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91 views23 pagesSecuritization Act
This document is an Act passed and approving the Government of the Virgin Island to refinance its current bonds that were rated CCC.
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Stedmann HodgeCopyright
© © All Rights Reserved
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/ 23
ACTNO. 8329
BILL NO. 33-0363
‘THIRTY-THIRD LEGISLATURE OF THE VIRGIN ISLANDS
Special Session
2020
‘An Act amending ttle 29 Virgin Islands Code, by adding a chepter 24, creatng “The Matching.
Fund Securitization Corporation” to: (1) acquire all ofthe Virgin Islands Governments right, title,
and irterest in the Matching Fund Receipts to be paid to or for the account ofthe Government by
the United States Treasury during the Transfer Period and the Related Rights, (2) issue Matching
Fund Securitization Bonds and the Residual Certificate in order to pay the purchase price therefor
and as otherwise authorized under the act, and (3) direct the Secretary and the United States
Depastment of Interior to pay the Matching Fund Receipts directly into the Deposit Account
WHEREAS, the Legislature ofthe Virgin Islands (“Legislature”) previously authorized the
issuarce of bonds, notes, or other evidences of indebtedness (as hereinafer defined as the
““Exising PPA Bonds") of the Government ofthe Virgin Islands (the "Government”) andior the
Virgia Islands Public Finance Authority (“PFA”) to provide funds to finance al! or a portion ofthe
costs of certain infrastructure and economic development projects o support the production of ram
bby Crazan VIRIL, Ltd. (*Cruzan”) and Diageo USVI, Ine. (“Diageo”) inthe Virgin Islands;
WHEREAS, the Legislature previously authorized the Government to enter into certain
agreements with Cruzan and Diageo in connection with the financing f the costs;
WHEREAS, the Legislature has determined that the Matching Fund Receipts (as hereinafter
defined) from the United States Treasury can be more efficiently used by erecting a new special
[purpose vehicle to serve as an independent and autonomous public eotporation and governmental
instrumentality (“Corporation”) whose purpose would be to acquie all of the Govemments rights,
ile, and interest in and to the Matching Fund Receipts, to issue Bonds and the Residual Cetficate,
as such terms are hereinafter defined, inorder to pay the purchase price therefor and as otherwise
authorized, and to direct the Secretary of the US. Treasury and the United States Department of
the Interior (he “DOT") to pay the Matching Fund Receipts directly into the deposit account
create by the trustee forthe Bonds tobe issued by the Corporation (the “Transacion”);
WHEREAS, the Legislature has determined that to fulfil the objectives ofthe Transaction,
it is necessary for the Government to apply the proceeds from the sale of the Matching Fund Receipts to prepay the Existing Matching Fund Loan Notes, as hereinafter defined, so thatthe PFA.
‘may refund, redeem, pay and defease all of its Existing PFA Bonds;
WHEREAS, the Legislature wishes to continue to use the Matching Fund Receipts tht it
receives from the US. Treasury to support its investment in infrastructure and economic
development projects in the Virgin Islands, but to do soon a more efficient basis:
WHEREAS, the Legislature acknowledges that providing fora statutory lien onthe assets
of the Corporation wo seeue the payweut ou the Bows and on the ancillary agreetments entered
into in connection with the Transaction would serve the interest of the Government;
WHEREAS, the Legislature seeks to euthorize the Government to assign, sell, ansfer oF
otherwise convey its interest in the Matching Fund Receipts that are to be received from the US.
‘Treasury as long as the Bonds are outstanding and to provide the Related Rights (as hereinafter
defined) to the Corporation in connection with such sale;
WHEREAS, the Legislature secks to authorize the Corporation to issue Bonds the proceeds
‘of which must be used to purchase fom the Government all of ts rights, ttle and interest in and
to the Matching Fund Receipts and the Related Rights and pay the related costs of the issuance;
WHEREAS, the Legislature seeks to authorize the Government to use the cash purchase
price forthe Matching Fund Receipts and the Related Rights to prepay all Existing Matching Fund
Loan Notes owing to the PFA so thatthe PFA may, in turn, refund, redeem, pay and defease all
Existing PFA Bonds that secure the Existing Matching Fund Loan Notes, thereby releasing the
existing liens on the Matching Fund Receipts so that they can be sold and conveyed to the
Corporation;
WHEREAS, in addition to the cash purchase price forthe Matching Fund Receipts, the
Government isto receive a Residual Certificate, pursuant to which the Government will have rights,
to the portion of the Matching Fund Receipts deposited by the U.S. Treasury into the deposit
account ofthe Corporation and which remain after the Corporation pays the debt service, reserve
funds and expenses in connection with the bonds and other obligations;
WHEREAS, the Legislature has determined thatthe issusnce of the intial Bonds and the
Residual Cerificate is expected to ultimately result in ineeased receipts to the Government on a
‘et present value basis by way ofthe Residual Certificate as compared to the residual receipts that
‘would have been expected to be available to the Government had the Existing Matching Fund
Loan Notes and Existing PFA Bonds remained outstanding dve to the Corporation's expected
lower borrowing costs when compared to the borrowing costs of the Government;
WHEREAS, the Legislature has determined that certsin amendments to the existing
‘agreements with Cruzan and Diageo and other new agreements may be necessary to carry out the
transactions contemplated by this act; and Now, Therefore,
Be it enacted by the Legislature ofthe Virgin Islands: SECTION 1. Title 29 Virgin Islands Code is amended by inserting a chapter 24 to read as
follows:
“Chapter 24. The Matching Fund Securitization Corporation
$1401. Short Tide
This chapter may be cited as “The Matching Fund Securtizaion Act of 2020."
§ 1402. Definitions
For the purposes of this chapter, the following terms have the meanings set forth in this
section:
(a) “Additional Bonds” means one or more additional series and/or tranches of Bonds
issued pursuant to the Indenture or another indenture after the Initia! Matching Fund Securitization
‘Bonds are issue.
() “Ancillary agreements" means the Sale Agreement, the Indenture, any supplemental
‘ndentures, other indenture, the bond purchase agroement between the Corporation and the bond,
purchasers, security enhancement agreements, investment agreements or any other agreement or
instrument entered into by the Corporation, the Government, ofthe Trustee in connection with, oF
in furtherance of, the sale and conveyance ofthe Matching Fund Receipts and the Related Rights
pursuant to this chapter and the issuance ofthe Bonds.
(©) “Bonds” means the Matching Fund Securitization Bonds and the Subordinate Lien
‘Bonds issued pursuant to the Indenture or other indenture
(@)“Bondiholder” means a registered owner of an outstanding Bond,
(©) “Code” means the Internal Revenue Code of 1986, as amended, and applicable
regulations
(0) “Corporation” means the Matching Fund Securitization Corporation established by
section 1404.
(@) “Cut-Off Date” means August 1, 2020.
(8) _ “Deposit Account” means a designated account inthe mame of the Corporation created
‘and held by the Trustee pursuant to the Indenture ata bank or trast company having trust powers
forthe deposit ofthe Matching Fund Receipts under the Indenture.
(@ “DOF” means the United States Department ofthe Interior.
() “Existing Matching Fund Loan Notes” means the outstanding special obligation notes
issued to the Public Finance Authority by the Government pursuan to the Loan Agreement dated
July 1, 2008, the Loan Agreement dated October 1, 2008, the Loan Agreement dated December 1, 2009, the Loan Agreement dated July 1, 2010, the Loan Agreettent dated September 1,2012, the
Loan Agreement dated September 1, 2013, and the Loan Agreement dated October 1, 2013, each
bby and among the Public Finance Authority, the trustee and the Government, which Loan Notes
are the security fr the repayment ofthe corresponding Existing PFA Bonds.
(&)_ “Existing PFA Bonds” means the various series of outstanding bonds issued by the
Public Finance Authority pursuant to an Indenture of Trust dated May 1, 1998, as amended and
supplemented, a Subordinated Indenture of Trust dated June ., 2009, as supplemented, and a
Subvidinated fnleniue uf Trust ded Deceiber I, 2009, supplemented, secured by Matching,
Fund Receipts on a senior and subordinate basis, respectively, received by the Goverment from
the US, Treasury,
() “Financing costs” means all costs associated with the following:
(1) the issuance, repayment, financing, of refinansing of the Bonds, whether upon
issuance or over the term of the Bonds,
@) the making of payments required by the ancillary agreements,
@) the preparation for and the entering into the transactions authorized by this
chapter,
(4) the maintenance, preservation, protection, and defense of the Trust Estate,
including any collection, enforcement, sale, protection or settlement actions relating to the
Trust Estate,
(5). theconfirmation, defense and protection ofthe statutory lien onthe Trust Estate,
(©) the performance of all ongoing activities celating to the Matching Fund
‘Securitization Bonds, the Residual Certificate, the Subordinate Lien Bonds, the Matching,
Fund Receipts, any ancillary agreements, and the Trust Esiate, and
(1) _ forthe compensation and expenses of or relating tothe independent directors of|
the Corporation,
(1m) “Financing entity” means the Corporation, the Trustee and any other person or entity
acting forthe benefit of the Bondholders or the Corporation that has rights under any ancillary
agreements
(0) “Government” means the Government ofthe Virgin Islands
(0) “Govemor" means the Governor ofthe
from time to time.
irgin Island: or his designee as may be named
(P) “Indenture” means the master trust indenture, bond indenture, trust agreement or
similar agreement between the Corporation and the Trustee, as amended or supplemented from ‘ime to time, fom the date ofthe issuance ofthe Initial Matching Fund Securitization Bonds and
the Residual Certificate.
(q) “nial Matching Fund Securitization Bonds” means the initial series of Matching
Fund Securitizaion Bonds issued pursuant to the Indenture,
(0) “Matching Fund Receipts” means the amounts paid and to be paid by the U.S, Treasury
through the Secretary of DOL asa transfer of federal excise taxes imposed and collected under the
Code in any fisal year on rum produced in the Virgin Islands and exported to the United States
1nd that is subject to federal excise tax pursuant to 26 USC $7652.
(6) _ *Melching Fund Securitization Bonds” means the Initial Matching Fund Securitization
Bonds and any Additional Bonds issued on a parity therewith, which bonds may be issued as
taxable or tax-exempt bonds, authorized to be issued by the Corporation from time to time pursuant
{othe Indentureor other indenture. Neither the Residual Certificate nor any Subordinate Lien Bond
isa Matching Pand Securitization Bond,
(©) “Public Finance Authority” means the Virgin Islands Public Finance Authority, a
public corporation and governmental instrumentality ofthe Government.
(u) “"Reited Rights” means the contractual rights provided by the Government, the
covenants made by the Government, and the Corporation's rights to enforce the rights’ and
covenants, all pursuant tothe Sale Agreement
(v) “Residual Certificate” means a certificate issued by the Corporation evidencing the
right ofthe holder to receive any Residual Receipts on deposit in the Residual Fund,
(ow) *Residual Certificate Holder” means the holder or holders ofthe Residual Cerificate,
Upon its issuance by the Corporation, the Residual Certificate Holder isthe Government.
(%) “Residual Fund” means the fund or account so designated, created and established
‘pursuant tothe indenture into Which the Residual Receipts are deposited.
(9) “Residual Receipts" means that portion of the Matching Fund Receipts deposited in
the Residual Fund, if any, after making the deposits required in each fiscal year forthe following,
in the order of priority provided in the Indenture:
(1) Payment of debt service on the Bonds;
2) Establishing, maintaining, or
‘connection with the issuance ofthe Bonds;
eplenishing any reserve funds created in
2) Payment of any other obligations of the Corporation under any ancillary
‘agreement oF
(4) Payment ofthe operating expenses ofthe Corporation, (2 “Resolution” means one or more resolutions by the board of directors of the
Corporation, adopted in accordance with this chapter, authorizing
(1) the Corporation's purchase of the Matching Fund Receipts and the Related
Rights,
2) the issuance of one or more series of Bonds,
@) any redemption, defeasance or refunding of Bonds, and
(4) the execution and delivery of the Indenture, any other indenture, any
supplemental indenture, and any ancillary agreement,
(2a) “Sale Agreement” means an agreement between the Corporation and the Government
that provides for the irevocable transfer, pursuant to section 1403 and the Resolution, to the
Corporation of all of the Govemsments Fight, ttle, and interest in and to the Matching Fund
Receipts to be paid by the U.S. Treasury to the Government during the Transfer Period and the
Related Rights, in exchange for:
(1) a cash payment of the net proceeds fiom the sale of any Matching Fund
Securitization Bonds and any Subordinate Lien Bonds, and
2) the Residual Certificate
(bb) “Secretary” means the Secretary ofthe US. Treasary
(cc) “Subordinate Lien Bonds” means Bonds tha: may be issued by the Corporation,
from time to time after the issuance ofthe Initial Matching Fund Securitization Bonds pursuant to
‘Resolution and an indenture, which Bonds are secured by a subordinate pledge on the Matching
Fund Receipts and the Related Rights
(da) “Transfer Period” means the period ftom and including the Cut-Off Date through and
including the date on which the last oustanding Bond is paid or defeased and all obligations
Under the Indenture and the ancillary agreements are paid infill
(ce) “Trust Estate” means the right title, and interest in and to:
(1) the Matching Fund Receipts paid to the Corporation during the Transfer Period
and the Related Rights,
2) all camings, interest, claims, credit enhancement payments, and proceeds of or
arising from the Matching Fund Receipts and any adjustments to and from the Related
Rights, and
G) all rights of the Comporation under the Sale Agreement and all other ancillary
agreements. The Trust Estate may not include any Residual Receipts, (f) “Trustee” means the bank or trust company appoisted as “Trustee” for the Bonds
pursuant to the Indenture and having the duties, responsibilities and rights provided for in the
Indenture, and its successor or successors and any other bank or trust company that may at any
‘time be substituted in its place pursuant to the Indenture,
(gg) “US. Treasury” means the United States Department ofthe Treasury,
(bh) “Virgin Islands” means the unincorporated territory of the United States of America
a described in the Revised Organic Act ofthe Virgin Islands, 48 U.S.C. § 1541 (a)
§ 1403. Authority to Sell and Transfer the Matching Fund Receipts and Provide
Related Rights
(®) For the purposes of prepaying the Existing Matching Fund Loan Notes so that the
Public Finance Authority may, in tum, refund, redeem, pay or defease all Existing PFA Bonds
secured thereby, releasing the existing liens on the Matching Fund Receipts so thatthe Government
‘may more efficiently leverage the value of the Matching Fund Receipts, the Government may sel,
to the Corporation all of the Governments right, ttle, and interest in and to the Matehing Fund
Receipts and the Related Rights and any earings or interest payable to the Government during
the Transfer Period at @ purchase price equal to the net proceeds from the sale of the Initial
Matching Fund Securitization Bonds, less the costs associated with the sale, plus the Residual
Certificate. But the US. Treasury shall first have acknowledged and confirmed in writing that it
will recognize the letters of instruction to be delivered pursuent to section 1403(h) and other
directions from the Corporation regarding the Matching Fund Receipts and will deposit Matching,
Fund Receipts directly into the Deposit Account,
() The Government may transfer all or a portion of the Residual Certificate upon the
‘conditions set forth in the Indenture
(©) The right to receive the Matching Fund Receipts during the Transfer Period and to
‘exercise and enjoy the Related Rights isa vested, presently existing propery right notwithstanding
‘that the amounts ofthe Matching Fund Receipts to be paid inthe future will depend on further acts
that have not yet occurred, including but not limited to:
(1) the production of rum in the Viegia Islands,
(2) the sale and export of the rum to the United States,
@) adjustments that’ may be made to the rate or amount of the Matching Fund
Receipts tobe paid by the U.S. Treasury, and
(4) the US. Treasury paying the Matching Fund Receipts dircily into the Deposit
‘Account, as requested by the Corporation,
(@ Subject to the authorization and restrictions of this chapter, the Governor stall
determine the terms and conditions of the Sale Agreement. which determination must be conclusively evidenced by his execution ofthe Sale Agreement. Once sold pursuant tothe Sale
‘Agreement, the Matching Fund Receipts that would have been paid tothe Government during the
Transfer Period, and the Related Rights, are no longer the property of the Government, and the
Government has no right to obtain the etur of the Matching Fund Receipts orto exercise and
enjoy any of the Related Rights, except as agent for the Corporation or the Trustee, asthe cise
‘may be. But for so long as the Government is the Residual Certificate Holder, it must receive
payment ofthe Residual Receipts inthe Residual Fund in accordance withthe Indenture solely 9y
Virtue of being the Residual Certificate Holder.
(©) The Government shall cause the net proceeds from its sale of the Matching Pund
Receipts and the Related Rights to be placed in one or more separate accounts and used to prepay
the Existing Matching Fund Loan Notes and pay all costs associsted withthe prepayment, and if
funds remain in those accounts after the prepayment of the Existing Matching Fund Loan Notes
and the payment of al related costs, the funds must be released tothe Government for any purpese
authorized by an act of the Legislature. In no event shall amounts paid to purchase the Matching
Fund Receipts and the Related Rights be available or be applied for payment ofthe Matching Fund
Securitization Bonds, the Subordinate Lien Bonds, the Residual Cerificate, any claim against the
Corporation, or any debt or obligation of the Corporation.
(8, Upon the Public Finance Authority's receipt ofthe Funds from the prepayment ofthe
Existing Matching Fund Loan Notes by the Government, the Public Finance Authority shall be
obligated to, and shall, use the amounts to cause all the Existing PFA Bonds to be redeemed or
‘defeased in full and shall be obligate to, and shall, pay in full all ther amounts oustanding uncer
the indenture and other documents related to the Existing PFA Bonds. In no event shall amounts
paid to prepay the Existing Matching Fund Loan Notes be available or be applied for payment of
the Matching Fund Securitization Bonds, the Subordinate Lien Bonds, the Residual Cerifica,
‘any claim against the Corporation, or any debtor obligation of the Corporation,
(2) The Government shall provide, ona timely basis foreach fiscal year to:
(1) to the DOI with copy to the Corporation, an estimate of the amount of rum to
‘be produced in the Virgin Islands and exported to the United States for the ensuing fiscal
year, and
2) to the Corporation, any information required to make the request for any
adjustment tothe Matching Fund Receipts for such year.
(h) The Goverment shall deliver one or mote agreements or instruments, including an
imevocable letter of instruction, nd in each and every instance under subsection (g) (1), directing
the Secretary and DOI to:
(1) _ recognize the Corporation as the owner ofthe Matching Fund Receipts tobe paid
during the Transfer Period forall purposes,
2) _ accept delivery of requests for adjustment from the Corporation relating to the
Matching Fund Receipts, and (2) _cause to be promptly transfered to the Deposit Account any and all payments of
the Matching Fund Receipts received in error during the Transfer Period
(The Government, acting by the Governor, may execute and deliver all documents and.
agreements and take all actions necessary or appropriate in connestion with the sale and
conveyance ofthe Matching Fund Receipts and the Related Rights pursuant to this chapler and the
prepayment of the Existing Matching Fund Loan Notes, and to take all actions permitted of
required by this chapter and included inthe Sale Agreement and to accomplish the purposes hereof
and thereof,
(The Public Finance Authority may execute and deliver all documents and agreements
and take all actions necessary or appropriate in connection with the redemption or defeasance in
full ofthe Existing PFA Bonds and the payment in full ofall other amounts outstanding under the
indenture and other document related to the Existing PFA Bonds.
(&)__ The Government shall cause a report of the final amount and disposition of the net
proceeds from the sale ofthe Matching Fund Receipts and the Related Rights to be made to the
Legislature of the Virgin Islands.
§ 1404, The Corporation
(2) The Matching Fund Securitization Corporation is established as a special purpose,
independent and autonomous, public corporation and governmental instrumentality of the
Government of the Virgin Islands. The Corporation is intended, created, and empowered to
effectuate the purposes stated in this chapter. The Corporation has a legal existence separate from
the Government, The debts, obligations, contracts, bonds, receipts, expenditures, accounts, funds,
facilities and property of the Corporation are those of the Corporation and not those of the
Government, or any office, bureau, department, agency, commission, branch, agent, office or
employee of the Government. The Corporation is not created or organized, and its operations may
not be conducted, for the purpose of making a profit,
(6) The purposes ofthe Corporation ar to:
(1) _ acquite all of the Government's right, tile, and interest in and to the Matching
Fund Receipts to be paid to o for the account ofthe Government by the U.S. Treasury during
the Transfer Period and the Related Rights,
(2) issue Bonds and the Residual Cerificate in order to pay the purchase price
therefor and as otherwise authorized under this chapter, and
(@) direct the Secretary and the DOI to pay the Matching Fund Receipts directly into
the Deposit Account.
(©) The Corporation shall, pursuant to @ Resolution: 10
(1) issue the Initial Matching Fund Securitization Bonds as contemplated by a
Resolution, and use the net proceeds to purchase and acquire the Government's right, ttle
and interest in and to the Matching Fund Receipts to be paid to of for the account ofthe
Government during the Transfer Period and the Related Rights, and own, hold and use the
‘Trust Estate and pay any related closing costs and ongoing financing costs
(2) direct that Matching Fund Receipts deposited inthe Deposit Account be applied
by the Trustee to the payments, at the times and in the order of priority, set forth in the
Indenture;
G)__in addition to the statutory lien om the Trust Estate securing the payment of
principal of and interest on the Bonds as referred to in section 1405), a additional security
forthe payment of principal of and interest on any Bonds issued by it and of any and all
other obligations under the Indenture, pledge and automatically create a security intrest that
shall be @ consensual lien on the Trust Estate, and take any and all actions to ereate and
impose the lens or other encumbrances that arise by force ofthis chapter;
(4) _ by the earlier of the date requested by the U.S. Treasury or such other deadline
provided by law, foreach fiscal year during the Transfer Period, when appropriate deliver
to the DOL writen letter requesting any adjustment to the amounts based on actual federal
excise taxes paid on rum produced in the Virgin Islands and exported to the United States,
ith the adjustment tobe applied to the amount of the Matching Fund Receipts paid to the
Corporation inthe ensuing year;
(5) ifauthorized by the Legislature, issue Additional Bonds for purposes related to
‘the Corporation as contemplated by a Resolution, and use the proceeds as contemplated in
the related indenture or supplemental indenture and pay any related closing costs and
‘ongoing financing costs; and
(6) issue the Residual Certificate as described in section 1403(3),
(@) So long as any Bonds remain outstanding, the Corporation may not merge or
‘consolidate, directly or indirectly, with any person or entity. In addition, the Corporation may not
incur, uarantee or otherwise become obligated to pay any debt other than the Bonds, the Residual
Certificate, or obligations other than those incurred pursuant to ancillary agreements and the
‘elated financing costs. The Corporation shall keep its assets and liabilities separate and distinct
from those of any other entity
(©) _ The Corporation has no authority o engage in any busines activities other than those
‘provided in this chapter. In connection with the authority provided inthis chapter, the Corporation
has the power to:
(1)__ Adopt, amend, repeal, and enforce bylaws, rules, regulations, and procedures as
it determines appropriate tothe goveming of its affairs and the conduct ofits business and
that are not inconsistent with this chapter; n
2) _Sueand be sued, and to complain and defend, in its own name;
@)__ Adopt, alter, and use a corporate seal, which nust be judicially noticed, but the
absence ofthe seal on a contractor other documents does na affect its validity:
(4) Acquire, hold, or pledge, contract rights, general intangibles, revenues, moneys,
‘and accounts as may be proper or expedient to carry out the purposes f the Corporation and
this chapter, and to assign, convey, sll transfer, lease or otherwise dispose of such property;
(5) Establish and maintain such reserves and special accounts, forthe benefit of the
Bondholders, to be held in trust or otherwise, as may be required by agreements made in
connection with the Bonds, or any agreement between itself and thied parties;
(©) Redeem, defease, or otherwise refund the Bonds in accordance with the terms of
the Indenture as long as the redemption, defeasance or refunding does not, solely by such
action, reduce the expected Residual Receipts to the Res dual Centificate Holder on a net
present value basis compared o the net Residual Receipts hat would have been expected to
be available to the Residual Certificate Holder had the Bends remained outstanding unless
the Residual Certificate Holder otherwise consents to such action:
(1) In furtherance ofthe pledge of the Trust Estate, execute and deliver one or more
agreements or other instruments pursuant to which it shall take all actions necessary or
appropriate to cause the Matching Fund Receipts to be paid directly from the U.S. Treasury
into the Deposit Account where it must be maintained inthe custody of the Trustee and.
must be held separate fom any other funds and accounts of the Government or the
Corporation ora bank or trast company:
(8) Elect, appoint, and employ officers and agents as the Corporation considers
advisable to operate and manage the affairs ofthe Corporation, and to define their duties and
fix, adjust, and define their compensation a it determines 0 be appropriate;
(9) Make, execute, and perform contracts, commitments, agreements, indentures,
instruments and ancillary agreements, in connection with the issuance of, security for, of
‘administration of, the Bonds and the Residual Certificate, as approved by its board of
directors and as necessary or appropriate to accomplish the purposes of the Corporation and
this chapter,
(10) Select, retain, and employ professionals, contractors, agents, bond insurance
providers, or rating agencies that are necessary of appropriate 10 enable or assist the
‘Corporation in carying out the purposes of the Corporation;
(11) Pay its financing costs, scheduled debt service on the Bonds and related
financing costs;
(12) Indemnity or insure members of the board of directors and officers of the
‘Corporation as it determines appropriate; (13). Purchase insurance or self insure against loss in connection with ts property and
‘other assets or other risks, in amounts and from insures a it determines appropriate;
(14) Invest any funds or other moneys under its castody and control in investment
securities or under any ancillary agreement pursuant tothe terms ofthe Indenture;
(15) Do all things necessary or appropriate to enforce its rights and require other
parties to fulfil ther obligations hereunder and under the ancillary agreements; and
(16) Do alt things necessary or appropriate to carry out its purposes and exercise the
powers expressly given and granted in this chapter
(0) Board of Directors.
(1). The Corporation is governed by aboard of diestors composed of three members.
‘The Governor serves as the ex-officio member of the board of directors. Two members of
the board of directors must be privat citizens, “independent members.
2) Anindependent member ofthe board of directors:
(A) must be older than 18 years of age and have at least seven years executive
or board experience in banking, accounting, and/or Finance;
(B) must not be a eurrent officer, employee or director of any governmental
entity of the Virgin Islands and must be at least thee years removed from having
served as an officer, employee or director of any governmental entity of the Virgin
Islands; and
(C)_ need not be a resident ofthe Virgin Islands,
() A quorum consists of two members, one of whom must be the Governor Any
one or more directors may participate in a meeting of the board of directors by means of a
conference telephone, video, or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time and allowing for the
verification of the identity of each of the directors. Participation by such means constitutes
presence in person at a meeting.
(4) Actions of the board of directors are determined by a majority vote of the
members, unless a unanimous vote of all the members is required by the by-laws of the
Corporation for certain purposes; but the affirmative vote of both of the independent
‘members is required forthe issuance of the Initial Matching Fund Securitization Bonds, and
the affirmative vote of both 2 majority ofthe independent members and the Governor is
required for the issuance of any Additional Bonds
(5) The two independent members of the board of directors must be appointed by
the Governor within 30 calendar days after the effective dite of this chapter. Any vacancy 13
by either ofthe tvo independent directors appointed by the Governor must be filled by the
‘Governor not more than 90 days after the date of the vacancy. At any time after the issuance
of the Initial Matching Fund Securitization Bonds, the board of directors shall increase the
size of the board of directors to five members, and the ;wo additonal directors must be
independent and be nominated by the Governor and confirmed by the Legislature. Any
vacancy of either of the additional independent directors must be filled by the Govemor not
later than 90 days after the date of the vacancy. Each ofthe independent members of the
board of directors serves a four-year term, except that an independent member selected to
fill a vacaney occurring before the end of the term for which his predecessor was selected
may only serve until the end ofthe term. A director serves after the expiration of his term
ntl his suceessor has taken office. Any director that has not been removed from the board
‘of directors pursuant to paragraph (7) may be reappointed at any time.
(©) The independent directors may receive compensation notin excess of $150 per
each day or part ofa day spent inthe meeting ofthe board of girectors, and all directors may
receive, orbe reimbursed for, the actual, reasonable, and necessary expenses incurred in the
performance oftheir official duties.
(1) The Governor may remove any director for inefficiency, neglect of duty or
‘misconduct in office after giving him a copy ofthe charges against him and an opportunity
to be heard, in person or by counsel, in his defense, upon not les than ten days" notice. If
any director isso removed, the Governor shall file in the Office ofthe Lieutenant Governor
‘a complete statement ofthe charges made against the director and his findings together with
‘a complete record ofthe proceedings.
(8) _ Each director has a fiduciary duty to act in the best interests ofthe Corporation,
including its creditors, the Bondholders, and shall perform other duties as may be specified
in the organizational documents er other agreements ofthe Corporation,
(8) All.assets and income of the Corporation are exempt from Virgin Islands taxation.
(4) The Corporation has the same fiscal year asthe Government.
(Am independent accountant, appointed by the board of directors of the Corporation,
shall conduct an annual audit ofthe accounts and records ofthe Corporation,
G)_No Virgin Islands laws, rules, or orders governing procurement or administrative
procedures, or personnel apply to the Corporation, ils activities, board members, officers, or
employees, except as otherwise provided for in this chapter.
(&) All operating and administrative expenses ofthe Corporation necessary forthe proper
business of the Corporation and budgeted at the time of the Ssuance of the Bonds or in any
suecessive year and the costs of issuance and marketing of the Bonds must be paid by the
Corporation out ofthe proceeds of the Bonds and the Matching Fund Receipts ‘$1405. Bonds of the Corporation
(a) Subject to section 1404(\S) and section 1408, the Corporation has the power to issue
Bonds in one or more series and/or tranches and at one or more times, including refunding Bonds
at or before maturity, and the obligations are payable solely from the Trust Estate, and the
Corporation has the power to provide for the authorization, securing, sale, and issuance of the
Bonds and the Residual Certificate consistent with this chapter. The Corporation has the power to
pledge the Trust Estate as security forthe payment of all amounts payable under the Indenture,
any supplemental indenture, and other indentures.
(®) The Corporation shall enter into an agreement with one or more underwriters oF
purchasers to sell the Initial Matching Fund Securitization Bonds in compliance with the
Resolution, setting forth the principal amount of the Initial Matching Fund Securitization Bonds
to be issued, the pricing and the proceeds expected from the issuance.
(©) _A Resolution must authorize and deseribe the terms of the Initial Matching Fund
‘Securitization Bonds tobe issued to finance the Corporation's acquisition ofthe Matching Fund
Receipts and the Related Rights only if the board of directors determines and states in the
Resolution thatthe issuance of the inital Matching Fund Securitization Bonds and the Residual
Certificate is expected to ultimately result in increased receipts to the Government on anet present
value basis by way ofthe Residual Certificate as compared tothe residual receipts that would have
been expected to be availabe to the Govemment had the Existing Matching Fund Loan Notes and
Existing PFA Bonds remained outstanding by taking advantage of the Corporation's expected
lower borrowing costs when compared 10 the borrowing costs of the Government,
(@) The Corporation, by Resolution ofits board of directors, may authorize the issuance
of one or more series of Bonds, The Resolution may stipulate the tenms of the Bonds, including
the following
(1) Whether the Bonds wil be issued as Matching Fund Securitization Bonds or 2s
Subordinate Lien Bonds;
@) The date a Bond beats;
(3) The date a Bond matures and, if different, the other date on which s Bond may
be paid;
(4) Whether the Bonds are issued as current interest bonds, capital appreciation
bonds, convertible, capital, appreciation bonds or a combination thereof,
(5) Whether the Bonds ae issued as serial bonds, term bonds or asa combination of
the two;
(©) The denominations; Is
(1) The interest rate or rates, or variable rate or rates changing from time to time, to
bbe payable semi-annually, all as provided in or determined pursuant fo authorization uncer
the Resolution;
(8) Themethod and tems of sles
(9) The method fr payment
(10) Security for he Bonds:
(II) The terms of redemption:
(12) The establishment of reserves and debt service funds and the use of proceeds of
the Bonds for costs of issuance, capitalized interest and otherwise in accordance with this
chapter,
(13) The terms of any ancillary agreements to be entered into in connection with the
issuance of such Bonds;
(14) ‘The identity ofthe Trustee and other financing entities in connection with the
issuance of the Bonds;
(15) Whether the Corporation will seek rating on the Bonds and whether the Bonds
may be insured; and
(16) Any other terms that, inthe opinion of the board of directors or its advisors, may
bbe necessary or appropriate forthe sale ofthe Bonds
(6) The Resolution authorizing the issuance of the Bonds must include a statement as to
‘whether a series of the Bonds is intended tobe issued on a federally tax-exempt or taxable basi
(0 The Resolution authorizing the issuance of the Bonds must include a description of te
use ofthe proceeds from the sale ofthe Bonds and provide for the payment of any closing financing,
costs and ongoing financing costs.
(a) Each Resolution must be irevocable but may be amended on or after the date of
issuance of the Bonds approved thereunder only in accordance with and subject tothe limitations
of the Indenture. The Resolution must remsin in effect and unabsted until the Bonds authorized
by the Resolution have been paid in fll and all amounts required tobe paid to any financing entity
are paid in full an all obligations thereunder have been performed in full
(8). The board of directors may delegate to the Governor the authority to prescribe the
terms and conditions of each series of Bonds, including those refered to in subsection (d), except
‘that the terms and conditions ofthe Residual Certificate issued in connection with the purchase of
the Matching Fund Receipts and the Related Rights must be consistent withthe terms ofthe Sale
‘Agreement. () The Bonds must be secured by a statutory lien on the Trust Estate. The Matching Fund
Securitization Bonds and any Subordinate Lien Bonds shal have the benefit of, and be secured by.
4 statutory lien upon the Trust Estate, which statutory lien must be effective, binding, and
‘enforceable against creditors and all others asserting rights therein or having claims of any kind in
tort, contract, or otherwise, irrespective of whether those partes have notice of he lien and without
the need for any physica delivery, recordation, filing or further act of any kind, The statutory lien
arises by operation of law pursuant to this subsection and automatically atacies tothe Trust Estate
from the time the Bonds are issued, without further action, filing or authorization by the
Corporation or any other entity, person, governmental authority, or officer. The statutory lien on
amounts constituting Residual Receipts is automatically releasod and discharged immediately
‘upon deposit by the Trustee ofthe amounts of Residual Receipts into the Residual Fund without
further action, filing or authorization by the Corporation or any other entity, person, govemmental
authority, or office.
()_Any pledge by the Corporation of the Trust Estate as security forthe Matching Fund
Securitization Bonds has the benefit of a consensual lie, perfected effective, binding, and
enforceable against creditors and all others asserting rights therein or having laims of any kind in
tort, contract, or otherwise, respective of whether those parties have notice ofthe lien and without
the need for any physical delivery, recordation, filing or further aet of any bind. The consensual
lien on amounts constituting Residual Receipts is automatically released and discharged
immediately upon any deposit by the Trustee of the Residual Receipts int> the Residual Fund
without further action, filing or authorization by the Corporation of any other entity, person,
‘governmental authority, or officer
(&) The Bonds are securities in which all public officers and bodies of the Government
and all agencies, instrumentalities, commissions, authorities, and political subdivisions thereof, all
insurance companies and associations and other persons carrying on an insurance business, all
banks, bankers, trust companies, savings banks and savings associations, irclading savings and
Joan associations, building and loan associations, investment companies and orher persons carrying
‘on a banking business, and all other persons whatsoever who are now or may hereafter be
authorized to invest in Bonds or other obligations ofthe Corporation, may properly and legally
invest funds including capital in theit control or belonging to them,
() The Bonds are securities that may be deposited with and are seccived by all pubic
officers and bodies of the Goverment and all agencies, instrumentaities, commissions,
authorities, nd political subdivisions thereof, for any purpose for which the deposit of Bonds or
other obligations of the Corporation is now or may hereafter be authorized
(m) The Bonds are obligations ofthe Corporation,
(1). The Bonds, obligations of the Corporation under the ancllary agreements or
other contracts, expenditures, accounts, funds, property and facilities ofthe Corporation are
those ofthe Corporation and not thase ofthe Government, or any department office, agency,
‘commission, municipality, branch, bureau, agent, officer or employee cf the Government. 7
(2) _ The Bonds are not obligations ofthe Government and arenot secured by a pledge
ofthe full faith and credit ofthe Government and the Bondholders may not require the levy
or imposition of taxes. Neither the full faith and credit nor the taxing power of the Virgin,
Islands is pledged to the payment ofthe principal of, or interest on, the Bonds,
(G3) _ The Bonds and the Residual Certificate are special obligations ofthe Corporation
payable solely from and secured by the Trust Estate,
(4) The Corporation has no taxing power.
(5) _ The Bonds must cont
through 4) of this subsection,
‘on their fae the statements contained in paragraphs (1)
(6) Nothing contained inthe Bonds or in the related financing or closing documents
creates an obligation on the part of the Corporation or the Government to make payments
‘with respect tothe Matching Fund Securitization Bonds, the Subordinate Lien Bonds, or the
Residual Certificate from sources other than the assets of the Corporation
(1) The issuance of the Bonds, the authority to issue the Bonds, the regularity thereof, the
validity of any pledge or lien, and the validity and legality of each Resolution authorizing the
Bonds and the proceedings so adopted are conclusively presumed,
(0) _ No official, employee, or agent of the Corporation or the Government is personally
liable solely because the Matching Fund Securitization Bonds are issued. Members of the board
of directors, while acting within the scope of their authority as directors of the Corporation, are
not subject to any personal or civil liability from the exercise of any of the Comporation’s purposes,
duties or responsibilities, unless the conduct ofthe director is determined by a court of competent
jurisdiction to constitute willful wrongdoing or gross negligence.
(p) The signature of an officer of the Corporation that appears on the Bonds, including
Matching Fund Securitization Bonds, not yet issued, or delivered, whether manual or facsimile,
remains valid and sufficient notwithstanding that the person has ceased to hold that office
(q) _ The Bonds are exempt as to principal and interes fom taxation by the Government or
by any political subdivision ofthe Government,
{§ 1406, Term of Corporation; No Bankruptcy
(a) The existence of the Corporation is perpetual; but the board of directors by majority
vote, including ll of the independent members, may dissolve the Corporation no earlier than one
year and one day after the Bonds, and all other obligations ofthe Corporation under the Indenture
and the ancillary agreements have been repaid or ther repayment has been provided for fully, and
the existence of the Corporation terminates when adequate provision has been made for the
pyment of all other debts and obligations, andthe winding up ofthe affairs of the Corporation
[No assets or earnings ofthe Corporation inures toa private person or entity. Upon dissolution of 1s
the Comporation, title to all property ofthe Corporation is vested in and becomes the property of
the Government.
(©) The Corporation may not be a debtor under any provision of the United States
Bankruptey Code or under any other bankruptcy or similar law, and neither any public officer ror
‘any organization, entity or other person shall authorize the Corporation to be or become a debior
under any provision of the United States Bankruptcy Code or under any ather ankruptey or similar
law. Until the date not earlier than one year and one day after the Bonds and all other obligations
‘under the Indentures and ancillary agreements are pad in ful:
(1) The Corporation may not dissolve or file a voluntary petition under any
‘bankruptcy legislation in effet from time to time or sell al, or substantially al, ofits assets;
(2) _Noppublic officer, organization, entity, or other person is empowered to authorize
the Corporation to be or become a debtor under any bankruptcy legislation in effect from
time to time; and
(3) The Corporation may not take any action that materially and adversely affests
the rights of the Bondholders or other obligations issued by it
{§ 1407. Sale of Matching Fund Receipts and Related Rights
(2) The transfer of the Govemment’s right, il, and interest in and to the Matching Fund
Receipts and the Related Rights pursuant to this chapter to the Corporation or any assignee
permitted under the Indenture must be treated as an absolute transfer and true sale ofall of the
Government’ right ile, and intrest in and to the Matching Fund Receipts designated as being
sold pursuant tothe terms ofthe Sale Agreement, and nat a pledge of or secured transaction relating
to the Government’ right, ile, and intrest in the Matching Fund Receipts and the Related Righs,
if the documents governing the transaction expressly state thatthe transaction is a sale or other
absolute transfer.
(b) The sale and conveyance of the Matching Fund Receipts and the Related Rights
pursuant to this chapter must occur only when all ofthe following have occurred
(1) The Comporation has adopted a Resolution;
2) The documents evidencing the sale and conveyance of the Matching Fund
Receipts and the Related Rights pursuant to this chapter have been executed and delivered
to the Corporation;
G) _ The Government has received the purchase price required for the rights tothe
Matching Fund Receipts and the Related Rights set forth in section 1403(a); and
(4) The US. Treasury has provided the written acknowledgment and confirmation
as contemplated in section 1403(a), and the Governor on behalf of the Government his 19