Purdue University on Behalf of Ross-Ade Foundation Direct Bank Purchase Request For Proposal(s) January 8, 2014

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1 Purdue University on Behalf of Ross-Ade Foundation Direct Bank Purchase Request For Proposal(s) January 8, 2014 Objective Purdue University, West Lafayette IN ( Purdue, the University, the Corporation or the Lessee ) is seeking proposals from interested commercial banks (the Respondents ) for the direct purchase of approximately $13.5 million of Certificates of Participation, Series 2014A (the COPs Series 2014A ). The COPs Series 2014A is being issued to finance a new softball complex (the Project ) with a cost of approximately $13.0 million, to fund 14 months of capitalized interest on the COPs Series 2014A and to pay for the costs of issuing the COPs Series 2014A. In addition, the COPs Series 2014A may also refinance $8,555,000 of the University s outstanding Series 2006 COPs (the Refunded Certificates ), in which case the principal amount of the COPs Series 2014A would be approximately $22.2 million. The COPs Series 2014A will be issued through Purdue s affiliated foundation, the Ross-Ade Foundation ( RAF, the Foundation or the Lessor ) and will consist of lease payments of the University to the Foundation for the use and occupancy of the Project. Lease payments will be payable from Available Funds and will equal the principal and interest payments on the COPs Series 2014A. The University seeks to select a proposal for the COPs Series 2014A that provides the best combination of interest cost, principal amortization, and rollover risk within its annual repayment budget, as further described below. The Respondents will have discretion in structuring their proposal, or proposals, with regard to maturity length and interest rate, as further described below. The University and the Foundation Purdue University was established in 1869 and serves the State of Indiana as the landgrant university created under the Morrill Act of The University was originally established to teach agricultural and mechanical arts and was named in honor of John Purdue, a substantial donor to the University. The University has grown from 39 students and six instructors at its inception, to an estimated population of about 70,000 full-time and part-time students and about 5,000 faculty members on its main, regional and statewide-technology campuses as of Fall The major areas and fields of study at the West Lafayette campus are organized into ten academic colleges and schools as follows: Agriculture; Education; Engineering; Health and Human Sciences; Liberal Arts; Management; Pharmacy; Science; Technology; and Veterinary Medicine. Undergraduate, Masters and Doctor of Philosophy degrees are awarded in all schools. The University also awards the professional degrees of Doctor of Pharmacy and Doctor of Veterinary Medicine. The University is fully accredited in all of its departments and divisions by the Higher Learning Commission of the North Central Association of Colleges and Schools. Twentyfive other professional agencies have accredited various schools, departments and programs within the University. The University is also a member of the Association of American Universities. 1

2 The Foundation was organized in 1924 to promote and develop the educational and physical welfare of Purdue University students with funds that could not be provided from State appropriations. The Foundation has built the football stadium known as Ross-Ade Stadium, the basketball arena known as Mackey Arena, and various parking garages, and has been instrumental in the development of the regional campuses by acquiring the land and constructing the facilities. All of the facilities are leased to the Corporation on a cost basis. The five-member Board of Directors of the Foundation includes two members of the Board of Trustees of the Corporation. The Foundation has assisted the Corporation in financing many of its capital projects through lease-purchase arrangements. Each lease to the Corporation is in the amount equal to the Foundation s obligation on the borrowed funds to construct the facility. Lease payments by the Corporation will amortize the applicable series of COPs. Once the borrowed funds are repaid, title to the facility is transferred to the Corporation unless otherwise agreed. The Corporation and the Foundation have entered into leasepurchase agreements securing loans with a total outstanding balance, as of January 1, 2014, in the amount of $127,530,000. The Corporation and the Foundation may borrow additional funds and enter into additional lease-purchase agreements for other capital projects payable from any Available Funds of the Corporation, at any time and without the consent of the COPs Series 2014A owner. All documents provided to Respondents will be available on the University s website at Notices of revisions and updates will be provided to those Respondents who confirm their intent to participate in the proposal process. Schedule of Events The Respondents will conform to the following timetable of events in the preparation and submission of proposals, and for the subsequent closing if awarded. This timetable is subject to change upon notification to all confirmed Respondents. Additionally, the timetable will be maintained on the posted website, available to all Respondents at any time. Timeline for Proposal Process Date Action By 1/8/2014 invitations to submit proposals Purdue 1/8/2014 Posting of Additional Information at uryop/borrowing/certificates_of_partici pation_series_2014a.html 1/16/2014 Notice of Intent to Submit Proposal to dlaussade@purdue.edu at Purdue 1/17/2014 Confirmation to Respondents of notice of Intent Purdue Respondent Purdue 2

3 Date Action By 1/24/2014 Questions due to Purdue Respondent 1/31/2014 Responses to questions posted Purdue 2/12/ :00 a.m. ET Proposals due to Purdue Respondents 2/12/2014 3:00 p.m. ET Award to Purchaser RAF, Purdue 2/13/2014 Sign Certificate Purchase Agreement RAF, Purdue, Purchaser 2/20/ :00 a.m. ET Closing RAF, Purdue, Purchaser Receipt of Proposals The Respondents may submit up to three proposals, as further described below. The proposals are due at 10:00 a.m. (ET) on February 12, 2014, in digital form by at and at The terms of the Respondent s proposal, or proposals, must be held firm until 3 p.m. (ET) of the same day. The University anticipates awarding the sale of the COPs Series 2014A prior to 3 p.m. to the commercial bank (the Purchaser ) providing the proposal that the University deems, in its sole discretion, to be in its best interests, and further reserves the right to reject any and all proposals at its sole discretion. Following the award, the Purchaser and the Foundation will enter into a Certificate Purchase Agreement, whereby the Purchaser agrees to take delivery of the COPs Series 2014A on February 20, 2014 ( the Closing Date ), at the interest rate, or rates, and with the principal repayment schedule provided in the winning proposal, in consideration of the purchase price of the principal amount thereof. See the Additional Information attached hereto for a current draft of the Certificate Purchase Agreement. Security The COPs Series 2014A will be issued pursuant to Trust Indenture dated as of February 15, 2014 (the 2014 Indenture), which Supplements and amends a Trust Indenture dated as of November 15, 1996 (the 1996 Indenture ), a Trust Indenture dated as of November 1, 1998 (the 1998 Indenture ), a Trust Indenture dated as of November 15, 2006 (the 2006 Indenture ), a Trust Indenture dated as of August 15, 2009 (the 2009 Indenture ) and a Trust Indenture dated as of February 15, 2011 (the 2011 Indenture) (collectively, the Indenture ) between the Bank of New York Mellon Trust Company, N.A. (the Trustee ) and the Lessor. The University has entered into a Northwest Athletic Site Lease Agreement dated as of February 15, 2014 (the Ground Lease ), pursuant to which it has leased to RAF the real estate on which the Project is to be located. The Project will be constructed by the Lessor and leased to the Corporation pursuant to a Softball Stadium Sublease Agreement dated as of February 15, 2014 (the 2014 Lease ). The COPs Series 2014A represent an undivided proportionate interest in the lease payments required to be paid by the Corporation to the Trustee under the 2014 Lease, as rental for the Project. Such proportionate interest is on a parity with the proportionate interests of other Participation Certificates in various other leases issued under the Indenture including the $1,745,000 3

4 outstanding Certificates of Participation, Series 1998 (the 1998 Certificates ), the $46,830,000 outstanding Certificates of Participation, Series 2006 (the 2006 Certificates ), the $3,975,000 outstanding Certificates of Participation, Series 2009A (the 2009A Certificates ), the $42,795,000 outstanding Certificates of Participation, Series 2009B (the 2009B Certificates ), the $32,185,000 outstanding Certificates of Participation, Series 2011A (the 2011A Certificates ), and any Additional Participation Certificates that may be issued under the Indenture (collectively with the COPs Series 2014A, the Parity Certificates ). The Corporation is required under the various leases to make lease payments in amounts sufficient to make the principal and interest payments on the COPs Series 2014A and all other Parity Certificates on each January 1 and July 1, and will pay as additional rental the amount of the Trustee fees, unless the Leases are terminated. The Leases are not subject to annual review by the Corporation and are subject to early termination only under certain limited circumstances, as described in the 2014 Lease (see the 2014 Lease Section 17 ). Under the Indenture, Additional Participation Certificates may be issued from time to time on a parity basis with the COPs Series 2014A, the 2011A Certificates, the 2009B Certificates, the Series 2009A Certificates, the 2006 Certificates and the 1998 Certificates in order to finance or refinance additional costs of the Project, prior projects and additional parking or athletic facilities. The Corporation has also covenanted and agreed in the leases that it will use and apply any Available Funds, as defined in the Indenture, to the extent necessary, for the purpose of satisfying its obligations under the leases; however, mandatory student fees assessed to all students, which include all academic fees assessed by the Corporation against students attending Purdue University, and appropriations by the State of Indiana shall not be considered available for the payment of such obligations. Notwithstanding any other provisions of the leases, the obligations imposed upon the Corporation under the leases for the payment of rent or making of other expenditures of money shall be and remain subject to the Available Funds which may lawfully be used by the Corporation for such purposes. No obligation imposed on the Corporation shall be or become an indebtedness of or liability against the State of Indiana. See the Additional Information attached hereto for a current draft of the 2014 Indenture for a full discussion of the security for the COPs Series 2014A. Required Approvals All necessary approvals have been obtained from the Trustees of Purdue University (the Board ) and from the governing board of the Foundation (the Foundation Board ) to proceed with the sale and issuance of the COPs Series 2014A. No additional approvals are required from the State of Indiana to proceed with this issuance. Documentation The legal opinion and all necessary documents for the issuance of the COPs Series 2014A, including the 2014 Indenture, the 2014 Lease, the Ground Lease, the Construction Agreement, the Assignment of Lease (from the Lessor to the Trustee), the Construction and Rebate Agreement, a Certificate Purchase Agreement, an Investment Letter, and a Federal Tax and Arbitrage Certificate will be prepared by Ice Miller LLP, Bond Counsel, and Stuart & Branigin LLP, Counsel to the Corporation and the Foundation, and will be available for review prior to the Closing Date. Current drafts of the 2014 Indenture, the Investment Letter, the 2014 Lease, the Construction Agreement, the Ground Lease and 4

5 the Certificate Purchase Agreement are provided with this Request for Proposals as Additional Information hereunder. In addition, a current description of the University, including relevant institutional, demographic and financial information (the University Report ), along with the Financial Reports of the University for the fiscal years ended June 30, 2013 and June 30, 2012, are included in the Additional Information provided with this request. The documentation described above is to be accepted by the Purchaser in the form provided, subject only to minor modifications prior to closing to accommodate the interest rate, or rates, and the principal amortization of the winning proposal. No additional terms or bank covenants will be incorporated into the documentation. Any conditions, covenants or other provisions that could change the interest rate on the COPs Series 2014A following closing will not be considered. The Respondents are required to accept the COPs Series 2014A documentation as is or not submit a proposal. Proposal Details In preparing your proposal, please take into account that the COPs Series 2014A will be tax-exempt but not bank qualified. The University will not be requesting any credit ratings for the COPs Series 2014A. For background information purposes only, the most recent reported ratings on the outstanding Parity Certificates are Aaa/AA+ by Moody s and Standard & Poor s, respectively, with a stable outlook for both ratings. The COPs Series 2014A will not have CUSIPs nor be DTC eligible, unless specifically requested by the Purchaser at the Purchaser s cost. The COPs Series 2014A will have one maturity, on July 1 st in the year of the final maturity with mandatory principal installments payable on July 1 st of all the preceding years, commencing on July 1, 2015, unless the Purchaser specifically requests separate maturities for each year. Likewise, the COPs Series 2014A will have one interest rate for its single maturity, unless the Purchaser specifically requests separate maturities for each year in which case the Purchaser may designate a separate interest rate for each maturity. The Purchaser will be required to sign an Investment Letter, a draft of which is attached to this Request as Additional Information. Respondents should review the content of this letter, as well as the drafts of the Certificate Purchase Agreement, 2014 Indenture, the 2014 Lease, the Construction Agreement and the Ground Lease before submitting a proposal. Respondents may submit one proposal for each of the three scenarios following the parameters described below. It is the University s objective to provide the Respondents with sufficient flexibility to provide their best and optimal proposal, given any internal pricing or maturity constraints. The University will consider proposals with final maturities ranging from 5 years (July 1, 2019) to 20 years (July 1, 2034), but will have a preference for those proposals that will maximize annual principal amortization and result in the minimum residual unamortized principal at the final maturity (i.e. rollover risk ). The University has budgeted $500,000 for debt service (net of capitalized interest) for the bond year ending 7/1/2015. The debt service budget is $1,150,000 per year commencing with the bond year ending 7/1/2016 through the bond year ending 7/1/2034. Ideally, the University would prefer to amortize all COPs Series 2014A principal with this targeted annual debt service budget, without a residual principal rollover on the Respondent s proposed final maturity. The Respondents are permitted to provide up to three proposals, at their sole discretion, one for each proposal scenario described below: 5

6 1. Proposal Scenario #1. Using the Proposal Template #1, structure a proposal with a 10 year final maturity of 7/1/2024 that fully funds the $13,000,000 project, plus costs of issuance and 14 months of capitalized interest. The Respondent is required to input (into the template) the interest rate (or rates), bank legal fees (not to exceed amount), the remaining unamortized principal at the final maturity in order to balance the sources and uses of funds, and respond to questions (see instructions on Proposal Template #1). Submit your final proposal on Proposal Form #1. 2. Proposal Scenario #2. Using the Proposal Template #2, structure a proposal with a final maturity of your choice (from 7/1/2019 to 7/1/2034), that fully funds the $13,000,000 project, plus costs of issuance and 14 months of capitalized interest. The Respondent is required to input (into the template) the final maturity year (must be on July 1), interest rate (or rates), bank legal fees (not to exceed amount), the remaining unamortized principal at the final maturity (if any) in order to balance the sources and uses of funds, and respond to questions (see instructions on Proposal Template #2). Submit your final proposal on Proposal Form #2. 3. Proposal Scenario #3. Using the Proposal Template #3, structure a proposal with a final maturity of your choice that fully funds the $13,000,000 project, the redemption of $8,555,000 Refunded Certificates maturing on 7/1/2027 (with a $4,185,000 mandatory redemption payment due on 7/1/2026), plus costs of issuance and 14 months of capitalized interest on the Project component. The Respondent is required to input (into the template) the final maturity year of the Project component (must be on July 1), interest rate (or rates), bank legal fees (not to exceed amount), the remaining unamortized principal (if any) at the final maturity of the Project component in order to balance the sources and uses of funds, and respond to questions (see instructions on Proposal Template #3). The $8,555,000 of Series 2014A principal that is allocable to funding the redemption of the Refunded Certificates will be amortized with $4,185,000 of principal paid on 7/1/2026 and $4,370,000 of principal paid on 7/1/2027. Submit your final proposal on Proposal Form #3. In each of the three proposal scenarios above, the Respondent will have the option of whether the COPs Series 2014A issue will be a draw down loan or if all Series 2014A proceeds will be drawn at closing. If the draw down option is selected, the Respondent may provide an additional interest rate, if desired, to be applied to the undrawn balance of the COPs Series 2014A principal. If the draw down option is selected, the draws for the Project on 2/20/2014, on 7/1/2014 and on 11/1/2014 and for 14 months of capitalized interest are pre-set and built into the cash flow (see Proposal Templates #1, #2 and #3 above). For purposes of computing your proposal(s), the Project draw downs are assumed to occur in three equal installments ($4,333,333.33) on the three dates indicated, plus an additional draw for all costs of issuance, capitalized interest and 6

7 refinancing cost (for Proposal Scenario #3 only) at closing on 2/20/2013. The actual draw amounts and dates for Project and for capitalized interest may differ from these assumptions, if mutually agreed upon by Purdue and the Purchaser. The purchase price of the COPs Series 2014A will be 100% of the principal amount thereof. No Purchaser s discount or acceptance fee will be allowed or payable from the proceeds of the COPs Series 2014A. All compensation to the Purchaser must be incorporated into your fixed interest rate quotes under Proposal Scenarios above. No outof-pocket expenditures of the Purchaser will be reimbursed from the COPs Series 2014A proceeds, except for bank legal counsel for which a not-to-exceed amount is to be entered into the Proposal Template and Proposal Form, as indicated. Interest on the COPs Series 2014A will be computed on the basis of a 30/360 day year, accruing from the Closing Date, with interest payable semiannually in arrears on January 1 and July 1, commencing on July 1, It is anticipated that the Purchaser will receive both principal and interest payments directly from the University by wire transfer. In addition to completing Proposal Forms for options #1, #2 and/or #3, please provide the following information with your proposal(s): 1. For proposals with final maturities of July 1, 2025 and after, please provide (at the bottom of the Proposal Form) optional redemption provisions that would be available to Purdue, indicating an initial call date of July 1, 2024, and redemption premiums (if any). If you are proposing optional redemption provisions that would apply to maturities earlier than July 1, 2025, or an earlier initial call date than July 1, 2024, please indicate such and the redemption schedule and call prices that would apply. If you are proposing that the COPs Series 2014A have no optional redemption available to Purdue (i.e. non-callable), please indicate such at the bottom of your Proposal Form. No demand provisions by the Purchaser will be allowed during the term of the COPs Series 2014A. 2. The COPs Series 2014A are expected to be sold as a single maturity, with a single interest rate, and with annual principal installments preceding the final maturity. If the purchaser desires multiple maturities (serials or terms) with separate interest rates, then indicate such and fill in the applicable Proposal Template and Proposal Form accordingly. 3. If the Purchaser desires that the COPs Series 2014A have CUSIPs assigned for each maturity, please indicate such on the applicable Proposal Form. In that event, it will be the Purchaser s responsibility to apply for the CUSIPs and to pay for the cost of assigning them. If in addition to assigning CUSIPs the Purchaser desires that the COPs Series 2014A be book-entry only with DTC as the depository, then indicate such on the applicable Proposal Form. In that event, Bond Counsel will prepare the necessary documentation for delivery to DTC and the cost will be borne by the Purchaser. 7

8 Logistics To assist you in preparing your proposal(s), the following Additional Information items supporting this Request for Proposals are available at: 1. Timetable; 2. Notice of Intent to Submit a Proposal; 3. University Report of relevant institutional, demographic and financial information dated January 8, 2014; 4. University s Financial Report for the Fiscal Years ending June 30, 2013 and before; 5. Official Statements for the University since 2003 including the most recent COPs financings; 6. Excel templates for separately preparing Proposal Scenarios #1, #2 and #3 and related Proposal Forms (to be saved to your local computer); 7. Draft 2014 Indenture for the COPs Series 2014A; 8. Draft 2014 Lease, Construction Agreement and Ground Lease; 9. Draft Certificate Purchase Agreement for the COPs Series 2014A; 10. Draft Investment Letter; 11. Summary of the University s Outstanding Debt and Debt Service; 12. Recently published credit reports from Moody s and Standard and Poor s for the University s outstanding debt; The University reserves the right to accept the proposal that it deems to be in its best interests or to reject all proposals. Proposals may not be submitted with the condition, or expectation, to engage in additional business relationships with Purdue apart from this loan. The timeline describes the means by which questions to and responses from the University will be made. For technical questions regarding how to use the Proposal Templates for preparing your proposals and completing the Proposal Forms, you may directly call or James McNulty at (312) , jmcnulty@jsvco.com; or John Vincent at (312) , jvincent@jsvco.com. Respondents that intend to submit proposal(s) on February 12, 2014, should a notice of their intent to submit a proposal by January 16, 2014 to Denise Laussade at dlaussade@purdue.edu so that intended Respondents can be assured of receiving any additional notices on a timely basis. We look forward to receiving your proposal(s) and appreciate your continued interest in Purdue University. 8