University of Virginia Library

APPROVAL OF BOND ISSUANCE

WHEREAS, pursuant to Chapter 3.2, Title 23 of the Code of Virginia of 1950, as amended (the "Act"), the General Assembly of Virginia has authorized the Virginia College Building Authority (the "Authority") to develop a pooled bond program (the "Program") to purchase bonds and other debt instruments issued by public institutions of higher education in the Commonwealth of Virginia (the "Institutions") to finance or refinance the construction of projects of capital improvement specifically included in a bill passed by a majority of those elected to each house of the General Assembly of Virginia (the "Projects"); and

WHEREAS, the Authority intends to issue from time to time under the Program its Educational Facilities Revenue Bonds (Public Higher Education Financing Program) (the "Bonds") to finance the purchase of bonds and other debt instruments issued by the Institutions to finance or refinance the Projects, all in the furtherance of the purposes of the Act and the Program; and

WHEREAS, the Board of Visitors of The Rector and Visitors of the University of Virginia (the "Board") may from time to time wish to finance or refinance Projects of the University of Virginia (the "Institution") through the Program; and

WHEREAS, if the Institution wishes to finance or refinance a Project through the Program, it will be necessary for the Institution to enter into a Loan Agreement (a "Loan Agreement") between the Authority and the Institution and to evidence the loan to be made by the Authority to the Institution pursuant to the Loan Agreement by issuing the Institution's promissory note (the "Note") pursuant to Section 23-19 of the Code of Virginia of 1950, as amended, and pursuant to the Loan Agreement, the Authority will agree to issue its Bonds and to use certain proceeds of the Bonds to purchase the Note issued by the Institution and the Institution will agree to use the proceeds received from the Authority to finance or refinance the construction of the Project and to make payments under the Loan Agreement and the Note in sums sufficient to pay, together with certain administrative and arbitrage rebate payments, the principal of premium, if any, and interest due on that portion of the Bonds issued to purchase the Note; and

WHEREAS, the Institution now proposes to sell to the Authority its Note (the "2002A Note") to be issued under a Loan Agreement (the "2002A Loan Agreement") to finance or refinance from the proceeds of Bonds issued by the Authority in 2002 (the "2002A Bonds") all or a portion of the costs of the acquisition of the School of Medicine research building, the construction of the Arts and Sciences building, an addition to the Aquatic and Fitness Center, the expansion of the Institution's hospital, the construction of the Emmet Street parking structure and the renovation of the Institution's cancer center, all located on the Institution's Charlottesville campus (collectively, the "2002A Project"); and

WHEREAS, it is the desire of the Board to delegate to such Authorized Officers (as hereinafter defined) of the Institution the authority to approve the form of the 2002A Loan Agreement and the form of the 2002A Note on behalf of the Board and, similarly, to authorize such Authorized Officers of the Institution to execute, deliver and issue in the name of and on behalf of the Institution, the 2002A Loan Agreement, the 2002A Note and any and all documents necessary to effectuate the financing or refinancing of all or a portion of the costs of the 2002A Project through the Program with the Authority and to facilitate the purchase of the 2002A Note by the Authority; and

WHEREAS, it is the desire of the Board to approve the further participation by the Institution in the Program in order to finance and refinance the 2002A Project and to authorize the execution, delivery and issuance of such other Loan Agreements and Notes on terms and conditions substantially similar to the 2002A Loan Agreement and 2002A Note, as to be approved by the Authorized Officers or either of them, and to similarly authorize such authorized Officers of the Institution to execute, deliver and issue in the name of and on behalf of the Institution, all Loan Agreements, all Notes and any and all future documents necessary to effectuate the Program by financing or refinancing the 2002A Project with the Authority and to facilitate the purchase of the Notes by the Authority.

RESOLVED:

Section 1. The 2002A Project is hereby designated a Project to be undertaken and financed or refinanced by the Authority and, accordingly, the President of the Institution and the Executive Vice President and Chief Operating Officer of the Institution (the "Authorized Officers"), or either of them, are hereby delegated and invested with full power and authority to approve the form of the 2002A Loan Agreement and the 2002A Note, and any pledge to the payment of the 2002A Note of the Institution's total gross university sponsored overhead, unrestricted endowment income, tuition and fees, indirect cost recoveries, auxiliary enterprise revenues, general and nongeneral fund appropriations and other revenues not required by law or restricted by a gift instrument to be used for another purpose, any of which are not required by law or by binding contract entered into on or prior to the date of issuance of the 2002A Bonds to be devoted to some other purpose on a basis that is senior in priority to the

2002A Bonds, as may be provided in the 2002A Loan Agreement, and such approval is hereby authorized, subject to the provisions of Section 4 hereof.

Section 2. Subject to the provisions of Section 4 hereof, the Authorized Officers, or either of them, are each hereby delegated and invested with full power and authority to execute, deliver and issue on behalf of the Board, (a) the 2002A Loan Agreement and the 2002A Note whose approval of such documents in accordance with Section 1 shall be evidenced conclusively by the execution and issuance of the 2002A Note and (b) any and all other documents, instruments or certificates as may be deemed necessary to consummate the financing or refinancing of all or a portion of the costs of the 2002A Project through the Program, the construction of the 2002A Project and the Institution's participation in the Program, and to further carry out the purposes and intent of this Resolution. The Authorized Officers are directed to take such steps and deliver such certificates prior to the delivery of the 2002A Note as may be required under existing obligations of the Institution.

Section 3. The Authorized Officers, or either of them, are each hereby delegated and invested with full power and authority to execute and deliver, on behalf of the Board, (a) such future Loan Agreements in substantially the form of the 2002A Loan Agreement, as to be approved by the Authorized Officers or either of them, with such changes, insertions or omissions as may be approved by the Authorized Officers, whose approval shall be evidenced exclusively by the execution and delivery of the future Loan Agreement, (b) such future Notes in substantially the form of the 2002A Note, as to be approved by the Authorized Officers or either of them, with such changes, insertions or omissions as may be approved by the Authorized Officers, whose approval shall be evidenced exclusively by the execution and delivery of the future Note, and (c) any and all other documents, instruments or certificates as may be deemed necessary in the future to consummate the Program, the construction, financing or refinancing of the 2002A Project and the Institution's participation in the Program, and to further carry out the purposes and intent of this Resolution in the future, it being the intent of the Board that no further action on behalf of the Board shall be necessary to empower the Authorized Officers, or either of them, to execute, deliver and issue such future Loan Agreements, future Notes and other documents as may be deemed necessary in order for the Institution to participate in the Program in the future.

Section 4. The authorizations given above as to the approval, execution, delivery and issuance of the 2002A Loan Agreement and the 2002A Note are subject to the following parameters: (a) that the principal amount to be paid under the 2002A Note shall not be greater than the aggregate amount authorized for the 2002A Project by the General Assembly of Virginia, including any adjustments required or permitted by law, (b) that the interest rate payable under the 2002A Note shall not exceed a "true" or "Canadian" interest cost more than 50 basis points higher than the interest rate for "AA" rated securities with comparable maturities, as reported by Delphis-Hanover, or another comparable service or index, on the date that the interest rates on the 2002A Note are determined, taking into account original issue discount or premium, if any, (c) that the weighted average maturity of the principal payments due under the 2002A Note shall not be in excess of 20 years, (d) that the last principal payment date under the 2002A Note shall not extend beyond the period of the reasonably expected economic life of the 2002A Project, (e) that the financing of the 2002A Project and the terms and provisions of the 2002A Loan Agreement and the 2002A Note will comply with the Alternative Construction and Financing Guidelines issued by the Commonwealth's Secretary of Finance, and (f) that the actual interest rates, maturities, and date of the 2002A Note shall be approved by an Authorized Officer, which approval will be evidenced by the execution of the 2002A Note.

Section 5. The authorizations given above as to the execution, delivery and issuance of any future Loan Agreements and future Notes are subject to the following parameters: (a) that the principal amount to be paid under such Notes shall not be greater than the amount authorized for the Projects being financed by the General Assembly of Virginia, including any adjustments required or permitted by law, (b) that the interest rate payable under such Notes shall not exceed a "true" or "Canadian" interest cost more than 50 basis points higher than the interest rate for "AA" rated securities with comparable maturities, as reported by Delphis-Hanover, or another comparable service or index on the dates that the interest rates on the Notes are determined, taking into account original issue discount or premium, if any, (c) that the weighted average maturity of the principal payments due under such Notes shall not be in excess of 20 years, (d) that the last principal payment date under such Notes shall not extend beyond the period of the reasonably expected economic life of the Projects being

financed, and (e) that the financing of such Projects and the terms and provisions of such Loan Agreements and Notes will comply with the then current Alternative Construction and Financing Guidelines issued by the Commonwealth's Secretary of Finance.

Section 6. The Board acknowledges, on behalf of the Institution, that if the Institution fails to make any payments of debt service due under any Loan Agreement or Note, including the 2002A Loan Agreement and the 2002A Note, the Program authorizes the State Comptroller to charge against the appropriations available to the Institution all future payments of debt service on that Loan Agreement and Note when due and payable and to make such payments to the Authority or its designee, so as to ensure that no future default will occur on such Loan Agreement or Note.

Section 7. The Board agrees that if the Authority determines that the Institution is an "obligated person" under Rule 15c2-12 of the Securities and Exchange Commission with respect to any issue of Bonds, the Institution will enter into a continuing disclosure undertaking in form and substance satisfactory to the Authority and the Institution and will comply with the provisions and disclosure obligations contained therein.

Section 8. This resolution shall take effect immediately upon its adoption.