Proceedings of the Board of Regents (1963-1966)

JULI' MEETING, 1965

957

SECTION 7. LEGAL MATTERS. The Borrower shall furnish the Government a
transcript of proceedings for the authorization, issuance, sale and security of the
Bonds evidencing that the Bonds, when delivered and paid for, will constitute binding and legal obligations, payable and secured in accordance with their tenor, and
that all proceedings for the financing and the acquisition, construction and development of the Project preliminary to the delivery of the Bonds to the Government
have been had and adopted in due time, form, and manner as required by law.
SECTION 8. SECURITY. The Borrower shall include in the proceedings for the
authorization, issuance, sale, and security of the Bonds, provisions for the payment
of the principal of and interest on the Bonds and for the security thereof of the
nature required to assure such payment and to safeguard the loan hereunder, including, in case the Bonds are payable in whole or in part from any special sources of
revenues, provisions designed to assure the production of such revenues and the
application thereof to the extent required for the payment and security of the
Bonds and interest thereon, including the maintenance of reasonable reserves.
SECTION 9. OPINION OF BOND COUNSEL. Simultaneously with the delivery of
any of the Bonds to the Government, the Borrower shall furnish to the Government
the approving opinion of bond counsel who shall be satisfactory to the Government,
and covering generally all of the Bonds and, specifically and unqualifiedly, the
Bonds then being delivered to the Government.
SECTION 10. CONSTRUCTION FINANCING. The Borrower shall make every effort
to obtain interim financing from private sources. Prior to entering into formal agreements for such financing, the Borrower shall furnish the Government with (1) a
satisfactory preliminary opinion of bond counsel; (2) evidence of its ability
to finance on reasonable terms the cost of the Project up to the time the Bonds are
ready for delivery; and (3) evidence of the receipt of firm bids establishing that the
Project can be constructed within the approved estimated cost thereof.
In the event any loan under temporary financing should become due prior to the
time when the Bonds are ready for delivery, the Borrower may apply to and, provided that the Borrower is in compliance with the Terms and Conditions of this
Loan Agreement, receive from the Government an advance against the Bonds in an
amount sufficient to liquidate such temporary loan.
Should the Borrower be able to demonstrate to the Government's satisfaction
that interim financing on reasonable terms is not available, the Government will
consider requests for advances in anticipation of the issuance of the Bonds. Requisitions for construction advances shall be accompanied by such supporting data as
the Government may require. The Government will honor such requisitions in
amounts and at times deemed by it to be proper.
Any funds made available to the Borrower by the Government pursuant to this
Section shall be repaid in full from the first proceeds derived from the sale of the
Bonds, and shall bear interest at the rate specified for the Bonds in the Loan
Agreement from the date made available to the date of repayment.
SECTION 11. PREREQUISITES TO LOAN DISBURSEMENTS. Prior to the Government disbursing any portion of the loan proceeds, the Borrower shall present satisfactory evidence that:
(a) It is able to provide the furnishings and movable equipment required for
the operation of the Project, as specified in Section 3 hereof;
(b) It has deposited in the Construction Account such funds as are necessary
with the loan proceeds to assure completion of the Project; and
(c) It is able to provide the Project site or sites free from all encumbrances.
SECTION 12. CONSTRUCTION ACCOUNT. The Borrower shall set up in a bank
or banks which are members of the Federal Deposit Insurance Corporation, or with
the fiscal agency of the Borrower fixed by law, a separate account or accounts
(herein collectively called the "Construction Account") into which shall be deposited any temporary loans, Government advances, and proceeds from the sale of the
Bonds (except accrued interest payments), and the additional funds, if any,
required by the provisions of the Loan Agreement to be furnished by the Borrower
in order to assure the payment of all Project Costs. Moneys in the Construction
Account shall be expended only for such purposes as shall have been previously
specified in the project cost estimates approved by the Government.
Where the moneys on deposit in the Construction Account exceed the estimated
disbursements on account of the Project for the next 90 days, the Borrower may
deposit such excess funds in time deposits in banks that are members of the Federal
Deposit Insurance Corporation or may invest such excess funds in direct obligation
of, or obligations the principal of and interest on which are guaranteed by, the