3.841% Taxable Bonds, Series 2017

NEW ISSUE-FULL BOOK ENTRY Ratings: Moody’s: “Aa1” (Stable Outlook) S&P: “AA” (Stable Outlook) See “RATINGS” herein

$402,320,000 UNIVERSITY OF SOUTHERN CALIFORNIA 3.841% Taxable Bonds, Series 2017

Price: 100% Yield: 3.841% CUSIP No. 914886AC01

Dated: Date of Delivery Due: October 1, 2047

The above-described bonds (the “Bonds”) are issuable only as fully registered bonds in denominations of $1,000 and integral multiples thereof. Interest from the date of delivery of the Bonds is payable on each April 1 and October 1, commencing October 1, 2017. The Bonds will initially be maintained in book-entry form registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”), to which payments of principal of, premium, if any, and interest on, the Bonds will be made by The Bank of New York Mellon Trust Company, N.A., Los Angeles, California, as Bond Trustee (the “Bond Trustee”). Individual purchases will be made in book-entry form only. Purchasers of Bonds will not receive physical delivery of bond certificates. So long as Cede & Co. is the registered owner, as nominee of DTC, references herein to the registered owners shall mean Cede & Co., as aforesaid, and shall not mean the Beneficial Owners (hereinafter defined) of the Bonds. So long as Cede & Co., as nominee of DTC, is the registered owner, payments on the Bonds will be made directly to Cede & Co. Disbursement of such payments to DTC’s Participants is the responsibility of DTC and disbursements of such payments to the Beneficial Owners is the responsibility of DTC’s Direct Participants and DTC’s Indirect Participants, as more fully described herein. See “BOOK ENTRY ONLY SYSTEM” herein.

The Bonds are subject to optional and mandatory sinking fund redemption prior to maturity as described herein.

The Bonds have not been registered under the Securities Act of 1933, as amended, in reliance upon the exception from registration set forth in Section 3(a)(4) of such Act.

The Bonds will be issued by the University of Southern California (the “University”) pursuant to a Bond Indenture, dated as of April 1, 2017 (the “Bond Indenture”), by and between the University and the Bond Trustee. The proceeds of the sale of the Bonds will be used by the University for any of its general corporate purposes and to pay costs of issuance of the Bonds.

The Bonds constitute full faith and credit unsecured general obligations of the University. Moreover, the University is not restricted by the Bond Indenture or otherwise from incurring additional indebtedness. Such additional indebtedness, if issued, may be either secured or unsecured and may be entitled to payment prior to payment on the Bonds. See “SECURITY FOR THE BONDS” herein.

University of Southern California

The Bonds are offered by the Underwriters, when, as and if issued, subject to prior sale, to withdrawal or modification of the offer without notice, and to the approval of legality by Hawkins Delafield & Wood LLP, Los Angeles, California and New York, New York, special counsel to the University. In addition, certain legal matters will be passed upon for the University by its Senior Vice President and General Counsel, and for the Underwriters by their counsel, Nixon Peabody LLP, Los Angeles, California. It is expected that the Bonds in definitive form will be available for delivery to the Underwriters in New York, New York on or about April 18, 2017.

Morgan Stanley Barclays BofA Merrill Lynch

Dated: April 10, 2017.

1 CUSIP Copyright, American Bankers Association. See the CUSIP footnote on page ii, SUMMARY OF THE OFFERING. [THIS PAGE INTENTIONALLY LEFT BLANK]

No dealer, broker, salesperson or other person has been authorized by the University or the Underwriters to give information or to make representations with respect to the Bonds, other than those contained in this Offering Memorandum, and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Offering Memorandum does not constitute an offer by any person to sell or the solicitation by any person of an offer to buy, nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. Certain information contained herein has been obtained from the University and other sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation of, the Underwriters. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Offering Memorandum nor any sales made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the parties referred to above since the date hereof. The order and placement of materials in this Offering Memorandum, including the Appendices, are not to be deemed a determination of relevance, materiality or importance, and this Offering Memorandum, including its Appendices, must be considered in its entirety. This offering of the Bonds is made only by means of this entire Offering Memorandum.

The Underwriters have provided the following sentence for inclusion in this Offering Memorandum: The Underwriters have reviewed the information in this Offering Memorandum in accordance with, and as part of their responsibilities to investors under, the federal securities laws as applied to the facts and circumstances of the offering of the Bonds and the security therefor, but the Underwriters do not guarantee the accuracy or completeness of such information.

______

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. ______

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS IN THIS OFFERING MEMORANDUM

Certain statements included or incorporated by reference in this Offering Memorandum constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “project,” “budget” or other similar words. Such forward-looking statements include, but are not limited to, certain statements contained in the information in APPENDIX A - “THE UNIVERSITY OF SOUTHERN CALIFORNIA.”

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE UNIVERSITY DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN ITS EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED OCCUR.

THE BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SECTION 3(a)(4) OF SUCH ACT. THE BOND INDENTURE HAS NOT BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT.

THE BONDS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR REGISTERED WITH OR APPROVED BY THE SECURITIES COMMISSION OR ANY REGULATORY AUTHORITY OF ANY STATE, NOR HAS THE SEC OR ANY STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR THE ADEQUACY OF THIS OFFERING MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Statements in this Offering Memorandum are made as of the date hereof unless stated otherwise and neither the delivery of this Offering Memorandum at any time, nor any sales thereunder, shall under any circumstances create an implication that the information contained herein is correct as of any time subsequent to the date hereof.

Any references to internet websites in this Offering Memorandum are shown for reference and convenience only; unless explicitly stated to the contrary, the information contained within the websites and any links contained within those websites are not incorporated herein by reference and do not constitute part of this Offering Memorandum.

In making an investment decision, investors must rely on their own examination of the University and the terms of the offering, including the merits and risks involved. Prospective investors should not construe the contents of this Offering Memorandum as legal, tax or investment advice.

TABLE OF CONTENTS

Page

INTRODUCTION ...... 1 General ...... 1 The Bonds ...... 1 Redemption ...... 1 Book-Entry Only System ...... 1 Use of Proceeds and Plan of Financing ...... 2 The University of Southern California ...... 2 Financial Condition of the University ...... 2 Miscellaneous ...... 2 THE BONDS ...... 3 Description of the Bonds ...... 3 Redemption ...... 4 Acceleration ...... 6 BOOK-ENTRY SYSTEM ...... 6 General ...... 6 Certificated Bonds ...... 8 Global Clearance Procedures ...... 9 SECURITY FOR THE BONDS ...... 9 General ...... 9 Investment Considerations ...... 10 ENFORCEABILITY OF REMEDIES ...... 16 PLAN OF FINANCING ...... 16 ESTIMATED SOURCES AND USES OF FUNDS ...... 17 CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS ...... 17 Certain U.S. Federal Income Tax Consequences to U.S. Holders ...... 17 Certain U.S. Federal Income and Estate Tax Consequences to Non-U.S. Holders ...... 18 BENEFIT PLANS AND ERISA CONSIDERATIONS ...... 21 RATINGS ...... 22 UNDERWRITING ...... 22 LEGAL MATTERS ...... 23 ABSENCE OF MATERIAL LITIGATION ...... 23 INDEPENDENT ACCOUNTANTS ...... 23 CONTINUING DISCLOSURE ...... 23 MISCELLANEOUS ...... 24

APPENDIX A THE UNIVERSITY OF SOUTHERN CALIFORNIA ...... A-1 APPENDIX B CONSOLIDATED FINANCIAL STATEMENTS OF THE UNIVERSITY OF SOUTHERN CALIFORNIA AS OF JUNE 30, 2016 AND 2015 ...... B-1 APPENDIX C CERTAIN PROVISIONS OF THE BOND INDENTURE ...... C-1 APPENDIX D PROPOSED FORM OF OPINION OF HAWKINS DELAFIELD & WOOD LLP ...... D-1 APPENDIX E BOOK-ENTRY SYSTEM ...... E-1 APPENDIX F GLOBAL CLEARANCE PROCEDURES ...... F-1

SUMMARY OF THE OFFERING

Issuer University of Southern California.

Securities Offered $402,320,000 3.841% Taxable Bonds, Series 2017, due October 1, 2047.

Issue Price 100%.

CUSIP Number 914886AC01.

Interest Accrual Date Interest will accrue from the Date of Issuance.

Interest Payment Dates Interest will be payable on April 1 and October 1 of each year, commencing October 1, 2017.

Redemption The Bonds are subject to optional redemption by the University, in whole or in part at any time, (i) prior to April 1, 2047, at the Make-Whole Redemption Price, and (ii) on or after April 1, 2047, at par. The Bonds are also subject to mandatory sinking fund redemption, as discussed more fully herein. See “THE BONDS –Redemption.”

Date of Issuance April 18, 2017.

Authorized Denominations The Bonds will be issued in denominations of $1,000 and any integral multiple thereof.

Form and Depository The Bonds will be delivered solely in registered form under a global book-entry system through the facilities of DTC.

Use of Proceeds The University will use the net proceeds of the Bonds for any of its general corporate purposes and to pay costs of issuance. See “PLAN OF FINANCING” herein.

Ratings Moody’s: “Aa1” S&P: “AA”

Bond Trustee The Bank of New York Mellon Trust Company, N.A.

1 Copyright 2017, American Bankers Association. The CUSIP (Committee on Uniform Securities Identification Procedures) number in this Offering Memorandum has been assigned by an organization not affiliated with the University, the Underwriters or the Bond Trustee, and such parties are not responsible for the selection or use of the CUSIP number. The CUSIP number is included solely for the convenience of Bondholders and no representation is made as to the correctness of the CUSIP number herein. CUSIP numbers assigned to securities may be changed during the term of such securities based on a number of factors including but not limited to the refunding or defeasance of such issue or the use of secondary market financial products. None of the University, the Underwriters or the Bond Trustee has agreed to, nor is there any duty or obligation to, update this Offering Memorandum to reflect any change or correction in the CUSIP number herein.

INFORMATION CONCERNING OFFERING RESTRICTIONS IN CERTAIN JURISDICTIONS OUTSIDE THE UNITED STATES

REFERENCES HEREIN TO THE “ISSUER” MEAN THE UNIVERSITY OF SOUTHERN CALIFORNIA AND REFERENCES TO “BONDS” OR “SECURITIES” MEAN THE BONDS OFFERED HEREBY. NEITHER THE UNIVERSITY OF SOUTHERN CALIFORNIA NOR THE UNDERWRITERS ASSUME ANY RESPONSIBILITY FOR THIS SECTION.

MINIMUM UNIT SALES

THE BONDS WILL TRADE AND SETTLE ON A UNIT BASIS (ONE UNIT EQUALING ONE BOND OF $1,000 PRINCIPAL AMOUNT). FOR ANY SALES MADE OUTSIDE THE UNITED STATES, THE MINIMUM PURCHASE AND TRADING AMOUNT IS 150 UNITS (BEING 150 BONDS IN AN AGGREGATE PRINCIPAL AMOUNT OF $150,000).

NOTICE TO PROSPECTIVE INVESTORS IN THE EUROPEAN ECONOMIC AREA

THIS OFFERING MEMORANDUM HAS BEEN PREPARED ON THE BASIS THAT ALL OFFERS OF THE SECURITIES TO ANY PERSON THAT IS LOCATED WITHIN A MEMBER STATE OF THE EUROPEAN ECONOMIC AREA (“EEA”) WILL BE MADE PURSUANT TO AN EXEMPTION UNDER ARTICLE 3 OF DIRECTIVE 2003/71/EC, AS AMENDED (INCLUDING BY DIRECTIVE 2010/73/EU) (THE “PROSPECTUS DIRECTIVE”), AS IMPLEMENTED IN MEMBER STATES OF THE EEA, FROM THE REQUIREMENT TO PRODUCE A PROSPECTUS FOR OFFERS OF THE SECURITIES. ACCORDINGLY, ANY PERSON MAKING OR INTENDING TO MAKE ANY OFFER TO ANY PERSON LOCATED WITHIN A MEMBER STATE OF THE EEA OF THE SECURITIES SHOULD ONLY DO SO IN CIRCUMSTANCES IN WHICH NO OBLIGATION ARISES FOR THE ISSUER OR ANY OF THE INITIAL PURCHASERS TO PRODUCE A PROSPECTUS FOR SUCH OFFER. NEITHER THE ISSUER NOR THE INITIAL PURCHASERS HAVE AUTHORIZED, NOR DO THEY AUTHORIZE, THE MAKING OF ANY OFFER OF SECURITIES THROUGH ANY FINANCIAL INTERMEDIARY, OTHER THAN OFFERS MADE BY THE INITIAL PURCHASERS, WHICH CONSTITUTE THE FINAL PLACEMENT OF THE SECURITIES CONTEMPLATED IN THIS OFFERING MEMORANDUM.

IN RELATION TO EACH MEMBER STATE OF THE EEA THAT HAS IMPLEMENTED THE PROSPECTUS DIRECTIVE (EACH, A “RELEVANT MEMBER STATE”), WITH EFFECT FROM AND INCLUDING THE DATE ON WHICH THE PROSPECTUS DIRECTIVE IS IMPLEMENTED IN THAT RELEVANT MEMBER STATE, THE OFFER OF ANY SECURITIES WHICH IS THE SUBJECT OF THE OFFERING CONTEMPLATED BY THIS OFFERING MEMORANDUM IS NOT BEING MADE AND WILL NOT BE MADE TO THE PUBLIC IN THAT RELEVANT MEMBER STATE, OTHER THAN: (A) TO ANY LEGAL ENTITY WHICH IS A “QUALIFIED INVESTOR” AS SUCH TERM IS DEFINED IN THE PROSPECTUS DIRECTIVE; (B) TO FEWER THAN 150 NATURAL OR LEGAL PERSONS (OTHER THAN “QUALIFIED INVESTORS” AS SUCH TERM IS DEFINED IN THE PROSPECTUS DIRECTIVE), SUBJECT TO OBTAINING THE PRIOR CONSENT OF THE RELEVANT INITIAL PURCHASER OR THE ISSUER FOR ANY SUCH OFFER OR (C) IN ANY OTHER CIRCUMSTANCES FALLING WITHIN ARTICLE 3(2) OF THE PROSPECTUS DIRECTIVE; PROVIDED THAT NO SUCH OFFER OF THE SECURITIES SHALL REQUIRE THE ISSUER OR THE INITIAL PURCHASERS TO PUBLISH A PROSPECTUS PURSUANT TO ARTICLE 3 OF THE PROSPECTUS DIRECTIVE OR A SUPPLEMENT TO A PROSPECTUS PURSUANT TO ARTICLE 16 OF THE PROSPECTUS DIRECTIVE.

FOR THE PURPOSES OF THIS PROVISION, THE EXPRESSION AN “OFFER OF SECURITIES TO THE PUBLIC” IN RELATION TO THE SECURITIES IN ANY RELEVANT MEMBER STATE MEANS THE COMMUNICATION IN ANY FORM AND BY ANY MEANS OF SUFFICIENT INFORMATION ON THE TERMS OF THE OFFER AND THE SECURITIES TO BE OFFERED SO AS TO ENABLE AN INVESTOR TO DECIDE TO PURCHASE THE SECURITIES, AS THE SAME MAY BE VARIED IN THAT RELEVANT MEMBER STATE BY ANY MEASURE IMPLEMENTING THE PROSPECTUS DIRECTIVE IN THAT RELEVANT MEMBER STATE AND THE EXPRESSION “PROSPECTUS DIRECTIVE” MEANS DIRECTIVE 2003/71/EC, AS AMENDED (INCLUDING BY DIRECTIVE 2010/73/EU) AS IMPLEMENTED IN EACH RELEVANT MEMBER STATE. iii

NOTICE TO PROSPECTIVE INVESTORS IN THE UNITED KINGDOM

THIS OFFERING MEMORANDUM IS FOR DISTRIBUTION ONLY TO, AND IS DIRECTED SOLELY AT, PERSONS WHO (I) ARE OUTSIDE THE UNITED KINGDOM, (II) ARE INVESTMENT PROFESSIONALS, AS SUCH TERM IS DEFINED IN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE “FINANCIAL PROMOTION ORDER”), (III) ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) OF THE FINANCIAL PROMOTION ORDER, OR (IV) ARE PERSONS TO WHOM AN INVITATION OR INDUCEMENT TO ENGAGE IN INVESTMENT ACTIVITY (WITHIN THE MEANING OF SECTION 21 OF THE FINANCIAL SERVICES AND MARKETS ACT 2000) IN CONNECTION WITH THE ISSUE OR SALE OF ANY BONDS MAY OTHERWISE BE LAWFULLY COMMUNICATED OR CAUSED TO BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS “RELEVANT PERSONS”). THIS OFFERING MEMORANDUM IS DIRECTED ONLY AT RELEVANT PERSONS AND MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS OFFERING MEMORANDUM RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. ANY PERSON WHO IS NOT A RELEVANT PERSON SHOULD NOT ACT OR RELY ON THIS OFFERING MEMORANDUM OR ANY OF ITS CONTENTS.

NOTICE TO INVESTORS IN KOREA

THE BONDS HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE FINANCIAL INVESTMENT SERVICES AND CAPITAL MARKETS ACT OF KOREA AND THE DECREES AND REGULATIONS THEREUNDER (THE “FSCMA”), AND THE BONDS HAVE BEEN AND WILL BE OFFERED IN KOREA AS A PRIVATE PLACEMENT UNDER THE FSCMA. NONE OF THE BONDS MAY BE OFFERED, SOLD OR DELIVERED DIRECTLY OR INDIRECTLY, OR OFFERED OR SOLD TO ANY PERSON FOR RE-OFFERING OR RESALE, DIRECTLY OR INDIRECTLY, IN KOREA OR TO ANY RESIDENT OF KOREA EXCEPT PURSUANT TO THE APPLICABLE LAWS AND REGULATIONS OF KOREA, INCLUDING THE FSCMA AND THE FOREIGN EXCHANGE TRANSACTION LAW OF KOREA AND THE DECREES AND REGULATIONS THEREUNDER (THE “FETL”). FURTHERMORE, THE PURCHASER OF THE BONDS SHALL COMPLY WITH ALL APPLICABLE REGULATORY REQUIREMENTS (INCLUDING BUT NOT LIMITED TO REQUIREMENTS UNDER THE FETL) IN CONNECTION WITH THE PURCHASE OF THE BONDS.

NOTICE TO PROSPECTIVE INVESTORS IN TAIWAN

THE OFFER OF THE BONDS HAS NOT BEEN AND WILL NOT BE REGISTERED WITH THE FINANCIAL SUPERVISORY COMMISSION OF TAIWAN PURSUANT TO RELEVANT SECURITIES LAWS AND REGULATIONS, AND THE BONDS MAY NOT BE OFFERED, ISSUED OR SOLD IN TAIWAN THROUGH A PUBLIC OFFERING OR IN CIRCUMSTANCES WHICH CONSTITUTE AN OFFER WITHIN THE MEANING OF THE SECURITIES AND EXCHANGE ACT OF TAIWAN THAT REQUIRES THE REGISTRATION OR FILING WITH OR APPROVAL OF THE FINANCIAL SUPERVISORY COMMISSION OF TAIWAN.

NOTICE TO RESIDENTS OF HONG KONG

WARNING. THE CONTENTS OF THIS OFFERING MEMORANDUM HAVE NOT BEEN REVIEWED BY ANY REGULATORY AUTHORITY IN HONG KONG. YOU ARE ADVISED TO EXERCISE CAUTION IN RELATION TO THE OFFER OF THE BONDS. IF YOU ARE IN ANY DOUBT ABOUT ANY OF THE CONTENTS OF THIS DOCUMENT, YOU SHOULD OBTAIN INDEPENDENT PROFESSIONAL ADVICE.

THIS DOCUMENT HAS NOT BEEN, AND WILL NOT BE, REGISTERED AS A PROSPECTUS IN HONG KONG NOR HAS IT BEEN APPROVED BY THE SECURITIES AND FUTURES COMMISSION OF HONG KONG PURSUANT TO THE SECURITIES AND FUTURES ORDINANCE (CHAPTER 571 OF THE LAWS OF HONG KONG) (“SFO”). ACCORDINGLY, THE BONDS MAY NOT BE OFFERED OR SOLD IN iv

HONG KONG BY MEANS OF THIS DOCUMENT OR ANY OTHER DOCUMENT, AND THIS DOCUMENT MUST NOT BE ISSUED, CIRCULATED OR DISTRIBUTED IN HONG KONG, OTHER THAN TO ‘PROFESSIONAL INVESTORS’ AS DEFINED IN THE SFO AND ANY RULES MADE THEREUNDER. IN ADDITION, NO PERSON MAY ISSUE OR HAVE IN ITS POSSESSION FOR THE PURPOSES OF ISSUE, WHETHER IN HONG KONG OR ELSEWHERE, ANY ADVERTISEMENT, INVITATION OR DOCUMENT RELATING TO THE BONDS, WHICH IS DIRECTED AT, OR THE CONTENTS OF WHICH ARE LIKELY TO BE ACCESSED OR READ BY, THE PUBLIC OF HONG KONG (EXCEPT IF PERMITTED TO DO SO UNDER THE SECURITIES LAWS OF HONG KONG) OTHER THAN WITH RESPECT TO BONDS WHICH ARE OR ARE INTENDED TO BE DISPOSED OF ONLY (A) TO PERSONS OUTSIDE HONG KONG, (B) TO ‘PROFESSIONAL INVESTORS’ AS DEFINED IN THE SFO AND ANY RULES MADE THEREUNDER.

NOTICE TO PROSPECTIVE INVESTORS IN SWITZERLAND

THIS OFFERING MEMORANDUM IS NOT INTENDED TO CONSTITUTE AN OFFER OR A SOLICITATION TO PURCHASE OR INVEST IN THE BONDS. THE BONDS MAY NOT BE PUBLICLY OFFERED, SOLD OR ADVERTISED, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM SWITZERLAND AND WILL NOT BE LISTED ON THE SIX SWISS EXCHANGE OR ON ANY OTHER EXCHANGE OR REGULATED TRADING FACILITY IN SWITZERLAND. NEITHER THIS OFFERING MEMORANDUM NOR ANY OTHER OFFERING OR MARKETING MATERIAL RELATING TO THE BONDS CONSTITUTES A PROSPECTUS AS SUCH TERM IS UNDERSTOOD PURSUANT TO ART. 652A OR ART. 1156 OF THE SWISS CODE OF OBLIGATIONS OR A LISTING PROSPECTUS WITHIN THE MEANING OF THE LISTING RULES OF THE SIX SWISS EXCHANGE OR ANY OTHER REGULATED TRADING FACILITY IN SWITZERLAND, AND NEITHER THIS OFFERING MEMORANDUM NOR ANY OTHER OFFERING OR MARKETING MATERIAL RELATING TO THE BONDS MAY BE PUBLICLY DISTRIBUTED OR OTHERWISE MADE PUBLICLY AVAILABLE IN SWITZERLAND. NEITHER THIS OFFERING MEMORANDUM NOR ANY OTHER OFFERING OR MARKETING MATERIAL RELATING TO THE OFFERING, NOR THE ISSUER, NOR THE BONDS HAVE BEEN OR WILL BE FILED WITH OR APPROVED BY ANY SWISS REGULATORY AUTHORITY. THE BONDS ARE NOT SUBJECT TO SUPERVISION BY ANY SWISS REGULATORY AUTHORITY, E.G., THE SWISS FINANCIAL MARKET SUPERVISORY AUTHORITY FINMA, AND INVESTORS IN THE BONDS WILL NOT BENEFIT FROM PROTECTION OR SUPERVISION BY SUCH AUTHORITY.

SELLING RESTRICTIONS FOR OFFER OF SECURITIES IN SINGAPORE

THIS OFFERING MEMORANDUM HAS NOT BEEN AND WILL NOT BE REGISTERED AS A PROSPECTUS WITH THE MONETARY AUTHORITY OF SINGAPORE. ACCORDINGLY, THIS OFFERING MEMORANDUM AND ANY OTHER DOCUMENT OR MATERIAL IN CONNECTION WITH THE OFFER OR SALE, OR INVITATION FOR SUBSCRIPTION OR PURCHASE, OF THE BONDS MAY NOT BE CIRCULATED OR DISTRIBUTED, NOR MAY THE BONDS BE OFFERED OR SOLD, OR BE MADE THE SUBJECT OF AN INVITATION FOR SUBSCRIPTION OR PURCHASE, WHETHER DIRECTLY OR INDIRECTLY, TO PERSONS IN SINGAPORE OTHER THAN (I) TO AN INSTITUTIONAL INVESTOR UNDER SECTION 274 OF THE SECURITIES AND FUTURES ACT, CHAPTER 289 OF SINGAPORE (THE “SFA”), (II) TO A RELEVANT PERSON PURSUANT TO SECTION 275(1), OR ANY PERSON PURSUANT TO SECTION 275(1A), AND IN ACCORDANCE WITH THE CONDITIONS SPECIFIED IN SECTION 275, OF THE SFA, OR (III) OTHERWISE PURSUANT TO, AND IN ACCORDANCE WITH THE CONDITIONS OF, ANY OTHER APPLICABLE PROVISION OF THE SFA.

WHERE THE BONDS ARE SUBSCRIBED OR PURCHASED UNDER SECTION 275 OF THE SFA BY A RELEVANT PERSON WHICH IS:

(A) A CORPORATION (WHICH IS NOT AN ACCREDITED INVESTOR (AS DEFINED IN SECTION 4A OF THE SFA)) THE SOLE BUSINESS OF WHICH IS TO HOLD INVESTMENTS AND THE

ENTIRE SHARE CAPITAL OF WHICH IS OWNED BY ONE OR MORE INDIVIDUALS, EACH OF WHOM IS AN ACCREDITED INVESTOR; OR

(B) A TRUST (WHERE THE TRUSTEE IS NOT AN ACCREDITED INVESTOR) WHOSE SOLE PURPOSE IS TO HOLD INVESTMENTS AND EACH BENEFICIARY OF THE TRUST IS AN INDIVIDUAL WHO IS AN ACCREDITED INVESTOR, SECURITIES (AS DEFINED IN SECTION 239(1) OF THE SFA) OF THAT CORPORATION OR THE BENEFICIARIES’ RIGHTS AND INTEREST (HOWSOEVER DESCRIBED) IN THAT TRUST SHALL NOT BE TRANSFERRED WITHIN SIX MONTHS AFTER THAT CORPORATION OR THAT TRUST HAS ACQUIRED SUCH BONDS PURSUANT TO AN OFFER MADE UNDER SECTION 275 OF THE SFA, EXCEPT:

(1) TO AN INSTITUTIONAL INVESTOR (AS DEFINED IN SECTION 4A OF THE SFA) OR TO A RELEVANT PERSON (AS DEFINED IN SECTION 275(2) OF THE SFA), OR TO ANY PERSON ARISING FROM AN OFFER REFERRED TO IN SECTION 275(1A) OR SECTION 276(4)(I)(B) OF THE SFA;

(2) WHERE NO CONSIDERATION IS OR WILL BE GIVEN FOR THE TRANSFER;

(3) WHERE THE TRANSFER IS BY OPERATION OF LAW;

(4) AS SPECIFIED IN SECTION 276(7) OF THE SFA; OR

(5) AS SPECIFIED IN REGULATION 32 OF THE SECURITIES AND FUTURES (OFFERS OF INVESTMENTS) (SHARES AND DEBENTURES) REGULATIONS 2005 OF SINGAPORE.

Offering Memorandum

Relating to

$402,320,000 UNIVERSITY OF SOUTHERN CALIFORNIA TAXABLE BONDS, SERIES 2017

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 Offering Memorandum, including the cover page and the Appendices (this “Offering Memorandum”), in order to make an informed investment decision. All statements contained in this Introduction are qualified in their entirety by reference to the entire Offering Memorandum. References to, and summaries of, provisions of the Constitution and 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 reference to the complete provisions thereof.

General

The purpose of this Offering Memorandum, including the cover page and the Appendices hereto, is to set forth certain information concerning the University of Southern California (the “University”) and its $402,320,000 aggregate principal amount of Taxable Bonds, Series 2017, dated their date of delivery (the “Bonds”). The Bonds are being issued by the University pursuant to a Bond Indenture (the “Bond Indenture”), dated as of April 1, 2017, by and between the University and The Bank of New York Mellon Trust Company, N.A., of Los Angeles, California, as Bond Trustee (the “Bond Trustee”). The Bonds constitute unsecured general obligations of the University. All capitalized terms used herein and not otherwise defined have the meanings set forth in the Bond Indenture. See “DEFINITIONS” in APPENDIX C hereto.

The Bonds

The Bonds will be issued in denominations of $1,000 or any integral multiple thereof in the aggregate principal amount shown on the cover page of this Offering Memorandum. The Bonds will be dated their date of delivery and will mature in the amounts and on the dates, and bear interest at the rates as shown on the cover of this Offering Memorandum. Interest on the Bonds shall be payable on April 1 and October 1 of each year, commencing October 1, 2017. See “THE BONDS” herein.

Redemption

The Bonds are subject to optional redemption by the University prior to maturity in whole or in part at any time, (i) prior to April 1, 2047, at the Make-Whole Redemption Price, and (ii) on or after April 1, 2047, at par. In addition, the Bonds are subject to mandatory sinking fund redemption, all as further described herein. See “THE BONDS – Redemption” herein.

Book-Entry Only System

When delivered, the Bonds will be registered in the name of Cede & Co., the nominee of The Depository Trust Company (“DTC”). DTC will act as the securities depository for the Bonds. Purchases 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 (except under certain circumstances described in the Bond Indenture). Payment of the principal or Redemption Price of and interest on the Bonds are payable by the Bond 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 receive payment for any Bond will be based only upon and subject to the procedures and limitations of the DTC book-entry system. Purchasers may own beneficial ownership interests in the Bonds in the United States through DTC and in Europe through Clearstream Banking, société anonyme (“Clearstream”), or the Euroclear System (“Euroclear”). See “BOOK-ENTRY SYSTEM” herein.

Use of Proceeds and Plan of Financing

The proceeds of the Bonds will be used by the University for any of its general corporate purposes, including, but not limited to, the acquisition, construction, renovation, improvement, rehabilitation and/or equipping by the University of higher educational and healthcare facilities, and to pay all or a portion of the costs of issuance of the Bonds. See “PLAN OF FINANCING” and “ESTIMATED SOURCES AND USES OF FUNDS” herein.

The University of Southern California

The University of Southern California is a nonprofit, coeducational university with its principal campus located near downtown Los Angeles, California. It currently has the largest enrollment of any private university in California. In the fall of 2016, approximately 19,000 undergraduate and 25,000 graduate, professional and other students were enrolled at the University. See APPENDIX A — “THE UNIVERSITY OF SOUTHERN CALIFORNIA” for a more detailed description of the University.

Financial Condition of the University

For the fiscal year ended June 30, 2016, total revenues, net of student aid, of the University were approximately $4,336,854,000. At June 30, 2016, the University’s total assets were approximately $10,634,745,000 and total liabilities were approximately $2,752,323,000. The University’s audited financial statements for the fiscal year ended June 30, 2016 are contained in APPENDIX B hereto. See also APPENDIX A — “THE UNIVERSITY OF SOUTHERN CALIFORNIA” for additional information on the financial condition of the University.

Miscellaneous

Included in this Offering Memorandum and the Appendices hereto are descriptions of the University, the Bonds and the Bond Indenture. All references herein to the Bond Indenture are qualified in their entirety by reference to such document, and the description herein of the Bonds is qualified in its entirety by reference to the terms thereof, and the information with respect thereto, included in the Bond Indenture. All such descriptions are further qualified in their entirety by reference to laws relating to or affecting the enforcement of creditors’ rights. The agreements of the University with the Bondholders are fully set forth in the Bond Indenture, and neither any advertisement of the Bonds nor this Offering Memorandum is to be construed as constituting an agreement with the purchasers of the Bonds. Insofar as any statements are made in this Offering Memorandum involving matters of opinion, regardless of whether expressly so stated, they are intended merely as such and not as representations of fact. Copies of the Bond Indenture as executed may be obtained from the Bond Trustee at its principal corporate trust office in Los Angeles, California.

The Bonds constitute full faith and credit unsecured general obligations of the University. The Bonds are not secured by a reserve fund, mortgage lien or security interest on or in any funds or other assets of the University, except for funds held from time to time by the Bond Trustee for the benefit of the holders of the Bonds under the Bond Indenture. See “SECURITY FOR THE BONDS” herein.

See APPENDIX C – “CERTAIN PROVISIONS OF THE BOND INDENTURE,” for a brief summary of the rights and duties of the University, the rights and remedies of the Bond Trustee and the Bondholders upon an event of default, and provisions relating to amendments of the Bond Indenture.

All capitalized terms used in this Offering Memorandum and not otherwise defined herein have the same meanings as in the Bond Indenture.

The information and expressions of opinion herein speak only as of their date and are subject to change without notice. Neither the delivery of this Offering Memorandum nor any sale made hereunder nor any future use of this Offering Memorandum shall, under any circumstances, create any implication that there has been no change in the affairs of the University.

THE BONDS

Description of the Bonds

Terms. The Bonds shall be issued in fully registered form and shall be payable as to interest on each April 1 and October 1, commencing October 1, 2017, during the term of the Bonds. The Bonds shall be dated their date of delivery except with respect to replacement bonds. The Bonds shall bear interest from their date of delivery, as aforesaid, at the rates of interest per annum and shall mature on October 1, 2047, as indicated on the cover page of this Offering Memorandum. The amount of interest payable on any Bond Payment Date shall be computed on the basis of a 360-day year consisting of twelve 30-day months. The Bonds shall be issued in denominations of $1,000 or any integral multiple thereof. The Bonds will be registered under a global book-entry system initially in the name of “Cede & Co.,” as nominee of the Securities Depository. Registered ownership of the Bonds, or any portions thereof, may not thereafter be transferred except as set forth in the Bond Indenture. 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 Bond Indenture and the Bonds. So long as the Bonds are held in book-entry form through DTC, all payments with respect to principal of and interest on each Bond will be made pursuant to DTC’s rules and procedures. See “BOOK-ENTRY SYSTEM”, APPENDIX E – “BOOK-ENTRY SYSTEM” and APPENDIX F – “GLOBAL CLEARANCE PROCEDURES” herein.

The Bank of New York Mellon Trust Company, N.A., is the Bond Trustee for the Bonds.

Medium and Place of Payment. Principal of, the Redemption Price, if any, and interest on the Bonds shall be payable in any coin or currency of the United States of America which, on the respective dates of payment of principal, the Redemption Price, if any, and interest, is tender for the payment of public and private debts.

Except for Book-Entry Bonds held by DTC in accordance with the terms and provisions of the Bond Indenture, interest on the Bonds shall be payable by check or draft drawn upon the Bond Trustee and mailed to the registered Holders of such Bonds at the addresses of such Holders as they appear on the books of the Bond Trustee on the Record Date; provided, however, that interest may be paid by wire or electronic transfer to the Holder of at least $1,000,000 aggregate principal amount of Bonds to the address designated by written notice by such Holder to the Bond Trustee not less than fifteen (15) days prior to the Record Date for such payment. Any such written request shall remain in effect until rescinded in writing by such Holder. Principal of and premium, if any, on the Bonds shall be paid when due by check or draft upon presentation and surrender of such Bonds at the corporate trust office of the Bond Trustee.

Exchange of Bonds. Except for Book-Entry Bonds held by DTC, Bonds, upon presentation and surrender thereof to the Bond Trustee together with written instructions satisfactory to the Bond Trustee, duly executed by the registered Holder or his or her attorney duly authorized in writing, may be exchanged for an equal aggregate face amount of fully registered Bonds of the same series with the same interest rate and maturity of any other authorized denominations.

Negotiability and Transfer of Bonds. Except for Book-Entry Bonds held by DTC, (a) all Bonds issued under the Bond Indenture shall be negotiable, subject to the provisions for registration and transfer thereof contained in the Bond Indenture or in the Bonds; (b) so long as any Bonds are Outstanding, the University shall cause to be maintained at the offices of the Bond Trustee books for the registration and transfer of Bonds, and shall provide for the registration and transfer of any Bond under such reasonable regulations as the University or the Bond Trustee may prescribe; and (c) each Bond shall be transferable only upon the registration books maintained by the Bond Trustee, by the Holder thereof in person or by his attorney duly authorized in writing, upon presentation and surrender thereof together with a written instrument of transfer satisfactory to the Bond Trustee duly executed by the registered Holder or his duly authorized attorney. Upon surrender for transfer of any such Bond, the University shall cause to be executed and the Bond Trustee shall authenticate and deliver, in the name of the transferee, one or

more new Bonds of the same aggregate face amount, maturity, series and rate of interest as the surrendered Bond, as fully registered Bonds only.

Provisions with Respect to Transfers and Exchanges. All Bonds surrendered in any exchange or transfer of Bonds shall forthwith be canceled by the Bond Trustee.

In connection with any such exchange or transfer of Bonds the Holder requesting such exchange or transfer shall as a condition precedent to the exercise of the privilege of making such exchange or transfer, remit to the Bond Trustee an amount sufficient to pay any tax or other governmental charge required to be paid with respect to such exchange or transfer.

Neither the University nor the Bond Trustee shall be obligated to (i) issue, exchange or transfer any Bond during the period of fifteen (15) days preceding any Bond Payment Date, or (ii) transfer or exchange any Bond which has been or is being called for redemption in whole or in part.

Redemption

Bonds Subject to Optional Redemption. The Bonds are subject to redemption prior to their stated maturity in whole or in part on any date, at the option of the University, (i) prior to April 1, 2047, at the Make-Whole Redemption Price, and (ii) on or after April 1, 2047, at par, in each case together with accrued interest to the date fixed for redemption. For purposes of this paragraph, the following definitions shall apply:

“Comparable Treasury Issue” shall mean the United States Treasury security or securities selected by a Designated Investment Banker as having an actual or interpolated maturity comparable to the remaining term of the Bonds to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the remaining term of such Bonds.

“Comparable Treasury Price” shall mean, with respect to any redemption date, the average of the Reference Treasury Dealer Quotations for such redemption date or, if the Designated Investment Banker obtains only one Reference Treasury Dealer Quotation, such Reference Treasury Dealer Quotation.

“Designated Investment Banker” shall mean one of the Reference Treasury Dealers appointed by the University.

“Make-Whole Redemption Price” shall mean the greater of:

(1) 100% of the principal amount of any Bonds being redeemed; and

(2) the sum of the present values of the remaining scheduled payments of principal and interest on any Bonds being redeemed (exclusive of interest accrued to the date of redemption) discounted to the redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 15 basis points.

“Treasury Rate” shall mean, with respect to any redemption date, the rate per annum equal to the semiannual equivalent yield to maturity or interpolated (on a day count basis) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

Bonds Subject to Mandatory Sinking Fund Redemption. The Bonds are subject to mandatory sinking fund redemption on each October 1 in the years and the principal amounts specified below, at a redemption price equal to the principal amount thereof as specified below, plus accrued interest to the redemption date.

Year Principal Amount 2045 $129,075,000 2046 134,040,000 2047† 139,205,000 ______† Final Maturity.

Selection of Bonds for Redemption. If less than all of the Bonds are called for redemption, the Bond Trustee shall select the Bonds or any given portion thereof to be redeemed from the Bonds Outstanding or such given portion thereof not previously called for redemption, pro rata.

If the Bonds are registered in book-entry only form and so long as DTC or a successor securities depository is the sole registered owner of the Bonds, if less than all of the Bonds of a maturity are called for prior redemption, the particular Bonds or portions thereof to be redeemed shall be selected on a pro rata pass-through distribution of principal basis in accordance with DTC procedures, provided that, so long as the Bonds are held in book-entry form, the selection for redemption of such Bonds shall be made in accordance with the operational arrangements of DTC then in effect.

It is the University’s intent that redemption allocations made by DTC be made on a pro rata pass-through distribution of principal basis as described above. However, the University can provide no assurance that DTC, DTC’s direct and indirect participants or any other intermediary will allocate the redemption of Bonds on such basis. If the DTC operational arrangements do not allow for the redemption of the Bonds on a pro rata pass-through distribution of principal basis as discussed above, then the Bonds will be selected for redemption, in accordance with DTC procedures, by lot.

Notice of Redemption. Notice of redemption shall be given by the Bond Trustee for and on behalf of the University, by Mail, not less than twenty (20) nor more than sixty (60) days prior to the redemption date, to: (1) the University; (2) the Holder of each Bond affected at the address shown on the registration books of the Bond Trustee on the date such notice is mailed; and (3) the Depository.

Each notice of redemption shall state the date of such notice, the date of issue of the Bonds, the redemption date, the Redemption Prices (or the method for determining the Redemption Price), the place or places of redemption (including the name and appropriate address or addresses of the Bond Trustee), the CUSIP number of the Bonds, the principal amount, the distinctive certificate numbers of the Bonds or portions thereof to be redeemed, the interest rate on the Bonds to be redeemed and shall also state that the interest on the Bonds designated for redemption shall cease to accrue from and after such redemption date and that on said date there will become due and payable on each of said Bonds the principal amount thereof to be redeemed, interest accrued thereon to the redemption date and the premium, if any, thereon (such premium to be specified) and shall require that such Bonds be then surrendered at the address or addresses of the Bond Trustee specified in the redemption notice, and with regard to optional redemption in the event that funds required to pay the Redemption Price, plus accrued interest, are not on deposit under the Bond Indenture at the time the notice of redemption is sent, a statement to the effect that the redemption is conditioned upon the receipt of the appropriate funds required to pay the Redemption Price, plus accrued interest to the date of redemption, by the Bond Trustee on or prior to the redemption date.

The receipt by any Bondholder of any notice mailed pursuant to the provisions of the Bond Indenture shall not be a condition precedent to the redemption of any Bond. Failure by a Bondholder to receive any notice pursuant to the provisions of the Bond Indenture, or the insufficiency of any such notice, shall not affect the sufficiency of the proceedings for redemption.

Any notice of optional redemption given under the Bond Indenture may be rescinded upon written request of the University at any time up to and including the fifth (5th) Business Day prior to the date fixed for redemption. The Bond Trustee shall give notice of such rescission in the same manner as for notices of redemption.

Partial Redemption of Bonds. Upon surrender of any Bond redeemed in part only, the Bond Trustee shall provide a replacement Bond in a principal amount equal to the portion of such Bond not redeemed, and deliver it to the registered owner thereof. The Bond so surrendered shall be cancelled by the Bond Trustee as provided herein. The University and the Bond Trustee shall be fully released and discharged from all liability to the extent of payment of the Redemption Price, plus accrued interest to the date of redemption, for such partial redemption.

Effect of Redemption. Notice of redemption having been duly given as aforesaid, and moneys for payment of the Redemption Price, plus accrued interest to the redemption date, being held by the Bond Trustee, the Bonds, or portions thereof, so called for redemption shall, on the redemption date designated in such notice, become due and payable at the Redemption Price (plus accrued interest, if any, to the redemption date), specified in such notice, interest on the Bonds or portions thereof so called for redemption shall cease to accrue, said Bonds shall cease to be entitled to any lien, benefit or security under the Bond Indenture, and the Holders of said Bonds shall have no rights in respect thereof except to receive payment of the Redemption Price thereof, plus accrued interest to the redemption date. All Bonds fully redeemed pursuant to the provisions described in the Bond Indenture shall be cancelled upon surrender thereof and may be destroyed by the Bond Trustee, which shall, upon request of the University, deliver to the University a certificate evidencing such destruction.

Acceleration

If any Bond Indenture Event of Default occurs under the Bond Indenture, including a Bond Indenture Event of Default resulting from a payment default on the part of the University, the principal of the Bonds may be accelerated and become immediately due and payable, at par, with interest payable thereon to the accelerated payment date. For a description of the Bond Indenture Events of Default under the Bond Indenture, see APPENDIX C — “CERTAIN PROVISIONS OF THE BOND INDENTURE.”

BOOK-ENTRY SYSTEM

The information in this section and in APPENDIX E – “BOOK-ENTRY SYSTEM” concerning DTC and DTC’s book-entry system has been obtained from sources that the University believes to be reliable, but neither the University nor the Underwriters take any responsibility for the accuracy thereof. THE UNIVERSITY ASSUMES NO RESPONSIBILITY FOR THIS SECTION OR FOR APPENDICES E OR F.

SO LONG AS CEDE & CO. IS THE REGISTERED OWNER OF THE BONDS, AS NOMINEE OF DTC, REFERENCES HEREIN TO THE BONDHOLDERS OR REGISTERED OWNERS OF THE BONDS SHALL MEAN CEDE & CO. AND SHALL NOT MEAN THE BENEFICIAL OWNERS OF THE BONDS.

General

DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered bonds registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate for each maturity will be issued for the Bonds, in the amount of the principal amount of such maturity of the Bonds, and will be deposited with DTC. Purchasers may own beneficial ownership interests in the Bonds in the United States through DTC and in Europe through Clearstream or Euroclear.

DTC holds and provides asset servicing for over 3.5 million 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, thereby eliminating 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,” and together with Direct Participants, “Participants”). The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission.

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

To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of the Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not 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.

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.

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

Payments of principal, Redemption Price and interest 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 University or the Bond Trustee, on the 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, nor its nominee, the Bond Trustee or the University, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, Redemption Price and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the University or the Bond 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.

DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the University or the Bond Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, such Bond certificates are required to be printed and delivered. The University, in its sole discretion and without the consent of any other person, may terminate the services of DTC with respect to the Bonds if the University determines that (i) DTC is unable to discharge its responsibilities with respect to the Bonds, or (ii) a continuation of the requirement that all of the Outstanding Bonds be registered in the

registration books kept by the Bond Trustee in the name of Cede & Co., as nominee of DTC, is not in the best interests of the Beneficial Owners. In the event that no substitute securities depository is found by the University or restricted registration is no longer in effect, Bond certificates will be delivered. See “Certificated Bonds” below.

The information herein concerning DTC and DTC’s book-entry system has been obtained from sources that the University and the Underwriters believe to be reliable, but the University and the Underwriters take no responsibility for the accuracy thereof.

Each person for whom a Participant acquires an interest in the Bonds, as nominee, may desire to make arrangements with such Participant to receive a credit balance in the records of such Participant, and may desire to make arrangements with such Participant to have all notices of redemption or other communications to DTC, which may affect such persons, to be forwarded in writing by such Participant and to have notification made of all interest payments. NEITHER THE UNIVERSITY NOR THE BOND TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO SUCH PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES WITH RESPECT TO THE BONDS.

So long as Cede & Co. is the registered owner of the Bonds, as nominee for DTC, references herein to Bondholders or registered owners of the Bonds shall mean Cede & Co., as aforesaid, and shall not mean the Beneficial Owners of the Bonds.

When reference is made to any action which is required or permitted to be taken by the Beneficial Owners, such reference shall only relate to those permitted to act (by statute, regulation or otherwise) on behalf of such Beneficial Owners for such purposes. When notices are given, they shall be sent by the Bond Trustee to DTC only.

For every transfer and exchange of Bonds, the Beneficial Owner may be charged a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in relation thereto.

NONE OF THE UNIVERSITY, THE UNDERWRITERS NOR THE BOND TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO DIRECT PARTICIPANTS, TO INDIRECT PARTICIPANTS, OR TO ANY BENEFICIAL OWNER WITH RESPECT TO (I) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC, ANY DIRECT PARTICIPANT, OR ANY INDIRECT PARTICIPANT; (II) ANY NOTICE THAT IS PERMITTED OR REQUIRED TO BE GIVEN TO THE OWNERS OF THE BONDS UNDER THE BOND INDENTURE; (III) THE SELECTION BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY PERSON TO RECEIVE PAYMENT IN THE EVENT OF A PARTIAL REDEMPTION OF THE BONDS; (IV) THE PAYMENT BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT WITH RESPECT TO THE PRINCIPAL OR REDEMPTION PRICE, IF ANY, OR INTEREST DUE WITH RESPECT TO THE BONDS; (V) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS THE OWNER OF THE BONDS; OR (VI) ANY OTHER MATTER.

Certificated Bonds

DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the University or the Bond Trustee. In addition, the University may determine that continuation of the system of book-entry transfers through DTC (or a successor securities depository) is not in the best interests of the Beneficial Owners. If for either reason the Book-Entry-Only system is discontinued, Bond certificates will be delivered as described in the Bond Indenture and the Beneficial Owner, upon registration of certificates held in the Beneficial Owner’s name, will become the Bondowner. Thereafter, the Bonds may be exchanged for an equal aggregate principal amount of the Bonds in other authorized denominations and of the same maturity, upon surrender thereof at the principal corporate trust office of the Bond Trustee. The transfer of any Bond may be registered on the books maintained by the Bond Trustee for such purpose only upon assignment in form satisfactory to the Bond Trustee. For every exchange or registration of transfer of the Bonds, the Bond Trustee may make a charge sufficient to reimburse them for any tax or other governmental charge required to be paid with respect to such exchange or registration of transfer. Neither the University nor the Bond Trustee shall be obligated to (i) issue, exchange or transfer any Bond during the period of fifteen (15) days preceding any Bond Payment Date, or (ii) transfer or exchange any Bond which has been or is being called for redemption in whole or in part.

Global Clearance Procedures

See APPENDIX F hereto, entitled “GLOBAL CLEARANCE PROCEDURES,” for a description of global clearance procedures with respect to the Bonds.

THE UNIVERSITY AND THE BOND TRUSTEE CANNOT AND DO NOT GIVE ANY ASSURANCES THAT DTC, DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS OF DTC, CLEARSTREAM, CLEARSTREAM CUSTOMERS, EUROCLEAR OR EUROCLEAR PARTICIPANTS WILL DISTRIBUTE TO THE BENEFICIAL OWNERS OF THE BONDS (1) PAYMENTS OF PRINCIPAL OF OR INTEREST OR REDEMPTION PREMIUM ON THE BONDS; (2) CONFIRMATIONS OF THEIR OWNERSHIP INTERESTS IN THE BONDS; OR (3) OTHER NOTICES SENT TO DTC OR CEDE & CO., ITS PARTNERSHIP NOMINEE, AS THE REGISTERED OWNER OF THE BONDS, OR THAT THEY WILL DO SO ON A TIMELY BASIS, OR THAT DTC DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS, CLEARSTREAM, CLEARSTREAM CUSTOMERS, EUROCLEAR OR EUROCLEAR PARTICIPANTS WILL SERVE AND ACT IN THE MANNER DESCRIBED IN THIS OFFERING MEMORANDUM.

THE UNIVERSITY AND THE BOND TRUSTEE WILL NOT HAVE ANY RESPONSIBILITY OR OBLIGATIONS TO DTC, THE DIRECT PARTICIPANTS, THE INDIRECT PARTICIPANTS OF DTC CLEARSTREAM, CLEARSTREAM CUSTOMERS, EUROCLEAR, EUROCLEAR PARTICIPANTS OR THE BENEFICIAL OWNERS WITH RESPECT TO (1) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS OF DTC, CLEARSTREAM, CLEARSTREAM CUSTOMERS, EUROCLEAR OR EUROCLEAR PARTICIPANTS; (2) THE PAYMENT BY DTC OR ANY DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS OF DTC, CLEARSTREAM, CLEARSTREAM CUSTOMERS, EUROCLEAR OR EUROCLEAR PARTICIPANTS OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL AMOUNT OF OR INTEREST OR REDEMPTION PRICE ON THE BONDS; (3) THE DELIVERY BY DTC OR ANY DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS OF DTC, CLEARSTREAM, CLEARSTREAM CUSTOMERS, EUROCLEAR OR EUROCLEAR PARTICIPANTS OF ANY NOTICE TO ANY BENEFICIAL OWNER THAT IS REQUIRED OR PERMITTED TO BE GIVEN TO OWNERS UNDER THE TERMS OF THE CERTIFICATE; OR (4) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS THE REGISTERED HOLDER OF THE BONDS.

THE INFORMATION CONTAINED HEREIN, IN APPENDIX E AND IN APPENDIX F CONCERNING DTC, CLEARSTREAM AND EUROCLEAR AND THEIR BOOK-ENTRY SYSTEMS HAS BEEN OBTAINED FROM DTC, CLEARSTREAM AND EUROCLEAR, RESPECTIVELY, AND THE UNIVERSITY MAKES NO REPRESENTATION AS TO THE COMPLETENESS OR THE ACCURACY OF SUCH INFORMATION OR AS TO THE ABSENCE OF MATERIAL ADVERSE CHANGES IN SUCH INFORMATION SUBSEQUENT TO THE DATE HEREOF.

SECURITY FOR THE BONDS

The following is a brief description of the security provided for the payment of the Bonds. For a more complete description of the Bond Indenture, see APPENDIX C — “CERTAIN PROVISIONS OF THE BOND INDENTURE.” Certain capitalized terms used below and not otherwise defined are defined in the Bond Indenture and/or in APPENDIX C hereto.

General

The Bonds will be issued by the University pursuant to the Bond Indenture. The Bond Indenture constitutes a contract between the University, the Bond Trustee and the holders of the Bonds, and the pledges and covenants made therein are for the equal and ratable benefit and security of the holders of all Bonds regardless of the times of issue of the Bonds. The Bond Indenture provides that the Bonds shall be unsecured general obligations of the University, equally and ratably payable from and equally and ratably secured by the payments made by the University and the funds established under the Bond Indenture.

The Bonds are not secured by a reserve fund, mortgage lien or security interest on or in any funds, property or other assets of the University. Pursuant to the Bond Indenture, proceeds of the Bonds will be held by the University, rather than the Bond Trustee, until expended, and may be comingled with general funds of the University. In addition, the University is not required to deposit with the Bond Trustee amounts necessary to pay the principal of or interest on the Bonds until the Business Day on which such amounts become due and payable on the Bonds. The proceeds of the Bonds held by the University are not subject to any lien or charge in favor of the Holders of the Bonds and do not constitute security for the Bonds. The University is not restricted by the Bond Indenture from otherwise incurring additional indebtedness, and such additional indebtedness, if incurred, may be either secured or unsecured.

Investment Considerations

The following are certain investment considerations and risk factors that have been identified by the University and should be carefully considered by prospective purchasers of the Bonds. The following should not be considered to be exhaustive. Investors should read this Offering Memorandum in its entirety. Inclusion of certain factors below is not intended to signify that there are not other investment considerations or risks attendant to the Bonds. See APPENDIX A for additional information on the University.

General. The Bonds constitute an unsecured general obligation of the University. There can be no assurance that income and receipts will be realized by the University in amounts sufficient to pay the principal of or interest on the Bonds.

Future economic and other conditions, including, without limitation, the loss by the University of one or more of its accreditations, destruction or loss of a substantial portion of the University’s facilities, litigation, competition, reduction in the amounts received by the University through fundraising efforts, reduction of the value of endowment funds, changes in the demand for post-high school education and changes in tuition rates and/or tuition discounting, may adversely affect income and receipts of the University. There can be no assurance that University income and receipts will not decrease.

The University operates hospital and health care facilities in addition to the University’s significant higher educational operations. As such, the University has hospital and health care operating risks. See APPENDIX A hereto. With respect to the operations of hospital facilities, there is a risk that costs of providing health care and hospital services will increase faster than the ability to recover such costs from Medicare, Medi-Cal and other third party payors.

Both the University’s stature in the educational community and its consolidated revenues, expenses, assets and liabilities may be affected by events, developments and conditions relating generally to, among other things, the ability of the University (a) to provide educational and research services of the types and quality required to maintain its stature; (b) to generate sufficient revenues, while controlling expenses, so that these services can be provided at a cost acceptable to the University’s consumers; (c) to attract faculty, staff and management necessary to provide these services and a student body of commensurate quality; (d) to build and maintain the facilities necessary to provide these services; and (e) to maintain sufficient student retention and graduation rates.

In turn, success in these areas depends upon the ability of the University and its management to respond to substantial challenges in a rapidly changing environment including, among others: (i) competition in the provision of educational services particularly through new educational media and distance learning and an increasing number of international programs and collaborative projects; (ii) developments in the regional, national and international economies, such as the high regional cost of living, the limited availability of affordable housing within reasonable commuting distance and increases in regional energy costs; (iii) volatility in the financial markets, variations in economic growth, changes in monetary policy and taxation, and the adequacy of the University’s investment management policies and the performance of its investments in the face of such challenges, all of which may negatively impact funds available from the University’s endowment, other investments and its donors to support University operations and capital needs; (iv) legislation and regulation by governmental authorities, including developments affecting the tax-exempt status of educational institutions like the University, changes in levels of governmental research funding and reimbursement for administrative overhead and infrastructure, regulation of tuition levels, and limitations imposed by the City of Los Angeles General Plan and Zoning Code on the

University’s expansion and use of facilities; and (v) discontinuation of favorable governmental policies and programs with respect to post-secondary education (including financial aid available to students). The preservation and growth of the University’s endowment are affected not only by the factors noted above but by discretionary increases in the annual payout to operations from endowment earnings, transfers of expendable funds and other distributions, all of which are subject to changes in policies and practices made by the Board and University management.

A variety of risks, uncertainties and other factors may affect the financial strength and stature of the University. By its nature, the University is an open environment, potentially vulnerable to disruption of operations, injury and damage notwithstanding its security and public safety programs. It is subject to governmental investigations and enforcement action and private suits, and may incur substantial costs of defense, sanctions, penalties and reputational harm for violation of laws applicable to the University in its routine operations. The University is a large landowner; it routinely stores, uses and produces hazardous substances in its operations; it houses several thousand students, faculty and others. The University purchases third-party insurance for losses resulting from fire and related natural hazards to the extent such losses exceed a deductible of $50,000 per occurrence. While the University’s property insurance coverage is believed by University management to be adequate and commensurate with an acceptable standard for comparable universities, the limits purchased are for expected losses and would fall short of covering the damage caused by a catastrophic event. The University carries limited third-party insurance for damage to facilities sustained from flooding and no third party insurance for damage to facilities due to seismic events; however, the University is eligible for the Federal Emergency Management Agency (“FEMA”) Public Assistance program which allows FEMA to indemnify the University (subject to certain requirements and guidelines) in the event of a declaration of disaster by the President of the United States covering the region in which the University is located. The University is located in a region that is subject to significant seismic activity. In the event of a significant seismic event, the University could suffer substantial damage to its facilities and disruption to its operations.

The Trump administration has issued several proposed travel bans which, when and if effective, will prohibit travelers from several countries from entering the United States and/or temporarily shut down the United States refugee program. Several lawsuits have already been filed challenging the proposed travel bans. At this time it is not possible to predict whether any proposed travel ban will be upheld or whether the new administration will propose additional travel bans. Approximately 32% of the University’s graduate students and approximately 14% of the University’s undergraduate students are international visa holders. It is impossible to predict at this time the full extent of the potential effects of the travel ban on the University. However, loss of tuition and fee revenue from international students affected by any travel ban, or some material portion thereof, may arise as a result of the potential enforcement of any travel ban. It is unknown what impact, if any, the proposed travel ban would have on the financial condition of the University.

USC Health System. The University, as described above and in Appendix A, owns and operates certain hospital and health care facilities. In fiscal year 2016, the unrestricted revenues from the Hospitals (as defined in Appendix A) contributed approximately 27% of the University’s total revenues. See APPENDIX A hereto, entitled “THE UNIVERSITY OF SOUTHERN CALIFORNIA ─ USC Health System” and the University’s audited financial statements in APPENDIX B hereto. The Health System (as defined in Appendix A), and the healthcare industry in general, are subject to federal, state and local laws and regulation by a number of governmental and private agencies, including those that administer Medicare and Medi-Cal, federal, state and local agencies responsible for administration of inspecting, licensing and accrediting healthcare facilities, and other federal, state and local agencies. As a result, the Hospitals and the rest of the Health System are sensitive to legislative changes in any regulatory or oversight programs. The future financial condition of the University and its health care operations could be adversely affected by, among other things, increased competition from other health care entities, the costs associated with responding to governmental inquiries and investigations, loss of utilization or revenues from licensing, certification or accreditation noncompliance, demand for health care, other forms of care or treatment, the costs of supplies, patient satisfaction scores and quality metrics, adoption of electronic health records and the ICD- 10 coding system, changes in the methods by which employers purchase health care for employees, changes in the method and amount of reimbursement to the University and its affiliates by governmental and managed care payors, retroactive adjustments of Medicare and Medicaid reimbursements following an audit or investigation, financial viability of these payors, changes in the provision of charity care and fair billing practices required, future changes in the economy, demographic changes, health care reform and related changes in the structure of how health care is

delivered and financed, availability of physicians and nurses, and malpractice claims and other litigation. Economic downturns and lower funding of Medicare and state Medicaid and other state health care programs may increase the number of patients who are unable to pay for their medical and hospital services care. Economic downturns put increased stresses on state budgets, which could potentially result in reductions in Medicaid payment rates or Medicaid eligibility standards, and delays of payment of amounts due under Medicaid and other state or local payment programs. These conditions may give rise to increases in health care providers’ uncollectible accounts, or “bad debts,” uninsured discounts and charity care and, consequently, to reductions in operating income. These factors and others may adversely affect the University’s ability to make payments on the Bonds under the Bond Indenture.

In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (the “ACA”), was signed into law. The ACA significantly affected the delivery of health care services, the financing of health care costs, reimbursement of health care providers and the legal obligations of health insurers, providers, employers and consumers. The ACA, among other things, included changes to the methodology under which Medicare and Medicaid pay for health care services, including providing incentives to providers that meet certain quality performance standards and reductions in payment to hospitals for certain readmissions. Since its enactment, there have been judicial and Congressional challenges to certain aspects of the ACA. The new Presidential Administration and U.S. Congress will likely continue to seek to modify, repeal, or otherwise invalidate all, or certain provisions of, the ACA. It is uncertain the extent to which any such changes may have a material impact on the Health System’s business or financial condition.

Moreover, other legislative changes have also been proposed and adopted since the ACA was enacted. These changes include the Budget Control Act of 2011, which, among other things, resulted in aggregate reductions to Medicare payments to providers of 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislative amendments, will remain in effect through 2025 unless additional Congressional action is taken. In addition, the American Taxpayer Relief Act of 2012 was signed into law, which included further reductions in Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These new laws may result in additional reductions in Medicare and other health care funding, which could have a material adverse effect on the University’s Health System.

Health care providers rely to a high degree on payment from the federal Medicare program and the State’s Medicaid program, known as the Medi-Cal program. Future changes in the underlying law and regulations, as well as payment policy and timing, create uncertainty and could have a material adverse impact on a hospital’s payment streams from these sources, including the Hospitals. With health care and hospital spending reported to be increasing faster than the rate of general inflation, and with federal budgetary allocations in a tenuous state during recovery from the national financial crisis, Congress and/or the Centers for Medicare and Medicaid Services may take action in the future to decrease or restrain Medicare outlays for hospitals and other health care providers. Medicare, Medi-Cal, employers and other purchasers have increasingly initiated a shift in reimbursements from paying for volume to paying for value, based on various health outcome measures, reporting requirements and quality and efficiency metrics. Measures of performance set by others that characterize a hospital or a provider negatively may adversely affect its financial condition.

As Medi-Cal is partially funded by the State, the financial condition of the State is also likely to affect funding levels and/or cause payment delays. This could have a material adverse impact on health care providers, including the University. Moreover, State funding for specialized programs for which a hospital may be eligible may be particularly susceptible to changes in State budgetary constraints.

Fraud and abuse in government funded health care programs is a significant concern of many health systems and health care providers, including the Health System. The federal government and, to a lesser degree, state governments, impose a wide variety of complex and technical requirements intended to prevent overutilization based on economic inducements, misallocation of expenses, overcharging and other forms of “fraud” and abuse in the Medicare and Medicaid programs, as well as other state and federally-funded health care programs. These laws, which impacts a broad spectrum of Health System activities and functions, including billing, accounting, recordkeeping, medical staff oversight, physician contracting and recruiting, cost allocation, clinical trials, discounts, the collection, dissemination, security, use and confidentiality of patient-identifiable information and

other functions and transactions, including joint venture and/or other arrangements with physicians and other healthcare providers, include the following:

• the federal Anti-Kickback Statute, which prohibits knowingly and willfully offering, paying, soliciting or receiving remuneration, directly or indirectly, overtly or covertly, in cash or in kind, in return for or to induce a person to refer an individual, or to purchase, lease, order, arrange for, or recommend purchasing, leasing or ordering, any good, facility, item or service that is reimbursable, in whole or in part, under a federal healthcare program. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. A violation of the federal Anti-Kickback Statute can serve as a basis for liability under federal False Claims Act (as described below);

• the federal Stark Law, which prohibits a physician from making a referral for certain designated health services covered by the Medicare program, including hospital inpatient and outpatient services, if the physician or an immediate family member has a financial relationship with the entity providing the designated health services, and prohibits that entity from billing or presenting a claim for the designated health services furnished pursuant to the prohibited referral, unless an exception applies. If a referring physician does not meet the requirements of a Stark Law exception, then the physician is prohibited from making Medicare and Medicaid referrals to the hospital and any such referrals will result in overpayments to the hospital and subject the hospital to the Stark Law’s penalties;

• the federal False Claims Act, which impose liability on any person or entity that, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for payment to the federal government. In addition, the ACA established a requirement for providers and suppliers to report and return any overpayments received from government payors under the Medicare and Medicaid programs within sixty (60) days of identification. Failure to identify and return such overpayments exposes the provider or supplier to liability under federal False Claims Act;

• the federal Civil Monetary Penalties Law, which prohibits, among other things, the offering or transfer of remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier of services reimbursable by Medicare or a state healthcare program, unless an exception applies, and imposes penalties against any person or entity that, among other things, is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or for a claim that is false or fraudulent;

• federal criminal statutes under the Health Insurance Portability and Accountability Act of 1996, or HIPAA, that prohibit, among other things, defrauding healthcare programs, willfully obstructing a criminal investigation of a healthcare offense and falsifying or concealing a material fact or making any materially false statements in connection with the payment for healthcare benefits, items or services. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;

• HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, which establishes comprehensive federal standards with respect to the privacy and security of protected health information, and requirements for the use of certain standardized electronic transactions with respect to transmission of such information; and

• a variety of similar state laws related to false claims (similar to the False Claims Act or generally applicable false claims laws), anti-kickback (similar to the federal Anti-Kickback Statute), and physician referral laws (similar to the Stark Law).

Violations may occur and be prosecuted in circumstances that do not have the traditional elements of fraud, and enforcement actions may extend to conduct that occurred in the past. The government and/or private “whistleblowers” often pursue aggressive investigative and enforcement actions. The government may impose a wide array of civil, criminal and monetary penalties, including withholding essential hospital payments from the Medicare or Medicaid programs, or exclusion from those programs. Aggressive investigation tactics, negative publicity and threatened penalties can be, and often are used to force settlements, payment of fines and prospective restrictions that may have a material adverse impact on hospital operations, financial condition and reputation. Multi-million dollar fines and settlements are common. These risks are generally uninsured. In addition, such settlements often contain additional compliance and reporting requirements as part of a consent decree, settlement agreement or corporate integrity agreement. Given the significant size of actual and potential settlements, it is expected that the government will continue to devote substantial resources to investigating healthcare providers’ compliance with these laws. Government enforcement and private whistleblower suits may increase in the hospital sector. There can be no assurances that the University’s Health System will not be found to have violated such laws, and, if so, that any sanction imposed as a result thereof would not have a material adverse effect on the operations or financial condition of the University. The federal government and most states have enacted antitrust laws that prohibit certain types of conduct deemed to be anti-competitive. These laws prohibit, among other things, price fixing, concerted refusal to deal, market monopolization, price discrimination, tying arrangements, acquisitions of competitors and other practices that have, or may have, an adverse effect on competition. Violations of federal or state antitrust laws can result in various sanctions, including criminal and civil penalties. Antitrust enforcement in the healthcare industry is currently a priority of the Federal Trade Commission (the "FTC"). The FTC has challenged multiple hospital system mergers recently, for example, and it also has pursued enforcement actions in health care joint ventures and mergers involving pharmaceutical and medical device companies, among others. State antitrust enforcers also may investigate and pursue enforcement actions against health care mergers in their jurisdiction, and they often participate in FTC investigations of health care transactions that impact their state. If the FTC or other antitrust enforcement authorities conclude that the University’s market share in any particular market is too concentrated, that the University’s or the University’s Health System partners' commercial payor contract negotiating practices are illegal, or that the University otherwise violates antitrust laws, the University could be subject to enforcement actions that could have a material adverse effect on its business, prospects, results of operations and financial condition.

In past years the number of professional and general liability suits and the dollar amounts of damage recoveries have increased in health care nationwide, resulting in substantial increases in malpractice insurance premiums, higher deductibles and generally less coverage. There can be no assurances that such increases will not continue and continue to drive up the costs of operating a health care facility generally. Professional liability and other actions alleging wrongful conduct and seeking punitive damages are often filed against hospitals and other health care providers. Insurance does not provide coverage for judgments for punitive damages. Litigation also arises from the corporate and business activities of hospitals, from a hospital’s status as an employer or as a result of medical staff or provider network peer review or the denial of medical staff or provider network privileges. As with professional liability, many of these risks are covered by insurance, but some are not. For example, some antitrust claims or business disputes are not covered by insurance or other sources and may, in whole or in part, be a liability of the hospital or other health care provider, such as the University, if determined or settled adversely.

Professional liability litigation is subject to public policy determinations and legal procedural rules that may be altered from time to time, with the result that the frequency and cost of such litigation, and resultant liabilities, may increase in the future. Hospitals, including those owned and operated by the University, may be affected by negative financial and liability impacts on physicians.

Healthcare providers are highly dependent upon information technology systems to deliver high quality, coordinated and cost-effective healthcare. Because these systems hold large quantities of highly sensitive protected health information, healthcare providers are considered likely targets for cyberattacks and other potential breaches of their systems. The University has deployed many protections to reduce the University’s risk of cyberattack, including the University’s partnership with a third-party security operations center. The Health System has taken, and continues to take, measures to protect its information technology system against such cyberattacks, but there can be no assurance that the Health System will not experience a significant breach. If such a breach occurs, the financial consequences of such a breach could have a materially adverse impact on the University.

Tax-Exempt Status of the University. The Bond Indenture requires the University to maintain its status as an organization described in Section 501(c)(3) of the Code and its exemption from federal income tax under Section 501(a) of the Code or corresponding provisions of future federal income tax laws. The maintenance of such status depends on compliance with general rules regarding the organization and operation of tax-exempt entities, including their operation for charitable and educational purposes and their avoidance of transactions that may cause their earnings or assets to inure to the benefit of private individuals.

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

Furthermore, the operations and practices of nonprofit, tax-exempt health care and higher educational organizations are routinely challenged or criticized for inconsistency or inadequate compliance with the regulatory requirements for, and societal expectations of, nonprofit tax-exempt organizations. Areas that have come under examination have included pricing practices, billing and collection practices, charitable care, methods of providing and reporting community benefit, executive compensation, exemption of property from real property taxation, private use of facilities financed with tax-exempt bonds and others.

The IRS has announced that it intends to closely scrutinize transactions between nonprofit hospitals and for-profit entities, and in particular has issued revised audit guidelines for tax-exempt hospitals. Because the University conducts diverse healthcare operations involving private parties, there can be no assurance that certain of its transactions would not be challenged by the IRS, which could adversely affect the tax-exempt status of the University.

As a result of ongoing IRS audit programs, tax-exempt organizations are increasingly subjected to a high level of scrutiny. One penalty available to the IRS under the Code with respect to a tax-exempt charity engaged in unlawful, private benefit or political activity is the revocation of tax-exempt status. Although the IRS has not frequently revoked the tax-exempt status of nonprofit corporations, it could do so in the future.

In some cases, the IRS has imposed substantial monetary penalties on tax-exempt nonprofit corporations in lieu of revoking their tax-exempt status. In those cases, the IRS and nonprofit corporations entered into settlement agreements requiring the nonprofit corporation to make substantial payments to the IRS. Given the potential risks of audit and other enforcement activity, the University could be at risk for incurring monetary and other liabilities imposed by the IRS.

Loss of tax-exempt status by the University potentially could result in defaults in covenants regarding the Bonds and other obligations could be triggered. Loss of tax-exempt status also could result in substantial tax liabilities on the income of the University. For these reasons, loss of tax-exempt status of the University could have material adverse consequences on the financial condition of the University and its ability to make payments on the Bonds.

State and Local Tax Exemption. It is possible that the loss by the University of federal tax exemption also would trigger a challenge to the state tax exemption of the University. Depending on the circumstances, such event could be adverse and material. In California, it is possible that legislation may be proposed to strengthen the role of the State in supervising nonprofit entities.

It is not possible to predict the scope or effect of future legislative or regulatory actions with respect to taxation of not-for-profit corporations. There can be no assurance that future changes in the tax laws and regulations of state or local governments will not materially adversely affect the operations and financial condition of the University.

Unrelated Business Income. The IRS and state, county and local taxing authorities may undertake audits and reviews of the operations of tax-exempt corporations with respect to the generation of unrelated business taxable

income (“UBTI”). The University participates in activities that may generate UBTI. An investigation or audit could lead to a challenge that could result in taxes, interest and penalties with respect to UBTI and, in some cases, ultimately could affect the tax-exempt status of the University. In recent years, the IRS and state, county and local taxing authorities have been undertaking audits and reviews of the operations of tax-exempt hospitals and universities with respect to their exempt activities and the generation of UBTI.

In addition, legislation that may be adopted at the federal, state and local levels with respect to unrelated business income cannot be predicted. Any legislation could have the effect of subjecting a portion of the income of the University to federal or state income taxes.

Exemption from Property Taxes. State, county and local taxing authorities have been undertaking audits and reviews of the operations of tax-exempt organizations with respect to their real and personal property tax exemptions. The loss by the University of its property tax exemptions could be adverse and material.

ENFORCEABILITY OF REMEDIES

The remedies available to the Bond Trustee or the Bondholders upon a Bond Indenture Event of Default 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 University 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. The various legal opinions delivered in connection with the issuance of the Bonds are 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.

PLAN OF FINANCING

The proceeds of the Bonds will be used by the University for any of its general corporate purposes, including, but not limited to, the acquisition, construction, renovation, improvement, rehabilitation and/or equipping by the University of higher educational and healthcare facilities, and to pay all or a portion of the costs of issuance of the Bonds. The University will have broad discretion as to its use of the proceeds of the Bonds, provided that such use is in compliance with the University’s tax status under Section 501(c)(3) of the Code. See also “ESTIMATED SOURCES AND USES OF FUNDS” below.

ESTIMATED SOURCES AND USES OF FUNDS

The proceeds of the Bonds are expected to be applied to any of the University’s general corporate purposes and to the payment of all or a portion of the costs of issuance of the Bonds. The proceeds of the Bonds are expected to be used as follows:

Estimated Sources of Funds: Par Amount of the Bonds $402,320,000 Total Sources $402,320,000

Estimated Uses of Funds(1): General Corporate Purposes $400,000,000 Costs of Issuance(2) 2,320,000 Total Uses $402,320,000

(1) Numbers are rounded to the nearest dollar. (2) Includes Underwriters’ discount, legal, financing and consulting fees, rating agency fees, printing costs and other miscellaneous expenses.

CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS

Certain U.S. Federal Income Tax Consequences to U.S. Holders

The following discussion is a summary of the principal United States Federal income tax consequences of the acquisition, ownership and disposition of the Bonds by original purchasers of the Bonds who are U.S. Holders (as defined below). This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), Treasury regulations, revenue rulings and court decisions, all as now in effect and all subject to change at any time, possibly with retroactive effect. This discussion is limited to U.S. Holders purchasing the Bonds for cash at original issue and at their original “issue price” within the meaning of Section 1273 of the Code (i.e., the first price at which a substantial amount of the Bonds is sold to the public for cash). This summary assumes that the Bonds will be held as “capital assets” under the Code, and it does not discuss all of the United States Federal income tax consequences that may be relevant to a holder in light of its particular circumstances or to holders subject to special rules, such as insurance companies, financial institutions, tax-exempt organizations, dealers in securities or foreign currencies, persons holding the Bonds as a position in a “hedge” or “straddle” for United States Federal income tax purposes, holders whose functional currency (as defined in Section 985 of the Code) is not the United States dollar, holders who acquire the Bonds in the secondary market, S corporations, partnerships or other entities or arrangements treated as partnerships for U.S. Federal income tax purposes (and investors therein), persons subject to the alternative minimum tax, or United States expatriates and former citizens or long-term residents of the United States. This discussion does not address all U.S. Federal income tax consequences relevant to a holder’s particular circumstances, including the impact of the tax on unearned income imposed by Section 1411 of the Code. Each prospective purchaser of the Bonds should consult with its own tax advisor concerning the United States Federal income tax and other tax consequences to it of the acquisition, ownership and disposition of the Bonds as well as any tax consequences that may arise under other U.S. Federal tax laws, such as estate and gift tax laws, or the laws of any state, local or foreign tax jurisdiction.

As used herein, the term “U.S. Holder” means a beneficial owner of a Bond that is for United States Federal income tax purposes (i) a citizen or resident of the United States, (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States or of any political subdivision thereof, (iii) an estate the income of which is subject to United States Federal income taxation regardless of its source or (iv) a trust whose administration is subject to the primary jurisdiction of a United States court and which has one or more United States fiduciaries who have the authority to control all substantial decisions of the trust.

If an entity treated as a partnership for U.S. Federal income tax purposes holds the Bonds, the tax treatment of a partner in the partnership will depend on the status of the partner, the activities of the partnership and certain determinations made at the partner level. Accordingly, partnerships holding the Bonds and the partners in such partnerships should consult their tax advisors regarding the U.S. Federal income tax consequences to them.

U.S. Holders—Interest Income

Interest on the Bonds is not excludable from gross income for United States Federal income tax purposes and generally is taxable to a U.S. Holder as ordinary income at the time such interest is received or accrued in accordance with the U.S. Holder’s regular method of tax accounting.

U.S. Holders—Disposition of Taxable Bonds

Except as discussed above, upon the sale, exchange, redemption, or other disposition of a Bond, a U.S. Holder generally will recognize taxable gain or loss in an amount equal to the difference between the amount realized (other than amounts attributable to accrued but unpaid interest not previously includable in income) and such U.S. Holder’s adjusted tax basis in the Bond. A U.S. Holder’s adjusted tax basis in a Bond generally will equal such U.S. Holder’s initial investment in the Bond, increased by any original issue discount included in the U.S. Holder’s income with respect to the Bond and decreased by the amount of any payments, other than qualified stated interest payments, received and bond premium amortized with respect to such Bond. Such gain or loss generally will be long-term capital gain or loss if the Bond was held for more than one year. Long-term capital gain or loss recognized by certain non-corporate U.S. Holders, including individuals, generally will be taxable at reduced rates. The deductibility of capital losses is subject to limitations.

U.S. Holders—Backup Withholding and Information Reporting

In general, information reporting requirements will apply to non-corporate U.S. Holders with respect to payments of principal, payments of interest, and the accrual of original issue discount on a Bond and the proceeds of the sale of a Bond before maturity within the United States (as well as the proceeds of certain sales outside the United States). Backup withholding (currently at a rate of 28%) will apply to such payments and to payments of original issue discount unless the U.S. Holder (i) is a corporation or other exempt recipient and, when required, demonstrates that fact, or (ii) provides a correct taxpayer identification number, certifies under penalties of perjury, when required, that such U.S. Holder is not subject to backup withholding and the applicable withholding agent has not been notified by the IRS that such U.S. Holder has failed to report all interest and dividends required to be shown on its United States Federal income tax returns.

Any amounts withheld under the backup withholding rules from a payment to a U.S. Holder may be allowed as a refund or a credit against such U.S. Holder’s United States Federal income tax provided the required information is timely furnished to the IRS.

Miscellaneous

Tax legislation, administrative actions taken by tax authorities, or court decisions, whether at the Federal or state level could affect the tax consequences of the ownership or disposition of the Bonds.

Prospective purchasers of the Bonds should consult their own tax advisors regarding the foregoing matters.

Certain U.S. Federal Income and Estate Tax Consequences to Non-U.S. Holders

This section describes certain U.S. Federal income and estate tax consequences to Non-U.S. Holders. For purposes of this discussion, a “Non-U.S. Holder” is a beneficial owner of a Bond that is neither a U.S. Holder nor an entity treated as a partnership for U.S. Federal income tax purposes.

Interest

If, under the Code, interest on the Bonds (including any original issue discount) is “effectively connected with the conduct of a trade or business within the United States” by a Non-U.S. Holder (and, if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment in the United States to which such interest is attributable), such interest will be subject to U.S. Federal income tax in a similar manner as if the Bonds were held by a U.S. Holder, as described above. Corporations that are Non-U.S. Holders may be subject

to a U.S. branch profits tax on such effectively connected interest at a rate of up to 30%, unless an applicable tax treaty provides otherwise. Such Non-U.S. Holder will not be subject to withholding taxes, however, if it provides a properly executed IRS Form W-8ECI to the applicable withholding agent, certifying that interest paid on a Bond is not subject to withholding tax because it is effectively connected with the conduct by the Non-U.S. Holder of a trade or business within the United States.

Interest on the Bonds held by other Non-U.S. Holders (including any original issue discount) may be subject to withholding taxes of up to 30% of each payment made to the Non-U.S. Holders unless the “portfolio interest” exemption applies, or, as discussed below, such withholding taxes are eliminated by an applicable treaty. In general, interest paid on the Bonds to a Non-U.S. Holder may qualify for the portfolio interest exemption, and thus will not be subject to U.S. Federal withholding tax, if (1) such Non-U.S. Holder is not a “controlled foreign corporation” (within the meaning of section 957 of the Code) related, directly or indirectly, to the University; (2) the Non-U.S. Holder is not a bank receiving interest on an extension of credit made in the ordinary course of its trade or business described in Section 881(c)(3)(A) of the Code; (3) the interest is not effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the United States under Section 871(b) or Section 882 of the Code; and (4) either (A) the applicable withholding agent receives from the Non-U.S. Holder a statement signed by such Non-U.S. Holder under penalties of perjury, on IRS Form W-8BEN or W-8BEN-E (or a successor form), certifying that such Non-U.S. Holder is not a United States person and providing such Non-U.S. Holder’s name and address or (B) a securities clearing organization, bank or other financial institution that holds the Bonds on behalf of such Non- U.S. Holder in the ordinary course of its trade or business certifies to the applicable withholding agent, under penalties of perjury, that such an IRS Form W-8BEN or W-8BEN-E (or a successor form) has been received from the Non-U.S. Holder by it and furnishes the applicable withholding agent with a copy thereof. Alternative methods may be applicable for satisfying the certification requirement described above. Foreign trusts and their beneficiaries are subject to special rules, and such persons should consult their own tax advisors regarding the certification requirements.

If a Non-U.S. Holder does not claim, or does not qualify for, the benefit of the portfolio interest exemption, the Non-U.S. Holder may be subject to a 30% withholding tax on interest payments on the Bonds. However, the Non-U.S. Holder may be able to claim the benefit of a reduced withholding tax rate under an applicable income tax treaty between the Non-U.S. Holder’s country of residence and the United States. Non-U.S. Holders are urged to consult their own tax advisors regarding their eligibility for treaty benefits. The required information for claiming treaty benefits is generally submitted on IRS Form W-8BEN or W-8BEN-E. In addition, a Non-U.S. Holder may under certain circumstances be required to obtain a U.S. taxpayer identification number.

Disposition of the Bonds

A Non-U.S. Holder will generally not be subject to U.S. Federal income tax or withholding tax on gain recognized on a sale, exchange, redemption or other disposition of a Bond. (Such gain does not include proceeds attributable to accrued but unpaid interest on the Bonds, which will be treated as interest and may be subject to the rules described above). A Non-U.S. Holder may, however, be subject to U.S. Federal income tax on such gain if: (1) the Non-U.S. Holder is a nonresident alien individual who was present in the United States for 183 days or more in the taxable year of the disposition and certain other requirements are met; or (2) the gain is effectively connected with the conduct of a U.S. trade or business (and, if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment in the United States to which such gain is attributable).

Information Reporting and Backup Withholding

The applicable withholding agent must report annually to the IRS and to each Non-U.S. Holder any interest (including any original issue discount) paid to the Non-U.S. Holder, regardless of whether any tax was actually withheld. Copies of these information returns may also be made available under the provisions of a specific tax treaty or agreement with the tax authorities of the country in which the Non-U.S. Holder resides.

Subject to the application of FATCA as described and defined below, a Non-U.S. Holder generally will not be subject to backup withholding with respect to payments of interest (including any original issue discount) on the Bonds as long as the Non-U.S. Holder (i) has furnished to the applicable withholding agent a valid IRS Form W- 8BEN or W-8BEN-E certifying, under penalties of perjury, its status as a non-U.S. person, (ii) has furnished to the

applicable withholding agent other documentation upon which it may rely to treat the payments as made to a non- U.S. person in accordance with Treasury regulations, or (iii) otherwise establishes an exemption. A Non-U.S. Holder may be subject to information reporting and/or backup withholding on a sale of the Bonds through the United States office of a broker and may be subject to information reporting (but generally not backup withholding) on a sale of the Bonds through a foreign office of a broker that has certain connections to the United States, unless the Non-U.S. Holder provides the certification described above or otherwise establishes an exemption. Non-U.S. Holders should consult their own tax advisors regarding their qualification for exemption from backup withholding and the procedure for obtaining such an exemption.

Amounts withheld under the backup withholding rules may be refunded or credited against the Non-U.S. Holder’s U.S. Federal income tax liability, if any, provided that the required information is timely furnished to the IRS.

U.S. Federal Estate Tax

A Bond held or beneficially owned by an individual who, for estate tax purposes, is not a citizen or resident of the United States at the time of death will not be includable in the decedent’s gross estate for U.S. estate tax purposes, unless at the time of such individual’s death, payments in respect of the Bonds would have been effectively connected with the conduct by such individual of a U.S. trade or business. In addition, the U.S. estate tax may not apply with respect to such Bond under the terms of an applicable estate tax treaty.

Foreign Account Tax Compliance Act

Under the Foreign Account Tax Compliance Act (“FATCA”), withholding taxes may be imposed on certain types of payments made to non-U.S. financial institutions and certain other non-U.S. entities. Specifically, a 30% withholding tax may be imposed on payments of interest on, or gross proceeds from the sale or other disposition of, a Bond paid to a “foreign financial institution” or a “non-financial foreign entity” (each as defined in the Code), unless (1) the foreign financial institution undertakes certain diligence and reporting obligations, (2) the non-financial foreign entity either certifies it does not have any “substantial United States owners” (as defined in the Code) or furnishes identifying information regarding each substantial United States owner, or (3) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in (1) above, it must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertake to identify accounts held by certain “specified United States persons” or “United States-owned foreign entities” (each as defined in the Code), annually report certain information about such accounts, and withhold 30% on certain payments to non-compliant foreign financial institutions and certain other account holders. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules.

Under current applicable Treasury regulations and administrative guidance, withholding under FATCA generally applies to payments of interest on a Bond, and will apply to payments of gross proceeds from the sale or other disposition of a Bond on or after January 1, 2019. Prospective investors should consult their tax advisors regarding the potential application of withholding under FATCA to their ownership of the Bonds.

THE FOREGOING SUMMARY IS INCLUDED HEREIN FOR GENERAL INFORMATION ONLY AND DOES NOT DISCUSS ALL ASPECTS OF U.S. FEDERAL INCOME TAXATION THAT MAY BE RELEVANT TO A PARTICULAR HOLDER OF BONDS IN LIGHT OF THE HOLDER’S PARTICULAR CIRCUMSTANCES AND INCOME TAX SITUATION. PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO ANY TAX CONSEQUENCES TO THEM FROM THE PURCHASE, OWNERSHIP AND DISPOSITION OF BONDS, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.

BENEFIT PLANS AND ERISA CONSIDERATIONS

The following is a summary of certain considerations associated with the purchase and holding of the Bonds by (a) employee benefit plans that are subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), (b) plans, individual retirement accounts and other arrangements that are subject to Section 4975 of the Code or provisions under any federal, state, local, non-U.S. or other laws, rules or regulations that are similar to such provisions of ERISA or the Code (collectively, “Similar Laws”), and (c) entities whose underlying assets are considered to include “plan assets” (within the meaning of ERISA) of any such plan, account or arrangement by reason of a plan’s investment in such entities (each of (a), (b) and (c), a “Benefit Plan”).

ERISA imposes certain fiduciary obligations and prohibited transaction restrictions on employee pension and welfare benefit plans subject to Title I of ERISA (“ERISA Plans”). Section 4975 of the Code imposes essentially the same prohibited transaction restrictions on tax-qualified retirement plans described in Section 401(a) and 403(a) of the Code, which are exempt from tax under Section 501(a) of the Code, other than governmental and church plans as described herein, and on Individual Retirement Accounts described in Section 408(b) of the Code and other arrangements that are subject to Section 4975 of the Code (collectively, “Tax-Favored Plans”). Certain employee benefit plans such as governmental plans (as defined in Section 3(32) of ERISA), foreign plans, and, if no election has been made under Section 410(d) of the Code, church plans (as defined in Section 3(33) of ERISA), are not subject to ERISA requirements. Additionally, such governmental, foreign and non-electing church plans are not subject to the requirements of Section 4975 of the Code. Such governmental, foreign and non-electing church plans may, however, be subject to Similar Laws. Accordingly, assets of such plans may be invested in the Bonds without regard to the ERISA and Code considerations described below, subject to the provisions of applicable federal and state law (including Similar Laws).

In considering an investment in the Bonds with any portion of the assets of a Benefit Plan, a fiduciary of the Plan should consider, among other matters, whether the investment is in accordance with the documents and instruments governing the Plan and the applicable provisions of ERISA, the Code or any applicable Similar Law relating to a fiduciary’s duties to the Plan including, without limitation, the prudence, diversification, delegation of control and prohibited transaction provisions of ERISA, the Code and any other applicable Similar Laws.

In addition to the imposition of general fiduciary obligations, including those of investment prudence and diversification and the requirement that a plan’s investment be made in accordance with the documents governing the plan, Section 406 of ERISA and Section 4975 of the Code prohibit a broad range of transactions involving assets of Benefit Plans and persons who have certain specified relationships to the Benefit Plans (“Parties In Interest” or “Disqualified Persons”), unless a statutory or administrative exemption is available. The definitions of “Party in Interest” and “Disqualified Person” are expansive. While other entities may be encompassed by these definitions, they include, most notably: (1) a fiduciary with respect to a Benefit Plan; (2) a person providing services to a Benefit Plan; and (3) an employer or employee organization any of whose employees or members are covered by the Benefit Plan. Certain Parties in Interest (or Disqualified Persons) that participate in a prohibited transaction may be subject to a penalty (or an excise tax) imposed pursuant to Section 502(i) of ERISA (or Section 4975 of the Code) unless a statutory or administrative exemption is available.

Further, the acquisition or holding of Bonds by or on behalf of a Benefit Plan could be considered to give rise to a prohibited transaction if the University, the Underwriters or the Bond Trustee, or any of their respective affiliates, is or becomes a Party in Interest or a Disqualified Person with respect to such Benefit Plan.

Most notably, ERISA and the Code generally prohibit the lending of money or other extension of credit between an ERISA Plan or Tax-Favored Plan and a Party in Interest or a Disqualified Person, and the acquisition of any of the Bonds by a Benefit Plan would involve the lending of money or extension of credit by the Benefit Plan. In such a case, however, certain exemptions from the prohibited transaction rules could be applicable depending on the type and circumstances of the plan fiduciary making the decision to acquire a Bond. Included among these exemptions are: Prohibited Transaction Class Exemption (“PTCE”) 96-23, regarding transactions effected by certain “in-house asset managers”; PTCE 90-1, regarding investments by insurance company pooled separate accounts; PTCE 95-60, regarding transactions effected by “insurance company general accounts”; PTCE 91-38, regarding investments by bank collective investment funds; and PTCE 84-14, regarding transactions effected by “qualified professional asset managers.” Further, the statutory exemption in Section 408(b)(17) of ERISA and Section

4975(d)(20) of the Code provides for an exemption for transactions involving “adequate consideration” with persons who are Parties in Interest or Disqualified Persons solely by reason of their (or their affiliate’s) status as a service provider to the Benefit Plan involved and none of whom is a fiduciary with respect to the Benefit Plan assets involved (or an affiliate of such a fiduciary). There can be no assurance that any class or other exemption will be available with respect to any particular transaction involving the Bonds, or that, if available, the exemption would cover all possible prohibited transactions.

Any ERISA Plan fiduciary considering whether to purchase the Bonds on behalf of an ERISA Plan should consult with its counsel regarding the applicability of the fiduciary responsibility and prohibited transaction provisions of ERISA and Section 4975 of the Code to such in investment and the availability of any of the exemptions referred to above. Persons responsible for investing the assets of Tax-Favored Plans that are not ERISA Plans should seek similar counsel with respect to the prohibited transaction provisions of the Code and the applicability of any Similar Laws.

It is the responsibility of each purchaser of the Bonds to ensure that its purchase, holding and transfer of such Bonds is not a prohibited transaction and does not violate the fiduciary or prohibited transaction rules of ERISA or the Code or any similar provisions of Similar Laws. The sale of any Bonds to any Benefit Plan is in no respect a representation by the University or any of its affiliates or representatives that such an investment meets all relevant legal requirements with respect to investments by such Benefit Plans generally or with respect to any particular Benefit Plan, or that such an investment is appropriate for such Benefit Plans generally or for any particular Benefit Plan

By purchasing and holding Bonds, each purchaser and subsequent transferee will be deemed to have represented and warranted that either (i) it is not a Benefit Plan, and no portion of the assets used by such purchaser or transferee to acquire and hold the Bonds constitutes assets of any Benefit Plan or (ii) neither the purchase nor the holding of the Bonds by such purchaser or subsequent transferee will result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or a similar violation under any applicable Similar Laws.

RATINGS

Moody’s Investors Service, Inc. (“Moody’s”) and Standard & Poor’s Ratings, a business unit of Standard & Poor’s Financial Services LLC (“S&P”), have assigned the Bonds long-term ratings of “Aa1” with a stable outlook and “AA” with a stable outlook, respectively. Any explanation of the significance of such ratings may only be obtained from the rating agency furnishing the same.

Generally, rating agencies base their ratings on information and materials furnished and on investigation, studies, and assumptions by the rating agencies. There is no assurance that the ratings mentioned above will remain in effect for any given period of time or that a rating might not be lowered or withdrawn entirely, if in the judgment of the rating agency originally establishing the rating, circumstances so warrant. The University and the Underwriters 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 might have an adverse effect on the market price or marketability of the Bonds.

UNDERWRITING

The Bonds are being purchased by the Underwriters listed on the cover page hereof (the “Underwriters”) for whom Morgan Stanley & Co. LLC is acting as representative. The Underwriters have agreed to purchase the Bonds at an aggregate purchase price of $400,509,560 (reflecting an Underwriters’ discount of $1,810,440). The purchase contract for the Bonds provides that the Underwriters will purchase all of the Bonds if any are purchased. The Underwriters’ obligation to make such purchase is subject to certain terms and conditions set forth in the purchase contract, the approval of certain legal matters by counsel and certain other conditions. The initial public offering price of the Bonds may be changed by the Underwriters.

The Underwriters may offer and sell the Bonds to certain dealers and others at a price lower than the initial offering price. The offering price of Bonds may be changed from time to time by the Underwriters.

The Underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. Certain of the Underwriters and their respective affiliates have provided, and may in the future provide, a variety of these services to the University and to persons and entities with relationships with the University, for which they received or will receive customary fees and expenses.

In the ordinary course of their various business activities, the Underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of the University (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the University. The Underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.

Morgan Stanley & Co. LLC, one of the underwriters of the Bonds, has entered into a retail distribution arrangement with Morgan Stanley Smith Barney LLC. As part of the distribution arrangement, Morgan Stanley & Co. LLC may distribute securities to retail investors through the financial advisor network of Morgan Stanley Smith Barney LLC. As part of this arrangement, the Morgan Stanley & Co. LLC may compensate Morgan Stanley Smith Barney LLC for its selling efforts with respect to the Bonds.

LEGAL MATTERS

Certain legal matters incidental to the issuance of the Bonds by the University are subject to the approval of Hawkins Delafield & Wood LLP, Los Angeles, California and New York, New York, Special Counsel to the University. The proposed form of the legal opinion of Hawkins Delafield & Wood LLP to be delivered upon the issuance of the Bonds is attached hereto as APPENDIX D. In addition, certain legal matters will be passed upon for the University by its Senior Vice President and General Counsel, and for the Underwriters by their counsel, Nixon Peabody LLP, Los Angeles, California.

ABSENCE OF MATERIAL LITIGATION

To the knowledge of the University, there is not now pending or threatened any litigation restraining or enjoining the issuance of the Bonds or questioning or affecting the validity of the Bonds, or the proceedings and authority under which such Bonds are to be issued. To the knowledge of the University, neither the creation, organization or existence, nor the title of the present trustees or other officers of the University to their offices, is being contested. To the knowledge of the University, there is no litigation pending or threatened which in any manner questions the right of the University to repay the Bonds in accordance with the provisions of the Bond Indenture or which would have a material adverse impact on the University’s financial position or results of operations.

INDEPENDENT ACCOUNTANTS

The consolidated financial statements of the University and its subsidiaries as of June 30, 2016 and 2015 and for each of the two years in the period ended June 30, 2016, included in APPENDIX B of this Offering Memorandum, have been audited by PricewaterhouseCoopers LLP, independent accountants, as stated in their report appearing therein.

CONTINUING DISCLOSURE

The University has entered into continuing disclosure undertakings (the “Continuing Disclosure Undertakings”) in connection with tax-exempt revenue bonds issued for the benefit of the University (the “Tax-

Exempt Bonds”). Holders and prospective purchasers of the Bonds may obtain copies of the information provided by the University under those Continuing Disclosure Undertakings on the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access system (“EMMA”). Each Continuing Disclosure Undertaking terminates when the related Tax-Exempt Bonds are paid or deemed paid in full.

The University covenants in the Bond Indenture that unless otherwise available on EMMA or any successor thereto or to functions thereof, copies of the University’s audited financial statements will either be posted on the University’s website or filed with the Bond Trustee.

MISCELLANEOUS

The references herein to the Bonds and the Bond Indenture are summaries of certain provisions thereof. Such summaries do not purport to be complete, and reference is made to such statute and documents for full and complete statements thereof. The agreements of the University with the Holders of the Bonds are fully set forth in the Bond Indenture, and neither any advertisement of the Bonds nor this Offering Memorandum is to be construed as constituting an agreement with the purchasers of the Bonds. Any statements made in this Offering Memorandum involving matters of opinion, whether or not expressly so stated, are intended merely as such and not as representations of fact. Copies of the documents mentioned in this paragraph are on file at the offices of the Bond Trustee. Copies in reasonable quantities of the Bond Indenture may be obtained upon request directed to the Bond Trustee, the Underwriters or the University. The Appendices hereto (other than APPENDICES D, E and F) contain certain information with respect to the University. The information contained in the Appendices (other than APPENDICES D, E and F) has been furnished by the University and officers and officials of the University, and by other sources the University believes to be current and reliable.

The University has reviewed the information contained herein which relates to it and has approved all such information for use in this Offering Memorandum. The University takes no responsibility for the information in this Offering Memorandum under the Sections entitled “INFORMATION CONCERNING OFFERING RESTRICTIONS IN CERTAIN JURISDICTIONS OUTSIDE THE UNITED STATES” and “BOOK- ENTRY SYSTEM”, and in APPENDICES D, E and F hereto. APPENDIX A, THE UNIVERSITY OF SOUTHERN CALIFORNIA, has been prepared by the University, and APPENDIX B, CONSOLIDATED FINANCIAL STATEMENTS OF THE UNIVERSITY OF SOUTHERN CALIFORNIA AS OF JUNE 30, 2016 AND 2015, was furnished by the University. APPENDIX C, CERTAIN PROVISIONS OF THE BOND INDENTURE, and APPENDIX D, PROPOSED FORM OF OPINION OF HAWKINS DELAFIELD & WOOD LLP, have been prepared by Hawkins Delafield & Wood LLP, Special Counsel to the University. Information relating to DTC and the book-entry system described under the heading “BOOK-ENTRY SYSTEM”, APPENDIX E - “BOOK-ENTRY SYSTEM” and APPENDIX F – “GLOBAL CLEARANCE PROCEDURES” is based upon information furnished by DTC, Clearstream and Euroclear and is believed to be reliable, but neither the University nor the Underwriters make any representations or warranties whatsoever with respect to such information. All of the Appendices hereto are incorporated as an integral part of this Offering Memorandum.

This Offering Memorandum has been reviewed and approved by the University of Southern California. Concurrently with the delivery of the Bonds, the University will furnish a certificate executed on behalf of the University by its Senior Vice President, Finance, and Chief Financial Officer (or other authorized officer) to the effect that this Offering Memorandum, except for the sections entitled “INFORMATION CONCERNING OFFERING RESTRICTIONS IN CERTAIN JURISDICTIONS OUTSIDE THE UNITED STATES,” “BOOK- ENTRY SYSTEM,” and APPENDICES D, E AND F, as of the date of this Offering Memorandum and as of the date of delivery of the Bonds, does not contain any untrue statement of a material fact or omit to state such a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The execution and delivery of this Offering Memorandum has been duly authorized by the University.

UNIVERSITY OF SOUTHERN CALIFORNIA

By /s/ James M. Staten James M. Staten Senior Vice President, Finance, and Chief Financial Officer Dated: April 10, 2017

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APPENDIX A

THE UNIVERSITY OF SOUTHERN CALIFORNIA

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APPENDIX A

THE UNIVERSITY OF SOUTHERN CALIFORNIA

Introduction

The University of Southern California (the “University” or “USC”) is a nonprofit, coeducational university with its principal campus located near downtown Los Angeles, California. The University currently has the largest enrollment of any private university in California and is ranked 15th in the Wall Street Journal / Times Higher Education College Rankings 2017. University President C. L. Max Nikias has been in his role since 2010, and the majority of the University’s senior administration has been hired since that time. Recent additions include Senior Vice President, Finance and Chief Financial Officer James M. Staten. In Fall 2016, approximately 19,000 undergraduate and 25,000 graduate, professional and other students were enrolled at the University, and the University expects Fall 2017 enrollment to be substantially the same. The University is an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”).

Educational Programs

The downtown Los Angeles campus is home to the USC Dana and David Dornsife College of Letters, Arts and Sciences (“USC Dornsife”) and many of USC’s professional schools and arts schools. The Health Sciences campus, northeast of downtown Los Angeles, is home to the Keck School of Medicine of USC, the School of Pharmacy, three major teaching hospitals, and programs in Occupational Science and Occupational Therapy and in Biokinesiology and Physical Therapy. USC also has programs and centers in Marina Del Rey, Orange County, Sacramento, Catalina Island, Alhambra and around Southern California, as well as Washington, D.C.

USC Dornsife is the academic heart of the University, advancing knowledge in traditional and emerging disciplines across the humanities, social sciences and sciences. With nearly 800 tenure- and non-tenure track faculty, 37 academic departments and programs, and dozens of research centers and institutes, USC Dornsife offers more than 140 degree options (majors and minors) for undergraduate students, more than 35 Ph.D. programs for its doctoral students, and a diverse collection of practical and innovative master’s degrees. USC Dornsife offers both bachelor of arts and bachelor of science degrees. USC Dornsife is at the core of USC’s mission to promote world-class research, train the next generation of scholars, and provide undergraduates with an education that is innovative, engaging, student-centered and experiential.

In addition to USC Dornsife, the University also enrolls undergraduate and graduate students at the following schools, institutes, centers and colleges: USC Annenberg School for Communication and Journalism; USC School of Architecture; USC Bovard College; USC Leventhal School of Accounting; USC School of Cinematic Arts; USC Davis School of Gerontology; Herman Ostrow School of Dentistry of USC; USC School of Dramatic Arts; USC Suzanne Dworak-Peck School of Social Work; USC Gould School of Law; Keck School of Medicine of USC; Division of Biokinesiology and Physical Therapy; USC Institute for Creative Technologies; USC Jimmy Iovine and Andre Young Academy for Arts, Technology and the Business of Innovation; USC Kaufman School of Dance; USC Marshall School of Business; USC Price School of Public Policy; USC Roski School of Art and Design; USC Rossier School of Education; USC Thornton School of Music; USC Viterbi School of Engineering; USC Viterbi School of Engineering Information Sciences Institute; and the USC Mrs. T.H. Chan Division of Occupational Science and Occupational Therapy.

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USC Health System

In April of 2009, the University purchased two hospitals, USC University Hospital (“UH”) and USC Norris Cancer Hospital (“Norris”). UH has been renamed Keck Hospital of USC (hereinafter referred to as “Keck Hospital”). In July of 2013, the University acquired Verdugo Hills Hospital in Glendale, California (“Verdugo Hills” and together with Norris and Keck Hospital, the “Hospitals”). The Hospitals operate as divisions of the University. U.S. News and World Report ranks the Hospitals among the nation’s leading medical centers, providing inpatient and outpatient medical and health care services to patients located in Southern California, and throughout the United States and internationally. In addition, USC Care Medical Group, Inc. operates as a Management Service Organization to the Keck School of Medicine physicians. The University’s Health System is comprised of the Hospitals, more than 692 faculty physicians practicing through USC Care Medical Group, Inc., 45 community-based ambulatory care clinics, and two ambulatory surgery centers (collectively the “Health System”).

Both Norris and Keck Hospital are located on the University’s Health Sciences Campus and are part of an integrated academic medical center, enhancing the quality of patient care and elevating the Keck School of Medicine of USC to a nationally acclaimed leader among the nation’s medical schools. The acquisition of Verdugo Hills allowed the University to establish a footprint in the La Canada community of the greater Los Angeles area and operate an emergency room. In fiscal year 2016, the unrestricted revenues from the Hospitals contributed approximately 27% of the University’s total revenues of approximately $4.34 billion reported in its audited financial statements for the fiscal year ended June 30, 2016. Hospital revenues contributed approximately $1.19 billion of total unrestricted operating revenues to the University's reported approximately $1.47 billion of unrestricted health care services revenues, as shown in the University’s audited financial statements for the fiscal year ended June 30, 2016. The remainder of health care services revenues include revenues generated from contracts with the County of Los Angeles and USC Care Medical Group. See APPENDIX B—Consolidated Financial Statements of the University of Southern California as of June 30, 2016 and 2015.

Keck Hospital opened in 1991 as a 261-bed hospital. In 2007, a 150-bed clinical tower was added to increase capacity at Keck Hospital to 411 beds. Keck Hospital is a tertiary/quaternary referral hospital that specializes in cardiac, oncology, transplant, neurosurgical, urological and orthopedic surgery. Keck Hospital removed psychiatric care from its license in 2013 and is now licensed for 401 beds.

Norris, a 60-bed hospital, is home to a National Cancer Institute designated comprehensive cancer center and is one of eleven hospitals in the nation having an exemption from the Medicare prospective payment system. This means that subject to certain limitations, Norris is reimbursed on a cost basis from Medicare as opposed to the Medicare fee schedule(s) that often do not cover the complete cost of care.

The Keck Hospital facility is 26 years old and does not require substantial repairs or upgrades in order to remain in compliance with building codes and other applicable laws. Norris is housed in a facility that is 34 years old, and the University is in the process of making additional improvements to the Norris facility for modernization and service-related upgrades.

In 2011, the University received a $150 million naming gift from the W. M. Keck Foundation to accelerate groundbreaking medical, clinical, and translational research and education. In recognition of this transformative gift, USC’s academic medical enterprise was named Keck Medicine of USC. Keck Medicine of USC includes the Keck School of Medicine and the Keck Medical Center of USC. The Keck Medical Center is comprised of Keck Hospital, Norris, Verdugo Hills and USC’s faculty practice plan, USC Care Medical Group, Inc. In July 2015, USC established the Alzheimer’s Therapeutic Research

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Institute (“ATRI”), which is located in San Diego, California. ATRI is part of the Keck School of Medicine and is operated by University faculty and staff.

Keck Hospital and Norris are staffed by University-employed physicians. The University’s faculty practice plan includes approximately 692 physicians, and, in addition to staffing Keck Hospital and Norris, University physicians staff LAC+USC Medical Center, which is owned and operated by the County of Los Angeles. Located adjacent to the University's Health Sciences Campus, LAC+USC Medical Center is the site of the nation's largest single-site residency training program at Los Angeles County Hospital and is co-sponsored by the University. Verdugo Hills is largely staffed by community- based physicians who are members of the independent medical staff.

See “Summary of Recent Events and Certain Potential Future Events” below for a discussion of recent events and updates.

The following table shows data regarding the utilization at the Hospitals (Verdugo Hills data included beginning in 2014).

As of June 30,

2012 2013 2014 2015 2016 Licensed Beds 471 461 619 619 619 Percent Occupancy 44% 46% 50% 58% 57% Admissions 10,260 10,534 17,698 19,721 19,745 Average Length of Stay (days) 7.43 7.58 6.30 6.59 6.49 Patient Days 76,257 79,805 111,982 129,904 128,048 Inpatient Surgeries 6,881 6,861 8,665 9,500 9,574 Ambulatory Surgeries 7,122 7,589 11,259 11,571 12,744

The University intends to continue the Health System’s relationships with all third party payers, including participation in the Medicare and Medicaid programs. As of June 2016, the current payer mix, based on admissions, at the Hospitals is 45.0% Medicare, 41.4% managed care and commercial insurance, 11.6% Medicaid, and 2.0% other.

Keck Medical Center is a priority of the University as it implements necessary or appropriate strategic investments. Physician recruiting has been a key component of the growth strategy and as a result patient volume has exceeded expectations. In fiscal year 2016, the Hospitals produced a gain of $15 million, and profitability is expected to be even stronger in fiscal year 2017.

Financial Information

The audited financial statements of the University are prepared in accordance with generally accepted accounting principles. Audited financial statements for the fiscal year ended June 30, 2016, are set forth in Appendix B to the Offering Memorandum. The Consolidated Balance Sheet presents the financial position of the University as of the end of the fiscal year. The Statement of Activities presents financial activities during the fiscal year, thereby reconciling the beginning and end-of-year net asset positions contained in the Consolidated Balance Sheet. The Statement of Cash Flows summarizes cash related activities during the fiscal year, thereby reconciling the beginning and end-of-year cash balances contained in the Consolidated Balance Sheet. The audited financial statements are an integral part hereof and should be read in their entirety.

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Five years of certain comparative financial data for the University are set forth below under the table captioned “Consolidated Balance Sheet Summary.”

Consolidated Balance Sheet Summary

As of June 30, (dollars in millions)

2012 2013 2014 2015 2016 Total Assets $ 8,091 $ 8,790 $ 9,979 $ 10,358 $ 10,635 Total Liabilities 2,294 2,405 2,516 2,633 2,752 Total Net Assets(1) $ 5,797 $ 6,385 $ 7,463 $ 7,725 $ 7,882

______(1) Totals may not tie as a result of rounding. For further detail on the classification of assets of the University, please see the audited financial statements for the fiscal year ended June 30, 2016, which are set forth in Appendix B to the Offering Memorandum.

From June 30, 2012 to June 30, 2016, total net assets increased by approximately 36%. This increase is largely attributable to the University’s successful fundraising campaign as well as the net appreciation in the fair value of investments of the endowment, consistent with the gains seen in the underlying equity markets over that period. See “Investments” below. There can be no assurances that net assets of the University will grow in the future or that, if net assets do increase, that they will increase at similar rates in future fiscal years.

Sponsored Research

Fiscal Years Ended June 30, (dollars in millions)

2012 2013 2014 2015 2016 Project Awards $ 535 $ 518 $ 580 $ 542 $ 802 Annual Direct Expenditures for Direct Research 390 347 351 377 375 Indirect Cost Recovery 132 133 136 142 139

As reflected in Note 10 to the financial statements included in Appendix B to the Offering Memorandum, executed contracts, grants, subcontracts, and cooperative agreements for future sponsored research activity not reflected in the financial statements totaled approximately $1.41 billion as of June 30, 2016.

Unlike direct costs, indirect costs are incurred for purposes common to several University projects, programs, or activities, and include such expense items as utilities, facilities, and general and administrative expenses. Accordingly, it is difficult to allocate indirect costs to specific projects for purposes of reimbursement. The United States Office of Management and Budget has acknowledged this difficulty and has established reimbursement principles and procedures in its “Uniform Guidance” to address the issue. The Uniform Guidance recognizes the following categories of indirect costs: (1) depreciation and use allowances; (2) operations and maintenance; (3) general administration expenses; (4) departmental administrative expenses; (5) sponsored projects administration; (6) library expenses; and (7) student administration and services.

The University uses the “predetermined rate” model to negotiate and recover indirect costs from the federal government, with the Department of Health and Human Services (“DHHS”) as its cognizant governmental agency for audit, negotiation and approval. Under the “predetermined rate” model, rates are negotiated in advance for an agreed upon period, which typically lasts several years. For example, following the most recent rate negotiation with DHHS, the University’s annual indirect cost recovery rates over the period from July 1, 2016 to June 30, 2020 is 65.0% of the modified total direct costs, although the indirect cost recovery rate for non-federal contracts may be lower. Under the “predetermined rate” model, the University does not remain exposed to future audits of indirect costs and the uncertainty of “open years.”

Investments

Investments of University funds are stated at market value (except for mortgages and gifts of real estate, which are stated at cost or fair market value on the date of gift) and are presented below by restriction. Unrestricted investments are those available to the University for any lawful purpose. Temporarily restricted investments consist of contributions received with donor restrictions that have not yet been satisfied, but that will ultimately be satisfied by passage of time, expenditure for a specified purpose, or both, and include such items as life income and annuity net assets. Permanently restricted investments consist of contributions received with donor restrictions that will not expire as a result of passage of time or expenditure for a specified purpose and include such items as true endowment and revolving student loan net assets.

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Investment Summary

As of June 30, (dollars in millions)

2012 2013 2014 2015 2016 Unrestricted Investments $ 1,285 $ 1,852 $ 1,986 $ 2,023 $ 1,871 Temporarily Restricted Investments 1,084 1,241 1,643 1,619 1,405 Permanently Restricted Investments 1,496 1,615 1,762 1,896 2,040 Total Investments $ 3,865 $ 4,709 $ 5,390 $ 5,537 $ 5,316

As of June 30, 2016, total investments totaled approximately $5.32 billion, as shown in the table above. As of June 30, 2016, University endowment funds were approximately $4.61 billion, with the remaining balance representing working capital used for various projects and operations. Between June 30, 2015, and June 30, 2016, total investments decreased by approximately 4%. See “Summary of Recent Events and Certain Potential Future Events” below for a discussion of more recent investment activity.

Fundraising

On March 27, 2017, more than a year earlier than expected, the University achieved its $6 billion campaign goal, raising an estimated total of $6,001,084,160 from over an estimated 326,000 donors (an estimated $4.2 billion of which is from cash contributions). Fundraising performance continues to be exceedingly strong. Since the start of the campaign, an estimated 88 donors have contributed approximately $10 million or more to the campaign and five have contributed $100 million or more, including one donor who contributed over $250 million. In fiscal year 2016, for the fourth year in a row, according to the VSE (Voluntary Support of Education) Survey from the Council for Aid to Education, USC again ranked third in cash fundraising among universities behind only Stanford and Harvard.*

Property, Plant and Equipment

Property, plant and equipment are comprised of the University’s property, buildings, library collections, and equipment. Property, plant and equipment are funded by gifts, grants, unrestricted funds, proceeds from the sale of bonds, and other borrowings.

* The estimated financial data included in this paragraph has been prepared by, and is the responsibility of, the University’s management. PricewaterhouseCoopers LLP has not audited, reviewed, compiled or performed any procedures with respect to such preliminary financial data. Accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto.

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Property, Plant and Equipment

As of June 30, (dollars in millions)

2012 2013 2014 2015 2016 Property, Plant and Equipment $ 3,822 $ 4,202 $ 4,735 $ 5,083 $ 5,737 Less: Accumulated Depreciation (1,513) (1,664) (1,807) (1,975) (2,154) Property, Plant and Equipment (net of accumulated depreciation) $ 2,309 $ 2,538 $ 2,928 $ 3,108 $ 3,583

Debt Service Requirements and Other Indebtedness

The University’s outstanding bonds and notes were approximately $1.22 billion as of June 30, 2016. The University continually examines its overall liability management strategy in light of its project and working capital requirements, interest rates, and other factors.

For a summary of the debt service requirements on the University’s outstanding bonds and notes on a fiscal year basis which were payable as of June 30, 2016, see Note 5 set forth in Appendix B to the Offering Memorandum. On August 22, 2016, the University issued $722,580,000 of its Taxable Bonds, Series 2016, the proceeds of which were used to defease the California Educational Facilities Authority Revenue Bonds (University of Southern California) Series 2007A, Series 2009A and Series 2009B.

The University has also established a $300 million unsecured line of credit with a major bank. This line, which matures on November 30, 2020, is for liquidity purposes and has not been used to date. Pursuant to the line of credit documents, the University has covenanted, among other things, to not create, incur, assume or suffer to exist (i) any liens on its property or assets other than customary permitted liens; and (ii) any additional debt other than debt secured by a permitted lien or unsecured debt (the Bonds constitute unsecured debt). The line of credit documents also require that the ratings of the University’s non-credit-enhanced, senior unsecured long-term debt assigned by S&P and Moody’s are not withdrawn, suspended, or downgraded to a rating below A or A2, respectively. Concurrently with the University’s approval of the issuance of the Bonds, the University has also approved a $200 million increase in the unsecured line of credit. In conjunction with that increase, the University will covenant to maintain a minimum of total net assets of $5.50 billion.

Management

Board of Trustees

The University is governed by a self-perpetuating Board of Trustees which as of March 1, 2017, is comprised of 60 voting members. Life Trustees and Honorary Trustees, elected by the Board of Trustees pursuant to the bylaws of the University, may serve life terms and attend meetings of the Board of Trustees and its committees, but they are not members of the Board of Trustees and do not have votes on matters considered by the Board of Trustees. The Board of Trustees is responsible for the overall management of the University including its academic policy, University development, long-range land use and resource planning, and supervision of financial and budgetary affairs.

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The Board of Trustees annually elects a Chairman. The Board has several standing committees, including a Finance Committee, an Audit and Compliance Committee, a Campus Planning Committee, and an Executive Committee. The Executive Committee may act with the full power of the Board in most matters between meetings of the Board of Trustees. The Board of Trustees holds regular meetings on the first Wednesday in June (the Annual Meeting), October, December, and February.

As of March 1, 2017, the current voting members of the Board of Trustees are as follows:

BOARD OF TRUSTEES

Miriam Adelson ...... Founder and Chairperson, Dr. Miriam and Sheldon G. Adelson Clinic for Drug Abuse, Treatment and Research Michael E. Adler ...... Of Counsel, Greenberg, Whitcombe, Takeuchi, Gibson, Grayver LLC Wallis Annenberg ...... Chairman, President and Chief Executive Officer, Annenberg Foundation Wanda M. Austin ...... President and Chief Executive Officer (Retired), The Aerospace Corporation Lisa Barkett ...... Attorney and Community Leader Thomas J. Barrack Jr...... Founder and Executive Chairman, Colony Capital, Inc. Marc Benioff ...... Chief Executive Officer and Chairman, Salesforce.com David C. Bohnett ...... Chairman, David Bohnett Foundation Joseph M. Boskovich Sr...... Chairman and Chief Investment Officer, Old West Investment Management, LLC Robert A. Bradway ...... Chairman and Chief Executive Officer, Amgen Jeanie Buss ...... President/Governor, Los Angeles Lakers Charles G. Cale ...... Managing Member, Griffin Opportunities LLC Ramona L. Cappello ...... President and Chief Executive Officer, Sun Harvest Salt, LLC Rick J. Caruso ...... Founder and Chief Executive Officer, Caruso Affiliated Alan I. Casden ...... Chairman and Chief Executive Officer, Casden Property Company LP Ronnie C. Chan ...... Chairman, Hang Lung Group Limited and Hang Lung Properties Limited Yang Ho Cho ...... Chairman and Chief Executive Officer, Korean Air Christopher Cox ...... President, Morgan Lewis Consulting LLC; Partner, Morgan, Lewis & Bockius LLP Frank H. Cruz...... President, Cruz & Associates David H. Dornsife ...... Chairman of the Board, The Herrick Corporation Suzanne Dworak-Peck ...... Ambassador, International Federation of Social Workers Michele Dedeaux Engemann ...... Community Leader Daniel J. Epstein ...... Executive Chairman and Founder, ConAm Management Frank J. Fertitta III ...... Chairman and Chief Executive Officer, Fertitta Entertainment Chengyu Fu ...... Former Chairman, Sinopec Corporation Stanley P. Gold ...... Chairman, Shamrock Holdings, Inc. Tamara Hughes Gustavson ...... Partner, American Commercial Equities Jane Harman...... Director, President and Chief Executive Officer, Woodrow Wilson International Center for Scholars Ming Hsieh ...... Chairman and Chief Executive Officer, Fulgent Therapeutics Suzanne Nora Johnson ...... Former Vice Chairman, The Goldman Sachs Group, Inc. Lydia H. Kennard ...... Chairman and Chief Executive Officer, KDG Construction Consulting Kenneth R. Klein ...... Chairman and Chief Executive Officer, Tintri, Inc. John Kusmiersky ...... President, The Brickstone Companies Kathy Leventhal ...... Community Leader Mitchell Lew ...... Chief Executive Officer, Prospect Medical Systems William J. McMorrow ...... Chairman and Chief Executive Officer, Kennedy Wilson John Mork (Chairman) ...... Chief Executive Officer, Energy Corporation of America

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Carmen Nava ...... Senior Vice President for Premium Care and Customer Loyalty, AT&T Entertainment Group Jerry W. Neely ...... Chairman and Chief Executive Officer (Retired), Smith International, Inc. Shelly Nemirovsky ...... Community Leader Dominic Ng ...... Chairman and Chief Executive Officer, East West Bank C. L. Max Nikias ...... President, University of Southern California J. Kris Popovich ...... Chairman, Hoffman Foundation Blake Quinn ...... Chairman and Chief Executive Officer, Quinn Group, Inc. Lorna Y. Reed ...... Community Leader Edward P. Roski Jr...... President and Chairman of the Board, Majestic Realty Company Amy A. Ross ...... Biotechnology Executive (Retired) Frederick J. Ryan Jr...... Publisher and Chief Executive Officer, The Washington Post Leonard D. Schaeffer ...... Founding Chairman and Chief Executive Officer, WellPoint, Inc. William E. B. Siart ...... Chairman, ExED Jeffrey H. Smulyan ...... Chairman of the Board, Emmis Communications Steven Spielberg ...... Principal Partner, DreamWorks SKG Heliane M. Steden ...... Managing Director, Merrill Lynch* Mark A. Stevens ...... Managing Partner, S-Cubed Capital; Special Limited Partner and Former Managing Partner, Sequoia Capital Ronald D. Sugar ...... Chairman Emeritus, Northrop Grumman Corporation Tracy M. Sykes ...... Doctor of Physical Therapy Ratan N. Tata ...... Chairman Emeritus, Tata Sons, Tata Industries, Tata Motors, Tata Steel and Tata Chemicals Daniel M. Tsai ...... Chairman, Fubon Financial Ronald N. Tutor ...... Chairman and Chief Executive Officer, Tutor Perini Corporation Wenxue Wang ...... Founder and Chairman, China Fortune Land Development Co. Ltd.

*Merrill Lynch, Pierce, Fenner and Smith Incorporated is one of the Underwriters of the Bonds.

LIFE TRUSTEES (NON-VOTING)

Malcolm R. Currie Joan A. Payden Gavin S. Herbert Frank Price B. Wayne Hughes Sr. Bruce M. Ramer Ray R. Irani William J. Schoen Glorya Kaufman Robert H. Smith John F. King Richard J. Stegemeier Daniel D. Lane Peter V. Ueberroth William Lyon Andrew J. Viterbi Claude Mann Gin D. Wong Kathleen L. McCarthy Willis B. Wood Jr. J. Douglas Pardee

HONORARY TRUSTEES (NON-VOTING)

Helene Galen Dallas-Price-Van Breda

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Senior Administration

The President of the University is elected by the Board of Trustees and, as Chief Executive Officer, is charged with the principal responsibility for administration of the University. The Provost and Senior Vice President, Academic Affairs, the Senior Vice President, Finance and Chief Financial Officer, the Senior Vice President, University Advancement, the Senior Vice President, Administration, the Senior Vice President, University Relations, the Senior Vice President and Chief Executive Officer, Keck Medicine of USC, the Senior Vice President and General Counsel, and the Secretary of the University are officers of the University elected by the Board of Trustees upon nomination by the President and are subject to the day-to-day direction of the President. The Athletic Director and the Chief Investment Officer are appointed by the President. The following table sets forth the names of the senior administration of the University, the current position held by each of them, and the year of appointment to that position. A brief statement of each individual’s background is included below the table.

SENIOR ADMINISTRATION

Year of Name Appointment/ Position Election C. L. Max Nikias President of the University 2010 Michael Quick Provost and Senior Vice President, Academic Affairs 2015 Carol Mauch Amir Senior Vice President and General Counsel 2016* Secretary of the University 2006 Albert R. Checcio Senior Vice President, University Advancement 2010 Todd R. Dickey Senior Vice President, Administration 2005 Thomas Jackiewicz Senior Vice President and Chief Executive Officer, 2012 Keck Medicine of USC Lisa Mazzocco Chief Investment Officer 2011 Thomas S. Sayles Senior Vice President, University Relations 2011 James M. Staten Senior Vice President, Finance, and Chief Financial Officer 2016 Lynn Swann Athletic Director 2016

* Carol Mauch Amir was elected Secretary of the University in 2006, appointed General Counsel in 2008 and elected Senior Vice President and General Counsel effective April 3, 2016.

C. L. MAX NIKIAS – President of the University. Dr. Nikias is the eleventh President of the University of Southern California. He holds the Robert C. Packard President’s Chair and the Malcolm R. Currie Chair in Technology and the Humanities, and chairs the USC Health System Board. In addition, he currently chairs the College Football Playoff Board of Managers. He has been at USC since 1991, as a professor, director of national research centers, dean, Provost, and now President. He holds faculty appointments in both electrical engineering and the classics, and currently teaches an undergraduate course on the culture of the Athenian democracy.

During his tenure as President, USC is emerging as a global research university due to a number of strategic initiatives that include: recruiting a cadre of transformative, world-class faculty and accelerating the expansion of the University’s academic medical enterprise; broadening USC’s international presence; improving the breadth and quality of its outstanding student body; improving the University’s infrastructure, including the development of the USC Village; and advancing one of the largest fundraising campaigns in the history of higher education.

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Dr. Nikias writes and speaks frequently about a range of nationally significant topics, including the value of and access to higher education; the current state and future of online education; the continued importance of the arts and humanities; the art of leadership through the classics; and the role of elite research universities, particularly as economic drivers.

Dr. Nikias is a member of the National Academy of Engineering, a fellow of the American Academy of Arts and Sciences, a charter fellow of the National Academy of Inventors (NAI), an associate member of the Academy of Athens, and a fellow of the Institute of Electrical and Electronics Engineers (IEEE) and the American Association for the Advancement of Science. Among numerous other honors, he has received the IEEE Simon Ramo Medal, an Academic Leadership Award from Carnegie Corporation of New York, the Ellis Island Medal of Honor, the Woodrow Wilson Award for Public Service, the State University of New York at Buffalo’s Distinguished Alumni Award, and honorary doctorates from his alma mater, the National Technical University of Athens, Hebrew Union College – Jewish Institute of Religion, University of Cyprus, University of Crete, and University of Piraeus.

As President, Dr. Nikias announced a $6 billion fundraising campaign, which, at the time of its launch, was one of the largest in the history of higher education. As of the end of Fiscal Year 2016, USC’s campaign had already surpassed the $5.4 billion mark, with at least 64 percent of the total money raised donated by non-alumni of the University. In the past four years, according to the VSE (Voluntary Support of Education) Survey from the Council for Aid to Education, USC has consistently ranked in the top three among universities, along with Stanford and Harvard, in cash charitable donations. In recognition of the campaign’s success, The Chronicle of Higher Education has called Dr. Nikias a “prodigious fundraiser.” On March 27, 2017, the campaign reached its $6 billion goal more than a year earlier than originally anticipated.* As a result, the University decided to extend the campaign for five calendar years, through the end of 2021.

Under Dr. Nikias’ leadership, the University is advancing a major capital construction program that already includes Wallis Annenberg Hall, the Michelson Center for Convergent Bioscience, Dauterive Hall, Fertitta Hall, the Kaufman International Dance Center, the McKay Center, Uytengsu Aquatics Center, the Engemann Student Health Center, a new Cinematic Arts building, and the University Club at Stoops, as well as the Soto Building, Currie Residential Hall, and Norris Consultation Center on the Health Sciences Campus, and beautification projects for both of USC’s campuses. In addition, construction has continued on time and under budget on the USC Village, a 1.3 million square-foot center of student residential colleges that is entirely reimagining the University’s landscape.

In recognition of his efforts to renew USC’s athletics heritage, The New York Times selected Dr. Nikias as one of a small number of national figures “who make sports’ little corner of the world a better place.”

Dr. Nikias is recognized internationally for his pioneering research on digital signal processing, digital media systems, and biomedicine. The U.S. Department of Defense has adopted a number of his innovations and patents in sonar, radar, and communication systems. He has authored more than 275 journal articles and conference papers, three textbooks, and eight patents, and has mentored more than 30 Ph.D. and postdoctoral scholars. Three of his publications received prestigious best papers awards.

* The estimated financial data included in this sentence has been prepared by, and is the responsibility of, the University’s management. PricewaterhouseCoopers LLP has not audited, reviewed, compiled or performed any procedures with respect to such preliminary financial data. Accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto.

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Dr. Nikias received a diploma from the National Technical University of Athens, also known as National Metsovion Polytechnic, the oldest and most prestigious higher education institution of Greece, and later earned his M.S. and Ph.D. degrees from the State University of New York at Buffalo.

MICHAEL QUICK – Provost and Senior Vice President, Academic Affairs. Dr. Quick, professor of biological sciences in the USC Dornsife College of Letters, Arts and Sciences, was elected as the University’s Provost and Senior Vice President, Academic Affairs effective April 1, 2015. Dr. Quick was recruited to the University in 2002 from the University of Alabama at Birmingham as associate professor of biological sciences, and was subsequently promoted to professor and Vice Dean for Research in the Dornsife College. From there, Dr. Quick was appointed Executive Vice Dean for Academic Affairs in the Dornsife College, before rising to Executive Vice Provost of the University, a position he held for four years. In 2014, Dr. Quick was additionally appointed Vice President for Academic Affairs. On December 1, 2014, Dr. Quick assumed the role of interim Provost of the University.

Dr. Quick received his Ph.D. degree in neuroscience from Emory University and studied as a postdoctoral research fellow at the California Institute of Technology. He previously served as director of the University’s neuroscience graduate program.

Dr. Quick’s scholarship focuses on the regulation of protein function, especially as it relates to the signaling properties of neurons. His laboratory work has sought to understand not only fundamental biological processes, but also how those processes can be altered, such as how drug abuse, as well as therapeutic drugs, alters the signaling properties of nerve cells. He has received several individual investigator and center grants from the National Institutes of Health and is the author of more than 60 scientific publications. Dr. Quick is the recipient of numerous teaching awards at USC and the University of Alabama.

CAROL MAUCH AMIR – Senior Vice President and General Counsel and Secretary of the University. Ms. Amir was elected Secretary of the University by the USC Board of Trustees in October 2006 and elected Senior Vice President and General Counsel effective April 3, 2016. In her role as Senior Vice President and General Counsel, Ms. Amir is a key strategic, business, and legal advisor to the senior leadership of the University, including the President and Board of Trustees, and is responsible for overseeing all legal matters for the University and its subsidiaries.

Ms. Amir supervises the Office of the General Counsel staff, including twelve attorneys who represent USC in legal proceedings and negotiations, oversees litigation management and corporate transactions, and advises the University on policy matters. She oversees the provision of legal services regarding tax issues, personnel matters, conflicts of interest, healthcare regulatory issues, intellectual property matters, NCAA issues, research issues, and corporate compliance programs. She also oversees the provision of legal services for Keck Medicine of USC, comprising the Keck Hospital of USC, USC Norris Cancer Hospital, Keck School of Medicine, USC Care Medical Group, and USC Verdugo Hills Hospital.

In addition to her responsibilities as Senior Vice President and General Counsel, Ms. Amir also oversees the University’s department of Risk Management and Insurance which protects the physical, financial, human, and reputational assets of the University. In her role as Secretary of the University, she is charged with maintaining the corporate records of USC and its numerous subsidiaries.

Ms. Amir joined the University as a University Counsel in 1999, before becoming Associate General Counsel in 2001, Managing General Counsel in 2005, and General Counsel in 2008. Prior to 1999, Ms. Amir was an associate at the law firm of Latham & Watkins, specializing in healthcare-related corporate transactions.

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Ms. Amir is a member of the USC Health System Board. She is also a member of the board of the Women’s Leadership Council and Los Angeles County Bar Association: Corporate Law Executive Committee. In 2011, Ms. Amir was honored by the Los Angeles Business Journal as the Corporate Counsel of the Year for Non Profit Businesses. She also is a member the California State Bar, the Los Angeles County Bar Association, and the National Association of College and University Attorneys.

Ms. Amir earned a B.A. degree in psychology from Wesleyan University, and graduated cum laude with a J.D. degree from New York University School of Law.

ALBERT R. CHECCIO – Senior Vice President, University Advancement. Mr. Checcio was elected Senior Vice President, University Advancement effective August 23, 2010. In this capacity, he is responsible for overseeing the University’s overall advancement and alumni relations efforts on both the University Park and Health Sciences campuses and for building partnerships with all of the University’s philanthropic and volunteer communities, including prominent individual supporters, charitable foundations, corporate donors, alumni, and friends.

Since his arrival at the University, Mr. Checcio has played an instrumental role in designing and successfully implementing the $6 billion Campaign for the University, the most ambitious fundraising campaign in the University’s history and, at the time of its launch, one of the largest ever in higher education.

Mr. Checcio reports directly to the President and works closely with the Provost and the deans in developing resources to fulfill the University’s potential and support its continued academic ascent. He also staffs the Development Committee and the Alumni Affairs Committee of the University’s Board of Trustees.

Mr. Checcio is a nationally recognized development leader with 40 years’ experience building comprehensive fundraising programs and executing successful campaigns at a range of institutions in higher education and health care, including Fordham University, American University in Washington, D.C., Temple University, the University of Pittsburgh, Drexel University, and Children’s Hospital of Philadelphia. He is a graduate of Drexel University.

TODD R. DICKEY – Senior Vice President, Administration. Mr. Dickey was elected Senior Vice President, Administration in April 2005. In this capacity, he provides strategic oversight of key administrative departments and works closely with the Provost and with schools and academic departments to support the academic mission.

Reporting directly to the President, Mr. Dickey oversees support functions and services that include public safety, human resources, campus master planning, real estate development projects, real estate acquisitions and leasing, student housing, campus dining services, parking and transportation, the Radisson Hotel, the USC bookstores, institutional compliance, internal audit, athletics compliance, child care, environmental health and safety, risk management, fire safety, and emergency planning. In addition, Mr. Dickey oversees the operations of the Los Angeles Memorial Coliseum and Sports Arena.

From 2001 to 2005, Mr. Dickey served as Vice President, General Counsel and Secretary of the University. This position included oversight of the Office of the Treasurer (endowment and asset management, liability management and cash management functions), and the Office of the Comptroller (financial accounting, financial reporting, budget performance monitoring, and adequacy of University internal controls).

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From 1998 to 2008, Mr. Dickey served as USC’s General Counsel overseeing all legal matters and legal representation for the University. He began his career at USC in 1996 as University counsel in the Office of the General Counsel. For two years before joining the University, Mr. Dickey was an associate at the law firm of Latham & Watkins, LLP. Prior to that, he clerked for the Honorable Ronald S. W. Lew, U.S. District Court judge for the Central District of California in Los Angeles. Before entering law school, Mr. Dickey served as a legislative aide to the U.S. Representative Glenn Anderson in Washington, D.C., as well as a fundraiser for the University of California, Irvine.

Mr. Dickey is a member of the USC Health System Board and has served on the board of directors of the Keck Hospital of USC and the USC Norris Cancer Hospital. He also is a member of the National Association of College and University Business Officers, the Council on Governmental Relations, the California State Bar, the Los Angeles County Bar Association, and the National Association of College and University Attorneys.

Mr. Dickey earned his B.A. degree in political science from the University of California, Irvine, and his J.D. degree from the USC Gould School of Law, where he graduated Order of the Coif (top 10% of class) and was executive notes editor of the law review.

THOMAS JACKIEWICZ – Senior Vice President and Chief Executive Officer, Keck Medicine of USC. Mr. Jackiewicz is responsible for oversight of the University’s clinical activities, including the renowned USC Norris Comprehensive Cancer Center, one of the first comprehensive cancer centers established in the United States; USC Care Medical Group, Inc., the medical faculty practice; Keck Medical Center of USC, which includes two acute care hospitals: 401-licensed bed Keck Hospital of USC and 60-licensed bed USC Norris Cancer Hospital; USC Verdugo Hills Hospital, a 158-licensed bed community hospital; outpatient facilities in Beverly Hills, downtown Los Angeles, La Cañada Flintridge, Pasadena, and the USC University Park Campus; and other clinical practices and joint ventures throughout Los Angeles and Orange counties.

Among his duties, Mr. Jackiewicz is responsible for implementation of a strategic vision to significantly grow, align, and integrate the medical enterprise. He oversees decisions on business development, information technology systems, and electronic records for the clinical operations, while also managing long-term growth of the clinical entities. He provides critical oversight of potential acquisition and merger opportunities to expand the USC Health System’s breadth and scope, and is actively driving the development of affiliations and partnerships in key referral areas.

Prior to joining USC in 2012, he served as Chief Executive Officer of University of California, San Diego Health System and Associate Vice Chancellor of University of California, San Diego Health Sciences. As Chief Executive Officer, he helped lead the academic health system during one of its largest periods of growth and expansion, including the addition of the Sulpizio Cardiovascular Center, the renovation and seismic retrofitting of UC San Diego Medical Center, and planning for the opening of the Jacobs Medical Center in 2015.

During his career, Mr. Jackiewicz has served as Director of Fiscal Operations for the clinical practices of the University of Pennsylvania, Director of Business and Financial Operations in the Department of Medicine at the University of Pennsylvania Health System, Senior Associate Chair for Finance and Administration in the Department of Medicine at Stanford University School of Medicine, and Chief Operating Officer at Columbia University Medical Center.

Mr. Jackiewicz earned his MPH degree in health policy and management from Columbia University and his bachelor’s degree in business administration from the University of Georgia.

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LISA MAZZOCCO – Chief Investment Officer. Ms. Mazzocco was named USC’s first Chief Investment Officer effective April 18, 2011. Ms. Mazzocco reports directly to the President and works closely with the University’s Senior Vice President, Finance and Chief Financial Officer and the Investment Committee of the USC Board of Trustees. She has built a staff that bolsters the investment function of USC’s endowment in support of the University’s academic mission. She also advises the Investment and Finance Committees of the USC Board of Trustees with respect to endowment performance, and chairs the University’s Retirement Oversight Committee.

Before joining USC, Ms. Mazzocco was Chief Investment Officer for the Los Angeles County Employees Retirement Association (“LACERA”), where she had worked since 1992. At LACERA, she was responsible for asset allocation of a $31 billion pension fund, working with the association’s Board of Investments to develop implementation plans for its investment strategies. She previously served as a Senior Analyst at Security Pacific National Bank, and began her career at Wilshire Associates. Ms. Mazzocco holds an M.B.A. degree from California State Polytechnic University, Pomona, and a bachelor’s degree from San Diego State University.

THOMAS S. SAYLES – Senior Vice President, University Relations. Mr. Sayles was elected Senior Vice President, University Relations effective July 1, 2011. In this capacity, he provides strategic direction and leadership of USC’s efforts to continuously improve its relationships with external and internal stakeholders. His responsibilities include government relations, communications, media relations, public relations, marketing, community outreach, and USC’s thirteen public radio stations.

Previously, Mr. Sayles practiced law in the private and public sectors. He left the practice of law to serve as California’s Commissioner of Corporations and later as Secretary of Business, Transportation and Housing. He then returned to the private sector to work for Sempra Energy as Vice President of Government and Community Affairs and as Senior Vice President of Consumer Marketing. Immediately prior to joining USC, Mr. Sayles was Senior Vice President for Government Affairs and Corporate Communications at Rentech, Inc., an alternative fuels company headquartered in Los Angeles.

In July 2009, he was appointed by then Los Angeles Mayor Antonio Villaraigosa to the governing board of the Los Angeles Department of Water and Power, and served as Board President until August of 2013. In January 2017, he was appointed by Los Angeles Mayor Eric Garcetti to serve on the Board of Airport Commissioners for the Los Angeles World Airports.

In 2013, Mr. Sayles was appointed to the Los Angeles 2020 Commission, a private and independent commission that was asked to study and report on fiscal stability and job growth in Los Angeles. The Commission issued two reports. The first set forth the challenges and opportunities Los Angeles faced and the second put forth concrete measures which, if adopted, would put Los Angeles on a path toward fiscal stability and renewed job creation.

Mr. Sayles also has been appointed by three different California governors to serve on boards and commissions, including the University of California Board of Regents and the California Community Colleges Board of Trustees.

Mr. Sayles previously served as Chairman of the Los Angeles Chamber of Commerce Board of Directors and is a member of the board of directors of Unified Grocers, the largest buying cooperative for independent grocers in the western United States. He previously served on the boards of directors of Golden State Bancorp (California Federal Bank) and Glendale Federal Bank.

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Born and raised in South Los Angeles, not far from USC’s University Park campus, Mr. Sayles earned a J.D. degree from Harvard Law School and a bachelor’s degree “with distinction” from Stanford University, where he was elected to Phi Beta Kappa.

JAMES M. STATEN – Senior Vice President, Finance, and Chief Financial Officer. Mr. Staten was elected Senior Vice President, Finance, and Chief Financial Officer effective January 15, 2016. Reporting directly to the President, he oversees a wide range of financial operations for USC, including budget and planning, treasury services, the University comptroller, financial and business services, the University’s health plan, Keck Medicine of USC finances, capital construction and facilities management services, and information technology services. Mr. Staten also serves on the following Boards: USC Health System, Keck Medicine Oversight, USC Care Medical Group, Inc., Lord Foundation of California, Marks Foundation, Robert E. and May R. Wright Foundation, USC Health Science Building, LLC, and Keck Hospital and the USC Norris Cancer Hospital Governing Board.

Mr. Staten came to USC from the Yale New Haven Health System, where he served as a key member of the President and CEO’s leadership team for more than 15 years. He held the titles of Executive Vice President and Chief Financial Officer for Yale New Haven Health System; Treasurer of the Boards of Yale New Haven Health System and Yale-New Haven Hospital; and Chairman of the Board of Medical Center Insurance Company. Under Mr. Staten’s leadership, Yale New Haven Health System and its hospitals and related businesses remained exceptionally strong, as he built a financial planning infrastructure, robust revenue cycle, enhanced information technology capabilities and treasury functions that allowed the entire enterprise to flourish, while increasing access to health care for patients throughout the region.

Among his many accomplishments at Yale New Haven, Mr. Staten led organizational transformations that included launches of system-wide information technology and data analytics, as well as cultural integration activities. He was directly responsible for the development and execution of all managed care contracting strategies, including those related to Yale New Haven Health System’s emerging population health organization, known as Total Health. Mr. Staten also played a key role in the development of all health care strategies for the Health System, including overseeing the formation of a large physician foundation and developing visionary strategies for acquiring physician practices. Additionally, he managed the critical financing that led to the successful opening of the Smilow Cancer Hospital at Yale-New Haven in 2010.

Prior to his arrival at Yale New Haven Health, Mr. Staten served as Senior Vice President of Finance at New York-Presbyterian Hospital and New York-Presbyterian Health System, where he was responsible for assuring the organization’s financial viability. Before assuming that role, he served as the organization’s Vice President of Financial Planning. Earlier in his career, he directed Ernst & Young’s New York State Healthcare Revenue Cycle Consulting Services, and was elected as a partner at Pannell Kerr Forster, which, at the time, ranked among the largest public accounting firms in the United States.

Mr. Staten holds a B.S. degree in business and economics from the State University College of New York, and has served as a board member of The Country School in Madison, Connecticut, as well as on the Board of the New Haven Connecticut Youth Tennis and Education Foundation.

LYNN SWANN – Athletic Director. Mr. Swann was named USC’s eighth Athletic Director effective July 1, 2016, providing leadership for the University’s 21 women’s and men’s athletic teams.

Mr. Swann, a legendary Hall of Fame wide receiver with USC and the Pittsburgh Steelers who made a mark in the worlds of broadcasting, politics, corporate governance, civic engagement, and philanthropy, succeeded Patrick C. Haden, who retired as Athletic Director on June 30, 2016.

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Well known both within the Trojan Family and globally, Mr. Swann drew on his football success to distinguish himself as an acclaimed leader in both the civic and corporate spheres. He is also a motivational speaker who has addressed a wide range of audiences across the country, offering an inspiring voice on the importance of assuming responsibility, strong leadership, and maximizing opportunities. As a respected philanthropist, Mr. Swann has raised money for a variety of charitable and community organizations, including to provide scholarships for the Pittsburgh Ballet.

Mr. Swann served two years (1993-1995) as President of the national board of Big Brothers Big Sisters of America, an organization with which he was active for more than 30 years. As President, he managed more than 300 agencies across the United States and helped establish the organization as the premier mentoring group in the nation.

President George W. Bush appointed Mr. Swann as the Chairman of the President’s Council on Fitness, Sports and Nutrition, where he served from 2002 to 2005.

In 2006, Mr. Swann was the Republican nominee for Pennsylvania governor, running a campaign that drew significant praise for its organization and focus as he attempted to become the first African- American governor in that state’s history. He captured 40 percent of the vote against the Democratic incumbent Ed Rendell.

Mr. Swann furthered his governance experience as a director of such international companies as The H. J. Heinz Company, Wyndham Hotels and Resorts, and Hershey Entertainment and Resorts. He currently serves on the Fluor Corporation Board. He was named to Savoy magazine’s 2016 list of the 300 Most Influential Black Corporate Directors. Mr. Swann worked for ABC from 1976 to 2006, serving as a host, reporter, and analyst for a wide range of events, including college football, Monday Night Football, and the USFL.

Mr. Swann earned his bachelor’s degree in public relations from USC in 1974.

Applications, Enrollments, Tuition and Financial Aid

Applications

The following table provides a five-year summary of undergraduate and graduate applications, admissions and new student enrollments at the University.

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Historical Application Pool and New Enrollments

For Undergraduate(1) Graduate(2) Academic Year Applications Admissions Enrollments Applications Admissions Enrollments 2012-13 54,385 11,952 4,679 51,730 15,043 6,897 2013-14 55,771 11,890 4,370 49,690 15,665 7,322 2014-15 60,582 11,797 4,533 52,806 15,233 7,378 2015-16 60,104 11,664 4,454 53,663 15,787 7,477 2016-17 63,049 11,420 4,518 54,709 15,816 7,701 ______(1) This data includes applications for freshman as well as transfer admission. USC adopted the Common Application for the Fall of 2012. The Common Application provides prospective students with an easy-to-use online platform that allows them to apply to many colleges while only completing one set of forms (as well as supplemental information for each college). The Common Application is almost universally accepted by elite private colleges and universities (presently, the only highly selective private universities not using the Common Application are Georgetown and MIT). (2) Graduate data include professional students who apply through a national consortium (Law, Medical, Dentistry, and Pharmacy students).

In Fall 2016, the mean grade point average for newly enrolled freshmen was 3.75 (on a 4.0 scale) and the 25th to 75th range of SAT scores (math plus verbal plus writing) was 1980 to 2200.

Admission offers in 2016-17 were intentionally lower than the previous year as USC sought to enroll a slightly smaller freshman and transfer class. Total freshman and transfer applications for Fall 2016 (Academic Year 2016-17) were over 63,000. The University anticipates strong future application volumes comprised of the top students from around the world. Moreover, USC expects to continue enrolling new freshman and transfer students who are extremely accomplished academically; geographically, ethnically and socio-economically diverse; and diverse in their academic interests.

Enrollments

The following table lists total regular session student headcount enrollments for the Fall semester for the current and each of the past four academic years. Based on information on applicants for Fall 2016 presented above, the University expects that the enrollment of both undergraduate and graduate students will remain relatively consistent for Fall 2017 with only slight increases and/or decreases as reflected below for prior years.

Total Student Enrollments

Students 2012-13 2013-14 2014-15 2015-16 2016-17

Undergraduate 18,316 18,444 18,740 18,810 18,794 Graduate/Law/Professional/Other 21,642 22,923 23,720 24,591 25,077 Total Enrollment 39,958 41,367 42,460 43,401 43,871

Tuition

The following table presents full-time undergraduate tuition rates for the current and each of the past four academic years.

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Undergraduate Tuition Rates1

Academic Year Tuition Per Full-Time2 Student Percent Increase

2012-13 $ 43,722 3.7% 2013-14 45,602 4.3% 2014-15 47,562 4.3% 2015-16 49,464 4.0% 2016-17 51,442 4.0% ______1 Graduate tuition rates, while significant, are not included due to the wide range of programs offered at varying tuition rates. 2 Full-time undergraduate students are those who carry 24-36 units per academic year.

Tuition rates are determined in the University’s budgeting process in conjunction with an analysis of projected expenses and the revenues necessary to satisfy such expenses. This year the process will be similar to the process in previous academic years, and the University will likely institute an increase in tuition rates for the Fall of 2017. For the 2016-17 academic year, other undergraduate student expenditures include mandatory and other fees of $841 (up from $813 in 2015-16), average room and board expenses of $14,348 (up from $13,855 in 2015-16), and other expenses of approximately $3,080, including books, transportation and personal expenses. The total estimated annual cost per full-time residential undergraduate student is approximately $69,711 for the 2016-17 academic year (up from $67,212 in 2015-16).

Financial Aid

To assist families with financing a USC education, the University’s undergraduate financial aid policy is designed to meet 100% of student demonstrated financial need (as determined by the University) for all undergraduate students. The Financial Aid Office provides student aid and services to all students through the awarding of University, federal and state need-based grants, merit scholarships, self-help (including federal work-study and federal direct loans), and other student and parent financing options.

During the academic years 2015-16 and 2016-17, 65% and an estimated 64%, respectively, of all undergraduate students attending the University received some form of financial assistance. An estimated $546 million of financial aid was awarded in 2016-17 to undergraduate students from federal, state, University, and private sources (up from $544 million in 2015-16). The largest single source of non- University grant aid in the fiscal year ended June 30, 2016, the California State Scholarship Program (“Cal Grants”), provided approximately $22 million in grants to undergraduate students (and an estimated $21 million in 2016-17). Graduate students were awarded an estimated $770 million in financial assistance in 2016-17, including federal direct loans, state, federal, and private grants, University scholarships, fellowships, and assistantships, as well as private loans (compared to $725 million in 2015- 16). Federal and state financial aid programs are subject to changing laws and regulations, and accordingly, future financial assistance from these sources is difficult to forecast. Should federal or state financial aid be reduced dramatically, there could be an adverse impact on University enrollment or finances. While the University does not expect dramatic fluctuations in state or federal funding, some reductions may be expected given the current budget climate. The California state budget for fiscal year 2015 delayed a scheduled 11.5% reduction in the maximum Cal Grant until fiscal year 2017; the current grant amount has been reduced by 6.5% since fiscal year 2011. Congress continues to debate Pell grant funding as they continue to hold hearings on the reauthorization of Federal Student Aid. The maximum Pell Grant was increased by $40 to $5,815 for 2016-17, and is scheduled to increase by $105 for 2017-18

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to a maximum of $5,920. Approximately 21% of USC undergraduates received an estimated $18 million in Pell grant funding in 2016-17.*

The University funds undergraduate grant aid from tuition revenue and expects enrollment and tuition to be consistent with previous years. Therefore, the University does not anticipate a reduction in the amount of University aid that will be available for the 2017-18 academic year. In fact, the amount budgeted for student aid increases every year along with tuition in order to meet the University’s priority to provide sizable financial aid packages to its students. The University anticipates strong continued University funding of student aid.

Insurance

The University maintains insurance with such coverage as it believes is customarily carried by similar private colleges and universities in California. Due to the prohibitive industry-wide cost of earthquake insurance and the size of required deductibles, the University does not carry earthquake insurance. The University carries limited third-party insurance for damage to facilities sustained from flooding; however, the University is eligible for the Federal Emergency Management Agency (“FEMA”) Public Assistance program which allows FEMA to indemnify the University (subject to certain requirements and guidelines) in the event of a Presidential declaration of disaster covering the region in which the University is located. All of the University’s structures met then-current building code standards at the time of construction. The University continues to upgrade and maintain structures to new building code standards as required. Nonetheless, a major earthquake affecting the Los Angeles area could have an impact on the structural integrity of the buildings on the University’s campus.

Litigation

The University is currently involved in various lawsuits involving liability claims. Management believes that no litigation currently pending against the University, even if decided unfavorably to the University, would have a material adverse impact on the financial position of the University.

Summary of Recent Events and Certain Potential Future Events

The University’s most recent fiscal year for which an audit is available ended on June 30, 2016.

For the 2017 enrollment cycle, undergraduate application totals have reached record highs. The number of freshman applicants for Fall 2017 surpassed 56,000 (excluding transfer applications), an increase of 3.5% from last year. USC continues to have one of the largest freshman applicant pools of any selective private university in the United States. The University believes that the steady increase in freshman applications (which have increased approximately 60% over the past 10 years) and decline in admission rate (from 25% to 16% over the same period) is primarily due to the University’s ongoing aggressive undergraduate recruitment activities and the strength of the USC “brand.”

The University currently anticipates investment returns to remain relatively low for the immediate term, consistent with industry benchmarks and the University’s peer groups. Given current market conditions, the estimated fiscal year 2017 endowment return is expected to be positive.

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The University closed fiscal year 2016 with its second highest fundraising performance in the campaign, raising over $1.05 billion in one year, and its third highest cash performance in any year of the campaign with $679 million. On March 27, 2017, more than a year earlier than expected, the University attained its fundraising goal of $6 billion. The University has decided to extend the campaign for five calendar years, through the end of 2021, in order to capitalize on the steady momentum and success of the campaign. The University is taking a long-term approach to fundraising, and believes it has an opportunity to connect in a more meaningful way with new donors, particularly with parents, grateful patients, and younger donors. There are additional areas such as scholarships and academic research priorities, particularly within the Health System, where there is room for expanding support. USC’s annual fundraising has grown to more than three times what it was prior to the start of the campaign, averaging $908 million in gifts and pledges annually as compared to the pre-campaign annual average of $284 million.*

The University expects that, for fiscal year 2017, the Hospitals’ net revenue will continue to grow, and the profitability and operations at the Health System will continue to improve. The Health System is also exploring affiliation opportunities with organizations in the Los Angeles and Orange County markets.

The preliminary financial data (excluding financial data gathered from any audited financials for any fiscal year up to and including fiscal year 2016) included in this Appendix A has been prepared by, and is the responsibility of, the University’s management. PricewaterhouseCoopers LLP has not audited, reviewed, compiled or performed any procedures with respect to such accompanying preliminary financial data. Accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto.

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APPENDIX B

CONSOLIDATED FINANCIAL STATEMENTS OF THE UNIVERSITY OF SOUTHERN CALIFORNIA AS OF JUNE 30, 2016 AND 2015

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Report on Consolidated Financial Statements For the Years Ended June 30, 2016 and 2015

Report of Independent Auditors

To the Board of Trustees Of the University of Southern California

We have audited the accompanying consolidated financial statements of the University of Southern California and its subsidiaries (the “University”), which comprise the consolidated balance sheets as of June 30, 2016 and 2015, and the related consolidated statements of activities and cash flows for the years then ended.

Management's Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the University's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the University's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the University of Southern California and its subsidiaries as of June 30, 2016 and 2015, and the changes in their net assets and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Los Angeles, California October 12, 2016

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81,9(56,7<2)6287+(51&$/,)251,$),1$1&,$/5(3257 Notes to Consolidated Financial Statements

Note 1. Significant accounting policies followed by the University of Southern California are set forth below:

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Other accounting policies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81,9(56,7<2)6287+(51&$/,)251,$),1$1&,$/5(3257 Note 1 (continued).

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

Note 2. Accounts receivable (in thousands):

$FFRXQWVUHFHLYDEOHDUHVXPPDUL]HGDVIROORZVDW-XQH 86*RYHUQPHQW 6WXGHQWDQGRWKHUQHWRIDOORZDQFHIRUGRXEWIXODFFRXQWVRI 3DWLHQWFDUHQHWRIDOORZDQFHIRUGRXEWIXODFFRXQWVRI Note 3. Investments (in thousands):

,QYHVWPHQWVFRQVLVWHGRIWKHIROORZLQJDW-XQH (TXLWLHV )L[HGLQFRPHVHFXULWLHV $OWHUQDWLYHLQYHVWPHQWV +HGJHIXQGV 3ULYDWHFDSLWDO 5HDOHVWDWHDQGRWKHU $VVHWVKHOGE\RWKHUWUXVWHHV 7RWDO

81,9(56,7<2)6287+(51&$/,)251,$),1$1&,$/5(3257 Note 3 (continued). 7KHIROORZLQJWDEOHVXPPDUL]HVWKHOHYHOVRIILQDQFLDOLQVWUXPHQWVFDUULHGDWIDLUYDOXHDVGHILQHGE\$6&YDOXDWLRQKLHUDUFK\GHILQHG SUHYLRXVO\IRUWKH\HDUHQGHG-XQH /HYHO, /HYHO,, /HYHO,,, 1$9 7RWDO ,QYHVWPHQWV (TXLWLHV )L[HGLQFRPHVHFXULWLHV +HGJHIXQGV 3ULYDWHFDSLWDO 5HDOHVWDWHDQGRWKHU $VVHWVKHOGE\RWKHUWUXVWHHV 7RWDOLQYHVWPHQWV 7KHIROORZLQJWDEOHVXPPDUL]HVWKHOHYHOVRIILQDQFLDOLQVWUXPHQWVFDUULHGDWIDLUYDOXHDVGHILQHGE\$6&YDOXDWLRQKLHUDUFK\GHILQHG SUHYLRXVO\IRUWKH\HDUHQGHG-XQH /HYHO, /HYHO,, /HYHO,,, 1$9 7RWDO ,QYHVWPHQWV (TXLWLHV )L[HGLQFRPHVHFXULWLHV +HGJHIXQGV 3ULYDWHFDSLWDO 5HDOHVWDWHDQGRWKHU $VVHWVKHOGE\RWKHUWUXVWHHV 7RWDOLQYHVWPHQWV The following table summarizes the university’s /HYHO,,,UHFRQFLOLDWLRQRILQYHVWPHQWVIRUWKH\HDUHQGHG-XQH %HJLQQLQJ 6DOHVDQG 5HDOL]HG 8QUHDOL]HG 7UDQVIHUV 7UDQVIHUV (QGLQJ %DODQFH 3XUFKDVHV PDWXULWLHV JDLQ JDLQ ORVV LQ RXW EDODQFH -XQH (TXLWLHV )L[HGLQFRPHVHFXULWLHV 5HDOHVWDWHDQGRWKHU $VVHWVKHOGE\RWKHUWUXVWHHV 7RWDO The following table summarizes the university’s Level III reconciliation of investments for the year ended June 30, 201 %HJLQQLQJ 6DOHVDQG 5HDOL]HG 8QUHDOL]HG 7UDQVIHUV 7UDQVIHUV (QGLQJ %DODQFH 3XUFKDVHV PDWXULWLHV JDLQ JDLQ ORVV LQ RXW EDODQFH -XQH (TXLWLHV )L[HGLQFRPHVHFXULWLHV 5HDOHVWDWHDQGRWKHU $VVHWVKHOGE\RWKHUWUXVWHHV 7RWDO

81,9(56,7<2)6287+(51&$/,)251,$),1$1&,$/5(3257 Note 3 (continued). 7KHXQLYHUVLW\XVHVWKH1$9WRGHWHUPLQHWKHIDLUYDOXHRIDOOWKHXQGHUO\LQJLQYHVWPHQWVZKLFK D GRQRWKDYHDUHDGLO\GHWHUPLQDEOHIDLU YDOXHDQG E SUHSDUHWKHLUILQDQFLDOVWDWHPHQWVFRQVLVWHQWZLWKWKHPHDVXUHPHQWSULQFLSOHVRIDQLQYHVWPHQWFRPSDQ\RUKDYHWKHDWWULEXWHV RIDQLQYHVWPHQWFRPSDQ\7KHIROORZLQJWDEOHOLVWVLQYHVWPHQWVE\PDMRUFDWHJRU\IRUWKH\HDUVHQGLQJ-XQHDQG UHVSHFWLYHO\

$W-XQH 5HGHPSWLRQ )DLU9DOXH 5HGHPSWLRQ &DWHJRU\RI 8QIXQGHG 5HVWULFWLRQVDQG ,QYHVWPHQW6WUDWHJ\ 'HWHUPLQHG 5HPDLQLQJ/LIH 5HGHPSWLRQ7HUPV 5HVWULFWLRQVDQG ,QYHVWPHQW &RPPLWPHQWV 7HUPVLQ3ODFHDW 8VLQJ1$9 7HUPV

$W-XQ 5HGHPSWLRQ )DLU9DOXH 5HGHPSWLRQ &DWHJRU\RI 8QIXQGHG 5HVWULFWLRQVDQG ,QYHVWPHQW6WUDWHJ\ 'HWHUPLQHG 5HPDLQLQJ/LIH 5HGHPSWLRQ7HUPV 5HVWULFWLRQVDQG ,QYHVWPHQW &RPPLWPHQWV 7HUPVLQ3ODFHDW 8VLQJ1$9 7HUPV

81,9(56,7<2)6287+(51&$/,)251,$),1$1&,$/5(3257 Note 4. Property, plant and equipment (in thousands):

3URSHUW\SODQWDQGHTXLSPHQWFRQVLVWHGRIWKHIROORZLQJDW-XQH 2016 2015

/DQGDQGLPSURYHPHQWV %XLOGLQJVDQGLPSURYHPHQWV %XLOGLQJVXQGHUFDSLWDOOHDVHV (TXLSPHQW /LEUDU\ERRNVDQGFROOHFWLRQV &RQVWUXFWLRQLQSURJUHVV

/HVV$FFXPXODWHGGHSUHFLDWLRQ Note 5. Bonds and notes payable (in thousands): ,QWHUHVW 0DWXULW\ CaliforniaEducationalFacilitiesAuthority (CEFA)RevenueBondsandNotes: 6HULHV% 3UHPLXP 6HULHV 3UHPLXP 6HULHV$ 3UHPLXP 6HULHV$ 'LVFRXQW 6HULHV% 3UHPLXP 6HULHV& 3UHPLXP 6HULHV$ 3UHPLXP 6HULHV$ 3UHPLXP UniversityofSouthernCaliforniaBonds 6HULHV 'LVFRXQW 6HULHV 'LVFRXQW CaliforniaInfrastructureRevenueBondsUSC (USC–SotoStreetHealthSciences) 6HULHV 3UHPLXP 1RWHV3D\DEOH /HVVFXUUHQWSRUWLRQRIORQJWHUPGHEW 3ULQFLSDOSD\PHQWUHTXLUHPHQWVUHODWLQJWRERQGVDQGQRWHVSD\DEOHDIWHUJLYLQJHIIHFWWRUHIXQGLQJIRUWKHQH[WILYHILVFDO\HDUVDUH DSSUR[LPDWHO\WKHUHDIWHU ,QWHUHVWSD\PHQWVIRUILVFDO\HDUDQGZHUHDQGUHVSHFWLYHO\

81,9(56,7<2)6287+(51&$/,)251,$),1$1&,$/5(3257 Note 5 (continued). 7KHXQLYHUVLW\KDVDUHYROYLQJOLQHRIFUHGLWZLWKDEDQNZLWKDPDWXULW\GDWHRI1RYHPEHU7KHOLQHRIFUHGLW DFFUXHVLQWHUHVWEDVHGRQ/,%25DQGFRQWDLQVDIHHRQWKHXQXVHGSRUWLRQRIWKHOLQHRIFUHGLW'XULQJWKH\HDUVHQGHG-XQHDQG WKHXQLYHUVLW\GLGQRWGUDZGRZQRQWKHOLQHRIFUHGLW7KHOLQHRIFUHGLWFRQWDLQVFHUWDLQUHVWULFWLYHFRYHQDQWVUHTXLUHGLQWKH DJUHHPHQW Note 6. Student Financial Aid (in thousands):

)LQDQFLDODLGLVDZDUGHGWRVWXGHQWVEDVHGRQQHHGDQGPHULW)LQDQFLDODLGGRHVQRWLQFOXGHSD\PHQWVPDGHWRVWXGHQWVIRUVHUYLFHV UHQGHUHGWRWKHXQLYHUVLW\ )LQDQFLDODLGIRUWKH\HDUHQGHG-XQHFRQVLVWVRIWKHIROORZLQJ LQWKRXVDQGV 8QGHUJUDGXDWH *UDGXDWH 7RWDO ,QVWLWXWLRQDOVFKRODUVKLSV (QGRZHGVFKRODUVKLSV ([WHUQDOILQDQFLDODLG )LQDQFLDODLGIRUWKH\HDUHQGHG-XQHFRQVLVWVRIWKHIROORZLQJ LQWKRXVDQGV 8QGHUJUDGXDWH *UDGXDWH 7RWDO ,QVWLWXWLRQDOVFKRODUVKLSV (QGRZHGVFKRODUVKLSV ([WHUQDOILQDQFLDODLG Note 7. Endowment (in thousands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Note 11. Commitments and Contingencies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either party gives four years’ notice of the termination.1RVXFKQRWLFHKDVEHHQSURYLGHGE\HLWKHUSDUW\ 7KHXQLYHUVLW\LVFRQWLQJHQWO\OLDEOHDVJXDUDQWRURQFHUWDLQREOLJDWLRQVUHODWLQJWRHTXLSPHQWORDQVVWXGHQWDQGSDUHQWORDQVDQGYDULRXV FDPSXVRUJDQL]DWLRQV7KHXQLYHUVLW\UHFHLYHVIXQGLQJRUUHLPEXUVHPHQWIURPJRYHUQPHQWDODJHQFLHVIRUYDULRXVDFWLYLWLHVZKLFKDUH VXEMHFWWRDXGLW,QDGGLWLRQFHUWDLQOLWLJDWLRQKDVEHHQILOHGDJDLQVWWKHXQLYHUVLW\DQGLQWKHRSLQLRQRIXQLYHUVLW\PDQDJHPHQWDIWHU FRQVXOWDWLRQZLWKOHJDOFRXQVHOWKHOLDELOLW\LIDQy, for the aforementioned matters will not have a material effect on the university’s ILQDQFLDOSRVLWLRQ

81,9(56,7<2)6287+(51&$/,)251,$),1$1&,$/5(3257 Note 12. Retirement Benefits:

5HWLUHPHQWEHQHILWVIRUHOLJLEOHXQLYHUVLW\HPSOR\HHVDUHSURYLGHGWKURXJKWKH7HDFKHUV,QVXUDQFHDQG$QQXLW\$VVRFLDWLRQDQGWKH&ROOHJH5HWLUHPHQW (TXLWLHV)XQG7KH9DQJXDUG*URXS$,*6XQ$PHULFD)LGHOLW\,QYHVWPHQWVDQG3UXGHQWLDO)LQDQFLDO8QGHUWKHVHGHILQHGFRQWULEXWLRQSODQVWKH XQLYHUVLW\DQGSODQSDUWLFLSDQWVPDNHFRQWULEXWLRQVWRSXUFKDVHLQGLYLGXDOIL[HGRUYDULDEOHDQQXLWLHVHTXLYDOHQWWRUHWLUHPHQWEHQHILWVHDUQHGRUWR SDUWLFLSDWHLQDYDULHW\RIPXWXDOIXQGVRUFRPPLQJOHGIXQGV8QGHUWKH86&5HWLUHPHQW6DYLQJV3URJUDPWKHXQLYHUVLW\PDNHVDQRQHOHFWLYH contribution to all eligible employees and also matches dollar for dollar the first 5% of the employees’ contributions.1HZO\KLUHGHPSOR\HHVRQRU DIWHU-DQXDU\ZLOOKDYHWKHXQLYHUVLW\QRQHOHFWLYHFRQWULEXWLRQVXEMHFWWRDIRXU\HDUYHVWLQJVFKHGXOH%HQHILWVFRPPHQFHXSRQWHUPLQDWLRQ RUUHWLUHPHQWDQGSUHUHWLUHPHQWVXUYLYRUGHDWKEHQHILWVDUHDOVRSURYLGHG&KDUJHVWRHGXFDWLRQDQGJHQHUDODFWLYLWLHVH[SHQVHVIRUWKHuniversity’s VKDUHRIFRVWVZHUHDSSUR[LPDWHO\DQGGXULQJWKH\HDUHQGHG-XQHDQGUHVSHFWLYHO\ 5HWLUHPHQWEHQHILWVIRUKRVSLWDOHPSOR\HHVFRYHUHGXQGHUDFROOHFWLYHEDUJDLQLQJDJUHHPHQWZLWKWKH1DWLRQDO8QLRQRI+HDOWKFDUH:RUNHUV 18+: DQGHPSOR\HHVRI86&9HUGXJR+LOOV+RVSLWDODQG8QLYHUVLW\3K\VLFLDQ$VVRFLDWHVDUHSURYLGHGE\DGHILQHGFRQWULEXWLRQ N SODQWKURXJK)LGHOLW\ LQYHVWPHQWV8QWLO$XJXVWWKHKRVSLWDOHPSOR\HHVFRYHUHGXQGHUDFROOHFWLYHEDUJDLQLQJDJUHHPHQWZLWK&1$ZHUHDOVRFRYHUHGXQGHUWKLV N SODQ8QGHUWKH N GHILQHGFRQWULEXWLRQSODQSDUWLFLSDQWVPDNHFRQWULEXWLRQVWRSXUFKDVHDYDULHW\RIPXWXDOIXQGV7KHXQLYHUVLW\PDNHV LWVFRQWULEXWLRQIROORZLQJWKHHQGRIWKHFDOendar year and matches 100% of the participants’ contributions up to 4% of eligible earnings providing the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activities expenses for the university’s share of costs were approximately $DQGGXULQJWKH\HDUHQGHG-XQH DQGUHVSHFWLYHO\ 5HWLUHPHQWEHQHILWVIRUQRQH[HPSWXQLYHUVLW\HPSOR\HHVDUHSURYLGHGWKURXJKDQRQFRQWULEXWRU\GHILQHGEHQHILWSHQVLRQSODQ7KHIROORZLQJ table sets forth the plan’s funded status at June 30 (in thousands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

81,9(56,7<2)6287+(51&$/,)251,$),1$1&,$/5(3257 Note 12 (continued). 7KH HVWLPDWHG QHW ORVV JDLQ DQG SULRU VHUYLFH FRVW IRU WKH 86& 6XSSRUW 6WDII 5HWLUHPHQW 3ODQ “3ODQ”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ong−term UHWXUQ IRUDSUXGHQWOHYHORIULVN,QDGGLWLRQWRSURGXFLQJDUHDVRQDEOHUHWXUQWKHLQYHVWPHQWVWUDWHJ\VHHNVWRPLQLPL]HWKHYRODWLOLW\LQRXU H[SHQVHDQGFDVKIORZ7KHWDUJHWDOORFDWLRQIRUSHQVLRQEHQHILWSODQDVVHWVLVHTXLW\VHFXULWLHVDQGIL[HGLQFRPHVHFXULWLHV $VGHVFULEHGLQ1RWHWKHXQLYHUVLW\XVHVDKLHUDUFK\WRUHSRUWLQYHVWHGDVVHWVLQFOXGLQJWKHLQYHVWHGDVVHWVRIWKH3ODQ)ROORZLQJLVD GHVFULSWLRQRIWKHYDOXDWLRQPHWKRGRORJLHVXVHGIRUDVVHWVPHDVXUHGDWIDLUYDOXH )DLU9DOXH The Plan’s interest in collective trusts is valued based on the net asset value information reported by the investment advisoU7KHIXQGLV YDOXHGDWWKHQRUPDOFORVHRIWUDGLQJRQWKH1HZ

Note 13. Leases: 7KHXQLYHUVLW\LVWKHOHVVHHRIYDULRXVHTXLSPHQWDQGVSDFHXQGHUQRQFDQFHODEOHRSHUDWLQJDQGFDSLWDOOHDVHV2SHUDWLQJOHDVHUHQWDO H[SHQVHIRUWKH\HDUVHQGHG-XQHDQGZDVDSSUR[LPDWHO\DQGUHVSHFWLYHO\6SDFHOHDVHV FRQWDLQFXVWRPDU\HVFDODWLRQFODXVHVZKLFKDUHLQFOXGHGLQDQQXDODJJUHJDWHPLQLPXPUHQWDOV )XWXUHDJJUHJDWHPLQLPXPUHQWDOSD\PHQWVDVRI-XQHXQGHURSHUDWLQJDQGFDSLWDOOHDVHVDUHDVIROORZV LQWKRXVDQGV )XWXUHPLQLPXPUHQWDOSD\PHQWV 2SHUDWLQJ &DSLWDO 7KHUHDIWHU /HVV,QWHUHVWRQFDSLWDOOHDVHV 7RWDO

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

81,9(56,7<2)6287+(51&$/,)251,$),1$1&,$/5(3257 Note 14. Functional Expenses:

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

)RUWKH\HDUHQGHG-XQHIXQFWLRQDOH[SHQVHFRQVLVWVRIWKHIROORZLQJ LQWKRXVDQGV $FDGHPLF+HDOWK &DUHDQG6WXGHQW 6XSSRUW )XQG5DLVLQJ

81,9(56,7<2)6287+(51&$/,)251,$),1$1&,$/5(3257 Note 15. Related parties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that such transactions be conducted at arm’s length, for JRRGDQGVXIILFLHQWFRQVLGHUDWLRQEDVHGRQWHUPVWKDWDUHIDLUDQGUHDVRQDEOHWRDQGIRUWKHEHQHILWRIWKHXQLYHUVLW\DQGLQDFFRUGDQFH ZLWKDSSOLFDEOHFRQIOLFWRILQWHUHVWODZV Note 16. Subsequent events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

APPENDIX C

CERTAIN PROVISIONS OF THE BOND INDENTURE

[THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX C

CERTAIN PROVISIONS OF THE BOND INDENTURE

The following are definitions of certain words and terms used in this Offering Memorandum and excerpts of certain provisions of the Bond Indenture. The following excerpts do not purport to set forth all of the provisions of the Bond Indenture to which reference is made for the complete and actual terms thereof. Words and terms used herein that are not defined herein shall have the same meanings as set forth in the Bond Indenture.

DEFINITIONS

“Account” shall mean any account created under this Bond Indenture.

“Beneficial Owner” shall mean whenever used with respect to a Bond, the Person in whose name such Bond is recorded as the beneficial owner of such Bond by a DTC participant on the records of such participant or such Person’s subrogee.

“Bond” or “Bonds” shall mean the University’s $402,320,000 aggregate principal amount of University of Southern California Taxable Bonds, Series 2017, dated their date of delivery and issued under this Bond Indenture to finance costs of the Project.

“Bond Fund” shall mean the fund created pursuant to Section 5.01(a) of this Bond Indenture.

“Bond Indenture” shall mean this Bond Indenture, dated as of April 1, 2017, by and between the University and the Bond Trustee, and when amended or supplemented, this Bond Indenture, as amended or supplemented.

“Bond Indenture Event of Default” shall mean any one or more of those events set forth in Section 7.01 of this Bond Indenture.

“Bond Payment Date” shall mean each date on which interest or both principal and interest shall be payable on any of the Bonds according to their respective terms so long as any Bonds are Outstanding, including any mandatory sinking fund redemption date.

“Bond Proceeds Fund” shall mean the fund created pursuant to Section 5.01(b) of this Bond Indenture.

“Bond Purchase Contract” shall mean the contract of purchase between the University and the Representative for the Underwriters of the Bonds.

“Bond Trustee” shall mean The Bank of New York Mellon Trust Company, N.A., of Los Angeles, California, and any successor to its duties under this Bond Indenture.

“Book-Entry Bonds” shall mean the Bonds held by DTC as the registered owner thereof pursuant to the terms and provisions of Section 2.13 of this Bond Indenture.

“Business Day” shall mean any day of the week other than Saturday, Sunday or a day which shall be in the State of California or in the jurisdiction of the Bond Trustee a legal holiday or a day on which banking corporations are authorized or obligated by law or executive order to close.

“Code” shall mean the Internal Revenue Code of 1986, as amended, or any successor code or law, and any regulations in effect or promulgated thereunder.

C-1 the Bonds to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the remaining term of such Bonds.

“Corporate Trust Office” shall mean the office of the Bond Trustee at which its principal corporate trust business is conducted, which at the date hereof is located at 400 South Hope Street, Suite 500 Los Angeles, California 90071, Attention: Corporate Trust Department, except that with respect to presentation of Bonds for payment or for registration of transfer or exchange, such term shall mean the office or agency of the Bond Trustee at which, at any particular time, its corporate trust agency business shall be conducted.

“Depository” shall mean The Depository Trust Company, 55 Water Street, 50th Floor, New York, New York 10041-0099, Attention: Call Notification Department, Fax (212) 855-7232; and its successors and assigns, or any other depository which agrees to follow the procedures required to be followed by such depository in connection with the Bonds.

“Designated Investment Banker” shall mean one of the Reference Treasury Dealers appointed by the University.

“DTC” shall mean The Depository Trust Company, a limited purpose trust company organized under the laws of the State of New York, and its successors and assigns.

“Fund” shall mean any fund created under this Bond Indenture.

“Governing Body” shall mean the University’s Board of Trustees.

“Holder” or “Bondholder” shall mean the registered owner of any Bond, including DTC or its nominee as the sole registered owner of Book-Entry Bonds.

“Interest Account” shall mean the account of the Bond Fund created pursuant to Section 5.01(a)(i) of this Bond Indenture.

“Make-Whole Redemption Price” shall mean the greater of:

(1) 100% of the principal amount of any Bonds being redeemed; and

“Notice by Mail” or “notice” of any action or condition “by Mail” shall mean a written notice meeting the requirements of this Bond Indenture mailed by first-class mail to the Holders of specified registered Bonds, at the addresses shown on the registration books maintained pursuant to Section 2.07 hereof.

“Opinion of Counsel” shall mean a written opinion of an attorney or firm of attorneys reasonably acceptable to the Bond Trustee and (so long as no Bond Indenture Event of Default has occurred and is continuing) the University, and who (except as otherwise expressly provided herein) may be either counsel for the University or for the Bond Trustee.

“Outstanding,” when used with reference to the Bonds, shall mean, as of any date of determination, all Bonds theretofore authenticated and delivered except: (i) Bonds theretofore cancelled by the Bond

C-2

Trustee or delivered to the Bond Trustee for cancellation; (ii) Bonds which are deemed paid and no longer Outstanding as provided in this Bond Indenture; (iii) Bonds in lieu of which other Bonds have been issued pursuant to the provisions of this Bond Indenture relating to Bonds destroyed, stolen or lost, unless evidence satisfactory to the Bond Trustee has been received that any such Bond is held by a bona fide purchaser; and (iv) for purposes of any consent or other action to be taken under this Bond Indenture by the Holders of a specified percentage of principal amount of Bonds, Bonds held by or for the account of the University, or any Person controlling, controlled by, or under common control with, the University (for purposes of this clause (iv), the Bond Trustee shall be permitted to rely on a certificate of the University).

“Permitted Investments” shall mean and include any of the following, if and to the extent the same are at the time legal for the investment of the University’s money (provided that the Trustee shall be entitled to rely upon any investment directions from the University as conclusive certification to the Trustee that the investments described therein are legal investments for the University):

(a) direct obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury of the United States of America or any Federal Reserve Bank) or obligations the timely payment of the principal of and interest on which are fully guaranteed by the United States of America;

(b) obligations, debentures, bonds, notes or other evidence of indebtedness issued or guaranteed by any of the following: Federal Home Loan Bank System, Government National Mortgage Association, Federal Home Loan Mortgage Corporation, Federal National Mortgage Association and Federal Housing Administration;

(c) bonds of any state in the United States or of any county or city of the State for which each rating agency then rating the University’s bonds maintains a rating at least equal to “A” (or the equivalent) or its highest short-term rating;

(d) repurchase agreements

(i) with any corporation or other entity that falls under the jurisdiction of the Bankruptcy Code, provided that:

(1) the term of such repurchase agreement is less than one year or due on demand,

(2) the Bond Trustee or third party acting solely as agent for the Bond Trustee has possession of the collateral,

(3) the market value of the collateral is maintained at an amount equal to at least 102% of the amount of cash transferred by the Bond Trustee to the dealer bank or securities firm under the repurchase agreement plus interest,

(4) failure to maintain the requisite collateral levels will require the Bond Trustee to liquidate the collateral immediately,

(5) the repurchase securities are either obligations of, or fully guaranteed as to principal and interest by, the United States or any United States agency, certificates of deposit or bankers’ acceptances,

(6) the repurchase securities are free and clear of any third-party lien or claim, and

C-3

(7) such corporation or other entity’s long-term debt obligations are rated in one of the two highest long-term rating categories of each rating agency then rating the University’s bonds, and

(ii) with financial institutions including the Bond Trustee and its affiliates insured by the Federal Deposit Insurance Corporation or any broker- dealer with “retail customers” which falls under the jurisdiction of the Securities Investors Protection Corporation (“SIPC”) provided that:

(1) the requirements specified in clause (i)(2), (3) and (4) are met,

(2) the Bond Trustee has a perfected first priority security interest in the collateral, and

(3) the collateral is free and clear of third-party liens and, in the case of a SIPC broker, was not acquired pursuant to a repurchase agreement or reverse repurchase agreement;

(e) interest bearing bankers acceptances and demand or time deposits (including certificates of deposit) in banks (including the Bond Trustee and its affiliates), providing such deposits are either (i) secured at all times, in the manner and to the extent provided by law, by collateral security described in clause (a) or (b) of this definition of a market value no less than the amount of moneys so invested and are maintained with banks the debt obligations of which are rated in one of the two highest rating categories of each rating agency then rating the University’s bonds, or (ii) fully insured by the Federal Deposit Insurance Corporation;

(f) United States Treasury Receipts and Stripped Treasury Coupons;

(g) taxable government money market portfolios composed of obligations issued or guaranteed as to payment of principal and interest by the full faith and credit of the United States of America, including without limitation any portfolio for which the Bond Trustee’s parent, affiliates or subsidiaries receive and retain a fee for services provided to the fund, whether as a custodian, transfer agent, investment advisor or otherwise, which are rated “AAAm” or “AAAmG” by Standard & Poor’s Ratings Services;

(h) commercial paper rated at the time of purchase in the highest rating category of each rating agency then rating the University’s bonds and issued by corporations organized and operating within the United States and having total assets in excess of $500,000,000;

(i) collateralized investment agreements or other collateralized contractual arrangements with corporations, financial institutions or national associations within the United States with such entities which are rated within the two highest rating categories of each rating agency then rating the University’s bonds and fully secured by collateral security described in clause (a) or (b) of this definition; and

(j) investments in a money market fund rated “AAAm” or “AAAm-G” or better by Standard & Poor’s Ratings Services or an equivalent rating by Moody’s Investors Service or any other nationally recognized rating agency, including funds for which the Bond Trustee, its parent holding company, if any, or any affiliates or subsidiaries of the Bond Trustee or such holding company receive and retain a fee for services provided to the fund, whether as a custodian, transfer agent, investment advisor or otherwise.

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“Person” shall include an individual, association, unincorporated organization, corporation, limited liability company, partnership, joint venture, or government or agency or political subdivision thereof.

“Principal Account” shall mean the account of the Bond Fund created pursuant to Section 5.01(a)(ii) of this Bond Indenture.

“Project” shall mean any general corporate purposes of the University, including but not limited to the acquisition, construction, renovation, improvement, rehabilitation and/or equipping of higher educational and healthcare facilities of the University to be financed with the proceeds of the Bonds.

“Record Date” shall mean each March 15 and September 15 (whether or not a Business Day).

“Redemption Account” shall mean the account of the Bond Fund created pursuant to Section 5.01(a)(iii) of this Bond Indenture.

“Redemption Price” shall mean, when used with respect to a Bond or portion thereof to be optionally redeemed, (i) prior to April 1, 2047, the Make-Whole Redemption Price, and (ii) on or after April 1, 2047, the principal amount thereof, in either case payable upon redemption thereof.

“Reference Treasury Dealer” shall mean each of Morgan Stanley & Co. LLC and Barclays Capital Inc. or their respective affiliates which are primary U.S. government securities dealers, and their respective successors; provided that if Morgan Stanley & Co. LLC or Barclays Capital Inc. or their respective affiliates shall cease to be a primary U.S. government securities dealer (a “Primary Treasury Dealer”), the University shall substitute therefor another Primary Treasury Dealer.

“Reference Treasury Dealer Quotations” shall mean, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Designated Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Designated Investment Banker by such Reference Treasury Dealer at 3:30 p.m., New York City time, on the third Business Day preceding such redemption date.

“Representation Letter” shall mean the Letter of Representations from the University and the Bond Trustee to DTC with respect to the Bonds.

“Representative” shall mean Morgan Stanley & Co. LLC, as representative for itself and the other Underwriters.

“State” shall mean the State of California.

“Supplement” shall mean an indenture supplementing or modifying the provisions of this Bond Indenture entered into by the University and the Bond Trustee in accordance with Article IX of this Bond Indenture.

“Underwriters” shall mean Morgan Stanley & Co. LLC, Barclays Capital Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated.

“University” shall mean the private, not-for-profit public benefit corporation organized and existing under the laws of the State, the corporate name of which is the University of Southern California, and its successors.

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“University Representative” shall mean the Person at the time designated to act on behalf of the University by written certificate furnished to the Bond Trustee, containing the specimen signature of such Person and signed on behalf of the University by its chairman, its president or chief executive officer, its chief financial officer or any senior vice president or vice president. Such certificate may designate an alternate or alternates who shall have the same authority, duties and powers as such University Representative.

PROVISIONS OF GENERAL APPLICATION

Section 1.03. All Bonds Equally and Ratably Secured; Bonds Are General Obligations of the University. All Bonds issued hereunder and at any time Outstanding shall in all respects be equally and ratably secured hereby, without preference, priority, or distinction on account of the date or dates or the actual time or times of the issuance or maturity of the Bonds, so that all Bonds at any time issued and Outstanding hereunder shall have the same right, lien, and preference hereunder, and shall all be equally and ratably secured hereby. The Bonds are general unsecured obligations of the University.

Section 1.04. Payments of Principal, Premium and Interest. The University covenants that it will duly and punctually pay the principal of and interest and any premium on the Bonds on the dates and in the places and manner mentioned therein and herein. Notwithstanding any schedule of payments to be made on the Bonds set forth therein or herein, the University agrees to make payments upon the Bonds and be liable therefor at the times and in the amounts equal to the amounts to be paid as principal or Redemption Price of or interest on the Bonds from time to time Outstanding under this Bond Indenture as the same shall become due whether at maturity, upon redemption, by declaration of acceleration or otherwise.

All amounts payable with respect to the Bonds or hereunder by the University, except as otherwise expressly provided herein, shall be paid to the Bond Trustee so long as any Bonds remain Outstanding.

The University agrees and represents that it has received fair consideration in return for the obligations undertaken and to be undertaken by the University resulting from each Bond issued or to be issued by the University hereunder.

Section 1.05. Obligations Unconditional. This Bond Indenture is a general unsecured obligation of the University and the obligations of the University to make payments pursuant hereto and pursuant to the Bonds and to perform and observe all agreements on its part contained herein shall be absolute and unconditional. Until this Bond Indenture is terminated or payment in full of all Bonds is made or is provided for in accordance with this Bond Indenture, the University (i) will not suspend or discontinue any payments hereunder or neglect to perform any of its duties required hereunder; (ii) will perform and observe all of its obligations set forth in this Bond Indenture; and (iii) except as provided herein, will not terminate this Bond Indenture for any cause including, without limiting the generality of the foregoing, any acts or circumstances that may constitute failure of consideration; commercial frustration of purpose; any change in the tax or other laws or administrative rulings of, or administrative actions by or under authority of, the United States of America or of the State.

AUTHORIZATION AND TERMS OF BONDS

Section 2.03. Medium and Place of Payment. (a) Principal of, premium, if any, and interest on the Bonds shall be payable in any coin or currency of the United States of America which, on the respective dates of payment of principal and interest, is tender for the payment of public and private debts.

(b) Except for Book-Entry Bonds held by DTC in accordance with the terms and provisions of Section 2.13 hereof, interest on the Bonds shall be payable by check or draft drawn upon the Bond Trustee and mailed on the Bond Payment Date to the registered Holders of such Bonds at the addresses of such Holders as they appear on the books of the Bond Trustee on the Record Date; provided, however, that interest may be paid by wire or electronic transfer to the Holder of at least $1,000,000 aggregate principal amount of Bonds to the address designated by written notice by such Holder to the Bond Trustee not less than fifteen (15) days prior to the Record Date for such payment. Any such written request shall remain in effect until rescinded in writing by such Holder.

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Principal of and premium, if any, on the Bonds shall be paid when due by check or draft upon presentation and surrender of such Bonds at the Corporate Trust Office of the Bond Trustee.

(c) In the event of a default by the University in the payment of interest due on a Bond on a Bond Payment Date, such defaulted interest will be payable to the Person in whose name such Bond is registered at the close of business on a special record date for the payment of such defaulted interest established by notice mailed by the Bond Trustee to the registered owners of Bonds not less than ten (10) days preceding such special record date.

(d) The University or the Bond Trustee may make a charge against any Bondholder sufficient for the reimbursement of any governmental charge required to be paid in the event that such Bondholder fails to provide a correct taxpayer identification number to the Bond Trustee. Such charge may be deducted from any interest or principal payment due to the Bondholder.

Section 2.04. Mutilated, Destroyed, Lost and Stolen Bonds. If (i) any mutilated Bond is surrendered to the Bond Trustee or if the University or the Bond Trustee receives evidence to their satisfaction of the destruction, loss or theft of any Bond, and (ii) there is delivered to the University and the Bond Trustee such security or indemnity as may be required by the University or the Bond Trustee to hold them harmless, then, in the absence of notice to the Bond Trustee that such Bond has been acquired by a bona fide purchaser and upon the Holder paying the reasonable expenses of the University and the Bond Trustee, the University shall cause to be executed and the Bond Trustee shall authenticate and deliver, in exchange for such mutilated Bond or in lieu of such destroyed, lost or stolen Bond, a new Bond of like principal amount, date and tenor. If any such mutilated, destroyed, lost or stolen Bond has become or is about to become due and payable, then the Bond Trustee may, in its discretion, pay such Bond when due instead of delivering a new Bond.

Section 2.06. Exchange of Bonds. Except for Book-Entry Bonds held by DTC in accordance with the terms and provisions of Section 2.13 hereof, Bonds, upon presentation and surrender thereof to the Bond Trustee together with written instructions satisfactory to the Bond Trustee, duly executed by the registered Holder or his or her attorney duly authorized in writing, may be exchanged for an equal aggregate face amount of fully registered Bonds of the same series with the same interest rate and maturity of any other authorized denominations.

Section 2.07. Negotiability and Transfer of Bonds. Except for Book-Entry Bonds held by DTC in accordance with the terms and provisions of Section 2.13 hereof, (a) all Bonds issued hereunder shall be negotiable, subject to the provisions for registration and transfer thereof contained herein or in the Bonds.

(b) So long as any Bonds are Outstanding, the University shall cause to be maintained at the offices of the Bond Trustee books for the registration and transfer of Bonds, and shall provide for the registration and transfer of any Bond under such reasonable regulations as the University or the Bond Trustee may prescribe. The Bond Trustee shall act as bond registrar for purposes of exchanging and registering Bonds in accordance with the provisions hereof.

(c) Each Bond shall be transferable only upon the registration books maintained by the Bond Trustee, by the Holder thereof in person or by his or her attorney duly authorized in writing, upon presentation and surrender of such Bond together with a written instrument of transfer satisfactory to the Bond Trustee duly executed by the registered Holder or his or her duly authorized attorney. Upon surrender for transfer of any such Bond, the University shall cause to be executed and the Bond Trustee shall authenticate and deliver, in the name of the transferee, one or more new Bonds of the same aggregate face amount, maturity, series and rate of interest as the surrendered Bond, as fully registered Bonds only.

Section 2.09. Provisions with Respect to Transfers and Exchanges. (a) All Bonds surrendered in any exchange or transfer of Bonds shall forthwith be cancelled by the Bond Trustee.

(b) In connection with any such exchange or transfer of Bonds, the Holder requesting such exchange or transfer shall as a condition precedent to the exercise of the privilege of making such exchange or transfer remit to the Bond Trustee an amount sufficient to pay any tax or other governmental charge required to be

C-7 paid with respect to such exchange or transfer. The cost of printing and any services rendered or expenses incurred by the Bond Trustee in connection with any transfer and exchange of Bonds shall be paid by the University.

(c) Neither the University nor the Bond Trustee shall be obligated to (i) issue, exchange or transfer any Bond during the period of fifteen (15) days preceding any Bond Payment Date, or (ii) transfer or exchange any Bond which has been or is being called for redemption in whole or in part.

Section 2.13. Book-Entry Bonds. (i) Except as provided in subparagraph (i) of this Section 2.13, the registered owner of all of the Bonds shall be DTC and the Bonds shall be registered in the name of Cede & Co., as nominee for DTC. Payment of semiannual interest for any Bond registered as of each Record Date in the name of Cede & Co. shall be made by wire or electronic transfer of funds to the account of Cede & Co. on the Bond Payment Date for the Bonds at the address indicated on the regular Record Date or special record date for Cede & Co. in the registry books of the University kept by the Bond Trustee.

(ii) The Bonds shall be initially issued in the form of separate single fully registered Bonds, authenticated by the Bond Trustee, in the amount of each separate stated maturity of the Bonds. Upon initial issuance, the ownership of such Bonds shall be registered in the registry books of the University kept by the Bond Trustee in the name of Cede & Co., as nominee of DTC. The Bond Trustee and the University may treat DTC (or its nominee) as the sole and exclusive owner of the Bonds registered in its name for the purposes of payment of the principal, premium, if any, or interest on the Bonds, selecting the Bonds or portions thereof to be redeemed, giving any notice permitted or required to be given to Holders of the Bonds under this Bond Indenture, registering the transfer of Bonds, obtaining any consent or other action to be taken by Holders of the Bonds and for all other purposes whatsoever, and neither the Bond Trustee nor the University shall be affected by any notice to the contrary. Neither the Bond Trustee nor the University shall have any responsibility or obligation to any DTC participant, any Person claiming a beneficial ownership interest in the Bonds under or through DTC or any DTC participant, or any other Person which is not shown on the registration books of the Bond Trustee as being a Holder of a Bond, with respect to the accuracy of any records maintained by DTC or any DTC participant; the payment of DTC or any DTC participant of any amount in respect of the principal, premium, if any, or interest on the Bonds; any notice which is permitted or required to be given to Bondholders under this Bond Indenture; or any consent given or other action taken by DTC as Holder of a Bond. The Bond Trustee shall pay all principal of, premium, if any, and interest on the Bonds only to or “upon the order of” DTC (as that term is used in the Uniform Commercial Code as adopted in the State of California), and all such payments shall be valid and effective to fully satisfy and discharge the University’s obligations with respect to the principal of, premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. No Person other than DTC shall receive an authenticated Bond evidencing the obligation of the University to make payments of principal, premium, if any, and interest pursuant to this Bond Indenture. Upon delivery by DTC to the Bond Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions herein with respect to Record Dates, the word “Cede & Co.” in this Bond Indenture shall refer to such new nominee of DTC.

(iii) In the event the University determines that it is in the best interest of the Beneficial Owners that they be able to obtain Bond certificates, the University may notify DTC and the Bond Trustee, whereupon DTC will notify the DTC participants, of the availability through DTC of Bond certificates. In such event, the Bond Trustee shall issue, transfer and exchange Bond certificates as requested by DTC and any other Bondholders in appropriate amounts. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving notice to the University and the Bond Trustee and discharging its responsibilities with respect thereto under applicable law. Under such circumstances (if there is no successor securities depository), the University and the Bond Trustee shall be obligated to deliver Bond certificates as described herein. In the event Bond certificates are issued, the provisions of this Bond Indenture shall apply to, among other things, the transfer and exchange of such certificates and the method of payment of principal of, premium, if any, and interest on such certificates. Whenever DTC requests the University and the Bond Trustee to do so, the Bond Trustee and the University will cooperate with DTC in taking appropriate action after reasonable notice (a) to make available one or more separate certificates evidencing the Bonds to any DTC participant having Bonds credited to its DTC account or (b) to arrange for another securities depository to maintain custody of certificates evidencing the Bonds.

(iv) Notwithstanding any other provision of this Bond Indenture to the contrary, so long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to the principal of,

C-8 premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, to DTC as provided in the Representation Letter.

(v) In connection with any notice or other communication to be provided to Holders of Bonds pursuant to the Bond Indenture by the University or the Bond Trustee with respect to any consent or other action to be taken by Holders of Bonds, the University or the Bond Trustee, as the case may be, shall establish a record date for such consent or other action and give DTC notice of such record date not less than fifteen (15) calendar days in advance of such record date to the extent possible. Notice to DTC shall be given only when DTC is the sole Holder of the Bonds.

(vi) The Bond Trustee and the University may rely on instructions from DTC and its participants as to the names of the beneficial owners of the Bonds and neither the University nor the Bond Trustee shall be liable for the delay or delivery of such instructions and conclusively may rely on, and shall be protected in relying on, such instructions. The cost of printing Bond certificates and expenses of the Bond Trustee shall be paid for by the University.

REVENUES AND FUNDS

Section 5.03. Flow of Funds. So long as any Bonds are Outstanding, payments received by the Bond Trustee from the University shall be deposited into the account of the Bond Fund as received and shall be applied in the following manner and order of priority:

(a) Interest Account. The Bond Trustee shall deposit to the Interest Account from payments of the University (which shall be made by the University by wire transfer of immediately available funds) on or before 8:00 a.m. Pacific Coast time on each April 1 and October 1, commencing on October 1, 2017, the amount, if any, necessary to cause the amount then being credited to the Interest Account, together with investment earnings on investments then on deposit in the Interest Account, if such earnings will be received before the next Bond Payment Date (but only to the extent that such amount or investment earnings have not previously been credited for purposes of such calculation), to be not less than the amount of interest to be paid on Outstanding Bonds on the next Bond Payment Date. Moneys in the Interest Account shall be used to pay interest on Bonds as it becomes due.

(b) Principal Account. The Bond Trustee shall deposit to the Principal Account from payments of the University (which shall be made by the University by wire transfer of immediately available funds) on or before 8:00 a.m. Pacific Coast time on each October 1 on which principal is due on the Bonds by mandatory sinking fund redemption or by maturity, the amount necessary to cause the amount then being credited to the Principal Account, together with the investment earnings on investments then on deposit in the Principal Account, if such earnings will be received before the next Bond Payment (but only to the extent that such amount or investment earnings have not previously been credited for purposes of such calculation), to be not less than the principal amount of the Bonds Outstanding coming due by mandatory sinking fund redemption or at maturity on the next Bond Payment Date. Moneys in the Principal Account shall be used to retire the Bonds by mandatory sinking fund redemption or by payment at their scheduled maturity.

(c) Redemption Account. If the University makes an optional prepayment of any principal due on the Bonds (that are subject to optional redemption), the amount so paid or transferred shall be credited to the Redemption Account and applied promptly by the Bond Trustee, first, to cause the amounts credited to the Interest Account or the Principal Account of the Bond Fund, in that order, to be not less than the amounts then required to be credited thereto and, then to retire Bonds by purchase, redemption or both purchase and redemption in accordance with the University’s directions. Any such purchase shall not be at a cost or price (including brokerage fees or commissions or other charges) which exceeds the Redemption Price at which such Bond could be redeemed on the date of purchase or on the next succeeding date upon which such Bond is subject to optional redemption plus accrued interest to the date of purchase. Any such redemption shall be of Bonds then subject to optional redemption at the Redemption Price then applicable for optional redemption of such Bonds plus accrued interest to the date of redemption.

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Any balance remaining in the Redemption Account after the purchase or redemption of Bonds in accordance with the University’s directions, or in any event on the day following the Bond Payment Date next succeeding the prepayment by the University, shall be transferred to the Interest Account.

GENERAL COVENANTS OF THE UNIVERSITY

Section 6.01. Principal and Interest. The University covenants that it will promptly pay or cause to be paid the principal of, premium, if any, and interest on each Bond issued hereunder at the place, on the dates and in the manner provided herein and in said Bonds according to the terms thereof.

The University shall not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of any of the claims for interest by the purchase or funding of such Bonds or claims for interest or by any other arrangement except with the written consent of the Bondholders in accordance with Section 9.02 and, if the maturity of any of the Bonds or the time of payment of any such claims for interest shall be extended without the written consent of the Bondholders, such Bonds or claims for interest shall not be entitled, in case of any default hereunder, to the benefits of this Bond Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest thereon which shall not have been so extended. Nothing in this Section shall be deemed to limit the right of the University to issue bonds for the purpose of refunding any Outstanding Bonds, and such issuance shall not be deemed to constitute an extension of maturity of Bonds.

Section 6.02. Performance of Covenants. The University covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations and provisions on its part to be performed as provided herein, in each and every Bond executed, authenticated and delivered hereunder and in all proceedings of the University pertaining thereto. The University is duly authorized pursuant to law to issue the Bonds and to enter into this Bond Indenture and to pledge and assign the assets purported to be pledged and assigned, respectively, under this Bond Indenture in the manner and to the extent provided in this Bond Indenture. The Bonds and the provisions of this Bond Indenture are and will be the legal, valid and binding general obligations of the University enforceable in accordance with their terms, and the University and the Bond Trustee shall at all times, to the extent permitted by law, defend, preserve and protect said pledge and assignment of any such assets and all the rights of the Bondholders under this Bond Indenture against all claims and demands of all Persons whomsoever.

Section 6.04. Protection of Lien. The University hereby agrees not to make or create or suffer to be made or created any assignment or lien having priority or preference over the assignment and lien hereof upon the interests granted hereby or any part thereof except as otherwise specifically provided herein.

Section 6.05. Securities Law Status. The University affirmatively represents and warrants that, as of the date of the Bond Indenture, it is an organization (i) organized and operated exclusively for higher educational or charitable purposes, and not for pecuniary profit; and (ii) no part of the net earnings of which inure to the benefit of any Person, private stockholder or individual, all within the meaning, respectively, of the Securities Act of 1933, as amended, and of the Securities Exchange Act of 1934, as amended. The University covenants that it shall not perform any act nor enter into any agreement which shall change such status as set forth in this Section.

Section 6.07. Continuing Disclosure. The University has entered into continuing disclosure undertakings (the “Continuing Disclosure Undertakings”) in connection with tax-exempt revenue bonds issued for the benefit of the University (the “Tax-Exempt Bonds”). Holders and prospective purchasers of the Bonds may obtain copies of the information provided by the University under those Continuing Disclosure Undertakings on the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access system (“EMMA”). Each Continuing Disclosure Undertaking terminates when the related Tax-Exempt Bonds are paid or deemed paid in full. The University hereby covenants that unless otherwise available on EMMA or any successor thereto or to the functions thereof, copies of the University’s audited financial statements will either be posted on the University’s website or filed with the Bond Trustee.

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DEFAULT AND REMEDIES

Section 7.01. Bond Indenture Events of Default. Each of the following is hereby declared a “Bond Indenture Event of Default” hereunder:

(a) If payment by the University in respect of any installment of interest on any Bond shall not be made in full when the same becomes due and payable;

(b) If payment by the University in respect of the principal of or redemption premium, if any, on any Bond shall not be made in full when the same becomes due and payable, whether at maturity or by proceedings for redemption or by declaration of acceleration or otherwise;

(c) The University shall fail duly to observe or perform any covenant or agreement on its part under this Bond Indenture (other than as described in clauses (a) or (b) above) for a period of thirty (30) days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the University by the Bond Trustee, or to the University and the Bond Trustee by the Holders of at least fifty percent (50%) in aggregate principal amount of Bonds then Outstanding. If the breach of the covenant or agreement is one which cannot be completely remedied within the thirty (30) days after written notice has been given, it shall not be a Bond Indenture Event of Default as long as the University has taken active steps within the thirty (30) days after written notice has been given to remedy the failure and is diligently pursuing such remedy;

(d) The University shall default in the payment of any indebtedness for borrowed moneys, which indebtedness is in an outstanding principal amount in excess of $40,000,000, whether such indebtedness now exists or shall hereafter be created, and any period of grace with respect thereto shall have expired where the effect of such default is to accelerate the maturity of such indebtedness or to permit the holders thereof (or a trustee on behalf of such holders) to cause such indebtedness to become due prior to its stated maturity; provided, however, that such default shall not constitute a Bond Indenture Event of Default within the meaning of this Section if within ninety (90) days, such default shall have been waived or excused.

(e) The entry of a decree or order by a court having jurisdiction in the premises adjudging the University as bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the University under the Federal Bankruptcy Code or any other applicable Federal or state law, or appointing a receiver, liquidator, assignee, or sequestrator (or other similar official) of the University or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of sixty (60) consecutive days;

(f) The University institutes proceedings to be adjudicated as bankrupt or insolvent, or the consent by the University is given to bankruptcy or insolvency proceedings being instituted against it, or the filing by the University of a petition or answer or consent seeking reorganization or relief under the Federal Bankruptcy Code or any other similar applicable Federal or state law, or the consent by the University to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee or sequestrator (or other similar official) of the University or of any substantial part of its property, or the making by the University of an assignment for the benefit of creditors, or the admission by the University in writing of its inability to pay its debts generally as they become due.

Section 7.02. Acceleration; Annulment of Acceleration. (a) Upon the occurrence of a Bond Indenture Event of Default, the Bond Trustee may, and upon the written request of the Holders of not less than fifty percent (50%) in aggregate principal amount of the Bonds Outstanding shall, without any further action, declare all Bonds Outstanding to be immediately due and payable, anything in the Bonds or herein to the contrary notwithstanding. The Bond Trustee shall declare such acceleration without regard to receipt of prior indemnification under Section 8.08 hereof. In such event, there shall be due and payable on the Bonds an amount equal to the total principal amount of all such Bonds, plus all interest accrued thereon and which accrues to the date of payment. The Bond Trustee shall give written notice of such acceleration to the University and the Bondholders stating the accelerated date on which the Bonds shall be due and payable.

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(b) If at any time after the principal of the Bonds shall have been so declared to be due and payable as a result of a Bond Indenture Event of Default, and before the entry of final judgment or decree in any suit, action or proceeding instituted on account of such default, or before the completion of the enforcement of any other remedy under this Bond Indenture, moneys shall have accumulated in the appropriate Funds and Accounts created under this Bond Indenture sufficient to pay the principal of all matured Bonds and all arrears of interest, if any, upon all Bonds then Outstanding (except the principal of any Bonds not then due and payable by their terms and the interest accrued on such Bonds since the last Bond Payment Date), and the charges, compensation, expenses, disbursements, advances and liabilities of the Bond Trustee and all other amounts then payable by the University hereunder shall have been paid or a sum sufficient to pay the same shall have been deposited with the Bond Trustee, and every other Bond Indenture Event of Default known to the Bond Trustee in the observance or performance of any covenant, condition, agreement or provision contained in the Bonds or in this Bond Indenture (other than a default in the payment of the principal of such Bonds then due and payable only because of the declaration under this Section) shall have been remedied to the satisfaction of the Bond Trustee, then and in every such case the Bond Trustee shall, by written notice to the University, rescind and annul such declaration and its consequences, and the Bond Trustee shall promptly give notice of such annulment in the same manner as provided in subsection (a) of this Section for giving notice of acceleration. No such annulment shall extend to or affect any subsequent Bond Indenture Event of Default or impair any right consequent thereon.

Section 7.03. Additional Remedies and Enforcement of Remedies. (a) Upon the occurrence and continuance of any Bond Indenture Event of Default, the Bond Trustee may or upon the written request of the Holders of not less than fifty percent (50%) in an aggregate principal amount of the Bonds Outstanding, together with indemnification of the Bond Trustee to its satisfaction therefor, shall proceed forthwith to protect and enforce its rights and the rights of the Bondholders hereunder and the Bonds by such suits, actions or proceedings as the Bond Trustee, being advised by counsel, shall deem expedient, including but not limited to:

(i) Civil action to recover money or damages due and owing;

(ii) Civil action to enjoin any acts or things, which may be unlawful or in violation of the rights of the Holders of Bonds; and

(iii) Enforcement of any other right of the Bondholders conferred by law or hereby.

(b) Regardless of the happening of a Bond Indenture Event of Default, the Bond Trustee, if requested in writing by the Holders of not less than fifty percent (50%) in aggregate principal amount of the Bonds then Outstanding, shall upon being indemnified to its satisfaction therefor, institute and maintain such suits and proceedings as it may be advised shall be necessary or expedient (i) to prevent any impairment of the security hereunder by any acts which may be unlawful or in violation hereof, or (ii) to preserve or protect the interests of the Holders, provided that such request is in accordance with law and the provisions hereof and, in the sole judgment of the Bond Trustee, is not unduly prejudicial to the interest of the Holders of Bonds not making such request.

Section 7.04. Application of Revenues and Other Moneys After Default. During the continuance of a Bond Indenture Event of Default all moneys received by the Bond Trustee pursuant to any right given or action taken under the provisions of this Article shall, after payment of the reasonable costs and expenses of the proceedings which result in the collection of such moneys and of the reasonable fees, expenses and advances incurred or made by the Bond Trustee with respect thereto, and the payments of any amounts due under Sections 6.06 and 8.06 of this Bond Indenture be deposited in the Bond Fund, and all amounts held by the Bond Trustee hereunder shall be applied as follows:

(a) Unless the principal of all Outstanding Bonds shall have become or have been declared due and payable:

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

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Second: To the payment to the Persons entitled thereto of the unpaid principal amounts or Redemption Price of any Bonds which shall have become due (other than Bonds previously called for redemption for the payment of which moneys are held pursuant to the provisions hereof), whether at maturity or by call for redemption, in the order of their due dates, and if the amounts available shall not be sufficient to pay in full all the Bonds due on any date, then to the payment thereof ratably, according to the principal amounts or Redemption Price due on such date, to the Persons entitled thereto, without any discrimination or preference.

(b) If the principal amounts of all Outstanding Bonds shall have become or have been declared due and payable, to the payment of the principal amounts and interest then due and unpaid upon the Bonds without preference or priority of principal over interest or of interest over principal, or of any installment of interest over any other installment of interest, or of any Bond over any other Bond, ratably, according to the amounts due respectively for principal amounts and interest, to the Persons entitled thereto without any discrimination or preference.

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

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

Whenever all Bonds and interest thereon have been paid under the provisions of this Section, and all reasonable fees, expenses and charges of the Bond Trustee have been paid, any balance remaining shall be paid to the Person entitled to receive the same; if no other Person shall be entitled thereto, then the balance shall be paid to the University or as a court of competent jurisdiction may direct.

Section 7.05. Remedies Not Exclusive. No remedy by the terms hereof conferred upon or reserved to the Bond Trustee or the Bondholders is intended to be exclusive of any other remedy but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or existing at law or in equity on or after the date hereof.

Section 7.06. Remedies Vested in the Bond Trustee. All rights of action (including the right to file proof of claims) hereunder or under any of the Bonds may be enforced by the Bond Trustee without the possession of any of the Bonds or the production thereof in any trial or other proceedings relating thereto. Any such suit or proceeding instituted by the Bond Trustee may be brought in its name as the Bond Trustee without the necessity of joining as plaintiffs or defendants any Holders of the Bonds. Subject to the provisions of Section 7.04 hereof, any recovery or judgment shall be for the equal benefit of the Holders of the Outstanding Bonds.

Section 7.07. Bondholders’ Control of Proceedings. If a Bond Indenture Event of Default shall have occurred and be continuing, notwithstanding anything herein to the contrary, the Holders of a majority in aggregate principal amount of Bonds then Outstanding shall have the right, at any time, by any instrument in writing executed and delivered to the Bond Trustee to direct the method and place of conducting any proceeding to be taken in connection with the enforcement of the terms and conditions hereof, provided that such direction is in accordance with law and the provisions hereof (including indemnity to the Bond Trustee as provided herein) and, in the sole judgment of the Bond Trustee, is not unduly prejudicial to the interest of Bondholders not joining in such direction

C-13 and provided further that nothing in this Section shall impair the right of the Bond Trustee in its discretion to take any other action hereunder which it may deem proper and which is not inconsistent with such direction by Bondholders.

Section 7.08. Individual Bondholder Action Restricted. (a) No Holder of any Bond shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement hereof or for the execution of any trust hereunder or for any remedy hereunder unless:

(i) a Bond Indenture Event of Default has occurred (A) under subsection (a) or (b) of Section 7.01 hereof of which the Bond Trustee is deemed to have notice, or (B) under subsection (c), (d), (e) or (f) of Section 7.01 hereof as to which the Bond Trustee has actual knowledge or as to which the Bond Trustee has been notified in writing;

(ii) the Holders of at least fifty percent (50%) in aggregate principal amount of Bonds Outstanding shall have made written request to the Bond Trustee to proceed to exercise the powers granted herein or to institute such action, suit or proceeding in its own name;

(iii) such Bondholders shall have offered the Bond Trustee indemnity as provided in Section 8.08 hereof;

(iv) the Bond Trustee shall have failed or refused to exercise the powers herein granted or to institute such action, suit or proceedings in its own name for a period of sixty (60) days after receipt by it of such request and offer of indemnity; and

(v) during such sixty (60) day period no direction inconsistent with such written request has been delivered to the Bond Trustee by the Holders of a majority in aggregate principal amount of Bonds then Outstanding in accordance with Section 7.07 hereof.

(b) No one or more Holders of Bonds shall have any right in any manner whatsoever to affect, disturb or prejudice the security hereof or to enforce any right hereunder except in the manner herein provided and for the equal benefit of the Holders of all Bonds Outstanding.

(c) Nothing contained herein shall affect or impair, or be construed to affect or impair, the right of the Holder of any Bond (i) to receive payment of the principal of or interest on such Bond on or after the due date thereof or (ii) to institute suit for the enforcement of any such payment on or after such due date; provided, however, no Holder of any Bond may institute or prosecute any such suit or enter judgment therein if, and to the extent that, prosecution of such suit or the entry of judgment therein would, under applicable law, result in the surrender, impairment, waiver or loss of the lien hereof on the moneys, funds and properties pledged hereunder for the equal and ratable benefit of all Holders of Bonds.

Section 7.09. Termination of Proceedings. In case any proceeding taken by the Bond Trustee on account of a Bond Indenture Event of Default shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Bond Trustee or to the Bondholders, then the University, the Bond Trustee and the Bondholders shall be restored to their former positions and rights hereunder, and all rights, remedies and powers of the Bond Trustee and the Bondholders shall continue as if no such proceeding had been taken.

Section 7.10. Waiver of Bond Indenture Event of Default. (a) No delay or omission of the Bond Trustee or of any Holder of the Bonds to exercise any right or power accruing upon any Bond Indenture Event of Default shall impair any such right or power or shall be construed to be a waiver of any such Bond Indenture Event of Default or an acquiescence therein. Every power and remedy given by this Article to the Bond Trustee and the Holders of the Bonds, respectively, may be exercised from time to time and as often as may be deemed expedient by them.

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(b) The Bond Trustee may waive any Bond Indenture Event of Default which in its opinion shall have been remedied before the entry of final judgment or decree in any suit, action or proceeding instituted by it under the provisions hereof, or before the completion of the enforcement of any other remedy hereunder.

(c) Notwithstanding anything contained herein to the contrary, the Bond Trustee, upon the written request of the Holders of at least a majority of the aggregate principal amount of Bonds then Outstanding, shall waive any Bond Indenture Event of Default hereunder and its consequences; provided, however, that, except under the circumstances set forth in subsection (b) of Section 7.02 hereof, a default in the payment of the principal amount of, premium, if any, or interest on any Bond, when the same shall become due and payable by the terms thereof or upon call for redemption, may not be waived without the written consent of the Holders of all the Bonds at the time Outstanding.

(d) In case of any waiver by the Bond Trustee of a Bond Indenture Event of Default hereunder, the University, the Bond Trustee and the Bondholders shall be restored to their former positions and rights hereunder, respectively, but no such waiver shall extend to any subsequent or other Bond Indenture Event of Default or impair any right consequent thereon. The Bond Trustee shall not be responsible to any person for waiving or refraining from waiving any Bond Indenture Event of Default in accordance with this Section.

Section 7.11. Notice of Default. (a) Promptly, but in any event within thirty (30) days after (i) the occurrence of a Bond Indenture Event of Default under Section 7.01(a) or (b) hereof, of which the Bond Trustee is deemed to have notice, or (ii) receipt, in writing or otherwise, by the Bond Trustee of actual knowledge or notice of a Bond Indenture Event of Default under Section 7.01 (c), (d), (e) or (f) hereof, the Bond Trustee shall, unless such Bond Indenture Event of Default shall have theretofore been cured, give written notice thereof by first class mail to each Holder of a Bond then Outstanding, provided that, except in the case of a default in the payment of principal amounts or the Redemption Price of or interest on any of the Bonds, the Bond Trustee may withhold such notice to such Holders if, in its sole judgment, it determines that the withholding of such notice is in the best interests of the Bondholders.

(b) The Bond Trustee shall immediately notify the University of (i) the occurrence of a Bond Indenture Event of Default under Section 7.01(a) or (b) hereof and (ii) when the Bond Trustee has received actual knowledge or notice, in writing or otherwise, of a Bond Indenture Event of Default under Section 7.01(c), (d), (e) or (f) hereof.

Section 7.12. Limitations on Remedies. It is the purpose and intention of this Article to provide rights and remedies to the Bond Trustee and Bondholders which may be lawfully granted, but should any right or remedy herein granted be held to be unlawful, the Bond Trustee and the Bondholders shall be entitled as above set forth, to every other right and remedy provided in this Bond Indenture and by law.

THE BOND TRUSTEE

Section 8.01. Duties, Immunities and Liabilities of Bond Trustee.

(A) The Bond Trustee shall perform such duties and only such duties as are specifically set forth in this Bond Indenture. The Bond Trustee shall, during the existence of any Bond Indenture Event of Default which has not been cured, exercise such of the rights and powers vested in it by this Bond Indenture, and use the same degree of care and skill in their exercise, as a reasonable person would exercise or use under the circumstances in the conduct of his or her own affairs. By execution hereof, the Bond Trustee shall evidence the acceptance of the powers, duties and obligations of the Bond Trustee as set forth herein. All Bonds shall be authenticated by the Bond Trustee before delivery in the manner and form provided herein. The Bond Trustee shall have no duty, responsibility or obligation for the issuance of Bonds or for the validity or exactness hereof, or of any other document relating to such issuance. The Bond Trustee makes no representations as to the validity or sufficiency of the Bond Indenture, any Bond or any pledge or security for the Bonds and further is not responsible for, and makes no representations with respect to, matters set forth in any offering memorandum or similar document prepared and distributed in connection with the sale of the Bonds. The Bond Trustee shall have no duty, responsibility or obligation for the payment of Bonds except for payment in accordance with the terms and provisions hereof from, and to the extent of, funds which are held in trust by the Bond Trustee for the purpose of such payment.

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The Bond Trustee shall have no liability for any act or omission to act hereunder, or under any other instrument or document executed pursuant hereto except for the Bond Trustee’s own negligence or willful misconduct. The Bond Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than fifty percent (50%) in aggregate principal amount of Bonds then Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Bond Trustee, or exercising any trust or power conferred upon the Bond Trustee, under this Bond Indenture. The duties and obligations of the Bond Trustee shall be determined solely by the express provisions hereof and no implied covenants or obligations against the Bond Trustee shall be read into this Bond Indenture.

The Bond Trustee shall not be required to expend or risk its own funds or otherwise incur individual liability in the performance of any of its duties or in the exercise of any of its rights or powers as the Bond Trustee, except as may result from its own negligence, willful misconduct or breach of trust.

(B) The University may remove the Bond Trustee at any time unless a Bond Indenture Event of Default shall have occurred and then be continuing, and shall remove the Bond Trustee if at any time requested to do so by an instrument or concurrent instruments in writing signed by the Holders of not less than a majority in aggregate principal amount of the Bonds then Outstanding (or their attorneys duly authorized in writing) or if at any time the Bond Trustee shall cease to be eligible in accordance with subsection (E) of this Section, or shall become incapable of acting, or shall be adjudged as bankrupt or insolvent, or a receiver of the Bond Trustee or its respective property shall be appointed, or any public officer shall take control or charge of the Bond Trustee or of its respective property or affairs for the purpose of rehabilitation, conservation or liquidation, in each case by giving written notice of such removal to the Bond Trustee, as the case may be, and thereupon shall appoint a successor Bond Trustee by an instrument in writing.

(C) The Bond Trustee may at any time resign by giving thirty (30) days’ prior written notice of such resignation to the University, the Bondholders by mail at the addresses shown on the Bond registration books maintained by the Bond Trustee and each rating agency then rating the Bonds. Upon receiving such notice of resignation, the University shall promptly appoint a successor Bond Trustee by an instrument in writing.

(D) Any removal or resignation of the Bond Trustee and appointment of a successor thereto shall become effective upon acceptance of appointment by the successor Bond Trustee. If no successor Bond Trustee shall have been appointed and have accepted appointment within forty-five (45) days of giving notice of removal or notice of resignation as aforesaid, the resigning Bond Trustee or any Bondholder (on behalf of himself and all other Bondholders) may petition any court of competent jurisdiction for the appointment of a successor Bond Trustee, and such court may thereupon, after such notice (if any) as it may deem proper, appoint such successor Bond Trustee. Any successor Bond Trustee appointed under this Bond Indenture shall signify its acceptance of such appointment by executing and delivering to the University and to its predecessor Bond Trustee a written acceptance thereof, and thereupon such successor Bond Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor Bond Trustee, with like effect as if originally named Bond Trustee herein; but, nevertheless at the request of the University or the request of the successor Bond Trustee, such predecessor Bond Trustee shall execute and deliver any and all instruments of conveyance or further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confirming to such successor Bond Trustee all the right, title and interest of such predecessor Bond Trustee in and to any property held by it under this Bond Indenture and shall pay over, transfer, assign and deliver to the successor Bond Trustee any money or other property subject to the trusts and conditions herein set forth. Upon request of the successor Bond Trustee, the University shall execute and deliver any and all instruments as may be reasonably required for more fully and certainly vesting in and confirming to such successor Bond Trustee all such moneys, estates, properties, rights, powers, trusts, duties and obligations. Upon acceptance of appointment by a successor Bond Trustee as provided in this subsection, such successor Bond Trustee shall mail a notice of the succession of such Bond Trustee to the trusts hereunder to the Bondholders at the addresses shown on the bond registration books maintained by the Bond Trustee, to the University and to each rating agency then rating the Bonds.

(E) Any Bond Trustee appointed under the provisions of this Bond Indenture shall be a trust company, association, corporation or bank having trust powers, having a principal corporate trust office in the State

C-16 or, if it shall not have a principal corporate trust office in the State, having the power under State law to perform all the duties of the Bond Trustee hereunder as evidenced by an opinion of its counsel, having a combined capital (exclusive of borrowed capital) and surplus (or the parent holding company of which has a combined capital and surplus) of at least $50,000,000 and subject to supervision or examination by State or federal authorities. In case at any time the Bond Trustee shall cease to be eligible in accordance with the provisions of this subsection (E), the Bond Trustee shall resign immediately in the manner and with the effect specified in this Section.

Section 8.08. The Bond Trustee Not Required to Take Action Unless Indemnified. Except as expressly required herein, the Bond Trustee shall neither be required to institute any suit or action or other proceeding hereunder or appear in any suit or action or other proceeding in which it may be a defendant, or to take any steps to enforce its rights and expose it to liability, nor shall the Bond Trustee be deemed liable for failure to take any such action, unless and until it shall have been indemnified, to its satisfaction, against any and all reasonable costs, expenses, outlays, counsel and other fees, other disbursements including its own reasonable fees and against all liability and damages (including but not limited to liability related to environmental laws and regulations). The Bond Trustee may, nevertheless, begin suit, or appear in and defend suit, or do anything else which in its judgment is proper to be done by it as the Bond Trustee, without prior assurance of indemnity, and in such case the University shall reimburse the Bond Trustee for all reasonable costs, expenses, outlays, counsel and other fees, and other reasonable disbursements including its own fees, and for all liability and damages (including but not limited to liability related to environmental laws and regulations) suffered by the Bond Trustee in connection therewith, except for the Bond Trustee’s negligence, willful misconduct or breach of trust. If the Bond Trustee begins, appears in or defends such a suit, the Bond Trustee shall give reasonably prompt notice of such action to the University, and shall give such notice prior to taking such action if possible. If the University shall fail to make such reimbursement, the Bond Trustee may reimburse itself from any surplus money created hereby; provided, however, that if the Bond Trustee shall collect any amounts or obtain a judgment, decree or recovery, by exercising the remedies available to it hereunder, the Bond Trustee shall have a first claim upon the amount recovered for payment of its reasonable costs, expenses and fees incurred.

SUPPLEMENTS

Section 9.01. Supplements Not Requiring Consent of Bondholders. The University and the Bond Trustee may, without the consent of or notice to any of the Holders, enter into one or more Supplements, which Supplement or Supplements thereafter shall form a part of this Bond Indenture, for one or more of the following purposes:

(a) To cure any ambiguity or formal defect or omission herein;

(b) To correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising hereunder which shall not materially adversely affect the interests of the Holders;

(c) To grant or confer upon the Holders any additional rights, remedies, powers or authority that may lawfully be granted or conferred upon them;

(d) To qualify this Bond Indenture under the Trust Indenture Act of 1939, as amended, or corresponding provisions of federal laws from time to time in effect;

(e) To secure additional revenues or provide additional security or reserves for payment of the Bonds; and

(f) To replace the Bond Trustee in accordance with Section 8.01 hereof.

Any Supplement authorized by the provisions of this Section 9.01 may be executed by the University and the Bond Trustee without the consent of the Holders of any of the Bonds at the time Outstanding, notwithstanding any of the provisions of Section 9.02, but the Bond Trustee shall not be obligated to enter into any

C-17 such Supplement which affects the Bond Trustee’s own rights, duties or immunities under this Bond Indenture or otherwise.

The Bond Trustee shall mail an executed copy of a Supplement authorized by this Section 9.01 to the University and the rating agencies then rating the Bonds promptly after execution by the University and the Bond Trustee.

Section 9.02. Supplements Requiring Consent of Bondholders. (a) Other than Supplements referred to in Section 9.01 hereof and subject to the terms and provisions and limitations contained in this Article and not otherwise, the Holders of not less than a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, from time to time, anything contained herein to the contrary notwithstanding, to consent to and approve the execution by the University and the Bond Trustee of such Supplements as shall be deemed necessary and desirable by the University for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained herein; provided, however, nothing in this Section shall permit or be construed as permitting a Supplement which would:

(i) extend the stated maturity of or time for paying interest on any Bond or reduce the principal amount of or the redemption premium or rate of interest payable on any Bond without the consent of the Holder of such Bond;

(ii) prefer or give a priority to any Bond over any other Bond without the consent of the Holder of each Bond then Outstanding not receiving such preference or priority; or

(iii) reduce the aggregate principal amount of Bonds then Outstanding the consent of the Holders of which is required to authorize such Supplement without the consent of the Holders of all Bonds then Outstanding.

(b) If at any time the University shall request the Bond Trustee to enter into a Supplement pursuant to this Section, the Bond Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of the proposed execution of such Supplement to be mailed by first class mail, postage prepaid, to all Holders of Bonds then Outstanding at their addresses as they appear on the registration books herein provided for. The Bond Trustee shall not, however, be subject to any liability to any Bondholder by reason of its failure to mail, or the failure of such Bondholder to receive, the notice required by this Section, and any such failure shall not affect the validity of such Supplement when consented to and approved as provided in this Section. Such notice shall briefly set forth the nature of the proposed Supplement and shall state that copies thereof are on file at the office of the Bond Trustee for inspection by all Bondholders.

(c) If within such period, not exceeding three years, as shall be prescribed by the University, following the first giving of such notice, the Bond Trustee shall receive an instrument or instruments purporting to be executed by the Holders of not less than the aggregate principal amount or number of Bonds specified in subsection 9.02(a) for the Supplement in question which instrument or instruments shall refer to the proposed Supplement described in such notice and shall specifically consent to and approve the execution thereof in substantially the form of the copy thereof referred to in such notice as on file with the Bond Trustee, thereupon, but not otherwise, the Bond Trustee may execute such Supplement in substantially such form, without liability or responsibility to any Holder of any Bond, whether or not such Holder shall have consented thereto.

(d) Any such consent shall be binding upon the Holder of the Bond giving such consent and upon any subsequent Holder of such Bond and of any Bond issued in exchange therefor (whether or not such subsequent Holder thereof has notice thereof), unless such consent is revoked in writing by the Holder of such Bond giving such consent or by a subsequent Holder thereof by filing with the Bond Trustee, prior to the execution by the Bond Trustee of such Supplement, such revocation. At any time after the Holders of the required principal amount or number of Bonds shall have filed their consents to the Supplement, the Bond Trustee shall make and file with the University a written statement to that effect. Such written statement shall be conclusive that such consents have been so filed.

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(e) If the Holders of the required principal amount or number of the Bonds Outstanding shall have consented to and approved the execution of such Supplement as herein provided, no Holder of any Bond shall have any right to object to the execution thereof, or to object to any of the terms and provisions contained therein or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Bond Trustee or the University from executing the same or from taking any action pursuant to the provisions thereof.

SATISFACTION AND DISCHARGE

Section 10.01. Discharge. If payment of all principal of, premium, if any, and interest on the Bonds in accordance with their terms and as provided herein is made, and if all other sums payable by the University hereunder shall be paid or provided for, then the liens, estates and security interests granted hereby shall cease. Thereupon, upon the request of the University, and upon receipt by the Bond Trustee of a certificate of a University Representative stating that all conditions precedent to the satisfaction and discharge of the lien hereof have been satisfied, the Bond Trustee shall execute and deliver proper instruments acknowledging such satisfaction and discharging the lien hereof and the Bond Trustee shall transfer all property held by it hereunder, other than moneys or obligations held by the Bond Trustee for payment of amounts due or to become due on the Bonds, to the University or such other Person as may be entitled thereto as their respective interests may appear. Such satisfaction and discharge shall be without prejudice to the rights of the Bond Trustee thereafter to charge and be compensated or reimbursed for services rendered and expenditures incurred in connection herewith.

The University may at any time surrender to the Bond Trustee for cancellation any Bond previously authenticated and delivered which the University may have acquired in any manner whatsoever and such Bond upon such surrender and cancellation shall be deemed to be paid and retired.

Section 10.02. Payment of Bonds After Discharge. Notwithstanding the discharge of the lien hereof as in this Article provided, the Bond Trustee shall nevertheless retain such rights, powers and duties hereunder as may be necessary and convenient for the payment of amounts due or to become due on the Bonds and the registration, transfer, exchange and replacement of Bonds as provided herein. Notwithstanding any provision of this Bond Indenture, and subject to applicable escheat laws, any moneys held by the Bond Trustee in trust for the payment of the principal of or premium, if any, or interest on any Bonds and remaining unclaimed for one year after the principal of all the Outstanding Bonds has become due and payable (whether at maturity or upon call for redemption or by declaration as provided in this Bond Indenture), if such moneys were so held at such date, or two years after the date of deposit of such moneys if deposited after said date when all of the Bonds became due and payable, shall be repaid to the University free from the trusts created by this Bond Indenture, and all liability of the Bond Trustee with respect to such moneys shall thereupon cease; provided, however, that before the repayment of such moneys to the University as aforesaid, the Bond Trustee shall (upon the request of the University) first mail to the Holders of Bonds which have not yet been paid, at the addresses shown on the registration books maintained by the Bond Trustee, a notice, in such form as may be deemed appropriate by the Bond Trustee, with respect to the Bonds so payable and not presented and with respect to the provisions relating to the repayment to the University of the moneys held for the payment thereof.

MISCELLANEOUS

Section 11.01. Evidence of Acts of Bondholders. Any request, direction, consent or other instrument provided hereby to be signed and executed by the Bondholders may be in any number of concurrent writings of similar tenor and may be signed or executed by such Bondholders in person or by agent appointed in writing. Proof of the execution of any such request, direction or other instrument or of the writing appointing any such agent and of the ownership of Bonds, if made in the following manner, shall be sufficient for any of the purposes hereof and shall be conclusive in favor of the Bond Trustee and the University, with regard to any action taken by them, or either of them, under such request or other instrument.

The fact and date of the execution by any Person of any such writing may be proved by the certificate of any officer in any jurisdiction who by law has power to take acknowledgments in such jurisdiction, that the Person signing such writing acknowledged before him the execution thereof, including, but not limited to, acknowledgement by a notary public, or by the affidavit of a witness of such execution; and

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The ownership of all Bonds shall be proved by the register of such Bonds maintained by the Bond Trustee.

Nothing in this Section shall be construed as limiting the Bond Trustee to the proof herein specified, it being intended that the Bond Trustee may accept any other evidence of the matters herein stated which it may deem sufficient. In addition, the assignment of ownership of a Bond shall be accompanied by a signature guaranty to the satisfaction of the Bond Trustee.

Any action taken or suffered by the Bond Trustee pursuant to any provision hereof, upon the request or with the assent of any Person who at the time is the Holder of any Bond or Bonds shall be conclusive and binding upon all future Holders of the same Bond or Bonds.

Whenever in this Bond Indenture either the University or the Bond Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Bond Indenture contained by or on behalf of the University or the Bond Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not.

Section 11.04. Holidays. When the date on which principal of or interest or premium on any Bond is due and payable is a day on which banking institutions at a place of payment on the Bonds are authorized by law to remain closed, payment may be made on Bonds presented at such place of payment on the next ensuing day on which banking institutions at such place are not authorized by law to remain closed with the same effect as though payment were made on the due date, and, if such payment is made, no interest shall accrue from and after such due date. When any other action is provided herein to be done on a day named or within a time period named, and the day or the last day of the period falls on a day other than a Business Day, it may be performed on the next ensuing Business Day with the same effect as though performed on the appointed day or within the specified period.

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APPENDIX D

PROPOSED FORM OF OPINION OF HAWKINS DELAFIELD & WOOD LLP

[THIS PAGE INTENTIONALLY LEFT BLANK]

ONE EMBARCADERO CENTER, SUITE 3820 SAN FRANCISCO, CA 94111 WWW.HAWKINS.COM

April 18, 2017

University of Southern California Los Angeles, California

Ladies and Gentlemen:

We have examined a record of proceedings relating to the issuance of $402,320,000 University of Southern California Taxable Bonds, Series 2017 (the “Bonds”) of the University of Southern California (the “University”).

The Bonds are issued under and pursuant to the provisions of the Bond Indenture, dated as of April 1, 2017 (the “Bond Indenture”), between the University and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Bond Trustee”). The University has agreed in the Bond Indenture, among other things, to pay the principal of and interest on the Bonds when due. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Bond Indenture.

The Bonds are dated their date of delivery, bear interest from their date, payable on April 1 and October 1, commencing on October 1, 2017, at the rate of 3.841% per annum and shall mature on October 1, 2047 in the principal amount of $402,320,000.

The Bonds are in the form of fully-registered bonds in denominations of $1,000 and integral multiples thereof as provided in the Bond Indenture and are numbered separately from R-1 upward in order of issuance.

We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the University. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions, referred to herein. We have not undertaken to verify through independent investigation the accuracy of the representations made in the foregoing documents.

We call attention to the fact that the rights and obligations under the Bonds and the Bond Indenture and their enforceability may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against nonprofit entities in the State of California. We express no opinion with respect to any indemnification, contribution, penalty, choice of law, choice of forum or waiver provisions contained in the foregoing documents, 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 Bond Indenture 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 Offering Memorandum or other offering material relating to the Bonds and express no opinion with respect thereto.

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

1. The University is duly authorized and entitled to issue the Bonds and the same have been duly and validly authorized and issued by the University in accordance with the Bond D-1

Indenture, and the Bonds constitute valid, binding, general obligations of the University, enforceable in accordance with their terms and the terms of the Bond Indenture and entitled to the benefits of the Bond Indenture.

2. The University has good right and lawful authority to utilize proceeds of the Bonds to provide for the financing of the Project (as defined in the Bond Indenture).

3. The Bond Indenture has been duly authorized, executed and delivered by the University and, assuming due authorization, execution and delivery by the Bond Trustee, constitutes a valid and legally binding agreement by and between the parties thereto, enforceable in accordance with its terms.

4. Under existing law, interest on the Bonds is included in gross income for federal income tax purposes pursuant to the Internal Revenue Code of 1986, as amended.

Except as stated in paragraph 4 above, we express no opinion as to any other federal, state or local tax consequences arising with respect to the Bonds or the ownership or disposition thereof. We render our opinion under existing statutes and court decisions as of the date hereof, and we assume no obligation to update, revise or supplement this opinion after the date hereof to reflect any action hereafter taken or not taken, or any facts or circumstances, or any change in law or in interpretations thereof, or otherwise, that may hereafter arise or occur, or for any other reason.

In rendering our opinion, have relied on the opinion of the Senior Vice President and General Counsel to the University. We note that such opinion is subject to a number of qualifications and limitations.

We have examined an executed Bond, and in our opinion the form of said Bond and its execution are regular and proper.

Very truly yours,

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APPENDIX E

BOOK-ENTRY SYSTEM

The information in this section concerning The Depository Company, New York, New York ("DTC") and DTC’s book-entry system has been obtained from sources that the University and the Underwriters believe to be reliable, but the University and the Underwriters take no responsibility for the accuracy thereof. DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued in the principal amount of the Bonds, and will be deposited with DTC. DTC, the world's largest depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, 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: AA+. 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. Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for such 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 Participants 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 Participant 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 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. 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 defaults, and proposed amendment to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the bonds for their benefit has

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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. Neither DTC nor Cede & Co. (or any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC's procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the University as soon as possible after the record date. The Omnibus Proxy to the University assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Payments of principal of and interest 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 University or the Bond Trustee, on the 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 or its nominee, the Bond Trustee or the University, subject to any statutory or regulatory requirements as may be in effect from time to time. Payments of principal of and interest on the Bonds to DTC is the responsibility of the University or the Bond Trustee, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct Participants and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the University or the Bond Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, Bond certificates are required to be printed and delivered. The University may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered. AS LONG AS CEDE & CO., OR ITS SUCCESSOR AS DTC'S PARTNERSHIP NOMINEE, IS THE OWNER OF THE BONDS, REFERENCES HEREIN TO “OWNERS” OF THE BONDS SHALL MEAN CEDE & CO., AS AFORESAID, AND SHALL NOT MEAN THE BENEFICIAL OWNERS OF THE BONDS. THE BENEFICIAL OWNERS WILL NOT RECEIVE BONDS REPRESENTING THEIR BENEFICIAL OWNERSHIP INTERESTS IN THE BONDS. IT IS ANTICIPATED THAT EACH BENEFICIAL OWNER WILL RECEIVE A WRITTEN CONFIRMATION OF THE OWNERSHIP INTEREST ACQUIRED BY SUCH BENEFICIAL OWNER IN THE BONDS FROM THE PERSON OR ENTITY FROM WHOM SUCH OWNERSHIP INTEREST IS ACQUIRED. The University and the Bond Trustee cannot and do not give any assurances that DTC will distribute to Participants, or that Participants or others will distribute payments of principal or interest with respect to the Bonds paid to DTC or its nominee as the registered owner or any redemption 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 Offering Memorandum. The University and the Bond Trustee are not responsible or liable for the failure of DTC or any 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. Beneficial Owners of the Bonds may experience some delay in the receipt of distributions of principal of and interest on the Bonds since such distributions will be forwarded by the Bond Trustee to DTC and DTC will credit such distributions to the accounts of the Beneficial Owners either directly or indirectly through Indirect Participants. The University and the Bond Trustee shall be entitled to treat Cede & Co. (or any Bondholder in whose name the Bonds are subsequently registered) as the Bondholder for all purposes of the Bond Indenture and any applicable laws, notwithstanding any notice to the contrary received by any such party; and the University and the Bond Trustee shall have no responsibility for transmitting payments to, communication with, notifying or otherwise dealing with any Beneficial Owners of the Bonds.

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APPENDIX F

GLOBAL CLEARANCE PROCEDURES

The Bonds initially will be registered in the name of Cede & Co. as registered owner and nominee for DTC, which will act as securities depository for the Bonds. Purchases of the Bonds will be in book-entry form only. Clearstream and Euroclear may hold omnibus positions on behalf of their participants through customers’ securities accounts in Clearstream’s and/or Euroclear’s names on the books of their respective U.S. Depositories, which, in turn, hold such positions in customers’ securities accounts in the U.S. Depositories’ names on the books of DTC. Citibank, N.A. acts as the U.S. Depository for Clearstream and JPMorgan Chase Bank acts as the U.S. Depository for Euroclear.

Clearstream

Clearstream Banking, société anonyme, 42 Avenue J.F. Kennedy, L-1855 Luxembourg (“Clearstream, Luxembourg”) is successor in name to Cedel Bank, S.A. Clearstream, Luxembourg is a wholly-owned subsidiary of Clearstream International S.A. On 1 January 1995, Clearstream, Luxembourg was granted a banking license in Luxembourg.

Clearstream International S.A., which is domiciled in Luxembourg, is as from June 2009, 51% owned by Clearstream Holding AG and 49% owned by Deutsche Borse AG (“DBAG”).

Clearstream Holding AG is domiciled in Germany and wholly owned by DBAG.

DBAG is a publicly held company organized under German law and traded on the Frankfurt Stock Exchange.

Clearstream, Luxembourg holds securities for its customers and facilitates the clearance and settlement of securities transactions between Clearstream, Luxembourg customers through electronic book-entry changes in accounts of Clearstream, Luxembourg customers, thereby eliminating the need for physical movement of certificates. Clearstream, Luxembourg provides to its customers, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Clearstream, Luxembourg also deals with domestic securities markets in many countries through established depository and custodial relationships.

Clearstream, Luxembourg is registered as a bank in Luxembourg, and as such is subject to regulation by the Commission de Surveillance du Secteur Financier (“CSSF”), which supervises Luxembourg banks. Since 12 February 2001, Clearstream, Luxembourg has also been supervised by the Central Bank of Luxembourg according to the Settlement Finality Directive Implementation of 12 January 2001, following the official notification to the regulators of the Clearstream, Luxembourg’s role as a payment system provider operating a securities settlement system. Clearstream, Luxembourg’s customers are world-wide financial institutions including underwriters, securities brokers and dealers, banks, trust companies and clearing corporations. Indirect access to Clearstream, Luxembourg is available to other institutions that clear through or maintain a custodial relationship with an account holder of Clearstream, Luxembourg. Clearstream, Luxembourg has established an electronic bridge with Euroclear Bank S.A./N.V. as the Operator of the Euroclear System (the “Euroclear Operator”) in Brussels to facilitate settlement of trades between Clearstream, Luxembourg and the Euroclear Operator.

Euroclear

Euroclear Bank S.A./N.V. (“Euroclear Bank”) holds securities and book-entry interests in securities for participating organizations and facilitates the clearance and settlement of securities transactions between Participants, as defined in the Terms and Conditions Governing Use of Euroclear as amended from time to time (the “Terms and Conditions”), and between Euroclear Participants and Participants of certain other securities intermediaries through electronic book-entry changes in accounts of such Participants or other securities intermediaries. Euroclear Bank provides Euroclear Participants, among other things, with safekeeping,

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administration, clearance and settlement, securities lending and borrowing, and related services. Euroclear Participants are investment banks, securities brokers and dealers, banks, central banks, supranationals, custodians, investment managers, corporations, trust companies and certain other organizations. Certain of the managers or underwriters for this offering, or other financial entities involved in this offering, may be Euroclear Participants. Non-Participants in the Euroclear System may hold and transfer book-entry interests in the securities through accounts with a Participant in the Euroclear System or any other securities intermediary that holds a book-entry interest in the securities through one or more securities intermediaries standing between such other securities intermediary and Euroclear Bank.

Clearance and Settlement. Although Euroclear Bank has agreed to the procedures provided below in order to facilitate transfers of securities among Participants in the Euroclear System, and between Euroclear Participants and Participants of other intermediaries, it is under no obligation to perform or continue to perform such procedures and such procedures may be modified or discontinued at any time.

Initial Distribution. Investors electing to acquire securities through an account with Euroclear Bank or some other securities intermediary must follow the settlement procedures of such an intermediary with respect to the settlement of new issues of securities. Securities to be acquired against payment through an account with Euroclear Bank will be credited to the securities clearance accounts of the respective Euroclear Participants in the securities processing cycle for the business day following the settlement date for value as of the settlement date, if against payment.

Secondary Market. Investors electing to acquire, hold or transfer securities through an account with Euroclear Bank or some other securities intermediary must follow the settlement procedures of such an intermediary with respect to the settlement of secondary market transactions in securities. Euroclear Bank will not monitor or enforce any transfer restrictions with respect to the securities offered herein.

Custody. Investors who are Participants in the Euroclear System may acquire, hold or transfer interests in the securities by book-entry to accounts with Euroclear Bank. Investors who are not Participants in the Euroclear System may acquire, hold or transfer interests in the securities by book-entry to accounts with a securities intermediary who holds a book-entry interest in the securities through accounts with Euroclear Bank.

Custody Risk. Investors that acquire, hold and transfer interests in the securities by book-entry through accounts with Euroclear Bank or any other securities intermediary are subject to the laws and contractual provisions governing their relationship with their intermediary, as well as the laws and contractual provisions governing the relationship between such an intermediary and each other intermediary, if any, standing between themselves and the individual securities.

Euroclear Bank has advised as follows:

Under Belgian law, investors that are credited with securities on the records of Euroclear Bank have a co- property right in the fungible pool of interests in securities on deposit with Euroclear Bank in an amount equal to the amount of interests in securities credited to their accounts. In the event of the insolvency of Euroclear Bank, Euroclear Participants would have a right under Belgian law to the return of the amount and type of interests in securities credited to their accounts with Euroclear Bank. If Euroclear Bank did not have a sufficient amount of interests in securities on deposit of a particular type to cover the claims of all Participants credited with such interests in securities on Euroclear Bank’s records, all Participants having an amount of interests in securities of such type credited to their accounts with Euroclear Bank would have the right under Belgian law to the return of their pro-rata share of the amount of interests in securities actually on deposit.

Under Belgian law, Euroclear Bank is required to pass on the benefits of ownership in any interests in securities on deposit with it (such as dividends, voting rights and other entitlements) to any person credited with such interests in securities on its records.

Initial Settlement; Distributions; Actions on Behalf of the Owners. All of the Bonds will initially be registered in the name of Cede & Co., the nominee of DTC. Clearstream and Euroclear may hold omnibus positions

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on behalf of their participants through customers’ securities accounts in Clearstream’s and/or Euroclear’s names on the books of their respective U.S. Depository, which, in turn, holds such positions in customers’ securities accounts in its U.S. Depository’s name on the books of DTC. Citibank, N.A. acts as depository for Clearstream and JPMorgan Chase Bank acts as depository for Euroclear (the “U.S. Depositories”). Holders of the Bonds may hold their Bonds through DTC (in the United States) or Clearstream or Euroclear (in Europe) if they are participants of such systems, or directly through organizations that are participants in such systems. Investors electing to hold their Bonds through Euroclear or Clearstream accounts will follow the settlement procedures applicable to conventional EuroBonds in registered form. Securities will be credited to the securities custody accounts of Euroclear and Clearstream holders on the business day following the settlement date against payment for value on the settlement date.

Distributions with respect to the Bonds held beneficially through Clearstream will be credited to the cash accounts of Clearstream customers in accordance with its rules and procedures, to the extent receive by its U.S. Depository. Distributions with respect to the Bonds held beneficially through Euroclear will be credited to the cash accounts of Euroclear Participants in accordance with the Terms and Conditions, to the extent received by its U.S. Depository. Such distributions will be subject to tax reporting in accordance with relevant United States tax laws and regulations.

Clearstream or the Euroclear Operator, as the case may be, will take any other action permitted to be taken by an owner of the Bonds on behalf of a Clearstream customer or Euroclear Participant only in accordance with the relevant rules and procedures and subject to the U.S. Depository’s ability to effect such actions on its behalf through DTC.

Procedures May Change. Although DTC, Clearstream and Euroclear have agreed to these procedures in order to facilitate transfers of securities among DTC and its Participants, Clearstream and Euroclear, they are under no obligation to perform or continue to perform these procedures and these procedures may be discontinued and may be changed at any time by any of them.

Secondary Market Trading. Secondary market trading between Participants (other than U.S. Depositories) will be settled using the procedures applicable to U.S. corporate debt obligations in same-day funds. Secondary market trading between Euroclear Participants and/or Clearstream customers will be settled using the procedures applicable to conventional EuroBonds in same-day funds. When securities are to be transferred from the account of a Participant (other than U.S. Depositories) to the account of a Euroclear Participant or a Clearstream customer, the purchaser must send instructions to the applicable U.S. Depository one business day before the settlement date. Euroclear or Clearstream, as the case may be, will instruct its U.S. Depository to receive securities against payment. Its U.S. Depository will then make payment to the Participant’s account against delivery of the securities. After settlement has been completed, the securities will be credited to the respective clearing system and by the clearing system, in accordance with its usual procedures, to the Euroclear Participant’s or Clearstream customers’ accounts. Credit for the securities will appear on the next day (European time) and cash debit will be back-valued to, and the interest on the Bonds will accrue from the value date (which would be the preceding day when settlement occurs in New York). If settlement is not completed on the intended value date (i.e., the trade fails), the Euroclear or Clearstream cash debit will be valued instead as of the actual settlement date.

Euroclear Participants and Clearstream customers will need to make available to the respective clearing systems the funds necessary to process same-day funds settlement. The most direct means of doing so is to pre- position funds for settlement, either from cash on hand or existing lines of credit, as they would for any settlement occurring within Euroclear or Clearstream. Under this approach, they may take on credit exposure to Euroclear or Clearstream until the securities are credited to their accounts one day later. As an alternative, if Euroclear or Clearstream has extended a line of credit to them, participants/customers can elect not to pre-position funds and allow that credit line to be drawn upon to finance settlement. Under this procedure, Euroclear Participants or Clearstream customers purchasing securities would incur overdraft charges for one day, assuming they cleared the overdraft when the securities were credited to their accounts. However, interest on the securities would accrue from the value date. Therefore, in many cases, the investment income on securities earned during that one day period may substantially reduce or offset the amount of such overdraft charges, although this result will depend on each participant’s/customer’s particular cost of funds. Because the settlement is taking place during New York business hours, Participants can employ their usual procedures for sending securities to the applicable U.S. Depository for the

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benefit of Euroclear Participants or Clearstream customers. The sale proceeds will be available to the DTC seller on the settlement date. Thus, to the participant, a cross-market transaction will settle no differently from a trade between two participants.

Due to time zone differences in their favor, Euroclear Participants and Clearstream customers may employ their customary procedure for transactions in which securities are to be transferred by the respective clearing system, through the applicable U.S. Depository to another participant’s. In these cases, Euroclear will instruct its U.S. Depository to credit the securities to the participant’s account against payment. The payment will then be reflected in the account of the Euroclear Participant or Clearstream customer the following business day, and receipt of the cash proceeds in the Euroclear Participant’s or Clearstream customers’ accounts will be back valued to the value date (which would be the preceding day, when settlement occurs in New York). If the Euroclear Participant or Clearstream customer has a line of credit with its respective clearing system and elects to draw on such line of credit in anticipation of receipt of the sale proceeds in its account, the back-valuation may substantially reduce or offset any overdraft charges incurred over that one day period.

If settlement is not completed on the intended value date (i.e., the trade fails), receipt of the cash proceeds in the Euroclear Participant’s or Clearstream customer’s accounts would instead be valued as of the actual settlement date.

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UNIVERSITY OF SOUTHERN CALIFORNIA • Taxable Bonds, Series 2017