Sec. 3. (a) The capital principal fund may be used only to guarantee payment of debt service on:
(1) securities issued by a qualified entity for a purpose specified in section 1(b) of this chapter; or
(2) bonds or notes issued to purchase securities issued for a purpose specified in section 1(b) of this chapter.
(b) The bank and the qualified entity must enter into an agreement before a guarantee under subsection (a)(1) is effective. This agreement may contain any provisions the bank considers appropriate and may specify which funds held by a state agency are subject to recovery under subsection (c).
(c) If debt service on securities of a qualified entity is paid by the bank to a qualified entity or owners of its securities under a guarantee under subsection (a)(1), the amount paid from the capital principal fund may be recovered from funds held by a state agency or department that are payable to the qualified entity as set forth in subsection (b).
As added by P.L.38-1988, SEC.5.
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