NEW ISSUE—BOOK-ENTRY ONLY RATINGS:Moodv's: "Baa3“S&P: "BBB-"See "KA ENGS" herein.

In the opinion of Squire, Sanders & Dempsey L.L.P., Bond Counsel, under existing law (i) assuming continuing compliance with certain covenants and the accuracy of certain representations, interest on the Bonds is excluded from gross income tor federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and (ii) interest on the Bonds is exempt from State of California personal income taxes. Interest on the Bonds may be subject to certain federal taxes imposed only on certain corporations, including the corporate alternative minimum tax on a portion of that interest. For a more complete discussion of the tax aspects, see “TAX MAT! HRS’’ herein.

$19,995,000CALIFORNIA EDUCATIONAL FACILITIES AUTHORITY

Revenue Bonds(Woodbury University) Series 2006

Dated: Date of Delivery Due: January 1, as shown below

The California {educational Facilities Authority Revenue Bonds (Woodbury University) Series 2(X)6, in the aggregate principal amount of $19,995,000 (the “Bonds"), will be issued by the California Educational Facilities Authority (the "Authority"), pursuant to that certain Indenture of Trust, dated as of January 1, 2006 (the “Indenture"), by and between the Authority and Wells Fargo Bank, National Association, as trustee (the "Trustee") The Authority will loan the proceeds ol the Bonds to Woodbury University, a private California nonprofit institution of higher education (the "University"), pursuant to that certain Loan Agreement, dated as of January I, 2006, by and between the Authority and the University (the "Loan Agreement").

\ -\ ( ); 1 >!' '■* v

The University will use the net proceeds of the loan to (a) refund the outstanding California Educational Facilities Authority Revenue Bonds (Woodbury University), Series 1995, (b) finance the cost of the acquisition, construction, rehabilitation, remodeling, renovation, and/or equipping of certain educational facilities of the University, as more fully described herein, (c) fund a reserve fund for the Bonds, and (d) pay coitain costs of issuance of the Bonds. See "FINANCING PLAN" herein.

The Bonds will be issued in book-entry form, without coupons, initially registered in the name of Cede & Co , as nominee of I'he Depository Trust Company, New York, New YoTk ("DTC"). Purchasers of the Bonds will not receive instruments representing their interest in the Bonds purchased. DTC will act as securities depository for the Bonds. Payments of principal, premium, if any, and interest on the Bonds are payable by the Trustee to DFC, which will in turn remit such principal, premium, it anv, and interest to the DTC Participants, which will in turn remii such principal and interest to the Beneficial Owners of the Bonds, all as more fully described herein.

The Bonds will be issued in denominations of $5,000 principal amount or any integral multiple thereof. Interest on the Bonds will be payable semiannually on January 1 and July 1 of each year, commencing July 1, 2006

The Bonds are subject to redemption prior to their respective stated maturities, as described herein. See "REDEMPTION OF BONUS" herein

The Bonds are limited obligations of the Authority payable only out of Revenues and other amounts held in the funds established bv the Indenture, primarily from funds to be paid by the University under the Loan Agreement. In the Loan Agreement, the University will pledge its full faith and credit to the payment of its obligations thereunder and, to secure its payments thereunder, the University will grant a lien on and interest in certain real property and will pledge its “Gross Revenues" (as defined herein)

THE BONDS DO NOT CONSTITUTE A DEBT OR LIABILITY OF THE STATE OF CALIFORNIA (THE “STATE”) OR ANY POLITICAL SUBDIVISION THEREOF, OTHER THAN THE AUTHORITY, AND NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE ST ATE OR OF ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR PREMIUM (IF ANY) OR INTEREST ON THE BONDS. THE BONDS ARE PAYABLE ONLY OUT OF FUNDS PLEDGED UNDER THE INDENTURE THE ISSUANCE OF THE BONDS SHALL NOT DIRECTLY, INDIRECTLY OR CONTINGENTLY OBLIGATE THE SFATE. OR ANY POLITICAL SUBDIVISION THEREOF TO LEVY OR TO PLEDGE ANY EORM OF TAXATION WHATSOEVER OR TO MAKE ANY APPROPRIATION FOR THEIR PAYMENT. THE AUTHORITY HAS NO TAXING POWER.

Maturity Schedule

CUS1P Prefix. 1301781-■»

55,455,000 Serial Bonds

Maturity Principal Interest CUSIP Maturity Principal Interest CUSIP(Tanuary 1) Amount Rate Yield Suffixt (January 1) Amount Rate Yield Suffixt

2007 $320,000 4.00% 3.60% AR7 2014 $430,000 4.30 % 4.50% AY22008 335,000 4.50 3.80 AS5 2015 450,000 4.40 4.60 AZ92009 350,000 4.50 4.00 AT3 2016 470,000 4.50 4.70 BA32010 365,000 4.50 4.10 AU0 2017 490,000 4.60 4.75 BB12011 380,000 4.00 4.20 AV8 2018 515,000 4.625 4.80 BC92012 400,000 4.10 4.30 AW6 2019 535,000 4.75 4.85 BD72013 415,000 425 4.40 AX4

$3,830,000 5.00% Term Bond maturing January 1, 2025; Price 100.429%, to Yield 4.94°/^-CUSIP: 130178 BE5f $4,165,000 5.00% Term Bond maturing January 1, 2030; Price 99.721%, to Yield 5.02°/^-CUSIP: 130178 BF2f $6,545,000 5.00% Term Bond maturing January 1,2036; Price 98.925%, to Yield 5.07%—CUSIP: 130178 BGOf

This cover page contains information for quick reference only. It is not intended to be a summary of all factors relating to an investment in the Bonds. Investors should review the entire Official Statement before making any investment decision.

The Bonds are offered by the Underwriter when, as and if issued by the Authority and accepted by the Underwriter, subject to the approval of legality by Squire, Sanders & Dempsey L.L.P., Bond Counsel. Certain legal matters will be passed upon for the Underwriter by Quint & Thitnmig LLP, San Francisco, California, for the Authority by its special counsel, U*slic M. Lava, Esq., Sausalito, California, and for the University bv Musick, Peeler & Garrett 1.I.P, Los Angeles, California. It is expected that the Bonds will be available for delivery in book-entry form in New York, New York, on or about January 11, 2006.

Honorable Philip AngelidesTreasurer of the State of California

E. J. DE LA ROSA & CO., INC.Dated: December 20, 2005

tCopyright 2005, American Bankers Association. CUSIP data herein is provided by Standard and Poor's, CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Service. CUSH’ numbers are provided for convenience of reference only. None of the Authority, the Corporation nr the Underwriter takes any responsibility for the accuracy of such numbers.

Tliis Official Statement does not constitute an offer to sell the Bonds in any jurisdiction in which or to any person to whom it is unlawful to make such an offer. No dealer, salesman or any other person has been authorized by the Authority, the University or the Underwriter to give any information or to make any representation other than those contained herein in connection with the offering of the Bonds and, if given or made, such information or representation must not be relied upon.

The information set forth herein under the captions "THE AUTHORITY" and "LITIGATION" (solely as it relates to the Authority) has been obtained from the Authority. All other information set forth herein has been obtained from the University and other sources (other than the Authority) which are believed to be current and reliable, but the accuracy or completeness of such information is not guaranteed by, and is not to be construed as a representation by, the Underwriter. Estimates and opinions are included and should not be interpreted as statements of fact. Summaries of documents do not purport to be complete statements of their provisions. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Authority or the University since the date hereof.

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

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS INTHIS OFFICIAL STATEMENT

Certain statements included or incorporated by reference in this Official Statement constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. 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 in APPENDIX A—"INFORMATION REGARDING WOODBURY UNIVERSITY."

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN 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 BY SUCH FORWARD-LOOKING STATEMENTS. THE UNIVERSITY DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN ITS EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED OCCUR.

TABLE OF CONTENTS

Page

INTRODUCTION.................................................1The Bonds........................................................... 1Use of Proceeds.................................................1Security and Sources of Payment for theBonds!............................................................... 2The University...................................................2Continuing Disclosure.....................................3Miscellaneous.................................................... 3

THE AUTHORITY......... .................... 4Organization and Membership of theAuthority............................................................4Indebtedness of the Authority........................4

FINANCING PLAN................ '..........................4ESTIMATED SOURCES AND USES OFFUNDS................................................................... 6THE BONDS..........................................................6

Description of the Bonds................................. 6Book-Entry System............................................7

REDEMPTION OF BONDS................................ 7Optional Redemption....................................... 7Mandatory Redemption from SinkingFund Payments..................................................7Mandatory Redemption from Proceedsof Condemnation or Insurance.......................9Selection of Bonds for Redemption................9Notice of Redemption......................................9Partial Redemption of Bonds.......................... 9Effect of Redemption...................................... 10

SOURCES OF PAYMENT OF ANDSECURITY FOR THE BONDS..........................10

General..............................................................10Revenues and Base Loan Payments........... 10Reserve Fund................................................... 11

Page

Other Amounts Held by the TrusteeUnder the Indenture...................................... 11Pledge of Gross Revenues............................. 12Real Property Security................................... 13Financial Covenants........................................13

INVESTMENT CONSIDERATIONS............ 13General..............................................................13Tax-Exempt Status of the Bonds....................14Unrelated Business Income...........................15State Income Tax Exemption.........................15Exemption from Property Taxes...................15Investment of Funds Risk.............................. 15Factors That Could Affect the Security Interest in the University's GrossRevenues.......................................................... 15Limitations Relating to Remedies underthe Deed of Trust............................................ 16Seismic Risks................................................... 17Bankruptcy and Other Factors thatCould Affect Security for the Bonds............. 17

ENFORCEABILITY OF REMEDIES.................18LEGALITY FOR INVESTMENT INCALIFORNIA.................................................... 19TAX MATTERS................................................... 19APPROVAL OF LEGAL PROCEEDINGS.....21LITIGATION...................................................... 21UNDERWRITING............................................. 21RATINGS............................................................ 22VERIFICATION OF MATHEMATICALCOMPUTATIONS............................................. 22INDEPENDENT ACCOUNTANTS................ 22CONTINUING DISCLOSURE........................ 22MISCELLANEOUS............................................ 23

APPENDIX A: INFORMATION REGARDING WOODBURY UNIVERSITY APPENDIX B: AUDITED FINANCIAL STATEMENTS OF WOODBURY UNIVERSITY FOR THE

YEARS ENDED JUNE 30, 2005 AND 2004 APPENDIX C: SUMMARY OF PRINCIPAL LEGAL DOCUMENTS APPENDIX D: FORM OF OPINION OF BOND COUNSEL APPENDIX E: BOOK-ENTRY ONLY SYSTEMAPPENDIX F: FORM OF CONTINUING DISCLOSURE AGREEMENT

OFFICIAL STATEMENT

$19,995,000CALIFORNIA EDUCATIONAL FACILITIES AUTHORITY

Revenue Bonds (Woodbury University) Series 2006

INTRODUCTION

This Introduction does not purport to be complete, and reference is made to the body of this Official Statement, the Appendices hereto and the documents referred to herein for more complete statements with respect to the matters summarized below.

The Bonds

This Official Statement (including its cover page and Appendices) sets forth certain information concerning Woodbury University (the "University") and the offering of the $19,995,000 California Educational Facilities Authority Revenue Bonds (Woodbury University) Series 2006 (the "Bonds"), being issued by the California Educational Facilities Authority (the "Authority") on the University's behalf. The Bonds will be issued pursuant to the provisions of the California Educational Facilities Authority Act, constituting Chapter 2 (commencing with section 94100) of Part 59 of Division 10 of Title 3 of the California Education Code, as amended (the "Act"), that certain Indenture of Trust, dated as of January 1,2006 (the "Indenture"), by and between the Authority and Wells Fargo Bank, National Association, as trustee (the "Trustee").

Ail capitalized terms used in the body of this Official Statement with respect to the Bonds and not otherwise defined herein have the meanings ascribed to them in APPENDIX C—"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—DEFINITIONS."

The Bonds will initially be issued in book-entry form and registered in the name of Cede & Co., as nominee of the Depository Trust Company ("DTC") which will act as securities depository for the Bonds. See APPENDIX E—"BOOK ENTRY SYSTEM." The Bonds will be issued in denominations of $5,000 principal amount or any integral multiple thereof. Interest on the Bonds will be payable semiannually on January 1 and July 1 of each year, commencing July 1, 2006.

Use of Proceeds

The Authority will lend the proceeds of the Bonds to the University pursuant to a loan agreement, dated as of January 1, 2006, by and between the Authority and the University (the "Loan Agreement"). The University will use the net proceeds of the loan, together with other available moneys, to (a) refund the outstanding California Educational Facilities Authority Revenue Bonds (Woodbury University), Series 1995 (the "1995 Bonds"), (b) finance the cost of the acquisition, construction, rehabilitation, remodeling, renovation, and/or equipping of certain educational facilities of the University (the "2006 Project"), as more fully described herein, (c) deposit moneys in the reserve fund held by the Trustee under the Indenture, and (d) pay certain costs of issuance of the Bonds. See "ESTIMATED SOURCES AND USES OF FUNDS" and "FINANCING PLAN" herein.

Security and Sources of Payment for the Bonds

The Bonds are limited obligations of the Authority payable only out of Revenues and other amounts held in the funds established by the Indenture, primarily from funds to be paid by the University under the Loan Agreement.

In the Loan Agreement, the University will pledge its full faith and credit to the payment of its obligations under the Loan Agreement. Such payments will be used to pay the principal of and premium, if any, and interest on the Bonds. Pursuant to the provisions set forth in the Indenture, the Authority will pledge the payments to be received under the Loan Agreement to the Trustee for the benefit of the Bondholders. To secure its payments under the Loan Agreement, the University will grant a first lien on and interest in the campus of the University in Burbank, California (the "Pledged Property"), pursuant to a deed of trust (the "Deed of Trust") and will pledge its "Gross Revenues" (as defined in APPENDIX C—"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS"). See "SOURCES OF PAYMENT OF AND SECURITY FOR THE BONDS—Real Property Security" and "—Pledge of Gross Revenues." The University has the right to release property from the Deed of Trust, subject to certain conditions. See APPENDIX C—"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—LOAN AGREEMENT—Deed of Trust and Additional Deeds of Trust."

A portion of the proceeds of the Bonds will be deposited in the Reserve Fund held by the Trustee under the Indenture. See "ESTIMATED SOURCES AND USES OF FUNDS" and "SOURCES OF PAYMENT OF AND SECURITY FOR THE BONDS—Reserve Fund."

THE BONDS DO NOT CONSTITUTE A DEBT OR LIABILITY OF THE STATE OR OF ANY POLITICAL SUBDIVISION THEREOF BUT SHALL BE PAYABLE SOLELY FROM THE RESPECTIVE FUNDS PROVIDED THEREFOR. NEITHER THE STATE NOR THE AUTHORITY SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF OR PREMIUM, IF ANY, OR INTEREST ON THE BONDS EXCEPT FROM THE FUNDS PROVIDED UNDER THE INDENTURE, THE LOAN AGREEMENT, AND NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OR OF ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR PREMIUM, IF ANY, OR INTEREST ON THE BONDS. THE ISSUANCE OF THE BONDS SHALL NOT DIRECTLY OR INDIRECTLY OR CONTINGENTLY OBLIGATE THE STATE OR ANY POLITICAL SUBDIVISION THEREOF TO LEVY OR TO PLEDGE ANY FORM OF TAXATION WHATSOEVER OR TO MAKE ANY APPROPRIATION FOR THEIR PAYMENT. THE AUTHORITY HAS NO TAXING POWER.

The University

The University, founded in 1884, is one of the oldest institutions of higher education in Southern California. An accredited, nonprofit university, the University is located on a 22-acre residential campus in Burbank, California, and offers bachelor's degrees from the School of Architecture and Design, Business and Management, and Arts and Sciences. The University also offers a master of business administration as well as weekend and evening study for working adults. A San Diego campus was established in 1998 to offer bachelor of architecture degrees. See APPENDIX A—"INFORMATION REGARDING WOODBURY UNIVERSITY" for a more detailed description of the University.

At the June 30, 2005, fiscal year end, the University had total assets of approximately $38.5 million and total net assets of approximately $28.7 million. In addition, the University had unrestricted revenues of approximately $24.35 million and temporarily restricted

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revenues of approximately SI.72 million (combined approximately $26.17 million) for the fiscal year ended June 30, 2005. The University's audited financial statements for the fiscal years ended June 30, 2005 and 2004, are'contained in APPENDIX B—”AUDITED FINANCIAL STATEMENTS OF WOODBURY UNIVERSITY FOR THE YEARS ENDED JUNE 30, 2005 AND 2004/' and should be carefully reviewed in their entirety by prospective investors prior to making an investment decision with respect to the Bonds.

Continuing Disclosure

The University will undertake in a continuing disclosure agreement, dated the date of issuance of the Bonds (the "Continuing Disclosure Agreement"), for the benefit of the Holders of the Bonds, to provide to the Trustee, acting as Dissemination Agent, certain annual information and notices required to be provided by Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the "Rule"). References to the Continuing Disclosure Agreement are qualified bv reference to the form thereof. See "CONTINUING DISCLOSURE" herein and APPENDIX F—"FORM OF CONTINUING DISCLOSURE AGREEMENT."

Miscellaneous

The descriptions herein of the Indenture, the Loan Agreement, the Tax Certificate, the Escrow Agreement, the Deed of Trust, the Continuing Disclosure Agreement and other agreements relating to the Bonds are qualified in their entirety by reference to such documents, and the description herein of the Bonds is qualified in its entirety by the forms thereof and the information with respect thereto included in such documents. All descriptions are further qualified in their entirety by reference to laws relating to or affecting the enforcement of creditors' rights. The agreements of the Authority with the Bondholders are fully set forth in the Indenture and neither any advertisement of the Bonds nor this Official Statement is to be construed as constituting an agreement with the purchasers of the Bonds. See APPENDIX C—"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—THE INDENTURE" for a brief summary of the rights and duties of the Authority, the rights and remedies of the Trustee and the Bondholders upon an event of default, provisions relating to amendment of the Indenture and procedures for defeasance of the Bonds.

Copies of the Indenture, the Loan Agreement, the Escrow Agreement, the Deed of Trust, the Continuing Disclosure Agreement and other agreements relating to the Bonds are available for inspection at Woodbury University, Burbank, California, or may be obtained in reasonable quantity upon request directed to the Trustee, the Underwriter or the University.

Insofar as any statements made in this Official Statement involve matters of opinion, regardless of whether expressly so stated, they are intended merely as such and not as representations of fact. The information and expressions of opinion herein speak only as of their date and are subject to change without notice. Neither the delivery of this Official Statement nor the consummation of any sale made hereunder nor any future use of this Official Statement shall, under any circumstances, create any implication that there has been no change in the affairs of the Authority or the University.

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THE AUTHORITY

The California Educational Facilities Authority is a public instrumentality of the State created pursuant to the provisions of the Act. The Authority is authorized to issue the Bonds, to make the loan contemplated by the Loan Agreement and to secure the Bonds by pledges of the Revenues derived by the Authority pursuant to the Loan Agreement and certain other sources of payment as provided in the Indenture, including amounts held in the funds and accounts established pursuant to the Indenture (excluding the Rebate Fund).

Organization and Membership of the Authority

The membership of the Authority consists of the Treasurer, the Controller and the Director of Finance of the State and two members appointed by the Governor of the State. Of the two appointed members, one must be affiliated with a public institution of higher education and the other must be affiliated with a private institution of higher education.

The members of the Authority serve without compensation but are entitled to reimbursement of actual and necessary expenses incurred in the performance of their duties.

The present members and officers of the Authority and their occupations are as follows:

Philip Angelides, Chairman Steve Westly, Member Michael C. Genest, Member Sylvia Scott-Hayes, Member Michael L. Jackson, Member

Treasurer of the State of CaliforniaController of the State of CaliforniaDirector of Finance of the State of CaliforniaTrustee, L.A. Community College District BoardVice President, Student Affairs, University of SouthernCalifornia

Frank Vega is the Executive Director of the Authority and is responsible to the Authority for the management of its affairs. Leslie M. Lava, Esq., of the Law Offices of Leslie M. Lava, Sausalito, California, is acting as special counsel to the Authority. PricewaterhouseCoopers LLP, Sacramento, California, serves as the financial advisor to the Authority, and Public Financial Management, Inc., San Francisco, California, serves as financial and pricing advisor to the Authority.

Indebtedness of the Authority

The Act does not limit the amount of indebtedness the Authority may have outstanding from time to time. As of September 30, 2005, the Authority had outstanding $3,298,640,331 aggregate principal amount of bonds and notes (excluding certain bonds and notes wrhich have been defeased) issued on behalf of various California independent colleges and universities.

FINANCING PLAN

General. The net proceeds of the Bonds will be loaned to the University which, together with other available moneys, will be used to (a) refund the 1995 Bonds, (b) finance the 2006 Project, (c) deposit moneys in the Reserve Fund, and (d) pay certain costs of issuance of the Bonds.

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Refunding of the 1995 Bonds. The 1995 Bonds were loaned to the University to finance costs of acquisition, construction, maintenance, renovation, expansion and structural rehabilitation of various facilities located on the main campus of the University at 7500 Glenoaks Boulevard, Burbank, California.

A portion of the proceeds of the Bonds, together with certain moneys pledged to the 1995 Bonds, will be used to purchase direct obligations of the United States of America and securities of certain federal agencies (collectively, the ''Escrow Securities"), to be held in trust in a separate fund or funds (the "Escrow Fund") for the 1995 Bonds, established under an Escrow Agreement, dated as of January 1, 2006 (the "Escrow Agreement"), by and between the University and The Bank of New York Trust Company, N.A., as successor trustee for the 1995 Bonds and as escrow bank (the "Escrow Bank"), as security solely for the 1995 Bonds. See "ESTIMATED SOURCES AND USES OF FUNDS." The Escrow Securities will mature at such times and in such amounts, and will bear interest payable at such times and in such amounts, that, together with the moneys available in the Escrow Fund, sufficient moneys will be available to pay, when due, all principal of and interest on the 1995 Bonds through February 15, 2006, and to provide for the redemption of the 1995 Bonds in full on February 15, 2006, at a redemption price equal to 102% of the par amount of the 1995 Bonds then outstanding, together with accrued interest to the date of redemption. The sufficiency of the moneys, investment earnings and maturing Escrow Securities such purposes will be verified by Grant Thornton LLP (the "Verification Agent"). See "VERIFICATION OF MATHEMATICAL COMPUTATIONS" herein. Assuming the accuracy of the Verification Agent's computations, as a result of the deposit and application of funds as provided in the Escrow Agreement, the obligations of the Authority and the University with respect to the 1995 Bonds will be defeased and discharged. The maturing principal of and the investment income to be derived from the Escrow Securities will be held in trust solely for the 1995 Bonds and will not be available to pay principal of, or premium or interest on, the Bonds or any bonds other than the 1995 Bonds.

Financing of the 2006 Project. A portion of the proceeds of the Bonds will be used to finance the 2006 Project. The 2006 Project includes financing and/or refinancing of the acquisition, construction, expansion, rehabilitation, remodeling, renovation and equipping of all or a portion of the educational facilities of the University, in each case with related and appurtenant facilities located on the main campus of the University at 7500 Glenoaks Boulevard, Burbank, California, as indicated: (a) building or buildings to house studios; (b) a business and/or multi purpose building including auditorium; (c) a 60-bed, three story residence hall building; (d) renovation of Wilshire Hall to provide faculty offices; (e) a parking lot; and (f) site/landscape/utility and building renovation and modification.

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ESTIMATED SOURCES AND USES OF FUNDS

The proceeds from the sale of the Bonds, together with other available moneys, will be applied as set forth below:

ESTIMATED SOURCESPrincipal amount of the BondsLess: Net Original Issue DiscountPlus: University's Equity ContributionPlus: 1995 Bonds Released MoneysTotal

S19,995,000.00 (100,273.30)

79,545.00 .347.58

819,974,619.28

ESTIMATED USESDeposit to Escrow Fund (1)Deposit to Construction Fund (2)Deposit to Reserve Fund (3)Costs of Issuance (4)Total

$ 4,444,330.81 13,728,602.22

1,292,248.75 509.437.50

$19,974,619.28

(1) Amounts in the Escrow Fund will invested in Escrow Securities and will be held in trust for the payment of the principal of and interest on the 1995 Bonds through February 15, 2006, and to provide moneys for the redemption of the 1995 Bonds on February 15, 2006.

(2) Amounts deposited in the Construction Fund will be used to finance the 2006 Project.(3) Represents the amount required to increase the amount on deposit in the Reserve Fund to the Reserve

Requirement.(4) Includes fees of the Authority, the Trustee, the rating agencies, Bond Counsel, counsel to the University and

Underwriter's discount, as well as certain other costs incurred in connection with the issuance and delivery of the Bonds. To the extent amounts within the Costs of Issuance Fund are insufficient, the balance of the costs and expenses will be paid from contributions by the University.

THE BONDS

Description of the Bonds

The Bonds will be issued as book-entry bonds in denominations of $5,000 and any integral multiple thereof. The Bonds will be dated the date of delivery and will bear interest from the Interest Payment Date to which interest has been paid as of the date on which such Bond is authenticated or, if such Bond is authenticated on or before June 15, 2006, from its dated date; provided, however, that if, at the time of authentication of any Bond, interest is in default on such Bond, such Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. Interest on the Bonds will be calculated on the basis of a 360-day year of twelve 30-day months and will be payable in arrears on each Interest Payment Date, upon maturity or upon prior redemption. The Bonds will mature (subject to the right of prior redemption as provided herein) on the dates, in the amounts and will bear interest as set forth on the inside cover of this Official Statement.

The principal of and premium, if any, on the Bonds will be payable in lawful money of the United States of America upon surrender at the Principal Office of the Trustee. The interest on any Bond shall be payable to the person whose name appears on the registration books of the Trustee as the registered owner thereof as of the close of business on the Record Date for each Interest Payment Date, such interest to be paid by check mailed by first class mail, postage prepaid, on such Interest Payment Date, to the registered owner at his or her address as it appears on such registration books. Notwithstanding the foregoing, however,

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any Holder of $1,000,000 or more in an aggregate principal amount of the Bonds shall be entitled to receive payments of interest on the Bonds held by it by wire transfer of immediately available funds to such bank or trust company located within the United States of America as such Holder shall designate in writing to the Trustee by the Record Date for such payment. So long as Cede & Co. is the registered owner of the Bonds, principal of, premium, if any, and interest on the Bonds are payable by wire transfer in same day funds by the Trustee to Cede & Co., as nominee for the Depository.

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 be the registered owner of the Bonds for all purposes of the Indenture and the Bonds. So long as the Bonds are held in book-entry form through DTC, all payments with respect to principal of and interest on each Bond will be made pursuant to DTC's rules and procedures. See APPENDIX E—"BOOK-ENTRY SYSTEM."

The Authority, the University and the Trustee will have no responsibility 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 other Securities Depository for the Bonds, any Nominee or any Participant with respect to any ownership interest in the Bonds, (b) the delivery of any notice by DTC or any DTC Participant or (c) the payment by DTC or by any DTC Participant of any amount due to any DTC Participant or Beneficial Owner, respectively, in respect of the principal of and interest on any Bond.

In the event of the discontinuance of the book-entry system for the Bonds, Bond certificates will be printed and delivered and the following provisions of the Indenture will apply: (a) principal of and premium, if any, on the Bonds will be payable upon surrender of the Bonds at the Principal Office of the Trustee, (b) Bonds may be transferred or exchanged for other Bonds of authorized denominations at the Principal Office of the Trustee, without cost to the owner thereof except for any tax or other governmental charge, and (c) Bonds will be issued in denominations as described under the heading "Description of the Bonds" above.

REDEMPTION OF BONDS

Optional Redemption

The Bonds are subject to redemption prior to their respective stated maturities, as a whole or in part on any date on or after January 1, 2015, at par, plus accrued interest, if any, to the date of redemption, from any moneys received by the Trustee from the University pursuant to the Loan Agreement, provided in each case that the maturities and amount of Bonds of each maturity to be redeemed from the amount so prepaid and the redemption date shall be as specified by the University in accordance with the Loan Agreement.

The University shall be required to give the Trustee written notice of its intention to redeem Bonds at least forty-five (45) days prior to the date fixed for such redemption unless the Trustee otherwise agrees to a shorter period for such notice.

Mandatory Redemption from Sinking Fund Payments

Bonds maturing on January 1, 2025, The Bonds maturing on January 1, 2025, are subject to redemption, in part, by lot, from mandatory sinking fund payments deposited in the

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Bond Fund on each January 1, from and after January 1, 2020, at the principal amount thereof plus accrued interest, if any, to the date of redemption (without premium), as follows:

Sinking Fund Installment

Payment Date (lanuarv 1)

Sinking Fund Installment

Amount20202021202220232024 2025+

$565,000590,000620,000650,000685,000720,000

+Maturity

Bonds maturing on January 1, 2030. The Bonds maturing on January 1,2030, are subject to redemption, in part, by lot, from mandatory sinking fund payments deposited in the Bond Fund on each January 1, from and after January 1, 2026, at the principal amount thereof plus accrued interest, if any, to the date of redemption (without premium), as follows:

Sinking Fund Installment

Payment Date (lanuarv 1)

202620272028 2029 2030+

Sinking Fund Installment

Amount$755,000

790,000830,000875,000915,000

tMaturity

Bonds maturing on January 2, 2036. The Bonds maturing on January 1, 2036 are subject to redemption, in part, by lot, from mandatory sinking fund payments deposited in the Bond Fund on each January 1, from and after January 1, 2031, at the principal amount thereof plus accrued interest, if any, to the date of redemption (without premium), as follows:

Sinking Fund Installment

Payment Date (fanuary 11

20312032203320342035 2036+

Sinking Fund Installment

Amount$ 960,000 1,010,000 1,060,000 1,115,000 1,170,000 1,230,000

tMaturity

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Mandatory Redemption from Proceeds of Condemnation or Insurance

The Bonds are subject to mandatory redemption, in whole or in part, by lot, from prepayments of Base Loan Payments on deposit in the Optional Redemption Account within the Bond Fund paid from the proceeds of condemnation of the Pledged Property or casualty insurance with respect to the Pledged Property pursuant to the Loan Agreement on any date at the principal amount thereof plus accrued interest, if any, to the date of redemption (without premium).

Selection of Bonds for Redemption

Whenever provision is made for the redemption of less than all of the Bonds, the Trustee will select the Bonds to be redeemed, from the Outstanding Bonds not previously called for redemption, by lot within a maturity and, if from more than one maturity, in inverse order of maturity or in such other order of maturity as shall be specified in a Request of the University.

Notice of Redemption

Notice of redemption will be given by the Trustee, at the expense of the University, for and on behalf of the Authority, to (i) the respective Holders of any Bonds designated for redemption at their addresses appearing on the Bond registration books of the Trustee, (ii) the Information Services, (iii) the Securities Depositories, and (iv) the Authority. Each notice of redemption will state the date of such notice, the redemption date, the redemption price (including any premium), the place or places of redemption (including the name and appropriate address or addresses of the Trustee), the CUSIP number (if any) of the maturity or maturities, and, if less than all the Bonds of any maturity are to be redeemed, the distinctive certificate numbers of the Bonds of such maturity to be redeemed and, in the case of Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice shall also state that on said date there will become due and payable on each of such Bonds the redemption price thereof or of said specified portion of the principal amount thereof in the case of a Bond to be redeemed in part only, together with interest accrued thereon to the redemption date, and that from and after such redemption date interest thereon shall cease to accrue, and shall require that such Bonds be then surrendered at the address or addresses of the Trustee specified in the redemption notice.

Any notice of redemption will be mailed by first class mail, postage prepaid, to Bondholders not less than thirty (30) days or more than sixty (60) days prior to the date fixed for redemption. Notices to the Information Services will be mailed by the Trustee by certified, registered or overnight mail at the time of the mailing of notices to Bondholders. Notices to the Securities Depositories will be given by telecopy or by certified, registered or overnight mail at least one Business Day before the mailing of notices to Bondholders.

Failure by the Trustee to give notice, or the insufficiency of any such notice, shall not affect the sufficiency of the proceedings for redemption of any Bond for which notice was properly given.

Partial Redemption of Bonds

Upon surrender of any Bond redeemed in part only, the Authority will execute and the Trustee will authenticate and deliver to the Holder thereof, at the expense of the University, a new Bond or Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bond surrendered.

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Effect of Redemption

Moneys for payment of the redemption price of, together with interest accrued to the redemption date on, the Bonds (or portions thereof) so called for redemption being held by the Trustee, on the redemption date designated in such notice, the Bonds (or portions thereof) so called for redemption shall become due and payable at the redemption price specified in such notice and interest accrued thereon to the redemption date, interest on the Bonds so called for redemption shall cease to accrue from and after the redemption date, said Bonds (or portions thereof) shall cease to be entitled to any benefit or security under the Indenture, and the Holders of said Bonds shall have no rights in respect thereof except to receive payment of said redemption price and accrued interest to the redemption date.

SOURCES OF PAYMENT OF AND SECURITY FOR THE BONDS

General

The principal of, premium, if any, and interest on the Bonds are payable solely from the Revenues which consist primarily of Base Loan Payments made by the University pursuant to the Loan Agreement.

THE BONDS DO NOT CONSTITUTE A DEBT OR LIABILITY OF THE STATE OF CALIFORNIA (THE "STATE") OR ANY POLITICAL SUBDIVISION THEREOF, OTHER THAN THE AUTHORITY, BUT SHALL BE PAYABLE SOLELY FROM THE FUNDS PROVIDED THEREFOR BY THE UNIVERSITY. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OR OF ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM (IF ANY) OR INTEREST ON THE BONDS. THE BONDS ARE PAYABLE ONLY OUT OF FUNDS PLEDGED UNDER THE INDENTURE. THE ISSUANCE OF THE BONDS SHALL NOT DIRECTLY, INDIRECTLY OR CONTINGENTLY OBLIGATE THE STATE OR ANY POLITICAL SUBDIVISION THEREOF TO LEVY OR TO PLEDGE ANY FORM OF TAXATION WHATSOEVER OR TO MAKE ANY APPROPRIATION FOR THEIR PAYMENT. THE AUTHORITY HAS NO TAXING POWER.

Revenues and Base Loan Payments

The Authority is obligated to pay the principal of, premium, if any, and interest on the Bonds solely from Revenues received from the University under the Loan Agreement and the other funds available therefore under the Indenture. "Revenues" mean all payments received by the Authority or the Trustee pursuant or with respect to the Indenture, the Loan Agreement and the Deed of Trust (except certain payments due and owing to the Authority or the Trustee), including, without limiting the generality of the foregoing, Base Loan Payments (including both timely and delinquent payments), prepayments and all income derived from the investment of any moneys in any fund or account established pursuant to the Indenture, but not including amounts, including investment income, received for or on deposit in the Rebate Fund. Pursuant to the Indenture, the Authority pledges to the Trustee for the benefit of the Bondholders all of the Revenues it receives.

The University's payment obligations under the Loan Agreement are general obligations of the University. Under the Loan Agreement, the University is unconditionally obligated to pay the Base Loan Payments to be made thereunder, which are due in amounts and at the times necessary to pay the principal (whether at maturity or upon redemption or acceleration) of, premium, if any, and interest to the maturity date or redemption of the Bonds, when due.

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Reserve Fund

The Indenture establishes a Reserve Fund to secure the Bonds and any Parity Debt. On the date of issuance of the Bonds, proceeds of the Bonds in the total amount of $1,292,248.75 will be deposited into the Reserve Fund which is an amount equal to the total Reserve Requirement for the Bonds. Amounts in the Reserve Fund will be used by the Trustee solely for the purpose of (i) making up any deficiency in the Bond Fund, (ii) making a transfer to the Rebate Fund, (iii) paying or redeeming all of the Bonds, (iv) transferring amounts in excess of the Reserve Requirement to the Bond Fund pursuant to the Indenture or (v) making the final Base Loan Payment.

All amounts in the Reserve Fund will be used and withdrawn by the Trustee solely for the purpose of making up any deficiency in the Bond Fund, including amounts for the payment or redemption of all Bonds then Outstanding. If at any time the amount on deposit in the Reserve Fund is less than the Reserve Requirement due to a transfer to the Bond Fund to make up any deficiency therein, the Trustee will promptly notify the Corporation of such deficiency, and, in accordance with the Loan Agreement, the Corporation will transfer to the Trustee, in twelve equal monthly installments due on the first Business Day of each month, commencing with the first Business Day of the next succeeding calendar month following the date of such transfer, for deposit in the Reserve Fund, the amount of such deficiency. The Trustee will notify the Authority and the Corporation immediately of any such transfer.

The Trustee will determine the value of the investments credited to the Reserve Fund no less frequently than semiannually (on or before January 1 and July 1 of each year), at the market value thereof. If such value is less than the Reserve Requirement, the Trustee will immediately notify the Authority and the Corporation of the amount of the deficiency, and the Corporation will (in accordance with the Loan Agreement) make equal monthly payments to the Trustee sufficient to cure such deficiency no later than the immediately succeeding semiannual valuation date. Any amount in the Reserve Fund in excess of the Reserve Requirement may be transferred to the Bond Fund.

For a description of the mechanics of the Reserve Fund, see APPENDIX C—"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—THE INDENTURE—Reserve Fund.”

Other Amounts Held by the Trustee Under the Indenture

Moneys on deposit in the Bond Fund, the Reserve Fund and the Construction Fund are pledged to the payment of the Bonds to the extent described in the Indenture.

Upon the occurrence of a default of the University in making any of the Base Loan Payments, such deficiency will be satisfied from one or more of the following sources of payment in the following order of priority:

(1) By a draw on undisbursed amounts, if any, then on deposit in theConstruction Fund; or

(2) By a draw on any amounts then on deposit in Reserve Fund.

In the case of a Loan Default Event, the Trustee or the Authority may accelerate the Loan Agreement and may take whatever action at law or in equity as may appear necessary or desirable to collect the payments due or to enforce performance and observance of any

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obligation, condition, or covenant of the University. See APPENDIX C—"SUMMARY OF PRINCIPAL DOCUMENTS—THE LOAN AGREEMENT—Events of Default and Remedies." Amounts received by the Trustee from the University following a Loan Default Event will be applied to the mandatory redemption of Bonds as and to the extent provided in the Indenture. However, the Indenture does not provide for the acceleration of the Bonds. See "THE BONDS—Redemption" and APPENDIX C—"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—THE INDENTURE."

Pledge of Gross Revenues

To secure payments under the Loan Agreement, the University has pledged, on a parity basis, its Gross Revenues to the payment thereof. The University must deposit Gross Revenues when received in a fund designated as the "Gross Revenue Fund" which the University has established and maintains at a banking institution or institutions of its choice. The term "Gross Revenues" is defined to mean "all revenues, income, receipts and money received by or on behalf of, and moneys due to, the University, solely from its Facilities, including (a) gross revenues derived from its operation and possession of such Facilities, (b) gifts, grants, bequests, donations and contributions, exclusive of any gifts, grants, bequests, donations and contributions to the extent specifically restricted by the donor to a particular purpose inconsistent with their use for the payment of Base Loan Payments, (c) proceeds derived from (i) condemnation proceedings, (ii) accounts receivable, (iii) securities and other investments, (iv) inventory and other tangible and intangible property, (v) insurance proceeds, (vi) contract rights and other rights and assets now or hereafter owned by the University, (vii) the proceeds of realization on any collateral provided by the University under the Loan Agreement, including, without limitation, the Deed of Trust, and (d) rental income from the lease of portions of the Facilities. Notwithstanding the foregoing, 'Gross Revenues' shall not include (i) amounts received by or on behalf of, or moneys due to, the University in connection with the guaranteed student loan origination programs in which the University participates or may hereafter participate, or (ii) amounts received as Auxiliary Revenues." There is no restriction on the withdrawal by the University of moneys in its Gross Revenue Fund unless and until the University is delinquent for more than one Business Day in the payment or required prepayment of any Base Loan Payment or payments with respect to Parity Debt, in which case, unless payment is made within ten days after notice, its Gross Revenue Fund shall be transferred to the name and credit of the Trustee for use to make payments owing under the Loan Agreement and with respect to any Parity Debt in default. See APPENDIX C—"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—THE LOAN AGREEMENT."

There is no assurance that moneys will be in a Gross Revenue Fund at such time, if applicable, that it is transferred to the name and credit of the Trustee, or that Gross Revenues will be deposited in such Gross Revenue Fund thereafter. Moreover, pursuant to the Loan Agreement, the University may incur other indebtedness which has a claim on Gross Revenues, thus reducing the amount that is available for the payment of the Bondholders. See APPENDIX A—"INFORMATION REGARDING WOODBURY UNIVERSITY" under the caption "Liabilities, Including Long-Term Indebtedness." Additionally, the lien of revenues will not extend to revenues received after the filing of bankruptcy unless the revenues can be traced as proceeds of other collateral (such as rent from the Pledged Property).

The pledge of Gross Revenues by the University will be perfected to the extent that such security interest may be perfected by filing of notice under the Uniform Commercial Code of the State. The pledge of Gross Revenues may be subordinated to the interest and claims of others. Some examples of cases of subordination of prior claims are (i) statutory liens, (ii) rights arising in favor of the United States of America or any agency thereof, (iii)

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present or future prohibitions against assignment in any federal statutes or regulations, (iv) constructive trusts, equitable liens or other rights impressed or conferred by any state or federal court in the exercise of its equitable jurisdiction, (v) federal or State bankruptcy or insolvency laws that may affect the enforceability of the Indenture or pledge of Gross Revenues and (vi) rights of third parties in Gross Revenues converted to cash and not in the possession of the Trustee or the Depository Bank(s). In addition, it may not be possible to perfect a security interest in any manner whatsoever in certain types of Gross Revenues (e.g., gifts, donations, certain insurance proceeds) prior to actual deposit by the University in its Gross Revenue Fund.

Real Property Security

To secure its payments under the Loan Agreement, on the date of issuance of the Bonds, the University will execute the Deed of Trust granting a first lien on and interest in the Pledged Property for the benefit of the Bondholders and the holders of any Parity Debt subject to Permitted Encumbrances. A description of the Pledged Property is described in APPENDIX A—"INFORMATION REGARDING WOODBURY UNIVERS1TY" under the caption "Certain Property Pledged to Secure Base Loan Payments." See APPENDIX C—"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—THE DEED OF TRUST." Also, see "INVESTMENT CONSIDERATIONS—Limitations Relating to Remedies under the Deed of Trust."

Financial Covenants

Liquidity, The University will covenant in the Loan Agreement that the ratio of the market value of Liquid Assets to Long-Term Indebtedness at fiscal year-end will not be less than .25 times as evidenced by its audited financial statements.

Debt Service Coverage. The University will covenant in the Loan Agreement that the ratio of its Revenues at fiscal year-end to the total principal, interest or other payments with respect to its Long-Term Indebtedness in any one year will be equal to or greater than 1.2D times.

INVESTMENT CONSIDERATIONS

General

Except as noted herein, the Bonds are payable solely from and secured by the Authority's pledge of the Revenues, which consist primarily of payments to be made by the University under the Loan Agreement. There can be no assurance that income and receipts will be realized by the University in amounts sufficient to make payments under the Loan Agreement and thus sufficient to pay the principal of, premium, if any, or interest on the Bonds.

Future economic and other conditions, including, without limitation, the loss by the University of its accreditation, destruction or loss of a substantial portion of the University's facilities, litigation, competition, a continuation of favorable governmental policies and programs with respect to post secondary education, the future direction of demographic trends determining the number of college-age persons in the general population, prospective levels of regional and national economic prosperity, natural, national or international calamities, the competitive appeal and perceived quality of the University's curriculum, reduction in the amounts received by the University through fundraising efforts, reduction of the value of endowment funds, increased operating expenses due to

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higher energy or other costs may adversely affect income and receipts of the University. There can be no assurance that University income and receipts will not decrease.

Tax-Exempt Status of the Bonds

Tax-Exempt Status of Interest on the Bonds. The Internal Revenue Code of 1986, as amended (the "Code") imposes a number of requirements that must be satisfied for interest on state and local obligations, such as the Bonds, to be excludable from gross income for federal income tax purposes. These requirements include limitations on the use of Bond proceeds, limitations on the investment earnings of Bond proceeds prior to expenditure, a requirement that certain investment earnings on Bond proceeds be paid periodically to the United States and a requirement that the issuers file an information report with the Internal Revenue Service (the "IRS"). The Authority and the University have covenanted in certain of the documents referred to herein that they will comply with such requirements. Failure by the University 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 of the Bonds.

Tax-Exempt Status of the University. The tax-exempt status of interest on the Bonds presently depends upon the maintenance by the University of its status as an organization described in Section 501(c)(3) of the Code. The maintenance of such status is contingent upon compliance with general rules promulgated in the Code and related regulations regarding the organization and operation of tax-exempt entities, including their operation for charitable purposes and their avoidance of transactions which may cause their earnings or assets to inure to the benefit of private individuals. As these general principles were developed primarily for public charities which do not conduct large-scale technical operations and business activities, they often do not adequately address the myriad of operations and transactions entered into by modern tax-exempt organizations.

Tax-exempt organizations such as the University are subject to scrutiny from ongoing IRS audit programs. The primary penalty available to the IRS under the Code with respect to a tax-exempt entity engaged in unlawful, private benefit is the revocation of tax- exempt status. Although the IRS has not frequently revoked the tax-exempt status of nonprofit corporations or trusts, it could do so in the future. Loss of tax-exempt status by the University would most likely result in loss of tax exemption of interest on the Bonds and of future tax-exempt debt of the University, if any, and defaults in covenants regarding the Bonds and existing and future tax-exempt debt, if any, would likely be triggered. Loss of tax-exempt status of the University would also have material adverse consequences on the financial condition of the University.

Bond Audit. In December 1999, as a part of a larger reorganization of the IRS, the IRS commenced operation of its Tax Exempt and Government Entities Division (the "TE/GE Division"), as the successor to its Employee Plans and Exempt Organizations division. The new TE/GE Division has a subdivision that is specifically devoted to tax-exempt bond compliance. Public statements by IRS officials indicate that the number of tax-exempt bond examinations is expected to increase significantly under the new TE/GE Division.

The University has not sought to obtain a private letter ruling from the IRS with respect to the Bonds, and the opinion of Squire, Sanders & Dempsey L.L.P., Bond Counsel, is not binding on the IRS. There is no assurance that an IRS examination of the Bonds will not adversely affect the market value of the Bonds. See the section entitled "TAX MATTERS" herein.

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Unrelated Business Income

In recent years, the IRS and state, county and local taxing authorities have been undertaking audits and reviews of the operations of tax-exempt organizations with respect to their exempt activities and the generation of unrelated business taxable income ("UBTI"). The University has not historically generated any UBTI. The University may participate in activities which generate UBTI in the future. Management of the University 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 status of the University as well as the exclusion from gross income for federal income tax purposes of the interest on the Bonds and other future tax-exempt debt of the University, if any.

State Income Tax Exemption

The State has not been as active as the IRS in scrutinizing the income tax exemption of organizations, though this does not preclude future State scrutiny, and it is likely that the loss by the University of federal tax exemption would also trigger a challenge to the State tax exemption of the University. Depending on the circumstances, such an event could be adverse and material.

Exemption from Property Taxes

In recent years, State, county and local taxing authorities have been undertaking audits and reviews of the operations of tax-exempt corporations with respect to their real property tax exemptions. The management of the University believes that its real property and the planned improvements thereon are and will continue to be exempt from California real property taxation.

Investment of Funds Risk

All funds and accounts held under the Indenture are required to be invested in Investment Securities as provided under the Indenture. See APPENDIX C—"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS—DEFINITIONS" for the definition of "Investment Securities." See APPENDIX B—"AUDITED FINANCIAL STATEMENTS OF WOODBURY UNIVERSITY FOR THE YEARS ENDED JUNE 30, 2005 AND 2004," for a summary of the investments of the University as of the date of such financial statements. All investments, including the Investment Securities and other investments made by the University, contain a certain degree of risk. Such risks include, but are not limited to, a lower rate of return than expected, loss of market value and loss or delayed receipt of principal. The occurrence of these events with respect to amounts held under the Indenture or by the University could have a material adverse effect on the security of the Bonds.

Factors That Could Affect the Security Interest in the University's Gross Revenues

Attachment, perfection and priority of the security interest in the Gross Revenues and the Gross Revenue Fund is subject to a number of risks and it may not be possible to enforce such security interest. The Trustee's security interest in the Gross Revenue Fund and all the Gross Revenues may be subordinated to the interest and claims of others in several instances. Some examples of cases of subordination of prior claims are (i) statutory liens, (ii) rights arising in favor of the United States of America or any agency thereof, fiii) present or future prohibitions against assignment in any statutes or regulations, (iv) constructive trusts, equitable liens or other rights impressed or conferred by any state or federal court in the exercise of its equitable jurisdiction, (v) federal or state bankruptcy or

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insolvency laws that may affect the enforceability of the Loan Agreement or pledge of Gross Revenues, (vi) rights of third parties in Gross Revenues converted to cash and not in the possession of the Trustee, (vii) commingling of proceeds of Gross Revenues with other moneys of the University not subject to the security interest in the Gross Revenues; and (viii) claims that might arise if control agreements with banks or securities firms are not executed or appropriate financing or continuation statements are not filed in accordance with the California Uniform Commercial Code as from time to time in effect. In addition, it may not be possible to perfect or enforce a security interest in any manner whatsoever in certain types of Gross Revenues (e.g., gifts, donations and certain insurance proceeds) prior to actual receipt by the University for deposit in the Gross Revenue Fund. Additionally, the lien on the Gross Revenues may not extend to revenues received after the filing of bankruptcy.

Limitations Relating to Remedies under the Deed of Trust

Foreclosure. There are two methods of foreclosing on a deed of trust under California law, by nonjudicial sale and by judicial sale. Foreclosure under a deed of trust may be accomplished by a nonjudicial trustee's sale under the power of sale provision in the deed of trust. Prior to such sale, the trustee must record a notice of default and election to sell and send a copy to the trustor, to any person who has recorded a request for a copy of the notice of default and notice of sale, to any successor in interest of the trustor to the beneficiary of any junior deed of trust and to certain other parties discernable from the real property records. The trustee then must wait for the lapse of at least three months after the recording of the notice of default and election to sell before establishing the trustee's proposed sale date and giving a notice of sale (in a form mandated by California statutes). The notice of sale must be posted in a public place and published once a week for three consecutive calendar weeks, with the first such publication preceding the trustee's sale by at least 20 days. Such notice of sale must be posted on the property and sent, at least 20 days prior to the trustee's sale, to the trustor, to each person who has requested a copy, to any successor in interest of the trustor, to the beneficiary of any junior deed of trust and to certain other parties discernable from the real property records. In addition, the notice of sale must be recorded with the county recorder at least 14 days prior to the date of sale. The trustor, any successor in interest of the trustor in the trust property, or any person having a junior lien or encumbrance of record may, during the statutory reinstatement period, cure any monetary default and reinstate the secured indebtedness by paying the entire amount of the debt then due under the terms of the deed of trust and the obligations secured thereby (exclusive of principal due by virtue of acceleration upon default) plus costs and expenses actually incurred in enforcing the obligation and certain statutorily limited attorneys' and trustee's fees. Following a nonjudicial sale, neither the trustor nor any junior lienholder has any right of redemption, and the beneficiary may not ordinarily obtain a deficiency judgment against the trustor. See "Antideficiency Legislation and Certain Other Limitations on Lenders" below.

Should foreclosure under a deed of trust be sought in the form of a judicial foreclosure, it is generally subject to most of the delays and expenses of other lawsuits, and may require several years to complete. The primary advantage of a judicial foreclosure is that the beneficiary is"entitled, subject to other limitations, to obtain a deficiency judgment against the tru stor to the extent that the amount of the debt is in excess of the fair market value of the property. Following a judicial foreclosure sale, the trustor or its successors in interest may redeem the property for a period of one year (or a period of only three months if the proceeds of sale are sufficient to satisfy the debt, plus interest and costs). In addition, in order to assure collection of any rents assigned as additional collateral under the Deed of Trust, a receiver for the encumbered Facilities might need to be appointed by a court.

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Antideficiency Legislation and Certain Other Limitations on Lenders. California has four principal statutory prohibitions limiting the remedies of a beneficiary under a deed of trust. Two such prohibitions limit the beneficiary's right to obtain a deficiency judgment, one being based on the method of foreclosure and the other on the type of debt secured. Under the former, a deficiency judgment is ordinarily barred when the foreclosure is accomplished by means of a nonjudicial trustee's sale, except for limited exceptions not applicable to the Deed of Trust. Under the latter (not applicable in this situation), a deficiency judgment is barred when a foreclosed deed of trust secures certain purchase money obligations.

Another California statute, commonly known as the "one form of action" rule requires the beneficiary to exhaust the security under a deed of trust by foreclosure before bringing a personal action against the trustor on the indebtedness. If the Trustee, the trustee under the Deed of Trust or the holders of the Bonds were to file suit or take other actions (including set off) to collect the debt secured by the Deed of Trust without first seeking to enforce their remedies under the Deed of Trust, they might be precluded from thereafter proceeding under the Deed of Trust, or they may be compelled to first seek to enforce their remedies under the Deed of Trust.

Another statutory provision limits any deficiency judgment obtained by a beneficiary following a judicial sale to the excess of the outstanding debt over the fair market value of the property at the time of sale. This prevents a beneficiary from obtaining a large deficiency judgment against tire debtor as the result of low bids at a judicial sale.

Other statutory provisions (such as the federal bankruptcy laws) may have the effect of delaying enforcement of the lien of the Deed of Trust in the event of a default by the University. See "Bankruptcy" below.

Seismic Risks

The facilities of the University are located in a seismically active region of northern California, The occurrence of severe seismic activity in the area could result in substantial damage to the facilities of the University and could have a material, adverse impact on the University's finances. The Loan Agreement does not require the University to maintain earthquake insurance for its facilities. For information on insurance currentlv maintained by the University, see APPENDIX A—"INFORMATION REGARDING WOODBURY UNIVERSITY."

Bankruptcy and Other Factors that Could Affect Security for the Bonds

The ability of the Trustee to enforce the obligations of the University under the Loan Agreement and the Deed of Trust may be limited by laws relating to bankruptcy, insolvency, reorganization or moratorium and by other similar laws affecting creditors rights, including equitable principles. In addition, the Trustee's ability to enforce such agreements will depend upon the exercise of various remedies specified by such documents which may in many instances require judicial actions that are often subject to discretion, delay and substantial costs or that otherwise may not be readily available or may be limited.

The various legal opinions to be delivered concurrently with the issuance of the Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposed by State and federal laws, rulings and decisions affecting remedies, and by bankruptcy, reorganization or other laws of general application affecting the enforcement of creditors' rights, including equitable principles.

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The Trustee's security interest in the Revenues under the Indenture may be subordinated to the interest and claims of others in several instances. Some examples of cases of subordination of prior claims are (i) statutory liens, (ii) rights arising in favor of the United States of America or any agency thereof, (iii) present or future prohibitions against assignment in any statutes or regulations, (iv) constructive trusts, equitable liens or other rights impressed or conferred by any state or federal court in the exercise of its equitable jurisdiction, (v) federal or state bankruptcy or insolvency laws that may affect the enforceability of the Loan Agreement or pledge of Revenues, (vi) rights of third parties in Revenues converted to cash and not in the possession of the Trustee or a depository bank, (vii) commingling of proceeds of Revenues with other moneys of the University not subject to the security interest in the Revenues; and (viii) claims that might arise if appropriate financing or continuation statements are not filed in accordance with the California Uniform Commercial Code as from time to time in effect.

Except as noted herein, the Bonds are payable solely from and secured by the Authority's pledge of Revenues, which consist primarily of payments to be made by the University under the Loan Agreement. There can be no assurance that income and receipts will be realized by the University in amounts sufficient to make payments under the Loan Agreement and thus sufficient to pay the principal of, premium (if any) and interest on the Bonds.

Future economic and other conditions, including, without limitation, the loss by the University of its accreditation, destruction or loss of a substantial portion of the University's facilities, litigation, competition, reduction in the amounts received by the University through fundraising efforts or research grants, changes in federal reimbursement programs, reduction of the value of endowment funds, the occurrence of national or international calamities, changes in the perceived quality of the University and the ability and energy of the University's faculty and administration, may adversely affect income and receipts of the University. There can be no assurance that the University's income and receipts will not decrease.

Nothing in the Indenture or in the Bonds, expressed or implied, is intended or shall be construed to give to any person other than the Authority, the Trustee, the University and the Bondholders 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 and shall be held to be for the sole and exclusive benefit of the Authority, the Trustee, the University and the Bondholders.

ENFORCEABILITY OF REMEDIES

Enforceability of the rights and remedies of the Authority, the Trustee or the owners of the Bonds upon an Event of Default under the Indenture or Loan Agreement may become subject to the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditor's rights generally, now or hereafter in effect, equity principles which may limit the specific enforcement under State law of certain remedies, the exercise by the United States of America of the powers delegated to it by the Constitution, the reasonable and necessary exercise, in certain exceptional situations, of the police powers inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or State government, if initiated, could subject the owners of the Bonds to judicial

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discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitation or modification of their rights.

LEGALITY FOR INVESTMENT IN CALIFORNIA

Obligations issued by the Authority under the Act are, under California law, securities in which all banks, savings banks, trust companies, savings and loan associations, investment companies and other persons carrying on a banking business, all insurance companies, insurance associations and other persons carrying on an insurance business, and all administrators, executors, guardians, trustees and other fiduciaries and all other persons whatsoever, who now are or may hereafter be authorized to invest in bonds or other obligations of the State, may properly and legally invest any funds, including capital belonging to them or within their control; and such obligations are securities which may properly and legally be deposited with and received by any state or municipal officer or agency of the State for any purpose for which the deposit of bonds or notes or other obligations of the State is now or may hereafter be authorized bylaw.

TAX MATTERS

In the opinion of Squire, Sanders & Dempsey L.L.P., Bond Counsel, under existing law (i) interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the ''Code"), and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; and (ii) interest on the Bonds is exempt from State of California personal income taxes. Bond Counsel will express no opinion as to any other tax consequences regarding the Bonds.

The opinion on federal tax matters will be based on and will assume the accuracy of certain representations and certifications, and continuing compliance with certain covenants, of the Authority and the University to be contained in the transcript of proceedings and that are intended to evidence and assure the foregoing, including that the Bonds are and will remain obligations the interest on which is excluded from gross income for federal income tax purposes. Bond Counsel will also rely on the opinion of University's Counsel as to all matters concerning the status of the University as an organization described in Section 501(c)(3) of the Code and exempt from federal income tax under Section 501(a) of the Code. Bond Counsel will not independently verify the accuracy of those certifications and representations or that opinion.

The Code prescribes a number of qualifications and conditions for the interest on state and local government obligations to be and to remain excluded from gross income for federal income tax purposes, some of which require future or continued compliance after issuance of the obligations in order for the interest to be and to continue to be so excluded from the date of issuance. Noncompliance with these requirements by the Authority or the University may cause the interest on the Bonds to be included in gross income for federal income tax purposes and thus to be subject to federal income tax retroactively to the date of issuance of the Bonds. The University and, subject to certain limitations, the Authority have each covenanted to take the actions required of it for the interest on the Bonds to be and to remain excluded from gross income for federal income tax purposes, and not to take any actions that would adversely affect that exclusion.

A portion of the interest on the Bonds earned by certain corporations may be subject to a federal corporate alternative minimum tax. In addition, interest on the Bonds may be

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subject to a federal branch profits tax imposed on certain foreign corporations doing business in the United States and to a federal tax imposed on excess net passive income of certain S corporations.

Under the Code, the exclusion of interest from gross income for federal income tax purposes may have certain adverse federal income tax consequences on items of income, deduction or credit for certain taxpayers, including financial institutions, certain insurance companies, recipients of Social Security and Railroad Retirement benefits, those that are deemed to incur or continue indebtedness to acquire or carry tax-exempt obligations, and individuals otherwise eligible for the earned income tax credit. The applicability and extent of these and other tax consequences will depend upon the particular tax status or other tax items of the owner of the Bonds. Bond Counsel will express no opinion regarding those consequences.

Purchasers of the Bonds at other than their original issuance at the respective prices indicated on the cover of this Official Statement should consult their own tax advisers regarding other tax considerations such as the consequences of market discount.

Certain of the Bonds ("Discount Bonds") as indicated on the cover of this Official Statement were offered and sold to the public at an original issue discount ("OID"). OID is the excess of the stated redemption price at maturity (for current interest bonds, the principal amount) over the "issue price" of a Discount Bond. The issue price of a Discount Bond is the initial offering price to the public (other than to bond houses, brokers or similar persons acting in the capacity of underwriters or wholesalers) at which a substantial amount of the Discount Bonds of the same maturity is sold pursuant to that offering. For federal income tax purposes, OID accrues to the owner of a Discount Bond over the period to maturity based on the constant yield method, compounded semiannually (or over a shorter permitted compounding interval selected by the owner). The portion of OID that accrues during the period of ownership of a Discount Bond (i) is interest excluded from the owner's gross income for federal income tax purposes to the same extent, and subject to the same considerations discussed above, as other interest on the Bonds, and (ii) is added to the owner's tax basis for purposes of determining gain or loss on the maturity, redemption, prior sale or other disposition of that Discount Bond. The amount of OID that accrues each year to a corporate owner of Discount Bonds is taken into account in computing the corporation's liability for federal alternative minimum tax. A purchaser of a Discount Bond in the initial public offering at the price for that Discount Bond stated on the cover of this Official Statement who holds that Discount Bond to maturity will realize no gain or loss upon the retirement of that Discount Bond.

Certain of the Bonds ("Premium Bonds") as indicated on the cover of this Official Statement were offered and sold to the public at a price in excess of their stated redemption price (the principal amount) at maturity. That excess constitutes bond premium. For federal income tax purposes, bond premium is amortized over the period to maturity of a Premium Bond, based on the yield to maturity of that Premium Bond (or, in the case of a Premium Bond callable prior to its stated maturity, the amortization period and yield may be required to be determined on the basis of an earlier call date that results in the lowest yield on that Premium Bond), compounded semiannually. No portion of that bond premium is deductible by the owner of a Premium Bond. For purposes of determining the owner's gain or loss on the sale, redemption (including redemption at maturity) or other disposition of a Premium Bond, the owner's tax basis in the Premium Bond is reduced by the amount of bond premium that accrues during the period of ownership. As a result, an owner may realize taxable gain for federal income tax purposes from the sale or other disposition of a Premium Bond for an amount equal to or less than the amount paid by the owner for that Premium Bond. A purchaser of a Premium Bond in the initial public

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offering at the price for that Premium Bond stated on the cover of this Official Statement who holds that Premium Bond to maturity (or, in the case of a callable Premium Bond, to its earlier call date that results in the lowest yield on that Premium Bond) will realize no gain or loss upon the retirement of that Premium Bond.

Owners of Discount and Premium Bonds should consult their own tax advisers as to the determination for federal income tax purposes of the amount of OID or bond premium properly accruable in any period with respect to the Discount or Premium Bonds and as to other federal tax consequences and the treatment of OID and bond premium for purposes of state and local taxes on, or based on, income.

APPROVAL OF LEGAL PROCEEDINGS

The validity of the Bonds under California law is subject to the approval of Squire, Sanders & Dempsey L.L.P., acting as Bond Counsel. The proposed form of the legal opinion of Bond Counsel is attached hereto as Appendix E—"PROPOSED FORM OF OPINION OF BOND COUNSEL." Approval of other legal matters will be passed upon for the Authority by its special counsel, Leslie M. Lava, Esq., Sausalito, California, for the University by Musick, Peeler & Garrett LLP, Los Angeles, California, and for the Underwriter by Quint & Thimmig LLP, San Francisco, California. Special counsel to the Authority undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement.

LITIGATION

There is no litigation pending, with service of process having been accomplished, against the Authority concerning the validity of the Bonds. For information on litigation pending against the University, see Appendix A—"INFORMATION CONCERNING WOODBURY UNIVERSITY—Legal Proceedings."

UNDERWRITING

Under a bond purchase contract among the Authority, the Treasurer of the State of California and E. J. De La Rosa & Co., Inc., the Bonds are being purchased at a price of $19,647,276.70 (being the principal amount of the Bonds of $19,995,000.00, less Underwriter's discount of $247,450.00, less net original issue discount of $100,273.30). The bond purchase contract provides that the Underwriter will purchase all of the Bonds, if any are purchased, the obligation to make such purchase being subject to the terms and conditions set forth in the bond purchase contract, including the approval of certain legal matters by counsel for the Underwriter,

The Underwriter intends to offer the Bonds to the public initially at the offering prices set forth on the cover page of this Official Statement, which may subsequently change without any requirement of prior notice.

The Underwriter may offer and sell the Bonds to certain dealers and others at lower than the public offering prices.

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RATINGS

Moody's Investors Service ("Moody's) and Standard & Poor's Ratings Services ("S&P") have assigned the ratings of "Baa3" and "BBB~," respectively, to the Bonds. Any explanation of the significance of such ratings, including Moody's and S&P's analyses of the University and the Bonds supporting such ratings, may be obtained from them as follows: Moody's at 99 Church Street, New York, NY 10007, telephone (212) 553-0300, and S&P at 55 Water Street, New York, NY 10041, telephone (212) 438-2000. There is no assurance that the ratings mentioned above will remain in effect for any given period of time or that a rating might not be lowered or withdrawn entirely if, in the judgment of the rating agency issuing such rating, circumstances so warrant. None of the Authority, the University or the Underwriter has undertaken any responsibility to oppose any such proposed revision or withdrawal. Any such downward change in or withdrawal of a rating might have an adverse effect on the market price or marketability of the Bonds.

VERIFICATION OF MATHEMATICAL COMPUTATIONS

The Verification Agent will verify, from the information provided to it, the mathematical accuracy as of the date of the closing on the Bonds of computations relating to the adequacy of the proceeds of the Bonds to be deposited with the Escrow Bank for the defeasance of the 1995 Bonds. The Verification Agent will also verify the yield of the Bonds and on the Federal Securities to be deposited in the various escrow funds upon the delivery of the Bonds. The Verification Agent will restrict its procedures to examining the arithmetical accuracy of certain computations and will not make a study or evaluation of the information and assumptions on which such computations are based and, accordingly, will not express an opinion on the data used, the reasonableness of the assumptions or the achieveability of the forecasted outcome.

INDEPENDENT ACCOUNTANTS

The Financial Statements of the University as of and for the fiscal years ended June 30, 2005 and 2004 (the "Financial Statements"), attached hereto as APPENDIX B—"AUDITED FINANCIAL STATEMENTS OF WOODBURY UNIVERSITY FOR THE YEARS ENDED JUNE 30, 2005 AND 2004," have been audited by Moss-Addams LLP, independent auditors, as stated in their report dated September 9, 2005.

CONTINUING DISCLOSURE

The Authority has determined that no financial or operating data concerning the Authority is material to an evaluation of the offering of the Bonds or to any decision to purchase, hold or sell Bonds and the Authority will not provide any such information. The University has undertaken all responsibilities for any continuing disclosure to Bondholders as described below, and the Authority shall have no liability to the Holders of the Bonds or any other person with respect to any continuing disclosure provided by the University.

The University has covenanted, for the benefit of the Holders and Beneficial Owners of the Bonds, to provide to the Trustee for dissemination as described below7 certain financial information and operating data (the "Annual Report") relating to the University by not later than 240 days following the end of the University's Hscal year (which fiscal year currently begins on July 1 of each year and ends on the next succeeding June 30 (each such twelve-month period a "Fiscal Year")), commencing with the Annual Report for the 2004-

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2005 Fiscal Year (due by March 1,2006), and to provide notices of the occurrence of certain enumerated events, if material. The Annual Report will be filed by the University or the Dissemination Agent on behalf of the University with each Nationally Recognized Municipal Securities Information Repository (and with the State Repository, if any). In addition, notices of material events will be filed by the University or the Dissemination Agent on behalf of the University with each Nationally Recognized Municipal Securities Information Repository or with the Municipal Securities Rulemaking Board and the State Repository, if any. As of the date of this Official Statement, there is no State Repository. The specific nature of the information to be contained in the Annual Report and the notices of material events Ls set forth in APPENDIX F—"FORM OF CONTINUING DISCLOSURE AGREEMENT." These covenants have been made in order to assist the Underwriter in complying with S.E.C. Rule 15c2-12(b)(5). The University is in full compliance with its previous undertakings with regard to said Rule.

MISCELLANEOUS

All quotations from and summaries and explanations of the Act, the Indenture and the Loan Agreement, the Escrow Agreement, the Deed of Trust and the Continuing Disclosure Agreement and of other statutes and documents contained herein do not purport to be complete, and reference is made to said documents and statutes for full and complete statements of their provisions. Copies in reasonable quantity of the Indenture and the Loan Agreement, the Escrow Agreement, the Deed of Trust and the Continuing Disclosure Agreement may be obtained upon request directed to the Underwriter or the University. Copies of the indenture, the Loan Agreement and the Escrow Agreement, the Deed of Trust and the Continuing Disclosure Agreement are also available for inspection at the Principal Corporate Trust Office of the Trustee in Los Angeles, California.

Any statements in this Official Statement involving matters of opinion are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the Authority or the University and Holders of any of the Bonds. Appendices A and B hereto contain certain information with respect to the University. The information contained in this Official Statement regarding the University, including such Appendices, has been furnished by the University and officers, officials and representatives of the University, and the Authority makes no representations or warranties whatsoever with respect to the information contained in any of the Appendices or any other information contained in this Official Statement, except for information set forth under the captions "THE AUTHORITY" and "LITIGATION" (solely as it relates to the Authority).

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The execution and delivery of this Official Statement by the Executive Director of the Authority have been duly authorized by the Authority.

CALIFORNIA EDUCATIONAL FACILITIES AUTHORITY

By________ /s/ Frank Vega___________Executive Director

The information in this Official Statement regarding the University, including Appendices A and B hereto, have been reviewed and approved by the University. Concurrently with the delivery of the Bonds, the University will furnish a certificate executed on behalf of the University by its President or other appropriate University officer to the effect that the information in this Official Statement relating to the University, as of the date of this Official Statement and as of the date of delivery of the Bonds, does not contain any untrue statement of a material fact relating to the University or omit to state such a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

WOODBURY UNIVERSITY

By /s/ Kenneth R. Nielsen, Ed.D.President

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APPENDIX A

INFORMATION REGARDING WOODBURY UNIVERSITY

The information presented in this Appendix A has been provided by Woodbury University and has not been independently verified or reviewed by the Authority.

General

Founded in 1884 by F. C. Woodbury, a prominent Los Angeles entrepreneur who sought to address the City's growing business community, Woodbury University {the "University") is one of the oldest institutions of higher education in Southern California. Initially located in the downtown business district of Los Angeles, then a city with a modest population of 11,000, the University relocated its facilities in 1937 to a larger site at 1027 Wilshire Boulevard that served the University's needs until its relocation to the present site in 1987.

An accredited, nonprofit university, the University is located on a 22-acre residential campus in Burbank, California, and offers bachelor's degrees from the School of Architecture and Design, Business and Management, and Arts and Sciences. The University also offers a master of business administration as well as weekend and evening study for working adults. A San Diego campus was established in 1998 to offer the bachelor of architecture degree.

The University occupies four different market areas, the traditional undergraduate architecture and design market, the traditional undergraduate business market, the non- traditional undergraduate market, and the working professional graduate market. The University implements sales and marketing strategies designed for each of these markets. Traditional undergraduate markets are approached with a heavy emphasis on personal sales. Admissions personnel visit scores of high schools, community colleges, college fairs, and other college outreach events. These activities build a prospect base that fuels applications and enrollment in each annual cycle. Media advertising drives non-traditional and graduate markets. Web banners and links, print advertising, and direct mail build prospect bases that fuel applications and enrollment for these programs. The University emphasizes professional education, access to classes, timely degree completion, and excellent service in order to position itself against less expensive state universities and more comprehensive liberal arts institutions. The University focuses on narrow market niches rather than presence in a broad range of academic fields.

Board of Trustees

The University is governed by a Board of Trustees (the "Board"), providing policy leadership and oversight. Trustees govern the University with a dedication to its mission to prepare graduates who are articulate, ethical and innovative life-long learners. The Board consists of individuals who have diverse experience in education, business, law, philanthropy, medicine and public service. Board members are appointed to serve five- year terms that are renewable.

Appendix A Page 1

The following table lists the members of the Board and their affiliations:

Robert W. Kummer Jr., Chairman

Lawrence G. Shoaf, Ph.D., Vice Chairman Ruth A. Bennington (Class of 1993)Brian B. BowmanAlison Bruesehoff (Class of 2003)

Donald L. ButlerStephen Chandler (Class of 1969)Sandra McNutt Comrie Harvey S. Cova (Class of 1956)R. Joseph De Briyn, Esq.Stephen W. Gamble (Class of 1956) Russell L. Hanlin James R. Inman V. Charles Jackson Richard King

Rozella S. Knox, M.D.Gregory N. Lippe, CPA (Class of 1967) William R. I.ucas (Class of 1952)Leonis C. Malburg (Class of 1949) Louis M. Naidorf, FAIA

Kenneth R. Nielsen, Ed.D.Ronald E. Soderling (Class of 1957)C. Edward SpiegelJudith D. Tamkin (Class of 1949)Carl R. TerzianWilliam R. Thomas (Class of 1969) Eddie S.Y. Wang, AIA Arthur Zenian (Class of 2002)

Board of Trustees __________________________ _____Director/Retired Chairman and CEO, Mellon 1st BusinessBankSenior Vice President, Marsh Risk &Insurance Services Attorney at LawChairman of the Board, Ryan Herco Products CorporationMuseum Executive Director, Forest Lawn Museum atForest Lawn Memorial-ParksPresident Emeritus, The Employers GroupPresident, Chandler PropertiesBusiness ExecutivePresident, Fox & Cova, Inc.Managing Partner, Musick, Peeler & Garrett LLP Retired President, Hospital Council of Southern California President Emeritus, Sunkist Growers, Inc.Retired Insurance ExecutivePresident and CEO, Community Bank in Pasadena Chairman Emeritus, Woodbury University Board of Trustees, Chairman and Founder, King International GroupPhysician, Family Medicine Physicians Managing Partner, Lippe, Hellie, Hoffer & Allison, LLP Senior Partner, Lucas, Horsfall, Murphy & Pindroh LLP Mayor, City of VernonDean Emeritus, School of Architecture and Design,Woodbury University; ArchitectPresident, Woodbury UniversityOwner/Senior Partner, RESCO PropertiesPresident, Cast & CrewVice President, The Tamkin FoundationChairman, Carl Terzian AssociatesPresident, Thomas MotorsPresident, GLC Enterprises LLCPresident, Binovia (Alumni Trustee)

Paul J. ConnGeorge R. Hensel (Class of 1953) William C. Himstreet

Richard KingDonald S. Maxwell (Class of 1956) Hugo J. Standing

Trustees Emeriti________Partner, Charles Dunn CompanyPresident, California Safety CenterProfessor Emeritus, School of Business Administration,University of Southern CaliforniaDirector of Pacific Rim Programs, Woodbury UniversityRetired Executive, Times Mirror CompanyRetired Chairman, Alexander & Alexander of California

Appendix A Page 2

Executive Officers

The President of the University is appointed by the Board and, as chief executive officer, is charged with the principal responsibility for administration of the University. All other executive officers of the University are appointed by the President. Corporate Officers of the University are appointed annually by the Board.

The following table sets forth the names of the executive officers of the University, the position held by each, and the period of their employment. A brief biography of each officer is set forth below the table.

NameKenneth R. Nielsen, Ed.D. Heemanshu M. Bhagat Steve Dyer Seta Javor

Ken Jones Richard M. Nordin David M. Rosen, Ph.D. Don E. St. Clair

___________Executive Officers___________________Position

PresidentVice President, Student Affairs Chief Information OfficerExecutive Assistant to the President, Secretary to the Board of TrusteesVice President, Finance and Administration Vice President, University Advancement Senior Vice President, Academic Affairs Vice President, Enrollment Management and University Marketing

Employed Since1996199920021990

2002200320031998

Kenneth R. Nielsen, Ed.D., President. Kenneth R. Nielsen became president of the University in 1996. During his past ten years, he has moved the University's endowment from $1.89 million to a little over $10 million. He previously served as President of the College of Saint Mary in Omaha, Nebraska (1984-1995), Vice President for Student Life at Seattle University, Vice President for Student Affairs and Associate Professor of Psychology at Northland College in Ashland, Wisconsin, and Assistant Dean of Students at Cornell University. He received his bachelor's degree in education with a major in Social Studies and Psychology from the University of Wisconsin in 1965, his Masters of Science degree in Guidance and Counseling from the University of Wisconsin in 1966, and a Doctorate in Education from the University of Wyoming at Laramie. He also participated in a Post-doctoral program at the Graduate School of Business Administration at Harvard University's Institute for Educational Management.

Heemanshu M. Bhagat, Vice President, Student Affairs. Mr. Bhagat was appointed to his position at the University as Vice President, Student Affairs, in October of 1999. He is responsible for providing leadership in the administration of a comprehensive Student Affairs Division which includes residential life, student activities, student orientation programs and First Year Experience, career services, health services, counseling services, international student sendees, food services and campus security. He received his Bachelor of Science degree in Biology and Psychology from Manchester College in Indiana, in 1983; his Master of Science Degree in College Student Personnel from Indiana State University in 1985, and has completed his doctoral studies from Cornell University and The University of Toledo. Prior to coming to the University, he served as Vice President and Dean for Student Affairs at Adrian College in Michigan and Director of Office of Campus Life and Adjunct Faculty at Kent State University in Ohio.

Steve Dyer, Chief Information Officer. Mr. Dyer is the senior-most technology staff person. He oversees all information technology and telecommunications systems on both the Burbank and San Diego campuses. His responsibilities include the use of hardware, software, printers, and the Internet by students, faculty, and staff. Over the last twenty years

Appendix A Page 3

,in previous positions, he has been the Manager of Technology for the aerospace firm Rohr (now B F Goodrich) and the Director of Information Technology for ICSS (Inter-Con Security Systems). He earned a Masters in Business Administration degree from the University of Wisconsin-Milwaukee and a bachelor's degree from the University of Wisconsin.

Seta Javor, Executive Assistant to the President, Secretary to the Board of Trustees. Ms. Javor came to the University in November of 1990 in her present capacity. She reports directly to the President with responsibility for scheduling, budgeting and planning, assisting with preparations for on- and off-campus meetings and events, and supervision of office staff. She also serves as Secretary to the Board of Trustees with the duties derived from that position. In addition to her responsibilities in the President's office, she serves as Corporate Secretary for the University. Ms. Javor received her education in Business Administration at West Coast University and Woodbury University. Prior to joining the University, Ms. Javor worked at Preferred Health Network as secretary to the President and the Board of Directors.

Ken Jones, Vice President, Finance and Administration. Kenneth Jones joined the University as Vice President, Finance and Administration in 2002. As chief financial officer, Mr. Jones is responsible for the financial management and planning at the University. This includes budget administration, investments and nonacademic business supervision for personnel and plant. Before coming to the University, Mr. Jones served for five years as Controller of Otis College of Art and Design in Westchester, California, and was a Senior Accountant with Air Frame Mfg. & Supply Co. in Valencia, California for eight years. He received his B.B.A. in Accounting, B.B.A in Finance, and an A.A. in Management from Texas A&M University, College Station, Texas.

Richard M. Nordin, Vice President, University Advancement. Richard M. Nordin came to the University as Vice President, University Advancement, in 2003. He earned his bachelor of science degree from the University of Southern California Marshall School of Business. Shortly after graduation, he joined the staff at the University of Southern California and spent the next 11 years in a variety of capacities, including three years as Director of Annual Giving, two years as Director of Alumni Relations, and three years as Executive Director for Annual Development, overseeing the areas of annual gifts, mid­range gifts and increasing alumni support as part of the $557 million campaign for USC. He served for five years as Director of Major Gifts for the University of Southern California's Keck School of Medicine. In addition, he has served as Director of Development for the Greater Los Angeles Zoo Association and the western United States region of the American Foundation for Aids Research. Just prior to his appointment to the University, he served as Vice President of University Advancement for the Western University of Health Sciences in Pomona, California.

David M. Rosen, Ph.D., Senior Vice President, Academic Affairs. David Rosen received a B.A. in English with honors at Haverford College. He received a Ph.D. in English from the Johns Hopkins University. He has taught at Dickinson College in Carlisle, Pennsylvania, at Arkansas State University, in Jonesboro, Arkansas, and at the University of Maine at Machias, where he remained for over 20 years, rising through the administrative ranks to become the vice president for academic affairs and interim president. Dr. Rosen was an NEH summer fellow at UC Berkeley. He was recipient of a John Carter Brown fellowship and was a resident scholar at the rare books library at Brown University. He served as board member and chair of the Maine Humanities Council.

Don E. St. Clair, Vice President, Enrollment Management and University Marketing. Mr. St. Clair is responsible for the recruitment of students, financial aid and overall University

Appendix A Page 4

marketing. He previously served as Director of Extended Studies and Vice President for Marketing at the Indiana Institute of Technology in Fort Wayne, Indiana, and Dean of Enrollment Services at Lewis University, in Romeoville, Illinois. Mr. St. Clair began his career in higher education, in 1986, by launching a then relatively unusual concept—an evening, accelerated degree program for working adults. That program, still in existence, has grown to be one of the largest in the Midwest. Mr. St. Clair is currently pursuing a doctor of education at Pepperdine University. He earned a master's degree in executive development at Ball State University in Indiana and holds an undergraduate degree in business and communications from Manchester College in Indiana.

Facilities

The University is presently located on a 22-acre residential campus in the Verdugo Foothills adjoining Burbank, California. The campus encompasses twenty academic, residential and administrative buildings as well as athletic facilities, parking and facilities maintenance structures. The current site provides ample room for campus expansion, including the facilities to be financed by the bonds, and to accommodate a growing student enrollment.

In 1998, the University opened a satellite campus in San Diego where it offers the B.Arch. and M. Arch degrees; an additional off-campus site is located in Hollywood. The University currently rents its facilities in San Diego and has no current plans to acquire this or other sites.

Accreditation and Affiliations

The University is accredited by the Western Association of Schools & Colleges. The University is also accredited by the National Architectural Accrediting Board for its Architecture program, the Foundation for Interior Design Education Research, for its Interior Architecture program and the Association of Collegiate Business Schools and Programs, for its Business and Management program.

Academic Program

The University's academic programs are organized into three schools:

The School of Architecture and Design includes the Animation, Architecture, Fashion Design, Graphic Design and Interior Architecture departments.

The School of Arts and Sciences includes the Communication, Interdisciplinary Studies, Politics & History, Psychology and Organizational Leadership majors and administers the General Education curriculum.

The School of Business and Management includes the Accounting, Business & Management, Fashion Marketing, Information Technology and Marketing majors and the MBA degree program. Weekend College and the Intensive Degree Program are special course delivery programs in which classes are offered during weekend or evening hours.

Undergraduate Program. The University offers undergraduate curricula leading to the degrees of Bachelor of Fine Arts (B.F.A.), Bachelor of Science (B.S.), and Bachelor of Architecture (B.Arch.).

Appendix A Page 5

Weekend College. The degree programs offered in the Weekend College are Bachelor of Science, Bachelor of Arts and a Master of Business Administration. The Bachelor of Science degrees are in Business and Management, Accounting, Information Technology, and Marketing; students can choose to concentrate in Finance, Human Resources Development, or Management. The Bachelor of Arts degree is in Psychology. The programs are designed to meet the special needs of students who are employed full-time. Course content and student performance expectations are similar or identical to those in the day and evening sessions of the University. Teaching methodologies, student assignments and testing schedules are adjusted to accommodate the calendar arrangements. The Weekend College meets the needs of the transfer student or the Associate in Arts (AA) degree, but it is also open to freshmen and sophomores.

Intensive Degree Program. The University's Intensive Degree Program offers a Bachelor of Science degree in Business & Management (with concentrations in Management, Human Resources, International Business or Finance) through an innovative program designed specifically for working adults. The program provides quality, academic programs in a highly interactive and collaborative learning environment designed for working adults. It offers the opportunity to enroll in courses taught in 5-week sessions (or in 9-week sessions due to subject content.) Nine consecutive 5-week sessions are offered every year, providing a chance for temporary time away from college without missing a complete semester. Classes are adult-oriented and not the usual lecture/test format. Students are actively involved in the learning environment and share education, work and life experiences, give presentations, work within team structures and complete individual assignments. A module (expanded syllabus) accompanies the textbook(s) for each course. The module identifies the material to be covered, the assignments/ activities to be completed, and the outcomes expected for each class meeting.

Graduate Studies. The University offers graduate curricula leading to the degree of Master of Architecture in Real Estate Development (M.Arch RED), Master of Business Administration (MBA), and Master of Organizational Leadership (MOL). The M.Arch RED program is a three-semester studio-based program offered to individuals holding a professional degree in architecture (B.Arch, M.Arch or D.Arch). The 12-month program provides hands-on professional experience in real estate and project development for architects. The MBA program requires a minimum of 12 three-unit graduate courses. There are nine required core courses and three elective courses. Electives are available in the areas of accounting, computer information systems, economics, finance, international business, management and marketing. The MOL is taught in a cohort format consisting of 10 courses (30 units.) The courses are delivered in a specific order, which allows for completion of the program in one year by attending one night a week in mostly five-week sessions.

Faculty

The following table reflects the number of full-time and part-time faculty appointments for the five most recent academic years. The data is for instructional faculty only, and excludes deans, associate deans, coaches, administrators and librarians who may hold faculty rank.

Appendix A Page 6

FacultyAcademic

Year Full Time Part Time FTP Total2000-01 37 192 101.002001-02 35 151 85.332002-03 40 158 92.672003-04 39 171 96.002004-05 45 166 100.33

Of the 45 full-time faculty in 2004-05,15 are professors, 13 are associate professors, 12 are assistant professors, and 5 are visiting professors. Approximately 88% of the faculty have obtained a Ph.D. or other terminal degree, and no faculty are tenured. The current undergraduate student/faculty ratio is 12 to 1. Approximately 38% of the faculty at the University are women and 3% of the faculty at the University represent minority faculty appointments.

Students

The 2005-06 entering freshmen class of 134 was selected from a pool of 356 applicants. The fall entering freshmen class has representatives from 5 states and 5 foreign countries; 10% of the class is from outside California. The average entering GPA for the freshmen class is 3.3 with SAT composite scores of 921.

Freshman Applicant PoolAcademic

Year Applications Acceptances Matriculations’2001-02 353 267 1232002-03 370 275 122

2003-04 362 264 1282004-05 340 251 1262005-06 356 270 136

*Students entering in the fall semester of academic year.

The following table provides student enrollments and the number of degrees conferred at the University for each of the five most recent academic years.

Enrollments and DegreesAcademic Fall Full-Time Equivalent Degree:

Year Student Enrollments* Awarde2000-01 1,128.08 2612001-02 1,151.16 2982002-03 1,126.83 3102003-04 1,157.58 3132004-05 1,294.75 331

*Based on the University's full-time equivalent enrollment for accounting and other purposes in accordance with generally accepted practices for colleges and universities.

The University has no current plans for growth. It intends to maintain the number of its full-time equivalent enrollment students at the present levels.

Approximately 49% of University students in the 2005 graduating class graduated within five years of entering the University.

Appendix A Page 7

Comprehensive Fees

Tuition, room, board and fees for full-time students at the University for the 2005-06 fiscal year total $30,428. A five-year summary of tuition and fees and room and board is provided below:

Comprehensive FeesAcademic Tuition Room

Year and Fees and Board* Total2001-02 $18,344 $6,454 $24,7982002-03 19,254 6,874 26,1282003-04 20,310 7,378 27,6882004-05 21,314 7,702 29,0162005-06 22,368 8,060 30,428

‘'Based on double occupancy, a 12 meal plan with $200 flex dollars.

Employees

The following table sets forth the number of non-faculty employees over the last fiveacademic years.

Employees (Regular, full and part-time)Academic Year

Classification 2001-02 2002-03 2003-04 2004-05 2005-06Exempt 48 55 55 61 63Non-Exempt 46 __49 50 51 52

Total 94 104 105 112 115

Employee Relations

The University has a Faculty Association and a Staff Association. Each of these groups meet as necessary to discuss issues related to their areas and, if need be, bring it to senior administration

Financial Statements

The audited financial statements of the University are presented in Appendix B and provide financial information as of June 30, 2005, and for the fiscal year then ended. Certain financial information contained in this Appendix A as of June 30, 2004, June 30, 2003, June 30, 2002, and June 30, 2001, and for the fiscal years then ended, has been derived from previously audited financial statements.

Appendix A Page 8

The Statement of Financial Position presents the financial position of the University as of the end of the fiscal year. The Statement of Activities presents financial activities during the fiscal year, thereby reconciling the beginning and end-of-year net asset positions contained in the Statement of Financial Position. The Statement of Cash Flows summarizes cash-related activities during the fiscal year, thereby reconciling the beginning and end-of- year cash balances contained in the Statement of Financial Position. The audited financial statements are an integral part hereof and should be read in their entirety.

____________________ Statement of Financial Position Summary___________________As of June 30

(dollars in thousands)2005 2004 2003 2002 2001

Total AssetsTotal Liabilities

$38,478(9,758)

$36,398(9,831)

$38,932(15,082)

$36,890(11,845)

$35,347(10,809)

Total Net Assets $28,720 $26,567 $23,850 $25,045 $24,538

Appendix A Page 9

Statement of Unrestricted Operating ActivitiesFiscal Year Ended June 30,

Revenues:Tuition and fees Less Scholarships:

Funded Unfunded

Private gifts and grantsAuxiliary enterprisesRealized and unrealized gain (loss)on investmentsInterest and dividendsOther

Total Revenues Reclassifications:Net assets released from restrictions

Total Revenues and reclassifications

Expenses:InstructionAcademic supportLibraryRegistrarStudent servicesInstitutional supportCampus operations and maintenanceAdmissionsUniversity marketingData processingAuxiliary enterprisesDepreciation and amortizationOther

Total expensesChange in net assets before change ir additional minimum pension liability

Change in additional minimum pension liability

Change in net assets after change ir additional minimum pension liability

Net assets beginning of year Net assets end of year

2005 2004 2003 2002 2001

S 25,558,621 $23,007,708 $21,588,792 $21,110,921 $19,812,345

(3,381,667) (3,262,282) (3,155,710) (3,390,607) (2,778,692)(5,523,553) (4,682,335) (3,928,049) (3,553,192) (3,492,352)

(16,653,401) (15,063,091) (14,505,033) (14,167,122) (13,541,301)

229,761 143,988 215,116 305,502 201,5151,648,562 1,657,962 1,552,773 1,446,910 1,599,032

499,686 827,279 (102,547) (641,745) (408,998)218,208 157,995 160,205 200,101 291,789439,619 314,097 395,154 164,051 463,756

19,689,237 18,164,412 16,725,734 15,641,941 15,688,395

4.658,583 4,674,839 4,721,123 4,011,647 3,255,99124,347,820 22,839,251 21,446,857 19,653,588 18,944,386

7,858,061 7,616,507 7,603,046 7,216,577 7,746,525828,867 548,507 481,429 595,697 627,488785,282 670,181 771,830 628,841 541,819375,245 362,324 382,608 343,659 301,954

1,442,482 1,392,515 1,385,665 1,166,111 1,025,9903,393,157 3,142,682 2,914,992 2,938,940 1,955,6231,765,049 1,741,242 1,681,471 1,750,411 1,943,675

727,890 464,419 372,212 634,611 778,9141,552,650 1,492,595 1,472,103 1,211,751 988,662

565,440 500,183 396,827 372,797 352,8691,089,415 1,026,543 927,845 783,162 855,0851,261,967 1,257,084 1,301,573 1,277,747 1,097,8971,295,312 1,403,188 939,565 171,274 75,484

22,940,817 21,617,970 20,631,166 19,091,578 18,291,985

1,407,003 1,221,281 815,691 562,010 652,401

(1,087,513) 865,723 (1,650,618) — —

i319,490 2,087,004 (834,927) 562,010 652,401

22,321,630 20.234,626 21,069,553 20,507,543 19,855,142$22,641,120 $22,321,630 $20,234,626 $21,069,553 $20,507,543

Investments

The following table summarizes the book and fair value of the University's Investments at June 30 of each of the last three fiscal years. Investments are generally recorded at fair value at the date of the gift and are stated at fair value, where applicable, for financial statement purposes. Where permitted by gift agreement and/or applicable regulations, certain assets are pooled for investing. Pooled investments and allocation of pooled investment income are accounted for using the unit market value method.

Appendix A Page 10

Realized and unrealized gains and losses arising from the sale or other disposition of investments and unrealized appreciation, and depreciation and other non-cash assets are accounted for as Unrestricted, or as Temporarily or Permanently Restricted if so stipulated by the donor of such assets.

The University follows an investment policy for its pooled endowment assets whereby funds arc invested for capital appreciation in anticipation of greater long-term returns while accepting lower current yields from dividends and interest.

Money market accounts Corporate obligations U.S. Government obligations Common stock and convertible stock

Investments Summaryas of June 30

2005 2004 2003 2002 2001

$ 286,789 S 805,389 $ 961,984 $ 241,479 $1,186,3051,862,264 2,217,081 1,792,338 2,081,124 1,988,4041,342,867 353,865 353,438 511,565 458,7606,525,892 5,571,538 4,094,190 44270144 4,309,200

$10,017,812 $8,857,873 $7,201,950 $7,104,312 $7,942,669

Plant Facilities

The following table summarizes the University's "Plant Facilities" for each of the fiscal years indicated. Real property purchased is stated at cost, and such properties acquired by gift or bequest are stated at fair value at date of donation. The University believes that the market value of these assets exceeds book value.

Plant Facilities Summaryas of June 30

3.005 7.004 7003 2002 2001

Land $ 7,384,774 $7,384,774 $7,384,774 $7,384,774 $7,384,774Land improvements 1,465,760 1,465,760 1,465,760 1,465,760 1,465,760Buildings 13,800,973 13,800,973 13,800,966 13,800,966 13,800,966Building improvements 4,247,603 4,098,398 3,818,961 3,623,689 1,398,046Furnishings and equipment 3,754,699 3,444,477 3,344,779 3,330,207 2,855,263Library books and materials 3,265,809 3,162,880 3,101,706 3,071,423 3,008,051Computers 2,318,266 2,082,205 1,967,687 1,855,082 1,702,582Computer software 375,323 293,044 222,607 194,372 161,177Capitalized computer leases — — — — 284,469

36,613,207 35,732,511 35,107,240 34,726,273 32,061,088Less accumulated depreciation (15,973,576) (14,711,608) (13,454,524) (12,152,951) (11,159,674)

20,639,631 21,020,903 21,652,716 22,573,322 20,901,414Construction in progress — — 208,718 25,157 908,801

$20,639,631 $21,020,903 $21,861,434 $22,598,479 $21,810,215

Insurance

The University maintains insurance with such coverage as is customarily carried by similar private colleges and universities in California. All University buildings have met or exceeded earthquake engineering standards in existence at the time of construction or renovation.

Fund Raising

A planning process was initiated during the summer of 2005 to conceptualize and prepare for a comprehensive fundraising campaign. In preparation for such an intensive

Appendix A Page 11

effort, the University has begun making a muiti-year investment to build fundraising and alumni relation's capacity. As part of this effort, University leadership has been taking steps to putin place a major gift program (gifts of $100,000 or more) that is critical to increasing support for endowment, new buildings, scholarships and other needs. It is now estimated that after less than one year, this program has helped double the University's total private gifts and grants to $2.16 million, a record since the University first became a nonprofit corporation in 1972.

Legal Proceedings

The University may be involved in legal proceedings arising in the ordinary course of its affairs which, in the aggregate, are not expected to have any material adverse effect on the financial condition or operations of the University.

Liabilities, Including Long-Term Indebtedness

The University's liabilities at June 30, 2005, are set forth in the University's Statement of Financial Position included in Appendix B and its footnotes. The following table illustrates the University's long-term Authority debt service (principal and interest) after giving effect to the issuance of the Bonds. The remainder of the liabilities consist of accounts payable, accruals, annuities payable, notes payable, funds held in trust for others, student deposits and government advances.

Maturity ffaniiarv 11 Principal Interest Total

2007 $ 320,000 3940,623.78 $1,260,623.782008 335,000 954,698.75 1,289,698.752009 350,000 939,623.75 1,289,623.752010 365,000 923,873.75 1,288,873.752011 380,000 907,448.75 1,287,448.752012 400,000 892,248.75 1,292,248.752013 415,000 875,848.75 1,290,848.752014 430,000 858,211.25 1,288,211.252015 450,000 839,721.25 1,289,721.252016 470,000 819,921.25 1,289,921.252017 490,000 798,771.25 1,288,771.252018 515,000 776,231.25 1,291,231.252019 535,000 752,412.50 1,287,412.502020 565,000 727,000.00 1,292,000.002021 590,000 698,750.00 1,288,750.002022 620,000 669,250.00 1,289,250.002023 650,000 638,250.00 1,288,250.002024 685,000 605,750.00 1,290,750.002025 720,000 571,500.00 1,291,500.002026 755,000 535,500.00 1,290,500.002027 790,000 497,750.00 1,287,750.002028 830,000 458,250.00 1,288,250.002029 875,000 416,750.00 1,291,750.002030 915,000 373,000.00 1,288,000.002031 960,000 327,250.00 1,287,250.002032 1,010,000 279,250.00 1,289,250.002033 1,060,000 228,750.00 1,288,750.002034 1,115,000 175,750.00 1,290,750.002035 1,170,000 120,000.00 1,290,000.002036 1,230,000 61,500.00 1,291,500.00

Appendix A Page 12

APPENDIX B

AUDITED FINANCIAL STATEMENTS OF WOODBURY UNIVERSITY

FOR THE YEARS ENDED JUNE 30, 2005 AND 2004

Appendix B

THIS PAGE INTENTIONALLY LEFT BLANK

WOODBURYINDEPEPENDENT AUDITOR’S REPORT

AND

FINANCIAL STATEMENTS

JUNE 30,2005 AND 2004

CONTENTS

PAGE

INDEPENDENT AUDITOR’S REPORT 1

FINANCIAL STATEMENTS Statements of financial position

as of June 30, 2005 and 2004 Statements of activities

for the years ended June 30, 2005 and 2004 Statements of cash flows

for the years ended June 30, 2005 and 2004 Notes to financial statements

as of June 30,2005 and 2004 6-14

MOSS -ADAMS LLPCERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITOR’S REPORT

To the Board of Directors Woodbury University

We have audited the accompanying statement of financial position of Woodbury University (a California non-profit corporation) as of June 30, 2005, and the related statements of activities and cash flows for the year then ended. These financial statements are the responsibility of Woodbury University’s management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Woodbury University as of June 30, 2004, were audited by other auditors whose report dated September 17, 2004, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as. evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Woodbury University at June 30, 2005 and the changes in its net assets and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Lo?'Angeles, California September 9,2005

Moores Rowland International an association of independent accounting firms throughout 1

WOODBURY UNIVERSITY STATEMENTS OF FINANCIAL POSITION

JUNE 30, 2005 2004

ASSETSCash and cash equivalents $ 1,884,622 $ 843,022

Investments 10,017,812 8,857,873Tuition receivable, net of allowance for doubtful

accounts of $431,597 in 2005 and $441,403 in 2004 916,247 974,525

Student loans, net 1,520,290 1,575,156

Grant receivable - Title V 634,494 1,108,137

Pledges mid other receivables, net 1,212,536 413,737

Prepaids, deposits and other assets 1,651,917 1,604,932

Property, plant and equipment, net 20,639,631 21,020,yU3

Total assets $ 38,477,549 $ 36,398,285

LIABILITIES AND NET ASSETSAccounts payable $ 255,219 $ 230,063

Accrued expenses and other liabilities 3,968,644 2,643,278

Tuition advances 861,912 914,611

Student funds payable and student deposits 361,896 633,322

Line of credit 4UU,UUU

Bonds payable 4,310,000 5,010,000

Total liabilities 9,757,671 9,831,274

Net Assets:Unrestricted:

Undesignated 389,567 312,323

Investment in property, plant and equipment 16,594,285 16,309,835

Board designated endowment 7,529,676 6,484,367

Pension-additional minimal liability (1,872,408) (784,895)

Total unrestricted 22,641,120 22,321,630

Temporarily restricted 3,354,480 1,637,212

Permanently restricted 2,724,278 2,608,169

Total net assets 28,719,878 26,567,011

Total liabilities and net assets S 38,477,549 ! 36,398,285

See accompanying notes. 2

WOODBURY UNIVERSITY STATEMENT OF ACTIVITIES

YEAR ENDED JUNE 30, 2005

Temporarily Permanently Year EndedUnrestricted Restricted Restricted 6/30/2005

Revenues and Reclassifications:Revenues:Tuition and fees $ 25,558,621 $ $ $ 25,558,621Less: Institutional student aid (5,523,553) (5,523,553)

Funded scholarships (3,381,667) - - (3,381,667)16,653,401 - - 16,653,401

Federal and state grants - 4,549,885 - 4,549,885Private gifts and grants 229,761 1,825,766 100,000 2,155,527Auxiliary enterprises 1,648,562 - 1,648,562Realized and unrealized gain

on investments 499,686 - - 499,686Interest and dividends 218,208 200 16,109 234,517

439,619 - - 439,619Total Revenues 19,689,237 6,375,851 116,109 26,181,197

Reclassifications:Net assets released from restrictions 4,658,583 (4,658,583) - -

Total revenues and reclassifications 24,347,820 1,717,268 116,109 26,181,197Expenses:Instruction 7,858,061 - - 7,858,061Academic support 828,867 - - 828,867Library 785,282 - - 785,282Registrar 375,245 - - 375,245Student services 1,442,482 - - 1,442,482Institutional support 3,393,157 - - 3393,157Campus operations and maintenance 1,765,049 - - 1,765,049Admissions 727,890 - - 727,890University marketing 1,552,650 - - 1,552,650Data processing 565,440 - - 565,440Auxiliary enterprises 1,089,415 - - 1,089,415Depreciation and amortization 1,261,967 - 1,261,967

1,295,312 - - 1,295,31222,940,817 . - 22,940,817

Change in net assets before change inadditional minimal pension liability 1,407,003 1,717,268 116,109 3,240,380

Change in additional minimal(1,087,513) - - (1,087,513)

Change in net assets 319,490 1,717,268 116,109 2,152,867Np.t aewts at beginning of war 22,321,630 1,637,212 2,608,169 26,567,011Net assets at end of year $ 22,641,120 $ 3,354,480 $ 2,724,278 $ 28,719,878

See accompanying notes. 3

WOODBURY UNIVERSITY STATEMENT OF ACTIVITIES

YEAR ENDED JUNE 30,

Revenues and Reclassifications: Revenues:Tuition and fees Less: Institutional student aid

Funded scholarships

Federal and state grants Private gifts and grants Auxiliary enterprises Realized and unrealized gain

on investments Interest and dividends Other

Total Revenues Reclassifications:Net assets released from restrictions

Total revenues and reclassifications Expenses:

InstructionAcademic supportLibraryRegistrarStudent servicesInstitutional supportCampus operations and maintenanceAdmissionsUniversity marketingData processingAuxiliary enterprisesDepreciation and amortizationOther

Total expensesChange in net assets before change in additional minimal pension liability

Change in additional minimal pension liability

Change in net assets Net assets at beginning of year Net assets at end of year

UnrestrictedTemporarilyRestricted

S 23,007,708 $(4,682,335) *(3,262,282) -

15,063,091 -

4,331,825143,988

1,657,962649,827

827,279 -

157,995 -314,097 -

18,164,412 4,981,652

4,674,839 (4,674,839)22,839,251 306,813

7,616,507 -

548,507 ■670,181 -362,324 -

1,392,515 -

3,142,682 -1,741,242 -

464,419 -1,492,595 •

500,183 -1,026,543 *1,257,084 -1,403,188 -

21,617,970 -

1,221,281 306,813

865,723 -

2,087,004 306,81320,234,626 1,330,399

$ 22,321,630 $ 1,637,212

PermanentlyRestricted

Year Ended6/30/2004

$ ■ !S 23,007,708 (4,682,335) (3,262,282)

■ 15,063,091

43,708 4,375,533251,000 1,044,815

- 1,657,962

827,27928,110 186,105

- 314,097322,818 23,468,882

322,818 23,468,882

7,616,507- 548,507- 670,181- 362,324- 1,392,515- 3,142,682- 1,741,242- 464,419- 1,492,595- 500,183- 1,026,543- 1,257,084- 1,403,188

21,617,970

322,818 1,850,912

865,723322,818 2,716,635

2,285,351 23,850,376$ 2,608,169 S 26,567,011

See accompanying notes. 4

WOODBURY UNIVERSITY STATEMENTS OF CASH FLOWS

2005 2004YEARS ENDED JUNE 30,

CASH FLOWS FROM OPERATING ACTIVITIESChange in net assets S 2,152,867 $ 2,716,635Adjustments to reconcile change in net assets to net cash

provided by operating activities:Depreciation and amortization 1,261,967 1,257,084Realized and unrealized gain on investments (499,686) (827,279)Changes in operating assets and liabilities:

Tuition receivable, net 58,278 (354,949)Student loans, net 54,866 (21,336)Grant receivable - Title V 473,643 (951,205)Pledges and other receivables, net (798,799) 321,152Prepaids, deposits and other assets (46,983) (67,673)Accounts payable 25,156 (125,850)Accrued expenses and other liabilities 3,325,366 (727,788)Tuition advances (52,699) 91,907Student fluids payable and student deposits (271,428) 123.171

Net cash provided by operating activities 3.682.548 1.433.869

CASH FLOWS FROM INVESTING ACTIVITIESNet purchases of investments (660,253) (828,644)Purchases of property, plant and equipment (880.695) (416.551)Net cash used in investing activities (1.540.948) (1.245.195)

CASH FLOWS FROM FINANCING ACTIVITIESPayments of bond principal (700,000) (655,000)Proceeds (principal payments) on line of credit (400.000) 400.000Net cash used in Financing activities (UOO.OOO) (255.000)

Net increase (decrease) in cash 1,041,600 (66,326)Cash and cash equivalents at beginning of year 843.022 909.348Cash and cash equivalents at end of year $ 1,884,622 $ 843,022

Supplemental information:Cash paid for interest % 355.415 395.343

See accompanying notes. 5

WOODBURY UNIVERSITY NOTES TO FINANCIAL STATEMENTS

NOTE 1 - DESCRIPTION OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Organization - Woodbury University (the University) offers undergraduate and graduate programs in various majors in the areas of arts and sciences, architecture and business. The University is located in Burbank, California.

Use of Estimates in the Preparation of Financial Statements - The University follows accounting principles generally accepted in the United States in the presentation of its financial statements. The preparation of financial statements requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates and assumptions could change in the future, as more information becomes known which could impact the amounts reported and disclosed herein.

Concentrations of Credit Risk - Financial instruments that potentially subject the University to concentrations of credit risk consists principally of cash deposits at financial institutions, student receivables and investments in marketable securities. At times, balances in the University’s cash accounts exceed the Federal Deposit Insurance Corporation (FDIC) limit. Concentration of credit risk with respect to receivables are limited due to the large number of students from which amounts are due, with no one account being significant.

Cash and Cash Equivalents - Woodbury considers all highly liquid investments, with a maturity of three months or less when purchased, to be cash equivalents. The carrying amount reported in the statement of financial position for cash equivalents approximates fair value.

Investments - Investments in marketable securities are carried at fair value, based on quoted market prices.

Perkins Loan Program - Student notes receivable represent loans made to students under the Perkins Loan Program. As amounts are repaid, the University re-lends funds available to other qualified students.

Promise to give - The University recognizes unconditional pledges at fair value as a receivable at the time of the pledge.

Property, Plant and Equipment - Property, plant, and equipment purchased are recorded at cost, or fair market value, at the date of donation, if donated. Depreciation and amortization on buildings and equipment are based upon the estimated useful lives of the assets, ranging between five years and thirty years, and are applied using the straight-line method. The University’s capitalization policy is to capitalize all repairs and maintenance costs in excess of $1,000.

6

WOODBURY UNIVERSITY NOTES TO FINANCIAL STATEMENTS

NOTE 1 - DESCRIPTION OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

Net Asset Classification - Net asset amounts that have similar characteristics have been combined into three categories-unrestricted, temporarily restricted and permanently restricted as follows:

Unrestricted net assets are not restricted by donors, or the donor-imposed restrictions have expired.

Temporarily restricted net assets contain donor-imposed restrictions that permit the University to use or expend the assets as specified. The restrictions are satisfied either by the passage of time or by actions of the University.

Permanently restricted net assets contain donor-imposed restrictions that stipulate the resources be maintained permanently, but permit the University to use, or expend the income derived from the donated assets according to donor purposes.

Contributions that the donor requires to be used to acquire long-lived assets (e.g. building improvements, furniture, fixtures, and equipment) are reported as temporarily restricted. The University reflects the expiration of the donor-imposed restrictions when the long-lived assets have been acquired, at which time temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions.

Tuition - The University records tuition income as earned. Tuition in arrears has been recorded as a receivable and tuition received in advance has been recorded as deferred income.

Tax Status - The Internal Revenue Service has ruled that the University qualifies under Section 501(c)(3) of the Internal Revenue Code and is therefore not subject to income taxes for activities related to its exempt programs. Management is not aware of any event, which would cause the University to be disqualified in operation.

Reclassifications - Certain 2004 account balances have been reclassified to better conform to the current year presentation.

7

WOODBURY UNIVERSITYNOTES TO FINANCIAL STATEMENTS

NOTE 2 - INVESTMENTS

As of June 30,2005 and 2004, investments consist of the followin

2005 2004

Money market accounts $ 286,789 $ 805,389Corporate obligations 1,862,264 2,127,081U.S, government obligations 1,342,867 353,865

Common and convertible stock 6,525,892 5,571,538$ 10,017,812 $ 8,857,873

NOTE 3 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following at June 30,2005 and 2004.

LandLand improvements BuildingsBuilding improvements Furnishings & equipment Library books & materials Computers Computer software

Less: accumulated depreciation

Property, plant and equipment, net

2005 2004

$ 7,384,7741,465,760

13,800,973 4,247,603 3,754,699 3,265,809 2,318,266

________ 375,32336,613,207

(15,973,576)

$ 20,639,631

$ 7,384,7741,465,760

13,800,973 4,098,398 3,444,477 3,162,880 2,082,205

________293,04435,732,511

(14,711,608)

$ 21,020,903

WOODBURY UNIVERSITY NOTES TO FINANCIAL STATEMENTS

NOTE 4 - BOND PAYABLE AND LONG TERM DEBT

On June 1, 1995, the University issued $9,685,000 of bonds through the California Educational Facilities Authority (CEFA). The bonds mature on June 1 each year in varying amounts with interest rates ranging from 6.75% to 7.15%, Principal maturity amounts remaining are as follows:

Maturity Date Principal Interest(June 1) Amount %

2010 $ 4,310>000 7.15

The bonds are secured by a deed of trust on the University’s real estate. In addition, there are certain restrictions on the University with regard to entering into other long-term borrowings and there are certain loan covenants with which the University must remain in compliance.

Certain bonds are subject to early redemption in whole or in part at the option of the University as follows:

Redemption Period (Dates Inclusive)___________Redemption Price

June 1,2005 through May 31,2006 102%June 1,2006 through May 31, 2007 101 %June 1,2007 and thereafter 100%

Bonds maturing June 1,2010, have the following maturity dates and amounts as follows:

MandatoryPayment Dates (June 1)

20062007200820092010 (Maturity)

Mandatory Payment

$ 745,000800,000 860,000 920,000 985,000

$ 4,310,000

9

WOODBURY UNIVERSITY NOTES TO FINANCIAL STATEMENTS

NOTE 5 - PLEDGES AND CONTRIBUTIONS RECEIVABLE

At June 30,2005 and 2004, pledges receivable, net of estimated uncollectible amounts, and discounted to present value, are due to be collected principally within one year as follows:

Gross unconditional promises to giveLess: unamortized discountNet unconditional promises to give

2005 2004

S 1,144,291 $ 232,458(7,693) (20,306)

S 1,136,598 S 212,152

NOTE 6 - STUDENT NOTES RECEIVABLE

Starting in the 1999 fiscal year, the University permitted certain students with past due tuition to pay the amounts owed over extended periods of up to 25 years at zero interest. These terms are offered to students who experienced unforeseen financial difficulties. These notes have been discounted for reporting purposes as follows and are presented with tuition receivable on thestatements of financial position:

2005 2004

Student notes receivable at face value $ 30,623 $ 38,338Less: unamortized discount (26,837) ------- (26,837)

$ 3,786 S 11,501

NOTE 7 - TEMPORARILY RESTRICTED NET ASSETS

At June 30,2005 and 2004, temporarily restricted net assets consist of the following:

2005 2004

Endowed scholarships $ 88,027 S 39,787Restricted scholarships 827,783 89,008Title V Co-Op matching gift 381,521 157,888Restricted private gifts:

KMendall life estate 975,806 910,697E-Commerce major 11,222 11,222Building project 807,868 183,223Gift Annuities 11,379 -Other 263,182 265,693

Less: present value discount3,366,788

(12,308)1,657,518

(20,306)$ 3,354,480 $ 1,637,212

10

WOODBURY UNIVERSITY NOTES TO FINANCIAL STATEMENTS

NOTE 7 - TEMPORARILY RESTRICTED NET ASSETS - (Continued)

For the years ended June 30, 2005 and 2004, net assets released from donor restrictions by satisfying conditions specified by the donors are as follows:

Cal Grant disbursement

2005

S 3,122,230 $

2004

2,859,238College Work Study Disbursement 186,506 249,998Title V 1,017,517 1,153,750Scholarships and grants 282,135 148,254Building Project 900 28,176Other 49,295 235,423

$ 4,658,583 $ 4,674,839

8 - PERMANENTLY RESTRICTED NET ASSETS

At June 30,2005 and 2004, permanently restricted net assets consist of the following:

Perkins Loan funds

2005

$ 1,568,188 $

2004

1,552,079Scholarship funds:

Woodbury Estate 350,000 250,000Hearst Foundation 200,000 200,000Carl Eyerick 139,000 139,000Fletcher Jones Foundation 210,000 210,000Harvey Cova 82,700 82,700Robert Laatsch 46,000 46,000Richard King 25,000 25,000Dora Kilby 33,240 33,240Connie Gillaspie 25,000 25,000Wanda McQuary 10,000 10,000Other 35,150 35,150

$ 2,724,278 $ 2,608,169

11

WOODBURY UNIVERSITY NOTES TO FINANCIAL STATEMENTS

NOTE 9 - PENSION PLAN

The Pension Plan for Employees of Woodbury University (the Plan) is administered by an insurance company and is available to all employees over 21 years of age provided they complete 1,000 hours of service. The Plan is a noncontributory defined benefit plan. The benefits are based on employees’ compensation during all years of service. The University’s funding policy is to make annual contributions as required by applicable regulations. Total pension expense was $877,882 (including $95,770 of actuarial fees and PBGC premiums) and $1,008,189 (including $51,993 of actuarial fees and PBGC premiums) for the years ended June 30, 2005 and 2004, respectively. Assets held by the Plan consist primarily of Contractual Fixed Dollar Funds, Money Market Funds, Indexed Bond Funds, Value Equity and Growth Equity funds maintained by the New York Life Insurance Company under Group Annuity Contract GA-11452.

Retirement plan expense includes net periodic pension expense for the Plan calculated using the Projected Unit Credit Method as follows:

2005 2004

Service cost-benefit earned during the year $ 676,642 $ 732,743Interest cost on project benefit obligation 660,466 606,959Return on plan assets (611,735) (491,992)Net amortization and deferral 56,739 108,486

Net periodic pension expense $ 782,112 $ 956,196

The following table set forth the funded status of the Plan as follows:

Actuarial present value of benefit obligation2005 2004

Vested $ 11,635,905 $ 9,540,806

Nonvested 110,093 89,402

Accumulated benefit obligation $ 11,745,998 $ 9,630,208

Projected benefit obligation $ 13,397,860 $ 10,767,758Plan assets at fair value 8,814,571 7,907,297

Unfunded projected benefit obligation Unrecognized net loss from past experience

4,583,289 2,860,461

different from that assumed (3,518,740) (1,915,268)

Prior service costAccrued pension cost, included in accrued

(5,530) (7,177)

expenses and other liabilities $ 1,059,019 $ 938,016

Additional minimum liability $ 1,872,408 $ 784,895

12

WOODBURY UNIVERSITY NOTES TO FINANCIAL STATEMENTS

NOTE 9 - PENSION PLAN (Continued)

Assumptions used in the actuarial computations were:

2005 2004

RetirementMortality

Age 65 Age 651863 Group Annuity 1863 Group Annuity

Discount rate 5.5%Rate of increase in compensation level: 4.5%Expected long-term of return on assets 7.5%

6.3%4.5%7.5%

The future expected benefit payments under the defined benefit plan at June 30, 2005 are as follows:

2006 $ 440,1912007 474,4312008 522,5142009 588,0182010 641,6982011-2016 4,040,031

Employer contributions expected to be paid during fiscal year ending June 30, 2006, are $221,894.

The University’s pension plan weighted average asset allocations at June 30, 2005 by asset category are as follows:

Equity securities 61%Debt securities 35%Other 5%

100%

13

WOODBURY UNIVERSITYNOTES TO FINANCIAL STATEMENTS

NOTE 10-LEASES

The University has entered into leases for office equipment and space rental. Rent expense under operating leases was $654,721 and $629, 641 for the years ended June 30, 2005 and 2004, respectively.

The future minimum lease payments under noncancelable operating leases at June 30, 2005 are as follows:

2006 $ 700,1712007 688,6032008 677,3392009 70,9862010 45,450Total future minimum lease payments $ 2,182,549

NOTE 11 - RELATED PARTIES

A member on the Board of Directors also serves as a paid consultant to the University.

The wife of the University President (and member of the Board) is an employee of the University.

A member of the Board of Directors is the chief executive officer of a bank which does business with the University.

14

APPENDIX C

SUMMARY OF PRINCIPAL LEGAL DOCUMENTS

The following are summaries of certain prolusions of the Indenture and the Loan Agreement which are not described elsewhere in this Official Statement. These summaries do not purport to be complete or definitive and are qualified in their entireties by reference to the full terms of such documents.

CERTAIN DEFINITIONS

The following are definitions of certain terms used in the Indenture, the loan Agreement, and this Official Statement, and not otherwise defined in this Official Statement. Reference is hereby made to the entire documents for the definitions of all terms used in such documents. The following definitions are equally applicable to both singular and plural forms of any of the terms defined herein:

"Accountant's Certificate" means a certificate signed by an independent certified public accountant of recognized national standing, or a firm of independent certified public accountants of recognized national standing, selected by the Corporation.

"Act" means the California Educational Facilities Authority Act, constituting Chapter 2 (commencing with Section 94100) of Part 59 of Division 10 of Title 3 of the Education Code of the State, as now in effect and as it may from time to time hereafter be amended or supplemented.

"Additional Payments" means the payments to be made by the Corporation to the Authority or the Trustee in accordance with the Loan Agreement.

"Authority" means the California Educational Facilities Authority, a public instrumentality and authority of the State, or its successors and assigns.

"Authorized Authority Representative" means the Chairman or deputy thereto, its Executive Director, Deputy Executive Director or any other person who at the time and from time to time is specifically authorized by resolution of the Authority furnished to the Trustee and the Corporation, as a person authorized to act on behalf of the Authority.

"Authorized Corporation Representative" or "Authorized Representative" means any person who at the time and from time to time may be designated, by written certificate furnished to the Authority and the Trustee, as a person authorized to act on behalf of the Corporation. Such certificate shall contain the specimen signature of such person, shall be signed on behalf of the Corpora lion by any officer of the Corporation and may designate an alternate or alternates.

"Authorized Denominations" means $5,000 principal amount or any integral multiple thereof.

"Auxiliary Revenues" means the revenues of the Corporation from the operation of its auxiliary enterprises, including but not limited to revenues from the operation of dormitories, food service fees, student recreation fees and student activity fees, as such may exist from time to time and as such amounts may be set forth under the item Auxiliary enterprises in the Corporation’s audited Statement of Activities on an annual basis.

"Base Loan Payments" means the payments required to be made by the Corporation to the Trustee for the account of the Authority in accordance with the Loan Agreement for the payment of the debt service on the 2006 Bonds.

"Bond" or "Bonds" means any or all, as the case may be, of the Authority's Revenue Bonds (Woodbury University) authorized under and secured by the Indenture.

"Bond Counsel" means any attorney at law or firm of attorneys, of nationally recognized standing in matters pertaining to the validity of, and exclusion from gross income for federal tax

Appendix C Page 1

purposes of interest on, bonds issued 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 fund by that name established pursuant to the Indenture.

"Bondholder" or "Holder" means the registered owner of any Bond.

"Book-Entry Bonds" means any Bonds that are then held in book-entry form by a Securities Depository as provided in the Indenture.

"Business Day" means any day other than (i) a Saturday, Sunday or legal holiday or (ii) a day on which banks located in California, New York and the cities in which the Principal Office of the Trustee is located are required or authorized to be closed, or (iii) a day on which the New York Stock Exchange is closed.

"Certificate of the Authority," "Consent of the Authority," "Order of the Authority" or "Request of the Authority" mean, respectively, a written certificate, consent, order or request of the Authority signed by or on behalf of the Authority by an Authorized Authority Representative.

"Certificate of the Corporation," "Request of the Corporation," "Requisition of the Corporation" or "Statement of the Corporation" mean, respectively, a written certificate, request, requisition or statement of the Corporation executed by an Authorized Corporation Representative.

"Code" means the Internal Revenue Code of 1986, as amended.

"Construction Fund" means the fund by the name "Series 2006 Construction Fund" established pursuant to the Indenture.

"Continuing Disclosure Agreement" means that certain Continuing Disclosure Agreement between the Corporation and the Trustee, as dissemination agent, dated as of the date of delivery of the 2006 Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof.

"Corporation" means (i) Woodbury University, a California nonprofit public benefit corporation, and its successors or assigns, and (ii) any surviving, resulting or transferee corporation as provided in the Loan Agreement.

"Costs" means, with respect to any Project, the sum of the items, or any such item, of the cost of the acquisition, construction, installation, improvement, renovation, remodeling, replacement, furnishing and equipping of such Project authorized to be paid with Bond proceeds pursuant to the provisions of the Act, including the reimbursement to the Corporation of amounts expended for such costs to the extent permitted by the Tax Certificate, but shall not include any 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 but not 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 any other 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 fund by the name "Series 2006 Costs of Issuance Fund" established pursuant to the Indenture.

"Deed of Trust" means one or more deeds of trust that satisfy the provisions of the Loan Agreement and are given by the Corporation in favor of the Trustee, as assignee of the Authority, for the benefit of the Holders of the Bonds and the holders of any Parity Debt.

Appendix C Page 2

"DTC" means The Depository Trust Company and its successors and assigns, or any other depository selected as set forth in the Indenture that agrees to follow the procedures required to be followed by such depository in connection with the Bonds.

"DTC Participants" means those broker-dealers, banks and other financial institutions from time to time for which DTC holds Bonds as securities depository.

"Electronic Notice'' means notice through telecopy, telegraph, telex, facsimile transmission, internet, e-mail or other electronic means of communication.

"Environmental Regulation" means any federal, state or local law, statute, code, ordinance, regulation, requirement or rule relating to dangerous, toxic or hazardous pollutants, Hazardous Substances, chemical waste, materials or substances.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

"ERISA Plan" means any "employee pension benefit plan," as such term is defined in ERISA, from time to time in effect for the benefit of employees of the Corporation.

"Event of Default" has the meaning specified in the Indenture or Loan Agreement as the context may require.

"Facilities" means all of the real and personal property constituting Woodbury University, located in Burbank, California as the same may be improved and expanded from time to time.

"Fitch" means Fitch Ratings, or its successors and assigns.

"GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession, that are applicable to the circumstances as of the date of determination.

"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, the United States of America, or securities evidencing ownership interests in such obligations or in specified portions thereof (which may consist of specific portions of the principal of or interest on such obligations).

"Gross Revenues" means all revenues, income, receipts and money received by or on behalf of, and moneys due to, the Corporation, solely from its Facilities, including (a) gross revenues derived from its operation and possession of such Facilities, (b) gifts, grants, bequests, donations and contributions, exclusive of any gifts, grants, bequests, donations and contributions to the extent specifically restricted by the donor to a particular purpose inconsistent with their use for the payment of Base Loan Payments, (c) proceeds derived from (i) condemnation proceedings, (ii) accounts receivable, (iff) securities and other investments, (iv) inventory and other tangible and intangible property, (v) insurance proceeds, (vi) contract rights and other rights and assets now or hereafter owned by such Corporation, and (vii) the proceeds of realization on any collateral provided by the Corporation under the Loan Agreement, including, without limitation, the Deed of Trust, and (d) rental income from the lease of portions of the Facilities. Notwithstanding the foregoing, "Gross Revenues" shall not include (i) amounts received by or on behalf of, or moneys due to, the Corporation in connection with the guaranteed student loan origination programs in which the Corporation participates or may hereafter participate, or (ii) amounts received as Auxiliary Revenues.

"Hazardous Substances" means (a) any oil, flammable substance, explosives, radioactive materials, hazardous wastes or substances, toxic wastes or substances or any other wastes, materials or pollutants which (i) pose a hazard to the Facilities or to persons on or about the Facilities or (ii) cause the Facilities to be in violation of any Environmental Regulation; (b) asbestos in any form which is or could become friable, urea formaldehyde foam insulation, transformers or other equipment which contain

Appendix C Page 3

dielectric fluid containing levels of polychlorinated biphenyls, or radon gas; (c) any chemical, material or substance defined as or included in the definition of "waste," "hazardous substances," "hazardous wastes," "hazardous materials," extremely hazardous waste," "restricted hazardous waste," or "toxic substances" or words of similar import under any Environmental Regulation including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 USC §§ 9601 et seq.; the Resource Conservation and Recovery Act ("RCRA"), 42 USC §§ 6901 et seq.; the Hazardous Materials Transportation Act, 49 USC §§ 1801 et seq.; the Federal Water Pollution Control Act, 33 USC §§ 1251 et seq.; the California Hazardous Waste Control Law ("HWCL"), Cal. Health & Safety §§ 25100 et seq.; the Hazardous Substance Account Act ("HSAA"), Cal. Health & Safely Code §§ 25300 et seq.; the Underground Storage of Hazardous Substances Act, Cal. Health & Safety §§ 25280 et seq.; the Porter-Cologne Water Quality Control Act (the "Porter-Cologne Act"), Cal. Water Code §§ 13000 et seq., the Safe Drinking Water and Toxic Enforcement Act of 1986 (Proposition 65); and Title 22 of the California Code of Regulations, Division 4, Chapter 30; (d) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental authority or agency or may or could pose a hazard to the health and safety of the occupants of the Facilities or the owners and/or occupants of property adjacent to or surrounding the Facilities, or any other person coming upon the Facilities or adjacent property; or (e) any other chemical, materials or substance which may or could pose a hazard to the environment.

"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 thereof.

"Information Services" means Financial Information, Inc/s "Financial Daily Called Bond Service," 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Services, "Called Bond Service," 65 Broadway, 16th Floor, New York, New York 10006; Moody's "Mergent/FIS, Inc.," 5250 77 Center Drive, Suite 150, Charlotte, North Carolina 28217, Attention: Called Bond Department; the Municipal Securities Rulemaking Board, CDI Pilot, 1640 King Street, Suite 300, Alexandria, Virginia 22314; and Standard & Poor's "Called Bond Record," 25 Broadway, 3rd Floor, New York, New York 10004; or, in accordance with then-current guidelines of the Securities and Exchange Commission, such other addresses and/or such other services providing information with respect to called bonds, as the Corporation may designate in a Certificate of the Corporation delivered to the Trustee.

"Interest Payment Date" means January 1 and July 1 of each year, commencing July 1,2006.

"Loan Agreement" means the Loan Agreement, dated as of the date of the Indenture, between the Authority and the Corporation and relating to the loan of the proceeds of the 2006 Bonds, as originally executed or as it may from time to time be supplemented or amended.

"Loan Default Events" means any of the events of default specified in the Loan Agreement.

"Moody's" means Moody's Investors Service, Inc., a corporation organized and existing under the laws of the State of Delaware, or its successors and assigns.

"Nominee" means Cede & Co., as nominee of DTC, the initial Securities Depository for the Bonds, and any successor nominee of DTC and, if another Securities Depository replaces DTC as Securities Depository under the Indenture, any nominee of such substitute Securities Depository.

"Notice by Mail" or "notice" of any action or condition "by Mail" shall mean a written notice meeting the requirements 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 (which may be counsel for the Authority) addressed to the Authority and the Corporation.

"Optional Redemption Account" means the account by that name within the Bond Fund established pursuant to the Indenture.

Appendix C Page 4

"Outstanding/' when used as of any particular time with reference to Bonds, (subject to the provisions of the Indenture relating to disqualified Bonds) means all Bonds theretofore authenticated and delivered by the Trustee under the Indenture except, (a) Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation; (b) Bonds in lieu of or in substitution for which other Bonds shall have been authenticated and delivered by the Trustee pursuant to the Indenture; and (c) Bonds with respect to which all liability of the Authority has been discharged to the extent provided in, and pursuant to the requirements of the Indenture.

"Parity Debt" means (i) the indebtedness of the Corporation in connection with the Bonds; and (ii) any other indebtedness now existing or hereafter incurred by the Corporation which the Corporation proposes to secure by a pledge of its general revenues and any other applicable agreements by which the Corporation is bound, if so designated by the Corporation, and, in connection with the issuance of an additional Series of Bonds hereunder, the Authority.

"Participant" means each DTC Participant and if there is a Securities Depository for the Bonds other than DTC, each broker-dealer, bank and other financial institution from time to time for winch such substitute Securities Depository holds Bonds as securities depository.

"Permitted Encumbrances" means, as of any particular time, (i) liens, charges and encumbrances, if any, listed on the policy of title insurance delivered at the time of initial issuance of the 2006 Bonds by the Corporation; (ii) liens for ad valorem taxes and special assessments not then delinquent; (iii) the Loan Agreement, the Indenture, the Deed of Trust, any loan agreements, indentures or deeds of trust or other collateral, security or other agreements related to Parity Debt then outstanding, and any financing statements naming the Authority or the Corporation as the debtor and naming the Authority or the Trustee as the secured party filed to perfect the security interest granted or to be granted in connection with any of the foregoing, (iv) utility, access and other easements and rights of way, restrictions and exceptions that will not materially interfere with or impair the operations being conducted in connection with any Project or the Facilities (or, if no operations are being conducted therein, the operations for which such Project was designed or last modified), (v) such minor defects, irregularities, encumbrances, easements, rights of way and clouds on title as normally exist with respect to properties similar in character to the 2006 Project and as do not in the aggregate materially impair the property affected thereby for the purpose for which it was acquired or is held, (vi) zoning laws and similar restrictions and liens arising in connection with worker's compensation, unemployment insurance, taxes, assessments, statutory obligations or liens, social security legislation, undetermined liens and charges incidental to construction, or other similar charges arising in the ordinary course of operation and not overdue or, if overdue, being contested in good faith and such other liens and charges at the time required by law as a condition precedent to the transactions or the activities of the Corporation or the exercise of any privileges or licenses necessary to the Corporation, and (vii) such other lien or encumbrance as permitted by the written consent of the Authority.

"Permitted Investments" means any of the following if and to the extent that the following are at the time legal investments under the laws of the State 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 created under 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) Government Obligations.

(c) Obligations which obligations are guaranteed 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 FarmersHome Administration)

Appendix C Page 5

(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

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

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

(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 Trust Corporation

(v) Student Loan Marketing Corporation.

(e) Commercial paper which is rated at the time of purchase in the highest short-term rating category (without regard to qualifier, "A-l" by S&P, "P-1" by Moody's and "F-l" by Fitch) of at least one nationally recognized rating agency and which matures not more than 270 days after the date of purchase.

(f) U.S. dollar denominated deposit accounts, federal funds and bankers' acceptances with domestic commercial banks (including the Trustee and its affiliates) which either (i) have a rating on their short-term certificates of deposit on the date of purchase in one of the two highest short-term rating categories (without regard to qualifier) of at least two nationally recognized rating agencies, (ii) are insured at all times by the Federal Deposit Insurance Corporation, or (iii) are coilateralized with direct obligations of the United States of America at 102% valued daily. All such certificates must mature no more than 365 days after the date of purchase.

(g) Investments in (i) money market funds subject to Securities and Exchange Commission Rule 2a-7 and rated in the highest short-term rating category for money market funds (without regard to qualifier) of at least one nationally recognized rating 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 Securities and Exchange Commission Rule 2a-7 in which the deposit shall not exceed 5% of the aggregate pool balance at any time and such pool is rated in one of the two highest short-term rating categories (without regard to qualifier, "A-l" by S&P, "P-1" by Moody's and "F-l" by Fitch) 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 such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and,

Appendix C Page 6

(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 rating agencies; 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, which escrow may be applied only to the payment of such principal of and Interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the 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 such irrevocable instructions, as appropriate.

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

(j) Repurchase agreements with any commercial bank that 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 repurchase agreement 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 maintained at an amount equal to at least 102% for those securities defined in paragraphs (b) and (c) above and 104% for those securities 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 the Trustee to liquidate the collateral immediately, (v) the repurchase securities are free and clear of any third-party lien or 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 all guidelines 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) obligations, the interest on which is excluded from gross income for federal income tax purposes pursuant to the Code and which are rated by the Rating Agency as of the date of such investment and at all times during the term of such investment in a rating category at least equal to the rating on the Bonds (or equivalent), or in the highest short-term rating category of the Rating Agency.

(m) taxable government money market portfolios restricted to obligations with maturities of one year or less, issued or guaranteed as to payment of principal and interest by the full faith and credit of the United States of America (including funds for which the Trustee or an affiliate provides investment advice or other service).

(n) collateralized investment agreements or other collateralized contractual arrangements with corporations, financial institutions or national associations within the United States fully secured by collateral security described in clauses (b) or (c) of this definition.

(o) shares in a California common law trust established pursuant to Title 1, Division 7, of Chapter 5 of the Government Code of the State which invests exclusively in investments permitted by Section 53635 of Title 5, Division 2, Chapter 4 of the Government Code of the State, as it may be amended; and

(p) Any other investments approved in writing by the Authority.

"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 political subdivision thereof.

Appendix C Page 7

“Pledged Property" means that certain real property described in the Deed of Trust, according to the respective priorities, if any, thereunder.

"Principal Office" means the corporate trust office of the Trustee designated in writing to the Authority, which initially shall be located in Los Angeles, California at the address set forth in the Indenture.

“Project" shall have the meaning ascribed thereto in the Loan Agreement.

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

"Rebate Fund" means the fund by that name established pursuant to the Indenture.

"Record Date" means, with respect to any Interest Payment Date for the Bonds, whether or not a Business Day, the fifteenth day of the calendar'month immediately preceding such Interest Payment Date.

"Reportable Event" means a reportable event as defined in Section 4043(b) of ERISA (other than a reportable event for which the notice required thereunder has been waived).

“Responsible Officer" of the Trustee means and includes the chairman of the board of directors, the president, every vice president, every assistant vice president, every trust officer, and every officer and assistant officer of the Trustee other than those specifically above mentioned, to whom any corporate trust matter is referred because of his or her knowledge of, and familiarity with, a particular subject.

"Reserve Fund" means the fund by that name established pursuant to the Indenture.

"Reserve Requirement" means as of any date of calculation, an amount equal to the least of (i) 125% of the average annual debt service on the Bonds Outstanding as of such date, (ii) maximum annual debt service on the Bonds Outstanding as of such date or (iii) 10% of the principal amount of the Bonds Outstanding as of such date.

"Revenues" means all payments received by the Authority or the Trustee pursuant or with respect to the Loan Agreement (except Additional Payments, any amounts paid by the Corporation pursuant or with respect to the Loan Agreement and amounts received for or on deposit in the Rebate Fund), including, without limiting the generality of the foregoing, Base Loan Payments (including both timely and delinquent payments), prepayments and all income derived from the investment of any money in any fund or account established pursuant to the Indenture (other than the Rebate Fund).

"S&P" means Standard & Poor's Ratings Services, or its successors and assigns.

“Securities Depository" means The Depository Trust Company, 55 Water Street, 50th Floor, New York, New York 10041-0099, Attn - Call Notification Department, Fax (212) 855-7232; or to such other addresses and/or such other securities depositories as the Authority may designate to the Trustee in writing.

“Special Record Date" means the date established by the Trustee pursuant to the Indenture as a record date for the payment of defaulted interest on Bonds.

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"State" means the State of California.

"Supplemental Indenture" or "indenture supplemental thereto" means any indenture hereafter duly authorized and entered into between the Authority and the Trustee in accordance with the provisions of the Indenture.

"Tax Certificate" means the Tax Certificate and Agreement between the Authority and the Corporation dated the date of issuance of the 2006 Bonds, as the same may be amended or supplemented in accordance with its terms.

"2006 Bonds" means the California Educational Facilities Authority Revenue Bonds (Woodbury University) Series 2006 authorized and issued pursuant to the Indenture and any bonds issued in exchange or replacement thereof in accordance with the Indenture.

"2006 Project" shall have the meaning ascribed thereto in the Loan Agreement.

"Trustee" means Wells Fargo Bank, National Association a national banking association organized under the laws of the United States of America, and its successors and assigns or any successor trustee appointed pursuant to the Indenture.

"WASC" means the Western Association of Schools and Colleges or its successor.

THE INDENTURE

Certain of the prolusions of the Indenture are summarized below; this summary does not purport to be complete or definitive and is qualified in its entirety by reference to the full terms of the Indenture.

Costs of Issuance Fund. The Trustee shall establish, maintain and hold in trust a separate fund designated as the "Series 2006 Costs of Issuance Fund." Moneys deposited in said fund shall be used to pay Costs of Issuance with respect to the 2006 Bonds upon Requisition of the Corporation filed with the Trustee. At the end of six months from the date of issuance of the 2006 Bonds, or upon earlier receipt of a Statement of the Corporation stating that amounts in such fund are no longer required for the payment of Costs of Issuance, such fund shall be terminated and any amounts then remaining in such fund shall be transferred to the Construction Fund.

Construction Fund. The Trustee shall establish, maintain and hold in trust a separate fund designated as the "Series 2006 Construction Fund." Such moneys shall be disbursed to pay Costs.

Before any payment from the Construction Fund shall be made, the Corporation shall file or cause to be filed with the Trustee a Requisition of the Corporation.

Upon the receipt by the Trustee of a Certificate of the Corporation conforming with the requirements of the Loan Agreement, and after payment of costs payable from the Construction Fund or provision having been made for payment of such costs not yet due by retaining sufficient amounts to pay such costs in the Construction Fund or otherwise as directed in such certificate, the Trustee shall close the Construction Fund and transfer any remaining balance in the Construction Fund into the Optional Redemption Account. The moneys in the Optional Redemption Account shall be used and applied in accordance with the Indenture, at the Request of the Corporation (unless some other application of such moneys is requested by the Corporation and would not, in the Opinion of Bond Counsel, cause interest on the 2006 Bonds to become includable in gross income for federal income tax purposes under the Code), to payment of the principal, premium (if any) or interest on the 2006 Bonds when due or the purchase for cancellation or redemption of 2006 Bonds as designated in a Certificate of the Corporation, to the maximum degree permissible, and at any time from or after the earliest dates at which such 2006 Bonds can be purchased or redeemed pursuant to the Indenture. Notwithstanding certain provisions of the Indenture, the moneys in such Optional Redemption Account which were transferred from the Construction Fund shall he invested at the Request of the Corporation in Permitted Investments at a yield no higher than the yield on the 2006 Bonds (unless in the Opinion of Bond Counsel investment at a higher yield would not cause interest on the 2006 Bonds to become includable in gross income for federal income

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tax purposes under the Code), and all such investment income shall be deposited in such Optional Redemption Account and expended or reinvested as provided above.

In event of an election of the Corporation to redeem all of the 2006 Bonds pursuant to the Indenture or an Event of Default which causes acceleration of the 2006 Bonds, any monies then remaining in the Construction Fund shall be transferred to the Optional Redemption Account within the Bond Fund, and all monevs in the Bond Fund shall be used to redeem 2006 Bonds.

Validity of Bonds. The validity of the authorization and issuance of the Bonds is not dependent on and shall not be affected in any way by any proceedings taken by the Authority or the Trustee with respect to or in connection with the Loan Agreement. The recital contained in the Bonds that the same are issued pursuant to the Act and the Constitution and laws of the State shall be conclusive evidence of their validity and of compliance with the provisions of law in their issuance.

Pledge and Assignment; Establishment of Bond Fund and Rebate Fund

Pledge and Assignment. Subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein and, subject to the rights of the Holders of the Bonds, there are pledged to secure the payment of the principal of and premium, if any, and interest thereon in accordance with their terms and the provisions of the Indenture, all of the Revenues and any other amounts (including proceeds of the sale of Bonds but excluding Additional Payments paid by the Corporation pursuant to the Loan Agreement and any amounts paid by the Corporation pursuant to the indemnification provisions of the Loan Agreement) held in any fund or account established pursuant to the Indenture other than the Rebate Fund. Said pledge shall constitute a lien on and security interest in such assets and shall attach, be perfected and be valid and binding from and after delivery of the Bonds, without any physical delivery thereof or further act.

The Authority transfers in trust, grants a security interest in, and assigns to the Trustee, for the benefit of the Holders from time to time of the Bonds, all of the Revenues and other amounts pledged in the Indenture and all of the right, title and interest of the Authority in the Loan Agreement (except for the right to receive any fees and expenses payable to the Authority, the right to receive any indemnification, the right to give approvals or consents, the right to access and inspect the Facilities and the right to receive any notices and reports and to give any consents). The Trustee shall be entitled to and shall collect and receive all of the Revenues, 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 the agent of the Trustee and shall forthwith be paid by the Authority to the Trustee. The Trustee also shall be entitled to and shall (subject to the provisions of the Indenture) take all steps, actions and proceedings following any Event of Default reasonably necessary in its judgment to enforce, either jointly with the Authority or separately, all of the rights of the Authority assigned to the Trustee and all of the obligations of the Corporation under the Loan Agreement.

All Revenues shall be held in trust for the benefit of the Holders from time to time of the Bonds but shall nevertheless be disbursed, allocated and applied solely for the uses and purposes set forth below.

There is also pledged to secure the payment of the principal of and premium, if any, and interest on the Bonds in accordance with their terms and the provisions of the Indenture, the Gross Revenues and the Deed of Trust (subject to the ratable sharing of such Gross Revenues and the Deed of Trust with holders of Parity Debt as specified in the Loan Agreement). Such pledge of Gross Revenues and Deed of Trust is, in accordance with the Loan Agreement, subject to release upon the satisfaction of certain conditions at such time as: (i) the Bonds shall have been awarded a rating of at least "A2" (or the equivalent thereof) by each Rating Agency then rating the Bonds; and (ii) no other series of bonds or Parity Debt shall be outstanding for which such Gross Revenues and Deed of Trust will not be simultaneously released; provided that (y) the Corporation shall have obtained the written consent of the Authority prior to any such release and (z) an Opinion of Bond Counsel, shall be delivered to the Trustee and the Authority to the effect that such release of Gross Revenues and Deed of Trust in the event of such rating is authorized under the Indenture and under the Loan Agreement and will not, in and of itself, adversely affect the tax-exempt status of interest on the Bonds or any other Parity Debt.

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If the Trustee has not received any payment required to be made by the Corporation under the Loan Agreement to pay principal, or redemption price of or interest on the Bonds by the due date, the Trustee shall immediately notify the Corporation and the Authority of such insufficiency by telephone, telecopy or telegram and confirm such notification by written notice. Failure by the Trustee to give notice pursuant to this paragraph, or the insufficiency of any such notice, shall not affect the payment obligations of the Corporation under the Loan Agreement, including without limitation the timing thereof.

The Bonds shall not constitute a debt or liability, or a pledge of the faith and credit, of the State or of any political subdivision thereof, other than the Authority, which shall only be obligated to pay the Bonds solely from the Revenues and funds provided therefor. The issuance of the Bonds shall not directly or indirectly or contingently obligate the State or any political subdivision thereof to levy or to pledge any form of taxation whatever therefor or to make any appropriation for their payment.

Bond Fund. Upon the receipt thereof, the Trustee shall deposit all Revenues in the Bond Fund, which the Trustee shall establish and maintain and hold in trust. The Trustee shall disburse and apply amounts in the Bond Fund only as set forth in the Indenture.

Rebate Fund. The Trustee shall establish and maintain a fund separate from any other fund established and maintained under the Indenture designated as the Rebate Fund. Within the Rebate Fund, the Trustee shall maintain the accounts required by the Tax Certificate if so directed in writing by the Authority or the Corporation. Subject to the transfer provisions provided in the Indenture, all money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the Rebate Requirement (as defined in the Tax Certificate), for payment to the federal government of the United States of America. None of the Authority, the Corporation or the Holder of any Bonds shall have any rights in or claim to such money. All amounts deposited into or on deposit in the Rebate Fund shall be governed by the Indenture and by the Tax Certificate (which is incorporated in the Indenture by reference). The Trustee shall be deemed conclusively to have complied with such provisions if it follows the written directions of the Authority or the Corporation and shall have no liability or responsibility to enforce compliance by the Authority or the Corporation with the terms of the Tax Certificate.

Upon receipt of and pursuant to a Request of the Corporation, an amount shall be deposited to the Rebate Fund by the Trustee from deposits by the Corporation or from available investment earnings on amounts held in the Bond Fund if and to the extent required, so that the balance of the Rebate Fund after such deposit shall equal the Rebate Requirement (as that term is defined in the Tax Certificate). Computations of the Rebate Requirement shall be furnished by or on behalf of the Corporation and the Authority in accordance with the Tax Certificate. The Trustee may rely conclusively upon the determination, calculations and certifications required by this paragraph. The Trustee shall have no responsibility to independently make any calculation or determination or to review such calculations.

Notwithstanding any other provision of the Indenture, including the defeasance provisions thereof, the obligation to remit the Rebate Requirement to the United States and to comply with all other requirements under this caption and the Tax Certificate shall survive the defeasance or payment in full of the Bonds.

Without limiting the generality of the foregoing, the Authority agrees that there shall be paid from time to time all amounts required to be rebated to the United States pursuant to Section 148(f) of the Code and any temporary, proposed or final Treasury Regulations as may be applicable to the Bonds from time to time. This covenant shall survive payment in full or defeasance of the Bonds. The Authority specifically covenants to pay, or cause to be paid, the Rebate Requirement to the United States at the times and in the amounts determined above, as described in the Tax Certificate. The Trustee agrees to comply with all written instructions of the Authority or the Corporation which such party states in writing are given in accordance with the Tax Certificate.

Notwithstanding any provision above, if the Corporation shall provide to the Authority and the Trustee an Opinion of Bond Counsel to the effect that any action required under the Indenture or the Tax Certificate is no longer required, or to the effect that some further action is required, to maintain the exclusion from gross income of the interest on the Bonds pursuant to Section 103 of the Code, the

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Authority and the Trustee may rely conclusively on such opinion in complying with the provisions of the Indenture, and the covenants under the Indenture shall be deemed to be modified to that extent.

Reserve Fund. The Trustee shall establish and maintain and hold in trust a separate fund designated the "Reserve Fund." All amounts in the Reserve Fund shall be used and withdrawn by the Trustee solely for the purpose of making up any deficiency in the Bond Fund, including amounts for the payment or redemption of all Bonds then Outstanding. If at any time the amount on deposit in the Reserve Fund is less than the Reserve Requirement due to a transfer to the Bond Fund to make up any deficiency therein, the Trustee shall promptly notify the Corporation of such deficiency, and, in accordance with the Loan Agreement, the Corporation shall transfer to the Trustee, in twelve equal monthly installments due on the first Business Day of each month, commencing with the first Business Day of the next succeeding calendar month following the date of such transfer, for deposit in the Reserve Fund, the amount of such deficiency. The Trustee shall notify the Authority and the Corporation immediately of any such transfer. The Trustee shall determine the value of the investments credited to the Reserve Fund no less frequently than semiannually, at the market value thereof. If such value is less than the Reserve Requirement, the Trustee shall immediately notify the Authority and the Corporation of the amount of the deficiency, and the Corporation shall (in accordance with the Loan Agreement) make equal monthly payments to the Trustee sufficient to cure such deficiency no later than the immediately succeeding semiannual valuation date. Any amount in the Reserve Fund in excess of the Reserve Requirement may be transferred to the Bond Fund. In making any valuations of investments hereunder, the Trustee may utilize and rely upon such pricing or valuation services as may be available to it, including those within its regular accounting system.

In lieu of making the deposit to the Reserve Fund in compliance with the provisions of the Indenture, or in replacement of moneys then on deposit in the Reserve Fund, the Corporation may deliver to the Trustee an irrevocable letter of credit issued by a financial institution having unsecured debt obligations rated in one of the two highest rating categories by a nationally recognized rating agency, in an amount (together with moneys and Permitted Investments on deposit in the Reserve Fund) equal to the Reserve Requirement. Such letter of credit shall have a term of no less than three (3) years. At least one (1) year prior to the stated expiration of such letter of credit, the Corporation shall deliver to the Trustee either (i) a replacement letter of credit, with substantially the terms as the previous letter of credit and issued by a financial institution having unsecured debt obligations rated in one of the two highest rating categories by a nationally recognized rating agency, (ii) an extension of the letter of credit for at least an additional year, or (iii) a surety bond satisfying the requirements of the following paragraph. Upon delivery of such replacement letter of credit, extended letter of credit or surety bond, the Trustee shall deliver the prior letter of credit or surety bond to or upon the written order of the Corporation. If the Corporation shall fail to deposit a replacement letter of credit, extended letter of credit or surety bond with the Trustee, the Corporation shall immediately obtain lawfully available funds in order to make deposits with the Trustee so that an amount equal to the Reserve Requirement is on deposit in the Reserve Fund no later than the stated expiration date of the letter of credit. If a drawing is made on the letter of credit, the Corporation shall make such payments as may be required by the terms of the letter of credit or any obligations related thereto (but no less than quarterly pro rata payments) so that the letter of credit shall, absent the delivery to the Trustee of a surety bond satisfying the requirements of the following paragraph or the deposit in the Reserve Fund of an amount sufficient to increase the balance in the Reserve Fund to the Reserve Requirement, be reinstated in the amount of such drawing within one year of the date of such drawing.

In lieu of making the Reserve Fund deposit in compliance with the Indenture, or in replacement of moneys then on deposit in the Reserve Fund, the Corporation may also deliver to the Trustee a surety bond securing an amount, together with moneys, Permitted Investments or letters of credit on deposit in the Reserve Fund, aggregating no less than the Reserve Requirement, issued by an insurance company whose unsecured debt obligations (or for which obligations secured by such insurance company's insurance policies) are rated in one of the two highest rating categories by a nationally recognized rating agency. Such surety bond shall permit the Trustee to make draws thereunder on the date up to and including the final Interest Payment Date. In the event that such surety bond for any reason lapses or expires, the Corporation shall immediately implement subsection (i) or (iii) of the third sentence of the preceding paragraph or make the required deposits to the Reserve Fund.

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Investment of Moneys in Funds. Except as otherwise provided in the defeasance provisions of the Indenture, any moneys in any of the funds and accounts established by the Trustee pursuant to the Indenture shall be invested by the Trustee solely in such Permitted Investments as are specified in a Request of the Corporation. If the Corporation does not file such a Request of the Corporation with the Trustee, the Trustee shall invest to the extent practicable in investments described in paragraph (7) of the definition of the term "Permitted Investments."

Except as otherwise provided in written instructions of the Corporation which the Corporation states in writing are given in accordance with the Tax Certificate, all interest, profits and other income received from the investment of moneys (aside from amounts on deposit in the Rebate Fund which shall remain on deposit in the Reserve Fund which shall remain on deposit in the Reserve Fund and aside from amounts on deposit in the Rebate Fund except as set forth in the Indenture) shall be deposited in the Construction Fund until all moneys in that fund have been expended or released in accordance with the Indenture and thereafter shall be deposited in the Bond Fund.

Subject to the defeasance provisions of the Indenture, investments in any and all funds and accounts established pursuant to the Indenture (other than the Rebate Fund) may be commingled for purposes of making, holding and disposing of investments, notwithstanding provisions therein for transfer to or holding in a particular fund amounts received or held by the Trustee under the Indenture, provided that the Trustee shall at all times account for such investments strictly in accordance with the particular funds to which they are credited and otherwise as provided in the Indenture. The Trustee may act as principal or agent in the making or disposing of any investment. The Trustee may sell or present for redemption, any securities so purchased whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such securities are credited, and the Trustee shall not be liable or responsible for any loss resulting from such investment.

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.

Issuance of Additional Series of Bonds

Conditions. In addition to the 2006 Bonds, the Authority may, by Supplemental Indenture, establish one or more series of Bonds of equal rank and parity with the 2006 Bonds and the Authority may issue, and the Trustee may authenticate and deliver to or upon the Written Order of the Authority, Bonds of any series so established, in such principal amount as shall be determined by the Authority, but only upon compliance by the Authority with the provisions of the Indenture, and subject to the following specific conditions, which are hereby made conditions precedent to the issuance of any such additional series of Bonds:

(a) Such additional series of Bonds shall have been issued to provide for the acquisition, construction or installation of Educational Facilities which constitute a "project" within the provisions of the Act (herein called a "Project") and for which the Corporation has requested financing from the Authority. For the purposes of the Indenture the refunding of all or any series of Bonds outstanding hereunder shall be included in the definition of "Project."

(b) No Default or Event of Default shall have occurred and be continuing under the Indenture, and no Default or Event of Default under the Indenture will occur as a result of the issuance of such series of Bonds or the application of the proceeds thereof in accordance with such Supplemental Indenture.

(c) The Supplemental Indenture authorizing the issuance of such additional series of Bonds shall require that the proceeds of the sale of such additional series shall be applied to the financing of the Costs and of expenses incident thereto, including Costs of Issuance, fees and expenses of the Trustee which may include fees and expenses of outside counsel and internal counsel to the Trustee, and similar expenses. Such Supplemental Indenture may also provide that a portion of such proceeds shall be applied to the payment of interest due or to become due on such additional series of Bonds during the period of actual construction of the corresponding Project, and for a further period not exceeding one year after such period of construction. Such Supplemental Indenture shall require the establishment of a bond reserve fund meeting the Reserve Requirement forthwith upon the receipt of the proceeds of the sale of such

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additional series of Bonds. Such deposit may be made from such proceeds or by the Corporation or from both such sources, as provided in such Supplemental Indenture. Such Supplemental Indenture may provide for the establishment of separate accounts for such additional series of Bonds within the funds created pursuant to the Indenture, including but not limited to a separate rebate account for such additional series of Bonds.

(d) The issuance of such additional series of Bonds shall not cause the Authority to exceed any limitations upon indebtedness which it is then authorized to incur under the Act.

(e) The Corporation and the Authority shall have executed amendments or supplements to the Loan Agreement or a supplemental agreement with respect to the Project to be financed by such additional series of Bonds which requires payments by the Corporation at such times and in such manner as may be necessary to provide for full payment of the principal, interest, and premium, if any, on such additional series of Bonds as such payments become due.

(f) Such additional series of Bonds shall be rated not less than "Baa3" by a Rating Agency.

(g) The additional series of Bonds may be fixed or variable rate and shall be payable as to principal and interest and shall have such provisions for redemption as are specified therein.

Proceedings for Issuance of Additional Series of Bonds.

(a) Whenever the Authority shall determine to issue an additional series of Bonds pursuant to the Indenture, the Authority shall by resolution authorize the execution and delivery of a Supplemental Indenture prescribing the terms and conditions of such additional series of Bonds. The Authority shall then execute such Supplemental Indenture and deliver the same to the Trustee, together with a certified copy of such resolution. Such Supplemental Indenture shall prescribe the forms of Bonds of such additional series and shall provide for the distinctive designation, denominations, methods of numbering, interest rates and places of payment of principal of and interest on such Bonds.

(b) Upon the execution and delivery to the Trustee of such Supplemental Indenture, the following documents shall be filed with the Trustee and the Authority:

(i) An Opinion of Bond Counsel stating that (A) such counsel has examined the Supplemental Indenture and such Supplemental Indenture is permitted or authorized by the terms of the Indenture; (B) the execution and delivery of the additional series of Bonds have been duly authorized by the Authority; (C) such additional series of Bonds, when duly executed by the Authority and authenticated and delivered by the Trustee, will be valid and binding limited obligations of the Authority; (D) upon the delivery of the additional series of Bonds, the aggregate principal amount of Bonds then Outstanding will not exceed the amount permitted by the Act and by the Indenture; and (E) the issuance of the additional series of Bonds will not cause the interest on any previously Outstanding Bonds to be includable in the gross income of Holders pursuant to Code Section 103(a) for Federal income tax purposes.

(ii) A Certificate of the Authority certifying that, to the best of its knowledge, the requirements of the Indenture with respect to the issuance of such additional Bonds have been met.

(iii) An executed counterpart of an amendment, supplement, lease or agreement satisfying the requirements of the Indenture.

(iv) A certificate of the Corporation certifying that the Corporation has met the requirements of the Indenture.

(v) A certificate executed by an Authorized Corporation Representative certifying that (A) the Corporation will not apply any part of the proceeds of the additional series of Bonds for any facility used or to be used for sectarian instruction or as a place for religious worship or for anv facility used or to be used primarily in connection with any part of the program of any school or department of divinity and (B) the Corporation neither restricts entry on racial or religious

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grounds nor requires any students gaining admission to receive instruction in the tenets of a particular faith.

(vi) A letter from each Rating Agency then rating the 2006 Bonds and any other Bonds then outstanding under the Indenture that the issuance of such additional series of Bonds shall not cause any then current rating on the 2006 Bonds or any of the other Outstanding Bonds to be lowered or reduced.

Certain Covenants

Punctual Payment. The Authority shall punctually pay, but only out of Revenues, pledged funds and the proceeds of the Bonds' allocable share of Gross Revenues and any proceeds realized pursuant to the Loan Agreement and the Bonds' allocable share of any proceeds realized pursuant to the Deed of Trust, the principal of, premium, if any, interest to become due in respect of every Bond issued under the Indenture at the times and places and in the manner provided therein and in the Bonds, according to the true intent and meaning thereof.

Extension or Funding of Claims for Interest. In order to prevent any accumulation of claims for interest after 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 approve any 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 so extended 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.

Encumbrance Upon Revenues. The Authority shall not create, or permit the creation of, any pledge, lien, charge or other encumbrance upon the Revenues and other assets pledged or assigned under the Indenture while any of the Bonds are Outstanding, except the pledge and assignment created by the Indenture (or as otherwise contemplated or permitted therein). Subject to this limitation, the Authority expressly reserves the right to enter into one or more other indentures for any of its corporate purposes, including other programs under the Act, and reserves the right to issue other obligations for such purposes.

Power to Issue Bonds and Make Pledge and Assignment. The Authority is duly authorized pursuant to law to issue the Bonds and to enter into the Indenture and to pledge and assign the Revenues and other assets purported to be pledged and assigned, respectively, under the Indenture in the manner and to the extent provided in the Indenture. The Bonds and the provisions of the Indenture are and will be the legal, valid and binding limited obligations of the Authority enforceable in accordance w-ith their terms, and the Authority and Trustee shall at all times, to the extent permitted by law and subject to the provisions of the Indenture, defend, preserve and protect said pledge and assignment of Revenues and other assets and all the rights of the Bondholders under the Indenture against all claims and demands of all persons whomsoever.

Accounting Records and Financial Statements. The Trustee shall at all times keep, or cause to he kept, proper hooks of record and account, prepared in accordance with the Trustee's accounting practices for books of record and account relating to similar trust accounts and in accordance with the customary standards of the industry for such books of record and account, in which complete and accurate entries shall be made of all transactions made by it relating to the proceeds of Bonds, the Revenues, the Loan Agreement and all funds and accounts established pursuant to the Indenture. Such books of record and account shall be available for inspection by the Authority, the Corporation and any Bondholder, or their respective agents or representatives duly authorized in writing, at reasonable hours, upon reasonable notice and under reasonable circumstances.

The Trustee shall file and furnish to the Authority and the Corporation monthly, a complete financial statement (which need not be audited) covering receipts, disbursements, allocation and application of Revenues and any other moneys (including proceeds of the Bonds) in any of the funds and accounts pursuant to the Indenture for the preceding month.

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Arbitrage Covenants. The Authority covenants that it shall not take any action, or fail to take any action, if such action or failure to take such action would result in the interest on the Bonds not being excluded from gross income for federal income tax purposes under Section 103 of the Code. Without limiting the generality of the foregoing, the Authority covenants that it will comply with the requirements of the Tax Certificate, which is incorporated in the Indenture as if fully set forth therein. This covenant shall survive tire payment in full or the defeasance of the Bonds.

In the event that at any time the Authority is of the opinion that it is necessary or helpful to restrict or limit the yield on the investment of any moneys held by the Trustee under the Indenture, the Authority shall so instruct the Trustee in a Request of the Authority accompanied by a supporting Opinion of Bond Counsel addressed to the Authority and the Trustee, and the Trustee shall take such action as may be directed in accordance with such instructions.

Notwithstanding any of the foregoing provisions, if the Authority shall provide to the Trustee an Opinion of Bond Counsel addressed to the Authority and the Trustee to the effect that any specified action is no longer required or that some further or different action is required to maintain the exclusion from federal income tax of interest on the Bonds, the Authority and the Trustee may conclusively rely on such opinion in complying with the requirements of the Indenture and the Tax Certificate, and the covenants under the Indenture shall be deemed to be modified to that extent.

Other Covenants; Amendment of the Loan Agreement. Subject to the provisions of the Indenture, the Trustee shall promptly collect all amounts due from the Corporation pursuant to the Loan Agreement and diligently enforce and take all steps, actions and proceedings reasonably necessary for the enforcement of all of the rights of the Authority under the Loan Agreement and assigned to it pursuant to the Indenture.

The Authority shall not amend, modify or terminate any of the terms of the Loan Agreement, or consent to any such amendment, modification or termination, without the prior written consent of the Trustee. The Trustee shall give such written consent if but only if (1) it has received a written representation from the Authority to the effect that such amendment or modification will not materially and adversely affect the interests of the Holders of the Bonds; provided that, if an Event of Default described in the Indenture has occurred and is continuing, the Trustee rather than the Authority shall make a determination that such amendment or modification will not materially and adversely affect the interests of the Holders of the Bonds (provided that, in making such determination, the Trustee may conclusively rely on written representations of financial consultants or advisors or the opinion or advice of counsel), or (2) the Holders of a majority in aggregate principal amount of the Bonds then Outstanding consent in writing to such amendment, modification or termination, provided that no such amendment, modification or termination shall reduce the amount of Base Loan Payments to be made to the Authority or the Trustee by the Corporation pursuant to the Loan Agreement, or extend the time for making such payments, without the written consent of all of the Holders of the Bonds then Outstanding.

Waiver of Laws. The Authority shall not at any time insist upon or plead in any manner whatsoever, or claim or take the benefit or advantage of, any stay or extension of law now or at any time hereafter in force that may affect the covenants and agreements contained in the Indenture or in the Bonds, and all benefit or advantage of any such law or laws is expressly waived by the Authority to the extent permitted by law.

Further Assurances. Whenever and so often as requested by the Trustee, the Authority shall promptly execute and deliver or cause to be executed and delivered all such other and further instruments, documents or assurances, and promptly do or cause to be done all such other and further things, as may be necessary or reasonably required in order to further and more fully vest in the Trustee and the Bondholders all of the rights, interests, powers, benefits, privileges and advantages conferred or intended to be conferred upon them by the Indenture and to perfect and maintain as perfected such rights, interests, powers, benefits, privileges and advantages.

Continuing Disclosure. Pursuant to the Loan Agreement, the Corporation has undertaken all responsibility for compliance with continuing disclosure requirements pursuant to Securities and Exchange Commission Rule 15c2-12(b)(5), and the Authority shall have no liability to the Holders of the

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Bonds or any other person with respect to Securities and Exchange Commission Rule 15c2-12. The Trustee, acting as dissemination agent, covenants and agrees that, subject to the provisions of the Indenture, it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement and of the Loan Agreement applicable to it. Notwithstanding any other provision of the Indenture, failure of the Corporation or the Trustee, acting as dissemination agent, to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default; however, the Trustee, at the written request of the Participating Underwriter (as such term is defined in the Continuing Disclosure Agreement) or the Holders of at least 25% in aggregate principal amount of Outstanding Bonds, shall (but only to the extent the Trustee has been tendered funds in an amount satisfactory to it or it has been otherwise indemnified from and against any loss, liability, cost or expense, including without limitation, fees and expenses of its counsel and agents and additional fees and charges of the Trustee) or any Bondholder or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Corporation to comply with its obligations under the Loan Agreement or, as to any Bondholder or Beneficial Owner, to cause the Trustee to comply with its obligations under this paragraph. For purposes of this paragraph, "Beneficial Owner" means any person which (1) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (2) is treated as the owner of any Bonds for federal income tax purposes.

Events of Default; Remedies on Default

Events of Default; Acceleration; Waiver of Default. If one or more of the following events ("Events of Default") shall happen, that is to say-

(a) if default shall be made in the due and punctual payment of the principal of, or premium (if any) on, any Bond as the same shall become due and payable (whether at maturity, by proceedings for redemption, by declaration or otherwise);

(b) if default shall be made in the due and punctual payment of any installment of interest on any Bond when and as such interest installment shall become due and payable;

(c) if default shall be made bv the Authority in the performance or observance of any other of the covenants, agreements or conditions on its part in the Indenture or in the Bonds contained, and such default shall have continued for a period of thirty (30) days after written notice thereof, specifying such default and requiring the same to be remedied, shall have been given to the Authority by the Trustee, or to the Authority and the Trustee by the Holders of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding; or

(d) if a Loan Default Event has occurred and is continuing;

then and in each and every such case during the continuance of such Event of Default, unless the principal of all the Bonds shall have already become due and payable, the Trustee, by notice in writing to the Authority, may and, upon the written request of the Holders of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding, shall declare the principal of all the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in the Indenture or in the Bonds contained to the contrary notwithstanding.

This provision, however, is subject to the condition that if, at any time after the principal of the Bonds shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered, there shall have been deposited with the Trustee a sum sufficient to pay all principal on the Bonds matured prior to such declaration and all matured installments of interest (if any) upon all the Bonds, with interest on such overdue installments of principal at the rate borne by the respective Bonds, and the reasonable fees and expenses of the Trustee and the Authority (including but not limited to those of their respective attorneys), and any and all other defaults known to the Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor, then, and in every such case, the Holders of at least a majority in aggregate principal amount of the Bonds then

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Outstanding, by written notice to the Authority and to the Trustee, may, on behalf of the Holders of all of the Bonds, rescind and annul such declaration and its consequences and waive such default; but no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon.

Institution of Legal Proceedings by Trustee. If one or more Events of Default shall happen and be continuing, the Trustee in its sole discretion may, and upon the written request of the Holders of a majority in aggregate principal amount of the Bonds then Outstanding, and upon being indemnified to its reasonable satisfaction therefor, shall, proceed to protect or enforce its rights or the rights of the Holders of Bonds under the Act or under the Loan Agreement or the Indenture by a suit in equity or action at law, either for the specific performance of any covenant or agreement contained in the Indenture, or in aid of the execution of any power therein granted, or by mandamus or other appropriate proceeding for the enforcement of any other legal or equitable remedy as 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 in connection with the institution of legal proceedings by the Trustee as described above shall be applied in the following order, at the date or dates fixed by the Trustee and, in the case of distribution of such moneys on account of principal of, or premium, if any, 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 and reasonable compensation to the Trustee for its own services and for the services of counsel, agents and employees by it properly engaged and employed, and all other expenses and liabilities incurred, and for advances made pursuant to the provisions of the Indenture.

Second - In case the principal of none of the Bonds shall have become due and remains unpaid, to the payment of interest in default on the Bonds, such payments to be made ratably and proportionately to the persons entitled thereto without discrimination or preference.

Third - In case the principal of any of the Bonds shall have become due by declaration or otherwise and remains unpaid, first to the payment of interest in default in the order of maturity thereof, and then to the payment of the principal of all Bonds then due and unpaid and the premium thereon, if any; in every instance such payment to be made ratably to the persons entitled thereto without discrimination or preference.

Fourth - To the replenishment of any shortfall in the Reserve Fund such that the amount on deposit in the Reserve Fund shall not be less than the Reserve Requirement.

Such moneys shall be applied at such times, and from time to time, as the Trustee shall determine, having due regard to the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Trustee shall apply such funds, it shall fix the date (which shall be an Interest Payment Date unless the Trustee shall deem another date more suitable) upon which such application is to be made and upon such date interest on the amounts of principal and past-due interest to be paid on such date shall cease to accrue.

Subject to other provisions of the Indenture, whenever all principal of, premium, if any, and interest on all Bonds have been paid and all fees, expenses and amounts owed to the Trustee and the Authority, (including without limitation attorney fees and expenses), and any payments required under the indemnification provisions of the Loan Agreement), and the Rebate Requirement (as defined in the Tax Certificate) shall have been paid, any balance remaining in the funds and accounts under the Indenture shall be paid to the Corporation.

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 be construed to be a waiver of any such default or acquiescence therein, and every power and remedy given to the Trustee or to the Holders of Bonds may be exercised from time to time, and as often as shall be deemed expedient. In case the Trustee shall have proceeded to enforce any right under the Indenture, and such proceedings shall have been discontinued or abandoned because of waiver or for

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any other reason, or shall have been determined adversely to the Trustee, then and in every such case the Authority and the Trustee, and the Holders of the Bonds, severally and respectively, shall be restored to their former positions and rights under the Indenture in respect to the trust estate; and all remedies, rights and powers of the Authority, the Trustee and the Holders of the Bonds shall continue as though no such proceedings had been taken.

Remedies Cumulative. No remedy conferred upon or reserved to the Trustee or to any Holder of the Bonds is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under the Indenture or now or hereafter existing at law7 or in equity.

Covenant to Pay Bonds in Event of Default. The Authority covenants that, upon the happening of any Event of Default, the Authority will pay, but only out of Revenues, pledged funds and the proceeds of the Bonds' allocable share of Gross Revenues and any proceeds realized pursuant to the Loan Agreement and the Bonds' allocable share of any proceeds realized pursuant to the Deed of Trust, to the Trustee, upon demand, for the benefit of the Holders of the Bonds, the whole amount then due and payable thereon (by declaration or otherwise) for interest, principal and premium, if any, as the case may be, and all other sums which may be due or secured under the Indenture, including reasonable compensation to the Trustee and its agents and counsel and any expenses or liabilities incurred by the Trustee under the Indenture and, its agents and counsel. In case the Authority shall fail to pay the same forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled to institute proceedings at law7 or in equity in any court of competent jurisdiction to recover judgment for the whole amount due and unpaid, together with costs and reasonable attorneys' fees, subject, howrever, to the condition that such judgment, if any, shall be limited to, and payable solely out of, Revenues, as provided in 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 be affected 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-in- fact of the Holders of all Bonds Outstanding under the Indenture for the purpose of filing any claims relating to the Bonds.

Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an Event of Default, shall have taken some action, by judicial proceedings or otherwise, pursuant to its duties under the Indenture, whether upon its own discretion or upon the request of the Holders of a majority in aggregate principal amount of the Bonds then Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the Holders of the Bonds, with respect to the 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 at the time there has been filed with it a written request signed by the Holders of at least a majority in aggregate principal amount of the Bonds Outstanding under the Indenture opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation.

Notwithstanding anything in the Indenture, the Deed of Trust or the Loan Agreement to the contrary, the Trustee shall not be required to enter, take possession of, or take any other action whatsoever with respect to the Pledged Property and the Deed of Trust unless the Trustee is satisfied that the Trustee will not be subject to any liability under any local, state or federal environmental law's or regulations of any kind whatsoever or form any circumstances present at the Pledged Property.

If the foregoing condition is not satisfied and the Trustee is not willing to waive such condition and initiate foreclosure proceedings, then the Trustee shall take such actions as are reasonably necessary or appropriate in order to facilitate the appointment of a co-trustee, being a person or entity designated by the Holders or a majority in principal amount of the Bonds then Outstanding and to assign to such person or entity (subject, however, to the trusts created pursuant to the Indenture) the beneficial interest under the Deed of Trust which secures the obligations under the Loan Agreement, for the limited

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purpose of conducting a foreclosure of such Deed of Trust and receiving and holding any title to real property obtained as a result of such foreclosure.

Limitation on Bondholders' Right to Sue. (a) Except as provided in (b), no Holder of any Bond 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 (1) such Holder shall have previously given to the Trustee written "notice of the occurrence of an Event of Default under the Indenture; (2) the Holders of at least a majority in aggregate principal amount of all the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (3) said Holders shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee; and (5) no direction inconsistent with such written request has been given to the Trustee during such sixty (60) day period by the Holders of a majority in aggregate principal amount of all the Bonds then Outstanding.

Such notification, request, tender of indemnity and refusal or omission are declared, in every case, to be conditions precedent to the exercise by any Holder of Bonds of any remedy under the Indenture; it being understood and intended that no one or more Holders of Bonds shall have any right in any manner whatever by his or their action to enforce any right under the Indenture, except in the manner therein provided, and that all proceedings at law or in equity to enforce any provision of the Indenture shall be instituted, had and maintained in the manner therein provided and for the equal benefit of all Holders of the Outstanding Bonds.

(b) The right of any Holder of any Bond to receive payment of the principal of and premium, if any, and interest on such Bond out of Revenues and the funds pledged in the Indenture, as therein provided, on and after the respective due dates expressed in such Bond, or to institute 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 provisions or any other provision of the Indenture.

The Trustee

Duties, Immunities and Liabilities of Trustee. 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, perform such duties and only such duties as 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 the circumstances in the conduct of their own affairs.

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 w'illful misconduct, except for the following:

(a) Prior to the occurrence of any Event of Default under the Indenture and after the curing of all Events of Default which may have occurred, the duties and obligations of the Trustee shall at all times be determined solely by the express provisions of the Indenture; the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in the Indenture; and no covenants or obligations shall be implied into the Indenture which are adverse to the Trustee.

(b) At all times, regardless of whether or not any Event of Default shall exist,

(i) the Trustee shall not be liable for any error of judgment made in good faith by aResponsible Officer or Officers of the Trustee unless it shall be proved that the Trustee wasnegligent in ascertaining the pertinent facts; and

(ii) the Trustee shall not be personally liable with respect to any action taken, permittedor omitted by it in good faith in accordance with the direction of the Holders of not less than a

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majority, or such other percentage as may be required under the 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

(iii) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively 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 to the requirements of the Indenture; but in the case of any such certificate or opinion, the Trustee shall be under a duty to examine the same to determine whether or not it conforms to the requirements of the Indenture.

(c) 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 duties under the Indenture.

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 the exercise of any of its rights or powers. The permissive right of the Trustee to perform acts enumerated in the Indenture or the Loan 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) Whenever in the administration of the trusts of the Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action under the Indenture, such matter (unless other evidence in respect thereof be in the Indenture specifically prescribed) may, in the absence 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 bad faith 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.

(c) 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 with respect to the Bonds.

(d) The Trustee shall not be deemed to have knowledge of an Event of Default under the Indenture, under the Loan Agreement or any other document related to the Bonds unless it shall have actual knowledge of such Event of Default.

(e) Before taking any action under the provisions of the Indenture relating to events of default, the Trustee may require indemnity satisfactory to the Trustee be furnished from any expenses and to protect it against any liability it may incur under the Indenture.

(f) The immunities extended to the Trustee also extend to its directors, officers, employees andagents.

Moneys Received by Trustee to Be Held in Trust. Subject to the provisions of the Indenture relating to defeasance, all moneys received by the Trustee shall, until used or applied as provided in the Indenture, be held in trust for the purposes for which they were received, hut need not be segregated from other funds except to the extent required by law or as otherwise provided therein. Except to the extent provided otherwise therein, any interest allowed on any such moneys shall be deposited in the fund to which such moneys are credited.

Qualifications of Trustee. There shall at all times be a trustee under the Indenture which shall be a corporation or banking association organized and doing business under the laws of the United States or

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of a state thereof, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least fifty million dollars ($50,000,000), subject to supervision or examination by federal or state authority. If such a corporation or banking association publishes reports of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then the combined capital and surplus of such corporation or banking association shall be deemed to be their combined capital and surplus as set forth in its most recent reports of conditions so published. In case at any time the Trustee shall cease to be eligible, the Trustee shall resign immediately in the manner and with the effect specified in the Indenture.

Resignation and Removal of Trustee and Appointment of Successor Trustee. The Trustee may at any time resign by giving thirty (30) days written notice to the Authority and the Corporation, and by giving to the Bondholders notice either by publication of such resignation, which notice shall be published at least once in a Qualified Newspaper, or by giving Notice by Mail to such Bondholders. The Trustee shall also mail a copy of any such notice of resignation to each Rating Agency. Upon receiving such notice of resignation, the Authority, with the advice and consent of the Corporation shall promptly appoint a successor Trustee by an instrument in writing. If no successor trustee shall have been so appointed and have accepted appointment within forty-five (45) days after the giving of such notice of 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 a successor Trustee. Such court may thereupon, after such notice, if any, as it may deem proper and may prescribe, appoint a successor Trustee.

In case at any time either of the following shall occur:

(a) the Trustee shall cease to be eligible 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

(b) 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 Corporation, 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, 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 the Trustee, and appoint a successor Trustee. Upon any removal of the Trustee, any outstanding fees and expenses of such former Trustee shall be paid.

The Authority, 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 appoint a successor Trustee, by an instrument or concurrent instruments in writing signed by the Authority or such Bondholders, as the case may be.

Any resignation or removal of the Trustee, and appointment of a successor Trustee, shall become effective only upon acceptance of appointment by the successor Trustee.

Acceptance of Trust by Successor Trustee. Any successor Trustee appointed shall execute, acknowledge and deliver to the Authority, the Corporation 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, deed or conveyance, shall become vested with all the rights, powers, trusts, duties and obligations of its predecessor in the trusts under the Indenture, with like effect as if originally named as Trustee therein; but, nevertheless, on the Written Request of the Authority or the request of the successor Trustee, the Trustee ceasing to act shall execute and deliver an instrument transferring to such successor Trustee, upon the trusts therein expressed, all the rights, powers and trusts of the Trustee so ceasing to act. Upon request of any such successor Trustee, the Authority shall execute any and all instruments in writing

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necessary or desirable for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and duties. Any Trustee ceasing to act shall, nevertheless, retain a lien upon all property or funds held or collected by such Trustee to secure the amounts due it as compensation, reimbursement expenses and indemnity afforded to it.

No successor Trustee shall accept appointment unless at the time of such acceptance such successor trustee shall be eligible.

Upon acceptance of appointment by a successor Trustee, the successor Trustee shall give the Bondholders and the Rating Agency notice of the succession of such Trustee to the trusts under the Indenture.

Modification of Indenture

Modification Without Consent of Bondholders. Subject to the conditions and restrictions in the Indenture contained, the Authority and the Trustee, from time to time and at any time, may enter into an Indenture or Supplemental Indentures, which indenture or indentures thereafter shall form a part thereof, including, without limitation, for one or more of the following purposes, provided that the Authority and the Trustee shall have received the written consent of the Corporation and an Opinion of Bond Counsel to the effect that such amendment or modification is authorized or permitted by the Indenture, the Act and other applicable law and complies with their respective terms, will not cause interest on the Bonds to be included in the gross income of the Holder thereof for federal income tax purposes and that such amendment or modification will not materially and adversely affect the interests of the Holders of the Bonds:

(a) to add to the covenants and agreements of the Authority in the Indenture contained, other covenants and agreements thereafter to be observed, or to assign or pledge additional security for the Bonds, or to surrender any right or power reserved in the Indenture to or conferred upon the Authority;

(b) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing, correcting or supplementing any defective provision, contained in the Indenture, or in regard to such matters or questions arising under the Indenture as the Authority may deem necessary or desirable and not inconsistent with the Indenture;

(c) to modify, amend or supplement the Indenture or any Supplemental Indenture in such manner as to permit the qualification thereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and, if they so determine, to add to the Indenture or any Supplemental Indenture such other terms, conditions and provisions as may be permitted by said Trust Indenture Act of 1939, as amended, or similar federal statute;

(d) to authorize the issuance of an additional series of Bonds, and to provide the terms and conditions under which such Bonds may be issued, subject to the provisions of the Indenture;

(e) in connection with an amendment of the Loan Agreement for the purpose of conforming the terms, conditions and covenants of the Indenture to the corresponding or related provisions of such amended Agreement; or

(f) any other purpose.

Any Supplemental Indenture authorized by the Indenture may be executed by the Authority and the Trustee without the consent of the Holders of any of the Bonds at the time Outstanding, notwithstanding any of the other provisions of the Indenture, but the Trustee shall not be obligated to enter into any such Supplemental Indenture which affects the Trustee’s own rights, duties or immunities under the Indenture or otherwise.

Modification With Consent of Bondholders. With the written consent of the Corporation and the Holders of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding, the Authority and the Trustee may from time to time and at any time, with an Opinion of Bond Counsel to the effect that such amendment or modification will not cause interest on the Bonds to

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be included in the gross income of the Holder thereof for federal income tax purposes, enter into an Indenture or Supplemental 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; provided, however, that no such Supplemental Indenture shall (1) extend the fixed maturity of any Bonds 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 or (2) reduce the aforesaid percentage of Holders of Bonds whose consent is required for the execution of such Supplemental Indentures or extend the time of payment or permit the creation of any lien on the Revenues or the funds pledged in the Indenture prior to or on a parity with the lien of the Indenture or deprive the Holders of the Bonds of the lien created by the Indenture upon the Revenues or the funds pledged therein, without the consent of the Corporation and the Holders of all the Bonds then Outstanding. Upon receipt by the Trustee of a Certificate of the Authority authorizing the execution of any such Supplemental Indenture, and upon the filing with the Trustee of evidence of the consent of the Corporation or the Bondholders, as aforesaid, the Trustee shall join with the Authority in the execution of such Supplemental Indenture unless such Supplemental Indenture 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 Supplemental Indenture.

It shall not be necessary for the consent of the Corporation or the Bondholders to approve the particular form of any proposed Supplemental Indenture, but it shall be sufficient if such consent shall approve the substance thereof.

Promptly after the execution by the Authority and the Trustee of any Supplemental Indenture, the Trustee shall cause to be mailed a notice, setting forth in general terms the substance of such Supplemental Indenture, to the Corporation and the Bondholders at the addresses shown on the Bond registration books maintained by the Trustee. Any failure of the Trustee to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such Supplemental Indenture.

The Trustee shall mail an executed copy of such Supplemental Indenture and any amendment of the Loan Agreement to the Corporation and each Rating Agency then rating any of the Bonds promptly after execution by the Authority, the Trustee, and in the case of the Loan Agreement, the Corporation.

Effect of Supplemental Indenture. Upon the execution of any Supplemental Indenture, the Indenture shall be and shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under the Indenture of the Authority, the Trustee and all Holders of Outstanding Bonds shall thereafter be determined, exercised and enforced under the Indenture subject in all respects to such modifications and amendments, and all the terms and conditions of any such Supplemental Indenture shall be part of the terms and conditions of the Indenture for any and all purposes.

Defeasance

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 and when the same become due and payable; or

(b) by the delivery to the Trustee, for cancellation by it, of all Bonds; or

fc) by providing for the payment or redemption thereof;

and if all other sums payable under the Indenture, including Additional Payments 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 shall cease, 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 thereon after such redemption date or maturity date) out of, the money and Government Obligations deposited with the Trustee as aforesaid for their payment, subject, however, to certain provisions of the Indenture and (ii)

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that in the case of Bonds (or portions thereof) for which provision for the payment or redemption thereof has been made, the provisions of the Indenture relating to the transfer and exchange of such Bonds (or portions thereof) and, if so reserved by the Corporation, the right to call the Bonds for optional redemption prior to maturity shall continue to apply to such Bonds (or portions thereof). Thereupon the Trustee shall, upon receipt of a Request of the Authority, and upon receipt by the Trustee and the Authority 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, forthwith execute proper instruments acknowledging satisfaction of and discharging the Indenture. The Trustee shall mail written notice of such payment and discharge to each Rating Agency. The satisfaction and discharge of the Indenture shall be without prejudice to the rights of the Trustee and the Authority to charge and be reimbursed by the Corporation for any expenditures which they may thereafter incur in connection therewith.

Discharge of Liability of Particular Bonds. Any Bond, or any portion thereof such that the portion that is not considered paid shall be in an authorized denomination, shall be deemed to be paid within the meaning of, and with the effect set forth in, the defeasance provisions of the Indenture when, whether upon or prior to the maturity or redemption date, as applicable, (a) payment of the principal 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 upon redemption), either (i) shall have been made in accordance with the terms thereof, or (ii) shall have been provided for by irrevocably depositing with the Trustee in trust and irrevocably setting aside exclusively for such payment (1) lawful money of the United States of America sufficient to make such payment or (2) nonprepayable, noncallable Government Obligations maturing as to principal and interest in such amounts and at such times as will insure, without reinvestment, the availability of sufficient moneys, to make such payment, (b) if such Bond (or portion thereof) is to be redeemed prior to the maturity thereof, notice of such redemption shall have been given 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 and the Authority pertaining to any such deposit shall have been paid or the payment thereof provided for to the satisfaction of the Trustee; (d) the Trustee shall have been irrevocably instructed (by the terms of the Indenture or a Written Request of the Authority) to apply such moneys and/or Government Obligations to the payment of the principal of, premium, if any, and interest on the Bond (or portion thereof) to be discharged; (e) the Authority and the Trustee shall have received an Opinion of Bond Counsel with respect to such deposit of money and/or Government Obligations; and (f) the Authority and the Trustee shall have received an Accountant's Certificate verifying that the moneys and Government Obligations so deposited, together with the interest earnings thereon (without reinvestment) will be sufficient to pay when due the principal 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 Trustee shall not be responsible for verifying the sufficiency of funds or Government Obligations provided to effect the defeasance of Bonds.

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 Corporation lawfully 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, and subject 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 by declaration as provided in the Indenture), then such moneys shall be repaid to the Corporation upon its written request, 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 expense of the Corporation) first publish at least once in a Qualified Newspaper a notice, in such form as may be deemed appropriate by the Corporation, the Authority and the Trustee, in respect of the amount so payable with respect to such Bond and in respect of the provisions relating to the repayment to the Corporation of the moneys held for the payment thereof. In the 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

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equivalent to the respective amounts deposited for the payment of the amount so payable with respect to such Bond and so repaid to the Corporation (without interest thereon).

Miscellaneous

Liability of Authority Limited to Revenues. The Corporation shall be solely responsible for the payment of the Bonds. Neither the State nor the Authority shall be obligated to pay the Bonds or the interest or premium if any, thereon except from Revenues provided by the Corporation, and neither the faith and credit nor the taxing power of the State or of any political subdivision thereof shall be pledged to the payment of the principal of, or premium, if any, or the interest on the Bonds. The issuance of the Bonds shall not directly or indirectly or contingently obligate the State or any political subdivision thereof to levy or to pledge any form of taxation whatever therefor or to make any appropriation for their payment. Nevertheless, the Authority may, but shall not be required to, advance for any of the purposes of the Indenture any funds of the Authority which may be made available to it for such purposes.

Waiver of Personal Liability. No director, member, officer, agent or employee of the Authority, of the State or any department, board or agency of the State shall be individually or personally liable for the payment of the principal of, or premium, if any, or interest on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof; but nothing in the Indenture shall relieve any such director, member, officer, agent or employee from the performance of any official duty provided by law or by the Indenture.

THE LOAN AGREEMENT

Certain provisions of the Loan Agreement are summarized below. This summary does not purport to be complete or definitive and is qualified in its entirety by reference to the Loan Agreement.

Payment of 2006 Bonds. The Corporation covenants and agrees to pay or cause to be paid to the Trustee, for the account of the Authority, all sums necessary for the payment of the debt service on the 2006 Bonds, as follows (the "Base Loan Payments"):

(1) By 10:30 a.m., Pacific time, on the day which is five (5) Business Days immediately preceding each Interest Payment Date and principal payment date (whether at maturity, by redemption or by acceleration as provided in the Indenture) with respect to the 2006 Bonds and continuing until the principal of and premium, if any, and interest on the 2006 Bonds shall have been fully paid (or provision for the payment thereof shall have been made as provided in the Indenture), the Corporation shall pay in funds which will be immediately available as of such time and date, as an installment in repayment of the loan from the Authority under the Loan Agreement, a sum equal to the aggregate amount payable on such date as principal (whether at maturity, by redemption or by acceleration as provided in the Indenture) of and premium, if any, and interest on the 2006 Bonds.

(2) Any amount at the time held by the Trustee in the Bond Fund for the payment of debt service on the 2006 Bonds shall be credited against the aforesaid Base Loan Payments then required to be met by the Corporation, to the extent such amount is in excess of the amount required for payment of (i) any 2006 Bonds theretofore matured or called for redemption and (ii) interest accrued to the date of redemption or maturity of any 2006 Bonds, in all cases where such 2006 Bonds have not been presented for payment.

(3) Any amount at the time held by the Trustee in any special fund established in connection with any refunding which amount is available and designated for payment of debt service on the 2006 Bonds on such Interest Payment Date may also, at the election of the Corporation, be credited against such Base Loan Payments.

If on any Interest Payment Date or principal payment date the balance in the Bond Fund is insufficient or unavailable to make required payments of principal of (whether at maturity, by redemption or bv acceleration as provided in the Indenture), premium, if any, and interest due on the 2006 Bonds on such date, the Corporation shall forthwith pay any such deficiency to the Trustee for deposit in the Bond Fund such amounts as may be necessary to make up any deficiency in the Bond Fund

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in the amounts and at the times specified in the Indenture. If amounts on deposit in the Reserve Fund are drawn upon in accordance with this subsection (b) or the amount on deposit therein is found to be less than the Reserve Requirement when valued in accordance with the terms of the Indenture, the Corporation shall pay to the Trustee for deposit in the Reserve Fund such amounts as may be necessary to make up any deficiency in the amounts and at the times specified in the Indenture.

The Corporation acknowledges that the Trustee shall give notice:

(1) to the Corporation in accordance with the Indenture at least ten (10) Business Days but not more than twenty (20) Business Days before each Interest Payment Date of the amount, if any, credited or to be credited to the Bond Fund by such next Interest Payment Date and the amount of the Base Loan Payment then due from the Corporation; provided, however, that any failure by the Trustee to so notify the Corporation shall not affect the Corporation's obligation to make any Base Loan Payment in a timely manner; and

(2) to the Corporation and the Authority in accordance with the Indenture if the Corporation fails to make any payment required under the Loan Agreement by the due date, such notice to be given by telephone or telecopy followed by written notice.

Additional Payments. In addition to the Base Loan Payments required to be made by the Corporation, the Corporation shall also pay to the Trustee or to the Authority, as the case may be, the following (the ''Additional Payments"):

(a) All taxes and assessments of any type or character charged to the Authority or to the Trustee affecting the amount available to the Authority or the Trustee from payments to be received under the Loan Agreement or in any way arising due to the transactions contemplated (including taxes and assessments assessed or levied by any public agency or governmental authority of whatsoever character having power to levy taxes or assessments) but excluding any taxes based upon the capital and/or income of the Trustee or any other person other than the Corporation; provided, however, that the Corporation shall have the right to protest any such taxes or assessments and to require the Authority or the Trustee, as the case may be, at the Corporation's expense, to protest and contest any such taxes or assessments assessed or levied upon them and that the Corporation shall have the right to withhold payment of any such taxes or assessments pending disposition of any such protest or contest unless such withholding, protest or contest would materially adversely affect the rights or interests of the Authority or the Trustee;

(b) All reasonable fees, charges and expenses of the Trustee for services rendered under the Indenture and all amounts referred to therein, as and when the same become due and payable;

(c) The reasonable fees and expenses of such accountants, consultants, attorneys and other experts as may be engaged by the Authority or the Trustee to prepare audits, financial statements or opinions or provide such other services as are reasonably required under the Loan Agreement, the Tax Certificate, the Indenture or the Deed of Trust;

(d) Annual fees and reasonable expenses of the Authority and any agency of the State or attorney selected by the Authority to act on its behalf in connection with the loan to the Corporation under the Loan Agreement, the 2006 Bonds, the Indenture or any other documents contemplated thereby, including without limitation reasonable expenses incurred by the Attorney General of the State or other attorney selected by the Authority in connection with any litigation which may at any time be instituted involving such loan or the 2006 Bonds, the Indenture or any other documents contemplated thereby and reasonable expenses incurred by the Authority in supervision and inspection of the Corporation and its operations with respect to the use and application of such loan; and

(e) Such amounts as may be necessary to satisfy the rebate requirements in accordance with the Tax Certificate.

Unconditional Obligation. The obligations of the Corporation to make or cause to be made the Base Loan Payments and Additional Payments and to perform and observe the other agreements on its part contained in the Loan Agreement shall be absolute and unconditional general obligations of the

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Corporation, payable from the Gross Revenues of the Corporation or any other legally available source of funds, irrespective of anv defense or any rights of setoff, recoupment or counterclaim it might otherwise have against the Authority or the Trustee, and during the term of the Loan Agreement, the Corporation shall pay absolutely the Base Loan Payments and Additional Payments and all other payments required under the Loan Agreement, free of any deductions, and without abatement, diminution or setoff. Until such time as the principal of and premium, if any, and interest on all Bonds shall have been fully paid (or provision for the payment thereof shall have been made as provided in the Indenture), the Corporation (i) will not suspend or discontinue any Base Loan Payments or Additional Payments, (ii) will perform and observe all of its other agreements contained in the Loan Agreement with respect to the Bonds, the Facilities and the 2006 Project; and (iii) will not terminate the Loan Agreement for any cause, including, without limiting the generality of the foregoing, 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 2006 Project or the Facilities, commercial frustration 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 or any failure of the Authority or the Trustee to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with the Loan Agreement. The Loan Agreement shall be deemed and construed to be a "net contract/' and the Corporation shall pay absolutely net the Base Loan Payments, Additional Payments and all other payments required under the Loan Agreement, free of any deductions, without abatement, diminution or set-off other than those expressly provided in the Loan Agreement.

Gross Revenue Pledge. In consideration of (1) the issuance of the 2006 Bonds by the Authority and the loan of the proceeds thereof to the Corporation and to secure the payment of the Base Loan Payments and Additional Payments and the performance of the other obligations of the Corporation under the Loan Agreement and (2) the issuance of any Parity Debt by the Corporation and to secure the payments required by the terms of the Parity Debt and the performance of the other obligations of the Corporation thereunder, the Corporation pledges and grants a security interest, to the extent permitted by law, to the Authority in all Gross Revenues and the proceeds thereof, and in the Deed of Trust, to secure the obligations of the Corporation under the Loan Agreement and any agreement creating, governing or relating to the Parity Debt; provided that such pledge of Gross Revenues and Deed of Trust are in accordance with the terms of the Loan Agreement, subject to release upon the satisfaction of certain conditions. The Corporation agrees that, so long as any of the Corporation's Bonds remain Outstanding or any Additional Payments remain unpaid, all of the Gross Revenues of the Corporation shall be deposited as soon as practicable upon receipt in a fund designated as the "Gross Revenue Fund" which the Corporation shall establish and maintain, subject to the provisions of the following paragraph, in an account or accounts at such banking institution or institutions as the Corporation shall from time to time designate, in writing to the Trustee and the holders of any Parity Debt for such purpose (herein called the "Depository Bank(s)"). Subject only to the provisions of the Loan Agreement permitting the application thereof for the purposes and on the terms and conditions set forth therein, the Corporation pledges, and to the extent permitted by law grants a security interest to the Trustee, as assignee of the Authority (for the benefit of the Bondholders and the holders of any Parity Debt, as and to the extent provided in the Loan Agreement) in the Gross Revenue Fund and all of the Gross Revenues to secure the payment of the Base Loan Payments and Additional Payments and payments with respect to Parity Debt and the performance by the Corporation of its other obligations under the Loan Agreement and all similar obligations under any Parity Debt agreements. The Corporation shall execute and cause to be filed Uniform Commercial Code financing statements, shall execute and cause to be sent to each Depository Bank a notice of die security interest granted under the Loan Agreement and shall execute and deliver such other documents (including, but not limited to, continuation statements) as may be necessary or reasonably requested by the Trustee or the Authority or the holders of any Parity Debt in order to perfect or maintain as perfected such security interest or give public notice thereof. If at any time when there are Corporation's Bonds Outstanding or obligations continue to exist with regards to Parity Debt, the Corporation shall establish a new depository account with a Depository Bank constituting a part of the Gross Revenue Fund, the Corporation covenants and agrees to notify the Trustee thereof and to cooperate with the Trustee in effecting a first lien on such account, including, without limitation, by means of executing the necessary UCC-1 financing statements, and any notices and acknowledgments with respect thereto.

Amounts in the Gross Revenue Fund may be used and withdrawn by the Corporation at any time for any lawful purpose, except as hereinafter provided. In the event that the Corporation is

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delinquent for more than one Business Day in the payment or required prepayment of any Base Loan Payment or payment with respect to Parity Debt, the Trustee shall notify the Corporation and the Depository Bank(s) of such delinquency, and, unless such Base Loan Payment or payment with respect to Parity Debt is paid within ten days after receipt of such notice, the Corporation shall cause the Depository Bank(s) to transfer the Gross Revenue Fund to the name and credit of the Trustee, as assignee of the Authority. The Gross Revenue Fund shall remain in the name and to the credit of the Trustee, until the amounts on deposit in said fund are sufficient to pay in full (or have been used to pay in full) all Base Loan Payments and the Parity Debt in default and until all other events of default under the Loan Agreement and the Parity Debt known to the Trustee shall have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor (including defaults with respect to any Parity Debt), whereupon the Gross Revenue Fund (except for the Gross Revenues required to make such payments or cure such defaults) shall be returned to the name and credit of the Corporation. During any period that the Gross Revenue Fund is held in the name and to the credit of the Trustee, the Trustee shall use and withdraw from time to time amounts in said fund, to make Base Loan Payments, Additional Payments, payments with respect to Parity Debt and the other payments required of the Corporation under the Loan Agreement and any Parity Debt agreements as such payments become due (whether by maturity, redemption, acceleration or otherwise), and, if such amounts shall not be sufficient to pay in full all such payments due on any date, then to the payment of Base Loan Payments and payments with respect to Parity Debt, ratably, according to the amounts due respectively for Base Loan Payments and payments with respect to Parity Debt, without any discrimination or preference, and to such other payments in the order which the Trustee, in its discretion, shall determine to be in the best interests of the holders of the Corporation's Bonds and the holders of any Parity Debt, without discrimination or preference. During any period when the Gross Revenue Fund is held in the name and to the credit of the Trustee, the Corporation shall not be entitled to use or withdraw any of the Gross Revenues unless (and then only to the extent that) the Trustee so directs for the payment of current or past due operating expenses of the Corporation; provided, however, that the Corporation shall be entitled to use or withdraw any amounts in the Gross Revenue Fund which do not constitute Gross Revenues. The Corporation shall execute and deliver all instruments as may be required to implement this Section. The Corporation further agrees that a failure to comply with the terms of this Section shall cause irreparable harm to the holders from time to time of the Corporation's Bonds and of any Parity Debt, and shall entitle the Trustee, as assignee of the Authority, with or without notice to the Corporation, to take immediate action to compel the specific performance of the obligations of the Corporation as provided in this paragraph.

Deed of Trust and Additional Deeds of Trust. With respect to the encumbrance of the Corporation's real property in favor of the 2006 Bonds and any Parity Debt, Corporation agrees to execute and deliver the Deed of Trust as security for its obligations of repayment to the Authority and as security for its obligations under Parity Debt.

The Corporation shall have the right from time to time to request that any part of the Pledged Property then subject to the Deed of Trust be released from and reconveyed to the Corporation free and clear of the lien of the Deed of Trust, subject to the following conditions:

(i) No Event of Default shall have occurred and be continuing under the Loan Agreement or the Deed of Trust or with respect to any Parity Debt;

(ii) The Corporation shall either:

(A) Obtain an appraisal showing that the fair market value of any Pledged Property subject to the Deed of Trust after giving effect to such release and reconveyance (the "Remaining Mortgaged Property") when combined with the value of any other real property which the Corporation proposes to substitute for such released and reconveyed real property (the "Substituted Mortgaged Property") would aggregate at least 100% of the aggregate Outstanding principal amount of the 2006 Bonds and any Parity Debt, less the amount credited to any permitted reserve, provided that:

(1) the appraisal shall be performed by an MAI-designated appraiser, approved by the Authority, and shall be dated not earlier than one (1) month before the proposed date of release and reconveyance;

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(2) the Substitute Mortgaged Property shall constitute real property of one or more legal parcels in compliance with the California Subdivision Map Act, with permanent legal access to public streets and to any parking required under local ordinances as a condition to such substitution;

(3) the Substitute Mortgaged Property shall be subject to the lien of the Deed of Trust, and subject to no other lien, charge or encumbrance except Permitted Encumbrances, as that term is defined in the Indenture, and title to the Substitute Mortgaged Property and the Remaining Mortgaged Property shall be insured by an ALTA Lender's policy of title insurance in the amount of the aggregate Outstanding principal amount of the 2006 Bonds and any Parity Debt and naming the Trustee as insured; and

(4) the Substituted Mortgaged Property shall have been subject to such environmental reviews as may have been reasonably requested in writing by the Trustee, as assignee of the Authority, and such reviews shall have been completed to the satisfaction of the Trustee; or

(B) pay the net proceeds of sale or other disposition of the Pledged Property then subject to the Deed of Trust to be released from the Deed of Trust to the Trustee:

(1) for deposit in the Bond Fund in accordance with the Indenture to the extent necessary to discharge all obligations of the Corporation under the Loan Agreement; or

(2) for deposit in an escrow account and release to a seller of the Substitute Mortgaged Property upon compliance with the requirements set forth in clauses (ii)(A)(l), (2), (3) and (4) above.

(iii) the Corporation shall pay (A) all costs of drafting, executing, recording and filing and (B) all other expenses and taxes (if any) applicable to or arising from any such release or exchange; and

(iv) the Corporation shall have obtained the consent of the Authority, to any such release or exchange, which consent will not be unreasonably withheld.

Notwithstanding anything to the contrary in the Loan Agreement, the Deed of Trust, the UCC-1 financing statements, amendments thereto, continuation statements, the execution of transfer instruments and control account agreements, any other security or collateral documents or any related documents or agreements, in the event of any conflict between the priorities in any collateral determined pursuant to the Deed of Trust and the priorities in such collateral determined pursuant to the Gross Revenue pledge, the priorities in such collateral determined pursuant to the Gross Revenue pledge shall govern in all cases except in respect of: (i) proceeds from the sale of the Pledged Property subject to such Deed of Trust (which shall in all cases be governed by the priority determined pursuant to the Deed of Trust); (ii) proceeds from the condemnation of the Pledged Property subject to such Deed of Trust (which shall in all cases be governed by the priority determined pursuant to the Deed of Trust); and (iii) proceeds from any casualty insurance or title insurance on such Pledged Property subject to such Deed of Trust (which shall in all cases be governed by the priority determined pursuant to the Deed of Trust).

The pledge of Gross Revenues and the Deed of Trust in favor of the 2006 Bonds shall be subject to release at such time as: (i) the 2006 Bonds shall have been awarded a rating of at least "A2" (or the equivalent thereof) by each Rating Agency then rating the 2006 Bonds; and (ii) no other series of bonds or Parity Debt shall be outstanding for which such pledge of Gross Revenues and Deed of Trust will not be simultaneously released; provided that (y) the Corporation shall have obtained the written consent of the Authority prior to anv such release and (z) an Opinion of Bond Counsel shall be delivered to the Trustee and the Authority to the effect that such release in the event of such rating is authorized under the Loan Agreement and the Indenture and will not, in and of itself, adversely affect the tax-exempt status of interest on the 2006 Bonds or any other Parity Debt.

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Prepayments. The Corporation may at any time prepay all or any part of the Base Loan Payments payable under the Loan Agreement, and the Authority agrees that the Trustee shall accept such prepayments when the same are tendered by the Corporation. All such prepayments shall be deposited in the Optional Redemption Account within the Bond Fund and credited against the Base Loan Payments in the order of their due date or, at the election of the Corporation exercised in a Request of the Corporation, used for the redemption of Outstanding 2006 Bonds of such maturities in the amounts and on the redemption dates specified in such Request; provided that the redemption date shall be such as to comply with the optional redemption provisions and the notice provisions of the Indenture. Notwithstanding any such prepayment, the Corporation shall not be relieved of its obligations under the Loan Agreement until all of the 2006 Bonds have been fully paid and retired (or provision for payment thereof shall have been made as provided in the defeasance provisions of the Indenture).

If the Corporation is not in default in the payment of any Base Loan Payments or Additional Payments, the Authority, at the request of the Corporation, at any time when the aggregate moneys in the Bond Fund established pursuant to the Indenture, including any prepayment deposited therein under the foregoing paragraph, are sufficient to effect redemption of all or part of the then Outstanding 2006 Bonds, and if such 2006 Bonds are then redeemable under the provisions of the Indenture, shall forthwith take all steps that may be necessary to effect such redemption in accordance with the Request of the Corporation. The Authority agrees that it will redeem the 2006 Bonds pursuant to the Indenture only pursuant to a Request of the Corporation.

In the event any portion of the Pledged Property is (i) taken from the Corporation by eminent domain, or (ii) damaged or destroyed, the Corporation shall transfer to the Trustee for deposit in the Optional Redemption Account within the Bond Fund, and the Trustee shall apply, the 2006 Bonds' allocable share of the proceeds of any condemnation award, or insurance received as a result of such taking or casualty, to the prepayment of Base Loan Payments and to the redemption of 2006 Bonds as provided in the Indenture; provided, that the Corporation need not transfer to the Trustee, and the Trustee need not apply, the amount of any such proceeds if (A) the Corporation delivers a Certificate of the Corporation to the Trustee to the effect that (1) the proceeds of such insurance or condemnation award, together with other moneys on hand and available to the Corporation for such purpose are sufficient to repair or replace the damaged, destroyed or condemned portion of the Pledged Property, (2) the Corporation will apply such moneys promptly to the replacement or repair of such portion of the Pledged Property and (3) during the period prior to completion of such repair or replacement, the Corporation's ability to generate Gross Revenues will not be materially adversely affected or (B) all of the following conditions are met:

(1) The Corporation obtains an appraisal that meets the requirements described above showing that the value of the Pledged Property then subject to the Deed of Trust after such condemnation or casualty is at least 100% of the aggregate Outstanding principal amount of the 2006 Bonds and any Parity Debt, less the amount credited to any permitted reserve;

(2) The Corporation obtains an Opinion of Bond Counsel, addressed to the Trustee and the Authority, to the effect that the failure to redeem the 2006 Bonds or any other Parity Debt and the acquisition of such assets will not, in and of themselves, adversely affect the tax-exempt status of interest on the 2006 Bonds or any other Parity Debt; and

(3) The Corporation delivers a Certificate of the Corporation to the Trustee and the Authority indicating that the loss of the portion of the Facilities damaged, destroyed or condemned will not materially adversely affect the operations or financial condition of the Corporation.

Investments. The Corporation, by a Request of the Corporation, may direct the investment by the Trustee of moneys in the funds and accounts established pursuant to the Indenture, subject to the limitations set forth therein. The Corporation covenants that it will not direct the Trustee to make any investments, and that the Corporation itself will not make any investments, of the proceeds of the 2006 Bonds or any other funds in any way pledged to the security of or reasonably expected to be used to pay the 2006 Bonds, that would cause any of the 2006 Bonds to be "arbitrage bonds" subject to federal income taxation by reason of Section 103(b)(2) of the Code. The Corporation shall not purchase any obligations of the Authority, pursuant to an arrangement, formal or informal, in an amount related to the amount of the

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loan made to the Corporation under the Loan Agreement. Nothing in this paragraph shall prohibit the Corporation from receiving 2006 Bonds by gift, bequest or devise or from purchasing 2006 Bonds m the secondary market other than pursuant to an arrangement related to the loan made pursuant to the Loan Agreement.

No Liability of the State or the Authority. The Corporation shall be solely responsible for the payment of the 2006 Bonds. Neither the State nor the Authority shall be obligated to pay the 2006 Bonds or the interest or premium thereon except from Revenues provided by the Corporation, and neither the faith and credit nor the taxing power of the State or of any political subdivision thereof shall be pledged to the payment of the principal of, the premium, if any, or the interest on the 2006 Bonds. The issuance of the 2006 Bonds shall not directly or indirectly or contingently obligate the State or any political subdivision thereof to levy or to pledge any form of taxation whatever therefor or to make any appropriation for their payment. Neither the members of the Authority nor any officer, agent or employee thereof nor any person executing the 2006 Bonds shall be liable personally on the 2006 Bonds or be subject to any personal liability or accountability by reason of the issuance thereof.

Maintenance of Corporate Existence; Consolidation, Merger, Sale or Transfer Under Certain Conditions. The Corporation agrees that during the term of the Loan Agreement and so long as any 2006 Bond is Outstanding, it will maintain its corporate existence, will not dissolve or otherwise dispose 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 Loan Agreements contained below, 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 the surviving, resulting or transferee corporation, as the case may be; or if the Corporation is not the surviving, resulting or transferee corporation, as the case may be, the surviving, resulting or transferee corporation (i) is a corporation organized under the laws of the United States or any state, district or territory thereof; (ii) is qualified to do business in the State; (iii) assumes in writing all of the obligations of the Corporation under the Loan Agreement; (iv) is not, after such transaction, otherwise in default under any provision of the Loan Agreement; and (v) is a "participating college" under the Act.

Notwithstanding the foregoing, as a condition precedent to any such 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 adversely affect the tax- exempt status of interest on the 2006 Bonds.

Notwithstanding any other provision of the Loan Agreement, the Corporation need not comply with any of the above provisions (other than the delivery of the Opinion of Bond Counsel referred to in the second paragraph) if, at the time of such transaction, all of the 2006 Bonds will be defeased.

The rights and obligations of the Corporation under the Loan Agreement may be assigned by the Corporation, in whole or in part; provided, however, that any assignment other than pursuant to the provisions of the Loan Agreement relating to the consolidation, merger, sale or transfer of the Corporation shall be subject to each of the following conditions:

(1) No such assignment shall relieve the Corporation from primary liability for any of its obligations under the Loan Agreement, and the Corporation shall continue to remain primarily liable for the payments specified in the Loan Agreement, and for performance and observance of the other agreements on its part therein provided to be performed and observed.

(2) Any such assignment from the Corporation shall retain for the Corporation such rights and interests as will permit it to perform its obligations under the Loan Agreement, and any assignee from the Corporation shall assume the obligations of the Corporation under the Loan Agreement to the extent of the interest assigned.

(3) The Corporation shall, within thirty (30) days after delivery thereof, furnish or cause to be furnished to the Authority and the Trustee a true and complete copy of every such assignment together with an instrument of assumption.

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(4) The Corporation shall cause to be delivered to the Authority and the Trustee an Opinion of Bond Counsel to the effect that such assignment will not, in and of itself, adversely affect the tax-exempt status of interest on the 2006 Bonds.

If a merger, consolidation, sale or other transfer is effected, the foregoing provisions shall continue in full force and effect and no further merger, consolidation, sale or transfer shall be effected except in accordance with such provisions.

Insurance. So long as any 2006 Bonds remain Outstanding, the Corporation will maintain or cause to be maintained with respect to the Facilities, with insurance companies or by means of self- insurance, insurance of such type, against such risks and in such amounts as are customarily carried by private colleges and universities located in tire State of a nature similar to that of the Corporation, which insurance shall include property damage, fire and extended coverage, public liability and property damage liability insurance. The insurance required under the Loan Agreement shall include (to the extent commercially available and economically practicable in the Corporation's discretion) earthquake and flood insurance in an amount equal to at least the lesser of the full replacement value of the Pledged Property or the aggregate principal amount of Outstanding 2006 Bonds, subject to reasonable deductibles. The Corporation shall at all times also maintain worker's compensation insurance as required by the laws of the State.

Financial Statements of the Corporation and Reporting of Other Information. The Corporation will furnish the following to the Authority, so long as any 2006 Bonds remain Outstanding:

(a) its financial statements as of the end of each of its fiscal years and for the year ended on such date, reported on as to fairness of presentation and conformity with generally accepted accounting principles by an independent public accountant selected by the Corporation, as soon as accepted by its Board of Trustees or the Finance Committee thereof, but in any event within 150 days after the end thereof, and to the Trustee copies of its audited financial statements as the Trustee shall reasonably request;

(b) on such date as the audited financial statements are furnished pursuant to paragraph (a), a Certificate of the Corporation;

(c) as soon as possible and in any event within thirty (30) days after the Corporation knows or has reason to know the PBGC (as that term is defined in the Loan Agreement) or the Corporation has instituted or will institute proceedings under Title IV of ERISA to terminate any ERISA Plan, a certificate of the chief financial officer of the Corporation setting forth details as to such Reportable Event and the action which the Corporation proposes to take with respect thereto, together with a copy of any notice of such Reportable Event which may be required to be filed with the PBGC, or any notice delivered by the PBGC evidencing its intent to institute such proceedings or any notice to the PBGC that any ERISA Plan is to be terminated, as the case may be. For all purposes of this covenant, the Corporation will be deemed to have all knowledge or knowledge of all facts attributable to the ERISA Plan administrator under such Title. The Corporation will furnish the Authority (or cause the ERISA Plan administrator to furnish the Authority) with the annual report for each ERISA Plan covered by Title IV and filed with the PBGC not later than 10 days after such report has been filed with the PBGC, to the extent the Corporation is required to file such report; and

(d) promptly upon the request of the Authority or the Trustee, such other information regarding the financial position, results of operations, business or prospects of the Corporation as such party may reasonably request from time to time.

Right of Access to and Inspections of the Facilities. The Corporation agrees that during the term of the Loan Agreement, and, to the extent within its control, for so long as the Corporation owns or operates the Facilities, the Authority and the Trustee and the duly authorized agents of any of them shall have the right (but not the duty) at all reasonable times during normal business hours to enter upon the site of the Facilities to examine and inspect the Facilities; provided, however, that this right is subject to federal and State laws and regulations applicable to the site of the Facilities; and provided further that the Corporation reserves the right to restrict access to the Facilities in accordance with reasonably adopted

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procedures relating to safety and security. The rights of access and inspection reserved to the Authority and the Trustee, and their respective authorized agents may be exercised only after the party seeking such access shall have given at least one week advance notice and executed release of liability (which release shall not limit any of the Corporation's obligations under the Loan Agreement) or confidentiality agreements if requested by the Corporation in the form then currently used by the Corporation.

Tax Covenants. It is the intention of the parties to the Loan Agreement that interest on the 2006 Bonds shall be and remain tax-exempt, and to that end the covenants and agreements of the Authority and the Corporation in the Loan Agreement and the Tax Certificate are for the benefit of the Trustee, the Authority and each and every person who at any time will be a Holder of the 2006 Bonds.

Each of the Corporation and the Authority covenants and agrees that it will not directly or indirectly use or permit the use of any proceeds of the 2006 Bonds or other funds, or take or omit to take any action that will cause any 2006 Bond to be an "arbitrage bond" within the meaning of Section 148 of the Code. Each of the Corporation and the Authority further covenants and agrees that it will not direct the Trustee to invest any funds held by it under the Indenture or the Loan Agreement, in such manner as would, or enter into or allow any related person to enter into any arrangement (formal or informal) that would, cause any 2006 Bond to be an "arbitrage bond" within the meaning of Section 148(a) of the Code. To such ends with respect to the 2006 Bonds, the Authority and the Corporation will comply with all requirements of Section 148 of the Code to the extent applicable to the 2006 Bonds. In the event that at any time the Authority or the Corporation is of the opinion that it is necessary to restrict or limit the yield on the investment of any moneys held by the Trustee under the Loan Agreement or the Indenture, the Authority or the Corporation shall so notify the Trustee in writing.

Without limiting the generality of the foregoing, the Corporation and the Authority agree that the Corporation will pay from time to time all amounts required to be rebated to the United States pursuant to Section 148(f) of the Code and any applicable Treasury Regulations. This covenant shall survive payment in full or defeasance of the 2006 Bonds. The Corporation specifically covenants to calculate or cause to be calculated and to pay or cause to be paid for and on behalf of the Authority to the United States at the times and in the amounts determined under the Indenture the Rebate Requirement as described in the Tax Certificate.

The Authority certifies, represents and agrees that it has not taken, and will not take, any action which will cause interest paid on the 2006 Bonds to become includable in gross income of the Holders of the 2006 Bonds for federal income tax purposes pursuant to Sections 103 and 141 through 150 of the Code; and the Corporation certifies and represents that it has not taken or, to the extent within its control, permitted to be taken, and the Corporation covenants and agrees that it will not take or, to the extent within its control, permit to be taken anv action which will cause the interest on the 2006 Bonds to become includable in gross income of the Holders of the 2006 Bonds for federal income tax purposes pursuant to the provisions of Article XIII of the Tax Reform Act of 1986; provided that neither the Corporation nor the Authority shall have violated these covenants if the interest on any of the 2006 Bonds becomes taxable to a person solely because such person is a "substantial user" of the financed facilities or a "related person" within the meaning of Section 147(a) of the Code; and provided, further, that none of the covenants and agreements contained in the Loan Agreement shall require either the Corporation or the Authority to enter an appearance or intervene in any administrative, legislative or judicial proceeding in connection with anv changes in applicable laws, rules or regulations or in connection with any decisions of any court or administrative agency or other governmental body affecting the taxation of interest on the 2006 Bonds. The Corporation acknowledges having read the Indenture and agrees to perform all duties imposed on it by the Indenture, the Loan Agreement and the Tax Certificate. Insofar as die Indenture and the Tax Certificate impose duties and responsibilities on the Corporation, they are specifically incorporated in the Loan Agreement by reference.

Notwithstanding any provision of the Loan Agreement and of the Indenture, if the Corporation shall provide to the Authority and the Trustee an Opinion of Bond Counsel that any specified action required under the Loan Agreement, the Indenture or the Tax Certificate is no longer required or that some further or different action is required to maintain the tax-exempt status of interest on the 2006 Bonds, the Corporation, the Trustee and the Authority may conclusively rely on such opinion in complying with any such requirements, and the covenants under the Loan Agreement shall be deemed to be modified to that extent.

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Other Covenants of the Corporation. The Corporation covenants as follows so long as any 2006 Bonds are Outstanding:

Maintenance. Operation and Use of the 2006 Project and the Facilities. The Corporation will use commercially reasonable efforts to cause the 2006 Project to be maintained in good condition and repair, will maintain, operate and use the 2006 Project, during the useful life thereof, as an integral part of the Facilities and will not alienate, sell, convey or transfer the 2006 Project unless it provides to the Trustee and the Authority an Opinion of Bond Counsel to the effect that such alienation, sale, conveyance or transfer will not adversely affect the tax-exempt status of interest on the 2006 Bonds.

The Corporation will operate the Facilities as an educational institution, maintain the Facilities in good repair, working order and condition to achieve this function and otherwise to meet the covenants and obligations contained in the Loan Agreement and honor all valid restrictions on the uses to which the Facilities may be subject so long as any 2006 Bonds are Outstanding and the Facilities are owned or operated by the Corporation or any distributee upon dissolution or any voluntary grantee of the Corporation.

Compliance with Laws. The Corporation agrees that it will at all times comply with, or cause to be complied with, all laws, statutes, rules, regulations, orders and directions of any governmental authority having jurisdiction over the Corporation or its business if a violation of any such law, statute, rule, regulation, order, or direction would materially and adversely affect the 2006 Project, except where contested in good faith and by proper proceedings.

ERISA. The Corporation will not, with respect to any F.RISA Plan:

(1) incur any "accumulated funding deficiency," as such term is defined in Section 412 of the Code, whether or not waived, if the amount of such accumulated funding deficiency, plus any accumulated funding deficiencies previously incurred with respect to such ERTSA Plan and not eliminated, would aggregate more than $100,000; provided that the incurring of such an accumulated funding deficiency will not be an "event of default" under the l oan Agreement if it is reduced below $100,000 or eliminated within 90 days after the date upon which the Corporation becomes aware of such accumulated funding deficiency; or

(2) terminate any ERISA Plan subject to Title IV of ERISA in a manner which could result in the imposition of a material lien on the property of the Corporation pursuant to Section 4068 of ERISA and which could reasonably be expected to materially adversely affect the business, earnings, properties or financial condition of the Corporation; or

(3) withdraw from a Multiemployer Plan in a "complete withdrawal" or a "partial withdrawal" as defined in Sections 4203(a) and 4205(a), respectively, of ERISA, if such withdrawal could reasonably be expected to materially adversely affect the Corporation's ability to comply at any time with any of the provisions of the Loan Agreement.

The Corporation shall:

(1) fund all current and past service pension liabilities under the provisions of all ERISA Plans subject to Title IV of ERISA such that if all such ERISA Plans were terminated at the same time by the Corporation any liens imposed on the Corporation under Section 4068 of ERISA would not be in an amount in the aggregate which would materially affect the Corporation's ability to comply at any time with any of die provisions of the Loan Agreement; and

(2) otherwise comply in all respects with the provisions applicable to its ERISA Plans contained in ERISA, the Code and the regulations published thereunder except for any noncompliance that could not reasonably be expected to affect the Corporation’s ability to comply at anytime with any provision of the Loan Agreement; and

(3) notify the Trustee and the Authority promptly after the Corporation knows or has reason to know (i) of the happening of any material Reportable Event with respect to any ERISA Plan subject to

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Title IV of ERISA and, in any event, at least five days prior to any notification of such material Reportable Event given to the PBGC pursuant to the terms of Section 4043 of ERISA or (ii) of an assessment against the Corporation or any Common Control Entity of any withdrawal liability to a Multiemployer Plan. Notwithstanding anything to the contrary in the Loan Agreement, the Corporation need not notify the Trustee or the Authority of such material Reportable Event or withdrawal liability unless it might materially adversely affect the business, prospects, earnings, properties or condition (financial or otherwise) of the Corporation.

For purposes of the above paragraph, the following terms shall have the following meanings. The term "Multiemplover Plan" has the meaning set forth in Section 4001(a)(3) of ERISA and all rules and regulations promulgated from time to time thereunder. The term "Common Control Entity" means any entity which is a member of a "controlled group of corporations" with, or is under "common control" with, the Corporation as defined in Section 414(b) or (c) of the Code. The term "PBGC" means the Pension Benefit Guaranty Corporation.

Taxes. Assessments. Other Governmental Charges and Utility Charges. For so long as the Facilities are in operation, the Corporation agrees that as between the Authority and the Corporation, the Corporation will pay or cause to be paid during the term of the Loan Agreement all taxes, governmental charges of any kind lawfully assessed or levied upon the Facilities or any part thereof, including any 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 body for public improvements that may be secured by a lien on the Facilities, provided that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the Corporation, to the extent described above, shall be obligated under the Loan Agreement to pay only such installments as are required to be paid during the term of the Loan Agreement. The Corporation may, at the Corporation's expense and in the Corporation's name, in good faith, contest any such taxes, assessments and other charges and, in the event of any such 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 to loss or forfeiture.

Accreditation. The Corporation will maintain its accreditation by WASC or its successor as a body that accredits colleges or, if none, another nationally recognized body or bodies that accredit such colleges. The Corporation covenants to provide to the Authority and the Trustee, within thirty (30) days of receipt thereof, copies of any letter in which the accrediting agency places the Corporation on probation, issues a warning to the Corporation or indicates that the Corporation's accreditation is being revoked.

Deed of Trust. The Corporation covenants to execute and deliver the Deed of Trust on the date of the initial issuance of the 2006 Bonds, as security for its obligations to the Authority under the Loan Agreement. During the term of the Loan Agreement, the Corporation shall not sell or otherwise encumber or alienate the Pledged Property, except for Permitted Encumbrances, without the prior written consent of the Authority or except as otherwise permitted in the Loan Agreement or in the Deed of Trust.

Notice of Event of Default. The Corporation will furnish, as soon as practicable and in any event within ten (10) days after it has knowledge thereof, to the Authority and the Trustee notice of any event which constitutes, or which with the giving of notice or the passage of time or both would constitute, an event of default under the Loan Agreement, which notice shall set forth the nature of such event and the action which the Corporation proposes to take with respect thereto.

Continuing Disclosure. So long as any of the 2006 Bonds are Outstanding, the Corporation covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement. Notwithstanding any other provision of the Loan Agreement, failure of the Corporation to comply with the Continuing Disclosure Agreement shall not be considered an event of default under the Loan Agreement and the Trustee shall have no right to accelerate any of the installments of the Base Loan Payments or principal and interest on the 2006 Bonds as a result thereof; however, the Trustee at the written request of E.J. De La Rosa & Co., Inc., or the Holders of at least 25% in aggregate principal amount of Outstanding 2006 Bonds shall (but only to the extent the Trustee has been

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tendered funds in an amount satisfactory to it or it has been otherwise indemnified from and against any loss, liability, cost or expense, including without limitation, fees and expense of its counsel and agents and additional fees and charges of the Trustee) or any Bondholder or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking specific performance by court order, to cause the Corporation to comply with such obligations. For purposes of this paragraph, "Beneficial Owner" means any person that (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any 2006 Bonds (including persons holding 2006 Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any 2006 Bonds for federal income tax purposes.

Construction Progress Reports. The Corporation agrees to provide to the Authority such information concerning the 2006 Project and the construction and equipping thereof as may be reasonably requested by the Authority, including but not limited to a quarterly status report. Such report shall be delivered to the Authority on or before the thirtieth (30th) day following the last day of each fiscal quarter during the construction period.

As soon as the acquisition, installation, construction, renovation, rehabilitation and equipping of the 2006 Project is completed, an Authorized Representative of the Corporation shall evidence the completion date by providing a Certificate of the Corporation to that effect to the Trustee and the Authority stating the final costs of the 2006 Project. Notwithstanding the foregoing, such Certificate of the Corporation 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 not then due and payable which exists at the date of such certificate or which may subsequently exist.

At the time such Certificate of the Corporation is delivered to the Trustee, moneys remaining in the Construction Fund (other than moneys relating to provisional payments as described above and in the Construction Fund provisions of the Indenture), including any earnings resulting from the investment of such moneys, shall be used as provided in the construction fund, provisions of the Indenture.

Qualification in California. The Corporation agrees that throughout the term of the Loan Agreement it, or any successor or assignee will be qualified to do business in the State.

Liquidity. The Corporation covenants that the ratio of the market value of Liquid Assets to Long- Term Indebtedness at fiscal year-end will not be less than .25 times as evidenced by its audited financial statements.

(1) For purposes of this section, the term "Long-Term Indebtedness" shall mean the following:

(A) all indebtedness and other obligations of the Corporation for borrowed money or for the payment of rent pursuant to any lease of or agreement to lease real property having an original term of more than one year, if such lease or agreement is required to he capitalized in accordance with generally accepted accounting principles;

(B) all indebtedness and other obligations of the sort generally described in clause (A) of this definition of all other persons the payment or collection of which the Corporation has guaranteed (except by reason of endorsement for collection in the ordinary course of business) or in respect of which such person is liable contingently or otherwise, including, without limitation, liable by way of an agreement to purchase, to provide funds for payment, to supply funds to or otherwise invest in such other person, or otherwise to assure a creditor against loss; and

(C) all indebtedness and other obligations of the sort generally described in clause (A) of this definition of all other persons (or for which the holder of such indebtedness has a then existing right, contingent or otherwise) to be secured by any mortgage, deed of trust, pledge, lien, security interest or other charge or encumbrance upon or in property owned by the Corporation, whether or not the Corporation has assumed or become liable for the payment of such indebtedness or obligation;

(D) provided that the term "Long-Term Indebtedness" shall not include:

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(i) indebtedness having an original stated maturity less than or equal to one year and not renewable or extendable at the option of the debtor for a term greater than one year beyond the date of original issuance or incurrence; provided, that if such indebtedness is so extendable or renewable at the option of the debtor, it nonetheless shall not be "Long Term Indebtedness" if it is required by the applicable governing documents that such indebtedness not be outstanding for a period of at least 30 consecutive calendar days in each fiscal or calendar year; and

(ii) student loan funds notes payable.

(iii) For purposes of this Section, the term "Liquid Assets" means cash, cash equivalents (unrestricted), stocks, bonds, debentures and other debt obligations or equity instruments which are regularly traded on a nationally recognized exchange, including, but not limited to, the New York Stock Exchange, the American Stock Exchange, Over- the Counter and NASDAQ, or interests in funds which invest only in the foregoing.

Debt Service Coverage Ratio. The Corporation covenants that the ratio of its Revenues at fiscal year-end to the total principal, interest or other payments with respect to its Long-Term Indebtedness in any one year shall be equal to or greater than 1.20 times.

For purposes of this Section, the term "Revenues" shall mean the excess of Unrestricted Revenues over Expenses, plus interest expense and plus depreciation as determined by reference to generally accepted accounting principals for colleges and universities but excluding in any event any gains or losses on any extinguishment of debt.

The Corporation further covenants and agrees that if this computation indicates that the Debt Service Coverage Ratio for such fiscal year shall be less than the required amount, it will promptly employ a Management Consultant to make recommendations as to a revision of the rates, fees and charges of the Corporation or the methods of operation of the Corporation which will result in producing the required Debt Service Coverage Ratio in the next fiscal year. Copies of the recommendations of the Management Consultant shall be filed with the Trustee and the Authority. The Corporation shall, promptly upon its receipt of such recommendations, subject to applicable requirements or restrictions imposed by law, and subject to a good faith determination of its Board of Trustees that such recommendations, in whole or in part, are in the best interests of the Corporation, revise its rates, fees and charges or its methods of operation or collections and shall take such other action as shall be in conformity with such recommendations. If the Corporation determines not to comply with such recommendations, it shall file with the Trustee and Authority a certified copy of a resolution of the Board of Trustees of the Corporation determining not to comply with such recommendations and stating in reasonable detail the reasons therefor. In the event that the Corporation fails to comply with the recommendations of the Management Consultant, subject to the applicable requirements or restrictions imposed by law and to the determination of the Board of Trustees that such recommendations are not in the best interests of the Corporation, the Authority may or may direct the Trustee to, in addition to the rights and remedies elsewhere set forth herein, institute and prosecute an action or proceeding in any court or before any board or commission having jurisdiction to compel the Corporation to comply with the recommendations and requirements of this subsection. If the Corporation complies in all material respects with the reasonable recommendations of the Management Consultant in respect to said rates, fees, charges and methods of operation or collection, the Corporation will be deemed to have complied with the covenants contained in this Section for such fiscal year notwithstanding that the Debt Service Coverage Ratio shall be less than the amount required under this Section; provided, that this sentence shall not be construed as in any way excusing the Corporation from taking any action or performing any duty required under this Loan Agreement or be construed as constituting a waiver of any other Loan Default Event.

Events of Default. Any one of the following which occurs and is continuing shall constitute an "Event of Default" under the Loan Agreement and Loan Default Events under the Indenture:

(a) The Corporation fails to make any Base Loan Payment or Additional Payment by its due date and, in the case of a failure to make any Additional Payment, such failure continues for two (2) Business Days after such due date; or

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(b) The Corporation fails to observe and perform any covenant, condition or agreement on its part to be observed or performed under the Loan Agreement other than as referred to in paragraph (a) above for a period of thirty (30) days after written notice specifying such failure and requesting that it be remedied is given to the Corporation by the Authority or the Trustee; provided, however, if the failure stated in the notice is correctable but cannot be corrected within the applicable period, the Authority will not unreasonably withhold its consent to an extension of such time if corrective action is instituted by the Corporation within the applicable period and diligently pursued until the default is corrected; or

(c) The Corporation fails to make any payments with respect to Parity Debt by its due date and, in the case of a failure to make any Additional Payment with respect to Parity Debt, such failure continues for two (2) Business Days after such due date; or

(d) The Corporation fails to observe and perform any covenant, condition or agreement on its part to be observed or performed under any loan or similar agreement with respect to Parity Debt other than as referred to in paragraph (c) above for a period of thirty (30) days after written notice specifying such failure and requesting that it be remedied is given to the Corporation by the Authority or the Trustee; provided, however, if the failure stated in the notice is correctable but cannot be corrected within the applicable period, the Authority will not unreasonably withhold its consent to an extension of such time if corrective action is instituted by the Corporation within the applicable period and diligently pursued until the default is corrected; or

(e) Any of the representations or warranties of the Corporation made in the Loan Agreement or in any other document, certificate or writing furnished by the Corporation to the Authority in connection with the application for or the negotiation of the Loan Agreement or the issuance of the 2006 Bonds was false or incorrect in any material respect when made; or

(f) There is an unexcused default by the Corporation under any agreement or instrument to which it is a party relating to the borrowing of money either (1) in failing to pay any installment of principal or interest in an aggregate amount of $250,000 or more, which default shall not have been waived or excused within 90 days after the Corporation received notice of such default or (2) as a result of which indebtedness in an amount of $1,000,000 or more shall have been accelerated and declared to be due and payable prior to its date of maturity; or

(g) The Corporation applies for or consents to the appointment of any receiver, trustee, or similar officer for it or for all or any substantial part of its property or admits in writing its inability to pay its debts as they mature; or such a receiver, trustee or similar officer is appointed without the application or consent of the Corporation and such appointment continues undischarged for a period of sixty (60) days; or the Corporation institutes (by petition, application, answer, consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding relating to it under the laws of any jurisdiction; or any such proceeding is instituted (by petition, application or otherwise) against the Corporation and remains undismissed for a period of sixty (60) days; or the Corporation makes a general assignment for the benefit of creditors.

The provisions of (b) or (d) are subject to the limitation that the Corporation shall not be deemed in default with respect to any covenant, condition or agreement to be observed or performed by the Corporation under the Loan Agreement, other than a covenant or agreement to make any payment required to be made by the Corporation under the Loan Agreement, if and so long as the Corporation is unable to carry out its agreements under the Loan Agreement by reason of strikes, lockouts or other industrial disturbances; acts of public enemies; 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; civil disturbances; 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 the settlement of strikes, lockouts and other industrial disturbances of the Corporation shall be entirely within the discretion of the Corporation, and the Corporation shall not be required to make settlement of strikes, lockouts and other industrial disturbances by acceding to the demands of the opposing party or parties

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when such course is, in the judgment of the Corporation, unfavorable to the Corporation. This limitation shall not apply to any default under fa), fc), fe), (f) or (g) above.

Remedies on Default. In the event any of the 2006 Bonds shall at the time be Outstanding and unpaid (and provision for the payment thereof shall not have been made as provided in the Indenture) and any event of default referred to in the Loan Agreement shall have happened and be continuing the Authority or the Trustee may take any one or more of the following remedial steps:

fl) The Authority or the Trustee may, at its option, declare all installments of Base Loan Payments payable for the remainder of the term of the Loan Agreement to be immediately due and payable, whereupon the same shall become immediately due and payable.

(2) The Authority or the Trustee may take whatever action at law or in equity may appear necessary or desirable to’collect the payments then due and thereafter to become due under the Loan Agreement, whether on the stated due date or by declaration of acceleration or otherwise, for damages or for specific performance or otherwise to enforce performance and observance of any obligation, condition or covenant of the Corporation under the Loan Agreement.

The term "all installments" shall mean an amount equal to the entire principal amount of the then Outstanding 2006 Bonds, together with all interest accrued or to accrue on and prior to the next succeeding redemption date or dates on which the 2006 Bonds can be and actually are redeemed after giving notice to the Holders thereof as required by the Indenture (less moneys available for such purpose then held by the Trustee) plus any other payments due or to become due under the Loan Agreement, including, without limitation, any unpaid fees and expenses of the Authority, the Trustee and any paying agents of the 2006 Bonds which are then due or will become due prior to the time that the 2006 Bonds are paid in full and the trust established by the Indenture is terminated.

No remedy conferred upon or reserved to the Authority or the Trustee in the Loan Agreement is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under the Loan Agreement or now or hereafter existing at law or in equity or by statute. No delay in exercising or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but anv such right or power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority or the Trustee to exercise any remedy reserved to it, it shall not be necessary to give any notice, other than such notice as may be expressly required in the Loan Agreement. The Trustee shall be deemed a third party beneficiary of all covenants and conditions contained in the Loan Agreement.

In the event the Corporation should default under any of the provisions of the Loan Agreement and the Authority or the Trustee should employ attorneys or incur other expenses for the collection of the payments due under the Loan Agreement or the enforcement of performance or observance of any obligation or agreement on the part of the Corporation contained in the Loan Agreement, the Corporation agrees that it will on demand therefor pay to the Authority or the Trustee the reasonable fee of such attorneys and such other reasonable expenses so incurred by the Authority or the Trustee.

Expenses; Indemnification. The Corporation covenants and agrees to pay the Authority and the Trustee all reasonable costs and charges, including fees and disbursements of attorneys, accountants, consultants and other experts, incurred in good faith in connection with the Loan Agreement, any 2006 Bonds, the Continuing Disclosure Agreement, the Tax Certificate, the Deed of Trust or the Indenture.

The Corporation agrees to indemnify and hold harmless the Authority and the Trustee, and the officers, members, directors, employees and agents of each (each an "Indemnified Party") from and against any and all losses, claims, damages, liabilities or expenses of every conceivable kind, character and nature whatsoever, including, but not limited to, losses, claims, damages, liabilities or expenses to the extent arising out of, resulting from or in any way connected with (1) the 2006 Project; or (2) the sale of any 2006 Bonds and the carrying out of any of the transactions contemplated by the 2006 Bonds, the Official Statement pertaining thereto (other than the information therein under the headings "THE AUTHORITY" and "LITIGATION" (solely as it relates to the Authority) and the provisions regarding DTC and the book-entry only system), the Indenture, the Continuing Disclosure Agreement, the Tax

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Certificate, the Deed of Trust or the Loan Agreement; provided that such indemnification shall not apply to losses, claims, damages, liabilities or expenses resulting because of the negligence or willful default of any Indemnified Party- The Corporation further agrees to pay or to reimburse such Indemnified Parties for any and all reasonable costs, reasonable attorneys fees, reasonable liabilities or reasonable expenses incurred in connection with investigating, defending against or otherwise in connection with any such losses, claims, damages, liabilities, expenses or actions (other than losses, claims, damages, liabilities, expenses or actions resulting because of such Indemnified Party’s negligence or willful default).

Promptly after receipt by an Indemnified Party of notice of the commencement of any action, such Indemnified Party shall, if a claim in respect thereof is to be made against the Corporation, notify the Corporation in writing of the commencement thereof. In case any such action shall be brought against any Indemnified Party, and such Indemnified Party shall notify the Corporation of the commencement thereof, the Corporation shall be entitled to participate in and, to the extent that it wishes, to assume the defense thereof, with counsel reasonably satisfactory to such Indemnified Party, and after notice from the Corporation to such Indemnified Party of its election so to assume the defense thereof, such Indemnified Party shall cooperate with respect thereto and the Corporation shall not be liable to such Indemnified Party for any legal or other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof other than reasonable costs of any investigation; provided, however, that if the named parties to any such action (including any impleaded parties) include the Indemnified Party and the Corporation, and the Indemnified Party reasonably concludes that representation of such Indemnified Party and the Corporation by the same counsel would be inappropriate (whether or not such representation by the same counsel has been proposed) under applicable standards of professional conduct due to actual or potential differing interests between them, the Indemnified Party shall have the right to select separate counsel reasonably satisfactory to the Corporation to assume such legal defense and to otherwise participate in the defense of such action on behalf of the Indemnified Party; provided, further, however, that the Corporation shall not, in connection with any one such action or separate but substantially similar or related actions arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys at any point in time for the Indemnified Party. The Corporation shall not be liable for any settlement of any such action effected without its prior written consent, but if settled with the prior written consent of the Corporation or if there is a final judgment for the plaintiff in any such action for which indemnity is given under the Loan Agreement, the Corporation will indemnify and hold such Indemnified Party harmless from and against anv loss or liability by reason of such settlement or judgment. Such indemnification provisions shall survive termination of the other provisions of the Loan Agreement.

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APPENDIX D

FORM OF OPINION OF BOND COUNSEL

Upon the delivery of the Bonds, Squire, Sanders & Dempsey L.L.P., Bond Counsel, proposes to issue its approving opinion in substantially the following form:

[Closing Date]

California Educational Facilities Authority 915 Capitol Mall, Suite 590 Sacramento, California 95814

California Educational Facilities Authority Revenue Bonds (Woodbury University) Series 2006

Ladies and Gentlemen:

We have acted as Bond Counsel in connection with the issuance by the California Educational Facilities Authority (the "Authority") of $19,995,000 in aggregate principal amount of California Educational Facilities Authority Revenue Bonds (Woodbury University) Series 2006 (the "Bonds") dated the date hereof. The Bonds are issued pursuant to the provisions of the California Educational Facilities Authority Act (constituting Chapter 2, commencing with Section 94100, of Part 59 of Division 10 of Title 3 of the Education Code of the State of California, as amended), and an Indenture, dated as of January 1, 2006 (the "Indenture"), by and between the Authority and Wells Fargo 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 Woodbury University (the "University") pursuant to a loan agreement, dated as of January 1, 2006 (the "Loan Agreement"), between the Authority and the University. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Indenture.

In our capacity as Bond Counsel, we have reviewed the Indenture, the Loan Agreement between the Authority and the University, the Tax Compliance Certificate dated the date hereof (the "Tax Certificate"), opinions of counsel to the Authority, the University and the Trustee, certificates of the Authority, the University, the Trustee and others as to certain factual matters, and such other certificates, documents, opinions and matters to the extent we have deemed necessary to render the opinions expressed herein.

In particular, we have relied upon the opinion of Musick Peeler & Garrett LLP, as counsel for the University regarding, among other matters, the current legal status of the University as an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), and a determination that the use of the facilities financed with the proceeds of the Bonds do not constitute "unrelated trade or business" activities as determined by applying Section 513(a) of the Code. We note that such opinion is subject to a number of qualifications and limitations. Failure of the University to be organized and operated in accordance with the Internal Revenue Service's requirements for the maintenance of its status as an organization described in Section 501(c)(3) of the Code, or use of the Bond-financed facilities in activities that are considered unrelated trade or business activities of the University within the meaning of Section 513 of the Code, may cause the interest on the Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds.

The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions, cover certain matters not directly addressed by such authorities and speak only as of the date hereof. 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 matters come to our attention after

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the date hereof. Our engagement with respect to the Bonds is concluded with their issuance on this date and we disclaim any obligation to update this opinion.

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 to verify, the accuracy of the factual matters represented, warranted or certified in the documents, and the correctness of the legal conclusions contained in the opinions, referred to in the second and third paragraphs hereof. Furthermore, we have relied upon the accuracy, which we have not independently verified, of the representations and certifications, and have assumed continuing compliance with all covenants and agreements contained in the Indenture, the Loan Agreement and the Tax Certificate, including (without limitation) covenants and agreements compliance 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. The accuracy of certain of those representations and certifications, and continuing compliance by the Authority and the University with certain of those covenants and agreements, are necessary for interest on the Bonds to be and to remain excluded from gross income for federal income tax purposes.

We call attention to the fact that the rights and obligations under the Bonds, the Indenture, the Loan Agreement and the Tax Certificate 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 discretion in appropriate cases and to the limitations on legal remedies against public entities in the State of California. We express no opinion with respect to any indemnification, contribution, penalty, choice of law, choice of forum or waiver provisions contained in the foregoing documents. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or any other offering materials relating to the Bonds and express no opinion herein relating thereto.

Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following 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, including proceeds of the sale of the Bonds held by the Trustee in any fund or account established pursuant to the Indenture, except the Rebate Fund, subject to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Indenture. The Indenture also creates a valid assignment to the Trustee, for the benefit of the holders from time to time of the Bonds, of the right, title and interest of the Authority in the Loan Agreement (to the extent more particularly described in the Indenture).

3. The Loan Agreement has been duly executed and delivered by, and constitutes a valid and binding agreement of, the Authority.

4. The Bonds are not a charge or lien on the funds or property of the Authority except to the extent of the aforementioned pledge and assignment. Neither the State of California nor any political subdivision thereof (other than the Authority to the extent provided in the Indenture) shall be obligated to pay the Bonds, and neither the faith and credit nor the taxing power of the State of California or any political subdivision thereof is pledged to the payment of the Bonds.

5. Interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Code and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations and is exempt from State of California personal income taxes. We express no opinion as to any other tax consequences regarding the Bonds.

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A portion of the interest on the Bonds earned by certain corporations may be subject to a federal corporate alternative minimum tax, and interest on Bonds may be subject to a federal branch profits tax imposed on certain foreign corporations doing business in the United States and a federal tax imposed on excess net passive income of certain S corporations.

Respectfully submitted,

Squire, Sanders & Dempsey L.L.P.

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APPENDIX E

BOOK-ENTRY ONLY SYSTEM

THE INFORMATION HEREIN CONCERNING DTC AND DTC'S BOOK-ENTRY SYSTEM HAS BEEN OBTAINED FROM SOURCES THAT THE AUTHORITY, THE UNIVERSITY, THE TRUSTEE AND UNDERWRITER BELIEVE TO BE RELIABLE, BUT THE AUTHORITY, THE UNIVERSITY, THE TRUSTEE AND THE UNDERWRITER TAKE NO RESPONSIBILITY FOR THE ACCURACY THEREOF. THE BENEFICIAL OWNERS SHOULD CONFIRM THE FOLLOWING INFORMATION WITH DTC OR THE DTC PARTICIPANTS {AS DEFINED HEREIN).

DTC will act as securities depository for the Bonds. The Bonds will be issued as fully- registered bonds registered in the name of Cede & Co. (DTC's partnership nominee). One fully- registered Bond will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC.

DTC is a limited-purpose trust company organized under the New York Banking Law, a "'banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds securities that its Participants (the "Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The Rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission.

Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except if use of the book-entry system for the Bonds is discontinued.

To facilitate subsequent transfers, all Bonds deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Bonds with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership.

DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such securities are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants and by Direct Participants and Indirect Participants to Beneficial Owners, will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

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

Neither DTC nor Cede & Co. will consent or vote with respect to the Bonds. Under its usual procedures, DTC mails an Omnibus Proxy to an issuer as soon as possible after the Record Date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the Record Date (identified in a listing attached to the Omnibus Proxy).

Principal and interest payments on the Bonds will be made to DTC. DTC's practice is to credit Direct Participants' accounts on payment dates in accordance with their respective holdings shown on DTC's records unless DTC has' reason to believe that it will not receive payment on the date payable. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Trustee or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the Authority or the Trustee, disbursement of such payments to Direct Participants shall be the responsibility of DTC and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants.

The Authority cannot and does not give any assurances that DTC, DTC Participants or others will distribute payments of principal, interest or premium with respect to the Bonds paid to DTC or its nominee as the registered owner, or will distribute any redemption notices or other notices, to the Beneficial Owners, or that they will do so on a timely basis or will serve and act in the manner described in this Official Statement. The Authority is not responsible or liable for the failure of DTC or any DTC Participant to make any payment or give any notice to a Beneficial Owner with respect to the Bonds or any error or delay relating thereto.

The foregoing description of the procedures and record-keeping with respect to beneficial ownership interests in the Bonds, payment of principal, interest and other payments on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interests in such Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be.

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APPENDIX F

PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT

This CONTINUING DISCLOSURE AGREEMENT (the "Disclosure Agreement") is executed and delivered by WOODBURY UNIVERSITY (the "University"), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as trustee and as dissemination agent (the "Trustee" and "Dissemination Agent"), in connection with the issuance of $19,995,000 California Educational Facilities Authority Revenue Bonds (Woodbury University) Series 2006 (the "Bonds"). The Bonds are being issued pursuant to that certain Indenture, dated as of January 1, 2006 (the "Indenture"), by and between the California Educational Facilities Authority (the "Authority") and Wells Fargo Bank, National Association, as trustee (the "Trustee"). The proceeds of the Bonds are being loaned by the Authority to the University pursuant to a Loan Agreement, dated as of January 1, 2006, between the Authority and the University (the "Loan Agreement"). Pursuant to Section 6.10 of the Indenture and Section 16(g) of the Loan Agreement, the University and the Trustee covenant and agree as follows:

Section 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the University and the Trustee for the benefit of the. holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule (defined below). The University and the Trustee acknowledge that the Authority has undertaken no responsibility with respect to any reports, notices or disclosures provided or required under this Agreement, and has no liability to any person, including any holder or beneficial owner of the Bonds, with respect to the Rule.

Section 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Agreement, unless otherwise defined, the following capitalized terms shall have the following meanings:

"Annual Report" shall mean any Annual Report provided by the University pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.

"Disseminatioti Agent” shall mean Wells Fargo Bank, National Association, or any successor Dissemination Agent designated in writing by the University and which has filed with the University and the Trustee a written acceptance of such designation.

"Listed Extents" shall moan any of the events listed in Section 5(a) of this Disclosure Agreement.

"National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule.

"Participating Underwriter” shall mean the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds.

"Repository" shall mean each National Repository and each State Repository.

"Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

"Stale Repository" shall mean any public or private repository or entity designated by the State of California as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Certificate, there is no State Repository.

Section 3. Provision of Annual Reports.

(a) The University shall, or shall cause the Dissemination Agent to, not later than 240 days after the end of the University's fiscal year, commencing with the report for the 2004/2005 fiscal year,

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provide to each Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. Not later than fifteen (15) Business Days prior to said date, the University shall provide the Annual Report to the Dissemination Agent (if other than the University). The Annual Report may be submitted as a single document or as separate documents comprising a package, and mav include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the University may be submitted separately from the balance of the Annual Report, and later than the date required above for the filing of the Annual Report if not available by that date. If the University's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c).

(b) If the University does not provide, or cause the Dissemination Agent to provide, an Annual Report to the Repositories bv the Annual Report date as required in subsection (a) above, the Dissemination Agent shall send a notice to (i) either the National Repositories or the Municipal Securities Rulemaking Board and (ii) the appropriate State Repository, if any, in substantially the form attached as Exhibit A, with a copy to the Trustee (if different than the Dissemination Agent).

(c) With respect to the Annual Report, the Dissemination Agent shall:

(i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and each State Repository, if any; and

(ii) if the Dissemination Agent is other than the University, and if, and to the extent, the University has provided an Annual Report in final form to the Dissemination Agent for dissemination, file a report with the University certifying that the Annual Report has been provided to the Repositories pursuant to this Disclosure Agreement, stating the date it was provided and listing all the Repositories to which it was provided.

Section 4. Content of Annual Reports. The University's Annual Report shall contain or incorporate by reference the following:

(a) Audited Financial Statements prepared in accordance with generally accepted accounting principles. If the University's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.

(b) Unless otherwise provided in the audited financial statements filed on or prior to the annual filing deadline for Annual Reports provided for in Section 3 above, financial information and operating data with respect to the University for preceding fiscal year, substantially similar to that provided in the corresponding tables and charts in the official statement for the Bonds:

(i) Faculty Summary;(ii) Tuition Rates;(iii) Applications;(iv) Enrollments and Degrees;(v) Financial Aid Programs;(vi) Room and Board Fees;(vii) Endowment and Similar Funds; and(viii) Plant Properties.

Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the University or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included bv reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The University shall clearly identify each such other document so included by reference.

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Section 5. Reporting of Significant Events.

(a) Pursuant to the provisions of this Section 5, the University shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material:

(i) Principal and interest payment delinquencies.(ii) Non-payment related defaults.(iii) Unscheduled draws on debt service reserves reflecting financial difficulties.(iv) Unscheduled draws on credit enhancements reflecting financial difficulties.(v) Substitution of credit or liquidity providers, or their failure to perform.(vi) Adverse tax opinions or events affecting the tax-exempt status of the security.fvii) Modifications to rights of security holders.(viii) Contingent or unscheduled bond calls.(ix) Defeasances.(x) Release, substitution, or sale of property securing repayment of the securities.(xi) Rating changes.

(b) Whenever the University obtains knowledge of the occurrence of a Listed Event, the University shall as soon as possible determine if such event would be material under applicable Federal securities law. The Dissemination Agent shall have no responsibility for such determination and shall be entitled to conclusively rely on the University's determination.

(c) If the University determines that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the University shall promptly file a notice of such occurrence with (i) each National Repository or the Municipal Securities Rulemaking Board and (ii) the appropriate State Repository, if any, with a copy to the Trustee (if different than the Dissemination Agent). Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(viii) and (ix) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds pursuant to the Indenture.

Section 6. Termination of Reporting Obligation. The University's obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds or upon the delivery to the Dissemination Agent of an opinion of Bond Counsel to the effect that continuing disclosure is no longer required. If such termination occurs prior to the final maturity of the Bonds, the University shall give notice of such termination in the same manner as for a Listed Event under Section 5(c).

Section 7. Dissemination Agent.

(a) The University may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the University pursuant to this Disclosure Agreement. The initial Dissemination Agent shall be Wells Fargo Bank, National Association. The Dissemination Agent may resign by providing thirty days written notice to the University. If at any time there is no designated Dissemination Agent appointed by the University, or if the Dissemination Agent so appointed is unwilling or unable to perform the duties of Dissemination Agent hereunder, the University shall be the Dissemination Agent and undertake or assume its obligations hereunder.

Any company succeeding to all or substantially all of the Dissemination Agent's corporate trust business shall be the successor to the Dissemination Agent hereunder without the execution or filing of any paper or any further act. The Dissemination Agent may resign its duties hereunder at any time upon written notice to the University.

(b) The Dissemination Agent shall be paid compensation by the University for its services provided hereunder in accordance with its schedule of fees as agreed to between the Dissemination Agent and the University from time to time and for all expenses, legal fees and advances made or

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incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the University hereunder and shall not be deemed to be acting in any fiduciary capacity for the University, holders or beneficial owners or any other party. The Dissemination Agent may rely and shall be protected in acting or refraining from acting upon any direction from the University or an opinion of Bond Counsel.

(c) The Dissemination Agent may conclusively rely upon the Annual Report provided to it by the University as constituting the Annual Report required of the University in accordance with this Disclosure Agreement and shall have no duty or obligation to review such Annual Report. The Dissemination Agent shall have no duty to prepare the Annual Report nor shall the Dissemination Agent be responsible for filing any Annual Report not provided to it by the University in a timely manner in a form suitable for filing with the Repositories.

Section 8. Amendment: Waiver. Notwithstanding any other provision of this Disclosure Agreement, the University may amend this Disclosure Agreement, and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied:

(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or type of business conducted;

(b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of Bond Counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and

(c) the proposed amendment or waiver either (i) is approved by holders of the Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of holders, or (ii) does not, in the opinion of Bond Counsel, materially impair the interests of the holders or beneficial owners of the Bonds.

If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.

If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the University to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be sent to the Repositories in the same manner as for a Listed Event under Section 5(c).

Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the University from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the University chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the University shall have no obligation under this Disclosure

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Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

Section 10. Default. In the event of a failure of the University to comply with any provision of this Disclosure Agreement, any Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the University to comply with its obligations under this Disclosure Agreement or, as to any holder or beneficial owner, to cause the Trustee, acting as Dissemination Agent, to comply with its obligations under the Indenture. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure of the University to comply with this Disclosure Agreement shall be an action to compel performance.

Section 11. Duties. Immunities and Liabilities of Dissemination Agent. All of the immunities, indemnities, and exceptions from liability in Article XI of the Indenture insofar as they relate to the Trustee shall apply to the Trustee and the Dissemination Agent in this Disclosure Agreement. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the University agrees, to the extent permitted by law, to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The Dissemination Agent may rely and shall be protected in acting or refraining from acting upon any direction from the University or an opinion of Bond Counsel. The obligations of the University under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. No person shall have any right to commence any action against the Trustee or Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure Agreement.

Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the University, the Dissemination Agent, the Participating Underwriters and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity.

Section 13. Alternative Filing Method. Any filing under this Disclosure Agreement may be made solely by transmitting such filing to the Texas Municipal Advisory Council (the "MAC"), as provided at http://www.disclosureusa.org, unless the United States Securities and Exchange Commission has withdrawn the interpretive advice in its letter to the MAC dated September 7, 2004.

Dated: [Closing Date] WOODBURY UNIVERSITY

By_________________President

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Dissemination Agent

ByAuthorized Signatory

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EXHIBIT A

NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT

Name of Issuer: California Educational Facilities Authority

Name of Issue: $19,995,000 California Educational Facilities Authority Revenue Bonds (Woodbury University) Series 2006

Name of Obligor: Woodbury University

Date of Issuance: [Closing Date]

NOTICE IS HEREBY GIVEN to [(i) each National Repository or the Municipal Securities Rulemaking Board and (ii) each appropriate State Repository] [the Municipal Securities Rulemaking Board] that the Woodbury University (the "Obligor") has not provided an Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Agreement, dated as of January 1, 2006, by and between the Obligor and Wells Fargo Bank, National Association, as dissemination agent. The Obligor anticipates that the Annual Report will be filed by-------------- •

Dated:________________________WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee and Dissemination Agent

cc: Trustee

ByAuthorized Officer

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