Credit Enhancement

(a)I Maga’hågan/Maga’låhen Guåhan is hereby authorized to enter into such contracts or agreements, on behalf of the government, with such banks, insurance companies or other financial institutions as I Maga’hågan/Maga’låhen Guåhan determines are necessary or desirable to improve the security and marketability of the bonds.

(1)Such contracts or agreements may contain an obligation to reimburse, with interest, any such banks, insurance companies or other financial institutions for advances used to pay principal of or interest on the bonds and to indemnify any such banks, insurance companies or other financial institutions for costs and expenses incurred in connection with any such advance. Any such reimbursement obligation and any other obligations of the government under such contracts or agreements may be secured by a pledge of pledged revenue, but only if and to the extent that such revenue has been pledged to the bonds.

(2)In the event that the bonds shall constitute the valid and binding general obligations of the government pursuant to Title 10, Guam Code Annotated, § 51A823, any such reimbursement obligations shall be general obligations of the government of Guam and any such advance, if necessary, shall be treated for Organic Act purposes as creating an obligation issued to refund the bonds.

(b)Any reimbursement agreement may include a provision that the obligations of the government under the agreement shall be secured by all or by part of pledged revenue; provided that, at the time of execution and delivery of each such agreement, any such provision shall be in compliance with and shall not violate or breach any provision of any indenture, lease or other instrument then in effect to which the government or the Department is a party.