434

408

System Bond and Interest Sinking Fund Account of 1963 from the revenues of the damaged building during the period such damaged building is non-revenue producing or the revenues therefrom are diminished by reason of loss of use caused by the perils covered by fire and extended coverage insurance. Any proceeds of use and occupancy insurance shall be deposited to the credit of the Dormitory System Bond and Interest Sinking Fund Account of 1963.

Section 713. 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 714. The Board covenants that it will keep accurate financial records and accounts of all items of cost and of all expenditures relating to the Project and the Dormitory System and every part thereof and of the Revenues thereof collected by it and the application of such Revenues. Such records and accounts shall be open to the inspection of the bondholders and their agents and representatives. The Board further covenants that, not later than one hundred eighty (180) days after the close of each fiscal year, it will file with the Secretary of the Board and will mail to the registered owners of the bonds then outstanding at their addresses as they shall appear on the registration books and to all other bondholders who shall have filed their names and addresses with the Secretary of the Board for such purpose and, if the United States of America or any agency thereof is the holder of any bonds, to such holder, an audit report for the preceding fiscal year, reflecting in reasonable detail the financial condition and record of operation of The University of North Carolina at Chapel Hill, the Dormitory System and each building constituting part of the Dormitory System and including an operating and income statement for the Dormitory System and each buiilding constituting part of the Dormitory System for the preceding fiscal year, showing for such fiscal year the Revenues, the Current Expenses, the enrollment at the Chapel Hill campus, the percentage of use and the rates charged for the use or services of the Dormitory System and of each building constituting a part thereof, the status of the several accounts and funds established pursuant to this Resolution and the insurance then in force, each such audit report to be prepared by an independent certified public accountant or firm of certified public accounts of suitable experience and responsibility or by the State Auditor of the State of North Carolina.

Section 715. The Board covenants that it will not sell or otherwise dispose of or encumber the Dormitory System or any part thereof, and that it will not create or permit to be created any charge or lien on the Revenues of the Dormitory System ranking equally with or prior to the charge or lien of the bonds issued under and secured by this Resolution on such Revenues. The Board may, however, notwithstanding the foregoing provisions of this Section, at any time abandon the use of, or sell or permit the sale by the University of North Carolina at Chapel Hill at fair market value of any of the facilities of the Dormitory System, provided that:

(a) the Board is not in default in the performance of any of the covenants, conditions, agreements or provisions contained in this Resolution;

(b) the proceeds derived from the sale of any such facilities shall be applied to either (i) the redemption of bonds in accordance with Article III of this Resolution, or (ii) the replacement of such facilities by other facilities made a part of the Dormitory System;

(c) the Business Manager and Chancellor of The University of North Carolina at Chapel Hill shall certify and the Board of the Executive Committee shall determine by resolution that the facilities of the Dormitory System to be sold or the use of which is to be abandoned are no longer economically feasible of producing any net revenues; and

(d) the Business Manager and Chancellor of The University of North Carolina at Chapel Hill shall certify and the Board of the Executive Committee shall determine by resolution that the estimated