University of Virginia Library

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

• The following resolution was adopted:
• WHEREAS, on March 30, 1984, the Rector and Visitors (the "Board") of the University of Virginia (the "Institution") adopted a resolution (a) authorizing the financing of the construction of a student housing project at Clinch Valley College (the "1984 Project") through the issuance by the Treasury Board of the Commonwealth of Virginia (the "Treasury Board") of Higher Educational Institutions Bonds, Series 1984 B (the "1984 bonds"), and (b) pledging certain net revenues derived from or related to the 1984 Project to the payment of that portion of the 1984 Bonds issued for the 1984 Project;
• WHEREAS, on May 27, 1988, the Board adopted a resolution (a) authorizing the financing of student housing facilities designated by project numbers 13843 and 11883 at Clinch Valley College (together, the "1988 Projects") through the issuance by the Treasury Board of Higher Educational Institutions Bonds, Series 1988 A (the "1988 Bonds"), and (b) pledging certain net revenues derived from or related to the 1988 Projects to the payment of that portion of the 1988 Bonds issued for the 1988 Projects;
• WHEREAS, the Treasury Board proposes to refund some or all of the 1984 Bonds and the 1988 Bonds through the issuance of the Commonwealth's Article X, Section 9(c) Refunding Bonds (the "Proposed Refunding Bonds"), as permitted by the Commonwealth of Virginia Article X, Section 9(c) Refunding Bond Act of 1992, Chapters 265 and 408 of the Virginia Acts of Assembly of 1992, as amended from time to time (the "Act"), to lower the aggregate debt service payments by the Institution with respect to the 1984 Project and the 1988 Projects; and
• WHEREAS, the Treasury Board may, from time to time, refund other bonds heretofore or hereafter issued with respect to other projects financed with higher educational institutions bonds under Article X, Section 9(c) of the Constitution of Virginia (together with the 1984 Bonds and the 1988 Bonds, the "Refunded Bonds") through the issuance of additional refunding bonds pursuant to the Act (together with the Proposed Refunding Bonds, the Refunding Bonds); and
• WHEREAS, the Act provides that the net revenues originally pledged to the payment of the Refunded Bonds shall be deemed, without the need for any further action on the part of the Institution, to be pledged to the payment of the principal of and interest on that portion of the Refunding Bonds similarly issued for its benefit;

NOW, THEREFORE, BE IT RESOLVED BY THE RECTOR AND VISITORS OF THE UNIVERSITY OF VIRGINIA:

Section 1. The Board covenants that the Institution will not take or omit to take any action the taking or omission of which will cause the Refunding Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the "1986 Code"), or otherwise cause interest on the Refunding Bonds

to be includable in the gross income of the owners thereof for federal income tax purposes under existing laws. Without limiting the generality of the foregoing, the Institution 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 Refunded Bonds or the Refunding Bonds that are subject to such rebate.

Section 2. The Board represents and covenants that the Institution has not and will not permit the proceeds of the Refunded Bonds to which the provisions of Section 103 of the Internal Revenue code of 1954, as amended (the "1954 Code"), apply 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 Institution need not comply with such covenants if the Institution 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 Refunded Bonds or the Refunding Bonds from being includable in the gross income of the owners thereof for federal income tax purposes.

Section 3. The Board represents and covenants that the Institution has not and will not permit the proceeds of the Refunded Bonds to which the provisions of Section 141 of the 1986 Code apply to be used in any manner that would result in (a) 5% 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 141(b) of the 1986 Code, (b) 5% or more of such proceeds being used with respect to any output facility within the meaning of Section 141(b)(4) of the 1986 Code, or (c) 5% or more of such proceeds being used directly or indirectly to make or finance loans to any person other than a governmental unit, as provided in Section 141(c) of the 1986 Code. The Institution need not comply with such covenants if the Institution 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 Refunded Bonds or the Refunding bonds from being includable in the gross income of the owners thereof for federal income tax purposes.

Section 4. The Board covenants that for so long as any of the Refunding Bonds are outstanding, the Institution will not enter into any 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 projects financed or refinanced with such bonds 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 into such agreement will not cause the interest on the Refunded Bonds or the Refunding

Bonds to be 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 Refunding Bonds are outstanding, the Institutions will not sell or dispose of all or any part of the projects financed with such bonds or allow any such project to cease being a revenue producing capital project of the Institution within the meaning of Article X, Section 9 of the Constitution 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, disposition or cessation will not cause interest on the Refunded Bonds or the Refunding Bonds to be includable in the gross income of the owners thereof for federal income tax purposes.

Section 6. The officers of the Institution 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 7. The Board acknowledges that the Treasury Board will rely on the representations and covenants set forth herein in issuing the Refunding Bonds, that such representations and covenants are critical to the security for the Refunding Bonds and the exclusion of the interest on the Refunded 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 an opinion of nationally recognized bond counsel acceptable to the Treasury Board that repealing, revoking, rescinding or amending any such covenant will not cause interest on the Refunded Bonds or the Refunding Bonds to be includable in the gross income of the owners thereof for federal income tax purposes, and that such covenants will be binding upon the Board and the Institution so long as any of the Refunded Bonds and the Refunding Bonds are outstanding.

Section 8. This resolution shall take effect immediately upon its adoption.