LSU Municipal Bond 2008

8/2/2019 LSU Municipal Bond 2008

1/160


2/160

MATURITY SCHEDULE

Series Principal Amount CUSIP* Maturity DateSeries 2008A Bonds $12,000,000 13048TDT7 August 1, 2028

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

* Copyright 2008, American Bankers Association. CUSIP data is provided by Standard & Poors CUSIP Service

Bureau, a division of The McGraw-Hill Companies, Inc. CUSIP numbers are provided for convenience of referenceonly. The Corporation assumes no responsibi lity for the accuracy of such numbers.


3/160

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

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

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

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

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

______________________________

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAYOVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE

MARKET PRICE OF THE BONDS AT LEVELS ABOVE THOSE WHICH MIGHTOTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMM ENCED,MAY BE DISCONTINUED AT ANY TIME.

______________________________

CAUTIONARY STATEMENTS REGARDING

FORWARD-LOOKING STATEMENTS IN THIS OFFICIAL STATEMENT

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

forward-looking statements. Such statements are generally identifiable by the terminology used such asplan, expect, estimate, budget, intend, projection, or other similar words. Such forward-

looking statements include, but are not limited to, certain statements contained in the information inAPPENDIX A INFORMATION REGARDING LA SIERRA UNIVERSITY.

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


4/160

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


5/160

TABLE OF CONTENTS

Page

-i-

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mandatory Purchase in L ieu of Redemption ................................................................................ 13

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

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

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

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

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

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

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

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


6/160

TABLE OF CONTENTS(continued)

Page

-ii-

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


7/160

TABLE OF CONTENTS(continued)

Page

-iii-

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

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

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

APPENDIX D SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL

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

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

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


8/160


9/160

OFFICI AL STATEMENT

$24,405,000CALIFORNIA MUNICIPAL FINANCE AUTHORITY

VARIABLE RATE REVENUE BONDS(LA SIERRA UNIVERSITY)

SERIES 2008

$12,000,000Series 2008A Bonds

$12,405,000Series 2008B Bonds

INTRODUCTION

This Introduction contains only a brief summary of certain of the terms of the Bonds beingoffered and a full review should be made of the entire Official Statement, including the cover page, theinside cover pages and the Appendices in or der to make an informed investment decision. Al l statementscontained in this Introduction are qualified in their entirety by reference to the entire Official Statement.References to, and summaries of, provisions of the lawsof the State of California (the State) or any

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

General

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

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

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

The Corporation

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


10/160

2

For more information about the Corporation, see APPENDIX A INFORMATION

REGARDING LA SIERRA UNIVERSITY and APPENDIX B AUDITED FINANCIALSTATEMENTS OF LA SIERRA UNIVERSITY.

The Bonds

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

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

The Interest Rate Period for the Bonds of any Series may be converted from time to time asprovided in the Indenture. See THE BONDS Conversion of Interest Rate Period.

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

Book-Entry System

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

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

Security and Sources of Payment for the Bonds

Payment of the principal, Purchase Price of, and interest on the Bonds initially will be supportedby an irrevocable, direct-pay letter of credit (the Letter of Credit) issued by Wells Fargo Bank, National

Association (the Bank) made pursuant to and subject to the terms of a Reimbursement Agreement,dated as of August 1, 2008 (the Reimbursement Agreement), between the Corporation and the Bank.The Reimbursement Agreement constitutes a Credit Agreement pursuant to the Indenture and the Letterof Credit constitutes a Credit Facility pursuant to the Indenture.

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


11/160

3

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

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

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

The Purchase Price of Bonds tendered or deemed tendered for purchase is payable onlyfrom the proceeds of the remarketing of such Bonds and from amounts made available under theCredit Facility for such Bonds. The Corporation has no obligation under the Loan Agreement tomake any payments with respect to the Purchase Price of Bonds tendered or deemed tendered forpurchase.

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

Certain Information Related to this Official Statement

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

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

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

Bondholders Risks

There are risks associated with the purchase of the Bonds. See BONDHOLDERS RISKSherein for a discussion of certain of these risks.

PLAN OF FINANCE

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


12/160

4

ESTI MATED SOURCES AND USES OF PROCEEDS

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

Estimated Sources of Proceeds

Par Amount of the Bonds $ 24,405,000.00

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

Total $ 24,405,000.00

1 Includes underwriters discount, initial annual fee paid to Remarketing Agent, legal and financing fees, ratingagency fees, printi ng costs and other miscellaneous expenses.


13/160

5

DEBT SERVICE REQUIREMENTS

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

Year Ending

August 1,

Principal Interest(1) Total

2009 $ 905,000 $ 764,082 $ 1,669,0822010 905,000 763,750 1,668,7502011 935,000 734,337 1,669,3372012 965,000 704,756 1,669,7562013 1,000,000 671,817 1,671,8172014 1,030,000 640,088 1,670,0882015 1,065,000 606,613 1,671,6132016 1,100,000 572,655 1,672,6552017 1,140,000 535,636 1,675,6362018 1,180,000 499,200 1,679,2002019 1,220,000 460,850 1,680,8502020 1,260,000 421,682 1,681,6822021 1,300,000 379,815 1,679,8152022 1,340,000 338,000 1,678,0002023 1,385,000 294,450 1,679,4502024 1,435,000 249,723 1,684,7232025 1,485,000 202,568 1,687,5682026 1,535,000 154,537 1,689,5372027 1,585,000 104,650 1,689,6502028 1,635,000 53,198 1,688,198

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

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

See Note 14 to APPENDIX B AUDITED FINANCIAL STATEMENTS OF LA SIERRA UNIVERSITY for a

description of existing indebtedness of the Corporation.

Source: Wells Fargo Institutional Securities, LLC.

THE BONDS

General

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

Off icial Statement. The Bonds wi ll be dated their date of i ssuance and will mature on the dates set forthon the inside cover page of this Official Statement.

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


14/160

6

Book-Entry System

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

premium, if any, and interest on each Bond will be made pursuant to DTCs rules and procedures. SeeAPPENDIX C BOOK-ENTRY SYSTEM.

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

Determination of I nterest Rates on the Bonds

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

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

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

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

Payment of the principal, Purchase Price of, and interest on the Bonds in a Weekly Interest RatePeriod initially will be supported by the Letter of Credit. The Corporation may provide one or moreAlternate Credit Facilities for the Letter of Credit, and may eliminate the support of any Series of Bondsby a Credit Facil ity, upon the terms and conditions provided in the Indenture and the Loan Agreement,which terms require the mandatory tender of such Bonds for purchase. See THE LETTER OF CREDIT

AND THE REIMBURSEMENT AGREEMENT and SECURITY AND SOURCES OF PAYMENTFOR THE BONDS Alternate Credit Facility.

Weekly Interest Rate Period for Bonds

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


15/160

7

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

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

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

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

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

Term Interest Rate Period for Bonds

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

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

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

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


16/160

8

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

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

Conversion of Interest Rate Period

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

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

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

PAYMENT OF THE BONDSAlternate Credit Facility.

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


17/160

9

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

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

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

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

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

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

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


18/160

10

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

Special Considerations Relating to the Bonds

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

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

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

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

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

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


19/160

11

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

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

TENDER OF BONDS FOR PURCHASE

Optional Tender

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

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

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

of purchase specified in such notice.

IF A BONDHOLDER FAILS TO DELIVER ANY BOND TO THE TRUSTEE ON ORBEFORE THE PURCHASE DATE, SUCH BOND SHALL BE DEEMED TO HAVE BEENPROPERLY TENDERED TO THE TRUSTEE AND, TO THE EXTENT THAT THERE SHALLBE ON DEPOSIT WITH THE TRUSTEE ON SUCH PURCHASE DATE AN AMOUNTSUFFICIENT TO PAY THE PURCHASE PRICE THEREOF, SUCH BOND SHALL CEASE TOCONSTITUTE OR REPRESENT A RIGHT TO PAYMENT OF PRINCIPAL THEREOF ORINTEREST THEREON OF THE FORMER HOLDER AND SHALL CONSTITUTE ANDREPRESENT ONLY THE FORMER HOLDERS RIGHT TO PAYMENT OF THE PURCHASEPRICE PAYABLE ON SUCH DATE. THE FOREGOING SHALL NOT LIMIT THEENTITLEMENT OF ANY BONDHOLDER ON ANY RECORD DATE TO RECEIPT OF

INTEREST, I F ANY, DUE ON ANY SUCH PURCHASE DATE.

SEE APPENDIX C BOOK-ENTRY SYSTEM FOR THE TENDER PROVISIONS

APPLICABLE WHILE THE BONDS ARE IN THE BOOK-ENTRY-ONLY SYSTEM . THEAUTHORITY, THE CORPORATION AND THE TRUSTEE SHALL NOT BE RESPONSIBLEIN THE EVENT DTC DOES NOT TENDER OR DELIVER BONDS FOR TENDER INACCORDANCE WITH DIRECTI ONS DTC RECEIVES FROM A DTC PARTICIPANT.


20/160

12

Mandatory Tender

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

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

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

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

(i ii) on the effective date of an Alternate Credit Facil ity with respect to such Series of Bonds;

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

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

With respect to Bonds subject to mandatory tender for purchase pursuant to clause (i) above, theTrustee shall give Notice by Mail to the Holders of such Bonds not later than two (2) Business Daysfollowing receipt of the notice from the Corporation described in clause (i) above, which notice shall statethat such Bonds are subject to mandatory tender for purchase on the date determined in accordance withclause (i), which date shall be specified in such notice. With respect to Bonds subject to mandatorytender for purchase pursuant to clause (ii) above, the Trustee shall give Notice by Mail to the Holders ofsuch Bonds, not later than the thirtieth (30th) day prior to the date on which such Bonds are subject tomandatory tender pursuant to clause (ii) in the form of notice described under the caption Conversion ofInterest Rate Period with respect to either a Weekly Interest Rate or Term Interest Rate, as applicable.With respect to Bonds subject to mandatory tender for purchase pursuant to clause (iii) above, the Trusteeshall give Notice by Mail of the provision of any commitment to issue an Alternate Credit Facility withrespect to such Bonds to the Holders of such Bonds, not later than the fifteenth (15th) day prior to the date

on which such Bonds are subject to mandatory tender pursuant to clause (iii), which notice shall (a) statethe expected effective date of such Alternate Credit Facility and (b) state that such Bonds shall be subjectto mandatory tender for purchase on the date specified in such notice. With respect to Bonds subject tomandatory tender for purchase pursuant to clause (iv) above, the Trustee shall give Notice by Mail to theHolders of such Bonds, not later than the fifteenth (15th) day prior to the date on which such Bonds aresubject to mandatory tender pursuant to clause (iv), which notice shall state that the Credit Facility then ineffect with respect to such Bonds has not been renewed and an Alternate Credit Facility has not beendelivered to the Trustee and that such Bonds are subject to mandatory tender for purchase, on the datedetermined in accordance with clause (iv), which date shall be specified in such notice. With respect to


21/160

13

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

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

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

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

BEFORE ANY PURCHASE DATE SPECIFIED ABOVE, SUCH BOND SHALL BE DEEMEDTO HAVE BEEN PROPERLY TENDERED TO THE TRUSTEE AND, TO THE EXTENT THATTHERE SHALL BE ON DEPOSIT WITH THE TRUSTEE ON SUCH PURCHASE DATE ANAMOUNT SUFFICIENT TO PAY THE PURCHASE PRICE THEREOF, SUCH BOND SHALLCEASE TO CONSTITUTE OR REPRESENT A RIGHT TO PAYMENT OF PRINCIPALTHEREOF OR INTEREST THEREON OF THE FORMER HOLDER AND SHALLCONSTITUTE AND REPRESENT ONLY THE FORMER HOLDERS RIGHT TO PAYMENT

OF THE PURCHASE PRICE PAYABLE ON SUCH DATE. THE FOREGOING SHALL NOTLIMIT THE ENTITLEMENT OF ANY BONDHOLDER ON ANY RECORD DATE TORECEIPT OF I NTEREST, IF ANY, DUE ON ANY SUCH PURCHASE DATE.

Mandatory Purchase in Lieu of Redemption

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

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

Effect of Purchase of Bonds

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


22/160

14

Purchase of Tendered Bonds

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

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

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

(i i) Money drawn or received under the Credit Facil ity for such Bonds.

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

Inadequate Funds for Tenders

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

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

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

Remarketing

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

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


23/160

15

REDEMPTION OF BONDS

Optional Redemption

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

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

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

Lesser of Length of TermInterest Rate Period or

Length of Time to Maturity

Redemption Dates and Prices

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

Greater than 6 and less than or equalto 10 years

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


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

% annually to 100%


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


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


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

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

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


24/160

16

Notice of Redemption

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

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

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

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

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

Effect of Redemption

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

Selection of Bonds to be Redeemed

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


25/160

17

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

SECURITY AND SOURCES OF PAYMENT FOR THE BONDS

General

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

The Purchase Price of Bonds tendered or deemed tendered for purchase is payable onlyfrom the proceeds of the remarketing of such Bonds and from amounts made available under theCredit Facility for such Bonds. The Corporation has no obligation under the Loan Agreement tomake any payments with respect to the Purchase Price of Bonds tendered or deemed tendered forpurchase.

NONE OF THE AUTHORITY, ANY AUTHORITY MEMBER OR ANY PERSONEXECUTING THE BONDS IS LIABLE PERSONALLY ON THE BONDS OR SUBJECT TOANY PERSONAL LIABILITY OR ACCOUNTABILITY BY REASON OF THEIR ISSUANCE.THE BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELYFROM AND SECURED BY THE PLEDGE OF CERTAIN REVENUES UNDER THEINDENTURE. 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 ASSETSTO PAY ALL OR ANY PORTION OF THE DEBT SERVICE DUE ON THE BONDS, TO LEVYOR TO PLEDGE ANY FORM OF TAXATION WHATEVER THEREFOR OR TO MAKE ANYAPPROPRIATI ON FOR THEIR PAYMENT. THE BONDS ARE NOT A PLEDGE OF THEFAITH AND CREDIT OF THE AUTHORITY, ITS MEMBERS, THE STATE OF CALIFORNIAOR ANY OF ITS POLITICAL SUBDIVISIONS, NOR DO THEY CONSTITUTEINDEBTEDNESS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORYDEBT LI MITATION. THE AUTHORITY HAS NO TAXING POWER.

Credit Facility

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

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


26/160

18

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

Alternate Credit Facility

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

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

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

Period for such Bonds;

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

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

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

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

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

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


27/160

19

Revenues and Repayment Installments

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

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

SEE APPENDIX D SUMMARY OF CERTAIN PROVISIONS OF THE 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 the Bank and is believed to bereliable. This information has not been verified independently by the Corporation, the Authority or theUnderwriter. None of the Corporation, the Authority or the Underwri ter make any representationwhatsoever as to the accuracy, adequacy or completeness of such information.

Wells Fargo Bank, National Association

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

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

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

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


28/160

20

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 orany affiliate of the Bank or Wells Fargo & Company will be pledged to the payment thereof.Payment of the Letter of Credit will not be insured by the FDIC.

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

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

THE LETTER OF CREDIT AND THE REIMBURSEMENT AGREEMENT

The following is a summary of certain of the provisions of the Letter of Credit and theReimbursement Agreement. This summary does not purport to be defini ti ve or comprehensive. Referenceis made to the actual document for the full terms thereof.

Letter of Credit

On the date of issuance of the Bonds, the Bank will issue in favor of the Trustee the Letter ofCredit in an original stated amount equal to the aggregate principal amount of the Bonds plus 50 days

interest thereon calculated at a rate equal to 12%, computed on the basis of a 365-day year (as from timeto time reduced and reinstated as provided in the Letter of Credit). The Letter of Credit (subject to anyreductions and reinstatements as provided therein) may be drawn upon with respect to the payment of theunpaid principal amount of, or portion of the purchase price corresponding to the principal of, the Bonds(or any Series thereof) and with respect to the payment of accrued but unpaid interest on, or portion of thepurchase price representing accrued interest on, the Bonds (or any Series thereof). The Letter of Creditdoes not cover the payment of any redemption or purchase premium.

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

The Letter of Credit will be an irrevocable obligation of the Bank to pay to the Trustee, uponpresentation of the certificates required by the terms thereof up to (i) an amount equal to the aggregateoutstanding principal amount of the Bonds (or any Series thereof) to pay the principal of the Bonds (orany Series thereof) when due and payable (whether at maturity or upon acceleration of maturity or afternotice of redemption or prepayment or otherwise) or the portion of the purchase price of the Bonds (or

any Series thereof) representing such principal, and (ii) an amount equal to 50 days interest on the Bonds(or any Series thereof) calculated at a rate equal to 12%, computed on the basis of a 365-day year.

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


29/160

21

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

Reimbursement Agreement

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

2008 (the Reimbursement Agreement), which, among other things, sets forth the terms and conditionswhereby Corporation is required to repay the Bank any amounts drawn by the Trustee under the Letter ofCredit and grants to the Bank certain liens and security interests in real property and other collateral ofCorporation. Except for Corporation and Reimbursement Agreement, capitalized terms used in this

Section and not otherwise defined shall have the meanings given to such terms in the ReimbursementAgreement.

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

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

Corporations redemption obligations described in the Reimbursement Agreement are

solely for the benefit of the Bank and may be waived or modified by the Bank in its sole andabsolute discretion in accordance with the terms of the Reimbursement Agreement.

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

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

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

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

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


30/160

22

(c) Corporation shall fail to maintain its Accreditation or Af fi liation; or

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

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

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