la sierra bond 2008

8/2/2019 La Sierra Bond 2008

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NEW ISSUE – Book-Entry Only Rating:

S&P: AAA/A-1+

(See “RATING” herein)

In the opinion of Orrick, Herrington & Sutcliffe LLP , Bond Counsel to the Authority, based upon an analysis of existing laws, regulations,

rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain

covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue

Code of 1986 (the “Code”). In the further opinion of Bond Counsel, interest on the Bonds is not a specific preference item for purposes of the

federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current

earnings when calculating corporate alternative minimum taxable income. Bond Counsel is also of the opinion that interest on the Bonds

is exempt from present State of California personal income taxes. Bond Counsel expresses no opinion regarding any other tax consequences

related to the ownership or disposition of, or the accrual or receipt of interest on, the Bonds. See “TAX MATTERS.”

$24,405,000CALIFORNIA MUNICIPAL FINANCE AUTHORITY

VARIABLE RATE REVENUE BONDS

(LA SIERRA UNIVERSITY)SERIES 2008

$12,000,000

Series 2008A

$12,405,000

Series 2008B

Dated: Date of Delivery Price: 100% Due: August 1, as shown on inside cover page

This cover page contains certain information for general reference only. It is not intended to be a summary of this issue.Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision.Capitalized terms used in this cover page shall have the meanings given such terms herein.

The California Municipal Finance Authority is issuing its Variable Rate Revenue Bonds (La Sierra University), Series 2008A (the “Series2008A Bonds”), and its Variable Rate Revenue Bonds (La Sierra University), Series 2008B (the “Series 2008B Bonds” and collectively with the

Series 2008A Bonds, the “Bonds”). The Bonds are issuable as fully-registered bonds registered in the name of a nominee of The Depository Trust Company, which will act as securities depository for the Bonds. Purchases and tenders of the Bonds may be made in book-entry form only,through brokers and dealers who are, or who act through, DTC Participants. Beneficial Owners of the Bonds will not receive physical delivery of bond certificates. Payments of the principal and Purchase Price of, premium, if any, and interest on the Bonds will be made to DTC by U.S. BankNational Association, as Trustee. Disbursement of payments to DTC Participants is the responsibility of DTC and disbursement of payments tothe Beneficial Owners is the responsibility of DTC Participants. See APPENDIX C – “BOOK-ENTRY SYSTEM.”

The Authority will loan the proceeds of the Bonds to La Sierra University (the “Corporation”) pursuant to a Loan Agreement to providefunds which the Corporation will use to (i) finance and refinance the acquisition, construction, installation, improvement, renovation, remodeling,furnishing, and/or equipping of certain educational facilities on the campus of La Sierra University, and (ii) pay costs incurred in connection withthe issuance of the Bonds, all as more fully described herein See “ESTIMATED SOURCES AND USES OF PROCEEDS.”

The Bonds are being issued as two series (each, a “Series”) of variable rate bonds. The Bonds will initially bear interest at a Weekly Interest Rate and will be available in denominations of $100,000 and any multiple of $5,000 in excess thereof. The Bonds of any Series are subject toconversion to a Term Interest Rate as more fully described herein and are subject to mandatory tender for purchase upon any such conversion.The specific interest rate with respect to each interest rate period is to be determined by the Remarketing Agent, initially Wells Fargo BrokerageServices, LLC. The Weekly Interest Rate will be computed on the basis of a 365/366-day year and actual days elapsed, payable on the first Business

Day of each calendar month, commencing September 1, 2008.

With respect to Weekly Interest Rate Periods, payment of the principal, Purchase Price of, and interest on the Bonds initially will be supportedby an irrevocable, direct-pay letter of credit (the “Letter of Credit”) issued by Wells Fargo Bank, National Association (the “Bank”) pursuant toand subject to the terms of a Reimbursement Agreement. The Letter of Credit will be in effect from the date of issuance of the Bonds through theoccurrence of the earliest of the termination events described herein.

THE BONDS ARE SUBJECT TO OPTIONAL REDEMPTION AND OPTIONAL AND MANDATORY TENDER FOR PURCHASE ASDESCRIBED HEREIN.

The Authority is obligated to pay the principal, premium, if any, and interest on the Bonds solely from the Revenues, which include amountsreceived from the Corporation under the Loan Agreement and amounts received under Credit Facilities for the Bonds, and the other funds

pledged therefor under the Indenture. The Corporation’s payment obligations under the Loan Agreement are general, unsecured obligations of the Corporation.

NONE OF THE AUTHORITY, ANY AUTHORITY MEMBER OR ANY PERSON EXECUTING THE BONDS IS LIABLE PERSONALLY ON THE BONDS OR SUBJECT TO ANY PERSONAL LIABILITY OR ACCOUNTABILITY BY REASON OF THEIR ISSUANCE. THEBONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY FROM AND SECURED BY THE PLEDGE OF

CERTAIN REVENUES UNDER THE INDENTURE. NEITHER THE AUTHORITY, ITS MEMBERS, THE STATE OF CALIFORNIA,NOR ANY OF ITS POLITICAL SUBDIVISIONS SHALL BE DIRECTLY, INDIRECTLY, CONTINGENTLY, OR MORALLY OBLIGATEDTO USE ANY OTHER MONEYS OR ASSETS TO PAY ALL OR ANY PORTION OF THE DEBT SERVICE DUE ON THE BONDS, TOLEVY OR TO PLEDGE ANY FORM OF TAXATION WHATEVER THEREFOR OR TO MAKE ANY APPROPRIATION FOR THEIRPAYMENT. THE BONDS ARE NOT A PLEDGE OF THE FAITH AND CREDIT OF THE AUTHORITY, ITS MEMBERS, THE STATE OFCALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS, NOR DO THEY CONSTITUTE INDEBTEDNESS WITHIN THE MEANINGOF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION. THE AUTHORITY HAS NO TAXING POWER.

The Bonds are offered when, as and if issued by the Authority and accepted by the Underwriter subject to the approval of legality by Orrick,Herrington & Sutcliffe LLP, Bond Counsel, and subject to certain other conditions. Certain legal matters will be passed upon for the Corporationby DLA Piper, San Diego, California, Corporation Counsel, for the Bank by Chapman and Cutler LLP, San Francisco, California, Bank Counsel andfor the Authority by Squire, Sanders & Dempsey, LLP, Authority Counsel. It is expected that the Bonds will be available for delivery through theDTC book-entry system on or about August 14, 2008.

Wells Fargo Institutional Securities, LLC

Dated: August 7, 2008



MATURITY SCHEDULE

Series Principal Amount CUSIP*

Maturity Date Series 2008A Bonds $12,000,000 13048TDT7 August 1, 2028

Series 2008B Bonds $12,405,000 13048TDS9 August 1, 2020

* Copyright 2008, American Bankers Association. CUSIP data is provided by Standard & Poor’s CUSIP ServiceBureau, a division of The McGraw-Hill Companies, Inc. CUSIP numbers are provided for convenience of referenceonly. The Corporation assumes no responsibility for the accuracy of such numbers.



This Official Statement does not constitute an offer to sell the Bonds in any jurisdiction in whichor to any person to whom it is unlawful to make such an offer. No dealer, salesperson or other person has been authorized by the California Municipal Finance Authority (the “Authority”), La Sierra University(the “Corporation”) or Wells Fargo Institutional Securities, LLC (the “Underwriter”) to give anyinformation or to make any representations, other than those contained herein, in connection with theoffering of the Bonds and, if given or made, such information or representations must not be relied upon.

The information set forth herein under the caption “THE BANK” has been obtained from WellsFargo Bank, National Association (the “Bank”). The information set forth herein under the captions“THE AUTHORITY” and “ABSENCE OF MATERIAL LITIGATION – The Authority” has beenobtained from the Authority. All other information set forth herein has been obtained from theCorporation, and other sources which are believed to be current and reliable. The accuracy or completeness of any information other than that contained under the captions “THE AUTHORITY” and“ABSENCE OF MATERIAL LITIGATION – The Authority” is not guaranteed by, and is not to beconstrued as a representation by, the Authority.

The Underwriter has provided the following sentence for inclusion in this Official Statement.The Underwriter has reviewed the information in this Official Statement in accordance with, and as part

of, its responsibilities to investors under the federal securities laws as applied to the facts andcircumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

Estimates and opinions included in this Official Statement should not be interpreted as statementsof fact. Summaries of documents do not purport to be complete statements of their provisions. Theinformation and expressions of opinion herein are subject to change without notice, and neither thedelivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create anyimplication that there has been no change in the affairs of the Authority, the Corporation, or the Bank since the date hereof.

______________________________

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY

OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE

MARKET PRICE OF THE BONDS AT LEVELS ABOVE THOSE WHICH MIGHT

OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED,

MAY BE DISCONTINUED AT ANY TIME.

______________________________

CAUTIONARY STATEMENTS REGARDING

FORWARD-LOOKING STATEMENTS IN THIS OFFICIAL STATEMENT

Certain statements included or incorporated by reference in this Official Statement constitute

“forward-looking statements.” Such statements are generally identifiable by the terminology used such as“plan,” “expect,” “estimate,” “budget,” “intend,” “projection,” or other similar words. Such forward-looking statements include, but are not limited to, certain statements contained in the information inAPPENDIX A – “INFORMATION REGARDING LA SIERRA UNIVERSITY.”

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINEDIN SUCH FORWARD-LOOKING STATEMENTS INVOLVES KNOWN AND UNKNOWN RISKS,UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS,PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM



ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BYSUCH FORWARD-LOOKING STATEMENTS. THE CORPORATION DOES NOT PLAN TO ISSUEANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHENITS EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCHSTATEMENTS ARE BASED OCCUR.



TABLE OF CONTENTS

Page

-i-

INTRODUCTION ....................................................................................................................................... 1

General ........................................................................................................................................... 1

The Corporation .............................................................................................................................. 1

The Bonds ....................................................................................................................................... 2

Book-Entry System ......................................................................................................................... 2

Security and Sources of Payment for the Bonds ............................................................................. 2

Certain Information Related to this Official Statement .................................................................. 3

Bondholders’ Risks ......................................................................................................................... 3

PLAN OF FINANCE ................................................................................................................................... 3

ESTIMATED SOURCES AND USES OF PROCEEDS ............................................................................ 4

DEBT SERVICE REQUIREMENTS .......................................................................................................... 5

THE BONDS ............................................................................................................................................... 5

General ........................................................................................................................................... 5

Book-Entry System ......................................................................................................................... 6

Determination of Interest Rates on the Bonds ................................................................................ 6

Weekly Interest Rate Period for Bonds........................................................................................... 6

Term Interest Rate Period for Bonds .............................................................................................. 7

Conversion of Interest Rate Period ................................................................................................. 8

Special Considerations Relating to the Bonds .............................................................................. 10TENDER OF BONDS FOR PURCHASE ................................................................................................. 11

Optional Tender ............................................................................................................................ 11

Mandatory Tender ......................................................................................................................... 12

Mandatory Purchase in Lieu of Redemption ................................................................................ 13

Effect of Purchase of Bonds ......................................................................................................... 13

Purchase of Tendered Bonds ........................................................................................................ 14

Inadequate Funds for Tenders ....................................................................................................... 14

Remarketing .................................................................................................................................. 14REDEMPTION OF BONDS ..................................................................................................................... 15

Optional Redemption .................................................................................................................... 15

Notice of Redemption ................................................................................................................... 16

Effect of Redemption .................................................................................................................... 16

Selection of Bonds to be Redeemed ............................................................................................. 16



TABLE OF CONTENTS (continued)

Page

-ii-

SECURITY AND SOURCES OF PAYMENT FOR THE BONDS ......................................................... 17

General ......................................................................................................................................... 17

Credit Facility ............................................................................................................................... 17

Alternate Credit Facility ............................................................................................................... 18

Revenues and Repayment Installments......................................................................................... 19

THE BANK ............................................................................................................................................... 19

Wells Fargo Bank, National Association ...................................................................................... 19

THE LETTER OF CREDIT AND THE REIMBURSEMENT AGREEMENT ....................................... 20

Letter of Credit .............................................................................................................................. 20

Reimbursement Agreement .......................................................................................................... 21

THE AUTHORITY ................................................................................................................................... 24

BONDHOLDERS’ RISKS ........................................................................................................................ 24

General ......................................................................................................................................... 24

The Bank ....................................................................................................................................... 25

Enforceability of the Letter of Credit ............................................................................................ 25

Tax-Exempt Status and Other Tax Matters ................................................................................... 25

First Amendment Issues ................................................................................................................ 27

Seismic Risks ................................................................................................................................ 28

Investments ................................................................................................................................... 28Risks Related to Outstanding Variable Rate Obligations ............................................................. 28

Enforceability of Remedies ........................................................................................................... 28

ABSENCE OF MATERIAL LITIGATION .............................................................................................. 29

The Authority ................................................................................................................................ 29

The Corporation ............................................................................................................................ 29

INDEPENDENT AUDITOR ..................................................................................................................... 29

RATINGS .................................................................................................................................................. 29

UNDERWRITING .................................................................................................................................... 29APPROVAL OF LEGALITY .................................................................................................................... 30

TAX MATTERS ........................................................................................................................................ 30

CONTINUING DISCLOSURE ................................................................................................................. 32

MISCELLANEOUS .................................................................................................................................. 32



TABLE OF CONTENTS (continued)

Page

-iii-

APPENDIX A INFORMATION REGARDING LA SIERRA UNIVERSITY ............................... A-1

APPENDIX B AUDITED FINANCIAL STATEMENTS OF LA SIERRA UNIVERSITY .......... B-1

APPENDIX C BOOK-ENTRY SYSTEM ....................................................................................... C-1

APPENDIX D SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL

DOCUMENTS ......................................................................................................... D-1

APPENDIX E FORM OF OPINION OF BOND COUNSEL ......................................................... E-1

APPENDIX F FORM OF LETTER OF CREDIT ........................................................................... F-1



[THIS PAGE INTENTIONALLYLEFTBLANK]



OFFICIAL STATEMENT

$24,405,000

CALIFORNIA MUNICIPAL FINANCE AUTHORITY

VARIABLE RATE REVENUE BONDS

(LA SIERRA UNIVERSITY)

SERIES 2008

$12,000,000

Series 2008A Bonds

$12,405,000

Series 2008B Bonds

INTRODUCTION

This Introduction contains only a brief summary of certain of the terms of the Bonds being

offered and a full review should be made of the entire Official Statement, including the cover page, the

inside cover pages and the Appendices in order to make an informed investment decision. All statements

contained in this Introduction are qualified in their entirety by reference to the entire Official Statement.

References to, and summaries of, provisions of the laws of the State of California (the “State”) or any

documents referred to herein do not purport to be complete and such references are qualified in their entirety by the complete provisions thereof.

General

This Official Statement, including the cover page, the inside cover pages and Appendices hereto(this “Official Statement”), provides certain information in connection with the offering of $24,405,000aggregate principal amount of the California Municipal Finance Authority Variable Rate Revenue Bonds(La Sierra University), Series 2008A (the “Series 2008A Bonds”) and the California Municipal FinanceAuthority Variable Rate Revenue Bonds (La Sierra University), Series 2008B (the “Series 2008B Bonds”and collectively with the Series 2008A Bonds, the “Bonds”).

The Bonds will be issued pursuant to and secured by an Indenture of Trust, dated as of August 1,2008 (the “Indenture”), between the California Municipal Finance Authority (the “Authority”) and U.S.Bank National Association, as trustee (the “Trustee”). The Authority will lend the proceeds of the Bondsto La Sierra University (the “Corporation”) pursuant to a Loan Agreement, dated as of August 1, 2008(the “Loan Agreement”), between the Authority and the Corporation. See “PLAN OF FINANCE” and“ESTIMATED SOURCES AND USES OF PROCEEDS.”

All capitalized terms used in this Official Statement and not otherwise defined herein have thesame meanings as in the Indenture. See APPENDIX D – “SUMMARY OF CERTAIN PROVISIONSOF THE PRINCIPAL LEGAL DOCUMENTS – DEFINITIONS” for definitions of certain words andterms used but not otherwise defined herein.

The Corporation

The Corporation is a nonprofit religious corporation and is exempt from federal income taxationas an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended. TheCorporation owns and operates La Sierra University, a private, Adventist liberal arts college located inRiverside, California.



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For more information about the Corporation, see APPENDIX A – “INFORMATIONREGARDING LA SIERRA UNIVERSITY” and APPENDIX B – “AUDITED FINANCIALSTATEMENTS OF LA SIERRA UNIVERSITY.”

The Bonds

The Bonds will be issued as two series (each, a “Series”) of variable rate bonds, all initially bearing interest at a Weekly Interest Rate. While the Bonds of any Series are in a Weekly Interest RatePeriod, interest on such Bonds is payable on the first Business Day of each calendar month, commencingSeptember 1, 2008. The Bonds will be dated their date of issuance and will mature on the dates set forthon the inside cover page. The Bonds will initially be issued in authorized denominations of $100,000 andany multiple of $5,000 in excess thereof. See “THE BONDS.”

Pursuant to the Indenture, the Bonds of any Series shall bear interest at either a Weekly InterestRate or a Term Interest Rate as specified from time to time by the Corporation. The maximum rate of interest any of the Bonds (other than Credit Provider Bonds) may bear is 12% per annum. See “THEBONDS – Determination of Interest Rates on the Bonds,” “– Weekly Interest Rate Period for Bonds” and“– Term Interest Rate Period for Bonds.”

The Interest Rate Period for the Bonds of any Series may be converted from time to time as provided in the Indenture. See “THE BONDS – Conversion of Interest Rate Period.”

The Bonds are subject to redemption and optional and mandatory tender for purchase prior totheir respective maturity dates as described herein. See “REDEMPTION OF BONDS” and “TENDER OF BONDS FOR PURCHASE.”

Book-Entry System

When delivered, the Bonds will be registered in the name of Cede & Co., a nominee of TheDepository Trust Company (“DTC”) which will act as securities depository for the Bonds. Purchases of

the Bonds and tenders of the Bonds may be made in book-entry form only, through brokers and dealerswho are, or who act through, DTC Participants. Beneficial Owners of the Bonds will not receive physicaldelivery of certificated securities. Payments of the principal and Purchase Price of, premium, if any, andinterest on the Bonds will be payable by the Trustee to DTC, which will in turn remit such payments tothe DTC Participants, which will in turn remit such payments to the Beneficial Owners of the Bonds. Inaddition, so long as Cede & Co. is the registered owner of the Bonds, the right of any Beneficial Owner toexercise its right to tender its interest in any Bond for purchase and receive payment therefor will be based only upon and subject to the procedures and limitations of the DTC book-entry system. SeeAPPENDIX C – “BOOK-ENTRY SYSTEM.”

Security and Sources of Payment for the Bonds

Payment of the principal, Purchase Price of, and interest on the Bonds initially will be supported by an irrevocable, direct-pay letter of credit (the “Letter of Credit”) issued by Wells Fargo Bank, NationalAssociation (the “Bank”) made pursuant to and subject to the terms of a Reimbursement Agreement,dated as of August 1, 2008 (the “Reimbursement Agreement”), between the Corporation and the Bank.The Reimbursement Agreement constitutes a Credit Agreement pursuant to the Indenture and the Letter of Credit constitutes a Credit Facility pursuant to the Indenture.

The Authority is obligated to pay the principal, premium, if any, and interest on the Bonds solelyfrom the Revenues which include amounts received from the Corporation under the Loan Agreement and



3

amounts received under Credit Facilities for the Bonds, and the other funds available herefor under theIndenture. Pursuant to the Indenture, the Authority has pledged to the Trustee for the benefit of theBondholders all of the Revenues.

The Corporation’s payment obligations under the Loan Agreement are general, unsecuredobligations of the Corporation. Under the Loan Agreement, the Corporation is unconditionally obligated

to pay the Repayment Installments to be made thereunder, which are due in amounts and at the timesnecessary to pay the principal (whether at maturity or upon redemption or acceleration) of, premium, if any, and interest to the respective maturity dates or redemption of the Bonds, when due.

The Purchase Price of Bonds tendered or deemed tendered for purchase is payable only

from the proceeds of the remarketing of such Bonds and from amounts made available under the

Credit Facility for such Bonds. The Corporation has no obligation under the Loan Agreement to

make any payments with respect to the Purchase Price of Bonds tendered or deemed tendered for

purchase.

There will be no reserve fund with respect to the Bonds.

Certain Information Related to this Official Statement

The descriptions herein of the Indenture, the Loan Agreement, the Letter of Credit, theReimbursement Agreement and other agreements relating to the Bonds are qualified in their entirety byreference to such documents, and the description herein of the Bonds is qualified in its entirety by theform thereof and the provisions of the Indenture. See APPENDIX D – “SUMMARY OF CERTAINPROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS” for a brief summary of certain provisionsof the Indenture and the Loan Agreement.

The information and expressions of opinion herein speak only as of their date and are subject tochange without notice. Neither delivery of this Official Statement nor any sale made hereunder nor anyfuture use of this Official Statement shall, under any circumstances, create any implication that there has

been no change in the affairs of the Authority, the Corporation or the Bank.

Bondholders’ Risks

There are risks associated with the purchase of the Bonds. See “BONDHOLDERS’ RISKS”herein for a discussion of certain of these risks.

PLAN OF FINANCE

The proceeds of the Bonds will be used to (i) finance and refinance the acquisition, construction,installation, improvement, renovation, remodeling, furnishing, and/or equipping of certain educationalfacilities on the campus of La Sierra University, and (ii) pay costs incurred in connection with theissuance of the Bonds.



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ESTIMATED SOURCES AND USES OF PROCEEDS

The following table sets forth the estimated sources and estimated uses of the proceeds of theBonds.

Estimated Sources of Proceeds

Par Amount of the Bonds $ 24,405,000.00

Estimated Uses of Proceeds Deposit to Construction Fund $ 8,000,000.00Payoff of Existing Loan 15,828,454.84Bank Fees and Expenses 214,412.11Deposit to Costs of Issuance Fund1 362,133.05

Total $ 24,405,000.00

1 Includes underwriter’s discount, initial annual fee paid to Remarketing Agent, legal and financing fees, ratingagency fees, printing costs and other miscellaneous expenses.



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DEBT SERVICE REQUIREMENTS

The following table sets forth, for each of the years ending August 1, the amounts required to bemade available for the payment of total debt service on the Bonds.

Year Ending

August 1,

Principal Interest(1) Total

2009 $ 905,000 $ 764,082 $ 1,669,082

2010 905,000 763,750 1,668,750

2011 935,000 734,337 1,669,337

2012 965,000 704,756 1,669,756

2013 1,000,000 671,817 1,671,817

2014 1,030,000 640,088 1,670,088

2015 1,065,000 606,613 1,671,613

2016 1,100,000 572,655 1,672,655

2017 1,140,000 535,636 1,675,636

2018 1,180,000 499,200 1,679,200

2019 1,220,000 460,850 1,680,850

2020 1,260,000 421,682 1,681,682

2021 1,300,000 379,815 1,679,815

2022 1,340,000 338,000 1,678,000

2023 1,385,000 294,450 1,679,450

2024 1,435,000 249,723 1,684,723

2025 1,485,000 202,568 1,687,568

2026 1,535,000 154,537 1,689,537

2027 1,585,000 104,650 1,689,650

2028 1,635,000 53,198 1,688,198

Totals: $ 24,405,000 $ 9,152,407 $ 33,557,407

_____________________ (1) Assumes all of the Bonds bear interest at 3.25% per annum.

See Note 14 to APPENDIX B – “AUDITED FINANCIAL STATEMENTS OF LA SIERRA UNIVERSITY” for adescription of existing indebtedness of the Corporation.

Source: Wells Fargo Institutional Securities, LLC.

THE BONDS

General

The Bonds will be issued in the aggregate principal amounts set forth on the cover page of this

Official Statement. The Bonds will be dated their date of issuance and will mature on the dates set forthon the inside cover page of this Official Statement.

Pursuant to the Indenture, the Bonds of any Series shall bear interest at a Weekly Interest Rate or a Term Interest Rate, as such rates shall be determined by the Remarketing Agent. The maximum rate of interest any of the Bonds (other than Credit Provider Bonds) may bear is 12% per annum. All the Bondswill initially bear interest at the Weekly Interest Rate, determined as described herein. The Bonds willinitially be issued in authorized denominations of $100,000 or any multiple of $5,000 in excess thereof.



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Book-Entry System

The Bonds will be registered in the name of Cede & Co., the nominee of DTC, and held in DTC’s book-entry system. So long as the Bonds are held in the book-entry system, DTC or its nominee will bethe registered owner of the Bonds for all purposes of the Indenture and the Bonds. So long as the Bondsare held in book-entry form through DTC, all payments with respect to principal, Purchase Price,

premium, if any, and interest on each Bond will be made pursuant to DTC’s rules and procedures. SeeAPPENDIX C – “BOOK-ENTRY SYSTEM.”

The Authority, the Corporation, the Trustee and the Remarketing Agent will have noresponsibility or obligation to DTC, any DTC Participants, or the Beneficial Owners with respect to (a)the accuracy of any records maintained by DTC or any DTC Participant, (b) the payment by DTC or byany DTC Participant of any amount due to any Participant or Beneficial Owner, respectively, in respect of the principal, Purchase Price of, redemption or interest on any Bond, or (c) the delivery of any notice byDTC or any DTC Participant.

Determination of Interest Rates on the Bonds

The interest rate on the Bonds shall be determined by the Remarketing Agent in the manner specified in the Indenture. Wells Fargo Brokerage Services, LLC has been appointed under the Indentureand a Remarketing Agreement with the Corporation to serve as Remarketing Agent for the Bonds. TheRemarketing Agent may resign or be removed and a successor Remarketing Agent may be appointed, allin accordance with the terms of the Indenture and the Remarketing Agreement.

The Weekly Interest Rate and the Term Interest Rate shall be determined as provided in theIndenture; provided, that no Bond (other than a Credit Provider Bond) shall bear interest at a rateexceeding the Maximum Interest Rate. Each Bond shall bear interest from and including the date of issuance to but excluding the date of payment in full thereof (whether at maturity, upon redemption or acceleration or otherwise). Interest shall be computed upon the basis of a 365-day or 366-day year, asapplicable, for the number of days actually elapsed for any Bonds bearing interest in a Weekly Interest

Rate Period or Term Interest Rate Period of less than one year. For Bonds bearing interest in a TermInterest Rate Period of one year or longer, interest shall be computed upon the basis of a 360-day year,consisting of twelve 30-day months.

The determination of the interest rate on the Bonds by the Remarketing Agent shall be conclusiveand binding upon the Bondholders, the Authority, the Bank and the Trustee.

Payment of the principal, Purchase Price of, and interest on the Bonds in a Weekly Interest RatePeriod initially will be supported by the Letter of Credit. The Corporation may provide one or moreAlternate Credit Facilities for the Letter of Credit, and may eliminate the support of any Series of Bonds by a Credit Facility, upon the terms and conditions provided in the Indenture and the Loan Agreement,which terms require the mandatory tender of such Bonds for purchase. See “THE LETTER OF CREDITAND THE REIMBURSEMENT AGREEMENT” and “SECURITY AND SOURCES OF PAYMENTFOR THE BONDS – Alternate Credit Facility.”

Weekly Interest Rate Period for Bonds

Upon initial issuance, the Bonds will be in a Weekly Interest Rate Period and will bear interest atWeekly Interest Rates payable on each Interest Payment Date for the Bonds, commencing September 1,2008. During each Weekly Interest Rate Period for a Series of Bonds, the Remarketing Agent will set aWeekly Interest Rate for such Series of Bonds by 5:00 p.m. (New York City time) on the Wednesday



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immediately preceding each Calendar Week (or by 12:00 noon (New York City time) on the next preceeding Business Day if such Wednesday is not a Business Day); provided that the initial WeeklyInterest Rate for each Series of Bonds shall be determined by the Remarketing Agent on or prior to theIssue Date and provided further that if a Series of Bonds is to be Converted to a Weekly Interest RatePeriod from a Term Interest Rate Period, the Weekly Interest Rate for the initial Calendar Week of suchWeekly Interest Rate Period shall be determined not later than the Business Day next preceding the

effective date of such Weekly Interest Rate Period. Each Weekly Interest Rate shall be the ratedetermined by the Remarketing Agent (on the basis of examination of obligations comparable to theapplicable Series of Bonds known by the Remarketing Agent to have been priced or traded under then prevailing market conditions) to be the minimum interest rate which, if borne by such Series of Bonds,would enable the Remarketing Agent to sell Bonds of such Series on such day at a price equal to the principal amount thereof plus accrued interest.

If for any reason the Weekly Interest Rate for a Series of Bonds for a Calendar Week is not sodetermined, the Weekly Interest Rate for such Series of Bonds for such Calendar Week shall be equal to110% of the SIFMA Swap Index.

The interest on each Bond bearing interest at the Weekly Interest Rate will be payable on the first

Business Day of each calendar month to the registered Bondholder whose name appears on theregistration books maintained by the Trustee as of the close of business on the Record Date, which shall be the Business Day immediately preceding the Interest Payment Date during any Weekly Interest RatePeriod; except that if there is a default in any payment of interest and sufficient funds thereafter becomeavailable to pay such interest, such payment shall be made to the registered Bondholder whose nameappears on the registration books as of a special record date to be established by the Trustee.

Term Interest Rate Period for Bonds

The duration of each Term Interest Rate Period will be determined by the Corporation and will bea period of approximately one month, approximately three months, approximately six months,approximately nine months, approximately one year or any multiple of approximately six months above

one year in each case ending on a day preceding a Business Day; provided, however, that notwithstandingthe foregoing any Term Interest Rate Period for a Series of Bonds which ends on the day immediately preceding the respective maturity date of such Series of Bonds may include a period of time from theInterest Payment Date for such Series of Bonds immediately preceding the maturity date of such Series of Bonds to the day immediately preceding such maturity date even if the time remaining to such day is notone of the periods specified above; and provided further that notwithstanding the foregoing any TermInterest Rate Period may end on the day immediately preceding the maturity date of such Series of Bondswhether or not such maturity date is a Business Day.

During each Term Interest Rate Period for a Series of Bonds, the Remarketing Agent will set aTerm Interest Rate for such Series of Bonds by 4:00 p.m. (New York City time) on the Business Day preceding the first day of such Term Interest Rate Period. Each Term Interest Rate shall be the rate

determined by the Remarketing Agent (in part, on the basis of examination of obligations comparable tosuch Series of Bonds known to the Remarketing Agent to have been priced or traded under then prevailing market conditions) to be the minimum interest rate which, if borne by such Series of Bonds,would enable the Remarketing Agent to sell such Series of Bonds on such Business Day at a price equalto the principal amount thereof; provided, however, that if for any reason the Term Interest Rate is not sodetermined for any Term Interest Rate Period, the Interest Rate Period on such Series of Bonds shallautomatically Convert to a Weekly Interest Rate Period.



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The interest on each Bond bearing interest at a Term Interest Rate for a Term Interest Rate Periodof less than one year will be payable the day immediately succeeding the last day of such Term InterestRate Period. The interest on each Bond bearing interest at a Term Interest Rate for a Term Interest RatePeriod of one year or longer will be payable each Semi-Annual Interest Payment Date during such TermInterest Rate Period and the day immediately succeeding the last day of such Term Interest Rate Period.Payment of such interest will be to the registered Bondholder whose name appears on the registration

books maintained by the Trustee as of the close of business on the Record Date, which shall be theBusiness Day immediately preceding the Interest Payment Date during any Term Interest Rate Period of less than one year or the fifteenth day of the month (whether or not a Business Day) prior to an InterestPayment Date with respect to any Term Interest Rate Period of one year or longer.

Conversion of Interest Rate Period

Conversion to Term Interest Rate Period. The Corporation, by written direction to the Trusteeand the Remarketing Agent, and with the written consent of the applicable Credit Provider andaccompanied by an Approving Opinion, may elect to Convert the Interest Rate Period for a Series of Bonds from a Weekly Interest Rate Period to a Term Interest Rate Period or from one Term Interest RatePeriod to another Term Interest Rate Period, and shall determine the duration of any such new Term

Interest Rate Period. The Corporation’s written direction to Convert a Series of Bonds to a Term InterestRate Period (a) shall specify the Series of Bonds to be Converted; (b) shall specify the Conversion Date tosuch Term Interest Rate Period which shall be (1) the Interest Payment Date which is not less than 30days following the receipt by the Trustee of such direction if such Series of Bonds is to be Convertedfrom a Weekly Interest Rate Period to a Term Interest Rate Period; or (2) the Interest Payment Date nextsucceeding the last day of the then-current Term Interest Rate Period which is not less than 30 daysfollowing the date of receipt by the Trustee of such direction if such Series of Bonds is to be Convertedfrom one Term Interest Rate Period to another; or (3) any date on which the Bonds of such Series may beoptionally redeemed pursuant to the Indenture not less than 30 days following the date of receipt by theTrustee of such direction; and (c) shall specify the last day thereof. The Corporation shall not Convert theInterest Rate Period on a Series of Bonds to a Term Interest Rate Period unless (a) the Credit Facility thenin effect with respect to such Series of Bonds has been modified, if necessary, to provide interest

coverage sufficient to provide for all interest to accrue on such Series of Bonds as of each InterestPayment Date during and immediately succeeding such Term Interest Rate Period plus ten (10) additionaldays at the Term Interest Rate for such Term Interest Rate Period; provided, however, that no CreditFacility shall be required in connection with the Conversion of such Series of Bonds to a Term InterestRate Period which ends on the day immediately preceding the maturity date of such Series of Bonds if theconditions to the termination of the Corporation’s obligation to maintain a Credit Facility set forth in theLoan Agreement have been satisfied; and (b) with respect to a Term Interest Rate Period of longer thannine months, the Trustee and the Authority have received prior to the effective date of such Term InterestRate Period of a continuing disclosure agreement imposing obligations upon the Corporation or any other responsible party to comply with the requirements of S.E.C. Rule 15c2-12, as it may from time to time beamended or supplemented, with respect to such Series of Bonds as provided in the Loan Agreement. See“REDEMPTION OF BONDS—Optional Redemption” and “SECURITY AND SOURCES OF

PAYMENT OF THE BONDS—Alternate Credit Facility.”

The Bonds of a Series are subject to automatic Conversion to an Interest Rate Period of the sameduration as the immediately preceding Interest Rate Period for Bonds of such Series upon the failure of the conditions contained in the Indenture to a Conversion of such Bonds to a Term Interest Rate Periodfrom a Term Interest Rate Period to a Weekly Interest Rate Period or from a Term Interest Rate Period toanother Term Interest Rate Period. Except for automatic Conversions pursuant to the Indenture, theTrustee shall give notice by first class mail of each Term Interest Rate Period to the applicableBondholders not less than 30 days prior to the effective date of such Term Interest Rate Period. Such



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notice shall state (1) that the interest rate on the applicable Series of Bonds will be Converted to or continue to be a Term Interest Rate Period, (2) the Conversion Date to, and final date of, such TermInterest Rate Period, (3) the day by which the Term Interest Rate for such Term Interest Rate Period shall be determined, (4) the manner by which such Term Interest Rate may be obtained, (5) the InterestPayment Dates during such Term Interest Rate Period, (6) that the Bonds of such Series shall be purchased on such effective date pursuant to the mandatory tender for purchase provisions of the

Indenture, (7) the procedures for such purchase, (8) the redemption provisions that will pertain to theBonds of such Series during such Term Interest Rate Period, (9) the ratings which are expected to beassigned to the Bonds upon such Conversion to a Term Interest Rate Period and (10) whether a CreditFacility will be in effect with respect to such Series of Bonds upon such Conversion to a Term InterestRate Period.

Conversion to Weekly Interest Rate Period. The Corporation, by written direction to the Trusteeand the Remarketing Agent, and with the written consent of the Credit Provider and accompanied by anApproving Opinion, may elect to Convert the Interest Rate Period for a Series of Bonds from a TermInterest Rate Period to a Weekly Interest Rate Period. The Corporation’s written direction to Convert aSeries of Bonds to a Weekly Interest Rate Period shall specify the Series of Bonds to be Converted andthe Conversion Date to a Weekly Interest Rate Period, which shall be (a) the Interest Payment Date next

succeeding the last day of the then current Term Interest Rate Period not less than 30 days following thedate of receipt by the Trustee of such direction, or (b) any date on which such Series of Bonds may beoptionally redeemed pursuant to the Indenture not less than 30 days following the date of receipt by theTrustee of such direction. See “REDEMPTION OF BONDS—Optional Redemption.”

Bonds of a Series are subject to automatic Conversion to a Weekly Interest Rate Period upon thefailure of the Remarketing Agent to establish a Term Interest Rate for a Term Interest Rate Period or uponthe failure of the conditions contained in the Indenture to a Conversion of such Series of Bonds from aWeekly Interest Rate Period to a Term Interest Rate Period. Except for automatic Conversions pursuantto the Indenture, the Trustee shall give notice by first class mail of a Conversion of a Series of Bonds to aWeekly Interest Rate Period to the applicable Bondholders not less than 30 days prior to the ConversionDate to such Weekly Interest Rate Period. Such notice shall state (1) that the Interest Rate Period on such

Series of Bonds will be Converted to a Weekly Interest Rate Period, (2) the Conversion Date to suchWeekly Interest Rate Period, (3) the day by which the initial Weekly Interest Rate for such WeeklyInterest Rate Period shall be determined and the manner by which such Weekly Interest Rate may beobtained, (4) the Interest Payment Dates with respect to such Weekly Interest Rate Period, (5) that theBonds of such Series will be purchased on such Conversion Date pursuant to the mandatory tender for purchase provisions of the Indenture, (6) the procedures for such purchase, (7) that, subsequent to sucheffective date, the applicable Bondholders will have the right to demand purchase of the Bonds of suchSeries upon not less than seven days’ notice, (8) the procedures for a demand for such purchase, (9) theredemption provisions that will pertain to the Bonds of such Series during such Weekly Interest RatePeriod, and (10) the ratings which are expected to be assigned to such Series of Bonds upon suchConversion to a Weekly Interest Rate Period.

Failure of Conditions of Conversion. If the conditions contained in the Indenture relating to theConversion of a Series of Bonds to a new Interest Rate Period are not satisfied after notice of suchConversion has been given to the applicable Bondholders, then the Interest Rate Period for such Series of Bonds that shall commence on the date of the mandatory purchase of such Bonds on such ConversionDate specified in such notice shall automatically be an Interest Rate Period of the same duration as theimmediately preceding Interest Rate Period for such Series of Bonds and the Remarketing Agent shalldetermine the interest rate to apply to such Bonds during such Interest Rate Period on the ConversionDate specified in such notice to Bondholders.



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The Trustee is not required to give notice for an automatic Conversion (1) to a Weekly InterestRate Period in the event that a Term Interest Rate is not determined by the Remarketing Agent for anyTerm Interest Rate Period, or (2) to an Interest Rate Period of the same duration as the immediately preceding Term Interest Rate Period in the event that the conditions of the Indenture to the Conversion of the Bonds to another Interest Rate Period are not satisfied.

Special Considerations Relating to the Bonds

The Remarketing Agent is Paid By the Borrower. The Remarketing Agent's responsibilitiesinclude determining the interest rate from time to time and remarketing Bonds that are optionally or mandatorily tendered by the owners thereof (subject, in each case, to the terms of the Indenture and theRemarketing Agreement), all as further described in this Official Statement. The Remarketing Agent isappointed by the Borrower and is paid by the Borrower for its services. As a result, the interests of theRemarketing Agent may differ from those of existing Holders and potential purchasers of Bonds.

The Remarketing Agent Routinely Purchases Bonds for its Own Account. The RemarketingAgent acts as remarketing agent for a variety of variable rate demand obligations and, in its solediscretion, routinely purchases such obligations for its own account. The Remarketing Agent is

permitted, but not obligated, to purchase tendered Bonds for its own account and, in its sole discretion,may routinely acquire such tendered Bonds in order to achieve a successful remarketing of Bonds (i.e., because there otherwise are not enough buyers to purchase such Bonds) or for other reasons. However,the Remarketing Agent is not obligated to purchase Bonds, and may cease doing so at any time withoutnotice. The Remarketing Agent may also make a market in Bonds by routinely purchasing and sellingBonds other than in connection with an optional or mandatory tender and remarketing. Such purchasesand sales may be at or below par. However, the Remarketing Agent is not required to make a market inBonds. The Remarketing Agent may also sell any Bonds it has purchased to one or more affiliatedinvestment vehicles for collective ownership or enter into derivative arrangements with affiliates or othersin order to reduce its exposure to Bonds. The purchase of Bonds by the Remarketing Agent may createthe appearance that there is greater third party demand for Bonds in the market than is actually the case.The practices described above also may result in fewer Bonds being tendered in a remarketing.

Bonds May be Offered at Different Prices on Any Date Including an Interest Rate

Determination Date. Pursuant to the Indenture and the Remarketing Agreement, the Remarketing Agentis required to determine the applicable rate of interest that, in its judgment, is the lowest rate that would permit the sale of a Series of Bonds bearing interest at the applicable interest rate at par plus accruedinterest, if any, on and as of the applicable interest rate determination date. The interest rate will reflect,among other factors, the level of market demand for a Series of Bonds (including whether theRemarketing Agent is willing to purchase such Bonds for its own account). There may or may not beBonds tendered and remarketed on an interest rate determination date, the Remarketing Agent may or may not be able to remarket any Bonds tendered for purchase on such date at par and the RemarketingAgent may sell Bonds at varying prices to different investors on such date or any other date. TheRemarketing Agent is not obligated to advise purchasers in a remarketing if it does not have third party

buyers for all of such Bonds at the remarketing price. In the event a Remarketing Agent owns any Bondsfor its own account, it may, in its sole discretion in a secondary market transaction outside the tender process, offer such Bonds on any date, including the interest rate determination date, at a discount to par to some investors.

The Ability to Sell Bonds Other Than Through the Tender Process May Be Limited. TheRemarketing Agent may buy and sell Bonds other than through the tender process. However, it is notobligated to do so and may cease doing so at any time without notice and may require Holders that wishto tender their Bonds to do so through the Tender Agent with appropriate notice. Thus, investors who



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purchase the Bonds, whether in a remarketing or otherwise, should not assume that they will be able tosell their Bonds other than by tendering such Bonds in accordance with the tender process.

The Remarketing Agent May Resign, Without a Successor Being Named. The RemarketingAgent may resign, upon 30 days’ prior written notice, without a successor having been named.

TENDER OF BONDS FOR PURCHASE

Optional Tender

During any Weekly Interest Rate Period for a Series of Bonds, any Bond of such Series (or portions thereof in amounts such that the amount purchased and the amount not purchased are inAuthorized Denominations) shall be subject to purchase on any Business Day from the sources specifiedin the Indenture upon delivery by the Holder of such Bond to the Trustee at its Principal Office of anirrevocable notice by telephone or Electronic Notice (promptly confirmed in writing) or written notice by5:00 p.m. (New York City time) on any Business Day at least seven (7) days prior to the Purchase Date,which states the principal amount of such Bond to be tendered for purchase and the Purchase Date, at aPurchase Price equal to 100% of the principal amount of such Bonds (or the portions thereof) tendered for

purchase, plus accrued and unpaid interest thereon to but not including the Purchase Date; provided,however, if the Purchase Date occurs after the Record Date applicable to the payment of such accruedinterest, then the Purchase Price shall not include accrued and unpaid interest, which shall be paid to theHolder of record on the applicable Record Date. The Purchase Price will be payable in immediatelyavailable funds.

Effect of Tender. Any notice delivered to the Trustee in accordance with the above paragraphshall be irrevocable with respect to the purchase of such Bond (or portion thereof) for which such noticewas delivered and shall be binding upon any subsequent Bondholder or Beneficial Owner of the Bond towhich it relates, including any Bond issued in exchange therefor or upon the registration of transfer thereof, and as of the date of such notice, the Holder or Beneficial Owner of the Bonds specified thereinshall not have any right to optionally tender for purchase such Bond (or portion thereof) prior to the date

of purchase specified in such notice.

IF A BONDHOLDER FAILS TO DELIVER ANY BOND TO THE TRUSTEE ON OR

BEFORE THE PURCHASE DATE, SUCH BOND SHALL BE DEEMED TO HAVE BEEN

PROPERLY TENDERED TO THE TRUSTEE AND, TO THE EXTENT THAT THERE SHALL

BE ON DEPOSIT WITH THE TRUSTEE ON SUCH PURCHASE DATE AN AMOUNT

SUFFICIENT TO PAY THE PURCHASE PRICE THEREOF, SUCH BOND SHALL CEASE TO

CONSTITUTE OR REPRESENT A RIGHT TO PAYMENT OF PRINCIPAL THEREOF OR

INTEREST THEREON OF THE FORMER HOLDER AND SHALL CONSTITUTE AND

REPRESENT ONLY THE FORMER HOLDER’S RIGHT TO PAYMENT OF THE PURCHASE

PRICE PAYABLE ON SUCH DATE. THE FOREGOING SHALL NOT LIMIT THE

ENTITLEMENT OF ANY BONDHOLDER ON ANY RECORD DATE TO RECEIPT OF

INTEREST, IF ANY, DUE ON ANY SUCH PURCHASE DATE.

SEE APPENDIX C – “BOOK-ENTRY SYSTEM” FOR THE TENDER PROVISIONS

APPLICABLE WHILE THE BONDS ARE IN THE BOOK-ENTRY-ONLY SYSTEM. THE

AUTHORITY, THE CORPORATION AND THE TRUSTEE SHALL NOT BE RESPONSIBLE

IN THE EVENT DTC DOES NOT TENDER OR DELIVER BONDS FOR TENDER IN

ACCORDANCE WITH DIRECTIONS DTC RECEIVES FROM A DTC PARTICIPANT.



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Mandatory Tender

The Bonds of a Series shall be subject to mandatory tender for purchase upon the occurrence of any of the events listed below from the sources listed in the Indenture at a Purchase Price equal to 100%of the principal amount of any Bond tendered or deemed tendered to the Trustee for purchase, plusaccrued and unpaid interest thereon to but not including the date of purchase; provided, however, if the

date of such purchase occurs after the Record Date applicable to the payment of such accrued interest,then the Purchase Price shall not include accrued and unpaid interest, which shall be paid to the Holder of record on the applicable Record Date:

(i) during any Weekly Interest Rate Period for such Series of Bonds, on any Business Day(not earlier than the 10th day following the 2nd Business Day after receipt by the Trustee of suchdesignation) designated by the Corporation with the consent of the applicable Credit Provider;

(ii) on the effective date of any new Interest Rate Period for such Series of Bonds;

(iii) on the effective date of an Alternate Credit Facility with respect to such Series of Bonds;

(iv) in the event that the Credit Facility then in effect with respect to such Series of Bonds isnot renewed, or an Alternate Credit Facility with respect to such Series of Bonds is not delivered to theTrustee, on the first Business Day which is at least five (5) calendar days preceding the expiration date of the Credit Facility then in effect with respect to such Series of Bonds; or

(v) on a Business Day which is no more than seven (7) calendar days following receipt bythe Trustee of a notice from the Credit Provider providing the Credit Facility then in effect with respect tosuch Series of Bonds that an event of default or termination has occurred and is continuing under theapplicable Credit Agreement or that the Credit Provider will not reinstate the interest portion of theapplicable Credit Facility and requesting the Trustee to cause the mandatory tender of the Bonds of suchSeries for purchase.

With respect to Bonds subject to mandatory tender for purchase pursuant to clause (i) above, theTrustee shall give Notice by Mail to the Holders of such Bonds not later than two (2) Business Daysfollowing receipt of the notice from the Corporation described in clause (i) above, which notice shall statethat such Bonds are subject to mandatory tender for purchase on the date determined in accordance withclause (i), which date shall be specified in such notice. With respect to Bonds subject to mandatorytender for purchase pursuant to clause (ii) above, the Trustee shall give Notice by Mail to the Holders of such Bonds, not later than the thirtieth (30th) day prior to the date on which such Bonds are subject tomandatory tender pursuant to clause (ii) in the form of notice described under the caption “Conversion of Interest Rate Period” with respect to either a Weekly Interest Rate or Term Interest Rate, as applicable.With respect to Bonds subject to mandatory tender for purchase pursuant to clause (iii) above, the Trusteeshall give Notice by Mail of the provision of any commitment to issue an Alternate Credit Facility withrespect to such Bonds to the Holders of such Bonds, not later than the fifteenth (15th) day prior to the dateon which such Bonds are subject to mandatory tender pursuant to clause (iii), which notice shall (a) statethe expected effective date of such Alternate Credit Facility and (b) state that such Bonds shall be subjectto mandatory tender for purchase on the date specified in such notice. With respect to Bonds subject tomandatory tender for purchase pursuant to clause (iv) above, the Trustee shall give Notice by Mail to theHolders of such Bonds, not later than the fifteenth (15th) day prior to the date on which such Bonds aresubject to mandatory tender pursuant to clause (iv), which notice shall state that the Credit Facility then ineffect with respect to such Bonds has not been renewed and an Alternate Credit Facility has not beendelivered to the Trustee and that such Bonds are subject to mandatory tender for purchase, on the datedetermined in accordance with clause (iv), which date shall be specified in such notice. With respect to



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Bonds subject to mandatory tender for purchase pursuant to clause (v) above, the Trustee shall give Notice by Mail to the Holders of such Bonds, not later than two (2) Business Days following receipt of the notice from a Credit Provider described in clause (v), which notice by the Trustee shall (a) state thatthe Trustee has received a notice from such Credit Provider that an event of default or termination hasoccurred and is continuing under the applicable Credit Agreement and requesting the Trustee to cause themandatory tender of such Bonds, and (b) state that such Bonds are subject to mandatory tender for

purchase on the date determined in accordance with such clause (v), which date shall be specified in suchnotice.

Upon the giving of notice to Bondholders of the mandatory tender of Bonds for purchase pursuant to the Indenture, such Bonds will be subject to mandatory tender for purchase notwithstandingthat the events described in such notice have not occurred on the Purchase Date specified in such notice,including the failure to change the Interest Rate Period on such Bonds to the Interest Rate Periodspecified in such notice, the failure of an Alternate Credit Facility to go into effect, the renewal of theexisting Credit Facility for such Bonds, or the curing of any event of default or termination under theapplicable Credit Agreement.

IF A BONDHOLDER FAILS TO DELIVER ANY BOND TO THE TRUSTEE ON OR

BEFORE ANY PURCHASE DATE SPECIFIED ABOVE, SUCH BOND SHALL BE DEEMEDTO HAVE BEEN PROPERLY TENDERED TO THE TRUSTEE AND, TO THE EXTENT THAT

THERE SHALL BE ON DEPOSIT WITH THE TRUSTEE ON SUCH PURCHASE DATE AN

AMOUNT SUFFICIENT TO PAY THE PURCHASE PRICE THEREOF, SUCH BOND SHALL

CEASE TO CONSTITUTE OR REPRESENT A RIGHT TO PAYMENT OF PRINCIPAL

THEREOF OR INTEREST THEREON OF THE FORMER HOLDER AND SHALL

CONSTITUTE AND REPRESENT ONLY THE FORMER HOLDER’S RIGHT TO PAYMENT

OF THE PURCHASE PRICE PAYABLE ON SUCH DATE. THE FOREGOING SHALL NOT

LIMIT THE ENTITLEMENT OF ANY BONDHOLDER ON ANY RECORD DATE TO

RECEIPT OF INTEREST, IF ANY, DUE ON ANY SUCH PURCHASE DATE.

Mandatory Purchase in Lieu of Redemption

Each Bondholder or Beneficial Owner, by purchase and acceptance of any Bond, irrevocablygrants to the Corporation the option to purchase such Bond at any time such Bond is subject to optionalredemption at a purchase price equal to the then applicable redemption price of such Bond. TheCorporation shall also deliver a Favorable Opinion of Bond Counsel and shall direct the Trustee to provide notice of mandatory purchase, such notice to be provided, as and to the extent applicable, in thesame manner as for notice of redemption and to select Bonds subject to mandatory purchase in the samemanner as Bonds called for redemption. On the date fixed for purchase of any Bond in lieu of redemptionas described in the Indenture, the Corporation shall pay the purchase price of such Bond to the Trustee inAvailable Amounts, and the Trustee shall pay the same to the Holders of the Bonds being purchasedagainst delivery thereof. No purchase of any Bond in lieu of redemption as described in the Indentureshall operate to extinguish the indebtedness of the Corporation evidenced by such Bond. No Bondholder

or Beneficial Owner may elect to retain a Bond subject to mandatory purchase in lieu of redemption. TheCorporation may exercise its option to purchase bonds, in whole or in part; in accordance with theIndenture.

Effect of Purchase of Bonds

No purchase of Bonds pursuant to the Indenture shall be deemed to be a payment or redemptionof such Bonds or any portion thereof and such purchase will not operate to extinguish or discharge theindebtedness evidenced by such Bonds, unless such Bonds are submitted to the Trustee for cancellation.



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Purchase of Tendered Bonds

On each Purchase Date that any Bonds are tendered for purchase (or deemed tendered for purchase) in accordance with the Indenture, the Trustee will purchase (but solely from funds received bythe Trustee in accordance with the terms of the Indenture) such Bonds (or portions thereof in AuthorizedDenominations) at the applicable Purchase Price. Funds for the payment of the Purchase Price of such

Bonds (or portions thereof in Authorized Denominations) shall be paid by the Trustee solely from thefollowing sources and in the following order of priority:

(i) Proceeds of the remarketing of such Bonds (or portions thereof in AuthorizedDenominations); and

(ii) Money drawn or received under the Credit Facility for such Bonds.

So long as the Bonds are held in the DTC book-entry system, payment of the Purchase Price of any Bond purchased (or deemed purchased) pursuant to the Indenture shall be made to DTC or itsnominee. See APPENDIX C – “BOOK-ENTRY SYSTEM.”

Inadequate Funds for Tenders

THE CORPORATION HAS NO OBLIGATION UNDER THE LOAN AGREEMENT TO

MAKE ANY PAYMENTS WITH RESPECT TO THE PURCHASE PRICE OF THE BONDS

TENDERED OR DEEMED TENDERED FOR PURCHASE.

If sufficient funds are not available for the purchase of all Bonds tendered or deemed tenderedand required to be purchased on any Purchase Date, the failure to pay the Purchase Price of all tenderedBonds when due and payable shall constitute an Event of Default pursuant to the Indenture and alltendered Bonds shall be returned to their respective Holders and shall bear interest at the MaximumInterest Rate from the date of such failed purchase until all such Bonds are purchased as required inaccordance with the Indenture. Thereafter, the Tender Agent shall continue to take all such action

available to it to obtain remarketing proceeds from the Remarketing Agent and sufficient other fundsfrom the Credit Facility Provider.

Remarketing

Wells Fargo Brokerage Services, LLC will serve as Remarketing Agent for the Bonds pursuant tothe terms of the Indenture and a Remarketing Agreement with the Corporation. The Remarketing Agentmay resign, or the Corporation or the Authority may remove the Remarketing Agent, in accordance withthe terms of the Indenture and the Remarketing Agreement.

Upon receipt of notice that any Bonds will be or are required to be tendered for purchase inaccordance with the Indenture, the Remarketing Agent is required under the Indenture and theRemarketing Agreement to use its best efforts to remarket such Bonds at a price equal to the PurchasePrice on the applicable Purchase Date in accordance with the optional or mandatory tender provisions of the Indenture, as applicable. The Remarketing Agent will transfer to the Trustee the proceeds of theremarketing of such Bonds.



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REDEMPTION OF BONDS

Optional Redemption

The Bonds of a Series shall be subject to redemption prior to their respective maturity dates, inwhole, or in part by lot in Authorized Denominations, from Available Amounts, as follows:

(A) During any Weekly Interest Rate Period for such Series of Bonds, on any Business Dayat a redemption price equal to 100% of the principal amount thereof plus accrued interest to theredemption date.

(B) During any Term Interest Rate Period for such Series of Bonds, on any Business Day,during the periods specified below, at the redemption prices (expressed as percentages of principalamount of the Bonds of such Series (or portions thereof) to be redeemed) hereinafter indicated plusaccrued interest to the redemption date:

Lesser of Length of TermInterest Rate Period or

Length of Time to Maturity Redemption Dates and Prices

Greater than 10 years At any time on or after the 5th anniversary of the effective datecommencing such Term Interest Rate Period at 102% declining½% annually to 100%

Greater than 6 and less than or equalto 10 years

At any time on or after the 3rd anniversary of the effective datecommencing such Term Interest Rate Period at 101 ½% declining½% annually to 100%


At any time on or after the 2nd anniversary of the effective datecommencing such Term Interest Rate Period at 101% declining

½% annually to 100%


At any time on or after the 2nd anniversary of the effective datecommencing such Term Interest Rate Period at 100 ½% declining½% annually to 100%


At any time on or after the 1st anniversary of the effective datecommencing such Term Interest Rate Period at 100 ½% declining½% annually to 100%


At any time on or after the 1st anniversary of the effective datecommencing such Term Interest Rate Period at 100%

Less than or equal to 1 year On the Interest Payment Date which is six months after theeffective date of such Term Interest Rate Period at 100%

Notwithstanding the optional redemption schedule set forth above, on or prior to the effectivedate of a Term Interest Rate Period ending on the day immediately preceding the maturity date of a Seriesof Bonds, the Remarketing Agent can provide an alternate optional redemption schedule for such Seriesof Bonds if it obtains an Approving Opinion.



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Notice of Redemption

The Trustee will give notice of any redemption of Bonds, by first-class mail, postage prepaid, tothe Holders of all Bonds to be redeemed, at the addresses appearing on the Bond Register, and other entities specified in the Indenture, not less than thirty (30) days nor more than sixty (60) days (except inthe case of redemption of Bonds bearing interest at a Weekly Rate, in which case not less than ten (10)

days) prior to the redemption date. Each notice of redemption of Bonds will identify the Bonds to beredeemed and will state the date of such notice, the Issue Date, the redemption date, the redemption price,the place of redemption, the Series and the principal amount, and, if less than all of the Bonds of suchSeries are to be redeemed, the distinctive certificate numbers of the Bonds of such Series to be redeemedand, in the case of Bonds of such Series to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. So long as DTC or its nominee is the sole registered owner of the Bonds under the book-entry system, redemption notices are to be sent to Cede & Co. Notices of redemption are also to be sent to certain information services that disseminate redemption notices and tocertain nationally recognized municipal securities information repositories.

With respect to any notice of redemption as described above, unless upon the giving of suchnotice the Bonds to be redeemed are deemed to have been paid in accordance with the Indenture, such

notice must state that such redemption is conditional upon the receipt by the Trustee on or prior to thedate fixed for such redemption of Available Amounts sufficient to pay the principal of, and premium, if any, and interest on, the Bonds to be redeemed, and that if such Available Amounts are not received, suchnotice will be of no force and effect, the Bonds to be redeemed shall not be subject to redemption on suchdate and the Bonds to be redeemed will not be required to be redeemed on such date. If such redemptionis not effectuated, the Trustee will, within a reasonable time thereafter, give notice that such AvailableAmounts were not so received.

The Corporation may rescind notice of redemption upon written notice to the Trustee no later than 5 Business Days prior to the date fixed for redemption. The Trustee shall give notice of suchrescission as soon thereafter as practicable in the same manner to the same Persons as notice of suchredemption was given.

Effect of Redemption

Notice of redemption having been duly given and Available Amounts for payment of theredemption price being held by the Trustee, the Bonds so called for redemption will, on the redemptiondate designated in such notice, become due and payable at the redemption price specified in such notice,interest on the Bonds to be redeemed will cease to accrue, said Bonds shall cease to be entitled to anylien, benefit or security under the Indenture, and the Holders thereof will have no rights except to receive payment, but only from the funds provided in connection with such redemption, of the redemption priceof and interest, if any, accrued on such Bonds to the redemption date.

Selection of Bonds to be Redeemed

If less than all the Bonds of a Series are called for redemption, the Trustee will select the Bondsof such Series or any portion thereof to be redeemed first from the Credit Provider Bonds of such Series,if any, or such portion thereof not previously called for redemption, by lot in such manner as it maydetermine, until all Credit Provider Bonds of such Series, if any, shall have been redeemed, and then fromthe other Bonds of such Series or such given portion thereof not previously called for redemption, by lot.For the purpose of any such selection the Trustee shall assign a separate number for each minimumAuthorized Denomination of each Bond of such Series of a denomination of more than such minimum; provided that following any such selection, the portion of such Bond to remain Outstanding shall be in an



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Authorized Denomination. Notwithstanding the foregoing, if less than all of the Bonds of a Series are to be redeemed at any time while the Bonds are Book-Entry Bonds, selection of the Bonds of such Series to be redeemed after Credit Provider Bonds of such Series have been redeemed shall be made in accordancewith customary practices of DTC or the applicable successor depository, as the case may be.

SECURITY AND SOURCES OF PAYMENT FOR THE BONDS

General

The principal, premium, if any, and interest on the Bonds are payable solely from the Revenuesreceived from the Corporation pursuant to the Loan Agreement and under Credit Facilities for the Bondsand the other amounts pledged therefor under the Indenture. The Purchase Price of the Bonds tendered or deemed tendered for purchase pursuant to the Indenture will be payable only from the proceeds of theremarketing of such Bonds and draws on the Credit Facility for such Bonds. The initial Credit Facilityfor the Bonds is the Letter of Credit issued by the Bank and supports the principal and Purchase Price of,and interest on the Bonds in a Weekly Interest Rate Period, but not any premium on the Bonds. See“THE BANK.”

The Purchase Price of Bonds tendered or deemed tendered for purchase is payable onlyfrom the proceeds of the remarketing of such Bonds and from amounts made available under the

Credit Facility for such Bonds. The Corporation has no obligation under the Loan Agreement to

make any payments with respect to the Purchase Price of Bonds tendered or deemed tendered for

purchase.

NONE OF THE AUTHORITY, ANY AUTHORITY MEMBER OR ANY PERSON

EXECUTING THE BONDS IS LIABLE PERSONALLY ON THE BONDS OR SUBJECT TO

ANY PERSONAL LIABILITY OR ACCOUNTABILITY BY REASON OF THEIR ISSUANCE.

THE BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY

FROM AND SECURED BY THE PLEDGE OF CERTAIN REVENUES UNDER THE

INDENTURE. NEITHER THE AUTHORITY, ITS MEMBERS, THE STATE OF CALIFORNIA,

NOR ANY OF ITS POLITICAL SUBDIVISIONS SHALL BE DIRECTLY, INDIRECTLY,CONTINGENTLY, OR MORALLY OBLIGATED TO USE ANY OTHER MONEYS OR ASSETS

TO PAY ALL OR ANY PORTION OF THE DEBT SERVICE DUE ON THE BONDS, TO LEVY

OR TO PLEDGE ANY FORM OF TAXATION WHATEVER THEREFOR OR TO MAKE ANY

APPROPRIATION FOR THEIR PAYMENT. THE BONDS ARE NOT A PLEDGE OF THE

FAITH AND CREDIT OF THE AUTHORITY, ITS MEMBERS, THE STATE OF CALIFORNIA

OR ANY OF ITS POLITICAL SUBDIVISIONS, NOR DO THEY CONSTITUTE

INDEBTEDNESS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY

DEBT LIMITATION. THE AUTHORITY HAS NO TAXING POWER.

Credit Facility

Pursuant to the Loan Agreement, except as described in the next paragraph, the Corporation hasagreed to maintain one or more Credit Facilities, either by maintaining the Letter of Credit or providingone or more Alternate Credit Facilities to provide a source of payment of the principal, Purchase Price of,and interest on, the Bonds. For information concerning the initial Credit Facility, see “THE LETTER OFCREDIT AND THE REIMBURSEMENT AGREEMENT – The Letter of Credit.”

The Corporation’s obligations to maintain a Credit Facility for any Series of the Bonds willterminate in the event that: (i) a Term Interest Rate Period ending on the day immediately preceding thematurity date of such Bonds is established and in effect pursuant to the Indenture; and (ii) the Corporation



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provides the Trustee with either (1) written evidence from the Rating Agency that effective upon thecommencement of such Term Interest Rate Period with no Credit Facility securing such Bonds, suchBonds will have a long-term rating of “A” or better, or if such Bonds will have only a short-term rating,such rating will be in the highest short-term rating category (without regard to “+” or “-” signs); or (2)written consent of the Authority.

Alternate Credit Facility

The Corporation may at any time provide an Alternate Credit Facility with respect to a Series of Bonds provided that each such Alternate Credit Facility meets the following conditions:

(i) the Alternate Credit Facility must be a Credit Facility entered into by, or issued by, acommercial bank or other financial institution;

(ii) the Alternate Credit Facility must be in an amount sufficient to pay the greater of (i) the principal and the maximum amount of interest payable on the Outstanding Bonds of such Series on anyInterest Payment Date for such Bonds during the current Interest Rate Period for such Bonds and (ii) themaximum Purchase Price of such Bonds which will be applicable during the then current Interest Rate

Period for such Bonds;

(iii) the Alternate Credit Facility must take effect on or before the date which is the firstBusiness Day which is not less than five (5) calendar days before the date of termination of the CreditFacility then securing such Bonds and the term of the Alternate Credit Facility must be at least 364 days(or, if shorter, the period to the maturity of such Bonds); and

(iv) if the Alternate Credit Facility is not an irrevocable, direct pay letter of credit upon theissuance of which such Bonds will be rated “A” or better by a rating agency, then the Alternate CreditFacility must be approved by the Authority.

Notwithstanding the above, the Corporation will not provide any Alternate Credit Facility with

respect to such Bonds if such Bonds are not then required to be tendered for purchase pursuant to theIndenture as a result of the provision of such Alternate Credit Facility for the then-current Credit Facility.

On or prior to the date of delivery to the Trustee of an Alternate Credit Facility meeting the aboverequirements, the Corporation must furnish to the Trustee (i) an opinion of Bond Counsel with respect tothe delivery of such Alternate Credit Facility, and (ii) an opinion or opinions of counsel to the CreditProvider of such Alternate Credit Facility, to the effect that such Alternate Credit Facility has been dulyauthorized, executed and delivered by such Credit Provider and, subject to standard exceptions andqualifications, constitutes the valid, legal and binding obligation of such Credit Provider enforceableagainst such Credit Provider in accordance with its terms.

Pursuant to the Indenture, if there shall have been delivered to the Authority and the Trustee (i) anAlternate Credit Facility meeting the requirements of the Loan Agreement and (ii) the opinions anddocuments required by the Loan Agreement, then the Trustee shall accept such Alternate Credit Facilityand, if so directed by the Corporation, upon the effectiveness of such Alternate Credit Facility and the payment of the Purchase Price of all Bonds tendered for purchase pursuant to the Indenture in connectionwith such Alternate Credit Facility promptly surrender the Credit Facility theretofore in effect withrespect to such Bonds for cancellation. In the event that the Corporation elects to provide an AlternateCredit Facility for a Series of Bonds, such Bonds shall be subject to mandatory tender as provided in theIndenture. See “TENDER OF BONDS FOR PURCHASE—Mandatory Tender.”



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Revenues and Repayment Installments

The Authority is obligated to pay the principal of, premium, if any and interest on the Bondssolely from the Revenues received from the Corporation under the Loan Agreement and under the CreditFacility for the Bonds and the other amounts pledged therefor under the Indenture. Pursuant to theIndenture, the Authority has pledged to the Trustee for the benefit of the Bondholders all of the Revenues.

“Revenues” mean all payments received by the Authority or the Trustee pursuant or with respect to theLoan Agreement (except any such payments made or with respect to certain provisions of the LoanAgreement) or a Credit Facility, including, without limiting the generality of the foregoing, RepaymentInstallments (including both timely and delinquent payments), prepayments and all income derived fromthe investment of any moneys in any fund or account established pursuant to the Indenture, but notincluding amounts, including investment income, received for or on deposit in the Rebate Fund and theBond Purchase Fund. “Revenues” does not include certain payments to the Authority or the Trusteespecified in the Loan Agreement or any amounts on deposit in the Rebate Fund. There will be no reservefund with respect to the Bonds.

SEE APPENDIX D – “SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPALLEGAL DOCUMENTS” for a summary of certain provisions of the Indenture and the Loan Agreement.

THE BANK

The information under this heading has been provided solely by the Bank and is believed to bereliable. This information has not been verified independently by the Corporation, the Authority or theUnderwriter. None of the Corporation, the Authority or the Underwriter make any representationwhatsoever as to the accuracy, adequacy or completeness of such information.

Wells Fargo Bank, National Association

The Bank is a national banking association organized under the laws of the United States of America with its main office at 101 North Phillips Avenue, Sioux Falls, South Dakota 57104, and

engages in retail, commercial and corporate banking, real estate lending and trust and investment services.The Bank is an indirect, wholly owned subsidiary of Wells Fargo & Company, a diversified financialservices company, a financial holding company and a bank holding company registered under the Bank Holding Company Act of 1856, as amended, with its principal executive offices located in San Francisco,California.

As of March 31, 2008, the Bank had total consolidated assets of approximately $486.8 billion,total domestic and foreign deposits of approximately $355.0 billion and total equity capital of approximately $43.3 billion.

Each quarter, the Bank files with the FDIC financial reports entitled “Consolidated Reports of Condition and Income for Insured Commercial Banks with Domestic and Foreign Offices,” commonlyreferred to as the “Call Reports.” The Bank’s Call Reports are prepared in accordance with regulatoryaccounting principles, which may differ from generally accepted accounting principles. The publiclyavailable portions of the Call Reports for the period ending March 31, 2008, and for Call Reports filed bythe Bank with the FDIC after the date of this Offering Memorandum may be obtained from the FDIC,Disclosure Group, Room F518, 550 17th Street, N.W., Washington, D.C. 20429 at prescribed rates, or from the FDIC on its Internet site at http://www.fdic.gov, or by writing to Corporate Secretary’s Office,Wells Fargo Center, Sixth and Marquette, MAC N9305-173, Minneapolis, MN 55479.



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The Letter of Credit will be solely an obligation of the Bank and will not be an obligation of,

or otherwise guaranteed by, Wells Fargo & Company, and no assets of Wells Fargo & Company or

any affiliate of the Bank or Wells Fargo & Company will be pledged to the payment thereof.

Payment of the Letter of Credit will not be insured by the FDIC.

The information contained in this section, including financial information, relates to and has been

obtained from the Bank, and is furnished solely to provide limited introductory information regarding theBank and does not purport to be comprehensive. Any financial information provided in this section isqualified in its entirety by the detailed information appearing in the Call Reports referenced above. Thedelivery hereof shall not create any implication that there has been no change in the affairs of the Bank since the date hereof.

THE LETTER OF CREDIT AND THE REIMBURSEMENT AGREEMENT

The following is a summary of certain of the provisions of the Letter of Credit and the

Reimbursement Agreement. This summary does not purport to be definitive or comprehensive. Reference

is made to the actual document for the full terms thereof.

Letter of Credit

On the date of issuance of the Bonds, the Bank will issue in favor of the Trustee the Letter of Credit in an original stated amount equal to the aggregate principal amount of the Bonds plus 50 days’interest thereon calculated at a rate equal to 12%, computed on the basis of a 365-day year (as from timeto time reduced and reinstated as provided in the Letter of Credit). The Letter of Credit (subject to anyreductions and reinstatements as provided therein) may be drawn upon with respect to the payment of theunpaid principal amount of, or portion of the purchase price corresponding to the principal of, the Bonds(or any Series thereof) and with respect to the payment of accrued but unpaid interest on, or portion of the purchase price representing accrued interest on, the Bonds (or any Series thereof). The Letter of Creditdoes not cover the payment of any redemption or purchase premium.

The Letter of Credit shall automatically terminate upon the earliest of (i) the honoring by theBank of the final drawing available to be made thereunder; (ii) the Bank’s receipt of the Letter of Creditand a written certificate of the Trustee and the Corporation that no Bonds are Outstanding within themeaning of the Indenture; (iii) the Bank’s receipt of the Letter of Credit and a written certificate of theTrustee and the Corporation that an Alternate Credit Facility has been accepted by the Trustee and is ineffect; or (iv) August 1, 2010.

The Letter of Credit will be an irrevocable obligation of the Bank to pay to the Trustee, upon presentation of the certificates required by the terms thereof up to (i) an amount equal to the aggregateoutstanding principal amount of the Bonds (or any Series thereof) to pay the principal of the Bonds (or any Series thereof) when due and payable (whether at maturity or upon acceleration of maturity or after notice of redemption or prepayment or otherwise) or the portion of the purchase price of the Bonds (or any Series thereof) representing such principal, and (ii) an amount equal to 50 days’ interest on the Bonds(or any Series thereof) calculated at a rate equal to 12%, computed on the basis of a 365-day year.

The Bank’s obligation under the Letter of Credit and the total amount of the Letter of Credit shall be reduced by an amount equal to each demand honored thereunder, effective as of the date of presentation of such demand, subject to reinstatement on the terms set forth in the Letter of Credit. Eachdemand honored by the Bank under the Letter of Credit will be paid with the Bank’s own funds.



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The Letter of Credit to be issued by the Bank will be substantially in the form attached hereto asAPPENDIX F.

Reimbursement Agreement

The Bank and Corporation have entered into a Reimbursement Agreement, dated as of August 1,

2008 (the “Reimbursement Agreement”), which, among other things, sets forth the terms and conditionswhereby Corporation is required to repay the Bank any amounts drawn by the Trustee under the Letter of Credit and grants to the Bank certain liens and security interests in real property and other collateral of Corporation. Except for “Corporation” and “Reimbursement Agreement”, capitalized terms used in thisSection and not otherwise defined shall have the meanings given to such terms in the ReimbursementAgreement.

The Reimbursement Agreement and the other documents, agreements and instruments, includingwithout limitation, the Deed of Trust, secure Corporation’s obligations to the Bank and do not secure theBonds or the obligations of Corporation to the Trustee or the Holders of the Bonds, nor do they inure tothe benefit of the Trustee or the Holders of the Bonds.

The Bank will issue the Letter of Credit pursuant to the terms and provisions of theReimbursement Agreement. Further, the Reimbursement Agreement requires Corporation to take allnecessary action to cause the redemption of portions of the Bonds on certain dates specified in theReimbursement Agreement in the principal amounts set forth therein.

Corporation’s redemption obligations described in the Reimbursement Agreement are

solely for the benefit of the Bank and may be waived or modified by the Bank in its sole and

absolute discretion in accordance with the terms of the Reimbursement Agreement.

The Reimbursement Agreement contains various affirmative and negative covenants and eventsof default, including, among other things, covenants regarding the following: pension plan regulatorymatters; further assurances; inspection of property, books and records; notices; compliance with Related

Documents; tax covenants; litigation; financial statements; financial condition; maintenance of propertyand insurance; merger, consolidation and transfer of assets; taxes and other obligations; distributions;maintenance of facilities; accreditation and affiliations; other indebtedness; guaranties; loans, advancesand investments; pledge of assets; and ground leases. In addition, pursuant to the ReimbursementAgreement, Corporation will, among other things, (i) preserve, renew and keep in full force and effect allrights, privileges, contracts and leases necessary or useful for the normal conduct of its businesses, (ii)comply with all applicable laws, (iii) conduct its business in an orderly manner without voluntaryinterruption and (iv) remain qualified to do business in each jurisdiction where such qualification isrequired.

Events of Default . The following is a summary of certain actions or events, the occurrence of any of which, among others, constitutes an Event of Default under the Reimbursement Agreement:

(a) Corporation shall fail to pay when due any amount owing under the ReimbursementAgreement or any Related Document or to deposit with Bank any amount specified in the ReimbursementAgreement when due to be deposited; or

(b) Any representation or warranty made by Corporation in the Reimbursement Agreementor in any Related Document or in any certificate, financial or other statement furnished by Corporation pursuant to the Reimbursement Agreement shall prove to have been untrue or incomplete in any materialrespect when made; or



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(c) Corporation shall fail to maintain its Accreditation or Affiliation; or

(d) Corporation shall fail to perform or observe any material term, covenant or agreement onits part to be performed or observed hereunder or under any Related Document (other than as specified in paragraphs (a), (b) or (c) above), and with respect to any such default which by its nature can be cured,such default shall continue for a period of twenty (20) days from its occurrence; or

(e) (i) Any impairment of the rights of Bank in the Real Property Collateral, including,without limitation, any attachment or like levy on the Real Property Collateral; or (ii) Bank, in good faith,reasonably believes any or all of the Real Property Collateral to be in danger of misuse, dissipation,commingling, loss, theft, damage or destruction, or otherwise in jeopardy or unsatisfactory in character or value; or

(f) Any material provision of the Reimbursement Agreement or any Related Document shallat any time for any reason cease to be in full force and effect or valid and binding on Corporation, or shall be declared to be null and void, or the validity or enforceability thereof shall be contested by Corporationor Corporation shall deny that it has any further liability or obligation under the ReimbursementAgreement or any Related Document, and such event shall have or be likely to have a material adverse

effect on the condition of Corporation or its ability to perform its obligations under the ReimbursementAgreement and the Related Documents; or

(g) Corporation shall: (i) apply for or consent to the appointment of a receiver, trustee,custodian, liquidator or the like of itself or any of its property; or (ii) admit in writing its inability to payits debts generally as they become due; or (iii) make a general assignment for the benefit of creditors, (iv) be adjudicated bankrupt or insolvent; or (v) commence a voluntary case under the Bankruptcy Code or file a voluntary petition or answer seeking reorganization, an arrangement with creditors or an order for relief or seeking to take advantage of any insolvency law or file an answer admitting the materialallegations of a petition filed against it in any bankruptcy, reorganization or insolvency proceeding; or (vi)take any organizational action for the purpose of effecting any of the foregoing; or

(h) If without the application, approval or consent of Corporation, an involuntary case or other proceeding shall be instituted in any court of competent jurisdiction, under the Bankruptcy Code or any law relating to bankruptcy, insolvency, reorganization, or relief of debtors seeking in respect of suchCorporation, an order for relief or an adjudication in bankruptcy, reorganization, dissolution, winding-up,liquidation, a composition or arrangement with creditors, a readjustment of debts, the appointment of atrustee, receiver, liquidator or custodian or the like of such Corporation, or of all or any substantial part of the assets of such Corporation, or other like relief in respect thereof under any bankruptcy or insolvencylaw; or

(i) (i) any defined event of default occurs under any Related Document; or (ii) Corporation(A) fails to make any payment when due (whether by scheduled maturity, acceleration or otherwise) inrespect of any indebtedness with an aggregate outstanding principal amount greater than $500,000,

whether direct or contingent (other than indebtedness under the Reimbursement Agreement) or (B) failsto observe or perform any other agreement or condition relating to any such indebtedness or contained inany instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effectof which default or other event is to cause, or to permit any holder of such indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to cause such indebtedness to be demanded or to becomedue or to be repurchased or redeemed prior to its stated maturity; or



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(j) There shall exist or occur any event or condition which Bank in good faith believesimpairs, or is substantially likely to impair, the prospect of payment or performance by Corporation of itsobligations under the Reimbursement Agreement or any of the Related Documents; or

(k) (i) The recording of any claim of lien against the Real Property Collateral other thanPermitted Real Property Liens, or the service on Bank of any bonded stop notice relating to the Project

and the continuance of such claim of lien twenty (20) days after notice of same to Corporation withoutdischarge, satisfaction or provision for payment being made by Corporation in a reasonable manner satisfactory to Bank; or (ii) the condemnation, seizure or appropriation of, or occurrence of an uninsuredcasualty with respect to any material portion of the Real Property Collateral or any other assets of theCorporation; or (iii) the sequestration or attachment of, or any levy or execution upon any portion of theReal Property Collateral; or

(l) The sale, transfer, hypothecation, assignment or encumbrance, whether voluntary,involuntary or by operation of law, other than as expressly allowed by the Reimbursement Agreement,without Bank’s prior written consent, of all or any part of or interest in the Real Property Collateral or amaterial part of the assets of Corporation; or

(m) The failure of the Deed of Trust as modified in writing from time to time, to be valid first priority lien, subject to Permitted Real Property Liens, upon any portion of the Real Property Collateral.

Upon the occurrence of an Event of Default under the Reimbursement Agreement, the Bank maydeclare all amounts payable by Corporation under the Reimbursement Agreement to be immediately dueand payable, without presentment, demand, protest or other notice or formality of any kind; provided thatupon the occurrence of an Event of Default described in (g) or (h) above, such acceleration shallautomatically occur.

In either case, the Bank may also: (a) require that Corporation immediately prepay to the Bank inimmediately available funds an amount equal to the undrawn balance of the Letter of Credit (such amountto be held by the Bank as collateral security for the Reimbursement Obligations); provided, however, that

upon the occurrence of an Event of Default described in (g) or (h) above, such prepayment obligationsshall automatically become immediately due and payable; (b) give notice of the occurrence of an Event of Default to the Trustee and direct the Trustee to cause a mandatory tender for purchase of the Bonds inaccordance with the requirements of the Indenture; (c) give notice of the occurrence of an Event of Default to the Trustee and direct the Trustee to accelerate the Bonds or take such actions as the Bank maydirect, under the Indenture or otherwise; (d) pursue any rights or remedies that the Bank may have under the Reimbursement Agreement or any of the Related Documents; (e) pursue any other rights or remediesavailable to the Bank at law or in equity; and (f) exercise all or any combination of the remedies providedfor in this paragraph. Notice to the Trustee by the Bank of any Event of Default under theReimbursement Agreement constitutes an Event of Default under the Indenture which, at the request of the Bank, will result in acceleration of the maturity of the Bonds.

Corporation and the Bank may amend the Reimbursement Agreement at any time withoutthe consent of the Trustee, the Holders of the Bonds or any other person and any such amendment

could amend the conditions under which Corporation would be in default thereunder and thereby

increase the ability of the Bank to give notices which could result in, among other things, an Event

of Default under the Indenture.



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THE AUTHORITY

Under Title 1, Division 7, Chapter 5 of the California Government Code (the “JPA Act”), certainCalifornia cities, counties and special districts have entered into a joint exercise of powers agreement (the“JPA Agreement”) forming the Authority for the purpose of exercising to powers common to themembers and to exercise the additional powers granted to the Authority by the JPA Act and any other

applicable provisions of California law. Under the JPA Agreement, the Authority may issue bonds, notesor any other evidence of indebtedness, for any purpose or activity permitted under the JPA Act or anyother applicable law.

The Authority may sell and deliver obligations other than the Bonds. These obligations will besecured by instruments separate and apart from the Bonds, Indenture and Agreement and the holders of such other obligations of the Authority will have no claim on the security for the Bonds. Likewise, theHolder of the Bonds will have no claim on the security for such other obligations that may be issued bythe Authority.

Neither the Authority nor its independent contractors has furnished, reviewed, investigated or verified the information contained in this Official Statement other than the information contained in this

section and the section entitled “ABSENCE OF MATERIAL LITIGATION — The Authority.” TheAuthority does not and will not in the future monitor the financial condition of the Corporation or otherwise monitor payment of the Bonds or compliance with the documents relating thereto.

BONDHOLDERS’ RISKS

The purchase and ownership of the Bonds involves investment risks that are discussed throughoutthis Official Statement. Each prospective purchaser of the Bonds (or a beneficial ownership interesttherein) should evaluate all of the information presented in this Official Statement. This section onBondholders’ Risks focuses primarily on the general risks associated with the Bonds; whereasAPPENDIX A describes the Corporation specifically. These provisions should be read together. Someof the risks that could affect the Bonds and the future financial condition of the Corporation are described

below. This description of various risks is not, and is not intended to be, exhaustive.

General

Except as noted under “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS,” theBonds are payable solely from and secured by the Authority’s pledge of Revenues. No representation or assurance can be made that revenues will be realized by the Corporation in amounts sufficient to make the payments under the Loan Agreements and, thus, to pay principal of, redemption premium and interest onthe Bonds.

Future economic and other conditions, including, without limitation, the loss by the Corporationof its accreditation, destruction or loss of a substantial portion of the Corporation’s facilities, litigation,competition, reduction of the amounts received by the Corporation through fundraising efforts or researchgrants, change in federal reimbursement programs, reduction in value of endowment funds, theoccurrence of national or international calamities, changes in the perceived value of the Corporation andthe ability of the Corporation’s faculty and administration, may adversely affect the revenues of theCorporation. There can be no assurance that the Corporation’s revenues will not decrease.



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The Bank

There can be no assurance that the credit ratings of the Bank will continue at its current level. Adecline in the credit rating of the Bank or the issuer of an Alternate Letter of Credit could result in adecline in any rating that may be assigned to the Bonds from time to time. Such a decline could in turnaffect the market price and the marketability of the Bonds. For information concerning the Bank, see

“THE BANK.”

Enforceability of the Letter of Credit

Section 105 of the Bankruptcy Code empowers a bankruptcy court to issue such orders as arenecessary or appropriate to carry out the provisions of the Bankruptcy Code. Court decisions discussingthe enforceability of letters of credit indicate that it is possible that a bankruptcy court acting pursuant toSection 105 or other equitable powers under the Bankruptcy Code could enjoin a drawing by the Trusteeunder the Letter of Credit or the payment by the Trustee to the Bondholders of amounts drawn under theLetter of Credit under various circumstances, including the bankruptcy or insolvency of, or a similar event with respect to, the Corporation or any affiliate of the Corporation.

The Letter of Credit also will not, and are not intended to, protect Bondholders from eventsaffecting the Bank or its creditworthiness, including, without limitation, the bankruptcy or insolvency of the Bank.

Tax-Exempt Status and Other Tax Matters

Maintenance of the Tax-Exempt Status of the Corporation. The tax-exempt status of the Bonds presently depends upon maintenance by the Corporation of its status as an organization described insection 501(c)(3) of the Code. The maintenance of such status is contingent on compliance with generalrules promulgated in the Code and related regulations regarding the organization and operation of tax-exempt entities, including their operation for charitable and other permissible purposes and their avoidance of transactions that may cause their earnings or assets to inure to the benefit of private

individuals. As these general principles were developed primarily for public charities that do not conductlarge-scale technical operations and business activities, they often do not adequately address the myriadof operations and transactions entered into by a modern education organization.

The Internal Revenue Service (“IRS”) has periodically conducted audit and other enforcementactivity regarding tax-exempt organizations. Such audits are conducted by teams of revenue agents, oftentake years to complete and require the expenditure of significant staff time by both the IRS and taxpayers.These audits examine a wide range of possible issues, including tax-exempt bond financing, activities of partnerships and joint ventures, retirement plans and employee benefits, employment taxes, politicalcontributions and other matters.

If the IRS were to find that the Corporation has participated in activities in violation of certainregulations or rulings, the tax-exempt status of the Corporation could be in jeopardy. Although the IRShas not frequently revoked the 501(c)(3) tax-exempt status of nonprofit corporations, it could do so in thefuture. Loss of tax-exempt status by the Corporation potentially could result in loss of tax exemption of the Bonds and of other tax-exempt debt of the Corporation and defaults in covenants regarding the Bondsand other related tax-exempt debt and obligations likely would be triggered. Loss of tax-exempt statusalso could result in substantial tax liabilities on income of the Corporation. For these reasons, loss of tax-exempt status of the Corporation could have a material adverse effect on the financial condition of theCorporation.



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In some cases, the IRS has imposed substantial monetary penalties on tax-exempt organizationsin lieu of revoking their tax-exempt status. In those cases, the IRS and exempt organizations entered intosettlement agreements requiring the to make substantial payments to the IRS. Given the size of theCorporation, the wide range of complex transactions entered into by the Corporation, and potentialexemption risks, the Corporation could be at risk for incurring monetary and other liabilities imposed bythe IRS.

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

State and Local Tax Exemption. It is likely that the loss by the Corporation of federal taxexemption would also trigger a challenge to its state tax-exemption. Depending on the circumstances,such event could be material and adverse.

It is not possible to predict the scope or effect of future legislative or regulatory actions withrespect to taxation of nonprofit corporations. There can be no assurance that future changes in the lawsand regulations of state or local governments will not materially adversely affect the financial conditionof the Corporation by requiring payment of income, local property or other taxes.

Unrelated Business Income. The IRS and state and local taxing authorities have beenundertaking audits and reviews of the operations of tax-exempt hospitals with respect to their exempt

activities which generate unrelated business taxable income (“UBTI”). The Corporation participates inactivities which generate UBTI. Management believes it has properly accounted for and reported UBTI;nevertheless, an investigation or audit could lead to a challenge which could result in taxes, interest and penalties with respect to unreported UBTI and in some cases could ultimately affect the tax-exempt statusof the Corporation as well as the exclusion from gross income for federal income tax purposes of theinterest payable on the Bonds and other tax-exempt debt of the Corporation.

Maintenance of Tax-Exempt Status of Interest on the Bonds. The Code imposes a number of requirements that must be satisfied for interest on state and local obligations, such as the Bonds, to beexcludable from gross income for federal income tax purposes. These requirements include limitationson the use of bond proceeds, limitations on the investment earnings of bond proceeds prior to expenditure,a requirement that certain investment earnings on bond proceeds be paid periodically to the United States

Treasury, and a requirement that the Authority files an information report with the IRS. The Corporationhas covenanted in the Loan Agreement that it will comply with such requirements. Future failure by theCorporation to comply with the requirements stated in the Code and related regulations, rulings and policies may result in the treatment of interest on the Bonds as taxable, retroactively to the date of issuance. The Authority has covenanted in the Indenture that it will not take any action or refrain fromtaking any action that would cause interest on the Bonds to be included in gross income for federalincome tax purposes.



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IRS officials have recently indicated that more resources will be invested in audits of tax-exempt bonds in the charitable organization sector, with specific reviews of private use. Record retention, whichthe IRS has particularly emphasized, is likely to be an object of scrutiny. The IRS recently sent severalhundred post-issuance compliance questionnaires to nonprofit corporations that have previously borrowedon a tax-exempt basis. The questions pertain to post-issuance compliance relating to the Corporation’s (i)record retention, (ii) qualified use of bond-financed property, (iii) arbitrage yield restriction and rebate

requirements, (iv) debt management policies and (v) voluntary compliance and education. IRSrepresentatives indicate that after analyzing responses from the first wave of responses, thousands morewill be sent.

Although the Corporation believes that its expenditure and investment of bond proceeds, use of property financed and refinanced with tax-exempt debt and record retention practices have complied withall applicable laws and regulations, there can be no assurance that the issuance of surveys will not lead toan IRS examination that could adversely affect the market value of the Bonds or of other outstanding tax-exempt indebtedness of the Corporation. The Bonds or other tax-exempt obligations issued for the benefit of the Corporation may be, from time to time, subject to examinations by the IRS. TheCorporation believes that the Bonds and other tax-exempt obligations issued for its benefit properlycomply with the tax laws. In addition, Bond Counsel will render an opinion with respect to the tax-

exempt status of the Bonds, as described under the caption “TAX MATTERS.” No ruling with respect tothe tax-exempt status of the Bonds has been or will be sought from the IRS, however, and opinions of counsel are not binding on the IRS or the courts.

First Amendment Issues

The Corporation operates a religious oriented educational institution and proceeds of the Bondswill be used to finance and refinance the educational related facilities operated by the Corporation. TheCorporation has covenanted that no portion of the proceeds of the Bonds shall be used to finance andrefinance any facility, place or building used or to be used for sectarian instruction or study or as a placefor devotional activities or religious worship or in connection with any part of the programs of any schoolor department of divinity for the duration of the useful life of the project financed with the proceeds of the

Bonds.

The “Establishment Clause” of the First Amendment to the United States Constitution has beeninterpreted by some courts to restrict public financial assistance to certain sectarian institutions generallyreferred to as “pervasively sectarian” institutions. The California Constitution also contains certain provisions that no governmental entity can use public funds to aid any church, sectarian society or for anysectarian purpose. The United State Supreme Court has not directly addressed the question of whether the Establishment Clause restricts the lending to “pervasively sectarian” institutions of the proceeds of atax-exempt of taxable bond issue involving no expenditure of public funds. However, the CaliforniaSupreme Court has recently addressed the question of whether the California Constitution prohibits thefinancing by an agency of the State of California on behalf of a sectarian institution or the financing of a projects or a sectarian institution involving no expenditure of public funds. The action entitled California

Statewide Communities Development Authority v. All Persons Interested in the Validity of a PurchaseAgreement, 40 Cal. 4th 788 (2007) sets forth certain criteria under which bonds may be issued to benefit asectarian institution, such as the Corporation, without violation of the California Constitution.

If a court were to find the issuance of the Bonds and the use of the proceeds to finance or refinance the Project described in this Official Statement unconstitutional under the federal and/or California Constitution, and if such an adverse decision were to become final, the Bonds could bedeclared unenforceable and/or void. Such an adverse decision could become final if the Corporation doesnot appeal the adverse decision or if the Corporation were unsuccessful upon appeal because the adverse



28

decision is upheld by the United States or California Supreme Court or because the United States or California Supreme Court declined to review the adverse ruling or such review is not sought. In the eventof a final adverse decision, any interest paid on the Bonds could become includable in gross income for federal and state tax purposes.

The Authority is not obligated to appeal an adverse ruling with respect to Bonds or any

determination that the interest paid on the Bonds is includable in gross income for federal or state tax purposes.

Seismic Risks

The Corporation is located in a seismically active region of Southern California. The occurrenceof severe seismic activity could result in substantial damage to one or more of the Corporation’s facilities,which could adversely affect the ability of the Corporation to operate and/or to make the payments due onthe Bonds. No seismic review of the buildings included in the Corporation’s real property has beenundertaken, and the Corporation carries no earthquake insurance. See APPENDIX A — “INFORMATION REGARDING LA SIERRA UNIVERSITY — Insurance.” If seismic activity causedsignificant damage to the Corporation’s real property, the ability of the Corporation to continue its

operations could be adversely affected and the security for the Bonds could be impaired. Neither theCorporation nor the Authority is able to predict whether or to what extent these effects could occur.

Investments

The Corporation has significant holdings in a broad range of investments, including real estate,mortgage-related and venture capital alternative investments. Market fluctuations may affect the value of those investments and those fluctuations may be and historically have been at times material. For adiscussion of the Corporation’s investments, see APPENDIX A – “INFORMATION REGARDING LASIERRA UNIVERSITY – Management’s Discussion of Financial Operations – Investment Policy andPerformance.”

Risks Related to Outstanding Variable Rate Obligations

Interest rates on the Bonds could rise. The interest rates are adjusted on a weekly basis while theBonds are bearing interest at Weekly Interest Rate. Although the Bonds may be converted to bear interestat a Term Interest Rate, this protection against rising interest rates is limited because the Corporationwould continue to pay interest at the variable rate until permitted to convert the interest rates pursuant tothe Indenture.

Enforceability of Remedies

The remedies available to the Trustee or the Bondholders upon an Event of Default under theIndenture or Loan Agreement are in many respects dependent upon judicial actions which are oftensubject to discretion and delay, and such remedies may not be readily available or may be limited. In particular, under the United States Bankruptcy Code, a bankruptcy case may be filed by the Authority, byor against the Corporation or by or against any of their affiliates. In general, the filing of any such petition operates as a stay against enforcement of the terms of the agreements to which the bankrupt entityis a party. The various legal opinions to be delivered concurrently with the Bonds (including BondCounsel’s approving opinion) will be qualified, as to the enforceability of the various legal instruments, by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting therights of creditors generally and by general principles of equity applied in the exercise of judicialdiscretion.



29

ABSENCE OF MATERIAL LITIGATION

The Authority

To the knowledge of the Authority, there is no action, suit, proceeding, inquiry or investigation, atlaw or in equity, before or by any court, governmental agency, public board or body, pending against the

Authority seeking to restrain or enjoin the sale or issuance of the Bonds, or in any way contesting or affecting any proceedings of the Authority taken concerning the sale thereof, the pledge or application of any moneys or security provided for the payment of the Bonds, the validity or enforceability of thedocuments executed by the Authority in connection with the Bonds, the completeness or accuracy of theOfficial Statement or the existence or powers of the Authority relating to the sale of the Bonds.

The Corporation

To the knowledge of the Corporation, there is no action, suit, proceeding, inquiry or investigation,at law or in equity, before or by any court, governmental agency, public board or body, pending againstthe Corporation seeking to restrain or enjoin the sale or issuance of the Bonds, or in any way contesting or affecting any proceedings of the Corporation taken concerning the sale thereof, the pledge or application

of any moneys or security provided for the payment of the Bonds, the validity or enforceability of thedocuments executed by the Corporation in connection with the Bonds, the completeness or accuracy of the Official Statement or the existence or powers of the Corporation relating to the sale of the Bonds.

There is no litigation of any nature now pending against the Corporation or, to the knowledge of the Corporation’s officers, threatened, which, if successful, would materially adversely affect theoperations or financial condition of the Corporation.

INDEPENDENT AUDITOR

The financial statements of the Corporation for the years ended June 30, 2007 and 2006, included

in Appendix B to this Official Statement, have been audited by Ahern • Adcock • Devlin LLP,

independent auditors as stated in their report appearing therein.

RATINGS

Standard & Poor’s Ratings Services, a division of The McGraw-Hill companies, Inc. (“S&P”) hasassigned the Bonds a long-term rating of “AAA” and a short-term rating of “A-1+” with theunderstanding that upon delivery of the Bonds, the Letter of Credit will be executed and delivered to theTrustee by the Bank. Any explanation of the significance of such ratings may only be obtained fromS&P.

There is no assurance that the ratings mentioned above will remain in effect for any given periodof time or that a rating might not be lowered or withdrawn entirely, if in the judgment of S&P,circumstances so warrant. The Authority, the Corporation, and the Underwriter have not undertaken anyresponsibility to bring to the attention of the Bondholders any proposed change in or withdrawal of arating or to oppose any such proposed revision or withdrawal. Any such downward change in or withdrawal of a rating may have an adverse effect on the market price or marketability of the Bonds.

UNDERWRITING

The Authority and the Corporation have entered into a purchase contract with Wells FargoInstitutional Securities, LLC, as Underwriter, pursuant to which the Underwriter has agreed, subject to



30

certain conditions, to purchase the Bonds from the Authority at a purchase price of $24,268,332 (whichrepresents the par amount of the Bonds, less the Underwriter’s discount of $136,668). The Underwriter isobligated under the purchase contract to purchase all of the Bonds if any are purchased. The Bonds may be offered and sold by the Underwriter to certain dealers and others at yields lower than the publicoffering price indicated on the cover hereof, and such public offering price may be changed, from time totime, by the Underwriter.

APPROVAL OF LEGALITY

Certain legal matters incident to the issuance of the Bonds are subject to the approving opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority. A complete copy of the proposedform of Bond Counsel opinion is contained in APPENDIX E hereto. Bond Counsel undertakes noresponsibility for the accuracy, completeness or fairness of this Official Statement. Certain other legalmatters will be passed upon for the Corporation by its counsel, DLA Piper, San Diego, California; for theBank by its counsel, Chapman and Cutler LLP, San Francisco, California; and for the Authority by itscounsel, Squire, Sanders & Dempsey, L.L.P., Los Angeles, California.

TAX MATTERS

In the opinion of Orrick, Herrington & Sutcliffe LLP (“Bond Counsel”), Bond Counsel to theAuthority, based upon an analysis of existing laws, regulations, rulings, and court decisions, andassuming, among other matters, the accuracy of certain representations and compliance with certaincovenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Code”). Bond Counsel is of the further opinionthat interest on the Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included inadjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counselis also of the opinion that interest on the Bonds is exempt from present State of California personalincome taxes. A complete copy of the proposed form of opinion of Bond Counsel is included herein asAPPENDIX E.

Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) (“Premium Bonds”) will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from grossincome for federal income tax purposes. However, the amount of tax-exempt interest received, and aBeneficial Owner’s basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such Beneficial Owner. Beneficial Owners of Premium Bonds shouldconsult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances.

The Code imposes various restrictions, conditions and requirements relating to the exclusion from

gross income for federal income tax purposes of interest on obligations such as the Bonds. The Authorityand the Corporation have made certain representations and covenanted to comply with certain restrictions,conditions and requirements designed to ensure that interest on the Bonds will not be included in federalgross income. Inaccuracy of these representations or failure to comply with these covenants may result ininterest on the Bonds being included in gross income for federal income tax purposes, possibly from thedate of original issuance of the Bonds. The opinion of Bond Counsel assumes the accuracy of theserepresentations and compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring), or any other matters coming to Bond Counsel’s attention after the date of issuance of the Bonds may



31

adversely affect the value of, or the tax status of interest on, the Bonds. Accordingly, the opinion of BondCounsel is not intended to, and may not, be relied upon in connection with any such actions, events or matters.

In addition, Bond Counsel has relied, among other things, on the opinion of DLA Piper, SanDiego, California, Counsel to the Corporation, regarding the current qualification of the Corporation as an

organization described in Section 501(c)(3) of the Internal Revenue Code of 1986 (the “Code”) and theuse of the facilities financed with the proceeds of the Bonds in activities that are not considered unrelatedtrade or business activities of the Corporation within the meaning of Section 513 of the Code. We notethat such opinion is subject to a number of qualifications and limitations. Failure of the Corporation to beorganized and operated in accordance with the Internal Revenue Service’s requirements for themaintenance of its status as an organization described in Section 501(c)(3) of the Code, or use of thefacilities financed or refinanced with the proceeds of the Bonds in activities that are considered unrelatedtrade or business activities of the Corporation within the meaning of Section 513 of the Code, may resultin interest payable with respect to the Bonds being included in federal gross income, possibly from thedate of issuance of the Bonds.

Although Bond Counsel is of the opinion that interest on the Bonds is excluded from gross

income for federal income tax purposes and interest on the Bonds is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of interest on, the Bondsmay otherwise affect a Beneficial Owner’s federal, state or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the Beneficial Owner or theBeneficial Owner’s other items of income or deduction. Bond Counsel expresses no opinion regardingany such other tax consequences.

Future legislative proposals, if enacted into law, clarification of the Code or court decisions, maycause interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to be subjectto or exempted from state income taxation, or otherwise prevent Beneficial Owners from realizing the fullcurrent benefit of the tax status of such interest. The introduction or enactment of any such futurelegislative proposals or clarification of the Code or court decisions may also affect the market price for, or

marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisorsregarding any pending or proposed federal or state tax legislation, regulations or litigation, as to whichBond Counsel expresses no opinion.

The opinion of Bond Counsel is based on current legal authority, covers certain matters notdirectly addressed by such authorities, and represents Bond Counsel’s judgment as to the proper treatmentof the Bonds for federal income tax purposes. It is not binding on the IRS or the courts. Furthermore,Bond Counsel cannot give and has not given any opinion or assurance about the future activities of theAuthority or the Corporation, or about the effect of future changes in the Code, the applicable regulations,the interpretation thereof or the enforcement thereof by the IRS. The Authority and the Corporation havecovenanted, however, to comply with the requirements of the Code.

Bond Counsel’s engagement with respect to the Bonds ends with the issuance of the Bonds, and,unless separately engaged, Bond Counsel is not obligated to defend the Authority, the Corporation or theBeneficial Owners regarding the tax-exempt status of the Bonds in the event of an audit examination bythe IRS. Under current procedures, parties other than the Authority, the Corporation and their appointedcounsel, including the Beneficial Owners, would have little, if any, right to participate in the auditexamination process. Moreover, because achieving judicial review in connection with an auditexamination of tax exempt bonds is difficult, obtaining an independent review of IRS positions withwhich the Authority or the Corporation legitimately disagrees, may not be practicable. Any action of theIRS, including but not limited to selection of the Bonds for audit, or the course or result of such audit, or



32

an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, theBonds, and may cause the Authority, the Corporation or the Beneficial Owners to incur significantexpense.

CONTINUING DISCLOSURE

The Authority has determined that no financial or operating data concerning the Authority ismaterial to an evaluation of the offering of the Bonds or to any decision to purchase, hold or sell Bondsand the Authority will not provide any such information. The Corporation has undertaken allresponsibilities for any continuing disclosure to Bondholders as described below, and the Authority shallhave no liability to the Holders of the Bonds or any other person with respect to Rule 15c2-12 promulgated by the Securities and Exchange Commission (the “Rule”).

The Corporation has not undertaken any initial continuing disclosure obligations with respect tothe Bonds. Under the Loan Agreement, the Corporation has agreed to comply with the continuingdisclosure requirements of the Rule for the Bonds whenever a Term Interest Rate Period of longer thannine months is in effect or if otherwise required by the Rule.

MISCELLANEOUS

All quotations from and summaries and explanations of the Indenture, the Loan Agreement, theLetter of Credit and the Reimbursement Agreement and of other documents and of statutes containedherein do not purport to be complete, and reference is made to said documents and statutes for full andcomplete statements of their provisions. A copy of the Indenture, the Loan Agreement, the Letter of Credit and the Reimbursement Agreement may be obtained upon request directed to the Underwriter or the Corporation.

Any statements in this Official Statement involving matters of opinion are intended as such andnot as representations of fact. This Official Statement is not to be construed as a contract or agreement between the Authority or the Corporation and Holders of any of the Bonds.



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The Authority has approved the use and distribution of this Official Statement The execution anddelivery of this Official Statement by the Corporation has been duly authorized by the Corporation.

LA SIERRA UNIVERSITY

By: /s/ Randal WisbeyPresident

By: /s/ David GeriguisVice President



APPENDIX A

INFORMATION CONCERNING LA SIERRA UNIVERSITY

Information in this APPENDIX A has been provided by La Sierra University



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INTRODUCTION ................................................................................................................................... A-1

General ....................................................................................................................................... A-1

La Sierra University Today ......................................................................................................... A-1

Membership ................................................................................................................................ A-1

Board of Trustees ........................................................................................................................ A-2

Management ................................................................................................................................ A-4

Faculty ....................................................................................................................................... A-5

Academic Programs .................................................................................................................... A-5

Accreditation ............................................................................................................................... A-7

FINANCIAL CONDITION OF LA SIERRA UNIVERSITY ................................................................ A-8

Statement of Operations .............................................................................................................. A-8

Fund Raising ............................................................................................................................. A-13

Endowment ............................................................................................................................... A-13Ground Leases .......................................................................................................................... A-14

Plant Properties ......................................................................................................................... A-14

Commitments and Contingencies ............................................................................................. A-15

Risk Management ..................................................................................................................... A-16

Litigation ................................................................................................................................... A-16



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INFORMATION CONCERNING LA SIERRA UNIVERSITY

INTRODUCTION

General

La Sierra University (“La Sierra”) is a Seventh-day Adventist coeducational institution that beganas La Sierra Academy in 1922 on acreage that had been part of an 1846 Mexican land grant known asRancho La Sierra. It is now part of the City of Riverside. La Sierra Academy become La Sierra Collegein 1939.

In 1967, La Sierra College was merged with Loma Linda University as its College of Arts andSciences. The School of Education was organized in 1968, followed in 1986 by the School of Businessand the Evening Adult Degree Program, and in 1987 by the School of Religion.

The Loma Linda and La Sierra campuses of Loma Linda University were reorganized intoseparate institutions in 1990, and four schools (the College of Arts and Sciences, the School of Education,the School of Business and Management, and the School of Religion) and the Evening Adult Degree

Program became La Sierra University.

La Sierra University Today

La Sierra is a Christian coeducational institution located in inland Southern California and is partof the Seventh-day Adventist system of higher education. La Sierra enrolls approximately 2,000 studentsin its College of Arts and Sciences and three professional schools.

La Sierra offers graduate and undergraduate curricula in applied and liberal arts and sciences, business and management, religion, and programs for professional education in fulfillment of requirements for teaching credentials.

La Sierra Library, Museums, Observatory, Arboretum, Brandstater Gallery, MICOL computinglaboratory, Learning Support and Testing Center, Hancock and Stahl Centers, and other campus resourcesfacilitate intellectual pursuits. Physical fitness is encouraged on campus by such activities as intramuraland varsity sports, physical education courses, and by three swimming pools, a fitness center, track,tennis, basketball, and volleyball courts.

La Sierra’s campus is located at 4500 Riverwalk Parkway, Riverside, California, and is situatedon 300 acres owned by La Sierra.

Membership

La Sierra is a membership corporation under the California non-profit corporations code. Themembers, identified in the Bylaws of La Sierra as the “Constituent Membership”, have the power to elect

the Board of Trustees and exercise the other powers of members of a non-profit corporation under theCalifornia Corporations Code.

The Bylaws of La Sierra provide that the Constituent Membership shall all be members of theSeventh-day Adventist Church (except for up to ten percent (10%) of the membership of the Board of Trustees) and consist of the following:



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(a) The members of the Executive Committee of the Pacific Union Conference of Seventh-day Adventists;

(b) Two (2) representatives from the Arizona Conference and three (3) representatives each,from the Southeastern California and Southern California conferences;

(c) Members of the Board of Trustees of La Sierra;

(d) The vice presidents and/or provost, chief financial officer, chief student life officer, chief development officer, and chief enrollment services officer of the University and the deans of the Collegeand Schools of La Sierra;

(e) The chair plus four additional representatives elected by the Academic Senate, and thechair plus two additional representatives elected by the Staff Council;

(f) Two elected representatives of the Student Association;

(g) The president of the alumni organization of La Sierra, the president-elect, and the alumni

coordinators for each academic entity of La Sierra.

Additional constituent members may be seated by a two-thirds (2/3) vote of the constituentmembers as defined above.

The Constituent Membership constitutes a nominating committee from among its membership toname individuals to be considered for positions on the Board of Trustees of La Sierra. This nominatingcommittee includes in its consideration the names of persons suggested by the Membership Committee of the Board of Trustees of La Sierra.

Board of Trustees

The activities, business, and affairs of La Sierra is managed and all corporate powers areexercised by, or under the direction of, the Board of Trustees. The Board of Trustees has a votingmembership of twenty-three (23), at least ninety percent (90%) of whom are required by the Bylaws to bemembers of the Seventh-day Adventist Church.

The Bylaws define the appointment, function and responsibilities of the Board of Trustees. TheBoard shall have a membership of twenty-three members. Of the twenty-three, eight are appointed due to positions within the Pacific Union Conference of Seventh-day Adventists, the president of La Sierra is anappointed trustee, and fourteen (14) other persons are elected by the Constituent Membership to no morethan two consecutive six-year terms unless the Constituent Membership approves an exception uponspecial request by the Board of Trustees. At least nine (9) of the trustees shall not be employed by anyentity of the Seventh-day Adventist Church.

The Board normally meets three times a year and has four standing committees including theAcademic Programs and Personnel Committee; Finance, Budget and Audit Committee; Development andMembership Committee; and Student Affairs Committee.



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As of July 1, 2008, the members of the Board of Trustees and their primary affiliations are asfollows:

Ricardo Graham, D.Min., Chair President

Pacific Union Conference of Seventh-day

Adventists (SDA)Westlake Village, California

Judy St. John, C.P.A., Vice Chair Steele & St. John, LLP

Thousand Oaks, California Randal R. Wisbey, D.Min., Secretary

President, La Sierra University

Riverside, California

Tony Anobile, M.A. President

Arizona Conference of SDA

Scottsdale, Arizona

Theodore BensonTreasurer

Pacific Union Conference of SDA

Westlake Village, CaliforniaKelly Bock, Ph.D.

Director of Education

Pacific Union Conference of SDAWestlake Village, California

Alvaro Bolivar, M.D. Private Surgical Practice

Chief of Surgical Services

Community Hospital of

San Bernardino, CaliforniaLarry L. Caviness, M.Div.

President

Southern CA Conference of SDA

Glendale, California

Henry Coil, J.D. Retired Businessman, Community

Leader

Consultant to the President/CEO

Tilden-Coil Constructors, Inc.


Leonard Darnell, B.S.

Businessman Redlands, California

Lowell Hanks, M.H.A. Executive Director

Medicine Education & Research Foundation

San Diego, California

Karen Hansberger, M.D. Private Medical Practice

Loma Linda, CaliforniaDonald Kanen, B.A.

Owner

Rocky Mountain Healthcare

Management, Inc.

Alamosa, Colorado

Carla Lidner Baum, D.D.S., M.S. Dentist and Community Volunteer


Shelia Marshall-McLean, M.F.C.T. Private Marriage, Family, and Child

Therapy Practice

Corona, CaliforniaGerald McIntosh, M.P.A.

Entrepreneur, Business Consultant

Houston, Texas

Bradford Newton, D.Min.Secretary

Pacific Union Conference of SDA

Westlake Village, CaliforniaDouglas Nies, Ph.D.

Private Psychology Practice

Glendale, California

Gerald Penick, M.A

President Southeastern CA Conference of SDA


Kathryn Proffitt, R.D.H. Businesswoman and former United

States Ambassador to Malta

Fountain Hills, Arizona

Marta Kalbermatter Tooma, D.D.S. Philanthropist and Dentist

Laguna Beach, California Arnold Trujillo, M.A.

Vice President

Pacific Union Conference of SDAWestlake Village, California

Ronald Zane, D.D.S. Retired Dentist




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Management

The following table sets forth the names of the six principal executive officers of La Sierra, alongwith their positions and tenure in office. A brief statement of the duties and background of each of theofficers appears following the table.

Name Position Position

Since

Randal R. Wisbey, D.Min. President and Chief Executive Officer 2007Warren C. Trenchard, Ph.D. Provost 2004David A. Geriguis, MBA Vice President for Financial Administration 2001Jeffry M. Kaatz, DMA Vice President for Advancement 2001Yamileth Bazan, MA Vice President for Student Life 2007David R. Lofthouse, BS Vice President for Enrollment 2007

Randal R. Wisbey, President and Chief Executive Officer of La Sierra and a member of its Boardof Trustees, is responsible for the overall operations of La Sierra. While La Sierra traces its history as an

educational institution back to 1922, Dr. Wisbey became its third president in its 18-year history since it became an independent institution once again in 1990. He succeeds Lawrence T. Geraty, who served asPresident from 1993 to 2007, and Fritz Guy, who served from 1990 to 1993. Dr. Wisbey received hisdoctorate in 1990 from Wesley Theological Seminary in Washington, DC. Prior to joining La Sierra, Dr.Wisbey served as president of Columbia Union College, Takoma Park, MD, for 7 years and CanadianUniversity College in Western Canada for two years.

Warren C. Trenchard, Provost of La Sierra, serves as the chief academic officer and the chief operating officer. In this role, Dr. Trenchard carries broad responsibility for the academic programs andensures the fulfillment of La Sierra’s academic mission and plans. Dr. Trenchard serves as a member of the Academic Programs and Personnel Committee of the Board of Trustees. Dr. Trenchard, who receivedthe Doctor of Philosophy degree from La Sierra of Chicago in 1981, was appointed Provost in July 2004.

He had previously served La Sierra as Senior Assistant to the President and Professor in the School of Religion. Prior to coming to La Sierra, Dr. Trenchard served as Vice President for AcademicAdministration at Canadian University College in Alberta, Canada.

David A. Geriguis, Vice President for Financial Administration of La Sierra, is responsible for the management of financial and operational functions of La Sierra, including accounting, investmentmanagement, purchasing functions, human resources, facilities management, student financial services,and business operations. He serves as a member of the Finance, Budget and Audit Committee of theBoard of Trustees. Mr. Geriguis received his MBA degree from California State University in 1996. Mr.Geriguis came to La Sierra in 1993 after spending his earlier career in the for-profit world culminated byworking as the U.S. CFO of a multinational corporation.

Jeffry M. Kaatz, Vice President for Advancement of La Sierra, is responsible for La Sierra’sfundraising efforts, alumni relations, internal and external publications, and media relations. Dr. Kaatzserves as a member of the Development Committee of the Board of Trustees. He holds a bachelor degreefrom Loma Linda University and a masters and doctorate degree from La Sierra of Southern California.He joined La Sierra in 1988 as an Assistant Professor and Chair for the Department of Music.

Yamileth Bazan, Vice President for Student Life of La Sierra, is responsible in helping studentssucceed academically as she makes sure the services provided to La Sierra students stay relevant to achanging student population. Ms. Bazan oversees all student services and activities, recreational sports,



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residential life, university ministry, and campus security. Ms. Bazan is a member of the Student AffairsCommittee of the Board of Trustees. She received a Masters of Arts degree from La Sierra’s School of Education in 2001. Prior to joining La Sierra, Ms. Bazan was Associate Youth Director for theSoutheastern California Conference of Seventh-day Adventists.

David R. Lofthouse, Vice President for Enrollment of La Sierra, is responsible for working with a

team of counselors to recruit and admit eligible students to La Sierra. Mr. Lofthouse received a Bachelor of Science degree with emphasis in Communications from Andrews University, Berrien Springs,Michigan. Mr. Lofthouse is a member of the Student Affairs Committee of the Board of Trustees. Prior to joining La Sierra, he was the Dean for Enrollment Management at Kettering College of Medical Arts inKettering, Ohio.

Faculty

The following table reflects the number of full-time professors, associate professors, and assistant professors and instructors for the past five academic years as of the Fall Quarter for such academic year.

FACULTY SUMMARY

Fall

Quarter Professors Associate

Professors Assistant

Professors Instructors Total

2003 39 29 22 2 922004 40 27 28 2 972005 37 27 31 1 962006 35 29 32 4 1002007 38 28 33 0 99

The full-time faculty as of the Fall Quarter of 2007 was comprised of 38 professors, 28 associate professors, and 33 assistant professors. 82 percent of the full time faculty has obtained the Ph.D. or other

terminal degrees appropriate to their disciplines. In addition to its faculty members, La Sierra alsoemployees approximately 209 full-time and 25 part-time staff members.

Academic Programs

As a community of learning that is also a community of faith, La Sierra fulfills its mission byengaging in three kinds of activity: it educates undergraduate and graduate students; it promotes researchin the areas in which it offers instruction; and it contributes to the good of the larger society.

La Sierra educates its students through a broad curriculum of secular subjects in the liberal artsand sciences and in selected professional areas. It promotes research through encouraging and facilitatingoriginal investigation, critical reflection, and scholarly publication. It serves its various communitiesthrough adult education, resource centers, cultural events, non-technical publications, and professionalconsultation. Among these varied activities, La Sierra maintains as a vital concern the education of itsundergraduate students.

Thus La Sierra does the things most other universities do: all information and course work usedto teach secular subjects are neutral with respect to religion. But La Sierra does these things as the fruitionof its Adventist heritage and commitment, even as it welcomes students from all religious and cultural backgrounds. La Sierra’s religious orientation provides a perspective for its educational programs and projects, a motivation for its intellectual vitality and rigor, a framework for its moral values and lifestyle,



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and a basis for its social consciousness and public service. Convinced that God is the author of all truth,La Sierra maintains an atmosphere of freedom and openness for intellectual exploration and expression.

As La Sierra does its work of teaching, research, and service, it strives to exemplify its ideals of educational comprehensiveness, community interaction, and intellectual excellence.

La Sierra is comprised of a college and three schools: the College of Arts and Sciences, theSchool of Business, the School of Education, and the School of Religion, which offer undergraduate,graduate and/or professional programs of study.

College of Arts and Sciences. The College of Arts and Sciences (the “College”) offers 13Bachelor of Arts degrees, 12 Bachelor of Science degrees, a Bachelor of Music degree, a Bachelor of Social Work degree, and a Bachelor of Fine Arts degree.

The College has as its fundamental purpose to provide an environment for learning and personalgrowth that challenges and enables students to develop their intellects and their intellectual skills, toexamine their values, and to mature in character and in Christian commitment. The liberal arts study inwhich a person may carry on an individual search for truth and value is joined in some disciplines to

professional study.

The College is a center for the expression of the values of the liberal arts within La Sierra. TheCollege identifies its mission as an educational institution consistent with the larger mission of theSeventh-day Adventist Church, and in this mission it is not only serving the church but is also one of theways that the church serves. From its graduates is drawn a creative cadre of church workers; its facultyconstitute a resource of talent and information to church and society; and its students and faculty form acommunity for the expression and development of Christian values that ultimately aid in human healing.

Commitment to excellence in scholarship must always be expressed in terms of individual goalsand abilities. The College commitment is to provide, as far as possible, opportunities for persons of varied backgrounds and abilities to develop to their maximum potential. For all students, broadly based general

studies are balanced by depth in a chosen major. College graduates expect to be able to enter professionsadequately prepared by the criteria of the licensing board or accrediting association of their discipline or to be prepared to enter the graduate or professional school of their choice. Within the scope of itsofferings the College designs curricula to meet these needs with distinction.

School of Business. The School of Business (the “SB”) recognizes the importance of businesseducation in cultivating the development of students as whole persons. It educates students—its ownmajors and others—for active citizenship, assisting in their moral development, facilitating their awareness of culture, and helping them to integrate their work and the rest of their lives. It challengesthem to understand work as a potential vocation, a unique responsibility they can receive as a gift fromGod and an opportunity for service.

Service is central to the SB curriculum. By directly assisting people in need, engaging in socialentrepreneurship or community education, and organizing or conducting policy analysis, students come tounderstand the significance of their studies and develop greater empathy.

The SB’s curricula emphasize workplace spirituality, social entrepreneurship, and ethics. Thefocused study of these themes as part of the business curriculum fosters intellectual development andexpands students’ moral and spiritual horizons. Service-learning activities simultaneously express itscommitments to excellence in the School’s areas of distinctive competence and provide students with thechance to develop appropriate habits and skills.



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School of Education. The School of Education’s mission is to prepare individuals for exemplaryservice in the various fields of education to the end that their students may realize their fullest potential inservice to God and humanity. Its goals are:

• to assist pre-service and in-service educational personnel in building a sound philosophy of education that reflects Christian values and ethical principles.

• to enable the student to implement basic principles of education which reflect sound theoriesand practices.

• to motivate investigative curiosity and a desire to participate in the advancement of knowledge.

• to help develop skills in educational research.

Curricula are offered for the degrees: Master of Arts in Teaching, Master of Arts, Master of Artsin Special Education, Specialist in Education, and Doctor of Education. Post baccalaureate (or “fifth-year”) credential programs and a certificate program are also available. The credential programs are

structured to fulfill requirements for teaching and service credentials prescribed by the North AmericanDivision of Seventh-day Adventists Department of Education and/or the California Commission onTeacher Credentialing.

School of Religion. The School of Religion provides general religious studies for all students inevery school of La Sierra. Based upon the central Christian belief in one God, Creator of the world andRedeemer of mankind, these studies explore the Bible as the inspired Word of God, provide instruction inChristian faith, examine the history and mission of the church, and offer guidance for the Christian life.

But beyond the general education needs of La Sierra, the School of Religion also meets academicand professional needs of specialists by providing (a) the major in religious studies, (b) the pre-seminary program, and (c) three graduate programs: the Master of Arts in Religious Studies, the Master of Pastoral

Studies, and the Master of Divinity.

Accreditation

La Sierra is accredited by the Accrediting Commission for Senior Colleges and Universities of the Western Association of Schools and Colleges (WASC).

La Sierra is also accredited by the Adventist Accrediting Association (AAA), the accreditingassociation of Seventh-day Adventist schools, colleges, and universities.

La Sierra is a member of the Council for Higher Education Accreditation, the Association of American Colleges and Universities, the National Association of Independent Colleges and Universities,and the Association of Independent California Colleges and Universities. Approval of programs is

maintained with the California Commission on Teacher Credentialing. The undergraduate program inSocial Work is fully accredited by the Council on Social Work Education, and the National Associationof Schools of Music accredits the music degrees.

Curricula are offered leading to the following degrees: Bachelor of Arts, Bachelor of Fine Arts,Bachelor of Music, Bachelor of Science, Bachelor of Social Work, Master of Arts, Master of BusinessAdministration, Master of Divinity, Master of Pastoral Studies, Specialist in Education, and Doctor of Education.



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FINANCIAL CONDITION OF LA SIERRA UNIVERSITY

The financial statements of La Sierra are presented in Appendix B, and comprise auditedstatements of the fiscal years ended June 30, 2007 and 2006. La Sierra maintains its accounts inaccordance with generally accepted accounting principles as applicable to educational institutions. SeeAppendix B – “Audited Financial Statements of La Sierra University.”

Statement of Operations

The following table provides a statement of unrestricted activities and changes in unrestricted netassets of La Sierra for each of the fiscal years ended June 30, 2005, 2006 and 2007 and for the elevenmonths ended May 31, 2007 and 2008. Management has derived the financial data for La Sierra for thefiscal years ended June 30, 2005, 2006 and 2007 from its audited financial statements. La Sierra’saudited financial statements for the two fiscal years ended June 30, 2007 have been audited by itsauditors, as stated in the independent auditors’ report included therein, and are included in Appendix B.The financial statements included in Appendix B, including the notes thereto, are an integral part hereof and should be read in their entirety. The financial information for the eleven months ended May 31, 2007and 2008 has been derived by La Sierra management from unaudited interim financial statements which

include all adjustments which La Sierra management considers necessary to present such information inconformity with generally accepted accounting principles and on a basis consistent with the auditedfinancial statements. The results of operations for the eleven months ended May 31, 2008 are notnecessarily indicative of the operating results to be expected for the entire fiscal year ending June 30,2008.

The audited financial statements included as Appendix B also contain information related to“temporarily restricted” assets and “permanently restricted” assets. Since these assets are restricted to a purpose inconsistent with their use for the payment of debt service on the Bonds, investors should notexpect that any of these assets will be available for debt service.

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STATEMENT OF UNRESTRICTED ACTIVITIES AND CHANGES IN

UNRESTRICTED NET ASSETS

(In Thousands of Dollars)

Fiscal Year

Ended June 30,

Eleven Months

Ended May 31,

2005 2006 2007 2007

2008

REVENUES AND OTHER SUPPORT: Net Tuition and Fees $21,242 $22,803 $23,761 $22,448,936 $23,265,598Grants and Contracts 3,962 5,216 4,164 3,281,679 2,786,723Contributions 106,908 791,281Investment Income 1,177 1,611 5,074 (57,014) (796,166)Auxiliary & Independent Operations

Revenue 6,425 7,223 7,663 7,082,362 7,797,643Other 1,510 2,026 1,630 1,334,853 2,184,809

Total Revenues 34,316 38,879 42,292 34,197,724 36,029,888

Net Assets Released FromRestrictions 1,508 2,970 2,392 -- --

Total Revenues and Other Support 35,824 41,849 44,684 34,197,724 36,029,888

EXPENSES:Program Expenses:

Instructional and Research 11,996 13,305 16,702 13,315,755 13,797,320Student Service 3,743 3,801 4,278 3,788,511 3,928,221Academic Support 3,325 3,745 4,150 5,150,341 5,733,639Institutional Support & Development 8,347 8,784 7,747 6,724,152 6,846,063Auxiliary & Independent Operations 5,925 7,852 6,106 4,809,833 5,559,159

Total Expenses 33,336 37,487 38,983 33,788,593 35,864,402

OTHER: Nonrecurring-gain on sale of assets 12,173 6,865 10,236 10,356,391 --

UNRESTRICTED NET ASSETS – Beginning of Year 29,638 44,299 55,527 55,526,639 71,463,693

UNRESTRICTED NET ASSETS – End of Year $44,299 $55,527 $71,464 $66,292,161 $71,629,179

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Tuition and Fees. The largest component of the Revenues is tuition and fees, which are afunction of tuition rates and enrollments. La Sierra’s tuition revenues have grown over the past five yearsdue to increases in both components.

Tuition Rates. La Sierra has raised its tuition rates in each of the past five years and believes that

its rates remain very competitive compared to those of other private institutions with which La Sierracompetes for students. The following table sets forth the tuition charged to full-time students for the pastfour years and the current academic year:

TUITION RATES

Academic

Year

Undergraduate

Full Time

Tuition and Fees

2003-2004 $16,7462004-2005 $17,790

2005-2006 $19,0832006-2007 $20,6342007-2008 $21,876

Student Enrollment. La Sierra’s enrollment has grown from 1,518 to 1,686 full time equivalent(FTE) students over the last five academic years. La Sierra has continued to maintain the academicquality of each incoming class, as reflected by average high school grade point average and SAT scores.La Sierra believes that its location in one of the largest population centers in the country, plans inrecruitment and marketing, and its management and fiscal investment in student retention initiatives, willenable it to realize its goal of steady enrollment growth up to 2,500 students in the next four to five years.

The following table sets forth La Sierra’s full time equivalent fall quarter enrollment for the past

four years and the current academic year together with the number of degrees conferred in each such year completed.

ENROLLMENTS AND DEGREES

Enrollments Degrees Awarded

Academic Year Under-Graduate Graduate Total Bachelor Graduate Total

2002-2003 1321 197 1518 207 105 312

2003-2004 1462 243 1705 193 114 307

2004-2005 1495 219 1714 197 185 382

2005-2006 1535 207 1742 201 133 334

2006-2007 1468 218 1686 215 121 336

“Full time equivalent” enrollment is computed by dividing the total enrolled units for part-timestudents by 12 and adding the result to the number of full-time students.



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La Sierra attracts students from a wide variety of high schools and other higher educationinstitutions. Approximately 75 percent of La Sierra’s students are from California, 15 percent are fromother states and 13 percent are from outside the United States. Approximately 77 percent of the studentsare under the age of 25, while 22 percent are age 25-54, and one percent of the student population is age55 and over. The following tables set forth applications, admissions and new enrollments for theundergraduate and graduate programs for the last five academic years as of the Fall Quarter for such

academic year.

APPLICATION POOLS

Undergraduate

Offered Selectivity

Fall Quarter Applications Admission Ratio Enrollment

2003 1644 857 52.1% 628

2004 1748 975 55.8% 574

2005 1714 1004 58.6% 582

2006 1609 891 55.4% 5562007 1674 879 52.5% 530

Graduate

Offered Selectivity

Fall Quarter Applications Admission Ratio Enrollment

2003 227 115 50.7% 106

2004 256 137 53.5% 73

2005 247 138 55.9% 104

2006 248 137 55.2% 88

2007 273 136 49.8% 95

Scholarships. The following table shows La Sierra’s total grants for all students, graduate andundergraduate, for the past five academic years.

FINANCIAL AID PROGRAMS

(In Thousands)

Grants

California State Federal La Sierra

Academic Year Programs Assistance Expenditures

2002-2003 $2,650 $2,319 $5,513

2003-2004 $3,158 $2,589 $6,023

2004-2005 $3,274 $2,416 $6,345

2005-2006 $3,283 $2,273 $6,835

2006-2007 $2,593 $2,532 $7,826



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A significant number of La Sierra’s students depend on sources of student financial aid other thanLa Sierra to pay tuition fees and expenses. The majority of such aid comes from state and federalgovernmental sources. The continued availability of those funds is contingent upon continued legislativesupport.

Grants, Contributions and Pledges. La Sierra is in the midst of a five-year capital campaign. It

has achieved about 50% of its $35 million target. However, the level and flow of gifts is subject tofluctuation. A successful fundraising effort is an important strategic objective of La Sierra. See “FundRaising” below. However, since these amounts will consist predominantly of restricted assets, they willnot be available for the payment of debt service on the Bonds.

Auxiliary & Independent Operations Revenue. Auxiliary & Independent Operations revenuesare generated principally from room and board fees. La Sierra attempts to operate its auxiliary enterprisesand independent operations on a better than break-even basis, after including charges for interest,depreciation and facilities maintenance.

The following table sets forth the combined room and board charges for the majority of undergraduate university residents for the past four years and the current academic year. Approximately

653 students live on campus with the residence halls at 75% of capacity.

ROOM AND BOARD FEES

Academic

Year Per Academic

Year

2002-2003 $4,3022003-2004 $4,6802004-2005 $4,9022005-2006 $5,2442006-2007 $5,874

Expenses. The most significant categories of expense are instruction, academic support, studentservices, institutional support, and auxiliary enterprises. Instruction expenses include principally facultyand academic staff salaries and benefits and other expenses related to the operations of the major academic divisions. Academic support expenses include Deans’ offices, library resources, advising andorientation and other general academic expenses. Student services expenses include registration,admissions, financial aid administration, psychological and health counseling and career guidance.Institutional support includes expenses related to executive management and such operations asinformation technology, fund raising, university publications, alumni activities, legal and audit functions,employee benefits, and other similar expenses, which benefit La Sierra as a whole. Auxiliary enterpriseexpenses include the costs of providing room and board to students.

Liabilities. La Sierra’s liabilities at June 30, 2006 and 2007 are shown on the Statement of Financial Position included in La Sierra’s financial statements set forth in Appendix B and the Notesthereto. Such liabilities amounted to $33,445,222, including a mortgage on the Thaine B. Price ScienceComplex of $17,456,177, which will be refunded with proceeds of the Bonds. The remainder of theliabilities consisted of accounts payable and accrued liabilities, deferred revenue and federal student loanfunds. La Sierra also has two unsecured lines of credit totaling $5,500,000, of which less than $1,700,000was outstanding as of June 30, 2007 and $470,000 as of March 30, 2008.



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On October 28, 2004, La Sierra entered into an interest rate swap agreement with a swapcounterparty. The effective date of the swap was February 2, 2006 and the termination date is February 2,2021. The initial notional amount was $12,000,000; and at June 30, 2007 and 2006, the notional amountwas $10,938,829 and $11,733,332, respectively. On August 25, 2006, La Sierra and the same swapcounterparty entered into a second swap agreement with a notional amount of $4,000,000. The effectivedate of the agreement was September 4, 2007 and the termination date is September 4, 2012. La Sierra

expects to terminate both swap agreements on or before the issuance of the Bonds and expects to payfrom its own equity a termination fee to the swap counterparty of between $400,000 and $600,000.

Fund Raising

In November 2005, La Sierra entered into a comprehensive fundraising capital campaign with agoal of raising $35 million that will provide facilities construction and renovation funding. In addition,La Sierra seeks to raise funds for scholarship endowments, faculty chairs, and academic programs.

Endowment

La Sierra’s endowment consists of assets that are permanently restricted by the donor, with the principal of the gift kept in perpetuity and the income available to support activities as designated by the

donor, and assets that have been designated by the Board as quasi endowment assets. La Sierra’s quasi-endowment has increased over the last four years as a result of sale of surplus land and ground leases,gifts and investment performance. Market values for La Sierra’s endowment as of June 30 for the pastfive fiscal years are shown below. La Sierra’s investment income and gains distributed from itsendowment fund are determined annually according to an endowment spending policy approved by theInvestment Committee and the Board of Trustees. Any investment income, including realized gains, inexcess of the spending policy is reinvested in the endowment.

A significant uncertainty facing La Sierra is the impact of the financial markets upon theinvestments in La Sierra’s endowment. While La Sierra has a diversified investment strategy designed for long-term appreciation, there will undoubtedly be periodic negative impacts upon the market value of such investments due to volatility in the financial markets.

TOTAL ENDOWMENT

MARKET VALUE


2004 $25,5792005 $30,2642006 $40,8992007 $53,551

La Sierra’s endowment investments are overseen by the Investment Committee and advised byCambridge & Associates, an Investment Consulting firm, and are invested principally in a professionallymanaged pool of securities. The total return on La Sierra’s pooled investments as of June 30 for the past

four fiscal years is shown below.

ENDOWMENT POOL RETURNS

2004 7.19%2005 5.94%2006 6.68%2007 15.08%



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Ground Leases

In May, 2003, La Sierra entered into a ground lease of 588 apartment homes with Fairfield CollettL.P. In 2006, Fairfield Collett, L.P. sold the improvements to Sequoia Equities, Inc. who then assumedthe lease. The tenant is leasing real property from La Sierra. The lease requires quarterly rent paymentsover the 99 year lease term.

Future minimum rentals to be received are:

2007-08 $ 1,009,5962008-09 1,009,5962009-10 1,009,5962010-11 1,009,5962011-12 1,009,596

Thereafter 90,863,640$95,911,620

On March 15, 2007, La Sierra entered into a ground lease with Riverwalk Commons LP. The

Tenant is leasing real property of approximately 26 acres for the purpose of constructing residential andcommercial buildings and other related improvements. Tenant will pay $478,561 for the first year andeither $957,122 or $1,435,683 for the second year, based on building permit acquisition, $1,435,683 per year for the third through tenth years, and $1,579,251.30 per year from year eleven through ninety-nine.In addition to the above payment schedule, tenant will begin paying the greater of 3.0 percent of the grossincome for the previous calendar year or the percent increase of the Consumer Price Index multiplied bythe gross income for the previous calendar year commencing April 15, 2010.

Riverwalk Commons LP has approached management of La Sierra and disclosed fundingdifficulties in connection with its construction loan. These funding difficulties have resulted in acessation of construction since February 2008. Riverwalk Commons LP has requested a 4-month rent-deferral under the applicable ground lease, to permit it to obtain replacement construction and/or take-out

funding.

On August 4, 2008, the Finance Committee of the Board of Trustees agreed to grant a 4-monthdeferral of the rent to Riverwalk Commons LP. The deferred payments plus interest would be due on theearlier of (a) the first draw from any new financing, (b) a sale or sublease of the project, or (c) March 31,2009.

Plant Properties

In 2006, La Sierra completed a comprehensive physical Master Plan that was unanimouslyapproved by the City Council of the City of Riverside. La Sierra’s strategic plan is reflected in the Master Plan as it relates to facilities and addresses citing of new buildings, campus land use districts, autocirculation and parking, pedestrian and bicycle parking, open space network, community orientedfacilities for the visual and performing arts, treatments of historic structures, parking lots and parkingstructures on the campus, and designs for compatible campus edges with adjacent neighborhoods. Thefirst phase expects growth up to 2,500 students, the second, up to 5,000 students.

Over the last few years, La Sierra expanded its campus by incorporating approximately 50 acresof surplus land into a ceremonial entrance, including water features and a defining sculpture. Athleticfields were constructed on both sides of the entrance. The Thaine B. Price Science Complex, housing theBiology and Mathematics and Computer Science departments, was completed in 2006. This building



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enhanced and expanded La Sierra’s educational facilities. In 2007 a major renovation of the diningcommons, thereby enhancing and upgrading the use of student life facilities, was undertaken. Proceedsfrom the Bond issuance will, in addition to reimbursement of the existing loan, fund construction of a perimeter fence around campus, mechanical, plumbing, electrical, IT, and other infrastructureimprovements.

The following table sets forth the Plant Properties of La Sierra at the end of each of the last four fiscal years ended on June 30.

PLANT PROPERTIES


2004 2005 2006 2007

Land $1,899 $1,983 $2,256 $2,196

Land Improvements 4,765 9,975 10,691 11,050

Buildings 26,585 27,405 28,702 52,921

Construction in progress 4,417 11,519 22,367 5,037

Equipment 13,983 15,093 17,249 18,951

Subtotal 51,649 65,975 81,265 90,155

Less Accumulated depreciation (30,216) (31,956) (34,100) (37,015)

Total $21,433 $34,019 $47,165 $53,140

Commitments and Contingencies

Leases. La Sierra leases several copiers and equipment under leases with monthly paymentstotaling approximately $2,484. Total expenses for operating leases were approximately $29,808 and$217,848 for the years ended June 30, 2007 and 2006, respectively.

Student Loans. La Sierra participates in a federally funded student loan program which requiresthat La Sierra comply with certain requirements over loan disbursement, reporting, and collection.

United States government loans refundable, with a balance of $6,553,964 and $6,510,828 atJune 30, 2007 and 2006, respectively, are reflected as a liability on the statement of financial position. Noallowance for uncollectible loan principal has been provided for the outstanding balances, since La Sierramay, subject to certain restrictions and compliance with loan program administration requirements, assignthe loans to the U.S. Department of Education (DOE) for collection.

Lease of Property. La Sierra entered into an agreement with a developer and a property owners’association on May 6, 2003 to lease a water well. Water will be extracted for irrigation and maintenanceof developer and association property and to supply water to La Sierra. The term of the lease is for 30

years for $98,000 per year and is subject to CPI increases beginning on January 1, 2008. As part of theagreement, La Sierra will use water to maintain 11 acres for a fee of $32,000 per year. The lease can beextended in ten-year increments.

Financial Aid Programs. Federally funded financial aid programs are subject to special audit.Such audits could result in claims against the resources of La Sierra. No provision has been made for anyliabilities that may arise from such audits since the amounts, if any, cannot be determined at this date.



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Risk Management

La Sierra employs a Director of Risk Management, Safety, and ADA, charged with identifyingexposure to loss in the categories of property, liability, net income and personnel, safety, and ADAcompliance. La Sierra systematically identifies major risks, develops risk control and loss prevention programs, monitors compliance with state and Federal OSHA guidelines, and convenes safety

committees. Additionally, it oversees and develops institutional processes for ensuring that capital projects are in compliance with the requirements of the American with Disabilities Act.

La Sierra maintains a full program of insurance, although these coverages may change from timeto time. La Sierra is part of the Adventist Risk Management of Seventh-day Adventists. La Sierra’scurrent insurance coverage, both group and individual, includes property, fine arts, boiler and machinery,general liability, automobile liability, media liability, crime, educators’ legal liability, fiduciary, limited professional liability, specific medical professional liability, healthcare medical professional liability,sports camp accident and general liability, cyber coverage, special events liability, workers’compensation, and student organization liability coverage.

La Sierra is self-insured for employee and student health care coverage, auto physical damage,

unemployment benefits, and worker’ compensation benefits. Additionally, La Sierra maintains an excessmedical insurance policy to cover any individual employee’s medical claims exceeding $60,000 and anexcess workers’ compensation policy which covers losses exceeding $250,000 per claim. Property,automobile and general liability coverage is provided through La Sierra’s participation in a self-insuredtrust, subject to various deductible limits. For automobile liability claims exceeding $25,000, and for property and general liability claims exceeding $50,000, coverage is provided through additional carriers.

Litigation

Various claims and litigation involving La Sierra are currently outstanding. However,management of La Sierra believes, based on consultation with legal counsel, that the ultimate resolutionof these matters will not have a material effect on La Sierra’s financial position. There is no material

litigation of any nature now pending against La Sierra or, to the knowledge of its officers, threatenedwhich seeks to restrain or enjoin the issuance or the sale of the Bonds or which in any way contests or affects the validity of the Bonds or any proceedings of La Sierra taken with respect to the issuance or salethereof, of the pledge or application of any moneys or security provided for the payment of the Bonds, theuse of the Bond proceeds or the existence or powers of La Sierra relating to the issuance of the Bonds.



APPENDIX B

AUDITED FINANCIAL STATEMENTS OF LA SIERRA UNIVERSITY



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APPENDIX C

BOOK-ENTRY SYSTEM

THE INFORMATION HEREIN CONCERNING DTC AND DTC’S BOOK-ENTRY SYSTEMHAS BEEN OBTAINED FROM SOURCES THAT THE AUTHORITY, THE CORPORATION, THE

TRUSTEE AND THE UNDERWRITER BELIEVE TO BE RELIABLE, BUT THE AUTHORITY, THECORPORATION, THE TRUSTEE AND THE UNDERWRITER TAKE NO RESPONSIBILITY FOR THE ACCURACY THEREOF. BENEFICIAL OWNERS SHOULD CONFIRM THE FOLLOWINGINFORMATION WITH DTC OR THE DTC PARTICIPANTS (AS DEFINED HEREIN).

The Depository Trust Company (“DTC”), New York, New York, will act as securities depositoryfor 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 representativeof DTC. One fully-registered Bond certificate will be issued for each Series of the Bonds in the aggregate principal amount of such Series, and will be deposited with DTC.

DTC, the world’s largest depository, is a limited-purpose trust company organized under the New

York Banking Law, a “banking organization” within the meaning of the New York Banking Law, amember 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 17Aof the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 millionissues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money marketinstruments (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 securitiestransactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securitiescertificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trustcompanies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC, is the holding company for DTC

National Securities Clearing Corporation, and Fixed Income Clearing Corporation all of which areregistered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to theDTC 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 relationshipwith a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has Standard &Poor’s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securitiesand Exchange Commission. More information about DTC can be found at www.dtcc.com andwww.dtc.org.

Purchases of Bonds under the DTC system must be made by or through Direct Participants,which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect

Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participantthrough which the Beneficial Owner entered into the transaction. Transfers of ownership interests in theBonds 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 ownershipinterests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.



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To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC areregistered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may berequested by an authorized representative of DTC. The deposit of Bonds with DTC and their registrationin the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership.DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only theidentity 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 accountof their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by DirectParticipants to Indirect Participants, and by Direct Participants and Indirect Participants to BeneficialOwners will be governed by arrangements among them, subject to any statutory or regulatoryrequirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certainsteps to augment the transmission to them of notices of significant events with respect to the Bonds, suchas 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 benefithas agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners maywish to provide their names and addresses to the registrar and request that copies of notices be provided

directly to them.

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

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

Principal, Purchase Price, premium, if any, and interest payments on the Bonds will be made toCede & 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 detailinformation from the Authority or the Trustee, on payable date in accordance with their respectiveholdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed bystanding 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 Participantand not of DTC nor its nominee, the Trustee, or the Authority, subject to any statutory or regulatoryrequirements as may be in effect from time to time. Payment of principal, Purchase Price, premium, if any, and interest payments to Cede & Co. (or such other nominee as may be requested by an authorizedrepresentative of DTC) is the responsibility of the Authority or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to

the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

A Beneficial Owner shall give notice to elect to have its Bonds purchased or tendered, through itsParticipant, to the Trustee, and shall effect delivery of such Bonds by causing the Direct Participant totransfer the Participant’s interest in the Bonds, on DTC’s records, to the Trustee. The requirement for physical delivery of Bonds in connection with an optional tender or a mandatory purchase will be deemedsatisfied when the ownership rights in the Bonds are transferred by Direct Participants on DTC’s recordsand followed by a book-entry credit of tendered Securities to the Trustee’s DTC account.



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

The Authority may decide to discontinue use of the system of book-entry transfers through DTC

(or a successor securities depository). In that event, Bond certificates will be printed and delivered.

The information in this section concerning DTC and DTC’s book-entry system has been obtainedfrom sources that the Authority, the Corporation, the Bank, the Underwriter and the Trustee believe to bereliable, but the Authority, the Corporation, the Bank, the Underwriter and the Trustee take noresponsibility for the accuracy thereof.



APPENDIX D

SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS



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APPENDIX D

SUMMARY OF CERTAIN PROVISIONS OF THE

PRINCIPAL LEGAL DOCUMENTS

The following is a summary of certain provisions of the Indenture of Trust (the “Indenture”) and the Loan Agreement (the “Agreement”) which are not described elsewhere in the Official Statement. This summary does not

purport to be comprehensive, and reference should be made to the Indenture and the Agreement for a full and

complete statement of their provisions.

DEFINITIONS

Unless the context otherwise requires, the following terms shall have the meanings specified below:

“Accountant’s Certificate” means a certificate signed by an independent certified public accountant of recognized national or regional standing, or a firm of independent certified public accountants of recognizednational or regional standing, selected by the Corporation.

“Act” means the Joint Exercise of Powers Act, comprising Articles 1, 2, 3 and 4 of Chapter 5 of Division 7of Title 1 (commencing with Section 6500) of the Government Code of the State.

“Act of Bankruptcy” means any of the following with respect to any person: (a) the commencement bysuch person of a voluntary case under the federal bankruptcy laws, as now in effect or hereafter amended, or anyother applicable federal or state bankruptcy, insolvency or similar laws; (b) failure by such person to timelycontrovert the filing of a petition with a court having jurisdiction over such person to commence an involuntary caseagainst such person under the federal bankruptcy laws, as now in effect or hereafter amended, or any other applicable federal or state bankruptcy, insolvency or similar laws; (c) such person shall admit in writing its inabilityto pay its debts generally as they become due; (d) a receiver, trustee, custodian or liquidator of such person or such

person’s assets shall be appointed in any proceeding brought against the person or such person’s assets; (e)assignment of assets by such person for the benefit of its creditors; or (f) the entry by such person into an agreementof composition with its creditors.

“Additional Payments” means the payments to be made by the Corporation to the Authority or the Trustee

pursuant to certain provisions of the Agreement.

“Agreement” means the Loan Agreement, dated as of August 1, 2008, between the Authority and theCorporation and relating to the loan of the proceeds of the Bonds, as originally executed or as it may from time totime be supplemented or amended.

“Alternate Credit Facility” means any letter of credit, guarantee, insurance policy or other credit supportarrangement, or any combination thereof, provided by the Corporation with respect to the Bonds or any Series of theBonds pursuant to the Agreement and the Indenture.

“Amendment” means any amendment or modification of the Agreement.

“Approving Opinion” means an Opinion of Bond Counsel to the effect that an action being taken (a) is

authorized by the applicable provisions of the Indenture, and (b) will not, in and of itself, result in the inclusion of interest on the Bonds in gross income for federal income tax purposes.

“Authority” means the California Municipal Finance Authority or its successors and assigns, a jointexercise of powers authority formed by the Joint Powers Agreement pursuant to the provisions of the Act.

“Authority Representative” or “Authorized Officer” means, with respect to the Authority, any member of the Board, or any other person designated as an Authority Representative by a certificate signed by a member of theBoard and filed with the Trustee.



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“Authorized Corporation Representative” or “Authorized Representative” means, with respect to theCorporation, any person who at the time and from time to time may be designated, by written certificate furnished tothe Authority, the Credit Provider (if any) and the Trustee, as a person authorized to act on behalf of theCorporation. Such certificate shall contain the specimen signature of such person, shall be signed on behalf of theCorporation by any officer of the Corporation and may designate an alternate or alternates.

“Authorized Denomination” means (a) with respect to Bonds during any Weekly Interest Rate Period or Term Interest Rate Period of less than one year, $100,000 or any multiple of $5,000 in excess thereof; and (b) withrespect to Bonds during any Term Interest Rate Period of one year or more, $5,000 or any integral multiple in excessthereof.

“Available Amounts” means (a) with respect to a Series of Outstanding Bonds secured by a Credit Facility,(i) funds received by the Trustee pursuant to such Credit Facility; (ii) moneys which have been continuously ondeposit with the Trustee (A) held in any separate and segregated fund, account or subaccount established under theIndenture in which no other moneys which are not Available Amounts are held, and (B) which have so been ondeposit with the Trustee for at least 123 consecutive days from their receipt by the Trustee and not commingled withany moneys so held for less than said period and during and prior to which period, and as of the date of theapplication thereof to the payment of Bonds of such Series, no Act of Bankruptcy of the Corporation or theAuthority has occurred; (iii) proceeds from the issuance and sale or remarketing of bonds, notes or other evidencesof indebtedness of the Authority received by the Trustee directly and contemporaneously with the issuance and sale

or remarketing of such bonds, notes or other evidences of indebtedness; (iv) any other moneys; or (v) proceeds of the investment of funds qualifying as Available Amounts under the foregoing clauses; provided, however, that withrespect to clause (iii) and (iv) there must be delivered to the Trustee at the time of such issuance and sale or remarketing of bonds, notes or other evidences of indebtedness of the Authority or the deposit of such moneys withthe Trustee, as applicable, an opinion of counsel (which may assume that no Holder of Bonds of such Series is an“insider” within the meaning of the Bankruptcy Code) from a firm experienced in bankruptcy matters to the effectthat the use of such moneys to pay amounts due on Bonds of such Series would not be recoverable from applicableBondholders pursuant to Section 550 of the Bankruptcy Code as avoidable preferential payments under Section 547of the Bankruptcy Code in the event of the occurrence of an Act of Bankruptcy of the Corporation or the Authority,and (b) with respect to a Series of Outstanding Bonds not secured by a Credit Facility, any moneys deposited withthe Trustee.

“Bankruptcy Code” means Title 11 of the United States Code, as amended.

“Bond Counsel” means any attorney at law or firm of attorneys, of nationally recognized standing inmatters pertaining to the validity of, and exclusion from gross income for federal tax purposes of interest on, bondsissued by states and political subdivisions and duly admitted to practice law before the highest court of any state of the United States and acceptable to the Authority.

“Bond Fund” means the Bond Fund established pursuant to the Indenture.

“Bond Purchase Fund” means the Bond Purchase Fund established pursuant to the Indenture.

“Bond Register” means the books for the registration of ownership of the Bonds, and the transfer of ownership of the Bonds, maintained by the Trustee pursuant to the Indenture

“Bonds” means, collectively the Series 2008A Bonds and Series 2008B Bonds authorized and issued pursuant to the Indenture and any bonds issued in exchange or replacement thereof in accordance with the Indenture.

“Book-Entry Bonds” means any Bonds which are then held in book-entry form by a Securities Depositoryas provided in the Indenture.

“Business Day” means any day other than (i) a Saturday or a Sunday or (ii) a day on which commercial banks in the city of San Francisco, California, or the city or cities in which the principal corporate trust office of



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Trustee, the Remarketing Agent or the office of the applicable Credit Provider at which demands for payment under a Credit Facility then in effect are to be presented are authorized or required by law to close.

“Calendar Week” means the period of seven (7) days from and including Thursday of any week to andincluding Wednesday of the next following week; provided, however, that the initial Calendar Week with respect toeach Weekly Interest Rate Period shall commence on the first day of such Weekly Interest Rate Period and shall end

on the next succeeding Wednesday; and provided further that the final Calendar Week with respect to each WeeklyInterest Rate Period shall commence on the Thursday immediately preceding the last day of such Weekly InterestRate Period and shall end on the last day of such Weekly Interest Rate Period.

“Certificate of the Authority” means a certificate signed by an Authorized Authority Representative. If andto the extent required by certain provisions of the Indenture, each Certificate of the Authority shall include thestatements provided for therein.

“Certificate of the Corporation” means a certificate signed by an Authorized Corporation Representative. If and to the extent required by certain provisions of the Indenture, each Certificate of the Corporation shall include thestatements provided for therein.

“Code” means the Internal Revenue Code of 1986, as amended.

“Completion Date” means the date of completion of the last portion of the Project as that date shall becertified as provided in the Agreement.

“Construction Fund” means the Construction Fund established pursuant to the Indenture.

“Conversion” or “Convert” means the adjustment of the rate borne by a Series of the Bonds from a WeeklyInterest Rate to a Term Interest Rate, from a Term Interest Rate to a Weekly Interest Rate or from a Term InterestRate for one Term Interest Rate Period to a Term Interest Rate for another Term Interest Rate Period.

“Conversion Date” means the date on which the Interest Rate Period for a Series of the Bonds is changed,or the date of a change of the Interest Rate Period for a Series of the Bonds specified in a notice given pursuant tothe Indenture.

“Conversion Notice” means the notice required by the Indenture of the Conversion of a Series of theBonds.

“Corporation” means (i) La Sierra University, a California nonprofit public benefit corporation, and itssuccessors and assigns, and (ii) any surviving, resulting or transferee corporation as provided in the Agreement.

“Costs” means, with respect to the Project, the sum of the items, or any such item, of the cost of theacquisition, construction, installation, improvement, renovation, remodeling, furnishing and equipping of the Projectauthorized to be paid with Bond proceeds pursuant to the Agreement, including the reimbursement to theCorporation of amounts expended for such costs to the extent permitted by the Tax Certificate, but shall not includeany Costs of Issuance.

“Costs of Issuance” means all items of expense directly or indirectly payable by or reimbursable to the

Authority or the Corporation and related to the authorization, issuance, sale and delivery of the Bonds, including butnot limited to costs of preparation and reproduction of documents, printing expenses, filing and recording fees,initial fees and charges of the Trustee, legal fees and charges, fees and disbursements of consultants and

professionals, rating agency fees, fees and charges for preparation, execution and safekeeping of the Bonds and anyother cost, charge or fee in connection with the original issuance of the Bonds which constitutes a “cost of issuance”within the meaning of Section 147(g) of the Code.

“Costs of Issuance Fund” means the Costs of Issuance Fund established pursuant to the Indenture.



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“Credit Agreement” means, with respect to any Credit Facility, the agreement or agreements between theCorporation and the applicable Credit Provider, as originally executed or as it or they may from time to time bereplaced, supplemented or amended in accordance with the provisions thereof, providing for the issuance of theCredit Facility and the reimbursement of the Credit Provider for payments thereunder, together with any related

pledge agreement, security agreement or other security document.

“Credit Facility” means, as of any time, the Initial Credit Facility or any Alternate Credit Facility, asapplicable, then securing the Bonds or any Series of the Bonds.

“Credit Facility Account” means the Credit Facility Account established in the Bond Fund pursuant to theIndenture.

“Credit Facility Purchase Account” means the Credit Facility Purchase Account established in the BondPurchase Fund pursuant to the Indenture.

“Credit Provider Bond” means any Bond acquired with moneys in the Credit Facility Purchase Account pursuant to the Indenture until such Bond is remarketed and the applicable Credit Facility has been fully reinstatedas provided in the Indenture or shall not be considered a Credit Provider Bond in accordance with the applicableCredit Agreement.

“Credit Provider” means, with respect to a Credit Facility, the bank or other financial institution issuing theCredit Facility or otherwise obligated under the Credit Facility to provide amounts to pay the principal and/or Purchase Price of, and/or interest on, or any Series of the Bonds.

“Electronic Notice” means notice through telecopy, telegraph, telex, facsimile transmission, internet, e-mailor other electronic means of communication.

“Event of Default” as used with respect to the Indenture has the meaning specified in the Indenture, and asused with respect to the Agreement has the meaning specified therein.

“Facilities” means all of the real and personal property constituting La Sierra University, primarily locatedat 4700 Pierce Street, Riverside, California, 92515 as the same may be improved and expanded from time to time.

“Fitch” means Fitch Ratings, its successors and their assigns, and, if such entity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “Fitch” shall be deemed to refer toany other nationally recognized securities rating agency (other than S&P or Moody’s) designated by the Authority,with the approval of the Corporation, by notice to each Credit Provider, the Trustee and the Remarketing Agent.

“Government Obligations” means bonds, notes, certificates of indebtedness, treasury bills or other securities constituting direct obligations of, or obligations the full and timely payment of which is guaranteed by, theUnited States of America, or securities evidencing ownership interests in such obligations or in specified portionsthereof (which may consist of specific portions of the principal of or interest on such obligations).

“Holder” or “Bondholder” means the registered owner of any Bond.

“Indenture” means the Indenture of Trust, as originally executed or as it may from time to time be

supplemented, modified or amended by any Supplemental Indenture entered into pursuant to the provisions of theIndenture.

“Initial Credit Facility” means the irrevocable direct pay letter of credit issued by the Initial Credit Provider with respect to the Bonds.

“Initial Credit Provider” means Wells Fargo Bank, National Association, as the issuer of the Initial CreditFacility.



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“Interest Payment Date” means (i) with respect to each Credit Provider Bond, each date for the payment of interest thereon set forth in the applicable Credit Agreement; (ii) with respect to each Bond bearing interest at aWeekly Interest Rate, the first Business Day, commencing September 1, 2008; (iii) with respect to each Bond

bearing interest at a Term Interest Rate for a Term Interest Rate Period of less than one year, the day immediatelysucceeding the last day of such Term Interest Rate Period; and (iv) with respect to any Term Interest Rate Period of one year or longer, each Semi-Annual Interest Payment Date during such Term Interest Rate Period and the dayimmediately succeeding the last day of such Term Interest Rate Period.

“Interest Period” means, with respect to a Series of Bonds, the period from and including any InterestPayment Date for such Series of Bonds to and including the day immediately preceding the next following InterestPayment Date for such Series of Bonds, except that the first Interest Period shall be the period from and includingthe date of the first authentication and delivery of the Bonds to and including the day immediately preceding the firstInterest Payment Date relating to the Bonds.

“Interest Rate Period” means either a Weekly Interest Rate Period or a Term Interest Rate Period.

“Investment Securities” means any of the following if and to the extent that the following are at the timelegal investments under the laws of the State of California for moneys held under the Indenture and then proposed to

be invested therein and shall be the sole investments in which amounts on deposit in any fund or account createdunder the Indenture shall be invested:

(a) Cash deposits (insured at all times by the Federal Deposit Insurance Corporation or otherwise collateralized with obligations described in paragraphs (b), (c) or (d)).

(b) Direct obligations (including obligations issued or held in book entry form on the booksof the Department of Treasury) of the United States of America.

(c) Obligations of any federal agency or federally sponsored entity which obligations areguaranteed by the full faith and credit of the United States of America, including but not limited to the following:

(i) Export-Import Bank,

(ii) Rural Economic Community Development Administration (formerly the

Farmers Home Administration),

(iii) Federal Financing Bank,

(iv) General Services Administration,

(v) U.S. Maritime Administration,

(vi) U.S. Department of Housing and Urban Development,

(vii) Small Business Administration,

(viii) Government National Mortgage Association,

(ix) Federal Housing Administration,

(x) Farm Credit System Financial Assistance Corporation, and

(xi) The guaranteed interest on obligations issued by the Resolution TrustCorporation.



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(d) Direct obligations of any of any federal agency or federally sponsored entity which arenot fully guaranteed by the full faith and credit of the United States of America, including but not limited to thefollowing:

(i) Federal National Mortgage Association,

(ii) Federal Home Loan Mortgage Corporation,

(iii) Federal Home Loan Bank System,

(iv) The principal component of obligations issued by the Resolution TrustCorporation, and

(v) Student Loan Marketing Corporation.

(e) Commercial paper which is rated at the time of purchase in the highest short-term ratingcategory (without regard to qualifier, "A-1" by S&P, "P-1" by Moody's and "F-1" by Fitch) of at least one nationallyrecognized rating agency and which matures not more than 18 months after the date of purchase.

(f) U.S. dollar denominated deposit accounts, federal funds and bankers’ acceptances withdomestic commercial banks (including the Trustee and its affiliates) which either (i) have a rating on their short-termcertificates of deposit on the date of purchase in one of the three highest short-term rating categories (without regardto qualifier) of at least two nationally recognized rating agencies, (ii) are insured at all times by the Federal DepositInsurance Corporation, or (iii) are collateralized with direct obligations of the United States of America at 102%valued daily. All such certificates must mature no more than 18 months after the date of purchase.

(g) Investments in (i) money market funds subject to SEC Rule 2a-7 and rated in the highestshort-term rating category for money market funds (without regard to qualifier) of at least one nationally recognizedrating agency, including funds for which the Trustee and its affiliates provide investment advisory or other management services, and (ii) public sector investment pools operated pursuant to SEC Rule 2a-7 in which thedeposit shall not exceed 5% of the aggregate pool balance at any time and such pool is rated in one of the threehighest short-term rating categories (without regard to qualifier, “A-1” by S&P, “P-1” by Moody’s and “F-1” byFitch) of at least two nationally recognized rating agencies.

(h) Pre-refunded municipal obligations defined as follows: Any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any suchstate which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have

been given by the obligor to call on the date specified in the notice; and,

(i) which are rated, based on an irrevocable escrow account or fund (the “escrow”),in the highest long-term rating category (without regard to qualifier) of at least two nationally recognized ratingagencies; or

(ii) (A) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting of cash or securities as described in paragraphs (b) or (c) above, whichescrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on

such bonds or other obligations on the maturity date or dates thereof or the redemption date or dates specified pursuant to such irrevocable instructions, as appropriate, and

(B) which escrow is sufficient, as verified by an Accountant’s Certificate,to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this

paragraph on the maturity date or dates thereof or the redemption date or dates specified pursuant to suchirrevocable instructions, as appropriate.



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(i) General obligations of states with a short-term rating in one of the three highest ratingcategories (without regard to qualifiers) and a long-term rating in one of the three highest rating categories (withoutregard to qualifiers) of at least two nationally recognized rating agencies. In the event such obligations are variablerate obligations, the interest rate on such obligations must be reset not less frequently than annually.

(j) Repurchase agreements with any commercial bank, which has a long-term, unsecured

rating of “A” or better by S&P and A2 or better by Moody’s, provided that (i) the term of such repurchaseagreement is not greater than thirty years, (ii) the Trustee or third party acting solely as agent for the Trustee has possession of the collateral, (iii) the collateral is valued weekly and the market value of the collateral is maintainedat an amount equal to at least 102% for those securities defined in paragraphs (b) and (c) above and 104% for thosesecurities defined in paragraph (d) above of the amount of cash transferred by the Trustee to the commercial bank under the repurchase agreement plus interest, (iv) failure to maintain the requisite collateral levels will permit theTrustee to liquidate the collateral immediately, (v) the repurchase securities are free and clear of any third-party lienor claim; and (vi) in the case of PSA Master Repurchase Agreements, there shall have been delivered to the Trustee,the Authority and the Corporation an Opinion of Counsel to the effect that such repurchase agreement meets allguidelines under State law for legal investment of the funds to be invested.

(k) Investment agreements, including guaranteed investment contracts (“GICs”), forward purchase agreements and reserve fund put agreements.

(l) Any other investments approved in writing by the Credit Provider.

“Issue Date” means, with respect to the Bonds, the date on which the Bonds are first delivered to the purchasers thereof.

“Mandatory Tender Bonds” has the meaning specified in the Indenture.

“Maximum Interest Rate” means (a) with respect to a Series of Bonds for which a Credit Facility is ineffect, the rate of interest specified in such Credit Facility which is used to determine the amount available under such Credit Facility for payment of interest due and payable to Holders of such Bonds, but in no event greater than12% per annum, and (b) with respect to a Series of Bonds for which no Credit Facility is in effect, 12% per annum;

provided, however, “Maximum Interest Rate” with respect to Credit Provider Bonds means the maximum rate of interest allowed by law, if any.

“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 entity 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 nationallyrecognized securities rating agency (other than S&P or Fitch) designated by the Authority, with the approval of theCorporation, by notice to each Credit Provider, the Trustee and the Remarketing Agent.

“Notice by Mail” or “notice” of any action or condition “by Mail” shall mean a written notice meeting therequirements of the Indenture mailed by first class mail, postage prepaid.

“Opinion of Bond Counsel” means an Opinion of Counsel which is a Bond Counsel.

“Opinion of Counsel” means a written opinion of counsel (who may be counsel for the Corporation)

acceptable to the Authority and the Corporation.

“Outstanding,” when used as of any particular time with reference to the Bonds or a Series of Bonds(subject to certain provisions of the Indenture under the caption “Evidence of Action by Bondholders”), means allBonds or all Bonds of such Series, as applicable, theretofore authenticated and delivered by the Trustee under theIndenture except:

(a) Bonds or Bonds of such Series theretofore cancelled by the Trustee or surrendered to theTrustee for cancellation;



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(b) Bonds or Bonds of such Series in lieu of or in substitution for which other Bonds or Bonds of such Series shall have been authenticated and delivered by the Trustee pursuant to the terms of theIndenture;

(c) Bonds or Bonds of such Series with respect to which the liability of the Authority has been discharged to the extent provided in, and pursuant to the requirements of, the Indenture; and

(d) Bonds or Bonds of such Series deemed purchased pursuant to the Indenture.

“Person” means an individual, corporation, firm, association, limited liability company, corporation, partnership, trust, or other legal entity or group of entities, including a governmental entity or any agency or politicalsubdivision thereof.

“Principal Office” (i) of the Trustee means the principal corporate trust office of the Trustee designated inwriting to the Authority, each Credit Provider and the Corporation, which initially shall be located at the address setforth in the Indenture; (ii) of the Remarketing Agent means its office designated in writing to the Authority, theTrustee, each Credit Provider and the Corporation; (iii) of the Initial Credit Provider means its office designated inwriting to the Authority, the Trustee and the Corporation; and (iv) of any subsequent Credit Provider means itsoffice located at such address as such Credit Provider shall designate in writing to the Authority, the Trustee and theCorporation.

“Project” means the additions to and improvements of those portions of the Facilities funded with proceedsof the Bonds, and the equipment and furnishings, generally described in the Agreement.

“Purchase Date” means any date on which any Bond is required to be purchased pursuant to the Indenture.

“Purchase Price” means an amount equal to 100% of the principal amount of any Bond (or the portionthereof) tendered or deemed tendered to the Trustee for purchase pursuant to the optional or mandatory tender for

purchase provisions of the Indenture, plus accrued and unpaid interest thereon to but not including the date of purchase; provided, however, if the Purchase Date occurs after the Record Date applicable to the interest accrued onsuch Bond from the last occurring Interest Payment Date, then the Purchase Price shall not include accrued andunpaid interest, which shall be paid to the Holder of record on the applicable Record Date.

“Qualified Newspaper” means The Wall Street Journal or The Bond Buyer or any other newspaper or journal containing financial news, printed in the English language and customarily published on each Business Day,of general circulation in New York, New York, and selected by the Corporation and designated to the Trustee.

“Rating Agency” means S&P to the extent it is then providing or maintaining a rating on the Bonds at therequest of the Corporation, or in the event that S&P no longer maintains such a rating on the Bonds, Moody’s, Fitch,or, if approved by the Authority, any other nationally recognized rating agency, in each case then providing or maintaining a rating on the Bonds at the request of the Corporation.

“Rebate Fund” means the Rebate Fund established and held by the Trustee in accordance with theIndenture

“Rebate Requirement” has the meaning assigned to such term in the Tax Certificate.

“Record Date” means (i) with respect to each Interest Payment Date described in clause (i) of the definitionof “Interest Payment Date,” such Interest Payment Date; (ii) with respect to each Interest Payment Date described inclause (ii) or clause (iii) of the definition of “Interest Payment Date,” the Business Day immediately preceding theapplicable Interest Payment Date; and (iii) with respect to each Interest Payment Date described in clause (iv) of thedefinition of “Interest Payment Date,” whether or not a Business Day, the fifteenth day of the month prior to theapplicable Interest Payment Date.



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“Surplus Account” means an account so designated established pursuant to the Indenture.

“Tax Agreement” means the Tax Certificate and Agreement relating to the Tax-Exempt Bonds, dated as of the Issue Date for the Bonds, by and between the Authority and the Corporation, as the same may be amended fromtime to time.

“Term Interest Rate” means a non-variable interest rate on a Series of the Bonds established for a TermInterest Rate Period in accordance with the Indenture.

“Term Interest Rate Period” means each period determined by the Corporation pursuant to the Indentureduring which a Series of the Bonds bears interest at a Term Interest Rate; provided that each such period shall be for a term of approximately one month, approximately three months, approximately six months, approximately ninemonths, approximately one year or any multiple of approximately six months above one year in each case ending ona day preceding a Business Day; provided, however, that notwithstanding the foregoing any Term Interest RatePeriod which ends on the day immediately preceding the maturity date of such Series of the Bonds may include a

period of time from the Interest Payment Date immediately preceding the maturity date of such Series of the Bondsto the day immediately preceding the maturity date of such Series of the Bonds even if the time remaining to suchday is not one of the periods specified above; and provided further that notwithstanding the foregoing any TermInterest Rate Period may end on the day immediately preceding the maturity date of such Series of the Bondswhether or not such maturity date is a Business Day.

“Trustee” means U.S. Bank National Association, a national banking association organized under the lawsof the United States of America, and its successors and assigns or any successor trustee appointed pursuant to theIndenture.

“Weekly Interest Rate” means an interest rate on a Series of the Bonds established for a Calendar Week pursuant to the Indenture.

“Weekly Interest Rate Period” means each period during which a Series of the Bonds bears interest atWeekly Interest Rates.

“Written Order of the Authority” and “Written Request of the Authority” mean, respectively, a writtenorder or request signed by or on behalf of the Authority by an Authorized Authority Representative.

“Weekly Put Bonds” shall have the meaning given such term in the Indenture.

INDENTURE OF TRUST

Construction Fund. The Trustee shall establish the La Sierra University Construction Fund to pay costsof the Project.

Costs of Issuance Fund. The Trustee shall establish the Costs of Issuance Fund (the “Costs of IssuanceFund”). The moneys in the Costs of Issuance Fund shall be held by the Trustee in trust and applied to the payment of Costs of Issuance, upon a requisition filed with the Trustee, signed by an Authorized Corporation Representative.All payments from the Costs of Issuance Fund shall be reflected in the Trustee’s regular accounting statements. Anyamounts remaining in the Costs of Issuance Fund six months following the Issue Date of the Bonds shall be

transferred to the Construction Fund and applied as provided in the Indenture.

Bond Purchase Fund. There shall be created and established with the Trustee a trust fund designated the“California Municipal Finance Authority Variable Rate Revenue Bonds (La Sierra University) Series 2008 BondPurchase Fund” (the “Bond Purchase Fund”). There shall also be created and established separate accounts in theBond Purchase Fund designated the “Remarketing Account” and the “Credit Facility Purchase Account.”

(a) Remarketing Account. All moneys received by the Trustee on behalf of purchasers of Bonds pursuant to the provisions of the Indenture relating to the remarketing of Bonds shall be (i) deposited in the



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Remarketing Account within the Bond Purchase Fund, (ii) held in trust in accordance with the provisions thereof and (iii) paid out in accordance with the Indenture.

(b) Credit Facility Purchase Account. All moneys received by the Trustee as payments under any Credit Facility for the purchase of Bonds shall be (i) deposited in the Credit Facility Purchase Account withinthe Bond Purchase Fund, (ii) held in trust in accordance with the provisions thereof and (iii) paid out in accordance

with the Indenture.

The funds held by the Trustee in the Bond Purchase Fund shall not be considered Revenues and shall notconstitute part of the trust estate that is subject to the lien of the Indenture. The moneys in the Bond Purchase Fundshall be used solely to pay the Purchase Price of Bonds of the applicable Series of Bonds for which such moneyswere received as provided in the Indenture (or to reimburse the applicable Credit Provider, if any, for paymentsmade under a Credit Facility for such purpose) and may not be used for any other purpose.

Remarketing of Tendered Bonds.

(a) Weekly Put Bonds.

(i) Not later than 10:30 a.m. (New York City time) on each Business Daysucceeding a day on which the Trustee receives a notice from a Holder of Bonds of a Series to be tendered pursuantto the Indenture (the “Weekly Put Bonds”), the Trustee shall give notice by telephone to the Remarketing Agent,specifying the Series designation and principal amount of Bonds for which it has received such notice, the names of the Holder or Holders thereof and the Purchase Date. The Remarketing Agent shall thereupon offer for sale and useits best efforts to find purchasers for such Weekly Put Bonds, other than Credit Provider Bonds, which shall beremarketed at par pursuant to the Indenture.

(ii) Not later than 11:00 a.m. (New York City time) on the Business Dayimmediately preceding the Purchase Date described in (i) above, the Trustee shall give notice by telephone to theRemarketing Agent of the accrued amount of the interest payable as of such Purchase Date, and confirming theaggregate principal amount of, the Weekly Put Bonds.

(iii) Not later than 11:30 a.m. (New York City time) on each Purchase Date for aSeries of Weekly Put Bonds, the Remarketing Agent shall give Electronic Notice (promptly confirmed in writing) to

the Corporation and the Trustee of the amount of remarketing proceeds that the Remarketing Agent has received for each Series of Weekly Put Bonds and the principal amount of each Series of Weekly Put Bonds which have not beenremarketed in accordance with the Remarketing Agreement.

(iv) If the Remarketing Agent’s notice pursuant to subparagraph (iii) above indicatesthat the Remarketing Agent has on hand less remarketing proceeds than are needed to purchase all the Weekly PutBonds of a Series to be purchased on any Purchase Date, the Trustee shall demand payment under the Credit Facilitythen in effect with respect to such Series of Weekly Put Bonds by 11:45 a.m. (New York City time) on suchPurchase Date so as to provide by 3:00 p.m. (New York City time) on such Purchase Date an amount sufficient,together with the remarketing proceeds to be available for such purchase, calculated solely on the basis of the noticegiven by the Remarketing Agent pursuant to subparagraph (iii) above, to pay the Purchase Price of the Weekly PutBonds of such Series. The Trustee shall immediately after such demand for payment give notice by telephone to theCorporation of the amount, if any, of such demand.

(b) Mandatory Tender Bonds.

(i) Not later than 9:30 a.m. (New York City time) on each Purchase Date occurring pursuant the Indenture, the Trustee shall give notice by telephone to the Remarketing Agent specifying the principalamount of all Outstanding Bonds of a Series which are subject to mandatory tender on such Purchase Date (the“Mandatory Tender Bonds”) and the names of the registered owner or owners thereof. The Remarketing Agent shallthereupon offer for sale and use its best efforts to find purchasers for such Mandatory Tender Bonds, other thanCredit Provider Bonds, which shall be remarketed at par pursuant to the Indenture.



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(ii) Not later than 10:00 a.m. (New York City time) on each Purchase Datedescribed in (i) above, the Trustee shall give notice by telephone to the Remarketing Agent of the accrued amount of the interest payable as of the Purchase Date specified in such notice from the Trustee on, and confirming theaggregate principal amount of, the Mandatory Tender Bonds.

(iii) Not later than 11:30 a.m. (New York City time) on each Purchase Date with

respect to a Series of Mandatory Tender Bonds, the Remarketing Agent shall give Electronic Notice (promptlyconfirmed in writing) to the Corporation and the Trustee of the amount of remarketing proceeds that theRemarketing Agent has received for each Series of Mandatory Tender Bonds and the principal amount of eachSeries of Mandatory Tender Bonds which have not been remarketed in accordance with the RemarketingAgreement.

(iv) If the Remarketing Agent’s notice pursuant to subparagraph (iii) above indicates thatsuch Remarketing Agent has on hand less remarketing proceeds than are needed to purchase all the MandatoryTender Bonds of a Series to be purchased on such Purchase Date, the Trustee shall demand payment under theCredit Facility then in effect with respect to such Series of Mandatory Tender Bonds by 11:45 a.m. (New York Citytime) on such Purchase Date so as to provide by 3:00 p.m. (New York City time) on such Purchase Date an amountsufficient, together with the remarketing proceeds to be available for such purchase, calculated solely on the basis of the notice given by the Remarketing Agent pursuant to subparagraph (iii) above, to pay the Purchase Price of theMandatory Tender Bonds of such Series. The Trustee shall immediately after such demand for payment give notice

to the Corporation of the amount, if any, of such demand.

(c) Limitation. If a Credit Facility is in effect with respect to a Series of Bonds, theRemarketing Agent shall not remarket any tendered Bonds of such Series to the Authority, the Corporation or anyaffiliate of the Corporation.

Disbursements from the Bond Purchase Fund.

(a) Application of Moneys. (i) Moneys in the Bond Purchase Fund with respect to a Seriesof Bonds (other than the proceeds of any remarketing of Credit Provider Bonds which shall be paid to the applicableCredit Provider on the remarketing date) shall be applied at or before 4:00 p.m. (New York City time) to the

purchase of Bonds of such Series as provided in the Indenture by the Trustee, on each Purchase Date, as follows:

First -- Moneys constituting funds in the Remarketing Account with respect to such Series of Bonds shall be used by the Trustee on any Purchase Date for such Series of Bonds to purchase tenderedBonds of such Series at the Purchase Price.

Second -- In the event such moneys in the Remarketing Account with respect to such Series of Bonds on any Purchase Date for such Series of Bonds are insufficient to purchase all tendered Bonds of such Series, moneys in the Credit Facility Purchase Account with respect to such Series of Bonds on suchPurchase Date shall be used by the Trustee at that time to purchase such remaining tendered Bonds of suchSeries at the Purchase Price thereof.

(ii) Notwithstanding anything to the contrary in this section, if the Bonds are Book-Entry Bonds, payment of the Purchase Price for tendered Bonds shall be made in accordance with the rules and procedures of DTC, including the timing requirements of DTC.

(b) Limitation. Notwithstanding anything contained to the contrary in the Indenture, whileany Credit Facility is in effect for a Series of Bonds the Trustee shall not use proceeds obtained by remarketing anyBonds of such Series to the Corporation, any affiliate of the Corporation or the Authority to pay any portion of thePurchase Price of the tendered Bonds of such Series, and no such proceeds shall be deposited in the RemarketingAccount.

Pledge of Revenues and Credit Facility. Subject only to the provisions of the Indenture permitting theapplication thereof for the purposes and on the terms and conditions set forth in the Indenture, all of the Revenues



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and all amounts (but excluding any Additional Payments paid by the Corporation pursuant to the Agreement) held inany fund or account established pursuant to the Indenture other than the Rebate Fund and the Bond Purchase Fundare irrevocably pledged to the punctual payment of the principal of, premium, if any, and interest on the Bonds, andthereafter to the extent provided in the applicable Credit Agreement, to the payment of obligations due to the CreditProvider under the Credit Agreement. Subject only to the provisions of the Indenture permitting the applicationthereof for the purposes and on the terms and conditions set forth therein, all amounts in the Bond Purchase Fundwith respect to a Series of Bonds are irrevocably pledged to the punctual payment of the Purchase Price of theBonds of such Series tendered or deemed tendered for purchase pursuant to the Indenture and thereafter, to theextent provided in the applicable Credit Agreement, to the payment of obligations due to the Credit Provider under such Credit Agreement. Said pledge shall constitute a first and exclusive lien on the Revenues and the amounts insuch funds and accounts for the payment of the Bonds, and payment to the Credit Provider in accordance with theterms of the Indenture and of the Credit Agreement to the extent of their interests therein.

The Authority transfers in trust, grants a security interest in, assigns and sets over to the Trustee, for the benefit of the Holders from time to time of the Bonds and the applicable Credit Provider to the extent of their interest therein, all of the Revenues and the other amounts pledged in (a) above and all right, title and interest and

privileges it has in and under the Agreement, except (i) the Authority’s rights to receive any notices under theIndenture or the Agreement, (ii) the Authority’s right to receive and enforce its rights with respect to payments of fees, expenses and indemnification and certain other purposes under the Agreement and (iii) the Authority’s rights togive approvals or consents pursuant to the Agreement, including, without limitation, the right to collect and receive

directly all of the Revenues and the right to hold and enforce any security therefor; and any Revenues collected or received by the Authority shall be deemed to be held, and to have been collected or received, by the Authority as theagent of the Trustee, and shall forthwith be paid by the Authority to the Trustee. The assignment under the Indentureis to the Trustee solely in its capacity as Trustee under the Indenture and subject to the provisions of the Indenture,and in taking or refraining from taking any action under the Agreement pursuant to such assignment, the Trusteeshall be entitled to the protections and limitations from liability afforded it as Trustee under the Indenture. TheTrustee also shall be entitled to take all steps, actions and proceedings reasonably necessary in its judgment (1) toenforce the terms, covenants and conditions of, and preserve and protect the priority of its interest in and under, theAgreement, any Credit Facility and any other security agreement with respect to the Project or the Bonds, and (2) toassure compliance with all covenants, agreements and conditions on the part of the Authority contained in theIndenture with respect to the Revenues.

Each Credit Facility provided with respect to a Series of Bonds is (to the extent the Authority has any

interest therein) irrevocably pledged to the punctual payment of the principal and Purchase Price of, and interest on,such Bonds, and proceeds of any drawing on such Credit Facility shall not be used for any other purpose. Said

pledge shall constitute a first and exclusive lien in favor of the Trustee for the benefit of the Holders of such Bondsof the Authority’s interest, if any, in each Credit Facility and any payments thereunder for the payment of the

principal and Purchase Price of, and interest on, such Bonds in accordance with the terms thereof. Each CreditFacility, if any, and any payments thereunder shall be held in trust for the benefit of the Holders from time to time of such Bonds, but shall nevertheless be disbursed, allocated and applied solely for the uses and purposes set forth inthe Indenture.

The Corporation may at its sole discretion from time to time deliver to the Trustee or the Authority suchadditional or other security to secure the payment of the principal of and interest and premium, if any, on, andPurchase Price of, the Bonds and any such additional or other security delivered by the Corporation shall be pledgedto such payment, provided that the delivery of such additional or other security does not result in the inclusion of

interest on any Bonds in gross income for federal income tax purposes.

The Bonds do not constitute a debt or liability of the State or of any political subdivision thereof, other thanthe Authority, but shall be payable solely from the funds provided therefor. The Authority is not obligated to paythe principal of the Bonds, or the redemption premium or interest thereon, except from the funds provided under theIndenture and the Agreement and neither the faith and credit nor the taxing power of the State or of any politicalsubdivision thereof, including the Authority, is pledged to the payment of the principal of or the redemption

premium or interest on the Bonds. The issuance of the Bonds does not directly or indirectly or contingently obligatethe State or any political subdivision thereof to levy or to pledge any form of taxation or to make any appropriationfor their payment. The Authority has no taxing power.



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Notwithstanding anything contained in the Indenture, the Authority is not required to advance any moneysderived from any source of income of any governmental body or political subdivision of the State or the Authorityother than the Revenues and Additional Payments, for any of the purposes in the Indenture, whether for the paymentof the principal of or interest on the Bonds or for any other purpose of the Indenture. The Bonds are not generalobligations of the Authority, and are payable from and secured only by the Revenues and the other assets pledgedfor such payment under the Indenture.

Bond Fund. Upon the receipt thereof, the Trustee shall deposit all Revenues in the “California MunicipalFinance Authority Variable Rate Revenue Bonds (La Sierra University) Series 2008 Bond Fund” (the “Bond Fund”)which the Trustee shall establish and maintain and hold in trust, and which shall be disbursed and applied only asauthorized in the Indenture. Except as provided under this caption and pursuant to the provisions of the Indenturerelating to Credit Facilities and the payment of Bonds after Discharge, moneys in the Bond Fund shall be used solelyfor the payment of the principal of and premium, if any, and interest on all the Bonds as the same shall become due,

pari passu, whether at maturity or upon redemption or acceleration.

The Trustee shall deposit in the Bond Fund from time to time, upon receipt thereof, all RepaymentInstallments received by the Trustee from the Corporation, subject to the provisions of the Indenture relating to theinvestment of moneys, any income received from the investment of moneys on deposit in the Bond Fund and anyother Revenues; provided, however, that any prepayment of Repayment Installments received under the Agreementfrom or for the account of the Corporation shall be deposited in a special account in the Bond Fund established by

the Trustee for the purposes of receipt and application of such prepayment, or in such other fund or account held bythe Trustee for such purpose in accordance with the provisions of the Indenture relating to defeasance.

In making payments of principal of, premium, if any, and interest on the Bonds, the Trustee shall use anyRevenues received by the Trustee.

Investment of Moneys. Subject to certain provisions of the Indenture relating to arbitrage covenants andthe Rebate Fund, any moneys in any of the funds and accounts to be established by the Trustee pursuant to theIndenture (other than the Bond Purchase Fund and the Credit Facility Account) shall be invested upon the writtendirection of the Corporation signed by an Authorized Corporation Representative (such direction to specify the

particular investment to be made), by the Trustee, if and to the extent then permitted by law, in InvestmentSecurities. In the absence of such written direction, the Trustee is directed to invest available moneys in InvestmentSecurities described in paragraph (g) of the definition thereof. Moneys in any fund or account (other than the Bond

Purchase Fund and the Credit Facility Account) shall be invested in Investment Securities with respect to which payments of principal thereof and interest thereon are scheduled to be paid or are otherwise payable (includingInvestment Securities payable at the option of the Holder) not later than the date on which such moneys will berequired by the Trustee. For investment purposes only, the Trustee may commingle the funds and accountsestablished under the Indenture (other than the Bond Purchase Fund, the Credit Facility Account, the Rebate Fundand any fund or account established pursuant to the defeasance provisions of the Indenture) but shall account for each separately.

Notwithstanding the foregoing provisions, (i) any moneys held in the Bond Purchase Fund and any moneysconstituting payments under any Credit Facility shall be held uninvested unless such moneys are invested inaccordance with the Indenture to effect the defeasance of Bonds and (ii) any moneys constituting AvailableAmounts shall be invested in Investment Securities that are rated “Aaa” by S&P and that mature on or before thedate on which such moneys are to be applied to the payment of the Bonds.

Any interest, profit or loss on any investments of moneys in any fund or account under the Indenture shall be credited or charged to the respective funds from which such investments are made. The Trustee may sell or present for redemption any obligations so purchased whenever it shall be necessary in order to provide moneys tomeet any payment, and the Trustee shall not be liable or responsible for any loss, fee, tax or other charge resultingfrom any investment, reinvestment or liquidation under the Indenture. Unless otherwise directed by the Corporation,the Trustee may make any investment permitted under the Indenture through or with its own commercial banking or investment departments.



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The Authority (and the Corporation by its execution of the Agreement) acknowledges that to the extentregulations of the Comptroller of the Currency or other applicable regulatory entity grant the Authority or theCorporation the right to receive brokerage confirmations of security transactions as they occur, the Authority and theCorporation specifically waive receipt of such confirmations to the extent permitted by law. The Trustee will furnishthe Authority and the Corporation periodic cash transaction statements which include detail for all investmenttransactions made by the Trustee under the Indenture. The Trustee or any of its affiliates may act as sponsor, advisor or manager in connection with any investments made by the Trustee under the Indenture.

Repayment to Corporation or Credit Provider. When there are no longer any Bonds Outstanding under the Indenture, and all fees, charges and expenses of the Trustee, the applicable Credit Provider, and the RemarketingAgent have been paid or provided for, payment of the full amount owing the United States Government, asdetermined under the Agreement, the Indenture and the Tax Certificate, all expenses of the Authority relating to theProject and the Indenture have been paid or provided for, and all other amounts payable under the Indenture andunder the Agreement have been paid, and the Indenture has been discharged and satisfied in accordance with theIndenture, the Trustee shall pay to the Corporation any amounts remaining in any fund established and held under the Indenture; provided, however, that no payment shall be made to the Corporation and such amounts shall be paidto the applicable Credit Provider if and to the extent the Corporation has any obligations to a Credit Provider whichare then due and payable, as certified by such Credit Provider to the Trustee.

Credit Facilities.

(a) The Trustee shall hold and maintain each Credit Facility for the benefit of the Holdersfrom time to time of the Bonds until such Credit Facility expires in accordance with its terms. The Trustee shallenforce all terms, covenants and conditions of each Credit Facility, including drawing on a Credit Facility asrequired to provide for all payments of debt service or purchase price of Bonds, and the provisions relating to the

payment of draws on, and reinstatement of amounts that may be drawn under, such Credit Facility, and will notconsent to, agree to or permit any amendment or modification of a Credit Facility that would materially adverselyaffect the rights or security of the Holders from time to time of the Bonds. If at any time during the term of anapplicable Credit Facility any successor Trustee shall be appointed and qualified under the Indenture, the resigningor removed Trustee shall request that the Bank transfer the Credit Facility to the successor Trustee. If the resigningor removed Trustee fails to make this request, the successor Trustee shall do so before accepting appointment.When a Credit Facility expires in accordance with its terms or is replaced by an Alternate Credit Facility or the lienof the Indenture has been released as provided in the Indenture, the Trustee shall immediately surrender the Credit

Facility to the Credit Provider thereof.

(b) The Trustee acknowledges the right of the Corporation at any time to provide anAlternate Credit Facility with respect to the Bonds or any Series of the Bonds and, upon satisfaction of theconditions specified in the Agreement, to discontinue providing a Credit Facility with respect to the Bonds or anySeries of the Bonds. If there shall have been delivered to the Authority and the Trustee (i) an Alternate CreditFacility meeting the requirements of the Agreement and (ii) the opinions and documents required by the Agreement,then the Trustee shall accept such Alternate Credit Facility and, if so directed by the Corporation, upon theeffectiveness of such Alternate Credit Facility and the payment of the Purchase Price of all Bonds tendered for

purchase pursuant to the Indenture in connection with such Alternate Credit Facility (either from the proceeds of theremarketing of such Bonds or from amounts made available under the Credit Facility being replaced by suchAlternate Credit Facility) promptly surrender the Credit Facility theretofore in effect with respect to such Bonds inaccordance with the respective terms thereof for cancellation; provided the Trustee shall not surrender any Credit

Facility until all draws or requests to purchase Bonds made under such Credit Facility have been honored. In theevent that the Corporation elects to provide an Alternate Credit Facility, the Bonds secured by the Credit Facility

being replaced shall be subject to mandatory tender as provided in the Indenture. If at any time all Bonds of a Seriesshall cease to be Outstanding under the Indenture or the conditions specified in the Agreement permitting theCorporation to discontinue providing a Credit Facility with respect to the Bonds of a Series shall be satisfied, or aCredit Facility shall be terminated pursuant to its terms, the Trustee shall promptly surrender such Credit Facility inaccordance with its terms for cancellation. The Trustee shall comply with the procedures set forth in each CreditFacility relating to the termination thereof.



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(c) In the event that a Credit Facility is in effect with respect to a Series of Bonds, theTrustee shall make a demand for payment under such Credit Facility subject to and in accordance with its terms, inorder to receive payment thereunder not later than the time payment is due on the Bonds of such Series on thefollowing dates in the following amounts:

(i) On each Interest Payment Date, in an amount which will be sufficient to pay all

interest due and payable on the Outstanding Bonds of such Series on such Interest Payment Date;

(ii) On any date fixed for payment (whether by acceleration, maturity or otherwise),defeasance or redemption of the Bonds of such Series in an amount which, together with amounts demanded for

payment pursuant to paragraph (i) above, will be sufficient to pay the principal amount due on such Bonds,including accrued interest and premium, if any (if a demand for payment is permitted for premium under the termsof such Credit Facility); and

(iii) On each Purchase Date, in an amount sufficient to pay the Purchase Price of anyBonds of such Series tendered or deemed tendered pursuant to the Indenture and which have not been remarketed inaccordance with the Indenture, or for which sufficient remarketing proceeds have not been received as providedtherein.

(d) Each such demand for payment shall be made not later than the time required by theCredit Facility in order to receive payment thereunder not later than the time payment is required to be made to theHolders of such Bonds pursuant to the Indenture. The Trustee shall give notice of each such demand for payment tothe Corporation at the time of each such demand. The proceeds of each such demand shall be deposited in theCredit Facility Account in the Bond Fund or the Credit Facility Purchase Account in the Bond Purchase Fund, asappropriate, and used in the order of priority established by the Indenture. At the time of making any demand under a Credit Facility pursuant to the Indenture, the Trustee shall deposit the proceeds of such demand directly in theCredit Facility Account in the Bond Fund. At the time of making any demand under a Credit Facility pursuant tothe Indenture, the Trustee shall deposit the proceeds of such demand directly in the Credit Facility Purchase Accountin the Bond Purchase Fund. The Trustee shall comply with all provisions of each Credit Facility in order to realizeupon any demand for payment thereunder, and will not demand payment under any Credit Facility of any amountsfor payment of: (i) Credit Provider Bonds; or (ii) Bonds held by the Authority or the Corporation or actually known

by the Trustee to be held by any affiliate of the Corporation or any nominee of the Authority unless such CreditFacility specifically permits such demand.

(e) Whenever requested in writing by the Corporation, the Trustee shall submit to eachCredit Provider a reduction certificate or other appropriate documentation necessary under the applicable CreditFacility to reduce the principal amount of Bonds and related interest to which such Credit Facility relates to reflectany purchase or redemption and the cancellation of such Bonds.

Payment of Principal and Interest. The Authority shall punctually pay, but only out of Revenues, theother amounts pledged therefor under the Indenture, the proceeds of the remarketing of the Bonds and the proceedsof any demand under a Credit Facility, in each case as provided in the Indenture, the principal and Purchase Price of and the interest (and premium, if any) on every Bond issued under the Indenture at the times and places and in themanner provided therein and in the Bonds according to the true intent and meaning thereof. All such payments shall

be made by the Trustee as provided in the Indenture. When and as paid in full, all Bonds, if any, shall be deliveredto the Trustee and shall forthwith be cancelled by the Trustee, who shall deliver a certificate evidencing such

cancellation to the Authority and the Corporation. The Trustee may retain or destroy such cancelled Bonds.

Extension or Funding of Claims for Interest. In order to prevent any accumulation of claims for interestafter maturity, the Authority shall not, directly or indirectly, extend or assent to the extension of the time for the

payment of any claim for interest on any of the Bonds, and shall not, directly or indirectly, be a party to or approveany such arrangement by purchasing or funding such claims or in any other manner. In case any such claim for interest shall be extended or funded, whether or not with the consent of the Authority, such claim for interest soextended or funded shall not be entitled, in case of default under the Indenture, to the benefits of the Indenture,except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have been so extended or funded.



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Preservation of Revenues. The Authority shall not waive any provision of the Agreement or take anyaction to interfere with or impair the pledge and assignment under the Indenture of Revenues and the assignment tothe Trustee of rights under the Agreement, or the Trustee’s enforcement of any rights thereunder, without the prior written consent of the Trustee and the Credit Provider. The Trustee may give such written consent, and may itself take any such action, or consent to any Amendment, only in accordance with the provisions of the Indenture.

Other Liens. So long as any Bonds are Outstanding, the Authority shall not create or suffer to be createdany pledge, lien or charge of any type whatsoever upon all or any part of the Revenues, the other amounts pledgedunder the Indenture, the proceeds of the remarketing of the Bonds and the proceeds of demands under a CreditFacility, other than the lien of the Indenture.

Arbitrage Covenants; Rebate Fund.

(a) The Authority covenants with all persons who hold or at any time held Bonds that theAuthority will not directly or indirectly use the proceeds of any of the Bonds or any other funds of the Authority or

permit the use of the proceeds of any of the Bonds or any other funds of the Authority or take or omit to take anyother action which will cause any of the Bonds to be “arbitrage bonds” or to be otherwise subject to federal incometaxation by reason of Sections 103 and 141 through 150 of the Code and any applicable regulations promulgatedthereunder. To that end the Authority covenants to comply with all covenants set forth in the Tax Certificate, whichis incorporated in the Indenture by reference as though fully set forth therein.

(b) The Trustee shall establish and maintain a fund separate from any other fund establishedand maintained under the Indenture designated the “California Municipal Finance Authority Variable Rate RevenueBonds (La Sierra University), Series 2008 Rebate Fund” (the “Rebate Fund”). Within the Rebate Fund, the Trusteeshall maintain such accounts as shall be directed by the Corporation as necessary in order for the Authority and theCorporation to comply with the terms and requirements of the Tax Certificate. Subject to the transfer provisions

provided in paragraph (c) below, all money at any time deposited in the Rebate Fund shall be held by the Trustee intrust, to the extent required to satisfy the Rebate Requirement (as defined in the Tax Certificate), for payment to theUnited States Government, and neither the Corporation, the Authority nor the Bondholders shall have any rights inor claim to such moneys. All amounts deposited into or on deposit in the Rebate Fund shall be governed by theIndenture, the Agreement and by the Tax Certificate. The Trustee shall conclusively be deemed to have compliedwith such provisions if it follows the directions of the Corporation, including supplying all necessary informationrequested by the Corporation and the Authority in the manner set forth in the Tax Certificate, and shall not be

required to take any actions thereunder in the absence of written directions from the Corporation.

(c) Upon receipt of the Corporation’s written instructions, the Trustee shall remit part or allof the balances in the Rebate Fund to the United States Government, as so directed. In addition, if the Corporation sodirects, the Trustee will deposit moneys into or transfer moneys out of the Rebate Fund from or into such accountsor funds as directed by the Corporation’s written directions. Any funds remaining in the Rebate Fund after redemption and payment of all of the Bonds and payment and satisfaction of any Rebate Requirement shall bewithdrawn and remitted to the Corporation upon its written request.

(d) Notwithstanding any provision of the Indenture, including in particular the provisions of the Indenture relating to defeasance, the obligation of the Corporation to pay the Rebate Requirement to the UnitedStates Government and to comply with all other requirements of the Indenture, the Agreement and the TaxCertificate shall survive the defeasance or payment in full of the Bonds.

(e) Notwithstanding any provisions of the Indenture or the Agreement, if the Corporationshall provide to the Authority and the Trustee an Opinion of Bond Counsel that any specified action required under the Indenture or the Agreement is no longer required or that some further or different action is required to maintainthe status of interest on the Bonds as excluded from gross income for federal income tax purposes, the Corporation,the Trustee and the Authority may conclusively rely on such opinion in complying with the arbitrage and rebaterequirements and the covenants under the Indenture shall be deemed to be modified to that extent.



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Events of Default; Acceleration- Waiver of Default.

(a) Each of the following events shall constitute an “Event of Default” under the Indenture:

(i) Failure to make payment of any installment of interest upon any Bond whensuch payment shall have become due and payable;

(ii) Failure to make due and punctual payment of the principal of or premium, if any, on any Bond when such payment shall have become due and payable, whether at the stated maturity thereof, or upon proceedings for redemption thereof or upon the maturity thereof by declaration;

(iii) Failure to pay the Purchase Price of any Bond tendered or subject to mandatorytender pursuant to the Indenture;

(iv) The occurrence of an “Event of Default” under the Agreement, as specified inthe Indenture;

(v) Default by the Authority in the performance or observance of any other of thecovenants, agreements or conditions on its part contained in the Indenture or in the Bonds, and the continuance of such default for a period of thirty (30) days after written notice thereof, specifying such default and requiring thesame to be remedied, shall have been given to the Authority and the Corporation by the Trustee, or to the Authority,the Corporation and the Trustee by the Holders of not less than twenty-five percent (25%) in aggregate principalamount of the Bonds at the time Outstanding; or

(vi) The Trustee receives notice from a Credit Provider that an event of default under a Credit Agreement has occurred and is continuing and requiring that the principal of and interest on the Bondssubject to such Credit Facility be declared immediately due and payable.

(b) No default specified in (a)(v) above shall constitute an Event of Default unless theAuthority and the Corporation shall have failed to correct such default within the applicable 30-day period;

provided, however, that if the default shall be such that it can be corrected, but cannot be corrected within such period, it shall not constitute an Event of Default if corrective action is instituted by the Authority or, theCorporation within the applicable period and diligently pursued until the default is corrected. With regard to any

alleged default concerning which notice is given to the Corporation under these provisions, the Authority grants theCorporation full authority for the account of the Authority to perform any covenant or obligation the non-

performance of which is alleged in said notice to constitute a default in the name and stead of the Authority with full power to do any and all things and acts to the same extent that the Authority could do and perform any such thingsand acts and with power of substitution. Notwithstanding such grant, the Corporation shall not have any obligationto cure any default of the Authority.

(c) Upon (i) the occurrence of an Event of Default under (a)(vi) above the Trustee shallimmediately declare the principal amount of all Bonds then Outstanding subject to the Credit Facility for which theTrustee has received notice under (a)(vi) above and the interest accrued thereon immediately due and payable, andsuch principal and interest shall thereupon become and be immediately due and payable or (ii) the occurrence andcontinuation of any Event of Default specified above, the Trustee may, and shall, upon the written request of theHolders of not less than twenty-five percent (25%) in aggregate principal amount of Bonds then Outstanding and, if

a Credit Facility is in effect, the consent of the Credit Provider, by notice in writing delivered to the Corporation andthe Credit Provider, with copies of such notice being sent to the Authority, declare the principal of all Bonds thenOutstanding and the interest accrued thereon immediately due and payable, and such principal and interest shallthereupon become and be immediately due and payable. Interest on the Bonds so declared immediately due and

payable shall cease to accrue from and after the date of declaration of any such acceleration. For so long as a CreditFacility is in effect with respect to a Series of Bonds and so long as the applicable Credit Provider has not failed to

pay any properly presented draw on such Credit Facility, said Credit Provider shall be solely entitled to direct theacceleration of the Series of Bonds subject to such Credit Facility, and the Trustee shall have no discretion withrespect thereto. Notwithstanding the foregoing, the Trustee shall not be required to take any action upon the



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occurrence and continuation of an Event of Default under (a)(iv) or (a)(v) above until a Responsible Officer of theTrustee has actual knowledge of such Event of Default. After any declaration of acceleration under the Indenture theTrustee shall immediately declare all indebtedness payable under the Agreement with respect to such Bonds to beimmediately due and payable in accordance with the Agreement and may exercise and enforce such rights as existunder the Agreement.

The preceding paragraph, however, is subject to the condition that if, at any time after the principal of Bonds shall have been so declared due and payable, and before any judgment or decree for the payment of themoneys due shall have been obtained or entered as hereinafter provided, there shall have been deposited with theTrustee a sum which, together with any other amounts then held in the Bond Fund, is sufficient to pay all the

principal of such Bonds matured prior to such declaration and all matured installments of interest (if any) upon allthe Bonds, and the reasonable expenses (including reasonable attorneys’ fees) of the Trustee, and any and all other defaults actually known to the Trustee (other than in the payment of principal of and interest on such Bonds due and

payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Trusteein its sole discretion or provision deemed by the Trustee to be adequate shall have been made therefor; and providedthat if there has been an Event of Default after a draw upon a Credit Facility and Credit Facility has been reinstated,then, and in every such case, the Holders of at least a majority in aggregate principal amount of the Bonds thenOutstanding (by written notice to the Authority and to the Trustee accompanied by the written consent of the CreditProvider, may, on behalf of the Holders of all Bonds, rescind and annul such declaration with respect to the Bondsand its consequences and waive such default; provided that no such rescission and annulment shall extend to or shall

affect any subsequent default, or shall impair or exhaust any right or power consequent thereon. The Trustee shall provide the Credit Provider with notice of any such rescission.

Institution of Legal Proceedings by Trustee. In addition, if one or more of the Events of Default under the Indenture shall happen and be continuing, the Trustee in its sole discretion may, and upon the written request of a Credit Provider, or the Holders of a majority in aggregate principal amount of the Bonds then Outstanding with theconsent of all Credit Providers, and upon being indemnified to its satisfaction in its sole discretion therefor (including with respect to any expenses or liability the Trustee may incur) shall, proceed to protect or enforce itsrights or the rights of the Holders under the Indenture, by a suit in equity or action at law, either for the specific

performance of any covenant or agreement contained therein, or in aid of the execution of any power thereingranted, or by mandamus or other appropriate proceeding for the enforcement of any other legal or equitable remedyas the Trustee shall deem most effectual in support of any of its rights or duties under the Indenture.

Application of Moneys Collected by Trustee. Any moneys collected by the Trustee and moneys in thefunds and accounts (other than the Rebate Fund and the Bond Purchase Fund) on or after the occurrence of an Eventof Default shall be applied in the order following, at the date or dates fixed by the Trustee and, in the case of distribution of such moneys on account of principal (or premium, if any) or interest, upon presentation of the Bonds,and stamping thereon the payment, if only partially paid, and upon surrender thereof, if fully paid:

First: To the payment of costs and expenses of collection, just and reasonable compensation to theTrustee for its own services and for the services of counsel, agents and employees by it properly engagedand employed, and for advances made pursuant to the provisions of the Indenture; provided, that any

payments under a Credit Facility shall not be so applied.

Second: In case the principal of none of the Outstanding Bonds shall have become due andremains unpaid, to the payment of interest in default on the Outstanding Bonds in the order of the maturity

thereof, such payments to be made ratably and proportionately to the persons entitled thereto withoutdiscrimination or preference, except as specified in the Indenture; provided, however, that no payment of interest shall be made with respect to any Bonds held by the Authority, the Corporation or actually known

by the Trustee to be held by any affiliate of the Corporation, or any nominee of the Authority, theCorporation, or any affiliate of the Corporation, until interest due on all Bonds not so registered shall have

been paid.

Third: In case the principal of any of the Outstanding Bonds shall have become due bydeclaration or otherwise and remains unpaid, first to the payment of principal of all Outstanding Bonds thendue and unpaid, then to the payment of interest in default in the order of maturity thereof, and then to the



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payment of the premium thereon, if any; in every instance such payment to be made ratably to the personsentitled thereto without discrimination or preference, except as specified in the Indenture; provided,however, that no payment of principal or premium or interest shall be made with respect to any Bonds held

by the Authority, the Corporation or known by the Trustee to be held by any affiliate of the Corporation or any nominee of the Authority, the Corporation, or any affiliate of the Corporation, until all amounts due onall Bonds not so held have been paid.

Fourth: To the Credit Provider, if any, for amounts due under its Credit Facility other than as theHolder of Credit Provider Bonds, as certified by the Credit Provider to the Trustee.

Effect of Delay or Omission to Pursue Remedy. No delay or omission of the Trustee or of any Holder of Bonds to exercise any right or power arising from any default shall impair any such right or power or shall beconstrued to be a waiver of any such default or acquiescence therein, and every power and remedy given by theIndenture to the Trustee or to the Holders may be exercised from time to time and as often as shall be deemedexpedient. In case the Trustee shall have proceeded to enforce any right under the Indenture, and such proceedingsshall have been discontinued or abandoned because of waiver or for any other reason, or shall have been determinedadversely to the Trustee, then and in every such case the Authority, the Trustee, the Credit Provider, if any, and theHolders of the Bonds, severally and respectively, shall be restored to their former positions and rights under theIndenture; and all remedies, rights and powers of the Authority, the Trustee, the Credit Provider and the Holders of the Bonds shall continue as though no such proceedings had been taken.

Covenant to Pay Bonds in Event of Default. The Authority covenants that, upon the happening of anyEvent of Default, the Authority will pay to the Trustee upon demand, but only out of Revenues, amounts madeavailable under a Credit Facility and any other funds pledged therefor under the Indenture, for the benefit of theHolders of the Outstanding Bonds, the whole amount then due and payable thereon (by declaration or otherwise) for interest or for principal and premium, or both, as the case may be, and all other sums which may be due under theIndenture or secured thereby, including reasonable compensation to the Trustee, its agents and counsel, and anyexpenses or liabilities incurred by the Trustee under the Indenture. In case the Authority shall fail to pay the sameforthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled toinstitute proceedings at law or in equity in any court of competent jurisdiction to recover judgment for the wholeamount due and unpaid, together with costs and reasonable attorneys’ fees and expenses, subject, however, to thecondition that such judgment, if any, shall be limited to, and payable solely out of, Revenues, amounts madeavailable under a Credit Facility and any other funds pledged therefor under the Indenture, and not otherwise. The

Trustee shall be entitled to recover such judgment as aforesaid, either before or after or during the pendency of any proceedings for the enforcement of the Indenture, and the right of the Trustee to recover such judgment shall not beaffected by the exercise of any other right, power or remedy for the enforcement of the provisions of the Indenture.

Trustee Appointed Agent for Bondholders. The Trustee is appointed the agent and attorney of theHolders of all Bonds Outstanding under the Indenture for the purpose of filing any claims relating to the Bonds.

Power of Trustee to Control Proceeding. In the event that the Trustee, upon the happening of an Eventof Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties under theIndenture, whether upon its own discretion or upon the request of Holders of the Bonds, it shall have full power, inthe exercise of its discretion for the best interests of the Holders of the Bonds or the Credit Provider, with respect tothe continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided,however, that the Trustee shall not, unless there no longer continues an Event of Default under the Indenture,

discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if atthe time there has been filed with it a written request signed by the Credit Provider, if any, or the Holders of at leasta majority in principal amount of the Bonds Outstanding under the Indenture opposing such discontinuance,withdrawal, compromise, settlement or other disposal of such litigation with the consent of the Credit Provider.

All rights of action under the Indenture or under any of the Bonds secured by the Indenture which areenforceable by the Trustee may be enforced by it without the possession of any of the Bonds, or the productionthereof at the trial or other proceedings relative thereto, and any such suit, action or proceeding instituted by theTrustee shall be brought in its name as Trustee of an express trust for the equal and ratable benefit of theBondholders, subject to the provisions of the Indenture.



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Limitation on Bondholders’ Right to Sue. (a) (i) Except as provided in the Indenture, no Holder of aBond issued under the Indenture shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon the Indenture, unless (i) such Holder shall have previously given to the Trustee writtennotice of the occurrence of an Event of Default under the Indenture; (ii) the Holders of at least a majority inaggregate principal amount of all the Bonds then Outstanding shall have made written request upon the Trustee toexercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (iii) saidHolders shall have tendered to the Trustee indemnity satisfactory to it against the costs, expenses (includingreasonable attorneys’ fees) and liabilities to be incurred in compliance with such request; (iv) the Trustee shall haverefused or omitted to comply with such request for a period of thirty (30) days after such written request shall have

been received by, and said tender of indemnity shall have been made to, the Trustee; and (v) each Credit Provider shall have consented.

(ii) Such notification, request, tender of indemnity and refusal or omission aredeclared, in every case, to be conditions precedent to the exercise by any Holder of Bonds of anyremedy under the Indenture; it being understood and intended that no one or more Holders shallhave any right in any manner whatever by his or her or their action to enforce any right under theIndenture, except in the manner provided in the Indenture, and that all proceedings at law or inequity to enforce any provision of the Indenture shall be instituted, had and maintained in themanner provided in the Indenture and for the equal benefit of all Holders of the OutstandingBonds, subject to the provisions of the Indenture.

(b) The right of any Holder to receive payment of the principal of (and premium, if any) andinterest on a Bond out of Revenues, amounts made available under a Credit Facility and any other funds pledgedtherefor under the Indenture, as therein provided, on and after the respective due dates expressed in such Bond, or toinstitute suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder, notwithstanding the foregoing or any other provision of the Indenture.

Duties, Immunities and Liabilities of Trustee.

(a) The Trustee shall, prior to an Event of Default under the Indenture, and after the curing of all Events of Default under the Indenture which may have occurred, shall perform such duties and only such dutiesas are specifically set forth in the Indenture. The Trustee shall, during the existence of any Event of Default under the Indenture (which has not been cured), exercise such of the rights and powers vested in it by the Indenture, and

use the same degree of care and skill in their exercise, as prudent persons would exercise or use under thecircumstances in the conduct of their own affairs.

(b) No provision of the Indenture shall be construed to relieve the Trustee from liability for its own negligent action or its own negligent failure to act or its own willful misconduct, except that:

(i) Prior to the occurrence of any Event of Default under the Indenture and after thecuring of all Events of Default which may have occurred, the duties and obligations of the Trusteeshall at all times be determined solely by the express provisions of the Indenture; the Trustee shallnot be liable except for the performance of such duties and obligations as are specifically set forthin the Indenture; and no covenants or obligations shall be implied into the Indenture which areadverse to the Trustee; and

(ii) At all times, regardless of whether or not any Event of Default shall exist,

(A) the Trustee shall not be liable for any error of judgment made in goodfaith by a Responsible Officer or Officers of the Trustee unless it shall be proved that theTrustee was negligent in ascertaining the pertinent facts; and

(B) the Trustee shall not be personally liable with respect to any actiontaken, permitted or omitted by it in good faith in accordance with the direction of theHolders of not less than a majority, or such other percentage as may be required under the



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Indenture, in aggregate principal amount of the Bonds Outstanding relating to the time,method and place of conducting any proceeding for any remedy available to the Trustee,or exercising any trust or power conferred upon the Trustee under the Indenture; and

(C) in the absence of bad faith on the part of the Trustee, the Trustee mayconclusively rely, as to the truth of the statements and the correctness of the opinions

expressed therein, upon any certificate or opinion furnished to the Trustee conforming tothe requirements of the Indenture; but in the case of any such certificate or opinion, theTrustee shall be under a duty to examine the same to determine whether or not itconforms to the requirements of the Indenture.

(iii) The Trustee may execute any of the trusts or powers of the Indenture and perform the duties required of it under the Indenture by or through attorneys, agents or receivers,and shall be entitled to advice of counsel concerning all matters of trust and concerning its dutiesunder the Indenture and the Trustee shall not be responsible for any misconduct or negligence onthe part of any attorney or agent appointed with due care by it under the Indenture.

(c) None of the provisions contained in the Indenture shall require the Trustee to expend or risk its own funds or otherwise incur individual financial liability in the performance of any of its duties or in theexercise of any of its rights or powers. The permissive right of the Trustee to perform acts enumerated in theIndenture or the Agreement shall not be construed as a duty or obligation under the Indenture.

Right of Trustee to Rely upon Documents, Etc. Except as otherwise provided in the Indenture:

(a) The Trustee may rely and shall be protected in acting upon any resolution, certificate,statement, instrument, opinion, report, notice, request, consent, order, bond, direction, demand, election or other

paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

(b) Any notice, request, direction, election, order or demand of the Authority mentioned inthe Indenture shall be deemed to be sufficiently evidenced by an instrument signed in the name of the Authority byan Authorized Authority Representative;

(c) The Trustee may consult with counsel of its selection (who may include its own counsel

or counsel for the Authority or Bond Counsel) and the opinion of such counsel shall be full and completeauthorization and protection in respect of any action taken or suffered by it under the Indenture in good faith and inaccordance with the opinion of such counsel; and

(d) Whenever in the administration of the trusts of the Indenture the Trustee shall deem itnecessary or desirable that a matter be proved or established prior to taking or suffering any action under theIndenture, such matter (unless other evidence in respect thereof be specifically prescribed therein) may, in theabsence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established

by a Certificate of the Authority; and such Certificate of the Authority shall, in the absence of negligence or badfaith on the part of the Trustee, be full warrant to the Trustee for any action taken or suffered by it under the

provisions of the Indenture upon the faith thereof.

(e) The Trustee shall have no responsibility with respect to any information, statement or

recital in any official statement, offering memorandum or any other disclosure material prepared or distributed withrespect to the Bonds.

(f) The Trustee shall not be deemed to have knowledge of an Event of Default under theIndenture, under the Agreement or any other document related to the Bonds unless it shall have actual knowledge atits Principal Office.



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(g) Before taking any action under the provisions of the Indenture relating to Default, theTrustee may require indemnity satisfactory to the Trustee be furnished from any expenses and to protect it againstany liability it may incur under the Indenture, subject to the provisions of the Indenture relating to indemnification.

(h) The immunities extended to the Trustee also extend to its directors, officers, employeesand agents.

(i) The Trustee may accept, hold and draw upon the Credit Facility issued by itself or by any of itscorporate affiliates to provide security and a source of payment for the Bonds. The Trustee covenants that it shall atall times maintain adequate controls to manage any potential conflict of interest. Notwithstanding any other

provision in the Indenture to the contrary, while the Credit Provider issuing the Credit Facility or Alternate CreditFacility is the Trustee or an affiliate of the Trustee and such Credit Provider has not failed to honor a properly

presented draw on the Credit Facility or Alternate Credit Facility, the Trustee shall have no discretion with respect tothe acceleration of the Bonds and shall do so only upon the written direction of such Credit Provider. The Trusteeshall immediately tender its resignation and take prompt steps to have a successor trustee appointed satisfying therequirements of the Indenture if such affiliated Credit Provider shall fail at any time to honor a properly presenteddraw on the Credit Facility.

Moneys Received by Trustee to Be Held in Trust. Subject to the provisions of the Indenture relating todefeasance, all moneys received by the Trustee shall, until used or applied as provided in the Indenture, be held intrust for the purposes for which they were received, but need not be segregated from other funds except to the extentrequired by law or as otherwise provided therein. Except to the extent provided otherwise in the Indenture, anyinterest allowed on any such moneys shall be deposited in the fund to which such moneys are credited. AvailableAmounts, moneys being held to become Available Amounts, amounts received under any Credit Facility and

proceeds of any remarketing of Bonds shall not be commingled with any other funds held by the Trustee under theIndenture.

Resignation and Removal of Trustee and Appointment of Successor Trustee.

(a) The Trustee may at any time resign by giving written notice to the Authority, theCorporation and the Credit Provider, if any, and by giving to the Bondholders notice either by publication of suchresignation, which notice shall be published at least once in a Qualified Newspaper, or by giving Notice by Mail tosuch Bondholders. The Trustee shall also mail a copy of any such notice of resignation to the Rating Agency. Upon

receiving such notice of resignation, the Authority, with the advice and consent of the Corporation and the consentof the Credit Provider shall promptly appoint a successor trustee by an instrument in writing. If no successor trusteeshall have been so appointed and have accepted appointment within thirty (30) days after the giving of such noticeof resignation by the resigning Trustee, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor trustee, or any Bondholder who has been a bona fide Holder for at least six (6)months may, on behalf of himself and others similarly situated, petition any such court for the appointment of asuccessor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and may prescribe,appoint a successor trustee.

(b) In case at any time either of the following shall occur:

(i) the Trustee shall cease to be eligible in accordance with the provisions of theIndenture and shall fail to resign after written request therefor by the Authority or by any Bondholder who has been

a bona fide Holder for at least six (6) months, or

(ii) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,

then, in any such case, the Authority may remove the Trustee and, with the advice and consent of the Corporationand the consent of the Credit Provider appoint a successor trustee by an instrument in writing, or any Bondholder who has been a bona fide Holder for at least six (6) months may, on behalf of himself and others similarly situated,



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petition any court of competent jurisdiction for the removal of the Trustee, and the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and may prescribe, remove theTrustee, and appoint a successor trustee. Upon any removal of the Trustee, any outstanding fees and expenses of such former Trustee shall be paid in accordance with the Indenture.

(c) The Authority or the Corporation, in the absence of an Event of Default, or the Holders of

a majority in aggregate principal amount of the Bonds at the time Outstanding may at any time remove the Trustee,and with the consent of the Credit Provider, if any, appoint a successor trustee, by an instrument or concurrentinstruments in writing signed by the Authority, or the Corporation or such Bondholders, as the case may be.

(d) Any resignation or removal of the Trustee, and appointment of a successor trustee, pursuant to any of the provisions of this section shall become effective only upon acceptance of appointment by thesuccessor trustee as provided in the Indenture, and upon transfer of the Credit Facility, if any, then in effect to thesuccessor trustee.

Acceptance of Trust by Successor Trustee. Any successor trustee appointed as provided in the Indentureshall execute, acknowledge and deliver to the Authority, the Corporation, the Credit Provider, if any, and to its

predecessor Trustee an instrument accepting such appointment under the Indenture, and thereupon the resignation or removal of the predecessor Trustee shall become effective and such successor trustee, without any further act, deedor conveyance, shall become vested with all the rights, powers, trusts, duties and obligations of its predecessor in thetrusts under the Indenture, with like effect as if originally named as Trustee in the Indenture; but, nevertheless, onthe Written Request of the Authority, the Request of the Corporation or the request of the successor trustee, theTrustee ceasing to act shall execute and deliver an instrument transferring to such successor trustee, upon the truststherein expressed, all the rights, powers and trusts of the trustee so ceasing to act. Upon request of any suchsuccessor trustee, the Authority shall execute any and all instruments in writing necessary or desirable for more fullyand certainly vesting in and confirming to such successor trustee all such rights, powers and duties. Any Trusteeceasing to act shall, nevertheless, retain a lien upon all property or funds held or collected by such Trustee to securethe amounts due it as compensation, reimbursement, expenses and indemnity afforded to it by the Indenture.

No successor trustee shall accept appointment unless at the time of such acceptance such successor trusteeshall be eligible under the provisions of the Indenture.

Upon acceptance of appointment by a successor trustee, the Authority or such successor trustee shall give

the Bondholders, the Credit Provider, if any, and the Rating Agency notice of the succession of such trustee to thetrusts under the Indenture in the manner prescribed in the Indenture for the giving of notice of resignation of theTrustee.

Modification Without Consent of Bondholders.

(a) The Authority and the Trustee, without the consent of or notice to any Bondholders fromtime to time and at any time, with the consent of each Credit Provider, if any, but subject to the conditions andrestrictions contained in the Indenture, may enter into a Supplemental Indenture or Supplemental Indenturesamending or supplementing the Indenture as theretofore in effect, which Supplemental Indenture or Indenturesthereafter shall form a part thereof; and the Trustee, without the consent of or notice to any Bondholders, with theconsent of each Credit Provider, if any, from time to time and at any time may consent to any Amendment to theAgreement; in each case for any one or more of the following purposes:

(i) to add to the covenants and agreements of the Authority contained in theIndenture, or of the Corporation contained in the Agreement, other covenants and agreementsthereafter to be observed, or to assign or pledge additional security for any of the Bonds, or tosurrender any right or power therein reserved to or conferred upon the Authority or theCorporation; provided, that no such covenant, agreement, assignment, pledge or surrender shallmaterially adversely affect the interests of the Holders of the Bonds;



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(ii) to make such provisions for the purpose of curing any ambiguity, inconsistencyor omission, or of curing, correcting or supplementing any defective provision contained in theIndenture or the Agreement, or in regard to matters or questions arising under the Indenture or theAgreement, as the Authority may deem necessary or desirable and not inconsistent with theIndenture and which shall not materially adversely affect the interests of the Holders of the Bonds;

(iii) to modify, amend or supplement the Indenture or any Supplemental Indenture insuch manner as to permit the qualification thereof under the Trust Indenture Act of 1939 or anysimilar federal statute hereafter in effect, and, if they so determine, to add to the Indenture or anySupplemental Indenture such other terms, conditions and provisions as may be permitted by saidTrust Indenture Act of 1939 or similar federal statute, and which shall not materially adverselyaffect the interests of the Holders of the Bonds;

(iv) to provide for any additional procedures, covenants or agreements necessary tomaintain the status of interest on the Bonds as excluded from gross income for federal income tax

purposes; provided that such Amendment or Supplemental Indenture shall not materiallyadversely affect the interests of the Holders of the Bonds;

(v) to modify or eliminate the book-entry registration system for the Bonds;

(vi) to provide for the appointment of a co-trustee or the succession of a newTrustee;

(vii) to change the description of the Project in accordance with the provisions of theAgreement and of the Tax Certificate;

(viii) to provide for an extension of a Credit Facility or the provision of an AlternateCredit Facility;

(ix) to comply with requirements of the Rating Agency in order to obtain or maintaina rating on any Bonds;

(x) in connection with any other change which will not adversely affect the security

for the Bonds or the status of interest on the Bonds as excluded from gross income for federalincome tax purposes or otherwise materially adversely affect the interests of the Holders of theBonds (such determination may be based upon an Opinion of Counsel); or

(xi) to modify, alter, amend or supplement the Indenture or the Agreement in anyother respect, including amendments which would otherwise be described in the provisions of theIndenture under the caption “Modification of the Indenture With Consent of Bondholders,” if theeffective date of such Supplemental Indenture or Amendment is a date on which all Bondsaffected thereby are subject to mandatory tender for purchase or if Notice by Mail of the proposedSupplemental Indenture or Amendment is given to Holders of the affected Bonds at least thirty(30) days before the effective date thereof and, on or before such effective date, such Bondholdershave the right to demand purchase of their Bonds pursuant to the Indenture.

(b) Before the Authority or the Trustee enters into a Supplemental Indenture and before theTrustee consents to any Amendment to the Agreement pursuant to these provisions, the Authority or the Trustee, asthe case may be, shall cause notice of the proposed execution of the Supplemental Indenture or Amendment to begiven by mail to each Credit Provider and the Rating Agency. A copy of the proposed Supplemental Indenture or Amendment shall accompany such notice. Not less than one week after the date of the first mailing of such notice,the Authority and/or the Trustee may execute and deliver such Supplemental Indenture or Amendment, but onlyafter there shall have been delivered to the Trustee an Approving Opinion regarding such Supplemental Indenture or Amendment.



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(c) Notwithstanding the foregoing provisions, the Trustee shall not be obligated to enter intoany such Supplemental Indenture which affects the Trustee’s own rights, duties or immunities under the Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such SupplementalIndenture, and the Trustee shall not enter into any Supplemental Indenture or consent to any Amendment withoutfirst obtaining the written consent of the Corporation. Any such Supplemental Indenture or Amendment may beapproved by an Authorized Authority Representative and need not be approved by resolution or other action of theBoard of Directors of the Authority.

Modification with Consent of Bondholders.

(a) With the consent of the Holders of not less than a majority in aggregate principal amountof the Bonds at the time Outstanding, evidenced as provided in the Indenture, and each Credit Provider, if any,(i) the Authority and the Trustee may from time to time and at any time enter into a Supplemental Indenture or Indentures for the purpose of adding any provisions to or changing in any manner or eliminating any of the

provisions of the Indenture or of any Supplemental Indenture; or (ii) the Trustee may consent to any Amendment tothe Agreement; provided, however, that no such Supplemental Indenture or Amendment will have the effect of extending the time for payment or reducing any amount due and payable by the Corporation pursuant to theAgreement with respect to the Bonds without the consent of the Holder of each Bond so affected; and that no suchSupplemental Indenture shall (1) extend the fixed maturity of any Bond or reduce the rate of interest thereon or extend the time of payment of interest, or reduce the amount of the principal thereof, or reduce any premium payable

on the redemption thereof, without the consent of the Holder of each Bond so affected, or (2) reduce the aforesaid percentage of Holders whose consent is required for the execution of such Supplemental Indenture or Amendment,or permit the creation of any lien on the Revenues and the other funds pledged to the payment of the Bonds under the Indenture, prior to or on a parity with the lien of the Indenture, except as permitted in the Indenture, or permit thecreation of any preference of any Bondholder over any other Bondholder, except as permitted in the Indenture, or deprive the Holders of the Bonds of the lien created by the Indenture upon the Revenues and the other funds pledgedto the payment of the Bonds under the Indenture, without the consent of the Holders of all the Bonds thenOutstanding. Nothing in this paragraph shall be construed as making necessary the approval of any Bondholder of any Supplemental Indenture or Amendment permitted by the provisions of the Indenture.

(b) Upon receipt by the Trustee of: (1) Approving Opinion regarding such SupplementalIndenture or Amendment; and (2) evidence of the consent of the Bondholders and each Credit Provider, if any, asaforesaid, the Trustee shall join with the Authority in the execution of such Supplemental Indenture or shall consent

to such Amendment; provided, however, that (i) the Trustee shall not be obligated to enter into any suchSupplemental Indenture which affects the Trustee’s own rights, duties or immunities under the Indenture or otherwise, in which case the Trustee may in its sole discretion, but shall not be obligated to, enter into suchSupplemental Indenture; and (ii) the Trustee shall not enter into such Supplemental Indenture or Amendmentwithout first obtaining the Corporation’s written consent thereto.

(c) It shall not be necessary for the consent of the Bondholders to approve the particular formof any proposed Supplemental Indenture or Amendment, but it shall be sufficient if such consent shall approve thesubstance thereof.

(d) Promptly after the execution by the parties thereto of any Supplemental Indenture or Amendment, the Trustee shall mail a notice (prepared by the Corporation) setting forth in general terms thesubstance of such Supplemental Indenture or such Amendment to each Credit Provider, if any, to each Bondholder

at the address contained in the Bond Register and to the Rating Agency. Any failure of the Trustee to give suchnotice, or any defect therein, shall not, however, in any way impair or affect the validity of any such SupplementalIndenture or such Amendment.

Effect of Supplemental Indenture or Amendment. Upon the execution of any Supplemental Indentureor any Amendment to the Agreement pursuant to the provisions of the Indenture, the Indenture or the Agreement, asthe case may be, shall be and be deemed to be modified and amended in accordance therewith, and the respectiverights, duties and obligations under the Indenture and the Agreement of the Authority, the Trustee, the Corporation,the Credit Provider and all Holders of Outstanding Bonds shall thereafter be determined, exercised and enforcedthereunder and under the Agreement subject in all respects to such Supplemental Indenture and Amendment, and all



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the terms and conditions of any such Supplemental Indenture or Amendment shall be part of the terms andconditions of the Indenture or the Agreement, as the case may be, for any and all purposes.

Discharge of Indenture. If the entire indebtedness on all Bonds shall be paid and discharged in any one or more of the following ways:

(a) by the payment of the principal of, and premium, if any, and interest on all Bonds, as andwhen the same become due and payable; or

(b) by the delivery to the Trustee, for cancellation by it, of all Bonds; or

(c) by providing for the payment or redemption thereof as provided in the Indenture;

and if all other sums payable under the Indenture by the Authority and all sums payable to each Credit Provider under each Credit Agreement, if any, shall be paid and discharged, then thereupon the Indenture shall cease,terminate and become null and void, all liability of the Authority and the Corporation in respect of the Bonds shallcease, terminate and be completely discharged, except: (i) that the Authority shall remain liable for such payment

but only from, and the Bondholders shall thereafter be entitled only to payment (without interest accrued thereonafter such redemption date or maturity date) out of, the money and Government Obligations deposited with theTrustee as aforesaid for their payment, subject, however, to the provisions of the Indenture and (ii) that in the case of Bonds (or portions thereof) for which provision for the payment or redemption thereof has been made in accordancewith the provisions of the Indenture relating to defeasance, the provisions of the Indenture relating to the transfer and exchange of such Bonds (or portions thereof) and, if so reserved by the Authority, the right to call the Bonds for optional redemption prior to maturity shall continue to apply to such Bonds (or portions thereof). Thereupon theTrustee shall, upon Written Request of the Authority, which the Authority shall provide upon direction of theCorporation, and upon receipt by the Trustee of an Opinion of Bond Counsel, stating that in the opinion of the signer all conditions precedent to the satisfaction and discharge of the Indenture have been complied with, forthwithexecute proper instruments acknowledging satisfaction of and discharging the Indenture. The Trustee shall mailwritten notice of such payment and discharge to the applicable Rating Agency. The satisfaction and discharge of theIndenture shall be without prejudice to the rights of the Trustee to charge and be reimbursed by the Corporation for any expenditures which it may thereafter incur in connection herewith.

Discharge of Liability of Particular Bonds.

(a) Any Bond, or any portion thereof such that the portion that is not considered paid inaccordance with this paragraph shall be in an Authorized Denomination, shall be deemed to be paid within themeaning of, and with the effect set forth in the Indenture when, whether upon or prior to the maturity or redemptiondate, as applicable, (a) payment of the principal and Purchase Price of and premium, if any, on such Bond or such

portion thereof, plus interest thereon to the due date thereof (whether such due date is by reason of maturity or uponredemption), either (i) shall have been made in accordance with the terms thereof, or (ii) shall have been providedfor by irrevocably depositing with the Trustee in trust and irrevocably setting aside exclusively for such payment(1) Available Amounts sufficient to make such payment or (2) nonprepayable, noncallable Government Obligations

purchased with the Available Amounts and maturing as to principal and interest in such amounts and at such timesas will insure, without reinvestment, the availability of sufficient moneys, together with any other AvailableAmounts needed by the Trustee for such purposes, to make such payment (based on an assumed interest rate equalto the Maximum Interest Rate for periods for which the actual interest rate on the Bonds cannot be determined),

provided, however, that provision for the payment of the Purchase Price of such Bond may be made by means of aCredit Facility; (b) if such Bond (or portion thereof) is to be redeemed prior to the maturity thereof, notice of suchredemption shall have been given as provided in the Indenture or provision satisfactory to the Trustee shall have

been made for giving such notice; (c) all necessary and proper fees, compensation and expenses of the Trustee pertaining to any such deposit shall have been paid or the payment thereof provided for to the satisfaction of theTrustee; (d) the Trustee shall have been irrevocably instructed (by the terms of the Indenture or a Written Request of the Authority) to apply such Available Amounts and Government Obligations to the payment of the principal (andunless such Purchase Price is to be paid from amounts made available under a Credit Facility, the Purchase Price) of,

premium, if any, and interest on the Bond (or portion thereof) to be discharged; (e) the Authority and the Trusteeshall have received an Approving Opinion with respect to such deposit of Available Amounts and/or Government



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Obligations; and (f) the Authority and the Trustee shall have received an Accountant’s Certificate verifying that theAvailable Amounts and Government Obligations so deposited, together with the interest earnings thereon (withoutreinvestment) will be sufficient to pay when due the principal (and unless such Purchase Price to be paid fromamounts made available under a Credit Facility, the Purchase Price) of, premium, if any, and interest on the Bond(or portion thereof) to be discharged to and including the earlier of its maturity or redemption date. The Trusteeshall not be responsible for verifying the sufficiency of funds or Government Obligations provided to effect thedefeasance of Bonds.

(b) The Authority and the Corporation may at any time surrender to the Trustee for cancellation by it any Bonds previously authenticated and delivered which the Authority and the Corporationlawfully may have acquired in any manner whatsoever, and such Bonds, upon such surrender and cancellation, shall

be deemed to be paid and retired.

Payment of Bonds after Discharge. Notwithstanding any provisions of the Indenture to the contrary, andsubject to applicable laws of the State, any moneys deposited with the Trustee, in trust for the payment of the

principal of, or interest or premium on, any Bond remaining unclaimed for two (2) years after such payment has become due and payable (whether on an Interest Payment Date, at maturity, upon call for redemption or bydeclaration as provided in the Indenture), then such moneys shall be repaid to the Corporation upon its writtenrequest, and the Holder of such Bond shall thereafter be entitled to look only to the Corporation for payment thereof,and all liability of the Authority and the Trustee with respect to such moneys shall thereupon cease; provided,

however, that before the repayment of such moneys to the Corporation as aforesaid, the Trustee shall (at the expenseof the Corporation) first publish at least once in a Qualified Newspaper a notice, in such form as may be deemedappropriate by the Corporation and the Trustee, in respect of the amount so payable with respect to such Bond and inrespect of the provisions relating to the repayment to the Corporation of the moneys held for the payment thereof. Inthe event of the repayment of any such moneys to the Corporation as aforesaid, the Holder of the Bond in respect of which such moneys were deposited shall thereafter be deemed to be an unsecured creditor of the Corporation for amounts equivalent to the respective amounts deposited for the payment of the amount so payable with respect tosuch Bond and so repaid to the Corporation (without interest thereon).

Limitation of Rights to Parties and Bondholders.

(a) Nothing in the Indenture or in the Bonds expressed or implied is intended or shall beconstrued to give to any person other than the Authority, the Trustee, the Corporation, each Credit Provider, if any,

and the Holders of the Bonds any legal or equitable right, remedy or claim under or in respect of the Indenture or any covenant, condition or provision therein contained; and all such covenants, conditions and provisions are andshall be held to be for the sole and exclusive benefit of the Authority, the Trustee, the Corporation, each CreditProvider and the Holders of the Bonds.

(b) To the extent that any provision of the Indenture expressly confers rights upon a CreditProvider (including, without limitation, rights to provide consents or directions or to give or receive notices) the

parties agree and acknowledge that such Credit Provider is a third party beneficiary of such provision and that suchCredit Provider may enforce such provision against the other parties to the Agreement.

LOAN AGREEMENT

Agreement to Acquire and Construct the Project. The Corporation agrees that it will acquire, construct,

install, improve, renovate, remodel, furnish and equip, or complete the acquisition, construction, installation,improvement, renovation, remodeling, furnishing and equipping of, the Project, and will acquire, construct, install,improve, renovate, remodel, furnish and equip all other facilities and real and personal property deemed necessaryfor the operation of the Project as a part of the Facilities, substantially in accordance with the description of theProject, including any and all supplements, amendments and additions or deletions thereto or therefrom, it beingunderstood that the approval of the Authority shall not be required for changes in such descriptions which do notsubstantially alter the purpose and description of the Project referred to above. The Corporation further agrees to

proceed with due diligence to complete the Project within three years from the date of the Agreement.



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Establishment of Completion Date; Obligation of Corporation to Complete.

(a) As soon as the acquisition, construction, installation, improvement, renovation,remodeling, furnishing and equipping of the Project is completed, the Authorized Corporation Representative, on

behalf of the Corporation, shall evidence the Completion Date by providing a certificate to that effect to the Trusteestating the Costs of the Project. Notwithstanding the foregoing, such certificate may state that it is given without

prejudice to any rights of the Corporation against third parties for any claims or for the payment of any amount notthen due and payable which exists at the date of such certificate or which may subsequently exist.

(b) At the time such certificate is delivered to the Trustee, moneys remaining in theConstruction Fund (other than moneys relating to provisional payments permitted by the Agreement), including anyearnings resulting from the investment of such moneys, shall be used as provided in the Indenture.

(c) In the event the moneys in the Construction Fund available for payment of the Costs of the Project should be insufficient to pay the costs thereof in full, the Corporation agrees to pay directly, or to depositin the Construction Fund moneys sufficient to pay, any costs of completing the Project in excess of the moneysavailable for such purpose in the Construction Fund. The Authority makes no express or implied warranty that themoneys deposited in the Construction Fund and available for payment of the Costs of the Project under the

provisions of the Agreement, will be sufficient to pay all the amounts which may be incurred for such costs of theProject. The Corporation agrees that if, after exhaustion of the moneys in the Construction Fund, the Corporationshould pay, or deposit moneys in the Construction Fund for the payment of, any portion of the costs of the Project

pursuant to the provisions of this section, it shall not be entitled to any reimbursement therefor from the Authority,from the Trustee or from the Holders of any of the Bonds, nor shall it be entitled to any diminution of the amounts

payable under the Agreement.

Repayment and Payment of Other Amounts Payable.

(a) (i) With respect to the Bonds, the Corporation covenants and agrees to pay to theTrustee as a Repayment Installment, on or before each date provided in or pursuant to the Indenture for the paymentof principal of (whether at maturity or upon redemption or acceleration), premium, if any, and/or interest on theOutstanding Bonds, until the principal of, premium, if any, and interest on the Bonds shall have been fully paid or

provision for the payment thereof shall have been made in accordance with the Indenture, in immediately availablefunds, for deposit in the Bond Fund, a sum equal to the amount then payable as principal (whether at maturity or

upon redemption or acceleration), premium, if any, and interest upon the Outstanding Bonds as provided in theIndenture. The Corporation agrees that any amounts due as a result of the acceleration of the maturity of the Bondsshall be due and payable immediately upon such acceleration.

(ii) Each payment made by the Corporation pursuant to this section shall at all times be sufficient to pay the total amount of interest and principal (whether at maturity or upon redemption or acceleration) and premium, if any, then payable on the Bonds; provided that any amount held by the Trustee in theBond Fund on any due date for a Repayment Installment under the Indenture shall be credited against theRepayment Installment due on such date, to the extent available for such purpose; and provided further that, subjectto the provisions of this paragraph, if at any time the available amounts held by the Trustee in the Bond Fund aresufficient to pay all of the principal of and interest and premium, if any, on the Bonds as such payments become due,the Corporation shall be relieved of any obligation to make any further payments with respect to the Bonds under the

provisions of this section. Notwithstanding the foregoing, if on any date the amount held by the Trustee in the Bond

Fund is insufficient to make any required payments of principal of (whether at maturity or upon redemption or acceleration) and interest and premium, if any, on the Bonds as such payments become due, the Corporation shallforthwith pay such deficiency as a Repayment Installment under the Indenture.

(b) In addition to the Repayment Installments, the Corporation shall also pay to the Authorityor to the Trustee, as the case may be, “Additional Payments.”

Unconditional Obligation. The obligations of the Corporation to make the payments required by theAgreement and to perform and observe the other agreements on its part contained therein shall be absolute andunconditional, irrespective of any defense or any rights of setoff, recoupment or counterclaim it might otherwise



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have against the Authority or the Trustee, and during the term of the Agreement, the Corporation shall payabsolutely the payments to be made on account of the loan as prescribed in the Agreement and all other paymentsrequired under the Indenture, free of any deductions and without abatement, diminution or setoff. Until such time asthe principal of, premium, if any, and interest on the Bonds shall have been fully paid, or provision for the paymentthereof shall have been made as required by the Indenture, the Corporation (i) will not suspend or discontinue any

payments provided for in the Agreement with respect to the Bonds; (ii) will perform and observe all of its other covenants contained in the Agreement with respect to the Bonds, the Facilities and the Project; and (iii) except as

provided in the provisions of the Agreement relating to prepayment, will not terminate the Agreement for any cause,including, without limitation, the occurrence of any act or circumstances that may constitute failure of consideration,destruction of or damage to, or taking or condemnation of, all or any part of the Project or the Facilities, commercialfrustration of purpose, any change in the tax or other laws of the United States of America or of the State or any

political subdivision of either of these, or any failure of the Authority or the Trustee to perform and observe anycovenant, whether express or implied, or any duty, liability or obligation arising out of or connected with theAgreement or the Indenture.

Assignment of Authority’s Rights. As security for the payment of the Bonds, the Authority will assign tothe Trustee the Authority’s rights, but not its obligations, under the Agreement, including the right to receive

payments under the Agreement (except (i) the rights of the Authority to receive notices under the Agreement, (ii) theright of the Authority to receive certain payments, with respect to expenses and indemnification and certain other

purposes under the Agreement, (iii) the right of the Authority to give approvals or consents pursuant to the

Agreement; (iv) the right of the Authority to access and inspect the Facilities; and (v) the right of the Authority todemand a report from the Corporation under the Agreement); and the Authority directs the Corporation to make the

payments required under the Agreement (except such payments for expenses and indemnification and certain other purposes) directly to the Trustee. The Corporation assents to such assignment and agrees to make payments directlyto the Trustee without defense or setoff by reason of any dispute between the Corporation and the Authority or theTrustee.

The Corporation’s Maintenance of its Existence; Assignments.

(a) (i) The Corporation agrees that during the term of the Agreement and so long asany Bond is Outstanding, it will maintain its existence as a nonprofit religious corporation, operating a facility of higher education and meeting the requirements of Section 501(c)(3) of the Code, will not dissolve or otherwisedispose of all or substantially all of its assets, and will not consolidate with or merge into another corporation or

permit one or more corporations to consolidate with or merge into it; provided, however, that the Corporation may,without violating the agreements contained in this section, consolidate with or merge into another corporation or

permit one or more other corporations to consolidate with or merge into it, or sell or otherwise transfer to another corporation all or substantially all of its assets as an entirety and thereafter dissolve if: the Corporation is thesurviving, resulting or transferee corporation, as the case may be; or if the Corporation is not the surviving, resultingor transferee corporation, as the case may be, the surviving, resulting or transferee corporation (i) is a corporationorganized under the laws of the United States or any state, district or territory thereof; (ii) is qualified to do businessin the State; (iii) is an organization meeting the requirements of Section 501(c)(3) of the Code, or a corresponding

provision of the federal income tax laws then in effect; and (iv) assumes in writing all of the obligations of theCorporation under the Agreement.

(ii) Notwithstanding the foregoing, as a condition precedent to any consolidation,merger, sale or other transfer, the Trustee and the Authority shall receive an Opinion of Bond

Counsel to the effect that such merger, consolidation, sale or other transfer will not, in and of itself, result in the inclusion of interest on the Bonds in gross income for federal income tax

purposes.

(iii) Notwithstanding any other provision of this section, the Corporation need notcomply with any of the above provisions of this section other than the delivery of the Opinion of Bond Counsel referred to in the second paragraph of this section if, at the time of such transaction,all of the Bonds will be defeased as provided in the Indenture.



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(b) If a merger, consolidation, sale or other transfer is effected, as provided in this section,the provisions of this section shall continue in full force and effect and no further merger, consolidation, sale or transfer shall be effected except in accordance with the provisions of this section.

Records and Financial Statements of Corporation. The Corporation shall maintain adequate books,accounts and records in connection with the operation of the Facilities in accordance with generally accepted

accounting principles and in compliance with the regulations of any governmental regulatory body having jurisdiction thereof. The Corporation shall, within 120 days after the close of each fiscal year, submit to theAuthority (if requested by the Authority), each Credit Provider and to the Trustee audited financial statements withrespect to the Corporation for such fiscal year. The Trustee shall have no duty to review such financial statements.The Trustee shall be permitted (but shall have no duty) at all reasonable times upon reasonable notice during theterm of the Agreement to examine the books and records of the Corporation with respect to the Project, subject tothe limitations expressed in the Agreement.

Maintenance and Repair; Taxes; Utility and Other Charges.

(a) For so long as the Facilities are in operation, the Corporation agrees to maintain, to theextent permitted by applicable law and regulation, the Facilities, or cause the Facilities to be so maintained, duringthe term of the Agreement (i) in safe condition and (ii) in good repair and in good operating condition consistentwith its historical practices, ordinary wear and tear excepted, making from time to time all necessary repairs theretoand renewals and replacements thereof.

(b) For so long as the Facilities are in operation, the Corporation agrees that between theAuthority and the Corporation, the Corporation will pay or cause to be paid during the term of the Agreement alltaxes, governmental charges of any kind lawfully assessed or levied upon the Facilities or any part thereof, includingany taxes levied against the Facilities, all utility and other charges incurred in the operation, maintenance, use,occupancy and upkeep of the Facilities and all assessments and charges lawfully made by any governmental bodyfor public improvements that may be secured by a lien on the Facilities, provided that with respect to specialassessments or other governmental charges that may lawfully be paid in installments over a period of years, theCorporation, to the extent described above, shall be obligated under the Agreement to pay only such installments asare required to be paid during the term of the Agreement. The Corporation may, at the Corporation’s expense and inthe Corporation’s name, in good faith, contest any such taxes, assessments and other charges and, in the event of anysuch contest, may permit the taxes, assessments or other charges so contested to remain unpaid during that period of

such contest and any appeal therefrom unless by such nonpayment the Facilities or any part thereof will be subject toloss or forfeiture.

Tax Covenant. The Corporation covenants and agrees that it will at all times do and perform all acts andthings permitted by law and the Loan Agreement which are necessary in order to assure that interest paid on theBonds will be excluded from gross income for federal income tax purposes and will take no action that would resultin such interest not being so excluded. Without limiting the generality of the foregoing, the Corporation agrees tocomply with the provisions of the Tax Agreement. This covenant shall survive payment in full or defeasance of theBonds for the duration of the useful life of the Project.

Continuing Disclosure. The Corporation covenants and agrees, whenever a Term Interest Rate Period of longer than nine months is in effect with respect to a Series of Bonds or if otherwise required by Rule 15c2-12, tocomply with the continuing disclosure requirements for such Series of Bonds as promulgated under Rule 15c2-12, as

it may from time to time hereafter be amended or supplemented. Notwithstanding any other provision of theAgreement, failure of the Corporation to comply with the requirements of Rule 15c2-12 applicable to the Bonds, asit may from time to time hereafter be amended or supplemented, shall not be considered an Event of Default under the Agreement or under the Indenture; however, the Trustee, at the written request of the Remarketing Agent or theHolders of at least 25% aggregate principal amount of Outstanding Bonds and upon receipt of indemnity satisfactoryto the Trustee shall or any Bondholder or beneficial owner (within the meaning of Rule 15c2-12) of any Bonds maytake such actions as may be necessary or appropriate, including seeking mandate or specific performance by courtorder, to cause the Corporation to comply with its obligations pursuant to this paragraph.



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Special Services Covenant. The Corporation shall operate and maintain the facilities as an educationalinstitution within the territorial limits of the City of Riverside, California as long as any Bonds remain Outstanding;

provided, however, the Authority, upon review of such facts as it deems relevant, may, from time to time, allow theCorporation to provide alternative services that provide public benefit to the City of Riverside, California and itsresidents, or deem this special services covenant to be satisfied in whole or in part.

Prohibited Uses Covenant. The Corporation covenants and agrees that no portion of the proceeds of theBonds will be used (1) to finance or refinance any facility, place or building used or to be used for sectarianinstruction or study or as a place for devotional activities or religious worship or in connection with any part of the

programs of any school or department of divinity, or (2) by a Person that is not a 501(c)(3) organization or agovernmental unit or by a 501(c)(3) organization (including the Corporation) in an unrelated trade or business, insuch manner or to such extent as would result in any of the Bonds being treated as an obligation not described inSection 103(a) of the Code. The Corporation agrees to provide a report to the Authority regarding compliance withthis covenant upon any such written demand by the Authority, such report to be provided within ten Business Daysof such request.

Events of Default.

(a) Any one of the following which occurs and is continuing shall constitute an Event of Default pursuant to the Agreement:

(i) failure by the Corporation to pay or cause to be paid any amounts required to be paid under the Agreement when due; or

(ii) if any material representation or warranty made by the Corporation in theAgreement or made by the Corporation in any document, instrument or certificate furnished to theTrustee or the Authority in connection with the issuance of the Bonds shall at any time prove tohave been incorrect in any respect as of the time made;

(iii) failure of the Corporation to observe and perform any covenant, condition or agreement on its part required to be observed or performed under the Agreement, other thanmaking the payments referred to in (a)(i) above, which continues for a period of thirty (30) daysafter written notice from the Trustee or the Authority, which notice shall specify such failure and

request that it be remedied, unless the Authority and the Trustee shall agree in writing to anextension of such time period; provided, however, that if the failure stated in the notice cannot becorrected within such period, the Authority and the Trustee will not unreasonably withhold their consent to an extension of such time period if corrective action is instituted within such period anddiligently pursued until the default is corrected;

(iv) The Corporation shall have repudiated its debts or become insolvent or admit inwriting its inability to pay its debts as they mature or shall apply for, consent to or acquiesce in theappointment of a trustee, custodian, liquidator or receiver for itself or any part of its property, or shall take any action to authorize or effect any of the foregoing; or in the absence of any suchapplication, consent or acquiescence, a trustee, custodian, liquidator or receiver shall be appointedfor it or for a substantial part of its property or revenues and shall not be discharged within a

period of 60 days; or all, or any substantial part, of the property of the Corporation shall be seized,

or otherwise appropriated, or any bankruptcy, reorganization, debt arrangement or other proceeding under any bankruptcy or insolvency law or any dissolution or liquidation proceedingshall be instituted by or against the Corporation (or any action shall be taken to authorize or effectthe institution by it of any of the foregoing) and if instituted against it, shall be consented to or acquiesced in by it, or shall not be dismissed within a period of 60 days; or

(v) the occurrence of an Event of Default under the Indenture.



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(b) The provisions of subsection (a)(iii) above are subject to the limitation that theCorporation shall not be deemed in default with respect to any covenant, condition or agreement to be observed or

performed by the Corporation under the Agreement, other than a covenant or agreement to make any paymentrequired to be made by the Corporation under the Agreement, if and so long as the Corporation is unable to carry outits agreements under the Agreement by reason of strikes, lockouts or other industrial disturbances; acts of publicenemies; orders of any kind of the government of the United States or of the State or any of their departments,agencies, or officials, or any civil or military authority; insurrections; riots; epidemics; landslides; lightning;earthquake; fire; hurricanes; storms; floods; washouts; droughts; arrests; restraint of government and people; civildisturbances; explosions; breakage or accident to machinery, transmission pipes or canals; partial or entire failure of utilities; or any other cause or event not reasonably within the control of the Corporation; it being agreed that thesettlement of strikes, lockouts and other industrial disturbances shall be entirely within the discretion of theCorporation, and the Corporation shall not be required to make settlement of strikes, lockouts and other industrialdisturbances by acceding to the demands of the opposing party or parties when such course is, in the judgment of theCorporation, unfavorable to the Corporation. This limitation shall not apply to any default under subsections (a)(i),(a)(ii), (a)(iv) or (a)(v) above.

Remedies on Default.

(a) Whenever any Event of Default shall have occurred and shall continue:

(i) Upon the occurrence of an Event of Default described in (a)(iv) above, and uponthe acceleration of the maturity of the Bonds as provided in the Indenture, the Trustee shall, andupon the occurrence of any other Event of Default and with the prior consent of the applicableCredit Provider the Trustee may, by notice in writing delivered to the Corporation (with copies of such notice being sent to the Authority and the Credit Provider) declare the unpaid balance of theloan or any portion thereof payable under the Agreement, in an amount equal to the Outstanding

principal amount of the Bonds so accelerated, together with the interest accrued thereon, to beimmediately due and payable.

(ii) The Trustee may have access to and may inspect, examine and make copies of the books and records and any and all accounts, data and federal income tax and other tax returnsof the Corporation.

(iii) The Authority or the Trustee may take whatever action or institute any proceeding, at law or in equity, as may be necessary or desirable for the collection of the paymentsand other amounts then due pursuant to the Agreement and thereafter to become due under theAgreement or the enforcement of the performance and observance of any obligation, agreement or covenant of the Corporation under the Agreement, including but not limited to instituting and

prosecuting to judgment or final decree and enforcing any such judgment or decree against theCorporation and collect in the manner provided by law moneys decreed to be payable.

(b) The provisions of subsection (a)(i) of this section, however, are subject to the conditionthat if, at any time after any portion of the loan shall have been so declared due and payable, and before any

judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided,there shall have been deposited with the Trustee a sum sufficient to pay all the principal of the Bonds matured prior to such declaration and all matured installments of interest (if any) upon all such Bonds, with interest on such

overdue installments of principal as provided in the Agreement, and the reasonable fees and expenses of the Trustee,and any and all other defaults actually known to the Trustee (other than in the payment of principal of and intereston such Bonds due and payable solely by reason of such declaration) shall have been made good or cured to thesatisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor, then,and in every such case, the Holders of at least a majority in aggregate principal amount of the Bonds thenOutstanding, by written notice to the Authority and to the Trustee accompanied by the written consent of theapplicable Credit Provider may, on behalf of the Holders of all the Bonds, rescind and annul such declaration and itsconsequences and waive such default; provided that no such rescission and annulment shall extend to or shall affectany subsequent default, or shall impair or exhaust any right or power consequent thereon.



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(c) In case the Trustee or the Authority shall have proceeded to enforce its rights under theAgreement and such proceedings shall have been discontinued or abandoned for any reason or shall have beendetermined adversely to the Trustee or the Authority, then, and in every such case, the Corporation, the Trustee andthe Authority shall be restored respectively to their several positions and rights under the Agreement, and all rights,remedies and powers of the Corporation, the Trustee and the Authority shall continue as though no such action had

been taken (provided, however, that any settlement of such proceedings duly entered into by the Authority, theTrustee or the Corporation shall not be disturbed by reason of this provision).

(d) In case proceedings shall be pending for the bankruptcy or for the reorganization of theCorporation under the federal bankruptcy laws or any other applicable law, or in case a receiver or trustee shall have

been appointed for any property of the Corporation or in the case of any other similar judicial proceedings relative tothe Corporation, or the creditors or property of the Corporation, then the Trustee shall be entitled and empowered,

by intervention in such proceedings or otherwise, to file and prove a claim or claims for the whole amount owingand unpaid pursuant to the Agreement and, in case of any judicial proceedings, to file such proofs of claim and other

papers or documents as may be necessary or advisable in order to have the claims of the Trustee allowed in such judicial proceedings relative to the Corporation, its creditors or its property, and to collect and receive any moneysor other property payable or deliverable on any such claims, and to distribute such amounts as provided in theIndenture after the deduction of its reasonable charges and expenses to the extent permitted by the Indenture. Anyreceiver, assignee or trustee in bankruptcy or reorganization is authorized to make such payments to the Trustee, andto pay to the Trustee any amount due it for reasonable compensation and expenses, including reasonable expenses

and fees of counsel incurred by it up to the date of such distribution.

No Remedy Exclusive. No remedy conferred upon or reserved to the Authority or the Trustee is intendedto be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative andshall be in addition to every other remedy given under the Agreement or now or hereafter existing at law or in equityor by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any suchright or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from timeto time and as often as may be deemed expedient. In order to entitle the Authority or the Trustee to exercise anyremedy reserved to it, it shall not be necessary to give any notice, other than such notice as may be expresslyrequired in the Agreement. Such rights and remedies as are given the Authority under the Agreement shall alsoextend to the Trustee, and the Trustee and the Holders of the Bonds shall be deemed third party beneficiaries of allcovenants and agreements contained in the Agreement except rights and remedies relating to fees, indemnificationand notification. To the extent that any covenants and agreements in the Agreement expressly grant rights to the

Credit Provider, it shall be deemed a third party beneficiary of such covenants and agreements.

Redemption of Bonds With Prepayment Moneys. By virtue of the assignment of certain rights of theAuthority under the Agreement to the Trustee as is provided in the Agreement, the Corporation agrees to and shall

pay (or cause to be paid) directly to the Trustee any amount permitted to be paid by it. The Trustee shall use themoneys so paid to it by the Corporation to effect redemption of the Bonds in accordance with the Indenture on thedate specified for such redemption pursuant to the Agreement or to apply such prepayment to making provision for the payment of Bonds as provided in the Indenture.

Option to Prepay Repayment Installments. The Corporation shall have the option to prepay theRepayment Installments payable under the Agreement with respect to all or any portion of the Bonds (the principalamount and Series designation to be specified by an Authorized Corporation Representative subject to therequirement that the Outstanding Bonds of each Series be in Authorized Denominations) by paying to the Trustee,

for deposit in the Bond Fund or such other fund established for such purpose and held by the Trustee, the applicableamount set forth in the Agreement.

Amount of Prepayment.

(a) In the case of a prepayment of the amount due under the Agreement with respect to allOutstanding Bonds pursuant to the immediately preceding paragraph, the amount to be paid shall be a sumsufficient, together with other funds then on deposit with the Trustee and available for such purpose and the

principal of and interest on any Government Obligations described in the Indenture then on deposit with the Trusteewhich are due and payable on and before the applicable payment or redemption date and which Government



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Obligations are then available for such purpose, to pay with Available Amounts (1) the principal of all OutstandingBonds on the maturity date or on the redemption date, as applicable, of such Bonds, plus interest accrued and toaccrue to the payment or redemption date of the Bonds, plus premium, if any, (2) all reasonable and necessary feesand expenses of the Authority, the Trustee and the Remarketing Agent accrued and to accrue through final paymentof the Bonds, and (3) all other liabilities of the Corporation accrued and to accrue under the Agreement with respectto the Bonds.

(b) In the case of prepayment of the Repayment Installments with respect to less than all of the Outstanding Bonds, the amount payable shall be a sum sufficient, together with other funds deposited with theTrustee and available for such purpose and the principal of and interest on any Governmental Obligations describedin the Indenture then on deposit with the Trustee which are due and payable on and before the applicable payment or redemption date and which Government Obligations are then available for such purpose, to pay with AvailableAmounts the principal amount of and premium, if any, and interest on the Bonds to be paid or redeemed with such

prepayment, as provided in the Indenture, and to pay expenses of the payment or redemption, as applicable, of suchBonds.



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APPENDIX E

FORM OF OPINION OF BOND COUNSEL

Upon issuance of the Bonds, Orrick, Herrington & Sutcliffe LLP , Bond Counsel to the Authority,

proposes to render its final approving opinion with respect thereto in substantially the following form:

[Date of Delivery]

California Municipal Finance Authority

California Municipal Finance AuthorityVariable Rate Revenue Bonds

(La Sierra University) Series 2008A and Series 2008B(Final Opinion)

Ladies and Gentlemen:

We have acted as bond counsel to the California Municipal Finance Authority (the “Authority”)in connection with issuance of $12,000,000 aggregate principal amount of California Municipal FinanceAuthority Variable Rate Revenue Bonds (La Sierra University) Series 2008A (the “Series 2008A Bonds”)and $12,405,000 aggregate principal amount of California Municipal Finance Authority Variable RateRevenue Bonds (La Sierra University) Series 2008B (the “Series 2008B Bonds” and collectively with theSeries 2008A Bonds, the “Bonds”), issued pursuant to the provisions of the Joint Exercise of Powers Act(constituting Chapter 5 of Division 7 of Title 1 (commencing with Section 6500) of the CaliforniaGovernment Code), and an indenture of trust, dated as of August 1, 2008 (the “Indenture”), between theAuthority and U.S. Bank National Association, as trustee (the “Trustee”). The Indenture provides that the

Bonds are issued for the purpose of making a loan of the proceeds thereof to La Sierra University (the“Corporation”), pursuant to a loan agreement, dated as of August 1, 2008 (the “Loan Agreement”), between the Authority and the Corporation. Capitalized terms not otherwise defined herein shall have themeanings ascribed thereto in the Indenture.

In such connection, we have reviewed the Indenture, the Loan Agreement, the Tax Certificate andAgreement, dated the date hereof relating to the Bonds (the “Tax Agreement”), by and between theAuthority and the Corporation, opinions of counsel to the Trustee and the Corporation, certificates of theAuthority, the Trustee, the Corporation and others, and such other documents, opinions and matters to theextent we deemed necessary to render the opinions set forth herein.

We have relied on the opinion of DLA Piper, counsel to the Corporation, regarding, among other matters, the current qualification of the Corporation as an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986 (the “Code”) and the use of the facilities financed with the proceeds of the Bonds in activities that are not considered unrelated trade or business activities of the Corporationwithin the meaning of Section 513 of the Code. We note that such opinion is subject to a number of qualifications and limitations. Failure of the Corporation to be organized and operated in accordance withthe Internal Revenue Service’s requirements for the maintenance of its status as an organization describedin Section 501(c)(3) of the Code, or use of the facilities financed or refinanced with the proceeds of theBonds in activities that are considered unrelated trade or business activities of the Corporation within the



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meaning of Section 513 of the Code, may result in interest on the Bonds being included in gross incomefor federal income tax purposes, possibly from the date of issuance of the Bonds.

The opinions expressed herein are based on an analysis of existing laws, regulations, rulings andcourt decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken

to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other maters come to our attention after the date hereof. Accordingly, this opinion speaks only as of its date and is not intended to, and may not, be relied upon in connection with any such actions, events or matters. Our engagement with respect to the Bonds has concluded with their issuance, and we disclaimany obligation to update this letter. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the Authority. We have assumed, without undertaking toverify, the accuracy of the factual matters represented, warranted or certified in the documents, and of thelegal conclusions contained in the opinions, referred to in the second and third paragraphs hereof.Furthermore, we have assumed compliance with all covenants and agreements contained in the Indenture,the Loan Agreement and the Tax Agreement, including (without limitation) covenants and agreementscompliance with which is necessary to assure that future actions, omissions or events will not cause

interest on the Bonds to be included in gross income for federal income tax purposes.

We call attention to the fact that the rights and obligations under the Bonds, the Indenture, theLoan Agreement and the Tax Agreement and their enforceability may be subject to bankruptcy,insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretionin appropriate cases and to the limitations on legal remedies against public authorities of the State of California. We express no opinion with respect to any indemnification, contribution, penalty, choice of law, choice of forum, choice of venue, waiver or severability provisions contained in the foregoingdocuments nor do we express any opinion with respect to the state or quality of title to or interest in anyof the assets described in or as subject to the lien of the Indenture or the Loan Agreement, or the accuracyor sufficiency of the description contained therein of, or the remedies available to enforce liens on, any

such assets. Finally, we undertake no responsibility for the accuracy, completeness or fairness of theOfficial Statement or other offering material relating to the Bonds and express no opinion with respectthereto.

Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of thefollowing opinions:

1. The Bonds constitute the valid and binding limited obligations of the Authority.

2. The Indenture has been duly executed and delivered by, and constitutes the valid and binding obligation of, the Authority. The Indenture creates a valid pledge, to secure the payment of the principal of and interest on the Bonds, of the Revenues and any other amounts held by the Trustee in any

fund or account established pursuant to the Indenture, except the Rebate Fund and the Bond PurchaseFund, subject to the provisions of the Indenture permitting the application thereof for the purposes and onthe terms and conditions set forth in the Indenture.

3. The Loan Agreement has been duly executed and delivered by, and constitutes a validand binding agreement of, the Authority.

4. The Bonds are payable solely from the Revenues and the other amounts pledged therefor under the Indenture. The Bonds are not a charge or lien on the funds or property of the Authority except



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to the extent of the aforementioned pledge. Neither the faith and credit nor the taxing power of the Stateof California or of any political subdivision thereof is pledged to the payment of the principal of or interest on the Bonds. The Bonds are not a debt of the State of California, and said State is not liable for the payment thereof.

5. Interest on the Bonds is excluded from gross income for federal income tax purposes

under Section 103 of the Code and is exempt from State of California personal income taxes. Interest onthe Bonds is not a specific preference item for purposes of the federal individual or corporate alternativeminimum taxes, although we observe that it is included in adjusted current earnings when calculatingcorporate alternative minimum taxes, although we observe that it is included in adjusted current earningswhen calculating corporate alternative minimum taxable income. We express no opinion regarding other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, theBonds.

Faithfully yours,



APPENDIX F

FORM OF LETTER OF CREDIT



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IRREVOCABLE LETTER OF CREDIT

August [14], 2008

Letter of Credit No. NZS624716U.S. Bank National Association633 W. 5th Street, 24th Floor Los Angeles, CA 90071Attention: Corporate Trust


We hereby establish in your favor at the request and for the account of La Sierra University,a California nonprofit religious corporation, our irrevocable direct-pay letter of credit in theamount of U.S. $24,805,622.00 (Twenty-Four Million Eight Hundred Five Thousand SixHundred Twenty-Two and No/100 Dollars) in connection with the Bonds (as defined below)available with ourselves by sight payment against presentation of one or more signed and dateddemands addressed by you to Wells Fargo Bank, National Association, Letter of CreditOperations Office, San Francisco, California, each in the form of Annex A (an “ A Drawing ”),Annex B (a “ B Drawing ”), Annex C (a “C Drawing ”), or Annex D (a “ D Drawing ”) hereto, withall instructions in brackets therein being complied with. Each such demand must be presented tous in its original form or by facsimile transmission of such original form.

Each such presentation must be made at or before 5:00 p.m. San Francisco time on aBusiness Day (as hereinafter defined) to our Letter of Credit Operations Office in San Francisco,California (presently located at One Front Street, 21st Floor, San Francisco, California 94111).

This Letter of Credit expires at our Letter of Credit Operations Office in San Francisco,California on August 1, 2010, or if such date is not a Business Day, then the first (1st)succeeding Business Day thereafter (the “ Expiration Date”).

As used herein the term “ Business Day” shall mean a day on which our San Francisco Letter of Credit Operations Office is open for business.

The amount of any demand presented hereunder will be the amount inserted in numberedParagraph 4 of said demand. By honoring any such demand we make no representation as to thecorrectness of the amount demanded.

We hereby agree with you that each demand presented hereunder in full compliance with the

terms hereof will be duly honored by our payment to you of the amount of such demand, inimmediately available funds of Wells Fargo Bank, National Association:

(i) not later than 10:00 a.m., San Francisco time, on the Business Day following theBusiness Day on which such demand is presented to us as aforesaid if such presentationis made to us at or before Noon, San Francisco time, or



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(ii) not later than 10:00 a.m., San Francisco time, on the second Business Day following theBusiness Day on which such demand is presented to us as aforesaid, if such presentationis made to us after Noon, San Francisco time.

Notwithstanding the foregoing, any demand presented hereunder, in full compliance with theterms hereof, for a C Drawing will be duly honored (i) not later than 11:45 a.m., San Francisco

time, on the Business Day on which such demand is presented to us as aforesaid if such presentation is made to us at or before 8:45 a.m., San Francisco time, and (ii) not later than 11:00a.m., San Francisco time, on the Business Day following the Business Day on which suchdemand is presented to us as aforesaid if such presentation is made to us after 8:45 a.m., SanFrancisco time.

If the remittance instructions included with any demand presented under this Letter of Creditrequire that payment is to be made by transfer to an account with us or with another bank, weand/or such other bank may rely solely on the account number specified in such instructions evenif the account is in the name of a person or entity different from the intended payee.

With respect to any demand that is honored hereunder, the total amount of this Letter of Credit shall be reduced as follows:

(A) With respect to any A Drawing, the total amount of this Letter of Credit shall be reduced,as to all demands subsequent to the applicable demand, by the amount of the applicabledemand as of the time of presentation of such demand; provided, however , that suchamount shall be automatically reinstated on the sixth (6th) Business Day following thedate such demand is honored by us, unless (i) you shall have received notice from us byexpress courier, authenticated SWIFT message, facsimile transmission, or registered mailno later than five (5) Business Days after such demand is honored by us that there shall be no such reinstatement, or (ii) such sixth (6th) Business Day falls after the ExpirationDate;

(B) With respect to any B Drawing, the total amount of this Letter of Credit shall be reduced,as to all demands subsequent to the applicable demand, by the amount of the applicabledemand as of the time of presentation of such demand and shall not be reinstated;

(C) With respect to any C Drawing, the total amount of this Letter of Credit shall be reduced,as of the time of presentation of the applicable demand and as to all demands subsequentto the applicable demand, by the sum of (1) the amount inserted as principal in paragraph5(A) of the applicable demand plus (2) the greater of (a) the amount inserted as interestin paragraph 5(B) of the applicable demand and (b) interest on the amount inserted as principal in paragraph 5(A) of the applicable demand calculated for fifty (50) days at therate of twelve percent (12%) per annum based on a year of 365 days (with any fraction of

a cent being rounded upward to the nearest whole cent); provided, however , that if theBonds (as defined below) related to a C Drawing are remarketed and the remarketing proceeds are paid to us prior to the Expiration Date, then on the day we receive suchremarketing proceeds the amount of this Letter of Credit shall be reinstated by an amountwhich equals the sum of (i) the amount paid to us from such remarketing proceeds and(ii) interest on such amount calculated for the same number of days, at the same interestrate, and on the basis of a year of the same number of days as is specified in (2)(b) of this paragraph (C) (with any fraction of a cent being rounded upward to the nearest whole



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cent), with such reinstatement and its amount being promptly advised to you; provided,

however , that in no event will the total amount of all C Drawing reinstatements exceedthe total amount of all Letter of Credit reductions made pursuant to this paragraph (C).

Upon presentation to us of a D Drawing referring to the 2008A Bonds (as defined below) incompliance with the terms of this Letter of Credit, no further demand whatsoever may be

presented hereunder referring to the 2008A Bonds (as defined below). Upon presentation to usof a D Drawing referring to the 2008B Bonds (as defined below) in compliance with the terms of this Letter of Credit, no further demand whatsoever may be presented hereunder referring to the2008B Bonds (as defined below).

No more than one A Drawing referring to the 2008A Bonds (as defined below) which wehonor (i) shall be presented to us during any consecutive twenty-seven (27) calendar day periodor (ii) shall be for an amount more than U.S.$197,261.00 (One Hundred Ninety-Seven ThousandTwo Hundred Sixty-One Dollars). No more than one A Drawing referring to the 2008B Bonds(as defined below) which we honor (i) shall be presented to us during any consecutive twenty-seven (27) calendar day period or (ii) shall be for an amount more than U.S.$203,361.00 (Two

Hundred Three Thousand Three Hundred Sixty-One Dollars).

It is a condition of this Letter of Credit that the amount available for drawing under thisLetter of Credit shall be decreased automatically without amendment upon our receipt of eachreduction authorization in the form of Annex E to this Letter of Credit (with all instructionstherein in brackets being complied with) sent to us as an authenticated SWIFT message or as asigned and dated original form.

This Letter of Credit is subject to, and engages us in accordance with the terms of, theUniform Customs and Practice for Documentary Credits (2007 Revision), Publication No. 600 of the International Chamber of Commerce (the “UCP ”); provided, however , that if any provisionof the UCP contradicts a provision of this Letter of Credit such provision of the UCP will not be

applicable to this Letter of Credit, and provided further that Article 32, the second sentence of Article 36, and subsection (e) of Article 38 of the UCP shall not apply to this Letter of Credit.Furthermore, as provided in the first sentence of Article 36 of the UCP, we assume no liability or responsibility for consequences arising out of the interruption of our business by Acts of God,riots, civil commotions, insurrections, wars, acts of terrorism, or by any strikes or lockouts, or any other causes beyond our control. Matters related to this Letter of Credit which are notcovered by the UCP will be governed by the laws of the State of California, including, withoutlimitation, the Uniform Commercial Code as in effect in the State of California, except to theextent such laws are inconsistent with the provisions of the UCP or this Letter of Credit.

This Letter of Credit is transferable and may be transferred more than once, but in each case

only in the amount of the full unutilized balance hereof to any single transferee who you shallhave advised us pursuant to Annex F has succeeded U.S. Bank National Association or asuccessor trustee as Trustee under the Indenture dated as of August 1, 2008 as supplementedfrom time to time (the “ Indenture”) between the California Municipal Finance Authority, a jointexercise of powers authority and a public entity of the State of California (the “ Issuer ”) and U.S.Bank National Association, as Trustee, pursuant to which (i) U.S. $12,000,000.00 in aggregate principal amount of the Issuer’s Variable Rate Revenue Bonds (La Sierra University) Series2008A (the “2008A Bonds”) and (ii) U.S. $12,405,000.00 in aggregate principal amount of the



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Issuer’s Variable Rate Revenue Bonds (La Sierra University) Series 2008B (the “2008B Bonds”,together with the 2008A Bonds, the “ Bonds”) were issued. Transfers may be effected withoutcharge to the transferor and only through ourselves and only upon presentation to us of a dulyexecuted instrument of transfer in the form attached hereto as Annex F. Any transfer of thisLetter of Credit as aforesaid must be endorsed by us on the reverse hereof and may not change

the place of presentation of demands from our Letter of Credit Operations Office in SanFrancisco, California.

All payments hereunder shall be made from our own funds.

This Letter of Credit sets forth in full our undertaking, and such undertaking shall not in anyway be modified, amended, amplified or limited by reference to any document, instrument or agreement referred to herein (including, without limitation, the Bonds and the Indenture), exceptthe UCP to the extent the UCP is not inconsistent with or made inapplicable by this Letter of Credit; and any such reference shall not be deemed to incorporate herein by reference anydocument, instrument or agreement except the UCP.

WELLS FARGO BANK ,

NATIONAL ASSOCIATION

By:Authorized Signature

Letter of Credit Operations OfficeTelephone No.: 1-800-798-2815Facsimile No.: (415) 296-8905



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Annex A to Wells Fargo Bank, National AssociationIrrevocable Letter of Credit No. NZS624716

WELLS FARGO BANK, NATIONAL ASSOCIATION

LETTER OF CREDIT OPERATIONS OFFICEONE FRONT STREET, 21ST FLOOR SAN FRANCISCO, CALIFORNIA 94111

FOR THE URGENT ATTENTION OF LETTER OF CREDIT MANAGER

[INSERT NAME OF BENEFICIARY] (THE “TRUSTEE”) HEREBY CERTIFIES TOWELLS FARGO BANK, NATIONAL ASSOCIATION (THE “BANK”) WITH REFERENCETO IRREVOCABLE LETTER OF CREDIT NO. NZS624716 (THE “LETTER OF CREDIT”;THE TERMS THE “2008A BONDS”, THE “2008B BONDS”, “BONDS”, “BUSINESS DAY”AND THE “INDENTURE” USED HEREIN SHALL HAVE THEIR RESPECTIVE

MEANINGS SET FORTH IN THE LETTER OF CREDIT) THAT:

(1) THE TRUSTEE IS THE TRUSTEE OR A SUCCESSOR TRUSTEE UNDER THE INDENTURE.

(2) THE TRUSTEE IS MAKING A DEMAND FOR PAYMENT UNDER THELETTER OF CREDIT WITH RESPECT TO THE PAYMENT, ON ANINTEREST PAYMENT DATE (AS DEFINED IN THE INDENTURE), OFACCRUED AND UNPAID INTEREST WITH RESPECT TO THE [INSERT

“2008A” OR “2008B”] BONDS.

(3) THE AMOUNT OF THIS DEMAND FOR PAYMENT WAS COMPUTED INACCORDANCE WITH THE TERMS AND CONDITIONS OF THE BONDSAND THE INDENTURE AND IS DEMANDED IN ACCORDANCE WITHTHE INDENTURE, WHICH AMOUNT PLEASE REMIT TO THEUNDERSIGNED AS FOLLOWS:

[INSERT REMITTANCE INSTRUCTIONS].

(4) THE AMOUNT HEREBY DEMANDED UNDER THE LETTER OF CREDITIS $[INSERT AMOUNT].

(5) THE TRUSTEE HAS CONTACTED OR ATTEMPTED TO CONTACT BYTELEPHONE AN OFFICER OF THE BANK’S LETTER OF CREDIT OFFICEIN SAN FRANCISCO, CALIFORNIA REGARDING THE AMOUNT OF THISDEMAND AND THE DATE AND TIME BY WHICH PAYMENT ISDEMANDED.



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(6) IF THIS DEMAND IS RECEIVED BY YOU AT OR BEFORE NOON, SANFRANCISCO TIME ON A BUSINESS DAY, YOU MUST MAKE PAYMENTON THIS DEMAND AT OR BEFORE 10:00 A.M., SAN FRANCISCO TIME,ON THE NEXT BUSINESS DAY. IF THIS DEMAND IS RECEIVED BYYOU AFTER NOON, SAN FRANCISCO TIME, ON A BUSINESS DAY, YOU

MUST MAKE PAYMENT ON THIS DEMAND AT OR BEFORE 10:00 A.M.,SAN FRANCISCO TIME, ON THE SECOND BUSINESS DAY FOLLOWINGSUCH BUSINESS DAY.

[INSERT NAME OF BENEFICIARY]

[INSERT SIGNATURE AND DATE]



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Annex B to Wells Fargo Bank, National AssociationIrrevocable Letter of Credit No. NZS624716

WELLS FARGO BANK, NATIONAL ASSOCIATIONLETTER OF CREDIT OPERATIONS OFFICEONE FRONT STREET, 21ST FLOOR SAN FRANCISCO, CALIFORNIA 94111

FOR THE URGENT ATTENTION OF LETTER OF CREDIT MANAGER.

[INSERT NAME OF BENEFICIARY] (THE “TRUSTEE”) HEREBY CERTIFIES TOWELLS FARGO BANK, NATIONAL ASSOCIATION (THE “BANK”) WITH REFERENCE TOIRREVOCABLE LETTER OF CREDIT NO. NZS624716 (THE “LETTER OF CREDIT”; THETERMS THE “2008A BONDS”, THE “2008B BONDS”, “BONDS”, “BUSINESS DAY” AND THE“INDENTURE” USED HEREIN SHALL HAVE THEIR RESPECTIVE MEANINGS SET FORTHIN THE LETTER OF CREDIT) THAT:

(1) THE TRUSTEE IS THE TRUSTEE OR A SUCCESSOR TRUSTEE UNDER THEINDENTURE.

(2) THE TRUSTEE IS MAKING A DEMAND FOR PAYMENT UNDER THE LETTER OF CREDIT WITH RESPECT TO THE PAYMENT OF THE PRINCIPAL AMOUNTOF, AND THE ACCRUED AND UNPAID INTEREST ON, REDEEMED BONDSUPON AN OPTIONAL AND/OR MANDATORY REDEMPTION OF LESS THANALL OF THE [INSERT “2008A” OR “2008B”] BONDS CURRENTLYOUTSTANDING.

(3) THE AMOUNT OF THIS DEMAND FOR PAYMENT WAS COMPUTED INACCORDANCE WITH THE TERMS AND CONDITIONS OF THE BONDS ANDTHE INDENTURE AND IS DEMANDED IN ACCORDANCE WITH THE

INDENTURE, WHICH AMOUNT PLEASE REMIT TO THE UNDERSIGNED ASFOLLOWS:


(4) THE AMOUNT HEREBY DEMANDED UNDER THE LETTER OF CREDIT IS$[INSERT AMOUNT WHICH IS THE SUM OF THE TWO AMOUNTS

INSERTED IN PARAGRAPH 5 BELOW].

(5) THE AMOUNT HEREBY DEMANDED IS EQUAL TO THE SUM OF (A)$[INSERT AMOUNT] BEING DRAWN WITH RESPECT TO THE PAYMENT OF

THE PRINCIPAL OF THE REDEEMED BONDS AND (B) $[INSERT AMOUNT] BEING DRAWN WITH RESPECT TO THE PAYMENT OF THE UNPAIDINTEREST ON THE REDEEMED BONDS.

(6) THE TRUSTEE HAS CONTACTED OR ATTEMPTED TO CONTACT BYTELEPHONE AN OFFICER OF THE BANK’S LETTER OF CREDIT OFFICE INSAN FRANCISCO, CALIFORNIA REGARDING THE AMOUNT OF THISDEMAND AND THE DATE AND TIME BY WHICH PAYMENT IS DEMANDED.



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(7) IF THIS DEMAND IS RECEIVED BY YOU AT OR BEFORE NOON, SANFRANCISCO TIME ON A BUSINESS DAY, YOU MUST MAKE PAYMENT ONTHIS DEMAND AT OR BEFORE 10:00 A.M., SAN FRANCISCO TIME, ON THE NEXT BUSINESS DAY. IF THIS DEMAND IS RECEIVED BY YOU AFTER NOON, SAN FRANCISCO TIME, ON A BUSINESS DAY, YOU MUST MAKEPAYMENT ON THIS DEMAND AT OR BEFORE 10:00 A.M., SAN FRANCISCOTIME, ON THE SECOND BUSINESS DAY FOLLOWING SUCH BUSINESS DAY.





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Annex C to Wells Fargo Bank, National AssociationIrrevocable Letter of Credit No. NZS624716

WELLS FARGO BANK, NATIONAL ASSOCIATIONLETTER OF CREDIT OPERATIONS OFFICEONE FRONT STREET, 21

STFLOOR

SAN FRANCISCO, CALIFORNIA 94111


[INSERT NAME OF BENEFICIARY] (THE “TRUSTEE”) HEREBY CERTIFIES TOWELLS FARGO BANK, NATIONAL ASSOCIATION (THE “BANK”) WITH REFERENCE TOIRREVOCABLE LETTER OF CREDIT NO. NZS624716 (THE “LETTER OF CREDIT”; THETERMS THE “2008A BONDS”, THE “2008B BONDS”, “BONDS”, “BUSINESS DAY” AND THE“INDENTURE” USED HEREIN SHALL HAVE THEIR RESPECTIVE MEANINGS SET FORTHIN THE LETTER OF CREDIT) THAT:


(2) THE TRUSTEE IS MAKING A DEMAND FOR PAYMENT UNDER THE LETTER OF CREDIT WITH RESPECT TO THE PAYMENT OF THE PRINCIPAL AMOUNTOF, AND INTEREST DUE ON, THOSE [INSERT “2008A” OR “2008B”] BONDSWHICH THE REMARKETING AGENT (AS DEFINED IN THE INDENTURE) HASBEEN UNABLE TO REMARKET WITHIN THE TIME LIMITS ESTABLISHED INTHE INDENTURE.

(3) THE AMOUNT OF THIS DEMAND FOR PAYMENT WAS COMPUTED INACCORDANCE WITH THE TERMS AND CONDITIONS OF THE BONDS ANDTHE INDENTURE AND IS DEMANDED IN ACCORDANCE WITH THE

INDENTURE, WHICH AMOUNT PLEASE REMIT TO THE UNDERSIGNED ASFOLLOWS:


(4) THE AMOUNT HEREBY DEMANDED UNDER THE LETTER OF CREDIT IS$[INSERT AMOUNT WHICH IS THE SUM OF THE TWO AMOUNTS

INSERTED IN PARAGRAPH 5 BELOW].

(5) THE AMOUNT OF THIS DEMAND IS EQUAL TO THE SUM OF (A) $[INSERT

AMOUNT] BEING DRAWN WITH RESPECT TO THE PAYMENT OFPRINCIPAL OF THE BONDS AND (B) $[INSERT AMOUNT] BEING DRAWN

WITH RESPECT TO THE PAYMENT OF INTEREST DUE ON THE BONDS.

(6) THE TRUSTEE HAS CONTACTED OR ATTEMPTED TO CONTACT BYTELEPHONE AN OFFICER OF THE BANK’S LETTER OF CREDIT OFFICE INSAN FRANCISCO, CALIFORNIA REGARDING THE AMOUNT OF THISDEMAND AND THE DATE AND TIME BY WHICH PAYMENT IS DEMANDED.



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(7) IF THIS DEMAND IS RECEIVED BY YOU AT OR BEFORE 8:45 A.M., SANFRANCISCO TIME ON A BUSINESS DAY, YOU MUST MAKE PAYMENT ONTHIS DEMAND AT OR BEFORE 11:45 A.M., SAN FRANCISCO TIME, ON SAIDBUSINESS DAY. IF THIS DEMAND IS RECEIVED BY YOU AFTER 8:45 A.M.,SAN FRANCISCO TIME, ON A BUSINESS DAY, YOU MUST MAKE PAYMENTON THIS DEMAND AT OR BEFORE 11:00 A.M., SAN FRANCISCO TIME, ONTHE BUSINESS DAY FOLLOWING SAID BUSINESS DAY.





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Annex D to Wells Fargo Bank, National AssociationIrrevocable Letter of Credit No. NZS624716

WELLS FARGO BANK, NATIONAL ASSOCIATIONLETTER OF CREDIT OPERATIONS OFFICEONE FRONT STREET, 21

STFLOOR

SAN FRANCISCO, CALIFORNIA 94111


[INSERT NAME OF BENEFICIARY] (THE “TRUSTEE”) HEREBY CERTIFIES TO WELLSFARGO BANK, NATIONAL ASSOCIATION (THE “BANK”) WITH REFERENCE TOIRREVOCABLE LETTER OF CREDIT NO. NZS624716 (THE “LETTER OF CREDIT”; THETERMS THE “2008A BONDS”, THE “2008B BONDS”, “BONDS”, “BUSINESS DAY” AND THE“INDENTURE” USED HEREIN SHALL HAVE THEIR RESPECTIVE MEANINGS SET FORTHIN THE LETTER OF CREDIT) THAT:


(2) THE TRUSTEE IS MAKING A DEMAND FOR PAYMENT UNDER THE LETTER OFCREDIT WITH RESPECT TO THE PAYMENT, AT STATED MATURITY, UPONACCELERATION FOLLOWING AN EVENT OF DEFAULT, UPON MANDATORYTENDER AS A WHOLE, OR UPON REDEMPTION AS A WHOLE, OF THE TOTALUNPAID PRINCIPAL OF, AND UNPAID INTEREST ON, ALL OF THE [INSERT“2008A” OR “2008B”] BONDS WHICH ARE PRESENTLY OUTSTANDING.

(3) THE AMOUNT OF THIS DEMAND FOR PAYMENT WAS COMPUTED INACCORDANCE WITH THE TERMS AND CONDITIONS OF THE BONDS AND THEINDENTURE AND IS DEMANDED IN ACCORDANCE WITH THE INDENTURE,WHICH AMOUNT PLEASE REMIT TO THE UNDERSIGNED AS FOLLOWS:

[INSERT REMITTANCE INSTRUCTIONS].(4) THE AMOUNT HEREBY DEMANDED UNDER THE LETTER OF CREDIT IS

$[INSERT AMOUNT WHICH IS THE SUM OF THE TWO AMOUNTS SET FORTHIN PARAGRAPH 5, BELOW].

(5) THE AMOUNT OF THIS DEMAND IS EQUAL TO THE SUM OF (A) $[INSERTAMOUNT] BEING DRAWN WITH RESPECT TO THE PAYMENT OF THE UNPAIDPRINCIPAL OF THE OUTSTANDING BONDS AND (B) $[INSERT AMOUNT] BEINGDRAWN WITH RESPECT TO THE PAYMENT OF THE UNPAID INTEREST ON THEOUTSTANDING BONDS.

(6) THE TRUSTEE HAS CONTACTED OR ATTEMPTED TO CONTACT BY TELEPHONE

AN OFFICER OF THE BANK’S LETTER OF CREDIT OFFICE IN SAN FRANCISCO,CALIFORNIA REGARDING THE AMOUNT OF THIS DEMAND AND THE DATEAND TIME BY WHICH PAYMENT IS DEMANDED.



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(7) IF THIS DEMAND IS RECEIVED BY YOU AT OR BEFORE NOON, SAN FRANCISCOTIME ON A BUSINESS DAY, YOU MUST MAKE PAYMENT ON THIS DEMAND ATOR BEFORE 10:00 A.M., SAN FRANCISCO TIME, ON THE NEXT BUSINESS DAY.IF THIS DEMAND IS RECEIVED BY YOU AFTER NOON, SAN FRANCISCO TIME,ON A BUSINESS DAY, YOU MUST MAKE PAYMENT ON THIS DEMAND AT OR BEFORE 10:00 A.M., SAN FRANCISCO TIME, ON THE SECOND BUSINESS DAYFOLLOWING SUCH BUSINESS DAY.





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Annex E to Wells Fargo Bank, National AssociationIrrevocable Letter of Credit No. NZS624716

WELLS FARGO BANK, NATIONAL ASSOCIATION.LETTER OF CREDIT OPERATIONS OFFICE

ONE FRONT STREET, 21ST FLOOR SAN FRANCISCO, CALIFORNIA 94111

FOR THE URGENT ATTENTION OF LETTER OF CREDIT MANAGER

LETTER OF CREDIT REDUCTION AUTHORIZATION

[INSERT NAME OF BENEFICIARY], WITH REFERENCE TO LETTER OF CREDIT

NO. NZS624716 ISSUED BY WELLS FARGO BANK, NATIONAL ASSOCIATION (THE

“BANK”), HEREBY UNCONDITIONALLY AND IRREVOCABLY REQUESTS THAT THE

BANK DECREASE THE AMOUNT AVAILABLE FOR DRAWING UNDER THE LETTER OF

CREDIT BY $[INSERT AMOUNT].

[FOR SIGNED REDUCTION AUTHORIZATIONS ONLY]


By: [INSERT SIGNATURE]

TITLE: [INSERT TITLE]

DATE: [INSERT DATE]

SIGNATURE GUARANTEED BY

[INSERT NAME OF BANK]

By: [INSERT NAME AND TITLE]



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Annex F to Wells Fargo Bank, National AssociationIrrevocable Letter of Credit No. NZS624716

WELLS FARGO BANK, NATIONAL ASSOCIATIONLETTER OF CREDIT OPERATIONS OFFICEONE FRONT STREET, 21ST FLOOR,SAN FRANCISCO, CALIFORNIA, 94111

FOR THE URGENT ATTENTION OF LETTER OF CREDIT MANAGER [INSERT DATE]

Subject: Your Letter of Credit No. NZS624716


For value received, we hereby irrevocably assign and transfer all of our rights under the above-captionedLetter of Credit, as heretofore and hereafter amended, extended, increased or reduced to:

[Name of Transferee]

[Address of Transferee]

By this transfer, all of our rights in the Letter of Credit are transferred to the transferee, and thetransferee shall have sole rights as beneficiary under the Letter of Credit, including sole rights relating toany amendments, whether increases or extensions or other amendments, and whether now existing or hereafter made. You are hereby irrevocably instructed to advise future amendment(s) of the Letter of Creditto the transferee without our consent or notice to us.

The original Letter of Credit is returned with all amendments to this date. Please notify the transfereein such form as you deem advisable of this transfer and of the terms and conditions to this Letter of Credit,including amendments as transferred.

You are hereby advised that the transferee named above has succeeded U.S. Bank NationalAssociation or a successor trustee as Trustee under the Indenture dated as of August 1, 2008 assupplemented from time to time (the “Indenture”) between the California Municipal Finance Authority, a joint exercise of powers authority and a public entity of the State of California (the “Issuer”) and U.S. Bank National Association, as Trustee, pursuant to which (i) U.S. $12,000,000.00 in aggregate principal amountof the Issuer’s Variable Rate Revenue Bonds (La Sierra University) Series 2008A (the “2008A Bonds”) and(ii) U.S. $12,405,000.00 in aggregate principal amount of the Issuer’s Variable Rate Revenue Bonds (LaSierra University) Series 2008B (the “2008B Bonds”, together with the 2008A Bonds, the “Bonds”) wereissued.

Very truly yours,



F-15

[Insert Name of Transferor]

By:[Insert Name and Title]

TRANSFEROR’S SIGNATURE GUARANTEED

By:[Bank Name]


By its signature below, the undersigned transferee acknowledges that it has duly succeeded U.S. Bank National Association or a successor trustee as Trustee under the Indenture.

[Insert Name of Transferee]
