University of Virginia Library

AUTHORIZATION TO ISSUE AND SELL FACULTY MORTGAGE REVENUE BONDS

Mr. Powell Davis, President of the Investment Corporation of Virginia, the principal underwriter of the Faculty Housing Revenue Bonds and Mr. Harry Frazier, III, of the firm of Hunton, Williams, Gay and Gibson, the University's bond counsel, were introduced. Mr. Davis and Mr. Frazier explained aspects of the issue known as "$9,000,000 The Rector and Visitors of the University of Virginia Faculty Housing Revenue Bonds, Series of 1972" (the Bond issue).

Mr. Wright Harrison, in compliance with Section 2.1-352 of the Virginia Code of 1950 as amended, a provision of the Virginia Conflict of Interests Act, read into the record a statement indicating that the Virginia National Bank with which he is associated will be one of the Bond issue buyers. A portion of the bonds will be purchased as a bank investment in the name of The Virginia National Bank, and a portion will be purchased as an investment by the Trust Department of the Bank as a fiduciary for others. He further stated that The Virginia National Bank will serve as trustee for the Bond issue. Mr. Wright Harrison thereby disqualified himself from voting or otherwise participating in any official action by The Rector and Visitors of the University of Virginia with respect to the Bond issue.

With the exception of Mr. Wright Harrison who abstained from voting, the following resolution was unanimously adopted by all members of the Board of Visitors present:

• WHEREAS, The Rector and Visitors of the University of Virginia (the University) is authorized by Section 23-30.01 of the Code of Virginia of 1950, as amended, upon the affirmative vote of at least two-thirds of the University's Board of Visitors (the Board) and by and with the approval of the Governor, to borrow money and issue its bonds and secure payment thereof by the pledge of any stocks, notes or bonds held by the University as part of its endowment funds and which are secured by a lien upon real estate; and
• WHEREAS, Section 103 (d) (3) of the Internal Revenue Code of 1954, as amended, excepts from the definition of an "arbitrage bond" any obligation "issued as a part of an issue substantially all of the proceeds of which are reasonably expected to be used to provide permanent financing for real property used or to be used for residential purposes for the personnel of an educational institution (within the meaning of Section 151 (e) (4)) which grants baccalaureate or higher degrees, or to replace funds which were so used, and . . . the yield on which over the term of the issue is not reasonably expected, at the time of the issuance of such issue, to be substantially lower than the yield on obligations acquired or to be acquired in providing such financing"; and
• WHEREAS, there are held among the endowment funds of the University notes or bonds secured by mortgages or deeds of trusts on real estate used to provide permanent financing for real property used for residential purposes for the personnel of the University on which the aggregate unpaid principal balance is not less than $9,000,000 and the University desires to issue its $9,000,000 Faculty Housing Revenue Bonds, Series of 1972 (the Bonds) to replace the endowment funds so used and to provide funds to be used in the future for such purposes; and
• WHEREAS, the University desires to transfer from its endowment funds to a trustee such notes or bonds have an aggregate unpaid principal balance of not less than $11,500,000 to be held by the trustee pursuant to the hereinafter described Indenture as security for the Bonds; and
• WHEREAS, there has been presented to this meeting the form of the following instruments or agreements which the University proposes to execute to carry out the transactions described above, copies of which instruments and agreements shall be filed with the Permanent Minutes of the meeting:
• (a) Indenture between the University and Virginia National Bank, as Trustee, dated as of February 1, 1972 (the Indenture);
• (b) Purchase Contract between the University and Investment Corporation of Virginia, Craigie Incorporated, and Wheat, First Securities, Inc. as managers of a group of underwriters (the Underwriters), dated February 3, 1972, whereby the Underwriters offer to purchase the Bonds (the Purchase Contract);
• (c) The Official Statement dated as of the date hereof, describing the University, its faculty mortgage program, the terms of the Bonds and the security therefor (the Official Statement);
• BE IT RESOLVED BY THE BOARD OF VISITORS OF THE UNIVERSITY OF VIRGINIA:
• (1) In order to replace endowment funds of the University used to provide permanent financing for real property used for residential purposes for the personnel of the University, there are hereby authorized to be issued $9,000,000 The Rector and Visitors of the University of Virginia Faculty Housing Revenue Bonds, Series of 1972 (the Bonds). The Bonds shall be dated February 1, 1972, shall mature in installments on February 1, in each of the years 1975 to 1987, inclusive, and on February 1, 1997, shall bear interest payable semi-annually at rates, shall be payable as to principal and interest at the principal office of Virginia National Bank, Norfolk, Virginia or First National City Bank, New York, New York, shall be issued in either coupon or registered form shall be registrable and exchangeable and shall be redeemable prior to maturity, all as more fully set forth in the Purchase Contract and the Indenture. The Rector or President and Secretary or Assistant Secretary of the University are hereby authorized and directed to have the Bonds prepared, to execute the Bonds, to deliver them to the Trustee for authentication and to cause the Bonds so executed and authenticated to be delivered to or for the account of the Underwriters upon payment of the purchase price.
• 2. The Bonds shall be limited obligations of the University, secured by the Indenture and by a pledge of notes or bonds secured by mortgages or deeds of trust on real estate and funds as described and provided in the Indenture. The Rector or President and Secretary or Assistant Secretary of the University are hereby authorized and directed to complete the Indenture, to make such insertions therein as shall conform the Indenture to the terms and conditions provided in the Purchase Contract, to execute, acknowledge and deliver the Indenture, so completed, to the Trustee and to provide for the transfer pursuant to the Indenture from the University's endowment funds to the Trustee of such notes or bonds having an aggregate unpaid principal balance of not less than $11,500,000.
• 3. Because of the special nature and complexity of the financing and the security for the Bonds, it was determined by the Administration of the University and the Finance Committee of the Board to be in the best interests of the University to negotiate the sale of the Bonds with underwriters who could plan and develop the terms and conditions for the Bonds and the security therefor. This determination is hereby ratified and reaffirmed. It is hereby determined that the Purchase Contract is in the best interests of the University and the Bonds shall be sold to the Underwriters at the price, upon the terms and conditions and upon the basis of the representations set forth therein. The Purchase Contract is hereby accepted and the Rector or President and Secretary or Assistant Secretary are hereby authorized to execute and deliver the Purchase Contract to the Underwriters.
• 4. The Official Statement is hereby adopted and approved and the Rector or President is hereby authorized to execute and deliver the Official Statement to the Underwriters. The Board hereby authorizes and approves the use by the Underwriters of the Official Statement, the information contained therein and the documents referred to therein, in connection with the sale of the Bonds.
• The Indenture, the Purchase Contract and the Official Statement shall be in substantially the forms submitted to this meeting and the Bonds shall be in substantially the form provided in the Indenture. Such form of Indenture, Purchase Contract, Official Statement and Bonds are hereby approved, with such omissions, insertions and changes as may be approved by the officers executing them, their execution to constitute conclusive evidence of their approval of any such omissions, insertions and changes;
• 6. The Executive Committee of the Board is hereby authorized and empowered to take any action it may deem necessary or desirable in connection with the authorization and sale of the Bonds, including, but not limited to, agreement to amendments to the terms of the Bonds and form of the Indenture, Purchase Contract and Official Statement that may be deemed to require approval by this Board.
• 7. The officers of the University are hereby authorized and directed to execute and deliver all certificates and instruments and to take all such further action as may be considered necessary by them in connection with the issuance and sale of the Bonds and the undertaking described in the Indenture.
• 8. All other acts of the officers of the University which are in conformity with the purposes and intent of this resolution and in furtherance of the issuance and sale of the Bonds and the undertaking described in the Indenture are hereby approved and confirmed.

Following the adoption of the resolution, the Rector signed the purchase contract, and a check in the amount of 1% of the $9,000,000 amount as a good faith payment was presented to the University by Mr. Powell Davis.

Messrs. Davis and Frazier left the meeting at this point.