University of Virginia Library

ARTICLE V

PLEDGES AND COVENANTS OF THE BOARD

SECTION 5.01. The Board covenants that it will, to the extent permitted by law, provide
and replace, as necessary from time to time, from sources other than the proceeds of the
Bonds to be issued hereunder and from sources and in a manner which will not adversely affect
the security of the Bonds, the furnishings and the moveable equipment necessary to the full
enjoyment of the use, occupancy and operation of the Project.

SECTION 5.02. Subject only to the right of the Board to cause amounts to be paid into
the Current Expenses Account and to expend the same as hereinbefore provided, the Gross Revenues
of the Project and all moneys and investments paid or to be paid, or held or to be held by the
State Treasurer pursuant to the provisions of this Resolution, are hereby pledged to secure the
payment of the principal of, the premiums, if any, and the interest on the Bonds in accordance
with their terms and the provisions of this Resolution, and this pledge shall be valid and binding
from and after the date upon which any Bonds are first issued hereunder, and the Gross Revenues
as received by the Board and other moneys or investments hereby pledged, shall immediately
be subject to the lien of this pledge without any physical delivery thereof or further act, and
the lien of this pledge shall be valid and binding against all parties having any claim of any
kind, in tort, contract or otherwise, against the Board, irrespective of whether such parties
shall have notice thereof.

SECTION 5.03. The Board covenants that it promptly will pay, or will cause to be
paid, the principal of, the premium, if any, and the interest on every Bond issued hereunder,
at the places, on the dates and in the manner specified herein and in the said Bonds and in
the coupons appertaining to the Coupon Bonds, according to the true intent thereof

SECTION 5.04. The Board covenants that it will at all times operate the Project
properly and in a sound and economical manner, and will maintain, preserve and keep the same,
with the appurtenances and every part and parcel thereof, in good repair, working order and
condition, and will, from time to time, make all necessary and proper repairs, renewals and
replacements so that at all times the operation of the Project may be properly and advantageously
conducted.

SECTION 5.05. The Board covenants that it will establish and maintain, so long as
any of the Bonds issued hereunder are outstanding, such parietal rules, rental rates and
charges for the use of the Project as may be necessary to (1) assure maximum occupancy and
use of the Project facilities, and (2) provide sufficient moneys to enable the Board to meet
the requirements of the Current Expenses Account, the Bond Fund, the Debt Service Reserve and
the Repairs Reserve as specified under Article IV of this Resolution, and that the Board will,
so far as practicable, give preference to filling Project housing vacancies over other similar
facilities at the College.

SECTION 5.06. The Board covenants that, so long as any of the Bonds are outstanding
hereunder, it will not dispose of its title to the Project, or to any part thereof, including
any lands or facilities necessary to the operation and use thereof, provided, however, that the
Board, from time to time, may alter, repair, replace, change or add to the fixtures, equipment
or structures of the Project, and may dispose of any machinery, fixtures or equipment, upon
substituting other property of equal value and utility therefor.

SECTION 5.07. The Board covenants that, upon the acceptance of any part of the Project
from the contractor, it will procure from responsible insurance companies, duly qualified
to do business in the State of Virginia, and will maintain with a responsible insurance company
or companies as long as any of the Bonds are outstanding, fire and extended coverage insurance
thereon, in amounts sufficient to provide for not less than full recovery whenever the loss
from causes covered by such insurance does not exceed eighty per centum (80%) of the full insurable
value thereof.

All such policies of insurance carried by the Board shall be deposited with the State
Treasurer, and the State Treasurer shall have the sole right to receive the proceeds of such
policies of insurance and to collect and to receipt for claims thereunder. Such proceeds are
hereby pledged, and shall be held by the State Treasurer as security for the Bonds until applied
or paid out as hereinafter provided in this Section 5.07.

The State Treasurer hereby is authorized in his own name to demand, collect, sue and
receipt for the insurance moneys which may become due and payable under such policies of insurance.
Any appraisement or adjustment of any loss or damage and any settlement or payment
of indemnity therefor, which may be agreed upon between the Board and any insurer, shall be
evidenced to the State Treasurer by a certificate, signed by the President and the secretary
or treasurer of the Board, and may be assented to and accepted by the State Treasurer. The
State Treasurer may rely upon such certificate as conclusive and shall in no way be liable or
responsible for the collection of insurance moneys in case of any loss or damage.

All such policies of insurance shall be open to the inspection of the Bondholders,
their agents and representatives, and the Administrator, and his agents and representatives,
at all reasonable times.

In the event of any damage to or destruction of the insured property, the Board, unless
it elects to pay and to redeem all of the outstanding Bonds, shall proceed diligently and
expeditiously to replace or to repair such damaged property. In the event of the payment to the
State Treasurer of the proceeds of any insurance policy relative to any particular loss which
does not exceed $10,000, such proceeds shall be paid over by the State Treasurer to the Board
upon the written order of the President and treasurer of the Board, or such other fiscal
officer of the Board as the Board shall by resolution appoint, and such payment shall be applied
by the Board, to the extent required, solely for repairing or reconstructing the damaged
property. If the proceeds of any such loss shall exceed $10,000, such proceeds shall be
paid out by the State Treasurer, from time to time, to the Board, upon the written order of

the President and treasurer of the Board, or such other fiscal officer of the Board as the
Board shall by resolution appoint, but only upon the receipt by the State Treasurer of (1)
a written requisition of the Board, executed by the President and treasurer of the Board or
such other fiscal officer of the Board as the Board shall by resolution appoint, specifying
the expenditures made or the indebtedness incurred in repairing or reconstructing the damaged
property, and certifying that the proceeds of insurance, together with any other moneys available
for such purpose, will be sufficient to complete such repairing or reconstructing, and
(2) if the Holders of not less than fifty-one per centum (51%) of the outstanding Bonds shall
request, written approval of the said requisition by an engineer or an architect named in the
said request.

In the event that the proceeds of insurance together with all other moneys legally available
for such purpose, are insufficient to complete the repair or the reconstruction of the
damaged property, such proceeds shall be deposited with and shall be held by the State Treasurer
as security for the Bonds and for the ratable benefit of the Holders thereof, provided,
however, that if the Board shall so request and the Holders of not less than fifty-one per
centum (51%) of the then outstanding Bonds, shall agree in writing, the State Treasurer shall
apply to such repair or reconstruction (in the manner above specified) all moneys held by him
in the Revenue Fund, the Bond Fund and all moneys and securities held by him in the Debt Service
Reserve, the Repairs Reserve, and the Redemption Fund.

Any proceeds of insurance held by the State Treasurer or by the Board and remaining
at the completion of any payment for such repair or reconstruction of the damaged property
shall be deposited in the Bond Fund.

Whenever and so long as the funds and investments of the Debt Service Reserve hereinbefore
provided for are less than the Required Value, the Board shall procure and maintain
use and occupancy insurance on the Project in an amount sufficient to enable the Board to deposit
in the Bond Fund out of the proceeds of such insurance, an amount equal to the sum that
would normally have been available from the revenues of the damaged building or buildings for
deposit in such Fund during the time the damaged building or buildings or non-revenue producing
as a result of loss of use caused by hazards covered by fire and extended coverage insurance.
The Board shall not be deemed in default under the terms of this Section if the Board shall procure
said use and occupancy insurance required under this Section in ten (10) days from the
date the funds and/or investments of the Debt Service Reserve become less than the Required
Value.

SECTION 5.08. Subject to the provisions of Article VII hereof, the Board covenants
that it will not, directly or indirectly, extend, or assent to the extension of, the time of
payment of any coupons appertaining to, or the time of payment of any claim for interest on,
any of the Bonds, and will not, directly or indirectly, be a party to, or approve, any such
arrangement, by purchasing or funding such coupons or claims for interest, or in any other
manner. In case any such coupons or claims for interest shall be extended or funded, such
coupons or claims for interest shall not be entitled, in case of any default hereunder, to
the benefit or the security of this Resolution, except subject to the prior payment in full
of the principal of all Bonds outstanding hereunder and of all coupons and claims for interest
which shall not have been so extended or funded.

SECTION 5.09. The Board covenants that it will at any and all times, in so far as
it may be authorized so to do by law, pass, make, do, execute, acknowledge and deliver all and
every such further resolutions, acts, deeds, conveyances, assignments, transfers and assurances
as may be necessary or desirable for the better assuring, conveying, granting, assigning and
confirming all and singular the Gross Revenues and other funds hereby pledged to the payment
of the Bonds and interest thereon or intended so to be, or which the Board may hereafter become
bound to pledge or assign.

SECTION 5.10. The Board covenants that it will keep and preserve complete and
accurate financial records and proper books relating to the Project, including complete and
accurate accounts of all sums of money received and disbursed in connection with the operation
and maintenance of the Project, such as all amounts charged and collected as fees, rents
and charges in connection with the Project and all sums disbursed for the payment of the principal
of or interest on or other debt service with respect to the Bonds issued pursuant to
this Resolution, and such records and books shall be open to inspection by the Bondholders and
their agents and representatives at all reasonable times, and that it will furnish to the State
Treasurer and to any Bondholder, upon request in writing not later than ninety (90) days after
the close of each Fiscal Year, a statement of all sums received and disbursed in connection
with the Project and of the status of the Bond Fund, the Debt Service Reserve, and the Repairs
Reserve, including balance sheets and financial statements certified by the Auditor of Public
Accounts of the State of Virginia and compiled in accordance with the system of accounting prescribed
by said Auditor of Public Accounts, reflecting in reasonable detail the financial condition
and record of operations of the Project.

SECTION 5.11. So long as any of the Bonds are outstanding and unpaid, the Board will
not furnish or supply any commodity, service or facility furnished by or in connection with the
Project free of charge to any person, firm or corporation, public or private

SECTION 5.12. The Board covenants that it will not issue any Bonds, certificates or
other evidences of indebtedness, other than the Bonds authorized hereby, secured by a pledge of
the Gross Revenues, and it will not create or cause to be created any lien or charge on such
Gross Revenues, and no part of the Project will be sold, mortgaged, leased or otherwise disposed
of or encumbered, nor will any lien for other purposes be allowed to remain thereon.

SECTION 5.13. The Board covenants that it will do and perform or cause to be done and
performed all acts and things required to be done or performed by or on behalf of the Board under
the provisions of the Constitution and statutes of the State of Virginia and this Resolution in
accordance with the terms of such provisions.