CALIFORNIA EDUCATIONAL FACILITIES AUTHORITY 5% REVENUE BONDS (CLAREMONT MCKENNA COLLEGE) SERIES 2009 REQUEST OF THE BORROWER AND INSTRUCTION FOR DEPOSIT AND DISCHARGE This irrevocable Request of the Borrower and Instruction for Deposit and Discharge (these Instructions ), dated December 3, 2015, is given by CLAREMONT MCKENNA COLLEGE, a nonprofit public benefit corporation created and existing under the laws of the State of California (the Borrower ) to the CALIFORNIA EDUCATIONAL FACILITIES AUTHORITY, a public instrumentality of the State of California (the Authority ), and MUFG UNION BANK, N.A. (formerly known as Union Bank, N.A.), a national banking association organized and existing under the laws of the United States of America, with corporate trust offices in Los Angeles, California, as trustee for the hereinafter defined 2009 Bonds (the Prior Trustee ); WlTNESSETH: WHEREAS, the Authority has previously issued its 5% Revenue Bonds (Claremont McKenna College) Series 2009 (the 2009 Bonds ), in the aggregate principal amount of $83,095,000, which amount is currently outstanding, and made a loan (the 2009 Loan ) of the proceeds thereof to the Borrower to finance or refinance the acquisition or construction of projects, as more particularly described under the caption 2009 Project in Exhibit A to the Loan Agreement (the 2009 Project ); WHEREAS, the 2009 Bonds were issued pursuant to that Indenture (the 2009 Indenture ), dated as of January 1, 2009, between the Authority and Prior the Trustee payable from Revenues (as defined in the 2009 Indenture) comprising certain payments received from the Borrower pursuant or with respect to that certain Loan Agreement, dated as of January 1, 2009 (the 2009 Loan Agreement ), between the Authority and the Borrower; WHEREAS, the Authority has authorized the issuance of the California Educational Facilities Authority Refunding Revenue Bonds (Claremont McKenna College) Series 2015A (the Bonds ), pursuant to that Indenture (the Indenture ), dated as of December 1, 2015, between the Authority and MUFG Union Bank, N.A., as trustee (the Series 2015 Trustee) and the loan of the proceeds thereof to the Borrower for, among other uses, the purposes set forth in the above recital; WHEREAS, the Authority has entered into a loan agreement, dated as of December 1, 2015 (the Loan Agreement ), with the Borrower, specifying the terms and conditions of a loan by the Authority to the Borrower of the proceeds of the Bonds; WHEREAS, the Borrower has determined that it is in the best financial interests of the Borrower to prepay the Base Loan Payments under the 2009 Loan Agreement and to refund and redeem the related 2009 Bonds;
WHEREAS, the Authority and the Borrower desire to provide for the payment of the principal of and interest on the 2009 Bonds through July 1, 2018 and, on January 1, 2019 (the Redemption Date ), the redemption of the 2009 Bonds (the 2009 Bonds ), at a redemption price (the Redemption Price ) equal to the principal amount of such 2009 Bonds, plus unpaid interest to the Redemption Date pursuant to Article X of the 2009 Indenture and Section 8 of the 2009 Loan Agreement; WHEREAS, according to the Accountant s Report (as hereafter defined), the proceeds of the Bonds, and the moneys from certain of the funds and accounts established under the 2009 Indenture, to be deposited in the Optional Redemption Account as provided herein will be sufficient to pay on the Redemption Date the Redemption Price of the 2009 Bonds maturing after the Redemption Date, and interest accrued to the Redemption Date (the amounts necessary to pay when due on the Redemption Price of the 2009 Bonds maturing after the Redemption Date and all interest accrued to the Redemption Date being herein referred to as the Escrow Requirements ); and WHEREAS, the Borrower desires to give these Instructions to the Prior Trustee for the purpose of providing the terms and conditions relating to the deposit and application of moneys and securities to provide for the payment and prepayment of all of the outstanding Base Loan Payments under the 2009 Loan Agreement and the redemption of the related 2009 Bonds pursuant to the 2009 Indenture; NOW, THEREFORE, the Borrower hereby irrevocably instructs the Prior Trustee as follows: Section 1. Optional Redemption Account. There has heretofore been established under the 2009 Indenture a fund held by the Prior Trustee known as the Optional Redemption Account. All money or securities (as provided in Section 10.03 of the 2009 Indenture) deposited in or transferred to the Optional Redemption Account pursuant to these Instructions is hereby irrevocably pledged as a special trust fund for the redemption of all of the outstanding 2009 Bonds on January 1, 2019 in accordance with Section 4.01(a) of the 2009 Indenture. The Prior Trustee shall have no lien upon or right of set off against such money or securities at any time on deposit in the Optional Redemption Account, and such amounts shall be applied only as provided herein. Section 2. Deposit and Transfer into Optional Redemption Account. From proceeds of the sale of the Bonds transferred to the Prior Trustee, the Prior Trustee shall deposit $94,229,218.03 in the Optional Redemption Account in immediately available funds. The Trustee shall hold all amounts deposited in the Optional Redemption Account pursuant to these Instructions invested as provided in Section 10.03 of the 2009 Indenture and Exhibit A hereto. The Trustee hereby acknowledges receipt of the Accountant s Report of Causey Demgen & Moore P.C., certified public accountants, dated December 3, 2015 relating to the sufficiency of each of (i) the initial cash deposit to the Optional Redemption Account and (ii) the Eligible Securities, which report satisfies the requirements of Section 10.03 of the 2009 Indenture. The 2
Trustee and the Authority further acknowledge receipt of the opinion of Orrick, Herrington & Sutcliffe LLP, which the Prior Trustee acknowledges as satisfying the requirements of Section 10.03 of the 2009 Indenture. As defined herein, the term Accountant s Report shall mean, as of any time, a verification report of an independent certified public accountant to the effect that principal of and interest on the Eligible Securities held or to be held, as applicable, in the Optional Redemption Account, when paid will provide, without any reinvestment, money which, together with the money on deposit in the Optional Redemption Account, will be sufficient to pay when due all Escrow Requirements then remaining to be paid. As defined herein, the term Eligible Securities shall mean (a) lawful money of the United States of America; or (b) noncallable notes, bills and bonds issued by the Department of the Treasury (including without limitation (1) obligations issued or held in book entry form on the books of the Department of the Treasury and (2) 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 York in book entry form), United States Treasury Obligations, State and Local Government Series and Zero Coupon United States Treasury Bonds, CATS, TIGRs and noncallable advance refunded municipal obligations secured by the foregoing or obligations issued by the Resolution Funding Corporation pursuant to the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended. The Trustee shall furnish the Borrower periodic cash transaction statements which include detail for all investment transactions effected by the Trustee or brokers selected by the Borrower. Upon the Borrower s election, such statements will be delivered via the Trustee s online service and upon electing such service, paper statements will be provided only upon request. The Borrower waives the right to receive brokerage confirmations of security transactions effected by the Trustee as they occur, to the extent permitted by law. The Borrower further understands that trade confirmations for securities transactions effected by the Trustee will be available upon request and at no additional cost and other trade confirmations may be obtained from the applicable broker. The Borrower confirms that by making the deposits described herein, it is defeasing and discharging all of the outstanding 2009 Bonds from the pledge of the Revenues and other funds provided for in the 2009 Indenture (except the moneys set aside in trust as described above) pursuant to Article X of the 2009 Indenture and, by operation of the 2009 Indenture, and these Instructions, it is prepaying in full the Base Loan Payments under the 2009 Loan Agreement attributable to the 2009 Bonds pursuant to Section 8 of the 2009 Loan Agreement and Section 4.01(a) of the 2009 Indenture. Section 3. Proceedings for Redemption of 2009 Bonds. The Borrower hereby irrevocably elects, and directs the Prior Trustee, to redeem, on January 1, 2019, all of the outstanding 2009 Bonds pursuant to the provisions of Section 4.01(a) of the 2009 Indenture. The Prior Trustee is hereby instructed to cause the redemption of the 2009 Bonds on the Redemption Date pursuant to the 2009 Indenture, to timely mail notice of redemption to the owners of the 2009 Bonds, substantially in the form attached hereto as Exhibit B in accordance with the Indenture and to send notice of defeasance to such owners in substantially the form attached 3
hereto as Exhibit C. In addition to its execution of these Instructions, accepting and agreeing to the terms hereof, the Prior Trustee shall execute and deliver concurrently herewith that certificate substantially in the form attached as Exhibit D hereto. The Trustee acknowledges receipt of the moneys described in Section 2 hereof and hereby agrees to apply $92,857,772.84 of such moneys to the purchase of the Eligible Securities set forth in Exhibit A hereto and to hold such Eligible Securities to the credit of the Optional Redemption Account. The $1,371,445.19 balance of moneys in the Optional Redemption Account shall remain uninvested. The Authority and the Borrower hereby irrevocably relinquish any interest in the moneys and Eligible Securities held in the Optional Redemption Account and agree and acknowledge that all such moneys and Eligible Securities are the property of the Prior Trustee, but only in its capacity as Trustee for the 2009 Bonds, to be held in trust and applied solely as provided in these Instructions. These Instructions shall constitute the consent of the Authority to the redemption of the 2009 Bonds and direction for the redemption of the 2009 Bonds. Section 4. Application of Funds to Redeem 2009 Bonds. The Trustee shall apply the amounts on deposit in the Optional Redemption Account to pay the principal of and interest on the 2009 Bonds through July 1, 2018 and, on the Redemption Date to pay the Redemption Price of the outstanding 2009 Bonds in accordance with Exhibit E hereto. Section 5. Transfer of Remaining Funds. Following the redemption of all of the outstanding 2009 Bonds on January 1, 2019, the Prior Trustee shall (a) withdraw any amounts remaining on deposit in the Optional Redemption Account, and transfer such amounts to the Borrower, and (b) withdraw any other residual amounts and earnings remaining on deposit under the 2009 Indenture and transfer such amounts to the Series 2015 Trustee, for deposit into the Bond Fund established under the Indenture to be used solely for the purpose of paying interest on the Bonds. Section 6. Directions from Authority. The provisions of Section 2 shall constitute irrevocable instructions to the Prior Trustee to transfer any and all moneys on deposit under the 2009 Indenture to the Optional Redemption Account and to apply moneys in the Optional Redemption Account to the payment of principal and premium of and interest on the 2009 Bonds required by Section 10.03 of the 2009 Indenture. Section 7. Termination of Obligations. The deposit of moneys in the Optional Redemption Account as set forth in Section 2 hereof shall constitute: (i) the deposit with respect to all Base Loan Payments to be paid by the Borrower pursuant to Section 8 of the 2009 Loan Agreement; and (ii) the deposit required by Section 10.03 of the 2009 Indenture with respect to the 2009 Bonds. Upon deposit of the moneys set forth in Section 2 hereof with the Prior Trustee, receipt of the Accountant's Report and the opinion of counsel as described in Section 2 hereof, and the irrevocable instructions to give notice contained in Section 3 hereof, the Authority, the Borrower and the Prior Trustee acknowledge that: (i) all liability of the Authority in respect of the 2009 Bonds shall cease, terminate and be completely discharged (except only for the right of 4
Holders thereof to be entitled to payment of the principal of, premium, if any, and interest on such 2009 Bond by the Authority, and the Authority shall remain liable for such payment only out of the money or Eligible Securities on deposit herein, subject to the provisions of Section 10.04 of the 2009 Indenture) and (ii) upon such provision having been made as set forth herein, the Borrower shall be relieved of all obligations under the 2009 Loan Agreement, except for the payment of all fees and expenses of the Prior Trustee incurred until the payment in full of the 2009 Bonds. Section 8. Irrevocable Instructions to Provide Notice. The Borrower hereby irrevocably instructs the Prior Trustee to give notice on or before November 30, 2018, as provided in Section 4.03 of the 2009 Indenture, of the redemption of the 2009 Bonds on the Redemption Date and of the defeasance of the 2009 Bonds no later than five (5) days following the closing date of the Bonds. Such notice of redemption shall be in the form required by Section 4.03 of the 2009 Indenture. Proposed forms are included as Exhibits B and C, respectively, attached hereto. The Authority hereby irrevocably instructs the Prior Trustee to give notice, as provided in Section 4.03 of the 2009 Indenture, of the redemption of the 2009 Bonds on the Redemption Date. Such notice shall be in the form required by Section 4.03 of the 2009 Indenture. The Trustee confirms that the instructions contained in this Section 8 are provisions satisfactory to the Prior Trustee for the giving of the notice of redemption of the 2009 Bonds in substantially the form set forth in Exhibit B hereto on the Redemption Date for purposes of Articles IV and X of the 2009 Indenture. Section 9. Substitution of Eligible Securities. Upon the written direction of the Borrower, and upon delivery to the Prior Trustee and the Authority of an Accountant s Report and an opinion of bond counsel to the effect that such action will not cause the interest on any of the Bonds to be includable in gross income for federal income tax purposes under the Internal Revenue Code of 1986, and the regulations and proposed regulations thereunder, the Prior Trustee shall sell, transfer, request the redemption or otherwise dispose of some or all of the Eligible Securities in the Optional Redemption Account and substitute therefor other Eligible Securities; provided, however, that any such substitution must be structured in such a manner that the Eligible Securities held to the credit of the Optional Redemption Account, together with the interest earnings thereon in the Optional Redemption Account, shall provide sufficient moneys to pay when due the Escrow Requirements remaining to be paid. Section 10. Amendment. These Instructions shall be irrevocable by the Borrower. These Instructions may be amended or supplemented by the Borrower, but only if the Borrower shall file with the Prior Trustee (a) an opinion of nationally recognized bond counsel engaged by the Borrower stating that such amendment or supplement will not, of itself, adversely affect the exclusion from gross income of interest represented by the 2009 Bonds or the Series 2015A Bonds under federal income tax law, and (b) a certification of an independent accountant or independent financial adviser engaged by the Borrower stating that such amendment or supplement will not affect the sufficiency of funds held in accordance with these Instructions to make the payments required by Section 4. 5
Section 11. Governing Law. These Instructions shall be construed in accordance with and governed by the laws of the State of California. [Remainder of page left intentionally blank.] 6
EXHIBIT A INITIAL ELIGIBLE SECURITIES TO BE DEPOSITED IN OPTIONAL REDEMPTION ACCOUNT California Educational Facilities Authority 5% Revenue Bonds (Claremont McKenna College) Series 2009 Type of Security Maturity Date First Int Pmt Date Par Amount Rate T-Note 6/30/2016 12/15/2015 $1,371,000 3.250% T-Note 12/31/2016 12/15/2015 1,393,000 3.250 T-Note 06/30/2017 12/15/2015 1,416,000 0.750 T-Note 12/31/2017 12/15/2015 1,421,000 0.750 T-Note 06/30/2018 12/15/2015 1,426,000 2.375 T-Note 12/31/2018 12/15/2015 84,538,000 1.500 A-1
EXHIBIT B FORM OF NOTICE OF REDEMPTION NOTICE OF FULL OPTIONAL REDEMPTION California Educational Facilities Authority 5% Revenue Bonds (Claremont McKenna College) Series 2009 Issue Date: January 2, 2009 CUSIP Number: 130178RU2 Maturity Date: January 1, 2039 Redemption Date: January 1, 2019 Redemption Amount: $83,095,000 Notice is hereby given that, pursuant to the terms of the Indenture dated as of January 1, 2009 (the Indenture ), between the California Educational Facilities Authority (the Authority ) and MUFG Union Bank, N.A. (formerly known as Union Bank, N.A.), as trustee, $83,095,000, representing all of the outstanding principal amount of the above-described California Educational Facilities Authority 5% Revenue Bonds (Claremont McKenna College) Series 2009 (the Bonds ), are hereby called for optional redemption on January 1, 2019 (the Redemption Date ) at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the Redemption Date. All of the Bonds Outstanding under the Indenture are hereby called for redemption on the Redemption Date. The Bonds called for redemption will be redeemed at the principal payment office of the Trustee as set forth below. On the Redemption Date, there will become due and payable on each of said Bonds the redemption price thereof, together with interest accrued thereon to the Redemption Date, and that from and after such Redemption Date interest thereon shall cease to accrue. Bonds are required to be surrendered at the principal payment office of the Trustee as set forth below. Presentation and delivery address for first class mail, by registered mail, express mail, or delivered in person: MUFG Union Bank, N.A. 120 S. San Pedro Street, Suite 410 Los Angeles, California 90012 Attention: Bond Redemptions The method of presentation and delivery of Bonds is at the option and risk of the holder thereof. If mail is used, insured registered mail, return receipt requested is suggested. The Trustee shall not be held responsible for the selection or use of the CUSIP number, nor is any representation made as to its correctness indicated in this Redemption Notice, which is included solely for the convenience of the Holders. The Trustee may be obligated to withhold a percentage of the redemption price from any holder who fails to furnish the Trustee with a valid taxpayer identification number or a certification that such holder is not subject to backup withholding. Holders who wish to avoid the application of these provisions should submit a completed IRS Form W-9 when presenting their Bonds. Date:, 2018 MUFG UNION BANK, N.A., as Trustee B-1
EXHIBIT C NOTICE OF DEFEASANCE [See attached] C-1
NOTICE OF DEFEASANCE California Educational Facilities Authority 5% Revenue Bonds (Claremont McKenna College) Series 2009 Issue Date: January 2, 2009 CUSIP Number: 130178RU2 Maturity Date: January 1, 2039 Redemption Date: January 1, 2019 Redemption Amount: $83,095,000 In accordance with Indenture dated as of January 1, 2009 (the Indenture ), between the California Educational Facilities Authority (the Authority ) and MUFG Union Bank, N.A. (formerly known as Union Bank, N.A.), as trustee (the Trustee ) relating to the Bonds, the Trustee is hereby providing notice of defeasance and advance refunding of the Bonds. As of the date hereof, proceeds in the Optional Redemption Account established under the Indenture dated as of January 1, 2009 (the Indenture ), between the California Educational Facilities Authority (the Authority ) and the Trustee, will be used to pay the principal and interest with respect to the Bonds, as directed in the irrevocable Request of the Borrower and Instruction for Deposit and Discharge given by the Borrower. The Bonds will be redeemed on January 1, 2019. Refunding proceeds are provided through the issuance by the California Educational Facilities Authority on December 3, 2015 of its Refunding Revenue Bonds (Claremont McKenna College) Series 2015A pursuant to an Indenture, dated as of December 1, 2015, between the Authority and MUFG Union Bank, N.A., as trustee and the loan of the proceeds thereof to the Borrower for deposit to the Optional Redemption Account. Capitalized terms not otherwise defined herein and used in this notice shall have the meanings given such terms in the Indenture. Dated: December 3, 2015 MUFG UNION BANK, N.A., as Trustee * CUSIP data herein is provided by CUSIP Global Services, managed by Standard & Poor s Financial Services LLC on behalf of the American Bankers Association, and is set forth herein for convenience of reference only. The Trustee, the Authority and the Borrower shall not be responsible for the accuracy of the CUSIP data included herein. C-2
EXHIBIT D CERTIFICATE OF PRIOR TRUSTEE [See attached] D-1
CALIFORNIA EDUCATIONAL FACILITIES AUTHORITY 5% REVENUE BONDS (CLAREMONT MCKENNA COLLEGE) SERIES 2009 CERTIFICATE OF PRIOR TRUSTEE The undersigned hereby states and certifies: (a) that the undersigned is an authorized officer of MUFG Union Bank, N.A. (formerly known as Union Bank, N.A.), as trustee (the Prior Trustee ) under that Indenture (the Indenture ), dated as of January 1, 2009, between the California Educational Facilities Authority (the Authority ) and the Prior Trustee, and with respect to the Request of the Borrower and Instruction for Deposit and Discharge, dated December 3, 2015 (the Instructions ), executed by Claremont McKenna College (the Borrower ) and agreed and accepted by the Authority, the Prior Trustee and the Series 2015 Trustee, relating to the Indenture and 2009 Bonds, and as such, is familiar with the facts herein certified and is authorized and qualified to certify the same; (b) that the Prior Trustee is duly organized and existing as a national banking association organized and existing under the laws of the United States of America, having the full power and authority to enter into and perform its duties under the Instructions; (c) that the Prior Trustee is duly authorized to carry out corporate trust powers, and has the full power and authority to perform its duties under the Instructions; (d) that to the best knowledge of the Prior Trustee, no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Prior Trustee that has not been obtained is or will be required for the consummation by the Prior Trustee of the other transactions contemplated to be performed by the Prior Trustee in connection with the acceptance and performance of the obligations created by the Instructions; and (e) that to the best knowledge of the Prior Trustee, compliance with the terms of the Instructions will not conflict with, or result in a violation or breach of, or constitute a default under, any material agreement or material instrument to which the Prior Trustee is a party or by which it is bound, or any law or any rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over the Prior Trustee or any of its activities or properties. D-2
EXHIBIT E 2009 BOND PAYMENT SCHEDULE [See attached] E-1
Nov 18, 2015 10:12 am Prepared by Prager & Co., LLC (Finance 7.012 CMC:RF0709A) Page 43 ESCROW SUFFICIENCY Claremont McKenna College 2015 Advance Refunding of Series 2009 Bonds Escrow Net Escrow Excess Excess Date Requirement Receipts Receipts Balance 12/03/2015 1,371,445.19 1,371,445.19 1,371,445.19 12/31/2015 706,522.50 706,522.50 2,077,967.69 01/01/2016 2,077,375.00-2,077,375.00 592.69 06/30/2016 2,077,522.50 2,077,522.50 2,078,115.19 07/01/2016 2,077,375.00-2,077,375.00 740.19 12/31/2016 2,077,243.75 2,077,243.75 2,077,983.94 01/01/2017 2,077,375.00-2,077,375.00 608.94 06/30/2017 2,077,607.50 2,077,607.50 2,078,216.44 07/01/2017 2,077,375.00-2,077,375.00 841.44 12/31/2017 2,077,297.50 2,077,297.50 2,078,138.94 01/01/2018 2,077,375.00-2,077,375.00 763.94 06/30/2018 2,076,968.75 2,076,968.75 2,077,732.69 07/01/2018 2,077,375.00-2,077,375.00 357.69 12/31/2018 85,172,035.00 85,172,035.00 85,172,392.69 01/01/2019 85,172,375.00-85,172,375.00 17.69 97,636,625.00 97,636,642.69 17.69
Nov 18, 2015 10:12 am Prepared by Prager & Co., LLC (Finance 7.012 CMC:RF0709A) Page 46 ESCROW CASH FLOW Claremont McKenna College 2015 Advance Refunding of Series 2009 Bonds Present Value Net Escrow to 12/03/2015 Date Principal Interest Receipts @ 1.2501594% 12/31/2015 706,522.50 706,522.50 705,837.99 06/30/2016 1,371,000.00 706,522.50 2,077,522.50 2,062,688.10 12/31/2016 1,393,000.00 684,243.75 2,077,243.75 2,049,528.76 06/30/2017 1,416,000.00 661,607.50 2,077,607.50 2,037,224.34 12/31/2017 1,421,000.00 656,297.50 2,077,297.50 2,024,197.01 06/30/2018 1,426,000.00 650,968.75 2,076,968.75 2,011,374.04 12/31/2018 84,538,000.00 634,035.00 85,172,035.00 81,966,922.60 91,565,000.00 4,700,197.50 96,265,197.50 92,857,772.84 Escrow Cost Summary Purchase date 12/03/2015 Purchase cost of securities 92,857,772.84 Target for yield calculation 92,857,772.84