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 | Board of Visitors minutes October 7, 1988 |  |
Section 9. This resolution shall take effect immediately upon its passage.
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding, dated as of _________, 1988, by and between The Rector and Visitors of the University of Virginia (the "University") and University of Virginia Hospitals ("Hospitals"), an operating division of the University, sets forth certain agreements and understandings of the parties concerning the making of an interfund loan (the "Loan") by the University to Hospitals in the amount of $22,500,000 in order to provide additional working capital for Hospitals, as follows:
1. By Article 2, Chapter 9, Title 23, Code of Virginia, 1950, as amended, there is created a corporation under the name and style of The Rector and Visitors of the University of Virginia (the "University") to be governed by a Board of Visitors (the "Board"), which is vested with the supervision, management and control of the University of Virginia at Charlottesville, Virginia.
2. Hospitals is an operating division of the University, being a separate financial reporting entity, with management responsibility for the operation of the University's hospital facilities.
3. Under the authority of Chapter 3, Title 23, Code of Virginia, 1950, as amended, and resolutions duly adopted by the Board and the Executive Committee of the Board, the University has heretofore issued, and there are currently outstanding, $95,386,796 Hospital Revenue Refunding Bonds (Series C) and $32,200,000 Variable Rate Demand Hospital Revenue Refunding Bonds (Series D) (collectively, the "Prior Bonds"), each of which series of Prior Bonds was issued to refund other series of hospital revenue bonds of the University issued previously to finance improvements and additions to the hospital and ancillary facilities operated by Hospitals.
4. The University is authorized by Article 2, Chapter 9, Title 23, Code of Virginia, 1950, as amended, to borrow money to effectuate any of its corporate purposes.
5. Management of Hospitals has requested the Board to authorize additional borrowing in order to provide additional working capital for Hospitals.
6. The Board has heretofore authorized the incurrence of a loan from The University of Virginia Health Services Foundation (the "Foundation") in the principal amount of $7,500,000 for the purposes hereinabove described and upon the terms and conditions
7. The Board has determined to make the Loan to Hospitals in the amount of $22,500,000 upon the terms and conditions hereinafter set forth, and Hospitals has agreed to accept the Loan.
8. The making of the Loan is in the best interests of the University and Hospitals.
9. The principal of and the interest on the Loan shall be payable solely from available funds of Hospitals, subject to the rights of the registered owners of the Prior Bonds and the rights of the holders of any additional Bonds issued pursuant to the Master Resolution adopted by the Executive Committee of the Board on November 30, 1984, as amended on May 30, 1985 (collectively, the "Master Resolution") and the holders of Parity Indebtedness (as defined in the Master Resolution) in and to the Net Revenues (as defined in the Master Resolution).
10. The principal amount of the Loan shall be due, subject to the right of prepayment hereinafter set forth, on the fifth anniversary of the date the Loan is funded; provided, however, that the due date of the Loan may be extended, at the option of the University, for an additional period of five years. The University shall exercise such option by delivering to the Vice President for Business and Finance of the University and the Director of Finance of Hospitals, not later than 30 days prior to the original due date of the Loan, written notice of its election to so extend the due date. In such event the University and Hospitals shall cause to be executed and delivered an amendment to the Memorandum of Understanding reflecting such extended due date.
11. The Loan shall bear interest as follows:
- (a) With respect to any proceeds of the Loan that have not been expended by Hospitals, the interest thereon shall be equal to the investment income, including any capital gains, realized thereon, such amount to be paid to the University by Hospitals promptly upon receipt. For purposes of this subparagraph, the purchase of an investment by Hospitals or by the University on behalf of Hospitals shall not be deemed to constitute an expenditure of proceeds of the Loan.
- (b) To the extent any proceeds of the Loan have been expended by Hospitals, the average outstanding balance for any calendar quarter shall bear interest, calculated on the basis of a year of 365/366 days and actual days elapsed, payable quarterly in arrears on each February 1, May 1, August 1 and November 1 at a rate per annum equal to the average rate earned on the Common Fund Short-Term Fund for the previous calendar quarter plus 1/2 of 1%. Such rate shall be recalculated quarterly.
Hospitals will maintain records and books of account in form sufficient to enable the calculations required by the preceding paragraph to be made in a timely manner, which records and books of account shall be available for inspection by the University, acting through its officers, agents, employees and other authorized representatives, at reasonable times and upon reasonable notice. Hospitals will provide prompt written notice to the Vice President of Business and Finance of the University of any expenditure of the proceeds of the Loan, determined as provided in paragraph 13 hereof, specifying the amount of such expenditure and the date on which it was made.
Both the principal of and the interest on the Loan shall be payable in such lawful money of the United States of America as at the time of payment thereof is legal tender for the payment of public and private debts. The principal of the Loan shall be payable, on the due date thereof, by interfund transfer on the books of the University and Hospitals. Payment of interest on the Loan shall be made by interfund transfer on the books of the University and Hospitals on each interest payment date.
12. The Loan may be prepaid at any time prior to the due date thereof, either in whole or in part, from any moneys that may be made available for such purpose, at the principal amount of the Loan to be prepaid, together with the interest accrued thereon to the date of prepayment, without penalty.
On the date of prepayment, moneys for such prepayment having been delivered to the University or an interfund transfer of an amount sufficient for such prepayment having been made on the books of the University and Hospitals, Hospitals' obligation with respect to the Loan or any part thereof so prepaid shall be discharged and any interest on the Loan or any part thereof so prepaid shall cease to accrue.
13. Simultaneously with the making of the Loan, the University shall credit the proceeds of the Loan and deposit the proceeds of the Note to an account which shall be held separate and apart from all other funds and accounts of the University and
14. All covenants, stipulations, obligations and agreements of the University and Hospitals contained in this Memorandum of Understanding shall be deemed to be covenants, stipulations, obligations and agreements of the University and Hospitals to the full extent permitted by the Constitution and laws of the Commonwealth of Virginia. No covenant, stipulation, obligation or agreement contained in this Memorandum of Understanding shall be deemed to be a covenant, stipulation, obligation or agreement of any present or future Visitor, officer, employee or agent of the University or Hospitals in his individual capacity. Neither any member of the Board nor any officer or employee of the University or Hospitals shall be subject to any personal liability or accountability by reason of the making of the Loan.
15. The officers, agents and employees of the University and Hospitals are hereby authorized and directed to do all acts and things required of them by the provisions of this Memorandum of Understanding for the full, punctual and complete performance of the terms, covenants, provisions and agreements contained in this Memorandum of Understanding.
THE RECTOR AND VISITORS OF
THE UNIVERSITY OF VIRGINIA
By: Vice President for Business and Finance
UNIVERSITY OF VIRGINIA HOSPITALS
By: Director of Finance
| Board of Visitors minutes October 7, 1988 | |