$7,700,000 CALIFORNIA MUNICIPAL FINANCE … · (Goodwill Industries of Orange ... and interest on the Bonds will be made to DTC by Wells Fargo Bank, ... (the “Letter of Credit”)

NEW ISSUE – BOOK-ENTRY ONLY Rating: Fitch: “AA/F1+” (See “RATINGS” herein)

In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California (“Bond Counsel”), under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel, interest on the Bonds is exempt from State of California personal income tax. See “TAX MATTERS” herein with respect to tax consequences with respect to the Bonds.

$7,700,000CALIFORNIA MUNICIPAL FINANCE AUTHORITY

Variable Rate Demand Revenue Bonds(Goodwill Industries of Orange County, California)

Series 2008

Dated: Date of Delivery Price: 100% Due: October 1, 2033

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

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

The Bonds are being issued by the California Municipal Finance Authority, which will loan the proceeds to Goodwill Industries of Orange County, California (the “Corporation”) pursuant to a Loan Agreement to provide funds which the Corporation will use (i) to finance and refinance the acquisition, construction, improvement and equipping of certain facilities of the Corporation in the cities of Anaheim and Santa Ana, California, (ii) to purchase certain equipment and fixtures and (iii) to pay costs incurred in connection with the issuance of the Bonds, all as more fully described herein. See “ESTIMATED SOURCES AND USES OF FUNDS” herein.

The Bonds are being issued as variable rate bonds. The Bonds will initially bear interest at a Weekly Interest Rate and will be available in denominations of $100,000 and any multiple of $5,000 in excess thereof. The Bonds are subject to conversion to a Term Interest Rate as more fully described herein and are subject to mandatory tender for purchase upon any such conversion. The specific interest rate with respect to each interest rate period is to be determined by the Remarketing Agent, initially Wells Fargo Brokerage Services, LLC. The Weekly Interest Rate will be computed on the basis of a 365/366-day year and actual days elapsed, payable on the first calendar day of each month, commencing November 1, 2008.

Payment of the principal, Purchase Price of, and interest on the Bonds will be initially supported by an irrevocable, direct-pay letter of credit (the “Letter of Credit”) issued by

Wells Fargo Bank, National Association

(the “Bank”) pursuant to and subject to the terms of a Reimbursement Agreement. The Letter of Credit will be in effect from the date of issuance of the Bonds through the occurrence of the earliest of the termination events described herein.

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

The Authority is obligated to pay the Bonds solely from the Revenues, including amounts received from the Corporation under the Loan Agreement, and the other funds pledged therefor under the Indenture pursuant to which the Bonds will be issued. The Corporation’s payment obligations under the Loan Agreement are general, unsecured obligations of the Corporation.

NONE OF THE AUTHORITY, ANY AUTHORITY MEMBER OR ANY PERSON ExECUTING THE BONDS IS LIABLE PERSONALLY ON THE BONDS OR SUBJECT TO ANY PERSONAL LIABILITY OR ACCOUNTABILITY BY REASON OF THEIR ISSUANCE. THE BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY FROM AND SECURED BY THE PLEDGE OF THE REVENUES, AMOUNTS MADE AVAILABLE UNDER THE CREDIT FACILITY, AND THE OTHER AMOUNTS PLEDGED THEREFOR UNDER THE INDENTURE, AND THE PURCHASE PRICE THEREOF IS PAYABLE SOLELY FROM, AND SECURED IN ACCORDANCE WITH THE TERMS OF THE BONDS AND THE PROVISIONS OF THE INDENTURE SOLELY BY, THE PROCEEDS OF THE REMARKETING OF THE BONDS AND AMOUNTS MADE AVAILABLE UNDER THE CREDIT FACILITY. NEITHER THE AUTHORITY, ITS MEMBERS, THE STATE OF CALIFORNIA, NOR ANY OF ITS POLITICAL SUBDIVISIONS SHALL BE DIRECTLY, INDIRECTLY, CONTINGENTLY OR MORALLY OBLIGATED TO USE ANY OTHER MONEYS OR ASSETS TO PAY ALL OR ANY PORTION OF THE DEBT SERVICE DUE ON THE BONDS, TO LEVY OR TO PLEDGE ANY FORM OF TAxATION WHATEVER THEREFOR OR TO MAKE ANY APPROPRIATION FOR THEIR PAYMENT. THE BONDS ARE NOT A PLEDGE OF THE FAITH AND CREDIT OF THE AUTHORITY, ITS MEMBERS, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS NOR DO THEY CONSTITUTE INDEBTEDNESS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION. THE AUTHORITY HAS NO TAxING POWER.

The Bonds are offered when, as and if issued by the Authority and accepted by the Underwriter subject to the approval of legality by Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California, Bond Counsel, and subject to certain other conditions. Certain legal matters will be passed upon for the Corporation by Rutan & Tucker, LLP, Costa Mesa, California, Corporation Counsel, for the Bank by Kathleen C. Johnson, Esq., Santa Barbara, California, Bank Counsel, and for the Authority by Squire, Sanders & Dempsey, LLP, Los Angeles, California, Authority Counsel. It is expected that the Bonds will be available for delivery through the DTC book-entry system on or about October 30, 2008.

Wells Fargo Institutional Securities, LLCDated: October 27, 2008

USE OF INFORMATION IN THIS OFFICIAL STATEMENT

This 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, salesperson or other person has been authorized by the California Municipal Finance Authority (the “Authority”), Goodwill Industries of Orange County, California (the “Corporation”) or Wells Fargo Institutional Securities, LLC (the “Underwriter”) to give any information or to make any representations, other than those contained herein, in connection with the offering of the Bonds and, if given or made, such information or representations must not be relied upon.

The information set forth in this Official Statement has been obtained from the Corporation, the Bank, the Authority, and others, from the sources referenced throughout this Official Statement and from other sources believed to be reliable. No representation or warranty is made, however, as to the accuracy or completeness of information received from parties other than the Corporation, the Bank and the Authority. In accordance with its responsibilities under federal securities laws, the Underwriter has reviewed the information in this Official Statement but does not guarantee its accuracy or completeness. This Official Statement contains, in part, estimates and matters of opinion which are not intended as statements of fact, and no representation or warranty is made as to the correctness of such estimates and opinions, or that they will be realized.

Estimates and opinions included in this Official Statement 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, the Corporation, or the Bank since the date hereof. This Official Statement has been prepared only in connection with the original offering of the Bonds bearing interest at Weekly Interest Rates and may not be reproduced or used in whole or in part for any other purpose.

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

The Bonds have not been registered with the Securities and Exchange Commission due to certain exemptions contained in the Securities Act of 1933, as amended. In making an investment decision investors must rely on their own examination of the Corporation, the Bank, the Authority, the Bonds and the terms of the offering, including the merits and risks involved. The Bonds have not been recommended by any federal or state securities commission or regulatory authority, and the foregoing authorities have neither reviewed nor confirmed the accuracy of this document.

THE PRICES AT WHICH THE BONDS ARE OFFERED TO THE PUBLIC BY THE UNDERWRITER (AND THE YIELDS RESULTING THEREFROM) MAY VARY FROM THE INITIAL PUBLIC OFFERING PRICES OR YIELDS APPEARING ON THE COVER PAGE HEREOF. IN ADDITION, THE UNDERWRITER MAY ALLOW CONCESSIONS OR DISCOUNTS FROM SUCH INITIAL PUBLIC OFFERING PRICES TO DEALERS AND OTHERS. IN ORDER TO FACILITATE DISTRIBUTION OF THE BONDS, THE UNDERWRITER MAY ENGAGE IN TRANSACTIONS INTENDED TO STABILIZE THE 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.

SPECIAL DISCLOSURE STATEMENT: WELLS FARGO BROKERAGE SERVICES, LLC (“WELLS FARGO”) IS A REGISTERED BROKER/DEALER AND A MEMBER OF THE NASD AND SPIC. WELLS FARGO IS NOT A BANK OR THRIFT AND IS SEPARATE FROM ANY WELLS FARGO BANK OR OTHER AFFILIATED BANK OR THRIFT. WELLS FARGO IS SOLELY RESPONSIBLE FOR ITS CONTRACTUAL OBLIGATIONS AND COMMITMENTS.

NONDEPOSIT INVESTMENT PRODUCTS OFFERED BY WELLS FARGO ARE NOT FDIC INSURED, ARE NOT DEPOSITS, ARE NOT OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK, AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL INVESTED.

FROM TIME TO TIME WELLS FARGO BANK, NATIONAL ASSOCIATION AND OTHER BANKS AFFILIATED WITH WELLS FARGO MAY LEND MONEY TO A BORROWER OF PROCEEDS OF SECURITIES THAT ARE UNDERWRITTEN OR DEALT IN BY WELLS FARGO. WITHIN THE PROSPECTUS OR OTHER DOCUMENTATION PROVIDED WITH EACH SUCH UNDERWRITING OR DEALING, THERE WILL BE A DISCLOSURE OF ANY MATERIAL LENDING RELATIONSHIP BY AN AFFILIATE OR WELLS FARGO WITH SUCH A BORROWER AND WHETHER THE PROCEEDS OF SUCH AN ISSUANCE OF SUCH SECURITIES WILL BE USED BY THE BORROWER TO REPAY ANY OUTSTANDING INDEBTEDNESS TO ANY WELLS FARGO AFFILIATE.

TABLE OF CONTENTS

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INTRODUCTION ..................................................................................................................................................... 1 GENERAL ................................................................................................................................................................ 1 THE BONDS............................................................................................................................................................. 1 BOOK-ENTRY SYSTEM............................................................................................................................................ 2 PURPOSES ............................................................................................................................................................... 2 SECURITY AND SOURCES OF PAYMENT FOR THE BONDS......................................................................................... 2 THE CORPORATION ................................................................................................................................................. 2 FINANCIAL CONDITION OF THE CORPORATION ....................................................................................................... 3 PARITY DEBT .......................................................................................................................................................... 3 NO CONTINUING DISCLOSURE ................................................................................................................................ 3 CERTAIN INFORMATION RELATED TO THIS OFFICIAL STATEMENT.......................................................................... 3

ESTIMATED SOURCES AND USES OF FUNDS ................................................................................................ 4

THE PROJECT ......................................................................................................................................................... 4

THE BONDS.............................................................................................................................................................. 4 GENERAL ................................................................................................................................................................ 4 BOOK-ENTRY SYSTEM............................................................................................................................................ 4 DETERMINATION OF INTEREST RATES ON THE BONDS ............................................................................................ 5 WEEKLY INTEREST RATE PERIOD FOR BONDS ........................................................................................................ 5 TERM INTEREST RATE PERIOD FOR BONDS............................................................................................................. 6 CONVERSION OF INTEREST RATE PERIOD ............................................................................................................... 6

TENDER OF BONDS FOR PURCHASE ............................................................................................................... 8 OPTIONAL TENDER ................................................................................................................................................. 8 MANDATORY TENDER ............................................................................................................................................ 9 PURCHASE OF TENDERED BONDS.......................................................................................................................... 10 REMARKETING...................................................................................................................................................... 10

REDEMPTION OF BONDS .................................................................................................................................. 10 OPTIONAL REDEMPTION ....................................................................................................................................... 10 NOTICE OF REDEMPTION....................................................................................................................................... 11 EFFECT OF REDEMPTION....................................................................................................................................... 12 SELECTION OF BONDS TO BE REDEEMED .............................................................................................................. 12

SECURITY AND SOURCES OF PAYMENT FOR THE BONDS .................................................................... 12 GENERAL .............................................................................................................................................................. 12 CREDIT FACILITY.................................................................................................................................................. 13 ALTERNATE CREDIT FACILITY.............................................................................................................................. 13 REVENUES AND REPAYMENT INSTALLMENTS ....................................................................................................... 14

THE BANK .............................................................................................................................................................. 14 WELLS FARGO BANK, NATIONAL ASSOCIATION................................................................................................... 14

THE LETTER OF CREDIT AND THE REIMBURSEMENT AGREEMENT................................................ 15 THE LETTER OF CREDIT ........................................................................................................................................ 15 THE REIMBURSEMENT AGREEMENT ..................................................................................................................... 15

INVESTMENT CONSIDERATIONS ................................................................................................................... 17 GENERAL .............................................................................................................................................................. 17 EXPIRATION OF THE INITIAL CREDIT FACILITY ..................................................................................................... 18 BANK’S OBLIGATIONS UNSECURED...................................................................................................................... 18 GENERAL FACTORS AFFECTING THE BANK........................................................................................................... 18 THE REMARKETING AGENT IS PAID BY THE CORPORATION .................................................................................. 18 REMARKETING AGENT ROUTINELY PURCHASES BONDS FOR ITS OWN ACCOUNT................................................ 18 BONDS MAY BE OFFERED AT DIFFERENT PRICES ON ANY DATE INCLUDING THE DATE ON WHICH THE

INTEREST RATE FOR THE BONDS IS DETERMINED................................................................................................ 19 ABILITY TO SELL THE BONDS OTHER THAN THROUGH TENDER PROCESS MAY BE LIMITED .............................. 19 REMARKETING AGENT MAY BE REMOVED, RESIGN OR CEASE REMARKETING THE BONDS, WITHOUT A

SUCCESSOR BEING NAMED................................................................................................................................... 19

TABLE OF CONTENTS (continued)

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CORPORATION INDEBTEDNESS.............................................................................................................................. 19 INSURANCE COVERAGE ........................................................................................................................................ 20 SEISMIC CONDITIONS............................................................................................................................................ 20 INVESTMENT OF FUNDS RISK................................................................................................................................ 20 INTEREST RATE SWAPS AND OTHER HEDGE RISK................................................................................................. 20 GIFTS AND FUNDRAISING...................................................................................................................................... 20 TAX-EXEMPT STATUS........................................................................................................................................... 21 BANKRUPTCY AND LIMITATIONS ON ENFORCEMENT OF REMEDIES ...................................................................... 22

THE AUTHORITY ................................................................................................................................................. 22

ABSENCE OF MATERIAL LITIGATION – AUTHORITY............................................................................. 22

ABSENCE OF MATERIAL LITIGATION – CORPORATION ....................................................................... 22

RATINGS................................................................................................................................................................. 22

UNDERWRITING .................................................................................................................................................. 23

APPROVAL OF LEGALITY ................................................................................................................................ 23

TAX MATTERS...................................................................................................................................................... 23

NO CONTINUING DISCLOSURE....................................................................................................................... 24

MISCELLANEOUS ................................................................................................................................................ 25

APPENDIX A – INFORMATION CONCERNING THE CORPORATION...........................................................A-1 APPENDIX B – AUDITED FINANCIAL STATEMENTS OF THE CORPORATION.........................................B-1 APPENDIX C – BOOK-ENTRY SYSTEM .............................................................................................................C-1 APPENDIX D – SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS ......D-1 APPENDIX E – FORM OF OPINION OF BOND COUNSEL................................................................................ E-1

OFFICIAL STATEMENT

$7,700,000 CALIFORNIA MUNICIPAL FINANCE AUTHORITY

Variable Rate Demand Revenue Bonds (Goodwill Industries of Orange County, California)

Series 2008

INTRODUCTION

This Introduction contains only a brief summary of certain of the terms of the Bonds being offered, and a full review should be made of the entire Official Statement, including the cover page and the Appendices, in order to make an informed investment decision. All statements contained in this Introduction are qualified in their entirety by reference to the entire Official Statement. References to, and summaries of, provisions of the laws of the State of California (the “State”) or any documents referred to herein do not purport to be complete and such references are qualified in their entirety by the complete provisions thereof.

General

This Official Statement, including the cover page and Appendices hereto (this “Official Statement”), provides certain information in connection with the offering of $7,700,000 aggregate principal amount of Variable Rate Demand Revenue Bonds (Goodwill Industries of Orange County, California) Series 2008 (the “Bonds”) of the California Municipal Finance Authority (the “Authority”).

The Bonds will be issued pursuant to and secured by an Indenture of Trust, dated as of October 1, 2008 (the “Indenture”), between the Authority and Wells Fargo Bank, National Association, as trustee (the “Trustee”). The Authority will lend the proceeds of the Bonds to Goodwill Industries of Orange County, California (the “Corporation”) pursuant to a Loan Agreement, dated as of October 1, 2008 (the “Loan Agreement”), between the Authority and the Corporation.

All capitalized terms used in this Official Statement and not otherwise defined herein have the same meanings as in the Indenture. See “APPENDIX DSUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTSDEFINITIONS” for definitions of certain words and terms used but not otherwise defined herein.

The Bonds

The Bonds will be issued as variable rate bonds initially bearing interest at a Weekly Interest Rate. While the Bonds are in a Weekly Interest Rate Period, interest on the Bonds is payable on the first calendar day of each month, commencing November 1, 2008. The Bonds will be dated their date of issuance and will mature on October 1, 2033 (the “Maturity Date”). The Bonds will initially be issued in authorized denominations of $100,000 and any multiple of $5,000 in excess thereof. See “THE BONDS” herein.

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

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

The Bonds are subject to redemption and optional and mandatory tender for purchase prior to the Maturity Date as described herein. See “REDEMPTION OF BONDS” and “TENDER OF BONDS FOR PURCHASE” herein.

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Book-Entry System

When delivered, the Bonds will be registered in the name of Cede & Co., a nominee of The Depository Trust Company (“DTC”) which will act as securities depository for the Bonds. Purchases of the Bonds and tenders of the Bonds may be made in book-entry form only, through brokers and dealers who are, or who act through, DTC Participants. Beneficial Owners of the Bonds will not receive physical delivery of certificated securities. Payments of the principal and Purchase Price of, premium, if any, and interest on the Bonds are payable by the Trustee to DTC, which will in turn remit such payments to the DTC Participants, which will in turn remit such payments to the Beneficial Owners of the Bonds. In addition, so long as Cede & Co. is the registered owner of the Bonds, the right of any Beneficial Owner to exercise its right to tender its interest in any Bond for purchase and receive payment therefor will be based only upon and subject to the procedures and limitations of the DTC book-entry system. See “APPENDIX CBOOK-ENTRY SYSTEM.”

Purposes

The Authority will lend the proceeds of the Bonds to the Corporation pursuant to the Loan Agreement to provide funds which the Corporation will use (i) to finance and refinance the acquisition, construction, improvement and equipping of certain facilities of the Corporation in the cities of Anaheim and Santa Ana, California, (ii) to purchase certain equipment and fixtures and (iii) to pay costs incurred in connection with the issuance of the Bonds, all as more fully described herein. See “ESTIMATED SOURCES AND USES OF FUNDS” and “THE PROJECT” herein.

Security and Sources of Payment for the Bonds

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

The Authority is obligated to pay Bonds solely from the Revenues which include amounts received from the Corporation under the Loan Agreement and amounts received under Credit Facilities for the Bonds, and the other funds available therefor under the Indenture. Pursuant to the Indenture, the Authority has pledged to the Trustee for the benefit of the Bondholders all of the Revenues.

The Corporation’s payment obligations under the Loan Agreement are general, unsecured obligations of the Corporation. Under the Loan Agreement, the Corporation is unconditionally obligated to pay the Repayment Installments to be made thereunder, which are due in amounts and at the 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. The Corporation has no obligation under the Loan Agreement to make any payments with respect to the Purchase Price of Bonds tendered or deemed tendered for purchase. There will be no reserve fund with respect to the Bonds.

The Purchase Price of Bonds tendered or deemed tendered for purchase is payable only from the proceeds of the remarketing of such Bonds and from amounts made available under the applicable Credit Facility then in effect for the Bonds. The Purchase Price of Bonds tendered or deemed tendered for purchase is payable only from the proceeds of the remarketing of such Bonds and, in instances when such tendered or deemed tendered Bonds are not remarketed in an amount equal to the principal amount thereof, from amounts made available under the applicable Credit Facility then in effect with respect to the Bonds.

The Corporation

The Corporation is a charitable organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, with its main office located in Santa Ana, California. The Corporation is a charity that provides

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educational, training and employment services to disabled and physically or mentally challenged individuals and individuals with other barriers to employment. See Appendix A for a description of the Corporation.

Financial Condition of the Corporation

For the fiscal year ended December 31, 2007, the Corporation had total unrestricted operating revenue of approximately $50,455,908 and unrestricted operating expenses of approximately $65,156,200. At December 31, 2007, the aggregate of all Corporation net assets was approximately $20,250,885. In addition, important information on the financial condition of the Corporation is set forth in “APPENDIX A—INFORMATION CONCERNING THE CORPORATION” and in the Corporation’s financial statements and notes thereto set forth in Appendix B, all of which should be carefully reviewed.

Parity Debt

The Bonds will be issued on a parity basis with the California Infrastructure and Economic Development Bank Variable Rate Demand Revenue Bonds (Goodwill Industries of Orange County, California) Series 2006 issued in the aggregate principal amount of $9,850,000 on March 9, 2006 (the “Series 2006 Bonds”). See “APPENDIX B—AUDITED FINANCIAL STATEMENTS OF THE CORPORATION” for a description of the Corporation’s outstanding indebtedness.

No Continuing Disclosure

The Corporation will not, while the Bonds bear interest at a Weekly Interest Rate, undertake any continuing disclosure obligations with respect to such Bonds. See “NO CONTINUING DISCLOSURE” for a discussion of the obligation the Corporation as to continuing disclosure as contemplated by Rule 15c2-12 (“Rule 15c2-12”) promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Certain Information Related to this Official Statement

The descriptions herein of the Indenture, the Loan Agreement, the Letter of Credit, the Reimbursement Agreement and other agreements relating to the Bonds are qualified in their entirety by reference to the complete text of such documents, and the description herein of the Bonds is qualified in its entirety by the form thereof and the provisions of the Indenture. See “APPENDIX DSUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS” for a brief summary of certain provisions of the Indenture and the Loan Agreement.

The information and expressions of opinion herein speak only as of their date and are subject to change without notice. Neither delivery of this Official Statement nor 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, the Corporation or the Bank.

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ESTIMATED SOURCES AND USES OF FUNDS

The Corporation anticipates that the proceeds of the Bonds and other available moneys will be applied as follows:

Estimated Sources of Funds Par Amount of the Bonds $7,700,000.00 Corporation Equity Contribution 33,832.28 Total $7,733,832.28 Estimated Use of Funds Project Fund $7,397,069.00 Costs of Issuance (1) 336,763.28 Total $7,733,832.28

(1) Costs of issuance include underwriter’s fees, fees and expenses of the Authority, the Trustee, Bond Counsel, Bank counsel, the Remarketing

Agent and the rating agency, printing costs, and other costs incurred in connection with the issuance of the Bonds. The deposit to the Cost of Issuance Fund is comprised of approximately $302,931 from proceeds of the Bonds and an equity contribution of approximately $33,832 from non-Bond proceeds of the Corporation.

THE PROJECT

The Bond proceeds, net of underwriter’s discount and costs of issuance, will be deposited in the Project Fund and will be used to (i) finance (a) the acquisition, construction, improvement and equipping of a 28,502 square foot industrial property located at 1601 East St. Andrew Place, Santa Ana, California to accommodate a fitness center to serve persons with disabilities, facilities to train disabled persons in the use of assistive technology, facilities for document destruction to be initially operated by Landmark Services, Inc. (“Landmark”) (and to repay in full a loan, the proceeds of which were used for such purposes) and/or for other purposes of the Corporation, (b) the making of certain leasehold improvements, fixtures, and the acquisition of equipment at the Corporation’s retail store facility located at 3021 West Lincoln Avenue, Anaheim, California, and (c) the making of certain building improvements at the Corporation’s administrative offices located at 410 North Fairview Street, Santa Ana, California (collectively, the “Project”) and (2) pay certain expenses incurred in connection with the issuance of the Bonds.

THE BONDS

General

The Bonds will be issued in the aggregate principal amount set forth on the cover page of this Official Statement. The Bonds will be dated their date of issuance and will mature on October 1, 2033.

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

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, Purchase Price, premium, if any, and interest on each Bond will be made pursuant to DTC’s rules and procedures. See “APPENDIX CBOOK-ENTRY SYSTEM” herein.

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The Authority, the Corporation, the Trustee and the Remarketing Agent 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 DTC Participant, (b) the payment by DTC or by any DTC Participant of any amount due to any Participant or Beneficial Owner, respectively, in respect of the principal, Purchase Price of, redemption or interest on any Bond, or (c) the delivery of any notice by DTC or any DTC Participant.

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 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 “THE BONDS – General” above.

Determination of Interest Rates on the Bonds

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

The Weekly Interest Rate and the Term Interest Rate shall be determined as provided in the Indenture; provided, that no Bond (other than a Credit Provider Bond) shall bear interest at a rate exceeding the Maximum Interest Rate. Each Bond shall bear interest from and including the date of issuance to but excluding the date of payment in full thereof (whether at maturity, upon redemption or acceleration or otherwise). Interest shall be computed upon the basis of a 365-day or 366-day year, as applicable, for the number of days actually elapsed for any Weekly Interest Rate Period or Term Interest Rate Period of less than one year. During any Term Interest Rate Period of one year or longer, interest on the Bonds shall be computed upon the basis of a 360-day year, consisting of twelve 30-day months.

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

Payment of the principal, Purchase Price of, and interest on the Bonds in a Weekly Interest Rate Period will be supported by the Letter of Credit. The Corporation may provide an Alternate Credit Facility for the Letter of Credit, and may eliminate the support of the Bonds by a Credit Facility, upon the terms and conditions provided in the Indenture and the Loan Agreement, which terms require the mandatory tender of Bonds for purchase prior to such substitution or elimination. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Credit Facility” and “—Alternate Credit Facility.”

No Liability. In determining the interest rate that the Bonds shall bear, the Remarketing Agent shall not have any liability to the Authority, the Corporation, the Trustee or any Bondholder, except for its negligence or willful misconduct.

Weekly Interest Rate Period for Bonds

Upon initial issuance, the Bonds will be in a Weekly Interest Rate Period and will bear interest at a Weekly Interest Rate, with interest payable on each Interest Payment Date for the Bonds, commencing November 1, 2008. During each Weekly Interest Rate Period, the Remarketing Agent will set a Weekly Interest Rate by 5:00 p.m. (New York City time) on the Wednesday immediately preceding each Calendar Week (or by 12:00 noon (New York City time) on the next preceding Business Day if such Wednesday is not a Business Day); provided, that if the Bonds are to be Converted to a Weekly Interest Rate Period from a Term Interest Rate Period, the Weekly Interest Rate for the initial Calendar Week of such Weekly Interest Rate Period shall be determined by the Remarketing Agent by the Business Day next preceding the effective date of such Weekly Interest Rate Period. Each Weekly Interest Rate shall be the rate determined by the Remarketing Agent (on the basis of examination of obligations comparable to the

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Bonds known by the Remarketing Agent to have been priced or traded under then prevailing market conditions) to be the minimum interest rate which, if borne by the Bonds, would enable the Remarketing Agent to sell the Bonds on such day at a price equal to the principal amount thereof plus accrued interest.

If for any reason the Weekly Interest Rate for a Calendar Week is not so determined, the Weekly Interest Rate for such Calendar Week shall remain at the then-existing rate (or if the Bonds are being Converted to a Weekly Interest Rate Period from a Term Interest Rate Period, the Weekly Interest Rate for such Calendar Week shall be a percent per annum equal to the Variable Index), and the Weekly Interest Rate for each succeeding Calendar Week not so determined by the Remarketing Agent shall be a percent per annum equal to the Variable Index.

The interest on each Bond bearing interest at the Weekly Interest Rate will be payable on the first calendar day of each month to the registered Bondholder whose name appears on the registration books maintained by the Trustee as of the close of business on the applicable Record Date, which shall be the Business Day immediately preceding the Interest Payment Date during any Weekly Interest Rate Period; except that if there is a default in any payment of interest and sufficient funds thereafter become available to pay such interest, such payment shall be made to the registered Bondholder whose name appears on the registration books as of a special record date to be established by the Trustee.

Term Interest Rate Period for Bonds

The duration of each Term Interest Rate Period will be determined by the Corporation and will be a period of approximately one month, approximately three months, approximately six months, approximately nine months, approximately one year or any multiple of approximately six months above one year, in each case ending on a day preceding a Business Day; provided, however, that notwithstanding the foregoing any Term Interest Rate Period which ends on the day immediately preceding the Maturity Date of the Bonds may include a period of time from the Interest Payment Date immediately preceding the Maturity Date of the Bonds to the day immediately preceding such Maturity Date even if the time remaining to such day is not one of the periods specified above; and provided further that notwithstanding the foregoing any Term Interest Rate Period may end on the day immediately preceding the Maturity Date of the Bonds whether or not such Maturity Date is a Business Day.

During each Term Interest Rate Period, the Bonds will bear interest at the applicable Term Interest Rate, which will be determined by the Remarketing Agent not later than 4:00 p.m. (New York City time) on the Business Day preceding the first day of such Term Interest Rate Period. The Term Interest Rate shall be the rate determined by the Remarketing Agent (in part, on the basis of the examination of obligations comparable to the Bonds known to the Remarketing Agent to have been priced or traded under then prevailing market conditions) to be the minimum interest rate which, if borne by the Bonds, would enable the Remarketing Agent to sell the Bonds on such Business Day at a price equal to the principal amount thereof; provided, however, that if for any reason the Term Interest Rate is not so determined for any Term Interest Rate Period, the Interest Rate Period on the Bonds shall automatically Convert to a Weekly Interest Rate Period.

The interest on each Bond bearing interest at a Term Interest Rate for a Term Interest Rate Period of less than one year will be payable the day immediately succeeding the last day of such Term Interest Rate Period. The interest on each Bond bearing interest at a Term Interest Rate for a Term Interest Rate Period of one year or longer will be payable each Semi-Annual Interest Payment Date during such Term Interest Rate Period and the day immediately succeeding the last day of such Term Interest Rate Period. Payment of such interest will be to the registered Bondholder whose name appears on the registration books maintained by the Trustee as of the close of business on the Record Date, which shall be the Business Day immediately preceding the Interest Payment Date during any Term Interest Rate Period of less than one year or the fifteenth day of the month (whether or not a Business Day) prior to an Interest Payment Date with respect to any Term Interest Rate Period of one year or longer.

Conversion of Interest Rate Period

Conversion to Weekly Interest Rate Period. The Corporation, by written direction to the Trustee and the Remarketing Agent, and with the written consent of the Credit Provider and accompanied by an Approving Opinion, may elect to Convert the Interest Rate Period for the Bonds from a Term Interest Rate Period to a Weekly Interest Rate Period. The Corporation’s written direction to Convert the Bonds to a Weekly Interest Rate Period shall

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specify the effective date of such Conversion to a Weekly Interest Rate Period, which shall be (a) the Interest Payment Date next succeeding the last day of the then current Term Interest Rate Period not less than 40 days following the date of receipt by the Trustee of such direction, or (b) any date on which the Bonds may be optionally redeemed pursuant to the Indenture not less than 40 days following the date of receipt by the Trustee of such direction. See “REDEMPTION OF BONDS—Optional Redemption” herein.

The Bonds are subject to automatic Conversion to a Weekly Interest Rate Period upon the failure of the Remarketing Agent to establish a Term Interest Rate for a Term Interest Rate Period or upon the failure of the conditions contained in the Indenture to a Conversion of the Bonds from a Weekly Interest Rate Period to a Term Interest Rate Period. Except for automatic Conversions pursuant to the Indenture, the Trustee shall give notice by first class mail of a Conversion of the Bonds to a Weekly Interest Rate Period to the Bondholders not less than 30 days prior to the effective date of such Weekly Interest Rate Period. Such notice shall state (1) that the Interest Rate Period on the Bonds will be Converted to a Weekly Interest Rate Period, (2) the effective date of such Weekly Interest Rate Period, (3) the day by which the Weekly Interest Rate shall be determined and the manner by which such Weekly Interest Rate may be obtained, (4) the Interest Payment Dates after such effective date, (5) that the Bonds will be purchased on such effective date pursuant to the mandatory tender for purchase provisions of the Indenture, (6) the procedures for such purchase referred to in clause (5) above, (7) that, subsequent to such effective date, the Bondholders will have the right to demand purchase of the Bonds upon not less than seven days’ notice, (8) the procedures for a demand for such purchase, (9) the redemption provisions that will pertain to the Bonds during such Weekly Interest Rate Period, and (10) the ratings which are expected to be assigned to the Bonds upon such Conversion to a Weekly Interest Rate Period.

Conversion to Term Interest Rate Period. The Corporation, by written direction to the Trustee and the Remarketing Agent, and with the written consent of the Authority and the Credit Provider and accompanied by an Approving Opinion, may elect to Convert the Interest Rate Period for the Bonds from a Weekly Interest Rate Period to a Term Interest Rate Period or from one Term Interest Rate Period to another Term Interest Rate Period, and shall determine the duration of such Term Interest Rate Period. The Corporation’s written direction to Convert the Bonds to a Term Interest Rate Period shall specify (a) the effective date of such Term Interest Rate Period which shall be (1) the Interest Payment Date which is not less than 40 days following the receipt by the Trustee of such direction if the Bonds are to be Converted from a Weekly Interest Rate Period to a Term Interest Rate Period; or (2) the Interest Payment Date next succeeding the last day of the then-current Term Interest Rate Period which is not less than 40 days following the date of receipt by the Trustee of such direction if the Bonds are to be Converted from one Term Interest Rate Period to another; or (3) any date on which the Bonds may be optionally redeemed pursuant to the Indenture not less than 40 days following the date of receipt by the Trustee of such direction; and (b) the last day thereof. The Corporation shall not Convert the Interest Rate Period on the Bonds to a Term Interest Rate Period unless (a) the Credit Facility then in effect with respect to the Bonds has been modified, if necessary, to provide interest coverage sufficient to provide for all interest to accrue on the Bonds as of each Interest Payment Date during and immediately succeeding such Term Interest Rate Period plus ten (10) additional days at the Term Interest Rate for such Term Interest Rate Period; provided, however, that no Credit Facility shall be required in connection with the Conversion of the Bonds to a Term Interest Rate Period which ends on the day immediately preceding the Maturity Date of the Bonds if the conditions to the termination of the Corporation’s obligation to maintain a Credit Facility set forth in the Loan Agreement have been satisfied; and (b) with respect to a Term Interest Rate Period of longer than nine months, Trustee and the Authority have received prior to the effective date of such Term Interest Rate Period a continuing disclosure agreement, imposing obligations upon the Corporation or any other responsible party to comply with the requirements of S.E.C. Rule 15c2-12, as it may from time to time be amended or supplemented, with respect to the Bonds as provided in the Loan Agreement. See “REDEMPTION OF BONDS—Optional Redemption” and “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Alternate Credit Facility” herein.

The Bonds are subject to automatic Conversion to a Term Interest Rate Period of the same duration as the immediately preceding Term Interest Rate Period upon the failure of the conditions contained in the Indenture to a Conversion of the Bonds from a Weekly Interest Rate Period or another Term Interest Rate Period. Except for automatic Conversions pursuant to the Indenture, the Trustee shall give notice by first class mail of each Term Interest Rate Period to the Bondholders not less than 30 days prior to the effective date of such Term Interest Rate Period. Such notice shall state (1) that the interest rate on the Bonds will be Converted to or continue to be a Term Interest Rate Period, (2) the effective date and final date of such Term Interest Rate Period, (3) the day by which the

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Term Interest Rate for such Term Interest Rate Period shall be determined, (4) the manner by which such Term Interest Rate may be obtained, (5) the Interest Payment Dates during such Term Interest Rate Period, (6) that the Bonds shall be purchased on such effective date pursuant to the mandatory tender for purchase provisions of the Indenture, (7) the procedures of such purchase referred to in clause (6), (8) the redemption provisions that will pertain to the Bonds during such Term Interest Rate Period, (9) the ratings which are expected to be assigned to the Bonds upon such Conversion to a Term Interest Rate Period, and (10) whether a Credit Facility will be in effect with respect to the Bonds upon such Conversion to a Term Interest Rate Period and, if so, identifying such Credit Facility.

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

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

TENDER OF BONDS FOR PURCHASE

Optional Tender

During any Weekly Interest Rate Period, the Bonds (or portions thereof in amounts such that the amount purchased and the amount not purchased are in Authorized Denominations) shall be subject to purchase on any Business Day from the sources specified in the Indenture upon delivery by the Holder of such Bond to the Trustee at its Principal Office of an irrevocable notice by telephone (promptly confirmed in writing) or Electronic Notice by 5:00 p.m. (New York City time) on any Business Day at least seven (7) days prior to the Purchase Date, which states the principal amount of such Bond to be tendered for purchase and the Purchase Date, at a Purchase Price equal to 100% of the principal amount of such Bonds (or the portions thereof) tendered for purchase, plus accrued and unpaid interest thereon to but not including the Purchase Date; provided, however, that if the Purchase Date occurs after the Record Date applicable to the payment of such accrued interest, then the Purchase Price shall not include accrued and unpaid interest, which shall be paid to the Holder of record on the applicable Record Date. The Purchase Price will be payable in immediately available funds.

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

IF A BONDHOLDER FAILS TO DELIVER ANY BOND TO THE TRUSTEE ON OR BEFORE THE PURCHASE DATE, SUCH BOND SHALL BE DEEMED TO HAVE BEEN PROPERLY TENDERED TO THE TRUSTEE AND, TO THE EXTENT THAT THERE SHALL BE ON DEPOSIT WITH THE TRUSTEE ON SUCH PURCHASE DATE AN AMOUNT SUFFICIENT TO PAY THE PURCHASE PRICE THEREOF, SUCH BOND SHALL CEASE TO CONSTITUTE OR REPRESENT A RIGHT TO PAYMENT OF PRINCIPAL THEREOF OR INTEREST THEREON OF THE FORMER HOLDER AND SHALL CONSTITUTE AND REPRESENT ONLY THE FORMER HOLDER’S RIGHT TO PAYMENT OF THE PURCHASE PRICE PAYABLE ON SUCH DATE. THE FOREGOING SHALL NOT LIMIT THE ENTITLEMENT OF ANY BONDHOLDER ON ANY RECORD DATE TO RECEIPT OF INTEREST, IF ANY, DUE ON ANY SUCH PURCHASE DATE.

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SEE “APPENDIX CBOOK-ENTRY SYSTEM” FOR THE TENDER PROVISIONS APPLICABLE WHILE THE BONDS ARE IN THE BOOK-ENTRY-ONLY SYSTEM. THE AUTHORITY, THE CORPORATION AND THE TRUSTEE SHALL NOT BE RESPONSIBLE IN THE EVENT DTC DOES NOT TENDER OR DELIVER BONDS FOR TENDER IN ACCORDANCE WITH DIRECTIONS DTC RECEIVES FROM A DTC PARTICIPANT.

Mandatory Tender

The Bonds shall be subject to mandatory tender for purchase upon the occurrence of any of the events listed below at a Purchase Price equal to 100% of the principal amount of any Bond tendered or deemed tendered to the Trustee for purchase, plus accrued and unpaid interest thereon to but not including the date of purchase; provided, however, that if the date of such purchase occurs after the Record Date applicable to the payment of such accrued interest, then the Purchase Price shall not include accrued and unpaid interest, which shall be paid to the Holder of record on the applicable Record Date:

(i) on the effective date of any new Interest Rate Period for the Bonds;

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

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

(iv) on the fifth Business Day following receipt by the Trustee of notice from the Credit Provider that an Event of Default has occurred under the Credit Agreement.

With respect to Bonds subject to mandatory tender for purchase pursuant to clause (i) above, the Trustee shall give Notice by Mail to the Holders of the Bonds, not later than the thirtieth (30th) day prior to the date on which the Bonds are subject to mandatory tender pursuant to clause (i) in the form of notice described under the caption “Conversion of Interest Rate Period” with respect to either a Weekly Interest Rate or Term Interest Rate, as applicable. With respect to Bonds subject to mandatory tender for purchase pursuant to the provision of the Indenture described in clause (ii) above, the Trustee shall give Notice by Mail of the provision of any commitment to issue an Alternate Credit Facility with respect to the Bonds to the Holders of the Bonds, not later than the fifteenth (15th) day prior to the date on which the Bonds are subject to mandatory tender pursuant to the provision of the Indenture described in clause (ii), which notice shall state (a) the expected effective date of such Alternate Credit Facility and (b) that the Bonds shall be subject to mandatory tender for purchase on the date specified in such notice. With respect to Bonds subject to mandatory tender for purchase pursuant to the provision of the Indenture described in clause (iii) above, the Trustee shall give Notice by Mail to the Holders of the Bonds, not later than the fifteenth (15th) day prior to the date on which the Bonds are subject to mandatory tender pursuant to clause (iii), which notice shall state that the Credit Facility then in effect with respect to the Bonds has not been renewed and an Alternate Credit Facility has not been delivered to the Trustee and that the Bonds are subject to mandatory tender for purchase, on the date determined in accordance with the provision of the Indenture described in clause (iii), which date shall be specified in such notice. With respect to Bonds subject to mandatory tender pursuant to clause (iv), the Trustee shall give notice by mail to the Holders of Bonds as soon as possible prior to the date on which Bonds are subject to mandatory tender pursuant to clause (iv), which notice shall state that the Bonds shall be subject to mandatory tender for purchase on the date specified in such notice, in accordance with the provision in the Indenture described in clause (iv).

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

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IF A BONDHOLDER FAILS TO DELIVER ANY BOND TO THE TRUSTEE ON OR BEFORE ANY PURCHASE DATE SPECIFIED ABOVE, SUCH BOND SHALL BE DEEMED TO HAVE BEEN PROPERLY TENDERED TO THE TRUSTEE AND, TO THE EXTENT THAT THERE SHALL BE ON DEPOSIT WITH THE TRUSTEE ON SUCH PURCHASE DATE AN AMOUNT SUFFICIENT TO PAY THE PURCHASE PRICE THEREOF, SUCH BOND SHALL CEASE TO CONSTITUTE OR REPRESENT A RIGHT TO PAYMENT OF PRINCIPAL THEREOF OR INTEREST THEREON OF THE FORMER HOLDER AND SHALL CONSTITUTE AND REPRESENT ONLY THE FORMER HOLDER’S RIGHT TO PAYMENT OF THE PURCHASE PRICE PAYABLE ON SUCH DATE. THE FOREGOING SHALL NOT LIMIT THE ENTITLEMENT OF ANY BONDHOLDER ON ANY RECORD DATE TO RECEIPT OF INTEREST, IF ANY, DUE ON ANY SUCH PURCHASE DATE.

Purchase of Tendered Bonds

On each Purchase Date that any Bonds are tendered for purchase (or deemed tendered for purchase) in accordance with the Indenture, the Trustee will purchase (but solely from funds received by the Trustee in accordance with the terms of the Indenture) such Bonds (or portions thereof in Authorized Denominations) at the applicable Purchase Price. Funds for the payment of the Purchase Price of such Bonds (or portions thereof in Authorized Denominations) shall be paid by the Trustee solely from the following sources and in the following order of priority:

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

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

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

THE CORPORATION HAS NO OBLIGATION UNDER THE LOAN AGREEMENT TO MAKE ANY PAYMENTS WITH RESPECT TO THE PURCHASE PRICE OF THE BONDS TENDERED OR DEEMED TENDERED FOR PURCHASE.

Remarketing

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

Upon receipt of notice that any Bonds (other than Bonds tendered as a result of an Event of Default under the Credit Agreement) will be or are required to be tendered for purchase in accordance with the Indenture, the Remarketing Agent is required under the Indenture and the Remarketing Agreement to use its best efforts to remarket such Bonds at a price equal to the Purchase Price on the applicable Purchase Date in accordance with the optional or mandatory tender provisions of the Indenture, as applicable. The Remarketing Agent will transfer to the Trustee the proceeds of the remarketing of such Bonds.

REDEMPTION OF BONDS

Optional Redemption

The Bonds shall be subject to redemption prior to the Maturity Date, in whole, or in part, in Authorized Denominations, from any source of funds constituting Available Amounts, as follows:

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(A) During any Weekly Interest Rate Period, on any Business Day at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date.

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

Lesser of Length of Term Interest Rate Period or Length of Time to Maturity

Redemption Dates and Prices

Greater than 10 years At any time on or after the 5th anniversary of the effective date commencing such Term Interest Rate Period at 102%, declining ½% annually to 100%

Greater than 6 and less than or equal to 10 years

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


At any time on or after the 2nd anniversary of the effective date commencing such Term Interest Rate Period at 101%, declining ½% annually to 100%


At any time on or after the 2nd anniversary of the effective date commencing such Term Interest Rate Period at 100 ½%, declining ½% annually to 100%


At any time on or after the 1st anniversary of the effective date commencing such Term Interest Rate Period at 100 ½%, declining ½% annually to 100%


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

Less than or equal to 1 year

On the Interest Payment Date which is six months after the effective date of such Term Interest Rate Period at 100%;

provided, however, that prior to the mailing of any notice of redemption in connection with any optional redemption of Bonds pursuant to the Indenture, the Trustee will have received written notification from the Credit Provider that such Credit Provider has consented to such optional redemption.

Notice of Redemption

The Trustee will give notice of any redemption of Bonds, by first-class mail, postage prepaid, to the Holders of all Bonds to be redeemed, at the addresses appearing on the Bond Register, and other entities specified in the Indenture, not less than thirty (30) days nor more than sixty (60) days prior to the redemption date. Each notice of redemption of Bonds will identify the Bonds to be redeemed and will state the date of such notice, the Issue Date, the redemption date, the redemption price, the place of redemption, the principal amount, and, if less than all of the Bonds are to be redeemed, the distinctive certificate numbers of the Bonds 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. So long as DTC or its nominee is the sole registered owner of the Bonds under the book-entry system, redemption notices are to be sent to Cede & Co. Notices of redemption are also to be sent to certain information services that disseminate redemption notices and to certain nationally recognized municipal securities information repositories.

With respect to any notice of redemption as described above, unless upon the giving of such notice the Bonds to be redeemed are deemed to have been paid in accordance with the defeasance provisions of the Indenture, such notice must state that such redemption is conditional upon the receipt by the Trustee on or prior to the date fixed for such redemption of Available Amounts sufficient to pay the principal of, and premium, if any, and interest on, the Bonds to be redeemed, and that if such Available Amounts are not received, such notice will be of no force

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and effect, the Bonds shall not be subject to redemption on such date and the Bonds will not be required to be redeemed on such date. If such redemption is not effectuated, the Trustee will, within a reasonable time thereafter, give notice that such Available Amounts were not so received.

Effect of Redemption

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

Upon surrender of any Bond redeemed in part only, the Trustee shall exchange the Bond redeemed for a new Bond of like tenor and in an Authorized Denomination without charge to the Holder in the principal amount of the portion of the Bond not redeemed. In the event of any partial redemption of a Bond which is registered in the name of the Nominee, DTC may elect to make a notation on the Bond certificate which reflects the date and amount of the reduction in principal amount of said Bond in lieu of surrendering the Bond certificate to the Trustee for exchange. The Authority and the Trustee shall be fully released and discharged from all liability upon, and to the extent of, payment of the redemption price for any partial redemption and upon the taking of all other actions required under the Indenture in connection with such redemption.

Selection of Bonds to be Redeemed

If less than all the Bonds are called for redemption, the Trustee will select the Bonds or any portion thereof to be redeemed first from outstanding Credit Provider Bonds, if any, or such portion thereof not previously called for redemption, by lot in such manner as it may determine, until all Credit Provider Bonds, if any, shall have been redeemed, and then from the other Outstanding Bonds or such given portion thereof not previously called for redemption, by lot. For the purpose of any such selection the Trustee shall assign a separate number for each minimum Authorized Denomination of each Bond of a denomination of more than such minimum; provided, that following any such selection, the portion of such Bond to remain Outstanding shall be in an Authorized Denomination. Notwithstanding the foregoing, if less than all of the Bonds are to be redeemed at any time while the Bonds are Book-Entry Bonds, selection of the Bonds to be redeemed after Credit Provider Bonds have been redeemed shall be made in accordance with customary practices of DTC or the applicable successor depository, as the case may be.

SECURITY AND SOURCES OF PAYMENT FOR THE BONDS

General

The principal, premium, if any, and interest on the Bonds are payable solely from the Revenues received from the Corporation pursuant to the Loan Agreement and under a Credit Facility for the Bonds and the other amounts pledged therefor under the Indenture. The Purchase Price of the Bonds tendered or deemed tendered for purchase pursuant to the Indenture is payable only from the proceeds of the remarketing of such Bonds and draws on the Credit Facility for such Bonds. The initial Credit Facility for the Bonds is the Letter of Credit issued by the Bank and supports the principal and Purchase Price of, and interest on the Bonds in a Weekly Interest Rate Period, but not any premium on the Bonds. See “THE BANK” and “THE LETTER OF CREDIT AND THE REIMBURSEMENT AGREEMENT” herein.

The Corporation has no obligation under the Loan Agreement to make any payments with respect to the Purchase Price of Bonds tendered or deemed tendered for purchase under the Indenture. Such Purchase Price is payable only from the proceeds of the remarketing of such Bonds and amounts made available under the Credit Facility. While the Bonds are in a Weekly Interest Rate Period, investors should make any decision with respect to the purchase, holding or tender of Bonds based on the credit of the Bank or other

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Credit Providers and not the Corporation. As a result, no financial or operating data with respect to the Corporation has been included in this Official Statement.

NONE OF THE AUTHORITY, ANY AUTHORITY MEMBER OR ANY PERSON EXECUTING THE BONDS IS LIABLE PERSONALLY ON THE BONDS OR SUBJECT TO ANY PERSONAL LIABILITY OR ACCOUNTABILITY BY REASON OF THEIR ISSUANCE. THE BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY FROM AND SECURED BY THE PLEDGE OF THE REVENUES, AMOUNTS MADE AVAILABLE UNDER THE CREDIT FACILITY, AND THE OTHER AMOUNTS PLEDGED THEREFOR UNDER THE INDENTURE, AND THE PURCHASE PRICE THEREOF IS PAYABLE SOLELY FROM, AND SECURED IN ACCORDANCE WITH THE TERMS OF THE BONDS AND THE PROVISIONS OF THE INDENTURE SOLELY BY, THE PROCEEDS OF THE REMARKETING OF THE BONDS AND AMOUNTS MADE AVAILABLE UNDER THE CREDIT FACILITY. NEITHER THE AUTHORITY, ITS MEMBERS, THE STATE OF CALIFORNIA, NOR ANY OF ITS POLITICAL SUBDIVISIONS SHALL BE DIRECTLY, INDIRECTLY, CONTINGENTLY OR MORALLY OBLIGATED TO USE ANY OTHER MONEYS OR ASSETS TO PAY ALL OR ANY PORTION OF THE DEBT SERVICE DUE ON THE BONDS, TO LEVY OR TO PLEDGE ANY FORM OF TAXATION WHATEVER THEREFOR OR TO MAKE ANY APPROPRIATION FOR THEIR PAYMENT. THE BONDS ARE NOT A PLEDGE OF THE FAITH AND CREDIT OF THE AUTHORITY, ITS MEMBERS, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS NOR DO THEY CONSTITUTE INDEBTEDNESS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION. THE AUTHORITY HAS NO TAXING POWER.

Credit Facility

Pursuant to the Loan Agreement, the Corporation has agreed to maintain one or more Credit Facilities, either by maintaining the Letter of Credit or providing one or more Alternate Credit Facilities to provide a source of payment for the principal, Purchase Price of, and interest on, the Bonds. See “THE LETTER OF CREDIT AND THE REIMBURSEMENT AGREEMENT – The Letter of Credit” herein.

Alternate Credit Facility

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

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

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

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

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

Notwithstanding the above, the Corporation will not provide any Alternate Credit Facility for the Credit Facility then securing the Bonds unless the Bonds are then required to be tendered for purchase pursuant to the Indenture as a result of the provision of such Alternate Credit Facility for the then-current Credit Facility.

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On or prior to the date of delivery to the Trustee of an Alternate Credit Facility meeting the above requirements, the Corporation must furnish to the Trustee and the Authority (i) an opinion of Bond Counsel with respect to the delivery of such Alternate Credit Facility, and (ii) an opinion or opinions of counsel to the Credit Provider of such Alternate Credit Facility, to the effect that such Alternate Credit Facility has been duly authorized, executed and delivered by such Credit Provider and, subject to standard exceptions and qualifications, constitutes the valid, legal and binding obligation of such Credit Provider enforceable against such Credit Provider in accordance with its terms.

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

Revenues and Repayment Installments

The Authority is obligated to pay the principal of, premium, if any and interest on the Bonds solely from the Revenues received from the Corporation under the Loan Agreement and under the Credit Facility for the Bonds and the other amounts pledged therefor under the Indenture. Pursuant to the Indenture, the Authority has pledged to the Trustee for the benefit of the Bondholders all of the Revenues. “Revenues” mean all payments received by the Authority or the Trustee pursuant or with respect to the Loan Agreement (except any additional payments owed to the Authority or Trustee) or a Credit Facility, including, without limiting the generality of the foregoing, Repayment Installments (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. “Revenues” does not include certain payments to the Authority or the Trustee specified in the Loan Agreement or any amounts on deposit in the Rebate Fund. There will be no reserve fund with respect to the Bonds.

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

THE BANK

The information under this heading has been provided solely by Wells Fargo Bank, National Association and is believed to be reliable, but has not been verified independently by the Authority, the Corporation, the Underwriter or the Trustee. No representation whatsoever as to the accuracy, adequacy or completeness of such information is made by the Authority, the Corporation, the Underwriter or the Trustee. None of the Authority, the Corporation, the Underwriter or the Trustee makes any representation herein as to the accuracy of such information or as to the absence of materially adverse changes in such information subsequent to the date hereof or that the information contained or incorporated hereby by reference is correct as of any time subsequent to its date.

Wells Fargo Bank, National Association

The Bank is a national banking association organized under the laws of the United States of America with its main office at 101 North Phillips Avenue, Sioux Falls, South Dakota 57104, and engages in retail, commercial and corporate banking, real estate lending and trust and investment services. The Bank is an indirect, wholly owned subsidiary of Wells Fargo & Company, a diversified financial services company, a financial holding company and a bank holding company registered under the Bank Holding Company Act of 1956, as amended, with its principal executive offices located in San Francisco, California (“Wells Fargo”).

As of June 30, 2008, the Bank had total consolidated assets of approximately $503.3 billion, total domestic and foreign deposits of approximately $343.3 billion and total equity capital of approximately $43.9 billion.

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Each quarter, the Bank files with the FDIC financial reports entitled “Consolidated Reports of Condition and Income for Insured Commercial Banks with Domestic and Foreign Offices,” commonly referred to as the “Call Reports.” The Bank’s Call Reports are prepared in accordance with regulatory accounting principles, which may differ from generally accepted accounting principles. The publicly available portions of the Call Reports for the period ending June 30, 2008, and for Call Reports filed by the Bank with the FDIC after the date of this Offering Memorandum may be obtained from the FDIC, Disclosure Group, Room F518, 550 17th Street, N.W., Washington, D.C. 20429 at prescribed rates, or from the FDIC on its Internet site at http://www.fdic.gov, or by writing to Corporate Secretary’s Office, Wells Fargo Center, Sixth and Marquette, MAC N9305-173, Minneapolis, MN 55479.

The Letter of Credit will be solely an obligation of the Bank and will not be an obligation of, or otherwise guaranteed by, Wells Fargo & Company, and no assets of Wells Fargo & Company or any affiliate of the Bank or Wells Fargo & Company will be pledged to the payment thereof. Payment of the Letter of Credit will not be insured by the FDIC.

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

PAYMENTS OF PRINCIPAL AND INTEREST ON THE BONDS WILL BE MADE FROM DRAWINGS UNDER THE LETTER OF CREDIT. PAYMENTS OF THE PURCHASE PRICE OF THE BONDS WILL BE MADE FROM DRAWINGS UNDER THE LETTER OF CREDIT IF REMARKETING PROCEEDS ARE NOT AVAILABLE. ALTHOUGH THE LETTER OF CREDIT IS A BINDING OBLIGATION OF THE BANK, THE BONDS ARE NOT DEPOSITS OR OBLIGATIONS OF WELLS FARGO BANK, NATIONAL ASSOCIATION OR ANY OF ITS AFFILIATED BANKS AND ARE NOT GUARANTEED BY ANY OF THESE ENTITIES. THE BONDS ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY AND ARE SUBJECT TO CERTAIN INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.

THE LETTER OF CREDIT AND THE REIMBURSEMENT AGREEMENT

The Letter of Credit

The Letter of Credit will be an obligation of the Bank to pay to the Trustee, upon request made with respect to the Bonds and in accordance with the terms thereof, up to: (i) $7,700,000 to pay principal of the Bonds when due, whether upon maturity, redemption or acceleration or to pay that portion of the Purchase Price of Bonds tendered for purchase and not remarketed, equal to the principal amount of such Bonds; plus (ii) $113,918 (an amount equal to 45 days’ interest accrued on the Bonds calculated at the rate of 12% per annum (computed on the basis of a 365-day year)) to pay accrued interest on the Bonds when due or to pay the accrued interest portion of the Purchase Price of Bonds tendered for purchase and not remarketed, as such amounts may be reduced or reinstated pursuant to the terms of the Letter of Credit. All drawings under the Letter of Credit will be paid with the Bank’s own funds.

The Letter of Credit shall terminate on the date which is the earliest of (i) honor by the Bank of a final draft presented to it by the Trustee under the Letter of Credit; (ii) the date of receipt by the Bank of notice from the Trustee stating that the Corporation has provided and the Trustee has accepted an Alternate Credit Facility; (iii) the date of receipt by the Bank of notice from the Trustee and the Corporation that the obligation of the Corporation to maintain the Credit Facility has terminated in accordance with clauses (i) and (ii) of Section 4.6(a) of the Loan Agreement; (iv) the date on which there are no Bonds Outstanding, or (v) the Expiration Date of the Letter of Credit (initially October 30, 2011).

The Reimbursement Agreement

The Reimbursement Agreement and the other agreements securing the Corporation’s obligation to reimburse the Bank do not secure the Trustee, the Holders of the Bonds, or the Bonds.

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Events of Default. The following is a summary of the circumstances set forth in the Reimbursement Agreement which constitute events of default thereunder. This summary is qualified by referenced to the complete text of the Reimbursement Agreement. Capitalized terms used under this caption and not otherwise defined shall have the meanings given to such terms in the Reimbursement Agreement.

(a) Any representation or warranty made by the Corporation in the Reimbursement Agreement or in any certificate, financial or other statement furnished by the Corporation pursuant to the Reimbursement Agreement or any of the Related Documents shall prove to be incorrect, false or misleading in any material respect when furnished or made; or

(b) The Corporation shall fail to pay to Bank or deposit with Bank any amount specified in the Reimbursement Agreement when due to be paid or deposited; or

(c) The Corporation shall fail to perform or observe any other material term, covenant or agreement on its part to be performed or observed under the Reimbursement Agreement (other than as specified in (b) above) or under any other Related Document, and with respect to any such default which by its nature can be cured, such default shall continue for a period of thirty (30) days from its occurrence; or

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

(e) The Corporation shall (i) apply for or consent to the appointment of a receiver, trustee, liquidator or custodian or the like of itself or of its property, (ii) admit in writing its inability to pay its debts generally as they become due, (iii) make a general assignment for the benefit of creditors, (iv) be adjudicated a bankrupt or insolvent, or (v) commence a voluntary case under the federal bankruptcy laws of the United States of America or file a voluntary petition or answer seeking reorganization, an arrangement with creditors or an order for relief or seeking to take advantage of any insolvency law or file an answer admitting the material allegations of a petition filed against it in any bankruptcy, reorganization or insolvency proceeding; or corporate action shall be taken by it for the purpose of effecting any of the foregoing; or

(f) If without the application, approval or consent of the Corporation, an involuntary case or other proceeding shall be instituted in any court of competent jurisdiction, under any law relating to bankruptcy, insolvency, reorganization, or relief of debtors seeking in respect of the Corporation, an order for relief or an adjudication in bankruptcy, reorganization, dissolution, winding-up, liquidation, a composition or arrangement with creditors, a readjustment of debts, the appointment of a trustee, receiver, liquidator or custodian or the like of the Corporation, or of all or any substantial part of the assets of the Corporation, or other like relief in respect thereof under any bankruptcy or insolvency law, and such involuntary petition or proceeding is unopposed or is not dismissed within sixty (60) days after its commencement; or

(g) The Corporation shall default in the payment or performance of any tax liability, or of any obligation or any defined event of default under the terms of any contract or instrument pursuant to which the Corporation has incurred any debt or other liability, including but not limited to the Related Documents, to any person or entity, including the Bank, after the expiration of any applicable cure periods; or the occurrence of any default or defined event of default under the Credit Agreement; or

(h) There shall exist or occur any event or condition which the Bank in good faith believes impairs, or is substantially likely to impair, the prospect of payment or performance by the Corporation of its obligations under any of the Related Documents; or

(i) The dissolution or liquidation of the Corporation, or the Corporation shall take action seeking to effect the dissolution or liquidation of the Corporation; or

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(j) Any change of ownership of the Corporation; or

(k) The sale, transfer, hypothecation, assignment or encumbrance, whether voluntary, involuntary or by operation of law, without the Bank’s prior written consent, of all or any part of or interest in any real property collateral required under the Reimbursement Agreement; or

(l) The filing of a notice of judgment lien in excess of $100,000.00 against the Corporation; or the recording of any abstract of judgment in excess of $100,000.00 against the Corporation in any county in which the Corporation has an interest in real property; or the service of a notice of levy and/or of a writ of attachment or execution, or other like process, against the assets of the Corporation; or the entry of a judgment against the Corporation and within twenty (20) days after the creation thereof, or at least ten (10) days prior to the date on which any assets could be lawfully sold in satisfaction thereof, such debt or claim is not satisfied or stayed pending appeal and insured against in a manner reasonably satisfactory to the Bank.

Rights Upon an Event of Default. Upon the occurrence of an Event of Default, and at any time thereafter unless and until such Event of Default has been waived by the Bank or cured by the Corporation within the applicable time period, the Bank shall be entitled to take any of the following actions without prejudice to the rights of the Bank to enforce its claims against the Corporation except as otherwise specifically provided for in the Reimbursement Agreement:

(a) Declare all unreimbursed drawings in respect of the Letter of Credit and any and all other indebtedness or obligations of any and every kind owing by the Corporation to the Bank to be due, whereupon the same shall be immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are deemed waived by the Corporation.

(b) Exercise all of its rights and remedies under the Reimbursement Agreement or under any of the other Related Documents and all rights of set-off.

(c) At its option, direct the Trustee to draw on the Letter of Credit in accordance with the provisions of the Indenture and to redeem the Bonds or cause a mandatory tender of the Bonds, as provided in the Indenture.

No remedy conferred upon or reserved to the Bank in the Reimbursement Agreement is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and in addition to every other remedy given under the Reimbursement Agreement, the Indenture, the Loan Agreement or the other Related Documents, now or hereafter existing at law or in equity or by statute.

INVESTMENT CONSIDERATIONS

The following are investment considerations that should be carefully considered by prospective purchasers of the Bonds. The following list should not be considered to be exhaustive and has been prepared within the context of this Official Statement. Inclusion of certain investment considerations below is not intended to signify that there are not other investment considerations or risks attendant to the Bonds that are material to an investment decision with respect to the Bonds that are otherwise described or apparent elsewhere herein.

General

As noted under “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” herein, the Bonds are payable from Repayment Installments made by the Corporation. Future economic and other conditions, including the Corporation’s revenue and expenses, the Corporation’s fundraising plans, a shortfall in the amounts expected to be received by the Corporation through fundraising efforts, litigation, investment returns, changes in the demand for the Corporation’s services, demographic changes, legislation, governmental regulations or catastrophic or other events damaging or delaying the Project or existing facilities at the Corporation could adversely affect the Corporation’s ability to pay the Repayment Installments. In addition, any developments affecting the nonprofit or tax-exempt status of the Corporation could adversely affect the financial condition and operations of the Corporation. There can be no assurance given that revenues of the Corporation will not decrease or that expenses of

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the Corporation will not increase. The Corporation’s obligation to make Repayment Installments under the Loan Agreement is an absolute and unconditional general obligation of the Corporation; however, such obligation is not secured by any property of the Corporation. Any and all financial forecasts are only good faith estimates and are not intended as a representation or warranty as to the future financial condition of the Corporation.

Expiration of the Initial Credit Facility

The Initial Credit Facility expires on October 30, 2011, subject to extension or earlier termination in certain circumstances as described therein. If the Initial Credit Facility is not extended or an Alternate Credit Facility is not obtained by the Corporation, the Bonds will be subject to mandatory redemption. There can be no assurance that the Corporation will be able to obtain an extension of the Initial Credit Facility or an Alternate Credit Facility. The Bank is under no obligation to extend the Initial Credit Facility beyond its scheduled expiration.

Bank’s Obligations Unsecured

The ability of the Bank to honor draws upon the Initial Credit Facility is based solely upon the Bank’s general credit and is not collateralized or otherwise guaranteed by the United States of America or any agency or instrumentality thereof. No provision has been made for replacement of or substitution for the Initial Credit Facility in the event of any deterioration in the financial condition of the Bank. Neither the Authority, nor the Corporation nor the Bank assumes any liability to any purchaser of the Bonds as a result of any deterioration of the financial condition of the Bank. Upon any insolvency of the Bank, any claim by the Trustee against the Bank would be subject to bank receivership proceedings.

General Factors Affecting the Bank

The Bank is subject to regulation and supervision by various regulatory bodies. New regulations could impose restrictions upon the Bank which would restrict its ability to respond to competitive pressures. Various legislative or regulatory changes could dramatically impact the banking industry as a whole and the Bank specifically. The banking industry is highly competitive in many of the markets in which the Bank operates. Such competition directly impacts the financial performance of the Bank. Any significant increase in such competition could adversely impact the Bank.

Prospective purchasers of the Bonds should evaluate the financial strength of the Bank based upon the information contained and referred to herein under the caption “THE BANK,” and other information available upon request from the Bank and should not rely upon any governmental supervision by any regulatory entity.

The Remarketing Agent is Paid by the Corporation

The Remarketing Agent’s responsibilities include determining the interest rate from time to time and remarketing Bonds that are optionally or mandatorily tendered by the owners thereof (subject, in each case, to the terms of the Remarketing Agreement), all as further described in this Official Statement. See “THE BONDS—Determination of Interest Rates on the Bonds” and “TENDER OF BONDS FOR PURCHASE—Remarketing.” The Remarketing Agent is appointed by the Corporation and is paid by the Corporation for its services. As a result, the interests of the Remarketing Agent may differ from those of existing holders and potential purchasers of Bonds.

Remarketing Agent Routinely Purchases Bonds For Its Own Account

The Remarketing Agent acts as remarketing agent for a variety of variable rate demand obligations and, in its sole discretion, routinely purchases such obligations for its own account. The Remarketing Agent is permitted, but not obligated, to purchase tendered Bonds for its own account and, in its sole discretion, routinely acquires such tendered Bonds in order to achieve a successful remarketing of the Bonds (i.e., because there otherwise are not enough buyers to purchase the Bonds) or for other reasons. However, the Remarketing Agent is not obligated to purchase Bonds, and may cease doing so at any time without notice. The Remarketing Agent may also make a market in the Bonds by routinely purchasing and selling Bonds other than in connection with an optional or mandatory tender and remarketing. Such purchases and sales may be at or below par. However, the Remarketing

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Agent is not required to make a market in the Bonds. The Remarketing Agent may also sell any Bonds it has purchased to one or more affiliated investment vehicles for collective ownership or enter into derivative arrangements with affiliates or others in order to reduce its exposure to the Bonds. The purchase of Bonds by the Remarketing Agent may cause the interest rate to be lower than it would be if the Remarketing Agent did not purchase Bonds and may create the appearance that there is greater third party demand for the Bonds in the market than is actually the case. The practices described above also may result in fewer Bonds being tendered in a remarketing.

Bonds May Be Offered At Different Prices On Any Date Including The Date On Which The Interest Rate For The Bonds Is Determined

Pursuant to the Remarketing Agreement, the Remarketing Agent is required to determine the applicable rate of interest that, in its judgment, is the lowest rate that would permit the sale of the Bonds bearing interest at the applicable interest rate at par plus accrued interest, if any, on and as of the applicable date of determination (the "Rate Determination Date"). The interest rate will reflect, among other factors, the level of market demand for the Bonds (including whether the Remarketing Agent is willing to purchase Bonds for its own account). The purchase of the Bonds by the Remarketing Agent may cause the interest rate to be lower than it would be if the Remarketing Agent did not purchase Bonds. There may or may not be Bonds tendered and remarketed on a Rate Determination Date, the Remarketing Agent may or may not be able to remarket any Bonds tendered for purchase on such date at par plus accrued interest, if any, and the Remarketing Agent may sell Bonds at varying prices to different investors on such date or any other date. The Remarketing Agent is not obligated to advise purchasers in a remarketing if it does not have third party buyers for all of the Bonds at the remarketing price. The Remarketing Agent, in its sole discretion, may offer Bonds on any date, including the Rate Determination Date, at a discount to par to some investors.

Ability To Sell The Bonds Other Than Through Tender Process May Be Limited

The Remarketing Agent may buy and sell Bonds other than through the tender process. However, the Remarketing Agent is not obligated to do so and may cease doing so at any time without notice and may require holders that wish to tender their Bonds to do so through the Trustee with appropriate notice. Thus, investors who purchase the Bonds, whether in a remarketing or otherwise, should not assume that they will be able to sell their Bonds other than by tendering the Bonds in accordance with the tender process.

Remarketing Agent May Be Removed, Resign Or Cease Remarketing The Bonds, Without A Successor Being Named

Under certain circumstances the Remarketing Agent may be removed or have the ability to resign or cease its remarketing efforts subject to the terms of the Remarketing Agreement.

Corporation Indebtedness

Under the Reimbursement Agreement, the Corporation is permitted to incur additional debt under certain circumstances. Any indebtedness which may be incurred by the Corporation could have a material effect on the Corporation’s operations, which may, among other things, limit the Corporation’s ability to borrow additional amounts for working capital, capital expenditures, acquisitions, debt service requirements and other purposes; require the Corporation to dedicate a significant portion of its cash flow to pay principal and interest on the Bonds, which will reduce the funds available for working capital, capital expenditures and other general administrative, charitable and educational purposes; and limit the Corporation’s ability to plan for and react to changes in its business and industry thereby making the Corporation more vulnerable to adverse changes in general economic, industry and competitive conditions. Any of these factors could have a material adverse effect on the financial condition of the Corporation and its ability to pay Repayment Installments with respect to the Bonds.

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Insurance Coverage

The insurance requirements imposed by the Loan Agreement are limited, and insurance proceeds may not be available to cover all claims or risks relating to the Project, the Facilities or the Corporation. See “APPENDIX B—AUDITED FINANCIAL STATEMENTS OF THE CORPORATION” for additional information regarding the Corporation’s insurance coverage. Litigation could arise from the business activities of the Corporation, including from its status as an employer. Many of these risks are covered by insurance, but some may not be covered completely or at all.

Future increases in insurance premiums and future limitations on the availability of certain types of insurance coverage could have an adverse impact on the Corporation’s financial condition and operations and, ultimately, could adversely impact the ability of the Corporation to make Repayment Installments.

Seismic Conditions

Generally, throughout the State, some level of seismic activity occurs on a regular basis. Periodically, the magnitude of a single seismic event can cause significant ground shaking and potential for damage to property located at or near the center of such seismic activity. The Corporation does not currently maintain earthquake insurance coverage.

Investment of Funds Risk

The Corporation invests its money pursuant to investment policies adopted from time to time by its Board of Directors. See “APPENDIX A—INFORMATION CONCERNING THE CORPORATION” and “APPENDIX B—AUDITED FINANCIAL STATEMENTS OF THE CORPORATION” for information regarding the investments of the Corporation. All investments made by the Corporation contain a 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 invested by the Corporation could have a material adverse effect on the availability of funds for the payment of Repayment Installments by the Corporation.

Interest Rate Swaps and Other Hedge Risk

Any interest rate swap or other hedge agreement to which the Corporation is a party, including interest rate swaps entered into in connection with the 2006 Bonds, may, at any time, have a negative value to the Corporation. If either a swap or other hedge counterparty or the Corporation terminates such an agreement when the agreement has a negative value to the Corporation, the Corporation would generally be obligated to make a termination payment to the counterparty in the amount of such negative value, and such payment could be substantial and potentially materially adverse to the Corporation’s financial condition. See “APPENDIX B—AUDITED FINANCIAL STATEMENTS OF THE CORPORATION.”

Gifts and Fundraising

The Corporation receives gifts, grants and donations from private and public sources. For a variety of reasons, the amount of annual gifts and fundraising results are difficult to project with precision. These reasons include the voluntary nature of charitable giving, the effect of the general and local economy on giving, the unpredictability of the effectiveness of the marketing of a fundraising campaign, the varying tax treatments of the deductibility of gifts and many other factors. A failure to attain sufficient levels of gifts and support could have a material adverse effect on the Corporation’s ability to maintain its current level of operations and pay debt service on the Bonds.

While the Corporation believes its fundraising goals to be reasonable, it is possible that its goals will not be attained. There can be no guarantee that the Corporation will be able to reach its fundraising goals. A failure to reach such goals could negatively affect the Corporation’s fundraising ability generally and the ability of the Corporation to pay Repayment Installments with respect to the Bonds.

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Tax-Exempt Status

The Code imposes a number of requirements that must be satisfied for interest on nonprofit corporation 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 Authority file an information report with the Internal Revenue Service (“IRS”). The Authority and the Corporation have covenanted in certain of the documents referred to herein that they will comply with such requirements.

Failure by the Corporation 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. Moreover, the occurrence of one or more of the other events described in this section also could adversely affect the exclusion from gross income for federal or State income tax purposes of the interest on the Bonds.

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

In recent years, the IRS has increased the frequency and scope of its audit and other enforcement activity regarding tax-exempt organizations and such organizations are increasingly subject to a greater degree of scrutiny by the IRS. 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 501(c)(3) tax-exempt status of nonprofit organizations, it could do so in the future. Loss of tax-exempt status by the Corporation could result, among other consequences, in the Corporation being in default of certain of its covenants regarding the Bonds. Loss of tax-exempt status of the Corporation also would have material adverse consequences on the financial condition of the Corporation and would cause interest on the Bonds to become taxable.

Less onerous sanctions also have been imposed by the IRS, which sanctions focus enforcement on private persons who transact business with a tax-exempt organization rather than the tax-exempt organization itself, but these sanctions do not replace the other, more severe remedies available to the IRS as mentioned above.

Unrelated Business Taxable 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 Corporation has not historically generated any significant amounts of UBTI. The Corporation may participate in activities which generate UBTI in the future. Management of the Corporation 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 Corporation as well as the exclusion from gross income for federal income tax purposes of the interest on the Bonds.

State Income Tax Exemption. The loss by the Corporation of its State income tax exemption could be adverse and material to the Corporation and to the value of the Bonds.

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 organizations with respect to their real property tax exemptions. The management of the Corporation believes that the Facilities and, once completed, the Project are or will be exempt from State real property taxes; however, there can be no assurance that this will continue to be the case, and any loss of exemption could have a material adverse effect on the financial condition of the Corporation.

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Bankruptcy and Limitations on Enforcement of Remedies

The remedies available to the Trustee or the Bondholders upon an Event of Default under the Indenture or Loan Agreement are in many respects dependent upon judicial actions, which are often subject to discretion and delay, and such remedies may not be readily available or may be limited. In particular, under the United States Bankruptcy Code, a bankruptcy case may be filed by or against the Corporation or by or against any of its affiliates. In general, the filing of any such petition operates as a stay against enforcement of the terms of the agreements to which the bankrupt entity is a party, and, in the bankruptcy process, executory contracts may be subject to assumption or rejection by the bankrupt party. In the event of any such rejection, the non-rejecting party or its assigns may become an unsecured claimant of the rejecting party. The various legal opinions to be delivered concurrently with the Bonds (including Bond Counsel’s approving opinion) will be qualified, as to the enforceability of the various legal instruments, by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by general principles of equity applied in the exercise of judicial discretion.

THE AUTHORITY

Under Title 1, Division 7, Chapter 5 of the California Government Code (the “JPA Act”), certain California cities, counties and special districts have entered into a joint exercise of powers agreement (the “JPA Agreement”) forming the Authority for the purpose of exercising to powers common to the members and exercising the additional powers granted to the Authority by the JPA Act and any other applicable provisions of California law. Under the JPA Agreement, the Authority may issue bonds, notes or any other evidence of indebtedness, for any purpose or activity permitted under the JPA Act or any other applicable law.

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

Neither the Authority nor its independent contractors has furnished, reviewed, investigated or verified the information contained in this Official Statement other than the information contained in this section and the section entitled “Absence of Material Litigation – The Authority.” The Authority does not and will not in the future monitor the financial condition of the Corporation or otherwise monitor payment of the Bonds or compliance with the documents relating thereto. Any commitment or obligation for continuing disclosure with respect to the Bonds or the Corporation has been undertaken solely by the Corporation. See “NO CONTINUING DISCLOSURE” herein.

ABSENCE OF MATERIAL LITIGATION – AUTHORITY

To the best knowledge of the Authority, there is no material litigation pending or threatened against the Authority concerning the validity of the Bonds or any proceedings of the Authority taken with respect to the issuance thereof.

ABSENCE OF MATERIAL LITIGATION – CORPORATION

To the best knowledge of the Corporation, there is no controversy of any nature now pending or threatened against the Corporation which seeks to restrain or enjoin the sale or issuance of the Bonds or which in any way contests or affects the validity of the Bonds or any proceedings of the Corporation taken with respect to the issuance or sale thereof, or the pledge or application of any moneys or security provided for the payment of the Bonds, the use of the Bond proceeds or the existence or powers of the Corporation relating to the issuance of the Bonds.

RATINGS

Fitch Ratings (“Fitch”) has assigned the Bonds a rating of “AA/F1+” with the understanding that upon delivery of the Bonds, the Letter of Credit will be executed and delivered to the Trustee by the Bank. Any explanation of the significance of such rating may only be obtained from Fitch. There is no assurance that such

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ratings 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 Fitch, circumstances so warrant. The Authority, the Corporation, and the Underwriter have not undertaken any responsibility to bring to the attention of the Bondholders any proposed change in or withdrawal of a rating or to oppose any such proposed revision or withdrawal. Any such downward change in or withdrawal of a rating may have an adverse effect on the market price or marketability of the Bonds.

UNDERWRITING

The Authority and the Corporation have entered into a purchase contract with Wells Fargo Institutional Securities, LLC, as Underwriter, pursuant to which the Underwriter has agreed, subject to certain conditions, to purchase the Bonds from the Authority for $7,623,000 (the par amount of the Bonds less an Underwriter’s discount of $77,000). The Underwriter is obligated under the purchase contract to purchase all of the Bonds if any are purchased. The Bonds may be offered and sold by the Underwriter to certain dealers and others at yields lower than the public offering price indicated on the cover hereof, and such public offering price may be changed, from time to time, by the Underwriter.

APPROVAL OF LEGALITY

Certain legal matters incident to the issuance of the Bonds are subject to the approving opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California, Bond Counsel. A complete copy of the proposed form of Bond Counsel opinion is contained in Appendix E hereto. Bond Counsel undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Certain other legal matters will be passed upon for the Authority by its counsel, Squire, Sanders & Dempsey, LLP, Los Angeles, California; for the Corporation by its counsel, Rutan & Tucker, LLP, Costa Mesa, California; and for the Bank by its counsel, Kathleen C. Johnson, Esq., Santa Barbara, California.

TAX MATTERS

In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, interest on the Bonds is excluded from gross income for federal income tax purposes, and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel, interest on the Bonds is exempt from State of California personal income tax. Bond Counsel notes that, with respect to corporations, interest on the Bonds may be included as an adjustment in the calculation of alternative minimum taxable income which may affect the alternative minimum tax liability of such corporations.

Bond Counsel’s opinion as to the exclusion from gross income of interest on the Bonds is based upon certain representations of fact and certifications made by the Authority and the Corporation and others and is subject to the condition that the Authority and the Corporation comply with all requirements of the Internal Revenue Code of 1986, as amended (the “Code”), that must be satisfied subsequent to the execution and delivery of the Bonds to assure that the interest on the Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause the interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The Authority and the Corporation have covenanted to comply with all such requirements.

The IRS has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for audit by the IRS. It is also possible that the market value of the Bonds might be affected as a result of such an audit of the Bonds (or by an audit of similar bonds).

Bond Counsel has relied on the opinion of Rutan & Tucker, LLP, Costa Mesa, California, Counsel to the Corporation, that the Corporation is an organization described in Section 501(c)(3) of the Code, regarding the intended operation of the facilities to be financed and refinanced by the Bonds as substantially related to the Corporation’s exempt purpose under Section 513 of the Code and other matters. Neither Bond Counsel nor Counsel to the Corporation can give or has given any opinion or assurance about the future activities of the Corporation, or

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about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the resulting changes in enforcement thereof by the Internal Revenue Service (“IRS”). Failure of the Corporation to be organized and operated in accordance with the requirements of the IRS for the maintenance of its status as an organization described in Section 501(c)(3) of the Code may result in interest on the Bonds being included in federal gross income, possibly from the date of the original issuance of the Bonds.

Bond Counsel’s opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. Bond Counsel has not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. The Indenture, the Loan Agreement, and the Tax Certificate permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. Bond Counsel expresses no opinion as to the exclusion from gross income of interest for federal income tax purposes with respect to any Bond if any such action is taken or omitted based upon the advice of counsel other than Stradling, Yocca, Carlson & Rauth.

Although Bond Counsel has rendered an opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes provided that the Authority and the Corporation continue to comply with certain requirements of the Code, the ownership of the Bonds and the accrual or receipt of interest with respect to the Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding any such tax consequences. Accordingly, before purchasing any of the Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax consequences with respect to the Bonds.

A copy of the proposed form of opinion of Bond Counsel is attached hereto as Appendix E.

NO 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 Authority shall have no liability to the Holders of the Bonds or any other person with respect to Rule 15c2-12 promulgated by the Securities and Exchange Commission (“Rule 15c2-12”). The Corporation has undertaken all responsibilities for any continuing disclosure to Bondholders as described below.

The Corporation will not, while the Bonds bear interest at a Weekly Interest Rate, undertake any continuing disclosure obligations with respect to the Bonds. The Corporation will covenant and agree in the Loan Agreement, upon Conversion to a Term Interest Rate greater than nine months, to provide continuing disclosure in accordance with the requirements promulgated under Rule 15c2-12, as it may from time to time hereafter be amended or supplemented. The Authority shall have no liability to the Holders of the Bonds or any other person with respect to Rule 15c2-12 under the Securities Exchange Act of 1934, as amended or any disclosure by the Corporation.

While bearing interest at a Weekly Interest Rate, the Bonds are exempt from the continuing disclosure requirements of Rule 15c2-12, pursuant to the exemptions provided in paragraph (d)(1) of Rule 15c2-12. So long as the Bonds and the remarketing thereof satisfy the exemptions provided in paragraph (d)(1) of Rule 15c2-12, no future information or disclosure will be provided by the Authority, the Corporation or the Bank.

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MISCELLANEOUS

All quotations from and summaries and explanations of the Indenture, the Loan Agreement, the Letter of Credit and the Reimbursement Agreement and of other documents and of statutes 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. A copy of the Indenture, the Loan Agreement, the Letter of Credit and the Reimbursement Agreement may be obtained upon request directed to the Underwriter or the Corporation.

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

The distribution and use of this Official Statement has been authorized by the Authority. The execution, delivery and use of this Official Statement has been authorized by the Corporation. The execution and delivery of this Official Statement by the Chief Financial Officer of the Corporation has been duly authorized by the Corporation.

GOODWILL INDUSTRIES OF ORANGE COUNTY, CALIFORNIA By: /s/ Donald J. Voska

Chief Financial Officer

(THIS PAGE INTENTIONALLY LEFT BLANK)

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APPENDIX A

INFORMATION CONCERNING THE CORPORATION

General

For 84 years Goodwill of Orange County (the “Corporation”) has provided thousands of people withdisabilities and other barriers the opportunity to achieve their highest levels of personal and economicindependence through competitive employment. Revenue generated from its 19 retail stores,shopgoodwill.com and a variety of other critical business services that include Workforce Solutions,Packaging and Assembly Services, Document Destruction Services and E-Waste Solutions enable theCorporation to reinvest in its mission, directing 91 cents of every dollar spent directly into its services,while providing training and employment opportunities to its program participants. The Corporation’sprograms strive to maximize the independence of everyone who is served through its comprehensiveassessment, training, employment and specialized support services. A wide spectrum of servicesenhances each person’s personal, social and employment goals. Staffed by a professional team, programsare individually tailored to meet the individual’s specific objectives. The Corporation has consistentlyreceived a four-star rating from Charity Navigator, America's premier independent charity evaluator,based on its organizational efficiency and capacity.

Facilities include:

Main Campus (Fee Ownership) (Includes the Corporation’s administrative offices, retail operations,shopgoodwill.com, Goodwill Store, Goodwill Computerworks, Goodwill Marketplace, and theCareer Center)410 North FairviewSanta Ana, CA 92807

Employment Training Center (Lease)2910 W. GarrySanta Ana, CA 92703

Community Based Services (Lease)2670 N. Main Street, Ste. 100CSanta Ana, Ca 92705

EmploymentWorks (Lease)12882 Garden Grove Blvd. #AGarden Grove, CA 92843

Goodwill Fitness & Technology Center (Fee Ownership)1601 E. St. Andrew PlaceSanta Ana, Ca 92705

Retail Store Facility (Lease)3201 West Lincoln Ave.Anaheim, CA 92801

Thirteen Additional Store Locations (2 owned, 11 leased)

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Organization and Governance

The Corporation was incorporated as a California nonprofit public benefit corporation in 1932 and wasformed for purposes other than pecuniary profit, to wit: To own such real estate and personal property asmay be necessary and proper to conduct the affairs of a nonprofit corporation under the laws of the Stateof California; to borrow money thereon, and buy, sell, mortgage, exchange, or otherwise dispose of suchproperty of any personal property belonging to it; to admit, receive and govern the members of thecorporation under the by-laws and the laws of the State of California; to erect and maintain such buildingsas may be necessary and proper to conduct the affairs of a nonprofit corporation; to establish and maintainsuitable and customary organizations for the purpose of social service and industrial education as may bedeemed necessary and proper and to do all other acts of a charitable, social, educational or recreationalpurpose which do not contemplate the distribution of gains, profits or dividends to the members thereof.The Corporation is currently governed by a Board of Directors (the “Board”) which establishes policies,oversees implementation of such policies, provides strategic direction to the Corporation and carries outits fiduciary responsibilities. The Bylaws of the Corporation provide that the Board shall be comprised ofnot less than 18 nor more than 30 directors.

Committees

The Corporation currently has the Following Committees:

Standing: Audit, Board Development, Budget, Finance & Investment, Executive, ExecutiveCompensation.

Ad Hoc: Alternative Revenue Source, Human Resource Corporate Compliance, Property Development,Strategic Planning

Fundraising Committees: Fitness Center, Goodwill Invitational, Planned Giving Advisory, ResourceDevelopment Team, Walter Knott Award Luncheon

The current Board consists of the following members, with committee memberships also noted.

Board of Directors

Michael Valentine – Chairman of the BoardMr. Valentine is the Chairman of the Corporation’s Board and is Chair of the Executive and ExecutiveCompensation Committees. He also serves on the Property Development, Board Development andFitness Center Committees and is a member of the Resource Development Team. A third generationOrange County real estate professional, Michael Valentine has developed, constructed, managed and soldmultiple projects throughout California. Mr. Valentine is currently a construction manager consultant.

Judi Garfi-Partridge - Vice ChairmanMs. Partridge is Vice Chairman of the Corporation’s Board, is a member of the Executive CompensationCommittee and represents the Corporation on the California Council of Goodwills. She serves as aMember-at-Large of the Executive Committee. Ms. Partridge founded Eastwood Insurance Services, Inc.during her career in the Insurance Industry that spanned over 30 years.

Carl R. Steen, Esq. - SecretaryMr. Steen is Secretary of the Corporation’s Board and a member of the Executive Committee. He is apartner in the Business Group in the Costa Mesa office of Baker & Hostetler, LLP and has more than 20years of experience in corporate and project development and finance transactions and related matters.

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Mr. Steen is the principal author of International Energy Project Development Opportunities, AffiliatedPower Producers and the Independent Power Market. He is an Adjunct Professor of Law at Whittier LawSchool in Southern California and has been a frequent lecturer at conferences on project development andfinance issues. He is a member of the bars of the District of Columbia, New York and California and isadmitted before the United States Supreme Court.

David L. DeFilippo – TreasurerMr. De Filippo is the Treasurer of the Corporation’s Board and chairs the Budget, Finance & InvestmentCommittees. He also serves on the Executive and Audit Committees. He is the Regional VicePresident/Southern California Business Banking for Union Bank of California and has more than 14 yearsof experience in banking.

Daniel T. ArmstrongMr. Armstrong is a member of the Corporation’s Board and served as Chairman of the Board in 2003-04.He currently serves on Strategic Planning, Audit, Fitness Center, and Budget, Finance & InvestmentCommittee. Prior to his retirement, he was Senior Vice President, Director of Retail Banking for HomeSavings of America. Mr. Armstrong is a retired Lieutenant Colonel of the U.S. Marine Corps andSquadron Commander.

Cheryl L. Barrett, Esq.Ms. Barrett is a member of the Corporation’s Board, serves on the Strategic Planning Committee andchairs the Planned Giving Committee. Ms. Barrett is an attorney with Feruzzo & Ferruzo, LLP inNewport Beach, and her practice is devoted entirely to Estate Planning, Probate and Trust Administration.Ms. Barrett is a member of the California Bar Association, Estate Planning and Probate Section, theOrange County Planned Giving Round Table, and the National Committee on Planned Giving.

Robert O. BriggsMr. Briggs is a member of the Corporation’s Board, chairs the Property Development Committee andserves on the Fitness Center Committee. Mr. Briggs is now a developer and syndicates small to mediumsized industrial buildings throughout Southern California.

Kathy BronsteinMs. Bronstein is a member of the Corporation’s Board. Ms. Bronstein is the President of KB BronsteinConsulting, whose clients range from well-established public companies to entrepreneurial start-ups. Sheis a business development strategist and consultant specializing in the retail and fashion trades.

Robert D. ChickeringMr. Chickering is a member of the Corporation’s Board and the Alternative Revenue Source Committee.He is the President/CEO of Trans Pacific Leasing Corporation in San Bernardino, and also owns andoperates Launch, a consulting firm. He has successfully lead several corporations, including SantaBarbara Aerospace, Inc., American Enviro Products, Inc., The Cotton Buds Company, Chickering/HowellAdvertising, and Cunningham &Walsh Advertising, Inc.

Kevin A. ColemanMr. Coleman is a member of the Corporation’s Board and is a member of the Resource DevelopmentCommittee. He founded Net Development Company, a national real estate design and development firmbased in Southern California, and has served as president for 26 years. Under his direction, the companyhas developed over 10 million square feet of facilities in California and Nevada.

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Steven CoyneMr. Coyne is a member of the Corporation’s Board, the Goodwill Invitational Committee and is Chair ofthe 2008 Walter Knott Award Luncheon Committee. Mr. Coyne is a commercial real estate developmentprofessional whose projects extend throughout Riverside, Los Angeles and Orange Counties. Prior tostarting his own firm, he was the Vice President of LNR Property Corporation.

Mark DalyMr. Daly is a member of the Corporation’s Board. Mr. Daly, formerly the vice president of communityrelations for Quiksilver, Inc., an outdoor sports lifestyle company, is experienced in organizationaldevelopment, marketing and fundraising.

Shauna FarleyMs. Farley is a member of the Corporation’s Board. Ms. Farley is the Executive Director of the WaltmarFoundation at Golden West College, whose mission is to support the college’s comprehensive academicopportunities to the community for lifelong learning.

Marcia Forsyth, Esq.Ms. Forsyth is a member of the Corporation’s Board and served as Secretary of the Board in 2003-04.She serves on the Corporate Compliance and Audit Committees. She is a partner at the law firm of Rutan& Tucker, LLP and specializes in real estate transactional law. She has represented numerous real estatedevelopers and investors since graduating from UCLA School of Law and joining Rutan & Tucker in1977. Her experience includes venture formation, land development and entitlement issues, title and duediligence considerations, purchase and sale agreements, debt and equity secured financings, commercialleasing and tax deferred exchanges.

Cindy GittlemanMs. Gittleman is a member of the Corporation’s Board, co-chairs the 2008 Walter Knott AwardLuncheon Committee and is a member of the Fitness Center Committee. She also serves on the ResourceDevelopment Team and Board Development Committee. She has served as co-Chair of the 2006 WalterKnott Award Committee and is a Goodwill Ambassador. She has served on several committees of theCity of Newport Beach.

John Heffernan, Esq.Mr. Heffernan is a member of the Corporation’s Board and the Budget, Finance & InvestmentCommittee. Mr. Heffernan is a managing partner in the law firm of Heffernan & Boortz, where heconcentrates on commercial, industrial and retail real property transactions.

K. Brian HortonMr. Horton is a member of the Corporation’s Board and previously served as Treasurer of the Board in2003-04. Presently, he is the Chair of the Audit Committee and a member of the Fitness CenterCommittee. Mr. Horton is President of 1st Enterprise Bank and was formerly President/Southern Divisionof Mellon 1st Business Bank, with oversight responsibility of Orange County, South Bay and InlandEmpire Regional offices.

Thomas A. Jackson, CTIEMr. Jackson is a member of the Corporation’s Board and the Board Development and Budget, Finance &Investment Committees. Mr. Jackson is the President of World Travel Bureau, Inc., and is a recognizedleader in the travel industry. He is a Certified Travel Counselor, Destination Specialist, a lifetime memberof the Institute of Certified Travel Agents, and previously served on their Board of Trustees. He has

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served on the Travel Advisory Boards for Northwest Airlines, Alamo Rent A Car, Sunset Magazine andClassic Custom Vacations, and is currently serving on the Advisory Board for Virtuoso.

Kenneth E. Petersen, Jr., Esq.Mr. Petersen is a member of the Corporation’s Board and the Planned Giving Committee. He is VicePresident, Business Development Officer for First American Trust, FSB. Prior to joining First AmericaTrust in 2000, he was managing principal of Peterson & Associates Insurance Services, LLC, a fullservice employee benefit and insurance brokerage firm. He has served as both a real estate assetmanager, as well as legal counsel to the president for Koll Management Services, and has practiced law asa business litigation attorney.

Thomas S. Salinger, Esq.Mr. Salinger is a member of the Corporation’s Board. Mr. Salinger is a partner at, and former head of theTrial Section of, the law firm of Rutan & Tucker, LLP. He has extensive experience in construction,landslide, real estate, title insurance and commercial litigation. Mr. Salinger currently serves as co-chairof the firm’s Construction Law Practice Group and is an active member of the firm’s Financial PracticesGroup. Mr. Salinger is a member of local, state and national Bar Associations.

Adam Salis, Esq.Mr. Salis is a member of the Corporation’s Board and is a member of the Landmark Services Board ofDirectors and serves on the Alternate Revenue Source Committee. Mr. Salis is an attorney at Manatt,Phelps & Phillips in its Costa Mesa office. He practices in the field of real estate transactions, as well ascorporate and commercial law, with an emphasis on leasing, acquisitions, sales, financing, constructionand development. He is a member of the State Bar of California and a licensed California real estatebroker.

Gene ScarbroughMr. Scarbrough is a member of the Corporation’s Board, a member of the Audit Committee, chair of theLandmark Services Board of Directors, and a past Goodwill Helmsmen President. He is owner ofScarbrough Ranches in Terra Bella, California, which grows citrus, olives and pistachios. He is active inthe agriculture industry and is a member of Sunkist Growers.

Rogers A. SeversonMr. Severson is a member of the Corporation’s Board and chairs the Fitness Center Committee. He alsoserves on the Board Development and Budget, Finance & Investment Committees. He is the founder ofthe SCI Special Fund, a not-for-profit entity that assists individuals with spinal cord injuries to maximizetheir independence. Mr. Severson is active in the real estate industry.

James P. TrainorMr. Trainor is a member of the Corporation’s Board. He is National Manager, Product Public Relationsfor Hyundai Motor America. Mr. Trainor provides executive leadership, develops innovativecommunications and is highly skilled in media relations and strategic planning. Mr. Trainor has more than25 years experience as a public affairs professional, having also served as Vice President, CorporateCommunications for Sirva, Inc. and as Director, Lincoln Mercury Public Affairs for Ford MotorCompany.

Todd Tripp, MPAMr. Tripp is a member of the Corporation’s Board and the Board Development Committee and serves as aMember-At-Large on the Executive Committee. He also chaired the 2008 Goodwill Invitational GolfTournament Committee. He is a Financial Representative for the Northwestern Mutual Financial Network

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and specializes in Estate Planning, Executive Benefits, Personal Life Insurance and InvestmentAllocation.

Joann Waldron – Co-Chair of the Honorary BoardMs. Waldron is a Co-Chair member of the Corporation’s honorary Board of Directors and is a member ofthe Assistance League of Tustin, and serves on the Board of Directors for The Salvation Army.

Laurence J. WeeseMr. Weese is a member of the Corporation’s Board. For the last 10 years, he has been a partner atHopkins Real Estate Group in Irvine, California. Previously, Mr. Weese was a broker with ColliersSeeley, president of Paul Laurence and Associates and senior vice president of Sienna Designs.

Management

The operation of the Corporation is managed by the President and Chief Executive Officer, who isselected by the Board. The President is responsible for the overall supervision of the Corporation’sactivities and oversees a staff of approximately 821 full-time and 60 part-time employees.

The President reports directly to the Board and its Executive Committee. The executive staff of theCorporation also interfaces directly with the Board through Board committees and by attendance andparticipation in Board and executive committee meetings.

Executive Staff/Bios

Dan S. Rogers - PRESIDENT & CEO

Dan Rogers' career spans over four decades of leadership and philanthropic experience. He is recognizedin Orange County, both in the private sector and by nonprofit organizations, for his business acumen andfund development skills, and for his expertise in strategic planning and program management.

Prior to joining the Corporation, he served as a consultant to Ford Motor Land Services, Inc. where hewas responsible for the disposition of Ford's major Western holdings. He facilitated growth at previousorganizations such as The Grainger Company and Lee & Associates, commercial real estate servicecompanies, and the World Football League. He was the first head basketball coach at University ofCalifornia, Irvine. Mr. Rogers also served as a member and Chairman of the Second Harvest Food Bankof Orange County Board of Directors.

Joan Dornbach – VICE PRESIDENT, MARKETING & PUBLIC RELATIONSJoan Dornbach has over 30 years of management experience and has provided creative marketingsolutions for a wide variety of businesses. Prior to joining the Corporation in 1996, she served as vicepresident of one of Orange County's most respected marketing, advertising and public relations firms. Shehas extensive experience in real estate development and childhood education.

Ms. Dornbach has a B.A. in Sociology and Economics from San Diego State University, with graduatestudies from the University of California at San Diego and holds a California State teaching credential.

She is a member of the Association of Fundraising Professionals and the International Association ofBusiness Communicators, and has served as an executive member of the City of Hope and has beenassociated with Olive Crest and HomeAid.

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Ms. Dornbach is responsible for the Corporation’s strategic planning process, the development ofmarketing and promotion plans for business development, community and media relations, and overseesthe planning, measurement and development of the image, reputation and public attitude toward theCorporation. Additionally, she directs the operations of the internet business activities, includingshopgoodwill.com, which has generated more that $60 million on behalf of the Corporation’s missionrelated services nationwide since its inception in 2000.

Anne Martin – VICE PRESIDENT, OPERATIONS/SALESAnne Martin has been employed within the Goodwill Industries Organization since 1980. In 1993 shebecame Vice President, Operations and Sales. Ms. Martin has a M.B.A. from the University of Phoenixand a B.S. degree in Child Development/Family Life from the University of Wisconsin, Stout. Ms. Martinis a member of several Orange County Chambers of Commerce. She has opened Goodwill stores inThailand and Malaysia and is the Orange County liaison in a partnership with Goodwill of Thailand.

Ms. Martin is responsible for the marketing, collection, transportation, recycling and sale of new anddonated merchandise and management of the e-commerce retail business. Additional responsibilitiesinclude asset protection/security and facilities management.

Nancy Quarles – VICE PRESIDENT, HUMAN SERVICESNancy Quarles has held positions with the Corporation since 1980. She has extensive experience in thefield of Rehabilitation, Work Force Development and Employee Relations. Ms. Quarles has been widelyrecognized for her expertise in understanding people who live with disabilities, recognizing their needsand for creating innovative programs and services on their behalf.

Ms. Quarles earned her M.R.A. in Rehabilitation Administration from the Universityof San FranciscoCollege of Business and a B.A. in Social Ecology from the University of California, Irvine. Ms. Quarlesserves as a consultant for the Spinal Cord Injury Foundation.

Ms. Quarles is responsible for all client activities related to education, training and employment services,community employment programs, industrial services, packaging and assembly, janitorial services andstate and federal contracts and grants including NISH. She is the Vice President of Landmark Services,Inc. Additional responsibilities include all aspects of Risk Management and oversight of the InformationTechnology Department. She also ensures compliance with the Department of Labor and theorganization’s accrediting agency (CARF).

Kim Seebach – VICE PRESIDENT HUMAN RESOURCESMr. Seebach has over 30 years of experience in non-profit leadership serving at- risk youth and peoplewho have disabilities and other barriers. He has served in executive Human Resources positions inCanada and the United States and as the Chief Operations Officer for Good Shepherd Communities, awest coast agency serving people with developmental disabilities.

He is a member of the Society for Human Resource Management and has been educated in HumanResource management at the University of California, Irvine and Chapman University.

Mr. Seebach is responsible for all aspects of human resources planning and administration, including:benefits, staffing, compliance, employee and labor relations, performance management, compensationand corporate policy development. As part of the Executive Team, he participates in planning andcontrolling corporate growth and evaluating performance against objectives.

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Nicole Suydam –VICE PRESIDENT, DEVELOPMENTNicole Suydam, CFRE, is Vice President, Development for the Corporation. She has more than 11 yearsof fundraising experience working for national and local nonprofit organizations.

Prior to her joining the Corporation in 2003, Ms. Suydam served as the development manager for Womenin Community Service, a national organization based in Alexandria, Virginia. From 1997 to 2001, shewas the development and public relations manager for the Second Harvest Food Bank of Orange County.

Ms. Suydam received her B.A. degree in History and Political Science from Vanguard University in1995.

Ms. Suydam has been recognized by OC Metro Magazine as one of "The Hottest 25 People in OrangeCounty" and she has been featured by the Nonprofit Times as one of the nation's "Top 10 NonprofitFundraisers Under the Age of 40." Vanguard University awarded her the Outstanding Young ProfessionalAward in 2006. Ms. Suydam currently serves on the Board of Directors of the Association of FundraisingProfessionals, Orange County Chapter. She earned her Certified Fund Raising Executive (CFRE)designation in 2004.

Ms. Suydam is responsible for all fundraising programs for the Corporation, including major gifts, annualgiving, special events and planned giving.

Phillip Runnels – DIRECTOR OF INFORMATION TECHNOLOGYMr. Runnels has over 20 years of experience in the computer industry with an extensive background incomputer production and management. He also trained corporate employees in the use of proprietarycomputer applications and hardware for a number of manufacturing firms prior to joining theCorporation. Mr. Runnels has also received special training in project and cost management during hiscareer within the computer industry.

Mr. Runnels is responsible for all activities within the Information Technology Department

Randy Taylor – DIRECTOR OF FACILITIESRandy Taylor has been employed by the Corporation since 1998. Mr. Taylor holds an M.B.A. and a B.A.in Administration and Management both from Columbia Pacific University. His twenty-five years ofprior experience includes corporate facilities, project management and construction/engineering in thehealth care industry. He has special training in construction engineering and contractor management. Mr.Taylor also holds a B-1 General Contractor's License.

Mr. Taylor is responsible for all activities related to facilities, loss prevention, property development,transportation and the recycling program.

Donald J. Voska – VICE PRESIDENT, FINANCE & CFODon Voska, a Certified Public Accountant, has 30 years of professional experience including positions ofincreasing responsibility in public accounting, consulting, and with the Federal Deposit InsuranceCorporation. He has a broad range of managerial, financial planning, accounting, reporting, and taxationexperience.

Mr. Voska holds a B.S. in Accounting and Business Administration from the University of NorthCarolina at Chapel Hill. He is also a Certified Public Accountant.

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Mr. Voska is responsible for all activities related to corporate finance, investment, accounting, reporting,reconciliation, payroll, purchasing and taxation.

Volunteers

In 2007, over 180 community volunteers supported the Corporation’s mission. In addition, theCorporation partners with the Volunteer Center of Orange County and the Volunteer Exchange Center toprovide court mandated community service opportunities. In 2007, approximately 6,700 court referredworkers performed nearly 122,000 hours of community service in the Corporation’s retail and processingoperations.

Operations

The Corporation’s programs maximize the independence of each person served through comprehensiveassessment, training, employment and specialized support services. A wide spectrum of servicesenhances each person’s personal, social and employment goals. Staffed by a professional team, programsare individually tailored to meet the individual’s specific objectives. The Corporation serves all ofOrange County, California. In 2007, the Corporation served 3,318 people with disabilities and otherbarriers and placed 403 into competitive employment.

In 2000 the Corporation formed Landmark Services, Inc., a separate corporation, to perform custodial anddocument destruction services through government contracts. The Corporation works with Landmark tosecure contracts in the private sector.

Fundraising

In January and February 2007, CCS Fundraising conducted a Campaign Feasibility and Planning Study,testing a possible $6,000,000 campaign goal to create the Fitness Center. There were 85 interviewsconducted, and the response was overwhelmingly favorable for the project to go forward. As a result, theCorporation’s Board approved moving forward in March 2007 with the Corporation’s first-ever capitalcampaign and set a goal of $6,000,000.

In less than one year of active fundraising, the Corporation received cash and pledges in excess of$6,000,000 and in March 2008 announced its intention to continue the campaign to raise an additional$1,000,000. As of September 29, 2008, over 415 individuals, corporations and foundations have helpedthe Corporation raise $7,000,129.40 in cash and five-year pledges.

Rogers Severson, a member of the Corporation’s Board, chairs the Goodwill Fitness Center Campaign.Under the leadership of Mr. Severson and President and CEO Dan Rogers, the campaign team now plansto raise an additional $600,000 to meet the operating needs of the Fitness Center.

In addition to the Capital Campaign, the Corporation seeks contributions on an annual basis throughmajor gifts, special events, direct mail, grants and deferred gifts. Annual donations compriseapproximately 1.28% of operating revenues

Endowment/Investment Policy

It is the policy of the Corporation to have an investment objectives policy that will: establishreasonable expectations, objectives and guidelines in the investment of the portfolio’s assets; set forth aninvestment structure detailing permitted asset classes and expected allocation among asset classes;provide for the engaging a professional investment advisor; encourage effective communication between

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the Investment Advisor and the Corporation; create the framework for a well-diversified asset mix thatcan be expected to generate acceptable long-term returns at a level of risk suitable to the Corporation.

Long Term Debt.

On March 8, 2006, the California Infrastructure and Economic Development Bank issued$9,850,000 variable rate tax exempt bonds and loaned the proceeds to the Corporation. The bonds andloan mature on March 1, 2031 and bear interest at a weekly interest rate as determined by a RemarketingAgent. The debt repayment schedule provides for principal payments which commenced on March 1,2007. There is currently outstanding on the loan the sum of $9,430,000. The proceeds of these bondswere used to finance the renovation and expansion of the Corporation’s retail and wholesale storefacilities, to make certain improvements related to street beautification and parking lot lighting andpurchase equipment and fixtures to use or install in conjunction with the project.

The Corporation’s Fitness Center

The Corporation purchased a building in November 2007 in order to build a fitness center forpeople with disabilities. The building was renovated after purchase. The bridge funding for this projectwas provided by Wells Fargo in the amount of $5,477,176.10. The Corporation paid $200,000 down as adeposit on the loan and the balance of $5,277,176.10, which bears interest at 5% per annum is due onNovember 10, 2008. The Wells Fargo loan will be paid in full from the loan of the proceeds of the bondsto the Corporation. A portion of this building is being leased to Landmark Services, Inc. to house thedocument destruction portion of its business at a monthly rent of $5,600.00.

Litigation

The Corporation is involved in a number of legal proceedings arising in the ordinary course of itsaffairs which, if determined adversely to the Corporation, are not expected to have any material adverseeffect on the Corporation’s finances or operations.

Financial Information

The operating revenues of the Corporation are primarily derived from store sales, auction sales,internet sales and contract services.

Set forth in the following tables are the Corporation's Statement of Activities summarizing TheCorporation’s operating activities and contributions for the fiscal years ended December 31, 2007, 2006and 2005.

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GOODWILL INDUSTRIES OF ORANGE COUNTY, CALIFORNIA

Statement of ActivitiesYear ended December 31, 2007

(With summarized financial information for the year ended December 31, 2006)

Totals

UnrestrictedTemporarilyRestricted

PermanentlyRestricted 2007 2006

Public support and revenue

Public supportIndirect public support $ 24,305 $ -- $ -- $ 24,305 $ 7,103Contributions 1,043,362 4,475,752 4,197 5,523,311 1,790,608Donated merchandise 20,901,074 -- -- 20,901,074 19,377,008Total public support 21,968,741 4,475,752 4,197 26,448,690 21,174,719

RevenueThrift store sales 31,413,298 -- -- 31,413,298 29,742,752Other sales 1,813,236 -- -- 1,813,236 1,105,007Contract services 4,748,842 -- -- 4,748,842 8,473,754Rehabilitation revenue 10,725,716 -- -- 10,725,716 4,332,849Technology services 527,965 -- -- 527,965 496,159Interest and other income 816,979 1,029 -- 818,008 789,390Realized and unrealized gains(losses) on marketable securities, net 605,958 4,621 -- 610,579 714,021Realized gains on fixed asset disposal 9,017 -- -- 9,017 1,400Unrealized loss on derivativeinstruments (205,103) -- -- (205,103) --Total revenue 50,455,908 5,650 -- 50,461,558 45,655,332

Net assets released from restrictions 980,376 (980,376) -- -- --

Total public support and revenue 73,405,025 3,501,026 4,197 76,910,248 66,830,051

ExpensesProgram servicesStore operations 37,627,134 -- -- 37,627,134 34,379,810Restoration 4,555,471 -- -- 4,555,471 4,280,193Solicitation and transportation 5,458,973 -- -- 5,458,973 5,152,511Rehabilitation 11,784,386 -- -- 11,784,386 9,686,445Contract services costs 5,345,426 -- -- 5,345,426 4,744,971Technology services 384,810 -- -- 384,810 310,713Total program services 65,156,200 -- -- 65,156,200 58,554,643

Supporting servicesGeneral and administrative 5,173,750 -- -- 5,173,750 4,594,194Fundraising 1,581,281 -- -- 1,581,281 956,023Total supporting services 6,755,031 -- -- 6,755,031 5,550,217

Total expenses 71,911,231 -- -- 71,911,231 64,104,860

Change in net assets 1,493,794 3,501,026 4,197 4,999,017 2,725,191

Net assets at beginning of year 19,835,768 370,625 44,492 20,250,885 17,525,694

Net assets at end of year $ 21,329,562 $ 3,871,651 $ 48,689 $ 25,249,902 $ 20,250,885

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Totals




Public supportIndirect public support $ 7,103 $ -- $ -- $ 7,103 $ 9,307Contributions 993,253 759,863 37,492 1,790,608 1,547,412Donated merchandise 19,377,008 -- -- 19,377,008 17,064,725Total public support 20,377,364 759,863 37,492 21,174,719 18,621,444

RevenueThrift store sales 29,742,752 -- -- 29,742,752 27,051,642Other sales 1,105,007 -- -- 1,105,007 952,640Contract services 8,473,754 -- -- 8,473,754 7,496,095Rehabilitation revenue 4,332,849 -- -- 4,332,849 4,039,813Technology services 496,159 -- -- 496,159 527,958Interest and other income 786,099 3,291 -- 789,390 605,815Realized and unrealized gains(losses) on marketable securities, net 714,140 (119) -- 714,021 (29,902)Realized gains on fixed asset disposal 1,400 -- -- 1,400 2,500Total revenue 45,652,160 3,172 -- 45,655,332 40,646,561


Total public support and revenue 66,509,802 282,757 37,492 66,830,051 59,268,005


Supporting servicesGeneral and administrative 4,594,194 -- -- 4,594,194 3,938,747Fundraising 956,023 -- -- 956,023 813,329Total supporting services 5,550,217 -- -- 5,550,217 4,752,076

Total expenses 64,104,860 -- -- 64,104,860 56,383,328

Change in net assets 2,404,942 282,757 37,492 2,725,191 2,884,677


Net assets at end of year $ 19,835,768 $ 370,625 $ 44,492 $ 20,250,885 $ 17,525,694

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Totals




Public supportIndirect public support $ 9,307 $ -- $ -- $ 9,307 $ 5,790Contributions 1,194,693 350,219 2,500 1,547,412 1,428,765Donated merchandise 17,064,725 -- -- 17,064,725 14,095,431Total public support 18,268,725 350,219 2,500 18,621,444 15,529,986

RevenueThrift store sales 27,051,642 -- -- 27,051,642 24,291,939Other sales 952,640 -- -- 952,640 473,959Contract services 7,496,095 -- -- 7,496,095 6,917,766Rehabilitation revenue 4,039,813 -- -- 4,039,813 3,579,915Technology services 527,958 -- -- 527,958 429,750Interest and other income 603,096 2,719 -- 605,815 368,925Realized and unrealized gains(losses) on marketable securities, net (28,931) (971) -- (29,902) 386,902Realized gains on fixed asset disposal 2,500 -- -- 2,500 34,457Total revenue 40,644,813 1,748 -- 40,646,561 36,483,613


Total public support and revenue 59,237,411 28,094 2,500 59,268,005 52,013,599


Supporting servicesGeneral and administrative 3,938,747 -- -- 3,938,747 3,536,961Fundraising 813,329 -- -- 813,329 697,393Total supporting services 4,752,076 -- -- 4,752,076 4,234,354

Total expenses 56,383,328 -- -- 56,383,328 49,854,493

Change in net assets 2,854,083 28,094 2,500 2,884,677 2,159,106


Net assets at end of year $ 17,430,826 $ 87,868 $ 7,000 $ 17,525,694 $ 14,641,017


APPENDIX B

AUDITED FINANCIAL STATEMENTS OF THE CORPORATION

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APPENDIX C

BOOK-ENTRY SYSTEM

THE INFORMATION HEREIN CONCERNING DTC AND DTC’S BOOK-ENTRY SYSTEM HAS BEEN OBTAINED FROM SOURCES THAT THE AUTHORITY, THE CORPORATION, THE TRUSTEE AND UNDERWRITER BELIEVE TO BE RELIABLE, BUT THE AUTHORITY, THE CORPORATION, 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).

The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each maturity the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC.

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has Standard & Poor’s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.

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

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

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

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

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

Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Authority or the Trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Trustee, or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

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

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

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

The foregoing information concerning DTC and DTC’s book-entry system has been obtained from sources that the Authority believes to be reliable, but the Authority takes no responsibility for the accuracy thereof.

BENEFICIAL OWNERS WILL NOT RECEIVE PHYSICAL DELIVERY OF BONDS AND WILL NOT BE RECOGNIZED BY THE TRUSTEE AS OWNERS THEREOF UNDER THE TERMS OF THE INDENTURE, AND BENEFICIAL OWNERS WILL BE PERMITTED TO EXERCISE THE RIGHTS OF OWNERS ONLY INDIRECTLY THROUGH DTC AND THE PARTICIPANTS. THE AUTHORITY WILL HAVE NO RESPONSIBILITY OR OBLIGATION TO SUCH DTC PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES WITH RESPECT TO THE PAYMENTS TO DTC PARTICIPANTS OR THE INDIRECT PARTICIPANTS OR THE BENEFICIAL OWNERS.

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The Authority, the Underwriter and the Corporation cannot and do not give any assurances that DTC, DTC Participants or others will distribute payments of principal, redemption price, Purchase Price and interest with respect to the Bonds paid to DTC or its nominee as the registered owner, or will distribute any redemption notices, notices of mandatory tender 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 the Underwriter and the Corporation are 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, redemption price, Purchase Price and interest with respect to 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.

[Remainder of Page Left Intentionally Blank]


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APPENDIX D

SUMMARY OF CERTAIN PROVISIONS OF THEPRINCIPAL LEGAL DOCUMENTS

The following is a summary of certain provisions of the Indenture and the Loan Agreement (the“Agreement”) which are not described elsewhere in the Official Statement. This summary does not purport to becomprehensive, and reference should be made to the Indenture and the Agreement for a full and complete statementof their provisions.

DEFINITIONS

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

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

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

“Act of Bankruptcy” means any of the following with respect to any person: (a) the commencement bysuch person of a voluntary case under the federal bankruptcy laws, as now in effect or hereafter amended, or anyother applicable federal or state bankruptcy, insolvency or similar laws; (b) failure by such person to timelycontrovert the filing of a petition with a court having jurisdiction over such person to commence an involuntary caseagainst such person under the federal bankruptcy laws, as now in effect or hereafter amended, or any otherapplicable federal or state bankruptcy, insolvency or similar laws; (c) such person shall admit in writing its inabilityto pay its debts generally as they become due; (d) a receiver, trustee, custodian or liquidator of such person or suchperson’s assets shall be appointed in any proceeding brought against the person or such person’s assets; (e)assignment of assets by such person for the benefit of its creditors; or (f) the entry by such person into an agreementof composition with its creditors.

“Additional Payments” means the payments to be made by the Corporation to the Authority or the Trusteepursuant to certain provisions of the Agreement.

“Agreement” or “Loan Agreement” means the Loan Agreement, dated as of October 1, 2008, between theAuthority and the Corporation and relating to the loan of the proceeds of the Bonds, as originally executed or as itmay from time to time be supplemented or amended.

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

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

“Approving Opinion” means an Opinion of Bond Counsel to the effect that an action being taken (a) isauthorized by the applicable provisions of the Indenture, and (b) will not, in and of itself, adversely affect the Tax-Exempt status of interest on the Bonds.

“Authority” means the California Municipal Finance Authority, or its successors and assigns, a jointexercise of powers authority formed by a Joint Exercise of Powers Agreement, dated as of January 1, 2004 by andamong certain California cities, counties and special districts, as may be amended from time to time (the “JointPowers Agreement”) pursuant to the provisions of the Act.

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“Authority Annual Fee” means 1.5 basis points times the outstanding principal amount of the Bonds. Forpurposes of this definition, the full original principal amount of the Bonds will be deemed to have been drawn downand outstanding on the Closing Date.

“Authority Issuance Fee” means $15,400.00 which amount is 0.2% of the original aggregate principalamount of the Bonds.

“Authorized Authority Representative” means any member of the Board of Directors of the Authority(“Authority Board”), or any other person designated as an Authority Representative by a certificate signed by amember of the Authority Board and filed with the Trustee, the Corporation, and each Credit Provider (if any).

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

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

“Available Amounts” means (a) during any period in which Outstanding Bonds are secured by a CreditFacility, (i) funds received by the Trustee pursuant to such Credit Facility or otherwise from the Credit Provider;(ii) moneys which have been continuously on deposit with the Trustee (A) held in any separate and segregated fund,account or subaccount established under the Indenture in which no other moneys which are not Available Amountsare held, and (B) which have so been on deposit with the Trustee for at least 123 consecutive days from their receiptby the Trustee and not commingled with any moneys so held for less than said period and during and prior to whichperiod, and as of the date of the application thereof to the payment of Bonds, no Act of Bankruptcy of theCorporation or the Authority has occurred; (iii) proceeds from the issuance and sale or remarketing of bonds, notesor other evidences of indebtedness of the Authority received by the Trustee directly and contemporaneously with theissuance and sale or remarketing of such bonds, notes or other evidences of indebtedness if there is delivered to theTrustee at the time such moneys are deposited with the Trustee an opinion of counsel (which may assume that noHolder of Bonds is an “insider” within the meaning of the Bankruptcy Code) from a firm experienced in bankruptcymatters to the effect that the use of such moneys to pay amounts due on the Bonds would not be recoverable fromthe Bondholders pursuant to Section 550 of the Bankruptcy Code as avoidable preferential payments underSection 547 of the Bankruptcy Code in the event of the occurrence of an Act of Bankruptcy of the Corporation orthe Authority; (iv) any other moneys if there is delivered to the Trustee at the time such moneys are deposited withthe Trustee an opinion of counsel as described in (iii) above; or (v) proceeds of the investment of funds qualifying asAvailable Amounts under the foregoing clauses; and (b) during any period in which Outstanding Bonds are notsecured by a Credit Facility, any moneys deposited with the Trustee.

“Bank” means Wells Fargo Bank, National Association, acting through its Los Angeles Branch, and itssuccessors or assigns.

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

“Basic Bond Rate” shall mean the rate of interest applicable to Bonds that are not Credit Provider Bonds.

“Beneficial Owner” means, with respect any Book-Entry Bond, the beneficial owner of such Bond asdetermined in accordance with the applicable rules of the Securities Depository for the Bonds.

“Bond Counsel” means any attorney at law or firm of attorneys, of nationally recognized standing inmatters pertaining to the validity of, and exclusion from gross income for federal tax purposes of interest on, bonds

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issued by states and political subdivisions and duly admitted to practice law before the highest court of any state ofthe United States and acceptable to the Authority.

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

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

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

“Bonds” means the California Municipal Finance Authority Variable Rate Demand Revenue Bonds(Goodwill Industries of Orange County, California) Series 2008 authorized and issued pursuant to the Indenture andany Bonds issued in exchange or replacement thereof in accordance with the Indenture.

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

“Business Day” means any day other than a Saturday or a Sunday, any day on which banks located in thecities in which the Principal Offices of the Trustee and the Remarketing Agent are located, and any day on whichbanks in the city in which the office of the Credit Provider where drawings under the Credit Facility are to be made,are not required or authorized to be closed.

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

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

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

“Certified Resolution” means a copy of a resolution of the Authority certified by the Secretary of theAuthority, or any other Authorized Authority Representative, to have been duly adopted by the Authority and to bein full force and effect on the date of such certification.

“Closing Date” means October 30, 2008.

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

“Completion Date” means the date of completion of the Project as that date shall be certified as provided inthe Agreement.

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

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

“Conversion Notice” means the notice required by the Indenture of the Conversion of the Bonds.

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“Corporation” means (i) Goodwill Industries of Orange County, California, a California nonprofit publicbenefit corporation, and its successors and assigns, and (ii) any surviving, resulting or transferee corporation asprovided in the Agreement.

“Costs” means, with respect to the Project, the sum of the items, or any such item, of the cost of thecompletion of the Project authorized to be financed with Bond proceeds pursuant to the provisions of the Act and theAgreement, including the reimbursement to the Corporation of amounts expended for such costs to the extentpermitted 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 theAuthority or the Corporation and related to the authorization, issuance, sale and delivery of the Bonds, including butnot limited to costs of preparation and reproduction of documents, printing expenses, filing and recording fees,initial fees and charges of the Trustee including fees of its counsel, initial fees and charges of the Credit Provider,including tees of its counsel, legal fees and charges, fees and disbursements of consultants and professionals, ratingagency fees, fees and charges for preparation, execution and safekeeping of the Bonds and any other cost, charge orfee in connection with the original issuance of the Bonds which constitutes a “cost of issuance” within the meaningof Section 147(g) of the Code.

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

“Credit Agreement” means, with respect to the Credit Facility, the agreement or agreements between theCorporation and the Credit Provider, as originally executed or as it or they may from time to time be replaced,supplemented or amended in accordance with the provisions thereof, providing for the issuance of the Credit Facilityand the reimbursement of the Credit Provider for payments thereunder, together with any related pledge agreement,security agreement or other security document. A Credit Facility and the related Credit Agreement may be a singledocument.

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

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

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

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

“Credit Provider Bond” means any Bond acquired with moneys in the Credit Facility Purchase Accountpursuant to the Indenture until such Bond is remarketed and the Credit Facility has been fully reinstated as providedin the Indenture or until such Bond is no longer considered a Credit Provider Bond in accordance with the CreditAgreement.

“DTC” means The Depository Trust Company and its successors and assigns.

“DTC Participants” means those broker-dealers, banks and other financial institutions from time to time forwhich DTC holds Bonds as securities depository.

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

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

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“Facilities” means all of the real and personal property of Goodwill Industries of Orange County,California, located at (i) 1601 East St. Andrew Place, Santa Ana, California, (ii) 3021 West Lincoln Avenue,Anaheim, California, and (iii) 410 North Fairview Street, Santa Ana, California, as the same may be improved andexpanded from time to time.

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

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

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

“Indenture” means the Indenture of Trust, as originally executed or as it may from time to time besupplemented, modified or amended by any Supplemental Indenture entered into pursuant to the provisions of theIndenture.

“Information Services” means Financial Information, Inc.’s “Daily Called Bond Service,” 1 CragwoodRoad, 2nd Floor, South Plainfield, New Jersey 07080, Attention: Editor; Standard and Poor’s J.J. KennyInformation Services’ “Called Bond Record,” 55 Water Street, 45th Floor, New York, New York 10041; andMergent, Inc., 585 Kingsley Park Drive, Fort Mill, South Carolina 29715, Attention: Called Bond Department.; or,in accordance with then-current guidelines of the Securities and Exchange Commission, such other addresses and/orsuch other services providing information with respect to called bonds, as the Corporation may designate in aCertificate of the Corporation delivered to the Trustee.

“Initial Credit Facility” means the Letter of Credit.

“Interest Payment Date” means (i) with respect to each Bond bearing interest at a Weekly Interest Rate, thefirst day of each calendar month, (ii) with respect to each Bond bearing interest at a Term Interest Rate for a TermInterest Rate Period of less than one year, the day immediately succeeding the last day of such Term Interest RatePeriod, and (iii) with respect to any Term Interest Rate Period of one year or longer, each Semi-Annual InterestPayment Date during such Term Interest Rate Period and the day immediately succeeding the last day of such TermInterest Rate Period.

“Interest Period” means the period from and including any Interest Payment Date to and including the dayimmediately preceding the next following Interest Payment Date, except that the first Interest Period shall be theperiod from and including the date of the first authentication and delivery of the Bonds to and including the dayimmediately preceding the first Interest Payment Date relating to the Bonds.

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

“Investment Securities” means any of the following if and to the extent that the following are at the timelegal investments under the laws of the State of California for moneys held under the Indenture and then proposed tobe invested therein and shall be the sole investments in which amounts on deposit in any fund or account createdunder the Indenture shall be invested:

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

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

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

(i) Export-Import Bank;

(ii) Rural Economic Community Development Administration (formerly the Farmers HomeAdministration);

(iii) Federal Financing Bank;

(iv) General Services Administration;

(v) U.S. Maritime Administration;

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

(vii) Small Business Administration;

(viii) Government National Mortgage Association;

(ix) Federal Housing Administration;

(x) Farm Credit System Financial Assistance Corporation; and

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

(d) Direct obligations of any federal agency or federally sponsored entity which are not fullyguaranteed 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; and

(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-1" by S&P, "P-1" by Moody's and "F-1" by Fitch) of at least one nationallyrecognized rating agency and which matures not more than 270 days after the date of purchase.

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

(g) Investments in (i) money market funds subject to SEC 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 ratingagency including funds for which the Trustee and its affiliates provide investment advisory or other managementservices, and (ii) public sector investment pools operated pursuant to SEC Rule 2a-7 in which the deposit shall not

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exceed 5% of the aggregate pool balance at any time and such pool is rated in one of the two highest short-termrating categories, without regard to qualifiers, of at least two nationally recognized rating agencies.

(h) Pre-refunded municipal obligations, defined as follows: any bonds or other obligations of any stateof the United States of America or of any agency, instrumentality or local governmental unit of any such state whichare not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been givenby the obligor to call on the date specified in the notice; and,

(i) which are rated, based on an irrevocable escrow account or fund (the “escrow”), in the highestlong-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 anescrow consisting of cash or securities as described in paragraphs (b) or (c) above, which escrow may be appliedonly to the payment of such principal of and interest and redemption premium, if any, on such bonds or otherobligations on the maturity date or dates thereof or the redemption date or dates specified pursuant to suchirrevocable instructions, as appropriate, and (B) which escrow is sufficient, as verified by an Accountant’sCertificate, to pay principal of and interest and redemption premium, if any, on the bonds or other obligationsdescribed in this paragraph on the maturity date or dates thereof or the redemption date or dates specified pursuant tosuch 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 toqualifiers) of at least two nationally recognized rating agencies. In the event such obligations are variable rateobligations, the interest rate on such obligations must be reset not less frequently than annually.

(j) Repurchase agreements with any commercial bank, which has a long-term, unsecured rating of“A” or better by S&P and A2 or better by Moody’s, provided that (i) the term of such repurchase agreement is notgreater than thirty years, (ii) the Trustee or third party acting solely as agent for the Trustee has possession of thecollateral, (iii) the collateral is valued weekly and the market value of the collateral is maintained at an amount equalto at least 102% for those securities defined in paragraphs (b) and (c) above and 104% for those securities defined inparagraph (d) above of the amount of cash transferred by the Trustee to the commercial bank under the repurchaseagreement plus interest, (iv) failure to maintain the requisite collateral levels will permit the Trustee to liquidate thecollateral immediately, (v) the repurchase securities are free and clear of any third-party lien or claim; and (vi) in thecase of PSA Master Repurchase Agreements, there shall have been delivered to the Trustee, the Authority and theCorporation an Opinion of Counsel to the effect that such repurchase agreement meets all guidelines under State lawfor legal investment of the funds to be invested.

(k) Investment agreements, including guaranteed investment contracts (“GICs”), forward purchaseagreements and reserve fund put agreements approved by the Credit Provider; and

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

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

“Letter of Credit” means that certain irrevocable direct pay letter of credit issued by the Bank in favor ofthe Trustee pursuant to that certain Reimbursement Agreement, dated as of October 1, 2008, between theCorporation and the Bank.

“Loan” means the loan in the initial aggregate principal amount of the Bonds made by the Authority to theCorporation pursuant to the Agreement.

“Mandatory Sinking Fund Payments” means the amounts payable on the date set forth in the Indenture.

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

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“Maximum Interest Rate” means with respect to the Bonds, the rate of interest specified in such CreditFacility which is used to determine the amount available under a Credit Facility for payment of interest due andpayable to Holders of the Bonds, but in no event greater than 12% per annum.

“Moody’s” means Moody’s Investors Service, Inc., a corporation organized and existing under the laws ofthe State of Delaware, its successors and assigns and, if such entity shall be dissolved or liquidated or shall no longerperform the functions of a securities rating agency, “Moody’s” shall be deemed to refer to any other nationallyrecognized securities rating agency (other than S&P or Fitch) designated by the Authority, with the approval of theCorporation, by notice to the Credit Provider, the Trustee and the Remarketing Agent.

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

“NRMSIR” means a nationally recognized municipal securities information repository recognized by theSecurities and Exchange Commission pursuant to Rule 15c2-12.

“Opinion of Bond Counsel” means an Opinion of Counsel by a nationally recognized bond counsel firmexperienced in matters relating to the exclusion from gross income for federal income tax purposes of interestpayable on obligations of state and political subdivisions.

“Opinion of Counsel” means a written opinion of counsel (who may be counsel for the Corporation)acceptable to the Authority and the Corporation. If and to the extent required by the provisions of the Indenture,each Opinion of Counsel shall include the statements provided for therein.

“Outstanding,” when used as of any particular time with reference to the Bonds (subject to the provisionsof the Indenture relating to action by Bondholders), means all Bonds theretofore authenticated and delivered by theTrustee 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 anddelivered by the Trustee pursuant to the terms of the Indenture;

(c) Bonds with respect to which the liability of the Authority has been discharged to the extentprovided in, and pursuant to the requirements of, the Indenture; and

(d) Bonds deemed purchased pursuant to the Indenture.

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

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

“Principal Office” (i) of the Trustee means the principal corporate trust office of the Trustee designated inwriting to the Authority, the Credit Provider and the Corporation, which initially shall be located in Los Angeles,California at the address set forth in the Indenture; (ii) of the Remarketing Agent means its office designated inwriting to the Authority, the Trustee, the Credit Provider and the Corporation; (iii) of the Bank means the Bank’sLos Angeles representative office or such other office of the Bank designated in writing to the Authority, the Trusteeand the Corporation; and (iv) of any subsequent Credit Provider means its office located at such address as suchCredit Provider shall designate in writing to the Authority, the Trustee and the Corporation.

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“Project” means the Project described under the heading “Description of the Project” in Exhibit A to theAgreement.

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

“Purchase Date” means, with respect to any Bonds, each date on which such Bond is required to bepurchased pursuant to the Indenture.

“Purchase Price” means an amount equal to 100% of the principal amount of any Bond (or the portionthereof) tendered or deemed tendered to the Trustee for purchase pursuant to the Indenture, plus accrued and unpaidinterest thereon to but not including the date of purchase; provided, however, if the Purchase Date occurs after theRecord Date applicable to the interest accrued on such Bond from the last occurring Interest Payment Date, then thePurchase Price shall not include accrued and unpaid interest, which shall be paid to the Holder of record on theapplicable Record Date.

“Qualified Newspaper” means The Wall Street Journal or The Bond Buyer or any other newspaper orjournal 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 Authority, with approval of the Corporation, anddesignated to the Trustee.

“Rating Agency” means Fitch, Moody’s or S&P to the extent they then are providing or maintaining arating on the Bonds, or in the event that Fitch, Moody’s or S&P no longer maintains a rating on the Bonds, any othernationally recognized rating agency then providing or maintaining a rating on the Bonds at the request of theCorporation and approved by the Authority.

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

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

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

“Remarketing Agent” means the initial Remarketing Agent for the Bonds designated in the Indenture andany successor thereto appointed pursuant thereto.

“Remarketing Agreement” means any agreement or agreements meeting the requirements of the Indenture.

“Repayment Installment” means any amount that the Corporation is required to pay to the Trustee pursuantto the Agreement.

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

“Revenues” means all payments received by the Authority or the Trustee pursuant or with respect to theAgreement (except Additional Payments) or a Credit Facility, including, without limiting the generality of theforegoing, Repayment Installments (including both timely and delinquent payments), prepayments and all incomederived from the investment of any moneys in any fund or account established pursuant to the Indenture, but notincluding amounts, including investment income, received for or on deposit in the Rebate Fund.

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“Rule 15c2-12” means Rule 15c2-12 adopted by the Securities and Exchange Commission under theSecurities Exchange Act of 1934, as it may from time to time be amended and supplemented.

“S&P” means Standard & Poor’s Ratings Services, its successors and their assigns, and, if such entity shallbe dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “S&P” shall bedeemed to refer to any other nationally recognized securities rating agency (other than Fitch or Moody’s) designatedby the Authority, with the approval of the Corporation, by notice to the Credit Provider, the Trustee and theRemarketing Agent.

“Semi-Annual Interest Payment Date” means April 1 and October 1.

“SID” means the state information depository, if any, of the State recognized by the Securities andExchange Commission pursuant to Rule 15c2-12.

“State” means the State of California.

“Supplemental Indenture” or “indenture supplemental hereto” means any indenture hereafter dulyauthorized and entered into between the Authority and the Trustee in accordance with the provisions of theIndenture.

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

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

“Tax-Exempt” means, with respect to interest on any obligations of a state or local government, includingthe Bonds, that such interest is excluded from the gross income of the holders thereof (other than any holder who isa “substantial user” of facilities financed with such obligations or a “related person” within the meaning ofSection 147(a) of the Code) for federal income tax purposes, whether or not such interest is includable as an item oftax preference or otherwise includable directly or indirectly for purposes of calculating other tax liabilities, includingany alternative minimum tax or environmental tax under the Code.

“Tax-Exempt Securities” means revenue bonds or other securities the interest on which is Tax-Exempt.

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

“Term Interest Rate Period” means each period determined by the Corporation pursuant to the Indentureduring which the Bonds bear interest at a Term Interest Rate; provided that each such period shall be for a term ofapproximately one month, approximately three months, approximately six months, approximately nine months,approximately one year or any multiple of approximately six months above one year in each case ending on a daypreceding a Business Day; provided, however, that notwithstanding the foregoing any Term Interest Rate Periodwhich ends on the day immediately preceding the maturity date of the Bonds may include a period of time from theInterest Payment Date immediately preceding the maturity date of the Bonds to the day immediately preceding thematurity date of the Bonds even if the time remaining to such day is not one of the periods specified above; andprovided further that notwithstanding the foregoing any Term Interest Rate Period may end on the day immediatelypreceding the maturity date of the Bonds whether or not such maturity date is a Business Day.

“Trustee” means Wells Fargo Bank, National Association, a national banking association organized underthe laws of the United States of America, and its successors and assigns or any successor trustee appointed pursuantto the Indenture.

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

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“Weekly Interest Rate Period” means each period during which the Bonds bear interest at Weekly InterestRates.

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

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

“Yield” shall have the meaning ascribed to such term by Section 148(h) of the Code.

THE INDENTURE

Project Fund. The Trustee shall establish the Project Fund (the “Project Fund”). The Trustee shallestablish within the Project Fund such accounts and subaccounts as are specified in a written instruction from theCorporation given in accordance with the Tax Certificate and, upon written direction from an AuthorizedCorporation Representative, such additional accounts and subaccounts as may be necessary or convenient to carryout the purposes of the Tax Certificate. Funds in the Project Fund shall be applied to the Costs of the Project asprovided in the Indenture. Before each payment is made from the Project Fund by the Trustee, there shall be filedwith the Trustee a requisition conforming to the requirements of the Agreement, approved by the Credit Providerand in the form attached as an exhibit to the Agreement. Each such requisition shall be sufficient evidence to theTrustee of the facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts. Uponreceipt of each such requisition, signed by an Authorized Corporation Representative and approved by the CreditProvider, the Trustee shall pay the amount set forth therein as directed by the terms thereof.

Upon the receipt by the Trustee of a certificate conforming with the requirements of the Agreement, andafter payment of Costs payable from the Project Fund or provision having been made for payment of such Costs notyet due by retaining sufficient amounts to pay such Costs in the Project Fund or otherwise as directed in suchcertificate, the Trustee shall transfer any remaining balance in the Project Fund into a separate account within theBond Fund, which the Trustee shall establish and hold in trust, and which shall be entitled the “Surplus Account.”The moneys in the Surplus Account shall be used and applied subject to certain provisions of the Indenture to thepurchase for cancellation or redemption of Bonds, to the maximum degree permissible, and at the earliest dates atwhich such Bonds can be purchased or redeemed pursuant to the Indenture. Notwithstanding certain provisions ofthe Indenture, the moneys in such Surplus Account shall be invested at a Yield no higher than the Yield on theOutstanding Bonds (unless there is delivered to the Trustee an Opinion of Bond Counsel to the effect thatinvestment at a higher Yield would not, in and of itself, adversely affect the Tax-Exempt status of interest on theBonds), and all such investment income shall be deposited in the Surplus Account and expended or reinvested asprovided above.

In the event of redemption of all the Bonds pursuant to the Indenture or an Event of Default which causesacceleration of the Bonds, any moneys then remaining in the Project Fund and the Bond Loan Repayment Fund shallbe transferred to the Surplus Account within the Bond Fund, and all moneys in the Bond Fund shall be used to payor redeem Bonds.

Costs of Issuance Fund. The Trustee shall establish the Costs of Issuance Fund (the “Costs of IssuanceFund”). The moneys in the Costs of Issuance Fund shall be held by the Trustee in trust and applied to the paymentof Costs of Issuance of the Bonds. All payments from the Costs of Issuance Fund shall be reflected in the Trustee’sregular accounting statements. Any amounts remaining in the Costs of Issuance Fund six months following the IssueDate of the Bonds shall be transferred to the Project Fund and applied as provided in the Indenture. Upon suchtransfer the Costs of Issuance Fund will be closed.

Bond Purchase Fund. There shall be created and established with the Trustee a trust fund designated the“California Municipal Finance Authority Variable Rate Demand Revenue Bonds (Goodwill Industries of OrangeCounty, California) Series 2008 Bond Purchase Fund” (the “Bond Purchase Fund”). There shall also be created andestablished separate accounts in the Bond Purchase Fund designated the “Remarketing Account” and the “CreditFacility Purchase Account.”

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(a) Remarketing Account. All moneys received by the Trustee on behalf of purchasers of Bondspursuant to the Indenture shall be (i) deposited in the Remarketing Account within the Bond Purchase Fund, (ii) heldin trust in accordance with the provisions thereof and (iii) paid out in accordance with the Indenture.

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

The funds held by the Trustee in the Bond Purchase Fund shall not be considered Revenues and shall notconstitute part of the trust estate that is subject to the lien of the Indenture. The moneys in the Remarketing Accountand in the Credit Facility Purchase Account shall be used solely to pay the Purchase Price of the Bonds, as providedin the Indenture (or to reimburse the Credit Provider, if any, for payments made under the Credit Facility for suchpurpose) and may not be used for any other purposes. All amounts held in the Remarketing Account and in theCredit Facility Purchase Account shall be held in trust by the Trustee for the benefit of the Bondholders orBeneficial Owners of tendered Bonds (provided that any amounts held in the applicable Remarketing Accountwhich are derived from the remarketing of Credit Provider Bonds shall be held in trust for the benefit of the CreditProvider). No other moneys shall be deposited in the Credit Facility Purchase Account.

Pledge of Revenues and Credit Facility. (a) Subject only to the provisions of the Indenture permitting theapplication thereof for the purposes and on the terms and conditions set forth in the Indenture, all of the Revenuesand all amounts, including the proceeds of the sale of the Bonds (but excluding any Additional Payments) held inany fund or account established pursuant to the Indenture other than the Rebate Fund and the Bond Purchase Fundare irrevocably pledged to the punctual payment of the principal of, premium, if any, and interest on the Bonds andto the payment of obligations due to the Credit Provider under the Credit Agreement. Subject only to the provisionsof the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in theIndenture, all amounts in the Remarketing Account and in the Credit Facility Purchase Account are irrevocablypledged pursuant to the Indenture to the punctual payment of the Purchase Price of the Bonds tendered or deemedtendered for purchase pursuant to the Indenture and to the extent provided in the Credit Agreement relating to theBonds, to the payment of obligations due to the Credit Provider under such Credit Agreement. Said pledge shallconstitute a first and exclusive lien on the Revenues and the amounts in such funds and accounts for the payment ofthe Bonds, and payment to the Credit Provider in accordance with the terms of the Indenture and of the CreditAgreement to the extent of their interests therein. All Revenues and other amounts pledged under the Indentureshall be held in trust for the benefit of the Holders from time to time of the Bonds, but shall nevertheless bedisbursed, allocated and applied solely for the uses and purposes set forth in the Indenture.

(b) The Authority transfers in trust, grants a security interest in, assigns and sets over to the Trustee,for the benefit of the Holders from time to time of the Bonds and the Credit Provider to the extent of their interesttherein, all of the Revenues and the other amounts pledged in the provisions of the Indenture described in (a) aboveand all right, title and interest and privileges it has in and under the Agreement (except (i) the Authority’s rights toreceive any notices, reports and opinions under the Indenture or the Agreement, (ii) the Authority’s right to receiveAdditional Payments and enforce its rights with respect to payments of fees, expenses and indemnification, and (iii)the Authority’s rights to give approvals or consents pursuant to the Agreement), including, without limitation, theright to collect and receive directly all of the Revenues and the right to hold and enforce any security therefor; andany Revenues collected or received by the Authority shall be deemed to be held, and to have been collected orreceived, by the Authority as the agent of the Trustee, and shall forthwith be paid by the Authority to the Trustee.The assignment under the Indenture is to the Trustee solely in its capacity as Trustee under the Indenture and issubject to the provisions of the Indenture. In taking or refraining from taking any action under the Agreementpursuant to such assignment, the Trustee shall be entitled to the protections and limitations from liability afforded itas Trustee under the Indenture. The Trustee also shall be entitled to take all steps, actions and proceedingsreasonably necessary in its judgment (1) to enforce the terms, covenants and conditions of, and preserve and protectthe priority of its interest in and under, the Agreement, the Credit Facility and any other security agreement withrespect to the Project or the Bonds, and (2) to assure compliance with all covenants, agreements and conditions onthe part of the Authority contained in the Indenture with respect to the Revenues.

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(c) Pursuant to the Indenture, each Credit Facility provided with respect to the Bonds is (to the extentthe Authority has any interest therein) irrevocably pledged to the punctual payment of the principal and PurchasePrice of, and interest on, the Bonds, and proceeds of any drawing on such Credit Facility shall not be used for anyother purpose. Said pledge shall constitute a first and exclusive lien in favor of the Trustee for the benefit of theHolders of the Bonds of the Authority’s interest, if any, in the Credit Facility relating to the Bonds and anypayments thereunder for the payment of the principal and Purchase Price of, and interest on, the Bonds inaccordance with the terms thereof. The Credit Facility relating to the Bonds, if any, and any payments thereundershall be held in trust for the benefit of the Holders from time to time of the Bonds, but shall nevertheless bedisbursed, allocated and applied solely for the uses and purposes set forth in the Indenture.

(d) The Corporation may at its sole discretion from time to time deliver to the Trustee or the Authoritysuch additional or other security to secure the payment of the principal of and interest and premium, if any, on, andPurchase Price of, the Bonds and any such additional or other security delivered by the Corporation shall be pledgedto such payment, provided that the delivery of such additional or other security does not adversely affect the Tax-Exempt status of interest on the Bonds.

Bond Fund. (a) Upon the receipt thereof, the Trustee shall deposit all Revenues in the “CaliforniaMunicipal Finance Authority Variable Rate Demand Revenue Bonds (Goodwill Industries of Orange County,California) Series 2008 Bond Fund” (the “Bond Fund”) which the Trustee shall establish and maintain and hold intrust, and which shall be disbursed and applied only as authorized in the Indenture. Except as provided in theIndenture, moneys in the Bond Fund shall be used solely for (i) the payment of the principal of and premium, if any,and interest on all the Bonds as the same shall become due, pari passu, whether at maturity or upon redemption oracceleration, or (ii) to reimburse to the Credit Provider for any obligations due and payable.

(b) The Trustee shall deposit in the Bond Fund from time to time, upon receipt thereof, all RepaymentInstallments received by the Trustee from the Corporation and any income received from the investment of moneyson deposit in the Bond Fund and any other Revenues; provided, however, that any prepayment of RepaymentInstallments received under the Agreement from or for the account of the Corporation shall be deposited in a specialaccount in the Bond Fund established by the Trustee for the purposes of receipt and application of such prepayment,or in such other fund or account held by the Trustee for such purpose in accordance with the provisions of theIndenture relating to defeasance of Bonds.

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

Investment of Moneys. Subject to certain provisions of the Indenture relating to arbitrage covenants andthe Rebate Fund, any moneys in any of the funds and accounts to be established by the Trustee pursuant to theIndenture (other than the Bond Purchase Fund and the Credit Facility Account) shall be invested if and to the extentthen permitted by law, in Investment Securities. In the absence of any written direction from the Corporation, theTrustee is directed to invest available moneys in Investment Securities described in paragraph (g) of the definitionthereof. Moneys in any fund or account (other than the Bond Purchase Fund and the Credit Facility Account) shallbe invested in Investment Securities with respect to which payments of principal thereof and interest thereon arescheduled to be paid or are otherwise payable (including Investment Securities payable at the option of the Holder)not later than the date on which such moneys will be required by the Trustee. For investment purposes only, theTrustee may commingle the funds and accounts established under the Indenture (other than the Bond Purchase Fund,the Credit Facility Account, the Rebate Fund and any fund or account established pursuant to the defeasanceprovisions of the Indenture) but shall account for each separately. Any Investment Securities that are registrablesecurities shall be registered in the name of the Trustee.

Notwithstanding the foregoing, (i) any moneys held in the Bond Purchase Fund and any moneysconstituting payments under the Credit Facility shall be held uninvested unless such moneys are invested to effectthe defeasance of the Bonds in accordance with the provisions of the Indenture and (ii) any moneys constitutingAvailable Amounts shall be invested in Investment Securities that are rated “Aaa” by Moody’s and that mature on orbefore the date on which such moneys are to be applied to the payment of Bonds.

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Repayment to Corporation or Credit Provider. When there are no longer any Bonds Outstanding underthe Indenture, and all fees, charges and expenses of the Trustee, the Credit Provider and the Remarketing Agenthave been paid or provided for, payment of the full amount owing the United States Government, as determinedunder the Agreement, the Indenture and the Tax Certificate, all expenses of the Authority relating to the Project, theIndenture, the Agreement and the Tax Certificate have been paid or provided for, and all other amounts payableunder the Indenture and under the Agreement have been paid, and the Indenture has been discharged and satisfied inaccordance with the Indenture, the Trustee shall pay to the Corporation any amounts remaining in any fundestablished and held under the Indenture; provided, however, that no payment shall be made to the Corporation andsuch amounts shall be paid to the Credit Provider if and to the extent the Corporation has any obligations to theCredit Provider which are then due and payable, as certified by the Credit Provider to the Trustee.

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

Extension or Funding of Claims for Interest. In order to prevent any accumulation of claims for interestafter maturity, the Authority shall not, directly or indirectly, extend or assent to the extension of the time for thepayment of any claim for interest on any of the Bonds, and shall not, directly or indirectly, be a party to or approveany such arrangement by purchasing or funding such claims or in any other manner. In case any such claim forinterest shall be extended or funded, whether or not with the consent of the Authority, such claim for interest soextended or funded shall not be entitled, in case of default under the Indenture, to the benefits of the Indenture,subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interestwhich shall not have been so extended or funded.

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

Compliance with Indenture. The Authority shall not issue, or permit to be issued, any Bonds secured orpayable in any manner out of Revenues in any manner other than in accordance with the provisions of the Indenture,and shall not permit any default to occur under the Indenture, but shall faithfully observe and perform all of itscovenants, conditions and requirements set forth in the Indenture.

Other Liens. So long as any Bonds are Outstanding, the Authority shall not create any pledge, lien orcharge of any type whatsoever upon all or any part of the Revenues, the other amounts pledged thereunder, theproceeds of the remarketing of Bonds, and the proceeds of demands under a Credit Facility, other than the lien of theIndenture.

Arbitrage Covenants; Rebate Fund. (a) The Authority covenants with all persons who hold or at anytime held Bonds that the Authority will not directly or indirectly use the proceeds of any of the Bonds or any otherfunds of the Authority or permit the use of the proceeds of any of the Bonds or any other funds of the Authority ortake or omit to take any other action which will cause any of the Bonds to be “arbitrage bonds” or to be otherwisesubject to federal income taxation by reason of Sections 103 and 141 through 150 of the Code and any applicableregulations promulgated thereunder. To that end the Authority covenants to comply with all covenants set forth inthe Tax Certificate, which are incorporated in the Indenture by reference as though fully set forth therein.

(b) The Trustee shall establish and maintain a fund separate from any other fund established andmaintained under the Indenture designated the “California Municipal Finance Authority Variable Rate DemandRevenue Bonds (Goodwill Industries of Orange County, California) Series 2008 Rebate Fund” (herein called the“Rebate Fund”). Within the Rebate Fund, the Trustee shall also maintain such accounts as shall be directed by theCorporation as necessary in order for the Authority and the Corporation to comply with the terms and requirementsof the Tax Certificate. Subject to the transfer provisions provided in paragraph (c) below, all money at any time

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deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the RebateRequirement (as defined in the Tax Certificate), for payment to the United States Government, and neither theCorporation, the Authority nor the Bondholders shall have any rights in, or claim to, such moneys. All amountsdeposited into, or on deposit in, the Rebate Fund shall be governed by the Indenture, by the Agreement and by theTax Certificate. The Trustee shall conclusively be deemed to have complied with such provisions if it follows thewritten directions of the Corporation, including supplying all necessary information requested by the Corporationand the Authority in the manner set forth in the Tax Certificate, and shall not be required to take any actionsthereunder in the absence of written directions from the Corporation.

(c) Upon receipt of the Corporation’s written instructions, the Trustee shall remit part or all of thebalances in the Rebate Fund to the United States Government, as so directed. In addition, if the Corporation sodirects, the Trustee will deposit moneys into or transfer moneys out of the Rebate Fund from or into such accountsor funds as directed by the Corporation’s written directions. Any funds remaining in the Rebate Fund afterredemption and payment of all of the Bonds and payment and satisfaction of any Rebate Requirement shall bewithdrawn and remitted to the Corporation upon its written request.

(d) Notwithstanding any provision of the Indenture, including in particular the provisions of theIndenture relating to defeasance, the obligation of the Corporation to pay the Rebate Requirement to the UnitedStates Government and to comply with all other requirements of the Indenture, the Agreement and the TaxCertificate shall survive the defeasance or payment in full of the Bonds.

(e) Notwithstanding the provisions of the Indenture described above or the provisions of theAgreement containing certain covenants regarding the Tax-Exempt status of the interest on the Bonds, if theCorporation shall provide to the Authority and the Trustee an Opinion of Bond Counsel that any specified actionrequired under the provisions of the Indenture summarized above or the provisions of the Agreement containingcertain covenants regarding the Tax-Exempt status of interest on the Bonds is no longer required or that somefurther or different action is required to maintain the Tax-Exempt status of interest on the Bonds, the Corporation,the Trustee and the Authority may conclusively rely on such opinion in complying with such requirements and thecovenants under the Indenture shall be deemed to be modified to that extent.

(f) The covenants of the Authority in the Indenture are made partially in reliance on therepresentations and covenants of the Corporation set forth in the Loan Agreement and the Tax Certificate.

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

Events of Default; Acceleration; Waiver of Default. Each of the following events constitute an “Eventof Default” under the Indenture:

(a) Failure to make payment of any installment of interest upon any Bond when such payment shallhave become due and payable;

(b) Failure to make due and punctual payment of the principal of or premium, if any, on any Bondwhen such payment shall have become due and payable, whether at the stated maturity thereof, or upon proceedingsfor redemption thereof or upon the maturity thereof by declaration;

(c) The occurrence of an “Event of Default” under the Agreement;

(d) A default by the Authority in the performance or observance of any other of the covenants,agreements or conditions on its part contained in the Indenture or in the Bonds, and the continuance of such default

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for a period of thirty (30) days after written notice thereof, specifying such default and requiring the same to beremedied, shall have been given to the Authority and the Corporation by the Trustee, or to the Authority, theCorporation and the Trustee by the Holders of not less than twenty-five percent (25%) in aggregate principal amountof the Bonds then Outstanding; or

(e) The Trustee receives notice from a Credit Provider that an Event of Default under the CreditAgreement (as defined in the Credit Agreement) has occurred and is continuing and directing the Trustee toaccelerate the Bonds or to cause a mandatory tender of the Bonds.

No default specified in (d) above shall constitute an Event of Default under the Indenture unless theAuthority shall have failed to correct such default within the applicable 30-day period; provided, however, that if thedefault is such that it can be corrected, but cannot be corrected within such period, it shall not constitute an Event ofDefault if corrective action is instituted by the Authority within the applicable period and diligently pursued until thedefault is corrected.

Upon the occurrence of an Event of Default described under (e) above, the Trustee shall immediately, orupon the occurrence and continuation of any other Event of Default specified above, the Trustee shall, upon thewritten request of the Credit Provider, by notice in writing delivered to the Corporation and the Credit Provider, withcopies of such notice being sent to the Authority, (i) declare the principal of all Bonds then Outstanding and theinterest accrued thereon immediately due and payable, and such principal and interest shall thereupon become andbe immediately due and payable or (ii) direct the Trustee to cause a mandatory tender of all Bonds pursuant to theIndenture. Interest on the Bonds shall cease to accrue from and after the date of declaration of any suchacceleration. The Trustee shall draw immediately after the date of declaration, which shall be no more than oneBusiness Day thereafter. Notwithstanding the foregoing, the Trustee shall not be required to take any action uponthe occurrence and continuation of an Event of Default under (c) or (d) above until a Responsible Officer of theTrustee has actual knowledge of such Event of Default. After any declaration of acceleration under the Indenture theTrustee shall immediately declare all indebtedness payable under the Agreement with respect to the Bonds to beimmediately due and payable in accordance with the Agreement and may exercise and enforce such rights as existunder the Agreement.

The preceding paragraph, however, is subject to the condition that if, at any time after the principal of theBonds shall have been so declared due and payable, and before any judgment or decree for the payment of themoneys due shall have been obtained or entered as hereinafter provided, there shall have been deposited with theTrustee a sum which, together with any other amounts then held in the Bond Fund, is sufficient to pay all theprincipal of such Bonds matured prior to such declaration and all matured installments of interest (if any) upon suchBonds, and the reasonable expenses (including reasonable attorneys’ fees) of the Trustee, and any and all otherdefaults actually known to the Trustee (other than in the payment of principal of and interest on such Bonds due andpayable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Trusteein its sole discretion, or provision deemed by the Trustee to be adequate shall have been made therefor; andprovided, that if there has been an Event of Default after a draw upon a Credit Facility and such Credit Facility hasbeen reinstated, then, and in every such case, the Holders of at least a majority in aggregate principal amount of suchBonds then Outstanding (by written notice to the Authority and to the Trustee accompanied by the written consentof the Credit Provider) may, on behalf of the Holders of all Bonds, rescind and annul such declaration with respectto the Bonds and its consequences and waive such default; provided, that no such rescission and annulment shallextend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon.The Trustee shall provide the Credit Provider and the Authority with notice of any such rescission.

Institution of Legal Proceedings by Trustee. In addition, if one or more of the Events of Default underthe Indenture shall happen and be continuing, the Trustee in its sole discretion may, and upon the written request ofthe Credit Provider, or the Holders of a majority in aggregate principal amount of the Bonds then Outstanding withthe consent of the Credit Provider, and upon being indemnified to its satisfaction in its sole discretion therefor(including with respect to any expenses or liability the Trustee may incur) shall, proceed to protect or enforce itsrights or the rights of the Holders under the Act or under the Indenture, by a suit in equity or action at law, either forthe specific performance of any covenant or agreement contained in the Indenture, or in aid of the execution of anypower granted in the Indenture, or by mandamus or other appropriate proceeding for the enforcement of any other

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legal or equitable remedy as the Trustee shall deem most effectual in support of any of its rights or duties under theIndenture.

Application of Moneys Collected by Trustee. Any moneys collected by the Trustee and moneys in thefunds and accounts (other than the Rebate Fund and the Bond Purchase Fund) on or after the occurrence of an Eventof Default shall be applied in the order following, at the date or dates fixed by the Trustee and, in the case ofdistribution of such moneys on account of principal (or premium, if any) or interest, upon presentation of the Bonds,and stamping thereon the payment, if only partially paid, and upon surrender thereof, if fully paid:

First: To the payment of costs and expenses of collection, just and reasonable compensation to theTrustee for its own services and for the services of counsel, agents and employees by it properly engagedand employed, and for advances made pursuant to the provisions of the Indenture with interest on all suchadvances at the rate of nine percent (9%) per annum; provided, that any payments under a Credit Facilityshall not be so applied.

Second: In case the principal of none of the Outstanding Bonds shall have become due andremains unpaid, to the payment of interest in default on the Outstanding Bonds in the order of the maturitythereof, such payments to be made ratably and proportionately to the persons entitled thereto withoutdiscrimination or preference, except as specified under the caption “Extension or Funding of Claims forInterest” in the Indenture; provided, however, that no payment of interest shall be made with respect to anyBonds held by the Authority, the Corporation or actually known by the Trustee to be held by any affiliateof the Corporation, or any nominee of the Authority, the Corporation, or any affiliate of the Corporation,until interest due on all Bonds not so registered shall have been paid.

Third: In case the principal of any of the Outstanding Bonds shall have become due bydeclaration or otherwise and remains unpaid, first to the payment of principal of all Outstanding Bonds(including Credit Provider Bonds) then due and unpaid, then to the payment of interest in default in theorder of maturity thereof, and then to the payment of the premium thereon, if any, and to the CreditProvider to reimburse the Credit Provider for drawings under the Credit Facility to pay the same; in everyinstance such payment to be made ratably to the persons entitled thereto without discrimination orpreference, except as specified in the Indenture; provided, however, that no payment of principal orpremium or interest shall be made with respect to any Bonds held by the Authority, the Corporation orknown by the Trustee to be held by any affiliate of the Corporation or any nominee of the Authority, theCorporation, or any affiliate of the Corporation, until all amounts due on all Bonds not so held have beenpaid.

Fourth: To the Credit Provider for amounts due under its Credit Facility other than as the Holderpursuant to the Credit Agreement, as certified by the Credit Provider to the Trustee.

Effect of Delay or Omission to Pursue Remedy. No delay or omission of the Trustee or of any Holder ofBonds to exercise any right or power arising from any default shall impair any such right or power or shall beconstrued to be a waiver of any such default or acquiescence therein, and every power and remedy given by theTrustee in connection with an Event of Default or to the Holders of Bonds may be exercised from time to time andas often as shall be deemed expedient. In case the Trustee shall have proceeded to enforce any right under theIndenture, and such proceedings shall have been discontinued or abandoned because of waiver or for any otherreason, or shall have been determined adversely to the Trustee, then and in every such case the Authority, theTrustee, the Credit Provider and the Holders of Bonds, severally and respectively, shall be restored to their formerpositions and rights under the Indenture; and all remedies, rights and powers of the Authority, the Trustee, the CreditProvider 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 Bonds isintended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be inaddition to every other remedy given under the Indenture or now or hereafter existing at law or in equity.

Covenant to Pay Bonds in Event of Default. The Authority covenants that, upon the happening of anyEvent of Default, the Authority will pay to the Trustee upon demand, but only out of Revenues, amounts made

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available under the Credit Facility and any other funds pledged therefor under the Indenture, for the benefit of theHolders of the Outstanding Bonds, the whole amount then due and payable thereon (by declaration or otherwise) forinterest or for principal and premium, or both, as the case may be, and all other sums which may be due under theIndenture or secured thereby, including reasonable compensation to the Trustee, its agents and counsel, and anyexpenses or liabilities incurred by the Trustee under the Indenture. In case the Authority shall fail to pay the sameforthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled toinstitute proceedings at law or in equity in any court of competent jurisdiction to recover judgment for the wholeamount due and unpaid, together with costs and reasonable attorneys’ fees and expenses, subject, however, to thecondition that such judgment, if any, shall be limited to, and payable solely out of, Revenues, amounts madeavailable under a Credit Facility and any other funds pledged therefor under the Indenture, as therein provided andnot otherwise. The Trustee shall be entitled to recover such judgment as aforesaid, either before or after or duringthe pendency of any proceedings for the enforcement of the Indenture, and the right of the Trustee to recover suchjudgment shall not be affected by the exercise of any other right, power or remedy for the enforcement of theprovisions of the Indenture.

Trustee Appointed Agent for Bondholders. The Trustee is appointed the agent and attorney of theHolders of all Bonds Outstanding under the Indenture for the purpose of filing any claims relating to the Bonds.

Power of Trustee to Control Proceeding. In the event that the Trustee, upon the happening of an Eventof Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties under theIndenture, whether upon its own discretion or upon the request of Holders of the Bonds, it shall have full power, inthe exercise of its discretion for the best interests of the Holders of the Bonds or the Credit Provider, with respect tothe continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided,however, that the Trustee shall not, unless there no longer continues an Event of Default under the Indenture,discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if atthe time there has been filed with it a written request signed by the Credit Provider or the Holders of at least amajority in principal amount of the Bonds Outstanding under the Indenture opposing such discontinuance,withdrawal, compromise, settlement or other disposal of such litigation and the consent of the Credit Provider. Inthe event that there is a conflict between the directions of the Holders of the Bonds and the Credit Provider, thedirections of such Credit Provider shall prevail.

All rights of action under the Indenture or under any of the Bonds secured by the Indenture which areenforceable by the Trustee may be enforced by it without the possession of any of the Bonds, or the productionthereof at the trial or other proceedings relative thereto, and any such suit, action or proceeding instituted by theTrustee shall be brought in its name as Trustee of an express trust for the equal and ratable benefit of theBondholders, subject to the provisions of the Indenture.

Limitation on Bondholders’ Right to Sue. (a) Except as provided in the Indenture, no Holder of a Bondissued under the Indenture shall have the right to institute any suit, action or proceeding at law or in equity, for anyremedy under or upon the Indenture, unless (i) such Holder shall have previously given to the Trustee written noticeof the occurrence of an Event of Default under the Indenture; (ii) the Holders of at least a majority in aggregateprincipal amount of all the Bonds then Outstanding shall have made written request upon the Trustee to exercise thepowers granted to it or to institute such action, suit or proceeding in its own name; (iii) said Holders shall havetendered to the Trustee indemnity satisfactory to it against the costs, expenses (including reasonable attorneys’ fees)and liabilities to be incurred in compliance with such request; (iv) the Trustee shall have refused or omitted tocomply with such request for a period of thirty (30) days after such written request shall have been received by, andsaid tender of indemnity shall have been made to, the Trustee; and (v) the Credit Provider shall have consented.

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

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(b) The right of any Holder to receive payment of the principal of (and premium, if any) and intereston a Bond out of Revenues, amounts made available under a Credit Facility and any other funds pledged thereforunder the Indenture, therein provided, on and after the respective due dates expressed in such Bond, or to institutesuit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affectedwithout the consent of such Holder, notwithstanding the provisions of the Indenture summarized above or any otherprovision of the Indenture.

Duties, Immunities and Liabilities of Trustee. The Trustee, prior to an Event of Default under theIndenture, and after the curing of all Events of Default under the Indenture which may have occurred, shall performsuch duties and only such duties as are specifically set forth in the Indenture. The Trustee shall, during the existenceof any Event of Default under the Indenture (which has not been cured), exercise such of the rights and powersvested in it by the Indenture, and use the same degree of care and skill in their exercise, as prudent persons wouldexercise 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 negligentaction or its own negligent failure to act or its own willful misconduct, except that:

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

(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 a ResponsibleOfficer or Officers of the Trustee unless it shall be proved that the Trustee was negligent in ascertaining thepertinent facts; and

(ii) the Trustee shall not be personally liable with respect to any action taken, permitted oromitted by it in good faith in accordance with the direction of the Holders of not less than a majority, or such otherpercentage as may be required under the Indenture, in aggregate principal amount of the Bonds Outstanding relatingto the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercisingany 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 tothe truth of the statements and the correctness of the opinions expressed therein, upon any certificate or opinionfurnished to the Trustee conforming to the requirements of the Indenture; but in the case of any such certificate oropinion, the Trustee shall be under a duty to examine the same to determine whether or not it conforms to therequirements of the Indenture.

(c) The Trustee may execute any of the trusts or powers of the Indenture and perform the dutiesrequired of it under the Indenture by or through attorneys, agents or receivers, and shall be entitled to advice ofcounsel concerning all matters of trust and concerning its duties under the Indenture and the Trustee shall not beresponsible for any misconduct or negligence on the part of any attorney or agent appointed with due care by itunder the Indenture.

None of the provisions contained in the Indenture shall require the Trustee to expend or risk its own fundsor otherwise incur individual financial liability in the performance of any of its duties or in the exercise of any of itsrights or powers. The permissive right of the Trustee to perform acts enumerated in the Indenture or the Agreementshall not be construed as a duty or obligation under the Indenture.

Right of Trustee to Rely upon Documents, Etc. Except as otherwise provided under “Duties, Immunitiesand Liabilities of Trustee” above:

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(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 ordocument believed by it to be genuine and to have been signed or presented by the proper party or parties;

(b) Any notice, request, direction, election, order or demand of the Authority mentioned in theIndenture shall be deemed to be sufficiently evidenced by an instrument signed in the name of the Authority by anAuthorized Authority Representative, and any resolution of the Authority shall be evidenced to the Trustee by aCertified Resolution;

(c) The Trustee may consult with counsel of its selection (including its own counsel or counsel for theAuthority or Bond Counsel), and the opinion of such counsel shall be full and complete authorization and protectionin respect of any action taken or suffered by it under the Indenture in good faith and in accordance with the opinionof such counsel; and

(d) Whenever in the administration of the trusts of the Indenture the Trustee shall deem it necessary ordesirable that a matter be proved or established prior to taking or suffering any action under the Indenture, suchmatter (unless other evidence in respect thereof be specifically prescribed in the Indenture) may, in the absence ofnegligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by aCertificate of the Authority; and such Certificate of the Authority shall, in the absence of negligence or bad faith onthe part of the Trustee, be full warrant to the Trustee for any action taken or suffered by it under the provisions ofthe Indenture upon the faith thereof.

(e) The Trustee shall have no responsibility with respect to any information, statement or recital inany official statement, offering memorandum or any other disclosure material prepared or distributed with respect tothe Bonds, except for information about the Trustee furnished by the Trustee, if any.

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

(g) Before taking any action under the Indenture, the Trustee may require that indemnity, satisfactoryto the Trustee, be furnished to cover any reasonable expenses and to protect it against any liability it may incurunder the Indenture, subject to the provisions of the Indenture relating to compensation and indemnification of theTrustee.

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

Trustee Not Responsible for Recitals. The Trustee assumes no responsibility for the correctness of therecitals contained in the Indenture and in the Bonds, except for the Certificate of Authentication thereon. TheTrustee makes no representations as to the validity or sufficiency of the Indenture or of the Bonds. The Trustee shallnot be accountable for the use or application of any of the Bonds authenticated or delivered under the Indenture or ofthe proceeds of such Bonds except to the extent specifically provided in the Indenture.

Right of Trustee to Acquire Bonds. The Trustee, and its officers and directors, may acquire and hold, orbecome the pledgee of, Bonds and otherwise deal with the Authority in the manner and to the same extent and withlike effect as though it were not Trustee under the Indenture.

Moneys Received by Trustee to Be Held in Trust. Subject to the provisions of the Indenture relating todefeasance, all moneys received by the Trustee shall, until used or applied as provided in the Indenture, be held intrust for the purposes for which they were received, but need not be segregated from other funds except to the extentrequired by law or as otherwise provided in the Indenture. Except to the extent otherwise provided in the Indenture,any interest allowed on any such moneys shall be deposited in the fund to which such moneys are credited.Available Amounts, moneys being held to become Available Amounts, amounts received under any Credit Facility

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and proceeds of any remarketing of Bonds shall not be commingled with any other funds held by the Trustee underthe Indenture.

Qualifications of Trustee. There shall at all times be a trustee under the Indenture which shall be acorporation or banking association organized and doing business under the laws of the United States or of a statethereof, authorized under such laws to exercise corporate trust powers, having (or if such bank or trust company is amember of a bank holding company system, its bank holding company has) a combined capital and surplus of atleast fifty million dollars ($50,000,000), subject to supervision or examination by federal or state authority. If such acorporation or banking association publishes reports of condition at least annually, pursuant to law or to therequirements of any supervising or examining authority referred to above, then for the purposes of the provisions ofthe Indenture summarized in this section the combined capital and surplus of such corporation or bankingassociation shall be deemed to be their combined capital and surplus as set forth in its most recent reports ofconditions so published. In case at any time the Trustee shall cease to be eligible in accordance with theseprovisions, 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. (a) The Trustee may atany time resign by giving written notice to the Authority, the Corporation and the Credit Provider and by giving tothe Bondholders notice either by publication of such resignation, which notice shall be published at least once in aQualified Newspaper, or by giving Notice by Mail to such Bondholders. The Trustee shall also mail a copy of anysuch notice of resignation to each Rating Agency. Upon receiving such notice of resignation, the Authority, with theadvice of the Corporation and the consent of the Credit Provider, shall promptly appoint a successor trustee by aninstrument in writing. If no successor trustee shall have been so appointed and have accepted appointment withinforty-five (45) days after the giving of such notice of resignation, the resigning Trustee may petition any court ofcompetent jurisdiction for the appointment of a successor trustee, or any Bondholder who has been a bona fideHolder for at least six (6) months may, on behalf of himself and others similarly situated, petition any such court forthe appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem properand may prescribe, appoint a successor trustee.

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

(i) the Trustee shall cease to be eligible in accordance with the provisions of the Indenture andshall fail to resign after written request therefor by the Authority or by any Bondholder who has been a bona fideHolder for at least six (6) months, or

(ii) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, ora receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of theTrustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any suchcase, the Authority may remove the Trustee and, with the advice of the Corporation and the consent of the CreditProvider, appoint a successor trustee by an instrument in writing, or any Bondholder who has been a bona fideHolder for at least six (6) months may, on behalf of himself and others similarly situated, petition any court ofcompetent jurisdiction for the removal of the Trustee, and the appointment of a successor trustee. Such court maythereupon, after such notice, if any, as it may deem proper and may prescribe, remove the Trustee, and appoint asuccessor trustee. Upon any removal of the Trustee, any outstanding fees and expenses of such former Trustee shallbe paid in accordance with the Indenture.

(c) The Authority, in the absence of an Event of Default, or the Holders of a majority in aggregateprincipal amount of the Bonds at the time Outstanding may at any time remove the Trustee, and with the advice ofthe Corporation and the consent of the Credit Provider, appoint a successor trustee, by an instrument or concurrentinstruments in writing signed by the Authority or such Bondholders, as the case may be.

(d) Any resignation or removal of the Trustee, and appointment of a successor trustee, pursuant to anyof the provisions of the Indenture summarized in this section shall become effective only upon acceptance ofappointment by the successor trustee as provided in the Indenture, and upon transfer of the Credit Facility, if any,then in effect to the successor trustee.

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Acceptance of Trust by Successor Trustee. Any successor trustee appointed as provided in the Indentureshall execute, acknowledge and deliver to the Authority, the Corporation, the Credit Provider and to its predecessorTrustee an instrument accepting such appointment under the Indenture, and thereupon the resignation or removal ofthe predecessor Trustee shall become effective and such successor trustee, without any further act, deed orconveyance, shall become vested with all the rights, powers, trusts, duties and obligations of its predecessor in thetrusts under the Indenture, with like effect as if originally named as Trustee in the Indenture; but, nevertheless, onthe Written Request of the Authority or the request of the successor trustee, the Trustee ceasing to act shall executeand deliver an instrument transferring to such successor trustee, upon the trusts in the Indenture expressed, all therights, powers and trusts of the Trustee so ceasing to act. Upon request of any such successor trustee, the Authorityshall execute any and all instruments in writing necessary or desirable for more fully and certainly vesting in andconfirming 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 itas compensation, reimbursement, expenses and indemnity afforded under the Indenture.

No successor trustee shall accept appointment as provided in the Indenture unless at the time of suchacceptance such successor trustee shall be eligible under the provisions of the Indenture.

Upon acceptance of appointment by a successor trustee as provided in the Indenture, the Authority or suchsuccessor trustee shall give the Bondholders, the Credit Provider and each Rating Agency notice of the succession ofsuch Trustee to the trusts under the Indenture in the manner prescribed in the Indenture for the giving of notice ofresignation of the Trustee.

Merger or Consolidation of Trustee. Any corporation or banking association into which the Trustee maybe merged or with which it may be consolidated, or any corporation or banking association resulting from anymerger or consolidation to which the Trustee shall be a party, or any corporation or banking association succeedingto all or substantially all of the corporate trust business of the Trustee shall be the successor of the Trustee under theIndenture without the execution or filing of any paper or any further act on the part of any of the parties thereto,anything in the Indenture to the contrary notwithstanding, provided that such successor trustee shall be eligibleunder the provisions of the Indenture.

Accounting Records and Reports; Financing Statements. The Trustee shall keep proper books of recordand account in accordance with corporate trust accounting standards in which complete and correct entries shall bemade of all transactions relating to the receipt, investment, disbursement, allocation and application of the Revenues,the proceeds of the Bonds, the proceeds of remarketing the Bonds and any amounts drawn under a Credit Facilityreceived by the Trustee. Such records relating to investment shall specify the account or fund to which eachinvestment (or portion thereof) held by the Trustee is to be allocated and shall set forth, in the case of eachInvestment Security, (a) its purchase price, (b) its value at maturity or its sale price, as the case may be, (c) theamounts and dates of any payments to be made with respect thereto and (d) such documentation and evidence as isrequired to be obtained by the Corporation to establish that the requirements of the Tax Certificate have been met.Such records shall be open to inspection by the Authority, the Corporation and the Credit Provider and by anyBondholder at any reasonable time during regular business hours on reasonable notice. The Trustee shall furnish tothe Authority and the Corporation monthly statements of all investments made by the Trustee and all funds andaccounts held by the Trustee; provided, that the Trustee shall not be obligated to deliver an accounting for any fundor account that (i) has a balance of $0.00 and (ii) has not had any activity since the last reporting date.

The Trustee shall retain all records until six years after any Bonds are no longer Outstanding.

The Trustee shall not be responsible for the preparation or filing of any UCC financing statements orcontinuation statements under the Indenture.

Tax Certificate. The Trustee covenants and agrees that it will comply with all written instructions of theCorporation given in accordance with the Tax Certificate and will take any and all action as may be necessary inaccordance with such written instructions. With respect to the Tax Certificate, the Trustee is not required to actwithout direction from the Corporation. The Trustee acknowledges receipt of the Tax Certificate and acknowledgesthat the provisions of the Tax Certificate are incorporated in the Indenture by reference. The Trustee shall not beaccountable for the use by the Corporation of the proceeds of the Bonds.

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Appointment of Co-Trustee. In the event the Trustee deems that by reason of any present or future law ofany jurisdiction it may not exercise any of the powers, rights or remedies granted to the Trustee or hold title to theproperties, in trust, as granted in the Indenture, or take any other action which may be desirable or necessary inconnection therewith, it may be necessary that the Trustee appoint an additional institution as a separate trustee orco-trustee. In the absence of an Event of Default under the Indenture, the appointment of any such separate trustee orco-trustee shall be subject to the approval of the Authority, the Credit Provider and advice of the Corporation. Theprovisions of the Indenture summarized below are adapted to these ends.

(a) In the event that the Trustee appoints an additional institution as a separate trustee or co-trustee,each and every remedy, power, right, claim, demand, cause of action, immunity, estate, interest or lien expressed orintended by the Indenture to be exercised by or vested in or conveyed to the Trustee with respect thereto shall beexercisable by and vest in such separate trustee or co-trustee but only to the extent necessary to enable such separatetrustee or co-trustee to exercise such powers, rights and remedies, and every covenant and obligation necessary tothe exercise thereof by such separate trustee or co-trustee shall run to and be enforceable by either of them. Such co-trustee may be removed by the Trustee at any time, with or without cause.

(b) Should any instrument in writing from the Authority be required by the separate trustee or co-trustee so appointed by the Trustee for more fully and certainly vesting in and confirming to it such properties,rights, powers, trusts, duties and obligations, any and all such instruments in writing shall, on request, be executed,acknowledged and delivered by the Authority. In case any separate trustee or co-trustee, or a successor to either,shall become incapable of acting, resign or be removed, all the estates, properties, rights, powers, trusts, duties andobligations of such separate trustee or co-trustee, so far as permitted by law, shall vest in and be exercised by theTrustee until the appointment of a successor to such separate trustee or co-trustee.

Appointment, Duties and Qualifications of Remarketing Agent. (a) In order to carry out the duties andobligations of the Remarketing Agent contained in the Indenture, the Corporation, with the approval of the CreditProvider, shall appoint the Remarketing Agent for the Bonds subject to the conditions set forth below. ARemarketing Agent shall be a bank, trust company or member of the National Association of Securities Dealers, Inc.organized and doing business under the laws of any state of the United States of America or the District of Columbiaand shall have together with its parent, if any, a capitalization of at least fifty million dollars ($50,000,000) as shownin its or its parent’s most recently published annual report. The Remarketing Agent initially appointed for the Bondsis Wells Fargo Brokerage Services, LLC.

(b) The Remarketing Agent may resign by notifying the Authority, the Trustee, the Credit Providerand the Bondholders at least forty-five (45) days before the effective date of such resignation. The Corporation mayremove the Remarketing Agent pursuant to the terms of the Remarketing Agreement. Any appointment of asuccessor Remarketing Agent by the Corporation shall be subject to the consent of the Credit Provider, if any. TheCredit Provider shall be a third party beneficiary of the Remarketing Agreement.

Modification of Indenture Without Consent of Bondholders. The Authority and the Trustee, withoutthe consent of or notice to any Bondholders from time to time and at any time, with the consent of the CreditProvider but subject to the conditions and restrictions contained in the Indenture, may enter into a SupplementalIndenture or Supplemental Indentures amending or supplementing the Indenture as then in effect, whichSupplemental Indenture or Indentures thereafter shall form a part of the Indenture; and the Trustee, without theconsent of or notice to any Bondholders, but with the consent of the Credit Provider from time to time and at anytime, may consent to any Amendment to the Agreement; in each case above for any one or more of the followingpurposes:

(a) to add to the covenants and agreements of the Authority contained in the Indenture or of theCorporation contained in the Agreement, to add other covenants and agreements thereafter to be observed, or toassign or pledge additional security for any of the Bonds, or to surrender any right or power therein reserved to orconferred upon the Authority or the Corporation; provided, that no such covenant, agreement, assignment, pledge orsurrender shall materially adversely affect the interests of the Holders of the Bonds;

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(b) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or ofcuring, correcting or supplementing any defective provision contained in the Indenture or the Agreement, or inregard to matters or questions arising under the Indenture or the Agreement, as the Authority may deem necessary ordesirable and not inconsistent with the Indenture and which shall not materially adversely affect the interests of theHolders of the Bonds;

(c) to modify, amend or supplement the Indenture or any Supplemental Indenture in such manner asto permit the qualification thereof under the Trust Indenture Act of 1939 or any similar federal statute hereafter ineffect, and, if they so determine, to add to the Indenture or any Supplemental Indenture such other terms, conditionsand provisions as may be permitted by said Trust Indenture Act of 1939 or similar federal statute, without materiallyadversely affecting the interests of the Holders of the Bonds;

(d) to provide for any additional procedures, covenants or agreements necessary to maintain the Tax-Exempt status of interest on the Bonds; provided that such Amendment or Supplemental Indenture shall notmaterially adversely affect the interests of the Holders of the Bonds;

(e) to modify or eliminate the book-entry registration system for the Bonds;

(f) to provide for the procedures required to permit any Bondholder to separate the right to receiveinterest on the Bonds from the right to receive principal thereof and to sell or dispose of such rights, as contemplatedby Section 1286 of the Code;

(g) to provide for the appointment of a co-trustee or the succession of a new Trustee;

(h) to change the description of the Project in accordance with the provisions of the Agreement and ofthe Tax Certificate;

(i) to provide for an extension of a Credit Facility or the provision of an Alternate Credit Facility;

(j) to comply with the requirements of the Rating Agency in order to obtain or maintain a rating onany Bonds;

(k) in connection with any other change which will not adversely affect the security for a the Bonds orthe Tax-Exempt status of interest thereon or otherwise materially adversely affect the interests of the Holders of theBonds (in which case such determination may be based upon an Opinion of Counsel); or

(l) to modify, alter, amend or supplement the Indenture or the Agreement in any other respect,including amendments which would otherwise be described in the Indenture, if the effective date of suchSupplemental Indenture or Amendment is a date on which all Bonds affected thereby are subject to mandatorytender for purchase or if Notice by Mail of the proposed Supplemental Indenture or Amendment is given to Holdersof the affected Bonds at least thirty (30) days before the effective date thereof and, on or before such effective date,such Bondholders have the right to demand purchase of their Bonds.

Before the Authority or the Trustee enters into a Supplemental Indenture and before the Trustee consents toany Amendment, the Authority, or the Trustee, as the case may be, shall cause notice of the proposed execution ofthe Supplemental Indenture or Amendment to be given by mail to the Credit Provider, the Corporation and eachRating Agency. A copy of the proposed Supplemental Indenture or Amendment shall accompany such notice. Notless than one week after the date of the first mailing of such notice, the Authority and/or the Trustee may executeand deliver such Supplemental Indenture or Amendment, but only after there shall have been delivered to theTrustee and the Authority an Opinion of Bond Counsel stating that such Supplemental Indenture or Amendment is:(i) authorized or permitted by the Indenture, the Act and other applicable law; (ii) will upon the execution anddelivery thereof be valid and binding upon the parties thereto in accordance with its terms; and (iii) will notadversely affect the Tax-Exempt status of interest on the Bonds.

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Notwithstanding the foregoing provisions, the Trustee shall not be obligated to enter into any suchSupplemental Indenture which affects the Trustee’s own rights, duties or immunities under the Indenture orotherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such SupplementalIndenture, and the Trustee shall not enter into any Supplemental Indenture or consent to any Amendment withoutfirst obtaining the written consent of the Corporation.

Modification of Indenture with Consent of Bondholders. With the consent of the Holders of not lessthan a majority in aggregate principal amount of the Bonds at the time Outstanding, and the Credit Provider (i) theAuthority and the Trustee may from time to time and at any time enter into a Supplemental Indenture or Indenturesfor the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of theIndenture or of any Supplemental Indenture; or (ii) the Trustee may consent to any Amendment to the Agreement;provided, however, that no such Supplemental Indenture or Amendment will have the effect of extending the timefor payment or reducing any amount due and payable by the Corporation pursuant to the Agreement with respect tothe Bonds without the consent of the Holders of all of the Bonds then Outstanding; and that no such SupplementalIndenture shall (1) extend the fixed maturity of any Bond or reduce the rate of interest thereon or extend the time ofpayment of interest, or reduce the amount of the principal thereof, or reduce any premium payable on theredemption thereof, without the consent of the Holder of each Bond so affected, or (2) reduce the aforesaidpercentage of Holders whose consent is required for the execution of such Supplemental Indenture or Amendment,or permit the creation of any lien on the Revenues and the other funds pledged to the payment of the Bonds underthe Indenture, prior to or on a parity with the lien of the Indenture, except as permitted in the Indenture, or permit thecreation of any preference of any Bondholder over any other Bondholder, except as permitted in the Indenture, ordeprive the Holders of the Bonds of the lien created by the Indenture upon the Revenues and the other funds pledgedto the payment of the Bonds under the Indenture, without the consent of the Holders of all the Bonds thenOutstanding. Nothing in this paragraph shall be construed as making necessary the approval of any Bondholder ofany Supplemental Indenture or Amendment.

Upon receipt by the Trustee of: (1) approval of the execution and delivery of such Supplemental Indentureor Amendment by a Certified Resolution or Authorized Authority Representative; (2) an Opinion of Counsel statingthat such Supplemental Indenture or Amendment is: (i) authorized or permitted by the Indenture, the Act and otherapplicable law; (ii) will, upon the execution and delivery thereof, be valid and binding upon the Authority inaccordance with its terms; and (iii) will not adversely affect the Tax-Exempt status of interest on the Bonds; and (3)evidence of the consent of the Bondholders and the Credit Provider, the Trustee shall join with the Authority in theexecution of such Supplemental Indenture or shall consent to such Amendment; provided, however, that (i) theTrustee 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, in which case the Trustee may in its sole discretion, but shallnot be obligated to, enter into such Supplemental Indenture; and (ii) the Trustee shall not enter into suchSupplemental Indenture without first obtaining the Corporation’s written consent thereto.

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

Required and Permitted Opinions of Counsel. Subject to the provisions of the Indenture, the Trusteeand the Authority are entitled to receive an Opinion of Counsel and rely on such Opinion of Counsel as conclusiveevidence that any Supplemental Indenture or Amendment executed pursuant to the provisions of the Indenturecomplies with the requirements of the Indenture, that the appropriate consents have been obtained. The Trustee isentitled to rely on such Opinion of Counsel as conclusive evidence that such Supplemental Indenture or Amendmenthas been duly authorized by the Authority.

Notation of Modification on Bonds; Preparation of New Bonds. Bonds authenticated and deliveredafter the execution of any Supplemental Indenture pursuant to the provisions of the Indenture may bear a notation, atthe Written Request of the Authority, as to any matter provided for in such Supplemental Indenture, and if suchSupplemental Indenture shall so provide, new Bonds, so modified as to conform, in the opinion of the Trustee andthe Authority, to any modification of the Indenture contained in any such Supplemental Indenture, may be preparedby the Authority at the cost of the Corporation, authenticated by the Trustee and delivered without cost to theHolders of the Bonds then Outstanding, upon surrender for cancellation of such Bonds in equal aggregate principalamounts.

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Notice to Rating Agency. The Trustee shall give to each Rating Agency maintaining a rating on theBonds notice of any supplement or amendment made to the Indenture, the Initial Credit Facility or other CreditFacility or the termination, expiration, extension or substitution of the Initial Credit Facility or other Credit Facility,notice of any Amendment, notice of any extraordinary redemptions or any redemption, purchase or defeasance of allof the Bonds, notice of any adjustment to a new Interest Rate Period, notice of any acceleration of obligations underthe Agreement or any Credit Facility and notice of any successor Trustee under the Indenture or any successorRemarketing Agent. Notwithstanding the foregoing, it is expressly understood and agreed that failure to provideany such notice to a Rating Agency or any defect therein will not (i) constitute an Event of Default under theIndenture; (ii) affect the validity of any action with respect to which notice is to be given or the effectiveness of anysuch action; or (iii) result in any liability to the Trustee.

Effect of Supplemental Indenture or Amendment. Upon the execution of any Supplemental Indentureor any Amendment Indenture or the Agreement pursuant to the Indenture, as the case may be, shall be and bedeemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations underthe Indenture and the Agreement of the Authority, the Trustee, the Corporation, the Credit Provider, and all Holdersof Outstanding Bonds shall thereafter be determined, exercised and enforced under the Indenture and under theAgreement subject in all respects to such Supplemental Indenture and Amendment, and all the terms and conditionsof any such Supplemental Indenture or Amendment shall be part of the terms and conditions of the Indenture or theAgreement, as the case may be, for any and all purposes.

Discharge of Indenture. If the entire indebtedness on all Bonds and all Additional Payments shall be paidand 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 thesame become due and payable; or

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

(c) by providing for the payment or redemption thereof as provided in the following paragraph;

and if all other sums payable under the Indenture and under the Agreement and all sums payable to the CreditProvider under the Credit Agreement shall be paid and discharged, the Credit Facility shall be returned to the CreditProvider for cancellation, and the Indenture shall cease, terminate and become null and void, and all liability of theAuthority 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 beentitled only to payment (without interest accrued thereon after such redemption date or maturity date) out of, themoney and Government Obligations deposited with the Trustee as aforesaid for their payment, subject, however, tocertain provisions of the Indenture and (ii) that in the case of Bonds (or portions thereof) for which provision for thepayment or redemption thereof has been made in accordance with the following paragraph, the provisions of theIndenture relating to the transfer and exchange of such Bonds (or portions thereof) and, if so reserved by theAuthority, the right to call the Bonds for optional redemption prior to maturity shall continue to apply to the Bonds(or portions thereof). Thereupon the Trustee shall, upon Written Request of the Authority, and upon receipt by theTrustee and the Authority of an Opinion of Bond Counsel, stating that in the opinion of the signer all conditionsprecedent to the satisfaction and discharge of the Indenture have been complied with, forthwith execute properinstruments acknowledging satisfaction of and discharging the Indenture. The Trustee shall mail written notice ofsuch payment and discharge to each Rating Agency. The satisfaction and discharge of the Indenture shall bewithout prejudice to the rights of the Trustee and the Authority to charge and be reimbursed by the Corporation forany expenditures which it may thereafter incur in connection with the Indenture.

Discharge of Liability of Particular Bonds. Any Bond, or any portion thereof such that the portion that isnot considered paid in accordance with this provision of the Indenture summarized section shall be in an AuthorizedDenomination, shall be deemed to be paid within the meaning of, and with the effect set forth in, the heading“Discharge of Indenture” when, whether upon or prior to the maturity or redemption date, as applicable, (a) paymentof the principal and Purchase Price of and premium, if any, on such Bond or such portion thereof, plus interestthereon to the due date thereof (whether such due date is by reason of maturity or upon redemption), either (i) shallhave been made in accordance with the terms thereof, or (ii) shall have been provided for by irrevocably depositing

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with the Trustee in trust and irrevocably setting aside exclusively for such payment (1) Available Amounts sufficientto make such payment or (2) nonprepayable, noncallable Government Obligations purchased with the AvailableAmounts and maturing as to principal and interest in such amounts and at such times as will insure, withoutreinvestment, the availability of sufficient moneys, together with any other Available Amounts needed by theTrustee for such purposes, to make such payment, provided, however, that provision for the payment of the PurchasePrice of such Bond may be made by means of a Credit Facility; (b) if such Bond (or portion thereof) is to beredeemed prior to the maturity thereof, notice of such redemption shall have been given; (c) all necessary and properfees, compensation and expenses of the Trustee pertaining to any such deposit shall have been paid or the paymentthereof provided for to the satisfaction of the Trustee; (d) the Trustee shall have been irrevocably instructed (by theterms of the Indenture or a Written Request of the Authority) to apply such Available Amounts and GovernmentObligations to the payment of the principal (and unless such Purchase Price is to be paid from amounts madeavailable under a Credit Facility, the Purchase Price) of, premium, if any, and interest on the Bond (or portionthereof) to be discharged; (e) the Authority and the Trustee shall have received an Approving Opinion with respectto such deposit of Available Amounts and/or Government Obligations; and (f) the Authority and the Trustee shallhave received an Accountant’s Certificate verifying that the Available Amounts and Government Obligations sodeposited, together with the interest earnings thereon (without reinvestment) will be sufficient to pay when due theprincipal (and unless such Purchase Price is to be paid from amounts made available under a Credit Facility, thePurchase Price) of, premium, if any, and interest on the Bond (or portion thereof) to be discharged to and includingthe earlier of its maturity or redemption date. The Trustee shall not be responsible for verifying the sufficiency offunds 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 anyBonds previously authenticated and delivered which the Authority and the Corporation lawfully may have acquiredin any manner whatsoever, and such Bonds, upon such surrender and cancellation, shall be deemed to be paid andretired.

Payment of Bonds after Discharge. Notwithstanding any provisions of the Indenture to the contrary, andsubject to applicable laws of the State, if any moneys deposited with the Trustee in trust for the payment of theprincipal of, or interest or premium on, any Bond remain unclaimed for two (2) years after such payment hasbecome due and payable (whether on an Interest Payment Date, at maturity, upon call for redemption or bydeclaration as provided in the Indenture), then such moneys shall be repaid to the Corporation upon its writtenrequest, and the Holder of such Bond shall thereafter be entitled to look only to the Corporation for payment thereof,and all liability of the Authority and the Trustee with respect to such moneys shall thereupon cease; provided,however, that before the repayment of such moneys to the Corporation as aforesaid, the Trustee shall (at the expenseof the Corporation) first publish at least once in a Qualified Newspaper a notice, in such form as may be deemedappropriate by the Corporation and the Trustee, in respect of the amount so payable with respect to such Bond and inrespect of the provisions relating to the repayment to the Corporation of the moneys held for the payment thereof. Inthe event of the repayment of any such moneys to the Corporation as aforesaid, the Holder of the Bond in respect ofwhich such moneys were deposited shall thereafter be deemed to be an unsecured creditor of the Corporation foramounts equivalent to the respective amounts deposited for the payment of the amount so payable with respect tosuch Bond and so repaid to the Corporation (without interest thereon).

Successors of Authority. All the covenants, stipulations, promises and agreements in the Indenture, by oron behalf of the Authority, shall bind and inure to the benefit of its successors and assigns, whether so expressed ornot. If any of the powers or duties of the Authority shall hereafter be transferred by any law of the State, and if suchtransfer shall relate to any matter or thing permitted or required to be done under the Indenture by the Authority,then the body or official of the State who shall succeed to such powers or duties shall act and be obligated in theplace and stead of the Authority as provided in the Indenture.

Limitation of Rights to Parties and Bondholders. Pursuant to the Indenture, nothing in the Indenture orin the Bonds expressed or implied is intended or shall be construed to give to any person other than the Authority,the Trustee, the Corporation, the Credit Provider, if any, and the Holders of the Bonds any legal or equitable right,remedy or claim under or in respect of the Indenture or any covenant, condition or provision therein or in theIndenture contained; and all such covenants, conditions and provisions are and shall be held to be for the sole andexclusive benefit of the Authority, the Trustee, the Corporation, the Credit Provider and the Holders of the Bonds.

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To the extent that any provision of the Indenture expressly confers rights upon the Credit Provider(including, without limitation, rights to provide consents or directions or to give or receive notices) the partiesthereto agree and acknowledge that the Credit Provider is a third party beneficiary of such provision and that theCredit Provider may enforce such provision against the other parties thereto.

Evidence of Action by Bondholders. (a) Any request, consent or other instrument required by theIndenture to be executed by Bondholders may be made in any number of concurrent writings of substantially similartenor and may be executed by such Bondholders in person or by agent or agents duly appointed in writing. Proof ofthe execution of any such request, consent or other instrument or of a writing appointing any such agent, shall besufficient for any purpose of the Indenture and shall be conclusive in favor of the Trustee and the Authority if madein the manner provided under this heading.

(b) The fact and date of the execution by any person of any such request, consent or other instrumentor writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public orother officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying that theperson signing such request, consent or other instrument or writing acknowledged to him or her the executionthereof. The fact and the date of execution of any request, consent or other instrument may also be proved in anyother manner which the Trustee may deem sufficient. The Trustee may nevertheless, in its discretion, require furtherproof in cases where it may deem further proof desirable.

(c) The ownership of Bonds shall be proved by the Bond Register.

(d) Any request, consent or vote of the Holder shall bind every future Holder of the same Bond andthe Holder of every Bond issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to bedone by the Trustee or the Authority in pursuance of such request, consent or vote.

(e) Except as otherwise provided in the Indenture, in determining whether the Holders of the requisiteaggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under theIndenture, Bonds which are owned by the Authority, by the Corporation or by any other direct or indirect obligor onthe Bonds, or by any person directly or indirectly controlling or controlled by, or under direct or indirect commoncontrol with, the Authority, the Corporation, or any other direct or indirect obligor on the Bonds, shall bedisregarded and deemed not to be Outstanding for the purpose of any such determination, provided that, for thepurpose of determining whether the Trustee shall be protected in relying on any such demand, request, direction,consent or waiver, only Bonds which the Trustee knows to be so owned shall be disregarded. Bonds so owned whichhave been pledged in good faith may be regarded as Outstanding for the purposes of this clause (e) if the pledgeeshall certify to the Trustee the pledgee’s right to vote such Bonds and that the pledgee is not a person directly orindirectly controlling or controlled by, or under direct or indirect common control with, the Authority, theCorporation or any other direct or indirect obligor on the Bonds. In case of a dispute as to such right, any decisionby the Trustee taken upon the advice of counsel shall be full protection to the Trustee.

(f) In lieu of obtaining any demand, request, direction, consent or waiver in writing, the Trustee maycall and hold a meeting of the Bondholders upon such notice and in accordance with such rules and regulations,including the right of the Bondholders to be represented and vote by proxy, as the Trustee considers fair andreasonable for the purpose of obtaining any such action.

Governing Law; Venue. The Indenture, the Bonds and the Agreement shall be construed in accordancewith and governed by the Constitution and laws of the State applicable to contracts made and performed in the State.The Indenture shall be enforceable in the State, and any action arising out of the Indenture shall be filed andmaintained in San Diego County Superior Court, San Diego, California, unless the Authority waives thisrequirement.

Continuing Disclosure. Pursuant to the Agreement, the Corporation shall, at any time that a Term InterestRate Period of longer than nine months is in effect with respect to the Bonds, or if otherwise required by Rule 15c2-12, undertake the continuing disclosure requirements for the Bonds as promulgated under S.E.C. Rule 15c2-12, as itmay from time to time hereafter be amended or supplemented, and the Authority shall have no liability to theHolders of the Bonds or any other person with respect to such disclosure matters. Notwithstanding any other

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provision of the Indenture, failure of the Corporation to comply with the requirements of Rule 15c2-12 applicable tothe Bonds, as it may from time to time hereafter be amended or supplemented, shall not be considered an Event ofDefault under the Indenture or under the Agreement; however, the Trustee may (and, at the written request of theRemarketing Agent or the Holders of at least 25% aggregate principal amount of Outstanding Bonds and uponreceipt of indemnity satisfactory to the Trustee, shall) or any Bondholder or Beneficial Owner (within the meaningof Rule 15c2-12) of any Bonds may take such actions as may be necessary or appropriate, including seekingmandate or specific performance by court order, to cause the Corporation to comply with its obligations under theAgreement.

Credit Provider. All provisions of the Indenture regarding consents, approvals, directions, appointmentsor requests by the Credit Provider shall be deemed not to require or permit such consents, approvals, directions,appointments or requests by the Credit Provider during any time in which no Credit Facility is in effect and noamounts are owing to such Credit Provider, or such Credit Provider has failed to honor a demand for paymentpresented to it in strict conformance with the applicable provisions of the Credit Facility, or after the Credit Facilityshall at any time for any reason cease to be valid and binding on the Credit Provider, or while such Credit Provideris denying further liability or obligation under the Credit Facility (unless such Credit Facility has been fully drawnor to the extent that the conditions to payment under the Indenture have not been fully satisfied) or after such CreditProvider has rescinded, repudiated or terminated the Credit Facility and no amounts are owing to the CreditProvider; provided, however, that nothing contained in the provisions of the Indenture summarized in this sectionshall limit the rights of the Credit Provider as a Holder of Credit Provider Bonds.

All provisions in the Indenture relating to the Credit Provider shall be of no force and effect with respect toa particular Credit Provider if the Credit Facility and Credit Agreement are not in effect, there are no related CreditProvider Bonds and all amounts owing to such Credit Provider under the Credit Agreement have been paid.

Opinions of Bond Counsel. The Authority Trustee, the and the Corporation, acknowledge that, wheneverin the Indenture or the Tax Certificate it is required that prior to the taking of any action (including but not limited toany modifications of arbitrage covenants) an Opinion of Bond Counsel is required to be delivered to the effect thatsuch action will not adversely affect the Tax-Exempt status of interest on the Bonds, if such opinion is not given byStradling Yocca Carlson & Rauth, a Professional Corporation, the original approving opinion of Stradling YoccaCarlson & Rauth, a Professional Corporation, with respect to the Bonds dated the Issue Date may no longer be reliedupon by any person, including subsequent Holders of the Bonds. No contrary representation shall be made by theTrustee, the Authority, or the Corporation, or any agent thereof.

THE AGREEMENT

Agreement to Complete the Project. The Corporation agrees that it will complete the Project.

In the event that the Corporation desires to alter or change the Project, and such alteration or changesubstantially alters either the purpose or the description of the Project, including any and all supplements,amendments and additions or deletions thereto or therefrom, the Authority will enter into, and will instruct theTrustee to consent to, such amendment or supplement to the Agreement as shall be required to reflect such alterationor change to the Project if the alteration or change does not have the effect of disqualifying the Project as facilitiesthat may be financed pursuant to the Act and upon receipt of:

(i) a certificate of the Authorized Corporation Representative describing in detail theproposed changes;

(ii) a copy of the proposed form of such amendment or supplement; and

(iii) an Opinion of Bond Counsel that such proposed changes, in and of themselves, will notadversely affect the Tax-Exempt status of interest on the Bonds.

Establishment of Completion Date; Obligation of Corporation to Complete. As soon as the Project iscompleted, an Authorized Corporation Representative, on behalf of the Corporation, shall evidence the Completion

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Date by providing a certificate to that effect to the Trustee, the Credit Provider and the Authority stating the Costs ofthe Project. Notwithstanding the foregoing, such certificate may state that it is given without prejudice to any rightsof the Corporation against third parties for any claims or for the payment of any amount not then due and payablewhich exists at the date of such certificate or which may subsequently exist.

At the time such certificate is delivered to the Trustee, moneys remaining in the Project Fund (other thanmoneys relating to provisional payments), including any earnings resulting from the investment of such moneys,shall be used as provided in the Indenture.

In the event the moneys in the Project Fund available for payment of the Costs of the Project should beinsufficient to pay the costs thereof in full, the Corporation agrees to pay directly, or to deposit in the Project Fund,moneys sufficient to pay any costs of completing the Project in excess of the moneys available for such purpose inthe Project Fund. The Authority makes no express or implied warranty that the moneys deposited in the ProjectFund and available for payment of the Costs of the Project under the provisions of the Agreement, will be sufficientto pay all the amounts which may be incurred for such costs of the Project. The Corporation agrees that if, afterexhaustion of the moneys in the Project Fund, the Corporation should pay, or deposit moneys in the Project Fund forthe payment of, any portion of the costs of the Project, it shall not be entitled to any reimbursement therefor from theAuthority, from the Trustee or from the Holders of any of the Bonds, nor shall it be entitled to any diminution of theamounts payable under certain provisions of the Agreement.

Repayment and Payment of Other Amounts Payable. (a) With respect to the Bonds, the Corporationcovenants and agrees to pay to the Trustee as a Repayment Installment, on or before each date provided in orpursuant to the Indenture for the payment of principal of (whether at maturity or upon redemption or acceleration),premium, if any, and/or interest on the Outstanding Bonds, until the principal of, premium, if any, and interest on theBonds shall have been fully paid or provision for the payment thereof shall have been made in accordance with theIndenture, in immediately available funds, for deposit in the Bond Fund, a sum equal to the amount then payable asprincipal (whether at maturity or upon redemption or acceleration), premium, if any, and interest upon theOutstanding Bonds as provided in the Indenture. The Corporation agrees that any amounts due as a result of theacceleration of the maturity of the Bonds shall be due and payable immediately upon such acceleration.

Each such payment made by the Corporation shall at all times be sufficient to pay the total amount ofinterest and principal (whether at maturity or upon redemption or acceleration) and premium, if any, then payable onthe Bonds; provided that any amount held by the Trustee in the Bond Fund on any due date for a RepaymentInstallment under the Agreement shall be credited against the Repayment Installment due on such date, to the extentavailable for such purpose; and provided further that, subject to the provisions of this paragraph, if at any time theavailable amounts held by the Trustee in the Bond Fund are sufficient to pay all of the principal of and interest andpremium, if any, on the Bonds as such payments become due, the Corporation shall be relieved of any obligation tomake any further payments with respect to the Bonds under the provisions of the Indenture summarized in thissection. Notwithstanding the foregoing, if on any date the amount held by the Trustee in the Bond Fund isinsufficient to make any required payments of principal of (whether at maturity or upon redemption or acceleration)and interest and premium, if any, on the Bonds as such payments become due, the Corporation shall forthwith paysuch deficiency as a Repayment Installment under the Agreement. The obligation of the Corporation to make anypayment under the Agreement shall be deemed to have been satisfied to the extent of any corresponding paymentmade by the Credit Provider to the Trustee under the Credit Facility.

(b) In addition to the Repayment Installments, the Corporation shall also pay to the Authority or to theTrustee, as the case may be, “Additional Payments,” as follows:

(i) All taxes and assessments of any type or character charged to the Authority or to the Trusteeaffecting the amount available to the Authority or the Trustee from payments to be received under the Agreement orin any way arising due to the transactions contemplated by the Agreement (including taxes and assessments assessedor levied by any public agency or governmental authority of whatever character having power to levy taxes orassessments), but excluding franchise taxes based upon the capital and/or income of the Trustee and taxes basedupon or measured by the net income of the Trustee; provided, however, that the Corporation shall have the right toprotest any such taxes or assessments and to require the Authority or the Trustee, at the Corporation’s expense, toprotest and contest any such taxes or assessments levied upon them, and that the Corporation shall have the right to

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withhold payment of any such taxes or assessments pending disposition of any such protest or contest unless suchwithholding, protest or contest would adversely affect the rights or interests of the Authority or the Trustee;

(ii) All reasonable fees, charges and expenses of the Trustee for services rendered under theIndenture and all amounts referred to in the Indenture relating to compensation and indemnification of the Trustee,as and when the same become due and payable;

(iii) The reasonable fees and expenses of such accountants, consultants, attorneys and otherexperts as may be engaged by the Authority or the Trustee to prepare audits, financial statements, reports oropinions or to provide other services as required under the Agreement, the Credit Agreement, the RemarketingAgreement, the Tax Certificate or the Indenture; and

(iv) The Authority Issuance Fee, the Authority Annual Fee and the reasonable fees andexpenses of the Authority or any agent selected by the Authority to act on its behalf in connection with theAgreement, the Tax Certificate, the Bonds or the Indenture, including, without limitation, any and all reasonableexpenses incurred in connection with the authorization, issuance, sale and delivery of any such Bonds or inconnection with any investigation or litigation which may at any time be instituted involving the Agreement, the TaxCertificate, the Bonds or the Indenture or any of the other documents contemplated thereby, or in connection withthe reasonable supervision or inspection of the Corporation, its properties, assets or operations or otherwise inconnection with the administration of the Agreement, the Tax Certificate, the Bonds, the Indenture or in connectionwith certain provisions of the Agreement.

Unconditional Obligation. The obligations of the Corporation to make the payments required above andto perform and observe the other agreements on its part contained in the Agreement shall be absolute andunconditional, irrespective of any defense or any rights of setoff, recoupment or counterclaim it might otherwisehave against the Authority or the Trustee, and during the term of the Agreement, the Corporation shall payabsolutely the payments to be made on account of the Loan as prescribed above and all other payments requiredunder the Agreement, free of any deductions and without abatement, diminution or setoff. Until such time as theprincipal of, premium, if any, and interest on the Bonds shall have been fully paid, or provision for the paymentthereof shall have been made as required by the Indenture, the Corporation (i) will not suspend or discontinue anypayments provided for in the Agreement; (ii) will perform and observe all of its other covenants contained in theAgreement; and (iii) except as provided in the provisions of the Agreement relating to prepayment, will notterminate the Agreement for any reason, including, without limitation, the occurrence of any act or circumstancesthat may constitute failure of consideration, destruction of or damage to, or taking or condemnation of, all or anypart of the Project or the Facilities, commercial frustration of purpose, any change in the tax or other laws of theUnited States of America or of the State or any political subdivision of either of these, or any failure of the Authorityor the Trustee to perform and observe any covenant, whether express or implied, or any duty, liability or obligationarising out of or connected with the Agreement or the Indenture.

Assignment of Authority’s Rights. As security for the payment of the Bonds, the Authority will assign tothe Trustee the Authority’s rights, but not its obligations, under the Agreement (except (i) the rights of the Authorityto receive any notices, reports or opinions under the Agreement, (ii) the right of the Authority to receive AdditionalPayments and enforce its rights with respect to the payment of fees, expenses and indemnification, (iii) the right ofthe Authority to give approvals or consents pursuant to the Agreement; (iv) the right of the Authority to access andinspect the Facilities; and (v) the right of the Authority to demand a report from the Corporation), including the rightto receive payments under the Indenture, and the Authority directs the Corporation to make the payments requiredunder the Agreement (except payments for Additional Payments) directly to the Trustee. The Corporation assents tosuch assignment and agrees to make payments directly to the Trustee without defense or setoff by reason of anydispute between the Corporation and the Authority or the Trustee.

The Authority acknowledges that the Corporation will be obligated to reimburse the Credit Provider foramounts provided under the applicable Credit Facility to purchase Bonds which are tendered for purchase and notremarketed pursuant to the applicable Remarketing Agreement, and acknowledges that any and all proceeds of anysubsequent remarketing of the Bonds so purchased will be paid to the Credit Provider, in order to discharge theCorporation’s reimbursement obligation (or any loan by such Credit Provider, to finance such reimbursementobligation) to such Credit Provider.

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Right of Access to and Inspection of the Facilities. The Corporation agrees that so long as any Bonds areoutstanding, the Authority, the Trustee, the Credit Provider, and the duly authorized agents of any of them shall havethe right (but not the duty) at all reasonable times during normal business hours to enter upon the site of theFacilities to examine and inspect the Facilities; provided, however, that this right is subject to federal and State lawsand regulations applicable to the site of the Facilities; and provided further, that the Corporation reserves the right torestrict access to the Facilities in accordance with reasonably adopted procedures relating to safety and security.The rights of access and inspection reserved to the Authority, the Trustee, the Credit Provider and their respectiveauthorized agents may be exercised only after the party seeking such access shall have given reasonable advancenotice and (except for the Authority) executed release of liability (which release shall not limit any of theCorporation’s obligations under the Indenture) agreements if requested by the Corporation in the form then currentlyused by the Corporation.

The Corporation’s Maintenance of its Existence; Assignments. (a) The Corporation agrees that duringthe term of the Agreement and so long as any Bond is Outstanding, it will maintain its corporate existence, will notdissolve or otherwise dispose of all or substantially all of its assets, and will not consolidate with or merge intoanother corporation or permit one or more corporations to consolidate with or merge into it; provided, however, thatthe Corporation may, without violating the agreements contained under this provisions, consolidate with or mergeinto another corporation or permit one or more other corporations to consolidate with or merge into it, or sell orotherwise 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 notthe surviving, resulting or transferee corporation, as the case may be, the surviving, resulting or transfereecorporation (i) is a nonprofit corporation organized under the laws of the United States or any state, district orterritory thereof described in Section 501(c)(3) of the Code, exempt from federal income taxation under Section501(a) of the Code, and not a private foundation as described in Section 509(a) of the Code, (ii) is qualified to dobusiness in the State, and (iii) assumes in writing all of the obligations of the Corporation under the Agreement.

Notwithstanding the foregoing, as a condition precedent to any consolidation, merger, sale or other transfer,the Trustee and the Authority shall receive an Opinion of Bond Counsel to the effect that such merger,consolidation, sale or other transfer will not in and of itself adversely affect the Tax-Exempt status of interest on theBonds.

Notwithstanding any other provision above, the Corporation need not comply with any of the aboveprovisions, other than the delivery of the Opinion of Bond Counsel referred to in the second paragraph of thissection, if, at the time of such transaction, all of the Bonds will be defeased as provided in the Indenture.

(b) If a merger, consolidation, sale or other transfer is effected, the provisions of the Indenturesummarized in this section shall continue in full force and effect, and no further merger, consolidation, sale ortransfer shall be effected except in accordance with these provisions.

(c) Another entity may also agree to become a co-obligor and jointly and severally liable with theCorporation (without the necessity of merger, consolidation or transfer of assets) under the Agreement if theforegoing provisions are satisfied.

Records and Financial Statements of Corporation. The Corporation shall maintain adequate books,accounts and records in connection with the operation of the Facilities in accordance with generally acceptedaccounting principles as generally applied to non-profit institutions and in compliance with the regulations of anygovernmental regulatory body having jurisdiction thereof. The Corporation shall, within 180 days after the close ofeach fiscal year, submit to the Credit Provider and to the Trustee and, if requested, to the Authority, audited financialstatements with respect to the Corporation for such fiscal year; provided, however, that the Corporation may providecombined financial statements for the Corporation and Landmark Services, Inc. (“Landmark”), so long as suchcombined statements contain supplementary information schedules as to Landmark. The Trustee and the Authorityshall have no duty to review such financial statements. The Trustee and the Authority shall be permitted (but shallhave no duty) at all reasonable times upon reasonable notice during the term of the Agreement to examine the booksand records of the Corporation with respect to the Project, subject to the limitations in the Agreement.

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Maintenance and Repair; Taxes; Utility and other Charges. For so long as the Bonds are Outstanding,the Corporation agrees to maintain, to the extent permitted by applicable law and regulation, the Facilities, or causethe Facilities to be so maintained (i) in safe condition and (ii) in good repair and in good operating condition,ordinary wear and tear excepted, making from time to time all necessary repairs thereto and renewals andreplacements thereof; provided, however, that nothing shall be construed to restrict or limit any comparableprovision in a Credit Agreement.

For so long as the Facilities are in operation, the Corporation agrees that between the Authority and theCorporation, the Corporation will pay or cause to be paid during the term of the Agreement all taxes andgovernmental charges of any kind lawfully assessed or levied upon the Facilities or any part thereof, including anytaxes levied against the Facilities, all utility and other charges incurred in the operation, maintenance, use,occupancy and upkeep of the Facilities and all assessments and charges lawfully made by any governmental bodyfor public improvements that may be secured by a lien on the Facilities, provided that with respect to specialassessments or other governmental charges that may lawfully be paid in installments over a period of years, theCorporation, to the extent described above, shall be obligated under the Agreement to pay only such installments asare required to be paid during the term of the Agreement. The Corporation may, at the Corporation’s expense and inthe Corporation’s name, in good faith, contest any such taxes, assessments and other charges and, in the event of anysuch contest, may permit the taxes, assessments or other charges so contested to remain unpaid during that period ofsuch contest and any appeal therefrom unless by such nonpayment the Facilities or any part thereof will be subject toloss or forfeiture.

Tax-Exempt Status of Interest on Bonds. (a) It is the intention of the parties to the Agreement thatinterest on the Bonds shall be and remain Tax-Exempt, and to that end the covenants and agreements of theAuthority and the Corporation in the Agreement and the Tax Certificate are for the benefit of the Trustee as well aseach and every person who at any time will be a Holder of the Bonds, except that the Authority and not the Trustee,shall have the right to representation before the Internal Revenue Service as the taxpayer in any audit of the Bonds.

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

(c) The Authority certifies, represents and agrees that it has not taken, and will not take, any actionwhich will cause interest paid on the Bonds to become includable in gross income of the Holders of any Bonds forfederal income tax purposes pursuant to Sections 103 and 141 through 150 of the Code; and the Corporationcertifies and represents that it has not taken or, to the extent within its control, permitted to be taken, and theCorporation covenants and agrees that it will not take or, to the extent within its control, permit to be taken anyaction which will cause the interest on the Bonds to become includable in gross income of the Holders of any Bondsfor 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 Bondsbecomes taxable to a person solely because such person is a “substantial user” of the financed facilities or a “relatedperson” within the meaning of Section 103(b)(13) of the Code; and provided, further, that none of the covenants andagreements contained in the Agreement shall require either the Corporation or the Authority to enter an appearanceor intervene in any administrative, legislative or judicial proceeding in connection with any changes in applicablelaws, rules or regulations or in connection with any decisions of any court or administrative agency or othergovernmental body affecting the taxation of interest on the Bonds.

(d) Notwithstanding any provision above and the Indenture, if the Corporation shall provide to theAuthority and the Trustee an Opinion of Bond Counsel that any specified action required under the Agreement or

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the Indenture is no longer required or that some further or different action is required to maintain the Tax-Exemptstatus of interest on the Bonds, the Corporation, the Trustee and the Authority may conclusively rely on suchopinion in complying with the requirements of the Agreement, and the covenants under the Agreement shall bedeemed to be modified to that extent.

Prohibited Uses Covenant. The Corporation covenants and agrees that so long as the Bonds areOutstanding no facility, place or building financed or refinanced with a portion of the proceeds of the Bonds will beused (1) for sectarian instruction or as a place for religious worship or in connection with any part of the programs ofany school or department of divinity so long as any Bonds are Outstanding or (2) by a Person that is not a 501(c)(3)organization or a governmental unit (as that term is defined in the Code) or by a 501(c)(3) organization (includingthe Corporation) in an unrelated trade or business. The Corporation agrees to provide a report to the Authorityregarding compliance with this covenant upon any such written demand by the Authority, such report to be providedwithin seven Business Days of such request.

Survival Clause. Notwithstanding anything to the contrary contained in the Agreement, the right of accessto and inspection of the Facilities and the prohibited uses covenants shall survive termination of the Agreement.

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

(a) failure by the Corporation to pay or cause to be paid any amounts required to be paid under theAgreement when due;

(b) if any material representation or warranty made by the Corporation in any document, instrumentor certificate furnished to the Trustee or the Authority in connection with the issuance of the Bonds shall at any timeprove to have been incorrect in any material respect as of the time made;

(c) failure of the Corporation to observe and perform any covenant, condition or agreement on its partrequired to be observed or performed under the Agreement, including the payment of Additional Payments, otherthan making the payments referred to in (a) above, which continues for a period of thirty (30) days after writtennotice from the Trustee or the Authority, which notice shall specify such failure and request that it be remedied,unless the Authority and the Trustee shall agree in writing to an extension of such time period; provided, however,that if the failure stated in the notice cannot be corrected within such period, the Authority and the Trustee will notunreasonably withhold their consent to an extension of such time period if corrective action is instituted within suchperiod and diligently pursued until the default is corrected;

(d) The Corporation shall have repudiated its debts or become insolvent or admit in writing itsinability to pay its debts as they mature or shall apply for, consent to or acquiesce in the appointment of a trustee,custodian, liquidator or receiver for itself or any part of its property, or shall take any action to authorize or effectany of the foregoing; or in the absence of any such application, consent or acquiescence, a trustee, custodian,liquidator or receiver shall be appointed for it or for a substantial part of its property or revenues and shall not bedischarged within a period of 60 days; or all, or any substantial part, of the property of the Corporation shall beseized, or otherwise appropriated, or any bankruptcy, reorganization, debt arrangement or other proceeding underany bankruptcy or insolvency law or any dissolution or liquidation proceeding shall be instituted by or against theCorporation (or any action shall be taken to authorize or effect the institution by it of any of the foregoing) and ifinstituted against it, shall be consented to or acquiesced in by it, or shall not be dismissed within a period of 60 days;or

(e) the occurrence of an Event of Default under the Indenture.

The provisions of (c) of the preceding paragraph are subject to the limitation that the Corporation shall notbe deemed in default with respect to any covenant, condition or agreement to be observed or performed by theCorporation under the Agreement, other than a covenant or agreement to make any payment required to be made bythe Corporation under the Agreement, if and so long as the Corporation is unable to carry out its agreements underthe Agreement by reason of strikes, lockouts or other industrial disturbances; acts of public enemies; orders of any

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kind of the government of the United States or of the State or any of their departments, agencies, or officials, or anycivil or military authority; insurrections; riots; epidemics; landslides; lightning; earthquake; fire; hurricanes; storms;floods; washouts; droughts; arrests; acts of terrorism; restraint of government and people; civil disturbances;explosions; breakage or accident to machinery, transmission pipes or canals; partial or entire failure of utilities; orany other cause or event not reasonably within the control of the Corporation; it being agreed that the settlement ofstrikes, lockouts and other industrial disturbances shall be entirely within the discretion of the Corporation, and theCorporation shall not be required to make settlement of strikes, lockouts and other industrial disturbances byacceding to the demands of the opposing party or parties when such course is, in the judgment of the Corporation,unfavorable to the Corporation. This limitation shall not apply to any default under subsections (a), (b), (d) or (e).

Remedies on Default. Whenever any Event of Default shall have occurred and shall continue:

(a) Upon the occurrence of an Event of Default described in paragraph (e) under “THE INDENTURE-- Events of Default; Acceleration; Waiver of Default” above, and upon the acceleration of the maturity of the Bondsas provided in the Indenture, the Trustee shall, and upon the occurrence of any other Event of Default and with theprior consent of the Credit Provider, the Trustee may, by notice in writing delivered to the Corporation (with copiesof such notice being sent to the Authority and the Credit Provider) declare the unpaid balance of the Loan payableunder the Agreement, in an amount equal to the Outstanding principal amount of the Bonds, together with theinterest accrued thereon, to be immediately due and payable.

(b) The Trustee may have access to and may inspect, examine and make copies of the books andrecords, and any and all accounts, data and federal income tax and other tax returns of the Corporation.

(c) The Authority or the Trustee may take whatever action or institute any proceeding, at law or inequity, as may be necessary or desirable for the collection of the payments and other amounts then due pursuant tothe Agreement and thereafter to become due under the Agreement or the enforcement of the performance andobservance of any obligation, agreement or covenant of the Corporation under the Agreement, including but notlimited to instituting and prosecuting to judgment or final decree and enforcing any such judgment or decree againstthe Corporation and collecting in the manner provided by law moneys decreed to be payable.

The provisions of (a), however, are subject to the condition that if, at any time after any portion of the Loanshall have been so declared due and payable, and before any judgment or decree for the payment of the moneys dueshall have been obtained or entered as hereinafter provided, there shall have been deposited with the Trustee a sumsufficient to pay all the principal of the Bonds matured prior to such declaration and all matured installments ofinterest (if any) upon all such Bonds, with interest on such overdue installments of principal as provided in theAgreement, and the reasonable fees and expenses of the Trustee, and any and all other defaults actually known to theTrustee (other than in the payment of principal of and interest on such Bonds due and payable solely by reason ofsuch declaration) shall have been made good or cured to the satisfaction of the Trustee or provision deemed by theTrustee to be adequate shall have been made therefor, then, and in every such case, the Holders of at least a majorityin aggregate principal amount of the Bonds then Outstanding, by written notice to the Authority and to the Trusteeaccompanied by the written consent of the Credit Provider may, on behalf of the Holders of all the Bonds, rescindand annul such declaration and its consequences and waive such default; provided that no such rescission andannulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or powerconsequent thereon.

In case the Trustee or the Authority shall have proceeded to enforce its rights under the Agreement andsuch proceedings shall have been discontinued or abandoned for any reason or shall have been determined adverselyto the Trustee or the Authority, then, and in every such case, the Corporation, the Trustee and the Authority shall berestored respectively to their several positions and rights under the Agreement, and all rights, remedies and powersof the Corporation, the Trustee and the Authority shall continue as though no such action had been taken (provided,however, that any settlement of such proceedings duly entered into by the Authority, the Trustee or the Corporationshall not be disturbed by reason of this provision).

In case proceedings shall be pending for the bankruptcy or for the reorganization of the Corporation underthe federal bankruptcy laws or any other applicable law, or in case a receiver or trustee shall have been appointed forany property of the Corporation or in the case of any other similar judicial proceedings relative to the Corporation,

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or the creditors or property of the Corporation, then the Trustee shall be entitled and empowered, by intervention insuch proceedings or otherwise, to file and prove a claim or claims for the whole amount owing and unpaid pursuantto the Agreement and, in case of any judicial proceedings, to file such proofs of claim and other papers ordocuments as may be necessary or advisable in order to have the claims of the Trustee allowed in such judicialproceedings relative to the Corporation, its creditors or its property, and to collect and receive any moneys or otherproperty payable or deliverable on any such claims, and to distribute such amounts as provided in the Indenture afterthe deduction of its reasonable charges and expenses to the extent permitted by the Indenture. Any receiver,assignee or trustee in bankruptcy or reorganization is authorized to make such payments to the Trustee, and to pay tothe Trustee any amount due it for reasonable compensation and expenses, including reasonable expenses and fees ofcounsel incurred by it up to the date of such distribution.

No Remedy Exclusive. No remedy conferred upon or reserved to the Authority or the Trustee is intendedto be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative andshall be in addition to every other remedy given under the Agreement or now or hereafter existing at law or in equityor by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any suchright or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from timeto time and as often as may be deemed expedient. In order to entitle the Authority or the Trustee to exercise anyremedy reserved to it, it shall not be necessary to give any notice, other than such notice as may be expresslyrequired in the Agreement. Such rights and remedies as are given the Authority under the Agreement shall alsoextend to the Trustee, and the Trustee and the Holders of the Bonds shall be deemed third party beneficiaries of allcovenants and agreements contained except rights and remedies relating to fees, indemnification and notification. Tothe extent that any covenants and agreements in the Agreement expressly grant rights to the Credit Provider, it shallbe deemed a third party beneficiary of such covenants and agreements.

No Additional Waiver Implied by one Waiver. No waiver by the Corporation, the Authority or theTrustee of any agreement or covenant contained in the Agreement shall be effective without the consent of theCredit Provider. In the event any agreement or covenant contained in the Agreement should be breached by theCorporation and thereafter waived by the Authority or the Trustee, such waiver shall be limited to the particularbreach so waived and shall not be deemed to waive any other breach under the Agreement.

Redemption of Bonds with Prepayment Moneys. By virtue of the assignment of certain rights of theAuthority under the Agreement to the Trustee, the Corporation agrees to and shall pay (or cause to be paid) directlyto the Trustee any amount permitted to be paid by it under the prepayment provisions of the Indenture. At thedirection of the Corporation, the Trustee shall use the moneys so paid to it by the Corporation to effect redemptionof the Bonds in accordance with the Indenture on the date specified for such redemption pursuant to the Agreementor to apply such prepayment to making provision for the payment of Bonds as provided in the Indenture.

Options to Prepay Repayment Installments. The Corporation shall have the option to prepay theRepayment Installments payable under the Agreement with respect to all or any portion of the Bonds (the principalamount to be specified by an Authorized Corporation Representative subject to the requirement that the OutstandingBonds be in Authorized Denominations) by paying to the Trustee, for deposit in the Bond Fund or such other fundestablished for such purpose and held by the Trustee, the applicable amount set forth in the Agreement.

Amount of Prepayment. In the case of a prepayment of the amount due under the Agreement with respectto all Outstanding Bonds, the amount to be paid shall be a sum sufficient, together with other funds then on depositwith the Trustee and available for such purpose and the principal of and interest on any Government Obligationsdescribed in the Indenture then on deposit with the Trustee which are due and payable on and before the applicablepayment or redemption date and which Government Obligations are then available for such purpose, to pay withAvailable Amounts (1) the principal of all Outstanding Bonds on the maturity date or on the redemption date, asapplicable, plus interest accrued and to accrue to the payment or redemption date of the Bonds, plus premium, ifany, (2) all reasonable and necessary fees and expenses of the Authority, the Trustee and the Remarketing Agentaccrued and to accrue through final payment of the Bonds, and (3) all other liabilities of the Corporation accrued andto accrue under the Agreement with respect to the Bonds.

In the case of prepayment of the Repayment Installments with respect to less than all of the OutstandingBonds, the amount payable shall be a sum sufficient, together with other funds deposited with the Trustee and

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available for such purpose and the principal of and interest on any Governmental Obligations described in theIndenture then on deposit with the Trustee which are due and payable on and before the applicable payment orredemption date and which Government Obligations are then available for such purpose, to pay with AvailableAmounts the principal amount of and premium, if any, and interest on the Bonds to be paid or redeemed with suchprepayment, as provided in the Indenture, and to pay expenses of the payment or redemption, as applicable, of theBonds.

Nonliability of Authority. The Authority shall not be obligated to pay the principal (or redemption price)of or interest on the Bonds, except from Revenues and other moneys and assets pledged thereto pursuant to theIndenture received by the Trustee on behalf of the Authority pursuant to the Agreement and the Indenture. Neitherthe faith and credit nor the taxing power of the State or any political subdivision thereof, nor the faith and credit ofthe Authority or any member thereof is pledged to the payment of the principal (or redemption price) or interest onthe Bonds. Neither the Authority nor its members, officers, directors, agents or employees or their successors andassigns shall be liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on anyconceivable theory, under, by reason of or in connection with the Agreement, the Bonds or the Indenture, exceptonly to the extent amounts are received for the payment thereof from the Corporation under the Agreement.

The Corporation acknowledges that the Authority’s sole source of moneys to repay the Bonds will beprovided by the payments made by the Corporation pursuant to the Agreement, together with investment income oncertain funds and accounts held by the Trustee under the Indenture, and agrees that if the payments to be made underthe Agreement shall ever prove insufficient to pay all principal (or redemption price) and interest on the Bonds asthe same shall become due (whether by maturity, redemption, acceleration or otherwise), then upon notice from theTrustee, the Corporation shall pay such amounts as are required from time to time to prevent any deficiency ordefault in the payment of such principal (or redemption price) or interest, including, but not limited to, anydeficiency caused by acts, omissions, nonfeasance or malfeasance on the part of the Trustee, the Corporation, theAuthority or any third party, subject to any right of reimbursement from the Trustee, the Authority or any such thirdparty, as the case may be, therefor but solely, in the case of the Authority, from the Revenues, other than withrespect to any deficiency caused by the willful misconduct of the Authority.


APPENDIX E

FORM OF OPINION OF BOND COUNSEL

Upon issuance of the Bonds, Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel, proposes to render its final approving opinion with respect thereto in substantially the following form:

October __, 2008

California Municipal Finance Authority Sacramento, California

$7,700,000 CALIFORNIA MUNICIPAL FINANCE AUTHORITY

VARIABLE RATE DEMAND REVENUE BONDS (GOODWILL INDUSTRIES OF ORANGE COUNTY, CALIFORNIA)

SERIES 2008

Ladies and Gentlemen:

We have examined a certified copy of the record of proceedings relating to the issuance by the California Municipal Finance Authority (the “Authority”) of $7,700,000 aggregate principal amount of its Variable Rate Demand Revenue Bonds (Goodwill Industries of Orange County, California) Series 2008 (the “Bonds”). The Bonds are issued pursuant to pursuant to the provisions of the Joint Exercise of Powers Act, comprising Chapter 5 of Division 7 of Title 1 (commencing with Section 6500) of the California Government Code (the “Act”), and an indenture, dated as of October 1, 2008 (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 Goodwill Industries of Orange County, California (the “Corporation”), pursuant to a Loan Agreement, dated as of October 1, 2008 (the “Loan Agreement”), by and between the Authority and the Corporation. The Indenture provides that payment of the principal and Purchase Price of and interest on the bonds is to be supported by an irrevocable direct pay letter of credit (the “Letter of Credit”) issued by Wells Fargo Bank, National Association (the “Bank”), pursuant to a Reimbursement Agreement, dated as of October 1, 2008 (the “Reimbursement Agreement”), by and between the Corporation and the Bank. Capitalized terms not otherwise defined herein shall have the meaning ascribed thereto in the Indenture.

In our capacity as Bond Counsel, we have examined originals or copies certified or otherwise identified to our satisfaction as being true copies of the (i) Indenture, (ii) the Loan Agreement, (iii) the Tax Certificate dated October 30, 2008, (iv) the Official Statement, dated October __, 2008 (the “Official Statement”), (v) the Purchase Contract, dated October 29, 2008 (the “Purchase Contract”), by and among the Corporation, the Authority and Wells Fargo Institutional Securities, LLC (the “Underwriter”), (vi) the Reimbursement Agreement, (vii) the Remarketing Agreement by and between the Corporation and Wells Fargo Brokerage Services, LLC, (viii) letters, certificates and opinions of counsel to the Authority, the Corporation, the Trustee and others delivered pursuant to Section 4(c) of the Purchase Contract, and (ix) such other laws, documents, certifications, opinions and matters to the extent we deemed necessary to render the opinions set forth herein.

We have assumed, but have not independently verified, that the signatures on all documents, letters, opinions and certificates which we have examined (whether originals or copies) are genuine, that all documents submitted to us are authentic and were duly and properly executed by the parties thereto other than the Authority and

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that all representations made in the documents that we have reviewed and all legal conclusions contained in the opinions referred to in the preceding paragraph are true and accurate. Furthermore, we have assumed 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.

Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the opinion that:

1. The Bonds have been duly authorized, executed and issued.

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, premium, if any, 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 the funds and accounts established pursuant to the Indenture (except the Rebate Fund and the Bond Purchase 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 Bonds are valid and binding limited obligations of the Authority, payable solely from the Revenues and other assets pledged and assigned therefor under the Indenture and are not a lien or charge upon the funds or property of the Authority except to the extent of the aforementioned pledge and assignment. The Bonds shall never constitute the debt or indebtedness of the Authority within the meaning of any provision or limitation of the Constitution of the State of California, and shall not constitute nor give rise to a pecuniary liability of the Authority or a charge against its general credit or taxing powers.

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

5. Under existing statutes, regulations, rulings and judicial decisions, assuming compliance by the Authority and the Corporation with certain covenants of the Indenture, the Loan Agreement, the Tax Certificate and other documents pertaining to the Bonds and certain requirements of the Internal Revenue Code of 1986, as amended (the “Code”), regarding the organization and operation of the Corporation, the use, expenditure and investment of Bond proceeds and the timely payment of certain investment earnings to the United States Treasury, interest on the Bonds is not includable in the gross income of the owners of the Bonds for purposes of federal income taxation. In rendering the foregoing opinion, we have relied upon the opinion of Rutan & Tucker, LLP, Costa Mesa, California, Counsel to the Corporation, regarding the qualification of the Corporation as an organization described in Section 501(c)(3) of the Code. In addition, we can give no opinion or assurance about the future activities of the Corporation or about the effect of future changes in the Code, the applicable regulations, the interpretations thereof or the resulting changes in enforcement thereof by the Internal Revenue Service. Failure to comply with the covenants and requirements described above or failure of the Corporation 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 may cause interest on the Bonds to be includable in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds.

6. Interest on the Bonds will not be treated as an item of tax preference in calculating alternative minimum taxable income of individuals and corporations; however, interest on the Bonds will be included as an adjustment in the calculation of corporate alternative minimum taxable income and may therefore affect a corporation’s alternative minimum tax liability.

We express no opinion regarding other federal income tax consequences caused by ownership of, or the receipt of interest on, the Bonds.

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The Indenture provides that the Bonds may be converted to bear interest at a Term Interest Rate, under the circumstances and subject to the conditions set forth in the Indenture. The foregoing opinions relate to the matters described herein only as of the date hereof. We express no opinion as to the exclusion of interest for federal income tax purposes on and after the occurrence of any such conversion or on and after the substitution of the Letter of Credit with an Alternate Credit Facility (as defined in the Indenture). Additionally, certain requirements and procedures contained or referred to in the Indenture or other relevant documents relating to the Bonds may be changed, and certain actions may be taken, under the circumstances and subject to the terms and conditions set forth in such documents, upon the advice or with an approving opinion of counsel nationally recognized in the area of tax-exempt obligations. We express no opinion as to any payment under the Loan Agreement or the exclusion of interest on the Bonds from gross income of the owners of the Bonds for federal income tax purposes on and after the date on which any such change occurs or such action is taken.

The opinions expressed herein are based upon our analysis and interpretation of existing laws, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof. Our engagement with respect to the Bonds has concluded with their issuance, and we disclaim any obligation to update this letter. We call attention to the fact that the rights and obligations under the Indenture, the Loan Agreement, the Tax Certificate and the Bonds and their enforceability may be subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights, to the application of equitable principles if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies 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 nor do we express any opinion with respect to the state or quality of title to or interest in any of the real or personal property described in or subject to the lien of the Indenture or the Loan Agreement or the accuracy or sufficiency of the description contained therein of, or the remedies available to enforce liens on, any such property. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Bonds and express no opinion with respect thereto.

Respectfully submitted,

STRADLING YOCCA CARLSON & RAUTH
