398

372

following the fiscal year in which the Debt Service Reserve requirements on such additional Series of parity Bonds have first been met in the manner prescribed by the provisions of Special Condition (e), above.

(3) Make such additional Series of parity Bonds payable as to principal on November 1 of each year in which principal falls due and payable as to interest on May 1 and November 1 of each year.

(1) The Borrower covenants and agrees that, so long as any of the Bonds are outstanding, it will not sell or otherwise dispose of any of the facilities of the Dormitory System to be established in accordance with the provisions of Special Condition (b) above, or any part thereof, and except as provided for in Special Conditions (i) and (j) above, it will not create or permit to be created, any charge or lien on the revenues of said Dormitory System, or any other revenues, pledged as security, ranking equal or prior to the lien of these Bonds.

Notwithstanding the foregoing provisions of this Condition, the Borrower may at any time permanently abandon the use of, or sell at fair market value, any of the Dormitory System facilities, provided that:

(1) It is in full compliance with all covenants and undertakings in connection with all Bonds then outstanding and payable from the net revenues of the Dormitory System and any other revenues pledged as security;

(2) It will, in the event of sale, apply the proceeds to either the redemption of outstanding Bonds in accordance with the provisions governing repayment of Bonds in advance of maturity, or the replacement of the facility so disposed of by another facility the revenues of which shall be incorporated into the Dormitory System as hereinbefore provided;

(3) It certifies, prior to any abandonment of use, that the facility to be abandoned is no longer economically feasible of producing net revenues; and

(4) It certifies that the estimated net revenues of the remaining Dormitory System facilities and any other revenues pledged as security, for the then next succeeding fiscal year, plus the estimated net revenues of the facility, if any, to be added to the Dormitory System satisfy the earnings test provided for in Special Conditions (i) and (j) above.

(5) That the certifications required by the provisions of the preceding paragraphs (3) and (4) are made by the Chief Financial Officer of the Borrower and approved by its President and governing body.

It is further provided that, notwithstanding the provisions of any of the foregong paragraphs (1) through (5) of this Condition, the Borrower may discontinue the operation of either or both Battle-Vance-Pettigrew and Smith Halls, or may sell or dispose of either or both of said Halls, if and whenever the Borrower shall determine that no net income can thereafter be reasonably anticipated therefrom. The proceeds of any such sale shall be deposited into the "Dormitory System Sinking Fund Account of 1963" established under the provisions of Special Condition (e) above.

(m) The Borrower covenants and agrees that it shall not permit any free use of the facilities and services of the Dormitory System to be established in accordance with the provisions of Special Condition (b) above, by itself, its administrative and faculty personnel, its students, or by others.

(n) At or prior to the advance of any loan funds hereunder or the public sale of its "University of North Carolina Dormitory System Revenue Bonds of 1963, Series A, C, D, E, and F" in the aggregate principal amount of $6,724,000 dated November 1, 1963, and in the manner provided for by Special Condition (a) above (whichever may first occur), the Borrower shall exchange its "University of North Carolina