Authorization of Refunding of Government of Guam Business Privilege Tax Bonds, Series

2011A, Government of Guam Business Privilege Tax Bonds, Series 2012B, and Government of Guam Business Privilege Tax Refunding Bonds, Series 2015D.

(a)Authorization of Issuance of Bonds. Pursuant to § 50103(k) of Title 12, Guam Code Annotated, I Maga’hågan/Maga’låhen Guåhan is authorized to issue one or more series of tax-exempt or taxable bonds of the government of Guam from time to time, including, but not limited to, on a forward basis, for the purpose of refunding all or a portion of the government of Guam’s outstanding Business Privilege Tax Bonds, Series 2011A (2011A Bonds), its Business Privilege Tax Bonds, Series 2012B (2012B Bonds), and/or its Business Privilege Tax Refunding Bonds, Series 2015D (2015D Bonds) and, together with the 2011A Bonds and the 2012B Bonds (Prior Bonds), in accordance with the following requirements, limitations, terms and conditions:

(1)All obligations of the government to pay debt service on, and the redemption price of, the Prior Bonds refunded shall be discharged concurrently with the issuance of the refunding bonds. Thereafter, such Prior Bonds shall be payable solely from and secured solely by an escrow established CH. 1 OFFICE OF I MAGA’HÅGA/MAGA’LÅHI [THE GOVERNOR] for such purpose in accordance with the government’s existing bond indenture or otherwise shall be redeemed on the closing date of the refunding bonds.

(2)The debt service savings resulting from the issuance of the refunding bonds shall be not less than an amount equal to two percent (2%) of the principal amount of the Prior Bonds refunded, inclusive of all charges and fees for bond counsel and bond underwriters and other costs of issuance in connection with the issuance, sell and delivery of the bonds. Debt service savings is defined for this purpose to be the amount by which the present value of debt service on the Prior Bonds exceeds the present value of debt service on the refunding bonds, using the yield on the refunding bonds as the discount rate for purposes of calculating present value. This provision shall not apply to the refunding of Prior Bonds for the primary purpose of providing cash flow relief to the government.

(3)Such refunding bonds shall have a principal amount or principal amounts sufficient to provide funds for the payment of all or a portion of the Prior Bonds refunded, and in addition, for the payment of all expenses incident to the calling, retiring or paying of such Prior Bonds and the issuance of such refunding bonds, including:

(A)the difference in amount between the par value of the refunding bonds and any amount less than par for which the refunding bonds are sold;

(B)any amount necessary to be made available for the payment of interest upon such refunding bonds from the date of sale thereof to the date of payment of the Prior Bonds or to the date upon which the Prior Bonds will be paid pursuant to the call thereof or agreement with the holders thereof;

(C)the premium, if any, necessary to be paid in order to call or retire the Prior Bonds and the interest accruing thereon to the date of the call or retirement; and

(D)any additional amount needed to provide for a deposit to the debt service reserve in connection with the issuance of the refunding bonds.

(4)The issuance of the refunding bonds shall not result in any increase in the aggregate amount of the government’s outstanding “public indebtedness” as that term is used in 48 USC 1423a (§11 of the Organic Act of Guam).

(5)The refunding bonds shall have a final maturity not later than the final maturity of the Prior Bonds; provided, however, that this provision shall not apply to the refunding of Prior Bonds for the primary purpose of providing cash flow relief to the government.

(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 a certificate or indenture authorizing the issuance of the bonds upon or prior to the issuance of the bonds.

(c)Pledge of Business Privilege Tax Revenues.

(1)All bonds authorized by Subsection

(a)of this Section, as may be amended from to time (BPT Bonds), shall be secured by a statutory lien on all tax revenues derived from the levy of the first three

(3)percentage points, out of the total number of percentage points levied from time to time, of the business privilege tax levied pursuant to Article 2 of Chapter 26, Title 11, Guam Code Annotated, or any successor thereto (pledged business privilege tax revenues).

(2)This lien shall arise automatically without the need for any action or authorization by I Maga’hågan/Maga’låhen Guåhan, the government of Guam, or any other person or entity. Such lien shall be valid and binding from the time such BPT Bonds are issued. The pledged business privilege tax revenues shall immediately be subject to such lien, and the lien shall automatically attach to the CH. 1 OFFICE OF I MAGA’HÅGA/MAGA’LÅHI [THE GOVERNOR] pledged business privilege tax revenues and be effective, binding, and enforceable against I Maga’hågan/Maga’låhen Guåhan, the government of Guam, their successors, assignees, and creditors, and all others asserting rights therein, irrespective of whether those parties have notice of the lien and without the need for any physical delivery, recordation, filing, or further act. Pledged business privilege tax revenues received by the government of Guam or by any trustee, depository or custodian shall be deposited in a separate account entitled the “BPT Revenue Fund.”

(3)Pledged business privilege tax revenues that are not required to make payments on the BPT Bonds shall automatically, and without the need for any further action, be released from such lien and shall be available for appropriation for any other lawful purpose of the government. The statutory lien described in this Subsection shall not be subject to Division 9 of Title 13, Guam Code Annotated, or any successor statute.

(d)In addition to the statutory lien provided for in Subsection

(c)of this Section, all or any part of the pledged business privilege tax revenues may be pledged, if and to the extent determined by I Maga’hågan/Maga’låhen Guåhan, to secure the payment of any BPT Bonds issued pursuant to that certain indenture, dated as of December 1, 2011, by and among the government of Guam, the Bank of Guam, as trustee, and the U.S. Bank National Association, as co-trustee, as amended or supplemented from time to time in accordance with its terms (BPT Indenture).

(1)Any such pledge shall be valid and binding against all parties in accordance with its terms and have priority against all parties in accordance with its terms from the time the pledge is made, and property so pledged shall immediately be subject to the lien of the pledge without the need for physical delivery, recordation, filing, or other further act. The pledge shall not be subject to Division 9 of Title 13, Guam Code Annotated, or any successor statute.

(2)The BPT Indenture by which such pledge is created need not be recorded and shall direct the distribution and disbursement of revenues from the BPT Revenue Fund following their deposit therein. All such taxes to the extent so pledged are hereby continuously appropriated for such purpose. So long as any bonds issued pursuant to the BPT Indenture, including, but not limited to, those authorized under Subsection

(a)of this Section, as may be amended from time to time, remain outstanding, the government of Guam may not reduce the rate of levy and collection of the pledged business privilege tax below three percent (3%), nor may the government of Guam reduce the services, products or activities to which the pledged business privilege tax applies, nor may the government of Guam upwardly adjust any exception or exclusion to, or otherwise impair, the pledged business privilege tax.

(e)Valid and Binding. The bonds authorized by this Section shall constitute the valid and binding limited obligations of the government of Guam, secured by a pledge of the pledged business privilege tax revenues described in Subsection

(c)of this Section, all as further specified below in such Subsection. All officers charged by law with any duty in the collection of the revenues of the government from which debt service on the bonds will be payable shall do every lawful thing necessary to collect such sum.

(f)Appropriation of Revenues. All revenues are hereby appropriated for the purposes of paying the principal and interest on the bonds issued pursuant to this Section. Revenues released from the lien of the indenture or certificate pursuant to which the bonds are issued shall be subject to appropriation by I Liheslaturan Guåhan for any other lawful purpose. Up to Five Million Dollars ($5,000,000) of said revenues shall be appropriated to the Department of Public Health and Social Services in FY 2021 and FY 2022 for the sole purpose of providing temporary assistance in the form of grants which shall be distributed to local non-profit organizations that provide food and commodities for homeless individuals, unemployed individuals, children, and low-income families. These funds shall not lapse and shall be available to DPHSS until fully expended; provided, that this appropriation of revenues shall not take effect if federal funds, to CH. 1 OFFICE OF I MAGA’HÅGA/MAGA’LÅHI [THE GOVERNOR] include funds from the American Rescue Plan Act of 2021, are expended for substantially similar purposes stated in this Subsection by the end of FY 2021.

(g)Additional Bonds. Nothing in this Section shall be construed to prevent the government from issuing, after appropriate enabling legislation, other obligations secured by pledged business privilege tax revenues on a parity with or subordinate to the bonds or the government’s obligations with respect thereto authorized by this Section on such terms as may be provided by the indenture or certificate pursuant to which the bonds are issued. Nothing in this Section shall be construed to prevent the government of Guam from issuing, after appropriate enabling legislation, other obligations of the government secured by the general obligation of the government on a parity with or subordinate to the bonds authorized by this Section on such terms as may be provided by the indenture or certificate pursuant to which the bonds are issued.

(h)Waiver of Immunity; Submission to Jurisdiction. Notwithstanding any substantive or procedural provision of Chapter 6 of Title 5, Guam Code Annotated, the government of Guam waives immunity from any suit or action in contract on the bonds but does not waive sovereign immunity as to the personal liability of elected officials and employees of the government of Guam. The government of Guam hereby submits to the jurisdiction of the U.S. District Court for the District of Guam for purposes of any such suit or action in contract on the bonds.

(i)No Personal Liability. 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.

(j)Form of Bonds; Covenants; Appointment of Fiduciaries.

(1)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 or conditions not inconsistent with this Section, including covenants relating to the collection of pledged business privilege tax revenues, shall be as specified in the certificate or indenture executed by I Maga’hågan/Maga’låhen Guåhan authorizing the issuance of the bonds.

(2)The certificate or indenture shall appoint one or more trustees, co-trustees or other fiduciaries authorized to receive and hold in trust the proceeds of the bonds, the pledged business privilege tax revenues and other moneys relating thereto, to protect the rights of bondholders and to perform such other duties as may be specified in the 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 bonds.

(k)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 determines are necessary or desirable to improve the security and marketability of the bonds issued under this Section, if and only if such contracts or agreements reduce the cost of the debt by more than the cost of credit enhancement. 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 shall be general obligations of the government of Guam and shall additionally be secured by a pledge of, pledged business privilege tax revenues, and any such advance, if necessary, shall be treated for Organic Act purposes as creating an obligation issued to refund the bonds. CH. 1 OFFICE OF I MAGA’HÅGA/MAGA’LÅHI [THE GOVERNOR]

(l)Use of Proceeds from the Sale of the Bonds. The proceeds from the sale of the bonds shall be used and are hereby appropriated to:

(1)fund an escrow to pay principal, interest and redemption price of Government of Guam Business Privilege Tax Bonds, Series 2011A, Government of Guam Business Privilege Tax Bonds, Series 2012B, and Government of Guam Business Privilege Tax Refunding Bonds, Series 2015D, or otherwise to pay in full such 2011A Bonds, 2012B Bonds or 2015D Bonds;

(2)pay expenses relating to the authorization, sale and issuance of the bonds, including, without limitation, printing costs, costs of reproducing documents, credit enhancement fees, underwriting, legal, financial advisory and accounting fees and charges, fees paid to banks or other financial institutions providing credit enhancement, costs of credit ratings and other costs, charges and fees in connection with the issuance, sale and delivery of the bonds; and

(3)fund capitalized interest on the bonds for a period not longer than twelve

(12)months from the date of issuance of such bonds.

(m)Permitted Investments. The proceeds of the bonds, and any pledged business privilege tax 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)Approval by Guam Economic Development Authority. § 50103(k), Title 12, Guam Code Annotated, 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 issue.

(o)Approval of Voters Not Required. Notwithstanding any law to the contrary, the issuance of the bonds authorized by this Section shall not be required to be subject to the approval of, or placed before, the voters of Guam.