University of Virginia Library

ARTICLE VI FUNDS AND ACCOUNTS

SECTION 601. Funds and Accounts.

A special account is hereby created in the Sinking Fund and designated "University of Virginia Fixed/Adjustable Rate Hospital Revenue Bonds (Series B) Sinking Fund Account" (the "Sinking Fund Account"). Two other special accounts are hereby created in the Sinking Fund and designated "University of Virginia Fixed/Adjustable Rate Hospital Revenue Bonds (Series B) Interest Account" (the "Interest Account") and "University of Virginia Fixed/Adjustable Rate Hospital Revenue Bonds (Series B) Bank Interest Account (the "Bank Interest Account"), respectively. An additional special account is hereby created in the Reserve Fund and designated "University of Virginia Fixed/Adjustable Rate Hospital Revenue Bonds (Series B) Reserve Account" (the "Reserve Account"), which special account shall consist of two subaccounts designated "Equity Subaccount" and "Proceeds Subaccount," respectively. An additional special account is hereby created in the Redemption Fund and designated "University of Virginia Fixed/Adjustable Rate Hospital Revenue Bonds (Series B) Redemption Account" (the "Redemption Account").

The moneys in each of said Accounts shall be held and applied as hereinafter provided and, pending such application, shall be subject to a lien in favor of the Holders and for the further security of such Holders until paid out or transferred as herein provided.

SECTION 602. Application of Money in Sinking Fund Account.

(a) Prior to and on the Fixed Rate Date, the money held for the credit of the Sinking Fund Account shall be applied as set forth in Section 209 hereof.

• (b) After the Fixed Rate Date money held for the credit of the Sinking Fund Account shall be applied to the retirement of Bonds, including Bank Bonds, then outstanding as follows:
• (i) If directed to do so by the University, the State Treasurer shall endeavor to purchase and cancel Bonds or portions thereof then subject to redemption by operation of the Sinking Fund Account at the most advantageous price obtainable with reasonable diligence, such price not to exceed the redemption price provided in Section 501(d) hereof which would be payable on the next December 1 to the Holders of such Bonds under the provisions of Article V hereof if such Bonds or portions thereof were to be called for redemption on such date, plus accrued interest to the date of purchase. The State Treasurer shall pay the interest accrued

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  on such Bonds or portions thereof to the date of settlement therefor from the Interest Account and the purchase price from the Sinking Fund Account, but no such purchase shall be made by the State Treasurer from money in the Sinking Fund Account within the period of forty-five (45) days immediately preceding the next December 1 on which such Bonds are subject to redemption. The aggregate purchase prices of such Bonds so purchased shall not exceed the amount deposited in the Sinking Fund Account on account of the Sinking Fund Requirement for such Bonds; provided, however, that if in any year the amount held for the credit of the Sinking Fund Account plus the principal amount of all Bonds purchased during such year pursuant to the provisions of this subparagraph (i) exceeds the aggregate Sinking Fund Requirements for all Bonds then Outstanding for such year, the State Treasurer shall endeavor to purchase any Bonds then Outstanding with such excess money;
• (ii) The State Treasurer shall call for redemption on each December 1, as provided in Section 501(d) hereof, Bonds or portions thereof then subject to redemption in a principal amount equal to the aggregate Sinking Fund Requirement for the Bonds for such December 1, less the principal amount of any such Bonds retired by purchase pursuant to subparagraph (i) of this Section. Such redemption shall be made pursuant to the provisions of Article III of the Resolution. If such December 1 or semiannual payment date for Bank Bonds is the stated maturity date of any such Bonds, the State Treasurer shall not call such Bonds for redemption but, not later than 10:00 A.M. on such maturity date, shall withdraw from the Sinking Fund Account and remit to the Paying Agent, in Federal Reserve or other immediately available funds, the amount required for paying the principal of such Bonds when due and payable. Not later than 10:00 A.M. on each such redemption date, the State Treasurer shall withdraw from the Interest Account and the Sinking Fund Account and wire transfer to the Paying Agent, in Federal Reserve or other immediately available funds the respective amounts required for paying the interest on and the redemption price of the Bonds or portions thereof so called for redemption.

In the event the balance in the Sinking Fund Account is insufficient for the payment of the redemption price on the Bonds on the next ensuing payment date, the State Treasurer shall transfer to such account such amounts as may be necessary to remedy the deficiency therein from the Reserve Account; provided, however, that amounts on deposit to the Proceeds Subaccount shall be exhausted prior to the transfer of any amount on deposit to the credit of the Equity Subaccount.

If, prior to any December 1, by the application of money in the Sinking Fund Account the State Treasurer should purchase and deliver to the Paying Agent for cancellation Bonds in excess of the aggregate Sinking Fund Requirement for such December 1, the tate Treasurer shall file with the University and the Paying Agent not later than the 20th day prior to the next December 1 on which Bonds are to be redeemed a statement identifying the Bonds purchased or delivered and the amount of such excess. The University shall thereafter cause an Officer's Certificate to be filed with the Paying Agent not later than the 10th day prior to such December 1, setting forth with respect to the amount of such excess the years in which the Sinking Fund Requirements with respect to Bonds are to be reduced and the amount by which the Sinking Fund Requirements so determined are to be reduced.

Upon the retirement of any Bonds by purchase or redemption pursuant to the provisions of this Section, the Paying Agent shall file with the State Treasurer and the University a statement identifying such Bonds and setting forth the date of purchase or redemption, the amount of the purchase price or the redemption price of such Bonds and the amount paid as interest thereon.

SECTION 603. Application of Money in Interest Account and the Bank Interest Account.

The State Treasurer shall withdraw money from the Interest Account and the Bank Interest Account and pay or cause to be paid interest on the Bonds and the portion of the purchase price of Bonds attributable to interest in accordance with Sections 208 and 210 hereof.

SECTION 604. Application of Money in Redemption Account.

(a) Prior to and on the Fixed Rate Date, money held for the credit of the Redemption Account shall be transferred to the Paying Agent one Business Day prior to the date of redemption and shall be applied by the Paying Agent on the date of redemption to reimburse the Bank for drawings made under the Letter of Credit or any Substitute Credit Facility or Alternate Credit Facility to pay the redemption price of Bonds to be optionally redeemed. Within one (1) hour after the Paying Agent has received the money drawn on the Credit Facility to pay principal of all Bonds (other than Bank Bonds) being redeemed and has received the amounts specified in the preceding sentence, the Paying Agent shall notify the Bank that a payment of principal on redemption is to be made and that the Bank shall be reimbursed.

• (b) After the Fixed Rate Date money held for the credit of the Redemption Account shall be applied to the purchase or redemption of Bonds, as follows:
• (i) Subject to the provisions of subparagraph (iii) of this Section, the State Treasurer shall endeavor to purchase

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  and cancel Bonds or portions thereof, whether or not such Bonds or portions thereof shall then be subject to redemption, at the most advantageous price obtainable with reasonable diligence, such price not to exceed the redemption price that would be payable on the next redemption date to the Holder of such Bonds under the provisions of Article V hereof if such Bonds or portions thereof should be called for redemption on such date from the money in the Redemption Account. The State Treasurer shall pay the interest accrued on such Bonds or portions thereof to the date of settlement therefor from the Interest Account and the purchase price from the Redemption Account.
• (ii) Subject to the provisions of subparagraph (iii) of this Section, the State Treasurer shall call for redemption on each Interest Payment Date such amount of Bonds or portions thereof as, with the redemption premium, if any, will exhaust the money then held for the credit of the Redemption Account as nearly as may be practicable; provided, however, that not less than Fifty Thousand Dollars ($50,000) principal amount of Bonds shall be called for redemption at any one time. Such redemption shall be made pursuant to the provisions of Article V hereof. Not later than 10:00 A.M. on the redemption date the State Treasurer shall withdraw from the Interest Account and from the Redemption Account and wire transfer to the Paying Agent, in Federal Reserve or other immediately available funds, the respective amounts required for paying the interest on and the redemption price of the Bonds or portions thereof so called for redemption; and
• (iii) Money in the Redemption Account shall be applied by the State Treasurer to the purchase or the redemption of Bonds then Outstanding in accordance with the latest Officer's Certificate filed by the University with the State Treasurer designating the Bonds to be purchased or redeemed. In the event no such Officer's Certificate is filed, the State Treasurer shall apply such money to the purchase or redemption of such Bonds as he shall determine.

Upon the retirement of any Bonds by purchase or redemption pursuant to the provisions of this Section, the State Treasurer shall file with the University and the Paying Agent a statement identifying such Bonds and setting forth the date of purchase or redemption, the amount of the purchase price or the redemption price of such Bonds and the amount paid as interest thereon.

SECTION 605. Application of Money in Reserve Account; Replenishment of Reserve Account.

(a) Simultaneous with the delivery of the Bonds, an amount equal to the Reserve Account Requirement shall be deposited in the Reserve Account from funds

ontributed by the University and/or the proceeds of the Bonds; rovided, however, that the amount so deposited from the proceeds of the Bonds shall be not less than the amount of interest accruing on the Bonds from November 1, 1984 through May 31, 1985. Any funds contributed by the University for deposit to the credit of the Reserve Account shall be deposited in the Equity Subaccount, and any of the proceeds of the Bonds deposited to the credit of the Reserve Account shall be deposited to the credit of the Proceeds Subaccount.

(b) Prior to and on the Fixed Rate Date, if either proceeds of the Bonds or Aged Money is not available in the Interest Account, the State Treasurer shall transfer from the Reserve Account to the Paying Agent, on the Business Day preceding each Interest Payment Date, the amount required to pay interest becoming due on such Interest Payment Date on all Bonds Outstanding which are not Bank Bonds and interest on Bank Bonds in an amount not exceeding the interest payable at the Maximum Interest Rate. Amounts on deposit to the credit of the Proceeds Subaccount shall be exhausted prior to the transfer of any amount on deposit to the credit of the Equity Subaccount.

(c) After the Fixed Rate Date, the State Treasurer shall use amounts in the Reserve Account to make transfers to the Interest Account and the Sinking Fund Account to the extent necessary to pay interest on and principal (whether at maturity, by acceleration or in satisfaction of the Sinking Fund Requirement) of the Bonds, whenever and to the extent that the money on deposit to the Interest Account and the Sinking Fund Account is insufficient for such purposes. Amounts on deposit to the credit of the Proceeds Subaccount shall be exhausted prior to the transfer of any amount on deposit to the credit of the Equity Subaccount.

(d) Prior to the Fixed Rate Date, the State Treasurer shall transfer from the Special Fund to the Equity Subaccount on each Interest Payment Date an amount equal to the amount of any transfer made pursuant to paragraph (b) of this Section. If on any Interest Payment Date there shall not be sufficient Net Revenues available to enable the State Treasurer to make the transfer required by this subsection (d), he shall so notify the Paying Agent in writing on such Interest Payment Date.

(e) From and after the Fixed Rate Date, the State Treasurer shall transfer from the Special Fund to the Equity Subaccount, in twelve (12) equal monthly installments, the amount of any transfer made from the Reserve Account pursuant to paragraph (c) of this Section.

(f) The University may at any time after the Fixed Rate Date withdraw amounts on deposit to the credit of the Proceeds Subaccount

for any lawful Hospital purpose so long as, simultaneously therewith, it shall deposit an equal amount of its funds to the credit of the Equity Subaccount.

(g) Prior to the effective date of any amendment to the Resolution which would increase the Maximum Interest Rate, the University shall deposit to the credit of the Equity Subaccount an amount equal to the increase in the Reserve Account Requirement resulting from such amendment.

SECTION 606. Investment of Money in Certain Accounts.

Money held in the Reserve Account shall be invested as follows:

• (a) In Government Obligations maturing within three (3) years from the date of investment.
• (b) In repurchase agreements for Government Obligations or investment agreements continuously secured by Government Obligations with any bank, trust company or dealer in government bonds which reports to, trades with and is recognized as a primary dealer by a Federal Reserve Bank, and which has outstanding indebtedness that is then rated by Moody's in a rating category not less than Baa3 or P-3, if such Government Obligations are delivered to the State Treasurer or are supported by a safekeeping receipt issued by a depository designated by the State Treasurer and if such repurchase and investment agreements provide that the value of the underlying Government Obligations shall continuously be maintained at a current market value of not less than their purchase price; or
• (c) In investment agreements with any bank or trust company which has outstanding indebtedness or has issued a letter of credit or other credit facility that constitutes the primary security for indebtedness that is then rated by Moody's in a rating category at least as high as the short-term rating category on the Bonds;

provided, however, that at all times prior to the Fixed Rate Date an amount equal to the Investment Requirement shall be invested (i) in Government Obligations maturing within the Maturity Requirement or (ii) as provided in paragraphs (b) and (c) of this Section.

Repurchase and investment agreements contemplated under (b) and (c) above must provide that moneys under such agreements may be drawn at any time.