemption price equal to the redemption price payable with respect to the 2012 Series C Bonds. Section 213. All obligations of the College under the Related Loan Document with respect to the 2012 Series C Bonds shall be deemed Obligations of the Obligated Group under the Master Indenture evidenced and secured by the C Subordinated Note. Section 214. The C Subordinated Note shall evidence Subordinated Indebtedness as defined in the Master Indenture. D D NOTE CREATED BY THIS SUPPLEMENTAL INDENTURE Section 215. There is hereby created a promissory note to be known and entitled D Note, the form of which is attached hereto as Exhibit D. The D Note, in an aggregate principal amount of $37,465,000, shall be executed, authenticated and delivered in accordance with Article II of the Master Indenture. Section 216. Principal on the D Note shall be payable in installments in the amounts and on the dates, and the unpaid principal shall bear interest from the date of the D Note, at the rate and payable at the times, as set forth or which reference is made in Exhibit D. Section 217. All obligations of the Obligated Group under the Guaranty shall be deemed Obligations of the Obligated Group under the Master Indenture evidenced and secured by the D Note. E. AUTHENTICATION OF 2012 NOTES Section 218. The Obligated Group Agent shall execute and the Master Trustee shall authenticate and deliver the 2012 Notes upon the filing with the Master Trustee of the following: (A) Certified copies of resolutions of each of the Members of the Obligated Group authorizing the execution and delivery of the Master Indenture, this Supplement and the 2012 Notes; (B) An executed counterpart of the Master Indenture; (C) An executed counterpart of this Supplement; (D) The executed 2012 Notes; (E) The executed Assignment of the A Note, the B Note and the C Note to the Bond Trustee; (F) An opinion of Independent Counsel to the Obligated Group acceptable to the Master Trustee as required by Section 701 of the Master Indenture; (G) An opinion of Independent Counsel acceptable to the Master Trustee to the effect that registration of the 2012 Notes under the Securities Act of 1933, as amended, is not required, or, if such registration is required, that the Obligated Group has complied with all applicable provisions of said Act; and (H) Trustee. Section 301. Such other documents, resolutions or other materials as may be required by the Master ARTICLE III COVENANTS AND AGREEMENTS Cash Maintenance Requirement. (a) The Obligated Group covenants that it will maintain Days Cash on Hand as follows, to be calculated as of the last day of each quarter, commencing on June 30, 2015: (i) (ii) (iii) (iv) (v) (vi) (vii) Days Cash on Hand tested on and after June 30, 2015, shall be a minimum of 20 days; Days Cash on Hand tested on and after June 30, 2016 shall be a minimum of 45 days; Days Cash on Hand tested on and after June 30, 2017 shall be a minimum of 60 days; Days Cash on Hand tested on and after June 30, 2018 shall be a minimum of 75 days; Days Cash on Hand tested on and after June 30, 2019 shall be a minimum of 90 days; Days Cash on Hand tested on and after June 30, 2020 shall be a minimum of 105 days; and Days Cash on Hand tested on and after June 30, 2021 shall be a minimum of 120 days. (b) Each Member further covenants and agrees that it will from time to time as often as necessary and to the extent permitted by law, revise its rates, fees and charges in such manner as may be necessary or proper to comply with the provisions of this Section. (c) Calculations of the Obligated Group s Days Cash on Hand shall be performed quarterly, as of the last day of each quarter, based on (i) unaudited financial statements when available (but no later than thirty (30) days after each quarter end) and (b) audited annual financial statements 8 9 when available (but no later than one hundred eighty (180) days after each Fiscal Year end) for the Fiscal Year end. (d) As soon as practicable, but in no event more than thirty (30) days after the last day of each quarter and in no event more than one hundred eighty (180) days after the last day of each Fiscal Year end, the Obligated Group Agent shall provide to the Master Trustee an Officer s Certificate from the Obligated Group Agent containing a calculation of the Obligated Group s Days Cash on Hand as of the last day of said quarter and a statement as to whether or not, to the best knowledge of the signer of such certificate, there has been any default by any Member in the fulfillment of any of the terms, covenants, provisions or conditions of the Master Indenture, and, if so, specifying the default or defaults and the nature thereof. (e) The Obligated Group s failure to maintain its Days Cash on Hand at the levels set forth in subsection (a) above at the end of any fiscal quarter shall constitute an event of default under the Master Indenture unless the Obligated Group retains a Consultant as required by Section 303 hereof and follows its recommendations. (f) If, at the end of any quarter, the Obligated Group s Days Cash on Hand is less than the level required to be maintained by the Obligated Group for such quarter end as provided in subsection (a) hereof, the Obligated Group shall deposit with the Trustee for the credit of the Operating Reserve Fund the amount necessary to satisfy the Days Cash on Hand requirement for such quarter. If the Operating Reserve Fund is required to be funded hereunder, the Obligated Group shall fund such account within thirty (30) days from the date the Officer s Certificate is delivered to the Master Trustee in accordance with subsection (d) above. (g) Notwithstanding anything herein to the contrary, during such time as an event of default has occurred and is continuing hereunder as a result of the Obligated Group s failure to maintain itsdayscashonhandatthelevelssetforthinsubsection(a)hereof,nopaymentshallbemadetothe Holders of the 2012 Subordinate Bonds on the next ensuing Interest Payment Date and on any succeeding Interest Payment Date thereafter until the Obligated Group can certify its compliance with the Days Cash on Hand requirement hereunder. Section 302. Debt Service Coverage Ratio. (a) Commencing with its Fiscal Year ended June 30, 2016, the Obligated Group covenants that it will maintain a Historical Debt Service Coverage Ratio of at least 1.20:1 at the end of each Fiscal Year. The Obligated Group s failure to maintain a Historical Debt Service Coverage Ratio of a least 1.20:1 at the end of any Fiscal Year shall constitute an event of default under the Master Indenture unless the Obligated Group retains a Consultant as required by Section 303 hereof and follows its recommendations. (b) Each Member further covenants and agrees that it will from time to time as often as necessary and to the extent permitted by law, revise its rates, fees and charges in such manner as may be necessary or proper to comply with the provisions of this Section. (c) Calculations of the Obligated Group s Historical Debt Service Coverage Ratio shall be performed annually as of June 30 of each year based on audited annual financial statements when available (but no later than one hundred eighty (180) days after each Fiscal Year end). (d) As soon as practicable, but in no event more than one hundred eighty (180) days after the last day of the Fiscal Year, the Obligated Group Agent shall provide to the Master Trustee an Officer s Certificate from the Obligated Group Agent containing a calculation of the Obligated Group s Historical Debt Service Coverage Ratio for said Fiscal Year and a statement as to whether or not, to the best knowledge of the signer of such certificate, there has been any default by any Member in the fulfillment of any of the terms, covenants, provisions or conditions of the Master Indenture, and, if so, specifying the default or defaults and the nature thereof. Section 303. Failure to Maintain Historical Debt Service Coverage Ratio or Days Cash on Hand; Consultant. On each covenant testing date, the Obligated Group shall maintain a Historical Debt Service Coverage Ratio of not less than 1.20:1 and Days Cash on Hand on such covenant testing date of at least the amount set forth in Section 301 hereof; provided, however, if (a) the Historical Debt Service Coverage Ratio on any covenant testing date is less than 1.20:1, but greater than 1.0:1, or if (b) the Days Cash on Hand is less than 60 days, but greater than 45 days (beginning with the June 30, 2017 covenant testing date and every covenant testing date thereafter), then it shall not be an Event of Default under the Master Indenture, the Related Bond Indenture or the Lease, provided that the Obligated Group shall, at its expense, retain a Consultant acceptable to the Holders of a majority of the 2012 Series A Bonds Outstanding to make recommendations with respect to the rates, fees and charges of the Obligated Group and the Obligated Group s methods of operation and other facts affecting its financial condition in order to increase the Projected Debt Service Coverage Ratio to at least 1.20:1 or its Days Cash on Hand to the levels required herein for such period; provided, further, that the Obligated Group s failure to maintain a Historical Debt Service Coverage Ratio at the end of each Fiscal Year of at least 1.0:1 shall constitute an Event of Default under the Master Indenture, the Related Bond Indenture and the Lease. A copy of the Consultant s report and recommendations, if any, shall be filed with the Master Trustee and the Trustee under the Indenture. Each Member hereby agrees that it shall promptly and fully follow each recommendation of the Consultant applicable to it to the extent permitted by law including, without limitation, any recommendation by the Consultant that a manager be retained by the Obligated Group to manage the Facilities. This Section 303 shall not be construed to prohibit any Member from performing its obligations to the extent required for such Member to continue its qualification as a Tax-Exempt Organization so long as such service does not prevent the Obligated Group from satisfying the other requirements of this Section. Section 304. Permitted Indebtedness. For so long as the 2012 Notes remain Outstanding, Subsection 415(A) of the Master Indenture is hereby amended and restated to read as follows: (A) Funded Indebtedness, if prior to incurrence thereof or, if such Funded Indebtedness was incurred in accordance with another subsection of Section 415 of the Master Indenture and any Member wishes to have such Funded Indebtedness classified as having been issued under this subsection (A), prior to such classification, there is delivered to the Master Trustee: (i) An Officer s Certificate from the Obligated Group Agent (which Officer s Certificate, including, without limitation, the scope, form, substance and other aspects thereof, is 10 C-3 11

170 acceptable to the Master Trustee) stating that the Funded Indebtedness Ratio of the Obligated Group, after giving effect to the incurrence of such Indebtedness and to the application of the proceeds thereof, does not exceed.67:1; or (ii) An Officer s Certificate from the Obligated Group Agent (which Officer s Certificate, including, without limitation, the scope, form, substance and other aspects thereof, is acceptable to the Master Trustee) stating that the Historical Pro Forma Debt Service Coverage Ratio of the Obligated Group for the most recent fiscal year preceding the date of delivery of the report for which combined financial statements reported upon by independent certified public accountants are available was not less than 1.20:1; or (iii) (a) An Officer s Certificate from the Obligated Group Agent (which Officer s Certificate, including, without limitation, the scope, form, substance and other aspects thereof, is acceptable to the Master Trustee) stating that the Historical Debt Service Coverage Ratio of the Obligated Group for the fiscal year next preceding the incurrence of such Funded Indebtedness for which combined financial statements reported upon by independent certified public accountants are available was not less than 1.20:1; and (b) (1) a written Consultant s report (which report, including, without limitation, the scope, form, substance and other aspects thereof, is acceptable to the Master Trustee) to the effect that the Projected Debt Service Coverage Ratio of the Obligated Group for each of the next two succeeding fiscal years or, if such Indebtedness is being incurred in connection with the financing of Facilities, the two fiscal years succeeding the projected completion date of such Facilities, is not less than 1.20:1, or (2) an Officer s Certificate from the Obligated Group Agent in a form acceptable to the Master Trustee to the effect that the Projected Debt Service Coverage Ratio of the Obligated Group for each of the next two succeeding fiscal years or, if such Indebtedness is being incurred in connection with the financing of Facilities, the two fiscal years succeeding the projected completion date of such Facilities, is not less than 1.20:1, provided that either of such reports shall include forecast balance sheets, statements of revenues and expenses and statements of cash flows for each of such two fiscal years and a statement of the relevant assumptions upon which such forecasted statements are based, which financial statements must indicate that sufficient revenues and cash flow could be generated to pay the operating expenses of the Obligated Group s proposed and existing Facilities and the debt service on the Obligated Group s other existing Indebtedness during such two fiscal years; provided that the requirements of the foregoing subsection (iii)(a) or (b), as the case may be, shall be deemed satisfied if (x) there is delivered to the Master Trustee the report of a Consultant (which report, including, without limitation, the scope, form, substance and other aspects thereof, is acceptable to the Master Trustee and which contains the information required by the proviso to subsection (iii)(b) in the case of projections) which contains an opinion of such Consultant that applicable laws or regulations have prevented or will prevent the Obligated Group from generating the amount of Income Available for Debt Service required to be generated by subsection (iii)(a) or (b), as the case may be, as a prerequisite to the issuance of Funded Indebtedness, and such report is accompanied by a concurring opinion of Independent Counsel (which Counsel and opinion, including, without limitation,the scope, form, substance and other aspects thereof, are acceptable to the Master Trustee) as to any conclusions of law supporting the opinion of such Consultant, (y) the report of the Consultant indicates that the rates charged or to be charged by the Obligated Group are or will be such that, in the opinion of such Consultant, the Obligated Group has generated or will generate the maximum amount of Gross Revenues reasonably practicable given such laws or regulations, and (z) the Historical Maximum Annual Debt Service Coverage Ratio of the Obligated Group and the Projected Debt Service Coverage Ratio of the Obligated Group referred to in the applicable subsection are at least 1.20:1. Section 305. Balloon Indebtedness, Put Indebtedness and Guaranteed Indebtedness. For so long as the 2012 Notes remain Outstanding, the Obligated Group will not incur any Balloon Indebtedness, Put Indebtedness or Guaranteed Indebtedness unless prior to the incurrence thereof there is delivered to the Master Trustee: (i) An Officer s Certificate from the Obligated Group Agent (which Officer s Certificate, including, without limitation, the scope, form, substance and other aspects thereof, is acceptable to the Master Trustee) stating that the Historical Pro Forma Debt Service Coverage Ratio of the Obligated Group for the most recent fiscal year preceding the date of delivery of the report for which combined financial statements reported upon by independent certified public accountants are available was not less than 1.20:1; or (ii) (a) An Officer s Certificate from the Obligated Group Agent (which Officer s Certificate, including, without limitation, the scope, form, substance and other aspects thereof, is acceptable to the Master Trustee) stating that the Historical Debt Service Coverage Ratio of the Obligated Group for the fiscal year next preceding the incurrence of any Balloon Indebtedness, Put Indebtedness or Guaranteed Indebtedness, as the case may be, for which combined financial statements reported upon by independent certified public accountants are available was not less than 1.20:1; and (b) (1) a written Consultant s report (which report, including, without limitation, thescope, form, substance and other aspects thereof, is acceptable to the Master Trustee) to the effect that the Projected Debt Service Coverage Ratio of the Obligated Group for each of the next two succeeding fiscal years or, if such Indebtedness is being incurred in connection with the financing of Facilities, the two fiscal years succeeding the projected completion date of such Facilities, is not less than 1.20:1, or (2) an Officer s Certificate from the Obligated Group Agent in a form acceptable to the Master Trustee to the effect that the Projected Debt Service Coverage Ratio of the Obligated Group for each of the next two succeeding fiscal years or, if such Indebtedness is being incurred in connection with the financing of Facilities, the two fiscal years succeeding the projected completion date of such Facilities, is not less than 1.20:1, provided that either of such reports shall include forecast balance sheets, statements of revenues and expenses and statements of cash flows for each of such two fiscal years and a statement of the relevant assumptions upon which such forecasted statements are based, which financial statements must indicate that sufficient revenues and cash flow could be generated to pay the operating expenses of the Obligated Group s proposed and existing Facilities and the debt service on the Obligated Group s other existing Indebtedness during such two fiscal years; provided that the requirements of the foregoing subsection (ii)(a) or (b), as the case may be, shall be deemed satisfied if (x) there is delivered to the Master Trustee the report of a Consultant (which report, including, without limitation, the scope, form, substance and other aspects thereof, is acceptable to the Master Trustee and which contains the information required by theproviso to subsection (ii)(b)in thecase of projections) which contains an opinion of such Consultant that applicable laws or regulations have prevented or will prevent the Obligated Group from generating the amount of Income Available for Debt Service required to be generated by subsection (ii)(a) or (b), as the case may be, as a prerequisite to the issuance of Balloon Indebtedness, Put Indebtedness or Guaranteed Indebtedness and such report is accompanied by a concurring opinion of Independent Counsel (which Counsel and opinion, including, without limitation,thescope, form, substance and other aspects thereof, are acceptable to the Master Trustee) as to any conclusions of law supporting the opinion of such Consultant, (y) the report of the Consultant indicates that the rates charged or to be charged by the Obligated Group are or will be such that, in the opinion of such Consultant, the Obligated Group has generated or will generate the maximum amount of Gross Revenues reasonably practicable given such laws or regulations, and (z) the Historical Maximum Annual Debt Service Coverage Ratio of the Obligated Group and the Projected Debt Service Coverage Ratio of the Obligated Group referred to in the applicable subsection are at least 1.20:1. Section 306. Sale, Lease or Other Disposition of Property. For so long as the 2012 Notes remain Outstanding, Section 417 of the Master Indenture is hereby amended as follows: (A) Subsection (g) shall be amended to read as follows: (g) (i) Leases of coal, oil, gas or other mineral rights or timber to any Person, (ii) sales or transfers of coal, oil, gas or other mineral rights or timber to any Person where the sales price for such Property to be sold or transferred by the Obligated Group does not exceed $100,000, and (iii) with the prior written consent of the Holders of a majority of the 2012 Series A Bonds Outstanding, sales or transfers of coal, oil, gas or other mineral rights or timber to any Person where the sales price of such Property to be sold or transferred by the Obligated Group exceeds $100,000. (B) A new subsection (h) shall be inserted into Section 417, which shall read as follows: (h) To any Person upon delivery to the Master Trustee of an Officer s Certificate of a Member (i) certifying that during the fiscal year immediately preceding the proposed disposition for which financial statements have been reported upon by independent certified public accountants, (a) the Historical Maximum Annual Debt Service Coverage Ratio of the Obligated Group, taking into account such disposition, would not have been less than 1.20:1 or (b) if the Historical Maximum Annual Debt Service Coverage Ratio is less than 1.20:1, the Historical Maximum Annual Debt Service Coverage Ratio would not have been reduced by more than 10% and (ii) demonstrating that, after taking into account such disposition, the conditions described in Section 304 of this Supplement are met for allowing the incurrence of one dollar of additional Funded Indebtedness. Section 307. Collateral Assignment of Life Insurance Policy. The 2012 Notes shall be secured by a collateral assignment of all right, title and interest in a life insurance policy issued to the Obligated Group Agent on the life of Richard A. Creehan, the President of the College, in the amount of $5,000, (the Life Insurance Policy ). The Life Insurance Policy shall remain in full force and effect, and shall remain assigned as security for the 2012 Notes, until such time as the Obligated Group shall (a) maintain a Historical Debt Service Coverage Ratio of at least 1.30:1 and (b) maintain Days Cash on Hand of at least 120 days, as of the last day of two consecutive fiscal quarters, at which time the Holders of a majority of the 2012 Series A Bonds Outstanding shall direct the Master Trustee as loss payee and insured to release the collateral assignment of the Life Insurance Policy as security for the 2012 Notes. Section 308. Pledge of Security Interest in Deposit Account. As security for the payment in full of the 2012 Notes, the College hereby assigns, pledges and grants to Wells Fargo Bank, N.A., as the Master Trustee and Bond Trustee, a security interest in all right, title and interest in or to the Account, as such term is defined in that certain Deposit Account Control Agreement dated as of November 1, 2012, and effective as of November 30, 2012, among the College, Premier Bank, Inc. and the Master Trustee. Section 309. Unrestricted Endowment Fund. (A) By no later than November 30, 2016, the Obligated Group shall establish an endowment fund consisting of at least $1,300,000 of unrestricted funds (the Unrestricted Endowment Fund ), which may be used for any purpose. The Obligated Group shall maintain the Unrestricted Endowment Fund for so long as the A Note remains Outstanding. (B) Beginning with the Fiscal Year ending June 30, 2017, each Officer s Certificate from the Obligated Group Agent to the Master Trustee required by Section 302(d) hereof shall also include a certification as to the amount on deposit in the Unrestricted Endowment Fund as of the last day of such Fiscal Year. Section 310. Attendance at Board Meetings. For so long as the A Note remains Outstanding, the Holders of the 2012 Series A Bonds shall be given notice of and shall be entitled to, attend meetings of the Board of Trustees of the Obligated Group Agent, either in person or telephonically; provided however, that during any meeting of the Board of Trustees of the Obligated Group Agent, the Board of Trustees may call an executive session which shall be open only to the membersoftheboardoftrusteesunlessaninvitationisextendedbytheboardoftrusteestothe Holders of the 2012 Series A Bonds to attend such executive session. ARTICLE IV RIGHTS OF HOLDERS OF 2012 SERIES A BONDS; FINANCIAL REPORTING; PRIORITY OF PAYMENTS ON 2012 NOTES Section 401. All rights of the Master Trustee granted under the Master Indenture (a) to accept, approve or consent to any action taken or proposed to be taken by the Obligated Group, (b) to accept as to form any document or certificate to be executed or delivered by the Obligated Group, (c) to approve the selection of any Consultant or other professional advisor, (d) to enforce the Obligations, (e) to exercise remedies with respect to the Obligations or (f) to take any other action with respect to the Obligations shall, with respect to the 2012 Series A Note, be deemed to be the rights of the Holders of a majority of the 2012 Series A Bonds Outstanding for all purposes. For purposes of this Supplement, any reference to the Holders of a majority of the 2012 Series A Bonds Outstanding shall mean the beneficial owners of such bonds. Section 402. For so long as the 2012 Series A Bonds remain Outstanding, any provisions under the Master Indenture that require the consent or approval of a majority of the Holders of the Obligations issued thereunder shall be granted solely to the Holders of a majority of the 2012 Series A Bonds Outstanding. Section 403. Notwithstanding anything in the Master Indenture or herein to the contrary, the Obligated Group Agent shall obtain the prior written consent or approval of the Holders of a majority of the 2012 Series A Bonds Outstanding, which consent or approval shall not be unreasonably withheld, for any of the following: (a) admission of any new Member to the Obligated Group under Section 404 of the Master Indenture; (b) withdrawal of any Member of the Obligated Group under Section 405 of the Master Indenture; (c) application of the Net Proceeds from any insurance payment or condemnation award under Sections 410 or 411 of the Master Indenture, except for the application of any insurance 14 C-4 15

171 payment of condemnation award towards the prepayment of the 2012 Series A Bonds; (d) any merger or consolidation of any Member with any Person who is not a Member or any sale or conveyance of substantially all Property of any Member to any Person who is not a Member under Section 413 of the Master Indenture; (e) the incurrence of any Indebtedness by the Obligated Group described in Section 304 hereof and Sections 415(A), (B), (D), (E), (F), (G), (H), (I), (K), (M), (N) or (O) of the Master Indenture; (f) the sale, lease or other disposition of Property of any Member in accordance with Sections 417(a), (b), (g) (except as otherwise allowed by Section 306 hereof) and (h) of the Master Indenture; (g) the creation of any Lien on Property of any Member allowed as a Permitted Encumbrance under Section 418 of the Master Indenture; or (h) the execution of any Supplemental Master Indenture under Article VII of the Master Indenture. If the Holders of a majority of the 2012 Series A Bonds Outstanding fail to respond to any request of the Obligated Group Agent for consent or approval hereunder within thirty (30) days of receipt of any such request from the Obligated Group Agent, then such request of the Obligated Group Agent shall be deemed to have been consented to or approved, as the case may be, by such Holders. Any request, consent, approval or other action in writing delivered hereunder shall be sent (i) by a nationally recognized next day courier service or (ii) by certified mail, return receipt requested, and shall be deemed effective upon receipt by the recipient. Section 404. For so long as the 2012 Series A Bonds remain Outstanding, the Members covenant and agree that in addition to the financial information required to be furnished under Section 414 of the Master Indenture, the Members shall also furnish to the Master Trustee and the Holders of the 2012 Series A Bonds, (a) as soon as practicable but in no event more than thirty (30) days after the last day of each month during the period from the date hereof until completion of the Construction Projects or during any month in which an event of default has occurred and is continuing under the Master Indenture or hereunder, the unaudited monthly financial statements of the Obligated Group, and (b) as soon as practicable but in no event more than thirty (30) days after the last day of each fiscal quarter, the unaudited quarterly financial statements of the Obligated Group. Section 405. For so long as the 2012 Series A Bonds remain Outstanding, the Obligated Group Agent shall deliver to the Holders of the 2012 Series A Bonds and, upon the written request of the Holders of a majority of the 2012 Series A Bonds or any Holder of a 2012 Series A Bond, to any pricing service that follows the 2012 Series A Bonds as identified by such Holders in their written request, copies of all financial information, certificates or reports required under the Master Indenture or required hereunder within the time periods prescribed under the Master Indenture or hereunder. Section 406. The Obligated Group Agent and the Holders of the 2012 Series A Bonds shall each furnish to the Related Bond Trustee and the Master Trustee a copy of any written request, consent or approval delivered by either party to the other party. Section 407. No payment on account of principal, premium, if any, sinkingfunds or interest on the Subordinated Notes shall be made, nor shall any property or assets be applied to the purchase or other acquisition or retirement of the Subordinated Notes, unless full payment of amounts then due and payable for principal, premium, if any, sinking funds and interest on the 2012 Series A Note has been made or duly provided for in accordance with the terms of the Master Indenture. No payment on account of principal, premium, if any, sinking funds or interest on the Subordinated Notes shall be made, nor shall any property or assets be applied to the purchase or other acquisition or retirement of the Subordinated Notes if, at the time of such payment or application or immediately after giving effect thereto, (a) there shall exist a default in the payment of principal, premium, if any, sinking funds or interest with respect to the 2012 Series A Note, or (b) there shall have occurred an event of default (other than a payment default) with respect to the 2012 Series A Note and such event of default shall not have been cured or waived and shall not have ceased to exist. Upon (a) any acceleration of maturity of the principal amount due on the Subordinated Notes or (b) any payment or distribution of any kind or character, whether in cash, property or securities, upon any dissolution or winding-up or total or partial liquidation, reorganization or arrangement of any Member, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all principal, premium, if any, and interest due or to become due upon the 2012 Series A Note shall first be paid in full, or payment thereof provided for in accordance with the terms of the Master Indenture, before any payment is made on account of the principal, premium, if any, or interest on the Subordinated Notes, and upon any such dissolution or winding-up or liquidation, reorganization or arrangement, any payment or distribution of any kind or character, whether in cash, property or securities, to which the Holders of the Subordinated Notes or the Trustee under the Master Indenture would be entitled, except for the provisions hereof, shall be paid by the Members, or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other person making such payment or distribution, to the Master Trustee to the extent necessary to pay the 2012 Series A Note in full after giving effect to any concurrent payment or distribution to the Master Trustee for the Holder of the 2012 Series A Note, before any payment or distribution is made to the Holders of the Subordinated Notes or to the Master Trustee under the Master Indenture. In addition to the priority of payment for the 2012 Series A Note described herein, such 2012 Series A Note shall also enjoy a priority in the security interest granted under the Master Indenture so that all proceeds or value attributed to such collateral shall be applied to the 2012 Series A Note prior to any other Indebtedness. ARTICLE V PRIORITY OF PAYMENTS Section For so long as the 2012 Series A Bonds remain Outstanding, payments on the Notes shall be made by the Trustee in the following order of priority: first, the Trustee shall pay the interest and principal payments due and owing on the 2012 Series A Note when due in accordance with the repayment terms thereof; and second, the Trustee shall pay the interest and principal due and owing on the 2012 Subordinate Notes when due in accordance with the repayment terms thereof; provided, however, if an Event of Default shall have occurred and be continuing under the Master Indenture, no principal and interest payments shall be made by the Trustee on the 2012 Subordinate Notes during the continuance of any Event of Default. Payments on the D Note shall be made by the Trustee in accordance with the priority of payments set forth in this Section 5.01 related to the 2012 Series A Note and the 2012 Subordinate Notes. ARTICLE VI MISCELLANEOUS Section 601. The Master Indenture, as amended and supplemented by this Supplement and as otherwise amended and supplemented, is in all respects ratified and confirmed, and the Master Indenture as so amended and supplemented shall be read, taken and construed as one in the same instrument. Except as herein otherwise expressly provided, all the provisions, definitions, terms and conditions of the Master Indenture, as amended and supplemented by this Supplement and as otherwise amended and supplemented, shall be deemed to be incorporated in, and made a part of, this Supplement. All references to this Master Indenture in the Master Indenture shall be to the Master Indenture as amended and supplemented by this Supplement and shall include any other amendments or supplements from time to time pertaining to the Bonds or to the Guaranty. Section 602. All the covenants, stipulations, promises and agreements in this Supplement by the College or the Master Trustee shall inure to the benefit of and shall bind their respective successors and assigns, whether so expressed or not. Section 603. If any provision in the Master Indenture or this Supplement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 604. This Supplement may be executed in any number of counterparts, each of which shall be an original, and all of which shall together constitute but one and the same instrument. Section 605. This Supplement shall be deemed to be a contract made under the laws of the State of West Virginia, and for all purposes shall be construed in accordance with the laws of said State. [SIGNATURES APPEAR ON THE FOLLOWING PAGE] IN WITNESS WHEREOF, the parties hereto have caused this Supplement to be duly executed by the persons thereunto duly authorized, as of the day and year first above written. ATTEST: By: Name: Harry G. Shaffer, III Title: Secretary ALDERSON-BROADDUS COLLEGE, INC., as Obligated Group Agent By: Name: Richard A. Creehan Title: Authorized Officer WELLS FARGO BANK, N. A., as Master Trustee By: Name: Title: Supplemental Master Indenture C-5 19

172 Exhibit A Form of A Note THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 SERIES A NOTE No A $ KNOW ALL MEN BY THESE PRESENTS that ALDERSON-BROADDUS COLLEGE INC., a nonprofit corporation organized and existing under the laws of the State of West Virginia (the College ), on behalf of itself and the Obligated Group as the Obligated Group Agent (the Obligated Group Agent ), for value received, hereby acknowledges that the Obligated Group is obligated to, and promises to pay to THE PHILIPPI MUNICIPAL BUILDING COMMISSION (the Issuer ), as issuer of the $ College Facilities Refunding and Improvement Revenue Bonds (Alderson-Broaddus College, Inc.) 2012 Series A (the 2012 Series A Bonds ) under the Bond Indenture (the Bond Indenture ) dated as of November 1, 2012, between the Issuer and Wells Fargo Bank, N. A., as bond trustee (the Bond Trustee ), and any successor trustee appointed under the Bond Indenture, or registered assigns, the principal sum of DOLLARS ($ ). This A Note also evidences and secures the obligation of the College under the Lease Agreement dated as of November 1, 2012 (the Lease Agreement ), between the Issuer and the College to make payments in respect of the 2012 Series A Bonds in accordance with the Bond Indenture. The principal installments of this Note correspond to the maturities and mandatory sinking fund payments of the 2012 Series A Bonds. The final maturity date of this Note is October 1, The principal of this Note bears interest at the same rates as the 2012 Series A Bonds. Interest payments on this Note correspond to the Interest Payment Dates for the 2012 Series A Bonds. Principal hereof, interest hereon and any applicable redemption premium (collectively Debt Service Charges ), are payable in any coin or currency of the United States of America which on the payment date is legal tender for the payment of public and private debts. This Note is one of a duly authorized Obligations issued by the Obligated Group under and pursuant to Supplemental Master Trust Indenture , dated as of November 1, 2012 (the Supplemental Indenture ), supplementing and amending the Master Trust Indenture, dated as of November 1, 2012, by and among the College, Alderson-Broaddus Endowment Corporation and Wells Fargo Bank, N. A., as master trustee (the Master Trustee ). The Master Trust Indenture, as supplemented and amended, is hereinafter called the Master Indenture. Capitalized terms used and not otherwise defined in this Note shall have the meaning assigned to such terms in the Lease Agreement and the Master Indenture. This Note is subject to redemption before maturity, to the extent, upon the conditions, and with respect to the corresponding payments of principal and interest and with any applicable redemption premium that the 2012 Series A Bonds are subject to upon redemption in accordance with the Bond Indenture. Giving notice of redemption of the 2012 Series A Bonds in accordance with the conditions set forth in the Bond Indenture will, without further action by the Master Trustee, the Bond Trustee or the Obligated Group Agent, constitute notice of the A-1 A-2 redemption of the corresponding amounts of principal on this Note and those amounts will become due and payable on the date of the redemption of those 2012 Series A Bonds so redeemed. The Obligated Group will pay Debt Service Charges on this Note at the times and in the amounts set forth above. The Obligated Group will be entitled to a credit, however, against the Debt Service Charges due on this Note, for amounts paid under the Lease Agreement and applied to the corresponding payment of Debt Service Charges on the 2012 Series A Bonds. Copies of the Master Indenture and the Lease Agreement are on file at the Corporate Trust Office of the Master Trustee and reference is hereby made to the Master Indenture and Lease Agreement for the provisions, among others, with respect to the nature and extent of the rights and obligations of the holders of this Note and other Obligations issued under the Master Indenture, the terms and conditions on which, and the purposes for which Obligations may be issued under the Master Indenture, and the rights, duties and obligations of the Obligated Group and the Master Trustee under the Master Indenture and the Lease Agreement, to all of which the holder of this Note, by acceptance hereof, consents. The Members of the Obligated Group are jointly and severally liable for the performance of the covenants of each Member and of the Obligated Group under the Master Indenture including, without limitation, payment of Debt Service Charges and all obligations under the Master Indenture. As of the date of this Note, Alderson-Broaddus College, Inc. and Alderson-Broaddus Endowment Corporation are the only Members of the Obligated Group. New Members may be added to the Obligated Group and existing Members may withdraw from the Obligated Group upon the conditions set forth in the Master Indenture. The Master Indenture permits the issuance of additional Obligations under the Master Indenture to be secured by the covenants made therein, all of which, regardless of the times of issue or maturity, are to be of equal rank without preference, priority or distinction of any Obligation of any series over any other Obligation, except as expressly provided in the Master Indenture. Upon the occurrence of certain events of default as defined in the Master Indenture, the principal of all Obligations then Outstanding may be declared, and thereupon shall become, due and payable as provided in the Master Indenture. The holder of this Note shall have such rights to enforce the provisions of the Master Indenture, or to institute any action with respect to a default under the Master Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, as are provided in the Master Indenture. The holder of this Note shall have such rights to enforce the provisions of the Lease Agreement and the Deeds of Trust or to institute any action with respect to a default under the Lease Agreement or the Deeds of Trust, or to institute, appear in or defend any suit or other proceeding with respect thereto, as are provided in the Lease Agreement and the Deeds of Trust. series in an amount equal to the aggregate principal amount Outstanding on this Note, and not otherwise. This Note will be registered on the register to be maintained at the principal office of the Master Trustee and will be transferable only in the manner and subject to the limitations, if any, set forth in the Master Indenture. Upon every exchange or registration of transfer of this Note, the Obligated Group may make a charge sufficient to reimburse it for any tax or taxes or other governmental charge required to be paid by the Master Trustee or the Obligated Group with respect to the exchange or transfer. That charge must be paid by the holder requesting transfer or exchange as a condition precedent to the exercise of that privilege. Upon transfer or exchange, the Obligated Group Agent must execute and the Master Trustee must authenticate and deliver, in exchange for this Note, a new registered Note or Notes registered in the name of that holder or the transferee. This Noteis anegotiableinstrument under the Uniform Commercial Code of West Virginia. The Obligated Group, the Master Trustee, any paying agent and any note registrar may deem and treat the person in whose name this Note is registered as the absolute owner for the purpose of receiving payment of the Debt Service Charges on this Note. Neither the Obligated Group, nor any paying agent, nor the Master Trustee, nor any note registrar will be affected by any notice to the contrary. All payments made to the registered owner of this Note will be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable on this Note. No recourse may be had for the payment of Debt Service Charges on this Note or for any claim based on this Note or upon any obligation, covenant, or agreement contained in the Master Indenture, against any past, present or future officer, director, member or trustee of the Obligated Group Agent or any other Member of the Obligated Group, or any incorporator, officer, director, member or trustee of any successor entity, either directly or through the Obligated Group Agent, any Member of the Obligated Group, or any successor entities, under any rule of law or equity, statute or constitution, or by the enforcement of any assessment or penalty or otherwise, and all liability of any incorporator, officer, director, member or trustee is expressly waived and released as a condition of and consideration for the issuance of this Note and its acceptance by the owner of this Note. This Note will not be entitled to any benefit under the Master Indenture, or become obligatory for any purpose, until this Note has been duly authenticated by execution by an authorized officer of the Master Trustee on the Master Trustee s Authentication Certificate. [Remainder of Page Intentionally Left Blank] This Note is issuable only as a fully registered note, and, as provided and to the extent authorized in the Master Indenture, this Note may be exchanged for a Note of the same A-3 C-6 A-4

173 IN WITNESS WHEREOF, ALDERSON-BROADDUS COLLEGE, INC., as Obligated Group Agent, has caused this Note to be executed in its nameon behalf of itself and the other Members of the Obligated Group by the manual or facsimile signature of its President and its corporate seal to be hereunto affixed and the same to be attested by its Secretary all as of the day of November, ALDERSON-BROADDUS COLLEGE, INC., as Obligated Group Agent By: Name: Richard A. Creehan [SEAL] Title: President MASTER TRUSTEE S AUTHENTICATION CERTIFICATE The Note to which this certificate is attached is one of the Obligations described in the within-mentioned Master Indenture. WELLS FARGO BANK, N. A., as Master Trustee By: Name: Joseph Progar Title: Attest: By: Name: Its: Secretary Dated: November, 2012 A-5 A-6 Exhibit B Form of B Subordinated Note THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 SERIES B SUBORDINATED NOTE No B $ KNOW ALL MEN BY THESE PRESENTS that ALDERSON-BROADDUS COLLEGE, INC., a nonprofit corporation organized and existing under the laws of the State of West Virginia (the College ), on behalf of itself and the Obligated Group as the Obligated Group Agent (the Obligated Group Agent ), for value received, hereby acknowledges that the Obligated Group is obligated to, and promises to pay to THE PHILIPPI MUNICIPAL BUILDING COMMISSION (the Issuer ), as issuer of the $ College Facilities Subordinate Lien Refunding Revenue Bonds (Alderson-Broaddus College, Inc.) 2012 Series B (the 2012 Series B Bonds ) under the Bond Indenture (the Bond Indenture ) dated as of November 1, 2012, between the Issuer and Wells Fargo Bank, N. A., as bond trustee (the Bond Trustee ), and any successor trustee appointed under the Bond Indenture, or registered assigns, the principal sum of DOLLARS ($ ). This B Subordinated Note also evidences and secures the obligation of the College under the Lease Agreement dated as of November 1, 2012 (the Lease Agreement ), between the Issuer and the College to make payments in respect of the 2012 Series B Bonds in accordance with the Bond Indenture. The principal installments of this Note correspond to the maturities and mandatory sinking fund payments of the 2012 Series B Bonds. The final maturity date of this Note is October 1, The principal of this Note bears interest at the same rates as the 2012 Series B Bonds. Interest payments on this Note correspond to the Interest Payment Dates for the 2012 Series B Bonds. Principal hereof, interest hereon and any applicable redemption premium (collectively Debt Service Charges ), are payable in any coin or currency of the United States of America which on the payment date is legal tender for the payment of public and private debts. This Note is one of a duly authorized Obligations issued by the Obligated Group under and pursuant to Supplemental Master Trust Indenture , dated as of November 1, 2012 (the Supplemental Indenture ), supplementing and amending the Master Trust Indenture, dated as of November 1, 2012, by and among the College, Alderson-Broaddus Endowment Corporation and Wells Fargo Bank, N. A., as master trustee (the Master Trustee ). The Master Trust Indenture, as supplemented and amended, is hereinafter called the Master Indenture. Anything in this B Subordinated Note to the contrary notwithstanding, this Note constitutes Subordinated Indebtedness under the Master Indenture and is not on a parity with the A Note or the D Note issued under the Supplemental Indenture and any other Obligations issued under the Master Indenture, except for the C Subordinated Note issued under the Supplemental Indenture which is on parity with this B Subordinated Note. This Note constitutes Subordinated Indebtedness as defined in the Master Indenture, B-1 C-7 B-2

174 and the terms required by Exhibit C to the Master Indenture for Subordinated Indebtedness are attached as Appendix I hereto and incorporated herein by reference. Capitalized terms used and not otherwise defined in this Note shall have the meaning assigned to such terms in the Lease Agreement and the Master Indenture. This Note is subject to redemption before maturity, to the extent, upon the conditions, and with respect to the corresponding payments of principal and interest and with any applicable redemption premium that the 2012 Series B Bonds are subject to upon redemption in accordance with the Bond Indenture. Giving notice of redemption of the 2012 Series B Bonds in accordance with the conditions set forth in the Bond Indenture will, without further action by the Master Trustee, the Bond Trustee or the Obligated Group Agent, constitute notice of the redemption of the corresponding amounts of principal on this Note and those amounts will become due and payable on the date of the redemption of those 2012 Series B Bonds so redeemed. The Obligated Group will pay Debt Service Charges on this Note at the times and in the amounts set forth above. The Obligated Group will be entitled to a credit, however, against the Debt Service Charges due on this Note, for amounts paid under the Lease Agreement and applied to the corresponding payment of Debt Service Charges on the 2012 Series B Bonds. Copies of the Master Indenture and the Lease Agreement are on file at the Corporate Trust Office of the Master Trustee and reference is hereby made to the Master Indenture and Lease Agreement for the provisions, among others, with respect to the nature and extent of the rights and obligations of the holders of this Note and other Obligations issued under the Master Indenture, the terms and conditions on which, and the purposes for which Obligations may be issued under the Master Indenture, and the rights, duties and obligations of the Obligated Group and the Master Trustee under the Master Indenture and the Lease Agreement, to all of which the holder of this Note, by acceptance hereof, consents. The Members of the Obligated Group are jointly and severally liable for the performance of the covenants of each Member and of the Obligated Group under the Master Indenture including, without limitation, payment of Debt Service Charges and all obligations under the Master Indenture. As of the date of this Note, Alderson-Broaddus College, Inc. and Alderson-Broaddus Endowment Corporation are the only Members of the Obligated Group. New Members may be added to the Obligated Group and existing Members may withdraw from the Obligated Group upon the conditions set forth in the Master Indenture. The Master Indenture permits the issuance of additional Obligations under the Master Indenture to be secured by the covenants made therein, all of which, regardless of the times of issue or maturity, are to be of equal rank without preference, priority or distinction of any Obligation of any series over any other Obligation, except as expressly provided in the Master Indenture. Upon the occurrence of certain events of default as defined in the Master Indenture, the principal of all Obligations then Outstanding may be declared, and thereupon shall become, due and payable as provided in the Master Indenture. The holder of this Note shall have such rights to enforce the provisions of the Master Indenture, or to institute any action with respect to a default under the Master Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, as are provided in the Master Indenture. The holder of this Note shall have no right to enforce the provisions of the Master Indenture, the Lease Agreement or the Deeds of Trust, or to institute any action to enforce the covenants of the Master Indenture, the Lease Agreement or the Deeds of Trust, or to take any action with respect to any default under the Master Indenture, the Lease Agreement or the Deeds of Trust, or to institute, appear in or defend any suit or other proceeding with respect to the Master Indenture, the Lease Agreement or the Deeds of Trust, except as expressly provided or permitted in the Master Indenture, the Lease Agreement or the Deeds of Trust. This Note is issuable only as a fully registered note, and, as provided and to the extent authorized in the Master Indenture, this Note may be exchanged for a Note of the same series in an amount equal to the aggregate principal amount Outstanding on this Note, and not otherwise. This Note will be registered on the register to be maintained at the principal office of the Master Trustee and will be transferable only in the manner and subject to the limitations, if any, set forth in the Master Indenture. Upon every exchange or registration of transfer of this Note, the Obligated Group may make a charge sufficient to reimburse it for any tax or taxes or other governmental charge required to be paid by the Master Trustee or the Obligated Group with respect to the exchange or transfer. That charge must be paid by the holder requesting transfer or exchange as a condition precedent to the exercise of that privilege. Upon transfer or exchange, the Obligated Group Agent must execute and the Master Trustee must authenticate and deliver, in exchange for this Note, a new registered Note or Notes registered in the name of that holder or the transferee. This Noteis anegotiableinstrument under the Uniform Commercial Code of West Virginia. The Obligated Group, the Master Trustee, any paying agent and any note registrar may deem and treat the person in whose name this Note is registered as the absolute owner for the purpose of receiving payment of the Debt Service Charges on this Note. Neither the Obligated Group, nor any paying agent, nor the Master Trustee, nor any note registrar will be affected by any notice to the contrary. All payments made to the registered owner of this Note will be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable on this Note. No recourse may be had for the payment of Debt Service Charges on this Note or for any claim based on this Note or upon any obligation, covenant, or agreement contained in the Master Indenture, against any past, present or future officer, director, member or trustee of the Obligated Group Agent or any other Member of the Obligated Group, or any incorporator, officer, director, member or trustee of any successor entity, either directly or through the Obligated Group Agent, any Member of the Obligated Group, or any successor entities, under any rule of law or equity, statute or constitution, or by the enforcement of any assessment or penalty or otherwise, and all liability of any incorporator, officer, director, member or trustee is expressly waived and B-3 B-4 released as a condition of and consideration for the issuance of this Note and its acceptance by the owner of this Note. This Note will not be entitled to any benefit under the Master Indenture, or become obligatory for any purpose, until this Note has been duly authenticated by execution by an authorized officer of the Master Trustee on the Master Trustee s Authentication Certificate. [Remainder of Page Intentionally Left Blank] IN WITNESS WHEREOF, ALDERSON-BROADDUS COLLEGE, INC., as Obligated Group Agent, has caused this Note to be executed in its nameon behalf of itself and the other Members of the Obligated Group by the manual or facsimile signature of its President and its corporate seal to be hereunto affixed and the same to be attested by its Secretary all as of the day of November, ALDERSON-BROADDUS COLLEGE, INC., as Obligated Group Agent By: Name: Richard A. Creehan [SEAL] Title: President Attest: By: Name: Its: Secretary B-5 C-8 B-6

175 MASTER TRUSTEE S AUTHENTICATION CERTIFICATE The Note to which this certificate is attached is one of the Obligations described in the within-mentioned Master Indenture. Dated: November, 2012 WELLS FARGO BANK, N. A., as Master Trustee By: Name: Joseph Progar Title: APPENDIX I SUBORDINATED INDEBTEDNESS Any issue of Subordinated Indebtedness shall be evidenced by instruments, or issued under an indenture or other document, containing provisions for the subordination of such Indebtedness (to which appropriate reference shall be made in the instruments evidencing such Indebtedness) substantially as follows (the term debentures being, for convenience, used in the provisions set forth below to designate the instruments issued to evidence Subordinated Indenture and the term this Indenture to designate the instrument, indenture or other document containing such provisions): All debentures issued under this Indenture shall be issued subject to the following provisions and each person taking or holding any such debenture whether upon original issue or upon transfer or assignment thereof accepts and agrees to be bound by such provisions. All debentures issued hereunder and any coupons thereto appertaining shall, to the extent and in the manner hereinafter set forth, be subordinated and subject in right to the prior payment of Superior Indebtedness as defined in this Appendix I. For all purposes of this Appendix I the term Superior Indebtedness shall mean all Obligations now or hereafter issued under that certain Master Trust Indenture (the Master Indenture ), dated as of November 1, 2012 among Alderson-Broaddus College, Inc., Alderson-Broaddus Endowment Corporation and Wells Fargo Bank, N. A., as master trustee (the Master Trustee ), as supplemented and modified to the date hereof, or as the same may hereafter from time to time be further supplemented and modified. No payment on account of principal, premium, if any, sinking funds or interest on the debentures shall be made, nor shall any property or assets be applied to the purchase or other acquisition or retirement of the debentures, unless full payment of amounts then due and payable for principal, premium, if any, sinking funds and interest on Superior Indebtedness has been made or duly provided for in accordance with the terms of such Superior Indebtedness. No payment on account of principal, premium, if any, sinking funds or interest on the debentures shall be made, nor shall any property or assets be applied to the purchase or other acquisition or retirement of the debentures, if, at the time of such payment or application or immediately after giving effect thereto, (a) there shall exist a default in the payment of principal, premium, if any, sinking funds or interest with respect to any Superior Indebtedness, or (b) there shall have occurred an event of default (other than a default in the payment of principal, premium, if any, sinking funds or interest) with respect to any Superior Indebtedness, as defined therein or in the instrument under which the same is Outstanding, permitting the Holders thereof to accelerate the maturity thereof and such event of default shall not have been cured or waived or shall not have ceased to exist. Upon (a) any acceleration of maturity of the principal amount due on the debentures or (b) any payment of distribution of any kind or character, whether in cash, property or securities, upon any dissolution or winding-up or total or partial liquidation, reorganization or arrangement of any Member (as defined in the Master Indenture), whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all principal, premium, if any, and interest due or to become due upon all Superior Indebtedness shall first be paid in full, or payment thereof provided for in accordance with the terms of such Superior Indebtedness, before any payment is made on B-7 B-8 account of the principal, premium, if any, or interest on the indebtedness evidenced by the debentures, and upon any such dissolution or winding-up or liquidation, reorganization or arrangement, any payment or distribution of any kind or character, whether in cash, property or securities, to which the Holders of the debentures or the Trustee under this Indenture would be entitled, except for the provisions hereof, shall be paid by the Members, or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other person making such payment or distribution, to the Master Trustee to the extent necessary to pay all Superior Indebtedness in full after giving effect to any concurrent payment or distribution to the Master Trustee for the Holders of Superior Indebtedness, before any payment or distribution is made to the Holders of the indebtedness evidenced by the debentures or to the Trustee under this Indenture. amount or amounts paid or distributed thereon and all other facts pertinent thereto or to the foregoing provisions, and (c) that the Trustee under any indenture relating to Subordinated Indebtedness and any paying agent therefor shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of moneys to or by such Trustee or such paying agent, unless and until such Trustee or such paying agent, as the case may be, shall have received written notice thereof from any Member or from one or more Holders of Superior Indebtedness, or from the Master Trustee. In the event that, in violation of any of the foregoing provisions, any payment or distribution of any kind or character, whether in cash, property or securities, shall be received by the Trustee under this Indenture or by the Holders of the debentures before all Superior Indebtedness is paid in full, or provision made for such payment in accordance with the terms of such Superior Indebtedness, such payment or distribution shall be held in trust for the benefit of, and shall be paid over or delivered to the Master Trustee for application to the payment of all Superior Indebtedness remaining unpaid to the extent necessary to pay all such Superior Indebtedness in full in accordance with its terms, after giving effect to any concurrent payment or distribution to the Master Trustee for the Holders of such Superior Indebtedness. No present or future Holder of Superior Indebtedness shall be prejudiced in its, his or her right to enforce subordination of the indebtedness evidenced by the debentures by any act or failure to act on the part of any Member or anyone in custody of its assets or property. The foregoing subordination provisions shall be for the benefit of the Holders of Superior Indebtedness and may be enforced by the Master Trustee against the Holders of debentures or any trustee thereof; provided, however, that the indentures or other instruments creating or evidencing subordinated debt or pursuant to which any subordinated debt is issued shall provide: (a) that the foregoing provisions are solely for the purpose of defining the relative rights of the Holders of Superior Indebtedness (as defined therein) on the one hand and the Holders of the Subordinated Indebtedness on the other hand, and that nothing therein shall impair, as between the Members and the Holders of the Subordinated Indebtedness, the obligation of the Members, which is unconditional and absolute, to pay to the Holders thereof the principal thereof, premium, if any, and interest thereon in accordance with its terms, nor shall anything therein prevent the Holders of the Subordinated Indebtedness or any Trustee on their behalf from exercising all remedies otherwise permitted by applicable law or thereunder upon default thereunder, subject to the rights set forth above of the Holders of Superior Indebtedness to receive cash, property or securities otherwise payable or deliverable to the Holders of the Subordinated Indebtedness, (b) that upon any payment or distribution of assets of any Member of the character referred to in the fourth paragraph of the foregoing provisions, the Trustee under any indenture relating to Subordinated Indebtedness shall be entitled to rely upon any order or decree of a court of competent jurisdiction in which such dissolution, winding-up, liquidation, reorganization or arrangement proceedings are pending, and upon a certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent or other person making any such payment or distribution, delivered to said Trustee for the purpose of ascertaining the persons entitled to participate in such distribution, the Holders of Superior Indebtedness and other indebtedness of such Member, the amount thereof or payable thereon, the B-9 C-9 B-10

176 Exhibit C Form of C Subordinated Note THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 SERIES C SUBORDINATED NOTE No C $ KNOW ALL MEN BY THESE PRESENTS that ALDERSON-BROADDUS COLLEGE, INC., a nonprofit corporation organized and existing under the laws of the State of West Virginia (the College ), on behalf of itself and the Obligated Group as the Obligated Group Agent (the Obligated Group Agent ), for value received, hereby acknowledges that the Obligated Group is obligated to, and promises to pay to THE PHILIPPI MUNICIPAL BUILDING COMMISSION (the Issuer ), as issuer of the $ College Facilities Subordinate Lien Refunding and Improvement Revenue Bonds (Alderson-Broaddus College, Inc.) 2012 Series C (Taxable) (the 2012 Series C Bonds ) under the Bond Indenture (the Bond Indenture ) dated as of November 1, 2012, between the Issuer and Wells Fargo Bank, N. A., as bond trustee (the Bond Trustee ), and any successor trustee appointed under the Bond Indenture, or registered assigns, the principal sum of DOLLARS ($ ). This C Subordinated Note also evidences and secures the obligation of the College under the Lease Agreement dated as of November 1, 2012 (the Lease Agreement ), between the Issuer and the College to make payments in respect of the 2012 Series C Bonds in accordance with the Bond Indenture. The principal installments of this Note correspond to the maturities and mandatory sinking fund payments of the 2012 Series C Bonds. The final maturity date of this Note is October 1, The principal of this Note bears interest at the same rates as the 2012 Series C Bonds. Interest payments on this Note correspond to the Interest Payment Dates for the 2012 Series C Bonds. Principal hereof, interest hereon and any applicable redemption premium (collectively Debt Service Charges ), are payable in any coin or currency of the United States of America which on the payment date is legal tender for the payment of public and private debts. This Note is one of a duly authorized Obligations issued by the Obligated Group under and pursuant to Supplemental Master Trust Indenture , dated as of November 1, 2012 (the Supplemental Indenture ), supplementing and amending the Master Trust Indenture, dated as of November 1, 2012, by and among the College, Alderson-Broaddus Endowment Corporation and Wells Fargo Bank, N. A., as master trustee (the Master Trustee ). The Master Trust Indenture, as supplemented and amended, is hereinafter called the Master Indenture. Anything in this C Subordinated Note to the contrary notwithstanding, this Note constitutes Subordinated Indebtedness under the Master Indenture and is not on a parity with the A Note or the D Note issued under the Supplemental Indenture and any other Obligations issued under the Master Indenture, except for the B Subordinated Note issued under the Supplemental Indenture which is on parity with this C Subordinated Note. This Note constitutes Subordinated Indebtedness as defined in the Master Indenture, C-1 C-2 and the terms required by Exhibit C to the Master Indenture for Subordinated Indebtedness are attached as Appendix I hereto and incorporated herein by reference. Capitalized terms used and not otherwise defined in this Note shall have the meaning assigned to such terms in the Lease Agreement and the Master Indenture. This Note is subject to redemption before maturity, to the extent, upon the conditions, and with respect to the corresponding payments of principal and interest and with any applicable redemption premium that the 2012 Series C Bonds are subject to upon redemption in accordance with the Bond Indenture. Giving notice of redemption of the 2012 Series C Bonds in accordance with the conditions set forth in the Bond Indenture will, without further action by the Master Trustee, the Bond Trustee or the Obligated Group Agent, constitute notice of the redemption of the corresponding amounts of principal on this Note and those amounts will become due and payable on the date of the redemption of those 2012 Series C Bonds so redeemed. The Obligated Group will pay Debt Service Charges on this Note at the times and in the amounts set forth above. The Obligated Group will be entitled to a credit, however, against the Debt Service Charges due on this Note, for amounts paid under the Lease Agreement and applied to the corresponding payment of Debt Service Charges on the 2012 Series C Bonds. Copies of the Master Indenture and the Lease Agreement are on file at the Corporate Trust Office of the Master Trustee and reference is hereby made to the Master Indenture and Lease Agreement for the provisions, among others, with respect to the nature and extent of the rights and obligations of the holders of this Note and other Obligations issued under the Master Indenture, the terms and conditions on which, and the purposes for which Obligations may be issued under the Master Indenture, and the rights, duties and obligations of the Obligated Group and the Master Trustee under the Master Indenture and the Lease Agreement, to all of which the holder of this Note, by acceptance hereof, consents. The Members of the Obligated Group are jointly and severally liable for the performance of the covenants of each Member and of the Obligated Group under the Master Indenture including, without limitation, payment of Debt Service Charges and all obligations under the Master Indenture. As of the date of this Note, Alderson-Broaddus College, Inc. and Alderson-Broaddus Endowment Corporation are the only Members of the Obligated Group. New Members may be added to the Obligated Group and existing Members may withdraw from the Obligated Group upon the conditions set forth in the Master Indenture. The Master Indenture permits the issuance of additional Obligations under the Master Indenture to be secured by the covenants made therein, all of which, regardless of the times of issue or maturity, are to be of equal rank without preference, priority or distinction of any Obligation of any series over any other Obligation, except as expressly provided in the Master Indenture. Upon the occurrence of certain events of default as defined in the Master Indenture, the principal of all Obligations then Outstanding may be declared, and thereupon shall become, due and payable as provided in the Master Indenture. The holder of this Note shall have such rights to enforce the provisions of the Master Indenture, or to institute any action with respect to a default under the Master Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, as are provided in the Master Indenture. The holder of this Note shall have no right to enforce the provisions of the Master Indenture, the Lease Agreement or the Deeds of Trust, or to institute any action to enforce the covenants of the Master Indenture, the Lease Agreement or the Deeds of Trust, or to take any action with respect to any default under the Master Indenture, the Lease Agreement or the Deeds of Trust, or to institute, appear in or defend any suit or other proceeding with respect to the Master Indenture, the Lease Agreement or the Deeds of Trust, except as expressly provided or permitted in the Master Indenture, the Lease Agreement or the Deeds of Trust. This Note is issuable only as a fully registered note, and, as provided and to the extent authorized in the Master Indenture, this Note may be exchanged for a Note of the same series in an amount equal to the aggregate principal amount Outstanding on this Note, and not otherwise. This Note will be registered on the register to be maintained at the principal office of the Master Trustee and will be transferable only in the manner and subject to the limitations, if any, set forth in the Master Indenture. Upon every exchange or registration of transfer of this Note, the Obligated Group may make a charge sufficient to reimburse it for any tax or taxes or other governmental charge required to be paid by the Master Trustee or the Obligated Group with respect to the exchange or transfer. That charge must be paid by the holder requesting transfer or exchange as a condition precedent to the exercise of that privilege. Upon transfer or exchange, the Obligated Group Agent must execute and the Master Trustee must authenticate and deliver, in exchange for this Note, a new registered Note or Notes registered in the name of that holder or the transferee. This Noteis anegotiableinstrument under the Uniform Commercial Code of West Virginia. The Obligated Group, the Master Trustee, any paying agent and any note registrar may deem and treat the person in whose name this Note is registered as the absolute owner for the purpose of receiving payment of the Debt Service Charges on this Note. Neither the Obligated Group, nor any paying agent, nor the Master Trustee, nor any note registrar will be affected by any notice to the contrary. All payments made to the registered owner of this Note will be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable on this Note. No recourse may be had for the payment of Debt Service Charges on this Note or for any claim based on this Note or upon any obligation, covenant, or agreement contained in the Master Indenture, against any past, present or future officer, director, member or trustee of the Obligated Group Agent or any other Member of the Obligated Group, or any incorporator, officer, director, member or trustee of any successor entity, either directly or through the Obligated Group Agent, any Member of the Obligated Group, or any successor entities, under any rule of law or equity, statute or constitution, or by the enforcement of any assessment or penalty or otherwise, and all liability of any incorporator, officer, director, member or trustee is expressly waived and C-3 C-10 C-4

177 released as a condition of and consideration for the issuance of this Note and its acceptance by the owner of this Note. This Note will not be entitled to any benefit under the Master Indenture, or become obligatory for any purpose, until this Note has been duly authenticated by execution by an authorized officer of the Master Trustee on the Master Trustee s Authentication Certificate. [Remainder of Page Intentionally Left Blank] IN WITNESS WHEREOF, ALDERSON-BROADDUS COLLEGE, INC., as Obligated Group Agent, has caused this Note to be executed in its nameon behalf of itself and the other Members of the Obligated Group by the manual or facsimile signature of its President and its corporate seal to be hereunto affixed and the same to be attested by its Secretary all as of the day of November, ALDERSON-BROADDUS COLLEGE, INC., as Obligated Group Agent By: Name: Richard A. Creehan [SEAL] Title: President Attest: By: Name: Its: Secretary C-5 C-6 MASTER TRUSTEE S AUTHENTICATION CERTIFICATE The Note to which this certificate is attached is one of the Obligations described in the within-mentioned Master Indenture. Dated: November, 2012 WELLS FARGO BANK, N. A., as Master Trustee By: Name: Joseph Progar Title: APPENDIX I SUBORDINATED INDEBTEDNESS Any issue of Subordinated Indebtedness shall be evidenced by instruments, or issued under an indenture or other document, containing provisions for the subordination of such Indebtedness (to which appropriate reference shall be made in the instruments evidencing such Indebtedness) substantially as follows (the term debentures being, for convenience, used in the provisions set forth below to designate the instruments issued to evidence Subordinated Indenture and the term this Indenture to designate the instrument, indenture or other document containing such provisions): All debentures issued under this Indenture shall be issued subject to the following provisions and each person taking or holding any such debenture whether upon original issue or upon transfer or assignment thereof accepts and agrees to be bound by such provisions. All debentures issued hereunder and any coupons thereto appertaining shall, to the extent and in the manner hereinafter set forth, be subordinated and subject in right to the prior payment of Superior Indebtedness as defined in this Appendix I. For all purposes of this Appendix I the term Superior Indebtedness shall mean all Obligations now or hereafter issued under that certain Master Trust Indenture (the Master Indenture ), dated as of November 1, 2012 among Alderson-Broaddus College, Inc., Alderson-Broaddus Endowment Corporation and Wells Fargo Bank, N. A., as master trustee (the Master Trustee ), as supplemented and modified to the date hereof, or as the same may hereafter from time to time be further supplemented and modified. No payment on account of principal, premium, if any, sinking funds or interest on the debentures shall be made, nor shall any property or assets be applied to the purchase or other acquisition or retirement of the debentures, unless full payment of amounts then due and payable for principal, premium, if any, sinking funds and interest on Superior Indebtedness has been made or duly provided for in accordance with the terms of such Superior Indebtedness. No payment on account of principal, premium, if any, sinking funds or interest on the debentures shall be made, nor shall any property or assets be applied to the purchase or other acquisition or retirement of the debentures, if, at the time of such payment or application or immediately after giving effect thereto, (a) there shall exist a default in the payment of principal, premium, if any, sinking funds or interest with respect to any Superior Indebtedness, or (b) there shall have occurred an event of default (other than a default in the payment of principal, premium, if any, sinking funds or interest) with respect to any Superior Indebtedness, as defined therein or in the instrument under which the same is Outstanding, permitting the Holders thereof to accelerate the maturity thereof and such event of default shall not have been cured or waived or shall not have ceased to exist. Upon (a) any acceleration of maturity of the principal amount due on the debentures or (b) any payment of distribution of any kind or character, whether in cash, property or securities, upon any dissolution or winding-up or total or partial liquidation, reorganization or arrangement of any Member (as defined in the Master Indenture), whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all principal, premium, if any, and interest due or to become due upon all Superior Indebtedness shall first be paid in full, or payment thereof provided for in accordance with the terms of such Superior Indebtedness, before any payment is made on C-7 C-11 C-8

178 account of the principal, premium, if any, or interest on the indebtedness evidenced by the debentures, and upon any such dissolution or winding-up or liquidation, reorganization or arrangement, any payment or distribution of any kind or character, whether in cash, property or securities, to which the Holders of the debentures or the Trustee under this Indenture would be entitled, except for the provisions hereof, shall be paid by the Members, or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other person making such payment or distribution, to the Master Trustee to the extent necessary to pay all Superior Indebtedness in full after giving effect to any concurrent payment or distribution to the Master Trustee for the Holders of Superior Indebtedness, before any payment or distribution is made to the Holders of the indebtedness evidenced by the debentures or to the Trustee under this Indenture. amount or amounts paid or distributed thereon and all other facts pertinent thereto or to the foregoing provisions, and (c) that the Trustee under any indenture relating to Subordinated Indebtedness and any paying agent therefor shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of moneys to or by such Trustee or such paying agent, unless and until such Trustee or such paying agent, as the case may be, shall have received written notice thereof from any Member or from one or more Holders of Superior Indebtedness, or from the Master Trustee. In the event that, in violation of any of the foregoing provisions, any payment or distribution of any kind or character, whether in cash, property or securities, shall be received by the Trustee under this Indenture or by the Holders of the debentures before all Superior Indebtedness is paid in full, or provision made for such payment in accordance with the terms of such Superior Indebtedness, such payment or distribution shall be held in trust for the benefit of, and shall be paid over or delivered to the Master Trustee for application to the payment of all Superior Indebtedness remaining unpaid to the extent necessary to pay all such Superior Indebtedness in full in accordance with its terms, after giving effect to any concurrent payment or distribution to the Master Trustee for the Holders of such Superior Indebtedness. No present or future Holder of Superior Indebtedness shall be prejudiced in its, his or her right to enforce subordination of the indebtedness evidenced by the debentures by any act or failure to act on the part of any Member or anyone in custody of its assets or property. The foregoing subordination provisions shall be for the benefit of the Holders of Superior Indebtedness and may be enforced by the Master Trustee against the Holders of debentures or any trustee thereof; provided, however, that the indentures or other instruments creating or evidencing subordinated debt or pursuant to which any subordinated debt is issued shall provide: (a) that the foregoing provisions are solely for the purpose of defining the relative rights of the Holders of Superior Indebtedness (as defined therein) on the one hand and the Holders of the Subordinated Indebtedness on the other hand, and that nothing therein shall impair, as between the Members and the Holders of the Subordinated Indebtedness, the obligation of the Members, which is unconditional and absolute, to pay to the Holders thereof the principal thereof, premium, if any, and interest thereon in accordance with its terms, nor shall anything therein prevent the Holders of the Subordinated Indebtedness or any Trustee on their behalf from exercising all remedies otherwise permitted by applicable law or thereunder upon default thereunder, subject to the rights set forth above of the Holders of Superior Indebtedness to receive cash, property or securities otherwise payable or deliverable to the Holders of the Subordinated Indebtedness, (b) that upon any payment or distribution of assets of any Member of the character referred to in the fourth paragraph of the foregoing provisions, the Trustee under any indenture relating to Subordinated Indebtedness shall be entitled to rely upon any order or decree of a court of competent jurisdiction in which such dissolution, winding-up, liquidation, reorganization or arrangement proceedings are pending, and upon a certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent or other person making any such payment or distribution, delivered to said Trustee for the purpose of ascertaining the persons entitled to participate in such distribution, the Holders of Superior Indebtedness and other indebtedness of such Member, the amount thereof or payable thereon, the C-9 C-10 Exhibit D Form of D Note THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 SERIES D NOTE No D $ KNOW ALL MEN BY THESE PRESENTS that ALDERSON-BROADDUS COLLEGE, INC., a nonprofit corporation organized and existing under the laws of the State of West Virginia (the College ), on behalf of itself and the Obligated Group as the Obligated Group Agent (the Obligated Group Agent ), for value received, hereby acknowledges that the Obligated Group is obligated to, and promises to pay to WELLS FARGO BANK, N. A., as bond trustee (the Bond Trustee ) under the Bond Indenture (the Bond Indenture ) dated as of November 1, 2012, between The Philippi Municipal Building Commission (the Issuer ) and the Trustee, entered into in connection with the issuance by the Issuer of its (i) $ College Facilities Refunding and Improvement Revenue Bonds (Alderson-Broaddus College, Inc.) 2012 Series A (the 2012 Series A Bonds ), (ii) $ College Facilities Subordinate Lien Refunding Revenue Bonds (Alderson-Broaddus College, Inc.) 2012 Series B (the 2012 Series B Bonds ), and (iii) $ College Facilities Subordinate Lien Refunding and Improvement Revenue Bonds (Alderson-Broaddus College, Inc.) 2012 Series C (Taxable) (the 2012 Series C Bonds and together with the 2012 Series A Bonds and the 2012 Series B Bonds, collectively, the Bonds ), and any successor trustee appointed under the Bond Indenture, or registered assigns, the principal sum of DOLLARS ($ ). This D Note also evidences and secures the obligation of the Obligated Group under the Guaranty Agreement dated as of November 1, 2012, between the Obligated Group and the Bond Trustee, to absolutely and unconditionally guarantee the full and prompt payment and performance by the Issuer of its obligations to make payments in respect of the Bonds in accordance with the Bond Indenture. The principal installments of this Note correspond to the maturities and mandatory sinking fund payments of the Bonds. The final maturity date of this Note is October 1, The principal of this Note bears interest at the same rates as the Bonds. Interest payments on this Note correspond to the Interest Payment Dates for the Bonds. All payments made by the Members of the Obligated Group on this Note shall be applied by the Trustee in order of priority of payment for the 2012 Series A Bonds and the 2012 Subordinate Bonds as set forth in the Bond Indenture. Principal hereof, interest hereon and any applicable redemption premium (collectively Debt Service Charges ), are payable in any coin or currency of the United States of America which on the payment date is legal tender for the payment of public and private debts. This Note is one of a duly authorized Obligations issued by the Obligated Group under and pursuant to Supplemental Master Trust Indenture , dated as of November 1, 2012 (the Supplemental Indenture ), supplementing and amending the Master Trust Indenture, dated as of November 1, 2012, by and among the College, Alderson-Broaddus Endowment Corporation D-1 C-12 D-2

179 and Wells Fargo Bank, N. A., as master trustee (the Master Trustee ). The Master Trust Indenture, as supplemented and amended, is hereinafter called the Master Indenture. Capitalized terms used and not otherwise defined in this Note shall have the meaning assigned to such terms in the Guaranty Agreement and the Master Indenture. The Obligated Group will pay Debt Service Charges on this Note at the times and in the amounts set forth above. The Obligated Group will be entitled to a credit, however, against the Debt Service Charges due on this Note, for amounts paid under the Guaranty Agreement and applied to the corresponding payment of Debt Service Charges on the Bonds. Copies of the Master Indenture and the Guaranty Agreement are on file at the Corporate Trust Office of the Master Trustee and reference is hereby made to the Master Indenture and Lease Agreement for the provisions, among others, with respect to the nature and extent of the rights and obligations of the holders of this Note and other Obligations issued under the Master Indenture, the terms and conditions on which, and the purposes for which Obligations may be issued under the Master Indenture, and the rights, duties and obligations of the Obligated Group and the Master Trustee under the Master Indenture and the Guaranty Agreement, to all of which the holder of this Note, by acceptance hereof, consents. The Members of the Obligated Group are jointly and severally liable for the performance of the covenants of each Member and of the Obligated Group under the Master Indenture including, without limitation, payment of Debt Service Charges and all obligations under the Master Indenture. As of the date of this Note, Alderson-Broaddus College, Inc. and Alderson-Broaddus Endowment Corporation are the only Members of the Obligated Group. New Members may be added to the Obligated Group and existing Members may withdraw from the Obligated Group upon the conditions set forth in the Master Indenture. The Master Indenture permits the issuance of additional Obligations under the Master Indenture to be secured by the covenants made therein, all of which, regardless of the times of issue or maturity, are to be of equal rank without preference, priority or distinction of any Obligation of any series over any other Obligation, except as expressly provided in the Master Indenture. Upon the occurrence of certain events of default as defined in the Master Indenture, the principal of all Obligations then Outstanding may be declared, and thereupon shall become, due and payable as provided in the Master Indenture. The holder of this Note shall have such rights to enforce the provisions of the Master Indenture, or to institute any action with respect to a default under the Master Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, as are provided in the Master Indenture. The holder of this Note shall have such rights to enforce the provisions of the Guaranty Agreement, or to institute any action with respect to a default under the Guaranty Agreement, or to institute, appear in or defend any suit or other proceeding with respect thereto, as are provided in the Guaranty Agreement. This Note is issuable only as a fully registered note, and, as provided and to the extent authorized in the Master Indenture, this Note may be exchanged for a Note of the same series in an amount equal to the aggregate principal amount Outstanding on this Note, and not otherwise. This Note will be registered on the register to be maintained at the principal office of the Master Trustee and will be transferable only in the manner and subject to the limitations, if any, set forth in the Master Indenture. Upon every exchange or registration of transfer of this Note, the Obligated Group may make a charge sufficient to reimburse it for any tax or taxes or other governmental charge required to be paid by the Master Trustee or the Obligated Group with respect to the exchange or transfer. That charge must be paid by the holder requesting transfer or exchange as a condition precedent to the exercise of that privilege. Upon transfer or exchange, the Obligated Group Agent must execute and the Master Trustee must authenticate and deliver, in exchange for this Note, a new registered Note or Notes registered in the name of that holder or the transferee. This Noteis anegotiableinstrument under the Uniform Commercial Code of West Virginia. The Obligated Group, the Master Trustee, any paying agent and any note registrar may deem and treat the person in whose name this Note is registered as the absolute owner for the purpose of receiving payment of the Debt Service Charges on this Note. Neither the Obligated Group, nor any paying agent, nor the Master Trustee, nor any note registrar will be affected by any notice to the contrary. All payments made to the registered owner of this Note will be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable on this Note. No recourse may be had for the payment of Debt Service Charges on this Note or for any claim based on this Note or upon any obligation, covenant, or agreement contained in the Master Indenture, against any past, present or future officer, director, member or trustee of the Obligated Group Agent or any other Member of the Obligated Group, or any incorporator, officer, director, member or trustee of any successor entity, either directly or through the Obligated Group Agent, any Member of the Obligated Group, or any successor entities, under any rule of law or equity, statute or constitution, or by the enforcement of any assessment or penalty or otherwise, and all liability of any incorporator, officer, director, member or trustee is expressly waived and released as a condition of and consideration for the issuance of this Note and its acceptance by the owner of this Note. This Note will not be entitled to any benefit under the Master Indenture, or become obligatory for any purpose, until this Note has been duly authenticated by execution by an authorized officer of the Master Trustee on the Master Trustee s Authentication Certificate. [Remainder of Page Intentionally Left Blank] D-3 D-4 IN WITNESS WHEREOF, ALDERSON-BROADDUS COLLEGE, INC., as Obligated Group Agent, has caused this Note to be executed in its nameon behalf of itself and the other Members of the Obligated Group by the manual or facsimile signature of its President and its corporate seal to be hereunto affixed and the same to be attested by its Secretary all as of the day of November, ALDERSON-BROADDUS COLLEGE, INC., as Obligated Group Agent By: Name: Richard A. Creehan [SEAL] Title: President MASTER TRUSTEE S AUTHENTICATION CERTIFICATE The Note to which this certificate is attached is one of the Obligations described in the within-mentioned Master Indenture. WELLS FARGO BANK, N. A., as Master Trustee By: Name: Joseph Progar Title: Attest: By: Name: Its: Secretary Dated: November, 2012 D-5 C-13 D-6

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181 Appendix D: Form of the Initial Lease

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183 INITIAL LEASE This Initial Lease (the Initial Lease ), dated as of the 1st day of November, 2012, by and between ALDERSON-BROADDUS COLLEGE, INC., a non-stock, not-for-profit corporation organized and existing under the laws of the State of West Virginia, as lessor (the Lessor ), and THE PHILIPPI MUNICIPAL BUILDING COMMISSION, a public corporation and municipal building commission, organized and existing under the laws of the State of West Virginia, as lessee (the Lessee ). All capitalized terms not defined herein shall have the meanings assigned thereto in the Bond Trust Indenture dated as of November 1, 2012, by and between the Lessee and Wells Fargo Bank, N. A., as bond trustee. WITNESSETH: That for and in consideration of the mutual benefits and obligations accruing to the parties, the issuance by the Lessee of its refunding and improvement revenue bonds, designated as (a) The Philippi Municipal Building Commission College Facilities Refunding and Improvement Revenue Bonds (Alderson-Broaddus College, Inc.), 2012 Series A in the original aggregate principal amount of $34,275,000, (b) The Philippi Municipal Building Commission College Facilities Subordinate Lien Refunding Revenue Bonds (Alderson-Broaddus College, Inc.), 2012 Series B in the original principal amount of $2,510,000, and (c) The Philippi Municipal Building Commission College Facilities Subordinate Lien Refunding and Improvement Revenue Bonds (Alderson-Broaddus College, Inc.), 2012 Series C (Taxable) in the original aggregate principal amount of $680,000 (collectively, the Bonds ), and in consideration of the sum of ONE DOLLAR ($1.00) cash in hand paid, the receipt and sufficiency of which are hereby acknowledged, the Lessor does hereby lease and demise, and the Lessee does hereby lease and take, those certain parcels of land, together with all improvements thereon and to be thereon and all tangible personal property thereon and to be thereon and all fixtures, furniture, equipment, furnishings and other necessary appurtenant facilities and personal property now or hereafter situate on or used in connection therewith owned by the Lessor, situate in the City of Philippi, Barbour County, West Virginia, and described in Exhibit A Site Description attached hereto and made a part hereof (the Property ). 1. Term. The term of this Initial Lease shall commence on the date of delivery of executed counterparts of this Initial Lease to the parties hereto and shall extend unless sooner terminated in accordance with the provisions hereof, until October 1, 2044, this term being the term of the Bonds, or until such later date as the entire principal of and interest on the Bonds have been paid in full. If the Bonds are earlier paid, by prepayment or redemption prior to maturity, this Initial Lease shall terminate as of said date of payment (the Lease Term ). 2. Rental. Rental hereunder shall be the consideration provided by the issuance of the Bonds by the Lessee, and the mutual agreements and covenants of the parties hereto. 3. Taxes. Lessor shall be responsible for and shall pay any and all real estate taxes and all municipal assessments levied against the premises. D-1

184 4. Lessor s Indemnity. Lessor shall indemnify and hold Lessee harmless from any claims of any nature arising out of or caused by the negligence or omission of Lessor, its agents, servants and employees. 5. Insurance. Lessor shall provide and maintain adequate insurance on the premises against loss or damage occurring on said premises. 6. Conditions for Release of Property. The Property may not be sold, transferred or otherwise disposed of during the Lease Term; provided, however, certain property may be subject to sale, transfer or disposition by the Lessor pursuant to Sections 413 or 417 of the Master Trust Indenture dated as of November 1, 2012, by and among the Lessor, Alderson- Broaddus Endowment Corporation and Wells Fargo Bank, N. A., as master trustee, only. 7. Subordinate to Lien of the Deeds of Trust. This Initial Lease is junior and subordinate to the Deeds of Trust. 8. Parties Bound. This Initial Lease shall be binding upon the parties hereto, their successors and assigns. 9. Counterparts. This Initial Lease may be executed in several counterparts, each of which shall be an original and all of which shall constitute one instrument. 10. Governing Law. This Initial Lease shall be governed exclusively by the laws of the State of West Virginia. [Remainder of Page Intentionally Left Blank] D-2

185 IN WITNESS WHEREOF, Alderson-Broaddus College, Inc. and The Philippi Municipal Building Commission have caused this Initial Lease to be executed by their duly authorized officers and attested in their respective corporate names as of the day and year first above written. ALDERSON-BROADDUS COLLEGE, INC. By: Name: Richard A. Creehan Title: President ATTEST: Its: Secretary [SEAL] THE PHILIPPI MUNICIPAL BUILDING COMMISSION ATTEST: By: Name: Howard Swick Title: Chairman Its: Secretary D-3

186 STATE OF WEST VIRGINIA, COUNTY OF BARBOUR, TO-WIT: The foregoing instrument was acknowledged before me this day of November, 2012, by Richard A. Creehan, the President of ALDERSON-BROADDUS COLLEGE, INC., a West Virginia non-stock, not-for-profit corporation, on behalf of said corporation. My commission expires:. [SEAL] Notary Public STATE OF WEST VIRGINIA, COUNTY OF BARBOUR, TO-WIT: The foregoing instrument was acknowledged before me this day of November, 2012, by Howard Swick, the Chairman of THE PHILIPPI MUNICIPAL BUILDING COMMISSION, a public corporation and municipal building commission, on behalf of said public corporation. My commission expires:. [SEAL] Notary Public This instrument prepared by: Elizabeth A. Benedetto, Esq. Spilman Thomas & Battle, PLLC 300 Kanawha Boulevard, East Charleston, West Virginia D-4

187 EXHIBIT A SITE DESCRIPTION [To be inserted] D-5

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189 Appendix E: Form of the Lease

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191 LEASE AGREEMENT LEASE AGREEMENT between THE PHILIPPI MUNICIPAL BUILDING COMMISSION, as Lessor, and ALDERSON-BROADDUS COLLEGE, INC., as Lessee Dated as of November 1, 2012 This Lease Agreement (the Lease ) dated as of November 1, 2012, by and between THE PHILIPPI MUNICIPAL BUILDING COMMISSION, a public corporation and municipal building commission organized and existing under the provisions of the laws of the State of West Virginia, as lessor ( Lessor ), and ALDERSON-BROADDUS COLLEGE, INC., a non-stock, not-for-profit corporation organized and existing under the laws of the State of West Virginia, as lessee ( Lessee ). All capitalized terms used herein but not defined herein shall have the meanings assigned thereto in the Bond Trust Indenture dated as of November 1, 2012 (the Indenture ) by and between Lessor and Wells Fargo Bank, N. A., as bond trustee (the Trustee ). WITNESSETH: WHEREAS, Lessor intends to issue its refunding and improvement revenue bonds, designated as (a) The Philippi Municipal Building Commission College Facilities Refunding and Improvement Revenue Bonds (Alderson-Broaddus College, Inc.), 2012 Series A in the original aggregate principal amount of $34,275,000, (b) The Philippi Municipal Building Commission College Facilities Subordinate Lien Refunding Revenue Bonds (Alderson-Broaddus College, Inc.), 2012 Series B in the original principal amount of $2,510,000, and (c) The Philippi Municipal Building Commission College Facilities Subordinate Lien Refunding and Improvement Revenue Bonds (Alderson-Broaddus College, Inc.), 2012 Series C in the original principal amount of $680,000 (collectively, the 2012 Bonds ) to finance the costs of (i) effectuating the current refunding of Lessor s College Facilities Revenue Bonds, Series 2010 A (Alderson-Broaddus College, Inc.), dated June 30, 2010, issued in the original aggregate principal amount of $5,000,000 (the Bonds to be Refunded ), (ii) planning, designing, acquiring, constructing, renovating and equipping certain capital improvements to the campus of Lessee, consisting of the construction of a new multi-sport stadium, locker room facilities, stadium seating, concessions, President s box, media boxes, turf field, lights to accommodate night games and practices, site improvements and walkways, new student housing consisting of a 144-bed apartment style student housing building and a 240-bed suite-style student housing building, and renovations and improvements to Benedum Hall, Priestley Hall and Kincaid Hall, together with all other necessary appurtenances and related facilities (collectively, the Construction Projects ), (iii) financing capitalized interest on the Construction Projects, (iv) funding a debt service reserve fund for the 2012 Series A Bonds, and (v) paying costs of issuance of the 2012 Bonds (collectively, the Project ); WHEREAS, the principal and interest of the 2012 Bonds are payable from rentals received by Lessor pursuant to the terms of this Lease; WHEREAS, in order to effectuate the financing undertaken pursuant to the issuance of the 2012 Bonds, Lessee has under and pursuant to an Initial Lease (the Initial Lease ) dated as of the date hereof, leased to the Lessor certain real estate, situate, lying and being in the City of Philippi, Barbour County, West Virginia, which real estate is more particularly described in Exhibit A Site Description, attached hereto and made a part hereof (the Site ), together with all improvements thereon and to be thereon and all tangible personal property thereon and to be thereon and all fixtures, furniture, equipment, furnishings and other necessary appurtenant facilities and personal property now or hereafter situate on or used in connection with the Site, including, but not limited to the Project improvements to be financed with a portion of the proceeds of the 2012 Bonds (together with the Site, collectively, the Facilities ); WHEREAS, in order to further effectuate the financing undertaken pursuant to the issuance of the 2012 Bonds, and in order to provide security for the repayment of the principal of and interest on the 2012 Bonds, the Lessor and the Lessee have determined that the Lessor shall enter into this Lease, whereby the Lessor agrees to lease the Facilities back to the Lessee under the terms and conditions described herein and the Lessee agrees to lease the Facilities from the Lessor and to pay unto the Lessor the lease rentals described herein; and WHEREAS, the Lessor has, contemporaneously with the execution and deliver of this Lease, pursuant to the Indenture, assigned all of its rights in and to this Lease (except for certain indemnification rights and reimbursement rights) to the Trustee for the benefit and security of the registered owners of the 2012 Bonds. NOW, THEREFORE, in consideration of the premises and other good and valuable consideration and of the mutual benefits, covenants and agreements herein expressed, the Lessor and the Lessee hereby agree as follows: 1. Term. The term of this Lease shall begin on the date hereof and shall extend unless sooner terminated in accordance with the provisions hereof, until October 1, 2044, this term being the term of the 2012 Bonds, or until such later date as the entire principal of and interest on the 2012 Bonds have been paid in full. If the 2012 Bonds are earlier paid, by prepayment or redemption prior to maturity, this Lease shall terminate as of said date of payment (the Lease Term ). 2. Rent; Releases. Lessee covenants to pay unto Lessor as rent for the Facilities, on or before the 1st day of each month during the term of this Lease commencing on April 1, 2014, the amounts necessary to pay the principal of and interest on the 2012 Bonds as set forth in Exhibit B Debt Service Schedule attached hereto and hereby made a part hereof (the Lease Payments ). The Lease Payments payable hereunder shall be applied by Lessor to payment of the principal of and interest on the 2012 Bonds, issued by Lessor pursuant to the Indenture, as the same shall become due and payable. The proceeds of the 2012 Bonds shall be applied to finance the costs of the Project. The Lessee hereby covenants to make all Lease Payments to the Trustee pursuant to the Indenture, at its designated corporate trust office, currently located at 123 S. Broad Street, Suite 1500, MAC: Y , Philadelphia, Pennsylvania 19109, Attention: Corporate Trust Services. Upon payment of all Lease Payments required hereunder, and such other sums as shall be necessary to pay the outstanding principal of, redemption premium, if any, and interest on the 2012 Bonds, Lessor shall, at Lessee s expense, if necessary, make and deliver to Lessee any releases or other instruments or documents as may be required to terminate this Lease Agreement and the Initial Lease and restore and return Lessor s leasehold interest in the Facilities to Lessee. 3. Debt Service Reserve Fund; Operating Fund; Priority of Payment. (a) (i) Pursuant to Section 5.05 of the Indenture, the Trustee shall establish and maintain a separate account to be known as the Debt Service Reserve Fund. The Debt Service Reserve Fund shall be initially fully funded with proceeds of the 2012 Bonds pursuant to Section 3.02(e) of the Indenture, and (ii) thereafter, amounts paid by the Lessee pursuant to the terms of this Section to maintain and restore the Debt Service Reserve Fund to the Debt Service Reserve Fund Requirement. The amount of any withdrawal from the Debt Service Reserve Fund shall be restored by the Lessee in no more than three (3) substantially equal, consecutive monthly installments, each payable on the last Business Day of the month, commencing in the first month following the date the withdrawal is made; provided that, if any withdrawal is made and if, prior to the restoration of the amount withdrawn, an additional withdrawal is made, such additional withdrawal shall be restored in equal monthly installments over the remainder of the restoration period for the initial withdrawal. In addition, if the market value of the investments in the Debt Service Reserve Fund is less than the Debt Service Reserve Fund Requirement on a Valuation Date, the difference between such Debt Service Reserve Fund Requirement and the market value of the Debt Service Reserve Fund shall be restored by the Lessee in no more than three (3) substantially equal, consecutive monthly installments, each payable on the last Business Day of the month, commencing in the first month following the date on which such deficiency occurs or the Valuation Date on which the valuation revealing the deficiency is made. Upon the making of any monthly deposit to restore a withdrawal or deficiency, the Lessee, at its cost, may direct the Trustee to recompute the market value of the assets in the Debt Service Reserve Fund, in which event the remaining amount to be restored, if any, after taking the new valuation into account shall be deposited in equal monthly installments over the balance of the restoration period. For purposes of this Lease, Valuation Date shall mean the first day of each month during the Lease Term. (ii) Moneys held in the Debt Service Reserve Fund shall be credited against payments only as set forth in Section (iii) So long as the 2012 Series A Bonds are outstanding, the Lessee is required to fund and maintain the Debt Service Reserve Fund as set forth in Article V of the Indenture. (b) So long as any of the 2012 Bonds are outstanding, the Trustee shall establish and maintain a separate account to be known as the Operating Reserve Fund (hereinafter the Operating Reserve Fund ). There shall be deposited to the credit of the Operating Reserve Fund the amounts paid by the Lessee pursuant to the terms of Section 301 the Supplemental Indenture to obtain and maintain the Days Cash on Hand requirement as set forth therein. 2 E-1 3

192 Whenever there shall be on deposit in the Operating Reserve Fund an amount which exceeds the amount required to be on deposit therein to satisfy the Days Cash on Hand requirement, the Trustee shall transfer such excess monies to the Lessee in accordance with the terms of Section 5.06 of the Indenture. (c) Commencing on the first day of the month following the Construction Draw Period and continuing on the first day of each month thereafter until the Maturity Date, the Lessee will deposit with the Trustee for deposit into a separate account to be known as the Revenue Fund (hereinafter the Revenue Fund ) revenues sufficient to fund the following items, and the Trustee will apply said deposits in the following descending order of priority: (i) (ii) (iii) (iv) (v) (vi) (vii) Pay the current and outstanding fees of the Trustee; Deposit to the Interest Fund one-sixth (1/6 th ) of the next interest payment amount due on the next ensuing Interest Payment Date, less all interest, profits and other income received from the investment of money in the Interest Fund, including any funds transferred to the Interest Fund as provided in Section 3.04(A) and (C) of the Indenture; Deposit to the Principal Fund one-twelfth (1/12 th ) of the next principal payment amount due on the next ensuing Principal Payment Date, less all interest, profits and other income received from the investment of money in the Principal Fund; If not funded in an amount equal to the Debt Service Reserve Fund Requirement, deposit to the Debt Service Reserve Fund the amounts required pursuant to section 3(a) hereof; Pay any and all fees due to the consultant pursuant to any management agreement entered into by the Lessee pursuant to Section 303 of the Supplemental Master Indenture , in accordance with joint written instructions received by the Trustee from the Lessee and any consultant under any management agreement; and If not funded in an amount required to meet the Days Cash on Hand requirement in accordance with Section 301 of the Supplemental Master Indenture , deposit to the Operating Reserve Fund the amounts required pursuant to section 3(b) hereof. Whenever all of the foregoing required transfers and payments have been made by the Trustee and there remains any surplus balance in the Revenue Fund, such surplus balance shall be transferred by the Trustee to the Lessee, as instructed in writing by the Lessee to the Trustee, to be used for any lawful purpose. The Trustee shall apply monies transferred from the Revenue Fund and deposited to the Interest Fund and Principal Fund hereunder in accordance with the order of priority set forth in the Supplemental Master Indenture Utilities and Other Related Services. Lessee covenants that it will fully and promptly pay for all water, gas, electricity, telephone service and other public utilities of every kind furnished to the Facilities incurred on and after the date hereof or the first date of occupancy, as applicable, of any part of the Facilities by Lessee. 5. Maintenance. Upon commencement hereof, Lessee shall maintain the Facilities, including the structure of the Facilities, both interior and exterior, the electrical and plumbing fixtures and equipment and interior and exterior painting, in good and tenantable condition equal to the condition of the premises as of the date hereof or the first date of occupancy, as applicable, of any part of the Facilities, normal wear and tear excepted. 6. Taxes and Assessments. Lessee will pay all taxes and assessments, if any, levied on the Facilities during the term of this Lease. 7. Subleasing. Lessee may only sublet the Facilities in whole or in part with Lessor s consent or as otherwise allowed under the Master Indenture, and the making of any such sublease shall not release the Lessee from or otherwise affect, in any manner, any of Lessee s obligations hereunder. Further, Lessee shall not sublet the Facilities or any part thereof in such manner which will cause the interest on the Tax-Exempt Bonds to be included in gross income of the holder thereof for federal income tax purposes. In addition, any sublease shall not be undertaken which would violate any restrictive covenants contained in the deed by which title to the property originally became vested in Lessee. 8. Neglect and Return of Premises. Lessee covenants that it will not commit waste on the Facilities and that the Facilities will be returned to Lessor at the termination of this Lease in substantially as good a condition as at the commencement thereof, damages from natural elements, normal depreciation and decay excepted, if the principal of, redemption premium, if any, and interest on the 2012 Bonds has not been repaid in full in such manner or is required under the Indenture, as the same may be supplemented or amended from time to time. 9. Default by Lessee. In the event Lessee defaults in any of the covenants contained herein, Lessor shall notify Lessee, in writing, of such default and if such default is not corrected within ninety (90) days after receipt of notification, Lessor may notify Lessee that this Lease is terminated, in which case all rentals due and to become due hereunder shall be accelerated and become due in full for the balance of the term hereof to pay the principal of, redemption premium, if any, and interest on all Outstanding 2012 Bonds, and re-enter the Facilities, unless Lessee exercises its right to redeem the 2012 Bonds in full as permitted under the terms of the Indenture. 10. Damage to Facilities by Fire, Etc. It is agreed by and between the parties hereto that Lessee shall insure the Facilities in an amount equal to the fair market value of the premises, but in any event not less than the amount of the Outstanding 2012 Bonds. In the event of any loss due to fire, natural elements or other cause to such an extent that continued occupancy by 4 5 Lessee would be impractical, Lessee shall give immediate notice thereof to Lessor, and may, at its option, exercise its right to redeem the 2012 Bonds in full as permitted under the terms of the Indenture, subject to the terms of the Supplemental Indenture The proceeds of any such insurance claim shall be paid to the Trustee and Lessee, as their interests may appear. 11. Quiet Enjoyment of Facilities. Lessee shall, at all times during the term of this Lease, peaceably and quietly have, hold and enjoy the Facilities. 12. Supervision of Construction. Lessor hereby assigns to Lessee and its duly authorized representatives the right and obligation to supervise and direct the construction and equipping of the Construction Projects. Lessee hereby accepts such obligation, relieves Lessor of any responsibility related to the same and expressly assumes all rights, obligations and responsibilities for supervising and directing the construction and equipping of the Construction Projects. 13. Covenants. While any 2012 Bonds remain outstanding, Lessee shall, among other things: (a) Comply with and carry out the continuing disclosure requirements of paragraph (b)(5) of Rule 15c2-12 (as amended from time to time, the Rule ) adopted by the Securities and Exchange Commission and execute a continuing disclosure undertaking for the benefit of the beneficial owners of the 2012 Bonds, and shall provide continuing information pertaining to the Lessee as required by the Rule. Notwithstanding any other provision of this Lease, failure of the Lessee to enter into and comply with such Continuing Disclosure Agreement shall not be considered a Lease Default Event; however, the Lessor may take such actions as may be necessary or desirable, including seeking specific performance by court order, to cause the Lessee to comply with its obligations under this Section; (b) Maintain, and at the Trustee s request, provide evidence of all insurance coverages as required under the terms of the Master Indenture, with the Trustee named as an additional insured; (c) Notify the Trustee if there is a release or threatened release of any hazardous substance on or affecting the Facilities; (d) Notify the Trustee if Lessee becomes a defendant in any litigation affecting its rights to use and occupy the Facilities; (e) Maintain Lessee s legal existence and good standing in the State of West Virginia and comply with all laws, statutes, ordinances, rules and regulations applicable to it, the Facilities and its business; (f) Promptly pay, when due, all taxes and assessments owed on the Facilities, if any, and all other taxes which might give rise to any lien or claim upon the Facilities; (g) Except for Permitted Encumbrances (as defined in and allowed under the Master Indenture) or allowed under Sections 413 or 417 of the Master Indenture, not sell, transfer, lease, pledge, mortgage, encumber, convey or assign any of Lessee s assets, other than in the ordinary course of business, without the Trustee s prior written consent; (h) Maintain Lessee s tax-exempt status under Section 501(c)(3) of the Code, and otherwise take all actions necessary to maintain the tax-exempt status of the Tax-Exempt Bonds; (i) Comply with all arbitrage/rebate requirements as set forth in Article V of the Indenture and in the Tax Compliance Certificate; (j) Complete construction of the Construction Projects to be completed so that Lessee and its students can occupy the same; (k) Promptly pay all administrative fees and expenses associated with the issuance of the 2012 Bonds and the creation and maintenance of all funds and accounts created under the terms of the Indenture; and (l) In connection with the Construction Projects, the Lessee shall enter into a Construction Monitoring Agreement with Partners and Associates, Inc. dba Partners Development (the Construction Monitor ) and the Trustee (the Construction Monitoring Agreement ), by which the Construction Monitor shall provide construction monitoring services to the Lessee to ensure the validity of all payments to be made under the construction contracts relating to the Construction Projects, upon such terms and conditions as set forth in the Construction Monitoring Agreement. 14. Indemnification, Immunity and Contribution. (a) To the extent permitted by law, the Lessee releases the Lessor and the Trustee from and agrees that the Lessor and the Trustee shall not be liable for, and agrees to indemnify and hold the Lessor and the Trustee harmless from, any liability for, or expense (including but not limited to reasonable attorneys fees) resulting from, or any loss or damage that may be occasioned by any cause whatsoever pertaining to the issuance, sale and delivery of the 2012 Bonds, the acceptance or administration of the trusts established pursuant to the Indenture or the actions taken or to be taken by the Lessor and the Trustee under this Lease or the Indenture, except the gross negligence or willful misconduct of either the Lessor or the Trustee. The parties intend that no general obligation, liability or charge against the general credit of the Lessor shall occur by reason of making this Lease, the issuance of the 2012 Bonds or performing any act required of it by this Lease. Nevertheless, if the Lessor shall incur any such pecuniary liability by reason of making this Lease, the issuance of the 2012 Bonds or performs any act required by this Lease, then in such event the Lessee shall indemnify and hold the Lessor harmless by reason thereof, to the extent permitted by law, as provided herein, unless such liability results from the gross negligence or willful misconduct of the Lessor. (b) No provision in this Lease or any obligation imposed upon the Lessor, nor the breach of those provisions or obligations, will constitute or give rise to or impose upon the Lessor a pecuniary liability or a charge upon its general credit or taxing power, if any. No board 6 E-2 7

193 member, employee, officer, director or agent of the Lessor will be personally liable with respect to this Lease, the 2012 Bonds or any of the documents related thereto. (c) Except as described in (a) of this Section 14, the Lessee will pay and will indemnify, defend and hold the Lessor and the Trustee, including any person at any time serving as a board member, director, officer, employee, agent or consultant of the Lessor or the Trustee or any person who controls the Lessor or the Trustee within the meaning of the Securities Act of 1933, as amended (collectively, the Indemnified Parties ) harmless from and against all claims, liabilities, losses, damages, costs, expenses (including reasonable attorneys fees), suits and judgments of any kind arising out of: (i) injury to or death of any person or damage to property in or upon any Facilities or the occupation, use, possession or condition of the Facilities or relating to the foregoing; (ii) any violation of any law, ordinance or regulation affecting the Facilities or the ownership, occupation, use, possession or condition of the Facilities; (iii) the issuance and sale of the 2012 Bonds, including the Private Placement Memorandum used in connection with such sale; (iv) the execution and delivery of this Lease, the Indenture, the Tax Compliance Certificate, the Bond Purchase Agreement or of any document required or in furtherance of the transactions contemplated by them; or (v) the performance of any act required of any indemnitee under this Section or under any provision of this Lease, the Initial Lease, the Indenture, the Tax Compliance Certificate or the Bond Purchase Agreement or of any document required or in furtherance of the transactions contemplated by them. (d) An Indemnified Party will promptly, upon receipt of notice of the existence of a claim or the commencement of a proceeding regarding which indemnity under this Section may be sought, notify the Lessee in writing. If a proceeding is commenced against the Indemnified Party, the Lessee may participate in the proceeding and, to the extent it elects to do so, may assume the defense with counsel satisfactory to the Indemnified Party. If, however, the Indemnified Party is advised in an Opinion of Counsel that there may be legal defenses available to it which are different from or in addition to those available to the Lessee, or if the Lessee fails to assume the defense of proceeding or to employ counsel for that purpose within a reasonable time after notice of commencement of the proceeding, the Lessee will not be entitled to assume the defense of the proceeding on behalf of the Indemnified Party, but will be responsible for the reasonable fees, costs and expenses of the Indemnified Party in conducting its defense. (e) No covenant or agreement contained in this Lease will be deemed to be the covenant or agreement of any board member, officer, attorney, agent or employee of the Lessor or the Lessee in an individual capacity. No recourse will be had for any payment of any claim against any officer, board member, agent, attorney or employee of the Lessor or the Lessee past, present, or future, or its successors or permitted assigns, either directly or through the Lessor, or any successor, whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all liability of such board members, officers, agents, attorneys or employees being released as a condition of and as a consideration for the execution and delivery of this Lease. (f) In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in this Section is for any reason held to be unavailable to the Indemnified Party, the Lessee shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by said indemnity agreement incurred by the Indemnified Party in such proportion as is appropriate to reflect the relative fault of the Lessee in connection with the claim or the commencement of a proceeding regarding which indemnity under this Section may be sought; provided, however, that no person guilty of fraudulent misrepresentation shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (g) The indemnifications set forth herein shall survive the termination of this Lease and the Indenture and/or the resignation or removal of the Trustee. 15. Events of Default. Each of the following events shall constitute and be referred to herein as a Lease Default Event : (a) Failure by the Lessee to pay in full any Lease Payment required hereunder, except any additional payments required hereunder, when the same shall become due and payable, whether at maturity of the 2012 Bonds, upon any date fixed for unconditional prepayment or redemption of the 2012 Bonds by acceleration or otherwise and the continuance of such failure for five (5) days; (b) If any material representation or warranty made by the Lessee herein or made by the Lessee in any document, instrument or certificate furnished to the Trustee or the Lessor in connection with the issuance of the 2012 Bonds shall at any time prove to have been incorrect in any respect as of the time made and shall not be corrected or brought into compliance within thirty (30) days after written notice thereof to the Lessee by the Lessor or the Trustee; (c) If the Lessee shall fail to comply with, observe or perform any other covenant, condition, agreement or provision in this Lease on its part to be observed or performed, or shall breach any warranty by the Lessee herein contained, and such breach or failure continues for a period of thirty (30) days after written notice, specifying such failure or breach and requesting that it be remedied, has been given to the Lessee by the Lessor or the Trustee; except that, if such failure or breach cannot with due diligence and dispatch be remedied within such thirty-day period but can be cured, such failure or breach shall not become a Lease Default Event so long as the Lessee shall immediately upon receipt of such notice commence with due diligence and dispatch to remedy such failure or breach in accordance with and subject to any directions or limitations of time established by the Trustee; or (d) Any Event of Default as defined in and under the Indenture; or 8 9 (e) Any Event of Default under Section 502 of the Master Indenture. 16. Remedies on Default. If a Lease Default Event shall occur, then, and in each and every such case during the continuance of such Lease Default Event, the Trustee on behalf of the Lessor, but subject to the limitations in the Indenture, including those relating to acceleration of principal of the 2012 Bonds, as to the enforcement of remedies, may take such action as it deems necessary or appropriate to collect amounts due hereunder, to enforce performance and observance of any obligation or agreement of the Lessee hereunder or to protect the interests securing the same, and may, without limiting the generality of the foregoing: (a) Exercise any or all rights and remedies given hereby or available hereunder or given by or available under any other instrument of any kind securing the Lessee s performance hereunder; (b) By written notice to the Lessee declare all Lease Payments and additional payments to be immediately due and payable under this Lease, whereupon the same shall become immediately due and payable; and (c) Take other acts or steps as may be available under the Indenture, as the registered owner of the A Note, B Subordinated Note and the C Subordinated Note under the Master Indenture, or at law or in equity to collect the payment required hereunder then due, whether on the stated due date or by declaration of acceleration or otherwise, for damages or for specific performance or otherwise to enforce performance and observance of any obligation, agreement or covenant of the Lessee hereunder, subject, however, to the provisions of the Act. 17. Discontinuance or Abandonment of Default Proceedings. If any proceeding taken by the Trustee on account of any Lease Default Event shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, then and in every case the Lessor, the Trustee and the Lessee shall be restored to their former position and rights hereunder, respectively, and all rights, remedies and powers of the Lessor and the Trustee shall continue as though no such proceeding had taken place. 18. Remedies Cumulative. No remedy conferred upon or reserved to the Lessor or the Trustee hereby or now or hereafter existing at law or in equity or by statute, shall be exclusive but shall be cumulative with all others. Such remedies are not mutually exclusive and no election need be made among them, but any such remedy or any combination of such remedies may be pursued at the same time or from time to time so long as all amounts realized are properly applied and credited as provided herein. No delay or omission to exercise any right or power accruing upon any Lease Default Event shall impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient by the Lessor or the Trustee. In the event of any waiver of a Lease Default Event hereunder, the parties shall be restored to their former positions and rights hereunder, but no such waiver shall extend to any other or subsequent Lease Default Event or impair any right arising as a result thereof. In order to entitle the Trustee to exercise any remedy reserved to it, it shall not be necessary to give notice other than as expressly required herein. 19. Application of Moneys Collected. Any Lease Payments or any other amounts collected pursuant to action taken under this Lease shall be applied in accordance with the provisions of Article V of the Indenture. 20. Attorneys Fees and Other Expenses. If, as a result of the occurrence of a Lease Default Event or the failure of the Lessee to pay the additional payments, the Lessor or the Trustee employs attorneys or incurs other expenses for the collection of payments due hereunder or for the enforcement of performance or observance of any obligation or agreement on the part of the Lessee, the Lessee will, on demand, reimburse the Lessor or the Trustee, as the case may be, for the reasonable fees of such attorneys and such other reasonable expenses so incurred. 21. Notice of Default. The Lessee agrees that, as soon as is practicable, and in any event within five (5) days, the Lessee will furnish the Trustee notice of any event which is a Lease Default Event pursuant to Section 15 which has occurred and is continuing on the date of such notice, which notice shall set forth the nature of such event and the action which the Lessee proposes to take with respect thereto; provided, however, that with respect to a Lease Default Event pursuant to Section 15(a), the Trustee shall give the Lessee immediate telephonic notice on the date such default occurs; provided however, that the failure of the Trustee to give notice of the default to the Lessee shall not toll any such default. 22. Amendments and Supplements. This Lease may be amended, changed or modified only as provided in Article IX of the Indenture. 23. Time of the Essence; Non-business Days. Time shall be of the essence of this Lease Agreement. When any action is provided for herein to be done on a day named or within a specified time period, and the day or the last day of the period falls on a day other than a Business Day, such action may be performed on the next ensuing Business Day with the same effect as though performed on the appointed day or within the specified period. 24. Assignment of Rights Under Lease. Except as otherwise expressly provided herein and in the Indenture, this Lease and the rights, interest, powers, privileges and benefits accruing to or vested in the Lessor shall be protected and enforced in conformity with the Indenture and are hereby assigned by the Lessor to the Trustee as security for the 2012 Bonds and shall be exercised and enforced for or on behalf of the Holders of the 2012 Bonds in conformity with the provisions hereof and the Indenture. The Lessor shall retain no rights hereunder except those rights set forth in Section 14 and the right to payment of expenses under Section 20 hereof, and notwithstanding any provision herein to the contrary, only the Trustee shall have the right to pursue any remedies hereunder. 25. Binding Effect. This instrument shall inure to the benefit of and shall be binding upon the Lessor and the Lessee and their respective successors and permitted assigns, subject to the limitations contained herein; provided, however, that the Trustee shall have only such duties and obligations as are expressly given to it hereunder. 26. Entire Agreement. This Lease, together with all agreements and documents incorporated by reference herein, constitutes the entire agreement of the parties and is not subject to modification, amendment, qualification or limitation except as expressly provided herein. 10 E-3 11

194 27. Severability. If any covenant, agreement or provision, or any portion thereof contained in this Lease, where the application thereof to any Person or circumstance is held to be unconstitutional, invalid or unenforceable, the remainder of this Lease and the application of such covenant, agreement or provision, or portion thereof, to other Persons or circumstances, shall be deemed severable and shall not be affected thereby, and this Lease shall remain valid, and the Holders shall retain all valid rights and benefits accorded to them under this Lease and the Constitution and laws of the State of West Virginia. 28. Notices. Unless otherwise expressly specified or permitted by the terms hereof, all notices, consents or other communications required or permitted hereunder shall be deemed sufficiently given or served if given in accordance with Section of the Indenture. 29. Term. Except as otherwise provided herein, this Lease shall remain in full force and effect from the date of execution hereof until no 2012 Bonds remain Outstanding under the Indenture and all payments required hereunder have been made. 30. Counterparts. This Lease may be executed in several counterparts, each of which shall be an original and all of which shall constitute one instrument. 31. Governing Law. This Lease shall be governed exclusively by the laws of the State of West Virginia. IN WITNESS WHEREOF, THE PHILIPPI MUNICIPAL BUILDING COMMISSION and ALDERSON-BROADDUS COLLEGE, INC. have caused this Lease to be executed in their respective corporate names, and have caused their corporate seals to be hereunto affixed and attested by their respective officers thereunto duly authorized, all as of the date first above written. [SEAL] ATTEST: Secretary THE PHILIPPI MUNICIPAL BUILDING COMMISSION By Name: Howard Swick Title: Chairman [Remainder of Page Intentionally Left Blank] ALDERSON-BROADDUS COLLEGE, INC. By Name: Richard A. Creehan Title: President [SEAL] ATTEST: Secretary STATE OF WEST VIRGINIA, COUNTY OF BARBOUR, TO-WIT: The foregoing instrument was acknowledged before me this day of November, 2012, by Howard Swick, Chairman of THE PHILIPPI MUNICIPAL BUILDING COMMISSION, a public corporation and municipal building commission, on behalf of the public corporation and municipal building commission. EXHIBIT A SITE DESCRIPTION [To be inserted] My commission expires: [NOTARIAL SEAL] Notary Public STATE OF WEST VIRGINIA, COUNTY OF BARBOUR, TO-WIT: The foregoing instrument was acknowledged before me this day of November, 2012, by Richard A. Creehan, President of ALDERSON-BROADDUS COLLEGE, INC., a West Virginia not-for-profit corporation, on behalf of the corporation. My commission expires: [NOTARIAL SEAL] Notary Public This instrument prepared by: Elizabeth A. Benedetto, Esq. Spilman Thomas & Battle, PLLC 300 Kanawha Boulevard, East Charleston, WV E-4

195 EXHIBIT B DEBT SERVICE SCHEDULE [To be inserted] [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] E-5

196 [THIS PAGE INTENTIONALLY LEFT BLANK]

197 Appendix F: Form of the Guaranty Agreement

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199 GUARANTY AGREEMENT This GUARANTY AGREEMENT (this Agreement ), is made as of this 1st day of November, 2012, by ALDERSON-BROADDUS COLLEGE, INC., a West Virginia nonprofit corporation (the College ), as Obligated Group Agent for the Obligated Group under the Master Indenture (as defined below), to and for the benefit of WELLS FARGO BANK, N.A., a national banking association, as bond trustee (the Trustee ). RECITALS A. The College has requested and The Philippi Municipal Building Commission, a public corporation of the State of West Virginia (the Issuer ), created pursuant to Chapter 8, Article 33 of the Code of West Virginia of 1931, as amended, has agreed, to issue its (a) College Facilities Refunding and Improvement Revenue Bonds (Alderson-Broaddus College, Inc.), 2012 Series A in the original aggregate principal amount of $34,275,000 (the 2012 Series A Bonds ), (b) College Facilities Subordinate Lien Refunding Revenue Bonds (Alderson-Broaddus College, Inc.), 2012 Series B in the original aggregate principal amount of $2,510,000 (the 2012 Series B Bonds ) and (c) College Facilities Subordinate Lien Refunding and Improvement Revenue Bonds (Alderson-Broaddus College, Inc.), 2012 Series C (Taxable) in the original aggregate principal amount of $680,000 (the 2012 Series C Bonds and together with the 2012 Series A Bonds and the 2012 Series B Bonds, collectively, the Bonds ), pursuant to a Bond Trust Indenture dated as of November 1, 2012, between the Issuer and the Trustee (the Indenture ). B. The Issuer has issued the Bonds simultaneously with the execution and delivery of this Guaranty for the purposes of: (i) financing the planning, design, acquisition, construction, renovation and equipping of certain capital improvements to the campus of the College, consisting of the construction of a new multi-sport stadium, locker room facilities, stadium seating, concessions, President s box, media boxes, turf field, lights to accommodate night games and practices, site improvements and walkways, new student housing consisting of a 144- bed apartment style student housing building and a 240-bed suite-style student housing building, as well as the renovation and improvement of Benedum Hall, Priestley Hall and Kincaid Hall, together with all other necessary appurtenances and related facilities (collectively, the Construction Projects ) for and on behalf of the College, (ii) financing capitalized interest on the Construction Projects, (iii) currently refunding the Issuer s College Facilities Revenue Bonds, Series 2010 A (Alderson-Broaddus College, Inc.), dated June 30, 2010, issued in the original aggregate principal amount of $5,000,000, (iv) funding a debt service reserve fund for the 2012 Series A Bonds, and (v) paying costs of issuance of the Bonds (collectively, the Projects ). C. The College and Alderson-Broaddus Endowment Corporation, a West Virginia nonprofit corporation ( ABEC ; the College and ABEC are each referred to as a Member or a Guarantor ) constitute an obligated group (the Obligated Group ) and are parties to that certain Master Trust Indenture dated as of November 1, 2012, among the College, ABEC and Wells Fargo Bank, N.A., as Master Trustee (as amended and supplemented from time to time, the Master Indenture ). D. The Bonds are secured by a pledge of the Trust Estate, as defined in the Indenture. The 2012 Series B Bonds and the 2012 Series C Bonds are secured by and payable from a lien on and pledge of the Trust Estate which is subordinate in priority to the lien on and pledge of the Trust Estate securing the 2012 Series A Bonds. E. It is a condition precedent to the Placement Agent placing the Bonds that the Members of the Obligated Group agree to guarantee the payment of the Bonds. F. The Obligated Group will materially and directly benefit from the issuance of the Bonds and, therefore, the Members are willing to enter into this Agreement. G. To evidence the obligations of the Obligated Group with respect to this Agreement, the Obligated Group Agent has issued to the Trustee the Obligated Group s D Note pursuant to the Master Indenture. NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, including the covenants, terms and conditions hereinafter appearing and in order to induce the Placement Agent to place the Bonds, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.01 Certain Defined Terms. All capitalized terms used and not otherwise defined herein shall have their respective meanings as set forth in the Master Indenture. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): Initial Lease shall mean the Lease dated as of November 1, 2012, between the College, as lessor, and the Issuer, as lessee, and all amendments thereof and supplements thereto. Lease shall mean the Lease Agreement, dated as of November 1, 2012, between the Issuer, as lessor, and the College, as lessee, and all amendments thereof and supplements thereto. Member shall mean the College, ABEC and any other Person who becomes a Member of the Obligated Group under the Master Indenture after the date hereof. Obligated Group shall mean the Members and any other Person which fulfills the requirement for entry into the Obligated Group under the Master Indenture after the date hereof. Person means any individual, joint venture, corporation, company, voluntary association, partnership, trust, joint stock company, unincorporated organization, association, government, or any agency, instrumentality, or political subdivision thereof, or any other form of entity. Placement Agent means BB&T Capital Markets, Inc., a division of Scott & Stringfellow 1 2 LLC. Related Documents means the Initial Lease, the Lease, the Indenture or any other agreement or instrument relating thereto. Supplemental Master Indenture means the Supplemental Master Indenture , dated as of November 1, 2012, between the Obligated Group Agent and the Master Trustee D Note shall the D Note of the Obligated Group Agent dated of even date herewith issued in favor of the Trustee in accordance with the Master Indenture and Supplemental Master Indenture ARTICLE II THE GUARANTY Section 2.01 The Guaranty. The Members of the Obligated Group, jointly and severally, hereby unconditionally and irrevocably guarantee to the Trustee, the full and prompt payment and performance by the Issuer of all of its obligations under the Bonds in their respective payment priority and the Related Documents including, without limitation, the obligation to pay all principal, redemption premium, if any, interest, fees, expenses and indemnification amounts when and as the same shall become due, whether at the stated maturity thereof, by acceleration or otherwise (including the obligation to make additional payments in the event of a Determination of Taxability) (as defined in the Indenture)). All payments made by the Members of the Obligated Group pursuant to this Agreement shall be applied by the Trustee in order of priority as set forth in Section 5.10 of the Indenture. Section 2.02 Guaranty Unconditional. This Agreement shall be a continuing, absolute and unconditional guaranty and shall remain in full force and effect until the entire principal of, redemption premium, if any, and interest on the Bonds in their respective payment priority shall have been paid or provided for according to the terms of the Bonds and the Related Documents and until all obligations arising upon a Determination of Taxability have been discharged and all of the obligations of the Issuer under the Bonds and the Related Documents shall have been paid and satisfied in full. Section 2.03 Operation of Guaranty. This is a guaranty of payment and not of collection, and the Members of the Obligated Group expressly waive any right to require that any action be brought against the Issuer or to require that resort be had to any security, whether held by or available to the Trustee, the Issuer or to any other Person. If the Issuer defaults in payment of principal, interest, redemption premium, fees or any other amount payable under the Bonds or the Related Documents when and as the same shall become due, whether at stated maturity, by acceleration, upon demand, or otherwise, or upon the occurrence of any other Event of Default hereunder, the Members, upon demand by the Trustee or its successors or assigns, will promptly and fully make such payments. The Members will pay all reasonable costs and expenses, including attorneys fees, paid or incurred by the Trustee or its successors or 3 F-1 assigns, under this Agreement. All payments by the Members hereunder shall be made in immediately available freely transferable coin or currency of the United States of America which on the respective dates of payment thereof is legal tender for the payment of public and private debts. Each default in payment of any amount payable under the Bonds or the Related Documents, or the occurrence of any other Event of Default hereunder, shall, to the extent permitted by the Indenture, give rise to a separate cause of action hereunder, and separate suits may be brought hereunder as each cause of action arises. The Trustee or its successors or assigns, in its sole discretion, shall have the right to proceed first and directly against the Members and their successors and assigns. Section 2.04 Obligation of the Guarantors Absolute. The obligations of the Members hereunder shall not be impaired, modified, released or limited by any occurrence or condition whatsoever, including without limitation (a) the release of any co-guarantor or any compromise, settlement, release, waiver, renewal, extension, indulgence or modification of or change in any of the obligations and liabilities of the Issuer contained in the Bonds or the other Related Documents, (b) any impairment, modification, release or limitation of the liability of the Issuer or any Member of the Obligated Group or its respective estate in bankruptcy, or any other security for the Bonds or the Related Documents or any remedy for the enforcement thereof, resulting from the operation of any present or future provision of the Bankruptcy Code, or other statute or from the decision of any court, (c) the assertion or exercise by the Trustee or its successors or assigns, of any rights or remedies under any of the Bonds or the Related Documents or its delay in or failure to assert or exercise any such rights or remedies, (d) any lack of validity or enforceability of the Bonds or the Related Documents or any other agreement or instrument relating thereto, (e) any change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of the Issuer evidenced by the Bonds and Related Documents, or any other amendment or waiver of or any consent to departure from the Bonds or the Related Documents, (f) any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any other guaranty, or (g) any other circumstance which might otherwise constitute a defense available to, or a discharge of, the Issuer or the Guarantors except, subject to the following sentence of this paragraph, final and irrevocable payment in full of the Issuer s obligations to the Trustee under the Bonds and the other Related Documents. Section D Note. The obligations of the Members of the Obligated Group under this Agreement are evidenced by the D Note issued by the Obligated Group Agent pursuant to the provisions of the Master Indenture, as supplemented by Supplemental Master Indenture The D Note shall be in the form as set forth in Exhibit A hereto and incorporated herein. 4

200 ARTICLE III EVENTS OF DEFAULT Section 3.01 Events of Default. Each of the following shall constitute an Event of Default by the Members under this Agreement: (a) Failure by the Members to pay, when due, any amount payable under this Agreement; or (b) Failure by any Member to comply with or perform any covenant or agreement to be complied with or performed by any Member in accordance with this Agreement which is not remedied within thirty (30) days after written notice thereof shall have been received by the Members from the Trustee; or (c) If any representation or warranty made by any Member in any writing furnished in connection with or pursuant to this Agreement or if any report, certificate, financial statement or other instrument or document delivered by or on behalf any Member shall be false or misleading in any material respect on the date as of which made; or (d) Liquidation or dissolution of any Member, or suspension of the business of any Member, or filing by any Member of a voluntary petition in bankruptcy or a voluntary petition or an answer seeking reorganization, arrangement, readjustment of its debts or for any other relief under the United States Bankruptcy Code, as amended, or under any other insolvency act or law, state or federal, now or hereafter existing, or any other action of any Member indicating its consent to, approval of, or acquiescence in any petition or proceedings; the application by any Member for, or the appointment by consent or acquiescence of, a receiver, a trustee or a custodian of any Member, or an assignment for the benefit of creditors, the inability of any Member or the admission by any Member in writing of its inability to pay its debts as they mature; or (e) Filing of an involuntary petition against any Member in bankruptcy or seeking reorganization, arrangement, readjustment of its debts or for any other relief under the United States Bankruptcy Code, as amended, or under any other insolvency act or law, state or federal, now or hereafter existing, or the involuntary appointment of a receiver, a trustee or a custodian of any Member for all or a substantial part of its property; the issuance of a warrant of attachment, execution or similar process against any substantial part of the property of any Member and the continuance of any of the events referred to in this subsection (j) for sixty (60) days remains undismissed or undischarged; or (f) The Bonds, this Agreement, the D Note or the Master Indenture for any reason shall be determined to be invalid or shall cease to be in full force and effect or unenforceable in any material respect; or (g) The occurrence and continuance of a default under the Master Indenture beyond expiration of any applicable cure period. Section 3.02 Rights Upon an Event of Default. Upon the occurrence of an Event of Default, and at any time thereafter unless and until such Event of Default has been waived by the Trustee or cured to the satisfaction of the Trustee, the Trustee shall be entitled to take any of the following actions without prejudice to the rights of the Trustee to enforce its claims against the Members, except as otherwise specifically provided for herein: (a) The Trustee may declare the D Note (including all principal, accrued interest and all other amounts payable on the Bonds) immediately due and payable without presentation, demand, protest or notice of any kind (except as hereinafter expressly provided), all of which are hereby expressly waived; (b) Subject to the terms and conditions of the Master Indenture, the Trustee may enforce any and all other rights and remedies available at law or in equity. The Trustee may proceed directly against the Members under this Agreement and it shall have no obligation to proceed against or exhaust any other remedy or remedies which it may have without resorting to any other security or guaranty, whether held by or available to the Trustee. Section3.03 NoRemedyExclusive.Noremedyhereinconferreduponorreservedto the Trustee is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder, under the Related Documents, or now or hereafter existing at law or in equity or by statute. Section 3.04 Reinstatement of Avoided Payment. If any amount received by the Trustee from any Member under this Agreement is required to be returned or paid to any Member or any other Person pursuant to any insolvency or bankruptcy law or for any other reason, then as of the date the Trustee makes such return or other payment, (a) the Members agreements and obligations under this Agreement shall be reinstated to the extent the same shall have theretofore been discharged and (b) the amount of such avoided payment shall be reinstated as part of the obligations of the Members hereunder, and such amount shall be immediately due and payable by the Members to the Trustee, without presentment, demand, notice of default or protest, all of which are hereby waived by the Members. This Section 3.04 shall survive termination of this Agreement. ARTICLE IV MISCELLANEOUS Section 4.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement, nor consent to any departure by the Guarantors therefrom, shall in any event be effective unless the same shall be in writing and signed by the Trustee and then such 5 6 amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Section 4.02 Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including required copies) and sent by receipted hand delivery (including Federal Express or other receipted courier service), facsimile or certified mail, return receipt requested, at the following address for the following parties: Obligated Group Members: Alderson-Broaddus College, Inc. 101 College Hill Drive Philippi, West Virginia Attn: President Alderson-Broaddus Endowment Corporation 101 College Hill Drive Philippi, West Virginia Attn: President Trustee: Wells Fargo Bank, N. A. 123 S. Broad Street 15 th Floor, Suite 1500 MAC: Y Philadelphia, Pennsylvania Attn: Corporate Trust Group or, as to each party, at such other address as shall be designated by such party in a written notice to other party. All such notices and communications shall, when hand delivered, be effective upon delivery, when faxed, be effective when confirmation of receipt is received, respectively, and, when made by certified mail, shall not be effective until received. been executed by the Obligated Group Agent and the Trustee and thereafter shall be binding upon and inure to the benefit of the Members and the Trustee and their respective successors and assigns, except that the Members shall not have the right to assign their rights hereunder or any interest herein without the prior written consent of the Trustee. Section 4.06 Severability. Any provision of this Agreement which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non-authorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction. Section 4.07 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of West Virginia. Section 4.08 Headings. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. Section 4.09 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. [Remainder of Page Intentionally Left Blank; Signature Page to Follow] Section 4.03 No Waiver. No failure on the part of the Trustee to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. Section 4.04 Indemnification. The Members agrees to defend, protect, indemnify and hold harmless the Trustee, all directors, officers, employees, attorneys, and agents of the Trustee, from and against all claims, actions, liabilities, damages, costs and expenses (including, without limitation, all attorneys fees, costs and expenses incurred in the investigation or defense of any matter) asserted against, imposed upon or incurred by the Trustee or any of such other persons, as a result of or arising from or relating to this Agreement or the other Related Documents or the transactions contemplated hereby, except to the extent due to the gross negligence or willful misconduct of the Trustee or other Person otherwise. to be indemnified hereunder. Section 4.05 Binding Effect. This Agreement shall become effective when it shall have 7 F-2 8

201 IN WITNESS WHEREOF, the Obligated Group Agent has executed this Guaranty Agreement as of the day and year first above written, for and on behalf of the Members. ALDERSON-BROADDUS COLLEGE, INC., as Obligated Group Agent for and on behalf of all of the Members of the Obligated Group named herein EXHIBIT A FORM OF D NOTE By: Name: Richard A. Creehan Title: President [SEAL] Attest: Secretary Guaranty Agreement ( ) No D THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 SERIES D NOTE $ KNOW ALL MEN BY THESE PRESENTS that ALDERSON-BROADDUS COLLEGE, INC., a nonprofit corporation organized and existing under the laws of the State of West Virginia (the College ), on behalf of itself and the Obligated Group as the Obligated Group Agent (the Obligated Group Agent ), for value received, hereby acknowledges that the Obligated Group is obligated to, and promises to pay to WELLS FARGO BANK, N. A., as bond trustee (the Bond Trustee ) under the Bond Indenture (the Bond Indenture ) dated as of November 1, 2012, between The Philippi Municipal Building Commission (the Issuer ) and the Trustee, entered into in connection with the issuance by the Issuer of its (i) $ College Facilities Refunding and Improvement Revenue Bonds (Alderson- Broaddus College, Inc.) 2012 Series A (the 2012 Series A Bonds ), (ii) $ College Facilities Subordinate Lien Refunding Revenue Bonds (Alderson-Broaddus College, Inc.) 2012 Series B (the 2012 Series B Bonds ), and (iii) $ College Facilities Subordinate Lien Refunding and Improvement Revenue Bonds (Alderson-Broaddus College, Inc.) 2012 Series C (Taxable) (the 2012 Series C Bonds and together with the 2012 Series A Bonds and the 2012 Series B Bonds, collectively, the Bonds ), and any successor trustee appointed under the Bond Indenture, or registered assigns, the principal sum of DOLLARS ($ ). This D Note also evidences and secures the obligation of the Obligated Group under the Guaranty Agreement dated as of November 1, 2012, between the Obligated Group and the Bond Trustee, to absolutely and unconditionally guarantee the full and prompt payment and performance by the Issuer of its obligations to make payments in respect of the Bonds in accordance with the Bond Indenture. The principal installments of this Note correspond to the maturities and mandatory sinking fund payments of the Bonds. The final maturity date of this Note is October 1, The principal of this Note bears interest at the same rates as the Bonds. Interest payments on this Note correspond to the Interest Payment Dates for the Bonds. All payments made by the Members of the Obligated Group on this Note shall be applied by the Trustee in order of priority of payment for the 2012 Series A Bonds and the 2012 Subordinate Bonds as set forth in the Bond Indenture. Principal hereof, interest hereon and any applicable redemption premium (collectively Debt Service Charges ), are payable in any coin or currency of the United States of America which on the payment date is legal tender for the payment of public and private debts. This Note is one of a duly authorized Obligations issued by the Obligated Group under and pursuant to Supplemental Master Trust Indenture , dated as of November 1, 2012 (the Supplemental Indenture ), supplementing and amending the Master Trust Indenture, dated as of November 1, 2012, by and among the College, Alderson-Broaddus Endowment Corporation and Wells Fargo Bank, N. A., as master trustee (the Master Trustee ). The Master Trust Indenture, as supplemented and amended, is hereinafter called the Master Indenture. Capitalized terms used and not otherwise defined in this Note shall have the meaning assigned to such terms in the Guaranty Agreement and the Master Indenture. The Obligated Group will pay Debt Service Charges on this Note at the times and in the amounts set forth above. The Obligated Group will be entitled to a credit, however, against the Debt Service Charges due on this Note, for amounts paid under the Guaranty Agreement and applied to the corresponding payment of Debt Service Charges on the Bonds. Copies of the Master Indenture and the Guaranty Agreement are on file at the Corporate Trust Office of the Master Trustee and reference is hereby made to the Master Indenture and Lease Agreement for the provisions, among others, with respect to the nature and extent of the rights and obligations of the holders of this Note and other Obligations issued under the Master Indenture, the terms and conditions on which, and the purposes for which Obligations may be issued under the Master Indenture, and the rights, duties and obligations of the Obligated Group and the Master Trustee under the Master Indenture and the Guaranty Agreement, to all of which the holder of this Note, by acceptance hereof, consents. The Members of the Obligated Group are jointly and severally liable for the performance of the covenants of each Member and of the Obligated Group under the Master Indenture including, without limitation, payment of Debt Service Charges and all obligations under the Master Indenture. As of the date of this Note, Alderson-Broaddus College, Inc. and Alderson-Broaddus Endowment Corporation are the only Members of the Obligated Group. New Members may be added to the Obligated Group and existing Members may withdraw from the Obligated Group upon the conditions set forth in the Master Indenture. The Master Indenture permits the issuance of additional Obligations under the Master Indenture to be secured by the covenants made therein, all of which, regardless of the times of issue or maturity, are to be of equal rank without preference, priority or distinction of any Obligation of any series over any other Obligation, except as expressly provided in the Master Indenture. Upon the occurrence of certain events of default as defined in the Master Indenture, the principal of all Obligations then Outstanding may be declared, and thereupon shall become, due and payable as provided in the Master Indenture. The holder of this Note shall have such rights to enforce the provisions of the Master Indenture, or to institute any action with respect to a default under the Master Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, as are provided in the Master Indenture. The holder of this Note shall have such rights to enforce the provisions of the Guaranty Agreement, or to institute any action with respect to a default under the Guaranty Agreement, or to institute, appear in or defend any suit or other proceeding with respect thereto, F-3

202 as are provided in the Guaranty Agreement. This Note is issuable only as a fully registered note, and, as provided and to the extent authorized in the Master Indenture, this Note may be exchanged for a Note of the same series in an amount equal to the aggregate principal amount Outstanding on this Note, and not otherwise. This Note will be registered on the register to be maintained at the principal office of the Master Trustee and will be transferable only in the manner and subject to the limitations, if any, set forth in the Master Indenture. Upon every exchange or registration of transfer of this Note, the Obligated Group may make a charge sufficient to reimburse it for any tax or taxes or other governmental charge required to be paid by the Master Trustee or the Obligated Group with respect to the exchange or transfer. That charge must be paid by the holder requesting transfer or exchange as a condition precedent to the exercise of that privilege. Upon transfer or exchange, the Obligated Group Agent must execute and the Master Trustee must authenticate and deliver, in exchange for this Note, a new registered Note or Notes registered in the name of that holder or the transferee. This Note is a negotiable instrument under the Uniform Commercial Code of West Virginia. The Obligated Group, the Master Trustee, any paying agent and any note registrar may deem and treat the person in whose name this Note is registered as the absolute owner for the purpose of receiving payment of the Debt Service Charges on this Note. Neither the Obligated Group, nor any paying agent, nor the Master Trustee, nor any note registrar will be affected by any notice to the contrary. All payments made to the registered owner of this Note will be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable on this Note. IN WITNESS WHEREOF, ALDERSON-BROADDUS COLLEGE, INC., as Obligated Group Agent, has caused this Note to be executed in its name on behalf of itself and the other Members of the Obligated Group by the manual or facsimile signature of its President and its corporate seal to be hereunto affixed and the same to be attested by its Secretary all as of the day of November, ALDERSON-BROADDUS COLLEGE, INC., as Obligated Group Agent By: Name: Richard A. Creehan [SEAL] Title: President Attest: By: Name: Its: Secretary No recourse may be had for the payment of Debt Service Charges on this Note or for any claim based on this Note or upon any obligation, covenant, or agreement contained in the Master Indenture, against any past, present or future officer, director, member or trustee of the Obligated Group Agent or any other Member of the Obligated Group, or any incorporator, officer, director, member or trustee of any successor entity, either directly or through the Obligated Group Agent, any Member of the Obligated Group, or any successor entities, under any rule of law or equity, statute or constitution, or by the enforcement of any assessment or penalty or otherwise, and all liability of any incorporator, officer, director, member or trustee is expressly waived and released as a condition of and consideration for the issuance of this Note and its acceptance by the owner of this Note. This Note will not be entitled to any benefit under the Master Indenture, or become obligatory for any purpose, until this Note has been duly authenticated by execution by an authorized officer of the Master Trustee on the Master Trustee s Authentication Certificate. [Remainder of Page Intentionally Left Blank] MASTER TRUSTEE S AUTHENTICATION CERTIFICATE The Note to which this certificate is attached is one of the Obligations described in the within-mentioned Master Indenture. WELLS FARGO BANK, N. A., as Master Trustee By: Name: Joseph Progar Title: Dated: November, ( ) [THIS PAGE INTENTIONALLY LEFT BLANK] F-4

203 Appendix G: Forms of the Deeds of Trust

204 [THIS PAGE INTENTIONALLY LEFT BLANK]

205 A CREDIT LINE DEED OF TRUST CREDIT LINE DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES, SECURITY AGREEMENT AND FIXTURE FILING or shall be attached to, or be deemed to be fixtures and a part of, the real property herein conveyed. THIS CREDIT LINE DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES, SECURITY AGREEMENT AND FIXTURE FILING, dated as of November 1, 2012, by and between ALDERSON-BROADDUS COLLEGE, INC. a West Virginia nonstock, nonprofit corporation, hereafter called "Grantor, and Kristian J. Jamieson, a resident of Monongalia County, West Virginia, as Trustee, hereinafter, together with any additional trustee hereafter appointed and any successors thereto, called "Trustees. W I T N E S S E T H: That for and in consideration of the indebtedness and trusts hereinafter set forth and of the sum of $10.00, cash in hand paid, the receipt and sufficiency of which are hereby acknowledged, Grantor does hereby GRANT and CONVEY unto Trustees, with power of sale, all of the following: (a) All of Grantor s estate, and any and all of Grantor s other right, title and interest covering those certain tracts or parcels of land located in the City of Philippi, Barbour County, West Virginia, which property is more particularly described on Schedule 1 attached hereto. (b) All right, title and interest of Grantor now owned or hereafter acquired in and to any and all sidewalks, alleys, streets, and all strips and gores of land adjacent to or used in connection with such real property and all easements and rights of way in connection therewith. (c) All right, title and interest of Grantor in and to all buildings, improvements and fixtures of every kind, and all machinery, equipment and property which are (d) All right, title and interest of Grantor in and to all equipment, materials, supplies and other property of every kind or nature whatsoever, now or hereafter owned by Grantor or in which it has or shall have an interest, procured for incorporation in or to be affixed to buildings or other improvements on the above described real property or appurtenant thereto. (e) All right, title and interest of Grantor in and to all furniture, furnishings, equipment and other items of tangible personal property now owned or in which Grantor has an interest or hereafter acquired by Grantor which are used or useful in the buildings or other improvements on such real property. (f) All rentals, income, issues and profits that may accrue from the aforesaid land and improvements or any part thereof; provided, however, that so long as Grantor shall not be in default hereunder Grantor shall be entitled to collect and receive all said rents, income, issues and profits. All property and interests in property described above, together with the real estate described above, shall secure the indebtedness herein described and covered by this Deed of Trust, and all the foregoing property, interests in property and other rights and interests are herein sometimes referred to collectively as the "Property. TO HAVE AND TO HOLD the Property unto Trustees and their successors in the trust forever; and Grantor does hereby covenant as set forth herein to and with Trustees and with Wells Fargo Bank, N.A., having an address and place of corporate trust business at 123 South Broad Street, 15 th Floor, Suite 1500, MAC: Y , Philadelphia, Pennsylvania 19109, as the trustee (together with any successors thereto, the Master Trustee ) under the 2 Master Trust Indenture dated as of November 1, 2012 (as supplemented and amended, the Master Indenture ), with Grantor and Alderson-Broaddus Endowment Corporation, on behalf of the respective Holders of the Series A Note, Series B Note and Series C Note (together, the Lease Notes ; the Series B Note and the Series C Note are hereinafter referred to together as the Subordinate Lease Notes ) issued by Grantor as Obligated Group Agent and of the Series D Note (the Guaranty Note ; the Series A Note and the Guaranty Note are hereinafter referred to together as the 2012 Senior Notes ; and the 2012 Senior Notes and the Subordinate Lease Notes are hereinafter referred to together as the 2012 Notes ), issued by Grantor as Obligated Group Agent pursuant to the Master Indenture and the Supplemental Master Trust Indenture , dated as of November 1, 2012 (the Supplemental Master Indenture ), and all Obligations issued under the Master Indenture on parity with the 2012 Senior Notes and all Subordinated Obligations issued under the Master Indenture on parity with the Subordinate Lease Notes, as the case may be. Grantor covenants with the Trustees and the Master Trustee, on behalf of the respective Holders of the 2012 Senior Notes and all Obligations issued under the Master Indenture on parity therewith and of the Subordinate Lease Notes and all Subordinated Obligations issued under the Master Indenture on parity therewith, that it will warrant generally the Property; that Grantor has the right to convey the Property to Trustees; that the same is free from any and all liens and encumbrances other than Permitted Encumbrances, as defined in the Master Indenture, and other exceptions, if any, which are approved in writing by the Master Trustee; that Trustees will have quiet possession thereof and that Grantor will execute such further assurances of the Property as may be requisite, including, but not limited to, the execution and delivery of financing statements and such other 3 instruments as the Master Trustee may require to impose the lien hereof more specifically upon any item or items of property, or rights or interests therein, covered by this Deed of Trust. IN TRUST NEVERTHELESS to secure the payment (a)(i) of the Series A Note, in the principal amount of $34,275,000, payable to the order of Wells Fargo Bank, N.A., as trustee (the 2012 Bond Trustee ) for the Related Bonds, as defined in the Master Indenture, and as the assignee of The Philippi Municipal Building Commission (the Building Commission ), the Related Issuer, as defined in the Master Indenture (in such capacities, the Holder of the Series A Note ), a copy of which Series A Note is attached hereto for identification as Exhibit 1-A and which Series A Note is by this reference incorporated herein and made a part hereof; (ii) on a junior and subordinate basis, of the Series B Note, in the principal amount of $2,510,000, payable to the order of the 2012 Bond Trustee for the Related Bonds, as defined in the Master Indenture, and as the assignee of the Building Commission, the Related Issuer, as defined in the Master Indenture (in such capacities, the Holder of the Series B Note ), a copy of which Series B Note is attached hereto for identification as Exhibit 1-B and which Series B Note is by this reference incorporated herein and made a part hereof; (iii) on a junior and subordinate basis, of the Series C Note, in the principal amount of $680,000, payable to the order of the 2012 Bond Trustee for the Related Bonds, as defined in the Master Indenture, and as the assignee of the Building Commission, the Related Issuer, as defined in the Master Indenture (in such capacities, the Holder of the Series C Note ), a copy of which Series C Note is attached hereto for identification as Exhibit 1-C and which Series C Note is by this reference incorporated herein and made a part hereof; and (iv) of the Series D Note, in the principal amount of $37,465,000, payable to the order of the 2012 Bond Trustee for the Related Bonds, as defined in the Master Indenture (in such capacity, the Holder of the Series D Note ), a copy of which Series D Note is attached hereto for identification as Exhibit 1-D and 4 G-1

206 which Series D Note is by this reference incorporated herein and made a part hereof; and (v) also of any and all extensions, modifications and renewals of said 2012 Notes, or any part thereof, however changed in form, manner or amount (together or alternately, as applicable, with respect to the 2012 Senior Notes, the Senior Notes, with respect to the Subordinate Lease Notes, the Subordinate Notes and with respect to either or both the 2012 Senior Notes or the Subordinate Lease Notes, the "Notes"); (b) of other obligations issued under the Master Indenture on a parity with the Senior Notes (together with the Senior Notes, the Senior Obligations ); (c) of other obligations issued under the Master Indenture on a parity with the Subordinate Notes (together with the Subordinate Notes, the Subordinated Obligations and, together with the Senior Obligations, the Obligations ); and (d) of all other indebtedness of Grantor to the Master Trustee or the Holders of the Obligations, or to the Trustees, at any time and from time to time arising hereunder or under the Master Indenture (all of which indebtedness, together with the interest thereon, is sometimes hereinafter collectively referred to as the "Secured Debt"). Grantor shall execute and deliver such supplements to this Deed of Trust as shall be necessary from time to time to include other Obligations issued under the Master Indenture on parity with the Senior Obligations or the Subordinated Obligations, as the case may be. To the extent allowed by law and without further action by the Grantor, the Trustees or the Master Trustee, all Senior Obligations secured hereby shall be secured on parity and all Subordinated Obligations secured hereby shall be secured on parity, in each case as if issued in connection with the initial execution and delivery hereof. Grantor covenants, represents, warrants and agrees as follows: 1. That Grantor will, so long as the Secured Debt, or any part thereof, remains unpaid: (a) pay as and when due and payable all taxes, assessments and other governmental charges and fees that may be levied or assessed against the Property, including the buildings and improvements now situate on the Property, or that may hereafter be erected 5 thereon, and any improvements and additions made therein or thereto from time to time and will furnish annually to the Master Trustee receipts showing the payment of such taxes, assessments, charges and fees; (b) have and keep the buildings and improvements now situate on the Property or that may hereafter be erected thereon, and all other insurable property covered by this Deed of Trust constantly insured against loss or damage by fire and such other casualties, contingencies and hazards as the Master Trustee may require, in one or more responsible and solvent insurance companies authorized to transact business in the State of West Virginia approved by the Master Trustee, and in an amount satisfactory to the Master Trustee, with a standard mortgagee clause, non-contributory, providing that loss or damage shall be payable to the Master Trustee as its interests may appear, and will pay the premiums for such insurance as the same become due and payable and deliver the policy or policies of such insurance and all renewals thereof, to the Master Trustee and, if such property shall be damaged by fire or other casualty insured against, the Master Trustee shall be entitled to receive the proceeds of such insurance to the extent of the unpaid balance of the Secured Debt and shall apply such proceeds to the Secured Debt or to restore the Property, as required by the Related Loan Documents (as defined in the Master Indenture); (c) keep and maintain the Property in good condition and repair and not abandon the same, or any part thereof, nor commit or permit the commission of waste on or in the Property, or any part thereof, or permit any building or improvement to be removed, destroyed, demolished or structurally altered in whole or in part, and Grantor shall comply, and cause all occupants of the Property or those in possession thereof to comply, with all laws, ordinances, rules and regulations relating to the use or maintenance of the Property and with all requirements, directions and orders and notices of violations thereof issued by any governmental agency, body or officer; (d) permit Trustees or the Master Trustee, or any of them, or their agents, to enter and inspect the Property at all reasonable times; (e) pay to Trustees, or to the Master Trustee, upon demand, any and all sums of money, including all costs, expenses and 6 reasonable attorneys' fees, which Trustees or the Master Trustee, or any of them, may incur or expend in any action or proceeding that may concern the Property, or any part thereof or interest therein, including without limitation any eminent domain proceeding, or any action or proceeding to sustain the lien of this Deed of Trust or its priority or in defending any party thereto, or any party secured hereby, against the liens, demands or claims of title of any person, firm or corporation, asserting priority over this Deed of Trust, or asserting title adverse to the title under which Trustees hold, or in the discharge of any such liens, demands or claims, or in connection with any action to foreclose this Deed of Trust, or to recover any indebtedness secured hereby. 2. In the event Grantor fails (i) to pay the principal of and interest on any Obligations when due or to make any other payment required or fails to comply with, perform or carry out any of the provisions of paragraph 1 hereof, or (ii) to perform any of the terms, covenants or agreements by Grantor to be performed under this Deed of Trust or the Master Indenture or is otherwise in default under this Deed of Trust or the Master Indenture, including, but not limited to, failure to pay any advances made by the Master Trustee to protect the lien and security hereof as provided herein and interest on any future advances and all other items of the Secured Debt when due, then, and in any such event, the Master Trustee shall have the right, without notice to or demand upon Grantor or any other person, to make any such payment, take any such action or do any such thing as is reasonably necessary to protect the lien and security hereof as fully and completely as if Grantor made each and every such payment when due, and kept, complied with, performed and carried out the provisions of said paragraph 1 and the Master Indenture in every respect. Without limiting the generality of the foregoing, the Master Trustee may, in any such event, (a) obtain the required insurance covering the Property and pay the premiums thereon or pay any unpaid premiums on any insurance procured by Grantor; (b) pay said taxes, assessments and other governmental charges and fees together with any penalties and 7 interest accrued thereon, and redeem the Property from a tax sale if it has been sold, and shall be subrogated to the lien of the governmental body to which such payment was made; (c) make and pay for any and all repairs which the Master Trustee deems necessary to place or keep the Property in good condition and repair; (d) stop or mitigate waste on or in the Property or any part thereof; (e) stop or prevent the removal, destruction, demolition or structural alteration of any building or improvement on the Property; (f) stop or prevent the violation of any law, ordinance, rule or regulation relating to the use or maintenance of the Property or of any requirement, direction or order or notice of violation thereof issued by any governmental agency, body or officer; and (g) pay all or any part of any sum or sums of money that may be due or payable under the provisions of paragraph l hereof; and Grantor hereby promises to pay to the Master Trustee, upon demand, any and all sums of money paid out or expended by the Master Trustee, for any of the purposes set out in this paragraph, together with interest thereon from the date of payment at the rate of 8% per annum, and agrees that any sum or sums of money so paid by the Master Trustee or by Trustees, or any of them, shall thereupon be and become a part of the Secured Debt, and shall be collectible as such, all without waiver of any right arising from the breach of or default in the performance of any warranty, covenant, condition, provision or agreement herein contained or contained in either of the Note or the Master Indenture, including the right to enter and take possession of the Property, and rent and manage the same, and the right to foreclose this Deed of Trust; but nothing herein contained shall be construed as imposing any duty or obligation upon the Master Trustee, or upon Trustees, to pay any such sum or sums of money herein authorized to be paid, or to take any other action authorized hereunder. 3. (a) For the purposes of this Deed of Trust (i) "hazardous materials" means and includes petroleum products, flammable explosives, radioactive materials, asbestos or any material containing asbestos, polychlorinated biphenyls or any hazardous, toxic or dangerous waste, substance or material defined as such or defined as a hazardous substance or other similar 8 G-2

207 term by, in or for the purposes of any environmental laws and (ii) "environmental laws" means any "superfund" or "superlien" law or any other federal, state or local statute, law, ordinance, code, rule, regulation, order or decree, regulating, relating to or imposing liability or standards of conduct concerning any hazardous materials as may now or at any time hereafter be in effect. Master Trustee harmless from and against all loss, damage and expense, including without limitation, attorneys' fees and costs incurred in the investigation, defense and settlement of claims, that the Master Trustee may incur as the result of or in connection with the assertion against the Master Trustee or any claim directly or indirectly, in whole or in part, as to the (b) Grantor and the Property are in compliance with all material presence or removal of any hazardous materials, or relating to any activities on or affecting the environmental laws. Property, whether prior to or during the term of the Secured Debt, and whether such activity was (c) So long as any of the Obligations is outstanding, Grantor shall carried on by the Grantor or any predecessor in interest of the Grantor or any other person. The provide the Master Trustee, at the expense of Grantor, with such reports of inspection or audits of the Property as the Master Trustee may request, prepared by qualified consultants approved by the Master Trustee, certifying as to the presence or absence of hazardous materials on the Property, and Grantor shall permit the Master Trustee, its agents and employees, to inspect or audit the Property, and for such purpose hereby grants the Master Trustee an easement to enter upon the Property and to conduct all such tests as the Master Trustee shall determine to be necessary. Grantor shall promptly notify the Master Trustee in writing of any order or pending or threatened action by any regulatory agency or other governmental body, or any claims made by any third party relating to environmental laws or hazardous materials on or emanations from the Property and shall promptly furnish the Master Trustee with copies of any correspondence or legal pleadings in connection therewith. The Master Trustee shall have the right, but absolutely no duty, to take any action it deems necessary or desirable, including without limitation appearing in or defending any such claims or actions, all at the cost of the Grantor. (d) Except as disclosed in or otherwise permitted under the Master 4. THIS IS A CREDIT LINE DEED OF TRUST FOR THE PURPOSES Indenture, Grantor shall place or permit to be placed on the Property only such hazardous materials as are required by or consistent with the operation of its facilities, and such hazardous materials shall be used, handled, collected, stored, treated and disposed of in compliance with all applicable environmental laws. If, at any time, it is determined by the Master Trustee that hazardous materials are or may be located on the Property which, under any applicable environmental laws, require special handling in collection, storage, treatment or disposal, the Grantor shall, within 30 days after receiving written notice thereof, take or cause to be taken, at its sole expense, such actions as may be necessary to comply with all applicable environmental laws. OF W. VA. CODE AND SECURES A MAXIMUM AMOUNT NOT TO EXCEED $37,465,000, and this Deed of Trust also is security for the payment of interest on such principal sums and for taxes, insurance premiums and other obligations, including interest thereon, undertaken by the Master Trustee or Trustees pursuant to the provisions of this Deed of Trust or the Master Indenture. This Deed of Trust secures future advances that the Holder of the 2012 Notes has agreed to make to Grantor in accordance with the terms and provisions of a Lease Agreement dated as of November 1, 2012, which future advances are intended to be obligatory within the meaning of W. Va. Code The occurrence of any of the following events shall constitute an event of (e) Grantor shall indemnify the Master Trustee and shall hold the 9 default hereunder (hereinafter called an "Event of Default"), and upon the occurrence of any 10 Event of Default the Secured Debt shall at the option of the Master Trustee immediately become due and payable without notice to or demand on Grantor, or any other person: (a) if default shall be made in the payment as and when due of the Obligations, or any installment or part thereof, or the interest thereon, or of any sum due under the provisions of the Master Indenture or this Deed of Trust or the interest thereon; (b) if default shall be made in the payment, as and when due and payable, of any tax, assessment or other governmental charge or fee or of any insurance premium or if the required insurance is not effected by Grantor or the policies delivered to the Master Trustee as herein required; (c) if there shall be a breach of or default in the performance of any covenant, condition, agreement, warranty or provision contained in the Master Indenture or this Deed of Trust; (d) if Grantor or any other obligor under the Master Indenture shall become insolvent or make an assignment for the benefit of creditors, or if any petition for bankruptcy or arrangement pursuant to the Federal Bankruptcy Act, or any similar federal or state law, shall be filed by or against Grantor or any other obligor under the Master Indenture; (e) if any representation or warranty made or furnished to the Master Trustee by Grantor or any other obligor under the Master Indenture in connection with this Deed of Trust or the Obligations or in the application for the Indebtedness (as defined in the Master Indenture) evidenced by the Obligations or in the Master Indenture or to induce the creditor to fund such Indebtedness proves to have been substantially untrue; (f) if there shall now or hereafter exist upon the Property, or any part thereof, any claim, lien or encumbrance, other than Permitted Encumbrances (as defined in the Master Indenture), which is or might be superior to the lien of this Deed of Trust; (g) except as provided in the Master Indenture, if the Property or any part thereof shall be sold, conveyed or transferred without the prior written consent of the respective holders of the Obligations; or (h) if Grantor shall do or suffer to be done any act or thing which would impair the security for the Secured Debt If any one or more Events of Default shall occur and be continuing, any one or more of the following rights and remedies shall exist, any two or more of which may be exercised concurrently: (a) Trustees or the Master Trustee may forthwith, without notice, separately or jointly: (i) enter into and upon all of the Property, either in person or by agent, and take possession of the Property without process of law, without liability to Grantor or other owner or owners of the Property, and manage and rent the same, or any part thereof, collect and receive the rents, issues and profits thereof (past due, due or to become due) and apply the same to the payment of the Secured Debt, after first deducting the costs and expenses incurred in managing the Property and in collecting said rents, issues and profits (including a commission of 10% of the total amount collected, which shall be paid to the Master Trustee, or to the Trustees, as the case may be, for managing the same and collecting and disbursing said rents, issues and profits accruing therefrom), and after deducting such further amount or amounts as may be necessary to pay or reimburse the Master Trustee and the Trustees for any sum or sums of money paid by them, or any of them, under the provisions hereof, together with interest thereon at the rate of 8% per annum thereon to the date of payment; (ii) have a receiver appointed by any court having jurisdiction to take charge of the Property and collect, receive and apply the rents, issues and profits thereof. In either case, any person or persons in possession of the Property, or any part thereof, shall be deemed a tenant at will and shall at once surrender such possession on demand of the Master Trustee or Trustees or a receiver. It is understood and agreed by and between the parties hereto that nothing herein contained shall be construed as a substitute for, or in derogation of, the right to foreclose this Deed of Trust or as imposing any duty or obligation upon the Master Trustee or upon the Trustees, or any of them, to take charge of the Property or 12 G-3

208 to collect said rents, issues or profit or to have a receiver appointed for such purposes; or (iii) exercise any or all of the rights and remedies provided for in paragraph 3 of this Deed of Trust. assessments or other governmental charges or fees, insurance, repairs, court costs, and all other costs and expenses incurred or paid under the provisions of this Deed of Trust, together with (b) Without notice to or demand on Grantor or any other person, the interest thereon at the rate of 8% per annum from the date of payment; third, to the Master Trustee, the full amount due and unpaid on the Senior Obligations, together with all interest Master Trustee may at its option declare the Secured Debt to be immediately due and payable and upon the exercise of said option the Secured Debt may be collected by proper action, foreclosure of this Deed of Trust, or any other legal or equitable proceeding. accrued thereon to the date of payment, and any other Secured Debt on parity therewith; fourth, to the Master Trustee, the full amount due and unpaid on the Subordinated Obligations, together with all interest accrued thereon to the date of payment, and any other Secured Debt on parity (c) At any time after the exercise by the Master Trustee of the option therewith; and fifth, the balance, if any, to Grantor, its successors or assigns, upon delivery of to declare the Secured Debt to be immediately due and payable, the Trustees, upon the written request of the Master Trustee, shall foreclose upon and sell the Property to satisfy the Secured Debt at public auction at the front door of the courthouse of the county in which the Property is situate, for cash in hand on the day of sale, after first giving notice of such sale by publishing such notice in some newspaper of general circulation published in the county wherein the Property is located, or if there be no such newspaper in a qualified newspaper of general circulation in said county, once a week for two successive weeks preceding the day of sale and after giving notice by certified mail to Grantor and to any subordinate lienholder who has previously notified the Master Trustee by certified mail of the existence of a subordinate lien, at least 20 days prior to the sale, and no other notice of such sale shall be required. Out of the proceeds of such sale Trustees shall pay, first, the costs and expenses of executing this trust, including an amount equal to two percent (2%) of the gross proceeds of sale (5% of the first $300) to Trustees, or to the one so acting, as his or their commission hereunder; second, to Master Trustee and Trustees, all moneys which they or any of them may have paid for taxes, 13 and surrender to the purchaser or purchasers of possession of the Property less the expense, if any, of obtaining such possession. 7. This instrument is to be filed for record in the real estate records of the county in which the Property is located, so as to serve as a fixture filing pursuant to W.Va. Code This instrument shall, with respect to all items of personal property and fixtures subject to the lien hereof, be deemed to grant a security interest to the Master Trustee under the Uniform Commercial Code of West Virginia (the "Code"). In the event of the occurrence of any Event of Default, in addition to the rights, remedies and powers hereinabove set forth, the Master Trustee and the Trustees shall have as to any and all fixtures and personal property covered by this Deed of Trust, all rights, remedies and powers of a secured party under the Code. All rights provided herein, in the Master Indenture or under the Code shall, to the full extent permitted by law, be cumulative. In connection with those rights, to the extent permitted by law, the Master Trustee may, and Trustees shall upon the written request of the Master Trustee, enter onto the real property to take possession of, assemble and collect such personal property or to render it unusable; require Grantor to assemble such personal property and make it 14 available to the Master Trustee or Trustees at a place the Master Trustee or Trustees designate, which is reasonably convenient to both parties. All or any part of such personal property may, at the option of the Master Trustee or Trustees, be combined with all or any part of the remainder of the Property and, consistent with Section 6 hereof, may be sold as an entirety, or such personal property may be sold separately in one or more lots and in such order and manner as the Master Trustee may elect. The Master Trustee or Trustees shall give Grantor written notice of the time and place of any public sale of any such personal property or of the time after which any private sale or other intended disposition of the personal property is to be made by sending notice to Grantor at least 10 days before the time of such sale or other disposition, which provisions for notice Grantor agrees are reasonable. The Master Trustee or Trustees (at the direction of the Master Trustee), upon notice to Grantor, may postpone or cancel any such sale or other disposition and reschedule it without further notice (other than notice of such rescheduled sale or disposition) to Grantor. 9. Grantor agrees that any sale made hereunder may be adjourned from time to time without notice other than oral proclamation of such adjournment at the time and place of sale, or at the time and place of any adjourned sale. 10. In the event that foreclosure proceedings are instituted hereunder but are not completed, Trustees shall be reimbursed for all costs and expenses incurred by them in commencing such proceedings, and, in addition, shall be entitled to, and paid a commission of 1% of the Secured Debt which is outstanding at the time such proceedings are instituted, but in no event shall such commission be less than $100; and all costs and expenses so incurred by Trustees, and such commission, together with interest thereon until paid at the rate of 8% per annum, shall be payable by Grantor on demand, and shall be and become a part of the Secured Debt and shall be collectible as such. 11. Trustees, or either of them, or the survivor thereof, may act in the 15 execution of this trust, and in the event either of Trustees shall act alone, the authority and power of the Trustee so acting shall be as full and complete as if the powers and authority granted to Trustees herein jointly had been granted to such Trustee alone; and either or both of Trustees are hereby authorized to act by agent or attorney in the execution of this trust. It shall not be necessary for any Trustee to be present in person at any foreclosure sale hereunder. 12. It is hereby expressly covenanted and agreed by all parties hereto that the Master Trustee may, at any time and from time to time hereafter, without notice, appoint and substitute another Trustee or Trustees, corporations or persons, in place of the Trustee or Trustees herein named to execute the trust herein created. Upon such appointment, either with or without a conveyance to said substituted Trustee or Trustees by the Trustees herein named, or by any substituted Trustee in case the said right of appointment is exercised more than once, the new and substituted Trustee or Trustees in each instance shall be vested with all the rights, titles, interests, powers, duties and trusts in the premises which are vested in and conferred upon the Trustees herein named; and such new and substituted Trustee or Trustees shall be considered the successors and assigns of the Trustees who are named herein within the meaning of this instrument, and substituted in their place and stead. Each such appointment and substitution shall be evidenced by an instrument in writing which shall recite the parties to, and the book and page of record of, this Deed of Trust, and the description of the real property herein described, which instrument, executed and acknowledged by the Master Trustee and recorded in the office of the Clerk of the County Commission of the County wherein the Property is situate, shall be conclusive proof of the proper substitution and appointment of such successor Trustee or Trustees, and notice of such proper substitution and appointment to all parties in interest. 13. A copy of any notice of trustee's sale under this Deed of Trust shall be served on Grantor by certified mail, return receipt requested, directed to Grantor at the address stated below or such other address given to the Master Trustee in writing by Grantor, subsequent 16 G-4

209 to the execution and delivery of this Deed of Trust. Any other notice (except notice of other liens that may be given to the Master Trustee pursuant to W. Va. Code ) shall be effective upon the deposit of such notice, in writing, in the regular United States mail, postage prepaid, addressed to the party or parties who receive such notice at the following addresses or at such other addresses any such party may give to the other parties in writing: To Grantor: Alderson-Broaddus College, Inc. 101 College Hill Drive P.O. Box 2004 Philippi, West Virginia Attention: President To the Master Trustee: Wells Fargo Bank, N.A. 123 South Broad Street 15th Floor, Suite 1500 MAC: Y Philadelphia, Pennsylvania Attention: Corporate Trust Group To Trustees: Kristian J. Jamieson Steptoe & Johnson PLLC 1085 Van Voorhis Road, Suite 400 P.O. Box 1616 Morgantown, WV It is further understood and agreed between the parties hereto that if any term or provision of this Deed of Trust, the Notes or the Master Indenture should contravene or be in conflict with any law of the State of West Virginia or any other applicable law or regulation, such term or provision is amended and modified to conform with such law. 16. It is further understood and agreed by and between the parties hereto that all covenants, agreements, representations and warranties are made and given jointly and severally by each party signing as Grantor and shall extend to and bind their heirs, devisees, personal representatives, successors and assigns, and shall inure to the benefit of the Master Trustee and the Trustees, and their respective successors and assigns. 17. It is hereby expressly provided that (a) any release of this Deed of Trust or any property hereunder shall be executed by the Master Trustee and (b) no amendment hereto need be executed by the Trustees unless such amendment affects the rights or responsibilities of the Trustees hereunder. [The remainder of this page is intentionally blank.] Notice of other liens given pursuant to W. Va. Code shall be given to the Master Trustee at the above address and shall be effective upon receipt by the Master Trustee. 14. No failure of the Master Trustee or the Trustees to exercise any option herein contained shall constitute a waiver of any right or privilege herein given or granted to the Master Trustee or the Trustees, and a waiver by the Master Trustee or the Trustees of the right to exercise any option as to any breach or default shall not constitute a waiver of the right to exercise the same option, or any other option herein contained, as to another or any continuing or subsequent breach or default WITNESS the following signatures: STATE OF WEST VIRGINIA, COUNTY OF BARBOUR, TO-WIT: ALDERSON-BROADDUS COLLEGE, INC. By: Title: President Alderson Broaddus College Ball Field Tract SCHEDULE 1 PROPERTY DESCRIPTION A parcel of land located in Philippi Corporation, Barbour County, West Virginia and being more particularly described as follows: Beginning at an iron rod found on the eastern side of US Route 119 & 250; Thence with US Route 119 & 250 N E. for feet to an iron rod found at the southwest corner of the Benjamin Howe tract as recorded in Deed Book 423 at page 454; Thence with the Howe tract S E. for feet to an iron rod found in the western line of the Kevin Lyons tract as recorded in Deed Book 389 at page 304; Thence with the Lyons tract S W. for feet, S E. for feet to a found iron rod and S W. for feet to an iron rod found in the northern line of the Sarah Woodford tract as recorded in Will Book 26 at page 370; The foregoing instrument was acknowledged before me this 13th day of November 2012 by Richard A. Creehan, the President of Alderson-Broaddus College, Inc., a West Virginia nonstock, nonprofit corporation, on behalf of said corporation. My commission expires. Thence with the Woodford tract N W. for feet to a found iron pipe, S W. for feet to a found iron rod and N W. for feet to the Point of Beginning, containing 4.21 acres; And being subject to possible rights of ownership to an overlap area along the N W. line; And being the tract conveyed to Alderson Broaddus College in Deed Book 118 at page 34; As shown on the Plat of Survey for Alderson Broaddus College attached and made a part of this description. [Stamp] Notary Public Alderson Broaddus College Main Campus Tract A parcel of land located partially in Philippi Corporation and partially in Philippi District, Barbour County, West Virginia and being more particularly described as follows: Beginning at an iron rod found in the northern line of the City Mobile Home Park tract as recorded in Deed Book 426 at page 153 on the eastern side of West Virginia Secondary Route 119/6; Thence with Route 119/6 N E. for feet, N.06 01E. for feet, N W. for feet, N W. for feet, N W. for feet, N W. for feet, N W. for feet, N W. for feet, N W. for feet, N W. for feet, N W. for feet, N W. for feet and N W. for feet; Thence crossing Route 119/6 N W. for feet to a set iron rod; This Deed of Trust was prepared by: Taunja Willis-Miller, Jackson Kelly PLLC, 150 Clay Street, Suite 500, Morgantown, West Virginia 26501, without examination of title. S-1 Thence S W. for feet to a point in the run; Thence N W. for feet to a point in the run; Thence N W. for feet to a found iron rod; 1 G-5

210 Thence S W. for feet to the center of the Airport Road; Thence with the Airport Road N W. for feet, N W. for feet, N W. for feet, N W. for feet, N W. for feet and N E. for feet; Thence leaving the Airport Road N E. for feet to an iron rod found on the southern side of the Old County Road; Thence with the Old Country Road S E. for feet to a found iron rod; Thence crossing the Old Country Road N E. for feet to an iron rod found at the southeast corner of the Richard Shearer tract as recorded in Deed Book 412 at page 35; Thence with the Shearer tract N E. for feet to a found iron rod, N W. for feet to a 54- inch black oak and N E. for feet to an iron rod set at a post at the southwest corner of the Lewis Bartlett tract as recorded in Deed Book 390 at page 125; Thence with the Bartlett tract (in part) and with the Donovan Stalnaker tract as recorded in Deed Book 310 at page 49 N E. for feet to an iron rod found at a fence corner at the northwest corner of the Conrad Lundeen tract as recorded in Deed Book 419 at page 573; Thence with the Lundeen tract (in part) and with the Timothy Dewitt tract as recorded in Deed Book 366 at page 61 S E. for feet to an iron pipe found at a fence corner; Thence continuing with the Dewitt tract N E. for feet to an iron rod found on the western side of US Route 119 & 250; Thence with US Route 119 & 250 S W. for feet to an iron rod found at the northeast corner of the Crystal Camp tract as recorded in Deed Book 397 at page 289; Thence with the Camp lot N W. for feet to a set iron rod and S W. for feet to an iron rod set on the northern line of Canter Street; Thence N W. for feet to an iron rod set at the northeast corner of the Roman Catholic Diocese tract as recorded in Deed Book 295 at page 505 and Deed Book 298 at page 564; Thence with the Roman Catholic Diocese tract N W. for feet, N W. for feet, N W. for feet, S W. for feet, S W. for feet, N W. for feet, N E. for feet, N E. for feet to a found iron rod, N W. for feet to a found iron rod, S W. for feet to a found iron rod, S E. for feet to a found iron rod and S E. for feet to an iron rod found in the western line of the Woodsboro Addition as recorded in Deed Book 96 at page 478; Thence with Woodsboro Addition S W. for feet to a set iron rod, S W. for feet to a set iron rod, S W. for feet to a set iron rod and S E. for feet to an iron rod set at a stone at the northwest corner of the Joan McDaniel tract as recorded in Deed Book 412 at page 37; Thence with the McDaniel tract S W. for feet to a stone found on the northern side of West Virginia Secondary Route 119/6; Thence with Route 119/6 N E. for feet, N E. for feet, N E. for feet, N E. for feet and N E. for feet to a point in US Route 119 & 250: Thence with US Route 119 & 250 (generally) S E. for feet to a point in the road, S E. for feet to a point on the eastern side of the road, S W. for feet to a point on the western side of the road, S W. for feet to an iron rod set on the western side of the road, S E for feet to a point in the road, S W. for feet to a point in the road, S W. for feet to a point on the western side of the road, S E. for feet to a point on the eastern side of the road, S W. for feet to a point on the eastern side of the road, S W. for feet to a point in the road, S W. for feet to an iron rod set on the western side of the road, S E. for feet to a point in the road, S E. for feet to a point in the road, S E. for feet to a point in the road and S E. for feet to a point in the road, S W. for feet to a point on the western side of the road and S E. for feet to the northern line of the City of Philippi tract as recorded in Deed Book 362 at page 616; Thence with the City of Philippi tract S W. for feet to a found iron pipe and S E. for feet to an iron pipe found in the northern line of the Frank Day tract as recorded in Deed Book 378 at page 475; Thence with the Day tract S W. for feet to a found iron pipe and S E. for feet to a 48- inch black oak on the northern bank of Shooks Run and at the northeast corner of the Lela Reed tract as recorded in Will Book 31 at page 488; Thence with the Reed tract N W. for feet to a point on the northern bank of the run; Thence continuing with the Reed tract and with the Barbour County Senior Center tract as recorded in Deed Book 447 at page 565 N W. for feet to an iron rod found at a stone; Thence continuing with the Barbour County Senior Center tract and with the Sharon Campbell tract as recorded in Will Book 04 at page 104 and with the J&B Rental tract as recorded in Deed Book 425 at page 473 S W. for feet to a stone at the northeast corner of the City Mobile Home tract as recorded in Deed Book 426 at page 153; Thence with the City Mobile Home Park N W. for feet to the Point of Beginning, containing acres; And excepting and being subject to various residential lots conveyed to staff and faculty, the right of ways for West Virginia Secondary Routes 119/6 and 119/20, the right of way for US Route 119 & 250, the rights of the old Beverly-Fairmont Turnpike, the right of way for an old country road, the City of Philippi water tanks and booster station and various rights of way for utilities and drainage; And being a part of the tracts conveyed to Alderson Broaddus College by the following deeds: Deed Book 214 at page 176, Deed Book 214 at page 532, Deed Book 377 at page 90, Deed Book 245 at page 400, Deed Book 260 at page 389, Deed Book 196 at page 299, Deed Book 447 at page 503, Deed Book 73 at page 258, Deed Book 118 at page 34, Deed Book 222 at page 222, Deed Book 275 at page 400, Deed Book 385 at page 458, Deed Book 234 at page 348, Deed Book 171 at page 28, and Deed Book 205 at page 231; As shown on the Plat of Survey for Alderson Broaddus College, dated April 2012, prepared by Dennis L. Fisher, P.S. #670. Thence S W. for feet to the center of Route 119/6; 2 3 [ATTACH PLAT OF SURVEY OF ALDERSON-BROADDUS COLLEGE] EXHIBIT 1-A SERIES A NOTE 4 G-6

211 EXHIBIT 1-B SERIES B NOTE EXHIBIT 1-C SERIES C NOTE EXHIBIT 1-D SERIES D NOTE A CREDIT LINE DEED OF TRUST CREDIT LINE DEED OF TRUST, MINERAL FINANCING STATEMENT, AS-EXTRACTED COLLATERAL FILING AND FIXTURE FILING THIS CREDIT LINE DEED OF TRUST, MINERAL FINANCING STATEMENT, AS-EXTRACTED COLLATERAL FILING AND FIXTURE FILING, dated as of November 1, 2012, by and between ALDERSON-BROADDUS COLLEGE, INC., a West Virginia nonstock, nonprofit corporation, hereafter called "Grantor, and Kristian J. Jamieson, a resident of Monongalia County, West Virginia, as Trustee, hereinafter, together with any additional trustee hereafter appointed and any successors thereto, called "Trustees. W I T N E S S E T H: That for and in consideration of the indebtedness and trusts hereinafter set forth and of the sum of $10.00, cash in hand paid, the receipt and sufficiency of which are hereby acknowledged, Grantor does hereby ASSIGN, GRANT and CONVEY unto Trustees, with power of sale, all of the following: G-7 (a) All of Grantor s respective right, title and interest in now owned or hereafter acquired, installed, maintained or in force in and to all of the following: i. All coal, oil, gas, coalbed methane gas and other minerals owned by or leased to the Grantor located upon, under or in the lands described or referred to in Schedule I ( Land ), included within the Land in place and as produced and extracted (as produced and extracted and including, but not limited to "as extracted collateral" as defined in the UCC, the "as-extracted collateral"), and all rights, privileges, titles and interests appurtenant and relating thereto and in connection therewith (including, without limitation, rights, privileges, titles and interests for the development, production, extraction, processing, treatment, storage, transportation and sale and other disposition of minerals and all contracts and other agreements relating to such activities, as well as all accounts, accounts receivable, contract rights, other rights to the payments of monies, chattel paper

212 and general intangibles arising from or relating to such activities) (the "Mineral Interests"); ii. All goods, inventory, cut timber, accounts, general intangibles, instruments, documents, chattel paper, equipment and all other personal property of any kind or character (including, but not limited to "goods," "inventory," "accounts," "general intangibles," "instruments," "documents," "chattel paper," and "equipment" as defined in the UCC) as now or hereafter used in connection with, arising from or otherwise related to the Mineral Interests (the "Personalty"); iii. All of Grantor s rights, interests and estates created under those certain servitudes, easements, rights of way, privileges, franchises, prescriptions, licenses, leases, permits and/or other rights, together with any amendments, renewals, extensions, supplements, modifications or other agreements related thereto and further together with any other servitudes, easements, rights of way, privileges, franchises, prescriptions, licenses, leases, permits and/or other rights in any county, all shown on Schedule II attached hereto and made a part hereof (whether presently existing or hereafter created and whether now owned or hereafter acquired by operation of law or otherwise) (herein collectively referred to as the Servitudes ); iv. Without limitation of the foregoing, all of Grantor s right, title and interest (whether now owned or hereafter acquired by operation of law or otherwise) in and to all transportation, gathering and transmission systems relating to the Mineral Interests, including, without limitation, any transportation, gathering or transportation systems located in any county shown on Schedule I, and all wells, wellheads, pipes, valves, gauges, meters and other measuring equipment, regulators, extractors, tubing, pipelines, flowlines, fuel lines, tanks, 2 facilities, improvements, fittings, compressors, dehydration units, separators, meters, metering stations, buildings, fittings, pipe, pipe connector, drips, storage facilities, absorbers, dehydrators, and power, telephone and telegraph lines, materials and other improvements, fixtures and/or personal property located on or under the Servitudes and/or in or on or otherwise related to such transportation, gathering and transmission systems (the properties, rights and interests described in this paragraph being herein collectively referred to as the Gathering Systems ); v. All reserves, escrows, impounds or deposit accounts (including, but not limited to "deposit accounts" as defined in the UCC) maintained by any Grantor with respect to the Mineral Interests (the "Deposit Accounts"); vi. All of Grantor s right, title, and interest in and to all accounts, receivables, rents, revenues, royalties, income, proceeds, profits, security and other types of deposits and other benefits paid or payable to Grantor by parties to leases or otherwise for using, leasing, licensing, possessing, operating from, residing in, selling or otherwise enjoying all or any part of the Mineral Interests (the "Rents"); vii. All of Grantor s interest in and rights under (whether now owned or hereafter acquired by operation of laws or otherwise) all presently existing and hereafter created agreements, such as construction contracts, architects' agreements, engineers' contracts, utility contracts, maintenance agreements, operating and management agreements, equipment leases, service contracts, production sales contracts, hedge or swap agreements, processing agreements, transportation agreements, gas balancing agreements, farmout and/or farm-in agreements, unitization or pooling agreements, salt water disposal agreements, 3 area of mutual interest agreements, listing agreements, guaranties, warranties, all permits (subject to any required regulatory approval), licenses, certificates and entitlements in any way relating to the construction, use, occupancy, operation, maintenance, enjoyment or ownership of all or any part of the Mineral Interests (collectively the "Operating Agreements ); viii. Without limitation of any other provision hereof, all of Grantor s right, title and interest in and to all payments received in lieu of production from the Lands (regardless of whether such payments accrued, and/or the events which gave rise to such payments occurred, on or before or after the date hereof), including, without limitation, take or pay payments and similar payments, payments received in settlement of or pursuant to a judgment rendered with respect to take or pay or similar obligations or other obligations under a production sales contract, payments received in buyout or buydown or other settlement of a production sales contract, and payments received under a gas balancing or similar agreement as a result of (or received otherwise in settlement of or pursuant to judgment rendered with respect to) rights held by Grantor as a result of Grantor (and/or its predecessors in title) taking or having taken less gas from lands covered by such properties (or lands pooled or unitized therewith) than their ownership of such properties would entitle them to receive (the payments described herein being called Payments in Lieu of Production ); ix. All property tax refunds payable with respect to all or any part of the Mineral Interests (the "Tax Refunds"); x. All insurance policies, unearned premiums therefor and proceeds from such policies covering any of the Property (defined below) described herein (the "Insurance"); 4 xi. All awards, damages, remunerations, reimbursements, settlements or compensation made by any governmental authority pertaining to any condemnation or other taking (or any purchase in lieu thereof) of all or any part of the Mineral Interests (the "Condemnation Awards"); xii. All rights, estates, powers, privileges, tenements, hereditaments, rights-of-way, easements, appendages and appurtenances appertaining to all or any part of the foregoing interests and properties ( Other Rights ); xiii. All Grantor s rights, title and interest in and to all geological, geophysical, engineering, accounting, title, legal and other technical or business data relating to the Mineral Interests ( Business Data ); and xiv. All accessions to, products of, and replacements and substitutions for any of the foregoing and all proceeds thereof (including, but not limited to "proceeds" and "accessions" as defined in the UCC), whether such proceeds or payments are goods, money, documents, instruments, chattel paper, securities, accounts, payment intangibles, fixtures or other assets (the "Proceeds"). (b) All property and interests in property described above shall secure the indebtedness herein described and covered by this Deed of Trust, and all the foregoing interests in property and other rights and interests are herein sometimes referred to collectively as the "Property. TO HAVE AND TO HOLD the Property unto Trustees and their successors in the trust forever; and Grantor does hereby covenant as set forth herein to and with Trustees and with Wells Fargo Bank, N.A., having an address and place of corporate trust business at 123 South Broad Street, 15 th Floor, Suite 1500, MAC: Y , Philadelphia, Pennsylvania 19109, as the trustee (together with any successors thereto, the Master Trustee ) under the Master Trust Indenture dated as of November 1, 2012 (as supplemented and amended, the 5 G-8

213 Master Indenture ), with Grantor and Alderson-Broaddus Endowment Corporation, on behalf of the respective Holders of the Series A Note, Series B Note and Series C Note (together, the Lease Notes ; the Series B Note and the Series C Note are hereinafter referred to together as the Subordinate Lease Notes ) issued by Grantor as Obligated Group Agent and of the Series D Note (the Guaranty Note ; the Series A Note and the Guaranty Note are hereinafter referred to together as the 2012 Senior Notes ; and the 2012 Senior Notes and the Subordinate Lease Notes are hereinafter referred to together as the 2012 Notes ), issued by Grantor as Obligated Group Agent pursuant to the Master Indenture and the Supplemental Master Trust Indenture , dated as of November 1, 2012 (the Supplemental Master Indenture ), and all Obligations issued under the Master Indenture on parity with the 2012 Senior Notes and all Subordinated Obligations issued under the Master Indenture on parity with the Subordinate Lease Notes, as the case may be. Grantor covenants with the Trustees and the Master Trustee, on behalf of the respective Holders of the 2012 Senior Notes and all Obligations issued under the Master Indenture on parity therewith and of the Subordinate Lease Notes and all Subordinated Obligations issued under the Master Indenture on parity therewith, that it will warrant generally the Property; that Grantor has the right to convey the Property to Trustees; that the same is free from any and all liens and encumbrances other than Permitted Encumbrances, as defined in the Master Indenture, and other exceptions, if any, which are approved in writing by the Master Trustee; that Trustees will have quiet possession thereof and that Grantor will execute such further assurances of the Property as may be requisite, including, but not limited to, the execution and delivery of financing statements and such other instruments as the Master Trustee may require to impose the lien hereof more specifically upon any item or items of property, or rights or interests therein, covered by this Deed of Trust. 6 IN TRUST NEVERTHELESS to secure the payment (a)(i) of the Series A Note, in the principal amount of $34,275,000, payable to the order of Wells Fargo Bank, N.A., as trustee (the 2012 Bond Trustee ) for the Related Bonds, as defined in the Master Indenture, and as the assignee of The Philippi Municipal Building Commission (the Building Commission ), the Related Issuer, as defined in the Master Indenture (in such capacities, the Holder of the Series A Note ), a copy of which Series A Note is attached hereto for identification as Exhibit 1-A and which Series A Note is by this reference incorporated herein and made a part hereof; (ii) on a junior and subordinate basis, of the Series B Note, in the principal amount of $2,510,000, payable to the order of the 2012 Bond Trustee for the Related Bonds, as defined in the Master Indenture, and as the assignee of the Building Commission, the Related Issuer, as defined in the Master Indenture (in such capacities, the Holder of the Series B Note ), a copy of which Series B Note is attached hereto for identification as Exhibit 1-B and which Series B Note is by this reference incorporated herein and made a part hereof; (iii) on a junior and subordinate basis, of the Series C Note, in the principal amount of $680,000, payable to the order of the 2012 Bond Trustee for the Related Bonds, as defined in the Master Indenture, and as the assignee of the Building Commission, the Related Issuer, as defined in the Master Indenture (in such capacities, the Holder of the Series C Note ), a copy of which Series C Note is attached hereto for identification as Exhibit 1-C and which Series C Note is by this reference incorporated herein and made a part hereof; and (iv) of the Series D Note, in the principal amount of $37,465,000, payable to the order of the 2012 Bond Trustee for the Related Bonds, as defined in the Master Indenture (in such capacity, the Holder of the Series D Note ), a copy of which Series D Note is attached hereto for identification as Exhibit 1-D and which Series D Note is by this reference incorporated herein and made a part hereof; and (v) also of any and all extensions, modifications and renewals of said 2012 Notes, or any part 7 thereof, however changed in form, manner or amount (together or alternately, as applicable, with respect to the 2012 Senior Notes, the Senior Notes, with respect to the Subordinate Lease Notes, the Subordinate Notes and with respect to either or both the 2012 Senior Notes or the Subordinate Lease Notes, the "Notes"); (b) of other obligations issued under the Master Indenture on a parity with the Senior Notes (together with the Senior Notes, the Senior Obligations ); (c) of other obligations issued under the Master Indenture on a parity with the Subordinate Notes (together with the Subordinate Notes, the Subordinated Obligations and, together with the Senior Obligations, the Obligations ); and (d) of all other indebtedness of Grantor to the Master Trustee or the Holders of the Obligations, or to the Trustees, at any time and from time to time arising hereunder or under the Master Indenture (all of which indebtedness, together with the interest thereon, is sometimes hereinafter collectively referred to as the "Secured Debt"). Grantor shall execute and deliver such supplements to this Deed of Trust as shall be necessary from time to time to include other Obligations issued under the Master Indenture on parity with the Senior Obligations or the Subordinated Obligations, as the case may be. To the extent allowed by law and without further action by the Grantor, the Trustees or the Master Trustee, all Senior Obligations secured hereby shall be secured on parity and all Subordinated Obligations secured hereby shall be secured on parity, in each case as if issued in connection with the initial execution and delivery hereof. Grantor covenants, represents, warrants and agrees as follows: 1. That Grantor will, so long as the Secured Debt, or any part thereof, remains unpaid: (a) pay as and when due and payable all taxes, assessments and other governmental charges and fees that may be levied or assessed against the Property, including the buildings and improvements now situate on the Property, or that may hereafter be erected thereon, and any improvements and additions made therein or thereto from time to time and will furnish annually to the Master Trustee receipts showing the payment of such taxes, assessments, 8 charges and fees; (b) have and keep the building and improvements now situate on the Property or that may hereafter be erected thereon, and all other insurable property covered by this Deed of Trust constantly insured against loss or damage by fire and such other casualties, contingencies and hazards as the Master Trustee may require, in one or more responsible and solvent insurance companies authorized to transact business in the State of West Virginia approved by the Master Trustee, and in an amount satisfactory to the Master Trustee, with a standard mortgagee clause, non-contributory, providing that loss or damage shall be payable to the Master Trustee as its interests may appear, and will pay the premiums for such insurance as the same become due and payable and deliver the policy or policies of such insurance and all renewals thereof, to the Master Trustee and, if such property shall be damaged by fire or other casualty insured against, the Master Trustee shall be entitled to receive the proceeds of such insurance to the extent of the unpaid balance of the Secured Debt and shall apply such proceeds to the Secured Debt or to restore the Property, as required by the Related Loan Documents (as defined in the Master Indenture); (c) keep and maintain the Property in good condition and repair and not abandon the same, or any part thereof, nor commit or permit the commission of waste on or in the Property, or any part thereof, or permit any building or improvement to be removed, destroyed, demolished or structurally altered in whole or in part, and Grantor shall comply, and cause all occupants of the Property or those in possession thereof to comply, with all laws, ordinances, rules and regulations relating to the use or maintenance of the Property and with all requirements, directions and orders and notices of violations thereof issued by any governmental agency, body or officer; (d) permit Trustees or the Master Trustee, or any of them, or their agents, to enter and inspect the Property at all reasonable times; (e) pay to Trustees, or to the Master Trustee, upon demand, any and all sums of money, including all costs, expenses and reasonable attorneys' fees, which Trustees or the Master Trustee, or any of them, may incur or expend in any action or proceeding that may concern the Property, or any part thereof or interest 9 G-9

214 therein, including without limitation any eminent domain proceeding, or any action or proceeding to sustain the lien of this Deed of Trust or its priority or in defending any party thereto, or any party secured hereby, against the liens, demands or claims of title of any person, firm or corporation, asserting priority over this Deed of Trust, or asserting title adverse to the title under which Trustees hold, or in the discharge of any such liens, demands or claims, or in connection with any action to foreclose this Deed of Trust, or to recover any indebtedness secured hereby. 2. In the event Grantor fails (i) to pay the principal of and interest on any Obligations when due or to make any other payment required or fails to comply with, perform or carry out any of the provisions of paragraph 1 hereof, or (ii) to perform any of the terms, covenants or agreements by Grantor to be performed under this Deed of Trust or the Master Indenture or is otherwise in default under this Deed of Trust or the Master Indenture, including, but not limited to, failure to pay any advances made by the Master Trustee to protect the lien and security hereof as provided herein and interest on any future advances and all other items of the Secured Debt when due, then, and in any such event, the Master Trustee shall have the right, without notice to or demand upon Grantor or any other person, to make any such payment, take any such action or do any such thing as is reasonably necessary to protect the lien and security hereof as fully and completely as if Grantor made each and every such payment when due, and kept, complied with, performed and carried out the provisions of said paragraph 1 and the Master Indenture in every respect. Without limiting the generality of the foregoing, the Master Trustee may, in any such event, (a) obtain the required insurance covering the Property and pay the premiums thereon or pay any unpaid premiums on any insurance procured by Grantor; (b) pay said taxes, assessments and other governmental charges and fees together with any penalties and interest accrued thereon, and redeem the Property from a tax sale if it has been sold, and shall be subrogated to the lien of the governmental body to which such payment was made; (c) make and 10 pay for any and all repairs which the Master Trustee deems necessary to place or keep the Property in good condition and repair; (d) stop or mitigate waste on or in the Property or any part thereof; (e) stop or prevent the removal, destruction, demolition or structural alteration of any building or improvement on the Property; (f) stop or prevent the violation of any law, ordinance, rule or regulation relating to the use or maintenance of the Property or of any requirement, direction or order or notice of violation thereof issued by any governmental agency, body or officer; and (g) pay all or any part of any sum or sums of money that may be due or payable under the provisions of paragraph l hereof; and Grantor hereby promises to pay to the Master Trustee, upon demand, any and all sums of money paid out or expended by the Master Trustee, for any of the purposes set out in this paragraph, together with interest thereon from the date of payment at the rate of 8% per annum, and agrees that any sum or sums of money so paid by the Master Trustee or by Trustees, or any of them, shall thereupon be and become a part of the Secured Debt, and shall be collectible as such, all without waiver of any right arising from the breach of or default in the performance of any warranty, covenant, condition, provision or agreement herein contained or contained in either of the Note or the Master Indenture, including the right to enter and take possession of the Property, and rent and manage the same, and the right to foreclose this Deed of Trust; but nothing herein contained shall be construed as imposing any duty or obligation upon the Master Trustee, or upon Trustees, to pay any such sum or sums of money herein authorized to be paid, or to take any other action authorized hereunder. 3. (a) For the purposes of this Deed of Trust (i) "hazardous materials" means and includes petroleum products, flammable explosives, radioactive materials, asbestos or any material containing asbestos, polychlorinated biphenyls or any hazardous, toxic or dangerous waste, substance or material defined as such or defined as a hazardous substance or other similar term by, in or for the purposes of any environmental laws and (ii) "environmental laws" means any "superfund" or "superlien" law or any other federal, state or local statute, law, ordinance, 11 code, rule, regulation, order or decree, regulating, relating to or imposing liability or standards of conduct concerning any hazardous materials as may now or at any time hereafter be in effect. (b) Grantor and the Property are in compliance with all material environmental laws. (c) So long as any of the Obligations is outstanding, Grantor shall provide the Master Trustee, at the expense of Grantor, with such reports of inspection or audits of the Property as the Master Trustee may request, prepared by qualified consultants approved by the Master Trustee, certifying as to the presence or absence of hazardous materials on the Property, and Grantor shall permit the Master Trustee, its agents and employees, to inspect or audit the Property, and for such purpose hereby grants the Master Trustee an easement to enter upon the Property and to conduct all such tests as the Master Trustee shall determine to be necessary. (d) Except as disclosed in or otherwise permitted under the Master Indenture, Grantor shall place or permit to be placed on the Property only such hazardous materials as are required by or consistent with the extraction or other operations in connection with the Mineral Interests, and such hazardous materials shall be used, handled, collected, stored, treated and disposed of in compliance with all applicable environmental laws. If, at any time, it is determined by the Master Trustee that hazardous materials are or may be located on the Property which, under any applicable environmental laws, require special handling in collection, storage, treatment or disposal, the Grantor shall, within 30 days after receiving written notice thereof, take or cause to be taken, at its sole expense, such actions as may be necessary to comply with all applicable environmental laws. (e) Grantor shall indemnify the Master Trustee and shall hold the Master Trustee harmless from and against all loss, damage and expense, including without limitation, attorneys' fees and costs incurred in the investigation, defense and settlement of 12 claims, that the Master Trustee may incur as the result of or in connection with the assertion against the Master Trustee or any claim directly or indirectly, in whole or in part, as to the presence or removal of any hazardous materials, or relating to any activities on or affecting the Property, whether prior to or during the term of the Secured Debt, and whether such activity was carried on by the Grantor or any predecessor in interest of the Grantor or any other person. The Grantor shall promptly notify the Master Trustee in writing of any order or pending or threatened action by any regulatory agency or other governmental body, or any claims made by any third party relating to environmental laws or hazardous materials on or emanations from the Property and shall promptly furnish the Master Trustee with copies of any correspondence or legal pleadings in connection therewith. The Master Trustee shall have the right, but absolutely no duty, to take any action it deems necessary or desirable, including without limitation appearing in or defending any such claims or actions, all at the cost of the Grantor. 4. THIS IS A CREDIT LINE DEED OF TRUST FOR THE PURPOSES OF W. VA. CODE AND SECURES A MAXIMUM AMOUNT NOT TO EXCEED $37,465,000, and this Deed of Trust also is security for the payment of interest on such principal sums and for taxes, insurance premiums and other obligations, including interest thereon, undertaken by the Master Trustee or Trustees pursuant to the provisions of this Deed of Trust or the Master Indenture. This Deed of Trust secures future advances that the Holder of the 2012 Notes has agreed to make to Grantor in accordance with the terms and provisions of a Lease Agreement dated as of November 1, 2012, which future advances are intended to be obligatory within the meaning of W. Va. Code The occurrence of any of the following events shall constitute an event of default hereunder (hereinafter called an "Event of Default"), and upon the occurrence of any Event of Default the Secured Debt shall at the option of the Master Trustee immediately become due and payable without notice to or demand on Grantor, or any other person: (a) if default shall 13 G-10

215 be made in the payment as and when due of the Obligations, or any installment or part thereof, or the interest thereon, or of any sum due under the provisions of the Master Indenture or this Deed of Trust or the interest thereon; (b) if default shall be made in the payment, as and when due and payable, of any tax, assessment or other governmental charge or fee or of any insurance premium or if the required insurance is not effected by Grantor or the policies delivered to the Master Trustee as herein required; (c) if there shall be a breach of or default in the performance of any covenant, condition, agreement, warranty or provision contained in the Master Indenture or this Deed of Trust; (d) if Grantor or any other obligor under the Master Indenture shall become insolvent or make an assignment for the benefit of creditors, or if any petition for bankruptcy or arrangement pursuant to the Federal Bankruptcy Act, or any similar federal or state law, shall be filed by or against Grantor or any other obligor under the Master Indenture; (e) if any representation or warranty made or furnished to the Master Trustee by Grantor or any other obligor under the Master Indenture in connection with this Deed of Trust or the Obligations or in the application for the Indebtedness (as defined in the Master Indenture) evidenced by the Obligations or in the Master Indenture or to induce the creditor to fund such Indebtedness proves to have been substantially untrue; (f) if there shall now or hereafter exist upon the Property, or any part thereof, any claim, lien or encumbrance, other than Permitted Encumbrances (as defined in the Master Indenture), which is or might be superior to the lien of this Deed of Trust; (g) except as provided in the Master Indenture, if the Property or any part thereof shall be sold, conveyed or transferred without the prior written consent of the respective holders of the Obligations; or (h) if Grantor shall do or suffer to be done any act or thing which would impair the security for the Secured Debt If any one or more Events of Default shall occur and be continuing, any one or more of the following rights and remedies shall exist, any two or more of which may be exercised concurrently: (a) Trustees or the Master Trustee may forthwith, without notice, separately or jointly: (i) enter into and upon all of the Property, either in person or by agent, and take possession of the Property without process of law, without liability to Grantor or other owner or owners of the Property, and manage and rent the same, or any part thereof, collect and receive the rents, issues and profits thereof (past due, due or to become due) and apply the same to the payment of the Secured Debt, after first deducting the costs and expenses incurred in managing the Property and in collecting said rents, issues and profits (including a commission of 10% of the total amount collected, which shall be paid to the Master Trustee, or to the Trustees, as the case may be, for managing the same and collecting and disbursing said rents, issues and profits accruing therefrom), and after deducting such further amount or amounts as may be necessary to pay or reimburse the Master Trustee and the Trustees for any sum or sums of money paid by them, or any of them, under the provisions hereof, together with interest thereon at the rate of 8% per annum thereon to the date of payment; (ii) have a receiver appointed by any court having jurisdiction to take charge of the Property and collect, receive and apply the rents, issues and profits thereof. In either case, any person or persons in possession of the Property, or any part thereof, shall be deemed a tenant at will and shall at once surrender such possession on demand of the Master Trustee or Trustees or a receiver. It is understood and agreed by and between the parties hereto that nothing herein contained shall be construed as a substitute for, or in derogation of, the right to foreclose this Deed of Trust or as imposing any duty or obligation upon the Master Trustee or upon the Trustees, or any of them, to take charge of the Property or to collect said rents, issues or profit or to have a receiver appointed for such purposes; or (iii) exercise any or all of the rights and remedies provided for in paragraph 3 of this Deed of Trust. 15 (b) Without notice to or demand on Grantor or any other person, the Master Trustee may at its option declare the Secured Debt to be immediately due and payable and upon the exercise of said option the Secured Debt may be collected by proper action, foreclosure of this Deed of Trust, or any other legal or equitable proceeding. (c) At any time after the exercise by the Master Trustee of the option to declare the Secured Debt to be immediately due and payable, the Trustees, upon the written request of the Master Trustee, shall foreclose upon and sell the Property to satisfy the Secured Debt at public auction at the front door of the courthouse of the county in which the Property is situate, for cash in hand on the day of sale, after first giving notice of such sale by publishing such notice in some newspaper of general circulation published in the county wherein the Property is located, or if there be no such newspaper in a qualified newspaper of general circulation in said county, once a week for two successive weeks preceding the day of sale and after giving notice by certified mail to Grantor and to any subordinate lienholder who has previously notified the Master Trustee by certified mail of the existence of a subordinate lien, at least 20 days prior to the sale, and no other notice of such sale shall be required. Out of the proceeds of such sale Trustees shall pay, first, the costs and expenses of executing this trust, including an amount equal to two percent (2%) of the gross proceeds of sale (5% of the first $300) to Trustees, or to the one so acting, as his or their commission hereunder; second, to Master Trustee and Trustees, all moneys which they or any of them may have paid for taxes, assessments or other governmental charges or fees, insurance, repairs, court costs, and all other costs and expenses incurred or paid under the provisions of this Deed of Trust, together with interest thereon at the rate of 8% per annum from the date of payment; third, to the Master Trustee, the full amount due and unpaid on the Senior Obligations, together with all interest 16 accrued thereon to the date of payment, and any other Secured Debt on parity therewith; fourth, to the Master Trustee, the full amount due and unpaid on the Subordinated Obligations, together with all interest accrued thereon to the date of payment, and any other Secured Debt on parity therewith; and fifth, the balance, if any, to Grantor, its successors or assigns, upon delivery of and surrender to the purchaser or purchasers of possession of the Property less the expense, if any, of obtaining such possession. 7. This instrument is to be filed for record in the real estate records of the county in which the Property is located, so as to serve as a fixture filing pursuant to W.Va. Code This instrument shall, with respect to all items of personal property and fixtures subject to the lien hereof, be deemed to grant a security interest to the Master Trustee under the Uniform Commercial Code of West Virginia (the "UCC"). In the event of the occurrence of any Event of Default, in addition to the rights, remedies and powers hereinabove set forth, the Master Trustee and the Trustees shall have as to any and all fixtures and personal property covered by this Deed of Trust, all rights, remedies and powers of a secured party under the UCC. All rights provided herein, in the Master Indenture or under the UCC shall, to the full extent permitted by law, be cumulative. In connection with those rights, to the extent permitted by law, the Master Trustee may, and Trustees shall upon the written request of the Master Trustee, enter onto the real property to take possession of, assemble and collect such personal property or to render it unusable; require Grantor to assemble such personal property and make it available to the Master Trustee or Trustees at a place the Master Trustee or Trustees designate, which is reasonably convenient to both parties. All or any part of such personal property may, at the option of the Master Trustee or Trustees, be combined with all or any part of the remainder of the Property and, consistent with Section 6 hereof, may be sold as an entirety, or such personal 17 G-11

216 property may be sold separately in one or more lots and in such order and manner as the Master Trustee may elect. The Master Trustee or Trustees shall give Grantor written notice of the time and place of any public sale of any such personal property or of the time after which any private sale or other intended disposition of the personal property is to be made by sending notice to Grantor at least 10 days before the time of such sale or other disposition, which provisions for notice Grantor agrees are reasonable. The Master Trustee or Trustees (at the direction of the Master Trustee), upon notice to Grantor, may postpone or cancel any such sale or other disposition and reschedule it without further notice (other than notice of such rescheduled sale or disposition) to Grantor. 9. Grantor agrees that any sale made hereunder may be adjourned from time to time without notice other than oral proclamation of such adjournment at the time and place of sale, or at the time and place of any adjourned sale. 10. In the event that foreclosure proceedings are instituted hereunder but are not completed, Trustees shall be reimbursed for all costs and expenses incurred by them in commencing such proceedings, and, in addition, shall be entitled to, and paid a commission of 1% of the Secured Debt which is outstanding at the time such proceedings are instituted, but in no event shall such commission be less than $100; and all costs and expenses so incurred by Trustees, and such commission, together with interest thereon until paid at the rate of 8% per annum, shall be payable by Grantor on demand, and shall be and become a part of the Secured Debt and shall be collectible as such. 11. Trustees, or either of them, or the survivor thereof, may act in the execution of this trust, and in the event either of Trustees shall act alone, the authority and power of the Trustee so acting shall be as full and complete as if the powers and authority granted to Trustees herein jointly had been granted to such Trustee alone; and either or both of Trustees are hereby authorized to act by agent or attorney in the execution of this trust. It shall not be 18 necessary for any Trustee to be present in person at any foreclosure sale hereunder. 12. It is hereby expressly covenanted and agreed by all parties hereto that the Master Trustee may, at any time and from time to time hereafter, without notice, appoint and substitute another Trustee or Trustees, corporations or persons, in place of the Trustee or Trustees herein named to execute the trust herein created. Upon such appointment, either with or without a conveyance to said substituted Trustee or Trustees by the Trustees herein named, or by any substituted Trustee in case the said right of appointment is exercised more than once, the new and substituted Trustee or Trustees in each instance shall be vested with all the rights, titles, interests, powers, duties and trusts in the premises which are vested in and conferred upon the Trustees herein named; and such new and substituted Trustee or Trustees shall be considered the successors and assigns of the Trustees who are named herein within the meaning of this instrument, and substituted in their place and stead. Each such appointment and substitution shall be evidenced by an instrument in writing which shall recite the parties to, and the book and page of record of, this Deed of Trust, and the description of the real property herein described, which instrument, executed and acknowledged by the Master Trustee and recorded in the office of the Clerk of the County Commission of the County wherein the Property is situate, shall be conclusive proof of the proper substitution and appointment of such successor Trustee or Trustees, and notice of such proper substitution and appointment to all parties in interest. 13. A copy of any notice of trustee's sale under this Deed of Trust shall be served on Grantor by certified mail, return receipt requested, directed to Grantor at the address stated below or such other address given to the Master Trustee in writing by Grantor, subsequent to the execution and delivery of this Deed of Trust. Any other notice (except notice of other liens that may be given to the Master Trustee pursuant to W. Va. Code ) shall be effective upon the deposit of such notice, in writing, in the regular United States mail, postage 19 prepaid, addressed to the party or parties who receive such notice at the following addresses or at such other addresses any such party may give to the other parties in writing: To Grantor: Alderson-Broaddus College, Inc. 101 College Hill Drive P.O. Box 2004 Philippi, West Virginia Attention: President To the Master Trustee: Wells Fargo Bank, N.A. 123 South Broad Street 15th Floor, Suite 1500 MAC: Y Philadelphia, Pennsylvania Attention: Corporate Trust Group To Trustees: Kristian J. Jamieson Steptoe & Johnson PLLC 1085 Van Voorhis Road, Suite 400 P.O. Box 1616 Morgantown, WV Notice of other liens given pursuant to W. Va. Code shall be given to the Master Trustee at the above address and shall be effective upon receipt by the Master Trustee. 14. No failure of the Master Trustee or the Trustees to exercise any option herein contained shall constitute a waiver of any right or privilege herein given or granted to the Master Trustee or the Trustees, and a waiver by the Master Trustee or the Trustees of the right to exercise any option as to any breach or default shall not constitute a waiver of the right to exercise the same option, or any other option herein contained, as to another or any continuing or subsequent breach or default. 15. It is further understood and agreed between the parties hereto that if any term or provision of this Deed of Trust, the Notes or the Master Indenture should contravene or be in conflict with any law of the State of West Virginia or any other applicable law or regulation, such term or provision is amended and modified to conform with such law. 16. It is further understood and agreed by and between the parties hereto that all covenants, agreements, representations and warranties are made and given jointly and severally by each party signing as Grantor and shall extend to and bind their heirs, devisees, personal representatives, successors and assigns, and shall inure to the benefit of the Master Trustee and the Trustees, and their respective successors and assigns. 17. It is hereby expressly provided that (a) any release of this Deed of Trust or any property hereunder shall be executed by the Master Trustee and (b) no amendment hereto need be executed by the Trustees unless such amendment affects the rights or responsibilities of the Trustees hereunder. [The remainder of this page is intentionally blank.] G-12

217 WITNESS the following signatures: STATE OF WEST VIRGINIA, COUNTY OF BARBOUR, TO-WIT: ALDERSON-BROADDUS COLLEGE, INC. By: Title: President SCHEDULE 1 MINERAL INTEREST DESCRIPTION All of Grantor s right, title and interest in the following: Barbour County, West Virginia Ruth Woods Dayton lease: interest in approximately 210 acres leased to Chesapeake Appalachia pursuant to lease recorded in Lease Book 35 at page 83. Russell H. Wentz lease: interest in approximately 100 acres leased to EXCO-North Coast pursuant to lease recorded in Lease Book 50 at page 263. C. Russell Wentz lease: interest in approximately 100 acres leased to EXCO-North Coast pursuant to lease recorded in Lease Book 50 at page 263. The foregoing instrument was acknowledged before me this 13th day of November 2012 by Richard A. Creehan, the President of Alderson-Broaddus College, Inc., a West Virginia nonstock, nonprofit corporation, on behalf of said corporation. [Stamp] My commission expires. Notary Public Russell Wentz E/H lease: interest in approximately 100 acres leased to EXCO-North Coast pursuant to lease recorded in Lease Book 50 at page 263. Dayton, Phillips lease: interest in approximately 62.5 acres leased to EQT pursuant to lease recorded in Lease Book 64 at page 466. Dayton, Ruth Woods lease: interest in approximately 180 acres leased to ECA pursuant to lease recorded in Lease Book 50 at page 109. Dayton, R. & R.A. Corley lease: interest in approximately 56 acres leased to EQT pursuant to lease recorded in Lease Book 64 at page 284. Dayton, Ruth Woods lease: interest in approximately 67 acres leased to Mountaineer Gas Services by lease recorded in Lease Book 49 at page 89. William Hill lease: interest in approximately acres deeded to Grantor pursuant to deed recorded in Deed Book 46 at page 393 and leased to Abarta Oil & Gas Co. by lease recorded in Lease Book 84 at page 79. This Deed of Trust was prepared by: Taunja Willis-Miller, Jackson Kelly PLLC, 150 Clay Street, Suite 500, Morgantown, West Virginia 26501, without examination of title. Daywood lease: interest in approximately 1807 acres leased to Commonwealth Energy. AB College lease: interest in approximately acres deeded to Grantor pursuant to deed recorded in Deed Book 120 at page 416 and leased to Denex Petroleum Corp by lease recorded in Lease Book 87 at page 37.. S-1 Tracey, Kernel D. lease: interest in approximately acres deeded to Grantor pursuant to deed recorded in Deed Book 46 at page 393 and leased to Abarta Oil & Gas Co. by lease recorded in Lease Book 84 at page Daywood Foundation lease: interest in approximately 2107 acres leased to Ross & Wharton Gas Co. by lease recorded in Lease Book 100 at page 270. Sturm, Lowell D. lease: interest in approximately 64 acres leased to Enervest Operating by lease recorded in Lease Book 121 at page 311. SCHEDULE 2 SERVITUDES DESCRIPTION None Goldie Stemple lease: interest in approximately acres leased to Enervest Operating by lease recorded in Lease Book 121 at page 311. Michael R. Scott lease: interest in approximately 108 acres leased to Enervest Operating by lease recorded in Lease Book 349 at page 220. Boone County, West Virginia Hill, J.C. Heirs lease: interest and interest in approximately 102 acres leased to Simcon Oil & Gas Corp. by Lease #2293. Lewis County, West Virginia Roscoe Hitt lease: interest in approximately 53 acres leased to Red Gas Inc. Butcher, M.L. lease: interest in approximately 225 acres leased to Chesapeake Appalachia by lease recorded in Lease Book 40 at page 10. Hitt-Roscoe lease: interest and interest in approximately 47 acres leased to Rubin Resources. Roane County, West Virginia Snodgrass, I.W. lease: interest in approximately 73 acres leased to ECA by lease recored in Lease Book 158 at pages 681 and 684. Upshur County, West Virginia I Vahoe McCollum lease: interest in approximately 130 acres leased to Chesapeake Appalachia by lease recorded in Lease Book 24X at page 371. Woody, Jimmy, etal. lease: interest in approximately 133 acres leased to ECA by lease recorded in Lease Book 62 at page 259. McCanin, Stanford lease: interest in acreage leased to Mountain V Oil & Gas. 2 G-13

218 EXHIBIT 1-A SERIES A NOTE EXHIBIT 1-B SERIES B NOTE EXHIBIT 1-C SERIES C NOTE EXHIBIT 1-D SERIES D NOTE G-14

219 A CREDIT LINE DEED OF TRUST CREDIT LINE DEED OF TRUST, MINERAL FINANCING STATEMENT, AS-EXTRACTED COLLATERAL FILING AND FIXTURE FILING THIS CREDIT LINE DEED OF TRUST, MINERAL FINANCING STATEMENT, AS-EXTRACTED COLLATERAL FILING AND FIXTURE FILING, dated as of November 1, 2012, by and between ALDERSON-BROADDUS ENDOWMENT CORPORATION, a West Virginia nonstock, nonprofit corporation, hereafter called "Grantor, and Kristian J. Jamieson, a resident of Monongalia County, West Virginia, as Trustee, hereinafter, together with any additional trustee hereafter appointed and any successors thereto, called "Trustees. W I T N E S S E T H: That for and in consideration of the indebtedness and trusts hereinafter set forth and of the sum of $10.00, cash in hand paid, the receipt and sufficiency of which are hereby acknowledged, Grantor does hereby ASSIGN, GRANT and CONVEY unto Trustees, with power of sale, all of the following: (a) All of Grantor s respective right, title and interest in now owned or hereafter acquired, installed, maintained or in force in and to all of the following: i. All coal, oil, gas, coalbed methane gas and other minerals owned by or leased to the Grantor located upon, under or in the lands described or referred to in Schedule I ( Land ), included within the Land in place and as produced and extracted (as produced and extracted and including, but not limited to "as extracted collateral" as defined in the UCC, the "as-extracted collateral"), and all rights, privileges, titles and interests appurtenant and relating thereto and in connection therewith (including, without limitation, rights, privileges, titles and interests for the development, production, extraction, processing, treatment, storage, transportation and sale and other disposition of minerals and all contracts and other agreements relating to such activities, as well as all accounts, accounts receivable, contract rights, other rights to the payments of monies, chattel paper and general intangibles arising from or relating to such activities) (the "Mineral Interests"); ii. All goods, inventory, cut timber, accounts, general intangibles, instruments, documents, chattel paper, equipment and all other personal property of any kind or character (including, but not limited to "goods," "inventory," "accounts," "general intangibles," "instruments," "documents," "chattel paper," and "equipment" as defined in the UCC) as now or hereafter used in connection with, arising from or otherwise related to the Mineral Interests (the "Personalty"); iii. All of Grantor s rights, interests and estates created under those certain servitudes, easements, rights of way, privileges, franchises, prescriptions, licenses, leases, permits and/or other rights, together with any amendments, renewals, extensions, supplements, modifications or other agreements related thereto and further together with any other servitudes, easements, rights of way, privileges, franchises, prescriptions, licenses, leases, permits and/or other rights in any county, all shown on Schedule II attached hereto and made a part hereof (whether presently existing or hereafter created and whether now owned or hereafter acquired by operation of law or otherwise) (herein collectively referred to as the Servitudes ); iv. Without limitation of the foregoing, all of Grantor s right, title and interest (whether now owned or hereafter acquired by operation of law or otherwise) in and to all transportation, gathering and transmission systems 2 relating to the Mineral Interests, including, without limitation, any transportation, gathering or transportation systems located in any county shown on Schedule I, and all wells, wellheads, pipes, valves, gauges, meters and other measuring equipment, regulators, extractors, tubing, pipelines, flowlines, fuel lines, tanks, facilities, improvements, fittings, compressors, dehydration units, separators, meters, metering stations, buildings, fittings, pipe, pipe connector, drips, storage facilities, absorbers, dehydrators, and power, telephone and telegraph lines, materials and other improvements, fixtures and/or personal property located on or under the Servitudes and/or in or on or otherwise related to such transportation, gathering and transmission systems (the properties, rights and interests described in this paragraph being herein collectively referred to as the Gathering Systems ); v. All reserves, escrows, impounds or deposit accounts (including, but not limited to "deposit accounts" as defined in the UCC) maintained by any Grantor with respect to the Mineral Interests (the "Deposit Accounts"); vi. All of Grantor s right, title, and interest in and to all accounts, receivables, rents, revenues, royalties, income, proceeds, profits, security and other types of deposits and other benefits paid or payable to Grantor by parties to leases or otherwise for using, leasing, licensing, possessing, operating from, residing in, selling or otherwise enjoying all or any part of the Mineral Interests (the "Rents"); vii. All of Grantor s interest in and rights under (whether now owned or hereafter acquired by operation of laws or otherwise) all presently existing and hereafter created agreements, such as construction contracts, architects' agreements, engineers' contracts, utility contracts, maintenance agreements, 3 operating and management agreements, equipment leases, service contracts, production sales contracts, hedge or swap agreements, processing agreements, transportation agreements, gas balancing agreements, farmout and/or farm-in agreements, unitization or pooling agreements, salt water disposal agreements, area of mutual interest agreements, listing agreements, guaranties, warranties, all permits (subject to any required regulatory approval), licenses, certificates and entitlements in any way relating to the construction, use, occupancy, operation, maintenance, enjoyment or ownership of all or any part of the Mineral Interests (collectively the "Operating Agreements ); viii. Without limitation of any other provision hereof, all of Grantor s right, title and interest in and to all payments received in lieu of production from the Lands (regardless of whether such payments accrued, and/or the events which gave rise to such payments occurred, on or before or after the date hereof), including, without limitation, take or pay payments and similar payments, payments received in settlement of or pursuant to a judgment rendered with respect to take or pay or similar obligations or other obligations under a production sales contract, payments received in buyout or buydown or other settlement of a production sales contract, and payments received under a gas balancing or similar agreement as a result of (or received otherwise in settlement of or pursuant to judgment rendered with respect to) rights held by Grantor as a result of Grantor (and/or its predecessors in title) taking or having taken less gas from lands covered by such properties (or lands pooled or unitized therewith) than their ownership of such properties would entitle them to receive (the payments described herein being called Payments in Lieu of Production ); ix. All property tax refunds payable with respect to all or any part of 4 G-15

220 the Mineral Interests (the "Tax Refunds"); x. All insurance policies, unearned premiums therefor and proceeds from such policies covering any of the Property (defined below) described herein (the "Insurance"); xi. All awards, damages, remunerations, reimbursements, settlements or compensation made by any governmental authority pertaining to any condemnation or other taking (or any purchase in lieu thereof) of all or any part of the Mineral Interests (the "Condemnation Awards"); xii. All rights, estates, powers, privileges, tenements, hereditaments, rights-of-way, easements, appendages and appurtenances appertaining to all or any part of the foregoing interests and properties ( Other Rights ); xiii. All Grantor s rights, title and interest in and to all geological, geophysical, engineering, accounting, title, legal and other technical or business data relating to the Mineral Interests ( Business Data ); and xiv. All accessions to, products of, and replacements and substitutions for any of the foregoing and all proceeds thereof (including, but not limited to "proceeds" and "accessions" as defined in the UCC), whether such proceeds or payments are goods, money, documents, instruments, chattel paper, securities, accounts, payment intangibles, fixtures or other assets (the "Proceeds"). (b) All property and interests in property described above shall secure the indebtedness herein described and covered by this Deed of Trust, and all the foregoing interests in property and other rights and interests are herein sometimes referred to collectively as the "Property. TO HAVE AND TO HOLD the Property unto Trustees and their successors in the trust forever; and Grantor does hereby covenant as set forth herein to and with Trustees and 5 with Wells Fargo Bank, N.A., having an address and place of corporate trust business at 123 South Broad Street, 15 th Floor, Suite 1500, MAC: Y , Philadelphia, Pennsylvania 19109, as the trustee (together with any successors thereto, the Master Trustee ) under the Master Trust Indenture dated as of November 1, 2012 (as supplemented and amended, the Master Indenture ), with Alderson-Broaddus College, Inc. (the College ) and Grantor, on behalf of the respective Holders of the Series A Note, Series B Note and Series C Note (together, the Lease Notes ; the Series B Note and the Series C Note are hereinafter referred to together as the Subordinate Lease Notes ) issued by the College as Obligated Group Agent and of the Series D Note (the Guaranty Note ; the Series A Note and the Guaranty Note are hereinafter referred to together as the 2012 Senior Notes ; and the 2012 Senior Notes and the Subordinate Lease Notes are hereinafter referred to together as the 2012 Notes ), issued by the College as Obligated Group Agent pursuant to the Master Indenture and the Supplemental Master Trust Indenture , dated as of November 1, 2012 (the Supplemental Master Indenture ), and all Obligations issued under the Master Indenture on parity with the 2012 Senior Notes and all Subordinated Obligations issued under the Master Indenture on parity with the Subordinate Lease Notes, as the case may be. Grantor covenants with the Trustees and the Master Trustee, on behalf of the respective Holders of the 2012 Senior Notes and all Obligations issued under the Master Indenture on parity therewith and of the Subordinate Lease Notes and all Subordinated Obligations issued under the Master Indenture on parity therewith, that it will warrant generally the Property; that Grantor has the right to convey the Property to Trustees; that the same is free from any and all liens and encumbrances other than Permitted Encumbrances, as defined in the Master Indenture, and other exceptions, if any, which are approved in writing by the Master Trustee; that Trustees will have quiet possession thereof and that Grantor will execute such further assurances of the Property as may be requisite, including, but not limited to, the execution and delivery of financing statements 6 and such other instruments as the Master Trustee may require to impose the lien hereof more specifically upon any item or items of property, or rights or interests therein, covered by this Deed of Trust. IN TRUST NEVERTHELESS to secure the payment (a)(i) of the Series A Note, in the principal amount of $34,275,000, payable to the order of Wells Fargo Bank, N.A., as trustee (the 2012 Bond Trustee ) for the Related Bonds, as defined in the Master Indenture, and as the assignee of The Philippi Municipal Building Commission (the Building Commission ), the Related Issuer, as defined in the Master Indenture (in such capacities, the Holder of the Series A Note ), a copy of which Series A Note is attached hereto for identification as Exhibit 1-A and which Series A Note is by this reference incorporated herein and made a part hereof; (ii) on a junior and subordinate basis, of the Series B Note, in the principal amount of $2,510,000, payable to the order of the 2012 Bond Trustee for the Related Bonds, as defined in the Master Indenture, and as the assignee of the Building Commission, the Related Issuer, as defined in the Master Indenture (in such capacities, the Holder of the Series B Note ), a copy of which Series B Note is attached hereto for identification as Exhibit 1-B and which Series B Note is by this reference incorporated herein and made a part hereof; (iii) on a junior and subordinate basis, of the Series C Note, in the principal amount of $680,000, payable to the order of the 2012 Bond Trustee for the Related Bonds, as defined in the Master Indenture, and as the assignee of the Building Commission, the Related Issuer, as defined in the Master Indenture (in such capacities, the Holder of the Series C Note ), a copy of which Series C Note is attached hereto for identification as Exhibit 1-C and which Series C Note is by this reference incorporated herein and made a part hereof; and (iv) of the Series D Note, in the principal amount of $37,465,000, payable to the order of the 2012 Bond Trustee for the Related Bonds, as 7 defined in the Master Indenture (in such capacity, the Holder of the Series D Note ), a copy of which Series D Note is attached hereto for identification as Exhibit 1-D and which Series D Note is by this reference incorporated herein and made a part hereof; and (v) also of any and all extensions, modifications and renewals of said 2012 Notes, or any part thereof, however changed in form, manner or amount (together or alternately, as applicable, with respect to the 2012 Senior Notes, the Senior Notes, with respect to the Subordinate Lease Notes, the Subordinate Notes and with respect to either or both the 2012 Senior Notes or the Subordinate Lease Notes, the "Notes"); (b) of other obligations issued under the Master Indenture on a parity with the Senior Notes (together with the Senior Notes, the Senior Obligations ); (c) of other obligations issued under the Master Indenture on a parity with the Subordinate Notes (together with the Subordinate Notes, the Subordinated Obligations and, together with the Senior Obligations, the Obligations ); and (d) of all other indebtedness of Grantor or the College as Obligated Group Agent to the Master Trustee or the Holders of the Obligations, or to the Trustees, at any time and from time to time arising hereunder or under the Master Indenture (all of which indebtedness, together with the interest thereon, is sometimes hereinafter collectively referred to as the "Secured Debt"). Grantor shall execute and deliver such supplements to this Deed of Trust as shall be necessary from time to time to include other Obligations issued under the Master Indenture on parity with the Senior Obligations or the Subordinated Obligations, as the case may be. To the extent allowed by law and without further action by the Grantor, the Trustees or the Master Trustee, all Senior Obligations secured hereby shall be secured on parity and all Subordinated Obligations secured hereby shall be secured on parity, in each case as if issued in connection with the initial execution and delivery hereof. Grantor covenants, represents, warrants and agrees as follows: 1. That Grantor will, so long as the Secured Debt, or any part thereof, remains unpaid: (a) pay as and when due and payable all taxes, assessments and other 8 G-16

221 governmental charges and fees that may be levied or assessed against the Property, including the buildings and improvements now situate on the Property, or that may hereafter be erected thereon, and any improvements and additions made therein or thereto from time to time and will furnish annually to the Master Trustee receipts showing the payment of such taxes, assessments, charges and fees; (b) have and keep the building and improvements now situate on the Property or that may hereafter be erected thereon, and all other insurable property covered by this Deed of Trust constantly insured against loss or damage by fire and such other casualties, contingencies and hazards as the Master Trustee may require, in one or more responsible and solvent insurance companies authorized to transact business in the State of West Virginia approved by the Master Trustee, and in an amount satisfactory to the Master Trustee, with a standard mortgagee clause, non-contributory, providing that loss or damage shall be payable to the Master Trustee as its interests may appear, and will pay the premiums for such insurance as the same become due and payable and deliver the policy or policies of such insurance and all renewals thereof, to the Master Trustee and, if such property shall be damaged by fire or other casualty insured against, the Master Trustee shall be entitled to receive the proceeds of such insurance to the extent of the unpaid balance of the Secured Debt and shall apply such proceeds to the Secured Debt or to restore the Property, as required by the Related Loan Documents (as defined in the Master Indenture); (c) keep and maintain the Property in good condition and repair and not abandon the same, or any part thereof, nor commit or permit the commission of waste on or in the Property, or any part thereof, or permit any building or improvement to be removed, destroyed, demolished or structurally altered in whole or in part, and Grantor shall comply, and cause all occupants of the Property or those in possession thereof to comply, with all laws, ordinances, rules and regulations relating to the use or maintenance of the Property and with all requirements, directions and orders and notices of violations thereof issued by any governmental agency, body or officer; (d) permit Trustees or the Master Trustee, or any of them, or their 9 agents, to enter and inspect the Property at all reasonable times; (e) pay to Trustees, or to the Master Trustee, upon demand, any and all sums of money, including all costs, expenses and reasonable attorneys' fees, which Trustees or the Master Trustee, or any of them, may incur or expend in any action or proceeding that may concern the Property, or any part thereof or interest therein, including without limitation any eminent domain proceeding, or any action or proceeding to sustain the lien of this Deed of Trust or its priority or in defending any party thereto, or any party secured hereby, against the liens, demands or claims of title of any person, firm or corporation, asserting priority over this Deed of Trust, or asserting title adverse to the title under which Trustees hold, or in the discharge of any such liens, demands or claims, or in connection with any action to foreclose this Deed of Trust, or to recover any indebtedness secured hereby. 2. In the event Grantor fails (i) to pay the principal of and interest on any Obligations when due or to make any other payment required or fails to comply with, perform or carry out any of the provisions of paragraph 1 hereof, or (ii) to perform any of the terms, covenants or agreements by Grantor to be performed under this Deed of Trust or the Master Indenture or is otherwise in default under this Deed of Trust or the Master Indenture, including, but not limited to, failure to pay any advances made by the Master Trustee to protect the lien and security hereof as provided herein and interest on any future advances and all other items of the Secured Debt when due, then, and in any such event, the Master Trustee shall have the right, without notice to or demand upon Grantor or any other person, to make any such payment, take any such action or do any such thing as is reasonably necessary to protect the lien and security hereof as fully and completely as if Grantor made each and every such payment when due, and kept, complied with, performed and carried out the provisions of said paragraph 1 and the Master Indenture in every respect. Without limiting the generality of the foregoing, the Master Trustee may, in any such event, (a) obtain the required insurance covering the Property and pay the 10 premiums thereon or pay any unpaid premiums on any insurance procured by Grantor; (b) pay said taxes, assessments and other governmental charges and fees together with any penalties and interest accrued thereon, and redeem the Property from a tax sale if it has been sold, and shall be subrogated to the lien of the governmental body to which such payment was made; (c) make and pay for any and all repairs which the Master Trustee deems necessary to place or keep the Property in good condition and repair; (d) stop or mitigate waste on or in the Property or any part thereof; (e) stop or prevent the removal, destruction, demolition or structural alteration of any building or improvement on the Property; (f) stop or prevent the violation of any law, ordinance, rule or regulation relating to the use or maintenance of the Property or of any requirement, direction or order or notice of violation thereof issued by any governmental agency, body or officer; and (g) pay all or any part of any sum or sums of money that may be due or payable under the provisions of paragraph l hereof; and Grantor hereby promises to pay to the Master Trustee, upon demand, any and all sums of money paid out or expended by the Master Trustee, for any of the purposes set out in this paragraph, together with interest thereon from the date of payment at the rate of 8% per annum, and agrees that any sum or sums of money so paid by the Master Trustee or by Trustees, or any of them, shall thereupon be and become a part of the Secured Debt, and shall be collectible as such, all without waiver of any right arising from the breach of or default in the performance of any warranty, covenant, condition, provision or agreement herein contained or contained in either of the Note or the Master Indenture, including the right to enter and take possession of the Property, and rent and manage the same, and the right to foreclose this Deed of Trust; but nothing herein contained shall be construed as imposing any duty or obligation upon the Master Trustee, or upon Trustees, to pay any such sum or sums of money herein authorized to be paid, or to take any other action authorized hereunder. 3. (a) For the purposes of this Deed of Trust (i) "hazardous materials" means and includes petroleum products, flammable explosives, radioactive materials, asbestos or 11 any material containing asbestos, polychlorinated biphenyls or any hazardous, toxic or dangerous waste, substance or material defined as such or defined as a hazardous substance or other similar term by, in or for the purposes of any environmental laws and (ii) "environmental laws" means any "superfund" or "superlien" law or any other federal, state or local statute, law, ordinance, code, rule, regulation, order or decree, regulating, relating to or imposing liability or standards of conduct concerning any hazardous materials as may now or at any time hereafter be in effect. (b) Grantor and the Property are in compliance with all material environmental laws. (c) So long as any of the Obligations is outstanding, Grantor shall provide the Master Trustee, at the expense of Grantor, with such reports of inspection or audits of the Property as the Master Trustee may request, prepared by qualified consultants approved by the Master Trustee, certifying as to the presence or absence of hazardous materials on the Property, and Grantor shall permit the Master Trustee, its agents and employees, to inspect or audit the Property, and for such purpose hereby grants the Master Trustee an easement to enter upon the Property and to conduct all such tests as the Master Trustee shall determine to be necessary. (d) Except as disclosed in or otherwise permitted under the Master Indenture, Grantor shall place or permit to be placed on the Property only such hazardous materials as are required by or consistent with the extraction or other operations in connection with the Mineral Interests, and such hazardous materials shall be used, handled, collected, stored, treated and disposed of in compliance with all applicable environmental laws. If, at any time, it is determined by the Master Trustee that hazardous materials are or may be located on the Property which, under any applicable environmental laws, require special handling in collection, storage, treatment or disposal, the Grantor shall, within 30 days after receiving written notice thereof, take or cause to be taken, at its sole expense, such actions as may be necessary to 12 G-17

222 comply with all applicable environmental laws. (e) Grantor shall indemnify the Master Trustee and shall hold the Master Trustee harmless from and against all loss, damage and expense, including without limitation, attorneys' fees and costs incurred in the investigation, defense and settlement of claims, that the Master Trustee may incur as the result of or in connection with the assertion against the Master Trustee or any claim directly or indirectly, in whole or in part, as to the presence or removal of any hazardous materials, or relating to any activities on or affecting the Property, whether prior to or during the term of the Secured Debt, and whether such activity was carried on by the Grantor or any predecessor in interest of the Grantor or any other person. The Grantor shall promptly notify the Master Trustee in writing of any order or pending or threatened action by any regulatory agency or other governmental body, or any claims made by any third party relating to environmental laws or hazardous materials on or emanations from the Property and shall promptly furnish the Master Trustee with copies of any correspondence or legal pleadings in connection therewith. The Master Trustee shall have the right, but absolutely no duty, to take any action it deems necessary or desirable, including without limitation appearing in or defending any such claims or actions, all at the cost of the Grantor. 4. THIS IS A CREDIT LINE DEED OF TRUST FOR THE PURPOSES OF W. VA. CODE AND SECURES A MAXIMUM AMOUNT NOT TO EXCEED $37,465,000, and this Deed of Trust also is security for the payment of interest on such principal sums and for taxes, insurance premiums and other obligations, including interest thereon, undertaken by the Master Trustee or Trustees pursuant to the provisions of this Deed of Trust or the Master Indenture. This Deed of Trust secures future advances that the Holder of the 2012 Notes has agreed to make to the College in accordance with the terms and provisions of a Lease Agreement dated as of November 1, 2012, which future advances are intended to be obligatory within the meaning of W. Va. Code The occurrence of any of the following events shall constitute an event of default hereunder (hereinafter called an "Event of Default"), and upon the occurrence of any Event of Default the Secured Debt shall at the option of the Master Trustee immediately become due and payable without notice to or demand on Grantor, or any other person: (a) if default shall be made in the payment as and when due of the Obligations, or any installment or part thereof, or the interest thereon, or of any sum due under the provisions of the Master Indenture or this Deed of Trust or the interest thereon; (b) if default shall be made in the payment, as and when due and payable, of any tax, assessment or other governmental charge or fee or of any insurance premium or if the required insurance is not effected by Grantor or the policies delivered to the Master Trustee as herein required; (c) if there shall be a breach of or default in the performance of any covenant, condition, agreement, warranty or provision contained in the Master Indenture or this Deed of Trust; (d) if Grantor or any other obligor under the Master Indenture shall become insolvent or make an assignment for the benefit of creditors, or if any petition for bankruptcy or arrangement pursuant to the Federal Bankruptcy Act, or any similar federal or state law, shall be filed by or against Grantor or any other obligor under the Master Indenture; (e) if any representation or warranty made or furnished to the Master Trustee by Grantor or any other obligor under the Master Indenture in connection with this Deed of Trust or the Obligations or in the application for the Indebtedness (as defined in the Master Indenture) evidenced by the Obligations or in the Master Indenture or to induce the creditor to fund such Indebtedness proves to have been substantially untrue; (f) if there shall now or hereafter exist upon the Property, or any part thereof, any claim, lien or encumbrance, other than Permitted Encumbrances (as defined in the Master Indenture), which is or might be superior to the lien of this Deed of Trust; (g) except as provided in the Master Indenture, if the Property or any part thereof shall be sold, conveyed or transferred without the prior written consent of the respective holders of the 14 Obligations; or (h) if Grantor shall do or suffer to be done any act or thing which would impair the security for the Secured Debt. 6. If any one or more Events of Default shall occur and be continuing, any one or more of the following rights and remedies shall exist, any two or more of which may be exercised concurrently: (a) Trustees or the Master Trustee may forthwith, without notice, separately or jointly: (i) enter into and upon all of the Property, either in person or by agent, and take possession of the Property without process of law, without liability to Grantor or other owner or owners of the Property, and manage and rent the same, or any part thereof, collect and receive the rents, issues and profits thereof (past due, due or to become due) and apply the same to the payment of the Secured Debt, after first deducting the costs and expenses incurred in managing the Property and in collecting said rents, issues and profits (including a commission of 10% of the total amount collected, which shall be paid to the Master Trustee, or to the Trustees, as the case may be, for managing the same and collecting and disbursing said rents, issues and profits accruing therefrom), and after deducting such further amount or amounts as may be necessary to pay or reimburse the Master Trustee and the Trustees for any sum or sums of money paid by them, or any of them, under the provisions hereof, together with interest thereon at the rate of 8% per annum thereon to the date of payment; (ii) have a receiver appointed by any court having jurisdiction to take charge of the Property and collect, receive and apply the rents, issues and profits thereof. In either case, any person or persons in possession of the Property, or any part thereof, shall be deemed a tenant at will and shall at once surrender such possession on demand of the Master Trustee or Trustees or a receiver. It is understood and agreed by and between the parties hereto that nothing herein contained shall be construed as a substitute for, or in derogation of, the right to foreclose this Deed of Trust or as imposing any duty or obligation 15 upon the Master Trustee or upon the Trustees, or any of them, to take charge of the Property or to collect said rents, issues or profit or to have a receiver appointed for such purposes; or (iii) exercise any or all of the rights and remedies provided for in paragraph 3 of this Deed of Trust. (b) Without notice to or demand on Grantor or any other person, the Master Trustee may at its option declare the Secured Debt to be immediately due and payable and upon the exercise of said option the Secured Debt may be collected by proper action, foreclosure of this Deed of Trust, or any other legal or equitable proceeding. (c) At any time after the exercise by the Master Trustee of the option to declare the Secured Debt to be immediately due and payable, the Trustees, upon the written request of the Master Trustee, shall foreclose upon and sell the Property to satisfy the Secured Debt at public auction at the front door of the courthouse of the county in which the Property is situate, for cash in hand on the day of sale, after first giving notice of such sale by publishing such notice in some newspaper of general circulation published in the county wherein the Property is located, or if there be no such newspaper in a qualified newspaper of general circulation in said county, once a week for two successive weeks preceding the day of sale and after giving notice by certified mail to Grantor and to any subordinate lienholder who has previously notified the Master Trustee by certified mail of the existence of a subordinate lien, at least 20 days prior to the sale, and no other notice of such sale shall be required. Out of the proceeds of such sale Trustees shall pay, first, the costs and expenses of executing this trust, including an amount equal to two percent (2%) of the gross proceeds of sale (5% of the first $300) to Trustees, or to the one so acting, as his or their commission hereunder; second, to Master Trustee and Trustees, all moneys which they or any of them may have paid for taxes, assessments or other governmental charges or fees, insurance, repairs, court costs, and all other 16 G-18

223 costs and expenses incurred or paid under the provisions of this Deed of Trust, together with interest thereon at the rate of 8% per annum from the date of payment; third, to the Master Trustee, the full amount due and unpaid on the Senior Obligations, together with all interest accrued thereon to the date of payment, and any other Secured Debt on parity therewith; fourth, to the Master Trustee, the full amount due and unpaid on the Subordinated Obligations, together with all interest accrued thereon to the date of payment, and any other Secured Debt on parity therewith; and fifth, the balance, if any, to Grantor, its successors or assigns, upon delivery of and surrender to the purchaser or purchasers of possession of the Property less the expense, if any, of obtaining such possession. 7. This instrument is to be filed for record in the real estate records of the county in which the Property is located, so as to serve as a fixture filing pursuant to W.Va. Code This instrument shall, with respect to all items of personal property and fixtures subject to the lien hereof, be deemed to grant a security interest to the Master Trustee under the Uniform Commercial Code of West Virginia (the "UCC"). In the event of the occurrence of any Event of Default, in addition to the rights, remedies and powers hereinabove set forth, the Master Trustee and the Trustees shall have as to any and all fixtures and personal property covered by this Deed of Trust, all rights, remedies and powers of a secured party under the UCC. All rights provided herein, in the Master Indenture or under the UCC shall, to the full extent permitted by law, be cumulative. In connection with those rights, to the extent permitted by law, the Master Trustee may, and Trustees shall upon the written request of the Master Trustee, enter onto the real property to take possession of, assemble and collect such personal property or to render it unusable; require Grantor to assemble such personal property and make it available to the Master Trustee or Trustees at a place the Master Trustee or Trustees designate, 17 which is reasonably convenient to both parties. All or any part of such personal property may, at the option of the Master Trustee or Trustees, be combined with all or any part of the remainder of the Property and, consistent with Section 6 hereof, may be sold as an entirety, or such personal property may be sold separately in one or more lots and in such order and manner as the Master Trustee may elect. The Master Trustee or Trustees shall give Grantor written notice of the time and place of any public sale of any such personal property or of the time after which any private sale or other intended disposition of the personal property is to be made by sending notice to Grantor at least 10 days before the time of such sale or other disposition, which provisions for notice Grantor agrees are reasonable. The Master Trustee or Trustees (at the direction of the Master Trustee), upon notice to Grantor, may postpone or cancel any such sale or other disposition and reschedule it without further notice (other than notice of such rescheduled sale or disposition) to Grantor. 9. Grantor agrees that any sale made hereunder may be adjourned from time to time without notice other than oral proclamation of such adjournment at the time and place of sale, or at the time and place of any adjourned sale. 10. In the event that foreclosure proceedings are instituted hereunder but are not completed, Trustees shall be reimbursed for all costs and expenses incurred by them in commencing such proceedings, and, in addition, shall be entitled to, and paid a commission of 1% of the Secured Debt which is outstanding at the time such proceedings are instituted, but in no event shall such commission be less than $100; and all costs and expenses so incurred by Trustees, and such commission, together with interest thereon until paid at the rate of 8% per annum, shall be payable by Grantor on demand, and shall be and become a part of the Secured Debt and shall be collectible as such. 11. Trustees, or either of them, or the survivor thereof, may act in the execution of this trust, and in the event either of Trustees shall act alone, the authority and power 18 of the Trustee so acting shall be as full and complete as if the powers and authority granted to Trustees herein jointly had been granted to such Trustee alone; and either or both of Trustees are hereby authorized to act by agent or attorney in the execution of this trust. It shall not be necessary for any Trustee to be present in person at any foreclosure sale hereunder. 12. It is hereby expressly covenanted and agreed by all parties hereto that the Master Trustee may, at any time and from time to time hereafter, without notice, appoint and substitute another Trustee or Trustees, corporations or persons, in place of the Trustee or Trustees herein named to execute the trust herein created. Upon such appointment, either with or without a conveyance to said substituted Trustee or Trustees by the Trustees herein named, or by any substituted Trustee in case the said right of appointment is exercised more than once, the new and substituted Trustee or Trustees in each instance shall be vested with all the rights, titles, interests, powers, duties and trusts in the premises which are vested in and conferred upon the Trustees herein named; and such new and substituted Trustee or Trustees shall be considered the successors and assigns of the Trustees who are named herein within the meaning of this instrument, and substituted in their place and stead. Each such appointment and substitution shall be evidenced by an instrument in writing which shall recite the parties to, and the book and page of record of, this Deed of Trust, and the description of the real property herein described, which instrument, executed and acknowledged by the Master Trustee and recorded in the office of the Clerk of the County Commission of the County wherein the Property is situate, shall be conclusive proof of the proper substitution and appointment of such successor Trustee or Trustees, and notice of such proper substitution and appointment to all parties in interest. 13. A copy of any notice of trustee's sale under this Deed of Trust shall be served on Grantor by certified mail, return receipt requested, directed to Grantor at the address stated below or such other address given to the Master Trustee in writing by Grantor, subsequent to the execution and delivery of this Deed of Trust. Any other notice (except notice of other 19 liens that may be given to the Master Trustee pursuant to W. Va. Code ) shall be effective upon the deposit of such notice, in writing, in the regular United States mail, postage prepaid, addressed to the party or parties who receive such notice at the following addresses or at such other addresses any such party may give to the other parties in writing: To Grantor: Alderson-Broaddus Endowment Corporation 101 College Hill Drive P.O. Box 2004 Philippi, West Virginia Attention: President To the Master Trustee: Wells Fargo Bank, N.A. 123 South Broad Street 15th Floor, Suite 1500 MAC: Y Philadelphia, Pennsylvania Attention: Corporate Trust Group To Trustees: Kristian J. Jamieson Steptoe & Johnson PLLC 1085 Van Voorhis Road, Suite 400 P.O. Box 1616 Morgantown, WV Notice of other liens given pursuant to W. Va. Code shall be given to the Master Trustee at the above address and shall be effective upon receipt by the Master Trustee. 14. No failure of the Master Trustee or the Trustees to exercise any option herein contained shall constitute a waiver of any right or privilege herein given or granted to the Master Trustee or the Trustees, and a waiver by the Master Trustee or the Trustees of the right to exercise any option as to any breach or default shall not constitute a waiver of the right to exercise the same option, or any other option herein contained, as to another or any continuing or subsequent breach or default. 20 G-19

224 15. It is further understood and agreed between the parties hereto that if any term or provision of this Deed of Trust, the Notes or the Master Indenture should contravene or be in conflict with any law of the State of West Virginia or any other applicable law or regulation, such term or provision is amended and modified to conform with such law. 16. It is further understood and agreed by and between the parties hereto that all covenants, agreements, representations and warranties are made and given jointly and severally by each party signing as Grantor and shall extend to and bind their heirs, devisees, personal representatives, successors and assigns, and shall inure to the benefit of the Master Trustee and the Trustees, and their respective successors and assigns. 17. It is hereby expressly provided that (a) any release of this Deed of Trust or any property hereunder shall be executed by the Master Trustee and (b) no amendment hereto need be executed by the Trustees unless such amendment affects the rights or responsibilities of the Trustees hereunder. WITNESS the following signatures: STATE OF WEST VIRGINIA, COUNTY OF BARBOUR, TO-WIT: ALDERSON-BROADDUS ENDOWMENT CORPORATION By: Title: Vice President The foregoing instrument was acknowledged before me this 13th day of November 2012 by Richard A. Creehan, the Vice President of Alderson-Broaddus Endowment Corporation, a West Virginia nonstock, nonprofit corporation, on behalf of said corporation. My commission expires. [The remainder of this page is intentionally blank.] [Stamp] Notary Public This Deed of Trust was prepared by: Taunja Willis-Miller, Jackson Kelly PLLC, 150 Clay Street, Suite 500, Morgantown, West Virginia 26501, without examination of title. 21. S-1 SCHEDULE 1 MINERAL INTEREST DESCRIPTION [Attach description of Barbour-Preston-Tucker property] SCHEDULE 2 SERVITUDES DESCRIPTION None G-20

225 EXHIBIT 1-A SERIES A NOTE EXHIBIT 1-B SERIES B NOTE EXHIBIT 1-C SERIES C NOTE EXHIBIT 1-D SERIES D NOTE G-21

226 [THIS PAGE INTENTIONALLY LEFT BLANK]

227 Appendix H: Forms of the Notes

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229 THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 SERIES A NOTE $34,275,000 November 30, 2012 KNOW ALL MEN BY THESE PRESENTS that ALDERSON-BROADDUS COLLEGE, INC., a nonprofit corporation organized and existing under the laws of the State of West Virginia (the College ), on behalf of itself and the Obligated Group as the Obligated Group Agent (the Obligated Group Agent ), for value received, hereby acknowledges that the Obligated Group is obligated to, and promises to pay to THE PHILIPPI MUNICIPAL BUILDING COMMISSION (the Issuer ), as issuer of the $34,275,000 College Facilities Refunding and Improvement Revenue Bonds (Alderson-Broaddus College, Inc.) 2012 Series A (the 2012 Series A Bonds ) under the Bond Indenture (the Bond Indenture ) dated as of November 1, 2012, between the Issuer and Wells Fargo Bank, N. A., as bond trustee (the Bond Trustee ), and any successor trustee appointed under the Bond Indenture, or registered assigns, the principal sum of THIRTY FOUR MILLION TWO HUNDRED SEVENTY FIVE THOUSAND DOLLARS ($34,275,000). This A Note also evidences and secures the obligation of the College under the Lease Agreement dated as of November 1, 2012 (the Lease Agreement ), between the Issuer and the College to make payments in respect of the 2012 Series A Bonds in accordance with the Bond Indenture. The principal installments of this Note correspond to the maturities and mandatory sinking fund payments of the 2012 Series A Bonds. The final maturity date of this Note is October 1, The principal of this Note bears interest at the same rates as the 2012 Series A Bonds. Interest payments on this Note correspond to the Interest Payment Dates for the 2012 Series A Bonds. Principal hereof, interest hereon and any applicable redemption premium (collectively Debt Service Charges ), are payable in any coin or currency of the United States of America which on the payment date is legal tender for the payment of public and private debts. This Note is one of a duly authorized Obligations issued by the Obligated Group under and pursuant to Supplemental Master Trust Indenture , dated as of November 1, 2012 (the Supplemental Indenture ), supplementing and amending the Master Trust Indenture, dated as of November 1, 2012, by and among the College, Alderson-Broaddus Endowment Corporation and Wells Fargo Bank, N. A., as master trustee (the Master Trustee ). The Master Trust Indenture, as supplemented and amended, is hereinafter called the Master Indenture. Capitalized terms used and not otherwise defined in this Note shall have the meaning assigned to such terms in the Lease Agreement and the Master Indenture. This Note is subject to redemption before maturity, to the extent, upon the conditions, and with respect to the corresponding payments of principal and interest and with any applicable redemption premium that the 2012 Series A Bonds are subject to upon redemption in accordance with the Bond Indenture. Giving notice of redemption of the 2012 Series A Bonds in accordance with the conditions set forth in the Bond Indenture will, without further action by the Master Trustee, the Bond Trustee or the Obligated Group Agent, constitute notice of the redemption of the corresponding amounts of principal on this Note and those amounts will become due and payable on the date of the redemption of those 2012 Series A Bonds so redeemed. The Obligated Group will pay Debt Service Charges on this Note at the times and in the amounts set forth above. The Obligated Group will be entitled to a credit, however, against the Debt Service Charges due on this Note, for amounts paid under the Lease Agreement and applied to the corresponding payment of Debt Service Charges on the 2012 Series A Bonds. Copies of the Master Indenture and the Lease Agreement are on file at the Corporate Trust Office of the Master Trustee and reference is hereby made to the Master Indenture and Lease Agreement for the provisions, among others, with respect to the nature and extent of the rights and obligations of the holders of this Note and other Obligations issued under the Master Indenture, the terms and conditions on which, and the purposes for which Obligations may be issued under the Master Indenture, and the rights, duties and obligations of the Obligated Group and the Master Trustee under the Master Indenture and the Lease Agreement, to all of which the holder of this Note, by acceptance hereof, consents. The Members of the Obligated Group are jointly and severally liable for the performance of the covenants of each Member and of the Obligated Group under the Master Indenture including, without limitation, payment of Debt Service Charges and all obligations under the Master Indenture. As of the date of this Note, Alderson-Broaddus College, Inc. and Alderson-Broaddus Endowment Corporation are the only Members of the Obligated Group. New Members may be added to the Obligated Group and existing Members may withdraw from the Obligated Group upon the conditions set forth in the Master Indenture. The Master Indenture permits the issuance of additional Obligations under the Master Indenture to be secured by the covenants made therein, all of which, regardless of the times of issue or maturity, are to be of equal rank without preference, priority or distinction of any Obligation of any series over any other Obligation, except as expressly provided in the Master Indenture. Upon the occurrence of certain events of default as defined in the Master Indenture, the principal of all Obligations then Outstanding may be declared, and thereupon shall become, due and payable as provided in the Master Indenture. The holder of this Note shall have such rights to enforce the provisions of the Master Indenture, or to institute any action with respect to a default under the Master Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, as are provided in the Master Indenture. The holder of this Note shall have such rights to enforce the provisions of the Lease Agreement and the Deeds of Trust or to institute any action with respect to a default under the Lease Agreement or the Deeds of Trust, or to institute, appear in or defend any suit or other proceeding with respect thereto, as are provided in the Lease Agreement and the Deeds of Trust. This Note is issuable only as a fully registered note, and, as provided and to the extent authorized in the Master Indenture, this Note may be exchanged for a Note of the same series in an amount equal to the aggregate principal amount Outstanding on this Note, and not otherwise. This Note will be registered on the register to be maintained at the principal office of the Master Trustee and will be transferable only in the manner and subject to the limitations, if any, set forth in the Master Indenture. Upon every exchange or registration of transfer of this Note, the Obligated Group may make a charge sufficient to reimburse it for any tax or taxes or other governmental charge required to be paid by the Master Trustee or the Obligated Group with respect to the exchange or transfer. That charge must be paid by the holder requesting transfer or exchange as a condition precedent to the exercise of that privilege. Upon transfer or exchange, the Obligated Group Agent must execute and the Master Trustee must authenticate and deliver, in exchange for this Note, a new registered Note or Notes registered in the name of that holder or the transferee. This Note is a negotiable instrument under the Uniform Commercial Code of West Virginia. The Obligated Group, the Master Trustee, any paying agent and any note registrar may deem and treat the person in whose name this Note is registered as the absolute owner for the purpose of receiving payment of the Debt Service Charges on this Note. Neither the Obligated Group, nor any paying agent, nor the Master Trustee, nor any note registrar will be affected by any notice to the contrary. All payments made to the registered owner of this Note will be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable on this Note. IN WITNESS WHEREOF, ALDERSON-BROADDUS COLLEGE, INC., as Obligated Group Agent, has caused this Note to be executed in its name on behalf of itself and the other Members of the Obligated Group by the manual or facsimile signature of its President and its corporate seal to be hereunto affixed and the same to be attested by its Secretary all as of the date first hereinabove written. ALDERSON-BROADDUS COLLEGE, INC., as Obligated Group Agent By: Name: Richard A. Creehan [SEAL] Title: President Attest: By: Name: Harry G. Shaffer, III Its: Secretary No recourse may be had for the payment of Debt Service Charges on this Note or for any claim based on this Note or upon any obligation, covenant, or agreement contained in the Master Indenture, against any past, present or future officer, director, member or trustee of the Obligated Group Agent, or any Member of the Obligated Group, or any incorporator, officer, director, member or trustee of any successor entity, either directly or through the Obligated Group Agent, any Member of the Obligated Group, or any successor entities, under any rule of law or equity, statute or constitution, or by the enforcement of any assessment or penalty or otherwise, and all liability of any incorporator, officer, director, member or trustee is expressly waived and released as a condition of and consideration for the issuance of this Note and its acceptance by the owner of this Note. This Note will not be entitled to any benefit under the Master Indenture, or become obligatory for any purpose, until this Note has been duly authenticated by execution by an authorized officer of the Master Trustee on the Master Trustee s Authentication Certificate. [Remainder of Page Intentionally Left Blank] Note A ( ) H-1

230 MASTER TRUSTEE S AUTHENTICATION CERTIFICATE The Note to which this certificate is attached is one of the Obligations described in the within-mentioned Master Indenture. THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 SERIES B SUBORDINATED NOTE Dated: November, 2012 WELLS FARGO BANK, N. A., as Master Trustee By: Name: Joseph Progar Title: Vice President $2,510,000 November 30, 2012 KNOW ALL MEN BY THESE PRESENTS that ALDERSON-BROADDUS COLLEGE, INC., a nonprofit corporation organized and existing under the laws of the State of West Virginia (the College ), on behalf of itself and the Obligated Group as the Obligated Group Agent (the Obligated Group Agent ), for value received, hereby acknowledges that the Obligated Group is obligated to, and promises to pay to THE PHILIPPI MUNICIPAL BUILDING COMMISSION (the Issuer ), as issuer of the $2,510,000 College Facilities Subordinate Lien Refunding Revenue Bonds (Alderson-Broaddus College, Inc.) 2012 Series B (the 2012 Series B Bonds ) under the Bond Indenture (the Bond Indenture ) dated as of November 1, 2012, between the Issuer and Wells Fargo Bank, N. A., as bond trustee (the Bond Trustee ), and any successor trustee appointed under the Bond Indenture, or registered assigns, the principal sum of TWO MILLION FIVE HUNDRED TEN THOUSAND DOLLARS ($2,510,000). This B Subordinated Note also evidences and secures the obligation of the College under the Lease Agreement dated as of November 1, 2012 (the Lease Agreement ), between the Issuer and the College to make payments in respect of the 2012 Series B Bonds in accordance with the Bond Indenture. The principal installments of this Note correspond to the maturities and mandatory sinking fund payments of the 2012 Series B Bonds. The final maturity date of this Note is October 1, The principal of this Note bears interest at the same rates as the 2012 Series B Bonds. Interest payments on this Note correspond to the Interest Payment Dates for the 2012 Series B Bonds. Principal hereof, interest hereon and any applicable redemption premium (collectively Debt Service Charges ), are payable in any coin or currency of the United States of America which on the payment date is legal tender for the payment of public and private debts. This Note is one of a duly authorized Obligations issued by the Obligated Group under and pursuant to Supplemental Master Trust Indenture , dated as of November 1, 2012 (the Supplemental Indenture ), supplementing and amending the Master Trust Indenture, dated as of November 1, 2012, by and among the College, Alderson-Broaddus Endowment Corporation and Wells Fargo Bank, N. A., as master trustee (the Master Trustee ). The Master Trust Indenture, as supplemented and amended, is hereinafter called the Master Indenture. Anything in this B Subordinated Note to the contrary notwithstanding, this Note constitutes Subordinated Indebtedness under the Master Indenture and is not on a parity with the A Note or the D Note issued under the Supplemental Indenture and any other Obligations issued under the Master Indenture, except for the C Subordinated Note issued under the Supplemental Indenture which is on parity with this B Subordinated Note. This Note constitutes Subordinated Indebtedness as defined in the Master Indenture, and the terms required by Exhibit C to the Master Indenture for Subordinated Indebtedness are attached as Appendix I hereto and incorporated herein by reference. Capitalized terms used and not otherwise defined in this Note shall have the meaning assigned to such terms in the Lease Agreement and the Master Indenture. This Note is subject to redemption before maturity, to the extent, upon the conditions, and with respect to the corresponding payments of principal and interest and with any applicable redemption premium that the 2012 Series B Bonds are subject to upon redemption in accordance with the Bond Indenture. Giving notice of redemption of the 2012 Series B Bonds in accordance with the conditions set forth in the Bond Indenture will, without further action by the Master Trustee, the Bond Trustee or the Obligated Group Agent, constitute notice of the redemption of the corresponding amounts of principal on this Note and those amounts will become due and payable on the date of the redemption of those 2012 Series B Bonds so redeemed. The Obligated Group will pay Debt Service Charges on this Note at the times and in the amounts set forth above. The Obligated Group will be entitled to a credit, however, against the Debt Service Charges due on this Note, for amounts paid under the Lease Agreement and applied to the corresponding payment of Debt Service Charges on the 2012 Series B Bonds. Copies of the Master Indenture and the Lease Agreement are on file at the Corporate Trust Office of the Master Trustee and reference is hereby made to the Master Indenture and Lease Agreement for the provisions, among others, with respect to the nature and extent of the rights and obligations of the holders of this Note and other Obligations issued under the Master Indenture, the terms and conditions on which, and the purposes for which Obligations may be issued under the Master Indenture, and the rights, duties and obligations of the Obligated Group and the Master Trustee under the Master Indenture and the Lease Agreement, to all of which the holder of this Note, by acceptance hereof, consents. The Members of the Obligated Group are jointly and severally liable for the performance of the covenants of each Member and of the Obligated Group under the Master Indenture including, without limitation, payment of Debt Service Charges and all obligations under the Master Indenture. As of the date of this Note, Alderson-Broaddus College, Inc. and Alderson-Broaddus Endowment Corporation are the only Members of the Obligated Group. New Members may be added to the Obligated Group and existing Members may withdraw from the Obligated Group upon the conditions set forth in the Master Indenture. The Master Indenture permits the issuance of additional Obligations under the Master Indenture to be secured by the covenants made therein, all of which, regardless of the times of issue or maturity, are to be of equal rank without preference, priority or distinction of any Obligation of any series over any other Obligation, except as expressly provided in the Master Indenture. Upon the occurrence of certain events of default as defined in the Master Indenture, the principal of all Obligations then Outstanding may be declared, and thereupon shall become, due and payable as provided in the Master Indenture. The holder of this Note shall have such rights to enforce the provisions of the Master Indenture, or to institute any action with respect to a default under the Master Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, as are provided in the Master Indenture. The holder of this Note shall have no right to enforce the provisions of the Master Indenture, the Lease Agreement or the Deeds of Trust, or to institute any action to enforce the covenants of the Master Indenture, the Lease Agreement or the Deeds of Trust, or to take any action with respect to any default under the Master Indenture, the Lease Agreement or the Deeds of Trust, or to institute, appear in or defend any suit or other proceeding with respect to the Master Indenture, the Lease Agreement or the Deeds of Trust, except as expressly provided or permitted in the Master Indenture, the Lease Agreement or the Deeds of Trust. This Note is issuable only as a fully registered note, and, as provided and to the extent authorized in the Master Indenture, this Note may be exchanged for a Note of the same series in an amount equal to the aggregate principal amount Outstanding on this Note, and not otherwise. This Note will be registered on the register to be maintained at the principal office of the Master Trustee and will be transferable only in the manner and subject to the limitations, if any, set forth in the Master Indenture. Upon every exchange or registration of transfer of this Note, the Obligated Group may make a charge sufficient to reimburse it for any tax or taxes or other governmental charge required to be paid by the Master Trustee or the Obligated Group with respect to the exchange or transfer. That charge must be paid by the holder requesting transfer or exchange as a condition precedent to the exercise of that privilege. Upon transfer or exchange, the Obligated Group Agent must execute and the Master Trustee must authenticate and deliver, in exchange for this Note, a new registered Note or Notes registered in the name of that holder or the transferee. This Note is a negotiable instrument under the Uniform Commercial Code of West Virginia. The Obligated Group, the Master Trustee, any paying agent and any note registrar may deem and treat the person in whose name this Note is registered as the absolute owner for the purpose of receiving payment of the Debt Service Charges on this Note. Neither the Obligated Group, nor any paying agent, nor the Master Trustee, nor any note registrar will be affected by any notice to the contrary. All payments made to the registered owner of this Note will be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable on this Note. No recourse may be had for the payment of Debt Service Charges on this Note or for any claim based on this Note or upon any obligation, covenant, or agreement contained in the Master Indenture, against any past, present or future officer, director, member or trustee of the Obligated Group Agent, or any Member of the Obligated Group, or any incorporator, officer, director, member or trustee of any successor entity, either directly or through the Obligated H-2

231 Group Agent, any Member of the Obligated Group, or any successor entities, under any rule of law or equity, statute or constitution, or by the enforcement of any assessment or penalty or otherwise, and all liability of any incorporator, officer, director, member or trustee is expressly waived and released as a condition of and consideration for the issuance of this Note and its acceptance by the owner of this Note. This Note will not be entitled to any benefit under the Master Indenture, or become obligatory for any purpose, until this Note has been duly authenticated by execution by an authorized officer of the Master Trustee on the Master Trustee s Authentication Certificate. [Remainder of Page Intentionally Left Blank] IN WITNESS WHEREOF, ALDERSON-BROADDUS COLLEGE, INC., as Obligated Group Agent, has caused this Note to be executed in its name on behalf of itself and the other Members of the Obligated Group by the manual or facsimile signature of its President and its corporate seal to be hereunto affixed and the same to be attested by its Secretary all as of the date first hereinabove written. ALDERSON-BROADDUS COLLEGE, INC., as Obligated Group Agent By: Name: Richard A. Creehan [SEAL] Title: President Attest: By: Name: Harry G. Shaffer, III Its: Secretary Note B ( ) MASTER TRUSTEE S AUTHENTICATION CERTIFICATE The Note to which this certificate is attached is one of the Obligations described in the within-mentioned Master Indenture. Dated: November, 2012 WELLS FARGO BANK, N. A., as Master Trustee By: Name: Joseph Progar Title: Vice President APPENDIX I SUBORDINATED INDEBTEDNESS Any issue of Subordinated Indebtedness shall be evidenced by instruments, or issued under an indenture or other document, containing provisions for the subordination of such Indebtedness (to which appropriate reference shall be made in the instruments evidencing such Indebtedness) substantially as follows (the term debentures being, for convenience, used in the provisions set forth below to designate the instruments issued to evidence Subordinated Indenture and the term this Indenture to designate the instrument, indenture or other document containing such provisions): All debentures issued under this Indenture shall be issued subject to the following provisions and each person taking or holding any such debenture whether upon original issue or upon transfer or assignment thereof accepts and agrees to be bound by such provisions. All debentures issued hereunder and any coupons thereto appertaining shall, to the extent and in the manner hereinafter set forth, be subordinated and subject in right to the prior payment of Superior Indebtedness as defined in this Appendix I. For all purposes of this Appendix I the term Superior Indebtedness shall mean all Obligations now or hereafter issued under that certain Master Trust Indenture (the Master Indenture ), dated as of November 1, 2012 among Alderson-Broaddus College, Inc., Alderson-Broaddus Endowment Corporation and Wells Fargo Bank, N. A., as master trustee (the Master Trustee ), as supplemented and modified to the date hereof, or as the same may hereafter from time to time be further supplemented and modified. No payment on account of principal, premium, if any, sinking funds or interest on the debentures shall be made, nor shall any property or assets be applied to the purchase or other acquisition or retirement of the debentures, unless full payment of amounts then due and payable for principal, premium, if any, sinking funds and interest on Superior Indebtedness has been made or duly provided for in accordance with the terms of such Superior Indebtedness. No payment on account of principal, premium, if any, sinking funds or interest on the debentures shall be made, nor shall any property or assets be applied to the purchase or other acquisition or retirement of the debentures, if, at the time of such payment or application or immediately after giving effect thereto, (a) there shall exist a default in the payment of principal, premium, if any, sinking funds or interest with respect to any Superior Indebtedness, or (b) there shall have occurred an event of default (other than a default in the payment of principal, premium, if any, sinking funds or interest) with respect to any Superior Indebtedness, as defined therein or in the instrument under which the same is Outstanding, permitting the Holders thereof to accelerate the maturity thereof and such event of default shall not have been cured or waived or shall not have ceased to exist. Upon (a) any acceleration of maturity of the principal amount due on the debentures or (b) any payment of distribution of any kind or character, whether in cash, property or securities, upon any dissolution or winding-up or total or partial liquidation, reorganization or arrangement of any Member (as defined in the Master Indenture), whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all principal, premium, if any, and interest due or to become due upon all Superior Indebtedness shall first be paid in full, or H-3

232 payment thereof provided for in accordance with the terms of such Superior Indebtedness, before any payment is made on account of the principal, premium, if any, or interest on the indebtedness evidenced by the debentures, and upon any such dissolution or winding-up or liquidation, reorganization or arrangement, any payment or distribution of any kind or character, whether in cash, property or securities, to which the Holders of the debentures or the Trustee under this Indenture would be entitled, except for the provisions hereof, shall be paid by the Members, or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other person making such payment or distribution, to the Master Trustee to the extent necessary to pay all Superior Indebtedness in full after giving effect to any concurrent payment or distribution to the Master Trustee for the Holders of Superior Indebtedness, before any payment or distribution is made to the Holders of the indebtedness evidenced by the debentures or to the Trustee under this Indenture. distribution, delivered to said Trustee for the purpose of ascertaining the persons entitled to participate in such distribution, the Holders of Superior Indebtedness and other indebtedness of such Member, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to the foregoing provisions, and (c) that the Trustee under any indenture relating to Subordinated Indebtedness and any paying agent therefor shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of moneys to or by such Trustee or such paying agent, unless and until such Trustee or such paying agent, as the case may be, shall have received written notice thereof from any Member or from one or more Holders of Superior Indebtedness, or from the Master Trustee. In the event that, in violation of any of the foregoing provisions, any payment or distribution of any kind or character, whether in cash, property or securities, shall be received by the Trustee under this Indenture or by the Holders of the debentures before all Superior Indebtedness is paid in full, or provision made for such payment in accordance with the terms of such Superior Indebtedness, such payment or distribution shall be held in trust for the benefit of, and shall be paid over or delivered to the Master Trustee for application to the payment of all Superior Indebtedness remaining unpaid to the extent necessary to pay all such Superior Indebtedness in full in accordance with its terms, after giving effect to any concurrent payment or distribution to the Master Trustee for the Holders of such Superior Indebtedness. No present or future Holder of Superior Indebtedness shall be prejudiced in its, his or her right to enforce subordination of the indebtedness evidenced by the debentures by any act or failure to act on the part of any Member or anyone in custody of its assets or property. The foregoing subordination provisions shall be for the benefit of the Holders of Superior Indebtedness and may be enforced by the Master Trustee against the Holders of debentures or any trustee thereof; provided, however, that the indentures or other instruments creating or evidencing subordinated debt or pursuant to which any subordinated debt is issued shall provide: (a) that the foregoing provisions are solely for the purpose of defining the relative rights of the Holders of Superior Indebtedness (as defined therein) on the one hand and the Holders of the Subordinated Indebtedness on the other hand, and that nothing therein shall impair, as between the Members and the Holders of the Subordinated Indebtedness, the obligation of the Members, which is unconditional and absolute, to pay to the Holders thereof the principal thereof, premium, if any, and interest thereon in accordance with its terms, nor shall anything therein prevent the Holders of the Subordinated Indebtedness or any Trustee on their behalf from exercising all remedies otherwise permitted by applicable law or thereunder upon default thereunder, subject to the rights set forth above of the Holders of Superior Indebtedness to receive cash, property or securities otherwise payable or deliverable to the Holders of the Subordinated Indebtedness, (b) that upon any payment or distribution of assets of any Member of the character referred to in the fourth paragraph of the foregoing provisions, the Trustee under any indenture relating to Subordinated Indebtedness shall be entitled to rely upon any order or decree of a court of competent jurisdiction in which such dissolution, winding-up, liquidation, reorganization or arrangement proceedings are pending, and upon a certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent or other person making any such payment or THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 SERIES C SUBORDINATED NOTE $680,000 November 30, 2012 KNOW ALL MEN BY THESE PRESENTS that ALDERSON-BROADDUS COLLEGE, INC., a nonprofit corporation organized and existing under the laws of the State of West Virginia (the College ), on behalf of itself and the Obligated Group as the Obligated Group Agent (the Obligated Group Agent ), for value received, hereby acknowledges that the Obligated Group is obligated to, and promises to pay to THE PHILIPPI MUNICIPAL BUILDING COMMISSION (the Issuer ), as issuer of the $680,000 College Facilities Subordinate Lien Refunding and Improvement Revenue Bonds (Alderson-Broaddus College, Inc.) 2012 Series C (Taxable) (the 2012 Series C Bonds ) under the Bond Indenture (the Bond Indenture ) dated as of November 1, 2012, between the Issuer and Wells Fargo Bank, N. A., as bond trustee (the Bond Trustee ), and any successor trustee appointed under the Bond Indenture, or registered assigns, the principal sum of SIX HUNDRED EIGHTY THOUSAND DOLLARS ($680,000). This C Subordinated Note also evidences and secures the obligation of the College under the Lease Agreement dated as of November 1, 2012 (the Lease Agreement ), between the Issuer and the College to make payments in respect of the 2012 Series C Bonds in accordance with the Bond Indenture. The principal installments of this Note correspond to the maturities and mandatory sinking fund payments of the 2012 Series C Bonds. The final maturity date of this Note is October 1, The principal of this Note bears interest at the same rates as the 2012 Series C Bonds. Interest payments on this Note correspond to the Interest Payment Dates for the 2012 Series C Bonds. Principal hereof, interest hereon and any applicable redemption premium (collectively Debt Service Charges ), are payable in any coin or currency of the United States of America which on the payment date is legal tender for the payment of public and private debts. This Note is one of a duly authorized Obligations issued by the Obligated Group under and pursuant to Supplemental Master Trust Indenture , dated as of November 1, 2012 (the Supplemental Indenture ), supplementing and amending the Master Trust Indenture, dated as of November 1, 2012, by and among the College, Alderson-Broaddus Endowment Corporation and Wells Fargo Bank, N. A., as master trustee (the Master Trustee ). The Master Trust Indenture, as supplemented and amended, is hereinafter called the Master Indenture. Anything in this C Subordinated Note to the contrary notwithstanding, this Note constitutes Subordinated Indebtedness under the Master Indenture and is not on a parity with the A Note or the D Note issued under the Supplemental Indenture and any other Obligations issued under the Master Indenture, except for the B Subordinated Note issued under the Supplemental Indenture which is on parity with this C Subordinated Note. This Note constitutes Subordinated Indebtedness as defined in the Master Indenture, and the terms required by Exhibit C to the Master Indenture for Subordinated Indebtedness are attached as Appendix I hereto and incorporated herein by reference. Capitalized terms used and not otherwise defined in this Note shall have the meaning assigned to such terms in the Lease Agreement and the Master Indenture. This Note is subject to redemption before maturity, to the extent, upon the conditions, and with respect to the corresponding payments of principal and interest and with any applicable redemption premium that the 2012 Series C Bonds are subject to upon redemption in accordance with the Bond Indenture. Giving notice of redemption of the 2012 Series C Bonds in accordance with the conditions set forth in the Bond Indenture will, without further action by the Master Trustee, the Bond Trustee or the Obligated Group Agent, constitute notice of the redemption of the corresponding amounts of principal on this Note and those amounts will become due and payable on the date of the redemption of those 2012 Series C Bonds so redeemed. The Obligated Group will pay Debt Service Charges on this Note at the times and in the amounts set forth above. The Obligated Group will be entitled to a credit, however, against the Debt Service Charges due on this Note, for amounts paid under the Lease Agreement and applied to the corresponding payment of Debt Service Charges on the 2012 Series C Bonds. Copies of the Master Indenture and the Lease Agreement are on file at the Corporate Trust Office of the Master Trustee and reference is hereby made to the Master Indenture and Lease Agreement for the provisions, among others, with respect to the nature and extent of the rights and obligations of the holders of this Note and other Obligations issued under the Master Indenture, the terms and conditions on which, and the purposes for which Obligations may be issued under the Master Indenture, and the rights, duties and obligations of the Obligated Group and the Master Trustee under the Master Indenture and the Lease Agreement, to all of which the holder of this Note, by acceptance hereof, consents. The Members of the Obligated Group are jointly and severally liable for the performance of the covenants of each Member and of the Obligated Group under the Master Indenture including, without limitation, payment of Debt Service Charges and all obligations under the Master Indenture. As of the date of this Note, Alderson-Broaddus College, Inc. and Alderson-Broaddus Endowment Corporation are the only Members of the Obligated Group. New Members may be added to the Obligated Group and existing Members may withdraw from the Obligated Group upon the conditions set forth in the Master Indenture. The Master Indenture permits the issuance of additional Obligations under the Master Indenture to be secured by the covenants made therein, all of which, regardless of the times of issue or maturity, are to be of equal rank without preference, priority or distinction of any Obligation of any series over any other Obligation, except as expressly provided in the Master Indenture. H-4

233 Upon the occurrence of certain events of default as defined in the Master Indenture, the principal of all Obligations then Outstanding may be declared, and thereupon shall become, due and payable as provided in the Master Indenture. The holder of this Note shall have such rights to enforce the provisions of the Master Indenture, or to institute any action with respect to a default under the Master Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, as are provided in the Master Indenture. The holder of this Note shall have no right to enforce the provisions of the Master Indenture, the Lease Agreement or the Deeds of Trust, or to institute any action to enforce the covenants of the Master Indenture, the Lease Agreement or the Deeds of Trust, or to take any action with respect to any default under the Master Indenture, the Lease Agreement or the Deeds of Trust, or to institute, appear in or defend any suit or other proceeding with respect to the Master Indenture, the Lease Agreement or the Deeds of Trust, except as expressly provided or permitted in the Master Indenture, the Lease Agreement or the Deeds of Trust. Group Agent, any Member of the Obligated Group, or any successor entities, under any rule of law or equity, statute or constitution, or by the enforcement of any assessment or penalty or otherwise, and all liability of any incorporator, officer, director, member or trustee is expressly waived and released as a condition of and consideration for the issuance of this Note and its acceptance by the owner of this Note. This Note will not be entitled to any benefit under the Master Indenture, or become obligatory for any purpose, until this Note has been duly authenticated by execution by an authorized officer of the Master Trustee on the Master Trustee s Authentication Certificate. [Remainder of Page Intentionally Left Blank] This Note is issuable only as a fully registered note, and, as provided and to the extent authorized in the Master Indenture, this Note may be exchanged for a Note of the same series in an amount equal to the aggregate principal amount Outstanding on this Note, and not otherwise. This Note will be registered on the register to be maintained at the principal office of the Master Trustee and will be transferable only in the manner and subject to the limitations, if any, set forth in the Master Indenture. Upon every exchange or registration of transfer of this Note, the Obligated Group may make a charge sufficient to reimburse it for any tax or taxes or other governmental charge required to be paid by the Master Trustee or the Obligated Group with respect to the exchange or transfer. That charge must be paid by the holder requesting transfer or exchange as a condition precedent to the exercise of that privilege. Upon transfer or exchange, the Obligated Group Agent must execute and the Master Trustee must authenticate and deliver, in exchange for this Note, a new registered Note or Notes registered in the name of that holder or the transferee. This Note is a negotiable instrument under the Uniform Commercial Code of West Virginia. The Obligated Group, the Master Trustee, any paying agent and any note registrar may deem and treat the person in whose name this Note is registered as the absolute owner for the purpose of receiving payment of the Debt Service Charges on this Note. Neither the Obligated Group, nor any paying agent, nor the Master Trustee, nor any note registrar will be affected by any notice to the contrary. All payments made to the registered owner of this Note will be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable on this Note. No recourse may be had for the payment of Debt Service Charges on this Note or for any claim based on this Note or upon any obligation, covenant, or agreement contained in the Master Indenture, against any past, present or future officer, director, member or trustee of the Obligated Group Agent, or any Member of the Obligated Group, or any incorporator, officer, director, member or trustee of any successor entity, either directly or through the Obligated IN WITNESS WHEREOF, ALDERSON-BROADDUS COLLEGE, INC., as Obligated Group Agent, has caused this Note to be executed in its name on behalf of itself and the other Members of the Obligated Group by the manual or facsimile signature of its President and its corporate seal to be hereunto affixed and the same to be attested by its Secretary all as of the date first hereinabove written. ALDERSON-BROADDUS COLLEGE, INC., as Obligated Group Agent By: Name: Richard A. Creehan [SEAL] Title: President MASTER TRUSTEE S AUTHENTICATION CERTIFICATE The Note to which this certificate is attached is one of the Obligations described in the within-mentioned Master Indenture. WELLS FARGO BANK, N. A., as Master Trustee By: Name: Joseph Progar Title: Vice President Attest: By: Name: Harry G. Shaffer, III Its: Secretary Dated: November, 2012 Note C ( ) H-5

234 APPENDIX I SUBORDINATED INDEBTEDNESS Any issue of Subordinated Indebtedness shall be evidenced by instruments, or issued under an indenture or other document, containing provisions for the subordination of such Indebtedness (to which appropriate reference shall be made in the instruments evidencing such Indebtedness) substantially as follows (the term debentures being, for convenience, used in the provisions set forth below to designate the instruments issued to evidence Subordinated Indenture and the term this Indenture to designate the instrument, indenture or other document containing such provisions): All debentures issued under this Indenture shall be issued subject to the following provisions and each person taking or holding any such debenture whether upon original issue or upon transfer or assignment thereof accepts and agrees to be bound by such provisions. All debentures issued hereunder and any coupons thereto appertaining shall, to the extent and in the manner hereinafter set forth, be subordinated and subject in right to the prior payment of Superior Indebtedness as defined in this Appendix I. For all purposes of this Appendix I the term Superior Indebtedness shall mean all Obligations now or hereafter issued under that certain Master Trust Indenture (the Master Indenture ), dated as of November 1, 2012 among Alderson-Broaddus College, Inc., Alderson-Broaddus Endowment Corporation and Wells Fargo Bank, N. A., as master trustee (the Master Trustee ), as supplemented and modified to the date hereof, or as the same may hereafter from time to time be further supplemented and modified. No payment on account of principal, premium, if any, sinking funds or interest on the debentures shall be made, nor shall any property or assets be applied to the purchase or other acquisition or retirement of the debentures, unless full payment of amounts then due and payable for principal, premium, if any, sinking funds and interest on Superior Indebtedness has been made or duly provided for in accordance with the terms of such Superior Indebtedness. No payment on account of principal, premium, if any, sinking funds or interest on the debentures shall be made, nor shall any property or assets be applied to the purchase or other acquisition or retirement of the debentures, if, at the time of such payment or application or immediately after giving effect thereto, (a) there shall exist a default in the payment of principal, premium, if any, sinking funds or interest with respect to any Superior Indebtedness, or (b) there shall have occurred an event of default (other than a default in the payment of principal, premium, if any, sinking funds or interest) with respect to any Superior Indebtedness, as defined therein or in the instrument under which the same is Outstanding, permitting the Holders thereof to accelerate the maturity thereof and such event of default shall not have been cured or waived or shall not have ceased to exist. Upon (a) any acceleration of maturity of the principal amount due on the debentures or (b) any payment of distribution of any kind or character, whether in cash, property or securities, upon any dissolution or winding-up or total or partial liquidation, reorganization or arrangement of any Member (as defined in the Master Indenture), whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all principal, premium, if any, and interest due or to become due upon all Superior Indebtedness shall first be paid in full, or payment thereof provided for in accordance with the terms of such Superior Indebtedness, before any payment is made on account of the principal, premium, if any, or interest on the indebtedness evidenced by the debentures, and upon any such dissolution or winding-up or liquidation, reorganization or arrangement, any payment or distribution of any kind or character, whether in cash, property or securities, to which the Holders of the debentures or the Trustee under this Indenture would be entitled, except for the provisions hereof, shall be paid by the Members, or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other person making such payment or distribution, to the Master Trustee to the extent necessary to pay all Superior Indebtedness in full after giving effect to any concurrent payment or distribution to the Master Trustee for the Holders of Superior Indebtedness, before any payment or distribution is made to the Holders of the indebtedness evidenced by the debentures or to the Trustee under this Indenture. In the event that, in violation of any of the foregoing provisions, any payment or distribution of any kind or character, whether in cash, property or securities, shall be received by the Trustee under this Indenture or by the Holders of the debentures before all Superior Indebtedness is paid in full, or provision made for such payment in accordance with the terms of such Superior Indebtedness, such payment or distribution shall be held in trust for the benefit of, and shall be paid over or delivered to the Master Trustee for application to the payment of all Superior Indebtedness remaining unpaid to the extent necessary to pay all such Superior Indebtedness in full in accordance with its terms, after giving effect to any concurrent payment or distribution to the Master Trustee for the Holders of such Superior Indebtedness. No present or future Holder of Superior Indebtedness shall be prejudiced in its, his or her right to enforce subordination of the indebtedness evidenced by the debentures by any act or failure to act on the part of any Member or anyone in custody of its assets or property. The foregoing subordination provisions shall be for the benefit of the Holders of Superior Indebtedness and may be enforced by the Master Trustee against the Holders of debentures or any trustee thereof; provided, however, that the indentures or other instruments creating or evidencing subordinated debt or pursuant to which any subordinated debt is issued shall provide: (a) that the foregoing provisions are solely for the purpose of defining the relative rights of the Holders of Superior Indebtedness (as defined therein) on the one hand and the Holders of the Subordinated Indebtedness on the other hand, and that nothing therein shall impair, as between the Members and the Holders of the Subordinated Indebtedness, the obligation of the Members, which is unconditional and absolute, to pay to the Holders thereof the principal thereof, premium, if any, and interest thereon in accordance with its terms, nor shall anything therein prevent the Holders of the Subordinated Indebtedness or any Trustee on their behalf from exercising all remedies otherwise permitted by applicable law or thereunder upon default thereunder, subject to the rights set forth above of the Holders of Superior Indebtedness to receive cash, property or securities otherwise payable or deliverable to the Holders of the Subordinated Indebtedness, (b) that upon any payment or distribution of assets of any Member of the character referred to in the fourth paragraph of the foregoing provisions, the Trustee under any indenture relating to Subordinated Indebtedness shall be entitled to rely upon any order or decree of a court of competent jurisdiction in which such dissolution, winding-up, liquidation, reorganization or arrangement proceedings are pending, and upon a certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent or other person making any such payment or distribution, delivered to said Trustee for the purpose of ascertaining the persons entitled to participate in such distribution, the Holders of Superior Indebtedness and other indebtedness of such Member, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to the foregoing provisions, and (c) that the Trustee under any indenture relating to Subordinated Indebtedness and any paying agent therefor shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of moneys to or by such Trustee or such paying agent, unless and until such Trustee or such paying agent, as the case may be, shall have received written notice thereof from any Member or from one or more Holders of Superior Indebtedness, or from the Master Trustee. THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 SERIES D NOTE $37,465,000 November 30, 2012 KNOW ALL MEN BY THESE PRESENTS that ALDERSON-BROADDUS COLLEGE, INC., a nonprofit corporation organized and existing under the laws of the State of West Virginia (the College ), on behalf of itself and the Obligated Group as the Obligated Group Agent (the Obligated Group Agent ), for value received, hereby acknowledges that the Obligated Group is obligated to, and promises to pay to WELLS FARGO BANK, N. A., as bond trustee (the Bond Trustee ) under the Bond Indenture (the Bond Indenture ) dated as of November 1, 2012, between The Philippi Municipal Building Commission (the Issuer ) and the Trustee, entered into in connection with the issuance by the Issuer of its (i) $34,275,000 College Facilities Refunding and Improvement Revenue Bonds (Alderson-Broaddus College, Inc.) 2012 Series A (the 2012 Series A Bonds ), (ii) $2,510,000 College Facilities Subordinate Lien Refunding Revenue Bonds (Alderson-Broaddus College, Inc.) 2012 Series B (the 2012 Series B Bonds ), and (iii) $680,000 College Facilities Subordinate Lien Refunding and Improvement Revenue Bonds (Alderson-Broaddus College, Inc.) 2012 Series C (Taxable) (the 2012 Series C Bonds and together with the 2012 Series A Bonds and the 2012 Series B Bonds, collectively, the Bonds ), and any successor trustee appointed under the Bond Indenture, or registered assigns, the principal sum of THIRTY SEVEN MILLION FOUR HUNDRED SIXTY FIVE THOUSAND DOLLARS ($37,465,000). This D Note also evidences and secures the obligation of the Obligated Group under the Guaranty Agreement dated as of November 1, 2012, between the Obligated Group and the Bond Trustee, to absolutely and unconditionally guarantee the full and prompt payment and performance by the Issuer of its obligations to make payments in respect of the Bonds in accordance with the Bond Indenture. The principal installments of this Note correspond to the maturities and mandatory sinking fund payments of the Bonds. The final maturity date of this Note is October 1, The principal of this Note bears interest at the same rates as the Bonds. Interest payments on this Note correspond to the Interest Payment Dates for the Bonds. All payments made by the Members of the Obligated Group on this Note shall be applied by the Trustee in order of priority of payment for the 2012 Series A Bonds and the 2012 Subordinate Bonds as set forth in the Bond Indenture. Principal hereof, interest hereon and any applicable redemption premium (collectively Debt Service Charges ), are payable in any coin or currency of the United States of America which on the payment date is legal tender for the payment of public and private debts. This Note is one of a duly authorized Obligations issued by the Obligated Group under and pursuant to Supplemental Master Trust Indenture , dated as of November 1, 2012 (the Supplemental Indenture ), supplementing and amending the Master Trust Indenture, H-6

235 dated as of November 1, 2012, by and among the College, Alderson-Broaddus Endowment Corporation and Wells Fargo Bank, N. A., as master trustee (the Master Trustee ). The Master Trust Indenture, as supplemented and amended, is hereinafter called the Master Indenture. Capitalized terms used and not otherwise defined in this Note shall have the meaning assigned to such terms in the Guaranty Agreement and the Master Indenture. The Obligated Group will pay Debt Service Charges on this Note at the times and in the amounts set forth above. The Obligated Group will be entitled to a credit, however, against the Debt Service Charges due on this Note, for amounts paid under the Guaranty Agreement and applied to the corresponding payment of Debt Service Charges on the Bonds. Copies of the Master Indenture and the Guaranty Agreement are on file at the Corporate Trust Office of the Master Trustee and reference is hereby made to the Master Indenture and Lease Agreement for the provisions, among others, with respect to the nature and extent of the rights and obligations of the holders of this Note and other Obligations issued under the Master Indenture, the terms and conditions on which, and the purposes for which Obligations may be issued under the Master Indenture, and the rights, duties and obligations of the Obligated Group and the Master Trustee under the Master Indenture and the Guaranty Agreement, to all of which the holder of this Note, by acceptance hereof, consents. The Members of the Obligated Group are jointly and severally liable for the performance of the covenants of each Member and of the Obligated Group under the Master Indenture including, without limitation, payment of Debt Service Charges and all obligations under the Master Indenture. As of the date of this Note, Alderson-Broaddus College, Inc. and Alderson-Broaddus Endowment Corporation are the only Members of the Obligated Group. New Members may be added to the Obligated Group and existing Members may withdraw from the Obligated Group upon the conditions set forth in the Master Indenture. The Master Indenture permits the issuance of additional Obligations under the Master Indenture to be secured by the covenants made therein, all of which, regardless of the times of issue or maturity, are to be of equal rank without preference, priority or distinction of any Obligation of any series over any other Obligation, except as expressly provided in the Master Indenture. Upon the occurrence of certain events of default as defined in the Master Indenture, the principal of all Obligations then Outstanding may be declared, and thereupon shall become, due and payable as provided in the Master Indenture. The holder of this Note shall have such rights to enforce the provisions of the Master Indenture, or to institute any action with respect to a default under the Master Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, as are provided in the Master Indenture. The holder of this Note shall have such rights to enforce the provisions of the Guaranty Agreement, or to institute any action with respect to a default under the Guaranty Agreement, or to institute, appear in or defend any suit or other proceeding with respect thereto, as are provided in the Guaranty Agreement. This Note is issuable only as a fully registered note, and, as provided and to the extent authorized in the Master Indenture, this Note may be exchanged for a Note of the same series in an amount equal to the aggregate principal amount Outstanding on this Note, and not otherwise. This Note will be registered on the register to be maintained at the principal office of the Master Trustee and will be transferable only in the manner and subject to the limitations, if any, set forth in the Master Indenture. Upon every exchange or registration of transfer of this Note, the Obligated Group may make a charge sufficient to reimburse it for any tax or taxes or other governmental charge required to be paid by the Master Trustee or the Obligated Group with respect to the exchange or transfer. That charge must be paid by the holder requesting transfer or exchange as a condition precedent to the exercise of that privilege. Upon transfer or exchange, the Obligated Group Agent must execute and the Master Trustee must authenticate and deliver, in exchange for this Note, a new registered Note or Notes registered in the name of that holder or the transferee. This Note is a negotiable instrument under the Uniform Commercial Code of West Virginia. The Obligated Group, the Master Trustee, any paying agent and any note registrar may deem and treat the person in whose name this Note is registered as the absolute owner for the purpose of receiving payment of the Debt Service Charges on this Note. Neither the Obligated Group, nor any paying agent, nor the Master Trustee, nor any note registrar will be affected by any notice to the contrary. All payments made to the registered owner of this Note will be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable on this Note. No recourse may be had for the payment of Debt Service Charges on this Note or for any claim based on this Note or upon any obligation, covenant, or agreement contained in the Master Indenture, against any past, present or future officer, director, member or trustee of the Obligated Group Agent, or any Member of the Obligated Group, or any incorporator, officer, director, member or trustee of any successor entity, either directly or through the Obligated Group Agent, any Member of the Obligated Group, or any successor entities, under any rule of law or equity, statute or constitution, or by the enforcement of any assessment or penalty or otherwise, and all liability of any incorporator, officer, director, member or trustee is expressly waived and released as a condition of and consideration for the issuance of this Note and its acceptance by the owner of this Note. This Note will not be entitled to any benefit under the Master Indenture, or become obligatory for any purpose, until this Note has been duly authenticated by execution by an authorized officer of the Master Trustee on the Master Trustee s Authentication Certificate. [Remainder of Page Intentionally Left Blank] IN WITNESS WHEREOF, ALDERSON-BROADDUS COLLEGE, INC., as Obligated Group Agent, has caused this Note to be executed in its name on behalf of itself and the other Members of the Obligated Group by the manual or facsimile signature of its President and its corporate seal to be hereunto affixed and the same to be attested by its Secretary all as of the date first hereinabove written. ALDERSON-BROADDUS COLLEGE, INC., as Obligated Group Agent By: Name: Richard A. Creehan [SEAL] Title: President MASTER TRUSTEE S AUTHENTICATION CERTIFICATE The Note to which this certificate is attached is one of the Obligations described in the within-mentioned Master Indenture. WELLS FARGO BANK, N. A., as Master Trustee By: Name: Joseph Progar Title: Vice President Attest: By: Name: Harry G. Shaffer, III Its: Secretary Dated: November, 2012 Note D ( ) H-7

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237 Appendix I: Market Study

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239 ALVAREZ & MARSAL REAL ESTATE ADVISORY SERVICES May3, 2012 Stephen H 'Mlitehead Par1ners Development 502 Union Avenue l<l>oimie, TN Ro: Mat1<01 Study Related to the O.Volop~Mnt of Multiple On.Campuo Student Housing FocllitiH at Alders011.Sroaddu. Coll"9" in Philippi, Wootlllrglnla Dear Mr Whilehead, Per om engagement letter dated February 3, 2012, tho following report summarl.tes A&M's obseivations and conclusions for lho above referenced property. The report Is presented In the fomnat identified below. 1 ExocuM Summary U CorropetiWe Context Analysil Ill Cunent Development Plan tv Foc:us Group/Sufvey Resuhs v Demand Analysis Submitted To: Stephen H. Whitehead Partners Oevek>pment 502 Union Avenue Knoxville, TN Alderson-Broaddus College Philippi, WV On Campus Housing Market Study Summary of Results May 2012 Submitted By: Alvarez & Morsal Real Estate Advisory Sel'lices, LLC 2100 Ross Avenue, 21" Floor Dallas, TX The ~nying analyses are basad on eatlmates and assumptions developed In connection with the market study. However, some assumptions inevotably will not materialize, and unanticipated events and circumstances may occur, therefore, actual results achieved wfll vary from our estimates and the variations may be motorial. This report Is Intended solely tor your information and assistance tor the funcuon stated above, and should not be relied upon tor any other purpose. Any third party recopient rreclplenl") of this report is beirlg provided a copy of 1he report tor Information purpooeo in connecbon With 1he Reclpler>ra overal duo d~ etlotls The Recipient ad<now1edgel lllat (i) d is either an,nsi!mional Act;redited lnvesiof", a "'ualifiad lnsiimional Buyer" or other prudent sophlltjcated lnscilutional investor, and (oi) d wil not be relying exclusively 011 1he report or infomnatjon conveyed during dlscusslons with Alvarez and Marui ra&m1, ij any, but rather II will be performing its own lr>dopendent due doi'v"r>co, consistent woth its eullomary practices wllh rospecl to similar investments, Including Inspections, analyses, report reviews, and evaluations of all relevanl facts and circumstances. Tho Recipient understands that Alvarez and Marui makes no representations or warranties regerdlng the accuracy of tho oo~usions --I 111~ I Preface contained in the report or conveyed during diseusslons relabng to tho repon. olher than that Alvarez and Marui exercised its professional judgment in reaching such conclusions and that tho report shall remain subject to eoeh of the condftions, limitations and assumptions stated within the report, The Recipient agrees that Alverez and Mars.al shall under no circumstances be liable to the Recipient and any persona or entrties by reason of the report or discussions relating to the report for an aggregate amoont no more than the professional fee actuauy received by Alvarez and Marui for the report_ Alvarez. and Marui Real Estate Advisory SeiVioes, LLC In FebNary of 2012, Alvaru & Marsal Rell Ellale AtMsory SeiVices, LLC r A&M") was engaged to conduct a si>jdent hou$ir>g mao1tel study ("the Study") related to 1he development of mult4>le ~mpus housing lacllnies to accommodate now student growth. The new housing is pan of a la'll"r campus master plan that is being implemented in conjunction with the construction of new athletic facilities. A&M was assisted by seveml individuals during the course of this study. As such, A&M would loko to thank the following individuals f«their support in this endeavor- >- Mr Bruce Blakenshop, VP tor Alsessmen~ Planning & T eehnology.- Ms Tanya Shelton, VP for Enrollment Management >- Mr Zachary Ward, Oiredor of Admouions 1- Mr Oennos Creehan, Athlebc Director >- Ms. Sarah Word, Dean of Students,.. Ms Meghan Johnson, D ector of Resldenoe Ute )oo Mr. Richard Creehan, President Presented herein are A&M's f1t1dlngs based on the analysis performed. The findings aro the professional opinions of A&M and ara derived from specifoc assumpbons and cor>dotlons f)<esenled in this report 'Mlrle A&M deems lllat all primary and secondary souroos oro reliable, thejr ao:uracy IS not gua111nteed by A&M Furthermore, 1he ~nying analyses aro based 011 osbmates and assumptions d...toped in c:onnec:110n With the market study However, some ass<jl11)1ions inevdably wil not matenaloze, lnd unanticipated evenls and circumstances may occur, lhereforo, actual reoults oehloved Wll vary from our eslmates and the variations may be matorilll This report is Intended solely for your infoomation and assistance for the funetoon stated above, and should not be relied upon for any other purpose. Any third peny recipient ("Recipient") of this report is being provided a copy of the report for lnfomnation purposes In connection wfth the Recipient's overall due diligence efforts. The Recipient acknowledges that (i) ~ is either an "Institutional Accredftad Investor", 1 "Ouatifled lnstomlonal Buyet" or olher prudent sophisticaled instirutional investor, and ( )" will not be relying oxclusovely on 1he report or infomnabon conveyed during dtscussioos with Alverez 1nd M.,...l ("A&M"), of any, but rather 4 wol be performng its own ondel>er>dont duo cliligenoe, cons.stent With its cualomory practices with respoet 10 10'11i!ar inveslmonts, inc*lding inspectoons, analyma, report reviews, and evaluatjons of al I-1 Propc:lt6d On.Cempu~ F~es DeveiOpmenl At0orton 8roecklut COllege Ptl!llppl. west Vwglnle ' I'

240 {11ls I Preface relevant facts and circtjmstances. The Recipient unde,..tands 11\at Alvarez and Marsal makes no representations or warranties regarding the accuracy of the conclusions oontained in the report or conveyed during discussions relating to the report, other than that Alvarez and Marsal exercised its professional judgment in reaching such conclusions and that the report shall remain subject to each of tile conditions. limitations and assumptions stated within the report. The Recipient agrees that Alvarez. and Marsal shall under no circumstances be liable to the Recipient and any persons or entities by reason of the report or di$cusstons relating to the report for an aggregate amount no more than the professional fee actuatty received by Alvarez and Ma=l for the report. Executive Summary Proposed On-Campus Fat*t!H ~ Aldef'son.Broaddus Conege Pl'llliwt, We:S1 Vttginia Pogtti Proposed On Carnpul F &e:iibes Development --Broad<luoCotlege Philippi. West V~tglni$ tfl~ b II. Executive Summary til~b I I. Executive Summary In February of 2012, Alvarez & Ma,..al Real Estate Advisory Services, llc ('A&M') was engaged to conduct a student housing market study ('the Study") related to lhe development of multipae on-campus housing facilities to accommodate new student growth. The new housing is part of a larger eampus master plan that is being implemen1ed In conjunction with the construction of new athletic facifities. Background On August 16, 2011, the Aklerson Broaddus College Strategic Plan ('Strategic Plan') was approved under the direction of the new President. Mr. Richard Creehan, with the top priority being enrollment growth. President Creehan's Strategic Plan, incorporates 11\e Admissions Yield Model methodology which achieves growth through an emphasis oo adding athletic programs. The athletic programs to be added to AB College are football, men's and women s lacrosse, a marching band, women's tennis, men's volleyball, men's and women's swimming, men's and women's golf, acrobatic/tumbling, cheerleading, and wrestling. This report presents lhe methodologies ulilized in analyzing the potential housing development and the observations based on these analyses. The following are some of the critical areas uncovered during A&M's analysis. Work Plan A&M's wort< plan included the following: A competitive context analysis was completed to evaluate student response to sirnllar enrollment initiatives that have been instituted at comparable schools (Sectiooll). students' willingness to pay the expected premiums for the new student housing facilities (Section IV); and A domand analysis was devised to assess demand for on campus at the proposed price points (Section V). Summary of Findings Competitive Context Analysis The objective of lhe Competitive Context Analysis was to evaluate AB College's enrollment growth strategies by exploring the outcomes of similar enrorment plans at comparable inslftutions. Prior to his presidency at AB College, President Creehan implemented components of the Admissions Yield Model at lhree colleges including: Alleghany College, located in Meadville, PA; Washington and Jefferson College (W&J'), located in Washington, PA; and Adrian College, loeated in Adrian, MI. The demand for the proposed on campus housing is based on the suooess of AB College's projected enrollment growth which is a function of the Admissions Yield Model. A&M analyzed the outcomes of 11\e Admissions Yield Model at the Peer Institutions In Older to assess tl1e potential success of the model at AB College. A&M performed several exercises to comp'ete this task, including: Observed the tactics and strategies implemented at each Peer Institution; Analyzed the enrollment!tends prior to, during, and after tl1e Admissions Yield Model was instituted at each Peer Institution: and Compared lhe historical enrollment trends to AB College's projections. An oveniew of the current development plan was compfeted to asses$ the cujtent student housing options and the new student llousing options to be compleled in 2013 (Section Ill); Focus group interviews and surveys were conducted in March 2012 to gain qualitative information regarding student housing preferences, the students' perception of the current plans for the new student housing facilities, and the Proposed On Ca-npus F8CIIIbe$ Oev~tn! AldOJS()n.Bioaddus College Phlhi)C)i, 'Nest Vlf9f'N I-2 Proposed On Campus Facilities Oeve&opment Aldet10n-Broaddus College Phi~l. West Vlfgtl'it

241 All~ I I. Executive Summary t1l~s 1.. Exa<:utlvo Summary Table 1.1 illustrates the overall and year-over-year enrollment growth after President Creehan s Admissions Yield Model was adopted at each of the Peer Institutions, as well as how much of the Model was adopted at each institution. Current Development Plan Wth the exception of students that live within a 50-mile radius of the school, AB College requires all students to live on campus for four years. However, AB College is planning to reduce the radius exception in the future which would create a greater need for on campus student housing. AddiUonalty, re-ctuiting efforts are focused on students residing outside of West Virginia which will create a greater concentration of students living on campus rather than opting out with the SO-mile radius exception. The current student housing is comprised of three otder residence halls: Kincaid, Priestley, and Benedum Halls. Kincaid Hall offers two, three and four bedroom suites with 25 units featuring k~chen appliances, and can house up to 259 students. Priestley Hall offers four-bedroom shared-slyle suites; however the seoond and third lloors were condemned and vacated in February 2012 for safety reasons due 10 deteriorating external stairs and walkway. AB College plans to repair the damaged stairs and walkway t:yver the sunvner of after which the second and third floors will be re opened for occupancy. Once the repairs are complete, Priestley Hall wid have the ablllly to house up to 234 students. Benedum Hall is comprised of shared one bedroom units with commun~ bathrooms. and houses up to 139 students. Note that the figures include current capacily. Prior to Priestley Hall's condemnation, oect~pancy on campus was 57%. The table illustrates that the projections for AB College are considered reasonable, especialty considering recent successes incorporating the Admissions Yield Model at Adrian College, which utilized 100% concep!s and grew at a faster rate than the previous colleges. The implementation of the Admissions Yield Model at AB College is expected to create a strong demand for on campus student housing. Figure I. 1 displays the master plan for AB College developed by Partners Development and The CoJJaborative, Inc. The top of the image displays three blue buildings known as "The Planr. and another blue building towards the center of the map whk:h will be known as "The Terrace. The Plant will be comprised of three buildings, two of whk:h will contain a total of 144 units in the apartment-slyle layoul, and one of whk:h will consist of 144 suite-slyle beds. The Terrace will include 96 suite-style beds in total. The new housing will add 384 beds to the existing on-campus inventory. Proposed On Cwnpua F aatities Development AJderson-Broadclus COIIeQe Pniq)pi, West VIrginia Proposed On Campus Facilities Oevelopmenl Aldtfaon-Broaddus College ~1. WestVlrgi,_ t1ll ~ I I. Executive Summary Figura I. 1 (Now Housing at AB College) 111~~ I I. Executive Summary Fcx:us Group I Survey Results A&.M conducted two separate types of surveys while vi~ing the AB College campus in March of 2012; first, A&M randomty selected students In the dining hall to fill out a survey questionnaire ("guerilla survey") and, second, A&.M conducted one focus group which included a survey on March 20, 2012 ("locus group") in which twelve AB College students participated. The questions on the paper suney djstributed during the focus group were similar to the guerilla survey; however. the focus group discussion included greater detail regarding the current deve'opment plan. The purpose of lhe guerilla survey was to gather additional demographic &>formation. The respondents of the guerina survey reported that the average annual pre-tax income of their parents was $88,250. The majofity of students surveyed indicated that they provide for their living expenses through a combination of academic scholarship and their parents' earnings. Not surprisingly. the biggest factor to AS College students when deciding where to live was cost and availability. In general, students viewed the current on campus housing at AB College as outdated and in need of repair and maintenance. Participants stated that they valued the convenience and sense of commun~ associated with living on campus. but would like to see some improvements made to the current housing options. Tile participants' views concerning other universities' on.. campus housing varied as some indicated that AB College's rooms were outdated while others voiced that AB College's rooms were bigger and had more privacy. Overall, students thought the appliances were in need of repair or replacement. Without discussing price, the students were given the option to choose between all of the different floor plan options planned for the new housing. The majority of the students showed a preference for private rooms in an apartment--style unit. This is supported by the level of students currently living on campus (36%) even while paying a 50% premium. Ptopos.ed On Campvs, F.cil* Devetopment Aldetson BroaOdus Colege P~i. West VIrginia Pagef 5 I-3 Proposed On Campos Faolitles Oevelopmenl AIIJ<M"&en-Broaoctus College Philippi. 1NeS1 V1r91nia

242 t11b II. Exocud e Summary lhree The Execu11\'e Board appr<mki 1M Slntlogic Plan on August 16, 2011, and the President p<esented 1M plan to all faculty and slatf members on August 18, The Slrategic Plan ou- Vibfllnt campus. and (3) orowong 1M academic experience ma., pooribes (1) grow~ng enr-~ (2) growing a AS College is us.ng 1111nous tools to increase enrolment with lhe presenl locus on add..g athletic p<ograms Add.-.ly stall and faculty members have initiated new marl<oting p<ograms The Admissions Department has slt11jlilied lhe application p<aoess and removed tile previously required essay from the applocabon. has added counselors lor ac~.,...;ons thereby reduong ll1ew lemtory s12e, and has expanded out ol state recrui\m1g A&M developed an enrollment model based on hoslorical W\lonnation and projections provi<led by A8 College Table 12 llustrales hosloncal dala and projects enrollment rates fof the next four academic years These projections use the conservative enrollment eslomates provided by A8 College, as explained in further delai in Section v. U11ng 1M hislorocal dala In Table 1.2, A&M analyzed each class's retention rates lrorn year to year A&M obsened lhat retention rates 10< freshman were lhe lowe$l but an ralel hi mproved on the most recent academic year (2011). The next step was to detem\lne how many ollhe future sludents will live on campus using historical data PfO'Iided by AS College llld thew ~ A&M assumed the rate al which studenls love on campuo wtl vary between 1) lhose wt.o entered A8 Colege belote the Stratogoc Plan was ~ted; 2) lhoee wt.o enlered alter; 3) and PhysiCian's Asslslant aludenls ("PA"a") A&M then appied varywig rates to the esbmaled number of enrolled students to arrive at 1M total number ol students expecled to reside on campus ITom 20t2to 2015 Table 13 compares 1M esllmated number of on-<:all1>\js residents to 1M number of availeble beds based on A&M's oonservalive enrollment model outlined in Table TABLELJ Table 1.2 demonsll8tes expected increases in enrollment based on the conservatl\<e projections proi/lded by AB College. II is inportantlo note lhat lhese occ:upancy roles take into consideration 100% ollhe bed capacity at Benedum Haa (139 beds). It has been brought to A&M's attention lhat the capaaty at Benedum oould be reduced based on how PA lludenls are assigned beds (Single occupancy ersus double occupancy) 1'91S til~ 1.. Exocutlvo Summary I. Executive Summary and lhe posslbilrly 1hatalhlellc lnlems might be aooommoda1ed in the llaa. Tradftionally, athletic lntems have also re<:eived a single occupancy room. Keeping eve~hlng else equal, Table 1.4 presen1s occtjpancy rates that would resuh from 350 freshmen enrolled In 2012, 400 enrolled In 2013, 350 enrolled in 2014, and 300 In Concl usion A&M's analysis demonstrates a strong demand for new housing that supports devek)pment of the proposed on campus student housing. As evidenced at President Creehan'a prior colleges In which he implemented all or parts ollhe Admissions Yield Model, a posilive Impact on enrollment growlh has ocouned. Furthermore. lhe more aspects of the model that were Implemented, lhe stronger the enrollment grow1h as evidenced by the grow1h reported al Adrian College. Additionally, the research oonducled by A&M during the guerilla and focus group sunteys Indicated demand lor new atudent houatng which coukt help attract and retain new students in the future. A&M s analy$4 ol appiabons 10 enrolment estmates that incoming sludents lor lhe academic year oould range from a low ol a high ol 427. These esllmales are wei obove AB College's oonservatlva estimate ol300 inoorring si!jdents. Addl1ionally, reoent discussiona W1th AS College official$ Indicated an expedation of approxmalely 375 lnooitiing aludenls An lnoomlng class ol may resul in on campus occupancy levels meeting or exoeedlng capacity. II this O«<Jr$, A8 College may need to otler lewor single occtjpancy un~s in thew exisbng housing unbl additional on campus beds can be added Currently, AS College sludenls living In 1 single-occupancy room pay $2,670 or a 50% premium more than those In a shared room. According to the Residenoe Hall Occupancy Reports, approximately 38% of the students living on campus were in a single-occupancy room as ol the academic year. Propoted On Cttnpua F aclltutt O.Volopmtnl Atdeftoll-Bf'oeddut COIItge Pf"l!llppl,WntVirginla I-4 Ptopottd On C._.,pus Fecilttltt OtvttopmM AICitttOn-Bio.oclut ColleQO PhilipP, Wett Vlrglnll

243 II. Competitive Context Analysis Objective The objective of the Competllivo Conlext Analy$is is to evaluate AB College's enrollment growth strategiea by exploring the outcomes of simtlar enrolment plana at ~arable institutions. Methodoi"9Y In the mid 1990's, President Rlcl1ard Creehan developed an enrollment growth model referred to as the Admissions Yield Model (sometimes referred to as the enrollment growth." "admissions growth," or "etlinity based" model). Prior to hi$ presidency at AB College. Pres~t Creehan lmplemenled components of the Admissions Yield Model at three colleges. Alleghany College. Was/11nglon and Jefferson College ("W&.T), and Adrian Colege. These colloges are referred to as the 'Peer lnslrtubons' In 2011, he began imjllemonbng an Admioslons Yield Model at AB Colege as outlined in the Strategic Plan (please refer to the Demand Analy$is seaoon). Competitive Context Analysis The demand lor the proposed on C8mpus housing is based on the success of AB College's projecled enrollment growth whdl is a function of the AdmiSSIOIIS Yield Model. A&M analyzed the outcomes of the AdmiSSIOns Yield Model at the Peer Institutions in order to assess the potential success of the model at AB College A&M perfomled seve1111 exercises to complete this task, lncwng: Observed the tae!ic$ alld strategies Implemented at each Peer Institution; Analyzed the enrollment trends prior to, during, and after the Admissions Yield Model was lnsmuted at each Peer Institution: and Co11'4>8red the historical enrollment trends to AB College's projections. Summary of Flndlnga Peer lnstitutions A&M studoed three colleges that Implemented the Admissions Y101d Model ura. the guidance of P-t Creehan The PM< Institutions are allour year colleges and have a current -nl of to 2,500 students. Map 11.1 displays the locallon of AB College as wei as the Peel lnsbtulion$ Proposed On ea...,. Foollbeo ~ ~Broaddus Cohge Philippi, W.~ Virginia ~~ I ll. Competitive eontaxt Analysts Ma,p 11.1 (Pear Institutions) /11, I n. competitive Context Analyals The idea of implementing new methods to gnow enrolment is not foreign among small 10 mid-sized univarslloes However, the Admissions Yield Model is unique when compared lo more tradrtlonal methods of growing enrollment. inclu<ling: Investment in online classes: Development of satellite campuses: and Recruitment of non tracutlonal students. Alleghany Cotlogo Admissions Ylold Model OVerview Tho foundation of the Admissions Yield Model Is driven by two strategic goals: The Introduction of new college sports teams. The conslnk:tjon of sports and recteation racl t~es to suppo<tlhe college teams. lcleolly. the Investment in spo<ts and recteabon programs Will Increase enrollment; and a reaub. the school wit generale addfbonal incomo through wruon. sporting event re-.enue. and increased fundru;.ng. FUI!hermcxo. the outcome ol the Admissions Yield - wengthens the siudent body academoc:8lly AI the number of applications rneraasea. a colege natu111ly become$ more seleclrva os It nears capacity. As a resu. the ~QCePtance rate clecfrnes and avarege tell SCOleS ond grade-point averages Improve In 1995, while sennng os head basebaa coach, Preside<~! Creehan was g!von the opportunity lo ~nt 8 porbon the Admissions Yield Model at Alleghany College, a private liberal arts college rn norlhwe$tern Pennsylvania. (A&M est.mates that tho model was ~nted at ~ of ill ful capaaty.) The 5tst laclic., the model wos rnplemented whdl conlllltad of hold.ng coadles acx:ounlable lor how many inqu._, applications. acceptances end turuon deposrts they generated as they rocnrted athletes. During the second phaso of the Implementation. Creehan campe~gned to develop new spo<ts faerbtoes In 1Q97, Allegheny epened the David V WIS8 Sport and Fnness Center ($13 mollion), which Included a 200-meter t111c1<, an aquatics oenter. a fitness oente< and a perlormence arena that was used lor recreational progmmo as well various other intercollegiate ethleuc events. These progmms were credrted with helping reverse consecutive declining years of enrollment. Prior to the Implementation of President Creehan's plan, Allegheny College had approximately 1,853 atudents In 1997, after the plan had been lmplemenled for two years. enrollment grew to 1,890 Though this growth level is not considered major. n is considered to be sigmfant as ~reversed years of declining enrollment Aa of tho lall2011 semesler. Alleghany College had a si\jdent body of approxwnately 2,100. total9rowth olapp<oxmately 13 3" I-5 Ptoposed On Campua Facilit.ea ~t Aldof10n.&ood<M cor,. Philippi, We,_ Vlrglnll

244 t11~ b ln. Competitive Context Analysis (11~S I ll. Competitive Context Analysis Table 11.1 inustrates Alleghany College's enrollment growth after lhe Model was implemented. Please note that A&M was provided histor"=al enrollment numbers from AB Col.lege and was nol able to directly confirm data wijh the Registrar Department contacts at Allegheny College. Tab/e l f of the football, track and field, and women's field hockey teams) and the renovation of Brooks Park (home of the women's softball team). Additionally, President Creehan spearheaded the implementation of various sports teams. In addition to ice hockey, he oversaw the creation of four new athletic programs including: men's and women's lacrosse, f;eld hockey, and water polo. These new outdoor athletics programs were the Impetus behind the development of the Ross Memorial Park and Alexandre Stadium. which was completed In In an Interview conducted by A&M. President Creehan stated that before the imptementation of the plan, enrollment remained steady at approxlmatety 315 incoming students. After the addition of the new sports teams, the incoming class numbered 469 in From 2002 to 2004, enrollment grew 12% (or 146 students). Table 11.2 illustrates enrollrnent growth after the Admissions Yield Model was implemented for W&J College. Please note that A&M was provided historical enrollment numbers from AB College. and Marian Sherwood at W&J would not cooperate with A&M's request to confirm the data As displayed in Table 11.1, after the Implementation of the Admissions Yield Model in 1995, enrollment began to stabilize. The strongest growth OCCtJITed in 1996 at 3.1%, the year after the model was implemented. From 1997 to enrollment growth remained steady. reversing the trend of negative growth. Washington and Jefferson College In 2002, Presi<lent Cree han aocepted the Director of Athletics position at W&J College where he also s.erved on the president's senior cabinet. W&J College is a private liberal arts oollege in Washington, Pennsylvania which is 30 miles south of Pittsburg. It was at W&J tllat President Creehan further refined the Admissions Yield Model. (A&M estimates tllalthe model was Implemented at 65% of fts full capacity.) One of the first ftems President Creehan aooomplished at W&J was founding an ice hockey team. He pressed for the construction of an on campus ioe rink for four years, but was unable to convince the school's president or board of tnjstees to suppolt the construction of new facilities. However, he was able oversee the renovation of the Cameron Stadium {home As displayed In Table 11.2, after the Implementation of tile Adn>ssions Yield Model In 2002, enrollment grew by 24.2% from 2003through As of the fall2011 semester, W&J had a student body of approximately 1,500. Proposed On Campus FacUit;es OevtiOprnent Alderson-Broaddus College Philippi. West Vtginia P~ On c.tnpus F&CilttiM Oevelopmens Akferson- 8tO$ddU$ College Philippi. West V.gfta (1Jls I ll. Competitive Context Analysis 111~ ~ I ll. Competitive Context Analysis Adrian College Located in southeast Michigan. Adrian College is a private liberal arts college affiliated with the United Methodist Church. Similar to Alleghany College and W&J, prior to the implementation of lhe Admission Yield Model, Adrian College experienced a historical enrollment low of 640 students in In President Creehan was hired as ExectJtive Vice President or Adrian College and was charged with the task of Increasing enrollment Supported by the administration, President Creehan was given the flexibility to implement the AIJmissions Yield Model Jn its entirety. Initially, the plan involved arestructuring or every division related to enrollment Including financial aid, admissions, athletics, marketing and public relations, and ptanumaintenanoe. All divisions reported directly to Creehan 10 ensure accountabilrty. Table 11.3 ulustrates enrollment growth after the Admissions Yield Model was implemented at Adrian College. Please note that A&M was provided some historical enrollment numbers from AB College while some numbers were obtained from the Adrian College website. but A&M was not able to directly conflfm data with the Registrar Department contacts at Adrian College. One of the chief priorities at Adrian College was athletic recruitment. Each coach was deemed an admissions counselor In addition to their tradrtional coaching ro~. The coaches focused on recruitment through students' extracurricular interest In fact, Adrian College increased the number of sports teams from 16to 24. Addftlonal enrollment strategies implemented at Adrian College included: Increased number or mail-outs advertising the college; Expanded advertising mark.et; Buin new facil~ies and added new programs to enhance the deslrab~ity of the college: and Restructured the admitta.nce standards to admit more competitive students. Adrian College made a goal or increasing enrollment to over students with a consistent freshmen class size of 400 students. Shortly after the Admissions Yield Model was instituted, the number of applications increased dramatically. Between 2005 and 2006 enrollment grew from 640 to 1,007 srudents (or an increase of 19.9%). This growth continued the following year wfth enronment growth of 26.0%. In six years, enrollment grew to 1,670 students. Moreover, during this time frame. the operating budget more than doubled to $55 million and the athletic program that was poorly ranked is n(iw experiencing success in a number of sports. As displayed in Table 11.3, after the implementation of the Admissions Yield Model in 2005, enrollment significantly grew In 2006 and The growth slowed in 2008 and 2009, but Adrian College stib experienced high growth rates with increases of 11.9% and 12.7%. respectively. The total enrollment growth from 2006 to 2010 was 73.8%, which is significantly higher than the prior Peer Institutions. As of the fall 2011 semester, Adrian College had a student body of approximately 1,670. Proposed On Campu'$ Ftcll!toes O&Jel~l Aldef'SOI'l>Sroaddus College Philippi, We$1 Virgir'A Po9ol16 I-6 Propo&ed On Campus Faciibes Oe'Yelopment Afdetscn-BrO&ddut College PNOppl, We$1 v.g;n..

245 t11l~ ln. CompetiUve Context Analysis 111~~ Ill. Competitive Context Analysis Peer Institution Enrollment Trends This analysis clear1y illustrates that as more of the components of the Admissions Yield Model were lmptemented, enrollment growth was impacted at the Peer Institutions. Table 11.4 summarizes the enrollment growth history for each Peer tnstituuon in relation to how much of President Creehan's Model was utilized. Furthermore, current enroumen1 at the three Peer Institutions indicates that the growth has continued to increase (Adrian CoUege) or sustained (W&J and Allegheny College) through the fau of 2011 semester. Conclusion Based on the outcomes of!he Peer Institutions' experience with the Admissions Yiekl Model, the strategic plan currenuy being implemented at AB College is expected to achieve positive results. Table 11.5 Illustrates AB College's historical enroltment and A&M's enrollment projections based on assumptions dertved in the Demand Analysis section of this report. Tobie 1 5 H1stor1cal & Projected Enrolhoont AS College Total % T orm Enrollment Change % 1.7% 3.7% 11.1% It is important 10 note that each of the Peer Institutions' had their own enronment goal$: however. ij Is apparent that lhe model has achieved success. Allegheny College allowed President Creehan to utilize 50% of the model and experienced the least amount of growth with an increase in enrollment of only 3.3% in the five years after implementation. 'Nhlle this Is Sow oompared to the other Peer Institutions, the rate of growtll is deemed healthy in comparison to other schools that A&M has su!veyed and reversed years of declining enroltment. W&J ublized 65% of the Yield model and experienced 24.4% growtll in five years. Adrian College allowed President Creehan to ifr91ement the Admissions Yield Model in ~s entirety and experienced a 73.8% enrollment growth in five years. President Creehan was hired at AB College in the summer of 2011 a.nd quickly received approval for implementation of the Strategic Plan whicl11ncorporates methodology from the Admissions YiekS Model. Propo$ed On Campus F&eiitie& Development Al<lenon-II<OO<I<ful COllege Philippi. WeSI Virglnie Proposed On Campus F~ Oevefopment Alderson-Broaddus College P~. West VirglrA Page 119 ~ ~ I ll. Competitive Context Analysis Table 11.6 compares the historical enrollment growth rates of the Peer lnstijutions to AB College's projected growtll rates. am fit W tor Admlnis~ and finance of 1>8 College Table 11.6 illustrates that the projections of AB College are wahin the Admissions Yield Moder s parameters. Adrian College utilized 100% of the Model and grew at a higher rate. If the Admissions Yield Model proves to be successful, the forecasted growth projections may be consenative. Applying a 3.4% growth in President Creehan's fifth year at AB College would create a 67.3% five-year cl1ange in enrollment which is still below actual growth achieved at Adrian College. Current Development Plan The Implementation of the Admissions Yield Model at AB College Is expected to create a strong demand for on campus student housing. For a more detailed discussion of conservative and aggressive enropment estimates. please see Section V. Proposed On Campus Facili11e-s Oevetopment AkJtrson BrO*ddus College Philippi, West wginla l>ogel20 I-7 Proposed On Campu$ FacllltleJ Devel0f)mtn1 Aldef&OO Sroaddus Colt* PhiliPI)i. WMc Vrginia

246 <11,~ Current Development Plan AI'~ Current Development Plan Curront Oovolopmont Plan AS College plans to aocommodate expe<:led increases In enrollment by developing new st\jdent housing facilities. Figure 11.1 displays lhe master plan for AS College developed by Partners Development and The Collaborative, lnc. Figure (New Housing at Alderson-Broaddus College) Current Housing Options A residency requirement of four years is currently in place. with the exception of students that live within a 50 mile radius of lhe school. However, AS CoUege ts planning to reduoe the radius exception in the future which would create a greater need for on campus student housing, Currently, AS College offers lhree dorm"orles for student housing: Kincaid. Priestly, and Benedum Halls. A comparison of lhe Fall 2011 occupancy rate to historical enrollment Indicates lhat lhe school's decreasing enrollment figures have resulted In underutilization of the current housing with 14% of the rooms unoccupied and 43% or the beds unoccupied. It shoukl be noted lhat in mid FebruaJY 2012, the second and third floors of Priestly Hall were condemned due to a structuralty unsound catwalk, and the residents were quickly moved Into Kincaid and Benedum. All three dormitories are okser and will receive varying levels of renovations In Kincaid Hall, located at lhe bottom right In Figure 111.1, features 259 beds In two, three and four bedroom suites. Kincaid has traditionalty been utilized as junior and senior housing. The unrts are fumished with chairs, a tabte, and a sofa. Each bedroom is furnished with two dressers, two beds, a computer desk and a wall mounted air conctrtioning unit There are 25 two and three bedroom suites in K;ncaid counted as apartments because tney feature a kitchen area equipped with an oven/stove. refrigerator, and mtcrowave. Kincaid also contains a community game room. laundry and storage room, and a sorority meeting room. Renovations will include the removal and replacement of exterior doors, new exterior door hardware, repair of and fresh paint on interior walls and ceilings, replacement of some ceilings, as needed, interior mold remediation. and new furniture. Featuring a oentjal open courtyard, Priestley Hall is located in the center of Figure The units in Priestley HaD contain four bedroom su~es. Priestly has 120 bedrooms wah a total of 180 beds as some rooms are coofogured for double-occupancy. AS College Is planning to Increase lhe number of double-occupancy un"s, adding 54 beds for a total of 234 beds. Traditionally, Priestley houses mostly freshman and sophomore students. Priestley's catwalk w 11 be: repaired over the summer of 2012, and the top two floors will be reopened. Additional renovations include repair of and fresh pain! on Interior wafls, plaster ceilings, and new furniture. Proposed On Campus Facll~let o.v.fopment Aldecsoo Broaddus College Philippi, West Vll'gllnia Proposed On Campus FaCilities Oevtlos>m nt Aldefson..Broaddus Coflege Pl'liflc:lpl, west Vir~nia I>Jiel22 111, ~ Current Development Plan 111,~ Current Development Ptan Located to lhe right of Priestley Hall in Figure 111.1, Benedum Hal is currently utilized primajily as a female residence hall and house.s PA students: however, some male students currently occupy beds. There are 70 rooms wilh 139 beds in Priestly Halt. All but one of the rootns Is doubh!-occupancy, and each floor has a community kitchen and bath. Renovation plans include a new HVAC system, removal and replacement of acoustical ceiling til-es, removal and replacement of lighting fixtures. electrical improvements to handle the new HVAC system, interior wall repairs and fresh paint. and new fumi1ure. Table compares each hall's occupancy rates for Fall2011. T""litio'"'",..''" junlo~ and 1enlo" I'T '"'""'~'.. l'rft; h.men and loi)iwltnoce. Occupancyra1H reaeetb6fofe oondeml'lalion PAatuden~. female. ndaii'iie'-: lnleml Campus Master Plan-Residential Facilities The top of Fogure displays three blue buildings which will be new student housing facilities and will take the place of an existing maintenance building and parking lol These buildings will be known as 'The Ptanr and will contain 286 beds. The blue btlilding near the center portion of the image whi be an additional student housing facility named '"The Terrace whid'l will contain 96 beds. AI the time of A&M's campus visit, the master plan included renovating the Chandler Wing, the large orange building towards lhe right of the Image. Or. Phillip E. Cline, currently serving as a member of lhe Board of Trustees, purchased lhe former Broaddus Hospital that is located on the campus grounds of AS College in May of and gifted a lo the college in January of Although the origi nal deve&opment plans at the time of the study were to indude additional student beds in lhe Chandler v..lng. those plans have subsequently been eliminated due to cost and devek>pment feasibility. P&ease see Appendix A for additional information regarding the Chandler renovation. The Plant will be comprised of three separate three-stojy buildings which will contain apar1ment-slyle and suite-style floor plans. Two of lhe buildings will be comprised of 144 apartment-style beds w11ile one building win contain 144 suite-style beds. Additionally, The Terrace will be comprised of 96 beds In the suite-style conf1qurafion. The layouts of lhe various floor plans are illustrated in Figures and PageJ23 I-8 Propos.e(l On C_,pus Facilitiel Development AJder$00-ero.ctdUS College Phllppi, 'West V1rginla

247 AI'S Current Development Plan t11~s current Development Plan Figure 111. illustnotes the apar1ment-style floor plans which win contain four private bedrooms with two shared bathrooms, a living room, and a full kitchen. This floor plan Is curtentty not offered in the on campus housing facilfties at AB College. As will be discussed In Section IV, the apartment-style was the mcsl popular among the students in the focus group. Each floor will also feature a community resident lounge, a quiet study room. and a laundry facility. Figure {Tho Plant - Apartment-Style Floor Plans),...,...,,... ~... Apartmoot.Style Building I fi Proposed On Campus Faclllbea. Oevelopment Ald~caddus College Philippi, \fvt-st Vl'ginla Pogo 12S Ptoposed On Carnpus f aeilities Development AldmOilo8rO>ddus C<>lloge Philippi, West v gln181 Page126 c'ilts CurTent Development Plan {11~b Current Development Plan As Hlustnole<!, the su~e-style floor plans will be comprised of two shared bedrooms that are connected by a bathroom (therefore, four students will share one bathroom). Each floor in the suite-styte buildings will also feature a resident &ounge, a quiet study room, and a laundry facilfty. Due to the removal of the Chandler Wing, an add~ional 48 beds have been included in the suit&--style units: recent development plans aim to add these beds to The Plant site. Figure {Tho Plant and Tho TcrTace-Suite-Style Floor Plans) Table 11.2 illustrates the supply of beds after the completion of The Plant and The Terrace. as well as the addnion of 54 beds in Priestley HaU. Note thai the room count does not equal the total bed capacity of each hall due to variations on oocupants per bedroom. Table. 2 Fall 2013 Bed Inventory Rooms Shared Surte Apart--nenl S1rgle Style Sli'le Reds Kincaid Hal Priestley Hall SenedumHall The Plant S8 The Terrace Total ,016 Sourc :,NO.II-OII Sro.ddus CofJeoot & Pai'IIW'S 0.-..loc:amO-n.l Campus Master Plan- Athletic Facilities I ' fi Another important component of the Master Plan is the development of additional athletic fields and facilities. As will be discussed in detail in Section V of this report, the foundation of the enrollment growth plan Is base<! on the add~ion of multiple athletic teams including footbad, men's and women's lacrosse. a marching band, women's tennis. men's volleyball, men's and women's swimming, men's and women's golf, an acrobatics/tumbling team, a clleerleading team. and wresthng. Many of these teams have fairly large rosters which could add to the enrollment numbers significantly. All new residential units will feature carpet in the living and bedroom spaces. The bathrooms, vanity area, and kitchen spaces will contain vinyl composition floors. AU of the counters in the bathrooms and kitchens wiu be plastic laminate and the kitchen sink will be stainless steel. Tile finishes in all of the buildings will be consistent but the patterns and colors wnl vary. The new fleld wiq be utilized for football, soccer, and la cros~ games and will feature 2,000 seats on two different levels. The lower level will be raised eight feet above the ground and wiu contain bleacher seating while the upper level will contain chair-back seating. Additionally, boxes will be placed between the two seating levels for coaches and press. In total, the new seating will be approximately 40 feet in heighl On the opposite side of the fiekt from the new bleactlers/seating will be the locker rooms with additional bk!acller seats, with stores and concessions positioned behind the bleachers. Proposed On Campus Facilities Development Alderton-8rood<IUi COllege Phlllppi, \tvestv g nle I-9 Proposed On Campus Facilrfifl Oeveloprnent Alderson-Sroedros College Pnii4PPi. We-st Virginia

248 111~~ Current Development Plan The field, lights, and scoreboard have an expected completion date of September Once the field is complete, an air inflated dome will be constructed and placed over the field so It can be utilized year-round. In addition to the existing and new sports at AB College, the stadium will also be large enough to host area high school playoff games. The new football team wid play at a club level during the academic year and will only play away games. However, the team will be eligible for competition in the NCAA Division II league for the academic year. The first NCAA home game has been SCheduled for September 7, 2013 against Pace University and will be televised. Various television stations in Clarksburg, West Virginia have televised announcements and advertisements for the new athletic programs at AB College In an effort to increase the awareness of these programs. As illustrated in Figure 111.1, a new baseball and softball field is also being constructed west of The Planl II is anticipated that this f101d could potentially be completed before the end of Focus Group I Survey Results Proposed On Campus Facilities Development Afdefson.Broaddus College ~.\'\lestvirginia Proposed On Campus Facilibes Oevelopl'rltnl Aklet$M-6roaddu& COllege Philippi, WeSC Virginia IV. Focus Group I Survey Res uti$ /111 ~ I IV. Focus Group I Survey Results Objectives The purpose of the focus group interv;ew was to engage current AB College students in an tnteractive conversation about their opinions, general observations, and suggestions regarding student housing. The focus group and guerilla survey were designed to gain qualitative information regarding studenl perceptions about the planned student housing facilities (to be completed for the Fall of 2013 semesler) and to gauge student interest in the varying unit types. Methodology A&M conducted two separate types of surveys white visiting the AS College campus in March of 2012; first, A&M approached students in the dining halt to fill out a guerrilla survey, and. second, A&M conducted a focus group on March 20, The questions on the paper survey disttfbuted during the focus group were similar to the guerilla survey: however. the focus group went into more detail regarding the current development plan. The focus group was led by a moderator from A&M and was assisted by Ms. Sarah Ward, Oean of Students. The moderator administered a paper questtonnaire then introduced a series of open-ended questions to encourage students to participate in conversation. The session lasted approximately one hour. Discussion topics included the c:urrent state of on campus housing, the master plan of the new student housing projects. and the various noor plan offerings currently being planned. The participants were provided detailed visual plans for The Plant, The Terrace. and the previously planned Chandler Wng during the focus group. The participants were actively engaged in the conversation and provided useful commentary c:oncerning student housing. The majority of the student participants embraced the opportunity to help enhance and improve on campus housing at AB Colk!ge. Guerltta Survey Participants As mentioned above, the participants of the guerilla survey were selected al random in the Heiner Dining Hall. The participants were given a paper survey and were asked to record their answers on the survey. The demographics of the participants are presented below:, Respondents included nineteen mates (59%) and thlneen females (41%). All participants (100%) were fult time students. Ctassif~tations Included twelve freshman (38%), ten sophomores (31%). eight juniors (25%). and two seniors (6%). Twenty-one student athletes (66%) and eleven non athletes (34%) responded. Thirty of the panlclpants (94%) currently tive on campus while two participants (6%) currently live off campus. The average age of the participants was 20 years old. All residence halls were represented Including Kincaid Half-Apartments (3%), Kincaid Halt-Suites (47%). Priestley Hall (28%), and Benedum Hall (16%). Two participants were Residential Advisors ( RA's'}. Seventeen or the panicipants (53%) listed West Virginia as their home s tate while the remainder listed Virginia (13%), Ohio (9%), Florida (6%), Colorado (3%), New York (3%). Pennsylvania (3%), V\l!sconsin (3%), and 6% of the participants live out of the country. Focus Gr oup Partlcipants The student participant$ or the focus group were selected by the Dean of Students. The focus group began with a paper questionnaire that was designed to collect demographic data on the participants. The demographics or the student participant$ are presented below: Respondents included five males (56%) and four females (44%). All paniclpants (100%) were f\j I~time students. Classifications included one freshman (1 1%), three sophomores (33%), three juniors (33%), and two seniors (22%). Five student athletes (56%) and four non-athletes (44%) panicipated. Proposed On C mpus Faeilititt Otvek>pmeot Alderson Bioaddus College Philippi, 'Nest Virginia Pagel 30 I-10 Proposed On Campus FeCilltJes Development Aldenon-Br086dus College Philippi, West Virginia

249 t11~ s I IV. Focus Group 1 survey Results /11l& I IV. Focus Group I Survey Results Eight participants (89%) currently live on campus while one participant (11%) currently lives off-campus. The average age of the participants was 20 years old. All residence halls were represented Including Kincaid Hall-Apartments (22%). Kincaid Hall-Suites (11 %), Priestley Hall (22%), and Benedum Hall (33%). Two participants (22%) are currently RA's. Nearly half (44%) of the participants listed West Virginia as their home state while the remainder listed Ohio (22%), Cafifornia (11%). Maryland (11%), and New Yorl< (11 %). When comparing the demographics of the guerilla survey participants and the focus group participants. they are fairty similar on most points such as gender, age, athlete vs. non athlete, and full-time status. The points in which they drtfer include classification (the guerilla survey captured more freshman wme the focus group captured more sophomores, juniors, and seniors), current residence hall, and home states. Since the guerilla survey had a slightly higher concentration of student athletes. there was a wider variance in home states than in the focus group. Table IV.1 displays the differences. TableN.1 Foeus Gf0.4) 56" '. 100'1. Guerilla $1.1\10)' SW! % ,.,. 33" 2S" 33.,. 31.,. On average, the parents of those who filled out the guerilla sujvey had an annual taxable Income of $ while the parents of the students that were part of the focus group had an average income of $144,166. In total, the average annual pre--tax income was $ with four students indicating that their parents made below S and two students whose parents made above $200,000. Table IV.2 Dlustrates the sou roes students use to pay for the~ living expenses. Most students pay for their living expenses with a combination of academic scholarships, athletic scholarships, student k>ans, their own earnings, or their parents' earnings. The most commonty cited means of paying for living expenses included academic scholarships, parents' earnings. and student SCans. TableN.2 Ac.1rJernL Nhr-tc Pare-~ s.:-!~ ~::''<> r!it ~ Sr.;rv~;~r"h'p 'J,I Ed n ror; Ea-r ng~ Leans Focos Group 3 GwrillaSUMY 20, Toea! 23 1$ ~of Total 2$.,. 1~,.,. 2$" 23% ~ Of those students participating in the guerilla and focus group surveys, sixteen (39%) indicated that they currently live in a full sune.style unit which 1$ defined as a containing a living room and private bath; nine (22%) indicated that they live in a semi su~e-style unft which is defined as containing a private bath; nine (22%) live In a traditional residence hall with a community bath. and five (12%) live In a fuu suije-style unft wijh a kijchen. When the students were asked what the biggest factor was In their decision of where to live for the 2011 to 2012 academic year, results varied. The most frequent factors that students indicated were those associated with cost a.nd availability. The next most frequent factors were the students' desire to live on campus and the ability 10 choose their roonvnates. The final question of the paper survey presented to both the guerilla survey and focus group participants was how important they thought new student housing will be in attracting and retaining AB College students In the future. They were given the option to say "Important" "Unimportant; or "Neither Important nor unimportant." Every student surveyed (100%) selected ' Important as their answer, and some students wrote in the word 'Very to emphasize their point Proposed On Campus F&eilru6a 06velopment Alderson-Broaddus College Philippi, West V ginia Plget32 PrOS»Md On Campus Facilities Development Al-Btoo<l<lo$ Col1090 Philppi, West Virginia <1)~ S I IV. Focus Group/ Survey Result$ tills l tv. Focus Group I Survey Results Summary or Findings- Focus Group The fotlowing is an overview of ASM's focus group fllldings and a synopsis of the discussions, specific points raised. and direct quotations. The responses that have been included are intended to illustrate the broad range or answers. comments. and concerns that were expressed by students during the focus group. In general, students viewed the current on campus housing as outdated and In need of repair and maintenance. Participants staled that they valued the convenience and sense of community associated with living on ea~us, but would like to see some Improvements made to the current housing options. Detailed Focus Group Responses The following section highlights the detailed responses given by focus group participants. While the prov'tded student responses represent specific co!tv'ilents made by focus group participants, language colloquialisms were modified for presentation purposes. 1) What do you think of the current on campus housing options? Responses varied depending on which residences hall$ the students are currently living in. including Kincaid, Priestley, and Benedum. Generally, the students currently living in Benedum Hall had complaints regarding the lack of air conditioning, space. and noise. Specific responses include: From an RA perspective, the walls in Benedum are extremely thin, and you can hear everything that's going on. However, with so many peop~ living there, It can be difficutt to know who's making the noise and force them to be quiet. Sharing one bathroom with six girls in Kincaid is too small. I think Kincaid is the best one. I haven't lived anywhere else, and I love~. Proposed On Campus Facilii»N Development AJ~Jerson-Btolddus CoAeg& Phi1ippi, We-st\ll'glrlla I-11 When asked how AB College's housing compared to on campus housing options offered at other universities, the responses were also varied. Specific responses include: AB s housing is more outdated than others, but some of the units have more r()()(l1. My friend's room at another university is even smaller than ours. A lot of other colleges have community bathrooms. I think there's ph3nty of room (in Kincaid) compared to other universities. 2) How can the current on campus housing options be improved? Overall, the students bell-eve the current on campus housing options to be outdated. SpecifiC responses included: It would be better If a lot of the appliances were fixed. Ackt air conditioning to Be.nedum. 3) What stylo/unit type do you prefer (i,o. apartment-style, sulto.style, shared room, pri vato room)? Without dtscussing price, the students were given the option to choose between all of the different floor plan options currently being offered or being planned for the new housing. The majority of the students showed a preference for private rooms In an apartment Style unij. However, many admitted that having a shared room during at least their freshman year was preferred over a private room. Specific responses Included: Shared rooms are not bad if there was more space in them. My freshman year, I was living in a suite with seven other people, and I liked it better that way because I got to know other people easier since we were in the suite style. o This quote was followed up with - That's good for freshman. Two other students agreed. Pr~ On CIITQ)Us Facilities Oevetopmen! Aldtr$0fto8t0fd<tul COII&g& Philippi, 'Nest V.rglnla

250 AI'S I IV. Focus Group 1 survey Results My freshman year, I started out living with a roommate, but then it turned awkward because I was an athk!te and she wasn't, and our personalities didn't mesll. I would prefer being grouped with people that have something in oommon. 4) Would you pay more to live in a private room than a shared room? How much more would you pay for a private room? The majority of lhe students slated a willingness to pay morelo live in a private room rather than a shared room; however, a few would prefer to continue sharing a room for the same cost. Specific comments Included: lfs nol wom illo me. I personally don'l mind (having a shared room), but I know that some people cannot study with another person around. I would nol pay significantly more: no more than $100 or $150 more than we currenuy pay. I woukl expect to pay less than we pay now for a private room because we pay significantly more than those with a shared room. S) After seeing lho plans displayed In lha presantallon, whal a.ra your thoughts on the new on campus housing that is currently bging planned? How does It compare to the current on campus housing available at Alderson-Broaddus College? The students appeared to be very excited about the new housing plans. A$ the plans were being displayed and explained. whispers of encouragement coukf be heard. The students were first given an il:lustration of the apartment-style units 4 which were fouowed by the suite style units. In the questionnaire part of each suney students were as-ked how AB College's on campus housing compared lo other universities. or the 41 students surveyed, fifteen (37%) thoughllhal AB College's current on campus housing was worse than other universities, twelve (2g%) though! the College's housing was equal, e!ghl t11~& I IV. Focus Group 1 Survey Results (20%) believed that AB College's housing was superior to those at other universities, and six (15%) were unfamiliar with other universities. Specific oomments about the apartment-style units included: That's awesome. That's super sweet That's reany nice. I like that a lot. It looks hke there's a lot more room in there. My friend at Arizona State has the same layout, and if s pretty good. It's nice that the shower and restroom area can be dosed off from the sink area. Specific oomments about the suite-style units included: There's not a common room/living room. I'm a b!g fan of the oommon room. There won't be as much communication/community fool. 6) Now that you are aware of the new housing plans, how do you feel about the price points of lhe units? Students were Informed of the new housing price points. The private bedroom units will be $2,925 per semester (or 9.6% higher than the existing rate), and the shared bedroom units will be $1,760 per semester (or 9.5% higher lhan the existing rate). In total. the students that participated in either the guerrilla survey or the focus group paid on average $1,916 per semester in rent. Mosl students (49%) indicated thai they pay $1,760 per semester, and len students (24%) indicated they pay $2,670 per semester. Overall. the majority of the sludenls appear 10 be willing to pay more than they currently pay for a new layout with a private bedroom. Specific oommenls included: The price of the apartment is much more reasonable than the price of the private rooms In lhe Chandler Wing. Proposed On Campus Feelhties oev.10prnent AJderson-Stoaddus College Philippi. VV6.stVifg nia Proposed On Campus Facilities DevelOpment Aidwson Broadctus College Phlc>PI. West Virginia P;oget37 111~ & I IV. Focus Group I Survey Results The price of lhe apartment-style is wom il The price of the su~e-style is reasonable. Once the planned portion of the focus group concluded. lhe students were asked 10 provide any final oommenls or questions. Although no longer part of the development plans, students re~eraled their concern of the price of the Chandler \Mng units ($3,218 per semester, or 10% higher lhan lhe new private bedrooms). One student slated thai they do nol believe the Chandler Wing should have a full floor of private rooms due lo the higher price and the difficulty In rmding enough demand and willingness to pay to fill those rooms. Other students expressed their excitement about the changes going on around campus and the new facilities being buitt and wished these changes were in effect when they first started as a freshman. Students have also told friends and/or relatives about the new developments and have encouraged them to consider AB College as lhe~ choice for oollege. Additional student concerns were concentrated on parl<ing; 1) adequate parl<ing in the upcoming school year and 2) improvements to the current parking situation. One suggestion to the parking situation was to better enforce: existing parking rules regarding parl<ing stlekers. Students also suggested not allowing fte$hman to bring a car to campus; however, lhe Dean of Students staled that the incoming class in lhe Fall of 2013 has been informed can will be allowed on campus. Demand Analysis The lasl questions expressed included whether or not there would be elevators, if the buildings will be controlled access, and what size the beds will be In lhe new apartment sl)lle units. Some sludenls staled thai private rooms should be provided with a lui ~ sized bed rather than a twin. Proposed On Campus F&aeies Development Aldttr$Cift.Bf0addus College Philippi, west VlrgitQ Page133 I-12 Proposed On C mpus Facilities Development Al--dus College Pt'!ilippi, W6M Virglnra

251 AI~ S I v.oemandanalysls Alder.Jon Broaddus Collogo Straleglc Plan The new Presidenl of AS College. Richard Creehan. was offered lhe job in early May of 2011, slarted July 1" 201 1, and by the middle of Augusl2011 a slralegic plan had been devised and presenled to lhe Executive Board. The Executive Board approved lhe pian on Augusl 16, 2011 and the President presented the plan to all faculty and staff members on August 18, Tile Strategic Plan outlines lhree main priorities: (1) growing enrollmenl. (2) growing a vibrant campus, and (3) growing the academic experience. Tile first priority, 'Growing Enrollmenr, has five objectives: 1, Achieve enrollment of 850 filll tlme undergraduate students wilh a projected goat of 1,000. Actions outlined to achieve!his goal Include revising tile College's organizational chart to create an enrollment division, expanding the ath'etics program, buildiog a mutti sport venue to support the new athletic programs, changing and expanding admissions recruiting to geographical territories for six counselors, and Implementing a variable merit based scholarship scale: 2. Sustain a goal of no fewer than 30 students entering at each level for the Physician's Asslstanl rpa') program by assigning PA re<:ruilrnent to a seventh admissions counselor. 3. Improve retention to 70% or better. which may be done by creating a standing retention committee that wru aggressively act to Improve retention efforts; 4. Maintain affordable tuition, room, board and fees, creating a pricing advantage over regional competition. This will be achieved by freezing comprehensive fees ala cos! of less than $30,000; and 5. Improve the marl<eting of lhe college by creating and Implementing a new publicijy and marl<eling strategy for admissions. The second priority, Gtowing a Vibrant Campus, has five objectives and additional action plans for each objective: 1. Initiate a professional campus master plan to include Broaddus HospitaJ by preparing an RFP to prospective ptanners and creating a task force comprised of faculty. slafl. board members, and students to wort< wijh lhe master planners; 2. Build a new residential village by acquiring land: Alb I V. Demand Analysis 3. Form another task force of faculty, staff, and students to detennine the needs for technology and environmental sustainability in the new structures: 4. Strenglhen Greek l ~e and olller student organizalions lo provide betler studenl aclivilies. To achieve this, AB College will administer a survey to students lo determine their preferences for campus activities and increase student participation in physical activities lhrough expansion of alhlelic teams and intramural&: and 5. Enex>urage greater c.on"munity involvement. The lhirtl priority. ' Growing lhe Academic Experience', also has five objeclives wijh additional action items to adlieve each objective: 1. Create experiential and hands--on learning opportunities throughout the curriculum and promote collaboration on research or creative work between faculty and students: 2. Modernize facilities and teaching space with appropriate technology by improving one classroom in each academic program with SMART technology as a prototype and modernizing lhe campus library wilh study labs and improved technology; 3. Develop new academic programs to enhance current programs and to match market demands. This may be achieved lhrough an independent academic audit in one year, which will review and revise curriculum to allow every undergraduate student 10 complele a degree In no more than four years, and develop both a fast-track program for a five-year maslefs degree and an on-tine pilot program; 4. Invest in faculty recojitment. development. and retention by conducting a study of peer and aspirant schools; and 5. Provide meaningful assistance to students in obtaining employment or attending graduate school by hiring a career counselor to establish a counseling center that will help students prepare for their future. Student Enrollment A$ mentioned above. AB College is using various methods to Increase enrollment. Including adding alhletic programs. Additionally, staff and faculty member.~ have initialed new marl<eting programs and have changed AB College's application process by simplifying applications for ease of access and use and removing lhe previously Proposed On Campus Facilities Development Al<f.ef'S<ln.Br<*ktuS College Philippi, West Vlrglnif Proposed On Campus FfCC!itles O.VtiOp!Mnt Ak:lerson Bfoaddos College Philippi, wost Vi'ginia l>agoj 40 t1l~s I v. Demand Analysis AI~ ~ I V. Demand Analysis required essay from the application. The oollege has added counselors for admissions. thus reducing their territory size, and expanded the out of state territories {such as marl<eting to Kentucky students for lhe first time). Hislorically, the majority (78%) of the students' home state has been West Virginia: however, the 2012 year to-date deposits indicate that only 38% of the students listed West Vicginia as!heir home state. This expansion of students from other states will create a greater concentration of students living on campus rather than opting out with the 50-mile radius exception. As previously mentioned, AS College is planning lo reduce lhe radius exceplion in tile Mure. Every student that visits the campus now receives a hoodte to advertise AB CoUege. AB College has also created a Facebook page. and students are added as "fciends' when they submit an application so they can be provided with important reminders or announcements from lhe College. All students whose applications are accepted reoeive a petsonalized license plate cover to increase visibility. Table V. 1 illustrates the enrollmenl hislory for the previous five academic years and lhe year.to-dale application data for tl1e upcoming school year. the program requirements were altered to four years in an undergraduate program and three years in a graduate program. The PA Program was given a provisional accredijation during lhe 2010 to 2011 academic year and was therefore unable lo admit new students. Ouring the same time period, applications experienoe<l a decline and then an increase with acceptances following a simitar trend. The percentage of students accepted compared to tile lolal enrolled tcended upward to a high of 37% in 2009 before falling to an average of 24% in 2010 and The year to-date application and acceptance numbers for the academic year have experienced a significant increa,se when compared to historical figures. Applleatlons have increased by more than 330% over the previous year and acceptances are up by almost 150% during the same time period. A&M compared historical acceptance to enrollment trends with year to-clate applications as a way of testing the conservative and aggressive enrollment growth numbers provided by AB College. As illustrated in Table V.1, lhe historical percentage of students enrolled to students accepted has ranged from 24% to 37% over the past five years. Considering the most recent enrollment to acceptance ratio (24%). new Incoming students could equal 342 based on lhe year-to-date applications received of 1,424. Utilizing the five-year average of 30% of students enrolled to accepted resu~s in an estimated incoming class of 427 students. The estimated range of 342 to 427 incoming students is above AS College's conservative estimate of 300 incoming students for the academic year. 11 is Important to note!hat AS College is reporting the receipt of 322 deposits year-to-date as of May 4, 2012, an add~ional indication!hat enrollment growth tor will meet or exceed conservative projections. As llluslrated, enrollment has dropped every year for the past fouc years. The largest decline occurred in 2010, which is moslty due to changes in the Physician Assistant ('PA') Program. Previously, the program was organized as lhree years in an undergraduate program and an additional two years in a graduate program. In 2010, O&mand Projection& Demand for student housing win be driven by the increase in total enrollment at AB Col~e. A&M developed an enrollment model based on historical inrormation and projections provided by AB College. The following tables demonstrate how the Ptoposed On Cami)Ul Facilities Oevebpment AJ6erson-8toadd\JS COllege Philippi. 'We~ Virgln18 Pagt14 1 Proposed On Campus F eell1tlts Devtfoptrlent Alderson-Broaddus College Philippi, west Virginia l>agoj 42 I-13

252 t11's I v. Demand Analysis 111, S I V. Demand Analysis incoming classes will Influence on campus housing occupancy rates. A&M observes thai by academic year 2015, each class will be strongly influenced by the growth achieved by implementation ol the St~teg ic Plan which was developed utilizing concepts from the Adm~ssions Yield Model. Table V.2 illustrates the historical and future predicted enrollment utilizing AB College's conservative estimates lor the incoming freshmen classes. AB College's aggressive enrollment targets are 350 freshmen enrolled in 2012, 400 enrolled In 2013, 350 enrolled in 2014, and 300 in The impact ollhe aggressive enrollment targets as it relates to on campus housing occupancy are displayed in Table V.8. The historical enrollment data for graduates does not distinguish between PA's and other g~duate students; lherelore. the following assumptions were applied to the graduate projections. The projected graduate enrollment is b<oken down into PA students. full-time, and part-time graduate students. AB College has received 32 PA applications for the 2012 academic year, and may only enroll a maximum of 36tolal PA students per class. Note that second year PA students are counted In other g~duates and do not attend classes on campus. AB College expects to have 72 total g~duate students in the future. From 2007 to 2009, prior to the PA program's change In its accreditation status as previously discussed, part-lime graduates averaged 13% of total g~duates. A&M applied this rate going forward resulting in nine part-lime g~duate students in each olthe forecast years. The following describes the methodology utaized to forecast the growth in the undergraduates at AB College. Two key components driving the model are retention rates and estimates of on ca~us housing residency, Using the historical data in Tabla V.2, A&M analyzed each class's retention rates from year to year. For example. the freshman class ol 2007 contained 207 students. One year later, in 2008, when lhese freshmen became sophomores lhere were 131 students in the class for a retention rate of 63%. The retention rates assume to capture students that are repealing a year and transfer students. Table V.3 inust~tes the same calculations as described above for each class and year as welt A&M's projected retention rates Incorporated into the model. The historical data demonstrates a steady decline In total enrolled students. As previously stated, the declines are anributed to a decrease in inooming freshmen and the change In the PA Program's accreditation process. Pr~ On C;~mpus Facilities Oevelopmenl Alderson-Broadckls College Philippi, Wesl Virginia Proposed On Campus Facilities 0e elopmenl Aklerson-BroeckiiA COitge Philippi, West V.glnle (11~~ I V. Demand Analysis 111~ ~ I V. Demand Analysts Improving the student retention rate is one of the primary goals as AS College moves forward with the implementation of the Strategic Plan. As illustrated in Table V.3, the retention rate for freshmen has improved significantly in the historical time series provided; however. It remains the biggest opportunity for improvemenl A&M's model projects that the freshmen retention rate will continue to Improve stabilizing at 84%. A&M's model projects that the most recent trends for sophomores to juniors' retention rates (86%) will remain constant in the lulure. VVhen the junior to senior retention rate is above 100%, it is a sign that some students required more than the traditional four years to graduate. The retention rate of 105% is a reasonabte assumption to forecast in the future. Please note thai the time trame of this model does not contemplate the notion that the athletes recruited in 2012 and after may lake more than lour years to g~duate lor eligibility purposes. For example, the students thai AB College is recruiting to play football will play their first year as a club team. This first year will not affect student athletes' four-year NCAA eligibility: therefore, a larger number of students wil potentially be on carlljus for five years. Because or this, it can be assumed that beginning In the academic year ol2015/2016, the junior to senior retention rates may increase which will affect the occupancy rates of on campus student housing. The next step was to estw'nate how many of the students will live on campus using historical data provided by AB College. These assumptions were broken down into two student groups. TABLE'O SttJCients entering 2012 and alter Students entering and before Mer new housing PA's ~ II&M '. 87% 71% 71% 50% Table V.4 assumes that undergraduate swdents entering AB College In the!all of 2012 and after will behave differently than previous classes. More of these students will be athletes and through the efforts of new recruitment strategies more students will be from outside AB College's immediate area including out-of-state students. Seeause of the expected change in the make-up ol these students, A&M has assumed that going forward, one-third of the Incoming freshman class will behave similarly to the most recent students, and thai 95% of 1he remainfng two-thirds of students will live on campus, resulting in an average rate of 87% ol the students entering in 2012 and thereafter residing on campus. The assumption of 95% on campus residency is high when compared to many four year Coileges/Unlverstties. However, the ru~l location of AB College and the fact thai few other options are available as well as tile recruitment policies which will attract many students from outside of commutable distances, this level of on campus residency is not unreasonabae. Furthermore, many students wfll be lnvotved in athletics or marching band, etc. These students are expected to be on campus more than other students and on campus housing offers the best option for them. Finally, this level ol student housing has been experienced at other small unlversit~ that A&M has studted located In similar rural areas. For those students that are currently living on campus, A&M has assumed that they will maintain their current living situation. A&M has been informed thai 71% olthe 2012 returning sludents have been assigned a room. A&M also considered whether the current students' preferences may change once the existing residence halls are renovated and new housing options become available. Juniors and seniors in the foctjs group and guerilla surveys conducted by A&M Indicated a strong preference to live in private rooms. A&M's calculations indicate that there are not enough private rooms in the current devetopment plan to change the behavior of the existing juniors and seniors. Therefore, A&M made no adjustments to on campus residency calculations for students entering AB College In 2011 and before once the renovations are complete. AB College has received 14 applications from the incoming PA class to live on campus; a rate of 50% is used for PA'sliving on campus in the future. It is also ln"~portant to note thai only lhe first year PA students will require housing. as PA students will be on cnnical rotatk>ns off campus later in their program. PI'Of)OSed On Campus Facilities Development Alderson-Broac:l s COIItge Philippi, West Virginia f>g&j C5 I-14 Pf'OP()Md On Campus Fecilitin Development Al<fttSOn.,Sfoaddus College PtlilA>i, W...VIrg...

253 t11~ S I v. Demand Analysis t1l~e I v. Demand Analysis A&M's calculations result In an average on campu.s residency of 80% for undergraduates and 23% for graduates. Overall, A&M expects approximately 75% of the students enrolled at AB College to reside in on campus housing in the ruture. Table V.S and V.S calculates the number of students expected to INe on campus over the next few years based on AB College's conservative growth assumptions. When compared to the number of beds available, the estimated occupancy rate for 2012 is 86%. This deelmes to 70% in 2013 when the new beds are added, but continued increases In fl'eshman enrollment and retention push the occupancy rate to 80% ln 2014 and 86% by The projected occupancy rates are substantially higher than current on campus occupancy rates (by bed) of 57%. The assumptions in Table V.4 are applied to each class In Table V.2 to calculate the estimated number of on campus residents in Table V.6. In the second year of Its implementation, the implementation of the Strategic Plan will result in a 30% increase in the number of students who will reside on campus at AB College. TABLEV.6 It is Important to note that these ooeupancy rates take into consideration 100% or the bed capacity at Benedum Hall (139 beds). It has been brought to A&M's attention that the capaclly at Benedum could be reduoed based on how PA students are assigned beds (single occupancy versus double occupancy) and the possibrity that athletic Interns might be accommodated in the hall. Trad~iona lly, athletic interns have also received a single occupancy room. Propoted On C mpu:s Ftlellrties oevelo,:wnent Aldenon-Broaddus College PhiW, ~&1 Virginia Pogt147 Proposed On Campus F aolttjn Otvtlc»ment Atdefson-Broaddus College f't~~wi, Wost Virgllllia t11~ S I v. Demand Analysis t1l~b I v. Demand Analysis Keeping everything else equal, Table V.8 presents ooeupancy rates that would resun from 350 freshmen enrolled in 2012, 400 enrolled in 2013, 350 enrolled in 201 4, and 300 in Tested Unit Types and Rental Rates The focus group participants were provided with a detailed description of tl\8 residential lacilaies Included In the campus master plan. Illustrations of the proposed unit types, and prices lor each of the unitlypes. At the time ol the focus group, the Chandler Wing was part of the development plans: however. since the Chandler Wing was later removed from the plans. those units have been excll.tded from tile following analysis. The current development plans include the following noor plans Table V.9 ProJect Development Program by Umt T ype Umt Type Oescnpt1on Rental Rate #of Beds Jo of Beds I' \ 1 ~ e / Total % A&M's analysis of applications to enrollment estimates that incoming students for the 2012/2013 academic year could range from a low of 342 to a high of 427. These estimates are weo above AB College's conservative estimate of 300 incoming students. Addalonally, recent discussions with AB College officials indicated an expectation of approximately 375 1ncoming students. An incoming class of 342 to 427 may result in on campus occupancy levels meeting or exceeding capacity. If this occurs, AB College may need to offer fewer singh! occupancy units in their existing housing until additional on campus beds can be added. Due to the removal of the Chandler Wing, an additional48 beds have been included in the suite-slyle units. which now comprise approximately 62.5% of the new beds to be constructed. The remaining 37.5% a.re planned to be built in the apartment slyle floor plans. Due to the anticipated increase in enrollment for 2012/2013, AB College has already revised the number of rooms that will be convened from sh1qie to double occupancy in Priest.ly Hall from 24 to 54. Proposed On Campus Ft cttt;e$ Otvelopm&nl Aldef"SSO>Sroaclcflls Colege Phihpt)i, W&st v glnia """1 49 I-15 Proposed On Campus Facilbfs DeveiOpmenl Aldefson..Broaddus College Pl'lilpi)i, V/e$1 VirgOe

254 111~ & I V. Demand Analysts 111, S I V. Demand Analysts Table V.10 displays a comparison in the rental rates for tile existing beds to the planned beds. - Toblo V.10 ProJeCt Development Program by Umt Type Umt Type Descnptton Rental Rate %Increase..,...,.. 9.5% Demand by Unit Type As illustrated in Table V.10 the most expensive option for students is to live in a singje. OCC>Jpancy room. Students living in a single-occupancy room currently pay $2,670 per academic year, or a 50% premium over those in a shared room. According to the Residence Hall Occupancy Reports, 36% of the students living on campus were in a single-occupancy room for the academic year. As illustrated, rental rates will be approximately 9.5% higher than existing rents on both the private and shared bedroom floor plans. However, it is Important to note that most of the current single oocupancy bedrooms are not In an apartment-style configuration (i.e.. they do not include full khchens). Therefore, the increase from an existing single occupancy unh to an apartment-style floor plan with a private bedroom is not unreasonable. Furthermore, the pricing for both unit types is consistent based on the current housing rates for the existing on campus housing. The new housing will offer a significanuy improved product. With the addrtion of the new housing in 2013, the most expensive option will be for a private room in an apartment-style unit at $2,925, a 50% premium over the new shared rooms. However, the prioe lncrease shoukf not affect the future demand for private rooms. If aij of the current private bedrooms are converted to shared, then after the new housing is construcled, only 14% of the bed supply will be private. This will be a sjgniflcantiy lower percentage than the 36% of students currentiy living in a private room on campus. The offering of 14% private to 86% shared rooms is consistent with the Strategic Plan's goal or maintaining affordable pricing relative to the regional compet~ion. PI'OI)0$00 On Campus Ftelbties Development Aldetson Broa6dvJ COllege Philippi,VtlesJVirginia PJie!51 Propo&ed On Campus Facilities Oe~ent Aldetsoo-Broackfus College Phif.ppi, West VirO*f!la 111~ S I Appendix A Chandler Wing Development Plans Or. Phillip E. Cline. currently serving as a member of the Board of Trustees, purchased tile former Broaddus Hospital that is located on the campus grounds of Alderson Broaddus College in May of and gifted it to the College in Janual'f of The building is 100,000 square feet on 3.75 acres. The entire building was renovated to remove asbestos, install a new roof. strip an interior contents, and wash and seal the entire exterior of the building. The Chandler Wing is a portion of this building. Although tile original development plans at the time of the study were to include additional student beds in the Chandler Wing, those plans have subsequently been removed due lo cost and development feasibility. The ronowing are Illustrations or the original plans for the Chandler Wing. Chandler Wing - East Elovation Appendix A Proposed On Campus Fadlill"' Oevel()pmM Al<Mts n.bn»ddus College Pt'il;:>pi, We~ V rgirea I-16 Proposed On Cttni)VS F&Ciltbel l'>evelopmenl Aldetson-8toaddus COllege ~. w..tv.glnla

255 111~ ~ I Appondix A /11~ 8 I Appendix A Chandler Wing- Middle Floor Chand lor Wing- Upper Floor (i>j2 - - H~~~~ 3.5Toallkck ($1ir2amclcnt.~ ir~eadltl\mfio) ' etw,dkt W1n1 llousiea: (11) dtoor~Apll'lll'IC'nb Ht>R~~;:dio Middle Floor Chandler I I ' fi Upper Floor Cha.ndJer I I,,, I A I As illustrated, the residential units were to comprise two floors of the Chandler Wng. The building would feature various floor pta.ns including a private studio apartment with a private bathroom, a private two bedroom apartment with one bathroom, and a shared lwo bedroom apartment with one bathroom. The shared and private lwo bedroom floor plans would also include a Mchen and living room. Each lloor was to provide laundry facilities for the residents and a resident lounge on the upper floor. Chandler Wing Focus Group As previously mentioned In Section IV of this report, the student participants of the focus group expressed concem for the premium pricing for the Chandler Wing unijs. Although they initially responded posijivety to the plans, overall visual appeal, and size of the units, their opinions changed when prices were introduced. One student stated that they do not believe the Chandler Wing should have a fuu floor of private rooms due to Proposed On c.mpvs F~et Development Alcjerson-Broacklus COIIQe Philippi. West Vl'glnla ProPQted' On Campus Facilities Oeveiopmern AJderson StoaekM COllege Philippf, West Vlrglnle. Pile ISS 111~ ~ I Appendix A the higher price and tha difficulty in finding enough demand and willingness to pay to fill those rooms. Other srudents suggested altering the plans to Include a higher percenl<!ge of the shared bedroom floor plans given the higher prices of the private bedroom ftoor plan units. Due to the complicated renovation requirements for the building, the rental rates for the Chandler Wing were set to be significantly higher than the eurrent rates of existing on campus facilities. A private bedroom in the existing on-<:ampus housing facilities currently costs the srudents $2,670 per semester. and the private bedrooms in the Chandler \'Ving were previously set to be $3.218, a 20.5% increase over existing rates. Vv'hikt the students were generally acce-pting of the proposed rental rates for the new apartment style private rooms (which will be approximately 9.5% higher than existing rates), tile Chandter Wing units would have been an additional premium of 10.0% to the new private rooms. [THIS PAGE INTENTIONALLY LEFT BLANK] Proposed On Campus F-* Development Alderson-Broaddus College PhiliPPI. West Virginia I-17

256 [THIS PAGE INTENTIONALLY LEFT BLANK]

257 Appendix J: Phase I Environmental Site Assessment (w/o Appendices)

258 [THIS PAGE INTENTIONALLY LEFT BLANK]

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'l'bcte b a poem Ill ~ lhc oost of informttioo obtained andlol be lime nquiml to pthet il ~wti&bl!be OCICMDCSI oc tho lnfonnatw., ASTM S lltrikes a llalancr: bttwt>tn the competid& pis ol1unldna the. BSA's CO&ll and dmo de!tiinds tid tho 1'$;1ttedon o( \lilcertaim)' llboul ookn>wn condlti0t1s artotded by eddhlonel inform11rioa 'l"ht~l ofl.lrylsvarilblcftomsitetos,tc: Not tvw7 propc:rt)',.,.g wwnac.._..,.. k:"yd ot-. CorWtlenc 'll'icb JOOd CIOI.'IIIIIIat:ill or~... die -Inti o( _... u-....,a~~cw.r-;o.~..,...,...,.ot.,._,. tlf«t"...-by die t)'iio..s opo(iijo p<i!xiiy... _1011_ ml BEC 1J1 L'fTROOUCTION 13.' c...p.-eiesa-~ '-7 h*-ldiioibt~otu..s"-...,.was.atlii~wbmi.mlybtcastcbe-mquary did110t Otlca(f~~m"~~fora ~111' fi'or's'y r;.$aj nttrbec.va~ baed oo rht. ~of Jlldcmc:nu lflldre at lhe tnnc unckt lhe ctn::.mjl.lncef ift..-ch tbey We:re madt. Su~t ESAt Mld IKJC. be c::omidtnd valid..sitds eo jtadce t1x lw"'p"wmfl or r J1rior auessmec1t bafcd OCI hi!mbi.t~m, Jle.W in.rorm&tioo, IIMI or devtlopi'll ledmology Of ami)'iieaj lec:bniquet.. and/or OCher con&empcm.ry f.aon I A UMITADON$ AND flxg:pnon$ The ptiotipallullllltiom and excepciocls art detitiiiccd S«ttift 1.3 ol ttlis ESA l"f99r. Olhcr poeeetiallimicabonl IOdleESA""ItJdJiodto(pltydal.._p<-.J «_nb'..s--by.. u----ot..-~a-~~oew-.,_..._.....,...,_astm E1m.o:s CoobnuotiV~idltyoftheESA An ESA Jl')CC'tina or uoooclift! o.t ASTM 6 152:?.0S Jlf'ICLlouc.al\dard UK! ~od to. 1hatl ISO d~oys pc'1or co cbc d&loc of ~i.mcion or the propc:rty or-fof 111nuctlont no1 tn\'olving.,. acqublcloo the d&te of tbe irmenck<l tranucuon, is p~wmod to be "IIKL lf. within dlis 180-day period, the ESA will be rt.l.ocl upon by 1 difftrtnt U~tr lhm the Uur fi)l' whom it originally -. prtpntd. the ~' Ustr tlwil comply with the various R$p0111Sibibtia tel fof\h ilt 40 CFR Plln 311 u wcji u Setlioa 6 of ASTM B 151'1-0S. 8EC «C::mmtnds ClOCiadlltiort whh 4p&lifttd kpl OJWSel ttptd1ftlltlao GbhptlODS.. 1.-u lfdleunr -1',.._,)-..,... ESAhas-.ai~...,.,.._.,.,., UICd 6om a pnar ESA is nllllaoewaat.. s:uda mformaticll ay I'IOl he used. Si.1.;1uty, tr tt 1::1 ~ 011. ocher utfon'nlllb -.,med by._.. of lbe ESA pcoce~~ ot kjiov.1t ~Uc: to the pcnoe oonduc:tina the SA... &be izlforma6oo bdn& utcel is 001 acatr~~e, wm icfonnatlon f101n prior ESA may ~ be ukd. I.$ SPI"'(IN 1'flltM$AN1)00t\'J)HJON$ :~ tend1 «cooditionoha""lxat i~ by tha 12 >lovdtl012-' --...:t-ab O>ikll" 1,6 USE8 RtlWQ hii~orii&-.u~troftlisesai'qicift..,beaoctia&a.eor..,..~~~ ~~"'~:~~... ~a.::~,:;,~~:'... ~.~ ~r (42 USC ff'=(3s) ltlld ~~ 2) c-;,..., /7op<ny Olmu ('l USC t96<)7(q)), 0< 3) a 8ooa F;de """""'"" Puoc!oaur(42 USC I 960)(,)~ 11tb BSA rtpoft lj lnetnckd to ptov:ide the Ut r wi\h inform&lion that h li.sfjci dlcl det'lnhk)n of AAl, sabjoct to!he!:n:'~~~~r:!om.:cjoe1~::=:~:r~;ft =~ ~i ~~c:~~i~: ~= duj J!SA upon is 1 eompcllltfll otftlll popmy~ Uchliamce, ~or ooc ~. ia DO,._ 1k. P.SA-ila IDd of itmi:t-cocicr UP~ a. lht Ibn. Rlllillr, to die ca:at M AAJ -- pa~~olthoesa_otij_ioboc-ofdle-~10-- ~. diu ESA.,_ 1101 ~ 1 fqna of ltpl IIChiee...S do-. DOC n:ie'wt Cbe Uur::.:! ae,.1 =r:;;!.~=n~j!~;;::&::w~!':===~ kpl for.u BEC ood..mew.pll)licll.,.._...,off J-2 BEC lji SITE O SCIUPTION Tltollll>joc<,;re;,_,...o((-llO"""')di-toploi0_.,..(21) --IoallofwtUcb.. --dlecityof... ~ ltpp. w... V'._ 1bc aubjeel ~te ph)'lbllddlal i JOJ Colkce HiD Dnw.. Pht1~. wcsc V'upua. Olbc:r told 'A'hkft provicle acccsa to tile iocl'*' US Roult WV Route: J 19. a,z srm ANl) V!CJMl'Y OfiitiBAl CHAR.ACIRRIS'l'1Qi The a.mera1 vicifli1y {}/ lhc wbje(t si~ QOOJiJtt. ol ~al lllld ue (see elto ennouted photographs in ~EtothioESAJq>OII). 1J ClJIRBEXT\JSEP:st1'BJDCI.mE Tho oot>,oa... _...,. '-c uod f«.,- flltijjtor ieotdq. (.,. Aj>poodJooo A.ad 810 du ESA JqlOII). 2. mocrum ftoails AI>'P QDJE8 SUE IMPRoyt.Mf.NTS The subject she is pma~dy Improved. 1be she ()C)IU.isu or el&h~ttt~ (18) «<ucatiooal rdued $11\KlNte$ end 1.hlrtte~t (13) llingle,fatnlly hornca. 2J QfRRFNf I&-:;. tl'aojqfnjno PR0Pmnt-'S 'T'be adjaoetat ~..,_ kalac uc:s arc s.l>jcdso. EAST; Cil)' oii'wiif'l'l WEST: Ml.x ot Woodla~ and Ji1111ed ~llal art:as SO\.J'Oi: Ocy or Phllrppi :U US R,PRQVIDI'JJ INFORMATION n.e...,_...,..,_,.a~.. u-. L "" ,...u.,-...,s~~ymj..., ;p..s Mt. Ko..~, J'IO'- ~Hoo... ESAoqoon. l I DD..E 8f'P8()$ Revkw oc wt 1:MP1 a.nd properly w fiks evalleble. from lbc Ciry of Philippi ~~ of A'iUSI'ncnl:s am Ta.utioa iod:icalcd the wbjoc sitolt tllown as Tu. Map 3 ancl ~I II. t2 SpfQ.t.J [l.mknowuidqb NoJIIOCiallmlltMwl<dp,GCitcflbttn dw-td tltjo ESA._.. fts cooveyed,. BllC. J 1 (!)MMQP n y Kl!))t,lfQI 8F.ASONARI v A$CEB'l'}JliABIBP-tmMtiTKJi _)J)_"""""""".. Jq>OII).Ia-ibef-..llty ~~ NOR1li.~\\' llo...-!y"-.-y...---thood>jo- tlo ESA"'''QQl.... BBC. A1J).RSON BltOAOOUS OOLLOOB PitAS! I 6SA

261 BEC J.O U';I!R PROVlDIIIl 11\'Jo'ORMA 11QN 34 VAUIAllQN &EDCJCDQN for EN\IIRQNMt'lHTAL ISSl JCS s-dupoodlc-b)'m Sbirl<y~At<., dlc--fortuolllleoalljc<t ~ai'i'w>,.,namaxfct~-----lffec:eoclby._..or~a~~ lj 0\\'NfJl PB<IflliY MAHNJi& &Wocx:trNfT INR)RMADQN Dmc:lor ot Pllyucal P'alrll. Mr. Ot.d P!yml.le... a'llllillbk for idfcrview. me tin ot... '* tulixidiis:saace,. Mt Plymale wu ootawarc of uy CER<l.A Hu;udol.la IUbwnocl It'd Ptcroleum ProdtKt rt:'--to ha-. oc:cutrod 11. lhesi\e. '6 REASON 008 OORJqtMINQ PHASE l P,SA The pwpote. of dlh ESA IJ to pro'lide!he ebalt (i c cbe UNr) witb a rt:poft c01101mifta J) IJilk)ri<:o/ r«:ogni:,td.. - """"'- l ),...,r.pj.. ~-..r «>odidoou. Mdlu3)<M... CC>Niilli>Mihu - vldeot Milleoalljc<tolto... ollbb... TheESAia...;.c.oo ,._ ~ill Srealoa I.)... laid dlis I!$A rcporc. It k.. 'BBC'a... M ec 011r wiu ldy oa... ESA b oololp-'y for <EtCLA UPs io-..., ol._ ESA _.. l1..lzild l. BECdld... fi..s JlliCORDS MftVIEW y...,... dwba$1101bceopevloooly-. BEC<*alned tu>d,..._. loell. -.lrlbtl,"""!<deal do<u"""" (e.a.. envin>n"""lll...,..._...w ~ _..,o.l<mopo.~p'n... Mtps.FEMA lloodploia ~--~-a«>lo&y._ ett:.j. sec -ifnlly rmew.d.. fll)lt..,... r...-ot I*' or ~..._ ot --F.od>olille-- -lodlcfolto.ma Fedenl R.«cRll Review lituiqmi Prlqckly Uac ~ NPL is a ll&bwl of' CERCUS tad idc:ntifttt over ljoo sftes lot priority clean.. _.,lhc Supetfulld Propra. NPLiiws.,.,._.. llti...jyt.va<..._/is oq. 1!DR povid<o polyp-!oto, NP1. dto -..-byepa\&,..._,_..,...id c-t(ei'ic)"""... EPAolllcot. ----oldoo...,.._.w.,.-.ry ynpl..,..,by..-.. f.. _, Up OCidc. BEC oo.dudclf 1bM 1be.t;ea 111.S k ~ popenb are 1101 hlld c. 1hr 011m:a1 b ot h"p'liites.. CompaAcNf>s EaftmtJttr<!!lgL Rtmqnt 02mpr!lf1!1dM 4!tdLjglttllrt /nli>rmqridnsytt(!ft CBRCUS COIItaint dltl on ~ially buudous WIS~ thu lhat bave betn reponod to the USEPA by ataiu, DJ.Izaieipalitics. prlvtco conlf*l,iea. and privaw pttll>llt, pumaan~ to S«tklll 103 of the Comprmea,ive En...,lll ~ ~ IIIII Uti>IUty A<1 (CERCI.A). CERCI.JS _,.,shu wt>ittt.. e;lhu pt(ii)oied~orod llw.nfltionj Priorities.t..ist(NPIJ.S aiea 'bic:h are illlbett'nleftlac8dd ISit&5fneOI:pMK for pollit>le-... NPI.. BEC 4.0 RF..COR.OS RllVll!W.,... maa.aoa--- ""' lip Cf!!Mttlt<Mi)'c EJs!rlmnmtnlqL lkip9!ljf. Cgmp<arqtlprt etr4 LJAAlUtr ht@rmqtfm $nwii Cgzntlrwf4J A tc'l'iew ol1be-*llllecl (Ill ea. CERCUS did OOt ick:nuty Y 1i1n.,maca; milt rldi.w ot b ~Ubjeellilt. ~~... c.rcm titoicerojs ti~t~.,.. o( -..y 199S. a;aa.js... ~ "No- ltomodlll... 88C-- d>e Mjoct... doe..,_ - - ()IPIW')... maoved from Cflt.CIJS NFR.AP tile's may be tiw -..t.ttc. followlna aa iflicial irlw.tlp~jc~a. oo C!Oirt&ni:nMioo wu foubd, oontminltion wu rtroi)ved quk:uy i1bovl tbc Mod far the $i~~e ro be placed Gil U. NPL. or tbc CUMAMit1Mion wu t10t tetlout moup to require Pecktal Suporfu:DCt tetloa or NFL eonickttdofl. EPA hat removed appro~im&le.ly l$.000 r<f'lt.af' Jitet to lift tho unlntendod \wrim 10 tl16tedeyelopmc:nt of theto properties and has ardlived them u himorica.ll'tcclfds to EPA doel not ncodleuly repe11tbe in't'etti!l* ln IJic flltute. Thlt potlcy c~ is part or!he BPA~ Utownf~elds R.edcvt.~t Propwa to help d.tic:~. ~t~lc~. pri'llllle in'ic$tors. md affcc1cd ~ COp«>mok.cooomic ~tofuaptoci!kd~.m. sas.,...,o(!--lolipcodos- -loolfoilor>do.. otdlc...,.._at... idcolify..., ~<FUJ>-. a,_.-,_... lldjmull ~Ire-- U.OIIm:M tijiofl'\frap.-... US&rjnqnnt Ce.ttrplt...,. oodo. soc Mjoct-""'""' A ~\iew of tb6 Urul«< Sl.u.llrla:inecrinc Coo\rols ti&tina w. perfonned. 1be Un.hed Su.tet n.a:lneerina Controls dmabltt ij li$ciqj or ahes with rna;lrwrin& COilttOif in pl Cnainecring conuojs include varlout ronns or caps, 'bgjjdln& (~ Mclt., anflfeactneftt ~hods '0 Cfta10 pichwiy climinuiofl for ttjluiiitfd Mlbltanc:CS t0 CJI&ef e:n~otal media or df'eet humao hcahb. -...;.wotlditlos- lip ,.!!NO OOili'ROLS.n.. 8y-m""*""--- IIOd dootdjocao_..... ootluood llle""""' US El<OCONTltOLSus l:tgjpsieql AmrgLt... otm.llll>jecltlld... ldmb!y..,.us...tlipcodt, BEC--d>etobjea... A review of the Otuted Swct IMtitudooal Cc:lntrols listlnj WQ ptrl'ont.'ll!'d.. The Uoiled SLatet lltjiitudonal Controls dllttbisc is Jlsliq or flkl wllh lntthutionaj C:OOtrO!t In p1~~~». lnstltutioctl ooatroll lnc~.tmini$1ttdve. n um. iueh as JtQI.InclwiLtor use rewictions. coottruction rescrlcdons, propa1y UJO ruuictions, and post ten'iiod:ia&ioa «.re ~u..lmneoc.a in&encted 10 prtveqt u.potwc to cooeamii'wils remainina on tiior. Deccl rt:stricci«m: ~,mendy requ:lttd a J.W1. otche iftlliru1ioa.d ooattob.,...,_ot,..._iooripcodos- -..., ~~-ot......,.._~.. usinst COim\01.$..._ ay.._.. ra..dos-. -- IIIII.. C>Ode. BEC ,....U...t DtNrt!!!trt~ p(dtfwc Suu A review oi the Dt:plrtmcat or Ddente Sia (DOD) 100"' w pctformcd. Thit dala ttt (OfiJOO fa fedcnlly owned or aclminimered landl. admtnbtcred by cbe Oet>ll1n~et~t of Oe{e:osc. that have 111y area oc:p.s.l 10 or Cfelllt.r (hm :res of' die U"'ted Stalot, J\aerto R.ieo. llld the U.S. ViraJn Islands. Tht revww or faclbcic:s klwed tip eodes withia a oee mue rlldlus or lbc a.bjcct site idmeined oo 000 site. By """'t<faalcio& ,,,, IOd up oodo. BfC --tho webotlitledoolhecwrtd~ooodlllbe:5e...;.c. sljo _. dlo tdjic<oi ptopcrics 10 WV!lOM A- ol BEC 4.0 Rl'.CORDS tu;vlew f«wrly UM(Qr:6pyt.$uq'ce;tppo0 doe -'YIItod o.r-s... (J'U)$)... - pu!-,_lo-s _ ol l'atlolrlylltod.-...s......,...,.,...,.,. us Am70>tJosot~ b _..., _,... 11W.. 1be re-aew or tfic!illtle~ l~ed id. zip OCJdet within a OCIC mile rlldius of the wbjccc tilf ldenlified no FUDS.. icct. 9y crou rercrct~elt18 n.amo. llldre#. CQutiC)'. t.nel tlp code. BEC coneludes lho tub-joel lite and lhc adjionlt propertie. are no1 listed on 1M Q.lmaC JlUOS dallbl.. ~ A.-otlho uo...s s-8rowofidds Si"'-,- priormod. u...,ora-rt<ldl Sir.s loohtd.d 1o llle s-at.. _,._,..._ by Cc>oponlr>o -~--IIOd B-"'- ~~arllilzardous~c!w f..._..,_..... wtu.~... -de>m9- -b)'tmi*d_..._u.,..._,a.-jields_a's,..,...s- - (TBA)-- b tloapod 10 help._-"""...,;ap.to,tolly-- EPA,B.rOWn(Jdcls ~ ~ Pilolt-llllird:ml:r..thc~ ofcontuiiiuboii ot\al astoc:iared wilh Bro 'nf'dd!s. Under die 11!A prosn.-. i:pa ~ t.din..& 1/!YJk,t k'chnlcaj wi~t~nee for ftl't'itorunental --..mems M JHownftddt silef lhrouajkm. b cou~tlly. ~ Brownfield Atfett.me:ntt (TBA) supp~nent &Del work wilh OCher effons or*t EPA's Brownfield Jnlti.ati~ 1o promote clc-.anup 1nd Rde~lopment or Bf"CCWWlfic:.Ldt. Coopet.IJv~ ACJ'«ll''''CCl Rtdpieot..SUiiOJ., polldcalsubdivljiont.. ~ aad lndi.-tribe$ boc:omc Brownf.tdds Cleanup Re'IOIYinc Loan f\and (BCIU.P) eoo.,end~.,rcemeot redplm w.'hen lhey entu into...,iicru'_.. _... _.Ilod.._r..._...,...,_ 9Ck1JI: coopet~~jyii ~".;lh rbe U.S. EPA. EPA a;etecu BCRLF COCif!Uitl"' ICJftiDi:a& Rdpimu bucd... IIOd tppllcotloo- BCIUJ' _..;...,.._,.~..,..,.EPA- provldod llrvwa6olds-.by_.,.,.,.,. 'l'be renew ot t~ locaed a. zjp ooddf; "'l"- a (IDeo6alf caik taewt ot lbllllbjcici sne idtmifled oo us the adjacent propcnc.we Dl)l. ti!kdon die c::wrml US Drownftek!l~ T4dc Rrltf.H hiw!slqa $yntm.aodbpcodt,di)cooodtldtsdlooalljc<ta!o_, A micw of the Toxk ReleuD laventor)' SyMcm of 1992 (I"RRS) wu performed. Tho TRTS l'qlor\ conlllnt ltlfonnation Oft tbe. industrlaj tt:ko.ue llldlor tra~urer oltoxic cbtmicals as rc:pon.ablfl uocxr ntk W ofebc Superfund...smen!> tu>d Raol!lori%ttloa ACf of ltc rc.vicw iadk.llld.. JUbjea t:ik is DOllueed 01 "'-TRlS. Fodlfry"""".fq:m.._,..., ,..u.or.u.-..,.,.,...,...,--~--~yt"' r.ajiliest<p- -the 1\e-c..ucn......s Rotxl""l'"" (RCRA). 'lbc FllciJity lodu. s,... (J'INDS) lucui&-..-_the F1NilS & _.. IIIII The review indicm«t that the subject site is listed on lh6 ANDS daub* undet 1wo (2) lq)«l''lk. liscltla DEC CODC.Iudet bii.$cd upoo re\licw ot tbc PINOS dlllbut UMinp are perdt (}ipog$) lfld map rt.l.a!lld. BEC achtltet Mr. Plymale iiwliciitd be had oo lalowkdje or in/ormadoo rt:latecl to e~y pre'l'iolu NP06S pennicl.. AI meta biimd "'Ale-BIJC did pormltrod.,.,...w polot..., olpollud.,...,.. _.., ha,. wammcd.. pnmk.. h clrme of ow. visit. &jbi!uffc..,...nifcmmaq T1oo R- c.n-..na. """ Rccowry..,._ Sy.- (RCJUS).Com<1i,. A<looo (CORJtACTS) ~wcnrn.e:mid.. BEC N$ (X)R.R.ACT$... ~ loc:mcd willlll a C. Dk r1dluj ollhe sobjdc.1'*- l)f c:ro.-nf~ ~ =-=~ =-'M ~ Cbe.,,.. Me-~.:IJ-omt propaucl ~DOt tilled Olllbe Qllftftl ~R=~ llld Rotxl""l' ln!or11l01lon Syt~em (RCRIS}Thwponm. s_,., tn<l Oispoh.l (TSD) No TSD facuidel wen ioelted wilhm a one-bl1t mue rtdnt (l.f Cbe subject ate.. By crot~-nferetldng ume.. -..,...,.,, ud lip codt, BEC coochd<s... MII>Jo<t IC... doe tdjoctolt ~.,. 001 U""' oo 11oo lhotdjad"""""*n""-.. doe..-us L~CONTit()lS-...-RCJUS.TSD- IMJOuds-IQJaoy_W_~...;...t. BB::a.:lladeathltiMMjoct titc~liiiotti.sccd asmdl ()NahlyWa~~e~. The mxw of'fac=wta m 1 dnequorta'mile!odousdodno<iclaoojyoaytodjloeo<-oo!nttuc. CONSF.NTj Sp<tWICf.JtCLA! OwrJ!IQtarU A miew ()( l.hc Supcrfmld Coaktlt Decrees dallbuo wu ptr(omxd. Major lqal ldtltments!hat etlabllih NfpOnlibiliry Uld HM!dank fot' clrltlup r--'pt. (Superfund) akea are rc1t&ted pc:riodkall)' by Ulitc<l St&ttt Di.suic:t Couru after scttl~ by p&niel10 liti,pdon rnmk1s. The review o( fka!tutj klalled it D, coda wlllua a - hatf de nd!ih ol 1M lllbjllc:t 1tW ide:oti6cd _, CONSENT-. By.._..,._,_,--1 IIOd lip a>do. BllC--1be IObjoa...,.,... pn>per<ieacedot- llla-consent- Il«mttlp,g,;q, A review oflhe Record of Doc:islo.l (ROD) databue wat performed. ROO doalments 12'1U1dlle 1 pamat~eo~ tm:ll!dy u an "'Pl. (Supcrfllnd)a lo()ofllalnina tocbftiealllld hcalltllnforrnation to aid irs tbecleoup. The miew of' facililles lococed In dp oodcs witbin OM mile radhu ot the 11.1bjcl.:t 1itc kkndfled oo ROO ~tea. By =--.:=~"":;...~::!';.,tncl tll)a>do. BECeondudc< thesubje<tli.. llld dlo ~ P<Opcr1ies """"""'HiJITtjicq.ljtg A.-ollloe-MiiiTIIIiopS"'ncs~--~----by l'ri-~jorr-...,... _...-..daf,... _..,..,...,..,.,.piles or Cbc Jed.lite!lllttlrW (Jnill WU,U ~ aftet Ul"'aallft hat boecl cxtjxtcd rnn Che..., Lncb or irtl:mia ~to radtoac:dve ttllk:rials from the pilet ce Jow; boweva". in.:mte Cl$t$ Wliup WIR uted u ClOClSinKlioa l't'llterials bdcn the~~~~ health ~o(lhe llilll'lll ~ ru:oartited. The reviewolf'lclliliet tot.led fn zipcodt.:$ wi!jrln a onchalfmllel"'diusofthewbject tilo tdenllnoed noumtra ~~==~~~:::':rc~~jp code, BI!C ccnd~ ~Mbjocl site lnd the~acenc Ope,_, brwzwr A rnlow ollk 0,... lloolp lo_,- (ODQ-- pafonord. N>-...,., oldloed... t'lciily..,doaoot...,...,lh_or...,ol""'port2s7orportlsa,-do... '111e moiew of faeilibct *-" blup code& within coe lllik rw;fiut ol the a~t;cct idettta6cd no y ==~"":;..,~ =-"""lipcode.bocoonclud<omo...;.c..,...,,..~~.. Al.Dl!RSON 8ROADOUS COUl!CS PHASB I.. J3SA II J-3

262 BEC 4.0 AACORDS IUIVU:W ToxicSrJuuwyCqntrqlAa A review ot the. T<Wc Subsuoces CoruroJ Att (TSCA) dau.buc wu p«formt<l TSCA klenti.get m&r~ufileturers and imponc:rs of d:lemical'"*lallees h~tjwod on the TSCA Chemical SllbJt&J:~Ce lnvemory List. It idchlde$ data on lbe pnxluctioa v<>lumc of these subswlc:es by plat~l titll\. Tbe re~w or facilities loetted in tip todcj within a one--l!j.lf mile radius ot the Mlbj«t silc idcmifled no TSCA sltts. 8y CtO$$-rd'crenting na.me. addtes.s, county, and tip code.. 8 C QOfK:I'*s tbe subject si~ am the adj&cf!fll propcrti" are not li~cd on lhe<:iz'f'tftt TSCA <.b:tabue. flfba ttca Trgdb!t tgttm A review ot the fifra (Rder&Jlnsteeicldo., Fungicide. 4t Rodenticide ActYJ'SCA (T~xie Subtstanccs Control Act) (FITS) databme w.s pet(ofmed.. P1TS ttac:b admini$1j'mi~ cues &nd pes6cidc enforocmccc ktion.s fmd COOlpHanoc activities rellttd to fif'ra. TSCA, llod EPCR.A (Eme:rgtt~Cy Plannina Mid Comnwnity R.i&bt to Know Act). The review Of facilities loc:atcll io zip codes Wilhitl a QlllO<hal ( mile. r111jig; oc the IUbject site idem.ifted no FTi'S s.het. Sy tross rtlcrenc::ing tlatlll\ addms. oowcy, a& zip ox1e. BBC coocludes tilt~~ she ood tbe actjaccut propc:rtle& are 001 li.sud on!be CIW'teDt PTTS dat.lbait. S.,Cri9n Z Trar.tin r S'vntm.r A review of tbc Sttdon 1 'battmg S)'ltcm (SSTS) database wu perf<mtled. ScotiCKI 7 of l.bc Pcdtrallnsccticidt. Pl.lnaJddo..00 Rodentiddc Ace. as amonded (9'l St L 819) ftq11irc$ all ~isttred pt~~kide prod uc:i_ng eicabli.stunenu to submit a report 10 the &viroamentaj Proleclion Ag~y b)' Mardl 1~ elida yetll", EAch es:tablisfuncnt mua rqk~n llle I)'Pel and amounu of pea.ldde$,.::live ingredients and dcvioes being produced, and tbol:c bavina beeo prodoocd and.sokl or disuibu~ l-n the puc yew. The review iddicattd lbe subjccl ~I.e is oot lbtcd oo ~SST'S. PCBAgMry Dmqkq,tt br"-'1'1 A,.v;cw of tbc PCB Aruvity DotUote (PADS)""' performed. Thb daabalo -ne, i<"""""' tnnoporte:s. oomme.n::ial wattbousin& &IXI/or brokers. mel dispase11 of PCS't who arc rcqu.ircd to Dotify!he EPA of $UCb K!Civities. The review i.ddicaltd tbesubjec:tahe is oot listed oo the PADS. Mqrm'all.iw.tillf?Tqf*inr SYn<m A review of the revaew of lho M*k:rial Ucensing Ttac.tifta System (Mt..TS) database wu pcrfotlllici1 MLTS i maintaidcd by the M..tbr Regul.uory Commbsloo aod oonwm a list or approximately 8,100 sl~e~ wbicb J)O$$e$$ or llsc radioactive INiteriall and ~icb m subjea to NRC lioenslns requltttnenta. The rtview ll.'ld cmod tile Mlbjcd site is not 1lued oo the MI... TS. MfMt Mq.srtr/ndq fjle A review of the Mines Master Index File (MINES) databa9e was perl'ortncd.. This databate comuns t.ll mioe ldmdfieadoo nuni>et$: ~ for mines active oropmed since The data also includes violadon Jnfonnadon. Tbe review iooicated thest~bjed: the Is no1limcd on!he MINES. RCRA, M mwpm.rty( Adipn TIJK.tin& $Vtm A review of the RCRA Admlniatrali\'10 A~on Tractina S~em (RAATS) cl.u.bue ~~o as performed. RAATS OQl'ltains records bated on co!orcc:mc:ot actlont: i.$$1.1c:d ud!b RCRA pertaining 10 major vi6laioj1; and i.ncjude$ administrative And c:ivij acriom brou&ht by~ tip A. For administnt.iocl acdof'l.'l a(w September 30, 1995, du mtry in the RAATS database. wu dilconti.nucd. EPA will retain a 009Y of ~he 4atabue tor historical. recard$. BEC 4.0 RI!CORDS Rl!VIRW RCRA Atfmbslt (qriyr Actiqn IW.lb!t S):utm!MttllmgdJ h Wlll ~ co tenninme RAA TS bccalse a decteuc in agency resources INIIk it impmible co c:ontlnuc 10 updale lhe informetion coma:ined in lbe database. The review tndlcaced lbe ltlbjca site is 004 USUid on lbc RAA TS. Emyttna JklpOIU( Ng:Ifkqtloo Syttlm A rcriew of d.c &ncrgenq Respoase Notiftcatloa Systtm (E.RNS) wu perf~ The ER.NS Oalabase sl«es informa~kln Clft chc sucsdm Mil/or accldet.lul ~Ieete o( h~s wbst.a~ku, inc.lucling petroleum. into tbe envirootnenl. The ~cw indicated tllu lht subject site ij DOl Listed Otllhe BR.NS dltaba$e. HownfmuMatl!ritJs!NonniJlioo Rreoair!rtattm A re~xw of the Hazardous Materials lncldt11t Report S)'$1c:m (~lmjrs) wu pufonncd. H).URS oootains hazardous n'll!trialspilll:nc:idmu reported 10 oor. The review indkatcd ibal tbesub;cctsitcisdoc list«tanlhe HMlRSdaubatc STATEANDLOCALRE<:ORDSllliVJEW A ~w of lbe Sl:lte of WeM Virginia, ~t of the EnvitQn:n'IIMt (MD6), Waste> Managemcnl 'Adminimlioas. and NoOcc ol Pocmtlal Ha:tardol.l$ Wulie $i1c$ (HWS) was performed. Swe haz::udout waste site l'«llod$ are. l11e IILUd' C(j,'tlivaltut to CERCUS. Thtw siles may or may oot alrtady be fisted on tbe f~tal c:::brcus li$t. Prioriry $i1c:s planned f«clt'anup using state funds (su:e equivale:tlt or Su:pesfuDd) ~ idet\ci(tcd aloog \vith,;.,..-cl..,op will be paid lot by.,..,.;ally IUJlOOOible,._.;.,. Avtlllbl< inlonnatioo..,;., by... No Huatdous Wasze SiltS wert repc.r1«f 10 be locucd '4ithin 1 one balf radius of the subjoc:l si1a. By cross,. rctereooina name. tddrca. county. coo zip~ BEC coacl'udet the wbjtct site. add the a4jaoenl propc:rties en oot on:tbecu:rrentnotioeofpowlliaih~swwesdeslisc. Soljd Wtyff fqcilitwiltjrt4full A review of!be S*e of West Virginia, DepiU'tment of the Environment (MOB), Solid Waw Divisi.Ofl, Petmiued Solid Waste Facilities,. and Landfills (SWFJLP) was performed. SWFII.P 1ype R\ICOI'd.$ typk:ally conl&in an iavcntory of solid W&Sle d.is:po$1] facilities or londfius in a particular $tate. Depending on lhe su~e, ~ may be active or laatth'c faeililics or opco dumps that fai loct to meet RCRA Subeillc D Sec:tioD 4004 criteria (or solid waste. lll'ldfitlt or disposal sites. No Solid WaslC fi~eitirics: «Landfills were reported 10 be.loclled vathin one - ball' mile radilis of lbc sutjca site. 8y ttou refttel'ldl),8; aame. adclrea. QOIUnCy, and zip oode, DEC oooclude$ the subj«:t site 1M Cbc adjaeeot properdcsarcnocoo ~c;um:ntsolid WastePacilitytlst R«w;tlnr Dirtttt)ry A review of the Recyc.Ung 01~ (SWRCV) was pc:rformcd. 1bU da&abue cootains ll.stiqg of rec:ycling facifitiesirhhestateorw~ Vqini&. No SWRCY were mportl.d to b8 loeaud within ODe mile radius o( the a;ubjcct liu:. By aoes-refertoeiq& rwne. addrts$. counl}'. nd ~ code. we oouelvdc. tbe subject s;ite and the adjlctnl propmies are QOt OQ Ck correnc SWRCY. 13 AI.J)P..R$0N BROADDUS C:Ou.ooe PRASB l ESA 14 BEC 4.0 RJ!CORDS Rt:Vl EW Oil Amrrql Pmge Cmr A revkw of the Od CoGcroa Pf'OIIlCU CaSC5 (OCPCASES) wu per!onocd. This database contains ctjses monhored by the Oil Control Progam. 'These cases can be leaking undergroond MOrage tents (IJST$) and other below ground releost$,1eakioj...,...,..., wtks (ASTol. opilll. and mspctdons. By c:rw-refenncitlg tlatne, address, OOW'II)', and 7.1p oode, OOC (()CICI\lde$ cbe. AJbject $itt add dlc adjacent ~es arc n~ 01'1 cbe curreot OCPCASES. B.EC advi&es!hat Cbe subject site wu previously Usce<l on!he d&tlbuehowevcr lftet tbe lhree uooerground Stof&F ta&w wue mno~ successfudy It \\'ls deliskd. lf4rgrkqll U$'(; &qata Sllq A rc'>iew of tile Historical LUST database (HI.ST WST) was performed. In the De~t of llml: &vi.rortrnontlloppecl adding new si.ta to its R@\U)' Sites Database. Current Iukin& u~~ckrgro\iocl JCOrag_e t.ant iofotmalioo a.y be found io (be OCPCASES d.mabue.. No His:IOrieal WST titef wert rtportcd 10 be kx:atoci l'lithiij 01'1~ - (()W1h mi~ radius of tbc subject tite. By CtOU refcrcoc:ing D&IIJC.. lddrm:, Ql).lnty, and zip code, DEC oonc1odu tbc. subject site and the adjaomt propcttie$ are oot oo the cunml Solid Waste Facility list. Rtrjstutd Undmtpfq!dStomg«Tqttb A review of the ReJist«ed Und&"vound Storace Tank$ <Wabue: (UST) W&j pc:r(omv:d. U8n are. rc&ulw:d under Svbcidc I of the lt.etout«conscrvuion and Recovery Act (RCRA) and must be registered with the ~ate department tespotisibje for admi.nislering the UST program. A review of tbc tjst dtu.bue reve&led tbat IWO (Z) wxkrgmjois storage t.attb VtUC remuvcd in Ocsober 1, DEC advises bascdoa itltemewj wilh site mana&ef at1d oc:cupants DO i:ftformatlon was anilableoolhe ~v.l nd location. BBC lldvisct thlllhrt:e (3) udik:r:yound storage tanb wttt obsttved during soi\e reoonnaissanc:c. BBC c:cndudes based oa review of cbe. UST ~ the adj.c:eo1 properties ~ DOC on the turra'll ~tlsk~ UoclcrpOOI>d s...,. Tank l.ist. lmtcqntrol A review of lhc Voluotary Oeanup Program Applkatlu/Pa:rtidpanu databl3e (INST CONTROl..) was pcrf01'1'rled. This databate maintaim si~et tneluded In t1» Vo~nwy Cletnt~p Program ApplicanW'Pwtidp.ants Ustiag thal bave Oocd RestricUoos. No INS1' CONTROl. c:&&e$ '-'Cfe reported 10 be loclkld withid one-balf mile radius of the subject s:ik. B)' <:roore.fertneing ~ address, CQU.ftty, add 7Jp code. sec COI'Cludes the wbjec:t si~ IQd the adjac:tnt properties ~ 001 on tllo <"""" lnst CO>m\OL VolunWY Ocapup Promm AppHetnly'br!idp!lft!t A review of!he Volu.ntary Oeanup Program Appli'*'t.s/Panicipantt dauba:te- (VO") was performccl The Volun.taryCiwlup Propm. adm1ait:uated by lbc Depc. o(1be &wlr0runen1. stramlinc:a \be environmcr.cal c~p ptoocss (Or aile&, usullly ~al or cornmerdal propcrtiea., wbich are c:ornminakd. or perotiy«! to be contaroinaud. by bazardous aubstanoes. Devclopm and lenclcrt ato provided wilh eeruin limitation oa liablliry Pll pan.idpanu in lhe program are provkied tec!qdt)' in the procc$$ by knowing exaq!y \\flat will be roquired, No VCP cases were RpOfUd ~o be kalcd within one - half mile rad.iu$ of me ~bj«:l tite. 8y ~rcfmncma name-, address, ooomy. and zip code, BEC cond*' \he tubjoet aile Md lbe a4j.loe:d( propmies arc noc On lhe CWJMl VCP. BEC 4.0 RF.CORDS Rh'VIEW 12 APQJJJONAI 6NVIRONMfNIAI ROCQRQS SO! IRQ.";$ fre«iom of fufommitioo M (foia) rcquesls were submittt.'d to Oa.rrolt Coutuy Health Depar1~t. Gvrt:tt Coun1y Solid Wu.te, and Allepeny Bkc:uic Comp:tny. At. l:be time of \h~ a$$c$sl0cnt. no n:pucs ha~ e been rocci~. Repliet, if flo)' will be forwarded when!hey 1rC received ODder sep&raleeovt:r. 4.3 PHYSICALSBJDNG SOURCE$ T<>pognj>by R<riew or 1~... pobu$1>cd by tbc U.S. Geologkal S"""f (PIUiippi Qu""""l<) and doted lodkatcdtholollowioc; 1bc Projct'c Site ts a n:lallvely Oat pa.roe:l ~ «Dlti or the S\ltljoct Site is approximately 1.sas feet above mean -tea le\'d (MS'L) Groondwakt ~ of the '"Ground Water Alllls of The Ullikd SWes DelaW~~~te, Wesa VlrJinla, New JeNey, Nor\h, Carolina, l'<tmo)l... a. Virginia. Weot vq;m. (Kouy1ilg>p, Jr. and Marl!«A. Hom. USGS 1991),.vealcdlbe followlog; The ~ Si1e is localed in theappalachim PrMtlu AqUifas 4.33 Wet..Lmds EDR,..vid<d tbc N~looal Wotloncb ln""'to'y (NWO Map of tbc PbiUppi Qwdt111S)e, published by the U.S. Oepartmcnc oftheltllelior. Revtew of the NWI Map irweatt.d dim prolbet.od wetliuids are 1ocalcd widtin a mhe radius from the aub}e<:t ~itt~ 4.).4 Flood lnsufllla!. Rate-Map EDR provkles a review of the Flood lnsurmoe Rate Map ('ARM) SC published by the Jledenr,J Eme"""'l' Manaae-<t ~ncy(fema). Review of the firm.map indicated tlw lhe s:ubj«t tilt i$ loeated outside cbe.so.year t1ood plain I.Od 100 year. flood plain boweytt a small portion on!he c~ernt1\05t portion of the property boundary is in the SOO.yeu Oood pltio. 4.).5Sen$i1lve~ 'lbere are individlals dotmtd sensitive rcc:epcott due 10!heir Uasile immune systans m:l special acnsitivity to eavi:otlmental ditdwga. 1bele $CO$idv~ rcceptots generally include the elderly,!he: $ide, and cbildtc:rl. EI.)R. tnc:b Cbc locations of tcbools. daycare oentt:q, hospitals. tlld mccltca.l cet'lttr5. Based on revi'cwcoad~ted by e::dr. Che subject site and no Se:DS.ith'e Rece~ wert ob$trwd within in a one (I) mile radius UtholoaY The oomposition of toils located tbeawject site: i.oc.t~. OOt is 00( necessarily Umlt«!d to, the fouo'aing: ThoAppolacilim l'lltcousl'royinceilldude$ tllat pot1 of Al~pnyO...ty -of Dons-. L-.l all of Coonty,.,...,..."""tl<s lo W<o~ VlftjNL ThcbctlrockofthiJ fegioooonsiwprildpallyol&<"'lyfoldcd""l<. -lold-foldingbasproduocd cl,_...,tllat.._o surf110e. Most olthenartnl gu rlddj itt W«A VitJinla are QSQC::iakl<f wilh tbcle ~r~ticlinal folds ia the A~ -.o.jotbcintcnoftmgi)1>ciimibasijii.<oiib<orin1"""oe~al'wmilm"t<'... ~.<Yi<ll VlrtjnjaOeoforic;aiS!my JorwflanEdw~Jr,l981) IS WVI2024 J-4 WVl2024

263 .. v-wn.- BEC 46 WSTORJCAI l G INH>RMA,DQN B'lR, SllRlf.C[SfiE U.l Hlslori<aiT_..,..,Mops Ro>Xwollh&..,ole...,....., Noa~~...-aDrllllwrw~tRmct.al orerideal ~ ik,... 4.A.2 ~"'"",_,.,... Rev... o( rht hi-oorial phooo>cnt>bt ""'""'td the lollo""'l lb6 t\lbjca a.te appw~1o be devdqx!d In kctpina wilhlc.nown uses 1111 mu tin. Thoa.b:jeet 1ile I, loealed in dlecityofji'tijiippi No cnvirotu'l~et~tlll)' advm~t oonditioru Itt ev~ or were evidc::llc widlin tht,... 4.A.J!!dooricollfti-Mops ::;;:!':,'!'::,:':"J;'!."'::"*"L>bnry.U.C...-..ss-.l'o,.-._co,... U.AOry~ Achy~ review WU ~by DR. bowc'wr"do irl(ot11'1mion '11'1$ avaiaabk. 1.$ H!STOR!CAt ll<ioin'r)r;majjoorlr Af)JO(HTNQPBOPf@f 4.S.I H;sl«icol TopoiJNlhlc M'l" Re>iew oldleoiiim<al-phic maps lncllcaoed ibe followins; No CQYVOCUIWriUJI)' licnme ~lie evidcftl Of WCR C idmt widjia 1he l.lMNI... Rrri<woldl< ,-.., ThcMjoa '*~~.. - IObodeotlopod IOibel'.lol... _IOdW-Ootbo NortbllldWCL No enviroamc"iuii)' advene-c:onditiolu.. evidml or 'Wtft evideql within l.bo ptjt... J.3 HiSioc:ical Pirt: lnwnun Maps ===~:::r=d 1 4.SA Ci<y o..- i~ ~~~~ben Ubnl). U..C revwcd Sanborn Are ln~e I'Mpl covcnoa Acityclrec:ecwyrev.wwt~~b)'EDR,.bowewr IIOir~ -ayii..,._ The~ lite Will ~lliim m M..:fa 21 A b)' Rlchlrd C RobifiiOtl, The 'WtOdw condilionls v..n dear and wm y with an ~ t4mperlltm of n"p for both daya. Annola&cd pbolo~dcpk'\ ~- tipeeuol d'ic sub:idct lile llld mitoi.incji"' propenla ~ provided in Apptad] E 10 &his ESA tq:10r1. ~ 1 MEDiOQOU2QY AND llmlijng C0Np1J10Ci8 n..oot;oa...._,...,_... _....,oc~oooo_ Sooiao9olASntBim.cs...._~.. - _. _,JI... IIJ)olllwllSA_lk.. IWI...,.,. ~-OIIa.d.,.. 17 BEC 5.0 Sl'll!R: ~0:.S.IITopcsolS<nOoy BECdld 1101cbltM..,. 14aMdl.lrq~ racwchtnd -~lbll...,..lmiiidy....,..._ ~ """'"'-_.-~ pco-..~-~... tdw:iiref..a,..-- a,..._ ac11 c... ot..w wm ~ lhe '-'~~--- l*"'or Uld o:lmoi' ot ~ sile (sw::nrtt llld penphery) by viswllpb)'sb& otleetvlliont 10 h txr.entac:oes.t is~ibk. l!xlel-iot (I immtdiut.l)' ac:l.,jlcml propcrtic& 10 lfle. O IMI vlwau)iiphysicall:y ob!uvtble tft>m pc!wic ~- Cld the.subjcdsitc. '2 Gf..'ltlW sm; $JD'JlNO,...,,;,..., Calk" Halo...._,.._ w.,. vq;.. 26<16. (toe AppcDibcot A...s BOooiloESA<q>OI!). SJ gxieltiqb OBSEJVADONS Tho """"Y ooo (ll) poroel ""' porod a>iijists ol,;p..n (IS) tduclliooal bw~ ond dlln..,. (13) sinll)e famlly homes Joe~ll:d bdwwn t,~jidew:)oped woodland$.,j.i Lancls.d"'" "'*"""_..., v--uuac.oltjw:odjowoc"""""'*clid,...,. i'he. bl'ld surfaot. ollhc wbjcn ""' b a valky and ridf!- aree wteh a dijht "' eucwatd. S1ufacc 'WI.W flow of tho _...No poodioco<poolod...,... Mjoct... mdac:c o1 pc:e:robcl or buardoulllllienal re1ca1a. ci6c:r oe 10. or olf fll. cbe lllllbju:t * 11 uc:.u ol th..._, Ul S...,.l\oob AotaldiiO< all""' fillplpco -Oidlaltd1bo ol_q)vs1'>111bei<>ijowlna-: Soudlwes~ c.omot or lhe Phys:ical Plant B'wklina conertce J*l mnaiftl in plaeo '" "-bk:b visual obsttvations detf:rmlned the UST'It; still in plaoe. South el.ttmion or d~ Pickett Ubrary vma Uld fuj pipes an uposod 1bovc the around itldlwing lbe otr ,._.,..., _...wy_ pmcac:e if a UST. Nonb e:l-twtic:lft or the ro..r Bn.:Sr:tut JioePW 1 CIOftCtN...-.boia. wu radowd ID 'hkb 1bt top of a ust-~..-y,6ve(5)_poood_ioob ,--.. Nard>-o( 1bo Plo)'lbl Pl.u Bou~- (I) 1,000 plloa-'*- old «>e (I)~ pllod Non~> pcx,;,. ofd>e l'll)'lbl Pbau w"".,..(1) ""''CY2.000 pllao '*"k b- Vltoaldw DOli_lhe_pwoleompn>docu...vorCERO.A -.. Mjaotnt 10 the Oty of Philippi Wiler t.anbodc (I) 500 p llon propane t&nlc it prc&dlt. Nortb portioo or tho lnc.ramural aru {PIIt'Ute Poocball Aeld) one (I) 2.$00 pllocl wute oil tu~k is pruetu which is be:uevcd 10 be \IMd by ID Pnknowll NaNttl OWOiJ Company fer ~ when deeantitla. off w.wteoil Ind. wacet from area wdls. HiMorieal did irlctildld a.._ a. report*'"'...,. were rwo (l) USTa M wm ft:mwd ill 1919 ~va., _ ldoatifiod. ~~~----- ocoopasboddo..._,.o<_ol....-.~ II BEC j,4 INWUOR (»$tlt,\tatklr Mr.-.-lly""""""lbo_...,. boilor_c... lfl(>liyc'-_. w,.. (-- Mr. Rollmtoo Obo<.0-bull<liQp... - vlt"""""... IUal boilen, "'.,... (11)-loooWiopooddidDO( of-mr, Vlcoor -Mr. w~...s..,..,.,...,..,. it oopptltd tro..cityoii'idiipp Ploblic Woob. 6.0 INT RVIBW8 tnllei'views wtte ~in~ Mlb ASTM E S. 1br: ptrjoil'l actually imctv~ wm: a functioo ()( ltbo::wioa: Wid wlllrrbillly. nowd bdow. 4.1 C\TfJtVIEW wmt Ql!tNfB Mr.CIIod~-~aslbo-. ABColkpio --lorllip_.,.... _ ooc. k a tole popnc:eor. Aa sac:b. Mr. Pl)'mlk..._... M he is ,. ol.., me-a <PecroltuN or - Sllbo...,) 0< "'""""""""' - 11 tbo Mjea t!tt. Addruoo.!ly, Mr PI,.,U did provide t1w: fooowioc~ Mr. PlynU tcncd usr. are prctene.r chc fh)'llcal Plant &ikling llld Pktett Ubrwy how'evet no dooeumen~ltlon Is avlillble with tbcttuus on chodowm or lnttarfty catlna 01.1any ofehe llnb. MJ, Plymale Malo AB Cones,c does not potitlt 11. unh-eiml WMie. pim. hau.rdout,.'ute management. CJf spiu JftVU~don Mid COI'Iwl. pl~at. Mt. PI)'I'Nle 1t1te lead ICid:blltt:riaaRtypicaUy lllded Ia and DOt MOrtd onei... Mr. ~'~yak- d>x DO.,_ lo -oa clospoool o( ~.PCB"'~ ---(4-mcn:ury~.--PCBJoPobo!'-co:.l!dt,., b--kooopul!odhal ilo'q:wa._too-...,... c:catau ~ _.._,.,. dli&iidc. Mr. P'fJmUc indkmod chat only~ c:hlonne itutiliztd ror lhe. swimm~na pool. Mr. ptymaje lulled!be ooly$10c1dw'iik:t ruoof1' permlc dw tbecalle~ his MthiJ time is fotebeclon$cnctioo o{ the. new football field. Mt. Plymale lnd~t.ed that the bum puo" IJ~e Ph,tct.~ Plant RullcUna 11 utill:t..ed for bwnin&.-net~ In wbicb bum pennitt are obcalned from the fir. Or:partmcat priar 110 be&iminc MY actl itles. Mr. Plymalo illdicolcd 11w t1>o m-..., dd>rit",.,. North bouoduy of,.. Pl!,_;c.l Pito>< BWJdooc b ~y-lho...,oltboncws-.c...cr.,._""_potro_ji"))ioou"' Mr. l'l)'mtle...tab CoDt,....,.. lloye 1 * pcnaijs-npdes ponall 11 tllio """ CERQJ.- Mr. Pl)molo did.. -..!> , tnif;bvthw Yrmt SCI'B MANAGIZ, boowlcdej ol AB ColloF _...,. - w-~ m MI. Otrtb WllllfOQ&III~Io}'eo al AB Cotlcp.for ll )'UitSAited cbm. bell DQIIaw&rooCmypc:Uoleum rdeatel or ltl)' CI!RCLA btwdous subi~m~<=e "leisciit the subject alto. Mr. WiUafonJ wu prcklll ~ cho lni«'vicw wilh Mt. Plymale add con.nmled eldl. or the Matemenu which was~ in tht i.nk:rvicw ~~rtlh Mr. Plymale see.. $«tfcct 6. fn rvllw wlth ~. 6,] I?O]RYII\WS MIH OC'Q!PANTS Mt. V'KtOr Wn&f!IIM Clllpllo)w M A8 CoDqe b 6,_.. limed... be IS DOl &...,. ol ay pc:erotc.jm ajt.cl.a BEC 6.0 INTERVIEWS 6.,1 QiiJ.BVJEW'S WID' OCQEP.\.VIS tmyiw(j M>.Soi>Na~-o(Sciotoot(l(I09) -I'JOl hacoood ~...-pic:blp&o.dlle.udlite~wet.. lalddlitioi!ms.~iiiiicdtbc-islllola.-.e olwjo>co>ictl ~~-oodlu-w-~ Pbo11 ABColl<fe. 611NJERVIf!WSWUli LQCAl OOVfltNMOOOJflClAL$ 8 C att.c~ 10 lntetvicw rt~ntltl ves of a nunlbet or the relevant govcmmcl'll atneici. The fouowln& ICtpOMCI Mle t«elwd.: Ory Flail-J)replrlmmtot ~and Tu..boa Ma. $lwtcy LAb... she it~ of tiijcercl.a Of p:wk:wd:,... lb&.ubj«t sille. M nm.&yjewswmt cmttjls BF.CIIItqlkd 10~ _,... ~ id cbovic:.im)'ofdwa.tljcct site.. No illldii\'lduja wcte available at~ ll.ft'le.oflbe.silevitl 1.0 m'dincs 1. Rt~ily..aceessiblt Ot vlsinc ruognhtd ~l'irottmtflfkll romlit/(j/fll wa-c ickad.rlltd a!ji'm 111hjcs1 JitQ and listed u(ollows; Thn:c 0) underpcund 1401'1.F 1..0 arc J.RMIIIII tho tltb~ Ssrt. AI~Uth no doalmcntabol'l is available.x..m, 1bc I&.IQlj of ray or the 1anb. 11 1!t tdcvan~ lo ao11c d':ll&.o... ot deld ~ WI& v tbopaoocool -"'"'",......,._ ""*'.,..._ sec...,_ obm:ryf.d ill cloel pcu...cytolbaetr:u., _... '"""' ol_ "" (I(Qimd ibijjoad.loo, Viwll obcvalioc~a ~ cht: JIR*DCC of U:lepl wrf'.~~et dlllllping a1 lhe Pb,...eal Plant 8ua1clma. It rclcvult &o I!IO'e that one ( I) empty 55-Gallon drum wt~s present wilmn this artl Ia addidon imtnedlalely 6()"',. jplldienc b pond Mid a.-.-et wrachet strum. H.az.ardout waskl, Uautdou" su"" nc:a. and lm.known aoludons., pmtnl wlttltn Ktmper Red Hllll Room OOC obletved d,ll che9e materials IIH SlCICkpiJcd oo the Ooora Mel counten.. In addition no ia!cii"'iiiboa ls table 10 die bm ol llaz~wous Wane MlnifaU. Furtbc:r. vaal ltof"'ic'l YCSitls 1ft. -.ed "'2006"'.t.icbl8dlcwd ~WaRt pic:blfl U t 101 occomd tor atlt.lll6 yun. l No readil~ot YIMWe 'f'cojuurl~ ~ Wltft.idatidW MIIOC'ICitiCS iw;m 19 ~ 3. BllCldaobfiod... lollowa>&ccjodioionoiod.. "'*",.,._, ----i<koli6cd... lllesioeafiocdomollot--htobemomt Three (3) uturt.l P' wttls wtn": icletltiflc:d It tm wb;oc. Pee. Two (2J ot lhe Wf:lk owmd by Coo.,.l &lc:r&y are lisled u Well APW1 and tt$ ~ 1 and 1ro U led '"attive"'. Addi1ionllly, Welll91l&&/AJ'I903 owned by Cont0ol &w:rt)' it reportedly lts.ccd u "'ppugged". 8EC did not ob5ei"yc any ad"ycrto e~wii'ofl menc.l conditi()ciiin lhe ~nc:nl \ic:inily o( ltlf:se ~o. io Allqjlctly,._.,-.,.~PCBs....,...,.-..yotlbo- BIICIIMo<> ol... _ol flktqjon.:t~mw-tleeft~ eec--.,..a..il.y'rilbe.. O'IU...,,..,_cow:t. 0..(1) ,...,..,._...,.._ ~o~r.....,.... _bf -.oa.oo.so~>p~allr-"'y_ol_coidlrioc ~--_..... BEC *1!\'i-t..t OD.. ol CQDSWd:ioa prtmfidct...,... ~ fl'lllla'wi.... ~ ~ PC8s ~ll'lllietia)&.lodiiicilu)'~rnmmahnycxiii.-.'icbidiill~bicni(cw\'ii.iiiab())tlqt... ~ BROA.DOUS COUP.08PIIASE I. GSA " J-5 A.L.OERSON 8ROADOV$ OOUJtOB PHASB I ESA

264 BEC M OPINJONS AAJ wu ach~vcd u a rtsult of the JlSA detcribcd here:in, wbjcc1 to lhe lirn.ibltions discussed in Section 1.4 oftl1is ESA ~ The linclinss or this ESA W&mnl coocjusions that thbr IOIW IWJdlly oott.a.{blt.,... lll.fibt~ r~cogniwl ~llvirot~mtnjal coi'idilion 011M,.b)«tlitL 8 C belitvt$tbtt througb h.isiorie&l ~b Cld site reoonnalssance that itnprq:~u envltu!menta! prtlcti(es are being used at lbt illbject site~ 9.o CONCLUSIONS & RE(..'()MMENDATIONS ~ DEC was reub.cd by Mr. Bruoe BJankmsh:ip (Uur) to cooduc::t a Ph:~.Se I ESA 11'1 confom'.lanct witb the scope anct limitations of ASThl B 1527 of!he rui pi'opci1)' known the Aldersoo Broaddus CoUege localcd at I 01 College Billl>ri~ Philippi, Wet! Virgmi.a My excq>eions 10 or dtldiom from thit pr.ctice ate described in Scctioo lo.ooftbbesarepon. BBC OQIICtudtf bned Oil rt-&vlatory rcseardl mel OCUitc te00cinai1sllll0e visible teeosbiud cnvironme.rual eooditioos are prcsenc 11 the subject &iw: as follows: BE:C oonei!dcles three (3) Wl<lcrgtoond Mortge taolcs ure identified t the lllbject sl.le. ln the ~ of do<:amenc.cioa indicating the $1:U:us of lhc:sle ~ants, DEC cone!o()es tbll tbe poc:ential for a peuoleutn product h.i~cal. on coin a. and/or f11t~,ate nk&x eusts. BF.C concludes btsed on bistorieal docunxnt review tbaltwo (2) um were n:movtd from AB College in SEC advises lhal doaunentation sptt-ifk:: to the $f.atus. l<>caciotl ()f ~plioiu ollhe tank$ w.:.rc unavail11bk. BBC COI~klde$ il1epl.wrt.ce dumping was obse:rv«< a11be Physical Planl Building. Specifically. buildina c:oo!i~netioo madt:rials, meta) cans. IittS, lltld 3S a;tlton drums wert ~. lb tlddit~n bum puc wu ob:sef'\'«1 adjacena to che dtui'lp pik. DEC obseow p11.inl ~am md metal rermams wilbip d~ bum pflc:. BOC~ but.d upon ima'yiews. m:ord doeull"ccll$ac::udt aod n:view, li')'sical sile impcclioo of(acititioe&, "'JIOidloa"'ABCo~""'ondl\miooalHam!douoW.,..Man'B'"""'.,.._""follow;.s; I. AB Co1Jeso campos bas l'no (2) dmoa poupt, ~ ~ -l111lerio1j 1M_.,,....,._..., OfficeofFdU..M..,_ SdloolofNMonlSdcoccoond-..,. 2. ABCoiJetcdoesootpo!."aSaformalwriuent~Wu.eM~Progam~ 3. A8 Co1Jeso llaif""'""'ible tor idmcifyitls. Iabell~ oollectios. """*"'e.*"" thl;>pl"' ofl>ltza<doul \\'i11sll.'s do not possess ~ fc4"11w IOd spcc::iajhiod tr1inktg. in cc:oniadce wilh US BPA llld US OSUAretulaOOos. 4. AB College does aac poa:tess tn dfccdve ~ ~ progn.m (or purdluidg. Inventory """"" ""'-- 5. AB College does rkil po$st$$ ~ tffect~'ve propvn or S)'*m 10 lrd; N.t.dou3 wasce ~tie& ~ oo a mond\ly bruis. Caulc>guing bla.llrdoos wasie gedcl'llled dllring rootillc activilic::sl)'pica) to inodmlonsolbigi>cro:lualioo (<s.-~~- - e><perimonb. clillics, &.) u well as blr:7ardout w..-o gc:nc:naod dllring apical improymltlll pojeas (eg. kad abett:menl., ~ll& maoc:ri&ls, PCB-o:lrJtaitlin& materials, de.). DEC achi-. baed upon FcdenolonciS131e"'!>'"""" c:a1ajo&ul aof"-<lous...,,.(oncl-iocluding~ <filp)oil) 1$ -y ooquln>d 10 clmsij\' A8 ColJcgo-- C:...Wiio!Wiy-Bx- Small Quonlityo...-.S..nQm<llyo.r..-.«l..qo~lya.--. BEC 9.0 CONCLUSIONS & RECOMMENDATIONS BEC provfdc:a the following OOIY«<iYe IL'IIon$ 10 lllinta.in IIOd/(Jf( mum 113 CIOallliance.,lh lltliled SUIIC$ f.n..,ironmenll\1 ~ Ag:Jq, Un.ilod SWcs: ()Q;upltlonal Saf<ty & lkaltb Adminbtracion. SI.Me rt wea Virginia I.Jqwtmem ot &lviroomcntal Procledion nod SWeof We.<~~ Vifgilri 8urt:aUo/N)ik Health: DEC recommc:ad.s JC'CUring doalmeoca6oa mdic::ming lhe Wllus of the existing thrtt ('3) USTt. lf lhe docummelltion is \lllayi'ibble BEC highly ~ coclftnl'li.n&!bot all heatitlg 1\ld lias. been ttmovtd (rom lilt USl'l. Sllcu16 nyofebc usr.-.;.""'""" f\ld oo AB Coll'll"oboolcl """"'""'<ilpoocofany ooxl all wame. oil <If sludge prcsmt.io the latlk in IOOCltdance with US EPA and WV O P pideliocs. ~ each lank Mlic:fl doalmrntatioo is flol present W: UST(s)~ ld be~ to detetmi.ne if a peetoleum rdease h3$ or hat not OIXImiiS. one~ lhallllkan be 11000f1111isbcd by performing inlqriey ~or soil sampling '""""'"""""'"... ofcbcusts. BOC recommerwk, based upoo inlerviews., record doel.amcau review, physicll &ilc in:spcc:lion ot facililies. the ~ otlh: A9 Collqe exbciog.llzardoos Waste Maoaccmcnl Propm. Chc fooowi~ I. t:>cydopmem:ofa bmaj writ~cst II.a:zatdou$ Waste.)f~nent Proafamdoc:tlmont l. Provide bma!iiics $pcdalizcd nining. in IIXOf'dancc...,;lh US EPA eod US OSHA regulalions, to AD Colq,llalf "'JXXI'Siblo ror...uy;og. llllel;og. oolloclioo. """"'"'s. ard ohipmel>l of""""""' wa.~cs. 3. Ewblidl a~-""'""" (or-....,;o~s pwd>asiog. m""""'y""""" *"" Esbblithacenll"aab.td~t progrtmfortrl kina~ot~"'a$11e$. S. ldmtify OCDial accumujiitiofl a«:a for temporary mrage of llazanbjs "-'... YC~St~t the aateuicc ~alt'.a.presc:mlya~ 6. Oeoemh-lbea=ot...,.~olcbo.,.;,Q"'""'"""ID. 7. aa;_,.,.,,ocotingolallunknowncllcmicolo.,idmufyhazatdous-wid!~ oollccdon, paclcagin&. ad disposal In~ whh US EPA and Swe of WttP- V'lflirtio hazardous wu~~ 8..a.sc n:lcoriuicdds disposing all a iscin; idmtlfied lla::7.aru:n$ immodia1cly m ~with US EPA anc1 ScaoeofWt$Virp""""""'-~ BEC I'CCOC001ellds. bued upcm site reconnalssmioii the folk>wlna actions should be taker~ td llddtt$$ lhe 6Wf'ace dumpina: at lhe Ph)1iW Plmt. Buildin& I. ~~~mr;;. :,::~,.~';.,"';o!~..;:o~~"::.'o._,.. 2. BactfiU lttu of nmoval upon ooroplcllkla or di$posi.i. 3. SEC 3d\i$C$ should regulaled Dllltc:ria.ls and or.petroleum related mateti.llk re...w lhemselvet during excavatioft work halt work activities to 6etenrtine tbeell.ledt of c:onlll;oirwioa if any. 86Cte 0t'lt~~llgConsol Energy lotemo\<tothc2,.soop!lon Wll.'lleo1 Clinic fromtheinuaa1.araj area aoct off A8 Colk:gecampus in advance or ~nau!ewoct f«the "futwt" fooiwi r.ekl. 86C reoornmc:ndl id an abw;lwn of c.. o. install parldng banicac1es aroolld die N11tural Ges Wdl the PbysicaiPIIDt&li:ldinc. 8EC ~ io advanc:e ol t~pcoctiog 1a10.. alioas ll1d in ISle lb.ojenoe of cxisring ~ (lofl(luct ~ve ldbc:sws, ked based pailll. m:roury om PCB.\ impections prior 10 MY tl'l'iovlltioos Swnmlnly. BEC ooocl..._...,.,...,..,...;..,o(~--ws,ond«>mppt1icn oflbecorrec:ci\'t ICiions in Cbe ~the &Ubjecl site docs oot present a sia.aif!cinl«lvircameotal liabt'lit)'. AI.»ERSSN' BROADOUSCOUE.CiBPIIASHI BSA WVIl ALDERSON BROADDUS COUOOB PltASB I 8SA 2l WVI2024 BEC 10.0 DRVIA TIONS No dckdonsanddevi~ &om the requiremt:nts of the AS'TM B ISZ7-0S apply 10 chc «~oduct or this ESA. U.4l NON AAI CONSIDI!RA110NS AddldOtl$ t() the rcqu.i.mnet:jl$ of the AS'JM B 1527-()$, n<le'i Ml toru:idttalions in this ESA report are as fouows; Plood Zones and:sensiti~ Habi18U. 12. REFEIU!NCFS SICNATURFSOP &NVUION.\1 NfALPROPESSIONALS Site RCI:::orwi$$811Ct &Fcnal Tt:ehnicaJ Rqlort 8)' ~~: -,...,,. ' '. ' [THIS PAGE INTENTIONALLY LEFT BLANK] A1.DBRSON BROADDUS COLI..!IOE PUASBJ BSA J-6

265 Appendix K: Management Prepared Financial Forecast

266 [THIS PAGE INTENTIONALLY LEFT BLANK]

267 New Undergrads First Time, Full Time Transfers Total Trend/Rate OPERATING REVENUE Trend Factor 3.00% Gross Tuition and Fees 15,211,728 15,202,376 13,813,702 13,361,747 18,203,793 23,429,954 24,867,977 28,038,007 31,043,372 Institutional Grants 7.00% 6,393,678 6,679,993 6,372,810 7,040,690 9,264,859 12,368,036 12,621,811 14,430,631 14,670,727 Net Tuition and Fees 8,818,050 8,522,383 7,440,892 6,321,057 8,938,934 11,061,918 12,246,166 13,607,376 16,372,645 Res Hall (Room and Board) 2,340,570 2,533,860 2,457,773 2,411,078 4,835,742 6,371,001 6,989,486 8,529,768 8,699,017 Other Auxillary Revenue 714, , , , ,285 1,077,663 1,143,805 1,252,044 1,345,883 Subtotal (Enrollment Based Revenue) 11,873,481 11,753,333 10,539,044 9,531,210 14,611,961 18,510,582 20,379,457 23,389,188 26,417,545 Private Gifts/Grants (unrestricted) 483, , ,066 1,278,359 2,100, , , , ,000 Investment Return (unrestricted) 44,682 46,350 49,746 53,679 50,000 50,000 50,000 50,000 50,000 Other Unrestricted Revenue 51, , ,751 62, , , , , ,000 Total Income 12,453,133 12,316,078 11,554,607 10,925,652 16,861,961 19,160,582 21,029,457 24,039,188 27,067,545 OPERATING EXPENSES Total Instructional Costs 5,824,649 5,894,840 5,805,685 6,445,263 6,911,082 7,010,807 7,332,833 7,446,262 7,631,400 Academic Support 805, , , , , , , , ,187 Student Services 2,344,685 2,536,633 2,578,346 2,794,949 2,951,189 3,076,058 3,126,114 3,162,059 3,228,080 Institutional Support 2,939,740 3,021,208 2,855,652 3,388,422 3,477,485 3,416,160 3,471,751 3,504,646 3,570,661 Fundraising 801, , , , , , , , ,898 Auxillary Costs 2,263,043 2,257,699 2,309,644 2,627,276 3,574,134 4,087,456 4,361,094 4,794,714 5,175,737 Other 197, , , , , , , , ,927 Total Expenses 15,176,595 15,260,896 14,971,930 16,894,885 18,641,604 19,281,248 20,004,277 20,630,284 21,354,890 Depreciation Expenses 1,099,679 1,114,148 1,209,225 1,209,225 1,209,225 1,209,225 1,209,225 1,209,225 1,209,225 Expeneses funded by Temp Rest. Gifts 1,356,717 1,558,458 2,056,651 1,109,940 1,109,940 1,109,940 1,109,941 1,109,942 1,109,942 Total Operating Expenses 12,720,199 12,588,290 11,706,054 14,575,720 16,322,439 16,962,083 17,685,111 18,311,117 19,035,723 NET OPERATING INCOME (267,066) (272,212) (151,447) (3,650,068) 539,522 2,198,499 3,344,346 5,728,071 8,031,822 DSRF Interest Income 29,470 29,470 29,470 29,470 29,470 Maintenance Reserve 50, (50,000) (75,000) (100,000) Trustee Fee (5,000) (5,000) (5,000) (5,000) (5,000) Capitalized Interest* 3,704, ,156 2,468, , Money Avail for DS 3,616, ,498,148 4,691,937 3,620,296 5,677,541 7,956,292 BOND FINANCING Series A Interest 7.750% 1,003,203 2,655,538 2,655,538 2,643,913 2,639,694 Series A Principal , ,000 Series A Debt Service 1,003,203 2,655,538 2,655,538 2,943,913 2,964,694 Series A Outstanding 34,265,000 34,265,000 34,265,000 34,265,000 33,965,000 33,640,000 Series B Interest 7.500% 71, , , , ,250 Series B Principal Series B Debt Service 71, , , , ,250 Series B Outstanding 2,510,000 2,510,000 2,510,000 2,510,000 2,510,000 2,510,000 Series C Interest 7.500% 18,842 49,875 49,875 49,875 49,875 Series C Principal Series C Debt Service 18,842 49,875 49,875 49,875 49,875 Series C Outstanding 665, , , , , ,000 Debt Coverage Ratio Series A Debt Coverage Ratio (All Bonds) Days Cash on Hand Number of Days Dollar Amount Required 969,047 2,257,535 3,129,160 Amount Contributed 969,047 1,288, ,625 Endowment Repayment Interest 4.00% 169, , , , ,000 Principal Debt Service 169, , , , ,000 Outstanding 4,225,000 4,225,000 4,225,000 4,225,000 4,225,000 4,225, ,986 1,629,275 (411,414) 1,038,015 3,712,848 Cash Position in Excess of Days Cash on Hand Requirements 235,986 1,865,261 1,453,847 2,491,862 6,204,711 Total Actual Days Cash on Hand Debt Service Reserve Fund Maximum Annual Debt Service 2,946,963 Interest Rate for DSRF 1.00% Interest Income 29,470 * Capitalized Interest includes the interest earned from the project funds and the DSRF October 10, 2012 K-1

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269 Appendix L: Proposed Form of Opinion of Bond Counsel

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271 November 30, 2012 BB&T Capital Markets, a division of Scott & Stringfellow, LLC, as Placement Agent HasbrouckHeights,NewJersey Wells Fargo Bank, N. A., as Bond Trustee Philadelphia, Pennsylvania The Philippi Municipal Building Commission Philippi, West Virginia Alderson-Broaddus College, Inc., as Obligated Group Agent Philippi, West Virginia Ladies and Gentlemen: We have examined, in our capacity as Bond Counsel to The Philippi Municipal Building Commission (the Issuer ), the transcript of proceedings (the Transcript ) relating to the issuance of its $34,275,000 principal amount of College Facilities Refunding and Improvement Revenue Bonds (Alderson-Broaddus College, Inc.) 2012 Series A (the Series A Bonds ), $2,510,000 principal amount of College Facilities Subordinate Lien Refunding Revenue Bonds (Alderson-Broaddus College, Inc.) 2012 Series B (the Series B Bonds and together with the Series A Bonds, the Tax-Exempt Bonds ) and $680,000 principal amount of College Facilities Subordinate Lien Refunding and Improvement Revenue Bonds (Alderson- Broaddus College, Inc.) 2012 Series C (Taxable) (the Taxable Bonds and together with the Tax-Exempt Bonds, the Bonds ). The Bonds are being issued pursuant to the laws of the State of West Virginia (the State ), particularly Articles 16 and 33 of Chapter 8 of the Code of West Virginia, 1931, as amended (collectively, the Act ), a Bond Authorizing Ordinance adopted by the Issuer on July 26, 2012, resolutions adopted by the Board of Trustees of Alderson-Broaddus College, Inc. (the College ) on April 20, 2012, as supplemented on July 21, 2012 and August 13, 2012, and resolutions adopted by the Board of Directors of Alderson-Broaddus Endowment Corporation (the Corporation and together with the College, the Obligated Group ) on July 21, 2012 (collectively, the Resolutions ), and a Bond Trust Indenture dated as of November 1, 2012 (the Bond Indenture ), between the Issuer and Wells Fargo Bank, N.A., as trustee (the Bond Trustee ). The Issuer and the College entered into an Initial Lease dated as of November 1, 2012 (the Initial Lease ), pursuant to which the College has agreed to lease the Facilities (as defined in the Bond Indenture) to the Issuer. Pursuant to a Lease Agreement between the Issuer and the College, dated as of November 1, 2012 (the Lease ), the Issuer has agreed to lease the Facilities back to the College. Under the Lease, the College has agreed to make rental payments in amounts and at such times sufficient to pay, among other things, the principal of and L-1

272 BB&T Capital Markets, Wells Fargo Bank, N. A. The Philippi Municipal Building Commission Alderson-Broaddus College, Inc. November 30, 2012 Page 2 redemption premium, if any, and interest on the Bonds when due. The obligations of the College under the Lease are evidenced and secured by the A Note, the B Note and the C Note (collectively, the Notes ) issued pursuant to the Master Trust Indenture, dated as of November 1, 2012, among the College, the Corporation and Wells Fargo Bank, N. A., as master trustee (the Master Trustee ), as amended and supplemented from time to time, including by the Supplemental Master Trust Indenture between the Obligated Group Agent and the Master Trustee (collectively, the Master Indenture ). In the Bond Indenture, the Issuer has assigned the Trust Estate to the Bond Trustee to provide for the payment of the principal of and interest on the Bonds. The Initial Lease, the Lease and the Bond Indenture are collectively referred to herein as the Bond Documents. Capitalized terms used but not defined in this opinion shall have the meanings assigned to them under the Bond Indenture. The Bonds recite that they have been issued pursuant to the Act for the purposes of (i) financing the planning, design, acquisition, construction, renovation and equipping of certain capital improvements to the campus of the College, consisting of the construction of a new multi-sport stadium, locker room facilities, stadium seating, concessions, President s box, media boxes, turf field, lights to accommodate night games and practices, site improvements and walkways, new student housing consisting of a 144-bed apartment style student housing building and a 240-bed suite-style student housing building, as well as the renovation and improvement of Benedum Hall, Priestley Hall and Kincaid Hall, together with all other necessary appurtenances and related facilities (the Construction Projects ), (ii) currently refunding the Issuer s College Facilities Revenue Bonds, Series 2010 A (Alderson-Broaddus College, Inc.), dated June 30, 2010, issued in the original principal amount of $5,000,000, (iii) paying capitalized interest on the Construction Projects, (iv) funding a debt service reserve fund for the 2012 Series A Bonds, and (v) paying costs of issuance of the Bonds. The Transcript includes certified copies of the Resolutions and signed counterparts of the Bond Indenture, the Initial Lease and the Lease. We also have examined a copy of one of the authenticated Bonds of each series. Reference is made to the opinion of (A) the opinion of Jackson Kelly PLLC, as counsel to the Obligated Group, of even date herewith, with respect to (i) the corporate status and qualification to do business of the Members of the Obligated Group, (ii) the due authorization, execution and delivery by the Members of the Obligated Group of the Bond Documents, (iii) the binding effect and enforceability of the Bond Documents upon the Members of the Obligated Group to the extent that the Obligated Group is a party thereto and (iv) to the effect that each Member of the Obligated Group is exempt from federal income taxation under Section 501(a) of L-2

273 BB&T Capital Markets, Wells Fargo Bank, N. A. The Philippi Municipal Building Commission Alderson-Broaddus College, Inc. November 30, 2012 Page 3 the Internal Revenue Code of 1986, as amended (the Code ), as an organization described in Section 501(c)(3) of the Code, and is not a private foundation as defined in Section 509(a) of the Code; (B) the opinion of Greenberg Traurig, LLP, as counsel to the Bond Trustee, of even date herewith, with respect to (i) the corporate power and authority of the Bond Trustee to enter into and perform its obligations under the Bond Indenture, (ii) the due authorization, execution and delivery by the Bond Trustee of the Bond Indenture and (iii) the binding effect and enforceability of the Bond Indenture upon the Bond Trustee; and (C) the opinion of Greenberg Traurig, LLP, counsel to the Master Trustee, of even date herewith, with respect to the corporate power and authority of the Master Trustee to perform its obligations under the Master Indenture, all of which are contained in the Transcript. We express no opinion as to such matters. Without undertaking to verify the same by independent investigation, we have relied on certifications by representatives of the Issuer and the Obligated Group Agent with respect to certain facts relevant to both our opinion and the requirements of the Code. The Issuer and the Obligated Group Agent have covenanted to comply with the provisions of the Code regarding, among other matters, the use, expenditure and investment of the proceeds of the Tax-Exempt Bonds and the timely payment to the United States of any arbitrage rebate amounts with respect to the Tax-Exempt Bonds, all as set forth in the proceedings and documents providing for the issuance of the Tax-Exempt Bonds (the Covenants ). We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, any parties. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents referred to in the first paragraph hereof. Based on this examination, we are of the opinion that under existing law: 1. The Bonds and the Bond Documents are legal, valid and binding agreements of the Issuer enforceable against the Issuer in accordance with their respective terms, subject to bankruptcy laws and other laws affecting creditors rights and to the exercise of judicial discretion. 2. Under the Act, the Bonds and the interest thereon are exempt from all taxation by the State of West Virginia and by any county, municipality, political subdivision or agency thereof. 3. Under current law, interest on the Tax-Exempt Bonds is excludable from gross income for federal income tax purposes under Section 103 of the Code, except when such Bonds are owned by a member of the Obligated Group and is not an item of tax preference for purposes L-3

274 BB&T Capital Markets, Wells Fargo Bank, N. A. The Philippi Municipal Building Commission Alderson-Broaddus College, Inc. November 30, 2012 Page 4 of the federal alternative minimum tax imposed on individuals and corporations, but such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. The opinion set forth in the preceding sentence is subject to the condition that all requirements of the Code that must be satisfied subsequent to the issuance of the Tax-Exempt Bonds in order that interest on the Tax-Exempt Bonds be, or continue to be, excludable from gross income for federal income tax purposes are so satisfied, and therefore failure by the Issuer or the Obligated Group to comply with the Covenants, among other things, could cause interest on the Tax-Exempt Bonds to be included in gross income for federal income tax purposes retroactively to their date of issuance. Except as set forth in this Paragraph 3, we express no opinion regarding any other tax consequences of the ownership of or receipt or accrual of interest on the Tax-Exempt Bonds. Furthermore, we express no opinion as to the effect on the excludability of the interest on the Tax-Exempt Bonds from gross income of (a) any event for which the Bond Documents requires the obtaining of an opinion of Bond Counsel, as defined in the Bond Indenture or (b) any amendment of the Bond Documents or waiver of the terms thereof. We do not express any opinion as to the status of title to any property or any interest therein or the creation, perfection or priority of any interest or right purported to be created therein or with respect thereto, or as to the necessity for the recording, or the sufficiency for recording purposes, of any instrument with respect to the creation, perfection or priority of any property interest or right with respect thereto. We express no opinion with respect to any indemnification, contribution, penalty, choice of law, choice of forum, choice of venue, waiver or severability provisions contained in the foregoing documents or other offering material relating to the Bonds and express no opinion with respect thereto. This opinion is rendered solely for your benefit and is furnished only with respect to the transactions contemplated by the Resolutions, the Bond Documents and the Master Indenture. Accordingly, this opinion may not be relied upon by or quoted to any other person or entity without, in each instance, our prior written consent. Our services as bond counsel have been limited to rendering the foregoing opinion based on our review of such proceedings and documents as we deem necessary to approve the validity of the Bonds and the tax-exempt status of the interest on the Tax-Exempt Bonds. We have not made any investigation concerning the business or financial resources of the Obligated Group, and therefore we express no opinion herein as to the accuracy or completeness of any information that may have been relied upon by any purchasers in making their decision to purchase the Bonds, including the information contained in the Private Placement Memorandum L-4

275 BB&T Capital Markets, Wells Fargo Bank, N. A. The Philippi Municipal Building Commission Alderson-Broaddus College, Inc. November 30, 2012 Page 5 of the Issuer with respect to the Bonds dated November 29, 2012, or other offering material relating to the Bonds and express no opinion with respect thereto. The opinions herein may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters that come to our attention after the date hereof. Accordingly, this opinion speaks only as of its date and is not intended to, and may not, be relied upon in connection with any such actions, events or matters. Respectfully submitted, SPILMAN THOMAS & BATTLE, PLLC L-5

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277 Appendix M: Consolidated Financial Statements for College and Alderson-Broaddus Endowment Corporation for Years Ended June 30, 2011 and 2010

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279 Consolidated FNnda1 S!atement:!l; Y.ars Ended June 30, 2011 and 2010 JABLE OF COtfTENTS Consolidated financial Statements Alderson-Broaddus College and Alderson-Broaddus Endowment Corporation lndependetil Auditw"s Report F.nenclel Stelomems. Cona:olidr.ed S1atement of Flnanc!al PosiCion ConSOIIdalled S1atement Of ActMtJes Cona:olldsled Statement of C8sh FlOWs NoW& to F~nanOal Statem61"11S Acoompanying Information: Sc:hedule Of Fl.ll'lttiOnal Expensn , 6-7..,. Years Ended June and 2010 xoao.. T_... l'07v-r-~bll ~~t VI... ls)oi Ofl'oce JCMJ4SI<4QO Fu.»4J.UIS4Si tn.oepehoe.nt AUDITOR'S REPORT informatjon tlaa: been subjeded to the ~ proced ~ In the audit. of the consolidated ~ stat«nennff and cert.wi addlbonal pnx.edu~s. Ww;iuding c:oml*lng and rec:oociling $UCh intofmation dlrectty lo the u~ng acoountlng and other" reconis usod to tnp1q the COMOidated rinandaf statemi!iiu or to the consolidated flfllncial statements lhemsetves, and ocher additional pmc:eoore& n accord8nce with ~ing standards oenertll"f fk:cetltecl in the Uniled States Of America. In our opinion. 1M information ia. fairiy..utted In all m~ respects, n retaboo to tm consoldated lf.n$1'1dal ltltements Mlwt'IO!e. Toti"Mt BoatdlofTru&l&Q Aldf!,raon..Broaddus Colege and Aldc!f&on.Broaddus Endoo.m'lentC~ PN~pp, west Virginia We have audited the aooompanying consolidated 5latemn ol mandai position ol Aldetson. Btold<tus Coltge and Alderaon-Broradi:M Enc:knroment COrporation (the COllege) as Of Jut~t 30, 2011 lnlf 2010, end tho rola:ecl eonsoidated statements Of.a;~ and cash 1\ows tor 1he years, Chen enclecl. Tlleee flnandal st.btemen~ e the respon$1b1wty ol the ~ s management. Our ~iblltt)' Is to 8XPf"l an opinion on thme financial &tatements based on our a ucits. The Wnclal etalemenls ol the College as ot M'8 30, 2010 wtte audited by ott'ler auclitcn whos.e rtport dated Matd\3, 2011 IXPfetsed en unqu;allfiecl opi'*>n on those sunemencs We conducted cu audits In accordance with aucitlng standants geoeral y accepted ln th8 Unhed States ot Amerleel. ThOSe standards rtq\ire d'lo81 we plan end perlom'l the audit to oti(im re&soonable ass.wance abou ~ the t'inancial ttatements are free of material mls&talsml!nl M audit lncm:ies examining, on a!tit basi&, evidence aupporttng lhe amounbs and dlsclo&ures in the flrliijlclal.tatements. An audit abo ir'm:l.ldes a$m$$lng lhe 8Clt'IOtnling principles used end ~ esti'nates maoe ~ mtoegoement, 11 well as evajijitif1i the OWfllll fir'imciii st.eement PfeMf~.t.t:ion. We lleieve that w IUdi!S provide: a rouone06o besis for our opinion February 23, 2012 In our oprion, the consolidated frlancial a:tatements ref~ to above pjea:ent rair1y, in all rn.at~~mi rupects, the consoidated financial pos;lbon Of Aldersoo-~s COIJege al'ld Ndersoo-~ Encbwment Co!'pora1ion as of June 30, 2011 and 2010, and the d'laf'iom in its ne4 assets and i1s cash news lei' the years 1hen encled, In toflfom'l!ty with ICCOUI'Iq prindples gennlly ~ed W.lhe U~ed Slates of America. The aceompan)ing rlt'l8ndlil atatementa have been prep.ared assuming that the ce~ege.,.,. ecrt~nue as a go.no ooneem. M dilo.sssed In Note 2 to 1M t'inoiuw:ial &latementll, the College t.aa suffered reeutring k>ues, l'tfls outttancting consttuctlon eommltment.j lhet have requlfe<l the Cotego to borrow from Itt. r$&trlcted enoowmonl llllnd accountt to meet ~lgotbll. end It OICpected 10 enter Into a forbearance agreemenl with one ol the Colloge'a londet~o. These factora:, and others discussed In Nota 2, flllise substantial doul:lt about its ability lo continue as a going concem. Mall&gemenfs pleons regarding these matlera also ere described ln Noee 2. The financial atatementa do not Include lt'r'f adjustmflrb that mlgl'lt re$1.111 from CN outcome Of this uncertlint)' OUr audit was conducted few the I)I.II1KI$8 or forming an opto11on on the conaolldatec:l financial saatemernls as e whole. The schedule of fooctlonal expena.ea on page 30 il. presented for purpqms Of additional analysis lind is not a r.quired part Of the bask eonsclidated financial atatements. Such lnk:tmation Is the responslbilily ~ mlnllglf!'lent and WIS derived from Wid relates directty W the Ul"'derl)4ng ec:countlng al'l<l otnor recortts UMid to l)l'epii(o 1he oontollde1ed,...ndal simomel'ltt. The M-1

280 ALOERSON-BROADOUS COlLEGE AAD ALOERSON BROADDUS ENOO'NMENT CORPORATION CONSOUDATEO STATEMENT Of FINANCIAL POSITION JWJe30,2011 and2010 ~ Cash and cash equfvalen~ Student and grants receivable, net or albmlnce few cb..tmul ~sd$435,3.57fof201 1 ltld~ch.3 151or2010 lnvtjntcxles. prepaid, and cxher Cont:riblhom r~e. '*of IIOwance fot doubtfd act:ou'lll fof $73,000 lot 2011 and 2010 OeoosQ held b'; tru~ee unc1et bond indenttn Student loam. recemtble. ~of el~ for uncolodible accoo..u Of$ lor 2011 ancl2010 N01e recfwable Cash restrided fof long tenn ln'f8s1ment and capbllean omget1ons LQr'9'term investments Property and &quipmenl, net SeneflcW ln1ere5t in memar tn.lsts Total assets llabilrrtesanq NflhSsgtS llltbilitin: Aceo<Jni> Acc:rued lablll)es Accrued oonstnjction oost& ~""""'.. ootlgltlono Student deposils and other ~lt!ftod Income Obllg3tiOn& trier splil interest agreernenls Retunde.bto.OVances Debt Netassecs. Unrea.trlcted T~resltk:ted Permanently rea1ricted 405, ,804,326 69, 59 2,705,799 25, ,065 14,882,!524 13,675, ,2$6.598,&41 880, ,120 2&8,< :127 2,703,259 8,&4a, <4&8 8$,099 :382, ,9'98 4.;260,4« o688,179 25, , S.o7a 11,799, , , ,3<6 145, ,031 2,7&4,397 7,408,~41 12,S (1,010,..,2) (1,517,54a) s.954.m 6,451,1$3 19, f 0111 net assets: '974<400 Revenues end other support TUition and fees less financial Bid Nettuitionlf'ldfees Contributions lrtvellmenl W'lcome, net of related e.qlen$0$ of $$9,859 Income on funds held In 1rust Gownvnent and Qttvale grants AuxiliatY enterprises Other inc<ltne Net assets rele3$ed from restrletlons and reclassjieatlont. ~s: EclocaliOnal and genertj Instruction -- Acedemic support Student semces lns1jtu!jonej~ Fund Research Auxiharyenlerprises Total elq)en&e! ALD RSON-8ROADO\.JS COLLEGE AAD ALDERSON-8ROAOOUS ENDOWMENT CORPORA non Chanoeln net auets befon gwts (k)56e&) Galno(\ooseo): Nelroallzedl\mroalizod gains (lcouo) Change In value of split-lntetht agreements Net gain on benenciallnterest in external trust CNingo In net assets CONSOLIDATED STATEMENT OF ACTIVITIES Ye Ended June 30, Ternporon~ Permanently ~.l!!!!!:!s!!l ~!2!:!!_ s ,702 s $13,813, , ,440,692 7,440,8~ 708,746 1,393, ,631 49,7<16 144,320 3, ,751 5,805, ,620 2,578,3-46 2,855,6!52 S00, ,069 38, $44 209,651-65,37!5 25,321 48,650 (1,006,144) {360380) 1,515, ,726 (2,831) 2se.2n ~ , , , t7 11U ~ 87$, , ,695 3,098, ,401 5,80$, ,620 2, ,&56, , ,089 38,7< ~ 2,089, ,609 ~ 2,895,263 1,6M.306 Total liabilities and nel assets l $ NM assets, beginning of year (1.517,548) ,974,400 Net assets, end or year S( ) S S1i $ The eooompan)'ing noles are an lntegt811 part of these flnandll statements. A LDERSON-BROADDUS COLLEGe ANO AL.OERS.ON-BROAODUS ENDOWMENT CORPORATION CONSOLIDATED STATEMENT OF ACTMTIES Vear Ended June 30, ALDERSOn-BROADDUS COllEGE AND AlOERSON-BROAOOUS ENDOWMENT CORPORATION CONSOLIDATED STATEMENTS OF CAS!< FLOWS... Ended J""' 30, 2011 """ 2010 Revenuet and othef "4lPCM"t Tuition and fees s 15,202,376 $ s Lessfil\ancfrallld (6,679,993) NolltM:Ion~tOM 8,522,383 Cootrit!Uiona 172, ,008 91,394 lnves1/tientlnootne, net of 1ttlattldl expeo5e$ of $33, Income on fundi held 111 tru&l.,: Gcwemment end private grentt 193, ,082 Audiary ertetplisea 3,230,950 Othlt 1noome 149,92:4 131,366 Net assets released from reslric:clons andr~ ( } ~ ""- Tocal re... enues and other suppcn t ~ ~ [THIS PAGE INTENTIONALLY LEFT BLANK],,.,_ 5,894,840 Acedemic support ,536,633 lnso.utton&l suppon 3, Food raising Researd'l 206,914 P<JI>li<- 46,235 Awdtialy enfetpris.n 2,257,f Tolalexpen585 15,290, Cl"'anne., nt1 aue~s befete gains (losses) (545629) ~ ~ Gains ('cues): Net reaizedlur eaiz.ed gains (losses} 698, ,043 62,870 Change In value of apit..ftt.efe&t agreemenlj (18,329) (121,779) 27,377 Net g~ln on benef!claj int«elt In ex'l.etnll ttus:t ,092 ~ ~ cn~ngelnnot~s 135,885 (552,880) 288,666,.,_beginning(1(- (1.~.433) s 15,202,378 (6,679,993) 6.522, ,203 <471, ,230, , ,840 7&4,584 2,536,633 3, ,914 <46, ,699 15,2(!0,806 ( ) 1,214,758 {110,731) ~ ~ (123,307) _1Q!!.1Q1Q_ Co>hflowsf<om-ngac<Joo<Jee: Change In net useta s 1,f385,300 $ (128,307) Adju$liT'IefltS 10 reconcile Cftar98 itl net assets to net C8lh --by(uoedln)_ng_ ~lndlrnottiut4otl 1, ,114,148 Provision ror bad clebls ,084 Loss on sale of property end ~ulpmanc 2,203 ~ (geln) loss on obllg;tuona under spllll lnterest egreements (90,391) 122,014 (lnerene) decrease rn Oi)elatJng assets: Aa:ol.ns rec::etvable (58,022) (20,905) lrwontories, prepakl. anc1 othtt (268,624) (69,843) C<nritM..(ions receivablo 363, ,967 Deposits l'leld by lt'usim under bond indenture lf'la'nse (decrease} n open~tmg Nbi!OO; 151,562 (2Cl0,000) Aeooun:Opo- [THIS PAGE INTENTIONALLY LEFT BLANK] (341,071) Accrueclllabllitles and construction costs 467,9<0 270,700 SttJdent deposits anct OU'Iol' def«rod inectne 142,7\7 (7,002) Refundable ad\rances (81,136) (69.728) Conttl~ re&trietad l'or long-term 'Investment (145,361) (146,700) Contributions of s.eo..riles (16,>33) Net oorealized and realized 9ain on (22.202) Jong tetm lrwestmtf'lt:s {2,069,367) (I,370,177) Net gain on beneficial r.tereat In extemaf tru&ts ~ ~ Ne<ca>hproWoedby(usedln)-aoog (:<20532) Cash flows from investing &etmties: Pun:hase olprope!1y and equlpmoi'i (1,368,901) (2,155,810) Proceeds from sale of property and eqdpmem 2, Proooodst.om _(I(_.,., 3,761,641 1!1,39S.807 Purchase ~ in've$tmeru (3.331,167) (7,135,513) ~entt. Of loans to student& (327,386) {401,020) Payments received on loanj to students 308,766 ~ Nee cash used In investng activilles ~ ~ Net as.sets, end of year $(I 517,548) s e4sua3 $19040,76$ S23,Q74,<400 The accompanying notes are an rttegral pan of these financial ate1ementa. M-2 (Conlin<Je<j)

281 A.L.DERSOf\1-.BROADDUS COLLEGE AND ALOERSON BROAOOliS ENOOWMENT CO~RATION CONSOLIOATEOSTATEMENTSOFCASH FLOWS YNtSEndedJU"1030,2011 anc12010 (Continoed) ALDERSON-BROADDUS COLLEGE ANO AL.OERSON-BROAOOUS ENDOWMENT CORPORATlON NOTES TO CONSOUOATED FINANClAL STATEMENTS 1 OESCRIPTTON OF ORGANIZATION AHO SUMMARY OF SIGNIFICANT ACCOUNllNG POUCIES Cash flows from tinandng actm1ies. Proceeds Prom oontritdlom..-e&.~ricted for pllnl. expansion and endowment lrtve&tment ln endowment. lnvestmtnt ir'l spl.it-intere:rt agreements CMI>e< financing-., ChAnge In restricled cash Ooerene WI ~ial ~ fotoutaioi!i OlliJanizatlon ObligatiOns incunad under $pkl:-lnterest agreements Payments of obligations under split-1nterest agreemenas Net borrov.ings on revolving lines of crecfd Proeeecls 11om Issuance Of tong-term debt and ~ leases Payments on kln9-tenn debt and capital 'eases 1-45,3$1 (229,593) (1!53,413) 971,152 ( ) 140,851 7,649 (773,202) (218,789) 7,848 ( ) ~ snts11 These fnancial s.ta1ernents present lhe consolidated flrlanc:iat posdion of AkSets.on-&oaddus Colege and AJderson-Broaddus EndOMnenl Corpcxabon (colectlvely referred to as the College), A1dtrfsoD.8lo.ci<M College..-ld AIOerson Brottddus Endowment Cotpotatlon are not tor-profit C(l(pOr8tions with common trustees. ~-Broaddus College is a pri\18te, lnclependenc COllege accredited by North Central Assoaalion of Colleges and Schools whictl enrols ihe majority of ita smjents 1tom the lmmediatt Weat Virginia r.gion, but also lwl students that OOI'T'Ie from lhloughout lhoe nation and some foreign eoun!rles. A~erson-Sroaddus Endowment Corporatioc\ holds, admwlistera. in'o'ests. and di$burses funds ~ properties In $OCOI'd80Ct With wms ot gifts, bequests, and trullbi for the benefit or Alderson-Broaddus College The fmanc:iid atalements ~ been ~ated tince At0erson-8rotddus Co!Mg4: has boeh an economic interest in Aklenon Bf'oaddus Endowmerc Cof'poratlon (ABEC) and control of ABEC through a majomy voting lncerht In Its govemiog boetd. All algnlr.cant "tercompany transactions have been e»mneted In lhese consolidated flnanci91 statements. ~ 141,102 ~ $ ,021 ~ $ Contributions received and IA:lOI'IditiORal promises to give are measured a! their fair values end 81'6 tepotted.. lnetease:s in net assets The coneoe report! gills of cash and otmr a:tsets as re51rided 1uppot1 if they are received with donof a.t~ lhat limit tho use of lhe donated auets, \IVhao a donor restriction explr'l&s, thal ia,..men a stlputated tine restric:tioo ends or purpose ~rietion is ~. lemi)oi'aliy r6stricted net a$$6ui are recimsified to ~ ~restricted ne1 as&ets and reponed In tho statement ot adlv'ttles as nee assel1 released!'tom restrictions. The Colege reports gifts of land, buydings, end equtpment as unre!uic:ted suppoct unleu e~ donor &1ipulations specify how Che donated assets must be used. Gifts of long INed aseets. -Mth explelt l'!stric:tlons that ~ I'IOw the auets am to be used and gl:rta or cash and other aaau that mu..t be used to ec:qw. k)ng-wed assets ar1 rep«te<s as restricted support. Ab&e:nt e:rf)!kttt donor stipulations ebout how loog those IOng.lived nse11 must be malnlalned, the College reports expbtiona of dooor res~ions when the c:lc::nllted or POQUired long...wed.mets..-e p&aced W. setvk:e Cash MX1 Ca,tl EsMvilonts Ce~ and CEish OQ~e consist prlmant; of Oon'IIMid Oeoosltllnd mont)' m&lbt h.ftts. excep~ lhat cash w!th donoc'~inpooed rewictlons the!: lmlt Its '-'" to long term lnve$tmen11s cf8~ naong. tenn me&tments. lnventones are s&ated ~ the IOWef of c:ost or marxet. \\\'ttl cost detetmined I)Miarty on tne bt.fn. fnt-out method. lnvewnents ere reported 8t 181r vwe Fair velue l:s the price that would be received lo sel n asset 01 paid to ltansfef liability in an Ofdeffy trensadion between market partieipants at the measuf'ttnflll"'t datfl See note 4 for discuhlon of fa"k" value mea~uramenta. The accompanying notes are an Integral pelt of these financial t latements 10 ALDERSON-BROADDUS COLLEGE Alii) AI.DERSO...,OADOUS ENDOWMENT CORPORA TJON NOTES TO CONSOLIDATED FINANCIAL STATEMErfl'"S (Coo- AU>ERSOH-BROADDUS COLLEGE ANO ALOERSON-OOOAOOUS ENDOWMENT COOPORATJON NOTES TO CONSOLIDATED FINANCtAL STATEMENTS (Continued) 1 DESCRIPTION OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNn NG POLICIES (Coftllnue<') Prooerty m1 Eou!Qment Property and equipment ete S1atecl at coal at tl'lt da~ of purchase or at fait Yalue at the dote of receipt In rte case of <klonated assets. lnteres1 Of'l funds bom:>wfld to fll"'ance!he conwuctioin or majof capital ~Ions" capblized during 1N: cooltnjetion period Depredation Is cajcuiate<l on astlllight lfne basis ewer the e&timaled useful lives of buildings and equlpmen1, ~ ranoe from 3 to 50 years, Maintenance and repah are charged to operabon:s a& R:urred and major Improvements are eapltarlz.ecj SQ!jt lotef!!s1 AQrmnents 'The Collegol n.as beneficial Interests. in various donor ltablished chalilable remainder 1ru~s and charitable gift e~ Aa!Sels: ~eo vnder such 8gceoerntnts are rocorded at U'leir ltllr valles. Contfibutiol'l revenue is cak::ulated based on the present valle of esti'nated fulure cast! lk:jw,+s uq a dl*oo+unt me commensurate wtlh the ti&k.s mdved ~ the present value of payments expected to be m«<e lo other beneflelaties. Duling the terms Of these <tqteememi, activity relating to reveh.1etions of expected future benefits to De reeefved by the ~ore~ future payments lo other beneficiaries reeog.nized as ehangea In the value of apli't lnterest &grmments: As the beneficiary ooder vanous ck)nor established perperuallnjic wrangementt, tt'l Cologe has the Wrevocable right to recehe lhe inoome earned on trust assets held In perpetuity, but never reo&ives the assees held n trust. When a tnn>t is lnitialy established, the College I1')CQ{Ilnizes ccntt\bution revonue, du.llfied as pennanentl)+ restrided support, and ber'l6fw::lallnlerest in perpetual trults moasurtd ellhe PfOHnl val.le of esbmated future easn receipts from the trusrs nset:s. Amual distrhrlions from the ltv5l5 are reported as inves:tmentlnoome that lnc:teases unrestricted net asse1s unle&s restrict.ed by the donof". Adjua1meots to \he amount "'PPOled 8:9 benet.$11neere~ In ~~ trusts, based on en annual review u~wlg the same basis as was used to measure the interest lfttially. are recognizect as permanently restricte<l gai'ls or tosses. Refundab!eAdyancp Refundable adyanca:s consist of amounts adyanoed to the College by the Federal Govemtnenl fot the purpose of funding the Perkins and Nursing Student loan Programs. Upon tennina'tion Of tl'le Colo9e's ~patlon In ll'le$e programs, 11'10 Colepo wou1e1 be required to remit to the govemnen1 al program cash on haocl and 10 remnqulsh an intetet~ In OUlStanding loans rec:61vable. oererrea 10en costs ate being 8r"nnO'tited on a s&ralgtlt-lne ba:sls over the life of lh4 related ~ ArnourU ere Inducted., ~. prepalclll'd ocner on tne statlt'i'iw!ts Of finaf'iciilll positictl and.,. roconied net of8+ccutlulr.ed~. 1 OESCRIPTK>N OF ORGANIZATION AND SUMMARY OF SIGNIFtcANT ACCOUNTING POUCIES (ConUnu.cJ) fyncfiona! BeponJng Expenles.ve reported on a lunctional basi5 that disclose. the purposes for w11ic:h the expen$0$ haw been heun't!kl A bnef dmaiption or tm func:tionll e~ cras&kabon& foiowa: lnstnetion - Expenses Incurred by the aca6emle departments trial are dlreetty lnvotved ~ leaching KWibes.. Academ.te Suppon - Exp-enses Incurred pfim.ar11y to PIO'VX!e auppon MI'Vlees for lnstn.~e~lon. 11 ~the cost of ed\jaltlon&l me:erial tor the hbrill)l and the prov1slonot $0t'VIc:e$ lhet<lirectty nslst the 8ICademk: functions,.suc::h as ac:ademk: deans 8nd eornlnlllration Stw.nt S61\1kes- ~set ll'lq.lrred for offloes ot ~ml$$ion$ end regimr end thom.-ctjvities of wnch the primary purpo$1t is to oootribute to the s.tudenl's emoilonal and phyalcat well; being and lo their intellectual, a.jiil.nf, and social developmbflt outside the cxwext of tbe formal insttuetlorii)i'oglan'l. /nstlulioi>iij Suppotr - E"PP<1.. - pnnc.paly lot (1) central e...n;ve...,.. actlviue. concemed with m8rwgement ol dtty to-day operatlom and long...lange plannilg. ('2) legal end fi&eaf operations. {3) administrative data processlng, (+4) penoonnef and employee records, an<l (5) activitiu conoemed with community and alumni relations. AuXliaf)l' Entetpl'f$&-E:xpemes.ncwred for operations SUCh a.s te:sidence halls:, food senioe, and tne boof(atore, "Mtk:h em.l to fumllh goods or &e+mces to studenlt, faculty, or- staft and are ma.wged aseuentlajty seff-lllpport~ng aetmtles. Fundraising- El(per'l$0$ W:url'ed tor College adyanoemern efforts. Including amual and planned gmog. Rose&rel'l- ~nses WM:u'ted kif pt09tam tu6illrch grants. Public SeMce - Expt!lnses lncumld for contract servk:m, use or the College's facilities by nonprofit commurilly organizations, end the cutrural devek>pmen1 of the College, It!. studen&s atld fac:uiy, and the torrounding community ~ The College is ciasaifled aa a tax-.xempt organtzation under Section 501(e)(3) of the lnttmal Revenue Code and, l:herefore., is not aubject to taxes on income derived from its. exempt sdmtles.. The Organita5orl has: been dassdied a.s an otganizetion that is nol a prtyate fetmation under So<oon 5091 X2). The College ~ - no Ionge< '"~e<:l 10 eqmlnllbon by ln<ome laxing authorities fot years ended prior to June 30, 2008 M-3

282 -att_.,.-..g<'odi~.-., ~COUEGENID AlJlERSOtHIROAD EHOO\'NENT CORPORATlON NOTES TO CONSOI.IOAT 0 FINAHCIAL STATEMEHTS (Cononuod) AI.D RSON.aROAO COLlEGE NO ~ ENDO\\YENTCORPORAllON NOTES TOCONSOUII\T DFtw<CW. STATEMEHIS (Cononuod) 1 D SCRIPTlOH OF OA:GAHIZAnoH AHO SUMMAA:V ~ SIONIFK:ANT ACCOUHTING POLICIES (Contlnuoel) Uu gf t;atrnttn ---.odull_.....,_ Tho-a<fin tom... ln-wllh--.g- gene<olyln lhl unhd Sta!st- of America requires m~t to ma:a Mttnaaea and asmmptionl. that artect 1M ripqrttd emoonts Of asseta and liablibn, tht d~rt ol oonllhgent amett and liabilities.- 1M dam Of hi.~ *Wnentl, 11"1<1 tho reponed emount1 of revtnuet 1nC1 e~ cmtng tn. _... _...,...~acoonatn be... ~ ~ nel &5M!b: 1ft he ol donor~~ ~ nel855eb may be ==:, t;.. ~.. RUled... ~ E...-.-a f1ipcx*f.. c:ornduii ~Willi Cluti&dt: P*'*' ~ gllnl, and 10U11 1N1.,. not~~ T~ ~ netmmttere lirtllllea f'l \M by do!'ior lmpc;imjci Mi~ thai e~ eilher by 1M pesaage of tlmtt or lhat can be 1\Milled by.aion of tnt Coltge putiuarlt 10 lhoee ~lations. Pefmanenr; reltricted net auata,,. lffi<.iumi required by ctoncn to M held in ~ howtvef, generally. lhe rncomo on lhe.ae set II...,..,.,.. to me«verious l'ftci1ece<l and OCher cptrttr\q neeci. TheM net esset. pft'nariy lndudt pen't\iillflt enclowmenl Iundt and 1\.ndl held in INMby-.. Tho Cclogo ~ -..g COlli 10._ ~S&t.100.w.I$1$Z.027forthe)INtlendrtd~:J and2010.~ ---~-... <:ooato.. --.at otciilltl.~..:leccour'lllltld , _._..._.._ Tho<:ooato-... """' AJ.-. h blilncm n such~ mayuceect h FCC 11M..a.bllhed by the Cole9e's board or truateet 1 - DESCRIPTION OF ORGANllATIOH AND SUMMARY OF SIGNIFICAHT ACCD\JNT111Cl I'OI.ICIU (Contln... l Acoooots receive~ contttt pnm..., 01 t.w'ipeid ctlarges to students for tuition, room ~ botrd Crecflt is granted 10 t1ucltnl on 1n lndtvldual bmia, aftef reviewing a atudlnt'a fnandll rmources and ropaymen! Mtoty, II'ICI COfl"'M~In; 10 tn stuclont 1M need to pey IN bllata In fiji pnot to the oornplimion ol tho MmMter Gene,.,y, ltudenla ere not permlttllld to reglstor for ellt"' until the 9CCOtJill balance lrom tht prevloua MmMte.r hils been paid. The Colege contiderl De~Mcet., ext:eu Of SO~ 10M Pitt dw The College don no1 ct1atg1e n1ereat on past 00. ~._.,...,_..-.g.,.. ThoCologe_on_tor Sludenlloon<l-atloono F-PorldnsLoonn"'-"'ng-..._ =\ll:lftaocculta t.md upon.. QNdl... ot apec:fic s8udenta. tnlrlnc tnndl end._, ~doetnotbllleve~~olcndiilnaknilted June t t e,...,. c: h20tt- Tbt data 10 wt'lch ~ ~ af*' Junt 30, 2011, ha'tt been evllue1td tor PC>IIibll adjullment to or dildolort in N f'lrl.-clal ttl*'**l It February 23, wt'llctl 11 tr.t date on ~&he flnandal ttlltltl"'tntt wtrt evntblt to be inued 2-GOING CONCERN ThiN financlelltallmltltt are pttq~~rt<l on p-.g c:onoem besll Which anum tne COitgt will be able \0 reab ltl MNtt and ~ ib liiioides n the nct1'nii oourm 0( butinte tor tne _...,. ThoCotogolloo-... losses. ho ~- """"'*'-""... hcclogobbonowoumb-.ctod_......, M:CCIUt'ltsbmeet~. IWidt'IM...,niDI~~WIIhcntofitl... JT~C~Mfi.JI)IdMc:tlbtd~ "- 7 lbt~ioimi.,...imi ~OI~...,.,...wtw::h ~~... "~~, H.,...~ ~--IIONf'lnO'IIiiiiOnot._IUdlnt~~Wwd'l-..-~~ ,.::hecUed 110 bit~"' Mln;t) t, ~ $lmllon of... ss..,... ==:=n~:-'.=::=-a:::::~~ ~c:::"..:.'"::=:attrl~~-:..or:=:~~ comodicnmiincclogof 20t()t.... mono""'_ln_7,._ lmplomontaloonathcclogo' ~-- lactofl; rain..., doubt.oout"' Coltge'tlblty to tor*lue as gong IXII"'I»m The lbmy to =~-=.n.:::.:::.:.n~~ to rneec a ~tjont eno _.,-. ~COU GEAHD ALDERSOIHIRO.tD EJ<IlOWO,tENT COAPORATIOH NOTES TOCOHSOI.IOI\TEOFIIWICII\L STATEMENTS ~~ t3 ~COIJ..EGEANDAI.DERSQH. IIROI\DDUS ENDOY\IoiEHT CORI'ORATlOH NOTESTDCOIISOUQI\TEDffW<CW.STATBENTS (c-..d) GOIHQ CONCERN (Continued) Owing.bw, 2011, the Colege e51ablllhed 1 atfl!eglo p&iming ~ 10.octest the Colege~ _.,._..... finlnc* ehllltnges "'*9 August 2011, lho e.g. unvtlld lhll rnoltt of a Sh'legic planning lnlblltlvtill'lll WM 11'1de111:1ten IIIOef lhe dlredlon of the Cofleoa'l **ll:ty hittd Ptelidenl The strategic pion-'"' 1) """""..._,, 2)...,...,. o...,.. comouj..,. 3)-.,. aeodomlc t~. TheN priorities wll be eddreu.d fltcluqhl numbtt of~ nom.." lfllpq"'ed Cy the 8olrd Of Tnateas n. Elll'lr'Ohlnt ~ _. bt IOc:lf'etMd thraogh reyiiklns., lhe Colegit'l no1mert modtl ll"'d fi"''8naall lid model, ticpii'iiion 01 tli'lleca on canpu5....s free.zlng -- --$30.000'*- A-- 00-ttwcughli>o drtytlopmn of. canpus mastet pl8n.... ~ of l"'een...,...,. CCII'npletlon of 1he --.--at Tho ~- ~--... _...,_.,_......,,_ To-tno...cing._ ~plliiying ~and MMCW ytdmc:lllbtdln NOll 1&. e. Ccllegli -~~ S l S ~ ~ rrom ts ~ food.a wnc~ot ena s.500.ooo CIOITI'1'Iiilme rn.n 11 - ~ Tho Cclogo- ~ $125,000 _ ~. tom h!se ~WIIh lfm,.,...piiyioitov. s )'MtPII'Od eotnctl o.mo Ocooow 2010,... Cologe-. _, ,., 1"")001"' -...y""' Cologo lind r.d m6wiii r9'11s This paied ~ Clrtlln *'<I tno mlnnl ngtu In a lrmxit.ny atu for wl'llcn IN eot.gt.. In tn. pt001t1 Of ldentrtylng 1n "*"ltd ll*d-ptrty to 5Nse fle Iandi on a long- """ btm Ont po~ lessor estim-.1ecj IM1 1 ~ ert~ngement COUld oenerate S8 m ilion in ~.. - cotll w1t11 on - 18!1 ""fmy.-. w!llch OOUICI-_,_ $200,000 In monhy CNh Dow to~ Colege, Althou!;llho Collge It eetwtly pui'iuing 1hlt, ~ has not ~ered inlo t lttq ~enl for the alorementiontd lend and mlntflll r\ghtl at of the ~ of 1he ~ To ldct'e h lrntrlodet:e ent'l flow noedt ot N Cologt. 1hot chlln'nll"' of U'le 8olfd <Of Truasoet ,the C<lloie. J:;oQ,OOO.. _--Ill , ""' the hoo,_ N,.,.-..on hio..-l.r>d at $2,000,000 rod hoo ~ $1, ln... h...,.,.,...-~ l'ltl\eir'ldiw I»YYbbl on or arouncl Mltdl 2012 In lddil:ion. I'll 8otNd d TNSIIelll has pasttd 1 l"'tccuon~.._coleglto(ic)twtlftalofll~~toaah. TNI:~n _..,.-ln-n-atl--o--ncologo., borrow t.xn endi:mm!n inll. to a:rver ~ eottt For h pedod *om ~ \ ~ hCdioge $ ""-""',.,..OOOJOI onh.,..._hougll lt'iionuycilllcrtlld.,.._7. 1NCollge...,.,..,~..,...-.blenderon,. N>a at... '"***Y ThoCologo It curjwot workng to lnd a 5l.b5taJle lendlf IDr lle Cl'ldll: ltdllty wei r boncb. l'lcmewt M ebilty '>do., c::.njt ~ dati!mw1ed w!th ~ 3 CONTRIBU'TIONS RECEIVABle 201 ~== rec:.lvabll QOntit1tO ot the fono'wlng unoonditional pr01'1'm$61 10 orve et Ju,e 30, Ratrtcted 10 W~ytllm1111 1n CIP411 ptojecb,_ 1on$1-ltl'l'l'lll'l~ottptOIIC -- _,...,. 4,80S,32S s !~ ~ !.Y!l.160,22: ,02$ G.5., wm ~ ~~ 2!7,609 s 1,157, , ,311 ~ $ 48602:15 ~ Cot'*it:MJtiont teeei'll~ lnciuoicl Clrtain oommitl'nlt"u from 1 FOI.I"'dation establllhici by tn -~ -at lht Colouo' -at-olwnd\ $4,275,000 and $ ~otjt.roo:i0, 201trod20tO.~ Tht eo.d ot T.,..._ anr:1 ~ ot 1t1e ColllgiiWNII'I COT!mitled to a sb"ong CIAg:)lng Mtegk: pnx:ettlnd belirwe the I)I"'Oee$ wll help tm Collge NIIOfe b lhariciii hmith.. telrr\lesaln lhl lnt"a~waur~ of the campus end provicle ~ tduc:l1lon 10 ttudentl HoweYer, 1tle ~ llltwnents do not ~ arry adjustment11hlt MIQI'\I bt ntotf.mi')i In lhe ~"Vent thill the Coltge 111 unlbiiio oonlnll 11 going Ql)r"'CCItn M-4

283 15 16 ALD ASON-BROAOOUS COLLEGE ANO ALDERSON-BROADDUS ENDOWMENT CORPORATK>N NOTES TOCONSOUDATED FINANCIAL STATEMENTS (Conlira>ed) ALDERSON BROADOUS COLLEGE AND Al.OERSON-BROAOOUS ENDO\I'IJMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Co<Wnued).. long-term INVESTMENTS Long-ten'n investments consisted of the 1olow1ng as of June 30, 2011 and 2010 EqUities v~ooqu11y s 1, " $ 1,308,182 GtONth equity 1,961,483 1,723,012 Small-cap e<pty 297,217 " 268,133 2 " tntetr\mioi'ial oqurty 3, % 2, EmefVingmarl<tot ,aG8 PfMte equity 898, ,284." Totalte'luml"'edQe~ 806, ,338 ~ -l ""'"' '"... ~ M" Fi)(edincQtn«ln...,tment..gradotbot'lds t, % 2,19$.969 H~Qnoyitldi)Otl(llt 613, ,372." Taxeb6e inftatfon-~ec-led funcll 695, ,556 AbiOiute retum MOQo ~ " -2" Cas, and cash equl..elent "'""" l!'lt Gowmment cash manegement !" RNI ott&te r"""tm.-.1 trvali 2$5,072 2% 277,Mi Commodillea-f81aled funds 559, ,!)30 lnau~annuitlet 304.S28 338,720 2 " ~ ""* _.Q.% ~ 1, !% $14,882,524.l!2% $13,205, ", !"' ~...,,..... " ~" ~% _l% 2% ".J.%!_%.,!22% 4. LONG-TERM INVESTMENTS (Contlnuedl At J!Sie 30, 2011 al'ld 2010, wb51antlally al of the College'& Investments were held in proprietary mutual fwids: of~ Cetlaghal'l & Co.,~-. the Colege's investment advisoc. Each of the cfr.oersitjed fl.ncs moy emplo;o one or more ln<.tepenoent 19ee11111st rnone)' m.anagemenl orgsniutlons to provide day-to-day pottfollo management services. Certain funds rnay lrl'~est h detiva!jve lnsln. ftuiints, nduding podions in forward currency contracts, Mancial futures contracts, and ~erest nato and v&mnoe &waps. C&mlin funds may inyest ca.pital., 1he securities of l55uers located in emerging m011<e1"""""'"' Realized and urveaized g &rn. (losses) on long+term I'Tvestments recognized ~nng th!e year& ended JIJne 30, 2011 anci2g10, consis.19d Of Realil:6d Vnreartz6d 5 FAIR VA LUE MEASUREMENTS l2!l_ ---lq!l._ $ 182,240 s (1,28\,317) lll.W ~ 1...J.w.m ~ Flnanc:a.t Accoun~ Standards 8olltd (FASB) AcQounting Standards Codibtion (ASC) 820, Fair Vatue MeswnJmenl.s end OisclosutN, provicles the fl'i!lmewortc: fof meawring f8lr wtue The frameworft provides 8 fair Y~IUO Ne~y th~t pnorttiz.es the mputs to Y!ill~tlon technique-s Used 10 measure fair YUle The hietarcny.gr.<es 1M hlgh&m priority 10 UMC:fusl.e<l quoted prices In &C!Nt: mltl<et& lot identleel 8$etS Of l~blllles (leyel 1 me.surementt) end the loweic priority to unobtef\111ble lncms (Jevel 3 measurements). Tl'le three levels. or fair \'We hiefarchy Wldec-FASBASC 320 a re de$0i)ed as follows.~ L8\lel 1 InputS to 1M valultiotl tnetr'todo!ogy are Ul'\ldtutted quoted pdces for IdentiCal auets or iabititles In actiye markets that &he Plan has tl'le ebillty to access Lft'o'el2 Inputs to the valuation methodofogy lnctude: quoied prioes ror sirnnar assets or tlabllltles In active mark.e1s; quoted prices ror ldenlicaf or similar asseta or Habiflties In Inactive mimfl:ets; Inputs other thttr QWtod pt~ee, thft ~ ob$emtbie for the nset or liabihcy: lnpucs: that are dertvad ptlncipally from Of corroborated by observable rnartet data by COf"lelatlon or olhet meant. U the asset or labmity has a specifled (contractual} tenn, the tevef 2 input muac be observable ror substan!jaly the full term of lha asset or liability ALDERSON-BROADDUS COLLEGE AND ALDERSON-8ROAOOUS ENDOWMENT CORPORA TlON NOTES TO CONSOUDATEO FINANCIAL STATEMENTS (Cont>luod) AlOERSOH-SROAOOUS COlLEGE ANO ALDERSOfii..BROAOOUS ENDOWMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Con"'ued) $ FAIR: VALUE MEASUREMENTS (Continued) Lave! 3 - Inputs to N va!wtion melhq IOgy are UI'IQbseiVable and slgnif'lc:ant to the fair val.le measurement. The a&&et or llabllitfs fair value measurttnm.. vel wllhin 1M fmr vai!jo t»trarchy Is bamtd on the lowe$!. 1~ of a('frf input thac is. SignifiCant to trte f1if value measurement. ValulM.ioo techniques umkt need to mo:imite the u&eofobwrvable rnwttandminwnlze the use oflii'iobselv~ble Inputs. The folowing is a descripbon of the valuation methodologjts used for anets mea:sured at fair value. There have been no chang&s. h"'lhe methodologtes used at June 30, 2011 end 2010 Corporate eqftln mutual funds and real utate lrrveitmenl tm.!: lunch Valued at the closing price reported on the active market on which the ndividual &ee:ullim are b11ded. HtdQe funds tnd C!fiValt eqtl1!v funds Va!UO<I '' the nf;ll asset value (NAV) of shares held al year end lnsu@!'t anpyititt Valued uaing di~ed call'! nows blsod on current yields of Similar lns'i:ru'nenta. ~ValUed at amortized cost. Benet'!clal loterut In external tru~ts ValUed using tne fair value of the awts ir'l the trutt as a pre~! empedient unlesa facts and c:wcumstanoes indica:e that the fair value Of the assets r. the tnlll dilfen from the lafr vaiijfl of the benofdlllnterests. 5 FAIR VALUE MEASUREMENTS (Continued) Assets measured at fw value on a recutmg basis oonsisied ot the follo\wig a t Jooe and2010" Corpcwa1eequltles 110,&45 s 91,195 s J 19,450 Mut~A~I "-*: y,lu.~ltylunl:k 1,675, GfCM!tlequllyfundt 1,961,433 t.9e1,.ca.3 SculcaptqUit'yfw'ldt; 297,2t lrm-1imenl~ bond funds 1, ,988,811 Hlgn )leldbond... O 613, ,560 TIXabltinftitionprotectedlunch M5, ,3161 lnt8fntionaleqtilyfimi 3,042,671 3,().12,671 Eme 9 rnlrkett. equity fl.lndt- 763,M 763,900 Hedgefuf'da 1.147,toe 1,147.90e Prfvttt~lunda 08,&15 89t61S llorwrma~tet 630, ,652 Oller. RUiettttei'I~INStfur'ICb 2a5,072 28~.072 Commolilia relalled 559,498 5S9.!il6 Ol>et1 7,387 7,367 INinnCe amuilim ~ !!!. s 14M2J24 S 4,SS5,787 s 7, s 2,6S.~.571 flene!d>l keece"~ "*"*1Ml1 ~ 2011 _1 S l.2m.iiii1 _s M-5

284 19 20 ALOERSO~OA.OOUS COLLEGE AND ALOERSON BROADOUS ENDOWMENT CORPORATlON NOTES-TO CONSOLIDATED FINANCIAL STATEMENTS (~ AI.OERSON-BAOADOUS COl. LEGE AND ALDERSON-BROADDUS ENDOWMENT CORPORATION NOTES TO CONSOlJOATEO FINANCIAL STATEMENTS (Conlinued) 6 FAIR VA.lUE MEASUREMENTS (ConUnut d) 2010! PROl'!M'I AND EQUIPMENT Property and equpnent consist of the folowfng as of Jme 30, 2011 and 201 0; Cotpc)t11:eeqUJ!M S s IU,195 s MLIII.Ialfl.tndl' Vitkle equity funds 1,308,182 1,301!1.HI2 Growttlequltytund& 1,723,072 1,723,072 Sm.. t19 equity funds 288, ,133 l~fonel l(yfu:nds 2,703,843 Emllflllng ma.rt:ets equity f1.11nd1 72U&e ltweltmlnt grade bond fulnds 2,196,969 H.gh yieldboftd funds 838,372 Ttxtblt in1'4tior\ ~ed funds!<io.ssii Hedge funds 1.tCJ Pfrtoaleeq~Nnds AI.28Ai MOMym«k:et l07 Other RHI t$1q inyellmenl trust funds 277,860 Commo<liilietttlated 277,$30 Oti>OR 7, , ,888 2, &3un 500, ,530 7,387 ltltuf'imoopi'!jf.lel ~ $ 13, s l.731,7a9 ~ 18,450 ~ _s. s 2,83.3,674 _s Buikftlgs Furniture and equcimem Landlmpro'tOIT!ef'lts Vehicles leu eco.mulllt8d deptedation Land Construction in progress $ 26,114, , ,$47 ~ 33,158,857 ~ 10,772, ,197 ~ 1...l1m.m s , ,323 ~ ~ 10,753, ,197 ~ ConstrudliOn in progress at June 30,2011 and 2010, represented renovations In progre:sa to Myers. Hal of Heath Sciencea of $ and $1S7.337, re&peetive/y. costs ncurrect for lhe reoovatlon of Heiner HaMiamtf Cemer Into new Campus Centet of $1,68.4,189 lt'cf S265,829, reapedivety; and tei"'cwationsn ptogretl etjund 30, t1e music r.cilibes of $3, EBT Dlbtoonsistsoflhe~MOfJune30, '1d2010: The d'langes ln lnvtstm entj measured et f" v~ for l ew! 31nputs are as follow1:: Bellance. begimingofyear Net realized end urwealized ga.ns Net pui'c:t'lasfls ancl tajn a.tance. end of year $ 2. ~ ,373 ~ ~ CoieOt F~ Revenue Bond:s, S&riH 2010A lnlerest ""1 a1 4.5% payal'o urnh!nnualiy IIIIOugh AuguM 1, 2012, at whk:t'l ttr~e pmc:ipal -.11 bl emoftized ever 18 YNQ, Interest rate ldjusts on Augua. 1, 20t5 lo the W:..exempt UBOFt ~ Rate, eql.im to 70% (1f the WTI or the week ~!~"~ding avetao& for the preceding week t.oe-year ~at Swaps and DerivatiVe Assocacion, K ml!:knaj1c.ec per swap rate kw ftxed payer In fti'un for~ 3-nlon~ UBOR. pkj:s 3~. withe loor of 4.5%, aecurad by deed ol trust on certaw\ real property and retated re... enuea s 4,0S9,779 $ 2,541,165 2\ 22 ALOERSON BROADOUS COUEGE AND AI.DERSON BROADOUS ENDOWMENT CORPORATION NOTES TO CONSOlJOATEO FINANaAL ST A TEMEI"fTS (CO<Wnued} AI.OERSON.eAOADOUS COU.EGE AND AlDERSQH.SROADOUS ENDOWMENT CORPORA TlON NOTES TO CONSOUOATED FINANClAL STATEMENTS (~ 7 - DEBT (Cotltil'luedl,._. pa- I<> bank. pa- in mon<ny... m.n.. IOtlllog $8,235. k>du<jng... ranging: ftotn 4.5So% to S.95"4, r.w payments <kle Fetwwry 2012 ~ Sepc:ember 2()15, 5llQ.W1KI byvehldes N«e payat:e to bltn<, payable In monl'lly lhaullkl"'ents of $3,998. 1ncldng Jntefet.l at 5,25%, final paymenl made JLKJe 2011, :seoured by ~pnent NoM payable to barfili. payable ~ monl'lly Installments of $727, ~ fntere&t lhe bank's. prtne ~&te, 1nat paymen1 due,uy 2019, seand by deed of tnj&.t on certain real property - poyaoieio bonk. pa-in mon<ny lns181menb ol $900, ilclucfngt Jntere:sl at the bank's. p!wne 1ate pius 0 S". ~81 ~ent due NoYembet 2()19, secued by deed of 11\JSl on certain r~~at property _,..,., Nola payabte to bank, lnter6st p8)'8bfe I t the PrimetF~ FWd~ Rate or ueo~ plus 1 0%, as --llli.. 168,0&4 59,012 61,801 ~ ~ ---'ll.l2 123, ,971 65,480 70,633 ~ ~ Tilt COII<9f 1\1$ S1 ~ mi!lon m.. tor prom~m<y nolo-'> prov"l.. r.. -""'' t elll}or tho Pnmelfed Funds ~e or ej LIBOR plus 1.0% with a lbor of 2'1t, as elecl6d by the COllege In ~. Each PtimeiFeCI Funds advance 5 paya~ on demand. LIBOR a<tvanoes are payable on the last dwt ol the ""l'\1et&st period,' a one, two-. 01' lhtee-mor'lth pmc>cl as mutually a:greed by the College and lhe lander _.. advance. Bottowings Ul"'<fer tr1e note are sewred by lho Coilftge'a invhcment poruotio, 'o'ltl1ch ls hekl In a c:u~l.ocoum vmh 1he lending bpl During November 2011, the Colege enteted into dii(;usslone. regatdlng a torbearanoe agreement wwl rhe lender in conneetion with thls credit f" ci1ity. During February 2012, a final..,ers;oo of the ~ agreemenl waa react'kmj by the parties and the Boatel of Trustees of the College adoptocj e rnolution alllhorizing management to sion the agreement Under 1he ten'ns of lhe ~reemene. cha amooo1 of avajable c:tedil: was teduc:red to $4.225,000 aod Is required to be repaid on the earlier of (e).mie 30, (b) the date the College fah lo make an Interest PtJYFT~ent when due Of (e) the da'!e of an OCQJrrence of fofbel.'l.-.nt:e event of de~ul. In addition, the oouateral requitemerna were amenqed to requite the College to provide SS ~of liquid eolateral 7 DEBT (Continued) The Colege was In default of certain covenants WI connection I Vith me College f aoimle$ Revenue Bonds, SMts. 2010A descnbad above, incajding the failure to oblaln the bank's approval for new debt 01 fi>:ad ~tsettt\excestof $200,000 during 1M fiseetyearemici June The bank hn weh&d the requhment of J uno 30. ~01 1 and for the yeat en<*! JIJI'IO Maturities of debt are a.s kllowa: June 30 2(} ThOrea_fter 4,5e5,4Q.4 138,&46 202, , , ZS For the purpose of.supplemenaal cash fklws diacloaure, W:erest paid eluting the )'ellre> ended June 30, 2011 and 2010, was $258,971 and $165,904, respect~yety. The Colege acquired p~operty end ~eta cost Of $1.640,112 and $60,283 tl'lrough lhe l$$uance of k>ng-term debt CluMg the yeart ended June 30, 2011 am respectlvery 8 CAPITAL LEASE OBUGATfON Dvr1n9 ~ 2011, the Cdlege entered Into., agfee~t\oent to leaw eeftllln computer 1'\&I'CJWare and networil.ing equij)ment ooder 81 ~at lease eq:jiring In The 8&581$ and ilabm!es are l'ecotdeel at the fair value of the asset. The a:saets are depreciated over the term of the tea:se AI.Ant , ~ and equlpm~ lnoiuded M~twork ~enl Ul'lelet ea~at lease oi approximatety $54,000. No de94'odation txpi&cu8 was rocoreled brehe year ende<l June30, 2011 R~tGd c.sh helude:s appro:dmetety $765,000 thet wa:s advano!'ci to 'he College fot Which equlprn81'1l Md not been acquired a& of Jme 30, By August 2011, &lba.umtialy ~Jl ree.trictad f\n:tt held been utilized to aequirt11he netwodt equipment In lddillorl, cltming June 2 011, the couege entiqd into an agtetitiwinf: to teau an il'ltegra!e<l enterprise resource p&ardtg (ERP) tvs'em. \rllinlng, support en<j hot.l servers, under a eapuaj lea$0 expiring Jn 201!5. As or June 30, 2'011, the College IJU!horized one NU~llment P')lm&nl of BJIP'Ol6rna1ely $1!52,000 i"' connection wfth lhe ERP portion of the Klase and commenoeel monttuy teas. payments of $3,400 related to!his act.oanoe. Subaequent to year end. lhe College authorized &dcalonet installment payments or epq4'0:0m8ttfy S22&,000 In c:onneebon with tm ERP portjon of tne leqe, at Which time monthly INto peyments lnoree$0d 10 oppro)(;netoly $&,500 A dditional advances for training, suppon and host servers are e81imeoted lobe appf'oximately $ 120,000 FUli.Ke minlml.m lease paymenta Include the amounts for~ the College was obligated at June 3(), M-6

285 Z3 24 A..LOERSON-BROAOOUS COU GE AND AI..DERSON-BROAODtJS ENOOWMEHf CORPORATION NOTE$ ~OCONSOliOIITEO FINANClAL STATEMENTS (Conilnoed) AI.OEASON..SROAOOUS COLLEGE AND ALOER.SON-BR.OAOOUS ENDOWMENT CORPORA OON NOTES TO CONSOLI>ATEO FINANCIAL STATEMENTS (Conbi>Uid) 8-CAPITAL LEASE OBUGATION (ConUnuod) MlrWnum future leas. l)a)'ment& fcf each of the nex1 fo..-year&: are as fol:>ws: Totttl mnnum base l)lyf'nents less amount r91xesenting n!erut ~value ol net lease paymen s 9 TUITION AND FEES, NET OF FINANCIAL AID 313, ,886 2~5.617 ~ ,196 tll 076) 9()3120 R~s reeei'vlcf tor student tuition and f&ea.. ntt of finandal aid, oonab.1s or the foiowlng for the yean. ended.kw1e 30, 2011 and 2010 leultlei"'ctaaaid. NtlutioNI ~hips...._, Endt:Mooc:I~Kfd8rt.~. funded ectemalllnlnelalllldl, llndod , % 228, _l1 % ~~" $ ~ % ,824,926 _... ~ 8, ~ %,!,&% ~% ~ "" Fhanaal ad a awanied co studems based upon I'IOeO and mori'l and II appmd to billed tuition and f&m, and room and board. Financial.-:t does no1 lroude peyment:j made 10 stu<sdnts lot &emoes fendeftd to tl'\6 oleqe nor does i irlc.kde Federal aid or othef awards mlde to specllk: SCUdencs ~ Cclege Clilctetion. Howevtt, the Colage does padic:lpate In W'OI1!:-$tudy program$; lhb&e e:q~c~nse1. ~ totatee1 $442,112 lind $464,177 tor the yean. ended..kjne and 2010, respectlvety, are fncluded in the ~ tunc:tionll t)i:jienm categonet on the sta'temenc of adiviias. Of these amooots, the iedefal govemment COI'ICfi)u(ecf 5144,320 lt'ld $193,670 for fie years endeei..junt 30, 2011 and ENDOWMENT l!!lemretal!oo of Relev8f!ll.aw The Boetd Of Trustees oe' the College has rrmrl)(ttocl tne lji"'itofm Prucs.t'lt Maneoetnent of hulitutionll Fun<Jt Act (UPMIFA) as requiring the presomitlon o' ln. fair V8lue of the original gift as of tt'le gift date of the donof-testrided enoo.wnent funds absent explicit donor SIIP~Jalilont to the contrary.ac:oortmgly, lhe Cclege dassifie:a. aa pennanendy rntrlcted net aaseta (a) lhe origni value ot grlbl donated to lhe pennanent endcmment. (b) the oc'foinaj vakje of subsequent gi!ts to the perms~~ ~enl. tncll (e) ~ of investment retum~ eo the pennment endowmenc made In aecorclanoe wen U'le OtedSon of 1M: a~ donor gil\ lnstr\j'nenl, When a~. at U'le 11lne lhe accunulalion is added 10 the fund. The rama.w.g portion of the donor.ftstlkted enclc:mment fund that is not c:lassmed as permanently restricted net _,se4s Is dassiled as temponuly rescric:ted ne1 as-sets until those 8I'I'I(U'\{S: are ~ted for ~xpendltun! by thtl College In a manner c:ons&!:tent with lhe standard of prudence pt85cribed by UPMIFA. In eocordance -with UPMJFA. 1Wt Cclege con:siders the kllowing facioi's 1"1 makl'lg a detetmination to appropriate or acc:umulate dotlor-restridtd ~funds. (1) the ooret1on end presoi\i'8flon of h fund.. (2) tne ~ d U'\0 College a.l'ld the donot restricled..-.,..,, Md, (3) gene... e«>nomic -~(4)""'-... ofln... lonond de-. < J ltle e:xpe.cted toea! return from lnocme and the appredation of inveanenll, (6) oulef retcm.wh of tho College, end (7) the lrwe$1menl policies of the Cologo Rfttv!O 9t!itd!xu and Bjsk Parameters l1'le Colego P'las ~ investr'ntnl lt1d apetktng QOfides for ~~ assets 11'\al anemp~ to provide a pc-wiclable ~~m of fl.n;ing to ~ wpported by ts endowment whie see14ng to malntak'l th& pun:hasing power or the endcm'melnt assets. El'1dclwnent assets h:lude those of donorrestricted funds that orvanizations must hold in ~tuity or for a donor -specified period as wei as boarj.d.tsigna1td b'lcls. Un6&r this policy, as approvtd b)' the 8oatd of Tru&tMS, tl'lt endowmenc assets ere twes:ted In a mii'w* lhlt Is Intended '0 P'O(kJCe tesu1s that exceed lhe price and yield results of a benctwn~ eorn()om(i of a total tetum. The Colege e)ll)ed's Its endowmenl funds to prcmde an avemge BnRJa1!'lite of ntlln of approdnatefy ~ % pljs inftaiion (meabi.ftld as the cooatrmw price ildex) Actual retums In any gm!n year may vary from 111is amount. Sttatpqlg Emp!Oytd for AdlitryiOg opiftdiyt!l To sabsfy its IOng tetm 111te--of-retum objec:uves. lhe Colege relles on a lotal retum str\ltegy il Wl"ic:h I'IV851ment returns are achieved tllr'l:ll.9l both ~I apprecialion (realized and UI'Yealized) and OJrr nt yield {*tteresl: anci divideods).. The- Colege targets a Cliverailed asset allocation that ptaoes emphasis on invatments 11 equities, tionds. and absolute tetum S1rategiH tn a tO ~ratio lo- IC:tlievo ils~retumobjec:tryeswlthln~mkccnsttainis ALOERSCN-tlllOAOOUS COLL GE ANO ALOERSON-8ROAODUS ENDOWMENT CORPORATION NOTES TO CONSOLIDATED F$NANC!Al STATEMENTS (Con11nued) 25 AlDERSON-BROADDUS COLLEGE AND AI..OERSON-BROAOOUS EN[)()VIIMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cornlnued) ENDOWMENT (COf'ltinuld) 10 ENOOWME.NT (Continued] Encktwment Nel Asset ComDOtibon by Type of Fund@! ofjuot Spending Poley and HcrN the Investment Obiectiyes Relate to Spending Poley Tet'I"'I))O'Miy PennanerrUy On Coleg.ntld lrwescments, the Colegtl emp!oyl a total retum etlelowment ~ ~ tha1 establishes 1t1e.-noun~ ~ endowmot'lt lrweltment reevm lh8t is ~ to support a.rent raeeds and restricted pi...wp09e9. TNs policy i&. destgneci to ~ program spending from c:&pitaa msjtet ftuduatiob& end to Increase lhe amount of mum ihat i:s reinvested in lhe corpus of the fund In order co tnt'lala IS 10ng4tcm val.le. With respect 110 uncm$$nited restridod funds, l it lt'le policy lo expend In any ftseal yeat, not more than fftoe percent (5'%) of the value of 1t1e fund ealcl4ated as lhe avttrage of the matkec \~\dues of the f\.lnd at the beginning of the most recent frve (5} celendar yur1. The fund valje, for this purpose, &hall be cak:ulated 10 Include only those assets haying an estllla.'ed value and ~ inc:ome. The percentage to be expen<m<j shall be Oeterrnintd b)'.etlon of the oovemlng bo6rci of the fijnld De"onatecl restricted ftjnels will be expencled In accorganot wkh pi(wislons e1-te1bbhlng the fland. In the ai:mlnce or any pcovisklns the po(jcy to e.xpend will be the same aa fof undeslgnated restricted funds. Funm wl1d po!'idttneits cynqopyate( fynqtl From tme to tme, the fa.w valtje of assets assoc:ieteel with Individual Clonor-restricl9d endcrnment fundt may fll btbw 1M level ~ the dooor or VPMIFA require$ ~ COllege to recai\ N.a fund Of pecpetua1 dunjlion. Oellc:lencilts or em n$n, 'Whi!tl are reqund to be repot1ed as ~ net assets, totajed $1,585,699 and $3,073,899 as of Jooe and 2010, respectiyely Swbseqvtnl ~ tnt restore the value Olf thg donor-restrk:ted encsown\wd. ftxldsto the requirecll&vel are clas-sif'led as 1n lncte.ase In l.ll"lrestl'laeel net essets EndcrMnf!!t NttAtset Composition by Type of Fund 8! of.ble TOI'I"'I))O''IIIy Petr'l'laf'IOnUy ~~~~ Oonor-tMtricted -... $ (1.585,099) $ -753 $ ,518 $15~.46S.573 Assela t-'d in oomec:tidn >Mth Sfllil.jnterest agreerne.nt.$ 171,711 1,392,22$ 721,t Scwd>dcsigaOd _,_ ~... $ Total...,.,... (1J)10013) s 2028,978 $ $ ~~ Restncted ~ OonorofMtricted -... $ (3,073,899) $ 2C9,379 $ t6,273,9t)c $ 13,449, Anettholdln~Wth &plll.-.. t~ B~t&d 153,2C3 $ 1,22$,5&~ $ 1»0.759 $ 2,013,~7 Changes In endowment net nsets (Of the,.earse:nd.o JL.W't130, 2011 anel2010wete a:s lollowa: Temporariy Pennonent~ ~~~ --.!JTola~l- Enclowment net eneta, July 1, 2009 s (3,436,126) $ 1,296,898 s 1s.ses.z5g $ l4,,ji4$,029 Investment Income, net of fees 4, , Net f6aliz.fwu unttal'iltd gains ,008,447 Ue4.26g 249, ,033 c""'- Chango in Value Of SPfit-ir'II8!Mt 70, ,912 agteements ,2-46 Rocovoty ollrio!wator fln:ls 679,695 (679,695) Appropriation ol endowmen: aasets tor xpendl(ure ---- ~ ---- ~ EndcJwment 1'101 as.sots. June 30, 2010 (2,560,130) 1,478,$45 16,904,662 15,823.4n lnvastmt~ incoi"nt, Mil Of fmi. 3,907,.. 7, ,552 Net realizec:l' unrealized gaina 54, ~3 2,079,380 Conltibl.ltlons 141, ,372 Change., value of split~est 198, ,482 _,.... 2~.650 Recovery ol underwater funds 1,4-88,200 (1, ) (20,7Z7) 30,776 ( ) (2,004) Appropna!Jon ol endamnent a&ht& lorexpend)ure ~ (363,559) Endowment net as.se1s, June 30, 2011 s (1,010,013) s 2, s s 18,fS..,650 M-7

286 27 28 AlDERSON-BROADDUS COUEGE ANO ALDERSON-BROAOOUS ENOOWMe.NT COR~ non NOTES. TO CONSOUDA TEO FINANCIAl STATEMENTS (Coo...,.., Al.OERSON-MOA.OD4JS COLLEGE ANO AlOERSON.BROAOOUS ENDOWMENT CORPORA TKlN NOTESTOCONSOLIOATEO FINANCIAl STATEMENTS (CcnMued) 11 NIIT ASSETS Net.-.etseonsiste<fof the foiiovmg as o( Jl.lle 30, 2011 and _,_,_ 2010 T empotarily I'MtDcti&d. Avalable for the tollo'mng purposes or periods. FNneial aid, gentfal operabont.. end maint«<anoe or Investment i'lland, ~. and equipment 5,322,454 Aco..mulated endowment lnvestm41111retwn, not Of atj'ioii.f'lts spenc - tesltidod pr1ma1t; tor llnanclalold 836,755 Trusts Mel amultlet.-restricted fof general operations ~ $,5a5, , , NET ASSETS RELEASED FRt)M RESTRICTlt)NS AND RECLASSIFICATIONS Net assets were releas-ed from donor re51tic:cions ~ e~se$ 'Were lnwrred to aatl$fy the restricted p.ltp(ims or by occurre.nce of OCher 4M!f1ts as &pec:ifled by doncn, as folows: -old OperatiOns and malntenanoe ot land, Wldln9a and equipnm:n1 Buildngs and equipment Sett~'-c:ciondtmere~ R.ecliKsifJcations to contorm with donof requesls ~ 679, , , ,995 ~ ~ , , ,729 ~ ,983._.,_ Pennanentfy m$lticted: R.. trietadln.. porpo<ulty,... noomo,_, &am wtlld\11 Financ:ial aid, genef8l operatjom.. end maintenance Otlnves:unenllnlaod,bulidlng, encl~ent S 16,414,519 Chlntable remejnoer W1tl to be lnveatec:f In petpetuty upon death of the benefldariet, lhe income from which will be available! for scholarships and other educatiooal pwposes Benefidall interest In perpetual trusts. the Income from which Is available foi &dlolar&hlps and other educallonal l.zu.llll!! $ , &46 13 R TI.REMENT PlAN The Cdle9e maintains a defined contribubon retirement plan (the Plan) undef Section 403(b) of ltl& lnterni RevMJ& COde ~ OOV6tl tlltottantia~ a1 ful -tl'l'le &mp!oy&es. 1be COiege mlde cootribubons: to the Plan based on 10% of the base aalary of pa:rticipaiu through Jdy 31,l010 Elfeetivo A.ugiAl 1, 2010, lho rnatct'ling eonttibution was amended to rectuee lh maten to 6% Ret1remen1 c:ontr1bubons for the years ended June 30, 2011 ana wete $186,962 and $ , respet(nety. 14 ~ RELATEO PAA:TY TRANSACTIIONS The Colle9e'.a OO.rci ol tfl.lsleet Is c:ompot;od ol brofd tpec:tmn of community ttnd ~&iness leaders. From time to tme, the College, In the normal COI.JfSEI of busines.s. may ent er Into transactions \'lih organiz.all0n8 In which a trus.tee h85 a perr.onal rtterest. tt ia tha polcy ot the College tnat INSiees abstain from voting on i&aues invoivii'io mattert In wt'lieh e conflict or inber~ Is lden~loe<j, The Colle5Je eondijcb Wsnen with a two loctll banks of wt1ith two membtq of the c:olege's board of trustees also &emt as an officer and dink:tof. A member of the board of truatees is etso the CEO of the local hospital that 54m'es tm College's student hltalth program. 15 SUBSEQUENT EVENTS Ourtng Jdy 2011, the Coltltge obtained a 60-day note payatm of apptoximatety $800,000 to fnance cenain operating expensm ot the College from a banic of Milch a trustee is associatect with This note, wnlch beats ~eres.t at S%, was paid ii'l full during Seocember ALOERSQN.8ROAOOUS COLLEGE AND Al.OERSON.BROAOOUS ENDOWM NT CORPORA OON NOTES TOCONSOUDATED FINANCIAL STATEMENTS (~ 15 SUBSEQUENT EVENTS (Contin ued) In COfV*bon Will'l an emendmenl ll\a1 WN 1igne<l with So<lexho, cne College's lo>od service ptovioer, dumg AUgUst 201 1, Sodeld'lo agteed to lnves.t approldrnatety $1.5 million aver:~~ flve.ye-ar period in the Coftege's strategic plan, begirft\g in September The Colege received $900,000 up front, whh the remainder payable over a 5-year penod. ln addi6on. an ~ eontract w.tn Sode:JCho, tht Cclege's phy:sieal plane management company. provid&d tor $500,000 C04'1"1tnitment $ of whic:t'l was recefvecl du~ OdoOer 2011, and G'le rem11ndor payable 0\'ar a S.-year period, At. described in Nottl 1, the COli tnlertd into a forb6318noe agteemet'lt with ita tender In eonneetion IIWih the Colep&''s revolving etedlt faeil'j. During November 2011, the College en1ered into an agreemt!f'a 'Mth an architect let provlcje a achematicd&slgn fora new mlili-purpose stadium on campus. The ~usoelated wlll'lri'iis pha,e of ll'le profoct are IPPfOJ(Imatef'J $134,000. Subsequent phases. of the ~ ~ design development.anc:1 c:onstrwtloo are ~ 10 the approval of the Colege. The rttfj'n iladun project is estimated to cost approlrima~el)' $1.25 mllion; however, the Colege has nol en!ered into a committn«jj wittl e oontractor In oonnecbon with tl'lls prof&cl ACCOMPANYING INFORMATION Oufin9 Otoltnbtt 2011, a lrustee of tn. College donated a building With en appraised "alue of $8,500,000 This ~ Is adjac:ent to certain campus pteperli6s al'ld hat not yet bten placed in SOfVIco. M-8