Repository: UIHistories Project: Board of Trustees Minutes - 1936 [PAGE 873]

EXTRACTED TEXT FROM PAGE:

870

BOARD OF TRUSTEES

[June 29

which the University is authorized by Senate Bill No. 542, approved July u, 1935 to retain in its own treasury for the performance of any contract or obligation with the Government in connection with any grant, advance, loan or contract for the erection of a building or buildings. Neither the Foundation nor any bondholders' trustee shall have the right to demand payment of the rental or discharge of the other obligations of the University under the lease out of any funds other than the aforesaid receipts and collections of the University which is authorized to retain in its own treasury. ( g ) Defaults: The lease shall prescribe the events of default thereunder including (but without limitation) a default by the University in payment of the rentals therein reserved or a default by the University in the performance of any of the other agreements, conditions, covenants or terms therein contained. The lease shall provide the consequences of such events of default, and the rights and remedies of the Foundation and any bondholders' trustee in case of the happening thereof. (h) Other Provisions: The lease also shall contain provisions as to such other matters as are customary in leases and shall be in form and substance satisfactory to the Foundation and (so long as it holds any of the bonds of the Foundation or is under contract to purchase same) the Government. Time is of the essence of the option to lease granted to the University hereby and the University shall have no right to exercise said option after the expiration of the period of said option; provided, however, that an agreement by the University with the Foundation to enter into the foregoing lease, as lessee, shall constitute an exercise of the aforesaid option. 2.02. The University hereby agrees with the Government that if it leases the Project at any time (whether or not pursuant to its exercise of the aforesaid option) it will pledge and use for the payment of its rentals or the performance of its obligations under any such lease, its own receipts and collections which it is authorized by Senate Bill No. 542, approved July II, 1935 to retain in its own treasury for the performance of any contract or undertaking with the Government in connection with any grant, advance, loan or contract for the erection of a building or buildings. The University hereby agrees with the Government that, during the period of this trust, it will not pledge or otherwise encumber said receipts and collections which it is authorized by Senate Bill No. 542 to retain in its own treasury for the payment of any other obligations incurred or to be incurred by the University under the Enabling Acts or either of them; provided, however, that with respect to said receipts and collections in excess of the sum of $86,000 for each yearly period ending December 31, the University may pledge or encumber said excess receipts and collections for other obligations, but any such pledge or encumbrance shall at all times be subject and subordinate to the pledge or encumbrance thereof, made or to be made by the University in any lease of the Project, for the discharge of its obligations under such lease. 2.03. In the event that the University elects not to exercise its option to enter into the aforesaid lease of the Project or terminates or fails to renew said lease at any time, the Foundation shall lease the Project to others for use exclusively for college, seminary, university or other exclusively public educational purposes, such lease to be on the most favorable terms obtainable; provided, however, that in case at the time of the leasing of the Project to others than the University there shall be outstanding any Bonds of the Foundation or interest coupons appurtenant thereto, no such lease shall be made which shall provide for an annual net rental less than $86,000 unless such lower rental is consented to in writing by the bondholders' trustee and (so long as it holds any of the Bonds of the Foundation or is under contract to purchase same) by the Government. In the event that the University elects not to exercise its option to enter into the aforesaid lease of the Project or terminates or fails to renew said lease at any time, the Foundation shall not thereafter lease the Project to the University, as lessee, except at the same rental and upon the same terms and conditions as those hereinabove set forth so long as there shall be outstanding any