University of Virginia Library

ARTICLE VI.

Particular Covenants.

Section 601. The Board covenants that it will promptly pay the principal of and the interest
on each and every bond issued under the provisions of this resolution at the place, on the dates
and in the manner provided herein and in said bonds and in the coupons appertaining thereto,
according to the true intent and meaning thereof. The principal and interest are payable solely
from the Revenues of the Housing System, which revenues are hereby pledged to the payment thereof
in the manner and to the extent hereinabove particularly specified, and nothing in the bonds or
in this resolution shall be deemed to constitute the bonds a debt of the State of Virginia or a
pledge of the faith and credit of the State, nor shall the bonds ever be or become a charge
against the State of Virginia.

Section 602. The Board covenants that it will forthwith proceed to construct the Project
in conformity with law and all requirements of all governmental authorities having jurisdiction
thereof, and that it will complete such construction with all expedition practicable.

The Board further covenants that it will require each person, firm or corporation with
whom it may contract for labor or materials in connection with the construction of the Project
to furnish a performance bond in the full amount of any contract exceeding Five Thousand Dollars
($5,000) in amount, and to carry such property damage and builders' risk insurance, if any,
as may be recommended by the Comptroller of the Institution. The Board further covenants that
in the event of any default under any such contract and the failure of the surety to complete
the contract, the proceeds of such performance bond will forthwith, upon receipt of such proceeds,
be deposited to the credit of the Construction Fund and will be applied toward the
completion of the contract in connection with which such performance bond shall have been furnished.

Section 603. The Board covenants that it will provide and maintain competent and adequate
architectural or engineering services covering the supervision and inspection of the development
and construction of the Project, and will obtain all approvals and permits required by law
as a condition precedent to the construction, development and operation of the Project.

Section 604. The Board covenants that it will establish and enforce reasonable rules and
regulations governing the use of the Housing System and the operation thereof, that all compensation,
salaries, fees and wages paid by it in connection with the maintenance, repair and
operation of the Housing System will be reasonable, that it will maintain and operate the
Housing System in an efficient and economical manner, that, from the Revenues of the Housing
System, it will at all times maintain the same in good repair and in sound operating condition
and will make all necessary repairs, renewals and replacements, that it will observe and perform
all of the terms and conditions contained in the Act, and that it will comply with all valid
acts, rules, regulations, orders and directions of any legislative, executive, administrative or
judicial body applicable to the Housing System.

Section 605. The Board covenants that it will not create or suffer to be created any lien
or charge upon the Housing System or any part thereof or upon the Revenues of the Housing System
ranking equally with or prior to the lien and charge of the bonds secured hereby upon such
Revenues, and that, from such Revenues or other available funds, it will pay or cause to be
discharged, or will make adequate provision to satisfy and discharge, within sixty (60) days
after the same shall accrue, all lawful claims and demands for labor, material, supplies
or other objects which, if unpaid, might by law become a lien upon the Housing System or any
part thereof or the Revenues therefrom, provided, however, that nothing in this Section contained
shall require the Board to pay or cause to be discharged, or make provision for, any
such lien or charge so long as the validity thereof shall be contested in good faith and by
appropriate legal proceedings.

Section 606. The Board covenants that if at any time the moneys held for the credit of
the Sinking Fund shall be insufficient for the purpose of paying the interest on and the
principal of the bonds as such interest and principal becomes due and payable, the Board will
deposit to the credit of the Sinking Fund an amount sufficient, together with the amount then
held for the credit of the Sinking Fund, to pay such interest and principal from any moneys
available for the use of the Institution and which are not required by law or by previous
binding contract to be devoted to some other purpose.

Section 607. Notwithstanding any other provision of this resolution, nothing herein shall
be construed to prevent the Board from paying all or any part of the Current Expenses from any
funds available to the Board for such purpose.

Section 608. The Board covenants that from and after the time when the contractors or
any of them engaged in constructing the Project or any part thereof shall cease to be responsible,
pursuant to the provisions of the respective contracts for the construction of the
Project or such part, for loss or damage to the Project or such part occurring from fire or
lightening, it will insure and at all times keep the Project or such part insured and will now
and at all times keep the Existing Dormitories insured with a responsible insurance company or
companies, qualified to assume the risk thereof, against physical loss or damage caused by fire
or lightening, with such exceptions as are ordinarily required by insurers of structures or
facilities of similar type, in an amount not less than eighty per centum (80%) of the replacement
value of the Project or such part and the Existing Dormitories, less depreciation,
provided, however, that such amount of insurance shall at all times be sufficient to comply
with any legal or contractual requirement which, if breached, would result in assumption by the
Board of a portion of any loss or damage as a co-insurer, and such insurance may provide for
the deduction from each claim for loss or damage (except in case of a total loss) of not more
than two per centum (2%) of the total amount of insurance required by the application of the
co-insurance clause, and provided, further, that if at any time the Board shall be unable to
obtain such insurance to the extent above required, either as to amount of such insurance or
as to the risks covered thereby or the deductible provision thereof, it will not constitute an
event of default under the provisions of this resolution if the Board shall carry such insurance
to the extent reasonably obtainable.

The proceeds of such insurance shall be available for, and shall to the extent necessary
be applied to, the repair, replacement or reconstruction of the damaged or destroyed property.
If such proceeds are more than sufficient for such purpose, the balance remaining shall be
deposited to the credit of the Sinking Fund. If such proceeds, with other available funds,
shall be insufficient for such purpose, such proceeds shall be deposited to the credit of the
Sinking Fund or shall be used to purchase bonds, as the Board by resolution may determine.

Section 609. The Board covenants that it will at all times carry in a responsible insurance
company or companies qualified to assume the risks thereof property damage insurance in such
amount and covering such risks as the Board shall deem to be reasonable and desirable.

Section 610. The Board covenants that no contract or contracts will be entered into or
any action taken by which the rights of the bondholders might be impaired or diminished.

Section 611. The Board covenants that it will keep an accurate record of the total
cost of the Project, and of all expenditures relating to the Housing System and of the Revenues
thereof collected, and of the application of such Revenues. Such records shall be open at all
reasonable times to the inspection of all interested persons.

The Board further covenants that, if so requested in writing by any bondholder within the
month of July after the close of any fiscal year, it will cause the Comptroller of the Institution
to make a report from the books and accounts relating to the Housing System for the
preceding fiscal year. Within the next two months copies of such report shall be filed with
the Secretary to the Board and the State Treasurer and shall be mailed by the Comptroller to all
bondholders who shall have filed their names and addresses with the Comptroller for such purpose
Each such report shall set forth in respect of the preceding fiscal year an income and expense
account for the Housing System, the percentage of use of the Housing System, the details of all
bonds paid, the amount on deposit at the end of such fiscal year to the credit of each Fund
created under the provisions of this resolution and the details of any investment thereof, a
schedule of all insurance policies which are then in effect, stating with respect to each policy
the name of the insurer, the amount, number and expiration date, and the hazards and risks
covered thereby, and also the findings of the Comptroller as to whether the moneys received by
the Board under the provisions of this resolution during such fiscal year have been applied in
accordance with the provisions of this resolution and whether the Board is in default of any of
the covenants contained in Sections 401 and 402 of this resolution.

Section 612. The Board covenants that it will not sell or otherwise dispose of or encumber
the Housing System or any part thereof and will not create or permit to be created any charge or
lien on the Revenues therefrom ranking equally with or prior to the charge or lien of the bonds
secured hereby on such Revenues. The Board may, however, sell or dispose or permit the sale
or disposal by the Institution of any furniture, fixtures, apparatus, tools, instruments or other
movable property acquired for or in connection with the Housing System or any materials used in
connection therewith, if the Board shall determine by resolution that such articles are no longer
needed or are no longer useful in connection with the construction of the Project or the operation
and maintenance of the Housing System. The proceeds of any sale made under the authority of this
Section shall be deposited to the credit of the Sinking Fund.