Water System Bonds of 2001

(a)Authorization of Issuance of Bonds. I Maga’hågan/Maga’låhen Guåhan is authorized to issue on behalf of the government of Guam an issue of bonds of the government which may be issued as part of a larger issue including bonds issued pursuant to Chapter 51, Title 12 of the Guam Code Annotated in an aggregate principal amount not to exceed Six Million Dollars ($6,000,000) for a maximum term of ten

(10)years and with a true interest cost not to exceed five and one-half percent (5.5%) per annum for the purpose of implementing the Water System Projects enumerated in Subsection

(i)of this Section, provided, however, that any such issue of bonds shall not cause a violation of the debt limitation of 48 U.S.C. §1423a.

(b)Terms and Conditions Determined by Certificate or Indenture. The terms and conditions of the bonds shall be as determined by I Maga’hågan/Maga’låhen Guåhan by the execution of one or more certificates or indentures authorizing the issuance of the bonds in substantially the form presented to I Liheslaturan Guåhan. Any such certificate or indenture may also authorize persons so designated to execute, on behalf of the government of Guam, any appropriate agreements or other documents relating to the bonds and the sale of the bonds. The certificates or indentures shall contain such terms and conditions as are consistent with this Section.

(c)Valid and Binding Obligation. The bonds authorized by this Section shall constitute the valid and legally binding limited obligations of the government of Guam payable from and secured by a pledge of the revenues described in Subsection

(d)of this Section. All officers charged by law with any duty in the collection of any revenues from which debt service on the bonds is payable shall do every lawful thing necessary to collect the money necessary for such purpose. The validity of any such bonds shall not be CH. 1 OFFICE OF I MAGA’HÅGA/MAGA’LÅHI [THE GOVERNOR] affected by the validity or regularity of any proceedings for the implementation of Water System Projects funded by the debt or debts.

(d)Pledge of Section 30 Revenues. All or any part of the revenues derived by the government of Guam under Section 30 of the Organic Act may be pledged to secure the repayment of any bonds issued pursuant to this Section and pay costs incurred in the creation of such debts, subject to any previously created lien on or pledge of such revenues. Any pledge made to secure the bonds shall be valid and binding from the time the pledge is made. The revenues pledged and thereafter received by the government of Guam or by any trustee, depository or custodian shall be deposited in a separate account and shall be immediately subject to the lien of such pledge without physical delivery thereof or further act, and the lien of such pledge shall be valid and binding against all parties having claims of any kind in tort, contract or otherwise, against the government of Guam, such trustee, depository or custodian, irrespective of whether the parties have notice thereof. The certificate or indenture by which such pledge is created need not be recorded. All revenues pledged are hereby continuously appropriated for the purpose for which they have been pledged.

(e)Waiver of Immunity; No Personal Liability. Notwithstanding any substantive or procedural provision of the Government Claims Act, Chapter 6 of Title 5 of the Guam Code Annotated, the government of Guam waives immunity from any suit or action in contract on the bonds issued pursuant to this Section, but does not waive sovereign immunity as to the personal liability of elected officials and full-time employees of the government of Guam. No employee or elected official of the government of Guam shall be individually or personally liable for the payment of any amounts due on any bonds issued under this Section, or for any other liability arising in connection with the bonds; provided, however, that nothing in this Section shall relieve any employee or elected official from the performance of any ministerial duty required by law.

(f)Form of Bonds; Covenants; Appointment of Trustee. The technical form and language of the bonds, including provisions for execution, exchange, transfer, registration, paying agency, lost or mutilated bonds, negotiability, cancellation and other terms and conditions not inconsistent with this Section, shall be as specified in a certificate or indenture approved by I Maga’hågan/Maga’låhen Guåhan, authorizing the issuance of the bonds. The certificate or indenture may appoint one or more trustees or other fiduciaries authorized to receive and hold in trust the proceeds of the bonds and revenues related thereto, to protect the rights of bondholders and to perform such other duties as may be specified in the certificate or indenture. I Maga’hågan/Maga’låhen Guåhan is also authorized to execute, on behalf of the government of Guam, any appropriate agreements, certificates or other instruments relating to the bonds and the sale of the bonds.

(g)Authorization for Credit Enhancement. I Maga’hågan/Maga’låhen Guåhan is authorized to enter into such contracts or agreements with such banks, insurance companies or other financial institutions as she/he determines are necessary or desirable to improve the security and marketability of the bonds issued pursuant to this Section. 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 or interest on the bonds. Any such reimbursement obligation shall be payable solely from and secured by a pledge of the revenues described in Subsection

(d)of this Section.

(h)Use of Proceeds from the Sale of Bonds. Proceeds from the sale of the bonds shall be used solely to pay and are hereby appropriated to pay the costs of the Water System Projects described in Subsection

(i)of this Section, to fund any necessary bond reserves, to pay past due accounts owed by the Guam Waterworks Authority to the Guam Power Authority; provided, such total amount paid from bond proceeds for this purpose shall not exceed Two Million Seven Hundred Fifty Thousand Dollars ($2,750,000.00), and to pay expenses related to the authorization, sale and issuance of the bonds, including without limitation, printing costs, costs of reproducing documents, bond insurance premiums, underwriting, legal and accounting fees and charges, fees paid to banks or other financial institutions providing credit enhancement, CH. 1 OFFICE OF I MAGA’HÅGA/MAGA’LÅHI [THE GOVERNOR] costs of credit ratings, fees and charges for execution, transportation and safekeeping of bonds and other costs, charges and fees in connection with issuance, sale and delivery of the debt or debts.

(i)Water System Projects.

(1)The proceeds of the bonds issued pursuant to Section 1508.1 of this Act shall be expended upon the capital outlays listed in Exhibit A of Public Law Number 26-034, not to exceed Three Million Two Hundred Fifty Dollars ($3,250,000). No proceeds received pursuant to this Section shall be expended without appropriation by I Liheslaturan Guåhan.

(2)[See NOTE below.]

(j)Policy and Intent. It is the policy and intent of I Liheslaturan Guåhan to ensure that all projects enumerated in Subsection

(i)are completed. In this respect, I Liheslaturan Guåhan gives its consent and authorization to allow the transfer of funds from a project with a surplus to a project with a shortfall, provided, however, that I Liheslaturan Guåhan shall approve all transfers. If a project or projects are placed on hold by the General Manager of Guam Waterworks Authority due to unanticipated circumstances, a transfer of funds from the project or projects enumerated in Subsection

(i)on hold to another project with a shortfall is permitted; provided, that prior to any transfer I Liheslaturan Guåhan shall approve all transfers.

(k)Approval of Guam Economic Development Authority Required. 12 GCA § 50103(k) provides that agencies and instrumentalities of the government of Guam shall issue bonds and other obligations only by means of and through the agency of the Guam Economic Development Authority (GEDA). No issue of bonds authorized by this Section shall be sold until the Board of Directors of GEDA has adopted a resolution approving the sale of such bonds.

(l)Approval of Terms and Conditions. 12 GCA § 50103(k) also provides that GEDCA shall not sell any bonds without approval by I Liheslaturan Guåhan of the terms and conditions of the issuance of the bonds. I Liheslaturan Guåhan hereby approves the issuance, terms and conditions of the bonds authorized by this Section.

(m)Permitted Investments. The proceeds of bonds issued by the government pursuant to this Section, and any revenues relating to such bonds, may be invested in, but only in, the types of investments permitted by the certificate or indenture pursuant to which such bonds are issued.

(n)Local Sale of Bonds. GEDA shall undertake its best efforts to cause a portion of any bonds issued pursuant to this Section, to be offered for sale in Guam, as well as in other jurisdictions, if and to the extent that such offer and any sales resulting from such offer do not increase the cost to the government of Guam of issuing and repaying such bonds.