University of Virginia Library

ARTICLE IV

CREATION OF FUNDS AND ACCOUNTS
AND PAYMENTS THEREFROM

SECTION 4.01. There is hereby created a special account to be known as the "Project
Revenue Fund Account" (hereinafter called the "Revenue Fund"), which shall be maintained as
long as any of the Bonds are outstanding and which shall be held separate and apart from all
other funds of the Board and which shall be maintained by the Board with the State Treasurer.
The Board covenants and agrees that it will pay to the State Treasurer for deposit in the
Revenue Fund the amount of all accrued interest received by the Board upon the sale of the
Bonds, for allocation to the Bond and Interest Sinking Fund Account in accordance with Section
2.04 of this Resolution, and thereafter, as soon as any portion of the Project has become
revenue-producing, the Board also covenants and agrees to pay monthly to the State Treasurer
for deposit in the Revenue Fund the Gross Revenues derived by it from the Project.

The moneys from time to time on deposit in the Revenue Fund shall be held by the
State Treasurer in trust and shall be subject to a lien and charge in favor of the Bondholders
until disbursed as hereinafter provided.

Moneys from time to time on deposit in the Revenue Fund shall be expended and used
only in the manner and in the order specified in Sections 4.02, 4.03, 4.04 and 4.05 hereof

SECTION 4.02. Current Expenses of the Project (herein called "Current Expenses")
shall be payable, as a first charge from the Revenue Fund as the same become due and payable.
For the purpose of paying the said Current Expenses there is hereby created a special account
to be known as the "Current Expenses Account" which shall be maintained by the Board with the
State Treasurer, and the State Treasurer shall transfer in each Fiscal Year from the Revenue
Fund to the Current Expenses Account in the manner and at the times hereinafter set forth the
amounts required to pay the Current Expenses during the then current Fiscal Year, the aggregate
of which shall, in no event, exceed the amount provided therefor in the Current Expenses Budget
(hereinafter provided for) for such Fiscal Year. There shall be transferred monthly from
the Revenue Fund to the Current Expenses Account not more than one-twelth (1/12) of the Current
Expenses Budget requirements. The Current Expenses Account shall be applied from time to time
by the State Treasurer to the payment of Current Expenses as budgeted, upon the vouchers of
the treasurer or other authorized fiscal officer of the Board.

Prior to the beginning of each Fiscal Year, the Board shall prepare and adopt by resolution
a proposed budget of Current Expenses during such ensuing Fiscal Year (herein called the
"Current Expenses Budget"). The proposed Current Expenses shall be itemized according to proper
classification and in reasonable detail, and the resolution of the Board adopting such Budget
shall find and determine that the Current Expenses listed therein constitute Current Expenses
as defined in Article I of this Resolution. If for any reason the Current Expenses Budget shall
not have been adopted and approved by the Board on or before the beginning of any Fiscal Year,
the Current Expenses Budget for the preceding Fiscal Year shall be deemed to be in force for
the current Fiscal Year until the Current Expenses Budget for such Year is adopted

The Current Expenses Budget for each Fiscal Year shall be filed promptly with the State
Treasurer.

SECTION 4.03. There is hereby created a special account to be known as the "Bond and
Interest Sinking Fund Account" (hereinafter called the "Bond Fund"), which shall be maintained
as long as any of the Bonds are outstanding by the Board with the State Treasurer in trust until
applied as hereinafter provided. The State Treasurer shall deposit in the Bond Fund an amount
equal to the accrued interest received upon the sale of the Bonds in accordance with the provisions
of Section 2.04. Thereafter, as soon as any portion of the Project becomes revenue-producing,
and after providing for the payment of Current Expenses as hereinbefore provided,
the State Treasurer shall transfer from the Revenue Fund and deposit to the credit of the Bond
Fund (a) on or before April 15 and October 15, respectively of each year, as long as any of the
Bonds shall remain outstanding, an amount sufficient to pay the semi-annual installment of interest
falling due on said Bonds on the next succeeding May 1 and November 1, respectively, and
(b) on or before April 15, 1960, and on or before April 15 of each year thereafter, as long as
any of the Bonds shall remain outstanding, an amount equal to one-half of the aggregate principal
amount of the Coupon Bonds at the time outstanding which shall mature by their express terms
on the next succeeding November 1, and an amount equal to one-half of the principal installments of
Registered Bonds, which installments shall become due on the next succeeding November 1, and (c)
on or before October 15, 1960, and on or before October 15 of each year thereafter, as long as any
of the Bonds shall remain outstanding, an amount equal to one-half of the aggregate principal
amount of the Coupon Bonds at the time outstanding which shall mature by their express terms on
the next succeeding November 1, and an amount equal to one-half of the principal installments of
Registered Bonds, which installments shall become due on the next succeeding November 1.

The State Treasurer, without any direction from the Board, shall use the money in the
Bond Fund to pay the principal of and the interest on the Bonds as the same become due and payable.

SECTION 4.04. There is hereby created a special account to be known as the "Debt Service
Reserve Fund Account" (hereinafter called the "Debt Service Reserve"), which shall be maintained
by the Board with the State Treasurer in trust until applied as hereinafter provided. There
shall be deposited in the Debt Service Reserve any securities of the United States of America or
any marketable negotiable securities listed on the New York Stock Exchange that have been or shall
be donated to the University for the purpose of establishing the Debt Service Reserve, in accordance
with the Stipulation Agreement attached hereto and marked Exhibit A. From the moneys remaining in
the Revenue Fund after allocating the full amounts required to be paid therefrom into the Current
Expenses Account and the Bond Fund, the State Treasurer shall next allocate and pay into the Debt
Service Reserve on or before the close of each Fiscal Year such amount as shall be necessary to
make the aggregate of the funds and investments therein equal at least to the "Required Value,"
or the principal amount of the Bonds then outstanding, whichever is the lesser. The moneys held
in the Debt Service Reserve shall be continously invested as nearly as practicable in marketable
direct obligations of the United States of America or marketable negotiable securities listed on
the New York Stock Exchange. All income or profits on such investments shall be credited to and
all losses thereon shall be charged to the Debt Service Reserve. The income from such investments
and, if necessary, the proceeds of sale of all or part of such investments and any other
moneys in the Debt Service Reserve shall be transferred to the Bond Fund to the extent that on
any April 15 or October 15 the amounts deposited therein from the Revenue Fund may be insufficient
to meet the current semi-annual principal and interest requirements on the outstanding Bonds.
Should the Debt Service Reserve become impaired by shrinkage in the Required Value of the investments
held therein or by withdrawals to make up deficiencies in the Bond Fund, the Debt Service
Reserve shall be replenished as soon as possible from the next available moneys in the Revenue
Fund before making any payments to the Building Maintenance and Equipment Reserve Account and
the Bond Redemption Fund Account, and should the Debt Service Reserve not be made whole by the
next June 30th, the rentals charged for the use of the Project for the next college year shall
be increased by amounts sufficient (1) to make up the impairment by the next following June 30
and (2) to preclude further impairment.

SECTION 4.05. There is hereby created a special account to be known as the "Building
Maintenance and Equipment Reserve Account" (hereinafter called the "Repairs Reserve") which shall
be maintained by the Board with the State Treasurer in trust until applied as hereinafter provided.
From the moneys remaining in the Revenue Fund after allocating therefrom the full amounts required
to be paid into the Current Expenses Account, the Bond Fund and the Debt Service Reserve, including
amounts necessary to replenish any deficiencies in said Debt Service Reserve, the State Treasurer
shall next allocate, on or before the close of each Fiscal Year, the entire balance in the
Revenue Fund until the funds and investments in the Repairs Reserve shall aggregate Three Thousand
Dollars ($3,000). All moneys in the Repairs Reserve may be drawn on by vouchers of the
treasurer or other fiscal officer of the Board and used for the purpose of paying the cost of
unusual or extraordinary renovation or replacement of the Project's fixed equipment, kitchen ranges
and refrigerators and buildings, including maintenance, repairs, renewals and replacements not paid
as part of the Current Expenses, and any such withdrawals from the Repairs Reserve shall be replenished
from the Revenue Fund as soon as possible after first making the required allocations
from the Revenue Fund to the Current Expenses Account, the Bond Fund, and the Debt Service Reserve.
In the event that the funds in the Bond Fund and the Debt Service Reserve shall be reduced below
the amount required to meet the then current semi-annual debt service requirements on the outstanding
Bonds and the Required Value of the Debt Service Reserve, funds on deposit in the Repairs
Reserve shall be transferred to the Bond Fund to the extent required to make up any deficiencies
in the Bond Fund.

SECTION 4.06. There is hereby created a special account to be known as the "Bond Redemption
Fund Account" (hereinafter called the "Redemption Fund") which shall be maintained by
the Board with the State Treasurer in trust until applied as hereinafter provided. From the moneys
remaining in the Revenue Fund after allocating therefrom the full amounts required to be paid into
the Current Expenses Account, the Bond Fund, the Debt Service Reserve and the Repairs Reserve, the
State Treasurer shall next allocate and pay into the Redemption Fund, on or before the close of
each fiscal year, the entire balance in the Revenue Fund. Whenever the accumulated funds in the
Redemption Fund are equal to One Thousand Dollars ($1,000) or more, plus amounts required to pay
the accrued interest and redemption premiums, if any, on Coupon Bonds subject to redemption, or
on Registered Bonds subject to prepayment, such funds shall be used to redeem or prepay Bonds in
their inverse numerical order or in the inverse order of maturity of the installments of principal
thereof, as the case may be.

SECTION 4.11. When the total of the funds and investments in the Bond Fund, the Debt
Service Reserve, the Repairs Reserve and the Redemption Fund is sufficient to redeem or prepay
all of the outstanding Bonds, such funds and investments shall be applied to redeem or prepay
all such Bonds.