University of Virginia Library

ARTICLE VI.

Particular Covenants.

Section 601. The Board covenants that it will promptly pay the principal of and the interest
on each and every bond issued under the provisions of this resolution at the place, on the dates
and in the manner provided herein and in said bonds and in the coupons appertaining thereto, according
to the true intent and meaning thereof. The principal and interest are payable solely from the
revenues derived from the ownership or operation of the Project, which revenues are hereby pledged
to the payment thereof in the manner and to the extent hereinabove particularly specified, and
nothing in the bonds or in this resolution shall be deemed to constitute the bonds a debt of the State
of Virginia or a pledge of the faith and credit of the State, nor shall the bonds ever be or become
a charge against the State of Virginia

Section 602. The Board covenants that it will establish and enforce reasonable rules and
regulations governing the use of the Project and the operation thereof, that all compensation,
salaries, fees and wages paid by it in connection with the maintenance, repair and operation of the
Project will be reasonable, that it will maintain and operate the Project in an efficient and
economical manner, that, from the revenues of the Project, it will at all times maintain the same
in good repair and in sound operating condition and will make all necessary repairs, renewals and
replacements, that it will observe and perform all of the terms and conditions contained in the Act,
and that it will comply with all valid acts, rules, regulations, orders and directions of any
legislative, executive, administrative or judicial body applicable to the Project

Section 603. The Board covenants that it will not create or suffer to be created any lien
or charge upon the Project or any part thereof or upon the revenues therefrom ranking equally with
or prior to the lien and charge of the bonds secured hereby upon such revenues, and that, from
such revenues or other available funds, it will pay or cause to be discharged, or will make
adequate provision to satisfy and discharge, within sixty (60) days after the same shall accrue,
all lawful claims and demands for labor, material, supplies or other objects which, if unpaid,
might by law become a lien upon the Project or any part thereof or the revenues therefrom,
provided, however, that nothing in this Section contained shall require the Board to pay or cause
to be discharged, or make provision for, any such lien or charge so long as the validity thereof
shall be contested in good faith and by appropriate legal proceedings

Section 604. Notwithstanding any other provision of this resolution, nothing herein shall be
construed to prevent the Board from paying all or any part of the Current Expenses from any funds
available to the Board for such purpose, or from depositing any funds available to the Board for
such purpose in the Sinking Fund for the payment of the interest on or the principal of the bonds
issued under the provisions of this resolution

Section 605. The Board covenants that from and after the time when the contractors or any of
them engaged in constructing the Project or any part thereof shall cease to be responsible, pursuant
to the provisions of the respective contracts for the construction of the Project or such
part, for loss or damage to the Project or such part occurring from fire or lightning, it will insure
and at all times keep the Project or such part insured with a responsible insurance company or
companies, qualified to assume the risk thereof, against physical loss or damage caused by fire or
lightning, with such exceptions as are ordinarily required by insurers of structures of facilities
of similar type, in an amount not less than eighty per centum (80%) of the replacement value of the
Project or such part, less depreciation, provided, however, that such amount of insurance shall at
all times be sufficient to comply with any legal or contractual requirement which, if breached,
would result in assumption by the Board of a portion of any loss or damage as a co-insurer, and
such insurance may provide for the deduction from each claim for loss or damage (except in case of
a total loss) of not more than two per centum (2%) of the total amount of insurance required by the
application of the co-insurance clause, and provided, further, that if at any time the Board shall
be unable to obtain such insurance to the extent above required, either as to amount of such
insurance or as to the risks covered thereby or the deductible provision thereof, it will not
constitute an event of default under the provisions of this resolution if the Board shall carry
such insurance to the extent reasonably obtainable

The proceeds of such insurance shall be available for, and shall to the extent necessary be
applied to, the repair, replacement or reconstruction of the damaged or destroyed property. If
such proceeds are more than sufficient for such purpose, the balance remaining shall be deposited
to the credit of the Sinking Fund. If such proceeds, with other available funds, shall be
insufficient for such purpose, such proceeds shall be deposited to the credit of the Sinking Fund
or shall be used to purchase bonds, as the Board by resolution may determine.

Section 606. The Board covenants that no contract or contracts will be entered into or any
action taken by which the rights of the bondholders might be impaired or diminished

Section 607. The Board covenants that it will keep an accurate record of the total cost of
the Project, of the fees, rents, charges and other revenues collected, and of the application of
such revenues. Such records shall be open at all reasonable times to the inspection of all
interested persons.

The Board further covenants that, if so requested in writing by any bondholder within the
month of July after the close of any fiscal year, it will cause the Comptroller of the Institution
to make a report from the books and accounts relating to the Project for the preceding fiscal year
Within the next two months copies of such report shall be filed with the Secretary to the Board
and the State Treasurer and shall be mailed by the Comptroller to all bondholders who shall have
filed their names and addresses with the Comptroller for such purpose. Each such report shall set
forth in respect of the preceding fiscal year an income and expense account for the Project, the
percentage of use of the Project, the details of all bonds paid, the amount on deposit at the end of
such fiscal year to the credit of each Fund created under the provisions of this resolution and the
details of any investment thereof, a schedule of all insurance policies which are then in effect,
stating with respect to each policy the name of the insurer, the amount, number and expiration date,
and the hazards and risks covered thereby, and also the findings of the Comptroller as to whether
the moneys received by the Board under the provisions of this resolution during such fiscal year
have been applied in accordance with the provisions of this resolution and whether the Board is in
default of any of the covenants contained in Sections 401 and 402 of this resolution

Section 608. The Board covenants that it will not sell or otherwise dispose of or encumber
the Project or any part thereof and will not create or permit to be created any charge or lien on
the revenues therefrom ranking equally with or prior to the charge or lien of the bonds secured
hereby on such revenues. The Board may, however, sell or dispose or permit the sale or disposal
by the Institution of any furniture, fixtures, apparatus, tools, instruments or other movable
property acquired for or in connection with the Project or any materials used in connection therewith,
if the Board shall determine by resolution that such articles are no longer needed or are no
longer useful in connection with the construction of the Project or the operation and maintenance
of the Project. The proceeds of any sale made under the authority of this Section shall be deposited
to the credit of the Sinking Fund