University of Virginia Library

RESOLUTION FOR AUTHORIZATION TO PARTICIPATE IN
COMMONWEALTH OF VIRGINIA 9-C BOND ISSUE

The following resolution was adopted:

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• WHEREAS, in 1983, the Board of Visitors (the "Board") of The Rector and Visitors of the University of Virginia (the "University") adopted a resolution (A) authorizing the financing of the Clinch Valley Student Union, Newcomb Hall Additions and Student Housing (together, the "1983 projects") through the issuance by the Commonwealth of Virginia (the "Commonwealth") of $8,385,000 of its $57,015,000 Higher Educational Institutions Bonds, 1983 Series D, E, F and G (the "1983 Bonds") and (B) pledging certain revenues derived from or related to the 1983 Projects to the payment of that portion of the 1983 Bonds;
• WHEREAS, in 1985, the Board adopted a resolution (A) authorizing the financing of the Observatory Dining Hall Addition, Sponsor's Hall Addition and Student Activity Building (together, the "1985 Projects") through the issuance by the Commonwealth of $3,250,000 of its $24,690,000 Higher Educational Institutions Bonds, Series 1985 (the "1985 Bonds") and (B) pledging certain revenues derived from or related to the 1985 Projects to the payment of that portion of the 1985 Bonds;
• WHEREAS, to lower the aggregate debt service payments owed on the 1983 Bonds and the 1985 Bonds, the Commonwealth proposes to refund some or all of the 1983 Bonds and the 1985 Bonds through the issuance of the Commonwealth's Article X, Section 9(c) Higher Educational Institutions Refunding Bonds, Series 1992 (the "Refunding Bonds"), all as permitted by the Commonwealth of Virginia Article X, Section 9(c) Refunding Bond Act of 1992, Chapter 265 of the Virginia Acts of Assembly of 1992 (the "Act"); and
• WHEREAS, the effect of the refunding of some or all of the 1983 Bonds and the 1985 Bonds will be to reduce the aggregate debt service payments owed by the University with respect to the 1983 Projects and the 1985 Projects;
• NOW, THEREFORE, BE IT RESOLVED BY THE RECTOR AND
  VISITORS OF THE UNIVERSITY OF VIRGINIA:
• Section 1. The Board acknowledges that the Commonwealth intends to issue the Refunding Bonds in order to lower the aggregate debt service payments due on the 1983 Bonds and the 1985 Bonds. This will have the effect of reducing the aggregate debt service payments owed by the University with respect to at least some, if not all of the 1983 Projects and the 1985 Projects. The Board further acknowledges and agrees that the University has an obligation to pay its proportionate share of debt service and other costs owed with respect to the 1983 Projects and the 1985 Projects, whether such payments are due on the 1983 Bonds, the 1985 Bonds or the Refunding Bonds, on the same terms on which the University is currently making payments relating to the 1983 Bonds and the 1985 Bonds. The University further acknowledges that the Commonwealth will determine which of the 1983 Projects and the 1985 Projects will be refunded with the proceeds of the Refunding Bonds.

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• Section 2. The Board acknowledges and agrees that, as stated in Section 8 of the Act, upon the issuance of the Refunding Bonds, the net revenues derived from or related to the 1983 Projects and the 1985 Projects previously pledged to the payment of the 1983 Bonds and the 1985 Bonds, respectively, also will be pledged to that portion of the Refunding Bonds allocable to the 1983 Projects and the 1985 Projects.
• Section 3. The Board covenants that the University will not take or omit to take any action the taking or omission of which will cause the 1983 Bonds, the 1985 Bonds or the Refunding Bonds to be "arbitrage bonds" within the meaning of Section 103 of the Internal Revenue Code of 1954, as amended (the "1954 Code"), or Section 148 of the Internal Revenue Code of 1986, as amended (the "1986 Code"), or otherwise cause interest on the 1983 Bonds, the 1985 Bonds or the Refunding Bonds to be includable in the gross income of the holders thereof for federal income tax purposes under existing laws. Without limiting the generality of the foregoing, the University will pay from time to time its proportional share of any rebate to the United States of the earnings derived from the investment of the gross proceeds of the Refunding Bonds.
• Section 4. The Board covenants that the University has not and will not permit the proceeds of the 1983 Bonds, the 1985 Bonds and the Refunding Bonds, on an aggregate basis, to be used in any manner that would result in (a) 25% or more of such proceeds being used in a trade or business carried on by any person other than a governmental unit, as provided in Section 103 of the 1954 Code, (b) 25% or more of such proceeds being used with respect to any output facility within the meaning of Section 103 of the 1954 Code considered as being used in a trade or business carried on by any person other than a governmental unit or (c) 25% or more of such proceeds being used directly or indirectly to make or finance loans to persons other than a governmental unit, as provided in Section 103(o) of the 1954 Code. The University need not comply with such covenants if the University obtains the written approval of the State Treasurer and an opinion of nationally recognized bond counsel acceptable to the Treasury Board that such covenants need not be complied with to prevent the interest on the 1983 Bonds, the 1985 Bonds and the Refunding Bonds from being includable in the gross income of the owners thereof for federal income tax purposes.
• Section 5. The Board covenants that for so long as any of the 1983 Bonds, the 1985 Bonds or the Refunding Bonds are outstanding, the University will not enter into any additional operating lease, management contract or similar agreement (or any amendment to any existing lease, management contract or similar agreement) with any person or entity, other than a state or local governmental unit, for all or any portion of the 1983 Projects or the 1985 Projects without first obtaining the written approval of the State Treasurer and an opinion of nationally recognized bond counsel acceptable to the Treasury Board that entering in to such agreement will not cause the interest on the 1983 Bonds, the 1985 Bonds or the Refunding Bonds to be included in the gross income of the owners thereof for federal income tax purposes.
• Section 6. The Board covenants that for so long as any of the 1983 Bonds, the 1985 Bonds or the Refunding Bonds are outstanding, the University will not sell or dispose of all or any part of the 1983 Projects or the 1985 Projects or allow any 1983 Project or 1985 Project to cease being a revenue producing capital project of the University within

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  the meaning of the Act without first obtaining the written approval of the State Treasurer and an opinion of nationally recognized bond counsel acceptable to the Treasury Board that such sale or disposition or cessation will not cause interest on the 1983 Bonds, the 1985 Bonds or the Refunding Bonds to be included in the gross income of the owners thereof for federal income tax purposes and will not otherwise violate the Act.
• Section 7. The officers of the University are authorized and directed to execute and deliver all certificates and instruments and to take all such further action as may be considered necessary or desirable in connection with the sale and issuance of the Refunding Bonds.
• Section 8. The Board acknowledges that the Treasury Board will rely on the representations and covenants set forth herein in issuing the Refunding Bonds, that such covenants are critical to the security for the Refunding Bonds and the exclusion of the interest on the 1983 Bonds, the 1985 Bonds and the Refunding Bonds from the gross income of the owners thereof for federal income tax purposes, that the Board will not repeal, revoke, rescind or amend any of such covenants without first obtaining the written approval of the Treasury Board, and that such covenants will be binding upon the Board and the University so long as any of the 1983 Bonds, the 1985 Bonds or the Refunding Bonds are outstanding.
• Section 9. This resolution shall take effect immediately upon its adoption.