Proceedings of the Board of Regents (1936-1939)

724

SECOND OCTOBER MEETING, 1938

plated and the expansion of the heating and power plant, such bonds to guarantee the performance of said contracts or subcontracts as the Trustee, in its
discretion, may require.
Section 5. The Trustee shall require the Obligor to submit to it for its
approval all contracts or subcontracts for the construction of said dormitories
and for the furnishing and equipping of the same, and for the expansion of the
heating and power plant of the University of Michigan, and the Obligor shall
not execute such contracts so submitted until the Trustee shall have signified its
approval thereof in writing.
Section 6. The Obligor shall carry or cause to be carried such insurance during
the construction of said dormitories and the expansion of the heating and power
plant as the Trustee may request. Said insurance shall be payable to the Trustee
as its interest shall appear.
Article V
Definitions
The term "year" as used in the succeeding Article shall have reference to the
fiscal year employed by the University of Michigan in keeping its books of
account.
The term "gross rents," or "gross room rents" shall mean and include all
sums paid by students of the University of Michigan for the right to reside and
occupy rooms in the girls' dormitory and men's dormitory to be constructed as
herein provided, when the same are completed and placed in operation, before any
deductions are made therefrom.
The term "net income" shall mean and include any excess of room rents not
needed to cover the interest and principal payments to the Trustee, together with
the income from dining rooms to be operated in conjunction with said dormitories, and other service charges, after deducting from the aggregate thereof the
actual expenses, insurance premiums, and ordinary repairs to buildings and
equipment.
Section 1. The Obligor covenants and agrees as follows:
a) To set aside out of the gross room rents to be collected from students of
the University of Michigan who shall reside and occupy rooms in either said
girls' dormitory or said men's dormitory and out of the net income to be derived
from the operation thereof, on the dates hereinafter set forth, not less than the
following sums, to-wit: on the fifteenth day of March, 1940, the sum of Ten
Thousand Five Hundred Dollars ($10,500.00); on the fifteenth day of September,
1940, the sum of Forty-two Thousand Dollars ($42,000.00) and on the fifteenth
day of March, 1941, and on the fifteenth day of March in each year thereafter
until all Dormitory Revenue Bonds issued hereunder are paid in full, the sum
of Forty-two Thousand Dollars ($42,000.00); and on the fifteenth day of September, 1941, and on the fifteenth day of September in each year thereafter until
all Dormitory Revenue Bonds issued hereunder are paid in full, the sum of Fortytwo Thousand Dollars ($42,000.00).
b) In order that there may be funds available to meet each payment of
principal and interest to be made to the Trustee as provided for in the preceding
paragraph, the Obligor shall set aside a sufficient sum from said gross room
rents to assure that it will have funds available to meet the next such payment
which shall become due and payable to the Trustee, before diverting or using
any of the gross room rents from said students in any semiannual period between
said payments for any other purpose.
c) That the Trustee shall have a first lien on the net income derived from
the operation of said girls' dormitory and said men's dormitory, when completed
and placed in operation, and said net income is hereby pledged to meet all payments herein provided for.
d) That it will set aside proper reserves for replacements and purchases of
necessary equipment, and for extraordinary repairs to buildings. Payments to
said depreciation reserve funds shall be omitted or reduced whenever necessary
in order that the payments to the Trustee hereinbefore provided for may be
made as they shall fall due. Provided, however, that should any default be made
in any payment to said reserve funds, the same shall be made good out of the
first surplus net income available. All reserve funds shall be maintained in cash
or invested in such securities as shall be approved by the Obligor.
Section 2. The Obligor covenants and agrees that on or before October 15
of each year it will pay over to the Trustee all net revenue from the operation
of said girls' dormitory and said men's dormitory for the preceding year as shall
remain in its possession after meeting all payments to the Trustee and for the
depreciation reserve funds hereinbefore provided for; and the sum so paid shall