university of south alabama board of trustees …

UNIVERSITY OF SOUTH ALABAMABOARD OF TRUSTEES MEETING

December 14, 200610:00 a.m.

A meeting of the University of South Alabama Board of Trustees was duly convened byMr. Donald L. Langham, Chair Pro Tempore, on Thursday, December 14, 2006, at 10:04 a.m. in theBoard Room of the Frederick P. Whiddon Administration Building.

Members Present: Trustees Steven Furr, Cecil Gardner, Samuel Jones, Donald Langham,Bettye Maye, Christie Miree, Mayer Mitchell, Bryant Mixon, James Nix,John Peek, Steven Stokes, Larry Striplin, and James Yance.

Members Absent: Trustees J. L. Chestnut, Joseph Morton, and Bob Riley.

Administration President Gordon Moulton; Drs. Dale Adams, Joseph Busta, Pat Covey, and Others: Lamar Duffy (COM Alumni Assn.), Miriam Fearn, Irene McIntosh

(Faculty Senate), Robert Shearer, and Sam Strada; Messrs. Louis Cardinal(Thornton Farish), Ken Davis, Wayne Davis, Robert Galbraith,Stan Hammack, Will Jackson (SGA), and Bob Young (Frazer Lanier); andMss. Diana Laier (Alumni Assn.), Vicki Tate (Faculty Senate), andJean Tucker.

Press: Mr. George Altman (Press-Register).

Upon the call to order and an invocation by Dr. Adams, Chairman Langham called for considerationof ITEM 1, the minutes of the September 14, 2006, meeting of the Board of Trustees. On motionby Mayor Nix, seconded by Sheriff Mixon, the minutes were unanimously adopted.

Chairman Langham read aloud RESOLUTION 1 of ITEM 1.A as follows. On motion bySheriff Mixon, seconded by Mayor Nix, the resolution was unanimously approved. Senator Lindseymade brief remarks about his tenure as a Board member and expressed appreciation for theopportunity to serve.

RESOLUTIONCOMMENDATION OF USA TRUSTEE W. H. LINDSEY

WHEREAS, W. H. “Pat” Lindsey was appointed to the Board of Trustees of the University of South Alabama in1993, and

WHEREAS, during his tenure as a member of the Board, Senator Lindsey served on the Executive and theEndowment and Investments Committees, and served continuously as a member of the Long-Range Planning SteeringCommittee from the time of his appointment to the Board to the end of his term as Trustee, and

WHEREAS, Senator Lindsey has served the University with distinction, graciously contributing his time, energy,wisdom, and guidance to the growth and development of higher education in the state of Alabama, the region, and to thestudents, alumni, faculty, and administration of the University of South Alabama,

USA Board of TrusteesDecember 14, 2006

NOW, THEREFORE, BE IT RESOLVED the University of South Alabama Board of Trustees expresses its deepappreciation and gratitude to Senator W. H. Lindsey for his devotion, service, and commitment to advancing the interestsof the Institution and its constituencies.

Chairman Langham read aloud RESOLUTION 2 of ITEM 1.A as follows. On motion by Ms. Maye,seconded by Mayor Nix, the resolution was unanimously approved.

RESOLUTIONCOMMENDATION OF USA TRUSTEE E. CRUM FOSHEE

WHEREAS, E. Crum Foshee was appointed to the Board of Trustees of the University of South Alabama in 1993,and

WHEREAS, Mr. Foshee served as Secretary of the Board from 2001 to 2004, and

WHEREAS, during his tenure as a member of the Board, he served on the Executive, the Academic and StudentAffairs, the Budget and Finance, the Endowment and Investments, the Health Affairs, and the Long-Range PlanningSteering Committees, and

WHEREAS, Mr. Foshee, as a member of the Board of Directors of the University of South Alabama Foundation,served as a steward of the University endowment, and

WHEREAS, Mr. Foshee has served the University with distinction, graciously contributing his time, energy,wisdom, and guidance to the growth and development of higher education in the state of Alabama, the region, and to thestudents, alumni, faculty, and administration of the University of South Alabama,

NOW, THEREFORE, BE IT RESOLVED the University of South Alabama Board of Trustees expresses its deepappreciation and gratitude to Mr. E. Crum Foshee for his devotion, service, and commitment to advancing the interestsof the Institution and its constituencies.

President Moulton presented ITEM 2, the President’s Report. He welcomed new TrusteesDr. Steve Furr and Messrs. John Peek and Jim Yance. Also introduced were Dr. Irene McIntosh andMs. Vicki Tate - Faculty Senate; Mr. Will Jackson - President, SGA; Ms. Diana Laier - President,USA National Alumni Association; and Dr. Miriam Fearn - Associate Professor and Chair,Department of Earth Sciences.

President Moulton called upon Dr. Covey for a report on academic programs. Dr. Covey reportedthat the Doctor of Nursing Practice, one of only 20 offered nationwide, would be implemented inSpring 2007. She said that the Alabama Commission on Higher Education (ACHE) had approveda Master of Science in Civil Engineering. She discussed an agreement recently completed withAuburn University to offer a Doctor of Pharmacy program, and reported that 1,434 students receiveddegrees during Fall Commencement on December 9.

The Board viewed a new television commercial for student recruitment featuring USA students,including Mr. Will Jackson, SGA President. President Moulton reminded the Board that upcomingevents included the Coors Classic basketball doubleheader on December 16 and the next regularmeeting of the Board of Trustees on March 22, 2007.

President Moulton called upon Dr. Busta for a report on USA Campaign Leadership goals.Dr. Busta welcomed Dr. Lamar Duffy - President, Medical Alumni Association. He reported that


the largest gift by an alumni couple in University history had been announced at a press conferenceon December 13, and thanked Dr. and Mrs. Steven Stokes for their recent gift of $2 million insupport of the creative writing program and the College of Medicine, bringing their total giving tothe University to $2.42 million including University matching gifts. He recognized Ms. Miree fora recent pledge to endow the USA National Alumni Association’s outstanding employee awardsprogram. He said the campaign has reached the $45 million level, and added that the USACampaign Leadership Team and the Development staff are working diligently to attain a goal of$48 million by March 2007. He noted that copies of the publication entitled Honor Roll of Donorshad been placed on the Board table.

Chairman Langham called for consideration of health affairs items. Dr. Stokes, Health AffairsCommittee Chair, moved approval of ITEM 3 resolutions as follows. Ms. Miree seconded, and theresolutions were unanimously approved.

RESOLUTIONUSA HOSPITALS MEDICAL STAFF APPOINTMENTS AND REAPPOINTMENTS

FOR AUGUST, SEPTEMBER AND OCTOBER 2006OCTOBER 27, 2006

WHEREAS, the Medical Staff appointments and reappointments for August, September, and October 2006, andOctober 27, 2006, for the University of South Alabama Hospitals are recommended for approval by the Medical ExecutiveCommittees of the University of South Alabama Hospitals,

THEREFORE, BE IT RESOLVED, that the appointments and reappointments be approved as submitted.

RESOLUTIONUSA HOSPITALS MEDICAL STAFF BYLAWS AND RULES AND REGULATIONS

REVISIONS OF NOVEMBER 9, 2006

WHEREAS, revisions of the USA Hospitals Medical Staff Bylaws and USA Medical Center’s Medical Staff Rules andRegulations were approved by the Medical Staffs of the University of South Alabama Hospitals at their November 9, 2006,Medical Staff meeting and recommended to the Board of Trustees for approval,

THEREFORE, BE IT RESOLVED, that the revisions be approved as presented.

Mr. Wayne Davis reported on the USA Mitchell Cancer Institute, ITEM 4. He said construction isproceeding smoothly and reminded Trustees to log onto the USA Web site for live viewing ofconstruction progress. The anticipated completion date is November 2007.

Mr. Hammack presented ITEM 5, a report on the USA / IHS Strategic Health Alliance. He said that,with the lease of Knollwood Hospital complete, the coordination of clinical services delivery andresident education continues to progress positively.

Chairman Langham called for a report of academic and student affairs items. Ms. Miree, Academicand Student Affairs Committee Chair, moved approval of ITEM 6 as follows. Ms. Maye secondedand the resolution was unanimously approved.


RESOLUTIONSABBATICAL AWARDS

WHEREAS, in accordance with University policy, proposals for Sabbatical Awards have been reviewed andrecommended by the respective faculty committees, Departmental Chair, College Dean, and by the Senior Vice Presidentfor Academic Affairs and President,

THEREFORE, BE IT RESOLVED, that the University of South Alabama Board of Trustees approves said SabbaticalAwards on this date, December 14, 2006, for the 2007-2008 academic year.

NAME DISCIPLINE TIME PERIOD

Dr. David A. Bowers, Jr. Political Science/Criminal Justice Spring 2008Dr. Martha J. Brazy History Academic Year 2007-2008Dr. Phillip J. Carr Anthropology Spring 2008Dr. Nicole T. Flynn Sociology Fall 2007Dr. Greg L. Gruner Music Spring 2008Dr. Fred W. McKenna Finance Fall 2007Dr. Henry M. McKiven History Spring 2008Dr. David H. Nelson Biological Sciences Fall 2007Dr. J. Steven Picou Sociology/Anthropology/Social Work Spring 2008Dr. Daniel S. Silver Mathematics/Statistics Academic Year 2007-2008Dr. Michelle L. Slagle Management Academic Year 2007-2008Dr. Susan G. Williams Mathematics/Statistics Academic Year 2007-2008Ms. Ameina Summerlin Mathematics/Statistics Fall 2007Dr. Mary Ann Robinson Professional Studies Spring 2008

Ms. Miree moved approval of ITEM 7 as follows. Mr. Peek seconded and the resolution wasunanimously approved.

RESOLUTIONPROFESSORS EMERITUS

WHEREAS, the following faculty members have retired from the University of South Alabama:

Terry G. Cronis, Ph.D., Professor of Special EducationDorothy Jean P. McIver, Ph.D., Professor of English

and,

WHEREAS, in recognition of their contributions to the University through extraordinary accomplishments inteaching and in the generation of new knowledge through research and scholarship, and for serving as a consistentlyinspiring influence to students for a period of time, and

WHEREAS, the faculty and chairpersons from their departments, academic dean, the Senior Vice President forAcademic Affairs, and the President have duly recommended the aforementioned retirees from the University faculty, and

NOW THEREFORE, BE IT RESOLVED that the Board of Trustees of the University of South Alabama in a seatedmeeting held on December 14, 2006, hereby appoints the aforenamed individuals to the rank of Professor Emeritus withthe rights and privileges thereunto appertaining, and

FURTHER, BE IT RESOLVED that the Board of Trustees of the University of South Alabama in recognition of theirextraordinary accomplishments and dedicated service to the University of South Alabama wishes to convey its deepappreciation to these individuals.


Ms. Miree moved approval of ITEM 8 as follows (refer to APPENDIX A for copies of policies andother authorized documentation). Ms. Maye seconded and the resolution was unanimouslyapproved.

RESOLUTIONAMENDMENTS TO FACULTY SENATE CONSTITUTION

WHEREAS, pursuant to Article III of the USA Faculty Senate Constitution, (as set forth in the USA FacultyHandbook, Chapter 2, Section 2.31) amendments thereto require approval of the University’s Board of Trustees, and

WHEREAS, the Faculty Senate and the University Faculty at large have voted to approve amendments relatingto scheduled senate meetings and the Mentoring Committee’s charge and function as described in the documentsaccompanying this resolution,

NOW, THEREFORE, BE IT RESOLVED the Board of Trustees approves the amendments to the Faculty SenateConstitution as proposed.

Dr. Adams presented ITEM 9, a report on student affairs. Concerning a new student recreationcenter, he said that the administration had made site visits to other centers, and that a consulting firmwith considerable experience in this type of facility had been engaged to develop a concept that isright for the University. The firm has surveyed USA students for feedback on the components theywould like in a recreation center. A program document should be complete before the next meetingof the Board in March 2007.

Chairman Langham called for a report of budget and finance items. Mayor Nix, Budget and FinanceCommittee Chair, noted receipt by Trustees of ITEM 10, the University’s Monthly Fund AccountingReports for July, August, and September 2006. He called upon Mr. Wayne Davis to discussITEM 10, as well as ITEM 11, the KPMG Audit Reports and Letters for the year ended September 30,2006. Mr. Davis provided highlights from the publication entitled University of South Alabama2006 Financial Report, saying that the University is in excellent financial condition. He said netassets total $311 million, up from $234 million in 2004. He noted that in the last five years, netassets had increased in excess of $100 million. He noted that one factor that significantlycontributed to the University’s healthy financial condition was the commitment of major gifts toCampaign USA.

Concerning ITEM 11, Mr. Wayne Davis reported that Mr. Mark Peach and Ms. Ashley Willson ofthe firm of KPMG, met with the Audit Committee on December 13, 2006, to deliver the requiredcommunications. He said KPMG rendered an unqualified opinion of the University’s financialstatements, and called upon Mr. Ken Davis to discuss the University’s response to the KPMGmanagement letter. Mr. Ken Davis reported that KPMG had outlined recommendations for theUniversity to modify internal controls, and said the University is putting methods into practice tocomply with the recommendations.

Mr. Ken Davis presented ITEM 12, a report of the Alabama Department of Examiners of PublicAccounts audit of disproportionate share hospital funds managed by the USA Foundation for the


five-year period ended June 2005. He said that no instances of noncompliance with applicable lawsand regulations were reported.

Mr. Wayne Davis presented ITEM 12.A as follows. He said the bids outlined relate to sitepreparation; opening of bids will take place in April 2007. On motion by Mayor Nix, seconded byMs. Miree, the resolution was unanimously approved.

RESOLUTIONCONSTRUCTION CONTRACT

ALLIED HEALTH PROFESSIONS AND NURSING BUILDING

WHEREAS, the Board of Trustees by a resolution on September 2, 2004, authorized the University Presidentto enter into a contract with Barganier, Davis, Sims Architects Associates for Architectural Services to design the AlliedHealth and Nursing Building, and

WHEREAS, the overall general contractor construction bids are expected to be received in February 2007, and

WHEREAS, bids for the initial site work and soil surcharge and for high-voltage power equipment and equipmentinstallation have been received, and it has been determined that the following bidders are the lowest responsive andresponsible bidders for the specified packages listed below, totaling $998,965.77:

Initial Site Work and Soil Surcharge McConnell Contractors $281,957.77

High-Voltage Power Equipment Stuart C. Irby Company $137,225.00

High-Voltage Power Equipment Installation Bagby and Russell Electric Co., Inc. $579,783.00

NOW, THEREFORE, BE IT RESOLVED, that the Board of Trustees of the University of South Alabama herebyauthorizes the University President to award the contract for initial site work and soil surcharge and for high-voltage powerequipment and equipment installation as specified above for the dollar amounts specified above, as well as any other minorcontracts necessary to complete the site-preparation phase of the project, in accordance with the bid laws of the Stateof Alabama.

Mr. Wayne Davis presented ITEM 12.B resolutions as follows. On motion by Mr. Striplin, secondedby Dr. Stokes, the resolutions were unanimously approved.

RESOLUTIONTRANSFER OF HEALTH SERVICES BUILDING

TO THE USA RESEARCH AND TECHNOLOGY CORPORATION

WHEREAS, the University of South Alabama owns a building known as the Health Services Building, and

WHEREAS, the creation of the USA Research and Technology Corporation (Corporation) was authorized by theUniversity of South Alabama Board of Trustees at its June 6, 2002, meeting and duly incorporated with the State ofAlabama on June 14, 2002, as a supporting organization of the University of South Alabama to, among other functions,“create, develop, construct, operate, manage, and finance one or more research and technology parks, technologyenterprise centers, and other facilities and operations which further scientific research activities of the University, andcontribute to the development of high-technology businesses in the State of Alabama,” and


WHEREAS, the Board of Trustees of the University deems it to be in the best interest of the University and theCorporation to transfer the Health Services Building to the Corporation for the purposes stated in the Articles ofIncorporation of the USA Research and Technology Corporation cited in the preceding paragraph,

THEREFORE, BE IT RESOLVED, that the Board of Trustees approves and authorizes the President to proceedwith the transfer of the subject building to the Corporation for the sum of FIVE MILLION, FIVE HUNDRED SIXTY-SIXTHOUSAND, FOUR HUNDRED FORTY FOUR AND NO/100 DOLLARS ($5,566,444.00) to be leased by the Corporation totenants who meet the required qualifications of the Corporation.

RESOLUTIONGROUND LEASE OF HEALTH SERVICES BUILDING LAND

TO THE USA RESEARCH AND TECHNOLOGY CORPORATION

WHEREAS, the University of South Alabama (“University”) owns certain real property which it utilizes to furtherits educational mission, and

WHEREAS, the USA Research and Technology Corporation (“Corporation”), a not-for-profit, supportingorganization of the University, was incorporated to further the educational and scientific mission of the University, topromote the University and its schools and departments, to promote the development of and to facilitate funding for theinfrastructure and services in Mobile, Alabama, and to attract high technology and scientific enterprises, and

WHEREAS, in order for said Corporation to fulfill its above-stated mission, it is recommended that the Universitylease approximately 13.2 acres of land known as the Health Services Building Land (shown on the attached Exhibit “A”as Lot 7 of the USA Technology & Research Park Master Plan) to the Corporation for the development, construction, andsupport of the park and its buildings for the sum of ONE DOLLAR AND NO/100 ($1.00) per annum, and a term that expireson July 1, 2048, and

WHEREAS, the Corporation will use the property only for the purposes stated in the Articles of Incorporationgoverning the Corporation, such purposes to be set forth in the lease document, and

WHEREAS, should said Corporation cease to exist for any reason, land and improvements thereon will revertto the University consistent with the terms of the lease, and

WHEREAS, the University has determined that leasing the real property described above is in the best interestof the University in that it will allow the University to continue and enhance its valued missions of education, research, andservice,

THEREFORE, BE IT RESOLVED, that the Board of Trustees of the University of South Alabama authorizes thePresident of the University to proceed with finalizing a land lease agreement with the USA Research and TechnologyCorporation for the lease of approximately 13.2 acres of real property known as the Health Services Building Land to theCorporation for development, support, and operation of the Corporation.

Mr. Wayne Davis called for consideration of a bond issue, ITEM 13. He reminded Trustees that, atthe September 14, 2006, Board meeting, the University administration was granted authorizationto proceed with due diligence and planning for a proposed $65 million bond issue to fundcompletion of Mitchell Cancer Institute construction, a building for the colleges of Allied Healthand Nursing, a student recreation center, and infrastructure and campus beautificationimprovements, including campus entrance portals and construction of a bell tower. He reported that,as a result of the due diligence process, an additional $10 million in capital projects had beenidentified. Also proposed is the use of bond proceeds to pay off debt remaining from the 1996 bond


issue estimated at approximately $25 million, for a total recommended bond issue of $100 million.The newly identified projects include construction of an athletics field house and a softball field,and renovation of the Administration, Alpha South, and Student Center buildings. Aerial photos ofthe campus and artists renderings of the campus master plan were shown.

Mr. Davis introduced the University’s financial advisor for the bond issue, Mr. Louis Cardinal ofthe firm of Thornton Farish, Inc. Mr. Cardinal briefly discussed the bond documents. He said thatmarket conditions are currently at their most favorable in many months, an indication that the timeis ideal for the University to consider a bond issue. Mr. Cardinal introduced Mr. Bob Young of theFrazer Lanier Company, the University’s senior bond underwriter, who reported a successful saleof bonds on December 12, 2006. He said that the average interest rate on the sale was 4.74 percent.He commended the University for an excellent presentation to Moody’s Investors Service duringa recent site visit to campus. On motion by Mayor Nix, seconded by Ms. Maye, the followingresolutions were unanimously approved.

RESOLUTION

BE IT RESOLVED by the Board of Trustees (herein called the “Board”) of UNIVERSITY OF SOUTH ALABAMA(herein called the “University”) as follows:

Section 1. Findings. The Board hereby finds and recites that the University has heretofore issued, pursuantto a resolution adopted October 31, 1996 (herein called the “Authorizing Resolution”), its $31,680,000 original principalamount of University Tuition Revenue Refunding and Capital Improvement Bonds, Series 1996, dated as of February 15,1996 (the “Series 1996 Bonds”), and (b) the University is not in default in the payment of the principal of and intereston any of the Series 1996 Bonds. The Series 1996 Bonds were issued pursuant to the provisions of a Tuition RevenueTrust Indenture, dated as of February 15, 1996 (the “Indenture”), from the University to The Bank of New York TrustCompany, N.A., Birmingham, Alabama.

Section 2. Call for Redemption. Acting pursuant to the provisions of Article VI of the Indenture, the Universitydoes hereby elect to redeem and pay, and does hereby call for redemption and payment, on February 18, 2007, all ofthe outstanding Series 1996 Bonds (herein called the “Called Bonds”), the redemption of each Called Bond to be effectedat a redemption price equal to the 102.00% of the face or par amount of each Bond so called for redemption.

Section 3. Provisions for Notice. The Bank of New York Trust Company, N.A., Birmingham, Alabama, is herebydirected, in its capacity as paying agent for the Series 1996 Bonds, to cause written notice of such redemption andprepayment to be given in the manner and at the time prescribed in Article VI of the Indenture.

Section 4. Actions Authorized. The President of the University is hereby authorized and directed to take orcause to be taken, in the name and behalf of the University, all of the actions required by the provisions of the Indentureto be taken in order to effect the redemption on February 18, 2007, of the Called Bonds herein called for redemption.

Section 5. No Repeal. The Board agrees that it will not repeal this resolution calling the Called Bonds forredemption on February 18, 2007.

RESOLUTIONISSUANCE OF $100,000,000 PRINCIPAL AMOUNT OF UNIVERSITY TUITION REVENUE REFUNDING

BONDS AND CAPITAL IMPROVEMENT SERIES 2006

BE IT RESOLVED by the Board of Trustees (herein called the “Board”) of UNIVERSITY OF SOUTH ALABAMA(herein called the “University”) as follows:


Section 1. (a) Findings. The Board has determined and hereby finds and declares that the following facts aretrue and correct:

(1) It is necessary, advisable, in the interest of the University and in the public interest that the Universityrefund and retire the University’s outstanding Tuition Revenue Refunding and Capital Improvement Bonds, Series 1996,dated as of February 15, 1996 (the "Refunded 1996 Bonds"), which bonds were originally issued in the aggregateprincipal amount of $31,680,000;

(2) It is necessary, advisable, in the interest of the University and in the public interest that the University issuethe Bonds hereinafter authorized for the purpose of refunding the Refunded 1996 Bonds; and

(3) It is necessary, advisable, in the interest of the University and in the public interest that the costs of issuingthe Bonds and the costs of certain capital improvements representing a portion of the University’s five and ten-year capitalimprovement program including, without limitation, construction of the Mitchell Cancer Institute, the Colleges of Nursingand Allied Health Professions building, a Student Recreation Center, the Bell Tower, the Engineering and Sciences building,a softball field, athletics field house, and improvements to campus entrances to include new portals; renovation of theAdministration, Student Center and Alpha South buildings and other capital improvements throughout the campus of theUniversity (collectively, the "Improvements") be financed with proceeds of the Bonds.

(b) Bonds to be Issued as Additional Parity Bonds Under the Indenture; Special Findings Under Section 8.2(b)of the Indenture. The Bonds shall be issued as additional parity bonds under Article VIII of the Indenture hereinafterreferred to. In accordance with the provisions of Section 8.2(b) of the Indenture, the Board hereby finds and declaresas follows:

(1) the University is not now in default under the Indenture and no such default is imminent; (2) the Bonds shall be designated Series 2006; (3) the persons to whom the Bonds are to be delivered are set forth in Section 6 hereof; (4) all of the Bonds are to be issued by sale in accordance with Section 6 hereof; (5) the sale price of the Bonds is set forth in Section 6 hereof; (6) (a) the only bonds that have previously been issued by the University under the Indenture are its

$31,680,000 original principal amount of University Tuition Revenue Refunding and Capital Improvement Bonds, Series1996, dated February 15, 1996 (the “Series 1996 Bonds”), its $7,055,000 original principal amount of University TuitionRevenue Refunding Bonds, Series 1996B, dated October 15, 1996 (the “Series 1996B Bonds”), its $40,130,000.70original principal amount of University Tuition Revenue Bonds, Series 1999, dated March 1, 1999 (the “Series 1999Bonds”), and its $51,080,000 original principal amount of Tuition Revenue Refunding and Capital Improvement Bonds,Series 2004, dated March 15, 2004 (the “Series 2004 Bonds”); and (b) in Article VIII of the Indenture, the University hasreserved the right to issue additional bonds, secured by a pledge of the Pledged Revenues on a parity with the Series1996 Bonds (initially issued thereunder and which are to be refunded with proceeds of the Series 2006 Bonds hereinafterreferred to), the Series 1996B Bonds (which bonds have been paid and retired), the Series 1999 Bonds, the Series 2004Bonds and with such additional parity bonds as shall have thereafter been issued hereunder, upon compliance with theapplicable provisions of said Article VIII; and

(7) the Bonds are being issued for the purpose of refunding the Series 1996 Bonds, paying costs of theImprovements, and paying the expenses of issuing the Bonds, including the premium of the Bond Insurer for the FinancialGuaranty Insurance Policy.

The Trustee is hereby requested to authenticate and deliver the Bonds to the purchasers specified in Section 6 hereofupon payment of the purchase price designated therein.

Section 2. Authorization of Bonds. For the purposes specified in Section 1 of this resolution, there are herebyauthorized to be issued by the University $100,000,000 aggregate principal amount of University Tuition RevenueRefunding and Capital Improvement Bonds, Series 2006, dated December 1, 2006 (herein called the “Bonds”), all underthe terms, conditions and provisions set out in the Fifth Supplemental Trust Indenture dated as of December 1, 2006,between the University and The Bank of New York Trust Company, N.A., as trustee (herein called the “Trustee”), which issupplemental to the Trust Indenture between the University and the Trustee dated as of February 15, 1996 (the said TrustIndenture, as supplemented by the said Fifth Supplemental Trust Indenture, herein called the “Indenture”). All theprovisions of the Indenture respecting the Bonds are hereby adopted as a part of this resolution as fully as if set out atlength herein.


Section 3. Source of Payment of the Bonds. The principal of and the interest on the Bonds shall be payablesolely from the Pledged Revenues as defined in the Indenture. Nothing contained in this resolution, in the Bonds or in theIndenture shall be deemed to impose any obligation on the University to pay the principal of or the interest on the Bondsexcept from the Pledged Revenues. The Bonds shall not represent or constitute obligations of any nature whatsoever ofthe State of Alabama and shall not be payable out of moneys appropriated to the University by the State. The agreements,covenants or representations contained in this resolution, in the Bonds and in the Indenture do not and shall neverconstitute or give rise to any personal or pecuniary liability or charge against the general credit of the University, and inthe event of a breach of any such agreement, covenant or representation, no personal or pecuniary liability or chargepayable directly or indirectly from the general revenues of the University shall arise therefrom. Neither the Bonds, nor thepledge or any agreement contained in the Indenture or in this resolution shall be or constitute an obligation of any naturewhatsoever of the State of Alabama, and neither the Bonds nor any obligation arising from the aforesaid pledge oragreements shall be payable out of any moneys appropriated to the University by the State of Alabama. Nothing containedin this section shall, however, relieve the University from the observance and performance of the several covenants andagreements on its part herein contained.

Section 4. Bonds Payable at Par. All remittances of principal of and interest on the Bonds to the holders thereofshall be made at par without any deduction for exchange or other cost, fees or expenses. The bank or banks at which theBonds shall at any time be payable shall be considered by acceptance of their duties hereunder to have agreed that theywill make or cause to be made remittances of principal of and interest on the Bonds, out of the moneys provided for thatpurpose, in bankable funds at par without any deduction for exchange or other cost, fees or expenses. The University willpay to such bank or banks all reasonable charges made and expenses incurred by them in making such remittances inbankable funds at par.

Section 5. Authorization of Indenture. The Board does hereby authorize and direct the President of theUniversity to execute and deliver, for and in the name and behalf of the University, to The Bank of New York Trust Company,N.A., as Trustee under the aforesaid Trust Indenture, a Fifth Supplemental Trust Indenture in substantially the formpresented to the meeting at which this resolution is adopted and attached as Exhibit I to the minutes of said meeting(which form is hereby adopted in all respects as if set out in full in this resolution) and does hereby authorize and directthe Secretary of the Board to affix to the Fifth Supplemental Trust Indenture the corporate seal of the University and toattest the same.

Section 6. Sale of the Bonds. The Bonds are hereby sold and awarded to The Frazer Lanier Company,Incorporated, Merchant Capital, LLC, Gardnyr Michael Capital, Inc., Compass Bank, Raymond James and Associates, Inc.,and Protective Securities, a Division Of Proequities (herein called the “Underwriters”), at and for a purchase price equalto $106,305,086.85 (reflecting an underwriting discount of $475,000 and original issue premium in the amount of$6,780,086.85) plus accrued interest on the Bonds from December 1, 2006, to the date of delivery thereof.

Section 7. Authorization of the Official Statement. The Board does hereby authorize and direct the Presidentof the University to execute, for and in the name and behalf of the University, an Official Statement with respect to theBonds, to be dated the date of the adoption of this resolution, in substantially the form presented to the meeting at whichthis resolution is adopted and attached as Exhibit II to the minutes of said meeting (which form is hereby adopted in allrespects as if set out in full in this resolution), with such changes as shall be necessary to conform to the provisions ofthis resolution. The Board does hereby declare that the Official Statement so executed by the President of the Universityshall be the Official Statement of the University with respect to the Bonds. The actions of the Underwriters in circulating,on behalf of the University, a Preliminary Official Statement respecting the Series 2006 Bonds, dated December 7, 2006,and attached hereto as Exhibit III, is hereby ratified and confirmed and the said Preliminary Official Statement is herebyadopted as the Preliminary Official Statement of the University and the Board hereby deems the said Official Statement"final" within the meaning of SEC Rule 15c2-12(b)(1) for the purposes of such rules.

Section 8. Authorization of Continuing Disclosure Agreement. The President of the University is herebyauthorized and directed to execute and deliver, on behalf of the University, a Continuing Disclosure Agreement for thebenefit of the beneficial owners of the Bonds, in substantially the form presented to the meeting at which this resolutionis adopted (which form shall be attached as Exhibit IV to the minutes of said meeting and which is hereby adopted in all


respects as if set out in full in this resolution). The said Continuing Disclosure Agreement is to be entered intocontemporaneously with the issuance of the Bonds in order to assist the Underwriters of the Bonds in complying with Rule15c2-12 of the Securities and Exchange Commission. The rights of enforcement of the said Continuing DisclosureAgreement shall be as provided therein, and in no event shall a default by the University thereunder constitute a defaulthereunder or under the Indenture.

Section 9. Execution and Delivery of Bonds. The Board does hereby authorize and direct the President of theUniversity to execute the Bonds, in the name and behalf of the University, by causing a manual or facsimile of his signatureto be imprinted thereon, and does hereby authorize and direct the Secretary of the Board to cause the corporate seal ofthe University to be imprinted or impressed on each of the Bonds and to attest the same by causing a manual or facsimileof the signature of said Secretary to be imprinted thereon, all in the manner provided in the Indenture, and the Presidentof the University is hereby authorized and directed to deliver the Bonds, subsequent to their execution as provided hereinand in the Indenture, to the Trustee under the Indenture, and to direct the Trustee to authenticate all the Bonds and todeliver them to the Underwriters, upon payment to the University of the purchase price therefor in accordance with theprovisions of Section 6 hereof.

Section 10. Application of Proceeds. The entire proceeds derived by the University from the sale of the Bondsshall be paid to said Trustee under the Indenture, which is thereupon authorized and directed to apply and disburse suchmoneys for the purposes and in the order specified in Section 1.5 of the Fifth Supplemental Trust Indenture hereinauthorized.

Section 11. Resolution Constitutes Contract. The provisions of this resolution shall constitute a contract betweenthe University and each holder of the Bonds.

Section 12. Severability. The various provisions of this resolution are hereby declared to be severable. In theevent any provision hereof shall be held invalid by a court of competent jurisdiction, such invalidity shall not affect anyother portion of this resolution.

Section 13. General Authorization. The President of the University, the Vice- President for Financial Affairs andthe Secretary of the Board are hereby authorized to execute such further certifications or other documents and to takesuch other action as any of them may deem appropriate or necessary for the consummation of the matters covered bythis resolution, to the end that the Bonds may be executed and delivered as promptly as practicable.

Chairman Langham called for a report of endowment and investments items. Mr. Mitchell, Chair,Endowment and Investments Committee, Presented performance for the total endowment and eachmoney manager for fiscal year 2006: Commonfund, Arlington Partners, Gerber/Taylor, OakmarkSelect, and Private Advisors. He stated that the endowment had outperformed its relative index forthe year (11.31 percent vs. 8.76 percent) and since inception in March 2000 (5.74 percent vs. 2.51percent). The University’s endowment totals $19.8 million. Mr. Mitchell said there are no plansto make investment changes at the present time.

Following a short recess, Chairman Langham read aloud ITEM 14 as follows, and moved forapproval. Ms. Miree seconded and the resolution was unanimously approved. Dr. and Mrs. Stokeswere presented a framed resolution. Dr. Stokes expressed gratitude for the opportunity to serve andprovide support to his and Mrs. Stokes’ alma mater.

UNIVERSITY OF SOUTH ALABAMA

COLLEGE OF EDUCATIONDEPARTMENT OF

PROFESSIONAL STUDIES

UCOM 3600 .MOBILE, ALABAMA 36688-0002TEL: (251) 380-2861 .FAX: (251) 380-2713

E-mail: coepsfYusouthal.edu

November 28, 2006

v. Gordon Moulton, PresidentUnjversity of South AlabamaPresjdent's OfficeAD 122CAMPUS MAIL

Dear President Moulton:

In its March 2006 meeting the Senate unanimously approved two amendments to theSenate constitution. The first amendment deals with changes in language to better definethe USA Faculty Senate Mentoring,Committee's charge and function. The second changeprovides changed meeting dates during months when classes are not in session at the timeof the regularly scheduled meeting.

After the Senate approval, the measures were presented to the faculty at large for a vote.Three-hundred and eighty-two (382) faculty members voted. Three-hundred and seventy-three (373) members of the faculty voted to approve the first change whiJe nine (9)members of the faculty voted against approval. Three-hundred and eighty-one (381)members of the facuJty voted to approve the second change and one (I) faculty membervoted against approval. The results indicate that a majority of the faculty approved bothamendments.

At this time I ask you to request the Board of Trustees of the University of SouthAlabama to formally adopt these changes to the Senate Constitution at the Board ofTrustees' December meeting. I thank you very much for your assistaJ1ce in this matterand I will be happy to answer any questions pertaining to these changes.

Sincerely yours.

P~!l<-l..A~ -cm9,~~;~:>P. Irene McIntoshUSA Faculty Senate Chair

enclosure

Community Counseling Rehabilitation Counseling School Counseling School Psychometry Educational Media Instructional Design and Det'elop,nent

AN AFFIRMATIVE ACTION/EQUAL OPPORTUNITY EDUCATIONAL INSTITUTION

9

Proposed Constitutional Chanees

Words in Bold Italics are the proposed changes in wording to the present USA Faculty SenateConstitution.

I. In order to better define the USA Faculty Senate Mentoring Committee'scharge and function, the Senate voted to rewrite the MentoringCommittee's description at its March 22, 2006 meeting. The following paragraph initalics is the text that is currently in the USA Faculty Handbookfollowed by the proposed changes, which are in bold:

This Committee will coordinate the Senate mentoring program for newfaculty. It will recommend policies for the mentoring program,identify and recruit faculty mentors, and establish operatingprocedures. The Committee will also represent faculty in mattersrelated to academic development at the university level (FacultyHandbook, Article 1; Section 4B6, Chap 2, pg. 38)

This Committee will represent the Faculty in matters related toacademic development and faculty mentoring at the university level.It will function to advance the mission of the Faculty Senate byproviding collaborative planning and consultation on matters as theyrelate to the teaching, research, and service activities of thefaculty; to provide input into University policy concerning academicdevelopment and faculty mentoring; and assess policy approaches to,and delivery of Faculty mentoring within the University.

2. The Faculty Senate has scheduled meetings every thirdWednesday of the month except in May, August, and December. As itreads currently, the Faculty Handbook (Article II, Section 1, Chap. 2,pg 39) makes no provision for scheduling of meetings which happen tofall on the Wednesdays when classes are not in session. Thisoccasionally affects the March meeting of the Senate when students areon Spring Break, and the November meeting which sometimes falls on the Wednesdayimmediately before Thanksgiving.

We propose that the following language in bold be added to Article II:Section I Chap. 2., p. 39 in order to eliminate confusion as toscheduled Senate meetings:

In the event that a regular meeting falls on a day when classes arenot in session, the meeting will be held on the following Wednesday at3:00 p.m.

10

FIFTH SUPPLEMENTAL TRUST INDENTURE

between

UNIVERSITY OF SOUTH ALABAJ\iA

and

THE BANK OF NEW YORK TRUST COMPANY, N.A.

$100,000,000University Tuition Revenue Refunding

And Capital Improvement BondsSeries 2006

Dated: December 1, 2006

FIFTH SUPPLEMENTAL TRUST INDENTURE between the UNIVERSITY OFSOUTH ALABAMA, public body corporate under the laws of Alabama (herein called the"University"), and THE BANK OF NEW YORK TRUST COMPANY, N.A. (as successorTrustee to AmSouth Bank of Alabama), a banking corporation in its capacity as Trustee underthe Trust Indenture of the University dated as of December 1, 2006 as supplemented (saidbanking association in said capacity being herein called the "Trustee"),

RECITALS

The University makes the following findings as a basis for the undertakings hereincontained:

(a) Pursuant to the provisions of the aforesaid Indenture (herein called the"Indenture"), the University has heretofore issued and sold its $31,680,000 original principalamount of University Tuition Revenue Refunding and Capital Improvement Bonds, Series 1996,dated February 15, 1996 (the "Series 1996 Bonds"), its $7,055,000 University Tuition Re\'enueRefunding Bonds, Series 1996B, dated October IS, 1996 (the "Series 1996B Bonds"),$40,130,00.70 University Tuition Revenue Bonds, Series 1999, dated March 1, 1999 (the "Series1999 Bonds"), and its $51,080,000 Tuition Revenue Refunding and Capital Improvement Bonds,Series 2004, dated March 15, 2004 (the "Series 2004 Bonds"). In Article VIII of the Indenture,the University has reserved the right to issue additional bonds, secured by a pledge of thePledged Revenues on a parity \\'ith the Series 1996 Bonds (initially issued thereunder and whichare to be refunded with proceeds of the Series 2006 Bonds hereinafter referred to), the Series1996B Bonds (which bonds have been paid and retired), the Series 1999 Bonds, the Series 2004Bonds and with such additional parity bonds as shall have thereafter been issued hereunder, uponcompliance with the applicable provisions of said Article VIII. The University now desires toissue additional bonds, in the principal amount of $100,000,000, for the purpose of providingfunds to pay costs of capital improvements at the University and to refund and retire the Series1996 Bonds. The University has duly adopted a resolution authorizing the issuance of suchadditional bonds. This Fifth Supplemental Trust Indenture is executed in order to specify thedetails with respect to such additional bonds.

(b) This Fifth Supplemental Trust Indenture is being executed to provide for theissuance of the Series 2006 Bonds (hereinafter referred to) as Additional Bonds under theIndenture.

Additional Definitions

The following definitions are in addition to those contained in the Indenture:

"Ambac Assurance Corporation" or the "Bond Insurer" means Ambac AssuranceCorporation, a Wisconsin-domiciled stock insurance company.

2

2(b) hereof."DTC" has the meaning given in Section

""Financial Guaranty Insurance Policy" shall mean the financial guaranty insurancepoljcy issued by Ambac Assurance jnsuring the payment when due of the principal of andinterest on the Series 2006 Bonds as provided therein.

"Improvements" means the costs of capital improvements at the University to be paidfrom proceeds of the Series 2006 Bonds, consisting generally of the construction of the MitchellCancer Institute, the Colleges of Nursing and Allied Health Professions building, a StudentRecreation Center, the Bell Tower, the Engineering and Sciences building, a softball field,athletics field house, and improvements to campus entrances to include new portals; renovationof the Administration Building, the Student Center and Alpha South buildings~ and other capitalimprovements throughout the campus.

"Interest Payment Date" means each June 1 and December 1, commencing June2007

"Record Date," as used in the Indenture, shall be, with respect to the Series 2006 Bonds,the May 15 and November 15 preceding each Interest Payment Date.

"Refunded Bonds" means the University Tuition Revenue Refunding and CapitalImprovement Bonds, Series 1996, dated as of February 15, 1996, originally issued in theaggregate principal amount of $31 ,680,000

"Series 2006 Bonds" means those of the Bonds bearing the designation Series 2006, asauthorized to be issued in the principal amount of $1 00,000,000.

NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE

WITNESSETH:

It is hereby agreed among the University, the Trustee and its successors in trust under theIndenture and the holders at any time of the Series 2006 Bonds hereinafter referred to (the saidholders evidencing their consent hereto by their acceptance of the said Series 2006 Bonds), eachwith each of the others, as follows:

ARTICLE I

SERIES 2006 BONDS

Section 1.1 (a) Authorization and Description of the Series 2006 Bonds. Thereis hereby authorized to be issued by the University under the Indenture an issue or series ofBonds designed Tuition Revenue Refunding and Capital Improvement Bonds, Series 2006,dated as of December 1, 2006, which shall be issued in the aggregate principal amount of$100,000,000. The Series 2006 Bonds shall mature and become payable on December 1 in theyears and amounts shown below. Interest shall be payable on June 1, 2007, and each InterestPayment Date thereafter, and shall bear interest at the per annum rates set forth below:

3

Maturity Date(December 1)

PrincipalAmount

InterestRate

202420252026202720282029203020312036

$ 5,600,0005,885,0006,190,0006,505,0006,840,0007,190,0007,560,0007,945,000

46,285,000

5.00%5.005.005.005.005.005.005.005.00

The Series 2006 Bonds shall be issued in denominations of $5,000 or any multiple thereof. TheSeries 2006 Bonds shall be initially issued in the Authorized Denominations and registered in thenames of the Holders as shall be designated by the purchaser of the Series 2006 Bonds from theUniversity .

Section 1.2 Redemption Provisions. (a) Optional Redemption. Those of the Series2006 Bonds having stated maturities in 2017 and thereafter shall be subject to redemption priorto their respective maturities, at the option of the University, in whole or in part (but, if in part, inmultiples of $5,000 with those of the maturities to be redeemed to be se1ected by the Universityat its discretion, and if less than all the Series 2006 Bonds having the same maturity are to beredeemed, those to be redeemed to be se1ected by the Trustee by lot), on December 1,2016, andon any date thereafter, at and for a redemption price for each Series 2006 Bond redeemed equa1to the par or face amount thereof plus accrued interest thereon to the date fixed for redemption.

(b) Scheduled Mandatory Redemption of Series 2006 Term Bond due2036 The Series 2006 Bonds due 2036 shall be subject to mandatory redemption and pa}'tnent,and the University shall redeem and pay such Series 2006 Bonds, at and for a redemption price,with respect to each such Series 2006 Bond or portion thereof redeemed, equal to the principalamount thereof plus accrued interest to the Redemption Date (those to be redeemed to beselected by the Trustee by lot) but only in the following aggregate principal amounts onDecember I in the following years:

AmountRedeemedYear

$ 8,355,0008,785,0009,235,0009,705,000

10,205,000

20322033203420352036 (final maturity)

d

The Trustee will, no later than sixty (60) days preceding each December I of the years shownabove, take such action as may be necessary to effect the redemption, on the next succeedingDecember I, of the respective principal amounts shown above of the Series 2006 Bonds dueDecember I, 2036. In the event that less than the entire principal of the Series 2006 Bonds of amaturity is redeemed and prepaid, the Trustee shall select by lot that portion of the principal ofthe Series 2006 Bonds of such maturity to be redeemed and prepaid, such redemption to be inincrements of$5,000 or any multiple thereof

(c) Payments into Bond Fund. The University will pay into the Bond Fund createdin the Tuition Revenue Trust Indenture dated as of February 15, 1996, in addition to all otherpayments required to be paid therein, an amount sufficient to pay the principal of and interest onthe Series 2006 Bonds when due and to redeem Series 2006 Bonds required to be redeemedpursuant to the provisions for scheduled mandatory redemption required by the provisions ofSection 1.2(b) hereof.

Section 1.3 Method of Payment. (a) The principal of the Series 2006 Bonds shallbe payable at maturity at the designated office of the Trustee in Bin11ingham, Alabama. Intereston the Series 2006 Bonds shall be payable by check or draft mailed or otherwise delivered by theTrustee to the respective Holders thereof at their addresses as they appear on the registry booksof the Trustee pertaining to the registration of the Series 2006 Bonds; provided that the finalpayment of such interest shall be made only upon surrender of the appropriate Series 2006 Bondto the Trustee. The principal and the interest on the Series 2006 Bonds shall be payable onlyupon maturity and only upon surrender of such Series 2006 Bonds of the Trustee. Allinstallments of principal of and interest on each Series 2006 Bond shall bear interest after therespective maturities of such principal and interest until paid or until moneys sufficient forpayment thereof shall have been deposited for that purpose with the Trustee, whichever firstoccurs, at the rate of interest borne by such Series 2006 Bond.

(b) Issued in Book-Entry Form. The Series 2006 Bonds shall be initiallyissued in book-entry only fonD, registered in the name of Cede & Co., the nominee of TheDepository Trust Company ("DTC"). So long as the said book-entry only system remains ineffect, the provisions of this First Supplemental Indenture, including the provisions governingthe registration and exchange of Series 2006 Bonds, places and manner of payment of Series2006 Bonds, requirements for presentment of Series 2006 Bonds shall be subject to the standardprocedures of the Depository Trust Company.

(c) Book-Entry Only System; Payment Provisions.

The Series 2006 Bonds will be issued as fully-registered Series 2006 Bonds in thename of Cede & Co., as nominee of DTC, as registered owner of the Series 2006 Bonds.Purchasers of such Series 2006 Bonds will not receive physical delivery of Series 2006 Bondcertificates. For purposes of this Official Statement, so long as all of the Series 2006 Bonds arein the custody of DTC, references to Series 2006 Bondholders or Owners shall mean DTC or itsnominee.

5

DTC will act as securities depository for the Series 2006 Bonds. The Series 2006Bonds will be issued as fully-registered securities in the name of Cede & Co., DTC's partnershipnominee ("Cede") or such other nominee as may be requested by an authorized representative ofDTC. One fully-registered Series 2006 Bond certificate will be issued for each maturity of theSeries 2006 Bonds, in the aggregate principal amount of such maturity, and will be depositedwith DTC.

DTC is a limited-purpose trust company organized under the New York BankingLaw, a "banking organization" within the meaning of the New York Banking Law, a member ofthe Federal Reserve System, a "clearing corporation" within the meaning of the New YorkUniform Commercial Code and a "clearing agency" registered pursuant to the provisions ofSection 17 A of the Securities Exchange Act of 1934, as amended. DTC holds securities that itsparticipants (the "Direct Participants") deposit with DTC. DTC also facilitates post-tradesettlement amDng Direct Participants of sales and other securities transactions in depositedsecurities, through electronic computerized book-entry transfers and pledges between DirectParticipants' accounts. This eliminates the need for physical movement of securities certificates.Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trustcompanies, clearing corporations and certain other organizations. DTC is a wholly-ownedsubsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is ownedby a number of Direct Participants of DTC and members of the Natjonal Securities ClearingCorporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation(NSCC, FICC, and EMCC, also subsidiaries of DTCC), as well as by the New York StockExchange, Inc., the American Stock Exchange, LLC, and the National Association of SecuritiesDealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clearthrough or maintain a custodial relationship with a Direct Participant, either directly or indirectly("Indirect Participants"). DTC has Standard & Poor's highest Rating: AAA. The DTC Rulesapplicable to its Direct and Indirect Participants are on file with the Securities and ExchangeCommission. More information about DTC can be found at www.dtcc.com and www.dtc.org.

Purchases of Series 2006 Bonds, in the denomination of $5,000 principal amountor any integral multiple of $5,000 in excess thereof, under the DTC system must be made by orthrough Direct Participants, which will receive a credit for the Series 2006 Bonds on DTC'srecords. The ownership interest of each actual purchaser of each Series 2006 Bond ("BeneficialOwner") is in turn to be recorded on the Direct and Indirect Participants' records. BeneficialOwners will not receive written confirmation from DTC of their purchase. Beneficial Ownersare expected, however, to receive written confirmations providing details of the transaction, aswell as periodic statements of their holdings, from the Direct or Indirect Participant throughwhich the Beneficial Owner entered into the transaction. Transfers of ownership interests in theSeries 2006 Bonds are to be accomplished by entries made on the books of Direct and IndirectParticipants acting on behalf of Beneficial Owners. Beneficial Owners will not receivecertificates representing their ownership interests in Series 2006 Bonds, except in the event thatuse of the book-entry system for the Series 2006 Bonds is discontinued.

To facilitate subsequent transfers, all Series 2006 Bonds deposited by DirectParticipants with DTC are registered in the name of DTC's partnership nominee, Cede, or such

6

other nominee as may be requested by an authorized representative of DTC. The deposit ofSeries 2006 Bonds with DTC and their registration in the name of Cede or such other DTCnominee does not effect any change in beneficial ownership. DTC has no knowledge of theactual Beneficial Owners of the Series 2006 Bonds; DTC's records reflect only the identity ofthe Direct Participants to whose accounts such Series 2006 Bonds are credited, which mayormay not be the Beneficial Owners. The Direct and Indirect Participants will remain responsiblefor keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants,by Direct Participants to Indirect Participants, and by Direct Participants and IndirectParticipants to Beneficial Owners will be governed by arrangements among them, subject to anystatutory or regulatory requirements as may be in effect from time to time.

Redemptjon notices shall be sent to DTC. If less than all of the Series 2006Bonds are bejng redeemed, DTC's practice is to deten11jne by Jot the amount of the jnterest ofeach Djrect Partjcjpant in such Series 2006 Bonds to be redeemed.

Neither DTC nor Cede (nor any other DTC nominee) will consent or vole withrespect to Series 2006 Bonds unless authorized by a Direct Participant in accordance witbDTC'sProcedures. Under its usual procedures, DTC mails an Omnibus Proxy to the University as soonas possible after the record date. The Omnibus Proxy assigns Cede's consenting or voting rightsto those Direct Participants to whose accounts the Series 2006 Bonds are credited on the recorddate (identified in a listing attached to the Omnibus Proxy).

Principal, redemption price and interest payments on the Series 2006 Bonds wiIIbe made by the Trustee to Cede or such other nominee as may be requested by an authorizedrepresentative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC'sreceipt of funds and corresponding detail information from the University or The Trustee, on apayment date in accordance with their respective holdings shown on DTC's records. Paymentsby Direct and Indirect Participants to Beneficial Owners wiII be governed by standinginstructions and customary practices, as in the case with securities held for the accounts ofcustomers in bearer forn1 or registered in "street name," and wiII be the responsibility of suchDirect and Indirect Participant and not of DTC, the Trustee or the University, subject to anystatutory or regulatory requirements as may be in effect from time to time. Payment of principal,redemption price and interest to Cede (or such other nominee as may be requested by anauthorized representative of DTC) is the responsibility of the University or the Trustee,disbursement of such payments to Direct Participants will be the responsibility of DTC, anddisbursement of such payments to the Beneficial Owners will be the responsibility of Direct andIndirect Participants.

NEITHER THE UNIVERSITY NOR THE TRUSTEE WILL HA VE ANYRESPONSIBILITY OR OBLIGATION TO SUCH PARTICIPANTS, OR TO THE PERSONSFOR WHOM THEY ACT AS NOMINEES WITH RESPECT TO THE SERIES 2006 BONDS,OR TO ANY BENEFICIAL OWNER IN RESPECT OF THE ACCURACY OF ANYRECORDS MAINTAINED BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECTPARTICIPANT, THE PAYMENT BY DTC OR ANY DIRECT PARTICIPANT OR

7

INDIRECT PARTICIPANT OF ANY AMOUNT IN RESPECT OF THE PRINCIPAL ORREDEMPTION PRICE OF OR INTEREST ON THE SERIES 2006 BONDS, ANY NOTICEWHICH IS PERMITTED OR REQUIRED TO BE GIVEN TO SERIES 2006 BONDHOLDERSUNDER THE FIFTH SUPPLEMENTAL INDENTURE, THE SELECTION BY DTC OR ANYDIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY PERSON TO RECEIVEPA YMENT IN THE EVENT OF PARTIAL REDEMPTION OF THE SERIES 2006 BONDSWITH RESPECT TO LESS THAN ALL OF THE SERIES 2006 BONDS, OR ANY OTHERACTION TAKEN BY DTC AS REGISTERED SERIES 2006 BONDHOLDER.

For every transfer and exchange of the Series 2006 Bonds, the Beneficial Ownermay be charged a sum sufficient to cover any tax, fee or other governmental charge that may beimposed in relation thereto, and any reasonable fees and expenses of the Trustee and the costsincurred in preparing Series 2006 Bond certificates.

DTC may discontinue providing its services as securities depository with respectto the Series 2006 Bonds at any time by giving reasonable notice to the University. In the eventof the discontinuance of the book-entry system for the Series 2006 Bonds, Series 2006 Bondcertificates will be printed and delivered and the following provisions of the Indenture willapply: (i) principal of the Series 2006 Bonds will be payable upon surrender of the Series 2006Bonds at the designated office of the Trustee; (ii) Series 2006 Bonds may be transferred orexchanged for other Series 2006 Bonds of authorized denominations as set forth in the nextsucceeding two paragraphs; and (iii) Series 2006 Bonds will be issued in denominations asdescribed in the front portion of the Official Statement under "THE SERIES 2006 BONDS".

In the event of "the discontinuance of the use of the system of book-entry-onlytransfers through DTC (or a successor depository), Series 2006 Bond certificates will be printedand delivered to DTC.

Section 1.4 Form of Series 2006 Bonds. The Series 2006 Bonds and the Trustee'sAuthentication Certificate applicable thereto shall be in substantially the following forms,respectively, with such insertions, omissions and other variations as may be necessary toconfonn to the provisions hereof:

8

[FORM OF CAPTION FOR BONDSHELD IN BOOK ENTRY FORM]

No.

UNITED STATES OF Al\.1ERICA

STATE OF ALABAMA

UNIVERSITY OF SOUTH ALABAl\1AUniversity Tuition Revenue Refunding and Capital Improvement Bobds

Series 2006 ,.,

Interest Rate Maturity Date CUSIP Number

Subject to the provisions as herein stated

For value received, UNIVERSITY OF SOUTH ALABAMA, a public bodycorporate under the laws of the State of Alabama (herein called the "University"), will pay,solely from the sources hereinafter referred to, to

or registered assigns, the principal sum of

DOLLARS on the date specified above, with interest thereon from the date hereof until thematurity hereof at the per annum rate of interest specified above, payable on June 1,2007, andsemiannually thereafter on each December I and June I until and at the maturity hereof. Theprincipal of this bond are payable only upon presentation and surrender of this bond at the

9

designated corporate trust office of The Bank of New York Trust Company, N.A. Birn1ingham,Alabama, or its successor as trustee under the Indenture hereinafter referred to. I terest on thisbond is payable by check or draft mailed by the Trustee on the interest payme t date to theregistered holder hereof and at the address shown on the registry books of the Tru tee penainingto the Bonds as of the close of business on the May 14 or November 15, as the cas may be, nextpreceding the date of payment of such interest. Interest payments that are due ith respect tothis bond and that are made by check or draft shall be deemed timely made if such heck or draftis mailed by the Trustee on or before the due date of such interest. Both theprinci al of and theinterest on this bond sha]] bear interest after their respecti,'e maturities until paid 0 until moneyssufficient for payment thereof have been deposited with the Trustee at the per ann m rate statedabove. The Indenture provides that a]] payments by the University or the Trustee t the person inwhose name a Bond is registered sha]] to the extent thereoffu]]y discharge and sati fy all liabilityfor the same. Any transferee of this bond takes it subject to all payments of princip I and interestin fact made with respect hereto. I

REFERENCE IS HEREBY MADE TO THE FURTHER PROf SIONS OF THIS SERIES 2006 BONP SET FORTH ON THE REVERSE HEREOF, WHIC FURTHER

PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET

FORTH HERE.

This bond is one of a duly authorized issue of bonds (herein calJed the "Bonds")issuable in series without express limit as to principal amount under a Trust Inden re dated as ofFebruary 15, 1996, as heretofore supplemented and as supplemented by a Fifth upplementalTrust Indenture (the Trust Indenture, as so supplemented, being herein calJed the "Indenture"),between the University and The Bank of New York Trust Company, N.A., New York (hereincalJed the "Trustee"). The principal of and the interest on the Bonds are payable solely out ofand are secured by a lien upon and pledge of certain fees from students levied by t e University(herein called the "Pledged Revenues") and shalJ not be payable from any 0 her funds orrevenues. Payment of the principal of and the interest on the Bonds is secured, pro rata andwithout preference or priority of one Bond over another or of the Bonds of any 0 e series overthe Bonds of any other, by a valid pledge of the revenues out of which they are payable.

Reference is hereby made to the Indenture for a description of the nature andextent of the security afforded thereby, the rights and duties of the University and tbe Trusteewith respect thereto, the rights of the holders of the Bonds and the terms and condit ons on whichadditional series of Bonds may be issued. The Indenture provides, inter alia, (a) th t in the eventof default by the University in the manner and for the time therein provided, the Trustee maydeclare the principal of and the interest accrued on this bond immediately due and payable,whereupon the same shall thereupon become immediately due and payable and the Trustee shallbe entitled to pursue the remedies provided in the Indenture, (b) that the holder of t is bond shallhave no right to enforce the provisions of the Indenture except as provided therein nd then onlyfor the equal and pro rata benefit of the holders of all the Bonds, and (c) that if this ond shall notbe presented for payment when due (whether by maturity or otherwise) and if funds sufficient forsuch payment shall have been made available to the Trustee therefore, all Ii bility of theUniversity to the holder of such bond and all rights of such holder against the Un versity undersuch bond or under the Indenture shall cease and terminate and that the sole right f such holder

10

shall thereafter be against the said funds so made available, which the Trustee is required to setaside and hold, subject to any applicable escheat or other similar law, for the benefit of suchholder. The Indenture also provides that the University and the Trustee, with the written consentof the holders of not less than a majority in aggregate principal amount of the Bonds thenoutstanding under the Indenture, may at any time and from time to time amend the Indenture orany indenture supplemental thereto, provided that no such amendment shall (I) without theconsent of the holder of each Bond affected, reduce the principal of, the rate of interest on anyBond, or (2) without the consent of the holders of all the Bonds then outstanding under theIndenture, extend the maturity of any installment of principal or interest on any of the Bonds,make any change in the schedule of required sinking fund or other similar payments with respectto any series of the Bonds, create a lien or charge on the Pledged Revenues ranking prior to or(except in connection with the issuance of additional parity bonds under the Indenture) on aparity with the lien or charge thereon contained in the Indenture, effect a preference or priority ofany Bond over any other Bond or reduce the aggregate principal amount of Bonds the holders ofwhich are required to consent to any such amendment. ;",;1 ;

The series of bonds of which this is one is designated Series 12006 and isauthorized to be issued in the aggregate principal amount of $100,000,000. .! ,

1 ,

Those of the Series 2006 Bonds having a stated maturity on December 1,2017, orthereafter shall be subject to redemption and payment by the University, at the option of theUniversity, as a whole or in part on December 1, 2016, and on any date thereafter (but ifredeemed in part, (i) of such maturity or maturities as the University shall designate, and if lessthan all the Series 2006 Bonds of a single maturity are to be redeemed, those to be redeemed tobe selected by the Trustee by lot, and (ii) only in installments of $5,000 or any integral multiplethereof), at and for a redemption price equal to the par or face amount thereof plus accruedinterest to the date fixed for redemption.

The Series 2006 Bonds having a stated maturity in 2036 shall be subject toscheduled mandatory redemption commencing December 1. 2032. but only in the dates andamounts set forth in the Indenture (with those to be redeemed to selected by the Trustee by lot) atand for a redemption price. with respect to each such Series 2006 Bond (or portion thereof)redeemed, equal to the principal amount thereof plus accrued interest to the date fIXed forredemption, but only to the extent required by the Indenture.

The Series 2006 Bonds are not general obligations of the University, and thecovenants and representations herein contained or contained in the Indenture do not and shallnever constitute a personal or pecuniary liability or charge against the general credit of theUniversity. The Series 2006 Bonds are not obligations or debts of the State of Alabama nor arethe faith and credit of said state pledged for payment thereof, and neither the principal of norinterest on said bonds is payable out of any moneys provided for or appropriated to theUniversity by the State of Alabama.

I t is hereby certified that all conditions. actions and things required by theConstitution and laws of Alabama to exist. be perf~nned and happen precedent to or in theissuance of this bond do exist. have been performed and have happened in due and legal fonn.

The Bonds are issuable only as ful1y registered bonds in the denomination of$5,000 or any integral multiple thereof. Provision is made in the Indenture for the exchange ofBonds for a like aggregate principal amount of Bonds of the same maturity and interest rate andin an authorized denomination, all as may be requested by the holder surrendering the Bond orBonds to be so exchanged and upon the terms and conditions specified in the Indenture.

This bond is transferable by the registered holder hereof in person, or by dulyauthorized attorney, on1y on the registry books of the Trustee pertaining to the Bonds and onlyupon surrender of this bond to the Trustee for cancellation, and upon any such transfer a newBond of like tenor herewith will be issued to the transferee in exchange therefore, all as moreparticularly provided in the Indenture; Each holder, by receiving and accepting this bond, sha11consent and agree and shall be estopped to deny that, insofar as the University and the Trusteeare concerned, this bond may be transferred on1y in accordance with the provisions of theIndenture.

The Trustee shall not be required so to transfer or exchange this bond during theperiod of fifteen days next preceding any interest payment date with respect thereto.

Execution by the Trustee of its authentication certificate hereon is essential to thevalidity hereof and is conclusive of the due issue hereof under the Indenture.

IN WITNESS WHEREOF, the University has caused this bond to be executedin its name and behalf with the signature of its President, has caused a facsimile of its corporateseal to be hereunto imprinted, has caused this bond to be attested by the signature of theSecretary of its Board of Trustees, and has caused this bond to be dated as of December 1,2006.

UNIVERSITY OF SOUTH ALABAl\IA

I ByPresident

University of South AlabamaAttest:

Secretary of theBoard of Trustees

12

Form of Trustee's Authentication Certificate

Date of Authentication and Registration:

The within bond is one of those described in the within-mentioned TrustIndenture.

THE BANK OF NEW YORK TRUST COMP ANY ~ N.A.,Trustee I

I ByIts Authorized Officer

13

Form of Assignment

For value received, the undersigned hereby sell(s), assign(s) and transfer(s) untothe within bond and hereby irrevocably constitute(s)

and appoint(s) attorney, with fullpower of substitution in the premises, to transfer this bond on the books of the within-mentionedTrustee.

DATED this

NOTE: The signature on this assignment must correspond \\,ith the name of the registered owneras it appears on the face of the within Bond in every particular, without alteration, enlargementor change whatsoever.

Signature guaranteed:

(Bank, Trust Company or Finn)*

By(Authorized Officer)

Its Medallion Number:* Signature(s) must be guaranteed by an eligibleguarantor institution which is a member of arecognized signature guarantee program, i.e.,Securities Transfer Agents Medallion Program(STAMP), Stock Exchanges Medallion Program(SEMP), or New York Stock Exchange MedallionSignature Program (MSP).

14

Section 1.5 Execution and Delivery of the Series 2006 Bonds. The Series 2006Bonds shall be forthwith executed and delivered to the Trustee and shall be authenticated anddelivered by the Trustee from time to time upon receipt by the Trustee of an order signed onbehalf of the University by its President, requesting such authentication and delivery anddesignating the person or persons to receive the same or any part thereof.

Section 1.6 Application of Proceeds from Sale of Series 2006 Bonds. The entireproceeds derived by the University from the sale of the Series 2006 Bonds shall be paid to theTrustee and promptly thereafter applied by the Trustee for the following purposes and in thefollowing order:.- .--

(a) accrued interest on the Series 2006 Bonds shall be paid into the Bond Fundand applied for payment of the interest due on the Series 2006 Bonds on June 1, 2007;

(b) the sum of $23,560,327 shall be deposited into the Bond Fund and applied forthe redemption of the Refunded Bonds on February] 8, 2007; and

(c) the balance of the principal proceeds derived from the sale of the Series 2006Bonds shall be paid into the Construction Fund created in Article III hereof and applied forpayment of the costs of the Improvements and the expenses of issuing the Series 2006 Bonds.

ARTICLE II

CONCERNING THE CODE

Section 2.1 Concerning the Code. (a) General. The University recognizes that theCode imposes certain conditions to the exemption from Federal income taxation of interestincome on the Series 2006 Bonds. Accordingly, the University agrees that it will continuallycomply with all requirements imposed by the Code as a condition to the exemption from Federalincome taxation of the interest income on the Series 2006 Bonds. With respect to any questionarising under this Section 2.1, the University may rely upon an opinion of nationally recognizedbond counsel acceptable to it.

(b) Bonds not to be "Private Activity Bonds". The University will notapply the proceeds of the Series 2006 Bonds in a manner that would cause any of the Bonds tobe "private activity bonds" within the meaning of Section 141 (a) of the Code.

(c) Concerning the Arbitrage Pro\'isions of the Code. The Universityagrees that it will comply with all provisions of the Code necessary to preclude the Series 2006Bonds being considered "arbitrage bonds" within the meaning of Section 148 of the Code.

(d) Provisions Respecting Registration of Series 2006 Bonds to Complywith Provisions of Code. The University and the Trustee recognize that the provisions of theCode require that the Series 2006 Bonds be in "registered form" and that, in general, each Series2006 Bond must be registered as to both principal and interest and any transfer of any Series2006 Bond must be effected only by the surrender of the old Bond and either by the reissuance of

15

the old Bond to a new Holder or the issuance ofa new Bond to a new Holder. The Trustee mayrely upon an opinion of nationally recognized bond counsel with respect to any question whichmay arise pertaining to the transfer, exchange or reissuance of Series 2006 Bonds.

ARTICLE III

CONSTRUCTION FUND

Section 3.1 2006 Construction Fund. There is hereby created a special trust fund,the full name of which shall be the"2006 Construction Fund," for the purpose of Pf Viding funds for acquisition and construction of the Improvemen5s. The President of the U iversity may

designate one of more banks as the depository, custodian and disbursing agent for the 2006Construction Fund. Moneys shall be paid into the 2006 Construction Fund in ac ordance withthe provisions of Section 1.3 hereof. The moneys in the 2006 Construction Fun shall be paidout of time to time upon order of the University. Moneys on deposit in the con ftruction Fund may be used to pay the expenses of issuing the Series 2006 Bonds and to pay cost of acquiring,

providing and constructing the Improvements, including reimbursement to the niversity ofamounts heretofore advanced by the University in payment of such costs.

Section 3.2 Investment of 2006 Construction Fund. In the event of investment ofmoneys on deposit in the 2006 Construction fund, the investment, the securities or !certificates inwhich such moneys are so invested, together with all income derived therefrom, shall become apart of the 2006 Construction Fund to the same extent as if they were mon~ys originallydeposited therein. Any depository for the 2006 Construction Fund may at any time and fromtime to time upon the direction of the University sell or otherwise convert into dash and suchsecurities or certificates whereupon the net proceeds therefrom shall become a patt or the 2006Construction Fund. East depository shall be fully protected in making any such in'testment, saleor conversion in accordance with the provisions of this section. In any determ~nation of theamount of moneys at any time forming a part of the 2006 Construction Fund, all such securitiesand certificates in which any portion of the 2006 Construction Fund is at the tim!e so investedshall be included therein at their then market value. Moneys on deposit in the Cons~ction Fundmay be invested in Eligible Certificates of Federal Securities, including money

r arket funds

consisting solely of Federal Securities. "

ARTICLE IV

SPECIAL PROVISIONS PERTAINING TOFINANCIAL GUARANTY INSURANCE POLICY

Section 4.1 Payment Procedure Pursuant to Financial Guaranty InsurancePolicy. As long as the Financial Guaranty Insurance Policy shall be in full force andeffect, the University, the Trustee and any Paying Agent agree to comply with the followingprOVISIons:

(a) At least one (1) business day prior to all Interest Payment Dates theTrustee or Paying Agent, if any, will detennine whether there will be sufficient funds in theFunds and Accounts to pay the principal of or interest on the Series 2006 Bonds on I such Interest

16

Payment Date. If the Trustee or Paying Agent, if any, detennines that there will be insufficientfunds in such Funds or Accounts, the Trustee or Paying Agent, if any, shall so notify AmbacAssurance. Such notice shall specify the amount of the anticipated deficiency, the Series 2006Bonds to which such deficiency is applicable and whether such Series 2006 Bonds will bedeficient as to principal or interest, or both. If the Trustee or Paying Agent, if any, has not sonotified Ambac Assurance at least one (1) business day prior to an Interest Payment Date,Ambac Assurance will make payments of principal or interest due on the Series 2006 Bonds onor before the first (1st) business day next following the date on which Ambac Assurance shallhave received notice of nonpayment from the Trustee or Paying Agent, if any.

(b) the Trustee or Paying Agent, if any, shall, after giving notice to AmbacAssurance as provided in (a) above, make available to Ambac Assurance and, at AmbacAssurance's direction, to The Bank of New York, in New York, New York, as insurance trusteefor Ambac Assurance or any successor insurance trustee (the "Insurance Trustee"), theregistration books by the Trustee or Paying Agent, if any, and all records relating to the Fundsand Accounts maintained under this Fifth Supplemental Indenture.

(c) the Trustee or Paying Agent, if any, shall provide Ambac Assurance andthe Insurance Trustee with a list of registered owners of Series 2006 Bonds entitled to receiveprincipal or interest payments from Ambac Assurance under the tenns of the Financial GuarantyInsurance Policy, and shall make arrangements with the Insurance Trustee (i) to mail checks ordrafts to the registered owners of Series 2006 Bonds entitled to receive full or partial interestpayments from Ambac Assurance and (ii) to pay principal upon the Series 2006 Bondssurrendered to the Insurance Trustee by the registered owners of Series 2006 Bonds entitled toreceive full or partial principal payments from Ambac Assurance.

(d) the Trustee or Paying Agent, if any, shall, at the time it provides notice toAmbac Assurance pursuant to (a) above, notify registered owners of Series 2006 Bonds entitledto receive the payment of principal or interest thereon from Arnbac Assurance (i) as to the fact ofsuch entitlement, (ii) that Ambac Assurance will remit to them all or a part of the interestpayments next coming due upon proof of Holder entitlement to interest payments and delivery tothe Insurance Trustee, in form satisfactory to the Insurance Trustee, of an appropriate assignmentof the registered owner's right to payment, (iii) that should they be entitled to receive fullpayment of principal from Ambac Assurance, they must surrender their Series 2006 Bonds(along with an appropriate instrument of assignment in form satisfactory to the Insurance Trusteeto pennit ownership of such Series 2006 Bonds to be registered in the name of AmbacAssurance) for payment to the Insurance Trustee, and not the Trustee or Paying Agent, if any,and (iv) that should they be entitled to receive partial payment of principal from AmbacAssurance, they must surrender their Series 2006 Bonds for payment thereon first to the Trusteeor Paying Agent, if any, who shall note on such Series 2006 Bonds the portion of the principalpaid by the Trustee or Paying Agent, if any, and then, along with an appropriate instrument ofassignment in form satisfactory to the Insurance Trustee, to the Insurance Trustee, which willthen pay the unpaid portion of principal.

(e) in the event that the Trustee or Paying Agent, if any, has notice that anypayment of principal of or interest on an Obligation which has become Due for Payment andwhich is made to a Holder by or on behalf of the University has been deemed a preferential

17

transfer and theretofore recovered from its registered owner pursuant to the United StatesBankruptcy Code by a trustee in bankruptcy in accordance with the final, nonappealable order ofa court having competent jurisdiction, the Trustee or Paying Agent, if any, shall, at the timeAmbac Assurance is notified pursuant to (a) above, notify all registered owners that in the eventthat any registered owner's payment is so recovered, such registered owner will be entitled topayment from Ambac Assurance to the extent of such recovery if sufficient funds are nototherwise available, and the Trustee or Paying Agent, if any, shall furnish to Ambac Assuranceits records evidencing the payments of principal of and interest on the Series 2006 Bonds \\'hichhave been made by the Trustee or Paying Agent, if any, and subsequently recovered fromregistered owners and the dates on which such payments were made.

0 (f)- _-0 inaddition' to those rights granted -Ambac Assurance under this Fifth

Supplemental Indenture, Ambac Assurance shall, to the extent it makes payment of principal ofor interest on Series 2006 Bonds, become subrogated to the rights of the recipients of suchpayments in accordance with the terms of the Financial Guaranty Insurance Policy, and toevidence such subrogation (i) in the case of subrogation as to claims for past due interest, theTrustee or Paying Agent, if any, shall note Ambac Assurance's rights as subrogee on theregistration books of the Obligor maintained by the Trustee or Paying Agent, if any, upon receiptfrom Ambac Assurance of proof of the payment of interest thereon to the registered owners ofthe Series 2006 Bonds, and (ii) in the case of subrogation as to claims for past due principal, theTrustee or Paying Agent, if any, shall note Ambac Assurance's rights as subrogee on theregistration books maintained by the Trustee or Paying Agent, if any, upon surrender of theSeries 2006 Bonds by the registered owners thereof together with proof of the payment ofprincipal thereof.

Section 4.2 Other Provision Pertaining to the Financial Guaranty InsurancePolicy.

(a) Any provision oftrus Fifth Supplemental Indenture expressly recognizing orgranting rights in or to Ambac Assurance may not be amended in any manner which affects therights of Ambac Assurance hereunder without the prior written consent of Ambac Assurance.Ambac Assurance reserves the right to charge the University a fee for any consent or amendment tothe Fifth Supplemental Indenture while the Financial Guaranty Insurance Policy is outstanding.

(b) Unless otheIWise provided in this Section 4.2, Arnbac Assurance's consentshall be required in lieu of Holder consent, when required, for the following purposes: (i) executionand delivery of any amendment, supplement. change or modification to the Fifth SupplementalIndenture, (ii) removal of the Trustee or Paying Agent and selection and appointment of anysuccessor trustee or paying agent. and (iii) initiation or approval of any action not described in (i) or(ii) above which requires Holder consent.

(c) Any reorganization or liquidation plan with respect to t1le University must beacceptable to Ambac Assurance. In the event of any reorganization or liquidation, AmbacAssurance shall have the right to vote on behalf of all Holders who hold Ambac Assurance-insuredSeries 2006 Bonds absent a default by Ambac Assurance under the applicable Financial GuarantyInsurance Policy insuring such Series 2006 Bonds.

18

(d) Anything in this Fifth Supplemental Indenture to I the contrarynotwithstanding, upon the occulTence and continuance of an event of default as defined herein,Ambac Assurance shall be entitled to control and direct the enforcement of all rights and remediesgranted to the Holders or the Trustee for the benefit of the Holders under this Fifth SupplementalIndenture.

(e) Anything in this Fifth Supplemental Indenture to the contrarynotwithstanding, upon the occurrence and continuance of an event of default as defined herein,Ambac Assurance shall be entitled to control and direct the enforcement of all rights and remediesgranted to the Holders or the Trustee for the benefit of the Holders under this Fifth SupplementalIndenture, including, without limitation: (i) the right to accelerate the principal of the Series 2006Bonds as described in this Fifth Supplemental Indenture, and (ii) the right to annul any declarationof acceleration, and Arnbac Assurance shall also be entitled to approve all \\'aivers of events ofdefault.

(f) Upon the occurrence of an event of default, the Trustee may, with theconsent of Ambac Assurance, and shall, at the direction of Ambac Assurance or la majority inprincipal amount of the Holders with the consent of Ambac Assurance, by written notice to theUniversity and Ambac Assurance, declare the principal of the Series 2006 Bonds to be immediatelydue and payable, whereupon that portion of the principal of the Series 2006 Bonds thereby comingdue and the interest thereon accrued to the date of payment shall, without further action, becomeand be immediately due and payable, anything in this Fifth Supplemental Indenture or in the Series2006 Bonds to the contrary notwithstanding.

In the event that the maturity of the Series 2006 Bonds is accelerated, theBond Insurer may elect, in its sole discretion, to pay all or a portion of the accelerated principal andinterest accrued on such principal to the date of acceleration (to the extent unpaid by the Obligor)with respect to the Bonds, and the Bond Trustee shall accept such amounts. Upon payment of all ofsuch accelerated principal and interest accrued to the acceleration date as provided above, the BondInsurer's obligations under the Bond Insurance Policy shall be ful1y discharged.

Notwithstanding anything herein to the contrary, in the event that theprincipal and/or interest due on the Series 2006 Bonds shall be paid by Ambac AssuranceCorporation pursuant to the Financial Guaranty Insurance Policy, the Series 2006 Bonds shallremain Outstanding for all purposes, not be defeased or otherwise satisfied and not be consideredpaid by the Obligor, and the assignment and pledge of the Pledged Revenue and all covenants,agreements and other Series 2006 Bonds of the University to the registered owners shall conrinue toexist and shall run to the benefit of Ambac Assurance, and Ambac Assurance shall be subrogated tothe rights of such registered owners.

19

ARTICLE V

CONCERNING PLEDGED REVENUES;CONFIRl\1ATION OF INDENTURE, AS SUPPLEMENTED

Section 5.1 Confirmation of Indenture. All the tenns, covenants and conditions ofthe Indenture, as supplemented hereby, are hereby in all respects ratified and confirmed, and theIndenture as so supplemented shall continue in full force and effect.

Section 5.2 Confirmation of Pledges. The provisions of the Indenture, wherein thePledged Revenues are pledged for payment of all Bonds issued under the Indenture, are herebyratified and con[lm1ed ~ +

(b) The definition of "Pledged Revenues" as defined in the Indenture and ineach supplemental indenture heretofore executed and delivered, is hereby clarified and extendedto include, within the said definition, the application fees, the registration fees, change of coursefees and the out-of state fees received from students with respect to the registration andattendance at the University. The definition of "Pledged Revenues" is hereby amended, with theintent to subject to the lien of the Indenture, the new facilities fee of $50 per student persemester, which fee was authorized by the Board on December 4, 2003 and which fee becomeseffective in the Fall 2006. The pledge of the Pledged Revenues pledged for payment of Bondsissued under the Indenture, as clarified and amended herein, is hereby ratified and confinned.

Section 5.2 Construction of Fifth Supplemental Trust Indenture. No provisions ofthis Fifth Supplemental Trust Indenture shall be construed to limit or restrict, either expressly orimpliedly, the obligations of the University contained in the Indenture or the powers of theTrustee thereunder, nor shall the provisions of this Fifth Supplemental Trust Indenture beconstrued in any manner inconsistent with the provisions of the Indenture or in any manner thatwould adversely affect the interest of the Holders of any Bonds.

Section 5.4 Severability. In the event that any provision hereof shall be held in,'alidor unenforceable by any court of competent jurisdiction. such holding shall not invalidate orrender unenforceable any other provision hereof.

20

IN WITNESS WHEREOF, the University has caused this Fifth SupplementalTrust Indenture to be executed in its name and behalf by the President of the University, hascaused its corporate seal to be hereunto affixed, and has caused this Fifth Supplemental TrustIndenture to be attested by the Secretary of its Board of Trustees, and the Trustee has caused thisFifth Supplemental Trust Indenture to be executed in its name and behalf, has caused itscorporate seal to be hereunto affixed and has caused this Fifth Supplemental Trust Indenture tobe attested, all by its duly authorized officers, and the University and the Trustee have causedthis Fifth Supplemental Trust Indenture to be so executed in several counterparts, each of whichshall be deemed an original, and have caused this Fifth Supplemental Trust Indenture to be datedas of December I, 2006, although actually executed and delivered on "

UNIVERSITY OF SOUTH ALABAl\1A

ByPresident

Attest:

-Secretary of the Board of Trustees

THE BANK OF NEW YORKTRUST COMPANY, N.A.

By

Its

Attest

Its

21

STATE OF ALABAMA

COUNTY OF MOBilE

I, , a Notary Pub]ic in and for saidcounty in said state, hereby certify that V. Gordon Moulton, whose name as the President of theUNIVERSITY OF SOUTH ALABAI\:1A, a public body corporate under the Jaws of Alabama,is signed to the foregoing instrument and who is known to me, acknowledged before me on thisday that, being informed of the contents of the within instrument, he, as such officer and with fu]]authority, execu ted the same vo]untarily for and as the act of said public corporation.

GIVEN--under--my--hand-and--official- seal-- of- office, this + day-- of--, 2006.

Notary Public

[NOTARIAL SEAL]

1/1523857.5 22

STATE OF ALABAMA

COUNTY OF JEFFERSON

I, , a Notary Public in and for said county in said state, herebycertify that , whose name as of The Bank of Ne York TrustCompany, N. -A~ in its capacity as Trustee under that certain Trust lndentur dated as ofFebruary 15, 1996, between it and the University of South Alabama, as suppleme ted, is signedto the foregoing instrument and who is known to me, acknowledged before me on this day that,being infonned of the contents of the within instrument, as such officer and with II authority,executed the same voluntarily for and as the act of said bank, in its capacity as trustee as--aforesaid:--

GIVEN under my hand and official seal of office, this -day of.

_,2006.

Notary Public

[NOTARIAL SEAL]

231/1523857.3

CONTINUING DISCLOSURE AGREEMENT

by

UNIVERSITY OF SOUTH ALABAl\1A

for the benefit of

BENEFICIAL OWNERS OF THEUNIVERSITY OF SOUTH ALABAMA

UNIVERSITY TUITION REVENUE REFUNDINGAND CAPITAL IMPROVEMENT BONDS

SERIES 2006DATED DECEMBER 1, 2006

1/1530012.1

CONTINUING DISCLOSURE AGREEMENT

This CONTINUING DISCLOSURE AGREEMENT (the "A reement") byUNIVERSITY OF SOUTH ALABAI\1A, a public corporation under the laws f the State ofAlabama (the "University"), for the benefit of the BENEFICIAL 0 :VNERS OFUNIVERSITY OF SOUTH ALABAI\1A UNIVERSITY TUITION REVENUEREFUNDING AND CAPITAL IMPROVEMENT BONDS, SERIES 2006, dated DecemberI, 2006, originally issued in the original aggregate principal amount of $10 ,000,000 (the

"Bonds"). i

RE CI TA'LS:

The Bonds are proposed to be issued by the University on or a out April 15,2004, and are subject to the provisions of Rule 15c2-12 (the ..Rule"), promu gated by theSecurities and Exchange Commission of the United States of America (the ..ommission")pursuant to the Securities Exchange Act of 1934. The University understands th t a failure ofthe University to comply with the provisions of this Agreement must be reported n accordancewith the Rule and must be considered by any broker, dealer or municipal securities dealer beforerecommending the purchase or sale of the Bonds in the secondary market and that uch a failuremay adversely affect the transferability and liquidity of the Bonds and their market rice.

NOW, THEREFORE, the University does hereby undertake and Jgree with theBeneficial O\\'I1ers of the Bonds as folJows: I

Section I. Pumose. This Agreement is being executed and del vered by theUniversity for the benefit of the Beneficial Owners of the Bonds and in order for th underwriterof the Bonds to be in compliance with SEC Rule 15c2-12(b)(5) (the "Rule"). As r quiredby theRule, this Agreement is enforceable by Beneficial Owners of the Bonds pursuant to the Indentureunder which the Bonds are issued (the "Indenture") and Section 9 of this Agreemen .

Section 2. Definitions. In addition to the definitions set forth it the Official

Statement with~p ~o the Bonds, which apply to any capitalized term used in thi Agreement,

the following capitalized terms shall have the following meanings:

"Beneficial Owner" shall mean any person which has the power, di

r eCtlY or indirectly, to vote or consent with respect to, or to dispose of ownership a , any

Bonds, including persons holding Bonds through nominees or depositories.

1/1530012.1 1

I

"Listed Events" shall mean any of the events with respect to the! Bonds listed in Section 5(a) of this Agreement.

"Municipal Securities Rulemaking Board" shall mean the MU[nicipal

Securities Rulemaking Board, whose address is:

Municipal Securities Rulemaking Board1818 N Street, N.W.Suite 800Washington, D.C. 20036-2491Tel: (202) 223-9347Fax: (202) 872-0347

"National Repository" shall mean any Nationally Recognized MupicjpalSecurities Information Repository for purposes of the Rule. I

"Repository'Repository .

shall mean each National Repository and each I State

"Rule" shall mean Rule 15c2-12(b)(5) adopted by the SeCUriti~s andExchange Commission ("SEC") under the Securities Exchange Act of 19 4 (the"1934 Act").

"State Repository" shall mean any public or private repository or en~ity asmay be designated by the State of Alabama as a state repository for the pu~se ofthe Rule. As of the date of this Agreement, there is no State Repository. I

"University Annual Report" shall mean any Annual Report provided bythe University pursuant to, and as described in, Sections 3 and 4 olf this

Agreement.

Section 3. Undertaking. The University hereby agrees, in accbrdance withthe provisions of the Rule, to provide ?r ca.use to be pro~ided, ?ot later than six mqnths a~er theclose of each fiscal year of the UnIversIty, commenCIng WIth the fiscal year that wIll endSeptember 30, 2007, to each Repository a University Annual Report in compli~nce with theprovisions of Section 4 of this Agreement. The University further agrees, in accordance with theprovisions of the Rule, to file in a timely manner a notice of any failure so to provi4e or cause tobe provided the University Annual Report or any part thereof, such notice to be filed with eachNational Repository or the Municipal Securities Rulemaking Board and with the StateRepository .

(a)Section 4. UniversitY ReRort.contain or incorporate by reference the following:

The University Annual Report shall

1/1530012.1 2

(1) the audited financial statements of the University and I notes

thereto;

(2) the revenues from the general tuition fees the proceeds ofI WhiCh

are pledged for payment of the Bonds;

(3) the undergraduate enrollment by division, and graduat,t and

professional enrollment by division, for the fall term commencing with"n the

fiscal year covered by the University Annual Report;

(4)College fees;

the schedule of undergraduate and graduate fees and ~edical

(5) the receipts from application fees, course fees, registratiod fees,change course fees and out-of-state fees and the student facilities fee; I

(6) the number of students, by geographic classification, attendiO g the

fall tenn commencing within the fiscal year covered by the University nnual

Report;

(7) the number of degrees awarded, by type of degree, 1 r the

academic year ending within the fiscal year covered by the University nnual

Report; and

(8) the direct State appropriations authorized and received, the~State appropriations received for employee benefits and the total State appropri tions

received.

(b) Anyone or more of the items listed above may be included by r ference fromother documents, including official statements of debt issues of the University or elated publicentities, which have been submitted to each of the Repositories. If the documen included byreference is a final official statement, it must be available from the Munici al SecuritiesRulemaking Board. The University shall clearly identify each such other documen so includedby reference in the University Annual Report.

Section 5.this Agreement:

Events. (a) The following constitute Listed Events for purposes of

(1) principal and interest payment delinquencies,

(2) non-payment related defaults,

(3) unscheduled draws on debt service reserves reflectitg financialdifficulties,

1/1530012.1 3

(4) unscheduled draws on credit enhancements reflecting financ.al difficulties,

(5) substitution of credit or liquidity providers, or their failure td perform,

(6)

(7)

adverse tax opinions or events affecting the tax-exempt status of theBonds, Imodifications to right. of holders of the Bonds,

(8) calls for redemption, bl ther than scheduled mandatory redetption, of theBonds" I

defeasances,

release, substitution, 1r sale of property securing repayment rf the Bonds,and ,

rating changes.

(b) Whenever the University obtains knowledge of the occurren~e ora ListedEvent, the University shall as soon as possible take such steps as are necessary to detennine ifsuch event would constitute material infonna~ion within the meaning of the 1934 A~t.

(c) If the University has1etennined that the occurrence of a Lit ted Event ismaterial. the University shall file a notice 0 such occurrence with each National epository orthe Municipal Securities Rulemaking Board ~nd with each State Repository.

Section 6. Additional Information. Nothing in this Agreem~nt shall bedeemed to prevent the University from disseminating any other information, using ~he means ofdissemination set forth in this Agreement Of any other means of communication,[or includingany other information in any University AnnJal Report or notice of occurrence of a isted Event,in addition to that which is required by this ~greement. If the University chooses t~ include anyinfo.~ation in any. Un.iversi~ Annual R~prrt or ~otice of occurrence ?f a .LiSt d Event inadditIon to that whIch IS specifically requlrep by thIs Agreement, the UnIversity S all have noobligation under this Agreement to update such information or include it in any furn e UniversityAnnual Report or notice of occurrence of a Listed Event. I

...s~£~iQn.1. Tenni~ati~n. Th~ University. reserves the. right to ~enninate itsoblIgatIon to provide annual financIal mf°"11atlon and notices of matenal events,as set forthabove, if and when the University no longer remains an obligated person with r spect to theBonds within the meaning of the Rule. I

Section 8. Amendment. Waiver. Notwithstanding any other pro,*ision of thisAgreement, the University may amend this Agreement and any provision of this A~eement may

1/1530012.1 4

be waived, if such amendment or waiver is supported by an opinion of counsel extert in federalsecurities laws, to the effect that such amendment or waiver wou1d not cause th undertakingsherein to vio1ate the Rule taking into account any subsequent change in or official interpretationof the Rule.

Section 9. Default. (a) In the event of a failure of the Univers'ty to providethe Repositories the University Annual Report as required by this Agreement, he BeneficialOwner of any Bond may take such actions as may be necessary and appropri te, includingseeking mandamus or specific perfomlance by court order. to cause the Univers ty to complywith its obligations to provide lTniversity Annual Reports under this Agreement.

(b) A default under this Agreement shall not be deemed a defaUf t with respect

to the Bonds under the Indenture or otherwise, and the sole remedy under this Ag ement in the

event of any failure of the University to comply with this Agreement shall be an act.on to compel

perfonnance.

(c) The University shall not be in default in any of its undertaki gs under thisAgreement until ten days after it shall have received notice from a Beneficial 0 ner that suchdefault has occurred; provided, that such period shall be extended to thirty days if upon receiptof such notice, the University has begun to comply with the provisions hereof and has taken allsteps then available to it to assure such compliance but, because of circumstanc s beyond theUniversity's control, it is unable to accomplish such compliance within the ten-day eriod.

Section 10. Certain Parties Not Liable: Expenses. None f the groupcomprised of the trustee under the Indenture, the paying agent for the Bonds, the re istrar for theBonds, the depository for any of the special funds with respect to the Bonds, the ndernTiter ofthe Bonds, the bond counsel delivering an approving opinion with respect to t e Bonds, theunderwriter's counsel and the counsel for the University shall have any liability or esponsibilityfor compliance by the University with its undertakings herein, and if the Universi obtains fromany person, firm, corporation or entity assistance in complying with its undertaki gs herein, itwill compensate such person, finn, corporation or entity in a reasonable and time y manner forsuch assistance as it may render to the University.

Section 11. Contract. This undertaking shall constitute a contraCrbetween theUniversity and the Beneficial Owners of the Bonds, but no other person, firm, c rporation orentity shall have any rights hereunder.

1/1530012.1 5

IN WITNESS WHEREOF, this Agreement has been duly authfrized by theUniversity and has been executed on behalf of the University by its President and ~ttested by theSecretary of its Board of Trustees, all as of the 9th day of January, 2007. I

UNIVERSITY OF SOUTH ALABAl\tA

-I -By -

Its President

Attest:

-

Secretary of Its Board of Trustees

61/1530012.1

RATINGS: Ambac Insurance: Mood)' 's: Aaa

Underlying: Moody's: A2

NEW ISSUE. BOOK-ENTRY ONLY See "RATINGS" herein

In the opinion of Bond Counsel. assuming continuing compliance by the University with the covenants selforth in

the Indenture herein referred to pertaining to certain requirements of the Internal Re,'enue Code of 1986. the

interest income on the Series 2006 Bonds will be excludable from gross income of the recipient thereof for Federal

income tax purposes. Ho)\'e\'er. see "Tax Exemption" herein for certain other Federal tax consequences to the

recipient of the interest income on the Series 2006 Bonds. In the opinion of Bond Counsel, the interest incolne on

the Series 2006 Bonds will be exempt from Alabama income taxation.

S100,000,000UNIVERSITY OF SOUTH ALABAMA

University Tuition Revenue Refunding andCapital Improvement Bonds

Series 2006Due: December 1, as shown hereinDated: December 1, 2006

SEE INSIDE COVER FOR SERIES, MATURITIES, INTEREST RATES AND PRICES OR YIELDS

The Series 2006 bonds are issued solely as fully registered bonds in a denomination of any integral multipleof $5,000. Principal is payable at the designated corporate trust office of Bank of New York Trust Company, N.A.,Bimlingham, Alabama, the Trustee. Interest (payable on June I, 2007, and on each December I and June Ithereafter) is payable by check mailed to the registered holder by the Trustee.

The Series 2006 Bonds are subject to redemption prior to maturity as described herein.

The Series 2006 Bonds will be special obligations of the University of South Alabama secured by apledge of and payable solely from certain fees levied by the University against students enrolled at theUniversity, as provided in the Indenture. Neither the Series 2006 Bonds nor the pledge of the said revenuesand other agreements provided in the Indenture shall be or constitute a general obligation of the Universityor an obligation of any nature \\'hatsoever of the State of Alabama, or be payable out of any moneysappropriated by the State to the Universit.)'.

Payment of the principal of and interest on the Series 2006 Bonds when due will be insured by a financialguaranty insurance policy to be issued by Ambac Assurance Corporation simultaneously with the delivery of theSeries 2006 Bonds. See "BOND INSURANCE" herein.

(Accrued interest from December 1~ 2006 to be added)

The Series 2006 Bonds are offered when, as and if issued by the University and received by theUnderwriters, subject to prior sale, to withdrawal or modifications of the offer ~'ithout notice, and to the approvalof legality of the Series 2006 Bonds by Bradley Arant Rose & White UP, Birmingham. Alabama, Bond Counsel. Itis expected that the Series 2006 Bonds in definitive form will be available for delivery in New York, New York, on or

about January 9, 2007.

MERCHANT CAPITAL, LLC.THE FRAZER LANIER COMPANYINCORPORATED

COMPASS BANKGARDNYR MICHAEL CAPITAL, INC.

PROTECTIVE SECURITIESA Division of ProEquities

RAYMOND JAMES ANDASSOCIATES, INC.

December 14,2006

$100,000,000UNIVERSITY OF SOUTH ALABAMA

Tuition Rt'J't'nut' Refunding and CapitallmproJ't'ment BondsSerit's .2006

Dated Dt'cembt'r I, .2006

Price orYield

Date of Maturity(December 1)

InterestRateAmount

202420252026202720282029203020312036

$5.600,000.005,885,000.006,190,000.006,505,000.00

6,840,000.007,190,000.007,560,000.007,945,000.00

46,285,000.00

5.00%5.005.005.005.005.005.005.005.00

4.09%4.114.124.134.144.154.164.174.18

SummalJ' Profile of the University of South Alabama(Please refer to the entire Official Statement)

The University was founded on May 9, 1963 by an act of the Legislature of Alabama. Today, the University is a

major institution of higher learning in the State. The University was admitted to membcrship in the Southern

Association of Colleges and Schools on December 4, 1968. Total enrollment for Fall 2006 is 13,090. Of those

students, 9,874 are classified as undergraduate students and 3,012 are enrolled in graduate or professional programs.

For the academic year ended June, 2006, the University awarded 2,222 degrees, of which 1,366 were Baccalaureate

Degrees, 714 Masters Degrees, 60 M.D. Degrees, 11 Ph.D. Degrees, and 71 Para-Professional Hcalth Degrees.

For the academic year ended June 2006, the University employed 729 full-time faculty persons. Approximately

46% of non-medical faculty are tenured. The University employs 5,148 persons in all categories. I

The main campus in Mobile, Alabama, consists of 1 I & major buildings, including hospital and medica! related

facilities. Those facilities include buildings providing 1,763 spaces available'for student residency on campus,

For its fiscal year ended September 30, 2006, the University received from Federal, State and private sources, grants

and contracts approximately $78,217,000 and an additional $101,203,000 from direct State of Alabama legislative

appropriations. Tuition and fees received during fiscal 2006 (net of scholarship allowances) was $47,236,000.

Total revenues from the University's Hospital and related medical facilities were $224,105,000. (Please see the

Audited Financial StatementsJor Fiscal 2006 attached to this Ojjicial Statement). \"~~l:il

Subsequent to the issuance of the Series 2006 Bonds, the total principal amount (including the current compounded

amount of Series 1999 Capital Appreciation Bonds) of indebtedness of the University payable from Pledge

Revenues are expected to be approximately $213,728,392 (the principal amount of the Series 2006 Bonds is subject

to change).

UNIVERSITY OF SOUTH ALABAMAADMINJSTRA TION

President V. Gordon Moulton

Trustees:

Mr. J. L. Chestnut, Jr.

Dr. Steven P. Furr

Mr. J. Cecil Gardner

The Honorable Samuel L. Jones

Mr. Donald L. Langham

Ms. Bettye R. Maye

Ms. Christie D. Miree

Mr. Mayer Mitchell

The Honorable Bryant Mixon

The Honorable James P. Nix

Mr. John M. Peek

Dr. Steven Stokes

Mr. Larry D. Striplin, Jr.

Mr. James A. Yance

0 ~

JAttorney ':;~'~;

Physician ~:"ii:~;¥[:~,

Attorney ":~c~;~, I;\\;j

Mayor, City of Mobile ;:it1

Labor Union Leader. Retired (1 ~*1',

Retired i;;;::~;&:;;1

Business Administration

Businessman, Mitchell Brothers, Inc.

Sheriff, Dale County, Alabama

Mayor, City ofFairhope, Retired

Attorney

Physician

Businessman

Attorney, Retired

Ex Officio:

Governor, State of AlabamaState Superintendent of Education

The Honorable Bob Riley

Dr. Joseph B. Morton

No dealer, brokrr, salesman or any other person has been authorized by the University, or the IJnder"Titers to give any inlormatiunor to make any representations olher than as contained in this Official Statement and, "given or made, such other information orrepresentations must not be relied upon as having been given or aulhorized by any of the foregoing. This Official Statemenl does notconstitute an offer to sell or the solicitation of an olTer to buy, nor shall there by any sale of the Series 2006 Bonds by any prrson, inany jurisdiction in whicb it is unlawful for such person to make such olTer, sulicitation or sale. The information and exprr!5ions ofopinion herein are subject to change ,,'itbout notice and neither the delivery of this Official Statement nor any sale made hereundershall, under any circumstances, creatr any inlplication that there has been no change in Ihe affairs of the University since Ihr datehereof.

TABLE OF CONTENTS

OFFICIAL STATEMENT

SI00,000,000UNIVERSITY OF SOUTH ALABAMAUniversity Tuition Revenue Refunding and

Capital Improvement BondsSeries 2006

Dated December I, 2006

INTRODUCTION

The purpose of this Official Statement which includes the cover page and the Exhibits is toprovide infonnation to all who may become owners of the $100,000,000 University of South Alabama UniversityTuition Revenue Refunding and Capital Improvement Bonds, Series 2006 (the "Series 2006 Bonds"). The Series2006 Bonds are being issued pursuant to the provisions of a Trust Indenture (the "indenture") between theUniversity of South Alabama and The Bank of New York Trust Company, N.A. (the "Trustee"), dated as ofDecember ], 2006. The Series 2006 Bonds, together with t\VO presently outstanding series of Bonds and anyAdditiona] Bonds which may hereafter be issued under the Indenture, are herein collectively referred to as the"Bonds."

Definitions of certain words and terms having initial capital letters used herein are defined in theIndenture or in the instrument or document in the description of which such word or term is used. Reference ishereby made to the full text of the documents and instruments briefly described herein which may be obtained fromthe Underwriters or from the University during the period of the offering.

The Governor, the State Superintendent of Education and the appointed trustees togetherconstitute a public body corporate under the name University of South Alabama (the "University"). The Universityis located in Mobile, Alabama, and its address is Mobile, Alabama 36688.

PURPOSEGeneral

General. The proceeds of the Series 2006 Bonds will be applied (a) to pay the costs of certaincapital improvements (hereinafter referred to), (b) to refund the outstanding Series 1996 Bonds (the "RefundedBonds"), and (c) to pay the expenses of issuing the Series 2006 Bonds.

Capital Improvements. Proceeds of the Series 2006 Bonds will be used to make capitalimprovements representing a portion of the University's five and ten-year capital improvement program. Generally,the capital improvements to be funded with the Series 2006 Bonds consist of construction of the Mitchell CancerInstitute, the Colleges of Nursing and Allied Health Professions building, a Student Recreation Center, the BellTower, the Engineering and Sciences building, a softball field, athletics fieldhouse, and improvements to campusentrances to include new portals; renovation of the Administration, Student Center and Alpha South buildings; andother capital improvements throughout the campus.

Refunding. A portion of the proceeds of the Series 2006 Bonds will be used to refund theRefunded Bonds. Contemporaneously with the issuance of the Series 2006 Bonds, the Board and the Bank of NewYork Trust Company, N.A. will enter into an Escrow Trust Agreement dated as of December 1,2006, into which theUniversity will deposit, out of proceeds of the Series 2006 Bonds, a cash amount sufficient to pay the principal,interest and call premium on the Refunded Bonds on the redemption date.

ESTIMATED USE OF PROCEEDS

The proceeds from the sale of the Series 2006 Bonds are expected to be applied substantially asfollows:

Sources

$100,000,000.006.780.086.85

Par AmountOriginal Issue Premium

TOTAL $106,780,086.85

Uses

$ 81,876,803.2323,560,327.21

Capital ImprovementsRefundingCost of issuance (including underwriting discount,

Bond insurance and legal) 1.342.956.41

TOTAL $) 06,780,086.85

THE SERIES 2006 BONDS

General Description

The Series 2006 Bonds will be dated December I, 2006, and will bear interest (payable on June I,2007, and on each June 1 and December 1 thereafter until maturity) at the rates and will mature on December I inthe years and in the amounts set forth on the cover page of this Official Statement. The Series 2006 Bonds will beissuable only as fully registered bonds without coupons in the denomination of $5,000 or any integral multiplethereof.

Except as hereinafter described under "Book-Entry Only System", the principal of the Series 2006Bond will be payable at the designated corporate trust office of the Trustee upon presentation and surrender of theSeries 2006 Bonds as they mature. Interest on Series 2006 Bonds wiIJ be paid by the Trustee by check or draftmailed to the registered owner of the Series 2006 Bond at the address shown on the registry books of the Trusteepertaining to the Series 2006 Bonds.

No charge will be made for any exchange or transfer of the Series 2006 Bonds, but the registeredowner thereof shall be responsible for paying all taxes and other governmental charges relating to such transfer orexchange. In the event a Series 2006 Bond is lost, stolen, destroyed or mutilated, the University and the Trusteemay require satisfactory indemnification for the replacement thereof and may charge the holder or owner of suchbond with their fees and expenses in connection with the replacement thereof.

Redemption of the Series 2006 Bonds Prior to Maturity

(a) Optional Redemption. Those of the Series 2006 Bonds having a stated maturity onDecember 1,2017, and thereafter will be subject to redemption prior to their respective maturities, at the option ofthe University, as a whole or in part, on December 1,2016, and on any date thereafter (and if in part, in suchmaturities as the University shall select, and if less than all of a single maturity is to be redeemed those to beredeemed to be selected by the Trustee by lot) at and for a redemption price with respect to each Series 2006 Bond

2

(or principal ponion thereof redeemed) equal to the par or face amount of each Series 2006 Bond redeemed plusaccrued interest to the date fixed for redemption.

(b) Scheduled Mandatory Redemption of Term Series 2006 Bonds Due 2036. Those ofthe Series 2006 Bonds having a stated maturity in 2036 shall be subject to scheduled mandatory redemption andpayment, and the University shall redeem and pay such Series 2005 Bonds, in accordance with the schedulehereinafter set forth, at and for a redemption price, with respect to each such Series 2006 Bond redeemed, equal tothe principal amount thereof plus accrued interest thereon to the date fixed for redemption, but only in the followingaggregate principal amounts on December I in the following with those to be redeemed to be selected by the Trusteeby lot.

Redemption Date(December 1)

Principal AmountRequired to be Redeemed

$ 8,355,0008,785,0009,235,0009,705,000

10,205,000

20322033203420352036 (final maturity)

Notice of Redemption. Notice of redemption is required to be mailed by United States registeredor certified mail to the registered owner of each Series 2006 Bond not more than sixty (60) nor less than thirty (30)days prior to the date fixed for redemption at the address shown on the registry books of the Trustee. No furtherinterest will accrue after the date fixed for redemption on the principal of any Series 2006 Bond called forredemption upon notice duly given as provided in the Indenture and if payment therefor has been duly provided andin such event, any Series 2006 Bond (or portion thcreof) called for redemption will no longer be protected by theprovisions of the Indenture.

In the event that less than all of the outstanding principal of any Series 2006 Bond is to beredeemed, the registered owner thereof shall surrender the Series 2006 Bond that is to be prepaid in part to theTrustee in exchange, without expense to the owner, for a new Series 2006 Bond of like tenor except in a principalamount equal to the unredeemed portion of the Series 2006 Bond.

Boon-Entry Only System

The Series 2006 Bonds will be issued as fully-registered Bonds in the name of Cede & Co., asnominee of DTC, as registered owner of the Series 2006 Bonds. Purchasers of such Series 2006 Bonds will notreceive physical delivery of Series 2006 Bond certificates. For purposes of this Official Statement, so long as all ofthe Series 2006 Bonds are in the custody of DTC, references to Series 2006 Bondholders or Owners shall meanDTC or its nominee.

DTC will act as securities depository for the Series 2006 Bonds. The Series 2006 Bonds will beissued as fully-registered securities in the name of Cede & Co., DTC's partnership nominee ("Cede") or such othernominee as may be requested by an authorized representative of DTC. One fully-registered Series 2006 Bondcertificate will be issued for each maturity of the Series 2006 Bonds, in the aggregate principal amount of suchmaturity, and will be deposited with DTC.

DTC is a limited-purpose trust company organized under the New York Banking Law, a "bankingorganization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a"clearing corporation" within the meaning of the New York Unifonn Commercial Code and a "clearing agency"registered pursuant to the provisions of Section 17 A of the Securities Exchange Act of 1934, as amended. DTCholds securities that its participants (the "Direct Participants") deposit with DTC. DTC also facilitates post-tradesettlement among Direct Participants of sales and other securities transactions in deposited securities, throughelectronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates theneed for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities

3

brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is o"lled by anumber of Direct Participants of DTC and members of the National Securities Clearing Corporation, Fixed IncomeClearing Corporation, and Emerging Markets Clearing Corporation (NSCC, FICC, and EMCC, also subsidiaries ofDTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange, LLC, and the NationalAssociation of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. andnon-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through ormaintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants").DTC has Standard & Poor's highest Rating: AAA. The DTC Rules applicable to its Direct and Indirect Pal1icipantsare on file with the Securities and Exchange Commission. More infonnation about DTC can be found at~dtcc.com and ~~:!~9.r£.

Purchases of Series 2006 Bonds, in the denomination of $5,000 principal amount or any integralmultiple of $5,000 in excess thereof, under the DTC system must be made by or through Direct Participants, whichwill receive a credit for the Series 2006 Bonds on DTC's records. The ownership interest of each actual purchaserof each Series 2006 Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Pal1icipants'records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Ownersare expected, however, to receive written confirmations providing details of the transaction, as well as periodicstatements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered intothe tTansaction. Transfers of ownership interests in the Series 2006 Bonds are to be accomplished by entries madeon the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will notreceive certificates representing their ownership interests in Series 2006 Bonds, except in the event that use of thebook-entry system for the Series 2006 Bonds is discontinued.

To facilitate subsequent transfers, all Series 2006 Bonds deposited by Direct Participants withDTC are registered in the name of DTC's partnership nominee, Cede, or such other nominee as may be requested byan authorized representative of DTC. The deposit of Series 2006 Bonds with DTC and their registration in the nameof Cede or such other DTC nominee does not effect any change in beneficial ownership. DTC has no knowledge ofthe actual Beneficial Owners of the Series 2006 Bonds; DTC's records reflect only the identity of the DirectParticipants to whose accounts such Series 2006 Bonds are credited, which mayor may not be the BeneficialOwners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings onbehalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by DirectParticipants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial O\\'nerswill begoverned by arrangements among them, subject to any statutory or regulatory requirements as may be in effect fromtime to time.

Redemption notices shall be sent to DTC. If less than all of the Series 2006 Bonds arc beingredeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such Series2006 Bonds to be redeemed.

Neither DTC nor Cede (nor any other DTC nominee) will consent or vote with respect to Series2006 Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usualprocedures, DTC mails an Omnibus Proxy to the Board as soon as possible after the record date. The OmnibusProxy assigns Cede's consenting or voting rights to those Direct Participants to whose accounts the Series 2006Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Principal, redemption price and interest payments on the Series 2006 Bonds will be made by theTrustee to Cede or such other nominee as may be requested by an authorized representative of DTC. DTC'spractice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail infonnationfrom the Board or Trustee, on a payment date in accordance with their respective holdings shown on DTC's records.Payments by Direct and Indirect Participants to Beneficia] Owners will be governed by standing instructions andcustomary practices, as in the case with securities held for the accounts of customers in bearer fonT! or registered in"street name," and will be the responsibility of such Direct and Indirect Participant and not of DTC, the Trustee orthe Board, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment ofprincipal, redemption price and interest to Cede (or such other nominee as may be requested by an authorized

4

reprcsentative of DTC) is the responsibility of the Board or the Trustee, disbursement of such payments 10 DircctParticipants will be the responsibility of DTC, and disbursement of such payments to the Beneficial O\\'ners will bethe responsibility of Direct and Indirect Participants.

NEITHER THE CITY NOR THE BANK WILL HAVE ANY RESPONSIBILITY OROBLIGA TION TO SUCH PARTICIPANTS, OR TO THE PERSONS FOR WHOM THEY ACT AS NOMINEESWITH RESPECT TO THE SERIES 2006 BONDS, OR TO ANY BENEFICIAL OWNER IN RESPECT OF THEACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECTPARTICIPANT, THE PAYMENT BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANTOF ANY AMOUNT IN RESPECT OF THE PRINCIPAL OR REDEMPTION PRICE OF OR INTEREST ON THESERIES 2006 BONDS, ANY NOTICE WHICH IS PERMITTED OR REQUIRED TO BE GIVEN TO SERIES2006 BONDHOLDERS UNDER THE AUTHORIZING ORDINANCE, THE SELECTION BY DTC OR ANYDIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY PERSON TO RECEIVE PA YMENTIN THEEVENT OF PARTIAL REDEMPTION OF THE SERIES 2006 BONDS WITH RESPECT TO LESS THAN ALLOF THE SERIES 2006 BONDS, OR ANY OTHER ACTION TAKEN BY DTC AS REGISTERED SERIES 2006BONDHOLDER.

For every transfer and exchange of the Series 2006 Bonds, the Beneficial Owner may be charged asum sufficient to cover any tax, fee or other governmental charge that may be imposed in relation thereto, and anyreasonable fees and expenses of the Trustee and the costs incurred in preparing Series 2006 Bond certificates.

DTC may discontinue providing its services as securities depository with respect to the Series2006 Bonds at any time by giving reasonable notice to the Board. In the event of the discontinuance ofthc book-entry system for the Series 2006 Bonds, Series 2006 Bond certificates will be printed and delivered and thefollowing provisions of the Indenture will apply: (i) principal of the Series 2006 Bonds will be payable uponsurrender of the Series 2006 Bonds at the designated office of the Trustee; (ii) Series 2006 Bonds may be transferredor exchanged for other Series 2006 Bonds of authorized denominations as set forth in the next succeeding twopar~graphs; and (iii) Series 2006 Bonds will be issued in denominations as described in the front portion of theOfficial Statement under "THE SERJES 2006 BONDS".

The Board may decide to discontinue use of the system of book-en try-only transfers through DTC(or a successor depository). In that event, Series 2006 Bond certificates will be printed and delivered to DTG.

SECURITY

General

The Series 2006 Bonds will be issued under the Indenture and will constitute limited obligationsof the University payable solely from and secured by a lien on and a pledge of the Pledged Revenues (hereinafterdefined) levied and collected by the University. The term "Pledged Revenues" is defined in the Indenture to meanthe amounts received by the University from General Fees and additional fees, if any, that may be subjected to thelien of the Indenture pursuant to a Supplemental Indenture. The term "General Fees" is defined in the Indenture tomean each fee now or hereafter levied by the University as a general tuition charge against students enrolled at theUniversity. The Supplemental Indenture under which the Series 2006 Bonds are issued will clarify the definition ofPledged Revenues to include the application fee, the out-of-state fee, the registration fee, and the building fee.

Excluding the Series 1996 Bonds which are to be refunded with proceeds of the Series 2006Bonds, two series of Bonds designated Series 1999 and Series 2004 (the "Outstanding Bonds") will remainoutstanding following the issuance of the Series 2006 Bonds. As of December 1,2006, the outstanding principal ofthe Outstanding Bonds was $113,698,392.

The Series 2006 Bonds are secured pro rata and on an equal lien basis one with the other, with theOutstanding Bonds and with any Additional Bonds that may be hereafter issued under and subject to the terms andconditions of the Indenture, by a pledge of the Pledged Revenues (the Outstanding Bonds, the Series 2006 Bondsand any Additional Bonds issued hereafter are hereinafter referred to collectively as the "Bonds").

5

The Bonds shall nevcr be payable from any funds at any time provided for or appropriated by theState of A labama. and shall not be a charge on the general credit or tax revenues of the State. Neither the State northe University shall be obligated, directly or indirectly, to contribute any funds, property or resources to the paymentof the Bonds except the Pledged Revenues.

Special Funds

The special funds are more fully described under the caption "Summary of Certain Provisions ofthe Indenture," below.

Additional Bonds

The Indenture authorizes the issuance of Additional Bonds, such as the Series 2006 Bonds, subjectto the provisions of the Indenture without express limit as to principal amount. See "Summary of Indenture,"infra, for coverage and other requirements. The Additional Bonds will be secured on a parity or equallicn basiswith the pledge of the Pledged Revenues for the benefit of all of the Bonds outstanding under the Indenture.

Debt Semce Requirements

The following table sets forth the debt service on the Series 1999 Bonds and the Series 2004Bonds as of September 30, 2006 (the end of Fiscal Year 2006 of the University) and the debt service on the Series2006 Bonds (excluding debt service on Series 1996 Bonds to be refunded):

OutstandingFiscal Year

(September 30)

Debt ServiceSeries 2006

Bonds


Bonds


BondsTotal Debt

Service

2007200820092010201120122013201420152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037

$2,500,0005,000,0005,000,0005,000,0005,000,0005,000,0005,000,0005,000,0005,000,0005,000,0005,000,0005,000,0005,000,0005,000,0005,000,0005,000,0005,000,0005,000,000

10,460,00010,457,87510,461,00010,458,62510,460,00010,459,25010,460,50010,457,87510,460,37510,461,87510,461,37510,457,87510,460,125

$276,076.252,951,927.503,448,590.003,848.977.504,051,238.754,250,000.004,450,000.004,650,000.004,650,000.004,650,000.007,550,000.007,545,000.007,545,000.00

$3,608,2303,601,6303,605,8803,611,5052,818,7552,638,2552,635,8802,495,7552,497,8802,496,5752,599,7202,599,3002,597,2158,670,1258,670,0008,671,6258,674,0008,666,375

$6,384,3061511,553,557.5012,054,470.0012,460,482.5011,869,993.7511,888,255.0012,085,880.0012,]45,755.0012,147,880.0012,]46,575.0015,]49,720.0015,] 44,300.0015,142,215.0013,670,125.0013,670,000.0013,674,000.0013,674,000.0013,666,375.0010,460,000.00] 0,457,875.0010,46],000.0010,458,625.0010,460,000.0010,459,250.0010,460,500.0010,457,875.00] 0,460,375.00

10,461,875.0010,461,375.0010,457,875.0010,460,125.00

t\

Pledged Revenues

The following is a summary of the annual revenues from Pledged Revenues for the fiscal yearsended September 30 shown below:

Fiscal Year Amount

$ 54,077,51947,852,64543,183,11439,663,13536,284,136

20062005200420032002

Tuition increases were placed into effect for certain of the years shown above. The foregoing information has beenextracted by the University from the audited financial statements of the University and is believed to be reliable;however, because such financial information was not presented in the financial statements of the University in theforegoing form, such information is not audited. Reference is hereby made to the audited financial statements of theUniversity appearing as Exhibit A hereto and which, for the other periods, are available on request from the

Underwriters during the period of the offering made hereby.

BOND INSURANCE

Payment Pursuant toFinancial Guaranty Insurance Policy

Ambac Assurance Corporation ("Ambac Assurance") has made a commitment to issue a financialguaranty insurance policy (the "Financial Guaranty Insurance Policy") relating to the Series 2006 Bonds, effective as ofthe date of issuance of the Series 2006 Bonds. Under the terms of the Financial Guaranty Insurance Policy, AmbacAssurance will pay to The Bank of New York, in New York, New York, or any successor thereto (the "InsuranceTrustee"), that portion of the principal of and interest on the Series 2006 Bonds that shall become Due for Payment butshall be unpaid by reason of Nonpayment by the Obligor (as such terms are defined in the Financial Guaranty InsurancePolicy). Ambac Assurance will make such payments to the Insurance Trustee on the later of the date on which suchprincipal and/or interest becomes Due for Payment or within one business day following the date on which AmbacAssurance shall have received notice of Nonpayment from the Trustee. The insurance will extend for the term of theSeries 2006 Bonds and, once issued, cannot be canceled by Ambac Assurance.

The Financial Guaranty Insurance Policy will insure payment only on stated maturity dates and onmandatory sinking fund installment dates, in the case of principal, and on stated dates for payment, in the case ofinterest.I f the Series 2006 Bonds become subject to mandatory redemption and insufficient funds are available for redemption ofall outstanding Series 2006 Bonds, Ambac Assurance will remain obligated to pay the principal of and interest onoutstanding Series 2006 Bonds on the originally scheduled interest and principal payment dates, including mandatorysinking fund redemption dates. In the event of any acceleration of the principal of the Series 2006 Bonds, the insuredpayments will be made at such times and in such amounts as would have been made had there not been an acceleration,except to the extent that Ambac Assurance elects, in its sole discretion, to pay all or a portion of the accelerated principaland interest accrued thereon to the date of acceleration (to the extent unpaid by the Obligor). Upon payment of all suchaccelerated principal and interest accrued to the acceleration date, Ambac Assurance's obligations under the Financial

Guaranty Insurance Policy shall be fully discharged.

In the event the Trustee has notice that any payment of principal of or interest on a Series 2006 Bondthat has become Due for Payment and that is made to a holder by or on behalf of the Obligor has been deemed apreferential transfer and theretofore recovered from its registered owner pursuant to the United States Bankruptcy Codein accordance with a final, non-appealable order of a court of competent jurisdiction, such registered owner will beentitled to payment from Ambac Assurance to the extent of such recovery if sufficient funds are not otherwise available.

7

The Financial Guaranty Insurance Policy does not insure any risk other than Nonpayment (as set forth in the FinancialGuaranty Insurance Policy). Specifically, the Financial Guaranty Insurance Policy does not cover:

). payment on acceleration, as a result of a call for redemption (other than mandatory sinkingfund redemption) or as a result of any other advancement of maturity;

2. payment of any redemption, prepaymcnt or acceleration premium; and

3. nonpayment of principal or interest caused by the insolvcncy or negligence of the Trustce,Paying Agent or Bond Registrar, if any.

I f it becomes necessary to call upon the Financial Guaranty Insurance Policy. payment of principalrequires surrender of the Series 2006 Bonds to the Insurance Trustee together with an appropriate instrument ofassignment so as to permit ownership of such Series 2006 Bonds to be registered in the name of Ambac Assurance to theextent of the payment under the Financial Guaranty Insurance Policy. Payment of interest pursuant to the FinancialGuaranty Insurance Policy requires proof of holder entitlement to interest payments and an appropriate assignm:nt of theholder's right to payment to Ambac Assurance.

Upon payment of the insurance benefits, Ambac Assurance will become the owner of the Series2006Bond, appurtenant coupon, if any, or right to payment of the principal of or interest on such Series 2006 Bond andwill be fully subrogated to the surrendering holder's rights to payment.

Ambac Assurance Corporation

Ambac Assurance is a Wisconsin-domiciled stock insurance corporation regulated by the Office ofthe Commissioner of Insurance of the State of Wisconsin, and is licensed to do business in 50 states, the District ofColumbia, the Territory of Guam, the Commonwealth of Puerto Rico and the U.S. Virgin Islands, with admittedassets of approximately $9,699,000,000 (unaudited) and statutory capital of approximately $6,223,000,000(unaudited) as of September 30, 2006. Statutory capital consists of Ambac Assurance's policyholders' surplus andstatutory contingency reserve. Standard & Poor's Ratings Services, a division of The McGraw-Hili Companies, Inc.,Moody's Investors Service, Inc. and Fitch Ratings have each assigned a triple-A financial strength rating 10 AmbacAssurance.

Ambac Assurance has obtained a ruling from the Internal Revenue Service to the effect that theinsuring of an obligation by Ambac Assurance will not affect the treatment for federal income tax purposes ofinterest on such obligation and that insurance proceeds representing maturing interest paid by Ambac Assuranceunder policy provisions substantially identical to those contained in the Financial Guaranty Insurance Policy shall betreated for federal income tax purposes in the same manner as if such payments were made by the ObJigor.AmbacAssurance makes no representation regarding the Series 2006 Bonds or the advisability of investing in the Series2006 Bonds and makes no representation regarding, nor has it participated in the preparation of, this OfficialStatement other than the information supplied by Ambac Assurance and presented under the heading 'BONDINSURANCE".

Available Information

The parent company of Ambac Assurance, Ambac Financial Group, Inc. (the "Company"), issubject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),and in accordance therewith files reports, proxy statements and other information with the Securities and ExchangeCommission (the "SEC"). These reports, proxy statements and other information can be read and copied at theSEC's public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC maintains an internet site athttp://www.sec.gov that contains reports, proxy and information statements and other information regardingcompanies that file electronically with the SEC, including the Company. These reports, proxy statements and otherinfonnation can also be read at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, NewYork 10005.

8

Copies of Ambac Assurance's financial statements prepared in accordance with statutoryaccounting standards are available from Ambac Assurance. The address of Ambac Assurance's administrativeoffices is One State Street Plaza, 19th Floor, New York, New York 10004, and its telephone number is (212) 668-0340.

Incorporation of Certain Documents by Reference

The following documents filed by the Company with the SEC (File No.this Official Statement:

.}0777) are incorporated by reference in

I. The Company's Annual Report on Fonn J O-K for the fiscal year ended December 3 J, 2005 and filed onMarch 13, 2006;

2. The Company's Current Report on Form 8-K dated and filed on April 26, 2006;

3. The Company's Quarterly Report on Form 10-Q for the fiscal quarterly period ended March 31.2006 andfiled on May 10,2006;

4. The Company's Current Report on Fonn 8-K dated July 25, 2006 and filed on July 26, 2006;

The Company's Current Report on Form 8-K dated and filed on July 26, 2006;

6. The Company's Quarterly Report on Fom1 10-Q fOT the fiscal quarterly period ended June 30,2006 andfiled on August 9, 2006;

The Company's CuTTent Report on Fonn 8-K dated and filed on October 25, 2006; and

7.

8. The Company's Quarterly Report on Fonn 10-Q for the fiscal quarterly period ended September 30, 2006and filed on November 8, 2006.

All documents subsequently filed by the Company pursuant to the requirements of the Exchange Act after the dateof this Official Statement will be availab1e for inspection in the same manner as described above in "Availablelnfonnation",

UNIVERSITY OF SOUTH ALABAMAGeneral

The University of South Alabama (the "University") was created by Act No. 157 adopted at theSecond special Session of the Legislature of Alabama of 1963 (now Sections 16-55-1 et seq. of the code of Alabamaof 1975) (the ., Act"). The University, with an enrollment of over 13,000 students, serves as a major center of high-

quality and accessible undergraduate, graduate, and professional education. The mission of the University activelyembraces the functions of teaching, research, public service and health care through which it pursues thepreservation, discovery, conununication and application of knowledge. The University was admitted to membershipjn the Southern Association of Colleges and Schools ("SACS") in 1968 and is fully accredited by the Commissionof Colleges of SACS to award baccalaureate, master's and doctoral degrees.

The Act provides for a Board of Trustees as the governing body of the University with all of therights, privileges and authorities necessary to promote the purpose of its creation, which is to establish and providefor the maintenance and operation of a State University in Mobile County, Alabama. The Board of Trustees consistsof seventeen members. Currently, there is one vacant position. The Governor of the State of Alabama and the StateSuperintendent of Education are ex-officio members of the Board of Trustees. Three members of the Board ofTrustees are appointed from Mobile County. Three members are appointed from the state at large. One member isappointed from each of the nine State Senatorial Districts as these Districts were designated at the time theUniversity was organized. All Trustees except ex-officio members are appointed by the Governor by and with theadvice and consent of the State Senate, and hold office for a term of twelve years and until their successors shall beappointed and qualified. The present members of the Board of Trustees are as follows:

9

Name of Trustee Occupation Term of Office

September 30,2013September 30,2017September 30,2013September 30,2013September 30,2009September 30,2017September 30,2013September 3D, 2009

September 30,2013September 30,2009September 30,2017September 30,2017September 30,2017September 30,2009Ex OfficioEx Officio

Mr. J. L. Chestnut, Jr.Dr. Steven P. FurrMr. J.Cecil GardnerThe Honorable Samuel L. JonesMr. Donald L. LanghamMs. Bettye R. MayeMs. Christie D. MireeMr. Mayer MitchellThe Honorable Bryant MixonThe Honorable James P. NixMr. John M. PeekDr. Steven StokesMr. Larry D. Striplin, Jr.Mr. James A. VanceThe Honorable Bob RileyDr. Joseph B. Morton

AttorneyPhysicianAttorneyMayor, City of MobileLabor Union Leader, RetiredEducator, RetiredBusiness AdministrationBusinessman, Mitchell Brothers, Inc.Sheriff, Dale County, AlabamaMayor, City of Fairhope, Retired

AttorneyPhysicianBusinessmanAttorney, RetiredGovernor, State of AlabamaState Superintendent of Education

The Board of Trustees appoints the President of the University. Mr. V. Gordon Moulton hasserved as President of the University since July 29, 1998. Mr. Moulton recelved his M.B.A. from Emory University.He joined the faculty of the College of Business at the University in 1966. In 1968, he was appointed Director ofUniversity Computer Services, while continuing to serve as a faculty member. He was appointed Dean ofAdministrative Services in 1977, and, in 198O, he was instrumental in establishing the Department of Computer andInformation Sciences and served as its Dean. From 1983 until his appointment as President, Mr. Moulton served asVice President for Services and Planning.

The organization below the Board of Trustees is composed of the President and six VicePresidents: Senior Vice President for Academic Affairs; Vice President for Health Sciences; Vice President forDevelopment and Alumni Relations; Vice President for Student Affairs; Vice President for Health Systems and VicePresident for Financial Affairs.

Under the present organization, the University is comprised of a College of Arts and Sciences,College of Business, College of Education, College of Engineering, College of Medicine, College of Allied HealthProfessions, College of Nursing, a Graduate School, a School of Computer and Infomlation Sciences and a Schoolof Continuing Education, each headed by an academic dean. Departments operate under the direction of departmentchairs, who work in coordination with the faculty and report directly to the deans.

The University was admitted to membership in the Southern Association of Colleges and Schoolsat the annual meeting on December 4, 1968.

Degrees and Programs

Through its ten colleges and schools, the University awards the bachelor's degree in almost fiftymajors or areas, the master's degree in thirty-two majors or areas and the doctorate degree in eight majors or areas.In addition, post-secondary certi ficates are offered in four areas. In the period 1998 through 2006, the University ofSouth Alabama added ten new academic programs to meet the needs of students and the state: B.S.B.A. ElectronicCommerce, B.S. Meteorology, M.S. Occupational Therapy, Bachelor of Social Work, M.S. Instructional Design andDevelopment, Doctor of Audiology, M.Ed. Reading, Doctor of Physical Therapy, M.S. Environmental Toxicologyand Doctor of Nursing Practice. During that same period, in order to make the best use of resources, the Universityclosed five programs: B.A. Economics, B.S.B.A. Managerial Economics, B.M. Music Performance, B.M. MusicTheory, and B.A. Art History.

10

Sum/nary Enrolllnent Profile -Fall 2006

NumberCollege of Allied Health Professions 1,347College of Arts and Sciences 3,741Mitchell College of Business 1,731College of Education 2,260College of Engineering 930College of Medicine 313College of Nursing 2,065School of Continuing Education and Spccial Programs 303School of Computer and Information Sciences 394Graduate School (M.S. Environmental Toxicology) 6Tota]. ~

Percent

10.328.613.217.37.12.4

15.82.33.0

-S2J100.0%

.Excludes 213 medical residents.

Enrollment and Trends

Total Enrol/ment by Head Count

Fall 20029,568

2,600155

12.323

Fall 2003

9,9052,925

26613.096

Fall 200410,1362,990

214

~

Fall 20059,957

2,978187

13.122

Fall 2006

9,8743,0]2

20413.090

UndergraduateGraduate/ProfessionalUnclassifiedTotal

Total Enrollment by FTE

Fall 2002

7,926l.§.Q2~

Fall 2003

8,374~

~

Fall 20048,477~

~

Fall 20058,414~

~

Fall 20068,4306.Q21~

UndergraduateGraduate/ProfessionalTotal

Acceptance Rate -Freshmen

Fall 20022,6832,48592.6%

Fall 20032,9302,21775.7%

Fall 20042,8012,61393.3%

Fall 20052,6812,321

86.6%

Fall 2006

2,9062,69092.6%

AppliedAdmittedAcceptance rate

Acceptance Rate -Transfers

Fall 20021,7081,43784.1%

Fall 20031,7991,45881.0%

Fall 20041,7501,68096.0%

Fall 20051,7701,50184.8%

Fall 2006

1,7601,52786.8%

AppliedAdmittedAcceptance rate

11

Matriculation Rate -Freshmen

Fall 2002

2,6831,43744.5%

Fall 2003

2,930\,45844.4%

Fall 2004

2,8011,34047.8%

Fall 2005

2,6811,25846.9%

Fall 20062,9061,43349.3%

AppliedMatriculatedMatriculation rate

Retention-Rate First-Time. Full-Time Freshmen

Fall 2001to

Fall 2002

1,116778

70%

Fall 2002to

Fall 20031,003

67868%

Fall 200310

Fall 2004

1,21887672%

Fall 2004to

Fall 2005

1,17982870%

Fall 2005to

Fall 2006

1,152827

72%

Number EnteredNumber ReturnedRetention Rate

Cumulative Graduation Rate -Freshmen

FallClass

Number Four YearsMatriculated Number Percent

Five YearsNumber Percent

Six YearsNumber Percent

199519961997199819992000

1,1821,0561,1321,044868

1,042

167147138143121167

14.)%13.9%12.2%13.7%13.9%16.0%

333282293286222332

28.2%26.7%25.9%27.4%25.6%31.9%

418357355350284413

35.4%33.8%31.4%33.5%32.7%39.6%

Average ACT Scores of Matriculated Students

Fall 2002 Fall 2003 Fall 2004 Fall 2005 Fall 2006

Average ACT scores 22.7 22.8 21.7 21.7 21.6

Geographic Concentrations of Students

2002 2003 2004 2005 2006

6,6551,2071,793

520979352817

12,323

7,0731,2831,905

5591,047361868

13,096

7,5461,2601,634

4741,110

503813

13,340

7,3221,2441,575

4701,142

555814

13,122

7,1551,2251,560

446

1,209656

839

13,090

Mobile CountyBaldwin CountyOther Alabama CountiesFloridaMississippiOther U. S. StatesInternationalTotal

12

Main Schools in Colnpetitive Group and Listed Tuition

Undergraduate I

Resident Non-ResidentGraduate2

Resident Non-Resident

University of South Alabama $4,502 $8,312 $4,700 $8,708

$4,4304,0085,2784,864

$8,3308,016

14,87813,516

$5,2924,6085,1984,864

$ I 0,044

9,21614,79813,516

4,7924,6884,104

10,7329,8868,108

4,8045,866

4,468

10,924

12,060

8,836

In-State Reference Group

Alabama A&M University

Alabama State University

Auburn University

University of AlabamaUniversity of Alabama at

BirminghamUniversity of Alabama in Huntsville

Troy State University

Mean of In-State Reference Group $4,596 $10,495 $5,014 $11,342

Regional Reference GroupUniversity of Southern Mississippi3University of New Orleans4University of West Florida

$4,310

3,810

2,782

$9,74010,85413,520

$4,3103,7204,640

$9,740

10,764

17,440

I Based on 30 undergraduate credit hours per academic year

2 Based on 24 graduate credit hours per academic year

3 Based on 12 hours per semester undergraduate and 9 hours per semester graduate

~ Based on 13 hours per semester undergraduate and 10 hours per semester graduate

Certain Fees and Charges

Undergraduate and Graduate. The following shows the fee schedule for the periods sho~,".Except as otherwise indicated, course fees are per semester hour. Graduate School does not include the College ofMedicine.

Fall & Spring Summer2001-02 2002 2002-03 2003-04 2004-05 2005-06

Application fee $25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 $25.00

Course fee, per semester hour (in-state)

113.00149.00

127.00167.00

127.00167.00

UndergraduateGraduate

97.00125.00

103.00135.00

103.00135.00

60.00Registration fee 33.00 50.00 50.00 60.00

25.00 50.00 50.00Change course fee 25.00 25.00

13

(Late Registration Fee)

Out of stale fee. per course

UndergraduateGraduate

194.00254.00

206.00270.00

206.00270.00

226.00298.00

254.00334.00

254.00334.00

Receipts from certain Tuition and Fees were for the fiscal periods shown as follows:

2001-2002 2002-2003 2003-2004 2004-2005 2005-2006

Application feeCourse feeRegistration feeChange of course feeBuilding FeeOut-of-state fee

$ 276,36031,632,596

1.696,952259,360

2.418.868$36_284_136

Medical College. Fees and certain charges for the College of Medicine were for the periodsindicated, as follows:

2001-2002 2002-2003 2003-2004 2004-2005 2005-2006

Application feeRegistration feeCourse fee

In-stateOut-of-state

$ 25.0033.00

$ 25.0050.00

$ 50.0065.00

$ 75.0066.00

$ 75.0066.00

7,70015,400

8,70017,400

9,77019,540

11,04022,080

12,25424,508

Degrees Awarded

The University awarded the following degrees for the academic years ending June 30 of the yearsshown below:

2003 2004 2005 2006

1,365 1,371 ,303 ,365BaccalaureateDegrees

1,366

Master Degrees

Certification -HealthPara Professionals

Professional DegreesM.D.Ph.D.

554 623 601 714 714

91 91 79 71 71

6013

5911

60

1259

II60

11

TOTAL 2,083 2,155 2,055 2,264 2,222

14

$ 292,73734,872,774

1,752,088245,629

2.499.907$39_663_135

$ 312,07438,336,717

] ,576,289

] 85,9802.772.054

$43.183.114

$ 315,47541,655,648

1,546,715

1,306,9003.027.907

$47.852.645

$ 310,60446,362,216

1,905,130

2,202,6173.296.952

$54.077.519

Faculty and Staff

Faculty and staff employees for the University were as follows at September 30:

2002 2003 2004 2005 2006

206166204

755

656

204158213100

3678

201158241110

2712

20716125297

3720

200160246117

6729

Full-time faculty by rank:ProfessorAssociate professorAssistant professorInstructorLecturerTOTAL

Full-time faculty by lengthof service:

Up to 2 years3-4 years5-9 years10-14 years15+ yearsTOTAL

14673

136121180656

14412493

120197678

19175

17061

215712

19680

135109200720

215106]]389

206729

Percent of faculty tenured(University instructional

faculty only) 49.5% 44% 44% 47% 46%

4,695Non-faculty 4,515 4,756 4,555 4,419

Total Universityemployees 5,171 5,373 5,468 5,275 5,148

Student Financial Aid

The University awarded and paid financial aid at the following levels for the years endedSeptember 30, as follows:

2002 2003 2004 2005 2006

$ 40,881,443 $ 45,350,803 $ 56,010,310 $ 59,064,146 $ 57,347,7908,647,896 9,666,417 11,007,900 10,112,792 9,320,301

503,318 658,008 421,622 595,354 343,929

Federal government:Student loansGrantsStudent employment

University:LoansScholarships

39,712

4,684,794

39,7125,248,164

39,7125,918,944

39,7125,907,253

39,7127,486,296

Total financial aid awarded $ 54,757,163 $ 60,963,104 $ 73,398,488 $ 75,719,257 $ 74,538,028

15

CAMPUS

FACILITIESCurrent Facilities

Details of construction/acquisition and renovations are as follows:

Years of constructionor acquisition

Gross Square FeetConstructed or Acquired

Gross Square FeetRenovated

Prior to 19601960-19691970-19791980-19891990-19992000-2006

1,091,1191,348,1431,072,407

910,706617,968309.296

5.349.639

207,676302,671192,96381,712

0.139.052

924.081Total

]6

111e campus is served by water, gas and electric utilities for the greater Mobile metro area.

Insurance

Claims for damages to the University's campus property are covered by the State Insurance Fundof the State of Alabama's Division of Risk Management. All buildings and contents are covered by the StateInsurance Fund policy. The University uses two self-insured trust funds to pay general liability and professionalliability claims. Injuries from work-related incidents to those employees covered by the University's self-insuredhealth plan are covered by that plan. Work-related injuries to employees not covered by the health plan arereviewed by the State Board of Adjustment for final resolution.

Technology

The University is continuing to implement the Banner suite of University software. In addition tothe Student Information System, the University is also live on the Alumni/Development, Finance, and HumanResource modules. Imaging implementation is in progress. These products provide an integrated system servingstudents, faculty, staff, and alumni.

All academic, office, and hospital buildings have network access, as does each room in the campusstudent residences. Network enhancements have added wireless access in many locations as well as additional fibertrunks. Many classrooms incorporate "electronic podia" with computers and projection equipment. The Universityis actively engaged in online education, and information technology is included in all disciplines throughout theUniversity, with approximately 740 computer workstations available for student use.

Student Housing

1,763 spaces are available for occupancy in campus student residences. Over the last five years, occupancyrates have averaged 86%, with the Fall 2006 semester at 92%. Approximately 12% of total headcount enrollmentoccupied student housing for the Fall 2006 semester.

The demand for student housing and the scarcity of suitable rental housing in the Mobile area prompted theUniversity in the winter of 2006 to explore adding additional student housing on campus. In August 2006 a landlease was signed under \\'hich Campus Crest at Mobile, L.L.C., a Campus Crest company, will build, own, andmanage a 504-bed student apartment complex located on approximately 12 acres of campus land near the intramuralfields and other student housing. Construction began in October 2006 and it is anticipated the apartments will beready for occupancy for the Fall 2007 semester. The University is under no obligation to guarantee the financing oroccupancy or any other revenue source with respect to the apartments.

SUMMARY INFORMATION RESPECTING STATE AND PRIVATE FUNDING

State Appropriations

The University has received appropriations from the State of Alabama for certain of its operatingcosts and other non-operating cash requirements, including capital expenditures. State appropriations may notlawfully be used for the payment of debt service on the Series 2006 Bonds. There can be no assurance that futureLegislatures will continue to make such appropriations, or if made, that they will be timely or sufficient when addedto operating revenues and General Fees remaining after the payment of debt service, to cover in full, operatingexpenses of the University.

The following tabulation compiled by the University staff from University accounting recordsshows State appropriations to the University for the fiscal years shown:

17

2250

Year EndedSeptember 30

Total AppropriationsAuthorized Received

2006

2005

2004

2003

2002

10],202,67786,621,887

84,233,051

83,845,5]681,603,5]4

101,202,67786,621,887

84,233,051

83,845,51681,603,514

Endowment

Endowment assets for the University are deposited both in the University and in the USAFoundation. Net endowment assets in the accounts of the University at September 30, 2006 were $27,064,000. Ofthe net endowment assets, $12,612,000 are classified as restricted, unexpendable, while the remainder are classifiedas restricted, expendable. The Board of Trustees has an approved endowment management and investment policythat includes an established spending rate of 5% based on the 3-year moving average net assets of endowments. Inmaintaining its endowment, it is the goal of the University to provide revenue while preserving principal to fundthose projects which have been endowed for specific purposes. Net assets of endowments are al]ocated as followsat September 30, 2006:

$11,387,0002,116,0006,318,0007.243.000

Pooled equity mutual fundsPooled bond mutual fundsManaged income alternative investmentsOther

Total $27.064.000

The University of South Alabama Foundation (the Foundation), a legally separate entity, exists forthe primary purpose of advancing the purpose of the University of South Alabama in furthering, improving, andexpanding its properties, services, facilities, and activities. Its total assets at June 30, 2006, its most recent fiscalyear-end, were $291,374,000 and its net assets were $290,502,000 at the same date. Assets are primarily invested inmarketable securities (42%), timber and mineral properties (51%), and real estate (6%). Cash and non-cashdistributions to the University over the past five fiscal years are, as reported in the audited financial statements of theFoundation for the years ended June 30, as follows:

20062005200420032002

$ 6,074,0006,213,0006,892,0005,654,000

9,913,000

SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE

The following is a brief summary of certain provisions of the Indenture as amended andsupplemented by the Supplemental Indenture, to which Indenture and Supplemental Indenture in their entiretyreference is made for the detailed provisions thereof. Unless the context clearly indicates otherwise, all referencesherein shan be deemed to include the Series 2006 Bonds, the Series 2004 Bonds, the Series 1999 Bonds and anyAdditional Bonds hereafter issued under the Indenture.

2251

Financial Guaranty Insurance Company shall be deemed to be the sole holder of the Series 2006Bonds it has insured for so long as it has not failed to comply with its payment obligations under the Bond InsurancePolicy. Certain other rights to direct remedies are reserved to Financial Guaranty Insurance Company in the FourthSupplemental Indenture.

As used in the following summary, the following definitions shall have the following respective

meanings.

..Annual Debt Service Requirement" means, as of any date of determination, the amount ofprincipal and interest maturing or Maturity Amount due with respect to the then outstanding Bonds in such BondYear; provided, that the principal amount or Maturity Amount of any Bonds subject to a Mandatory RedemptionRequirement during such Bond Year shall, for purposes of this definition, be considered as maturing in the BondYear during which such redemption is required and not in the Bond Year in which their stated maturity occurs.

"Bond Year" means the period beginning December 2 in each calendar year and ending onDecember 1 of the next succeeding calendar year.

Special Funds

Bond Fund. The Indenture also provides for the creation of a special trust fund called the "BondPrincipal and Interest Fund." The University is required to pay into the Bond Fund, in addition to all other amountsrequired by the Indenture, the following:

(a) Contemporaneously with the issuance and sale of any of the Bonds and out ofthe proceeds derived from such sale, the University is required to pay into the Bond Fund suchpart of the proceeds from the sale as is allocable to premium (if any) and accrued interest.

(b) On or before the Business Day preceding each Interest Payment Date until theprincipal and the interest on the Bonds is paid in full, the University is required to pay into theBond fund, out of the moneys in the Revenue Account, an amount equal to the sum of (i) thesemiannual installment of interest that will mature on the Bonds on the then next succeedingsemiannual Interest Payment Date with respect thereto, plus (ii) the principal or Maturity Amountthat will become due on the Bonds on the then next succeeding Principal Payment Date, plus (iii)the principal or Maturity Amount of Bonds required to be redeemed on the next succeedingPrincipal Payment Date pursuant to any Mandatory Redemption Requirement.

(c) In the event that the moneys paid or transferred into the Bond Fund with respectto any Interest Payment Date is less than the amount required to be paid therein with respect tosuch Interest Payment Date, until such time as the payments into the Bond Fund are current, theUniversity is required to pay into the Bond Fund, in addition to the payments provided fOT withrespect to current then required to be paid therein all moneys on deposit in the Revenue Accountuntil such time as the payments required to be made into the Bond Fund are in a fully currentcondition.

All moneys paid into the Bond Fund are required to be used only for payment of the principal ofand the interest on the Bonds upon or after the respective maturities of such principal and interest and to redeemBonds subject to a Mandatory Redemption Requirement. If at the final maturity of the Bonds, however such Bondsmay mature, there are in the Bond Fund moneys in excess of what is required to pay in full the principal of and theinterest on the Bonds, then any such excess will be returned to the University.

19

2252

The Indenture authorizes the issuance of Additional Bonds, subject to the provisions of theIndenture. Among the conditions to the issuance of any Additional Bonds are the following:

(a) Supplemental Indenture. Prior to the issuance of any Additional Bonds, thereshall be executed and delivered a supplemental indenture containing a provision that thesemiannual payments into the Bond Fund be adjusted to provide for such additional amounts asmay be necessary to pay the principal of and interest on such Additional Bonds provided,however, that in making such adjustment the principal amount of any such Additional Bondsrequired by the terms of the Supplemental Indenture to be redeemed during any Bond Year shallbe considered as maturing in the Bond Year during which such redemption is required and not inthe Bond Year in which their stated maturity occurs;

The item or items required by either of the(b) Certificate as to Pledged Revenuesfollowing subparagraphs (i) or (ii):

(i) A certificate by the Vice President for Financial Affairs of theUniversity certifying that the amount of Pledged Revenues received during theFiscal year next preceding the date of the issuance of the Additional Bonds thenproposed to be issued was not less than 125% of the maximum Annual DebtService Requirement with respect to the then current or any then succeedingBond Year, which certificate shall set forth the figures on which it is based andshall Tecite that the Pledged Revenues for such Fiscal Year specified thereinwere taken from the annual audit of the University for such Fiscal Year or, ifsuch audit shall not have been completed for the most recent Fiscal year at thedate of such certificate, were taken from the official records of the University, or

(ii) A Resolution or Resolutions adopted by the University afterthe commencement of the Fiscal Year next preceding the issuance of the thenproposed Additional Bonds either (i) increasing the General Fees, or (ii) levyingnew fees and charges of a type or kind different from the General Fees, or (iii) acombination thereof, accompanied by a certificate of the Vice President forFinancial Affairs stating that if the increased Pledged Revenues or the new feesset forth in the said Resolution or Resolutions had been in effect throughout theFiscal Year next preceding the date of issuance of the then proposed AdditionalBonds would have been not less than 125% of the maximum Annual DebtService Requirement during the then current or any then succeeding Bond Yearwith respect to Bonds that will be outstanding immediately following theissuance of the then proposed Additional Bonds; and

(c) Opinion of Independent Counsel. An opinion dated on the date of issuance ofsuch Additional Bonds, signed by Independent Counsel acceptable to the Trustee, approving thefonns of all documents required above to be delivered to the Trustee and reciting that they complywith the applicable requirements set out above.

Maintenance of Pledged Revenues

The University has covenanted in the Indenture that, so long as any of the Bonds remainoutstanding and unpaid, the University will fix, levy and col1ect Pledged Revenues from all students attending theUniversity during each Fiscal Year in such amounts and at such times as shall be required to produce revenuessufficient to pay the principal of, unamortized premium, if any, and interest on the Bonds during the same FiscalYear.

20

1253

Supplemental Indentures

Supplemental Indentures Without Bondholder Consent. The University and the Trustee may atany time and from time to time enter into such Supplemental Indentures (in addition to such SupplementalIndentures as are otherwise provided for in the Indenture) as shall not be inconsistent with the terms and provisionsof the Indenture, for anyone or more of the following purposes:

(a) to add to the covenants and agreements of the University contained in theIndenture other covenants and agreements thereafter to be observed and performed by theUniversity, provided that such other covenants and agreements may not either expressly orimpliedly limit or restrict any of the obligations of the University contained in the Indentures; or

(b) to cure any ambiguity or to cure, correct or supplement any defect orinconsistent provisions contained in the Indenture or in any Supplemental Indenture or to makeany provisions with respect to matters arising under the Indenture or any Supplemental Indenturefor any other purpose if such provisions are necessary or desirable and are not inconsistent withthe provisions of the Indenture or any Supplemental Indenture and do not adversely affect theinterests of the holders of the Bonds. Any such Supplemental Indenture will not require theconsent of any bondholders.

Supplemental Indentures Requiring Bondholders Consent. In addition to those SupplementalIndentures described above, the Indenture provides that the University and the Trustee may, at any time and fromtime to time, with the written consent of the holders of not less than sixty-six and two-thirds percent (662/3%) inOutstanding Amount of Bonds, enter into such Supplemental Indentures as shall be deemed necessary or desirableby the University and the Trustee for the purpose of modifying, altering, amending, adding to or rescinding, in anyparticular, any of the terms or provisions contained in the Indenture or in any Supplemental Indenture; provided thatwithout the written consent of the Holder of each Bond affected, no reduction in the principal amount of, rate ofinterest on, or the premium payable upon the redemption of, any Bond shall be made; and provided, further, that,without the written consent of the holders of all the Bonds, none of the following shall be permitted.

(i) an extension of the maturity of any installment of principal ofor interest on any Bond;

(ii) any change in the schedule of required sinking fund or othersimilar payments with respect to any series of the Bonds;

(iii) the creation of a lien or charge on the Pledged Revenuesranking prior to or (except in connection with the issuance of Additional Bonds)on a parity with the lien or charge thereon contained herein;

(iv)Bonds; or

the establishment of preferences or priorities as between the

(v) a reduction in the aggregate principal amount of Bonds theholders of which are required to consent to such Supplemental Indenture.

Upon the execution of any Supplemental Indenture under and pursuant to the provisions of this section, theIndenture shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties andobligations under the Indenture of the University, the Trustee and all holders of the Bonds then outstanding shallthereafter be determined, exercised and enforced hereunder, subject in all respects to such modifications andamendments.

21

2254

Defaults and Remedies

Events of Default under the Indenture include the following:

(a) failure by the University to pay principal of, the interest on or the premium (ifany) on any Bond as and when the same shall become due, as provided therein and in theIndenture (whether such shall become due pursuant to any Mandatory Redemption Provisions orotherwise);

(b) failure by the University to perform and observe any of the agreements andcovenants on its part contained in the Indenture (other than in the manner described in (a) above)which such failure continues for a period of not less than thirty (30) days after written notice ofsuch failure has been given to the University by the Trustee or by the holders of not less thantwenty-five percent (25%) in outstanding amount of Bonds, unless during such period or anyextension thereof the University has commenced and is diligently pursuing appropriate correctiveaction; or

(c) detennination by a court having jurisdiction that the University is insolvent orbankrupt, or appointment by a court having jurisdiction of a receiver for the University or for asubstantia! part thereof, or approval by a court of competent jurisdiction of any petition forreorganization of the University or rearrangement or readjustment of the obligations of theUniversity under any provisions of the bankruptcy laws of the United States.

Upon the occurrence of an Event of Default the Trustee shall have the following rights andremedies:

(a) Acceleration. The Trustee may, by written notice to the University and with theconsent of the Bond Insurer, declare the principal of all the Bonds forthwith due and payable, andsuch principal shall thereupon become and be immediately due and payable, anything herein or inthe Bonds to the contrary notwithstanding. If, however, the University makes good that defaultand every other default hereunder (except for those installments of principal declared due andpayable that would, absent such declaration, not be due and payable), with interest on all overduepayments of principal and interest, and made reimbursement of aJ] of the reasonable expenses ofthe Trustee, then the Trustee may (and, if Tequested in writing by the holders of a majority inprincipal amount of the then outstanding Bonds, shal1), by written notice to the University, waivesuch default and its consequences, but no such waiver shall affect any subsequent default or rightrelative thereto.

(b) Mandamus and Other Remedies. The Trustee shall have the right of mandamusor other lawful remedy in any court of competent jurisdiction to enforce its rights and the rights ofthe holders of the Bonds against the University and any officers, agents or employees of theUniversity, including but not limited to the right to require the University and its officers, agentsor employees to perform and observe all of its or their duties under the laws of the State ofAlabama.

Concerning the Trustee

The Trustee shall be under no obligation to institute suit or to take any proceedings under theIndenture or to enter any appearance or in any way defend in any suit in which it may be made defendant or to take!,teps in the execution of trust created or in the enforcement of any rights or powers under the Indenture, until it shallbe indemnified to its satisfaction against any and all costs and expense, outlays and counsel fees and otherreasonable disbursements and against al11iability.

22

22"55

The Trustee shall not be liable in connection with the performance of its duties under the Indentureexcept for its gross negligence or willful misconduct.

The University has agreed to pay to the Trustee from time to time reasonable compensation for allservices rendered by it under the Indenture, including the services of bond registrar and paying agent and also all ofits reasonable expenses, charges, counsel fees and other disbursements and those of its attorneys and employeesincurred in and about the performance of its powers and duties under the Indenture prior to the Bonds. Nothingcontained in the Indenture or any supplemental indenture shall require the Trustee to expend or risk its own funds orotherwise incur any financial liability in the performance of any of its duties or in the exercise of any of its rights orpowers if it believes that the repayment of such funds or the making whole in respect of such liability is notreasonably assured to it.

RA TINGS

Moody's Investors Service, Inc. has issued a rating of "Aaa" to the Series 2006 Bonds with theunderstanding that, upon delivery of the Series 2006 Bonds, a policy insuring the payment when due of the principalof and interest on the Series 2006 Bonds will be issued by Ambac Assurance Corporation. Such ratings reflect onlythe views of the rating agencies at the time such rating is given and the University makes no representation as to theappropriateness of such rating. There is no assurance that the rating on the Series 2006 Bonds will continue for anygiven period of time or that such rating may not be suspended, lowered or withdrawn entirely if, in the judgment ofthe rating agencies, circumstances should Bond. Any such downwaTd change in, OT withdrawal of, the rating mayhave an adverse effect on the secondary market of the Series 2006 Bonds.

The University has furnished to Moody's Investors Service, Inc. certain infonnation and materialrespecting the Series 2006 Bonds and itself, and Moody's has given a rating of" A2" to the Series 2006 Bonds. Anyexplanation of the significance of any such rating may be obtained only from the rating agency. There is noassurance that such ratings will remain in effect for any given period of time or that they will not be reviseddownward or withdrawn entirely by Moody's. Any such downward revision or withdrawal of any rating assigned tothe Series 2006 Bonds may have an adverse effect on the market price of the Series 2006 Bonds. Neither theUniversity nor the Underwriter has undertaken any responsibility after the issuance of the Series 2006 Bonds toassure maintenance of the ratings or to oppose any such revision or withdrawal.

LITIGATION

The University is a defendant in one suit and has been notified by the Equal EmploymentOpportunity Office ("EEOC") of a charge filed with the EEOC against the University. The said suit and charge botharise from alleged negligence or other grounds against the University and certain of its employees in the operation ofthe University or the University of South Alabama Hospitals with respect to hiring practices and personnel policies.In the pending suit and charge, the University (or the named hospital) is due to be dismissed as a defendant due tosovereign immunity. In addition, the University has been notified of claims against it filed in the State Board ofAdjustment but none of these claims involve any significant sums in excess of the sums otherwise provided for and,,'ould not have an impact upon the collection of the Pledged Revenues. In the opinjon of the University Attorney,the aggregate exposure of the University with respect to all pending claims and suits would not be materia! to theUniversity's financial position.

LEGALITY

The Series 2006 Bonds will be issued subject to the approving opinion of Bradley Arant Rose &White, LLP, Bimringharn, Alabama, Bond Counsel. It is anticipated that the opinion of Bond Counsel will be insubstantially the fOrn1 set forth in Exhibit B.

23

TAX EXEMPTIONGeneral

Pursuant to the provisions of the Internal Revenue Code of 1986 (the "Code"), the exemption ofthe interest income on the Series 2006 Bonds from gross income for federal income tax purposes is dependent uponcompliance by the University with certain provisions of the Code subsequent to the issuance of the Series 2006Bonds. Among the requirements of the Code to the continued exemption of the interest income on the Series 2006Bonds from gross income for federal income tax purposes are certain requirements relating to the use andexpenditure of proceeds from the Series 2006 Bonds, restrictions on the investment of proceeds earned prior toexpenditure, and the requirement that certain earnings be rebated to the United States of America. In theproceedings under which the Series 2006 Bonds are issued, the University has made certain covenants (the"Compliance Covenants") to the effect that it will comply with all conditions to and requirements for the exemptionfrom gross income for federal income tax purposes of the interest income on the Series 2006 Bonds imposed by theCode. Failure to comply with the Compliance Covenants may result in the interest income on the Series 2006Bonds being subject to gross income for federal income tax purposes from the date of issuance of the Series 2006Bonds.

Bradley Arant Rose & White LLP, Bond Counsel, is of the opinion that, under the Code, aspresently construed and administered, and assuming compliance by the University with the Compliance Covenants,the interest income on the Series 2006 Bonds will be excludable from gross income of the recipients thereof forfederal income tax purposes pursuant to the provisions of Section 103 of the Code and will not constitute an item oftax preference for the purpose of computing the liability of individuals or corporations for the alternative minimumtax imposed by Section 55 of the Code. Bond Counsel will express no opinion with respect to the federal taxconsequences to the recipients of the interest income on the Series 2006 Bonds under any provision of the Code notreferred to above.

Bond Counsel is further of the opinion that the interest income on the Series 2006 Bonds isexempt from present Alabama income taxation.

CONTINUING DISCLOSURE

The University will enter into a Continuing Disclosure Agreement for the benefit of holders of theSeries 2006 Bonds wherein the University has agreed to provide annually certain financial infornlation andoperating data relating to the University (the "Annual Reports"), and to provide notices of the occurrence of certainenumerated events, ifmaterial. The Annual Reports will be filed by the University with each nationally recognizedmunicipal securities infornlation repository C'NRMSIR") and with the state information depository of Alabama("SID"), if any. The notices of material events will be filed by the University with the Municipal SecuritiesRulemaking Board or each NRMSIR and with the SID, if any. The specific nature of the information to becontained in the Annual Reports or the notices of material events and the other provisions of the ContinuingDisclosure Agreement are summarized in Exhibit C hereto. The Continuing Disclosure Agreement has been enteredinto in order to assist the Underwriters of the Series 2006 Bonds in complying with Rule 15c2-12(b )(5) of theSecurities and Exchange Commission. A failure by the University to comply with the Continuing DisclosureAgreement must be reported in accordance with the Rule and must be considered by any broker, dealer or municipalsecurities dealer before recommending the purchase or sale of the Series 2006 Bonds in the secondary market.Consequently, such a failure may adversely affect the transferability and liquidity of the Series 2006 Bonds and theirmarket price.

STATE NOT LIABLE ON SERIES 2006 BONDS

The Series 2006 Bonds are special obligations of the University payable solely out of, and securedby a pledge of, the Pledged Revenues. Neither the principal of nor the interest on the Series 2006 Bonds nor theaforesaid pledge or any other agreement contained in the Indenture shall constitute an obligation of any naturewhatsoever of the State of Alabama, and neither the Series 2006 Bonds nor any obligation arising from said pledgeor agreements shall be payable out of any moneys appropriated to the University by the State of Alabama.

24

FINANCIAL INFORMATION

Exhibit A contains audited financial statements of the University for the fiscal year endedSeptember 30, 2006.

VERIFICATION

The arithmetical accuracy of certain computations included in the schedules provided byFinancial Advisor r on behalf of the University relating to the forecasted payments of principal and interest toredeem the Refunded Bonds, and computation of the yields on the Series 2006 Bonds was examined by TheArbitrage Group, Inc.. Such computations were based solely upon assumptions and information supplied byFinancial Advisor on behalf of the University. The Arbitrage Group, Inc. has restricted its procedures to examiningthe arithmetical accuracy of certain computations and has not made any study or evaluation of the assumptions andinformation upon which the computations are based and, accordingly, has not expressed an opinion on the data used,the reasonableness of the assumptions, or the achievability of the forecasted outcome.

FINANCIAL ADVISOR

Thornton Farish Inc., Montgomery, Alabama, has served as financial advisor to the University inconnection with the issuance of the Series 2006 Bonds.

UNDERWRITING

The Series 2006 Bonds are being purchased for reoffering by the underwriters shown on the frontcover hereof (the "Underwriters") at an aggregate purchase price of $106,305,086.85, reflecting underwritingdiscount of $475,000 and original issue premium of $6,780,086.85, plus accrued interest from December I, 2006.The public offering price of the Series 2006 Bonds as set forth on the cover page of this Official Statement may bechanged from time to time by the Underwriters and the Underwriters may allow a concession from the publicoffering price to certain dealers.

MISCELLANEOUS

The references herein to statutory provisions, the Indenture and other documents and instrumentsare summaries of certain provisions thereof and do not purport to be complete. For full and complete statements ofsuch provisions reference is hereby made to the specific statutory provision, document or instrument to which suchsummary relates.

So far as any statements made in this Official Statement involve matters of opinion or ofestimates, whether or not expressly stated, they are set forth as such and not as representations of fact. Norepresentation is made that any of the statements will be realized. Neither this Official Statement nor any statementwhich may have been made verbally or in writing is to be construed as a contract with the owners of the Series 2006Bonds.

The information contained in this Official Statement has been compiled or prepared frominformation obtained from sources believed to be reliable; however, the University makes no representation as to theaccuracy or completeness of such information. The information and the expressions of opinion herein are subject tochange without notice. Accordingly, neither the delivery of this Official Statement nor any sale made hereundershall. under any circumstances, create any implication that, since the date hereof, there has been no change in theaffairs of the University or any other governmental agencies or entities discussed herein.

25

UNIVERSITY OF SOUTH ALABAMA

26

EXHIBIT A

AUDITED FINANCIAL STATEMENT FORFISCAL YEAR ENDED SEPTEMBER 30, 2006

EXHIBIT B

PROPOSED FORM OF OPINION OF BOND COUNSEL

(FOrn1 of Opinion of Bradley Arant Rose & White LLP

(Dated the date of delivery of the Series 2006 Bonds)

We have examined the Constitution and laws of the State of Alabama and certified copies ofproceedings of the Board of Trustees of the University of South A labama (herein called the "University") and otherdocuments submitted to us pertaining to the issuance and validity of

$100,000,000UNIVERSITY OF SOUTH ALABAMAUniversity Tuition Revenue Refunding and

Capital Improvement BondsSeries 2006

Dated as of December I, 2006

(herein called the "Series 2006 Bonds"). The statements hereinafter made and the opinions hereinafter exprcssed arebased upon our examination of said constitution, laws and proceedings.

The documents submitted show as follows:

(1) That the Series 2006 Bonds have been issued under a Trust Indenture dated asFebruary 15, 1996, as heretofore supplemented and by a Fifth Supplemental Trust Indenture, datedas of December 1,2006 between the University and The Bank of New York Trust Company, N .A.,as trustee (herein together called the "Indenture"), wherein there has been pledged for payment ofall bonds issued thereunder so much as may be necessary therefor of the proceeds of the generaltuition fees levied against all students attending the University (herein called the "PledgedRevenues"); and

(2) That the University is authorized under the Indenture to issue, without expresslimit as to principal amount but only upon compliance with certain conditions precedent specifiedin the Indenture. additional bonds secured by a pledge of the Pledged Revenues on a parity withall other bonds issued under the Indenture and at any time outstanding.

We are of the following opinion: that the University exists as a public corporation under the lawsof the State of Alabama and has corporate power to issue the Series 2006 Bonds and to execute and deliver theIndenture; that the Series 2006 Bonds have been duly authorized, sold, executed and issued in the manner providedby the applicable provisions of the Constitution and laws of the State of Alabama, are in due and legal Conn andevidence valid and binding limited or special obligations of the University payable, as to principal and interest,solely out of the Pledged Revenues; that the payment of the principal of and the interest on the Series 2006 Bonds issecured, pro rata and without preference or priority of one over another and on a parity with Bonds previouslyissued under the Indenture and with all other bonds hereafter issued under the Indenture, by a pledge of the PledgedRevenues and the provisions of the Indenture; that the said pledge is valid, subject to all lawful prior charges on thePledged Revenues; that the Indenture has been duly authorized, executed and delivered on behalf of the University;and that under existing statutes, the interest income on the Series 2006 Bonds is exempt from Alabama incometaxation.

We are of the further opinion that, under the Internal Revenue Code of 1986 (herein called the"Code"), as presently construed and administered, and assuming continuing compliance by the University with itscovenants (set forth in the Indenture) pertaining to certain requirements of the Code, (i) the interest inconx: on theSeries 2006 Bonds will be excludable from the gross income of the recipients thereof for federal income taxpurposes pursuant to the provisions of Section 103 of the Code and, therefore, will be exempt from present federalincome taxation, and (ii) the interest income on the Series 2006 Bonds will not be treated as an item of taxpreference in computing the alternative minimum tax for individuals and corporations imposed by Section 55 of theCode. We call to your attention, however, that a portion of the interest income on the Series 2006 Bonds will beinc1uded in alternative minimum taxable income of corporations for the purpose of computing the alternativeminimum tax imposed by Section 55 of the Code. We express no opinion with respect to the federal income taxconsequences to the recipients of the interest income on the Series 2006 Bonds except as stated above.

We are of the opinion that the interest income on the Series 2006 Bonds is, under existing statutesand regulations, exempt from Alabama income taxation.

Neither the principal of nor the interest on the Series 2006 Bonds nor the aforesaid pledge or anyother agrecments contained in the Indenture constitute an obligation of any nature whatsoever of the State ofAlabama, and neither the Series 2006 Bonds nor any obligation arising from said pledge or other agreements arepayable out of any moneys appropriated to the University by the State of Alabama.

Yours very truly,

Exhibit C

Summary of Continuing Disclosure Agreement

EXHIBITC

SUMMARY OFCONTINUING DISCLOSURE AGREEMENT

The following is a summary of the Continuing Disclosure Agreement (the ..Agreement") enteredinto by the University, for the benefit of the holders of the Series 2006 Bonds, in order to assist the Underwriters in

complying with the provisions of Rule 15c2-12 (the "Rule"), promulgated by the Securities and ExchangeCommission of the United States of America (the "Commission") pursuant to the Securities Exchange Act of 1934.Except where otherwise defined in the Exhibit, all capitalized terms have the meaning assigned in the front portionof this Official Statement.

Annual Report of the University. The University agrees, in accordance with the provisions ofthe Rule, to provide or cause to be provided to each nationally recognized municipal securities informationrepository ("NRMSIR") and to the appropriate state information depository ("SID"), if any, for the State ofAlabama, in each case as designated by the Commission in accordance with the Rule, not later than six months afterthe close of each fiscal year of the University (October I -September 30) commencing after September 30, 2007,the following annual financial information and operating data (the "University Annual Report"):

(I) the audited financial statements of the Univcrsity and notes thcreto;

(2)of the Series 2006 Bonds;

the revenues from the general tuition fees the proceeds of which are pledged for payment

(3) the schedule of undergraduate and graduate fees and Medical College fees;

(4) the receipts from application fees, course fees, registration fees, change course fees andout-of-state fees;

(5) the number of students, by geographic classification, attending the fall term commencingwithin the fiscal year covered by the University Annual Report;

(6) the number of degrees awarded, by type of degree, for the academic year ending withinthe fiscal year covered by the University Annual Report; and

(7) a statement of the direct State appropriations authorized and received, the Stateappropriations received for employee benefits and the total State appropriations received.

Notice of Material Events. The University agrees to provide or cause to be provided, in a timelymanner, (i) to each NRMSlR or to the Municipal Securities Rulemaking Board and (ii) to the SID for the State ofAlabama, if any, notice of the occurrence of any of the following events with respect to the Series 2006 Bonds, ifmaterial:

(i) principal and interest payment delinquencies;

(ii) non-payment related defaults;

unscheduled draws on debt service reserves reflecting financial difficulties;

unscheduled draws on credit enhancements reflecting financial difficulties;

(v) substitution of credit or liquidity providers, or their failure to perform;

(vi) adverse tax opinions or events affecting the tax-exempt status of the Series 2006Bonds;

(vii) modifications of the rights ofhoJders of the Series 2006 Bonds;

(viii) calls for redemption, other than scheduled mandatory redemption, of any of theSeries 2006 Bonds;

(ix) defeasances;

(x)Bonds; or

release, substitution or sale of property securing repayment of the Series 2006

(xi) rating changes.

Additional Information. The University may from time to time choose to provide otherinfomlation in addition to the infomlation and notices listed above, but the University does not undertake in theAgreement to commit to provide any such additional infomlation or to update or to continue to provide suchadditional infomlation or notices once provided.

Beneficiaries and Enforcement. The University agrees that its undertakings pursuant to the Ruleset forth in the Agreement are intended to be for the benefit of the holders of the Series 2006 Bonds and shall beenforceable by such holders. No failure by the University to comply with its obligations under the Agreement shallconstitute an event of default under the Indenture.

EXHIBIT D

SPECIMEN POLICY OF BOND INSURANCE

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F,,"n No.: 2B-0012 (li011A-