A. Any bonds issued under the Institution Bond Act for refunding purposes may be:
(1) delivered in exchange for the outstanding bonds authorized to be refunded; or
(2) sold at public or private sale for not less than the par value of the bonds, plus accrued interest from the last interest date or, if there is no previous interest date, from the bond date, to the date of delivery of the bonds.
B. The proceeds shall immediately:
(1) be applied to retirement of the bonds to be retired or refunded; or
(2) be placed in escrow to be applied to payment of the bonds upon presentation for payment by the holders.