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HomeMy WebLinkAboutRES-2007-037 Resolution Providing Final Approval for County Installment Financing~~~' ~dc~ ~u d~ ~ J'"..~-O ~' 3 Resolution Providing Final Aanroval for Countv Installment Financine WHEREAS: By resolution adopted April 10, 2007, the Orange County Board of Commissioners made a preliminary determination to carry out a plan to finance certain public projects through an installment financing with SunTrust Leasing Corporation ("SunTrust"). The County's .Finance Officer has made available to this Board the draft documents listed on Exhibit B (the "Documents"), relating to the County's carrying out the financing plan. NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of Orange County, North Carolina, as follows: I. Determination To Proceed with Projects -The Board confiiws its decision to carry out the financing plan for the projects described on Exhibit A (the "Projects"). The County will carry out the plan with financing from SunTrust, generally in accordance with a financing proposal from SunTrust dated.March 13, 2007. Under the financing plan, SunTrust will make funds available to the County for use on Project costs. 'The County will repay the amount advanced, with interest, over time. The County will grant to SunTrust a mortgage-type interest in the Elementary School #10 and the County Justice Facility (and, in each case, the associated real property) to secure the County's repayment obligation. 2. Approval of Documents; Direction To Execute Documents -- The Board approves the forms of the Documents submitted to this meeting. The Board authorizes and directs the Board's Chair and the County Manager, or either of them, to execute and deliver the Documents in their final forms. The Documents in their respective final forms must be in substantially the forms presented, with such changes as the Chair or the County Manager may approve. The execution and delivery of any Document by an authorized County officer will be conclusive evidence of his approval of any such changes. The Documents in final form, however, must provide for the amount financed by the County not to exceed $50,057,000, plus amounts that may be needed to pay financing costs and to pay other necessary and related costs, and for a financing term not to extend beyond December 31, 2027. • 4 3. Authorization to Finance Officer To Complete Closing -The Board authorizes and directs the Finance Officer to take all appropriate action to complete the financing with SunTrust in accordance with this resolution. The Board authorizes and directs the Finance Officer to hold executed copies of all financing documents authorized or permitted by this resolution in escrow on the County's behalf until the conditions for their delivery have been completed to such officer's satisfaction, and thereupon to release the executed copies of such documents for delivery to the appropriate persons or organizations. Without limiting the generality of the foregoing, the Board specifically authorizes the Finance Officer to approve changes to any Documents, agreements or certifications previously signed by County officers or employees, provided that such changes do not conflict with this resolution or substantially alter the intent from that expressed in the form originally signed. The Finance Officer's authorization of the release of any such document for delivery will constitute conclusive evidence of such officer's approval of any such changes. 4. Resolutions As To Tax Matters -- The County will not take or omit to take any action the taking or omission of which will cause its obligations to pay principal and interest to be "arbitrage bonds," within the meaning of Section 148 of the "Code" (as defined below), or "private activity bonds" within the meaning of Code' Section 141, or otherwise cause interest components of the installment payments to be includable in gross income for federal income tax purposes. Without limiting the generality of the foregoing, the County will comply with any Code provision that may require the County at any time to pay to the United States any part of the earnings derived from the investment of the financing proceeds. In this resolution, "Code" means the United States Internal Revenue Code of 1986, as amended, and includes applicable Treasury regulations. S. Miscellaneous Provisions -- All County officers and employees are authorized and directed to take all .such further action as they may consider necessary or desirable in furtherance of the purposes of this resolution, including the execution and delivery of additional agreements as they may determine to be in the County's best interest. All such prior actions of County officers and employees are ratified, approved and confirmed. Upon the absence, unavailability or refusal to act of the County Manager; the Board's Chair or the Finance Officer, any other of such officers may assume any responsibility or carry out any function assigned in this resolution. -All other Board proceedings; or parts thereof, in conflict with this resolution are repealed, to the extent of the conflict. This resolution takes effect immediately. Exhibit A-Components of the Proiect Proiect Component Estimated financing amount ($) Central Orange Senior Center - 2,500,000 Funds to be used with bond fends to construct Senior Center Addition to Orange County SportsPlex Elementary 10 CHCCS - 22,102,000 Construction of New Elementary School on property owned by the County CHCCS Renovations -Completion of renovations to existing schools 3,450,000 Efland Water and Sewer- Completion of Water and Sewer Lines 400,000 Jail -expansion of existing jail to add additional beds 600,000 Justice Facility- Courthouse addition to include courtrooms and office space 10,200,000 Durham Technical Community College - County's contribution to be used with 3,588,000 state bond funds provided to Durham Tech Twin Creeks Infrastructure -.water and sewer lines to site of Elementary #10 1,250,000 West Ten Soccer -Development of soccer complex on existing county property 2,267,000 Solid Waste Operations Center - 2,200,000 New Facility to house solid waste staff SportsPlex Renovations - 1,500,000 renovations to existing facility required to accommodate senior center addition 6 Exhibit B -Draft Documents (a) A. draft dated Apri123, 2007, of an Installment Financing Contract to be dated on or about June I, 200T (the "Financing Contract"), between the County and SunTrust, providing for the advance of funds to the County for the County's undertaking of the Projects. (b) A draft dated April 23, 2007, of a Deed of Trust and Security Agreement to be dated on or about June 1, 2007, from the County to a deed of trust trustee for SunTrust's benefit, providing for a security interest in the proposed new Elementary School #10 and the County Justice Facility (and, in each case, .the associated real property) to secure the County's repayment obligation. (c) A draft dated Apri123, 2007, of a Project Fund Agreement to be dated on or about June 1, 2007, providing for the safekeeping of fmancing proceeds pending their use on Project Costs. Sanford Holshouser draft of Anril 23, 2007 SUNTRUST LEASING CORPORATION and ORANGE COUNTY, NORTH CAROLINA INSTALLMENT FINANCING CONTRACT Dated as of June 1, 2007 This instrument has been preaudited in the manner required by The Local Government Budget and Fiscal Control Act. Kenneth T. Chavious Finance Officer Orange County, North Carolina 97562v1 8 INSTALLMENT FINANCING CONTRACT THIS INSTALLMENT FINANCING CONTRACT (the "Contract") is dated as of June 1,.2007, and is between ORANGE COUNTY, NORTH CAROLINA, a political subdivision of the State of North Carolina (the "County"), and SUNTRUST LEASING CORPORATION ("SunTrust"). RECITALS• The County desires to obtain funds to enable the County to acquire, construct and improve certain school facilities and to provide for certain other public improvements, as well as to pay fmancing costs and other related costs. SunTnxst has agreed to advance funds to the County for such purpose. This Contract provides for SunTrust's obligation to advance the funds, and the County's obligation to repay the funds with interest. In accordance with the County's authority under Section 160A-20 of the North Carolina General Statutes, the County will secure its obligations under this Contract by a security interest in the Pledged Facilities and the Pledged Sites (each as defined in Exhibit A). Unless the context clearly requires otherwise, capitalized terms used in this Contract and not otherwise defined will have the meanings set forth in Exhibit A. NOW, THEREFORE, for and in consideration of the mutual promises and covenants contained in this Contract, the parties agree as follows: ARTICLE I ADVANCE SunTrust advances [$50,057,000] (the "Amount Advanced") to the County, and the County accepts the Amount Advanced. SunTrust is advancing the Amount Advanced by depositing the Advance as provided in the Project Fund Agreement. The County will use the Amount Advanced to pay Project Costs as provided in this Contract and in the Project Fund Agreement. 97562v1 g 9 ARTICLE II . CONTRACT PAYMENTS 2.1. Installment Payments. The County will repay the Amount Advanced by making Installment Payments directly to SunTrust in lawful money of the United States at the times and in the amounts set forth in Exhibit B, except as otherwise provided in this Contract. 2.2. Additional Payments. The County will pay all Additional Payments on a timely basis directly to the person or entity to which such Additional Payments are owed in.lawful money of the United States. If the County fails to.pay any Additional Payment when'due, SunTrust may (but will be under no obligation to) pay such Additional Payment. The County agrees to reimburse SunTrust for any such Additional Payment, together with interest thereon at the annual rate of 5.00%. 2.3. Prepayment. (a) Prior to June _, 2017, the County may prepay the outstanding principal component of the Amount Advanced, at its option on any regularly scheduled payment date, in whole but not in part, by paying (i) all Additional Payments then due and payable, (ii) all interest accrued and unpaid to the prepayment date, and (iii) 101.5% of the outstanding principal amount. (b) On and after June , 2017, the County may prepay the outstanding principal component of the Amount Advanced, at its option on any regularly scheduled payment date, in whole or in part, by paying (i) all Additional Payments then due and payable, (ii) all interest accrued and unpaid to the prepayment date, and (iii)100% of the principal amount to be prepaid, without premium. In the case of any partial prepayment, at the County's option, (A) the prepayment shall be applied to outstanding principal components of Installment Payments in inverse order of their maturity, with such prepayment having no affect on the other scheduled dates and amounts of principal components of Installment Payments, or (B) SunTrust will prepare a revised Exhibit B (the schedule of Installment Payments) that re-amortizes the resulting remaining principal balance of the Amount Advanced over the remaining payment period on substantially the same amortization basis: The County will pay SunTrust an administrative fee of $2,000 for each request for a re-amortization after a partial prepayment. 97562v1 9 io 2.4. No Abatement. There will be no abatement or reduction of the Installment Payments or Additional Payments by the County for any reason, including, but not limited to, any defense, recoupment, setoff, counterclaim, or any claim arising out of or related to the Project Sites or the Financed Facilities. The County assumes and will bear the entire risk of completiop, loss and damage to the Project Sites and the Financed Facilities from any cause whatsoever, it being the parties' intention that the Installment Payments will be made in all events unless the County's obligation to make Installment Payments is terminated as provided in this Contract. 2.5. Appropriations. (a) The County will cause the Budget Officer to include in the initial proposal for each of the County's annual budgets the amount of all Installment Payments and estimated Additional Payments coming due during the Fiscal Year to which such budget applies. Notwithstanding that the initial proposed budget includes an appropriation for Contract Payments, the County Board may determine not to include such an appropriation in the final County budget for such Fiscal Year; further, the County Board may amend an adopted budget to delete an approved appropriation. (b) If within 15 days after the beginning of any Fiscal Year the County has not appropriated an amount equal to the Installment Payments and estimated Additional Payments coming due during such Fiscal Year, then the County must send a notice to such effect to SunTrust and to the LGC, to the attention of its Secretary, at 4505 Fair Meadow Lane, Suite 102, Raleigh, North Carolina 27607- 6449. ARTICLE III CONSTRUCTION 3.1. Construction; Changes. (a) The County will comply with the provisions of the North Carolina General Statutes and enter into the Construction Contracts, or in the alternative the County may provide for the School Board to enter into some or all of the Construction Contracts. The County will cause the construction of the Pledged Facilities to be carried on continuously in accordance with the Plans and Specifications and all applicable State and local laws and regulations. The County will provide for the Pledged Facilities to be constructed on the Pledged Sites and will insure (i) that no portion of the Pledged Facilities encroaches upon nor overhangs any easement or right-of--way and (ii) that the Pledged Facilities, when erected, will be wholly within any applicable 97562v1 10 ti building restriction lines, however established, and will not violate applicable use or other restrictions contained in prior conveyances or applicable protective covenants or restrictions: The County will provide for all utility lines, septic systems and streets serving the Pledged Sites to be completed in accordance with health department standards and other applicable regulations of any governmental agency having jurisdiction. (b) The County may approve changes to the Plans and Specifications and the Construction Contracts in its discretion except that the County may not, without SunTrust's consent, approve any changes which (i) increase total estimated Project Costs above the amounts previously identified and designated therefor, or (ii) result in the use of the Pledged Facilities for purposes substantially different from those initially proposed. 3.2. Right of Entry and Inspection. SunTrust and its representatives and agents, upon.reasonable notice to the County, will have the right to enter upon the Pledged Sites and inspect the Pledged Facilities from time to time during construction and at any other time during the Contract term, and the County will cause any contractor or subcontractor to cooperate with any such parties and agents during such inspections. No right of inspection or approval granted in this Section imposes upon any party any. duty or obligation whatsoever to undertake any inspection or to make any approval. No inspection made or approval given by any party will be deemed to impose upon any parry any duty or obligation whatsoever to identify or correct any defects in the Pledged Facilities.or to notify any person with respect thereto, and no liability will be imposed upon any party and no warranties (either express or implied) are made by SunTrust as to the quality or fitness of any improvement, any such inspection and approval being made solely for SunTrust's benefit. 3.3. Contractors' Performance and Payment Bonds. The County will provide for each contractor entering into a Construction Contract to furnish a performance bond and a separate labor and material payment bond as required by Article 3, Chapter 44A of the North Carolina General Statutes. The County will provide copies of such bonds to SunTrust. Each such bond will include SunTrust as adual obligee. Upon any material default by a contractor under any Construction Contract, or upon any material breach of warranty with respect to any materials, workmanship or performance, the County will promptly proceed, either separately or in conjunction with others, to pursue diligently its remedies against such 97562v1 11 i2 contractor or against the surety of any bond securing the performance of such Construction Contract. 3.4. Contractors' General Public Liability and Property Damage Insurance. The County will provide for each contractor entering into a Construction Contract to procure and maintain standard form (a) comprehensive general public liability and property damage insurance, at such contractor's own cost and expense, during the duration of such contractor's Construction Contract, in the amount of at least $1,000,000, and (b) comprehensive automobile liability insurance on owned, hired and nonowned vehicles for not less than $1,000,000. Such policies will include SunTrust as an additional named insured or loss payee. 'The County will provide to SunTrust a certificate of insurance in a form acceptable to SunTrust, with respect to each. contractor and subcontractor. Such insurance will provide protection from all claims for bodily injury, including death, property damage and contractual liability, products/completed operations, broad form property damage and XCU (explosive, collapse and underground damage), where applicable. 3.5. Contractors' Builder's Risk Completed Value Insurance. The County will provide for each contractor entering into a Construction Contract to purchase and maintain property insurance (builder's risk) upon all materials and equipment for the construction, acquisition, installation and equipping of the Pledged Facilities (excluding contractor's tools and equipment) at the Pledged Sites at the full insurable value thereof. This insurance will include SunTrust as an additional named insured or loss payee, and will insure against "all risk" subject to standard policy conditions and exclusions. The contractor will purchase and maintain similar property insurance for portions of the work stored off the Pledged Sites or in transit when such portions of the work are to be included in an application for payment. The contractor will be responsible for the payment of any deductible amounts associated with this insurance. 3.6. Contractors' Workers' Compensation Insurance. The County will provide for each contractor entering into a Construction Contract to procure and maintain workers' compensation insurance during the term of such Construction Contract, covering the contractor's employees working thereunder. A certificate of insurance evidencing such coverage, in form acceptable to SunTrust, will be provided to SunTrust with respect to each contractor entering into a Construction Contract. Each Construction Contract must .also provide that each subcontractor of any contractor who is a party to such Construction Contract shall be required to furnish similar workers' compensation insurance. 97662v1 12 13 3.7. Cooperation. SunTrust and the County will cooperate fully with each other in filing any claim or proof of loss with respect to any bond or: insurance policy described in this Contract. In no event will SunTrust or the County voluntarily settle, or consent to the settlement of, any proceeding arising out of any claim with respect to the Financed Facilities without the other's written consent. ARTICLE IV COUNTY'S RESPONSIBILITIES 4.1. Care and Use. The County will use the Pledged Sites and the Pledged Facilities in a careful and proper manner, and will keep the Pledged Sites and the Pledged Facilities in good condition, repair, appearance and working order for the purposes intended. 4.2. Utilities. The County will pay all charges for utility services furnished to or used on or in connection with the Pledged Sites and the Pledged Facilities. 4.3. Risk of Loss. The County will bear all risk of loss to and condemnation of the Financed Facilities and the Project Sites. Upon loss, damage or condemnation of the Mortgaged Property, the County will proceed as provided in Article VI. 4.4. Bank's Performance of County's Responsibilities. Any performance required of the County or any payments required to be made by the County for the insurance, maintenance or preservation of the Mortgaged Property may, if not timely performed or paid, be performed or paid by SunTrust. The County will then reimburse SunTrust for any such payments and for any associated costs and expenses, legal or otherwise, together with interest thereon at the annual rate of 5.00%. 4.5. Compliance with Requirements. The County will promptly and faithfully comply with all requirements of governmental authorities relating to the use or condition of the Mortgaged Property, the violation of which would adversely affect the use, value or condition of the Mortgaged Property, whether or not such requirement will necessitate structural changes or improvements or interfere with the use or enjoyment of the Mortgaged Property (or be diligently and in good faith contesting such requirements). Unless required by applicable law or unless SunTrust has otherwise agreed in writing, the County will not use the Mortgaged Properly for any purposes other than that for which the same were 97562v1 13 14 intended as of the date of this Contract. The County will in no event use the Mortgaged Properly or any part thereof nor allow the same to be used for any unlawful purpose or in violation of any certificate of occupancy or other permit or certificate, or any law, ordinance or regulation. 4.6. Use and Operation of Facilities. (a) The County will use and operate the Pledged Facilities for their intended public purposes, and for no other purpose unless required by law. The County will be solely responsible for the operation of the Pledged Facilities, and will not contract with any other person or entity for such operation provided, however, that the County may lease that portion of the Pledged Facilities described as Elementary School #10 to the School Board, or may otherwise provide for the School Board's use of such facilities, but no such lease or other arrangement will have any affect on the County's obligations under this Financing Contract. (b) Notwithstanding the provisions of subsection (a), the parties acknowledge that the County intends to lease the portion of the Pledged Facilities described as Elementary School #10 to The Chapel Hill-Carrboro City Board of Education (the "School Board"), or may otherwise provide for the School Board's .use of such portion of the Pledged Facilities. In addition, the County and the School Board may agree that the School Board will assume some of the County's responsibilities under this Contract, including obligations with respect to entering into and monitoring construction contracts related to Elementary School #10. Notwithstanding any other provision of this Contract to the contrary, the parties agree that any such lease or other arrangements between the County and the School Board will not violate any provision of this Contract.. No such ,lease or other arrangement, however, will in any way reduce the County's responsibilities to SunTrust for the Pledged Facilities under this Contract. 4.7. Modification of Pledged Facilities; Installation of Equipment and Machinery. The County has the right to remodel the Pledged Facilities or make substitutions, additions, modifications and improvements to the Pledged Facilities, at its own cost and expense; provided, however, that such substitutions, additions, modifications and improvements will not in any way damage the Pledged Facilities or result in the use of the Pledged Facilities for purposes substantially different from those initially proposed; and provided further that the Pledged Facilities, as improved or altered, upon completion of such substitutions, additions, modifications and improvements, will be of a value not less than the value of the Pledged. Facilities immediately prior to such making of substitutions, additions, modifications and improvements. 97562vi 14 is The County may also, from time to time in its sole discretion and at its own expense, install machinery, equipment and other tangible property in or on the Pledged Facilities. All such property will remain the County's sole property in which neither SunTrust nor any assignee of SunTrust will have any interest; provided, however, that any such property which becomes permanently affixed to the Pledged Facilities will be subject to this Contract and the lien and security interest arising under the Deed of Trust if SunTrust reasonably determines that the Pledged Facilities would be damaged or impaired by the removal of such machinery; equipment or other tangible property. 4.8. Taxes and Other Governmental Charges. If the Mortgaged Property or any portion thereof is, for any reason, deemed subject to taxation, assessments or charges lawfully made by any governmental body, the County will, during the Contract term, pay the amount of all such taxes, assessments and governmental charges as Additional Payments. With respect to special assessments or other governmental charges which may be lawfully paid in installments over a period of years, the County will be obligated to provide for Additional Payments only for such installments as are required to be paid during the Contract term. The County must not allow any liens for taxes, assessments or governmental charges with respect to the Mortgaged Property or any portion thereof to become delinquent (including, without limitation, any taxes levied upon the Mortgaged Property or any portion thereof which, if not paid, will become a charge on any interest in the Mortgaged Property, including SunTnast's interest, or the rentals and revenues derived therefrom or hereunder). The County may,. at its own expense and in its own name, in good faith contest any such taxes, assessments and utility and other charges and, in the event of any such contest, may permit such charges so contested to remain unpaid during the period of such contest and any appeal therefrom unless SunTrust notifies the County that, in the opinion of Independent Counsel, by nonpayment of any such items the security afforded pursuant to this Contract or the Deed of Trust will be materially endangered or the Mortgaged Property or any portion thereof will be subject to loss or forfeiture, in which event such charges will be paid forthwith (but such payment will not in itself constitute a waiver of the right to continue to contest such charges). 4.9. Property Damage Insurance. (a) From and after substantial completion of the Pledged Facilities, the County will, at its own expense, acquire, carry and maintain broad-form extended coverage property damage insurance with respect to the Pledged Facilities in an amount equal to its estimated replacement cost. Such property damage insurance must include SunTrust as an additional 97562vt 15 16 named insured or loss payee. The County will provide evidence of such coverage to SunTrust promptly upon such substantial completion. (b) (i) All insurance required by this Section will be maintained with generally recognized responsible insurers and may carry reasonable deductible or risk-retention amounts. All such policies will be deposited with SunTrust, provided that in lieu of such policies there may be deposited with SunTrust a certificate or certificates of the respective insurers attesting. the fact that the insurance required by this Section is in full force and effect. Prior to the expiration of any such policy, the County will furnish SunTrust evidence satisfactory to SunTrust that the policy has been renewed or replaced or is no longer required by this Contract. (ii) In the alternative, the County may maintain the insurance required by subsection (a) above (A) by one or more blanket or umbrella insurance policies or (B) by means of an adequate self-insurance fund or risk-retention program, or by participation in a group risk pool or similar program. (iii) If the County obtains blanket or umbrella coverage, the County will deposit with SunTrust a certificate or certificates of the respective insurers evidencing such coverage and, with respect to property insurance, stating the amount of coverage provided with respect to the Pledged Facilities (or any covered portion thereof). If the County provides for any such alternative risk management programs, the County's risk manager or an independent insurance consultant will review such programs annually for sufficiency.. SunTrust may rely on any such certificate as to the sufficiency of any such alternative program. (c) No County agent or employee will have the power to adjust or settle any property damage loss greater than $1,000,000 with respect to the Pledged Facilities, whether`or not covered by insurance, without SunTrust's prior written consent. (d) SunTrust will not be responsible for the sufficiency or adequacy of any required insurance and will be fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss agreed to by SunTrust. ' (e) The County will deliver to SunTrust annually by each June 30 a certificate stating that the risk coverages required by this Contract are in effect. ARTICLE V 97562v1 16 i~ TITLE: LIENS 5.1. Title. Title to the Pledged Sites and the Pledged Facilities and any and all additions, repairs,. replacements or modifications thereto will at all times be in the County, subject to the lien of the Deed of Trust and to the Permitted Encumbrances. Simultaneously with the execution and delivery of this Contract, the County will deliver to SunTrust the Deed of Trust in form mutually satisfactory to SunTrust and the County. 5.2. No Encumbrance, Mortgage or Pledge of Mortgaged Property. (a) The County will not permit any mechanic's or other lien to be perfected or remain against the Mortgaged Property or any portion thereof; provided that subsequent to the Completion Date, if the County first notifies SunTrust of the County's intention to do so, the County may in good faith contest any mechanic's or other lien filed or perfected against the Mortgaged Property or any portion thereof. In such event the County may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom unless SunTrust notifies the County that, in the opinion of Independent Counsel, by nonpayment of any such items SunTrust's title to the Mortgaged Property or any portion thereof will be materially endangered, or will be subject to loss or forfeiture, in which event the County will promptly pay and cause to be satisfied and discharged all such unpaid items (but such payment will not in itself constitute a waiver of the right to continue to contest such items). SunTrust will cooperate fully with the County in any such contest, upon the request and at the expense of the County. (b) Except as provided in subsection (a) above, the County will not directly or indirectly create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with respect to the Mortgaged Property, except Permitted Encumbrances. The County will promptly, at its own expense, take such action as may be appropriate to discharge any such mortgage, pledge, lien, charge, encumbrance or claim not excepted above which it will have created, incurred or suffered to exist. (c) The County will reimburse SunTrust for any expense incurred by it in order to discharge or remove any such mortgage, pledge, lien, security interest, encumbrance or claim, together with interest thereon at the annual rate of 5.00%. ARTICLE VI 97562v1 1~ 18 DAMAGE, DESTRUCTION AND CONDEMNATION; USE OF NET PROCEEDS 6.1. Damage, Destruction or Condemnation. The County will promptly notify SunTrust if (a) the Mortgaged Property or any portion thereof is destroyed or damaged by fire or other casualty, (b) any governmental authority takes, or notifies the County of any intent to take, title to, or the temporary or permanent use of the Mortgaged Property or any portion thereof, or the estate of the County or SunTrust in the Mortgaged Property or any portion thereof, under the power of eminent domain, (c) a material defect in the construction of the Pledged Facilities becomes apparent, or (d) title to or the use of all or any portion of the Mortgaged Property is lost by reason of a defect in title. Each such notice must describe generally the nature and extent of such damage, destruction or taking. The County must provide any additional information concerning such matter as SunTrust may reasonably request. 'The County will file its claims under insurance coverages and claims for awards or payments in the nature of condemnation awards resulting from any such damage, destruction or taking. The County will prosecute all such claims for such awards or payments in good faith and with due diligence. Any Net Proceeds received by the County as a result of such claims will be used as provided in Sections 6.2 and 6.3. 6.2. Security Interest in Net Proceeds; Deposit and Disbursement. (a) The County grants a security interest in the Net Proceeds to SunTrust to secure the County's obligations under this Contract, subject to the further provisions of this Section. This Contract is intended as and constitutes a security agreement with respect to such security interest. All Net Proceeds will remain subject to the security interest provided for in this Section 6.2(a) until expended in compliance with the requirements of this Contract. (b) If the amount of Net Proceeds received by the County from any single event or any single series of related events is less than $1,000,000, then the County will have no obligation to account to SunTrust or any other person or entity with respect to the use of such Net Proceeds. The County, however, acknowledges that its use of such funds may be constrained by the requirements of the Code and the County's covenant in Section 7.1(k). 97562v1 18 19 (c) If the amount of Net Proceeds received by the County from any single event or any single series of related events is at least $1,000,000, the County will cause such Net Proceeds (i) to be paid to SunTrust for deposit in the Project Fund, if received before the Completion Date, or (ii) if received thereafter, to be paid to an escrow agent (which_shall be a bank, trust company or similar entity exercising fiduciary responsibilities) for deposit in a special escrow fund to be held by such escrow agent. Whenever disbursement from such escrow fund may be required, the escrow agent will disburse Net Proceeds upon receipt of requisitions in substantially the form of Exhibit A to the Project Fund Agreement. The County will thereafter provide for the application of all Net Proceeds so deposited in accordance with Section 6.3. 6.3. Use of Net Proceeds. The County may elect to proceed under either subsection (a), (b) or (c) below with respect to Net Proceeds deposited pursuant to Section 6.2(c); provided, however, that subsections (a) and (b) below will be available to the County only if no Event of Default is continuing. The County will notify SunTrust of its election within 60 days after-the date of the deposit. (a) If the amount of Net Proceeds is equal to at least 75% of the outstanding principal of the Amount Advanced, then the County may provide additional funds from any legal source and use such Net Proceeds and additional County funds to prepay the Amount Advanced in full pursuant to Section 2.3; (b) If as a result of the event (or series of events) giving rise to the Net Proceeds (i) the County has lost beneficial use of at least 51% of the Pledged Facilities of which it had beneficial use prior to such event or (ii) the damaged portion of the Pledged Facilities cannot be restored to its prior condition within six months after the event (or series of events) with respect to which the Net Proceeds have been collected, then the County may use the Net Proceeds (and only the Net Proceeds) to prepay the principal component of the Amount Advanced in part pursuant to Section 2.3; or (c) Otherwise the County will use the Net Proceeds and other available funds for the completion or for repair and restoration of the Mortgaged Property. The County will not be entitled to any reimbursement of any funds paid pursuant to this subsection, nor will the County be entitled to any postponement or diminution of its obligation to make Contract Payments as a result of any such contribution. Any repair or replacement paid for in whole of in part out of such Net Proceeds will be the County's property and will be part of the Mortgaged Property. 97562v1 19 20 Determinations as to the extent of loss described in (b) above will be made by an Appropriate Consultant and will be in form and substance reasonably acceptable to SunTrust. ARTICLE VII COUNTY'S WARRANTIES REPRESENTATIONS AND COVENANTS The County warrants, represents and covenants (all such warranties, representations and covenants being continuing) as follows: (a) The .County is a duly organized and validly existing political subdivision of the State. The County-has all powers necessary to enter into the transactions contemplated by this Contract, the Deed of Trust and the Project Fund Agreement, and to carry out its obligations under such instruments. (b) The County will take no action that would adversely affect its existence as a political subdivision in good'standing in the State, cause the County to be consolidated with or merge into another political subdivision of the State or permit one or more other political subdivisions of the State to consolidate with or merge into it, unless the political subdivision of the State created thereby expressly assumes in writing the County's obligations under this Contract. (c) The County has duly and validly authorized, executed and delivered this Contract, the Deed of Trust and the Project Fund Agreement. Assuming due authorization, execution and delivery thereof by the other parties thereto, this Contract, the Deed of Trust and the Project Fund Agreement constitute valid,. legal and binding obligations of the County, enforceable (in the case of the Deed of Trust, by the Deed of Trust Trustee and SunTrust) in accordance with their respective terms, subject to bankruptcy, insolvency and other similar laws affecting the enforcement of creditors' rights generally and such principals of equity as a court having jurisdiction may impose. (d) No further approval or consent is required from any governmental authority with respect to the County's entering into or performing under this Contract, the Deed of Trust or the Project Fund Agreement. (e) There is no action, suit or proceeding at law or in equity before or by any court, public board or body pending or, to the best of the County's knowledge, threatened, against or affecting the County (or any official thereof in an official capacity) challenging the validity or enforceability of this Contract, the Deed of 97562v1 20 21 Trust or the Project Fund Agreement or any other documents relating to such agreements. The County's performance of its obligations under this Contract, the Deed of Trust and the Project Fund Agreement, and compliance with the provisions hereof and thereof, under the circumstances contemplated hereby or thereby, does not and will not in any material respect constitute on the County's part a breach of or default under, or result in the creation of a lien or other encumbrance on any County property (except as contemplated herein or therein), pursuant to any agreement or other instrument to which the County is a party, or any existing law, regulation, court order or consent decree to which the County is subject. (f) No County representation, covenant or warranty in this Contract is false or misleading in any material respect. (g) The County is vested with fee simple title to the Pledged Sites. There are no liens or encumbrances on the Pledged Facilities or the Pledged Sites other than the Existing Encumbrances, as defined in the Deed of Trust. (h) The resolutions relating to the County's performance of this Contract, the Deed of Trust and the transactions contemplated hereby and thereby have been duly adopted, are 'in full force and effect, and have not been in any respect modified, revoked or rescinded. (i) The County reasonably believes funds will be available to satisfy all of its obligations under this Contract. (j) The Financed Facilities have been or will be designed and constructed so as to comply with all applicable subdivision, building and zoning ordinances and regulations, if any, and any and all applicable federal and State standards and requirements relating to the Financed Facilities. The Financed Facilities have not been and will not be used in any private business or put to any private business use. . (k) T'he County will- not take or permit, or omit to take or cause to be taken, any action that would cause its obligations under this Contract to be "arbitrage bonds" or "private activity bonds" within the meaning of the Code, or otherwise adversely affect the exclusion from gross income for federal income tax purposes of the designated interest component of Installment Payments to which such components would otherwise be entitled and, if it should take or permit, or omit to take or cause to be taken, any such action, the County will take or cause to 97562v1 Zj zz be taken all lawful actions within its power necessary to rescind or correct such actions or omissions promptly upon having knowledge thereof. (1) To the extent information is available on the Closing Date, and based upon, the County's examination of the Project Sites and of the Plans and Specifications and estimated Project Costs provided by Appropriate Consultants, the Financed Facilities can be constructed, acquired and equipped for a total price within the total amount of funds to be available therefor in the Project Fund, income anticipated to be derived from the investment thereof and other funds expected to be available for such purposes. If the total amount available for such purposes in the Project Fund will be insufficient to pay the entire cost of constructing, acquiring and equipping the Financed Facilities, the County will pay any such excess costs, with no resulting reduction or offset in the amounts otherwise payable by the County. (m) The County has determined to undertake all of the Financed Facilities after extensive consideration of the County's needs and responsibilities, and consideration of alternative means of carrying out those responsibilities. The County's governing Board of Commissioners has determined that each of the Financed Facilities will satisfy a current need for public facilities and services in the County. All of the Financed Facilities are appropriate and needed to carry out important governmental functions of the County, including education, law enforcement, solid waste disposal, public. recreation and services for senior citizens. The functions served by the Pledged Facilities -education and law enforcement -are functions that the County is required by State law to undertake. The County has an immediate use for all of the Financed Facilities. The County expects the need and usefulness for each facility to continue throughout the term of the Contract. Any loss of a Financed Facility (and especially the loss of any of the Pledged Facilities) would create a temporary disruption in the County's ability to carry out its governmental functions at the desired service level. ARTICLE VIII INDEMNIFICATION To the extent permitted by law, the County agrees to indemnify, protect and save SunTrust, the LGC and their officers, members and employees, harmless from all liability, obligations, losses, claims, damages, actions, suits, proceedings, costs and expenses, including attorneys' fees, arising out of, connected with, or resulting directly or indirectly from the Project Sites or the Financed Facilities or the 97562v1 22 23 transactions contemplated by this Contract. The indemnification arising under this Article will survive the Contract's termination. ARTICLE IX DISCLAIlYII;R OF WARRANTIES The County acknowledges that SunTrust has not designed the Financed Facilities, that SunTrust has not supplied any plans or specifications with respect thereto and that SunTrust (a) is not a manufacturer of, nor a dealer in, any of the component parts of the Financed Facilities or similar facilities, (b) has not made any recommendation, given any advice nor taken any other action with respect to (1) the choice of any supplier, vendor or designer of, or any other contractor with respect to, the Financed Facilities or any component part thereof or any property or rights relating thereto, or (2) any action taken or to be taken with respect to the Financed Facilities or any component part thereof or any property or rights. relating thereto at any stage of the construction thereof, (c) has not at any time had physical possession of the Financed Facilities or any component part thereof or made any inspection thereof or any property or rights relating thereto, and (d) has not made any warranty or other representation, express or implied, that the Financed Facilities or any component part thereof or any property or rights relating thereto (1) will not result in or cause injury or damage to persons or property, (2) has been or will be properly designed, or will accomplish the results which the County intends therefor, or (3) is safe in any manner or respect. SUNTRUST MAKES NO EXPRESS OR IMPLIED WA~RIZANTY OR REPRESENTATION OF ANY KIND WHATSOEVER WITH RESPECT TO THE FINANCED FACILITIES OR ANY COMPONENT PART THEREOF, INCLUDING BUT NOT LIIvIITED TO ANY WA,RRANT'Y OR REPRESENTATION WITH RESPECT TO THE MERCHANTABILITY OR TIC FITNESS OR SUITABILITY THEREOF FOR ANY PURPOSE, and further including the design or condition thereof; the safety, workmanship, quality or capacity thereof; .compliance thereof with the requirements of any law; rule, specification or contract pertaining thereto; any latent defect; the ability of the Financed Facilities to perform any function; that the Amount Advanced will be sufficient to pay all Project Costs; or any other characteristic of the Financed Facilities; it being agreed that the County is to bear all risks relating to the Financed Facilities, the completion thereof or the transactions contemplated by this Contract or by the Deed of Trust or the Project Fund Agreement, and the County waives the benefits of any and all implied warranties and representations of SunTrust. 97562vi 23 24 The provisions of this Article will survive the Contract's termination. ARTICLE X DEFAULT AND REMEDIES 10.1. Events of Default. An "Event of Default" is any of the following: (a) The County's failure to make any Installment Payment by the due date. (b) The occurrence of an Event of Nonappropriation. (c) The County breaches or fails to perform or observe any term, condition or covenant of this Contract, the Deed of Trust or the Project Fund Agreement on its part to be observed or performed, other than as referred to in subsections (a) or (b) above, including payment of any Additional Payment, for a period of 30 days after written notice specifying such failure and requesting that it be remedied has been given to the County, unless SunTrust agrees in writing to an extension of such time prior to its expiration; provided, however, that if the failure stated in the notice cannot reasonably be corrected within the applicable period and the County institutes corrective action within the applicable period, no Event of Default will be deemed to have occurred so long as the County diligently pursues the same. (d) Proceedings under any bankruptcy, insolvency, reorganization or similar law are instituted by or against the County as a debtor, or a receiver, custodian or similar officer is appointed for the County or any of its property. (e) Any warranty, representation or statement made by the County in this Contract, in the Deed of Trust or in the Project Fund Agreement is found to be incorrect or misleading in any material respect as of the Closing Date. (f) Any lien, charge or encumbrance (other than Permitted Encumbrances) prior to or affecting the validity of the Deed of Trust is found to exist, or proceedings are instituted to enforce any lien, charge or encumbrance against the Mortgaged Property and such lien, charge or encumbrance would be prior to the lien of the Deed of Trust. 97562vi 24 25 (g) The County fails to pay when due any principal of or interest on any of its general obligation bonds. 10.2. Remedies on Default. Upon the continuation of any Event of Default, SunTrust may, without any further demand• or notice, exercise any one or more of the following remedies: (a) Declare the unpaid principal components of the Installment Payments, and the accrued interest thereon, immediately due and payable; (b) Proceed by appropriate court action to enforce performance by.the County of the applicable covenants of this Contract, the Deed of Trust or the Project Fund Agreement or to recover for the breach thereof; and (c) Avail itself of all available remedies under the Deed of Trust, including foreclosure on the Pledged Facilities and recovery of attorneys' fees and other expenses, and of all other remedies available at law or in equity. SunTnxst's exercise of remedies is subject to the limitations set forth in Article XII. 10.3. No Remedy Exclusive; Delay Not Waiver. All remedies under this Contract are cumulative and may be exercised concurrently or separately. The exercise of any one remedy will not be deemed an election of such remedy or preclude the exercise of any other remedy. If any Event of Default occurs and is thereafter waived, such waiver will be limited to the particular breach so waived and will not be deemed a waiver of any other breach under this Contract. ARTICLE XI ASSIGNMENTS 11.1. County's Assignments. The County will not sell or assign any interest in this Contract without SunTrust's prior written consent. 11.2. Bank's Assignment. SunTrust may, at any time and from time to time, assign all or any part of its interest in this Contract including, without limitation, SunTrust's rights to receive Installment Payments. Any assignment made by SunTrust or any subsequent assignee shall not purport to convey any greater interest or rights than those held by SunTrust pursuant to this Contract. 97562v1 25 26 Notice of any assignment must be provided to the County. The County will keep a complete and accurate record of all assignments. After the giving of any such notice, the County will thereafter make all payments in accordance with the notice to the assignee named therein and will, if so requested, acknowledge such assignment in writing, but such acknowledgment will in no way be deemed necessary to make the assignment effective. ARTICLE VIII COUNTY'S LIlVIITED OBLIGATION Notwithstanding any other provision of this Contract, the parties intend that this transaction comply with North Carolina General Statutes Section 160A-20. No deficiency judgment may be entered against the County in violation of such Section 160A-20. No provision of this Contract will be construed or interpreted as creating a pledge of the County's faith and credit within the meaning of any constitutional debt limitation. No provision of this Contract will be construed or interpreted as an illegal delegation of governmental powers or as an improper donation or lending of the County's credit within the meaning of the North Carolina constitution. The County's taxing power is not and may not be pledged directly or indirectly or contingently to secure any moneys due under this Contract. No provision of this Contract will be construed to pledge or to create a lien on any class or source of the County's moneys (other than the Net Proceeds and the amounts on deposit from time to time in the Project Fund), nor will any provision of this Contract restrict the County's future issuance of any of its bonds or other obligations payable from any class or source of the County's moneys (except to the extent the this Contract and the Deed of Trust restrict the incurrence of additional obligations secured by the Mortgaged Property). To the extent of any conflict between this Article and any other provision of this Contract, this Article will take priority. ARTICLE XIII MISCELLANEOUS 13.1. Defeasance. The County's repayment obligations for the Amount Advanced will be deemed paid and satisfied for all purposes when payment either 97562v1 2f 27 (a) has been made in accordance with the terms hereof (whether at maturity, upon prepayment or otherwise) or (b) has been provided for by depositing with. a Qualified Agent (1) cash sufficient to make such payment or (2) Federal Securities maturing as to principal and interest in such amounts and at such times as will insure, without reinvestment, the availability of sufficient moneys to make such payment (which will be evidenced by a certificate, in form satisfactory to SunTrust, of a firm of independent certified public accountants or similar experts reasonably acceptable to SunTrust) and which are not subject to redemption or purchase prior to maturity at the option of anyone other than the holder. When the County's repayment obligations for the Amount Advanced are deemed paid under this Section, the County's repayment obligations under this Contract will be payable solely-from the cash or Federal Securities deposited pursuant to' (b) above, and SunTrust will provide for the release of the lien and cancellation of the Deed of Trust as provided in the Deed of Trust. No deposit under (b) above will be made until the County has furnished SunTrust a written opinion of an attorney or firm of attorneys nationally- recognized on the subject of state and local government debt obligations acceptable to SunTrust to the effect that the deposit of such cash or Federal Securities wIll not cause the County's repayment obligations under this Contract to become "arbitrage bonds" within the meaning of the Code. Notwithstanding any provision of this Agreement to the contrary, any Qualified Agent under this Section will dispose of moneys held by it for any repayment of any portion of the Amount Advanced (whether principal, interest or prepayment premium as provided for in Section 2.3) left unclaimed for five years after the date the principal component of such repayment becomes due in accordance with N.C. Gen. Stat. Sec. 116B-51 or any successor provision. The persons entitled to such payment will thereafter be entitled to look only to their remedies under N.C. Gen. Stat. Chapter 116B or any. successor provision, and all liability of the County and any such escrow agent with respect to such moneys will cease. 13.2. Notices. (a) Any communication provided for in this Contract must be in writing. (b) Any communication under this Contract will be sufficiently given and deemed given when delivered by hand or on the date shown as the date of delivery on a United States Postal Service return receipt, if addressed as follows: 97562v1 27 zs (i) If intended for the County, addressed to it at the following address: Orange County, Attention: Finance Director, Re: Notice under 2007 SunTrust Installment Financing Contract, Post Office Box 8181, Hillsborough, North Carolina 27278. (ii) If intended for SunTrust, addressed to it at the following address: SunTrust Leasing Corporation, Attention: , Re: Notice under 2007 Installment Financing Contract with Orange County, North Carolina, [address/city/state]. (c) Any addressee may designate additional or different addresses .for communications by notice given under this Section to each of the others. 13.3. Non-Business Days. If the date for making any payment or the last day for performance of any act or the exercising of any right will not be a Business Day, such payment may be made or act performed or right exercised on or before the next succeeding Business Day. 13.4. Governing Law. The parties intend that North Carolina law will govern this Contract. To the extent permitted by law, the parties agree that any action brought with respect to this Contract will be brought in the North Carolina General Court of Justice in Orange County, North Carolina. 13.5. Severability. If any provision of this Contract is determined to be unenforceable, that will not affect any other provision of this Contract. 13.6. Amendments. This Contract may not be modified or amended unless such amendment is in writing and signed by the County and SunTrust. 13.7. Binding Effect. Subject to the specific provisions of this Contract, this Contract will be binding upon and inure to the benefit of and be enforceable by the parties and their respective successors and assigns. 13.8. Third-Party Beneficiaries. There are no parties intended to be or which shall be deemed to be third-party beneficiaries of this Contract. 13.9. Time. Time is of the essence of this Contract and each and all of its provisions. 13.10. Limitation on Liability of Officers and Agents. No officer, agent or employee of the County, of the LGC or SunTrust will be subject to any personal 97562v1 - - 28 ' 29 liability or accountability by reason of the execution of this Contract or any other documents related to the transactions contemplated by this Contract. Such officers, agents or employees will be deemed to execute such documents in their official capacities only, and not in their individual capacities. This Section will not relieve any such officer, agent or employee from the performance of any official duty provided by law. 13.11. Counterparts. This Contract may be executed in several counterparts, including separate counterparts. Each will be an original, but all of them together constitute the same instrument. 13.12. Definitions. Unless the context clearly requires otherwise, capitalized terms used in this Contract and not otherwise defined will have the meanings set forth in Exhibit A. [The remainder of this page has been left blank intentionally.) 97562v1 29 30 IN WITNESS WHEREOF, the County :and SunTrust have caused this instrument to be executed as of the day and year first above written by duly authorized officers. ATTEST: (SEAL) ORANGE COUNTY NORTH CAROLINA Donna S. Baker Clerk, Board of Commissioners This contract has been approved under the provisions of Article 8, Chapter 159 of the General Statutes of North Carolina. T. Vance Holloman Secretary, North Carolina Local Government Commission By [T. Vance Holloman or Designated Assistant] Moses Carey, Jr. Chair, Board of Commissioners 5UNTRUST LEASING CORPORATION By: Printed Name: Title: [Installment Financing Contract dated as of June 1, 2007] Exhibits - A - Defmitions B - Payment schedule C - Financed Facilities description 97562v1 30 31 EI~TT A -Definitions For all purposes of this Contract, unless the context requires otherwise, the following terms will have the following meanings: "Additional Payments" means any of SunTrust's expenses (including attorneys' fees) in prosecuting or defending any action or proceeding in connection with this Contract and any taxes or any other expenses, including, but not limited to, SunTrust's administrative or legal costs (including costs of maintaining its existence and good standing), licenses, permits, state and local sales and use or ownership taxes or property taxes which SunTrust is required to pay as a result of this Contract, inspection and reinspection fees, or any other amounts payable by the County as a result of its covenants under this Contract, under the Deed of Trust or under the Project Fund Agreement (together with. interest that may accrue on, any of the above if the County fails to pay the same, as set forth in this Contract). "Amount Advanced" has the meaning assigned in Article I. "Appropriate Consultant" means one or more independent public accountants or firms of public accountants, or architects or firms of architects, engineers or firms of engineers, professional management consultants or firms of management consultants, or such other independent persons, having (at the time retained for the purposes of this Contract) a favorable reputation for skill and experience in an appropriate area of expertise, as may be selected by the County and approved by SunTrust (which approval will not be unreasonably withheld) from time to time to perform and carry out the duties imposed on an Appropriate Consultant by this Contract. "Budget Officer" means the County officer from time to time charged with preparation of the. draft County budget initially submitted to the County Board for its consideration. . "Closing Date" means the date on which this Contract is first executed and delivered by the parties. "Code" means the Internal Revenue Code of 1986, as amended, including regulations, rulings and revenue procedures promulgated thereunder or under the Internal Revenue Code of 1954, as amended, as applicable to the County's obligations under this Contract. Reference to any specific Code provision will be deemed to include any successor provisions thereto. 97562v1 31 32 "Completion Certificate" means the certificate evidencing substantial completion of the Financed Facilities provided for in Section 2.3(a) of the Project Fund Agreement. "Completion Date" means the date on which the County delivers the Completion Certificate. "Construction Contracts" means the contracts between the County and contractors for the construction of the Pledged Facilities. "County Board" means the County's governing board as from time to time constituted. "Contract Payments" means Installment Payments and Additional Payments. "County Representative" means the County Manager, County finance officer or any other person or persons at the time designated, by a written certificate furnished to SunTrust and signed on the County's behalf by the County Manager or the Chair of the County .Board, to act on the County's behalf for the purpose of performing any act (or any specified act) under this Contract. "Deed of Trust" means the Deed of Trust and Security Agreement, dated as of June 1, 2007, from the County to a deed of trust trustee for the benefit of SunTrust and its assigns, as it may be duly amended or supplemented. "Event of Default" means one or more events of default as defined in Section 10.1. "Event of Nonappropriation" means a determination by the County Board not to include an appropriation for Contract Payments in the County budget for any Fiscal Year, as contemplated in Section 2.5(a), or any subsequent action by the County Board to delete such an appropriation from an approved County budget. "Federal Securities" means, to the extent such are legal investments for the County's funds at the time of purchase, (a) direct obligations of the United States of America for which its full faith and credit are pledged, (b) securities or obligations evidencing direct ownership interests in specified portions (principal or interest) of obligations described in (a), or (c) obligations unconditionally guaranteed by the United States of America. 97562v1 32 33 "Financed Facilities" means (a) the Pledged Facilities, along with (b) all other County property the construction or acquisition of which has been financed (in whole or in part) with the Amount Advanced, in each case along with all renewals, replacements, additions and substitutions therefor. Exhibit C provides a general description of the Financed Facilities, as intended by the County as of the Closing Date. "Fiscal Year" means the County's fiscal year beginning July 1, or such other fiscal year as the County may later lawfully establish. "Force Majeure" means, without limitation, acts of God; strikes, lockouts or other .industrial .disturbances; acts of public enemies; orders or restraints of any kind of the federal or State government or any of their departments, agencies or officials or any civil or military authority; insurrection; riots; landslides; earthquakes; fires; storms; droughts; floods; falling space debris; explosions; breakage or accidents to machinery, transmission pipes or canals; or any other cause or event not within the County's control but not due to the County's negligence. "Independent Counsel" means. an attorney duly admitted to the practice of law before the highest court in the State that is selected by the County and approved by SunTrust (which approval will not be unreasonably withheld). . "Installment Payments" means the payments payable by the County pursuant to Section 2.1. "LGC" means the North Carolina Local Government Commission, or any successor to its functions. "Mortgaged Properly" has the meaning assigned in the Deed of Trust, and generally includes the Pledged Sites and the Pledged Facilities. "Net Proceeds" means all payments and proceeds derived from (a) claims made on account of insurance coverages required under this Contract, (b) any exercise of condemnation or eminent domain authority related to all or any portion of the Mortgaged Property, (c) proceeds of title insurance related to the Mortgaged Property, (d) payments on any bonds required by Section 3.3, (e) any amounts recovered from any contractor on an action for default or breach, as described in Section 3.3, or (f) any sale of the Pledged Facilities, as well as all judgments, settlements or other payments in lieu of any of the foregoing, in any case reduced by the sum of (i) all expenses (including attorneys' fees and costs) incurred in the 97s62v1 33 34 collection of such proceeds and (ii) all amounts expended by the County, SunTrust or SunTrust to remedy the event giving rise to such proceeds, all of which amounts will be paid or reimbursed from the gross proceeds. "Permitted Encumbrances" means, as of any particular time, (a) the "Existing Encumbrances," as defined in the Deed of Trust, (b) liens for taxes and assessments not then delinquent, or liens which may remain unpaid pursuant to Sections 4.8 or 5.2, (c) the Deed of Trust, (d) any lease or other agreement with the School Board as contemplated by Section 4.6(b), (e) any lien or encumbrance made by its terms expressly subordinate to the lien of the Deed of. Trust, and (f) easements and rights-of--way granted by the County pursuant to Section 1-6(e)(i) of the Deed of Trust. "Plans and Specifications" means the: plans and specifications for the Pledged Facilities as prepared for the County by an Appropriate Consultant. "Pledged Facilities" has the meaning ascribed to that term in the Deed of Trust, and generally includes the County's new Elementary School #10 and the County's Justice Facility. . "Pledged Sites" has the meaning ascribed to that term in the Deed of Trust, and generally includes the real property upon which the Pledged Facilities are to be constructed. "Project Costs" means all costs of the design, planning, constructing, acquiring, installing and equipping of the Financed Facilities as determined in accordance with generally accepted accounting principles and that will not adversely affect the exclusion from gross income for federal income tax purposes of the designated interest component of Installment Payments payable under this Contract, including (a) sums required to reimburse the County or its agents for advances made for any such costs, (b) interest during the construction process and, for up to six months thereafter, and (c) all costs related to the fmancing of the Financed Facilities through this Contract and all related transactions. "Project Fund Agreement" means the Project Fund Agreement of even date between SunTrust and the County, as it maybe duly amended or supplemented. "Project Sites" means (a) the Pledged Sites, along with (b) the real properly associated with the remainder of the Financed Facilities. 97562v1 34 35 "Qualified Agent" means any bank or other financial institution qualified to exercise corporate trust powers that is selected by the County, is reasonably acceptable to SunTrust and is acceptable to the LGC. "State" means the State of North Carolina. "Project Fund Agreement" means the Project Fund Agreement of even date between SunTrust and the County, as it maybe duly amended or supplemented. In addition, all capitalized terms used herein and not otherwise defined have the meanings assigned thereto in the Project Fund Agreement. 97562vt 35 36 [to come] EDIT B -Schedule of Installment Payments 97562v1 36 37. EDIT C -The Financed Facilities Proiect Comaonent Estimated financing amount ($1 Central Orange Senior Center - 2,500,000 Funds to be used with bond funds to construct Senior Center Addition to Orange County SportsPlex Elementary 10 CHCCS - 22,102,000 Construction of New Elementary School on property owned by the County CHCCS Renovations -Completion of renovations to existing schools 3,450,000 Efland Water and Sewer - Completion of Water and Sewer Lines 400,000 Jail -expansion of existing jail to add additional beds 600,000 Justice Facility -Courthouse addition to include courtrooms and office space 10,200,000 Durham Technical Community College - County's contribution to be used with 3,588,000 state bond funds provided to Durham Tech Twin Creeks Infrastructure -water and sewer lines to site of Elementary # 10 1,250,000 West Ten Soccer -Development of soccer complex on existing county property 2,267,000 Solid Waste Operations Center - 2,200,000 New Facility to house solid waste staff SportsPlex Renovations - 1,500,000 renovations to existing facility required to accommodate senior center addition 97562v1 37 38 Sanford Holshouser draft.of Anri123, 2007 Prepared by and return after recording to: Robert M. Jessup Jr. Sanford Holshouser LLP Post Office Box 5646 Cary, NC 27512-5646 STATE OF NORTH CAROLINA ) ORANGE COUNTY ) The collateral is or includes fixtures. ' This deed of trust secures future advances. THIS DEED OF TRUST AND SECURITY AGREEMENT (this "Deed of Trust") is dated as of June 1, 2007, and is granted by ORANGE COUNTY, NORTH CAROLINA, a political subdivision of the State of North Carolina (the "County"), to [name] (the "Deed of Trust Trustee"), for the benefit of SUNTRUST LEASING CORPORATION ("SunTrust"). RECITALS: Pursuant to an Installment Financing Contract dated as of June 1, 2007 (the "Financing Contract"), between the County and SunTrust, SunTrust is providing for an advance of [$50,057,000] for the benefit of the County. The County will use these funds, together with other available funds, to provide for the acquisition, construction and improvement of certain school facilities and other public improvements, as well as to pay financing and other related costs, as more fully described in the Financing Contract. As a condition to entering into the Financing Contract, SunTrust has required the County to secure its obligations under the Financing Contract by this 97561v1 38 39 conveyance of a portion of the facilities that are to be so constructed and improved (the "Pledged Facilities," as more particularly defined below), the real property associated with the Pledged Facilities and the other "Mortgaged Property," as defined below. The County will construct the Pledged Facilities on the real property described in Exhibit A. The County is the record owner of that real property. This Deed of Trust is given to secure current advances under the Financing Contract of [$50,057,000], as well as potential future advances in. the total maximum principal amount of $75,000,000. The time during which such future advances may be made is 15 years from June 1, 2007. The current scheduled date for final repayment is on or about June 30, 2026. NOW, THEREFORE, (1) in consideration of the execution and delivery of the Financing Contract and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, (2) to secure the County's performance of all its covenants under this Deed of Trust and under the Financing Contract, including the repayment of amounts advanced pursuant to the Financing Contract, and (3) to charge the Mortgaged Property, as defined below, with such payment and performance, the County sells, grants and conveys to the Deed of Trust Trustee, successors and assigns forever, in trust, with power of sale, the following (collectively, the "Mortgaged Property"): (a) the property described in Exhibit A, and all real property hereafter acquired by the County in replacement of, or in substitution for, all or any part of such premises, together with all easements, rights, rights-of--way and . appurtenances belonging to any such property (the. "Pledged Sites"); and (b) the improvements described in Exhibit B and all other improvements and fixtures now or hereafter attached to or used. in or on those improvements or the Pledged Sites, including (i) all renewals and replacements thereof and all additions thereto, (ii) all articles in substitution thereof, and (iii) all building materials for construction or repair of, such improvements upon their delivery to the Pledged Sites (collectively, the "Pledged Facilities"); 97561v1 39 40 TO HAVE AND TO HOLD the Mortgaged Property with all privileges and appurtenances thereunto belonging, to the Deed of Trust Trustee, successors and assigns forever, upon the trusts, terms and conditions and for the purposes set outbelow, in fee simple intrust; SUBJECT, HOWEVER, to the encumbrances described in Exhibit C (the "Existing Encumbrances"); 'BUT TffiS CONVEYANCE IS MADE UPON THIS SPECIAL TRUST: if the County pays its "Obligations," as defined below, in full in accordance with the Financing Contract and this Deed of Trust, and the County complies with all of the terms, covenants and conditions of the Financing Contract and this Deed of Trust, this conveyance will be null and void and will be canceled of record at the County's request and cost, and title will revest as provided by law; BUT H', HOWEVER, THERE OCCURS AN EVENT OF DEFAULT UNDER THE FINANCING CONTRACT, then SunTrust will have the remedies provided for in this Deed of Trust, including directing the Deed of Trust Trustee to sell the Mortgaged Property under power of sale. THE .COUNTY COVENANTS AND AGREES with the Deed of Trust Trustee and SunTrust (and their respective heirs, successors and assigns), in consideration of the foregoing, as follows: 1. Security Provided By This Deed of Trust 1-1 Security for Payment and Performance. This Deed of Trust secures the County's payment, as and when the same become due and payable, of all amounts payable by the County under the Financing Contract and this Deed of Trust (the "Obligations") and the County's timely compliance with all terms, covenants and conditions of the Financing Contract, this Deed of Trust and the Project Fund Agreement (these three instruments are referred to in this Deed of Trust as the "Financing Documents"). 1-2 Present and Future Advances. This Deed of Trust is executed to secure all the County's present and future obligations to SunTrust related to the Mortgaged Property. The making of future advances is subject to the terms and conditions of the Financing Contract, the Project Fund Agreement and this Deed of Trust. The amount of the present obligations secured by this Agreement is [Fifty 97561v1 40 41 Million Fifty-Seven Thousand Dollars ($50,057,000)] and the total amount, including present and future obligations, that may be secured by this Agreement at any one time is Seventy-five Million Dollars ($75,000,000). The period within which future obligations maybe incurred is 15 years from June 1, 2007. 1-3 Security Interest in Fixtures. 'This Deed of Trust is intended to be a security agreement pursuant to the North Carolina Uniform Commercial Code for the "Fixtures;" as defined below. The County grants to SunTrust and the Deed of Trust Trustee a security interest in the Fixtures. The County agrees that the security interest in the Fixtures granted in this Section 1-3 will be in addition to, and not in lieu of, any security interest in the Fixtures acquired by real property law. The County agrees to execute, deliver and file, or cause to be filed, in such place or places as may be required by law, financing statements (including any continuation statements required by the North Carolina Uniform Commercial Code) iri such form as SunTrust may require to evidence the security interest in the Fixtures. Upon the occurrence of an Event of Default under this Deed of Trust, SunTrust or Deed of Trust Trustee is entitled to exercise all rights and remedies of a secured party under the North Carolina Uniform Commercial Code and may proceed as to the Fixtures in the same manner as provided herein for the real property. The "Fixtures" are all articles of personal property attached or affixed to the Pledged Facilities, including but not limited to all apparatus, machinery, motors, elevators, fittings and all plumbing, heating, lighting, electrical, laundry, ventilating, refrigerating, incinerating, air-conditioning, fire and ,heft protection and sprinkler equipment, including all renewals and replacements thereof and all additions thereto, and all articles in substitution thereof, and all proceeds of all the foregoing in whatever form. The County is not obliged to renew, repair or replace any inadequate, obsolete, worn-out, unsuitable, undesirable or unnecessary Fixture. If the County determines that any Fixture has become inadequate, obsolete, worn-out, unsuitable, undesirable or unnecessary, the County may remove such Fixture from the Pledged Facilities and sell, trade-in, exchange or otherwise dispose of it (as a whole or in part), with no further obligation to SunTrust if the fair market value of the such Fixture at the time of disposition does not exceed $250,000. If the fair. market value of the such Fixture at the time of disposition exceeds $250,000, then an amount equivalent to the fair market value of such Fixture (whether or not received 97561vi 41 42 in cash by the County at the time of the disposition) will deemed to be Net Proceeds and subject to the provisions of Article VI of the Financing Contract. 1-4 County's Obligation Limited. Notwithstanding any other provision of this Deed of Trust, the parties intend that this transaction comply with North Carolina General Statutes Section 160-20. No deficiency judgment may be entered against the County in violation of such Section 160A-20. No provision of this Deed of Trust should be construed or interpreted as creating a pledge of the County's faith and credit within the meaning of any constitutional debt limitation. No provision of this Deed of Trust should be construed or interpreted as an illegal delegation of governmental powers; nor as an improper donation or lending of the County's-.credit within the meaning of the North Carolina constitution. The County's taxing power is not and may not be pledged, directly or indirectly contingently, to secure any moneys due under this Deed of Trust. No provision of this Deed of Trust restricts the County's future issuance of any of its bonds or other obligations payable from any class or source of the County's moneys (except to the extent the Financing Documents restrict the incurrence of additional obligations secured by the Mortgaged Property). To the extent of any conflict between this Section and any other provision of this Deed of Trust, this Section takes priority. 1-5 County's Continuing Obligations. The County remains liable for full performance of all its covenants under this Deed of Trust (subject to the limitations described in Section 1-4), notwithstanding the occurrence of any event or circumstances whatsoever, including any of the following: (a) Any act or omission by SunTrust, or SunTrust's waiver of any right granted or remedy available to it; (b) The forbearance or extension of time for payment or performance of any obligation under this Deed of Trust, whether granted to the County or any other person; (c) The sale or release of all or part of the Mortgaged Property or the release of any party who assumes all or any part of such performance; or 97561vt 42 43 (d). Another party's assumption of any of the County's obligations under this Deed of Trust. 1-6 Releases; Grants of Easements. (a) So long as no Event, of Default is continuing, SunTrust and the Deed of Trust Trustee will, upon the County's request and at any time, execute and deliver all documents necessary to effect the release of Mortgaged Property from the lien of this Deed of Trust upon the County's compliance with the requirements of this Section. (b) In connection with the release of a portion (but less than all) of the Mortgaged Property, the County must file with SunTrust and the Deed of Trust Trustee either (i) an appraisal prepared by an Appropriate Consultant, or (ii) evidence of listed tax value or insured value, in any case showing that the value of that portion of the Mortgaged Property that is proposed as the portion that is to remain subject to the lien of the Deed of Trust is not less than 85% of the aggregate outstanding principal component of the Installment Payments. (c) In the case of a proposed release of all the Mortgaged Property, the County must pay to SunTrust (or some fiduciary reasonably acceptable to SunTrust) an amount (i) which is sufficient to provide for the payment in full of all Contract Payments in accordance with Sections 2.3 and 13.1 of the .Financing Contract and (ii) which is required to be used for such payment. (d) In any event, the County must file with SunTrust and the Deed of Trust Trustee (i) a certified copy of a County Board resolution stating the purpose for which the County desires such release, giving an adequate legal description of the portion of the Mortgaged Property to be released and requesting such release, (ii) a copy of the proposed instrument of grant or release, (iii) a written application signed by a County Representative requesting such instrument; and (iv) a certificate executed by a County Representative that no Event of Default is continuing and that the grant or release will not materially impair the intended use of the Pledged Facilities. (e) In addition to the provisions for release described above, (i) The County may from time to time grant easements, licenses, rights-of--way and other similar rights with respect to any part of the Mortgaged Property, and the County may release such interests, with or without consideration. The County must send notice of any such grant or 97561v1 43 44 release to SunTrust, along with a certificate that such grant or release will not materially impair the intended use of the Pledged Facilities. (ii) The County may dispose of any inadequate, obsolete, worn-out, undesirable or unnecessary Fixture in accordance with Section 1-3. 2. County's Payment Oblieation; Bank's Advances 2-1 Payment of Obligations; Compliance with Covenants. The County must pay the Obligations as and when the same become due and payable in the manner set forth in this Deed of Trust and in the Financing Contract, and must comply in all respects with all of the terms, covenants, and conditions contained in the Financing Documents. 2-2 Taxes and Other Governmental Charges. The County must pay, or cause to be paid, all taxes, assessments and other governmental charges related to the Pledged Facilities as provided in the Financing Contract. 2-3 Insurance. The County must obtain and continually maintain the insurance coverages (or alternative risk coverages) required by the Financing Contract. 2-4 Net Proceeds. The Net Proceeds (a) of any payments on insurance policies arising from any damage to the Mortgaged Property or (b) of any action or proceeding in condemnation or related to condemnation, as provided for in the Financing Contract, in any case will be payable and applied as provided. in the Financing Contract. 2-5 Payment of Costs and Attorney's Fees. If the Deed of Trust Trustee or SunTrust employs an attorney to assist in the enforcement or collection of any Obligations, or if the Deed of Trust Trustee or SunTrust voluntarily or otherwise becomes a party to any suit or legal proceeding (including a proceeding conducted under any state or federal bankruptcy or insolvency statute) to protect the Mortgaged Property, to protect the lien of this Deed of Trust, to enforce collection of the Obligations or to enforce compliance by the County with any of the provisions of the Financing Documents, the County will pay reasonable attorneys' fees and all of the costs that may reasonably be incurred (whether or not any suit or proceeding is commenced), and such fees and costs (together with interest at the rate of 5.00% per year) are secured as Obligations under this Deed of Trust (but if any such proceeding is adverse to the County, then only. if the Deed of Trust Trustee or SunTrust, as the case may be, is a prevailing party in such action). 97561vt 44 45 2-6 Advances for Performance of County's Obligations. If the County fails to perform any of its obligations under the Documents, the Deed of Trust Trustee and SunTrust are authorized, but not obligated, to perform or cause to be performed such obligation. All such expenditures, together with interest thereon at the rate of 5.00% per year, are secured as Obligations under this Deed of Trust. 3. County's Other Covenants 3-1 Title Covenants. The County covenants with the Deed of Trust Trustee and SunTrust that the County is seized of and has the right to convey the Mortgaged Property in fee simple, that the Mortgaged Property is free and clear of all liens and encumbrances other than Existing Encumbrances, that title to the Mortgaged Property is marketable, and that the County will forever warrant and defend title to the Mortgaged Property (subject to the Permitted Encumbrances, as defined in the Financing Contract) against the claims of all persons. 3-2 Maintenance and Repairs; Additions and Demolition. (a) The County will keep the Mortgaged Property in good order and repair (reasonable wear and tear excepted) and in good operating condition, will not commit or permit any waste or any other thing to occur whereby the value or usefulness of the Mortgaged Property might be impaired, and will make from time to time all necessary or appropriate repairs. (b) The County from time to time may make any additions, modifications or improvements to the Mortgaged Property that it may deem desirable and that do not materially decrease the value of the Mortgaged Property. All such additions, modifications and improvements within the boundaries of the Pledged Sites will become a part of the Mortgaged Property. The County will do, or cause to be done, all such things as .may be required by law in order fully to protect SunTrust's security. 3-3 Environmental Representations, Warranties, Covenants and Indemnification. (a) The County warrants and represents as follows: (i) The County has no knowledge and, after reasonable inquiry, no reason to believe (A) that any industrial use has been made of the Mortgaged Property, (B) that the Mortgaged Property has been used for the storage, 97561v1 45 46 treatment or disposal of chemicals or any wastes or materials that are classified by federal, State or local laws as hazardous or toxic substances, (C) that any manufacturing, landfilling or chemical production has occurred on the Mortgaged Property, or (D) that there is any asbestos or other contaminant on, in or under the Mortgaged Property. (ii) To the County's knowledge, the Mortgaged Property is in compliance with all federal, State and local environmental laws and regulations. The County will keep the Mortgaged Property, and the activities at the Mortgaged Property, in compliance with all such environmental laws and regulations..The County will, in a timely manner, take all lawful action necessary to maintain such compliance or to remedy any lack of such compliance. Any hazardous materials or substances kept on the Mortgaged Property will be used in the routine maintenance and operation of the Pledged Facilities and the Pledged Sites and will be used in accordance with label instructions. (iii) The County will promptly notify SunTrust of any change in the nature or extent of any hazardous materials, substances or wastes maintained on, in or under the Mortgaged Property or used in connection therewith, and will promptly send to SunTrust copies of any citations, orders, notices or other material governmental or other communication received with respect to any other hazardous materials, substances, wastes or other environmentally regulated substances affecting the Mortgaged Property. (b) To the extent permitted by law, the County will indemnify and hold SunTrust and the Deed of Trust Trustee harmless from and against (i) any and all damages, penalties, fines, claims, liens, suits, liabilities, costs (including clean-up costs), judgments and expenses (including attorneys', consultants' or experts' fees and expenses) of every kind and nature suffered by or asserted against SunTrust or the Deed of Trust Trustee as a direct or indirect result of any warranty or representation made by the County in subsection (a) being false or untrue in any material respect, or (u) any requirement under any law or regulation which requires the elimination or removal o~ any hazardous materials, substances, wastes or other environmentally regulated substances by SunTrust, the County or any transferee or assignee of the County of SunTrust. (c) The County's obligations under this Section will continue in effect notwithstanding satisfaction of the Obligations or foreclosure under this Deed of Trust or delivery of a deed in lieu of foreclosure. 97561v1 ~ 46 47 4. The Deed of Trust Trustee 4-1 Deed of Trust Trustee's Liability. The Deed of Trust Trustee will suffer no liability by virtue of acceptance of this trust except such as may be incurred as a result of the Deed of Trust Trustee's failure to account for the proceeds of any sale under this Deed of Trust. 4-2 Substitute Trustees. If the Deed of Trust Trustee dies, becomes incapable of acting or renounces trust, or if for any reason SunTrust desires to replace the Deed of Trust Trustee, then SunTrust has the unqualified right to appoint one or more substitute or successor Deed of Trust Trustees by instruments filed for registration in the office of the Register of Deeds where this Deed of Trust is recorded. Any such removal or appointment may be made at any time without notice, without specifying any reason therefor and without any court approval. Any such appointee becomes vested with title to the Mortgaged Property and with all rights, powers and duties conferred upon the Deed of Trust Trustee by this Deed of Trust in the same manner and to the same effect as though such. Deed of Trust Trustee were named as the original Deed of Trust Trustee. 5. Defaults and Remedies: Foreclosure 5-1 Defaults and Remedies. Upon the occurrence and continuation of an Event of Default, SunTrust may pursue its rights and remedies as provided under the Financing Contract and this Deed of Trust. 5-2 Foreclosure; Sale under Power of Sale. (a) Right to foreclosure or sale. Upon the continuation of an Event of Default, at SunTrust's request, the Deed of Trust Trustee must foreclose this Deed of Trust by judicial proceedings or, at SunTrust's option, the Deed of Trust Trustee must sell (and is empowered to sell) all or any part of the Mortgaged Property (and if in part, any such sale in no way adversely affects the lien created by this Deed of Trust against the remainder) at public sale to the last and highest bidder for cash (free of any equity of redemption, homestead, dower, curtesy or other exemption, all of which the County expressly waives to the extent permitted by law) after compliance with applicable State laws relating to foreclosure sales under power of sale. The Deed of Trust Trustee will execute and deliver a proper deed or deeds to the successful purchaser at such sale. 97561v1 47 48 (b) Bank's Bid. SunTrust may bid and become the purchaser at any sale under this Deed of Trust. In lieu of paying cash therefor, SunTrust may make settlement for the purchase price by crediting against the Obligations the proceeds of sale net of sale expenses, including the Deed of Trust Trustee's commission, and after payment of such taxes and assessments as may be a lien on the Mortgaged Properly superior to the lien of this Deed of Trust (unless the Mortgaged Property is sold subject to such liens and assessments, as provided by law). (c) County's Bid. The County may bid for all or any part or parts of the Mortgaged Property at any foreclosure sale, but the County may not bid less than an amount sufficient to provide for full payment of the Obligations unless SunTrust otherwise consents in writing. (d) Successful bidder's deposit. At any sale the Deed of Trust Trustee may, at its option, require any successful bidder (other than SunTrust) immediately to make a deposit with the Deed of Trust Trustee against the successful bid in. the form of. cash or a certified check in an amount of up to 5% of the sale price. Notice of any such requirement need not be included in the advertisement of the notice of such sale. (e) Application of sale proceeds. The Deed of Trust Trustee will apply the proceeds of any foreclosure sale in the manner and in the order prescribed by State law, it being agreed (i) that the expenses of any such sale will include a commission to the Deed of Trust Trustee equal to one-half of one percent of the gross sales price (but not exceeding a total of $25,000) for all services performed by the Deed of Trust Trustee under this Deed of Trust, and (ii) that any proceeds of any such sale remaining after the payment of all obligations and the prior application thereof in accordance with State law will be paid to the County. 5-3 Possession of Mortgaged Property. Upon the continuation of any Event of Default, SunTrust, to the extent permitted by law, is authorized to (a) take possession of the Mortgaged Property, with or without legal action, (b) lease the Mortgaged Property, (c) collect all rents and profits therefrom, with or without taking possession of the Mortgaged Property, and (d) after deducting all costs of collection and administration expenses, apply the net rents and profits to the payment of necessary maintenance and insurance costs, and then apply such amounts to the County's account and in reduction of the Obligations (applying such amounts first to interest accrued and then to installments of principal in the inverse order of their maturity). SunTrust will be liable to account only for rents and profits it actually receives. 97561v1 48 49 6. Miscellaneous 6-1 Notices. (a) Any communication provided for in this Deed of Trust must be in writing. (b) Any communication under this Deed of Trust will be sufficiently given and deemed given when delivered by hand or on the date shown as the- date of delivery on a United States Postal Service return receipt, if addressed as follows: (i) If intended for the County, addressed to it at the following address: Orange County, Attention: Finance Director, Re: Notice under 2007 SunTrust Deed of Trust, Post OfFce Box 8181, Hillsborough, North Carolina 27278. (ii) If intended for SunTrast, addressed to it at the following address: SunTrust Leasing Corporation, Attention: , Re: Notice under 2007 Deed of Trust from Orange County, North Carolina, [address/city/state]. (ii) if to the Deed of Trust Trustee, to , Re: Notice under 2007 Deed of Trust from Orange County, North Carolina, [address/city/state]. (c) Any communication sent under this Deed of Trust to any one party must be sent to the other parties at the same time.. (d) Any addressee 'may designate additional or different addresses for communications by notice given under this Section to each of the others. • 6-2 Successors; Assignments. (a) This Deed of Trust is binding upon, will inure to the benefit of, and is enforceable by the County, the Deed of Trust Trustee and SunTrust, and their respective successors and assigns. (b) Except as otherwise provided in this Deed of Trust or in the Financing Contract, the County may not sell, lease, transfer or otherwise dispose of all or any part of the Mortgaged Property or any interest therein without .SunTrust's prior written consent. SunTrust must not unreasonably withhold its consent. 97561v1 49 50 6-3 No Marshalling. The County waives any and all rights to require marshalling of assets in connection with the exercise of any remedies provided in this Deed of Trust or as permitted by law. 6-4 Definitions. All capitalized terms used in this Deed of Trust and not otherwise defined have the meanings ascribed to them in the Financing Contract. 6-5 Governing Law; Forum. The County, SunTrust and- the Deed of Trust Trustee intend that North Carolina law will govern this Deed of Trust. To the extent permitted by law, the County, SunTrust and the Deed of Trust Trustee agree that- any action brought with respect to this Deed of Trust must be brought in the North Carolina General Court of Justice in Orange County, North Carolina. 6-6 Limitation of Liability of Officers and Agents. No officer, agent or employee of the County will be subject to any personal liability or accountability by reason of the execution of this Deed of Trust or any other documents related to the transactions contemplated by this Deed of Trust. Such officers or agents are deemed to execute such documents in their official capacities only, and not in their individual capacities. This Section does not relieve an officer, agent or employee of the County from the performance of any official duty provided by law. 6-7 Covenants Running with the Land. All covenants contained in this Deed of Trust or in the Financing Contract run with the real estate encumbered by this Deed of Trust. 6-8 Further Instruments. Upon the request of SunTrust or the Deed of Trust Trustee, the County will execute, aclrnowledge and deliver such further instruments reasonably necessary or desired by SunTrust or the Deed of Trust Trustee to-carry out more effectively the purposes of this Deed of Trust or any other document related to the transactions contemplated by this Deed of Trust, and to subject to the liens and security interests hereof and thereof all or any part of the Mortgaged Property intended to be given or conveyed hereunder or thereunder, whether now given or conveyed or acquired and conveyed subsequent to the date of this Deed of Trust. 6-9 Severability. If any provision of this Deed of Trust is determined to be unenforceable, that will not affect any other provision of this Deed of Trust. 97561v1 50 51 6-10 Non-Business Days. If the date for making any payment or the last day for performance of any act or the exercising of any right is not a Business Day, such payment may be made or act performed or right exercised on or before the next succeeding Business Day. 6-11 Entire Agreement; Amendments. This Deed of Trust, together with the other Documents, constitutes the County's entire agreement with SunTrust and the Deed of Trust Trustee with respect to its general subject matter. This Deed of Trust may not be changed without the written consent of the County, SunTrust and the Deed of Trust Trustee, but the Deed of Trust Trustee must approve any amendment requested by the :County and SunTrust that does not materially increase the Deed of Trust Trustee's responsibility or liability. [The remainder of this page has been left blank intentiona[[y.J 97561v1 51 52 IN WITNESS WHEREOF, the County has caused this instrument to be signed, sealed and delivered as of the day and year first above written by duly authorized officers. ATTEST: (SEAL) ORANGE COUNTY, NORTH CAROLINA Donna S. Baker Moses Carey, Jr. Clerk, Board of Commissioners Chair, Board of Commissioners * * * * ~ STATE OF NORTH CAROLINA; ORANGE COUNTY I, a Notary Public of such County and State, certify that Moses Carey, Jr., and Donna S. Baker personally came before me this day and acknowledged that they are the Chair and Clerk, respectively, of the governing Board of Commissioners of Orange County, North Carolina, and that by authority duly given and as the act of such County, the foregoing instrument was signed in the County's name by such Chair, sealed with its corporate seal and attested by such Clerk. WITNESS my hand and official stamp or seal, this day of June, 2007. [SEAL] Notary Public My commission expires: [Deed of Trust and Security Agreement for the benefit of SunTrust Leasing Corporation, dated as of June 1, 2007] 97561v1 52 53 E~~IT A -- Real Property Description (the "Pledged Sites") Elementary School #10 Site Descri tp ion [to come] Justice Facility Site Description [to come] EDIT B -Description of Pledged Facilities [to come] EI~~IT C -- Existing Encumbrances [to come] 97561vi 53 54 Sanford Holshouser draft of Anri123.2007 PROJECT FUND AGREEMENT TffiS PROJECT FUND AGREEMENT is dated as of June 1, 2007, and is by and between ORANGE COUNTY, NORTH CAROLINA, a political subdivision of the State of North Carolina (the "County"), and SUNTRUST LEASING CORPORATION ("SunTrust"). RECITALS The County is, simultaneously with the execution and delivery of this Project Fund Agreement, executing and delivering an Installment Financing Contract dated as of June 1, 2007 (the "Financing Contract"), between the County and SunTrust. The purpose of the Financing Contract is to provide for SunTrust's advance of [$50,057,000.00] to the County to finance the County's acquisition and construction of the "Financed Facilities," as defined in the Financing Contract. In partial consideration for SunTrust's entering into the Financing Contract, the County has agreed to provide for financing proceeds to be deposited and disbursed pursuant to this Project Fund Agreement. NOW, THEREFORE, the parties agree as follows: SECTION 1. In this Project Fund Agreement, the term "Project Costs" means all costs of the design, planning, constructing, acquiring, installing and equipping of the Financed Facilities, as determined in accordance with generally accepted accounting principles and that will not adversely affect the exclusion from gross income for federal income tax purposes of the designated interest component of Installment Payments payable by the County under the Financing Contract, including (a) sums required to reimburse the County or its agents for advances made for any such costs, (b) interest during the construction process and for up to six months thereafter, and (c) all costs related to the financing of the Financed Facilities through the Financing Contract and all related transactions. In addition, any capitalized terms used in this Project Fund Agreement and not otherwise defined shall have the meanings assigned thereto in the Financing Contract. 54 s5 SECTION 2. PROJECT FUND. 2.1. Proiect Fund. On the Closing Date, SunTrust will deposit [$50,057,000.00] into a special account of the County to be designated "2007-1 Orange County Project Fund" (the "Project Fund"). This account shall be held separate and apart from all other County funds. The Project Fund is the County's property, but the County may withdraw amounts on deposit in the Project Fund only as provided in the Project Fund Agreement and only for application from time to time to the payment of Project Costs. Pending such application, such amounts shall be subject to a lien and charge in favor of SunTrust to secure the County's obligations under the Financing Contract. 2.2. Requisitions from Proiect Fund. SunTrust will disburse moneys in the Project Fund from time to time, either to pay Project Costs directly or to reimburse the County for previous expenditures for Project Costs, upon SunTrust's receipt of a requisition substantially in the form of Exhibit A and signed by a County Representative. Unless otherwise directed by the County, SunTrust will disburse moneys from the Project Fund that are due to the County by wire transfer to such bank account or accounts in the United States as the County may designate from time. to time by notice to SunTrust. Upon receipt of a requisition from the County, SunTrust will promptly review the requisition, and within two Business Days of the receipt of a requisition will either process the requisition for payment or notify the County of its disapproval of the requisition or its need for additional information. 2.3. Disposition of Proiect Fund Balance. (a). Upon completion -The County will promptly deliver a certificate to SunTrust when work on the Financed Facilities has been completed to the ,point that substantially all Financed Facilities are suitable for carrying out substantially all the purposes they are to serve for the County. This certificate must also state the amount of any funds that should be retained in the Project Fund to pay Project Costs incurred but not yet paid. SunTrust will then withdraw any additional balance remaining in the Project Fund and apply such balance against outstanding Required Payments. ss 56 (b) Upon default -Upon the occurrence of an Event of Default, SunTrust may withdraw any balance remaining in the Project Fund and apply such balance against outstanding Required Payments. (c) Application of Project Fund balance - SunTrust will apply any amounts to be applied against outstanding Required Payments pursuant to this section (i) first against all Additional Payments then due and payable, (ii) then to interest accrued and unpaid to the prepayment date, and (iu) then to the prepayment, in inverse order of maturity and without premium (notwithstanding any contrary provisions of Section 2.3 of the Financing Contract), of the outstanding principal components of Installment Payments. Such prepayment, however, will not affect any other County payment obligation under the Financing Contract. SunTrust will notify the County of any withdrawal from the Project Fund made under this Section 2.3, and in the notice will describe its application of the funds withdrawn. 2.4. Investment. (a) The County and SunTrust agree that money in the Project Fund will be continuously invested and reinvested in a separate account with the North Carolina Capital Management Trust, unless the County provides written direction of an alternate investment. (b) From and after the date that is three years from the Closing Date, the County will not purchase or hold any investment which has a "yield," as determined under the Code, in excess of the "yield" on the County's obligations under the Financing Contract, unless the County has supplied SunTrust with a Bond Counsel Opinion to the effect that such investment will not adversely affect the exclusion from gross income for federal income tax purposes to which the interest components of Installment Payments would otherwise be entitled., (c) Investment obligations acquired with money in the Project Fund shall be deemed at all times to be part of the Project Fund. The interest accruing thereon and any profit or loss realized upon the disposition or maturity of any such investment shall be credited to or charged against the Project Fund. (d) All earnings on moneys in the Project Fund must be used for Project Costs. 56 57 SECTION 3. NIISCELLANEOUS. 3.1. .Notices. Any notice or other communication required or contemplated by this Project Fund Agreement shall be deemed to be delivered if in writing, addressed as provided below and if (a) actually received by such addressee, or (b) in the case of mailing, when indicated to have been delivered by a signed receipt returned by the United States Postal Service after deposit in the United States mails, postage and registry fees prepaid, and clearly directed to be transmitted as registered or certified mail: (i) If intended for the County, addressed to it at the following address: Orange County, Attention: Finance Director, Re: Notice under 2007 SunTrust Project Fund Agreement, Post Office Box 8181, Hillsborough, North Carolina 27278. (ii) If intended for SunTrust, addressed to it at the following address: SunTrust Leasing Corporation, Attention: , Re: Notice under 2007 Project Fund Agreement with Orange County, North Carolina, [address/city/state]. Any party may designate a different or alternate address for notices by notice given under this Project Fund Agreement. 3.2. Survival of Covenants and Representations. All covenants, representations and warranties made by the County in this Project Fund Agreement and in any certificates delivered pursuant to this Project Fund Agreement shall survive the delivery of this Project Fund Agreement. 3.3. Choice of Law. The parties intend that North Carolina law will govern this Project Fund Agreement. 3.4. Amendments. This Project Fund Agreement may not be modified or amended unless such amendment is in. writing and signed by SunTrust and the County. 3.5. No Third-Part Beneficiaries. There are no parties intended to be or which shall be deemed to be third-party beneficiaries of this Project Fund Agreement. s~ 58 3.6. Successors and Assigns. All of the covenants and conditions of this Project Fund Agreement shall be binding upon and inure to the benefit of the parties to this Project Fund Agreement and their respective successors and assigns. 3.7. Severability. If any court of competent jurisdiction shall hold any provision of this Project Fund Agreement invalid or unenforceable, such holding shall not invalidate or. render unenforceable any other provision of this Project Fund Agreement. 3.8. Counteruarts. This Project Fund Agreement maybe executed in any number of counterparts, including separate counterparts, each executed counterpart constituting an original but all together only one agreement. 3.9. Termination. Except as otherwise provided in this Project Fund Agreement, this Project Fund Agreement shall cease and terminate upon payment of all funds (including investment proceeds) from the Project Fund. [The remainder of this page has been left blank intentionally.) sa 59 IN WITNESS WHEREOF, each of the parties has caused this Project Fund Agreement to be signed and delivered by a duly authorized officer, all as of the date first above written. ORANGE COUNTY, NORTH CAROLINA Kenneth T. Chavious Finance Officer SUNTRUST LEASING CORPORATION Printed Name: Title: [Project Fund Agreement dated as of June 1, 2007] 59 60 Exhibit A -Form of Requisition [To Be Prepared on County's Letterhead for Submission) [Date] [SunTrust address, to come] RE: Request by Orange County, North Carolina (the "County"), for disbursement of funds from a Project Fund created under a Project Fund Agreement dated as of June 1, 2007, between the County and SunTrust Leasing Corporation Pursuant to the terms and conditions of the above-referenced Project Fund Agreement, the County authorizes and requests the disbursement of funds from the Project Fund established under such Project Fund Agreement for the Project Costs described below. Capitalized terms used in this requisition and not otherwise defined have the meanings ascribed in the Project Fund Agreement. This is requisition number from the Project Fund. Amount Payee Payee's address Description of Costs to Be Paid Orange County makes this requisition pursuant to the following representations: 1. The County has appropriated in its current fiscal year funds sufficient to pay the Installment Payments and estimated Additional Payments due in the current fiscal year. 60 61 2. The purpose of this disbursement is for partial payment on the project contemplated under the Project Fund Agreement. 3. The requested disbursement has not been subject to any previous requisition. 4. No notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the moneys payable herein to any of the persons, firms or corporations named herein has been received, or if any notice of any such lien, attachment or claim has been received, such lien, attachment or claim has been released or discharged or will be released or discharged upon payment of this requisition. 5. This requisition contains no items representing payment on account of any percentage entitled to be retained on the date of this requisition. 6. No Event of Default is continuing, and no event or condition is existing which, with notice or lapse of time or both, would become an Event of Default. 7. The County has insurance in place that complies with the insurance requirements of the Financing Contract. Attached is evidence that the amounts shown in this requisition are properly payable at this time, such as bills, receipts, invoices, architects' payment certifications or other appropriate documents. ORANGE COUNTY, NORTH CAROLINA By: Exhibit Form On[y - Do Not Sign1 Printed name: Title: 61