$15,160,000 BOARD OF TRUSTEES OF NORTHEASTERN ILLINOIS UNIVERSITY

Transcription

1 NEW ISSUE Ratings: BOOK-ENTRY ONLY Insured Underlying Standard & Poor s : AA A- (See DESCRIPTION OF RATINGS herein) Subject to compliance by the Board of Trustees of Northeastern Illinois University (the Board ) with certain covenants, in the opinion of Chapman and Cutler LLP, Bond Counsel, under present law, interest on the Series 2014 Bonds is not includible in gross income of the owners thereof for Federal income tax purposes, and is not included as an item of tax preference in computing the Federal alternative minimum tax for individuals and corporations, but such interest is taken into account in computing an adjustment used in determining the Federal alternative minimum tax for certain corporations. See TAX EXEMPTION herein for a more complete discussion. Interest on the Series 2014 Bonds is not exempt from present Illinois income taxes. $15,160,000 BOARD OF TRUSTEES OF NORTHEASTERN ILLINOIS UNIVERSITY University Facilities System Revenue Bonds Series 2014 consisting of $4,520,000 $10,640,000 BOARD OF TRUSTEES OF NORTHEASTERN ILLINOIS UNIVERSITY BOARD OF TRUSTEES OF NORTHEASTERN ILLINOIS UNIVERSITY UNIVERSITY FACILITIES SYSTEM REVENUE BONDS UNIVERSITY FACILITIES SYSTEM REVENUE BONDS SERIES SERIES Dated: Date of Delivery Due: July 1, as shown below The Board of Trustees of Northeastern Illinois University University Facilities System Revenue Bonds, Series (the Series Bonds ) and the Board of Trustees of Northeastern Illinois University University Facilities System Revenue Bonds, Series (the Series Bonds and, collectively with the Series Bonds, the Series 2014 Bonds ) shall be issued as fully registered Bonds in denominations of $5,000 or any integral multiple thereof and, when issued, will be registered in the name of Cede & Co., as registered owner and nominee for The Depository Trust Company, New York, New York ( DTC ). DTC will act as securities depository for the Series 2014 Bonds. Purchases of beneficial interests in the Series 2014 Bonds will be made in book-entry form only. Purchasers of a beneficial interest in such Series 2014 Bonds ( Beneficial Owners ) will not receive certificates representing their interests in the Series 2014 Bonds. The Series 2014 Bonds will mature on the dates and will bear interest at the rates shown below. Interest on the Series 2014 Bonds is payable semiannually on each January 1 and July 1, beginning July 1, The principal of the Series 2014 Bonds is payable semiannually at the principal corporate trust office of U. S. Bank National Association, Chicago, Illinois (the Registrar ), or its successor. Interest on the Series 2014 Bonds, together with the principal thereof, will be paid by the Registrar directly to DTC, so long as DTC or its nominee is the registered owner of the Series 2014 Bonds. The final disbursements of such payments to the Beneficial Owners will be the responsibility of the DTC participants or the indirect participants. See Book-Entry Only System for more information. The scheduled payment of principal of and interest on the Series 2014 Bonds when due will be guaranteed under a municipal bond insurance policy to be issued concurrently with the delivery of the Series 2014 Bonds by Build America Mutual Assurance Company. The Series Bonds are subject to redemption prior to maturity as described herein. THE SERIES 2014 BONDS WILL BE SPECIAL, LIMITED OBLIGATIONS OF THE BOARD AND WILL BE PAYABLE ONLY FROM THE SOURCES DESCRIBED HEREIN. THE SERIES 2014 BONDS ARE NOT OBLIGATIONS, GENERAL, SPECIAL OR OTHERWISE, OF THE STATE OF ILLINOIS. THE SERIES 2014 BONDS SHALL NOT CONSTITUTE A DEBT, LEGAL OR MORAL, OF THE STATE OF ILLINOIS, AND SHALL NOT BE ENFORCEABLE AGAINST THE STATE, NOR SHALL PAYMENT THEREOF BE ENFORCEABLE OUT OF ANY FUNDS OF THE BOARD, OR OF THE UNIVERSITY, OTHER THAN THE INCOME AND REVENUES PLEDGED AND ASSIGNED TO, OR IN TRUST FOR THE BENEFIT OF, THE HOLDERS OF THE SERIES 2014 BONDS. THE BOARD HAS NO TAXING POWER. The Series 2014 Bonds are offered when, as and if issued by the Board and received by the Purchaser, subject to prior sale, to withdrawal or modification of the offer without notice, to the approval of legality of the Series 2014 Bonds by Chapman and Cutler LLP, Chicago, Illinois, Bond Counsel, and to certain other conditions. Chapman and Cutler LLP will also serve as Disclosure Counsel to the Board. Certain legal matters will be passed upon for the Board by its counsel, Dunn Law Firm, LLP, Bloomington, Illinois. John S. Vincent & Company LLC, Chicago, Illinois, is serving as financial advisor to the University. It is expected that the Series 2014 Bonds will be available for delivery through DTC on or about December 23, Certain information in the Preliminary Official Statement has been updated in this Official Statement. See INFORMATION UPDATED FROM THE PRELIMINARY OFFICIAL STATEMENT on the inside cover hereof. HUTCHINSON,SHOCKEY,ERLEY &CO. The date of this Official Statement is November 25, 2014.

2 MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, PRICES, YIELDS AND CUSIP 1 NUMBERS $15,160,000 University Facilities System Revenue Bonds Series 2014 BOARD OF TRUSTEES OF NORTHEASTERN ILLINOIS UNIVERSITY $4,520,000 University Facilities System Revenue Bonds Series Year Principal Interest Approx. CUSIP 1 (July 1) Amount Rate Price Yield $ 225, % % DB , DC , DD , DE , DF , DG , DH , DJ , DK3 $10,640,000 University Facilities System Revenue Bonds Series Year Principal Interest Approx. CUSIP 1 (July 1) Amount Rate Price Yield $ 790, % % DL , * 3.10 DM , DP2 $1,750, % Term Bond Due July 1, 2027 Price *; Yield 3.40% CUSIP DN7 $1,990, % Term Bond Due July 1, 2030 Price ; Yield 4.00% CUSIP DQ0 $2,155, % Term Bond Due July 1, 2032 Price ; Yield 4.10% CUSIP DR8 $2,200, % Term Bond Due July 1, 2034 Price ; Yield 4.20% CUSIP DS6 INFORMATION UPDATED FROM THE PRELIMINARY OFFICIAL STATEMENT The following information has been updated in this Official Statement from the Preliminary Official Statement: Note information on the bond insurance policy. See BOND INSURANCE, SUMMARY OF CERTAIN PROVISIONS OF THE RESTATED BOND RESOLUTION -- General Covenants -- Rights of the Series 2014 Bond Insurer, DESCRIPTION OF RATINGS and APPENDIX F. The Restated Bond Resolution is expected to take effect on December 26, 2014, the date on which the redemption of all of the outstanding Series 2004 Bonds is scheduled to occur. See INTRODUCTION, second paragraph, and THE REFUNDING PLAN. The 2013 Pension Reform Act has been declared unconstitutional and void in its entirety by the Circuit Court of Sangamon County, Illinois. See RISK FACTORS -- Pension Costs and APPENDIX A-- STATE UNIVERSITIES RETIREMENT SYSTEM OF ILLINOIS. The Bond Reserve Account will be released upon the redemption of the Series 2004 Bonds, currently scheduled to occur on December 26, 2014, and there will not be a debt service reserve account securing the Series 2014 Bonds upon their issuance. See SECURITY FOR THE SERIES 2014 BONDS -- Series 2004 Bond Reserve Account, SOURCES AND USES OF FUNDS and THE REFUNDING PLAN. 1 Copyright 2014, American Bankers Association. CUSIP data herein is provided by Standard & Poor s, CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. The CUSIP numbers are provided for convenience and reference only. Neither the University nor the Purchaser are responsible for the selection or use of the CUSIP numbers, nor is any representation made as to their correctness on the Series 2014 Bonds or as indicated above. * Priced to the January 1, 2025 call date.

3 This Official Statement, which includes the cover page and the appendices hereto, does not constitute an offer to sell or the solicitation of any offer to buy, nor shall there be any sale of any of the Series 2014 Bonds, by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. No dealer, broker, salesman or other person has been authorized by the Board or the Purchaser to give any information or to make any representations other than those contained in this Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by the Board, the Purchaser, or the Financial Advisor. This Official Statement, which includes the cover page, inside cover page and appendices hereto, does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Series 2014 Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtained from the Board and other sources which are believed by the Board to be reliable, but is not guaranteed as to accuracy or completeness by, and is not to be construed as a promise or guarantee of, the Purchaser. Statements regarding specific documents, including the Series 2014 Bonds, are summaries of and subject to the detailed provisions of such documents and are qualified in their entirety by reference to each such document, copies of which will be on file with the Board and the Financial Advisor and will be provided upon request. This Official Statement contains, in part, estimates and matters of opinion, which are not intended as statements of fact, and no representation is made as to the correctness of such estimates and opinions, or that they will be realized. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstance, create any implication that there has been no change in the affairs of the Board or the information or opinions contained in this Official Statement since the date of this Official Statement. This Official Statement contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements include, among others, statements concerning expectations, beliefs, opinions, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. The forward-looking statements in this Official Statement are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by such statements. IN CONNECTION WITH THIS OFFERING, THE PURCHASER MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2014 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 PURCHASER MAY OFFER AND SELL THE SERIES 2014 BONDS TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENTS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATED ON THE COVER PAGE HEREOF AND SUCH PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE PURCHASER. Build America Mutual Assurance Company ( BAM ) makes no representation regarding the Series 2014 Bonds or the advisability of investing in the Series 2014 Bonds. In addition, BAM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding BAM, supplied by BAM and presented under the heading BOND INSURANCE and Appendix F SPECIMEN MUNICIPAL BOND INSURANCE POLICY. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. THE SERIES 2014 BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE BOND RESOLUTION RELATING TO THE SERIES 2014 BONDS HAS NOT BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS. THE REGISTRATION OR QUALIFICATION OF THE SERIES 2014 BONDS IN ACCORDANCE WITH APPLICABLE PROVISIONS OF LAW OF THE STATES IN WHICH SERIES 2014 BONDS HAVE BEEN REGISTERED OR QUALIFIED AND THE EXEMPTION FROM REGISTRATION OR QUALIFICATION IN OTHER STATES CANNOT BE REGARDED AS A RECOMMENDATION THEREOF. The Purchaser is under no obligation to make a secondary market for the Series 2014 Bonds, and no assurance can be given that a secondary market for the Series 2014 Bonds will develop.

4 Intentionally Left Blank

5 TABLE OF CONTENTS INTRODUCTION... 1 DESCRIPTION OF THE SERIES 2014 BONDS... 3 General... 3 Redemption... 3 RISK FACTORS... 5 BOND INSURANCE... 7 Bond Insurance Policy... 7 Build America Mutual Assurance Company... 8 BOOK-ENTRY ONLY SYSTEM... 9 General Provisions... 9 Successor Securities Depository; Discontinuation of Book-Entry System SECURITY FOR THE SERIES 2014 BONDS General Series 2004 Bond Reserve Account Issuance of Parity Bonds Rate Covenant ANNUAL DEBT SERVICE REQUIREMENTS ON THE BONDS SOURCES AND USES OF FUNDS THE REFUNDING PLAN NORTHEASTERN ILLINOIS UNIVERSITY,UNIVERSITY FACILITIES SYSTEM Description of System Facilities Historical Pro Forma Debt Service Coverage SUMMARY OF CERTAIN PROVISIONS OF THE ORIGINAL BOND RESOLUTION Flow of Funds General Covenants SUMMARY OF CERTAIN PROVISIONS OF THE RESTATED BOND RESOLUTION Pledge of Revenues and Income Flow of Funds General Covenants LITIGATION FINANCIAL STATEMENTS PURCHASE FINANCIAL ADVISOR DESCRIPTION OF RATINGS TAX EXEMPTION General LEGAL MATTERS CONTINUING DISCLOSURE UNDERTAKING MISCELLANEOUS CERTIFICATION APPENDIX A NORTHEASTERN ILLINOIS UNIVERSITY APPENDIX B DEFINITIONS OF CERTAIN TERMS APPENDIX C PROPOSED FORM OF OPINION OF BOND COUNSEL APPENDIX D FORM OF CONTINUING DISCLOSURE AGREEMENT APPENDIX E SUMMARY OF OUTSTANDING DEBT SERVICE APPENDIX F SPECIMEN MUNICIPAL BOND INSURANCE POLICY i

6 Intentionally Left Blank

7 $15,160,000 BOARD OF TRUSTEES OF NORTHEASTERN ILLINOIS UNIVERSITY UNIVERSITY FACILITIES SYSTEM REVENUE BONDS SERIES 2014 consisting of $4,520,000 $10,640,000 BOARD OF TRUSTEES OF NORTHEASTERN ILLINOIS UNIVERSITY BOARD OF TRUSTEES OF NORTHEASTERN ILLINOIS UNIVERSITY UNIVERSITY FACILITIES SYSTEM REVENUE BONDS UNIVERSITY FACILITIES SYSTEM REVENUE BONDS SERIES SERIES INTRODUCTION This Official Statement, including the cover page hereof and appendices attached hereto, is provided to prospective purchasers in connection with the sale and delivery by the Board of Trustees of Northeastern Illinois University (the Board ) of $15,160,000 principal amount of its University Facilities System Revenue Bonds, Series 2014 (the Series 2014 Bonds ) consisting of $4,520,000 University Facilities System Revenue Bonds, Series (the Series Bonds ) and $10,640,000 University Facilities System Revenue Bonds, Series (the Series Bonds ). The Board is a body politic and corporate of the State of Illinois responsible for the governance of Northeastern Illinois University (the University ). Certain capitalized terms used in this Official Statement are defined and have the meanings set forth under the captions SUMMARY OF CERTAIN PROVISIONS OF THE ORIGINAL BOND RESOLUTION or SUMMARY OF CERTAIN PROVISIONS OF THE RESTATED BOND RESOLUTION, as applicable, and in APPENDIX B hereto. The Series 2014 Bonds will be issued pursuant to the Northeastern Illinois University Revenue Bond Law (the Act ) and a Bond Resolution adopted by the Board of Governors of State Colleges and Universities, the predecessor to the Board, on behalf of Northeastern Illinois University on July 12, 1973 authorizing the issuance of University Facilities Revenue Bonds, Series of 1973 (the Series 1973 Bonds ), as supplemented by a First Supplemental Revenue Bond Resolution adopted by the Board on February 4, 1997, authorizing the issuance of the University Facilities System Revenue Bonds, Series 1997 (the Series 1997 Bonds ), by a Second Supplemental Revenue Bond Resolution adopted by the Board on February 11, 2004 authorizing the issuance of the University Facilities System Revenue Bonds, Series 2004 (the Series 2004 Bonds ), and by a Third Supplemental Revenue Bond Resolution adopted by the Board on November 13, 2014 (collectively, the Original Bond Resolution ). The Third Supplemental Revenue Bond Resolution provides that when the Series 2004 Bonds are no longer outstanding, the provisions of the Original Bond Resolution will be amended and restated as set forth in Appendix A of the Third Supplemental Revenue Bond Resolution (as so amended and restated, the Restated Bond Resolution ). References in this Official Statement to the Bond Resolution are to the Original Bond Resolution or the Restated Bond Resolution, as the context requires. During the period that any Series 2004 Bonds remain outstanding after the issuance of the Series 2014 Bonds, the provisions of the Original Bond Resolution will control. Upon the redemption of all of the outstanding Series 2004 Bonds (currently scheduled on December 26, 2014), the Restated Bond Resolution will govern the Series 2014 Bonds and any Parity Bonds hereafter issued. Proceeds from the sale of the Bonds, with funds of the Board, will be used to (i) currently refund all of the remaining Series 2004 Bonds and (ii) pay certain expenses incurred in connection 1

8 with the issuance of the Series 2014 Bonds. See the information under the captions THE REFUNDING PLAN and NORTHEASTERN ILLINOIS UNIVERSITY,UNIVERSITY FACILITIES SYSTEM. The Series 2004 Bonds are currently outstanding in the amount of $16,755,000 and constitute all of the outstanding revenue bonds issued on behalf of Northeastern Illinois University. The existing facilities (the Existing Facilities ) of the Northeastern Illinois University, University Facilities System (the System or University Facilities System ) include a student union, parking facilities, vending facilities, and a bookstore. See the information under the caption, NORTHEASTERN ILLINOIS UNIVERSITY,UNIVERSITY FACILITIES SYSTEM Description of System Facilities. On January 1, 1996, the Board, established in 1995 by Illinois General Assembly Public Act , succeeded to all rights, powers and duties relating to the governance of the University that were previously vested in the Board of Governors of State Colleges and Universities of the State of Illinois (the Board of Governors ), including the obligations of the Board of Governors under the Bond Resolution. The Board of Governors was abolished on January 31, The Series 2014 Bonds will be authorized pursuant to the Act. The Act empowers the Board to borrow money and issue and sell bonds to purchase, erect, build, construct, reconstruct, complete, repair, replace, alter, extend, better, equip, develop and improve revenue-producing buildings, structures or facilities, including student residence halls, apartments, staff housing facilities, health, hospital and medical facilities, dining halls, student union buildings, field houses, stadiums, physical education installations and facilities, auditoriums, facilities for student or staff services, facilities or buildings leased to the United States of America, off-street parking facilities, or any combination thereof. Additionally, the Board is authorized to refund or refinance, from time to time as often as it shall be advantageous and in the public interest to do so, any and all bonds issued and sold by the Board pursuant to the Act. Under the Act, the Board is authorized to hold in the treasury of the University all revenues derived from the University s income authorized by law to be retained in the University s treasury for such purpose, constituting revenues of the System and Pledged Fees and Pledged Tuition, and to pledge such revenues and income for the payment of operating and maintenance costs and for the retirement of such bonds. See SECURITY FOR THE SERIES 2014 BONDS and SUMMARY OF CERTAIN PROVISIONS OF THE ORIGINAL BOND RESOLUTION and SUMMARY OF CERTAIN PROVISIONS OF THE RESTATED BOND RESOLUTION. THE SERIES 2014 BONDS WILL BE SPECIAL, LIMITED OBLIGATIONS OF THE BOARD AND WILL BE PAYABLE ONLY FROM THE SOURCES DESCRIBED HEREIN. THE SERIES 2014 BONDS ARE NOT OBLIGATIONS, GENERAL, SPECIAL OR OTHERWISE, OF THE STATE OF ILLINOIS. THE SERIES 2014 BONDS SHALL NOT CONSTITUTE A DEBT, LEGAL OR MORAL, OF THE STATE OF ILLINOIS, AND SHALL NOT BE ENFORCEABLE AGAINST THE STATE, NOR SHALL PAYMENT THEREOF BE ENFORCEABLE OUT OF ANY FUNDS OF THE BOARD, OR OF THE UNIVERSITY, OTHER THAN THE INCOME AND REVENUES PLEDGED AND ASSIGNED TO, OR IN TRUST FOR THE BENEFIT OF, THE HOLDERS OF THE SERIES 2014 BONDS. THE BOARD HAS NO TAXING POWER. See SECURITY FOR THE SERIES 2014 BONDS. The summaries of and references to all documents, statutes and other instruments referred to in this Official Statement do not purport to be complete and are qualified in their entirety by reference to the full text of each such document, statute or instrument. Copies of the Original Bond Resolution and the Restated Bond Resolution are available for inspection at the Office of the Vice President for Finance and Administration of the University, 5500 North St. Louis Avenue, Chicago, Illinois and at the office of the University s Financial Advisor, John S. Vincent & Company LLC, 208 S. 2

9 La Salle Street, Suite 1625, Chicago, Illinois Any terms not defined in this Official Statement shall have the meanings as set forth in the respective documents. The Appendices hereto are part of this Official Statement and should be read in their entirety. GENERAL DESCRIPTION OF THE SERIES 2014 BONDS The Series 2014 Bonds will be issued in two series as fully registered bonds, as shown on the cover page hereof. The Series 2014 Bonds will be registered under the book-entry system described under the caption BOOK-ENTRY ONLY SYSTEM (the Book-Entry System ) and the method of payment of the Series 2014 Bonds and matters pertaining to transfers and exchanges while the Series 2014 Bonds are held in the Book-Entry System are described under that caption. During any period in which one or both series of the Series 2014 Bonds are not held in the Book-Entry System, the payment and other provisions described below under BOOK-ENTRY ONLY SYSTEM SUCCESSOR SECURITIES DEPOSITORY;DISCONTINUATION OF BOOK-ENTRY SYSTEM would apply to the Series 2014 Bonds. As provided in the Bond Resolution and subject to certain limitations and payment of certain taxes or other governmental charges set forth in the Bond Resolution, the Series 2014 Bonds are transferable or exchangeable by the Owners thereof at the principal corporate trust office of the Registrar. U. S. Bank National Association, Chicago, Illinois, will serve as Bond Registrar and Paying Agent for the Series 2014 Bonds. The Registrar shall not be required to transfer or exchange any Series 2014 Bond (i) during the period after the fifteenth day of the month next preceding any interest payment date, (ii) after notice calling such Series 2014 Bond for redemption has been mailed, or (iii) during a period of fifteen days preceding the mailing of a notice of redemption. The Series 2014 Bonds will be dated their date of delivery and will mature on July 1 of the years and in the amounts shown on the inside cover page hereof and will bear interest (computed on the basis of a 360-day year of twelve 30-day months) at the rates set forth on the inside cover page hereof, payable on July 1, 2015 and on each January 1 and July 1 thereafter. The Series 2014 Bonds will be issued in denominations of $5,000 or any integral multiple thereof. The Series 2014 Bonds will bear interest from their date or from the most recent interest payment date to which interest has been paid, or duly provided for, until the principal amount of the Series 2014 Bonds is paid. REDEMPTION Optional Redemption. The Series Bonds are not subject to optional redemption prior to maturity. The Series Bonds maturing on or after July 1, 2025 are subject to redemption on any date on or after January 1, 2025, at the option of the Board, in whole or in part at any time, and, if in part, in the maturities designated by the Board and within a single maturity in integral multiples of $5,000 in such manner as the Registrar may deem fair and appropriate, at a redemption price of par (100%), plus accrued interest to the date fixed for redemption. Mandatory Redemption of Term Bonds. The Series Bonds maturing on July 1, 2027, July 1, 2030, July 1, 2032 and July 1, 2034 will be subject to mandatory redemption prior to maturity through the application of sinking fund payments, in integral multiples of $5,000 selected by lot by the Bond Registrar at a redemption price equal to 100% of the principal amount thereof, plus accrued 3

10 interest to the date fixed for redemption, in the following principal amounts on July 1, in each of the years set forth on the following tables. Series Bonds Term Bonds Due July 1, 2027 Due July 1, 2030 Principal Principal Date Amount Date Amount 7/01/2026 $ 855,000 7/01/2029 $ 975,000 7/01/2027 (1) 895,000 7/01/2030 (1) 1,015,000 Due July 1, 2032 Due July 1, 2034 Principal Principal Date Amount Date Amount 7/01/2031 $ 1,055,000 7/01/2033 $ 1,140,000 7/01/2032 (1) 1,100,000 7/01/2034 (1) 1,060,000 (1) Final Maturity The principal amount of such Series Bonds to be redeemed in each year as set forth in the immediately preceding tables may be reduced through the earlier optional redemption thereof, with any partial optional redemptions of such Series Bonds credited against future sinking fund requirements from such bond and interest sinking fund payment dates as determined by the Board. In addition, on or prior to the 60th day preceding any bond and interest sinking fund payment date, the Registrar may, and if directed by the Board shall, purchase Series Bonds of such maturities in an amount not exceeding the amount of such Series Bonds required to be retired on such bond and interest sinking fund payment date and at a price not exceeding par plus accrued interest. Any such Series Bonds so purchased shall be canceled and credited against the bond and interest sinking fund payment required on such next bond and interest sinking fund payment date. General Redemption Terms. Notice identifying any Series Bond to be redeemed will be given by mailing a copy of the redemption notice by first class mail at least 30 days prior to the date fixed for redemption to the Owner of each Series Bond, or portion thereof, to be redeemed at the address shown on the registration books maintained by the Registrar, provided that failure to give such notice by mailing, or any defect therein, as to any Series Bond shall not affect the validity of any proceedings for the redemption of any other such Series Bond. With respect to any optional redemption of the Series Bonds, unless moneys sufficient to pay the principal of and interest on the Series Bonds to be redeemed shall have been received by the Registrar prior to the giving of such notice of redemption, such notice shall state that said redemption shall be conditional upon the receipt of such moneys by the Registrar on or prior to the date fixed for redemption. For purposes of any redemption of less than all of the Series Bonds of a single maturity, the particular Series Bonds or portions of Series Bonds to be redeemed shall be selected by lot by the Registrar by such method as the Registrar shall deem fair and appropriate (except when the Series Bonds are held in a book-entry system, in which case the selection of Series Bonds to be redeemed will be made in accordance with procedures established by DTC or any other book-entry depository); provided that such lottery shall provide for the selection of redemption of Series Bonds or portions thereof so that any $5,000 Series Bond or $5,000 portion of a 4

11 Series Bond shall be as likely to be called for redemption as any other such $5,000 Series Bond or $5,000 portion of a Series Bond. Notice of redemption having been given as described above and in the Bond Resolution, and notwithstanding failure to receive such notice, the Series Bonds or portions of Series Bonds so to be redeemed will, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date (unless the Board shall default in the payment of the redemption price) such Series Bonds or portions of Series Bonds shall cease to bear interest. Upon surrender of such Series Bonds for redemption in accordance with said notice, such Series Bonds will be paid by the Registrar at the redemption price. RISK FACTORS The purchase of the Series 2014 Bonds involves certain investment risks. Accordingly, each prospective purchaser of the Series 2014 Bonds should make an independent evaluation of the entirety of the information presented in this Official Statement and its appendices and exhibits in order to make an informed investment decision. Certain of the investment risks are described below. The following statements, however, should not be considered a complete description of all risks to be considered in the decision to purchase the Series 2014 Bonds, nor should the order of the presentation of such risks be construed to reflect the relative importance of the various risks. There can be no assurance that other risk factors are not material or will not become material in the future. Decline in Enrollment. The University has experienced a decline in enrollment. Revenues of the System, Pledged Tuition and Pledged Fees are dependent on the number of students who attend the University. To the extent that enrollment in the University continues to decline, a decrease in these sources of funding would result in reduced fund balances of the University and the System. Finances of the State of Illinois; Decrease in State Appropriations. Although State appropriations to the University are not pledged to the payment of the Series 2014 Bonds, the University relies on annual State funding for general expenditures of the University. As shown in APPENDIX ANORTHEASTERN ILLINOIS UNIVERSITY Budget and State Appropriations, the State reduced the amount of State current operating funding to the University by 4.4% for Fiscal Year 2010 to Fiscal Year The State has deferred release of approved appropriations for both Fiscal Years 2014 and As a consequence of this deferral, there can be no assurance that the full amount of the $37.8 million of approved appropriations for Fiscal Year 2015 will be ultimately received or received in a timely fashion, or that approved appropriations will continue to be made at the current level. Such delays present cash flow challenges to the University. The State has experienced adverse economic conditions resulting in significant shortfalls between the State s general fund revenues and spending demands. In addition, the underfunding of the State s pension systems has contributed to the State s poor financial health. A continued failure by the State to make State appropriations expected by the University, or failure to make such payments in a timely manner, will negatively impact the University s financial condition and will likely adversely affect the financial condition of the System. Pension Costs. Retirement benefits for University employees are provided under a retirement plan administered by the State Universities Retirement System of Illinois ( SURS ). Historically, the State has made the required contributions to SURS on behalf of the University s employees. However, there has been severe underfunding of the State s retirement systems, including SURS. The pension 5

12 reform legislation that was signed into law by the Governor has been struck down by the Sangamon County Circuit Court as unconstitutional and void in its entirety. Future legislation may require the University to assume part or all of the liability for funding its employees pensions, which would adversely affect the University s financial condition. Furthermore, the underfunding of pensions may impact the University s ability to recruit and retain faculty and staff. See APPENDIX ANORTHEASTERN ILLINOIS UNIVERSITY State Universities Retirement System of Illinois. Economic Conditions. The financial health of the University and the System is in part dependent on the strength of the State and local economy. Many factors affect the economy, including rates of employment and economic growth and the level of residential and commercial development. Furthermore, the University has experienced a decline in enrollment. Real or perceived threats to the financial stability of the State or the University may have an adverse effect on the value that may be ascribed to the Series 2014 Bonds in the secondary market. Loss or Change of Series 2014 Bond Ratings. The Series 2014 Bonds have received an underlying credit rating from Standard & Poor s Ratings Group, New York, New York ( S&P ) as well as a rating based on a bond insurance policy. The ratings can be changed or withdrawn at any time for reasons both under and outside the University s control. Any change or withdrawal or combination thereof could adversely affect the ability of investors to sell the Series 2014 Bonds or may affect the price at which they can be sold. See DESCRIPTION OF RATINGS. Secondary Market for the Series 2014 Bonds. No assurance can be given that a secondary market will develop for the purchase and sale of the Series 2014 Bonds or, if a secondary market exists, that such Series 2014 Bonds can be sold for any particular price. The Purchaser is not obligated to engage in secondary market trading or to repurchase any of the Series 2014 Bonds at the request of the owners thereof. Prices of the Series 2014 Bonds as traded in the secondary market are subject to adjustment upward and downward in response to changes in the credit markets and other prevailing circumstances. No guarantee exists as to the future market value of the Series 2014 Bonds. Such market value could be substantially different from the original purchase price. Continuing Disclosure. A failure by the Board to comply with the Continuing Disclosure Agreement will not constitute an event of default on the Series 2014 Bonds. Any such failure must be reported in accordance with Rule 15c2-12 (the Rule ) adopted by the Securities and Exchange Commission (the Commission ) under the Securities Exchange Act of 1934, as amended (the Exchange Act ), and may adversely affect the transferability and liquidity of the Series 2014 Bonds and their market price. See CONTINUING DISCLOSURE UNDERTAKING. Suitability of Investment. The interest rate borne by the Series 2014 Bonds is intended to compensate the investor for assuming the risk of investing in the Series 2014 Bonds. Furthermore, the tax-exempt feature of the Series 2014 Bonds is currently more valuable to high tax bracket investors than to investors that are in low tax brackets. As such, the value of the interest compensation to any particular investor will vary with individual tax rates and circumstances. Each prospective investor should carefully examine this Official Statement and its own financial condition to make a judgment as to its ability to bear the economic risk of such an investment, and whether or not the Series 2014 Bonds are an appropriate investment for such investor. Future Changes in Laws. Various state and federal laws, regulations and constitutional provisions apply to the Board and to the Series 2014 Bonds. The Board can give no assurance that 6

13 there will not be a change in, interpretation of, or addition to such applicable laws, provisions and regulations which would have a material effect, either directly or indirectly, on the University or the System. Future actions of the State may affect the overall financial condition of the University and the System. Factors Relating to Tax Exemption. As discussed under TAX EXEMPTION, interest on the Series 2014 Bonds could become includible in gross income for purposes of federal income taxation, retroactive to the date the Series 2014 Bonds were issued, as a result of future acts or omissions of the Board in violation of its covenants in the Bond Resolution. Should such an event of taxability occur, the Series 2014 Bonds are not subject to any special redemption. There are or may be pending in the Congress of the United States legislative proposals relating to the federal tax treatment of interest on the Series 2014 Bonds, including some that carry retroactive effective dates, that, if enacted, could affect the market value of the Series 2014 Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, it would apply to Series 2014 Bonds issued prior to enactment. Finally, reduction or elimination of the tax-exempt status of obligations such as the Series 2014 Bonds could have an adverse effect on the Board s ability to access the capital markets to finance future capital or operational needs by reducing market demand for such obligations or materially increasing borrowing costs of the Board. The tax-exempt bond office of the Internal Revenue Service (the Service ) is conducting audits of tax-exempt bonds, both compliance checks and full audits, with increasing frequency to determine whether, in the view of the Service, interest on such tax-exempt obligations is includible in the gross income of the owners thereof for federal income tax purposes. It cannot be predicted whether the Service will commence any such audit. If an audit is commenced, under current procedures the Service may treat the Board as a taxpayer and the Series 2014 Bondholders may have no right to participate in such proceeding. The commencement of an audit with respect to any tax-exempt obligations of the Board could adversely affect the market value and liquidity of the Series 2014 Bonds, regardless of the ultimate outcome. Bankruptcy. The rights and remedies of the Series 2014 Bondholders may be limited by and are subject to the provisions of federal bankruptcy laws, to other laws or equitable principles that may affect the enforcement of creditors rights, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against local governments. The various opinions of counsel to be delivered with respect to the Series 2014 Bonds and the Bond Resolution will be similarly qualified. BOND INSURANCE POLICY BOND INSURANCE Concurrently with the issuance of the Series 2014 Bonds, Build America Mutual Assurance Company ( BAM ) will issue its Municipal Bond Insurance Policy for the Series 2014 Bonds (the Policy ). The Policy guarantees the scheduled payment of principal of and interest on the Series 2014 Bonds when due as set forth in the form of the Policy included as an exhibit to this Official Statement. The Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law. 7

14 BUILD AMERICA MUTUAL ASSURANCE COMPANY BAM is a New York domiciled mutual insurance corporation. BAM provides credit enhancement products solely to issuers in the U.S. public finance markets. BAM will only insure obligations of states, political subdivisions, integral parts of states or political subdivisions or entities otherwise eligible for the exclusion of income under section 115 of the U.S. Internal Revenue Code of 1986, as amended. No member of BAM is liable for the obligations of BAM. The address of the principal executive offices of BAM is: 200 Liberty Street, 27th Floor, New York, New York 10281, its telephone number is: , and its website is located at: BAM is licensed and subject to regulation as a financial guaranty insurance corporation under the laws of the State of New York and in particular Articles 41 and 69 of the New York Insurance Law. BAM's financial strength is rated AA/Stable by Standard and Poor's Ratings Services, a Standard & Poor's Financial Services LLC business ( S&P ). An explanation of the significance of the rating and current reports may be obtained from S&P at The rating of BAM should be evaluated independently. The rating reflects the S&P s current assessment of the creditworthiness of BAM and its ability to pay claims on its policies of insurance. The above rating is not a recommendation to buy, sell or hold the Series 2014 Bonds, and such rating is subject to revision or withdrawal at any time by S&P, including withdrawal initiated at the request of BAM in its sole discretion. Any downward revision or withdrawal of the above rating may have an adverse effect on the market price of the Series 2014 Bonds. BAM only guarantees scheduled principal and scheduled interest payments payable by the issuer of the Series 2014 Bonds on the date(s) when such amounts were initially scheduled to become due and payable (subject to and in accordance with the terms of the Policy), and BAM does not guarantee the market price or liquidity of the Series 2014 Bonds, nor does it guarantee that the rating on the Series 2014 Bonds will not be revised or withdrawn. Capitalization of BAM BAM's total admitted assets, total liabilities, and total capital and surplus, as of September 30, 2014 and as prepared in accordance with statutory accounting practices prescribed or permitted by the New York State Department of Financial Services were $492.2 million, $38.0 million and $454.2 million, respectively. BAM is party to a first loss reinsurance treaty that provides first loss protection up to a maximum of 15% of the par amount outstanding for each policy issued by BAM, subject to certain limitations and restrictions. BAM's most recent Statutory Annual Statement, which has been filed with the New York State Insurance Department and posted on BAM's website at is incorporated herein by reference and may be obtained, without charge, upon request to BAM at its address provided above (Attention: Finance Department). Future financial statements will similarly be made available when published. BAM makes no representation regarding the Series 2014 Bonds or the advisability of investing in the Series 2014 Bonds. In addition, BAM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of 8

15 this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding BAM, supplied by BAM and presented under the heading BOND INSURANCE. Additional Information Available from BAM Credit Insights Videos. For certain BAM-insured issues, BAM produces and posts a brief Credit Insights video that provides a discussion of the obligor and some of the key factors BAM's analysts and credit committee considered when approving the credit for insurance. The Credit Insights videos are easily accessible on BAM's website at buildamerica.com/creditinsights/. Obligor Disclosure Briefs. Subsequent to closing, BAM posts an Obligor Disclosure Brief on every issue insured by BAM, including the Series 2014 Bonds. BAM Obligor Disclosure Briefs provide information about the gross par insured by CUSIP, maturity and coupon; sector designation (e.g. general obligation, sales tax); a summary of financial information and key ratios; and demographic and economic data relevant to the obligor, if available. The Obligor Disclosure Briefs are also easily accessible on BAM's website at buildamerica.com/obligor/. Disclaimers. The Obligor Disclosure Briefs and the Credit Insights videos and the information contained therein are not recommendations to purchase, hold or sell securities or to make any investment decisions. Credit-related and other analyses and statements in the Obligor Disclosure Briefs and the Credit Insights videos are statements of opinion as of the date expressed, and BAM assumes no responsibility to update the content of such material. The Obligor Disclosure Briefs and Credit Insight videos are prepared by BAM; they have not been reviewed or approved by the issuer of or the underwriter for the Series 2014 Bonds, and they assume no responsibility for their content. BAM receives compensation (an insurance premium) for the insurance that it is providing with respect to the Series 2014 Bonds. Neither BAM nor any affiliate of BAM has purchased, or committed to purchase, any of the Series 2014 Bonds, whether at the initial offering or otherwise. GENERAL PROVISIONS BOOK-ENTRY ONLY SYSTEM The following information concerning The Depository Trust Company, New York, New York ( DTC ) and its book-entry system has been obtained from DTC. The Board, the University, the Financial Advisor, and the Bond Registrar take no responsibility for the accuracy or completeness of such information. The Depository Trust Company ( DTC ), New York, New York, will act as securities depository for the Series 2014 Bonds of both series. The Series 2014 Bonds will be issued as fullyregistered securities registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Certificate will be issued for each maturity of the Series 2014 Bonds of each series, each in the aggregate principal amount of each such maturity, and will be deposited with DTC. DTC, the world s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning 9

16 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 DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has a 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 Purchases of the Series 2014 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2014 Bonds on DTC s records. The ownership interest of each actual purchaser of each Certificate ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2014 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Series 2014 Bonds, except in the event that use of the book-entry system for the Series 2014 Bonds is discontinued. To facilitate subsequent transfers, all Series 2014 Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2014 Bonds with DTC and their registration in the name of Cede & Co., or such other DTC nominee, does not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2014 Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Series 2014 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Series 2014 Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Series 2014 Bonds, such as redemptions, tenders, defaults and proposed amendments 10

17 to the Certificate Documents. For example, Beneficial Owners of the Series 2014 Bonds may wish to ascertain that the nominee holding the Series 2014 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 Bond Registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Series 2014 Bonds of a maturity are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Series 2014 Bonds unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Board as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts the Series 2014 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, principal, and interest payments on the Series 2014 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts upon DTC s receipt of funds and corresponding detailed information from the Board or the Bond Registrar, on the payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, the Bond Registrar, or the Board, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, principal and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Board or the Bond Registrar, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as Securities Depository with respect to the Series 2014 Bonds at any time by giving reasonable notice to the Board or the Bond Registrar. Under such circumstances, in the event that a successor Securities Depository is not obtained, certificates for the Series 2014 Bonds are required to be printed and delivered as described in the Indenture. The Board may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor Securities Depository). In that event, certificates for the Series 2014 Bonds will be printed and delivered to DTC. The Board will have no responsibility or obligation to any Securities Depository, any Participants in the book-entry system or the Beneficial Owners with respect to (i) the accuracy of any records maintained by the Securities Depository or any Participant; (ii) the payment by the Securities Depository or by any Participant of any amount due to any Beneficial Owner in respect of the principal amount or redemption price of, or interest on, any Series 2014 Bonds; (iii) the delivery of any notice by the Securities Depository or any Participant; (iv) the selection of the Beneficial 11

18 Owners to receive payment in the event of any partial redemption of the Series 2014 Bonds; or (v) any other action taken by the Securities Depository or any Participant. SUCCESSOR SECURITIES DEPOSITORY;DISCONTINUATION OF BOOK-ENTRY SYSTEM In the event that (i) the Board determines that DTC is incapable of discharging its responsibilities described in the Indenture and in the blanket letter of representations from the Board and accepted by DTC (the Representation Letter ), (ii) the Representation Letter shall be terminated for any reason or (iii) the Board determines that it is in the best interest of the Beneficial Owners of the Series 2014 Bonds that they be able to obtain certificated Series 2014 Bonds, the Board will notify DTC and the Direct Participants of the availability through DTC of certificated Series 2014 Bonds and the Series 2014 Bonds will no longer be restricted to being registered in the registry maintained by the Bond Registrar in the name of Cede & Co., as nominee of DTC. At that time, the Board may determine that the Series 2014 Bonds shall be registered in the name of and deposited with a successor depository operating a universal book-entry system, as may be acceptable to the Board, or such depository s agent or designee, or if the Board does not select such an alternate universal book-entry system, then the Series 2014 Bonds may be registered in whatever name or names registered owners of Series 2014 Bonds transferring or exchanging Series 2014 Bonds shall designate, in accordance with the provisions of the Indenture. GENERAL SECURITY FOR THE SERIES 2014 BONDS The Series 2004 Bonds, the Series 2014 Bonds and any other Parity Bonds hereafter issued are payable from and secured by a pledge of and lien on (i) the Net Revenues of the System, (ii) the Pledged Fees and Pledged Tuition (subject to the prior payment of operating and maintenance expenses of the System, but only to the extent necessary) and (iii) funds held in the Bond Account. Until the effective date of the Restated Bond Resolution, funds held in the Bond Reserve Account will also secure the Series 2004 Bonds, the Series 2014 Bonds and any Parity Bonds. All of the Series 2004 Bonds, the Series 2014 Bonds and any Parity Bonds hereafter issued shall be equally and ratably secured by said pledge and lien without priority or preference one over the other by reason of series designation, denomination, number, maturity, date or terms of redemption prior to maturity, date of sale or delivery or otherwise. THE SERIES 2014 BONDS WILL BE SPECIAL, LIMITED OBLIGATIONS OF THE BOARD AND WILL BE PAYABLE ONLY FROM THE SOURCES DESCRIBED HEREIN. THE SERIES 2014 BONDS ARE NOT OBLIGATIONS, GENERAL, SPECIAL OR OTHERWISE, OF THE STATE OF ILLINOIS. THE SERIES 2014 BONDS SHALL NOT CONSTITUTE A DEBT, LEGAL OR MORAL, OF THE STATE OF ILLINOIS, AND SHALL NOT BE ENFORCEABLE AGAINST THE STATE, NOR SHALL PAYMENT THEREOF BE ENFORCEABLE OUT OF ANY FUNDS OF THE BOARD, OR OF THE UNIVERSITY, OTHER THAN THE INCOME AND REVENUES PLEDGED AND ASSIGNED TO, OR IN TRUST FOR THE BENEFIT OF, THE HOLDERS OF THE SERIES 2014 BONDS. THE BOARD HAS NO TAXING POWER. See SUMMARY OF CERTAIN PROVISIONS OF THE ORIGINAL BOND RESOLUTION and SUMMARY OF CERTAIN PROVISIONS OF THE RESTATED BOND RESOLUTION. Net Revenues. The System s Gross Revenues are deposited to the credit of a special fund created and designated as the University Facilities Revenue Fund for Northeastern Illinois University (the Revenue Fund ). The Revenue Fund is maintained with the Depository. Current System 12

19 expenses will be payable from the Revenue Fund as they become due and payable. The Treasurer may retain in the Revenue Fund an operating reserve not to exceed an amount equal to operation and maintenance expenses for one month. Until the effective date of the Restated Bond Resolution, the Treasurer shall transfer from the Revenue Fund to the Bond Account on the first day of each month an amount of money equal to not less than one-sixth of the interest coming due on the next interest payment date on the Series 2004 Bonds, the Series 2014 Bonds and any Parity Bonds and one-twelfth of the principal coming due on the next principal payment date of the Series 2004 Bonds, the Series 2014 Bonds and any Parity Bonds. On a date not less than fifteen days before each July 1 and January 1 of each Fiscal Year the Treasurer will transfer from the Bond Account to the Registrar such amounts as will be sufficient to pay the principal of and interest on the Series 2004 Bonds, the Series 2014 Bonds and any Parity Bonds due on such interest payment date or principal payment date. After the effective date of the Restated Bond Resolution, the Treasurer is required to transfer to a separate fund (the Bond Fund ), after payment of operating and maintenance expenses of the System then due, on or before the business day before each January 1 and July 1 (or such other interest payment dates and principal payment dates that are provided for a series of Bonds in the supplemental resolution authorizing such series of Bonds), an amount which, when added to the balance in the Bond Fund, will be sufficient to equal the interest and principal due on the Series 2014 Bonds and any Parity Bonds (collectively, the Bonds ) on the next interest payment date or principal payment date. See SUMMARY OF CERTAIN PROVISIONS OF THE BOND RESOLUTION Flow of Funds. Pledged Fees and Pledged Tuition. The Treasurer is required to deposit in the Revenue Fund such Pledged Fees and such Pledged Tuition as is necessary together with Gross Revenues (i) to meet operating and maintenance expenses of the System, and (ii) to meet Annual Debt Service. Until the effective date of the Restated Bond Resolution, such deposit must also be sufficient to meet Bond Reserve Account deposit requirements. See NORTHEASTERN ILLINOIS UNIVERSITY Pledged Fees and Pledged Tuition, in APPENDIX A. SERIES 2004 BOND RESERVE ACCOUNT Upon the issuance of the Series 2004 Bonds an amount was deposited into a subaccount in the Bond Reserve Account designated the Series 2004 Bond Reserve Subaccount (the Series 2004 Bond Reserve Subaccount ). On the effective date of the Restated Bond Resolution (scheduled to be December 26, 2014), all amounts in the Series 2004 Bond Reserve Subaccount will be used to pay a portion of the redemption price of the Series 2004 Bonds. ISSUANCE OF PARITY BONDS Parity Bonds may be issued under the terms of the Original Bond Resolution only upon compliance with all of the following conditions: 1. All transfers and deposits to be made under the terms of the Bond Resolution are current. 2. Such Parity Bonds are being issued to acquire any project as defined in the Act, to refund any bonds authorized under the Bond Resolution or for any one or more or all of the foregoing purposes. 3. Until the effective date of the Restated Bond Resolution: For each of the two Fiscal Years immediately preceding the proposed issuance of any Parity Bonds, (i) the average of the 13

20 sum of annual Net Revenues was at least equal to the Maximum Annual Debt Service on the Series 2004 Bonds, the Series 2014 Bonds and Outstanding Parity Bonds and (ii) the average of the sum of annual Net Revenues, Pledged Fees, and Pledged Tuition would have been at least equal to 200 percent of (2.0 times) Maximum Annual Debt Service for the Outstanding the Series 2004 Bonds, the Series 2014 Bonds, the Parity Bonds and the proposed Parity Bonds in any future Fiscal Year. After the effective date of the Restated Bond Resolution: For the two Fiscal Years immediately preceding the issuance of such additional bonds, the average of the sum of annual Net Revenues, Pledged Fees and Pledged Tuition must equal at least 200% (2.0 times) Maximum Annual Debt Service on all Outstanding Bonds and such additional bonds. See SUMMARY OF CERTAIN PROVISIONS OF THE RESTATED BOND RESOLUTION Additional Bonds for additional requirements for the issuance of Parity Bonds under the Restated Bond Resolution. RATE COVENANT The Bond Resolution contains agreements and covenants that the rates, rents, charges and fees chargeable to the students, staff members and others using or being served by, or having the right to use or the right to be served by the System will be fixed and revised from time to time in an amount that shall be sufficient such that the sum of the Net Revenues of the System, Pledged Fees, and Pledged Tuition in each Fiscal Year is at least equal to 200 percent (2.0 times) of Maximum Annual Debt Service. 14

21 ANNUAL DEBT SERVICE REQUIREMENTS ON THE BONDS The following table sets forth, for each bond year ending July 1, the amount required for the payment of principal of and interest on the Series 2014 Bonds. Year Ending Series Series Combined July 1 Principal Interest Total Principal Interest Total Debt Service 2015 $ 225, $ 88, $313, $ 230, $ 230, $ 543, , , , , , , , , , , , , , , , , , ,172, , , , , , ,164, , , , , , ,165, , , , , , ,166, , , , , , ,165, , , , , , ,163, $ 790, , ,230, ,230, , , ,232, ,232, , , ,231, ,231, , , ,228, ,228, , , ,228, ,228, , , ,231, ,231, ,015, , ,232, ,232, ,055, , ,231, ,231, ,100, , ,234, ,234, ,140, , ,230, ,230, ,060, , ,103, ,103,

22 SOURCES AND USES OF FUNDS The sources and uses of funds for the Series 2014 Bonds are as follows: Sources of Funds Principal Amount of Series Bonds... $ 4,520, Principal Amount of Series Bonds... 10,640, Net Original Issue Premium , Release of Series 2004 Bond Reserve Subaccount... 1,400, Total Sources of Funds... $ 17,185, Uses of Funds Refunding Cost... $ 16,755, Purchaser s Discount , Costs of Issuance , Total Uses of Funds... $ 17,185, THE REFUNDING PLAN A portion of the proceeds from the Series 2014 Bonds, with funds of the Board, will be used to currently refund all of the outstanding University Facilities System Revenue Bonds, Series 2004 issued in the original aggregate principal amount of $16,970,000 and outstanding in the principal amount of $16,755,000. Upon the sale and delivery of the Series 2014 Bonds, proceeds of the Series 2014 Bonds will be deposited into the Bond Account in an amount sufficient, without any earnings thereon but with amounts already deposited therein and amounts released from the Series 2004 Bond Reserve Subaccount, to redeem all of the Series 2004 Bonds on December 26, NORTHEASTERN ILLINOIS UNIVERSITY,UNIVERSITY FACILITIES SYSTEM DESCRIPTION OF SYSTEM FACILITIES The following Existing Facilities comprise the University Facilities System: Parking Facilities. The parking operations are an auxiliary service within the System and are funded primarily through user fees and parking violation fines. 16

23 The following tables set forth the parking rates and parking revenues for use of the parking facilities for the Fiscal Years ended June 30, 2010 through Parking Rates Fiscal Year (Ending June 30) Level I Rates Annual (12 Months) $ $ $ $ $ Academic Year (9 Months) $ $ $ $ $ Semester (3 terms/year) $ $ $ $ $ Permits Sold Level II Rates Employee Annual (12 Months) $ $ $ $ $ Student Semester ($/credit hour) * $12.50 $12.50 $12.20 $12.00 $11.45 Semester (3 terms/year) $ $ $ $ $ Permits Sold 13,130 15,692 18,462 19,099 20,041 Daily Permits ** $5.00 $5.00 $5.00 $5.00 $5.00 Permits Sold 30,369 28,216 24,769 20,250 22,267 * Students pay by the credit hours taken per semester, up to 16 credit hours. ** Daily Permits are $2.00 if purchased in bulk. Parking Revenues* Fiscal Year (Ending June 30) Level I Revenue $ 170,793 $ 173,894 $ 182,705 $ 180,153 $ 185,488 Level II Revenue 1,830,859 1,851,605 1,958,752 2,075,725 2,013,969 Daily Permit Revenue 190, , , , ,338 Meter Revenue 4,190 6,343 5,833 6,413 7,267 Parking Fines Collected 108, , , , ,366 Total Revenue $ 2,305,666 $ 2,412,353 $ 2,488,349 $ 2,576,962 $ 2,504,428 * Sum may not equal total due to rounding. At its November 13, 2014 meeting, the Board approved a $1.00 per credit hour decrease in the parking fee and the implementation of a new Campus Improvement fee of $1.00 per credit hour. These changes will take effect beginning in fall semester The Student Union. The Student Union is the focal point of the activity programs on campus. It is the site of lectures, discussions, concerts, dances, meetings and other activities, utilizing the meeting rooms, food services and other facilities. Students are charged a Student Union Fee based on the number of credit hours, up to 16 credit hours, for which they enroll. Total Student Union Fees, less exemptions, for the past five Fiscal Years are set forth in the following table Student Union Fees $1,301,749 $1,402,457 $1,487,054 $1,556,608 $1,545,844 17

24 Bookstore. The bookstore is operated by the Beck s Book Stores Inc. pursuant to a renewed contract for a term of 10 years commencing June 1, Under the contract, the University receives concession fees at a rate of 8.5% on the first $2,000,000 of bookstore net sales, a rate of 9.0% on the next $2,000,000 of net sales, and a rate of 9.5% on all net sales above $4,000,000. Under the previous contract that included the five years prior to June 1, 2011, the University received concession fees at an annual percentage of bookstore net sales equal to 8.0%. The following table sets forth the concession fees to the University from the bookstore for the past five Fiscal Years Concession Fees $321,907 $318,421 $336,515 $361,394 $389,215 Vending Facilities. Vending machines are conveniently located throughout the University to provide a wide variety of food and beverage items. Vending operations are provided by industry leading, nationally recognized vendors. Pepsi Co. handles the full service vending of all cold canned and bottled beverages. Canteen Inc. is now responsible for the vending of all cold food, candy, snacks, and hot beverages. In addition, Canteen Inc. provides ancillary equipment such as dollar bill changers and microwave ovens at agreed-to locations. Vending purchases are primarily cash transactions with a limited number of cold beverage machines fitted with card readers for credit/debit card use. The vending operation generates revenue in the form of commissions on soft drink sales and profit sharing on sales of food items. Current vending expenses consist primarily of electricity costs, administrative costs, and limited support costs. Currently the University receives a 50% commission on the sale of beverages and receives 50% of net profits on the sale of cold food, candy, snacks, and hot beverages. The following table sets forth the vending sales to the University for the past five Fiscal Years Sales $129,489 $125,991 $132,365 $144,154 $119,877 18

25 HISTORICAL PRO FORMA DEBT SERVICE COVERAGE The following table shows debt service coverage from all pledged revenue for the past four Fiscal Years REVENUES AND OTHER ADDITIONS Student Union fees net of refunds... $ 1,301,749 $ 1,402,457 $ 1,487,054 $ 1,556,608 Interest subsidy U.S. Department of H.U.D ,000 70,000 70,000 Rental and use fees... 3,145 5,005 3,585 34,673 Interest income... 8,085 41,133 31,314 39,364 Bookstore commission fees , , , ,394 Parking revenue... 2,305,666 2,412,353 2,488,349 2,576,962 Vending revenue , , , ,154 Miscellaneous income... (3,957) 8,353 44,562 77,730 Total revenues and other additions... $ 4,066,084 $ 4,488,713 $ 4,593,744 $ 4,860,885 EXPENDITURES AND OTHER DEDUCTIONS Personal services... $ 1,226,484 $ 1,132,882 $ 1,069,661 $ 1,350,820 Resale items... 4,635 9,359 11,493 7,445 Contractual services... 1,095, , , ,720 Commodities ,656 55,590 86, ,362 Telecommunications... 6,579 5,707 7,328 5,584 Depreciation and amortization , , , ,420 Miscellaneous expenses , , , ,868 Total Expenditures and Other Deductions... $ 3,645,660 $ 3,242,986 $ 3,500,331 $ 3,642,219 Net revenues before depreciation and amortization ,424 1,245,727 1,093,413 1,218,666 Depreciation and amortization , , , ,420 Net Revenues (1)... 1,116,132 1,943,078 1,787,163 1,941,086 Pledged Fees and Pledged Tuition... 61,073,493 62,848,672 64,175,683 62,542,173 Net Revenues and Funds Pledged for Debt Service... $ 63,305,757 $ 66,734,828 $ 67,750,009 $ 66,424,345 Historical Maximum Annual Debt Service (in BY 2031)... $ 1,312,020 $ 1,312,020 $ 1,312,020 $ 1,312,020 Historical coverage ratio x 50.9x 51.6x 50.6x Pro Forma Maximum Annual Debt Service (in BY 2032) (2)... $ 2,544,800 $ 2,544,800 $ 2,544,800 $ 2,544,800 Pro Forma Historical Coverage Ratio (2) x 26.2x 26.6x 26.1x (1) (2) Depreciation and amortization are not deducted from funds available to pay debt service in accordance with the definition of Net Revenues in the Bond Resolution. Pro Forma Maximum Annual Debt Service includes debt service on both the Series 2004 Bonds and the Series 2014 Bonds. Following the expected redemption of all of the Series 2004 Bonds on December 26, 2014, Maximum Annual Debt Service will be $1,234,000 in BY2032. At that time, the pro forma historical coverage ratios will be 51.3x (2014), 54.1x (2013), 54.9x (2012), and 53.8x (2011). 19

26 SUMMARY OF CERTAIN PROVISIONS OF THE ORIGINAL BOND RESOLUTION The following is a summary of certain provisions of the Original Bond Resolution, to which reference is made for a complete statement of the provisions or contents thereof. The discussion herein is qualified by such reference. The Original Bond Resolution will be superseded by the Restated Bond Resolution at such time as the Series 2004 Bonds are no longer outstanding, currently expected to be December 26, See SUMMARY OF CERTAIN PROVISIONS OF THE RESTATED BOND RESOLUTION for a summary of the terms that will be applicable to the Series 2014 Bonds and Parity Bonds after the effective date of the Restated Bond Resolution. FLOW OF FUNDS The Gross Revenues of the System will be deposited as soon as practicable after receipt thereof by the Treasurer in a separate and special account of the University known as the Revenue Fund, which account will be maintained at the Depositary. The Treasurer also will deposit to the credit of the Revenue Fund such Pledged Fees and such Pledged Tuition as are necessary, together with Gross Revenues, to meet (i) operating and maintenance expenses of the System, (ii) together with amounts paid with respect to the Series 2004 Bonds, the Series 2014 Bonds and Parity Bonds and (iii) required deposits to the subaccounts of the Bond Reserve Account, all as provided in the Original Bond Resolution. All moneys credited to the funds and accounts established pursuant to the Original Bond Resolution will be used and held for use only in the manner and in the order designated below. Operation and Maintenance Account. On the first day of each calendar month, the Treasurer shall transfer from the Revenue Fund to the Operation and Maintenance Account a sum of money as shall be determined by the Board necessary to pay the estimated expenses of the operation and maintenance of the System during the ensuing month under efficient and economical management, which shall include adequate provision for insurance, audit, ordinary maintenance and repair and any fees due the Registrar. Bond Account. After making the transfer to the Operation and Maintenance Account, the Treasurer shall transfer from the Revenue Fund to the Bond Account on the first day of each month an amount of money equal to not less than (i) one-sixth of the interest coming due on the next succeeding interest payment date on the Series 2004 Bonds, the Series 2014 Bonds and Parity Bonds falling due on the next succeeding interest payment date and (ii) one-twelfth of the principal of the Series 2004 Bonds, the Series 2014 Bonds and Parity Bonds falling due on the next succeeding principal payment date All moneys transferred to the Bond Account shall be used solely and only for the payment of the Series 2004 Bonds, the Series 2014 Bonds and Parity Bonds and the interest thereon. Not less than 15 days prior to each July 1 and January 1 of each Fiscal Year, the Treasurer shall deposit with the Registrar moneys sufficient to pay the interest and principal due on the Series 2004 Bonds, the Series 2014 Bonds and Parity Bonds on each payment date. Bond Reserve Account. See the information under the caption SECURITY FOR THE BONDS Series 2004 Bond Reserve Subaccount. Repair and Replacement Reserve Account. On or before July 1 and January 1 in each Fiscal Year, after the transfers to the Operation and Maintenance Account, Bond Account and Bond Reserve Account, respectively, the Treasurer shall transfer from the Revenue Fund to the Repair and Replacement Reserve Account a sum of money equal to not less than the greater of (i) $25,000 or (ii) the pro rata amount of the estimated cost of the acquisition and installation of such furnishings and 20

27 equipment as may be needed in the System to repair and replace the existing furnishings and equipment, as calculated by the Board in relation to the estimated life of such furnishings and equipment to be acquired and installed, until the amounts so accumulated in the Repair and Replacement Reserve Account are equal to the greater of (i) $500,000 or (ii) the actual cost of repairing and replacing the existing furnishings and equipment in the System. Moneys in the Repair and Replacement Reserve Account shall be used to pay the cost of unusual or extraordinary maintenance or repairs, renewals and replacements in, on or about the System, including the repair and replacement of the furnishings and equipment therein, not paid or defrayed as an ordinary and normal operation and maintenance expense for the System. Whenever moneys in the Bond Account and the Bond Reserve Account shall be reduced below the amount required to meet current debt service on the Series 2004 Bonds, the Series 2014 Bonds and Parity Bonds, the Treasurer shall transfer from the Repair and Replacement Reserve Account to the Bond Account such amounts as are necessary to prevent or remedy a default in the payment of interest on or principal of the Series 2004 Bonds, the Series 2014 Bonds and Parity Bonds. All moneys so transferred will thereafter be reimbursed by a resumption of the semiannual transfers described above to the Repair and Replacement Reserve Account. Moneys and investments to the credit of the Repair and Replacement Reserve Account are not pledged as security for the payment of the Bonds. Non-Instructional Facilities (Development) Reserve Account. On or before the Close of each Fiscal Year the Treasurer will, from the funds remaining in the Revenue Fund, credit to the Non- Instructional Facilities (Development) Reserve Account such funds as have been approved by the Board for expenditure or planned for expenditure for new space or construction in, or an addition to, a facility constituting a part of the System, and contiguous real estate thereto, consistent with the purpose and mission of that facility. Moneys or investments to the credit of such Account are not pledged as security for the payment of the Series 2004 Bonds, the Series 2014 Bonds or Parity Bonds, but they may be used to remedy deficiencies in the Bond Account. Equipment Reserve Account. On or before the Close of each Fiscal Year, the Treasurer will, from the funds remaining in the Revenue Fund, credit to the Equipment Reserve Account such funds as have been approved by the Board for expenditure in connection with the acquisition of movable equipment to be installed in the facilities constituting the System. The maximum amount which may be accumulated to the credit of such Account shall not exceed 20% of the book value of the movable equipment of the System. Moneys or investments to the credit of the Equipment Reserve Account are not pledged as security for the payment of the Series 2004 Bonds, the Series 2014 Bonds or Parity Bonds, but they may be used to remedy deficiencies in the Bond Account. Remaining Revenues. Any moneys remaining in the Revenue Fund at the end of each Fiscal Year, after all required transfers as described above have been made, shall be deemed Surplus Revenues, and may be used for any lawful purpose as the Board by resolution shall direct. Investment of Revenue Funds and Accounts. The moneys in the Bond Account, the Bond Reserve Account and the Repair and Replacement Reserve Account shall be invested or reinvested by the Treasurer upon order and direction of the Board in direct obligations of, or obligations the principal of and interest on which are fully guaranteed by, the United States of America. Money in the Bond Account not immediately required for payment of debt service may be invested in such obligations maturing in not more than six months. Money in the Bond Reserve Account and the Repair and Replacement Reserve Account may be invested in such obligations maturing in not more than five 21

28 years and ten years, respectively. Obligations so purchased shall be deemed at all times to be a part of the Account for which they were purchased and all interest accruing thereon and any profit realized from such investments shall be paid to the Revenue Fund. All other moneys credited to the other accounts in the Revenue Fund may be invested or reinvested at the direction of the Treasurer in any investments permitted by the laws of the State of Illinois for the investment of public funds and all income thereon or profit therefrom shall be credited to the Revenue Fund. All such securities so purchased shall mature or be redeemable on a date or dates prior to the time when such moneys so invested will be required for expenditure. GENERAL COVENANTS Under the provisions of the Original Bond Resolution, the Board covenants and agrees with the holders of the Series 2004 Bonds, the Series 2014 Bonds and Parity Bonds, as follows: (1) Title to Project Sites. The Board will have an indefeasible title in fee simple to the site or sites of the System; and it will not sell, lease, mortgage, pledge or otherwise dispose of or encumber the System, or the site or sites thereof, or any part thereof, including any facility necessary to the operation and use thereof, until all of the Series 2004 Bonds, the Series 2014 Bonds and Parity Bonds have been fully paid in accordance with their terms; provided that, while any of the Series 2004 Bonds, the Series 2014 Bonds and Parity Bonds remain outstanding, any one or more or any combination of the buildings, structures or facilities comprising the System: (i) may be abandoned when declared non-income producing because destroyed, worn out, obsolete or otherwise physically or structurally unfit for the use and occupancy thereof for which the same were initially acquired; or (ii) may be converted to non-income use for administrative, academic or other purposes when declared not to be suitable for the use and occupancy thereof for which the same were initially acquired; provided further, that such declaration shall be evidenced by a resolution duly adopted by the Board and filed with the Treasurer, upon the filing of a certificate of the Treasurer showing that the Net Revenues of the System, not including Net Revenues derived from the building, structure or facility to be so abandoned or converted, in each of the two then preceding Fiscal Years prior to the date of the adoption of such resolution providing for the abandonment or conversion thereof, have been equal to not less than 125% of the maximum amount of principal and interest coming due in any future Fiscal Year on the Series 2004 Bonds, the Series 2014 Bonds and Parity Bonds then outstanding. (2) Operation. The Board will maintain and preserve and keep the System in good repair, working order and condition so that the System will at all times be available for maximum use and occupancy, and it will at all times continuously operate and manage the System in an efficient and economical manner. (3) Rate Covenant. See SECURITY FOR THE BONDS Rate Covenant. (4) Parietal Rules. Notwithstanding any other facilities which now or at any time hereafter may be available for students and faculty of the University, the Board will require and adopt parietal rules and regulations designed to assure the maximum use of the System until all 22

29 of the Series 2004 Bonds, the Series 2014 Bonds and Parity Bonds have been fully paid as to both principal and interest. (5) Insurance. (a) The Board will keep the System, including furnishings, equipment and facilities, in good usable condition and continuously insured against loss or damage by fire and lightning, the perils included under the extended coverage endorsement, and boiler explosion if boilers are installed in the System, in a responsible insurance company or companies, authorized and qualified under the laws of the State of Illinois to assume such risks, in amounts sufficient to provide for not less than full recovery whenever the loss from causes covered by such insurance does not exceed 80% in the aggregate of the full insurable value of the System so damaged. All moneys collected on account of loss or damage covered by any such policy or policies of insurance shall be used only for reconstruction, replacement or repairs, and the Board covenants in the event of any loss or damage to the System, to reconstruct, replace or repair the damaged portion thereof promptly and without any delay. Any moneys received from such insurance remaining upon the completion of such reconstruction, replacement or repair shall be deposited in the Revenue Fund. In the event said moneys so received are insufficient to restore the System to its former condition for maximum use and occupancy, then said moneys shall be deposited in the Bond Account and held for the benefit of the holders of the Series 2004 Bonds, the Series 2014 Bonds and Parity Bonds as their interests may appear. (b) The Board further covenants and agrees that whenever, and so long as, the funds and investments in the Bond Account and the Bond Reserve Account are inadequate to meet the then current year s debt service requirements on the Series 2004 Bonds, the Series 2014 Bonds and Parity Bonds then outstanding, it shall procure and maintain Use and Occupancy Insurance on the System, in an amount sufficient to enable the Board to deposit in the Bond Account and the Bond Reserve Account, out of the proceeds of such insurance, an amount equal to the sum that would normally be available for deposit in each such Account from the revenues of the damaged System during the time the damaged System is non-revenue producing as a result of loss of use caused by fire and lightning, the perils covered by said fire and extended coverage insurance, and boiler explosion if boilers are servicing the System. To the extent the Board does not enjoy sovereign immunity under the laws of the State of Illinois, it will procure and maintain Public Liability Insurance with limits of not less than $100,000 for one person and $300,000 for more than one person involved in one accident, to protect the Board and/or officers, agents and employees of the University from claims for bodily injury and/or death which may arise from the operation of the System, including any use or occupancy of grounds, structures and vehicles in connection therewith. (6) Records and Audit. The Board will keep proper books of records and accounts (separate from all other records and accounts of the Board) in which complete and correct entries shall be made of all expenditures for maintaining, operating and repairing the System and all income and revenues collected therefrom. As soon as possible after the Close of each Fiscal Year, audit reports shall be prepared by an independent public accountant or by the Auditor General of the State of Illinois, reflecting in reasonable detail the financial condition of the Board and the operation of the System in accordance with the covenants of the Bond Resolution. Such audit reports shall particularly include a schedule of all insurance then in 23

30 force, the enrollment at the University, the occupancy of and the rates charged for the use of the System, and the status of each Account under the Original Bond Resolution. Modifications. The holders of 65% in principal amount of the Series 2004 Bonds, the Series 2014 Bonds and Parity Bonds at any time outstanding (not including in any case any such Bonds which may then be held or owned by or for the account of the Board or the University), with the consent of the Series 2004 Bond Insurer, shall have the right from time to time to consent to and approve the adoption by the Board of a resolution or resolutions modifying or amending any of the terms or provisions contained in the Original Bond Resolution, providing, however, that the Original Bond Resolution may not be so modified or amended in such manner as to: (a) make any change in the maturity of the Series 2004 Bonds, the Series 2014 Bonds or Parity Bonds; (b) make any change in the rate of interest borne by any of the Series 2004 Bonds, the Series 2014 Bonds or Parity Bonds; (c) reduce the amount of the principal of, or redemption premium payable on, the Series 2004 Bonds, the Series 2014 Bonds or Parity Bonds; (d) modify the terms of payment of the principal of, or the interest or redemption premiums on, the Series 2004 Bonds, the Series 2014 Bonds or Parity Bonds, or any of them, or impose any conditions with respect to such payment; (e) create any lien on or pledge of the income and revenues described in the Original Bond Resolution ranking prior to the lien thereon and pledge thereof created by the Original Bond Resolution; (f) create any preference or priority of any Series 2004 Bond, Series 2014 Bond or Parity Bond over any other such bond of the same or different series; (g) reduce the percentage of the Series 2004 Bonds, the Series 2014 Bonds or Parity Bonds required in the Original Bond Resolution for the approval of any amendatory resolution; or (h) affect the rights of the holders of less than all of the Series 2004 Bonds, the Series 2014 Bonds or Parity Bonds then outstanding. Defeasance. If the Board shall pay or provide for the payment of the entire indebtedness on all the Series 2004 Bonds, the Series 2014 Bonds or Parity Bonds Outstanding in any one or more of the following ways and if the Board shall also pay or cause to be paid all other sums payable under the Original Bond Resolution by the Board, then the Original Bond Resolution and the estate and rights granted thereunder shall cease, determine and become null and void: (a) by paying or causing to be paid the principal of (including redemption premium, if any) and interest on all Outstanding Series 2004 Bonds, the Series 2014 Bonds and Parity Bonds, as and when the same become due and payable; (b) by depositing with the Registrar, in trust, at or before maturity, moneys and/or Government Securities in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) all outstanding Series 2004 Bonds, Series 2014 Bonds and Parity Bonds (including the payment of premium, if any, and interest payable on such Series 2004 Bonds, Series 2014 Bonds and Parity Bonds to the 24

31 maturity or redemption date thereof), provided that such moneys, if invested, shall be invested in Government Securities in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Outstanding Series 2004 Bonds, Series 2014 Bonds and Parity Bonds at or before their respective maturity dates; it being understood that the investment income on such Government Securities may be used for any other purpose under the Act; (c) by delivering to the Registrar, for cancellation by it, all Outstanding Series 2004 Bonds, Series 2014 Bonds and Parity Bonds; or (d) by depositing with the Registrar, in trust, moneys and/or Government Securities in such amount as the Registrar shall determine will, together with other moneys deposited therein and together with the income or increment to accrue thereon, without consideration of any reinvestment thereof, be fully sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Series 2004 Bonds, Series 2014 Bonds or Parity Bonds at or before their respective maturity dates. Remedies. Any Owner of any Series 2004 Bond, Series 2014 Bond or Parity Bond may either by action at law or in equity compel the Board to perform all duties imposed upon it under the provisions of the Original Bond Resolution and the Act and the performance of any and all covenants made by the Board in the Original Bond Resolution. The Series 2004 Bond Insurer, acting alone, shall have the right to direct all such remedies with respect to the Series 2004 Bonds. The Series 2004 Bond Insurer shall be recognized as the registered owner of each Series 2004 Bond for the purposes of exercising all rights and privileges available to Bondholders. With respect to the Series 2004 Bonds, the Series 2004 Bond Insurer shall have the right to institute any suit, action, or proceeding at law or in equity under the same terms as a Bondholder in accordance with the Original Bond Resolution. Contractual Obligations. The provisions of the Original Bond Resolution and of each section and subsection thereof shall constitute a contract by and between the Board and the holder or holders of the the Series 2004 Bonds, Series 2014 Bonds and Parity Bonds or any of them, and after delivery of any such bonds no change, alteration or amendment of any provision of the Original Bond Resolution or of any section or subsection thereof shall be made which will impair the interests of the holder or holders of all of the Series 2004 Bonds, Series 2014 Bonds or Parity Bonds then outstanding. SUMMARY OF CERTAIN PROVISIONS OF THE RESTATED BOND RESOLUTION The following is a summary of certain provisions of the Restated Bond Resolution, to which reference is made for a complete statement of the provisions or contents thereof. The discussion herein is qualified by such reference. The Restated Bond Resolution will become effective on the date on which no Series 2004 Bonds remain outstanding, currently scheduled on December 26, PLEDGE OF REVENUES AND INCOME The Bonds are payable from and secured by a pledge of and lien on the following sources: (i) the Net Revenues; (ii) the Pledged Fees, but subject to the prior payment of operating and maintenance expenses of the System, but only to the extent necessary (iii) the Pledged Tuition, but subject to the prior payment of operating and maintenance expenses of the System, but only to the extent necessary; and (iv) the funds held in the Bond Fund. 25

32 All of the Bonds shall be equally and ratably secured by said pledge and lien without priority or preference one over the other by reason of series designation, denomination, number, maturity, date or terms of redemption prior to maturity, date of sale or delivery or otherwise; it being the intent hereof that all of the Bonds are co-equal as to such pledge and lien, as aforesaid, securing the payment thereof. FLOW OF FUNDS The Gross Revenues of the System will be collected by the Board and segregated from all other moneys of the Board and deposited as soon as practicable after receipt thereof by the Treasurer in a separate and special account of the University known as the Revenue Fund, which account will be maintained at the Depositary. The Treasurer also will deposit to the credit of the Revenue Fund such Pledged Fees and such Pledged Tuition as are necessary, together with Gross Revenues, to meet (i) operating and maintenance expenses of the System and (ii) Annual Debt Service on the Bonds. All moneys credited to the funds and accounts established pursuant to the Bond Resolution will be used and held for use only in the manner and in the order designated below. Operation and Maintenance. Current expenses of the System will be payable from the Revenue Fund as the same become due and payable. Such expenses will include all necessary operating expenses, current maintenance charges, expenses of reasonable upkeep and repairs, equipment purchases, fees due the Bond Registrar, an adequate provision for insurance, and all other expenses incident to the operation of the System. At the end of the Fiscal Year, the Treasurer may retain in the Revenue Fund moneys sufficient for operation and maintenance expenses for the next 30 days and to maintain an operating reserve therein not to exceed an amount equal to operation and maintenance expenses for one month. Bond Fund. The Board has established and covenants and agrees to maintain a separate fund, to be known as the Bond Fund (the Bond Fund ) with the Bond Registrar into which will be deposited all funds transferred therein pursuant to the Bond Resolution. On or before the business day before each January 1 and July 1 (or such other interest payment dates and principal payment dates as shall be provided for a series of Bonds in the supplemental resolution authorizing such Bonds), after payment of operating and maintenance expenses of the System then due, the Treasurer shall transfer and deposit to the credit of the Bond Fund such amounts which, when added to the balance therein, will be sufficient to equal the interest and principal due on the Bonds on the next interest payment date or principal payment date. The Bond Registrar shall use moneys in the Bond Fund to pay the interest due on the Bonds then Outstanding on the next interest payment date and the principal of the Bonds when due. All moneys credited to the Bond Fund shall be and are irrevocably pledged to and shall be used solely for the payment of the principal and interest on the Bonds. Notwithstanding the foregoing, if any such Bonds bear, or are expected to bear, interest at a Variable Rate, the Treasurer shall transfer amounts to the Bond Fund to pay interest on such Bonds at such times and in such amounts as set forth in the supplemental resolution authorizing such Bonds. The moneys in the Bond Fund shall be invested or reinvested by the Bond Registrar upon the request of the Treasurer, in Permitted Investments. Investment income therefrom shall be credited to the Bond Fund and used for the next interest payment on the Bonds. Repair and Replacement Reserve Account. The Board has established and covenants and agrees to maintain a separate account to be known as the Repair and Replacement Reserve Account (the Repair and Replacement Reserve Account ) with the Depository into which will be deposited all 26

33 funds transferred therein pursuant to the Bond Resolution. On or before the Close of each Fiscal Year, the Treasurer will, from the funds remaining in the Revenue Fund, credit to the Repair and Replacement Reserve Account such funds as have been approved by the Board for credit to a repair and replacement reserve. The maximum amount which may be accumulated in such Account, including investments thereof, shall not exceed 5% of the replacement cost of the facilities constituting the System, as determined by the then current Engineering News Record Building Cost Index (or comparable index), plus either 10% of the historical cost of the parking lots which are part of the System or 100% of the estimated cost of resurfacing any one existing parking lot which is part of the System, or such larger amount and percentages as may be determined by the Board from time to time. All moneys and investments so held in said Account will be used and held for use to pay the costs of unusual or extraordinary maintenance or repairs, renewals and replacements, and renovating or replacement of the facilities constituting the System or replacement of fixed equipment not paid as part of the ordinary maintenance and operation of the System. The Treasurer may also credit to the Repair and Replacement Reserve Account proceeds of insurance and awards from claims which replace funds in such Account used to repair or rehabilitate the part of the System damaged or destroyed. Moneys and investments to the credit of the Repair and Replacement Reserve Account are not pledged as security for the payment of the Bonds. In the event the moneys in the Bond Fund are reduced at any time below the amounts required to be on deposit therein, then the funds so credited to the Repair and Replacement Reserve Account may be transferred by the Treasurer for deposit in the Bond Fund to the extent required to eliminate the deficiency in the Bond Fund and to restore such sums as may be necessary for that purpose, and all moneys so transferred will thereafter be replaced by a resumption of the specified credits to the Repair and Replacement Reserve Account. Non-Instructional Facilities (Development) Reserve Account. On or before the Close of each Fiscal Year the Treasurer will, from the funds remaining in the Revenue Fund, credit to the Non-Instructional Facilities (Development) Reserve Account such funds as have been approved by the Board for expenditure or planned for expenditure for new space or construction in, or an addition to, a facility constituting a part of the System, and contiguous real estate thereto, consistent with the purpose and mission of that facility. Moneys or investments to the credit of such Account are not pledged as security for the payment of the Bonds, but they may be used to remedy deficiencies in the Bond Fund. Equipment Reserve Account. On or before the Close of each Fiscal Year, the Treasurer will, from the funds remaining in the Revenue Fund, credit to the Equipment Reserve Account such funds as have been approved by the Board for expenditure in connection with the acquisition of movable equipment to be installed in the facilities constituting the System. The maximum amount which may be accumulated to the credit of such Account shall not exceed 20% of the book value of the movable equipment of the System. Moneys or investments to the credit of the Equipment Reserve Account are not pledged as security for the payment of the Bonds, but they may be used to remedy deficiencies in the Bond Fund. Disposition of Residual Funds in the Revenue Fund. At the Close of each Fiscal Year and after all transfers and maximum deposits hereinabove described shall have been made, and after any deficiencies in any such transfers and deposits which may exist from any previous Fiscal Year shall have been remedied, the balance of any excess funds in the Revenue Fund then remaining shall be deemed surplus revenues, and may be used by the Board for any lawful purpose as the Board by resolution shall direct. 27

34 All moneys in the other accounts in the Revenue Fund, other than the Bond Fund, may be invested or reinvested at the direction of the Treasurer in any Permitted Investments and all income thereon or profit therefrom shall be credited to the Revenue Fund. All such securities so purchased shall mature or be redeemable on a date or dates prior to the time when such moneys so invested will be required for expenditure. Investment of Revenue Funds and Accounts. All other moneys credited to the other accounts in the Revenue Fund may be invested or reinvested at the direction of the Treasurer in any investments permitted by the laws of the State of Illinois for the investment of public funds and all income thereon or profit therefrom shall be credited to the Revenue Fund. All such securities so purchased shall mature or be redeemable on a date or dates prior to the time when such moneys so invested will be required for expenditure. GENERAL COVENANTS So long as any of the Bonds are Outstanding, the Board expressly covenants and agrees with the Owner or Owners of the Bonds as follows: Title. The Board will have an indefeasible title in fee simple to the sites of the System, subject only to Permitted Encumbrances, and it will not sell, lease, mortgage, pledge or otherwise dispose of or encumber the System, or the sites thereof, or any part thereof, until all of the Bonds have been fully paid in accordance with their terms; provided that any one or more or any combination of the buildings, structures or facilities comprising the System: (1) may be abandoned or sold, when determined by the Board not to be income producing because destroyed, worn out, obsolete or otherwise physically or structurally unfit for the use or occupancy thereof for which the same was initially acquired, or (2) when determined by the Board not to be suitable for the use and occupancy thereof for which the same was initially acquired, may be converted to non-income use for administrative, academic or other purposes. A copy of the resolution or resolutions of the Board making such determination shall be filed with the Treasurer. Operation of the System. The Board will maintain, preserve and keep the System in good repair, working order and condition and will make any and all necessary repairs, renewals, replacements and additions thereto so that the System will at all times be available for maximum use and occupancy, and it will at all times operate and manage the System in an efficient and economical manner. Rate Covenant. See SECURITY FOR THE BONDS Rate Covenant. Insurance. The Board will keep the System, including furnishings, equipment and facilities, in good usable condition and continuously insured against loss or damage by fire and lightning, the perils included under the extended coverage endorsement, and boiler explosion if boilers are installed in the System, by a responsible insurance company or companies, authorized and qualified under the laws of the State of Illinois to assume such risks, in amounts sufficient to provide for not less than full recovery whenever the loss from causes covered by such insurance does not exceed 80% in the aggregate of the full insurable value of the portion of the System so damaged. All moneys collected on account of loss or damage covered by any such policy or policies of insurance shall be used only for reconstruction, replacement or repair of the System facilities, and the Board covenants, in the event of any loss or damage to the System, to reconstruct, replace or repair the damaged portion thereof promptly and without any delay. Any moneys received from such insurance remaining upon the completion of such reconstruction, replacement or repair shall be deposited in the 28

35 Revenue Fund. In the event said moneys so received are insufficient to restore the System to its former condition for maximum use and occupancy, then said moneys shall be deposited in the Bond Fund and applied in accordance with the related Tax Exemption Certificate and Agreement, and held for the benefit of the holders of the Bonds as their interests may appear. To the extent the Board does not enjoy sovereign immunity under the laws of the State of Illinois, it will procure and maintain public liability insurance with limits of not less than $100,000 for one person and $300,000 for more than one person involved in one accident, to protect the Board and/or officers, agents and employees of the University from claims for bodily injury and/or death which may arise from the operation of the System, including any use or occupancy of grounds, structures and vehicles in connection therewith. Records and Audit. The Board will keep proper books of records and accounts (separate from all other records and accounts of the Board) in which complete and correct entries shall be made of all expenditures for maintaining, operating and repairing the System and all income and revenues collected therefrom. As soon as possible after the Close of each Fiscal Year, audit reports shall be prepared by an independent public accountant or by the Auditor General of the State of Illinois, reflecting in reasonable detail the financial condition of the Board and the operation of the System in accordance with the covenants of the Bond Resolution. Such audit reports shall particularly include a schedule of all insurance then in force, the enrollment at the University, the rates charged for the use of the System, and the status of each Fund and Account under the Bond Resolution. The Treasurer will provide a copy of each such audit report to each Bond Insurer. Modifications with Consent of Owners. The Owners of a majority in original principal amount of the Bonds at any time Outstanding or, if a change relates to less than all Bonds, the Owners of a majority in original principal amount of the series of Bonds at any time Outstanding affected by such change (not including any Bonds which may then be held or owned by or for the account of the Board or the University unless 100% of such Bonds are so owned), shall have the right from time to time to consent to and approve the adoption by the Board of a resolution or resolutions modifying or amending any of the terms or provisions contained in the Bond Resolution; provided, however, that, without the consent of the Owners of all Outstanding Bonds affected thereby, the Bond Resolution may not be so modified or amended in such manner as to: (a) make any change in the maturity of any Bonds; (b) make any change in the rate of interest borne by any of the Bonds; (c) reduce the amount of the principal of, or redemption premium payable on, any of the Bonds; (d) modify the terms of payment of the principal of, or the interest or redemption premium, if any, on the Bonds, or any of them, or impose any conditions with respect to such payment; (e) create any lien on or pledge of the income and revenues described in Section 9 hereof ranking prior to the lien thereon and pledge thereof created by the Bond Resolution; (f) create any preference or priority of any Bond or Bonds of the same or different series, over any other Bond or Bonds of the same or different series, authorized under the Bond Resolution; 29

36 (g) reduce the percentage of Bonds the Owners of which are herein required for the approval of any amendatory resolution; or (h) affect the rights of the Owners of less than all of the Bonds then Outstanding, unless such amendment or modification shall be applicable only to a particular series of Bonds and the Owners of a majority in original principal amount of such series of Bonds shall have consented to such amendment or modification. Whenever at any time there shall be filed in the office of the Treasurer the consent of the Owners of at least a majority (or, if applicable, 100%) in aggregate original principal amount of the Bonds then Outstanding as in this Section defined, thereupon, but not otherwise, such amendatory resolution shall become effective. It shall not be necessary for the consent of the Owners of the Bonds to approve the particular form of any supplemental resolution, but it shall be sufficient if such consent shall approve the substance thereof. Owners of Bonds shall be deemed to have consented to such amendments if the official statement or other disclosure document pursuant to which such Bonds are offered and sold specifically describes such amendment and states that by purchasing such Bonds, such Owners and any subsequent Owners shall be deemed to have consented to such amendment for purposes of this section. Any consent given by the Owner of a Bond pursuant to the provisions of this section shall be irrevocable and shall be conclusive and binding upon all future Owners of the same Bond. The fact and date of the execution of any consent under the provisions of this Section may be proved by the certificate of any officer in any jurisdiction who by the laws thereof is authorized to take acknowledgments of deeds within such jurisdiction, that the person signing such consent acknowledged before him the execution thereof, or may be proved by any affidavit of a witness to such execution sworn to before such officer. Modifications without Consent of Owners. Notwithstanding the provisions stated in above under Modifications with Consent of Owners, the Board may, from time to time and at any time, without the consent of or notice to the Owners of the Bonds, amend the Bond Resolution to: (a) Resolution; cure any formal defect, omission, inconsistency or ambiguity in the Bond (b) add to the covenants and agreements of, and limitations and restrictions upon, the Board under the Bond Resolution other covenants, agreements, limitations and restrictions to be observed by the Board which are not contrary to or inconsistent with the Bond Resolution as theretofore in effect; (c) confirm, as further assurance, any pledge under, and the subjection to any claim, lien or pledge created or to be created by, the Bond Resolution, or of any moneys, securities or funds held under the Bond Resolution; (d) provide for the issuance of additional Bonds; (e) modify, alter, amend or supplement the Bond Resolution to make appropriate provisions for the Board to enter into swap agreements, forward payment conversion agreements, agreements or contracts providing for payments based on levels or changes in 30

37 interest rates, to exchange cash flows or a series of payments based on levels of or changes in similar exposure between the Board and the provider of such agreement; (f) in connection with the issuance of Variable Rate Bonds, including provisions required for the delivery of credit enhancement or liquidity support for such Variable Rate Bonds; and (g) modify, alter, amend or supplement the Bond Resolution in any other respect, including amendments which would otherwise be described above under Modifications with Consent of Owners, if the effective date of such amendment is a date on which all then- Outstanding Bonds affected thereby (i) will no longer be Outstanding; (ii) are subject to mandatory purchase or (iii) are subject to demand for purchase and whose Owners have received notice of such proposed amendment at least 30 days before such effective date. Defeasance. If the Board shall pay or provide for the payment of the entire indebtedness on all Outstanding Bonds, in any one or more of the following ways by: (a) paying or causing to be paid the principal of (including redemption premium, if any) and interest on all Outstanding Bonds, as and when the same become due and payable; (b) depositing with the Bond Registrar, in trust, at or before maturity, moneys and/or Government Securities in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) all outstanding Bonds (including the payment of premium, if any, and interest payable on such Bonds to the maturity or redemption date thereof), provided that such moneys, if invested, shall be invested in Government Securities in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Outstanding Bonds at or before their respective maturity dates; it being understood that the investment income on such Government Securities may be used for any other purpose under the Act; or (c) delivering to the Bond Registrar, for cancellation by it, all Outstanding Bonds; (d) depositing with the Bond Registrar, in trust, moneys and/or Government Securities in such amount as the Bond Registrar shall determine will, together with other moneys deposited therein and together with the income or increment to accrue thereon, without consideration of any reinvestment thereof, be fully sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Bonds at or before their respective maturity dates; and if the Board shall also pay or cause to be paid all other sums payable hereunder by the Board, then and in that case the Bond Resolution and the estate and rights granted hereunder shall cease, determine and become null and void. All moneys, funds, securities or other property remaining on deposit in all funds and accounts established under the Bond Resolution (other than said moneys or Government Securities deposited in trust as above provided) shall, upon the full satisfaction of the Bond Resolution, forthwith be transferred, paid over and distributed to the Board. 31

38 The Board may at any time surrender to the Bond Registrar for cancellation by it any Bond previously authenticated and delivered which the Board may have acquired in any manner whatsoever, and such Bonds, upon such surrender and cancellation, shall be deemed to be paid and retired. Provision for Payment of a Particular Series of Bonds or Any Portion of Bonds. If the Board shall pay or provide for the payment of the entire indebtedness on the Bonds or on all Bonds of a particular series or any portion of a series, at any time in one of the following ways: (a) by paying or causing to be paid the principal of (including redemption premium, if any) and interest on all Bonds or Bonds of such series Outstanding or any such portion thereof, as and when the same shall become due and payable; (b) by depositing with the Bond Registrar, in trust, at or before maturity, moneys and/or Government Securities in an amount sufficient, without consideration of any income or increment to accrue thereon, to pay or redeem (when redeemable) all Outstanding Bonds or Bonds of such series or any such portion thereof (including the payment of premium, if any, and interest payable on such Bonds or Bonds to the maturity or redemption date), provided that such moneys, if invested, shall be invested in Government Securities in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Outstanding Bonds or Bonds of such series or any such portion thereof at or before their respective maturity dates; it being understood that the investment income on such Government Securities may be used for any other purpose under the Act; (c) by delivering to the Bond Registrar, for cancellation by it, such Bonds; or (d) by delivering to the Bond Registrar, in trust, moneys and/or Government Securities in such amount as the Bond Registrar shall determine will, together with other moneys deposited and together with the income or increment to accrue thereon without consideration of any reinvestment thereof, be fully sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Bonds or Bonds of such series or any such portion thereof at or before their respective maturity dates; and if the Board shall also pay or cause to be paid all other sums payable hereunder by the Board with respect to such series of such Bonds or any such portion thereof, and, if such Bonds of such series or any such portion thereof are to be redeemed prior to the maturity thereof or if provision for the payment of only a portion of the Bonds of a particular series is being made, notice, as the case may be, of such redemption or of such provision (which notice shall specify which individual Bonds are entitled to the benefit of such security) shall have been given as in the Bond Resolution provided or provisions satisfactory to the Bond Registrar shall have been made for the giving of such notice, such Bonds shall cease to be entitled to any lien, benefit or security under the Bond Resolution. The liability of the Board in respect to such Bonds shall continue but the Owners thereof shall thereafter be entitled to payment (to the exclusion of all other Owners of Bonds) only out of the moneys or Government Securities deposited with the Bond Registrar as aforesaid. Remedies. Any Owner of any Bond may, either by action at law or in equity, compel the Board to perform all duties imposed upon it under the provisions of the Bond Resolution and under the provisions of the Act, and the performance of any and all covenants made by the Board in and by the Bond Resolution. 32

39 Contractual Obligations. The Bond Resolution constitutes a contract between the Board and the Owners of the Bonds and shall remain in full force and effect so long as any of the Bonds remain Outstanding. As long as any of the Bonds remain Outstanding and unpaid either as to principal or interest or both, the Board will at all times exercise all of its lawful powers to preserve and protect the security of the Bonds and the rights of the Bondholders under the Bond Resolution. Rights of the Series 2014 Bond Insurer. Anything in the Bond Resolution to the contrary notwithstanding, upon a default under the Bond Resolution, the Series 2014 Bond Insurer shall be deemed to be the sole holder of the Series 2014 Bonds for all purposes and shall be entitled to control and direct the enforcement of all rights and remedies granted to the holders of the Series 2014 Bonds or to a trustee, paying agent, registrar or similar agent (a Trustee ) for the benefit of such holders under the Bond Resolution. Such Trustee may not waive any default without the written consent of the Series 2014 Bond Insurer. For purposes of enforcing the foregoing provision, the Series 2014 Bond Insurer is explicitly recognized as, and shall be deemed to be, a third party beneficiary of the Series 2014 Bonds and the Bond Resolution. LITIGATION There is no litigation pending against the Board, the University or relating to the System, or to the knowledge of the Board threatened, which in any way questions or affects the validity of the Series 2014 Bonds or any proceedings or transactions relating to their issuance, sale and delivery or affecting the validity of the establishment of the System. The Board is not aware of any litigation, the resolution of which would have a material adverse impact on the Board s ability to meet debt service on the Series 2014 Bonds. FINANCIAL STATEMENTS Audited financial statements for Northeastern Illinois University for the fiscal years ended June 30, 2013, 2012, 2011, and 2010 are on file with and may be obtained from the Municipal Securities Rulemaking Board through its Electronic Municipal Market Access ( EMMA ) System for municipal securities disclosure. Copies of such audited financial statements and additional historical audited financial statements may also be obtained by accessing the website of the Illinois Auditor General at PURCHASE The Purchaser of the Series Bonds, Hutchinson, Shockey, Erley & Co., has agreed, subject to certain customary conditions precedent to closing, to purchase the Series Bonds from the Board at an aggregate purchase price of $4,807, (which is equal to the original principal amount of the Series Bonds, plus a net original issue premium of $347,460.20, and less an underwriter s discount of $59, The Purchaser of the Bonds will be obligated to purchase all of the Series Bonds if any are purchased. The Purchaser of the Series Bonds, Hutchinson, Shockey, Erley & Co., has agreed, subject to certain customary conditions precedent to closing, to purchase the Series Bonds from the Board at an aggregate purchase price of $10,678, (which is equal to the original principal amount of the Series Bonds, plus a net original issue premium of $278,250.75, and less an 33

40 underwriter s discount of $240,036.20). The Purchaser of the Bonds will be obligated to purchase all of the Series Bonds if any are purchased. FINANCIAL ADVISOR John S. Vincent & Company LLC is serving as Financial Advisor to the University on debt and capital related issues, including the issuance of the Series 2014 Bonds. The Financial Advisor s duties, responsibilities, and fees arise solely from that as financial advisor to the University. The Financial Advisor will not participate in the underwriting of the Series 2014 Bonds. The financial information included in this Official Statement has been compiled by the Financial Advisor. Such information does not purport to be a review, audit or certified forecast of future events and may not conform with accounting principles applicable to compilations of financial information. The Financial Advisor is not a firm of certified public accountants and does not serve in that capacity or provide accounting services in connection with the Series 2014 Bonds. The Financial Advisor has not been engaged, nor has it undertaken, to independently verify the accuracy, completeness or fairness of the information contained in this Official Statement. DESCRIPTION OF RATINGS Standard & Poor s Ratings Services, a Division of The McGraw Hill Companies, Inc. ( Standard & Poor s ), has assigned a municipal bond rating of A- to the Series 2014 Bonds. Standard & Poor s currently views the outlook of its rating as negative. In addition, Standard & Poor s has assigned the Series 2014 Bonds the rating of AA with the understanding that upon delivery of the Series 2014 Bonds, a policy guaranteeing the payment when due of the principal and interest on the Series 2014 Bonds will be issued by Build America Mutual Assurance Company. The Board and the University furnished to Standard & Poor s certain information and materials, some of which may have not been included in this Official Statement. No application was made to any other rating agency for the purpose of obtaining an additional rating on the Series 2014 Bonds. Such ratings express only the view of Standard & Poor s. An explanation of the significance of the ratings may be obtained from Standard & Poor s. The ratings are not market ratings nor recommendations to buy, sell, or hold the Series 2014 Bonds, and the ratings and the Series 2014 Bonds should be evaluated independently. There is no assurance that such ratings will continue for any given period of time or will not be revised, or withdrawn entirely by Standard & Poor s, if, in its judgment, circumstances so warrant. Except as required under the Continuing Disclosure Undertaking, the Board undertakes no responsibility either to bring to the attention of the owners of the Series 2014 Bonds any proposed change in or withdrawal of such ratings or to oppose any such revision or withdrawal. GENERAL TAX EXEMPTION Federal tax law contains a number of requirements and restrictions that apply to the Series 2014 Bonds, including investment restrictions, periodic payments of arbitrage profits to the United States, requirements regarding the proper use of bond proceeds and the facilities financed therewith and certain other matters. The Board has convenanted to comply with all requirements that must be satisfied in order for the interest on the Series 2014 Bonds to be excludible from gross income for 34

41 federal income tax purposes. Failure to comply with certain of such covenants could cause interest on the Series 2014 Bonds to become includible in gross income for federal income tax purposes retroactively to the date of issuance of the Series 2014 Bonds. Subject to the Board s compliance with the above-referenced covenants, under present law, in the opinion of Bond Counsel, interest on the Series 2014 Bonds is excludable from the gross income of the owners thereof for federal income tax purposes and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations, but such interest is taken into account, however, in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. In rendering its opinion, Bond Counsel will rely upon certifications of the Board with respect to certain material facts within the Board s knowledge. Bond Counsel s opinion represents its legal judgment based upon its review of the law and the facts that it deems relevant to render such opinion and is not a guarantee of a result. The Internal Revenue Code of 1986, as amended, (the Code ) includes provisions for an alternative minimum tax ( AMT ) for corporations in addition to the corporate regular tax in certain cases. The AMT, if any, depends upon the corporation s alternative minimum taxable income ( AMTI ), which is the corporation's taxable income with certain adjustments. One of the adjustment items used in computing the AMTI of a corporation (with certain exceptions) is an amount equal to 75 percent of the excess of such corporation's adjusted current earnings over an amount equal to its AMTI (before such adjustment item and the alternative tax net operating loss deduction). Adjusted current earnings would include all tax-exempt interest, including interest on the Series 2014 Bonds. Ownership of the Series 2014 Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, corporations subject to the branch profits tax, financial institutions, certain insurance companies, certain S corporations, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations. Prospective purchasers of the Series 2014 Bonds should consult their tax advisors as to applicability of any such collateral consequences. The issue price (the Issue Price ) for each maturity of the Series 2014 Bonds is the price at which a substantial amount of such maturity of the Bonds is first sold to the public. The Issue Price of a maturity of the Series 2014 Bonds may be different from the price set forth, or the price corresponding to the yield set forth, on the inside cover page hereof. If the Issue Price of a maturity of the Series 2014 Bonds is less than the principal amount payable at maturity, the difference between the Issue Price of each such maturity, if any, of the Series 2014 Bonds (the Discount Bonds ) and the principal amount payable at maturity is original issue discount. For an investor who purchases a Discount Bond in the initial public offering at the Issue Price for such maturity and who holds such Discount Bond to its stated maturity, subject to the condition that the Board complies with the covenants discussed above: (a) the full amount of original issue discount with respect to such Discount Bond constitutes interest which is excludable from the gross income of the owner thereof for federal income tax purposes; (b) such owner will not realize taxable capital gain or market discount upon payment of such Discount Bond at its stated maturity; (c) such original issue discount is not included as an item of tax preference in computing the AMT for 35

42 individuals and corporations under the Code, but is taken into account in computing an adjustment used in determining the AMT for certain corporations under the Code, as described above; and (d) the accretion of original issue discount in each year may result in an alternative minimum tax liability for corporations or certain other collateral federal income tax consequences in each year even though a corresponding cash payment may not be received until a later year. Based upon the stated position of the Illinois Department of Revenue, under Illinois income tax law, accreted original issue discount on the Discount Bonds is subject to taxation as it accretes, even though there may not be a corresponding cash payment until a later year. Owners of Discount Bonds should consult their tax advisors with respect to the state and local tax consequences of original issue discount on such Discount Bonds. Owners of Series 2014 Bonds who dispose of Series 2014 Bonds prior to the stated maturity (whether by sale, redemption or otherwise), purchase Series 2014 Bonds in the initial public offering, but at a price different from the Issue Price, or purchase Series 2014 Bonds subsequent to the initial public offering should consult their own tax advisors. If a Series 2014 Bond is purchased at any time for a price that is less than the Series 2014 Bond s stated redemption price at maturity, or, in the case of a Discount Bond, its Issue Price plus accreted original issue discount (the Revised Issue Price ), the purchaser will be treated as having purchased a Series 2014 Bond with market discount subject to the market discount rules of the Code (unless a statutory de minimis rule applies). Accrued market discount is treated as taxable ordinary income and is recognized when a Series 2014 Bond is disposed of (to the extent such accrued discount does not exceed gain realized) or, at the purchaser s election, as it accrues. Such treatment would apply to any purchaser who purchases a Discount Bond for a price that is less than its Revised Issue Price. The applicability of the market discount rules may adversely affect the liquidity or secondary market price of such Series 2014 Bond. Purchasers should consult their own tax advisors regarding the potential implications of market discount with respect to the Series 2014 Bonds. An investor may purchase a Series 2014 Bond at a price in excess of its stated principal amount. Such excess is characterized for federal income tax purposes as bond premium and must be amortized by an investor on a constant yield basis over the remaining term of the Series 2014 Bond in a manner that takes into account potential call dates and call prices. An investor cannot deduct amortized bond premium relating to a tax-exempt bond. The amortized bond premium is treated as a reduction in the tax-exempt interest received. As bond premium is amortized, it reduces the investor s basis in the Series 2014 Bond. Investors who purchase a Series 2014 Bond at a premium should consult their own tax advisors regarding the amortization of bond premium and its effect on the Series 2014 Bond s basis for purposes of computing gain or loss in connection with the sale, exchange, redemption or early retirement of the Series 2014 Bond. 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 adversely affect the market value of the Series 2014 Bonds. It cannot be predicted whether or in what form any of such proposal might be enacted or whether, if enacted, it would apply to securities issued prior to enactment. Prospective purchasers of the Series 2014 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. The Internal Revenue Service (the Service ) has an ongoing program of auditing tax-exempt obligations to determine whether, in the view of the Service, interest on such tax-exempt obligations is includible in the gross income of the owners thereof for federal income tax purposes. It cannot be 36

43 predicted whether or not the Service will commence an audit of the Series 2014 Bonds. If an audit is commenced, under current procedures the Service may treat the Board as the taxpayer and the Bondholders may have no right to participate in such procedure. The commencement of an audit could adversely affect the market value and liquidity of the Series 2014 Bonds until the audit is concluded, regardless of the ultimate outcome. Payments of interest on, and proceeds of the sale, redemption or maturity of, tax-exempt obligations, including the Series 2014 Bonds, are in certain cases required to be reported to the Service. Additionally, backup withholding may apply to any such payments to any Series 2014 Bond owner who fails to provide an accurate Form W-9 Request for Taxpayer Identification Number and Certification, or a substantially identical form, or to any Series 2014 Bond owner who is notified by the Service of a failure to report any interest or dividends required to be shown on federal income tax returns. The reporting and backup withholding requirements do not affect the excludability of such interest from gross income for federal tax purposes. Interest with respect to the Series 2014 Bonds is not exempt from present Illinois income taxes. Ownership of the Series 2014 Bonds may result in other state and local tax consequences to certain taxpayers. Bond Counsel expresses no opinion regarding any such collateral consequences arising with respect to the Series 2014 Bonds. Prospective purchasers of the Series 2014 Bonds should consult their tax advisors regarding the applicability of any such state and local taxes. LEGAL MATTERS Certain legal matters incident to the authorization, issuance and sale of the Series 2012 Bonds by the Board are subject to the approving opinion of Chapman and Cutler LLP ( Chapman ) as Bond Counsel, who has been retained by, and acts as, Bond Counsel to the Board. The proposed form of the opinion of Bond Counsel is included hereto as APPENDIX C. Chapman and Cutler LLP is also acting in a separate capacity as Disclosure Counsel to the Board. Although as Disclosure Counsel to the Board, Chapman has assisted the Board with certain disclosure matters, Chapman has not undertaken to independently verify the accuracy, completeness or fairness of this Official Statement or other offering material related to the Series 2014 Bonds and does not guarantee the accuracy, completeness or fairness of such information. Chapman s engagement as Disclosure Counsel was undertaken solely at the request and for the benefit of the Board, to assist it in discharging its responsibility with respect to this Official Statement, and not for the benefit of any other person (including the Purchaser and any person purchasing the Series 2014 Bonds from the Purchaser), and did not include any obligation to establish or confirm factual matters, forecasts, projections, estimates or any other financial or economic information in connection therewith. Certain legal matters in connection with the Series 2014 Bonds will be passed upon for the Board by Board Counsel, Dunn Law Firm, LLP, Bloomington, IL. CONTINUING DISCLOSURE UNDERTAKING The Board will agree in a Continuing Disclosure Agreement to provide certain annual financial information and operating data and notices of certain events as required by Rule 15c2-12 of the Securities and Exchange Commission (the Rule ). The proposed form of such Continuing Disclosure Agreement is included as APPENDIX D to this Official Statement. The Continuing Disclosure Agreement may be enforced by any beneficial or registered Owner of the Series

44 Bonds, but the Board s failure to comply will not be a default under the Bond Resolution. A failure by the Board to comply with the Continuing Disclosure Agreement must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Series 2014 Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Series 2014 Bonds and their market price. During the past five years there have been numerous rating actions reported by Moody's Investors Service, Standard & Poor's Rating Corporation and Fitch Ratings affecting the municipal bond insurance companies, some of which had insured obligations previously issued by the Board. Due in part to widespread public dissemination of these rating actions, event notices were not filed in response thereto. Notwithstanding such failure to file these event notices, the Board represents that there have been no instances in the last five years in which it has failed to comply in all material respects with any undertaking previously entered into by it pursuant to the Rule. MISCELLANEOUS The foregoing summaries or descriptions of the Series 2014 Bonds and the Bond Resolution and all references to other materials not purporting to be quoted in full are only brief outlines of certain provisions thereof and do not constitute complete statements of such documents or provisions and reference is hereby made to the complete documents relating to such matters for further information, copies of which are publicly available for inspection at the Office of the Vice President for Finance and Administration of the University, 5500 North St. Louis Avenue, Chicago, Illinois and at the offices of the Board s Financial Advisor, John S. Vincent & Company LLC, 208 South LaSalle Street, Suite 1625, Chicago, Illinois The agreement of the Board with the owners of the Series 2014 Bonds is fully set forth in the Bond Resolution, and neither any advertisement of the Series 2014 Bonds nor this Official Statement is to be construed as constituting an agreement with the purchasers of the Series 2014 Bonds. Any statement made in this Official Statement indicated to involve matters of opinion or estimates are represented as opinions or estimates in good faith. No assurance can be given, however, that the facts will materialize as so opined or estimated. The attached Appendices are integral parts of this Official Statement and must be read together with all of the foregoing statements. 38

45 CERTIFICATION As of the date hereof, this Official Statement is, to the best of my knowledge, complete and correct in all material respects and does not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made herein, in light of the circumstances under which they were made, not misleading. The preparation of this Official Statement and its distribution have been authorized by the Board of Trustees of Northeastern Illinois University. BOARD OF TRUSTEES OF NORTHEASTERN ILLINOIS UNIVERSITY By: /s/ Michael Pierick Treasurer, Board of Trustees 39

46 Intentionally Left Blank

47 Appendix A Northeastern Illinois University

48 Intentionally Left Blank

49 APPENDIX A NORTHEASTERN ILLINOIS UNIVERSITY The information contained herein as Appendix A to the Official Statement has been obtained from the Board of Trustees of Northeastern Illinois University and other sources deemed to be reliable. INFORMATION IS PROVIDED HEREIN REGARDING THE BOARD OF TRUSTEES OF NORTHEASTERN ILLINOIS UNIVERSITY. HOWEVER, THE SERIES 2014 BONDS DO NOT CONSTITUTE A GENERAL OBLIGATION OF THE BOARD OF TRUSTEES OR OF THE UNIVERSITY. THEREFORE INFORMATION HEREIN REGARDING THE UNIVERSITY SHOULD BE CONSIDERED GENERAL BACKGROUND INFORMATION ONLY FOR THE PURPOSES OF EVALUATING AN INVESTMENT IN THE SERIES 2014 BONDS. THE SERIES 2014 BONDS, TOGETHER WITH ANY OUTSTANDING UNIVERSITY FACILITIES SYSTEM REVENUE BONDS AND SUCH BONDS AS MAY BE ISSUED IN THE FUTURE (COLLECTIVELY, THE BONDS ), ARE PAYABLE FROM AND SECURED BY A PLEDGE OF AND LIEN ON: (I) THE NET REVENUES OF THE SYSTEM, (II) PLEDGED TUITION AND PLEDGED FEES (SUBJECT TO PRIOR PAYMENT OF OPERATING AND MAINTENANCE EXPENSES OF THE SYSTEM, BUT ONLY TO THE EXTENT NECESSARY), AND (III) FUNDS HELD IN THE BOND ACCOUNT. SINCE THE SYSTEM IS NOT A SEPARATE LEGAL ENTITY, BUT IS PART OF THE UNIVERSITY, INFORMATION CONCERNING THE UNIVERSITY IS SET FORTH IN THIS APPENDIX A.

50 Intentionally Left Blank

51 NORTHEASTERN ILLINOIS UNIVERSITY TABLE OF CONTENTS NORTHEASTERN ILLINOIS UNIVERSITY General...A-1 Mission Statement...A-1 Board of Trustees...A-2 Principal Officers of the University...A-2 Academic Programs...A-4 Accreditation...A-5 Student Enrollment...A-6 Matriculation...A-6 Tuition and Fees...A-7 Pledged Fees...A-8 Pledged Tuition...A-8 Financial Aid to Students...A-8 Budget and State Appropriations...A-8 Faculty and Staff...A-10 Employee Benefits...A-10 State Universities Retirement System of Illinois...A-10 Financial Condition of the University...A-11 Future Capital Projects...A-14 Pro Forma University Annual Debt Service...A-14

52 Intentionally Left Blank

53 GENERAL NORTHEASTERN ILLINOIS UNIVERSITY Northeastern Illinois University (the University ) is an accredited public university serving the Chicago metropolitan area. Total graduate and undergraduate enrollment is over 10,000. In addition to offering traditional programs in the arts, sciences, business, and education, the University has a strong commitment to innovative, non-traditional education and has been a leader in the development of special programs for adult learners. Northeastern Illinois University traces its origin to the beginnings of teacher training in Illinois. Founded in September 1867 in Blue Island as Cook County s first teacher training school, the institution has evolved into the comprehensive university that it is today. Its campus at 5500 North St. Louis Avenue opened in In 1961, total enrollment was 1,348 students pursuing the bachelor of arts or bachelor of science degrees, although the major concentration was primarily in education. Throughout the 1960s, enrollment increased, programs were expanded, and the institution s mission broadened. In 1971, with a total enrollment over 7,000, the college became Northeastern Illinois University. Today, the 67-acre main campus is an attractively landscaped urban oasis near the north branch of the Chicago River. Its location eight miles northwest of downtown Chicago, only 20 minutes from O Hare Airport, and convenient to expressways and public transportation, makes it an ideal campus for commuter students. The University has no student housing facilities. The main campus consists of 18 modern buildings totaling more than 1,000,000 square feet. Instruction is supported by conventional as well as technology-enhanced classrooms, a modern fourstory library with access to local, regional and internet resources and a wide assortment of traditional and computer laboratories. A redesigned Student Union, a modern Physical Education Complex and a state-of-the-art Fine Arts Center, containing both academic and performance space, complete the opportunities for an excellent, well-rounded education. The University s other campuses, El Centro, the Carruthers Center for Inner City Studies and the Center for College Access and Success, enhance the University s ability to serve the entire metropolitan area. MISSION STATEMENT Northeastern Illinois University, as a public comprehensive university with locations throughout Chicago, provides an exceptional environment for learning, teaching, and scholarship. The University prepares a diverse community of students for leadership and service in the region and in a dynamic multicultural world. A-1

54 BOARD OF TRUSTEES The University is governed by its Board of Trustees which is composed of nine voting members appointed by the Governor of the State of Illinois, with the advice and consent of the Illinois Senate, and one voting student member, elected by the students, who serves a one-year term. No more than five of the members appointed by the Governor may be affiliated with the same political party. The Board is responsible for the general supervision and management of the University s educational programs, its land, buildings and other properties. The current Board members are set forth below: Board of Trustees Term Expires Carlos Azcoitia, Chair 2017 Robert Biggins 2019 Omar Duque, Secretary 2017 Barbara Fumo 2019 Marvin Garcia 2019 Jin Lee, Vice Chair 2015 Darlene Ruscitti 2017 Jonathan J. Stein 2017 Amanda Slefo (Student Member) 2015 PRINCIPAL OFFICERS OF THE UNIVERSITY The current officers of the University are set forth below: Principal Officers of the University Sharon K. Hahs, Ph.D. President Richard J. Helldobler, Ph.D. Provost and Vice President for Academic Affairs Michael J. Pierick Vice President for Finance and Administration Melba Rodriquez Vice President for Institutional Advancement Frank E. Ross, Ph.D. Vice President for Student Affairs Sharon K. Hahs. Dr. Hahs became President of the University in February Prior to that appointment she had more than 30 years experience in higher education, most recently having served as Provost and Vice Chancellor for Academic Affairs and Director of Special Projects at Southern Illinois University Edwardsville. Dr. Hahs was a member of the chemistry faculty at Metropolitan State College in Denver from , where she was promoted to Associate Professor and Professor. She also served as Special Assistant to the Vice President for Academic Affairs for the academic year. Dr. Hahs earned her Ph.D. and M.S. in inorganic chemistry from the University of New Mexico and her B.A. in chemistry from Illinois Wesleyan University, Bloomington, Illinois. The President of the University is accountable to the Northeastern Illinois University Board of Trustees for the administration of the institution and has full power and responsibilities within the framework of Board policies for the organization, management, direction, and supervision of the University. A-2

55 Richard J. Helldobler. Dr. Helldobler was appointed Provost and Vice President for Academic Affairs in December of Dr. Helldobler came to the University from Shepherd University, where he served as Vice President for Academic Affairs for three years. Previously he served for three years as Associate Provost and Associate Vice President for Academic Affairs, six years as Dean of the College of Liberal Arts, and 10 years as Chair of the Department of Theatre and Dance, all at California University of Pennsylvania. Dr. Helldobler received his doctoral degree and master s degrees from Bowling Green University and a bachelor s degree from the University of Toledo. The Provost and Vice President for Academic Affairs is responsible for instruction and academic programs. Academic programs are offered through the Colleges of Arts and Sciences, Education, Business and Management and the Graduate College. In addition, Academic Affairs is responsible for the Ronald Williams Library; the Carruthers Center for Inner City Studies; El Centro; the Center for College Access and Success; the Center for Teaching and Learning; and the Offices of Enrollment Services, Institutional Research, and Sponsored Programs. Michael Pierick. Mr. Pierick was appointed University Vice President for Finance and Administration in January He has more than 25 years of higher education administrative affairs leadership experience. He served most recently as Assistant Campus Dean for Administration and Finance at University of Wisconsin, Rock County for 13 years. Previously he served at Penn State University for six years as Director of Document Services and related administrative roles and as Director of Printing Services at the University of Wisconsin, Madison for eight years. Mr. Pierick holds an M.B.A. from the Eberly College of Business and Information Technology at Indiana University of Pennsylvania, as well as a B.A. in English from the University of Wisconsin Madison and a B.A. in Business Management from Edgewood College. In addition, Mr. Pierick has taken coursework toward a master s degree in higher education administration at Penn State University. The Vice President for Finance and Administration provides support to the University community through the management of units that contribute to the daily operation of the University. These activities include Facilities Management, University Budgets, University Police, Internal Audits and Financial and Administrative Affairs, which encompasses Auxiliaries and Support Services (Bookstore, Child Care Center, Copier Services, Mailing/Shipping and Receiving, and Motor Pool); Bursar; Controller; Human Resources; Purchasing and University Technology Services. Melba Rodriguez. Ms. Rodriguez became Vice President for Institutional Advancement in August of Prior to her appointment she had over 15 years of experience in private higher education advancement and other nonprofit institutional development, most recently serving as the Chief Development Office at the National Museum of Mexican Art. Prior to her tenure at the Museum, she served as the Vice President for Lifelink Charities in Bensenville, Illinois, Vice President for Institutional Advancement at Clarke College, and Vice President for Institutional Advancement at St. Augustine College. In each of these positions, Ms. Rodriguez acted as the primary catalyst, strategist and implementer in organization fundraising and marketing. Ms. Rodriguez received a B.A. in Business Administration and Social Sciences from Mundelein College. She also received a Certificate in Fundraising Management from The Center of Philanthropy at Indiana University. A-3

56 The Vice President for Institutional Advancement serves as the University s senior advancement and communications officer. Institutional Advancement is responsible for strengthening and advancing the University through strategic initiatives, programs and campaigns executed by the unit s Offices of Alumni Relations, Development, Marketing, Public Relations and University Events. Through these offices, Institutional Advancement seeks to raise awareness for and build and enhance the University s reputation within the community, across the nation and around the world; promote programs and events; publicize accomplishments of faculty, staff and students; raise funds beyond those traditionally provided by the State of Illinois; provide programs for and services to alumni; and present opportunities for alumni of the University to reconnect with their alma mater and support it through advocacy, volunteerism, or philanthropy. Frank E. Ross. Dr. Ross became the Vice President for Student Affairs in August Prior to his appointment he served as the Associate Provost for Student Success at University of North Texas at Dallas, and as Assistant Vice Chancellor for Student Life at Indiana University Purdue University Indianapolis. Dr. Ross received his doctoral degree from Indiana University, master s degrees from Ball State University and Western Kentucky University, and a bachelor s degree from Ball State University. The Vice President for Student Affairs is responsible for programs and services that support student access, enrollment, retention and graduation. Departments within the Division of Student Affairs include: Academic and Career Development; Student Counseling and Psychological Services; Student Disability Services; TRIO Student Support Services; Campus Recreation; Center for Civic Engagement; Student Leadership Development; Student Union; Learning Resource Center; New Student and Family Programs; Project Success; Proyecto Pa Lante; Student Rights and Responsibilities; the LGBTQ Resource Center, and the Women s Resource Center. ACADEMIC PROGRAMS The University offers undergraduate and graduate programs in arts and sciences, business and management, and education. In addition to degree programs, the University offers many courses and programs of study in in-service education through late afternoon, evening, and Saturday classes, summer sessions, and extension courses. The degree and other programs offered by the University are as follows: Undergraduate Programs: African & African American Studies Exercise Science Mass Media Anthropology Finance Mathematics Art General Business Administration Music Asian Studies Geography Philosophy Bilingual/Bicultural Education Gerontology Physical Education Biology Global Studies Physics Chemistry Health & Wellness Political Science Child Advocacy Studies Health Education Psychology Communication, Media & Theatre History Secondary Education Computer Science Human Resource Development Social Work Counselor Education Inner City Studies Sociology Dance Interdisciplinary Studies Spanish Early Childhood Education International Business Special Education Earth Science Justice Studies Teaching English as a Foreign/Second Economics Latino and Latin American Studies Language A-4

57 Educational Leadership Linguistics Theatre Elementary Education Literacy Studies University Without Walls English Management Women s and Gender Studies Environmental Studies Marketing Graduate Programs: Accounting History Bilingual/Bicultural Human Resource Development Biology Inner City Studies Business Administration Language Arts Chemistry Elementary Education Communication, Media & Theatre Secondary Education Computer Science Latin American Literatures & Cultures Counseling Linguistics Community Counseling Mathematics Family Counseling Applied Mathematics Rehabilitation Counseling Mathematics for Elementary School Teachers School Counseling Secondary Education Mathematics Earth Science Music Educational Leadership Political Science School Leadership Reading Higher Education Leadership Special Education English Initial Certification (LBS I) Literature Early Childhood Special Education Composition/Writing Gifted Education Exercise Science LBS II Geography & Environmental Studies Teaching English as a Second/Foreign Language Gerontology ACCREDITATION The University is accredited by the Higher Learning Commission of the North Central Association and the College of Education is accredited by the National Council for Accreditation of Teacher Education. College of Education certification programs are fully approved by the Illinois State Board of Education. The University is officially recognized by the Illinois State Board of Education and is approved for veterans training under the provisions of the various federal laws providing educational benefits to former members of the Armed Forces. A number of individual academic programs have been accredited or otherwise approved by their respective disciplinary professional organizations. The Social Work program is accredited by the Council on Social Work Education. The Art Department is accredited by the National Association of Schools of Art and Design (NASAD). The Music Department is accredited by the National Association of Schools of Music (NASM). The Counselor Education programs are accredited by the Council for the Accreditation of Counseling and Related Educational Programs (School and Family/Community Counseling) and The Council on Rehabilitation Education (Rehabilitation Counseling). The undergraduate Chemistry program is an American Chemical Society Approved program. The College of Business and Management is in the process of A-5

58 seeking accreditation and is in formal pre-accreditation status with the Association to Advance Collegiate Schools of Business (AACSB International). STUDENT ENROLLMENT Total University enrollment for the 2014 fall semester is 10,275, consisting of 5,069 full-time and 5,206 part-time students. There are 8,412 undergraduate and 1,863 graduate students. A fulltime student for the Fall and Spring semesters is an undergraduate enrolled for 12 or more credit hours or a graduate student enrolled for nine or more credit hours. The following table sets forth the University s full-time and part-time headcount, undergraduate and graduate headcount and full-time equivalent enrollment of all students (graduate and undergraduate) for the Fall semester of each of the last five calendar years: Fall Semester Full-time 5,069 5,415 5,846 5,995 6,037 Part-time 5,206 5,406 5,303 5,585 5,709 Total: 10,275 10,821 11,149 11,580 11,746 Undergraduate 8,412 8,950 9,140 9,421 9,498 Graduate 1,863 1,871 2,009 2,159 2,248 Total: 10,275 10,821 11,149 11,580 11,746 Full-time equivalent 6,605 6,965 7,371 7,645 7,758 The following table sets forth the University s enrollment in terms of total credit hours for each of the past five Fiscal Years. Fiscal Year Ended June Total Credit Hours 217, , , , ,440 MATRICULATION The table below shows applications, acceptances and enrollment for incoming freshmen and transfer students for the past six academic years, based on Fall semester enrollments. Freshmen Applications received 5,052 5,195 5,400 5,118 5,104 4,035 Applications approved 2,873 3,081 3,375 3,291 3,341 2,997 Enrolled , ,042 1,071 Transfer Students Applications received 2,267 2,306 2,728 2,723 2,493 2,217 Applications approved 1,733 1,795 2,027 2,157 1,881 1,796 Enrolled 1,279 1,356 1,331 1,385 1,378 1,398 A-6

59 TUITION AND FEES Set forth below are the tuition and fees charged by the University in the Fall semester of each of the past five academic years on a per credit hour basis (up to 16 credit hours per semester) for full-time undergraduate students who are Illinois residents. Fall Semester Tuition (Continuing) $ $ $ $ $ Tuition (Newly Enrolled Fall 2010) 1 $ $ $ $ $ Tuition (Newly Enrolled Fall 2011) 1 $ $ $ $ Tuition (Newly Enrolled Fall 2012) 1 $ $ $ Tuition (Newly Enrolled Fall 2013) 1 $ $ Tuition (Newly Enrolled Fall 2014) 1 $ Mandatory Fees Activity Fee $ 5.00 $ 5.00 $ 4.00 $ 4.00 $ 3.80 Student Union Campus Recreation Fee Performing Arts Fee Student Health Service Fee Computer Resource Fee Academic Enhancement Fee Parking Fee (waivable) Total Mandatory Fees $ $ $ $ $ Health Insurance Fee 2 $ $ $ $ $ Clean/Renewable Energy Fee 3 $ 3.00 $ 3.00 $ 3.00 $ 3.00 $ Per Public Act , Illinois undergraduate students newly enrolled starting Fall 2004 will have their tuition held constant for a period of four continuous academic years. Public Act amended Public Act to provide undergraduate students two additional academic years of tuition charged at the rate for students who enrolled the academic year following the academic year the student first enrolled in the University. Assessed to all Undergraduate students enrolled in 12 or more credit hours who do not provide evidence of other health insurance coverage. Amount shown is the charge per semester. Charged per semester. At its November 13, 2014 meeting, the Board adopted a tuition policy that states, beginning in fall semester 2015, all new students from states neighboring Illinois will be assessed in-state tuition rates. Students will qualify if they reside in Indiana, Wisconsin, Michigan, Iowa, Kentucky or Missouri. In addition, the Board has a current policy of allowing a student who is an active member of the United States Armed Forces or an honorably discharged veteran, regardless of state residency, to qualify for in-state tuition. At the same meeting, the Board approved extending this policy to spouses and dependent children of active duty military and veterans beginning in fall semester PLEDGED FEES Of the fees which constitute permissible Pledged Fees, the University currently charges the following fees: Activity Fee, Campus Recreation Fee, Performing Arts Fee, Student Health Service Fee and Computer Resource Fee. The categories and rates of such fees change from time to time, and different types of fees may be assessed in the future. A-7

60 The schedule set forth below shows the amount of fees, less exemptions, constituting Pledged Fees charged to students during each of the past five Fiscal Years Pledged Fees $7,006,680 $7,327,775 $7,761,767 $7,826,652 $7,306,021 PLEDGED TUITION The following table sets forth University tuition revenues, less exemptions, for each of the past five Fiscal Years Pledged Tuition $54,066,813 $55,520,897 $56,413,916 $54,715,521 $49,853,142 FINANCIAL AID TO STUDENTS Approximately 81% of the University s student body receives some form of financial assistance. Such financial aid includes employment, loans, scholarships, grants, and tuition waivers whose funding sources are through various federal, State, institutional, and other programs. Total financial aid expenditures in Fiscal Year 2014 totaled $57.8 million of which 72% was funded from federal sources, 17% from the State, 9% from the University and 2% from other sources. The following table sets forth the source of funding of financial aid expenditures for the past five Fiscal Years for which information is available. Fiscal Year Ended June SOURCE: Federal $ 41,575,579 $ 45,800,732 $ 47,605,592 $ 50,036,756 $ 16,555,582 State 9,809,336 10,589,510 11,491,858 10,364,742 23,145,201 University 5,006, ,550 3,736,048 5,376,935 3,109,770 Other 1,387,744 1,845, , ,237 1,003,114 $ 57,779,587 $ 63,148,449 $ 63,421,150 $ 66,318,670 $ 43,813,667 1 Beginning in Fiscal Year 2011, Stafford Loans are counted as Federal aid. Previously, Stafford Loans had been counted as State aid. BUDGET AND STATE APPROPRIATIONS As described under SECURITY FOR THE SERIES 2014 BONDS General, the Bonds and the operating and maintenance expenses of the System are payable solely from Net Revenues of the System, Pledged Fees and Pledged Tuition. The State of Illinois is not obligated to pay debt service on the Series 2014 Bonds. However, the University annually receives appropriations from the General Assembly of the State, which are to be applied to the educational and general expenditures of the University. In addition, payments are made by the State on behalf of the University for employee benefits and retirement contributions. The Fiscal Year 2014 State appropriation approved by the General Assembly for educational and general expenditures of the University totaled $37.8 million, nearly the same as the amount from the previous fiscal year. The University sends vouchers to the State to reimburse the University from A-8

61 State funds for the University s payments for personal services and other goods and services. State appropriations, including payments made by the State on behalf of the University, account for approximately 41% of the University s annual operating budget. The University sends vouchers to the State for payment of personal services and other goods and services to be paid from State-appropriated funds. The State has deferred release of approved appropriations for both Fiscal Years 2014 and 2015 to all of the public universities in Illinois. Although the State s fiscal year ends on June 30, the University did not receive all of its Fiscal Year 2014 appropriation until September 2014, which was approximately three months after the end of the fiscal year. The balance of the State appropriations for Fiscal Year 2013 were also received approximately three months after the close in June With regard to the Fiscal Year 2015 appropriations, $20 million has been vouchered and the University received only $2.9 million as of October As a consequence of this deferral, there can be no assurance that the full amount of the $37.8 million of approved appropriations for Fiscal Year 2015 will be ultimately received or received in a timely fashion, or that approved appropriations will continue to be made at the current level. Such delays present cash flow challenges to the University. The following table sets forth the State funding received by the University for the past five Fiscal Years: Fiscal Year Ended June 30 (in 000 s) Current Operating Funds $ 37,847 $ 37,808 $ 40,228 $ 40,711 $ 43,733 Payments on behalf of University 48,951 50,028 39,102 33,391 30,096 Total $ 86,798 $ 87,836 $ 79,330 $ 74,102 $ 73,828 Source: Compiled from audited Financial Reports of the University for Fiscal Years and unaudited financial information for Fiscal Year Sum may not equal total due to rounding. 2 Fiscal year 2010 State appropriations include $4.2 million in Federal ARRA funds distributed through State appropriations. The Governmental Accounting Standards Board ( GASB ) Statement 24 (Accounting and Financial Reporting for Certain Grants and Other Financial Assistance) requires state universities to recognize in their financial statements and notes the amount the State of Illinois contributes to the State Universities Retirement System of Illinois ( SURS ) on behalf of the University employees. The amount recognized each year has been a relatively consistent amount and is included in the Payments on behalf of University on the table above. In addition, the State provided approximately $1.1 million for Fiscal Year 2014 and $0.7 million for Fiscal Year 2013 in Capital Funds for University projects. No State Capital Funds were received in Fiscal Years 2012, 2011 or For more information on Capital Funds, see Future Capital Projects in this APPENDIX A. FACULTY AND STAFF As of the Fall term 2014, the University s faculty totaled 599 members, 357 of which are full time. Of the total faculty, approximately 39% are tenured or tenured track. The University employs a staff of 850 full-time employees. Of this total, 542 are full-time Civil Service and the remaining 298 are permanent, full-time administrators and professional staff. Certain faculty and staff of the University are represented by one of five unions. The faculty, some administrative and professional staff and some Civil Service classifications are represented by A-9

62 the University Professionals of Illinois AFT-IFT, AFL-CIO, Local Building service workers are represented by Local 714, International Brotherhood of Teamsters. Plant operating engineers are represented by the International Union of Operating Engineers, AFL-CIO, Local 399. Council 31 of the American Federation of State, County and Municipal Employees, AFL-CIO, Local 1989 represents the clerical and paraprofessional workers. The Metropolitan Alliance of Police represents employees in the Police Officer I classification. The University characterizes its relationship with all of these unions as good. The University is currently in the process of renegotiating all five of its collective bargaining agreements and plans to finalize these in the near future. EMPLOYEE BENEFITS The University provides all full-time continuing employees with health, dental, and life insurance coverage with nominal employee-paid premiums. Those same coverages are available for the employee s dependents at group rates. The part-time continuing staff who have a 50% or higher appointment also are eligible to participate in this same insurance program. Educational benefits also are available to permanent employees of the University. Under educational benefits, a full-time employee covered by the faculty union is waived eight credit hours per term while other employees are waived six hours per term. State law requires a 50% tuition waiver, with certain conditions, for the children of employees of Illinois public universities with at least seven years of service. Employees also are provided the opportunity to participate in tax deferred savings programs. In addition, dependent upon an employee s classification and status, sick leave and vacation time are also available. All employees of the University are covered by the Illinois Workers Compensation Act and can receive payment for medical expenses and/or salary compensation for on-the-job injuries. By law, the University is required to participate in the State Universities Retirement System of Illinois and Medicare Tax portion of the FICA program. STATE UNIVERSITIES RETIREMENT SYSTEM OF ILLINOIS Retirement benefits are provided for substantially all University employees under a contributory retirement plan administered by SURS. Approximately 1,454 employees of the University participated in SURS as of October 1, Historically, employer contributions to SURS with respect to University employees have not constituted an operating expense of the System. The liabilities of SURS relating to payments to University participants are not liabilities of the Board, but are liabilities of SURS, subject to continued annual appropriations by the General Assembly of the State. On December 5, 2013 Public Act (the 2013 Pension Reform Act ) was signed into law. The 2013 Pension Reform Act seeks to achieve full funding of the State s retirement systems, including SURS, partially through increased payments from the State into the retirement systems and partially through a less generous benefits package for current and future retirees. The 2013 Pension Reform Act provides for changes to cost-of-living adjustments, retirement ages, pensionable salary caps and employee contributions to SURS. It affects the benefits available to both current and future employees of the University. The effective date of the 2013 Pension Reform Act was to be June 1, A-10

63 Several lawsuits were filed seeking to overturn the 2013 Pension Reform Act on constitutional grounds. The litigation was consolidated in the Circuit Court of Sangamon County, Illinois. On November 21, 2014, the Circuit Court struck down the 2013 Pension Reform Act as unconstitutional and void in its entirety. It is likely that this ruling will be appealed to the Illinois Supreme Court. Including the University s share, the SURS total preliminary unfunded accrued actuarial liability was $21.6 billion at June 30, However, no assurance can be given that future legislation would not require the University to assume part or all of the liability for funding its employees pensions in the future. Further, recent governmental accounting standards may require that the University s share of the SURS unfunded liability be reported in the University s financial statements beginning with Fiscal Year FINANCIAL CONDITION OF THE UNIVERSITY The financial statements of the University are presented in accordance with accounting principles generally accepted in the United States of America as promulgated by the Government Accounting Standards Board. See FINANCIAL STATEMENTS for more information on audited financial statements of the University. A-11

64 REVENUES AND EXPENDITURES OF THE UNIVERSITY STATEMENT OF REVENUE,EXPENSES AND CHANGES IN NET ASSETS FOR THE FISCAL YEARS ENDED JUNE 30, 2011 THRU 2014 (Unaudited) OPERATING REVENUES: Student Tuition and Fees, net of scholarship allowance $ 53,086,279 $ 54,804,774 $ 56,276,791 $ 53,052,879 Federal Grants and Contracts 16,953,971 18,572,471 13,005,164 13,561,635 State and Local Grants 3,188,777 1,959,867 2,272,522 2,706,114 Nongovernmental Grants and Contracts 394, ,533 1,057,662 1,495,146 Auxiliary Enterprises 3,489,734 3,597,316 3,743,385 3,912,966 Other Operating Revenues 4,104,707 4,084,073 4,458,941 4,317,416 Total Operating Revenues 81,217,750 83,733,034 80,814,465 79,046,156 OPERATING EXPENSES: Instruction 80,578,599 82,967,356 78,899,658 70,745,029 Research 977, ,984 1,031, ,946 Public Service 15,312,242 16,701,833 12,623,930 13,439,552 Academic Support 10,290,657 11,252,587 10,569,274 9,603,298 Student Services and Programs 17,827,029 16,657,338 13,077,999 11,608,228 Institutional Support 19,531,980 16,179,347 11,957,194 13,440,062 Operation and Maintenance of Plant 16,940,704 15,828,556 15,309,594 14,014,069 Scholarships and Fellowships 7,406,380 8,194,388 8,498,231 9,124,810 Auxiliary Enterprises 5,346,184 5,266,697 4,999,239 4,052,508 Depreciation Expense 4,533,895 4,456,619 4,836,851 4,944,041 Other Operating Expenses 591, ,777 1,462,165 1,763,866 Total Operating Expenses 179,336, ,376, ,265, ,500,409 Operating Loss (98,118,704 (95,643,448) (82,450,945) (74,454,253) NON-OPERATING REVENUES (EXPENSES): State Appropriations General Revenue Fund 37,847,400 37,807,600 40,228,500 40,711,218 Payments on Behalf of the University 48,950,555 50,028,479 39,101,845 33,390,867 Pell Grant 17,043,383 17,775,249 18,719,529 19,972,301 Investment Income 93, , , ,381 Interest on Indebtedness (1,505,864) (2,218,518) (1,673,942) (1,499,699) Other Non-operating Revenues ,000 70,000 70,000 Net Non-operating Revenues 102,428, ,740,059 96,632,076 92,809,068 Income before Other Revenues, Expenses Gains or Losses 4,309,791 8,096,611 14,181,131 18,354,815 Loss on Disposal of Capital Assets 935 (9,268) (20,750) (13,799) Capital Additions provided by State of Illinois 1,071, , (184,273) Increase in Net Position 5,381,915 8,769,028 14,160,381 18,156,743 NET POSITION NET POSITION BEGINNING OF YEAR 152,915, ,146, ,986, ,829,457 PRIOR YEAR ADJUSTMENTS (3,240,435) NET POSITION BEGINNING OF YEAR, AS RESTATED 149,675,174 8,769,028 14,160,381 18,156,743 NET POSITION END OF THE YEAR $ 155,057,089 $ 152,915,609 $ 144,146,581 $ 129,986,200 A-12

65 STATEMENT OF NET ASSETS OF THE UNIVERSITY FOR THE FISCAL YEARS ENDED JUNE 30, 2011 THRU 2014 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 64,016,576 $ 68,579,084 $ 49,252,846 $ 42,612,199 Short-term investments Receivables, net 18,889,478 22,162,196 20,202,638 24,176,736 Inventories 6,283 6,397 6,914 18,170 Deferred charges 1,170, ,341 1,041, ,729 Other assets 6,782 72,381 38,596 38,596 Total Current Assets 84,089,164 91,657,399 70,542,238 67,631,430 NONCURRENT ASSETS: Restricted cash and cash equivalents 8,868,765 15,884,401 2,944,566 7,635,272 Restricted investments 1,079,996 1,342,265 1,358,686 1,346,959 Receivables, net 2,324,795 2,454,329 2,418,160 2,406,118 Unamortized bond issue costs - 1,353, , ,102 Capital assets, net 145,514, ,847, ,292, ,328,374 Other assets 503, , ,248 - Total Noncurrent Assets 158,291, ,432, ,121, ,434,825 Total Assets 242,380, ,090, ,663, ,066,255 LIABILITIES Current liabilities: Accounts payable and accrued liabilities 16,156,462 8,761,510 8,207,393 7,532,184 Deferred revenues 1,584,791 2,058,245 3,108,943 2,664,518 Liability for compensated absences 1,210,052 1,372,505 1,451, ,037 Revenue bonds payable 215, , , ,000 Certificates of participation, net 1,361, , , ,284 Funds held in custody for others 350, , , ,460 Total current liabilities 20,878,149 13,530,222 14,007,375 12,134,483 NONCURRENT LIABILITIES: Liability for compensated absences 5,569,346 5,388,300 4,869,412 7,309,987 Revenue bonds payable 16,755,000 16,970,000 17,165,000 17,350,000 Certificates of participation, net 43,924,866 45,286,060 17,475,301 18,285,585 Total Noncurrent Liabilities 66,249,212 67,644,360 39,509,713 42,945,572 Total Liabilities $ 87,127,361 $ 81,174,582 $ 53,517,088 $ 55,080,055 DEFERRED INFLOW OF RESOURCES 195, NET ASSETS Invested in capital assets, net of related debts 95,597,781 80,856,620 93,184,828 82,618,639 Restricted for: Nonexpendable Scholarships and charitable trust Expendable Grants and contracts 797, , , ,487 Student loans 2,287,206 2,304,264 2,397,807 2,486,987 Debt service 2,545,019 2,144,950 2,101,010 1,951,010 Capital projects (738,235) (416,815) - - Other 1,271,087 1,762,886 1,169, ,588 Unrestricted 53,296,322 65,861,358 44,957,742 41,616,489 TOTAL NET ASSETS $ 155,057,089 $ 152,915,609 $ 144,146,581 $ 129,986,200 A-13

66 FUTURE CAPITAL PROJECTS The State appropriated $72 million of Capital Funds for the construction of a new Education Building at the main campus. The design, development, and construction are overseen by the Capital Development Board for State appropriated projects. This project is currently in the schematic design phase with occupancy expected during the fall semester of The University is engaged in a $12 million project to expand its utility infrastructure at the main campus to allow for the construction of the Education Building and to meet future needs for utility connectivity in the southern part of the campus. This project is currently in the construction document phase and is expected to be completed during the fall semester of This project is being funded from unrestricted reserves. The University is engaged in a $2 million project to expand its Center for Diversity and Intercultural Affairs at the main campus. This project will provide additional space for programs supporting the diverse student body at the University. This project is currently in the construction document phase and is expected to be completed during the summer of This project is being funded from unrestricted reserves. The University is engaged in a $1 million renovation project of an existing building adjacent to the new El Centro location. The building was originally purchased along with the land for El Centro. The building is being renovated into a welcome center for El Centro and will house academic and administrative staff. This project is currently in the construction phase and is expected to be completed by December This project is being funded from unrestricted reserves. The University is in the process of negotiating with a private developer to design, develop, construct, and operate an estimated $24-$35 million residence hall to be situated on the University s main campus. This project is expected to provide an estimated beds and to be the first residence hall at the University. The residence hall is expected to support student recruitment from states bordering Illinois and internationally. Negotiations to date indicate that the residence hall would be financed by a private housing foundation with debt issued through the Illinois Finance Authority. The project is likely to require certain commitments from the University, such as financial and occupancy breakeven commitments. The University anticipates a ground lease arrangement with the private developer that will provide net cash flows of the project to the University after funding of operations, debt service, and reserves. The residence hall will not be a System facility, and will be managed by a private management company. The University currently has no plans to issue additional University Facilities System Revenue Bonds. PRO FORMA UNIVERSITY ANNUAL DEBT SERVICE The table on the following page shows the pro forma combined annual debt service for the University. A-14

67 PRO FORMA COMBINED ANNUAL UNIVERSITY DEBT SERVICE UFS Revenue Bonds 1 Outstanding Year Ending Series 2014 Certificates of Participation 2 Combined Principal July 1 Principal 3 Interest Total Principal 4 Interest 5 Total University Balance 7/1/ , , ,895 1,360,000 1,809,856 3,169,856 3,713,751 58,755,000 7/1/ , , ,650 1,430,000 1,760,706 3,190,706 4,027,356 57,090,000 7/1/ , , ,600 1,515,000 1,707,372 3,222,372 4,056,972 55,335,000 7/1/ , , ,172,400 1,595,000 1,649,081 3,244,081 4,416,481 53,155,000 7/1/ , , ,164,000 1,690,000 1,586,056 3,276,056 4,440,056 50,865,000 7/1/ , , ,165,000 1,790,000 1,517,869 3,307,869 4,472,869 48,450,000 7/1/ , , ,166,250 1,890,000 1,443,831 3,333,831 4,500,081 45,915,000 7/1/ , , ,165,450 2,010,000 1,364,091 3,374,091 4,539,541 43,235,000 7/1/ , , ,163,650 2,125,000 1,278,644 3,403,644 4,567,294 40,415,000 7/1/ , , ,230,850 2,260,000 1,185,203 3,445,203 4,676,053 37,365,000 7/1/ , , ,232,150 2,390,000 1,083,161 3,473,161 4,705,311 34,160,000 7/1/ , , ,231,400 2,530, ,861 3,503,861 4,735,261 30,775,000 7/1/ , , ,228,650 1,425, ,256 2,311,256 3,539,906 28,455,000 7/1/ , , ,228,900 1,510, ,641 2,331,641 3,560,541 26,005,000 7/1/ , , ,231,000 1,680, ,170 2,430,170 3,661,170 23,350,000 7/1/2030 1,015, , ,232,000 1,090, ,298 1,782,298 3,014,298 21,245,000 7/1/2031 1,055, , ,231,400 1,135, ,124 1,786,124 3,017,524 19,055,000 7/1/2032 1,100, , ,234,200 1,175, ,518 1,782,518 3,016,718 16,780,000 7/1/2033 1,140,000 90, ,230,200 1,225, ,611 1,786,611 3,016,811 14,415,000 7/1/2034 1,060,000 43, ,103,460 1,270, ,265 1,783,265 2,886,725 12,085,000 7/1/2035 1,325, ,000 1,787,000 1,787,000 10,760,000 7/1/2036 1,375, ,000 1,783,000 1,783,000 9,385,000 7/1/2037 1,350, ,500 1,703,500 1,703,500 8,035,000 7/1/2038 1,425, ,000 1,723,000 1,723,000 6,610,000 7/1/2039 1,510, ,300 1,749,300 1,749,300 5,100,000 7/1/2040 1,595, ,403 1,771,403 1,771,403 3,505,000 7/1/2041 1,690, ,060 1,799,060 1,799,060 1,815,000 7/1/2042 1,815,000 37,208 1,852,208 1,852,208 15,160,000 7,466,105 22,626,105 45,180,000 24,927,084 70,107,084 92,733,189 1 Assumes issuance of Series 2014 and full refunding of Series Outstanding Certificates of Participation include the Series 2012 Certificates, the Series 2010 Certificates, and Series 2006 Certificates. 3 Principal comes due on July 1. 4 Principal comes due on the preceding October 1. 5 Gross of interest subsidies. A-15

68 Intentionally Left Blank

69 Appendix B Definitions of Certain Terms

70 Intentionally Left Blank

71 APPENDIX B DEFINITIONS OF CERTAIN TERMS DEFINITIONS RELATING TO THE ORIGINAL BOND RESOLUTION. For purposes of the Original Bond Resolution, the following words and terms shall have the following meanings. See below, DEFINITIONS RELATING TO THE RESTATED BOND RESOLUTION for definitions used in the Restated Bond Resolution. Act means, with respect to the Series 2014 Bonds, the Northeastern Illinois University Revenue Bond Law, 110 ILCS, 680/26-1, et seq, as supplemented and amended. Annual Debt Service means, in any Fiscal Year, an amount in such Fiscal Year equal to the sum of the principal payable on the Series 2004 Bonds, the Series 2014 Bonds and Parity Bonds at maturity, mandatory redemption, mandatory prepayment or otherwise, together with interest to be paid thereon in such Fiscal Year. In determining the Annual Debt Service in any future Fiscal Year or Fiscal Years for any purpose under the Original Bond Resolution if any Parity Bonds then being considered bear interest at a Variable Rate, then for the purpose of making such determination of Annual Debt Service on such Parity Bonds for any such Fiscal Year, such Annual Debt Service shall be computed by assuming that the rate of interest applicable to such Fiscal Year or Fiscal Years is equal to the Revenue Bonds Index as shown in the most recent edition of The Bond Buyer, published in New York, New York, at the time of the authorization of such Parity Bonds. Bond Account means the University Facilities Revenue Bond Account established pursuant to the Original Bond Resolution. Bond Counsel means any firm of nationally recognized bond counsel reasonably acceptable to the Board. Bond Reserve Account means the University Facilities Revenue Bond Reserve Account established pursuant to the Original Bond Resolution. Bond Reserve Requirement the lesser of (a) Maximum Annual Debt Service on the Series 2004 Bonds, the Series 2014 Bonds and the Parity Bonds, (b) 125 per cent of average Annual Debt Service on the Series 2004 Bonds, the Series 2014 Bonds, and Parity Bonds, or (c) 10 per cent of the original principal amount of the the Series 2004 Bonds, the Series 2014 Bonds and Parity Bonds. Board means the Board of Trustees of Northeastern Illinois University. Close of the Fiscal Year means the August 31 following the end of the related Fiscal Year. Code means with respect to the Series 2004 Bonds, the Series 2014 Bonds and any Parity Bonds hereafter issued, the Internal Revenue Code of 1986, as amended. Depository means such bank or banks as may be designated by the Board. Enabling Act means with respect to the Series 2004 Bonds, the Series 2014 Bonds and any Parity Bonds hereafter issued, the Act. Equipment Reserve Account means the account of that name established pursuant to the requirements of the Original Bond Resolution. B-1

72 Fiscal Year means the period commencing July 1 of each calendar year and ending June 30 of the next succeeding calendar year. Government Securities means direct general obligations of the United States of America, or any obligations unconditionally guaranteed as to the payment of principal and interest by the full faith and credit of the United States of America. Gross Revenues means all fees, rentals and other charges received from students, staff members and others using or being served by, or having the right to use or the right to be served by, the System and all other income and receipts, to be received directly or indirectly from the continued operation, use, occupancy and maintenance of the System; but Gross Revenues does not include Pledged Fees, Pledged Tuition or (except for transfer of investment income) transfers from the Bond Reserve Account, the Repair and Replacement Reserve Account, the Non-Instructional Facilities (Development) Reserve Account or the Equipment Reserve Account. Maximum Annual Debt Service means the largest total Annual Debt Service payable in the then current or any future Fiscal Year. Moody s means Moody s Investors Service, Inc., a corporation organized and existing under the laws of the State of Delaware, 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 organization designated by the Board, by notice to the Registrar. Net Revenues means that portion of the Gross Revenues remaining after providing sufficient funds for the reasonable and necessary cost of currently maintaining, repairing, insuring and operating the System, which cost shall include an amount equal to amounts paid by the operator of the bookstore to the Board for the exclusive rights associated with the sale of Northeastern-identified athletic wear. Non-Instructional Facilities (Development) Reserve Account means the account of that name established pursuant to the Bond Resolution. Operation and Maintenance Account means the University Facilities Revenue Bond Operation and Maintenance Account established pursuant to the Original Bond Resolution. Outstanding, or outstanding when used in reference to the Series 2004 Bonds, the Series 2014 Bonds or Parity Bonds, means, as of a particular date, the aggregate of all Series 2004 Bonds, Series 2014 Bonds and all Parity Bonds theretofore authenticated and delivered except: (a) those canceled at or prior to such date or delivered to or acquired by the Registrar at or prior to such date for cancellation; (b) those deemed to be paid in accordance with the Original Bond Resolution; (c) those in lieu of or in exchange or substitution for which other Series 2004 Bonds, Series 2014 Bonds or Parity Bonds shall have been authenticated and delivered pursuant to the Original Bond Resolution. Parity Bonds means, collectively, additional bonds authorized and issued under the Original Bond Resolution from time to time on a parity with the Series 2004 Bonds and the Series 2014 Bonds. Pledged Fees means the health, hospital, medical, laboratory, admission, student activities, student services and all other fees (excluding the Athletic Fee, the Health Insurance Fee and Tuition) collected from students matriculated, registered or otherwise enrolled at or attending the University B-2

73 and pledged by the Board to be retained in its Treasury pursuant to the Enabling Act, but does not include those fees assessed for the use and operation of the System. Pledged Tuition means Tuition pledged by the Board to be retained in its Treasury pursuant to the Enabling Act which will be necessary to meet, together with Gross Revenues and Pledged Fees, (i) operating and maintenance expenses, (ii) Annual Debt Service and (iii) any required deposits to the subaccounts of the Bond Reserve Account. Repair and Replacement Reserve Account means the University Facilities Revenue Bond Repair and Replacement Reserve Account established pursuant to the Original Bond Resolution. Reserve Account Credit Instrument means an insurance policy, surety bond or irrevocable letter of credit which may be delivered to the Registrar in lieu of or in the partial substitution for cash or securities required to be on deposit in the Bond Reserve Account. In the case of an insurance policy or surety bond, the company providing the same shall be an insurer which, at the time of the issuance of the policy or surety bond, has been assigned the highest rating accorded insurers by Moody s and S&P, and the policy or bond shall be subject to the irrevocable right of the Registrar to draw thereon in a timely fashion upon satisfaction of any conditions set forth in the Original Bond Resolution. In the case of a letter of credit, the letter of credit shall be irrevocable, shall be payable to the Registrar and shall be issued by a banking institution having a credit rating on its long-term unsecured debt within one of the two highest rating categories from Moody s and S&P. Revenue Fund means the University Facilities Revenue Fund established pursuant to the Original Bond Resolution. S&P means Standard & Poor s Ratings Services, a division of The McGraw-Hill Companies, Inc., its successors and their assigns, and, if such entity shall be dissolved or 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 organization designated by the Board, by notice to the Registrar. Series 2004 Bond Insurer means XL Capital Assurance Inc., a monoline financial guaranty insurance company incorporated under the laws of the State of New York, and its successors and assigns. Series 2004 Bonds means the Northeastern Illinois University University Facilities System Revenue Bonds, Series 2004, to be issued under the provisions of the Original Bond Resolution. Series 2014 Bonds means the Northeastern Illinois University University Facilities System Revenue Bonds, Series and Series , to be issued under the provisions of the Original Bond Resolution. Treasurer means the Treasurer of the Board, or his or her designee. Tuition means and includes the moneys collected from all students matriculated, registered or otherwise enrolled at or attending the University for tuition. University means Northeastern Illinois University. Variable Rate means a variable floating interest rate on any Parity Bonds established in accordance with the terms of the supplemental resolution under which said Parity Bonds are authorized. B-3

74 DEFINITIONS RELATING TO THE RESTATED BOND RESOLUTION. For purposes of the Restated Bond Resolution, the following words and terms shall have the following meanings. Act means the Northeastern Illinois University Revenue Bond Law, 110 ILCS 681/26-1 et seq., as it may be amended and supplemented. Annual Debt Service means, in any Fiscal Year, an amount in such Fiscal Year equal to the principal payable on the Bonds (or, if applicable, a particular series of the Bonds) at maturity, mandatory redemption, mandatory prepayment or otherwise, together with interest to be paid thereon in such Fiscal Year; provided, however, that: (a) payments on Bonds which have been refunded or which are to be made from funds escrowed or deposited with a third party shall be excluded; and (b) in the event any Variable Rate Bonds are being issued, Annual Debt Service on such Variable Rate Bonds for any such Fiscal Year shall be computed by assuming that the rate of interest applicable to such Fiscal Year or Fiscal Years is the highest of (i) the actual rate at the date of calculation, or if the Bonds are not yet Outstanding, the initial rate, (ii) if the Bonds have been Outstanding for at least 12 months, the average rate over the 12 months immediately preceding the date of calculation, and (iii)(a) if interest on the Bonds is issued as excludable from gross income under the applicable provisions of the Code, the rate of interest equal to the Revenue Bond Index as shown in the most recent edition of The Bond Buyer, or (B) if interest on the Bonds is not intended to be so excludable, the interest rate on direct United States Treasury Obligations with comparable maturities, but in each case not in excess of the rate authorized by law. Board or Board of Trustees means the Board of Trustees of Northeastern Illinois University and its successors or assigns. Bond or Bonds means the Series 2014 Bonds and each series of University Facilities System Revenue Bonds issued under the provisions of the Bond Resolution and any supplemental resolutions. Bond Fund means the fund of that name established pursuant to the requirements of the Bond Resolution. Bond Counsel means any firm of nationally recognized bond counsel acceptable to the Board. Bond Insurance Policy means a bond insurance policy issued with respect to a series of Bonds as may be provided in the supplemental resolution authorizing such series of Bonds. Bond Insurer means the entity, if any, identified as such with respect to a series of Bonds in the supplemental resolution authorizing such series of Bonds. Bond Registrar means the bond registrar and paying agent appointed for a series of Bonds in accordance with the provisions of the Bond Resolution or in the supplemental resolution authorizing such series of Bonds. The Bond Registrar for the Series 2014 Bonds is U.S. Bank National Association, Chicago, Illinois, and its successors and assigns. Bond Resolution or Restated Bond Resolution means the Bond Resolution adopted as Exhibit A to the Third Supplemental Revenue Bond Resolution of the Board, effective as of the date that no Series 2004 Bonds remain outstanding, as from time to time amended or supplemented in accordance with its terms. B-4

75 Business Day means a day of the year on which the designated corporate trust office of the Bond Registrar is not required or authorized to remain closed. Close of the Fiscal Year means the August 31 following the end of the related Fiscal Year. Code means the Internal Revenue Code of 1986, as from time to time supplemented or amended. References to the Code and to sections of the Code shall include relevant final, temporary or proposed Regulations as in effect from time to time and as applicable to a series of Bonds. Depository means any bank or banks designated by the Board as custodians of accounts under the Revenue Fund (except the Bond Fund, which is to be maintained by the Bond Registrar) and for an Expense Fund. Any such bank or banks shall be a member of the Federal Deposit Insurance Corporation and eligible to act as such under State law. Equipment Reserve Account means the account of that name established pursuant to the requirements of the Bond Resolution. Existing Facilities means the facilities (including equipment) described in the Bond Resolution, together with all improvements, repairs, extensions or replacements, hereafter constructed or acquired that have not been converted to non-income use or abandoned for non-economic feasibility, as determined by resolution of the Board and filed with the Treasurer. Expense Fund means each fund established under the Bond Resolution for a series of Bonds or in a supplemental resolution authorizing a series of Bonds into which a part of the proceeds of such Bonds will be deposited and which will be used for the purpose of paying costs of issuance of such Bonds. Fiscal Year means the period commencing July 1 of any calendar year and ending June 30 of each succeeding calendar year. Government Securities means direct, general obligations of the United States of America, or any obligations unconditionally guaranteed as to the payment of principal and interest by the full faith and credit of the United States of America or such other obligations of the United States of America that are permitted to be used for defeasance purposes under State law. Government Securities, if any, used to defease a series of Bonds must meet the requirements of the Bond Insurer, if any, as set forth in the supplemental resolution authorizing the series of Bonds. Gross Revenues means all fees, rentals, and other charges received from students, staff members and others using or being served by, or having the right to use or the right to be served by, or to operate any portion of the facilities comprising the System, including, but not limited to, System Fees, and all other income and receipts received directly or indirectly from the continued operation, use, occupancy and maintenance of the System, but Gross Proceeds does not include Pledged Fees, Pledged Tuition or (except for transfer of investment income) transfers from the Repair and Replacement Reserve Account, the Non-Instructional Facilities (Development) Reserve Account or the Equipment Reserve Account. Maximum Annual Debt Service means the largest total Annual Debt Service payable in the then current or any future Fiscal Year. Moody s means Moody s Investors Service, Inc., a corporation organized and existing under the laws of the State of Delaware, 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, B-5

76 Moody s shall be deemed to refer to any other nationally recognized securities rating organization designated by the Treasurer, by notice to the Bond Registrar. Net Revenues means that portion of the Gross Revenues of the System remaining after providing sufficient funds for the reasonable and necessary cost of currently maintaining, repairing, insuring and operating the System, plus interest income. Non-Instructional Facilities (Development) Reserve Account means the account of that name established pursuant to the requirements of the Bond Resolution. Outstanding, when used in reference to the Bonds means, as of a particular date, the aggregate of all Bonds authenticated and delivered under the Bond Resolution except: (a) those cancelled at or prior to such date by the Bond Registrar or delivered to the Bond Registrar at or prior to such date for cancellation; (b) those deemed to be paid in accordance with the Bond Resolution; (c) those in lieu of or in exchange or substitution for which other Bonds shall have been authenticated and delivered pursuant to the Bond Resolution; and (d) for purposes of any consent or other action to be taken by the Owners of a specified percentage of Bonds or of a series of Bonds under the Bond Resolution, those held by or for the account of the Board or the University, unless all such Bonds are so held. Owner means, with respect to a Bond, the person in whose name such Bond shall be registered upon the registration books of the Bond Registrar. Paying Agent means the entity acting as the Bond Registrar for such series of Bonds. Permitted Encumbrances means with respect to the sites of the System (a) liens for taxes and special assessments which are not then delinquent or, if then delinquent, are being contested in good faith; (b) utility, access and other easements and rights-of-way, restrictions and exceptions that will not interfere in any substantial way with or impair the operation of the System; (c) any known mechanic s, laborer s, materialman s, supplier s or vendor s lien or right in respect thereof, if payment is not due under the contract in question or if such lien is being contested in good faith; (d) such minor defects, irregularities, encumbrances, easements, rights-of-way and clouds on title as normally exist with respect to properties similar in character to the property included in the System and do not materially impair the property affected thereby for the purpose for which it was acquired or is held; (e) zoning laws and similar restrictions not violated and liens arising in connection with workmen s compensation, unemployment insurance, taxes, assessments, statutory obligations or liens, social security legislation, undetermined liens and charges incidental to construction, or other similar charges arising in the ordinary course of operations and not overdue or, if overdue, being contested in good faith; (f) such other liens and charges at the time required by law as a condition precedent to the transaction of the activities of the Board or the University or the exercise of any privileges or licenses necessary to the Board or the University; (g) lease agreements or lease-purchase agreements the payments on which are paid from operating revenues; (h) the pledge of any revenue bonds or additional debt which is subordinate to the Bonds; and (i) the pledge to the Bonds. Permitted Investments means any investments permitted by the laws of the State for the investment of public funds. B-6

77 Pledged Fees means the health, hospital, medical, laboratory, admission, student activities, student services and all other fees (excluding Tuition, which is separately pledged, the Athletic Fee and the Health Insurance Fee) that may be charged and collected from students at the University. Pledged Tuition means Tuition pledged by the Board to be retained in its Treasury pursuant to the Act which will be necessary to meet, together with Gross Revenues and Pledged Fees, (i) operating and maintenance expenses and (ii) Annual Debt Service. Record Date means the date defined as such in the supplemental resolution authorizing such series of Bonds. Repair and Replacement Reserve Account means the account of that name established pursuant to the requirements of the Bond Resolution. Revenue Fund means the fund of that name established pursuant to the requirements of the Bond Resolution. S&P means Standard & Poor s Ratings Services, a division of The McGraw-Hill Companies, Inc., a corporation duly organized and existing under the laws of the State of New York, its successors and their assigns, and, if such entity shall be dissolved or 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 organization designated by the Treasurer, by notice to the Bond Registrar. Series 2014 Bond Insurer means Build America Mutual Assurance Company and its successors and assigns. Series 2014 Bonds means the University Facilities System Revenue Bonds, Series and Series State means the State of Illinois. System means each and all of the following: (i) any facilities financed with the proceeds of Bonds; (ii) the Existing Facilities as described in the Bond Resolution; and (iii) all repairs, replacements, alterations, extensions, betterments, developments and improvements hereafter acquired, constructed or installed for the System, that have not been abandoned, sold or converted to non-income use and occupancy pursuant to the Bond Resolution. Tax Exemption Certificate and Agreement means the agreement of that name, if any, delivered by the Board in connection with the issuance of a series of Bonds. Treasurer means the Treasurer of the Board, or his or her designee. Tuition means and includes the moneys collected from all students matriculated, registered or otherwise enrolled at or attending the University for tuition. University means Northeastern Illinois University. Variable Rate means a variable, floating or fluctuating interest rate on any Bonds established in accordance with the terms of the supplemental resolution under which said Bonds are authorized. B-7

78 Intentionally Left Blank

79 Appendix C Proposed Form of Opinion of Bond Counsel

80 Intentionally Left Blank

81 APPENDIX C PROPOSED FORM OF OPINION OF BOND COUNSEL Upon the issuance of the Series 2014 Bonds, Chapman and Cutler LLP, Bond Counsel, proposes to issue its approving opinion in substantially the following form: [LETTERHEAD OF CHAPMAN AND CUTLER LLP] [To Be Dated the Closing Date] Board of Trustees of Northeastern Illinois University 5500 North St. Louis Avenue Chicago, Illinois We hereby certify that we have examined a certified copy of the proceedings of the Board of Trustees of Northeastern Illinois University (the Board ), passed preliminary to the issue by the Board of its University Facilities System Revenue Bonds, Series in the aggregate principal amount of $4,520,000 (the Series Bonds ) and its University Facilities System Revenue Bonds, Series in the aggregate principal amount of $10,640,000 (the Series Bonds and with the Series Bonds, the Series 2014 Bonds ) dated December 23, 2014, due on July 1 of the years and in the amounts and bearing interest at the rates per annum as follows: SERIES BONDS SERIES BONDS JULY 1 OF THE YEAR INTEREST RATE JULY 1 OF THE YEAR INTEREST RATE AMOUNT AMOUNT 2015 $ 225, % 2024 $ 790, % , , , ,750, , , , ,990, , ,155, , ,200, , , C-1

82 We are of the opinion that such proceedings show lawful authority for the issuance of the Series 2014 Bonds under the authorizing resolution of the Board of Governors of State Colleges and Universities of the State of Illinois, as the predecessor of the Board, adopted July 12, 1973, as amended and supplemented on February 4, 1997, February 11, 2004 and November 13, 2014, and as hereafter amended or supplemented (collectively, the Bond Resolution ) and the laws of the State of Illinois now in force. Capitalized terms used herein and not defined shall have the meanings set forth in the Bond Resolution. We further certify that we have examined the form of bond prescribed for such issue and find the same in due form of law. In our opinion the Series 2014 Bonds, to the amount named, are valid and legally binding limited obligations of the Board, except that the rights of the owners of the Series 2014 Bonds and the enforceability of the Series 2014 Bonds may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditors rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion. The Series 2014 Bonds are payable from and, together with the Board s outstanding University Facilities Revenue Bonds, Series 2004 and such bonds as may be issued on a parity with the Series 2014 Bonds and the outstanding Series 2004 Bonds pursuant to the terms of the Bond Resolution, secured by a pledge of (i) the Net Revenues of the System, (ii) the Pledged Fees and Pledged Tuition, subject to the prior payment of operating and maintenance expenses of the System, but only to the extent necessary, and (iii) until released in accordance with the Bond Resolution, funds held in the Bond Reserve Account. It is our opinion that, subject to the Board s compliance with certain covenants, under present law, interest on the Series 2014 Bonds is excludable from gross income of the owners thereof for federal income tax purposes and is not included as an item of tax preference in computing the alternative minimum tax for individuals and corporations under the Internal Revenue Code of 1986, as amended, but is taken into account in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. Failure to comply with certain of such Board covenants could cause interest on the Series 2014 Bonds to be includible in gross income for federal income tax purposes retroactively to the date of issuance of the Series 2014 Bonds. Ownership of the Series 2014 Bonds may result in other federal tax consequences to certain taxpayers, and we express no opinion regarding any such collateral consequences arising with respect to the Series 2014 Bonds. It is also our opinion that interest on the Series 2014 Bonds is includible in the calculation of Illinois state income tax for Bondholders who are residents of Illinois. Ownership of the Series 2014 Bonds may result in other state and local tax consequences to certain taxpayers, and we express no opinion regarding any such collateral consequences arising with respect to the Series 2014 Bonds. We express no opinion herein as to the accuracy, adequacy or completeness of the Official Statement relating to the Bonds. In rendering this opinion, we have relied upon certifications of the Board with respect to certain material facts within the Board s knowledge. Our opinion represents our legal judgment based upon our review of the law and the facts that we deem relevant to render such opinion and is not a guarantee of a result. This opinion is given as of the date hereof and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. C-2

83 Appendix D Form of the Continuing Disclosure Agreement

84 Intentionally Left Blank

85 APPENDIX D FORM OF THE CONTINUING DISCLOSURE AGREEMENT CONTINUING DISCLOSURE AGREEMENT FOR THE PURPOSE OF PROVIDING CONTINUING DISCLOSURE INFORMATION UNDER SECTION (b)(5) OF RULE 15c2-12 This Continuing Disclosure Agreement (this Agreement ) is executed and delivered by the Board of Trustees of Northeastern Illinois University (the Board ), in connection with the issuance of $4,520,000 University Facilities System Revenue Bonds, Series and $10,640,000 University Facilities System Revenue Bonds, Series (collectively, the Bonds ). The Bonds are being issued pursuant to a resolution adopted by the Board on November 13, 2014 (the Resolution ). In consideration of the issuance of the Bonds by the Board and the purchase of such Bonds by the beneficial owners thereof, the Board covenants and agrees as follows: 1. PURPOSE OF THIS AGREEMENT. This Agreement is executed and delivered by the Board as of the date set forth below, for the benefit of the beneficial owners of the Bonds and in order to assist the Participating Underwriters in complying with the requirements of the Rule (as defined below). The Board represents that it will be the only obligated person with respect to the Bonds at the time the Bonds are delivered to the Participating Underwriters and that no other person is expected to become so committed at any time after issuance of the Bonds. 2. Definitions. The terms set forth below shall have the following meanings in this Agreement, unless the context clearly otherwise requires. Annual Financial Information means information for the preceding Fiscal Year of the type included in the Final Official Statement as follows: (i) Under NORTHEASTERN ILLINOIS UNIVERSITY, UNIVERSITY FACILITIES SYSTEM, under the subcaption Description of System Facilities, total revenues of the Parking Facilities, the Student Union, Bookstore and Vending Facilities; and under the subcaption Historical Pro Forma Debt Service Coverage, actual System results and coverage of Maximum Annual Debt Service; and (ii) under NORTHEASTERN ILLINOIS UNIVERSITY, under the subcaption Pledged Fees, the amount of Pledged Fees; under the subcaption Pledged Tuition, Tuition revenues less exemptions. Annual Financial Information Disclosure means the dissemination of disclosure concerning Annual Financial Information and the dissemination of the Audited Financial Statements as set forth in Section 4. Audited Financial Statements means the audited financial statements of the Board prepared pursuant to the standards and as described in Exhibit I. Commission means the Securities and Exchange Commission. Dissemination Agent means any agent designated as such in writing by the Board and which has filed with the Board a written acceptance of such designation, and such agent s successors and assigns. D-1

86 EMMA means the MSRB through its Electronic Municipal Market Access system for municipal securities disclosure or through any other electronic format or system prescribed by the MSRB for purposes of the Rule. Exchange Act means the Securities Exchange Act of 1934, as amended. MSRB means the Municipal Securities Rulemaking Board. Official Statement means the Final Official Statement, dated November 25, 2014, and relating to the Bonds. Participating Underwriter means each broker, dealer or municipal securities dealer acting as an underwriter in the primary offering of the Bonds. Reportable Event means the occurrence of any of the Events with respect to the Bonds set forth in Exhibit II. Reportable Events Disclosure means dissemination of a notice of a Reportable Event as set forth in Section 5. Rule means Rule 15c2-12 adopted by the Commission under the Exchange Act, as the same may be amended from time to time. State means the State of Illinois. Undertaking means the obligations of the Board pursuant to Sections 4 and CUSIP NUMBERS. The CUSIP Numbers of the Bonds are set forth in Exhibit III. The Board will include the CUSIP Numbers in all disclosure materials described in Sections 4 and 5 of this Agreement. 4. ANNUAL FINANCIAL INFORMATION DISCLOSURE. Subject to Section 8 of this Agreement, the Board hereby covenants that it will disseminate its Annual Financial Information and its Audited Financial Statements (in the form and by the dates set forth in Exhibit I) to EMMA in such manner and format and accompanied by identifying information as is prescribed by the MSRB or the Commission at the time of delivery of such information and by such time so that such entities receive the information by the dates specified. MSRB Rule G-32 requires all EMMA filings to be in word-searchable PDF format. This requirement extends to all documents required to be filed with EMMA, including financial statements and all other externally prepared reports. If any part of the Annual Financial Information can no longer be generated because the operations to which it is related have been materially changed or discontinued, the Board will disseminate a statement to such effect as part of its Annual Financial Information for the year in which such event first occurs. If any amendment or waiver is made to this Agreement, the Annual Financial Information for the year in which such amendment or waiver is made (or in any notice or supplement provided to EMMA) shall contain a narrative description of the reasons for such amendment or waiver and its impact on the type of information being provided. 5. REPORTABLE EVENTS DISCLOSURE. Subject to Section 8 of this Agreement, the Board hereby covenants that it will disseminate in a timely manner (not in excess of ten business days after the occurrence of the Reportable Event) Reportable Events Disclosure to EMMA in D-2

87 such manner and format and accompanied by identifying information as is prescribed by the MSRB or the Commission at the time of delivery of such information. MSRB Rule G-32 requires all EMMA filings to be in word-searchable PDF format. This requirement extends to all documents to be filed with EMMA, including financial statements and other externally prepared reports. Notwithstanding the foregoing, notice of optional or unscheduled redemption of any Bonds or defeasance of any Bonds need not be given under this Agreement any earlier than the notice (if any) of such redemption or defeasance is given to the Bondholders pursuant to the Resolution. 6. CONSEQUENCES OF FAILURE OF THE BOARD TO PROVIDE INFORMATION. The Board shall give notice in a timely manner to EMMA of any failure to provide Annual Financial Information Disclosure when the same is due hereunder. In the event of a failure of the Board to comply with any provision of this Agreement, the beneficial owner of any Bond may seek mandamus or specific performance by court order, to cause the Board to comply with its obligations under this Agreement. A default under this Agreement shall not be deemed a default under the Resolution, and the sole remedy under this Agreement in the event of any failure of the Board to comply with this Agreement shall be an action to compel performance. 7. AMENDMENTS;WAIVER. Notwithstanding any other provision of this Agreement, the Board by resolution authorizing such amendment or waiver, may amend this Agreement, and any provision of this Agreement may be waived, if: (a) (i) The amendment or waiver is made in connection with a change in circumstances that arises from a change in legal requirements, including without limitation, pursuant to a no-action letter issued by the Commission, a change in law, or a change in the identity, nature, or status of the Board, or type of business conducted; or (ii) This Agreement, as amended, or the provision, as waived, would have complied with the requirements of the Rule at the time of the primary offering, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (b) The amendment or waiver does not materially impair the interests of the beneficial owners of the Bonds, as determined by parties unaffiliated with the Board. In the event that the Commission or the MSRB or other regulatory authority shall approve or require Annual Financial Information Disclosure or Reportable Events Disclosure to be made to a central post office, governmental agency or similar entity other than EMMA or in lieu of EMMA, the Board shall, if required, make such dissemination to such central post office, governmental agency or similar entity without the necessity of amending this Agreement. 8. TERMINATION OF UNDERTAKING. The Undertaking of the Board shall be terminated hereunder if the Board shall no longer have any legal liability for any obligation on or relating to repayment of the Bonds under the Resolution. The Board shall give notice to EMMA in a timely manner if this Section is applicable. 9. DISSEMINATION AGENT. The Board may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Agreement, and may D-3

88 discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. 10. Additional Information. Nothing in this Agreement shall be deemed to prevent the Board from disseminating any other information, using the means of dissemination set forth in this Agreement or any other means of communication, or including any other information in any Annual Financial Information Disclosure or notice of occurrence of a Reportable Event, in addition to that which is required by this Agreement. If the Board chooses to include any information from any document or notice of occurrence of a Reportable Event in addition to that which is specifically required by this Agreement, the Board shall have no obligation under this Agreement to update such information or include it in any future disclosure or notice of occurrence of a Reportable Event. 11. Beneficiaries. This Agreement has been executed in order to assist the Participating Underwriters in complying with the Rule; however, this Agreement shall inure solely to the benefit of the Board, the Dissemination Agent, if any, and the beneficial owners of the Bonds, and shall create no rights in any other person or entity. 12. Recordkeeping. The Board shall maintain records of all Annual Financial Information Disclosure and Reportable Events Disclosure, including the content of such disclosure, the names of the entities with whom such disclosure was filed and the date of filing such disclosure. 13. Assignment. The Board shall not transfer its obligations under the Resolution unless the transferee agrees to assume all obligations of the Board under this Agreement or to execute an Undertaking under the Rule. 14. Governing Law. This Agreement shall be governed by the laws of the State. BOARD OF TRUSTEES OF NORTHEASTERN ILLINOIS UNIVERSITY By Treasurer, Board of Trustees Date:, 2014 D-4

89 Exhibit I ANNUAL FINANCIAL INFORMATION AND TIMING AND AUDITED FINANCIAL STATEMENTS All or a portion of the Annual Financial Information and the Audited Financial Statements as set forth below may be included by reference to other documents which have been submitted to EMMA or filed with the Commission. If the information included by reference is contained in a Final Official Statement, the Final Official Statement must be available on EMMA; the Final Official Statement need not be available from the Commission. The Board shall clearly identify each such item of information included by reference. Annual Financial Information exclusive of Audited Financial Statements will be submitted to EMMA by 240 days after the last day of the University s fiscal year (currently June 30). Audited Financial Statements as described below should be filed at the same time as the Annual Financial Information if not previously, filed as described below. If unavailable when the Annual Financial Information is filed, Audited Financial Statements will be submitted to EMMA within 30 days after availability to the Board. Audited Financial Statements will be prepared in accordance with U.S. generally accepted accounting principles as promulgated by the Government Accounting Standards Board. If any change is made to the Annual Financial Information as permitted by Section 4 of the Agreement, the Board will disseminate a notice of such change as required by Section 4. D-5

90 Exhibit II EVENTS WITH RESPECT TO THE BONDS FOR WHICH REPORTABLE EVENTS DISCLOSURE IS REQUIRED 1. Principal and interest payment delinquencies 2. Non-payment related defaults, if material 3. Unscheduled draws on debt service reserves reflecting financial difficulties 4. Unscheduled draws on credit enhancements reflecting financial difficulties 5. Substitution of credit or liquidity providers, or their failure to perform 6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security 7. Modifications to the rights of security holders, if material 8. Bond calls, if material, and tender offers 9. Defeasances 10. Release, substitution or sale of property securing repayment of the securities, if material 11. Rating changes 12. Bankruptcy, insolvency, receivership or similar event of the Board 13. The consummation of a merger, consolidation, or acquisition involving the Board or the System or the sale of all or substantially all of the assets of the Board or the System, 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, if material 14. Appointment of a successor or additional trustee or the change of name of a trustee, if material This event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the Board in a proceeding under the U.S. 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 Board, or if such jurisdiction has been assumed by leaving the existing governing 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 Board. D-6

91 Exhibit III $4,520,000 Board of Trustees of Northeastern Illinois University University Facilities System Revenue Bonds Series MATURITY DATE CUSIP 7/1/2015 DB3 7/1/2016 DC1 7/1/2017 DD9 7/1/2018 DE7 7/1/2019 DF4 7/1/2020 DG2 7/1/2021 DH0 7/1/2022 DJ6 7/1/2023 DK3 $10,640,000 Board of Trustees of Northeastern Illinois University University Facilities System Revenue Bonds Series MATURITY DATE CUSIP 7/1/2024 DL1 7/1/2025 DM9 7/1/2027 DN7 7/1/2028 DP2 7/1/2030 DQ0 7/1/2032 DR8 7/1/2034 DS6 D-7

92 Intentionally Left Blank

93 Appendix E Summary of Outstanding Debt Service

94 Intentionally Left Blank

95 Summary of Outstanding Debt Service By Series and Issue Type (As of October 1, 2014) Prepared by John S. Vincent & Company LLC October 9, 2014

96 Intentionally Left Blank

97 Summary of Outstanding Debt Service (By Series and Issue Type) Table of Contents Summary of Outstanding Debt as of October 1, 2014 Summary Combined Outstanding Annual Debt Service Graph - by Issue Type Graph 1 Combined Outstanding Annual Debt Service Graph - by Series Graph 2 Summary of Outstanding Annual Net Debt Service Requirements Table 1 University Facilities System Revenue Bonds University Facilities System Outstanding Debt Service Graph Series 2004 Annual Debt Service Requirements Series 2004 Semiannual Debt Service Requirements Graph A Schedule A Schedule A Certificates of Participation Certificates of Participation Outstanding Debt Service Graph Summary of COPs Annual Net Debt Service Requirements Summary of COPs Semiannual Net Debt Service Requirements Series 2012 Annual Debt Service Requirements Series 2012 Semiannual Debt Service Requirements Series 2010 Annual Net Debt Service Requirements Series 2010 Semiannual Net Debt Service Requirements Series 2006 Annual Debt Service Requirements Series 2006 Semiannual Debt Service Requirements Graph A Schedule B Schedule B Schedule B1 Schedule B1 Schedule B2 Schedule B2 Schedule B3 Schedule B3 E-1

98 Summary The Board of Trustees of Northeastern Illinois University Summary of Outstanding Debt as of October 1, 2014 Dated Original Original Outstanding Par Final Remaining Bond Advance 1st Optional Lead Date Issue True Interest Cost Par As of 10/1/2014 Maturity Interest Rates Insurer Type Refundable Call at Par Underwriter University Facilities System 4/8/2004 UFS Revenue Bonds Series % $16,970,000 $16,755,000 7/1/ % % XLCA New Money Yes Now at 100% (1/1/2014) Competitive Sale Edward Jones University Facilities System Total: $16,970,000 $16,755,000 E-2 Certificates of Participation 11/14/2012 Certificates of Participation Series /8/2010 Certificates of Participation Series 2010 (Taxable BABs) 3/8/2006 Certificates of Participation Series % $28,500,000 $28,040,000 10/1/ % % None New Money Yes 10/1/2022 Competitive Sale Edward Jones Gross % 6,060,000 5,550,000 10/1/ % % None New Money Yes 10/1/2020 Competitive Sale Net % Edward Jones 4.589% 15,060,000 10,230,000 10/1/ % % None New Money Yes 10/1/2015 Competitive Sale Morgan Stanley DW Certificates of Participation Total: $49,620,000 $43,820,000 Grand Total: $66,590,000 $60,575,000

99 $5.0 The Board of Trustees of Northeastern Illinois University Combined Outstanding Annual Debt Service By Issue Type Graph 1 $4.5 $4.0 E-3 Annual Debt Service (in millions) $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 Bond Year Ending October 1 Certificates of Participation University Facilities System

100 $5.0 The Board of Trustees of Northeastern Illinois University Combined Outstanding Annual Debt Service By Series Graph 2 $4.5 $4.0 E-4 Annual Debt Service (in millions) $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 Bond Year Ending October 1 UFS Series 2004 Series 2012 COPS Series 2010 COPS Series 2006 COPS

101 The Board of Trustees of Northeastern Illinois University Summary of Outstanding Annual Net Debt Service Requirements For Bond Year 2014 and Forward Table 1 University COPs Bond Year Facilities Certificates of Combined Series 2010 Combined Ending System 1 Participation 2 Total Govt. Subsidy Net Total 10/1/ ,373 3,216,113 4,155,485 (101,913) 4,053,572 10/1/ ,453 3,250,300 4,191,753 (99,582) 4,092,171 10/1/ ,943 3,274,444 4,212,386 (96,628) 4,115,758 10/1/2018 1,309,013 3,308,719 4,617,731 (93,019) 4,524,712 10/1/2019 1,310,028 3,343,394 4,653,421 (88,688) 4,564,733 10/1/2020 1,309,428 3,372,344 4,681,771 (83,700) 4,598,071 10/1/2021 1,307,495 3,415,319 4,722,814 (77,925) 4,644,888 10/1/2022 1,309,205 3,447,863 4,757,068 (71,378) 4,685,689 10/1/2023 1,309,325 3,494,425 4,803,750 (64,120) 4,739,630 10/1/2024 1,307,825 3,525,981 4,833,806 (55,937) 4,777,870 10/1/2025 1,309,675 3,560,341 4,870,016 (46,889) 4,823,127 10/1/2026 1,309,630 2,342,381 3,652,011 (36,848) 3,615,163 10/1/2027 1,307,655 2,365,131 3,672,786 (25,780) 3,647,007 10/1/2028 1,309,158 2,468,150 3,777,308 (13,545) 3,763,763 10/1/2029 1,308,920 1,802,190 3,111,110 3,111,110 10/1/2030 1,311,460 1,807,405 3,118,865 3,118,865 10/1/2031 1,312,020 1,804,843 3,116,863 3,116,863 10/1/2032 1,310,600 1,810,193 3,120,793 3,120,793 10/1/2033 1,311,650 1,808,030 3,119,680 3,119,680 10/1/2034 1,310,475 1,813,500 3,123,975 3,123,975 10/1/2035 1,311,475 1,810,500 3,121,975 3,121,975 10/1/2036 1,730,500 1,730,500 1,730,500 10/1/2037 1,751,500 1,751,500 1,751,500 10/1/2038 1,779,500 1,779,500 1,779,500 10/1/2039 1,804,100 1,804,100 1,804,100 10/1/2040 1,833,705 1,833,705 1,833,705 10/1/2041 1,889,415 1,889,415 1,889,415 26,393,803 67,830,284 94,224,086 (955,953) 93,268,134 Outstanding Principal (as of 10/1/2014): $16,755,000 $43,820,000 $60,575,000 1 Principal on the University Facilities System bonds mature on the preceding 7/1. 2 Principal on the Certificates of Participation mature on 10/1. E-5

102 The Board of Trustees of Northeastern Illinois University Outstanding University Facilities System Issues UFS Revenue Bonds Series, 2004 E-6

103 The Board of Trustees of Northeastern Illinois University Outstanding University Facilities System Revenue Bonds By Series Graph A $5.0 $4.5 $4.0 $3.5 E-7 Annual Debt Service (in millions) $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $ Bond Year Ending July 1 Series 2004

104 The Board of Trustees of Northeastern Illinois University University Facilities System Schedule A University Facilities System Revenue Bonds, Series 2004 Outstanding Annual Debt Service Requirements Bond Year Total Ending Principal Rate Interest Debt Service 7/1/ , % 719, , /1/ , % 711, , /1/ , % 702, , /1/ , % 694, ,309, /1/ , % 670, ,310, /1/ , % 644, ,309, /1/ , % 617, ,307, /1/ , % 589, ,309, /1/ , % 559, ,309, /1/ , % 527, ,307, /1/ , % 494, ,309, /1/ , % 459, ,309, /1/ , % 422, ,307, /1/ , % 384, ,309, /1/ , % 343, ,308, /1/2030 1,010, % 301, ,311, /1/2031 1,055, % 257, ,312, /1/2032 1,100, % 210, ,310, /1/2033 1,150, % 161, ,311, /1/2034 1,200, % 110, ,310, /1/2035 1,255, % 56, ,311, ,755,000 9,638, ,393, Call Features: Now at 100% (call date 1/1/2014). E-8

105 The Board of Trustees of Northeastern Illinois University University Facilities System Schedule A University Facilities System Revenue Bonds, Series 2004 Outstanding Semiannual Debt Service Requirements Total Bond Year Date Principal Rate Interest Debt Service Total 1/1/ , , /1/ , % 359, , , /1/ , , /1/ , % 355, , , /1/ , , /1/ , % 351, , , /1/ , , /1/ , % 347, , ,309, /1/ , , /1/ , % 335, , ,310, /1/ , , /1/ , % 322, , ,309, /1/ , , /1/ , % 308, , ,307, /1/ , , /1/ , % 294, ,014, ,309, /1/ , , /1/ , % 279, ,029, ,309, /1/ , , /1/ , % 263, ,043, ,307, /1/ , , /1/ , % 247, ,062, ,309, /1/ , , /1/ , % 229, ,079, ,309, /1/ , , /1/ , % 211, ,096, ,307, /1/ , , /1/ , % 192, ,117, ,309, /1/ , , /1/ , % 171, ,136, ,308, /1/ , , /1/2030 1,010, % 150, ,160, ,311, /1/ , , /1/2031 1,055, % 128, ,183, ,312, /1/ , , /1/2032 1,100, % 105, ,205, ,310, /1/ , , /1/2033 1,150, % 80, ,230, ,311, /1/ , , /1/2034 1,200, % 55, ,255, ,310, /1/ , , /1/2035 1,255, % 28, ,283, ,311, ,755,000 9,638, ,393, Call Features: Now at 100% (call date 1/1/2014). E-9

106 The Board of Trustees of Northeastern Illinois University Outstanding Certificates of Participation Certificates of Participation, Series 2012 Certificates of Participation, Series 2010 (Taxable BABs) Certificates of Participation, Series 2006 E-10

107 The Board of Trustees of Northeastern Illinois University Outstanding Certificates of Participation By Series Graph B $5.0 $4.5 $4.0 $3.5 E-11 Annual Debt Service (in millions) $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 Bond Year Ending October 1 Series 2012 Series 2010 Series 2006

108 The Board of Trustees of Northeastern Illinois University Certificates of Participation Schedule B Summary of Outstanding Annual Net Debt Service Requirements Bond Year Combined Series 2010 Combined Net Ending Series 2012 Series 2010 Series 2006 Debt Service Gov't Subsidy Debt Service 10/1/2015 1,523, ,181 1,196,806 3,216,113 (101,913) 3,114,199 10/1/2016 1,538, ,519 1,202,206 3,250,300 (99,582) 3,150,718 10/1/2017 1,548, ,081 1,200,238 3,274,444 (96,628) 3,177,815 10/1/2018 1,566, ,769 1,201,025 3,308,719 (93,019) 3,215,700 10/1/2019 1,584, ,394 1,205,325 3,343,394 (88,688) 3,254,706 10/1/2020 1,601, ,144 1,201,825 3,372,344 (83,700) 3,288,643 10/1/2021 1,622, ,644 1,205,650 3,415,319 (77,925) 3,337,393 10/1/2022 1,641, ,938 1,207,450 3,447,863 (71,378) 3,376,484 10/1/2023 1,669, ,200 1,207,225 3,494,425 (64,120) 3,430,305 10/1/2024 1,683, ,819 1,212,350 3,525,981 (55,937) 3,470,045 10/1/2025 1,706, ,969 1,209,863 3,560,341 (46,889) 3,513,452 10/1/2026 1,687, ,281 2,342,381 (36,848) 2,305,533 10/1/2027 1,696, ,656 2,365,131 (25,780) 2,339,352 10/1/2028 1,784, ,700 2,468,150 (13,545) 2,454,605 10/1/2029 1,802,190 1,802,190 1,802,190 10/1/2030 1,807,405 1,807,405 1,807,405 10/1/2031 1,804,843 1,804,843 1,804,843 10/1/2032 1,810,193 1,810,193 1,810,193 10/1/2033 1,808,030 1,808,030 1,808,030 10/1/2034 1,813,500 1,813,500 1,813,500 10/1/2035 1,810,500 1,810,500 1,810,500 10/1/2036 1,730,500 1,730,500 1,730,500 10/1/2037 1,751,500 1,751,500 1,751,500 10/1/2038 1,779,500 1,779,500 1,779,500 10/1/2039 1,804,100 1,804,100 1,804,100 10/1/2040 1,833,705 1,833,705 1,833,705 10/1/2041 1,889,415 1,889,415 1,889,415 46,299,028 8,281,294 13,249,963 67,830,284 (955,953) 66,874,331 E-12

109 The Board of Trustees of Northeastern Illinois University Certificates of Participation Schedule B Summary of Outstanding Semiannual Net Debt Service Requirements Combined Series 2010 Combined Net Bond Year Date Series 2012 Series 2010 Series 2006 Debt Service Gov't Subsidy Debt Service Total 4/1/ , , , ,056 (50,957) 842,100 10/1/2015 1,004, , ,403 2,323,056 (50,957) 2,272,100 3,114,199 4/1/ , , , ,650 (49,791) 817,859 10/1/2016 1,026, , ,603 2,382,650 (49,791) 2,332,859 3,150,718 4/1/ , , , ,722 (48,314) 791,408 10/1/2017 1,044, ,041 1,002,619 2,434,722 (48,314) 2,386,408 3,177,815 4/1/ , , , ,359 (46,510) 762,850 10/1/2018 1,070, ,884 1,020,513 2,499,359 (46,510) 2,452,850 3,215,700 4/1/ , , , ,697 (44,344) 732,353 10/1/2019 1,097, ,697 1,042,663 2,566,697 (44,344) 2,522,353 3,254,706 4/1/ , , , ,172 (41,850) 699,322 10/1/2020 1,123, ,572 1,058,413 2,631,172 (41,850) 2,589,322 3,288,643 4/1/ , , , ,659 (38,963) 663,697 10/1/2021 1,153, ,322 1,082,825 2,712,659 (38,963) 2,673,697 3,337,393 4/1/ , , , ,431 (35,689) 625,742 10/1/2022 1,183, ,969 1,106,225 2,786,431 (35,689) 2,750,742 3,376,484 4/1/ ,000 91,600 78, ,213 (32,060) 585,153 10/1/2023 1,222, ,600 1,128,613 2,877,213 (32,060) 2,845,153 3,430,305 4/1/ ,406 79,909 53, ,991 (27,968) 540,022 10/1/2024 1,249, ,909 1,158,675 2,957,991 (27,968) 2,930,022 3,470,045 4/1/ ,755 66,984 27, ,171 (23,445) 491,726 10/1/2025 1,285, ,984 1,182,431 3,045,171 (23,445) 3,021,726 3,513,452 4/1/ ,050 52, ,691 (18,424) 440,266 10/1/2026 1,281, ,641 1,883,691 (18,424) 1,865,266 2,305,533 4/1/ ,738 36, ,566 (12,890) 414,676 10/1/2027 1,305, ,828 1,937,566 (12,890) 1,924,676 2,339,352 4/1/ ,725 19, ,075 (6,773) 387,303 10/1/2028 1,409, ,350 2,074,075 (6,773) 2,067,303 2,454,605 4/1/ , , ,095 10/1/2029 1,446,095 1,446,095 1,446,095 1,802,190 4/1/ , , ,203 10/1/2030 1,471,203 1,471,203 1,471,203 1,807,405 4/1/ , , ,921 10/1/2031 1,489,921 1,489,921 1,489,921 1,804,843 4/1/ , , ,596 10/1/2032 1,517,596 1,517,596 1,517,596 1,810,193 4/1/ , , ,015 10/1/2033 1,539,015 1,539,015 1,539,015 1,808,030 4/1/ , , ,250 10/1/2034 1,569,250 1,569,250 1,569,250 1,813,500 4/1/ , , ,750 10/1/2035 1,592,750 1,592,750 1,592,750 1,810,500 4/1/ , , ,250 10/1/2036 1,540,250 1,540,250 1,540,250 1,730,500 4/1/ , , ,250 10/1/2037 1,588,250 1,588,250 1,588,250 1,751,500 4/1/ , , ,750 10/1/2038 1,644,750 1,644,750 1,644,750 1,779,500 4/1/ , , ,550 10/1/2039 1,699,550 1,699,550 1,699,550 1,804,100 4/1/ ,853 71,853 71,853 10/1/2040 1,761,853 1,761,853 1,761,853 1,833,705 4/1/ ,208 37,208 37,208 10/1/2041 1,852,208 1,852,208 1,852,208 1,889,415 46,299,028 8,281,294 13,249,963 67,830,284 (955,953) 66,874,331 E-13

110 The Board of Trustees of Northeastern Illinois University Certificates of Participation Schedule B1 Certificates of Participation, Series 2012 Outstanding Annual Net Debt Service Requirements Bond Year Total Ending Principal Rate Interest Debt Service 10/1/ , % 1,038, ,523, /1/ , % 1,023, ,538, /1/ , % 1,008, ,548, /1/ , % 991, ,566, /1/ , % 974, ,584, /1/ , % 956, ,601, /1/ , % 937, ,622, /1/ , % 916, ,641, /1/ , % 894, ,669, /1/ , % 868, ,683, /1/ , % 841, ,706, /1/ , % 812, ,687, /1/ , % 781, ,696, /1/2028 1,035, % 749, ,784, /1/2029 1,090, % 712, ,802, /1/2030 1,135, % 672, ,807, /1/2031 1,175, % 629, ,804, /1/2032 1,225, % 585, ,810, /1/2033 1,270, % 538, ,808, /1/2034 1,325, % 488, ,813, /1/2035 1,375, % 435, ,810, /1/2036 1,350, % 380, ,730, /1/2037 1,425, % 326, ,751, /1/2038 1,510, % 269, ,779, /1/2039 1,595, % 209, ,804, /1/2040 1,690, % 143, ,833, /1/2041 1,815, % 74, ,889, ,040,000 18,259, ,299, Call Features: Callable 10/1/2022 at 100%. E-14

111 The Board of Trustees of Northeastern Illinois University Certificates of Participation Schedule B1 Certificates of Participation, Series 2012 Outstanding Semiannual Net Debt Service Requirements Total Bond Year Date Principal Rate Interest Debt Service Total 4/1/ , , /1/ , % 519, ,004, ,523, /1/ , , /1/ , % 511, ,026, ,538, /1/ , , /1/ , % 504, ,044, ,548, /1/ , , /1/ , % 495, ,070, ,566, /1/ , , /1/ , % 487, ,097, ,584, /1/ , , /1/ , % 478, ,123, ,601, /1/ , , /1/ , % 468, ,153, ,622, /1/ , , /1/ , % 458, ,183, ,641, /1/ , , /1/ , % 447, ,222, ,669, /1/ , , /1/ , % 434, ,249, ,683, /1/ , , /1/ , % 420, ,285, ,706, /1/ , , /1/ , % 406, ,281, ,687, /1/ , , /1/ , % 390, ,305, ,696, /1/ , , /1/2028 1,035, % 374, ,409, ,784, /1/ , , /1/2029 1,090, % 356, ,446, ,802, /1/ , , /1/2030 1,135, % 336, ,471, ,807, /1/ , , /1/2031 1,175, % 314, ,489, ,804, /1/ , , /1/2032 1,225, % 292, ,517, ,810, /1/ , , /1/2033 1,270, % 269, ,539, ,808, /1/ , , /1/2034 1,325, % 244, ,569, ,813, /1/ , , /1/2035 1,375, % 217, ,592, ,810, /1/ , , /1/2036 1,350, % 190, ,540, ,730, /1/ , , /1/2037 1,425, % 163, ,588, ,751, /1/ , , /1/2038 1,510, % 134, ,644, ,779, /1/ , , /1/2039 1,595, % 104, ,699, ,804, /1/ , , /1/2040 1,690, % 71, ,761, ,833, /1/ , , /1/2041 1,815, % 37, ,852, ,889, ,040,000 18,259, ,299, Call Features: Callable 10/1/2022 at 100%. E-15

112 The Board of Trustees of Northeastern Illinois University Certificates of Participation Schedule B2 Certificates of Participation, Series 2010 (Taxable Build America Bonds) Outstanding Annual Net Debt Service Requirements Bond Year Total Government Total Net Ending Principal Rate Interest Debt Service Subsidy Debt Service 10/1/ , % 291, , (101,913.44) 394, /1/ , % 284, , (99,581.56) 409, /1/ , % 276, , (96,628.44) 429, /1/ , % 265, , (93,019.06) 447, /1/ , % 253, , (88,687.82) 464, /1/ , % 239, , (83,700.32) 485, /1/ , % 222, , (77,925.32) 509, /1/ , % 203, , (71,378.12) 527, /1/ , % 183, , (64,120.00) 554, /1/ , % 159, , (55,936.56) 573, /1/ , % 133, , (46,889.06) 597, /1/ , % 105, , (36,848.44) 618, /1/ , % 73, , (25,779.68) 642, /1/ , % 38, , (13,545.00) 670, ,550,000 2,731, ,281, (955,952.82) 7,325, Call Features: Callable 10/1/2020 at 100%. E-16

113 The Board of Trustees of Northeastern Illinois University Certificates of Participation Schedule B2 Certificates of Participation, Series 2010 (Taxable Build America Bonds) Outstanding Semiannual Net Debt Service Requirements Total Government Total Net Bond Year Date Principal Rate Interest Debt Service Subsidy Debt Service Total 4/1/ , , (50,956.72) 94, /1/ , % 145, , (50,956.72) 299, , /1/ , , (49,790.78) 92, /1/ , % 142, , (49,790.78) 317, , /1/ , , (48,314.22) 89, /1/ , % 138, , (48,314.22) 339, , /1/ , , (46,509.53) 86, /1/ , % 132, , (46,509.53) 361, , /1/ , , (44,343.91) 82, /1/ , % 126, , (44,343.91) 382, , /1/ , , (41,850.16) 77, /1/ , % 119, , (41,850.16) 407, , /1/ , , (38,962.66) 72, /1/ , % 111, , (38,962.66) 437, , /1/ , , (35,689.06) 66, /1/ , % 101, , (35,689.06) 461, , /1/ , , (32,060.00) 59, /1/ , % 91, , (32,060.00) 494, , /1/ , , (27,968.28) 51, /1/ , % 79, , (27,968.28) 521, , /1/ , , (23,444.53) 43, /1/ , % 66, , (23,444.53) 553, , /1/ , , (18,424.22) 34, /1/ , % 52, , (18,424.22) 584, , /1/ , , (12,889.84) 23, /1/ , % 36, , (12,889.84) 618, , /1/ , , (6,772.50) 12, /1/ , % 19, , (6,772.50) 657, , ,550,000 2,731, ,281, (955,952.82) 7,325, Call Features: Callable 10/1/2020 at 100%. E-17

114 The Board of Trustees of Northeastern Illinois University Certificates of Participation Schedule B3 Certificates of Participation, Series 2006 Outstanding Annual Debt Service Requirements Bond Year Total Ending Principal Rate Interest Debt Service 10/1/ , % 456, ,196, /1/ , % 427, ,202, /1/ , % 395, ,200, /1/ , % 361, ,201, /1/ , % 325, ,205, /1/ , % 286, ,201, /1/ , % 245, ,205, /1/2022 1,005, % 202, ,207, /1/2023 1,050, % 157, ,207, /1/2024 1,105, % 107, ,212, /1/2025 1,155, % 54, ,209, ,230,000 3,019, ,249, Call Features: Callable 10/1/2015 at 100%. E-18

115 The Board of Trustees of Northeastern Illinois University Certificates of Participation Schedule B3 Certificates of Participation, Series 2006 Outstanding Semiannual Debt Service Requirements Total Bond Year Date Principal Rate Interest Debt Service Total 4/1/ , , /1/ , % 228, , ,196, /1/ , , /1/ , % 213, , ,202, /1/ , , /1/ , % 197, ,002, ,200, /1/ , , /1/ , % 180, ,020, ,201, /1/ , , /1/ , % 162, ,042, ,205, /1/ , , /1/ , % 143, ,058, ,201, /1/ , , /1/ , % 122, ,082, ,205, /1/ , , /1/2022 1,005, % 101, ,106, ,207, /1/ , , /1/2023 1,050, % 78, ,128, ,207, /1/ , , /1/2024 1,105, % 53, ,158, ,212, /1/ , , /1/2025 1,155, % 27, ,182, ,209, ,230,000 3,019, ,249, Call Features: Callable 10/1/2015 at 100%. E-19

116 Intentionally Left Blank

117 Appendix F Specimen Municipal Bond Insurance Policy

118 Intentionally Left Blank

119 MUNICIPAL BOND INSURANCE POLICY ISSUER: [NAME OF ISSUER] Policy No: MEMBER: [NAME OF MEMBER] BONDS: $ in aggregate principal amount of [NAME OF TRANSACTION] [and maturing on] Effective Date: Risk Premium: $ Member Surplus Contribution: $ Total Insurance Payment: $ BUILD AMERICA MUTUAL ASSURANCE COMPANY ( BAM ), for consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY agrees to pay to the trustee (the Trustee ) or paying agent (the Paying Agent ) for the Bonds named above (as set forth in the documentation providing for the issuance and securing of the Bonds), for the benefit of the Owners or, at the election of BAM, directly to each Owner, subject only to the terms of this Policy (which includes each endorsement hereto), that portion of the principal of and interest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Issuer. On the later of the day on which such principal and interest becomes Due for Payment or the first Business Day following the Business Day on which BAM shall have received Notice of Nonpayment, BAM will disburse (but without duplication in the case of duplicate claims for the same Nonpayment) to or for the benefit of each Owner of the Bonds, the face amount of principal of and interest on the Bonds that is then Due for Payment but is then unpaid by reason of Nonpayment by the Issuer, but only upon receipt by BAM, in a form reasonably satisfactory to it, of (a) evidence of the Owner s right to receive payment of such principal or interest then Due for Payment and (b) evidence, including any appropriate instruments of assignment, that all of the Owner s rights with respect to payment of such principal or interest that is Due for Payment shall thereupon vest in BAM. A Notice of Nonpayment will be deemed received on a given Business Day if it is received prior to 1:00 p.m. (New York time) on such Business Day; otherwise, it will be deemed received on the next Business Day. If any Notice of Nonpayment received by BAM is incomplete, it shall be deemed not to have been received by BAM for purposes of the preceding sentence, and BAM shall promptly so advise the Trustee, Paying Agent or Owner, as appropriate, any of whom may submit an amended Notice of Nonpayment. Upon disbursement under this Policy in respect of a Bond and to the extent of such payment, BAM shall become the owner of such Bond, any appurtenant coupon to such Bond and right to receipt of payment of principal of or interest on such Bond and shall be fully subrogated to the rights of the Owner, including the Owner s right to receive payments under such Bond. Payment by BAM either to the Trustee or Paying Agent for the benefit of the Owners, or directly to the Owners, on account of any Nonpayment shall discharge the obligation of BAM under this Policy with respect to said Nonpayment. Except to the extent expressly modified by an endorsement hereto, the following terms shall have the meanings specified for all purposes of this Policy. Business Day means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions in the State of New York or the Insurer s Fiscal Agent (as defined herein) are authorized or required by law or executive order to remain closed. Due for Payment means (a) when referring to the principal of a Bond, payable on the stated maturity date thereof or the date on which the same shall have been duly called for mandatory sinking fund redemption and does not refer to any earlier date on which payment is due by reason of call for redemption (other than by mandatory sinking fund redemption), acceleration or other advancement of maturity (unless BAM shall elect, in its sole discretion, to pay such principal due upon such acceleration together with any accrued interest to the date of acceleration) and (b) when referring to interest on a Bond, payable on the stated date for payment of interest. Nonpayment means, in respect of a Bond, the failure of the Issuer to have provided sufficient funds to the Trustee or, if there is no Trustee, to the Paying Agent for payment in full of all principal and interest that is Due for Payment on such Bond. Nonpayment shall also include, in respect of a Bond, any payment made to an Owner by or on behalf of the Issuer of principal or interest that is Due for Payment, which payment has been recovered from such Owner pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court having competent jurisdiction. Notice means delivery to BAM of a notice of claim and certificate, by certified mail, or telecopy as set forth on the attached Schedule or other acceptable electronic delivery, in a form satisfactory to BAM, from and signed by an Owner, the Trustee or the Paying Agent, which notice shall specify (a) the person or entity making the claim, (b) the Policy Number, (c) the claimed amount, (d) payment instructions and (e) the date such claimed amount becomes or became Due for Payment. Owner means, in respect of a Bond, the person or entity who, at the time of Nonpayment, is entitled under the terms of such Bond to payment thereof, except that Owner shall not include the Issuer, the Member or any other person or entity whose direct or indirect obligation constitutes the underlying security for the Bonds. F-1