§ 14-138-117 - Security for bonds. - Arkansas Statutes

14-138-117. Security for bonds.

(a) The principal of, and interest on, the bonds shall be secured by a pledge of the revenues out of which the bonds shall be made payable and by a pledge of the lease agreement covering the project from which revenues so pledged shall be derived and of the rental therefrom and may be secured by an indenture covering the project.

(b) The trustee under any indenture may be a trust company or bank having trust powers, whether located within or without the state.

(c) (1) The indenture may contain any agreements and provisions customarily contained in instruments securing evidences of indebtedness including, without limiting the generality of the foregoing, provisions respecting:

(A) The nature and extent of the security;

(B) The collection, segregation, and application of the rental from any project covered by the indenture;

(C) Terms to be incorporated in the lease agreement respecting the project;

(D) Covenants to always operate the project as a revenue-producing undertaking and to charge and collect, including the obligation to increase from time to time, sufficient rentals to maintain income at required levels;

(E) The maintenance and insurance of the project;

(F) The creation and maintenance of reserve and other special funds; and

(G) The rights and remedies available in the event of default to the holders of the bonds or the trustees under the indenture, all as the board shall deem advisable and as shall not be in conflict with the provisions of this chapter.

(2) In making such agreements or provisions, the corporation shall not have the power to obligate itself except with respect to projects and the application of the revenue therefrom.

(d) (1) If there is any default by the corporation in payment of the principal of or the interest on the bonds or in any of the agreements on the part of the corporation that may properly be included in any indenture securing the bonds, the bondholders or the trustee under any indenture, as authorized in such indenture, may either in law or in equity, by suit, action, mandamus, or other proceeding, enforce payment of the principal or interest and compel performance of all duties of the board and officers of the corporation, and shall be entitled as a matter of right and regardless of the sufficiency of any such security to the appointment of a receiver in equity with all the powers of such receiver for the operation and maintenance of the project covered by such indenture and the collection, segregation, and applications of rents therefrom.

(2) Any such indenture shall not be subject to foreclosure and shall not be construed so as to authorize the sale of any project covered thereby, or any part thereof, in satisfaction of the bonds secured thereby.

(e) The indenture may contain provisions:

(1) Regarding the rights and remedies of any trustee thereunder and the holders of the bonds and the coupons; and

(2) Restricting the individual rights of action of the holders of the bonds and coupons.