Colorado Health Facilities Authority$204,290,000 colorado health facilities authority health facilities revenue and revenue refunding bonds (the evangelical lutheran good samaritan

NEW ISSUE RATINGS:Book-Entry Only Fitch: “A-” Moody’s: “Baa1” Standard & Poor’s: “BBB+” (See “RATINGS” herein.)

In the opinion of Kutak Rock LLP, Bond Counsel, under existing laws, regulations, rulings and judicial decisions and assuming the accuracy of certain representations and continuing compliance with certain covenants, interest on the Bonds is excludable from gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax. Bond Counsel is also of the opinion that, under existing State of Colorado statutes, interest on the Bonds is exempt from Colorado income tax. For a more complete description of such opinions of Bond Counsel, see “TAX MATTERS” herein.

$204,290,000COLORADO HEALTH FACILITIES AUTHORITY

HEALTH FACILITIES REVENUE AND REVENUE REFUNDING BONDS(THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY PROJECT)

SERIES 2015A

Dated: Date of Delivery Due: June 1, as shown on the inside cover

The Colorado Health Facilities Authority (the “Authority”) is issuing its special, limited obligation Health Facilities Revenue and Revenue Refunding Bonds (The Evangelical Lutheran Good Samaritan Society Project) Series 2015A (the “Bonds”), payable solely from certain amounts derived pursuant to the Loan Agreement, dated as of July 1, 2015 (the “Agreement”), by and between the Authority and

The evangelical luTheran good SamariTan SocieTy

and from payments made by The Evangelical Lutheran Good Samaritan Society (the “Society”) and the other Members of the Obligated Group (which, upon the issuance of the Bonds, will consist of the Society, The Evangelical Lutheran Good Samaritan Foundation (the “Foundation”) and Good Samaritan Society HCBS, LLC) on Obligation No. 47. Obligation No. 47 will be issued by the Society, as Obligated Group Representative, under and pursuant to the terms of the Second Amended and Restated Master Trust Indenture, dated as of October 1, 2013, as supplemented and amended from time to time, including by the Thirty-Sixth Supplement to Master Trust Indenture, dated as of July 1, 2015 (collectively, the “Master Indenture”), between the Society, as Obligated Group Representative, and Wells Fargo Bank, National Association, as master trustee (the “Master Trustee”). Obligation No. 47 will be issued to U.S. Bank National Association, as trustee (the “Trustee”) under the Bond Indenture (as defined below).

THE BONDS AND ALL OBLIGATIONS OF THE AUTHORITY UNDER OR WITH RESPECT TO THE BONDS, THE BOND INDENTURE AND THE AGREEMENT SHALL BE AND REMAIN SPECIAL, LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY AND ONLY OUT OF THE SECURITY SPECIFICALLY PLEDGED THERETO BY THE SOCIETY AND BY THE OTHER MEMBERS OF THE OBLIGATED GROUP. NO RECOURSE SHALL BE HAD AGAINST ANY PROPERTIES, FUNDS OR ASSETS OF THE AUTHORITY (OTHER THAN THE SECURITY SPECIFICALLY PLEDGED THERETO BY THE SOCIETY AND BY OTHER MEMBERS OF THE OBLIGATED GROUP) OR THE STATE OF COLORADO FOR THE PAYMENT OF ANY AMOUNTS OWING UNDER OR WITH RESPECT TO THE BONDS, THE BOND INDENTURE, THE AGREEMENT OR ANY OBLIGATIONS OF THE AUTHORITY UNDER OR WITH RESPECT TO THE BONDS. NONE OF THE BONDS, THE BOND INDENTURE OR THE AGREEMENT, NOR THE OBLIGATIONS OF THE AUTHORITY UNDER OR WITH RESPECT THERETO, CONSTITUTE OR CREATE AN INDEBTEDNESS OF THE AUTHORITY OR THE STATE WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION. THE REGISTERED OWNERS OF THE BONDS SHALL HAVE NO RIGHT TO COMPEL THE PAYMENT OF ANY AMOUNTS OWING UNDER OR WITH RESPECT TO THE BONDS, THE BOND INDENTURE OR THE AGREEMENT OUT OF ANY TAX REVENUES, FUNDS OR OTHER ASSETS OF THE AUTHORITY OR THE STATE. THE AUTHORITY HAS NO TAXING POWER.

The Bonds are being issued pursuant to a Bond Trust Indenture, dated as of July 1, 2015 (the “Bond Indenture”), by and between the Authority and the Trustee; the Colorado Health Facilities Authority Act, Article 25 of Title 25 of the Colorado Revised Statutes, as amended; the Supplemental Public Securities Act, Part 2 of Article 57 of Title 11 of the Colorado Revised Statutes, as amended; and a resolution adopted by the Authority. The Bonds are being offered as fully registered bonds in denominations of $5,000 and integral multiples thereof. The Depository Trust Company (“DTC”), New York, New York will act as securities depository for the Bonds, and the Bonds will be registered in the name of Cede & Co., as nominee of DTC. Purchasers of the Bonds will not receive certificates evidencing their ownership interests in the Bonds. So long as Cede & Co. is the registered owner of the Bonds, principal and interest payments on the Bonds will be made by the Trustee directly to DTC, which will remit such payments to the Participants (as defined herein) for subsequent distribution to the Beneficial Owners (as defined herein).

Interest on the Bonds is payable semiannually on the first day of June and December of each year until maturity or earlier redemption, commencing December 1, 2015. The Bonds bear interest at the rates and mature on the dates shown on the inside cover page of this Official Statement.

The Bonds are subject to optional, mandatory and extraordinary redemption prior to maturity as more fully described herein.

AN INVESTMENT IN THE BONDS INVOLVES A DEGREE OF RISK. THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. INVESTORS MUST READ THIS ENTIRE OFFICIAL STATEMENT, INCLUDING THE SECTION CAPTIONED “BONDHOLDERS’ RISKS” AND THE APPENDICES, TO OBTAIN INFORMATION ESSENTIAL TO MAKING AN INFORMED INVESTMENT DECISION.

The Bonds are being offered, subject to prior sale, when, as and if issued by the Authority and accepted by the Underwriters named below. The issuance of the Bonds is subject to (a) the approval of legality by Kutak Rock LLP, as Bond Counsel, (b) the approval of certain legal matters by Stinson Leonard Street LLP, as counsel to the Society and the other Members of the Obligated Group, by Ballard Spahr LLP, as counsel to the Authority, and by Dentons US LLP, as special counsel to the Underwriters, and (c) certain other conditions. Kutak Rock LLP has also been retained to advise the Obligated Group concerning, and has assisted in, the preparation of this Official Statement. It is expected that the Bonds will be available for delivery through the facilities of DTC in New York, New York, on or about July 23, 2015, against payment therefor.

Citigroup Herbert J. Sims & Co.The Date of this Official Statement is July 9, 2015.

$204,290,000 COLORADO HEALTH FACILITIES AUTHORITY

HEALTH FACILITIES REVENUE AND REVENUE REFUNDING BONDS (THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY PROJECT)

SERIES 2015A

Stated Maturity (June 1)

Principal Amount

Interest Rate

Yield

Price

CUSIP 1,2

2016 $ 145,000 2.000% 0.880% 100.952% 19648A2A2 2017 3,025,000 3.000 1.250 103.199 19648A2B0 2018 3,110,000 3.000 1.640 103.777 19648A2C8 2019 5,035,000 4.000 1.910 107.731 19648A2D6 2020 5,240,000 4.000 2.260 107.956 19648A2E4 2021 5,735,000 5.000 2.630 112.780 19648A2F1 2022 6,225,000 5.000 2.940 112.702 19648A2G9 2023 6,565,000 5.000 3.140 112.855 19648A2H7 2024 6,905,000 5.000 3.290 113.040 19648A2J3 2025 7,270,000 5.000 3.420 113.120 19648A2K0 2026 6,740,000 5.000 3.580 111.7003 19648A2L8 2027 7,075,000 5.000 3.720 110.4753 19648A2M6 2028 4,670,000 5.000 3.820 109.6103 19648A2N4 2029 4,955,000 5.000 3.900 108.9243 19648A2P9 2030 5,240,000 5.000 3.970 108.3283 19648A2Q7 2031 5,560,000 5.000 4.010 107.9893 19648A2R5 2032 5,910,000 5.000 4.060 107.5673 19648A2S3 2033 6,270,000 5.000 4.100 107.2313 19648A2T1 2034 6,635,000 5.000 4.160 106.7293 19648A2U8 2035 3,835,000 5.000 4.200 106.3963 19648A2V6 2036 2,360,000 5.000 4.240 106.0653 19648A2W4

$24,355,000 5.000% Bonds Due June 1, 2040 Yield: 4.350% Price: 105.159%3 CUSIP 1,2 19648A2X2

$71,430,000 5.000% Bonds Due June 1, 2045 Yield: 4.430% Price: 104.5063 CUSIP 1,2 19648A2Y0

___________________ 1 The Obligated Group, the Authority and the Underwriters take no responsibility for the accuracy of the CUSIP numbers, which are included solely for the convenience of the owners of the Bonds. 2 CUSIP is a registered trademark of the American Bankers Association, Standard & Poor’s, CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. 3Price to optional call date of June 1, 2025.

This Official Statement has been prepared from information furnished by the Obligated Group, the Authority and others, and has been reviewed and approved by the Obligated Group, the Authority or counsel to each of those parties, to the extent of information provided by each such party. No person is authorized to give any information or to make any representations other than those contained in this Official Statement, and, if given or made, such information or representations may not be relied upon as having been made by the Obligated Group, the Authority or the Underwriters. The Bond Trustee will provide a final copy of the documents referred to herein to each investor who makes a written request accompanied with evidence of beneficial ownership of a Bond. Requests for such documents should be directed to U.S. Bank Corporate Trust, EP-MN-WS3C, 60 Livingston Avenue, Saint Paul, MN 55107-2292, Attention: Judith Foley.

NONE OF THE INFORMATION IN THIS OFFICIAL STATEMENT, OTHER THAN WITH RESPECT TO INFORMATION CONCERNING THE AUTHORITY CONTAINED UNDER THE CAPTIONS “SUMMARY STATEMENT—THE AUTHORITY,” “THE AUTHORITY” AND “LITIGATION—THE AUTHORITY,” HAS BEEN SUPPLIED BY THE AUTHORITY, AND THE AUTHORITY MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION NOT SUPPLIED BY THE AUTHORITY.

Neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Society, the Obligated Group, the Authority or any other party since the date of this Official Statement or the earliest date as of which such information is given, or, in the case of the financial statements of the Society and the Obligated Group included herein, since the date of such financial statements, or that information herein is correct as of any time since the date of this Official Statement.

IN CONNECTION WITH THE SALE OF THE BONDS, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZATION, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

THE BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION BY REASON OF THE PROVISIONS OF SECTION 3(a)(2) OF THE SECURITIES ACT OF 1933, AS AMENDED. THE REGISTRATION, IF ANY, OR QUALIFICATION OF THE BONDS IN ACCORDANCE WITH APPLICABLE PROVISIONS OF SECURITIES LAWS OF THE STATES IN WHICH THE BONDS HAVE BEEN REGISTERED, IF ANY, OR QUALIFIED AND THE EXEMPTION FROM REGISTRATION OR QUALIFICATION IN OTHER STATES SHALL NOT BE REGARDED AS A RECOMMENDATION THEREOF. NEITHER THESE STATES NOR ANY OF THEIR AGENCIES HAVE PASSED UPON THE MERITS OF THE BONDS OR THE ACCURACY OR COMPLETENESS OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE UNDERWRITERS HAVE REVIEWED THE INFORMATION IN THIS OFFICIAL STATEMENT IN ACCORDANCE WITH AND AS A PART OF THEIR RESPONSIBILITIES TO INVESTORS UNDER FEDERAL SECURITIES LAWS AS APPLIED TO THE FACTS AND CIRCUMSTANCES OF THIS TRANSACTION, BUT THE UNDERWRITERS DO NOT GUARANTEE THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION.

The CUSIP numbers included in this Official Statement are for the convenience of the holders and potential holders of the Bonds. No assurance can be given that the CUSIP numbers for the Bonds

will remain the same after the date of issuance and delivery of the Bonds. CUSIP is a trademark of the American Bankers Association. The CUSIP numbers are provided by Standard and Poor’s, CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. These numbers are not intended to create a database and do not serve in any way as a substitute for the CUSIP Service. The CUSIP numbers shown on the inside cover hereof have been assigned to the issue by an organization not affiliated with the Authority, the Underwriters or the Obligated Group and are included for convenience only. None of the Authority, the Underwriters nor the Obligated Group is responsible for the selection of the CUSIP numbers, nor is any representation made as to their correctness on the Bonds or as indicated herein.

THE INFORMATION SET FORTH HEREIN HAS BEEN OBTAINED FROM SOURCES WHICH ARE BELIEVED TO BE RELIABLE BUT IT IS NOT GUARANTEED AS TO ACCURACY AND IS NOT TO BE CONSTRUED AS A REPRESENTATION OF SUCH BY THE AUTHORITY OR THE OBLIGATED GROUP.

THIS OFFICIAL STATEMENT IS NOT TO BE CONSTRUED AS A CONTRACT WITH THE PURCHASERS OF THE BONDS. STATEMENTS CONTAINED IN THIS OFFICIAL STATEMENT WHICH INVOLVE ESTIMATES, FORECASTS OR MATTERS OF OPINION, WHETHER OR NOT EXPRESSLY SO DESCRIBED IN THIS OFFICIAL STATEMENT, ARE INTENDED SOLELY AS SUCH AND ARE NOT TO BE CONSTRUED AS REPRESENTATIONS OF FACTS. THE INFORMATION AND EXPRESSIONS OF OPINION CONTAINED IN THIS OFFICIAL STATEMENT ARE SUBJECT TO CHANGE WITHOUT NOTICE.

THE ORDER AND PLACEMENT OF MATERIALS IN THIS OFFICIAL STATEMENT, INCLUDING THE APPENDICES, ARE NOT TO BE DEEMED A DETERMINATION OF RELEVANCE, MATERIALITY OR IMPORTANCE, AND THIS OFFICIAL STATEMENT, INCLUDING THE APPENDICES, MUST BE CONSIDERED IN ITS ENTIRETY. THE CAPTIONS AND HEADINGS IN THIS OFFICIAL STATEMENT ARE FOR CONVENIENCE ONLY AND IN NO WAY DEFINE, LIMIT OR DESCRIBE THE SCOPE OR INTENT, OR AFFECT THE MEANING OR CONSTRUCTION, OF ANY PROVISIONS OR SECTIONS IN THIS OFFICIAL STATEMENT. THE OFFERING OF THE BONDS IS MADE ONLY BY MEANS OF THIS ENTIRE OFFICIAL STATEMENT.

THIS OFFICIAL STATEMENT IS BEING PROVIDED TO PROSPECTIVE PURCHASERS EITHER IN BOUND PRINTED FORM (“ORIGINAL BOUND FORMAT”) OR IN ELECTRONIC FORMAT ON THE WEBSITE www.munios.com. THIS OFFICIAL STATEMENT MAY BE RELIED UPON ONLY IF IT IS IN ITS ORIGINAL BOUND FORMAT OR IF IT IS PRINTED IN FULL DIRECTLY FROM SUCH WEBSITE.

In accordance with disclosure requirements, this Official Statement may be amended or supplemented to indicate material changes.

TABLE OF CONTENTS

SUMMARY STATEMENT ...................................... i

The Bonds .......................................................... i Book-Entry Only ................................................ i Use of Bond Proceeds ........................................ i Security and Sources of Payment ...................... ii Redemption ...................................................... iii The Authority ................................................... iii The Obligated Group ........................................ iii

INTRODUCTION ..................................................... 1 THE AUTHORITY ................................................... 2 THE OBLIGATED GROUP ..................................... 2 THE PROJECTS ....................................................... 3 BONDHOLDERS’ RISKS ........................................ 4

General ............................................................... 4 Federal and State Legislation and Regulation .......................................................... 4 Other Health Care Risk Factors ........................ 11 Potential Environmental Risks ......................... 13 Construction Risks ........................................... 13 Covenant to Maintain Tax Exempt Status of Interest on the Bonds ......................... 13 Security for the Bonds; Security for Other Debt ........................................................ 14 Dependence on Investment Portfolio Earnings ............................................................ 15 Certain Matters Relating to the Enforceability of the Master Indenture and Other Documents ....................................... 15 Enforceability of Remedies, Bankruptcy, Limitations on Security Interests and Other Matters Relating to the Security for the Bonds ................................ 16 Obligated Group Debt; Ability to Incur Future Indebtedness .......................................... 17 Ratings .............................................................. 18 Certain Other Risks .......................................... 18

FORWARD-LOOKING STATEMENTS ............... 18 UNDERTAKING TO PROVIDE ONGOING DISCLOSURE ..................................... 19 THE BONDS ........................................................... 20

General Description .......................................... 20 Book-Entry System .......................................... 21 Successor Securities Depository; Discontinuation of Book Entry System ............ 23 Debt Service ..................................................... 24

REDEMPTION ....................................................... 25

Optional Redemption ........................................ 25 Mandatory Sinking Fund Redemption.............. 25

Extraordinary Redemption ............................... 26 Notice of Redemption ....................................... 26 Purchase of Bonds in Lieu of Redemption ...................................................... 27

SECURITY AND SOURCES OF PAYMENT .............................................................. 27

General ............................................................. 27 The Bond Indenture .......................................... 28 The Reserve Fund ............................................. 29 The Master Indenture ....................................... 29 Contribution Agreements ................................. 32

SOURCES AND USES OF FUNDS ....................... 32 ENFORCEMENT OF REMEDIES ......................... 33 TAX MATTERS ..................................................... 33

General Matters ................................................ 33 Original Issue Premium .................................... 34 Backup Withholding ......................................... 34 Changes in Federal and State Tax Law ............ 35

THE UNDERWRITERS ......................................... 35 RATINGS ................................................................ 36 APPROVAL OF LEGAL MATTERS .................... 36 LITIGATION .......................................................... 36

The Authority ................................................... 36 The Society and the Obligated Group .............. 36

AUDITORS ............................................................. 36 ACCURACY AND COMPLETENESS OF OFFICIAL STATEMENT....................................... 37 MISCELLANEOUS ................................................ 37

APPENDIX A – INFORMATION REGARDING THE SOCIETY AND THE OBLIGATED GROUP

APPENDIX B – THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES AUDITED, CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR ITS FISCAL YEARS ENDED DECEMBER 31, 2014 AND DECEMBER 31, 2013

APPENDIX C – DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF PRINCIPAL DOCUMENTS

APPENDIX D – PROPOSED FORM OF BOND COUNSEL OPINION

APPENDIX E – FORM OF CONTINUING DISCLOSURE UNDERTAKING

SUMMARY STATEMENT

This Summary Statement is subject in all respects to more complete information contained elsewhere in this Official Statement, including the Appendices to this Official Statement. The offering of the Bonds to potential investors is made only by means of this entire Official Statement, including the Appendices attached hereto. No person is authorized to detach this Summary Statement from this Official Statement or to otherwise use it without the entire Official Statement, including the Appendices attached hereto. All capitalized terms used in this Summary Statement shall have the meanings assigned to them under the heading “DEFINITIONS OF CERTAIN TERMS” in APPENDIX C to this Official Statement.

The Bonds

The offering consists of $204,290,000 Colorado Health Facilities Authority Health Facilities Revenue and Revenue Refunding Bonds (The Evangelical Lutheran Good Samaritan Society Project), Series 2015A (the “Bonds”), dated the date of their delivery and issued by the Colorado Health Facilities Authority (the “Authority”) pursuant to a Bond Trust Indenture, dated as of July 1, 2015 (the “Bond Indenture”), by and between the Authority and U.S. Bank National Association, as trustee (the “Trustee”); a resolution adopted by the Authority; the Colorado Health Facilities Authority Act, Article 25 of Title 25 of the Colorado Revised Statutes, as amended (the “Act”); and the Supplemental Public Securities Act, Part 2 of Article 57 of Title 11 of the Colorado Revised Statutes, as amended. See the caption “THE BONDS” herein.

Book-Entry Only

The Bonds are being issued in book-entry form only under the book-entry system maintained by The Depository Trust Company, New York, New York (“DTC”). So long as DTC or its nominee is the Registered Owner of the Bonds, disbursements and payments of principal, premium, if any, and interest to the Participants (as defined herein) is the responsibility of DTC and disbursement of such payments to the ultimate purchasers (the “Beneficial Owners”) is the responsibility of the Participants. See “THE BONDS—Book-Entry System” herein for a description of the book-entry system of payment and transfer.

Use of Bond Proceeds

Proceeds from the sale of the Bonds will be used, together with moneys available to The Evangelical Lutheran Good Samaritan Society (the “Society”), to (a) finance or refinance the costs of the acquisition, construction, improvement and equipping of certain home health agencies, skilled nursing facilities and other health care and senior living facilities in various locations, (b) refund the outstanding principal amount of the Colorado Health Facilities Authority Health Facilities Revenue Bonds (The Evangelical Lutheran Good Samaritan Society Project), Series 2004A, issued on behalf of the Society, (c) refund $20,385,000 in aggregate principal amount of the Colorado Health Facilities Authority Health Facilities Revenue Bonds (The Evangelical Lutheran Good Samaritan Society Project) Series 2005, issued on behalf of the Society, (d) refund $55,390,000 in aggregate principal amount of the Colorado Health Facilities Authority Health Facilities Revenue Bonds (The Evangelical Lutheran Good Samaritan Society Project) Series 2006, issued on behalf of the Society, (e) fund the Reserve Fund, and (f) pay certain costs of issuance associated with the Bonds. See the captions “SOURCES AND USES OF FUNDS” and “THE PROJECTS” herein.

ii

Security and Sources of Payment

The Bonds do not constitute a debt or liability or a charge against the general credit or taxing power of the Authority, the State, or any political subdivision thereof and neither the Authority, the State nor any agency thereof nor any political subdivision thereof shall be liable on the Bonds. Neither the faith and credit nor the taxing power of the State or any agency or political subdivision thereof is pledged to the payment of the principal of or the interest on the Bonds. The Authority has no taxing powers. The Bonds do not constitute a debt or liability or charge against the general credit or taxing power of any other state, city, town, county, authority or agency of any of them, or of any other political subdivision which held a public hearing and approved the issuance of the Bonds by the Authority.

The Bonds are special, limited obligations of the Authority, payable solely from loan repayments and certain other amounts derived from the Loan Agreement, dated as of July 1, 2015 (the “Agreement”), by and between the Authority and the Society, from payments made by the Obligated Group (which, upon the issuance of the Bonds will consist of the Society, The Evangelical Lutheran Good Samaritan Foundation (the “Foundation”) and Good Samaritan Society HCBS, LLC (“HCBS, LLC”)) on Obligation No 47, as described below, and from certain funds held under the Bond Indenture. Obligation No. 47 will be issued to the Trustee by the Society, as Obligated Group Representative, under the Second Amended and Restated Master Trust Indenture, dated as of October 1, 2013, as supplemented and amended from time to time, including by the Thirty-Sixth Supplement to Master Trust Indenture, dated as of July 1, 2015 (collectively, the “Master Indenture”), between the Society, as Obligated Group Representative, and Wells Fargo Bank, National Association, as master trustee (the “Master Trustee”), to secure payments on the Bonds. Obligation No. 47 will be secured under the Master Indenture on a parity with the other outstanding Obligations. The Obligated Group may incur additional indebtedness, including additional Obligations under the Master Indenture, provided that the Obligated Group meets certain financial tests and other requirements prescribed by the Master Indenture. See “THE MASTER INDENTURE—Amount of Indebtedness” and “—Limitations on Indebtedness” in APPENDIX C. Additional Obligations will be secured under the Master Indenture on a parity with Obligation No. 47 and the other outstanding Obligations. The obligation of the Society to make payments under the Agreement sufficient to pay when due the principal of and interest on the Bonds is a general obligation of the Society. See the caption “SECURITY AND SOURCES OF PAYMENT” herein.

The Reserve Fund will initially be funded in the amount of $16,686,871 to serve as security for the payment of principal of and interest on the Bonds.

Under the Master Indenture, the Members of the Obligated Group agree to make any and all payments with respect to Obligations (including Obligation No. 47) issued thereunder. The Society, the Foundation and HCBS, LLC will constitute the Members of the Obligated Group on the date of issuance of the Bonds. Payments on Obligation No. 47 are required to be in an amount sufficient to pay when due the principal of and interest on the Bonds. The Society, the Foundation, HCBS, LLC and any other future Members of the Obligated Group will be jointly and severally liable with respect to such payments as provided in the Master Indenture. All Obligations, including Obligation No. 47, are secured under the Master Indenture by a pledge of the Gross Revenues of the Members of the Obligated Group, subject to Permitted Liens. See “SECURITY AND SOURCES OF PAYMENT” herein and “THE MASTER INDENTURE—Security; Payment of Principal and Interest” in APPENDIX C.

In connection with the issuance of the Bonds and the addition of HCBS, LLC to the Obligated Group, the Society, as Obligated Group Representative, expects to enter into contribution agreements with certain affiliates of HCBS, LLC whereby such entities will agree to fund any payment obligations under the Master Indenture at the place, on the dates and in the manner provided in the Master Indenture, upon receipt of any demand therefor from the Obligated Group Representative and the Obligated Group

iii

will agree to assist such affiliates in paying indebtedness of such affiliates, provided that such affiliate indebtedness has been approved in writing by the Obligated Group Representative and such payment is made in compliance with the provisions of the Master Indenture. HCBS, LLC and such affiliates have covenanted not to terminate the contribution agreements for so long as the Bonds are outstanding. See the caption “SECURITY AND SOURCES OF PAYMENT” herein.

Redemption

The Bonds are subject to redemption prior to maturity as described under the caption “REDEMPTION” herein.

The Authority

The Authority is an independent public body politic and corporate constituting a public instrumentality. The Authority is a political subdivision of the State of Colorado (the “State”). The Authority is not an agency of State government and is not subject to administrative direction by any department, commission, board or agency of the State. The Authority was created by the Act, and its purpose is to provide financing for health facilities and to provide alternative methods by which health institutions in the State or their affiliates may finance health facilities located in the State and other states and refund or refinance outstanding indebtedness incurred for such health facilities. See the caption “THE AUTHORITY” herein for a more detailed description of the Authority.

The Obligated Group

On the date of issuance of the Bonds, the Obligated Group will consist of the Society, the Foundation and HCBS, LLC. Subject to certain conditions specified in the Master Indenture, other entities may become Members of the Obligated Group or, once Members, may withdraw from the Obligated Group; provided that neither the Society nor the Foundation may withdraw from the Obligated Group.

The Society is a nonprofit corporation founded in 1922 under the laws of the State of North Dakota. The Society operates skilled nursing facilities, residential housing for seniors, home and community based health services and affordable housing projects in 217 locations across the United States. The Society is the largest not-for-profit provider of senior care and services in the country, operating in 24 states, employing approximately 19,000 staff members and serving approximately 28,400 residents.

As of December 31, 2014, the Society owned and operated skilled nursing facilities and residential housing in 168 locations; managed one residential housing facility and sub-acute care unit where the Society has partial ownership; leased four skilled nursing and residential housing facilities owned by others; managed 14 skilled nursing and residential housing facilities owned by others; and managed 32 affordable housing projects for seniors and disabled persons that are controlled by the Society.

The Foundation is a Minnesota nonprofit corporation organized in 1992 exclusively for the purpose of providing support, assistance and aid to and for the exclusive benefit of the Society, in connection with the mission of the Society. HCBS, LLC is a limited liability company organized under the laws of the State of South Dakota in November, 2014 for the purpose of acquiring assets of, and ownership interests in, certain home health agencies.

iv

Set forth below is certain financial information that summarizes the financial status of the Obligated Group. Reference is hereby made to the caption “THE OBLIGATED GROUP” herein and to Appendices A and B for a discussion of the Society, the Obligated Group and their businesses and for interim, unaudited financial information of the Obligated Group and for the most recent audited financial statements of the Society and affiliates. Unaudited consolidating financial information for the Obligated Group is included as part of a supplement to the Society’s audited financial statements attached as APPENDIX B.

[Remainder of page intentionally left blank]

v

Summary Operating Statement 1 (in thousands)

Years Ended December 31

Three Months Ended March 31

(Unaudited) 2014 2013 2012 20152 2014

Operating Revenues $974,076 $960,013 $946,484 $243,233 $241,729 Operating Expenses 991,821 967,191 940,865 242,254 246,515 Operating Gain (Loss) ($17,745) ($7,178) $5,619 $979 ($4,786)

Nonoperating Revenue (Net) 11,102 20,506 15,261 5,933 2,062 Net Unrealized Gains 13,306 7,888 16,105 2,028 4,543 Other Changes in Net Assets (10,339) (18,232) (8,092) 3,056 1,398 Change in Unrestricted Net Assets

($3,676) $2,984 $28,893 $11,996 $3,217

Condensed Summary Balance Sheet1 (in thousands)

December 31 March 31 (Unaudited)

2014 2013 2015

Cash and Investments $358,233 $365,807 $350,909 Other Current Assets 115,373 190,690 107,893 Assets Limited As To Use 84,337 94,784 97,625 Net Property, Plant & Equipment 944,471 920,854 956,870 Other Assets 93,802 74,719 126,154 Total Assets $1,596,216 $1,646,854 $1,639,451 Total Current Liabilities 157,868 225,522 199,658 Long-Term Debt 570,064 554,801 494,729 Other Liabilities 113,797 107,436 115,047 Total Net Assets 754,487 759,095 830,017 Total Liabilities and Net Assets $1,596,216 $1,646,854 $1,639,451

____________________ 1 These financial summaries present information for the Obligated Group only, drawn from the audited financial statements of the Society and affiliates for the annual figures and from the unaudited financial statements for the Obligated Group for the interim periods indicated. The unaudited financial information includes all adjustments which the Society considers necessary for a fair presentation of the results of operations for such periods. Operating results for the three months ended March 31, 2015 are not necessarily indicative of results which may be expected for the full fiscal year ending December 31, 2015. The Society’s individual financial results are consolidated with its related affordable housing entities, its captive insurance company, Good Samaritan Holdings, LLC, the Foundation and HCBS, LLC (which was formed in 2014 but had no activity) for purposes of the audited financial statements included as APPENDIX B. None of the affordable housing entities, the captive insurance company or Good Samaritan Holdings, LLC (which has no assets), however, is a Member of the Obligated Group and none of them is obligated to make any payments with respect to the Bonds or any Obligations under the Master Indenture. Moreover, the Obligated Group does not have any legal right to the assets or revenues of those companies to support payments required of the Obligated Group. Similarly, none of those companies has any legal right to compel payments from any Member of the Obligated Group on its behalf. As of December 31, 2014, the net operating revenue of Members of the Obligated Group constituted approximately 99.2% of the Society’s annual consolidated net operating revenue and the Members’ assets constituted approximately 92.8% of the Society’s total consolidated assets as shown in the audited consolidated financial statements included as APPENDIX B. Unaudited consolidating financial information for the Obligated Group is included as part of a supplement to the Society’s audited financial statements. See Appendices A and B for more information. 2 The Summary Operating Statement of the Obligated Group for the three months ended March 31, 2015, does not include any operating information for HCBS, LLC and its related entities because HCBS, LLC was not a Member of the Obligated Group during such period. See “THE SOCIETY AND THE OBLIGATED GROUP—HCBS, LLC” in Appendix A. Total operating revenues for such affiliates for the three month period ending March 31, 2015 were approximately $5.1 million (9.8% of Obligated Group total operating revenues for such period, including HCBS, LLC).

OFFICIAL STATEMENT

$204,290,000 COLORADO HEALTH FACILITIES AUTHORITY

HEALTH FACILITIES REVENUE AND REVENUE REFUNDING BONDS (THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY PROJECT)

SERIES 2015A

INTRODUCTION

This Official Statement, including the Appendices attached hereto (collectively, this “Official Statement”), is furnished to provide information in connection with the offering and sale of the Bonds. All capitalized terms used herein and not otherwise defined shall have the meanings assigned to them under the caption “DEFINITIONS OF CERTAIN TERMS” in APPENDIX C to this Official Statement.

The Colorado Health Facilities Authority (the “Authority”) is issuing its special, limited obligation Health Facilities Revenue and Revenue Refunding Bonds (The Evangelical Lutheran Good Samaritan Society Project) Series 2015A (the “Bonds”) under and pursuant to the authority of the Colorado Health Facilities Authority Act, Article 25 of Title 25 of the Colorado Revised Statutes, as amended (the “Act”) and the Supplemental Public Securities Act, Part 2 of Article 57 of Title 11 of the Colorado Revised Statutes, as amended, as well as a Bond Trust Indenture dated as of July 1, 2015 (the “Bond Indenture”), by and between the Authority and U.S. Bank National Association, as Trustee (the “Trustee”) and a resolution approved and adopted by the Authority. On the date of delivery of the Bonds, the Authority will enter into a Loan Agreement, dated as of July 1, 2015 (the “Agreement”) with The Evangelical Lutheran Good Samaritan Society (the “Society”), pursuant to which the Authority will loan the proceeds of the Bonds to the Society and the Society will agree to pay when due the principal of and interest on the Bonds. In addition, the Society, as Obligated Group Representative under the Second Amended and Restated Master Trust Indenture dated as of October 1, 2013 (as supplemented and amended from time to time, the “Master Indenture”), among the Society, the Evangelical Lutheran Good Samaritan Foundation (the “Foundation”) and Wells Fargo Bank, National Association, as master trustee (the “Master Trustee”), will issue Obligation No. 47 (“Obligation No. 47”) under the Master Indenture and the Thirty-Sixth Supplement to Master Trust Indenture, dated as of July 1, 2015 (“Supplement No. 36”) to the Trustee to secure payments on the Bonds. The payments required of the Obligated Group on Obligation No. 47 will be equivalent to the payments required of the Society on the Bonds, and credit will be given on payments made under Obligation No. 47 for payments made on the Bonds.

The Bonds and all obligations of the Authority under or with respect to the Bonds, the Bond Indenture and the Agreement shall be and remain special, limited obligations of the Authority payable solely and only out of the security described herein (see “SECURITY AND SOURCES OF PAYMENT” herein) and specifically pledged thereto. No recourse shall be had against any properties, funds or assets of the Authority (other than such security) or the State of Colorado (the “State”) for the payment of any amounts owing under or with respect to the Bonds, the Bond Indenture or the Agreement. The Bonds are not general obligations of the State or the Authority. The full faith and credit and taxing powers of the State are not and may not be pledged for the payment of the Bonds. No person may compel the levy of a tax for the payment or compel the appropriation of money of the State or the Authority for the payment of the Bonds. The Authority has no taxing powers. In addition, no other state or political subdivision thereof which approved the issuance by the Authority of any portion of the Bonds is obligated to make any payments on the Bonds.

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Brief descriptions of the Authority, the Society, the Obligated Group, the Bonds, the Master Indenture, the Bond Indenture, the Agreement and Obligation No. 47 are included in this Official Statement. All references herein to such documents are qualified in their entirety by reference to such documents, and references herein to the Bonds are qualified in their entirety by reference to the form thereof included in the Bond Indenture and the information with respect thereto included in such documents, all of which will be available for inspection until the issuance of the Bonds at the office of the Society in Sioux Falls, South Dakota, and thereafter at the offices of the Trustee in Saint Paul, Minnesota.

THE AUTHORITY

The Authority, created July 1, 1977, is an independent public body politic and corporate constituting a public instrumentality and a political subdivision of the State of Colorado. The Authority is not an agency of the State of Colorado government and is not subject to administrative direction by any department, commission, board or agency of the State. The Authority was created by the Act, and its purpose is to provide financing for health facilities and to provide alternative methods by which health institutions in the State or their affiliates may finance health facilities located in the State and other states and refund or refinance outstanding indebtedness incurred for such health facilities.

The Act provides that the governing body of the Authority will be a Board of Directors consisting of seven members appointed for staggered, four-year terms by the Governor of the State with the consent of the State Senate. Each member must be a resident of the State, and no more than four members may be of the same political party.

The Authority has offered and plans to offer other obligations from time to time to finance other health care facilities. Such obligations have been and will be issued pursuant to and secured by instruments separate and apart from the Bond Indenture. Payments on these other obligations will be payable solely from revenue pledged under the separate instruments relating to such obligations and not from any revenue pledged under the Bond Indenture.

The Authority has not prepared or assisted in the preparation of this Official Statement, except the statements under this Section, the information with respect to the Authority under the caption “LITIGATION—The Authority” and the information with respect to the Authority under the caption “SUMMARY STATEMENT—The Authority” and, except as aforesaid, the Authority is not responsible for any statements made in this Official Statement. Except for the execution and delivery of documents required to effect the issuance of the Bonds, the Authority has not otherwise assisted in the public offer, sale or distribution of the Bonds. Accordingly, except as aforesaid, the Authority disclaims responsibility for the disclosures set forth in this Official Statement or otherwise made in connection with the offer, sale and distribution of the Bonds.

The Authority has engaged Ponder & Co. of Chicago, Illinois to serve as its financial advisor.

THE OBLIGATED GROUP

On the date of issuance of the Bonds, the Obligated Group will consist of the Society, the Foundation and Good Samaritan Society HCBS, LLC (“HCBS, LLC”). Subject to certain conditions specified in the Master Indenture, other entities may become Members of the Obligated Group or, once Members, may withdraw from the Obligated Group; provided that neither the Society nor the Foundation may withdraw from the Obligated Group. The Members of the Obligated Group do not presently contemplate the addition of any other Members to the Obligated Group.

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The Society is a nonprofit corporation founded in 1922 under the laws of the State of North Dakota. The Society operates skilled nursing facilities, residential housing for seniors, home and community based health services and affordable housing projects in 217 locations across the United States. The Society is the largest not-for-profit provider of senior care and services in the country, operating in 24 states, employing approximately 19,000 staff members and serving approximately 28,400 residents.

As of December 31, 2014, the Society owned and operated skilled nursing facilities and residential housing in 168 locations; managed one residential housing facility and sub-acute care unit where the Society has partial ownership; leased four skilled nursing and residential housing facilities owned by others; managed 14 skilled nursing and residential housing facilities owned by others; and managed 32 affordable housing projects for seniors and disabled persons that are controlled by the Society.

Revenues from skilled nursing facility operations owned by the Society have historically comprised the majority of the Society’s revenues, constituting approximately 90% of the Society’s operating revenues in fiscal year 2000. However, in recent years and as part of the Society’s strategic plan, the percentage of the Society’s operating revenues attributable to skilled nursing facility operations has decreased (to 78.9% in 2014). The Society has been diversifying within the health care industry over the last few decades, and increasingly in recent years in connection with its strategic plan to grow its percentage of revenues attributable to senior housing and home and community based services with less dependence on revenues from skilled nursing facility operations. See “THE SOCIETY AND THE OBLIGATED GROUP—Strategic Direction” in APPENDIX A.

The Foundation is a Minnesota nonprofit corporation organized in 1992 exclusively for the purpose of providing support, assistance and aid to and for the exclusive benefit of the Society, in connection with the mission of the Society. The sole member of the Foundation is the Society, and the President of the Society is the Chairperson of the Board of Directors of the Foundation. HCBS, LLC is a limited liability company organized under the laws of the State of South Dakota in November, 2014 for the purpose of acquiring assets of, and ownership interests in, certain home health agencies. The sole member of HCBS, LLC is the Society.

See APPENDIX A for further discussion of the management, capitalization, revenues and expenditures, facilities and strategic direction of the Society and for other information relating to the Society and the Members of the Obligated Group. See APPENDIX B for the Society and its affiliates’ audited, consolidated financial statements as of and for the years ended December 31, 2014 and December 31, 2013, which includes supplemental information concerning the Obligated Group.

After the close of this offering, for information on the Society, including its audited financial reports (which includes supplemental information concerning the Obligated Group), its current and most recent Official Statements, and the most recent reports from Standard & Poor’s Ratings Services, Fitch Ratings and Moody’s Investors Service, please see the “Finances” link on the Society website, www.good-sam.com. This information is not included by reference in this Official Statement, and the Society disclaims any obligation to keep the information current on its website.

THE PROJECTS

A portion of the proceeds of the Bonds will used to finance or refinance the costs of the acquisition, construction, improvement and equipping of certain home health agencies, skilled nursing facilities and other health care and senior living facilities in various locations (the “New Money Projects”). See “SOURCES AND USES OF FUNDS” herein. The New Money Projects are located in:

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Kissimmee, Florida; Jeffersontown, Kentucky; Waconia, Minnesota; Pine River, Minnesota; Grand Island, Nebraska; Sioux Falls, South Dakota; and Denton, Hurst, Mesquite and El Paso, Texas. See “OBLIGATED GROUP FINANCIAL INFORMATION—Series 2015 Projects” in APPENDIX A for a more detailed description of the New Money Projects.

A portion of the proceeds of the Bonds will be used to refund bonds previously issued by the Authority for the benefit of the Society (the “Refunded Bonds”). See “SOURCES AND USES OF FUNDS” herein. The skilled nursing facilities and other health care and senior living facilities financed or refinanced with proceeds of the Refunded Bonds are located in Colorado, Arizona, Arkansas, Florida, Iowa, Kansas, Minnesota, Nebraska, New Mexico, North Dakota, South Dakota and Wisconsin.

BONDHOLDERS’ RISKS

General

The Society and other long-term care providers face numerous challenges. Consumer demands for alternatives to traditional long-term care, declining resident census, declining average length of stay in skilled nursing facilities, staff shortages and inadequate reimbursement from the federal and state governments require creative, timely responses as the Society seeks to continue to provide high quality care. Some of the Society’s responses to these and other challenges are discussed in APPENDIX A. Some are discussed in this Section.

Federal and State Legislation and Regulation

General. Approximately 59% of the total residents served by the Society live in the Society’s skilled nursing facilities. Approximately 64% of those residents are covered by Medicaid or Medicare. In 2014, the Society received approximately 36.6% of its total revenues from various states’ Medicaid programs and approximately 23.5% through Medicare (a total of 60.1% of the Society’s total revenues). Medicaid is a governmental program that pays for medical care for certain indigents. Currently, the Medicaid program is jointly funded by states and the federal government, but administered by the individual states. Medicare is a health care program for seniors that is funded by the federal government. Over the last ten years or more, Congress has established and proposed programs generally intended to reduce federal contributory payments to states under the Medicaid program and to reduce federal obligations under Medicare. The Society expects further changes and/or reductions in Medicaid and Medicare funding and reimbursement patterns, which may have a materially adverse effect upon the operations and financial condition of the Society and the Members of the Obligated Group.

In addition, the Medicaid program is a state block grant program, under which the individual states have complete discretion over the eligibility requirements and the method of provision of health services pursuant to the program. In such a situation, especially with federally provided per capita dollars declining in real terms, there is a possibility that states will limit eligibility and/or reimbursement to nursing and long-term care providers such as the Society. Such limitations may have a materially adverse effect upon the operations and financial condition of the Obligated Group. Certainly, as the states develop and evolve their individual programs, the administrative cost of compliance will increase for the Society.

Health Care Reform. In recent years, health care reform at both the federal and state levels has been identified as a priority by political leaders and candidates, business leaders and public advocates. In March 2010, federal health care reform efforts culminated in the enactment of H.R. 3590, the Patient Protection and Affordable Care Act, amended by H.R. 4872, the Health Care and Education Reconciliation Act of 2010 (collectively, the “Affordable Care Act”). The constitutionality of some

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elements of the Affordable Care Act has been challenged in courts around the country. In June 2012, the Supreme Court upheld the Affordable Care Act while also substantially limiting the law’s expansion of Medicaid, effectively allowing states to choose between participating in the expansion while receiving additional federal payments or foregoing the expansion and retaining existing payments. As of the beginning of 2015, 14 of the 24 states in which the Society operates have opted in to the Affordable Care Act’s expansion of the Medicaid program. Each state’s status, however, is subject to change. Attempts to amend and repeal provisions of the Affordable Care Act have been introduced in previous Congressional sessions and certain amendments to the Affordable Care Act were contained in the American Taxpayer Relief Act of 2012 signed into law by President Obama on January 2, 2013. The ultimate outcomes of any legislative attempts to repeal, amend or eliminate or reduce funding for the Affordable Care Act are unknown.

Different aspects of the Affordable Care Act have recently taken effect and others will continue to take effect at different times over the next several years, including an array of coverage expansion, health insurance regulation and tax increase measures, and, therefore, the full consequences of the Affordable Care Act on the industry cannot be immediately realized. The ramifications of the Affordable Care Act may also become apparent only following implementation or through later regulatory and judicial interpretations. In addition, the uncertainties regarding the implementation of the Affordable Care Act create unpredictability for the strategic and business planning efforts of health care providers, which in itself constitutes a risk.

Medicaid eligibility and services were expanded in 2014 for the states that opted in to the expanded coverage, and the federal government provided some additional Medicaid funding. However, the Affordable Care Act also contains provisions (some of which are already effective) aimed at reducing Medicare and Medicaid reimbursements to providers. The Affordable Care Act also makes changes aimed at reducing projected growth of the Medicare program, including tying provider payments more closely to efficiency and quality outcomes. The Affordable Care Act also provides for new methods and increased resources to combat waste, fraud and abuse, as well as demonstration programs relating to alternative approaches for medical malpractice disputes.

The Affordable Care Act also funds various demonstration programs and pilot projects and other voluntary programs to evaluate and encourage new provider delivery models and payment structures, including “accountable care organizations” and bundled provider payments. The outcomes of these projects and programs, including the likelihood of their being made permanent or expanded or their effect on health care organizations’ revenues or financial performance cannot be predicted.

Some regulations implementing provisions of the Affordable Care Act have not yet been promulgated or finalized, so it is not possible to predict all aspects of the Act’s impact on the Members of the Obligated Group.

Many states have also enacted or are considering health care reform measures. The purpose of much of the statutory and regulatory activity has been to control health care costs, particularly costs paid under the Medicaid and Medicare programs.

It is not known which additional proposals may be proposed or adopted or, if adopted, what effect such proposals would have on the Obligated Group’s operations or revenue. However, the recent increase in focus and interest on federal and state health care reform may increase the likelihood of further significant changes affecting the health care industry in the near future. There can be no assurance that recently enacted, currently proposed or future health care legislation, regulation or other changes in the administration or interpretation of governmental health care programs will not have an adverse effect on the Members of the Obligated Group. Reductions in funding levels of the Medicare program, changes in

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payment methods under the Medicare and Medicaid programs, reductions in states’ funding of Medicaid, or other legislative or regulatory changes could materially reduce the Obligated Group’s income.

Medicaid Program. In 2014, the Society received approximately 36.6% of its total revenues from various states’ Medicaid programs. Medicaid programs provide funds for payment for services obtained by “medically indigent persons.” Each state currently funds a substantial portion of Medicaid payments and exercises considerable discretion in determining payments allowed to providers. Regulations promulgated by the United States Center for Medicare and Medicaid Services (“CMS”) provide that states are not required to pay for long-term care services on a cost-related basis, but may do so according to payment rate systems established by the state and identified in a state Medicaid plan.

CMS pays each state a federal medical assistance percentage (the “FMAP”) of the expenditures the state makes for medical services under its Medicaid program. The FMAP is calculated based on the United States Department of Commerce’s statistics of average income per person in each state and in the nation as a whole. States may claim the FMAP without regard to any maximum on the dollar amounts per recipient. The FMAP, however, can be reduced if a state does not have an effective program to control use of institutional services. States also receive federal reimbursement for a percentage of specified administrative costs. States which pay more than they should for Medicaid services as a result of eligibility errors or errors in determining the amount an individual or family must spend on medical care as a condition of eligibility may be subject to a reduction in federal Medicaid funding.

Medicaid Reimbursement. Brief summaries of the Medicaid reimbursement systems of the major states from which Medicaid funds are currently received by the Society for nursing services are set forth below. In 2014, the Society earned approximately 56% of its total Medicaid revenues from these five states, approximately 17% of the total in Minnesota alone. No other state exceeded 8% of the total.

Iowa. The Medicaid program administered by Iowa reimburses skilled nursing services prospectively on a facility specific basis at per diem rates. The rate is determined according to actual audited costs plus inflation, incentive factors and performance factors. The Direct Care is case-mix adjusted quarterly with a rate limit of 120% of median reported direct care cost for all facilities. Non-direct Care is the lesser of reported allowable costs adjusted for inflation or a rate limit of 110% of median reported non-direct care costs for all facilities. The system is re-based every other year.

Kansas. The Medicaid program administered by Kansas reimburses skilled nursing services pursuant to a prospective rate determined annually. The facility specific rate is subject to four cost center limitations: Operating, Indirect Healthcare, Direct Healthcare and Real and Personal Property Fee. The Direct Health Care Limit is facility specific and is adjusted quarterly based on the facility’s average case mix. The Property Rate is based on property costs from 1983. The Real and Personal Property Fee may be increased when significant capital expenditures are made. A Quality and Efficiency Outcomes Incentive Factor was implemented on July 1, 2005.

Minnesota. The Medicaid program administered by Minnesota has historically reimbursed nursing facilities at contracted rates based on the case mix of the residents served that is periodically adjusted by an annual inflation index. Rates are varied by 48 case mix levels reflecting differences in care needs. Beginning in 2008, a new cost-based payment system was implemented that provided a “rebasing” of nursing facility rates and was to be phased in over an eight-year period (the “Value-Based System”). In 2009 the Value-Based System was suspended and in 2011 any further phase-in of the Value-Based System was eliminated. From time to time facilities may also receive a quality add-on to the operating rate that is established by the legislature.

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Historically, Minnesota has, with some exceptions, required nursing facilities participating in the Medicaid program to charge private paying residents only the applicable Medicaid rate for similar services, a practice commonly referred to as rate equalization. Nursing facilities are also able to charge higher rates for private-pay residents in private rooms, commonly referred to as the private room differential. In 2003, the Minnesota legislature revised legislation allowing private pay residents to be billed 20% more than the Medicaid rate for the first 30 days of their admission.

Nebraska. The Medicaid program administered by Nebraska reimburses skilled nursing services pursuant to a prospective per diem rate established on a facility specific basis. The per diem is “case-mix adjusted” to the level of care provided by the facility. The rate is determined according to audited costs, the average case mix weight and an inflation factor. There are three cost centers used to develop the rates under Medicaid: direct nursing cost, capped at 125% of the median costs; other support services, capped at 115% of median costs; and fixed costs capped at $27 per resident per day.

South Dakota. The Medicaid program administered by South Dakota reimburses skilled nursing services pursuant to a prospective per diem rate established on a facility specific basis. The per diem rate is “case-mix adjusted” to the level of care provided by the facility. The rate is determined according to audited costs and the average case mix weight plus an inflation factor. The direct care ceiling is set at 115% of the median for all facilities with a case mix of 1.0 or higher. Ceilings for other costs are set at 105% of the median for all facilities with a case mix of 1.0 or higher.

Medicaid Managed Care. A growing number of state Medicaid agencies are choosing to contract with managed care organizations (“MCOs”) to provide and pay for health care services. In 2014, per the AHCA 2014 Medicaid Shortfall Report, it was estimated that 26 states had some form of Medicaid managed care. MCOs establish an organized network of providers and hold them accountable for costs and outcomes. This transition to managed care Medicaid is to promote the delivery of efficient, coordinated and high quality health care that promotes member choice and accountability in health care coordination. Of the states in which the Society operates, many either have or plan to implement a Medicaid Managed Long Term Services and Supports program. Those states with a program in operation include Arizona, Florida, Hawaii, Idaho, Illinois, Kansas, Minnesota, New Mexico, Oregon, Tennessee, Texas, Washington and Wisconsin. Iowa plans to implement a statewide program in 2016. Reimbursement under Medicaid managed care may either be based on the state rate setting system or a negotiation of rates between providers and MCOs.

The amount of Medicaid reimbursement received by providers in the future will depend on, among other things, fiscal considerations of both the federal and state governments in establishing their budgets for funding the Medicaid program. Because a portion of Medicaid’s program costs are paid by states, the absolute level of Medicaid revenue paid to the Members of the Obligated Group, as well as the timeliness of their receipt, may be partly dependent upon the financial condition of and budgetary factors facing such states, which may be adversely affected by factors beyond the states’ control. Since state payments to Medicaid providers are often subject to state legislative appropriation, delays in appropriations may occur from time to time, creating a risk that payments for services to Medicaid patients will be withheld or delayed. Future changes in state law or policy could adversely affect state Medicaid funding. To the extent future changes in state law, policy or financial conditions of a particular state cause the state to reduce its funding of the non-federal portion of Medicaid reimbursement, the revenue of Medicaid providers such as the Members of the Obligated Group could be adversely affected.

While the Affordable Care Act has generally expanded Medicaid eligibility and funding in a number of states, considerable uncertainty remains as to its implementation and impact. Medicaid funding may be affected further by future health care reform legislation and general governmental budgetary concerns. Such factors could lead to future reductions in Medicaid payments, and Medicaid

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payment rates could become insufficient to cover increases in costs of providing services to Medicaid patients. It is impossible to predict the effect such changes might have on the Members of the Obligated Group.

Medicare Program. In 2014, the Society received approximately 23.5% of its total revenues from Medicare. The Society is subject to highly technical regulations by a number of federal, state and local government agencies and private agencies, including those that administer the Medicare program. Changes in the structure of the Medicare system, as well as potential limitations on payments from governmental and other third party payors, could potentially have an adverse effect on the results of operations of the Obligated Group. Actions by governmental agencies concerning the licensure and certification of the Society’s facilities or the initiation of audits or investigations concerning billing practices could also potentially have an adverse effect on the results of operations of the Obligated Group.

There is an expanding and increasingly complex body of law, regulation and policy (both federal and state) relating to the Medicare program, which is not directly related to payments under such program. This includes reporting and other technical rules as well as broadly stated prohibitions regarding improper inducements for referrals, referrals by physicians for designated health services to entities with which the physicians have a prohibited financial relationship and payment of kickbacks in connection with the purchase of goods and services (see “—Enforcement Activity” below). Violations of prohibitions against false claims, improper inducements and payments, prohibited physician referrals and illegal kickbacks may result in civil and/or criminal sanctions and penalties. Civil penalties range from monetary fines that may be levied on a per-violation basis to temporary or permanent exclusion from the Medicare program. A determination that the Society or a Member of the Obligated Group is in violation of these laws could have a material adverse effect on the finances of the Obligated Group.

Medicare Reimbursement. Medicare reimbursement to skilled nursing facilities (“SNFs”) depends on several factors, including the character of the facility, the beneficiary’s circumstances and the type of items and services provided. Extended care services furnished by SNFs are covered only if the patient spent at least three consecutive days as a hospital inpatient prior to admission to the SNF and if the patient was admitted to the SNF within 30 days of discharge from a qualifying hospital stay. Medicare Part A covers nursing services furnished by or under the supervision of a registered professional nurse, as well as physical, occupational and speech therapy provided by the SNF. “Ancillary” services not covered by Medicare Part A provided to SNF patients may be covered under Medicare Part B. SNF services for Medicare Part A inpatient stays are reimbursed for up to 100 days for each spell of illness. Medicare payments are subject to patient coinsurance and deductibles.

Medicare payments for patients in SNFs are based on a Prospective Payment System (“PPS”). Under the PPS, SNFs are paid a single per diem rate per resident according to the Resource Utilization Group (“RUG”) to which the patient is assigned. RUG rates are based on the expected resource needs of patients and cover routine services, therapy services and nursing costs. SNF PPS payment rates are adjusted annually based on the skilled nursing facility “market basket” index, or the cost of providing SNF services. There is no guarantee that market basket updates will continue to be made on an annual basis; in March 2010 the Medicare Payment Advisory Commission (“MedPAC”) recommended eliminating the market basket update for skilled nursing facilities. The Affordable Care Act introduced a productivity adjustment that reduces the market basket updates.

The Affordable Care Act contains other provisions (some of which are already effective) aimed at reducing Medicare reimbursements to providers. These provisions include the “value-based purchasing” provisions aimed at tying Medicare provider payments more closely to efficiency and quality outcomes. Because the Affordable Care Act is relatively new, the full impact of these provisions on the Obligated Group is unknown.

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Future legislation, regulation and actions by the federal government are expected to continue the trend toward more restrictive limitations on reimbursement for long term care services. At present, no determination can be made concerning whether, or in what form, such legislation could be introduced and enacted into law. Similarly, the impact of future cost control programs and regulations upon the Obligated Group’s financial performance cannot be determined at this time.

Medicare and Medicaid Annual Cost Reporting. Medicaid and Medicare each requires the filing of annual cost reimbursement reports, which are subject to audit by the various states and the federal government. The Society does not believe that its audits for prior years for either Medicaid or Medicare will result in any material liabilities.

Anti-Kickback Laws. The Federal Medicare/Medicaid Anti-Fraud and Abuse Amendments to the Social Security Act (the “Anti-Kickback Law”) make it a criminal felony offense (subject to certain exceptions) to knowingly or willfully offer, pay, solicit or receive remuneration in order to induce business for which reimbursement may be provided under the Medicare or Medicaid programs. The arrangements prohibited under the Anti-Kickback Law can involve hospitals, physicians and other health care providers such as nursing homes. Prohibited arrangements may include joint ventures between providers, space and equipment rentals, purchases of physician practices, physician recruiting programs and management and personal services contacts. The Affordable Care Act contains provisions relaxing the intent requirements for criminal liability under the Anti-Kickback Law, so that actual knowledge of statutory requirements or specific intent to violate them is not required for a criminal prosecution. The Affordable Care Act also provides that Anti-Kickback Law violations may constitute a basis for False Claims Act liability. In addition to criminal penalties, violations of the Anti-Kickback Law can lead to civil monetary penalties and suspension or exclusion from the Medicare and Medicaid programs for not less than five years. Exclusion of the Society from either of these programs would have a material adverse impact on the operations and financial condition of the Obligated Group.

The Society’s management believes that the Society is presently in material compliance with the Anti-Kickback Law. However, in light of the lack of regulatory guidance and the scarcity of case law interpreting the Anti-Kickback Law, there can be no assurances the Society will not be found to have violated the Anti-Kickback Law, and if so, whether any sanction imposed would have a material adverse effect on the operations of the Society or the financial condition of the Obligated Group.

Restrictions on Referrals. The federal Anti-Self Referral Legislation (“Stark Law”) is the federal law prohibiting certain enumerated patient referrals. Specifically, the Stark Law prohibits a physician, or an immediate family member of such physician, that maintains a financial relationship with an entity, from referring patients to that entity. The Stark Law also prohibits an entity receiving a prohibited referral from billing the Medicare or Medicaid programs for any services rendered to the patient. The Stark Law contains certain exceptions which protect parties from liability under the Stark Law if the parties comply with the requirements of the exceptions. The sanctions under the Stark Law include denial and refund of payments, civil monetary penalties and suspension or exclusion from the Medicare and Medicaid programs.

The Society’s management believes that the Society is presently in material compliance with the Stark Law. However, in light of the narrowness of the statutory exception, lack of regulatory guidance and the scarcity of case law interpreting the Stark Law, there can be no assurances the Society will not be found to have violated the Stark Law, and if so, whether any sanction imposed would have a material adverse effect on the operations of the Society or the financial condition of the Obligated Group.

Billing and Reimbursement Practices. Health care providers, including nursing homes and assisted living facilities, are also subject to criminal, civil and exclusionary penalties for violating billing

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and reimbursement standards under state and federal law. In recent years, state and federal enforcement authorities have investigated and prosecuted providers for submitting false claims to Medicare or Medicaid for services not rendered or for misrepresenting the level or necessity of services actually rendered in order to obtain a higher level of reimbursement. The United States Department of Justice has pursued a number of national investigations concerning allegations under the federal False Claims Act relating to alleged improper billing practices by health care providers. Significant fines and penalties are being imposed in these areas and, since enforcement authorities are in a position to exert considerable settlement pressure against providers, substantial settlement amounts are being paid. In addition, the False Claims Act authorizes “qui tam” actions in which a private person (known as a “relator”) sues on behalf of the government. If a lawsuit is successful, the relator is eligible to receive a percentage of the recovered amount. The Affordable Care Act also allows CMS to reduce provider payments by set-offs for various types of federal liabilities that providers (or their affiliates) may have. This “cross-provider” recovery provision (which may extend to all entities sharing a federal tax identification number) constitutes an important change from prior rules. Many states have also adopted state false claims acts authorizing civil actions by the state as well as private rights of action against a person submitting false Medicaid claims.

These enforcement activities are aimed at a wide variety of health care related activities, many of which have not generally been perceived as “fraud.” In many areas, regulatory authorities have not provided clear guidance. The False Claims Act and similar laws may be violated merely by reason of inaccurate or incomplete reports, and ordinary course errors and omissions may result in liability. Because the Medicare and Medicaid programs impose complex mechanisms for the determination of proper billing codes, around which the Society has structured its accounting and financial systems, and because future modifications to Medicare and Medicaid may occur, the Members of the Obligated Group may not be able to comply expeditiously with such modifications, resulting in an adverse effect on operations.

Electronic Transmission of Health Information; Privacy and Security Regulations. Pursuant to the provisions of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), CMS has established electronic data transmission standards for health care providers. CMS has also promulgated regulations concerning the privacy of health data and the security of such data. Business associate agreements have been entered into by the Members of the Obligated Group in compliance with the privacy regulations. Violations of privacy or other HIPAA regulations carry significant civil and criminal penalties. The Members of the Obligated Group believe they are in substantial compliance with the privacy and security laws and regulations.

The federal Health Information Technology for Economic Clinical Health Act (“HITECH”) adopted in 2009 contains additional privacy and security provisions including requiring health care providers to notify individuals and HHS of unauthorized acquisition, access, use or disclosure of certain protected health information and extending enforcement authority to state attorneys general.

The Affordable Care Act generally strengthens federal involvement in health care data collection and use. Pursuant to the Affordable Care Act’s goal of simplifying health care administration, it is expected that unified information technology operating rules and security standards will be established.

National Labor Relations Act. Skilled nursing facilities and their employees fall within the scope of, and are subject to, the National Labor Relations Act. See the caption “OTHER INFORMATION—Employees” in APPENDIX A hereto. Accordingly, labor relations with skilled nursing facility employees are regulated by the federal government. Employees may organize, bargain collectively and strike. Employees at nine of the Society’s 157 skilled nursing facilities currently are represented by unions. Most of the nine facilities are in Minnesota. Such employees represent

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approximately 3.0% of the Society’s total employees. Procedures are provided to aid in the resolution of disputes and to attempt to avoid strikes, including review of the disputes and recommendations for their resolution by the Federal Mediation and Conciliation Service and a mandatory “cooling off” period. There are no pending or threatened labor disputes, and the Society believes its relations with its employees are good.

Other Governmental Regulation. Various states and the federal government regularly consider increasing (and do increase) the regulation of skilled nursing facilities and retirement housing, in an effort to protect seniors. Although such additional regulations, if adopted, would be intended to prevent abuses, there can be no assurance that they would not have the effect of limiting the ability of skilled nursing facilities and retirement housing to generate revenues or of increasing their expenses, thereby impairing the ability of the Society to make payments in an amount sufficient to pay the principal of and interest on the Bonds.

In additional efforts to reduce costs, some states have implemented allowable cost systems where skilled nursing facilities receive fixed payments regardless of the actual costs of providing the service. Certain states, including Minnesota and North Dakota, have adopted regulations requiring operators of skilled nursing facilities, including the Society, to limit their charges to “private pay” patients to the Medicaid reimbursement level, which has the general effect of limiting the Society’s revenues.

In addition, as stated above, Congress and the President regularly attempt to curb the growth of federal spending on health care programs. In addition to reducing spending for such programs, other recent actions include elimination of funding for health planning agencies and an increased emphasis on competition, managed care and other programs which may have a materially adverse effect upon the operations and financial condition of the Obligated Group.

Other Health Care Risk Factors

Evolving Industry. Occupancy percentages at skilled nursing facilities around the country have been falling generally for several years, even though, according to LeadingAge (an industry association comprised of approximately 6,000 nonprofit organizations), there has been stagnation in the number of available beds. The Society believes that this is primarily because of the increased availability of assisted living, senior living with services and other types of senior housing and of home health care, as well as other advances in the care of seniors. The Society anticipates that this trend will continue.

The Society’s immediate response to this situation was to develop more residential housing units for seniors and to reduce the number of skilled nursing beds where it was economically efficient to do so, and it has continued in this direction. See the caption “THE SOCIETY AND THE OBLIGATED GROUP—Strategic Direction—Service Line and Revenue Diversification” in APPENDIX A. This strategy has reduced the Society’s reliance on Medicare and Medicaid reimbursement programs for payments for services to residents (from approximately 60.9% in 2000 to 60.1% in 2014) and provides a greater continuum of care for seniors served by the Society. The Society has also adopted a strategic goal of increasing the number of in-home services it provides to seniors by (a) developing home health care initiatives and establishing or acquiring home health care agencies in various geographic areas where it already has campuses, (b) establishing a center at its national campus for developing new technology for maintaining well-being while staying at home under its “Vivo” and “LivingWell@Home” initiatives, and (c) joining the Mayo Clinic and a small number of other supporting companies in a Healthy Aging and Independent Living (HAIL) Lab Consortium.

Managed Care. Skilled nursing facilities throughout the United States are facing a health care environment that is becoming increasingly dominated by the development of risk-based managed care

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plans. The necessity for nursing facilities to contract with managed care plans is increasing not only for privately insured residents but also for certain Medicare beneficiaries. States are experimenting with innovative delivery and payment systems to provide care to Medicare beneficiaries and in some states there are certain plans that provide for contractual risk-sharing in the delivery of services to individuals who are eligible for both Medicaid and Medicare. The current trend in health care reimbursement is for the federal government to enable the states to use managed care as a way to reduce costs without the need for federal interference and approval. There can be no assurances that the Society will be able to enter into satisfactory contracts with such managed care plans or that the revenues generated for the Obligated Group by any such managed care plans with which the Society may choose to contract will be sufficient to meet the Society’s actual operating costs.

Malpractice Claims and Losses. The number of malpractice suits and the dollar amount of patient damage recoveries have been increasing nationwide, resulting in substantial increases in malpractice insurance premiums for healthcare providers like the Society. For that and other reasons, the Society established a captive insurance company in 2000 to ameliorate the cost and risks of acquiring private malpractice and other insurance. See the caption “OTHER INFORMATION–Insurance” in APPENDIX A. Regular continued losses, however, may have a materially adverse effect upon the operations and financial condition of the Obligated Group.

Staffing. The Society, along with most other healthcare employers of hourly wage earners, occasionally has difficulty filling all of its available staff positions in certain areas of the country. The Society has closed operations in a couple of locations due to the lack of staffing rather than sacrifice quality care. The Society has made a considerable effort to eliminate or reduce its use of temporary nursing service agencies and has been successful in accomplishing that goal. Also the Society has attempted to adjust staffing levels by census, but has had challenges doing so in small facilities due to staffing generally being less variable and more fixed as resident census declines. The Society is also attempting to reduce overtime, but there are open shifts that need to be filled by staff that create overtime situations.

In addition, under various regulations, the Society must “staff to acuity,” which means that as a skilled nursing facility’s mix of patients varies, the number and training of the staff must be adjusted accordingly. This increases costs as the Society must either hire a greater number and/or higher skill level of full-time staff or use independent, temporary (and more expensive) staff.

Enforcement Activity. The operations of the health care industry and the ownership and organization of individual participants have been subject to increasing scrutiny by federal and state governmental agencies. In response to perceived and actual abuses and violations of the terms of existing federal and state health care payment programs, these agencies have increased their audit and enforcement activities, and federal and state legislation has been considered or enacted providing for or expanding existing civil and criminal penalties against certain activities.

As with other health care providers, the Society may be the subject of Medicare intermediary or carrier, Department of Health and Human Services Office of Inspector General, United States Attorney General, Department of Justice or state attorney general investigations, audits or inquiries in the future. Because of the complexity of these laws, the instances in which an alleged violation may arise to trigger such investigations, audits or inquiries is increasing and could result in enforcement action against the Society or another Member of the Obligated Group.

Regardless of the merits of a particular case or cases, the Obligated Group could incur significant legal and settlement costs. Prolonged and publicized investigations could be damaging to the reputation,

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business and credit of the Obligated Group, regardless of the outcome, and could have material adverse consequences on the financial condition of the Obligated Group.

Licensing Requirements. Various health and safety regulations and statutes apply to the Society’s facilities and are administered and enforced by various state and federal agencies. Violations of certain health and safety standards could result in closure of all or a portion of a licensed facility, exclusion from Medicaid and Medicare or imposition of the requirement of complying with such standards. The Society’s facilities are currently in compliance with all existing material regulations and standards. Such standards are, however, subject to change and there can be no guarantee that in the future the Society’s facilities will meet these changed standards or that the Obligated Group will not be required to expend significant sums in order to comply with such changed standards.

Potential Environmental Risks

There are potential risks relating to environmental liability associated with the ownership of any real property. If hazardous substances are found on the property, owners and operators of such property may be held liable for costs of cleanup relating to such hazardous substances. In addition, under certain state statutes, liens arising as a result of liabilities relating to hazardous substances may take priority over all other liens, including any mortgages or deeds of trust thereon. However, neither the obligations of the Society under the Agreement, nor the obligations of the Members of the Obligated Group under Obligation No. 47 are secured by a mortgage on any of the property owned by any Member of the Obligated Group and under the Master Indenture and the Members of the Obligated Group may not grant such a mortgage unless it secures all Obligations on a parity basis.

The Society owns, leases or manages 217 properties in 24 states. The Society is unaware of any property owned, leased or managed by the Society which would subject it to substantial environmental liability. The Society has performed preliminary environmental site investigations on all of its properties. Many of these investigations were conducted internally. The Society has followed and will follow the recommendations of its environmental consultants in connection with such investigations.

Construction Risks

Construction projects are subject to a variety of risks, including but not limited to delays in issuance of required building permits or other necessary approvals or permits, strikes, shortages of materials and adverse weather conditions. Such events could delay occupancy. Cost overruns may occur due to change orders, delays in the construction schedule, scarcity of building materials and other factors. Cost overruns could cause the costs to exceed available funds.

Covenant to Maintain Tax Exempt Status of Interest on the Bonds

The tax exempt status of the interest on the Bonds, as described under the caption “TAX MATTERS” contained in this Official Statement, is based on the continued compliance by the Authority, the Trustee and the Members of the Obligated Group with certain covenants contained in the Bond Indenture, the Agreement, the Master Indenture and certain tax compliance documents and on the reporting of certain information to the United States Treasury. These covenants relate generally to arbitrage limitations, rebate of certain excess investment earnings to the federal government, restrictions on the amount of issuance costs which can be financed with the proceeds of the Bonds, requirements regarding the timely and proper use of proceeds of the Bonds, maintenance by the Society of its status as an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), and limitations regarding the amount of outstanding tax exempt non-hospital bonds which can

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be issued on behalf of the Obligated Group. Maintenance by the Society of its Section 501(c)(3) status involves many complex and sometimes costly areas of governmental regulation, including, but not limited to, the provision of charity care. Failure to comply with any of these covenants may result in the treatment of interest on the Bonds as taxable retroactive to the date of issuance. In a series of recent actions, the Internal Revenue Service has stepped up its audit and other scrutiny of 501(c)(3) organizations in general and their use of tax exempt financing in particular.

In addition, a possible modification or repeal of certain existing federal income tax laws – which may occur with certain recent tax reform proposals, a change in Internal Revenue Service policies, possible court decisions or other factors beyond the control of the Society, (a) could result in a loss by the Society of its status as an exempt organization under Section 501(c)(3) of the Code, which might have an adverse impact on the characterization of interest on the Bonds for federal income tax purposes, as well as on the Society’s ability to make payments on the Bonds, and/or (b) could result in a loss or a limitation of the usefulness of the federal exemption of interest on debt such as the Bonds from gross income for federal income tax purposes. The introduction or enactment of any such legislative proposals, clarification of the Code or court decisions or other factors beyond the control of the Society may also affect the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation. See “TAX MATTERS” herein for further information regarding the tax status of the Bonds.

Security for the Bonds; Security for Other Debt

Payments of interest on and principal of the Bonds are a general obligation of the Society, which are secured by the general obligation of the Members of the Obligated Group to make payments on Obligation No. 47 as needed. The payments on Obligation No. 47 are supported by a pledge of the Gross Revenues of the Members of the Obligated Group, but are not secured by a mortgage on any property of the Members of the Obligated Group. See the caption “SECURITY AND SOURCES OF PAYMENT” herein.

The Members of the Obligated Group have covenanted in the Master Indenture not to create any new mortgages on any property owned by any Member, unless such mortgages secure all Obligations on a parity basis. The Master Indenture permits, however, certain mortgages that were existing on the date of execution of the Master Indenture, provided that such mortgage may not be increased or modified to apply to any property of any Obligated Group Member not subject to the mortgage on such date unless the mortgage as so increased or modified otherwise qualifies as a Permitted Lien under the Master Indenture. See “THE MASTER INDENTURE—Limitations on Creation of Liens” in APPENDIX C. As of December 31, 2014, the Society had such outstanding mortgages on three facilities to secure debt instruments totaling approximately $2,517,000 in aggregate principal amount outstanding.

The Members of the Obligated Group have, from time to time, entered into Supplements to the Master Indenture or other agreements that contain certain supplemental covenants and additional provisions benefiting certain credit enhancers. These covenants and additional provisions described in APPENDIX C under the caption “ADDITIONAL RESTRICTIVE COVENANTS CONTAINED IN SUPPLEMENTAL INDENTURES AND/OR BANK DOCUMENTS,” are for the benefit of the affected credit enhancers only, and do not benefit the holders of the Bonds. A default under these covenants and additional provisions, however, may cause a default and acceleration of Obligation No. 47, which may in turn cause a default and acceleration of the Bonds.

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Dependence on Investment Portfolio Earnings

The performance of the Society’s investment portfolio has a material impact upon the financial results of the Society. In many years, operating income of the Society has been less than the realized gains or losses on investments. Periodic market declines may also adversely affect the Society’s investment portfolio by increasing unrealized investment portfolio losses and reducing investment income, although the Society has experienced portfolio gains in recent years. Declines in investment portfolio values may reduce or eliminate non-operating revenues. Investment losses (even if unrealized) may trigger debt covenant violations and may jeopardize the Obligated Group’s economic security. See the captions “OBLIGATED GROUP FINANCIAL INFORMATION—Statement of Operations” and “OBLIGATED GROUP FINANCIAL INFORMATION—Investment Portfolio” in APPENDIX A.

Earnings and gains from investments are dependent upon financial market conditions for both equity and fixed income investments and upon the Society’s investment policies and strategies. Revenues of the Society derived from investment income have been more volatile than revenues derived from operational income and public support from charitable sources. There can be no assurance that the historical record of investment earnings and gains reflected recently in the Society’s consolidated financial statements will continue, and there can be no assurance that the Society will not experience significant losses on investments.

Certain Matters Relating to the Enforceability of the Master Indenture and Other Documents

The finances of the Obligated Group Members (and of all future Members, if any, of the Obligated Group) are consolidated to determine whether various covenants and tests contained in the Master Indenture (including tests relating to the incurrence of Additional Indebtedness) are met. In this regard, it should be noted that the joint and several obligations of the Members of the Obligated Group to make payments in respect of the Obligations (directly or indirectly) may be limited to the extent such payments (a) are requested with respect to any Obligation which is issued for a purpose which is not consistent with the governmental or charitable purposes of such Member (other than the Member which directly benefited from such Obligation), or which is issued for the benefit of any entity other than a government or a nonprofit corporation which is exempt from federal income taxes under Section 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) are required to be made from any moneys or assets which are donor restricted or which are subject to a direct or express trust which does not permit the use of such moneys or assets for such a payment; (c) would result in the cessation or discontinuation of any material portion of the health care or related services previously provided by such Member (other than the Member which directly benefited from such Obligation); or (d) are requested to be made pursuant to any loan violating applicable usury laws. Due to the absence of clear legal precedent in this area, the extent to which the assets of the Members of the Obligated Group or any future Member of the Obligated Group fall within the category referred to in clauses (b) and (c) above cannot now be determined. See the Society’s audited financial statements and supplemental information included in APPENDIX B. The amount of the Obligated Group’s assets that fall within category (b) above could be substantial. The joint and several liability of the Members of the Obligated Group may be further limited by applicable principles of charitable trust law, applicable provisions relating to fraudulent conveyances and bankruptcy, provisions of state nonprofit corporation laws and equitable principles, including the principles that such payments may be held to be against public policy.

Under the United States Bankruptcy Code, a trustee in bankruptcy and, under state fraudulent conveyance statutes, a creditor of a related guarantor, may avoid any obligation incurred by a related guarantor if, among other bases therefor, (a) the guarantor has not received fair compensation or reasonably equivalent value in exchange for the guaranty, (b) the guaranty renders the guarantor

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insolvent, as defined in the United States Bankruptcy Code or fraudulent conveyance statutes, or (c) the guarantor is undercapitalized. As a result, a Member may not be required to make any payment on an Obligation, or portion thereof, the proceeds of which Obligations were not lent or otherwise disbursed to such Member, to the extent that such payment or use would render the Member insolvent, may be voided by a trustee in bankruptcy in the event of a bankruptcy of such Member, or may be voided by third party creditors in an action brought pursuant to any applicable state fraudulent conveyance statutes. Application by courts of the tests of “insolvency,” “reasonably equivalent value” and “fair consideration” has resulted in a conflicting body of case law. It is possible that, in an action to force a Member of the Obligated Group to make a payment on an Obligation for which it was not the direct beneficiary, a court might not enforce such obligation to pay in the event it is determined that the Member against whom such payment is sought is analogous to a guarantor of the debt of the Member who directly benefited from the borrowing and that sufficient consideration for such Member’s guaranty was not received or that the incurrence of such Obligation has rendered or will render such member insolvent.

Enforceability of Remedies, Bankruptcy, Limitations on Security Interests and Other Matters Relating to the Security for the Bonds

The realization of any rights upon a default will depend upon the exercise of various remedies specified in the Agreement, the Bond Indenture and the Master Indenture. These remedies may require judicial action, which is often subject to discretion and delay. Under existing law, certain of the remedies specified in the Agreement, the Bond Indenture and the Master Indenture may not be readily available or may be limited (including limitations imposed by bankruptcy laws and other existing statutes, constitutional provisions and judicial decisions). A court may decide not to order the specific performance of the covenants contained in these documents.

The effectiveness of the Master Indenture, including the pledge of the Gross Revenues described therein, may be limited by a number of factors, including: (a) the absence of an express assignment of payments due to the Society under the Medicaid or Medicare programs or under the contracts between the Society and other third party payors, and present or future prohibitions against assignment of certain accounts contained in state or federal statutes or regulations, including statutes which may affect assignment of Medicaid and Medicare payments; (b) statutory liens; (c) rights arising in favor of the United States of America or an agency thereof; (d) constructive trusts, equitable liens or other rights impressed or conferred by a federal or state court in the exercise of its equitable jurisdiction; (e) federal or state bankruptcy laws that may affect enforceability or certain federal statutes and judicial decisions that may cast doubt upon the right of the Master Trustee, in the event of a default, to collect and retain accounts receivable from Medicaid, Medicare and other governmental programs; and (f) rights of third parties in any revenues, including revenues converted to cash, not in the possession of the Master Trustee; and (g) the requirement that appropriate continuation statements be filed in accordance with the Uniform Commercial Code. In addition, it may not be possible to perfect a security interest in any manner whatsoever in certain types of Gross Revenues (e.g., gifts, donations, certain insurance proceeds, Medicaid and Medicare payments) before actual receipt by the Master Trustee, and it is uncertain whether a security interest granted in Medicaid and Medicare receivables can be perfected in any event. Healthcare providers are currently prohibited generally from assigning such receivables, and it is unclear whether this prohibition will be interpreted so as to preclude the granting or perfection of security interests. Moreover, there is no account control agreement between the Society and the Master Trustee, and therefore it is unlikely that any of the revenues of the Obligated Group will flow to the Master Trustee after any event of default under the Master Indenture until such an account control agreement is prepared or the Master Trustee obtains a court order to that effect.

In the event the Authority, a Member of the Obligated Group or a future Member of the Obligated Group were to become a debtor under Title 11 of the United States Code (the Federal Bankruptcy Code),

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or similar state law provisions, payments on the Bonds or payments under the Agreement or on Obligation No. 47 may be stayed or, under certain circumstances, subject to avoidance, and the interests of the Trustee or other creditors in such payments may not extend to payments acquired after the commencement of such a bankruptcy case. Furthermore, if the bankruptcy court concludes that the Trustee or other creditors have “adequate protection,” it may enter orders affecting the security of the Trustee, including orders providing for the substitution, subordination and sale of security. In addition, a reorganization plan may be adopted even though it has not been accepted by the Trustee or other creditors, if the Trustee or other creditors are provided with the benefit of its original lien or the “indubitable equivalent.” Thus, in the event of the bankruptcy of the Authority, a Member of the Obligated Group or a future Member of the Obligated Group, the amount realized by the Trustee or other creditors may depend on the bankruptcy court’s interpretation of “indubitable equivalent” and “adequate protection” under the then existing circumstances. The bankruptcy court may also have the power to invalidate certain provisions of the Master Indenture or such other contracts that make bankruptcy and related proceedings by the Authority, a Member of the Obligated Group or a future Member of the Obligated Group an event of default thereunder.

In addition, there exists in some states statutory or common law authority for a court to terminate the existence of a nonprofit corporation or undertake supervision of its affairs on various grounds, including a finding that such corporation has insufficient assets to carry out its stated charitable purposes. Such court action may arise on the court’s own motion or pursuant to a petition of the attorney general or other persons, pursuant to the common law and statutory power to enforce charitable trusts and to see to the application of their funds to their intended charitable uses.

All legal opinions with respect to the enforceability of the Bond Indenture, the Master Indenture, the Agreement, Obligation No. 47 and other financing documents will be expressly subject to a qualification that enforceability thereof may be limited by bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium or other similar laws affecting the rights of creditors, and by general principles of equity.

Obligated Group Debt; Ability to Incur Future Indebtedness

At the end of Fiscal Year 2014, the Obligated Group had approximately $576,667,000 of Long-Term Indebtedness outstanding (which includes current maturities of long-term debt of approximately $10,775,000). All of this Long-Term Indebtedness is the primary obligation of the Society. Approximately $9,000,000 to $15,000,000 of the Society’s regularly amortized Long-Term Indebtedness matures each year. See Note 9 of the Society’s audited financial statements and the Consolidating Balance Sheet in APPENDIX B attached hereto for a discussion of the Society’s Long-Term Indebtedness as of December 31, 2014. See also “THE BONDS—Debt Service” herein for a table showing the Society’s expected annual debt service payments. Included in the Obligated Group’s debt as of December 31, 2014, is approximately $71,900,000 due under the Society’s Revolving Term Loan from U.S. Bank National Association, $47,000,000 of which is expected to be repaid from the proceeds of the Bonds and $13,000,000 of which will be paid with escrowed funds in 2016. All amounts due under the U.S. Bank Revolving Term Loan are currently due on January 15, 2016.

The Society provides certain payment and completion guarantees with respect to the low income tax credit projects it manages. Such guarantees are contingent and are not included in the Society’s indebtedness in its audited financial statements or for purposes of the Master Indenture.

The Foundation and HCBS, LLC currently have no Long-Term Indebtedness outstanding except Obligations issued under the Master Indenture, as a Member of the Obligated Group.

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The Members of the Obligated Group have the ability to incur future Indebtedness which is on a parity with the Bonds. See “APPENDIX C—THE MASTER INDENTURE—Limitations on Indebtedness,” for a description of the circumstances under which the Members of the Obligated Group can incur such Indebtedness.

Ratings

Standard & Poor’s Ratings Group, Fitch Ratings and Moody’s Investors Service have each assigned ratings to the Bonds. See the caption “RATINGS” herein. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. Ratings have a tendency to change over time, and do not depend on a request to a rating agency for a revision. If a rating on the Bonds is withdrawn or revised downward, there will be an adverse effect on the market price of the Bonds. Neither the Obligated Group Representative nor any other party has undertaken any responsibility to ensure the maintenance of any rating or to oppose any revision or withdrawal thereof.

Certain Other Risks

In addition to the risks described above, long term health care providers such as the Society are subject to various other factors that may adversely influence their capabilities to meet punctually and fully their financial obligations when due and payable. Such factors include, but are not limited to: home health care programs which allow seniors to remain at home for longer periods of time; lower demand for certain or all health care services because of an unforeseeable oversupply of such services caused by future over-construction of similar facilities or better health or increased independence of seniors; better medical care which cures or mitigates chronic or long-term disabilities among seniors (e.g., a cure for Alzheimer’s); restrictions on long term care or retirement housing imposed by governmental bodies; increased requirements to provide beds and services to indigents lacking resources to pay for services provided; the ability of the Society to provide acceptable facilities and to operate those facilities economically and efficiently; unusual economic or demographic developments in its service areas; competition, particularly from large for-profit corporations in the senior residential housing market; inflated costs of energy, labor, services and materials; the possibility of the imposition of state real estate or other taxes on nonprofit corporations such as the Society; and other conditions. The occurrence of these factors is not necessarily predictable or controllable either by the Society or by consultants or other experts whom the Society could hire, and may have a materially adverse effect upon the operations and financial condition of the Society to an extent that cannot be determined at this time.

FORWARD-LOOKING STATEMENTS

This Official Statement contains statements relating to future results that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. When used in this Official Statement, the words “estimate,” “intend,” “expect,” “anticipate” and similar expressions identify forward-looking statements. Any forward-looking statement 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 unanticipated events and circumstances may occur. Therefore, investors should be aware that there are likely to be differences between forward-looking statements and actual results; those differences could be material.

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UNDERTAKING TO PROVIDE ONGOING DISCLOSURE

The Society, as Obligated Group Representative, has entered into an undertaking (the “Undertaking”) for the benefit of the Registered Owners and beneficial owners of the Bonds to send certain financial information and operating data to certain information repositories annually and to provide notice to those information repositories, the Municipal Securities Rulemaking Board (the “MSRB”) and any state information depository of certain events, pursuant to the requirements from time to time of Section (b)(5)(i) of Securities and Exchange Commission Rule 15c2-12, as amended (17 C.F.R. Part 240, § 240.15c2-12) (the “Rule”). The MSRB has designated its Electronic Municipal Market Access system (“EMMA”), found at http://emma.msrb.org, as the sole repository for such disclosure filings. See APPENDIX E “FORM OF CONTINUING DISCLOSURE UNDERTAKING.”

In addition to providing certain financial information and operating data annually and notice of certain events to EMMA pursuant to the requirements of the Rule, the Society has agreed in the Undertaking to cause to be filed with EMMA, for each quarter of each year within 60 days of the end of each such fiscal quarter, both the unaudited quarterly consolidated financial statements of the Society and its affiliates (balance sheet and statement of operations) and the Obligated Group’s unaudited quarterly financial statements containing statements of income and a balance sheet prepared by management, together with utilization and occupancy information related to the Obligated Group’s skilled nursing facilities and residential housing units, beginning with the fiscal quarter ending September 30, 2015.

A failure by the Society to comply with the Undertaking will not constitute an Event of Default under the Agreement or the Bond Indenture (although Registered Owners and beneficial owners of the Bonds will have any available remedy at law or in equity). Nevertheless, such a failure must be reported in accordance with the Rule 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.

In connection with the Society’s previous bond issuances in 2012 and 2013, it was discovered that, while the Society had been providing certain financial and operating information and notice of certain listed events to EMMA in accordance with prior undertakings, the information provided by the Society to EMMA was not linked to each of the Society’s outstanding bond issues. The Society believes that it has taken appropriate steps to ensure that the information provided to its dissemination agent is now linked to all of the Society’s outstanding bonds by CUSIP number. In addition to a failure to link disseminated financial and operating data to all of the Society’s outstanding bond issues, it was also discovered that certain of the operational data and financial covenant information required to be filed quarterly and annually pursuant to prior undertakings had not consistently been filed, or in certain cases filed in a timely manner, and that certain event notices and notices of failure to file such information had also not been filed. While the Society believed these failures and missing filings were communicated to its dissemination agent, not all of the filing deficiencies were corrected in connection with these prior bond issuances, as the Society had disclosed. The Underwriters and the Society have discussed these prior failures, as well as a plan to ensure future compliance with its disclosure obligations. As a result, a corrective action plan has been completed and confirmed by Digital Assurance Certification, LLC (“DAC”) with respect to any filing deficiencies, and the Society will undertake training and compliance for the appropriate Society employees. In addition, the Society has engaged DAC to act as its disclosure dissemination agent, effective May 19, 2015, and has replaced the Society’s dissemination agent on its prior undertakings.

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THE BONDS

General Description

The Bonds are being issued in the aggregate principal amount of $204,290,000 as fully registered bonds. The Bonds will be issued in denominations of $5,000 and any integral multiple thereof. The Bonds will be dated the date of their delivery.

The Bonds will be authenticated as set forth in the Bond Indenture. Each Bond will bear interest, at the interest rates set forth on the inside cover hereof, from the Interest Payment Date to which interest has been paid or duly provided for next preceding its date of authentication, unless (a) such date of authentication is prior to the first Interest Payment Date, in which case the Bond will bear interest from its date of issuance; or (b) such date of authentication shall be an Interest Payment Date to which interest on the Bonds has been paid in full or duly provided for, in which case such Bond will bear interest from such date of authentication; provided, however, that if, as shown by the records of the Trustee, interest on the Bonds shall be in default, Bonds issued in exchange for Bonds surrendered for transfer or exchange will bear interest from the last date to which interest has been paid in full or duly provided for on the Bonds or, if no interest has been paid or duly provided for on the Bonds, as set forth above. Each Bond will bear interest on overdue principal, until paid, at the Late Payment Rate. Interest on the Bonds will accrue on the basis of a 360 day year based on twelve 30 day months.

The Bonds will mature on the dates and in the amounts set forth on the inside cover of this Official Statement.

The principal of and interest on the Bonds will be payable in lawful money of the United States of America. Subject to the provisions described under the caption “—Book Entry System” below, principal of the Bonds will be payable at the principal corporate office of the Trustee in St. Paul, Minnesota. Payment of interest on any Interest Payment Date on any Bond will be made to the Registered Owner thereof (initially Cede & Co.) as of the close of business on the Regular Record Date immediately prior thereto and will be made by check or draft mailed on the Interest Payment Date to the Registered Owner at his or her address as it appears on the registration books maintained by the Trustee. If and to the extent that there shall be a default in the payment of the interest due on such Interest Payment Date, such defaulted interest will be paid to the Registered Owners in whose names any such Bonds are registered at the close of business on a special record date established by the Trustee for the payment of such defaulted interest. The Trustee may make payments of interest on any Bond by such alternative means as may be mutually agreed to between the Registered Owner of such Bond and the Trustee.

Subject to the provisions described under the caption “—Book Entry System” below, the Bonds may be transferred or exchanged for a like aggregate principal amount of Bonds of authorized denominations of the same series, date, interest rate and maturity. The Trustee may require the payment by any Registered Owner requesting exchange or transfer of a sum sufficient to cover any tax or other governmental charge required to be paid with respect to such exchange or transfer and of any other expenses necessarily incurred in connection with such transfer. Bonds surrendered for transfer must be duly endorsed for transfer or accompanied by an assignment duly executed by the Registered Owner or his attorney duly authorized in writing, at the principal corporate trust office of the Trustee.

The Trustee shall not be required to effect any transfer or exchange during the 15 days immediately preceding any Interest Payment Date or the date of mailing of any notice of redemption or at any time following the mailing of any such notice, if the Bond or portion thereof to be transferred or exchanged has been called for such redemption.

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If any Bond is mutilated, lost, stolen or destroyed, the Registered Owner thereof will be entitled to the issuance of a substitute Bond or payment only if, in the case of any lost, stolen or destroyed Bond, there first shall be furnished to the Authority and the Trustee evidence of such loss, theft or destruction, together with an indemnity satisfactory to the Authority. In the case of a mutilated Bond, such Bond must be surrendered to the Trustee. In the event any such Bond (except a mutilated Bond) shall have matured, instead of issuing a duplicate Bond, the Trustee may pay the same without surrender thereof.

Book-Entry System

The Bonds initially will be issued solely in book entry form to be held in the book entry only system maintained by The Depository Trust Company (“DTC”), New York, New York. So long as such book entry system is used, only DTC will receive or have the right to receive physical delivery of Bonds and, except as otherwise provided herein with respect to Beneficial Owners (as defined below), of Beneficial Ownership Interests, Beneficial Owners will not be or be considered to be, and will not have any rights as, owners or holders of the Bonds under the Bond Indenture.

The information in this section concerning DTC and DTC’s book-entry-only system has been obtained from DTC, and the Authority, the Obligated Group and the Underwriters take no responsibility for the accuracy thereof.

DTC 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 certificate will be issued for each series and maturity of the Bonds in the aggregate principal amount of each series and maturity of the Bonds and will be deposited with DTC.

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. 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 (“SEC”). More information about DTC can be found at www.dtcc.com.

Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their

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purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.

To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of 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 remain responsible for keeping accounts of their holdings on behalf of their customers.

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

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

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Authority as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Payment of principal, interest and redemption prices 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 Authority or 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, Trustee, or Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Authority or 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.

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DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to Authority or Trustee. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered.

Successor Securities Depository; Discontinuation of Book Entry System

If at any time DTC notifies the Authority that it is unwilling or unable to continue as securities depository with respect to any or all Bonds, or if at any time DTC shall no longer be registered or in good standing under the Securities Exchange Act of 1934 or other applicable statute or regulation and a successor securities depository is not appointed by the Authority within 90 days after the Authority receives notice or becomes aware of such condition, as the case may be, then the Authority shall execute and the Trustee shall authenticate and deliver certificates representing the Bonds as provided in the Bond Indenture.

The beneficial owners of the Bonds have no right to a depository for the Bonds. The Trustee may remove DTC or any successor thereto for cause at any time or for any reason at any time, and shall remove DTC as depository upon the written request of the beneficial owners of a majority of the Outstanding principal amount of Bonds. In such event, the Authority shall (a) appoint a successor securities depository, qualified to act as such under Section 17A of the Securities Exchange Act of 1934, notify the prior securities depository of the appointment of such successor securities depository and transfer one or more separate Bond certificates to such successor securities depository or (b) notify the securities depository of the availability of Bond certificates for transfer to the beneficial owners of the Bonds pursuant to direction from DTC. In such event, the Bonds shall no longer be restricted to being registered in the name of DTC, the successor securities depository, or its nominee. Neither the Authority nor the Trustee shall be responsible or liable for the determination of beneficial owners but may rely exclusively upon information provided by DTC or a successor securities depository.

The Authority may, and at the request of the Society shall, discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bonds will be printed and delivered to DTC.

NONE OF THE AUTHORITY, THE SOCIETY, THE UNDERWRITERS OR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY DIRECT PARTICIPANT, INDIRECT PARTICIPANT OR ANY BENEFICIAL OWNER OR ANY OTHER PERSON NOT SHOWN ON THE REGISTRATION BOOKS OF THE TRUSTEE AS BEING A REGISTERED OWNER WITH RESPECT TO: (A) THE BONDS; (B) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT; (C) THE TIMELY OR ULTIMATE PAYMENT BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OR REDEMPTION PRICE OF OR INTEREST ON THE BONDS; (D) THE DELIVERY BY ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY NOTICE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE BOND INDENTURE TO BE GIVEN TO REGISTERED OWNERS; (E) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF THE BONDS; OR (F) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS REGISTERED OWNER.

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Debt Service

The principal and interest payments, including the mandatory sinking fund redemption payments, on the Bonds, as well as the debt service on the other Outstanding Indebtedness of the Obligated Group, on an annual basis, will be as set forth in the table below:

Fiscal Year Series 2015A Bonds Other Debt Total Ending 12/31 Principal Interest Debt Service1 Debt Service

2015 — $3,550,116 $17,422,869 $20,972,985 2016 $ 145,000 9,983,250 26,764,904 36,893,154 2017 3,025,000 9,936,425 23,927,666 36,889,091 2018 3,110,000 9,844,400 23,961,133 36,915,533 2019 5,035,000 9,697,050 22,180,681 36,912,731 2020 5,240,000 9,491,550 22,129,237 36,860,787 2021 5,735,000 9,243,375 21,692,475 36,670,850 2022 6,225,000 8,944,375 21,500,283 36,669,658 2023 6,565,000 8,624,625 21,478,547 36,668,172 2024 6,905,000 8,287,875 21,476,172 36,669,047 2025 7,270,000 7,933,500 21,465,761 36,669,261 2026 6,740,000 7,583,250 22,345,487 36,668,737 2027 7,075,000 7,237,875 22,354,279 36,667,154 2028 4,670,000 6,944,250 25,052,759 36,667,009 2029 4,955,000 6,703,625 25,012,275 36,670,900 2030 5,240,000 6,448,750 24,979,666 36,668,416 2031 5,560,000 6,178,750 24,931,426 36,670,176 2032 5,910,000 5,892,000 24,866,766 36,668,766 2033 6,270,000 5,587,500 24,810,606 36,668,106 2034 6,635,000 5,264,875 24,769,469 36,669,344 2035 3,835,000 5,003,125 27,832,021 36,670,146 2036 3,975,000 4,807,875 27,888,388 36,671,263 2037 1,300,000 4,676,000 30,690,943 36,666,943 2038 1,480,000 4,606,500 30,582,276 36,668,776 2039 19,470,000 4,082,750 13,114,421 36,667,171 2040 490,000 3,583,750 32,595,097 36,668,847 2041 515,000 3,558,625 32,597,713 36,671,338 2042 540,000 3,532,250 32,593,906 36,666,156 2043 570,000 3,504,500 32,596,703 36,671,203 2044 34,030,000 2,639,500 — 36,669,500 2045 35,775,000 894,375 — 36,669,375 Total $204,290,000 $194,266,666 $723,613,929 $1,122,170,595

______________________ 1This debt service schedule assumes the refunding of the Refunded 2004A Bonds, the Refunded 2005 Bonds and the Refunded 2006 Bonds and includes the unrefunded portion of the Series 2005 Bonds and the Series 2006 Bonds. See “SOURCES AND USES OF FUNDS” herein. This debt service schedule uses the actual interest rate for the existing fixed rate bonds and an assumed interest rate for the existing variable rate bonds equal to the current 20-year average for SIFMA of 2.0%. The assumed interest rate for the 2011 bonds is equal to 2.35%, the fixed rate on the bonds until December 1, 2016; however, such rate was assumed to maturity for this debt service schedule. Such interest rate assumptions for the existing variable rate bonds and the 2011 bonds is not calculated, therefore, in accordance with the provisions of the Master Indenture. Variable rate credit enhancement and remarketing fees are not included and debt service on the Revolving Term Loan with U.S. Bank National Association is not included. The Society provides certain payment and completion guarantees with respect to the low income tax credit projects it manages. Such guarantees are contingent and are not included. The Society’s Medium Term Note Program currently outstanding in the principal amount of approximately $8.1 million is not required to be included in the calculation of Maximum Annual Debt Service pursuant to the Master Indenture. See the definitions of Debt Service and Medium Term Note Program under the caption “Definitions of Certain Terms” in APPENDIX C.

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REDEMPTION

Optional Redemption

The Bonds maturing on or after June 1, 2026 are subject to redemption by the Authority, at the option and direction of the Society, in whole or in part at any time on or after June 1, 2025, and if in part, in such manner as shall be designated by the Society, provided that if less than all of such Bonds of a single maturity will be selected by lot, such redemption to be at a redemption price equal to the principal amount thereof to be redeemed plus accrued interest to the redemption date, without premium.

Mandatory Sinking Fund Redemption

The Bonds maturing on June 1, 2040 (the “2040 Term Bonds”) are subject to mandatory sinking fund redemption, by lot, at a redemption price equal to 100% of the principal amount redeemed plus accrued interest to the redemption date, on June 1 in the years (each, a “2040 Sinking Fund Payment Date”) and amounts (each, a “2040 Mandatory Sinking Fund Payment”) as follows:

Year (June 1)

Principal Amount

2036 $1,615,000 2037 1,300,000 2038 1,480,000 2039 19,470,000 2040* 490,000

____________________ * Final Maturity.

The Bonds maturing on June 1, 2045 (the “2045 Term Bonds” and together with the 2040 Term Bonds, the “Term Bonds”) are subject to mandatory sinking fund redemption, by lot, at a redemption price equal to 100% of the principal amount redeemed plus accrued interest to the redemption date, on June 1 in the years (each, a “2045 Sinking Fund Payment Date” and together with the 2040 Sinking Fund Payment Date, a “Sinking Fund Payment Date”) and amounts (each, a “2045 Mandatory Sinking Fund Payment” and together with the 2040 Mandatory Sinking Fund Payment, a “Mandatory Sinking Fund Payment”) as follows:

Year (June 1)

Principal Amount

2041 $515,000 2042 540,000 2043 570,000 2044 34,030,000 2045* 35,775,000

____________________ * Final Maturity.

The Trustee shall select by lot and call for redemption from the respective Term Bonds to be redeemed on each respective Sinking Fund Payment Date the amounts specified above, and the Term Bonds selected by the Trustee shall become due and payable on such date. The Society may reduce the

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amount of any Mandatory Sinking Fund Payment payable on any Sinking Fund Payment Date by an amount equal to the principal amount of the applicable Term Bonds then to be redeemed on such Sinking Fund Payment Date that shall be surrendered by the Society to the Trustee uncanceled; provided that the Society shall have surrendered such respective Term Bonds to the Trustee not less than 60 days prior to such respective Sinking Fund Payment Date, together with an Officer’s Certificate stating its election to use such Term Bonds for such purpose, and stating how many of such Term Bonds shall be used as a credit on any particular subsequent Sinking Fund Payment Date. In such case, the Trustee shall reduce the amount of respective Term Bonds to be redeemed on such Sinking Fund Payment Date by the amount of such Term Bonds so surrendered and designated by the Society. In case of the failure of the Society, at or before the time required above, to present such Officer’s Certificate and to surrender such Term Bonds to the Trustee, the Society shall not be permitted to make any such reduction in the amount of the Mandatory Sinking Fund Payment payable on such Sinking Fund Payment Date, and the Trustee shall make no reduction in the amount of the Term Bonds to be redeemed on such Sinking Fund Payment Date.

Extraordinary Redemption

The Bonds are subject to redemption by the Authority, at the option of the Society, on any date for which timely notice of redemption can be given, in whole at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date, (a) if as a result of any changes in the Constitution of the State or the Constitution of the United States of America or of legislative or administrative action (whether state or federal) or by final decree, judgment or order of any court or administrative body (whether state or federal) entered after the contest thereof by the Society in good faith, the Agreement shall have become void or unenforceable or impossible to perform in accordance with the intent and purposes of the parties as expressed in the Agreement, or (b) unreasonable burdens or excessive liabilities shall have been imposed on the Society in respect to the Projects, including, without limitation, federal, state or other ad valorem, property, income or other taxes not being imposed on the date of the Agreement, which in the sole judgment of the Society render the continued operation of the Projects uneconomic.

To exercise such option, the Society must, within 60 days following the event authorizing such redemption, give written notice to the Authority and to the Trustee, and must specify therein the date of redeeming the Bonds, which date shall be not less than 50 days nor more than 90 days from the date such notice is mailed. The redemption price in such event is the principal amount of the Bonds being redeemed plus accrued interest to the redemption date, without premium.

The Bonds are also subject to redemption by the Authority, in whole at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date upon a declaration of acceleration of the Bonds by the Trustee pursuant to the Bond Indenture following an Event of Default.

Notice of Redemption

Notice of the call for any redemption, identifying the Bonds or portions thereof to be redeemed, shall be given by the Trustee by mailing a copy of the redemption notice by first class mail at least 30 days and not more than 45 days prior to the date fixed for redemption to the Authority and the Registered Owner of each Bond to be redeemed in whole or in part at the address shown on the registration books. All official notices of redemption shall be dated and shall state: (a) the redemption date; (b) the redemption price; (c) if less than all Outstanding Bonds are to be redeemed, the identification by series, designation, letters, numbers or other distinguishing marks (and, in the case of partial redemption, the respective principal amounts) of the Bonds to be redeemed, plus (i) the CUSIP numbers, if any, of all Bonds being redeemed; (ii) the date of issue of the Bonds as originally issued; (iii) the rate of interest borne by each Bond being redeemed; (iv) the maturity date of each Bond being redeemed; and (v) any

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other descriptive information needed to identify accurately the Bonds being redeemed; (d) that on the redemption date the redemption price will become due and payable upon each such Bond or portion thereof called for redemption, and that interest thereon shall cease to accrue from and after said date; and (e) the place where such Bonds are to be surrendered for payment of the redemption price, which place of payment shall be the principal corporate trust office of the Trustee.

Failure to receive notice by mailing or any defect in that notice regarding any Bond, however, shall not affect the validity of the proceedings for the redemption of any other Bond for which proper notice of redemption was given. Notices may be sent out regardless of whether any money has been deposited for redemption of the Bonds and such notices shall state that, notwithstanding anything else in the notice, no redemption shall occur unless sufficient moneys to redeem the Bonds called for redemption are on deposit with the Trustee on the date fixed for redemption. No further interest shall accrue on the principal of any Bonds duly called for redemption after the redemption date if payment therefor has been duly provided for, and such Bonds will no longer be considered to be Outstanding under the Bond Indenture.

Purchase of Bonds in Lieu of Redemption

By their acceptance of the Bonds, the Registered Owners irrevocably grant to the Society, and any assigns of the Society with respect to such right, the option to purchase, at any time and from time to time, any Bond which is redeemable pursuant to the optional redemption or extraordinary optional redemption provisions of the Bond Indenture at a purchase price equal to the redemption price therefor. To exercise such option, the Society shall give the Trustee a written request exercising such option within the time period specified in the Bond Indenture as though such written request were a direction of the Society for redemption, and the Trustee shall thereupon give the Registered Owners of the Bonds to be purchased notice of such purchase in the manner specified in the Bond Indenture as though such purchase were a redemption and the purchase of such Bonds shall be mandatory and enforceable against the Registered Owners. On the date fixed for purchase pursuant to any exercise of such option, the Society shall pay the purchase price of the Bonds then being purchased to the Trustee in immediately available funds, and the Trustee shall pay the same to the sellers of such Bonds against delivery thereof. Following such purchase, the Trustee shall cause such Bonds to be registered in the name of the Society or its nominee and shall deliver them to the Society or its nominee. In the case of the purchase of less than all of the Bonds, the particular Bonds to be purchased shall be selected in accordance with the Bond Indenture as though such purchase were a redemption. No such purchase of the Bonds will operate to extinguish the indebtedness evidenced thereby unless the Society shall expressly so elect. Notwithstanding the foregoing, no such purchase shall be made unless the Society shall have delivered to the Trustee concurrently therewith (a) an opinion of nationally recognized bankruptcy counsel to the effect that such purchase will not constitute an avoidable preference under Section 547 of the United States Bankruptcy Code in the event that the Society should become a debtor in proceedings commenced thereunder; and (b) an opinion of nationally recognized Bond Counsel to the effect that such purchase will not result in the inclusion of interest on the Bonds in gross income for federal income tax purposes.

SECURITY AND SOURCES OF PAYMENT

General

The obligation of the Society to make payments under the Agreement sufficient to pay when due the principal of and interest on the Bonds, is a general obligation of the Society. The obligation of the Members of the Obligated Group to make the payments on Obligation No. 47 is a general obligation of each Member, jointly and severally, supported by a pledge of the Gross Revenues of the Members of the Obligated Group.

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THE BONDS AND ALL OBLIGATIONS OF THE AUTHORITY UNDER OR WITH RESPECT TO THE BONDS, THE BOND INDENTURE AND THE AGREEMENT SHALL BE AND REMAIN SPECIAL, LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY AND ONLY OUT OF THE SECURITY SPECIFICALLY PLEDGED THERETO BY THE SOCIETY AND THE OTHER MEMBERS OF THE OBLIGATED GROUP. NO RECOURSE SHALL BE HAD AGAINST ANY PROPERTIES, FUNDS OR ASSETS OF THE AUTHORITY (OTHER THAN THE SECURITY SPECIFICALLY PLEDGED THERETO BY THE SOCIETY AND THE OTHER MEMBERS OF THE OBLIGATED GROUP) OR THE STATE FOR THE PAYMENT OF ANY AMOUNTS OWING UNDER OR WITH RESPECT TO THE BONDS, THE BOND INDENTURE, THE AGREEMENT OR ANY OBLIGATIONS OF THE AUTHORITY UNDER OR WITH RESPECT TO THE BONDS. NONE OF THE BONDS, THE BOND INDENTURE OR THE AGREEMENT NOR THE OBLIGATIONS OF THE AUTHORITY UNDER OR WITH RESPECT THERETO, CONSTITUTE OR CREATE AN INDEBTEDNESS OF THE AUTHORITY OR THE STATE WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION. THE REGISTERED OWNERS OF THE BONDS SHALL HAVE NO RIGHT TO COMPEL THE PAYMENT OF ANY AMOUNTS OWING UNDER OR WITH RESPECT TO THE BONDS, THE BOND INDENTURE OR THE AGREEMENT OUT OF ANY TAX REVENUES, FUNDS OR OTHER ASSETS OF THE AUTHORITY OR THE STATE. THE AUTHORITY HAS NO TAXING POWER.

Moreover, the Bonds shall not constitute or become an indebtedness, debt, liability or general charge against the credit or taxing power of any other state, city, town, county, authority or agency of any of them, or of any other political subdivision which held a public hearing and approved the issuance of the Bonds by the Authority.

Pursuant to statute, the State has pledged not to limit, alter, restrict or impair certain rights of the Authority, including the right to establish, charge and collect rates, fees and other charges necessary to produce sufficient revenues to fulfill the terms of any agreements made with the Registered Owners of the Bonds and with the parties who may enter into contracts with the Authority. Further, the State has agreed pursuant to statute that it will not impair in any way the rights or remedies of the Registered Owners of the Bonds until the Bonds are fully paid.

The Society has the ability to incur future Indebtedness which may be on a parity with its payment obligations under the Agreement securing the Bonds, and the Members of the Obligated Group have the ability to incur future Indebtedness backed by Obligations on a parity with Obligation No. 47. See the discussion below under the caption “SECURITY AND SOURCES OF PAYMENT–The Master Indenture—Additional Indebtedness” and under the caption “THE MASTER INDENTURE—Limitations on Indebtedness” in APPENDIX C for a description of the circumstances under which the Society and the other Members of the Obligated Group can incur such Indebtedness. See also “BONDHOLDERS’ RISKS—Security for the Bonds; Security for Other Debt” and “THE MASTER INDENTURE—Limitation on Creation of Liens” in APPENDIX C for a discussion of existing mortgages with respect to certain of the Society’s facilities. The Bonds and Obligation No. 47 will not be secured by a mortgage. The Members of the Obligated Group have covenanted in the Master Indenture not to create any new mortgages on any property owned by any Member other than to secure certain non-recourse debt, unless such mortgages secure all Obligations on a parity basis.

The Bond Indenture

The Bonds are issued pursuant to and secured by the Bond Indenture. Pursuant to the Bond Indenture, the Trust Estate consists of (a) all right, title and interest of the Authority in and to the Agreement (including all extensions and renewals of the term thereof, if any), including, but not limited to, the present and continuing right to make claim for, collect, receive and receipt for any of the sums,

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amounts, income, revenues, issues and profits and any other sums of money payable or receivable under the Agreement (except for the Unassigned Rights as defined in APPENDIX C hereto), (b) all moneys, assets and securities from time to time held by the Trustee under the terms of the Bond Indenture, except for moneys deposited with or paid to the Trustee for the redemption or other payment of or as a reserve for specific Bonds, which moneys shall be held in trust for the Registered Owners of such specific Bonds only and except for moneys in the Rebate Fund, and (c) Obligation No. 47; and all proceeds of any of the foregoing.

The Reserve Fund

The Reserve Fund will initially be funded in an amount equal to $16,686,871 to serve as security for the payment of principal of and interest on the Bonds. See “DEFINITIONS OF CERTAIN TERMS” in APPENDIX C for the definition of “Reserve Fund Requirement” and “THE BOND INDENTURE—Reserve Fund” in APPENDIX C for a description of the funding, permitted use and replenishment of the Reserve Fund.

The Master Indenture

Joint and Several Obligations. Under the Master Indenture, each Member of the Obligated Group is authorized to incur (with the consent of the Obligated Group Representative), on behalf of itself and the other Members of the Obligated Group, Obligations to evidence or secure Indebtedness. On the date of issuance of the Bonds, the Society, the Foundation and HCBS, LLC will be the Members of the Obligated Group. The Society is the Obligated Group Representative. All Members of the Obligated Group are jointly and severally liable with respect to the payment of each Obligation incurred under the Master Indenture. All Members of the Obligated Group are required to make payments on Obligation No. 47 in amounts sufficient to pay when due the principal of and interest on the Bonds, although credit is granted on those payments for payments made by the Society under the Agreement. Obligation No. 47 will be issued to the Trustee. Subject to certain conditions specified in the Master Indenture, other entities may become Members of the Obligated Group or, once Members, may withdraw from the Obligated Group; provided that neither the Society nor the Foundation may withdraw from the Obligated Group. For a more detailed discussion of entry to or withdrawal from the Obligated Group, see “THE MASTER INDENTURE—Parties Becoming Members of the Obligated Group” and “—Withdrawal From the Obligated Group,” and “ADDITIONAL RESTRICTIVE COVENANTS CONTAINED IN SUPPLEMENTAL INDENTURES AND/OR BANK DOCUMENTS” in APPENDIX C. The joint and several obligations of the Obligated Group Members are subject to possible limitations and uncertainties as to enforceability. See “BONDHOLDERS’ RISKS—Certain Matters Relating to the Enforceability of the Master Indenture” herein.

Pledge of Gross Revenues. Pursuant to the Master Indenture, the Members of the Obligated Group have pledged and granted a security interest in their Gross Revenues to the Master Trustee as security for payments on the Obligations. The pledge and security interest in the Gross Revenues is subject to certain limitations as to effectiveness and enforceability and to Permitted Liens. See “DEFINITIONS OF CERTAIN TERMS” in APPENDIX C for the definition of “Gross Revenues” and “THE MASTER INDENTURE—Limitations on Creation of Liens” in APPENDIX C for a description of the “Permitted Liens” under the Master Indenture. The security interest in the Gross Revenues may be perfected only in the rights to receive certain accounts receivable at the time of any Event of Default, but is prior to any other security interest (other than Permitted Liens). See “BONDHOLDERS’ RISKS—Enforceability of Remedies, Bankruptcy, Limitations on Security Interests and Other Matters Relating to the Security for the Bonds” herein. The Master Indenture does not limit the ability of the Members of the Obligated Group to apply Gross Revenues as received to pay operation and maintenance expenses or for any other lawful purpose.

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Additional Indebtedness. The Obligated Group may incur additional Indebtedness including additional Obligations under the Master Indenture; provided that the Obligated Group meets certain financial tests and other requirements prescribed by the Master Indenture. See “THE MASTER INDENTURE—Limitations on Indebtedness” in APPENDIX C. Additional Obligations are secured under the Master Indenture on a parity with Obligation No. 47 with respect to the Gross Revenues. As a condition to the issuance of each additional Obligation under the Master Indenture, the Obligated Group Representative must certify that there is no Event of Default under the Master Indenture.

All of the currently Outstanding Indebtedness of the Society is also secured by Obligations issued by the Obligated Group under the Master Indenture. See “BONDHOLDERS’ RISKS – Obligated Group Debt; Ability to Incur Future Indebtedness” herein.

Income Available for Debt Service and Other Covenants. Each Member of the Obligated Group has agreed to manage its business such that Income Available for Debt Service of the Obligated Group is for each Fiscal Year at least 115% of Maximum Annual Debt Service. If such required ratio is not maintained, the Society (as Obligated Group Representative) is required to retain a Consultant to make recommendations to achieve the required ratio. Each Member of the Obligated Group has agreed to implement such recommendations to the extent practicable and operationally feasible. See “THE MASTER INDENTURE—Income Available for Debt Service” in APPENDIX C. The Master Indenture also contains covenants limiting the sale, lease and disposition of property, and limiting the consolidation or merger of Members of the Obligated Group with other entities. Several Supplements to the Master Indenture contain covenants relating to the incurrence of obligations pursuant to swap and other Financial Products Agreements by the Obligated Group, as well as a covenant requiring the Obligated Group to maintain a debt to capitalization ratio at or below 60% in order to incur Additional Indebtedness. See “ADDITIONAL RESTRICTIVE COVENANTS CONTAINED IN SUPPLEMENTAL INDENTURES AND/OR BANK DOCUMENTS” in APPENDIX C.

The Members of the Obligated Group have, from time to time, entered into Supplements to the Master Indenture or other agreements that contain certain supplemental covenants and additional provisions benefiting certain credit enhancers. These covenants and additional provisions described in APPENDIX C under the caption “ADDITIONAL RESTRICTIVE COVENANTS CONTAINED IN SUPPLEMENTAL INDENTURES AND/OR BANK DOCUMENTS,” are for the benefit of the affected credit enhancers only, and do not benefit the holders of the Bonds. A default under these covenants and additional provisions, however, may cause a default and acceleration of Obligation No. 47, which may in turn cause a default and acceleration of the Bonds.

Mortgages. The Members of the Obligated Group have covenanted in the Master Indenture not to create any new mortgages on any property owned by any Member, unless such mortgages secure all Obligations on a parity basis. The Master Indenture permits, however, certain mortgages that were existing on the date of execution of the Master Indenture, provided that such mortgage may not be increased or modified to apply to any property of any Obligated Group Member not subject to the mortgage on such date unless the mortgage as so increased or modified otherwise qualifies as a Permitted Lien under the Master Indenture. See “THE MASTER INDENTURE—Limitations on Creation of Liens” in APPENDIX C. As of December 31, 2014, the Society had such outstanding mortgages on three facilities to secure debt instruments totaling approximately $2,517,000 in aggregate principal amount outstanding. The Master Indenture also permits the Members of the Obligated Group to grant non-recourse mortgages on certain designated properties. See “THE MASTER INDENTURE—Limitations on Creation of Liens” in APPENDIX C.

Proposed Amendments to the Master Indenture; Deemed Consent of Series 2015A Bondholders. The Society is in the process of securing consents from the registered owners of the

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requisite aggregate principal amount of Obligations to permit the amendment of the Master Indenture to modify the definition and treatment of Balloon Indebtedness under the Master Indenture as described below (the “Amendment”).

The Master Indenture provisions relating to Balloon Indebtedness currently read as follows:

For the purposes of the definition of “Debt Service,” if the principal payment with respect to any particular Long Term Indebtedness in any one Fiscal Year of the Obligated Group shall exceed by 20% the average annual principal payments made on account of that particular Indebtedness, Debt Service for such larger principal payment (the “Balloon Payment”) for the period under consideration shall be construed as follows: (i) if the Balloon Payment matures outside the period under consideration, the calculation of Debt Service for the Balloon Payment shall assume level debt service for the time remaining until the maturity of the Balloon Payment for the Indebtedness of which the Balloon Payment is a part, using either (A) the actual interest rate or (B) if the actual interest rate is variable and the period under consideration is in the future, the higher of (1) the highest variable interest rate paid by any Obligated Group Member over the past 24 months on variable rate indebtedness of similar maturity and creditworthiness as that being incurred, plus 50 basis points, or (2) the highest variable interest rate over the past 24 months for variable rate indebtedness of similar maturity and creditworthiness according to the BMA Index (or such other index as is acceptable to the Master Trustee), plus 50 basis points; or (ii) if the Balloon Payment matures within the period under consideration and would become a current liability on the audited balance sheet of any Member of the Obligated Group, the full amount of the Balloon Payment shall be included in the calculation of Debt Service; provided, in either case, that the amount of the Balloon Payment shall be reduced by the amount of any Lender Commitment or any irrevocable escrow established by any Member of the Obligated Group with a bank pledged to the payment of the Balloon Payment; and provided further that if the Balloon Payment is in connection with the Society’s Medium Term Note Program, the Balloon Payment shall be reduced by the amount remaining after subtracting (x) the minimum sum as calculated under clause (a) of the definition of Days Cash on Hand above necessary to reach 90 Days Cash on Hand, from (y) the total sum as calculated under clause (a) of the definition of Days Cash on Hand above (both determined on the basis of the Obligated Group’s most recently available audited Financial Statements).

The Master Indenture provisions relating to Balloon Indebtedness, as amended, shall read as follows:

For the purposes of the definition of “Debt Service,” (a) it shall be assumed, at the option of the Obligated Group Representative, that the principal of Balloon Indebtedness is amortized from the date of calculation of Debt Service over a term of 30 years with level annual debt service payments and that the interest rate thereon is a fixed rate equal to the average Thirty-Year Revenue Bond Index published by The Bond Buyer for the six-month period immediately preceding the date of calculation; provided, however, if the Obligated Group is using a Lender Commitment to reduce the amount of a Balloon Payment in this clause (a), the Lender Commitment shall be included in Long-Term Indebtedness for purposes of this definition only; provided, further, that if the Balloon Payment is in connection with the Society’s Medium Term Note Program, the Balloon Payment shall be reduced by the amount remaining after subtracting (x) the minimum sum as calculated under clause (a) of the definition of Days Cash on Hand necessary to reach 90 Days Cash on Hand, from (y) the total sum as calculated under clause (a) of the definition of Days Cash on Hand (both determined on the basis of the Obligated Group’s most recently available audited Financial Statements).” “Balloon Indebtedness” means Long-Term Indebtedness 25% or more of the original principal of which matures or is subject to mandatory redemption or purchase within any period of twelve consecutive months, which original principal amount is not required by the documents governing such Indebtedness to be amortized prior to the commencement of such twelve month period in amounts such that, following such amortization, the

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principal amount maturing during such twelve month period will be less than 25% of such original principal amount.

By purchasing the Bonds, the Bondholders shall be deemed to have irrevocably consented to the Amendment to the Master Indenture and to have authorized the Bond Trustee (as holder of Obligation No. 47) to consent to the Amendment.

Contribution Agreements

In connection with the issuance of the Bonds, the Society, as Obligated Group Representative, expects to enter into contribution agreements with certain affiliates of HCBS, LLC whereby such entities will agree to fund any payment obligations under the Master Indenture at the place, on the dates and in the manner provided in the Master Indenture, upon receipt of any demand therefor from the Obligated Group Representative and the Obligated Group will agree to assist such affiliates in paying indebtedness of such affiliates, provided that such affiliate indebtedness has been approved in writing by the Obligated Group Representative and such payment is made in compliance with the provisions of the Master Indenture. HCBS, LLC and such affiliates have covenanted not to terminate the contribution agreements for so long as the Bonds are outstanding. See “CONTRIBUTION AGREEMENTS” in Appendix C for a description of such agreements.

SOURCES AND USES OF FUNDS

Proceeds from the sale of the Bonds will be used, together with other moneys available to the Society, to (a) finance or refinance, or reimburse the Society for, the costs of the acquisition, construction, improvement and equipping of certain home health agencies, skilled nursing facilities and other health care and senior living facilities in various locations; (b) refund the outstanding principal amount of the Colorado Health Facilities Authority Health Facilities Revenue Bonds (The Evangelical Lutheran Good Samaritan Society Project), Series 2004A, issued on behalf of the Society (the “Refunded 2004A Bonds”), (c) refund $20,385,000 in aggregate principal amount of the Colorado Health Facilities Authority Health Facilities Revenue Bonds (The Evangelical Lutheran Good Samaritan Society Project) Series 2005, issued on behalf of the Society (the “Refunded 2005 Bonds”), (d) refund $55,390,000 in aggregate principal amount of the Colorado Health Facilities Authority Health Facilities Revenue Bonds (The Evangelical Lutheran Good Samaritan Society Project) Series 2006, issued on behalf of the Society (the “Refunded 2006 Bonds”), (e) fund the Reserve Fund, and (f) pay certain costs of issuance associated with the Bonds.

The estimated uses of proceeds of the Bonds are as follows:

Sources of Funds

Bond Par Amount ................................................................................................. $204,290,000Plus Original Issue Premium ................................................................................ 14,755,391Society Funds ....................................................................................................... 15,040,610

TOTAL .............................................................................................................. $234,086,001 Uses of Funds

Deposit to Project Fund ........................................................................................ $55,139,174Refund the Refunded 2004A Bonds ..................................................................... 24,290,500Refund the Refunded 2005 Bonds ........................................................................ 21,387,403Refund the Refunded 2006 Bonds ........................................................................ 58,177,450Repayment of Line of Credit ................................................................................ 55,800,000Deposit to the Reserve Fund ................................................................................. 16,686,872Costs of Issuance, Including Underwriters’ Discount .......................................... 2,604,602

TOTAL .............................................................................................................. $234,086,001

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Bond proceeds and other amounts available therefor will be deposited on the date of issuance of the Bonds with the bond trustee for the Refunded 2004A Bonds pursuant to an escrow agreement and will be used to redeem the Refunded 2004A Bonds on or about 30 days after the date of issuance of the Bonds, at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date.

Bond proceeds and other amounts available therefor will be deposited on the date of issuance of the Bonds with the bond trustee for the Refunded 2005 Bonds pursuant to an escrow agreement and will be held and invested in escrow to June 1, 2016, the first optional call date on which the Refunded 2005 Bonds are permitted to be redeemed (the “2005 Escrow Period”). Amounts on deposit under the escrow agreement will be used to pay the principal of and interest on the Refunded 2005 Bonds during the 2005 Escrow Period and will be used on June 1, 2016, to redeem the Refunded 2005 Bonds at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date.

Bond proceeds and other amounts available therefor will be deposited on the date of issuance of the Bonds with the bond trustee for the Refunded 2006 Bonds pursuant to an escrow agreement and will be held and invested in escrow to June 1, 2016, the first optional call date on which the Refunded 2006 Bonds are permitted to be redeemed (the “2006 Escrow Period”). Amounts on deposit under the escrow agreement will be used to pay the principal of and interest on the Refunded 2006 Bonds during the 2006 Escrow Period and will be used on June 1, 2016, to redeem the Refunded 2006 Bonds at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date.

The accuracy of the mathematical computations of the adequacy of the maturing principal of and interest earned on the escrow securities, together with other available funds, held in the respective escrow funds to provide for the defeasance of the Refunded 2005 Bonds and the Refunded 2006 Bonds will be verified by CliftonLarsonAllen LLP, certified public accountants.

ENFORCEMENT OF REMEDIES

The rights of the Registered Owners of the Bonds and the enforceability of the Bonds, the Agreement, the Bond Indenture, the Master Indenture, the Contribution Agreements and Obligation No. 47 may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors’ rights heretofore or hereafter enacted to the extent constitutionally applicable. The enforcement thereof may also be subject to and limited by general equity principles and the exercise of judicial discretion in appropriate cases. See also the discussion of enforceability included under the caption “BONDHOLDERS’ RISKS” above.

TAX MATTERS

General Matters

In the opinion of Kutak Rock LLP, Bond Counsel, under existing laws, regulations, rulings and judicial decisions, interest on the Bonds is excludable from gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax. The opinion described in the preceding sentence assumes the accuracy of certain representations and compliance by the Authority, the Society and the Members of the Obligated Group with covenants designed to satisfy the requirements of the Code that must be met subsequent to the issuance of the Bonds. Failure to comply with such covenants could cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The Authority, the Society and the Members of the Obligated Group have covenanted to comply with such requirements. Bond Counsel has expressed no opinion regarding other federal tax consequences arising with respect to the Bonds.

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Notwithstanding Bond Counsel’s opinion that interest on the Bonds is not a specific preference item for purposes of the federal alternative minimum tax, such interest will be included in adjusted current earnings of certain corporations, and such corporations are required to include in the calculation of alternative minimum taxable income 75 percent of the excess of such corporations’ adjusted current earnings over their alternative minimum taxable income (determined without regard to such adjustment and prior to reduction for certain net operating losses).

The accrual or receipt of interest on the Bonds may otherwise affect the federal income tax liability of the owners of the Bonds. The extent of these other tax consequences will depend on such owner’s particular tax status and other items of income or deduction. Bond Counsel has expressed no opinion regarding any such consequences. Purchasers of the Bonds, particularly purchasers that are corporations (including S corporations and foreign corporations operating branches in the United States of America), property or casualty insurance companies, banks, thrifts or other financial institutions, certain recipients of social security or railroad retirement benefits, taxpayers entitled to claim the earned income credit, taxpayers entitled to claim the refundable credit in Section 36B of the Code for coverage under a qualified health plan or taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations, should consult their tax advisors as to the tax consequences of purchasing or owning the Bonds.

Bond Counsel is also of the opinion that the Bonds, the transfer thereof and the income therefrom, including any profit made on the sale thereof, is exempt from all taxation and assessment in the State of Colorado under existing laws of the State of Colorado. Bond Counsel has expressed no opinion regarding other tax consequences arising with respect to the Bonds under the laws of the State of Colorado or any other state or jurisdiction.

Original Issue Premium

The Bonds that have an original yield below their respective interest rates, as shown on the inside cover of this Official Statement (collectively, the “Premium Tax-Exempt Bonds”), are being sold at a premium. An amount equal to the excess of the issue price of a Premium Tax-Exempt Bond over its stated redemption price at maturity constitutes premium on such Premium Tax-Exempt Bond. A purchaser of a Premium Tax-Exempt Bond must amortize any premium over such Premium Tax-Exempt Bond’s term using constant yield principles, based on the purchaser’s yield to maturity (or, in the case of Premium Tax-Exempt Bonds callable prior to their maturity, generally by amortizing the premium to the call date, based on the purchaser’s yield to the call date and giving effect to any call premium). As premium is amortized, the amount of the amortization offsets a corresponding amount of interest for the period, and the purchaser’s basis in such Premium Tax-Exempt Bond is reduced by a corresponding amount resulting in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes upon a sale or disposition of such Premium Tax-Exempt Bond prior to its maturity. Even though the purchaser’s basis may be reduced, no federal income tax deduction is allowed. Purchasers of the Premium Tax-Exempt Bonds should consult their tax advisors with respect to the determination and treatment of premium for federal income tax purposes and with respect to the state and local tax consequences of owning a Premium Tax-Exempt Bond.

Backup Withholding

As a result of the enactment of the Tax Increase Prevention and Reconciliation Act of 2005, interest on tax-exempt obligations such as the Bonds is subject to information reporting in a manner similar to interest paid on taxable obligations. Backup withholding may be imposed on payments to any owner of the Bonds that fails to provide certain required information including an accurate taxpayer identification number to any person required to collect such information pursuant to Section 6049 of the

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Code. The reporting requirement does not in and of itself affect or alter the excludability of interest on the Bonds from gross income for federal income tax purposes or any other federal tax consequence of purchasing, holding or selling tax-exempt obligations.

Changes in Federal and State Tax Law

From time to time, there are legislative proposals in the Congress and in the states that, if enacted, could alter or amend the federal and state tax matters referred to under this heading “TAX MATTERS” or adversely affect the market value of the Bonds. It cannot be predicted whether or in what form any such proposal 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 of the 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 Bonds or the market value thereof would be impacted thereby. Purchasers of the Bonds should consult their tax advisors regarding any pending or proposed legislation, regulatory initiatives or litigation. The opinions expressed by Bond Counsel are based on existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the Bonds, and Bond Counsel has expressed no opinion as of any date subsequent thereto or with respect to any pending legislation, regulatory initiatives or litigation.

PROSPECTIVE PURCHASERS OF THE BONDS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS PRIOR TO ANY PURCHASE OF THE BONDS AS TO THE IMPACT OF THE CODE UPON THEIR ACQUISITION, HOLDING OR DISPOSITION OF THE BONDS.

THE UNDERWRITERS

Citigroup Global Markets Inc. and Herbert J. Sims & Co. (the “Underwriters”) have agreed, subject to the terms of a Bond Purchase Agreement among the Members of the Obligated Group, the Authority and the Underwriters, to purchase from the Authority the Bonds offered hereby. If the Underwriters purchase any of the Bonds, they must purchase all of the Bonds.

The Underwriters have agreed to purchase the Bonds at a price of $217,247,639, with no accrued interest. The difference between the par amount of the Bonds and the purchase price is equal to the original issue premium of $14,755,391 and the Underwriters’ discount of $1,797,752. The Bonds are being offered for sale to the public at the initial prices or yields stated on the inside cover of this Official Statement. Concessions from the initial prices may be allowed to selected dealers and special purchasers. The initial prices and yields are subject to change after the date hereof.

The Members of the Obligated Group have agreed to indemnify the Authority and the Underwriters against certain civil liabilities, including certain liabilities under the federal securities laws.

Citigroup Global Markets Inc., an underwriter of the Bonds, has entered into a retail distribution agreement with each of TMC Bonds L.L.C. (“TMC”) and UBS Financial Services Inc. (“UBSFS”). Under these distribution agreements, Citigroup Global Markets Inc. may distribute municipal securities to retail investors through the financial advisor network of UBSFS and the electronic primary offering platform of TMC. As part of this arrangement, Citigroup Global Markets Inc. may compensate TMC (and TMC may compensate its electronic platform member firms) and UBSFS for their selling efforts with respect to the Bonds.

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RATINGS

Standard & Poor’s Ratings Services, Fitch Ratings and Moody’s Investors Service have assigned their municipal bond ratings of “BBB+,” “A-” and “Baa1,” respectively, to the Bonds. Standard & Poor’s Ratings Services has included a “stable outlook” with its rating, Fitch Ratings has included a “stable outlook” with its rating and Moody’s Investors Service has included a “stable outlook” with its rating. Such ratings reflect only the views of such ratings organizations and are based on the creditworthiness of the Obligated Group; an explanation of the significance of the ratings may be obtained from each of them. A securities rating is not a recommendation to buy, sell or hold securities, and there is no assurance that the ratings will continue for any given period of time or that the ratings will not be revised downward, suspended or withdrawn entirely by such rating agencies, if, in their respective judgments, circumstances so warrant. Any such downward revision, suspension or withdrawal of either rating will have an adverse effect on the market price or marketability of the Bonds.

APPROVAL OF LEGAL MATTERS

Legal matters incident to the authorization and issuance of the Bonds are subject to the approving opinion of Kutak Rock LLP, Bond Counsel. Certain legal matters will be passed upon (a) for the Society and the Obligated Group by its special counsel, Stinson Leonard Street LLP, Minneapolis, Minnesota; (b) for the Authority by its general counsel, Ballard Spahr LLP; and (c) for the Underwriters by their special counsel Dentons US LLP. Kutak Rock LLP has also been retained to advise the Obligated Group concerning, and has assisted in, the preparation of this Official Statement.

The various legal opinions to be delivered concurrently with the delivery of the Bonds express the professional judgment of the attorneys rendering the opinions as to the legal issues expressly addressed therein. By rendering a legal opinion, the opinion giver does not become an insurer or guarantor of the result indicated by that expression of professional judgment, of the transaction on which the opinion is rendered, or of the future performance of parties to the transaction. Nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction.

LITIGATION

The Authority

There is not pending or, to the knowledge of the Authority, threatened, any material litigation against the Authority questioning or affecting the validity of the Bonds or the proceedings or authority under which they are issued.

The Society and the Obligated Group

There is not pending or, to the knowledge of the Society or the other Members of the Obligated Group, threatened, any material litigation against the Society or the other Members of the Obligated Group, other than ordinary routine litigation consistent with the kind of business conducted by the Society and such Members which, if determined adversely to the Society or such Member, would individually or in the aggregate have a material adverse effect on the financial position or results of operations of the Society and the Obligated Group.

AUDITORS

The consolidated financial statements of the Society and its affiliates included in APPENDIX B hereto, as of and for the years ended December 31, 2014, and December 31, 2013, have been audited by

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CliftonLarsonAllen LLP, certified public accountants, as stated in their report with respect thereto. Also included in this Official Statement and Appendix A is certain unaudited consolidated financial information of the Obligated Group as of and for the three months ended March 31, 2014 and 2015. The results of operations for the period ended March 31, 2015 should not be considered to be indicative of the results for the fiscal year ending December 31, 2015.

ACCURACY AND COMPLETENESS OF OFFICIAL STATEMENT

Any statements made in this Official Statement involving matters of opinion or estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the matters involving opinions are true or that any of the estimates will be realized.

The information contained in this Official Statement has been supplied by various sources believed to be reliable. The Authority furnished only the information contained under the headings “SUMMARY STATEMENT—The Authority,” “THE AUTHORITY” and “LITIGATION—The Authority” and, except for such information, makes no representation as to the adequacy, completeness or accuracy of this Official Statement or the information contained herein. In addition, (a) information about the Society and the Obligated Group and the sources and uses of funds has been supplied by the Society, as Obligated Group Representative; (b) information about the prices, yields and optional redemption dates for the Bonds and under the caption “THE UNDERWRITERS” has been supplied by the Underwriters; and (c) information under the captions “THE BONDS” (except under the subheading “Book-Entry System”), “REDEMPTION,” “SECURITY AND SOURCES OF PAYMENT” and “TAX MATTERS” and the information in Appendices C, D and E have been supplied by Kutak Rock LLP, as Bond Counsel. Kutak Rock LLP has prepared this Official Statement from the information provided, without independently verifying the information, and has circulated this Official Statement to the various sources of the information for comment prior to printing. The Society, as Obligated Group Representative, has delivered to the Underwriters a certificate representing that the information in this Official Statement about the Society and the Obligated Group does not contain any untrue statement of a material fact and does not omit to state any material fact necessary to make the statements contained herein not misleading. No representation is made as to any change in the affairs of the Society or the Obligated Group since the date of this Official Statement.

MISCELLANEOUS

The references herein and in APPENDIX C to the Master Indenture, the Bond Indenture, the Agreement, the Continuing Disclosure Undertaking and the Contribution Agreements are brief outlines of certain provisions thereof. Such outlines do not purport to be complete; for full and complete statements of the provisions thereof reference is made to each such document. Copies of such documents will be on file at the principal office of the Trustee following delivery of the Bonds.

The attached Appendices A, B, C, D and E are integral parts of this Official Statement and should be read together with all of the foregoing information.

The delivery of this Official Statement dated as of the date set forth on the cover page has been approved by the Society, as Obligated Group Representative.

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THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY

By /s/ David J. Horazdovsky President and Chief Executive Officer

APPENDIX A

INFORMATION REGARDING THE SOCIETY AND THE OBLIGATED GROUP

____________________________________

Table of Contents Page

THE SOCIETY AND THE OBLIGATED GROUP

Introduction ................................................................................................................................. A-1 The Obligated Group .................................................................................................................. A-1 Affiliates—Not Part of Obligated Group .................................................................................... A-6 Strategic Direction ...................................................................................................................... A-6

OBLIGATED GROUP OPERATING INFORMATION General ..................................................................................................................................... A-10 Skilled Nursing Facilities .......................................................................................................... A-11 Residential Housing for Seniors ............................................................................................... A-12 Home and Community Based Services ..................................................................................... A-13 Owned Facilities ....................................................................................................................... A-14 Leased Facilities ....................................................................................................................... A-15 Managed Facilities .................................................................................................................... A-15 Competition .............................................................................................................................. A-16

GOVERNANCE AND MANAGEMENT Society ..................................................................................................................................... A-17 Foundation ................................................................................................................................ A-23

OBLIGATED GROUP SOURCES OF REVENUE OBLIGATED GROUP FINANCIAL INFORMATION

Statement of Operations ............................................................................................................ A-25 Management’s Discussion of the Statement of Operations ...................................................... A-28 Balance Sheet ............................................................................................................................ A-31 Management’s Discussion of the Balance Sheet ...................................................................... A-31 Historical Coverage of Pro Forma Maximum Annual Debt Service ........................................ A-32 Capital and Operating Budgets ................................................................................................. A-32 Series 2015 Project ................................................................................................................... A-34 Investment Portfolio.................................................................................................................. A-34 Charitable Contributions ........................................................................................................... A-34

OTHER INFORMATION Employees ................................................................................................................................. A-35 Volunteers ................................................................................................................................. A-35 Insurance ................................................................................................................................... A-35 Taxation .................................................................................................................................... A-36

A-1

THE SOCIETY AND THE OBLIGATED GROUP

Introduction

The Evangelical Lutheran Good Samaritan Society (the “Society”) is a not-for-profit corporation, founded in 1922 under the laws of the State of North Dakota. The Society operates skilled nursing facilities, residential housing for seniors, home and community based health services and affordable housing projects in 217 locations across the United States. The Society is the largest not-for-profit provider of senior care and services in the country. Since its founding in 1922, the Society’s mission has been to share God’s love in word and deed by providing shelter and supportive services to older persons and others in need.

The Society’s Obligated Group currently consists of the Society and The Evangelical Lutheran Good Samaritan Foundation (the “Foundation”). In connection with the issuance of the Bonds, Good Samaritan Society HCBS, LLC (“HCBS, LLC”) is expected to be added to the Obligated Group and certain other entities affiliated with the Society and HCBS, LLC will enter into contribution agreements whereby such entities will agree to fund any payment obligations under the Master Indenture and the Obligated Group will agree to assist such affiliates in paying indebtedness of such affiliates, provided that such affiliate indebtedness has been approved in writing by the Obligated Group Representative and such payment is made in compliance with the provisions of the Master Indenture. HCBS, LLC and such affiliates have covenanted not to terminate the contribution agreements for so long as the Bonds are outstanding. See “The Obligated Group – HCBS, LLC” below. Other entities may from time to time become Members of the Obligated Group or, once Members, may withdraw from the Obligated Group upon meeting certain conditions specified in the Master Indenture; provided that neither the Society nor the Foundation may withdraw from the Obligated Group.

The Society has developed and is in the process of implementing an organization-wide strategic plan aimed at keeping pace with the rapidly evolving market for senior care services and the changing landscape of federal and state regulation of health care. See “THE SOCIETY AND THE OBLIGATED GROUP—Strategic Direction” below.

The Obligated Group

Society. The first Society center opened in a rented six-room house in Arthur, North Dakota, in March 1923. Though it began primarily as a center for people with physical and mental disabilities, the Society soon expanded the scope of services it offered. The Society opened other centers in nearby towns in the years that followed. By 1952, the Society was serving seven states with 32 centers. As communities sought services for seniors and others in need, the Society’s growth continued. Today, the Society operates 217 locations and home health agencies in 24 states, employing approximately 19,000 staff members and serving approximately 28,400 residents and clients.

As of December 31, 2014, the Society owned and operated skilled nursing facilities and residential housing in 168 locations; managed one residential housing facility and sub-acute care unit where the Society has partial ownership; leased four skilled nursing and residential housing facilities owned by others; managed 14 skilled nursing and residential housing facilities owned by others; and managed 32 affordable housing projects for seniors and disabled persons that are controlled by the Society (see “Affiliates—Not Part of Obligated Group” below). The statistics in the preceding sentence and the numbers of beds, units and facilities that are given elsewhere in this APPENDIX A as of December 31, 2014 have not changed materially as of the date of this Official Statement. The Society has also operated home health agencies and other community based services for more than a decade, but in the last two years has created four new agencies and acquired seven existing agencies in keeping with the

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Society’s strategic plan to diversify service lines. See “THE SOCIETY AND THE OBLIGATED GROUP—Strategic Direction—Service Line and Revenue Diversification” and “OBLIGATED GROUP OPERATING INFORMATION—Home and Community Based Services” below.

The consolidated financial statements of The Evangelical Lutheran Good Samaritan Society and Affiliates attached to the Official Statement as APPENDIX B include information for certain affiliates of the Society that are not Members of the Obligated Group. As of December 31, 2014, the net operating revenue of Members of the Obligated Group constituted approximately 99.2% of the Society’s annual consolidated net operating revenue and the Members’ assets constituted approximately 92.8% of the Society’s total consolidated assets.

The following map shows the locations at which the Society operates across the United States.

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The table below sets forth the numbers of nursing care facilities, residential complexes, affordable housing projects and other facilities owned, managed and leased by the Society as of December 31, 2014:

Society Locations

Skilled Nursing & Residential

Housing Facilities

Skilled Nursing

Facilities Only

Residential Housing

Facilities Only

Affordable Housing

Projects 1 Total

Locations

Owned 103 50 13 2 168 Leased 1 3 — — 4 Managed

Owned by Others 3 4 4 3 14 Owned in part by and controlled by Society

1 — — — 1

Owned in whole or in part by Affiliate1

— — — 30 30

Totals 108 57 17 35 217 ____________________ 1 The Society earns a fee for managing the affordable housing facilities owned by the affordable housing entities, but the affordable housing entities are not part of the Obligated Group.

The Society’s operations are concentrated in the upper Midwest portion of the United States. As of December 31, 2014, 31 (20%) of the skilled nursing facilities owned by the Society and 1,751 (16%) of the skilled nursing beds were located in Minnesota, the largest single state concentration for the Society. However, no single state currently accounts for more than 17% of the Society’s annual revenue nor more than 22% of the Society’s annual cash flows.

Revenues from skilled nursing facility operations owned by the Society have historically comprised the majority of the Society’s revenues, constituting approximately 90% of the Society’s operating revenues in fiscal year 2000. However, in recent years and as part of the Society’s strategic plan, the percentage of the Society’s operating revenues attributable to skilled nursing facility operations has decreased (to 78.9% in 2014). See “THE SOCIETY AND THE OBLIGATED GROUP—Strategic Direction—Service Line and Revenue Diversification” and “OBLIGATED GROUP OPERATING INFORMATION—Skilled Nursing Facilities” below. Charges for skilled nursing facility services are primarily reimbursed to the Society by Medicaid and Medicare (for approximately 66% of the residents in 2014) and by other third party payors and private residents (for approximately 34% of the residents in 2014).

The Society has been diversifying within the health care industry over the last few decades and increasingly in recent years in connection with its strategic plan to grow its percentage of revenues attributable to senior housing and home and community based services with less dependence on revenues from skilled nursing facility operations. See “THE SOCIETY AND THE OBLIGATED GROUP—Strategic Direction” in this Appendix A.

Foundation. The Foundation is a Minnesota nonprofit corporation organized in 1992 exclusively for the purpose of providing support, assistance and aid to and for the exclusive benefit of the Society, in

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connection with the mission of the Society. The sole member of the Foundation is the Society, and the Chairperson of the Board of Directors of the Foundation is the President of the Society. The current President of the Foundation is Walter Woods, who recently took office. The Executive Vice President of Finance, Chief Financial Officer and Treasurer of the Foundation is Grant Tribble and the Secretary is Thomas J. Kapusta, both of whom hold those same offices for the Society. See “GOVERNANCE AND MANAGEMENT—Society” and “—Foundation” in this Appendix A.

The Foundation has historically focused its resource development efforts at the level of the Society’s individual facilities. However, as part of the Society’s strategic plan, the Foundation’s master plan is being revised to include and focus on Society-wide initiatives and major capital development. See “THE SOCIETY AND THE OBLIGATED GROUP—Strategic Direction—Foundation” in this Appendix A.

The Foundation and the Society raised approximately $18,959,000 in gross donations in 2014 (for a net amount after expenses of approximately $14,987,000). See “OBLIGATED GROUP FINANCIAL INFORMATION—Charitable Contributions” in this Appendix A. All funds the Foundation raises are used to support the mission of the Society.

HCBS, LLC. HCBS, LLC is a limited liability company organized under the laws of the State of South Dakota in November, 2014 for the purpose of acquiring assets of, and ownership interests in, certain home health agencies. The sole member of HCBS, LLC is the Society. The Society expects to add HCBS, LLC as a Member of the Obligated Group in connection with the issuance of the Bonds.

HCBS, LLC is the sole member of Good Samaritan Society HCBS-Choice, LLC (“HCBS-Choice”) and Good Samaritan Society HCBS-BJG, LLC (“HCBS-BJG”), both of which were formed in November, 2014 for the purpose of acquiring assets of certain home health agencies. HCBS, LLC also owns all of the equity interests in Angels in Waiting Hospice, LLC (“Angels”), JJEA, LLC (“JJEA”), Always Above and Beyond Home Health Care Services, LLC (“Always”) and HMS Heritage Management Services, L.L.C. (“HMS”). In connection with the issuance of the Bonds, the Society, as Obligated Group Representative, expects to enter into contribution agreements with HCBS-Choice, HCBS-BJG, Angels, JJEA, Always and HMS whereby such entities will agree to fund any payment obligations under the Master Indenture at the place, on the dates and in the manner provided in the Master Indenture, upon receipt of any demand therefor from the Obligated Group Representative, and the Obligated Group will agree to assist such affiliates in paying indebtedness of such affiliates, provided that such affiliate indebtedness has been approved in writing by the Obligated Group Representative and such payment is made in compliance with the provisions of the Master Indenture. HCBS, LLC and such affiliates have covenanted not to terminate the contribution agreements for so long as the Bonds are outstanding. HCBS-Choice, HCBS-BJG, Angels, JJEA, Always and HMS are not Members of the Obligated Group.

See Footnote 2 under the caption “OBLIGATED GROUP FINANCIAL INFORMATION—Statement of Operations” in this Appendix A for a description of the operating revenues of HCBS, LLC and its related entities discussed above.

Organizational Chart. The chart on the following page shows the corporate structure of the Society and its affiliated entities, including the entities that are or are expected to be members of the Obligated Group and the entities that are expected to enter into contribution agreements with the Obligated Group Representative as discussed above.

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Always Above and Beyond Home Health

Care Services, LLC

Angels in Waiting Hospice,

LLC

JJEA, LLC

Good Samaritan Society HCBS,-

Choice, LLC

HMS Heritage Management Services, LLC

Good Samaritan Society HCBS-

BJG, LLC

Good Samaritan Society HCBS, LLC

Obligated Group

Contribution Agreements

HUDs and Tax Credit GP

Good Samaritan Society Insurance,

LTD “Captive”

The Evangelical Lutheran Good

Samaritan Foundation

Tax Credit Limited

Partnerships

The Evangelical Lutheran Good Samaritan Society

Obligated Group

Obligated Group

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Discussions with respect to joint ventures, affiliations, acquisitions, dispositions or change of use of facilities are held from time to time by the Society with other parties. As a result, it is possible that the current organization and assets of the Members of the Obligated Group may change from time to time. No such transaction is currently pending or has been approved by any Obligated Group Member.

Affiliates—Not Part of Obligated Group

HUD Subsidized and Low Income Tax Credit Housing Entities. Since 1979, the Society has formed 37 entities to engage in the development of 32 affordable housing projects for seniors and disabled persons. Collectively, the entities own 25 Section 202 (supportive housing for the elderly) projects and act as general or limited partners for seven low income housing tax credit projects. These affiliated entities all share generally the same members of their Boards of Directors, which are generally Directors and/or officers of the Society.

The Society provides management services for all of the affordable housing projects described above and receives a management fee for such services, generally at a rate set by the U.S. Department of Housing and Urban Development (“HUD”). The Society also earns a developer fee and provides certain payment and completion guarantees for its low income tax credit projects. The Society has made certain advances to the entities from time to time in accordance with the Master Indenture for interim construction and operating purposes. The Society has no right to withdraw income or assets from the affordable housing entities to use for its own purposes. See Note 2 to the Society’s audited financial statements in APPENDIX B. For audit purposes, however, the financial statements of the affordable housing entities are consolidated with the Society’s financial statements. This consolidation tends to increase net assets (by approximately $36,610,000 on December 31, 2014) and to reduce net income (by approximately $1,900,000 for the fiscal year ended December 31, 2014) for the Society. See the audited financial statements included as APPENDIX B to the Official Statement. The Society has joined the National Affordable Housing Trust to assist the Society in its efforts to develop more low income tax credit housing projects.

Insurance Subsidiary. In November 2000, the Society formed a “captive” insurance company named Good Samaritan Society Insurance LTD (“GSSI”) in the Cayman Islands as part of a self-insurance arrangement. While the Society is the sole owner of the insurance company, GSSI is not a Member of the Obligated Group. See “OTHER INFORMATION—Insurance” below.

Joint Ownership and Other Alliances. In 1998, the Society and Olathe Medical Center, Inc. formed a non-profit corporation to build and own an assisted living and senior housing with services facility in Olathe, Kansas. The Society manages the facility. The joint venture is not consolidated with the Society for purposes of financial reporting. The Society has loaned the joint venture approximately $3.3 million evidenced by a promissory note of the joint venture. Neither the Society nor any other Member of the Obligated Group has any liability for indebtedness of the joint venture.

Strategic Direction

The long-term care industry, as well as the entire healthcare industry, is in the beginning of a significant transformation to align with the Centers for Medicare and Medicaid Services’ (“CMS”) Triple Aim of improving health of the population, improving the healthcare experience and reducing costs. Beginning in late 2013 and continuing through 2014, the Society invested much time and energy in crafting its strategic plan that would provide the road map for shifting the Society’s services and how they are provided to achieve the CMS Triple Aim goals. The centerpiece of the Society’s transformative organizational strategic plan and related tactics is focused on providing a full-continuum of care that

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provides entry points that allow the Society to provide the services needed, in the location that provides the best health, experience and cost options.

Long-term care housing and services options continue to evolve as the baby boomers replace the World War II generation. Generally seniors now want to live in their homes and have services brought to them. When baby boomers do move into long-term care communities, they want more housing options than have been offered to earlier generations. In addition, there is increasing demand for shorter stay, post-acute rehab housing services. However, the objectives of the payors of these services is also impacting the long-term care industry and how and where services will be provided. The Society believes it is well positioned in many of its larger market areas to respond to the increased need for care coordination and capitalize on its continuum of care to meet the needs and desires of both the payors and those receiving services. Payors view the Society’s ability to offer a full continuum of long-term care services favorably because it allows for a better transition of patient care, better flow of information, reduced costs and better outcomes.

The Society’s strategic plan is focused on positioning the organization for being a trusted and valued partner in the overall health care of the United States through the care coordination of seniors and others in need. The key components of the strategic plan have been developed under the following guiding principles:

1. Maintaining the mission of the Society;

2. Positioning the Society to participate in Population Health models by proving the full continuum of care in large markets; and

3. Balancing growth with financial performance.

The Society’s strategic plan reflects the guiding principles by focusing on:

1. Expanding post-acute rehabilitation services;

2. Growing home and community-based services;

3. Increasing housing, assisted living and adjacent services;

4. Developing new services to support people wherever they call home;

5. Achieving operational excellence;

6. Improving customer and employee engagement; and

7. Leveraging the Foundation by shifting the resource development focus from being exclusively at the local level for specific projects to developing a significant national focus to find partners that share the same mission and outcomes as the Society.

Many efforts have begun to accomplish the work of the strategic plan, setting the foundation for achieving the Society’s goals. This work is highlighted below.

Service Line and Revenue Diversification. A major focus of the Society’s strategic plan is to reduce the percentage of revenue it receives from skilled nursing facilities and increase the percentage of revenue it receives from senior housing and home health revenues. Since 2000, the percentage of overall

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revenue received from skilled nursing facilities operations has decreased from approximately 90% to approximately 78.9% in 2014. The Society expects this trend to continue in keeping with its strategic plan. Since 2000, total system skilled nursing beds have declined by approximately 26%, while the number of residential units has increased by approximately 45%. Such declines are attributable to a decreasing census and staffing shortages in small facilities in rural markets. Also, the Society’s skilled nursing census is impacted by a greater focus on the average length of stay based on the expectation that, in the near future, referral sources and payors will use the average length of stay as a criterion for discharges from acute settings. The Society has also transformed many of its skilled nursing facilities to include or expand the number of private rooms and include additional amenities.

The strategy to reduce the percentage of revenues attributable to skilled nursing operations is driven in part by the Society’s desire to strengthen its payor mix by growing revenues from private pay and Medicare sources and decreasing revenues attributable to Medicaid. The Society is also focused on the private pay and private insurance markets for each of its service lines. The Society has decreased the percentage of revenues from Medicaid from approximately 47.6% in 2000 to 36.6% in 2014, while increasing revenues from Medicare from approximately 13.3% in 2000 to 23.5% in 2014 and from private pay and other sources from approximately 39.1% in 2000 to 39.9% in 2014.

The Society continues to focus on growing its census of post-acute patients. It is currently analyzing approximately 50 markets where it believes it has an opportunity to grow market share in the provision of post-acute services. The Society is also aggressively exploring and negotiating participation in accountable care organizations (“ACOs”) and other affiliations that are expected to result in an increased post-acute patient census. The Society has already entered into a number of ACO contracts. The Society’s full continuum of care, quality outcomes and cost-effective pricing have been key elements in securing the ACO contracts and affiliations. At the same time, the Society is focused on reducing the average length of stay for post-acute patients, improving quality and partnering to reduce re-hospitalization rates.

The Society is responding to seniors’ demand for in home services by increasing its number of Medicare certified home health and private duty agencies, so services such as nursing, rehab, housekeeping and laundry are available where seniors are living. The Society is actively seeking to grow its home and community-based services by creating new agencies or acquiring existing agencies, resulting in a 215% increase in the number of clients served by such Society operations since 2007. As of December 31, 2014, the Society owned and operated 30 home health agencies. Most recently, the Society acquired home health agencies that operate in the vicinities of Fort Worth and El Paso, Texas. See “OBLIGATED GROUP OPERATING INFORMATION—Home and Community Based Services Operations” in this Appendix A.

The Society, since the inception of CMS’s Bundled Payments for Care Improvement initiatives two years ago, has been participating in the Model 3 program (described below) and in the first round owned five of the eight skilled nursing facilities across the nation enrolled in the program. This participation underscores the Society’s desire to be a leader in understanding and shaping an “at-risk” reimbursement model. The Model 3 program is the post-acute payment model that requires that the provider accept a fixed payment for a 90-day episode of care and cover all health care costs for the qualifying individual receiving care for such period. Covered healthcare costs include any hospital stay, physician services, therapies and medication. The goal of the program is provision of services to qualified individuals for 90 days post-discharge from a hospital into a skilled nursing home in the most clinically appropriate and lowest cost setting. The Society has gained a tremendous amount of knowledge in this prototype at-risk reimbursement model that will be the cornerstone for reimbursement in the future. The Society is working closely with CMS in the further design of this model. Reimbursement to the

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Society under the Model 3 program initially did not fully cover the Society’s cost of care, however, CMS later revised its reimbursement methodology and the Society was fully reimbursed.

The Society also continues to develop housing and assisted living projects. Some of the Society’s senior housing projects were put on hold during the economic recession, but the Society has resumed construction when a project demonstrates its ability to meet the Society’s expected internal rate of return standards. The Society’s management is currently conducting an in-depth market analysis in certain target markets that management has identified for growth in the senior housing area, with an emphasis on developing larger campuses. The Society is also focusing on growing its involvement in affordable housing projects, as the management fee income received by the Society is an important source of revenue for the Obligated Group. The Society also seeks to grow its assisted living memory care services to meet market demand.

Management Changes. The Society has recently reorganized its senior management structure along service lines (such positions were previously organized by geography) in order to sharpen management’s focus on strategic growth and operations by service line. The Society has also added a number of executives in key positions, with the intent of blending the Society’s long-tenured senior leadership with the new members of management in order to optimize industry experience and provide for innovative thinking and direction. See “GOVERNANCE AND MANAGEMENT” in this Appendix A.

Savings Initiative. The Society has developed and, over the past several years, begun implementing an organization-wide expense reduction initiative that has produced positive operational results over the last twelve months. See “OBLIGATED GROUP OPERATING INFORMATION—Management’s Discussion of the Statement of Operations” in this Appendix A. Key components of the savings initiative include centralizing purchasing of supplies, billing of accounts and cash management for all facilities; managing staffing and overtime more effectively; implementing a standardized food program; completing and implementing electronic medical record training; implementing a worker’s compensation pilot program; and closing underperforming facilities.

Divestitures. Facilities that are in locations that will not have a sustainable senior population or work force in the future are continually being evaluated by the Society to determine their operational and economic feasibility. The Society has divested 17 locations over the last five years. The divested locations accounted for a combined net operating loss of four million dollars in such five year period. Most of these facilities included only skilled nursing beds. The Society’s board has approved the divestiture of an additional five facilities, the locations of which cannot be disclosed due to regulatory and other considerations. The Society expects to continue to divest itself of underperforming locations.

Technology and Innovation. The Society is exploring and developing the use of technology to help keep seniors in their homes longer while providing a cost effective way of monitoring for sudden changes in the seniors’ health conditions. The Society has received grants from The Leona M. and Harry B. Helmsley Charitable Trust and Margaret A. Cargill Foundation for its LivingWell@Home program. The program provides services to seniors in their homes through technology, including monitoring of vital signs and activities of daily living and a personal emergency response system. A team of nurses and data specialists confidentially review patients’ information gathered from the technology, and alert the patient, the patient’s caregiver or the patient’s primary care physician with any concerns.

Foundation. The Foundation’s master plan is being revised by its President and Board to refocus the Foundation on national fundraising efforts. The plan seeks to grow the impact, relevance and revenue of the Foundation by positioning the Society as a major player in transforming the aging experience for all people in the United States.

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OBLIGATED GROUP OPERATING INFORMATION

General

The Society provides health care and certain other services to the residents of its Good Samaritan Facilities (the “Facilities”) pursuant to its mission. Currently the Society provides services to approximately 15,500 residents in Facilities owned by the Society, 11,500 home health clients and 1,400 residents in the affordable housing setting.

The Society employs central management personnel at its national campus in Sioux Falls, South Dakota, to coordinate and support each Facility and to supply services, including financial, accounting, data processing, information technology, nursing, medical records, sales and marketing, social services, construction and building maintenance, personnel recruitment and training, purchasing, printing and public relations. Charges for central management services are made to each Facility in the amount of approximately 4.65% of each Facility’s operating revenue.

Facility insurance consists of workers’ compensation, auto insurance and liability insurance covered by a captive insurance company wholly owned by the Society, with excess coverage through Lloyds of London for liability insurance, Sentry Insurance for stop-loss coverage for workers’ compensation, and a layered program involving 18 insurance companies for property insurance. The captive insurance company also provides coverage for hail losses up to the layered program deductible, as well as medical stop-loss coverage for the group health insurance program before an independent insurance company’s stop-loss coverage begins. See “OTHER INFORMATION—Insurance” in this APPENDIX A.

Each Facility is managed by a local administrator responsible to a regional vice president of the Society who in turn reports to the Chief Operating Officer. As of December 31, 2014, the Society had eight regional vice presidents. Each Facility is professionally staffed to meet federal and state requirements. Such staffing may include nurses, nursing assistants, physical therapists, food service specialists, activity directors and social workers. The largest Facility has more than 1,000 residents and the smallest Facility has about 25 residents. A substantial proportion of the Facilities are located in communities with fewer than 100,000 inhabitants. Most Facilities have a local advisory board that provides assistance and support.

Each Facility is expected to operate on a self-sufficient basis under the direction of the Society’s management. Individual Facilities that need temporary financial aid will be assisted with paying staff payroll and vendors on a timely basis by the Society’s national campus.

The Society regularly reviews the performance of its Facilities to make decisions regarding capital expenditures and operations. As a result of this review process and other financial management oversight, the Society closes or sells Facilities from time to time. See “THE SOCIETY AND THE OBLIGATED GROUP—Strategic Direction—Divestitures” in this Appendix A.

The Society and its Facilities are subject to considerable local, state and federal regulation, particularly in the areas of life safety, health care and food preparation. The Society believes that it and all of its Facilities are in substantial compliance with all applicable laws and regulations. In addition, the Society has a policy of a smoke-free environment in all of its operations and Facilities, whether or not required by state or local laws.

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Skilled Nursing Facilities

The skilled nursing facilities operated by the Society provide long term health care treatment and facilities for adults. The facilities also provide short-term, post-acute care: residency for seniors needing rehabilitation services after hospitalization, surgery or illness and before returning home. Admission is ordinarily under the supervision of the resident’s personal physician. Charges normally consist of a per diem room rate.

As of December 31, 2014, the Society owned 153 skilled nursing facilities and leased four skilled nursing facilities, which provided a total of 10,754 beds. The Society also managed four skilled nursing facilities providing an additional 177 beds.

The following table sets forth certain statistical information concerning skilled nursing facilities owned and leased by the Society for each of the five years ended December 31, 2014.

Skilled Nursing Facilities Owned and Leased by the Society

2014 2013 2012 2011 2010

Number of Facilities as of December 31 157 161 165 169 170 Available beds as of December 31 10,754 11,137 11,308 11,745 12,021 Annual resident days (in thousands) 3,375 3,482 3,570 3,695 3,782 Occupancy percentage1 86.0% 85.7% 86.3% 86.2% 86.2% Average daily operating revenue2 $221.80 $216.41 $210.53 $205.40 $194.97 Average daily operating expense2 $220.44 $213.12 $208.17 $200.75 $191.37 Nursing operating revenues as a

percentage of total operating revenues 78.9% 79.9% 80.5% 81.5% 82.3% ____________________ 1 Occupancy percentage is calculated by dividing annual resident days by the average available beds during the year times the number of days in the year. 2 Per occupied bed.

The table below sets forth the distribution of the 153 owned and four leased skilled nursing facilities as of December 31, 2014, by number of beds:

Owned and Leased Skilled Nursing Facilities by Size

Number of beds 1-39 40-79 80-119 120-159 160 and over Number of Facilities 14 103 30 5 5

Each skilled nursing Facility’s beds are licensed pursuant to state regulations, which prescribe a required level of care. The federal government also mandates certain requirements for skilled nursing facilities as to the type of care and the facilities themselves.

A skilled nursing Facility’s charge for services normally consists of a daily rate that includes payment for all services except the costs of a private physician, certain minor ancillary services offered by some Facilities and drugs. The daily rate varies depending upon the specific operating costs of the Facility and the level of care provided to the resident. Residents pay from private sources, or the cost of their care is reimbursed to the Facility by state and/or federal programs. See “OBLIGATED GROUP SOURCES OF REVENUE.” The daily rate is generally intended to meet anticipated operating requirements plus funding depreciation of the skilled nursing Facility. Under Minnesota and North Dakota law, the Society cannot charge private pay residents more than the Medicaid rates in those states.

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The Society has implemented a function-rich and paperless electronic medical record system in all of its skilled nursing Facilities.

Residential Housing for Seniors

The Society’s operations include residential retirement facilities generally connected or adjacent to its skilled nursing facilities. These facilities provide a continuum of care environment for seniors, with living arrangements from full independent living units to skilled nursing care on one campus or in nearby Facilities. Today, approximately 69% of the Society’s campuses include independent and/or senior housing with services and/or assisted living facilities. These residential retirement units are equipped with emergency call systems into the nursing facilities and share with the skilled nursing facilities some services, which may include common kitchen and dining facilities, maintenance, social services and 24-hour emergency nurse service. Assisted living residents receive assistance in the performance of basic daily living tasks with which they may have difficulty, and care at levels below that of skilled nursing.

The Society owns approximately 602 duplexes and twin homes. Duplex and twin home residents must pay an entrance fee. Some portion of each entrance fee may be refundable, depending on the particular residential contract and state law. The amortizable portion of all entrance fees is amortized to income by the Society over the actuarially determined life expectancy of each individual resident at the time of move in. If the resident chooses to move out, the contractually required portion of the entrance fee is paid to the resident moving out after either re-leasing the unit or after a set period of time, usually between 30 to 60 days. A monthly rental fee is charged in addition to the entrance fee. Contractual terms vary from Facility to Facility. None of the Society’s Facilities is a life care unit—that is, the Society does not guarantee lifetime care for a one-time entrance or endowment fee. The Society does, however, attempt to place apartment residents who need skilled nursing care into a Society skilled nursing Facility, where one is located in the vicinity, for which a separate daily fee is charged.

As of December 31, 2014, the Society owned residential housing at 116 locations, with a total of 7,300 residential units, and managed eight Facilities with an additional 180 residential units. The residential units range in size from one room “studio” units to three bedroom units. Most have cooking facilities. The Society also manages a number of affordable housing projects for seniors and disabled persons. See “THE SOCIETY AND THE OBLIGATED GROUP—Affiliates—Not Part of Obligated Group” in this Appendix A.

The following table sets forth statistical information concerning the residential units owned by the Society for the five years ended December 31, 2014.

Residential Housing Owned by the Society

2014 2013 2012 2011 2010

Number of locations as of December 31 116 119 123 123 119 Number of units as of December 31 1 7,300 7,347 7,360 7,128 7,019 Occupancy percentage as of December 31 1 85.0% 84.0% 82.9% 84.5% 84.2% Average daily operating revenue2 $65.38 $63.84 $62.03 $60.12 $57.76 Average daily operating expense2 $65.00 $63.10 $62.16 $61.02 $58.89 ____________________ 1 The number of units used to calculate the occupancy percentage does not include units which were opened during the preceding 12 months. If the units opened in these years were included, the occupancy percentages for each year would decline slightly due to the lag in filling units. 2 Per diem per resident.

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Management of the Society believes that the lack of overall increase in residential census is at least partially due to a continued decline of census in some of the Society’s larger Facilities, which are older and have relatively small units. The Society is concentrating on building residential facilities with larger units, while renovating older units where management believes it makes economic sense.

Home and Community Based Services

The Society’s operations include Home and Community Based Services (“HCBS”) agencies, which include home health, hospice and private duty agencies (collectively called Services@Home). Helping individuals maintain their highest level of health and success in their activities of daily living is the primary goal of Home and Community Based Services. Services include helping people with staying well, recovering from sickness or injury and providing companionship. With the assistance provided by HCBS agencies and the support they provide for various levels of care, individuals can meet their goal to age in place.

Home healthcare is provided for those who have experienced an illness or injury that requires

skilled medical assistance, but who wish to remain in their home. Depending on the client’s needs and condition, services are provided by an interdisciplinary team consisting of registered nurses, vocational nurses, physical therapists, occupational therapists, speech therapists, social workers and aides. The team works with the client’s medical provider to develop a specific plan of care that best meets the client’s needs and to help him or her remain safe and have a successful recovery at home. Reimbursement for services provided is through Medicare, Medicaid, managed care, private insurance or private pay.

Hospice is a service for terminally ill individuals whose physician anticipates a life expectancy of six months or less. After physician certification, the hospice agency assesses the client’s appropriateness for end-of-life care. The hospice benefit covers payment for equipment, supplies and medications “related to the terminal illness.” Reimbursement for services provided is through Medicare, Medicaid, private insurance or private pay. Care and palliation is provided by an interdisciplinary team that may include physicians, nurses, social workers, chaplains, hospice aides, volunteers and therapists. The four levels of hospice care include: routine, general inpatient, continuous care and respite. The services provided by hospice agencies assist in the delivery of the Society’s mission and ministry to “others in need” and vastly expand the Society’s outreach into the community.

Services@Home provides non-medical services to people who need outside assistance in order to remain independent in their own home. Reimbursement for services provided is primarily through private pay, but other private insurance and Medicaid programs are available in some states.

As of December 31, 2014, the Society owned 40 agencies, consisting of 30 home healthcare agencies, three hospice agencies and seven Services@Home agencies.

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Home and Community Based Services Agencies Owned by the Society For the five years ended December 31, 2014

2014 2013 2012 2011 2010

Number of locations as of December 31 40 38 35 33 33 Number of clients as of December 31 11,460 10,076 9,705 7,206 6,832 Number of visits as of December 31 291,148 282,689 268,927 261,793 224,407 Average daily operating revenue1 $131.322 $111.89 $114.10 $104.86 $112.12 Average daily operating expense1 $135.872 $119.28 $111.64 $103.54 $106.23 HCBS operating revenues as a percentage

of total Society operating revenues 3.9% 3.3% 3.2% 2.9% 2.7% ___________________ 1 Per visit calculation. 2 The Society has implemented measures aimed at increasing its return on investment for home and community based services, resulting in average daily operating revenue of $143.65 and average daily operating expense of $131.41 for the first quarter of 2015.

Owned Facilities

The Society, as of December 31, 2014, owned Facilities in 24 states. The following table shows the locations and component units of these Facilities:

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Society Owned and Operated Skilled Nursing Facilities and Residential Housing as of December 31, 2014

State Number of Locations

Skilled Nursing Beds

Basic Care and Assisted Living

Units 1

Senior Housing With Services

Units 1

Independent Housing Units 1

Arizona 6 404 70 28 208 Arkansas 2 120 58 36 95 Colorado 6 408 168 266 374 Florida 3 330 100 86 783 2 Hawaii 1 44 20 15 184 Idaho 5 323 46 27 147 Illinois 3 214 — 28 33 Indiana 1 — — 4 — Iowa 19 1,470 40 210 46 Kansas 11 721 49 72 61 Kentucky 1 100 — — — Minnesota 33 1,784 712 325 26 Montana 1 49 — — — Nebraska 22 1,506 375 81 354 New Mexico 7 589 37 12 309 North Dakota 11 564 200 12 38 Ohio 1 50 — 12 4 Oregon 3 186 — — 193 South Dakota 21 1,064 314 153 128 Tennessee 1 30 24 42 32 Texas 3 178 54 101 289 Washington 2 154 14 — 135 West Virginia 1 57 — — — Wisconsin 4 232 24 19 88

Totals 168 10,577 2,305 1,529 3,427

____________________ 1 Basic care and assisted living units include those locations where the Society provides residents assistance with the performance of basic daily living tasks. Senior housing with services provides only basic services, including meals and housekeeping. Residents of independent housing units are expected to live independently, although at various locations the Society may supply minor assistance to the residents. 2 In addition, the Society owns approximately 469 mobile home pads in Kissimmee, Florida, which are available for rent for nominal sums.

Leased Facilities

The Society leases and operates four skilled nursing Facilities in Kansas which have 177 skilled nursing care beds.

Managed Facilities

The table below sets forth certain information relating to the Facilities managed by the Society.

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Managed Facilities as of December 31, 2014

State

Number

of Locations

Skilled

Nursing Beds

Assisted

Living Units 1

Senior Housing

With ServicesUnits 1

Independent Housing Units 1

Affordable Housing

Arizona 2 — — — — 60 Colorado 1 — — — — 43 Florida 1 — — — — 40 Idaho 2 — — — — 66 Indiana 4 199 15 — — — Illinois 1 — — — — 22 Iowa 2 74 — — — — Kansas 2 34 36 102 — 170 Kentucky 1 — — — — 24 Minnesota 5 56 74 — 21 — Nebraska 7 — — — — 277 North Dakota 1 50 16 — — — New Mexico 3 — — — — 111 Ohio 1 — — — — 40 Oregon 1 — — — — 24 South Dakota 3 — — — — 142 Texas 2 — — — — 141 West Virginia 3 91 — — 53 — Wisconsin 3 — — — — 71

Totals 45 504 141 102 74 1,306

____________________ 1 Assisted living units include only those locations where the Society provides residents assistance with the performance of basic daily living tasks. Senior housing with services provides only basic services, including meals and housekeeping. Residents of senior independent housing units are expected to live independently, although at various locations, the Society may supply minor assistance to the residents.

Competition

The Society has no non-profit competitor on a national level, as there is no other non-profit organization with a comparable set of services for the elderly over such a broad service area. The Society’s skilled nursing Facilities compete with for-profit corporations which have a national presence, however, and the Society has many competitors in marketing residential housing for seniors, both on a national level and in individual markets.

Within specific markets, the Society’s Facilities compete with other for profit and nonprofit skilled nursing facilities, assisted living facilities and residential housing options for seniors. This competition may adversely affect the occupancy rate and charges of individual Facilities. The Society believes that it competes effectively by offering quality care and a continuum of services for seniors. The Society also believes that its centralized management system generally enhances the ability of any particular Facility to compete because of the economies of scale in the services provided and of the quality of management information supplied.

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With the emerging at-risk reimbursement models and affiliation with other non-long term care health care providers, the Society is uniquely positioned in many markets to provide the continuum of care many competitors are not able to supply. The Society believes that ACOs and other payors are seeking partners that are able to bring the long term care continuum to provide greater continuity in care for those individuals transitioning through the various levels of care.

GOVERNANCE AND MANAGEMENT

Society

General. The Society’s membership of approximately 342 individuals consists of (a) current members of the Board of Directors of the Society, who are members of a Christian church, (b) certain managerial employees of the Society, who are members of a Christian church, and (c) other current members of the Society who continue to vote at least once every two years at the Society’s annual meeting. Annual meetings are held by the Society’s membership, generally in June or July. The membership elects 15 members of the Board of Directors, nine of whom are not employees of the Society and six of whom are administrators of Society Facilities. The President of the Society serves as the sixteenth member of the Board. All outside directors must be Lutheran; candidates for four of the positions must be approved by the Evangelical Lutheran Church in America (“ELCA”) and candidates for two of the positions must be approved by the Lutheran Church—Missouri Synod (“LCMS”). The directors are limited to two consecutive three year terms each and five are elected each year (except for the President of the Society).

The officers of the Society are elected by the Board of Directors. Other members of the management team are appointed by the President of the Society. All of the officers and members of the management team must be members of a Christian church.

Other than the agreements which give the ELCA and the LCMS rights of prior approval of a total of six nominees for the Society’s Directors (and the formal recognition of the Society as a social ministry organization of LCMS in the agreement between the two organizations), the Society, ELCA and LCMS operate independently, and none of them has any financial obligation to any other. Among the donations the Society receives each year, though, are gifts from various (particularly Lutheran) churches and other religious organizations and individuals.

Board of Directors. The Society’s Board of Directors has the responsibility for governing the business affairs of the Society. The Board generally meets four times annually to determine policy, including strategic goals and investment strategy, receive reports and consider best practices for the Society’s officers. The Board has four committees: the Executive Committee, the Audit Committee, the Governance Committee and the Indemnification Committee. The function of the Audit Committee is to choose and retain the independent auditors for the Society. See the caption “AUDITORS” in the body of the Official Statement. The Audit Committee also reviews the audit findings with the independent auditors and with the remainder of the Board, as necessary.

There are currently two vacancies on the Board of Directors.

The current members of the Board of Directors of the Society, their occupations and places of residence are:

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Name Occupation; Residence Expiration

of Term Neil L. Gulsvig ........................................ Chairperson

Member – Exec. Committee

Chief Executive Officer, Align Health; ......................... Wausau, Wisconsin

2015

John F. Holt ............................................. Vice Chairperson

Member – Exec. Committee

Pastor, Evangelical Lutheran Church in America; ......... Albert Lea, Minnesota

2016

Liane M. Connelly ................................... Member – Exec. Committee

Assistant Dean and Associate Professor, ..................... University of Nebraska Medical Center, College of Nursing; Norfolk, Nebraska

2015

H. Theodore Grindal ................................ Member – Exec. Committee

Attorney and Partner, Lockridge, Grindal, and Nauen; Minneapolis, Minnesota

2015

David J. Horazdovsky .............................. Member – Exec. Committee

President and CEO of Society; ....................................... Sioux Falls, South Dakota

Ex Officio

Michael J. Deuth ...................................... Executive Director of Facility; .......................................

Brainerd, Minnesota 2015

Alan R. Gard ............................................ Executive Director, Aetna; .............................................

Omaha, Nebraska 2017

Gwen Wagstrom Halaas .......................... Senior Associate Dean, Associate Professor and M.D.,

University of North Dakota, School of Medicine and Health Sciences; Grand Forks, North Dakota

2016

Teresa M. Hildebrandt ............................. Administrator of Facility;...............................................

St. Peter, Minnesota 2015

Connie S. March-Curtis ........................... Retired, President and CEO, Presence Life

Connections; .................................................................. Peotone, Illinois

2017

Guy R. Matson ......................................... Executive Director of Facility; .......................................

Las Cruces, New Mexico 2016

John R. Racek .......................................... Retired, Principal with CliftonLarsonAllen; ..................

Hopkins, Minnesota 2016

Sharon A. St. Mary .................................. Executive Director of Facility; .......................................

Roseville, Minnesota 2017

Dennis D. Stene ....................................... Retired, Certified Public Accountant/ Partner, Henry

Scholten and Company, LLP; ........................................ Sioux Falls, South Dakota

2017

Management Team. As discussed above under the caption “THE SOCIETY AND THE

OBLIGATED GROUP—Strategic Direction—Management Changes,” the Society has recently added a

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number of new management positions and recruited new management personnel to fill those and existing positions. Also, the Society has aligned its operations management by service line rather than by geographic location. This realignment allows for service line expertise to be applied across all of the locations providing a certain level of service. The new positions include a Chief Administrative Officer, a Vice President of Operations for Rehab-Skilled and Senior Living, a Vice President of Operations for Home and Community Based Services, a Vice President of Affordable Housing, a Chief Medical Officer, a Director of Mergers, Acquisitions and Divestitures, a Director of Government Relations, a Director of Strategy and Project Management and a Director of National Campus Services.

New to the Society within the past year are Grant Tribble, Chief Financial Officer; Bergen Peterson, Chief Administrative Officer; Dr. Victoria Walker, Chief Medical Officer; and Walter Woods, President of the Foundation. Short biographies for such individuals are included below.

The current principal members of the management team of the Society are:

Name Position David J. Horazdovsky President and Chief Executive Officer

Bergen Peterson Executive Vice President and Chief Administrative Officer

Thomas A. Syverson Executive Vice President and Chief Operating Officer

Grant Tribble Executive Vice President, Chief Financial Officer and Treasurer

Joseph E. Herdina Vice President, Finance and Assistant Treasurer

Kimberly Johansen Vice President, Operations—Home and Community-Based Services

Thomas J. Kapusta Chief Legal Officer and Corporate Secretary, Vice President for Legal Audit and Compliance Services

James D. Krekelberg Vice President/Controller

Dean Mertz Vice President, Workforce Systems

Raye Nae Nylander Vice President, Affordable Housing

Mark A. Scharnberg Vice President, Revenue Systems

Linda Studer Vice President, Operations—Rehab-Skilled and Senior Living

Dr. Victoria Walker Chief Medical Officer

Rev. Greg Wilcox Vice President, Mission Effectiveness and Senior Pastor

Rustan Williams Vice President, Information Services/Technology Systems

Walter Woods President, Good Samaritan Foundation

Mr. David J. Horazdovsky, President and Chief Executive Officer, age 59, assumed his current position in July 2003. He joined the Society in August 1978, after receiving his bachelor’s degree in hospital administration and sociology from Concordia College in Moorhead, Minnesota. Mr. Horazdovsky served as an administrator for the Society at Windom and East Grand Forks, Minnesota, and at Eugene, Oregon, from 1978 until 1989, when he became Regional Director for Minnesota. Prior to his current position, he served as Vice President for Advancement, Support and Planning from 1994 to 1997, Vice President for Operations from 1997 to 2002, and Executive Vice President and Chief Operating Officer from January 2002 to July 2003. He was a member of the Society’s Board of Directors from 1985 until 1989, and is currently an ex officio member of the Board.

Ms. Bergen Peterson, Executive Vice President and Chief Administrative Officer, age 55, joined the Society in January 2015. Ms. Peterson served as Vice President of Strategic Planning and

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Collaboration at UnityPoint Health – St. Luke’s in Sioux City, Iowa from 2011 until she joined the Society. In that role she was responsible for organizational strategic planning and community collaboration. A member of the senior leadership team, she also had oversight for marketing; communications; human resources; and employee health and wellness. Previously, Ms. Peterson was Senior Vice President for Strategy and Planning and Senior Vice President and Chief Information Officer from 1999-2010 for Columbia Community Credit Union in Vancouver, Washington. She went to Columbia Community Credit Union after working for First Interstate Bancorp as the Vice President of Segment Management. Ms. Peterson earned a bachelor’s degree in finance from Marquette University; a master’s in business administration from Portland State University; and a master’s of science from the University of Oregon. She is also a Fellow Designate in the American College of Healthcare Executives. She has served communities in numerous ways, most recently as a loaned executive to the United Way of Siouxland; a supervisory committee member to the Vermillion Federal Credit Union; and a board member of UnityPoint at Home.

Mr. Thomas A. Syverson, Executive Vice President and Chief Operating Officer, age 50, assumed his current position on February 28, 2014. Prior to his appointment Mr. Syverson served as Vice President, Operations Systems—Northern Territory from July 2010 to February 2014. Mr. Syverson graduated from Augustana College in 1987 and began his career with the Society as an intern. After completing his internship at the Good Samaritan Society – Sioux Falls Center, he served as administrator of the Good Samaritan Society center in Syracuse, Nebraska from 1988 to 1996. He then transferred to Windom, Minnesota and served as administrator from 1996 to 2001. During that time he earned a master’s degree in applied gerontology from the University of North Texas. In 2001, Mr. Syverson joined the National Campus staff and began serving as an associate regional director and in 2002, he began serving as the regional director for Southern Minnesota. Mr. Syverson has served on a number of committees and task forces during his career recently served as the chairman of the National Association of Long Term Care Administrator Boards.

Mr. Grant Tribble, Executive Vice President, Chief Financial Officer and Treasurer, age 51, joined the Society in December 2014. Prior to joining the Society, Mr. Tribble served as Senior Vice President of Health System Operations and Chief Operating Officer of the Athens Regional Health System. In that role, he had oversight for all fiscal, financial and operational services for the health system, which employs more than 3,200 people. Mr. Tribble is also an educator for the University of Georgia, instructing graduate students in the areas of leadership, management and strategic management. Prior to that time, Mr. Tribble was Chief Financial Officer and Vice President of Finance for Athens Regional Medical Center, a role he held from 1998-2011. He was also President of the Athens Area Health Plan Select; Chief Financial Officer and Director of Finance and Reimbursement for the Visiting Nurse Health System in Atlanta; and Healthcare Audit Manager for KPMG, in Atlanta. Mr. Tribble is a certified public accountant and a Fellow in the American College of Healthcare Executives. He served as an infantry captain in the U.S. Army from 1985-1990. He earned a bachelor’s degree in business administration, a master’s degree in business administration and a master’s degree in public health, all from the University of Georgia. He has been heavily involved in civic organizations, including the Athens Area Community Foundation, the Boy Scouts, the United Way and the Food Bank of Northeast Georgia.

Mr. Joseph E. Herdina, Vice President, Finance and Assistant Treasurer, age 59, assumed his current position in December 2009. In this capacity he oversees Finance, Treasury, Billing, Purchasing and Insurance Procurement. Mr. Herdina is a Certified Public Accountant (Inactive) and spent eight years as an auditor in the healthcare industry and prepared Medicare and Medicaid cost reports before he began his career with the Good Samaritan Society in October 1986 as a reimbursement consultant. In May 1994, he moved to the position of department director, accounting services. He then assumed the role of

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Controller in June 2002. Mr. Herdina has a bachelor’s degree in business administration from the University of South Dakota.

Ms. Kimberly Johansen, Vice President, Operations—Home and Community-Based Services, age 57, graduated from the University of Nebraska Medical Center with a bachelor’s degree in nursing. In 1980, she began working for the Society in Hastings, Nebraska. She held several positions over the years including Medicare unit supervisor, director of nursing, director of apartment services, administrator of home health, and executive director of five Society communities. During that time, Ms. Johansen says she experienced the compassion that staff members showed her children in the child daycenter center, and the care provided to her mother and mother-in-law in the skilled care center. In 2010, Ms. Johansen moved to Sioux Falls as the director of Rehab and Skilled Care. In 2014, she started her current position.

Thomas J. Kapusta, Esq., Chief Legal Officer and Corporate Secretary, Vice President for Legal Audit and Compliance Services, age 60, joined the Society in March 2000, and serves as Chief Legal Officer and Corporate Secretary for the organization. In this role, he provides strategic leadership for Society corporate governance, legal, internal audit and compliance services. He also coordinates and manages all external legal activity and supervises staff and outside counsel. Further, he provides specialized legal advice in the area of health care law and regulation. Mr. Kapusta received his bachelor’s degree from the University of Wisconsin-Madison in English and Philosophy, his Juris doctorate degree from the Marquette University School of Law, a certificate in health law and policy from Pace University School of Law and a master of law in health law from Loyola University – Chicago School of Law. He has also received a certificate in management from Marquette University and a certificate of achievement in environmental law and policy from the George Washington University National Law Center. Mr. Kapusta is admitted to practice in the States of Connecticut, Illinois, South Dakota and Wisconsin. He is a member of the American Health Lawyers Association and serves on its Post-Acute and Senior Living Practice Group. He also serves on the Leading Age Legal Committee.

Mr. James D. Krekelberg, Vice President/Controller, age 58, began his career with the Society in March 1990. Prior to joining the Society, he worked in various accounting roles for national and local trucking companies. He has served the Society as a data control coordinator, data control consultant, senior data control consultant, department director for accounting service operations and as director, accounting services. In December 2009, Jim moved to the position of Controller and in January 2011, to Vice President/Controller.

Mr. Dean Mertz, Vice President, Workforce Systems, age 62, earned a bachelor’s degree in public health at South Dakota State University in 1977 and joined the Society in 1978. He also has a master’s degree in management with an emphasis on human relations and organizational behavior from the University of Phoenix. Mr. Mertz was the administrator at rehab/skilled care centers in Wymore, Nebraska; Prescott, Arizona; Kaneohe, Hawaii; and Palm Desert, California. At the Society’s national campus, he has held the positions of Regional Director for the Southwest Region, Director for Administrative Personnel, Vice President for Human Resources (since 1992) and Interim Vice President, Regional Operations (January through April 2010) In May 2010, Mr. Mertz was appointed to his current position, Vice President, Workforce Systems. In this role, he provides the overall strategic development and coordination of workforce development activities, which includes talent acquisition, talent management, learning and development, safety and environmental risk, employee relations as well as benefits and compensation. Mr. Mertz is a member of the Society for Human Resource Management at the national level.

Ms. Raye Nae Nylander, Vice President, Affordable Housing, age 64, assumed her current position in January of 2015. In this role she has responsibilities for all affordable housing development,

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acquisitions, property management and asset management. Before serving in her current role, Ms. Nylander served as Executive Vice President, Treasurer and Chief Financial Officer since January of 2002. She has also served as Vice President for Financial Services, Treasurer and Chief Financial Officer, senior division director for financial and payment systems within the Society. Ms. Nylander has a bachelor’s degree in accounting from National American University in Rapid City, South Dakota. She is a member of the National Affordable Housing Trust (“NAHT”), an affordable housing syndication organization of the largest 11 non-profit affordable housing developers in the country and is currently the chair of the board. She is also a member of NAHT’s sponsoring organization, Stewards of Affordable Housing for the Future established to enhance policy around the preservation of affordable housing.

Mr. Mark A. Scharnberg, Vice President, Revenue Systems, age 37, assumed his current position in January 2011. In this capacity he oversees Medicare and Managed Care Reimbursement and Compliance, Provider Network, Third Party Payor Contracts, Ancillary Services Contracts, Accounts Receivable and Billing, and Collections. In October 2001, Mr. Scharnberg joined the Society in an accounts receivable clinical project position. In April 2003, he transferred to a business office consultant position, which he held until August 2005, when he became the business office consultant supervisor. In March 2008, Mr. Scharnberg was named the director of accounts receivable, a position he held until assuming his current role. Mr. Scharnberg received bachelors’ degrees in accounting and management information systems from Augustana College, a master of business administration from the University of South Dakota, and is also a certified public accountant.

Ms. Linda Studer, Vice President, Operations—Rehab-Skilled and Senior Living, age 54, began serving as Vice President, Operations—Rehabilitation Skilled and Senior Living in June 2014. She graduated from Minnesota State University – Mankato in 1982 with a bachelor’s degree in social work. She began her career with the Society on May 2, 1983, as a social worker serving in this capacity at Society locations in Windom and Jackson, Minnesota, through 1991. In 1992, Linda joined the Society’s administrator-in-training program and went on to serve as an administrator in Socorro, New Mexico, Luverne, Minnesota and Sioux Falls, South Dakota, from 1992 to 2008. In 2008, she was named executive director for the Good Samaritan Society – Communities of Sioux Falls and in 2012 she moved into the role of director of operations for the Illinois/South Dakota Network. Linda has served on a number of task forces and committees during her career.

Dr. Victoria Walker, M.D., C.M.D., Chief Medical and Quality Officer, age 44, joined the Society in September 2013 as the organization’s first Chief Medical Officer. She grew up in rural Northern Iowa, where she was fortunate to live close to a large, extended family. Through their example, she learned the rewards of hard work, service to others and faithfulness. Dr. Walker earned a double major in biology and chemistry at Mt. Marty College in Yankton, South Dakota. She attended medical school at the University of South Dakota, where she was honored by election to the elite Alpha Omega Alpha Honor Medical Society (“AOA”). The motto of AOA is to be “worthy to serve the suffering,” an ongoing goal. Dr. Walker is a 2014-15 nonresidential American Political Science Association Congressional Fellow in Health and Aging Policy, placed with Altarum Institute and CMS, Center for Clinical Standards and Quality, Survey and Certification Group.

Rev. Dr. Greg Wilcox, Vice President, Mission Effectiveness and Senior Pastor, age 60, was ordained a Lutheran clergyman in 1983 and served a parish in Hendrum, Minnesota. He joined the Society in 1988, and served as Director for Spiritual Ministries prior to being named Vice President for Spiritual Ministries in 1998. Rev. Wilcox is a member of Lutheran Services in America and Augustana College’s Board of Trustees in Sioux Falls, South Dakota. He has developed the Society’s curriculum for lay ministry, the STAR Program, and the Society’s values program, The Good Samaritan Society Way. Rev. Wilcox leads retreats, seminars and workshops on the subjects of spirituality and aging. He received

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his bachelor’s degree from Augustana College and a master of divinity degree and doctor of ministry degree from Luther Seminary in St. Paul, Minnesota.

Mr. Rustan (Rusty) Williams, Vice President, Information Services/Technology Systems and Chief Information Officer, age 57, joined the Society in June 1997. Prior to joining the Society, he served as Chief Information Officer for the multi-state hospital division of Adventist Health Systems in Orlando, Florida. Mr. Williams has spent the last 35 years working in health care, serving in different application development, systems implementation and management positions. Recent assignments have included business development for a wellness and well-being service that the Society calls LivingWell@Home. He received a bachelor’s degree in business and administration and an associate’s degree in computer science from Southeast Missouri State University in Cape Girardeau, Missouri, and a master’s degree in business administration from Colorado Technical University in Sioux Falls, South Dakota. Mr. Williams is a member of the College of Healthcare Information Executives and the Center of Aging Services Technology, and has served as a committee member with the American Healthcare Association.

Foundation

The Society is the sole member of the Foundation. The Foundation bylaws call for board membership to be no fewer than three persons and no more than twenty-four persons. Membership currently is at 13 members. The bylaws also provide that the Chairperson of the Foundation’s Board of Directors will be the President of the Society and the Vice Chairperson of the Foundation’s Board will be the Chairperson of the Society’s Board of Directors. At least 51% of Board members need to be members of a Lutheran church and the remaining board membership can be from other Christian faiths. The bylaws provide that the Board of Directors may include up to five administrators of the Society’s Facilities.

Mr. Walter D. Woods, President, Good Samaritan Foundation, age 52, was elected President of the Foundation in 2015. He has over 20 years of social development experience working both with and for young people and people over 50 years old in America. Prior to joining the Foundation, Walter served as Vice President – Strategic Programs for the AARP Foundation (2010-2014), a consultant to The World Bank Group (2006-2010), Chief Development Officer for the Boys and Girls Clubs of Greater Washington (2004-2006) and Managing Director – Commercial Markets for the American Gas Association (1999-2004). Walter has published numerous marketing and sales articles including: “A Program for the 21st Century” for the Greater Washington Society of Association Executives magazine Executive Update, October 2000. Mr. Woods has a master’s of business administration from Northwestern University – J.L. Kellogg Graduate School of Management, Evanston, Illinois; a bachelor’s of business administration, cum laude, from Howard University, Washington DC; and completed the Executive Program for Non-Profit Leaders from Stanford University’s Graduate School of Business, Palo Alto, California. He has been added to the 2001 Associations Advance America Honor Roll by ASAE for developing a program that “resulted in significant benefit to American society” and given a 2003 Award of Excellence by ASAE for developing a program that resulted in “significant benefit to American society.”

OBLIGATED GROUP SOURCES OF REVENUE

The Society provides services ranging from skilled nursing to independent housing options to residents on a non-denominational and non-discriminatory basis. About 59% of the total number of residents served live in skilled nursing Facilities. Approximately 64% of the residents in the Society’s skilled nursing Facilities are covered by federal and state programs providing for payments on behalf of the residents to the Society, providing approximately 72% of the Society’s total skilled nursing revenues.

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The percentage of residents occupying skilled nursing beds paid for by governmental programs generally has been increasing over the last several years, although the revenue attributable to reimbursement from governmental programs by percentage of total revenue has been decreasing due to government rate increases below the increases from private payors. Most of these payments are made under the Medicaid program, where the federal government provides funds to participating states for medical assistance to “medically indigent” persons. Reimbursement under Medicaid programs varies for each state. See the caption “BONDHOLDERS’ RISKS—Federal and State Legislation and Regulation” in the body of the Official Statement. Governmental payments to skilled nursing Facilities generally do not represent full reimbursement for the particular Facility’s costs. Many states have a maximum reimbursable daily rate that effectively limits the amount paid to the Society for Medicaid patients, regardless of cost. In addition, all of the Society’s skilled nursing Facilities are qualified to admit Medicare patients and, in recent years, Medicare payments have represented an increasingly larger percentage of the Society’s total skilled nursing facility revenues.

The table below sets forth the percentage of the Society’s revenue by type of payor for each of the five years ended December 31, 2014.

Total Revenue Mix By Payor

2014 2013 2012 2011 2010

Private Pay 39.9% 39.3% 38.3% 38.1% 38.6% Medicaid 36.6 37.1 38.7 38.3 39.6 Medicare 23.5 23.6 23.0 23.6 21.8

Totals 100.0% 100.0% 100.0% 100.0% 100.0%

The table below sets forth the percentage of the Society’s skilled nursing and residential revenue by type of payor for each of the five years ended December 31, 2014.

Total Skilled Nursing and Residential Revenue Mix By Payor

2014 2013 2012 2011 2010


Totals 100.0% 100.0% 100.0% 100.0% 100.0%

The table below sets forth the percentage of the Society’s home and community based service revenue by type of payor for each of the five years ended December 31, 2014.

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HCBS Revenue Mix By Payor

2014 2013 2012 2011 2010


Totals 100.0% 100.0% 100.0% 100.0% 100.0%

The Society believes the percentage of private pay residents in skilled nursing Facilities generally will continue to decrease over the next several years, thereby limiting the Society’s ability to increase revenues by raising rates in those facilities. The Society is therefore focusing its efforts on increasing residential units, which are occupied primarily by private pay residents, and expanding home and community based services, which are paid for primarily by private sources. See “THE SOCIETY AND THE OBLIGATED GROUP—Strategic Direction—Service Line and Revenue Diversification.”

OBLIGATED GROUP FINANCIAL INFORMATION

Statement of Operations

The following statement of operations of the Obligated Group for Fiscal Years 2012, 2013 and 2014 has been extracted from the supplemental information of, and should be read in conjunction with, the consolidated financial statements of The Evangelical Lutheran Good Samaritan Society and Affiliates as of December 31, 2014 and 2013, audited by CliftonLarsonAllen LLP, certified public accountants and attached to the Official Statement as APPENDIX B.

The consolidated financial statements of The Evangelical Lutheran Good Samaritan Society and Affiliates attached to the Official Statement as APPENDIX B include information for certain affiliates of the Society that are not Members of the Obligated Group. For the fiscal year ended December 31, 2014, these affiliates represented approximately 7.2% of the combined total assets of the Society and its affiliates. The affordable housing properties account for 3.2% of the combined total cash flow of the Society and its affiliates, even though their contribution to the combined total operating loss is approximately 9.5%. Affordable housing properties, due to the rent structure employed by HUD, do not generate net operating gains. Therefore, reporting under generally accepted accounting principles will always reflect an operating loss for affordable housing properties. However, the goal of the rent structure design is that the properties will generate positive cash flow, which has been the Society’s experience with such properties. The supplementary schedules attached to the consolidated financial statements in APPENDIX B show the separate operating information for the Members of the Obligated Group on a consolidating and a consolidated basis.

The unaudited consolidated statement of operations of the Obligated Group as of and for the three months ended March 31, 2015 is set forth below. Although the figures are unaudited, the management of the Society believes that they present fairly the financial results and status of the Obligated Group in conformity with generally accepted accounting principles, applied on a basis consistent with the accompanying audited financial statements, which include the financial results for the Obligated Group contained in APPENDIX B. Operating results for the three months ended March 31, 2015 are not necessarily indicative of results which may be expected for the full fiscal year ending December 31, 2015.

Accounting standards require the results of operations, for facilities meeting the discontinued operation criteria as defined by accounting standards, to be presented comparatively in audited financial statements. As a result, the audited financial statements for the years ended December 31, 2014 and

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2013, include reclassifications to the 2013 statement of operations, when compared to the numbers previously issued in the audited financial statement for the years ended December 31, 2013 and 2012. The reclassifications had no impact on the overall change in net assets.

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Obligated Group Consolidated Statement of Operations 1

(In Thousands)

Obligated Group Consolidated

Statement of Operations 1

(In Thousands)

Year Ended December 31

Three Months Ended March 31

(Unaudited)

2014 2013 2012 20152 2014 Operating Revenues

Routine Care and ancillary services $929,270 $920,149 $908,430 $232,690 $234,159 Resource development 8,428 4,776 4,986 422 470 Net assets released from restriction 3,077 4,885 5,793 823 452 Other revenue 33,301 30,203 27,275 9,298 6,644

Total Operating Revenues $974,076 $960,013 $946,484 $243,233 $241,725 Operating Expenses

Housing and Services $666,378 $657,289 $655,924 $158,130 $162,026 Administrative 165,658 156,000 139,436 42,345 44,045 Employee health benefits 46,174 41,248 37,666 13,017 11,617 Resource development 3,972 3,970 3,804 652 993 General insurance 21,068 22,495 19,834 5,858 5,396 Interest 21,762 20,263 20,564 5,569 5,765 Depreciation 66,809 65,926 63,637 16,683 16,673

Total Operating Expenses $991,821 $967,191 $940,865 $242,254 $246,515 Operating Gain/(Loss) ($17,745) ($7,178) $5,619 $979 ($4,790) Nonoperating gains and other support 11,102 20,506 15,261 5,933 2,062 Gain/(Loss) on disposal of fixed

assets

(9,503)

(15,457)

(8,400) 710 (60) Net unrealized (losses) gains on

investments

13,306

7,888

16,105 2,028 4,543 Net assets released from restrictions 7,880 5,752 6,967 2,346 1,462 Loss from discontinued operations (7,361) (5,278) (3,429) 0 0 Loss on Extinguishment of Debt (1,355) (3,249) (3,230) 0 0 Change in Unrestricted Net Assets ($3,676) $2,984 $28,893 $11,996 $3,217 ____________________ 1 These financial statements present information for the Obligated Group only, drawn from a supplement to the Society’s audited financial statements, except for the three month interim periods, which are unaudited. The unaudited financial information includes all adjustments which the Society considers necessary for a fair presentation of the results of operations for such periods. Operating results for the three months ended March 31, 2015 are not necessarily indicative of results which may be expected for the full fiscal year ending December 31, 2015. The Society’s individual financial results are consolidated with its related affordable housing entities, the captive insurance company, Good Samaritan Holdings, LLC, the Foundation and HCBS, LLC (which was formed in 2014 but had no activity) for purposes of the audited financial statements. None of the affordable housing entities, the captive insurance company or Good Samaritan Holdings, LLC (which has no assets), however, is obligated to make any payments on the Bonds, nor does the Obligated Group have any legal right to the assets or revenues of those companies to support any payments required of any Member of the Obligated Group. See Appendix B of the Official Statement for more information. 2 The Statement of Operations for the three months ended March 31, 2015, does not include any operating information for HCBS, LLC and its related entities. See “THE SOCIETY AND THE OBLIGATED GROUP—HCBS, LLC.” Total operating revenues for such affiliates for the three month period ending March 31, 2015 were approximately $5.1 million (9.8% of Obligated Group total operating revenues for such period, including HCBS, LLC).

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Management’s Discussion of the Statement of Operations

Three Months Ended March 31, 2015. The total operating revenue for the first quarter of 2015 (“Q1-’15”) increased slightly compared to the first quarter of 2014 (“Q1-’14”) by 0.6%. Skilled nursing census declined in Q1-’15, however, the census for post-acute or short-term stay patients increased 3.7% due to additional post-acute beds coming on line and also because of increased sales efforts. The first quarter also marks the third quarter in a row that has seen an improvement in the net operating results due to cost reduction measures and post-acute revenue growth. Also, Q1-’15 operating expenses are $4.3 million below Q1-’14.

Essentially all functional categories of operating expenses for Q1-’15 are below the actual expenses from the prior year reflecting the attention management has placed on reducing costs in response to the census decline. The challenge continues for the Society to reduce costs in smaller locations because the variable costs tend to become more fixed and because minimum staffing requirements are in place. To that end, the Society’s board of directors has given approval for five locations to be sold or closed in the near future; the aggregate operating loss of these locations was $1.4 million in 2014. In the past five years, 17 locations have been closed or sold due to operating issues.

Dividend and investment income was flat for Q1-’15 compared to Q1-’14, however, the Society’s quarterly rebalancing of its investment portfolio has resulted in the Society realizing a gain on investments of $3.9 million in Q1’-15. The Society uses eight professional investment managers for various investment alternatives while maintaining a 55% equity and 45% fixed income split plus a short-term asset allocation for operating cash needs. The Society uses an investment advisor to continually review and evaluate the performance of the various fund managers.

Fiscal Year 2014. The 2014 audited net operating loss was $17.7 million with an additional $7.4 million net operating loss from discontinued operations. The operating revenues for 2014 grew by $14 million or 1.5% over 2013.

In 2014, the total occupancy (adjusting for closed facilities and new beds opened in other locations) declined by 1.1%. The Society’s census decline was due to rural facilities facing a decreasing population and to a reduction in admissions in more urban settings because hospitals are not electing to discharge as rapidly due to readmission concerns. Also, hospital discharges to home health instead of to post-acute settings has been identified as a reason for reduced post-acute census. The 2014 post-acute and skilled nursing patient census declined for all payor types with private pay and Medicare occupancy percentages reductions leading the way. The Society’s 2014 admissions declined 1.3% while the Medicare average length of stay of approximately 26 days remained constant in 2014.

The Society implemented a number of cost reduction measures in mid-2014 which resulted in improved net operating results for the third and fourth quarters. The cost reductions that were implemented immediately were intended to provide a quick turn-around of the negative operating results while other measures with longer-term savings were engaged. The immediate cost reduction measures included a reduction of national office staff, travel, overtime and consulting services. The long-term cost reductions include a standardized staffing to census approach, overtime reduction and the standardization of the food menus across the Society.

The health care industry is in the beginning stages of transition from a fee-for-service reimbursement model to a performance-based payment methodology. The long-term care industry and the Society are experiencing these changes as well. The Society is substantially increasing its efforts to obtain affiliation agreements with accountable care organizations and reduce re-hospitalizations and length of stays. The Society expects occupancy will be challenging again in 2015.

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The Society is also very active in acquiring home health agencies as well as growing existing agencies because of the increasing focus of providing care in the least costly location – at the care recipient’s home. In 2014, the Society’s home health revenue was $40.4 million compared to $34.2 million in 2013 and $30.4 million in 2012. The estimated total home health revenue for 2015 is $65.7 million.

Total operating expenses increased for 2014 over 2013 by $24.6 million, or 2.5%. Administration costs are the only category of expense that was significantly higher in 2014 than 2013 with a $9.7 million or 6.2% increase. The bad debt expense for 2014 was $1.4 million higher in 2014 than 2013 primarily due to the write-off of many Medicaid pending accounts determined to be uncollectable. Other major expenditures leading to this increase were increases in employee health insurance, professional liability insurance and one-time expenses related to training for the Society’s electronic medical record system.

Post-acute and skilled care facilities struggled to reduce variable expenses, primarily staffing, when census was declining due to a variety of reasons. Many smaller facilities do not have the economies of scale which makes staffing reductions hard to achieve, while other facilities are reluctant to cut staffing because attracting a stable workforce has been a challenge. The Society has fully implemented a uniform staffing and scheduling application which will assess staffing levels compared to current census on a daily basis. The application will also assist in controlling overtime. Also, in 2015, the Society will complete the implementation of a standard food menu which will result in lower food costs.

In 2014, the income available for debt service decreased $17.4 million to $80.9 million with $9.4 million of the decrease coming from interest income and realized gains on investments. As a result of the decrease in income available for debt service, the 2014 debt coverage ratio declined from 2.49 in 2013 to 2.05 in 2014, with the maximum annual debt service remaining the same.

Days cash on hand also decreased in 2015 from 164 days to 156 days.

Fiscal Year 2013. The total operating revenue for 2013 increased $13.5 million, or 1.4%, over the 2012 consolidated operating revenue. However, the 2013 total operating revenue was 1.3% below the budgeted total.

The Society’s post-acute services strategy produced positive results with a Medicare revenue growth of 4.5% for 2013, but the 2013 budget had Medicare revenue growth of 9.1%. Managed Care revenue growth in 2013 was up 3.9% over 2012, but a 14.9% budgeted increase was projected.

During 2013, the Society continued to focus and reposition its Rehabilitation/Skilled Care services to align with the emerging payment methodologies under the Affordable Care Act (“ACA”). The Society has locations that are the provider of choice in many markets; however, other locations are positioning to be the provider of choice through improved quality, lower hospital readmission rates and reduced average length of stays (“ALOS”).

This strategy is necessary for future revenue streams, but in 2013, the Society was still reimbursed for facility occupancy. As a result, there was a financial disconnect in moving from the pay-for-services reimbursement system in place to the emerging payment methodologies focused on lower occupancy through lower lengths of stay. This results in a downward pressure on the Society’s operations in the transition period. This conversion is necessary for the Society’s long-term mission viability, but causes some financial stress in the short-run.

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The strategies to lower ALOS and hospital readmissions are necessary for the growth of future revenue streams; however, these strategies affect current operations by reducing the number of Medicare and Managed Care census days. The Medicare ALOS reduced 0.5 days to 25.0 days from 2012 to 2013 while the Managed Care ALOS reduced 0.4 days to 20.3 days for the same comparison period. These ALOS improvements reduced Medicare days by 6,575 and Managed Care days by 1,500. Medicare and Managed Care (Skilled) admissions were 13,798 in 2013 compared to 12,432 in 2012. This 1,366 increase would have resulted in approximately 29,300 additional skilled days whereas the Society experienced a 6,739 increase. The difference of 22,561 days can be explained by reductions in ALOS (8,075 estimated) and reduced re-admissions from an acute care hospital resulting in a skilled stay of approximately 14,500 days.

The Society budgeted for Medicare and Managed Care census growth of 23.2 residents per day and a constant ALOS. These two factors lead to missing the 2013 budgeted amounts for Medicare and Managed Care revenues.

Medicaid and Managed Care Medicaid total revenue for 2013 declined 3.0% from 2012, and was 2.1% below the 2013 budget. Medicaid census for 2013 was approximately 90,000 resident days less than the 2012 Medicaid census. The reduction averaged about 1.5 Medicaid residents per day in each of the Society’s skilled care locations. Much of the decline was due to various Medicaid waiver programs several states have in place to allow Medicaid recipients to stay in housing and care options other than skilled nursing facilities. The Society expects this trend to continue into the future which is why another strategy for the Society is to expand Home and Community Based Services (HCBS).

HCBS operating revenues increased 11.1% or $4.3 million in 2013 over 2012, and was over the 2013 budget by 4.4% or $1.8 million. The Society recognizes the ACA’s goal to keep seniors and others in need of services in the lowest level of care possible and still achieve the quality of care goals for these individuals. The Society’s strategy is also to provide care wherever people live. The Society will continue to grow operating revenue in HCBS through acquisition and growth of existing agencies.

The total operating expenses increased similarly to the increase in operating revenues in 2013. The total operating expenses were up 2.8% over 2012, but were below the 2013 budgeted expenses by 1.1%. However, 2013 total operating revenues were below budget by $12.9 million, but total operating expenses were only $10.6 million below budget. As a result, the actual net operating loss was $5.9 million or $2.3 million more than the budgeted $3.5 million net operating loss.

Almost every functional expense category except rehabilitation expenses was below budget for 2013. Rehabilitation expenses increased due to the increase in post-acute census growth. Resident care expenses were below budget by $4.1 million and below 2012 expenses by $5.0 million. Administrators and their management appropriately reduced staffing as census declined in the affected facilities. Total direct staffing hours dropped in 2013 from 6.22 hours per resident per day to 6.10. This reduction in staffing resulted in approximately $7.2 million in reduced costs.

Administration and employee health benefit expenses grew by $20.1 million in 2013. This 11.3% increase was planned and was included in the 2013 budget. The increase in administration expenses primarily was incurred to position the Society for future. Fiscal year 2013 included a complete year of Electronic Medical Records (“EMR”) training and implementation which had begun in the 4th quarter of 2012. EMR costs for 2013 increased $6.9 million. The 2013 growth in the LivingWell@Home strategy and the outreach to those looking to the Society as a trusted resource though the Fulfillment Center added an additional $1.0 million in expense. Additional positions to support EMR and other software and hardware enhancements, plus growth in National Campus positions to support the Society’s strategic and tactical efforts increased costs by $2.9 million. The total EMR cost for 2013 was $8.2 million at National

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Campus and $2.5 million for training at the facilities. Group health insurance increased $3.5 million. Also contributing to the increase in administration expense was the write-off of bad debts. The completion of the consolidation of the billing and accounts receivable processes allowed the National Campus staff to better understand the receivables and it was determined that many write-offs should have occurred in prior years. The bad debt total also included two large prior year settlements with CMS due to HCBS claims made that lacked the proper documentation. There was an increase in bad debt write-off of $2.5 million above the reserve for bad debts for 2013.

Balance Sheet

The condensed balance sheet of the Obligated Group as of December 31, 2014 is presented below. The figures are excerpted from the audited financial statements included as APPENDIX B to the Official Statement, and in the opinion of the Society, as the Obligated Group Representative, present fairly the financial position of the Members of the Obligated Group, in conformity with generally accepted accounting principles, except that the consolidation and certain categorizations are not in conformance with generally accepted accounting principles.

Obligated Group Condensed Balance Sheet As of December 31, 2014

(In Thousands)

Assets Liabilities and Net Assets

Cash and Investments $358,233 Current Portion of Long-Term Debt $10,775 Accounts Receivable 83,465 Accounts Payable 36,228 Inventory 4,010 Accruals 65,705 Other Current Assets 27,898 Other Current Liabilities 45,160 Current Assets (Total) 473,606 Current Liabilities (Total) 157,868 Assets Restricted As To Use 84,337 Long-Term Indebtedness 570,064 Property (net of Accumulated

Depreciation) 944,471 Apartment Entry Fees and Other

Liabilities 113,797 Investments, Notes Receivable and

Other Assets 93,802 Net Assets 754,487

Total Assets $1,596,216 Total Liabilities and Net Assets $1,596,216

Management’s Discussion of the Balance Sheet

Three Months Ended March 31, 2015. Total unrestricted cash available for any purpose for Q1-’15 was $404.8 million. This total was down from Q1-’14 by $8.7 million, but was up from the end of 2014 by $6.4 million. Total Days Cash on Hand for Q1-’15 and for Q1-’14 were both at 164 days of operating expense. The Society’s Master Indenture requires 90 days of cash available.

The average age of plant for Q1-’15 was 14.8 years up slightly from one year ago despite first quarter property additions of $20.7 million. Fixed asset additions are financed a variety of ways. Larger projects are financed with the Society’s line of credit through various phases of construction and ultimately permanently financed with long-term tax-exempt bond debt with an equity position. Smaller fixed asset purchases tend to be financed with available cash and with donations restricted for a fixed asset purpose. The Society has a number of entry fee programs for independent living twin home development that is also a source of funding for fixed assets.

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The Current Maturities of Long-Term Debt as of March 31, 2015 include a $80.9 million balance on the Society’s line of credit. The line has grown in Q1-’15 from $71.9 million. The Bonds are expected to pay-down the existing line of credit. The Bonds will also potentially refinance three existing bond issues if the interest rates hold steady making the refinancing desirable. Management plans to renew the line of credit by the end of the year which is consistent with its annual practice.

Fiscal Year 2014. Total unrestricted cash for 2014 was $398.4 million down $10.9 million from the 2013 total of $409.3 million. Accounts receivable was down from 2013 by $0.8 million due to additional write-offs and collection efforts.

The total of fixed asset additions for 2014 was $ 106.3 million. These capital expenditures were financed with cash and the Society’s line of credit which increased $52.2 million in 2014. The Society did not incur any long-term debt in 2014. However, a significant amount of the line of credit will be paid off in mid-2015 with the Bonds. The total of the line of credit at the end of 2014 was $71.9 million.

Accounts payable for 2014 increased by $8.3 million. Also, defeased long-term bonds of $55.8 million were paid in 2014.

Historical Coverage of Pro Forma Maximum Annual Debt Service

($ in thousands)

2014 2013 2012

Excess (Deficit) of Revenue over Expense ($4,195) $2,168 $24,795 Unrealized (gain) loss on investments and derivatives (13,306) (7,889) (16,098) Interest expense 21,762 20,403 20,978 Depreciation expense 66,809 66,179 64,207 Amortization Expense (101) (188) 173 Loss on Disposal and Impairment of Property, Loss on

Extinguishment of Debt and Discontinued Operations 9,949 17,644 7,202 Income available for Debt Service $80,918 $98,317 $101,257

Pro Forma Maximum Annual Debt Service1 $36,916 $36,916 $36,916

Historical Coverage of Pro Forma Maximum Annual Debt Service

2.19x 2.66x 2.74x

____________________ 1 Based on the assumptions described under the caption “THE BONDS—Debt Service” in the body of this Official Statement, which in some cases are different than the assumptions required by the Master Indenture.

Capital and Operating Budgets

Operating Budgets. The operating budget for each Facility is prepared by the Facility’s administrator in September preceding the subject year. The unaudited financial statements as of June 30 are adjusted to project income and expense for the subject year. The administrator projects the rates which must be charged residents of the Facility. The forecasted statement of income and expense and rates are reviewed, modified if necessary, and approved by the Facility’s regional vice president. In some cases, rates and budgets are adjusted during the year. After approval by the regional vice presidents, the individual Facilities’ budgets are combined and adjusted into one aggregate budget by the Society.

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Capital Budgets. Toward the end of each year, the Society’s management proposes an annual capital budget to the Board, which covers both capital improvements to existing Facilities and the construction of new Facilities or purchase of home health agencies. The capital expenditure budget items are suggested by both regional vice presidents, development staff and executive leadership from in-depth market analyses, and are collected and refined by the Chief Financial Officer’s staff before presentation to the Board for action. The capital budget, as approved, sets forth projects which will be built (or acquired) at some time in the future, generally over the next few fiscal years. The budgeted amounts are spent in the year approved and in subsequent years (unless a particular project is cancelled).

The capital spending budgets approved for the fiscal years 2011 through 2015 as well as the total capital expenditures for that same period are reflected in the following table:

Capital Budget and Spending1 (In Thousands)

Year Capital Spending Approved Budget Actual Capital Spending

2011 $129,850 $91,550 2012 133,500 77,273 2013 118,091 103,529 2014 167,900 106,312 2015 260,100 196,0002

______________ 1Source of funds for capital spending include lines of credit, cash from operations, entrance fees, donations and bond financings. 2Society’s anticipated capital spending in 2015 for projects already approved.

The total capital expenditure budget approved by the Board for fiscal year 2015 for projects already approved is approximately $260,100,000. The Society’s total capital expenditures anticipated in 2015 for projects already approved are approximately $196,000,000. Management believes that additional capital projects will be approved as part of the 2015 capital budgeting process which will create capital expenditures in 2016 and beyond. In the event that net income from operations in not adequate to support the level of planned capital spending, management will not approve the start of such projects.

Of the total amount budgeted for capital expenditures in 2015, approximately $21,800,000 is for new Facilities and approximately $238,300,000 is for renovations and additions to and/or replacement of existing Facilities.

The Society is committed to keeping its current Facilities in good mechanical condition to ensure the safety and comfort of its residents. Also, the Society understands the need to have attractive housing options, and updates its Facilities on a routine basis to attempt to maintain or increase census levels. The Society continues to make significant investments in its information systems and technology to provide more timely and detailed information to management.

The Society expects to expand in the future in the areas of home health care and housing, financing the expansion by contributing approximately 30% of such capital expenditures from internal sources and by issuing debt obligations for the remaining 70% of such capital expenditures.

All capital expenditures for major projects are evaluated for their potential contribution of serving the Society’s mission, revenue generation and return on investment to ensure financial viability and mission sustainability. The annual capital budget is established largely on the basis of the amount of cash

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flow generated by operations. The Society balances the capital spending needs for its expansion and development plans, and reinvesting in existing Facilities, with the amount of cash flow. The capital spending target is $1.20 for every $1.00 of cash flow from operations, which achieves the goal of maintaining a strong balance sheet with the proper mix of cash to debt. Each capital spending project in excess of $500,000 is also analyzed on a rate of return basis for its contribution to future cash flow.

Series 2015 Project

The home health agencies, skilled nursing facilities and other health care and senior living facilities included in the Series 2015 Project are located in: Kissimmee, Florida (general remodeling and new roofs); Jeffersontown, Kentucky (post-acute addition); Waconia, Minnesota (a 3-story independent housing and assisted living addition and remodeling); Pine River, Minnesota (new HVAC and roof); Grand Island, Nebraska (post-acute and skilled nursing addition) and Sioux Falls, South Dakota (memory care building and National Campus building to a replace an operating leased building in addition to remodeling). A portion of the Bonds is expected to reimburse the Society’s line of credit for the acquisition of a number of home health agencies that operate in the vicinities of Fort Worth and El Paso, Texas.

Investment Portfolio

The Society manages its approximately $424,897,000 (as of December 31, 2014) investment portfolio (which includes some of its “assets restricted as to use”) by using eight style specific outside money managers and Wilshire Consulting Services to implement the investment strategy approved by a financial committee appointed by the Society’s Board of Directors. A high level of diversification is achieved through a mix of domestic and international equities, and fixed income and cash equivalent securities. Currently, the Society’s targets are approximately 34% fixed income, 41% equity (both domestic and international) and 25% cash and cash equivalents. Policy targets are periodically reviewed and are maintained by systematic quarterly rebalancing and by quarterly investment performance analyses by Wilshire Consulting Services, which are reviewed by the Society’s financial staff. In addition, the outside money managers report annually to senior staff and an investment sub-committee of the Board’s audit committee plus a representative from the Foundation board of directors. The Foundation’s smaller investment portfolio is managed by the same outside money managers in the same fashion. See Note 3 of the Society’s audited financial statements attached as APPENDIX B to the Official Statement for a description of the Society’s investment portfolio as of December 31, 2014 and 2013.

Charitable Contributions

Individual Facilities and the Society and the Foundation receive donations from various sources. In some cases, these gifts are designated for specified purposes and therefore restricted. Unrestricted gifts are available for any purpose of the Society, including debt service.

In accordance with U.S. generally accepted accounting principles, the Society treats restricted gifts as a direct addition to the fund balance on its financial statements, while unrestricted gifts are treated as income. In determining each Facility’s daily rate for services, the individual Facility does not take into consideration the possibility of receiving gifts.

Information on gifts to the Society and the Foundation for each of the five years ended December 31, 2014 is shown below:

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Fiscal Year Ended December 31 (In Thousands)

2014 2013 2012 2011 2010

Unrestricted Gifts Treated as Income: Unrestricted cash gifts $ 8,428 $ 4,776 $ 4,989 $ 3,728 $ 3,351 Donations of food and other supplies 5,860 4,103 4,588 5,221 4,050

$14,288 $8,879 $ 9,577 $ 8,949 $ 7,401

Restricted Gifts Added to Fund Balance 4,671 12,627 9,517 $ 7,216 $ 7,455 Total Gifts $18,959 $21,506 $19,094 $16,165 $14,856

OTHER INFORMATION

Employees

The Society, along with its affiliated HUD housing corporations, had approximately 10,647 full time and 8,388 part time employees (14,244 FTE’s) as of December 31, 2014. During the year ended December 31, 2014, the Society’s labor costs accounted for approximately 57.8% of the Society’s operating expense.

The Society has experienced satisfactory labor relations at its Facilities. At the present time, approximately 3.0% of the Society’s total employees (the majority of the employees at nine Society Facilities) are represented by unions. Other organizational attempts may be made in the future.

The Society provides various benefits to its employees. All employees who average 64 hours of work per pay period over four biweekly pay periods have an option to receive health, dental, life and accidental death and dismemberment insurance. The Society contributes 78% of single health and dental insurance premiums and pays 100% of the life and accidental death and dismemberment insurance premiums. Just over half of the Society’s employees are eligible for such health insurance coverage, and approximately 55% of those eligible have chosen that option. The Society also provides a retirement plan where the Society is presently paying into the plan 3.25% of salaries of all eligible employees, mainly administrators and certain other key personnel. For managerial employees (approximately 580 individuals), the Society pays an additional 3.75% of salaries into the pension plan. See Note 11 of the Society’s audited financial statements attached as APPENDIX B to the Official Statement.

Volunteers

The Society receives valuable support from an active volunteer program. The Society’s volunteers contributed approximately 269,765 hours of service in the Society’s Facilities in 2014. The services contributed by the volunteers enhance the quality of life for the residents of the Society’s Facilities, but do not replace the work of the Society’s employees, particularly the nursing staff.

Insurance

The Society’s Board of Directors authorized the formation of its own “captive” insurance company, as a self-insurance arrangement, in July 2000. The insurance company was incorporated in the Cayman Islands on November 24, 2000 and named Good Samaritan Society Insurance, LTD (“GSSI”). GSSI presently provides insurance coverage (only to the Society) for Workers Compensation and General, Professional and Automobile Liability. Also, GSSI insures the Society’s property deductible

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from $100,000 to $500,000 for hail claims. Additional coverage may be added to the self-insurance program in the future. See also “OBLIGATED GROUP OPERATING INFORMATION—General.”

A summary of the financial results of operation for the last three fiscal years of GSSI is provided below:

Fiscal Year Ended December 31 (In Thousands)

2014 2013 2012

Total Assets $46,299 $50,473 $46,958 Total Liabilities 33,383 36,689 29,774 Total Equity 12,916 13,784 17,184 Net Income (868) (3,400) 1,854

GSSI is not a member of the Obligated Group, and the Obligated Group has no ability to withdraw funds from GSSI. The Obligated Group Representative, however, has agreed to attempt to adjust premiums paid to GSSI so that GSSI’s net operating revenue is as small as is financially prudent.

Taxation

The Society and the Foundation are exempt from federal income taxation as charitable organizations described by Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, and from state income taxation in most states by comparable provisions of state laws. HCBS, LLC is a disregarded entity for federal tax purposes. Certain jurisdictions have from time to time sought to impose ad valorem property taxes on Society Facilities. Such attempts have generally been unsuccessful.

APPENDIX B

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES AUDITED, CONSOLIDATED FINANCIAL STATEMENTS AS OF AND

FOR ITS FISCAL YEARS ENDED DECEMBER 31, 2014 AND DECEMBER 31, 2013

[THIS PAGE INTENTIONALLY LEFT BLANK]

THE EVANGELICAL LUTHERAN

GOOD SAMARITAN SOCIETY AND AFFILIATES

CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013


THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES TABLE OF CONTENTS


INDEPENDENT AUDITORS' REPORT 1�

CONSOLIDATED FINANCIAL STATEMENTS�

CONSOLIDATED BALANCE SHEETS 3�

CONSOLIDATED STATEMENTS OF OPERATIONS 5�

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS 6�

CONSOLIDATED STATEMENTS OF CASH FLOWS 7�

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8�

INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTAL INFORMATION 35�

SUPPLEMENTAL INFORMATION�

CONSOLIDATED DEPARTMENTAL SUMMARY OF OPERATING EXPENSES 36�

CONSOLIDATED SUMMARY OF RESOURCE DEVELOPMENT ACTIVITY 38�

2014 CONSOLIDATING FINANCIAL STATEMENTS�

CONSOLIDATING BALANCE SHEET 39�

CONSOLIDATING STATEMENT OF OPERATIONS 43�

CONSOLIDATING STATEMENT OF CHANGES IN NET ASSETS 45�

CONSOLIDATING STATEMENT OF CASH FLOWS 47�

2014 CONSOLIDATING OBLIGATED GROUP FINANCIAL STATEMENTS�

CONSOLIDATING OBLIGATED GROUP BALANCE SHEET 51�

CONSOLIDATING OBLIGATED GROUP STATEMENT OF OPERATIONS 53�

CONSOLIDATING OBLIGATED GROUP STATEMENT OF CHANGES IN NET ASSETS 54�

CONSOLIDATING OBLIGATED GROUP STATEMENT OF CASH FLOWS 55�

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES TABLE OF CONTENTS (CONTINUED)


2013 CONSOLIDATING FINANCIAL STATEMENTS�

CONSOLIDATING BALANCE SHEET 56�

CONSOLIDATING STATEMENT OF OPERATIONS 60�

CONSOLIDATING STATEMENT OF CHANGES IN NET ASSETS 62�

CONSOLIDATING STATEMENT OF CASH FLOWS 64�

2013 CONSOLIDATING OBLIGATED GROUP FINANCIAL STATEMENTS�

CONSOLIDATING OBLIGATED GROUP BALANCE SHEET 68�

CONSOLIDATING OBLIGATED GROUP STATEMENT OF OPERATIONS 70�

CONSOLIDATING OBLIGATED GROUP STATEMENT OF CHANGES IN NET ASSETS 71�

CONSOLIDATING OBLIGATED GROUP STATEMENT OF CASH FLOWS 72�

(1) An independent member of Nexia International

INDEPENDENT AUDITORS' REPORT

Board of Directors The Evangelical Lutheran Good Samaritan Society and Affiliates Sioux Falls, South Dakota We have audited the accompanying consolidated financial statements of The Evangelical Lutheran Good Samaritan Society and Affiliates (the Society) (a North Dakota corporation) and its subsidiaries, which comprise the consolidated balance sheets as of December 31, 2014 and 2013, and the related consolidated statements of operations, changes in net assets, and cash flows for the years then ended, and the related notes to the consolidated financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Board of Directors The Evangelical Lutheran Good Samaritan Society and Affiliates

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Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Society and its subsidiaries as of December 31, 2014 and 2013, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

CliftonLarsonAllen LLP

Minneapolis, Minnesota April 24, 2015

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2014 AND 2013 (DOLLAR AMOUNTS IN THOUSANDS)

See accompanying Notes to Consolidated Financial Statements. (3)

2014 2013

ASSETS

CURRENT ASSETSCash and Cash Equivalents 15,600$ 23,529$ Investments 384,047 379,063 Accounts Receivable, Net 83,846 84,538 Notes and Other Current Receivables 1,911 2,084 Current Portion of Assets Limited as to Use - 57,403 Inventory 4,016 5,788 Prepaid Expenses 3,544 2,226 Securities Lending - Collateral Held for Loaned Securities 25,325 46,287

Total Current Assets 518,289 600,918

ASSETS LIMITED AS TO USEInvestments 75,051 62,698 Securities Lending - Investments Loaned to Broker 25,127 45,663

Total Assets Limited as to Use, Less Current Portion 100,178 108,361

PROPERTY AND EQUIPMENTLand and Land Improvements 160,874 157,741 Buildings and Improvements 1,447,061 1,421,726 Furniture and Equipment 262,085 256,228 Vehicles 18,815 17,902

Total 1,888,835 1,853,597 Less: Accumulated Depreciation (998,174) (960,132)

Subtotal 890,661 893,465 Construction and Development 110,593 81,758

Total Property and Equipment 1,001,254 975,223

OTHER ASSETSInvestments 33,804 32,421 Notes Receivable and Other Assets 33,878 18,709 Unamortized Financing Fees 4,446 4,851

Total Other Assets 72,128 55,981

Total Assets 1,691,849$ 1,740,483$

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2014 2013

LIABILITIES AND NET ASSETS

CURRENT LIABILITIESCurrent Maturities of Long-Term Debt 15,519$ 69,109$ Resident Funds and Prepaid Rents 5,560 9,953 Accounts Payable 40,221 29,973 Accrued Expenses:

Salaries and Wages 17,196 16,307 Vacation 26,987 27,018 Employee Benefits and Payroll Taxes 10,217 10,093 Insurance 38,698 37,075 Interest 1,569 2,712

Current Portion of Housing Entry Fees 8,687 8,687 Securities Lending - Payable Under Investment Loan Agreement 25,874 46,835 Other Current Liabilities 8,808 8,268

Total Current Liabilities 199,336 266,030

LONG-TERM DEBT, Less Current Maturities 590,021 572,424

OTHER LIABILITIESNon-Refundable Housing Entry Fees 17,775 17,621 Refundable Housing Entry Fees 87,297 80,993

Annuities and Other Liabilities 9,165 9,342 Total Other Liabilities 114,237 107,956

Total Liabilities 903,594 946,410

NET ASSETSUnrestricted:

Unrestricted 697,970 703,662 Non-Controlling Interest 11,890 11,535

Total Unrestricted 709,860 715,197 Temporarily Restricted 59,589 60,165 Permanently Restricted 18,806 18,711

Total Net Assets 788,255 794,073

Total Liabilities and Net Assets 1,691,849$ 1,740,483$

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (DOLLAR AMOUNTS IN THOUSANDS)


2014 2013

OPERATING REVENUEHousing and Services 938,525$ 928,992$ Resource Development 8,428 4,776 Net Assets Released from Restrictions for Operating Purposes 3,077 4,885 Other Revenue 32,242 29,827

Total Operating Revenue 982,272 968,480

OPERATING EXPENSEHousing and Services 669,892 660,443 Administrative 168,143 158,334 Employee Health Benefits 46,468 41,493 Resource Development 3,972 3,970 General Insurance 21,583 22,995 Interest 22,971 21,625 Depreciation 69,352 68,250

Total Operating Expense 1,002,381 977,110

OPERATING LOSS (20,109) (8,630)

NONOPERATING GAINS (LOSSES) AND OTHER SUPPORTInterest Income 6,415 7,364 Realized Gain on Investments 4,559 13,146 Unrealized Gain on Investments 13,306 7,888 Loss on Disposal and Impairment of Property (10,149) (15,467) Loss on Extinguishment of Debt (1,355) (3,249)

Total Nonoperating Gains and Other Support 12,776 9,682

EXCESS (DEFICIT) OF REVENUE OVER EXPENSE (7,333) 1,052

Net Assets Released from Restrictions for Capital Purposes 7,880 5,752 Change in Non-Controlling Interest 1,477 6,188

CHANGE IN UNRESTRICTED NET ASSETS BEFORE DISCONTINUED OPERATIONS 2,024 12,992

LOSS FROM DISCONTINUED OPERATIONS (7,361) (5,278)

CHANGE IN UNRESTRICTED NET ASSETS (5,337)$ 7,714$

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS



Temporarily Permanently Unrestricted Restricted Restricted Total

Deficit of Revenue over Expense (7,333)$ -$ -$ (7,333)$

Net Assets Released from Restrictions for Capital Purposes 7,880 - - 7,880

Net Assets Released from Restrictions - (10,957) - (10,957)

Restricted Contributions - 10,436 204 10,640

Change in Non-Controlling Interest 1,477 - - 1,477

Decrease in Beneficial Interest in Perpetual Trust - - (109) (109)

Change in Net Assets before Discontinued Operations 2,024 (521) 95 1,598

Loss from Discontinued Operations (7,361) (55) - (7,416)

Change in Net Assets (5,337) (576) 95 (5,818)

Net Assets - Beginning 715,197 60,165 18,711 794,073

Net Assets - Ending 709,860$ 59,589$ 18,806$ 788,255$

Temporarily Permanently Unrestricted Restricted Restricted Total

Excess of Revenue over Expense 1,052$ -$ -$ 1,052$

Net Assets Released from Restrictions for Capital Purposes 5,752 - - 5,752

Net Assets Released from Restrictions - (10,637) - (10,637)

Restricted Contributions - 15,399 1,108 16,507

Change in Non-Controlling Interest 6,188 - - 6,188

Increase in Beneficial Interest in Perpetual Trust - - 223 223

Change in Net Assets before Discontinued Operations 12,992 4,762 1,331 19,085

Loss from Discontinued Operations (5,278) (71) - (5,349)

Change in Net Assets 7,714 4,691 1,331 13,736

Net Assets - Beginning 707,483 55,474 17,380 780,337

Net Assets - Ending 715,197$ 60,165$ 18,711$ 794,073$

2013

2014

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATED STATEMENTS OF CASH FLOWS



2014 2013

CASH FLOWS FROM OPERATING ACTIVITIESChange in Net Assets (5,818)$ 13,736$ Adjustments to Reconcile Change in Net Assets to Net Cash Provided by Operating Activities:

Reconciling Items Included in Discontinued Operations 6,110 3,489 Depreciation 69,352 68,250 Amortization 57 (19) Provision for Bad Debts (2,496) 799 Housing Entry Fees and Annuities Revenue (3,278) (3,491) Realized and Unrealized Gain on Investments (17,865) (21,034) Change in Beneficial Interest in Perpetual Trusts 109 (223) Loss on Disposal and Impairment of Property 10,149 15,467 Loss on Refinancing of Debt 1,355 3,249 Change in Non-Controlling Interest (1,477) (6,188) Reclassification of Restricted Contributions (4,812) (12,404) Change in Assets:

Accounts Receivable 6,115 (2,341) Other Current Assets 618 375

Change in Liabilities:Resident Funds, Prepaid Rents and Accounts Payable 5,270 (2,483) Accrued Expenses and Other Current Liabilities (1,772) 7,920

Net Cash Provided by Operating Activities 61,617 65,102

CASH FLOWS FROM INVESTING ACTIVITIESChange in Investments 29,436 (9,058) Change in Notes Receivable and Other Assets (3,450) (1,828) Business Acquisitions (18,250) (3,651) Property Additions (110,877) (101,132) Proceeds from Sale of Property 3,541 1,099

Net Cash Used by Investing Activities (99,600) (114,570)

CASH FLOWS FROM FINANCING ACTIVITIESProceeds from Annuities Issued and Housing Entry Fees 21,086 18,577 Refund of Housing Entry Fees (11,448) (9,938) Payment of Financing Fees (513) (1,163) Proceeds from Long-Term Debt Borrowings 27,000 47,141 Repayment of Long-Term Debt (12,348) (17,164) Proceeds from Contributions 6,277 17,915

Net Cash Provided by Financing Activities 30,054 55,368

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (7,929) 5,900

Cash and Cash Equivalents - Beginning of Year 23,529 17,629

CASH AND CASH EQUIVALENTS - END OF YEAR 15,600$ 23,529$

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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NOTE 1 ORGANIZATION

Organization and Principles of Consolidation The financial statements include the consolidated accounts of The Evangelical Lutheran Good Samaritan Society, a North Dakota non-profit corporation; its wholly owned Cayman Islands captive insurance company, Good Samaritan Society Insurance, Ltd; its controlled foundation, The Evangelical Lutheran Good Samaritan Foundation, a Minnesota non-profit corporation; its controlled affordable housing entities, South Dakota non-profit corporations and tax credit limited partnerships; Good Samaritan Holdings, LLC, its controlled residential facilities and Good Samaritan Society HCBS, LLC which was formed in 2014 but had no activity (collectively, the Society). All material intercompany balances, transactions, and earnings have been eliminated. The Society operates in communities throughout the United States. Housing and services for seniors are provided within the communities the Society operates through a continuum of care including skilled and rehab services, senior housing with services, and home and community based services. As of December 31, 2014, the Society owned or leased 172 continuum of care communities, 37 home care, hospice and private duty agencies; and controlled 30 operating affordable housing and senior housing with services projects, in 24 states. As of December 31, 2013, the Society owned or leased 177 continuum of care communities, 34 home care, hospice and private duty agencies; and controlled 29 operating affordable housing and senior housing with services projects, in 24 states. The Society funds some of its insurance deductible and self-insurance obligations through Good Samaritan Society Insurance, Ltd (GSSI). The contracts between GSSI and the Society are deposit contracts in which GSSI agrees to reimburse or indemnify the Society for certain deductible and self-insurance obligations related to its operations. The contracts are not considered insurance for U.S. accounting, tax, or regulatory purposes. As of December 31, 2014 and 2013, the Society managed 14 and 11 facilities, respectively, owned by others and was also an equity member in two joint venture relationships, which it does not control. The consolidated financial statements do not include the accounts of the managed facilities or the joint ventures, which the Society does not control (Note 8). Corporate Governance and Compensation The Society’s Board of Directors has adopted a Policy Governance Program to guide and direct Board activities relating to organizational performance.



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NOTE 1 ORGANIZATION (CONTINUED)

Corporate Governance and Compensation (Continued) The Society’s employee compensation plan includes all positions within the Society’s National Campus and field Administrators/Executive Directors and Executive Managers. The compensation plan is reviewed, re-calibrated and updated every five years through the use of an external consultant, which last occurred in 2011. During this review the compensation plan is evaluated, updated and re-calibrated to be 100% competitive at the 50th percentile of the national labor market. Obligated Group The Evangelical Lutheran Good Samaritan Society and The Evangelical Lutheran Good Samaritan Foundation are the members of the Obligated Group under a Master Trust Indenture which secures a major portion of the Society’s debt. Each member of the Obligated Group is required to secure the related debt by a pledge of gross revenues and a security interest in any fund or account in which gross revenues are deposited subsequent to a default. In addition, each member of the Obligated Group is jointly and severally liable for all debt under the indenture. Non-Controlling Interest The non-controlling interest at December 31, 2014 and 2013 includes other partners’ interests related to the ventures of six and four tax credit limited partnerships, respectively. The tax credit limited partnerships are consolidated in these financial statements for the years ended December 31, 2014 and 2013. The net assets attributed to the non-controlling partner are reported as non-controlling interest within unrestricted net assets on the consolidated balance sheets. In February 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-02 “Consolidation”. The amendments in this ASU clarify that limited partnerships will be variable interest entities unless the limited partnership provides partners with either substantive kick-out or participating rights over the general partner and removes the presumption that a general partner should consolidate a limited partnership. The amendments in the ASU are effective for fiscal periods beginning after December 15, 2015 for public entities, as defined, therefore the amendments will be effective for our consolidated financial statements for the year ending December 31, 2016. The adoption of the amendment is expected to result in the non-controlling limited partnerships no longer being consolidated in our financial statements. Tax Exempt Status The Society’s U.S. domiciled entities are exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code or are pass-through entities not subject to tax. Good Samaritan Society Insurance, Ltd. is an exempt company under the Companies Law of the Cayman Islands.



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NOTE 1 ORGANIZATION (CONTINUED)

Tax Exempt Status (Continued) The Society follows the accounting standard for contingencies in evaluating the accounting for uncertainty in income taxes recognized in an entity’s financial statements. This standard prescribes recognition and measurement of tax provisions taken or expected to be taken on a tax return that are not certain to be realized. The Society’s income tax returns are subject to review and examination by federal, state, and local authorities. The Society is not aware of any activities that would jeopardize its tax-exempt status. The tax returns for the years 2011 to 2013 are open to examination by federal, local, and state authorities. Social Accountability The Society provides charitable services and housing for residents who are not able to pay the full rates associated with the services they receive from the Society. In addition, the Society contributes to the communities it serves in a variety of ways. These include, but are not limited to: providing free meals; conducting health fairs for seniors; volunteering employees’ time to deliver meals; furnishing meeting spaces to local churches, support groups, and service societies; and providing free transportation for seniors living in the communities served by the Society.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Basis of Presentation Contributions received are recorded as an increase in unrestricted, temporarily restricted or permanently restricted support, depending on the existence or nature of any donor restrictions. Accordingly, net assets of the Society and changes therein are classified and reported as follows:

Unrestricted – Those resources over which the board of directors has discretionary control. Designated amounts represent those revenues which the board of directors has set aside for a particular purpose.



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NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Basis of Presentation (Continued) Temporarily Restricted – Those resources subject to donor imposed restrictions which will be satisfied by actions of the Society or passage of time. The Society has elected to present temporarily restricted contributions that are fulfilled in the same period within the unrestricted net assets class.

Permanently Restricted – Those resources subject to a donor imposed restriction that must be maintained permanently by the Society.

Unconditional promises to give cash and other assets are accrued at estimated fair market value at the date each promise is received. The gifts are reported as either temporarily or permanently restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction is satisfied, net assets are released and reported as an increase in unrestricted net assets. Income earned on temporary or permanently restricted support, including capital appreciation is recognized in the period earned. Cash and Cash Equivalents For purposes of the consolidated statements of cash flows, the Society considers all cash and short-term investments with an original maturity of three months or less to be cash and cash equivalents. The carrying amount of cash equivalents is a reasonable estimate of fair value. The Society’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and temporary cash investments. The Society believes it places its cash and cash equivalents and temporary cash investments with high quality credit institutions. At times such investments may be in excess of the FDIC insurance limit. Investments Investments in equity securities with readily determinable fair values and all investments in debt securities are measured at fair value in the accompanying consolidated balance sheets. Investment income or loss (including realized and unrealized gains and losses on investments, interest and dividends) is included in the excess (deficit) of revenue over expense unless the income or loss is restricted by donor. The cost of securities sold is based on the specific identification method. The Society has investments in a variety of investment funds. The Society’s investment policy limits investing to investment grade securities. The investment portfolio is governed by a policy that is reviewed quarterly by the board of directors. In general, investments are exposed to various risks such as interest rate, credit and overall market volatility. Due to the level of risk associated with certain investments, it is reasonably possible that change in the values of the investments will occur in the near term and that such changes could materially affect account balances and the consolidated statements of operations.



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Securities Lending The Society participates in securities lending transactions through a program managed by its custodial bank. A portion of its investments are loaned to selected established brokerage firms in return for cash which the Society uses to purchase other investments. These investments are collateral for the original investments loaned. Under terms of its securities lending agreement, the program requires brokers who borrow securities from the Society to provide collateral of a value of at least equal to 102% of the then fair value of the loaned securities. Valuations of the collateral pools are provided to the Society by the custodial bank. At December 31, 2014 and 2013, the excess of the obligation to return the collateral investments over the fair market value of the collateral received of $549 and $548, respectively, have been recorded as an unrealized loss on investments on the consolidated statements of operations. Accounts Receivable The Society uses the allowance method to account for uncollectible accounts. The allowance is based on management’s estimate of potential bad debts as well as historical collection history. When the Society has exhausted all collection efforts and accounts are deemed uncollectible, they are written off against the allowance for doubtful accounts. Accounts receivable are net of an allowance for doubtful accounts of approximately $4,388 and $6,916 as of December 31, 2014 and 2013, respectively. Inventory Inventory consists principally of food, unused linens, office supplies, and housekeeping supplies. Inventories are valued at cost determined by the first-in, first-out (FIFO) method. Assets Limited as to Use Assets limited as to use include assets designated by the Society (over which it retains control and may, at its discretion, subsequently use for other purposes) for funded depreciation and debt retirement funds, insurance fund reserves, development funds, endowment and annuity funds, assets held by trustees under bond and mortgage indenture agreements, and assets held under HUD regulatory agreements and other affordable housing agency agreements. Interest earned on assets held by trustees under bond and mortgage indenture agreements is included in interest expense on the consolidated statements of operations. Property and Equipment Property and equipment with an original cost at or above five hundred dollars is recorded at cost for purchased assets or fair market value at date of receipt for donated assets. Depreciation of property is provided on the straight-line basis. Depreciation rates are based on the estimated useful lives of the assets and/or the rates allowed by the Medicare and Medicaid regulations applicable to each state.



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Property and Equipment (Continued) The lives used are as follows:

Property Useful LivesLand Improvements 10 - 30 YearsBuildings 5 - 40 YearsFurniture and Equipment 3 - 20 YearsVehicles 2 - 6 Years

Maintenance, repairs, and replacements which do not improve the assets or extend the assets’ lives are expensed as incurred. Costs of additions and improvements are added to the land, land improvements, buildings, and furniture and equipment accounts. Construction and development costs have been deferred until the projects have been completed. When the projects are completed, these costs will be capitalized and depreciated over the life of the projects. If the projects are cancelled, the construction and development costs are expensed during that period. The Society reviews its property and equipment periodically to determine potential impairment. If determined that the carrying value exceeds the fair market value, an impairment loss is recognized. Interest Capitalization Interest costs incurred on borrowed funds during the period of construction of capital assets are capitalized as a component of the cost of acquiring those assets, and depreciated over the estimated useful lives by the straight-line method of depreciation. Notes Receivable and Other Assets Included in notes receivable and other assets are notes receivable, investments in perpetual trusts, investments in unconsolidated joint ventures, intangible assets as a result of home care acquisitions and funds escrowed for the purchase of a home health entity. The notes receivable are evaluated for collectability on a periodic basis, and an allowance for doubtful accounts is established based upon management’s estimate of potential bad debts. The investment in perpetual trust is recorded at market value, and includes the Society’s portion of beneficial interest in the perpetual trusts. The Society reports its investments in unconsolidated joint ventures on the equity method of accounting which approximates the Society’s equity in the underlying book value of the unconsolidated joint ventures.



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Notes Receivable and Other Assets (Continued) Intangible assets represent costs assigned to customer lists, licenses, and goodwill purchased when acquiring home health entities. In December 2014, Good Samaritan Society HCBS, LLC entered into an agreement to purchase ACH Health Services, Inc. a home health care, hospice care and supportive care service provider for $18,250. The purchase price was deposited into escrow by the Society and included in other assets at December 31, 2014. Subsequent to year end the transaction closed and the Society took over operations. Unamortized Financing Fees Costs incurred in connection with the issuance of long-term debt are capitalized and amortized over the historical outstanding term of the related indebtedness. Total finance fees were $8,719 and $9,075 for the years ended December 31, 2014 and 2013, respectively. Accumulated amortization at December 31, 2014 and 2013 was $4,273 and $4,224 respectively. Amortization expense for the years ended December 31, 2014 and 2013 was $907 and $892, respectively. Housing Entry Fees The Society has housing entry fees for admittance into housing units at various locations. These contracts for housing entry fees vary by location, and typically have varying refundable portions up to 100% of these entry fees. The refundable portions of the housing entry fees are refundable based upon time restrictions and vacancy of the housing unit. The nonrefundable portion of the housing entry fees are recorded as deferred revenue and amortized into income over the life expectancy of the resident and fully recognized when the resident vacates its unit. The Society records a current portion of housing entrance fees that is expected to be refunded in the next year. Charitable Gift Annuities Payable The Society has established a gift annuity program whereby donors may contribute assets to the Society in exchange for the right to receive a fixed dollar annual return during their lifetime, averaging approximately 6.91% and 7.73% for 2014 and 2013, respectively. The difference between the amount provided for the gift annuity and the present value of the liability for future payments is recognized as a contribution at the date of the gift as specified by the donor. The Society uses published mortality rate tables adopted by the Social Security Administration. The annuity liability is revalued annually based upon computed present values. Upon the death of a beneficiary, the related annuity is terminated and no further obligation exists to the deceased beneficiary’s estate. The Society records the annuity liability at the present value of future payments using a discount rate of 5%. Total charitable gift annuities payable as of December 31, 2014 and 2013 were $3,214 and $3,231, respectively, and included in annuities and other liabilities in the consolidated balance sheets.



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Asset Retirement Obligations Asset retirement obligations represent obligations to dispose of assets that are legally required to be removed at a future date. They are recorded at the net present value using a risk-free interest rate and inflationary rate, and are included in annuities and other liabilities in the consolidated balance sheets. The asset retirement obligation was $5,510 and $5,591 at December 31, 2014 and 2013, respectively, and is included in annuities and other liabilities on the consolidated balance sheets. Housing and Services and Third Party Reimbursement Agreements Housing and services revenue includes rent, room charges and ancillary services to residents of the skilled and rehab service facilities, senior housing with service facilities, and home and community based services and is recorded at established billing rates net of contractual adjustments resulting from agreements with third-party payers, if applicable. The services provided through third-party payers are primarily paid through the Medicaid and Medicare programs. The Medicaid programs are covered through the state departments of health and rates charged are in accordance with the rules established in those states. The Medicare program is administered by the United States Centers for Medicare and Medicaid Services (CMS). The Medicare program pays on a prospective payment system, a per diem price based system or an episodic based system for home and community based services. The approximate percentage of housing and services revenue provided from Medicaid and Medicare reimbursement programs for the years ended December 31, 2014 and 2013 was:

2014 2013Medicaid and Medicaid Managed Care 36.6 % 37.1 %Medicare and Medicare Managed Care 23.5 23.6

Total 60.1 % 60.7 %

Revenue under third-party payer agreements is subject to audit and, in certain instances, retroactive adjustments. Provisions for estimated third-party payer settlements are provided in the period the related services are rendered. Differences between the estimated and final settlements are reported in operations in the year of settlement. The approximate percentage of housing and services revenue by product line for the years ended December 31, 2014 and 2013 was:

2014 2013Rehabilitation/Skilled Nursing 78.9 % 79.9 %Senior Housing with Services 17.2 16.8Home and Community Based Services 3.9 3.3

Total 100.0 % 100.0 %



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Housing and Services and Third Party Reimbursement Agreements (Continued) Skilled and rehab service facilities and home health and hospice agencies licensed for participation in the Medicare and Medicaid programs are subject to annual licensure renewal. If it is determined that a facility is not in substantial compliance with the requirements of participation, CMS may impose sanctions and penalties during the period of noncompliance. Such a payment ban would have a negative impact on the revenues of the Society. Donated Services Substantial amounts of services are donated by individuals to the Society each year. The income and expenses attributable to donated services are not reflected in the consolidated statements of operations. These services enhance the quality of care furnished to Society residents but do not represent services that would require additional Society staffing if the services were not provided on a volunteer basis. Excess (Deficit) of Revenue over Expense The consolidated statements of operations include a line entitled “excess (deficit) of revenue over expense” which is the performance indicator for the Society. Changes in unrestricted net assets which are excluded from the performance indicator, consistent with industry practice, include grant proceeds for capital purposes, assets released from restriction for capital purposes, contributions of long-lived assets (including assets acquired using contributions which by donor restriction were to be used for the purpose of acquiring such assets), permanent transfers of assets to and from affiliates for other than goods or services, and loss on discontinued operations. Disclosure of Cash Flow Information Noncash investing and financing activities are as follows:

2014 2013Noncash Property Gifts 379$ 1,087$ Bond Escrow Funds for Advance Refunding:

Used to Pay Off Long-Term Debt 57,483 3,249 Refinancing of Long-Term Debt 25,200 38,300 Construction in Progress Included in Accounts Payable 3,354 2,186Cash Payment for Interest 27,112 25,024

Restrictions on Assets of Affordable Housing Entities The affordable housing entities’ operations are subject to the administrative directives, rules, and regulations of certain regulatory agencies, primarily the U.S. Department of Housing and Urban Development (HUD). Accordingly, the availability of these corporations’ net assets is severely limited. No distributions can be paid out of the corporations and the assets cannot be diverted to another use.



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Fair Value Measurements The Society follows the Fair Value Measurements accounting standard. The standard emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability and establishes a fair value hierarchy. The fair value hierarchy consists of three levels of inputs that may be used to measure fair value as follows:

Level 1 – Inputs that utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Society has the ability to access.

Level 2 – Inputs that include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Fair values for these instruments are estimated using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows.

Level 3 – Inputs that are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Additionally, from time to time, the Society may be required to record at fair value other assets on a nonrecurring basis in accordance with GAAP. These adjustments to fair value usually result from the application of the lower-of-cost-or-market accounting or write down of individual assets. Nonfinancial assets measured at fair value on a nonrecurring basis would include nonfinancial assets and nonfinancial liabilities measured at fair value in the second step of a goodwill impairment test, other real estate owned, and other intangible assets measured at fair value for impairment assessment. The Society also has the irrevocable option to elect fair value for the initial and subsequent measurement for certain financial assets and liabilities on an instrument-by-instrument basis. The Society has not elected to measure any existing financial instruments at fair value, however, may elect to measure newly acquired financial instruments at fair value in the future. Reclassification Amounts in the consolidated balance sheet as of December 31, 2013 and the related consolidated statement of operations, changes in net assets and cash flows for the year then ended have been reclassified to conform to the 2014 classification.



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Subsequent Events In preparing these consolidated financial statements, the Society has considered events and transactions that have occurred through April 24, 2015, the date the consolidated financial statements were issued.

NOTE 3 INVESTMENTS

The fair value of investments is based upon quoted market prices for those or similar investments. Investment portfolios consisted of the following at December 31, 2014 and 2013:

ObligatedGroup Other Total

Equities 191,234$ 4,091$ 195,325$ U.S. Government Securities 57,189 15,009 72,198 Corporate Debt Securities 120,848 21,877 142,725 Commercial Paper 14,358 - 14,358 Money Market Funds 80,113 13,310 93,423

Total 463,742$ 54,287$ 518,029$

Balance Sheet Classifications:Current Assets 345,620$ 38,427$ 384,047$ Assets Limited as to Use (Note 6) 84,337 15,841 100,178 Other Assets 33,785 19 33,804

Total 463,742$ 54,287$ 518,029$

2014

ObligatedGroup Other Total

Equities 153,544$ 3,845$ 157,389$ U.S. Government Securities 134,821 17,363 152,184 Corporate Debt Securities 111,440 17,551 128,991 Commercial Paper 25,450 - 25,450 Money Market Funds 106,578 6,656 113,234

Total 531,833$ 45,415$ 577,248$

Balance Sheet Classifications:Current Assets 347,225$ 31,838$ 379,063$ Assets Limited as to Use (Note 6) 152,187 13,577 165,764 Other Assets 32,421 - 32,421

Total 531,833$ 45,415$ 577,248$

2013

Total unrealized gains on investments held at December 31, 2014 and 2013 were $45,601 and $32,608 respectively.



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NOTE 4 FAIR VALUE MEASUREMENTS

The Society uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. For additional information on how the Society measures fair value refer to Note 2 – Summary of Significant Accounting Policies. The following tables present the fair value hierarchy for the balances of the assets and liabilities of the Society measured at fair value on a recurring basis as of December 31, 2014 and 2013: Assets and Liabilities Recorded at Fair Value on a Recurring Basis

December 31,Assets: 2014 Level 1 Level 2 Level 3Investments Equities 195,325$ 195,325$ -$ -$ U.S. Government Securities 72,198 72,198 - - Corporate Debt Securities 142,725 - 142,725 - Commercial Paper 14,358 - 14,358 - Securities Lending Collateral 25,325 - 25,325 - Perpetual Trust 4,394 - - 4,394 Total 454,325$ 267,523$ 182,408$ 4,394$

December 31,Assets: 2013 Level 1 Level 2 Level 3Investments Equities 157,389$ 157,389$ -$ -$ U.S. Government Securities 152,184 152,184 - - Corporate Debt Securities 128,991 - 128,991 - Commercial Paper 25,450 - 25,450 - Securities Lending Collateral 46,287 - 46,287 - Perpetual Trust 4,503 - - 4,503 Total 514,804$ 309,573$ 200,728$ 4,503$

The following tables provide a summary of changes to fair value of the Society’s Level 3 financial assets and liabilities for the years ended December 31, 2014 and 2013.

PerpetualTrust

Beginning Balance - January 1, 2014 4,503$ Total Gains or Losses (Realized or Unrealized) for the Year Included in:

Interest and Dividend Income 137 Unrealized Gains 57

Purchases, Sales, Issuances and Settlements, Net (303) Ending Balance - December 31, 2014 4,394$



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NOTE 4 FAIR VALUE MEASUREMENTS (CONTINUED)

Assets and Liabilities Recorded at Fair Value on a Recurring Basis (Continued)

PerpetualTrust

Beginning Balance - January 1, 2013 4,280$ Total Gains or Losses (Realized or Unrealized) for the Year Included in:

Interest and Dividend Income 91 Unrealized Gains 61

Purchases, Sales, Issuances and Settlements, Net 71 Ending Balance - December 31, 2013 4,503$

Gains and losses related to the Society’s Level 3 financial assets and liabilities included in change in net assets are recorded on the consolidated statements of changes in net assets as increase (decrease) in beneficial interest in perpetual trust for the years ended December 31, 2014 and 2013. Trading securities, securities lending collateral, and bond indenture funds (securities) are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions, and other factors such as credit loss assumptions. Securities valued using Level 1 inputs include those traded on an active exchange, such as the New York Stock Exchange, as well as U.S. Treasury and other U.S. government and agency mortgage-backed securities that are traded by dealers or brokers in active over-the-counter markets. Securities valued using Level 2 inputs include private collateralized mortgage obligations, municipal bonds, and corporate debt securities. Securities valued using Level 3 include a Perpetual Trust which is valued on the fair value of the assets of the trust. The significant unobservable input used in the fair value measurement of the Society’s beneficial interest in perpetual trust is their allocated portion of the underlying trust assets. Significant changes in this input could result in a significant change to the fair value measurement.



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The following tables present the fair value hierarchy for the balances of the assets of the Society measured at fair value on a non-recurring basis as of December 31, 2014 and 2013: Assets and Liabilities Recorded at Fair Value on a Non-Recurring Basis

December 31,Assets 2014 Level 1 Level 2 Level 3Property and Equipment 11,423$ -$ -$ 11,423$

December 31,Assets 2013 Level 1 Level 2 Level 3Property and Equipment 44,904$ -$ -$ 44,904$

In accordance with the provisions of the Impairment or Disposal of Long-Lived Assets accounting standard, long-lived assets held and used with carrying values of $25,598 and $56,954 were written down to their fair value of $11,423 and $44,904 at December 31, 2014 and 2013, respectively, resulting in impairment charges of $14,175 and $12,050, being included in operations for the years ended December 31, 2014 and 2013, respectively. The Society considers the need for impairment on its facilities annually. Potentially impaired facilities are identified by those with negative operating performance. Facilities identified with negative operating performance are then reviewed further by management to determine if the negative operations can be improved. If management determines the operations cannot be improved and impairment is necessary the amount of impairment to be recorded is determined. Using the facilities income available for debt service divided by an industry average capitalization rate, the estimated fair market value of the facility is determined which is then compared to the net book value. The difference between the estimated fair market value and the net book value is based on a number of different factors to determine the estimated impairment. Fair Market Value of Financial Instruments The accounting standard Disclosures about Fair Value of Financial Instruments, requires the disclosure of the estimated fair value of financial instruments including those financial instruments for which the Society did not elect the fair value option. The fair values of such instruments have been derived, in part, by management's assumptions, the estimated amount and timing of future cash flows, and estimated discount rates. Different assumptions could significantly affect these estimated fair values. Accordingly, the net realizable value could be materially different from the estimates presented below. In addition, the estimates are only indicative of the value of individual financial instruments and should not be considered an indication of the fair value of the Society.



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Fair Market Value of Financial Instruments (Continued) The following disclosures represent financial instruments in which the ending balances at December 31, 2014 and 2013, are not carried at fair value in their entirety on the consolidated balance sheet.

Cost Fair Value Cost Fair ValueLong-Term Debt 601,368$ 624,169$ 636,406$ 629,901$

December 31, 2014 December 31, 2013

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate fair value:

Long-Term Debt The fair value of long-term debt is calculated based on the estimated trade values as of December 31, 2014 and 2013. The value is estimated using the rates currently offered for like debt instruments with similar remaining maturities. Based upon these inputs, the fair market value of long-term debt would be classified as a level three liability. All Other The carrying value is a reasonable estimate of the fair value for all other financial instruments due to the short-term nature of those financial instruments.

NOTE 5 PROPERTY AND EQUIPMENT

The Society has evaluated the recoverability of its investment in property at various facilities experiencing losses and, accordingly, has reduced the carrying value of certain facilities’ property to estimated fair market value. Reductions in the carrying value of property of $14,175 and $12,050 were recorded during 2014 and 2013, respectively, and are included in loss on disposal and impairment of property in the accompanying consolidated statements of operations. Construction and development in progress at December 31, 2014 and 2013 of $110,593 and $81,758, respectively, consists of numerous projects throughout the Society including the construction and renovation of a number of facilities. The total estimated cost to complete these projects at December 31, 2014 is approximately $87,137 and is expected to be funded through a combination of long-term debt borrowings, investments, contributions, and housing entrance fee receipts. Interest costs of $1,901 and $1,482 have been capitalized into property costs for the years ended December 31, 2014 and 2013, respectively.



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NOTE 6 ASSETS LIMITED AS TO USE

Assets limited as to use are recorded at fair value and invested in the following at December 31, 2014 and 2013: Obligated Group 2014 2013

Bond Reserve Funds - Provide a reserve for payment of principal and interest on the bonds in the event the Society's bond funds are insufficient to meet debt service requirements. 40,129$ 40,184$

Bond Funds - Established for the Society to deposit monthly amounts necessary to pay principal and interest on the bonds. 831 585

Project Funds - Established for the Society to fund various projects financed by bond issuances. 2,475 9,623

Escrow Accounts - Escrow accounts have been established from the proceeds of bond issuances for the advance refunding of indebtedness of the Society. - 57,403

Funds Held Under Affordable Housing Regulatory Agreements - Various escrow and reserve funds have been established under the regulatory agreements with HUD and other affordable housing agencies. 80 269

Workers' Compensation Reserve - Funds required to be designated for workers' compensation by an insurance carrier and by the State of Minnesota. 606 606

Total Restricted Investments 44,121 108,670

Management Designated - Endowment and Annuity - Funds have been established for endowments and annuities received by the Society. 30,578 32,172

Management Designated - Funded Depreciation, Debt Retirement, Insurance Reserves, and Development - Funds established by the Society for the replacement of equipment, retirement of debt, to fund future insurance costs, and to fund future advancement of the Society. 9,638 11,345

Total Management Designated 40,216 43,517

Total Obligated Group 84,337 152,187

OtherFunds Held Under Affordable Housing Regulatory Agreements 13,159 6,363 Workers' Compensation Reserve 132 292 Management Designated Funded Depreciation and Debt Retirement Funds 2,550 6,922

Total Other 15,841 13,577

Total Assets Limited as to Use 100,178 165,764 Less: Current Portion - 57,403 Noncurrent Portion of Assets Limited as to Use 100,178$ 108,361$



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NOTE 7 DISCONTINUED OPERATIONS

The Society has identified several of its facilities that meet the criteria of discontinued operations at December 31, 2014 and 2013. In accordance with the accounting standard Accounting For the Impairment or Disposal of Long-Lived Assets, the operating activity for these facilities are presented as discontinued operations in the consolidated statements of operations. The amounts included in discontinued operations at December 31, 2014 and 2013 consist of:

Obligated Group Other TotalTotal Operating Revenues 4,805$ -$ 4,805$ Total Operating Expenses (6,666) - (6,666) Interest Income 21 - 21 Realized Gain on Investments 14 - 14 Unrealized Gain on Investments 30 - 30 Assets released from Restrictions for Capital Purposes 13 - 13

Loss from Operations of Discontinued Divisions (1,783) - (1,783)

Loss on Disposal of Property (5,578) - (5,578) Loss from Discontinued Operations (7,361)$ -$ (7,361)$

2014

Obligated Group Other TotalTotal Operating Revenues 11,356$ -$ 11,356$ Total Operating Expenses (14,271) - (14,271) Interest Income 24 - 24 Realized Gain on Investments 69 - 69 Unrealized Gain on Investments 56 - 56 Assets released from Restrictions for Capital Purposes 58 - 58

Loss from Operations of Discontinued Divisions (2,708) - (2,708)

Loss on Disposal of Property (2,570) - (2,570) Loss from Discontinued Operations (5,278)$ -$ (5,278)$

2013

Loss from Discontinued Operations shown as temporarily restricted in the consolidated statements of changes in net assets reflect contributions received or net assets released from restrictions related to the facilities which are considered discontinued. The Society continues to evaluate facilities related to the potential for sales or closures.



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NOTE 8 INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

The Society is a 50% equity member in two unconsolidated joint ventures providing services to the elderly as of December 31, 2014 and 2013. The Society’s investment in these joint ventures is accounted for under the equity method of accounting. The joint ventures’ financial statements are not included in the accompanying consolidated financial statements, as the Society does not have control over financial decisions. The investment in these unconsolidated joint ventures, as well as amounts due from the unconsolidated joint ventures is included in notes receivable and other assets and is as follows:

2014 2013Investment in Unconsolidated Joint Ventures 6,293$ 6,475$ Notes Receivable from Unconsolidated Joint Ventures 3,258 3,428

NOTE 9 LONG-TERM DEBT

Long-term debt at December 31, 2014 and 2013 consists of the following: Description 2014 2013

Obligated Group Secured Debt:Mortgages and Other Secured Notes and Bonds (1) 1,757$ 1,980$ Pledged Revenue Notes and Bonds (2) 532,655 544,343 Demand and Mandatory Tender Bonds (3) 41,610 69,400

Total Obligated Group Secured Debt 576,022 615,723 Obligated Group Unsecured Notes (4) 645 712

Total Obligated Group Debt 576,667 616,435 Other Secured Debt (5) 24,701 19,971

Total Debt 601,368 636,406 Current Maturities (15,519) (69,109) Premium on Bonds Payable 4,172 5,127

Total Long-Term Debt 590,021$ 572,424$

(1) For the years ended December 31, 2014 and 2013, mortgages and other secured notes

totaling $1,757 and $1,980, respectively, bear interest varying from 2.0% - 9.0%, mature from 2016 through 2032 and require monthly principal and interest payments. Mortgage notes are secured by mortgages on Society property.



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NOTE 9 LONG-TERM DEBT (CONTINUED)

(2) As of December 31, 2014 and 2013, pledged revenue notes and bonds totaling $452,315 and $515,405, respectively, bear interest varying from 2.35% - 5.625%, mature from 2034 through 2043, and require annual principal and semi-annual interest payments. Pledged notes aggregating $80,340 and $28,938 at December 31, 2014 and 2013, respectively, are subject to variable (floating) interest rates and mature in 2016. Variable interest rate indebtedness, as described above, bears interest determined by various indices such as LIBOR and U.S. Treasury bill rates plus certain margins. Included in pledged bonds is a construction line of credit through US Bank. This line of credit has a maximum borrowing limit of $85,000 and matures in January 2016.

In May 2012, the Society refinanced a number of long-term debt issuances with the Series 2012 revenue bonds in the amount of $169,955. Pledged bonds include $55,775 of defeased bond issues at December 31, 2013. Escrow funds totaling $57,403 for the payment of principal and interest on the defeased bonds are included in assets limited as to use as of December 31, 2013 (see Note 6) and were used to redeem the bonds in June 2014. Pledged revenue notes and bonds are secured by a pledge of gross revenues and a security interest in any fund or account in which gross revenues are deposited subsequent to a default.

(3) The Society has variable rate demand revenue bonds totaling $41,610 and $44,200 as of December 31, 2014 and 2013, respectively. By definition, a variable rate demand bond is a long-term tax-exempt bond the interest of which is indexed to a current short-term market rate and rate resets. The bonds are set to be retired in lump sum payments from 2015 through 2039. These bonds are secured by irrevocable letters of credit for the face amount of the bonds. The Society has a liability to repay the amount drawn on the letters of credit upon repayment terms in the reimbursement agreement. The repayment terms from draws against irrevocable letters of credit require repayment to be made in eight equal installments commencing on the first quarterly date occurring on or after the 367th day following a draw. The Society may remarket bonds purchased under this demand provision. Additionally, the Society has the option to convert these bonds into fixed rate, long-term bonds at various times. These letters of credit are currently scheduled to expire from 2015 through 2018. Upon expiration, the Society intends to enter into new letters of credit at those dates. Revenue bonds totaling $25,200 at December 31, 2013, bear a fixed rate of 5.00% until December 1, 2014, at which time the bonds were subject to mandatory tender. The Society had the option to remarket the bonds using an interest rate period elected by the Society or call the bonds. The Society called the bonds and redeemed them with proceeds from the US Bank line of credit during 2014.



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NOTE 9 LONG-TERM DEBT (CONTINUED)

(4) Included in the Obligated Group unsecured notes at December 31, 2014 and 2013 are special assessments of $645 and $712 at December 31, 2014 and 2013, respectively, and generally require monthly principal and interest payments with maturities ranging from 2015 through 2037.

(5) At December 31, 2014 and 2013, other secured debt consists of mortgages financed or insured by the U.S. Department of Housing and Urban Development of $24,701 and $19,971, respectively, with interest rates ranging from 0.0% to 9.25% that mature from 2015 to 2052.

Under the terms of the various financing agreements, the Society has agreed to certain debt covenant restrictions. The Society is required to meet certain financial and operating covenants including the achievement of certain minimum income levels to satisfy debt service, and days cash on hand level. Interest expense is presented net of interest income earned on bond reserve funds of $642 in 2014 and $518 in 2013. The average interest rate on the Society’s debt based on an annualized average debt balance was approximately 3.8% and 3.6% for 2014 and 2013, respectively. The long-term debt principal repayment summary is shown below.

Obligated OtherGroup Secured Total

Year Debt Debt Debt2015 10,775$ 4,744$ 15,519$ 2016 107,777 690 108,467 2017 26,712 735 27,447 2018 8,382 784 9,166 2019 8,764 834 9,598

Thereafter 414,257 16,914 431,171 Total 576,667$ 24,701$ 601,368$

Required principal payments of $108,467 in 2016 above include $71,902 in draws upon the Society’s line of credit to finance construction projects in progress. The Society intends to refinance the line of credit with permanent financing prior to payment being required. The required principal payments in 2016 also include $20,475 of principal payments on variable rate demand debt based upon the reimbursement terms of the letter of credit. The Society intends to extend the letters of credit upon expiration. Required principal payments of $27,447 in 2017 include $18,675 of principal payments on variable rate demand debt based upon the reimbursement terms of the letter of credit. The Society intends to extend the letters of credit upon expiration.



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NOTE 10 CLASSIFICATION OF NET ASSETS

Temporarily restricted net assets are available for the following purposes at December 31, 2014 and 2013: Obligated Group 2014 2013

Capital Projects and Renovations 12,428$ 15,744$ Resident Care and Other Services 8,931 6,642

Total Obligated Group 21,359 22,386

OtherCapital Advance Notes 37,329 37,329 Grant Proceeds 901 450

Total Other 38,230 37,779 Total Temporarily Restricted Net Assets 59,589$ 60,165$

Permanently restricted net assets are available for the following purposes at December 31, 2014 and 2013:

2014 2013Endowments 14,412$ 14,208$ Perpetual Trust 4,394 4,503

Total Permanently Restricted Net Assets 18,806$ 18,711$

Endowments The Society’s endowments consist of numerous individual funds established for a variety of purposes. Its endowment includes both donor restricted endowment funds and funds designated by the board of directors to function as endowments. As required by GAAP, net assets associated with endowment funds, including funds designated by the board of directors to function as endowments, are classified and reported based on the existence or absence of donor imposed restrictions. Perpetual Trusts Notes receivable and other assets include the Society’s beneficial interest in perpetual trusts of $4,394 and $4,503 as of December 31, 2014 and 2013, respectively. Donors have established these perpetual trusts, for which the Society is not the trustee, naming the Society as a beneficiary. The current market value of the original trusts are shown as permanently restricted as they are not available for distribution. Investment income earned on the trust funds is recorded as temporarily restricted for capital improvements.



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NOTE 10 CLASSIFICATION OF NET ASSETS (CONTINUED)

Interpretation of Relevant Law The Society has complied with the State Prudent Management of Institutional Funds Act (the Act). The Society has interpreted the Act as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Society classifies as permanently restricted net assets (1) the original value of gifts donated to the permanent endowment, (2) the original value of subsequent gifts to the permanent endowment, and (3) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Society in a manner consistent with the standard of prudence prescribed in the Act. In accordance with the Act, the Society considers the following factors in making a determination to appropriate or accumulate donor restricted endowment funds:

- The duration and preservation of the fund - The purposes of the Society and the donor- restricted endowment fund - General economic conditions - The possible effect of inflation and deflation - The expected total return from income and the appreciation of investments - Other resources of the Society - The investment policy of the Society

The following table shows the changes in endowment net assets for the year ended December 31, 2014:

Temporarily PermanentlyUnrestricted Restricted Restricted Total

Endowment Net Assets, Beginning of Year 2,383$ 3,661$ 14,208$ 20,252$ Investment Return:

Investment Income 37 148 - 185 Net Appreciation (Realized and Unrealized) 353 330 - 683

Contributions - - 204 204 Net Assets Appropriated for Expenditure (92) 86 - (6) Endowment Net Assets, End of Year 2,681$ 4,225$ 14,412$ 21,318$



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Interpretation of Relevant Law (Continued) The following table shows the changes in endowment net assets for the year ended December 31, 2013:

Temporarily PermanentlyUnrestricted Restricted Restricted Total

Endowment Net Assets, Beginning of Year 2,217$ 2,725$ 13,101$ 18,043$ Investment Return:

Investment Income 37 135 - 172 Net Depreciation (Realized and Unrealized) 210 677 - 887

Contributions - - 1,107 1,107 Transfer from Other Funds 51 - - 51 Net Assets Appropriated for Expenditure (132) 124 - (8) Endowment Net Assets, End of Year 2,383$ 3,661$ 14,208$ 20,252$

Funds with Deficiencies From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level that the donor or the Act requires the Society to retain as a fund of perpetual duration. There were no deficiencies of this nature that are reported in unrestricted net assets as of December 31, 2014 and 2013. Return Objectives and Risk Parameters The Society has adopted investment and spending policies for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment. Endowment assets include those assets of donor-restricted funds that the Society must hold in perpetuity or for a donor-specified period. Under this policy, as approved by the board of directors, the endowment assets are invested in a manner that is intended to preserve and grow capital, strive for consistent absolute returns, preserve purchasing power by striving for long-term returns which either match or exceed the set payout, fees and inflation without putting the principal value at imprudent risk, and diversify investments consistent with commonly accepted industry standard to minimize the risk of large losses. Strategies Employed for Achieving Objectives To satisfy its long-term rate-of-return objectives, the Society relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The Society targets a diversified asset allocation that meets the Society’s long-term rate-of-return objectives while avoiding undue risk from imprudent concentration in any single asset class or investment vehicle.



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Spending Policy and How the Investment Objectives Relate to Spending Policy The Society’s spending policy provides that no distributions are to be made during any year in which the fair market value of the investments is below the amount originally restricted. If the fair market value of the investments is not below the amount originally restricted, the Society’s spending policy is to appropriate for distribution each year 4% to 6% of its endowment fund’s twelve quarter weighted average fair value on December 31st of the fiscal year prior to the year in which the distribution is planned. In establishing this policy, the Society considered the long-term expected return on its endowment.

NOTE 11 RETIREMENT PLANS

The Society provides a non-contributory pension plan covering all eligible employees. The plan is administered by the Portico Benefit Services, and provides that the Society shall contribute 3.25% of each eligible employee’s salary/wage to the plan. The eligible provisions for the plan require three years of employment, 1,000 hours of service each year and employment on December 31 of each calendar year unless the employee retired during the year. The Society also provides a non-contributory pension plan covering administrators, executive directors, executive managers and other executive-level/key personnel. The plan is administered by Portico Benefit Services and provides that the Society shall contribute 3.75% of the covered employee’s salary or wages, named earlier in this paragraph, to the plan. A 457(b) plan was created during the year ending December 31, 2007 (the Plan). Section 457(b) of the Internal Revenue Code allows certain tax-exempt employers, including those participating in the ELCA Master Institutional Retirement Plan or ELCA Retirement Plan for the ELCA (ELCA 403(b) retirement plans) to sponsor non-qualified deferred compensation plans. The highly compensated employees (as defined by the IRS) participate in this plan and are a part of the Plan. The Society contributed approximately $8,797 and $8,871 to these plans during the years ended December 31, 2014 and 2013, respectively. No prior service costs or unfunded vested benefits exist under these plans. The Society’s policy is to fund pension costs as accrued.



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NOTE 12 FUNCTIONAL EXPENSES

Functional classification of expenses for the years ended December 31, 2014 and 2013 consisted of the following:

2014 2013Program 806,287$ 792,681$ Management and General 191,493 179,834 Fundraising 4,601 4,595

Total Expenses 1,002,381$ 977,110$

NOTE 13 COMMITMENTS AND CONTINGENCIES

Insurance The Society self-funds employee health benefits at a majority of its facilities. The Society contracts separately to insure for excessive or unexpected claims through a stop-loss insurance policy that pays claims in excess of $1,000 per person per year. Claims in excess of these amounts will be funded by the insurance carrier. Property insurance coverage is purchased from third-party insurance carriers on a guaranteed cost basis with a deductible of $100 per claim, $500 per claim for wind and hail damage and $10 per claim for affordable housing property insurance. The Society funds insurance deductibles and self-insurance retentions from claims related to employee injuries through its wholly owned captive insurance subsidiary, Good Samaritan Society Insurance, Ltd. The deductibles and self-insured retentions for employee injuries is $500 per claim. Purchased excess insurance policies pay claims in excess of the deductibles and retentions. The Society also funds its auto liability deductible and general liability and professional liability self-insured retentions through Good Samaritan Society Insurance, Ltd. Purchased umbrella liability insurance policies in the aggregate amount of $35,000 provides coverage for claims in excess of $1,000 for auto and general liability and $3,000 for professional liability. For the years ended December 31, 2014 and 2013, the Society incurred insurance expenses as follows:

2014 2013Employee Health Benefits 46,468$ 41,493$ Workers' Compensation 10,993 11,624 General Insurance 21,583 22,995

Total 79,044$ 76,112$



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NOTE 13 COMMITMENTS AND CONTINGENCIES (CONTINUED)

Insurance (Continued) The Society’s provision for outstanding losses, although supported by actuarial projections and other data, is ultimately based on management’s expectations of future events. It is possible that these estimates could change as more detailed information concerning the losses is received and the effect of such changes could be material to the financial statements. The Society has established reserves for these self-insured policies for claims incurred but not reported based on historical claims experience, and actuarial calculations. These reserves at December 31, 2014 and 2013 were as follows:

2014 2013Employee Health Benefits 5,891$ 5,055$ Workers' Compensation 25,611 25,315 General Insurance 7,197 6,705

Total 38,698$ 37,075$

Capital Advance Notes Capital advance notes from the U.S. Department of Housing and Urban Development and certain other forgivable notes aggregate $37,329 as of December 31, 2014 and 2013. The notes bear no interest and repayment is not required as long as the applicable affordable housing projects remain available for very low-income elderly persons for a stated period (principally 40 years). These notes have been accounted for as temporarily restricted contributions. Health Care The health care industry is subject to numerous laws and regulations by federal, state and local governments. These laws and regulations include, but are not necessarily limited to, matters such as licensure, accreditation, government health care program participation requirements, reimbursement for resident services, and Medicare and Medicaid fraud and abuse. Recently, government activity has increased with respect to investigations and allegations concerning possible violations of fraud and abuse statutes and regulations by health care providers. Violations of these laws and regulations could result in expulsion from government health care programs together with the imposition of significant fines and penalties, as well as significant repayments for patient services previously billed. Management is not aware of any violations of these laws and regulations that would have a material effect on the Society.



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NOTE 13 COMMITMENTS AND CONTINGENCIES (CONTINUED)

General and Professional Liability General and professional liability claims have been asserted against the Society by certain claimants. The claims are in various stages of processing and some may ultimately be brought to trial. In the opinion of management, the outcome of these actions will not have a material effect on the financial position or the results of operations of the Society. Incidents occurring through December 31, 2014 may result in the assertion of additional claims. Other claims may be asserted arising from services provided to residents in the past. Management believes that these claims, if asserted, would be settled at amounts which would not result in additional losses to the Society.

(35) An independent member of Nexia International

INDEPENDENT AUDITORS' REPORT ON

SUPPLEMENTAL INFORMATION Board of Directors The Evangelical Lutheran Good Samaritan Society and Affiliates Sioux Falls, South Dakota We have audited the consolidated financial statements of The Evangelical Lutheran Good Samaritan Society and Affiliates as of and for the years ended December 31, 2014 and 2013, and our report thereon dated April 24, 2015, which contained an unmodified opinion on those consolidated financial statements. Our audits were performed for the purpose of forming an opinion on the consolidated financial statements as a whole. The supplementary consolidating information is presented for purposes of additional analysis and it is not a required part of the consolidated financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The consolidating information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the consolidating information is fairly stated in all material respects in relation to the consolidated financial statements as a whole. The 2014 and 2013 financial statements of Good Samaritan Society Insurance, Ltd. LLC were audited by other auditors whose reports thereon were unmodified. The Affordable Housing Entities consist of numerous entities and divisions. In 2014, 89.10% of those total assets and 88.80% of total revenues were audited by other auditors whose reports were unmodified. In 2013, 99.59% of those total assets and 94.19% of total revenues were audited by other auditors whose reports were unmodified.

CliftonLarsonAllen LLP

Minneapolis, Minnesota April 24, 2015

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATED DEPARTMENTAL SUMMARY OF OPERATING EXPENSES


(SEE INDEPENDENT AUDITORS’ REPORT ON SUPPLEMENTAL INFORMATION)

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2014

PayrollSalaries Taxes and Cost of Maintenance

and Employee Food and andWages Benefits Supplies Repairs Insurance

Housing and Services:Resident Services 257,251$ 24,100$ 31,621$ 182$ -$

Rehabilitation 1,970 189 962 11 -

Social Services and Activities 21,406 2,053 965 12 -

Laundry 7,218 722 1,850 113 -

Housekeeping 14,484 1,411 3,104 30 -

Dietary 43,904 4,121 41,035 425 -

Other Services 29,200 2,593 796 4 -

Operations and Maintenance 17,540 1,593 3,684 13,740 -

Property and Other - - - - -

Administrative 89,440 10,675 4,715 4,936 -

Employee Health Benefits - 46,468 - - -

Resource Development 2,964 295 57 - -

General Insurance - - - - 21,583

Interest - - - - -

Depreciation - - - - -

Total Year Ended December 31, 2014 485,377$ 94,220$ 88,789$ 19,453$ 21,583$

Total Year Ended December 31, 2013 476,891$ 89,763$ 87,808$ 18,624$ 22,995$

(37)

2013

Utilities Interestand Contract Other and

Telephone Services Expenses Depreciation Total Total

-$ 8,881$ 23,352$ -$ 345,387$ 343,444$

- 52,815 163 - 56,110 53,612

- 460 986 - 25,882 26,052

- 682 11 - 10,596 10,816

- 308 42 - 19,379 19,719

- 5,160 55 - 94,700 93,943

- 988 1,801 - 35,382 33,074

30,026 1,640 10,027 - 78,250 75,783

- - 4,206 - 4,206 4,000

3,818 6,308 48,251 - 168,143 158,334

- - - - 46,468 41,493

2 82 572 - 3,972 3,970

- - - - 21,583 22,995

- - - 22,971 22,971 21,625

- - - 69,352 69,352 68,250

33,846$ 77,324$ 89,466$ 92,323$ 1,002,381$ 977,110$

32,621$ 73,957$ 84,576$ 89,875$ 977,110$


THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATED SUMMARY OF RESOURCE DEVELOPMENT ACTIVITY



(38)

2014 2013

RESOURCE DEVELOPMENT REVENUEUnrestricted Gifts 8,428$ 4,776$ Temporarily Restricted Gifts for Charity Care and Operating Expenses 5,860 4,103 Temporarily Restricted Gifts for Property Replacement and Expansion 4,576 11,296 Permanently Restricted Gifts:

Beneficial Interest in Perpetual Trusts (109) 223 Other 204 1,108

Total Resource Development Revenue 18,959 21,506

RESOURCE DEVELOPMENT EXPENSE 3,972 3,970

EXCESS OF RESOURCE DEVELOPMENT REVENUES OVER EXPENSES 14,987$ 17,536$

ADDITIONAL INFORMATION Noncash Property Gifts included in Resource Development Revenue 379$ 1,087$

Annuities Issued:Liabilities Recognized 198$ 92$ Gift Income included in Unrestricted Gifts 9 48 Gift Income included in Temporarily Restricted Gifts 196 20 Gift Income included in Permanently Restricted Gifts 31 30

Total Assets Received in Exchange for Annuities Issued 434$ 190$

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATING BALANCE SHEET

DECEMBER 31, 2014 (DOLLAR AMOUNTS IN THOUSANDS)


(39)

Good

SamaritanObligated Society Affordable

Group Insurance, HousingTotal Ltd. Entities

ASSETS

CURRENT ASSETSCash and Cash Equivalents 12,613$ 2,102$ 885 Investments 345,620 38,427 - Accounts Receivable, Net 83,465 290 107 Notes and Other Current Receivables 1,666 245 - Current Portion of Assets Limited as to Use - - - Inventory 4,010 - 6 Prepaid Expenses 3,450 10 84 Securities Lending - Collateral Held for Loaned Securities 22,782 2,543 -

Total Current Assets 473,606 43,617 1,082

ASSETS LIMITED AS TO USEInvestments 61,760 132 13,159 Securities Lending - Investments Loaned to Broker 22,577 2,550 -

Total Assets Limited as to Use, Less Current Portion 84,337 2,682 13,159

PROPERTY AND EQUIPMENTLand and Land Improvements 154,728 - 6,297 Buildings and Improvements 1,375,418 - 74,280 Furniture and Equipment 259,096 - 2,989 Vehicles 18,775 - 40

Total 1,808,017 - 83,606 Less: Accumulated Depreciation (973,250) - (24,929)

Subtotal 834,767 - 58,677 Construction and Development 109,704 - 889

Total Property and Equipment 944,471 - 59,566

OTHER ASSETSInvestments 33,785 - 19 Notes Receivable and Other Assets 56,672 - 192 Unamortized Finance Fees 3,345 - 1,101

Total Other Assets 93,802 - 1,312

Total Assets 1,596,216$ 46,299$ 75,119

(40)

ConsolidatingElimination Consolidated

Entries Total

-$ 15,600$ - 384,047

(16) 83,846 - 1,911 - - - 4,016 - 3,544

- 25,325 (16) 518,289

- 75,051 - 25,127

- 100,178

(151) 160,874 (2,637) 1,447,061

- 262,085 - 18,815

(2,788) 1,888,835 5 (998,174)

(2,783) 890,661 - 110,593

(2,783) 1,001,254

- 33,804 (22,986) 33,878

- 4,446 (22,986) 72,128

(25,785)$ 1,691,849$

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATING BALANCE SHEET (CONTINUED)



(41)

Good




CURRENT LIABILITIESCurrent Maturities of Long-Term Debt 10,775$ -$ 4,744 Resident Funds and Prepaid Rents 5,560 - - Accounts Payable 36,228 1,625 8,500 Accrued Expenses:

Salaries and Wages 17,097 - 99 Vacation 26,987 - - Employee Benefits and Payroll Taxes 10,217 - - Insurance 9,552 29,146 - Interest 1,852 - 60

Current Portion of Housing Entry Fees 8,687 - - Securities Lending - Payable Under Investment Loan Agreement 23,262 2,612 - Other Current Liabilities 7,651 - 3,487

Total Current Liabilities 157,868 33,383 16,890

LONG-TERM DEBT, Less Current Maturities 570,064 - 21,179

OTHER LIABILITIESNon-Refundable Housing Entry Fees 17,775 - - Refundable Housing Entry Fees 87,297 - -

Annuities and Other Liabilities 8,725 - 440 Total Other Liabilities 113,797 - 440

Total Liabilities 841,729 33,383 38,509


Unrestricted 714,322 12,916 (13,510) Non-Controlling Interest - - 11,890

Total Unrestricted 714,322 12,916 (1,620) Temporarily Restricted 21,359 - 38,230 Permanently Restricted 18,806 - -

Total Net Assets 754,487 12,916 36,610

Total Liabilities and Net Assets 1,596,216$ 46,299$ 75,119

(42)


Entries Total

-$ 15,519$ - 5,560

(6,132) 40,221

- 17,196 - 26,987 - 10,217 - 38,698

(343) 1,569 - 8,687

- 25,874 (2,330) 8,808 (8,805) 199,336

(1,222) 590,021

- 17,775 - 87,297 - 9,165 - 114,237

(10,027) 903,594

(15,758) 697,970 - 11,890

(15,758) 709,860 - 59,589 - 18,806

(15,758) 788,255

(25,785)$ 1,691,849$

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATING STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2014 (DOLLAR AMOUNTS IN THOUSANDS)


(43)

Good



OPERATING REVENUEHousing and Services 929,270$ -$ 9,255$ Resource Development 8,428 - - Net Assets Released from Restrictions for Operating Purposes 3,077 - - Underwriting Income - 12,927 - Other Revenue 33,301 - 347

Total Operating Revenue 974,076 12,927 9,602

OPERATING EXPENSEHousing and Services 666,378 - 3,514 Administrative 165,658 - 3,294 Employee Health Benefits 46,174 - 294 Resource Development 3,972 - - General Insurance 21,068 16,382 515 Interest 21,762 - 1,343 Depreciation 66,809 - 2,548

Total Operating Expense 991,821 16,382 11,508

OPERATING LOSS (17,745) (3,455) (1,906)

NONOPERATING GAINS (LOSSES) AND OTHER SUPPORT

Interest Income 6,543 1,128 6 Realized Gain on Investments 4,559 600 - Unrealized Gain on Investments 13,306 859 - Loss on Disposal and Impairment of Property (9,503) - - Loss on Extinguishment of Debt (1,355) - -

Total Nonoperating Gains and Other Support 13,550 2,587 6

EXCESS (DEFICIT) OF REVENUE OVER EXPENSE (4,195) (868) (1,900)

Assets Released from Restrictions for Capital Purposes 7,880 - - Change in Non-Controlling Interest - - 1,477

CHANGE IN UNRESTRICTED NET ASSETS BEFORE DISCONTINUED OPERATIONS 3,685 (868) (423)

LOSS FROM DISCONTINUED OPERATIONS (7,361) - -

CHANGE IN UNRESTRICTED NET ASSETS (3,676)$ (868)$ (423)$

(44)


Entries Total

-$ 938,525$ - 8,428

- 3,077 (12,927) - (1,406) 32,242

(14,333) 982,272

- 669,892 (809) 168,143

- 46,468 - 3,972

(16,382) 21,583 (134) 22,971

(5) 69,352 (17,330) 1,002,381

2,997 (20,109)

(1,262) 6,415 (600) 4,559 (859) 13,306 (646) (10,149)

- (1,355)

(3,367) 12,776

(370) (7,333)

- 7,880 - 1,477

(370) 2,024

- (7,361)

(370)$ (5,337)$

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATING STATEMENT OF CHANGES IN NET ASSETS



(45)

Good



UNRESTRICTED NET ASSETSDeficit of Revenues over Expenses (4,195)$ (868)$ (1,900)$ Assets Released from Restrictions for Capital Purposes 7,880 - - Change in Non-Controlling Interest - - 1,477

Change in Unrestricted Net Assets Before Discontinued Operations 3,685 (868) (423)

Loss from Discontinued Operations (7,361) - -

Change in Unrestricted Net Assets (3,676) (868) (423)

TEMPORARILY RESTRICTED NET ASSETSContributions for Charity Care and Operating Expenses 5,409 - 451 Contributions for Capital Purposes 4,576 - - Net Assets Released from Restrictions (10,957) - -

Change in Temporarily Restricted Net Assets Before Discontinued Operations (972) - 451

Loss from Discontinued Operations (55) - -

Change in Temporarily Restricted Net Assets (1,027) - 451

PERMANENTLY RESTRICTED NET ASSETSContributions for Endowment Funds and Trusts 204 - - Decrease in Beneficial Interest in Perpetual Trust (109) - -

Change in Permanently Restricted Net Assets 95 - -

CHANGE IN NET ASSETS (4,608) (868) 28

Net Assets - Beginning of Year 759,095 13,784 36,582

NET ASSETS - END OF YEAR 754,487$ 12,916$ 36,610$

(46)


Entries Total

(370)$ (7,333)$

- 7,880 - 1,477

(370) 2,024

- (7,361)

(370) (5,337)

- 5,860 - 4,576 - (10,957)

- (521)

- (55)

- (576)

- 204 - (109) - 95

(370) (5,818)

(15,388) 794,073

(15,758)$ 788,255$

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATING STATEMENT OF CASH FLOWS



(47)

Good



CASH FLOWS FROM OPERATING ACTIVITIESChange in Net Assets (4,608)$ (868)$ 28$ Adjustments to Reconcile Change in Net Assets to Net Cash Provided (Used) by Operating Activities:

Reconciling Items Included in Discontinued Operations 6,110 - - Depreciation 66,809 - 2,548 Amortization (101) 91 67 Provision for Bad Debts (2,509) - 13 Housing Entry Fees and Annuities Revenue (3,278) - - Realized and Unrealized Gain on Investments (17,865) (1,459) - Change in Beneficial Interest in Perpetual Trusts 109 - - Loss on Disposal and Impairment of Property 9,503 - - Loss on Refinancing of Debt 1,355 - - Change in Non-Controlling Interest - - (1,477) Reclassification of Restricted Contributions (4,780) - (32) (Increase) Decrease in Assets:

Accounts Receivable 3,315 (84) (49) Other Current Assets 453 163 2

Increase (Decrease) in Liabilities:Resident Funds, Prepaid Rents and Accounts Payable 4,955 389 (74) Accrued Expenses and Other Current Liabilities (3,480) 787 921

Net Cash Provided (Used) by Operating Activities 55,988 (981) 1,947

CASH FLOWS FROM INVESTING ACTIVITIESChange in Investments 30,210 (849) 75 Change in Notes Receivable and Other Assets (272) - (6,588) Business Acquisitions (18,250) - - Property Additions (106,312) - (5,470) Proceeds from Sale of Property 3,597 - (56)

Net Cash Used by Investing Activities (91,027) (849) (12,039)

(48)


Entries Total

(370)$ (5,818)$

- 6,110 (5) 69,352

- 57 - (2,496) - (3,278)

1,459 (17,865) - 109

646 10,149 - 1,355 - (1,477) - (4,812)

2,933 6,115 - 618

- 5,270 - (1,772)

4,663 61,617

- 29,436 3,410 (3,450)

- (18,250) 905 (110,877)

- 3,541 4,315 (99,600)

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATING STATEMENT OF CASH FLOWS (CONTINUED)



(49)

Good



CASH FLOWS FROM FINANCING ACTIVITIESProceeds from Annuities Issued and Housing Entry Fees 21,086 - - Refund of Housing Entry Fees (11,448) - - Payment of Financing Fees - - (513) Proceeds from Long-Term Debt Borrowings 27,000 - 8,374 Repayment of Long-Term Debt (12,348) - (2,329) Proceeds from Contributions 4,780 - 1,497 Change in Intercompany Payable - - 2,933

Net Cash Provided by Financing Activities 29,070 - 9,962

DECREASE IN CASH AND CASH EQUIVALENTS (5,969) (1,830) (130)

Cash and Cash Equivalents - Beginning of Year 18,582 3,932 1,015

CASH AND CASH EQUIVALENTS - END OF YEAR 12,613$ 2,102$ 885$

(50)


Entries Total

- 21,086 - (11,448) - (513)

(8,374) 27,000 2,329 (12,348)

- 6,277 (2,933) - (8,978) 30,054

- (7,929)

- 23,529

-$ 15,600$

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATING OBLIGATED GROUP BALANCE SHEET



(51)

The The

Evangelical EvangelicalLutheran Lutheran

Good Good Consolidating ObligatedSamaritan Samaritan Elimination Group

Society Foundation Entries TotalASSETS

CURRENT ASSETSCash and Cash Equivalents 12,578$ 35$ -$ 12,613$ Investments 331,807 13,813 - 345,620 Accounts Receivable, Net 83,650 - (185) 83,465 Notes and Other Current Receivables 1,666 - - 1,666 Current Portion of Assets Limited as to Use - - - - Inventory 4,010 - - 4,010 Prepaid Expenses 3,450 - - 3,450 Securities Lending - Collateral Held for Loaned Securities 22,782 - - 22,782

Total Current Assets 459,943 13,848 (185) 473,606

ASSETS LIMITED AS TO USEInvestments 34,535 27,225 - 61,760 Securities Lending - Investments Loaned to Broker 22,577 - - 22,577

Total Assets Limited as to Use, Less Current Portion 57,112 27,225 - 84,337

PROPERTY AND EQUIPMENTLand and Land Improvements 154,728 - - 154,728 Buildings and Improvements 1,375,418 - - 1,375,418 Furniture and Equipment 259,095 1 - 259,096 Vehicles 18,775 - - 18,775

Total 1,808,016 1 - 1,808,017 Less: Accumulated Depreciation (973,250) - - (973,250)

Subtotal 834,766 1 - 834,767 Construction and Development 109,704 - - 109,704

Total Property and Equipment 944,470 1 - 944,471

OTHER ASSETSInvestments 16,948 16,837 - 33,785 Notes Receivable and Other Assets 114,455 - (57,783) 56,672 Unamortized Finance Fees 3,345 - - 3,345

Total Other Assets 134,748 16,837 (57,783) 93,802

Total Assets 1,596,273$ 57,911$ (57,968)$ 1,596,216$

(52)

The The



Society Foundation Entries TotalLIABILITIES AND NET ASSETS

CURRENT LIABILITIESCurrent Maturities of Long-Term Debt 10,775$ -$ -$ 10,775$ Resident Funds and Prepaid Rents 5,560 - - 5,560 Accounts Payable 36,221 7 36,228 Accrued Expenses:

Salaries and Wages 17,082 15 - 17,097 Vacation 26,987 - - 26,987 Employee Benefits and Payroll Taxes 10,217 - - 10,217 Insurance 9,552 - - 9,552 Interest 2,037 - (185) 1,852

Current Portion of Housing Entry Fees 8,687 - - 8,687 Securities Lending - Payable Under Investment Loan Agreement 23,262 - - 23,262 Other Current Liabilities 7,651 - - 7,651

Total Current Liabilities 158,031 22 (185) 157,868

LONG-TERM DEBT, Less Current Maturities 570,064 - - 570,064

OTHER LIABILITIESNon-Refundable Housing Entry Fees 17,775 - - 17,775 Refundable Housing Entry Fees 87,297 - - 87,297

Annuities and Other Liabilities 8,619 106 - 8,725 Total Other Liabilities 113,691 106 - 113,797

Total Liabilities 841,786 128 (185) 841,729

NET ASSETSUnrestricted 714,322 40,955 (40,955) 714,322 Temporarily Restricted 21,359 2,542 (2,542) 21,359 Permanently Restricted 18,806 14,286 (14,286) 18,806

Total Net Assets 754,487 57,783 (57,783) 754,487

Total Liabilities and Net Assets 1,596,273$ 57,911$ (57,968)$ 1,596,216$

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATING OBLIGATED GROUP STATEMENT OF OPERATIONS



(53)

The The



Society Foundation Entries TotalOPERATING REVENUE

Housing and Services 929,270$ -$ -$ 929,270$ Resource Development 8,428 - - 8,428 Net Assets Released from Restrictions for Operating Purposes 3,077 - - 3,077 Other Revenue 33,301 - - 33,301

Total Operating Revenue 974,076 - - 974,076

OPERATING EXPENSEHousing and Services 666,352 26 - 666,378 Administrative 165,231 427 - 165,658 Employee Health Benefits 46,174 - - 46,174 Resource Development 2,747 1,225 - 3,972 General Insurance 21,068 - - 21,068 Interest 21,762 - - 21,762 Depreciation 66,809 - - 66,809

Total Operating Expense 990,143 1,678 - 991,821

OPERATING LOSS (16,067) (1,678) - (17,745)


Interest Income 7,663 731 (1,851) 6,543 Realized Gain on Investments 3,827 732 - 4,559 Unrealized Gain on Investments 11,240 2,066 - 13,306 Loss on Disposal and Impairment of Property (9,503) - - (9,503) Loss on Extinguishment of Debt (1,355) - - (1,355)

Total Nonoperating Gains and Other Support 11,872 3,529 (1,851) 13,550

EXCESS (DEFICIT) OF REVENUE OVER EXPENSE (4,195) 1,851 (1,851) (4,195)

Assets Released from Restrictions for Capital Purposes 7,880 - - 7,880 Transfer to Foundation from Society (3,940) 3,940 - - Increase in Interest in the Unrestricted Net Assets of the Foundation 3,940 - (3,940) -

CHANGE IN UNRESTRICTED NET ASSETS BEFORE DISCONTINUED OPERATIONS 3,685 5,791 (5,791) 3,685

LOSS FROM DISCONTINUED OPERATIONS (7,361) - - (7,361)

CHANGE IN UNRESTRICTED NET ASSETS (3,676)$ 5,791$ (5,791)$ (3,676)$

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATING OBLIGATED GROUP STATEMENT OF CHANGES IN NET ASSETS



(54)

The The



Society Foundation Entries TotalUNRESTRICTED NET ASSETS

Excess (Deficit) of Revenues over Expenses (4,195)$ 1,851$ (1,851)$ (4,195)$ Net Assets Released from Restrictions for Capital Purposes 7,880 - - 7,880 Transfer to Foundation from Society (3,940) 3,940 - - Increase in Interest in the Unrestricted Net Assets of the Foundation 3,940 - (3,940) -

Change in Unrestricted Net Assets Before Discontinued Operations 3,685 5,791 (5,791) 3,685

Loss from Discontinued Operations (7,361) - - (7,361)

Change in Unrestricted Net Assets (3,676) 5,791 (5,791) (3,676)

TEMPORARILY RESTRICTED NET ASSETSContributions for Charity Care and Operating Expenses 4,433 976 - 5,409 Contributions for Capital Purposes 4,576 - - 4,576 Net Assets Released from Restrictions (10,957) - - (10,957) Transfer from Foundation to Society 544 (544) - - Increase in Interest in the Temporarily Restricted Net Assets of the Foundation 432 - (432) -

Change in Temporarily Restricted Net Assets Before Discontinued Operations (972) 432 (432) (972)

Loss from Discontinued Operations (55) - - (55)

Change in Temporarily Restricted Net Assets (1,027) 432 (432) (1,027)

PERMANENTLY RESTRICTED NET ASSETSContributions for Endowment Funds and Trusts 199 5 - 204 Decrease in Beneficial Interest in Perpetual Trust (109) - - (109) Transfers to Foundation from Society (1,309) 1,309 - - Increase in Interest in the Permanently Restricted Net Assets of the Foundation 1,314 - (1,314) -

Change in Permanently Restricted Net Assets 95 1,314 (1,314) 95

CHANGE IN NET ASSETS (4,608) 7,537 (7,537) (4,608)

Net Assets - Beginning of Year 759,095 50,246 (50,246) 759,095

NET ASSETS - END OF YEAR 754,487$ 57,783$ (57,783)$ 754,487$


THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATING OBLIGATED GROUP STATEMENT OF CASH FLOWS



(55)

The The



Society Foundation Entities TotalCASH FLOWS FROM OPERATING ACTIVITIES

Change in Net Assets (4,608)$ 7,537$ (7,537)$ (4,608)$ Adjustments to Reconcile Change in Net Assets to Net Cash Provided by Operating Activities:

Reconciling Items Included in Discontinued Operations 6,110 - - 6,110 Depreciation 66,809 - - 66,809 Amortization (101) - - (101) Provision for Bad Debts (2,509) - - (2,509) Housing Entry Fees and Annuities Revenue (3,279) 1 - (3,278) Realized and Unrealized Gain on Investments (15,067) (2,798) - (17,865) Change in Beneficial Interest in Perpetual Trusts 109 - - 109 Loss on Disposal and Impairment of Property 9,503 - - 9,503 Loss on Refinancing of Debt 1,355 - - 1,355 Reclassification of Restricted Contributions (4,775) (5) - (4,780) Transfer to Foundation 2,952 (2,952) - - (Increase) Decrease in Assets:

Accounts Receivable 3,315 - - 3,315 Other Current Assets 443 10 - 453

Increase (Decrease) in Liabilities:Resident Funds, Prepaid Rents and Accounts Payable 4,955 - - 4,955 Accrued Expenses and Other Current Liabilities (3,473) (7) - (3,480)

Net Cash Provided by Operating Activities 61,739 1,786 (7,537) 55,988

CASH FLOWS FROM INVESTING ACTIVITIESChange in Investments 32,039 (1,829) - 30,210 Change in Notes Receivable and Other Assets (7,809) - 7,537 (272) Business Acquisitions (18,250) - - (18,250) Property Additions (106,312) - - (106,312) Proceeds from Sale of Property 3,597 - - 3,597

Net Cash Used by Investing Activities (96,735) (1,829) 7,537 (91,027)

CASH FLOWS FROM FINANCING ACTIVITIESProceeds from Annuities Issued and Housing Entry Fees 21,086 - - 21,086 Refund of Housing Entry Fees (11,448) - - (11,448) Proceeds from Issuance of Long-Term Debt 27,000 - - 27,000 Repayment of Long-Term Debt (12,348) - - (12,348) Proceeds from Contributions 4,775 5 - 4,780

Net Cash Provided by Financing Activities 29,065 5 - 29,070

DECREASE IN CASH AND CASH EQUIVALENTS (5,931) (38) - (5,969)

Cash and Cash Equivalents - Beginning of Year 18,509 73 - 18,582

CASH AND CASH EQUIVALENTS - END OF YEAR 12,578$ 35$ -$ 12,613$

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATING BALANCE SHEET



(56)

Good



ASSETS

CURRENT ASSETSCash and Cash Equivalents 18,582$ 3,932$ 1,015$ Investments 347,225 31,838 - Accounts Receivable, Net 84,286 206 62 Notes and Other Current Receivables 1,836 248 - Current Portion of Assets Limited as to Use 57,403 - - Inventory 5,788 - - Prepaid Expenses 2,115 10 101 Securities Lending - Collateral Held for Loaned Securities 39,262 7,025 -

Total Current Assets 556,497 43,259 1,178

ASSETS LIMITED AS TO USEInvestments 56,043 292 6,363 Securities Lending - Investments Loaned to Broker 38,741 6,922 -

Total Assets Limited as to Use 94,784 7,214 6,363

PROPERTY AND EQUIPMENTLand and Land Improvements 151,534 - 6,207 Buildings and Improvements 1,350,600 - 72,728 Furniture and Equipment 253,341 - 2,887 Vehicles 17,862 - 40

Total 1,773,337 - 81,862 Less: Accumulated Depreciation (934,241) - (25,891)

Subtotal 839,096 - 55,971 Construction and Development 81,758 - -

Total Property and Equipment 920,854 - 55,971

OTHER ASSETSInvestments 32,421 - - Notes Receivable and Other Assets 38,099 - 186 Unamortized Finance Fees 4,199 - 652

Total Other Assets 74,719 - 838

Total Assets 1,646,854$ 50,473$ 64,350$

(57)


Entries Total

-$ 23,529$ - 379,063

(16) 84,538 - 2,084 - 57,403 - 5,788 - 2,226

- 46,287 (16) 600,918

- 62,698 - 45,663 - 108,361

- 157,741 (1,602) 1,421,726

- 256,228 - 17,902

(1,602) 1,853,597 - (960,132)

(1,602) 893,465 - 81,758

(1,602) 975,223

- 32,421 (19,576) 18,709

- 4,851 (19,576) 55,981

(21,194)$ 1,740,483$

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATING BALANCE SHEET (CONTINUED)



(58)

Good




CURRENT LIABILITIESCurrent Maturities of Long-Term Debt 66,761$ -$ 2,348$ Resident Funds and Prepaid Rents 9,953 - - Accounts Payable 27,924 1,236 3,908 Accrued Expenses:

Salaries and Wages 16,209 - 98 Vacation 27,018 - - Employee Benefits and Payroll Taxes 10,093 - - Insurance 8,716 28,359 - Interest 2,818 - 93

Current Portion of Housing Entry Fees 8,687 - - Securities Lending - Payable Under Investment Loan Agreement 39,741 7,094 - Other Current Liabilities 7,602 - 2,829

Total Current Liabilities 225,522 36,689 9,276

LONG-TERM DEBT, Less Current Maturities 554,801 - 17,972

OTHER LIABILITIESRefundable Housing Entry Fees 17,621 - - Non-Refundable Housing Entry Fees 80,993 - -

Annuities and Other Liabilities 8,822 - 520 Total Other Liabilities 107,436 - 520

Total Liabilities 887,759 36,689 27,768


Unrestricted 717,998 13,784 (12,732) Non-Controlling Interest - - 11,535

Total Unrestricted 717,998 13,784 (1,197) Temporarily Restricted 22,386 - 37,779 Permanently Restricted 18,711 - -

Total Net Assets 759,095 13,784 36,582

Total Liabilities and Net Assets 1,646,854$ 50,473$ 64,350$

(59)


Entries Total

-$ 69,109$ - 9,953

(3,095) 29,973

- 16,307 - 27,018 - 10,093 - 37,075

(199) 2,712 - 8,687

- 46,835 (2,163) 8,268 (5,457) 266,030

(349) 572,424

- 17,621 - 80,993 - 9,342 - 107,956

(5,806) 946,410

(15,388) 703,662 - 11,535

(15,388) 715,197 - 60,165 - 18,711

(15,388) 794,073

(21,194)$ 1,740,483$

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATING STATEMENT OF OPERATIONS



(60)

Good



OPERATING REVENUEHousing and Services 920,149$ -$ 8,843$ Resource Development 4,776 - - Net Assets Released from Restrictions for Operating Purposes 4,885 - - Underwriting Income - 12,534 - Other Revenue 30,203 - 987

Total Operating Revenue 960,013 12,534 9,830

OPERATING EXPENSEHousing and Services 657,289 - 3,154 Administrative 156,000 - 3,253 Employee Health Benefits 41,248 - 245 Resource Development 3,970 - - General Insurance 22,495 16,457 500 Interest 20,263 - 1,362 Depreciation 65,926 - 2,324

Total Operating Expense 967,191 16,457 10,838

OPERATING LOSS (7,178) (3,923) (1,008)


Interest Income 7,360 1,094 4 Realized Gain on Investments 13,146 1,106 - Unrealized Gain (Loss) on Investments 7,888 (1,677) - Loss on Disposal and Impairment of Property (15,457) - (10) Loss on Extinguishment of Debt (3,249) - -

Total Nonoperating Gains and Other Support 9,688 523 (6)

EXCESS (DEFICIT) OF REVENUE OVER EXPENSE 2,510 (3,400) (1,014)

Assets Released from Restrictions for Capital Purposes 5,752 - - Change in Non-Controlling Interest - - 6,188

CHANGE IN UNRESTRICTED NET ASSETS BEFORE DISCONTINUED OPERATIONS 8,262 (3,400) 5,174

LOSS FROM DISCONTINUED OPERATIONS (5,278) - -

CHANGE IN UNRESTRICTED NET ASSETS 2,984$ (3,400)$ 5,174$

(61)


Entries Total

-$ 928,992$ - 4,776

- 4,885 (12,534) - (1,363) 29,827

(13,897) 968,480

- 660,443 (919) 158,334

- 41,493 - 3,970

(16,457) 22,995 - 21,625 - 68,250

(17,376) 977,110

3,479 (8,630)

(1,094) 7,364 (1,106) 13,146 1,677 7,888

- (15,467) - (3,249)

(523) 9,682

2,956 1,052

- 5,752 - 6,188

2,956 12,992

- (5,278)

2,956$ 7,714$

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATING STATEMENT OF CHANGES IN NET ASSETS



(62)

Good



UNRESTRICTED NET ASSETSExcess (Deficit) of Revenues over Expenses 2,510$ (3,400)$ (1,014)$ Assets Released from Restrictions for Capital Purposes 5,752 - - Change in Non-Controlling Interest - - 6,188

Change in Unrestricted Net Assets Before Discontinued Operations 8,262 (3,400) 5,174

Loss from Discontinued Operations (5,278) - -

Change in Unrestricted Net Assets 2,984 (3,400) 5,174

TEMPORARILY RESTRICTED NET ASSETSContributions for Charity Care and Operating Expenses 4,103 - - Contributions for Capital Purposes 10,620 - 676 Net Assets Released from Restrictions (10,637) - -

Change in Temporarily Restricted Net Assets Before Discontinued Operations 4,086 - 676

Loss from Discontinued Operations (71) - -

Change in Temporarily Restricted Net Assets 4,015 - 676

PERMANENTLY RESTRICTED NET ASSETSContributions for Endowment Funds and Trusts 1,108 - - Increase in Beneficial Interest in Perpetual Trust 223 - -

Change in Permanently Restricted Net Assets 1,331 - -

CHANGE IN NET ASSETS 8,330 (3,400) 5,850

Net Assets - Beginning of Year 750,765 17,184 30,732

NET ASSETS - END OF YEAR 759,095$ 13,784$ 36,582$

(63)


Entries Total

2,956$ 1,052$

- 5,752 - 6,188

2,956 12,992

- (5,278)

2,956 7,714

- 4,103 - 11,296 - (10,637)

- 4,762

- (71)

- 4,691

- 1,108 - 223 - 1,331

2,956 13,736

(18,344) 780,337

(15,388)$ 794,073$

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATING STATEMENT OF CASH FLOWS



(64)

Good



CASH FLOWS FROM OPERATING ACTIVITIESChange in Net Assets 8,330$ (3,400)$ 5,850$ Adjustments to Reconcile Change in Net Assets to Net Cash Provided (Used) by Operating Activities:

Reconciling Items Included in Discontinued Operations 3,489 - - Depreciation 65,926 - 2,324 Amortization (188) 125 44 Provision for Bad Debts 752 - 47 Noncash Member Distribution - - - Housing Entry Fees and Annuities Revenue (3,491) - - Realized and Unrealized (Gain) Loss on Investments (21,034) 571 - Change in Beneficial Interest in Perpetual Trusts (223) - - Loss on Disposal and Impairment of Property 15,457 - 10 Loss on Refinancing of Debt 3,249 - - Change in Non-Controlling Interest - - (6,188) Reclassification of Restricted Contributions (11,728) - (676) (Increase) Decrease in Assets:

Accounts Receivable 1,903 (20) 30 Other Current Assets 668 (119) (174)

Increase (Decrease) in Liabilities:Resident Funds, Prepaid Rents and Accounts Payable (3,036) 451 102 Accrued Expenses and Other Current Liabilities 6,467 1,635 (182)

Net Cash Provided (Used) by Operating Activities 66,541 (757) 1,187

CASH FLOWS FROM INVESTING ACTIVITIESChange in Investments (10,537) 1,621 (142) Change in Notes Receivable and Other Assets 6,141 - (1,297) Business Acquisitions (3,651) - - Property Additions (103,529) - (6,449) Proceeds from Sale of Property 1,081 - 18

Net Cash Provided (Used) by Investing Activities (110,495) 1,621 (7,870)

(65)


Entries Total

2,956$ 13,736$

- 3,489 - 68,250 - (19) - 799 - - - (3,491)

(571) (21,034) - (223) - 15,467 - 3,249 - (6,188) - (12,404)

(4,254) (2,341) - 375

- (2,483) - 7,920

(1,869) 65,102

- (9,058) (6,672) (1,828)

- (3,651) 8,846 (101,132)

- 1,099 2,174 (114,570)

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATING STATEMENT OF CASH FLOWS (CONTINUED)



(66)

Good



CASH FLOWS FROM FINANCING ACTIVITIESProceeds from Annuities Issued and Housing Entry Fees 18,577 - - Refund of Housing Entry Fees (9,938) - - Payment of Financing Fees (1,036) - (127) Proceeds from Long-Term Debt Borrowings 47,141 - 6,619 Repayment of Long-Term Debt (17,164) - (2,060) Proceeds from Contributions 11,728 - 6,187 Change in Intercompany Payable - - (4,254)

Net Cash Provided by Financing Activities 49,308 - 6,365

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,354 864 (318)

Cash and Cash Equivalents - Beginning of Year 13,228 3,068 1,333

CASH AND CASH EQUIVALENTS - END OF YEAR 18,582$ 3,932$ 1,015$

(67)


Entries Total

- 18,577 - (9,938) - (1,163)

(6,619) 47,141 2,060 (17,164)

- 17,915 4,254 - (305) 55,368

- 5,900

- 17,629

-$ 23,529$

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATING OBLIGATED GROUP BALANCE SHEET



(68)

The The



Society Foundation Entries TotalASSETS

CURRENT ASSETSCash and Cash Equivalents 18,509$ 73$ -$ 18,582$ Investments 335,247 11,978 - 347,225 Accounts Receivable, Net 84,456 - (170) 84,286 Notes and Other Current Receivables 1,836 - - 1,836 Current Portion of Assets Limited as to Use 57,403 - - 57,403 Inventory 5,788 - - 5,788 Prepaid Expenses 2,115 - - 2,115 Securities Lending - Collateral Held for Loaned Securities 39,262 - - 39,262

Total Current Assets 544,616 12,051 (170) 556,497

ASSETS LIMITED AS TO USEInvestments 32,750 23,293 - 56,043 Securities Lending - Investments Loaned to Broker 38,741 - - 38,741

Total Assets Limited as to Use 71,491 23,293 - 94,784

PROPERTY AND EQUIPMENTLand and Land Improvements 151,534 - - 151,534 Buildings and Improvements 1,350,600 - - 1,350,600 Furniture and Equipment 253,340 1 - 253,341 Vehicles 17,862 - - 17,862

Total 1,773,336 1 - 1,773,337 Less: Accumulated Depreciation (934,241) - - (934,241)

Subtotal 839,095 1 - 839,096 Construction and Development 81,758 - - 81,758

Total Property and Equipment 920,853 1 - 920,854

OTHER ASSETSInvestments 17,394 15,027 - 32,421 Notes Receivable and Other Assets 88,335 10 (50,246) 38,099 Unamortized Finance Fees 4,199 - - 4,199

Total Other Assets 109,928 15,037 (50,246) 74,719

Total Assets 1,646,888$ 50,382$ (50,416)$ 1,646,854$

(69)

The The



Society Foundation Entries TotalLIABILITIES AND NET ASSETS

CURRENT LIABILITIESCurrent Maturities of Long-Term Debt 66,761$ -$ -$ 66,761$ Resident Funds and Prepaid Rents 9,953 - - 9,953 Accounts Payable 27,912 24 (12) 27,924 Accrued Expenses:

Salaries and Wages 16,201 8 - 16,209 Vacation 27,018 - - 27,018 Employee Benefits and Payroll Taxes 10,093 - - 10,093 Insurance 8,716 - - 8,716 Interest 2,976 - (158) 2,818

Current Portion of Housing Entry Fees 8,687 - - 8,687 Securities Lending - Payable Under Investment Loan Agreement 39,741 - - 39,741 Other Current Liabilities 7,602 - - 7,602

Total Current Liabilities 225,660 32 (170) 225,522

LONG-TERM DEBT, Less Current Maturities 554,801 - - 554,801

OTHER LIABILITIESRefundable Housing Entry Fees 17,621 - - 17,621 Non-Refundable Housing Entry Fees 80,993 - - 80,993

Annuities and Other Liabilities 8,718 104 - 8,822 Total Other Liabilities 107,332 104 - 107,436

Total Liabilities 887,793 136 (170) 887,759

NET ASSETSUnrestricted 717,998 35,164 (35,164) 717,998 Temporarily Restricted 22,386 2,110 (2,110) 22,386 Permanently Restricted 18,711 12,972 (12,972) 18,711

Total Net Assets 759,095 50,246 (50,246) 759,095

Total Liabilities and Net Assets 1,646,888$ 50,382$ (50,416)$ 1,646,854$

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATING OBLIGATED GROUP STATEMENT OF OPERATIONS



(70)

The The



Society Foundation Entries TotalOPERATING REVENUE

Housing and Services 920,149$ -$ -$ 920,149$ Resource Development 4,776 - - 4,776 Net Assets Released from Restrictions for Operating Purposes 4,885 - - 4,885 Other Revenue 30,203 - - 30,203

Total Operating Revenue 960,013 - - 960,013

OPERATING EXPENSEHousing and Services 657,262 27 - 657,289 Administrative 155,646 354 - 156,000 Employee Health Benefits 41,248 - - 41,248 Resource Development 2,853 1,117 - 3,970 General Insurance 22,495 - - 22,495 Interest 20,263 - - 20,263 Depreciation 65,926 - - 65,926

Total Operating Expense 965,693 1,498 - 967,191

OPERATING LOSS (5,680) (1,498) - (7,178)


Interest Income 8,232 489 (1,361) 7,360 Realized Gain on Investments 11,992 1,154 - 13,146 Unrealized Gain on Investments 6,672 1,216 - 7,888 Loss on Disposal and Impairment of Property (15,457) - - (15,457) Loss on Extinguishment of Debt (3,249) - - (3,249)

Total Nonoperating Gains and Other Support 8,190 2,859 (1,361) 9,688

EXCESS OF REVENUE OVER EXPENSE 2,510 1,361 (1,361) 2,510

Assets Released from Restrictions for Capital Items 5,752 - - 5,752 Transfer to Foundation from Society (26,279) 26,279 - - Increase in Interest in the Unrestricted Net Assets of the Foundation 26,279 - (26,279) -

CHANGE IN UNRESTRICTED NET ASSETS BEFORE DISCONTINUED OPERATIONS 8,262 27,640 (27,640) 8,262

LOSS FROM DISCONTINUED OPERATIONS (5,278) - - (5,278)

CHANGE IN UNRESTRICTED NET ASSETS 2,984$ 27,640$ (27,640)$ 2,984$

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATING OBLIGATED GROUP STATEMENT OF CHANGES IN NET ASSETS



(71)

The The



Society Foundation Entries TotalUNRESTRICTED NET ASSETS

Excess of Revenues over Expenses 2,510$ 1,361$ (1,361)$ 2,510$ Net Assets Released from Restrictions for Capital Purposes 5,752 - - 5,752 Transfer to Foundation from Society (26,279) 26,279 - - Increase in Interest in the Unrestricted Net Assets of the Foundation 26,279 - (26,279) -

Change in Unrestricted Net Assets Before Discontinued Operations 8,262 27,640 (27,640) 8,262

Loss from Discontinued Operations (5,278) - - (5,278)

Change in Unrestricted Net Assets 2,984 27,640 (27,640) 2,984

TEMPORARILY RESTRICTED NET ASSETSContributions for Charity Care and Operating Expenses 3,084 1,019 - 4,103 Contributions for Capital Purposes 10,620 - - 10,620 Net Assets Released from Restrictions (10,637) - - (10,637) Transfer to Society from Foundation 441 (441) - - Increase in Interest in the Temporarily Restricted Net Assets of the Foundation 578 - (578) -

Change in Temporarily Restricted Net Assets Before Discontinued Operations 4,086 578 (578) 4,086

Loss from Discontinued Operations (71) - - (71)

Change in Temporarily Restricted Net Assets 4,015 578 (578) 4,015

PERMANENTLY RESTRICTED NET ASSETSContributions for Endowment Funds and Trusts 1,005 103 - 1,108 Increase in Beneficial Interest in Perpetual Trust 223 - - 223 Transfers to Foundation from Society (387) 387 - - Increase in Interest in the Permanently Restricted Net Assets of the Foundation 490 - (490) -

Change in Permanently Restricted Net Assets 1,331 490 (490) 1,331

CHANGE IN NET ASSETS 8,330 28,708 (28,708) 8,330

Net Assets - Beginning of Year 750,765 21,538 (21,538) 750,765

NET ASSETS - END OF YEAR 759,095$ 50,246$ (50,246)$ 759,095$

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATING OBLIGATED GROUP STATEMENT OF CASH FLOWS



(72)

The The



Society Foundation Entries TotalCASH FLOWS FROM OPERATING ACTIVITIES

Change in Net Assets 8,330$ 28,708$ (28,708)$ 8,330$ Adjustments to Reconcile Change in Net Assets to Net Cash Provided by Operating Activities:

Reconciling Items Included in Discontinued Operations 3,489 - - 3,489 Depreciation 65,926 - - 65,926 Amortization (188) - - (188) Provision for Bad Debts 752 - - 752 Housing Entry Fees and Annuities Revenue (3,498) 7 - (3,491) Realized and Unrealized Gain on Investments (18,664) (2,370) - (21,034) Change in Beneficial Interest in Perpetual Trusts (223) - - (223) Loss on Disposal and Impairment of Property 15,457 - - 15,457 Loss on Refinancing of Debt 3,249 - - 3,249 Reclassification of Restricted Contributions (11,625) (103) - (11,728) Transfer to Foundation 24,683 (24,683) - - Increase in Assets:

Accounts Receivable 1,903 - - 1,903 Other Current Assets 678 (10) - 668

Increase (Decrease) in Liabilities:Resident Funds, Prepaid Rents and Accounts Payable (3,036) - - (3,036) Accrued Expenses and Other Current Liabilities 6,515 (48) - 6,467

Net Cash Provided by Operating Activities 93,748 1,501 (28,708) 66,541

CASH FLOWS FROM INVESTING ACTIVITIESChange in Investments (8,949) (1,588) - (10,537) Change in Notes Receivable and Other Assets (22,567) - 28,708 6,141 Business Acquisitions (3,651) - - (3,651) Property Additions (103,529) - - (103,529) Proceeds from Sale of Property 1,081 - - 1,081

Net Cash Used by Investing Activities (137,615) (1,588) 28,708 (110,495)

THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES CONSOLIDATING OBLIGATED GROUP STATEMENT OF CASH FLOWS (CONTINUED)



(73)

The The



Society Foundation Entries TotalCASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from Annuities Issued and Housing Entry Fees 18,577 - - 18,577 Refund of Housing Entry Fees (9,938) - - (9,938) Payment of Deferred Financing Fees (1,036) - - (1,036) Proceeds from Issuance of Long-Term Debt 47,141 - - 47,141 Repayment of Long-Term Debt (17,164) - - (17,164) Proceeds from Contributions 11,625 103 - 11,728

Net Cash Provided by Financing Activities 49,205 103 - 49,308

INCREASE IN CASH AND CASH EQUIVALENTS 5,338 16 - 5,354

Cash and Cash Equivalents - Beginning of Year 13,171 57 - 13,228

CASH AND CASH EQUIVALENTS - END OF YEAR 18,509$ 73$ -$ 18,582$


APPENDIX C

DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF PRINCIPAL DOCUMENTS


C-1

APPENDIX C

DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF PRINCIPAL DOCUMENTS

Brief descriptions of the Master Indenture, the Bond Indenture, the Thirty-Sixth Supplemental Indenture, the Agreement and the Contribution Agreements are included hereafter in this Appendix C. Such descriptions do not purport to be comprehensive or definitive. All references herein to the Master Indenture, the Bond Indenture, the Thirty-Sixth Supplemental Indenture, the Loan Agreement and the Contribution Agreements are qualified in their entirety by reference to each such document. All references to the Bonds are qualified in their entirety by reference to the definitive form thereof and the information with respect thereto included in the Bond Indenture.

DEFINITIONS OF CERTAIN TERMS

“Act” means the Colorado Health Facilities Authority Act, constituting Article 25, Title 25 of the Colorado Revised Statutes, as amended.

“Additional Indebtedness” means any Indebtedness (including all Obligations) incurred subsequent to the issuance of the Initial Obligation.

“Affiliate” means a corporation, partnership, joint venture, limited liability company, limited liability partnership, association, business trust or similar entity organized under the laws of the District of Columbia or any state of the United States of America which is directly or indirectly controlled by any Member of the Obligated Group, by any other Affiliate or by any Person that controls any Member of the Obligated Group or that controls any other Affiliate; provided, however, the term “Affiliate” will not include any Member of the Obligated Group. For purposes of this definition, control means the power to direct the management and policies of a Person through the ownership of not less than a majority of its voting securities or the right to designate or elect not less than a majority of the members of its board of directors or other governing board or body by law, contract, or otherwise.

“Aggregate Principal Amount” means the outstanding principal of a security and, in the case of a discount or non-interest bearing security, its accreted value calculated in accordance with the documents authorizing such security or if not so defined, generally accepted accounting principles, and, in the case of a Financial Products Agreement, the notional amount thereof.

“Agreement” means the Loan Agreement, dated as of July 1, 2015, between the Authority and the Society, and any and all modifications, alterations, amendments and supplements thereto.

“Assets” means the assets financed or refinanced by the Society with the proceeds from the Bonds, as described generally in the Agreement.

“Authorized Denominations” means $5,000 or any integral multiple thereof.

“Authorized Representative” means, with respect to the Society and each other Member of the Obligated Group, its respective chief executive officer or chief financial officer or any other individual or individuals designated as an Authorized Representative thereof by the chief executive officer or the chief financial officer of the respective Member in a writing filed with the Master Trustee and each Related Bond Trustee.

C-2

“Balloon Indebtedness” means Long-Term Indebtedness 25% or more of the original principal of which matures or is subject to mandatory redemption or purchase within any period of twelve consecutive months, which original principal amount is not required by the documents governing such Indebtedness to be amortized prior to the commencement of such twelve month period in amounts such that, following such amortization, the principal amount maturing during such twelve month period will be less than 25% of such original principal amount.

“Beneficial Owner” means any Person which (a) has the power, directly or indirectly, to vote or consent with respect to, or dispose of ownership of, any Bond (including any Person holding a Bond through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bond for federal income tax purposes.

“BMA Index” means an index based upon the weekly interest rate resets of tax-exempt variable rate issues included in a database maintained by Municipal Market Data, Inc., which meet specific criteria established by The Bond Market Association, as of the most recent date for which such index was published, or such other weekly, high-grade index comprised of seven-day, tax-exempt variable rate demand notes produced by Municipal Market Data, Inc. or its successor, as is designated by The Bond Market Association, or in its absence, by the Obligated Group Representative; provided, however, that if such index is no longer produced by Municipal Market Data, Inc. or its successor, then “BMA Index” will mean such other reasonably comparable index selected by the Obligated Group Representative.

“Bond Fund” means the particular trust fund established and so designated pursuant to the Bond Indenture.

“Bond Indenture” means the Bond Trust Indenture, dated as of July 1, 2015, by and between the Authority and the Trustee, pursuant to which the Bonds are authorized and to be issued, including any supplements thereto and any amendments thereof.

“Bond Purchase Agreement” means the Bond Purchase Agreement, dated July 9, 2015, by and among the Underwriters’, the Authority and the Society.

“Bonds” means the Authority’s Health Facilities Revenue and Revenue Refunding Bonds (The Evangelical Lutheran Good Samaritan Society Project) Series 2015A.

“Business Day” means a day (a) on which commercial banking business is transacted in the city in which the Master Trustee has its principal corporate trust office, except for Saturdays and Sundays, (b) on which the New York Stock Exchange is open for business, and (c) on which the principal corporate office of the Society is open for business.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder.

“Completion Indebtedness” means any Long-Term Indebtedness incurred by any Member of the Obligated Group for the purpose of financing the completion of acquiring, constructing, improving, or equipping facilities for which Indebtedness has theretofore been incurred in accordance with the provisions of the Master Indenture, to the extent necessary to provide a completed and equipped facility of the type and scope contemplated at the time that such initial Indebtedness was originally incurred, and in accordance with the general plans and specifications for such facility as originally prepared in connection with the incurring of such initial Indebtedness with only such changes as have been made in conformance with the documents pursuant to which the original Indebtedness was incurred.

C-3

“Consolidated” means consolidated in accordance with generally accepted accounting principles (“GAAP”), after the elimination of interorganizational items; provided that, for purposes of the Master Indenture, the Obligated Group will not consolidate with its financial statements, the financial statements of any corporation or other legal entity (a) whose assets are not available, as needed by the Obligated Group, to pay the Obligations; and (b) which has no legal right to require that the Obligated Group pay or assist in paying its debt, even though GAAP might otherwise require such consolidation.

“Consultant” means a person or firm that is a professional management consultant or accountant or accounting firm having a favorable reputation and the skill and experience necessary to render the particular report required by the provisions of the Master Indenture, which person or firm is not an employee or an Affiliate of any Member of the Obligated Group, and which is chosen by the Obligated Group Representative.

“Contribution Agreement” means each Contribution Agreement, dated as of July 1, 2015, among the Society, as Obligated Group Representative, Good Samaritan Society HCBS, LLC and a HCBS Affiliate, and any and all modifications, alterations, amendments and supplements thereto.

“Costs of Issuance Fund” means the particular trust fund established and so designated pursuant to the Bond Indenture.

“Days Cash on Hand” means as of each determination, the quotient derived by dividing (a) the sum of the Obligated Group’s unrestricted cash, cash equivalents and other marketable and liquid investments available for operating purposes, plus any restricted fund where the restriction can be removed by action of the Governing Body of an Obligated Group Member, and minus (i) funds held by trustees, including without limitation debt service funds, debt service reserve funds and construction funds, (ii) pension and retirement funds, (iii) self-insurance funds, (iv) borrowed moneys payable in one year or less, unless such borrowed moneys are fully collateralized or unless there exists a firm refinancing commitment from a financial institution rated in the “A+” or “A1” or higher rating category, (v) any demand obligations, unless a liquidity facility with a term-out provision containing a term of at least three years exists from a financial institution rated in the “A+” or “A1” or higher rating category, (vi) borrowed funds that are entrusted with a lender, and (vii) any collateral or swap termination payments which are reasonably anticipated to be required to be posted or paid within the next twelve months; by (b) the total operating expenses (excluding depreciation and amortization) of the Obligated Group (i) for the previous Fiscal Year, as reported on the Obligated Group’s most recent Financial Statements, where the determination is being made on the basis of those Financial Statements, divided by 365, or (ii) for the period from January 1 through June 30, where the determination is being made for that six month period, divided by 182.

“Debt Service” means, with respect to any period, the sum of (x) interest on all Long Term Indebtedness; and (y) principal retirements of all Long Term Indebtedness, other than interest or principal retirements financed with the proceeds of Long Term Indebtedness or Short-Term Indebtedness or made by the application of moneys from an irrevocable escrow established for such payments or nonrefundable deferred apartment entry fees. For the purposes of this definition:

(a) it shall be assumed, at the option of the Obligated Group Representative, that the principal of Balloon Indebtedness is amortized from the date of calculation of Debt Service over a term of 30 years with level annual debt service payments and that the interest rate thereon is a fixed rate equal to the average Thirty-Year Revenue Bond Index published by The Bond Buyer for the six-month period immediately preceding the date of calculation; provided, however, if the Obligated Group is using a Lender Commitment to reduce the amount of a Balloon Payment in this clause (a), the Lender Commitment shall be included in Long-Term Indebtedness for

C-4

purposes of this definition only; provided, further, that if the Balloon Payment is in connection with the Society’s Medium Term Note Program, the Balloon Payment shall be reduced by the amount remaining after subtracting (x) the minimum sum as calculated under clause (a) of the definition of Days Cash on Hand necessary to reach 90 Days Cash on Hand, from (y) the total sum as calculated under clause (a) of the definition of Days Cash on Hand (both determined on the basis of the Obligated Group’s most recently available audited Financial Statements);

(b) if any particular Long Term Indebtedness has a variable interest rate and the period under consideration is in the future, interest will be determined based on, the higher of (1) the highest variable interest rate paid by any Obligated Group Member over the past 24 months on variable rate indebtedness of similar maturity and creditworthiness as that being incurred, plus 50 basis points, or (2) the highest variable interest rate over the past 24 months for variable rate indebtedness of similar maturity and creditworthiness according to the BMA Index (or such other index acceptable to the Master Trustee) plus 50 basis points;

(c) if any Member of the Obligated Group has entered into a Financial Products Agreement, so long as the counterparty to the Financial Products Agreement is rated “A” or better by S&P and Moody’s or is approved by the Master Trustee, interest on the Obligated Group’s Long-Term Indebtedness will be adjusted by the actual net payments made or received by the Obligated Group, or if the Financial Products Agreement is entered into with respect to particular Long Term Indebtedness the interest will be determined by the actual net payments made or received by the Obligated Group with respect to the particular Long-Term Indebtedness and, to the extent amortized in accordance with generally accepted accounting principles, will be so amortized for purposes of this definition; provided, that if the rating of the Financial Products Agreement provider falls below “A,” and such provider is not approved by the Master Trustee, then either (i) the Obligated Group will terminate the Financial Products Agreement, or (ii) interest will be determined by reference to the higher of (A) the swap, cap, or other similar rate, or (B) the interest rate on the Long Term Indebtedness; and

(d) if any particular Long Term Indebtedness is a guaranty by any Member of the Obligated Group of another person’s Indebtedness, then (i) so long as no payments are actually required to be made by that Member under the guaranty, 20% of the debt service on such Indebtedness for the period under consideration will be included for purposes of this definition, and (ii) if any payments have been made by that Member pursuant to the guaranty within 18 months prior to the period under consideration, or for purposes of determining the ability of any Member to incur such guaranty, 100% of the debt service on such Indebtedness will be included for purposes of this definition.

“Default” or “Event of Default” means with respect to any Default or Event of Default under the Agreement or the Bond Indenture, any occurrence or event specified and defined under the headings “THE MASTER INDENTURE—Events of Default,” “THE AGREEMENT—Events of Default” or “THE BOND INDENTURE—Defaults and Remedies” therein.

“Excluded Facility” or “Excluded Facilities” means all land, improvements, equipment and other facilities designated by the Obligated Group Representative as such in an Officer’s Certificate delivered to the Master Trustee, owned by a Member of the Obligated Group; provided, however, that (a) any Indebtedness directly or indirectly incurred for or secured by any such Excluded Facilities will be non-recourse against any Property other than such Excluded Facilities and (b) any funds of a Member of the Obligated Group (other than funds derived from Excluded Facilities) used to acquire or otherwise pay for any such Excluded Facilities or pay any expenses in connection with the Excluded Facilities must satisfy the provisions of the Master Indenture with respect to disposition of Property. The Obligated

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Group Representative may provide an Officer’s Certificate indicating that Property previously designated as Excluded Facilities is no longer Excluded Facilities, provided that if such Excluded Facilities were no longer classified as such, the provisions of the Master Indenture (assuming for any time periods referred to in the Master Indenture such Excluded Property did not constitute Excluded Property) would be met for the incurrence of one dollar of Long-Term Indebtedness.

“Excluded Property” means any Excluded Facility and all rents, revenues or other income derived directly or indirectly from such Excluded Facility.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Favorable Opinion of Bond Counsel” means, with respect to any action relating to the Bonds, the occurrence of which requires such an opinion, a written legal opinion of Bond Counsel addressed to the Trustee, the Authority and the Society, as applicable, to the effect that such action is permitted under the Bond Indenture and will not impair the exclusion of interest on the Bonds from gross income for purposes of federal income taxation or the exemption of interest on the Bonds from income taxation under the laws of the State (subject to customary exceptions).

“Financial Products Agreement” means an interest rate swap, cap, collar, option, floor, forward or other hedging agreement, arrangement or security, however denominated, identified to the Master Trustee in an Officer’s Certificate as having been entered into by a Member of the Obligated Group with a Qualified Provider for the purpose of (a) reducing or otherwise managing the Member’s risk of interest rate changes or (b) effectively converting the Member’s interest rate exposure, in whole or in part, from a fixed rate exposure to a variable rate exposure, from a variable rate exposure to a fixed rate exposure, or from a variable rate exposure to a different variable rate exposure.

“Financial Products Payments” means payments periodically required to be paid to a counterparty by a Member of the Obligated Group pursuant to a Financial Products Agreement.

“Financial Products Receipts” means amounts periodically required to be paid to a Member of the Obligated Group by a counterparty pursuant to a Financial Products Agreement.

“Financial Statements” means, for any period and depending on the context, (a) the audited financial statements of the Obligated Group Representative which are presented in the form of and prepared in accordance with generally accepted accounting principles; such financial statements will include accompanying schedules of other financial information which present the details of the combining balance sheets and statements of operations and changes in net assets of the Obligated Group Representative and should specifically identify the Consolidated balances and statements for the Obligated Group, with inter-company items eliminated and excluding therefrom any revenues, expenses, assets, liabilities and other financial data with respect to Excluded Property, or (b) an unaudited balance sheet, statement of operations and changes in net assets for such period for the Obligated Group prepared by the Obligated Group Representative based on the accompanying unaudited Consolidated schedules, where required. The financial statements of the Obligated Group Representative prepared pursuant to (a) above will be examined by independent certified public accountants in accordance with generally accepted auditing standards. The report of such independent certified public accountants will express an opinion relative to such combined financial statements and will state that the schedules of other financial information of the Obligated Group Representative have been subject to the auditing procedures applied in the audit of the financial statements of the Obligated Group Representative, and are fairly stated in all material respects in relation to such financial statements taken as a whole.

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“Fiscal Year” means January 1 to December 31 or such other twelve-month period adopted as the Fiscal Year of the Obligated Group as designated by the Obligated Group Representative.

“Foundation” means The Evangelical Lutheran Good Samaritan Foundation, a Minnesota nonprofit corporation, and its successors and assigns.

“Governing Body” means, when used with respect to the Obligated Group Representative or any other Member of the Obligated Group, its board of directors, board of trustees, or other board or group of individuals in which the powers of the Obligated Group Representative or the Member of the Obligated Group are vested.

“Governmental Obligations” means direct obligations of, or obligations the principal of and interest on which are guaranteed by, the United States of America or any agency or instrumentality thereof, when such obligations are backed by the full faith and credit of the United States of America, including without limitation Farmers Home Administration, General Services Administration, Guaranteed Title XI financing, Government National Mortgage Association, and State and Local Government Series.

“Gross Revenues” means all receipts, revenues, income (including investment income) and other money received by or on behalf of the Members of the Obligated Group and all rights to receive the same from all sources, excluding Excluded Property, but including without any other limitation (a) gross revenues derived from the operation and possession of each Member’s facilities, including, without limitation, any license, lease or sublease of those facilities; (b) gifts, grants, bequests, donations and contributions, exclusive of any gifts, grants, bequests, donations and contributions to the extent specifically restricted by the donor to a particular purpose inconsistent with their use for the payment of Obligations or funds of a Member of the Obligated Group derived therefrom which due to donor restrictions cannot legally be used to pay Obligations; and (c) proceeds derived from (i) condemnation awards and insurance proceeds, (ii) accounts receivable and other contract rights and chattel paper, (iii) securities and other investments, (iv) inventory and other tangible and intangible property, (v) Financial Products Receipts, (vi) contract rights under medical reimbursement programs and agreements, including without limitation, Medicare and Medicaid and any successor programs, (vii) insurance proceeds, including without limitation, proceeds from both policies insuring the Members’ Property and actions and policies insuring residents served by the Members, such as long term care insurance policies and other health-care-insurance receivables, and (viii) all other contractual rights and other rights and assets now or hereafter owned by each Member.

“Guaranty” means any obligation of any Member of the Obligated Group guaranteeing in any manner, directly, indirectly or contingently, and whether by payment, advance, purchase, reserve or otherwise, any obligation of any other Person which obligation of such other Person would, if such obligation were the obligation of a Member of the Obligated Group, constitute Indebtedness under the Master Indenture.

“HCBS Affiliate” means each of Good Samaritan Society HCBS-Choice, LLC, Good Samaritan Society HCBS-BJG, LLC, Angels in Waiting Hospice, LLC, JJEA, LLC, Always Above and Beyond Home Health Care Services, LLC and HMS Heritage Management Services, L.L.C.

“Holder” means the person or persons in whose name or names an Obligation will be registered on the books of the Master Trustee kept for that purpose in accordance with provisions of the Master Indenture.

“Improvements” means that portion of the Assets constituting health care and senior living facilities.

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“Income Available for Debt Service” for any period means the Consolidated excess of revenues over expenses (excluding extraordinary items, unrealized gains or losses on investments and unrealized gains or losses on Financial Products Agreements), as determined in accordance with generally accepted accounting principles (except for such exclusions), which will include revenue or expenses related to any termination payments related to any Financial Products Agreements, plus amounts that have been deducted for (a) interest on Long-Term Indebtedness, (b) amortization of debt discount and costs of issuance of Long-Term Indebtedness, and (c) Property, Plant and Equipment retirement and depreciation; provided, however, that Income Available for Debt Service will include “other-than-temporary” impairment losses recorded pursuant to FAS 115.

“Indebtedness” means, for Members of the Obligated Group, (a) all indebtedness, whether or not represented by bonds, debentures, notes or other securities, for the repayment of money borrowed; (b) all deferred indebtedness for the payment of the purchase price of capital assets, including without limitation any capital lease and any Synthetic Lease Obligations; (c) all guaranties, endorsements, assumptions and other contingent obligations in respect of, or to purchase or to otherwise acquire, indebtedness of others; and (d) all indebtedness secured by any mortgage, pledge or lien existing on Property owned by a Member of the Obligated Group, subject to such mortgage, pledge or lien, whether or not the indebtedness secured thereby has been assumed; less (x) deposit funds, bond retirement funds, escrow funds and bond reserve funds pledged as collateral to Long-Term Indebtedness and restricted until final payment of such Long-Term Indebtedness, and (y) any Subordinate Indebtedness and Non-recourse Indebtedness.

“Initial Obligation” means the first Obligation (or Obligations issued at the same time) issued under the Master Indenture.

“Insurance Consultant” means a Person or firm designated by the Obligated Group Representative, who is not, and no member, stockholder, director, officer or employee of which is, an officer, director, trustee or employee of a Member of the Obligated Group or an Affiliate, that is nationally recognized as qualified to survey risks and to recommend insurance coverage for health care providers, health related facilities and services and organizations engaged in such operations and other facilities which are operated by Members of the Obligated Group, or is acceptable to the Master Trustee. Willis of Illinois, Inc. is the initial Insurance Consultant.

“Interest Payment Date” means, each June 1 and December 1, commencing December 1, 2015.

“Irrevocable Deposit” means the irrevocable deposit in trust of cash in an amount, or Government Obligations, or other securities permitted for such purpose pursuant to the terms of the documents governing the payment of or discharge of Indebtedness, the principal of and interest on which will be an amount, and under terms sufficient to pay all or a portion of the principal of, premium, if any, and interest on, as the same will become due, of any such Indebtedness which would otherwise be considered Outstanding. The trustee of such deposit may be the Master Trustee, a Related Bond Trustee or any other trustee or escrow agent authorized to act in such capacity.

“Late Payment Rate” means a rate of interest of 7% per annum.

“Lender Commitment” means an irrevocable commitment by a bank or other institutional or corporate lender whose long-term debt is rated “A” or better by Moody’s or S&P.

“Lien” means any mortgage, deed of trust or pledge of, security interest in or encumbrance on, any Property of any Member of the Obligated Group which secures any Indebtedness or any other

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obligation of any Member of the Obligated Group or any other Person, other than an obligation to any Member of the Obligated Group.

“Loan Repayments” means the payments required to be made by the Society pursuant to the Loan Agreement.

“Long–Term Indebtedness” means all Indebtedness created, assumed or guaranteed by any Member of the Obligated Group that matures by its terms, or is renewable at the option of any Member of the Obligated Group to a date, more than one year after the date of the original creation, assumption or guarantee of such Indebtedness by the Member; provided that any Indebtedness incurred pursuant to a line of credit or similar arrangement with a financial institution will not be considered Long-Term Indebtedness, regardless of the maturity date of such line of credit or similar arrangement, and further provided that any Indebtedness (of whatsoever maturity) incurred under the Medium Term Note Program will be deemed and considered to be Outstanding Long-Term Indebtedness for all purposes under the Master Indenture.

“Mandatory Sinking Fund Payment” means the amount to be paid on each Sinking Fund Payment Date.

“Master Indenture” means the Second Amended and Restated Master Trust Indenture dated as of October 1, 2013, among the Society, the Foundation and the Master Trustee, as amended and supplemented from time to time; provided that covenants and agreements that are applicable only to Obligations specified in particular supplements will not be deemed to apply to any other Obligations issued under the Master Indenture through the operation of this definition.

“Master Trustee” means Wells Fargo Bank, National Association, and its successors in the trust created under the Master Indenture.

“Maximum Annual Debt Service” means the maximum amount of Debt Service which will become due on the combined Indebtedness of all of the Members of the Obligated Group in any succeeding Fiscal Year of the Obligated Group.

“Medium Term Note Program” means (a) the Society’s “medium term note program” as established in accordance with the Trust Indenture dated as of October 1, 1995, between the Society and Norwest Bank Minnesota, National Association (as predecessor to Wells Fargo Bank, National Association), or as represented in the future by some similar, substituted trust indenture; and (b) up to $50,000,000 of debt incurred to refinance notes issued under the Medium Term Note Program as described in clause (a) above, or debt similarly incurred to refinance such debt, such debt to be incurred under a loan agreement with one or more banks designated by the Society’s Authorized Representative in a certificate to the Master Trustee, provided that any debt incurred pursuant to this clause (b) is to be deducted from the amount available under the Medium Term Note Program described in clause (a) above.

“Member of the Obligated Group” or “Obligated Group Member” or “Member” means the Obligated Group Representative and any other Person becoming a Member of the Obligated Group pursuant to the Master Indenture, but excluding any Member of the Obligated Group which has withdrawn from the Obligated Group pursuant to the Master Indenture. Members of the Obligated Group initially are the Society and the Foundation, and neither the Society nor the Foundation may withdraw from the Obligated Group.

“Moody’s” means Moody’s Investors Service, a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, and, if such corporation will be dissolved or

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liquidated or will no longer perform the functions of a securities rating agency, “Moody’s” will be deemed to refer to any other nationally recognized securities rating agency designated by the Society by notice to the Master Trustee.

“Non-Recourse Indebtedness” means any Indebtedness incurred to finance the acquisition of Property, secured by a Lien on such Property, liability for which is effectively limited to the Property subject to such Lien with no recourse, directly or indirectly, to any other Property of any Member of the Obligated Group.

“Obligated Group” means, collectively, the Members of the Obligated Group.

“Obligated Group Representative” means, initially, the Society and thereafter any Person as may be designated as such pursuant to written notice to the Master Trustee executed by all of the Members of the Obligated Group.

“Obligation” or “Obligations” means any obligation of the Obligated Group issued under the Master Indenture, including Obligation No. 47, and pursuant to a Supplement, as a joint and several obligation of each Obligated Group Member, which will be in the form set forth in the Supplement, and authenticated by the Master Trustee, to support any obligation of a Member of the Obligated Group, including but not limited to bonds, obligations, debentures, reimbursement agreements, loan agreements, guaranties, leases, Financial Products Agreements or other payment obligations.

“Obligation No. 47” means the obligation entitled Members of the Obligated Group Obligation No. 47, in the aggregate principal amount of $204,290,000.

“Officer’s Certificate” means a certificate signed by the President, Chief Financial Officer or Assistant Treasurer of the Obligated Group Representative, or the Authorized Representative of the Obligated Group Representative.

“Opinion of Bond Counsel” means an opinion in writing signed by an attorney or firm of attorneys acceptable to the Master Trustee and the Obligated Group Representative, and experienced in the field of municipal bonds whose opinions are generally accepted by purchasers of municipal bonds.

“Opinion of Counsel” means an opinion in writing signed by an attorney or firm of attorneys, including in-house counsel, acceptable to the Master Trustee and the Obligated Group Representative, who may be counsel for any Member of the Obligated Group or other counsel.

“Outstanding” when used with reference to Obligations and other Indebtedness means, as of any date of determination, all Obligations and Indebtedness theretofore issued or incurred and not paid and discharged, other than (a) Obligations theretofore canceled by the Master Trustee or delivered to the Master Trustee for cancellation, (b) Indebtedness deemed paid and no longer outstanding pursuant to the terms thereof, whether by payment, prepayment, defeasance, substitution or otherwise, (c) Obligations in lieu of which other Obligations have been authenticated and delivered or have been paid pursuant to the provisions of the Master Indenture regarding mutilated, destroyed, lost or stolen Obligations, (d) Obligations owned by any Obligated Group Member as provided in the Master Indenture, and (e) Obligations or Indebtedness for which there has been made an Irrevocable Deposit, but only to the extent that payment of Debt Service on such Obligation or Indebtedness is payable from such Irrevocable Deposit; provided, however, that if two or more obligations which constitute Indebtedness represent the same underlying obligation for purposes of the various financial covenants contained in the Master Indenture, but only for such purposes, only one of such obligations will be deemed Outstanding and the

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obligation so deemed to be Outstanding will be that one which produces the greater amount to be included in the Debt Service requirement to be included in the calculation of such covenants.

“Payment Date” means each Interest Payment Date or any other date on which any principal of, premium, if any, or interest on any Bond is due and payable for any reason, including without limitation upon any redemption of Bonds pursuant to the Bond Indenture.

“Payment Obligations” means such amounts as are necessary to duly and punctually pay the principal of and premium, if any, interest and any other amount payable on all Outstanding Obligations or portions thereof the proceeds of which were loaned or otherwise made available to such HCBS Affiliate or that were otherwise issued for the benefit of such HCBS Affiliate and any other payments, required by the terms of such Obligations, the applicable Supplemental Master Indenture and the Master Indenture, when and as the same become payable, whether at maturity, upon call for redemption, by acceleration of maturity or otherwise, and (ii) such amounts that are otherwise necessary to enable each Member to comply with the provisions of the Master Indenture, including without limitation, the payment of Obligations, with respect to the other Obligations issued by a Member of the Obligated Group.

“Permitted Investments” means the following investments, if and to the extent the same are legal for investment, with regard to any moneys held as part of the Bond Fund, the Project Fund, the Reserve Fund, the Costs of Issuance Fund or any other fund held by the Trustee pursuant to the Bond Indenture:

(a) Governmental Obligations;

(b) obligations of any of the following federal agencies which obligations represent full faith and credit of the United States of America, including: Export - Import Bank; Rural Economic Community Development Administration; U.S. Maritime Administration; Small Business Administration; U.S. Department of Housing & Urban Development (PHA’s); Federal Housing Administration; and Federal Financing Bank;

(c) U.S. dollar denominated deposit accounts, federal funds and banker’s acceptances with domestic commercial banks which have a rating on their short-term certificates of deposit on the date of purchase of “A–1” or “A–1+” by S&P and “P–1” by Moody’s and maturing no more than 360 days after the date of purchase, where ratings on holding companies are not considered as the rating of the bank;

(d) commercial paper which is rated at the time of purchase in the single highest classification, “A–1+” by S&P and “P–1” by Moody’s, and which matures not more than 270 days after the date of purchase;

(e) investments in a money market fund rated “AAAm” or “AAAm—G” or better by S&P;

(f) pre-refunded municipal obligations, defined as follows:

Any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and (i) which are rated, based on an irrevocable escrow account or fund (the “escrow”), in the highest rating category of S&P and Moody’s or any successors thereto; or (ii)(A) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or obligations described in

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paragraph (a) above, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate; and (B) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates thereof or on the redemption date or dates specified in the irrevocable instructions referred to above, as appropriate;

(g) general obligations of states with a rating of at least “A2/A” or higher by both Moody’s and S&P; and

(h) investment agreements from providers rated at least as high by S&P and Moody’s as each respective rating agency’s rating for the Bonds at the time the investment agreements are executed.

“Person” means an individual, association, unincorporated organization, corporation, partnership, joint venture, limited liability company, limited liability partnership, business trust or a government or an agency or a political subdivision thereof, or any other entity.

“Projects” means the refunding of the Refunded Bonds; financing or refinancing the costs of the acquisition, construction, improvement and equipping of the Assets, including certain home health agencies, skilled nursing facilities and other health care and senior living facilities in various locations; funding the Reserve Fund; and paying certain costs associated with the issuance of the Bonds.

“Project Fund” means the fund created pursuant to the Bond Indenture.

“Property” means any and all rights, titles and interests in and to any and all assets whether real or personal, tangible or intangible and wherever situated, other than funds or other Property received as donations which are restricted by the donor to purposes inconsistent with payment of Debt Service on Obligations or operating expenses as determined in accordance with generally accepted accounting principles and other than Excluded Property.

“Property, Plant and Equipment” means all Property owned by the Members of the Obligated Group which is property, plant and equipment under generally accepted accounting principles.

“Qualified Provider” means any financial institution or insurance company which is a party to a Financial Products Agreement, if the unsecured long-term debt obligations of such financial institution or insurance company (or of the parent or a subsidiary of such financial institution or insurance company if such parent or subsidiary guarantees the performance of such financial institution or insurance company under such Financial Products Agreement), or obligations secured or supported by a letter of credit, contract, guarantee, agreement, insurance policy or surety bond issued by such financial institution or insurance company (or such guarantor parent or subsidiary), are rated in one of the three highest rating categories (without regard to numerical or similar modifiers) of a national rating agency at the time of the execution and delivery of the Financial Products Agreement.

“Rebate Fund” means the particular trust fund established and so designated pursuant to the Bond Indenture.

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“Registered Owner” means the person or persons in whose name or names a Bond will be registered on the books of the Trustee kept for that purpose in accordance with provisions of the Bond Indenture.

“Regular Record Date” means the fifteenth day of the calendar month preceding an Interest Payment Date for the Bonds.

“Related Bond Indenture” means any indenture, bond resolution or other comparable instrument pursuant to which a series of Related Bonds is issued.

“Related Bond Issuer” means the issuer of any Related Bonds.

“Related Bond Trustee” means the trustee and its successors in the trust created under any Related Bond Indenture.

“Related Bonds” means the revenue bonds or other obligations issued or incurred by any state, territory or possession of the United States or any municipal corporation or political subdivision formed under the laws thereof or any constituted authority or agency or instrumentality of any of the foregoing empowered to issue obligations on behalf thereof (“governmental issuer”), pursuant to a Related Bond Indenture, the proceeds of which are loaned or otherwise made available to (a) a Member of the Obligated Group in consideration of the execution, authentication and delivery of an Obligation to or for the order of such governmental issuer, or (b) any Person other than a Member of the Obligated Group in consideration of the issuance to such governmental issuer (i) by such Person of any evidence of indebtedness or other obligation of such Person and (ii) by a Member of the Obligated Group of a Guaranty in respect of such indebtedness or other obligation, which Guaranty is represented by an Obligation.

“Requesting Registered Owners” means any Registered Owner of at least $1,000,000 Outstanding principal amount of any series of Related Bonds and any Registered Owner who has requested in writing delivered to the Obligated Group Representative, any of the information required by the master Indenture to be distributed to Requesting Registered Owners.

“Reserve Fund” means the particular trust fund established and so designated pursuant to the Bond Indenture.

“Reserve Fund Requirement” means the least, on the date of issuance of the Bonds, of (a) 10% of the principal amount of the Bonds, (b) the maximum annual debt service in any Bond Year on the Bonds, or (c) 125% of the average annual debt service on the Bonds, which amount is equal to $16,686,871 on the date of issuance of the Bonds, which will be deposited in the Reserve Fund.

“Revenues” means all payments received by the Trustee for the account of the Authority pursuant to the Loan Agreement and the Bond Indenture.

“Rule” means Rule 15c2-12 adopted by the Commission under the Exchange Act, as the same may be amended from time to time.

“Short-Term Indebtedness” means all Indebtedness created, assumed or guaranteed by any Member of the Obligated Group that is not Long-Term Indebtedness; provided that any Indebtedness incurred pursuant to a line of credit or similar arrangement with a financial institution will be considered Short-Term Indebtedness, regardless of the maturity date of such line of credit or similar arrangement; and provided further that any Indebtedness which falls under the Medium Term Note Program, even

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though it may be incurred through an arrangement with a financial institution, will be considered Long-Term Indebtedness, regardless of its maturity date.

“Sinking Fund Payment Date” means with respect to the 2040 Term Bond, June 1, 2036 and each June 1 thereafter, to and including June 1, 2040, and with respect to the 2045 Term Bond, June 1, 2041 and each June 1 thereafter, to and including June 1, 2045.

“Society” means The Evangelical Lutheran Good Samaritan Society, a North Dakota nonprofit corporation, and its successors and assigns.

“Society Certificate” means a certificate signed by the Society Representative.

“Society Representative” means the person or persons at the time designated to act on behalf of the Society by written certificate furnished to the Authority and the Trustee containing the specimen signatures of such person or persons and signed on behalf of the Society by its President or a Vice President. Such certificate may designate an alternate or alternates.

“S&P” means Standard & Poor’s Ratings Services, a division of Standard & Poor’s Financial Services, LLC, a part of McGraw Hill Financial, Inc., a corporation organized and existing under the laws of the State of New York, its successors and assigns and, if such corporation will be dissolved or liquidated or will no longer perform the functions of a securities rating agency, “S&P” will be deemed to refer to any other nationally recognized securities rating agency designated by the Society by notice to the Trustee, which rating agency then maintains a rating with respect to the Bonds.

“State” means the State of Colorado.

“Subordinated Indebtedness” means any Indebtedness, other than Obligations, the payment of which is either unsecured or secured on a subordinate basis, but which is in any case specifically subordinated to the payment of principal and interest on Obligations and evidenced by a document which contains provisions substantially in the form set forth in Exhibit A of the Master Indenture and for which the Obligated Group Representative has received an Opinion of Counsel to the effect that such Indebtedness constitutes Subordinated Indebtedness.

“Supplement” means an indenture supplemental to, and authorized and executed pursuant to the terms of, the Master Indenture.

“Synthetic Lease Obligation” means the monetary obligation of a Member of the Obligated Group under (1) a so-called synthetic or off-balance sheet or tax retention lease of real property or (2) any agreement for the use or possession of real property creating obligations that do not appear on the balance sheet of such Member, which (a) contains a residual guarantee by such Member, within the meaning of Statement of Financial Accounting Standards No. 13 - Accounting for Leases of the Financial Accounting Board, and (b) upon the insolvency or bankruptcy of such Member, would be characterized as debt of such Member (without regard to its treatment for accounting purposes). The amount of Synthetic Lease Obligations of any Member under any such lease or agreement will be the amount which would be shown as a liability on the balance sheet of such Member, prepared in accordance with Generally Accepted Accounting Principles, if such lease or agreement were accounted for as a capitalized lease obligation. Synthetic Lease Obligations will be included in the determination of all financial ratios, and the annual synthetic lease payment will be included in the calculation of Debt Service and Debt Service coverage (and other debt-related) ratios.

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“Tax-Exempt Organization” means a Person organized under the laws of the United States of America or any state thereof which is an organization described in Section 501(c)(3) of the Code and exempt from federal income taxes under Section 501(a) of the Code, or corresponding provisions of federal income tax laws from time to time in effect.

“Tax Regulatory Agreement” means the Tax Regulatory Agreement, between the Authority and the Society, as Obligated Group Representative, relating to the Bonds, including any amendments thereof and any supplements thereto.

“Total Assets” means, at any point in time, all assets of the Obligated Group, other than Excluded Property, as shown on the balance sheet in the most recent Financial Statements available.

“Trustee” means U.S. Bank National Association, as trustee, or any successor trustee, appointed pursuant to the Bond Indenture. The principal office of the Trustee will be the business address set forth in the Bond Indenture or such other address as designated in writing to the City as its principal office for its duties as Trustee under the Bond Indenture.

“Thirty-Sixth Supplement” means the Thirty-Sixth Supplement to Master Trust Indenture, dated as of July 1, 2015, by and between the Society and the Master Trustee.

“Unassigned Rights” means the Authority’s right to receive payments under certain provisions of the Agreement, its right to be released and indemnified, its right to receive notices and its right to perform certain discretionary acts.

“Underwriters” means collectively, Citigroup Global Markets Inc. and Herbert J. Sims & Co., as the underwriters of the Bonds.

“Value” means the value of the Permitted Investments in the Reserve Fund, which will be determined as follows: (a) all Permitted Investments credited to the Reserve Fund will be valued at fair market value. The Trustee will determine the fair market value based on accepted industry standards and from accepted industry providers; and (b) as to certificates of deposit and bankers’ acceptances, the Value will be the face amount thereof plus accrued interest thereon.

THE MASTER INDENTURE

General

The Master Indenture contains various covenants, security provisions, terms and conditions, certain of which are summarized below. Reference is made to the Master Indenture, as amended and supplemented, for a full and complete statement of its provisions.

Amount of Indebtedness

Each Member of the Obligated Group may incur Indebtedness by issuing Obligations under the Master Indenture or by creating Indebtedness under any other document, in each case subject to the provisions and restrictions of the Master Indenture. The principal amount of Indebtedness that may be created under the Master Indenture or under other documents is not limited, except as limited by the provisions of the Master Indenture, including the provisions of the paragraph describing “Limitations of Indebtedness” below, or of any Supplement. Each Member of the Obligated Group is and will be jointly and severally liable for each and every Obligation. Each Obligation will be issued pursuant to a Supplement.

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Appointment of Obligated Group Representative

Each Member of the Obligated Group, by becoming a Member of the Obligated Group, irrevocably appoints the Obligated Group Representative as its agent and true and lawful attorney in fact and grants to the Obligated Group Representative on its behalf (a) full and exclusive power to execute Supplements authorizing the issuance of Obligations or series of Obligations, (b) full and exclusive power to execute Obligations for and on behalf of the Obligated Group and each Member of the Obligated Group, (c) full and exclusive power to execute Supplements on behalf of the Obligated Group and each Member of the Obligated Group pursuant to the Master Indenture, and (d) full power to prepare, or authorize the preparation of, any and all documents, certificates or disclosure materials reasonably and ordinarily prepared in connection with the issuance of Obligations under the Master Indenture or Related Bonds associated therewith and to execute and deliver such items to the appropriate parties in connection therewith.

Security; Payment of Principal and Interest

Each Member of the Obligated Group represents and warrants that it has not pledged, mortgaged, encumbered or granted a security interest in any of its Property except for Permitted Liens, and covenants that it will not pledge, mortgage, encumber or grant a security interest in any of its Property except for Permitted Liens.

All Obligations issued pursuant to the Master Indenture will be joint and several general obligations of each Member of the Obligated Group equally and ratably secured by a pledge of the Gross Revenues as hereafter provided.

Each Member of the Obligated Group pledges, and to the extent permitted by law grants a security interest to the Master Trustee in, all of its Gross Revenues and in any fund or account in which its Gross Revenues are deposited, to secure the payment of Obligations under the Master Indenture and the performance by the Members of the Obligated Group of their other obligations under the Master Indenture.

Each Obligation will be a joint and several obligation of each Member of the Obligated Group. Notwithstanding anything in the Master Indenture to the contrary, however, neither the Society nor the Foundation will be obligated to use moneys which due to donor restrictions cannot legally be used to pay Obligations.

Each Member of the Obligated Group jointly and severally covenants to promptly pay or cause to be paid the principal of, premium, if any, and interest on each Obligation issued pursuant to the Master Indenture at the place, on the dates and in the manner provided in the Master Indenture, any Supplement and in said Obligation according to the terms thereof whether at maturity, upon proceedings for redemption, by acceleration, or otherwise.

Insurance

Each Member of the Obligated Group agrees that it will maintain, or cause to be maintained, insurance (which may include reasonable deductibles) of such types and in such amounts as is customary for health care providers of similar size and character and in accordance with prevailing industry practice. Such insurance may be provided by one or more self-insurance programs, shared or pooled insurance programs or programs of captive insurance companies considered to be adequate by the Obligated Group Representative except that hazard or casualty risk on any real or personal property owned, leased or used by a Member of the Obligated Group, including Property, Plant and Equipment of the Obligated Group,

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will not be self-insured (except for reasonable deductibles). At least once every three years, the Obligated Group Representative will employ an Insurance Consultant to prepare and file with the Master Trustee a report on the adequacy of the insurance maintained by the Obligated Group Representative and the other Members of the Obligated Group.

Limitations on Creation of Liens

Each Member of the Obligated Group agrees not to create or suffer to be created or permit the existence of any Lien upon Property now owned or hereafter acquired by it other than Permitted Liens. Permitted Liens consist of the following:

(a) Liens arising by reason of good faith deposits with any Member of the Obligated Group in connection with leases, rentals or sales of real estate, bids or contracts (other than contracts for the payment of money), deposits by any Member of the Obligated Group 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;

(b) 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 of the Obligated Group to maintain self-insurance or to participate in any funds established to cover any insurance risks or in connection with workers’ compensation, unemployment insurance, pension or profit sharing plans or other social security arrangements, or to share in the privileges or benefits provided for companies participating in such arrangements;

(c) Any judgment Lien or award against any Member of the Obligated Group so long as such judgment is being contested in good faith and execution thereon is stayed or while the period for responsive pleading has not lapsed;

(d) (i) Rights reserved to or vested in any municipality or public authority by the terms of any right, power, franchise, grant, license, permit or provision of law affecting any Property; (ii) any Liens on any Property for taxes, assessments, levies, fees, water and sewer charges and other governmental and similar charges and any Liens of mechanics, materialmen, laborers, suppliers or vendors for work or services performed or goods or materials furnished in connection with such Property, which are not due and payable or which are not delinquent, or the amount or validity of which is being contested and execution thereon is stayed, or with respect to Liens of mechanics, materialmen, laborers, suppliers or vendors which have been due for less than 90 days; (iii) easements, rights-of-way, servitudes, restrictions, oil, gas or other mineral reservations and other minor defects, encumbrances and irregularities in the title to any Property, Plant and Equipment which do not materially impair the use of such Property, Plant and Equipment; and (iv) statutory landlord’s Liens;

(e) Leases where any Member of the Obligated Group is lessor, which relate to Property, Plant and Equipment of a type that is customarily the subject of such leases, including without limitation office space for physicians and educational institutions, food service facilities, research and development facilities, parking facilities, barber shops, beauty shops, flower shops, gift shops, pharmacy and similar shops; leases where any Member of the Obligated Group is lessor, entered into in accordance with the provisions of the Master Indenture; leases, licenses or similar rights to use Property, Plant or Equipment where any Member of the Obligated Group is lessor, lessee, licensor, licensee or the equivalent thereof existing as of the date of the Master

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Indenture and any renewals and extensions if payment is not yet due under the contract in question or if such Lien is being contested in accordance with the Master Indenture; and ground leases of unimproved real property;

(f) Such minor defects and irregularities of title 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 Member owning it;

(g) Any Lien on pledges, gifts or grants, including any income derived from the investment thereof, and Liens on or in Property given, bequeathed or devised by the owner thereof, existing at the time of such gift, bequest or devise, provided that such Liens attach solely to the Property which is the subject of such gift, bequest or devise, and any Indebtedness secured by such Liens is not assumed by any Member of the Obligated Group or, if assumed, is less than 70% of the appraised value of the subject Property;

(h) Any Lien created by the Master Indenture (including without limitation the Lien on Gross Revenues) and any other Lien securing all Obligations on a parity basis;

(i) Any Lien existing for not more than 30 days after any Member of the Obligated Group will have first received notice thereof;

(j) Liens on moneys deposited by residents, patients or others with any Member of the Obligated Group as security for or as prepayment for the cost of patient care or any rights of residents of long term care or similar facilities to endowment or similar funds, any rights of students to fees or tuition, deposited by or on behalf of such patients, residents or students;

(k) Any security interest in any depreciation reserve, debt service reserve, debt service or similar fund established pursuant to the terms of any Supplement, Related Bond Indenture or loan agreement in favor of the Master Trustee, the Related Bond Trustee, the Related Bond Issuer, the provider of any liquidity or credit support for such Related Bonds or the holder of the Indebtedness issued pursuant to such Supplement or Related Bond Indenture or any related Indebtedness;

(l) Any Liens on Property of any Person existing at the date such Person becomes a Member of the Obligated Group; provided that such Lien will qualify as a Permitted Lien under this subparagraph only for so long as any Indebtedness secured by the Lien continues to exist without any increase after the date upon which the Person became a Member of the Obligated Group or merges into an Obligated Group Member and provided further than any such Person will provide a list of any such existing Liens to the Master Trustee on such date;

(m) Any Lien arising by reason of any escrow established to pay Debt Service with respect to Obligations or Related Bonds;

(n) Any Lien in favor of a Related Bond Trustee on the proceeds of Related Bonds and any earnings thereon prior to the application of such proceeds and such earnings;

(o) Liens securing Non-Recourse Indebtedness incurred pursuant to the provisions of the Master Indenture;

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(p) Any Lien described on Exhibit B to the Master Indenture which is existing on the date of execution of the Master Indenture, provided that no such Lien (or the amount of Indebtedness secured thereby) may be increased or modified to apply to any Property of any Obligated Group Member not subject to such Lien on such date unless such Lien as so increased or modified otherwise qualifies as a Permitted Lien under the Master Indenture;

(q) Any Lien securing Financial Products Agreements pursuant to the Master Indenture;

(r) Liens on Property created in anticipation of the sale, assignment, transfer or other disposition of such Property (as permitted by the Master Indenture) and which are required or are conditions to such disposition, provided that the Obligated Group Representative provides an Officer’s Certificate to the effect that such Lien will not adversely affect the Income Available for Debt Service of the Obligated Group; and

(s) Any Lien which constitutes a purchase money security interest under the Uniform Commercial Code, as enacted in the state in which such purchase money security interest attaches.

Limitations on Indebtedness

Each Obligated Group Member agrees that it will not incur any Additional Indebtedness other than Indebtedness consisting of one or more of the following:

(a) Indebtedness to the extent that such Indebtedness either meets one of the tests set forth in subparagraph (b) below or, when added to all other Indebtedness not meeting any of the tests set forth in subparagraph (b) below that the Obligated Group then has Outstanding, would not exceed 15.0% of the Obligated Group’s previous Fiscal Year’s total operating revenues as set forth in the most recently available Financial Statements; provided that for a period of 30 consecutive calendar days in each Fiscal Year, the amount of Short-Term Indebtedness Outstanding must be reduced to not more than 5.0% of the Gross Revenues for the most recent Fiscal Year for which Financial Statements of the Obligated Group are available; and further provided that no Indebtedness (of whatsoever maturity) issued and outstanding under the Medium Term Note Program will be deemed or considered to be Outstanding Short-Term Indebtedness for purposes of this test; and further provided that no variable rate obligation of the Obligated Group which is secured as to liquidity by a Lender Commitment will be deemed or considered to be Outstanding Short-Term Indebtedness for purposes of this test.

(b) Indebtedness which meets at least one of the following tests:

(i) the Obligated Group’s Income Available for Debt Service for the two most recent Fiscal Years for which the Obligated Group’s Financial Statements are available at the time of the incurrence of the proposed Indebtedness, as measured pursuant to those audited Financial Statements, equaled or exceeded 125% of Maximum Annual Debt Service for any one future Fiscal Year, including the proposed Indebtedness on a pro forma basis; or

(ii) the Obligated Group has met or surpassed a ratio of 125% for Income Available for Debt Service compared with Maximum Annual Debt Service for the two most recent Fiscal Years for which the Obligated Group’s Financial Statements are available at the time of the incurrence of the proposed Indebtedness, as measured

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pursuant to those audited Financial Statements, and the Obligated Group’s projected Income Available for Debt Service for the first three full Fiscal Years immediately succeeding the completion of the project(s) being financed by the proposed Indebtedness will equal or exceed 125% of the Maximum Annual Debt Service (including principal and interest payments on the proposed Indebtedness) for any single succeeding Fiscal Year; or

(iii) the net proceeds of the proposed Long–Term Indebtedness are to be used exclusively for a refunding or refundings (as described in the Code) where the average annual debt service of the applicable Indebtedness is reduced; or

(iv) the net proceeds of the proposed Long–Term Indebtedness are to be used exclusively for a refinancing of notes issued by the Society pursuant to its Medium Term Note Program, where the principal amount of Outstanding notes is reduced by at least the principal amount of the proposed Long–Term Indebtedness when the refinancing is completed.

An Officer’s Certificate with accompanying evidence, and showing the financial calculations, if applicable, delivered to the Master Trustee, the Related Bond Issuer and the Related Bond Trustee, will be sufficient to show compliance with the provisions of any test contained in subparagraph (a) above or this subparagraph (b); provided that compliance with the test set forth in clause (b)(ii) above will require delivery to the Master Trustee, the Related Bond Issuer and the Related Bond Trustee of a report from an independent Consultant acceptable to the Master Trustee, showing such compliance.

(c) Completion Indebtedness may be incurred by any Member of the Obligated Group without limitation provided there is filed with the Master Trustee (i) an Officer’s Certificate stating that at the time the original Indebtedness for the capital improvements to be completed was incurred, such Member had a reasonable belief that the proceeds of such Indebtedness together with other available moneys would be sufficient to complete such capital improvements, (ii) a certificate of an independent architect setting forth the amount reasonably expected to be required to complete the capital improvement for which the Indebtedness was incurred and (iii) an Officer’s Certificate stating that the proceeds of the Completion Indebtedness and other moneys available therefor, including estimated investment earnings, will be sufficient to complete the capital improvement.

(d) Non-Recourse and Subordinated Indebtedness may be incurred without limitation.

The conversion of Indebtedness from variable rate Indebtedness to Indebtedness bearing a fixed interest rate or from one type of variable rate Indebtedness to another type of variable rate Indebtedness or from Indebtedness bearing a fixed interest rate to variable rate Indebtedness pursuant to the terms of the documents providing for the issuance of such Indebtedness will not be considered to be incurrence of Indebtedness.

For the purposes of meeting the tests set forth in subparagraphs (b)(ii) and (iii) above, any Indebtedness that will no longer be Outstanding on the proposed issuance date of the Indebtedness then to be incurred will be excluded from the calculations required by such tests.

Concurrent with the issuance of any Additional Indebtedness, the Obligated Group Representative will furnish the Master Trustee with an Officer’s Certificate of the Obligated Group

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Representative which identifies the Indebtedness to be incurred, identifies the provision of the Master Indenture pursuant to which such Indebtedness is to be incurred, demonstrates compliance with the provisions of such subparagraph and states that no Event of Default then exists under the Master Indenture and that upon issuance of the Additional Indebtedness no Event of Default will exist under the Master Indenture and that no event will have occurred which with the passage of time or the giving of notice or both would become an Event of Default; provided, however, that said Officer’s Certificate is not required to state that no Event of Default is then existing in connection with the issuance of Additional Indebtedness which is issued to refund any Indebtedness theretofore issued and then Outstanding if the Obligated Group Representative has delivered an Officer’s Certificate of the Obligated Group Representative (which is accompanied by an Opinion of Counsel acceptable to the Master Trustee as to any conclusions of law supporting such Officer’s Certificate) that any existing Event of Default under the Master Indenture will be cured by such refunding.

Indebtedness incurred pursuant to any one of the subparagraphs of under this heading may be reclassified as Indebtedness incurred pursuant to any other of such subparagraphs if the tests set forth in the subparagraph to which such Indebtedness is to be reclassified are met at the time of such reclassification.

Income Available for Debt Service

The Members of the Obligated Group will fix, charge and collect, subject to applicable requirements or restrictions imposed by law or regulation, such rates, fees, and charges for the use of and for the services and products furnished or to be furnished by them, such that for each Fiscal Year, Income Available for Debt Services will be equal to at least 115% of Maximum Annual Debt Service.

If Income Available for Debt Service is less than 115% of Maximum Annual Debt Service for any Fiscal Year, the Obligated Group Representative will immediately notify the Master Trustee and will hire a Consultant, within 30 days of the date of such determination, to examine the rates, rentals, fees and charges and the methods of operation of the Obligated Group and make recommendations to enable the Obligated Group to meet the 115% requirement. The Obligated Group Representative will notify the Master Trustee promptly of the fact it has retained a Consultant. If, in the judgment of such Consultant, it is not possible for the Obligated Group to meet such requirement, the report of such Consultant will so indicate and will further indicate the projected ratio of Income Available for Debt Service to Maximum Annual Debt Service if the recommendations of such Consultant are followed. The Members of the Obligated Group covenant and agree that promptly upon the receipt of the recommendations of the Consultant, and subject to applicable requirements or restrictions imposed by law, they will revise their rates, rentals, fees and charges or their methods of operation and will take such other action as will be in conformity with such recommendations. The Obligated Group Representative will certify to the Master Trustee after such employment of a Consultant, that it has complied in good faith with the recommendations of the Consultant and will supply a copy of the Consultant’s report to the Master Trustee. If the Obligated Group substantially complies with the provisions of the Master Indenture described in this paragraph, the Obligated Group will for the Fiscal Year in which such Consultant is employed and for one subsequent Fiscal Year be excused from compliance with the 115% requirement, so long as the each Member of the Obligated Group fixes, charges and collects rates, rentals, fees and charges for the use of and for the services furnished or to be furnished by that Member which will be sufficient for such Fiscal Year to produce Income Available for Debt Service equal to at least 100% of Maximum Annual Debt Service. Thereafter, if the Obligated Group fails to meet the tests set forth above, the Obligated Group Representative may again employ the same or another Consultant to comply with the provisions under this heading; provided that such employment of a Consultant pursuant to this paragraph to comply with the provisions under this heading, may not be used more than once every three Fiscal Years. If the Obligated Group complies with these requirements, the failure to comply with the 115% of

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Maximum Annual Debt Service test will not be an Event of Default during such period of compliance unless Income Available for Debt Service is less than 100% of the Maximum Annual Debt Service.

Days Cash on Hand

The Members of the Obligated Group, as a group, will maintain at least 90 Days Cash on Hand, tested on a semi-annual basis. The calculation will be certified by an Officer’s Certificate delivered to the Master Trustee within 10 days of the receipt of the Financial Statements, based on the Financial Statements for the particular Fiscal Year, and then again within 10 days of the receipt of the unaudited financial statements for the six-month period ending June 30 of each year. If Days Cash on Hand are determined to be less than 90 on either such basis, the Obligated Group Representative will immediately notify the Master Trustee and will hire a Consultant, within 30 days of the date of such determination, to examine the methods of operation of the Obligated Group and the management of its financial portfolio. The Consultant will make such recommendations as the Consultant believes are appropriate to enable the Obligated Group to meet the 90 Days Cash on Hand requirement. The Members of the Obligated Group have covenanted and agreed that promptly upon the receipt of the recommendations of the Consultant, and subject to applicable requirements or restrictions imposed by law, they will revise their rates, rentals, fees and charges or their methods of operation or management of their financial portfolio and will take such other action as will be in conformity with such recommendations. If the Obligated Group substantially complies with the provisions of the Master Indenture described in this paragraph and the recommendations of the Consultant, the failure to comply with the 90 Days Cash on Hand requirement will be waived and will not become an Event of Default. Thereafter, if the Obligated Group fails to meet the tests set forth above, the Obligated Group Representative may again employ the same or another Consultant to comply with this paragraph. Notwithstanding anything to the contrary in the provisions under this heading, the failure to maintain at least 75 Days Cash on Hand, as tested on a semi-annual basis as set forth above, will be an Event of Default.

Sale, Lease or Other Disposition of Property

Each Member of the Obligated Group agrees to restrict any disposition of any of its Property, Plant and Equipment (except dispositions in the ordinary course of its business or dispositions to another Member of the Obligated Group, both of which will be allowed without any limitation, provided that the Obligated Group remains in compliance with the provisions of the Master Indenture after such disposition) during the term of the Master Indenture, as follows: (a) any transfer or other disposition of unrestricted and unencumbered cash, cash equivalents or marketable securities without at least fair market value consideration, and any pledge of unrestricted and unencumbered cash, cash equivalents or marketable securities without fair market value consideration, in any one Fiscal Year is limited to 7.5% of the Obligated Group’s aggregate unrestricted and unencumbered cash, cash equivalents and marketable securities, as shown in the most recent audited Financial Statements; (b) the Obligated Group will not transfer or otherwise dispose of without fair market value consideration more than 5.0% of its net Property, Plant and Equipment, as shown in the most recent audited Financial Statements, in any one Fiscal Year; provided that no transfer or disposition without fair market value consideration will be made unless the Obligated Group Representative provides to the Master Trustee, prior to such transfer, an Officer’s Certificate showing that, after taking into account such disposition, the projected ratio of Income Available for Debt Service divided by Maximum Annual Debt Service for the first Fiscal Year immediately following such disposition will be greater than 1.15; and (c) no Member of the Obligated Group will dispose of any of its Property (except in the ordinary course of its business or to another Member of the Obligated Group) after an Event of Default has occurred and is continuing under the Master Indenture.

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Consolidation, Merger, Sale or Conveyance

(a) Each Member of the Obligated Group agrees not to merge or consolidate with, or sell or convey all or substantially all of its Property to, any Person that is not a Member of the Obligated Group unless: (i) at the time of such consolidation, merger, sale or conveyance (including without limitation the purchase of all or substantially all of the Property of a Member of the Obligated Group), such successor entity is organized under the laws of the District of Columbia or one of the states of the United States of America and becomes a Member of the Obligated Group in accordance with the Master Indenture (provided, that if an Obligated Group Member merges, the surviving entity will remain an Obligated Group Member) and will execute and deliver to the Master Trustee an appropriate instrument, satisfactory to the Master Trustee, containing the agreement of such successor entity 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 the Master Indenture to be kept and performed by such Member; (ii) an Officer’s Certificate is delivered to the Master Trustee certifying that no Member of the Obligated Group, including such successor entity, immediately after such merger, consolidation, sale or conveyance would be in default in the performance or observance of any covenant or condition of the Master Indenture and that at least one of the tests described in the Master Indenture could be met for the incurrence of one additional dollar of Long-Term Indebtedness, assuming such merger, consolidation, sale or conveyance actually occurred at the beginning of the most recent Fiscal Year or period of 12 full consecutive calendar months for which Financial Statements are available; and (iii) if all amounts due or to become due on any tax exempt Related Bond have not been fully paid to the Registered Owner thereof, there will have been delivered to the Master Trustee and the Related Bond Trustee for such tax exempt Related Bond (A) an Opinion of Bond Counsel, in form and substance satisfactory to the Master Trustee, to the effect that the consummation of such merger, consolidation, sale or conveyance, whether or not contemplated on the date of the delivery of any such Related Bonds, would not adversely affect the validity of such Related Bonds or result in the inclusion of interest payable on such Related Bonds in gross income for purposes of federal income taxation and (B) an Opinion of Counsel, in form and substance satisfactory to the Master Trustee, to the effect that the consummation of such transaction (1) would not require the registration of any Related Bonds under the Securities Act of 1933, as amended, or any state securities law, or of any Supplement under the Trust Indenture Act of 1939, as amended, or any state securities law, or if such registration is required, that all applicable registration and qualification provisions of said acts have been complied with, and (2) will not adversely affect the status as a Tax Exempt Organization of any Member which otherwise has such status.

(b) In case of any such consolidation, merger, sale or conveyance and upon any such successor corporation becoming a Member of the Obligated Group, such successor corporation may succeed to and be substituted for its predecessor, and its predecessor may be released from all obligations under the Master Indenture, if a written request for such actions is submitted to the Master Trustee by the Obligated Group Representative.

(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 accept an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale or conveyance, and any such assumption, complies with the provisions of the Master Indenture and that it is proper for the Master Trustee under the provisions of the Master Indenture to join in the execution of any instrument required to be executed and delivered by the Master Indenture.

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Concurrent with such consolidation, merger, sale or conveyance, the Obligated Group Representative will furnish the Master Trustee with an Officer’s Certificate to the effect that no Event of Default then exists under the Master Indenture and that upon such consolidation, merger, sale or conveyance no Event of Default will exist under the Master Indenture and that no event will have occurred which with the passage of time or the giving of notice or both would become an Event of Default.

(e) Before any Member of the Obligated Group will acquire operating assets with other than Indebtedness, which acquisition is reasonably expected to increase total operating expenses of the Obligated Group by 15% or more in the first full Fiscal Year following the proposed date of the acquisition or completion of construction thereof (whichever is later), the Master Trustee must receive a report from the Obligated Group Representative to the effect that: (i) Income Available for Debt Service divided by Debt Service for any period of 12 consecutive calendar months designated by the Obligated Group Representative of the 18 calendar months immediately preceding such proposed date (if the operating assets to be acquired in such acquisition were in existence during such period), as adjusted to give effect to the acquisition as if it had been made at the beginning of such 12-month period, was at least 1.15; or (ii) the average of the Income Available for Debt Service divided by Debt Service for the two consecutive 12-month periods immediately succeeding such proposed date is expected to be: (A) greater than 1.20; or (B) higher than it would have been had the acquisition not been made. If the Income Available for Debt Service divided by Debt Service, as calculated at the end of the Fiscal Year next preceding such proposed date, was less than 1.25, the report required above must be prepared by an independent consultant.

Financial Products Agreements

Any Member of the Obligated Group may enter into a Financial Products Agreement or Agreements, the payments on which may be secured by an Obligation on a parity with other Obligations issued under the Master Indenture, and such Member may direct the Master Trustee to issue an Obligation or Obligations and enter into a Supplement with respect thereto (in which case the Obligation for such purpose may be issued without meeting the requirements of the Master Indenture for incurring Additional Indebtedness and such Obligation will not be taken into account for purposes of any financial or other covenant contained in the Master Indenture).

Filing of Financial Statements, Certificate of No Default, Other Information

(a) Each Member of the Obligated Group agrees to keep adequate records and books of accounts, each separate from the other and from all other records and accounts, in which complete and correct entries will be made, in accordance with generally accepted accounting principles consistently applied (such books at all times to be subject to the inspection by the Master Trustee and any Holder, or their representatives duly authorized in writing; provided, however, the Master Trustee will not be obligated to inspect such books), and to provide the Obligated Group Representative such information as is reasonably required to enable the Obligated Group Representative to comply with the provisions of subparagraph (b) below.

(b) So long as any Obligations are Outstanding, the Obligated Group Representative will furnish or cause to be furnished to the Master Trustee and the Requesting Registered Owners, as indicated, the following information; provided, that such indicated information will only be provided to Requesting Registered Owners to the extent it is not available on the Society’s website: (i) to the Master Trustee (for distribution to the NRMSIRs) and the Requesting Registered Owners, within 150 days after the end of each Fiscal Year, or within 30 days after availability, whichever is sooner, copies of the

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complete Financial Statements for the Obligated Group (including a balance sheet, a statement of operations, a statement of changes in net assets, a statement of cash flow and/or such other schedules as are required by generally acceptable accounting principles and have been delivered to the Obligated Group Representative in connection with such financial statements), together with (A) the report and opinion of a certified public accountant stating that the Financial Statements have been prepared in accordance with generally accepted accounting principles and that such accountant’s examination was performed in accordance with generally accepted auditing standards, and (B) certificates signed by the chief financial officer of the Obligated Group Representative and a certified public accountant stating that no event which constitutes an Event of Default under the Master Indenture or which with the giving of notice or the passage of time or both would constitute an Event of Default under the Master Indenture has occurred and is continuing as of the end of such Fiscal Year, or specifying the nature of such event and the actions taken and proposed to be taken by the Obligated Group to cure such default; provided, that the certificate provided by the certified public accountant may be based on the work performed in connection with its report and opinion on the Financial Statements of the Obligated Group. The certificate of the chief financial officer of the Obligated Group Representative will include the calculations showing the actual ratios of the Obligated Group made for purposes of determining compliance with the Master Indenture and the Obligated Group’s liquidity for purposes of compliance with the Master Indenture, and the certificate of the certified public accountant will include computations of the Income Available for Debt Service and Days Cash on Hand, both for the most recent Fiscal Year; (ii) upon written request, copies of all relevant regular or periodic reports which any Member of the Obligated Group may be required to file with any federal or state department, bureau, commission or agency and which are otherwise available for public inspection at such department, bureau, commission or agency; and (iii) to the Requesting Registered Owners and to the Master Trustee for distribution to the NRMSIRs, within 45 days after the end of each calendar quarter, quarterly and annual unaudited financial statements, as the case may be, of the Obligated Group as soon as such unaudited financial statements become available.

Parties Becoming Members of the Obligated Group

Persons which are not Members of the Obligated Group may become Members of the Obligated Group if: (a) the Person that is becoming a Member of the Obligated Group will execute and deliver to the Master Trustee an appropriate instrument (i) containing the agreement of such Person to become a Member of the Obligated Group under the Master Indenture and thereby become subject to compliance with all provisions of the Master Indenture pertaining to a Member of the Obligated Group, including the performance and observance of all covenants and obligations of a Member of the Obligated Group, and (ii) containing the unconditional agreement of such Person to jointly and severally make payments upon each Obligation at the times and in the amounts provided in each such Obligation; (b) each instrument executed and delivered to the Master Trustee in accordance with subparagraph (a) under this heading will be accompanied by an Opinion of Counsel, addressed to and satisfactory to the Master Trustee, to the effect that such instrument has been duly authorized, executed and delivered by such Person and constitutes a valid and binding obligation enforceable in accordance with its terms, with such exceptions and limitations as are acceptable to the Master Trustee; (c) there will be filed with the Master Trustee an Officer’s Certificate of the Obligated Group Representative demonstrating that one of the conditions for the incurrence of one additional dollar of Long-Term Indebtedness set forth in paragraphs (a)(i) or (ii) under the heading “—Limitations on Indebtedness” above would be met, assuming such admission actually occurred at the beginning of the most recent Fiscal Year or period of 12 full consecutive calendar months for which Financial Statements are available; (d) if all amounts due or to become due on any Related Bond have not been paid in full to the holders thereof, there will be delivered to the Master Trustee (i) an Opinion of Bond Counsel, in form and substance satisfactory to the Master Trustee, to the effect that the consummation of such transaction would not adversely affect the validity of such Related Bonds or result in inclusion of interest payable on any such Related Bond in gross income for purposes of federal income taxation and (ii) an Opinion of Counsel, in form and substance satisfactory to the Master

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Trustee, to the effect that the consummation of such transaction (A) would not require the registration of the Related Bonds under the Securities Act of 1933, as amended, or any state securities law, or the Related Supplement under the Trust Indenture Act of 1939, as amended, or any state securities law, or if such registration is required, that all applicable registration and qualification provisions of said acts have been complied with, and (B) will not adversely affect the status as a Tax-Exempt Organization of any Member which otherwise has such status; and (e) there will have been delivered to the Master Trustee by the Person becoming a Member of the Obligated Group an irrevocable power of attorney authorizing the execution of Obligations by the Obligated Group Representative.

Concurrent with the addition of such Obligated Group Member, the Obligated Group Representative will furnish the Master Trustee with an Officer’s Certificate of the Obligated Group Representative to the effect that no Event of Default then exists under the Master Indenture and that upon addition of such Obligated Group Member no Event of Default will exist under the Master Indenture and that no event will have occurred which with the passage of time or the giving of notice or both would become an Event of Default and acknowledging the addition of such Person as a Member of the Obligated Group which will be bound by all provisions of the Master Indenture.

Withdrawal From the Obligated Group

Neither the Society nor the Foundation will withdraw from the Obligated Group. No other Member of the Obligated Group may withdraw from the Obligated Group unless, prior to the taking of such action: (a) if all amounts due on any Related Bond have not been paid in full to the holders thereof, there will be delivered to the Master Trustee an Opinion of Bond Counsel, in form and substance satisfactory to the Master Trustee, to the effect that such Member’s withdrawal from the Obligated Group would not result in the inclusion of interest payable on any such Related Bond in gross income for the purposes of federal income taxation; (b) there will be delivered to the Master Trustee an Officer’s Certificate of the Obligated Group Representative to the effect that one of the tests described in paragraphs (a)(i) or (ii) under the heading “—Limitations on Indebtedness” above would be met for the incurrence of one additional dollar of Long-Term Indebtedness, assuming such withdrawal actually occurred at the beginning of the most recent Fiscal Year or period of 12 full consecutive calendar months for which Financial Statements are available; and (c) there will have been delivered to the Master Trustee an Officer’s Certificate of the Obligated Group Representative to the effect that immediately prior to and immediately after such withdrawal no Event of Default exists under the Master Indenture and no event will have occurred which with the passage of time or the giving of notice or both would become such an Event of Default.

Upon the withdrawal of any Member from the Obligated Group pursuant to the foregoing provisions under this heading, all liability of such Member of the Obligated Group with respect to all Obligations Outstanding under the Master Indenture will cease, and the Lien of the Master Indenture on any Property of such Member of the Obligated Group will be released.

Events of Default

Event of Default, as used in the Master Indenture, will mean any of the following events: (a) the Members of the Obligated Group will fail to make any payment of the principal of, premium, if any, or interest on any Obligations issued and Outstanding under the Master Indenture when and as the same will become due and payable, whether at maturity, by proceedings for redemption, by acceleration or otherwise, in accordance with the terms thereof and of the Master Indenture; (b) any Member of the Obligated Group will fail duly to perform, observe or comply with any other covenant or agreement on its part under the Master Indenture for a period of 30 days after the date on which written notice of such failure, requesting the same to be remedied, will have been given to the Obligated Group Representative

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by the Master Trustee, or to the Obligated Group Representative and the Master Trustee by the Holders of at least 50% in Aggregate Principal Amount of Obligations then Outstanding; provided, however, that if said failure is such that it cannot be corrected within 30 days after the receipt of such notice but can be corrected with diligence, it will not constitute an Event of Default if corrective action is instituted within such 30-day period and diligently pursued until the Event of Default is corrected; (c) any representation or warranty made by any Member 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 to the Master Indenture proves untrue in any material respect as of the date of the issuance or making thereof and will not be corrected or brought into compliance within 30 days after written notice thereof to the Obligated Group Representative by the Master Trustee or the Holders of at least 50% in aggregate principal amount of the Outstanding Obligations; (d) an event of default will occur under a Related Bond Indenture or upon a Related Bond; (e) any Member of the Obligated Group will fail to make any required payment with respect to any Indebtedness for borrowed money the outstanding principal amount of which is in excess of 2% of Total Assets for the most recent Fiscal Year for which Financial Statements are available (other than Obligations issued and Outstanding under the Master Indenture and other than Non-Recourse Indebtedness), whether such Indebtedness now exists or will hereafter be created, and any period of grace with respect thereto will have expired, or an event of default as defined in any mortgage, indenture or instrument under which there may be issued, or by which there may be secured or evidenced, any Indebtedness the outstanding principal amount of which is in excess of 2% of Total Assets for the most recent Fiscal Year for which Financial Statements are available (other than Non-Recourse Indebtedness), whether such Indebtedness now exists or will hereafter be created, will occur, which event of default will not have been waived by the holder of such mortgage, indenture or instrument, and as a result of such failure to pay or other event of default such Indebtedness will have been accelerated; provided, however, that such default will not constitute an Event of Default within the meaning of this paragraph if within 60 days, or within the time allowed for service of a responsive pleading if any proceeding to enforce payment of the Indebtedness is commenced, any Member of the Obligated Group in good faith will contest the obligation to pay or the existence of such Indebtedness; (f) the entry of a decree or order by a court having jurisdiction in the premises for relief against any Member of the Obligated Group, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of such Member under the United States Bankruptcy Code or any other applicable federal or state law, or appointing a receiver, liquidator, custodian, assignee or sequestrator (or other similar official) of such Member or of any substantial part of its Property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 90 consecutive days; and (g) the institution by any Member of the Obligated Group of proceedings of an order for relief, or the consent by it to an order for relief against it, or the filing by it of a petition or answer or consent seeking reorganization, arrangement, adjustment, compensation or relief under the United States Bankruptcy Code or any other similar applicable federal or state law, or the consent by it to the filing of any such petition or to the appointment of a receiver, liquidator, custodian, assignee, trustee or sequestrator (or other similar official) of such Member of the Obligated Group or of any substantial part of its Property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due.

Acceleration; Annulment of Acceleration

Upon the occurrence and during the continuation of an Event of Default under the Master Indenture, the Master Trustee may and, upon the written request of (i) the Holders of not less than 50% in Aggregate Principal Amount of Obligations Outstanding or (ii) any Person properly exercising the right given to such Person under any Supplement to require acceleration of the Obligations issued pursuant to such Supplement, will, by notice to the Members of the Obligated Group declare all Obligations Outstanding immediately due and payable, whereupon such Obligations will become and be immediately

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due and payable, anything in the Obligations or in any other provision of the Master Indenture to the contrary notwithstanding; provided, however, that if the terms of any Supplement give a Person the right to consent to acceleration of the Obligations issued pursuant to said Supplement, the Obligations issued pursuant to such Supplement may not be accelerated by the Master Trustee unless such consent is properly obtained pursuant to the terms of such Supplement. In the event Obligations are accelerated there will be due and payable on such Obligations an amount equal to the total principal amount of all such Obligations, plus all interest accrued thereon to the date of acceleration and, to the extent permitted by applicable law, which accrues to the date of payment.

At any time after the principal of the Obligations will have been so declared to be due and payable and before the entry of final judgment or decree in any suit, action or proceeding instituted on account of such default, if (i) the Obligated Group has paid or caused to be paid or deposited with the Master Trustee moneys sufficient to pay all matured installments of interest and interest on installments of principal and interest and principal or redemption prices then due (other than the principal then due only because of such declaration) of all Obligations Outstanding; (ii) the Obligated Group has paid or caused to be paid or deposited with the Master Trustee moneys sufficient to pay the charges, compensation, expenses, disbursements, advances, fees and liabilities of the Master Trustee; (iii) all other amounts then payable by the Obligated Group under the Master Indenture will have been paid or a sum sufficient to pay the same will have been deposited with the Master Trustee; and (iv) every Event of Default (other than a default in the payment of the principal of such Obligations then due only because of such declaration) will have been remedied, then the Master Trustee may, and upon the written request of Holders of not less than a majority in Aggregate Principal Amount of the Obligations Outstanding will, annul such declaration and its consequences with respect to any Obligations or portions thereof not then due by their terms; provided that no such annulment will extend to Obligations issued pursuant to a Supplement which provides that no such declaration may be annulled by the Master Trustee unless consent of a particular Person is obtained without the consent of such Person. No such annulment will extend to or affect any subsequent Event of Default or impair any right consequent thereon.

Additional Remedies and Enforcement of Remedies

Upon the occurrence and continuance of any Event of Default, the Master Trustee may, and upon the written request of the Holders of not less than 50% in Aggregate Principal Amount of the Obligations Outstanding, together with indemnification of the Master Trustee to its satisfaction therefor, will, proceed forthwith to protect and enforce its rights and the rights of the Holders under the Master Indenture by such suits, actions or proceedings as the Master Trustee, being advised by counsel, will deem expedient, but only to the extent permitted by law, including but not limited to: (i) enforcement of the right of the Holders to collect and enforce the payment of amounts due or becoming due under the Obligations; (ii) suit upon all or any part of the Obligations; (iii) civil action to require any Person holding moneys, documents or other property pledged to secure payment of amounts due or to become due on the Obligations to account as if it were the trustee of an express trust for the Holders; (iv) civil action to enjoin any acts or things which may be unlawful or in violation of the rights of the Holders; (v) realize upon the security interest in the Gross Revenues and exercise all of the rights and remedies of a secured party under applicable state laws; and (vi) enforcement of any other right of the Holders conferred by law or by the Master Indenture; provided, however, that such Holders will have no recourse under the Master Indenture to Excluded Property.

Regardless of the happening of an Event of Default, the Master Trustee, if requested in writing by the Holders of not less than 50% in Aggregate Principal Amount of the Obligations then Outstanding, will, upon being indemnified to its satisfaction therefor, institute and maintain such suits and proceedings as it may be advised will be necessary or expedient (i) to prevent any impairment of the security under the Master Indenture by any acts which may be unlawful or in violation of the Master Indenture, or (ii) to

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preserve or protect the interests of the Holders; provided that such request and the action to be taken by the Master Trustee are not in conflict with any applicable law or the provisions of the Master Indenture and, in the sole judgment of the Master Trustee, is not unduly prejudicial to the interests of the Holders not making such request.

Application of Moneys After Default

During the continuance of an Event of Default all moneys received by the Master Trustee pursuant to any right given or action taken pursuant to the Master Indenture (except for security given with respect to particular Obligations to the extent permitted in the Master Indenture, which security will only be applied to payment of debt service on such particular Obligations), after payment of (i) the costs and expenses of the proceedings resulting in the collection of such moneys and of the fees, expenses and advances incurred or made by the Master Trustee with respect thereto and all other fees and expenses of the Master Trustee under the Master Indenture; and (ii) in the sole discretion of the Master Trustee, the payment of the expenses of operating the Property of any Members of the Obligated Group, will be applied as follows:

(a) Unless the principal of all Outstanding Obligations will 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 Obligations in the order of the maturity of such installments and, if the amount available will 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 installments of any Obligations which will have become due, whether at maturity or by call for redemption, in the order of their due dates, and if the amounts available will not be sufficient to pay in full all Outstanding Obligations due on any date, then to the payment thereof ratably, according to the amounts of principal installments due on such date, to the Persons entitled thereto, without any discrimination or preference; and Third: to be held for the payment to the Persons entitled thereto as the same will become due of the principal of and premium, if any, and interest on the Obligations which may thereafter become due either at maturity or upon call for redemption prior to maturity, and if the amount available will not be sufficient to pay in full Obligations due on any particular date, together with interest then due and owing thereon, payment will be made ratably according to the amount of principal due on such date to the Persons entitled thereto without any discrimination or preference.

(b) If the principal of all Outstanding Obligations will have become or have been declared due and payable, to the payment of the principal and interest then due and unpaid upon Outstanding Obligations 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 Obligation over any other Obligation, ratably, according to the amounts due respectively for principal and interest, to the Persons entitled thereto without any discrimination or preference.

(c) If the principal of all Outstanding Obligations will have been declared due and payable, and if such declaration will thereafter have been rescinded and annulled under the provisions of the Master Indenture, then, subject to the provisions of under this heading in the event that the principal of all Outstanding Obligations will later become due or be declared due and payable, the moneys will be applied in accordance with the provisions of under this heading.

Whenever moneys are to be applied by the Master Trustee pursuant to the provisions under this heading, such moneys will be applied by it at such times, and from time to time, as the Master Trustee

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will 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 will apply such moneys, it will fix the date upon which such application is to be made and upon such date interest on the amounts of principal to be paid on such dates will cease to accrue. The Master Trustee will give such notice as it may deem appropriate of the deposit with it of any such moneys and of the fixing of any such date, and will not be required to make payment to the Holder of any unpaid Obligation until such Obligation will be presented to the Master Trustee for appropriate endorsement of any partial payment or for cancellation if fully paid.

Whenever all Obligations and interest thereon have been paid under the provisions under this heading and all expenses and charges of the Master Trustee have been paid, any balance remaining will be paid to the Person entitled to receive the same; if no other Person will be entitled thereto, then the balance will be paid to the Members of the Obligated Group, their respective successors, or as a court of competent jurisdiction may direct.

Remedies Not Exclusive

No remedy by the terms of the Master Indenture conferred upon or reserved to the Master Trustee or the Holders is intended to be exclusive of any other remedy, but each and every such remedy will be cumulative and will be in addition to every other remedy given under the Master Indenture or existing at law or in equity or by statute on or after the date of the Master Indenture.

Remedies Vested in the Master Trustee

All rights of action (including the right to file proof of claims) under the Master Indenture or under any of the Obligations may be enforced by the Master Trustee without the possession of any of the Obligations or the production thereof in any trial or other proceedings relating thereto. Any such suit or proceeding instituted by the Master Trustee may be brought in its name as the Master Trustee without the necessity of joining as plaintiffs or defendants any Holders. Subject to the provisions of the paragraph describing “Application of Moneys After Default” above, any recovery or judgment will be for the equal benefit of the Holders.

Appointment of Receivers

Upon the occurrence of an Event of Default, 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 the Master Indenture, the Master Trustee will be entitled, as a matter of right, to the extent permitted under applicable law, to the appointment of a receiver or receivers of the rights and properties pledged under the Master Indenture and of the revenues, issues, payments and profits thereof, pending such proceedings, with such powers as the court making such appointment will confer.

Holders’ Control of Proceedings

If an Event of Default will have occurred and is continuing, notwithstanding anything in the Master Indenture to the contrary, the Holders of more than 50% in Aggregate Principal Amount of Obligations then Outstanding will have the right, at any time, by an instrument in writing executed and delivered to the Master Trustee and accompanied by indemnity satisfactory to the Master Trustee, to direct the method and place of conducting any proceeding to be taken in connection with the enforcement of the terms and conditions of the Master Indenture or for the appointment of a receiver or any other proceedings under the Master Indenture; provided that such direction is not in conflict with any applicable law or the provisions of the Master Indenture, and provided further, that the Master Trustee will have the

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right to decline to follow any such direction if the Master Trustee in good faith will determine that the proceeding so directed would involve it in personal liability or would be unduly prejudicial to the interest of any Holders not joining in such direction. Nothing in the provisions under this heading impair the right of the Master Trustee in its discretion to take any other action under the Master Indenture which it may deem proper and which is not inconsistent with such direction by Holders.

The foregoing notwithstanding, the Holders of more than 50% in Aggregate Principal Amount of the Obligations then Outstanding which are entitled to the exclusive benefit of certain security (to the extent provided in the Master Indenture) in addition to that intended to secure all or other Obligations will 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 the Master Indenture, the Supplement or Supplements pursuant to which such Obligations were issued or so secured with respect to such separate security; provided, however, that such direction will not be otherwise than in accordance with the provisions of law and of the Master Indenture.

Termination of Proceedings

In case any proceeding taken by the Master Trustee on account of an Event of Default will have been discontinued or abandoned for any reason or will have been determined adversely to the Master Trustee or to the Holders, then the Members of the Obligated Group, the Master Trustee and the Holders will be restored to their former positions and rights under the Master Indenture, and all rights, remedies and powers of the Master Trustee and the Holders will continue as if no such proceeding had been taken.

Waiver of Events of Default

No delay or omission of the Master Trustee or of any Holder to exercise any right or power accruing upon any Event of Default will impair any such right or power or will be construed to be a waiver of any such Event of Default or an acquiescence therein. Every power and remedy given to the Master Trustee and the Holders, respectively, may be exercised from time to time and as often as may be deemed expedient by them.

The Master Trustee may waive any Event of Default which in its opinion will have been remedied before the entry of final judgment or decree in any suit, action or proceeding instituted by it under the provisions of the Master Indenture or before the completion of the enforcement of any other remedy under the Master Indenture.

Notwithstanding anything contained in the Master Indenture to the contrary, the Master Trustee, upon the written request of the Holders of more than 50% of the Aggregate Principal Amount of Obligations then Outstanding, will waive any Event of Default under the Master Indenture and its consequences; provided, however, that, except under the circumstances set forth in the provisions of the paragraph describing “Acceleration; Annulment of Acceleration” above, a default in the payment of the principal of, premium, if any, or interest on any Obligation, when the same will become due and payable by the terms thereof or upon call for redemption, may not be waived without the written consent of the Holders of all the Outstanding Obligations with respect to which such payment default exists.

In case of any waiver by the Master Trustee of an Event of Default under the Master Indenture, the Members of the Obligated Group, the Master Trustee and the Holders will be restored to their former positions and rights under the Master Indenture, respectively, but no such waiver will extend to any subsequent or other Event of Default or impair any right consequent thereon.

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Notice of Event of Default

The Master Trustee will, within 10 days after it has knowledge of the occurrence of an Event of Default, mail to all Holders as the names and addresses of such Holders appear upon the records of the Master Trustee, notice of such Event of Default known to the Master Trustee, unless such Event of Default will have been cured before the giving of such notice; provided that, except in the case of default in the payment of the principal of or premium, if any, or interest on any of the Obligations and the Events of Default specified in subparagraphs (e) and (f) of the paragraph describing “Events of Default” above, the Master Trustee will be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors of the Master Trustee in good faith determines that the withholding of such notice is in the interests of the Holders.

Removal and Resignation of the Master Trustee

The Master Trustee may resign or may be removed at any time by an instrument or instruments in writing signed by the Holders of more than 50% of the Aggregate Principal Amount of Obligations then Outstanding or, if no Event of Default will have occurred and is continuing, by an instrument in writing signed by the Obligated Group Representative. No such resignation or removal will become effective unless and until a successor Master Trustee (or temporary successor trustee as provided below) has been appointed and has assumed the trusts created by the Master Indenture. Written notice of such resignation or removal will be given to the Members of the Obligated Group and to each Holder at the address then reflected on the records of the Master Trustee and such resignation or removal will take effect upon the appointment and qualification of a successor Master Trustee. A successor Master Trustee may be appointed at the direction of the Holders of not less than a majority in Aggregate Principal Amount of Obligations Outstanding or by the Obligated Group Representative if the Master Trustee was removed by the Obligated Group Representative. In the event a successor Master Trustee has not been appointed and qualified within 60 days of the date notice of resignation is given, the Master Trustee, any Member of the Obligated Group or any Holder may apply to any court of competent jurisdiction for the appointment of a temporary successor Master Trustee to act until such time as a successor is appointed as above provided.

Supplements Not Requiring Consent of Holders

The Obligated Group Representative, on behalf of the Members of the Obligated Group, and the Master Trustee may, without the consent of or notice to any of the Holders, enter into one or more Supplements for one or more of the following purposes: (a) To cure any ambiguity or formal defect or omission in the Master Indenture; (b) To correct or supplement any provision in the Master Indenture which may be inconsistent with any other provision in the Master Indenture, or to make any other provisions with respect to matters or questions arising under the Master Indenture and which will not materially and adversely affect the interests of the Holders; (c) To grant or confer ratably upon all of the Holders any additional rights, remedies, powers or authority that may lawfully be granted or conferred upon them, subject to the provisions of the Master Indenture; (d) To qualify the Master Indenture under the Trust Indenture Act of 1939, as amended, or corresponding provisions of federal law from time to time in effect; (e) To create and provide for the issuance of Obligations or other Indebtedness as permitted under the Master Indenture; (f) To obligate a successor to any Member of the Obligated Group as provided in the Master Indenture; and (g) To add a new Member as provided in the Master Indenture.

Supplements Requiring Consent of Holders

Other than Supplements referred to in the provisions of the paragraph describing “Supplements Not Requiring Consent of Holders” above, and subject to the terms and provisions and limitations contained in the Master Indenture and not otherwise, the Holders of more than 50% in Aggregate

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Principal Amount of Obligations then Outstanding will have the right, from time to time, anything contained in the Master Indenture to the contrary notwithstanding, to consent to and approve the execution by the Obligated Group Representative, on behalf of the Members of the Obligated Group and the Master Trustee, of such Supplements as will be deemed necessary and desirable for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in the Master Indenture; provided, however, nothing will permit or be construed as permitting a Supplement which would: (i) Effect a change in the times, amounts or currency of payment of the principal of, premium, if any, and interest on any Obligation or a reduction in the principal amount or redemption price of any Obligation or the rate of interest thereon, without the consent of the Holder of such Obligation; (ii) Permit the preference or priority of any Obligation over any other Obligation except as expressly provided in the Master Indenture, without the consent of the Holders of all Obligations then Outstanding; or (iii) Reduce the Aggregate Principal Amount of Obligations then Outstanding the consent of the Holders of which is required to authorize such Supplement without the consent of the Holders of all Obligations then Outstanding.

Any such consent will be binding upon the Holder giving such consent and upon any subsequent Holder of such Obligation and of any Obligation issued in exchange therefor (whether or not such subsequent Holder thereof has notice thereof), unless such consent is revoked in writing by the Holder of such Obligation giving such consent or by a subsequent Holder thereof by filing with the Master Trustee, prior to the execution by the Master Trustee of such Supplement, such revocation. At any time after the Holders of the required Aggregate Principal Amount or number of Obligations will have filed their consents to the Supplement, the Master Trustee will make and file with the Obligated Group Representative a written statement to that effect. Such written statement will be conclusive that such consents have been so filed.

If the Holders of the required Aggregate Principal Amount of the Obligations Outstanding will have consented to and approved the execution of such Supplement as provided in the Master Indenture, no Holder will 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 Master Trustee or any Member of the Obligated Group from executing the same or from taking any action pursuant to the provisions thereof.

Satisfaction and Discharge of Master Indenture

If (a) the Obligated Group Representative will deliver to the Master Trustee for cancellation all Obligations theretofore authenticated (other than any Obligations which will have been mutilated, destroyed, lost or stolen and which will have been replaced or paid as provided in the Supplement) and not theretofore canceled; or (b) all Obligations that have not become due and payable and have not been canceled or delivered to the Master Trustee for cancellation will be deemed to have been paid and discharged pursuant to the terms of the Supplement under which such Obligations were issued, and if in all cases the Members of the Obligated Group will also pay or cause to be paid all other sums payable under the Master Indenture by the Members of the Obligated Group or any thereof, then the Master Indenture will cease to be of further effect, and the Master Trustee, on demand of the Obligated Group Representative and at the cost and expense of the Members of the Obligated Group, will, upon written request of the Obligated Group Representative, and upon receipt by the Master Trustee of an Officer’s Certificate from the Obligated Group Representative and an Opinion of Counsel acceptable to the Master Trustee, each stating that in the opinion of the signers all conditions precedent to the satisfaction and discharge of the Master Indenture have been complied with, execute proper instruments acknowledging satisfaction of and discharging the Master Indenture. Each Member of the Obligated Group, respectively, by the Master Indenture agrees to reimburse the Master Trustee for any costs or expenses theretofore and

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thereafter reasonably and properly incurred by the Master Trustee in connection with the Master Indenture or such Obligations.

ADDITIONAL RESTRICTIVE COVENANTS CONTAINED IN SUPPLEMENTAL INDENTURES AND/OR BANK DOCUMENTS

The Obligated Group has covenanted in certain supplements to the Master Indenture to comply with additional covenants and provisions (in addition to all other provisions in the Master Indenture) for the benefit of certain credit enhancers. These provisions do not benefit the bondholders, and may be waived by the benefited credit enhancers without the consent of the bondholders or the Master Trustee, but only with the consent of the Authority, which may not be unreasonably withheld. The supplemental provisions are generally more restrictive than the comparable provisions contained in the Master Indenture. Occasionally restrictive covenants are also included in reimbursement agreements with banks supplying letters of credit which support payments on the related bonds or in continuing covenant agreements or similar documents where the related bonds are purchased by a private institution.

The only credit enhancer or private purchaser benefited by supplemental and/or additional provisions and covenants is U.S. Bank National Association. The provisions and covenants are effective only so long as the bonds enhanced or purchased by U.S. Bank are Outstanding.

Any material amendments to the Master Indenture must be approved in writing by U.S. Bank National Association.

THE THIRTY-SIXTH SUPPLEMENT

In connection with the issuance of the Bonds, the Society, as Obligated Group Representative, and the Master Trustee will enter into a Thirty-Sixth Supplement to the Master Indenture, dated as of July 1, 2015, that provides for the issuance of Obligation No. 47. Obligations No. 47 will secure the Society’s obligations under the Agreement to make payments sufficient to pay when due the principal of and interest on the Bonds.

THE AGREEMENT

The following, in addition to information contained under the headings “SUMMARY STATEMENT,” “THE PROJECTS,” “SOURCES AND USES OF FUNDS” and “THE BONDS,” summarizes certain provisions of the Agreement, to which document, in its entirety, reference is made for the complete provisions thereof.

Loan of Bond Proceeds and Required Repayments

In order to finance the Projects and the costs of issuance of the Bonds, the Authority will lend the proceeds of the Bonds to the Society. On or before the twentieth day of the month preceding an Interest Payment Date, the Society will pay to the Trustee, for the account of the Authority, a sum equal to the principal, premium, if any, and interest coming due and payable on the Bonds on such Interest Payment Date.

The Society also agrees to pay the fees and expenses of the Authority, the Trustee and the Underwriters in connection with the Bonds.

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Obligations of the Society Unconditional

The obligations of the Society to make the loan payments required by the Agreement and to perform and observe the other agreements on its part contained in the Agreement will be absolute and unconditional, irrespective of any defense or any rights of set off, recoupment or counterclaim it might otherwise have against the Authority or the Trustee. The Society will make all loan payments required by the Agreement free of any deductions and without abatement, diminution or setoff other than those expressly provided in the Agreement.

Additional Covenants of the Society

The Society will agree to the following additional covenants in the Agreement:

Tax Exempt Status. The Society will agree to take any and all actions necessary to preserve the exclusion of interest on the Bonds from gross income for purposes of federal income taxation.

Indemnification. The Society will covenant and agree to indemnify the Authority generally against any and all liability relating to its participation in this financing, except to the extent such liabilities, losses, damages, costs and expenses are caused by the willful and wanton misconduct of such indemnified party.

Investment of Bond Fund, Reserve Fund, Project Fund, Costs of Issuance Fund and Rebate Fund Moneys

Any moneys held as a part of the Bond Fund, the Reserve Fund, the Project Fund, the Rebate Fund, the Reserve Fund, the Costs of Issuance Fund and any other fund held by the Trustee will be invested or reinvested in any Permitted Investments by the Trustee, to the extent permitted by law, except that investments will be made only at the request of and as directed by the Society Representative. All such Permitted Investments will at all times be a part of the fund and account from which the moneys used to acquire such Permitted Investments will have come, and all income and profits on such Permitted Investments will be credited to, and losses thereon will be charged against, such funds and accounts, except that the earnings (net of investment losses, if any) from an account within the Reserve Fund will be credited to the corresponding account the Bond Fund as provided in the Bond Indenture. Such Permitted Investments will be made so as to mature or be subject to redemption at the option of the holder thereof on or prior to the date or dates that the Society anticipates that moneys therefrom will be required. Such Permitted Investments (other than Permitted Investments held in the Rebate Fund) will be held as part of the Trust Estate and all Permitted Investments will be registered in the name of the Trustee.

In the absence of written instructions from the Society Representative, the funds will be invested in First American Government Obligations Class A.

Events of Default

The Agreement provides that any one or more of the following events will constitute an “Event of Default”:

(a) failure by the Society to pay the amounts required to be paid under the Agreement at the times specified therein. The Trustee will give telephonic or telegraphic notice, with subsequent written notice, to the Society of such failure;

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(b) failure by the Society to observe and perform any covenant, condition or agreement on its part to be observed or performed, other than as referred to in paragraph (a) above, for a period of 30 business days after written notice specifying such failure and requesting that it be remedied has been given to the Society by the Trustee, unless the Trustee has agreed in writing to an extension of such time prior to its expiration; provided, however, if the failure stated in the notice be such that it cannot be corrected within the applicable period, but can be corrected with due diligence, the Trustee will not unreasonably withhold its consent to an extension of such time if corrective action is instituted by the Society within the applicable period and diligently pursued until the default is corrected;

(c) certain events of bankruptcy, dissolution, liquidation or reorganization by the Society, as set forth in the Agreement;

(d) the occurrence of an Event of Default under the Bond Indenture or the Master Indenture; or

(e) any payment default on any Indebtedness of the Society which exceeds $1,000,000 or on any final judgment against the Society which exceeds $1,000,000; provided, however, that such payment default will not be deemed an Event of Default under the Agreement if the Society is actively contesting such payment in good faith.

The Society will not be deemed to be in default under paragraph (b) above if by reason of force majeure, as defined in the Agreement, it is unable in whole or in part to carry out any agreement in the Agreement, other than the agreement to make the loan repayments.

Remedies

Whenever any Event of Default has happened and is continuing, the Trustee or the Authority with the written consent of the Trustee, may take one or any combination of the following remedial steps:

(a) by written notice to the Society, declare an amount equal to (i) all amounts then due and payable on the Bonds, whether by acceleration of maturity (as provided in the Bond Indenture) or otherwise, and (ii) any other amounts then due and payable under the Agreement or the Bond Indenture, to be immediately due and payable as liquidated damages under the Agreement and not as a penalty;

(b) have reasonable access to and inspect, examine and make copies of the relevant books and records and any and all relevant accounts, data and income tax and other tax returns of the Society during regular business hours of the Society if reasonably necessary in the opinion of the Authority or the Trustee; or

(c) take whatever action at law or in equity may appear necessary or desirable, including, without limitation, to collect the amounts then due and thereafter to become due, or to enforce performance and observance of any obligation, agreement or covenant of the Society under the Agreement, and also including, without limitation, any remedy set forth in the Bond Indenture, subject to the limitations set forth in the Agreement and the Bond Indenture.

Any amounts collected pursuant to action taken upon the happening of an Event of Default will be paid into the Bond Fund and applied in accordance with the provisions of the Bond Indenture.

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Amendments, Changes and Modifications

Subsequent to the issuance of the Bonds and prior to their payment in full (or provision for the payment thereof having been made in accordance with the provisions of the Bond Indenture), and except as otherwise expressly provided in the Agreement, the Agreement may not be effectively amended, changed, modified, altered or terminated without the written consent of the Trustee, in accordance with the provisions of the Bond Indenture. Notwithstanding the foregoing, the Authority and the Society may agree to any amendment or supplement to the provisions relating to the Unassigned Rights in the Agreement without the consent of any other Person.

THE BOND INDENTURE

The following, in addition to information contained under the headings “SUMMARY STATEMENT,” “THE BONDS” and “REDEMPTION,” summarizes certain provisions of the Bond Indenture, to which document, in its entirety, reference is made for the complete provisions thereof.

General

The Bond Indenture constitutes an assignment and pledge by the Authority to the Trustee to secure the Bonds of all of the right, title and interest of the Authority in and to the Agreement (except certain fees and expenses and indemnification payments and the right to make certain determinations and receive certain notices) and all moneys held by the Trustee in any of the funds or accounts established under the Bond Indenture (including, without limitation, moneys held in the Bond Fund and the Reserve Fund, but excluding amounts in the Rebate Fund). No additional bonds may be issued under the Bond Indenture. The Authority has created and established with the Trustee pursuant to the Bond Indenture trust funds to be designated the Bond Fund, the Reserve Fund, the Rebate Fund, the Project Fund and the Costs of Issuance Fund.

The Bond Fund

The Bond Fund, into which the payments made pursuant to the Agreement and certain other amounts specified in the Bond Indenture will be deposited, will be maintained with the Trustee. Moneys in the Bond Fund will be used solely for the payment of the principal of, premium, if any, and interest on the Bonds and for the redemption of the Bonds prior to maturity.

The Reserve Fund

Upon the issuance of the Bonds, an amount equal to the Reserve Fund Requirement will be deposited in the Reserve Fund. The amount in the Reserve Fund will be replenished to the Reserve Fund Requirement in case of any draws upon any account of the Reserve Fund. Moneys on deposit in the Reserve Fund will be used to pay the principal of, premium, if any, and interest on the Bonds as the same become due (whether at maturity or upon redemption or by acceleration) in the event that moneys in the Bond Fund are insufficient therefor, and to pay the final maturities of principal of and interest on the Bonds. The Trustee will determine the Value of all investments in the Reserve Fund at least semiannually in accordance with the definition of Value set forth in the Agreement. If any such valuation reveals that the Value of such Permitted Investments is less than the Reserve Fund Requirement with respect to the Bonds, the Trustee will immediately notify the Authority and the Society of the amount of the difference between the amount derived by such valuation and the Reserve Fund Requirement, which difference will be deposited by the Society in the Reserve Fund pursuant to the Agreement.

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The Project Fund

Moneys deposited in the Project Fund of the Bond Indenture will be used to pay the costs incurred in financing and refinancing the Project. The Authority has, in the Bond Indenture, authorized the Trustee to disburse moneys from the Project Fund upon receipt of a requisition signed by a Society Representative.

The Costs of Issuance Fund

Moneys deposited in the Costs of Issuance Fund of the Bond Indenture will be used to pay the costs incurred in issuing the Bonds. The Authority has, in the Bond Indenture, authorized the Trustee to disburse moneys from the Costs of Issuance Fund upon receipt of a requisition signed by a Society Representative.

Investment

Any moneys held as part of the Bond Fund, the Reserve Fund, the Project Fund, the Costs of Issuance Fund, the Rebate Fund or any other fund will be invested and reinvested by the Trustee in Permitted Investments as provided in the Agreement. See the caption “THE AGREEMENT—Investment of Bond Fund, Reserve Fund, Project Fund, Costs of Issuance Fund and Rebate Fund Moneys” herein.

Provisions Concerning the Trustee

The Trustee has agreed in the Bond Indenture to accept and perform the trusts imposed in that document, subject to certain conditions, which are set forth therein and to which potential investors are referred. In particular, after an Event of the Default of which the Trustee has notice or is deemed to have notice, the Trustee is required to use the same degree of care and skill in the exercise of the rights and powers vested in the Trustee by the Bond Indenture as an ordinary, prudent person would exercise or use in the conduct of his own business affairs. Additionally, the Trustee is not required to take certain actions until it is requested by the Registered Owners of a specified percentage of the outstanding principal amount of the Bonds and occasionally until it is indemnified by those Registered Owners.

The Trustee may resign upon 30 days’ written notice; provided that the resignation does not take effect until a new Trustee is appointed. The Trustee may be removed upon 30 days’ written notice (a) by the Society, so long as the Society is not in default under the Bond Indenture, with the consent of the Authority, (b) by the Authority, with the consent of the Society so long as the Society is not in default under the Bond Indenture, or (c) by an instrument or concurrent instruments in writing delivered to the Trustee and to the Authority and signed by the Registered Owners of a majority in aggregate principal amount of Outstanding Bonds; provided, however, such removal by the Registered Owners will not take effect until the appointment of a successor Trustee by the Registered Owners, the Society or the Authority.

A new trustee may be appointed (a) by the Society (as long as the Society is not in default under the Bond Indenture) with the consent of the Authority, (b) by the Authority, with the consent of the Society (as long as the Society is not in default under the Bond Indenture), or (c) by the Registered Owners of a majority in aggregate principal amount of Outstanding Bonds by an instrument or concurrent instruments in writing signed by such Registered Owners, or by their attorneys in fact duly authorized, a copy of which will be delivered personally or sent by registered mail to the Authority and the Society. In the event the Authority, the Society and the Registered Owners choose different successor trustees, the choice of the Registered Owners will take precedence.

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Discharge of Lien

The lien of the Bond Indenture will be discharged if: (a) the Authority pays or causes to be paid, or there will otherwise be paid or provision for payment made, to the Registered Owners of the Bonds, the principal of, premium, if any, and interest due or to become due on the Bonds at the times and in the manner stipulated therein; (b) the Authority is not then be in default in any of the covenants and promises in the Bonds and in the Bond Indenture; and (c) the Authority pays or causes to be paid to the Trustee and any paying agents all sums of money due or to become due according to the provisions of the Bond Indenture.

Any Bond will be deemed to be paid when (a) payment of the principal of and premium, if any, on such Bond, plus interest thereon to the due date thereof (whether such due date be by reason of maturity or upon redemption as provided in the Bond Indenture) either (i) will have been made or caused to be made in accordance with the terms thereof, or (ii) will have been provided by irrevocably depositing with a commercial bank with trust powers (the “2015 Escrow Agent”), in trust and set aside exclusively for such payment, (A) moneys sufficient to make such payment and/or (B) noncallable Governmental Obligations, maturing as to principal and interest in such amounts and at such times as will insure the availability of sufficient moneys to make such payment; and (b) all necessary and proper fees, compensation and expenses of the Trustee pertaining to the Bonds with respect to which such deposit is made will have been paid or the payment thereof provided for to the Trustee’s satisfaction. The Society will provide to the Trustee and the Authority copies of (1) if such report is available, a report by an independent certified public accountant or by a nationally recognized verification agent that the money and securities held in the escrow account, together with investment earnings (but without considering any reinvestment of such earnings), will be sufficient to pay, as the same become due upon maturity or earlier redemption, all principal of, premium, if any, and interest on the Bonds which have not then previously been paid; (2) an opinion of Bond Counsel to the effect that establishment of the escrow account and the scheduled investments of moneys therein will not adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes; and (3) an opinion of Counsel that the Bonds have been defeased in accordance with the Bond Indenture. Such report and opinions will include the Trustee and the Authority as addressees or the Trustee and the Authority will be provided letters stating that the Trustee and the Authority can rely on such report and opinions as if it were addressed to the Trustee or the Authority, as the case may be. At such times as a Bond will be deemed to be paid hereunder, as aforesaid, such Bond will no longer be secured by or entitled to the benefits of the Bond Indenture, except for the purposes of any such payment from such moneys or Governmental Obligations. Notwithstanding any of the foregoing, moneys deposited with the 2015 Escrow Agent to defease the Bonds must be sufficient to cover all future payments to the Registered Owners of such Bonds at the maximum interest rate possible over the remaining term of the Bonds.

Notwithstanding the foregoing, no deposit under clause (a)(ii) of the immediately preceding paragraph will be deemed a payment of such Bonds until: (a) proper notice of redemption of such Bonds will have been previously given in accordance with the Bond Indenture, or in the event said Bonds are not by their terms subject to redemption within the next succeeding 45 days or are not to be redeemed within the next succeeding 45 days, until the Society will have given the Trustee on behalf of the Authority, irrevocable instructions to notify, as soon as practicable, the Registered Owners of the Bonds, in accordance with the requirements of the Bond Indenture, that the deposit required by (a)(ii) above has been made with the 2015 Escrow Agent and that said Bonds are deemed to have been paid and stating the maturity or redemption date upon which moneys are to be available for the payment of the principal of and the applicable redemption premium, if any, on said Bonds, plus interest thereon to the due date thereof; or (b) the maturity of such Bonds. Any notice of such defeasance will include a statement as to the impact of the defeasance on any Bond redemption rights of the Society.

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Defaults and Remedies

Any of the following events will constitute an “Event of Default” under the Bond Indenture:

(a) default in the due and punctual payment of any interest on any Bond;

(b) default in the due and punctual payment of the principal of or premium, if any, on any Bond, whether at the stated maturity thereof, or upon proceedings for redemption thereof, or upon the maturity thereof by declaration;

(c) default in the performance or observance of any other of the covenants, agreements or conditions on the part of the Authority contained in the Bond Indenture or in the Bonds and failure to remedy the same after notice as provided in the Bond Indenture; or

(d) the occurrence of an “Event of Default” under the Agreement (see the caption “THE AGREEMENT—Events of Defaults” herein) or the Tax Regulatory Agreement.

(e) declaration under the Master Indenture that the principal of Obligation No. 47 or all Obligations under the Master Indenture is immediately due and payable.

During the continuation of an Event of Default the Trustee may, and will at the direction of the Registered Owners of a majority in aggregate principal amount of the Outstanding Bonds, by notice in writing delivered to the Authority, the Registered Owners and the Society, declare the principal of all Outstanding Bonds and the interest accrued thereon to be immediately due and payable. Upon any declaration of acceleration, the Authority and the Trustee will immediately declare an amount equal to all amounts then due and payable on the Bonds to be immediately due and payable under the Agreement.

Waiver of Event of Default

The Trustee may at its discretion waive any Event of Default under the Bond Indenture and its consequences and rescind any declaration of acceleration of principal, and will do so upon the written request of the Registered Owners of more than 66-2/3% in aggregate principal amount of all Outstanding Bonds provided, however, that there will not be waived any Event of Default in the payment of the principal of or interest on any Outstanding Bonds unless prior to such waiver or rescission all arrears of principal and interest (other than principal of or interest on the Bonds which became due and payable by declaration of acceleration), both, to the extent permitted by law, with interest at the Late Payment Rate (as defined in the Agreement) per annum on overdue installments, and all expenses of the Trustee and the Authority in connection with such Event of Default will have been paid or provided for. In case of any such waiver or rescission, or in case any proceeding taken by the Trustee on account of any such Default will have been discontinued or abandoned or determined adversely, then and in every such case, the Authority, the Trustee and the Registered Owners of the Bonds will be restored to their former positions and rights under the Bond Indenture, respectively, but no such waiver or rescission will extend to any subsequent or other Default or impair any right consequent thereon.

Supplemental Bond Indentures; Amendment of the Agreement

The Authority and the Trustee may enter into indentures supplemental to the Bond Indenture without the consent of or notice to the Registered Owners of the Bonds for any one or more of the following purposes: (a) to cure any ambiguity or formal defect or omission in the Bond Indenture; (b) to grant to or confer upon the Trustee for the benefit of the Registered Owners of the Bonds any additional

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rights, remedies, powers or authorities that may lawfully be granted to or conferred upon the Registered Owners of the Bonds or the Trustee; (c) to subject to the Bond Indenture additional revenues, properties or collateral; (d) to modify, amend or supplement the Bond Indenture or any indenture supplemental thereto in such manner as to permit the qualification thereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute then in effect or to permit the qualification of the Bonds for sale under the securities laws of any of the states of the United States of America; (e) to evidence the appointment of a separate Trustee or a Co-Trustee or the succession of a new Trustee or paying agent under the Bond Indenture; (f) to satisfy any written requirement of S&P or Moody’s to maintain or raise the S&P or Moody’s rating, respectively, on the Bonds; or (g) to make any other change that does not materially adversely affect the rights of any Registered Owner.

For purposes of clause (g) of the preceding paragraph, an amendment or supplement to the Bond Indenture will not be deemed a change that materially adversely affects the rights of any Registered Owner if there will have been delivered to the Trustee and the Authority a written opinion of counsel (which may be Bond Counsel or counsel to the Authority or the Society) to the effect that such amendment or supplement will not legally impair the obligations of the Authority or materially adversely affect the rights of the Registered Owners.

Exclusive of supplemental indentures for the purposes set forth in the previous paragraph, the consent of the Registered Owners of not less than two-thirds in aggregate principal amount of Outstanding Bonds is required to approve any supplemental indenture, except no supplemental indentures will permit, without the consent of the Registered Owners of all Bonds outstanding, (i) an extension of the maturity of the principal of, or the interest on, any Bond issued under the Bond Indenture, (ii) a reduction in the principal amount of, or redemption premium on, any Bond or the rate of interest thereon, (iii) a privilege or priority of any Bond or Bonds over any other Bond or Bonds, (iv) a reduction in the aggregate principal amount of the Bonds required for consent to such supplemental indentures or any modification or waiver of the provisions of the Agreement, (v) the creation of any lien ranking prior to or on a parity with the lien of the Bond Indenture, or any part thereof, except as expressly permitted by the Bond Indenture, or (vi) the deprivation of the Registered Owner of any Outstanding Bond of the lien of the Bond Indenture.

No supplemental indenture will become effective unless and until the Society has consented to the execution and delivery thereof provided the Society is not in default under the Agreement.

In executing, or accepting the additional trusts created by, any supplemental indenture described above or the modification thereby of the trusts created by the Bond Indenture, the Trustee shall receive, and, subject to the Bond Indenture, shall be fully protected in relying upon, an opinion of Bond Counsel addressed and delivered to the Trustee and the Authority stating that (a) the execution of such supplemental indenture is authorized or permitted by the Bond Indenture, (b) the execution and delivery of such supplemental indenture will not adversely affect the exclusion from federal gross income of interest on the Bonds for federal income tax purposes and (c) the supplemental indenture will constitute the valid and binding agreement of the Authority, enforceable against the Authority in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance laws, laws affecting the enforcement of creditors’ rights, the application of equitable principles and judicial discretion, and the covenant of good faith and fair dealing that may be implied by law into contracts.

The Authority and the Trustee may, without the consent of or notice to the Registered Owners of the Bonds, consent to any amendment, change or modification of the Agreement (including an assignment thereof) and the exhibits thereto as may be required (a) by the provisions of the Agreement and the Bond Indenture; (b) for the purpose of curing any ambiguity or formal defect or omission in the Agreement;

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(c) so as to more precisely identify the Project; (d) to enter into an indenture or indentures supplemental to the Bond Indenture; or (e) in connection with any other change therein which, in the judgment of the Trustee, which may be based upon the advice of counsel, is not to the material prejudice of the Trustee or the Registered Owners. In addition, and notwithstanding anything to the contrary in the Bond Indenture, the Authority and the Society may agree to any amendment or supplement to the provisions relating to the Unassigned Rights in the Agreement without the consent of any other Person. Exclusive of the amendments, changes or modifications as provided in the preceding sentences, no other amendment, change or modification of the Agreement may be made without the giving of notice and written approval or consent of the owners of not less than two-thirds in aggregate principal amount of the Bonds of a series affected thereby at the time outstanding; provided, however, that without the written consent of the Registered Owners of all of the Outstanding Bonds of a series affected thereby, no such amendment, change or modification will permit or will be construed as permitting any amendment, change or modification of the Agreement that would permit the termination or cancellation of the Agreement or a reduction in or postponement of the payments under the Agreement or any change in the provisions relating to the payment thereunder. If at any time the Authority and the Society request the consent of the Trustee to any such proposed amendment, change or modification of the Agreement pursuant to the provisions of this paragraph, the Trustee will, upon being indemnified with respect to expenses, cause notice of such proposed amendment, change or modification to be given in the same manner as provided by in the Bond Indenture with respect to supplemental indentures. Such notice will briefly set forth the nature of such proposed amendment, change or modification and will state that copies of the instrument embodying the same are on file at the principal corporate trust office of the Trustee for inspection by all Registered Owners.

In executing any amendment, change or modification to the Agreement described above, the Trustee shall receive, and, subject to the Bond Indenture, shall be fully protected in relying upon, an opinion of Bond Counsel addressed and delivered to the Trustee and the Authority stating that (a) the execution of such amendment, change or modification to the Agreement is authorized or permitted by the Bond Indenture, (b) the execution and delivery of such amendment, change or modification to the Agreement will not adversely affect the exclusion from federal gross income of interest on the Bonds for federal income tax purposes and (c) the amendment, change or modification to the Agreement will constitute the valid and binding agreement of the Authority, enforceable against the Authority in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance laws, laws affecting the enforcement of creditors’ rights, the application of equitable principles and judicial discretion, and the covenant of good faith and fair dealing that may be implied by law into contracts.

CONTRIBUTION AGREEMENTS

The following summarizes certain provisions of the Contribution Agreements, to which documents, in their entirety, reference is made for the complete provisions thereof.

The HCBS Affiliate agrees that it will provide any funds that may be required and to promptly pay the same to the Obligated Group Representative upon receipt of any demand therefor from the Obligated Group Representative, Good Samaritan Society HCBS, LLC, the Master Trustee or any Related Bond Trustee, as the case may be, but subject to the provisions of the following paragraph, by 2 p.m. Eastern time on the same business day as demanded; provided, however, that if any such demand is made after 11 a.m. Eastern time on any business day, any such Payment Obligation to the Obligated Group Representative or other party shall not be required until 10 a.m. Eastern time on the following business day. Any Payment Obligation is a guaranty of payment and not of collection and HCBS Affiliate expressly waives any right to require that any action be brought against the Obligated Group Representative or to require that resort be had to any other security for the Payment Obligations. In

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furtherance thereof, HCBS Affiliate waives all defenses that would normally be available to a guarantor or surety under a guaranty or contract of surety. HCBS Affiliate shall pay all reasonable costs and expenses, including attorneys’ fees and expenses, paid or incurred by the Master Trustee or any third party beneficiary in connection with the enforcement of the obligation of HCBS Affiliate to pay the Payment Obligations to the Obligated Group Representative or other party when demanded. All payments by HCBS Affiliate shall be paid in lawful money of the United States of America. The obligations of HCBS Affiliate shall be continuing, absolute and unconditional and shall not be impaired, modified, released or limited by any occurrence, defense or condition whatsoever.

Notwithstanding the above provisions, HCBS Affiliate will not be required to make any payment if to do so would be inconsistent with state law or would cause HCBS Affiliate to breach the terms of any restricted gift.

Notwithstanding the above provisions, upon the occurrence and continuation of an Event of Default, HCBS Affiliate will make the payments required by the Contribution Agreement directly to the Master Trustee or to the Related Bond Trustees designated by the Master Trustee. In connection therewith and in order to better secure the obligations to the Master Trustee under the Master Indenture in connection with the Obligations, the Obligated Group Representative will assign and pledge to the Master Trustee all of its rights to receive payments to be made by HCBS Affiliate under the Contribution Agreement and the proceeds of any such payments.

The HCBS Affiliate shall not create or incur or permit to be created or incurred or to exist any lien on any of its Property or Gross Revenues (as defined below), except for Permitted Liens.

In order to secure the full, prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of its Payment Obligations under the Master Indenture, HCBS Affiliate will pledge and grant to the Obligated Group Representative, and to its successors and assigns, to the extent permitted by law, a continuing security interest in all of its right, title and interest in, to and its Gross Revenues whether now owned or hereafter acquired by HCBS Affiliate, wherever located, and whether now or hereafter existing or arising, subordinate only to Permitted Liens.

The Obligated Group Representative, on behalf of the Obligated Group, covenants in the Contribution Agreement that the Obligated Group will agree to assist such HCBS Affiliate in paying Indebtedness of the HCBS Affiliate provided such Indebtedness is approved by the Obligated Group Representative and any payment thereof by the Obligated Group is made in compliance with the Master Indenture.

Good Samaritan Society HCBS, LLC and the HCBS Affiliates have covenanted not to terminate the Contribution Agreements for so long as the Bonds are outstanding.

APPENDIX D

PROPOSED FORM OF BOND COUNSEL OPINION


APPENDIX D

PROPOSED FORM OF BOND COUNSEL OPINION

July 23, 2015

Colorado Health Facilities Authority 3033 East 1st Avenue Suite 301 Denver, CO 80206

The Evangelical Lutheran Good Samaritan Society 4800 West 57th Street Sioux Falls, SD 57106

U.S. Bank National Association Corporate Trust Department, EP-MN-WS3C 60 Livingston Avenue St. Paul, MN 55107-2292

Wells Fargo Bank, National Association 6th Street & Marquette Avenue MAC N9303-110 Minneapolis, MN 55479-0069

Citigroup Global Markets Inc. 390 Greenwich Street New York, NY 10013

Herbert J. Sims & Co. 601 Carlson Parkway Suite 1050 Minnetonka, MN 55305

$204,290,000 Colorado Health Facilities Authority

Health Facilities Revenue and Revenue Refunding Bonds (The Evangelical Lutheran Good Samaritan Society Project)

Series 2015A

Ladies and Gentlemen:

We have acted as Bond Counsel in connection with the issuance and sale by the Colorado Health Facilities Authority (the “Authority”), an independent public body politic and corporate constituting a public instrumentality of the State of Colorado, of $204,290,000 aggregate principal amount of its Health Facilities Revenue and Revenue Refunding Bonds (The Evangelical Lutheran Good Samaritan Society Project), Series 2015A (the “Bonds”) pursuant to the provisions of the Colorado Health Facilities Authority Act, Article 25, Title 25 of the Colorado Revised Statutes, as amended (the “Act”), the Supplemental Public Securities Act, Part 2, Article 57, Title 11 of the Colorado Revised Statutes, as amended (the “Supplemental Act”), and a resolution adopted by the Authority on June 18, 2015 (the “Resolution”). The Bonds are being issued pursuant to a Bond Trust Indenture, dated as of July 1, 2015 (the “Indenture”), by and between the Authority and U.S. Bank National Association, as trustee (the “Trustee”), solely as fully registered bonds dated July 23, 2015. The proceeds of the Bonds will be used (a) to finance or refinance certain capital expenditures previously made or to be made by The Evangelical Lutheran Good Samaritan Society (the “Society”) to provide for the costs of the acquisition, construction, improvement and equipping of certain home health agencies, skilled nursing facilities and other health care and senior living facilities in various locations, (b) refund the outstanding principal amount of the Colorado Health Facilities Authority Health Facilities Revenue Bonds (The Evangelical Lutheran Good Samaritan Society Project), Series 2004A, issued on behalf of the Society, (c) refund $20,385,000 aggregate principal amount of the Colorado Health Facilities Authority Health Facilities Revenue Bonds (The Evangelical Lutheran Good Samaritan Society Project) Series 2005, issued on behalf of the Society,

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(d) refund $55,390,000 aggregate principal amount of the Colorado Health Facilities Authority Health Facilities Revenue Bonds (The Evangelical Lutheran Good Samaritan Society Project) Series 2006, issued on behalf of the Society, (e) fund the Reserve Fund, and (f) pay certain costs of issuance associated with the Bonds (collectively referred to as the “Project”).

The Bonds are subject to extraordinary, mandatory and optional redemption by the Authority prior to maturity only at the times, in the manner and upon the terms provided in the Bonds and in the Indenture. THE BONDS AND ALL OBLIGATIONS OF THE AUTHORITY UNDER OR WITH RESPECT TO THE BONDS, THE INDENTURE AND THE AGREEMENT (AS DEFINED BELOW) SHALL BE AND REMAIN LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY AND ONLY OUT OF THE SECURITY SPECIFICALLY PLEDGED BY THE SOCIETY THERETO. NO RECOURSE SHALL BE HAD AGAINST ANY PROPERTIES, FUNDS OR ASSETS OF THE AUTHORITY (OTHER THAN THE SECURITY) OR THE STATE OF COLORADO FOR THE PAYMENT OF ANY AMOUNTS OWING UNDER OR WITH RESPECT TO THE BONDS, THE INDENTURE OR THE AGREEMENT. The principal of, premium, if any, and interest on the Bonds shall be payable solely out of the revenues derived from the Loan Agreement, dated as of July 1, 2015 (the “Agreement”) by and between the Authority and the Society, a nonprofit 501(c)(3) corporation (other than to the extent payable out of the proceeds of the Bonds or income from the temporary investment thereof and, under certain circumstances, the net proceeds of insurance), and also from amounts payable by the Society, the Evangelical Lutheran Good Samaritan Foundation (the “Foundation”) and Good Samaritan Society HCBS, LLC (“HCBS, LLC” and together collectively with the Society and the Foundation, the “Obligated Group”) and other members of the obligated group pursuant to Obligation No. 47 issued under the Master Indenture, as defined below.

In connection with the issuance of the Bonds, we have examined the following:

(a) a certified copy of the Resolution;

(b) a certified copy of the Second Amended and Restated Master Trust Indenture, dated as of October 1, 2013 (the “Master Indenture”), between the Society, as Obligated Group Representative, the Foundation and Wells Fargo Bank, National Association, as master trustee;

(c) the Act and the Supplemental Act;

(d) an executed counterpart of the Agreement;

(e) an executed counterpart of the Indenture;

(f) an executed counterpart of the Tax Regulatory Agreement, dated July __, 2015 (the “Tax Regulatory Agreement”), between the Authority and the Society, as Obligated Group Representative;

(g) the forms of the Bonds;

(h) an executed Obligation No. 47 dated July 23, 2015 (“Obligation No. 47”), issued by the Society, as Obligated Group Representative, under the Master Indenture and a Thirty-Sixth Supplement to Master Trust Indenture, dated as of July 1, 2015;

(i) the opinion of Stinson Leonard Street LLP, as special counsel to the Obligated Group;

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(j) the opinion of Ballard Spahr LLP, as general counsel to the Authority; and

(k) such other documents as we deemed relevant and necessary in rendering this opinion.

As to questions of fact material to our opinion, we have relied upon representations of the Authority, the Society, as the Obligated Group Representative, and the Trustee contained in the Indenture, the Agreement and the Tax Regulatory Agreement, certified proceedings of the Authority, certificates and representations of the Authority, the Society, the Foundation, HCBS, LLC and the Trustee and certificates of public officials, without undertaking to verify the facts by independent investigation. Without limiting the generality of the foregoing, we have relied upon certifications to the effect that the Society and the Foundation are nonprofit corporations described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), exempt from federal income taxation pursuant to Section 501(a) of the Code and that ownership and operation of the Project will not constitute an “unrelated trade or business” of the Society or the Foundation within the meaning of Section 513 of the Code.

We understand that you (except for Wells Fargo Bank, National Association) will be receiving an opinion of Ballard Spahr LLP of even date herewith relating to, among other matters, the organization and existence of the Authority, the power of the Authority to enter into and perform the Agreement, the Indenture and the Tax Regulatory Agreement (collectively, the “Bond Documents”), the adoption of the Resolution and the execution and delivery of the Bond Documents by the Authority, and the extent to which the Bond Documents are binding and enforceable upon the Authority.

Based upon the foregoing examination and upon such legal authority as we deem relevant and in reliance on the opinion of Stinson Leonard Street LLP and on the certifications described above, we are of the opinion that:

1. The Authority is an independent public body corporate constituting a public instrumentality of the State of Colorado created by, and existing by virtue of, the Act. Pursuant to the Act, the Authority is empowered to issue the Bonds for the purpose of financing the Project.

2. The Bonds have been validly authorized, executed and issued in accordance with the laws of the State of Colorado now in force, and represent valid and binding limited obligations of the Authority. The principal of, premium, if any, and interest on the Bonds shall be payable solely from amounts to be received pursuant to the Agreement (other than to the extent payable out of the proceeds of the Bonds or income from the temporary investment thereof), and also from amounts received as payments on Obligation No. 47.

3. The Indenture, the Agreement and the Tax Regulatory Agreement have been duly authorized, executed and delivered by the Authority and represent the valid and binding agreements of the Authority enforceable in accordance with their terms. The Indenture constitutes a valid pledge and assignment of the property described in the granting clauses thereof.

4. Under existing laws, regulations, rulings and judicial decisions, interest on the Bonds is excluded from gross income for federal and State of Colorado income tax purposes.

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 Bonds. The Authority and the Society, as Obligated Group Representative, have covenanted in the Indenture, the Tax Regulatory Agreement and certain other documents to comply with certain guidelines and limitations

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designed to assure that interest on the Bonds will not become includible in gross income. Failure to comply with these covenants may result in interest on the Bonds being included in gross income from the date of issue of the Bonds. Our opinion assumes compliance with such covenants.

We are further of the opinion that interest on the Bonds is not a specific preference item nor included in adjusted current earnings for purposes of the alternative minimum tax provisions contained in the Code.

The accrual or receipt of interest on the Bonds may otherwise affect the federal income tax liability of the recipient. The extent of these other tax consequences will depend upon the recipient’s particular tax status or other items of income or deduction. We specifically express no opinion regarding any such consequences. Purchasers of the Bonds, particularly purchasers that are corporations (including S corporations and foreign corporations operating branches in the United States), property or casualty insurance companies, banks, thrifts, or other financial institutions, recipients of Social Security or Railroad Retirement benefits, taxpayers otherwise entitled to claim the earned income credit and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations are advised to consult their tax advisors as to the tax consequences of purchasing or holding the Bonds.

The rights of the registered owners of the Bonds and the enforceability of the Bonds and the documents described above are subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors’ rights heretofore or hereafter enacted, to the extent constitutionally applicable. The enforcement thereof may also be subject to and limited by general equity principles and the exercise of judicial discretion in appropriate cases.

We offer no opinion as to any proposed or pending legislation or as to any other matters, including matters which may take place after the date hereof, and the registered owners of the Bonds shall not be entitled to rely on this firm with respect thereto.

Very truly yours,

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APPENDIX E

FORM OF CONTINUING DISCLOSURE UNDERTAKING


APPENDIX E

FORM OF CONTINUING DISCLOSURE UNDERTAKING

$204,290,000 Colorado Health Facilities Authority

Health Facilities Revenue and Revenue Refunding Bonds (The Evangelical Lutheran Good Samaritan Society Project)

Series 2015A

This Continuing Disclosure Undertaking (this “Undertaking”) is executed and delivered as of July 23, 2015, by The Evangelical Lutheran Good Samaritan Society (the “Society”), on behalf of itself and as Obligated Group Representative under the Second Amended and Restated Master Trust Indenture, dated as of October 1, 2013, by and among the Society, The Evangelical Lutheran Good Samaritan Foundation and Wells Fargo Bank, National Association (the “Master Trustee”), as supplemented by the Thirty-Sixth Supplement to Master Trust Indenture, dated as of July 1, 2015, by and between the Society, as Obligated Group Representative, and the Master Trustee (as so supplemented, the “Master Indenture”). Capitalized terms used but not otherwise defined herein shall have the meanings assigned thereto in the Master Indenture or the Bond Trust Indenture, dated as of July 1, 2015 (the “Bond Indenture”), by and between the Colorado Health Facilities Authority and U.S. Bank National Association, as bond trustee thereunder.

Section 1. Purpose. This Undertaking constitutes the written undertaking for the benefit of the Registered Owners of the Colorado Health Facilities Authority Health Facilities Revenue and Revenue Refunding Bonds (The Evangelical Lutheran Good Samaritan Society Project), Series 2015A (the “Series 2015A Bonds”). The Society intends that each Registered Owner be a beneficiary of this Undertaking with the right to enforce this Undertaking directly against the Society and the Obligated Group.

Section 2. Definitions. The terms set forth below shall have the following meanings in this Undertaking, unless the context clearly otherwise requires.

“Annual Financial Information” means the financial information and operating data described in Exhibit I.

“Annual Financial Information Disclosure” means the dissemination of disclosure concerning Annual Financial Information and the dissemination of the Audited Financial Statements as set forth in Section 4 hereof.

“Audited Financial Statements” means the audited consolidated financial statements of the Society, prepared in accordance with generally accepted accounting principles in the United States as in effect from time to time (“GAAP”). All or a portion of the Audited Financial Statements may be included by reference to other documents which have been submitted to the MSRB or filed with the Commission. The Society shall clearly identify each such item of information included by reference.

“Commission” means the Securities and Exchange Commission.

“Dissemination Agent” means any agent designated as such in writing by the Society and which has filed with the Society a written acceptance of such designation, and such agent’s successors and assigns.

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“EMMA” means the Electronic Municipal Market Access website for municipal securities disclosure of the MSRB.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Listed Event” means the occurrence of any of the events with respect to the Series 2015A Bonds set forth in Exhibit II.

“Listed Events Disclosure” means dissemination of a notice of a Listed Event as set forth in Section 5.

“MSRB” means the Municipal Securities Rulemaking Board.

“Participating Underwriter” means each broker, dealer or municipal securities dealer acting as an underwriter in any primary offering of the Series 2015A Bonds.

“Prescribed Form” means, with regard to the filing of Annual Financial Information, Audited Financial Statements, Quarterly Financial Statements, Quarterly Financial Information and notices of Listed Events with the MSRB at www.emma.msrb.org (or such other address or addresses as the MSRB may from time to time specify), such electronic format, accompanied by such identifying information, as shall have been prescribed by the MSRB and which shall be in effect on the date of filing of such information.

“Quarterly Financial Information” means financial information and operating data of the type included in the tables titled “Skilled Nursing Facilities Owned and Leased by the Society” and “Residential Housing Owned by the Society” on page A-11 and page A-12, respectively, of Appendix A to the Official Statement.

“Quarterly Financial Information Disclosure” means the dissemination of disclosure concerning Quarterly Financial Information and the dissemination of the Quarterly Financial Statements as set forth in Section 4 hereof.

“Quarterly Financial Statements” means both the unaudited quarterly consolidated financial statements of the Obligated Group (balance sheet and statement of operations) and the unaudited quarterly financial statements of the Obligated Group (balance sheet and statement of operations), both prepared in accordance with GAAP, except such financial statements may omit footnotes and a statement of cash flows that would be required by GAAP.

“Rule” means Rule 15c2-12 adopted by the Commission under the Exchange Act, as the same may be amended from time to time.

“State” means the State of Colorado.

Section 3. CUSIP Number/Official Statement. The final CUSIP 1© numbers of the Series 2015A Bonds are 19648A2A2, 19648A2B0, 19648A2C8, 19648A2D6, 19648A2E4, 19648A2F1, 19648A2G9, 19648A2H7, 19648A2J3, 19648A2K0, 19648A2L8, 19648A2M6, 19648A2N4, 19648A2P9, 19648A2Q7, 19648A2R5, 19648A2S3, 19648A2T1, 19648A2U8, 19648A2V6,

1 The Society takes no responsibility for the accuracy of the CUSIP numbers, which are included solely for the convenience of owners of the Series 2015A Bonds. © Copyright 2015, American Bankers Association, Standard & Poor’s, CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc.

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19648A2W4, 19648A2X2 and 19648A2Y0. The final Official Statement relating to the Series 2015A Bonds is dated July 9, 2015 (the “Official Statement”).

Section 4. Annual Financial Information Disclosure and Quarterly Financial Information Disclosure. Subject to Section 9 of this Undertaking, the Society hereby covenants that it will disseminate the Annual Financial Information and the Audited Financial Statements (in the form and by the dates set forth below and in Exhibit I) by the Society’s delivery of such Annual Financial Information and Audited Financial Statements to the MSRB within 180 days of the completion date of the Society’s fiscal year or, if Audited Financial Statements are not available when the Annual Financial Information is filed, unaudited financial statements shall be included and Audited Financial Statements will be provided to the MSRB within 10 Business Days after availability to the Society. The Society also covenants that it will disseminate the Quarterly Financial Statements and the Quarterly Financial Information by the Society’s delivery of such Quarterly Financial Statements and Quarterly Financial Information to the MSRB within 60 days after the end of each fiscal quarter of each year.

The Society is required to deliver such information in Prescribed Form and by such time so that such entities receive the information by the dates specified.

If any part of the Annual Financial Information can no longer be generated because the operations to which it is related have been materially changed or discontinued, the Society will disseminate a statement to such effect as part of its Annual Financial Information for the year in which such event first occurs.

If any amendment is made to this Undertaking, the Annual Financial Information for the year in which such amendment is made (or in any notice or supplement provided to the MSRB) shall contain a narrative description of the reasons for such amendment and its impact on the type of information being provided.

Section 5. Listed Events Disclosure. Subject to Section 9 of this Undertaking, the Society hereby covenants that it will disseminate in a timely manner, not in excess of 10 Business Days after the occurrence of the event, Listed Events Disclosure to the MSRB in Prescribed Form. Notwithstanding the foregoing, notice of optional or unscheduled redemption of any Series 2015A Bonds or defeasance of any Series 2015A Bonds need not be given under this Undertaking any earlier than the notice (if any) of such redemption or defeasance is given to the owners of the Series 2015A Bonds pursuant to the Bond Indenture. From and after the date hereof, the Society is required to deliver such Listed Events Disclosure in the same manner as provided by Section 4 of this Undertaking.

Section 6. Duty To Update EMMA/MSRB. The Society shall determine, in the manner it deems appropriate, whether there has occurred a change in the MSRB’s e-mail address or filing procedures and requirements under EMMA each time it is required to file information with the MSRB.

Section 7. Consequences of Failure of the Society to Provide Information. The Society shall give notice in a timely manner, not in excess of 10 Business Days after the occurrence of the event, to the MSRB in Prescribed Form of any failure to provide Annual Financial Information Disclosure or Quarterly Financial Information Disclosure when the same is due hereunder.

In the event of a failure of the Society to comply with any provision of this Undertaking, the holder of any Series 2015A Bond may seek specific performance by court order to cause the Society to comply with its obligations under this Undertaking. A default under this Undertaking shall not be deemed an Event of Default under the Bond Indenture or any other agreement, and the sole remedy under

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this Undertaking in the event of any failure of the Society to comply with this Undertaking shall be an action to compel performance.

Section 8. Amendments; Waiver. Notwithstanding any other provision of this Undertaking, the Society may amend this Undertaking, and any provision of this Undertaking may be waived, if:

(i) The amendment or waiver is made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of the Society or type of business conducted;

(ii) This Undertaking, as amended, or the provision, as waived, would have complied with the requirements of the Rule at the time of the primary offering, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances;

(iii) The amendment or waiver does not materially impair the interests of the holders of the Series 2015A Bonds, as determined either by parties unaffiliated with the Society or by an approving vote of the holders of the Series 2015A Bonds holding a majority of the aggregate principal amount of the Series 2015A Bonds (excluding Series 2015A Bonds held by or on behalf of the Society or its affiliates) at the time of the amendment, pursuant to the terms of the Bond Indenture; or

(iv) The amendment or waiver is otherwise permitted by the Rule.

Section 9. Termination of Undertaking. This Undertaking of the Society shall be terminated hereunder when the Society shall no longer have any legal liability pursuant to the terms of the Bond Indenture for any obligation on or relating to the repayment of the Series 2015A Bonds. The Society shall give notice to the MSRB in a timely manner and in Prescribed Form if this Section is applicable.

Section 10. Dissemination Agent. The Society may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Undertaking, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Society has entered into an engagement letter with Digital Assurance Certification, L.L.C. (“DAC”), pursuant to which the Society has engaged DAC as its Dissemination Agent to file and disseminate information provided by the Society in connection with the Society’s obligations under this Undertaking.

Section 11. Additional Information. Nothing in this Undertaking shall be deemed to prevent the Society from disseminating any other information, using the means of dissemination set forth in this Undertaking or any other means of communication, or including any other information in any Annual Financial Information Disclosure or Quarterly Financial Information Disclosure or notice of occurrence of a Listed Event, in addition to that which is required by this Undertaking. If the Society chooses to include any information from any document or notice of occurrence of a Listed Event in addition to that which is specifically required by this Undertaking, the Society shall not have any obligation under this Undertaking to update such information or include it in any future disclosure or notice of the occurrence of a Listed Event.

Section 12. Beneficiaries. This Undertaking has been executed in order to assist each Participating Underwriter in complying with the Rule; however, this Undertaking shall inure solely to the benefit of the Society, the Dissemination Agent, if any, and the holders of the Series 2015A Bonds, and shall create no rights in any other person or entity.

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Section 13. Recordkeeping. The Society shall maintain records of all Annual Financial Information Disclosure, Quarterly Financial Information Disclosure and Listed Events Disclosure, including the content of such disclosure, the names of the entities with whom such disclosure was filed and the date of filing such disclosure.

Section 14. Past Compliance. In connection with the Society’s previous bond issuances in 2012 and 2013, it was discovered that, while the Society had been providing certain financial and operating information and notice of certain listed events to EMMA in accordance with prior undertakings, the information provided by the Society to EMMA was not linked to each of the Society’s outstanding bond issues. The Society believes that it has taken appropriate steps to ensure that the information provided to its dissemination agent is now linked to all of the Society’s outstanding bonds by CUSIP number. In addition to a failure to link disseminated financial and operating data to all of the Society’s outstanding bond issues, it was also discovered that certain of the operational data and financial covenant information required to be filed quarterly and annually pursuant to prior undertakings had not consistently been filed, or in certain cases filed in a timely manner, and that certain event notices and notices of failure to file such information had also not been filed. While the Society believed these failures and missing filings were communicated to its dissemination agent, not all of the filing deficiencies were corrected in connection with these prior bond issuances, as the Society had disclosed. A corrective action plan has been completed and confirmed by DAC with respect to any filing deficiencies, and the Society will undertake training and compliance for the appropriate Society employees. In addition, the Society has engaged DAC to act as its disclosure dissemination agent, effective May 19, 2015, and has replaced the Society’s dissemination agent on its prior undertakings.

Section 15. Assignment. The Society shall not transfer its obligations under the Bond Indenture unless the transferee agrees to assume all obligations of the Society under this Undertaking or to execute a continuing disclosure undertaking under the Rule.

Section 16. Governing Law. This Undertaking shall be governed by the laws of the State.

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THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY, as Obligated Group Representative

By Grant Tribble Treasurer

[Signature Page to Continuing Disclosure Undertaking]

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EXHIBIT I

ANNUAL FINANCIAL INFORMATION AND TIMING AND AUDITED FINANCIAL STATEMENTS

“Annual Financial Information” means financial information and operating data (exclusive of Audited Financial Statements) of the type included in Appendix A to the Official Statement in the table titled “Society Locations” on page A-3; in the tables titled “Skilled Nursing Facilities Owned and Leased by the Society” and “Owned and Leased Skilled Nursing Facilities by Size” on page A-11; in the table titled “Residential Housing Owned by the Society” on page A-12; and in the table titled “Total Revenue Mix by Payor” on page A-24.

All or a portion of the Annual Financial Information and the Audited Financial Statements may be included by reference to other documents which have been submitted to the MSRB or filed with the Commission, and such information need not be provided in the exact format as shown in the Official Statement. The Society shall clearly identify each such item of information included by reference.

Annual Financial Information will be provided to the MSRB within 180 days after the last day of the Society’s fiscal year. Audited Financial Statements should be filed at the same time as the Annual Financial Information. If Audited Financial Statements are not available when the Annual Financial Information is filed, unaudited financial statements shall be included, and Audited Financial Statements will be provided to the MSRB within 10 Business Days after availability to the Society.

Audited Financial Statements will be prepared in accordance with generally accepted accounting principles in the United States as in effect from time to time.

If any change is made to the Annual Financial Information as permitted by Section 4 of the Continuing Disclosure Undertaking, including for this purpose a change made to the fiscal year of the Society, the Society will disseminate a notice to the MSRB of such change in Prescribed Form as required by such Section 4.

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EXHIBIT II

EVENTS WITH RESPECT TO THE SERIES 2015A BONDS FOR WHICH LISTED EVENTS DISCLOSURE IS REQUIRED

1. Principal and interest payment delinquencies;

2. Nonpayment-related defaults, if material;

3. Unscheduled draws on debt service reserves reflecting financial difficulties;

4. Unscheduled draws on credit enhancements reflecting financial difficulties;

5. Substitution of credit or liquidity providers, or their failure to perform;

6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Series 2015A Bonds, or other material events affecting the tax status of the Series 2015A Bonds;

7. Modifications to rights of holders of the Series 2015A Bonds, if material;

8. Series 2015A Bond calls, if material, and tender offers;

9. Defeasances;

10. Release, substitution or sale of property securing repayment of the Series 2015A Bonds, if material;

11. Rating changes;

12. Bankruptcy, insolvency, receivership or similar event of an obligated person (as defined in the Rule);*

13. The consummation of a merger, consolidation or acquisition involving an obligated person or the sale of all or substantially all of the assets of an obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and

14. Appointment of a successor or additional trustee or the change of name of a trustee, if material.

∗ This event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of an obligated person, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of an obligated person.

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