P.R. Laws tit. 24, § 3133
(a) Financing powers. — The Trust may negotiate and execute contracts, leases and all those other necessary or convenient instruments and agreements with any person, in order to exercise the powers and functions conferred upon the Trust by this chapter. The Trust may also mortgage or pledge any property to pay the principal and the interest on any bonds issued by the Trust or bonds issued by a benefited entity, and pledge all or part of the revenues the Trust may receive, including, but not limited to, the funds proceeding from the Settlement Agreement.
All revenues or any other moneys deposited in the Trust, including any payment received or to be received in the future by the Trust as part of the Settlement Agreement, shall be first applied to the payment of the principal of, and the premium, if any, and the interest on any bond or obligation issued by or in behalf of the Trust according to the provisions of this chapter, and then in effect.
(b) Trust bonds. — The Trust is hereby authorized to issue bonds from time to time for such principal amounts which in the opinion of the Trust are needed to provide sufficient funds to finance the activities, purposes or ends of the Trust, including, but not limited to, all expenses for the development and design of infrastructure destined to the Trust projects, to repay obligations of, or provide financial assistance to the Commonwealth of Puerto Rico and its public corporations and instrumentalities that provide the infrastructure for the Trust projects, to pay interest on its bonds for the period determined by the Trust, and to pay such other expenses of the Trust or of those benefited entities, including, but not limited to, working capital, which are incidental, necessary or convenient to achieve its corporate purposes and powers, and to pay any expenses for the issue of, and establish reserves to secure, said bonds. The Trust may also issue bonds to acquire obligations of any benefited entity. Without it being construed as a limitation, the product of the bonds may be applied to any expenses or purposes for which the product of the obligations of any benefited entity may be disbursed or, in those cases in which the Trust provides financing, in lieu of a public corporation or instrumentality of the Commonwealth of Puerto Rico, the Trust may apply the product of the bonds to any expenses or purposes for which the product of the obligations of said government entity could have been legally applied with regard to the projects.
(1) The bonds issued by the Trust may be made payable from the total or part of the gross or net revenues and from other revenues derived by the Trust which may include the product of funds proceeding from the Settlement Agreement made available to the Trust, all as provided in the Trust contract or resolution under which the bonds are issued. The principal of, and interest on the bonds issued by the Trust may be secured by pledging any Trust revenues, which may include the product of the funds proceeding from the Settlement Agreement made available to the Trust, all as provided in the Trust contract or resolution under which the bonds are issued. Said pledge shall be valid and binding as of the moment it is made without the need of a public or notarized document. The revenues thus pledged, including those which the Trust receives subsequently, shall be immediately subject to said pledge without the need of the physical delivery thereof or of any other action, and said pledge shall be valid and binding and shall prevail against any third party having a claim of any kind for damages, breach of contract or other motive against the Trust, regardless of whether said third party has not been notified to that effect. Neither the Trust contract or resolution, nor any collateral contract by means of which the rights of the Trust on any revenues are pledged or assigned shall have to be presented or registered to formalize the pledge on the same against any third party, except in the files of the Trust. The resolution or resolutions authorizing the bond issue or the Trust contract securing the same, may contain provisions which shall be part of the contract with the holders of the bonds issued under said resolution or resolutions or under said Trust contract with respect to the security and creation of pledges on the revenues and assets of the Trust, the creation and maintenance of redemption and reserve funds, the limitations regarding the purposes for which the proceeds of the bonds may be used, the limitations regarding the issue of additional bonds, and the limitations as to the introduction of amendments or supplements to the resolution or resolutions or to the Trust contract, as well as to the granting of rights, powers and privileges and to the imposition of obligations and responsibilities to the trustee under any Trust contract or resolution, and the rights, powers, obligations and responsibilities which shall arise in the event of the noncompliance of any obligation under said resolution or resolutions or under said Trust contract, or regarding any rights, powers or privileges conferred on the bondholders as security on the same, to increase their attractiveness for the sale of the bonds.
(2) The bonds may be authorized by means of a resolution or resolutions of the Board. The same may be issued in series, bear such a date or dates, become due in the term or terms not to exceed fifty (50) years from their respective dates of issue and accrue interest, if any, at such interest rate or rates (which may be fixed or variable), that do not exceed the maximum rate then allowed by law. The bonds may be payable at such a place or places, whether within or outside of Puerto Rico, may be of such a denomination or denominations and in such a form, whether through coupons or registered, may have such registration or conversion privileges, may be issued as uncertified bonds, may be granted in such a manner, may be payable by such a means of payment, may be subject to such redemption terms, with or without a premium, may provide for the replacement of mutilated, destroyed, stolen or lost bonds, may be authenticated in such a manner and when such conditions are met, may contain such terms and conditions, and may be issued temporarily pending the execution and delivery of definitive bonds, which the resolution or resolutions or the terms of the Trust contract may provide. The bonds may be exchanged for obligations of the benefited entity or may be sold at public or private sale at such a price or prices as determined by the Trust. Provided, however, That refinancing bonds may be sold or exchanged for outstanding Trust bonds under such terms which in the opinion of the Trust respond to its best interests. The form and manner of the bonds notwithstanding, and in the absence of an express notice on the face of the bonds stating that the same are not negotiable, all Trust bonds, including any coupons belonging to the same, shall have, at all times, and it shall be understood that they have, all the characteristics and incidences, including their negotiability, of negotiable instruments under the laws of Puerto Rico.
(3) The product of the sale of every bond issue shall be disbursed in the manner and under the restrictions, if any, provided by the Trust in the resolution or resolutions authorizing the issue of bonds or in the Trust contract which secures said bonds.
(4) The Trust bonds bearing the signature of the Trust officials who exercise the duties of their office on the date the bonds are signed shall constitute valid and unavoidable obligations even when prior to the delivery and payment of said bonds, any or all officials whose signatures or facsimiles thereof appear in the same have ceased being officials of the Trust. Any resolution or Trust contract which secures the bonds may provide for any of said bonds to mention the fact that said bonds were issued according to the provision of this chapter, and any bonds mentioning this fact under the authority of such a Trust contract or resolution shall be conclusively deemed to be valid and that it was issued according to the provisions of this chapter. Neither the members of the Board of the Trust nor any person granting the bonds shall be personally liable for said bonds, nor shall they be subject to any civil liability whatsoever for the issue of said bonds.
(c) Refinancing bonds. — The Trust is hereby authorized to issue refinancing bonds of the Trust in order to refinance those bonds in effect and outstanding at that time, and which have been issued under the provisions of this chapter, including the payment of any redemption premium with regard to the same and any interest accrued or to be accrued as of the date of redemption or maturity of said bonds and, should the Trust deem it advisable, for any of the purposes for which it can issue bonds. The issuing of said bonds, their maturity and other details with regard thereto, the rights of the bond holders and the rights, duties and obligations of the Trust regarding said bonds shall be governed by the provisions of this chapter related to the issue of bonds whenever and to the extent said provisions are applicable.
The refinancing bonds issued under this chapter may be sold or exchanged for outstanding bonds issued under this chapter, and if sold, the product of said sale may be used, in addition to any authorized purpose, to purchase, redeem or pay said bonds in effect and outstanding and may be invested pending said application by such means and in such form as determined by the Trust, subject to the limitations imposed by §§ 1261 et seq. of Title 7. The refinancing bonds may be issued, at the discretion of the Trust, at any time on or before their due date or the date selected for redeeming the bonds being refinanced.
(d) Trust contract. — At the discretion of the Trust, any bonds issued under the provisions of this chapter may be secured by a Trust contract by and between the Trust and any bank or trust company described in the following paragraph, which may be a bank or trust company operating within or outside of Puerto Rico. Notwithstanding, any provision of law to the contrary[,] said Trust contract shall not have to be executed through a public document for it to constitute a valid trust under the laws of Puerto Rico.
It shall be lawful for any bank or trust company incorporated under the laws of Puerto Rico, the United States of America or any state of the United States of America which acts as depository of the yield of the bonds, revenues or other moneys, to grant such indemnification bonds or provide as guaranty those securities required by the Trust. In addition to the above, the Trust contract may contain all those provisions the Trust may deem reasonable and proper for the security of the bond holders.
(e) Covenant of the Government of Puerto Rico. — The Government of the Commonwealth of Puerto Rico is committed to and agrees with the holders of any bonds issued under this chapter and with the persons and entities that enter into contracts with the Trust pursuant to the provisions of this chapter, that:
(1) It shall irrevocably order the escrow agent under the Master Settlement Agreement to transfer the totality or part of the payments assigned to the Trust according to the provisions of subsection (a) of this section, directly in favor of the Trust or its assignee to insure the payment of the bonds;
(2) it shall defend the rights of the Trust to receive said payments up to the maximum allowed by the Master Settlement Agreement;
(3) it shall ensure that the Model Statute, as defined in the Global Settlement Agreement, be diligently complied with;
(4) it shall not amend the Master Settlement Agreement in a way that may materially alter the rights of the bondholders or of those persons and entities that enter into contracts with the Trust;
(5) it shall not limit or alter the rights of the Trust to meet the terms of its agreements with said bondholders or with contracting persons or entities, and
(6) it shall not limit or alter the rights hereby conferred to the Trust until said bonds and the interest thereon have been fully satisfied and said contracts have been totally complied with and honored by the Trust. The Trust, in its capacity as the agent of the Commonwealth of Puerto Rico, is hereby authorized to include this promise of the Commonwealth of Puerto Rico in said bonds or contracts.
(f) Bonds, lawful investments and collateral for deposits. — The Trust bonds shall constitute lawful investments and may be accepted as collateral for fiduciary, trust and public funds, whose investment or deposit is under the authority or the control of the Commonwealth of Puerto Rico or of any official or officials thereof.
History —July 30, 1999, No. 173, § 15; July 19, 2002, No. 103, § 2.