Agenda, Meeting of the Utah State Board of Regents January 17, 2003

Agenda, Meeting of the Utah State Board of Regents. University of Utah, Olpin Student Union, January 17, 2003.

AGENDA MEETING OF THE UTAH STATE BOARD OF REGENTS January 17, 2003 Utah State Board of Regents Office of the Commissioner of Higher Education Board of Regents Building, The Gateway 60 South 400 West Salt Lake City, Utah 84101-1284 AGENDA STATE BOARD OF REGENTS MEETING UNIVERSITY OF UTAH OLPIN STUDENT UNION January 17, 2003 7:30 a.m. - BREAKFAST MEETING - STATE BOARD OF REGENTS, 9:00 a.m. UNIVERSITY OF UTAH BOARD OF TRUSTEES, PRESIDENT MACHEN, COMMISSIONER FOXLEY (Parlor A) 9:00 a.m. - MEETINGS OF BOARD COMMITTEES 10:00 a.m. Academic, Applied Technology and Student Success Committee (Collegiate Room) CONSENT: 1. Consent Calendar, Academic, Applied Technology & Student Success Committee Tab A a. University of Utah - Permanent approval, Scientific Computing & Imaging Institute b. Utah College of Applied Technology - Associate of Applied Technology (AAT) Degree in Information Technology at the Mountainland Applied Technology College INFORMATION: 2. Information Calendar, Academic, Applied Technology & Student Success Committee Tab B a. University of Utah - i. Stand-alone Minor in Nutrition ii. Name change and administrative transfer of Social Work Professional and Community Education Program iii. Interdisciplinary Minor in Literacy Studies b. Weber State University - Name change: Physical Education Non-teaching Major to Human Performance c. USHE - Programs under Consideration/Development at USHE Institutions DISCUSSION: 3. Discussion Draft of Policy R312, Institutional Categories, Accompanying Criteria, and Tab C Institutional Missions and Roles Finance, Facilities and Accountability Committee (Saltair Room) ACTION: 1. Utah State University - Real Estate Purchase and Associated Revenue Bond Tab D 2. Utah Valley State College - Lease of Property to Heber Power for a Substation Tab E 3. Utah Valley State College - Purchase of Property Contiguous to Campus Tab F CONSENT: 4. Consent Calendar, Finance, Facilities and Accountability Committee Tab G a. USHE - Money Management Reports b. UofU and USU - Capital Facilities Delegation Reports c. OCHE - Monthly Investment Report d. Weber State University - Property Transactions INFORMATION: 5. USHE - Annual Report on Leased Space Tab H 6. USHE - Minutes of 12/17/2002 Meeting of the Finance, Facilities & Accountability Committee Tab I 7. University of Utah - Campus Master Plan and new Long-Range Development Plan Tab J 8. Utah State University - Co-Generation Lease-Purchase Tab K 10:00 a.m. - COMMITTEE OF THE WHOLE 12:00 noon (Saltair Room) 1. Report of 12/18/02 Special Legislative Session - Base Budget Reductions and Tab L One-time Restorations 2. USHE Priorities for 2003 Legislative Session, Including Governor's Recommendation Tab M and Regents' Review of 2003-2004 Budget Request 3. Results of Student Hearings on Second-tier Tuition Increases for 2003-2004 Tab N 4. Report of Regents' Public Affairs Committee Tab O 5. Report of Employers' Education Coalition, Assuring Our Children's Future Tab P 12:00 noon - LUNCHEON MEETING WITH LEGISLATIVE HIGHER EDUCATION Tab Q 1:30 p.m. APPROPRIATIONS SUBCOMMITTEE (Ballroom) 1:30 p.m. - REGULAR BUSINESS MEETING OF THE BOARD 3:30 p.m. (Saltair Room) 1. Report of the Chair 2. Report of the Commissioner 3. Report of Board Committees Academic, Applied Technology & Student Success Committee (Tabs A - C) Finance, Facilities & Accountability Committee (Tabs D - K) 4. General Consent Calendar Tab R * * * * * Projected times for the various meetings are estimates only. The Board Chair retains the right to take action on any item at any time. In compliance with the Americans with Disabilities Act, individuals needing special accommodations (including auxiliary communicative aids and services) during this meeting should notify ADA Coordinator, 60 South 400 West, Salt Lake City, UT 84180 (801-321-7124), at least three working days prior to the meeting. TDD # 801-321-7130. Tab A, Page 1 of 6 MEMORANDUM January 8, 2003 TO: State Board of Regents FROM: Cecelia H. Foxley SUBJECT: Consent Calendar, Academic, Applied Technology, and Student Success Committee The following requests have been submitted by the designated institutions for consideration by the Regents on the Consent Calendar of the Academic, Applied Technology, and Student Success Committee. 1. University of Utah (U of U) a. Permanent Approval of the Scientific Computing and Imaging Institute Request: The Scientific Computing and Imaging (SCI) Institute was established by the University of Utah and authorized by the Utah State Board of Regents on January 31, 2000 for an initial three year period. Officials at the U of U now propose to make the Institute a permanent research institute at the University of Utah. Need: The Scientific Computing and Imaging Institute has been very successful since its inception and continues to grow both in size and in its leadership role in scientific computing, scientific visualization, and imaging research. The Scientific Computing and Imaging Institute currently houses the NIH Center for Bioelectric Field Modeling, Simulation, and Visualization and the DOE Advanced Visualization Technology Center. The SCI Institute is also the home to NIH BISTI Program of Excellence on Bio-Imaging and Visualization and oversees the SGI-Utah Visual Supercomputing Center. In addition, the SCI Institute is formally associated with other National research efforts: NSF Partners in Advanced Computational Infrastructure (NCSA PACI) and the DOE Center for the Simulation of Accidental Fires and Explosions. Furthermore, the SCI Institute is the home to the Engineering Scholars Program. The continuation of the SCI Institute is necessary to maintain a comprehensive, cohesive, organizational structure that supports interdisciplinary research across a wide spectrum of topics and among a diverse and talented group of engineers, scientists, and biomedical researchers. Institutional Impact: The administrative structure for the day-to-day management of the Institute is in place and operational. Where appropriate and for large projects that include separate research and technical development components, there will be an associated manager for each component. Faculty members supervise the educational and research activities of the graduate students and ensure their integration into the academic programs of the University. The Institute's Executive and Faculty Committees meet on a regular, frequent basis (typically biweekly during the semester), as do other groups within the Institute working on common projects. Regular meetings of the full Institute serve to discuss matters of common interest and also to present results and ideas from each of the subgroups. A major goal of the management of the SCI Institute is to encourage close communication among member of the group and thus support cross-fertilization between projects wherever possible. The SCI Institute reports to the Vice President for Research. Tab A, Page 2 of 6 While the SCI does not offer degree programs, the Institute positively contributes to the academic mission of the University. The SCI Institute is currently home to over 25 graduate and undergraduate students. All of the SCI faculty train graduate students and the tenure-track faculty teach in either Computer Science or Bioengineering. In the past two years, our faculty have graduated three Ph.D. students and nine M.S. students, as well as offered research experiences to several undergraduate students. Finances: External research grants and contracts will continue to be the source of income for the research and development activities of the SCI Institute. Since the Institute was created in 2000, Institute officials have been successful in generating $14.6 million in external funding: 40 percent from the National Institutes of Health, 13 percent from the National Science Foundation, 39 percent from the U.S. Department of Education, and eight percent from other external sources. 2. Utah College of Applied Technology (UCAT) a. Request to Offer the AAT Degree in Information Technology at the Mountainland Applied Technology College (MATC) Request: In September, 2002 the Regents approved an Associate of Applied Technology (AAT) Degree in Information Technology, to be offered by the Utah College of Applied Technology. This approval was granted for those UCAT campuses with the capability, at that time, to offer the complete curriculum for the degree. Regents requested that those campuses not prepared to offer the degree at that time bring a request forward to the Regents if the decision was made, at a later date, to offer the degree. At the time that the degree was approved for UCAT, the MATC was in the development stages for the two required core courses it had lacked for the degree. The two courses have been developed, and the full set of courses required for the AAT/IT program is now available. Accordingly, UCAT officials request authorization to offer the AAT Degree in Information Technology at the MATC. Letters of regional support for this request have been received from Utah Valley State College Interim President Lucille Stoddard, the Mountainland Region Applied Technology Education Coordinating Council (ATECC), and the superintendents of the seven Mountainland Region school districts. Copies of these letters are attached. Need: The Mountainland Region's need for the AAT/IT Degree is consistent with the statewide need outlined in the UCAT degree proposal in terms of industry, labor market demand and student demand. The Department of Workforce Services (DWS) projects average annual openings in the Mountainland Region for computer support specialists to be 110 through the year 2005. Approval to offer the degree at MATC will allow current and future IT students to achieve the full associate degree credential, and will provide opportunities for Mountainland Region students consistent with those available in other regions of the state. Institutional Impact: Prior to the development of the AAT Degree, the MATC had an established IT Program that emphasized networking. As the degree was developed, only two courses were lacking in the existing program to meet the full degree requirements. The MATC has since finished development and preparations for the two courses necessary to complete the program, Introduction to Information Technology and Introduction to Programming, which are scheduled to the be offered January 2003. All MATC courses and competencies are as outlined in the UCAT degree's networking track. Tab A, Page 3 of 6 Finances: Costs for the two additional courses are being absorbed within existing MATC budgets through attrition of 3.5 FTE administrative staff positions and redistribution of their duties to remaining staff. A portion of the attrition savings will be applied to expanding the partial-year contracts of current IT faculty to accommodate the additional teaching load. It is the recommendation of the Commissioner that the Regents approve the institutional requests on the Consent Calendar of the Academic, Applied Technology, and Student Success Committee. Cecelia H. Foxley, Commissioner CHF/LF Attachments Tab B, Page 1 of 4 MEMORANDUM January 8, 2003 TO: State Board of Regents FROM: Cecelia H. Foxley SUBJECT: Information Calendar, Academic, Applied Technology, and Student Success Committee The following items have been submitted by the designated entities for review by the Regents on the Information Calendar of the Academic, Applied Technology, and Student Success Committee. The items submitted by USHE institutions were previously approved by the institutional Boards of Trustees. No action is required by the Regents. 1. University of Utah a. Stand-alone Minor in Nutrition The Nutrition Minor will offer undergraduate students focused training in the field of Nutrition and related topics of health promotion/disease prevention. Currently there is a growing student interest in nutrition; however, there is no undergraduate program offered at the University to meet this need. This Nutrition Minor takes advantage of faculty and coursework infrastructure already in place to meet the needs of student interested in this field, and will serve as an ideal complement to existing B.S. programs in Exercise Sports Science and Health Promotion and Education. b. Name Change of the Academic Outreach and Continuing Education (AOCE) Social Work Program to the Social Work Professional and Community Educational Program, and Corresponding Administrative Transfer of the Program from the AOCE to the Graduate School of Social Work For approximately the past 18 years, the continuing education function of the Graduate School of Social Work (GSSW) at the University of Utah has been housed under the umbrella of first, the Division of Continuing Education (DCE), which then became Academic Outreach and Continuing Education (AOCE). Although this program has had ultimate reporting responsibility to AOCE for administrative, financial and personnel supervision, program personnel have been housed within the Graduate School of Social Work. This change better aligns program responsibilities with the appropriate administrative entity. c. Interdisciplinary Minor in Literacy Studies The University Writing Program is offering this interdisciplinary Minor to provide students access to the variety of historical, theoretical and practical scholarship and service practices that are now combined in the field of Literacy Studies. Literacy Studies is of interest to students in literary majors, history, linguistics, education, family and consumer studies, political science, sociology, social work, and in the academic units Tab B, Page 2 of 4 whose curricula explore gender, race and ethnicity. It combines historical, educational, social and political descriptors of reading and writing as cultural activities that characterize societies. 2. Weber State University a. Name Change from the Physical Education - Non-teaching Major to Human Performance. This change more clearly identifies the focus of the Physical Education - Non-teaching Major, and makes this Major more consistent with national and international trends to use the phrase "Human Performance" as a sub-discipline within the larger field of Physical Education. 3. Utah System of Higher Education (USHE) a. Programs Under Consideration/Development at USHE Institutions Matrices showing programs under consideration or development at USHE colleges and universities are attached. Commissioner's Recommendation It is the recommendation of the Commissioner that the Regents review the Information Calendar and raise any outstanding questions. No action is required by the Board. Cecelia H. Foxley, Commissioner CHF/LF Utah System of Higher Education Programs Under Development/Consideration Section I From: December, 2002 through November, 2003 Current Status Key: 1. Under review by department faculty. 2. Under review by curriculum committee(s) and/or Faculty Senate. 3. Forwarded to the CAO, President and Board of Trustees for approval. 4. Sent to Commissioner's Office and all USHE Institutions for review. 5. On Regents' Agenda. Projected for Institution Program Name Degree Type Current Status Regents' Agenda U of U Foods and Nutrition Minor 2 Entrepreneurship BS 4 Consumer and Community Studies BA/BS 2 International Studies BA/BS/Minor 4 Except. To Moratorium. Req. USU Professional Communication PhD 4 Reviewed - Being Held Personal and Financial Planning BA/BS 4 Reviewed - Being Held Business w/Specializations in Accounting, BIS, Mgt., Marketing and Operations Mgt. PhD 2 Aerospace Engineering MS, PhD 1 Biochemistry BS 2 Applied Environmental Geoscience BS, MS 2 Wildlife Science BS 2 Conservation and Restoration Ecology BS 2 Fisheries and Aquatic Sciences BS 2 Watershed and Earth Systems BS 2 Computer Science and Computer Scientist MS 1 Geology PhD 1 WSU Applied Technology BAT 4 Except. To Moratorium. Req. Emergency Care and Resuce BS 1 Early Childhoold and Special Educ. BS 2 Crime Scene Investigation AS 1 Plastics Engineering Technology BS 1 Biomedical Engineering Technology BS 1 SUU Paralegal Studies Minor 2 Snow No Programs Pending Dixie Visual Technologies AAS 3 Health Sciences Management BS CEU Hospitality Management AS/AAS 5 Transportation Technology AS/AAS 1 Apprenticeship AAS 1 Paraprofessional Educator AS/AAS 1 Native American Studies AA/AS 1 UVSC Art and Visual Communication BA,BFA,BS 4 Reviewed - Being Held Dance BA,BFA,BS 2 Music BA,BS 2 Applied Technology BAT Except. To Moratorium. Req. Community Health BA/BS Spanish BA,BS 2 SLCC Broadcast Video/Audio Production AAS 4 Reviewed - Being Held Film Production AAS 4 Reviewed - Being Held Geoscience AAS 1 Chemistry AS 1 Chemistry Technician AAS 1 Pharmacy Technician AAS Interior Design Associate AAS 4 UCAT Business Technology AAT 3 Page 1 of 3 Utah System of Higher Education Programs Under Development/Consideration Section II From: April, 2003 through March, 2005 Institution Program Name Degree Type U of U Occupational Therapy MS Physical Therapy DPT Parks, Recreation and Tourism MPRTM College of Health Depts. And Divisions Interdisciplinary PhD in Health Community Development (Env. Studies & FCS) Undergrad. Certificate Anthropology of Religion Undergrad. Certificate Medical Anthropology Undergrad. Certificate Power Politics of Anthropology Undergrad. Certificate Research and Assessment Undergrad. Certificate Pharmaceutical Sciences BS Combined Doctor of Pharmacy/Philosphy Doctorate Historic Preservation Certificate Gender Studies Certificate Demography Certificate USU Philosophy MA Public Administration MS Agricultural Policy Relations BS Agronomy MS Aerospace Engineering MS, PhD Geography MS Physical Geography MS Human Dimensions of Ecosystem Science and Management MA, MS, PhD Interdisciplinary Doctorate in Disabilities PhD WSU European Studies without Language Minor Professional and Technical Writing Bachelor's Instrumental Musical Pedagogy Bachelor's SUU Environmental Resource Mgt. Or Natural Resource Mgt. MS General Studies (School of Cont./Prof. Studies BS Public Administration (with U of U) MPA Communications MA/MS Theory and Practice of Writing MA Dance BFA Theatre Arts BFA Counseling Psychology MA/MS Exercise Science BA/BS Snow No Programs Pending Dixie Communicaton Technologies BS Speech Language Pathology (Incubated by USU) BS Medical Radiography AAS Bachelor of Nursing BSN CEU Environmental Studies AA/AS Environmental Science AA/AS Wilderness Studies AA/AS Safety Science AA/AS Manufacturing Engineering Technology AA/AS Allied Health Professions Certificate Page 2 of 3 Institution Program Name Degree Type UVSC Communication BA/BS Computer Engineering Technology BS School Health Education BS Health Services Administration BS Mild/Moderate Special Education BA/BS Physical Education/Recreation BS Physical Education/Coaching Education BS Technology Education BS Spanish Education BA Music Education BA/BS Political Science BA/BS Semiconductor Technology AAS Math Education Minor Earth Science Education Minor Chemistry Education Minor Physical Education Minor School Health Minor Theatre BA/BS SLCC Genealogy AAS Hospitality Management AAS Horticulture AAS Pre Bio-Engineering APE Mechanical Engineering AAS Civil Engineering AAS Nanotechnology AS, AAS Electrical Engineering AAS UCAT Welding AAT Apprenticeship AAT Dental Assisting AAT Machining AAT Industrial Maintenance AAT Diesel AAT Electronics AAT Page 3 of 3 Tab C, Page 1 of 2 MEMORANDUM January 8, 2003 TO: State Board of Regents FROM: Cecelia H. Foxley SUBJECT: R312, Institutional Categories, Accompanying Criteria, and Institutional Missions and Roles - Discussion Item Issue The Regents' 2002 Master Planning Task Force on Missions and Roles recommended the development of policy R312, Institutional Categories, Accompany Criteria, and Institutional Missions and Roles, to incorporate the changes that have occurred in the USHE since 1993. This document is now in the process of being shared at institutions with Boards of Trustees, and feedback being received. Background At the November 8, 2002 Board of Regents' meeting proposed policy R312, Institutional Categories, Accompanying Criteria, and Institutional Missions and Roles, was introduced. This is a new policy which replaces two previous policies: R311, Institutional Roles and Missions, and R313, Institutional Categories and Accompanying Criteria. The purpose of this policy is to incorporate the changes that have occurred in the USHE institutions and create a comprehensive, system-wide approach to the individual roles of the institutions throughout the system that reflects what is in the best interest of Utah students and citizens. The policy reflects what is considered appropriate at this point in time and for the near future. However, as situations in Utah change there is an opportunity for institutions to have their mission and role revisited if there are compelling criteria that indicate a revision is in the best interest of the students, the institution and the citizens of Utah. Currently the policy is being shared with Boards of Trustees to inform them regarding the direction that seems appropriate for their respective institutions and solicit their feedback. Institutional Presidents and/or Chief Academic Officers should be prepared to communicate this feedback at the Board of Regents' meeting on January 17, 2003. If general agreement is reached on the policy, the Regents may choose to move this item to an action item and approve it. If further deliberation and consideration are needed, appropriate time will be provided. Tab C, Page 2 of 2 Commissioner's Recommendation It is the recommendation of the Commissioner that the Board review Policy R312, Institutional Categories, Accompanying Criteria, and Institutional Missions and Roles, receive feedback from the USHE institutions and either approve the policy or continue the dialogue as needed. Cecelia H. Foxley, Commissioner CHF/DDW Attachment Tab D, Page 1 of 6 & Attachments MEMORANDUM January 8, 2003 TO: State Board of Regents FROM: Cecelia H. Foxley SUBJECT: Utah State University - Real Estate Purchase and Associated Revenue Bond Issue Utah State University officials request that the Regents approve the purchase of land for $1,100,000 and approve a resolution that will enable the issuance of revenue bonds to provide a portion of the financing needed to acquire that land. The land will replace Agricultural Experiment Station farmland located north of the main Logan campus that will be assigned to the USU Innovation Campus to accommodate growth. Background Utah State University proposes to purchase approximately 550 acres of land in Cache County located 12 miles northwest of Logan, Utah. The USU Board of Trustees approved this acquisition and bond financing on November 15, 2002, subject to approval by the Regents. The University obtained an appraisal of $1,100,000, and has agreed to this purchase price. An earnest money payment has been made in the amount of $3,000, with an additional down payment of $497,000 to be paid at closing. The balance of the purchase price and associated closing and issuance costs are to be paid by obtaining financing through a private placement, non-taxable bond. Installment payments will be made over a period of 10 to 12 years at an annual interest rate of approximately 4 percent. In order to finance this purchase, University officials request that the Regents use special bonding authority granted to the Regents by the Legislature. Most Regent revenue bonds are issued under the authority of UCA 53-B-21, which requires formal Legislative approval prior to issuance. The University requests that the Regents use separate, limited bonding authority granted to them in UCA 11-17-17. This authority allows the Regents to issue up to $10 million per year on behalf of USU for purposes related to its educational mission. The Attorney General has appointed Chapman and Cutler as bond counsel. USU has selected Zions Bank Public Finance to serve as Financial Advisor. A "Term Preliminary Sheet" provided by the Financial Advisor is included as Attachment 1. Also included are two documents provided by Bond Counsel - a draft "Authorizing Resolution" (Attachment 2) and a draft "Bond Purchase Contract" (Attachment 3.) Parameters established by the resolution are as follows: a principal amount not to exceed $750,000; a maximum term not to exceed 13 years; and interest rates not to exceed 4.75 percent. Tab D, Page 2 of 6 & Attachments State Board of Regents January 8, 2003 Page 2 Also available for review but not attached are two additional draft documents prepared by Bond Counsel - the revised "Third Supplemental Indenture of Trust" and the "Deed of Trust, Assignment of Rents, Security Agreement and Financing Statement." The bonds will be funded through facilities and administrative rate recoveries (formerly known as indirect cost revenues). The bonds will be subordinated to the research revenue bonds issued by USU in 1995 and 2002. Representatives of the University, Bond Counsel, and Financial Advisor will be available to answer questions. Recommendation It is the recommendation of the Commissioner that the Regents approve the acquisition by Utah State University of 550 acres of land in Cache County for $1.1 million with a $500,000 down payment to be funded from existing University research revenues. It is also recommended that the Regents approve the issuance by Utah State University of a private placement bond for $600,000, with its associated bonding parameters, to fund the balance of the land purchase. Cecelia H. Foxley, Commissioner CHF/MHS Attachments Tab D, Page 3 of 6 & Attachments TERM PRELIMINARY SHEET Estimate of Par Amount, Series 2003 .............. $725,000 Statutory Authorization..................................... 11-17-1 et. seq. Dated Date ........................................................ February 15, 2003 Sale Date and Time........................................... 4:00 P.M. MST on January __, 2003 Sale Methodology ............................................. Private Placement Sale Competitive Bid Closing Date...................................................... March __, 2003 Interest Payment Dates ..................................... June 1 and December 1 First Interest Payment Date............................... June 1, 2003 First Principal Payment..................................... December 1, 2003 Underlying Bond Rating................................... None applied for. Bond Insurance ................................................. None applied for. Tax Status of Series 2003 ................................. Federally Tax Exempt, Not Bank Qualified Purpose of the Issue .......................................... To fund an acquisition fund with approximately $600,000, which, together with other funds available to the University, will be sufficient to acquire 550 acres of farmland located in the unincorporated area of Cache County, Utah approximately 12 miles northwest of Logan. The property will replace Agricultural Experiment Station farmland to be assigned to the USU Innovation Campus in North Logan. Land Appraisal Available ................................. Yes, on request University Cash Contribution ........................... $500,000.00 Mortgage on Property ....................................... Yes, in the form of a Trust Deed. Estimated DS Coverage on Bonds.................... 7.52x Final Maturity ................................................... December 1, 2015 Tab D, Page 4 of 6 & Attachments Capitalized Interest Fund .................................. None Estimated TIC Interest Rate.............................. 3.95% (12-31-02 Estimate) Pledged Revenues ............................................. Indirect Cost Recovery (F and A) Research Revenues of Utah State University. Parity Bond Pledge.......... ................................. Yes, the bonds have a parity lien on the Research Revenues of Utah State University for the USU Research Revenue Bonds, Series 1995A and 2002A. Source of Bond Payment.......... ........................ Indirect Cost Recovery Revenues of Utah State University including the USU Foundation Additional Security ........................................... Trust Deed on the Land. Title Insurance.......... ........................................ Lender's Policy through Chicago Title Insurance Company. Local Agent is Northern Title, Logan, Utah. Optional Redemption Feature ........................... December 15, 2007 @ 100.0% Capitalized Debt Service Reserve Fund ........... Funded to Maximum Annual Debt Service Initial Acquisition Fund Amount ...................... $1,100,000 Numbers Structure ............................................ Gross Funded Anticipated Underlying Bond Ratings.............. No Rating Requested Delivery............................................................. Fully Registered Bonds (Typewritten) Interest Basis..................................................... 30/360 Denominations .................................................. Private Placement certificates as requested Payments to the Trustee .................................... Monthly on the 15th on each month Bond Counsel.................................................... Chapman and Cutler Disclosure Opinion ........................................... None Offered Utah State University Chief Contact................. Clint G. Moffitt, Controller Tab D, Page 5 of 6 & Attachments Financial Advisor.............................................. Zions Bank Public Finance Financial Advisor as Bidder.............................. The University has given specific authorization to Zions First National Bank to enter a bid on the Bonds. Trustee, Paying Agent and Registrar ................ Wells Fargo Bank Northwest, N.A. Sophisticated Investor ("Big Boy") Letter........ Required Private Placement Purchaser............................. To Be Determined Tab D, Page 6 of 6 & Attachments COSTS OF ISSUANCE REPORT Costs of Issuance Budget Versus Actual Budget as of Actual as of Issuer's Expenses-Detail February __, 2003 March __, 2003 Bond Counsel Fees and Disbursements............................... $7,750 $_______ Financial Advisor and Disbursements ................................. 7,000 _______ Estimated Trustee Fees and First Year's Annual ................ 4,000 _______ University's Real Estate Closing Costs ............................... 20,000 _______ Title Insurance Costs............................................................ 1,500 _______ Contingency ......................................................................... 4,750 0.00 Total Budgeted Issuer Expenses.................................. $45,000 $_______ Expenses as per $1,000 par amount..................................... $____ All In Costs Per Bond Estimated Private Placement Fee .........($7,250.00) $10.00 Issuer Costs of Issuance .......................($45,000.00) 62.07 ...........................................................................Total Costs/Bond ($52,250.00) $72.07 DRAFT 1/6/03 1449960.01.03 0867754/RDB/mt When Recorded Please Return to: Ryan D. Bjerke Chapman and Cutler 50 South Main Street, Suite 900 Salt Lake City, Utah 84144 DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FINANCING STATEMENT DATED AS OF MARCH ___, 2003 FROM UTAH STATE UNIVERSITY OF AGRICULTURE AND APPLIED SCIENCE (TRUSTOR) TO WELLS FARGO BANK NORTHWEST, N.A., as Trustee (TRUSTEE) - i - TABLE OF CONTENTS SECTION PAGE ARTICLE I COVENANTS AND AGREEMENTS OF THE BORROWER ................................5 Section 1.1. Payment of Secured Obligations..................................................................5 Section 1.2. Maintenance, Repair and Operation.............................................................5 Section 1.3. Insurance ......................................................................................................5 Section 1.4. Assignment of Policies Upon Foreclosure...................................................7 Section 1.5. Actions Affecting Mortgaged Property........................................................7 Section 1.6. Taxes............................................................................................................8 Section 1.7. Alterations, Additions and Improvements to the Mortgaged Property..................................................................................................9 Section 1.8. Utilities.........................................................................................................9 Section 1.9. Actions by Trustee to Preserve Mortgaged Property...................................9 Section 1.10. Additional Security ....................................................................................10 Section 1.11. Successors and Assigns..............................................................................10 Section 1.12. Inspections .................................................................................................10 Section 1.13. Liens...........................................................................................................10 Section 1.14. Condemnation Proceeds.............................................................................11 Section 1.15. Governmental Requirements......................................................................11 [Section 1.16. Parking Areas]............................................................................................11 Section 1.17. Performance of Borrower's Covenants; Authority ....................................11 Section 1.18. Actions of Borrower with Respect to Mortgaged Property .......................11 Section 1.19. Trustee's Powers........................................................................................12 Section 1.20. Indemnification; Waiver of Offset.............................................................12 Section 1.21. Ground Leases and Other Leases...............................................................13 Section 1.22. Name of Borrower .....................................................................................13 ARTICLE II ASSIGNMENT OF RENTS AND UNRESTRICTED RECEIVABLES, ISSUES AND PROFITS..................................................................................13 Section 2.l. Assignment of Rents ..................................................................................13 Section 2.2. Collection Upon Default ............................................................................14 ARTICLE III SECURITY AGREEMENT.............................................................................14 Section 3.1. Creation of Security Interest ......................................................................14 Section 3.2. Financing Statement...................................................................................14 ARTICLE IV REMEDIES UPON DEFAULT........................................................................15 Section 4.1. Events of Default .......................................................................................15 Section 4.2. Remedies Upon Default.............................................................................16 Section 4.3. Other Remedies..........................................................................................17 Section 4.4. Appointment of Receiver...........................................................................17 Section 4.5. Remedies Not Exclusive............................................................................17 Section 4.6. Limitation on Remedies.............................................................................18 SECTION PAGE - ii - Section 4.7. Bidder at Foreclosure Sale .........................................................................18 Section 4.8. Application of Moneys...............................................................................18 Section 4.9. Right of Bondholder to Direct Proceedings...............................................18 ARTICLE V MISCELLANEOUS .......................................................................................19 Section 5.l. Governing Law ..........................................................................................19 Section 5.2. Release of Mortgage ..................................................................................19 Section 5.3. Prepayment.................................................................................................19 Section 5.4. Notices .......................................................................................................19 Section 5.5. Captions .....................................................................................................19 Section 5.6. Invalidity of Certain Provisions .................................................................19 Section 5.7. Consents, etc., of Bondholder ....................................................................20 EXHIBIT A - PROPERTY DESCRIPTION FIXTURE FILING NOTICE: THIS DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FINANCING STATEMENT IS INTENDED TO CONSTITUTE A FINANCING STATEMENT FILED AS A FIXTURE FILING PURSUANT TO SECTION 70A-9A-501 OF THE UTAH CODE ANNOTATED 1953, AS AMENDED, AND COVERS GOODS WHICH ARE OR ARE TO BECOME FIXTURES RELATED TO THE REAL ESTATE DESCRIBED HEREIN, AFTER-ACQUIRED PROPERTY AND PROCEEDS AND IS TO BE RECORDED IN THE REAL ESTATE RECORDS OF THE COUNTY RECORDER OF CACHE COUNTY, UTAH. THIS DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FINANCING STATEMENT (hereafter referred to as this "Mortgage"), made and entered into as of March ___, 2003, by and between UTAH STATE UNIVERSITY OF AGRICULTURE AND APPLIED SCIENCE, as Trustor (herein referred to as the "Borrower"), whose mailing address is Utah State University, Logan, Utah 84322-2400, and WELLS FARGO BANK NORTHWEST, N.A., a national banking institution, as Trustee (herein referred to as the "Trustee"), whose mailing address is 79 South Main Street, 3rd Floor, Salt Lake City, Utah 84111, as Trustee under that certain General Indenture of Trust, dated as of August 1, 1995, as amended and supplemented to the date hereof, by and between the State Board of Regents of the State of Utah (the "Board"), for and on behalf of the Borrower, and the Trustee (the "Indenture"), W I T N E S S E T H: Reference is hereby made to the Indenture for definitions of various terms used herein. WHEREAS, the Borrower desires to obtain a portion of the moneys which will be used (i) to finance the acquisition of approximately 550 acres of land in Cache County, Utah, to be used as Research Facilities (the "Series 2003 Project); (ii) to deposit a portion of the Debt Service Reserve Fund Requirement, and (iii) to pay related expenses incurred in connection with the issuance of the Bonds (as hereinafter defined), all as permitted under the Utah Industrial Facilities and Development Act, Chapter 17 of Title 11, Utah Code Annotated 1953, as amended (the "Act"). WHEREAS, pursuant to the Act, the Board, for and on behalf of the Borrower, is obtaining funds for such purposes through the issuance and sale of its Utah State University, Research Revenue Bonds, Series 2003 (the "Series 2003 Bonds"), which Series 2003 Bonds will be issued under and secured by the Indenture on a parity with the Board's outstanding Utah State University Research and Refunding Revenue Bonds, Series 1995A, and Utah State University Research Revenue and Refunding Bonds, Series 2002A (collectively, with the Series 2003 Bonds, the "Bonds"). Pursuant to the Indenture, the Board and the Borrower have pledged and assigned their rights in and to (i) the Revenues, (ii) all moneys in funds and accounts held by the Trustee under the Indenture, including the investments, if any thereof, and (iii) all other rights granted under the Indenture, as part of the security for the Bonds. The Bonds will be payable out of the Revenues and other payments provided for in the Indenture. -2- WHEREAS, the Act provides that any bonds issued thereunder may be secured by (among other things) a mortgage covering all or any part of a project financed thereby; and WHEREAS, the Borrower desires to provide security for the payment of the Bonds from time to time, according to their tenor and effect, and for the performance and observance by the Borrower of all the covenants expressed or implied in the Indenture and in the Bonds; NOW, THEREFORE, the Borrower agrees to the following: GRANT IN TRUST Borrower, as Trustor, irrevocably and unconditionally grants, transfers, assigns, conveys and warrants to Trustee in trust for the benefit of Trustee, and its successors and assigns, IN TRUST, WITH POWER AND SALE AND RIGHT OF ENTRY AND POSSESSION, all estate right, title and interest which Borrower now has or may later acquire in the following property (collectively, the "Mortgage Property"): (1) The real property located in Cache County, Utah, as more particularly described on Exhibit A attached hereto; (2) The entire interest of the Borrower in and to all buildings, structures, improvements and appurtenances now standing, or at any time hereafter constructed or placed, upon such real estate, including all right, title and interest of the Borrower, if any, in and to all building material, building equipment and fixtures of every kind and nature whatsoever on any of said real estate or in any building, structure or improvement now or hereafter standing on said real estate, which are classified as fixtures under applicable law and which are used in connection with the operation, maintenance or protection of said buildings, structures and improvements as such, whether or not the same are used in connection with the operation of any business conducted upon any of said real estate, and the reversion or reversions, remainder or remainders, in and to any of said real estate, and together with the entire interest of the Borrower in and to all and singular the tenements, hereditaments, easements, rights-of-way, rights, privileges and appurtenances to said real estate, belonging or in any wise appertaining thereto, including without limitation the entire right, title and interest of the Borrower in, to and under any streets, ways, alleys, gores or strips of land adjoining said real estate, and all claims or demands whatsoever of the Borrower either in law or in equity, in possession or expectancy of, in and to said real estate, it being the intention of the parties hereto that, so far as may be permitted by law, all property of the character hereinabove described, which is now owned or is hereafter acquired by the Borrower and is affixed or attached or annexed to said real estate, shall be and remain or become and constitute a portion of said real estate and the security covered by and subject to the lien of this Mortgage; (3) All appurtenances, easements, water and water rights belonging to or used upon or in connection with said real estate (however represented), pumps, pumping plants, pipes, flumes and ditches, rights-of-way and other rights used in connection -3- therewith or as a means of access thereto, or hereafter owned or constructed or placed thereupon; (4) All the estate, interest, right, title, property or other claim or demand of every nature whatsoever in and to the Mortgaged Property, including specifically, but without limitation, all deposits made with or other security given to utility companies by the Borrower with respect to the Mortgaged Property and claims or demands relating to insurance or condemnation awards which the Borrower now has or may hereafter acquire, including all advance payments of insurance premiums made by the Borrower with respect thereto; (5) All right, title and interest of the Borrower in and to all ground leases, leases, subleases, licenses, occupancy agreements, concessions or other arrangements, whether written or oral, whereby any person, corporation or business or governmental entity has agreed to pay money or any consideration for the use, possession or occupancy of the premises hereby conveyed or subject to the lien hereof, or any part or portion thereof or space therein, and all rents, income, profits, benefits, advantages and claims against guarantors under any of the foregoing; (6) All rents, profits, damages, royalties and revenues of every kind, nature and description whatsoever that the Borrower may be entitled to receive from any person or entity owning or having or hereafter acquiring a right to the oil, gas, water (whether riparian, appropriative or otherwise, and whether or not appurtenant) or mineral rights and reservations of the Mortgaged Property, with the right in the Trustee to receive and receipt therefor and apply the same to the indebtedness secured hereby either before or after any default hereunder or under the Indenture, and the Trustee may demand, sue for and recover any such payments but shall not be required to do so; and (7) All right, title and interest of the Borrower in and to after-acquired property, proceeds (whether cash or non-cash) of the items set forth in this Granting Clause and products of the items set forth in this Granting Clause. To the extent that the Mortgaged Property is not comprised of real property, this Mortgage constitutes or shall be treated as constituting a security agreement under the Utah Uniform Commercial Code, so that the Trustee shall have and may enforce a security interest to secure payments of all sums due or to become due under this Mortgage, the Indenture or the Bonds, in any or all of the aforesaid building material, building equipment and fixtures and other articles of property, real, personal and mixed, now owned or hereafter acquired, in addition to, but not in limitation of the lien upon the same as part of the realty imposed by the foregoing provision hereof, such security interest to attach at the earliest moment permitted by law. TO HAVE AND TO HOLD all and singular the Mortgaged Property, whether now owned or hereafter acquired, unto the Trustee and its respective successors in said Mortgaged Property and assigns forever; -4- The foregoing provisions of this Mortgage are herein referred to collectively as the "Granting Clause." FOR THE PURPOSE OF SECURING: (1) payment of each and every obligation and performance of each and every covenant and agreement of the Borrower contained herein or the Indenture, as such documents may be amended or supplemented from time to time in accordance with their terms, and with respect to the Bonds; (2) payment of the principal of, premium, if any, and interest on the Bonds issued by the Board pursuant to the Indenture, which Bonds are payable as to interest on their respective Interest Payment Dates of each year until payment in full of the principal amount thereof and bear interest at the rates per annum and mature, subject to prior redemption, as provided in the Indenture; and (3) payment of all sums advanced by or on behalf of the Trustee hereunder or under the Indenture for the purpose of protecting the Mortgaged Property, with interest thereon, all as provided herein and in the Indenture. All payments of principal, interest and other amounts being payable by the Borrower to the Trustee at the principal corporate trust office of the Trustee at its address first above written. The Borrower hereby covenants with the Trustee that the Borrower has marketable fee simple title in and to the Mortgaged Property; that the Borrower has good and lawful authority to assign, sell, convey and mortgage the same under the Act; that the Mortgaged Property is free and clear of all liens and encumbrances whatsoever; and the Borrower covenants to warrant and defend the Mortgaged Property against the lawful claims of all persons whomsoever, except as may be above stated. CONDITIONED, HOWEVER, that if the Board, as issuer of the Series 2003 Bonds, its successors or assigns, shall pay, or cause to be paid, or provision for such payment shall have been made in accordance with Article X of the Indenture, and shall cause the payments to be made on the Bonds as required under Article V of the Indenture, or shall provide, as permitted by the Indenture, for payment of the Series 2003 Bonds by depositing with Trustee under the Indenture the entire amount due or to become due thereon, and shall well and truly cause to be kept, performed, and observed all of its material covenants and conditions pursuant to the terms of the Indenture and shall pay or cause to be paid to Trustee under the Indenture all sums of money due or to become due to it in accordance with the terms and provisions of the Indenture, then upon the final payment of the Series 2003 Bonds, the mortgage lien rights and security interests hereby granted shall cease, determine, and be void; otherwise such rights and interest shall be and remain in full force and effect. All capitalized terms used in this Mortgage and not otherwise specifically defined herein shall have the meaning ascribed to such terms in the Indenture. -5- IN ORDER MORE FULLY TO PROTECT THE SECURITY OF THIS MORTGAGE, THE BORROWER HEREBY COVENANTS AND AGREES AS FOLLOWS: ARTICLE I COVENANTS AND AGREEMENTS OF THE Borrower The Borrower hereby covenants and agrees as follows. Section 1.1. Payment of Secured Obligations. To pay when due (a) the principal of, and the premium (if any) and interest on, the indebtedness evidenced by the Bonds, (b) the charges, fees, and all other sums as provided in the Indenture and herein and (c) the principal of, and interest on, any future advances secured by this Mortgage. Section 1.2. Maintenance, Repair and Operation. The Borrower shall, at its own expense, maintain, repair, manage and operate the Mortgaged Property, or cause the same to be maintained, managed and operated, in good order, condition and repair, and shall suffer no waste or injury thereto, ordinary wear and tear excepted. The Borrower shall provide or cause to be provided all security service, custodial service, janitor service, power, gas, telephone, light, heating and water and all other public utility services. The Borrower shall not place, or permit to be placed, a load upon any floor of the Series 2003 Project exceeding the floor load per square foot area which such floor was designed to carry and which may be allowed by law. The Borrower shall keep or cause to be kept the Mortgaged Property free and clear of all liens, charges and encumbrances, except those caused or consented to by the Trustee in accordance with the Indenture. Section 1.3. Insurance. (a) Insurance Required. Borrower shall keep and maintain the Mortgaged Property at all times insured in such risks and in such amounts, with such deductible provisions, as are customary in connection with the operation of facilities of the type and size comparable to the Series 2003 Project and other Mortgaged Property and, subject to the provisions of Section 1.3(e) hereof, Borrower shall carry and maintain, or cause to be carried and maintained, and pay or cause to be paid timely the premiums for, at least the following insurance with respect to the Mortgaged Property and Borrower; (i) insurance coverage for buildings and contents including steam boilers, fired-pressure vessels and certain other machinery for fire, lightening, windstorm and hail, explosion, riot, riot attending a strike, civil commotion, aircraft and vehicles, sonic shock, smoke, vandalism and malicious mischief, sprinkler leakage, elevator, and all other risks and perils of direct physical loss, on a replacement cost basis in an amount equal to the full insurable value thereof, but in any event not less than an amount sufficient to prevent Borrower from becoming a co-insurer under any applicable co-insurance clause; provided, that at all times, Borrower shall maintain such insurance in an amount not less than an amount necessary to pay and retire and redeem all the outstanding Bonds in accordance with the provisions of the Indenture; -6- (ii) comprehensive general liability in amounts of at least $5,000,000 coverage per occurrence and $5,000,000 coverage of annual aggregate claims; (iii) comprehensive automobile liability insurance; (iv) workers' compensation insurance or self-insurance as required by the laws of the State of Utah; (v) all risk builders risk insurance during any construction of any improvements to the Series 2003 Project, in an amount equal to 100% of the replacement cost of such improvements to the Series 2003 Project as such cost may increase from time to time as construction progresses, providing all risk coverage on such improvements and materials stored at the Series 2003 Project and elsewhere, and including the perils of collapse, damage resulting from collapse, damage resulting from error in design or faulty workmanship or materials, water damage and, if requested by the Bondholders, earthquake, business interruption and other risks; (vi) flood insurance, or evidence satisfactory to the Bondholders that the Mortgaged Property is not located in a flood plain; and (vii) such other insurance as the Bondholders may require. The term "full insurable value" as used in clause (i) above shall mean the actual replacement cost, using the items of value set forth above (including the cost of restoring the surface grounds owned or leased by the Borrower), without deduction for physical depreciation. (b) Insurers and Policies. Each insurance policy required by Section 1.3(a) hereof (i) shall be issued by an insurer (or insurers) which is financially responsible, of recognized standing and authorized to issue such policy of insurance in the State of Utah; (ii) shall be in such form and with such provisions as are generally considered standard provisions for the type of insurance involved; and (iii) shall prohibit cancellation or substantial reduction of coverage by the insurer without at least 30 days prior written notice to the Trustee and Borrower. Without limiting the generality of the foregoing, all insurance policies described in subsection (i), (v) and (vi) of Section 1.3(a) shall name the Trustee and Borrower as parties insured thereunder as the respective interest of each of such parties may appear. Losses under such policies shall be payable to the Trustee in accordance with the standard form mortgage clause and shall be applied as provided in Section 6.10 of the Indenture. Losses not in excess of $200,000 may be adjusted with the insurer by Borrower on behalf of the insured parties. At the time of the issuance and delivery of the Bonds and from time to time thereafter as Trustee may reasonably require (in any event, at least annually), Borrower shall deliver to Trustee a certificate of insurance with respect to the insurance policies required under Section 1.3(a) hereof. (c) Uninsured Property; Obligation of Contractors. In the event the Mortgaged Property, or any part thereof, shall be damaged, lost or destroyed as a result of a casualty as to which insurance is not required under the terms of this Mortgage, Borrower shall, promptly after such damage, loss or destruction, expend for repairs, restoration or replacement of the property -7- damaged, lost or destroyed such sum as may be required therefor. Nothing in this Mortgage shall be construed as relieving any contractor or other third party from any obligation or duty which he may have respecting the repair, restoration or replacement of any part of the Mortgaged Property. (d) Failure to Carry Insurance. In the event Borrower shall, at any time, neglect or refuse to procure or maintain insurance as herein required, (i) the Bondholders may, at their option, direct Trustee to procure and maintain such insurance (at Bondholders' cost), and Borrower shall be obligated to forthwith reimburse Bondholders for all amounts expended in connection therewith and all such amounts shall be secured by this Mortgage and (ii) neither Trustee nor Bondholders shall have any liability if Bondholders elect not to procure and maintain such insurance pursuant to subsection (i) above. [(e) Insurance Consultant. Borrower shall engage an Insurance Consultant at least annually to review the insurance maintained by Borrower and to make recommendations respecting the types, amounts and provisions of insurance that should be carried by Borrower. In the event that the insurance required by Section 1.3(a) of this Mortgage is not commercially available, or if Borrower deems such coverage to be available only at an unreasonable cost, or if the coverage then maintained by Borrower is excessive with respect to the liability insured against, Borrower shall confer with its Insurance Consultant for the purpose of reviewing the insurance coverage of, and insurance required for, the Borrower and the Mortgaged Property and making recommendations respecting the types, amounts and provisions of insurance that should be carried by Borrower. A signed copy of the report of the Insurance Consultant shall be filed with the Trustee, Borrower and each holder of ten percent or more in aggregate principal amount of the Bonds then outstanding, and the insurance requirements specified hereunder shall be modified to conform with the recommendations contained in the report.] (f) Borrower's Liability. No acceptance of any insurance policy by the Trustee shall relieve or release Borrower from any liability, duty or obligation under the provisions of this Mortgage. Section 1.4. Assignment of Policies Upon Foreclosure. In the event of foreclosure of this Mortgage or other transfer of title or assignment of the Mortgaged Property in extinguishment, in whole or in part, of the obligations secured hereby, all right, title and interest of the Borrower in and to all policies of insurance required by Section 1.3 hereof shall inure to the benefit of and pass to the successor in interest to the Borrower or the purchaser or grantee of the Mortgaged Property. Section 1.5. Actions Affecting Mortgaged Property. The Borrower shall appear in and defend any action or proceeding affecting or purporting to affect the security of this Mortgage, any additional or other security for any of the obligations secured hereby or the interest, rights, powers or duties of the Trustee hereunder; it being agreed, however, that in the case of an action or proceeding against the Trustee, then the Trustee, at its option, may appear in and defend any such action or proceeding deemed necessary by it to perfect, maintain or protect such interest, rights, powers or duties, all in such manner and to such extent as the Trustee shall determine, and the Trustee is authorized to pay, purchase or compromise on behalf of the Borrower any -8- encumbrance or claim which in its judgment, with the consent of the Borrower so long as no Event of Default has occurred and is continuing hereunder and otherwise in its own discretion, appears or purports to affect the security hereof or to be superior hereto; to pay all costs and expenses, including costs of evidence of title and attorney's fees in a reasonable sum, in any above-described action or proceedings in which the Borrower may appear. Section 1.6. Taxes. (a) The Borrower and the Trustee understand and agree that the Mortgaged Property is property owned by a political subdivision of the state and is therefore free and exempt from all taxation in accordance with applicable law, including but not limited to Section 59-2-1101(2) Utah Code Annotated 1953, as amended. (b) Notwithstanding Section 1.6(a) hereof, in the event that the Mortgaged Property or any portion thereof shall, for any reason, be deemed subject to taxation, assessments or charges lawfully made by any governmental body which may be secured by a lien against the Mortgaged Property, all such taxes, assessments and governmental charges then due shall be paid, or caused to be paid, by the Borrower. The Borrower shall not allow any liens for taxes, assessments or governmental charges to exist with respect to the Mortgaged Property or any portion thereof or upon any personal property, equipment or other facility used in the operation or maintenance thereof (including, without limitation, any taxes levied upon the Mortgaged Property or any portion thereof which, if not paid, will become a charge on the rentals and receipts from the Mortgaged Property or any portion thereof prior to or on a parity with the charge thereon), or any interest therein (including the interest of the Borrower) or the rentals and revenues derived therefrom or hereunder, except to the extent permitted by Section 1.6(c) hereof. (c) The Borrower may, at its expense and in its name, in good faith contest, or cause to be contested, any such taxes, assessments and other charges, and, in the event of any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom unless by nonpayment of any such items the security afforded pursuant to the terms of the Mortgage will be materially endangered (in the judgment of the Trustee or the owners of a majority in the aggregate principal amount of the Bonds then Outstanding) or the Mortgaged Property or any essential part thereof will be subject to loss or forfeiture (in the judgment of the Trustee or the owners of a majority in the aggregate principal amount of the Bonds then Outstanding), in which event such taxes, assessments or charges shall be paid forthwith to the extent herein provided. The Trustee will cooperate fully with the Borrower in any such contest. In the event that the Borrower shall fail to pay any of the foregoing items required by this Section 1.6 to be paid, the Trustee may (but shall be under no obligation to) pay the same and any amounts so advanced therefor by the Trustee shall become an additional obligation of the Borrower to the party making the advancement, which amounts the Borrower hereby agrees to pay (subject to the foregoing limitation) on demand together with interest thereon from the date thereof until paid at the lesser of two percent (2%) per annum above the Trustee's announced prime rate or the maximum rate permitted by law. Section 1.7. Alterations, Additions and Improvements to the Mortgaged Property. (a) The Borrower shall have the right to make or permit to be made any alterations, additions or improvements of any kind, structural or otherwise, as it shall deem necessary or desirable, on or to the Mortgaged Property, to attach fixtures, structures or signs, and to affix any personal -9- property to the improvements on the Mortgaged Property; provided, however, that no such alteration, addition or improvement shall reduce or otherwise adversely affect the value of the Mortgaged Property or materially alter or change the character or use of the Mortgaged Property or impair the exclusion from gross income for federal income tax purposes of interest on the Bonds or otherwise adversely affect the purposes for which the Borrower acquired the Mortgaged Property. All such alterations, additions and improvements shall become the property of the Borrower as a part of the Mortgaged Property and shall be subject to this Mortgage. (b) The Borrower will not permit any mechanic's or other lien to be established or remain against the Mortgaged Property for labor or materials furnished in connection with any construction, substitutions, additions, modifications, improvements, repairs, renewals or replacements so made or permitted to be made by the Borrower, provided that if the Borrower shall first notify the Trustee of the Borrower's intention so to do, the Borrower may in good faith contest or cause to be contested any mechanic's or other lien filed or established against the Mortgaged Property, and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom unless by nonpayment of any such items the security afforded pursuant to the terms of this Mortgage will be materially endangered (in the judgment of the Trustee) or the Mortgaged Property or any essential part thereof will be subject to loss or forfeiture (in the judgment of the Trustee), in which event the Borrower shall promptly pay, or cause to be paid, and cause to be satisfied and discharged all such unpaid items. Section 1.8. Utilities. The Borrower shall pay or cause to be paid when due all utility charges which are incurred for the benefit of the Mortgaged Property or which may become a charge or lien against the Mortgaged Property for gas, electricity, water or sewer services furnished to the Mortgaged Property and all other assessments or charges of a similar nature, whether public or private, affecting the Mortgaged Property or any portion thereof, whether or not such taxes, assessments or charges are liens thereon. Section 1.9. Actions by Trustee to Preserve Mortgaged Property. If the Borrower fails to make any payment or to do any act as and in the manner provided in this Mortgage, the Indenture or the Bonds, the Trustee in its own discretion, without obligation so to do and without notice to or demand upon the Borrower and without releasing the Borrower from any obligation, may make or do the same in such manner and to such extent as it may deem necessary to protect the security hereof. In connection therewith (without limiting its general powers), the Trustee shall have and is hereby given the right, but not the obligation, (i) to enter upon and take possession of the Mortgaged Property; (ii) to make additions, alterations, repairs and improvements to the Mortgaged Property which it may consider necessary or proper to keep the Mortgaged Property in good condition and repair; (iii) to appear and participate in any action or proceeding affecting or which may affect the security hereof or the rights or powers of the Trustee; (iv) to pay, purchase, contest or compromise any encumbrance, claim, charge, lien or debt which in its judgment may affect or appears to affect the security of this Mortgage or be prior or superior hereto; and (v) in exercising such powers, to pay necessary expenses, including employment of counsel or other necessary or desirable consultants. The Borrower shall immediately, upon demand therefor by the Trustee, pay all reasonable costs and expenses -10- incurred by the Trustee in connection with the exercise by the Trustee of the foregoing rights, including without limitation costs of evidence of title, court costs, appraisals, surveys and attorneys' fees. Section 1.10. Additional Security. In the event the Trustee at any time holds additional security for any of the obligations secured hereby, the Trustee may enforce the sale thereof or otherwise realize upon the same, at its option, either before or concurrently herewith or after foreclosure hereunder. Section 1.11. Successors and Assigns. This Mortgage applies to, inures to the benefit of and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. Section 1.12. Inspections. The Trustee, any owner of 10% or more in aggregate principal amount of the Bonds then Outstanding, or their respective agents, representatives or workers, are authorized to enter at any reasonable time upon or in any part of the Mortgaged Property for the purpose of inspecting the same and for the purpose of performing any of the acts they are authorized to perform under the terms of this Mortgage, the Indenture or the Bonds. Notwithstanding anything herein to the contrary, the Trustee shall be entitled to exercise its rights granted pursuant to this Section only after the Trustee has provided not less than two (2) days prior written notice to the Borrower stating its desire to make such an inspection and outlining its proposed actions in connection with such inspection, subject to the limitations herein provided. Section 1.13. Liens. The Borrower shall pay and discharge, or cause to be paid and discharged, promptly, at the Borrower's cost and expense, all liens, encumbrances and charges upon the Mortgaged Property or any part thereof or interest therein. The Borrower shall have the right to contest in good faith the validity of any such lien, encumbrance or charge and, in the event of any such contest, may permit such liens, encumbrances or charges so contested to remain unpaid during the period of such contest and any appeal therefrom unless by nonpayment of any such items the security afforded pursuant to the terms of this Mortgage will be materially endangered (in the judgment of the Trustee) or the Mortgaged Property or any essential part thereof will be subject to loss or forfeiture (in the judgment of the Trustee) in which event such liens, encumbrances or charges shall be paid forthwith. Section 1.14. Condemnation Proceeds. All condemnation proceeds of the Mortgaged Property shall be deposited with the Trustee under the Indenture and are hereby assigned to the Trustee to be held and disbursed by the Trustee as provided in Section ___ of the Indenture; provided, however, that such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice and provided that any condemnation proceeds not so required to be deposited may be retained by the Borrower and used for any lawful purpose. Section 1.15. Governmental Requirements. The Borrower shall comply with, and cause the Mortgaged Property and the use and condition thereof to comply fully with, all statutes, ordinances and requirements, regulations, orders and decrees relating to the Borrower or the -11- Mortgaged Property or the use thereof by any federal, state, county or other governmental authority to the extent applicable and observe and comply with all conditions and requirements necessary to preserve and extend any and all rights, licenses, permits, privileges and franchises (including, but not limited to, Environmental Laws and laws relating to land use and development, construction, access, water rights and use, noise and pollution) which are applicable to the Borrower or have been granted for the Mortgaged Property or the use thereof. [Section 1.16. Parking Areas. The Borrower shall provide and improve or cause to be provided and improved as parking facilities within the Mortgaged Property surface areas of a square footage at least sufficient to park as many vehicles as required by applicable local ordinances.] Section 1.17. Performance of Borrower's Covenants; Authority. The Borrower shall faithfully observe and perform at all times any and all covenants, conditions and agreements on its part contained in this Mortgage, the Indenture, any and every Bond executed, authenticated and delivered thereunder. The Borrower represents that it is duly authorized under the Constitution and laws of the State of Utah, including particularly and without limitation Title 53B, Utah Code Annotated 1953, as amended, and that it has all right, power and authority under the Act, to grant a mortgage lien on and security interest in the Mortgaged Property to the Trustee for the purposes and uses herein set forth, and to enter into, execute and deliver this Mortgage; and that all action on its part for the execution and delivery of this Mortgage has been duly and effectively taken. The Borrower warrants that there is no financing statement or other filed or recorded instrument in which the Borrower is named as, or which the Borrower has signed as, debtor now on file in any public office covering any of the Mortgaged Property excepting the financing statements or other instruments filed or to be filed in respect of and for the security interest provided for herein, and that the lien and security interest herein created have been duly perfected and are prior to any other. Section 1.18. Actions of Borrower with Respect to Mortgaged Property. The Borrower will not: (a) by affirmative act, consent to the creation or existence of any Lien (other than the security interest and lien of this Mortgage); or (b) sell, mortgage, transfer, assign or hypothecate (other than to the Trustee) its interest in the Mortgaged Property or any part thereof or interest therein or in any amount to be received by it from the disposition of the Mortgaged Property. Section 1.19. Trustee's Powers. To the extent permitted in the Indenture and without affecting the liability of any other person liable for the payment of any obligation herein mentioned, and without affecting the lien or charge of this Mortgage upon any portion of the Mortgaged Property not then or theretofore released as security for the full amount of all unpaid obligations, Trustee may from time to time and without notice (i) release any person so liable, (ii) extend the maturity or alter any of the terms of any such obligation, (iii) grant other indulgences, (iv) take or release any other or additional security for any obligation herein mentioned, or (v) make compositions or other arrangements with debtors in relation thereto. -12- Section 1.20. Indemnification; Waiver of Offset. (a) If Trustee is made a party defendant to any litigation concerning this Mortgage or the Mortgaged Property or any part thereof or any interest therein, or the occupancy thereof by Borrower, then Borrower shall indemnify, defend, and hold Trustee harmless from all liability by reason of said litigation, including reasonable attorneys' fees and expenses incurred by Trustee in any such litigation whether or not any such litigation is prosecuted to judgment. If Trustee commences an action against Borrower to enforce any of the terms hereof or because of the alleged breach by Borrower of any of the terms hereof, or for the recovery of any sum secured hereby, Borrower shall pay to Trustee reasonable attorneys' fees and expenses, and the right to such attorneys' fees and expenses shall be deemed to have accrued on the commencement of such action, and shall be enforceable whether or not such action is prosecuted to judgment. If Borrower breaches any term of this Mortgage, Trustee may employ an attorney or attorneys to protect its rights hereunder, and in the event of such employment following any breach by Borrower, Borrower shall pay Trustee on demand reasonable attorneys' fees and expenses incurred by Trustee, whether or not an action is actually commenced against Borrower by reason of breach. (b) Borrower waives any and all right to claim or recover against Trustee, its officers, employees, agents, and representatives, for loss of or damage to Borrower, the Mortgaged Property, Borrower's property or the property of others under Borrower's control from any cause insured against or required to be insured against by the provisions of this Mortgage. (c) All sums payable by Borrower hereunder shall be paid without notice, demand, counterclaim, setoff, deduction, or defense and without abatement, suspension, deferment, diminution, or reduction, and the obligations and liabilities of Borrower hereunder shall in no way be released, discharged, or otherwise affected (except as expressly provided herein) by reason of (i) any damage to or destruction of or any condemnation or similar taking of the Mortgaged Property or any part thereof; (ii) any restriction or prevention of or interference with any use of the Mortgaged Property or any part thereof; (iii) any title defect or encumbrance or any eviction from the Mortgaged Property or any part thereof by title paramount or otherwise; (iv) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation, or other like proceeding relating to Trustee, or any action taken with respect to this Mortgage by any trustee or receiver of Trustee, or by any court, in any such proceeding; (v) any claim which Borrower has or might have against Trustee; (vi) any default or failure on the part of Trustee to perform or comply with any of the terms hereof or of any other agreement with Borrower; or (vii) any other occurrence whatsoever, whether similar or dissimilar to the foregoing; whether or not Borrower shall have notice or knowledge of any of the foregoing. Except as expressly provided herein and to the extent permitted by law, Borrower waives all rights now or hereafter conferred by statute or otherwise to any abatement, suspension, deferment, diminution, or reduction of any sum secured hereby and payable by Borrower. Section 1.21. Ground Leases and Other Leases. To pay when due all rents and other payments and perform all covenants and agreements contained in any lease, sublease, or ground lease which may constitute a portion of or an interest in the Mortgaged Property; not to surrender, assign, or sublease any such lease, sublease, or ground lease, nor take any other action which would effect or permit the termination of any such lease, sublease, or ground lease. Borrower covenants to furnish to Trustee within thirty (30) days after the date upon which such -13- rents or other payments are due and payable by Borrower, receipts or other evidence satisfactory to Trustee evidencing the payment thereof. Section 1.22. Name of Borrower. The Borrower shall notify the Trustee promptly, but in no event less than ten Business Days after the effective date thereof, of any change to the name, identity or corporate structure of the Borrower. ARTICLE II ASSIGNMENT OF RENTS AND UNRESTRICTED RECEIVABLES, ISSUES AND PROFITS Section 2.l. Assignment of Rents. The Borrower hereby assigns and transfers to the Trustee all the rents, issues and profits of the Mortgaged Property and hereby gives and confers upon Trustee the right, power, and authority to collect such rents, issues, profits. The Borrower does hereby irrevocably constitute and appoint the Trustee its true and lawful attorney with an interest and full power of substitution, for it and in its name, place and stead to ask, demand, collect, receive and receipt for any and all rents, income and other sums which are assigned under the Granting Clause hereof or under this Article II. Notwithstanding the foregoing, the Borrower shall have the right, subject to Section 1.18 of this Mortgage, to collect and use such rents, issues and profits prior to or at any time there is not an Event of Default under this Mortgage, the Indenture or the Bonds. The assignment of rents, issues and profits of the Mortgaged Property in this Article II is intended to be an absolute assignment from the Borrower to the Trustee and not merely the passing of a security interest. The rents, issues and profits are hereby assigned absolutely by the Borrower to the Trustee subject only to the right of the Borrower, subject to Section 1.18 of this Mortgage, to collect and use such rents, issues, and profits prior to the occurrence of an Event of Default under this Mortgage, the Indenture or the Bonds. Section 2.2. Collection Upon Default. Upon any Event of Default hereunder or under the Bonds or the Indenture, the Trustee may, at any time without notice (except as otherwise hereinafter provided), either in person, by agent or by a receiver appointed by a court, and without regard to the adequacy of any security for the obligations hereby secured, enter upon and take possession of the Mortgaged Property, or any part thereof, or space therein, in its own name sue for or otherwise collect such rents, issues and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorneys' fees, upon any obligations secured hereby, and in such order as the Trustee may determine. The collection of such rents, issues, and profits, or the entering upon and taking possession of the Mortgaged Property, or the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done in response to such default or pursuant to such notice of default. The Trustee's failure or discontinuance at any time to collect any of such rents, issues and profits shall not in any manner affect the right, power or authority of the Trustee thereafter to collect the same. Nothing contained herein, nor the Trustee's exercise of the Trustee's right to collect such rents, issues and profits, shall be or be construed to be an affirmation by the Trustee of any tenancy, lease, option or other interest in the Mortgaged Property, or an assumption of liability under, or a subordination of the lien or charge of this Mortgage to, any tenancy, lease, option or other interest in the Mortgaged Property. -14- Notwithstanding anything herein to the contrary, the Trustee shall only take any of the actions authorized by this Section after providing at least thirty (30) days' prior written notice to the Borrower unless by providing such notice for such period prior to taking any action the security afforded pursuant to the terms of the assignment of rents contemplated by this Article II will be materially endangered (in the judgment of the Trustee) or a material portion of such rents, issues and profits will be subject to loss or forfeiture (in the judgment of the Trustee), in which event the Trustee shall provide such written notice to the Borrower prior to taking any action authorized by the Section as shall be reasonable under the circumstances. ARTICLE III SECURITY AGREEMENT Section 3.1. Creation of Security Interest. The Borrower hereby grants to the Trustee a present security interest in the Revenues and other personal property (tangible and intangible) and other proceeds (whether cash or non-cash), if any, described and referred to in the Granting Clause hereto now or hereafter acquired for the purpose of securing payment and performance of all obligations of the Borrower contained herein, in the Indenture or in the Bonds. Section 3.2. Financing Statement. This Mortgage also constitutes a Financing Statement within the purview of Section 70A-9a-502(3), Utah Code Annotated 1953, as amended, and in compliance therewith the following information is set forth: 1. NAMES AND ADDRESSES: The names and addresses of the Debtor and the Secured Party are: DEBTOR: Utah State University of Agriculture and Applied Science Old Main Hill Logan, Utah 84322-2400 DEBTOR'S FEDERAL INCOME TAX EMPLOYER IDENTIFICATION NUMBER: 87-0257692 SECURED PARTY: Wells Fargo Bank Northwest, N.A., as Trustee 79 South Main Street, 3rd Floor Salt Lake City, Utah 84111 2. COLLATERAL: This Financing Statement covers the types (or items) of collateral described in Section 3.1 hereof and in the Granting Clause contained herein. After-acquired property, proceeds of the collateral and products of the collateral are also covered by this financing statement. 3. FIXTURES AND REAL ESTATE: The collateral covered by this Financing Statement includes goods which are or are to become fixtures in or upon or related to the herein described -15- real property situated in the Cache County, Utah. This Financing Statement is intended to constitute a fixture filing pursuant to Section 70A-9a-502 of the Utah Code Annotated 1953, as amended, and is to be recorded in the real estate records of the County Recorder of Cache County, Utah. 4. RECORD OWNER: The name of the record owner of the real property referred to above in paragraph 3 is Utah State University of Agriculture and Applied Science, of the City of Logan, Cache County, Utah, a political subdivision of the State of Utah. ARTICLE IV REMEDIES UPON DEFAULT Section 4.1. Events of Default. Any of the following events shall be deemed an "Event of Default" hereunder: (a) Default in the payment of any interest on any of the Bonds or on any other sum secured hereby when the same shall become due and payable; or (b) An "event of default" as defined in the Indenture shall have occurred thereunder; or (c) Default in the payment of the principal of or premium, if any, on any Bonds or on any other sum secured hereby when the same shall become due and payable; or (d) Default in the performance or observance of any of the covenants, agreements or conditions on the part of the Borrower in this Mortgage and the continuance thereof for a period of thirty (30) days after written notice to the Borrower given by the Trustee or to the Trustee, the Borrower by the owners of not less than a majority in aggregate principal amount of Bonds then outstanding. Section 4.2. Remedies Upon Default. Upon the occurrence and continuance of any Event of Default hereunder, the Trustee may, and at the written request of owners of not less than 25% in aggregate principal amount of the Bonds then outstanding shall, declare all obligations secured hereby to be immediately due and payable, whereupon such obligations shall, without further action, become and be immediately due and payable, anything in this Mortgage, in the Indenture or in the Bonds to the contrary notwithstanding. Thereafter, the Trustee may, and at the written request of the owners of not less than 25% in aggregate principal amount of the Bonds then outstanding shall, commence an action to foreclose this Mortgage in the manner permitted by law against the Borrower's right, title and interest in the Mortgaged Property in such manner and order as the Trustee may determine and as may be permitted by law and take one or any combination of the following additional remedial steps: -16- (a) The Trustee may temporarily lease the Mortgaged Property or any portion thereof for the benefit of the owners of the Bonds, pending sale of the Mortgaged Property; (b) Either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court and without regard to the adequacy of its security, enter upon and take possession of the Mortgaged Property, or any part thereof, in its own name or in the name of the Borrower, and do any acts which it deems necessary or desirable to preserve the value, marketability or rentability of the Mortgaged Property or part thereof or interest or space therein, increase the income therefrom or protect the security hereof and, with or without taking possession of the Mortgaged Property, sue for or otherwise collect the rents, issues and profits thereof, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection including attorneys' fees, upon any obligations secured hereby, all in such order as the Trustee may determine. The entering upon and taking possession of the Mortgaged Property, the collection of such rents, issues and profits, and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done in response to such default or pursuant to such notice of default and, notwithstanding the continuance in possession of the Mortgaged Property or the collection, receipt and application of rents, issues or profits, the Trustee shall be entitled to exercise every right and remedy provided for in the Indenture or this Mortgage or now or hereafter permitted by law upon occurrence of any Event of Default; (c) Exercise any or all of the remedies available to a secured party under the Utah Uniform Commercial Code, as then in effect, with respect to property subject to this Mortgage which is covered by the Utah Uniform Commercial Code. Without limiting the generality of the foregoing, the Trustee shall have the right to take possession of any personal property or fixtures subject to the lien of this Mortgage and to take such other measures as the Trustee may deem as necessary for the care, protection, preservation and marketing of said personal property and fixtures. The Trustee may require the Borrower to assemble any such personal property or fixtures and make the same available to the Trustee at a place to be designated by the Trustee which is reasonably convenient to the Borrower. It is agreed that a commercially reasonable manner of disposition of personal property includes, without limitation, disposition with the real property in the manner provided above. Section 4.3. Other Remedies. (a) Upon the occurrence of an Event of Default hereunder, the Trustee may, as an alternative, either after entry or without entry, pursue any available remedy by suit at law or equity to enforce the payment of the principal of, and premium, if any, and interest on, the Bonds then outstanding, including, without limitation, foreclosure and mandamus and an action for specific performance of any agreement herein contained. (b) Upon the occurrence of an Event of Default hereunder, if requested to do so by the owners of at least 25% in aggregate principal amount of Bonds then outstanding and if indemnified as provided in the Indenture, the Trustee shall exercise such one or more of the rights and powers conferred by this Article IV as the Trustee, upon being advised by counsel, shall deem most expedient in the interests of the Bondholder; provided that the obligation of the Trustee to accelerate the principal of the Bonds shall be subject to Section 4.2 hereof. -17- Section 4.4. Appointment of Receiver. Upon the occurrence of an Event of Default hereunder and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Trustee or of the Bondholder under this Mortgage, the Trustee, as a matter of right and after at least five (5) days notice to the Borrower, and without regard to the then value of the Mortgaged Property or the interest of the Borrower, at the expense of the Borrower, shall have the right to apply to any court having jurisdiction to appoint a receiver or receivers of the Mortgaged Property, and the Borrower hereby irrevocably consents to such appointment and, to the extent permitted by law, waives notice of any application therefor. Any such receiver or receivers shall have the power of attorney and all the usual powers and duties of receivers in like or similar cases and all the powers and duties of the Trustee in case of entry as provided in Section 4.2 hereof and shall continue as such and exercise all such powers until the date of confirmation of sale of the Mortgaged Property unless such receivership is sooner terminated. Section 4.5. Remedies Not Exclusive. The Trustee shall be entitled to enforce payments and performance of any obligations secured hereby and to exercise all rights and powers under this Mortgage, the Indenture, the Bonds or other agreement or any laws now or hereafter in force, notwithstanding some or all of the said obligations secured hereby may now or hereafter be otherwise secured, whether by mortgage, deed of trust, pledge, lien, assignment or otherwise. Neither the acceptance of this Mortgage nor its enforcement whether by court action or other powers herein contained, shall prejudice or in any manner affect the Trustee's right to realize upon or enforce any other security now or hereafter held by the Trustee, it being agreed that the Trustee shall be entitled to enforce this Mortgage, the Indenture and any other security now or hereafter held by the Trustee in such order and manner as it may in its absolute discretion determine. No remedy herein conferred upon or reserved to the Trustee is intended to be exclusive of any other remedy herein or by law provided or permitted, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. Every power or remedy given by this Mortgage, the Indenture or the Bonds or to which it may be otherwise entitled, may be exercised, concurrently or independently, from time to time and as often as may be deemed expedient by the Trustee, and the Trustee may pursue inconsistent remedies. Section 4.6. Limitation on Remedies. (a) In the event of a foreclosure of this Mortgage pursuant to Section 4.2 hereof, the Trustee shall use its best efforts to obtain fair market value for the Mortgaged Property; provided however, the moneys received through the foreclosure for the benefit of the Bondowners shall be limited to the aggregate principal amount of the Series 2003 Bonds then outstanding and all moneys obtained in excess of the aggregate principal amount of the Series 2003 Bonds then outstanding shall be delivered as soon as practicable to the Borrower. (b) Notwithstanding anything herein to the contrary, no deficiency judgment upon foreclosure as herein provided may be entered against the Borrower or the Board or the State if Utah or any of its political subdivisions. Section 4.7. Bidder at Foreclosure Sale. As authorized by Section 11-17-5(4) of the Act, in the event of foreclosure on the lien of this Mortgage as provided herein, the Trustee or the then owner or owners of any of the Bonds secured hereby may become the purchaser at any -18- foreclosure sale, if the highest bidder, so long as such purchase is made consistent with law and this Mortgage. Section 4.8. Application of Moneys. All moneys received by the Trustee pursuant to any right given or action taken under the provisions of this Article IV shall be deposited and applied by the Trustee in accordance with Section 7.4 of the Indenture. Section 4.9. Right of Bondholder to Direct Proceedings. Anything in this Mortgage to the contrary notwithstanding, the owners of a majority in aggregate principal amount of the Bonds then outstanding shall have the right, at any time, by an instrument or instruments in writing executed and delivered to the Trustee, to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of this Mortgage or for the appointment of a receiver or any other proceedings hereunder; provided that such direction shall not be otherwise than in accordance with the provisions of law and of this Mortgage. ARTICLE V MISCELLANEOUS Section 5.l. Governing Law. This Mortgage shall be governed by and construed in accordance with the laws of the State of Utah. In the event that any provision or clause of this Mortgage conflicts with applicable laws, such conflicts shall not affect other provisions of this Mortgage which can be given effect without the conflicting provision, and to this end the provisions of this Mortgage are declared to be severable. This instrument cannot be waived, changed, discharged or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of any waiver, change, discharge or termination is sought. Section 5.2. Release of Mortgage. The Trustee shall release this Mortgage and the lien and security interest granted hereby by proper instrument or instruments upon presentation of satisfactory evidence that all interests hereby secured have been fully paid or discharged. Section 5.3. Prepayment. The Series 2003 Bonds and the Indenture contain certain provisions for the prepayment of the obligations set forth therein on various terms and conditions therein contained. Section 5.4. Notices. Whenever the Borrower or the Trustee shall desire to give or serve any notice, demand, request or other communication with respect to this Mortgage, each such notice, demand, request or other communication shall be in writing and shall be effective only if the same is delivered by personal service or mailed by registered or certified mail, postage prepaid, return receipt requested, addressed to the addresses first hereinabove set forth for the Borrower and the Trustee, respectively. Any party may at any time change its address for such notices by delivering or mailing to the other party hereto, as aforesaid, a notice of such change. Section 5.5. Captions. The captions or headings at the beginning of each Section hereof are for the convenience of the parties and are not a part of this Mortgage. -19- Section 5.6. Invalidity of Certain Provisions. If the lien of this Mortgage is invalid or unenforceable as to any part of the obligations, or if the lien is invalid or unenforceable as to any part of the Mortgaged Property, the unsecured or partially secured portion of the obligations shall be completely paid prior to the payment of the remaining and secured or partially secured portion of the obligations, and all payments made on the obligations, whether voluntarily or under foreclosure or other enforcement action or procedure, shall be considered to have been first paid on and applied to the full payment of that portion of the obligations which is not secured or fully secured by the lien of this Mortgage. Section 5.7. Consents, etc., of Bondholder. Any consent, request, direction, approval, objection or other instrument required by this Mortgage to be signed and executed by the Bondholder may be given in the manner set forth in Section 11.1 of the Indenture. -20- DATED as of the day and year first above written. Borrower: UTAH STATE UNIVERSITY OF AGRICULTURE AND APPLIED SCIENCE By ____________________________________ ___________________ [SEAL] Attest: ________________________________ ____________________ Trustee: WELLS FARGO BANK NORTHWEST, N.A. as Trustee By ____________________________________ Its __________________________________ [SEAL] Attest: ________________________________ Its _____________________ -21- STATE OF UTAH ) ) :SS COUNTY OF SALT LAKE ) On the ____ day of March, 2003, personally appeared before me ________________ and ___________________ who, being by me duly sworn, did say that they are the ______________ and _______________, respectively, of Utah State University of Agriculture and Applied Science (the "University"), of the City of Logan, Cache County, Utah, the political subdivision of the State of Utah described in and which executed the foregoing instrument, and that the within and foregoing Mortgage, Security Agreement and Assignment of Rents was signed on behalf of said corporation by authority of a resolution of the Board of Regents of the State of Utah duly passed and approved; said _______________ and __________________ duly acknowledged to me that said University duly executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and official seal on the day and year in this certificate first above written. _________________________________ NOTARY PUBLIC Residing at: Salt Lake County, Utah My Commission Expires: _________________. -22- STATE OF UTAH ) ) :SS COUNTY OF SALT LAKE ) On the _____ day of March, 2003, personally appeared before me _______________ and _______________ who, being by me duly sworn, did say that they are a _______________ and _______________, respectively, of Wells Fargo Bank Northwest, N,A., described in and which executed the foregoing instrument, and that the within and foregoing Mortgage, Security Agreement and Assignment of Rents was signed on behalf of said corporation by authority of a resolution duly adopted by its Board of Directors; said _______________ and _______________ duly acknowledged to me that said corporation duly executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and official seal on the day and year in this certificate first above written. _________________________________ NOTARY PUBLIC Residing at: Salt Lake County, Utah My Commission Expires: ____________________ A-1 EXHIBIT A DEED OF TRUST, SECURITY AGREEMENT AND FINANCING STATEMENT OF UTAH STATE UNIVERSITY OF AGRICULTURE AND APPLIED SCIENCE TO WELLS FARGO BANK NORTHWEST, N.A. The following-described real property located in Cache County, state of Utah, described as follows: PARCEL 1: BEGINNING SOUTH 598 FEET FROM THE NORTHEAST CORNER OF SECTION 31, TOWNSHIP 13 NORTH, RANGE 1 WEST OF THE SALT LAKE BASE AND MERIDIAN, AND RUNNING THENCE SOUTH 89°29'30" WEST 2636 FEET; THENCE NORTH 47'30" EAST 598 FEET TO THE TRUE POINT OF BEGINNING. THENCE NORTH 0°47'30" EAST 203.7 FEET NORTH, 27°10' EAST 55.6 FEET; THENCE NORTH 47°50' EAST 155.9 FEET; THENCE NORTH 55°43'30" EAST 105.3 FEET; THENCE NORTH 62°15'30" EAST 103.3 FEET; THENCE NORTH 69°11'30" EAST 152 FEET; THENCE NORTH 70°47' EAST 850 FEET; THENCE SOUTH 16°40' EAST 24.5 FEET; THENCE NORTH 70°47' EAST 751.54 FEET TO THE WEST LINE OF PACIFICORP PROPERTY; THENCE SOUTH 46°15' EAST 1442.11 FEET TO THE SOUTH LINE OF SECTION 29, TOWNSHIP 13 NORTH, RANGE 1 WEST OF THE SALT LAKE BASE AND MERIDIAN; THENCE SOUTH 89°17'55" WEST 426.26 FEET TO THE SOUTHWEST CORNER OF SAID SECTION 29; THENCE WEST 2636 FEET MORE OR LESS TO THE BEGINNING. (13-049-0005) PARCEL 2: BEGINNING AT A POINT NORTH 89°51' WEST 28.581 CHAINS OF A POINT 1770.5 FEET SOUTH OF THE NORTHEAST CORNER OF SECTION 31, TOWNSHIP 13 NORTH, RANGE 1 WEST OF THE SALT LAKE BASE AND MERIDIAN, AND RUNNING THENCE WEST 5.391 CHAINS; THENCE NORTH 26.7 CHAINS; THENCE EAST 5.39 CHAINS; THENCE SOUTH 26.7 CHAINS TO THE PLACE OF BEGINNING. (13-050-0003) PARCEL 3: THE NORTH 70 RODS OF THE SOUTHEAST QUARTER OF SECTION 32, TOWNSHIP 13 NORTH, RANGE 1 WEST OF THE SALT LAKE BASE AND MERIDIAN. (13-051-0006) A-2 PARCEL 4: THE SOUTH 90 RODS OF THE SOUTHEAST QUARTER OF SECTION 32, TOWNSHIP 13 NORTH, RANGE 1 WEST OF THE SALT LAKE BASE AND MERIDIAN. (13-051-0007) SUBJECT TO A ROAD DEDICATION TO CACHE COUNTY AS DISCLOSED IN BOOK 1113 AT PAGE 740 FOR THAT PART OF 4600 NORTH STREET. PARCEL 5: BEGINNING 598 FEET SOUTH FROM THE NORTHEAST CORNER OF SECTION 31, TOWNSHIP 13 NORTH, RANGE 1 WEST OF THE SALT LAKE BASE AND MERIDIAN; THENCE SOUTH 89°29'30" WEST 2636 FEET; THENCE NORTH 47°30" EAST 598 FEET; THENCE EAST 2636 FEET TO THE BEGINNING. LESS THE FOLLOWING: BEGINNING 28.581 CHAINS NORTH 89°51' WEST FROM A POINT 598 FEET SOUTH OF THE NORTHEAST CORNER OF SAID SECTION 31; THENCE WEST 5.391 CHAINS NORTH 598 FEET EAST 5.391 CHAINS; THENCE SOUTH 598 FEET TO THE BEGINNING. (13-050-0002) PARCEL 6: BEGINNING SOUTH 598 FEET FROM THE NORTHEAST CORNER OF SECTION 31, TOWNSHIP 13 NORTH, RANGE 1 WEST OF THE SALT LAKE BASE AND MERIDIAN, AND RUNNING THENCE SOUTH 89°29'30" WEST 2636 FEET; THENCE NORTH 0°47'30" EAST 598 FEET; THENCE WEST 4.3 CHAINS; THENCE SOUTHEASTERLY 27 CHAINS; THENCE EAST 38.96 CHAINS; THENCE NORTH 1172.5 FEET TO THE BEGINNING. LESS THE FOLLOWING: BEGINNING NORTH 89°51' WEST 28.581 CHAINS OF A POINT SOUTH 1770.5 FEET FROM THE NORTHEAST CORNER OF SAID SECTION 31; THENCE WEST 5.391 CHAINS; THENCE NORTH 1172.5 FEET; THENCE EAST 5.391 CHAINS; THENCE SOUTH 1172.5 FEET TO THE BEGINNING. ALSO LESS THE OREGON SHORTLINE RAILROAD RIGHT-OF-WAY. (13-050-0004) A-3 PARCEL 7: BEGINNING AT THE NORTHWEST CORNER OF SECTION 32, TOWNSHIP 13 NORTH, RANGE 1 WEST OF THE SALT LAKE BASE AND MERIDIAN; THENCE EAST 10 CHAINS; THENCE SOUTH 0°42' EAST 598 FEET; THENCE SOUTH 89°8' WEST 10 CHAINS; THENCE NORTH 598 FEET TO THE BEGINNING. LESS: BEGINNING AT THE NORTHEAST CORNER OF THE WEST HALF OF THE NORTHWEST QUARTER OF THE NORTHWEST QUARTER OF SAID SECTION 32 AND RUNNING THENCE SOUTH 0°55'30" EAST 230.97 FEET ALONG THE EAST LINE OF THE WEST HALF OF THE NORTHWEST QUARTER OF THE NORTHWEST QUARTER; THENCE NORTH 46°15' WEST 329.81 FEET TO THE NORTH LINE OF SECTION 32 AND RUNNING THENCE NORTH 89°17'55" EAST 234.53 FEET TO THE BEGINNING. (13-051-0001) PARCEL 8: BEGINNING 598 FEET SOUTH OF THE NORTHWEST CORNER OF SECTION 32, TOWNSHIP 13 NORTH, RANGE 1 WEST OF THE SALT LAKE BASE AND MERIDIAN AND RUNNING THENCE NORTH 89°8' EAST 10.0 CHAINS SOUTH 722 FEET; THENCE SOUTH 88°21' WEST 10.0 CHAINS; THENCE NORTH 722 FEET TO THE BEGINNING. ALSO: BEGINNING AT THE SOUTHWEST CORNER OF THE EAST HALF OF THE NORTHWEST QUARTER OF THE NORTHWEST QUARTER OF SAID SECTION 32 AND F SECTION 32, SAID EASEMENT RECORDED JANUARY 12, 1961 AS ENTRY NO. 306671 IN BOOK 50 AT PAGE 296 OF OFFICIAL RECORDS IN THE CACHE COUNTY RECORDERS OFFICE. (13-051-0005) PARCEL 9: BEGINNING AT THE WEST QUARTER CORNER OF THE NORTHWEST QUARTER OF SECTION 32 TOWNSHIP 13 NORTH, RANGE 1 WEST OF THE SALT LAKE BASE AND MERIDIAN AND RUNNING THENCE EAST 660 FEET; THENCE NORTH 89°08' EAST 492.5 FEET; THENCE SOUTH 24°42' EAST 316.1 FEET; THENCE SOUTH 205 FEET; THENCE WEST 1279.892 FEET; THENCE NORTH 0°42' WEST 484.766 FEET TO THE BEGINNING. A-4 LESS: BEGINNING SOUTH 89°18'17" WEST 172.0 FEET OF THE NORTHEAST CORNER OF THE SOUTHWEST QUARTER OF THE NORTHWEST QUARTER OF SAID SECTION 32 AND RUNNING THENCE SOUTH 24°19'30" EAST 315.61 FEET (SOUTH 24°42' EAST 316.1 FEET BY RECORD) THENCE NORTH 45°20' WEST 406.35 FEET TO THE NORTH LINE OF THE SOUTHWEST QUARTER OF THE NORTHWEST QUARTER AND RUNNING THENCE NORTH 89°18'17" EAST 159.01 FEET TO THE BEGINNING. (13-051-0008) PARCEL 10: BEGINNING 2 RODS NORTH OF THE SOUTHWEST CORNER OF SECTION 32, TOWNSHIP 13 NORTH, RANGE 1 WEST; THENCE NORTH 3442.23 FEET; THENCE EAST 1279.892 FEET; THENCE NORTH 205 FEET; THENCE SOUTH 79°20'39" EAST 1397.28 FEET TO A POINT SOUTH 0°56'56" EAST 1887.35 FEET FROM THE NORTH QUARTER OF SAID SECTION 32; THENCE SOUTH 3356.65 FEET TO THE NORTH LINE OF COUNTY ROAD; THENCE WEST 40 CHAINS TO BEGINNING. TOGETHER WITH AND EASEMENT TO OPERATE AND MAINTAIN A PUMPING PLANT AND APPURTENANCES LOCATED ON THE SOUTH EDGE OF THE BEAR RIVER AT A POINT 1423.5 FEET SOUTH, 1378 FEET EAST, FROM THE NORTHWEST CORNER OF SECTION 32, TOWNSHIP 13 NORTH, RANGE 1 WEST OF THE SALT LAKE BASE AND MERIDIAN, AND AN UNDERGROUND PIPELINE COMMENCING AT SAID POINT AND RUNNING THENCE SOUTHWESTERLY 230 FEET TO A POINT WHICH IS 1620 FEET SOUTH AND 1300 FEET EAST OF THE SAID NORTHWEST CORNER OF SECTION 32, SAID EASEMENT RECORDED JANUARY 12, 1961 AS ENTRY NO. 306671 IN BOOK 50 AT PAGE 296 OF OFFICIAL RECORDS IN THE CACHE COUNTY RECORDERS OFFICE. (13-051-0005) DRAFT 1/06/03 1447395.01.07 0867754/RDB/mt Salt Lake City, Utah January 17, 2003 The State Board of Regents of the State of Utah (the "Board") met in regular session at the University of Utah in Salt Lake City, Utah on January 17, 2003, commencing at 9:30 a.m. The following members of the Board were present: Nolan E. Karras Chair Pamela J. Atkinson Vice Chair Jerry C. Atkin Member Linnea S. Barney Member Daryl C. Barrett Member Kim R. Burningham Member Khay Douangdara Member David J. Grant Member L. Brent Hoggan Member James S. Jardine Member Michael R. Jensen Member Charles E. Johnson Member David J. Jordan Member George Mantes Member Jed H. Pitcher Member Sara V. Sinclair Member Marlon O. Snow Member Maria Sweeten Member. ABSENT: ____________________ ____________________. - 2 - ALSO PRESENT: Cecelia H. Foxley Commissioner of Higher Education Joyce Cottrell Secretary After the meeting had been duly convened and called to order by the Chair and the roll had been called with the above result, the Chair announced that one of the purposes of the meeting was the consideration of various matters with respect to the issuance and sale of the State Board of Regents of the State of Utah, Utah State University Research Revenue Bonds, Series 2003. The following resolution was introduced in written form by Regent _____________, and after full discussion, pursuant to motion made by Regent ____________ and seconded by Regent ________________, was adopted by the following vote: YEA: _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ NAY: _________________. - 3 - The resolution is as follows: RESOLUTION A RESOLUTION OF THE STATE BOARD OF REGENTS OF THE STATE OF UTAH AUTHORIZING THE ISSUANCE AND SALE OF ITS UTAH STATE UNIVERSITY RESEARCH REVENUE BONDS, SERIES 2003 IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $750,000; AUTHORIZING THE EXECUTION AND DELIVERY OF A THIRD SUPPLEMENTAL INDENTURE OF TRUST, A DEED OF TRUST, ASSIGNMENT OF RENTS, S ECURITY AGREEMENT AND FINANCING STATEMENT, A BOND PURCHASE CONTRACT AND OTHER DOCUMENTS REQUIRED IN CONNECTION THEREWITH; AUTHORIZING THE TAKING OF ALL OTHER ACTIONS NECESSARY TO THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS RESOLUTION; AND RELATED MATTERS. WHEREAS, the State Board of Regents of the State of Utah (the "Board") is established and exists under and pursuant to Section 53B-1-103, Utah Code Annotated 1953, as amended; WHEREAS, pursuant to the provisions of Title 53B, Chapter 1 and Section 11-17-17, Utah Code Annotated 1953, as amended (the "Code"), the Board is authorized to act as the governing authority of Utah State University of Agricultural and Applied Science (the "University") for the purpose of exercising the powers contained in Title 11, Chapter 17 of the Code (the "Act"); WHEREAS, pursuant to the Act, the Board is authorized to issue bonds, for and on behalf of the University, payable from a special fund into which the revenues of the University may be deposited; WHEREAS, pursuant to the provisions of the Act, the Board is authorized to issue revenue bonds to finance the acquisition of land that is suitable for use by the University for the purpose of aiding in the accomplishment of its authorized academic, scientific, engineering, technical, and economic development functions; WHEREAS, the Board considers it desirable and necessary for the benefit of the residents of the State of Utah to issue a series of revenue bonds to be designated as the "State Board of Regents of the State of Utah, Utah State University Research Revenue Bonds, Series 2003" (the "Series 2003 Bonds") for the purpose of providing funds for acquiring approximately 550 acres of real estate in Cache County, Utah, to replace the University's Agricultural Experiment Station (the "Project"), satisfying a debt service reserve requirement, and paying costs of issuance of the Series 2003 Bonds, including the cost of any bond insurance policy or other credit enhancement for the Series 2003 Bonds; - 4 - WHEREAS, the Board finds that the Project is suitable for use by the University for the purpose of aiding in the accomplishment of the University's authorized academic, scientific, engineering, technical, and economic development function; WHEREAS, the Series 2003 Bonds will be issued in an aggregate principle amount of not to exceed $750,000 and will be issued pursuant to the General Indenture of Trust, dated as of August 1, 1995, as heretofore amended and supplemented (the "General Indenture"), and as further amended and supplemented by a Third Supplemental Indenture of Trust, dated as of March 1, 2003 (the "Third Supplemental Indenture" and, together with the General Indenture, the "Indenture") each by and between the Board, acting for and on behalf of the University, and Wells Fargo Bank Northwest, N. A. (formerly known as First Security Bank of Utah, N.A.), as trustee (the "Trustee"); WHEREAS, the Series 2003 Bonds shall be payable solely from the revenues and other moneys pledged therefor under the Indenture and shall not constitute nor give rise to a general obligation or liability of the State of Utah, the Board or the University or constitute a charge against the general credit of the State of Utah, the Board or the University; WHEREAS, the University is authorized, pursuant to the Act, to secure the payment of the bonds by a mortgage covering all or any part of the Project; WHEREAS, the University desires to enter into the Deed of Trust, Assignment of Rents, Security Interest and Financing Statement, between the University and the Trustee (herein referred to as the "Mortgage"), to provide additional security for the Series 2003 Bonds and to enhance their marketability, thereby reducing the interest payable on the Series 2003 Bonds; WHEREAS, there has been presented to the Board at this meeting a form of a Bond Purchase Contract (the "Bond Purchase Contract") among the Board, the University and the prospective purchaser of the Series 2003 Bonds (the "Purchaser"), a form of the Mortgage, and a form of the Third Supplemental Indenture; and WHEREAS, pursuant to Sections 11-17-3 and 53B-21-102(3)(m) of the Utah Code Annotated 1953, as amended, the Board desires to grant to the Chair and/or Vice Chair of the Board and/or the Chair of the Finance and Facilities Committee of the Board the authority to approve the final principal amounts, terms, maturities, interest rates and purchase prices at which the Series 2003 Bonds shall be sold and any changes with respect thereto from those terms which were before the Board at the time of adoption of this Resolution, provided such terms do not exceed the parameters set forth in Schedule A of this Resolution; WHEREAS, other than certain "preliminary expenditures" (within the meaning of U.S. Treas. Reg. §1.150-2(f)(2)), all or a portion of the expenditures relating to the Project (the "Expenditures") (i) have been paid and incurred within the sixty days prior to the passage of this Resolution or (ii) will be paid and incurred on or after the passage of this Resolution; NOW, THEREFOR, BE IT RESOLVED BY THE STATE BOARD OF REGENTS OF THE STATE OF UTAH, AS FOLLOWS: - 5 - Section 1. The Board hereby adopts the recitals set out above as its findings and determinations. Section 2. All terms defined in the foregoing recitals hereto shall have the same meanings when used herein. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Indenture. Section 3. Issuer reasonably expects to reimburse the Expenditures with proceeds of the Series 2003 Bonds. Section 4. All action heretofore taken (not inconsistent with the provisions of this Resolution) by the Board and the officers of the Board or the University directed toward the issuance of the Series 2003 Bonds are hereby ratified, approved and confirmed. Section 5. The Third Supplemental Indenture in substantially the form presented to the Board at this meeting are in all respects authorized, approved and confirmed. The Chair or Vice Chair and Secretary of the Board and the President, the Vice President or the Associate Vice President of the University are hereby authorized to execute and deliver the Third Supplemental Indenture in the form and with substantially the same content as presented at this meeting for and on behalf of the Board and the University, with such alterations, changes or additions as may be authorized pursuant to the terms of this Resolution. Section 6. For the purpose of providing funds to be used for (i) acquiring approximately 550 acres of real estate in Cache County, Utah, (ii) satisfying a debt service reserve requirement and (iii) paying costs of issuance of the Series 2003 Bonds, including any bond insurance policy or other credit enhancement for the Series 2003 Bonds, the Board hereby authorizes the issuance of the Series 2003 Bonds in the aggregate principal amount of not to exceed $750,000. The Series 2003 Bonds shall bear interest at the rates and shall mature in the principal amounts and on the dates as shall be approved by the Chair or Vice Chair of the Board or the Chair of the Finance and Facilities Committee, and shall provide a debt service savings, all within the parameters set forth on Schedule A attached hereto and incorporated herein by reference. Section 7. The form, terms and provisions of the Series 2003 Bonds and the provisions for the signatures, authentication, payment, registration, transfer, exchange, redemption and number shall be as set forth in the Indenture. The Chair or Vice Chair and the Secretary of the Board and the President or the Vice President of the University are hereby authorized to execute by manual or facsimile signature and seal by facsimile the Series 2003 Bonds and to deliver the Series 2003 Bonds to the Trustee for authentication. All terms and provisions of the Indenture and the Series 2003 Bonds are hereby incorporated in this resolution. The appropriate officials of the Board and the University are hereby authorized to execute and deliver to the Trustee the written order of the Board for authentication and delivery of the Series 2003 Bonds in accordance with the provisions of the Indenture. Section 8. The University is hereby authorized to enter into the Mortgage to provide additional security for the Series 2003 Bonds. The President, the Vice President, or the - 6 - Associate Vice President of the University are hereby authorized to execute and deliver the Mortgage, in substantially the form of the Mortgage presented at this meeting, for and on behalf of the University with such alterations, changes or additions as may be necessary or as may be pursuant to Section 10 hereof. Section 9. The Series 2003 Bonds are hereby authorized to be sold to the Purchaser at the price and upon the terms and conditions set forth in the Bond Purchase Contract. The Chair or Vice Chair of the Board and the President, the Vice President, or the Associate Vice President of the University are hereby authorized to execute and deliver the Bond Purchase Contract, in substantially the form of the Bond Purchase Contract presented at this meeting, for and on behalf of the Board with such alterations, changes or additions as may be necessary or as may be pursuant to Section 10 hereof. Pursuant to Sections 11-17-3 and 53B-21-102(3)(m) of the Utah Code Annotated 1953, as amended, the Chair or Vice Chair of the Board or the Chair of the Finance and Facilities Committee (with concurrence of the President, the Vice President, or the Associate Vice President of the University) is hereby authorized to specify and agree as to the final principal amounts, interest rates, maturities, purchase price and other terms of the Series 2003 Bonds, including any bond insurance or other credit enhancement for the Series 2003 Bonds, for and on behalf of the Board and the University by the execution of the Bond Purchase Contract and the Indenture and any changes thereto from those terms which were before the Board at the time of adoption of this Resolution, provided such terms are within the parameters set by this Resolution. Section 10. The appropriate officers of the Board and the University, including without limitation the Chair, Vice Chair, the Chair of the Finance and Facilities Committee, Commissioner of Higher Education and Secretary of the Board and the President, the Vice President, and the Associate Vice President of the University, are hereby authorized to take all action necessary or reasonably required by the Indenture and the Bond Purchase Contract to carry out, give effect to and consummate the transactions as contemplated thereby and are authorized to take all action necessary in conformity with the Act. Section 11. The appropriate officials of the Board and the University, including without limitation the Chair or Vice Chair of the Board, and the Chair of the Finance and Facilities Committee, and the President, the Vice President and the Associate Vice President of the University are authorized to make any alterations, changes or additions to the Third Supplemental Indenture, the Series 2003 Bonds, the Mortgage, the Bond Purchase Contract, or any other document herein authorized and approved which may be necessary to correct errors or omissions therein, to remove ambiguities therefrom, to conform the same to other provisions of said instruments, to the provisions of this Resolution or any resolution adopted by the Board or the provisions of laws of the State of Utah or the United States. Section 12. The appropriate officials of the Board and the University, including without limitation the Chair, the Vice Chair, the Chair of the Finance and Facilities Committee, Commissioner of Higher Education and Secretary of the Board, the President, the Vice President, and the Associate Vice President of the University, are hereby authorized and directed to execute and deliver for and on behalf of the Board and the University any or all additional certificates, documents and other papers and to perform all other acts they may deem necessary or - 7 - appropriate in order to implement and carry out the matters authorized in this Resolution and the documents authorized and approved herein, including (without limitation) such (i) continuing disclosure undertakings or agreements as shall be necessary under Rule 15c2-12 of the Securities and Exchange Commission and (ii) such certificates and agreements as shall be necessary to establish and maintain the tax exempt status of interest on the Series 2003 Bonds under the provisions of the Internal Revenue Code of 1986, as amended. Section 13. Upon their issuance, the Series 2003 Bonds will constitute special limited obligations of the Board payable solely from and to the extent of the sources set forth in the Indenture. No provision of this Resolution, the Series 2003 Bonds, the Mortgage, the Bond Purchase Contract, the Indenture or any other instrument, shall be construed as creating a general obligation of the Board or the University, or of creating a general obligation of the State of Utah or any political subdivision thereof, nor as incurring or creating a charge upon the general credit of the Board, the University, the State of Utah or any political subdivision thereof. Section 14. In accordance with the provisions of Section 11-17-16 of the Act, the Secretary of the Board shall cause the following "Notice of Bonds to be Issued" to be published one time in The Herald Journal, a newspaper of general circulation in Cache County, Utah, and shall cause a copy of this Resolution, together with the exhibits thereto, to be kept on file in the Secretary's office for public examination during the regular business hours of the Secretary for at least thirty days after the date of such publication. The "Notice of Bonds to be Issued" shall be in substantially the following form: NOTICE OF BONDS TO BE ISSUED NOTICE IS HEREBY GIVEN pursuant to the provisions of Section 11-17-16, Utah Code Annotated 1953, as amended, that on January 17, 2003, the State Board of Regents of the State of Utah (the "Board"), for and on behalf of Utah State University of Agricultural and Applied Science (the "University") adopted a resolution (the "Resolution") in which it authorized and approved the issuance of the Board's Utah State University Research Revenue Bonds, Series 2003 (the "Bonds") in an aggregate principal amount of not to exceed $750,000, to mature not later than December 1, 2016, to bear interest at a rate or rates not to exceed four and three-quarters percent (4.75%) per annum, and to be sold at a discount from par, expressed as a percentage of principal amount, of not to exceed two percent (2.00%). The Bonds are to be issued and sold by the Issuer pursuant to (1) the Resolution, (2) a Bond Resolution to be adopted at a future date, (3) a General Indenture of Trust, dated as of August 1, 1995, between the Issuer and Wells Fargo Bank Northwest, N. A. (the "Trustee"), and (4) a Third Supplemental Indenture of Trust between the Issuer and the Trustee, supplementing and amending the General Indenture of Trust. The Bonds are to be issued for the purpose of (a) financing the acquisition of approximately 550 acres of real estate in Cache County, Utah, to replace the University's Agricultural Experiment Station, (b) providing for any necessary debt service and other reserves, and (c) paying costs relating to the issuance of the Bonds, all as set forth in the Resolution, the Bond Resolution, the General Indenture of Trust and the Third Supplemental Indenture of Trust. - 8 - The Bond Resolution will be adopted by the Board at a future date prior to the issuance of the Bonds. A copy of the Resolution is on file in the office of the Secretary of the Board, located at 60 South 400 West, Salt Lake City, Utah, where it may be examined during regular business hours of the Secretary from 8:00 a.m. to 5:00 p.m. Said Resolution shall be so available for inspection for a period of at least thirty (30) days from and after the date of the publication of this notice. NOTICE IS FURTHER GIVEN that pursuant to law for a period of thirty days from and after the date of the publication of this notice, any person in interest shall have the right to contest the legality of the above-described Resolution of the Board, or the Bonds or any provisions made for the security and payment of the Bonds, and that after such time, no one shall have any cause of action to contest the regularity, formality or legality thereof for any cause. DATED this 18th day of January, 2003. STATE BOARD OF REGENTS OF THE STATE OF UTAH By ____________________________________ Secretary Section 15. Pursuant to Section 2.13(c) of the General Indenture, it is hereby ordered that the amount to be accumulated in the Debt Service Reserve Fund shall be raised to an amount not less than the Debt Service Reserve Requirement of all Bonds now Outstanding, including the Series 2003 Bonds. Such amount shall be accumulated in the Debt Service Reserve Fund (taking into account any Reserve Instrument Coverage) at the time of issuance of the Series 2003 Bonds. Section 16. After any of the Series 2003 Bonds are delivered by the Trustee to the Purchaser and upon receipt of payment therefor, this Resolution shall be and remain irrepealable until the principal of, premium, if any, and interest on the Series 2003 Bonds are deemed to have been fully discharged in accordance with the terms and provisions of the Indenture. Section 17. If any provisions of this Resolution should be held invalid, the invalidity of such provisions shall not affect the validity of any of the other provisions of this Resolution. Section 18. All resolutions of the Board or parts thereof inconsistent herewith, are hereby repealed to the extent only of such inconsistency. This repealer shall not be construed as reviving any bylaw, order or resolution or part thereof. Section 19. This Resolution shall become effective immediately upon its adoption. - 9 - PASSED AND APPROVED by the State Board of Regents of the State of Utah this 17th day of January, 2003. STATE BOARD OF REGENTS OF THE STATE OF UTAH ____________________