Guam § 81106 - Authorization of Bonds.

§ 81106. Authorization of Bonds.

(a) The Authority may issue bonds, from time to time, for the

purposes and in the manner provided in this Chapter. The Authority may

issue bonds to refund all or any portion of bonds previously issued under

this Chapter.

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(b) All bonds must be payable solely from and secured solely by the

tobacco receipts, or the portion of the tobacco receipts the board

determines to pledge for payment of the bonds.

(c) Neither the members of the board, nor any person executing the

bonds or any notes, nor any employee of the Authority or the

government shall be liable individually or personally on the bonds or

notes, or be subject to any personal liability or accountability by reason

of the issuance of the bonds; provided, however, that nothing in this

Chapter shall relieve any such person from the performance of any

ministerial duty required by law.

(d) The board has no power to pledge the faith, credit or taxing

power of the government in connection with the issuance of the bonds,

and each bond must recite on its face that it is a limited obligation of the

Authority issued pursuant to and in accordance with this Chapter; that it

is payable solely from and secured solely by the tobacco receipts; that it

is not an obligation of the government; and that it is not backed by the

full faith, credit or taxing power of the government. Failure to include

this language on the face of any bond does not cause the bond to become

an obligation of the government, or a pledge of the full faith, credit or

taxing power of the government.

(e) Any pledge made by the Authority of the tobacco receipts is

valid and binding from the time when the pledge is made, and the

tobacco receipts pledged and then or thereafter received by the Authority

are immediately subject to the lien of the pledge, and the pledge shall

constitute a lien and security interest, which shall immediately attach to

the tobacco receipts, without any physical delivery thereof or further act.

The lien of the pledge is valid and binding against all parties having

claims of any kind in tort, contract or otherwise against the Authority,

irrespective of whether the parties have notice of such pledge. Neither

the resolution of the Authority or any indenture, trust agreement or other

instrument by which a pledge is created need be recorded or filed to

perfect the pledge.

(f) The Authority may sell bonds issued under this Chapter either in

a negotiated sale, or through a competitive bidding process in accordance

under procedures established by the board. The determination of

whether to sell bonds through negotiation or through competitive bidding

shall be made by the board.

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(g) The Authority may not issue any bonds, unless the board has

first adopted its resolution authorizing the issuance, finding that the

issuance and the proposed use of the bond proceeds is in accordance with

this Chapter, and authorizing the execution and delivery of any indenture

providing for the pledge and other terms of the bonds.

(h) The technical form and language of the bonds, including

provisions for execution, exchange, transfer, registration, paying agency,

lost or mutilated bonds, negotiability, cancellation and other tenets,

covenants or conditions not inconsistent with this Chapter, shall be as

specified in the indenture approved by the board. Regardless of their

form or character, bonds issued under this Chapter shall be negotiable

instruments for all purposes, subject only to the provisions of such bonds

for registration. Such indenture may also appoint one (1) or more

trustees or other fiduciaries authorized to receive and hold in trust the

tobacco receipts, the proceeds of the bonds and other moneys relating

thereto, to protect the rights of bondholders and to perform such other

duties as may be specified in the indenture. Covenants of the Authority

in the indenture may include, without limitation, the establishment and

maintenance of reserve funds for the payment of debt service on bonds if

the tobacco receipts are inadequate in any year, restrictions on the later

issuance of additional bonds or making the later issuance subject to

certain conditions relating to available debt service coverage or

otherwise, conditions on the timing of the release of all or a portion of

the tobacco receipts from the lien of the indenture, the enforcement of

the Master Settlement Agreement, or any other matter that the board

considers appropriate, subject to Subsections (d), (i) and (j) of this

Section.

(i) The Authority may not enter into any covenant that purports to

create any right on the part of the board, the Authority, any bondholder,

or any trustee to recover amounts consisting of the tobacco receipts once

those amounts have been released from the lien of the indenture. Any

covenant in violation of this Subsection is void and of no effect.

(j) The Authority may establish such limitations on the investment

of the proceeds of the bonds and other moneys relating to the bonds as

may be necessary or desirable to establish and protect the exclusion of

interest on the bonds from gross income for Federal income tax purposes.