Higher Educational Facilities Financing Authority, Florida EDUCATIONAL FACILITIES FINANCING AUTHORITY ... Series 2010 (Bethune-Cookman University, Inc. Project) Dated: Date of Delivery

NEW ISSUE--BOOK-ENTRY ONLY Fitch: A+ (stable outlook) S&P: A- (stable outlook) See “RATING” herein

Under existing statutes, regulations, rulings and court decisions, interest on the Bonds (i) will not be included in gross income of the holders for purposes of federal income taxation and (ii) will not be an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, subject to limitations or exceptions described under “TAX MATTERS”. The opinion of bond counsel will address these aspects of the tax status of the Bonds and should be read in its entirety for a complete understanding of the scope of the opinion and the conclusions expressed. The Bonds have been designated as “qualified tax-exempt obligations” for purposes of Section 265(b) of the Code.

$23,825,000HIGHER EDUCATIONAL FACILITIES FINANCING AUTHORITY

Educational Facilities Revenue Bonds, Series 2010 (Bethune-Cookman University, Inc. Project)

Dated: Date of Delivery Due: July 1, 2032

The $23,825,000 Higher Educational Facilities Financing Authority Educational Facilities Revenue Bonds, Series 2010 (Bethune-Cookman University, Inc. Project) (the “Bonds”) are revenue bonds issued by the Higher Educational Facilities Financing Authority (the “Authority”), under and pursuant to the Constitution and laws of Florida, including particularly, the Act (as defined herein).

The Bonds are being issued to (i) finance and refinance the costs of certain capital improvements to or for the University’s educational facilities as more particularly described herein, including, without limitation, the construction and improvements to its dormitory facilities, (ii) currently refund the outstanding Volusia County Educational Facilities Authority Variable Rate Educational Facilities Revenue Bonds, Series 2001 (Bethune-Cookman College, Inc. Project), (iii) fund a debt service reserve fund for the Bonds, and (iv) pay certain costs associated with the issuance of the Bonds. See “THE PROJECT”, “THE REFUNDING PROGRAM” and “ESTIMATED SOURCES AND USES OF FUNDS” herein.

The Bonds will be issued pursuant to Part II, Chapter 243, Florida Statutes, as amended, and other applicable provisions of law (the “Act”), and the Bond Trust Indenture dated as of November 1, 2010 and Resolution adopted on August 26, 2010. The proceeds derived from the sale of the Bonds will be loaned to Bethune-Cookman University, Inc., a Florida not-for-profit corporation and an accredited institution of higher education (together with its successors and assigns and any surviving, resulting or transferee corporation, the “University”), pursuant to a Loan Agreement dated as of November 1, 2010 between the University and the Authority (as amended from time to time, the “Loan Agreement”).

The Bonds are being issued as fully registered bonds and will initially be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). Individual purchases of beneficial interests in the Bonds will be made in book-entry only form, in the principal amount of $5,000 and any integral multiple of $5,000. Interest on the Bonds will accrue from their dated date and will be payable on January 1 and July 1 of each year commencing on January 1, 2011. Purchasers of beneficial interests in the Bonds will not receive physical delivery of certificates. Transfers of beneficial interests in the Bonds will be effected through the DTC book-entry system as described herein. The Bonds will not be transferable or exchangeable, except for transfer to another nominee of DTC or otherwise as described herein. Principal, interest, and the redemption price, if any, with respect to the Bonds will be payable by U.S. Bank National Association, Orlando, Florida, as Trustee, Paying Agent and Registrar for the Bonds to Cede & Co., as nominee of DTC. See “BOOK-ENTRY ONLY SYSTEM” herein.

The Bonds are subject to redemption prior to maturity as more fully described herein. See “DESCRIPTION OF BONDS” herein.

THE AUTHORITY SHALL NOT BE OBLIGATED TO PAY THE BONDS OR THE INTEREST THEREON EXCEPT FROM THE REVENUES AND THE PROCEEDS PLEDGED THEREFOR, AND NEITHER THE FAITH AND CREDIT OF THE AUTHORITY NOR THE FAITH AND CREDIT OR THE TAXING POWER OF VOLUSIA COUNTY, FLORIDA OR OF THE STATE OF FLORIDA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE BONDS. THE AUTHORITY HAS NO TAXING POWER.

The Bonds are offered subject to prior sale, when, as and if issued by the Authority, subject to the approving opinion of Nabors, Giblin,& Nickerson, P.A, Tampa, Florida, Bond Counsel, and certain other conditions. Certain legal matters will be passed upon for the University by its Counsel, Pamela Browne, Esq., Daytona Beach, Florida; and for the Authority by its Counsel, GrayRobinson, P.A., Lakeland, Florida. Certain legal matters in connection with the Bonds will be passed upon for the Underwriter by Marchena and Graham, P.A., Orlando, Florida, counsel to the underwriters. Dunlap & Associates, Winter Park, Florida is serving as Financial Advisor to the University. It is expected that the Bonds in definitive form will be available for delivery through DTC on or about November 16, 2010.

Morgan KeeganOctober 29, 2010

$23,825,000 HIGHER EDUCATIONAL FACILITIES FINANCING AUTHORITY


Maturities, Principal Amounts, Interest Rates, Yields, Prices and Initial CUSIP Numbers

Maturity Date

(July 1)

Principal Amount

Interest Rate%

Yield %

Price

Initial CUSIP

Numbers** 2011 $720,000 1.125 1.150 99.984% 34073TBV8 2012 735,000 3.000 1.670 102.122% 34073TBW6 2013 755,000 3.000 2.130 102.208% 34073TBX4 2014 775,000 2.250 2.500 99.137% 34073TBY2 2015 795,000 2.500 2.810 98.662% 34073TBZ9 2016 815,000 3.000 3.160 99.179% 34073TCA3 2017 840,000 3.250 3.550 98.240% 34073TCB1 2018 870,000 3.500 3.800 98.027% 34073TCC9 2019 905,000 4.000 4.080 99.419% 34073TCD7 2020 940,000 4.000 4.250 98.037% 34073TCE5 2025 550,000 5.000 4.750 101.907%* 34073TCG0

$4,205,000 4.500% Term Bonds Due July 1, 2024 Yield: 4.700% Initial CUSIP No.: 34073TCH8 $10,920,000 5.375% Term Bonds Due July 1, 2032 Yield: 5.200% Initial CUSIP No.: 34073TCF2

*Priced to first optional call date of July 1, 2020. ** CUSIP Numbers are included solely for the convenience of the reader of this Official Statement. The Authority, the University and Underwriter take no responsibility for the accuracy or use of the CUSIP numbers in this Official Statement.

BETHUNE – COOKMAN UNIVERSITY 640 Dr. Mary McLeod Bethune Boulevard

Daytona Beach, Florida 32114 (386) 481-2000

Authority HIGHER EDUCATIONAL FACILITIES FINANCING AUTHORITY

University Management Dr. Trudie Kibbe Reed, President

Dr. E. Dean Montgomery, Executive Vice President, Finance and Administration Dr. Sarah Williams, Vice President for Academic Affairs

Dr. Willis Walter, Vice President for Research and Planning Ms. Shirley Range, Vice President for Institutional Advancement

Mr. Dwaun J. Warmack, Vice President for Student Affairs Mr. Franklin E. Patterson, Chief Information Officer

Authority Counsel GRAY ROBINSON P.A.

Lakeland, Florida

University Counsel PAMELA BROWNE, ESQUIRE

Daytona Beach, Florida

Bond Counsel NABORS, GIBLIN AND NICKERSON, P.A.

Tampa, Florida

Underwriter MORGAN KEEGAN & COMPANY, INC.

Winter Park, Florida

Underwriter’s Counsel MARCHENA AND GRAHAM, P.A.

Orlando, Florida

Financial Advisor DUNLAP & ASSOCIATES, INC.

Winter Park, Florida

NO DEALER, BROKER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED BY THE AUTHORITY, THE UNIVERSITY OR THE UNDERWRITER TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION, OTHER THAN THOSE CONTAINED IN THIS OFFICIAL STATEMENT, IN CONNECTION WITH THE OFFERING OF THE BONDS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FOREGOING. THIS OFFICIAL STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY THE BONDS AND THERE SHALL BE NO SALE OF THE BONDS BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH OFFER, SOLICITATION OR SALE.

THE INFORMATION AND EXPRESSIONS OF OPINION CONTAINED IN THIS OFFICIAL STATEMENT ARE SUBJECT TO CHANGE WITHOUT NOTICE AND NEITHER THE DELIVERY OF THIS OFFICIAL STATEMENT NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE THE IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE AUTHORITY SINCE THE DATE HEREOF OR THE EARLIEST DATE AS OF WHICH SUCH INFORMATION IS GIVEN.

THE UNDERWRITER HAS PROVIDED THE FOLLOWING STATEMENT FOR INCLUSION IN THIS OFFICIAL STATEMENT: THE UNDERWRITER HAS REVIEWED THE INFORMATION IN THIS OFFICIAL STATEMENT IN ACCORDANCE WITH, AND AS PART OF, THEIR RESPONSIBILITIES TO INVESTORS UNDER THE FEDERAL SECURITIES LAWS AS APPLIED TO THE FACTS AND CIRCUMSTANCES OF THIS TRANSACTION, BUT THE UNDERWRITER DOES NOT GUARANTEE THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION.

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.

ALL SUMMARIES HEREIN OF DOCUMENTS AND AGREEMENTS ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO SUCH DOCUMENTS AND AGREEMENTS, AND ALL SUMMARIES HEREIN OF THE BONDS ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE FORM THEREOF INCLUDED IN THE AFORESAID DOCUMENTS AND AGREEMENTS.

IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER 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 STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS AND OTHERS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICE STATED ON THE INSIDE COVER PAGE OF THIS OFFICIAL STATEMENT, AND SUCH PUBLIC OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER.

THE BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR HAS THE BOND INDENTURE BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS. THE REGISTRATION OR QUALIFICATION OF THE BONDS IN ACCORDANCE WITH APPLICABLE PROVISIONS OF THE SECURITIES LAWS OF THE STATES, IF ANY, IN WHICH THE BONDS HAVE BEEN REGISTERED OR QUALIFIED, IF ANY, AND THE EXEMPTION FROM REGISTRATION OR QUALIFICATION IN CERTAIN OTHER STATES CANNOT 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 MAY BE A CRIMINAL OFFENSE.

EXCEPT FOR THE INFORMATION HEREIN PERTAINING TO THE AUTHORITY UNDER THE CAPTIONS “THE AUTHORITY” AND “LITIGATION,” THE AUTHORITY HAS NOT REVIEWED AND MAKES NO REPRESENTATION AS TO THE ACCURACY, FAIRNESS OR COMPLETENESS OF THE INFORMATION SET FORTH IN THIS OFFICIAL STATEMENT AND DISCLAIMS ANY RESPONSIBIITY THEREFOR.

[THIS PAGE INTENTIONALLY LEFT BLANK]

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TABLE OF CONTENTS

(The Table of Contents is for convenience of reference only and is not intended to define, limit or describe the scope or intent of any provisions herein.) INTRODUCTORY STATEMENT ............................................................................................................................... 1

THE AUTHORITY ....................................................................................................................................................... 2

THE UNIVERSITY ...................................................................................................................................................... 2

THE PROJECT ............................................................................................................................................................. 3

Lee Rhyant Residential Life Center ................................................................................................................ 3

The Projects Funded by the Refunded Bonds ................................................................................................. 4

THE REFUNDING PROGRAM ................................................................................................................................... 4

ESTIMATED SOURCES AND USES OF FUNDS ..................................................................................................... 5

DEBT SERVICE REQUIREMENTS ........................................................................................................................... 6

DESCRIPTION OF THE BONDS ................................................................................................................................ 7

General .......................................................................................................................................................... 7

Redemption Prior to Maturity ......................................................................................................................... 8

Optional Redemption ...................................................................................................................................... 8

Mandatory Sinking Fund Installments ............................................................................................................ 8

Purchase in Lieu of Redemption ................................................................................................................... 10

Notice of Redemption ................................................................................................................................... 10

Special Obligations ....................................................................................................................................... 10

BOOK-ENTRY ONLY SYSTEM .............................................................................................................................. 11

SECURITY FOR THE BONDS .................................................................................................................................. 15

Security for Payment of the Bonds ................................................................................................................ 15

Debt Service Reserve Fund ........................................................................................................................... 16

THE LOAN AGREEMENT ........................................................................................................................................ 16

Limitations on Indebtedness .......................................................................................................................... 16

Limitations on Creation of Liens; Permitted Liens. ...................................................................................... 18

LONG TERM INDEBTEDNESS ............................................................................................................................... 20

INVESTMENT RISK FACTORS ............................................................................................................................... 20

University’s Obligations under Loan Agreement Unsecured ........................................................................ 20

Enforceability ................................................................................................................................................ 21

Early Redemption .......................................................................................................................................... 21

Tax-Exempt Status of Bonds ......................................................................................................................... 21

Secondary Market and Prices ........................................................................................................................ 22

Competition ................................................................................................................................................... 22

Accreditation ................................................................................................................................................. 22

Investments ................................................................................................................................................... 22

Facilities ........................................................................................................................................................ 22

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Impact of Market Turmoil ............................................................................................................................. 23

Severe Weather ............................................................................................................................................. 23

Other Risk Factors Regarding the University ................................................................................................ 23

LITIGATION .............................................................................................................................................................. 24

THE UNDERWRITER ............................................................................................................................................... 24

RATINGS .................................................................................................................................................................... 25

TAX MATTERS ......................................................................................................................................................... 25

General ........................................................................................................................................................ 25

Federal Tax-Exempt Status. .......................................................................................................................... 25

Federal Tax Preference Treatment. ............................................................................................................... 25

Qualified Tax-Exempt Obligations. .............................................................................................................. 25

State Tax-Exempt Status. .............................................................................................................................. 25

Opinion of Bond Counsel .............................................................................................................................. 26

Collateral Tax Consequences ........................................................................................................................ 26

Other Tax Matters ......................................................................................................................................... 26

Tax Treatment of Original Issue Discount .................................................................................................... 26

Bond Premium............................................................................................................................................... 27

LEGAL MATTERS .................................................................................................................................................... 27

FINANCIAL ADVISOR ............................................................................................................................................. 28

CONTINUNING DISCLOSURE ................................................................................................................................ 29

MISCELLANEOUS .................................................................................................................................................... 29

AUTHORIZATION OF AND CERTIFICATION CONCERNING OFFICIAL STATEMENT ............................... 31

APPENDIX “A” BETHUNE-COOKMAN UNIVERSITY GENERAL INFORMATION APPENDIX “B” AUDITED FINANCIAL STATEMENTS AND REPORT OF THE

INDEPENDENT AUDITORS THEREON FOR THE FISCAL YEARS ENDED JUNE 30, 2009 AND 2010

APPENDIX “C” BOND TRUST INDENTURE AND LOAN AGREEMENT APPENDIX “D” FORM OF OPINION OF BOND COUNSEL APPENDIX “E” FORM OF CONTINUING DISCLOSURE COMMITMENT

$23,825,000 HIGHER EDUCATIONAL FACILITIES FINANCING AUTHORITY


INTRODUCTORY STATEMENT

This Official Statement is provided to furnish certain information in connection with the original issuance and sale by the Higher Educational Facilities Financing Authority (the "Authority") of $23,825,000 in aggregate principal amount of its Educational Facilities Revenue Bonds, Series 2010 (Bethune-Cookman University, Inc. Project), (the "Bonds").

The Bonds will be issued pursuant to Part II, Chapter 243, Florida Statutes, as amended, and other applicable provisions of law (the "Act") a Bond Trust Indenture, dated as of November 1, 2010 (the "Indenture") and a resolution adopted on August 26, 2010. The Bonds will be special and limited obligations as described under the caption "DESCRIPTION OF THE BONDS -- Special Obligations." The proceeds derived from the sale of the Bonds will be loaned to Bethune-Cookman University, Inc., a Florida not-for-profit corporation and an accredited institution of higher education (together with its successors and assigns and any surviving, resulting or transferee corporation, the "University"), pursuant to a Loan Agreement dated as of November 1, 2010 between the University and the Authority (as amended from time to time, the "Loan Agreement").

The Bonds are being issued to (i) finance and refinance the costs of certain capital improvements to or for the University's educational facilities as more particularly described herein, including, without limitation, the construction and improvements to its dormitory facilities, (the “Project”), (ii) currently refund the outstanding Volusia County Educational Facilities Authority Variable Rate Educational Facilities Revenue Bonds, Series 2001 (Bethune-Cookman College, Inc. Project, (the "Refunded Bonds") (iii) fund a debt service reserve fund for the Bonds, and (iv) pay certain costs associated with the issuance of the Bonds. See “THE PROJECT”, “THE REFUNDING PROGRAM” and "ESTIMATED SOURCES AND USES OF FUNDS" herein.

All of the Authority's rights under the Loan Agreement will be assigned to the Trustee as security for the payment of the principal of, premium, if any, and interest on the Bonds, except for certain rights to fees, notices and indemnification payments.

Descriptions of the Authority, the University, the Project, the Refunding Program and the Bonds, follow. The descriptions herein do not purport to be comprehensive or definitive and are qualified in their entirety by reference to each specific document being described, copies of all of which are available for inspection at the principal corporate trust office of the Trustee, Paying Agent and Registrar, U.S. Bank National Association at 225 E. Robinson Street, Suite 250, Orlando, Florida 32801, Attention: Cristina Fleitas, Vice President. Terms not defined herein have the meanings set forth in the respective documents.

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Although the Authority has consented to the use of this Official Statement in connection with the offer and the sale of the Bonds, it has not participated in the preparation hereof and it makes no representation as to its accuracy or completeness.

THE AUTHORITY

The Authority is a public body corporate and politic created and existing under the laws of the State of Florida pursuant to the provisions of Part II, Chapter 243, Florida Statutes, as amended (the "Act"). The Authority is authorized to issue the Bonds, to finance the costs of the Project and to refund certain existing outstanding bonds and to secure the Bonds by an assignment of the payments to be received under the Agreement. In order to accomplish the foregoing, the Authority is authorized to enter into and/or accept delivery of the Indenture and the Agreement.

The Bonds will be limited obligations of the Authority as described under the caption "DESCRIPTION OF THE BONDS – Special Obligations."

Rule 3E-400.003, Rules for Government Securities, promulgated by the Florida Department of Banking and Finance, Division of Securities, under Section 517.051(1), Florida Statutes ("Rule 3E-400.003"), requires the Authority to disclose each and every default as to the payment of principal and interest with respect to an obligation issued by the Authority after December 31, 1975. Rule 3E-400.003 further provides, however, that if the Authority in good faith believes that such disclosures would not be considered material by a reasonable investor, such disclosures may be omitted.

The Authority, in the case of the Bonds, is merely a conduit for payment, in that the

Bonds do not constitute a general debt, liability or obligation of the Authority, but are instead secured by and payable solely from payments of the University under the Agreement and by other security discussed herein. The Bonds are not being offered on the basis of the financial strength of the Authority. The Authority believes, therefore, that disclosure of any default related to a financing not involving the University or any person or entity related to the University would not be material to a reasonable investor. The Authority has not been a party to any other financing involving the University. Accordingly, the Authority has not taken affirmative steps to contact the various trustees of other conduit bond issues of the Authority to determine the existence of prior defaults; however, the Authority is not aware of the existence of any defaults with respect to bonds issued by it.

THE UNIVERSITY

Bethune-Cookman University is a Florida United Methodist Church affiliated, historically black, co-educational institution organized and operated by the University, a Florida not-for-profit corporation. The current composition of the University is the result of a 1923 merger between Daytona Educational and Training School for Negro Girls, founded in 1904, chartered by the Florida State Department of State in 1905, and Darnell Cookman Institute of Jacksonville, Florida, founded in 1872 as a private not-for profit secondary school for boys.

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In 1925, the institution was renamed Daytona Cookman Collegiate Institute, and in 1933 effected Florida State Department of Education approval as a junior University. At that same time the school was renamed Bethune-Cookman College.

The Florida State Department of Education accredited Bethune-Cookman College in 1941 for a four-year elementary education program. The first class graduated in 1943 with an earned Bachelor of Science degree in elementary teacher education. Accreditation by the Florida State Department of Education to offer bachelor degrees in teacher education and other academic fields continues to the present time.

In 1947, Bethune-Cookman College was approved by the Southern Association of Universities and Schools and in 1960 received accreditation. It has continually received reaffirmation of accreditation on the 10-year cycle. The latest accreditation was in 2000 and extends through December 2010. The University is currently undergoing re-accreditation. As a part of the re-accreditation process, in September of 2009 the University hosted an onsite visit of the re-accreditation team. In March of 2010, the University received a draft report from the re-accreditation team citing that there were no non-compliance issues. Such report did not contain any recommendations. As such, the University expects to receive notice of its re-accreditation prior to December.

Bethune-Cookman College achieved University status in 2007 with the launch of a master’s degree program in transformative leadership and the current name was adopted.

The University presently offers 35 bachelor degrees through seven academic divisions. The teacher education program has been accredited and reaccredited by the National Council for Accreditation of Teacher Education (NCATE), since 1985. The nursing education program has been affirmed by the State Department of Nursing Licensure since 1983 and accredited by the National League of Nursing since 1997. The hospitality management program has been accredited by the Accreditation Commission for Programs in Hospitality Administration since 1998.

THE PROJECT

Lee Rhyant Residential Life Center

The Project consists of financing and/or refinancing costs of acquisition, renovation, expansion, construction and equipping of certain educational facilities located or to be located in Volusia County, Florida which are or will be owned and operated by the university including, without limitation, the Lee Rhyant Residential Life Center, (“LR Life Center”) a new dormitory for the University.

The Lee Rhyant Residential Life Center is a three-story, 62,800 square foot, 270 bed, coeducational dormitory with suites of two students to a room. It is an honors dorm and students must possess a GPA of at least 3.0. in order to qualify to live there. Construction on the LR Life Center began in 2009 and is almost complete with the exception of the café and completion of the computer labs and classrooms. Students started moving into the LR Life Center at the end of September 2010 and move in is scheduled to be completed by the end of October 2010. Males and females are separated on different wings but congregate in common areas. The LR Life Center includes a cafe with full kitchen, computer labs and two classrooms with enhanced computer technology. Starting in Spring the University will be holding some honors classes and

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also classes for the Quality Enhancement Plan (QEP) Wildcats Write program. The LR Life Center, named after one of the University’s trustees, is located on the corner of Dr. Martin Luther King Blvd and George W. Engram Blvd. The Projects Funded by the Refunded Bonds

The proceeds of the Refunded Bonds were primarily used by the University to finance and refinance the costs of certain capital improvements for its educational facilities including, without limitation, its Performing Arts, Communications, Music and Science Buildings, Dormitory, central chiller system, telephone system and land located on the campus of the University.

THE REFUNDING PROGRAM

The Refunded Bonds will be called for redemption on or about December 18, 2010 at a redemption price equal to 100 percent of the principal amount thereof, plus accrued interest to the redemption date. To effect the refunding and redemption of the Refunded Bonds, a portion of the proceeds of the Bonds, together with other available funds of the University, will be deposited with U.S. Bank National Association, as escrow agent (the "Escrow Agent") in an escrow deposit trust fund created under an Escrow Deposit Agreement to be dated November 16, 2010 between the University and the Escrow Agent (the "Escrow Deposit Agreement") and such amounts will be applied by the Escrow Agent to pay the principal of and accrued interest on the Refunded Bonds on their redemption date. The amounts initially deposited in the Escrow Fund established under the Escrow Deposit Agreement is sufficient to pay the principal of and interest on the Refunded Bonds on the redemption date, without regard to any investment of such funds. The portion of the proceeds of the Bonds held by the Escrow Agent and other amounts held by the Escrow Agent under the Escrow Deposit Agreement will be held in trust for the sole benefit of the holders of the Refunded Bonds. Such amounts will not be available to pay the principal of or interest on the Bonds. Additionally, as part of the Refunding Program, the University will terminate a Swap Agreement with SunTrust Bank executed in connection with the Refunded Bonds. Any swap termination payment will be paid from available University funds and not from the proceeds of the Bonds.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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ESTIMATED SOURCES AND USES OF FUNDS

The proceeds to be received from the sale of the Bonds are expected to be applied as follows:

Sources: Par Amount of Bonds $23,825,000.00 Net Original Issue Premium 21,328.50

University Funds 283,854.25 Total Sources $24,130,182.75 Uses:

Deposit to Expense Fund(1) $456,662.13 Deposit to Debt Service Reserve Fund 1,807,568.76 Deposit to Escrow Deposit Trust Fund 18,653,854.24 Deposit to Project Fund 3,212,097.62

Total Uses $24,130,182.75

(1) Includes, but is not limited to the cost of issuance and Underwriters' Discount.


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DEBT SERVICE REQUIREMENTS

The following table sets forth the Debt Service Requirements for the Outstanding Bonds.

Fiscal Year

Ended June 30

Outstanding Bonds

Debt Service

Series 2010

Bond Principal

Series 2010

Bond Principal

Total Series 2010 Bonds Debt

Service

Total Bonds Debt

Service 2011 $1,866,683.18 00.00 $131,223.44 $131,223.44 $1,997,906.62 2012 1,020,368.34 $720,000.00 1,045,737.50 1,765,737.50 2,786,105.84 2013 1,018,660.00 735,000.00 1,030,662.50 1,765,662.50 2,784,322.50 2014 1,021,410.02 755,000.00 1,008,312.50 1,763,312.50 2,784,722.52 2015 1,018,451.64 775,000.00 988,268.75 1,763,268.75 2,781,720.39 2016 573,943.32 795,000.00 969,612.50 1,764,612.50 2,338,555.82 2017 370,200.00 815,000.00 947,450.00 1,762,450.00 2,132,650.00 2018 370,200.02 840,000.00 921,575.00 1,761,575.00 2,131,775.02 2019 370,200.02 870,000.00 892,700.00 1,762,700.00 2,132,900.02 2020 370,200.00 905,000.00 859,375.00 1,764,375.00 2,134,575.00 2021 370,200.00 940,000.00 822,475.00 1,762,475.00 2,132,675.00 2022 370,200.00 980,000.00 781,625.00 1,761,625.00 2,131,825.00 2023 370,200.00 1,025,000.00 736,512.50 1,761,512.50 2,131,712.50 2024 370,200.00 1,075,000.00 689,262.50 1,764,262.50 2,134,462.50 2025 370,200.00 1,125,000.00 639,762.50 1,764,762.50 2,134,962.50 2026 370,200.00 1,180,000.00 583,768.75 1,763,768.75 2,133,968.75 2027 370,200.00 1,245,000.00 519,628.13 1,764,628.13 2,134,828.13 2028 92,550.00 1,315,000.00 450,828.13 1,765,828.13 1,858,378.13 2029 00.00 1,385,000.00 378,265.63 1,763,265.63 1,763,265.63 2030 00.00 1,460,000.00 301,806.26 1,761,806.26 1,761,806.26 2031 00.00 1,545,000.00 221,046.88 1,766,046.88 1,766,046.88 2032 00.00 1,625,000.00 135,853.13 1,760,853.13 1,760,853.13 2033 00.00 1,715,000.00 46,090.63 1,761,090,63 1,761,090.63

Total $10,684,266.54 $23,825,000.00 $15,101,842.23 $38,926,842.23 $49,611,108.77


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DESCRIPTION OF THE BONDS

General

The Bonds will be dated the date of their original issuance and will mature and bear interest from their dated date to their respective maturity dates in the amounts and at the rates set forth on the inside cover page of this Official Statement. Interest on the Bonds will be paid by U.S. Bank National Association, Orlando, Florida, as registrar, paying agent and trustee for the Bonds on January 1, and July 1, of each year commencing on January 1, 2011. Interest on the Bonds will be calculated on the basis of a 360 day year consisting of twelve thirty day months. Interest shall be paid by check or draft mailed by the Paying Agent to the registered owners thereof as their addresses appear on the registration books maintained by the Trustee, as Bond Registrar, at the close of business on the 15th day (whether or not a business day) of the month next preceding the interest payment date (the "Record Date"), irrespective of any transfer or exchange of such Bonds after such Record Date and before such interest payment date unless the Authority shall be in default of interest due on such interest payment date. The principal of the Bonds will be payable at the corporate trust operations office of the Trustee in Orlando, Florida, subject to optional redemption, purchase and tender as more fully described herein. The principal of, premium, if any, and interest on, and the Purchase Price of, the Bonds are payable at the place and in the manner specified in this Official Statement.

No owner of any Bond has the right to compel any exercise of the taxing power of the State of Florida or of any political subdivision or instrumentality thereof, including the Authority, to pay the Bonds, the interest thereon or any other amount due with respect thereto. The Bonds are not general obligations of the Authority, Volusia County, Florida, the State of Florida or of any political subdivision or instrumentality thereof, but are special obligations of the Authority payable solely from amounts payable by the University under the Agreement and other moneys pledged therefore under the Indenture. Neither Volusia County, Florida, the Authority, the State of Florida nor any political subdivision or instrumentality thereof has any obligations with respect to the purchase of the Bonds. The Authority has no taxing power.

The Bonds are being issued in book-entry only form under the procedures of The

Depository Trust Company (“DTC”). While the Bonds are in the book-entry only form, the method and procedures for payment of the bonds and matters pertaining to transfers and exchanges of the Bonds will be governed by the rules and procedures of the book-entry only system. If the book-entry only system is discontinued, the Indenture contains alternate provisions for the method of payment and for transfers and exchanges. See “BOOK-ENTRY ONLY SYSTEM” herein for a description of the DTC book-entry only system.

The University, the Authority, the Bond Registrar and the Paying Agent may deem and treat the registered owner of any Bond as the absolute owner of such Bond for the purpose of receiving payment of the principal thereof and the interest thereon. Subject to the provisions of the Indenture, a Bond may be exchanged at the office of the Bond Registrar for a like aggregate principal amount of Bonds of other authorized denominations of the same series and maturity.

For every exchange or transfer of the Bonds, the Authority, the University and the

Trustee, as Bond Registrar, may charge the registered owner an amount sufficient to reimburse them for any tax, fee or other governmental charge required (other than by the University or the

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Authority) to be paid with respect to or in connection with any such transfer or exchange and may require that such amount be paid before any such new Bonds are delivered.

Redemption Prior to Maturity

Optional Redemption

The Bonds are not redeemable at the option of the University or the Issuer prior to July 1, 2020. The Bonds maturing on or after July 1, 2021 may be redeemed in whole or in part at the option of the University on any date on or after July 1, 2020 at a redemption price equal to 100% of the principal amount of each Bond redeemed plus accrued interest to the redemption date.

Any Bonds which are University Bonds are subject to redemption in whole or in part (in an Authorized Denomination) prior to their Maturity Date at the option of the University out of amounts deposited in the Redemption Fund by the University, in whole or in part (and if in part, in an Authorized Denomination) on any Business Day while such Bonds are University Bonds at a redemption price equal to 100% of the principal amount thereof plus accrued interest, if any, to the redemption date.

Mandatory Sinking Fund Installments

The Bonds maturing on July 1, 2024 shall be subject to mandatory redemption and payment prior to maturity at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date, without premium. The University shall deposit in the Bond Sinking Fund a sum that, together with all amounts then on deposit in the Bond Sinking Fund and then available for the redemption of the Bonds shall be sufficient to redeem (after credit as provided below) the following principal amounts of Bonds on the following sinking fund payment dates:

Redemption Date(July 1)

Principal Amount

2021 $980,000 2022 1,025,000 2023 1,075,000 2024* 1,125,000

*Maturity

The Bonds maturing on July 1, 2032 shall be subject to mandatory redemption and

payment prior to maturity at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date, without premium. The University shall deposit in the Bond Sinking Fund a sum that, together with all amounts then on deposit in the Bond Sinking Fund and then available for the redemption of the Bonds shall be sufficient to redeem (after credit as provided below) the following principal amounts of Bonds on the following sinking fund payment dates:

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Redemption Date(July 1)

Principal Amount

2025 $630,000 2026 1,245,000 2027 1,315,000 2028 1,385,000 2029 1,460,000 2030 1,545,000 2031 1,625,000 2032* 1,715,000

*Maturity

On or before the thirtieth (30th) day prior to any sinking fund payment date, the Trustee

shall proceed to select for redemption (by lot in such manner as the Trustee may determine), from all Outstanding Bonds subject to mandatory sinking fund redemption on such date, an aggregate principal amount of such Bonds equal to the amount required to be on deposit in the Bond Sinking Fund with respect to such Bonds on such sinking fund payment date, and shall call such Bonds or portions thereof in Authorized Denominations for redemption from the sinking fund on such sinking fund payment date and give notice of such call. At the option of the University, to be exercised by delivery of a Written Request of the University to the Trustee on or before the sixtieth (60th) day next preceding any sinking fund payment date, it may (i) deliver to the Trustee for cancellation Bonds or portions thereof in Authorized Denominations of the maturity relating to such sinking fund payment date in any aggregate principal amount desired by the University or (ii) specify a principal amount of Bonds or portions thereof in Authorized Denominations or the maturity relating to such sinking fund payment date which prior to said date have been purchased or redeemed (otherwise than through the operation of the Sinking Fund) and cancelled by the Trustee at the request of the University and not theretofore applied as a credit against any sinking fund payment. Each such Bond or portion thereof so delivered or previously redeemed shall be credited by the Trustee at one hundred percent (100%) of the principal amount thereof against the obligation of the Authority on such sinking fund payment date with respect to Bonds of such maturity. Any excess shall be credited against the next sinking fund payment relating to the Bonds of such maturity. In the event the University shall avail itself of the provisions of clause (i) of the second sentence of this paragraph, the Written Request shall be accompanied by the Bonds or portions thereof to be cancelled.

The amount of mandatory Bond Sinking Fund redemption requirement shall be reduced by the amount of Bonds acquired and delivered in accordance with Section 4.4 of the Trust Indenture in satisfaction of such Bond Sinking Fund requirement. Payment or redemption of the Bonds through the Bond Sinking Fund shall be without premium. The Bonds shall be redeemed by the Trustee pursuant to the provisions of this paragraph without any notice from or direction by the Authority or the University. Interest is payable upon mandatory Bond Sinking Fund redemptions as set forth in Section 4.3 of the Indenture.

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Purchase in Lieu of Redemption

In lieu of an optional redemption and cancellation of Bonds, Bonds may be purchased by the University for its own account and either (i) cancelled or (ii) remarketed. Notice and selection of Bonds being purchased pursuant in lieu of redemption shall be given/selected in the same manner as the notice and selection of Bonds called for optional redemption; provided, that the required notice shall be modified as necessary to reflect a purchase in lieu of redemption.

Notice of Redemption

Except as hereinafter provided, a copy of the notice of the call for any such redemption identifying the Bonds to be redeemed shall be given by first class mail, postage prepaid, to the registered owners of Bonds to be redeemed at their addresses as shown on the Bond Register not less than thirty (30) days or more than sixty (60) days prior to the redemption date. Except for mandatory Bond Sinking Fund redemptions, prior to the date that the redemption notice is first given as aforesaid, funds shall be placed with the Trustee to pay the principal of such Bonds, any premium thereon and accrued interest thereon to the redemption date, or such notice shall state that any redemption is conditional on such funds being deposited with the Trustee on the redemption date and that a failure to make such deposit shall not constitute an event of default hereunder.

Failure to give notice as prescribed in the Indenture with respect to any Bond, or any defect in such notice, shall not affect the validity of the proceedings for redemption for any Bond with respect to which notice was properly given. Upon the happening of the above conditions and if sufficient moneys are on deposit with the Trustee on the applicable redemption date to redeem the Bonds to be redeemed and to pay interest due thereon and premium, if any, the Bonds thus called shall not after the applicable redemption date bear interest, be protected by the Indenture or be deemed to be outstanding under the provisions of the Indenture. The Trustee shall redeem, in the manner provided in the Indenture, such an aggregate principal amount of such Bonds at the principal amount thereof plus accrued interest to the redemption date and unpaid thereon and premium, if any, as will exhaust as nearly as practicable such funds. At the direction of the University, such funds may be invested in United States Government Obligations until needed for redemption payout. Notwithstanding the forgoing, so long as Bonds are subject to the book-entry only system of registration, such notice shall only be sent to the corresponding securities depository (which shall initially be DTC) and such notice may be sent by means of facsimile or any other means acceptable to the securities depository.

Special Obligations

The principal of, premium, if any, and interest on the Bonds shall be special and limited obligations of the Authority payable solely from amounts payable under the Loan Agreement (except for Unassigned Rights and except to the extent paid out of moneys attributable to Bond proceeds or the income from the temporary investment thereof and, under certain circumstances, proceeds from insurance and condemnation awards) and shall be a valid claim of the respective holders thereof only against the funds established under the Indenture and other moneys held by the Trustee for the benefit of the Bonds and the payments due or to become due upon or under the Loan Agreement (except for Unassigned Rights) all of which are assigned and pledged under the Indenture for the equal and ratable payment of the Bonds and shall be used for no other

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purpose than to pay the principal of, premium, if any, and interest on the Bonds, except as may be otherwise expressly authorized in the Indenture.

THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE BONDS DO NOT CONSTITUTE A DEBT OR LIABILITY OF THE STATE OR OF ANY AGENCY OR POLITICAL SUBDIVISION THEREOF, OTHER THAN A SPECIAL AND LIMITED OBLIGATION OF THE AUTHORITY WITHIN THE MEANING OF THE ACT, OR A PLEDGE OF THE FAITH AND CREDIT OF THE STATE OR ANY AGENCY OR POLITICAL SUBDIVISION THEREOF, BUT SHALL BE PAYABLE SOLELY FROM THE FUNDS PLEDGED THEREFOR IN ACCORDANCE WITH THIS BOND INDENTURE. THE ISSUANCE OF THE BONDS UNDER THE PROVISIONS OF THE ACT DOES NOT, DIRECTLY, INDIRECTLY OR CONTINGENTLY, OBLIGATE THE STATE OR ANY AGENCY OR POLITICAL SUBDIVISION THEREOF TO LEVY ANY FORM OF TAXATION FOR THE PAYMENT THEREOF OR TO MAKE ANY APPROPRIATION FOR THEIR PAYMENT AND THE BONDS AND THE INTEREST PAYABLE THEREON DO NOT NOW AND SHALL NEVER CONSTITUTE A DEBT OF THE STATE OR ANY AGENCY OR POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF THE CONSTITUTION OR THE STATUTES OF THE STATE AND DO NOT NOW AND SHALL NEVER CONSTITUTE A CHARGE AGAINST THE CREDIT OR TAXING POWER OF THE STATE OR ANY AGENCY OR POLITICAL SUBDIVISION THEREOF. THE AUTHORITY HAS NO TAXING POWER. NEITHER THE STATE NOR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF SHALL IN ANY EVENT BE LIABLE FOR THE PAYMENT OF THE PRINCIPAL OF, REDEMPTION PREMIUM, IF ANY, OR INTEREST ON THE BONDS OR FOR THE PERFORMANCE OF ANY PLEDGE, OBLIGATION OR AGREEMENT OF ANY KIND WHATSOEVER WHICH MAY BE UNDERTAKEN BY THE AUTHORITY. NO BREACH BY THE AUTHORITY OF ANY SUCH PLEDGE, OBLIGATION OR AGREEMENT MAY IMPOSE ANY LIABILITY, PECUNIARY OR OTHERWISE, UPON THE STATE OR ANY AGENCY OR POLITICAL SUBDIVISION THEREOF OR ANY CHARGE UPON ITS OR THEIR GENERAL CREDIT OR AGAINST ITS OR THEIR TAXING POWER.

BOOK-ENTRY ONLY SYSTEM

The information in this section concerning The Depository Trust University, New York, New York ("DTC"), and DTC's book-entry system has been obtained from sources that the Authority believes to be reliable, but the Authority takes 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 Bond certificate will be issued for each maturity of the Bonds and will be deposited with DTC.

DTC, the world's largest securities depository, is a limited-purpose trust University 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

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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 University 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 (the "Indirect Participants"). DTC has Standard & Poor's highest rating: "AAA." The DTC rules applicable to its Direct and Indirect Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.

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 (each a "Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant (collectively, "Participants") 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 the Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

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

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Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Registrar and request that copies of the notices be provided directly to them.

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

Principal and interest payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the Authority or the Paying Agent on a payment date in accordance with their respective holdings shown on DTC's records. Payments by DTC Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such DTC Participant and not of DTC nor its nominee, the Trustee, the Registrar, the Paying Agent, or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest on the Bonds, as applicable, to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

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

The Authority may decide to discontinue use of the system of book-entry-only transfers through DTC upon compliance with any applicable DTC rules and procedures. In that event, Bond certificates will be printed and delivered to DTC.

The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the Authority believes to be reliable, by the Authority takes no responsibility for the accuracy thereof.

The Authority, the University, and the Paying Agent and Registrar do not have any responsibility or obligation to the Direct Participants, Indirect Participants or the Beneficial Owners with respect to (a) the accuracy of any records maintained by DTC or any Direct Participant or Indirect Participant; (b) the payment by DTC or any Direct Participant or Indirect Participant of any amount due to any Beneficial Owner in respect of the principal of and interest on the Bonds; (c) the delivery or timeliness of delivery by DTC or any Direct Participant or Indirect Participant of any notice to any Beneficial Owner, which is required or permitted under

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the terms of the Indenture to be given to Bondholders; or (d) any consent given or other action taken by DTC, or its nominee, Cede & Co., as Bondholders.

THE ABOVE INFORMATION CONCERNING DTC AND DTC'S BOOK-ENTRY SYSTEM HAS BEEN OBTAINED FROM SOURCES THAT THE AUTHORITY AND THE UNDERWRITER BELIEVE TO BE RELIABLE, BUT THE AUTHORITY AND THE UNDERWRITER TAKE NO RESPONSIBILITY FOR THE ACCURACY THEREOF. NEITHER THE AUTHORITY, THE TRUSTEE NOR THE REMARKETING AGENT WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO DTC PARTICIPANTS, BENEFICIAL OWNERS OR OTHER NOMINEES OF SUCH BENEFICIAL OWNERS FOR (i) SENDING TRANSACTION STATEMENTS; (ii) MAINTAINING, SUPERVISING OR REVIEWING, OR THE ACCURACY OF, ANY RECORDS MAINTAINED BY DTC OR ANY DTC PARTICIPANT OR OTHER NOMINEES OF SUCH BENEFICIAL OWNERS; (iii) PAYMENT OR THE TIMELINESS OF PAYMENT BY DTC TO ANY DTC PARTICIPANT, OR BY ANY DTC PARTICIPANT OR OTHER NOMINEES OF BENEFICIAL OWNERS TO ANY BENEFICIAL OWNER, OF ANY AMOUNT DUE IN RESPECT OF THE PRINCIPAL OF OR REDEMPTION PREMIUM, IF ANY, OR INTEREST ON BOOK-ENTRY BONDS; (iv) DELIVERY OR TIMELY DELIVERY BY DTC TO ANY DTC PARTICIPANT, OR BY ANY DTC PARTICIPANT OR OTHER NOMINEES OF BENEFICIAL OWNERS TO ANY BENEFICIAL OWNERS, OF ANY NOTICE (INCLUDING NOTICE OF REDEMPTION) OR OTHER COMMUNICATION WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE INDENTURE TO BE GIVEN TO HOLDERS OR OWNERS OF BOOK-ENTRY BONDS; (v) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF BOOK-ENTRY BONDS, OR (vi) ANY ACTION TAKEN BY DTC OR ITS NOMINEE AS THE REGISTERED OWNER OF THE BOOK-ENTRY BONDS.

So long as Cede & Co. is the registered owner of the Bonds, as nominee for DTC, reference herein to the registered owners of the Bonds (other than under the heading "TAX EXEMPTION" herein) shall mean Cede & Co., as aforesaid, and shall not mean the Beneficial Owners of the Bonds.


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SECURITY FOR THE BONDS

Security for Payment of the Bonds

As security for the payment of the Bonds, the Authority has assigned and pledged to the Trustee all right, title and interest of the Authority in and to the Trust Estate. This pledge and assignment will convey a first priority security interest in the Trust Estate. The funds and accounts under the Indenture (referred to as the “Bond Indenture Funds”) include the following: Revenue Fund. The Revenue Fund will be established to collect loan payments by the University. All payments under the Loan Agreement with respect to debt service on the Bonds will be deposited into the Revenue Fund and held therein until disbursed as provided in the Indenture. Amounts in the Revenue Fund will be used to make payments to the Interest Fund and the Bond Sinking Fund to pay debt service on the Bonds. Interest Fund. The Interest Fund will be established to pay interest on the bonds as it becomes due and payable, except for income on amounts in this fund which is to be transferred to the Rebate Fund. Bond Sinking Fund. The Bond Sinking Fund will be established to pay principal of and to mandatorily redeem Bonds, except for income on amounts in this fund which is to be transferred to the Rebate Fund. Debt Service Reserve Fund. The Debt Service Reserve Fund will be fully funded at closing with proceeds of the Bonds. Money in this fund may be used to pay debt service on the Bonds when money in the Interest Fund and Bond Sinking Fund is not sufficient for that purpose. Redemption Fund. Money for the redemption, prepayment or purchase and cancellation of Bonds will be deposited in the Redemption Fund. Amounts on deposit in the Redemption Fund shall be used first to make up any deficiencies in the Interest Fund and the Bond Sinking Fund and second for the redemption or purchase of Bonds in accordance with the Indenture provisions for redemption and purchase. Expense Fund. The Expense Fund will be established to disburse Bond proceeds for the payment of the costs of issuance of the Bonds. Money may be withdrawn from the Expense Fund for this purpose upon requisition of the University. Project Fund. The Project Fund will be established to disburse Bond proceeds for payment of the costs of the Project. Money may be withdrawn from the Project Fund upon requisition of the University. Although the Indenture creates a security interest in the Bond Indenture Funds, money in the Bond Indenture Funds may be disbursed for the designated purpose of each Bond Indenture Fund. See APPENDIX C for a further description of each Bond Indenture Fund and the terms and conditions for use of money in the Bond Indenture Funds.

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A Rebate Fund will be established pursuant to the Tax Exemption Agreement to be used to pay arbitrage rebate liability if and when due. The Rebate Fund is not part of the Trust Estate. Debt Service Reserve Fund

The Debt Service Reserve Fund will be fully funded at closing with proceeds of the Bonds. The required balance in the Debt Service Reserve Fund is an amount (referred to in the Indenture as the “Reserve Requirement”) equal to the lesser of (a) 10% of the original principal amount of the Bonds, (b) 125% of the average annual debt service on the Bonds Outstanding, or (c) the maximum annual debt service on the Bonds Outstanding. The Reserve Requirement may decrease as Bonds are retired.

THE LOAN AGREEMENT

The Loan Agreement requires that the University make loan payments to the Trustee for deposit into the Revenue Fund in amounts sufficient to pay the principal of, premium, if any, and interest on the Bonds when due, whether as regularly scheduled interest or principal payments, at maturity, by mandatory or optional redemption, acceleration or otherwise, and to make certain other payments. The University will receive credits against amounts due as loan payments for certain amounts available from other sources including certain earnings on funds held by the Trustee. Loan payments and other amounts payable to the Authority under the Loan Agreement (except for the Unassigned Rights) are pledged under the Indenture for the payment of principal, redemption premium, if any, and interest on the Bonds, and the rights of the Authority in and to such payments (except for the Unassigned Rights) are assigned to the Trustee, to secure payments on the Bonds. The University has consented to such assignment and agrees in the Loan Agreement that the trustee may enforce any of the rights, privileges and remedies of the Authority under the Loan Agreement (other than the Unassigned Rights). Limitations on Indebtedness

The University has covenanted and agreed in the Loan Agreement that it will not incur any Additional Indebtedness if, after giving effect to all other Indebtedness incurred by the University, such Indebtedness could not be incurred pursuant to paragraphs (a) through (j) set forth below. Any Indebtedness may be incurred only in the manner and pursuant to the terms set forth therein.

(a) Long-Term Indebtedness may be incurred if prior to incurrence of the Long-Term Indebtedness there is delivered to the Trustee:

(i) An Officer's Certificate providing a general description of such Indebtedness and certifying that the Long-Term Debt Service Coverage Ratio (excluding Subordinated Debt) for the most recent period of 12 full consecutive calendar months preceding the date of delivery of the Officer’s Certificate for which there are audited financial statements available, taking all Long-Term Indebtedness (excluding Subordinated Debt) incurred after such period and the proposed Long-Term Indebtedness

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into account as if such Long-Term Indebtedness had been incurred at the beginning of such period, is not less than 1.25 plus 1.00 on Subordinated Debt; or

(ii) (A) an Officer's Certificate demonstrating that the Long-Term Debt Service Coverage Ratio (excluding Subordinated Debt) for the period mentioned in subparagraph (a) (i) above, excluding the proposed Long-Term Indebtedness, is at least 1.25 and (B) a certificate of a Consultant (or, in the case of a Long-Term Debt Service Coverage Ratio (excluding Subordinated Debt) greater than 1.50, an Officer's Certificate) demonstrating that the forecasted Long-Term Debt Service Coverage Ratio is not less than 1.25 for (x) in the case of Long-Term Indebtedness (other than a Guaranty) to finance capital improvements, each of the two full Fiscal Years succeeding the date on which such capital improvements are forecasted to be in operation or (y) in the case of Long-Term Indebtedness not financing capital improvements, or in the case of a Guaranty, each of the two full Fiscal Years succeeding the date on which the Indebtedness is incurred, as shown by pro forma financial statements for the University for each such period, accompanied by a statement of the relevant assumptions upon which such pro forma financial statements are based; and (C) in each case, plus 1.00 on Subordinated Debt; or

(iii) written confirmation from the Rating Agency or Agencies providing a rating on the Bonds that such rating(s) are confirmed after taking the proposed Long-Term Indebtedness into consideration.

(b) In addition to, and not in lieu of, Long-Term Indebtedness permitted to be incurred in paragraph (a) above, Long-Term Indebtedness may be incurred provided that immediately after giving effect to any Long-Term Indebtedness incurred pursuant to this paragraph (b) and Short-Term Indebtedness, the aggregate of Long-Term Indebtedness incurred pursuant to this paragraph (b) shall not exceed 50% of Total Revenues as reflected in the most recent audited financial statements of the University; provided, further, that the aggregate of the principal amount of Indebtedness Outstanding pursuant to this paragraph (b) and paragraph (d) below shall not at any time exceed 50% of Total Revenues as reflected in the most recent audited financial statements of the University.

(c) Long-Term Indebtedness incurred for the purpose of refunding any Outstanding Long-Term Indebtedness if the Maximum Annual Debt Service will not increase by more than 10% after the incurrence of such proposed refunding Long-Term Indebtedness and after giving effect to the disposition of the proceeds thereof, and in connection with the issuance of such Long-Term Indebtedness the University receives an Opinion of Counsel stating that upon the incurrence of such proposed Long-Term Indebtedness and application of the proceeds thereof, the Outstanding Long-Term Indebtedness to be refunded thereby will no longer be Outstanding;

(d) (i) Short-Term Indebtedness may be incurred subject to the limitation that the aggregate of all Short-Term Indebtedness shall not at any time exceed 20% of Total Revenues as reflected in the most recent audited financial statements of the University; provided, that the aggregate of the principal amount of Indebtedness Outstanding under this paragraph (d) (i) and paragraph (b) above shall not at any time exceed 50% of Total Revenues as reflected in the most recent audited financial statements of the University.

(ii) Short-Term Indebtedness may also be incurred if the tests set forth in paragraph (a) above are met with respect to the incurrence of such Short-Term Indebtedness.

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For the purpose of calculating compliance with the tests set forth in paragraph (a)(i) or (a)(ii) above, the Short-Term Indebtedness to be incurred pursuant to this sub-paragraph (d)(ii) shall be treated as long-term Indebtedness. For the purpose of this paragraph (d) a Guaranty of Subordinated Indebtedness shall be treated in the manner described in the Loan Agreement.

(e) Non-Recourse Indebtedness may be incurred without limit.

(f) Completion Indebtedness may be incurred in an amount not exceeding 20% of the principal amount of the Indebtedness issued to finance a project; provided, however, that prior to the incurrence of Completion Indebtedness, the University shall (i) obtain a certificate of an architect estimating the costs of completing the facilities for which Completion Indebtedness is to be incurred, and (ii) make a determination that the amount of Completion Indebtedness to be incurred will be sufficient, together with other funds, if applicable, to complete construction of the facilities in respect of which Completion Indebtedness is to be incurred. Completion Indebtedness may be incurred in an amount exceeding 20% of the principal amount of the Indebtedness issued to finance a project if, in addition to the above-described requirements, the requirements of paragraph (a) above are met.

(g) Subordinated Debt may be incurred if taking the proposed Subordinated Debt into consideration, the University is able to meet one of the tests set forth in paragraph (a) for the incurrence of $1.00 of additional Long-Term Indebtedness.

(h) Indebtedness under a Credit Facility (including a Guaranty of Indebtedness under a Credit facility) may be incurred without limit.

(i) Derivative Indebtedness may be incurred without limit.

(j) Indebtedness secured by accounts receivable may be incurred in any amount not exceeding 10% of the aggregate sale price of such accounts receivable.

Limitations on Creation of Liens; Permitted Liens.

(a) The University has agreed in the Loan Agreement that it will not create or suffer to be created or permit the existence of any mortgage, deed or trust or pledge of, security interest in or encumbrance (a "Lien") on property now owned or hereafter acquired by it, other than Permitted Liens.

(b) Permitted Liens shall consist of the following:

(i) Liens arising by reason of good faith deposits with the University in connection with leases of real estate, bids or contracts (other than contracts for the payment of money), deposits by the University 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;

(ii) Any Lien arising by reason of deposits with, or the giving of any form of security to, any governmental agency or anybody 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 the University to maintain self-insurance or to participate in any funds established to cover any insurance risks or in connection with

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workers' compensation, unemployment insurance, pension or profit sharing plans or other social security, or to share in the privileges or benefits required for companies participating in such arrangements;

(iii) Any judgment lien against the University so long as such judgment is being contested in good faith and execution thereon is stayed;

(iv) (A) 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 of the University; (B) any liens on any property of the University for taxes, assessments, levies, fees, water and sewer, rents, and other governmental and similar charges and any liens of mechanics, materialmen, laborers, suppliers or vendors for work or services performed or materials furnished in connection with such property, which are not due and payable or which are not delinquent or which, or the amount or validity of which, are being contested and execution thereon is stayed or, with respect to liens of mechanics, materialmen, laborers, suppliers or vendors, have been due for less than 90 days; (C) 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 which do not materially impair the use of such property or materially and adversely affect the value thereof; (D) to the extent that it affects title to any property of the University, this Loan Agreement; and (E) landlord's liens.

(v) Any Lien which is existing on the date of authentication and delivery of the Bonds; provided that no such Lien may be increased, extended, renewed or modified to apply to secure Additional Indebtedness, unless such Lien as so extended, renewed or modified otherwise qualifies as a Permitted Lien pursuant to the Indenture;

(vi) Any Lien securing Non-Recourse Indebtedness permitted by the Loan Agreement as described in paragraph (e) under “THE LOAN AGREEMENT- Limitations on Indebtedness” herein;

(vii) Any Lien on property acquired by the University if the Indebtedness secured by the Lien is Additional Indebtedness permitted under the provisions of the Loan Agreement described in “THE LOAN AGREEMENT-Limitations on Indebtedness” herein;

(viii) Any Lien on property of the University (other than accounts receivable) in an aggregate amount not exceeding 15% of the book value of all property of the University (other than accounts receivable), determined in accordance with generally accepted accounting principles;

(ix) Any Lien in favor of a creditor or a trustee on the proceeds of Indebtedness and any earnings thereon prior to the application of such proceeds and such earnings;

(x) Any Lien securing all Indebtedness on a parity basis;

(xi) Liens on moneys deposited by students or others with the University as security for or as prepayment for the cost of educational or other services; and

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(xii) Liens on property received by the University through gifts, grants or bequests, such Liens being due to restrictions on such gifts, grants or bequests of property or the income thereon.

See APPENDIX C for the full text of the Loan Agreement.

LONG TERM INDEBTEDNESS

The following table sets forth the total long-term indebtedness of the University for

Fiscal Years 2006 to 2010.

FY 2006

FY 2007

FY 2008

FY 2009

FY 2010

Post Series 2010

Total unrestricted revenue, gains, and support 62,189,343 67,239,597 57,818,924 69,352,617 67,677,832 plus interest earnings on restricted funds 423,267 428,484 683,191 679,433 438,391 plus losses (gains) of extinguishment of indebtedness or capital assets 0 0 0 0 0 plus unrealized losses (gains) on investments (468,034) (1,143,726) 3,498,412 2,549,767 (1,677,027) plus non-recurring, unanticipated losses (gains) 0 0 0 0 0 plus unrealized losses (gains) or interest rate swaps (983,331) 150,208 923,019 1,194,971 817,916 minus earnings from the investment of Escrowed Interest 0 0 0 0 0 Revenues 61,161,245 66,674,563 62,923,546 73,776,788 67,257,112 Total expenses 50,060,341 54,839,892 57,628,416 63,393,489 60,938,637 minus depreciation and amortization expense (2,564,957) (2,982,094) (3,175,159) (3,032,819) (3,218,407) minus interest expense (1,367,827) (1,442,995) (1,353,166) (1,390,696) (1,252.018) Expenses 46,127,557 50,414,803 53,100,091 58,969,974 56,468,212 _________ _________ _________ _________ ________ _________ Excess revenues over expenses 15,033,688 16,259,760 9,823,455 14,806,814 10,788,900 10,788,900 Maximum annual debt service 1,992,751 1,992,751 1,927,732 2,456,498 2,388,776 2,786,106 Long-term debt service charge 7.5 8.2 5.1 6.0 4.5 3.9 Total long-term indebtedness 29,014,304 28,362,126 27,371,841 26,320,572 25,127,147 30,582,147 Total revenues 61,161,245 66,674,563 62,923,546 73,776,788 67,257,112 67,257,112 Total long-term indebtedness as a % of total revenues 47.4% 42.5% 43.5% 35.7% 37.4% 45.5%

INVESTMENT RISK FACTORS

University’s Obligations under Loan Agreement Unsecured

The University’s obligations under the Loan Agreement are general obligations of the University. The obligations of the University shall be a general unsecured obligation of the University. There are no limitations on the University’s use or investment of its endowment funds or other property that are designed for the protection of the Bondholders. In addition, except as described herein, the University is not subject to limitation or restriction regarding its ability to incur additional debt or encumber its property. Upon any defaults by the University on its obligations under the Loan Agreement, the Bondholders would (except to the extent of Bond proceeds and investment income there from or other assets, if any, held as part of the Trust Estate by the Trustee) be unsecured creditors. (See herein, “SECURITY FOR THE BONDS – The Loan Agreement.”)

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Enforceability

The practical realization of any rights upon any default under the Loan Agreement or under the Indenture will depend upon the exercise of various remedies specified in such instruments, as restricted by federal and state laws. The remedies available upon an Event of Default under the Loan Agreement or the Indenture will, in many respects, be dependent upon judicial action, which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, including specifically Title 11 of the United States Code, the remedies specified by the federal bankruptcy code or in the Loan Agreement and the Indenture may not be readily available or may be limited. The various legal opinions to be delivered with the Loan Agreement, the Indenture and the Bonds will be qualified as to the enforceability of the various legal instruments by reference to limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the right of creditors. Early Redemption

Purchasers of Bonds, including those who purchase Bonds at a price in excess of their principal amount or who hold such a Bond trading at a price in excess of par, should consider the fact that the Bonds maturing on or after July 1, 2021, are subject to optional redemption at a redemption price equal to their principal amount plus accrued interest in the event such Bonds are redeemed prior to maturity. See herein “DESCRIPTION OF THE BONDS – Redemption Prior to Maturity.” Tax-Exempt Status of Bonds

The exemption of interest on the Bonds from federal income taxes is dependent upon continuing compliance by the Authority and the University with the requirements of the Code. If there is a failure to comply, interest on the Bonds could become includable for federal income tax purposes in the gross incomes of the owners thereof, which inclusion in gross income could be retroactive the date of issuance of the Bonds. Although the Bonds may be redeemed if necessary to prevent interest on the Bonds from becoming taxable, a loss of the exclusion of the interest on the Bonds from gross income for federal income tax purposes does not constitute a default under the Indenture, unless such loss of tax-exempt status is a result of a failure to perform a covenant, condition or agreement under the Tax Exemption Agreement, and acceleration upon a loss of tax-exempt status is not required under the Indenture. Consequently, the Trustee may not have remedies available to it to mitigate the adverse economic effects to the Owners of the Bonds resulting from the interest on the Bonds becoming subject to federal income taxation. If interest on the Bonds becomes so includable in the owners’ gross incomes, the effect will be to reduce the yield on an owner’s Bonds as a result of the federal and, in certain cases, state and local, income tax liability incurred in connection with the receipt of interest on the Bonds. There is no provision for any adjustment to the interest rate borne by the Bonds in the event of any such loss of tax exempt status, nor is any provision made for the payment of any penalties or premium in such event. Such loss of tax exempt status can be expected to have a material adverse affect on the market price of the Bonds. Potential purchasers of the Bonds should note that there are no provisions for an early redemption of, or interest rate adjustment for, Bonds if interest on the Bonds becomes taxable.

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Secondary Market and Prices

It has been the practice of the Underwriter to maintain a secondary market in municipal securities it sells, and the Underwriter currently intends to engage in secondary market trading of the Bonds, subject to applicable securities laws. The Underwriter, however, is not obligated to engage in secondary trading or to repurchase any of the Bonds at the request of the owners thereof. Because of general market conditions or because of adverse history or economic prospects connected with a particular issue or Authority, secondary marketing activity in connection with a particular issue may be suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price. THERE CAN BE NO GUARANTEE THAT THERE WILL BE A SECONDARY MARKET FOR THE BONDS, OR IF A SECONDARY MARKET EXISTS, THAT THE BONDS CAN BE SOLD FOR ANY PARTICULAR PRICE. Competition

The University competes for students generally with Universities located throughout the United States, many of which receive significant support from state governments and therefore can afford to charge lower tuition rates than the University. Other educational facilities may in the future expand their programs in competition with the programs provided by the University. Increased competition from other educational facilities or a decrease to the student population interested in pursuing higher education could have a material adverse economic impact on the University. In addition, future revenues and expenses of the University will be subject to conditions which may differ from current conditions to an extent that cannot be determined at this time. Accreditation

The University is accredited by the Southern Association of Universities and Schools (“SACS”). In granting a facility’s accreditation and renewing the accreditation each ten years, SACS considers, among other things, the physical buildings and equipment, the qualifications of the administrative personnel and teaching staffs and the quality of the educational programs and courses offered. A failure on the part of the University to maintain its accreditation may result in a reduced number of students attending the University and a reduction in revenues and could have a material adverse affect on the financial condition of the University. Investments

The University has significant holdings in a broad range of investments. Market fluctuations may affect the value of those investments and those fluctuations may be and historically have been at times material. For a discussion of the University’s investments, see “APPENDIX A – BETHUNE-COOKMAN UNIVERSITY GENERAL INFORMATION – Investment Policy”. Facilities

None of the facilities of the University are pledged as security for the Bonds. Therefore, in the event of default and acceleration of the Bonds, bondholders would have no rights to any facilities of the University.

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Impact of Market Turmoil

In recent years, the economies of the United States and other countries have experienced severe disruption, prompting a number of banks and other financial institutions to seek additional capital, including capital provided through the federal government, to merge, and, in some cases, to cease operations. These events collectively have led to significant reductions in lending capacity and extension of credit, erosion of investor confidence in the financial sector, and historically aberrant fluctuations in interest rates. This disruption of the credit and financial markets has led to volatility in the securities markets, significant losses in investment portfolios, increased business failures and consumer and business bankruptcies, and is a major cause of the current economic recession. In 2008 and 2009, federal legislation was enacted and regulatory and other initiatives were implemented by agencies of the Federal government and the Federal Reserve Board with the objective of stabilizing the financial markets by enhancing liquidity, providing additional capital to the financial sector and improving the performance and efficiency of credit markets. Other legislation is pending or under active consideration by Congress, and additional regulatory action is being considered or implemented by various Federal agencies and the Federal Reserve Board and foreign governments, all of which are intended to continue and strengthen efforts to restore the domestic and global credit markets. It is unclear whether these legislative, regulatory and other governmental actions will have the positive effect that is intended. Severe Weather

The University is located in a region susceptible to severe weather events, including hurricanes. The occurrence of hurricanes or other major natural disasters may damage facilities, interrupt utility service, or otherwise negatively affect the operations of the University and its ability to produce revenue. Hurricanes often occur in the peak season which corresponds to the opening of each school year. Further, repairs may be delayed due to demand for contractors and building supplies following a major storm and such high demand could cause price increases exceeding available insurance. An active hurricane season could increase deductibles associated with storm damage. The University is located within blocks of the eastern Florida coastline and as such a hurricane or severe weather could have a material adverse impact on the operations of the University. Other Risk Factors Regarding the University

In the future, the following factors, among many others, may adversely affect the operation of the University to an extent that cannot be determined at this time:

(1) Changes in the demand for higher education in general or for programs offered by the University in particular.

(2) A decline in the demographic pool of candidates who may elect to attend the University.

(3) Lack of demand for on-campus housing at the University.

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(4) Employee strikes and other adverse labor actions that could result in a substantial reduction in revenues without corresponding decreases in costs.

(5) Increased costs and decreased availability of public liability insurance. (6) Cost and availability of energy. (7) High interest rates which could prevent borrowing for needed capital

expenditures. (8) A decrease in student loan funds or other aid that permits many students the

opportunity to pursue higher education. (9) An increase in the costs of health care benefits, retirement plan or other benefit

packages offered by the University to its employees. (10) A significant decrease in the value of the University’s investments caused by

market or other external factors. (11) Reduction in funding support from donors or other external sources. (12) Elimination of external funding for research.

LITIGATION

There is no pending or, to the knowledge of the Authority or the University, any threatened litigation against the Authority or the University which in any way questions or affects the validity of the Bonds, or any proceedings or transactions relating to their issuance, sale or delivery, or the adoption of the Indenture or which may materially adversely affect the imposition, collection and pledge of the revenues pledged for the payment of the Bonds.

THE UNDERWRITER

Morgan Keegan & Company, Inc., (the "Underwriter"), has agreed to purchase the Bonds pursuant to a Bond Purchase Agreement entered into between the Authority, the University and the Underwriter. The Underwriter has agreed to purchase the Bonds at a purchase price of $23,664,666.37 representing the par amount of the Bonds less an underwriting discount of $181,662.13 plus a net original issue premium of $21,328.50. The Bond Purchase Agreement provides that the Underwriter will purchase all of the Bonds if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in the Bond Purchase Agreement. The Underwriter intends to offer the Bonds to the public initially at the offering price shown on the cover page hereof, which price may subsequently change without any requirement of prior notice. The Underwriter reserves the right to join with other dealers and underwriters in offering the Bonds to the public. The Underwriter may offer and sell the Bonds to certain dealers at prices lower than the public offering.

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RATINGS

The Bonds have been assigned long-term ratings of "A+" with a stable outlook by Fitch and "A-" with a stable outlook by S&P.

Such ratings express only the views of the rating agencies. An explanation of the significance of such ratings may be obtained from the rating agencies furnishing the same. There is no assurance that such ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by the rating agencies if, in the judgment of the rating agencies, circumstances so warrant.

TAX MATTERS

General

Under existing law, the tax status of the Bonds will include the following characteristics: Federal Tax-Exempt Status.

Interest on the Bonds will be excluded from gross income for federal income tax purposes if the Authority and the Borrower comply with all requirements of the Internal Revenue Code of 1986 (the "Internal Revenue Code") that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be and remain excluded from gross income. Failure to comply with such requirements could cause the interest on the Bonds to be included in gross income, retroactive to the date of issuance of the Bonds. The Authority and the Borrower have covenanted to comply with all such requirements.

Federal Tax Preference Treatment.

Interest on the Bonds will not be an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, it should be noted that with respect to corporations, such interest is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on such corporations.

Qualified Tax-Exempt Obligations.

The University has designated the Bonds "qualified tax-exempt obligations" for purposes of Section 265(b) of the Code.

State Tax-Exempt Status.

Interest on the Bonds will be exempt from taxation under the laws of the State of Florida, except as to estate taxes and taxes imposed by Chapter 220, Florida Statutes, as amended, and interest, income or profits on debt obligations owned by corporations, as defined in said Chapter 220. See "INVESTMENT RISK FACTORS-Tax-Exempt Status of Bonds" for a discussion of certain risk factors relating to investment in the Bonds.

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Opinion of Bond Counsel

Nabors, Giblin & Nickerson, P.A., Tampa, Florida, has served as bond counsel with respect to the issuance of the Bonds. The form of opinion of bond counsel will address the tax status summarized above and is attached to this Official Statement as APPENDIX D. The opinion should be read in its entirety for a complete understanding of the scope of the opinion and the conclusions expressed. Collateral Tax Consequences

Prospective purchasers of the Bonds should be aware that ownership of the Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, individual recipients of Social Security or Railroad Retirement benefits, certain S corporations with "excess net passive income", foreign corporations subject to a branch profits tax, life insurance companies, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry the Bonds. Bond Counsel will not express any opinion as to such collateral tax consequences. Prospective purchasers of the Bonds should consult their tax advisors as to collateral federal income tax consequences.

PURCHASE, OWNERSHIP, SALE OR DISPOSITION OF THE BONDS AND THE RECEIPT OR ACCRUAL OF THE INTEREST THEREON MAY HAVE ADVERSE FEDERAL TAX CONSEQUENCES FOR CERTAIN INDIVIDUAL OR CORPORATE BONDHOLDERS, INCLUDING, BUT NOT LIMITED TO, THE CONSEQUENCES DESCRIBED ABOVE. PROSPECTIVE BONDHOLDERS SHOULD CONSULT WITH THEIR TAX SPECIALISTS FOR INFORMATION IN THAT REGARD. Other Tax Matters

Interest on the Bonds may be subject to state or local income taxation under applicable state or local laws in other jurisdictions. Purchasers of the Bonds should consult their tax advisors as to the income tax status of interest on the Bonds in their particular state or local jurisdictions.

During recent years legislative proposals have been introduced in Congress, and in some cases enacted, that altered certain federal tax consequences resulting from the ownership of obligations that are similar to the Bonds. In some cases these proposals have contained provisions that altered these consequences on a retroactive basis. Such alteration of federal tax consequences may have affected the market value of obligations similar to the Bonds. From time to time, legislative proposals are pending which could have an effect on both the federal tax consequences resulting from ownership of the Bonds and their market value. No assurance can be given that additional legislative proposals will not be introduced or enacted that would or might apply to, or have an adverse effect upon, the Bonds. Tax Treatment of Original Issue Discount

Bond Counsel is further of the opinion that the difference between the principal amount of the Bonds maturing on July 1, 2011 and 2014 through 2024 (collectively, the "Discount Bonds") and the initial offering price to the public (excluding bond houses, brokers or similar

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persons or organizations acting in the capacity of underwriters or wholesalers) at which price a substantial amount of such Discount Bonds of the same maturity was sold constitutes original issue discount which is excluded from gross income for Federal income tax purposes to the same extent as interest on the Bonds. Further, such original issue discount accrues actuarially on a constant interest rate basis over the term of each Discount Bond and the basis of each Discount Bond acquired at such initial offering price by an initial purchaser thereof will be increased by the amount of such accrued original issue discount. The accrual of original issue discount may be taken into account as an increase in the amount of tax-exempt income for purposes of determining various other tax consequences of owning the Discount Bonds, even though there will not be a corresponding cash payment. Owners of the Discount Bonds are advised that they should consult with their own advisors with respect to the state and local tax consequences of owning such Discount Bonds. Bond Premium

The difference between the principal amount of the Bonds maturing on July 1, 2012, 2013, 2025 and 2032 (collectively, the "Premium Bonds") and the initial offering price to the public (excluding bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers) at which price a substantial amount of such Premium Bonds of the same maturity was sold constitutes to an initial purchaser amortizable bond premium which is not deductible from gross income for Federal income tax purposes. The amount of amortizable bond premium for a taxable year is determined actuarially on a constant interest rate basis over the term of each Premium Bond (or, in the case of a Premium Bond callable prior to maturity, the amortization period and yield must be determined on the basis of the earliest call date that results in the lowest yield on the Premium Bond). For purposes of determining gain or loss on the sale or other disposition of a Premium Bond, an initial purchaser who acquires such obligation in the initial offering to the public at the initial offering price is required to decrease such purchaser’s adjusted basis in such Premium Bond annually by the amount of amortizable bond premium for the taxable year. The amortization of bond premium may be taken into account as a reduction in the amount of tax-exempt income for purposes of determining various other tax consequences of owning such Bonds. Owners of the Premium Bonds are advised that they should consult with their own advisors with respect to the state and local tax consequences of owning such Premium Bonds.

LEGAL MATTERS

Nabors, Giblin & Nickerson, P.A., Tampa, Florida, has served as bond counsel with respect to the issuance of the Bonds. Bond counsel will render an opinion with respect to the Bonds in substantially the form attached as APPENDIX D. The opinion of bond counsel should be read in its entirety for a complete understanding of the scope of the opinion and the conclusions expressed. Delivery of the Bonds is contingent upon the delivery of the opinion of bond counsel.

Bond counsel has not been engaged nor undertaken to review (a) the accuracy, completeness or sufficiency of this Official Statement or any other offering material related to the Bonds, except as may be provided in a supplemental opinion of Bond Counsel to the Underwriter and the Authority, upon which only they may rely, and which will relate only to certain information contained in this Official Statement regarding (i) the terms of the Bonds and

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the Indenture, to the extent those statements purport to summarize the terms of the Bonds and the Indenture, (ii) the security and source of payment for the Bonds, and (iii) the tax-exempt status of the Bonds.

In connection with the issuance of the Bonds, GrayRobinson, P.A., Lakeland, Florida, has served as counsel to the Authority, Pamela Browne, Esquire, has served as counsel to the Borrower, and Marchena and Graham, P.A., Orlando, Florida has served as counsel to the Underwriter.

The legal opinions of Bond Counsel, counsel to the Borrower, counsel to the Authority, and counsel to the Underwriter are based on existing law, which is subject to change. Such legal opinions are further based on factual representations made to such counsel as of the date thereof. Bond Counsel, counsel to the Borrower, counsel to the Authority, and counsel to the Underwriter assume no duty to update or supplement their respective opinions to reflect any facts or circumstances, including changes in law, which may thereafter occur or become effective.

The legal opinions to be delivered concurrently with the delivery of the Bonds express the professional judgment of the attorneys rendering the opinions regarding 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.

FINANCIAL ADVISOR

Dunlap & Associates, Inc., Winter Park, Florida, serves as financial advisor to the University. Although the Financial Advisor assisted the University in the preparation of this Official Statement, and in other matters relating to the planning, structuring and issuance of the Bonds and provided other advice, the Financial Advisor is not obligated to undertake and has not undertaken to make an independent verification of the accuracy, completeness or fairness of the information or statements contained in this Official Statement or the appendices hereto. The Financial Advisor did not engage in any underwriting activities with regard to the sale of the Bonds.


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CONTINUNING DISCLOSURE

The University has covenanted for the benefit of bondholders to provide certain financial information and operating data relating to the University and the Bonds in each year (the "Annual Report"), and to provide notices of the occurrence of certain enumerated material events. Such covenant shall only apply so long as the Bonds remain outstanding under the Indenture. The covenant shall also cease upon the termination of the continuing disclosure requirements of S.E.C. Rule 15c2-12(b)(5) (the "Rule") by legislative, judicial or administrative action. The Annual Report will be filed by the University as required in connection with the implementation of the Municipal Securities Rulemaking Board's new Electronic Municipal Market Access System ("EMMA"), as contemplated by Securities and Exchange Commission Release Number 34-59062 (dated December 5, 2008).

The specific nature of the information to be contained in the Annual Report and the notices of material events are described in APPENDIX E – "FORM OF CONTINUING DISCLOSURE COMMITMENT," which shall be executed by the University at the time of issuance of the Bonds. These covenants have been made in order to assist the Underwriters in complying with the Rule. A default under any of such covenants does not constitute an event of default under the Indenture.

MISCELLANEOUS

The Bonds are intended to be exempt securities under the Securities Act of 1933, as

amended (the "Securities Act"), and the offer, sale and delivery of the Bonds do not require registration under the Securities Act or qualification of the Indenture under the Trust Indenture Act of 1939, as amended. During the course of the transaction and prior to the sale of the Bonds, prospective purchasers or beneficial ownership interest in the Bonds may ask questions of and receive answers from the Underwriter concerning the terms and conditions of the offering and any additional information necessary to verify the accuracy of the information furnished, in each case to the extent the Underwriter possesses such information or can acquire it without unreasonable efforts or expense. Any request for information or for copies of documents may be directed to Morgan Keegan & Company, Inc. 515 W. Morse Boulevard, Winter Park, Florida 322789, Attention: Jon E. Eichelberger, Managing Director.

There are appended to this Official Statement the Bethune-Cookman University General Information (APPENDIX A), the Audited Financial Statements and Report of the Independent Auditors Thereon for the Fiscal Years Ended June 30, 2009 and 2010 (APPENDIX B), the Indenture and Loan Agreement (APPENDIX C), the Form Of Opinion Of Bond Counsel (APPENDIX D), the Form of Continuing Disclosure Commitment (APPENDIX E). Such Appendices are integral parts of this Official Statement and should be read together with all other parts of this Official Statement. The references herein to the Indenture, Loan Agreement, Resolution and the Act and the other documents referenced herein are brief outlines of certain provisions thereof. Such outlines do not purport to be complete and reference is made to such documents for full and complete

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statements of their provisions. Copies of such documents are available from the Office of the Chief Financial Officer Dr. E. Dean Montgomery, 640 Dr. Mary McLeod Bethune Boulevard, Daytona Beach, Florida 32114.

.

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


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AUTHORIZATION OF AND CERTIFICATION CONCERNING OFFICIAL STATEMENT

This Official Statement has been authorized and approved by the University. Upon the delivery of the Bonds, the undersigned will furnish a certificate on behalf of the University to the effect that, to the best of his knowledge, this Official Statement did not, as of its date, and does not as of the date of delivery of the Bonds, contain any untrue statement of a material fact or omit to state a material fact which should be included herein for the purpose for which this Official Statement is to be used, or which is necessary in order to make the statements contained herein, in light of the circumstances under which they were made, not misleading.

BETHUNE-COOKMAN UNIVERSITY

By: /s/ Trudie Kibbe Reed Trudie Kibbe Reed, President


APPENDIX A

INFORMATION REGARDING BETHUNE-COOKMAN UNIVERSITY


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APPENDIX A

INFORMATION REGARDING BETHUNE-COOKMAN UNIVERSITY General

Bethune-Cookman University (the “University”) was founded in 1904 by Mary McLeod

Bethune. Today the University sustains her legacy of faith, scholarship and service through its relationship with the United Methodist Church and its commitment to academic excellence and civic engagement.

The University is a four (4) year private and fully accredited institution of post secondary

learning. The University is the sixth (6th) largest of the thirty-nine (39) members of the UNCF college located in the Atlantic Coast City of Daytona Beach, Florida. The University is ranked by U.S. News & World Report, 2009 America’s Best Colleges edition, as one of the top baccalaureate institutions in the South and one of the nation’s top historically black colleges and universities.

The University is accredited by the Commission on Colleges of the Southern Association

of Colleges and Schools (SACS), the Florida State Department of Education, NCATE, the National League for Nursing and Accrediting Commission, Inc., the Accreditation Programs in Hospitality and Administration and the National Collegiate Athletic Association (NCAA).

The University is enjoying steady growth and student enrollment and in its financial

strength. The University’s campus is an 82 acre urban campus situated within the coastal city of Daytona Beach, Florida which is home to approximately 165,000 residents and lies only minutes from the Atlantic Ocean. The University is convenient to business centers, churches, theaters, museums, public transportation, entertainment, venue and shopping. Further, the University is located less than sixty (60) miles from Orlando.

The University is one of eleven (11) United Methodist Church related historically black

institutions that share a common set of values and educational principles with the United Methodist Church and other church related colleges and Universities. The University connection to the United Methodist Church dates back to 1872, when the Cookman Institute of Jacksonville, Florida was established. Following the merger of the Cookman Institute with Dr. Mary McLeod Bethune School in Daytona Beach, the school that became known as Bethune-Cookman College affiliated with the United Methodist Church in 1924.

The University is home to seven (7) academic schools offering thirty-five (35)

undergraduate degrees and a growing master’s degree program offering a Master of Science in Transformative Leadership. Six (6) of the most popular majors are: biology, business administration, criminal justice, nursing, psychology, and teacher education. In addition to the graduate program in Transformative Leadership which helped elevate it to University status, another Master’s Degree program in Environmental Science is being considered at this time.

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The University also hosts a number of centers on campus. The Center for Civic Engagement (“CCE”) is the physical hub of the University’s community-focused programs, which are a continuation of the rich legacy entrusted to the institution by its founder, Dr. Mary McLeod Bethune. The CCE serves to institutionalize Dr. Bethune’s democratic ideals such as her practice of hosting town hall meetings which brings together community stake holders across racial and gender lines to address pressing challenges of the day. The CCE and Bethune-Cookman University will continue this legacy and at the same time build on the vision for the 21st century. In addition, the Center for Study of Healthcare Disparities and the Odessa Chambliss Wellness Center located in the School of Nursing were created to improve healthcare access to underserved population by providing services to promote healthy lifestyle and educate at-risk citizens to prevent and treat illnesses.

The faculty is committed to the University, to one another and to their students.

Approximately fifty (50 percent of the 202 full-time faculty possess terminal degrees and the University boasts a student-to-faculty ratio of 17-1. Teaching is the faculty’s highest priority, but professors are also active scholars and artists. Moreover, the faculty is engaged with their students as mentors, guides, and partners on research projects and academic work. A strong tradition of student-faculty collaboration contributes to the University’s lively intellectual community.

Faculty governance, which represents a fundamental aspect of the administration by

addressing issues related to faculty rights and responsibilities, is addressed through the Faculty Association. The Faculty Association is “the official representative body” of the faculty and serves as a forum for faculty opinion and initiatives. All faculty members are voting members of the Faculty Association.

The student population at the University enjoyed an impressive upswing through 2008.

Enrollment climbed from 2,800 in 2004 to 3,633 in 2008. Since 2008, enrollment remains consistent. The fall of 2007 freshman class was the largest freshman class in the history of the University and forty (40%) percent of the 2008 – 2009 freshman class had a high school GPA of 3.0 or higher, a twelve (12%) percent increase since 2003. The University graduated the largest class in its school history at the 2008 spring commencement and then broke that record again at the 2009 spring commencement. Since 1943, the University has graduated more than 14,000 students. Approximately fifty two (52%) percent of the student population is residential, sixty seven (67%) percent of the students are from within the state, ninety two (92%) percent of the students are African American, five (5%) percent of the students are international and sixty (60%) percent of the student body is female. The students are academically accomplished, multi-talented, and spiritually engaged. Many of this year’s graduates are pursuing advanced degrees and all of the recent graduating nursing students have had secured jobs by the time of commencement.

The University is an NCAA Division I member of the Mid-Eastern Athletic Conference.

The University sponsors 17 varsity intercollegiate sports consisting of 9 women's and 8 men's teams. With a diverse student-athlete population of young people from over 10 countries, the University is among the leaders in the State of Florida in graduation rates for student athletes and

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ranked in the upper tier of historically black colleges and universities in the academic progress rates for student athletes annually.

The University is situated on 82.75 acres with 78 buildings. Some of the new

developments include the L. Gale Lemerand School of Nursing building which opened in January 2008. Highlights include technology-equipped classrooms, skill labs, a wellness center and a community health center. The recently constructed Center for Civic Engagement is the physical hub of the University’s community focused programs and includes space for community meetings. The building also houses a student lounge and a fitness center. Two new student residences have been built and the home of Dr. Bethune, a national historic landmark is being fully restored.

[Remainder of Page Intentionally Left Blank]

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Governance The University is governed by a Board of Trustees. The Board is primarily charged with the responsibility of approving policies related to operation of the University and assisting in fundraising. The Board is organized in accordance with the Charter and Bylaws of Bethune-Cookman. The current Board consists of thirty-six (36) members and meets in the fall and spring of each year. The Executive Committee meets four (4) times a year. The University’s Board of Trustees shares a deep commitment to the University and provides strong support to the President, her leadership team and the faculty. The following table sets forth the names of the officers and members of the Board as of July 7, 2010, each member’s principal business or professional affiliation as of such date, and the year in which each member’s term expires. NAME AFFILIATION TERM EXPIRES Berrece Andrews, Jr.

Next Level Vacations (Corp.) 2014

Rev. Dr. William S. Barnes

St. Luke’s United Methodist Church (UMC)

2011

Byrd Bonner, Esquire

The United Methodist Church Foundation (UMC & Legal)

2014

Rev. Dr. Randolph Bracy, Jr.

New Covenant Baptist Church of Orlando (Other)

2017

Judge Prince Cartwright

Retired Judge (Legal) 2014

Audley Coakley

Rainbow Mortgage (Corp.) Alumni Class of ‘68

2017

The Honorable Dr. Joyce Cusack

Florida State Representative Democratic Leader Pro Tempore (2006-2008)

2018

Rev. Dr. L. Ronald Durham

Greater Friendship Baptist Church (Other/Church)

2019

Lois Fry

Fry Marketing Services (Corp.) (Retired Owner)

2017

Rev. Dr. Robert M. Gibbs

St. Andrews United Methodist Church (UMC)

2014

Dr. Larry R. Handfield, Esquire

The Handfield Firm (Legal) Alumni Class of ‘78

2015

Rev. John Wesley Harrington

Morrison United Methodist Church (UMC)

2014

Dorothye Henderson

Retired (UMC) 2014

Dr. William E. Hogan, II

The Hogan Group (Corp. & Academics)

2015

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Rev. Dr. Kevin M. James, Sr.

Palma Ceia United Methodist Church (UMC) Alumni Class of ‘84

2014

Michael P. Johnson

Retired (Corp.) 2010

Dr. Irving J. Matthews

The Matthews Automotive Group (Corp.)

2011

Johnny L. McCray, Jr., Esquire

Attorney (Legal) 2016 (estimated)

Ben Novello

BDNB Ventures (Corp.) 2016

Joyce Odongo

Fifth Third Bank (Corp.) 2017

Joe Petrock

HH Foundation/Government Relations (Medical)

2014

Alexis Pugh

Retired (UMC) 2014

Lee E. Rhyant

Lockheed Martin Aeronautics Company (Corp.) Alumni Class of ‘72

2011

Rev. Philip H. Roughton

Christ Church (UMC) 2010

Madeline Scales-Taylor

Mayo Clinic Jacksonville (Medical) 2014

John J. Schroepfer

UBS Financial Services, Inc. (Financial) – Retired

2014

Evelyn B. Walker

National Alumni Association (Other) Alumni Class of ‘55

2013

Bishop Timothy Whitaker

Florida Conference of The United Methodist Church (UMC)

N/A (Appointed by virtue of position)

Etienna R. “ET” Winzer

Chase Education Finance (Financial) 2014

Rev. Dr. Thomas S. Yow, III

United Methodist Higher Education Ministry (UMC & Academics)

2018

Rev. Dr. Eugene Zimmerman

Minister (UMC) 2017

Administration The Administrative structure of the University is designed to execute the Board of Trustees’ policies through appropriate and cost effective procedures. Organizationally the University is headed by the President, who answers to the Board. There are six sectors including: Presidential, Academic Affairs, Finance and Administration, Institutional Advancement, Center for Information Technology and Student Affairs. Each sector is run by an administrator who reports directly to the President. In addition, in the Academic Sector there is

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an Office of Institutional Research and Planning, which supports and coordinates the strategic planning function of the University. Extended representation in support of the administration is achieved through a series of University-wide committees. The administrative structure and its corollary management systems are continually reviewed as part of the strategic planning process. President’s Office. Dr. Trudie Kibbe Reed, Ed.D assumed the presidency of then Bethune-Cookman College on August 16, 2004 after a successful career in higher education as both a college president and a high-ranking administrator with The United Methodist Church. As the first woman to serve as the President after Dr. Bethune, Dr. Reed turned the college into a University. Dr. Reed’s leadership skills are widely recognized and utilized in varied arenas. She recently was elected to the board of the National Association of Independent Colleges and Universities and U.S. Senator Bill Nelson selected her to serve on Florida’s Federal Judicial Nominating Commission. She is a commissioner for SACS and was appointed by the Secretary of Education to sit on the board of Historically Black Colleges and Universities Capital Financing Advisory Board. She serves as chair for a presidential consortium of 103 United Methodist Church schools, the National Association of Schools and Colleges of the United Methodist Church (“NASCUMC”). In 2008, she was elected as a member of the United Methodist General Board of Higher Education and Ministry. In 2006, she was selected by the governor of Florida to serve a three (3) year term on the State’s Commission of Volunteerism and Community Service. She has also served on the White House Advisory Board for Historically Black Colleges and Universities. Dr. Reed is a member of the Daytona Beach Chamber of Commerce, Rotary International, the Futures Foundation for Volusia County Schools and the United Way Board. She is also on the NAICU Board and the corporate UNCF Board. Dr. Reed received a B.A. degree in sociology and a master’s degree in social work from the University of Texas at Austin. She earned an M.A. degree and doctorate degree from Columbia University in the area of adult and higher education. Dr. Reed served eighteen (18) years as a senior level administrator with The United Methodist Church. At age 28, she became the youngest CEO elected to the General Commission on the Status and Role of Women. When later serving as associate general secretary for the General Council on Ministries, she developed educational programs for eight national agencies, seminaries, college and universities. She also coordinated the denomination’s first national initiative in prison ministry, deaf ministry, and ministries by, with, and for older adults. She drafted legislation and conceptualized a church-wide study that developed into a major quadrennial emphasis for the denomination: “Strengthening the Black Church for the 21st Century.” From 1994-1998, Dr. Reed was dean of the Leadership Institute and a tenured professor at Columbia College of South Carolina where she founded and edited the publication “A Leadership Journal for Women: Women in Leadership- Sharing the Vision.” While in South Carolina, Dr. Reed was recognized by the governor for outstanding leadership, voted “Business Woman of the Year” and received the Diamond Twin Award from the YMCA for outstanding leadership and community service.

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Dr. Reed has taught in the doctoral program at United Theological Seminary in Dayton, Ohio and in the conflict resolution program at Anticoh University in Ohio. While serving as the first female president of Philander Smith College in Little Rock, Arkansas, she broke all fund-raising records, raising more than $40 million dollars in three years. Academic Affairs. Vice-President of Academic Affairs, Dr. Sarah Williams

Before joining Bethune-Cookman University in 2009, Dr. Williams was a Professor of Sociology in the Division of Social Work, Behavioral, and Political Sciences at Prairie View A&M University (“PVAMU”) from 1998 through 2009. There she was responsible for teaching courses in sociology and social work and advising students. She also engaged in research, teaching, and service at PVAMU and in the community. She was the Project Director of the George R. Ragland Scholars Program, which is designed to educate and increase the number of minority and culturally aware social service practitioners.

Upon becoming the head of the Department of Sociology at PVAMU Dr. Williams

engaged in strategic planning, redirected the Department to expand its focus, and developed a baccalaureate degree program in Social Work. Through vision and tenacious work, she achieved the initial accreditation of the baccalaureate Social Work Program and maintained such status for three accreditation cycles.

During this time she was active in additional program development, instituted the Master

of Arts program in Sociology and developed it into the second largest major in the graduate school at PVAMU. She conceptualized and wrote the proposal for the establishment of that Master of Social Work program.

Dr. Williams received her Ph.D. in Sociology in 1978 from the The University of Texas

at Austin, a Master of Social Work in 1972 from The University of Houston and a B.A. in Sociology from the The University of Texas at Austin in 1970. She has also pursued further studies at the South Texas College of Law, Texas A&M University, PVAMU and the University of North Texas.

Dr. Williams was highly instrumental in the February 2010 SACS reaffirmation process,

which the University passed with no recommendations.

Finance and Administration. Executive Vice-President/Chief Financial Officer/Chief Operations Officer, Dr. E. Dean Montgomery

Dr. E. Dean Montgomery is the Executive Vice President/ Chief Financial Officer/Chief Operations Officer of Bethune-Cookman University. Dr. Montgomery brings a wealth of experience as an administrator and financial advisor in higher education. His high standards and effective fiscal leadership have leveraged important resources for Bethune-Cookman University and have contributed significantly to the school’s recent elevation to university status.

Most recently, Dr. Montgomery was selected by the Southern Association of Colleges and Schools (“SACS”) to make a presentation at the 2009 Annual Meeting of the Commission on Colleges; also, Dr. Montgomery has led roundtable discussions at Annual Meetings for

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SACS. Dr. Montgomery has served on a SACS financial subcommittee to assist in developing a companion document to the Principles of Accreditation: Foundations for Quality Enhancement (the “Principles”). This critical tool will clarify the requirements found with the Principles, helping institutions understand the rationale for certain requirements and guiding them toward documentation of compliance. In addition, Dr. Montgomery has made numerous presentations for the Southern Education Foundation, United Negro College Fund, and for various Boards of Trustees and faculty/staff members of many colleges and universities. Dr. Montgomery also serves as a Peer Evaluator as it relates to financial and physical resources for SACS and he serves as a Special Reader for SACS Board of Trustees. He has accumulated more than forty institutional visits since 1994.

Dr. Montgomery has been requested to serve as a guest lecturer for fiscal seminars held at Harvard University, Boston, MA.

In May of 2010, the Board of Trustees of Bethune-Cookman University awarded Dr. Montgomery an honorary degree of Doctor of Business Administration for exceptional achievements and contributions as a Financial Leader and Servant to Colleges and Universities throughout the United States.

Dr. Montgomery received a Meritorious Service Award from the Commission on Colleges (SACS 2009 Annual Meeting-Atlanta, GA) which is “presented to those in higher education who have demonstrated extraordinary commitment to and understanding of accreditation processes, who are respected by their peers for their integrity and the meritorious quality of their service, and who are recognized as models of competency, creativity, and accomplishment.”

Prior to being appointed to his current position as Executive Vice President/Chief Operations Officer/Chief Financial Officer at Bethune-Cookman University he served as Vice President for Fiscal Affairs for eight (8) years. Dr. Montgomery served thirteen (13) years as Vice President, Business Affairs and Chief Financial Officer for Voorhees College (Denmark, South Carolina). He is a veteran leader in the areas of finance and administration and is known throughout the nation as an expert in fiscal affairs in higher education. Consequently, he is frequently sought out by numerous institutions for advice, expertise and crisis management. He has served and continues to serve as a mentor to chief financial officers in other institutions. Also, he has facilitated financial planning and retirement workshops/seminars for Met Life, Inc. Institutional Advancement. Interim Vice-President, Dr. Hiram Powell

Dr. Powell is currently the Interim Vice President for Institutional Advancement at Bethune-Cookman University. Prior to accepting this promotion, he served as the Associate Vice President for Academic Affairs. However, his association with the University began many years earlier as a student in Music Education. He graduated with a Bachelor of Science degree in Music Education, class of 1976, before going on to complete his graduate and doctoral work. His return to the University as a professor in music has led him to ever-increasing roles of responsibility and his current position as a key member of the University’s administration.

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Dr. Powell possesses a wealth of knowledge and experience in higher education, having

served in both academic and administrative roles at several institutions. Over the years, Dr. Powell has held numerous leadership positions and currently serves on the boards of Atlantic Center for the Arts, The Community Cultural Foundation/Florida International Festival, and the Pabst Foundation for the Arts.

Beyond the office and the classroom, Dr. Powell maintains his passion for music and education through the presentation of papers and lectures at national and regional conferences and workshops. Student Affairs. Vice-President, Dr. Dwaun J. Warmack Dr. Warmack brings a decade of experience in higher education to the position. He most recently was associate dean of students at Rhodes College (“Rhodes”) in Memphis, TN, where he had oversight of student affairs areas including judicial affairs, student activities, Greek life, new student and parent orientation, and multicultural affairs. While at Rhodes, he also served on the institution’s SACS Reaffirmation Committee. Warmack has also held positions at Western Carolina University in Cullowhee, NC and Delta State University in Cleveland, Mississippi.

Dr. Warmack received his Bachelor of Science and Master of Science in Education degrees from Delta State University in Cleveland, MS. He received his Doctor of Education, Educational Leadership with Specialization in Higher Education from Union University, Jackson, TN. He has made numerous presentations in the areas of Student Affairs and Diversity. Accreditation and Memberships

Bethune-Cookman University is accredited by the Commission on Colleges of the Southern Association of Colleges and Schools to award the Bachelor of Arts, Bachelor of Science and Master of Science degrees. Additionally, the University is accredited by the National League of Nursing Accrediting Commission, Inc., Accreditation Commission for Programs in Hospitality Administration, Florida State Department of Education for Special Programs, National Council for Accreditation of Teacher Education, University Senate of the United Methodist Church and the National Collegiate Athletic Association (NCAA).

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Academic Program and Degrees

DEGREES CONFERRED BY UNIVERSITY

Academic Year

Bachelor’s Degrees

Graduate Degrees

Total Degrees Conferred

2004-05 322 0 322 2005-06 332 0 332 2006-07 343 0 343 2007-08 389 9 398 2008-09 453 6 459

University Facilities

The University is located in Daytona Beach, Florida which is home to approximately 165,000 residents and lies only minutes from the Atlantic Ocean. The 82.75 acre urban campus is convenient to business centers, churches, theaters, museums, public transportation, entertainment, venues and shopping. Further, the University is located less than sixty (60) miles from Orlando. The University has seventy-eight (78) buildings and several parcels of land. Some of the projects completed in the last few years include:

2007-08

• Expanded and renovated the cafeteria dining area.

• Purchased and renovated property near the new Athletic Training Facility property for football office operations and student labs.

• Purchased several small contiguous properties and converted to additional student parking

2008-09 • Replaced floor and HVAC system in Richard V. Moore Gymnasium • Renovated the vacated school of Nursing building to house expanded offices for the

student Financial Aid office and allow expansion of the Admissions Office. • Renovated HVAC and classrooms in Harrison Rhodes Social Science building.

2009-10

• Began construction of Lee Rhyant Residential Life Complex. • Began construction of Larry R. Handfield Athletic Training Center • Renovated restrooms in Joyner and Bronson Halls. • Interior renovations to the Carl Swisher Library building.

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Student Demand Data Enrollment

Student Breakdown

FALL 2005

FALL 2006

FALL 2007

FALL 2008

FALL 2009

Total Students Enrolled: 3090 3111 3433 3633 3614 Graduate School n/a 18 39 35 20 Undergraduate Programs 3090 3093 3394 3598 3594

Application and Matriculation Information. The following is a summary of applications, acceptances and matriculations for entering freshman class for the University over the past six (6) years:

APPLICATION INFORMATION

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Total Applicants 4186 4296 4458 4469 4938 5188 Total Acceptances 2810 3147 3417 3343 3569 3587 Accept Rate 67% 73% 77% 75% 72% 69% Applicant Yield 956 1023 1020 1240 1194 1126 Yield Rate 34% 33% 30% 37% 34% 31% On-Campus Housing and Occupancy: The University has ten (10) residential halls, six (6) female and four (4) male; two (2) scholarship houses; and four (4) leadership houses. The total number of residential students was 1,818 for Fall 2009, approximately fifty (50) percent of the total undergraduate population. In years where the demand for student housing has exceeded capacity, the University rented temporary facilities near campus to house the overflow.

FALL FALL FALL FALL FALL 2005 2006 2007 2008 2009

New Students 1050 1048 1262 1198 1129 Returning Students 2040 2063 2171 2435 2485 Full Time Students 2795 2925 3196 3481 3460 Part Time Students 295 168 237 152 154 Full Time Equivalence (FTE) 2989 3023 3253 3541 3511 Male Students 1270 1309 1420 1439 1445 Female Students 1820 1784 2013 2194 2169 Daytona Beach Campus 3023 3016 3293 3585 3584 Other B-CU Locations 67 77 101 48 30 Students Living On-Campus 1788 1662 1891 1877 1818 Students Staying Off-Campus 1302 1431 1542 1756 1796

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On-Campus Housing and Occupancy: Fall 2005 to Fall 2009

Academic Year 2005-06 2006-07 2007-08 2008-09 2009-10 On-Campus Housing

• Residential Halls

• Scholarship Houses

• Alternative Housing

10

NA

NA

10

NA

NA

10 2 1

10 2 4

10 2 4

Total Number of Beds 1772 1804 1881 1881 1881 Percent Occupancy

100 (1788)

92 (1662)

100 (1891)

99.8 (1877)

96 (1818)

Geographic Origin of Student Body – Permanent Residence. The University draws its student body primarily from Florida but additionally from across the United States and several foreign countries. The following is a summary of the geographic origin of the student body for the past five (5) years.

GEOGRAPHIC ORIGIN OF STUDENT BODY

Fall 2005 Fall 2006 Fall 2007 Fall 2008 Fall 2009 Florida 2,018 2,059 2,301 2,430 2,545 Other States 963 931 999 1028 1,002 Foreign Countries 109 103 94 175 67 Total 3,090 3,093 3,394 3,633 3,614 Tuition, Fees, Room and Board The University meets the cost of its operations primarily through tuition, fees, room and board charges, gifts, grants and endowment income. Approximately sixty percent of the University annual operating revenue is obtained through tuition and fees. During fiscal year 2009 the University granted tuition and fee discounts of $11,684,884, utilizing University funds to provide such financial assistance. The table below shows the tuition, fees and annual room and board fees for the past seven (7) years for the University:

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Tuition

Room and Board

Total Charges

Percent Increase

2004-05 10,610 6,374 16,984 2005-06 11,230 6,692 17,922 5.5% 2006-07 11,792 7,026 18,818 5.0% 2007-08 12,382 7,377 19,759 5.0% 2008-09 12,877 7,672 20,549 4.0% 2009-10 12,877 7,672 20,549 0.0% 2010-11 13,452 7,980 21,432 4.3%

Student Financial Aid

The University offers many types of financial aid including scholarships, loans and grants. Some of the scholarships include the Bethune-Cookman University Presidential, Excelsior and Academic Scholarships for academically gifted students, Athletic Scholarships for talented athletes and Band and Choir scholarships for those students gifted in the performing arts. Other Scholarship Programs include the United Negro College Fund (UNCF) Scholarship, United Methodist Church Scholarships, Florida Mary McLeod Bethune Scholarship Grant Fund, the Charles Stewart Mott Foundation Endowed Scholarship, the Blue Cross & Blue Shield of Florida Endowed Scholarship for Nursing, the Dr. William Cosby Scholarship Endowment, and the Jessie Ball du Pont Endowed Scholarship.

Outstanding Indebtedness Details of long-term debt as of July 31, 2010 are as follows:

July 31, 2010 HBCU Dormitory Capital Project Loan, bearing interest at

6.01% payable in monthly installments of $30,850, including interest through September 2027. Collateralized by land and building $ 3,931,052

2001 Series Bonds, bearing variable interest rate with principal

and interest payments starting in October 2001 and maturing serially through July 2032, collateralized by the University’s unrestricted revenues 18,370,000

Loan payable bearing variable interest rate of LIBOR plus 185

basis points. Interest due monthly and principal due semiannually. Matures October 1, 2015. Collateralized by land and building 1,365,000

Various capital equipment leases, bearing variable interest rates

and payable in monthly installments totaling $41,641 through June 30, 2013. Collateralized by underlying assets 478,429

$ 24,144,481

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Budgetary Process Integration with the Planning Process

Each of the sectors, schools, departments/units of the University is required to develop an annual operating plan for its specific unit, in support of the institutional strategic plan and thus the institutional mission. Annual plans are developed with collaborative feedback and suggestions from personnel within each unit.

The annual plan for each unit is evaluated at the end of the year to measure success with respect to its completion and to adapt to the next year's priorities. The process of setting and evaluating outcomes of goals, making improvements, and revising subsequent plans will continue until their complete achievement.

Linking planning to budgeting and decision support system. A five-year planning outlook is an important part of the budget process and helps focus the budget decision-making process on the structural match between revenues and expenditures. In addition, during the execution phase of the budget, management decisions ensure a match between revenues and expenditures on a short-term basis. Thus the planning process has direct impact on budgeting process and assessment where each academic and administrative sector ties budget to strategic goals, assessment and feedback.

Budget Process

While the Board of Trustees is responsible for authorizing or appropriating the funds to be expended by each of the Cabinet supervised program sectors of the University, the University’s budget office is responsible for the allotment of these appropriations. The allotment process guarantees that the University has the cash available to pay its bills. In some instances the University cannot responsibly allot appropriation on the first day of a fiscal year since revenues may be collected throughout the year. The allotment process is important for managing the University’s cash flow and is also a mechanism that can ensure that expenditures do not exceed available revenues. It is through both the Cabinets’ management of their budgets and the budget execution process that the expenditures of budgeted funds are matched with actual recurring revenues.

The University’s Finance and Administration sector carries out the process of updating and documenting the institutional budget process. The intent is to have an open process – inclusive, fully documented, and most importantly, linked to the planning process of the institution. The resulting budget process allows more input from and balance with the departments and units and emphasizes that in all cases, the budget must be responsive to the initiatives of the institution.

It is the responsibility of the sector head to include the department/unit supervisors, faculty and staff in the development of the budget request. Critical needs are identified for correction to enhance quality of programs and services. Each department is expected to review current programs for potential improvements/reallocations prior to presenting a request for funds.

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Reallocations will occur at two levels, institutional and departmental. Department reallocations occur when current programs and/or activities are reduced, eliminated, or efficiencies are created, and the resulting resources are moved to serve higher priorities. Given the enrollment projections, it is critical that reallocations be used as a means of funding institutional priorities. Investment Objective

The overall financial objectives of the Endowment are (1) to support the current and future operations of the University and (2) to preserve the purchasing power of the Endowment.

The primary investment objective of the Endowment is to attain an average annual real total return1 (net of investment management fees) of at least 5.0% over the long term (rolling twenty-quarter periods). It is recognized that the real return objective may be difficult to attain in every such period, but should be attainable over a series of such periods. Asset Allocation

The Endowment’s investments shall be diversified by asset class, within asset classes and by manager. The purpose of diversification is to provide reasonable assurance that no class of securities, manager or individual holding will have a disproportionate impact on the Endowment’s aggregate results.

To achieve its long-term investment objective, the Endowment’s assets shall be invested primarily in equities, but will also include allocations to asset classes that might serve as partial hedges against inflation and deflation. The asset allocation of the Endowment should reflect the University’s long-term financial objective as well as the University’s tolerance for risk. Endowment results will be measured relative to blended benchmarks composed of the appropriate asset class indices and weighted based upon the Endowment’s policy target and actual allocations. The policy target allocations and relevant indices are as follows:

Asset Class: Policy Target Range Specified IndicesU.S. Equity 33% 23% - 43% Russell 3000® Index Global ex-U.S. Equity 22% 12% - 32% MSCI ACWI ex-U.S. Index Hedge Funds 10% 5% - 15% HFRI Hedge Fund of Funds Index Real Assets 10% 5% - 15% CPI-U + 5% Bonds 25% 15% - 35% Manager Composite2 1. Real total return is the sum of capital appreciation (or loss) and current income achieved in the form of dividends

and interest, adjusted for inflation as measured by the CPI-U index. 2. Fixed income investments will be benchmarked against a blended composite composed of each underlying

manager’s benchmark and weighted based upon each manager’s respective weight within the portfolio. Endowment Spending Policy

The Endowment seeks to achieve reasonable stability in budgeting for University operations and to maintain intergenerational equity between near-term and long-term priorities. The Trustees believe that, subject to exigent circumstances, a long-term spending rate of 3.0% of the Endowment is appropriate and, therefore, has adopted the following spending policy:

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Spending from the Endowment in any given fiscal year shall equal 3.0% of the Endowment’s average market value for the preceding twelve quarters. Faculty and Employee Relations The University has 202 full-time instructional faculty, 50 percent of whom hold the Ph.D. or appropriate terminal degree. Part-time adjunct faculty members are employed as needed. The total number of adjunct faculty fluctuates throughout the academic year.

FACULTY AND STAFF

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Faculty Arts and Sciences 150 147 161 170 196 202Counseling 2 2 2 2 2 5Library 7 5 6 7 10 10Total Faculty 159 154 169 179 208 235 Staff Administrative/Professional 179 196 204 203 219 209Technical/Paraprofessional 0 0 0 20 6 5Clerical/Secretarial 93 95 87 70 75 72Skilled Crafts 0 0 0 0 0 0Service/Maintenance 32 24 23 23 23 38Total Staff 304 315 314 316 323 324 Total Faculty & Staff 463 469 483 495 531 559 For additional information about Bethune-Cookman University, please contact the Office of the President, Bethune-Cookman University, 640 Dr. Mary McLeod Bethune Boulevard, Daytona Beach, Florida 32114.

APPENDIX B

AUDITED FINANCIAL STATEMENTS AND REPORT OF THE INDEPENDENT AUDITORS THEREON FOR THE FISCAL YEARS ENDED JUNE 30, 2009 AND 2010


Ernst & Young LLP

F I N A N C I A L S T A T E M E N T S

Bethune-Cookman University, Inc. Years Ended June 30, 2010 and 2009 With Report of Independent Certified Public Accountants

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1008-1180100

Bethune-Cookman University, Inc.

Financial Statements

Years Ended June 30, 2010 and 2009

Contents

Report of Independent Certified Public Accountants ......................................................................1


Statements of Financial Position ......................................................................................................2 Statements of Activities ...................................................................................................................3 Statements of Cash Flows ................................................................................................................5 Notes to Financial Statements ..........................................................................................................6

Report of Independent Certified Public Accountants on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance With Government Auditing Standards ...................................................................................................................................25


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1008-1180100

Report of Independent Certified Public Accountants


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Ernst & Young LLP Suite 1700 390 North Orange Avenue Orlando, FL 32801 -1671

Tel: +1 407 872 6600 Fax: +1 407 872 6626 www.ey.com

A member firm of Ernst & Young Global Limited

1008-1180100 1

Report of Independent Certified Public Accountants

The Board of Trustees Bethune-Cookman University, Inc.

We have audited the accompanying statements of financial position of Bethune-Cookman University, Inc. (the University) as of June 30, 2010 and 2009, and the related statements of activities and cash flows for the years then ended. These financial statements are the responsibility of the University’s administration. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the University’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the University’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by the administration, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bethune-Cookman University, Inc. as of June 30, 2010 and 2009, and the changes in its net assets and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued our report dated October 1, 2010, on our consideration of the University’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

��October 1, 2010


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1008-1180100



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1008-1180100 2

June 302010 2009

AssetsCash and cash equivalents 20,765,842$ 25,404,701$ Restricted cash 872,298 864,726 Student receivables, net of allowance for doubtful accounts

of $857,683 and $787,227 in 2010 and 2009, respectively 1,191,776 1,563,432 Grant and student aid receivables 4,712,312 661,926 Investments 34,035,220 30,366,485 Assets held in trust by others 315,783 304,641 Prepaid expenses 464,816 384,435 Contributions receivable, net 257,518 267,396 Property, plant, and equipment, net 67,767,728 62,554,494 Other assets 331,689 348,428 Total assets 130,714,982$ 122,720,664$

LiabilitiesAccounts payable 1,378,258$ 1,548,818$ Student deposits 243,282 263,461 Accrued expenses and other liabilities 3,747,322 2,585,105 Long-term debt 25,127,147 26,320,572 Total liabilities 30,496,009 30,717,956

Net assets:Unrestricted 74,408,854 67,669,689 Temporarily restricted 16,686,391 15,453,324 Permanently restricted 9,123,728 8,879,695

Total net assets 100,218,973 92,002,708 Total liabilities and net assets 130,714,982$ 122,720,664$

See accompanying notes.


Statements of Financial Position

3 1008-1180100


Statements of Activities

Temporarily PermanentlyUnrestricted Unrestricted Restricted Total

Revenues, gains, and support:Tuition and fees 46,790,583$ –$ –$ 46,790,583$ Less scholarship allowance (11,623,095) – – (11,623,095) Net tuition and fees 35,167,488 – – 35,167,488

Federal grants and contracts 114,439 5,420,139 – 5,534,578 State grants – 3,962,253 – 3,962,253 Private gifts and grants 2,209,447 2,413,722 244,033 4,867,202 Interest and dividend income 480,454 438,391 – 918,845 Other income 854,934 121,645 – 976,579 Auxiliary enterprises 15,636,669 143,660 – 15,780,329 Net realized and unrealized

gains on investments 1,176,996 1,588,578 – 2,765,574 Change in value of interest

rate swaps (817,916) – – (817,916) Net assets released from

restrictions 12,855,321 (12,855,321) – – Total revenues, gains, and support 67,677,832 1,233,067 244,033 69,154,932

Expenses and losses:Educational and general:

Instruction and research 18,680,212 – – 18,680,212 Academic support 1,312,494 – – 1,312,494 Student services and activities 7,050,800 – – 7,050,800 Institutional support 12,773,197 – – 12,773,197 Operation and maintenance 8,525,895 – – 8,525,895

Auxiliary enterprises 12,596,069 – – 12,596,069 Total expenses and losses 60,938,667 – – 60,938,667

Change in net assets 6,739,165 1,233,067 244,033 8,216,265 Net assets at beginning of year 67,669,689 15,453,324 8,879,695 92,002,708 Net assets at end of year 74,408,854$ 16,686,391$ 9,123,728$ 100,218,973$


Year Ended June 30, 2010

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1008-1180100 4


Statements of Activities

Temporarily PermanentlyUnrestricted Unrestricted Restricted Total

Revenues, gains, and support:Tuition and fees 46,935,273$ –$ –$ 46,935,273$ Less scholarship allowance (11,645,884) – – (11,645,884) Net tuition and fees 35,289,389 – – 35,289,389

Federal grants and contracts 91,390 5,862,350 – 5,953,740 State grants 4,018 4,720,263 – 4,724,281 Private gifts and grants 2,565,022 2,795,378 156,553 5,516,953 Interest and dividend income 722,966 679,433 – 1,402,399 Other income 1,335,771 218,446 – 1,554,217 Auxiliary enterprises 16,133,118 29,500 – 16,162,618 Net realized and unrealized

losses on investments (5,082,175) (5,492,257) – (10,574,432) Change in value of interest

rate swaps (1,194,971) – – (1,194,971) Net assets released from

restrictions 19,488,089 (19,488,089) – – Total revenues, gains, and support 69,352,617 (10,674,976) 156,553 58,834,194

Expenses and losses:Educational and general:

Instruction and research 19,374,630 – – 19,374,630 Academic support 1,435,768 – – 1,435,768 Student services and activities 7,348,576 – – 7,348,576 Institutional support 12,625,114 – – 12,625,114 Operation and maintenance 8,828,906 – – 8,828,906

Auxiliary enterprises 13,780,495 – – 13,780,495 Total expenses and losses 63,393,489 – – 63,393,489

Change in net assets 5,959,128 (10,674,976) 156,553 (4,559,295) Net assets at beginning of year 61,710,561 26,128,300 8,723,142 96,562,003 Net assets at end of year 67,669,689$ 15,453,324$ 8,879,695$ 92,002,708$


Year Ended June 30, 2009

5 1008-1180100


Statements of Cash Flows

Year Ended June 302010 2009

Operating activitiesChange in net assets 8,216,265$ (4,559,295)$ Adjustments to reconcile change in net assets to net cash

provided by operating activities:Contributions for long-term endowments (244,033) (156,553) Net realized and unrealized (gains) losses on investments (2,765,574) 10,574,432 Depreciation and amortization 3,218,407 3,032,819 Change in value of interest rate swap 817,916 1,194,971 Bad debt expense 718,770 701,241 Increase in student receivables (347,114) (895,190) (Increase) decrease in grant and student aid receivables (4,050,386) 150,644 (Increase) decrease in prepaid expenses (80,381) 15,021 Decrease (increase) in contributions receivable, net 9,878 (131,825) (Increase) decrease in assets held in trust by others (11,142) 36,990 Decrease in other assets 16,739 16,738 (Decrease) increase in accounts payable (170,560) 995,099 Decrease in student deposits (20,179) (2,279) Increase (decrease) in accrued expenses and other liabilities 344,301 (144,136) Loss on disposal of fixed assets 159,376 –

Net cash provided by operating activities 5,812,283 10,828,677

Investing activitiesPurchase of property, plant, and equipment (8,591,017) (1,199,190) Purchases of investments (13,447,782) (15,989,254) Proceeds from sales and maturities of investments 12,544,621 14,656,653 Net cash used in investing activities (9,494,178) (2,531,791)

Financing activitiesContributions for long-term endowments 244,033 156,553 Proceeds from borrowings 645,154 109,476 Repayment of note payable and long-term debt (1,838,579) (1,160,745) Net cash used in financing activities (949,392) (894,716)

Net change in cash and cash equivalents (4,631,287) 7,402,170 Cash and cash equivalents at beginning of year 26,269,427 18,867,257 Cash and cash equivalents at end of year 21,638,140$ 26,269,427$

Reconciliation to statements of financial positionCash and cash equivalents 20,765,842$ 25,404,701$ Restricted cash 872,298 864,726 Cash and cash equivalents at end of year 21,638,140$ 26,269,427$

Supplemental cash flow informationInterest paid 1,287,635$ 1,357,785$


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Notes to Financial Statements

June 30, 2010

1008-1180100 6

1. Summary of Significant Accounting Policies

Bethune-Cookman University, Inc. (the University), located in Daytona Beach, Florida, is affiliated with the General Board of Higher Education and Ministry, an agency of the United Methodist Church. The University offers undergraduate, graduate, and continuing education courses to students on its main campus and six satellite locations, and is accredited by the Commission on Colleges of the Southern Association of Colleges and Schools.

Basis of Accounting

The financial statements of the University have been prepared on the accrual basis of accounting.

Basis of Presentation

The financial statements have been prepared to focus on the University as a whole and to present balances and transactions according to the existence or absence of donor-imposed restrictions. This has been accomplished by classifying net assets and changes therein as follows:

� Unrestricted net assets – net assets that are not subject to donor-imposed stipulations.

� Temporarily restricted net assets – net assets subject to donor-imposed stipulations that may or will be met either by actions of the University and/or the passage of time.

� Permanently restricted net assets – net assets subject to donor-imposed stipulations that the corpus be maintained permanently by the University. Donors of these assets permit the University to use all, or part of, the earnings on related investments for general or specific purposes.

Revenues and support are reported as increases in unrestricted net assets unless use of the related assets is limited by donor-imposed restrictions. Expenses are reported as decreases in unrestricted net assets. Gains and losses on investments and other assets or liabilities are reported as increases or decreases in unrestricted net assets unless their use is restricted by explicit donor stipulation. Expirations of temporary restrictions on net assets (i.e., the donor-stipulated purpose has been fulfilled and/or the stipulated time period has elapsed) are reported as net assets released from restrictions in the statements of activities.


Notes to Financial Statements (continued)

7 1008-1180100

1. Summary of Significant Accounting Policies (continued)

Contributions, including unconditional promises to give, are recognized as revenues in the period they are made or received. Conditional promises to give are not recognized until they become unconditional, that is, when the conditions on which they depend are substantially met.

Contributions of assets other than cash are recorded at their estimated fair value at the date of the gift. Contributions to be received after one year are discounted at an appropriate discount rate commensurate with the risks involved. Amortization of discounts is recorded as a component of contributions revenue in accordance with donor-imposed restrictions, if any, on the contributions. An allowance for uncollectible contributions receivable is provided when, based upon the administration’s judgment and including such factors as the prior collection history, type of contribution, and nature of fund-raising activity, an allowance is considered necessary.

Interest and dividend income and realized and unrealized gains and losses on investments of endowments and similar funds are reported as follows:

� As increases in permanently restricted net assets if the terms of the gift or the University’s interpretation of relevant state law requires that they be added to the principal of a permanent endowment fund

� As increases or decreases in temporarily restricted net assets if the terms of the gift impose restrictions on the use of the income

� As increases or decreases in unrestricted net assets in all other cases

Reclassifications

Certain prior year balance sheet amounts have been reclassified to conform to current year presentation. Specifically, the amounts previously classified as mortgage, notes and other receivables are now classified as grants and student aid receivables.

Liquidity

Assets are presented in the accompanying statements of financial position according to their nearness of conversion to cash, and liabilities are presented according to the nearness of their maturity and resulting use of cash.

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Cash and Cash Equivalents and Restricted Cash

Cash and cash equivalents include all highly liquid investments with an original maturity of 90 days or less. Restricted cash consists of debt proceeds, certain sinking funds, and escrow accounts required under the terms of certain debt covenants.

Investments

Investments primarily consist of equity securities and bonds, as further detailed on Note 3. All investments are carried at fair value.

Pooled endowment and board-designated funds are invested on the basis of a total return policy to provide income and to realize appreciation in investment values. Under this policy, a portion of realized and unrealized gains accumulated, in addition to accumulated earnings, are used to support operations. Any such gains used to support operations are utilized in accordance with the same restrictions, if any, imposed by donors on the use of income earned by the endowment and similar funds.

Investment income and net realized and unrealized gains/losses on investments are included in the statement of activities according to the net asset category affected.

Investments Without Readily Determinable Values

Investments without readily determinable values consist of funds-of-funds, partnerships, and limited liability companies and are included with investments. Investments for which there is no readily determinable fair value are classified as level 2 or 3 (see Note 7) depending on the valuation technique. Depending on the underlying asset, the fair value is determined through national exchange prices for securities with a readily determinable value, or valuations and estimates typically determined by the underlying asset’s manager. Due to the inherent uncertainty of these estimates, these values may differ from the value that would have been used had a ready market for these investments existed and the difference could be material.



9 1008-1180100


Property, Plant, and Equipment

Property, plant, and equipment are stated at cost at the date of acquisition, or fair value at the date of donation in the case of gifts. The University’s policy is to capitalize assets acquired for $5,000 or greater with a useful life in excess of one year. Depreciation on plant and equipment is provided using the straight-line method, based on the estimated useful lives. Equipment under capital lease is amortized over the shorter of the asset’s useful life or the life of the lease using the straight-line method. The estimated useful life of buildings is 30 years. The estimated useful lives of equipment range from 6 to 20 years.

Student Receivables

The University grants credit without collateral to its students. These receivables are distributed among a wide range of students. These student receivable are evaluated for collectibility and allowances are established based on student account activity and other factors.

Grant and Student Aid Receivables

The University receives funding from various agencies, and receives student aid funding on behalf of its students. The related receivables are the result of timing of reimbursement requests made by the University. There is no allowance for uncollectible amounts, as these receivables are generally from the government and are supported by contractual agreements.

Income Taxes

The University is recognized as exempt from federal income taxes under Section 501(a) as an organization described in Section 501(c)(3) of the Internal Revenue Code. Accordingly, the financial statements do not reflect a provision for income taxes.

Use of Estimates

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

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1008-1180100 10


Concentration of Credit Risk

The University maintains cash accounts with several large financial institutions. All accounts at each financial institution are guaranteed by the Federal Deposit Insurance Corporation up to $250,000 per bank. The University has cash deposited that exceeds the federally insured deposit amount. Management does not anticipate nonperformance by the financial institutions. The University also places its cash equivalents and short-term investments with high-quality institutions.

Fair Value Measurements

Effective July 1, 2008, the University adopted the Financial Accounting Standards Board (FASB) Accounting Standards Codification No. 820, Fair Value Measurements and Disclosures (ASC 820), for financial assets and liabilities. The statement defines fair value, provides guidance for measuring fair value, and requires certain disclosures. This standard discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The statement establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

� Level 1: Observable inputs such as quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

� Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

� Level 3: Unobservable inputs that are used when little or no market data is available and reflect the reporting entity’s own assumptions. These include pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs.



11 1008-1180100

2. Contributions Receivable

Included in contributions receivable at June 30, 2010 and 2009, are the following unconditional promises to give for the purposes indicated:

2010 2009 Total unconditional promises to give $ 332,497 $ 374,850 Less allowance for doubtful accounts (69,179) (99,084) 263,318 275,766 Less discounts (5,800) (8,370) Net unconditional promises to give $ 257,518 $ 267,396

Unconditional pledges at June 30, 2010, are due in the following fiscal years:

2011 $ 166,597 2012 60,710 2013 56,360 2014 48,330 2015 and later 500 Total $ 332,497

Pledges to be collected after one year from the fiscal year-end are discounted using a risk-free rate determined at pledge date and applied to the schedule of payments and due during each ensuing fiscal year.

From time to time, the University is informed of intentions to give by prospective donors. Such expressions of intent are revocable and unenforceable. The ultimate value of these expressions has not been established or recognized in the accompanying financial statements.

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1008-1180100 12

3. Investments

The composition of investments as of June 30, 2010 and 2009, is set forth in the following table. Investments are stated at fair value.

2010 2009 U.S. mid to large-cap equity $ 10,069,658 $ 8,951,690 U.S. small-cap equity 1,714,990 1,416,443 Global ex-U.S. equity 7,363,474 6,662,611 Hedge funds 3,209,191 – Commingled funds 3,031,812 2,592,996 Bonds 8,625,277 7,744,069 Short-term investment funds 20,818 2,998,676 $ 34,035,220 $ 30,366,485

4. Property, Plant, and Equipment

Property, plant, and equipment and related accumulated depreciation and amortization at June 30, were as follows:

2010 2009 Land and improvements $ 6,457,468 $ 6,409,918 Buildings 83,061,974 82,523,985 Equipment purchased under capital leases 2,180,577 2,025,571 Equipment 7,222,665 5,809,783 Construction-in-progress 6,179,883 479,167 105,102,567 97,248,424 Less accumulated depreciation and amortization (37,334,839) (34,693,930) Property, plant, and equipment, net $ 67,767,728 $ 62,554,494

Amortization expense on the assets under capital leases of $309,667 and $323,911 for the years ended June 30, 2010 and 2009, respectively, is included in depreciation and amortization expense. Depreciation expense for the remaining property and equipment was $2,908,740 and $2,708,908 for the years ended June 30, 2010 and 2009, respectively.



13 1008-1180100

4. Property, Plant, and Equipment (continued)

In June 2009, the University entered into a contract for $4,000,000 for the construction of an Athletic Training Center. As of June 30, 2010, this project had not yet begun construction but is expected to be completed in Fall 2011.

5. Long-Term Debt

Details of long-term debt at June 30, 2010 and 2009, are as follows:

2010 2009

HBCU Dormitory Capital Project Loan, bearing interest at

6.01% payable in monthly installments of $30,850, including interest through September 2027, collateralized by land and building. $ 3,931,052 $ 4,058,820

2001 Series Bonds, bearing variable interest rate that

resembles BMA rate (0.43% at June 30, 2010) with principal and interest payments starting in October 2001 and maturing serially through July 2032, collateralized by the University’s unrestricted revenues. 18,855,000 19,755,000

Loan payable bearing variable interest rate of LIBOR plus

185 basis points. Interest due monthly and principal due semiannually. Matures October 1, 2015, collateralized by land and building. 1,365,000 1,570,000

Various capital equipment leases, bearing variable interest

rates and payable in monthly installments totaling $30,705 through August 30, 2015, collateralized by underlying assets. 976,095 936,752

$25,127,147 $ 26,320,572 Under the terms of the bond agreements, the University is required to make sinking fund deposits for the periodic payment of bond interest and the retirement of bond principal.

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1008-1180100 14

5. Long-Term Debt (continued)

The University has a promissory note agreement of $1,000,000 with a commercial bank, under which the University may borrow for working capital purposes. This note is renewable annually and is payable on demand, subject to certain restrictions. At June 30, 2010 and 2009, the University had no amounts outstanding under these agreements. The interest rate varies with the LIBOR rate.

The following is a schedule by years of future minimum lease payments under capital leases together with the present value of the net minimum lease payments as of June 30, 2010:

Year ending June 30: 2011 $ 368,455 2012 242,944 2013 204,569 2014 179,408 2015 160,301 Thereafter 38,824

Total minimum lease payments 1,194,501 Less amount representing interest (218,406) Present value of net minimum lease payments $ 976,095

Temporarily restricted assets of $1,131,259 and $1,013,237 at June 30, 2010 and 2009, respectively, provided by a National Endowment for the Humanities matching grant, are restricted for retirement of indebtedness. The income from the investment of these monies and principal is to be utilized for retirement of plant indebtedness and is available to supplement the amount of unrestricted asset payments.



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5. Long-Term Debt (continued)

Future annual principal and interest payments on notes and bonds payable as of June 30, 2010, are as follows:

Year

Bond and Mortgage Principal

Bond and Mortgage Interest Total

2011 $ 839,618 $ 1,130,312 $ 1,969,930 2012 876,943 1,094,115 1,971,058 2013 925,802 1,054,954 1,980,756 2014 968,612 1,015,357 1,983,969 2015 1,024,638 971,032 1,995,670 Thereafter 19,515,439 8,706,681 28,222,120 $ 24,151,052 $ 13,972,451 $ 38,123,503

On October 3, 2001, the University entered into a financing agreement designed to pay off the remaining principal balances of the Living Learning Center loan, science hall annex mortgage note payable, and the HBCU Loan No. 2, in addition to financing the construction of the music building annex, portions of the fine arts auditorium, and the purchase of a phone system and land surrounding the campus. The outstanding principal of the bond was originally backed by a $21,960,042, three-year letter of credit agreement that matured on October 15, 2006, and was renewed each year until April 15, 2008. In October 2007, the letter of credit was amended and restated and matures October 15, 2012. It is then renewable until the July 1, 2032 maturity date of the bonds. The variable interest rate resembles the BMA rate.

Interest expense totaled $1,252,018 for the year ended June 30, 2010, and $1,390,696 for the year ended June 30, 2009. No interest was capitalized during the years ended June 30, 2009 or 2010.

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1008-1180100 16

6. Interest Rate Swaps

In November 2001, the University entered into a hedging relationship, the purpose of which was to hedge the variability of future cash flows attributed to interest rate fluctuations and, therefore, holds only cash flow hedges. The University entered into two variable-to-fixed interest rate swap contracts for 80% of the total outstanding bonds, leaving the remaining balance subject to market fluctuations. These swap agreements were to terminate on November 1, 2008. In May 2005, the University elected to extend the term of the swaps until November 1, 2015. On November 1, 2007, the University canceled these two swap agreements and replaced them with a single swap agreement terminating July 1, 2032, for the entire outstanding principal of the bonds. The University pays a blended average interest rate of approximately 4.777%.

The estimated value of the swap agreement at June 30, 2010 and 2009, is a liability of $2,895,160 and $2,077,244, respectively, and is included in accrued expenses and other liabilities in the statements of financial position. The fair value of interest rate swaps is the estimated market rates that the University would receive or pay to terminate the swaps at the reporting date. Net settlements under this agreement are recorded as adjustments to interest expense. These adjustments increased interest expense by $656,777 and $516,864 for the years ended June 30, 2010 and 2009, respectively. Changes in the fair value of the agreement are included in the change in value of interest rate swaps in the accompanying statements of activities as the instrument does not qualify for hedge accounting treatment. These adjustments total $(817,916) and $(1,194,971) for the years ended June 30, 2010 and 2009, respectively.



17 1008-1180100

7. Fair Value of Financial Instruments and Fair Value Disclosures

The following table presents the fair values for assets and liabilities measured on a recurring basis by ASC 820 hierarchy level as of June 30, 2010:

Description Fair

Value

Level 1: Quoted prices in active markets

for identical assets or liabilities

Level 2: Significant other

observable inputs

Level 3: Significant

unobservable inputs

Assets (liabilities) Cash and cash equivalents $ 20,765,842 $ 20,765,842 $ – $ – Investments:

U.S. mid to large-cap equity 10,069,658 10,069,658 – – U.S. small-cap equity 1,714,990 1,714,990 – – Global ex-U.S. equity 7,363,474 2,439,220 4,924,254(1) – Hedge funds 3,209,191 – – 3,209,191(2) Commingled funds 3,031,812 – 3,031,812(1) – Bonds 8,625,277 6,286,097 2,339,180(1) – Short-term investment funds 20,818 20,818 – –

Assets held in trust by others 315,783 – – 315,783(4) Interest rate swap (2,895,160) – (2,895,160)(3) –

(1) The valuation of investments in certain global ex-U.S. equity funds, commingled funds, and bond funds are

based on the values of the underlying investments, for which quoted market prices are readily available. The University then determines its share of the overall fair value. The global ex-U.S. equity investment classified as Level 2 is organized as a limited partnership. Participating shares are redeemable on a weekly basis (i.e., first day of the calendar month and every Friday) at the option of the University upon four days written notice. The bonds investment classified as Level 2 is organized as a limited partnership. Participating shares are redeemable on a monthly basis (i.e., first day of each calendar month) at the option of the University upon 15 days written notice.

(2) The fair value of this investment is based on the net asset value per share. The net asset value is determined by the fund manager, based on the values of the underlying investments. This investment is organized as a limited company. Participating shares are redeemable on a quarterly basis (i.e., first business day of the calendar quarter) at the option of the University upon 45 days written notice, after October 1, 2010 (one year from the date of initial subscription of participating shares).

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1008-1180100 18

7. Fair Value of Financial Instruments and Fair Value Disclosures (continued)

(3) The valuation of this instrument is determined using market standard valuation techniques including discounted cash flow analysis on the expected cash flow of the derivative. The analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, such as interest rate curves. To comply with the provisions of ASC 820, the University incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of the derivative contract for the effect of nonperformance risk, the University has considered the impact of netting and any applicable credit enhancements. The University has classified the entire derivative valuation in Level 2 of the hierarchy, as the impact of the credit valuation adjustment is not significant to the overall valuation.

(4) The University is the irrevocable remainder beneficiary of several split-interest agreements. The assets of these charitable remainder trusts are held by an independent trustee. The University’s interest in these trusts has been recorded at fair value using a payout rate of approximately 3.0% and a discount rate of 3.2%. The change in fair value since the prior year is driven by unrealized losses on the investments held by the trust. This change is included in net realized and unrealized losses on investments within the statement of activities.

The carrying value of receivables, accounts payable, and accrued expenses are reasonable estimates of their fair value due to the short-term nature of these financial instruments. The fair value of debt obligations is estimated based on quoted market prices for the same or similar issues or based on the current rates offered to the University for debt of the same maturities. The fair value of debt obligations approximates carrying value as of June 30, 2010 and 2009.

Changes in Fair Value of Level 3 Instruments

The University classifies the fair values of financial instruments within Level 3 if there are no observable markets for the instruments, or, in the absence of active markets, the majority of the inputs used to determine the fair value of the instruments are based on assumptions about market participants. The following is a rollforward table of Level 3 financial instruments for which we have used significant unobservable inputs in the fair value measurement on a recurring basis:

Investment Hedge Funds

Assets Held in Trust by

Others Fair value as of June 30, 2009 $ – $ 304,641 Purchases of investments 3,119,096 – Unrealized gains included in change in net assets 90,095 11,142 Fair value as of June 30, 2010 $ 3,209,191 $ 315,783



19 1008-1180100

8. Restricted Net Assets

Temporarily restricted net assets at June 30, 2010 and 2009, are available for the following purposes:

2010 2009 Institution support programs and passage of time $ 257,518 $ 267,396 Restricted programs 1,433,009 1,220,955 Acquisition of building and equipment 2,373,246 2,555,292 Student aid 6,664,269 6,071,459 Other educational and general operations 5,958,349 5,338,222 $ 16,686,391 $ 15,453,324

Permanently restricted net assets at June 30, 2010 and 2009, are restricted in perpetuity, the income from which is expendable to support:

2010 2009 Student aid $ 8,638,279 $ 8,398,530 Other educational and general operations 485,449 481,165 $ 9,123,728 $ 8,879,695

Net assets were released from donor restrictions by incurring expenses satisfying the restricted purposes, principally for instruction, research, and departmental support, and as assets acquired with donor-restricted funds were placed into service.

9. Endowment

The University’s endowment consists of approximately 160 individual funds established for a variety of purposes. Its endowment includes both donor-restricted endowment funds, either permanently or temporarily restricted, and funds designated by the Board of Trustees to function as endowments. As required by generally accepted accounting principles (GAAP), net assets associated with endowment funds, including funds designated by the Board of Trustees to function as endowments, are classified and reported based on the existence or absence of donor-imposed restrictions.

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1008-1180100 20

9. Endowment (continued)

Interpretation of Relevant Law

The State of Florida operates under the Florida Uniform Management of Institutional Funds Act (UMIFA), enacted in 2003. The Board of Trustees of the University has interpreted UMIFA 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 University classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the organization in a manner consistent with the standard of prudence prescribed by UMIFA. In accordance with UMIFA, the University considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds:

1) The duration and preservation of the fund 2) The purposes of the organization and the donor-restricted endowment fund 3) General economic conditions 4) The possible effect of inflation and deflation 5) The expected total return from income and the appreciation of investments 6) Other resources of the organization 7) The investment policies of the organization

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 UMIFA requires the University to retain as a fund of perpetual duration. In accordance with GAAP, deficiencies of this nature are reported in unrestricted net assets. As of June 30, 2010 and 2009, the amount of permanently restricted endowments whose fair value of assets was less than the level required by donor stipulation totaled $419,078 and $703,730, respectively. These deficiencies resulted from unfavorable market fluctuations that occurred shortly after the investment of new permanently restricted contributions and continued appropriation for certain programs that was deemed prudent by the Board of Trustees.



21 1008-1180100


Return Objectives and Risk Parameters

The University has adopted investment and spending policies for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment while seeking to maintain the purchasing power of the endowment assets. Endowment assets include those assets of donor-restricted funds that the organization must hold in perpetuity or for a donor-specified period(s) as well as board-designated funds. Under this policy, as approved by the Board of Trustees, the endowment assets are invested in a manner to attain an average annual real total return (net of investment management fees) of at least 5.0% over the long term (rolling 20-quarter periods). It is recognized that the real return objective may be difficult to attain in every such period, but should be attainable over a series of such periods.

Strategies Employed for Achieving Objectives

To satisfy its long-term rate-of-return objectives, the University’s investments are diversified by asset class, within asset classes and by manager. The purpose of diversification is to provide reasonable assurance that no class of securities, manager, or individual holding will have a disproportionate impact on the endowment’s aggregate results. To achieve its long-term investment objective, the endowment’s assets are invested primarily in equities, but also include allocations to asset classes that might serve as partial hedges against inflation and deflation. The asset allocation of the endowment reflects the University’s long-term financial objectives as well as the University’s tolerance for risk. Endowment results are measured relative to blended benchmarks composed of the appropriate asset class indices and weighted based upon the endowment’s policy target and actual allocations.

Spending Policy and How the Investment Objectives Relate to Spending Policy

The endowment seeks to achieve reasonable stability in budgeting for University operations and to maintain intergenerational equity between near-term and long-term priorities. The Board of Trustees believe that, subject to exigent circumstances, a long-term spending rate of 3.0% of the endowment is appropriate and, therefore, has adopted the following spending policy: Spending from the endowment in any given fiscal year shall equal 3.0% of the endowment’s average market value for the preceding 12 quarters. In establishing this policy, the University considered the long-term return objective of at least 5.0% over the long term.

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1008-1180100 22


Changes in Endowment Net Assets

June 30, 2010 Temporarily Permanently Unrestricted Restricted Restricted Total

Endowment net assets, beginning of year $ 12,226,711 $ 9,247,200 $ 8,879,695 $ 30,353,606

Investment return:

Investment income 332,276 438,391 – 770,667 Net appreciation (realized

and unrealized) 1,459,730 1,303,926 – 2,763,656 Total investment return 1,792,006 1,742,317 – 3,534,323 Contributions – 19,330 244,033 263,363 Appropriation of endowment assets

for expenditure (123,867) (378,504) – (502,371) Other changes:

Transfers to create board-designated endowment funds 386,299 – – 386,299

Endowment net assets, end of year $ 14,281,149 $ 10,630,343 $ 9,123,728 $ 34,035,220

Endowment Net Asset Composition by Type of Fund June 30, 2010

Temporarily Permanently Unrestricted Restricted Restricted Total

Donor-restricted endowment funds $ (419,079) $ 10,630,343 $ 9,123,728 $ 19,334,992 Board-designated endowment funds 14,700,228 – – 14,700,228 Total funds $ 14,281,149 $ 10,630,343 $ 9,123,728 $ 34,035,220



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Changes in Endowment Net Assets

June 30, 2009 Temporarily Permanently Unrestricted Restricted Restricted Total

Endowment net assets, beginning of year $ 16,477,446 $ 14,406,198 $ 8,723,142 $ 39,606,786

Investment return:

Investment income 491,665 679,433 – 1,171,098 Net appreciation (realized

and unrealized) (5,025,101) (5,549,331) – (10,574,432) Total investment return (4,533,436) (4,869,898) – (9,403,334) Contributions – – 156,553 156,553 Appropriation of endowment assets

for expenditure (135,857) (289,100) – (424,957) Other changes:

Transfers to create board-designated endowment funds 418,558 – – 418,558

Endowment net assets, end of year $ 12,226,711 $ 9,247,200 $ 8,879,695 $ 30,353,606

Endowment Net Asset Composition by Type of Fund June 30, 2009

Temporarily Permanently Unrestricted Restricted Restricted Total

Donor-restricted endowment funds $ (703,731) $ 9,247,200 $ 8,879,695 $ 17,423,164 Board-designated endowment funds 12,930,442 – – 12,930,442 Total funds $ 12,226,711 $ 9,247,200 $ 8,879,695 $ 30,353,606

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1008-1180100 24

10. Retirement Plan

The University maintains a tax-sheltered annuity plan that is available to employees on a voluntary basis. The total expenses for this plan were $825,595 and $958,639 for the years ended June 30, 2010 and 2009, respectively.

11. Contingent Liabilities and Commitments

Litigation

In the normal course of business, the University is party to other various matters involving disputes and/or litigation. While it is not possible at this time to determine the ultimate outcome of these matters, the administration believes that any ultimate liability will not be material to the financial statements.

Contingencies

Amounts received by the University under federal and state financial assistance programs are subject to audit and adjustment by those grantor agencies. If expenses under those programs were to be disallowed as a result of such audits, the reimbursement to the federal or state government would be recorded as a liability of the University. In the opinion of the administration, any such adjustment would not be material to the University’s financial statements or its financial assistance programs.

12. Subsequent Events

In preparing these financial statements, the University has evaluated events and transactions for potential recognition or disclosure through October 1, 2010, the date the financial statements were available to be issued. During this period, there were no subsequent events that required recognition in the financial statements. Additionally, there were no nonrecognized subsequent events that required disclosure.

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1008-1180100 25

Report of Independent Certified Public Accountants on Internal Control Over Financial Reporting and on Compliance

and Other Matters Based on an Audit of the Financial Statements Performed in Accordance With Government Auditing Standards

The Board of Trustees Bethune-Cookman University, Inc.

We have audited the financial statements of Bethune-Cookman University, Inc. as of and for the year ended June 30, 2010, and have issued our report thereon dated October 1, 2010. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered the University’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the University’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the University’s internal control over financial reporting.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis.

Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.


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1008-1180100 26

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the University’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

This report is intended solely for the information and use of management, the Board of Trustees, others within the entity, federal and state awarding agencies and pass-through entities and is not intended to be, and should not be, used by anyone other than these specified parties.

��October 1, 2010


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Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. This Report has been prepared by Ernst & Young LLP, a client serving member firm located in the United States.


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APPENDIX C

BOND TRUST INDENTURE AND LOAN AGREEMENT


BOND TRUST INDENTURE

BETWEEN

HIGHER EDUCATIONAL FACILITIES FINANCING AUTHORITY

AND

U.S. BANK NATIONAL ASSOCIATION,

AS BOND TRUSTEE

DATED AS OF NOVEMBER 1, 2010

$23,825,000 Higher Educational Facilities Financing Authority Educational Facilities Revenue Bonds, Series 2010

(Bethune-Cookman University, Inc. Project)

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TABLE OF CONTENTS Page

ARTICLE I DEFINITIONS

SECTION 1.1. DEFINITIONS ................................................................................... 4

ARTICLE II THE BONDS

SECTION 2.1. AUTHORIZED AMOUNT OF BONDS ......................................... 14 SECTION 2.2. ISSUANCE OF BONDS.................................................................. 14 SECTION 2.3. EXECUTION; LIMITED OBLIGATION; NO LIABILITY

OF STATE .................................................................................. 15 SECTION 2.4. AUTHENTICATION ...................................................................... 16 SECTION 2.5. FORM OF BONDS AND TEMPORARY BONDS ........................ 17 SECTION 2.6. DELIVERY OF BONDS ................................................................. 17 SECTION 2.7. MUTILATED, LOST, STOLEN OR DESTROYED BONDS ....... 18 SECTION 2.8. TRANSFER AND EXCHANGE OF BONDS; PERSONS

TREATED AS OWNERS .......................................................... 18 SECTION 2.9. BOOK-ENTRY ONLY SYSTEM FOR THE BONDS ................... 19 SECTION 2.10. SUCCESSOR SECURITIES DEPOSITORY; TRANSFERS

OUTSIDE BOOK-ENTRY ONLY SYSTEM ........................... 20 SECTION 2.11. PAYMENTS AND NOTICES TO CEDE & CO ............................ 21

ARTICLE III APPLICATION OF BOND PROCEEDS AND

REQUIRED FUND DEPOSITS

SECTION 3.1. EXPENSE FUND ............................................................................ 22 SECTION 3.2. PROJECT FUND ............................................................................. 22 SECTION 3.3. DEPOSIT OF BOND PROCEEDS ................................................. 24

ARTICLE IV REVENUES AND FUNDS

SECTION 4.1. SOURCE OF PAYMENT OF BONDS ........................................... 25 SECTION 4.2. REVENUE FUND ........................................................................... 25 SECTION 4.3. INTEREST FUND ........................................................................... 25 SECTION 4.4. BOND SINKING FUND ................................................................. 26 SECTION 4.5. DEBT SERVICE RESERVE FUND ............................................... 26 SECTION 4.6. REDEMPTION FUND .................................................................... 28

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SECTION 4.7. INVESTMENT OF FUNDS; INCOME .......................................... 29 SECTION 4.8. TRUST FUNDS ............................................................................... 29 SECTION 4.9. EXCLUDED FUNDS; TRANSFERS TO REBATE FUND .......... 30

ARTICLE V REDEMPTION OF BONDS

SECTION 5.1. MANDATORY SINKING FUND REDEMPTIONS WITHOUT PREMIUM .............................................................. 31

SECTION 5.2. OPTIONAL REDEMPTION ........................................................... 32 SECTION 5.3. PURCHASE IN LIEU OF REDEMPTION..................................... 33 SECTION 5.4. NOTICE OF REDEMPTION; CONDITIONAL NOTICE ............. 33 SECTION 5.5. METHOD OF SELECTING BONDS IN CASE OF

PARTIAL REDEMPTION ......................................................... 34 SECTION 5.6. BONDS DUE AND PAYABLE ON REDEMPTION DATE;

INTEREST CEASES TO ACCRUE .......................................... 34 SECTION 5.7. CANCELLATION ........................................................................... 34

ARTICLE VI GENERAL COVENANTS

SECTION 6.1. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST .................................................................................. 36

SECTION 6.2. PERFORMANCE OF COVENANTS; LEGAL AUTHORIZATION .................................................................... 36

SECTION 6.3. OWNERSHIP; INSTRUMENTS OF FURTHER ASSURANCE ............................................................................. 36

SECTION 6.4. RECORDING AND FILING ........................................................... 37 SECTION 6.5. BOOKS AND RECORDS ............................................................... 37 SECTION 6.6. LIST OF BONDHOLDERS ............................................................ 37 SECTION 6.7. RIGHTS UNDER THE LOAN AGREEMENT .............................. 37 SECTION 6.8. DESIGNATION OF ADDITIONAL PAYING AGENTS .............. 37 SECTION 6.9. ARBITRAGE; COMPLIANCE WITH TAX EXEMPTION

AGREEMENT ............................................................................ 38

ARTICLE VII EVENTS OF DEFAULT AND REMEDIES

SECTION 7.1. EVENTS OF DEFAULT ................................................................. 39 SECTION 7.2. ACCELERATION ........................................................................... 41 SECTION 7.3. REMEDIES; RIGHTS OF BONDHOLDERS ................................ 41 SECTION 7.4. DIRECTION OF PROCEEDINGS BY HOLDERS ....................... 42 SECTION 7.5. APPOINTMENT OF RECEIVERS ................................................. 42 SECTION 7.6. APPLICATION OF MONEYS ....................................................... 43

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SECTION 7.7. REMEDIES VESTED IN BOND TRUSTEE ................................. 44 SECTION 7.8. RIGHTS AND REMEDIES OF BONDHOLDERS ........................ 44 SECTION 7.9. TERMINATION OF PROCEEDINGS ........................................... 45 SECTION 7.10. WAIVER OF EVENTS OF DEFAULT .......................................... 45 SECTION 7.11. UNIVERSITY'S RIGHTS OF POSSESSION AND USE OF

PROPERTY ................................................................................ 46 SECTION 7.12. WAIVER OF REDEMPTION; EFFECT OF SALE OF

TRUST ESTATE ........................................................................ 46 SECTION 7.13. NOTICE OF DEFAULT. ................................................................. 46

ARTICLE VIII THE BOND TRUSTEE

SECTION 8.1. ACCEPTANCE OF THE TRUSTS ................................................. 47 SECTION 8.2. FEES, CHARGES AND EXPENSES OF BOND TRUSTEE

AND ANY ADDITIONAL PAYING AGENT.......................... 50 SECTION 8.3. NOTICE TO THE AUTHORITY AND BONDHOLDERS IF

DEFAULT OCCURS ................................................................. 51 SECTION 8.4. INTERVENTION BY BOND TRUSTEE ....................................... 51 SECTION 8.5. SUCCESSOR BOND TRUSTEE .................................................... 51 SECTION 8.6. BOND TRUSTEE REQUIRED; ELIGIBILITY ............................. 51 SECTION 8.7. RESIGNATION BY THE BOND TRUSTEE................................. 52 SECTION 8.8. REMOVAL OF THE BOND TRUSTEE ........................................ 52 SECTION 8.9. APPOINTMENT OF SUCCESSOR BOND TRUSTEE BY

THE BONDHOLDERS; TEMPORARY BOND TRUSTEE ................................................................................... 52

SECTION 8.10. CONCERNING ANY SUCCESSOR BOND TRUSTEES ............. 53 SECTION 8.11. BOND TRUSTEE PROTECTED IN RELYING UPON

RESOLUTION, ETC .................................................................. 53 SECTION 8.12. SUCCESSOR BOND TRUSTEE AS BOND TRUSTEE OF

FUNDS, PAYING AGENT AND BOND REGISTRAR .......... 53 SECTION 8.13. PAYING AGENTS; APPOINTMENT AND ACCEPTANCE

OF DUTIES; REMOVAL .......................................................... 54

ARTICLE IX SUPPLEMENTAL INDENTURES

SECTION 9.1. SUPPLEMENTAL INDENTURES NOT REQUIRING CONSENT OF BONDHOLDERS ............................................. 55

SECTION 9.2. SUPPLEMENTAL INDENTURES REQUIRING CONSENT OF BONDHOLDERS ................................................................. 56

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ARTICLE X AMENDMENTS, ETC. TO LOAN

AGREEMENT

SECTION 10.1. AMENDMENTS TO THE LOAN AGREEMENT NOT REQUIRING CONSENT ........................................................... 58

SECTION 10.2. AMENDMENTS TO THE LOAN AGREEMENT REQUIRING CONSENT OF BONDHOLDERS ...................... 58

ARTICLE XI SATISFACTION OF THIS BOND

INDENTURE

SECTION 11.1. DEFEASANCE ................................................................................ 60 SECTION 11.2. LIABILITY OF AUTHORITY NOT DISCHARGED ................... 61 SECTION 11.3. SELECTION OF DEFEASED BONDS .......................................... 61 SECTION 11.4. WHEN REFUNDING IS NOT PERMITTED ................................ 62

ARTICLE XII MANNER OF EVIDENCING OWNERSHIP

OF BONDS

SECTION 12.1. PROOF OF OWNERSHIP .............................................................. 63

ARTICLE XIII MISCELLANEOUS

SECTION 13.1. LIMITATION OF RIGHTS ............................................................. 64 SECTION 13.2. UNCLAIMED MONEYS ................................................................ 64 SECTION 13.3. SEVERABILITY ............................................................................. 64 SECTION 13.4. NOTICES ......................................................................................... 65 SECTION 13.5. ADDITIONAL NOTICES TO RATING AGENCIES .................... 66 SECTION 13.6. COUNTERPARTS .......................................................................... 66 SECTION 13.7. APPLICABLE LAW ....................................................................... 66 SECTION 13.8. IMMUNITY OF OFFICERS, EMPLOYEES AND

MEMBERS OF AUTHORITY .................................................. 66 EXHIBIT A Form of Bond EXHIBIT B Form of Requisition

BOND TRUST INDENTURE

THIS BOND TRUST INDENTURE is dated as of November 1, 2010 and is between the HIGHER EDUCATIONAL FACILITIES FINANCING AUTHORITY, issuer, and U.S. BANK NATIONAL ASSOCIATION, as bond trustee.

PRELIMINARY STATEMENT

The Higher Educational Facilities Financing Authority, a public body corporate and politic organized and existing under the laws of the State of Florida (together with any successors, the "Authority") has authorized the issuance of its $23,825,000 initial aggregate principal amount of its tax exempt Educational Facilities Revenue Bonds, Series 2010 (Bethune-Cookman University, Inc. Project) (the "Bonds"). The Bonds will be issued pursuant to Part II, Chapter 243, Florida Statutes, as amended, and other applicable provisions of law (the "Act"), and this Bond Indenture. The proceeds derived from the sale of the Bonds will be loaned to Bethune-Cookman University, Inc., a Florida not-for-profit corporation and an accredited institution of higher education (together with its successors and assigns and any surviving, resulting or transferee corporation, the "University"), pursuant to a Loan Agreement dated as of November 1, 2010 between the University and the Authority (as amended from time to time, the "Loan Agreement").

The Bonds are being issued to (i) finance and refinance the costs of certain capital improvements to or for the University's educational facilities as more particularly described in the Loan Agreement, (ii) currently refund the outstanding Volusia County Educational Facilities Authority Variable Rate Educational Facilities Revenue Bonds, Series 2001 (Bethune-Cookman College, Inc. Project, (iii) fund a Debt Service Reserve Fund for the Bonds, and (iv) pay certain costs associated with the issuance of the Bonds.

NOW, THEREFORE, THIS BOND INDENTURE WITNESSETH:

That the Authority in consideration of the premises and of the purchase of the Bonds and of other good and lawful consideration, the receipt of which is hereby acknowledged, and to secure the payment of the principal of, premium, if any, and interest on the Bonds and the performance and observance of all of the covenants and conditions herein and therein contained, has executed and delivered this Bond Indenture and has conveyed, granted, assigned, transferred, pledged, set over and confirmed and granted a security interest in and by these presents does hereby convey, grant, assign, transfer, pledge, set over and confirm and grant a security interest in, unto the Bond Trustee, its successor or successors and its or their assigns forever, with power of sale, all and singular the property, real and personal, hereinafter described (said property being herein sometimes referred to as the "trust estate") to wit:

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GRANTING CLAUSES

DIVISION I

All right, title and interest of the Authority in and to the funds created hereunder and all amounts held therein, including investment earnings;

DIVISION II

All right, title and interest of the Authority in and to the Loan Agreement and the amounts payable to the Authority under the Loan Agreement (excluding Unassigned Rights);

DIVISION III

Any and all other property of every kind and nature from time to time hereafter, by delivery or by writing of any kind, conveyed, pledged, assigned or transferred as and for additional security hereunder by the Authority or the University or by anyone in their behalf to the Bond Trustee, including without limitation, any funds held by the Bond Trustee in any of the funds established hereunder as security for the Bonds;

EXCEPTED PROPERTY

There is, however, expressly excepted and excluded from the trust estate moneys held by the Bond Trustee in the Rebate Fund established pursuant to the Tax Exemption Agreement;

TO HAVE AND TO HOLD, all and singular, the properties and the rights and privileges hereby conveyed, assigned and pledged by the Authority or intended so to be, unto the Bond Trustee and its successors and assigns forever, in trust, nevertheless, with power of sale for the equal and pro rata benefit and security of each and every holder of the Bonds issued and to be issued hereunder, without preference, priority or distinction as to participation in the lien, benefit and protection hereof of one Bond over or from the others, by reason of priority in the issue or negotiation or maturity thereof, or for any other reason whatsoever, except as herein otherwise expressly provided, so that each and all of such Bonds shall have the same right, lien and privilege under this Bond Indenture and shall be equally secured hereby with the same effect as if the same had all been made, issued and negotiated simultaneously with the delivery hereof and were expressed to mature on one and the same date;

PROVIDED, NEVERTHELESS, and these presents are upon the express condition, that if the Authority or its successors or assigns shall well and truly pay or cause to be paid the principal of the Bonds with interest, according to the provisions set forth in such Bonds and each of them or shall provide for the payment or redemption of such Bonds by depositing or causing to be deposited with the Bond Trustee the entire

3

amount of funds or securities required for payment or redemption thereof when and as authorized by the provisions hereof, and shall also pay or cause to be paid all other sums payable hereunder by the Authority, then these presents and the estate and rights hereby granted shall cease, determine and become void, and thereupon the Bond Trustee, on payment of its lawful charges and disbursements then unpaid, on demand of the Authority and upon the payment of the costs and expenses thereof, shall duly execute, acknowledge and deliver to the Authority such instruments of satisfaction or release as may be necessary or proper to discharge this Bond Indenture, including if appropriate any required discharge of record, and if necessary, shall grant, reassign and deliver to the Authority, its successors or assigns, all and singular the property, rights, privileges and interests by it hereby granted, conveyed and assigned, and all substitutes therefor, or any part thereof, not previously disposed of or released as herein provided; otherwise this Bond Indenture shall be and remain in full force;

AND IT IS HEREBY COVENANTED, DECLARED AND AGREED by and between the parties hereto that all Bonds are to be issued, authenticated and delivered, and that all the trust estate is to be held and applied, subject to the further covenants, conditions, releases, uses and trusts hereinafter set forth, and the Authority, for itself and its successors, does hereby covenant and agree to and with the Bond Trustee and its respective successors in said trust, for the benefit of those who shall own the Bonds, or any of them, as follows: C

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4


SECTION 1.1. DEFINITIONS. To the extent not defined herein, the terms used in this Bond Indenture shall have the same meanings as set forth in the Loan Agreement. All accounting terms not otherwise defined in the Loan Agreement or herein have the meanings assigned to them in accordance with generally accepted accounting principles then in effect.

In addition to the words and terms elsewhere defined in this Bond Indenture or the Loan Agreement, the following words and terms as used in this Bond Indenture shall have the following meanings unless the context or use indicates another or different meaning or intent:

"Act" has the meaning specified in the Preliminary Statement to this Bond Indenture.

"Authority" has the meaning specified in the Preliminary Statement to this Bond Indenture.

"Authority's Expenses" means the reasonable and necessary fees and expenses incurred by the Authority with respect to this Bond Indenture, the Loan Agreement, the Purchase Contract, the Bonds or any property financed or refinanced with the proceeds of the Bonds, including any advances made by the Authority plus interest on those advances as provided by any of the applicable documents to which the University is a party and those for any legal, accounting, financial or other experts reasonably retained by the Authority, as well as any recording expenses, trustee's acceptance fees, escrow and title insurance costs, legal fees, bank fees, bond insurance and rating agency fees, printing expenses and other fees and fair and customary expenses incurred or to be incurred by or on behalf of the Authority in connection with or as an incident to the issuance and sale of the Bonds.

"Authorized Denomination" means $5,000 and any integral multiple thereof.

"Bond Counsel" means Nabors, Giblin & Nickerson, P.A., or any other nationally recognized municipal bond counsel acceptable to the Authority.

"Bond Indenture" means this Bond Trust Indenture dated as of November 1, 2010, including the Exhibits hereto, from the Authority to the Bond Trustee, as it may from time to time be amended or supplemented.

"Bond Register" means the registration books of the Authority kept by the Bond Trustee to evidence the registration and transfer of Bonds.

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"Bond Registrar" means the Bond Trustee as keeper of the Bond Register.

"Bond Sinking Fund" means the fund by that name created in Section 4.4 hereof.

"Bond Trustee" means U.S. Bank National Association, or any successor trustee under this Bond Indenture.

"Bond Trustee's Prime Rate" means a fluctuating rate of interest equal to the prime rate established from time to time by the applicable department of the Bond Trustee or the largest commercial bank with which it is affiliated if it does not have a prime rate. The Bond Trustee's Prime Rate shall change simultaneously with any corresponding change or changes in the Bond Trustee's or such affiliated bank's prime rate.

"Bondholder," "holder" and "owner of the Bonds" means any registered owner of any Bond.

"Bonds" means the $23,825,000 aggregate principal amount of Higher Educational Facilities Financing Authority Educational Facilities Revenue Bonds, Series 2010 (Bethune-Cookman University, Inc. Project) authorized to be issued by the Authority pursuant to the terms and conditions of Section 2.2 hereof.

"Business Day" means a day which is not (a) a Saturday, Sunday or legal holiday or any other day on which banking institutions in the State or the State of New York are authorized by law to close or (b) a day on which the New York Stock Exchange is closed.

"Closing Date" means November 16, 2010, the date of the initial issuance and delivery of the Bonds.

"Code" means the Internal Revenue Code of 1986, as amended. Each reference to a Section of the Code herein shall be deemed to include the United States Treasury Regulations, including temporary or proposed regulations relating to such Section which are applicable to the Bonds or the use of the proceeds thereof.

"Counsel" means an attorney duly admitted to practice law before the highest court of any state and, without limitation, may include independent or in-house legal counsel for the University or the Bond Trustee.

"Debt Service Reserve Fund" means the fund by that name created in Section 4.5 of this Bond Indenture.

"Defaulted Interest" means interest on any Bond which is payable but not duly paid on the date due.

"DTC" means The Depository Trust Company.

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"DTC Participant" means those broker dealers, banks and other financial institutions reflected on the books of DTC.

"Escrow Agreement" means the Escrow Deposit Agreement, dated November 16, 2010, between the University and U.S. Bank National Association, in its capacity as escrow agent and as trustee and paying agent for the Refunded Bonds, providing for the redemption of the Refunded Bonds.

"Expense Fund" means the fund by that name created in Section 3.1 hereof.

"Fitch" means Fitch Inc. d/b/a Fitch Ratings, its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "Fitch" shall be deemed to refer to any other nationally recognized securities rating agency which has been designated by the University by notice to the Authority and the Bond Trustee.

"Governing Body" means the board of directors, the board of trustees or similar group in which the right to exercise the powers of corporate directors or trustees is vested.

"Government Obligations" means (a) United States Government Obligations or (b) evidences of a direct ownership in future interest or principal payments on United States Government Obligations, which United States Government Obligations are held in book-entry form on the books of the Department of the Treasury.

"Immediate Notice" means notice by telephone, telex, telecopier or electronic mail to such telephone number, telex number or telecopier number or electronic mail address as the addressee shall have directed in writing, promptly followed by written notice by first class mail postage prepaid to such address as the addressee shall have directed in writing.

"Independent Counsel" means an attorney duly admitted to practice law before the highest court of any state and, without limitation, may include independent legal counsel for the Authority, the University or the Bond Trustee.

"Indirect Participant" means a person on behalf of whom a DTC Participant directly or indirectly holds an interest in the Bonds.

"Interest Fund" means the fund by that name created in Section 4.3 hereof.

"Interest Payment Date" means January 1 and July 1 of each year, commencing January 1, 2011.

"Loan Agreement" has the meaning specified in the Preliminary Statement of this Bond Indenture.

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"Maturity Date" means the maturity date for each Bond assigned a specific serial or different term maturity date pursuant to Section 2.2 hereof.

"Maximum Interest Rate" means the maximum rate permitted by law.

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

"Officer's Certificate" means a certificate signed, in the case of a certificate delivered by a corporation, by the president, any vice president or any other officer authorized to sign by resolution of the Governing Body of such corporation or, in the case of a certificate delivered by any other Person, the chief executive, chief financial officer or general counsel of such other Person, in either case whose authority to execute such Officer's Certificate shall be evidenced to the satisfaction of the Bond Trustee.

"Official Statement" means the Official Statement dated October 29, 2010, prepared in connection with the issuance and sale of the Bonds.

"Opinion of Bond Counsel" means a written opinion of Bond Counsel in form and substance acceptable to the Authority and the Bond Trustee, which opinion may be based on a ruling or rulings of the Internal Revenue Service.

"Outstanding Bonds" or "Bonds Outstanding" means all Bonds which have been duly authenticated and delivered by the Bond Trustee under this Bond Indenture, except:

(a) Bonds canceled after purchase in the open market or because of payment at or redemption prior to maturity;

(b) Bonds for the payment or redemption of which cash or Government Obligations shall have been theretofore deposited with the Bond Trustee (whether upon or prior to the maturity or redemption date of any such Bonds) in accordance with Article XI of this Bond Indenture; provided that if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given or arrangements satisfactory to the Bond Trustee shall have been made therefor, or waiver of such notice satisfactory in form to the Bond Trustee shall have been filed with the Bond Trustee;

(c) Bonds in lieu of which others have been authenticated under Section 2.7 or 2.8 of this Bond Indenture; and

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(d) for the purpose of all consents, approvals, waivers and notices required to be obtained or given under this Bond Indenture, Bonds held or owned by the University or any Person controlling, controlled by or under common control with the University to the extent provided in Section 12.1 hereof.

"Paying Agent" means the Bond Trustee and the bank or banks, if any, designated pursuant to this Bond Indenture to receive and disburse the principal of and interest on the Bonds.

"Payment Date" means each Interest Payment Date and each Principal Payment Date.

"Person" means any natural person, firm, joint venture, association, partnership, business trust, corporation, limited liability company, public body, agency or political subdivision thereof or any other similar entity.

"Principal Payment Date" means the date on which a principal payment, whether at maturity or pursuant to a mandatory sinking fund amortization, is due on the Bonds.

"Project" means all personal and real property to be financed or refinanced in whole or in part, and whether directly or indirectly, with the proceeds of the Bonds including, without limitation, the facilities financed with the proceeds of the Refunded Bonds.

"Project Fund" means the fund by that name created in Section 3.2 hereof.

"Purchase Contract" means the Bond Purchase Agreement dated October 29, 2010, among the Underwriter, the Authority and the University, providing for the sale of the Bonds.

"Qualified Investments" means any of the following, if and to the extent that the same are at the time legal for investment of funds of the Authority:

A. Direct obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury, and CATS and TIGRS) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America.

B. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself):

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1. U.S. Export-Import Bank (Eximbank) Direct obligations or fully guaranteed certificates of beneficial ownership 2. Farmers Home Administration (FmHA) Certificates of beneficial ownership 3. Federal Financing Bank 4. Federal Housing Administration Debentures (FHA) 5. General Services Administration Participation certificates 6. Government National Mortgage Association (GNMA or "Ginnie Mae") GNMA - guaranteed mortgage-backed bonds GNMA - guaranteed pass-through obligations (not acceptable for certain cash-flow sensitive issues.) 7. U.S. Maritime Administration Guaranteed Title XI financing 8. U.S. Department of Housing and Urban Development (HUD) Project Notes Local Authority Bonds New Communities Debentures - U.S. government guaranteed debentures U.S. Public Housing Notes and Bonds - U.S. government guaranteed

public housing notes and bonds

C. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non-full faith and credit U.S. government agencies (stripped securities are only permitted if they have been stripped by the agency itself):

1. Federal Home Loan Bank System Senior debt obligations 2. Student Loan Marketing Association (SLMA or "Sallie Mae") Senior debt obligations 3. Resolution Funding Corp. (REFCORP) obligations 4. Farm Credit System Consolidated system-wide bonds and notes

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D. Money market funds which may be managed or advised by the Bond Trustee or affiliates registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by Standard & Poor's of AAAm-G; AAA-m; or AA-m and if rated by Moody=s rated Aaa, Aa1 or Aa2 and that are invested only in Qualified Investments.

E. Certificates of deposit secured at all times by collateral described in (A) and/or (B) above. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks. The collateral must be held by a third party and the bondholders must have a perfected first security interest in the collateral.

F. Certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC, including BIF and SAIF.

G. Debt obligations of any U.S. corporation or trust, which obligations are rated by at least two nationally recognized rating agencies in one of the three highest rating categories, or commercial paper of same rated by at least two nationally recognized rating agencies in the highest rating category at the time of purchase by Standard & Poor's or Moody's (without incorporating refinements or gradation of rating category by numerical modifier or otherwise).

H. Commercial paper rated, at the time of purchase, "Prime - 1" by Moody's and "A-1" or better by S&P.

I. Bonds or notes issued by any state or municipality which are rated by Moody's and S&P in one of the two highest rating categories at the time of purchase by Standard & Poor's or Moody's.

J. Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of "Prime - 1" or "A3" or better by Moody's and "A-1" or "A" or better by S&P.

K. Repurchase Agreements must follow the following criteria:

1. Repos must be between the municipal entity and a dealer bank or securities firm

a. Primary dealers on the Federal Reserve reporting dealer list which are rated A or better by Standard & Poor's and Moody's, or

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b. Banks rated "A" or above by Standard & Poor's and Moody's.

2. The written repo contract must include the following:

a. Securities which are acceptable for transfer are:

(l) Direct U.S. governments, or

(2) Federal agencies backed by the full faith and credit of the U.S. government (and FNMA & FHLMC)

b. The term of the repo may be up to 30 days

c. The collateral must be delivered to the municipal entity, trustee (if trustee is not supplying the collateral) or third party acting as agent for the trustee (if the trustee is supplying the collateral) before/simultaneous with payment (perfection by possession of certificated securities).

d. Valuation of Collateral

(l) The securities must be valued weekly, market-to-market at current market price plus accrued interest

(a) The value of collateral must be equal to 104% of the amount of cash transferred by the municipal entity to the dealer bank or security firm under the repo plus accrued interest. If the value of securities held as collateral slips below 104% of the value of the cash transferred by municipality, then additional cash and/or acceptable securities must be transferred. If, however, the securities used as collateral are FNMA or FHLMC, then the value of collateral must equal 105%.

3. Legal opinion which must be delivered to the University to the effect that the repo meets guidelines under state law for legal investment of public funds.

Rating categories when referred to herein shall be without regard to gradations within such categories, such as "plus" or "minus."

"Rating Agency" means, as applicable, Moody's, Standard & Poor's and Fitch or their respective successors and assigns.

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"Rebate Fund" means the fund by that name created by the Tax Exemption Agreement.

"Record Date" means the fifteenth day (whether or not a Business Day) next preceding an Interest Payment Date therefor.

"Redemption Fund" means the fund by that name created in Section 4.6 hereof.

"Refunded Bonds" means the outstanding Volusia County Educational Facilities Authority Variable Rate Educational Facilities Revenue Bonds, Series 2001 (Bethune-Cookman College, Inc. Project).

"Reserve Requirement" means the lesser of (i) 10% of the original principal amount of the Bonds, (ii) 125% of the average annual debt service on the Outstanding Bonds or (iii) the maximum annual debt service on the Outstanding Bonds.

"Representation Letter" means the Blanket Issuer Letter of Representations dated October 24, 2002, from the Authority to DTC.

"Revenue Fund" means the fund by that name created in Section 4.2 of this Bond Indenture.

"Special Record Date" means the date fixed by the Bond Trustee pursuant to Section 2.2 hereof for the payment of Defaulted Interest.

"Standard & Poor's" or "S&P" means Standard & Poor's, a division of the McGraw-Hill Companies, Inc., a corporation organized and existing under the laws of the State of New York, its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "Standard & Poor's" shall be deemed to refer to any other nationally recognized securities rating agency which has been designated by the University by notice to the Bond Trustee and the Authority.

"State" means the State of Florida.

"Tax Exemption Agreement" means the Tax Exemption Agreement and Certificate relating to the Bonds dated November 16, 2010, between the University and the Authority.

"Tax-Exempt Organization" means a Person organized under the laws of the United States of America or any state thereof which is an organization described in Section 501(c)(3) of the Code, which is exempt from federal income taxes under Section 501(a) of the Code and which is not a "private foundation" within the meaning of Section 509(a) of the Code, or corresponding provisions of federal income tax laws from time to time in effect.

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"Unassigned Rights" means the right of the Authority to receive payment of its fees and expenses, the Authority's right to indemnification in certain circumstances, the Authority's right to execute and deliver supplements and amendments to the Loan Agreement and the Authority's right to grant consents under the Loan Agreement.

"Underwriter" means Morgan Keegan & Company, Inc.

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

"University" has the meaning specified in the Preliminary Statement to this Bond Indenture.

"University Bond" means any Bond which is registered in the name of the University.

"University's Closing Certificate" means the Officer's Certificate of the University dated the date of and delivered on the Closing Date.

"University's Documents" means the Loan Agreement, the Official Statement, the Tax Exemption Agreement and all other documents to which the University is a party related to the issuance of the Bonds.

"Written Request" means with reference to the Authority, a request in writing signed by the Chairman or Vice Chairman of the Authority and with reference to the University means a request in writing signed by the President or any Vice President of the University or any other officers designated in writing by the Authority or the University, as the case may be. "Written Requests" to requisition amounts deposited in the Expense Fund or Project Fund shall be in substantially the form of Exhibit B hereto.

Words of the feminine gender shall be deemed and construed to include correlative words of the masculine and neuter genders. Unless the context shall otherwise indicate, words importing the singular number shall include the plural and vice versa. Headings of articles and sections herein and the table of contents hereof are solely for the convenience of reference, do not constitute a part hereof and shall not affect the meaning, construction or effect hereof. All references in this instrument to designated "Articles," "Sections" and other subdivisions are to the designated Articles, Sections and other subdivisions of this instrument as originally executed. The words "herein," "hereof" and "hereunder" and other words of similar import refer to this Bond Indenture as a whole and not to any particular Article, Section or other subdivision unless the context indicates otherwise.

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ARTICLE II THE BONDS

SECTION 2.1. AUTHORIZED AMOUNT OF BONDS. No Bonds may be issued under the provisions of this Bond Indenture except in accordance with this Article. The Bonds shall be issued in the initial aggregate principal amount of $23,825,000. No other Bonds may be issued under this Bond Indenture.

SECTION 2.2. ISSUANCE OF BONDS.

(a) The Bonds shall be designated "Higher Educational Facilities Financing Authority Educational Facilities Revenue Bonds, Series 2010 (Bethune-Cookman University, Inc. Project)." The Bonds shall be issuable as fully registered Bonds in Authorized Denominations. Unless the Authority shall otherwise direct, the Bonds shall be numbered from R-1 upward. Interest on the Bonds shall be payable on each Interest Payment Date applicable thereto. Each Bond shall be dated as of the most recent Interest Payment Date to which interest has been duly paid or provided for next preceding its date of issue, unless issued on an Interest Payment Date on which interest has been paid or provided for, in which event it shall be dated as of such Interest Payment Date or, if issued prior to the first Interest Payment Date on which interest is paid, it shall be dated the original date of issue.

(b) The Bonds shall mature on July 1, in the years and in the principal amounts as follows and bear interest at the rates per annum set forth below:

Year (July 1)

Principal Amount

Interest Rate

Year (July 1)

Principal Amount

Interest Rate

2011 $720,000 1.125% 2018 $ 870,000 3.500% 2012 735,000 3.000 2019 905,000 4.000 2013 755,000 3.000 2020 940,000 4.000 2014 775,000 2.250 2024 4,205,000 4.500 2015 795,000 2.500 2025 550,000 5.000 2016 815,000 3.000 2032 10,920,000 5.375 2017 840,000 3.250

(c) Interest on the Bonds shall be calculated on the basis of a 360 day year

consisting of twelve (12), thirty (30) day months.

(d) The principal of and premium, if any, on the Bonds shall be payable upon presentation and surrender thereof at the designated corporate office of the Bond Trustee, or its successor in trust. Payment of principal of, premium, if any, and interest on the Bonds shall be payable in any currency of the United States of America which, at the respective dates of payment thereof, is legal tender for the payment of public and private debts.

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(e) Interest payments on a Bond (other than with respect to Defaulted Interest) shall be made to the registered owner thereof appearing on the Bond Register as of the close of business of the Bond Registrar on the Record Date; provided, however, that such payments shall be payable by check or draft of the Bond Trustee mailed on the Interest Payment Date to such registered owner at the address of such owner as it appears on the Bond Register or at such other address furnished in writing by such registered owner to the Bond Trustee or to any owner of $1,000,000 or more in aggregate principal amount of Bonds as of the close of business of the Bond Trustee on the Record Date for a particular Interest Payment Date, by wire transfer sent on the Interest Payment Date, to such owner. The foregoing notwithstanding, Defaulted Interest shall be payable as provided in (g) below.

(f) Defaulted Interest with respect to any Bond shall cease to be payable to the holder of such Bond on the relevant Record Date and shall be payable to the holder in whose name such Bond is registered at the close of business on the Special Record Date for the payment of such Defaulted Interest, which Special Record Date shall be fixed in the following manner. The University shall notify the Bond Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Bond and the date of the proposed payment (which date shall be such as will enable the Bond Trustee to comply with the second sentence hereafter), and shall deposit with the Bond Trustee at the time of such notice an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Bond Trustee for such deposit prior to the date of the proposed payment. Money deposited with the Bond Trustee shall be held in trust for the benefit of the holders of the Bonds entitled to such Defaulted Interest as provided in this Section. Following receipt of such funds the Bond Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Bond Trustee of the notice of the proposed payment. The Bond Trustee shall promptly notify the University of such Special Record Date and, in the name and at the expense of the University, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, not less than 10 days prior to such Special Record Date, to each holder of a Bond at the address of such holder as it appears on the Bond Register.

SECTION 2.3. EXECUTION; LIMITED OBLIGATION; NO LIABILITY OF STATE. The Bonds shall be executed on behalf of the Authority by the facsimile or manual signature of its Chairperson or Vice Chairperson and its Secretary or Assistant Secretary (or such other officer or Member as may be designated by the Authority) and shall have impressed or printed manually or by facsimile thereon the corporate seal of the Authority. The facsimile signatures of said Persons shall have the same force and effect as if such Persons had manually signed each of said Bonds. In case any officer whose signature or facsimile of whose signature shall appear on the

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Bonds shall cease to be such officer before the delivery of such Bonds, such signature or such facsimile shall nevertheless be valid and sufficient for all purposes, the same as if such Person had remained in office until delivery.

The principal of, premium, if any, and interest on the Bonds shall be special and limited obligations of the Authority payable solely from amounts payable under the Loan Agreement (except for Unassigned Rights and except to the extent paid out of moneys attributable to Bond proceeds or the income from the temporary investment thereof and, under certain circumstances, proceeds from insurance and condemnation awards) and shall be a valid claim of the respective holders thereof only against the funds established under this Bond Indenture and other moneys held by the Bond Trustee for the benefit of the Bonds and the payments due or to become due upon or under the Loan Agreement (except for Unassigned Rights) all of which are hereby assigned and pledged hereunder for the equal and ratable payment of the Bonds and shall be used for no other purpose than to pay the principal of, premium, if any, and interest on the Bonds, except as may be otherwise expressly authorized in this Bond Indenture.

The principal of, premium, if any, and interest on the Bonds do not constitute a debt or liability of the State or of any agency or political subdivision thereof, other than a special and limited obligation of the Authority within the meaning of the Act, or a pledge of the faith and credit of the State or any agency or political subdivision thereof, but shall be payable solely from the funds pledged therefor in accordance with this Bond Indenture. The issuance of the Bonds under the provisions of the Act does not, directly, indirectly or contingently, obligate the State or any agency or political subdivision thereof to levy any form of taxation for the payment thereof or to make any appropriation for their payment and the Bonds and the interest payable thereon do not now and shall never constitute a debt of the State or any agency or political subdivision thereof within the meaning of the Constitution or the statutes of the State and do not now and shall never constitute a charge against the credit or taxing power of the State or any agency or political subdivision thereof. The Authority has no taxing power.

Neither the State nor any political subdivision or agency thereof shall in any event be liable for the payment of the principal of, redemption premium, if any, or interest on the Bonds or for the performance of any pledge, obligation or agreement of any kind whatsoever which may be undertaken by the Authority. No breach by the Authority of any such pledge, obligation or agreement may impose any liability, pecuniary or otherwise, upon the State or any agency or political subdivision thereof or any charge upon its or their general credit or against its or their taxing power.

SECTION 2.4. AUTHENTICATION. No Bond shall be valid or obligatory for any purpose or entitled to any security or benefit under this Bond Indenture unless and until a certificate of authentication on such Bond substantially in the form set forth in Exhibit A shall have been duly executed by the Bond Trustee, and such executed certificate of the Bond Trustee upon any such Bond shall be conclusive evidence that

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such Bond has been authenticated and delivered under this Bond Indenture. The Bond Trustee's certificate of authentication on any Bond shall be deemed to have been executed by it if signed by an authorized signatory of the Bond Trustee but it shall not be necessary that the same signatory sign the certificate of authentication on all of the Bonds issued hereunder.

SECTION 2.5. FORM OF BONDS AND TEMPORARY BONDS. The Bonds shall be substantially in the form set forth in Exhibit A hereto with such appropriate variations, omissions and insertions as are permitted or required by this Bond Indenture or deemed necessary by the Bond Trustee, Bond Counsel, Authority's Counsel and the Authority.

The Bonds may be initially issued in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds shall be of such denomination or denominations as may be determined by the Authority, and may contain such reference to any of the provisions of this Bond Indenture as may be appropriate. Every temporary Bond shall be executed by the Authority and be authenticated by the Bond Trustee upon the same conditions and in substantially the same manner as the definitive Bonds. If the Authority issues temporary Bonds it will execute and furnish definitive Bonds without delay and thereupon the temporary Bonds may be surrendered for cancellation in exchange therefor at the designated corporate trust office of the Bond Trustee, and the Bond Trustee shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Bond Indenture as definitive Bonds authenticated and delivered hereunder.

SECTION 2.6. DELIVERY OF BONDS. Upon the execution and delivery of this Bond Indenture, the Authority shall execute and deliver to the Bond Trustee and the Bond Trustee shall authenticate the Bonds to be issued in the initial aggregate principal amount of $23,825,000, and the Bond Trustee shall deliver them to the Purchaser through the DTC system as may be directed by the Underwriter.

Prior to the delivery by the Bond Trustee of any of the Bonds, there shall be filed with or delivered to the Bond Trustee and the Authority:

(a) a copy, duly certified by the Chairperson or Vice Chairperson or the Secretary or Assistant Secretary of the Authority, of the resolution(s) adopted and approved by the Authority authorizing the execution and delivery of the Loan Agreement, the Tax Exemption Agreement, the Purchase Contract and this Bond Indenture and the issuance and sale of the Bonds;

(b) a copy, duly certified by the Secretary or an Assistant Secretary of the University, of the resolutions adopted and approved by the University authorizing the execution and delivery of the Loan Agreement, the Official

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Statement, the Tax Exemption Agreement and other documents and certificates executed by the University in connection with the issuance of the Bonds and approving this Bond Indenture and the issuance and sale of the Bonds;

(c) an original executed counterpart of this Bond Indenture, the Loan Agreement and the Tax Exemption Agreement;

(d) a request and authorization to the Bond Trustee on behalf of the Authority and signed by its Chairperson or Vice Chairperson to authenticate and deliver the Bonds in an initial aggregate principal amount not exceeding $23,825,000 to the Underwriter upon payment to the Bond Trustee, but for the account of the Authority, of the net proceeds from the sale of the Bonds; and

(e) such other closing documents and opinions of counsel as the Bond Trustee, the Authority, Counsel to the Authority or Bond Counsel may reasonably specify.

SECTION 2.7. MUTILATED, LOST, STOLEN OR DESTROYED BONDS. In the event any temporary or definitive Bond is mutilated, lost, stolen or destroyed, the Authority may execute and the Bond Trustee may authenticate a new Bond of like form, date and denomination as that mutilated, lost, stolen or destroyed; provided that, in the case of any mutilated Bond, such mutilated Bond shall first be surrendered to the Authority, and in the case of any lost, stolen or destroyed Bond, there shall be first furnished to the Authority and the Bond Trustee evidence of such loss, theft or destruction satisfactory to the Authority and the Bond Trustee, together with indemnity satisfactory to them. In the event any such Bond shall have matured, instead of issuing a duplicate Bond the Authority may pay the same without surrender thereof. The Authority and the Bond Trustee may charge the holder or owner of such Bond with their reasonable fees and expenses in this connection.

SECTION 2.8. TRANSFER AND EXCHANGE OF BONDS; PERSONS TREATED AS OWNERS. The Authority shall cause the Bond Register to be kept at the designated corporate trust office of the Bond Trustee, as Bond Registrar, which is hereby constituted and appointed the registrar of the Authority. Upon surrender for transfer of any Bond at the designated corporate trust office of the Bond Trustee, duly endorsed by, or accompanied by a written instrument or instruments of transfer in form satisfactory to the Bond Trustee and duly executed by, the registered owner or the attorney of such owner duly authorized in writing, the Authority shall execute and the Bond Trustee shall authenticate, date and deliver in the name of the transferee or transferees a new Bond or Bonds of the same maturity of authorized denominations, for the same aggregate principal amount and of like tenor. Any Bond or Bonds may be exchanged at said office of the Bond Trustee for the same aggregate principal amount of Bond or Bonds of other authorized denominations and of like tenor. The execution by

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the Authority of any Bond shall constitute full and due authorization of such Bond and the Bond Trustee shall thereby be authorized to authenticate, date and deliver such Bond.

If any Bond is transferred or exchanged on the Bond Register by the Bond Trustee after notice of the optional redemption of such Bond has been given, the Bond Trustee shall attach a copy of such notice to the Bond issued in connection with such transfer or exchange. The Bond Trustee shall not be required to register the transfer of or exchange any Bond after the mailing of notice calling such Bond or portion thereof for redemption has occurred as herein provided, or during the period of fifteen days next preceding the giving of notice calling any Bond or Bonds of the same maturity for redemption.

The Person in whose name any Bond shall be registered shall be deemed and regarded as the absolute owner thereof for the purpose of receiving payment of or on account of principal thereof and premium, if any, thereon and interest due thereon and for all other purposes, and neither the Authority nor the Bond Trustee shall be affected by any notice to the contrary, but such registration may be changed as herein provided. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid.

Any Bond surrendered for the purpose of payment or retirement or for exchange or transfer or for replacement pursuant to Section 2.7 or 2.8 hereof, shall be canceled upon surrender thereof to the Bond Trustee or any Paying Agent. Any such Bonds canceled by any Paying Agent other than the Bond Trustee shall be promptly transmitted by such Paying Agent to the Bond Trustee. Certification of Bonds canceled by the Bond Trustee and Bonds canceled by a Paying Agent other than the Bond Trustee which are transmitted to the Bond Trustee shall be made to the Authority and to the University. Canceled Bonds may be destroyed by the Bond Trustee unless instructions to the contrary are received from the Authority or the University.

The Authority and the Bond Trustee may charge each Bondholder requesting an exchange, change in registration or registration of transfer a sum not exceeding the actual cost of any tax, fee or other governmental charge required to be paid with respect to such exchange, registration or transfer, except in the case of the issuance of a definitive Bond for a temporary Bond and except in the case of the issuance of a Bond or Bonds for the unredeemed portion of a Bond surrendered for redemption.

SECTION 2.9. BOOK-ENTRY ONLY SYSTEM FOR THE BONDS. The Bonds shall be initially issued in the form of a separate single fully registered Bond for each of the maturities. Upon initial issuance, the ownership of each such Bond shall be registered in the Bond Register in the name of Cede & Co., as nominee of DTC, and except as provided in Section 2.10 hereof, all of the Outstanding Bonds shall be registered in the Bond Register in the name of Cede & Co., as nominee of DTC.

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With respect to Bonds registered in the Bond Register in the name of Cede & Co., as nominee of DTC, the Authority, the Bond Trustee and the University shall have no responsibility or obligation to any DTC Participant or to any person on behalf of whom such a DTC Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence, the Authority, the Bond Trustee and the University shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other Person, other than a Bondholder, as shown in the Bond Register, of any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to any DTC Participant or any other Person, other than a Bondholder, as shown in the Bond Register, of any amount with respect to principal of, premium, if any, or interest on the Bonds. Notwithstanding any other provision of this Bond Indenture to the contrary, the Authority, the Bond Trustee and each Paying Agent, if any, shall be entitled to treat and consider the Person in whose name each Bond is registered in the Bond Register as the absolute owner of such Bond for the purpose of payment of principal, premium, if any, and interest on such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Bond Trustee and each Paying Agent, if any, shall pay all principal of, premium, if any, and interest on the Bonds only to or upon the order of the respective Bondholders, as shown in the Bond Register as provided in this Bond Indenture, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to satisfy and discharge the Authority's obligations fully with respect to payment of principal of, premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. No Person other than a Bondholder, as shown in the Bond Register, shall receive a Bond certificate evidencing the obligation of the Authority to make payments of principal, premium, if any, and interest pursuant to this Bond Indenture. Upon delivery by DTC to the Bond Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions in this Bond Indenture with respect to interest checks or drafts being mailed to the registered owner as of the close of business on the Record Date, the word "Cede & Co." in this Bond Indenture shall refer to such new nominee of DTC; and upon receipt of such a notice the Bond Trustee shall promptly deliver a copy thereof to each Paying Agent, if any.

SECTION 2.10. SUCCESSOR SECURITIES DEPOSITORY; TRANSFERS OUTSIDE BOOK-ENTRY ONLY SYSTEM. In the event that the Authority, the University or the Bond Trustee determines that DTC is incapable of discharging its responsibilities described herein and in the Representation Letter or that it is in the best interest of the beneficial owners of the Bonds that they be able to obtain certificated Bonds, the Authority or the Bond Trustee shall, with the consent of the University (which consent shall not be unreasonably withheld), (i) appoint a successor securities depository, qualified to act as such under Section 17(a) of the Securities

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Exchange Act of 1934, as amended, notify and DTC and DTC Participants of the appointment of such successor securities depository and transfer one or more separate Bond certificates to such successor securities depository or (ii) notify and DTC and DTC Participants of the availability through DTC of Bond certificates and transfer one or more separate Bond certificates to DTC Participants having Bonds credited to their DTC accounts. In such event, the Bonds shall no longer be restricted to being registered in the Bond Register in the name of Cede & Co., as nominee of DTC, but may be registered in the name of the successor securities depository, or its nominee, or in whatever name or names Bondholders transferring or exchanging Bonds shall designate, in accordance with the provisions of this Bond Indenture. The Bond Trustee shall give written notice to the University of a determination to issue certificated bonds.

SECTION 2.11. PAYMENTS AND NOTICES TO CEDE & CO. Notwithstanding any other provision of this Bond Indenture to the contrary, so long as any of the Bonds is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal of, premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, in the manner provided in the Representation Letter. The Bond Trustee shall request in each notice sent to Cede & Co. pursuant to the terms of this Bond Indenture that Cede & Co. forward or cause to be forwarded such notice to the DTC Participants, but neither the Bond Trustee nor the Authority shall be liable if the Bond Trustee fails to make such request or if Cede & Co. fails to honor such request.

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ARTICLE III APPLICATION OF BOND PROCEEDS AND

REQUIRED FUND DEPOSITS

SECTION 3.1. EXPENSE FUND. A special fund is hereby established with the Bond Trustee and designated the "Expense Fund – Bethune-Cookman University, Inc. Project (hereinafter called the "Expense Fund") to the credit of which such deposits shall be made as are required by the provisions of Section 3.3 of this Bond Indenture.

The money in the Expense Fund shall be held by the Bond Trustee in trust and shall be applied to the payment of the costs of issuing the Bonds, including necessary incidental expenses and reimbursement to the University for such costs and expenses paid by the University in connection with issuing the Bonds and, pending such application, shall be subject to a lien and charge in favor of the holders of the Bonds for their security until paid out.

After completion of payment of all costs of issuance of the Bonds, as certified by a Written Request of the University to the Bond Trustee, and in any event no later than April 1, 2011, any surplus money in the Expense Fund shall be transferred to the Project Fund.

Payments from the Expense Fund shall be made in accordance with the provisions of this paragraph. Before any such payment shall be made, there shall be filed with the Bond Trustee a Written Request of the University stating (i) the name of the person, firm or corporation to whom each such payment is due, (ii) the amount of each payment, and (iii) the purpose by general classification for which each obligation to be paid was incurred. Such Written Request shall be accompanied by written invoices for the matters referenced therein and if the purpose of the Written Request is to reimburse the University for prior expenditures, proof of prior payment by the University of such invoices. Upon receipt of each requisition the Bond Trustee shall pay the obligation set forth in such requisition out of money in the Expense Fund, and each such obligation shall be paid by wire transfer or by check signed by one or more officers or employees of the Bond Trustee designated for such purpose by the Bond Trustee. In making such payments the Bond Trustee may rely upon such Written Requests.

SECTION 3.2. PROJECT FUND. A special fund is hereby established with the Bond Trustee and designated the "Project Fund – Bethune-Cookman University, Inc. Project" (hereinafter called the "Project Fund"), to the credit of which such deposits shall be made as are required by the provisions of Section 3.3 of this Bond Indenture.

Monies in the Project Fund shall be held by the Bond Trustee in trust and shall be applied to the payment of, and reimbursement to the University for, costs and expenses in

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connection with the Project, and, pending such application, shall be subject to a lien and charge in favor of the holders of the Bonds for their security until paid out.

After completion of the Project, as certified in a Written Request of the University to the Bond Trustee, surplus money in the Project Fund shall be applied as directed in such Written Request as follows (and in the following order): (a) to pay the costs of new improvements or equipment for the University, but only upon receipt by the Bond Trustee of an Opinion of Bond Counsel that such payment will not adversely affect the validity of, or the exclusion from, gross income for federal income tax purposes of interest on the Bonds, (b) to the Interest Fund to pay interest coming due on the Bonds on the next two Interest Payment Dates, (c) upon receipt of an Opinion of Bond Counsel that such payment will not adversely affect the validity or exclusion from gross income for federal tax purposes of the interest on the Bonds, to the Bond Sinking Fund to pay the principal coming due on the Bonds on the next Principal Payment Date, and (d) to the Redemption Fund and held as a segregated subaccount therein to be used to purchase and retire Bonds at the Written Request of the University or to redeem Bonds on their first optional redemption date, and such surplus money shall not be invested at a yield exceeding the yield on the Bonds.

Payments from the Project Fund shall be made in accordance with the following provisions: Before any such payment shall be made, there shall be filed with the Bond Trustee a Written Request of the University stating:

(a) The name of the person, firm or corporation to whom each such payment is due;

(b) The respective amounts to be paid;

(c) The purpose by general classification for which each obligation to be paid was incurred; and

(d) That obligations in the stated amounts have been incurred by the University and are presently due and payable and that each item thereof is a necessary cost of the Project and is a proper charge against the Project Fund and has not been paid previously from the Project Fund.

Such Written Request shall be accompanied by a summary of such invoices for the matters referenced therein and if the purpose of the Written Request is to reimburse the University for prior expenditures, evidence of prior payment by the University of such amounts.

Upon receipt of each Written Request, the Bond Trustee shall pay the obligations set forth in such Written Request out of moneys in the Project Fund, and each such obligation shall be paid by check signed by the Bond Trustee or by wire transfer in

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accordance with the instructions provided by the University. In making such payments, the Bond Trustee may conclusively rely upon such Written Request.

SECTION 3.3. DEPOSIT OF BOND PROCEEDS. The Authority, for and on behalf of the University, shall deposit or cause to be deposited with the Bond Trustee all of the proceeds loaned to the University from the sale of the Bonds (net of (i) Underwriter's discount of $181, 662.13 and (ii) $18,653,854.24 wired directly to the Escrow Agent (as defined in the Escrow Agreement) to be applied in accordance with the provisions of the Escrow Agreement), and the Bond Trustee shall deposit such proceeds as follows:

(a) Deposit $275,000.00 of the Bond proceeds to the credit of the Expense Fund established pursuant to Section 3.1 hereof;

(b) Deposit $1,807,568.76 of the Bond proceeds to the credit of the Debt Service Reserve Fund established pursuant to Section 4.5 hereof; and

(c) Deposit the remainder of the Bond proceeds ($3,212,097.62) to the credit of the Project Fund established pursuant to Section 3.2 hereof.

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ARTICLE IV REVENUES AND FUNDS

SECTION 4.1. SOURCE OF PAYMENT OF BONDS. The Bonds herein authorized and all payments to be made by the Authority thereon and into the various Funds established under this Bond Indenture are not general obligations of the Authority but are special limited obligations payable solely from amounts payable under the Loan Agreement pledged hereunder (it being understood that such pledged payments do not include the fees and expenses of the Authority and amounts payable to the Authority as indemnification under certain circumstances), amounts on deposit in the Funds created hereunder (other than the Rebate Fund).

SECTION 4.2. REVENUE FUND. The Authority shall establish with the Bond Trustee and maintain so long as any of the Bonds are outstanding a separate account to be known as the "Revenue Fund – Bethune-Cookman University, Inc. Project" (hereinafter called the "Revenue Fund"). The Revenue Fund shall be held by the Bond Trustee. All payments under the Loan Agreement, as and when received by the Bond Trustee, shall be deposited in the Revenue Fund and shall be held therein until disbursed as herein provided. Pursuant to the assignment and pledge of payments under the Loan Agreement set forth in the granting clauses contained herein, the Authority will direct the University to make payments under the Loan Agreement directly to the Bond Trustee when and as the same become due and payable under the terms of the Loan Agreement.

SECTION 4.3. INTEREST FUND.

(a) The Authority shall establish with the Bond Trustee and maintain so long as any of the Bonds are outstanding a separate account to be known as the "Interest Fund – Bethune-Cookman University, Inc. Project" (hereinafter called the "Interest Fund"). The Interest Fund shall be held by the Bond Trustee.

(b) Not later than the Business Day preceding each Interest Payment Date, commencing January 1, 2011, the Bond Trustee shall deposit in the Interest Fund from moneys in the Revenue Fund an amount which, together with any moneys already on deposit in the Interest Fund and available to make such payment, will not be less than the amount of interest to become due on the Bonds on the next succeeding Interest Payment Date. No deposit pursuant to this paragraph need be made if and to the extent that there is a sufficient amount already on deposit and available for such purpose in the Interest Fund.

(c) Except as provided in this paragraph, in Section 7.7 or Section 8.2 hereof and as directed by the University pursuant to the Tax Exemption Agreement, moneys in the Interest Fund shall be used solely to pay interest on the Bonds when due. The Bond

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Trustee shall at all times maintain accurate records of deposit into the Interest Fund and the sources and dates of such deposits.

SECTION 4.4. BOND SINKING FUND.

(a) The Authority shall establish with the Bond Trustee and maintain so long as any of the Bonds are outstanding a separate account to be known as the "Bond Sinking Fund – Bethune-Cookman University, Inc. Project" (hereinafter called the "Bond Sinking Fund"). The Bond Sinking Fund shall be held by the Bond Trustee.

(b) Not later than the Business Day preceding each July 1, commencing with July 1, 2021, after making the deposits required by Section 4.3, hereof, the Bond Trustee shall deposit in the Bond Sinking Fund from moneys in the Revenue Fund an amount which will be not less than the amount of principal to become due on the Bonds on the next succeeding Principal Payment Date, whether by maturity or by mandatory Bond Sinking Fund redemption. No deposit pursuant to this paragraph need be made if and to the extent that there is a sufficient amount already on deposit and available for such purpose in the Bond Sinking Fund.

(c) Except as provided in this paragraph, in Sections 7.7 or 8.2 hereof and as directed by the University pursuant to the Tax Exemption Agreement, moneys in the Bond Sinking Fund shall be used solely for the payment of principal of the Bonds as the same shall become due and payable at maturity and to redeem the Bonds in accordance with the mandatory Bond Sinking Fund redemption schedule provided in Section 5.1 hereof. The Bond Trustee shall at all times maintain accurate records of deposits into the Bond Sinking Fund, and the sources and dates of such deposits.

(d) In lieu of such mandatory Bond Sinking Fund redemption the Bond Trustee may, at the written request of the University, purchase an equal principal amount of Bonds with the same Maturity Date in the open market at prices not exceeding the principal amount of the Bonds being purchased plus accrued interest. In addition, the amount of Bonds to be redeemed on any date pursuant to the mandatory Bond Sinking Fund redemption schedule shall be reduced by the principal amount of Bonds with the same Maturity Date which are acquired by the University and delivered to the Bond Trustee for cancellation.

SECTION 4.5. DEBT SERVICE RESERVE FUND. The Authority shall establish with the Bond Trustee and maintain so long as any of the Bonds are outstanding a separate fund to be known as the "Debt Service Reserve Fund – Bethune-Cookman University, Inc." (the "Debt Service Reserve Fund"). An initial deposit will be made to the credit of the Debt Service Reserve Fund from Bond proceeds in the amount of $1,807,568.76, as provided in Section 3.3 hereof. Except for amounts in excess of the Reserve Requirement which shall be applied in accordance with Section 4.7(b)(ii) hereof, moneys on deposit in the Debt Service Reserve Fund shall be used only to make up any

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deficiencies in the Interest Fund and the Bond Sinking Fund (in that order) with respect to the Bonds.

Except as otherwise provided in this Section 4.5, moneys in the Debt Service Reserve Fund is required to be maintained in an amount equal to the Reserve Requirement. Moneys on deposit in the Debt Service Reserve Fund shall be invested in Qualified Investments. Qualified Investments in the Debt Service Reserve Fund shall be valued by the Bond Trustee at least once annually on the basis of fair market value. If at the time of any valuation the amount on deposit in the Debt Service Reserve Fund is less than 90% of the Reserve Requirement as a result of a decline in the market value of investments in the Debt Service Reserve Fund, the Loan Agreement requires the University to deposit in the Debt Service Reserve Fund the amount necessary to restore the amount on deposit in the Debt Service Reserve Fund to the Reserve Requirement within not more than 180 days following the date on which the University receives notice of such deficiency. If at the time of any valuation the amount on deposit in the Debt Service Reserve Fund is less than 100% of the Reserve Requirement as a result of the Debt Service Reserve Fund having been drawn upon as provided in this Bond Indenture, the Loan Agreement requires the University to pay the amount which was withdrawn to the Bond Trustee in not more than 12 substantially equal monthly payments beginning with the first day of the first month after the month in which such draw occurred.

In lieu of or in substitution for maintaining and depositing moneys in the Debt Service Reserve Fund, the University may deliver to the Bond Trustee for deposit in the Debt Service Reserve Fund a letter of credit, surety bond, non-callable insurance policy or similar instrument issued by a domestic or foreign bank, insurance company or other financial institution whose debt obligations are rated in one of the two highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) by Standard & Poor's, Fitch or Moody's at the time of delivery, in a face amount equal to all or any portion of the Reserve Requirement. Any such letter of credit, surety bond, insurance policy or similar instrument shall (1) be issued in the name of the Bond Trustee, (2) contain no restrictions on the ability of the Bond Trustee to receive payment thereunder other than a certification by the Bond Trustee that the funds drawn thereunder are to be used for the purposes set forth in the preceding paragraphs, (3) be for a term of at least five (5) years from the date of issuance, (4) provide that the obligation to reimburse the issuer thereof is subordinate to the obligation to pay debt service on the Bonds, and (5) provide that the Bond Trustee shall receive payment thereunder prior to any expiration or termination thereof and whenever moneys are required for the purposes for which Debt Service Reserve Fund moneys may be applied. If at any time the ratings on debt obligations of the issuer of the letter of credit, surety bond, non-callable insurance policy or similar instrument fall below the requirements set forth in this paragraph, the University shall deliver to the Bond Trustee on or before the earlier of the date which is six (6) months prior to the expiration of such surety bond, insurance policy or similar instrument or the date which is twelve (12) months from the

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date such issuer's debt obligations were downgraded, (1) a surety bond, non-callable insurance policy or similar instrument meeting the requirements of this paragraph and/or (2) cash or Qualified Investments which, in aggregate, equal the Reserve Requirement. Six (6) months prior to the expiration date of any surety bond, non-callable insurance policy or similar instrument deposited in the Debt Service Reserve Fund pursuant to this paragraph, the University shall deliver to the Bond Trustee a substitute surety bond, non-callable insurance policy or similar instrument meeting the requirements of this paragraph and/or cash or Qualified Investments which, in aggregate, equal the Reserve Requirement.

If the University elects to deposit a letter of credit, surety bond, insurance policy or similar instrument in the Debt Service Reserve Fund in lieu of or in substitution for moneys on deposit therein, the Bond Trustee shall return to the University from the Debt Service Reserve Fund moneys originally deposited by the University therein in an amount equal to, or Qualified Investments held therein having a market value equal to, either (i) the face amount of the letter of credit, surety bond, insurance policy or similar instrument then being deposited, or (ii) the portion of the amounts then on deposit in the Debt Service Reserve Fund deposited by the University if all of the amounts on deposit therein are being released. If the University elects to deposit a letter of credit, surety bond, insurance policy or similar instrument in the Debt Service Reserve Fund in lieu of moneys on deposit therein, any moneys on deposit in the Debt Service Reserve Fund which were originally proceeds of the Bonds shall be transferred to the Bond Sinking Fund to the extent necessary to make the next principal payment therefrom and then to the Redemption Fund to optionally redeem Bonds; provided, however, that if the Bond Trustee shall have received an opinion of Bond Counsel (which Bond Counsel and opinion, including the scope, form, substance and other aspects thereof are acceptable to the Bond Trustee) to the effect that the deposit of such proceeds in the Project Fund for disbursement to pay "costs" of a "project" as permitted under the Act will not adversely affect the validity of the Bonds or any exemption for the purposes of federal income taxation to which interest on the Bonds is otherwise entitled, then the Bond Trustee shall deposit such proceeds in the Project Fund to the extent so permitted by such opinion.

SECTION 4.6. REDEMPTION FUND.

(a) The Authority shall establish with the Bond Trustee and maintain so long as any of the Bonds are outstanding a separate account to be known as the "Redemption Fund – Bethune-Cookman University, Inc. Project" (the "Redemption Fund"). In the event of (i) prepayment by or on behalf of the University under the Loan Agreement, (ii) receipt by the Bond Trustee of condemnation awards or insurance proceeds for purposes of redeeming Bonds or (iii) deposit with the Bond Trustee by the University or the Authority of moneys from any other source for redeeming Bonds, except as otherwise provided in Section 4.4 of this Bond Indenture, such moneys shall be deposited in the Redemption Fund.

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(b) Moneys on deposit in the Redemption Fund shall be used first to make up any deficiencies existing in the Interest Fund and the Bond Sinking Fund (in the order listed) and second for the purchase or redemption of Bonds in accordance with the provisions of Article V hereof.

SECTION 4.7. INVESTMENT OF FUNDS; INCOME.

(a) Moneys in the Revenue Fund, Interest Fund, Bond Sinking Fund, Debt Service Reserve Fund, Expense Fund, Project Fund and Redemption Fund shall be invested in Qualified Investments upon a Written Request of the University filed with the Bond Trustee; provided, however, that moneys held in the Redemption Fund shall only be invested in United States Government Obligations with a term not exceeding the earlier of 30 days from the date of investment of such moneys or the date such moneys are anticipated to be required. Absent a written request regarding investment instructions, the Bond Trustee shall invest the subject moneys in any investment vehicle described in item D of the term "Qualified Investments." Such investments shall be made so as to mature on or prior to the date or dates that moneys therefrom are anticipated to be required. The Bond Trustee, when authorized by the University, may trade with itself in the purchase and sale of securities for such investments; provided, however, that in no case shall any investment be otherwise than in accordance with the investment limitations contained herein. The Bond Trustee shall not be liable or responsible for any loss resulting from any such investments. Any purchase or sale of securities may be accomplished through the Bond Trustee's bond department.

(b) All income derived from the investment of moneys on deposit in the following funds shall be deposited as follows:

(i) income derived from the investment of moneys on deposit in the Interest Fund, Redemption Fund, Expense Fund and the Bond Sinking Fund shall be retained in such Funds;

(ii) income derived from the investment of moneys on deposit in the Debt Service Reserve Fund so long as the amount on deposit therein is (A) greater than the Reserve Requirement, shall be deposited to the Project Fund prior to the completion of the Project and thereafter to the Interest Fund and (B) less than the Reserve Requirement, shall be retained in the Debt Service Reserve Fund; and

(iii) income derived from the investment of moneys on deposit in the Project Fund (A) prior to the completion of the Project, shall be retained in the Project Fund and (B) after completion of the Project, shall be applied in accordance with Section 3.2 hereof.

SECTION 4.8. TRUST FUNDS. All moneys received by the Bond Trustee under the provisions of this Bond Indenture shall be trust funds under the terms hereof for

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the benefit of all outstanding Bonds and shall not be subject to lien or attachment of any creditor of the Authority or the University. Such moneys shall be held in trust and applied in accordance with the provisions of this Bond Indenture.

SECTION 4.9. EXCLUDED FUNDS; TRANSFERS TO REBATE FUND. The foregoing provisions of this Article IV notwithstanding, (i) the Rebate Fund shall not be considered a part of the "trust estate" created by this Bond Indenture and (ii) the Bond Trustee shall be permitted to transfer moneys on deposit in any of the trust funds established under this Article IV to the Rebate Fund in accordance with the written Request of the University purported to be pursuant to the provisions of the Tax Exemption Agreement.

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ARTICLE V REDEMPTION OF BONDS

SECTION 5.1. MANDATORY SINKING FUND REDEMPTIONS WITHOUT PREMIUM.

(a) The Bonds maturing on July 1, 2024 shall be subject to mandatory redemption and payment prior to maturity at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date, without premium. Pursuant to Section 4.2 of the Loan Agreement, the University shall deposit in the Bond Sinking Fund a sum that, together with all amounts then on deposit in the Bond Sinking Fund and then available for the redemption of the Bonds shall be sufficient to redeem (after credit as provided below) the following principal amounts of Bonds on the following sinking fund payment dates:

July 1 of the Year

Principal Amount

2021 $ 980,000 2022 1,025,000 2023 1,075,000 2024* 1,125,000

_________ *Final Maturity

(b) The Bonds maturing on July 1, 2032 shall be subject to mandatory

redemption and payment prior to maturity at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date, without premium. Pursuant to Section 4.2 of the Loan Agreement, the University shall deposit in the Bond Sinking Fund a sum that, together with all amounts then on deposit in the Bond Sinking Fund and then available for the redemption of the Bonds shall be sufficient to redeem (after credit as provided below) the following principal amounts of Bonds on the following sinking fund payment dates:

July 1 of the Year

Principal Amount

July 1 of the Year

Principal Amount

2025 $ 630,000 2029 $1,460,000 2026 1,245,000 2030 1,545,000 2027 1,315,000 2031 1,625,000 2028 1,385,000 2032* 1,715,000

__________ *Final Maturity

(c) On or before the thirtieth (30th) day prior to any sinking fund payment date,

the Bond Trustee shall proceed to select for redemption (by lot in such manner as the

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Bond Trustee may determine), from all Outstanding Bonds subject to mandatory sinking fund redemption on such date, an aggregate principal amount of such Bonds equal to the amount required to be on deposit in the Bond Sinking Fund with respect to such Bonds on such sinking fund payment date, and shall call such Bonds or portions thereof in Authorized Denominations for redemption from the sinking fund on such sinking fund payment date and give notice of such call. At the option of the University, to be exercised by delivery of a Written Request of the University to the Bond Trustee on or before the sixtieth (60th) day next preceding any sinking fund payment date, it may (i) deliver to the Bond Trustee for cancellation Bonds or portions thereof in Authorized Denominations of the maturity relating to such sinking fund payment date in any aggregate principal amount desired by the University or (ii) specify a principal amount of Bonds or portions thereof in Authorized Denominations or the maturity relating to such sinking fund payment date which prior to said date have been purchased or redeemed (otherwise than through the operation of the Sinking Fund) and cancelled by the Bond Trustee at the request of the University and not theretofore applied as a credit against any sinking fund payment. Each such Bond or portion thereof so delivered or previously redeemed shall be credited by the Bond Trustee at one hundred percent (100%) of the principal amount thereof against the obligation of the Authority on such sinking fund payment date with respect to Bonds of such maturity. Any excess shall be credited against the next sinking fund payment relating to the Bonds of such maturity. In the event the University shall avail itself of the provisions of clause (i) of the second sentence of this paragraph, the Written Request shall be accompanied by the Bonds or portions thereof to be cancelled.

(d) The amount of mandatory Bond Sinking Fund redemption requirement shall be reduced by the amount of Bonds acquired and delivered in accordance with Section 4.4 hereof in satisfaction of such Bond Sinking Fund requirement. Payment or redemption of the Bonds through the Bond Sinking Fund shall be without premium. The Bonds shall be redeemed by the Bond Trustee pursuant to the provisions of this paragraph without any notice from or direction by the Authority or the University. Interest is payable upon mandatory Bond Sinking Fund redemptions as set forth in Section 4.3 hereof.

SECTION 5.2. OPTIONAL REDEMPTION.

(a) The Bonds are not redeemable at the option of the University or the Authority prior to July 1, 2020. The Bonds maturing on and after July 1, 2021 may be redeemed in whole or in part at the option of the University on any date on and after July 1, 2020 at a redemption price equal to 100% of the principal amount of each Bond redeemed plus accrued interest to the redemption date.

(b) Any Bonds which are University Bonds are subject to redemption in whole or in part (in an Authorized Denomination) prior to their Maturity Date at the option of the University out of amounts deposited in the Redemption Fund by the University, in

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whole or in part (and if in part, in an Authorized Denomination) on any Business Day while such Bonds are University Bonds at a redemption price equal to 100% of the principal amount thereof plus accrued interest, if any, to the redemption date.

SECTION 5.3. PURCHASE IN LIEU OF REDEMPTION. In lieu of an optional redemption and cancellation of Bonds, Bonds may be purchased by the University for its own account and either (i) cancelled or (ii) remarketed. Notice and selection of Bonds being purchased pursuant to the provisions of this Section 5.3 shall be given/selected in the same manner as the notice and selection of Bonds called for optional redemption; provided, that the notice provided for in Section 5.4 hereof shall be modified as necessary to reflect a purchase in lieu of redemption.

SECTION 5.4. NOTICE OF REDEMPTION; CONDITIONAL NOTICE.

(a) Except as hereinafter provided, a copy of the notice of the call for any such redemption identifying the Bonds to be redeemed shall be given by first class mail, postage prepaid, to the registered owners of Bonds to be redeemed at their addresses as shown on the Bond Register not less than thirty (30) days or more than sixty (60) days prior to the redemption date. Except for mandatory Bond Sinking Fund redemptions, prior to the date that the redemption notice is first given as aforesaid, funds shall be placed with the Bond Trustee to pay the principal of such Bonds, any premium thereon and accrued interest thereon to the redemption date, or such notice shall state that any redemption is conditional on such funds being deposited with the Bond Trustee on the redemption date and that a failure to make such deposit shall not constitute an event of default hereunder.

(b) Failure to give notice in the manner prescribed hereunder with respect to any Bond, or any defect in such notice, shall not affect the validity of the proceedings for redemption for any Bond with respect to which notice was properly given. Upon the happening of the above conditions and if sufficient moneys are on deposit with the Bond Trustee on the applicable redemption date to redeem the Bonds to be redeemed and to pay interest due thereon and premium, if any, the Bonds thus called shall not after the applicable redemption date bear interest, be protected by this Bond Indenture or be deemed to be outstanding under the provisions of this Bond Indenture. The Bond Trustee shall redeem, in the manner provided in this Article V, such an aggregate principal amount of such Bonds at the principal amount thereof plus accrued interest to the redemption date and unpaid thereon and premium, if any, as will exhaust as nearly as practicable such funds. At the direction of the University, such funds may be invested in United States Government Obligations until needed for redemption payout.

(c) Notwithstanding the foregoing, so long as Bonds are subject to the book-entry only system of registration, such notice shall only be sent to the corresponding

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securities depository (which shall initially be DTC) and such notice may be sent by means of facsimile or any other means acceptable to the securities depository.

(d) If any Bond is transferred or exchanged on the Bond Register by the Bond Registrar after notice has been given calling such Bond for redemption, the Bond Registrar will attach a copy of such notice to the Bond issued in connection with such transfer.

SECTION 5.5. METHOD OF SELECTING BONDS IN CASE OF PARTIAL REDEMPTION. In the event that less than all of the Outstanding Bonds or portions thereof shall be redeemed, the maturities of the Bonds to be redeemed shall be designated by the University and, if not so designated, the Bonds to be redeemed shall be redeemed in inverse order of maturity. If less than all Bonds or portions thereof of a single maturity are to be redeemed, they shall be selected by lot in such manner as the Bond Trustee may determine (subject to Section 5.1(e) hereof).

In case a Bond is of a denomination larger than an Authorized Denomination, a portion of such Bond may be redeemed, but Bonds shall be redeemed only in the principal amount of an Authorized Denomination each or any integral multiple thereof. Upon surrender of any Bond for redemption in part only, the Authority shall execute and the Bond Trustee shall authenticate and deliver to the owner thereof, at the expense of the University, a new Bond or Bonds of the same maturity of Authorized Denominations in an aggregate principal amount equal to the unredeemed portion of the Bond surrendered.

SECTION 5.6. BONDS DUE AND PAYABLE ON REDEMPTION DATE; INTEREST CEASES TO ACCRUE. Except as otherwise provided in Section 5.1 hereof, on or before the Business Day prior to the redemption date specified in the notice of redemption, an amount of money which together with all amounts then on deposit in the Bond Sinking Fund or Redemption Fund, as appropriate and available for redemption of the Bonds shall be sufficient to redeem all Bonds called for redemption at the appropriate redemption price, including accrued interest to the date fixed for redemption, shall be paid to the Bond Trustee for deposit in the Bond Sinking Fund or Redemption Fund, as appropriate. On the redemption date the principal amount of each Bond to be redeemed, together with the accrued interest thereon to such date and redemption premium, if any, shall become due and payable; and from and after such date, notice having been given and the deposit having been made in accordance with the provisions of this Article V, then, notwithstanding that any Bonds called for redemption shall not have been surrendered, no further interest shall accrue on any such Bonds. From and after such date of redemption (such notice having been given and such deposit having been made), the Bonds to be redeemed shall not be deemed to be Outstanding hereunder, and the Authority shall be under no further liability in respect thereof.

SECTION 5.7. CANCELLATION. All Bonds which have been redeemed shall be cancelled and cremated or otherwise destroyed by the Bond Trustee and shall not

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be reissued and a counterpart of the certificate of cremation or other destruction evidencing such cremation or other destruction shall be furnished by the Bond Trustee to the Authority and the University; provided, however, that one or more new Bonds shall be issued for the unredeemed portion of any Bond without charge to the holder thereof.

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ARTICLE VI GENERAL COVENANTS

SECTION 6.1. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST. Subject to the limited source of payment hereinafter referred to, the Authority covenants that it will promptly pay the principal of, premium, if any, and interest on every Bond issued under this Bond Indenture at the place, on the dates and in the manner provided herein and in said Bond according to the true intent and meaning thereof. The principal of and interest and premium, if any, on the Bonds are payable solely from payments or prepayments by the University under the Loan Agreement, which payments are hereby specifically assigned and pledged to the payment of the Bonds in the manner and to the extent herein specified, and nothing in the Bonds or in this Bond Indenture shall be considered as assigning or pledging any other funds or assets of the Authority (except the moneys and the Loan Agreement pledged under this Bond Indenture).

SECTION 6.2. PERFORMANCE OF COVENANTS; LEGAL AUTHORIZATION. The Authority covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations and provisions contained in this Bond Indenture, in any and every Bond executed, authenticated and delivered hereunder and in all proceedings of its members pertaining thereto. The Authority shall not be required to perform any undertaking or to execute any instrument pursuant to the provisions hereof until it shall have been requested to do so by the University or the Bond Trustee, or shall have received the instrument to be executed and, at the option of the Authority, shall have received from the party requesting such performance or execution assurance satisfactory to the Authority that the Authority shall be reimbursed for its reasonable expenses incurred or to be incurred in connection with such performance or execution. The Authority represents that it is duly authorized under the Constitution and laws of the State to issue the Bonds authorized hereby, to execute this Bond Indenture, to assign the Loan Agreement and payments thereunder under this Bond Indenture in the manner and to the extent herein set forth; all action on its part for the issuance of the Bonds and the execution and delivery of this Bond Indenture has been taken; and the Bonds in the hands of the holders thereof as shown on the Bond Register are and will be valid and enforceable obligations of the Authority according to the import thereof.

SECTION 6.3. OWNERSHIP; INSTRUMENTS OF FURTHER ASSURANCE. The Authority represents that the pledge and assignment of its interest in the Loan Agreement (other than the Unassigned Rights) to the Bond Trustee hereby made are valid. The Authority covenants that it will defend, at the sole cost of the University, its interest in the Loan Agreement and the assignment thereof to the Bond Trustee, for the benefit of the holders of the Bonds against the claims and demands of all Persons whomsoever. The Authority covenants that, at the sole cost of the University, it will do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and

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delivered, such indentures supplemental hereto and such further acts, instruments and transfers as the Bond Trustee may reasonably require for the better assuring, transferring, conveying, pledging, assigning and confirming unto the Bond Trustee, the Loan Agreement and all payments thereon and thereunder pledged hereby to the payment of the principal of, premium, if any, and interest on the Bonds.

SECTION 6.4. RECORDING AND FILING. The Authority covenants that, solely from additional amounts payable as provided in Section 4.8 of the Loan Agreement, it will cause, if necessary, this Bond Indenture and all supplements hereto and the Loan Agreement and all supplements thereto, and all related financing statements, to be kept, recorded and filed in such manner and in such places as may be required by law in order to preserve and protect fully the security of the holders of the Bonds and the rights of the Bond Trustee hereunder.

SECTION 6.5. BOOKS AND RECORDS. The Authority covenants that so long as any Bonds are outstanding and unpaid, to the extent of its financial dealings or transactions in relation to the University and the amounts derived from the Loan Agreement pledged under this Bond Indenture, it will cause the Bond Trustee to keep, or cause to be kept, proper records and accounts, and the Trustee hereby agrees to keep such records and provide the same to the Authority upon reasonable request. Such records and accounts shall at all times be open for any lawful purpose to the inspection of such accountants or other agencies as the Bond Trustee may from time to time designate.

SECTION 6.6. LIST OF BONDHOLDERS. The Bond Registrar will keep on file at its office the Bond Register, indicating the names and addresses of the holders of the Bonds and the serial numbers of such Bonds held by each of such holders. At reasonable times and under reasonable regulations established by the Bond Registrar, the Bond Register may be inspected and copied by the University, the Authority or by the authorized representative of any holder or holders of ten percent (10%) or more in outstanding principal amount of the Bonds, such ownership and the authority of any such designated representatives to be evidenced to the satisfaction of the Bond Registrar.

SECTION 6.7. RIGHTS UNDER THE LOAN AGREEMENT. The Authority agrees that the Bond Trustee in its own name or in the name of the Authority may enforce all rights of the Authority and all obligations of the University under and pursuant to the Loan Agreement for and on behalf of the Bondholders (other than the Unassigned Rights), whether or not the Authority is in default hereunder.

SECTION 6.8. DESIGNATION OF ADDITIONAL PAYING AGENTS. The Authority may, in its discretion (but only with the prior consent of the University), cause the necessary arrangements to be made through the Bond Trustee and to be thereafter continued for the designation of alternate Paying Agents and for the making available of funds hereunder for the payment of such of the Bonds as shall be presented

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when due at the principal corporate trust office of the Bond Trustee, or its successor in trust hereunder, or at the principal corporate trust office of said alternate Paying Agents.

SECTION 6.9. ARBITRAGE; COMPLIANCE WITH TAX EXEMPTION AGREEMENT. The Authority covenants and agrees that it will not take any action or fail to take any action with respect to the investment of the proceeds of any Bonds issued under this Bond Indenture (regardless of the source thereof and whether or not held under this Bond Indenture) or with respect to the payments derived from the Loan Agreement or any other moneys regardless of source or where held which may, notwithstanding compliance with the other provisions of this Bond Indenture, the Loan Agreement and the Tax Exemption Agreement, result in constituting the Bonds "arbitrage bonds" within the meaning of such term as used in Section 148 of the Code. The Authority further covenants and agrees that it will comply with and take all actions required by the Tax Exemption Agreement.

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ARTICLE VII EVENTS OF DEFAULT AND REMEDIES

SECTION 7.1. EVENTS OF DEFAULT. Each of the following events is hereby declared an "event of default:"

(a) payment of any installment of interest on any of the Bonds (other than University Bonds) shall not be made when the same shall become due and payable; or

(b) payment of the principal of or the redemption premiums, if any, on any of the Bonds (other than University Bonds) shall not be made when the same shall become due and payable, either at maturity, by proceedings for redemption or through failure to make any payment to any Fund hereunder or otherwise; or

(c) the Authority shall for any reason be rendered incapable of fulfilling its obligations hereunder; or

(d) an order or decree shall be entered, appointing a receiver, receivers, custodian or custodians for any of the revenues of the Authority, or approving a petition filed against the Authority seeking reorganization of the Authority under the federal bankruptcy laws or any other similar law or statute of the United States of America or any state thereof, or if any such order or decree, having been entered without the consent or acquiescence of the Authority, shall not be vacated or discharged or stayed on appeal within sixty (60) days after the entry thereof; or

(e) any proceeding shall be instituted, with the consent or acquiescence of the Authority, or any plan shall be entered into by the Authority, for the purpose of effecting a composition between the Authority and its creditors or for the purpose of adjusting the claims of such creditors pursuant to any federal or State statute now or hereafter enacted, if the claims of such creditors are under any circumstances payable from any part or all of the trust estate, including money derived by the Authority under this Bond Indenture or the Loan Agreement (other than Unassigned Rights); or

(f) the Authority (i) files a petition in bankruptcy under the applicable title of the United States Code, as amended, (ii) makes an assignment for the benefit of its creditors, (iii) consents to the appointment of a receiver, custodian or trustee for itself or for the whole or any part of the trust estate or (iv) is generally not paying its debts as such debts become due; or

(g) (i) the Authority is adjudged insolvent by a court of competent jurisdiction, (ii) on a petition in bankruptcy filed against the Authority it is adjudged a bankrupt, or (iii) an order, judgment or decree is entered by any court

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of competent jurisdiction appointing, without the consent of the Authority, a receiver, custodian or trustee of the Authority or of the whole or any part of its property and any of the aforesaid adjudications, orders, judgments or decrees shall not be vacated or set aside or stayed within sixty (60) days from the date of entry thereof; or

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

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

(j) any event of default as defined in Section 6.1 of the Loan Agreement shall occur and such event of default shall be continuing from and after the date the Authority (or the Bond Trustee, as assignee of the Authority) is entitled under the Loan Agreement to declare all amounts under the Loan Agreement to be immediately due and payable; or

(k) the Authority shall default in the due and punctual performance of any other of the covenants, conditions, agreements and provisions contained in the Bonds or in this Bond Indenture or in any indenture supplemental hereto on the part of the Authority to be performed, and such default shall continue for thirty (30) days after written notice specifying such default and requiring the same to be remedied shall have been given to the Authority, the Bond Trustee and the University by the Bond Trustee, which notice the Bond Trustee may give in its discretion and must give at the request of the owners of not less than ten percent (10%) in aggregate principal amount of the Bonds then Outstanding hereunder; provided, that, if such default cannot with due diligence and dispatch be wholly cured within thirty (30) days but can be wholly cured, the failure of the Authority to remedy such default within such 30-day period shall not constitute a default hereunder if the Authority shall immediately upon receipt of such notice commence with due diligence and dispatch the curing of such default and, having so commenced the curing of such default, shall thereafter prosecute and complete the same with due diligence and dispatch; or

(l) the Authority, the University or the Bond Trustee shall default in the performance of any covenant, condition, agreement or provision of the Tax Exemption Agreement, and such default shall continue for a period of thirty (30) days after written notice specifying such default and requiring the same to be remedied shall have been given to the party in default, the University by the other

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party; provided, that if such default cannot with due diligence and dispatch be wholly cured within thirty (30) days but can be wholly cured, the failure of the Authority, the University or the Bond Trustee to remedy such default within such 30-day period shall not constitute a default hereunder if any of the foregoing shall immediately upon receipt of such notice commence with due diligence and dispatch the curing of such default and, having so commenced the curing of such default, shall thereafter prosecute and complete the same with due diligence and dispatch.

SECTION 7.2. ACCELERATION. Anything in this Bond Indenture to the contrary notwithstanding, upon the occurrence of an event of default specified in subsection (c) through (l) of Section 7.1 hereof the Bond Trustee may, without any action on the part of the Bondholders, or upon the occurrence of an event of default specified in subsection (c) through (l) of Section 7.1 hereof and the written request of the owners of not less than 25% in principal amount of the Bonds then outstanding hereunder (exclusive of University Bonds and any Bonds the registered owner of which is the Authority), and upon being indemnified to its satisfaction as provided in Section 8.1(l) hereof, the Bond Trustee shall, or upon the occurrence and continuance of an event of default specified in subsection (a) or (b) of Section 7.1 hereof, the Bond Trustee shall, by notice in writing delivered to the Authority and the University, declare the entire principal amount of the Bonds then outstanding hereunder and the interest accrued thereon immediately due and payable, and the entire principal and interest shall thereupon become and be immediately due and payable, subject, however, to the provisions of Section 7.10 hereof with respect to waivers of events of default. The Bond Trustee shall give notice thereof by first class mail, postage prepaid, to all owners of Outstanding Bonds; provided, however, that the giving of such notice shall not be considered a precondition to the Bond Trustee declaring the entire principal amount of the Bonds then outstanding and the interest accrued thereon immediately due and payable. The Bonds shall cease to accrue interest on the date of acceleration if they are paid on such date.

SECTION 7.3. REMEDIES; RIGHTS OF BONDHOLDERS.

(a) Upon the occurrence of any event of default the Bond Trustee may take whatever action at law or in equity it deems necessary or desirable (i) to collect any amounts then due under this Bond Indenture, the Bonds or the Loan Agreement, (ii) to enforce performance of any obligation, agreement or covenant of the Authority under this Bond Indenture or the Bonds, of the University under the Loan Agreement, of a guarantor under any guaranty given with respect to any Bond or of the grantor of any other collateral given to secure the payment of the Bonds, or (iii) to otherwise enforce any of its rights.

(b) If an event of default shall have occurred, and if it shall have been requested to do so by the holders of twenty-five percent (25%) in aggregate principal

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amount of the Bonds outstanding, and shall have been indemnified as provided in 8.1(l) hereof, the Bond Trustee shall be obligated to exercise such one or more of the rights and powers conferred by this Section as the Bond Trustee shall deem most expedient in the interests of the holders of the Bonds; provided, however, that the Bond Trustee shall have the right to decline to comply with any such request if the Bond Trustee shall be advised by counsel (who may be its own counsel) that the action so requested may not lawfully be taken or the Bond Trustee in good faith shall determine that such action would be unjustly prejudicial to the holders of the Bonds not parties to such request or would subject the Bond Trustee to personal liability.

(c) No remedy by the terms of this Bond Indenture conferred upon or reserved to the Bond Trustee (or to the holders of the Bonds) is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to any other remedy given to the Bond Trustee or to the holders of the Bonds hereunder now or hereafter existing at law or in equity or by statute.

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

(e) No waiver of any default or event of default, hereunder, whether by the Bond Trustee, the holders of the Bonds, shall extend to or shall affect any subsequent default or event of default or shall impair any rights or remedies consequent thereon.

SECTION 7.4. DIRECTION OF PROCEEDINGS BY HOLDERS. The holders of not less than a majority in aggregate principal amount of the Bonds then outstanding shall have the right, at any time, by an instrument or instruments in writing executed and delivered to the Bond Trustee, to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of this Bond Indenture, including enforcement of the rights of the Authority under the Loan Agreement (other than Unassigned Rights) or for the appointment of a receiver or any other proceedings hereunder; provided that such direction shall be in accordance with the provisions of law and of this Bond Indenture.

SECTION 7.5. 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 Bond Trustee and the holders of Bonds under this Bond Indenture, the Bond Trustee shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the properties pledged hereunder and of the revenues, issues, payments and profits thereof, pending such proceedings, with such powers as the court making such appointment shall confer.

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SECTION 7.6. APPLICATION OF MONEYS.

(a) Subject to the provisions of Section 4.1 hereof, all moneys received by the Bond Trustee, by any receiver or by any Bondholder pursuant to any right given or action taken under the provisions of this Article VII shall, after payment of the costs and expenses of the proceedings resulting in the collection of such moneys and of the expenses, including legal fees and expenses, liabilities and advances incurred or made by the Bond Trustee be deposited in the Bond Sinking Fund, and all moneys so deposited during the continuance of an event of default (other than moneys for the payment of Bonds which have previously matured or otherwise become payable prior to such event of default or for the payment of interest due prior to such event of default), together with all moneys in the Funds maintained by the Bond Trustee under Articles III and IV hereof, shall be applied as follows:

(i) Unless the principal of all the Bonds shall have become or shall have been declared due and payable, all such moneys shall be applied:

First: To the payment of amounts, if any, payable pursuant to the Tax Exemption Agreement for rebate;

Second: To the payment to the Persons entitled thereto of all installments of interest then due on the Bonds, in the order of the maturity of the installments of such interest, and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment ratably, according to the amounts due on such installment, to the Persons entitled thereto, without any discrimination or privilege; and

Third: To the payment to the Persons entitled thereto of the unpaid principal of any of the Bonds which shall have become due (other than the Bonds called for redemption for the payment of which moneys are held pursuant to the provisions of this Bond Indenture), and, if the amount available shall not be sufficient to pay in full the Bonds, then to the payment ratably, according to the amount of principal due to the Persons entitled thereto, without any discrimination or privilege.

(ii) If the principal of all the Bonds shall have become due or shall have been declared due and payable, all such moneys shall be applied:

First: To the payment of amounts, if any, payable pursuant to the Tax Exemption Agreement for rebate; and

Second: To the payment of the principal and interest then due and unpaid upon the Bonds, without preference or priority of principal over interest or of interest over any other installment of interest, or of any Bond

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over any other Bond, ratably, according to the amounts due respectively for principal and interest, to the Persons entitled thereto without any discrimination or privilege.

(iii) If the principal of all the Bonds shall have been declared due and payable, and if such declaration shall thereafter have been rescinded and annulled under the provisions of this Article, then, subject to the provisions of paragraph (b) of this Section in the event that the principal of all the Bonds shall later become due or be declared due and payable, the moneys shall be applied in accordance with the provisions of paragraph (a) of this Section.

(b) Whenever moneys are to be applied by the Bond Trustee pursuant to the provisions of this Section, such moneys shall be applied by it at such times, and from time to time, as the Bond Trustee shall determine, having due regard for the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Bond Trustee shall apply such moneys, it shall fix the date (which shall be an Interest Payment Date unless it shall deem another date more suitable) upon which such application is to be made and upon such date interest on the amounts of principal to be paid on such date shall cease to accrue. The Bond Trustee shall give notice of the deposit with it of any such moneys and of the fixing of any such date and of the Special Record Date in accordance with Section 2.2(f) hereof 10 days prior to the Special Record Date. The Bond Trustee shall not be required to make payment to the holder of any unpaid Bond until such Bond shall be presented to the Bond Trustee for appropriate endorsement or for cancellation if fully paid.

(c) Whenever all Bonds and interest thereon have been paid under the provisions of this Section 7.6 and all expenses and charges of the Bond Trustee have been paid, any balance remaining shall be paid to the Persons entitled to receive the same and then to the University.

SECTION 7.7. REMEDIES VESTED IN BOND TRUSTEE. All rights of action including the right to file proofs of claim under this Bond Indenture or under any of the Bonds may be enforced by the Bond Trustee without the possession of any of the Bonds or the production thereof in any trial or other proceedings relating thereto and any such suit or proceeding instituted by the Bond Trustee shall be brought in its name as Bond Trustee without the necessity of joining as plaintiffs or defendants any holders of the Bonds, and any recovery of judgment shall be for the equal benefit of the holders of the outstanding Bonds.

SECTION 7.8. RIGHTS AND REMEDIES OF BONDHOLDERS. No holder of any Bond shall have any right to institute any suit, action or proceedings in equity or at law for the enforcement of this Bond Indenture or for the execution of any trust hereof or for the appointment of a receiver or any other remedy hereunder, unless a default shall have become an event of default and the holders of not less than twenty-five

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percent (25%) in aggregate principal amount of the Bonds then outstanding shall have made written request to the Bond Trustee and shall have offered it reasonable opportunity either to proceed to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name, and unless also they have offered to the Bond Trustee indemnity as provided in Section 8.1, and unless the Bond Trustee shall thereafter fail or refuse to exercise the power hereinbefore granted, or to institute such action, suit or proceeding in its own name; and such notification, request and offer of indemnity are hereby declared in every case at the option of the Bond Trustee to be conditions precedent to the execution of the powers and trusts of this Bond Indenture and to any action or cause of action for the enforcement of this Bond Indenture, or for the appointment of a receiver or for any other remedy hereunder; it being understood and intended that no one or more holders of the Bonds shall have any right in any manner whatsoever to affect, disturb or prejudice the lien of this Bond Indenture by its, his, her or their action or to enforce any right hereunder except in the manner herein provided, and that all proceedings at law or in equity shall be instituted, had and maintained in the manner herein provided and for the equal benefit of the holders of all Bonds outstanding. Nothing in this Bond Indenture contained shall, however, affect or impair the right of any Bondholder to enforce the payment of the principal of and interest on any Bond at and after the maturity thereof, or the obligation of the Authority to pay the principal of and interest on each of the Bonds issued hereunder to the respective holders thereof at the time and place, from the source and in the manner herein and in said Bonds expressed.

SECTION 7.9. TERMINATION OF PROCEEDINGS. In case the Bond Trustee shall have proceeded to enforce any right under this Bond Indenture by the appointment of a receiver, or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Bond Trustee, then and in every case the Authority and the Bond Trustee shall, subject to any determination in such proceeding, be restored to their former positions and rights hereunder with respect to the property pledged and assigned hereunder, and all rights, remedies and powers of the Bond Trustee shall continue as if no such proceedings had been taken.

SECTION 7.10. WAIVER OF EVENTS OF DEFAULT. The Bond Trustee may, except with respect to defaults described in (1) below, waive any event of default hereunder and its consequences and rescind any declaration of maturity of principal, and shall do so, (1) upon written request of the owners of at least a majority in aggregate principal amount of all the Bonds outstanding in respect of which default in the payment of principal when due (whether by mandatory redemption through the Bond Sinking Fund or at the dates of maturity specified therein) and/or interest when due exists, or (2) upon written request of the owners of at least twenty-five percent (25%) in aggregate principal amount of all the Bonds outstanding in the case of any other event of default. The foregoing notwithstanding, in no event shall there be waived (a) any event of default in the payment of the principal of any Outstanding Bonds when due whether by

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mandatory redemption through the Bond Sinking Fund or at the dates of maturity specified therein, or (b) any default in the payment when due of the interest on any such Bonds unless prior to such waiver or rescission all arrears of interest, with interest thereon (to the extent permitted by law) at the rate borne by the Bonds in respect of which such default shall have occurred on overdue installments of interest or all arrears of payments of principal when due (other than as a result of acceleration), as the case may be, and all expenses of the Bond Trustee and any Paying Agent in connection with such default shall have been paid or provided for and in case of any such waiver or rescission or in case any proceeding taken by the Bond Trustee on account of any such default shall have been discontinued or abandoned or determined adversely, then and in every such case the Authority, the Bond Trustee and the Bondholders shall, subject to any determination in such proceeding, be restored to their former positions and rights hereunder respectively, but no such waiver or rescission shall extend to any subsequent or other default, or impair any right consequent thereon.

SECTION 7.11. UNIVERSITY'S RIGHTS OF POSSESSION AND USE OF PROPERTY. So long as the University is in full compliance with the terms and provisions of the Loan Agreement, it shall be suffered and permitted to possess, use and enjoy its property and appurtenances thereto free of claims hereunder of the Authority or the Bond Trustee.

SECTION 7.12. WAIVER OF REDEMPTION; EFFECT OF SALE OF TRUST ESTATE. The Authority, to the extent permitted by law, shall not claim any rights under any stay, valuation, exemption or extension law, and hereby waives any right of redemption which it may have in respect of property of the University. Upon the institution of any foreclosure proceedings or upon any sale of the property of the University to satisfy amounts owing under the Loan Agreement, or any acceleration of the maturity of the principal of all Bonds then outstanding hereunder, if not previously due and payable, shall without more become immediately due and payable.

SECTION 7.13. NOTICE OF DEFAULT. In the event of any default hereunder, the Bond Trustee will promptly give written notice thereof to the Authority and the University, setting forth the nature of such default.

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ARTICLE VIII THE BOND TRUSTEE

SECTION 8.1. ACCEPTANCE OF THE TRUSTS. The Bond Trustee accepts and agrees to execute the trusts imposed upon it by this Bond Indenture, but only upon the terms and conditions set forth herein. The Bond Trustee, prior to the occurrence of an event of default and after the curing of all events of default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Bond Indenture and no implied covenants or obligations should be read into this Bond Indenture against the Bond Trustee. In case an event of default hereunder has occurred and is continuing, the Bond Trustee shall exercise such of the rights and powers vested in it by this Bond Indenture and shall use the same degree of care as a prudent person would exercise or use in the circumstances in the conduct of such person's own affairs. The Bond Trustee agrees to perform such trusts only upon and subject to the following expressed terms and conditions:

(a) The Bond Trustee may execute any of the trusts or powers hereof and perform any of its duties by or through attorneys, agents, receivers or employees and shall not be responsible for the misconduct or negligence of the same appointed in accordance with the standard specified above, and shall be entitled to advice of counsel concerning all matters of trusts hereof and duties hereunder, and may in all cases pay such reasonable compensation to any attorney, agent, receiver or employee retained or employed by it in connection herewith. The Bond Trustee may act upon the opinion or advice of an attorney, surveyor, engineer or accountant selected by it in the exercise of reasonable care or, if selected or retained by the Authority, approved by the Bond Trustee in the exercise of such care. The Bond Trustee shall not be responsible for any loss or damage resulting from any action or inaction based on its good faith reliance upon such opinion or advice.

(b) The Bond Trustee shall not be responsible for any recital herein, or in the Bonds (except with respect to the certificate of the Bond Trustee endorsed on the Bonds), or for the investment of moneys as herein provided (except that no investment shall be made except in accordance with Section 4.7 hereof), or for the recording or rerecording, filing or re-filing of this Bond Indenture, or any supplement or amendment thereto, or the filing of financing statements, or for the validity of the execution by the Authority of this Bond Indenture, or of any supplemental indentures or instruments of further assurance, or for the sufficiency of the security for the Bonds issued hereunder or intended to be secured hereby, or for the value or title of the property herein conveyed or otherwise as to the maintenance of the security hereof. The Bond Trustee may (but shall be under no duty to) require of the Authority and the University full information and advice as to the performance of the covenants, conditions and agreements in the Loan

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Agreement and shall make its best efforts, but without any obligation, to advise the Authority and the University of any default known to the Bond Trustee. Except as otherwise provided in Section 8.4 hereof, the Bond Trustee shall have no obligation to perform any of the duties of the Authority under the Loan Agreement.

(c) The Bond Trustee shall not be accountable for the use or application by the Authority or the University of any of the Bonds or the proceeds thereof or for the use or application of any money paid over by the Bond Trustee in accordance with the provisions of this Bond Indenture or for the use and application of money received by any Paying Agent (except when the Bond Trustee acts as Paying Agent). The Bond Trustee may become the owner of Bonds secured hereby with the same rights it would have if not Bond Trustee.

(d) The Bond Trustee shall be protected in acting upon any notice, order, requisition, request, consent, certificate, order, opinion (including an opinion of Independent Counsel), affidavit, letter, telegram or other paper or document in good faith deemed by it to be genuine and correct and to have been signed or sent by the proper person or persons. The Bond Trustee shall be protected in relying upon any telephonic or other electronic communication deemed by it in good faith to be genuine and correct and to be from the proper person or persons whenever this Bond Indenture permits such telephonic or other electronic communication. Any action taken by the Bond Trustee pursuant to this Bond Indenture upon the request or authority or consent of any person who at the time of making such request or giving such authority or consent is the owner of any Bond, shall be conclusive and binding upon all future owners of the same Bond and upon Bonds issued in exchange therefor or in place thereof.

(e) As to the existence or non-existence of any fact or as to the sufficiency of validity of any instrument, paper or proceedings, the Bond Trustee shall be entitled to rely upon a certificate signed on behalf of the Authority by its Chairperson or Vice Chairperson or its Secretary or Assistant Secretary as sufficient evidence of the facts therein contained and prior to the occurrence of a default of which the Bond Trustee has been notified as provided in subsection (g) of this Section, or of which by said subsection it is deemed to have notice, shall also be at liberty to accept a similar certificate to the effect that any particular dealing, transaction or action is necessary or expedient, but may at its discretion secure such further evidence deemed necessary or advisable, but shall in no case be bound to secure the same. The Bond Trustee may accept a certificate of the Secretary or Assistant Secretary of the Authority under its seal to the effect that a resolution in the form therein set forth has been adopted by the Authority as conclusive evidence that such resolution has been duly adopted, and is in full force and effect.

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(f) The permissive right of the Bond Trustee to do things enumerated in this Bond Indenture shall not be construed as a duty and the Bond Trustee shall not be answerable for other than its negligence or willful misconduct.

(g) The Bond Trustee shall not be required to take notice or be deemed to have notice of any default hereunder except failure to cause to be made any of the payments to the Bond Trustee required to be made by Article IV unless the Bond Trustee shall be specifically notified in writing of such default by the Authority or by the holders of at least twenty-five percent (25%) in aggregate principal amount of all Bonds then outstanding, and all notices or other instruments required by this Bond Indenture to be delivered to the Bond Trustee must, in order to be effective, be delivered at the designated corporate trust office of the Bond Trustee, and in the absence of such notice so delivered, the Bond Trustee may conclusively assume there is no default except as aforesaid.

(h) The Bond Trustee shall not be personally liable for any debts contracted or for damages to persons or to personal property injured or damaged, or for salaries or nonfulfillment of contracts during any period in which it may be in possession of or managing any property.

(i) At any and all reasonable times, and upon reasonable prior notice, the Bond Trustee, and the duly authorized agents, attorneys, experts, engineers, accountants and representatives of any of them, shall have the right fully to inspect any and all of the property pledged hereunder, including all books, papers and records of the Authority pertaining to the property pledged hereunder and the Bonds, and to take such memoranda from and in regard thereto as may be desired.

(j) The Bond Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises.

(k) Notwithstanding anything elsewhere in this Bond Indenture contained, the Bond Trustee shall have the right, but shall not be required, to demand, in respect of the authentication of any Bonds, the withdrawal of any cash, the release of any property, or any action whatsoever within the purview of this Bond Indenture, any showings, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, in addition to that by the terms hereof required as a condition of such action by the Bond Trustee deemed desirable for the purpose of establishing the right of the Authority to the authentication of any Bonds, the withdrawal of any cash, the release of any property or the taking of any other action by the Bond Trustee.

(l) Before taking any action under Article VII other than making payments of principal, interest and purchase price on the Bonds as they become

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due, causing an acceleration when required by this Bond Indenture, the Bond Trustee may require that a satisfactory indemnity bond be furnished for the reimbursement of all expenses (including reasonable attorneys fees) to which it may incur and to protect it against all liability, except liability which is adjudicated to have resulted from its negligence or willful misconduct in connection with any action so taken.

(m) All moneys received by the Bond Trustee or any Paying Agent shall, until used or applied or invested as provided in this Bond Indenture, be held in trust for the purposes for which they were received but need not be segregated from other funds except to the extent required by law or by this Bond Indenture. Neither the Bond Trustee nor any Paying Agent shall be under any liability for interest on any moneys received hereunder except as may be otherwise agreed upon.

SECTION 8.2. FEES, CHARGES AND EXPENSES OF BOND TRUSTEE AND ANY ADDITIONAL PAYING AGENT. The Bond Trustee shall be entitled to payment and/or reimbursement for reasonable fees and for its services, including its services as Paying Agent and Bond Registrar, and all advances, counsel fees and other expenses reasonably and necessarily made or incurred by the Bond Trustee in connection with such services. Any additional Paying Agent shall be entitled to payment and reimbursement for its reasonable fees and charges as additional Paying Agent for the Bonds. Upon an event of default, but only upon an event of default, the Bond Trustee and any additional Paying Agent shall have a right of payment prior to payment on account of interest or principal of or premium, if any, on any Bond for the foregoing advances, fees, costs, and expenses incurred; provided that the Bond Trustee and any such Paying Agent shall not have a prior right to payment or claim therefor against (a) moneys held to pay redemption price, including premium, of the Bonds previously called for redemption or (b) moneys or obligations deposited with or paid to the Bond Trustee for the redemption or payment of Bonds which are deemed to have been paid in accordance with Article XI hereof.

The Authority shall require the University, pursuant to the Loan Agreement, and the University shall indemnify and hold harmless the Bond Trustee against any liabilities which the Bond Trustee may incur in the exercise and performance of its powers and duties hereunder and under any other agreement referred to herein which are not due to the Bond Trustee's negligence or willful misconduct, and for any reasonable fees and expenses of the Bond Trustee to the extent funds are not available under this Bond Indenture for the payment thereof. The rights of the Bond Trustee under this Section 8.2 shall survive the payment in full of the Bonds and the discharge of this Bond Indenture.

When the Bond Trustee incurs expenses or renders services after an event of default specified in Section 7.1 occurs, the reasonable expenses and the compensation for

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services (including the reasonable fees and expenses of its agents and counsel) are intended to constitute expenses of administration under applicable bankruptcy law.

SECTION 8.3. NOTICE TO THE AUTHORITY AND BONDHOLDERS IF DEFAULT OCCURS. If a default occurs of which the Bond Trustee is by subsection (g) of Section 8.1 hereof required to take notice or if notice of default be given as in said subsection (g) provided, then the Bond Trustee shall give written notice thereof by mail to the Authority and the University and the registered owners of all Bonds then outstanding as shown on the Bond Register.

SECTION 8.4. INTERVENTION BY BOND TRUSTEE. In any judicial proceeding to which the Authority or the University is or are a party and which in the opinion of the Bond Trustee and its counsel has a substantial bearing on the interests of the registered owners of the Bonds, the Bond Trustee may intervene on behalf of the Bondholders and, subject to the provisions of Section 8.1(l) , shall do so if requested in writing by the registered owners of at least twenty-five percent (25%) in aggregate principal amount of all Bonds then outstanding. The rights and obligations of the Bond Trustee under this Section are subject to the approval of a court of competent jurisdiction.

SECTION 8.5. SUCCESSOR BOND TRUSTEE. Any corporation or association into which the Bond Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, provided such corporation or association is otherwise eligible under Section 8.6 hereof, shall be and become the successor Bond Trustee hereunder and vested with all of the title to the whole property of the trust estate and all the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding.

SECTION 8.6. BOND TRUSTEE REQUIRED; ELIGIBILITY. There shall at all times be a Bond Trustee hereunder which shall be a commercial bank or trust company operating within the State organized under the laws of the United States of America or the State or another state , authorized to exercise corporate trust powers, subject to supervision or examination by federal or state authorities, and having a reported combined capital and surplus of not less than $50,000,000 or assets under administration of not less than $200,000,000. If at any time the Bond Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner provided in Section 8.7 hereof. No resignation or removal of the Bond Trustee and no appointment of a successor Bond Trustee shall become effective until the successor Bond Trustee, has accepted its appointment under Section 8.10 hereof.

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SECTION 8.7. RESIGNATION BY THE BOND TRUSTEE. The Bond Trustee and any successor Bond Trustee may at any time resign from the trusts hereby created by giving written notice to the Authority and the University and by registered or certified mail to each registered owner of the Bonds then outstanding, as shown by the Bond Register. Such notice to the Authority and the University may be served personally or sent by registered or certified mail.

SECTION 8.8. REMOVAL OF THE BOND TRUSTEE. The Bond Trustee may be removed at any time, by an instrument or concurrent instruments in writing delivered to the Bond Trustee and the Authority, and signed by the registered owners of not less than a majority in aggregate principal amount of the Bonds then outstanding. So long as no event of default has occurred and is continuing under this Bond Indenture or the Loan Agreement and no event shall have occurred which with the passage of time or the giving of notice or both would become such an event of default under this Bond Indenture or the Loan Agreement, the Bond Trustee may also be removed at any time by an instrument in writing signed by the Authority, upon the written request of the University, and delivered to the Bond Trustee. The foregoing notwithstanding, the Bond Trustee may not be removed by the Authority unless written notice of the delivery of such instrument or instruments signed by the Authority is mailed to the owners of all Bonds outstanding under this Bond Indenture, which notice indicates the Bond Trustee will be removed for cause (including maintaining non-competitive fees) and replaced by the successor trustee named in such notice, such removal and replacement to become effective on the 90th day next succeeding the date of such notice, unless the owners of not less than 10% in aggregate principal amount of such Bonds then outstanding under this Bond Indenture shall object in writing to such removal and replacement. Such notice shall be mailed by first class mail, postage prepaid, to the owners of all such Bonds then outstanding at the address of such owners then shown on the Bond Register.

SECTION 8.9. APPOINTMENT OF SUCCESSOR BOND TRUSTEE BY THE BONDHOLDERS; TEMPORARY BOND TRUSTEE. In case the Bond Trustee hereunder shall resign or be removed, or be dissolved, or shall be in the process of dissolution or liquidation, or otherwise becomes incapable of acting hereunder, or in case it shall be taken under the control of any public officer or officers, or of a receiver appointed by a court, a successor may be appointed by the owners of a majority in aggregate principal amount of the Bonds then outstanding by an instrument or concurrent instruments in writing signed by such registered owners, or by their attorneys in fact, duly authorized; provided, nevertheless, that in case of such vacancy the Authority by an instrument executed and signed by its Secretary or Assistant Secretary, or other designated officer of the Authority under its seal, may appoint a temporary Bond Trustee to fill such vacancy until a successor Bond Trustee shall be appointed by the Bondholders in the manner above provided; and any such temporary Bond Trustee so appointed by the Authority shall immediately and without further action be superseded by the successor

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Bond Trustee so appointed by such Bondholders. The Authority agrees to follow the direction of the University in appointing a temporary Bond Trustee unless the Authority shall have a reasonable objection to the entity selected by the University. If a successor Bond Trustee has not been appointed or has not accepted such appointment within thirty days of notice of resignation or removal of the Bond Trustee, the Bond Trustee may apply to a court of competent jurisdiction for the appointment of a successor Bond Trustee and the costs, expenses and attorney's fees which are incurred in connection with such proceeding shall be paid as provided in Section 8.2 hereof.

SECTION 8.10. CONCERNING ANY SUCCESSOR BOND TRUSTEES. Every successor Bond Trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor and also to the Authority an instrument in writing accepting such appointment hereunder, and thereupon such successor, without any further act, deed or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessor; but such predecessor shall, nevertheless, on the Written Request of the Authority, or of its successor, execute and deliver an instrument transferring to such successor Bond Trustee all the estates, properties, rights, powers and trusts of such predecessor hereunder and under the Tax Exemption Agreement; and every predecessor Bond Trustee shall deliver all securities and moneys held by it as Bond Trustee hereunder to its successor. Should any instrument in writing from the Authority be required by any successor Bond Trustee for more fully and certainly vesting in such successor the estate, rights, powers and duties hereby vested or intended to be vested in the predecessor, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Authority. The resignation of any Bond Trustee and the instrument or instruments removing any Bond Trustee and appointing a successor hereunder, together with all other instruments provided for in this Article shall be filed and/or recorded by the successor Bond Trustee in each recording office, if any, where this Bond Indenture shall have been filed and/or recorded.

Notice of the appointment of any successor Bond Trustee hereunder shall be given by such successor Bond Trustee to each Rating Agency at such time maintaining a rating with respect to the Bonds pursuant to Section 13.5 hereof.

SECTION 8.11. BOND TRUSTEE PROTECTED IN RELYING UPON RESOLUTION, ETC. The resolutions, opinions, certificates and other instruments provided for in this Bond Indenture may be accepted by the Bond Trustee as conclusive evidence of the facts and conclusions stated therein and shall be full warrant, protection and authority to the Bond Trustee for the release of property and the withdrawal of cash hereunder.

SECTION 8.12. SUCCESSOR BOND TRUSTEE AS BOND TRUSTEE OF FUNDS, PAYING AGENT AND BOND REGISTRAR. In the event of a change in the office of the Bond Trustee, the predecessor Bond Trustee which has resigned or been removed shall cease to be Bond Trustee of the Revenue Fund, Interest Fund, Bond

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Sinking Fund, Project Fund, Redemption Fund, Expense Fund and any other trust funds provided hereunder and shall cease to be the Bond Registrar and Paying Agent for the principal of, premium, if any, and interest on the Bonds, and the successor Bond Trustee shall become such Bond Trustee, Bond Registrar and Paying Agent unless a separate Paying Agent or Agents are appointed by the Authority in connection with the appointment of any successor Bond Trustee.

SECTION 8.13. PAYING AGENTS; APPOINTMENT AND ACCEPTANCE OF DUTIES; REMOVAL.

(a) The Bond Trustee is hereby designated and agrees to act as principal Paying Agent and as Bond Registrar for and in respect of the Bonds.

(b) The Authority may appoint one or more additional Paying Agents for the Bonds. Any such Paying Agent shall be a commercial bank with trust powers or trust company organized under the laws of the United States of America or one of the states thereof. Each Paying Agent other than the Bond Trustee shall signify its acceptance of the duties and obligations imposed upon it by this Bond Indenture by executing and delivering to the Authority and the Bond Trustee a written acceptance thereof. The Authority may remove any Paying Agent other than the Bond Trustee and any successors thereto, and appoint a successor or successors thereto; provided that any such Paying Agent designated by the Authority shall continue to be a Paying Agent of the Authority for the purpose of paying the principal of, premium, if any, and interest on the Bonds until the designation of a successor as such Paying Agent. Each Paying Agent is hereby authorized to pay or redeem Bonds when duly presented to it for payment or redemption, which Bonds shall thereafter be delivered to the Bond Trustee for cancellation.

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ARTICLE IX SUPPLEMENTAL INDENTURES

SECTION 9.1. SUPPLEMENTAL INDENTURES NOT REQUIRING CONSENT OF BONDHOLDERS. The Authority and the Bond Trustee may, without the consent of, or notice to, any of the Bondholders, enter into an indenture or indentures supplemental to this Bond Indenture, as shall not be inconsistent with the terms and provisions hereof, for any one or more of the following purposes:

(a) to cure any ambiguity or formal defect or omission in this Bond Indenture;

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

(c) to assign and pledge under this Bond Indenture additional revenues, properties or collateral;

(d) to evidence the appointment of a separate bond trustee or the succession of a new bond trustee hereunder;

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

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

(g) to provide for the refunding or advance refunding of the Bonds, including the right to establish and administer an escrow fund and to take related action in connection therewith;

(h) to modify, amend or supplement this Bond Indenture or any indenture supplemental hereto in such manner as to permit certificated Bonds;

(i) to modify, amend or supplement this Bond Indenture or any indenture supplemental hereto in such manner as to permit continued compliance with the Tax Exemption Agreement; or

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(j) to modify, amend or supplement the provisions hereof in any other way which the Bond Trustee has determined (which determination may be based on such opinions of Independent Counsel and factual certificates as the Bond Trustee deems necessary) does not materially adversely affect the rights or interests of any Bondholder. The Bond Trustee shall be entitled to rely upon an opinion of Bond Counsel in reaching the determination pursuant to this paragraph (j).

The Authority and the Bond Trustee may not enter into an indenture or indentures supplemental to this Bond Indenture pursuant to paragraph (f) of this Section 9.1 unless the Authority and the Bond Trustee shall have received an Opinion of Bond Counsel to the effect that the issuance of coupon Bonds will not adversely affect the validity of such Bonds or any exemption from federal income tax to which the interest on the Bonds would otherwise be entitled.

If at any time the University shall request the Authority and the Bond Trustee to consent to any amendment pursuant to subsection (i) above, the Bond Trustee shall cause notice of the proposed execution of such amendment, change or modification to the Bond Indenture to be given to each Rating Agency then maintaining a rating on the Bonds by first class mail, postage prepaid, at least 10 days prior to the execution of such amendment, change or modification to the Bond Indenture, which notice shall include a copy of the proposed amendment, change or modification. In addition, if at any time the University shall request the Authority and the Bond Trustee to consent to any amendment pursuant to this Section, the Bond Trustee shall cause a copy of such amendment, change or modification to be mailed to each Rating Agency then maintaining a rating on the Bonds upon the execution and delivery of such amendment, change or modification.

SECTION 9.2. SUPPLEMENTAL INDENTURES REQUIRING CONSENT OF BONDHOLDERS. In addition to supplemental indentures covered by Section 9.1 hereof and subject to the terms and provisions contained in this Section, and not otherwise, the holders of not less than a majority in aggregate principal amount of the Bonds which are outstanding hereunder at the time of the execution of such indenture or supplemental indenture shall have the right, from time to time, anything contained in this Bond Indenture to the contrary notwithstanding, to consent to and approve the execution by the Authority and the Bond Trustee of such other indenture or indentures supplemental hereto as shall be deemed necessary and desirable by the Authority for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Bond Indenture or any supplemental indenture; provided, however, that nothing in this Section or in Section 9.1 hereof contained shall permit, or be construed as permitting, (a) an extension of the stated maturity or reduction in the principal amount of, or reduction in the rate or extension of the time of paying of interest on, or reduction of any premium payable on the redemption of, any Bonds, without the consent of the holders of such Bonds, (b) a reduction in the

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amount or extension of the time of any payment required to be made to or from the Interest Fund or the Bond Sinking Fund provided herein, without the consent of the holders of all the Bonds at the time outstanding, (c) the creation of any lien prior to or on a parity with the lien of this Bond Indenture, without the consent of the holders of all the Bonds at the time outstanding, (d) a reduction in the aggregate principal amount of Bonds the holders of which are required to consent to any such supplemental indenture, without the consent of the holders of all the Bonds at the time outstanding, or (e) the modification of the rights, duties or immunities of the Bond Trustee without the written consent of the Bond Trustee.

If at any time the Authority shall request the Bond Trustee to enter into any such supplemental indenture for any of the purposes of this Section, the Bond Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of the proposed execution of such supplemental indenture to be mailed by registered or certified mail to the registered owners of the Bonds at their addresses as the same shall appear on the Bond Register. Such notice shall briefly set forth the nature of the proposed supplemental indenture and shall state that copies thereof are on file at the designated corporate trust office of the Bond Trustee for inspection by all Bondholders. The Bond Trustee shall not, however, be subject to any liability to any Bondholder by reason of its failure to mail such notice, and any such failure shall not affect the validity of such supplemental indenture when consented to and approved as provided in this Section. If the holders of not less than a majority in aggregate principal amount of the Bonds which are outstanding hereunder at the time of the execution of any such supplemental indenture shall have consented to and approved the execution thereof as herein provided, no holder of any Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Bond Trustee or the Authority from executing the same or from taking any action pursuant to the provisions thereof. Upon the execution of any such supplemental indenture as in this Section permitted and provided, this Bond Indenture shall be and be deemed to be modified and amended in accordance therewith.

If at any time the University shall request the Authority and the Bond Trustee to consent to any amendment, change or modification of this Bond Indenture pursuant to this Section 9.2, the Bond Trustee shall cause notice of the proposed execution of such amendment, change or modification to this Bond Indenture to be given to each Rating Agency maintaining a rating on the Bonds in the manner provided in Section 13.4 hereof at least 10 days prior to the execution of such amendment, change or modification to this Bond Indenture which notice shall include a copy of the proposed amendment, change or modification to this Bond Indenture.

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ARTICLE X AMENDMENTS, ETC. TO LOAN AGREEMENT

SECTION 10.1. AMENDMENTS TO THE LOAN AGREEMENT NOT REQUIRING CONSENT. The Authority, the University and the Bond Trustee may, without the consent of or notice to the holders of the Bonds, consent to any amendment, change or modification of the Loan Agreement as may be required (i) by the provisions of the Loan Agreement and this Bond Indenture, (ii) for the purpose of curing any ambiguity or formal defect or omission, (iii) for the purpose of complying with the provisions of the Tax Exemption Agreement or (iv) in connection with any other change therein which, in the judgment of the Bond Trustee (which judgment may be based on such opinions of Independent Counsel and factual certificates as the Bond Trustee deems necessary), does not materially adversely affect the rights of the Bond Trustee or the owners of the Bonds; provided, however, that nothing in this Section 10.1 shall permit, or be construed as permitting, any amendment, change or modification of the Loan Agreement that may result in anything described in the lettered clauses of Section 9.2 hereof, without the consent of each Bondholder affected.

SECTION 10.2. AMENDMENTS TO THE LOAN AGREEMENT REQUIRING CONSENT OF BONDHOLDERS. Except for the amendments, changes or modifications as provided in Section 10.1 hereof, neither the Authority nor the Bond Trustee shall consent to any other amendment, change or modification of the Loan Agreement without the written approval or consent of the holders of not less than a majority in aggregate principal amount of the Bonds which are outstanding hereunder at the time of execution of any such amendment, change or modification; provided, however, that no such amendment, change or modification shall ever affect the obligation of the University to make payments under the Loan Agreement as they become due and payable. If at any time the Authority or the University shall request the consent of the Bond Trustee to any such proposed amendment, change or modification of the Loan Agreement, the Bond Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of such proposed amendment, change or modification to be mailed in the same manner as provided by Section 9.2 hereof with respect to supplemental indentures. Such notice shall briefly set forth the nature of such proposed amendment, change or modification and shall state that copies of the instrument embodying the same are on file at the principal office of the Bond Trustee for inspection by all Bondholders. The Bond Trustee shall not, however, be subject to any liability to any Bondholder by reason of its failure to mail such notice, and any such failure shall not affect the validity of such amendment, change or modification when consented to and approved as provided in this Section. If the holders of not less than a majority in aggregate principal amount of the Bonds outstanding hereunder at the time of the execution of any such amendment, change or modification shall have consented to and approved the execution thereof as herein provided, no holder of any Bond shall have any right to object to any of the terms

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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 Bond Trustee or the Authority from executing the same or from taking any action pursuant to the provisions thereof.

If at any time the University shall request the Authority and the Bond Trustee to consent to any amendment, change or modification of the Loan Agreement pursuant to this Section 10.2, the Bond Trustee shall cause notice of the proposed execution of such amendment, change or modification to the Loan Agreement to be given to each Rating Agency maintaining a rating on the Bonds, in the manner provided in Section 13.4 hereof at least 10 days prior to the execution of such amendment, change or modification to the Loan Agreement, which notice shall include a copy of the proposed amendment, change or modification to the Loan Agreement.

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ARTICLE XI SATISFACTION OF THIS BOND INDENTURE

SECTION 11.1. DEFEASANCE. If the Authority shall pay or provide for the payment of all or a portion of all Bonds outstanding (including, for the purpose of this Article, any Bonds held by the University) in any one or more of the following ways:

(a) by paying or causing to be paid the principal of (including redemption premium, if any) and interest on all or a portion of the Bonds outstanding the portion, (which may be all), being referred to as the "Paid Bonds"), as and when the same become due and payable;

(b) by delivering to the Bond Trustee, for cancellation by it, the Paid Bonds; or

(c) by depositing with the Bond Trustee, in trust, cash and/or Government Obligations which are not prepayable or callable prior to the date the moneys therefrom are anticipated to be required in such amount as will provide funds sufficient to pay (i) the principal of and redemption premium, if any, on such Paid Bonds due upon the maturity or redemption of such Paid Bonds, as the case may be; (ii) interest on such Paid Bonds as the same becomes due and payable until the maturity or redemption of such Paid Bonds; and (iii) all amounts, if any, due the Authority and the Bond Trustee.

(d) If the Authority shall also pay or cause to be paid all other sums payable hereunder by the Authority with respect to such Paid Bonds, then and in that case this Bond Indenture and the estate and rights granted hereunder shall cease, determine and become null and void as to the Paid Bonds, and thereupon the Bond Trustee shall, upon Written Request of the Authority, and upon receipt by the Bond Trustee, of an Officer's Certificate of the University and an opinion of Independent Counsel, each stating that in the opinion of the signers all conditions precedent to the satisfaction and discharge of this Bond Indenture with respect to the Paid Bonds have been complied with, forthwith execute proper instruments acknowledging satisfaction of and discharging this Bond Indenture and the lien hereof with respect to the Paid Bonds. The satisfaction and discharge of this Bond Indenture with respect to the Paid Bonds shall be without prejudice to the rights of the Bond Trustee to charge and be reimbursed by the University for any expenditures which it may thereafter incur in connection herewith or with respect to any Bonds that may remain Outstanding.

All moneys, funds, securities, or other property remaining on deposit in the Expense Fund, Revenue Fund, Interest Fund, Bond Sinking Fund, Debt Service Reserve Fund, Project Fund or Redemption Fund or in any other fund or investment under this

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Bond Indenture (other than said Government Obligations or other moneys deposited in trust as above provided and amounts held pursuant to Section 13.2 hereof) with respect to the Paid Bonds shall, upon the full satisfaction of this Bond Indenture with respect to such Paid Bonds, forthwith be transferred, paid over and distributed to the Authority and the University, as their respective interests may appear or, in the event all Bonds Outstanding are not paid, retained for the benefit of the remainder of the Outstanding Bonds.

The Authority or the University may at any time surrender to the Bond Trustee for cancellation by it any Bonds previously authenticated and delivered which the Authority or the University may have acquired in any manner whatsoever, and such Bonds, upon such surrender and cancellation, shall be deemed to be paid and retired.

SECTION 11.2. LIABILITY OF AUTHORITY NOT DISCHARGED. Upon the deposit with the Bond Trustee, in trust, at or before maturity, of money or Government Obligations in the necessary amount to pay or redeem all outstanding Bonds (whether upon or prior to maturity or the redemption date of such Bonds), provided that if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in Article V herein provided, or provisions satisfactory to the Bond Trustee shall have been made for the giving of such notice, and compliance with the other payment requirements of Section 11.1, and the Bond Indenture may be discharged in accordance with the provisions hereof with respect to the Paid Bonds, but the liability of the Authority in respect of such Bonds shall continue provided that the holders thereof shall thereafter be entitled to payment only out of the moneys or Government Obligations deposited with the Bond Trustee as aforesaid.

SECTION 11.3. SELECTION OF DEFEASED BONDS. If less than all Bonds of a series or maturity are defeased as provided in Section 11.1, the Bonds of such series and maturity to be paid from the trust shall be selected by the Bond Trustee by lot by such method as shall provide for the selection of portions (in Authorized Denominations) of the principal of Bonds of such series and maturity of a denomination larger than the smallest Authorized Denomination. Such selection shall be made within seven days after such trust is established. This selection process shall be in lieu of the selection process otherwise provided with respect to redemption of Bonds. After such selection is made, Bonds that are to be paid from such trust (including Bonds issued in exchange for such Bonds pursuant to the transfer or exchange provisions of this Bond Indenture) shall be identified by a separate CUSIP number or other designation satisfactory to the Trustee. The Trustee shall notify Holders whose Bonds (or portions thereof) have been selected for payment from such trust and shall direct such Bondholders to surrender their Bonds to the Trustee in exchange for Bonds with the appropriate designation. The selection of Bonds for payment from such trust pursuant to this Section shall be conclusive and binding on the Authority, the University and the Bondholder.

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SECTION 11.4. WHEN REFUNDING IS NOT PERMITTED. None of the Bonds outstanding hereunder may be refunded as aforesaid nor may this Bond Indenture be discharged if under any circumstances such refunding would result in the loss of any exemption for purposes of federal income taxation to which interest on such Bonds would otherwise be entitled. As a condition precedent to the refunding of any Bonds outstanding hereunder, the Bond Trustee shall receive an Opinion of Bond Counsel to the effect that any exclusion from gross income of interest on the Bonds would not be adversely affected by such refunding.

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ARTICLE XII MANNER OF EVIDENCING OWNERSHIP OF BONDS

SECTION 12.1. PROOF OF OWNERSHIP. Any request, direction, consent or other instrument provided by this Bond Indenture to be signed and executed by the Bondholders may be in any number of concurrent writings of similar tenor and may be signed or executed by such Bondholders in person or by any agent appointed in writing. Proof of the execution of any such request, direction or other instrument or of the writing appointing any such agent and of the ownership of Bonds, if made in the following manner, shall be sufficient for any of the purposes of this Bond Indenture and shall be conclusive in favor of the Bond Trustee and the Authority, with regard to any action taken by them, or either of them, under such request or other instrument, namely:

(a) The fact and date of the execution by any person of any such writing may be proved by the certificate of any officer in any jurisdiction who by law has power to take acknowledgments in such jurisdiction, that the person signing such writing acknowledged before him the execution thereof, or by the affidavit of a witness of such execution; and

(b) The ownership of Bonds and the amounts and numbers of such Bonds and the date of holding the same shall be proved by the Bond Register.

Any action taken or suffered by the Bond Trustee pursuant to any provision of this Bond Indenture, upon the request or with the assent of any Person who at the time is the registered owner of any Bond or Bonds shall be conclusive and binding upon all future owners of the same Bond or Bonds. In determining whether the owners of the required principal amount of Bonds outstanding have taken any action under this Bond Indenture, University Bonds (unless all Bonds which are then outstanding, determined without regard to this Section 12.1, are University Bonds) shall be disregarded and deemed not to be outstanding, except that for the purpose of determining whether the Bond Trustee shall be protected in relying on any such action, only such Bonds which the Bond Trustee knows are so owned shall be so disregarded. Bonds so owned which have been pledged in good faith may be regarded as outstanding if the pledgee establishes to the satisfaction of the Bond Trustee the pledgee's right so to act with respect to such Bonds and that the pledgee is not any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the University. In case of a dispute as to such right, any decision by the Bond Trustee taken upon the advice of counsel shall be full protection to the Bond Trustee.

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ARTICLE XIII MISCELLANEOUS

SECTION 13.1. LIMITATION OF RIGHTS. With the exception of rights herein expressly conferred, nothing expressed or mentioned in or to be implied from this Bond Indenture or the Bonds is intended or shall be construed to give to any person or company other than the parties hereto and the holders of the Bonds, any legal or equitable right, remedy or claim under or in respect to this Bond Indenture or any covenants, conditions and provisions herein contained; this Bond Indenture and all of the covenants, conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of the parties hereto and the holders of the Bonds as herein provided.

SECTION 13.2. UNCLAIMED MONEYS. Any moneys deposited with the Bond Trustee by the Authority in accordance with the terms and covenants of this Bond Indenture, in order to redeem or pay any Bond in accordance with the provisions of this Bond Indenture, and remaining unclaimed by the registered owner of the Bond for six (6) years after the date fixed for redemption or of maturity, as the case may be, shall, if the Authority is not at the time to the knowledge of the Bond Trustee in default with respect to any of the terms and conditions of this Bond Indenture, or in the Bonds contained, be repaid by the Bond Trustee to the University; and thereafter the registered owner of the Bond shall be entitled to look only to the University for payment thereof; provided, however, that the Bond Trustee, before being required to make any such repayment, shall, at the expense of the University, mail to the registered owner thereof at its address, as the same shall last appear on the Bond Register, a notice to the effect that said moneys have not been so applied and that after the date named in said notice any unclaimed balance of said moneys then remaining shall be returned to the University. If the University makes arrangements satisfactory to the Authority and the Bond Trustee to indemnify the Authority and the Bond Trustee for any costs which they may incur due to the unavailability of moneys due to such investment, such moneys may be invested in accordance with Section 4.7 hereof. Investment income on any such unclaimed moneys received by the Bond Trustee shall be deposited as provided in Section 4.7 hereof until the final maturity or redemption date of the Bonds. Any such income generated after such date shall be deemed to be unclaimed moneys of the type referred to in the first sentence of this Section and shall be disposed of in accordance with such sentence. The University, by approval of this Bond Indenture as evidenced by the Loan Agreement, covenants and agrees to indemnify and save the Authority and the Bond Trustee harmless from any and all loss, costs, liability and expense suffered or incurred by the Authority and the Bond Trustee by reason of having returned any such moneys to the University as herein provided.

SECTION 13.3. SEVERABILITY. If any provision of this Bond Indenture shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions, or in all

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cases because it conflicts with any other provision or provisions or any constitution or statute or rule of public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatever.

The invalidity of any one or more phrases, sentences, clauses or Sections in this Bond Indenture contained, shall not affect the remaining portions of this Bond Indenture, or any part thereof.

SECTION 13.4. NOTICES. Except as otherwise provided in this Bond Indenture, all notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when in writing and mailed by first class mail, postage prepaid, with proper address as indicated below. Any of such parties may, by written notice given by such party to the others, designate any address or addresses to which notices, certificates or other communications to them shall be sent when required as contemplated by this Bond Indenture. Until otherwise provided by the respective parties, all notices, certificates and communications to each of them shall be addressed as follows:

To the Authority: Higher Educational Facilities Financing Authority 26852 Tanic Drive Wesley Chapel, Florida 33544 Attention: Secretary/Treasurer Telephone No. 813/929-6691 Telecopy No. 813/929-6693 To the University: Bethune-Cookman University, Inc. 640 Dr. Mary McLeod Bethune Blvd. Daytona Beach, Florida 32114 Attention: President Telephone No. 386/481-2001 To the Bond Trustee: U.S. Bank National Association 225 East Robinson Street, Suite 250 Orlando, Florida 32801 Attention: U.S. Bank Corporate Trust Services Telephone No. 407/835-3805 Telecopy No. 407/835-3814

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To Moody's: Moody's Investors Service 99 Church Street New York, New York 10007 Attention: Municipal Structured Finance Group To Fitch: Fitch Ratings One State Street Plaza New York, New York 10004 Attention: Municipal Structured Finance To Standard and Poor's: Standard and Poor's Rating Services 55 Water Street New York, New York 10014

The Bond Trustee shall give Immediate Notice to each owner of Bonds of any

change in the addresses of the Bond Trustee.

SECTION 13.5. ADDITIONAL NOTICES TO RATING AGENCIES. The Bond Trustee hereby agrees that if at any time (i) payment of principal and interest on the Bonds is accelerated pursuant to the provisions of Section 7.3 hereof, (ii) the Authority, at the direction of the University, shall redeem all or any portion of the Bonds outstanding hereunder prior to maturity, (iii) a successor Bond Trustee is appointed hereunder, (iv) the Bondholders shall consent to any amendment to this Bond Indenture, the Loan Agreement or shall waive any provision of this Bond Indenture or the Loan Agreement, or (v) the Authority or the University shall provide for the payment of all or any portion of the Bonds outstanding hereunder prior to maturity pursuant to Section 11.1 or 11.3 hereof, then, in each case, the Bond Trustee will promptly give notice of the occurrence of such event to each Rating Agency then maintaining a rating on the Bonds, which notice in the case of an event referred to in clause (iv) hereof shall include a copy of any such amendment or waiver.

SECTION 13.6. COUNTERPARTS. This Bond Indenture may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

SECTION 13.7. APPLICABLE LAW. This Bond Indenture shall be governed exclusively by the applicable laws of the State.

SECTION 13.8. IMMUNITY OF OFFICERS, EMPLOYEES AND MEMBERS OF AUTHORITY. No recourse shall be had for the payment of the principal of or premium, if any, or interest on any of the Bonds or for any claim based thereon or upon any obligation, covenant or agreement in this Bond Indenture contained against any past, present or future officer, director, member, employee or agent of the

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Authority or any incorporator, officer, director, member, trustee, employee or agent of any successor corporation or body politic or of the State or any agency or political subdivision thereof, as such, either directly or through the Authority or any successor corporation or body politic or of the State or any agency or political subdivision thereof, under any rule of law or equity, statute or constitution, or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such incorporators, officers, directors, trustees, members, employees or agents as such is hereby expressly waived and released as a condition of and consideration for the execution of this Bond Indenture and the issuance of such Bonds.

IN WITNESS WHEREOF, the Higher Educational Facilities Financing Authority has caused this Bond Trust Indenture to be signed in its name and on its behalf by its Chairman and attested by its Secretary and U.S. Bank National Association to evidence its acceptance of the trusts, created by this Bond Trust Indenture has caused these presents to be signed in its name and on its behalf by one of its Authorized Signatories all as of the day and year first above written.


By: Chairman ATTEST: By: Secretary U.S. BANK NATIONAL

ASSOCIATION By: Authorized Signatory

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EXHIBIT A FORM OF BOND

UNITED STATES OF AMERICA STATE OF FLORIDA

HIGHER EDUCATIONAL FACILITIES FINANCING AUTHORITY EDUCATIONAL FACILITIES REVENUE BOND,

SERIES 2010 (BETHUNE-COOKMAN UNIVERSITY, INC. PROJECT)

R-___ $__________

INTEREST RATE MATURITY DATE DATED DATE CUSIP

July 1, ____ November 16, 2010

REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT:

The Higher Educational Facilities Financing Authority (the "Authority"), a public body corporate and politic created under Part II, Chapter 243, Florida Statutes, as amended (the "Act"), for value received, hereby promises to pay in lawful money of the United States of America to the registered owner set forth above, or registered assigns, on the Maturity Date (as identified above), unless this Bond shall be redeemable and shall have previously been called for redemption and payment of the redemption price made or provided for, but solely from amounts available under the Bond Indenture (hereinafter defined) and certain amounts payable under the Loan Agreement (hereinafter defined), which amounts and payments are pledged and assigned for the benefit and payment hereof pursuant to the Bond Indenture and not otherwise, upon surrender hereof, the principal amount set forth above upon presentation and surrender thereof at the designated corporate trust office of U.S. Bank National Association, Orlando, Florida, as Bond Trustee, or its successor in trust under the Bond Indenture (as hereinafter defined) and to pay interest (computed as described herein and in the Bond Indenture) on such principal amount, but solely from said amounts available under the Bond Indenture and payable under the Loan Agreement, payable on each Interest Payment Date (as hereinafter defined) until payment of such principal amount, or provision therefor, shall have been made upon redemption or at maturity.

Interest payments on a Bond (other than with respect to Defaulted Interest) shall be made to the registered owner thereof appearing on the Bond Register as of the close of

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business of the Bond Registrar on the Record Date. Interest on the Bonds shall, except as hereinafter provided, be paid by check or draft of the Bond Trustee mailed on the Interest Payment Date to such registered owner at the address of such owner as it appears on the Bond Register or at such other address furnished in writing by such registered owner to the Bond Trustee or to any owner of $1,000,000 or more in aggregate principal amount of Bonds as of the close of business of the Bond Trustee on the Record Date for a particular Interest Payment Date, by wire transfer sent on the Interest Payment Date, to such owner. The foregoing notwithstanding, Defaulted Interest shall be payable as provided in the Bond Indenture.

This Bond is one of an authorized Series of Bonds issued under the hereinafter described Bond Indenture in the aggregate original principal amount of $23,825,000 (the "Bonds") for the purpose of loaning funds to Bethune-Cookman University, Inc., a Florida not-for-profit corporation and an accredited institution of higher education (the "University"), which will be used, together with certain other moneys, to (i) finance and refinance the costs of acquisition, construction, installation and equipping of capital improvements to or for the University's, or the University's affiliates', educational facilities, (ii) refund the outstanding Volusia County Educational Facilities Authority Variable Rate Educational Facilities Revenue Bonds, Series 2001 (Bethune-Cookman College, Inc. Project), (iii) fund a Debt Service Reserve Fund, (iv) pay certain expenses incurred in connection with the issuance of the Bonds, all as permitted under the Act. The proceeds derived from the sale of the Bonds will be loaned to the University pursuant to a Loan Agreement dated as of November 1, 2010 between the University and the Authority (as amended from time to time, the "Loan Agreement").

The Bonds are all issued under and equally and ratably secured by and entitled to the security of a Bond Trust Indenture dated as of November 1, 2010, (the "Bond Indenture") duly executed and delivered by the Authority to U.S. Bank National Association (the "Bond Trustee"), pursuant to which Bond Indenture, all of the right, title and interest of the Authority in and to the Loan Agreement (excluding Unassigned Rights, as defined in the Bond Indenture) are assigned by the Authority to the Bond Trustee as security for the Bonds. Under the terms of the Bond Indenture, all or any portion of the Bonds may be refunded through a deposit in escrow for the benefit of such refunded Bonds of cash or Government Obligations (as defined in the Bond Indenture) and become payable solely from such cash and Government Obligations. Reference is made to the Bond Indenture, and to the Loan Agreement and to all amendments thereto for the provisions, among others, with respect to the nature and extent of the security, the rights, duties and obligations of the Authority and the Bond Trustee and the rights of the owners of the Bonds, and to all the provisions of which the owner hereof by the acceptance of this Bond assents.

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NOTICE OF LIMITED OBLIGATION

THIS BOND AND SUCH OTHER BONDS OF THE SERIES OF WHICH IT FORMS A PART, AND THE INTEREST PAYABLE HEREON, DO NOT CONSTITUTE A DEBT OR LIABILITY OF THE STATE OF FLORIDA (THE "STATE") OR OF ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OTHER THAN THE AUTHORITY OR A PLEDGE OF THE FAITH AND CREDIT OF THE STATE OR ANY POLITICAL SUBDIVISION THEREOF BUT SHALL BE PAYABLE SOLELY FROM THE FUNDS PLEDGED THEREFOR IN ACCORDANCE WITH THE BOND INDENTURE. THE ISSUANCE OF THE BONDS UNDER THE PROVISIONS OF THE ACT DOES NOT, DIRECTLY, INDIRECTLY OR CONTINGENTLY, OBLIGATE THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF TO LEVY ANY FORM OF TAXATION FOR THE PAYMENT THEREOF OR TO MAKE ANY APPROPRIATION FOR THEIR PAYMENT AND THE BONDS AND THE INTEREST PAYABLE THEREON DO NOT NOW AND SHALL NEVER CONSTITUTE A DEBT OF THE STATE WITHIN THE MEANING OF THE CONSTITUTION OR THE STATUTES OF THE STATE AND DO NOT NOW AND SHALL NEVER CONSTITUTE A CHARGE AGAINST THE CREDIT OR TAXING POWER OF THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF. THE AUTHORITY HAS NO TAXING POWER. THE STATE SHALL NOT IN ANY EVENT BE LIABLE FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE BONDS OR FOR THE PERFORMANCE OF ANY PLEDGE, MORTGAGE, OBLIGATION OR AGREEMENT OF ANY KIND WHATSOEVER WHICH MAY BE UNDERTAKEN BY THE AUTHORITY.

THIS BOND AND THE OTHER BONDS, AND THE INTEREST AND PREMIUM, IF ANY, PAYABLE HEREON AND THEREON, ARE LIMITED OBLIGATIONS OF THE AUTHORITY AND ARE PAYABLE SOLELY (i) FROM PAYMENTS OR PREPAYMENTS TO BE MADE UNDER THE LOAN AGREEMENT, (ii) FROM CERTAIN MONEYS HELD BY THE BOND TRUSTEE UNDER THE BOND INDENTURE, AND (iii) FROM THE INCOME FROM THE TEMPORARY INVESTMENT OF ANY OF THE FOREGOING.

This Bond is registered on the Bond Register and may be transferred by the registered owner hereof at the written request of such registered owner in person or by his duly authorized attorney, but only in the manner, subject to the limitations and upon the payment of the charges provided in the Bond Indenture and upon surrender and cancellation of this Bond. Upon such transfer, a new fully registered bond or bonds of the same Subseries and maturity and of authorized denominations for the same aggregate principal amount shall be issued to the transferee in exchange therefor. The person in whose name this Bond is registered shall be deemed and regarded as the absolute owner

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hereof for the purpose of receiving payment of, or on account of, the principal, premium, if any, and interest due hereon and for all other purposes, and neither the Authority nor the Bond Trustee shall be affected by any notice to the contrary. If any Bond is transferred or exchanged on the Bond Register by the Bond Trustee after notice of the optional redemption of such Bond has been given, the Bond Trustee shall attach a copy of such notice to the Bond issued in connection with such transfer or exchange.

The Bonds are issuable only as registered Bonds in Authorized Denominations of $15,000 and any integral multiples thereof.

Redemption

Mandatory Sinking Fund Redemptions Without Premium. The Bonds maturing on July 1, 2024 shall be subject to mandatory redemption and payment prior to maturity at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date, without premium. Pursuant to Section 4.2 of the Loan Agreement, the University shall deposit in the Bond Sinking Fund a sum that, together with all amounts then on deposit in the Bond Sinking Fund and then available for the redemption of the Bonds shall be sufficient to redeem (after credit as provided below) the following principal amounts of Bonds on the following sinking fund payment dates:

July 1 of the Year

Principal Amount

2021 $ 980,000 2022 1,025,000 2023 1,075,000 2024* 1,125,000

_________ *Final Maturity

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The Bonds maturing on July 1, 2032 shall be subject to mandatory redemption and payment prior to maturity at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date, without premium. Pursuant to Section 4.2 of the Loan Agreement, the University shall deposit in the Bond Sinking Fund a sum that, together with all amounts then on deposit in the Bond Sinking Fund and then available for the redemption of the Bonds shall be sufficient to redeem (after credit as provided below) the following principal amounts of Bonds on the following sinking fund payment dates:

July 1 of the Year

Principal Amount

July 1 of the Year

Principal Amount

2025 $ 630,000 2029 $1,460,000 2026 1,245,000 2030 1,545,000 2027 1,315,000 2031 1,625,000 2028 1,385,000 2032* 1,715,000

__________ *Final Maturity

On or before the thirtieth (30th) day prior to any sinking fund payment date, the

Bond Trustee shall proceed to select for redemption (by lot in such manner as the Bond Trustee may determine), from all Outstanding Bonds subject to mandatory sinking fund redemption on such date, an aggregate principal amount of such Bonds equal to the amount required to be on deposit in the Bond Sinking Fund with respect to such Bonds on such sinking fund payment date, and shall call such Bonds or portions thereof in Authorized Denominations for redemption from the sinking fund on such sinking fund payment date and give notice of such call. At the option of the University, to be exercised by delivery of a Written Request of the University to the Bond Trustee on or before the sixtieth (60th) day next preceding any sinking fund payment date, it may (i) deliver to the Bond Trustee for cancellation Bonds or portions thereof in Authorized Denominations of the maturity relating to such sinking fund payment date in any aggregate principal amount desired by the University or (ii) specify a principal amount of Bonds or portions thereof in Authorized Denominations or the maturity relating to such sinking fund payment date which prior to said date have been purchased or redeemed (otherwise than through the operation of the Sinking Fund) and cancelled by the Bond Trustee at the request of the University and not theretofore applied as a credit against any sinking fund payment. Each such Bond or portion thereof so delivered or previously redeemed shall be credited by the Bond Trustee at one hundred percent (100%) of the principal amount thereof against the obligation of the Authority on such sinking fund payment date with respect to Bonds of such maturity. Any excess shall be credited against the next sinking fund payment relating to the Bonds of such maturity. In the event the University shall avail itself of the provisions of clause (i) of the second sentence of this paragraph, the Written Request shall be accompanied by the Bonds or portions thereof to be cancelled.

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Optional Redemption. Bonds maturing on and after July 1, 2021 may be redeemed in whole or in part at the option of the Authority (upon the direction of the University on any date on and after July 1, 2020 at a redemption price equal to 100% of the principal amount redeemed plus accrued interest to the redemption date.

Any Bonds which are University Bonds are subject to redemption in whole or in part (in an Authorized Denomination) prior to their Maturity Date at the option of the Authority upon direction of the University out of amounts deposited in the Redemption Fund by the University, in whole or in part (and if in part, in an Authorized Denomination) on any Business Day while such Bonds are University Bonds at a redemption price equal to 100% of the principal amount thereof plus accrued interest, if any, to the redemption date.

Purchase in Lieu of Redemption. In lieu of an optional redemption and cancellation of Bonds, Bonds may be purchased by the University for its own account and either (i) cancelled or (ii) remarketed. Notice and selection of Bonds being purchased pursuant to the provisions of Section 5.3 of the Bond Indenture shall be given/selected in the same manner as the notice and selection of Bonds called for optional redemption; provided, that the notice provided for in Section 5.4 of the Bond Indenture shall be modified as necessary to reflect a purchase in lieu of redemption.

Notice of Redemption. Except as hereinafter provided, a copy of the notice of the call for any such redemption identifying the Bonds to be redeemed shall be given by first class mail, postage prepaid, to the registered owners of Bonds to be redeemed at their addresses as shown on the Bond Register not less than 15 days prior to the redemption date. Except for mandatory Bond Sinking Fund redemptions, prior to the date that the redemption notice is first given as aforesaid, funds shall be placed with the Bond Trustee to pay such Bonds, any premium thereon and accrued interest thereon to the redemption date, or such notice shall state that any redemption is conditional on such funds being deposited with the Bond Trustee on the redemption date and that a failure to make such deposit shall not constitute an event of default under the Bond Indenture.

Failure to give notice in the manner prescribed hereunder with respect to any Bond, or any defect in such notice, shall not affect the validity of the proceedings for redemption for any Bond with respect to which notice was properly given. Upon the happening of the above conditions and if sufficient moneys are on deposit with the Bond Trustee on the applicable redemption date to redeem the Bonds to be redeemed and to pay interest due thereon and premium, if any, the Bonds thus called shall not after the applicable redemption date bear interest, be protected by the Bond Indenture or be deemed to be outstanding under the provisions of the Bond Indenture. The Bond Trustee shall redeem, in the manner provided in the Bond Indenture, such an aggregate principal amount of such Bonds at the principal amount thereof plus accrued interest to the redemption date and unpaid thereon and premium, if any, as will exhaust as nearly as

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practicable such funds. At the direction of the University, such funds may be invested in United States Government Obligations until needed for redemption payout.

If any Bond is transferred or exchanged on the Bond Register by the Bond Registrar after notice has been given calling such Bond for redemption, the Bond Registrar will attach a copy of such notice to the Bond issued in connection with such transfer.

Selection of Bonds. In the event that less than all of the Outstanding Bonds or portions thereof shall be redeemed, the maturities of the Bonds to be redeemed shall be designated by the University and, if not so designated, the Bonds to be redeemed shall be redeemed in inverse order of maturity. If less than all Bonds or portions thereof of a single maturity are to be redeemed, they shall be selected by lot in such manner as the Bond Trustee may determine pursuant to the Bond Indenture.

In case a Bond is of a denomination larger than an Authorized Denomination, a portion of such Bond ($5,000 or any integral multiple thereof) may be redeemed, but Bonds shall be redeemed only in the principal amount of an Authorized Denomination each or any integral multiple thereof. Upon surrender of any Bond for redemption in part only, the Authority shall execute and the Bond Trustee shall authenticate and deliver to the owner thereof, at the expense of the University, a new Bond or Bonds of the same maturity of Authorized Denominations in an aggregate principal amount equal to the unredeemed portion of the Bond surrendered.

Except as otherwise provided in the Bond Indenture, on or before the Business Day prior to the redemption date specified in the notice of redemption, an amount of money which together with all amounts then on deposit in the Bond Sinking Fund or Redemption Fund, as appropriate and available for redemption of the Bonds shall be sufficient to redeem all Bonds called for redemption at the appropriate redemption price, including accrued interest to the date fixed for redemption, shall be paid to the Bond Trustee for deposit in the Bond Sinking Fund or Redemption Fund, as appropriate. On the redemption date the principal amount of each Bond to be redeemed, together with the accrued interest thereon to such date and redemption premium, if any, shall become due and payable; and from and after such date, notice having been given and the deposit having been made in accordance with the provisions of Article V of the Bond Indenture, then, notwithstanding that any Bonds called for redemption shall not have been surrendered, no further interest shall accrue on any such Bonds. From and after such date of redemption (such notice having been given and such deposit having been made), the Bonds to be redeemed shall not be deemed to be Outstanding, and the Authority shall be under no further liability in respect thereof.

All or any portion of the Bonds are subject to advance defeasance by depositing with the Bond Trustee cash and/or Government Obligations (as such term is defined in the Bond Indenture) in an amount, together with the income or increment to accrue

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thereon, without consideration of any reinvestment thereof, and any uninvested cash, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Bonds outstanding under the Bond Indenture at or before their respective maturity dates. All or any portion of the Bonds are also subject to advance defeasance of the Bond Indenture by depositing with the Bond Trustee cash and/or Government Obligations (as such term is defined in the Bond Indenture) in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all or a portion of the Bonds outstanding under the Bond Indenture at or before their respective maturity dates, it being understood that the investment income on such Government Obligations may be used for any other purpose under the Act. Upon such payment or provision therefor, together with all other payments required under the Bond Indenture, the Bond Indenture may be discharged with respect to such Bonds in accordance with the provisions thereof, but the Authority shall remain the obligor on such Bonds, although the owners thereof and the owner hereof shall be entitled to payment solely out of such cash and funds received from such Government Obligations deposited with the Bond Trustee.

None of the Bonds outstanding under the Bond Indenture may be refunded as aforesaid nor may the Bond Indenture be discharged if under any circumstances such refunding would result in the loss of any exemption for purposes of federal income taxation to which interest on such Bonds would otherwise be entitled. As a condition precedent to the advance refunding of any Bonds outstanding hereunder, the Bond Trustee shall receive an Opinion of Bond Counsel to the effect that any exclusion from gross income of interest on such Bonds would not be adversely affected by reason of such refunding.

The owner of this Bond shall have no right to enforce the provisions of the Bond Indenture or to institute action to enforce the covenants therein, or to take any action with respect to any event of default under the Bond Indenture, or to institute, appear in or defend any suit or other proceedings with respect thereto, except as provided in the Bond Indenture. In certain events, on the conditions, in the manner and with the effect set forth in the Bond Indenture, the principal of all Bonds of all Series issued under the Bond Indenture and then outstanding may become or may be declared due and payable before the stated maturity thereof, together with interest accrued thereon. Modifications or alterations of the Bond Indenture, or of any supplements thereto, may be made only to the extent and in the circumstances permitted by the Bond Indenture.

No recourse shall be had for the payment of the principal of or premium or interest on any of the Bonds or for any claim based thereon or upon any obligation, covenant or agreement in the Bond Indenture contained, against any past, present or future officer, director, member, employee or agent of the Authority, or any incorporator, officer, director, member, trustee, employee or agent of any successor corporation or body politic, as such, either directly or through the Authority or any successor corporation or

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body politic, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such incorporators, officers, directors, trustees, members, employees or agents, as such, is hereby expressly waived and released as a condition of and consideration for the execution of the Bond Indenture and the issuance of the Bonds.

It is hereby certified that all conditions, acts and things required to exist, happen and be performed under the Act and under the Bond Indenture precedent to and in the issuance of this Bond, exist, have happened and have been performed, and that the issuance, authentication and delivery of this Bond have been duly authorized by a resolution of the Authority duly adopted.

This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Bond Indenture until the certificate of authentication hereon shall have been duly executed by the Bond Trustee.

IN WITNESS WHEREOF, as provided by the Act, the Higher Educational Facilities Financing Authority has caused this Bond to be executed in its name and on its behalf by the manual or facsimile signature of its Chair and by the manual or facsimile signature of its Secretary and its facsimile seal to be hereunto affixed, all as of the dated date specified above.


By: Chair ATTEST: By: Secretary

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CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the within-mentioned Bond Indenture.

Authentication Date: ________________

U.S. BANK NATIONAL ASSOCIATION, as Bond Trustee

By: Authorized Signatory

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Unless this certificate is presented by an authorized representative of The Depository Trust Company to the Issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as requested by the authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto

Insert Social Security or Other Identifying Number of Assignee

(Name and Address of Assignee) the within Bond and does hereby irrevocably constitute and appoint ________________ _____________________________, as attorneys to register the transfer of the said Bond on the books kept for registration thereof with full power of substitution in the premises. Dated: Signature Guaranteed: (Authorized Officer) signature must be guaranteed by an institution which is a participant in the Securities Transfer Agent Medallion Program (STAMP) or similar program.

NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatever.

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EXHIBIT B FORM OF REQUISITION REQUISITION NO. ___

Pursuant to Section [3.1/3.2] of the Bond Trust Indenture dated as of November 1,

2010 by and between U.S. Bank National Association, as Trustee (the "Bond Trustee") and the Higher Educational Facilities Financing Authority (the "Authority"), the undersigned __________ of Bethune-Cookman University, Inc. (the "University") hereby requests and authorizes the Bond Trustee to pay to the University or to the person(s) listed on the Disbursement Schedule hereto, from the moneys deposited in the [Expense Fund/Project Fund], the aggregate sum of $__________ to pay such person(s) or to reimburse the University for the advances, payments and expenditures made by it in connection with the items listed on the Disbursement Schedule.

[INSERT INFORMATION REQUIRED BY SECTION 3.2 (paragraphs (a) through (c)) WITH RESPECT TO REQUISITIONS FROM THE PROJECT FUND]:

In connection with the foregoing request and authorization, the undersigned hereby certifies that the obligations on the attached Disbursement Schedule have been incurred by the University and are presently due and payable and that each item thereof is a necessary cost of the Project and is a proper charge against the Project Fund and has not been paid previously from the Project Fund.

This statement and all exhibits hereto, including the Disbursement Schedule, shall be conclusive evidence of the facts and statements set forth herein and shall constitute full warrant, protection and authority to the Bond Trustee for its actions taken pursuant hereto.

Dated: __________, _____

BETHUNE-COOKMAN UNIVERSITY, INC.

By: Its:

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DISBURSEMENT SCHEDULE Payee Purpose Amount


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and

BETHUNE-COOKMAN UNIVERSITY, INC.

LOAN AGREEMENT

DATED AS OF NOVEMBER 1, 2010 The rights of the Higher Educational Facilities Financing Authority hereunder have been assigned to U.S. Bank National Association, as Bond Trustee under a Bond Trust Indenture dated as of November 1, 2010, except for certain unassigned rights described herein.

i

TABLE OF CONTENTS

Page


SECTION 1.1. DEFINITIONS ................................................................................... 2

ARTICLE II REPRESENTATIONS

SECTION 2.1. REPRESENTATIONS BY AUTHORITY ........................................ 2 SECTION 2.2. REPRESENTATIONS AND WARRANTIES BY THE

UNIVERSITY .................................................................................. 3

ARTICLE III ISSUANCE OF BONDS OF THE AUTHORITY

SECTION 3.1. AGREEMENT TO ISSUE BONDS; PROCEEDS OF BONDS ....... 4 SECTION 3.2. MAKING OF THE LOAN ................................................................ 4 SECTION 3.3. PAYMENT OF BONDS .................................................................... 4 SECTION 3.4 PLEDGE OF THIS LOAN AGREEMENT ....................................... 5

ARTICLE IV OBLIGATION PAYMENTS, FUND DEPOSITS, PREPAYMENTS AND

OTHER PAYMENTS

SECTION 4.1. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST; PAYMENTS REQUIRED BY THE TAX EXEMPTION AGREEMENT ......................................................... 5

SECTION 4.2. PAYMENTS IN RESPECT OF THE BONDS AND THIS LOAN AGREEMENT ..................................................................... 5

SECTION 4.3. CREDITS ON PRINCIPAL PAYMENTS ........................................ 6 SECTION 4.4. PREPAYMENT GENERALLY ........................................................ 6 SECTION 4.5. NOTICE OF PREPAYMENT ........................................................... 6 SECTION 4.6. EFFECT OF PARTIAL PREPAYMENT .......................................... 7 SECTION 4.7. AMORTIZATION SCHEDULES ..................................................... 7 SECTION 4.8. ADDITIONAL PAYMENTS ............................................................ 7 SECTION 4.9. UNIVERSITY'S OBLIGATIONS UNCONDITIONAL................... 8

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ARTICLE V COVENANTS OF THE UNIVERSITY

SECTION 5.1. MAINTENANCE OF FACILITIES .................................................. 8 SECTION 5.2. COMPLIANCE WITH ORDERS AND ORDINANCES ................. 8 SECTION 5.3. SUFFICIENT REVENUES ............................................................... 9 SECTION 5.4. AUTHORITY'S RIGHT TO PERFORM THE UNIVERSITY'S

COVENANTS ................................................................................. 9 SECTION 5.5. INDEMNITY ..................................................................................... 9 SECTION 5.6. NOTICE OF DEFAULT .................................................................. 11 SECTION 5.7. MAINTENANCE OF TAX STATUS ............................................. 11 SECTION 5.8. MAINTENANCE OF EXISTENCE ................................................ 11 SECTION 5.9. FINANCIAL INFORMATION AND REPORTS ........................... 11 SECTION 5.10. TAX EXEMPT BONDS .................................................................. 12 SECTION 5.11. INVESTMENTS AND ARBITRAGE ............................................ 12 SECTION 5.12. DISPOSITION OF PROJECT FUND AND EXPENSE FUND

MONEYS ....................................................................................... 12 SECTION 5.13 LIMITATIONS ON INDEBTEDNESS. ......................................... 12 SECTION 5.14 LIMITATIONS ON CREATION OF LIENS; PERMITTED

LIENS. ........................................................................................... 21

ARTICLE VI EVENTS OF DEFAULT AND REMEDIES THEREFOR

SECTION 6.1. EVENTS OF DEFAULT AND REMEDIES .................................. 23 SECTION 6.2. APPLICATION OF PROCEEDS OF REMEDIES ......................... 24 SECTION 6.3. REMEDIES CUMULATIVE .......................................................... 25 SECTION 6.4. DELAY OR OMISSION NOT A WAIVER ................................... 25 SECTION 6.5. WAIVER OF EXTENSION, VALUATION AND

APPRAISEMENT LAWS ............................................................. 25 SECTION 6.6. REMEDIES SUBJECT TO PROVISIONS OF LAW ..................... 26

ARTICLE VII SUPPLEMENTS AND AMENDMENTS TO THIS LOAN AGREEMENT

SECTION 7.1. SUPPLEMENTS AND AMENDMENTS TO THIS LOAN AGREEMENT ............................................................................... 26

ARTICLE VIII DEFEASANCE

SECTION 8.1. DEFEASANCE ................................................................................ 26

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ARTICLE IX MISCELLANEOUS PROVISIONS

SECTION 9.1 LOAN AGREEMENT FOR BENEFIT OF PARTIES HERETO ... 27 SECTION 9.2. SEVERABILITY ............................................................................. 27 SECTION 9.3. NOTICES ......................................................................................... 27 SECTION 9.4. SUCCESSORS AND ASSIGNS ..................................................... 28 SECTION 9.5. COUNTERPARTS........................................................................... 28 SECTION 9.6. GOVERNING LAW ........................................................................ 28 SECTION 9.7. IMMUNITY ..................................................................................... 28 SECTION 9.8. OBLIGATIONS DUE ON SATURDAYS, SUNDAYS OR

HOLIDAYS ................................................................................... 28 SECTION 9.9. LIMITATION ON INTEREST ........................................................ 28 SCHEDULE A LOAN REPAYMENT SCHEDULE ............................................. A-1

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LOAN AGREEMENT

This is a LOAN AGREEMENT dated as of November 1, 2010 (the "Loan Agreement"), between BETHUNE-COOKMAN UNIVERSITY, INC., a Florida not-for-profit corporation and an accredited institution of higher education (the "University"), and the HIGHER EDUCATIONAL FACILITIES FINANCING AUTHORITY, a public body corporate and politic created and existing under and by virtue of Part II, Chapter 243 of the Florida Statutes, as amended (the "Authority").

PRELIMINARY STATEMENT

The University desires to obtain a portion of the moneys which will be used, together with certain other moneys to, (i) finance and refinance the cost of acquisition, construction, installation and equipping of certain capital improvements to the University's educational facilities including, without limitation, the construction and improvements to its dormitory facilities, (ii) refund the outstanding Volusia County Educational Facilities Authority Variable Rate Educational Facilities Revenue Bonds, Series 2001 (Bethune-Cookman College, Inc. Project) (the "Refunded Bonds"), (iii) fund a debt service reserve fund, (iv) pay the termination payment due on an interest rate exchange agreement related to the Refunded Bonds and (iv) pay related expenses incurred in connection with the issuance of the Bonds (as hereinafter defined), all as permitted under the Act.

Pursuant to the Act, the Authority is obtaining funds to loan to the University for the purposes aforesaid through the issuance and sale of its Educational Facilities Revenue Bonds, Series 2010 (Bethune-Cookman University, Inc. Project) in the initial aggregate principal amount of $23,825,000 (the "Bonds"), which will be issued under and secured by a Bond Trust Indenture dated as of November 1, 2010 (the "Bond Indenture") between the Authority and U.S. Bank National Association, as bond trustee (the "Bond Trustee"). Pursuant to the Bond Indenture, the Authority will pledge and assign certain of its rights under this Loan Agreement as part of the security for the Bonds. The Bonds will be payable out of the payments to be made by the University provided for in this Loan Agreement.

NOW THEREFORE, in consideration of the foregoing, the mutual covenants, conditions and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby expressly acknowledged, the University and the Authority hereby covenant and agree as follows:

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SECTION 1.1. DEFINITIONS. The terms used in this Loan Agreement, unless the context requires otherwise, shall have the same meanings as set forth herein or in the Bond Indenture. All accounting terms not otherwise defined herein or in the Bond Indenture shall have the meanings assigned to them in accordance with generally accepted accounting principles in effect from time to time.

All references in this instrument to designated "Articles," "Sections" and other subdivisions or subsections are to the designated Articles, Sections and other subdivisions of this instrument as originally executed. The words "herein," "hereof" and "hereunder" and other words of similar import refer to this Loan Agreement as a whole and not to any particular Article, Section or other subdivision unless the context indicates otherwise.

ARTICLE II REPRESENTATIONS

SECTION 2.1. REPRESENTATIONS BY AUTHORITY. The Authority represents and warrants that:

(a) it is a public body corporate and politic organized and existing under the laws of the State including, particularly, the Act and will do or cause to be done all things within its power necessary to preserve its existence so long as any of the Bonds are Outstanding;

(b) the Authority has duly authorized the issuance, execution, delivery and performance of this Loan Agreement, the Bond Indenture and the other documents to which it is a party associated with the issuance of the Bonds and has duly noticed and held the public hearing required by Section 147(f) of the Code in connection with the issuance of the Bonds;

(c) the Authority has not pledged or assigned and will not pledge or assign its interest in this Loan Agreement, or any of the other documents associated with the issuance of the Bonds other than to secure the Bonds from time to time Outstanding as provided herein and in the Bond Indenture; and

(d) each of the Authority=s representations, warranties and certifications contained in this Loan Agreement, the Tax Exemption Agreement and the Purchase Contract is true and correct in all material respects as of the date hereof.

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SECTION 2.2. REPRESENTATIONS AND WARRANTIES BY THE UNIVERSITY. The University makes the following representations and warranties as the basis for its covenants herein:

(a) the University is a not-for-profit corporation validly organized and existing under the laws of the State of Florida and is an accredited institution of higher education.

(b) each of its representations, warranties and certifications contained in this Loan Agreement, the Tax Exemption Agreement and the Borrower's Closing Certificate is true and correct in all material respects as of the date hereof;

(c) it reasonably expects to own all of the Project throughout the term of this Loan Agreement and it intends to use such facilities in connection with its operation of an institution of higher education and no Person other than the University currently owns or will own or use any portion of the Project;

(d) it is duly authorized under the laws of the State and all other applicable provisions of law and its articles of incorporation and by-laws to execute and deliver this Loan Agreement, the Tax Exemption Agreement and each of the other documents or instruments being delivered by the University in connection with the issuance of the Bonds, that all action on its part necessary for the valid execution and delivery of this Loan Agreement, the Tax Exemption Agreement and each of the other documents or instruments to which the University is a party related to the issuance of the Bonds (collectively the "University's Documents") has been duly and effectively taken, and this Loan Agreement is a legal and valid obligation of the University;

(e) neither the execution and delivery of the University's Documents, nor the consummation of the transactions contemplated hereby and thereby, nor the fulfillment of or compliance with the terms and conditions hereof or thereof conflicts with or results in a breach of the terms, conditions, or provisions of any agreement or instrument to which the University is now a party or by which the University is bound;

(f) there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, known to be pending or threatened against or affecting the University or any of its officers, nor to the best knowledge of the University is there any basis therefor, wherein an unfavorable decision, ruling, or finding would materially adversely affect the transactions contemplated by the University's Documents or which would adversely affect, in any way, the validity or enforceability of the Bonds, the University's Documents, or any agreement or instrument to which the University is a party, used or contemplated for use in the consummation of the transactions contemplated by the University's Documents or the Bond Indenture;

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(g) it has all material licenses and permits from all State, local and other governmental and regulatory agencies having jurisdiction required for the operation of its educational facilities;

(h) it has obtained all licenses and permits from all State, local and other governmental and regulatory agencies having jurisdiction required for the occupancy and operation of the Project which are currently obtainable and the University is not aware of any facts or circumstances which lead it to believe that all licenses and permits from all State, local and other governmental and regulatory agencies having jurisdiction required for the occupancy and operation of the Project which are not currently available will not be issued in due course; and

(i) the University has reviewed and is familiar with the terms and provisions of the Bond Indenture and will fully and faithfully perform all the duties and obligations which the Authority has covenanted and agreed in the Bond Indenture to cause the University to perform and any duties and obligations which the University is required in the Bond Indenture to perform. The foregoing shall not apply to any duty or undertaking of the Authority which by its nature cannot be delegated or assigned.

ARTICLE III ISSUANCE OF BONDS OF THE AUTHORITY

SECTION 3.1. AGREEMENT TO ISSUE BONDS; PROCEEDS OF BONDS. In order to provide funds to make the loan to the University hereunder, the Authority agrees to issue and sell the Bonds pursuant to the Purchase Contract. The University agrees that the proceeds of the Bonds being loaned to the University pursuant to this Loan Agreement shall be deposited with the Bond Trustee and applied as provided in the Bond Indenture.

SECTION 3.2. MAKING OF THE LOAN. The Authority hereby loans $23,825,000 to the University, and the University accepts the loan from the Authority on the terms and conditions provided in this Loan Agreement. The proceeds of such loan will be disbursed to the University as provided in this Loan Agreement and the Bond Indenture.

SECTION 3.3. PAYMENT OF BONDS. The University agrees that the principal of and the interest and redemption premium, if any, on the Bonds shall be payable in accordance with the provisions of the Bond Indenture and Schedule A to this Loan Agreement and that this Loan Agreement and payments to be made hereunder (excluding Unassigned Rights) shall be assigned and pledged to the Bond Trustee to secure the payment of the Bonds. The foregoing notwithstanding, the University agrees that the moneys and securities, if any, on deposit in the Rebate Fund created by the Tax

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Exemption Agreement are not part of the "trust estate" and are not available to make payments of principal of, premium, if any, and interest on the Bonds.

SECTION 3.4 PLEDGE OF THIS LOAN AGREEMENT. Except for Unassigned Rights, all of the Authority's right, title and interest in this Loan Agreement (including the right to receive the payments to be made by the University pursuant to this Loan Agreement) have been assigned to the Bond Trustee pursuant to the Bond Indenture. The University consents to that assignment and agrees that the Bond Trustee may enforce any of the rights, privileges and remedies of the Authority under this Loan Agreement, other than the Unassigned Rights. In the event the Authority ceases operations, the Authority's right to execute and deliver amendments to this Loan Agreement or the Bond Indenture and to receive notices and other documents and to provide its consent, acceptance or approval with respect to matters as to which that right is given in this Loan Agreement or the Bond Indenture may be exercised and enforced by the Bond Trustee.

ARTICLE IV OBLIGATION PAYMENTS, FUND DEPOSITS,

PREPAYMENTS AND OTHER PAYMENTS

SECTION 4.1. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST; PAYMENTS REQUIRED BY THE TAX EXEMPTION AGREEMENT. The University will duly and punctually pay the principal of, premium, if any, and interest on the Bonds in the manner set forth in Schedule A to this Loan Agreement or in the Bond Indenture, according to the true intent and meaning thereof and hereof. Notwithstanding any schedule of payments set forth herein, the University agrees to make payments upon the Bonds and be liable therefor at the times and in the amounts (including principal, interest and premium, if any) equal to the principal of, premium, if any, and interest on the Bonds from time to time outstanding, whether as regularly scheduled interest or principal payments, at maturity, by mandatory or optional redemption, acceleration or otherwise; provided, however, that the University may be entitled to certain credits on such payments as permitted by Section 4.3 hereof. The University also agrees to make any payments as required under the Tax Exemption Agreement.

SECTION 4.2. PAYMENTS IN RESPECT OF THE BONDS AND THIS LOAN AGREEMENT. The University covenants and agrees to make the following deposits to provide for payments and prepayments under this Loan Agreement, as the case may be, directly to the Bond Trustee for deposit into the appropriate Fund established by the Bond Indenture, on the following dates:

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(a) Interest. On or before the Business Day preceding the first day of each January 1 and July 1, beginning January 1, 2011, an amount not less than the interest to become due on the Bonds on the next succeeding Interest Payment Date.

(b) Principal. On or before the Business Day next preceding each Principal Payment Date as set forth on Schedule A hereto, including each mandatory Bond Sinking Fund redemption date established pursuant to Section 5.1 of the Bond Indenture, an amount equal to the amount of principal to become due on each Bond on such date by maturity or mandatory Bond Sinking Fund redemption; provided, however, that the University may be entitled to certain credit on such payments as permitted under Section 4.3 hereof.

(c) Debt Service Reserve Fund. On or before (i) the 180th day following notice from the Bond Trustee that the amount on deposit in the Debt Service Reserve Fund is less than 90% of the Reserve Requirement as a result of a drop in the market value of the investments therein, the amount necessary to fund the Debt Service Reserve Fund at the Reserve Requirement, and (ii) the first day of the month next succeeding the month in which funds are transferred from the Debt Service Reserve Fund to the Interest Fund or Bond Sinking Fund to pay the principal of or interest on the Bonds, and on the first day of each month thereafter, 1/12th of the amount necessary to replenish the transferred amount.

SECTION 4.3. CREDITS ON PRINCIPAL PAYMENTS. Notwithstanding any provision contained in this Loan Agreement or in the Bond Indenture to the contrary, the principal amount of Bonds of any maturity purchased by the University and delivered to the Bond Trustee, or purchased by the Bond Trustee on behalf of the University and canceled, shall be credited against the obligation of the University to pay the principal of the Bonds in such order as the University shall elect prior to such purchase or if no such election is made prior to such purchase, in the inverse order thereof.

SECTION 4.4. PREPAYMENT GENERALLY. No prepayment or purchase of the Bonds may be made except to the extent and in the manner expressly permitted by the Bond Indenture. Such prepayments or purchases shall be made by paying to the Bond Trustee an amount sufficient to redeem (when redeemable) or purchase all or a part of the Bonds, as the case may be, at the redemption or purchase prices specified therefor in the Bond Indenture. Any prepayment or purchase pursuant to this Section shall include accrued interest and premium, if any, required for redemption or purchase of such Bonds as shall be purchased or redeemed by such prepayment.

SECTION 4.5. NOTICE OF PREPAYMENT. The University shall provide the Bond Trustee and the Authority with a Written Request of any prepayment of

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and redemption or purchase of the Bonds not less than thirty-five (35) days prior to the prepayment date in accordance with Section 5.4 of the Bond Indenture, which Written Request shall designate the date of prepayment and the amount thereof and direct the redemption or purchase of Bonds in accordance with the terms of the Bond Indenture.

SECTION 4.6. EFFECT OF PARTIAL PREPAYMENT. Upon any partial prepayment or purchase of the Bonds, each installment of interest which shall thereafter be payable on the Bonds shall be reduced, taking into account the interest rate on the Bonds remaining outstanding after the redemption or purchase of Bonds from the proceeds of such partial prepayment and after the purchase and delivery and cancellation of Bonds described in Section 4.3 hereof.

SECTION 4.7. AMORTIZATION SCHEDULES. On the date of any partial prepayment or purchase of the Bonds, the University shall deliver to the Authority and the Bond Trustee two copies of a new amortization schedule with respect to Bonds then outstanding setting forth the amount of the principal and interest installments to be paid after the date of such partial prepayment or purchase.

SECTION 4.8. ADDITIONAL PAYMENTS. The University agrees to pay directly all reasonable costs incurred by or on behalf of the Authority or the Bond Trustee in connection with or incident to the issuance and sale of the Bonds which exceed the amount on deposit in the Expense Fund described in Section 3.1 of the Bond Indenture, including, without limitation, any commitment and other financing costs, recording expenses, trustee=s acceptance fees and initial annual fees, legal fees, printing expenses, bond and issuer counsel fees and other fees and expenses.

The University agrees to pay or cause to be paid the following items to the following persons as additional payments under this Loan Agreement:

(a) to the Bond Trustee, upon demand, an amount equal to all reasonable fees of the Bond Trustee for services rendered under the Bond Indenture and all fees and charges of any Paying Agent, registrar, counsel, accountant, consultant, engineer or other persons incurred in the performance of services under the Bond Indenture on request of the Bond Trustee for which the Bond Trustee and such other persons are entitled to payment or reimbursement;

(b) to the Authority, within thirty (30) days of receipt of invoice, all reasonable fees and expenses incurred by the Authority in relation to this Loan Agreement or the Bonds which are not otherwise required to be paid by the University under the terms of this Loan Agreement;

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(c) to the Authority or the Bond Trustee, as the case may be, the amount of all advances of funds made by either of them under the provisions of this Loan Agreement or an amount equal to all advances made by either of them under the Bond Indenture, with interest thereon at the Bond Trustee's Prime Rate from the date of each such advance; and

(d) to the Bond Trustee, an amount equal to any deficiency in the amount required to be on deposit in any fund under the Bond Indenture caused by a decrease in the value of the investments therein.

SECTION 4.9. UNIVERSITY'S OBLIGATIONS UNCONDITIONAL. The University agrees that its obligation to make the payments described in this Loan Agreement and to perform its obligations under this Loan Agreement are absolute and unconditional and are not subject to diminution by any defense (other than payment), by any right of set off, counterclaim or abatement, by the happening or non-happening of any event or for any other reason whatsoever.

ARTICLE V COVENANTS OF THE UNIVERSITY

SECTION 5.1. MAINTENANCE OF FACILITIES. The University agrees that it will maintain and keep the property financed or refinanced, directly or indirectly, with the proceeds of the Bonds and all of its other educational facilities, or cause the property financed or refinanced, directly or indirectly, with the proceeds of the Bonds, and all of its other educational facilities, to be maintained and kept, in good repair, working order and condition except for ordinary wear and tear and that it will make or cause to be made all necessary repairs and replacements, except with respect to such facilities as are obsolete or no longer useful or necessary to the University's operations.

SECTION 5.2. COMPLIANCE WITH ORDERS AND ORDINANCES. Subject to the following sentence, the University will, at its sole cost and expense, comply with all present and future laws, ordinances, orders, decrees, rules, regulations and requirements of every duly constituted governmental authority, commission, association and court (collectively, a "Governmental Rule") of which the University has notice and the violation of which would materially and adversely affect its property, plant and equipment or its use, occupancy, or condition. The University is not required to comply with any Governmental Rule so long as the University, in good faith and at its own cost and expense, is contesting the validity of the Governmental Rule or its applicability to the University or is taking other appropriate action in an appropriate manner and by appropriate proceedings which operate during its pendency to prevent the sale, forfeiture, loss or loss of use and occupancy of its property, plant and equipment; provided that no contest, action or proceeding may subject the Authority or the Bond

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Trustee to any liability unless the University had indemnified the Authority or the Bond Trustee, as the case may be, to the satisfaction of the Authority or the Bond Trustee.

SECTION 5.3. SUFFICIENT REVENUES. Notwithstanding any other provision of the University's Documents, the University unconditionally agrees that it will pay pursuant to this Loan Agreement the full amount needed and at the times needed to enable the Authority (or the Bond Trustee on its behalf) to make timely payment of the principal of (whether due upon maturity, redemption, acceleration or otherwise), premium, if any, and interest on the Bonds.

SECTION 5.4. AUTHORITY'S RIGHT TO PERFORM THE UNIVERSITY'S COVENANTS. If the University fails to make any payment or perform any act required by any of the University's Documents (unless the payment or performance is one which any of the University's Documents permits the University to contest and the University is contesting it by diligently pursuing appropriate proceedings) then the Authority or the Bond Trustee, upon not less than five (5) days' prior written notice to the University, may (but is not obligated to) remedy the default for the account of the University and make advances for that purpose. No remedy by the Authority or the Bond Trustee operates to release the University from its default. Any money advanced by the Authority or the Bond Trustee in the discharge of an obligation of the University under this Loan Agreement are additional obligations of the University to the one making the advance, are due from the University in immediately available funds on demand and bear interest at the Bond Trustee=s Prime Rate from the date of the advance until paid.

SECTION 5.5. INDEMNITY. (a) The University agrees to pay, and agrees to protect, indemnify and save the Authority and the Bond Trustee harmless from and against any and all liabilities, losses, damages, costs, expenses (including reasonable attorneys' fees), causes of action, settlements, judgments or other obligations of any nature arising through any suits, claims, demands, actions or proceedings of any nature arising from, in connection with or as a result of:

(i) any injury to or death of any person or damage to property in or upon the Project or resulting from or connected with the use, non-use, condition or occupancy of the Project or any part thereof;

(ii) the violation of any agreement or condition of this Loan Agreement or the Tax Exemption Agreement, except by the Bond Trustee;

(iii) the violation of any contract, agreement or restriction by the University relating to its property, plant and equipment;

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(iv) the violation of any law, ordinance or regulation arising out of the ownership, occupancy or use of its property, plant and equipment or any part thereof;

(v) the construction, acquisition, equipping and installation of the Project or the failure to construct, acquire, equip or install the Project;

(vi) the issuance and sale of the Bonds or the execution, delivery and performance of the University's Documents or the Bond Indenture;

(vii) any act of the University or any of its agents, contractors or licensees; and

(viii) any statement or information concerning the University, its officers and members or the property, plant and equipment of the University contained in the Official Statement or any other final official statement or prospectus furnished to purchasers of any securities that is untrue or incorrect in any material respect and any omission from the Official Statement or any official statement or prospectus of any statement or information which should be contained in it for the purpose for which it is to be used or which is necessary to make the statements in it concerning the University, its officers and members or the property, plant and equipment of the University not misleading in any material respect, if such other official statement or prospectus is approved in writing by the University.

Nothing contained in this Loan Agreement prohibits the University from pursuing its remedies against the Authority, or the Bond Trustee for damages caused by the Authority's gross negligence or willful acts or the Bond Trustee's negligent or willful acts.

(b) The University also agrees to indemnify and hold harmless the Bond Trustee against any loss, liability or expense incurred without negligence or bad faith on the part of the Bond Trustee arising out of or in connection with the acceptance or administration of the Bond Indenture including the costs and expense of a defense against any claim or liability.

(c) If any suit, claim, demand, action or proceeding is brought against the Authority or the Bond Trustee with respect to which indemnity may be sought under this Section, the Authority and the Bond Trustee, as the case may be, agree to promptly notify the University in writing, and the University agrees to assume the defense of the suit, claim, demand, action or proceeding including the employment of Counsel and the payment of all expenses. Each of the Authority and the Bond Trustee may, however, retain its own counsel and still be indemnified against the cost of employing counsel and all other expenses despite an assumption of the defense by the University if the Authority or the Bond Trustee believes in good faith that there are defenses available to it which are

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not available to the University or which are adverse to or in conflict with those available to the University and which the Authority or the Bond Trustee believes in good faith cannot be effectively asserted by common counsel. The Authority and the Bond Trustee always have the right to employ separate Counsel but, subject to the preceding sentence, fees and expenses of its separate Counsel must be paid by the Authority or the Bond Trustee unless the University and the Authority or the Bond Trustee have mutually agreed to the employment of the Authority's or the Bond Trustee's separate Counsel. The University is not liable for any settlement of a suit, claim, demand, action or proceeding effected without its written consent. If the suit, claim, demand, action or proceeding is settled with the consent of the University or results in a final judgment for the plaintiff, the University agrees to indemnify and hold harmless the Authority and the Bond Trustee from and against any loss or liability by reason of the settlement or judgment.

All amounts payable to or with respect to the Authority under this Section shall be deemed to be fees and expenses of the Authority for the purposes of the provisions hereof and of the Bond Indenture dealing with the assignment of the Authority's rights hereunder.

SECTION 5.6. NOTICE OF DEFAULT. The University agrees to give to the Bond Trustee notice of any event which with the lapse of time or the giving of notice or both would be an event of default hereunder (a "default") within ten (10) days of the University or any of its officers learning of the occurrence of the default.

SECTION 5.7. MAINTENANCE OF TAX STATUS. The University agrees that it will at all times maintain its existence as a not-for-profit corporation and its status as an organization described in Section 501(c)(3) of the Code, exempt from federal income taxation under Section 501(a) of the Code. The University agrees that it will not take any action or permit any action to be taken by others which will adversely affect its agreement made in this paragraph.

SECTION 5.8. MAINTENANCE OF EXISTENCE. The University agrees that during the term of this Loan Agreement it will maintain its corporate existence as an accredited institution of higher education and will be duly qualified to transact business in the State, will not dissolve, will not sell, lease, transfer or otherwise dispose of all or substantially all of its assets, will not receive from any other corporation by sale, lease, transfer or otherwise all or substantially all of its assets, will not consolidate with or merge into another corporation and will not permit one or more other corporations to consolidate with or merge into it.

SECTION 5.9. FINANCIAL INFORMATION AND REPORTS. The University agrees to keep proper books of record and account in which full, true and correct entries will be made of all the University's business and affairs in accordance with

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generally accepted accounting principles consistently maintained. The University will provide, or cause the Trustee to provide, all financial information related to the Bonds which the Authority shall reasonably request.

SECTION 5.10. TAX EXEMPT BONDS. The University and Authority intend that the interest paid on the Bonds will be excluded from the gross income of the Owners of the Bonds for federal income tax purposes pursuant to Section 103 of the Code. The University agrees that it will not take any action which would, or fail to take any action the omission of which would, adversely affect the validity of the Bonds or any exemption from federal income taxation to which interest on the Bonds would otherwise be entitled.

SECTION 5.11. INVESTMENTS AND ARBITRAGE. Section 4.8 of the Bond Indenture provides that money on deposit in the Bond Indenture Funds will be invested in Qualified Investments as directed by the University. The University agrees (i) to provide written investment instructions to the Bond Trustee as needed, (ii) that all of such investment instructions are subject to the provisions of the Tax Exemption Agreement and Article VI of the Bond Indenture and (iii) that it will not make or direct any use of any funds which will cause the Bonds to be "arbitrage bonds" within the meaning of such term as used in Section 148 of the Code ("Arbitrage Bonds"). The University agrees for the benefit of the Owners of the Bonds that no use will be made of the proceeds derived from the issuance and sale of the Bonds which will cause the Bonds to be Arbitrage Bonds.

SECTION 5.12. DISPOSITION OF PROJECT FUND AND EXPENSE FUND MONEYS. The University agrees that if after payment by the Bond Trustee of all amounts requested pursuant to Written Requests theretofore tendered to the Bond Trustee under the provisions of Sections 3.1 and 3.2 of the Bond Indenture, there shall remain any moneys in the Project Fund, such moneys may be withdrawn and shall be used or deposited as provided in Section 3.2 of the Bond Indenture.

SECTION 5.13 LIMITATIONS ON INDEBTEDNESS. The University covenants and agrees that it will not incur any Additional Indebtedness if, after giving effect to all other Indebtedness incurred by the University, such Indebtedness could not be incurred pursuant to one of subsections (a) to (j), inclusive, of this Section 5.13. Any Indebtedness may be incurred only in the manner and pursuant to the terms set forth in such subsections.

(a) Long-Term Indebtedness may be incurred if prior to incurrence of the Long-Term Indebtedness there is delivered to the Bond Trustee:

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(i) An Officer's Certificate providing a general description of such Indebtedness and certifying that the Long-Term Debt Service Coverage Ratio (excluding Subordinated Debt) for the most recent period of 12 full consecutive calendar months preceding the date of delivery of the Certificate for which there are audited financial statements available, taking all Long-Term Indebtedness (excluding Subordinated Debt) incurred after such period and the proposed Long-Term Indebtedness into account as if such Long-Term Indebtedness had been incurred at the beginning of such period, is not less than 1.25 plus 1.00 on Subordinated Debt; or

(ii) (A) an Officer's Certificate demonstrating that the Long-Term Debt Service Coverage Ratio (excluding Subordinated Debt) for the period mentioned in subsection (a)(i) of this Section 5.13, excluding the proposed Long-Term Indebtedness, is at least 1.25 and (B) a certificate of a Consultant (or, in the case of a Long-Term Debt Service Coverage Ratio (excluding Subordinated Debt) greater than 1.50, an Officer's Certificate) demonstrating that the forecasted Long-Term Debt Service Coverage Ratio is not less than 1.25 for (x) in the case of Long-Term Indebtedness (other than a Guaranty) to finance capital improvements, each of the two full Fiscal Years succeeding the date on which such capital improvements are forecasted to be in operation or (y) in the case of Long-Term Indebtedness not financing capital improvements, or in the case of a Guaranty, each of the two full Fiscal Years succeeding the date on which the Indebtedness is incurred, as shown by pro forma financial statements for the University for each such period, accompanied by a statement of the relevant assumptions upon which such pro forma financial statements are based and (c) in each case, plus 1.00 on Subordinated Debt; or

(iii) written confirmation from the Rating Agency or Agencies providing a rating on the Bonds that such rating(s) are confirmed after taking the proposed Long-Term Indebtedness into consideration.

(b) In addition to, and not in lieu of, Long-Term Indebtedness permitted to be incurred under subsection 5.13(a) above, Long-Term Indebtedness may be incurred provided that immediately after giving effect to any Long-Term Indebtedness incurred pursuant to this subsection 5.13(b) and Short-Term Indebtedness, the aggregate of Long-Term Indebtedness incurred under this subsection 5.13(b) shall not exceed 50% of Total Revenues as reflected in the most recent audited financial statements of the University; provided, further, that the aggregate of the principal amount of Indebtedness outstanding under this subsection 5.13(b) and subsection 5.13(d) shall not at any time exceed 50% of Total Revenues as reflected in the most recent audited financial statements of the University.

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(c) Long-Term Indebtedness incurred for the purpose of refunding any outstanding Long-Term Indebtedness if the Maximum Annual Debt Service will not increase by more than 10% after the incurrence of such proposed refunding Long-Term Indebtedness and after giving effect to the disposition of the proceeds thereof, and in connection with the issuance of such Long-Term Indebtedness the University receives an Opinion of Counsel stating that upon the incurrence of such proposed Long-Term Indebtedness and application of the proceeds thereof, the outstanding Long-Term Indebtedness to be refunded thereby will no longer be outstanding;

(d) (i) Short-Term Indebtedness may be incurred subject to the limitation that the aggregate of all Short-Term Indebtedness shall not at any time exceed 20% of Total Revenues as reflected in the most recent audited financial statements of the University; provided, that the aggregate of the principal amount of Indebtedness outstanding under this subsection 5.13(d)(i) and subsection 5.13(b) shall not at any time exceed 50% of Total Revenues as reflected in the most recent audited financial statements of the University

(ii) Short-Term Indebtedness may also be incurred if the tests set forth in Sections 5.13(a) are met with respect to the incurrence of such Short-Term Indebtedness. For the purpose of calculating compliance with the tests set forth in Sections 5.13(a)(i) or 5.13(a)(ii), the Short-Term Indebtedness to be incurred pursuant to this Section 5.13(d)(ii) shall be treated as Long-Term Indebtedness. For purposes of this Section 5.13(d) a Guaranty of Short-Term Indebtedness shall be treated in the manner described in the definitions of "Guaranty" and "Exposure to Guaranteed Debt" herein.

(e) Non-Recourse Indebtedness may be incurred without limit.

(f) Completion Indebtedness may be incurred in an amount not exceeding 20% of the principal amount of the Indebtedness issued to finance a project; provided, however, that prior to the incurrence of Completion Indebtedness, the University shall (i) obtain a certificate of an architect estimating the costs of completing the facilities for which Completion Indebtedness is to be incurred, and (ii) make a determination that the amount of Completion Indebtedness to be incurred will be sufficient, together with other funds, if applicable, to complete construction of the facilities in respect of which Completion Indebtedness is to be incurred. Completion Indebtedness may be incurred in an amount exceeding 20% of the principal amount of the Indebtedness issued to finance a project if, in addition to the above-described requirements, the requirements of Section 5.13(a) hereof are met.

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(g) Subordinated Debt may be incurred if, taking the proposed Subordinated Debt into consideration, the University is able to meet one of the tests set forth in 5.13(a) for the incurrence of $1.00 of additional Long-Term Indebtedness.

(h) Indebtedness under a Credit Facility (including a Guaranty of Indebtedness under a Credit Facility) may be incurred without limit.

(i) Derivative Indebtedness may be incurred without limit.

(j) Indebtedness secured by accounts receivable may be incurred in any amount not exceeding 10% of the aggregate sale price of such accounts receivable.

Indebtedness incurred pursuant to any one of subsections (b), (d)(i) or (d)(ii) of this Section 5.13 may be reclassified as Indebtedness incurred pursuant to any other of such subsections if the tests set forth in the subsection to which such Indebtedness is to be reclassified are met at the time of such reclassification.

Indebtedness containing a "put" or "tender" provision pursuant to which the holder of such Indebtedness may require that such Indebtedness be purchased prior to its maturity shall not be considered Balloon Long-Term Indebtedness, solely by reason of such "put" or "tender" provision, and the put or tender provision shall not be taken into account in testing compliance with any debt incurrence test pursuant to this Section 5.13.

As used in this Section 5.13, the following terms shall have the following meanings:

"Additional Indebtedness" means any Indebtedness incurred by the University after the date of this Loan Agreement.

"Balloon Long-Term Indebtedness" means Long-Term Indebtedness 20% or more of the principal payments of which are due in a single year, which portion of the principal is not required by the documents pursuant to which such Indebtedness is issued to be amortized by redemption prior to such date.

"Completion Indebtedness" means any Long-Term Indebtedness incurred for the purpose of financing the completion of facilities for the acquisition, construction or equipping of which Long-Term Indebtedness has theretofore been incurred in accordance with the provisions of this Loan Agreement, to the extent necessary to provide a completed and equipped facility of the type and scope contemplated at the time that such Long-Term Indebtedness theretofore incurred was originally incurred.

"Consultant" means a firm or firms which is not, and no member, stockholder, director, officer, trustee or employee of which is, an officer, director, trustee or employee

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of the University, and which is a professional consultant of national repute for having the skill and experience necessary to render the particular report required by the provisions hereof.

"Credit Facility" means a municipal bond insurance policy, line of credit, letter of credit, standby bond purchase agreement or similar credit enhancement or liquidity facility provided by an insurer, bank or other financial institution and established in connection with the issuance of Indebtedness to provide credit or liquidity support for such indebtedness, or to serve as a surety in lieu of a debt service reserve fund related to such Indebtedness.

"Derivative Agreement" means, without limitation, (i) any contract known as or referred to or which performs the function of an interest rate swap agreement, currency swap agreement, forward payment conversion agreement or futures contract related to Long-Term Indebtedness; (ii) any contract providing for payments based on levels of, or charges or differences in, interest rates, currency exchange rates, or stock or other indices; (iii) any contract to exchange cash flows or payments or series of payments; (iv) any type of contract called, or designed to perform the function of, interest rate floors or caps, options, puts or calls, to hedge or minimize any type of financial risk, including, without limitation, payment, currency, rate or other financial risk; and (v) any other type of contract or arrangement that the University determines is to be used, or is intended to be used, to manage or reduce the cost of Indebtedness, to convert any element of Indebtedness from one form to another, to maximize or increase investment return, to minimize investment return risk or to protect against any type of financial risk or uncertainty.

"Derivative Indebtedness" means payments for which the University shall have become obligated under a Derivative Agreement.

"Derivative Period" means the period during which a Derivative Agreement is in effect.

"Escrowed Interest" means amounts of interest on Long-Term Indebtedness for which moneys or United States Government Obligations have been deposited in escrow, which deposit has been determined by a Consultant to be sufficient to pay such Escrowed Interest.

"Escrowed Principal" means amounts of principal on Long-Term Indebtedness for which moneys or United States Government Obligations have been deposited in escrow, which deposit has been determined by a Consultant to be sufficient to pay such Escrowed Principal.

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"Exposure to Guaranteed Debt" means, with respect to the period of time for which calculated, an amount equal to the sum of one hundred percent (100%) of the amount which would be payable as principal and interest on the Indebtedness for which a Guaranty has been issued (calculated in the same manner as the Long-Term Debt Service Coverage Ratio); provided, however, that so long as (a) such Guaranty constitutes a contingent liability under generally accepted accounting principles; and (b) the University has not been required, by reason of its Guaranty, to make any payment in respect of the guaranteed indebtedness within the immediately preceding twelve (12) months, only twenty percent (20%) of the guaranteed Indebtedness shall constitute the Exposure to Guaranteed Debt.

"Guaranty" means any obligation of the University guaranteeing in any manner, directly or indirectly, any obligation of any Person which obligation of such other Person would, if such obligation were the obligation of the University, constitute Indebtedness hereunder. For the purposes of this Loan Agreement, the aggregate annual principal and interest payments on any Indebtedness in respect of which the University shall have executed and delivered its Guaranty shall be determined in accordance with the definition of Exposure to Guaranteed Debt.

"Income Available for Debt Service" means as to any period of calculation, excess of revenues (including interest earnings on restricted funds, and a sum equal to all gifts, grants, bequests, contributions and donations unrestricted as to their use) over expenses before depreciation, amortization and interest expense on Long-Term Indebtedness, as determined in accordance with generally accepted accounting principles consistently applied; provided, however, (1) no determination thereof shall take into account any (a) gain or loss resulting from either the extinguishment of Indebtedness or the sale, exchange or other disposition of capital assets not made in the ordinary course of business, or (b) unrealized gains and losses on investments, or (c) non-recurring, unanticipated gains or losses; provided, however, that in the case of losses, such losses shall be excluded only to the extent that the University has unrestricted cash or short term investments sufficient to pay such loss which shall be certified in an Officer's Certificate, or (d) change in value of interest rate swaps, and (2) revenues shall not include earnings from the investment of Escrowed Interest or earnings constituting Escrowed Interest to the extent that such earnings are applied to the payment of principal of or interest on Long-Term Indebtedness which is excluded from the determination of Long-Term Debt Service Requirement.

"Indebtedness" means (i) all indebtedness of the University for borrowed money, (ii) all installment sales, conditional sales and capital lease obligations incurred or assumed by the University, (iii) all Guaranties, whether constituting Long-Term Indebtedness or Short-Term Indebtedness and (iv) Derivative Indebtedness. For purposes of the financial tests in this Loan Agreement, obligations of the University under

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Guaranties shall be included within the term "Indebtedness" only to the extent of the definition of Exposure to Guaranteed Debt.

"Long-Term Debt Service Coverage Ratio" means for any period of time the ratio determined by dividing (i) the Income Available for Debt Service by (ii) Maximum Annual Debt Service.

"Long-Term Debt Service Requirement" means, for any period for which such determination is made, the aggregate of the payments to be made in respect of principal and interest (whether or not separately stated) on outstanding Long-Term Indebtedness of the University during such period, also taking into account:

(i) with respect to Balloon Long-Term Indebtedness which is not amortized by the terms thereof (a) the amount of principal which would be payable in such period if such principal were amortized from the date of incurrence thereof over a period of not to exceed thirty (30) years as determined by an Officer's Certificate on a level debt service basis at an interest rate equal to the rate borne by such Indebtedness on the date calculated, except that if the date of calculation is within twelve (12) months of the actual maturity of such Indebtedness, the full amount of principal payable at maturity shall be included in such calculation or (b) principal payments or deposits with respect to Indebtedness secured by an irrevocable letter of credit issued by, or an irrevocable line of credit with, a bank rated in either of the three highest long-term rating categories or the two highest short-term rating categories, in each case without regard to gradations within such categories, from either Moody's, S&P or Fitch, or insured by an insurance policy issued by any insurance company rated at least "A" by Alfred M. Best Company or its successors in Best's Insurance Reports or its successor publication, nominally due in the last fiscal year in which such Indebtedness matures may, at the option of the University, be treated as if such principal payments or deposits were due as specified in any loan or other financing agreement issued in connection with such letter of credit, line of credit or insurance policy or pursuant to the repayment provisions of such letter of credit, line of credit or insurance policy, and interest on such Indebtedness after such fiscal year shall be assumed to be payable pursuant to the terms of such loan or other financing agreement or repayment provisions;

(ii) with respect to Long-Term Indebtedness which is Variable Rate Indebtedness the interest on such Indebtedness shall be calculated at the rate which is equal to the average of the actual interest rates which were in effect (weighted according to the length of the period during which each such interest rate was in effect) for the most recent twelve-month period immediately preceding the date of calculation for which such information is available (or shorter period if such

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information is not available for a twelve-month period), except that with respect to new Variable Rate Indebtedness (and the incurrence thereof) the interest rate for such Indebtedness for the initial interest rate period shall be the initial rate at which such Indebtedness is issued and thereafter shall be calculated as set forth above;

(iii) with respect to any Credit Facility, to the extent that such Credit Facility has not been used or drawn upon, the principal and interest relating to such Credit Facility shall not be included in the Long-Term Debt Service Requirement;

(iv) with respect to any Derivative Indebtedness, the interest on such Indebtedness during any Derivative Period, and for so long as the provider of the Derivative Agreement has not been terminated, shall be calculated by adding (x) the amount of interest payable by the University on such Derivative Indebtedness pursuant to its terms and (y) the amount of interest payable by the University under the Derivative Agreement, and subtracting (z) the amount of interest payable by the provider of the Derivative Agreement at the rate specified in the Derivative Agreement; provided, however, that from and after the termination of any Derivative Agreement, the amount of interest payable by the University shall be the interest calculated as if such Derivative Agreement had not been executed;

provided, however, that Escrowed Interest and Escrowed Principal shall be excluded from the determination of Long-Term Debt Service Requirement.

"Long-Term Indebtedness" means all Indebtedness having a maturity longer than one year incurred or assumed by the University, including:

(i) money borrowed for an original term, or renewable at the option of the borrower for a period from the date originally incurred, longer than one year;

(ii) leases which are required to be capitalized in accordance with generally accepted accounting principles having an original term, or renewable at the option of the lessee for a period from the date originally incurred, longer than one year;

(iii) installment sale or conditional sale contracts having an original term in excess of one year;

(iv) Short-Term Indebtedness if a commitment by a financial lender exists to provide financing to retire such Short-Term Indebtedness, such commitment provides for the repayment of principal on terms which would, if

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such commitment were implemented, constitute Long-Term Indebtedness and the University reasonably expects to cause, or shall have caused, the Short-Term Indebtedness to be retired through a borrowing under such commitment; and

(v) the current portion of Long-Term Indebtedness.

"Maximum Annual Debt Service" means the highest Long-Term Debt Service Requirement for any succeeding Fiscal Year.

"Net Revenues" means the excess of revenues over operating expenses, excluding unrealized gains or losses on investments.

"Non-Operating Revenues" means non-operating revenues of the University determined in accordance with generally accepted accounting principles.

"Non-Recourse Indebtedness" means any Indebtedness incurred to finance the purchase or improvement of property secured exclusively by a lien on or pledge of such property or the revenues or net revenues produced by such property or both, the liability for which is effectively limited to such property or revenues subject to such lien with no recourse, directly or indirectly, to any other property or revenues of the University.

"Short-Term Indebtedness" means all Indebtedness having a maturity of one year or less, other than the current portion of Long-Term Indebtedness, incurred or assumed by the University, including:

(i) money borrowed for an original term, or renewable at the option of the borrower for a period from the date originally incurred, of one year or less;

(ii) leases which are capitalized in accordance with generally accepted accounting principles having an original term, or renewable at the option of the lessee for a period from the date originally incurred, of one year or less; and

(iii) installment purchase or conditional sale contracts having an original term of one year or less.

"Subordinated Debt" means Indebtedness the payment of which is specifically subordinated to the payment of principal and interest on the Bonds or other Indebtedness incurred pursuant to the provisions of Sections 5.13(a), (b), (c), (d), (f), (h), (i) or (j) hereof.

"Total Operating Revenues" means, as to any period of time, total operating revenues less all deductions from revenues, as determined in accordance with generally accepted accounting principles consistently applied.

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"Total Revenues" means, as to any period of time, Total Operating Revenues plus Non-Operating Revenues.

"Variable Rate Indebtedness" means any portion of Indebtedness the interest rate on which has not been established at a fixed or constant rate to maturity.

SECTION 5.14 LIMITATIONS ON CREATION OF LIENS; PERMITTED LIENS.

(a) The University agrees that it will not create or suffer to be created or permit the existence of any mortgage, deed or trust or pledge of, security interest in or encumbrance (a "Lien") on property now owned or hereafter acquired by it, other than Permitted Liens.

(b) Permitted Liens shall consist of the following:

(i) Liens arising by reason of good faith deposits with the University in connection with leases of real estate, bids or contracts (other than contracts for the payment of money), deposits by the University 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;

(ii) 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 the University 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, or to share in the privileges or benefits required for companies participating in such arrangements;

(iii) Any judgment lien against the University so long as such judgment is being contested in good faith and execution thereon is stayed;

(iv) (A) 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 of the University; (B) any liens on any property of the University for taxes, assessments, levies, fees, water and sewer, rents, and other governmental and similar charges and any liens of mechanics, materialmen, laborers, suppliers or vendors for work or services performed or materials furnished in connection with such property, which are not due and payable or which are not delinquent or which, or the amount or validity of which,

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are being contested and execution thereon is stayed or, with respect to liens of mechanics, materialmen, laborers, suppliers or vendors, have been due for less than 90 days; (C) 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 which do not materially impair the use of such property or materially and adversely affect the value thereof; (D) to the extent that it affects title to any property of the University, this Loan Agreement; and (E) landlord's liens.

(v) Any Lien which is existing on the date of authentication and delivery of the Bonds; provided that no such Lien may be increased, extended, renewed or modified to apply to secure Additional Indebtedness, unless such Lien as so extended, renewed or modified otherwise qualifies as a Permitted Lien hereunder;

(vi) Any Lien securing Non-Recourse Indebtedness permitted by Section 5.13(e) hereof;

(vii) Any Lien on property acquired by the University if the Indebtedness secured by the Lien is Additional Indebtedness permitted under the provisions of Section 5.13 hereof;

(viii) Any Lien on property of the University (other than accounts receivable) in an aggregate amount not exceeding 15% of the book value of all property of the University (other than accounts receivable), determined in accordance with generally accepted accounting principles;

(ix) Any Lien in favor of a creditor or a trustee on the proceeds of Indebtedness and any earnings thereon prior to the application of such proceeds and such earnings;

(x) Any Lien securing all Indebtedness on a parity basis;

(xi) Liens on moneys deposited by students or others with the University as security for or as prepayment for the cost of educational or other services; and

(xii) Liens on property received by the University through gifts, grants or bequests, such Liens being due to restrictions on such gifts, grants or bequests of property or the income thereon.

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ARTICLE VI EVENTS OF DEFAULT AND REMEDIES THEREFOR

SECTION 6.1. EVENTS OF DEFAULT AND REMEDIES. The occurrence and continuance of any of the following events shall constitute an "event of default" hereunder:

(a) failure by the University to make any payment required by Section 4.1 or 4.2 hereof for the payment of the Bonds when the same shall become due and payable, whether upon a scheduled Interest Payment Date, at maturity, upon any date fixed for prepayment or purchase, by acceleration or otherwise; or

(b) failure of the University to comply with or perform any of the covenants, conditions, or provisions hereof or of the Tax Exemption Agreement and, except in case of a failure under Section 6.1(a) hereof which shall immediately constitute an event of default, to remedy such default within sixty (60) days after written notice thereof from the Authority or the Bond Trustee, to the University, the Authority and the Bond Trustee; provided that, if such default cannot with due diligence and dispatch be wholly cured within 60 days but can be wholly cured, the failure of the University to remedy such default within such 60-day period shall not constitute a default hereunder if the University shall immediately upon receipt of such notice commence with due diligence and dispatch the curing of such default and, having so commenced the curing of such default, shall thereafter prosecute and complete the same with due diligence and dispatch; or

(c) if any representation or warranty made by the University herein or in any statement or certificate furnished to the Authority, the Bond Trustee or the purchaser of any Bonds in connection with the sale of the Bonds or furnished by the University pursuant hereto proves untrue in any material respect as of the date of the issuance or making thereof and shall not be made good within sixty (60) days after written notice thereof by the Authority to the University, or the Authority, as the case may be; or

(d) if the University admits insolvency or bankruptcy or its inability to pay its debts as they mature, or is generally not paying its debts as such debts become due, or makes an assignment for the benefit of creditors or applies for or consents to the appointment of a trustee, custodian or receiver for the University, or for the major part of its property; or

(e) if a trustee, custodian or receiver is appointed for the University or for the major part of its property and is not discharged within sixty (60) days after such appointment; or

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(f) if bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, proceedings under Title 11 of the United States Code, as amended, or other proceedings for relief under any bankruptcy law or similar law for the relief of debtors under federal or State law are instituted by or against the University (other than bankruptcy proceedings instituted by the University against third parties) and, if instituted against the University, are not dismissed, stayed or otherwise nullified within 60 days after institution; or

(g) if payment of any installment of interest or principal, or any premium, on any Bond shall not be made when the same shall become due and payable under the provisions of the Bond Indenture.

Upon the occurrence of an event of default, the Bond Trustee may, or upon receipt from the owners of at least 25% of the principal amount of the Bonds then Outstanding of a request to do so, shall, by written notice to the University, declare all amounts due under this Loan Agreement to be immediately due and payable.

Upon the occurrence of any event of default, the Bond Trustee as assignee of the Authority, may take whatever action at law or in equity it deems necessary or desirable (i) to collect any amounts then due under this Loan Agreement, (ii) to enforce performance of any obligation, agreement or covenant of the University under this Loan Agreement, or any other document to which the University is a party associated with the issuance of the Bonds or (iii) to otherwise enforce any of its rights.

No waiver of any event of default extends to or affects any subsequent event of default or impairs any rights or remedies consequent thereon.

The University will give Immediate Notice to the Authority and the Bond Trustee of any event of default.

SECTION 6.2. APPLICATION OF PROCEEDS OF REMEDIES. The proceeds or avails resulting from the exercise of any such remedies, together with any other sums which then may be held by the Authority (or the Bond Trustee, as assignee of the Authority) under this Loan Agreement, whether under the provisions of this Article or otherwise, and which are available for such application shall be applied as follows:

FIRST: To the payment of the costs and expenses of the exercise of such remedies, including reasonable compensation to the Authority and the Bond Trustee, their agents, attorneys and counsel, and the expenses of any judicial proceedings wherein the same may be made, and of all fees, expenses, liabilities and advances made or incurred by any of them as permitted by this Loan Agreement, together with interest at the Bond Trustee's Prime Rate on such

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advances made by the Authority, and to the payment of all taxes, assessments or claims prior to the claim of this Loan Agreement, except any taxes, assessments, liens or other charges, subject to which property may have been sold.

SECOND: To the payment of any amounts then payable under the Tax Exemption Agreement.

THIRD: To the payment of the whole amount then due, owing and unpaid on the Bonds for principal, interest and premium, if any, and in case such proceeds shall be insufficient to pay in full the whole amount so due, owing or unpaid on the Bonds, then ratably according to the aggregate of such principal and the accrued and unpaid interest and premium, if any, without preference or priority as between principal, interest or premium; such application to be made upon presentation of the Bonds and the notation thereon of the payment, if partially paid, or the surrender and cancellation thereof, if fully paid.

FOURTH: To the payment of any other sums required to be paid by the University pursuant to any provisions of this Loan Agreement.

FIFTH: To the payment of the surplus, if any, to the University, its successors or assigns, upon the Written Request of the University or to whomsoever may be lawfully entitled to receive the same upon its written request, or as any court of competent jurisdiction may direct.

SECTION 6.3. REMEDIES CUMULATIVE. No remedy herein conferred upon or reserved to the Authority (or the Bond Trustee, as assignee of the Authority) is intended to be exclusive of any other remedy or remedies, and each and every such remedy shall be cumulative, and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute.

SECTION 6.4. DELAY OR OMISSION NOT A WAIVER. No delay or omission of the Authority to exercise any right or power accruing upon any event of default shall impair any such right or power, or shall be construed to be a waiver of any such event of default or an acquiescence therein; and every power and remedy given by this Loan Agreement to the Authority (or the Bond Trustee as assignee of the Authority) may be exercised from time to time and as often as may be deemed expedient by the Authority (or the Bond Trustee as assignee of the Authority).

SECTION 6.5. WAIVER OF EXTENSION, VALUATION AND APPRAISEMENT LAWS. To the extent permitted by law, the University will not during the continuance of any event of default hereunder insist upon, or plead, or in any manner whatever claim or take any benefit or advantage of, any stay or extension law

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wherever enacted, now or at any time hereafter in force, which may affect the covenants and terms of performance of this Loan Agreement; nor claim, take or insist upon any benefit or advantage of any law now or hereafter in force providing for the valuation or appraisement of the University's property, or any part thereof, prior to any sale or sales thereof which may be made pursuant to any provision herein contained, or pursuant to the decree, judgment or order of any court of competent jurisdiction; nor after any such sale or sales, claim or exercise any right under any statute heretofore or hereafter enacted by the United States of America or by any state or territory, or otherwise, to redeem the Property so sold or any part thereof; and the University hereby expressly waives all benefits or advantage of any such law or laws and covenants not to hinder, delay or impede the execution of any power herein granted or delegated to the Authority (or the Bond Trustee as assignee of the Authority), but to suffer and permit the execution of every power as though no such law or laws had been made or enacted.

SECTION 6.6. REMEDIES SUBJECT TO PROVISIONS OF LAW. All rights, remedies and powers provided by this Article may be exercised only to the extent that the exercise thereof does not violate any applicable provision of the law of the State and all the provisions of this Article are intended to be subject to all applicable mandatory provisions of the law of the State which may be controlling and to be limited to the extent necessary so that they will not render this Loan Agreement invalid or unenforceable under the provisions of any applicable law.

ARTICLE VII SUPPLEMENTS AND AMENDMENTS TO THIS LOAN

AGREEMENT

SECTION 7.1. SUPPLEMENTS AND AMENDMENTS TO THIS LOAN AGREEMENT. This Loan Agreement may be supplemented and amended only as provided in Article X of the Bond Indenture.

ARTICLE VIII DEFEASANCE

SECTION 8.1. DEFEASANCE. If the University shall pay and discharge or provide, in a manner satisfactory to the Authority, for the payment and discharge of the whole amount of the principal of, premium, if any, and interest on the Bonds, in such manner as to render all Bonds issued no longer Outstanding, and shall pay or cause to be paid all other sums payable hereunder, and all sums payable under the Bond Indenture, or shall make arrangements satisfactory to the Authority and the Bond Trustee for such payment and discharge, then and in that case all property, rights and interest hereby conveyed or assigned or pledged shall revert to the University, and the estate, right, title and interest of the Authority therein shall thereupon cease, terminate and become void;

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and this Loan Agreement, and the covenants of the University contained herein, shall be discharged except as provided in Section 5.5, and the Authority or the Bond Trustee, on behalf of the Authority, in such case on demand of the University and at its cost and expense, shall execute and deliver to the University a proper instrument or proper instruments acknowledging the satisfaction and termination of this Loan Agreement, and shall convey, assign and transfer or cause to be conveyed, assigned or transferred, and shall deliver or cause to be delivered, to the University, all property, including money, then held by the Authority other than moneys deposited with the Bond Trustee for the payment of the principal of and premium, if any, or interest on the Bonds.

The University agrees to pay all reasonable costs of the Authority, its advisors and counsel in connection with any refunding of the Bonds, including, without limitation, the cost of having a bond rating reassigned to any Bonds which are to be advance refunded. The University also agrees that prior to advance refunding the Bonds it will make available to any rating agency which is maintaining a rating on the Bonds to be refunded such information as any such rating agency may require to reassign a bond rating to any Bonds which are be advance refunded.

ARTICLE IX MISCELLANEOUS PROVISIONS

SECTION 9.1 LOAN AGREEMENT FOR BENEFIT OF PARTIES HERETO. Except as provided in Section 5.5, nothing in this Loan Agreement, express or implied, is intended or shall be construed to confer upon, or to give to, any person other than the parties hereto, any right, remedy or claim under or by reason of this Loan Agreement or any covenant, condition or stipulation hereof; and the covenants, stipulations and agreements contained in this Loan Agreement are and shall be for the sole and exclusive benefit of the parties hereto, their successors and assigns.

SECTION 9.2. SEVERABILITY. In the event any provision of this Loan Agreement is held invalid or unenforceable by any court of competent jurisdiction, the holding is not to invalidate or render unenforceable any other provision of this Loan Agreement.

SECTION 9.3. NOTICES. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when hand delivered or mailed by first class mail postage prepaid with proper address as indicated in the Bond Indenture. The Authority, the University and the Bond Trustee may, by written notice given by each to the others, designate any address or addresses to which notices, certificates or other communications to them shall be sent when required as contemplated by this Loan Agreement.

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SECTION 9.4. SUCCESSORS AND ASSIGNS. Whenever in this Loan Agreement any of the parties hereto is named or referred to, the successors and assigns of such party shall be deemed to be included and all the covenants, promises and agreements in this Loan Agreement contained by or on behalf of the University, or by or on behalf of the Authority, shall bind and inure to the benefit of the respective successors and assigns, whether so expressed or not.

SECTION 9.5. COUNTERPARTS. This Loan Agreement is being executed in any number of counterparts, each of which is an original and all of which are identical. Each counterpart of this Loan Agreement is to be deemed an original hereof and all counterparts collectively are to be deemed but one instrument.

SECTION 9.6. GOVERNING LAW. It is the intention of the parties hereto that this Loan Agreement and the rights and obligations of the parties hereunder shall be governed by and construed and enforced in accordance with the laws of the State.

SECTION 9.7. IMMUNITY. To the extent permitted by law, no recourse may be had for any claim based on this Loan Agreement or any agreement supplemental to this Loan Agreement, against any member, director, trustee or officer, past, present or future member, employee, director or agent of the University, or any predecessor or successor corporation, as such, either directly, or through the University or any such predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty or otherwise, all such liability, whether at common law, in equity, by a constitution, statute or otherwise, of members, directors, trustees or officers, as such, being released as a condition of and consideration for the execution of this Loan Agreement.

SECTION 9.8. OBLIGATIONS DUE ON SATURDAYS, SUNDAYS OR HOLIDAYS. If any date upon which an obligation of the University or the Authority is to be performed falls on a day which is not a Business Day, then the payment or fulfill-ment of the obligation may be made on the next succeeding Business Day with the same effect as if made on the date due.

SECTION 9.9. LIMITATION ON INTEREST. No provision of this Loan Agreement is intended to require the payment or permit the collection of interest in excess of the maximum permitted by law. If any provision of this Loan Agreement requires payment of interest in an amount in excess of the maximum permitted by law, the University is not obligated to pay any interest in excess of the amount permitted by law. This provision controls any provisions of this Loan Agreement inconsistent with it.

[Signature Page Follows]

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IN WITNESS WHEREOF, the University and the Authority have caused this Loan Agreement to be executed in their respective corporate names and have caused their respective corporate seals to be hereunto affixed and attested by their duly authorized officers, all as of the date first above written.


By: Chair ATTEST: By: Secretary BETHUNE-COOKMAN

UNIVERSITY, INC. By: Title: ATTEST: By: Title:

SCHEDULE A LOAN REPAYMENT SCHEDULE

Payment Date* Principal Interest Total 01/01/2011 - $131,223.44 $ 131,223.44 07/01/2011 $720,000.00 524,893.75 1,244,893.75 01/01/2012 - 520,843.75 520,843.75 07/01/2012 735,000.00 520,843.75 1,255,843.75 01/01/2013 - 509,818.75 509,818.75 07/01/2013 755,000.00 509,818.75 1,264,818.75 01/01/2014 - 498,493.75 498,493.75 07/01/2014 775,000.00 498,493.75 1,273,493.75 01/01/2015 - 489,775.00 489,775.00 07/01/2015 795,000.00 489,775.00 1,284,775.00 01/01/2016 - 479,837.50 479,837.50 07/01/2016 815,000.00 479,837.50 1,294,837.50 01/01/2017 - 467,612.50 467,612.50 07/01/2017 840,000.00 467,612.50 1,307,612.50 01/01/2018 - 453,962.50 453,962.50 07/01/2018 870,000.00 453,962.50 1,323,962.50 01/01/2019 - 438,737.50 438,737.50 07/01/2019 905,000.00 438,737.50 1,343,737.50 01/01/2020 - 420,637.50 420,637.50 07/01/2020 940,000.00 420,637.50 1,360,637.50 01/01/2021 - 401,837.50 401,837.50 07/01/2021 980,000.00 401,837.50 1,381,837.50 01/01/2022 - 379,787.50 379,787.50 07/01/2022 1,025,000.00 379,787.50 1,404,787.50 01/01/2023 - 356,725.00 356,725.00 07/01/2023 1,075,000.00 356,725.00 1,431,725.00 01/01/2024 - 332,537.50 332,537.50 07/01/2024 1,125,000.00 332,537.50 1,457,537.50 01/01/2025 - 307,225.00 307,225.00 07/01/2025 1,180,000.00 307,225.00 1,487,225.00 01/01/2026 - 276,543.75 276,543.75 07/01/2026 1,245,000.00 276,543.75 1,521,543.75 01/01/2027 - 243,084.38 243,084.38 07/01/2027 1,315,000.00 243,084.38 1,558,084.38 01/01/2028 - 207,743.75 207,743.75 07/01/2028 1,385,000.00 207,743.75 1,592,743.75 01/01/2029 - 170,521.88 170,521.88 07/01/2029 1,460,000.00 170,521.88 1,630,521.88 01/01/2030 - 131,284.38 131,284.38 07/01/2030 1,545,000.00 131,284.38 1,676,284.38 01/01/2031 - 89,762.50 1,676,284.38 07/01/2031 1,625,000.00 89,762.50 1,714,762.50 01/01/2032 - 46,090.63 46,090.63 07/01/2032 1,715,000.00 46,090.63 1,761,090.63 ____________

* Due to Bond Trustee one Business Day prior to Payment Date.

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APPENDIX D

FORM OF OPINION OF BOND COUNSEL


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APPENDIX D

FORM OF OPINION OF NABORS, GIBLIN & NICKERSON, P.A., WITH RESPECT TO THE BONDS

Upon delivery of the Bonds in definitive form, Nabors, Giblin & Nickerson, P.A., Tampa, Florida, Bond Counsel, propose to render its opinion with respect to such Bonds in substantially the following form:

[Date of Issuance] Higher Educational Facilities Financing Authority Tallahassee, Florida Members:

In the capacity of Bond Counsel we have examined a record of proceedings relating to the issuance by the Higher Educational Facilities Financing Authority (the "Authority") of its $23,825,000 aggregate principal amount of Educational Facilities Revenue Bonds, Series 2010 (Bethune-Cookman University, Inc. Project) (the "Bonds"). We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion.

The Bonds are issued under and pursuant to Part II, Chapter 243, Florida Statutes, as amended, and other applicable provisions of law (the "Act"), and pursuant to a Bond Trust Indenture, dated as of November 1, 2010 (the "Bond Indenture") between the Authority and U.S. Bank National Association, as bond trustee (the "Trustee").

The Bonds are being issued to (i) finance and refinance the costs of certain capital improvements to or for the higher educational facilities of Bethune-Cookman University, Inc. (the "University"), including the current refunding all of the outstanding Volusia County Educational Facility Authority's Variable Rate Educational Facilities Revenue Bonds (Bethune-Cookman College, Inc. Project), Series 2001, (ii) fund a debt service reserve fund for the Bonds, and (iii) pay certain costs associated with the issuance of the Bonds.

The Bonds are payable from and secured solely by a pledge of and lien upon the funds and accounts established under the Bond Indenture and loan repayments made by the University to the Authority pursuant to that certain Loan Agreement, dated as of November 1, 2010, between the Authority and the University (the "Loan Agreement").

Higher Educational Facilities Financing Authority [Date of Issuance] Page 2

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Pursuant to the Loan Agreement, the University (i) agrees to make loan payments sufficient to pay, among other obligations, the principal of, purchase price, premium, if any, and interest on the Bonds, when due, and to make any required deposits into certain funds established by the Bond Indenture and (ii) expressly assumes the performance of all of the Authority's payment obligations under the Bond Indenture.

Neither the Authority, the State of Florida (the "State") nor any political subdivision or agency of the State shall in any event be liable for the payment of the principal of, premium, if any, or interest on the Bonds or for the performance of any pledge, obligation or agreement undertaken by the Authority, except to the extent that the trust estate created under the Bond Indenture is sufficient therefor. No owner of any Bond has the right to compel any exercise of the taxing power of the State or any political subdivision or agency thereof to pay the Bonds or the interest thereon, and the Bonds do not constitute a general indebtedness of the Authority within the meaning of any constitutional or statutory provision or limitation. The Authority has no taxing power.

The Bonds are dated their date of delivery, will mature on the dates and in the principal amounts, and will bear interest at the respective rates per annum, as provided in the Bond Indenture. Interest on the Bonds shall be payable on each Interest Payment Date (as defined in the Bond Indenture). The Bonds are subject to redemption and purchase prior to maturity in accordance with the terms of the Bond Indenture. The Bonds are in the form of fully registered Bonds in the denomination of $5,000 and integral multiples thereof.

Reference is made to opinion of even date of General Counsel to the University, with respect to various matters, including, (i) the status of the University as an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), (ii) the corporate power of the University to enter into and perform its obligations under the Loan Agreement, and (iii) the authorization, execution and delivery of the Loan Agreement by the University.

As to questions of fact material to our opinion we have relied upon representations of the Authority, the University and the certified proceedings and other certifications of appropriate officials of the Authority and the University, furnished to us (including certifications as to the use of the proceeds of the Bonds), without undertaking to verify the same by independent investigation.


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Based upon the foregoing and in reliance upon the matters hereinafter referred to, we are of the opinion that:

1. The Authority is a public body corporate and politic and a duly created and validly existing public instrumentality under the laws of the State of Florida including, particularly, the Act, and has full power and authority to enter into, execute and deliver the Bond Indenture and the Loan Agreement and to issue and sell the Bonds.

2. The resolutions of the Authority authorizing, among other things, the issuance and sale of the Bonds has been duly adopted by the Authority, and no further action of the Authority is required for their continued validity.

3. The Bond Indenture and the Loan Agreement have each been duly authorized and approved by the Authority, have each been duly executed and delivered by the Authority, and, assuming the due authorization, execution and delivery of such documents by the other parties thereto, constitute legal, valid and binding obligations of the Authority enforceable in accordance with their respective terms.

4. The Bonds have been duly authorized by the Authority, duly executed by authorized representatives of the Authority, authenticated by the Trustee and validly issued by the Authority and constitute the legal, valid and binding limited obligations of the Authority enforceable in accordance with their terms and are entitled to the benefit and security of the trust estate created under the Bond Indenture.

5. Pursuant to Section 243.70 of the Act, the Bonds and interest thereon are exempt from taxation under the laws of the State of Florida, except as to estate taxes and taxes imposed by Chapter 220, Florida Statutes, on interest, income or profits on debt obligations owned by corporations, as defined in said Chapter 220.

6. Under existing statutes, regulations, rulings and court decisions, the interest on the Bonds is excluded from gross income for federal income tax purposes. Such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations although it should be noted that, in the case of corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings for purposes of computing such alternative minimum tax on such corporations. The opinion set forth in the first sentence of this paragraph is subject to the condition that the Authority and the University comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be (or continues to be) excluded from gross income for federal income tax purposes. Failure to comply with certain of such requirements


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could cause the interest on the Bonds to be so included in gross income retroactive to the date of issuance of the Bonds. The Authority and the University have covenanted to comply with all such requirements. Ownership of the Bonds may result in collateral federal tax consequences to certain taxpayers and we express no opinion regarding such collateral federal tax consequences.

7. By resolution of the Executive Committee of the Board of Trustees of the University, the University has designated the Bonds as "qualified tax-exempt obligations" for purposes of the Code in accordance with Section 265(b)(3)(B) thereof. Any change in the findings and facts set forth in said resolution and in the certifications of the University delivered at the closing with respect to the Bonds and relating to such designation could adversely impact the status of the Bonds as "qualified tax-exempt obligations."

8. The Bonds are exempt from registration under the Securities Act of 1933, as amended, and the Bond Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended.

Except as may expressly be set forth in an opinion delivered by us to the underwriter of the Bonds on the date hereof (upon which only the underwriter may rely), (1) we have not been engaged or undertaken to review the accuracy, sufficiency or completeness of the Official Statement or other offering material relating to the Bonds and we express no opinion relating thereto and (2) we have not been engaged or undertaken to review the compliance with any federal or state law with regard to the sale or distribution of the Bonds and we express no opinion relating thereto.

The opinions expressed in paragraphs 3 and 4 hereof are qualified to the extent that the enforceability of the Bonds, the Loan Agreement and the Bond Indenture, respectively, may be limited by any applicable bankruptcy, insolvency, moratorium, reorganization, or other similar laws affecting creditors' rights generally, or by the exercise of judicial discretion in accordance with general principles of equity.

This opinion is given as of the date hereof and we assume no obligation to update, raise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur.

We have examined the form of the Bonds and, in our opinion, the form of the Bonds is regular and proper.

Respectfully submitted,

APPENDIX E

FORM OF CONTINUING DISCLOSURE COMMITMENT


APPENDIX E

CONTINUING DISCLOSURE CERTIFICATE

This CONTINUING DISCLOSURE CERTIFICATE (the “Disclosure Certificate”) is executed by BETHUNE-COOKMAN UNIVERSITY (the “University”) for the benefit of the holders of, and in connection with the issuance by the Higher Educational Facilities Financing Authority (the “Issuer”) of its $23,825,000 Revenue Bonds (Bethune-Cookman Project), Series 2010 (Tax-Exempt) (the “Bonds”), issued pursuant to a Bond Trust Indenture dated as November 1, 2010 (the “Indenture”) between the Issuer and U.S. Bank National Association and a resolution adopted on August 26, 2010. The University agrees as follows:

SECTION 1. PURPOSE OF DISCLOSURE CERTIFICATE. This Disclosure Certificate is being executed and delivered by the University for the benefit of the Bondholders and in order to assist the original underwriter of the Bonds in complying with Rule 15c2-12(b)(5) promulgated by the Securities and Exchange Commission (“SEC”) pursuant to the Securities Exchange Act of 1934, as amended (the “Rule”).

SECTION 2. PROVISION OF ANNUAL INFORMATION. Except as otherwise provided herein, the University shall provide, within 30 days after approval, in accordance with its Bylaws by the University’s Board of Trustees of its audited financial statements from its out auditors, the information set forth below in this Section 2 to (i) Municipal Securities Rulemaking Board (the “MSRB”) or any successor to its functions for the purpose of the Rule; the address, phone number and fax number of the MSRB for the purposes of the Rule as of the date hereof are set forth on Exhibit A hereto, and (ii) any state information depository that is established within the State of Florida (the “SID”), it being understood that no such SID is currently established in the State of Florida. Notwithstanding the immediately preceding sentence and subject to the reporting requirement of Section 3(L) hereof, if any of such information cannot be provided by the University within one year following the end of its Fiscal Year (as hereinafter defined) for reasons outside of the University’s control, such information shall be provided as soon as it becomes available to the University:

(A) Audited financial statements of the University for the most recent Fiscal Year for which audited financial statements have been completed; provided, however, if the audited financial statements of the University are not completed prior to May 1 of the following year, the University shall provide unaudited financial statements in the same format which was presented in the Official Statement (as hereinafter defined) on such date and shall provide the audited financial statements when and if they become available to the University.

(B) Additional financial information and operating data of the type included with respect to the University in the final Official Statement dated October, 2010, prepared in connection with the placement of the Bonds (the “Official Statement”).

(C) Description of any additional series of bonds which are issued under the Indenture.

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(D) Description of any material litigation which would have been disclosed in the Official Statement if such litigation had occurred and been ongoing at the time the Official Statement is dated.

(E) Any other financial information or operating data of the type included in the Official Statement which would be material to a holder or prospective holders of the Bonds.

For purposes of this Disclosure Certificate, “Fiscal Year” means the period commencing on July 1 and ending on June 30 of the next succeeding year, or such other period of time provided by applicable law.

SECTION 3. REPORTING SIGNIFICANT EVENTS. The University shall provide to the MSRB and to the SID, if any, on a timely basis, notice of any of the following events, if such event is material with respect to the Bonds:

(A) Principal and interest payment delinquencies;

(B) Non-payment related defaults;

(C) Unscheduled draws on the debt service reserves, if any, reflecting financial difficulties;

(D) Unscheduled draws on credit enhancement, if any, reflecting financial difficulties;

(E) Substitution of credit or liquidity providers, if any, or their failure to perform;

(F) Adverse tax opinions or events affecting the tax-exempt status of the Bonds;

(G) Modifications to rights of Bondholders;

(H) Calls on the Bonds (other than scheduled mandatory prepayment);

(I) Defeasance of the Bonds;

(J) Release, substitution, or sale of property securing repayment of the Bonds;

(K) Rating changes; and

(L) Notice of any failure on the part of the University to meet the requirements of Section 2 hereto

The University may from time to time, in its discretion, choose to provide notice of the occurrence of certain other events, in addition to those listed in this Section 3, if, in the judgment of the University, such other events are material with respect to the Bonds, but the University does not specifically undertake to commit to provide any such additional notice of the occurrence of any material event except those events listed above.

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Whenever the University obtains knowledge of the occurrence of a significant event described in this Section 3, the University shall as soon as reasonably possible determine if such event would be material under applicable federal securities law to holders of the Bonds, provided, however, that any event under clauses (D), (E), (F), and (K) above will always be deemed to be material.

SECTION 4. SUBMISSION OF INFORMATION TO THE MSRB. The information required to be disclosed pursuant to Sections 2 and 3 of this Disclosure Certificate shall be submitted to the MSRB through its Electronic Municipal Market Access system (“EMMA”). Further information regarding EMMA can be retrieved by visiting the web site http://emma.msrb.org/. Subject to future changes in submission rules and regulations, such submissions shall be provided to the MSRB through EMMA, in portable document format (“PDF”) files configured to permit documents to be saved, viewed, printed and retransmitted by electronic means. Such PDF files shall be word-searchable (allowing the user to search for specific terms used within the document through a search or find function available in a software package).

Subject to future changes in submission rules and regulations, at the time that such information is submitted through EMMA, the University, or any dissemination agent engaged by the University pursuant to Section 7 hereof, shall also provide to the MSRB information necessary to accurately identify:

(A) the category of information be provided;

(B) the period covered by any annual financial information, financial statements or other financial information or operating data;

(C) the issues or specific securities to which such submission is related or otherwise material (including CUSIP number, issuer name, state, issue description/securities name, dated date, maturity date, and/or coupon rate);

(D) the name of any obligated person other than the University;

(E) the name and date of the document being submitted; and

(F) contact information for the submitter.

SECTION 5. NO EVENT OF DEFAULT. Notwithstanding any other provision in the Indenture or the proceedings of the University approving the Bonds to the contrary, failure of the University to comply with the provisions of this Disclosure Certificate shall not be considered an event of default under the Indenture, provided, however, any Bondholder may take such actions as may be necessary and appropriate, including pursuing an action for mandamus or specific performance, as applicable, by court order, to cause the University to comply with its respective obligations hereunder. For purposes of this Disclosure Certificate, “Bondholder” shall mean any

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person who (A) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (B) is treated as the owner of any Bonds for federal income tax purposes.

SECTION 6. INCORPORATION BY REFERENCE. Any or all of the information required herein to be disclosed may be incorporated by reference from other documents, including official statements of issues of the University or related public entities, which have been submitted to the MSRB and the SID, if any, or the SEC. If the document incorporated by reference is final official statement, it must be available from the MSRB. The University shall clearly identify each document incorporated by reference.

SECTION 7. DISSEMINATION AGENTS. The University may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such agent, with or without appointing a successor disseminating agent.

SECTION 8. TERMINATION. The University’s obligations under this Disclosure Certificate shall terminate upon (A) the legal defeasance, prior redemption or payment in full of all of the Bonds, or (B) the termination of the continuing disclosure requirements of the Rule by legislative, judicial or administrative action.

SECTION 9. AMENDMENTS. Notwithstanding any other provision of this Disclosure Certificate, the University may amend this Disclosure Certificate, and may waive any provision if such amendment or waiver is supported by an opinion of counsel nationally recognized in the area of federal securities laws, to the effect that such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule.

SECTION 10. ADDITIONAL INFORMATION. Nothing in this Disclosure Certificate shall be deemed to prevent the University from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in its annual information described in Section 2 hereof or notice of occurrence of a significant event described in Section 3 hereof, in addition to that which is required by this Disclosure Certificate. If the University chooses to include any information in its annual information or notice of occurrence of a significant event in addition to that which is specifically required by this Disclosure Certificate, the University shall have no obligation under this Disclosure Certificate to update such information or include it in its future annual information or notice of occurrence of a significant event.

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SECTION 11. OBLIGATED PERSONS. If any person, other than the University, becomes an Obligated Person (as defined in the Rule) relating to the Bonds, the University shall use its best efforts to require such Obligated Person to comply with all provisions of the Rule applicable to such Obligated Person.

[SIGNATURE PAGE TO FOLLOW]

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SIGNATURE PAGE TO CONTINUING DISCLOSURE CERTIFICATE

Dated this _____ day of __________, 2010

Bethune-Cookman University

By: Printed Name: Title:

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EXHIBIT A

Municipal Securities Rulemaking Board 1640 King Street, Suite 300 Alexandria, Virginia 22314-2719 Phone: (202) 223-9503 Fax: (202)872-0347/(703)683-1930


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