NEW ISSUE - BOOK-ENTRY ONLY RATING: S&P: "BBB+" (See "RATING OF THE BONDS" herein)

In the opinion of Kutak Rock LLP, Bond Counsel, under existing laws, regulations, rulings and judicial decisions and assuming the accuracy of certain representations and continuing compliance with certain covenants, interest on the Bands is excludahle fram gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax. Bond Counsel is also of the opinion that interest on the Bonds is exempt from State of California (the ''State'') personal income taxes. For a more complete description of such opinions of Bond Counsel, see "TAX MATTERS" herein. $14,205,000 CALIFORNIA MUNICIPAL FINANCE AUTHORITY REFUNDING REVENUE BONDS (SOUTHERN CALIFORNIA INSTITUTE OF ARCHITECTURE PROJECT) SERIES 2017 Dated: Date of Delivery Due: December 1, as shown below The California Mwticipal Finance Authority (the "Authority") vVill issue its Refunding Revenue Bonds (Southern California Institute of Architecture Project), Series 2017 (the "Bonds") to (i) current refund the Authority's Educational Facility Revenue Bonds (Southern California Institute of Architecture Project) Series 2011 (the "Prior Bonds"), which vVill be outstanding in the aggregate principal amount of $16,030,000 as of the date of delivery of the Bonds, and (ii) pay costs of issuance relating to the Bonds. The Bonds vVill be issued pursuant to the terms of an Indenture of Trust, dated as of December 1, 2017 (the "Indenture"), by and between the Authority and U.S. Bank National Association, as trustee (the "Trustee"). Proceeds of the Bonds will be loaned to the Southern California Institute of Architecture ( the "Corporation"), pursuant to a Loan Agreement, dated as of December 1, 2017 (the "Loan Agreement"), by and between the Authority and the Corporation.

The Bonds vVill bear interest from the date of issuance and delivery thereof, payable semiannually on each June 1 and December 1, commencing June 1, 2018. The Bonds will mature in accordance with the schedule shown on the inside cover hereof. The Bonds will be issuable as fully registered bonds -without coupons in the denominations of $5,000 and any integral multiple thereof. The Bonds will be registered in the name of a nominee of The Depository Trust Company ("DTC"), which will act as 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 bond certificates. Payments of the principal of, premium, if any, and interest on the Bonds vVill be made to DTC by the Trustee. Disbursement of payments to DTC Participants is the responsibility of DTC and disbursement of payments to the Beneficial Owners is the responsibility of DTC Participants. See APPENDIX E - "BOOK-ENTRY SYSTEM." The Bonds and the interest thereon are payable from Revenues (as defined herein) and amounts held in the funds and accounts established pursuant to the Indenture ( other than the Rebate Fund), subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Indenture. Revenues consist primarily of loan payments to be made by the Corporation. The Bonds are subject to redemption prior to maturity, as described herein. See ''THE BONDS - Redemption of Bonds." This cover page contains certain information for general reference only. It is not intended to be a summary of this issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. Capitalized terms used in this cover page shall have the meanings given such terms herein. NONE OF THE AUTHORITY, ANY AUTHORITY MEMBER, OR ANY PERSON EXECUTING THE BONDS IS LIABLE PERSONALLY ON THE BONDS OR SUBJECT TO ANY PERSONAL LIABILITY OR ACCOUNTABILITY BY REASON OF THEIR ISSUANCE. THE BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY FROM AND SECURED BY THE PLEDGE OF CERTAIN REVENUES UNDER THE INDENTURE. NEITHER THE AUTHORITY, ITS MEMBERS, THE STATE OF CALIFORNIA, NOR ANY OF ITS POLITICAL SUBDIVISIONS SHALL BE DIRECTLY, INDIRECTLY, CONTINGENTLY, OR MORALLY OBLIGATED TO USE ANY OTHER MONEYS OR ASSETS TO PAY ALL OR ANY PORTION OF THE DEBT SERVICE DUE ON THE BONDS, TO LEVY OR TO PLEDGE ANY FORM OF TAXATION WHATEVER THEREFOR OR TO MAKE ANY APPROPRIATION FOR THEIR PAYMENT. THE BONDS ARE NOT A PLEDGE OF THE FAITII AND CREDIT OF THE AUTHORITY, ITS MEMBERS, THE STATE OF CALIFORNIA, OR ANY OF ITS POLITICAL SUBDIVISIONS, NOR DO THEY CONSTITUTE INDEBTEDNESS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION. THE AUTHORITY HAS NO TAXING POWER. The Bonds are offered when, as and if issued by the Authority and accepted by the Underwriter subject to receipt of the approving legal opinion of Kutak Rock LLP, Bond CoW1Sel. Certain legal matters vVill be passed upon for the Authority by its special counsel, Jones Hall, A Professional Law Corporation; for the Corporation by its counsel, Allen Matkins Leck Gamble Mallory & Natsis LLP; and for the Underwriter by its counsel, Hawkins Delafield & Wood LLP. It is expected that the Bonds in definitive form will be delivered through the facilities of DTC in New York, New York, on or about December 19, 2017. US Bancorp December 6, 2017 MATURITY SCHEDULE

$14,205,000 Series 2017 Bonds

Maturity Principal Interest December 1 Amount Rate Yield CUSIP1 2018 $315,000 4.000% 1.600% 13048VAA6 2019 345,000 4.000 1.870 13048VAB4 2020 360,000 4.000 1.920 13048VAC2 2021 375,000 4.000 2.000 13048VAD0 2022 390,000 5.000 2.070 13048VAE8 2023 405,000 5.000 2.170 13048VAF5 2024 425,000 5.000 2.280 13048VAG3 2025 450,000 5.000 2.380 13048VAH1 2026 470,000 5.000 2.500 13048VAJ7 2027 495,000 5.000 2.620 13048VAK4 2028 520,000 5.000 2.700'"' 13048VAL2 2029 545,000 5.000 2.760'"' 13048VAM0 2030 575,000 5.000 2.810'"' 13048VAN8 2031 600,000 5.000 2.860'"' 13048VAP3 2032 630,000 5.000 2.910'"' 13048VAQI 2033 665,000 5.000 2.960'"' 13048VAR9 2034 695,000 5.000 3.010'"' 13048VAS7 2035 730,000 5.000 3.060'"' 13048VAT5 2036 765,000 5.000 3.090'"' 13048VAU2 2037 805,000 5.000 3.120'"' 13048VAV0 2038 845,000 5.000 3.140'"' 13048VAW8 2039 890,000 5.000 3.150'"' 13048VAX6 2040 930,000 5.000 3.160'"' 13048VAY4 2041 980,000 5.000 3.170'"' 13048VAZ1

t CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by Standard and Po or's Financial Services LLC on behalf of the American Bankers Association. CUSIP numbers are provided for convenience of reference only. Neither the Corporation nor the Underwriter take any responsibility for the accuracy of such numbers. (cl Yield calculated to the first optional redemption date of December 1, 2027 at par. This Official Statement does not constitute an offer to sell the Bonds in any jurisdiction in which or to any person to whom it is unlawful to make such an offer. No dealer, salesman or any other person has been authorized by the Authority, the Corporation or the Underwriter to give any information or to make any representation other than those contained herein in connection with the offering of the Bonds and, if given or made, such information or representation must not be relied upon.

The information relating to the Authority set forth herein under the captions "THE AUTHORITY" and "ABSENCE OF MATERIAL LITIGATION - The Authority" has been furnished by the Authority. The Authority does not warrant the accuracy of the statements contained herein relating to the Corporation, nor does it directly or indirectly guarantee, endorse or warrant (I) the creditworthiness or credit standing of the Corporation, (2) the sufficiency of the security for the Bonds or (3) the value or investment quality of the Bonds. The Authority makes no representations or warranties whatsoever with respect to any information contained herein except for the information under the captions "THE AUTHORITY" and "ABSENCE OF MATERIAL LITIGATION - The Authority."

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

The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

For purposes of compliance with Rule 15c2-12 of the United States Securities and Exchange Commission, as amended, and in effect on the date hereof, this Official Statement constitutes an official statement of the Corporation that has been deemed final by the Corporation as of its date except for the omission of no more than the information permitted by Rule 15c2-12.

References to website addresses presented herein are for informational purposes only and may be in the form of a hyperlink solely for the reader's convenience. Unless specified otherwise, such websites and the information or links contained therein are not incorporated into, and are not part of, this Official Statement for purposes of, and as that term is defined in, Rule l 5c2-l 2.

Certain statements included or incorporated by reference in this Official Statement constitute "forward­ looking statements." Such statements are generally identifiable by the terminology used such as "plan," "expect," "estimate," "budget," "intend," "projection" or other similar words. Such forward-looking statements include, but are not limited to, certain statements contained in the information in APPENDIX A - "SOUTHERN CALIFORNIA INSTITUTE OF ARCHITECTURE."

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVES KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE CORPORATION 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. [THIS PAGE IN1ENTIONALLY LEFT BLANK] TABLE OF CONTENTS

INTRODUCTION ...... I General ...... I Use of Proceeds ...... I The Corporation ...... I The Bonds ...... I Security for the Bonds ...... 2 Continuing Disclosure ...... 2 lvfiscellaneous ...... 2 THE AUTHORITY ...... 3 PLAN OF REFUNDING ...... 3 ESTIMATED SOURCES AND USES OF FUNDS ...... 4 DEBT SERVICE SCHEDULE ...... 4 THEBONDS ...... 5 General ...... 5 Book-Entry System ...... 5 Redemption of Bonds ...... 6 SECURITY AND SOURCES OF PA YlvIBNT FOR THE BONDS ...... 7 Limited Obligations ...... 7 General ...... 7 Debt Service Coverage Ratio ...... 8 Additional Indebtedness ...... 8 Enforceability of Remedies ...... 9 BONDHOLDERS' RISKS ...... 9 General ...... 9 General Factors Affecting the Corporation ...... I 0 Dependence on Tuition and Other Revenues ...... 11 Dependence on Federal and State Educational Funding ...... 11 Investment Income ...... 11 Fund Raising ...... 12 Competition ...... 12 Enforceability of Remedies ...... 12 Insurance Coverage ...... 12 Forward Looking Statements ...... 13 Effect of Determination ofTaxability ...... 13 Consequences of Changes in the Corporation's Tax Status ...... 14 Potentially Adverse Tax Legislation ...... 14 ABSENCE OF MATERIAL LITIGATION ...... 15 The Authority ...... 15 The Corporation ...... 15 TAX MATTERS ...... 15 UNDERWRITING ...... 17 RA TING OF THE BONDS ...... 17 LEGAL MATTERS ...... 18 CONTINUING DISCLOSURE ...... 18 INDEPENDENT ACCOUNTANTS ...... 18 MISCELLANEOUS ...... 19

APPENDIX A - SOUTHERN CALIFORNIA INSTITUTE OF ARCHITECTURE APPENDIX B - FINANCIAL STATEMENTS OF THE CORPORATION APPENDIX C - SIBvDvlAR Y OF PRINCIPAL LEGAL DOCUMENTS APPENDIX D - PROPOSED FORM OF BOND COUNSEL OPINION APPENDIX E - BOOK-ENTRY SYSTEM APPENDIX F - PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT OFFICIAL STATEMENT

$14,205,000 CALIFORNIA MUNICIPAL FINANCE AUTHORITY REFUNDING REVENUE BONDS (SOUTHERN CALIFORNIA INSTITUTE OF ARCHITECTURE PROJECT) SERIES 2017

INTRODUCTION

General

This Official Statement, including the cover page and the Appendices hereto, furnishes certain information in connection with the sale by the California Municipal Finance Authority (the "Authority") of $14,205,000 in aggregate principal amount of its Refunding Revenue Bonds (Southern California Institute of Architecture Project), Series 2017 (the "Bonds"), to be issued by the Authority pursuant to an Indenture of Trust, dated as of December 1, 2017 (the "Indenture"), between the Authority and US. Bank National Association, as trustee (the "Trustee"). Certain terms used herein are defined in APPENDIX C - "SIBvDvlARY OF PRINCIPAL LEGAL DOCUJvIBNTS"

Use of Proceeds

The Authority will lend the proceeds of the Bonds to the Southern California Institute of Architecture, a California nonprofit public benefit corporation (the "Corporation"), pursuant to a Loan Agreement, dated as of December 1, 2017 (the "Loan Agreement"), by and between the Authority and the Corporation. The Corporation will use the proceeds of the Bonds to (i) current refund the Authority's Educational Facility Revenue Bonds (Southern California Institute of Architecture Project) Series 2011 (the "Prior Bonds"), which will be outstanding in the aggregate principal amount of $16,030,000 as of the date of delivery of the Bonds, and (ii) pay costs of issuance relating to the Bonds.

The Corporation

The Corporation is a non-profit public benefit corporation organized under the laws of the State of California, is an exempt organization under §50l(c)(3) of the Internal Revenue Code of 1986, as amended, and is located in the City of Los Angeles, California. See APPENDIX A - "SOUTHERN CALIFORNIA INSTITUTE OF ARCHITECTURE" for a more detailed description of the Corporation.

At the August 31, 2017 fiscal year end, the Corporation had total assets of $72. 5 million and total net assets of $48.4 million. In addition, the Corporation had total revenues of $25.9 million for the fiscal year ended August 31, 2017 ( consisting of umestricted revenues of $25.6 million and permanently restricted revenues of approximately $300,000). The Corporation's audited financial statements for the fiscal year ended August 31, 2017 are contained in APPENDIX B - "FINANCIAL STATEMENTS OF THE CORPORATION," and should be carefully reviewed in their entirety by prospective investors prior to making an investment decision with respect to the Bonds.

The Bonds

Interest with respect to the Bonds will be payable semiannually on June 1 and December 1 of each year, commencing June 1, 2018. The Bonds will be issued in denominations of $5,000 principal amount or any integral multiple thereof The Bonds will initially be issued in book-entry form and registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC") which will act as securities depository for the Bonds. See APPENDIX E - "BOOK ENTRY SYSTEM" The Bonds will be subject to redemption prior to maturity, as described herein. See "THE BONDS - Redemption of Bonds."

Security for the Bonds

As security for its obligations under the Bonds, the Authority will enter into the Indenture with the Trustee. Pursuant to the Indenture, the Authority will pledge and assign to the Trustee its right, title, and interest in and to (i) the Revenues (generally loan payments to be made by the Corporation under the Loan Agreement as further described herein), and (ii) any other amounts (including proceeds of the sale of all bonds) authorized and secured under the Indenture, but excluding Additional Payments (as defined therein and herein), held in any fund or account established pursuant to the Indenture other than the Rebate Fund. See "SECURITY AND SOURCES OF PA YlvIBNT FOR THE BONDS" and "BONDHOLDERS' RISKS" herein. The proceeds of the Bonds will be loaned by the Authority to the Corporation pursuant to the Loan Agreement. The Corporation's obligation to make loan payments under the Loan Agreement is an unsecured general obligation of the Corporation and is not secured by a pledge of any property of the Corporation.

The Corporation has agreed to certain covenants for the protection of the Bondholders, including certain financial covenants and certain other covenants not to take any action that would impair the tax-exempt status of interest on the Bonds. These and other covenants of the Corporation are discussed further in "SECURITY AND SOURCES OF PA YlvIBNT FOR THE BONDS" and APPENDIX C - "SIBvDvlAR Y OF PRINCIPAL LEGAL DOCUJvIBNTS - THE LOAN AGREEMENT"

Continuing Disclosure

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

Miscellaneous

The descriptions herein of the Indenture, the Loan Agreement, the Tax Regulatory Agreement and other agreements relating to the Bonds are qualified in their entirety by reference to such documents, and the description herein of the Bonds is qualified in its entirety by the forms thereof and the information with respect thereto included in such documents. Such description and information do not purport to be comprehensive or definitive. All descriptions are further qualified in their entirety by reference to laws relating to or affecting the enforcement of creditors' rights. The agreements of the Authority with the Bondholders are fully set forth in the Indenture and neither any advertisement of the Bonds nor this Official Statement is to be construed as constituting an agreement with the purchasers of the Bonds. See APPENDIX C - "SIBvDvlAR Y OF PRINCIPAL LEGAL DOCUJvIBNTS - THE INDENTURE" for a brief summary of the rights and duties of the Authority, the rights and remedies of the Trustee and the Bondholders upon an event of default, provisions relating to amendment of the Indenture and procedures for defeasance of the Bonds.

All capitalized terms used in the body of this Official Statement with respect to the Bonds and not otherwise defined herein have the meanings ascribed to them in APPENDIX C - "SIBvDvlAR Y OF PRINCIPAL LEGAL DOCUJvIBNTS -CERTAIN DEFINITIONS."

Insofar as any statements made in this Official Statement involve matters of opinion, regardless of whether expressly so stated, they are intended merely as such and not as representations of fact. The information and expressions of opinion herein speak only as of their date and are subject to change without

2 notice. Neither the delivery of this Official Statement nor the consummation of any sale made hereunder nor any future use of this Official Statement shall, under any circumstances, create any implication that there has been no change in the affairs of the Authority or the Corporation.

THE AUTHORITY

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

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

Neither the Authority nor its independent contractors has furnished, reviewed, investigated, or verified the information contained in this Official Statement other than the information contained in this section and the section entitled "ABSENCE OF LITIGATION - The Authority." The Authority does not and will not in the future monitor the financial condition of the Corporation or otherwise monitor payment of the Bonds or compliance with the documents relating thereto. Any commitment or obligation for continuing disclosure with respect to the Bonds or the Corporation has been undertaken solely by the Corporation. See "CONTINUING DISCLOSURE" herein.

PLAN OF REFUNDING

The Corporation will use the proceeds of the Bonds to (i) current refund the Prior Bonds, which will be outstanding in the aggregate principal amount of $16,030,000 as of the date of delivery of the Bonds, plus a prepayment fee, and (ii) pay costs of issuance relating to the Bonds. On the date of delivery of the Bonds, a portion of the proceeds of the Bonds will be transferred by the Trustee to the trustee for the Prior Bonds (the "Prior Bonds Trustee"), to redeem the Prior Bonds in full. Upon receipt of the proceeds of the Bonds by the Prior Bonds Trustee, the Prior Bonds will no longer be deemed outstanding.

The Corporation used the proceeds of the Prior Bonds to finance the acquisition of (i) the real property and improvements located at 960 East 3'd Street, Los Angeles, California, and (ii) the real property located at 350 South Merrick Street, Los Angeles, California, which facilities are owned and operated by the Corporation ( collectively, the "Project").

3 ESTIMATED SOURCES AND USES OF FUNDS

The schedule below contains the estimated sources and uses of funds resulting from the sale of the Bonds:

SOURCES OF FUNDS Par Amount of the Bonds $14,205,000.00 Plus: Original Issue Premium 2 262 627.80 TOTAL SOURCES OF FUNDS $16 467 627.80

USES OF FUNDS Refund Prior Bonds $16,030,000.00 Prepayment Fee 135,000.00 Issuance Costs1 302 627.80 TOTAL USES OF FUNDS $16 467 627.80

Includes the llllderwriter's discount, legal, printing, rating, Trustee, and Authority fees and other miscellaneous costs of issuance.

DEBT SERVICE SCHEDULE

The following table shows the estimated annual debt service due on the Bonds, assuming no early redemption of the Bonds. Period Ending Total Annual December 1 Principal Interest Debt Service 2018 $315,000 $661,485 $976,485 2019 345,000 683,700 1,028,700 2020 360,000 669,900 1,029,900 2021 375,000 655,500 1,030,500 2022 390,000 640,500 1,030,500 2023 405,000 621,000 1,026,000 2024 425,000 600,750 1,025,750 2025 450,000 579,500 1,029,500 2026 470,000 557,000 1,027,000 2027 495,000 533,500 1,028,500 2028 520,000 508,750 1,028,750 2029 545,000 482,750 1,027,750 2030 575,000 455,500 1,030,500 2031 600,000 426,750 1,026,750 2032 630,000 396,750 1,026,750 2033 665,000 365,250 1,030,250 2034 695,000 332,000 1,027,000 2035 730,000 297,250 1,027,250 2036 765,000 260,750 1,025,750 2037 805,000 222,500 1,027,500 2038 845,000 182,250 1,027,250 2039 890,000 140,000 1,030,000 2040 930,000 95,500 1,025,500 2041 980,000 49,000 1,029,000 Total $14,205,000 $10,417,835 $24,622,835

4 THE BONDS

General

The Bonds will bear interest from their date of delivery at the rates set forth on the inside cover of this Official Statement. Interest will be payable on June 1 and December 1 of each year, commencing June 1, 2018. The Bonds will mature (subject to the right of prior redemption) as shown on the inside cover of this Official Statement.

The Bonds will be issued as book-entry bonds in denominations of $5,000 and any integral multiple thereof The Bonds will be dated the date of delivery thereof, and each Bond will bear interest from the Interest Payment Date to which interest has been paid as of the date on which it is authenticated, unless it is authenticated on or before May 15, 2018, in which event such Bond will bear interest from its dated date; provided, however, that if, at the time of authentication of any Bond, interest is in default on such Bond, such Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. Interest on the Bonds will be calculated on the basis of a 360-day year of twelve 30-day months and will be payable in arrears on each Interest Payment Date, upon maturity or upon prior redemption.

The Bonds will be registered in the name of Cede & Co., as nominee of the Depository, and will be evidenced by one Bond for each maturity in the total aggregate principal amount of the Bonds of such maturity. Registered ownership of the Bonds, or any portion thereof, may not thereafter be transferred except as described below under the heading "Book-Entry System."

Book-Entry System

Except as otherwise provided in the Indenture, the Bonds will be registered in the name of Cede & Co., the nominee of DTC or such nominee as DTC shall request, and held in DTC's book-entry system. So long as the Bonds are held in the book-entry system, DTC or its nominee will be the registered owner of the Bonds for all purposes of the Indenture and the Bonds. So long as the Bonds are held in book-entry form through DTC, all payments with respect to principal of and interest on each Bond and all notices with respect to such Bond will be made and given, respectively, to DTC as provided in the DTC Representation Letter. See APPENDIX E - "BOOK-ENTRY SYSTEM"

The Bonds issued under the Indenture will be in the form of a single authenticated fully registered bond for each stated maturity representing the aggregate principal amount of the Bonds maturing on such date. Upon initial issuance of the Bonds, the ownership of all such Bonds will be registered in the registration records maintained by the Trustee in the name of Cede & Co., as nominee of DTC, or such other nominee as DTC shall request. The Trustee and the Authority 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 redemption price of and interest on such Bonds, selecting the Bonds or portions thereof to be redeemed, giving any notice permitted or required to be given to Holders under the 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 Trustee nor the Authority or any paying agent will be affected by any notice to the contrary.

With respect to Bonds registered in the Bond Register kept by the Trustee in the name of the nominee, the Authority and the Trustee will have no responsibility or obligation to any Participant or to any person on behalf of which a Participant holds an interest in the Bonds. Without limiting the foregoing sentence, the Authority and the Trustee have no responsibility or obligation with respect to (a) the accuracy of the records of the Securities Depository, the Nominee, or any Participant with respect to any ownership interest in the Bonds; (b) the delivery to any Participant or any other person, other than as shown in the Bond Register kept by the Trustee, of any notice with respect to the Bonds, including any notice of redemption; ( c) the selection by the

5 Securities Depository and its Participants of the beneficial interests in the Bonds to be redeemed in the event the Bonds are redeemed in part; or ( d) the payment to any Participant or any other Person, other than the nominee as shown in the Bond Register kept by the Trustee, of any amount with respect to principal of, interest or premium, if any, on the Bonds. The Authority and the Trustee may treat and consider the person in whose name each Bond is registered in the Bond Register kept by the Trustee as the Holder and absolute Holder of such Bond for the purpose of payment of principal of, interest or premium, if any, on such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond and for all other purposes whatsoever.

Subject to its prior receipt of adequate funds therefor, the Trustee will pay all principal, interest or premium, if any, with respect to the Bonds only to or upon the order of the respective Holders, as shown in the Bond Register kept by the Trustee, or their respective attorneys duly authorized in writing, and all such payments will be valid and effective to fully satisfy and discharge the Authority's obligations with respect to payment of principal, interest or premium, if any, with respect to the Bonds to the extent of the sum or sums so paid. No person other than a Holder, as shown in the Bond Register kept by the Trustee, will receive a Bond evidencing the obligation of the Authority to make payments of principal, interest or premium, if any, pursuant to the Indenture.

Redemption of Bonds

Optional Redemption. The Bonds maturing on or after December I, 2028 will be subject to redemption prior to their scheduled maturities, on or after December I, 2027, at the option of the Corporation, as a whole or in part on any date, from funds derived by the Corporation from any source, at their principal amount, plus accrued interest to the date fixed for redemption, without premium.

Extraordinary OptionalRedemptionfromlnsurance and Condemnation Proceeds. The Bonds will be subject to redemption prior to their stated maturity, at the option of the Corporation as a whole or in part on any date from moneys required to be transferred from the Insurance and Condenmation Proceeds Fund to the Special Redemption Account, at a redemption price equal to the principal amount thereof together with interest accrued thereon to the date fixed for redemption, without premium.

Mandatory Redemption upon Determination ofTaxability. The Bonds will be subject to mandatory redemption prior to their stated maturity, as a whole, on any Business Day not more than 40 days after the Trustee receives notice of a Determination of Taxability, at a redemption price of par, plus interest accrued thereon to the date of redemption.

Notice of Redemption. Notice of redemption will be given by the Trustee to the respective Holders of any Bonds designated for redemption at their addresses appearing on the Bond Register. Each notice of redemption will state the date of such notice, the redemption date, the Redemption Price, the place or places of redemption, the CUSIP number, if any, of the maturity and, if less than all the Bonds are to be redeemed, the distinctive certificate numbers of the Bonds to be redeemed and, in the case of Bonds to be redeemed in part only, the respective portions of the principal, amount thereof to be redeemed. Each such notice will also state that on said date there will become due and payable on each of said Bonds the Redemption Price thereof or of said specified portion of the principal amount thereof in the case of a Bond to be redeemed in part only, together with interest accrued thereon to the redemption date, and that from and after such redemption date interest thereon will cease to accrue, and will require that such Bonds be then surrendered at the address or addresses of the Trustee specified in the redemption notice. Any notice of redemption will be mailed by first­ class mail, postage prepaid, to Bondholders, not less than 30 days or more than 60 days prior to the date fixed for redemption.

Neither failure to receive any notice nor any defect in such notice so given will affect the sufficiency of the proceedings for the redemption of such Bonds. Any notice of redemption given under the Indenture, other than an extraordinary optional redemption from insurance and condenmation proceeds as described

6 above, may be rescinded upon Written Request of the Corporation, at any time up to and including the fifth Business Day prior to the date fixed for redemption. The Trustee will give notice of such rescission in the same manner as for notices of redemption.

Partial Redemption of Bonds; Selection of Bonds. Upon surrender of any Bond redeemed in part only, the Authority will execute, and the Trustee will authenticate and deliver to the Holder thereof, at the expense of the Corporation, a new Bond or Bonds of Authorized Denominations equal in aggregate principal amount to the umedeemed portion of the Bond surrendered bearing the same interest rate and maturity date.

Whenever provision is made in the Indenture for the redemption of less than all of the Bonds, the Corporation will select the maturities of the Bonds to be redeemed and the Trustee will select the Bonds within each specified maturity to be redeemed or such given portion thereof not previously called for redemption by lot in any manner which the Trustee in its sole discretion deems appropriate.

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

SECURITY AND SOURCES OF PAYMENT 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 security for the Bonds as provided by the Indenture and the Loan Agreement, see APPENDIX C - "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS -THE INDENTURE" and" -THE LOAN AGREEMENT"

Limited Obligations

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

General

Pursuant to the Indenture, the Authority will irrevocably pledge to the Trustee for the benefit of the Holders of the Bonds, all Revenues received by the Authority or the Trustee for the account of the Authority pursuant or with respect to the Loan Agreement ( except Additional Payments), including, without limiting the

7 generality of the foregoing, Base Loan Payments (including both timely and delinquent payments), prepayments and all income derived from the investment of any moneys in any fund or account established pursuant to the Indenture, but not including amounts received for or on deposit in the Rebate Fund.

Pursuant to the Loan Agreement, the Corporation will have an absolute and unconditional obligation to make the Base Loan Payments, which will be used to pay the principal of, premium, if any, and interest on the Bonds, and the Additional Payments, in accordance with the Loan Agreement. See APPENDIX C - "SUJvDv[ARY OF PRINCIPAL LEGAL DOCUJvIBNTS - THE LOAN AGREEMENT" The Corporation's obligation to make loan payments under the Loan Agreement is an unsecured general obligation of the Corporation and is not secured by a pledge of any property of the Corporation, including the Project.

Although the Bonds will be issued by the Authority, the Bonds should be viewed as direct obligations of the Corporation for purposes of evaluating their security.

Debt Service Coverage Ratio

Under the Loan Agreement, the Corporation covenants to maintain a minimum Debt Service Coverage Ratio of 1.10:1.00 for each Fiscal Year, commencing with the Fiscal Year ending August 31, 2018, calculated as of the last day of each Fiscal Year, based on the Corporation's audited financial statements. Contemporaneously with the filing of the Corporation's audited financial statements required pursuant to the Continuing Disclosure Agreement, the Corporation will provide a certificate to the Trustee, which shall also be filed with EMlvlA, to evidence the Corporation's Debt Service Coverage Ratio, which evidence may be in the form of a certificate of the Accountant reporting on such annual audited financial statements or included in the notes to the Corporation's annual audited financial statements.

In the event the Debt Service Coverage ratio is below I. 10 to 1.00 as of any calculation date, the Corporation will promptly employ (or cause to be employed) an Independent Consultant to review and analyze the operations and administration of the Corporation, submit to the Corporation and Trustee written reports, and make such recommendations as to the operations and administration of the Corporation as such Independent Consultant deems appropriate, including any recommendation as to a revision of the methods of operations and administration of the Corporation. The Corporation agrees to consider any recommendations by the Independent Consultant and, to the fullest extent practicable and allowed by law and consistent with its covenants hereunder, to adopt and carry out such recommendations. So long as the Corporation is otherwise in compliance with the provisions of this subheading and using its best efforts to implement, subject to the limitations set forth herein, the recommendations of the Independent Consultant, no default will be deemed to have occurred so long as the Debt Service Coverage Ratio is equal to or greater than 1.00 to 1.00.

Additional Indebtedness

Under the Loan Agreement, the Corporation covenants not to incur any Indebtedness unless such Indebtedness is incurred in compliance with any one of the following provisions:

(i) Indebtedness, if prior to incurrence of such Indebtedness, the Corporation delivers to the Trustee a Certificate of the Corporation certifying, together with a certificate of an Accountant confirming the contents thereof, that the Corporation's Liquidity Ratio as of the most recent Fiscal Year end is not less than 50%.

(ii) Indebtedness for the purpose of refunding any outstanding Indebtedness so as to render it no longer outstanding if:

(A) the principal ( or mandatory sinking fund or installment purchase price or lease rental or similar payments) and interest payments on the proposed Indebtedness do not

8 exceed the principal ( or mandatory sinking fund or installment purchase price or lease rental or similar payments) and interest payments on the Indebtedness being refunded, or

(B) the requirements of paragraph (i) above are met.

Under the Indenture, "Indebtedness" of any person at any date of determination means the total amount of obligations of the Corporation to pay others, excluding trade payables incurred in the ordinary course of business but including, without limitation, (a) the Corporation's obligations under or with respect to the Bonds or the Loan Agreement, the Continuing Disclosure Agreement or the Tax Regulatory Agreement relating to the Bonds, (b) amounts owing pursuant to any derivative or similar contract, (c) any guarantee, (d) payments under leases which are capitalized in accordance with GAAP having a term of more than one year from the date of incurrence or assumption thereof by the Corporation which, under GAAP, are shown on the balance sheet as a liability, and (e) payments under installment purchase contracts having an original term in excess of one year, notwithstanding the fact that payments in respect thereof (whether installment, serial maturity or sinking fund or otherwise) are required to be made less than one year after the date of creation thereof

Under the Indenture, "Liquidity Ratio" means, as of the date of measurement, the ratio (expressed as a percentage) determined by dividing Cash and Investments by the sum of (i) the principal amount of Indebtedness outstanding, plus (ii) the principal amount of any Indebtedness then proposed to be incurred.

Enforceability of Remedies

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

BONDHOLDERS' RISKS

General

An investment in the Bonds involves a degree of risk because of the various risks described in this Official Statement. No person should purchase any of the Bonds without carefully reviewing the following information, which summarizes some, but not all, of the factors that should be carefully considered prior to such a purchase. Furthermore, the tax-exempt feature of the Bonds is relatively more valuable to high tax bracket investors than to investors who are in the lower tax brackets, and so the value of the interest compensation to any particular investor will vary with his or her marginal tax rate. Each prospective investor should, therefore, determine his or her present and anticipated marginal tax rate before investing in the Bonds. Each prospective investor should also carefully examine this Official Statement and his or her own financial condition (including the diversification of his or her investment portfolio) in order to make a judgment as to whether the Bonds are an appropriate investment.

9 The Bonds are special, limited obligations of the Authority, payable solely from loan payments to be made by the Corporation under the Loan Agreement and certain other funds held by the Trustee under the Indenture and secured by the Revenues, which principally consist of loan payments to be made by the Corporation. The Corporation's obligation to make such loan payments is an unsecured general obligation of the Corporation and not secured by a pledge of any property of the Corporation. No representation or assurance can be given that the Corporation will realize revenues in amounts sufficient to make such payments with respect to the Bonds and to pay other expenses and obligations of the Corporation. The realization of future revenues is dependent upon, among other things, the capabilities of the management of the Corporation and future changes in economic and other conditions that are unpredictable and cannot be determined at this time.

Identified and summarized below are a number of "Bondholders' Risks" that could adversely affect the operation of the Project and/or the Bonds and that should be considered by prospective investors. The following discussion is not intended to be exhaustive, but includes certain major factors that should be considered along with other factors set forth elsewhere in this Official Statement, including the Appendices hereto.

General Factors Affecting the Corporation

The Corporation operates an independent architecture school and is subject to the demand for architecture training and the job market for architects. The Corporation is also subject to the same competitive pressures that affect other private schools. Changing demographics may mean a smaller pool of persons from which to draw entering classes. Greater competition for students together with rising tuition may mean that the Corporation will need to increase its financial aid packages to attract and retain students or that it may face fewer students and decreased revenues. Attracting and keeping qualified administrators and faculty may mean higher expenditures for salaries and administrative costs. Each of these factors can have an impact on the revenues of the Corporation. Factors that may also adversely affect the operations of the Corporation, although the extent cannot be presently determined, include, among others: (I) changes in the demand for higher education in general or for programs offered by the Corporation in particular; (2) a decrease in availability of student loan funds or other aid; (3) reductions in funding support from donors; (4) labor issues or an increase in the costs of health care benefits, retirement plan or other benefit packages offered by the Corporation to its employees and retirees; (5) a significant decline in the Corporation's investments based on market or other external factors; (6) litigation; and (7) natural disasters, which might damage the Corporation's facilities, interrupt service to its facilities or otherwise impair the operation of the Corporation's facilities. Neither the Underwriter nor the Authority has made any independent investigation of the extent to which any such factors will have an adverse impact on the revenues of the Corporation.

Both the Corporation's stature in the educational community and its revenues, expenditures, assets and liabilities may be affected by events, developments and conditions relating generally to, among other things, the ability of the Corporation: (i) to attract students and maintain enrollment levels, and to provide educational services of the types and quality required to maintain its stature; (ii) to generate sufficient revenues while controlling expenses, so that these services can be provided at a cost acceptable to the Corporation's students; (iii) to attract faculty, staff and management necessary to provide these services and sufficient students; and (iv) to build and maintain the facilities necessary to provide these services. The Corporation has a significant number of international students and the ability to attract and maintain enrollment of international students may be subject to special risks. See APPENDIX A - "SOUTHERN CALIFORNIA INSTITUTE OF ARCHITECTIJRE - Diversity."

The Corporation's success in the areas described above depends upon the ability of the Corporation and its management to respond to substantial challenges in a rapidly changing environment including, among others, (i) legislation and regulation by governmental authorities, including developments affecting the authority of educational institutions like the Corporation to do business under state and/or federal laws, the tax­ exempt status of educational institutions like the Corporation, changes in levels of funding and reimbursement

10 for administrative overhead and infrastructure, regulation of tuition levels, changes in immigration laws limiting the University's ability to admit international students or hire international administrators and faculty, and limitations on the Corporation's expansion and use of facilities; (ii) competition in the provision of educational services particularly through new educational media and distance learning; (iii) developments in the regional, national and international economies, such as the high regional cost of living in California and increases in regional energy costs; (iv) volatility in the financial markets, variations in economic growth, changes in monetary policy and taxation, and the adequacy of the Corporation'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 Corporation's endowment, other investments and its donors to support Corporation operations and capital needs; and (v) changes in accreditation standards. The preservation and growth of the Corporation'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 of Trustees and Corporation management. See APPENDIX A - "SOUTHERN CALIFORNIA INSTITUTE OF ARCHITECTURE" and APPENDIX B - "FINANCIAL STATEMENTS OF THE CORPORATION"

Dependence on Tuition and Other Revenues

Net tuition and fee revenues are the largest revenue source for the Corporation, representing approximately 83.3% of total revenues for the Fiscal Year ended August 31, 2017. While the Corporation has been able to demonstrate sufficient student demand for its academic programs at current tuition levels, there is no assurance that the Corporation will be able to maintain student demand at current and planned tuition levels. If the Corporation is unable to generate sufficient revenues to pay principal of and interest on the Bonds, an Event of Default will occur under the Indenture. Upon the occurrence of an Event of Default, the Bonds may not be paid or may be paid before maturity or applicable redemption dates. The Corporation's ability to generate revenues and its overall financial condition may be adversely affected by a wide variety of future events and conditions including (i) a decline in enrollment, including international students, (ii) increased competition from other schools, (iii) loss of accreditation, and (iv) failure to meet applicable federal guidelines or some other event that results in students being ineligible for federal financial aid.

Dependence on Federal and State Educational Funding

A percentage of the Corporation's revenues from tuition and fees has been funded by guaranteed student loans and other federal government programs. See APPENDIX A - "SOUTHERN CALIFORNIA INSTITUTE OF ARCHITECTURE - FINANCIAL CONDITION OF SCI-ARC - Student Financial Aid." Financial assistance is a significant factor in the decision of many students to attend a particular institution. Approximately 32.3% of the student body receives governmental financial assistance in the form of grants, loans, and work study. The level of financial assistance is directly affected by funding levels of federal and State financial aid programs, the level of private giving to the Corporation, and income derived from the investment of endowment and similar funds.

There is no assurance that governmental financial assistance programs will continue to be available to the students of the Corporation. A substantial change in governmental financial assistance could adversely affect the Corporation's ability to make payments under the Loan Agreement.

Investment Income

A portion of the Corporation's total revenues and support (unrestricted, temporarily restricted, and permanently restricted net assets) is derived from income earned on investments in the Corporation's funds (investment income and net realized and unrealized gains on investments). See APPENDIX A - "SOUTHERN CALIFORNIA INSTITUTE OF ARCHITECTURE - FINANCIAL CONDITION OF SCI-ARC - Cash and Investments" herein. There can be no assurance that developments in the securities markets will not have an adverse effect on the market value of those investments and the income generated therefrom.

11 Fund Raising

The Corporation has historically been able to raise funds from a variety of sources to finance, in part, its operations and capital development programs and to build the size of its endowment. While the Corporation plans to continue these efforts, there can be no assurance that they will be successful. Such efforts may be affected adversely by a number of factors, including changes in general economic conditions and changes in tax law affecting the deductibility of charitable contributions.

Competition

A key factor in maintaining the Corporation's revenues is the Corporation's ability to attract a sufficient number of qualified students and qualified faculty. The Corporation competes with higher education institutions located in California as well as other institutions in the other recruiting areas from which the Corporation draws its students, including publicly-supported institutions. The Corporation expects to encounter competition in maintaining its recruiting base and seeking to expand its student recruitment. Attracting and retaining qualified faculty is essential to attracting qualified students and is dependent on the Corporation's ability to offer competitive compensation and facilities constituting the working environment. No assurances can be given that the Corporation will continue to attract sufficient numbers of qualified students or faculty so that the Corporation's revenues will be sufficient to make the payments required under the Loan Agreement.

Enforceability of Remedies

The Bonds are payable from the funds pledged under the Indenture, including payments to be made under the Loan Agreement. The payments to be made by the Corporation under the Loan Agreement are an unsecured general obligation of the Corporation. Pursuant to the Indenture, the Bonds are secured by a grant of a security interest to the Trustee in the Authority's interest in the Loan Agreement. The practical realization of value upon any default will depend upon the exercise of various remedies specified by the financing documents. These and other remedies may, in many respects, require judicial actions, which are often subject to discretion and delay.

Under existing law (including, particularly, federal bankruptcy law), the remedies specified by the financing documents may not be readily available or may be limited. A court may decide not to order the specific performance of the covenants contained in the financing documents. The various legal opinions to be delivered concurrently with the Bonds (including Bond Counsel's approving opinion and the opinion of counsel to the Corporation) will be qualified, as to the enforceability of the various legal instruments, by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by general principles of equity applied in the exercise of judicial discretion.

Insurance Coverage

The insurance requirements imposed by the Loan Agreement are limited, and insurance proceeds may not be available to cover all claims or risks relating to the Corporation or its facilities. See APPENDIX A - "SOUTHERN CALIFORNIA INSTITUTE OF ARCHITECTURE - FINANCIAL CONDITION OF SCI­ ARC - Risk Management." Litigation could arise from the business activities of the Corporation, including from its status as an employer. See "ABSENCE OF MATERIAL LITIGATION - The Corporation" and APPENDIX A - "SOUTHERN CALIFORNIA INSTITUTE OF ARCHITECTURE - FINANCIAL CONDITION OF SCI-ARC - Litigation." Many of these risks are covered by insurance, but some may not be covered completely or at all.

Future increases in insurance premiums and future limitations on the availability of certain types of insurance coverage could have an adverse impact on the Corporation's financial condition and operations and, ultimately, could adversely impact the ability of the Corporation to meet debt service on the Bonds.

12 Generally, throughout California, some level of seismic activity occurs on a regular basis. Periodically, the magnitude of a single seismic event can cause significant ground shaking and potential for damage to property located at or near the center of such seismic activity. The Corporation currently does not maintain flood insurance but maintains earthquake insurance; however, the Corporation may decide not to maintain earthquake insurance in the future.

Forward Looking Statements

This Official Statement statements relating to future results that are "forward looking statements" as defined in the Private Securities Litigation Reform Act of 1995. When used in this Official Statement, the words "estimate," "forecast," "intend," "expect," and similar expressions identify forward looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward looking statements. The factors that may cause projected revenues and expenditures to be materially different from those anticipated include (I) the ability of the students of the Corporation to meet their financial obligations, (2) lower than anticipated revenues, (3) higher than anticipated operating expenses, (4) litigation, (5) changes in governmental regulation, (6) loss of federal tax-exempt status of the Corporation, (7) changes in demographic trends, (8) competition from other similar institutions, and (9) general economic conditions. No representation or assurances can be made that Revenues will be generated from the operation of the Corporation in amounts sufficient to pay maturing principal and interest on the Bonds.

Effect of Determination ofTaxability

The Corporation will covenant not to take any action that would cause the Bonds to be arbitrage bonds or that would otherwise adversely affect the federal income tax status of interest in the Bonds. The Corporation will also make representations with respect to certain matters within its knowledge that have been relied on by Bond Counsel and that Bond Counsel has not independently verified. Failure to comply with such covenants could cause interest on the Bonds to become subject to federal income taxation retroactively from the Closing Date.

It is possible that a period of time may elapse between the occurrence of the event that causes interest to become taxable and the determination that such an event has occurred. In such a case, interest previously paid on the Bonds could become retroactively taxable from the date of their issuance. Additionally, certain owners of Bonds are subject to possible adverse tax consequences. See "TAX Jv[A TTERS" herein.

An opinion of Bond Counsel will be obtained as described under "TAX MATTERS" herein. Such an opinion is not binding on the Internal Revenue Service. Application for a ruling from the Internal Revenue Service regarding the status of the interest on the Bonds has not been made. The opinion of Bond Counsel contains certain exceptions and is based on certain assumptions described herein under the heading "TAX MATTERS." Failure by the Authority or the Corporation to comply with certain provisions of the Code and covenants contained in the Indenture, the Loan Agreement, and the Tax Regulatory Agreement could result in interest on the Bonds becoming includable in gross income for federal tax purposes.

An opinion of Bond Counsel will be obtained regarding the exemption of interest on the Bonds from certain taxation by the State of California, as described under "TAX MATTERS" herein. Bond Counsel has not opined as to whether interest on the Bonds is subject to state or local income taxation in jurisdictions other than California. Interest on the Bonds may or may not be subject to state or local income taxation in jurisdictions other than California under applicable state or local laws. Each purchaser of the Bonds should consult his or her own tax advisor regarding the taxable status of the Bonds in a particular state or local jurisdiction.

13 Consequences of Changes in the Corporation's Tax Status

The Corporation has obtained a determination letter from the Internal Revenue Service stating that it will be treated as an exempt organization as described in §50l(c)(3) of the Code and can reasonably be expected to not be classified as a "private foundation." In order to maintain its exempt status and to not be considered a private foundation, the Corporation will be subject to a number of requirements affecting its operation. The possible modification or repeal of certain existing federal income tax laws, the change of Internal Revenue Service policies or positions, the change of the Corporation's method of operations, purposes or character or other factors could result in loss by the Corporation of its tax-exempt status.

In recent years, the IRS and state, county and local taxing authorities have been undertaking audits and reviews of the operations of tax-exempt organizations with respect to their exempt activities and the generation of unrelated business taxable income ("UBTI"). The Corporation has not historically generated any significant amount ofUBTI. The Corporation may participate in activities which generate UBTI in the future. Management believes it has properly accounted for and reported UBTI; nevertheless, an investigation or audit could lead to a challenge which could result in taxes, interest and penalties with respect to unreported UBTI and in some cases could ultimately affect the tax-exempt status of the Corporation as well as the exclusion from gross income for federal income tax purposes of the interest on the Bonds and other future tax-exempt debt of the Corporation, if any.

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

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

The Corporation will covenant to remain eligible for such tax-exempt status and to avoid operating the Project as an unrelated trade or business (as determined by applying §512(a) of the Code). Failure of the Project to remain so qualified or of the Corporation to so operate the Project could affect the funds available to the Corporation for payments under the Loan Agreement by subjecting the Corporation to federal income taxation and could result in the loss of the excludability of interest on the Bonds from gross income for purposes of federal income taxation. See "Effect of Determination ofTaxability" above.

Potentially Adverse Tax Legislation

There are or may be pending in the Congress of the United States legislative proposals, including some that carry retroactive effective dates, that, if enacted, could alter or amend the federal tax matters referred to above or affect the market value of the Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, it would apply to bonds issued prior to enactment. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation. Bond Counsel expresses no opinion regarding any pending or proposed federal tax legislation. See "TAX MATTERS."

14 ABSENCE OF MATERIAL LITIGATION

The Authority

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

The Corporation

There is no litigation now pending or threatened against the Corporation, of which the Corporation has knowledge, that in any manner questions the right of the Corporation to enter into or perform its obligations under the Loan Agreement or that individually or in the aggregate would adversely affect the operations of the Corporation, financial or otherwise.

TAX MATTERS

General M afters. In the opinion of Kulak Rock LLP, Bond Counsel, under existing laws, regulations, rulings and judicial decisions, interest on the Bonds is excludable from gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax. The opinion described in the preceding sentence assumes the accuracy of certain representations and compliance by the Authority and the Corporation with covenants designed to satisfy the requirements of the Code that must be met subsequent to the issuance of the Bonds. Failure to comply with such requirements could cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The Authority and the Corporation have covenanted to comply with such requirements. Bond Counsel has expressed no opinion regarding other federal tax consequences arising with respect to the Bonds.

Notwithstanding Bond Counsel's opinion that interest on the Bonds is not a specific preference item for purposes of the federal alternative minimum tax, such interest will be included in adjusted current earnings of certain corporations, and such corporations are required to include in the calculation of alternative minimum taxable income 75 percent of the excess of such corporations' adjusted current earnings over their alternative minimum taxable income ( determined without regard to such adjustment and prior to reduction for certain net operating losses).

The accrual or receipt of interest on the Bonds may otherwise affect the federal income tax liability of the owners of the Bonds. The extent of these other tax consequences will depend on such owners' particular tax status and other items of income or deduction. Bond Counsel has expressed no opinion regarding any such consequences. Purchasers of the Bonds, particularly purchasers that are corporations (including S corporations and foreign corporations operating branches in the United States of America), property or casualty insurance companies, banks, thrifts or other financial institutions, certain recipients of social security or railroad retirement benefits, taxpayers entitled to claim the earned income credit, taxpayers entitled to claim the refundable credit in Section 36B of the Code for coverage under a qualified health plan or taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations, should consult their tax advisors as to the tax consequences of purchasing or owning the Bonds.

Bond Counsel is also of the opinion that interest on the Bonds is exempt from State of California personal income taxes. Bond Counsel has expressed no opinion regarding other tax consequences arising with respect to the Bonds under the laws of the State or any other state or jurisdiction.

A copy of the anticipated form of opinion of Bond Counsel is attached hereto as APPENDIX D.

Original Issue Discount. The Bonds that have an original yield above their respective interest rates, as shown on the inside cover of this Official Statement (collectively, the "Discount Bonds"), are being sold at

15 an original issue discount. The difference between the initial public offering prices of such Discount Bonds and their stated amounts to be paid at maturity constitutes original issue discount treated in the same manner for federal income tax purposes as interest, as described above.

The amount of original issue discount that is treated as having accrued with respect to a Discount Bond is added to the cost basis of the owner of the bond in determining, for federal income tax purposes, gain or loss upon disposition of such Discount Bond (including its sale, redemption or payment at maturity). Amounts received on disposition of such Discount Bond that are attributable to accrued original issue discount will be treated as tax-exempt interest, rather than as taxable gain, for federal income tax purposes.

Original issue discount is treated as compounding semiannually, at a rate determined by reference to the yield to maturity of each individual Discount Bond, on days that are determined by reference to the maturity date of such Discount Bond. The amount treated as original issue discount on such Discount Bond for a particular semiannual accrual period is equal to (a) the product of (i) the yield to maturity for such Discount Bond ( determined by compounding at the close of each accrual period) and (ii) the amount that would have been the tax basis of such Discount Bond at the beginning of the particular accrual period if held by the original purchaser, (b) less the amount of any interest payable for such Discount Bond during the accrual period. The tax basis for purposes of the preceding sentence is determined by adding to the initial public offering price on such Discount Bond the sum of the amounts that have been treated as original issue discount for such purposes during all prior periods. If such Discount Bond is sold between semiannual compounding dates, original issue discount that would have been accrued for that semiannual compounding period for federal income tax purposes is to be apportioned in equal amounts among the days in such compounding period.

Owners of Discount Bonds should consult their tax advisors with respect to the determination and treatment of original issue discount accrued as of any date and with respect to the state and local tax consequences of owning a Discount Bond. Subsequent purchasers of Discount Bonds that purchase such bonds for a price that is higher or lower than the "adjusted issue price" of the bonds at the time of purchase should consult their tax advisors as to the effect on the accrual of original issue discount.

Original Issue Premium The Bonds that have an original yield below their respective interest rates, as shown on the inside cover of this Official Statement ( collectively, the "Premium Bonds"), are being sold at a premium. An amount equal to the excess of the issue price of a Premium Bond over its stated redemption price at maturity constitutes premium on such Premium Bond. A purchaser of a Premium Bond must amortize any premium over such Premium Bond's term using constant yield principles, based on the purchaser's yield to maturity (or, in the case of Premium Bonds callable prior to their maturity, generally by amortizing the premium to the call date, based on the purchaser's yield to the call date and giving effect to any call premium). As premium is amortized, the amount of the amortization offsets a corresponding amount of interest for the period, and the purchaser's basis in such Premium Bond is reduced by a corresponding amount resulting in an increase in the gain ( or decrease in the loss) to be recognized for federal income tax purposes upon a sale or disposition of such Premium Bond prior to its maturity. Even though the purchaser's basis may be reduced, no federal income tax deduction is allowed. Purchasers of the Premium Bonds should consult their tax advisors with respect to the determination and treatment of premium for federal income tax purposes and with respect to the state and local tax consequences of owning a Premium Bond.

Backup Withholding. As a result of the enactment of the Tax Increase Prevention and Reconciliation Act of 2005, interest on tax-exempt obligations such as the Bonds is subject to information reporting in a manner similar to interest paid on taxable obligations. Backup withholding may be imposed on payments to any owner of the Bonds that fails to provide certain required information including an accurate taxpayer identification number to any person required to collect such information pursuant to Section 6049 of the Code. The reporting requirement does not in and of itself affect or alter the excludability of interest on the Bonds from gross income for federal income tax purposes or any other federal tax consequence of purchasing, holding or selling tax-exempt obligations.

16 Changes in Federal and State Tax Law. From time to time, there are legislative proposals in the Congress and in the states that, if enacted, could alter or amend the federal and state tax matters referred to under this heading "TAX MATTERS" or adversely affect the market value of the Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether if enacted it would apply to bonds issued prior to enactment. In addition, regulatory actions are from time to time announced or proposed and litigation is threatened or commenced which, if implemented or concluded in a particular manner, could adversely affect the market value of the Bonds. It cannot be predicted whether any such regulatory action will be implemented, how any particular litigation or judicial action will be resolved, or whether the Bonds or the market value thereof would be impacted thereby. Purchasers of the Bonds should consult their tax advisors regarding any pending or proposed legislation, regulatory initiatives or litigation. The opinions expressed by Bond Counsel are based on existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the Bonds, and Bond Counsel has expressed no opinion as of any date subsequent thereto or with respect to any pending legislation, regulatory initiatives or litigation.

PROSPECTIVE PURCHASERS OF THE BONDS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS PRIOR TO ANY PURCHASE OF THE BONDS AS TO THE IMPACT OF THE CODE UPON THEIR ACQUISITION, HOLDING OR DISPOSITION OF THE BONDS.

UNDERWRITING

The Authority is offering the Bonds through US. Bancorp Investments, Inc. (the "Underwriter"), pursuant to a Bond Purchase Agreement. The Underwriter has agreed to purchase the Bonds at a price of $16,325,847.27 which represents the par amount of the Bonds, plus original issue premium of $2,262,627.80 and less the Underwriter's discount of $141,780.53. The Bond Purchase Agreement provides that the Underwriter will purchase all of the Bonds, if they are purchased. Pursuant to the Bond Purchase Agreement, the Corporation will indemnify the Underwriter, the Authority and the Trustee against certain liabilities, including certain liabilities under federal securities laws, to the extent permitted by law. The Underwriter reserves the right to join with dealers and other underwriters in offering the Bonds to the public. The obligation of the Underwriter to purchase the Bonds will be subject to various conditions contained in the Bond Purchase Agreement.

"US Bancorp" is the marketing name of US. Bancorp and its subsidiaries, including US. Bancorp Investments, Inc., as the Underwriter for the Bonds; U.S. Bank National Association, as the Trustee and Prior Trustee; US. Bank National Association, as Dissemination Agent (as defined under "CONTINUING DISCLOSURE" below); and US. Bank National Association, as the current holder of the Prior Bonds to be redeemed using the proceeds of the Bonds.

RATING OF THE BONDS

S&P Global Ratings ("S&P") has assigned the Bonds the rating of "BBB+." An explanation of the significance of such rating may be obtained from S&P. Such rating reflects only the views of S&P, and neither the Authority, the Corporation, nor the Underwriter makes any representation as to the appropriateness thereof.

There is no assurance that such rating will continue for any given period of time or that such rating will not be revised downward or withdrawn entirely, if, in the judgment of S&P, circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Bonds.

17 LEGAL MATTERS

All matters incidental to the authorization and issuance of the Bonds will be subject to the legal opinion of Kulak Rock LLP, Los Angeles, California, Bond Counsel, the form of which is included as APPENDIX D hereto. Certain legal matters will be passed on for the Authority by its special counsel, Jones Hall, A Professional Law Corporation, San Francisco, California, for the Corporation by its counsel, its counsel, Allen Matkins Leck Gamble Mallory & Natsis LLP, Los Angeles, California, and for the Underwriter by its counsel, Hawkins Delafield & Wood LLP, San Francisco, California.

None of the legal counsel referenced in this Official Statement has (a) participated in the underwriting of the Bonds, (b) provided any advice regarding the creditworthiness of the Bonds, or ( c) assisted in determining the value of the security for the Bonds upon the occurrence of an event of default. Legal counsel have solely and exclusively opined to those matters which are expressly set forth in their opinions which are attached hereto or which have been delivered in connection herewith and no Holder of a Bond shall be authorized or entitled to infer that such legal counsel have rendered opinions beyond those stated in their written opinions or to rely on the participation of counsel in this transaction. Except for negligent errors in their express written opinions, legal counsel shall have no obligations to Holders of the Bonds, and Holders of the Bonds must not rely either expressly or implicitly upon such counsel in determining whether the Bonds represent suitable investments or otherwise meet their creditworthiness and risk tolerance standards.

CONTINUING DISCLOSURE

The Corporation, as the only obligated person with respect to the Bonds under Rule 15c2-12 promulgated by the Securities and Exchange Commission (the "Rule"), will enter into a Continuing Disclosure Agreement, dated as of December 1, 2017 (the "Continuing Disclosure Agreement"), between the Corporation and US. Bank National Association, as Dissemination Agent, for the benefit of the Holders from time to time of the Bonds. Pursuant to the Continuing Disclosure Agreement, the Corporation has agreed to provide certain financial information and operating data relating to the Corporation and the Bonds by not later than 180 days after the end of the Corporation's fiscal year (the "Annual Report") and to provide notices of the occurrence of certain enumerated events so long as the Bonds are outstanding, as provided in the Continuing Disclosure Agreement. The Annual Report and notices of enumerated events will be filed by the Dissemination Agent, on behalf of the Corporation, with the Municipal Securities Rulemaking Board (the "MSRB") through its Electronic Municipal Market Access ("EMMA") System The Authority has determined that no financial or operating data concerning the Authority is material to an evaluation of the offering of the Bonds or to any decision to purchase, hold, or sell the Bonds, and the Authority will not provide any such information. The Authority shall have no liability to the Holders of the Bonds or any other person with respect to the Rule. The above covenants with respect to continuing disclosure have been made in order to assist the Underwriter in complying with the Rule. For additional information concerning disclosure, see APPENDIX F - "PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT"

In the last five years, the Corporation did not have any bonds outstanding pursuant to which the Corporation had any continuing disclosure obligations.

INDEPENDENT ACCOUNTANTS

The financial statements of the Corporation as of and for the year ended August 31, 2017, with summarized comparative financial information as of and for the year ended August 31, 2016, included in APPENDIX B have been audited by Roscoe & Swanson, Accountancy Corporation, independent accountants, as stated in their report appearing herein. Roscoe & Swanson, Accountancy Corporation, the Corporation's independent auditor, has not been engaged to perform and has not performed, since the date of its report included herein, any procedures on the financial statements addressed in that report. Roscoe & Swanson, Accountancy Corporation also has not performed any procedures relating to this Official Statement.

18 MISCELLANEOUS

The information set forth herein relating to the Corporation has been furnished by the Corporation.

The Authority has furnished only the information included herein under the headings, "THE AUTHORITY," and "ABSENCE OF MATERIAL LITIGATION -The Authority."

SOUTHERN CALIFORNIA INSTITUTE OF ARCIDTECTURE

By: /s/ Hernan Diaz Alonso Director I CEO

By: /s/ John Enright Vice Director I Chief Academic Officer

19 [THIS PAGE IN1ENTIONALLY LEFT BLANK] APPENDIX A

SOUTHERN CALIFORNIA INSTITUTE OF ARCIDTECTURE Table of Contents

SOUTHERN CALIFORNIA INSTITUTE OF ARCHITECTURE A-I General A-I J\1ission A-2 Administration A-2 Facilities and Resources A-6 Degree Offerings A-7 Curriculum A-8 Career Placement and Professional Licensure A-8 Community Outreach A-8 Public Programs and Galleries A-9 Enrollment A-10 Student Applications, Acceptances and Matriculation A-10 Tuition and Fees A-11 Diversity A-13 Faculty A-15 Accreditations and Affiliations A-15

FINANCIAL CONDITION OF SCI-ARC A-16 Discussion of Financial Performance A-17 Cash and Investments A-17 Budget Planning A-17 Student Financial Aid A-18 Property, Buildings and Equipment A-18 Outstanding Indebtedness A-19 Risk Management A-19 Litigation A-19 SOUTHERN CALIFORNIA INSTITUTE OF ARCIDTECTURE

General

Southern California Institute of Architecture ("SCI-Arc" or the "Institute") is one of the nation's few independent architecture schools and offers undergraduate, graduate and post-professional programs. In the field of architecture, SCI-Arc is considered one of the top ten architecture schools in the United States. It is home to Pritzker Prize winners, Rome Prize scholars, Fellows and Gold Medalists of the American Institute of Architects, and students who go on to teach at Columbia, Harvard, Princeton, and Yale, among others. Students routinely transfer from places like the University for the Applied Arts in Vienna, the Royal Danish Academy, the University of Seoul, the University of Hong Kong, and other global institutions. Students come to SCI-Arc from Ghana, Ethiopia, Norway, Thailand, Malaysia, Argentina, Columbia, and many other countries, all seeking the very best architectural education in the world.

SCI-Arc began in 1972 when a like-minded group of faculty and students led by Ray Kappe, then Chair of Architecture at Cal Poly Pomona, left that school and established 'The New School' in a converted industrial building in Santa Monica. Subsequently renamed the Southern California Institute of Architecture (SCI-Arc), the school was founded to foster the kind of intellectual freedom produced in classrooms dedicated to the needs of the architecture student.

The Institute is located in a quarter-mile long former freight depot in the Arts District in downtown Los Angeles. The Institute distinguishes itself from its competitors by the vibrant creative atmosphere of its studios. SCI-Arc's approximately 500 students and 80 faculty members work jointly to re-examine assumptions, create, explore and test the limits of architecture.

SCI-Arc, its faculty and its alumni are leaders in the field of contemporary architecture. The Institute's reputation attracts internationally recognized architects, designers, artists, theorists and writers who interact with the students in studios, lecture halls and hallways.

Students come from around the world in pursuit of a SCI-Arc education. Most have already completed some college level work; many already hold degrees. Enrollment is divided almost equally between undergraduate and graduate programs. SCI-Arc is serious about educating and challenging students, but does so in an unconventional atmosphere. It is not uncommon to see a student skateboarding inside to get from one end of the building to the other, working on a model with their dog napping nearby, or seeing student reviews being conducted in the open hallways.

SCI-Arc is part of the cultural center of Los Angeles. The Institute's neighbors include the Museum of Contemporary Art on Grand Avenue, the Geffen Contemporary in Little Tokyo, the Japanese American National Museum, the Mexican-style plaza on historic Olvera Street, downtown's Gallery Row and Chinatown. Major works of architecture nearby include those built by architects with close ties to SCI- Arc: the CalTrans Building by Thom Mayne, the Walt Disney Concert Hall by Frank Gehry and the Ramon C. Cortines School of Visual and Performing Arts by Wolf Prix.

In 1975, both of the Institute's Bachelor of Architecture (B.Arch.) and Master of Architecture (M.Arch.) programs were accredited by the National Architectural Accreditation Board. In 1995, SCI-Arc received its initial regional accreditation from the Western Association of Schools and Colleges.

In 2000, the Institute relocated to the historic Santa Fe Freight Depot building along the LA River Corridor in downtown Los Angeles. Today, SCI-Arc prides itself for being a catalyst for the new Arts District, a place of pedestrians, coffee shops, art galleries, trendy restaurants, massive urban development, and loft living. In 2011, SCI-Arc purchased the building and adjacent parking lot, securing the Freight Depot as the school's first permanent home in its history - ensuring its continuity for many years to come. Following the purchase of the property, SCI-Arc celebrated its 40th Anniversary in 2012.

A-1 Under the direction of the new Director, Heman Diaz Alonso, SCI-Arc will begin a new strategic planning process in early calendar year 2018. Investing in institutional advancement infrastructure to support diversified fundraising strategy and goals and alunmi engagement is expected to be a primary initiative of the new plan. In previous years the Institute's modest permanently endowed scholarship fund was supplemented by its quasi-endowed funds. As the organization solidifies its investment policy and fundraising priorities, the goal is to significantly increase the endowed funds available for scholarships, in order to allow the school to remain competitive in recruiting and retaining top tier students, particularly those with financial need.

Now in its 45th year, SCI-Arc has seen five Institute Directors: Ray Kappe, Michael Rotondi, Neil Denari, Eric Owen Moss, and current Director/CEO Hernan Diaz Alonso.

Mission

SCI-Arc teaches architects to engage, speculate, and innovate, to take the lead in reimagining the limits of architecture. Its students and faculty critically examine the rich possibilities of the built environment. From design and materials to culture and experience, SCI-Arc asks questions regarding new theoretical constructs and designed realities to constitute possible futures, and seeks to contribute an imaginative, rigorous, and forward-thinking approach to help shape the future of the architectural profession.

Administration

Board of Trustees

SCI-Arc's operations and fiduciary responsibilities are overseen by a diverse Board of Trustees consisting of up to twenty-four members. Board membership includes recognized leaders in the areas of architectural design, art, finance, real estate, construction, law, entertainment, and philanthropy. SCI-Arc faculty, students, and alunmi also have representation on the Board.

[Remainder ofPage Intentionally Left Blank.]

A-2 The following is a list of the officers and members of the Board for academic year 2017-2018 and the principal business or professional affiliation of each member.

OFFICERS: PRINCIPAL BUSINESS AFFILIATION Tom Gilmore (Chairman) Gilmore & Associates LLC Kevin Ratner (Vice Chair) For est City West Daniel Swartz (Treasurer) Quadrangle Development Company Abby Sher (Secretary) Entrepreneur & Philanthropist

BOARD: Richard Baptie Hathaway Dinwiddie Construction Barbara Bestor Bestor Architecture Joe Day (MArch '94) Deegan Day Design Hernan Diaz Alonso (Director/CEO) SCI-Arc Xefirotarch Tim Disney Blu Homes, Inc. Uncommon Productions, LLC William Fain Johnson Fain Partners Anthony Ferguson BDOUSALLP Frank 0. Gehry Gehry Partners Ann Guitierrez (Student Representative) SCI-Arc Fernando Guitierrez Gaya Sinergia Constructiva Thom Mayne Morphosis Architects Jerry Neuman DLA Piper Greg Otto Walter P. Moore Abigail Scheuer (MArch '93) Philanthropist Steven Song SCAAA Marcelo Spina (Faculty Representative) P-A-T-T-E-R-N-S Ted Tanner AEG Worldwide Sam Teller SpaceX and Tesla John Winston (Alumni Representative) John Winston Studio (MArch '04)

The various Committees of the Board support the overall functioning, assessment, and responsibilities of the Board of Trustees. The Board committees meet on a regular basis and before each quarterly Board meeting. Standing committees of the Board of Trustees include the Executive Committee, Finance Committee, Audit Committee, Advancement Committee, Building & Grounds Committee, Investment Committee, Committee on Trustees, and Governance Committee.

A-3 Institutional Leadership

SCI-Arc's leadership is comprised of individuals who are both influential figures in the field of architecture and design, as well as educational leaders with decades of experience as teachers and higher education administrators. They serve as representatives to various higher education, business, community, and architecture related organizations.

Director/CEO: Hernan Diaz Alonso

Heman Diaz Alonso assumed the role of SCI-Arc director beginning in the 2015 academic year. He has been a distinguished faculty member since 2001, serving in several leadership roles, including Graduate Thesis Coordinator from 2007-10, and Graduate Programs Chair from 2010-15. He is widely credited with spearheading SCI-Arc's transition to digital technologies, and he played a key role in shaping the school's graduate curriculum over the last decade.

Mr. Diaz Alonso is principal of the Los Angeles-based architecture office Xefirotarch. In 2005 he was the winner of MoMA PSI 's Young Architects Program (YAP) competition, and in 2012 he received the Educator of the Year award from the American Institute of Architects (AJA). He won the 2013 AR+D Award for Emerging Architecture and a 2013 Progressive Architecture Award for his design of the Thyssen­ Bomemisza Pavilion/J'v1useum in Patagonia, Argentina. Jvfr. Diaz Alonso's architectural designs have been featured in exhibitions at the Venice Architecture Biennale, the London Architecture Biennale, and ArchiLab in Orleans, France.

Mr. Diaz Alonso has held appointments as Yale University's Louis I. Kahn Visiting Assistant Professorship of Architectural Design (2010), Visiting Design Studio Faculty at the GSAPP at Columbia University (2004-10), and an ongoing appointment as architectural design professor in the Urban Strategies Postgraduate Program at the University of Applied Arts Vienna. In spring 2015, he served as Yale University's Eero Saarinen Professor of Architectural Design.

Jvfr. Diaz Alonso received a Professional Bachelor Degree in Architecture from the National University of Rosario and a Masters in Advance Architectural Design from Columbia University.

Vice Director I Chief Academic Officer: John Enright

John Enright, FAIA, was appointed Vice Director/Chief Academic Officer in 2015. He has been practicing architecture for thirty years, and has taught at SCI-Arc since 2001. Mr. Enright served as Undergraduate Program Chair from 2010 to 2015. Mr. Enright is founding principal of Griffin Enright Architects, based in Los Angeles, CA Mr. Enright has taught design studios and technology seminars at SCI­ Arc, Syracuse University, University of Houston, and the University of Southern California. His academic research focuses on design and building technology, including new digital paradigms as applied to fabrication and construction. He has served on the advisory committee of the national AIA's Educator Practitioners Network, and he currently serves on the Los Angeles Mayor's Design Advisory Panel and NCARB's Integrated Path Evaluation Committee.

Mr. Enright received a Master of Architecture degree from Columbia University and a Bachelor of Architecture degree from Syracuse University.

Undergraduate Program Chair: Tom Wiscombe

Tom Wiscombe has been a senior SCI-Arc faculty member for more than ten years. He assumed the role of Undergraduate program Chair in 2015 after having coordinated the SCI-Arc's Applied Studies curriculum for six years. J\l[r_ Wiscombe is Principal of Tom Wiscombe Architecture, an internationally recognized design practice. He sits on the board for the Main Museum of Los Angeles Art, Los Angeles and is

A-4 member of the American Institute of Architects. Mr. Wiscombe has taught at SCI-Arc, University of Pennsylvania and Yale University. Previously, he worked for Coop Himmelb(l)au, where he was Chief Designer for BMW Welt, Munich, the Lyon Museum of Confluences, and the Dresden Cinema Center His work is part of the permanent collection of the FRAC Centre Paris, the Art Institute of Chicago, MoMA San Francisco, and MoMA New Yark. He completed his B.A in Architecture at UC Berkeley and his M.Arch I degree at UCLA

Graduate Program Chair: Elena Manferdini

Elena Manferdini assumed the position of Graduate Programs Chair in 2015 after previously coordinating the Graduate Thesis program at SCI-Arc. Ms. Manferdini founded Atelier Manferdini in Venice, California, where she is principal. She has taught at SCI-Arc, Cornell, University of Pennsylvania and University of California, Berkley. In 2011, she was one of the recipients of the prestigious annual grants from the United States Artists (USA) in the category of architecture and design. Ms. Manferdini was awarded the 2013 COLA Fellowship given by City of Los Angeles Department of Cultural Affairs to support the production of original artwork. That same year, she received a Graham Award for architecture, the 2013 ACADIA Innovative Research Award of Excellence, and was selected as recipient for the Educator of the Year presidential award given by the AJA Los Angeles. She had been a member of the National Council of the Architectural Boards Council since 2006. Ms. Manferdini received a professional degree in Engineering from the University of Engineering in Bologna and Masters in Architecture and Urban Design from the University of California, Los Angeles.

Post-Graduate Chair: David Ruy

David Ruy became SCI-Arc's Post-Graduate Chair in 2016. Mr. Ruy has taught at SCI-Arc, Pratt Institute, University of Pennsylvania, Princeton University and Columbia University. He is the Director of Ruy Klein, which has been widely published and exhibited. Ruy Klein has been the recipient of numerous awards recognizing the firm as one of the leading experimental practices in architecture today. The firm's work is part of the permanent collection of The Museum of Modem Art in New Yark City and The Frac Centre in Orleans, France. Mr. Ruy received his M.Arch degree from Columbia University and his B.A degree from St. John's College where he studied philosophy and mathematics.

Chief Financial Officer: Sue Gosney

Sue Gosney returned to SCI-Arc in April 2017. Ms. Gosney previously held the positions of Director of Finance and CFO at SCI-Arc from 2003 to 2008. Prior to returning to SCI-Arc, she was the CFO for Inner­ City Arts, an arts education non-profit organization from 2012 to 2017 and Director of Finance for Create Advertising, LLC from 2008 to 2012. She received her BS in Finance from the University of Southern California. Ms. Gosney is member of the Finance Committee for Inner-City Arts.

Chief Administrative Officer: Paul Holliday

Paul Holliday has worked for SCI-Arc since 2007. During this time, he has served as the Academic Affairs Coordinator, Academic Affairs Manager, and Accreditation Liaison Officer for SCI-Arc. In 2015, Mr. Holliday became the Chief Administrative Officer He holds a BA in Communication Arts from Loyola Marymount University and a Jv[A in Educational Administration (specialization in Higher Education programs) from California State University-Northridge.

Academic Council (Faculty, Students, Staff, and Leadership)

The Academic Council formulates, implements and evaluates aspects of the academic development and management of the Institute. It provides an opportunity for students, faculty, and staff to participate in discussions with SCI-Arc's leadership on policy decisions. Its membership consists of representatives from

A-5 institutional and academic leadership, Faculty Council, Student Union, and staff at-large. Meetings of the Academic Council occur once per semester during the academic year, or more frequently as needed, and are open for anyone to attend. Reports of the council's deliberations are made available to the Board of Trustees, faculty, and students. The Academic Council appoints working committees as needed to assist with research and implementation. These include the Technology Committee, the Admissions Committee, the Portfolio Review Committee and the Scholarships Committee.

Faculty Council (Faculty)

The Faculty Council considers issues of importance to the SCI-Arc faculty and the Institute, and formulates proposals for submission to the Director/CEO, Vice Director/Chief Academic Officer, Academic Program Chairs, and/or Academic Council. The Faculty Council is made up of all current faculty members and elects four members of the faculty to serve on the Academic Council and one representative for appointment to the Board of Trustees. The Council meets a minimum of once a semester, or more frequently as needed.

Facilities and Resources

SCI-Arc is located in the Arts District of downtown Los Angeles in the quarter-mile long former Santa Fe Railroad freight depot building. Designed by architect Harrison Albright, the depot was originally built in 1907 as two parallel 1,250-foot long twin structures stretching along Santa Fe Avenue. Inside the building, three steel mezzanines have been built to add an additional, 35,000 square feet of space to the existing 53,000 square foot building, and to stabilize the shell. The first SCI-Arc classes were held in the depot in September 2001. In April 2011, the Institute officially purchased the former freight depot building as its permanent home.

The Institute offers students an integrated suite of tools and facilities to support academic progress and experimentation. These include some of the most advanced digital fabrication machines available, computer facilities with all software necessary for the Institute's curriculum, printing, a supply store, and a library dedicated to the study of architecture and related disciplines. Below are descriptions of physical resources available to SCI-Arc students, faculty, and staff

W.M. Keck Lecture Hall: Designed as a large multipurpose room, the Keck Lecture Hall hosts the weekly SCI-Arc lecture series, large lecture classes, exhibitions, as well as studio project and thesis reviews. In addition, the lecture hall is used for special events at SCI-Arc.

Kappe Library: The Kappe Library, focused on architecture, welcomes all architectural researchers. Located on the second floor of the north end of the SCI-Arc building, the library's print collection is made up of over 19,000 books in 97 subject areas, with architecture and related technical and design subjects accounting for most of the collection.

Fabrication Shop: The recently-renovated 6,000-square-foot facility plays an integral role in student work and includes a machine room, bench room, metal working area and multiple assembly spaces.

The Magic Box: SCI-Arc's state-of-the-art digital fabrication lab expands the school's experimental approach to digital three-dimensional design. Completed in Spring 2015, the 2-story digital lab, along with the existing Shop and the Robot House, occupies more than 12,000 square feet, making it one of the largest and most advanced fabrication facilities at an architecture school, and allows SCI-Arc students and faculty the tools to help imagine the future of architecture. The Magic Box is equipped with state of the art computer controlled (CNC) machines, including laser cutters, 3-axis milling machines, powder, paper, resin, and plastic 3 D printers.

A-6 Robot House: The double-height 1,000-square-foot is a research space for hands-on collaborative experimentation, advanced multi-robotic fabrication, and exploration of innovative architectural design techniques.

Supply Store & Print Center: The SCI-Arc Supply Store supports the SCI-Arc curriculum, providing the tools and materials necessary to allow students to experiment with model making and drawing. It also provides books and readers for seminars. The SCI-Arc Print Center provides students and faculty with access to large format high resolution color laser prints.

Information Technology: SCI-Arc's Information Technology Department includes two state-of-the­ art computer labs that provide a technologically rich environment for research, learning and teaching laser printers.

Degree Offerings

Undergraduate Degree Program (B. Arch)

SCI-Arc's Bachelor of Architecture (B.Arch) Program is a 5-year professional degree, accredited by NAAB (the National Architectural Accrediting Board), focusing on both design excellence and intellectual breadth through a liberal arts-based education.

Graduate Degree Programs (MArch 1 and MArch 2)

The Graduate Programs are led by faculty engaged in worldwide architectural practices in fields ranging from design and engineering to visual and cultural studies.

SCI-Arc offers two professional Master of Architecture degrees, M.Arch I and M.Arch 2, both accredited by NAAB (National Architectural Accrediting Board).

MArch 1: The Master of Architecture I is a three-year (seven-term) professional program open to applicants who hold a bachelor's degree or equivalent in any field of study. This program requires attendance for the fall and spring terms of the first two years, and the fall, spring and summer terms of the final year.

MArch 2: The Master of Architecture 2 is a two-year (five-term) professional program open to applicants with a minimum of a four-year degree in Architecture, or its equivalent abroad. This program requires attendance for the fall and spring terms of the first year, and the fall, spring and summer terms of the final year.

Post Graduate Degree Programs (SCI-Arc EDGE)

SCI-Arc EDGE is a new platform for advanced studies in architecture. Its innovative postgraduate degree programs are designed to test the theoretical and practical limits of architectural innovation in order to launch new architectural careers for the twenty-first century. Each program identifies a distinct territory in the emerging milieus of the contemporary.

Architectural Technologies (M.S. ): Architectural Technologies is a one-year (three term) postgraduate degree program leading to a Master of Science in Architectural Technologies.

Fiction and Entertainment (M.A.): Fiction and Entertainment is a one-year (three term) postgraduate degree program leading to a Master of Arts in Fiction and Entertainment.

Design of Cities (M.S. ): Design of Cities is a one-year (three term) postgraduate degree program leading to a Master of Science in the Design of Cities.

A-7 Desi en Theory and Pedaeoey @1.S. ): Design Theory and Pedagogy is a unique one-year (three term) postgraduate degree program leading to a Master of Science in Design Theory and Pedagogy.

The SCI-Arc EDGE program requires a terminal degree in architecture for admission (B Arch, M Arch, or equivalent).

Curriculum

At its founding, the curriculum of SCI-Arc was based on the studio environment, modeled after the atelier model of architectural education practiced for many years at the Ecole des Beaux Arts in Paris and the Architectural Association in London. In this model, students are identified according to their progression through the studio curriculum, and take lecture courses and seminar courses in concert with the expressed learning goals at each stage. While no longer small enough to be contained in one room, the studios are all open, and part of the spatial landscape of the school. All studio reviews, panels, and discussions are held in the open corridors and halls of the former Freight Depot.

From its inception, SCI-Arc was imagined as a place to foster a cohesive spirit among its community of students, and within their larger community of Southern California. SCI-Arc's continued commitment to free programs that are open to the public, as well as service-oriented design-build programs in and around the Los Angeles basin, has created many opportunities to engage the public and spark debate both within the school and at large.

Every summer, SCI-Arc organizes two independent programs open to anyone interested in the discipline of architecture, whether gauging their interest in the field or beginning an architectural degree.

SCI-Arc has continued the tradition of supporting student travel within the curriculums. Each summer semester, for upper level students, SCI-Arc offers a study abroad program in Tokyo, Japan. The program is led by a SCI-Arc faculty member and select faculty from partner institution, Hosei University in Tokyo.

Career Placement and Professional Licensure

SCI-Arc has established several resources for students to prepare for their career after SCI-Arc.

Open Season is SCI-Arc's career networking event where the Institute invites employers, including studio principals, hiring managers, and alunmi, to student exhibition receptions to meet students and see their work Portfolio workshops offer first-hand advice to students about interviewing and presentation skills. The workshops include recommendations for crafting resumes and portfolios. The SCI-Arc Job Board is an online listing of job openings for alunmi. SCI-Arc's Internship program encourages students to intern at professional firms. Internships help encourage strong ties from the Institute into the field of architecture and related design throughout the city and abroad. SCI-Arc has an Alumni Network in 51 countries, providing a strong link between SCI-Arc and the professional world. In addition, the Alumni Council fosters opportunities for alumni networking, aids students with professional growth, and encourages alumni to support the school.

SCI-Arc also works to provide resources for those students who want to pursue professional licensure. Information and study guides are available through the Academic Advisor's office, in their Professional Practice courses and the school's library and student portal.

Community Outreach

SCI-Arc has continued to be an active participant in the greater Los Angeles community by engaging m a series of community centered design/build projects that provide students with real-world experience. Recent projects have included a joint venture with Cal-Tech in the 2013 Solar Decathlon Competition sponsored through the US. Department of Energy; a college competition to design and build affordable,

A-8 sustainable housing. In 2014-2015 SCI-Arc and Habitat for Humanity Organization of Greater Los Angeles began a partnership initiative for SCI-Arc students to design and help build homes on land provided by the Los Angeles County.

Supporting the Downtown Los Angeles Arts District community includes participation with local community groups such as the Arts District Business Improvement District (BID), the Los Angeles River Artists and Business Association (LARABA), as well as hosting meetings for the Los Angeles County Metropolitan Transportation Authority (Metro), and Los Angeles Department of Transportation.

Participation within the architecture community includes a partnership with the National Organization of Minority Architects (NOMA) for SCI-Arc to be a host of NOMA lectures and events and Los Angeles; and with the AIAILA's 2015 & 2016 Women in Architecture and Design conference featuring inspirational and energetic presentations that showcase women who are leading the design profession.

Pop-Arc is a series of programs SCI-Arc has developed to explore new forms of community engagement with high school students both locally and internationally. The Pop-Arc programs offers design workshops of varying lengths that focus on a range of topics such as digital design workflows, physical model making, and visual analysis. Each workshop is tailored to a specific student population, and encourages students to think critically about formal decisions.

Public Programs and Galleries

SCI-Arc's public programs invite the community into the Institute to foster debate and understanding of architecture's capacity to transform the world. Guest lectures, special faculty talks, symposiums and curated gallery exhibits are open to the public.

The SCI-Arc Gallery is committed to exhibiting experimental projects by contemporary architects. Each of the SCI-Arc Gallery's five yearly exhibitions is executed as a workshop in which students work closely with the invited architect to assist in the fabrication and installation/de-installation of the exhibit. The goal of the gallery is to exhibit work that provokes critical discussions of current building practices - it is a space where practitioners, professionals, faculty, students, and the public can learn about and experience provocative architecture.

The SCI-Arc Library Gallery hosts exhibitions of built projects, design proposals and student work, fabricated and installed by SCI-Arc students and faculty as well as architects and students from around the world.

Recent gallery exhibitions have included work from, Zaha Hadid, Sy !via Lavin, Jose Oubrerie, Maxi Spina, Mark Foster Gage, Mira Henry, and David Ruy. Recent visiting lecturers include, Frank Gehry, Thom Mayne, Mayor Eric Garcetti, Patrick Schumacher, Graham Harman, and Slavoj Zizek

A-9 Enrollment

Historical Analysis. The Institute has a capacity for 550 students but the FTE enrollment goal is 500 students to support the quality and student to faculty ratio ( currently 11: I) for the program The following table shows full-time enrollments for the academic years 2013-14 to 2017-18.

FTE Enrollment

2013-14 2014-15 2015-16 2016-17 2017-18 Graduate 253 257 241 256 248 Undergraduate 252 259 253 254 257 Total 505 516 494 510 505

Retention. The Institute recognizes that retention of students is as important as attracting new ones. SCI- Arc has maintained a high retention rate for both its graduate and undergraduate programs as measured by the percentage of first-year students who return as second-year students. The following chart highlights the Institute's retention percentage for the past five academic years. The decrease in undergraduate retention in FY2015-16 was due to approximately ten students leaving the program for personal, bereavement, and financial reasons. Because the emollment is small, this anomaly had a significant impact on the retention percentage:

Retention Percentage from 1st to 2nd Year*

2012-13 2013-14 2014-15 2015-16 2016-17 Graduate Retention % 92% 90% 93% 90% 85% Undergraduate Retention % 89% 89% 92% 76% 90%

* Includes both first-time freshmen and transfer students.

Student Applications, Acceptances and Matriculation

Graduate Admissions Statistics. Acceptance to SCI-Arc's graduate program has remained relatively consistent, averaging 81 % with an average matriculate rate of 27%. The following table highlights the Institute's graduate program application, acceptance and enrollment statistics. FY2017-18 decline in graduate emollment is offset by the increase in enrollment for the post graduate program. Because SCI-Arc's enrollment goal is 500, the enrollment in each program is adjusted to meet this enrollment goal.

Graduate: Applications, Acceptances and Enrollment

2013-14 2014-15 2015-16 2016-17 2017-18 Number of applications 433 444 386 448 419 Number of acceptances 342 322 328 352 382 Acceptances as % of Applications 79% 73% 85% 79% 91% Enrollments 93 101 91 96 89 Enrollments as % of Acceptances 27% 31% 28% 27% 23%

Post Graduate Admissions Statistics. SCI-Arc's post graduate program expanded its degree programs from two to four in the academic year 2016-17 and therefor doubled its applicants and enrollments. Applicants are invited to apply to the program through networking and relationships with other school's architectural programs so the acceptance rate is naturally high at an average of 97%. The following table highlights the Institute's undergraduate application, acceptance, and emollment statistics.

A-10 Post Graduate: Applications, Acceptances and Enrollment

2013-14 2014-15 2015-16 2016-17 2017-18 Number of applications 46 53 52 101 112 Number of acceptances 44 52 51 96 109 Acceptances as % of Applications 96% 98% 98% 95% 97% Enrollments 16 23 20 31 40 Enrolhnents as % of Acceptances 36% 44% 39% 32% 37%

Undergraduate Admissions Statistics. SCI-Arc undergraduate enrollment has remained consistent over the past five years, averaging 62 matriculates each year. The acceptance rate for new undergraduate applicants during this period increased from 67% to 95%. SCI-Arc is working on strategies to improve the number of "completed" applications through Pop-Arc community outreach programs and subscribing to Common App, a shared college application platform. The following table highlights the Institute's undergraduate application, acceptance, and enrollment statistics.

Undergraduate: Applications, Acceptances and Enrollment*

2013-14 2014-15 2015-16 2016-17 2017-18 Number of applications 330 311 311 290 246 Number of acceptances 222 207 234 277 234 Acceptances as % of Applications 67% 67% 75% 96% 95% Enrollments 66 59 58 67 61 Enrolhnents as % of Acceptances 30% 29% 25% 25% 26%

* Includes both first-time freshmen and transfer students.

Tuition and Fees

From fiscal year 2009-10 to fiscal year 2014-15, SCI-Arc increased tuition (between 10% and 7% each year) to bring tuition rates up to market with other major competitive architectural programs. Since then, tuition increases have leveled off at an average of 2% annually. The following is a listing of full-time graduate and undergraduate student tuition charges per semester for the past five academic years ( exclusive of room and board which are not offered by Sci-Arc).

Tuition and Fees Per Semester

2013-14 2014-15 2015-16 2016-17 2017-18 Tuition $18,300 $19,581 $20,560 $20,900 $21,350 Fees 350 550 550 550 550 Total Tuition & Fees $18,650 $20,131 $21,110 $21,450 $21,900

A-11 SCI-Arc's tuition and fees are in the lower half of amounts charged by the colleges and universities the Institute believes to be its major architecture program competitors. Based on data compiled from the respective schools' websites, the average tuition and fees for graduate and undergraduate architecture programs during the academic year 2017-18 for those schools are as follows:

Annual Comparative Tuition and Fees (Graduate Program)

Tuition & Institution Fees Cornell $59,000 USC 55,800 Columbia - GSAPP 55,000 Yale 50,650 Wash Univ. in St. Louis 49,700 MIT 49,600 Princeton 48,900 Harvard 48,800 Syracuse 48,000 U of Michigan* 47,500 AA School, London 46,000 SCI-Arc 43,800 Cooper Union 43,300 Woodbury 41,610 Pratt Institute 41,100 UCLA* 37,100 The School of Architecture at Taliesin (fka Frank Lloyd Wright) 35,000 UC Berkeley* 33,900 Rice 31,700 Virginia Tech 31,600 University of Virginia* 31,500

*Non-resident Tuition

A-12 Annual Comparative Tuition and Fees (Undergraduate Program)

Institution Tuition & Fees USC $54,300 Cornell 52,900 RISD 48,500 Pratt 48,100 California College of the Arts 47,300 Syracuse 46,700 Rice 45,600 Cooper Union 44,900 SCI-Arc 43,800 UC Berkeley* 42,100 UCLA* 41,200 Woodbury 38,700 U of Texas Austin* 37,800 New School of Arch & Design 35,800 Virginia Tech* 31,000

*Non-resident Tuition

Diversity

A diverse SCI-Arc community has always been a goal of the Institute. SCI-Arc continues to work to create a learning environment where different design backgrounds, teaching pedagogies, politics, ideas, people, and cultures are welcomed and encouraged.

International faculty bring diverse ideas and teaching pedagogies to SCI-arc's curriculum from countries including Austria, Argentina, Greece, Italy, Mexico, Spain, Australia, Canada, Japan, England, China, and The Netherlands. Internal and external international faculty are often invited to participate in SCI­ Arc Public Lecture Series, Gallery exhibitions, the weekly Faculty Talk Series, and in nearly all review juries.

Sixty percent of SCI-Arc's student population is international and represents over 40 different countries including Germany, China, Brazil, Peru, Korea, Mexico, India, Greece, Saudi Arabia, Turkey, Sweden, Taiwan, Venezuela, Russia, Spain, and Ghana, as follows:

A-13 Student Enrollment by Country

Country 2013/14 FA 2014/15 FA 2015/16 FA 2016/17 FA 2017/18 FA UNITED STATES OF AMERICA 245 235 197 192 182 CHINA 73 90 96 112 131 KOREA, REPUBLIC OF 25 25 25 21 19 TAIWAN, PROVINCE OF CHINA 22 24 22 24 22 CANADA 22 24 21 21 19 INDIA 6 9 16 22 23 IRAN (ISLAMIC REPUBLIC OF) 9 7 II 15 12 ITALY 0 5 8 8 SAUDI ARABIA II II 18 12 7 TURKEY 7 6 7 8 6 MEXICO 4 5 4 6 6 VENEZUELA II II 8 6 5 HONGKONG II 10 5 5 5 ALL OTHER 70 69 66 62 65 516 527 501 514 510

Student Enrollment by Ethnicity (Undergraduate & Graduate combined)

Race/Ethnicity 2013/14 FA 2014/15 FA 2015/16 FA 2016/17 FA 2017/18 FA American Indian/ Alaska Native 0 0 0 0 0 Asian 81 67 63 52 40 Hawaiian/ Pacific Islander 2 2 2 2 0 Black or African American 6 3 3 5 4 Hispanic/Latino 69 64 47 50 58 White 116 118 99 103 88 Two or more races II 14 13 12 6 Nomesident Alien* 218 251 267 285 309 Race / ethnicity unknown 13 8 7 5 5 516 527 501 514 510

*International Students~ Nomesident Aliens

A-14 Faculty

The Institute's faculty currently includes 32 permanent full-time faculty and 49 part-time/adjunct faculty. Of those part time/adjunct faculty, many are visiting from other architecture programs throughout the world. SCI-Arc faculty are expected to remain current in their field and active professionally. All faculty are expected to be engaged outside of the institute in the field of architecture in meaningful ways. Most are involved in private practices. The number of full-time and part-time faculty for the past five academic years is shown in the following table:

Faculty Composition

Positions 2013-14 2014-15 2015-16 2016-17 Fal12017 Full time: 31 31 28 32 32 Part time/ Adjunct: 56 49 47 43 49 Total Faculty 87 80 75 75 81

Fall 2017 Faculty Credentials

Post- Registered Degree MArch B.Arch PhD. Ph.D Professional Other (US. type (accredited) ( accredited) (architecture) (other) (architecture) degrees Jurisdiction) Degrees Earned 46 6 6 3 19 28

In addition to the faculty, SCI-Arc currently employs 66 full-time and 10 part-time staff The faculty and staff are not organized in a union or collective bargaining agreement.

Accreditations and Affiliations

The professional degrees awarded by SCI-Arc, the B.Arch and M.Arch, are accredited by the National Architectural Accrediting Board ("NAAB") and the Western Association of Schools and Colleges ("WASC").

Western Association of Schools & Colleges (WASC): SCI-Arc is accredited by the Accrediting Commission for Senior Colleges and Universities of the Western Association of Schools and Colleges ("WASC"). WASC is recognized as one of six regional associations that accredit public and private schools, colleges, and universities in the United States. The Western region covers institutions in California and Hawaii, the territories of Guam, American Samoa, Federated States of Micronesia, Republic of Palau, Commonwealth of the Northern Marianas Islands, the Pacific Basin, and East Asia, and areas of the Pacific and East Asia.

The WASC Senior College and University Commission is recognized by the US. Department of Education as certifying institutional eligibility for federal funding in a number of programs, including student access to federal financial aid.

In 2016 SCI-Arc was granted an 8-year term of accreditation from WASC. The next scheduled W ASC accreditation visit is expected in 2024

The National Architectural Accrediting Board (NAAB): The sole agency authorized to accredit U.S. professional degree programs in architecture, recognizes three types of degrees: The Bachelor of Architecture, the Master of Architecture, and the Doctor of Architecture. A program may be granted an eight­ year, three-year, or two-year term of accreditation, depending on the extent of its conformance with established educational standards. The next scheduled NAAB accreditation visit is expected to be in Spring 2018.

A-15 FINANCIAL CONDITION OF SCI-ARC

The following summaries and discussions of financial matters should be read in conjunction with the financial statements of the Institute for the fiscal year 2016-17, related notes, and the independent auditors' report included as Appendix B to the Official Statement. The financial statements have been audited by Roscoe & Swanson, Independent Auditors.

The Institute operates on a fiscal year ending August 31. The following table summarizes the Statement of Activities for the years ended August 31, 2013, 2014, 2015, 2016 and 2017.

Statement of Activities (in thousands)

2013 2014 2015 2016 2017 Change in lll1Iestricted net assets: Revenues: $19,457 $21,071 $23,405 $23,465 $24,755 Tuition and fees (1,769) (1,983) (2,191) (2,686) (3,221) Less scholarships Net tuition and fees 17,688 19,088 21,214 20,779 21,534 Contributions 776 691 348 324 473 Auxiliary enterprises 1,097 1,029 1,131 1,252 1,184 Other income 219 310 245 362 295 Investment income (loss) 28 29 (245) 609 2,072 Net assets released from restrictions 400 314 242 89 38 Total revenues $20,208 $21 461 $22,935 $23,415 $25,596

Expenses: Instruction $9,378 $9,009 $9,597 $10,091 $11273 General and Administrative 4,038 3,864 4,012 4351 4799 Auxiliary enterprises 1,005 1,088 1,157 1400 1514 Fund Raising* 0 0 0 600 638 Depreciation 852 845 840 883 884 Interest 684 670 750 740 722 Total expenses $15,957 $15,476 $16,356 $18,065 $19,830

Change in lll1Iestricted net assets $4,251 $5,985 $6,579 $5,350 $5,766

Change in temporarily restricted net assets: Contributions $50 $262 $106 $4 Net assets released from restrictions (400) (314) (242) (89) (38) Change in temporarily restricted net assets $(350) $(52) $(136) $(85) $(38)

Change in permanently restricted net assets: Contributions $706 $355 $28 $468 $291

Change in net assets $4,607 $6,288 $6,471 $5,733 $6,019

Net assets, beginning 19,270 23,877 30,165 36,636 42,369 Net assets, ending $23,877 $30,165 $36,636 $42,369 $48,388

* Adopted the accounting standards on the presentation of Not-for-Profit financial statements on September 1, 2016. Prior to the change in presentation, Flllldraising expenses were included llllder General and Administrative expenses.

A-16 The Institute's net assets as of August 31, 2013, 2014, 2015, 2016 and 2017 were as follows:

Net Assets (in thousands)

2013 2014 2015 2016 2017 Net assets: Unrestricted $21,996 $27,981 $34,560 $39,910 $45,676 Temporarily restricted 314 262 126 41 3 Permanently restricted 1,567 1,922 1,950 2,418 2,709 Total net assets $23,877 $30,165 $36,636 $42,369 $48,388

Discussion of Financial Performance

SCI-Arc's operating model over the last five years has produced a strong annual operating average surplus of 26%. This has resulted in an increase in unrestricted cash reserves and the ability to increase institutional scholarships from 9% of tuition revenue to 14%. The Institute has also been able to fund significant construction and equipment expenses for expansion and upgrades to its facilities without taking on additional debt or borrowing on its line of credit. In 2015, SCI-Arc retained an investment advisor to manage its portfolio. A majority of the investments were kept fairly liquid in anticipation of paying off the 2011 Bond Series. With the recent decision to re-finance the outstanding bonds, SCI-Arc is currently revisiting its investment policy to maximize the long-term return on investments and continue to support increases in tuition discounts.

Cash and Investments

SCI-Arc's total cash and investments have increased 105% over the past five years primarily from surpluses from tuition revenue. As of August 31, 2017, 72% of SCI-Arc's assets are held in investments and 28% in cash, compared to 5% in investments in 2013. The Institute's cash and investments as of August 31, 2013, 2014, 2015, 2016 and 2017 were as follows:

Cash and Investments 2013 2014 2015 2016 2017 Cash and Cash Equivalents $18,751 $25,405 $8,900 $11,512 $11,264 Investments 1,028 1,140 19,675 22,668 29,188 Total Cash and Investments $19,779 $26,545 $28,575 $34,180 $40,452

Budget Planning

The budget planning process is managed by SCI-Arc's CFO who collaborates with department managers to compile operating revenue and expenses and capital expenditures budgets. The budget is reviewed and approved by the Director/CEO and Vice Director/Chief Academic Officer and then presented to the Finance Committee of the Board of Trustees. The Finance Committee then recommends the budget to the full Board for approval.

Tuition rates are approved at the January Board meeting, to take effect the following academic year beginning in September

A-17 Student Financial Aid

Admission to SCI-Arc is determined without regard to a student's ability to pay the full cost of his or her education. The Institute's financial aid policy is designed to maximize assistance to all admitted students who demonstrate financial need, but it does not meet all need. Students must reapply for financial aid and scholarships every year. Sources of financial aid from federal and state governments and the institution include Pell Grants, Supplemental Educational Opportunity Grants (SEOG), Cal Grant A & B, Federal and Institutional Work Study, subsidized and unsubsidized government loans, private loans, and institutional and outside scholarships

Over the past five years, institutional financial aid has increased 81 % from $1.65 million to $2.99 million. The total number of students receiving aid remained the same and the average award increased by 80% over this period, compared to an 18% Tuition and Fees increase over the same time period. The following chart shows the financial aid granted by SCI-Arc for the last five academic years, the number of recipients, and the average aid per recipient:

Financial Aid

Average Total Number of Financial Year Awarded Scholarships Recipients Aid Awarded

2013 $1,650,909 178 $9,275 2014 1,860,927 199 9,351 2015 2,085,731 195 10,696 2016 2,554,972 178 14,354 2017 2,993,236 179 16,722

Property, Buildings and Equipment

As of August 31, 2017, the net book value of the capital assets of the Institute in its property, buildings and equipment totaled $30.3 million.

Total Property, Buildings and Equipment

2013 2014 2015 2016 2017 Land $17,160 $17,160 $17,160 $17,160 $17,160 Building & Improvements 6,988 7,150 10,843 12,568 12,900 Construction in Progress 0 1,237 779 0 0 Furniture & Equipment 4,519 5,180 6,244 6,566 7,057 Leasehold Improvements 216 216 216 216 216 Library 459 459 459 459 459

Less accumulated depreciation (4,168) (4,919) (5,759) (6,642) (7,527) Total $25,174 $26,483 $29,942 $30,327 $30,265

A-18 Outstanding Indebtedness

Other than trade payables, SCI-Arc's only indebtedness is the bond issue to be refunded.

Risk Management

The Institute carries standard industry insurance policies with A+ A.M. Best rating insurance companies. Coverage includes a commercial package policy with real and personal property ($34.9 million), earthquake ($25 million), general comprehensive liability, educator's legal liability ($2 million), workers' compensation and employer's liability, umbrella liability ($10 million), business interruption insurance ($22 million) and crime coverage.

Litigation

The Institute is not aware of any litigation pending or threatened wherein an unfavorable decision would have a material adverse impact on the financial condition of the Institute.

A-19 [THIS PAGE IN1ENTIONALLY LEFT BLANK] APPENDIXB

F1NANCIAL STATEMENTS OF THE CORPORATION [THIS PAGE IN1ENTIONALLY LEFT BLANK] SCI-Arc

Financial Statements

August 31, 2017 SCI-Arc

Financial Statements

Contents

Independent Auditor's Report 1-2

Financial Statements

Statements of Financial Position 3 Statements of Activities 4 Statements of Cash Flows 5 Notes to Financial Statements 6-17

Supplemental Information

Schedule of Expenditures of Federal Awards 18 Notes to the Schedule of Expenditures of Federal Awards 19

Independent Auditor's Reports on Compliance and Internal Control

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 20-21

Report on Compliance For Each Major Federal Program and Report on Internal Control Over Compliance Required by the Uniform Guidance 22-24

Summary of Auditor's results 25

Financial Statement Findings 26

Federal Award Findings and Questioned Costs 26

Status of Prior Year Findings 27 Roscoe & Swanson Accountancy Corporation Certified Public Accountants 23717 Hawthorne Blvd., Suite 206 Torrance, CA 90505 (310) 540-5300 FAX (310) 540-5311

Independent Auditor's Report

Board of Directors Southern California Ins ti lute of Archi lecture Los Angeles, CA

Report on the Financial Statements

We have audi led the accompanying financial statements of Southern California Ins ti lute of Architecture (SCI-Arc) (a nonprofit corporation), which comprise the statements of financial position as of August 31, 2017 and 2016, and the related statements of activities, and cash flows for the years then ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these 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 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 these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the 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 entity'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 financial statements. Board of Directors -2-

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 financial statements referred to above present fairly, in all material respects, the financial position of SCI-Arc as of August 31, 2017 and 2016, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Report on Supplemental Information

Our audit was conducted for the purpose of forming an op1mon on the financial statements as a whole. The schedule of expenditures of federal awards, as required by Office of Management and Budget Uniform Guidance is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting records and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements taken as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated November 17, 2017 on our consideration of SCI-Arc's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering SCI­ Arc's internal control over financial reporting and compliance. Roscoe & Swanson

Roscoe & Swanson, Accountancy Corporation

Torrance, California

November 17, 2017 SCI-Arc

Statements of Financial Position in thousands

Au st 31 2017 2016

Assets Cash and cash equivalents $11,264 $11,512 Receivables, net 88 65 Pledges receivable, net 978 941 Inventory, prepaid expenses and other assets 725 616 Investments, at fair value 29,188 22,668 Property and equipment, net 30,265 30,327

Total assets $72,508 $66,129

Liabilities and Net Assets

Accounts payable and accrued expenses $ 1,327 $ 875 Deferred revenue 6,720 6,486 Loans payable 16,073 16,399

Total liabilities 24 120 23 760

Net assets: With out donor restrictions 45,676 39,910 With donor restrictions 2 712 2 459

Total net assets 48 388 42 369

Total liabilities and net assets $72,508 $66,129

The accompanying notes are an integral part of these financial statements.

3 SCI-Arc

Statements of Activities in thousands

Year ended August 31, 2017 2016

Changes in net assets without donor restrictions: Revenues: Tuition and fees $24,755 $23,465 Less scholarships (3,221) (2,686) Net tuition and fees 21,534 20,779 Contributions 473 324 Auxiliary enterprises 1,184 1,252 Other income 295 362 Investment return net 2 072 609

Total revenues and gains without donor restrictions 25,558 23,326

Net assets released from restrictions: Satisfaction of purpose restrictions 1 53 Expiration of time restrictions 37 36

Total net assets released from restrictions 38 89

Total revenues, gains and other support without donor restrictions 25,596 23,415

Expenses: Instruction 12,652 11,489 General and administrative 4,959 4,509 Fundraising 642 604 Auxiliary enterprises 1,577 1,463

Total expenses 19,830 18,065

Increase in net assets with out donor restrictions 5 766 5 350

Changes in net assets with donor restrictions: Contributions 256 472 Investment return, net 35 Net assets released from restrictions (38) (89)

Increase in net assets with donor restrictions 253 383

Increase in total net assets 6,019 5,733

Net assets, beginning 42,369 36,636

Net assets, ending $48,388 $42,369

The accompanying notes are an integral part of these financial statements.

4 SCI-Arc

Statements of Cash Flows in thousands

Year ended August 31 2017 2016

Cash flows from operating activities Change in net assets $6,019 $ 5,733 Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation 884 883 Amortization of deferred loan costs 93 93 Investments market value adjustment and other (2,232) (306) Changes in assets and liabilities that provide (use) cash: Receivables (22) 417 Pledges and bequests (37) (101) Prepaid expenses, inventory and other assets (109) (133) Accounts payable and accrued expenses 453 (642) Deferred revenue 233 1 007

Net cash provided by operating activities 5,282 6,951

Cash flows from investing activities Purchase of investments (12,671) (6,018) Proceeds from sale and maturities of investments 8,384 3,332 Purchase of property and equipment (823) {1,268)

Net cash used in investing activities (5,110) (3,954)

Cash flows from financing activities Repayment of debt (420) (385)

Net cash used in financing activities (420) (385)

Increase (decrease) in cash (248) 2,612

Cash and cash equivalents, beginning 11,512 8,900

Cash and cash equivalents, ending $11,264 $11,512

Additional information: Cash paid for interest $ 629 $ 647

The accompanying notes are an integral part of these financial statements.

5 SCI-Arc

Notes to Financial Statements

1 - Organization

The Southern California Institute of Architecture (SCI-Arc) is a California non-profit corporation established in 1972. It is a fully accredited school of Architecture, offering Bachelor and Masters degrees. With an enrollment of approximately 500 students, it has become an internationally recognized leader in experimental design and urbanism. The school is located in the Santa Fe Railroad Freight Depot, a quarter­ mile long, reinforced concrete building in downtown Los Angeles, built in 1907. The building has become a critical laboratory for the continuing development of downtown Los Angeles. The school currently offers a study abroad program in Japan through Hosei University in Tokyo. During the academic year ended August 31, 2017, international students comprised approximately 56% of the student body.

SCI-Arc is a non-profit organization as described in Section 50l(c)(3) of the Internal Revenue Code (the 11 11 Code ) and is exempt from federal income taxes on related income pursuant to the Code and under corresponding sections of the California Revenue and Taxation Code.

2 - Summary of significant accounting policies

Financial statement presentation SCI-Arc's financial statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America. Net assets are classified based on the existence or absence of donor imposed restrictions. Accordingly, SCI-Arc classifies its net assets and changes in net assets as follows:

Net assets without donor restrictions include the revenues and expenses related to SCI-Arc's primary educational mission. Also included are contributions not subject to donor imposed restrictions and donor restricted contributions whose restrictions are met in the same reporting period.

Net assets with donor restrictions include contributions subject to donor imposed restrictions that are perpetual in nature, purpose restricted or time-restricted. Net assets are released from donor restrictions either by actions of SCI-Arc pursuant to those restrictions or by the passage of time.

Use ofestimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the reporting period. Actual results could differ from those estimates.

Credit risk Financial instruments which potentially subject SCI-Arc to concentrations of credit risk consist principally of cash balances in excess of FDIC insured limits, investments and receivables. Cash is placed in a high credit quality financial institution which limits the amount of credit exposure. Credit risk concentration with respect to receivables is primarily related to amounts due from donors, government grants and students. SCI-Arc's management does not believe significant credit risk exists at August 31, 2017.

Fair value Measurements SCI-Arc defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The following describes the hierarchy of inputs used to measure fair value and the primary valuation methodologies used by SCI-Arc for financial instruments measured at fair value on a recurring basis. The three levels of inputs are as follows:

6 SCI-Arc

Notes to Financial Statements

Level I - Quoted prices in active markets for identical assets or liabilities.

Level II - Inputs other than Level I that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the same term of the assets or liabilities.

Level 111 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Cash and cash equivalents SCI-Arc considers all cash and highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents, excluding those held for long term investments.

Accounts receivable Tuition and fees receivable represent amounts due for current or past semesters for which students have registered. Management periodically reviews and assesses the collectability of receivables and provides an allowance when collection is doubtful. Historical bad debt experience has been consistent with management's expectations. Other accounts receivable include receivables from federal and state grant programs.

Pledges Receivable Unconditional promises to give ("pledges") are recorded as contribution revenue and as receivables. Pledge contributions are classified as temporarily restricted or permanently restricted based on time restrictions or donor-imposed restrictions. Pledges receivable are reported at their discounted value using credit-adjusted borrowing rates. An allowance for uncollectible pledges is estimated by management based on such factors as prior collection history, type of contribution and the nature of the fund.raising activity. inventory Inventory is valued at the lower of cost (first-in, first-out) or net realizable value.

Deferred loan costs Costs incurred in obtaining the financing to acquire SCI-Arc's campus have been capitalized and are being amortized over the initial term of the loans. investments Investment purchases are recorded at cost, or if donated, at fair value on the date of donation. Thereafter, investments are reported at their fair values in the statements of financial position and are classified within Level 1, Level II and Level Ill of the fair value hierarchy. Net investment return/(loss) is reported in the statements of activities and consists of interest and dividend income, realized and unrealized capital gains and losses, less external and direct internal investment expenses.

SCI-Arc has certain alternative investments, which consist of fixed income funds, hedge funds and private equity/venture capital funds. SCI-Arc uses net asset value (NA V) as reported by its investment advisor and the fund managers as a practical expedient, to determine the fair value of investments in investment funds which (a) do not have a readily determimble fair value and (b) either have the attributes of an investment fund or prepare their financial statements consistent with the measurement principles of an investment fund. At August 31, 2017 and 2016, the fair value of all such investments has been determined by using NA V as a practical expedient.

7 SCI-Arc

Notes to Financial Statements

Property and Equipment and Depreciation Property and equipment which is purchased or constructed, is stated at cost. Assets acquired by gift or bequest are stated at fair value at the date of acquisition. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Normal repair and maintenance expenses and minor equipment replacement costs are expensed as incurred. When items are retired or otherwise disposed of, the cost and accumulated depreciation and amortization are removed from the accounts, and any profit or loss on such retirements or disposal is recognized in the year of disposal.

Revenue recognition Student tuition and fees and Scholarships - Student tuition and fees are recorded as revenues in the year in which the related academic services are rendered. Student tuition and fees received in advance of services rendered are recorded as deferred revenue. Scholarships are reported in the Statement of Activities as a reduction of tuition and fees and are recognized in the same manner as described for student tuition and fees.

Contributions - Gifts of cash and other assets are recorded as with or without donor restrictions based on the existence and/or nature of any donor restrictions.

Promises to give - Unconditional promises to give that are expected to be collected within one year are recorded at net realizable value. Unconditional promises to give that are expected to be collected in future years are recorded at the discounted present value of their estimated future cash flows. The discounts of those amounts are computed using risk-free interest rates applicable to the years in which the promises are received. Amortization of the discounts is included in contribution revenue.

Grants - Revenues from grants are recorded as allowable expenditures under such agreements are incurred.

Auxiliary enterprise revenue - Revenues from supporting services, such as the student store, print center, Computer Numerical Control (CNC) machine tooling facility and Three Dimensioml print facility, are recorded at the time of delivery of the product or service.

Other revenue - Other revenues include administrative fees, cafe and site rentals, vending commissions, expense reimbursements, late charges and other miscellaneous items. Amounts received are recorded at the time of the transaction.

Expenses Expenses are reported as decreases in net assets without donor restrictions.

Advertising costs~ These costs are expensed as incurred and were $208,607 and $143,821 during the years ended August 31, 2017 and 2016, respectively.

Reclassifications Certain balances on the financial statements for the year ended August 31, 2016 were reclassified to conform to classifications used in the current year statement.

implementation ofrecent authoritative pronouncements On September 1, 2016, SCI-Arc adopted the new FASB standard Presentation of Financial Statements of Not-For-Profit Entities. This standard reduces net assets from three classes to two; requires information about liquidity and availability of financial assets to meet expenses; requires presentation of expenses by both their natural and functional classifications; requires investment return to be reported net; and, requires information with respect to donor imposed restrictions. As a result of adopting this standard, certain prior year amounts were reclassified to conform to current year presentation.

8 SCI-Arc

Notes to Financial Statements

3 - Information about financial assets and liquidity

SCI-Arc's financial assets, without donor or other restrictions limiting their use, available within one year of the balance sheet date for general expenditure are as follows (in thousands):

Cash and cash equivalents $11,264 Receivables and pledges receivable due in one year or less 326 Other investments available for current use 25 745

37 335

SCI-Arc's liquidity management policy is to structure its financial assets to be available as its general expenditures, liabilities and other obligations come due. In addition, SCI-Arc has invested excess cash in short-term, intermediate term and long term investments. These investments have been set aside to be available to pay, if needed, all or part of SCI-Arc's debt that matures in 2018. To help manage unanticipated liquidity needs, SCI-Arc has a line of credit of$2 million, which it could draw upon. Additionally, SCI-Arc has a quasi-endowment of $1.1 million. Amounts from its quasi-endowment could be made available if necessary. Also, certain intermediate term and long term investments have lock-up provisions that could reduce the total investments available (see Note 7 for disclosures about investments).

SCI-Arc's endowment funds consist of donor-restricted endowments and a quasi-endowment. Income from donor-restricted endowments is restricted for specific purposes and, therefore, is not available for general expenditure.

4 - Receivables, net

Receivables are summarized as follows: (in thousands) 2017 2016 Students, less allowance for doubtful accounts $ 9 $ 1 Government grants 29 53 Other 50 11

88 65

5 - Pledges receivable, net

Unconditional promises are included in the financial statements as pledges receivable and revenue in the appropriate net asset category. Pledges are recorded after discounting to the present value of future cash flows. The discount rate used to calculate the present value of contributions was 2.25%.

Pledges are expected to be realized in the following periods (in thousands): One year or less $238 Between one year and five years 6 More than five years 1,020 Less discount to present value (286)

978

Approximately seventy-three (73%) of the pledges receivable are from one person.

9 SCI-Arc

Notes to Financial Statements

Pledges receivable at August 31, 2017 have the following restrictions (in thousands): Endowments: Chair $714 Scholarships and other 32 Total endowments 746 Other 232

978

6 - Inventory, prepaid expenses and other assets

(in thousands) 2017 2016 Inventory $155 $150 Prepaid expenses 555 451 De osits 15 15

725 616

7 - Investments

Investments are summarized as follows, stated at fair value (in thousands): 2017 2016 Investment cash and equivalents $ 418 $ 1,715 Certificate of deposit 4,000 Fixed income bonds and bond funds 9,997 4,744 Equities: Common stock 945 751 US Equities 5,906 4,506 Non-US Equities 3,991 3,374 Alternative investment funds: Fixed income funds 1,389 3,878 Hedge funds 1,929 3,135 Natural resources 265 362 Private e uit 348 203

29 188 22 668

At August 31, 2017 and 2016 investments include endowment assets of $2,955,144 and $2,394,929, respectively.

Investments are professionally managed by an outside investment organization which is subject to oversight by Sci-Arc's Investment Committee. The Investment Committee has established an investment policy that covers asset allocation and performance objectives and imposes restrictions on the managers. These restrictions cover concentrations of market risk, credit quality of investments and various other matters.

Investments are exposed to risks, such as changes in interest rates, credit ratings and market volatility. Due to the level of risk associated with certain investment securities, changes in the values of investments could occur in the near term and these changes could materially affect the amounts reported in the financial statements.

10 SCI-Arc

Notes to Financial Statements

The following summarizes financial instruments carried at fair value as of August 31, 2017 and 2016, by the valuation hierarchy defined above. Investments that are valued using NA V have not been classified in the fair value hierarchy. The NA V amounts presented with the fair value amounts in this table are intended to permit reconciliation of the fair value hierarchy to amounts presented in the statement of financial position:

August 31, 2017 (in thousands) Level I Level 2 Level 3 Total Investment cash and equivalents $ 418 $ 418 Certificate of deposit 4,000 4,000 Fixed income bonds and bond funds 9,997 9,997 Equities: Common stock 945 945 US Equities 5,906 5,906 Non-US Equities 3,991 3,991 Hedge funds 380 380 Natural resources 265 265

Total using the valuation hierarchy $25,902 25,902 Investments valued at NAV 3 286

29 188

August 31, 2016 (in thousands) Level I Level 2 Level 3 Total Investment cash and equivalents $ 1,715 $1,715 Fixed income bonds and bond funds 4,744 4,744 Equities: Common stock 751 751 US Equities 4,506 4,506 Non-US Equities 3,375 3,375 Hedge funds 420 420 Natural resources 362 362

Total using the valuation hierarchy $15,873 15,873 Investments valued at NAV 6 795

22 668

The following table lists alternative investment funds valued at NA V by major category as of August 31, 2017: Fair Value Remaining Redemption Redemption Category of investment (in thousands) Life Frequency notice period Fixed income funds(!) $1,389 Open ended Monthly, quarterly 45 to 60 days Hedge funds (3) 1,549 Open ended Quarterly, annually 35 to 95 days Private equity (4) 348 See ( 4) below llliquid llliquid

Investments at NAV $3,286

11 SCI-Arc

Notes to Financial Statements

The following table lists alternative investment funds valued at NA V by major category as of August 31, 2016: Fair value Remaining Redemption Redemption Category of investment (in thousands) Life Frequency notice period Alternative investment funds: Fixed income funds(!) $3,878 Open ended Monthly, quarterly 45 to 60 day Hedge fund (2) 1,240 One year Quarterly NIA Hedge funds (3) 1,474 Open ended Quarterly, annually 35 to 95 days Private equity (4) 203 See ( 4) below llliquid llliquid

Investments at NAV $6,795

(1) This class includes investments in funds that have an objective to seek capital appreciation by investing in a diversified portfolio of structured credit products. One fund has a focus on seasoned residential mortgage-backed securities and one has a focus in the United States and European credit markets. (2) This class includes a fund operating as a hedge fund that has a focus on long and short term investments in agency and non-agency mortgage backed securities and other mortgage related investments. This fund was liquidated during the fiscal year ended August 31, 2017. (3) This class includes investments in three funds. One fund has an investment strategy to provide risk­ adjusted returns by employing a concentrated, value oriented long/short investment strategy with a willingness to use activism, one fund has an investment strategy which in intends to provide risk­ adjusted returns by investing globally in public companies in the life science industry and one fund has an investment strategy to provide risk-adjusted returns by investing in US and European distressed debt, leveraged debt and equity and collateralized loan obligations. (4) This class includes an investment in a master fund structure with a strategy to achieve returns by investing in mezzanine and venture capital funds. The master fund will continue until January 2024 and its life may be extended for up to three more years. SCI-Arc had an unfunded equity commitment to the private equity fund of $460,768 at August 31, 2017.

Investment return consisted of the following for the years ended August 31, 2017 and 2016: ( in tho us ands) 20 I 7 2016 Interest and dividend income $ 526 $345 Realized and unrealized gains 1,690 261 Investment income 2,216 606 Mamgement fees (I 09) (103)

Net investment return $2,107 $503

8 - Property and equipment

Property and equipment are summarized as follows: (in thousands) 2017 2016 Land $17,160 $17,160 Building and improvements 12,900 12,568 Furniture, fixtures and equipment 7,057 6,566 Leasehold improvements 216 216 Librar 459 459 37,792 36,969 Less accumulated depreciation (7,527) (6,642)

30 265 30 327

12 SCI-Arc

Notes to Financial Statements

9 - Loans payable

Loans payable are as follows: (in thousands) 2017 2016 Loans payable $16,135 $16,555 Deferred loan costs (62) (156)

16 073 16 399

In 2011 SCI-Arc borrowed the proceeds of tax exempt bonds (the "Bonds") issued by the California Municipal Fimnce Authority (CMFA) for the purchase of its campus. The Bonds were purchased by US Bank in a private placement for an initial seven year fixed rate period which extends to May 1, 2018 (the 11 11 Private Placement Rate Period ). At that time SCI-Arc may redeem the remaining Bonds, request US Bank to commit to another private placement period, obtain a new private placement purchaser, or re­ market the remaining Bonds in the public market.

As provided by the CMFA loan agreement, SCI-Arc and US Bank entered into a supplemental agreement which governs the bank's commitment during the Private Placement Rate Period. Under the supplemental agreement the loans bear interest at 3.79% and are collateralized by the campus property and parking lot. Accrued interest, as well as principal payments to redeem Bonds prior to maturity, are payable monthly. The required principal payments for the next fiscal year are $250,000. At May 1, 2018 the remaining unpaid balance will be $15,885,000. The supplemental agreement also restricts future borrowing and requires compliance with certain financial ratios and reporting covenants. SCI-Arc's management is looking at options to refinance the unpaid balance before its due date.

US Bank also provided a $2,000,000 unsecured revolving line of credit, which is renewable annually and bears interest at LIBOR plus 1.25%. SCI-Arc has not used this line of credit.

10 - Leases

SCI-Arc leases the school store and office space under operating leases. The leases require payment of certain common area expenses and provide for renewal options. Future minimum payments under these leases at August 31, 2017 were as follows (in thousands):

Years ended Au st 31 2018 $170 2019 45

215

Rent expense for each of the fiscal years ended August 31, 2017 and 2016 was approximately $178,000 and $161,000, respectively.

11 - Retirement Plan

SCI-Arc has established a retirement plan for its employees. Employees are allowed to contribute up to the annual lnterml Revenue Service 401(k) limit each year through a salary reduction program. Additionally, the plan provides for employer discretionary matching contributions, as well as, non­ matching elective contributions. Contributions on behalf of the employees for the years ended August 31, 2017 and 2016 were $306,844 and $293,502, respectively.

13 SCI-Arc

Notes to Financial Statements

12 - Net assets

Net assets without donor restrictions (in thousands): 2017 2016 Designated by the Board to the endowment fund $ 1,132 $ 900 Undesigmted 44,544 39,010

45 676 39 910

Net assets with donor restrictions (in thousands): 2017 2016 Subject to expenditure for specified purposes: Scholarshi s $ 3 $ 4 Subject to the passage of time: For periods after August 31 37 Perpetual in nature: Funded endowments: Technology 700 700 Scholarships 988 638 Prize 218 218 Other 22 22 Accumulated investment gains 35 1,963 1,578 Unfunded endowments 746 840

2 709 2 418

2 712 2459

Net assets were released from donor restrictions by incurring expenses satisfying the restricted purpose or by occurrence of the passage of time or other events specified by the donors as follows (in thousands):

Purpose restrictions accomplished 2017 2016 Development and other $ - $53 Scholarshi s 53 Time restrictions expired 37 36

Total restrictions released $38 $89

Net assets were received with restrictions from donors were as follows(in thousands):

2017 2016 Scholarships $240 $279 Other 16 193

256 472

14 SCI-Arc

Notes to Financial Statements

13 - Commitments and Contingencies

SCI-Arc has received funds pursuant to government grants and contracts for student financial assistance through the Federal Work-Study, Pell and Supplemental Educational Opportunity programs. These programs are subject to review and audit by the grantor agency. Although such an audit could generate disallowances under terms of the grants, SCI-Arc's management believes that any required reimbursements would not be material

14 - Endowment

The endowment consists of approximately 12 individual funds established by donors to provide annual funding for specific activities, primarily scholarships, awards and prizes. The endowment also includes certain net assets without donor restrictions that have been designated for endowment by the Board of Directors.

SCI-Arc's Investment Committee is charged with determining the manner in which endowment funds will be invested and expended consistent with the standard of prudence prescribed by Uniform Prudent Management of lnstitutioml Funds Act (UPMIFA).

The Investment Committee has interpreted UPMIF A as requiring the preservation of the original contribution as of the contribution date of donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation SCI-Arc classifies as assets with donor restrictions that are permanent in nature the amount of permanent endowment gifts, subsequent permanent endowment gifts, and the accumulations to permanent endowments made in accordance with the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of donor­ restricted endowment funds that are not classified as permanent in nature are classified as net assets with donor restrictions that are time or purpose restricted until they are expended in a manner consistent with the standard of prudence prescribed by UPMIFA.

The following is a summary of endowment net asset composition by fund type (in thousands):

Without donor With donor restrictions restrictions Total

August 31, 2017 Board designated endowment funds $1,132 $ $1,132 Donor restricted endowment funds Original donor restricted amount and amounts required to be maintained in perpetuity by the donor 1,928 1,928 Accumulated investment gains 35 35

1 132 1 963 3 095

August 31, 2016 Board designated endowment funds $900 $ $ 900 Donor restricted endowment funds Original donor restricted amount and amounts required to be maintained in perpetuity by the donor 1,578 1,578

900 1 578 2 478

15 SCI-Arc

Notes to Financial Statements

From time to time, certain donor-restricted endowment funds may have fair values less than the amount required to be maintained by donors or by law (underwater endowments). SCI-Arc has interpreted UPMIF A to permit spending from underwater endowments in accordance with prudent measures required under law. At August 31, 2017 and 2016, there were no underwater funds.

Investment and spending policies:

The Investment Committee has not established a formal endowment spending policy. Investment return is being retained in the endowment fund to help build up the fund. Current awards and scholarships (awards) required by donor purpose restrictions are being paid using other unrestricted funds. Investment return equal to those awards is retained as board designated. Investment return in excess of the awards is allocated to the board designated and donor restricted funds based on their average balances for the year.

Endowment assets are summarized as follows (in thousands): 2017 2016 Comingled cash $ 140 $ 83 Investments 2 955 2 395

3 095 2 478

Changes in endowment net assets were (in thousands): Without donor With donor restrictions restrictions Total Endowment assets, August 31, 2015 $ 727 $1,244 $1,971 Contributions 334 334 Investment return 173 173 Endowment assets, August 31, 2016 900 1,578 2,478 Contributions 240 240 Pledge payments 110 110 Investment return 232 35 267

Endowment assets, August 31,2017 $1,132 $1,963 $3,095

15 - Functional expenses

The following tables present expenses by both their nature and function (in thousands): Year ended Au ust 31, 2017 General and Fund Auxiliary Instruction Administrative Raising Enterprises Total Salaries, benefits and payroll taxes $ 8,403 $2,817 $427 $ 370 $12,017 Advertising, printing and publications 277 450 96 5 828 Occupancy 899 424 3 236 1,562 Office 596 279 171 1,047 Services and professional fees 499 496 76 19 1,090 Supplies 252 66 4 60 382 Travel and meals 347 267 31 5 650 Cost of sales 648 648 Depreciation 767 88 2 27 884 Interest 612 72 2 36 722

$12,652 $4,959 $642 $1,577 $19,830

16 SCI-Arc

Notes to Financial Statements

Year ended Au ust 31 2016 General and Fund Auxiliary Instruction Administrative Raising Enterprises Total Salaries, benefits and payroll taxes $ 7,509 $2,510 $403 $ 343 $10,765 Advertising, printing and publications 307 345 103 5 760 Occupancy 825 463 289 1,578 Office 443 405 52 901 Services and professional fees 424 327 45 I 797 Supplies 197 72 9 89 367 Travel and meals 386 229 38 3 656 Cost of sales 618 618 Depreciation 769 86 2 26 883 Interest 629 72 2 37 740

$] 1,489 $4,509 $604 $1,463 $18,065

Operating expenses are allocated functionally on a direct basis. Certain categories of expenses are attributable to more than one function, such as interest, depreciation, information technology, and maintenance. Interest and depreciation are allocated based on square footage. Other expenses are allocated based on estimates of time and costs utilized.

16 - Subsequent events

SCI-Arc's management is working with the CMF A and US Bancorp to refund the bonds that were issued in 2011. The proceeds of the refunding will be loaned to SCI-Arc and used to repay the mortgage notes that were used to purchase the campus. The refunding is expected to be completed by a public bond offering on or about December 1, 2017. The terms, conditions and cost of the offering have not been fully determined.

SCI-Arc's management has evaluated subsequent events through November 17, 2017, which is the date the financial statements were available to be issued.

17 SCI-Arc

Supplemental Information

Schedule of Expenditures of Federal Awards

Federal Grantor Federal Program Title CFDA# Expenditures

U.S. Department of Education - Student Financial Assistance (SFA) Programs:

Federal Direct Student Loan Program 84.268 $7,838,022

Federal Pell Grant Program 84.063 272,364

Federal Supplemental Education Opportunity Grant Program 84.007 19,050

Federal Work Study Program 84.033 39,607

Total Federal Assistance - all SFA program cluster *$8,169,043

* Denotes expenditures under the major program

The accompanying notes are an integral part of this schedule.

18 SCI-Arc

Supplemental Information

Notes to Schedule of Expenditures of Federal Awards

Year ended August 31, 2017

1 - Basis of Presentation

The accompanying schedule of expenditures of federal awards includes the federal financial assistance program activity of SCI-Arc and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Therefore, some amounts presented in this schedule may differ from the amounts presented in, or used in the preparation of, the basic financial statements.

2 - Financial responsibility composite ratio

SCI-Arc's composite ratio for the year ending August 31, 2017 was 3.0.

3 - Indirect cost rate

SCI-Arc did not elect to use the 10% de minimis cost rate as covered in Indirect Costs.

19 Roscoe & Swanson Accountancy Corporation Certified Public Accountants 23717 Hawthorne Blvd., Suite 206 Torrance, CA 90505 (310) 540-5300 FAX (310) 540-5311

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards

Independent Auditor's Report

Board of Directors SCI-Arc Los Angeles, CA

We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of SCI-Arc (SCI-Arc), which comprise the statements of financial position as of August 31, 2017, and the related statements of activities, and cash flows for the years then ended, and the related notes to the financial statements, and have issued our report thereon dated November 17, 2017.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered SCI­ Arc's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of SCI-Arc's internal control. Accordingly, we do not express an opinion on the effectiveness of SCI-Arc's internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

20 Board of Directors -2-

Compliance and Other Matters

As part of obtaining reasonable assurance about whether SCI-Arc's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Roscoe & Swanson

Roscoe & Swanson, Accountancy Corporation

Torrance, California

November 17, 2017

21 Roscoe & Swanson Accountancy Corporation Certified Public Accountants 23717 Hawthorne Blvd., Suite 206 Torrance, CA 90505 (310) 540-5300 FAX (310) 540-5311

Report on Compliance For Each Major Federal Program and Report on Internal Control Over Compliance Required by the Uniform Guidance

Independent Auditor's Report

Board of Directors SCI-Arc Los Angeles, CA

Report on Compliance For Each Major Federal Program

We have audited SCI-Arc's (SCI-Arc) compliance with the types of compliance requirements described in the 0MB Compliance Supplement that could have a direct and material effect on each of SCI-Arc's major federal programs for the year ended August 31, 2017. SCI-Arc's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs.

Management's Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts and grants applicable to its federal programs

Auditor's Responsibility

Our responsibility is to express an opinion on compliance for each of SCI-Arc's major federal programs based on our audit of the types of compliance requirements referred to above.

We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about SCI-Arc's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of SCI-Arc's compliance with those requirements.

22 Board of Directors -2-

Opinion on Each Major Federal Program

In our opinion, SCI-Arc complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended August 31, 2017.

Report on Internal Control Over Compliance

Management of SCI-Arc is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered SCI-Arc's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of SCI-Arc's internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that a material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

23 Board of Directors -3-

Purpose of this Report

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of The Uniform Guidance. Accordingly, this communication is not suitable for any other purpose. Roscoe & Swanson

Roscoe & Swanson, Accountancy Corporation

Torrance, California

November 17, 2017

24 SCI-Arc

Schedule of Findings and Questioned Costs

Year ended August 31, 2017

Section I - Summary of Auditor's results

Financial Statements

Type of auditor's report issued: Unmodified

Internal control over financial reporting:

Material weaknesses identified? Yes X No

Reportable conditions identified tbat are not considered to be material weaknesses? Yes _X_ None reported

Noncompliance material to financial statements noted? Yes X No

Federal Awards

Internal control over major programs:

Material weaknesses identified? Yes X No

Reportable conditions identified tbat are not considered to be material weaknesses? Yes _X_ None reported

Type of auditor's report issued on compliance for major programs: Unmodified

Any audit findings disclosed tbat are required to be reported in accordance witb Uniform Guidance? Yes X No

Identification of major programs:

CFDA Numbers Name of Federal Program

SFA Cluster 84.268, 84.063, Federal Direct Student 84.033 and 84.007 Loan Program

Dollar threshold used to distinguish between type A and type B programs: $750,000

Auditee qualified as a low-risk auditee? X Yes No

25 SCI-Arc

Schedule of Findings and Questioned Costs

Year ended August 31, 2017

Section II - Financial Statement Findings

No matters were reported.

Section III - Federal Award Findings and Questioned Costs

No matters were reported.

26 SCI-Arc

Status Of Prior Year Findings

The status of reportable findings for the year ended August 31, 2016 is as follows:

Finding number 2016-001

Satisfactory Academic Progress

Condition

Students who received federal financial aid did not meet the minimum GPA established under the school's SAP policy.

Current Status

The Grantee has implemented a policy requiring academic personnel to notify financial aid personnel of any students failing to meet the school's SAP policy. No similar problem was identified in the current year.

27 [THIS PAGE IN1ENTIONALLY LEFT BLANK] APPENDIXC

SUMMARY OF PRINCIPAL DOCUMENTS

INDENTURE

The following is a summary of certain provisions of the Indenture. This summary does not purport to be complete and is qualified in its entirety by reference to the Indenture for further information in this regard. All capitalized terms used but not otherwise defined in this Appendix shall have the meanings assigned to such terms in the Indenture.

Definitions

"Act" means the Joint Exercise of Powers Act, constituting Chapter 5 of Division 7 of Title I of the Government Code of the State of California, as now in effect and as it may from time to time hereafter be amended or supplemented.

"Act of Bankruptcy" means the filing of a petition in bankruptcy ( or other commencement of a bankruptcy or similar proceeding) by or against the Borrower under any applicable bankruptcy, insolvency or similar law as now or to become in effect.

"Additional Payments" means the payments to be made by the Borrower to the Trustee or the Issuer in accordance with the Agreement.

"Agreement" means that certain Loan Agreement pertaining to the Bonds, between the Issuer and the Borrower, as originally executed or as it may from time to time be supplemented, modified or amended subject to and in accordance with the terms thereof and the Indenture.

"Authorized Denominations" means $5,000 and integral multiples thereof

"Authorized Official" means any member of the Commission of the Issuer and any other person as may be designated and authorized to sign on behalf of the Issuer pursuant to a resolution adopted thereby.

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

"Beneficial Owner" means any person who has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds, including persons holding Bonds through nominees or depositories.

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

"Bondholder" or "Holder" means, with respect to any Bond, the person in whose name such Bond is registered.

"Bond Obligations" means and includes all of the Borrower's obligations under or with respect to the Bonds or any of the Borrower Documents.

"Bond Year" means the period of 12 consecutive months ending on November 30 in any year in which Bonds are Outstanding, provided that the first Bond Year shall begin on the date of issuance and end on November 30, 2018.

C-1 "Borrower" means Southern California Institute of Architecture, a California nonprofit public benefit corporation, organized and existing under the laws of the State, and its successors or assigns permitted pursuant to the Agreement.

"Borrower Documents" means the Agreement, the Continuing Disclosure Agreement, and the Tax Regulatory Agreement.

"Business Day" means any day other than (i) Saturday or Sunday, (ii) a day on which the banking institutions in (a) Los Angeles, California; (b) New York, New York or (c) the city in which the Trustee has its principal office, or (iii) a day on which the New Yark Stock Exchange is closed.

"Certificate," "Order" or "Written Request" mean respectively,(a) when used with respect to a document of the Issuer, a written certificate, order or request of the Issuer signed by or on behalf of the Issuer by its Chair, Executive Director, the Chair's or Executive Director's designee or by any other person who is specifically authorized by the Issuer to execute such a document on its behalf, and (b) when used with respect to a document of the Borrower, a written certificate, order or request of the Borrower signed by or on behalf of the Borrower by its Chief Executive Officer or Chief Financial Officer, or by any other person who is specifically authorized by a resolution of the Board of Trustees of the Borrower to execute such a document on its behalf

"Code" means the Internal Revenue Code of 1986 as amended from time to time, any successor code or law, and any regulations in effect or promulgated thereunder.

"Continuing Disclosure Agreement" means the Continuing Disclosure Agreement pursuant to which the Borrower undertakes to provide continuing disclosure in satisfaction of the requirements of Securities and Exchange Commission Rule 15c2-l 2(b )(5).

"Corporate Trust Office" means, with respect to the Trustee, the office of the Trustee at which at any particular time its corporate trust business shall be principally administered, which at the date of execution of the Indenture is that specified in the Indenture; provided, however, that with respect to presentation of Bonds for payment or for registration of transfer and exchange such term shall mean the office or agency of the Trustee at which, at any particular time, its corporate trust agency business shall be conducted.

"Costs of Issuance" means all items of expense directly or indirectly payable by or reimbursable to the Borrower and related to the original authorization, execution, sale and delivery of the Bonds, including but not limited to: costs of preparation and reproduction of documents; fees and expenses of the Issuer and its counsel; initial fees, expenses and charges of the Trustee (including its counsel); legal fees and charges of bond counsel and the respective counsel to the Borrower and the Underwriter; and any other cost, charge or fee in connection with the original delivery of the Bonds.

"Costs of Issuance Fund" means the fund by that name established pursuant to the Indenture.

"Determination of Taxability" means interest on the Bonds, or any of them, is determined not to be tax-exempt to the Holder thereof by a final administrative determination of the Internal Revenue Service or final judicial decision of a court of competent jurisdiction in a proceeding of which the Borrower received a notice. A determination or decision will not be considered final for this purpose until the conclusion of any appellate review, if sought.

"Electronic Means" shall mean the following communications methods: e-mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Trustee, or another method or system specified by the Trustee as available for use in connection with its services under the Indenture.

C-2 "Eligible Securities" means any of the following obligations as and to the extent that such obligations are at the time legal investments under the Act for moneys held hereunder and then proposed to be invested therein, as shall be certified by the Borrower to the Trustee:

(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 obligations the timely payment of the principal of and interest on which are unconditionally guaranteed by the United States of America;

(b) bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies, provided that such obligations are backed by the full faith and credit of the United States of America (stripped securities shall constitute Eligible Securities only if they have been stripped by the agency itself): US. Export-Import Bank, Farmers Home Administration, Federal Financing Bank, General Services Administration, U.S. Maritime Administration, US. Department of Housing and Urban Development, Government, National Mortgage Association, and Federal Housing Administration;

( c) bonds, debentures, notes, or other evidence of indebtedness issued or guaranteed by any of the following non-full faith and credit US. government agencies (stripped securities shall constitute Eligible Securities only if they have been stripped by the agency itself): Federal Home Loan Bank System, Federal Home Loan Mortgage Corporation ("FHLMC"), Fannie Mae ("FNMA"), Student Loan Marketing Association, Resolution Funding Corporation or Farm Credit System;

(d) bonds or notes issued by any state or municipality which are rated by any Rating Agency then rating the Bonds in one of the two highest rating categories assigned by such agency without regard to modifier;

( e) repurchase agreements with either a primary dealer on the reporting dealer list of the Federal Reserve or any bank, which, in either case, is rated "A" or better by any Rating Agency then rating the Bonds, provided that (i) the Trustee or third party acting solely as agent for the Trustee has possession of the collateral; (ii) the collateral is valued weekly and the market value of the collateral is maintained at an amount equal to at least 102% (or, if the collateral consists of obligations ofFHLMC or FNMA, 103 % ) of the amount of cash transferred by the Trustee to the dealer bank or securities firm under the repurchase agreement plus interest; (iii) failure to maintain the requisite collateral levels will require the Trustee to liquidate the collateral immediately; (iv) the repurchase securities are either obligations of, or fully guaranteed as to principal and interest by, the United States or any federal agency backed by the full faith and credit of the United States; (v) the repurchase securities are free and clear of any third-party lien or claim; and (vi) there shall have been delivered to the Trustee, the Issuer and the Borrower an Opinion of Counsel to the effect that such repurchase agreement meets all guidelines under State law for legal investment of public funds;

(f) investment agreements, including guaranteed investment contracts ("G!Cs"), with investment contract providers which are rated "A" or better by S&P or Moody's at the time of investment;

(g) money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of "AAAm-G"; "AAA-m"; or "AA-m," including money market funds for which the Trustee, its affiliates or subsidiaries retains a fee for services provided to the fund, whether as a custodian, transfer agent, investment advisor or otherwise;

(h) certificates of deposit secured at all times by collateral described in clause (a) or (b) above, issued by commercial banks, savings and loan associations or mutual savings banks relating to

C-3 collateral held by a third party, and in which collateral the Trustee has a perfected first security interest;

(i) certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC, including BIF and SAIF, or of banks, including the Trustee and its affiliates, the short-term obligations of which are rated by any Rating Agency then rating the Bonds in one of the two highest rating categories assigned by such agency;

(j) commercial paper rated, at the time of purchase, either "A-1" or better by S&P or "P- l" or better by Moody's;

(k) federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of "A-1" or "A" or better by S&P or "P-1" or "A2" or better by Moody's; and

(1) obligations of a bank or other financial institution rated "A-1" or "A" or better by S&P or "P-1" or "A2" or better by Moody's.

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

"Event of Default" means any of the events specified in the Indenture.

"Financed Facilities" means those capital facilities of the Borrower previously refinanced with the proceeds of the Prior Bonds, as described in more detail on Exhibit A to the Agreement.

"Fiscal Year" means the period beginning on September I of each year and ending on the next succeeding August 31 or any other twelve-month period selected and designated by the Borrower as the official fiscal year period of the Borrower.

"GAAP" will refer to generally accepted accounting principles in the United States as in effect from time to time.

"Indebtedness" of any Person at any date of determination means the total amount of obligations of the Borrower to pay others, excluding trade payables incurred in the ordinary course of business but including, without limitation, (a) the Bond Obligations, (b) amounts owing pursuant to any derivative or similar contract, (c) any guarantee, (d) payments under leases which are capitalized in accordance with GAAP having a term of more than one year from the date of incurrence or assumption thereof by the Borrower which, under GAAP, are shown on the balance sheet as a liability, and (e) payments under installment purchase contracts having an original term in excess of one year, notwithstanding the fact that payments in respect thereof (whether installment, serial maturity or sinking fund or otherwise) are required to be made less than one year after the date of creation thereof.

"Indenture" means the indenture, as originally executed or as it may from time to time be supplemented, modified or amended by any supplemental indenture entered into pursuant to the provisions of the Indenture.

"Information Services" means the Electronic Municipal Market Access System ("EMMA"), a service of the Municipal Securities Rulemaking Board, or such other service providing information with respect to called bonds as the Borrower may designate in writing to the Trustee.

"Insurance and Condenmation Proceeds Fund" means the fund by that name established pursuant to the Indenture.

C-4 "Interest Payment Date" means each June 1 and December 1, commencing on June 1, 2018.

"Issuer" means the California Municipal Finance Authority, a joint powers agency organized and existing under the laws of the State of California.

"Issuer Annual Fee" means 0.015% of the aggregate principal amount of the loan outstanding as of August 1 of each year, and payable in accordance with Section 6 of the Agreement, provided that the full aggregate principal amount of the loan shall be deemed outstanding on the closing date, and provided further that the Issuer Annual Fee with respect to the loan for any year shall not be less than $500.00.

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

"Material Indebtedness" means any Indebtedness which has a principal amount outstanding of not less than $500,000.

"Moody's" means Moody's Investors Service, a corporation organized and existing under the laws of the state of New Yark, its successors and their assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency designated by the Issuer, with the approval of the Borrower.

"Nominee" means the nominee of the Securities Depository, initially Cede & Co., which may be the Securities Depository, or any nominee substituted by the Securities Depository pursuant to the Indenture.

"Opinion of Bond Counsel" means an Opinion of Counsel addressed to the Trustee and the Issuer and delivered by a nationally recognized bond counsel firm experienced in matters relating to the exclusion from gross mcome for federal income tax purposes of interest payable on obligations of state and political subdivisions.

"Opinion of Counsel" means a written opinion of counsel (who may be counsel for the Issuer) appointed by the Issuer and acceptable to the Borrower. If and to the extent required by the provisions of the Indenture, each Opinion of Counsel shall include the statements provided for in the Indenture.

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

"Outstanding," when used as of any particular time with reference to Bonds, means (subject to the provisions of the Indenture) all Bonds theretofore, or thereupon being, authenticated and delivered by the Trustee under the Indenture except (a) Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation; (b) Bonds with respect to which all liability of the Issuer shall have been discharged in accordance with the Indenture; and ( c) Bonds for the transfer or exchange of which, or in lieu of or in substitution for which, other Bonds shall have been authenticated and delivered by the Trustee pursuant to the Indenture.

"Participant" means those broker-dealers, banks and other financial institutions from time to time for which the Securities Depository holds Bonds as a securities depository.

"Person" includes an individual, association, corporation, partnership, limited liability company, joint venture, any entity or a government or an agency or a political subdivision thereof.

"Prior Bonds" means $16,030,000 aggregate principal amount of outstanding California Municipal Finance Authority Educational Facility Revenue Bonds (Southern California Institute of Architecture Project) Series 2011.

C-5 "Rating Agency" means Moody's or S&P.

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

"Rebate Requirement" shall have the meaning assigned to that term in the Tax Regulatory Agreement.

"Redemption Price" means, with respect to any Bond ( or portion thereof), the principal amount of such Bond (or portion thereof) plus the applicable premium, if any, payable upon redemption thereof pursuant to the provisions of such Bond and the Indenture.

"Regular Record Date" means the close of business on the 15th calendar day (whether or not a Business Day) of the month immediately preceding each Interest Payment Date.

"Representation Letter" means, collectively, the letters, executed by the Issuer and the Trustee and delivered to the Securities Depository, representing such matters as shall be necessary to qualify the Bonds for the Securities Depository's book-entry system

"Request," "Written Request," "Certificate" or "Requisition," when used with respect to a document of the Borrower, mean, respectively, a request, certificate or requisition of the Borrower executed by any one of its Chief Executive Officer or Chief Financial Officer, or such other person as may be designated by the Board of Trustees of the Borrower to sign for the Borrower.

"Responsible Officer" of the Trustee means and includes the chairman of the board of directors, the president, every senior vice president, every vice president, every assistant vice president, every trust officer and every officer and assistant officer of the Trustee to whom any corporate trust matter is referred because of his or her knowledge of, and familiarity with, a particular subject and who is specifically assigned to administer the duties of the Trustee under the Indenture.

"Retained Rights" means the Issuer's rights to Additional Payments, any indemnification and the right to receive opinions, certifications, notices, information, inspections, consents and indemnifications pursuant to the Agreement, the Tax Regulatory Agreement, the Indenture and related documents.

"Revenues" means all payments received by the Issuer or the Trustee for the account of the Issuer pursuant or with respect to the Agreement (except Additional Payments), including, without limiting the generality of the foregoing, Base Loan Payments (including both timely and delinquent payments), prepayments and all income derived from the investment of any moneys in any fund or account established pursuant to the Indenture, but not including amounts received for or on deposit in the Rebate Fund.

"S&P" means S&P Global Ratings, a division of McGraw Hill Financial Inc., a corporation organized and existing under the laws of the State of New York, its successors and their assigns, or, if such corporation shall be dissolved, liquidated or shall no longer perform the functions of a securities rating agency, "S&P" shall be deemed to refer to any other nationally recognized securities rating agency designated by the Issuer, with the approval of the Borrower.

"Securities Depository" means The Depository Trust Company, or such other securities depository as the Issuer may designate to the Trustee in writing.

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

"State" means the State of California.

C-6 "Supplemental Indenture" or "Indenture Supplemental thereto" means any indenture hereafter duly authorized and entered into between the Issuer and the Trustee in accordance with the provisions of the Indenture.

"Tax Regulatory Agreement" means the Tax Regulatory Agreement by and between the Issuer and the Borrower together with the Exhibits thereto, including Exhibit A thereto executed by the Underwriter, dated the date of issuance of the Bonds, as the same may be amended or supplemented in accordance with its terms.

"Trustee" means U.S. Bank National Association, a national banking association organized and existing under the laws of the United States of America, or its successor as Trustee as provided in the Indenture.

"Underwriter" means U.S. Bancorp Investments, Inc.

Pledge of Revenues

Subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Indenture, all of the Revenues and any other amounts ( excluding Additional Payments paid by the Borrower) held in any fund or account established pursuant to the Indenture other than the Rebate Fund, are pledged to secure the payment of the principal of and premium, if any, and interest on the Bonds in accordance with their terms and the provisions of the Indenture. Said pledge shall constitute a first priority lien on and security interest in such assets and shall attach, be perfected and be valid and binding from and after delivery of the Bonds, without any physical delivery thereof or further act.

Under the Indenture, the Issuer transfers in trust, grants a security interest in and assigns to the Trustee, for the benefit of the Holders from time to time of the Bonds, all of the Revenues and other amounts pledged and all of the right, title and interest of the Issuer in the Agreement ( except Retained Rights). The Trustee shall be entitled to and shall collect and receive all of the Revenues, and any Revenues collected or received by the Issuer shall be deemed to be held, and to have been collected or received, by the Issuer as the agent of the Trustee and shall forthwith be paid by the Issuer to the Trustee without any set-off whatsoever The Trustee also shall be entitled (subject to the provisions of the Indenture) to take all steps, actions and proceedings reasonably necessary in its judgment to enforce, either jointly with the Issuer or separately, all of the rights of the Issuer assigned to the Trustee and all of the obligations of the Borrower under the Agreement.

All Revenues shall be held in trust for the benefit of the Holders from time to time of the Bonds, but nevertheless be disbursed, allocated and applied solely for the uses and purposes set forth in the Indenture. In accordance with the Indenture, the Trustee, solely as an accommodation to the Borrower, shall use its reasonable efforts to provide the Borrower with prior written notice of the amount due on any Interest Payment Date.

If the Borrower fails to make any payment pursuant to the Agreement, by the due date for such payment, the Trustee shall promptly notify the Issuer and the Borrower of such failure by telephone, facsimile or telegraph and confirm such notification by written notice, except that notice to the Issuer shall be solely by written notice.

Bond Fund

Upon the receipt thereof, the Trustee shall deposit all Revenues into the Bond Fund, which the Trustee shall establish and maintain and hold in trust. The Trustee shall disburse and apply amounts in the Bond Fund only as authorized in the Indenture on each principal payment date, the Trustee shall apply moneys in the Bond Fund to pay the principal of the Bonds as such principal becomes due and payable, and on each interest payment date, the Trustee shall apply moneys in the Bond Fund to pay the interest of the Bonds as such interest becomes due and payable. In the event that the Borrower makes a prepayment pursuant to the

C-7 Agreement and elects pursuant thereto to apply the amount so prepaid to the redemption of Bonds, such prepayment shall be forthwith deposited in the Optional Redemption Account or the Special Redemption Account, as applicable, within the Bond Fund which the Trustee shall establish and maintain and shall be applied thereafter to the redemption of Bonds as promptly as practicable in accordance with the provisions of the Indenture.

At least thirty days before each Interest Payment Date, the Trustee shall determine the balance held in the Bond Fund on that date, and shall give notice to the Borrower of such amount and the amount of the Base Loan Payment due on the next Interest Payment Date. Such notice shall be mailed, telecommunicated or delivered in such a manner that the Borrower will receive such notice at such time. Any telephonic notice shall be supplemented by notice given in accordance with the preceding sentence. The Trustee shall use its best efforts to provide the Borrower with notice as provided in this provision of the Indenture; provided, however, failure by the Trustee to give notice pursuant to this provision, or the insufficiency of any such notice, shall not affect or diminish the obligations of the Borrower under the Agreement.

Rebate Fund

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

Upon receipt of and pursuant to a Request of the Borrower, an amount shall be deposited to the Rebate Fund by the Trustee from deposits by the Borrower or from available investment earnings on amounts held in the Bond Fund if and to the extent required, so that the balance of the Rebate Fund after such deposit shall equal the Rebate Requirement. Computations of the Rebate Requirement shall be furnished by or on behalf of the Borrower in accordance with the Tax Regulatory Agreement.

The Trustee shall have no obligation to rebate any amounts required to be rebated pursuant to this provision, other than from moneys held in the Rebate Fund, or from other moneys provided to it by the Borrower upon written direction of the Borrower. The Trustee shall invest all amounts held in the Rebate Fund in Eligible Securities as specified in a Written Request of the Borrower and, absent such direction, the Trustee shall invest such amounts to the extent practicable in investments described in the definition of the term "Eligible Securities." Upon receipt of a Request of the Borrower, the Trustee shall remit part or all of the balances in the Rebate Fund to the United States, as so directed. In addition, if the Borrower so directs, the Trustee will deposit moneys into or transfer moneys out of the Rebate Fund from or into such accounts or funds as directed in a Written Request of the Borrower. Any funds remaining in the Rebate Fund after redemption and payment of all of the Bonds and payment and satisfaction of any Rebate Requirement, or provision made therefor, and payment of all Additional Payments shall be withdrawn and remitted to the Borrower. Notwithstanding any other provision of the Indenture, including in particular Article X thereof, the obligation to remit the Rebate Requirement to the United States and to comply with all other requirements of the Indenture and the Tax Regulatory Agreement shall survive the defeasance or payment in full of the Bonds and discharge of the Indenture. Notwithstanding any provision of the Indenture, if the Borrower shall provide to the Issuer and the Trustee an Opinion of Bond Counsel to the effect that any action required under the Indenture or the Tax Regulatory Agreement is no longer required, or to the effect that some further action is required, to maintain the exclusion from gross income of the interest on the Bonds pursuant to Section 103 of

C-8 the Code, the Issuer and the Trustee may rely conclusively on such opinion in complying with the provisions hereof, and the covenants hereunder shall be deemed to be modified to that extent.

Insurance and Condemnation Proceeds Fund

As and when needed, the Trustee shall establish, maintain and hold in trust a separate fund designated as the "Insurance and Condemnation Proceeds Fund," and administer said fund as set forth in the Agreement. Before any payment from the Insurance and Condemnation Proceeds Fund shall be made, the Borrower shall file or cause to be filed with the Trustee a Requisition of the Borrower stating: (I) the item number of such payment; (2) the name of the Person to whom each such payment is due, which may be the Borrower in the case of reimbursement for costs of such repair or replacement theretofore paid by the Borrower; (3) the respective amounts to be paid; (4) the purpose by general classification for which each obligation to be paid was incurred; (5) that obligations in the stated amounts have been incurred by the Borrower and are presently due and payable and that each item thereof is a proper charge against the Insurance and Condemnation Proceeds Fund and has not been previously paid from the Insurance and Condemnation Proceeds Fund; and (6) that there has not been filed with or served upon the Borrower any notice of claim of lien, or attachment upon, or claim affecting the right to receive payment of, any of the amounts payable to any of the persons named in such Requisition, for which adequate security for the payment of such obligation has been posted, or which has not been released or will not be released simultaneously with the payment of such obligation, other than materialmen's or mechanics' liens accruing by mere operation of law. Upon receipt of a Requisition, the Trustee shall pay the amount set forth in such Requisition as directed by the terms thereof out of the Insurance and Condemnation Proceeds Fund. The Trustee may conclusively rely upon such Requisition and shall have no responsibility or duty to investigate any of the matters set forth therein. The Trustee shall not make any such payment if it has received any written notice of claim of lien, attachment upon, or claim affecting the right to receive payment of, any of the moneys to be so paid, that has not been released or will not be released simultaneously with such payment, unless adequate security for the payment of such obligation has been posted. When the repair or replacement of damaged, destroyed or taken property shall have been completed, the Borrower shall deliver to the Trustee a Certificate of the Borrower stating the fact and date of such completion and stating that all of the costs thereof have been determined and paid ( or that all of such costs have been paid less specified claims that are subject to dispute and for which a retention in the Insurance and Condenmation Proceeds Fund is to be maintained in the full amount of such claims until such dispute is resolved). Subject to the Agreement, the Borrower shall direct the Trustee by said Certificate of the Borrower to transfer any remaining balance in the Insurance and Condenmation Proceeds Fund, less the amount of any such retention, to the Special Redemption Account or, at the election of the Borrower, to the Bond Fund. Upon the disbursement of all moneys in the Insurance and Condemnation Proceeds Fund, such fund shall thereafter be closed until such time as such fund is again required to be established pursuant to the Indenture.

Investment of Moneys in Funds

Except as otherwise provided in the Indenture, all moneys in any of the funds and accounts ( other than the Rebate Fund) established pursuant to the Indenture shall be invested by the Trustee solely in such Eligible Securities as are specified in a Request of the Borrower, which Request of the Borrower shall state that such investment is an Eligible Security as required by the Indenture, provided, however, that, if the Borrower does not file such a Request with the Trustee by noon of the second Business Day preceding the day when investments are to be made, the Trustee shall invest to the extent practicable in investments described in clause (g) of the definition of the term "Eligible Securities"; provided, however, that any such investment shall be made by the Trustee only if, prior to the date on which such investment is to be made, the Borrower shall have directed in writing specifying a specific money market fund and, if no such request in writing by the Borrower is so received, the Trustee shall hold such moneys uninvested.

All interest, profits and other income received from the investment of moneys within the Rebate Fund shall be credited to the Rebate Fund. All interest, profits and other income received from the investment of moneys within the Cost of Issuance Fund shall be credited to the Bond Fund for payment of principal and

C-9 interest on the Bonds. Except as otherwise provided in written instructions of the Borrower which the Borrower states in writing are given in accordance with the Tax Regulatory Agreement, all interest, profits and other income received from the investment of moneys in any other fund or account established under the Indenture shall be credited to the Bond Fund.

Subject to the Indenture, investments in any and all funds and accounts established pursuant to the Indenture ( other than the Rebate Fund) may be commingled for purposes of making, holding and disposing of investments, notwithstanding provisions in the Indenture for transfer to or holding in a particular fund amounts received or held by the Trustee hereunder, provided that the Trustee shall at all times account for such investments strictly in accordance with the particular funds to which they are credited and otherwise as provided in the Indenture. The Trustee or an affiliate of the Trustee may act as principal or agent in the making or disposing of any investment, and shall be entitled to its customary fee therefor The Trustee or its affiliates may act as sponsor, advisor or depository with regard to any Eligible Security. The Trustee may sell or present for redemption, any securities so purchased whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such securities is credited, and the Trustee shall not be liable or responsible for any loss resulting from such investment. To the extent that Eligible Securities are registrable securities, such Eligible Securities shall be registered in the name of the Trustee for the benefit of the Holders and held by the Trustee.

The Issuer (and the Borrower by its execution of the Agreement) acknowledge that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grants the Issuer and the Borrower the right to receive brokerage confirmations of security transactions as they occur, the Issuer and the Borrower specifically waive receipt of such confirmations to the extent permitted by law. The Trustee will furnish the Issuer and the Borrower monthly cash transaction statements which include detail for all investment transactions made by the Trustee hereunder.

With respect to all funds and accounts, the Trustee will, at the expense of the Borrower, determine the value thereof not less often than quarterly, at fair market value. The Trustee will determine the fair market value based on accepted industry standards and from accepted industry providers as reflected in its trust accounting statements. As to certificates of deposit and bankers' acceptances, the value of the investments will be determined by the face amount thereof; and as to any investment not specified above, by the value thereof established by prior agreement among the Borrower and the Trustee. Deficiencies in the amount on deposit in any fund or account resulting from a decline in market value will be restored no later than the succeeding valuation date from the first available moneys. The Trustee will sell, or present for prepayment, any Eligible Security so purchased by the Trustee whenever it will be necessary in order to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund to which such Eligible Security 1s credited, and the Trustee will not be liable or responsible for any loss resulting from such investment.

Covenants of the Issuer

Punctual Payment. The Issuer shall punctually pay, but only out of Revenues and pledged funds as provided for in the Indenture, the principal, premium, if any, and interest to become due in respect of every Bond issued hereunder at the times and places and in the manner provided for in the Indenture and in the Bonds, according to the true intent and meaning thereof.

Extension of Payment of Bonds. The Issuer 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 of such Bonds or claims for interest or by any other arrangement except with the written consent of all Bondholders.

Encumbrance Upon Revenues. The Issuer shall not create, or permit the creation of, any pledge, lien, charge or other encumbrance upon the Revenues and other assets pledged or assigned under the Indenture while any of the Bonds are Outstanding, except the pledge and assignment created by the Indenture. Subject to

C-10 this limitation, the Issuer expressly reserves the right to enter into one or more other indentures for any of its public purposes, including other economic development projects under the Act, and reserves the right to issue other obligations for such purposes.

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

Accounting Records and Financial Statements. The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with the Trustee's accounting practices for books of record and account relating to similar trust accounts and in accordance with the customary standards of the corporate trust industry for such books of record and account, in which complete and accurate entries shall be made of all transactions made by it relating to the proceeds of Bonds, the Revenues, the Agreement and the Indenture and all funds and accounts established pursuant to the Indenture. Such books of record and account shall be available for inspection by the Issuer, the Borrower and any Bondholder, or his agent or representative duly authorized in writing, at reasonable hours, upon reasonable notice and under reasonable circumstances. The Trustee shall maintain the records described in this paragraph until six years after the first date upon which no Bond is Outstanding. The Trustee shall furnish to the Borrower monthly and to the Issuer upon request, a complete financial statement (which may be in the form of its regular statements) covering receipts, disbursements, allocation and application of Revenues and the proceeds of the Bonds made by the Trustee; provided that the Trustee shall not be obligated to deliver an accounting for any fund or account that (i) has a balance of zero, and (ii) has not had any activity since the last reporting date.

Tax Covenants Relating to the Bonds. The Issuer shall at all times do and perform all acts and things permitted by law and the Indenture that are necessary or desirable in order to assure that interest paid on the Bonds will be excluded from gross income for purposes of federal income taxes and shall take no action that would result in such interest not being excluded from gross income for federal income taxes. Without limiting the generality of the foregoing, the Issuer agrees to comply with the provisions of the Tax Regulatory Agreement. This covenant shall survive payments in full or defeasance of the Bonds.

Amendment of Agreement. The Issuer shall not amend, modify or terminate any of the terms of the Agreement, or consent to any such amendment, modification or termination, without the prior written consent of the Trustee. The Trustee shall give such written consent if but only if (a) it has received an Opinion of Bond Counsel to the effect that such amendment or modification will not materially and adversely affect the interests of the Holders of the Bonds (which written representation may be based on representations of other parties in accordance with the provisions of the Indenture); or (b) the Holders of a majority in aggregate principal amount of the Bonds then Outstanding consent in writing to such amendment, modification or termination, provided that no such amendment, modification or termination shall reduce the amount of Base Loan Payments to be made to the Issuer or the Trustee by the Borrower pursuant to the Agreement, or extend the time for making such payments, without the written consent of all of the Holders of the Bonds then Outstanding. The Trustee shall mail a copy of such amendment as executed to any Rating Agency then rating the Bonds promptly after execution by the Issuer and the Borrower.

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

C-11 Further Assurances. The Issuer will make, execute and deliver any and all such further indentures, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of the Indenture and for the better assuring and confirming unto the Holders of the Bonds the rights and benefits provided in the Indenture.

Continuing Disclosure. Pursuant to the Agreement, the Borrower has covenanted and agreed that it will comply with the continuing disclosure requirements promulgated under Securities and Exchange Commission Rule 15c2-12(b)(5) (the "Rule"), as it may from time to time hereafter be amended or supplemented. The Issuer shall have no obligation or liability to the Bondholders or any other person with respect to such disclosure matters. Notwithstanding any other provision of the Indenture, failure of the Borrower to comply with the Continuing Disclosure Agreement shall not be an Event of Default; however, the Trustee may and shall take, at the request of the Holders of at least 25% aggregate principal amount of Outstanding Bonds, upon receipt of satisfactory indemnification, such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Borrower to comply with its obligations under the Agreement and under the Continuing Disclosure Agreement.

Events of Default

Events of Default Acceleration Waiver of Default. Each of the following events which has occurred and is continuing shall constitute an "Event of Default" under the Indenture:

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

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

(c) failure by the Issuer in the performance or observance of any other of the covenants, agreements or conditions on its part in the Indenture or in the Bonds contained, and continuance of such failure for a period of 60 days after written notice thereof, specifying such failure and requiring the same to be remedied, shall have been given to the Issuer and the Borrower by the Trustee, or to the Issuer, the Trustee and the Borrower by the Holders of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding; or

(d) the occurrence and continuance of a Loan Default Event.

If a failure by the Issuer specified in subsection ( c) above shall be such that it cannot be corrected within the applicable 60-day period, such failure shall not constitute an Event of Default if corrective action is instituted by the Issuer within the applicable period and diligently pursued.

During the continuance of an Event of Default, unless the principal of all the Bonds shall have already become due and payable, the Trustee may, and upon the written request of the Holders of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding, and upon receipt of indemnification satisfactory to it, shall, by notice in writing to the Issuer and the Borrower, promptly declare the principal of all the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in the Indenture or in the Bonds contained to the contrary notwithstanding. Interest on the Bonds shall cease to accrue as of the date of acceleration. The Trustee shall promptly notify the Bondholders of the date of acceleration and the cessation of accrual of interest on the Bonds in the same manner as for a notice of redemption. The Trustee shall also provide notice of acceleration to any Rating Agency then rating the Bonds.

C-12 Institution of Legal Proceedings by Trustee. If one or more Events of Default shall happen and be continuing, the Trustee in its discretion may, and upon the written request of the Holders of a majority in aggregate principal amount of the Bonds then Outstanding, and upon being indemnified to its satisfaction therefor, shall, proceed to protect or enforce its rights or the rights of the Holders of Bonds under the Act or under the Agreement or the Indenture by a suit in equity or action at law, either for the specific performance of any covenant or agreement contained in the Indenture, or in aid of the execution of any power granted in the Indenture, or by mandamus or other appropriate proceeding for the enforcement of any other legal or equitable remedy as the Trustee shall deem most effectual in support of any of its rights or duties hereunder.

Remedies Cumulative. No remedy conferred upon or reserved to the Trustee or to any Holder of the Bonds in the Indenture 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 now or hereafter existing at law or in equity.

Covenant to Pay Bonds in Event of Default. The Issuer covenants that, upon the happening of any Event of Default, the Issuer will pay, but only out of Revenues and the other funds provided in the Indenture therefor, to the Trustee, upon demand, for the benefit of the Holders of the Bonds, the whole amount then due and payable thereon (by declaration or otherwise) for interest or for principal and premium, or both, as the case may be, and all other sums which may be due hereunder or secured hereby, including compensation to the Trustee and its agents and counsel and any expenses or liabilities incurred by the Trustee hereunder and, its agents and counsel. In case the Issuer shall fail to pay the same forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled to institute proceedings at law or in equity in any court of competent jurisdiction to recover judgment for the whole amount due and unpaid, together with costs and reasonable attorneys' fees, subject, however, to the condition that such judgment, if any, shall be limited to, and payable solely out of, Revenues as provided in the Indenture and not otherwise. The Trustee shall be entitled to recover such judgment as aforesaid, before or after or during the pendency of any proceedings for the enforcement of the Indenture, and the right of the Trustee to recover such judgment shall not be affected by the exercise of any other right, power or remedy for the enforcement of the provisions of the Indenture.

Limitation on Bondholders' Right to Sue. Notwithstanding any other provision of the Indenture, no Holder of any Bond issued hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon the Indenture unless (a) such Holder shall have previously given to the Trustee written notice of the occurrence of an Event of Default hereunder; (b) the Holders of at least a majority in aggregate principal amount of all the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers granted in the Indenture or to institute such action, suit or proceeding in its own name; (c) said Holders shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; and ( d) the Trustee shall have refused or omitted to comply with such request for a period of 60 days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee.

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

The right of any Holder of any Bond to receive payment of the principal of and premium, if any, and interest on such Bond out of Revenues and the funds pledged in the Indenture, as provided for in the Indenture, on and after the respective due dates expressed in such Bond, or to institute suit for the enforcement of any

C-13 such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder, notwithstanding the provisions of the Indenture.

Amendment oflndenture

Modification Without Consent of Bondholders. Subject to the conditions and restrictions in the Indenture contained, the Issuer and the Trustee, from time to time and at any time, may enter into an indenture or indentures supplemental thereto, which indenture or indentures thereafter shall form a part thereof, including, without limitation, for one or more of the following purposes; provided that the Issuer and the Trustee shall have received the written consent of the Borrower and an Opinion of Bond Counsel to the effect that: (I) such amendment or modification will not cause interest on the Bonds to be included in the gross income of the Holders thereof for federal income tax purposes and (2) that such amendment or modification will not materially and adversely affect the interests of the Holders of the Bonds:

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

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

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

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

(e) to conform to the terms and provisions of any credit enhancement for the Bonds or to obtain a rating on the Bonds.

Any supplemental indenture authorized by the provisions of the Indenture may be executed by the Issuer and the Trustee without the consent of the Holders of any of the Bonds, notwithstanding any of the provisions of the Indenture, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under the Indenture or otherwise.

The Trustee shall mail an executed copy of any supplemental indenture authorized by the Indenture to any Rating Agency then rating the Bonds promptly after execution by the Issuer and the Trustee.

Modification with Consent of Borrower and Bondholders. With the written consent of the Borrower and/or the Holders of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding, the Issuer and the Trustee may from time to time and at any time, with an Opinion of Bond Counsel addressed to the Issuer and the Trustee to the effect that such amendment or modification will not cause interest on the Bonds to be included in the gross income of the Holders thereof for federal income tax purposes, enter into an indenture or indentures supplemental thereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture; provided, however, that no such supplemental indenture shall (a) extend the fixed maturity of any Bonds or reduce the rate of interest thereon or extend the time of payment of interest, or reduce the amount of

C-14 the principal thereof, or reduce any premium payable on the redemption thereof; or (b) reduce the aforesaid percentage of Holders of Bonds whose consent is required for the execution of such supplemental indentures or extend the time of payment or permit the creation of any lien on the Revenues or the funds pledged in the Indenture prior to or on a parity with the lien of the Indenture or deprive the Holders of the Bonds of the lien created by the Indenture upon the Revenues or the funds pledged in the Indenture, in each case without the consent of the Holders of all the Bonds then Outstanding. Upon receipt by the Trustee of a Certificate of the Issuer authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of the Borrower and the Bondholders, as aforesaid, the Trustee shall join with the Issuer in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under the Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture.

It shall not be necessary for the consent of the Borrower and the Bondholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof

Promptly after the execution by the Issuer and the Trustee of any supplemental indenture pursuant to the provisions of this Section hereof, the Trustee shall mail a notice, setting forth in general terms the substance of such supplemental indenture, to the Borrower and the Bondholders at the addresses shown on the Bond registration books maintained by the Trustee. Any failure of the Issuer to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

Defeasance

Discharge of Indenture. Bonds may be paid by the Issuer in any of the following ways, provided that the Issuer also causes to be paid any other sums payable under the Indenture by the Borrower or the Issuer, including the payment of Additional Payments: by paying or causing to be paid the principal of and premium, if any, and interest on the Bonds Outstanding, as and when the same become due and payable; depositing with the Trustee, in trust, at or before maturity, moneys or securities in the necessary amount to pay or redeem Bonds Outstanding; or by delivering to the Trustee, for cancellation by it, all Bonds Outstanding. If the Issuer shall cause to be paid all Bonds then Outstanding as provided above and shall also cause to be paid all other sums payable hereunder, including, without limitation, any Rebate Requirement to be paid pursuant to the Tax Regulatory Agreement, and notwithstanding that any Bonds shall not have been surrendered for payment, the Indenture and the pledge of Revenues made under the Indenture and all covenants, agreements and other obligations of the Issuer under the Indenture shall cease, terminate, become void and be completely discharged and satisfied, except only as provided in the Indenture. In such event, upon request of the Issuer, the Trustee shall cause an accounting for such period or periods as may be requested by the Issuer to be prepared and filed with the Issuer and shall execute and deliver to the Issuer all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the Trustee shall pay over, transfer, assign or deliver all moneys or securities or other property held by it pursuant to the Indenture which are not required for the payment or redemption of Bonds not theretofore surrendered for such payment or redemption, and which are not required for the payment of fees and expenses of the Trustee, to the Borrower.

Discharge of Liability on Bonds. Upon the deposit with the Trustee, in trust, at or before maturity, of moneys or securities in the necessary amount (as provided in the Indenture) to pay or redeem any Outstanding Bond, whether upon or prior to its maturity or the redemption date of such Bond (provided that, if such Bond is to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in the Indenture provided or provision satisfactory to the Trustee shall have been made for the giving of such notice), then all liability of the Issuer in respect of such Bond shall cease, terminate and be completely discharged, except only that thereafter the Holder thereof shall be entitled to payment of the principal of, premium, if any, and interest on such Bond by the Issuer, and the Issuer shall remain liable for such payment but only out of the money or securities deposited with the Trustee as aforesaid for its payment; provided further, however, that the provisions of the Indenture shall apply in all events.

C-15 The Issuer or the Borrower may at any time surrender to the Trustee for cancellation by it any Bonds previously issued and delivered, which the Issuer or the Borrower may have acquired in any manner whatsoever, and such Bonds, upon such surrender and cancellation, shall be deemed to be paid and retired.

Deposit of Money or Securities with Trustee. Wbenever in the Indenture it is provided or permitted that there be deposited with or held in trust by the Trustee moneys or securities in the amount necessary to pay or redeem any Bonds, the moneys or securities so to be deposited or held may include moneys or securities held by the Trustee in the funds established pursuant to the Indenture and shall be: lawful money of the United States of America in an amount equal to the principal amount of such Bonds and all unpaid interest thereon to maturity, except that, in the case of Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption shall have been given or provision satisfactory to the Trustee shall have been made for the giving of such notice, the amount to be deposited or held shall be the principal amount of such Bonds and all unpaid interest thereon to the redemption date, together with the redemption premium, if any; or (I) noncallable direct obligations of the United States of America (including, without limitation, obligations issued or held in book-entry form on the books of the Department of the Treasury, and CATS and TIGRS) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America (including without limitation the interest component of Resolution Funding Corporation strips for which separation of principal and interest is made by request to the Federal Reserve Bank of New Yark in book-entry form) or (2) securities the interest on which is excludable from gross income for federal tax purposes which have been advance refunded pursuant to the Code for which a nationally recognized rating service is maintaining a rating equal to the rating of a direct obligation of the United States of America and the principal of and interest on which when due will provide money sufficient to pay the principal of, and premium, if any, and all unpaid interest to maturity, or to the redemption date, as the case may be, on the Bonds to be paid or redeemed, as such principal, and premium, if any, and interest become due, provided that, in the case of Bonds which are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as provided or provision satisfactory to the Trustee shall have been made for the giving of such notice; provided, in each case, that the Trustee shall have been irrevocably instructed (by the terms of the Indenture) to apply such money to the payment of such principal, premium, if any, and interest with respect to such Bonds and provided, further, that the Issuer, and the Trustee shall have received (I) an Opinion of Bond Counsel to the effect that such deposit shall not cause interest on the Bonds to be included in the gross income of the Holders thereof for federal income tax purposes, and (2) a verification report of a firm of certified public accountants or other financial services firm acceptable to the Issuer verifying that the money or securities so deposited together with earnings thereon will be sufficient to make all payments of principal of and premium, if any, and interest on the Bonds to be discharged to and including the earlier of their respective maturity dates or the date they are to be redeemed.

Payment of Bonds after Discharge oflndenture. Notwithstanding any provision of the Indenture, and subject to applicable escheat laws, any moneys held by the Trustee in trust for the payment of the principal of, premium, if any, or interest on any Bonds and remaining unclaimed for two years after such amount has become due and payable (whether at maturity or upon call for redemption or by declaration as provided in the 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 such amount became due and payable, shall be repaid to the Borrower free from the trusts created by the Indenture, upon receipt of an indenmification agreement acceptable to the Issuer and the Trustee indemnifying the Issuer and the Trustee with respect to claims of Holders which have not yet been paid, and all liability of the Trustee and the Issuer with respect to such moneys shall thereupon cease and thereafter holders shall solely be entitled as unsecured creditors to payment from the Borrower; provided, however, that before the repayment of such moneys to the Borrower as aforesaid, the Trustee may (at the cost of the Borrower) first mail to the Holders which have not yet been paid, at the addresses shown on the registration books maintained by the Trustee, a notice, in such form as may be deemed appropriate by the Trustee with respect to the Bonds so payable and not presented and with respect to the provisions relating to the repayment to the Borrower of the moneys held for the payment thereof

C-16 LOAN AGREEMENT

The following is a summary of certain provisions of the Agreement. This summary does not purport to be complete and is qualified in its entirety by reference to the Agreement for further information in this regard. All capitalized terms used but not otherwise defined in this Appendix shall have the meanings assigned to such terms in the Agreement.

Representations and Warranties of the Borrower

The Borrower makes the following representations and warranties to the Issuer:

(a) The Borrower is a nonprofit public benefit corporation duly incorporated and in good standing under the laws of the State, has the requisite legal right, power and authority to enter into and deliver each of the Borrower Documents and to carry out and consummate all transactions contemplated by each of the Borrower Documents, and by proper corporate action has duly authorized the execution and delivery of each of the Borrower Documents.

(b) The execution and delivery of each of the Borrower Documents and the consummation of the transactions therein contemplated will not conflict with or constitute a breach of or default under the articles of incorporation of the Borrower, its bylaws, any law or administrative rule or regulation applicable to the Borrower, any court or administrative decree or order applicable to the Borrower or any material loan agreement, bond, debenture, note or other evidence of indebtedness or any material contract, agreement or lease to which the Borrower is a party, which conflict, breach or default such material agreements would materially adversely affect the assets, operations or financial condition of the Borrower.

(c) The Borrower will not permit the use of the Financed Facilities or any portion thereof by any person who restricts access to the Financed Facilities on the basis of racial or religious grounds.

(d) No portion of the proceeds of the Bonds will be used to finance or refinance any facility used or to be used for sectarian instruction or as a place for religious worship or any facility used or to be used in connection with any part of the program of a school or department of divinity.

(e) There are no actions, suits or proceedings which have been served on the Borrower or, to the knowledge of the Borrower, are otherwise pending or threatened against the Borrower which, if determined adversely to the Borrower, would result in any material adverse change in the assets, operations or financial condition of the Borrower, and the Borrower is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or governmental agency which default might have consequences that would materially and adversely affect the assets, operations or financial condition of the Borrower. The Borrower enjoys the peaceable and undisturbed possession of all of the premises which are material to its operations.

(f) The Borrower is an organization described in Section 50l(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), and is exempt from federal income tax under Section 501 (a) of such Code, except with respect to any unrelated business income of the Borrower, which income is not expected to result from the consummation of any transaction contemplated by the Agreement. The Borrower is not a private foundation within the meaning of Section 509(a) of the Code, and the Borrower at all times will maintain its status as an organization described in Section 50l(c)(3) of the Code and its exemption from federal income tax under Section 50l(a) of the Code or corresponding provisions of future federal income tax laws. The facts and circumstances which formed the basis of the Borrower's status as an organization described in Section 50l(c)(3) of the Code as represented to the Internal Revenue Service continue substantially to exist. To the best knowledge of Borrower, no proceedings are pending or threatened in any way contesting or affecting the Borrower's status as an organization described in Section 50l(c)(3) of the Code.

C-17 (g) No facility will be used by any person not an "exempt person" within the meaning of the Code and the regulations proposed and promulgated thereunder, or by a governmental unit or a 50l(c)(3) organization (including the Borrower) in an "unrelated trade or business" within the meaning of Section 5 l 3(a) of the Code and the regulations proposed and promulgated thereunder, in such manner or to such extent as would result in loss of exclusion from gross income for federal tax purposes of interest on any of the Bonds under Section 103 of the Code.

(h) The audited balance sheet of the Borrower at August 31, 2017, and the related statements of activities, cash flows and functional expenses for the year ended on such date, including the related footnotes (copies of which, reviewed by independent certified public accountants, have been furnished to the Issuer), fairly state the financial position of the Borrower at the last day of said fiscal year and the changes in net assets for the year ended on such date in accordance with generally accepted accounting principles, consistently applied, and since August 31, 2017 there has been no material adverse change in the assets, operations or financial condition of the Borrower.

(i) To the best knowledge of the Borrower, no written information, exhibit or report containing current or historical information which was furnished to the Issuer or the Underwriter by the Borrower, taken together, contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading, and the information pertaining to the Borrower in the Official Statement does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(j) The Borrower is in compliance with all laws, ordinances, governmental rules and regulations to which it is subject and which are material to its properties, operations, finances or status as an organization described in Section 50l(c)(3) of the Code.

(k) The Borrower has obtained all licenses, permits, franchises or other governmental authorizations necessary and material to the ownership of its property or to the conduct of its activities, and agrees to obtain all such licenses, permits, franchises or other governmental authorizations as may be required in the future for its operations in all cases where failure to obtain such licenses, permits, franchises or other governmental authorizations could reasonably be expected to materially and adversely affect the condition (financial or otherwise) of the Borrower or its ability to perform its obligations under the Borrower Documents.

(1) The Borrower represents and warrants, that as of the date of this Agreement, the Borrower is in compliance in all material respects with ERISA and other laws to the extent applicable thereto.

(m) The officers of the Borrower executing the Borrower Documents are duly and properly in office and fully authorized to execute the same.

(n) Each of the Borrower Documents has been duly authorized, executed and delivered by the Borrower and (i) the Agreement, when assigned to the Trustee pursuant to the Indenture, will constitute the legal, valid and binding agreement of the Borrower with the Trustee enforceable against the Borrower in accordance with its terms for the benefit of the Holders of the Bonds, except as enforcement may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and by the application of equitable principles if equitable remedies are sought; and (ii) the Tax Regulatory Agreement and the Continuing Disclosure Agreement, and any rights of the Issuer and obligations of the Borrower thereunder, constitute the legal, valid, and binding agreements of the Borrower with the Issuer enforceable against the Borrower in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and by the application of equitable principles if equitable remedies are sought.

C-18 (o) No consent or approval of any trustee or holder of any indebtedness of the Borrower, and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection with the execution and delivery of the Borrower Documents or the consummation of any transaction contemplated thereby, except as have been obtained or made and as are in full force and effect.

(p) All tax returns (federal, state and local) required to be filed by or on behalf of the Borrower have been filed, and all taxes shown thereon to be due, including interest and penalties except such, if any, as are being actively contested by the Borrower in good faith, have been paid or adequate reserves have been made for the payment thereof, which reserves, if any, are reflected in the financial statements described in subsection (h) above.

( q) The Agreement, when assigned to the Trustee pursuant to the Indenture, will constitute the legal, valid and binding agreement of the Borrower to the Trustee enforceable against the Borrower in accordance with its terms for the benefit of the Holders of the Bonds, and the Retained Rights of the Issuer and obligations of the Borrower not so assigned to the Trustee constitute the legal, valid, and binding agreements of the Borrower enforceable against the Borrower in accordance with their terms; except as enforcement may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and by the application of equitable principles if equitable remedies are sought.

Representations and Warranties of the Issuer

The Issuer makes the following representations and warranties to the Borrower:

(a) The Issuer is a joint exercise of powers agency duly created and existing under the laws of the State. Under the provisions of the Act, the Issuer has the power to enter into the transactions contemplated by the Agreement and the Indenture and to carry out its obligations under the Agreement and under the Indenture. By proper action, the Issuer is duly authorized to execute, deliver and perform its obligations under the Agreement and the Indenture.

(b) To the current actual knowledge of the Executive Director of the Issuer, the execution and delivery of the Agreement and the Indenture and the consummation by the Issuer of the transactions contemplated in the Agreement and the Indenture will not in any material respect conflict with or constitute on the part of the Issuer a material breach of or default under any agreement or other instrument to which the Issuer is a party or by which it is bound or any existing law, regulation, court order or consent decree to which it is subject which breach or default would have a material adverse effect on the Issuer's ability to perform its obligations under the Indenture or the Agreement.

( c) The Agreement and the Indenture, when executed by the Issuer, and assuming due execution on the part of the other parties thereto, will constitute the valid and binding agreements of the Issuer enforceable against the Issuer in accordance with their respective terms.

(d) No member, officer or other official of the Issuer participating in the approval of the Agreement has any interest in the Borrower or in the transactions contemplated by the Agreement.

(e) To the knowledge of the Issuer, there is no action, suit, proceeding, claim, mqmry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body pending or threatened against or affecting the Issuer, challenging the Issuer's authority to enter into the Agreement or the Indenture or any other action wherein an unfavorable ruling or finding would adversely affect the enforceability of the Agreement or the Indenture, or the exclusion of interest on the Bonds from gross income for federal tax purposes under the Code, or would materially and adversely affect any of the transactions contemplated by the Agreement.

C-19 Additional Payments

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

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

(b) the reasonable annual (or other regular) fees and expenses of the Trustee, and all reasonable fees, charges and expenses of the Trustee for any extraordinary services rendered by the Trustee under the Indenture, as and when the same become due and payable, a schedule of which has been received and approved by the Borrower;

( c) the reasonable fees and expenses of such accountants, consultants, attorneys and other experts as may be engaged by the Issuer or the Trustee to prepare audits, financial statements or opinions or provide such other services as are reasonably required to enforce this Agreement, the Indenture or the Tax Regulatory Agreement;

(d) other necessary, ordinary and reasonable administrative and legal fees and expenses of the Issuer, including, without limitation, reasonable expenses incurred by any attorneys representing the Issuer in connection with any questions, investigations, litigation, audits or inquiries arising under this Agreement, the Indenture, the Bonds, the Tax Regulatory Agreement, or any related document, the amendment of any of the foregoing or the enforcement thereof, any matters affecting the Project, or any litigation that may, at any time be instituted involving such loan or the Bonds, this Agreement, the Indenture, the Tax Regulatory Agreement or any other document contemplated hereby or thereby, or in connection with the inspection of the Borrower, its properties, assets or operations, or otherwise in connection with the administration of this Agreement, or those pertaining to the representation of the Issuer as a "taxpayer" before the internal Revenue Service in any inquiry, examination, audit or investigation of the Bonds; provided, however, that the Issuer hereby agrees that it will not retain consultants with respect to the issuance, sale or delivery of the Bonds unless it first notifies the Borrower in writing of its reason for retaining such consultants;

(e) the Issuer Annual Fee;

(f) all other reasonable and necessary fees, expenses and charges of the Issuer and indemnity payments payable to the Issuer arising out of or in connection with the issuance of the Bonds and the Agreement, including, but not limited to, those pertaining to any tax inquiry, audit, investigation or proceeding by the Internal Revenue Service in connection with the Bonds. and

(g) such amounts as may be necessary to satisfy the Rebate Requirements.

Such Additional Payments (except the Issuer's Annual Fee, which shall be paid by the Borrower to the Issuer annually as set forth below) shall be billed to the Borrower by the Issuer or the Trustee from time to time, together with (i) a statement executed by a duly authorized official or agent of the Issuer or the Trustee,

C-20 as the case may be, certifying that the amount billed has been incurred or paid by the Issuer or the Trustee for one or more of the above items; and (ii) a copy of the invoice or statement for the amount so incurred or paid. Amounts so billed shall be paid by the Borrower within 30 days after notice to the Borrower from the Trustee or the Issuer. Payment by the Borrower to either the Issuer or the Trustee of the amount so billed by either such party shall fulfill such payment obligation of the Borrower.

The Issuer shall not be required to submit a bill to the Borrower for payment of the Issuer Annual Fee or any amount due to satisfy the Rebate Requirements, the calculation and payment for which is the responsibility of the Borrower. The Issuer Issuance Fee and the initial Issuer Annual Fee shall be paid to the Issuer by the Borrower on the Closing Date. Thereafter, the Issuer Annual Fee shall be due and payable by the Borrower in advance on December 1 of each year, commencing with the first such date following the Closing Date. The Borrower's obligation to pay the Issuer Issuance Fee and the Issuer Annual Fee shall in no way limit the other amounts that may be payable by the Borrower to the Issuer under the Agreement, including the enforcement thereof.

Investments

The Borrower, by its written Request to the Trustee, may direct the investment by the Trustee of moneys in the funds and accounts established pursuant to the Indenture, subject to the limitations set forth in the Indenture. The Borrower covenants that it will not direct the Trustee to make any investments and itself will not make any investments of the proceeds of the Bonds, or any other funds in any way pledged to the security of or reasonably expected to be used to pay the Bonds, which would cause any of the Bonds to be "arbitrage bonds" subject to federal income taxation by reason of Section 103( c) of the Code. The Borrower shall not purchase any obligations of the Issuer, pursuant to an arrangement, formal or informal, in an amount related to the amount of the loan made to the Borrower under the Agreement. Nothing in this Section shall prohibit the Borrower from receiving Bonds by gift, bequest or devise or from purchasing Bonds in the secondary market other than pursuant to an arrangement related to such loan.

Maintenance of Corporate Existence, Consolidation, Merger, Sale or Transfer Under Certain Conditions

The Borrower covenants and agrees that, so long as any of the Bonds are Outstanding, it will maintain its existence as a California nonprofit public benefit corporation and will not dissolve, sell or otherwise dispose of all or substantially all of its assets or consolidate with or merge into another corporation or permit one or more corporations to consolidate with or merge into it. Notwithstanding the foregoing, the Borrower may, without violating the covenants contained in this Section, consolidate with or merge into another corporation, or permit one or more other corporations to consolidate with or merge into it, or sell or otherwise transfer to another corporation all or substantially all of its assets as an entirety and thereafter dissolve, if certain conditions set forth in the Agreement are met.

Insurance

So long as any Bonds remain Outstanding, the Borrower will maintain or cause to be maintained, with insurance companies or by means of self-insurance, insurance of such type, against such risks and in such amounts as are customarily carried by public benefit corporations located in the State of a nature similar to that of the Borrower. The Trustee shall have no responsibility whatsoever to determine whether the Borrower has met its obligations hereunder with respect to insurance. Anything in this provision to the contrary notwithstanding, it shall not be deemed an event of default hereunder if the Borrower shall procure insurance with coverage below that required by the Agreement if the Borrower presents evidence to the satisfaction of the Trustee that the insurance so provided affords the greatest amount of coverage available at commercially reasonable rates for the risk being insured. The Borrower may, but shall not be required to, insure against risk of earthquake.

C-21 Tax Covenants

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

Loan Default Event

Any of the following shall be a "loan default event" under the Agreement, and the terms "loan default event" or "default" shall mean, whenever used in the Agreement, any one or more of the following events:

(a) failure by the Borrower to make any Base Loan Payment or Additional Payment by its due date;

(b) failure by the Borrower to observe and perform any covenant, condition or agreement contained therein for a period of 60 days after written notice specifying such failure and requesting that it be remedied is delivered to the Borrower by the Trustee; provided, however, if the failure stated in the notice is correctable but cannot be corrected within the applicable period, the Issuer will not umeasonably withhold its consent to an extension of such time if corrective action is instituted by the Borrower within the applicable period and diligently pursued until the default is corrected;

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

(d) an event of default under any Material Indebtedness resulting in acceleration or the declaration of acceleration of any Material Indebtedness.

Remedies on Default

In the event any of the Bonds shall at the time be Outstanding and unpaid ( and provision for the payment thereof shall not have been made as provided in the Indenture) and any loan default event shall have happened and be continuing, the Issuer or the Trustee may take any one or more of the following remedial steps: (i) each of the Issuer or the Trustee may, at its option, declare all installments of Base Loan Payments payable hereunder for the remainder of the term of the Agreement to be immediately due and payable, whereupon the same shall become immediately due and payable; and (ii) each of the Issuer or the Trustee may take whatever action at law or in equity may appear necessary or desirable to collect the payments then due and thereafter to become due hereunder, or to enforce performance and observance of any obligation, condition or covenant of the Borrower under the Agreement.

The term "all installments" shall mean an amount equal to the entire principal amount of the then Outstanding Bonds, together with all interest accrued or to accrue on and prior to the next succeeding redemption date or dates on which the Bonds can be and actually are redeemed after giving notice to the Holders thereof as required by the Indenture (less moneys available for such purpose then held by the Trustee) plus any other payments due or to become due under the Agreement, including, without limitation, any unpaid

C-22 fees and expenses of the Issuer and the Trustee which are then due or will become due prior to the time that the Bonds are paid in full and the trust established by the Indenture is terminated.

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

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

C-23 [THIS PAGE IN1ENTIONALLY LEFT BLANK] APPENDIXD

PROPOSED FORM OF BOND COUNSEL OPINION

December 19, 2017

California Municipal Finance Authority 2111 Palomar Airport Road Carlsbad, California 92011 $14,205,000 California Municipal Finance Authority Refunding Revenue Bonds (Southern California Institute of Architecture) Series 2017

Ladies and Gentlemen:

We have acted as bond counsel in connection with the issuance by the California Municipal Finance Authority (the "Issuer") of its $14,205,000 aggregate principal amount Refunding Revenue Bonds (Southern California Institute of Architecture), Series 2017 (the "Bonds"), issued pursuant to the Joint Exercise of Powers Act, constituting Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the "Act"), an Indenture of Trust, dated as of December 1, 2017 (the "Indenture"), between the Issuer and US. Bank National Association, as trustee (the "Trustee"), and a resolution adopted by the Issuer on November 17, 2017 (the "Resolution"). The Bonds are issued for the purpose of making a loan of the proceeds thereof to Southern California Institute of Architecture, a California nonprofit public benefit corporation (the "Borrower"), pursuant to a Loan Agreement, dated as of December 1, 2017 (the "Loan Agreement"), between the Issuer and the Borrower. Terms not otherwise defined herein shall have the meanings ascribed to such terms in the Indenture.

In such connection, we have reviewed the Indenture, the Loan Agreement, the Resolution, an opinion of counsel to the Borrower with respect to the Borrower and the Loan Agreement, the Tax Regulatory Agreement, dated the date hereof (the "Tax Regulatory Agreement"), between the Issuer and the Borrower, certificates of the Issuer, the Trustee, the Borrower and others, and such other documents and matters to the extent deemed necessary by us to render the opinions set forth herein. We have not undertaken to verify independently, and have assumed, the accuracy of the factual matters represented, warranted or certified in such documents, and of the legal conclusions contained in the opinions referred to above, and 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 Issuer.

Certain requirements, agreements and procedures contained or referred to in the Indenture, the Loan Agreement, the Tax Regulatory Agreement, and other relevant documents may be changed and certain actions (including, without limitation, defeasance of the Bonds) may be taken under the circumstances and subject to the terms and conditions set forth in such documents. No opinion is expressed herein as to the effect of any such change that occurs or action that is taken on the validity of any Bond or the tax-exempt status of the interest thereon upon the advice or approval of bond counsel other than ourselves.

We have relied upon the opinion, dated this date, of counsel to the Borrower, with respect to the due organization and good standing of the Borrower as a California nonprofit public benefit corporation and with respect to the status of the Borrower as an organization described in Section 50l(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"). We are not passing upon title to or the description of the facilities or properties of the Borrower or the nature and extent of any liens thereon.

D-1 The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur. Our engagement with respect to the Bonds has concluded with their issuance and we disclaim any obligation to update this letter We have assumed compliance with all covenants and agreements contained in the Indenture, the Loan Agreement and the Tax Regulatory Agreement, including, without limitation, covenants and agreements, compliance with which is necessary to assure that future actions, omissions, or events will not cause interest on the Bonds to be included in gross income for federal income tax purposes. We call attention to the fact that the rights and obligations under the Bonds, the Indenture, the Loan Agreement and the Tax Regulatory Agreement may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other similar laws affecting creditors' rights, to the application of equitable principles, and to the exercise of judicial discretion in appropriate cases. We also express no opinion with respect to any indenmification, contribution, choice of law, choice of forum or waiver provisions contained in the foregoing documents. Finally, we have undertaken no responsibility for the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Bonds and express no opinion relating thereto.

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

I. The Bonds constitute the valid and binding special, limited obligations of the Issuer

2. The Indenture has been duly and legally authorized, executed and delivered by, and constitutes the valid and binding obligation of, the Issuer The Indenture creates a valid pledge, to secure the payment of the principal of and interest on the Bonds, of the Revenues and any other amounts (including proceeds of the sale of the Bonds) held by the Trustee in any fund or account established pursuant to the Indenture, except the Rebate Fund, subject to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Indenture. The Indenture also creates a valid assignment to the Trustee, for the benefit of the Holders from time to time of the Bonds, of the right, title and interest of the Issuer in the Loan Agreement (to the extent and as more particularly described in the Indenture).

3. The Loan Agreement has been duly executed and delivered by, and constitutes the valid and binding agreement of, the Issuer, enforceable in accordance with its terms.

4. None of the Issuer, any Issuer member, or any person executing the Bonds is liable personally on the Bonds or subject to any personal liability or accountability by reason of their issuance. The Bonds are special, limited obligations of the Issuer, payable solely from and secured by the pledge of Revenues under the Indenture and are not a lien or charge upon the funds or property of the Issuer except to the extent of the aforementioned pledge and assignment. The Bonds are not a debt or liability of the State of California (the "State") or any political subdivision of the State ( other than the Issuer as described in the preceding sentence). Neither the State nor any political subdivision of the State shall be obligated to pay the principal of, premium, if any, purchase price of, or interest on, the Bonds or other costs incident thereto except from the Revenues and funds pledged therefor Neither the faith and credit nor the taxing power of the State or any political subdivision of the State is pledged to the payment of the principal of, premium, if any, purchase price of, or interest on, the Bonds. Neither the State nor any political subdivision of the State is required to levy or pledge any form of taxation whatever or to make any appropriation for the payment of the Bonds.

5. Interest on the Bonds (including original issue discount properly allocable to the owner of a Bond) is excludable from gross income for federal income tax purposes under Section 103 of the Code, is not a specific preference item for purposes of the federal alternative minimum tax and is exempt from current State of California personal income taxes. We express no opinion regarding

D-2 other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Bonds. We note, however, that for purposes of computing the alternative minimum tax imposed on certain corporations, interest on the Bonds will be included in adjusted current earnings of such corporations, and such corporations are required to include in the calculation of alternative minimum taxable income 75% of the excess of such corporations' adjusted current earnings over their alternative minimum taxable income (determined without regard to such adjustment and prior to reduction for certain net operating losses).

Very truly yours,

D-3 [THIS PAGE IN1ENTIONALLY LEFT BLANK] APPENDIXE

BOOK-ENTRY SYSTEM

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

The Depository Trust Company, New York, NY ("DTC") will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities without coupons registered in the name of Cede & Co. (DTC's partnership nominee). One fully-registered Bond will be issued for each of the Bonds, each in the aggregate principal amount of such Bond, and will be deposited with DTC.

DTC, the world's largest securities depository, is a limited-purpose trust company organized under the New Yark Banking Law, a "banking organization" within the meaning of the New Yark 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 US. 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 the Standard & Poor's Rating of "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; nothing contained in such website is incorporated into this Official Statement.

Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of the Beneficial Owners. Beneficial Owners will not receive Bonds 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 ofDTC's partnership nominee, Cede & Co. The deposit of 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 identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The

E-1 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 redemptions and tenders, if any, defaults and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them

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

Neither DTC nor Cede & Co. (nor such 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 Onmibus Proxy to the issuer as soon as possible after the record date. The Onmibus 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).

Proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative ofDTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the Corporation or the Trustee on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in " street name," and will be the responsibility of such Participant and not of DTC nor its nominee, the Trustee, the Corporation or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of proceeds, distributions, and dividend payments to Cede & Co. ( or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owner(s) will be the responsibility of Direct and Indirect Participants.

Discontinuance of Book-Entry System

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

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

The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the Corporation believes to be reliable, but neither the Authority nor the Corporation takes any responsibility for the accuracy thereof

THE TRUSTEE, AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE BONDS, WILL SEND NOTICES TO OWNERS ONLY TO DTC. ANY FAILURE OF DTC TO ADVISE ANY DTC

E-2 PARTICIPANT, OR OF ANY DTC PARTICIPANT TO NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT THE VALIDITY OF SUFFICIENCY OF THE PROCEEDINGS RELATING TO ANY ACTION PREMISED ON SUCH NOTICE.

E-3 [THIS PAGE IN1ENTIONALLY LEFT BLANK] APPENDIXF

PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT

This Continuing Disclosure Agreement (the "Disclosure Agreement"), dated as of December 1, 2017, is executed and delivered by Southern California Institute of Architecture (the "Corporation") and US. Bank National Association, as dissemination agent (the "Dissemination Agent") in connection with the issuance of California Municipal Finance Authority Refunding Revenue Bonds (Southern California Institute of Architecture Project), Series 2017 (the "Bonds"). The Bonds are being issued pursuant to an Indenture of Trust, dated as of December 1, 2017 (the "Indenture"), between the California Municipal Finance Authority (the "Authority") and US. Bank National Association, as trustee. The proceeds of the Bonds are being loaned by the Authority to the Corporation pursuant to a Loan Agreement, dated as of December 1, 2017 (the "Loan Agreement"), between the Authority and the Corporation. Pursuant to Section 6.10 of the Indenture and Section 16 of the Loan Agreement, the Corporation and the Dissemination Agent covenant and agree as follows:

SECTION L Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Corporation and the Dissemination Agent for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule ( defined below). The Corporation and the Dissemination Agent acknowledge that the Authority has undertaken no responsibility with respect to any reports, notices or disclosures provided or required under this Agreement, and has no liability to any person, including any Holder or Beneficial Owner of the Bonds, with respect to the Rule.

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

"Annual Report" shall mean any Annual Report provided by the Corporation pursuant to, and as described in, Sections III. and IV. of this Disclosure Agreement.

"Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income tax purposes.

"Disclosure Representative" shall mean the person designated by the Corporation on the signature page hereof or such person's designee, or such other person as the Corporation shall designate in writing to the Dissemination Agent from time to time.

"Dissemination Agent" shall mean U.S. Bank National Association, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Corporation and which has filed with the Corporation a written acceptance of such designation.

"Listed Events" shall mean any of the events listed in Section V.A and Section V.B. of this Disclosure Agreement.

"MSRB" shall mean the Municipal Securities Rulemaking Board or any other entity designated or authorized by the SEC to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the SEC, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org.

F-1 "Participating Underwriter" shall mean any of the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds.

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

"State" shall mean the State of California.

SECTION III. Provision of Annual Reports.

A. The Corporation shall, or, upon written direction, shall cause the Dissemination Agent to, not later than 180 days after the end of the Corporation's fiscal year, commencing with the report for the 2017-18 Fiscal Year, provide to the MSRB an Annual Report which is consistent with the requirements of Section IV. of this Disclosure Agreement. The Annual Report may cross-reference other information as provided in Section IV. of this Disclosure Agreement; provided that the audited financial statements of the Corporation may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the Corporation's fiscal year changes, it shall give notice of such change in a filing with the MSRB. The Annual Report shall be submitted on a standard form in use by industry participants or other appropriate form and shall identify the Bonds by name and CUSIP number.

B. Not later than fifteen (15) Business Days prior to the date specified in subsection A, the Corporation shall provide the Annual Report to the Dissemination Agent.

C. If the Dissemination Agent is unable to verify that an Annual Report has been provided to the MSRB by the date required in subsection A, the Dissemination Agent shall, in a timely manner, send or cause to be sent to the MSRB a notice in substantially the form attached as Exhibit A

D. The Dissemination Agent shall file a report with the Corporation and the Authority certifying that the Annual Report has been provided pursuant to this Disclosure Agreement and stating the date it was provided.

SECTION IV. Content of Annual Reports. The Corporation's Annual Report shall contain or include by reference the following:

A The audited financial statements of the Corporation for the prior fiscal year, prepared in accordance with generally accepted accounting principles as promulgated from time to time by the Financial Accounting Standards Board. If the Corporation's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section III.A, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements required for the fiscal year being audited, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.

B. The completed form attached hereto as Exhibit B or such other form which contains substantially the same information.

Any or all of the items listed above may be set forth in one or a set of documents or may be included by specific reference to other documents, including official statements of debt issues with respect to which the Corporation is an "obligated person" (as defined by the Rule), which have been made available to the public on the MSRB's website. The Corporation shall clearly identify each such other document so included by reference.

F-2 SECTION V. Reporting of Listed Events.

A. Pursuant to the provisions of this Section V., the Corporation shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds not later than ten business days after the occurrence of the event:

1. Principal and interest payment delinquencies;

2. Unscheduled draws on debt service reserves reflecting financial difficulties;

3. Unscheduled draws on credit enhancements reflecting financial difficulties;

4. Substitution of credit or liquidity providers, or their failure to perform;

5. Adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determination oftaxability or of a Notice of Proposed Issue (IRS Form 5701 TEE);

6. Tender offers;

7. Defeasances;

8. Rating changes; or

9. Bankruptcy, insolvency, receivership or similar event of the obligated person.

Note: for the purposes of the event identified in subparagraph (9), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the US. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person.

B. The Corporation shall give, or cause to be given through the Dissemination Agent, notice of the occurrence of any of the following events with respect to the Bonds, if material, not later than ten business days after the occurrence of the event:

1. Unless described in paragraph 5(A)(5), other material notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds;

2. Modifications to rights of Bond holders;

3. Optional, unscheduled or contingent Bond calls;

4. Release, substitution, or sale of property securing repayment of the Bonds;

5. Non-payment related defaults;

F-3 6. The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms; or

7. Appointment of a successor or additional trustee or the change of name of a trustee.

C. If the Corporation learns of the occurrence of a Listed Event described in Section V(A), or determines that knowledge of a Listed Event described in Section V(B) would be material under applicable federal securities laws, the Corporation shall within ten business days of occurrence file a notice of such occurrence with the MSRB. Notwithstanding the foregoing, notice of the Listed Event described in subsection (B)(3) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Holders of affected Bonds pursuant to the Indenture.

SECTION VI. Format for Flings with MSRB. Any report or filing with the MSRB pursuant to this Disclosure Agreement must be submitted in electronic format, accompanied by such identifying information as is prescribed by the MSRB.

SECTION VII. Termination of Reporting Obligation. The Corporation's and the Dissemination Agent's obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If the Corporation's obligations under the Loan Agreement are assumed in full by some other entity, such person shall be responsible for compliance with this Disclosure Agreement in the same manner as if it were the Corporation and the original Corporation shall have no further responsibility hereunder. If such termination or substitution occurs prior to the final maturity of the Bonds, the Corporation shall give notice of such termination or substitution in a filing with the MSRB, in the same manner as for a Listed Event described in Section V(C).

SECTION VIII. Dissemination Agent. The Corporation may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Corporation pursuant to this Disclosure Agreement. If at any time there is not any other designated Dissemination Agent, the Corporation shall be the Dissemination Agent. The Dissemination Agent may resign by providing thirty days written notice to the Corporation.

SECTION IX. Amendment· Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Corporation and the Dissemination Agent may amend this Disclosure Agreement ( and the Dissemination Agent shall agree to any amendment so requested by the Corporation provided, the Dissemination Agent shall not be obligated to enter into any such amendment that modifies or increases its duties or obligations hereunder) and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied:

A If the amendment or waiver relates to the provisions of Sections III.A, IV. or V, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted;

B. The undertaking herein, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and

F-4 C. The proposed amendment or waiver either (i) is approved by the Holders of the Bonds in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Holders or Beneficial Owners of the Bonds.

In the event of any amendment or waiver of a provision of this Disclosure Agreement, the Corporation shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type ( or, in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Corporation. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in a filing with the MSRB, and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.

SECTION X. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Corporation from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice required to be filed pursuant to this Disclosure Agreement, in addition to that which is required by this Disclosure Agreement. If the Corporation chooses to include any information in any Annual Report or notice in addition to that which is specifically required by this Disclosure Agreement, the Corporation shall have no obligation under this Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event or any other event required to be reported.

SECTION XI. Default. In the event of a failure of the Corporation to comply with any provision of this Disclosure Agreement, any Holder or Beneficial Owner of the Bonds may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Corporation, as the case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture or the Loan Agreement, and the sole remedy under this Disclosure Agreement in the event of any failure of the Corporation to comply with this Disclosure Agreement shall be an action to compel performance.

SECTION XII. Duties, Immunities and Liabilities of the Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Corporation agrees to indenmify and save the Dissemination Agent, their officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities, costs and expenses (including attorney's fees) due to the Dissemination Agent's fraud, violation of law, whether willful or negligent, negligence or willful misconduct. The Dissemination Agent shall be paid compensation by the Corporation for its services provided hereunder in accordance with its schedule of fees as amended from time to time and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall have no duty or obligation to review any information provided to them hereunder and shall not be deemed to be acting in any fiduciary capacity for the Corporation, the Bondholders, or any other party. The Dissemination Agent shall have no duty to prepare any information report nor shall the Dissemination Agent be responsible for filing any report not provided to it by the Corporation in a timely manner and in a form suitable for filing. The obligations of the Corporation under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.

F-5 SECTION XIII. Notices. Any notices or communications to or among any of the parties to this Disclosure Agreement may be given as follows:

To the Corporation: Southern California Institute of Architecture 900 East 3'd Street Los Angeles, CA 90013 Attention: Sue Gosney, Chief Financial Officer Telephone (213) 356-5330 E-mail: [email protected]

To the Dissemination Agent: U.S. Bank National Association 633 West 5th Street, 24th Floor Los Angeles, CA 90071 Attention: Fonda Hall, Vice President Telephone (213) 615-6023 E-mail: [email protected]

Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s) to which subsequent notices or communications should be sent.

SECTION XIV. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Authority, the Corporation, the Dissemination Agent, the Participating Underwriter, and Holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.

SECTION XV. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

SOUTHERN CALIFORNIA INSTITUTE OF ARCIDTECTURE

By: Authorized Representative

U.S. BANK NATIONAL ASSOCIATION, as Dissemination Agent

By: Authorized Representative

F-6 EXHIBIT A

NOTICE TO MSRB OF FAILURE TO FILE ANNUAL REPORT

Name of Authority: California Municipal Finance Authority

Name of Bond Issue: $14,205,000 California Municipal Finance Authority Refunding Revenue Bonds (Southern California Institute of Architecture Project), Series 2017

Name of Corporation: Southern California Institute of Architecture

Date of Issuance: December 19, 2017

NOTICE IS HEREBY GIVEN that the Corporation has not provided an Annual Report with respect to the above-named Bonds as required by Section 6.10 of the Indenture dated as of December 1, 2017 between the Authority and Trustee and by Section 16 of the Loan Agreement dated as of December 1, 2017 between the Authority and the Corporation. [The Corporation anticipates that the Annual Report will be filed by _____ ]

Dated:

U.S. BANK NATIONAL ASSOCIATION, as Dissemination Agent

cc: Southern California Institute of Architecture

F-7 EXHIBITB

SOUTHERN CALIFORNIA INSTITUTE OF ARCIDTECTURE CONTINUING DISCLOSURE ANNUAL REPORT

Please update the following information for the most recent or fiscal year. Only the data for the most recent fiscal year needs to be included in your annual report:

a) Please attach a copy ofyour most recent audited financial statements.

b) Please update the information for the last completed fiscal year in the following sections ofAppendix A of the Official Statement relating to the Bonds:

Enrollment • Update table entitled "FTE Enrollment"

Student Applications, Acceptances and Matriculation • Update tables entitled "Graduate: Applications, Acceptances and Enrollment"; "Post­ Graduate: Applications, Acceptances and Enrollment"; and "Undergraduate: Applications, Acceptances and Enrollment"

Tuition and Fees • Update table entitled "Tuition and Fees Per Semester"

Faculty • Update table entitled "Faculty Composition"

Financial Condition of Sci-Arc • Update tables entitled "Statement of Activities" and "Net Assets" (provided that these tables do not need to be updated if the information is available in the audited financial statements ofthe Corporation)

Cash and Investments • Update table entitled "Cash and Investments" (provided that this table does not need to be updated if the information is available in the audited financial statements of the Corporation)

Student Financial Aid • Update table entitled "Financial Aid"

Outstanding Indebtedness • Please describe any new and material outstanding indebtedness of the Corporation, provided that this information does not need to be provided if the information is available in the audited financial statements of the Corporation

F-8 [THIS PAGE IN1ENTIONALLY LEFT BLANK] [THIS PAGE IN1ENTIONALLY LEFT BLANK]

CALIFORNIA MUNICIPAL FINANCE AUTHORITY • REFUNDING REVENUE BONDS (SOUTHERN CALIFORNIA INSTITUTE OF ARCHITECTURE PROJECT), SERIES 2017

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