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University of South Carolina

BOARD OF TRUSTEES

Executive Committee

Telephone Conference Call

April 25, 2000

The Executive Committee of the University of South Carolina Board of Trustees met via telephone conference on Tuesday, April 25, 2000, at 3:30 p.m. in Room 206-B of the Osborne Administration Building.

Mr. William C. Hubbard, Chairman, was present in the room. Members present via telephone were: Mr. James Bradley; Dr. C. Edward Floyd; Mr. Samuel R. Foster, II; and Mr. Michael J. Mungo. Mr. Mack I. Whittle, Jr. was absent. Other Board members present via telephone were: Mr. Toney J. Lister and Mr. John C. von Lehe, Jr.

Others present were: President John M. Palms, via telephone; Secretary Thomas L. Stepp; Executive Vice President for Academic Affairs and Provost Jerome D. Odom; Vice President and Chief Operating Officer J. Lyles Glenn; Vice President for Medical Affairs and Dean of the School of Medicine, Larry A. Faulkner; Vice President for Business and Finance John L. Finan; Vice President for Human Resources Jane M. Jameson; Vice President for Student and Alumni Services Dennis A. Pruitt; General Counsel Walter H. (Terry) Parham; Athletics Director Michael B. McGee, via telephone; Senior Associate Athletics Director John T. Moore, via telephone; Associate Dean for Administration and Finance, School of Medicine, Brian J. Jowers; Director of Legal Affairs for the School of Medicine Educational Trust and Clinical Faculty Practice Plan Kennerly McLendon; representative from McNair Law Firm Joseph D. Walker; Controller John Campbell; and Director of Public Affairs Russell McKinney.

Chairman Hubbard called the meeting to order and asked Secretary Stepp to call the roll to determine those present via telephone. Chairman Hubbard invited those present in the room to introduce themselves. Mr. McKinney said that no members of the media were present. Chairman Hubbard then stated that notice of the meeting had been posted and the press notified as required by the Freedom of Information Act; the agenda and supporting materials had been circulated to the members of the Committee; and a quorum was present to conduct business. Chairman Hubbard noted that Chairman Lister was present and that he had been especially invited to participate in the meeting.

Chairman Hubbard said that there were contractual matters appropriate for Executive Session which involved Olympic Sports Coaching Contracts and negotiations related to the purchase of an airplane. Mr. Mungo moved that the Committee enter Executive Session, and Mr. Bradley seconded. The vote was taken via roll call, and the motion carried.

The following were invited to remain: Dr. Palms; Mr. Stepp; Dr. Odom; Mr. Glenn; Mr. Finan; Ms. Jameson; Dr. Pruitt; Mr. Parham; Dr. McGee; Dr. Moore; Mr. McKinney; Mrs. Mayfield, and Mrs. Hyatt.

Executive Session

Contractual Matters

Return to Open Session

I. Refinancing Richland Medical Park, School of Medicine: Dr. Faulkner presented a request to the Committee to authorize the USC School of Medicine Educational Trust to borrow up to $12 million for the purposes of refinancing certain existing indebtedness, renovating Medical Park Two and Medical Park Four, funding the purchase of certain capital equipment, and extending the current ground leases on which the facilities were located.

Dr. Faulkner noted that in October 1999, Mr. Mungo suggested that the administration pursue tax-exempt bonds as a means of re-financing the existing debt. The matter was carefully reviewed, and it was determined that the action was possible and would result in a considerable financial savings. The reduced interest rate would allow all of the debt to be serviced with lease payments which were received on the facilities.

In response to Mr. Bradley's questions, Dr. Faulkner said it would take 20 years to pay the debt. The existing debt had 7.15 percent interest, and it was anticipated that the rate could be reduced by at least two percentage points. Mr. Bradley asked if the proposed variable rate financing would be fixed for one year, and Mr. Walker explained that it would probably be structured as a lower floater type industrial revenue bond with tax-exempt financing. The rate would probably be reset weekly, and a Letter of Credit would be used to provide liquidity and provide for the lowest possible rate. The Letter of Credit would probably cost 50 basis points. Mr. Walker added that the rate provided in the information distributed had included all associated costs including the Letter of Credit.

Mr. Bradley asked if some alternatives could be provided from the financial institution which would fix the rate for a specific period: one, three, five, or seven years, or at least put a "cap" on how much the rate could be raised during such a specific period? Mr. Walker answered in the affirmative and said that there could be a combination of "caps" and "swaps." Mr. Bradley said that he wanted to review alternatives which might limit the rate increases.

Chairman Hubbard said that leaving such specific conditions "open" pending receipt of additional information would require the final proposal to be presented to the Executive Committee for approval. When Dr. Floyd suggested that the information be presented to Mr. Bradley, Mr. Bradley requested that Mr. Mungo also review the information.

Discussion ensued and Mr. Walker opined that because the Educational Trust would issue the bonds on behalf of the University, it only needed a resolution authorizing the Trust to issue the bonds. The bonds would not "officially" be University debt so the Board could delegate oversight authority to two of its Trustees. Secretary Stepp noted that the Board of Trustees of the University of South Carolina was the ultimate governing board of the Educational Trust.

Chairman Hubbard stated that the final document required Board approval, but he did not anticipate that to be an onerous burden if Messrs. Bradley and Mungo had reviewed and approved the document.

Mr. Mungo confirmed with Mr. Walker that there would be no penalty if the bonds were pre-paid, and then he asked how expensive it would be to refinance the bonds subsequently. Mr. Walker responded that the financing cost for a transaction of that size might be between $50,000 and $100,000.

Mr. Mungo instructed the administration to remove the word "Treasurer" from Section 4., Paragraph 2, on page 3 of the proposed Resolution because the University did not have a Treasurer.

At Chairman Hubbard's request, Secretary Stepp stated that the motion was to approve the spirit and intent of the re-financing plan, as presented. The plan would be reviewed by Mr. Mungo and Mr. Bradley who would be included in the negotiations, with the understanding that the final document would be presented to the Executive Committee for approval.

Dr. Floyd moved approval of the motion as stated by Secretary Stepp, and Mr. Foster seconded. The vote was taken and it was noted that Secretary Stepp recorded no "nay" votes. The motion carried.

II. Employee Expenses Reimbursement Policy: Mr. Finan explained that the proposed changes to the Employee Expenses Reimbursement Policy were requested to conform to legislative changes which altered the definition and authorization of how designated funds could be used with the addition of Section 59-101-187 to the South Carolina Code of Laws in 1999.

Mr. Finan said that the document, as distributed, presented each change. He noted that it should be further amended to include the word "Chancellors" on the first page in Section A. This change would include Chancellors in the list of individuals who could approve food expenses.

After discussion of the inception of the original policy, Mr. Mungo moved to adopt, on behalf of the full Board, the Reimbursement of Personal Consumption and Related Items at Employee's Official Headquarters Policy as mailed with an amendment to add the word "Chancellors" as stipulated above. Mr. Bradley seconded the motion. The vote was taken via roll call, and the motion carried.

III. Contract Approval, Murton Roofing of South Carolina, Inc.: Mr. Parham said that this proposed contract was between the University and Murton Roofing of South Carolina, Inc., for roofing, heating, ventilating, air conditioning (HVAC) replacement, and air conditioning renovation work on the USC Aiken Student Activities Center. The contract had been competitively bid, and Murton Roofing was the low bidder. The value of the contract was $759,875.

The contract would be funded from the budgets of two projects which had been previously approved by the Board of Trustees as well as by the State. $640,110 would be expended from the budget of the Re-Roof/HVAC Replacement Project budget (H29-9521) that had a total budget of $675,000 funded from the settlement of USC Aiken Administration Building Asbestos Abatement project. $119,765 would be expended from the budget of the Student Activities Center Renovation Project budget (H29-9524) that had a total budget of $3.2 million.

Under the contract, the work would begin immediately and would be substantially completed within 115 calendar days.

Dr. Floyd moved approval of the contract as mailed, and Mr. Foster seconded. The vote was taken via roll call, and the motion carried.

IV. Coaching Contract for Donald Ray Tanner, Head Baseball Coach: Dr. McGee was pleased to recommend, with the approval of Dr. Palms, the proposed contract that moved Coach Tanner back to a five year term and included a base salary of $95,000. Coach Tanner enjoyed the full confidence of the University, and the University was highly pleased with the performance of his student athletes on the field and also in the classroom. Coach Tanner had widespread support among the "Carolina faithful."

Dr. Palms added his strong support of the revised contract.

Mr. Parham said that the contract was virtually identical to Coach Tanner's current contract with three exceptions. First, Coach Tanner's base salary would be increased from $86,840 to $95,000. Second, the term of the contract would be five years beginning June 1, 2000, and ending May 31, 2005. Coach Tanner's existing contract was due to expire on May 31, 2003; this represented a two year extension of his current contract. Third, there was a change in the termination provision of the contract. In the event Coach Tanner terminated the contract, he would be obligated to pay the University an amount equal to 50% of his base salary, per year, for the remaining term of the contract, not to exceed a total of $100,000. Under his current contract, Coach Tanner would pay 50% of his base salary for the remaining term of the contract with no cap on the maximum amount he would be obligated to pay.

All other aspects of the contract would remain the same. Coach Tanner would earn supplemental compensation of up to two and one half months of his base salary based on performance benchmarks such as the baseball team winning the SEC Championship, being selected for post-season play, advancing to the College World Series, and winning the National Championship.

Coach Tanner would continue to be provided an automobile and would be allowed to conduct up to three weeks of summer, and one week of winter, baseball camps.

Except as mentioned previously, the termination provisions of the contract would remain the same. In that regard, there was one grammatical change that Mr. Mungo called to Mr. Parham's attention. Paragraph 8.01 provided that the University could terminate the coach for cause if he was convicted or entered Pre-Trial Intervention (PTI) as a result of a felony or a misdemeanor involving moral turpitude. Mr. Mungo asked that a semi-colon be placed between the words felony and misdemeanor so that the phrase "involving moral turpitude" clearly would apply only to misdemeanors. Mr. Parham agreed and would make that change.

Mr. Mungo moved approval of the proposed contract with the change as stipulated above, and Mr. Bradley seconded the motion. The vote was taken via roll call, and the motion carried.

V. Purchase of the former Columbia Museum of Art Properties: Dr. Palms said that he had briefed the Board, during its April meeting at USC Beaufort, on the proposed purchase of the former Columbia Museum of Art property. He called on Mr. Glenn who provided specific information on the purchase. Mr. Glenn said that the Development Foundation Real Estate Committee would receive a contract the following day to purchase the property for $3.4 million and to close between the 1st and the 15^th of September with the seller responsible for all environmental conditions, if any existed. Those terms were identical to the ones reported by Dr. Palms to the Board of Trustees at USC Beaufort.

Mr. Mungo asked if the property had received an MAI appraisal, and Mr. Glenn said that, according to Dr. VanHuss, if an MAI had not been completed, it would be. Dr. Floyd expressed his strong support for the acquisition of the property, and he then questioned the continued use of a portion of the property by the "little theatre." Secretary Stepp explained that there were approximately 20 years remaining on an original 50 year lease agreement for a very small corner of the property. In response to a question by Dr. Floyd, Mr. Glenn said that the lease payments totaled between $30,000 and $48,000 per year.

Mr. Mungo cautioned that the administration should determine a property's usage before purchasing it. Dr. Palms responded that the parcel in question would adequately meet specific needs stipulated in the Columbia Campus Facilities Master Plan.

There was no other business to be brought before the Executive Committee, and Chairman Hubbard declared the meeting adjourned at 4:40 p.m.

Respectfully submitted,

Thomas L. Stepp,

Secretary