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Home My WebLink AboutAgenda - 11-16-2010 - 4kORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: November 16, 2010 Action Agenda Item No. 4-k SUBJECT: To Adopt Final Bond Resolution Authorizing the Issue of Limited Obligation Refunding Bonds in the Maximum Amount of $101.6 million, and to Issue Additional $2 million to Finance Computer Hardware/Software and Communications Equipment DEPARTMENT: Financial Services PUBLIC HEARING: (Y/N) No ATTACHMENT(S): INFORMATION CONTACT: 1.Resolution 2. Preliminary Draft Official Statement Clarence Grier 919-245-2453 3. Draft Deed of Trust and Security Bob Jessup 919-933-9891 Agreement 4. Draft Trust Agreement 5. Draft Bond Purchase Aareement PURPOSE: To adopt final bond resolution authorizing the issue of Limited Obligation Refunding Bonds in the maximum amount of $101.6 million, and to issue an additional $2 million in financing for computer hardware/software and communications equipment. BACKGROUND: At the October 19, 2010 meeting, the Board of County Commissioners authorized an application to the Local Government Commission (LGC) for approval to issue Limited Obligation Refunding Bonds in an amount not to exceed $101.6 million, and the issuance of an additional $2 million to finance computer hardware/software and communications equipment. Additionally, the Board of County Commissioners authorized staff to proceed with the actions necessary to move forward with the refunding. The Board of County Commissioners adopted the bond order to issue the bonds at the October 19, 2010 board meeting. The Bond Order was published October 22, 2010. Market rates have recently increased which has reduced the savings from the refunding, but not below the minimum 3% required by the LGC to proceed with the sale. The savings achieved will be positively or negatively impacted by future market conditions. The scheduled sale date is December 9, 2010. In order to proceed with the refunding the Board of County Commissioners must adopt a Resolution for the Sale of Refunding Bonds (attached). FINANCIAL IMPACT: The resulting financial impact of this action is a savings in future debt service costs, the amount will be determined when the bonds are sold, and the financing of computer hardware/software and communications equipment. RECOMMENDATION(S): The Manager recommends that the Board adopt the Resolution for Sale of Refunding Bonds and additional financing for computer hardware/software and communications equipment. -}-E~,r~~~- I Resolution Providing Final Approval of Terms and Documents For County's 2010 Installment Refinancings And Equipment Financing WHEREAS: The Board of Commissioners of Orange County, North Carolina, has previously determined to carry out to refmance County installment financings and to finance certain equipment, including sheriff's radios, telephone equipment and property information management software (collectively, the "Project"). The financing. for the project will take the form of a new installment financing pursuant to the authority of Section 160A-20 of the General Statutes and will include the use of limited obligation bonds. The County's Finance Officer has made available to this Board the draft documents listed on Exhibit A (the "Documents"), and a draft of an official statement providing for the disclosure of information to prospective investors in the County's financing obligations. All of these items relate to the County's carrying out the financing • plan. BE IT THEREFORE RESOLVED by the Board of Commissioners of Orange County, North Carolina, as follows: 1. Determination To Proceed with Project -- The Board confirms its decision to carry out the Project. 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 those Documents to which the County is a party. 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 such officer's approval of any such changes. The Documents in final form, however, must provide for the principal amount of limited obligation bonds to not exceed $101,600,000 and for a financing term not to extend beyond December 31, 2030. 3. Approval of Official Statement -The Board approves the draft official statement submitted to this meeting as the form of the preliminary official statement • pursuant to which the Bonds (as defined in Exhibit A) will be offered for sale. 1 The preliminary official statement as distributed to prospective investors must be • in substantially the form presented, with such changes as the Finance Officer may approve. The Board directs the Finance Officer, after the sale of the Bonds, to complete and otherwise prepare the preliminary official statement as an official statement in final form. The Board authorizes and approves the use, in connection with the sale of the Bonds, of the preliminary official statement and final official statement by BB&T Capital Markets BB&T Capital Markets (a division of Scott & Stringfellow, LLC), together with Wells Fargo Securities, as the underwriters of the Bonds. The Board acknowledges that it is the County's responsibility, and ultimately the Board's responsibility, to ensure that the Official Statement in its final form neither contains an untrue statement of a material fact nor omits to state a material fact required to be included therein for the purpose for which such Official Statement is to be used or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. By the adoption of this resolution, the Board members approve the Official Statement as materially correct and complete, and further acknowledge and accept their own responsibility for causing the County to fulfill these responsibilities for the Official Statement. 4. Authorization To Refinance Obligations with Existing Lenders -The • Board understands that for certain of the County's outstanding installment financing obligations, it may be in the County's best interest to modify the existing agreements with the current lenders, instead of refinancing those obligations through the issuance of the limited obligation bonds. The Finance Officer, and all other County officers and representatives, are authorized and directed to take all appropriate action to carry out such modifications and refinancings with the existing lenders. S. Authorization to County Manager and Finance Officer To Complete Closing -The County Manager, the Finance Officer and all other County officers and employees are authorized and directed to take all proper steps to complete the financing in accordance with the terms of 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 (a) to approve any additional agreements appropriate to carry out the Project financing contemplated by this resolution, including agreements for the custody 2 • or investment of Bond proceeds and agreements for appropriate professional services, and (b) to approve changes to any documents or closing 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. In addition, the Finance Officer is authorized and directed to take all appropriate steps for the efficient and convenient carrying out of the County's on-going responsibilities with respect to the Bonds. This authorization includes, without limitation, contracting with third parties for reports and calculations that inay be required under the Bonds, this resolution or otherwise with respect to the Bonds. 6. 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. 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. In addition, upon the unavailability of the Chair or the Clerk, respectively, any of the rights or responsibilities directed to such officers may be carried out or exercised by the Vice Chair or any Deputy or Assistant Clerk. 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 --Draft Documents (a) A draft dated November 11, 2010, of an Installment Financing Contract to be dated on or about December 1, 2010 (the "Financing Contract"), between the County and Orange County Public Facilities Company (the "Company), providing for the advance of funds to the County for the County's undertaking of the Project and further providing for the County's obligation to repay the amounts advanced. (b) A draft of a Deed of Trust and Security Agreement to be dated on or about December 1, 2010, from the County to a deed of trust trustee for the Company's benefit, providing far a security interest in the New School (and the associated land) to secure the • County's obligations under the Financing Contract. (c) A draft of a Trust Agreement to be dated on or about December 1, 2010, between the Company and a Trustee, providing for the issuance of limited obligation 3 i bonds (the "Bonds") to generate funds for the advance to the County under the Financing • Contract. The Bonds are payable from amounts paid by the County under the Financing Contract. (d) A draft of a Bond Purchase Agreement to be dated on or about December 9, 2010, providing for the underwriters' obligations to purchase the Bonds. The Bond Purchase Agreement includes a Letter of Representation to be delivered by the County. The final form of this Agreement will set out the interest rates for the Bonds. • • 4 ~~hr~ G7 • SHLF draft of November 11, 2010 ORANGE COUNTY PUBLIC FACILITIES COMPANY and ORANGE COUNTY, NORTH CAROLINA INSTALLMENT FINANCING CONTRACT Dated as of December 1, 2010 • This instrument has been preaudited in the manner required by The Local Government Budget and Fiscal Control Act. Clarence Grier Finance Officer Orange County, North Carolina • INSTALLMENT FINANCING CONTRACT • THIS INSTALLMENT FINANCING CONTRACT (the "Contract") is dated as of December 1, 2010, and is between ORANGE COUNTY, NORTH CAROLINA, a political subdivision of the State of North Carolina (the "County"), and ORANGE COUNTY PUBLIC FACILITIES COMPANY, a North Carolina nonprofit corporation (the "Company"). RECITALS: The County desires to obtain funds to refinance certain existing financing obligations, to provide for the acquisition of certain equipment, and to pay financing and other related costs. The Company has agreed to advance funds to the County for such purpose. The County is obtaining funds for such advance by providing for the issuance of the 2010 Bonds (as defined below). This Contract provides for the Company'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 Facilities and the 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 AnVANC'F. The Company advances [$85,000,000] (the "Amount Advanced") to the County, and the County accepts the Amount Advanced. The Company is advancing the Amount Advanced by providing for the transfer and deposit of such Advance as provided in the Trust Agreement. The County acknowledges that the total of such deposits is being [(a) reduced by a discount for the underwriting of the 2010 Bonds, and (b) increased by an amount of original issue • premium in the offering of the 2010 Bonds;] the final total of the deposits to be made by the Company pursuant to this Article is $ 2 The County will use the Amount Advanced to pay as provided in Section 4.01 of the Trust Agreement. ARTICLE II CONTRACT PAYMENTS 2.1. Installment Payments. (a) The County will repay the Amount Advanced by making Installment Payments directly to the Trustee at the times and in the amounts set forth in Exhibit B, except as otherwise provided in this Contract. (b) Not less than 15 days prior to each Payment Date, the Trustee shall determine the amounts on deposit and available to make the payments due on such Payment Date with respect to the 2010 Bonds, whether in (i) the Interest Account or the Principal Account of the Payment Fund, or (ii) any special trust fund established pursuant to Section 7.01 of the Trust Agreement. The Trustee shall notify the County of such amounts not less than 10 days prior to the applicable Payment Date. The County's obligation to make Installment Payments is reduced by such available amounts as determined by the Trustee. • (c) The County shall make all Installment Payments in lawful money of the United States, by wire transfer or other transfer of immediately available funds to such account in the United States as the Trustee may designate to the County from time to time. 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, the Company may (but will be under no obligation to) pay such Additional Payment. The County agrees to reimburse the Company for any such Additional Payment, together with interest thereon at the annual rate of 4.00%. 2.3. Prepayments. The County at its option may prepay principal components of Installment Payments as and when corresponding principal payments of the 2010 Bonds may be prepaid pursuant to Section 3.01 of the Trust Agreement. Upon any such prepayment, the Trustee will recalculate the schedule of Installment Payments to reflect the prepayment, and will then deliver a substitute Exhibit B to the County reflecting the recalculated payment schedule. 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 Sites or the Facilities. The County assumes and bears the entire risk of 3 completion, loss and damage to the Sites and the 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, or if at any time the County amends the annual budget to reduce the amount appropriated for Contract Payments, then the County must send a notice to such effect to the Trustee, and to the LGC, to the attention of its Secretary, at the Albemarle Building, 325 North Salisbury Street, Raleigh, NC 27603. ARTICLE III • COUNTY'S RESPONSIBILITIES 3.1. Care and Use. The County will use the Sites and the Facilities in a careful and proper manner, and will keep the Mortgaged Property in good condition, repair, appearance and working order for the purposes intended. 3.2. Utilities. The County will pay all charges for utility services furnished to or used on ar in connection with the Sites and the Facilities. 3.3. Risk of Loss. The County will bear all risk of loss to and condemnation of the Facilities and the Sites. Upon loss, damage or condemnation of the Mortgaged Property, the County will proceed as provided in Article VI. 3.4. Company'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 Properly may, if not timely performed or paid, be performed or paid by the Company. The County will then reimburse the Company for any such payments and for any associated costs and expenses, legal or otherwise, together with interest thereon at the annual rate of 4.00%, • all as Additional Payments under this Contract. 4 • 3.5. Compliance with Requirements. The County shall 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 the Company has otherwise agreed in writing, the County shall not use the Mortgaged Property for any purposes other than that for which the same were intended as of the Closing Date. The County will in no event use the Mortgaged Property 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. 3.6. Use and Operation; Leasing. (a) The Facilities will be useful to .the County in carrying out its required functions, including its required functions of providing school facilities and criminal justice facilities. The County expects that the County and the School Board will need and use the Facilities continuously during the Contract term. The County will be solely responsible for the operation of the Facilities, and will not contract with any other person or entity for such operation. The Facilities will not be used in any private business or put to any private business use, except for such minor and occasional uses as may be consistent with their use as local government facilities and that will not cause the County to be in violation of its covenant as set forth in Section 6.1(j). (b) Notwithstanding the provisions of subsection (a), the parties acknowledge that the County intends to lease that portion of the Facilities that constitutes public school facilities to the School Board, or may otherwise provide for the School Board's use of such 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. , 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 with respect to the Facilities under this Contract. 3.7. Modification of Facilities; Installation of Equipment and Machinery. The County has the right to repair, maintain and remodel the Facilities or make substitutions, additions, modifications and improvements to the Facilities, at its own cost and expense; provided, however, that such substitutions, additions, modifications and improvements will not in any way damage the Facilities or result in the use of the Facilities for purposes substantially different from those initially proposed; and provided further that the 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 Facilities immediately prior to such making of substitutions, additions, modifications and improvements. s 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 Facilities. All such property will remain the County's sole property in which neither the Company nor any assignee of the Company will have any interest; provided, however, that any such property which becomes permanently affixed to the Facilities will be subject to this Contract and the lien and security interest arising under the Deed of Trust if the Company will reasonably determine that the Facilities would be damaged or impaired by the removal of such machinery, equipment or other tangible property. 3.8. 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 shall, 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 is 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 the Company'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 the Company 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). 3.9. Property Damage Insurance. (a) The County shall, at its own expense, acquire, carry and maintain broad-form extended coverage property damage insurance with respect to the Facilities in an amount equal to its estimated replacement cost, or shall provide for the School Board to acquire, carry and maintain such insurance. Such property damage insurance must include standard mortgagee coverage in favor of the Trustee. (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. The County will provide copies of all such policies to the Trustee upon request. 6 • Prior to the expiration of any such policy, the County will furnish the Trustee evidence satisfactory to the Trustee that the policy has been renewed or replaced or is no longer required by this Contract. (ii) In the alternative, the County or the School Board 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 provide to the Trustee, upon request, 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 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. The County shall provide to the Trustee such evidence as to the sufficiency of any such alternative program as it may reasonably request. (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 Facilities, whether or not covered by insurance, without the Trustee's prior written consent. • d The Trustee will not be res onsible for the sufficiency or adequacy of any () P 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 the Trustee. 3.10. Right of Entry and Inspection. The Company and its representatives and agents will have the right to enter upon the Sites and inspect .the Facilities from time to time during construction and at any other time during the Contract term, and the County shall 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 will be deemed to impose 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 party any duty or obligation whatsoever to identify or correct any defects in the Facilities or to notify any person with respect thereto, and no liability will be imposed upon any parry and no warranties (either express or implied) are made by the Company as to the quality or fitness of any improvement, any such inspection and approval being made solely for the Company's benefit. • 3.11. Cooperation. The Company and the County shall 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 the Company or the County voluntarily • settle, or consent to the settlement of, any proceeding arising out of any claim with respect to the Facilities without the other's written consent. ARTICLE IV TITLE; LIENS 4.1. Title. Title to the Sites and the 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 other Permitted Encumbrances. Simultaneously with the execution and delivery of this Contract, the County shall deliver to the Company the Deed of Trust in form mutually satisfactory to the Company and the County. 4.2. No Encumbrance, Mortgage or Pledge of Mortgaged Property. (a) The County will not permit any mechanic's or other lien to be perfected or to remain against the Mortgaged Property or any portion thereof; provided that if the County first notifies the Trustee 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 the County is notified that, in the opinion of Independent Counsel, by nonpayment of any such items the Company'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). The Company 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, or encumbrances incurred in connection with the authorization, execution and delivery of Additional Bonds. 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 the Trustee 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 4.00%. ARTICLE V • DAMAGE, DESTRUCTION AND CONDEMNATION; s • USE OF NET PROCEEDS 5.1. Damage, Destruction or Condemnation. The County shall promptly notify the Company and the Trustee 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 the Company in the Facilities, the Sites or any portion thereof, under the power of eminent domain, (c) a material defect in the construction of the 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 the Company or the Trustee may reasonably request. The County shall 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 shall 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 5.2 and 5.3. • 5.2. Securi Interest in Net Proceeds• De osit and Disbursement. t3' ~ P (a) The County grants a security interest in the Net Proceeds to the Company to secure the Obligations, 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 subsection 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 the Company 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 covenants and representations in Section 6.2. (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 to be paid to the Trustee (i) for deposit in the Project Fund, if received before the Completion Date, or (ii) if received thereafter, for deposit and application as • provided in Section 5.3. 9 5.3. Use of Net Proceeds. The County may elect to proceed under either • subsection (a), (b} or (c) with respect to Net Proceeds deposited with the Trustee. The County shall notify the Company and the Trustee 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 Bonds, then the County may provide additional funds from any legal source and use such Net Proceeds and additional County funds to prepay the Bonds in full pursuant to Section 3.01(b) of the Trust Agreement; (b) If as a result of 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 Facility of which it had beneficial use prior to such event or (ii) the damaged portion of the Pledged Facility 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 Bonds in part pursuant to Section 3.01(b) of the Trust Agreement; or (c) Otherwise the County shall 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. 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 the Trustee. If the County decides to proceed pursuant to subsection (c) above, the Trustee will disburse Net Proceeds for the payment of such costs upon receipt of requisitions provided by the County and in form and substance reasonably acceptable to the Trustee. Any repair or replacement paid for in whole or in part out of such Net Proceeds will be the County's property and will be part of the Mortgaged Property. ARTICLE VI WARRANTIES. REPRESENTATIONS AND COVENANTS 6.1. By the County. 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 io • contemplated by this Contract and the Deed of Trust and to carry out its obligations under this Contract. (b) The County has duly and validly authorized, executed and delivered this Contract and the Deed of Trust. Assuming due authorization, execution and delivery thereof by the other parties thereto, this Contract and the Deed of Trust constitute valid, legal and binding obligations of the County, enforceable (in the case of the Deed of Trust, by the Deed of Trust Trustee, the Company and the Trustee, as the Company's assignee) 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. (c) No further approval or consent is required from any governmental authority with respect to the County's entering into or performing under this Contract or the Deed of Trust. (d) 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 or the Deed of Trust. The County's performance of its obligations under this Contract and the Deed of Trust, 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 properly (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. (e) No County representation, covenant or warranty in this Contract is false or misleading in any material respect. (fj The County is vested with fee simple title to the Sites. There are no liens or encumbrances on the Facilities or the Sites other than the Existing Encumbrances, as defined in the Deed of Trust. (g) 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. (h) The County believes funds will be available to satisfy all of its obligations • under this Contract. I1 (i) The Facilities have been 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 Facilities. The Facilities have not been and will not be used in any private business or put to any private business use. (j) The County will not take or permit, or omit to take or cause to be taken, any action that would cause the Obligations to be "arbitrage bonds" or "private activity bonds" within the meaning of the Code. If the County shall take or permit, or take or cause to be taken, any such action, the County shall take (or cause to be taken) all lawful actions within its power reasonably necessary to rescind or correct such actions or omissions promptly upon having knowledge thereof. 6.2. County's Undertaking for Continuing Disclosure. The County undertakes, for the benefit of the beneficial owners of the Bonds, to provide the following items and information to the Municipal Securities Rulemaking Board ("MSRB"): (a) by not later than seven months from the end of each of the County's Fiscal Years, audited County financial statements for such fiscal year, if available, prepared in accordance with Section 159-34 of the General Statutes of North Carolina, as it may be amended from time to time, or any successor statute, or, if such audited financial statements are not available by seven months from the end of any fiscal year, unaudited • County financial statements for such fiscal year, to be replaced subsequently by audited County financial statements to be delivered within 15 days after such audited financial statements become available for distribution; (b) by not later than seven months from the end of each of the County's Fiscal Years, (i) the financial and statistical data as of a date not earlier than the end of the preceding fiscal year (which data will be prepared at least annually, will specify the date as to which such information was prepared and will be delivered with any subsequent material events notices specified in subparagraph (c) below) for the type of information included under the headings in the final Official Statement relating to the 2010 Bonds under the captions "THE COLJN'TY -Debt Information" and " -Tax Information" (excluding any information on overlapping or underlying debt) to the extent such items are not included in the audited financial statements referred to in (a) above; (c) in a timely manner, not in excess of ten business days after the occurrence of the event, notice of any of the following events with respect to the 2010 Bonds: (1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; • (3) unscheduled draws on debt service reserves reflecting financial difficulties; 12 • (4) unscheduled draws on any credit enhancements reflecting fmancial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the 2010 Bonds, or other material events affecting the tax status of the 2010 Bonds; (7) modifications to rights of the beneficial owners of the 2010 Bonds, if material; (8) calls for redemption of 2010 Bonds (other than calls pursuant to sinking fund prepayment), if material, and tender offers; (9) defeasances; (10) release, substitution or sale of any property securing repayment of the 2010 Bonds, if material; • 11 ratin chan es• ( ) g g (12) bankruptcy, insolvency, receivership or similar proceedings related to the County, the Company or any other person or entity that may at any time become legally obligated to make Installment Payments (collectively, the "Obligated Persons"); (13) The consummation of a merger, consolidation, or acquisition involving an Obligated Person or the sale of all or substantially all of the assets of the Obligated Person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (14) Appointment of a successor or additional trustee or the change of name of a trustee, if material; and (d) in a timely manner, notice of a failure of the County to provide required annual financial information described in (a) or (b) above on or before the date specified. For the purposes of the event identified in subparagraph (12) above, the event is • considered to occur when any of the following occurs: the appointment of a receiver, fiscal agent or similar officer for an Obligated Person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court 13 or governmental authority has assumed jurisdiction over substantially all of the assets or • business of the Obligated Person, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Obligated Person. If the County fails to comply with the undertaking described above, the Company may take action to protect and enforce the rights of all the beneficial owners of the 2010 Bonds with respect to such undertaking, including an action for specific performance; provided, however, that failure to comply with such undertaking will not be an Event of Default and will not result in any acceleration of payment of the 2010 Bonds. All actions will be instituted, had and maintained in the manner provided in this paragraph for the benefit of all beneficial owners of the 2010 Bonds. The County shall provide the documents and other information referred to above to the MSRB in an electronic format as prescribed by the MSRB and accompanied by identifying information as prescribed by the MSRB. The County may discharge its undertaking as set forth in this Section by providing such information in any manner that the United States Securities and Exchange • Commission subsequently authorizes in lieu of the manner described above. The County reserves the right to modify from time to time the information to be provided to the extent necessary or appropriate in the County's judgment, provided that: (A) any such modification may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of the County; (B} the information to be provided, as modified, would have complied with the requirements of Rule 15c2-12 as of the date of the final Official Statement, after taking into account any amendments or interpretations of Rule 15c2-12, as well as any changes in circumstances; and (C) any such modification does not materially impair the interests of the beneficial owners, as determined either by parties unaffiliated with the County or by the approving vote of the registered owners of a maj ority in principal amount of the 2010 Bonds pursuant to the terms of the Trust Agreement, as it may be amended from time to time, at the time of the amendment. Any annual financial information containing modified operating data or financial • information will explain, in narrative form, the reasons for the modification and the i4 • impact of the change in the type of operating data or financial information being provided. The provisions of this Section will terminate upon payment, or provision having been made for payment, in a manner consistent with Rule 15c2-12, in full of the Installment Payments. 6.3. By the Company. The Company warrants, represents and covenants (all such warranties, representations and covenants continuing) as follows: (a) The Company is a nonprofit corporation duly organized, existing and in good standing under and by virtue of State law and has the power to enter into this Contract and the Trust Agreement. The Company has duly authorized this Contract and the Trust Agreement and has caused each to be executed on its behalf in accordance with the State law. (b) Neither the execution and delivery of this Contract or the Trust Agreement, nor the fulfillment of or compliance with the terms and conditions hereof or thereof, nor the consummation of the transactions contemplated hereby or thereby, results in a breach of the terms, conditions or provisions of the Company's charter or bylaws or any agreement or instrument to which the Company is now a party or by which the Company • is bound, or constitutes a default under any of the foregoing. (c) To the best of the Company's knowledge after reasonable investigation, there is no action, suit, proceeding or investigation at law or in equity before or by any court, public board, or body pending or threatened against or affecting the Company challenging the validity or enforceability of this Contract, the Trust Agreement or any documents relating to the transactions contemplated by such agreement, or the Company's performance of its obligations hereunder and thereunder. ARTICLE VII INDEMNIFICATION To the extent permitted by law, the County agrees to indemnify, protect and save (a) the Company and its officers and directors, (b) the LGC and its members and employees, and (c) the Trustee and its officers 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 Sites or the Facilities, or the transactions contemplated by this Contract. The indemnification arising under this Article will survive the Contract's termination. • ARTICLE VIII is DISCLAIMER OF WARRANTIES • The County acknowledges that neither the Company nor the Trustee has designed the Facilities, that neither the Company nor the Trustee has supplied any plans or specifications with respect thereto and that neither the Company nor the Trustee (a) is a manufacturer of, nor a dealer in, any of the component parts of the Facilities or similar Facilities, (b) has 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 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 Facilities or any component part thereof or any property or rights relating thereto at any stage of the construction thereof, (c) has at any time had physical possession of the Facilities or any component part thereof or made any inspection thereof or any property or rights relating thereto, and (d) has made any warranty or other representation, express or implied, that the 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. THE COMPANY MAKES NO EXPRESS OR IMPLIED WARRANTY OR REPRESENTATION OF ANY KIND WHATSOEVER WITH RESPECT TO THE FACILITIES OR ANY COMPONENT PART THEREOF, INCLUDING BUT NOT • LIMITED TO ANY WARRANTY OR REPRESENTATION WITH RESPECT TO THE MERCHANTABILITY OR THE 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 Facilities to perform any function; or any other characteristic of the Facilities; it being agreed that the County is to bear all risks relating to the Facilities, the completion thereof or the transactions contemplated by this Contract or by the Deed of Trust or the Trust Agreement, and the County waives the benefits of any and all implied warranties and representations of the Company. The provisions of this Article will survive the Contract's termination. ARTICLE IX DEFAULT AND REMEDIES 9.1. 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. 16 • (c) The County breaches or fails to perform or observe any term, condition or covenant of this Contract, the Deed of Trust or the Trust 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 90 days after written notice specifying such failure and requesting that it be remedied has been given to the County, unless the Company 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 90-day notice period, no Event of Default will be deemed to have occurred so long as the County diligently pursues the same. (d) Any warranty, representation or statement made by the County in this Contract, in the Deed of Trust or in the Trust Agreement is found to be incorrect or misleading in any material respect as of the Closing Date. (e) 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. • 9.2. Remedies on Default. Upon the continuation of any Event of Default, the ' Company 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 Trust 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 Facilities and recovery of attorneys' fees and other expenses, and of all other remedies available at law or in equity. The Company's exercise of remedies is subject to the limitations set forth in Article XI. 9.3. 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 17 will be limited to the particular breach so waived and will not be deemed a waiver of any • other breach under this Contract. ARTICLE X ASSIGNMENTS 10.1. County's Assignments. The County will not sell or assign any interest in this Contract without the Company's prior written consent. 11.2. Company's Assignment. The Company will assign substantially all of its rights under this Contract, including rights to receive and enforce Contract Payments (but excluding the Company's rights to indemnification and payment of costs and its rights to receive notices) to the Trustee pursuant to the Trust Agreement, without recourse against the Company. The County consents to such assignment, and agrees to accept performance, direction and any other action by the Trustee to the same extent provided in this Contract for the action of the Corporation, and to render performance to the Trustee to the same extent provided in this Contract for performance to the Corporation (in each case, except with respect to the Corporation's reserved rights). Notice of any further 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 shall, if so requested, acknowledge such assignment in writing, but such acknowledgment will in no way be deemed necessary to make the assignment effective. ARTICLE XI COUNTY'S LIMITED 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. • is • 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 Net Proceeds and the funds and accounts established pursuant to the Trust Agreement as may be provided in the Trust Agreement), 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 this Contract, the Trust Agreement, the Deed of Trust and the 2010 Bonds 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 XII MISCELLANEOUS 12.1. County Accepts Trust Agreement Terms. The County accepts and agrees to be bound by its responsibilities provided for under the Trust Agreement. 12.2. 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 delivery date on a United States Postal Service certified mail receipt, or a delivery receipt from a national commercial package delivery service, if addressed as follows: (i) if to the County, to Orange County Manager, Attention: Notice under 2010 LOBS Financing Contract, Post Office Box 8181, Hillsborough, North Carolina 27278. (ii) if to the Company, to Orange County Public Facilities Company, Attention: Notice under 2010 LOBS Financing Contract, c/o Orange County Manager, Post Office Box 8181, Hillsborough, North Carolina 27278. (iii) if to the Trustee, to The Bank of New York Mellon Trust Company, N.A., (c) Any communication sent under this Contract to the Company must also be sent to the County and the Trustee. • (d) Any addressee may designate additional or different addresses for communications by notice given under this Section to each of the others. 19 12.3. 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. 12.4. Governing Law; Forum. 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 must be brought in the North Carolina General Court of Justice in Orange County, North Carolina. 12.5. Severability. If any provision of this Contract is determined to be unenforceable, that will not affect any other provision of this Contract. 12.6. Amendments. This Contract will not be changed except in accordance with Article X of the Trust Agreement. 12.7. 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. 12.8. Third-Party Beneficiaries. The parties intend that the Trustee be a third- • parry beneficiary of the obligations of the parties under this Contract. 12.9. Time. Time is of the essence of this Contract and each and all of its provisions. 12.10. Limitation on Liability of Officers and Agents. No officer, agent or employee of the County, of the LGC or the Company will be subject to any personal 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. 12.11. 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. 12.12. Definitions. Unless the. context clearly requires otherwise, capitalized terms used in this Contract and not otherwise defined have the meanings set forth in Exhibit A. In addition, all capitalized terms used herein and not otherwise defined have the • meanings assigned thereto in the Trust Agreement. 20 [The remainder of this page has been left blank intentionally.] • • 21 IN WITNESS WHEREOF, the County and the Company have caused this • instrument to be executed as of the day and year first above written by duly authorized officers. ATTEST: (SEAL) Donna S. Baker Clerk, Board of Commissioners ORANGE COUNTY NORTH CAROLINA ATTEST: (SEAL) [name] Secretary 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] [Installment Financing Contract dated as of December 1, 2010] Exhibits - A - Definitions B - Payment schedule Frank Clifton County Manager ORANGE COUNTY PUBLIC FACILITIES COMPANY [name] President C7 22 • EXHIBIT A -Definitions For all purposes of this Contract, unless the context requires otherwise, the following terms will have the following meanings: "2010 Bonds" has the meaning ascribed to that term in the Trust Agreement. "Additional Payments" means the reasonable and customary fees and expenses of the Company or the Trustee, any of the Company's or the Trustee'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, the Company'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 the Company 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 Trust Agreement (together with interest that may accrue on any of the above if the County will fail to pay the same, as set forth in this Contract). "Amount Advanced" has the meaning assigned in Article I. • "A ro riate Consultant" means one or more inde endent ublic acc unt PP P p p o ants 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 the Company (which approval will not be unreasonably withheld) from time to time to perform and carry out the duties imposed on an Appropriate Consultant. "Bonds" has the meaning ascribed to that term in the Trust Agreement. "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, which the parties expect to be on or about December 21, 2010. "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 23 Contract. Reference to any specific Code provision will be deemed to include any • successor provisions thereto. "Contract Payments" means Installment Payments and Additional Payments. "County Board" means the County's governing board as from time to time constituted. "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 the Trustee and signed on the County's behalf by the County Manager or the Chairman 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 December 1, 2010, from the County to a deed of trust trustee for the benefit of the Company 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 9.1. "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. "Facilities" has the meaning ascribed to that term in the Deed of Trust, and generally includes (a) the County Justice Facility in Hillsborough, North Carolina, and (b) Morris Grove Elementary School in Chapel Hill, North Carolina. "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 the • Company (which approval will not be unreasonably withheld). 24 • "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 Property" has the meaning assigned in the Deed of Trust. "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, or (d) any sale of the 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 collection of such proceeds and (ii) all amounts expended by the County, the Company or the Trustee to remedy the event giving rise to such proceeds, all of which amounts will be paid or reimbursed from the gross proceeds. "Payment Date" means each date on which an Installment Payment is due from the County, as specified in Exhibit B. • "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 3.8 or 4.2, (c) the Deed of Trust, (d) any lease to the School Board as contemplated by Section 3.6(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. "School Board" means the Board, of Education for The Chapel Hill - Carrboro City Schools, and its successors "Sites" has the meaning ascribed to that term in the Deed of Trust, and generally includes the real property upon which the Facilities are located. "State" means the State of North Carolina. "Trust Agreement" means the Trust Agreement of even date between the Company and the Trustee, as it may be duly amended or supplemented. "Trustee" means The Bank of New York Mellon Trust Company, N.A, and its • successors as Trustee under the Trust Agreement. 25 ~~ ~_J EXHIBIT B -Schedule of Installment Payments Date - 25t day of the month preceding the following date Principal ($) Interest ($) Total ($) [to come) U • 26 • SHLF draft of No~Tember 11, 2010 Prepared by and return after recording to: Robert M. Jessup Jr. Sanford Holshouser. LLP 209 Lloyd St., Suite 350 Carrboro, NC 2751.0 STATE OF NORTH CAROLINA ) The collateral is or includes fixtures. } This Deed of Trust ORANGE COUNTY ) secures future advances. THIS DEED OF TRUST AND SECURITY AGREEMENT (this "Deed of Trust") is dated as of December 1, 2010, and is granted by ORANGE COUNTY, NORTH CAROLINA, apolitical subdivision of the State of North Carolina (the • "County"), to a resident of County, (the "Deed of Trust Trustee"}, for the benefit of ORANGE COUNTY PUBLIC FACILITIES COMPANY, a North Carolina nonprofit corporation (the "Company"). RECITALS: The Company is advancing [$85,000,000] to the County pursuant to an Installment Financing Contract dated as of December 1, 2010 (the "Financing Contract"), between the County and the Company. The County will use these funds, together with other available funds, to refinance certain existing financing obligations, to provide for the acquisition of certain equipment, and to pay financing and other related costs. As a condition to entering into the Financing Contract, the Company has required the County to secure its obligations under the Financing Contract by this conveyance of certain public facilities (the "Facilities," as more particularly defined below) that were acquired and improved with proceeds of some of the financings that are now to be refinanced, along with the real property associated with the Facilities and the other "Mortgaged Property," as defined below. The Facilities are located 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 [$85,000,000], as well as .potential future advances in the total maximum principal amount of $100,000,000. The time during which such future advances may be • made is 30 years from December 1, 2010. The current scheduled date for final repayment is on or about June 30, 2027. See Section 6-2(c) below for information on the assignment of the Company's rights under this Deed of Trust. 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, [her] successors and assigns forever, in trust, with power of sale, the following (collectively, the "Mortgaged • Property"): (a) (i) the property described in Exhibit A, and (ii) all real property hereafter acquired by the County in exchange for, or in consideration of the exchange of, or with the proceeds from any disposition of, all or any part of any property described in this subparagraph, and in all cases together with all easements, rights, liberties, rights-of--way and appurtenances belonging to any such property (collectively, the "Site"); (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 Site, including (i) all renewals and replacements thereof and all additions thereto, and (ii) all articles in substitution thereof (collectively, the "Facilities"); TO HAVE AND TO HOLD the Mortgaged Property with all privileges and appurtenances thereunto belonging, to the Deed of Trust Trustee, [her] successors and assigns forever, upon the trusts, terms and conditions and for the purposes set out below, in fee simple in trust; SUBJECT, HOWEVER, to the encumbrances described in Exhibit C (the "Existing Encumbrances"); • BUT THIS CONVEYANCE IS MADE UPON THIS SPECIAL TRUST: if the County pays its "Obligations," as defined below, in full in accordance with the Financing 2 • 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 revert as provided by law; BUT IF, HOWEVER, THERE OCCURS AN EVENT OF DEFAULT UNDER THE FINANCING CONTRACT, then the Company 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 the Company (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 (a) the Financing Contract, (b) this Deed of Trust, (c) the Trust Agreement dated as of December 1, 2010 (the "Trust Agreement"), between the Company and the Trustee named therein, (d) the ($85,000,000] Limited Obligation Bonds (the "Bonds") executed and delivered pursuant to the Trust Agreement, and (e) any Additional Bonds, as defined in the Trust Agreement, as may be executed and delivered pursuant to the Trust Agreement. 1-2 Present and Future Advances. This Deed of Trust is executed to secure all the County's present and future obligations to the Company related to the Mortgaged Property. The making of future advances is subject to the terms and conditions of the Financing Contract, the Trust Agreement and this Deed of Trust. The amount of the present obligations secured by this Agreement is [Eighty-Five Million] Dollars ([$85,000,000]) and the total amount, including present and future obligations, that may be secured by this Agreement at any one time is One Hundred Million Dollars ($100,000,000). The period within which future obligations may be incurred is 30 years from December 1, 2010. 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, and any other portion of the Mortgaged Property deemed to • be personal property (the "Personal Property Collateral"). The County grants to the Company and the Deed of Trust Trustee a security interest in the Personal Property Collateral to secure the Obligations. The County agrees that the security interest in the 3 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 requested by the Company, the Trustee or the Deed of Trust Trustee, financing statements (including any continuation statements) in such form as such party may reasonably request to evidence the security interest provided for in this Section. Upon the occurrence of an Event of Default under this Deed of Trust, the Company or the 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 Personal Property Collateral in the same manner as provided herein for the real property. The "Fixtures" are all articles of personal property attached or affixed to the 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 theft 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 Facilities and sell, trade-in, exchange or otherwise dispose of it (as a whole or in part), with an amount equivalent to the fair market value of the Fixture as removed deemed to be Net Proceeds and subject to the provisions of Section 6.2 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 will comply with North Carolina General Statutes Sectia~n 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. shall 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 "Documents," as defined in Section 2-1 below, restrict the incurrence of additional obligations secured by the Mortgaged Property). 4 • 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 ail its covenants under the Financing Contract and 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 the Company, or the Company`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 Properly or the release of any party who assumes all or any part of such performance; or (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, the Company and the Deed of Trust Trustee shall, upon the County's request and at any time, execute and deliver all documents necessary to effect the release of all or a portion of the 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 ail) of the Mortgaged Property, the County must file with the Company and the Deed of Trust Trustee evidence that the appraised, tax or insured 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 50% 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 the Trustee (or other fiduciary) an amount (i) which is sufficient to provide for the payment in full of all Outstanding Bonds in accordance with Article III and Article VII (if applicable) of the Trust Agreement and (ii) which is required to be used for such payment. (d) In any event, the County must file with the Company 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 a brief and general description of the portion of the Mortgaged Property to be released and requesting such release, (ii) a copy of the s proposed instrument of grant or release, including a complete legal description of the property to be released, (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 Facilities. (e) In addition to the provisions for release described above, (i) The County inay 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 release to the Company, along with a certificate that such grant or release will not materially impair the intended use of the 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 Obligation; Company's Advances 2-1 Payment of Obligations; Compliance with Covenants. The County shall 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 shall comply in all respects with all of the terms, covenants, and conditions contained in this Deed of Trust, in the Financing Contract, in the Trust Agreement and in the Bonds (together, the "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 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 of (a) any payments on insurance policies arising from any damage to the Mortgaged Property or (b) 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 the Company employs an attorney to assist in the enforcement or collection of any Obligations, or if the Deed of Trust Trustee or the Company voluntarily or otherwise • becomes a party or parties 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 6 • Obligations or to enforce compliance by the County with any of the provisions of the 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 annual rate of 5.00%) 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 the Company, as the case may be, is a prevailing party in such action). 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 the Company are authorized; but not obligated, to perform or cause to be performed such obligation. All such expenditures, together with interest thereon at the annual rate of 5.00%, 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 the Company 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 Permitted Encumbrances, as defined in the Financing Contract, 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. 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. 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, treatment or disposal of chemicals or any wastes or materials that are classified by federal, State or Iocal 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 envirorunental 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 Facilities and the Site and will be used in accordance with label instructions. (iii) The County will promptly notify the Company 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 the Company 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 the Company 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 the Company 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 (ii) any requirement under any law or regulation which requires the elimination or removal of any hazardous materials, substances, wastes or other environmentally regulated substances by the Company, the County or any transferee or assignee of the County of the Company. (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. 4. The Deed of Trust Trustee 4-1 Deed of Trust Trustee' Liability. The Deed of Trust Trustee will suffer no liability by virtue of [her] acceptance of this trust except such as may be incurred as a result of any failure on [her] part 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 [her] trust, or if for any reason the Company desires to • replace the Deed of Trust Trustee, then the Company 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. s • 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, the Company 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 the Company's request, the Deed of Trust Trustee shall foreclose this Deed of Trust by judicial proceedings or, at the Company's option, the Deed of Trust Trustee shall 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 shall execute and deliver a proper deed or deeds to the successful purchaser at such sale. (b) Company's Bid. The Company may bid and become the purchaser at any sale under this Deed of Trust. In lieu of paying cash, the Company 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 Property 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 the Company otherwise consents in writing. (d) Successful bidder's deposit. At any sale the Deed of Trust Trustee may, at [her] option, require any successful bidder (other than the Company) 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. 9 (e) Application of sale proceeds. The Deed of Trust Trustee shall 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, the Company, 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 Properly, (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 in accordance with the provisions of Section 8.11 of the Trust Agreement. The Company will be liable to account only for rents and prof is it actually receives. 5-4 Execution on Personal Property. Upon the continuation of any Event of Default and in addition to all other remedies granted in this Agreement, the Company shall • have all the rights and remedies of a secured parry under the UCC with respect to the Personal Property Collateral and may proceed as to the Personal Property Collateral in the same manner as provided in this Deed of Trust for the real property portion, with the Company having no obligation to proceed against real or personal property in preference to the other. 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 delivery date on a United States Postal Service certified mail receipt, or a delivery receipt from a national commercial package delivery service, if addressed as follows: (i) if to the County, to Orange County Manager, Attention: Notice under 2010 LOBS Deed of Trust, Post Office Box 8181, Hillsborough, North Carolina 27278. • (II) if to the Deed of Trust Trustee, to 10 • (iii) if to the Company, to Orange County Public Facilities Company, Attention: Notice under 2010 LOBs Deed of Trust, c/o Orange County Manager, Post Office Box 8181, Hillsborough, North Carolina 27278. (iv) if to the Trustee, to (c) Any communication sent under this Deed of Trust must be sent to the County and the Trustee along with any other parties to which the communication may be addressed. (d) Any addressee inay 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, the Company and any registered owner of Bonds, and [her] 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 the Company's prior written consent. The Company must not unreasonably withhold its consent. (c) The Company is assigning-substantially all of its rights under this Deed of Trust and under the Financing Contract to the Trustee pursuant to the Trust Agreement, without recourse against the Company. The Trustee is entitled to all the rights provided to the Company under this Deed of Trust, except for those rights not assigned to the Trustee under the Trust Agreement. 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 or the Trust Agreement. 6-5 Governing Law; Forum. The County, the Company 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, the Company 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, the Company or the Trustee (including the Deed of Trust Trustee) 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 any such officer, agent or employee 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 the Company or the Deed of Trust Trustee, the County will execute, acknowledge and deliver such further instruments reasonably necessary or desired by the Company 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. rovision of this Deed of Trust is determined to • 6-9 Severability. If any p be unenforceable, that will not affect any other provision of this Deed of Trust. 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 the Company, the Trustee and the Deed of Trust Trustee with respect to its general subject matter. This Deed of Trust may not be changed except in accordance with Article X of the Trust Agreement. [The remainder of this page has been left blank intentionally.) • 12 IN WITNESS WHEREOF, the County has caused this instrument to be signed, sealed and delivered by duly authorized officers, as of the day and year first above written. ATTEST: (SEAL) Donna S. Baker Clerk, Board of Commissioners • ~ * ~ ~ ~ ~ STATE OF NORTH CAROLINA; ORANGE COUNTY Frank Clifton County Manager I, a Notary Public of such County and State, certify that Frank Clifton and Donna S. Baker personally came before me this day and acknowledged that they are the. County Manager and the Clerk of the governing Board of Commissioners, respectively, 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 County Manager, sealed with its corporate seal and attested by such Clerk. WITNESS my hand and official stamp or seal, this day of December, 2010. • [SEAL] My commission expires: [Deed of Trust and Security Agreement for the benefit of Orange County Public Facilities Company, dated as of December 1, 2010] ORANGE COUNTY, NORTH CAROLINA Notary Public 13 1 EXHIBIT A -Site Description • [County Justice Facility site] [Morris Grove Elementary School site] EXHIBIT B -- Facilities Description The parcel described in Exhibit A-1 is the site of the County Justice Facility. The parcel described in Exhibit A-2 is the site of Morris Grove Elementary School. EXHIBIT C -- Existing Encumbrances [To come] • • 14 ~tt~ct l YIti.Q~A-~- .'t-~.' • EXHIBIT A LETTER OF REPRESENTATION December , 2010 BB&T Capital Markets, a division of Scott & Stringfellow, LLC Charlotte, North Carolina $[Amount] Limited Obligation Bonds, Series 2010 Evidencing Proportionate Undivided Interests in the Rights to Receive Certain Payments Pursuant to an Installment Financing Contract Between Orange County Public Facilities Company and Orange County, North Carolina Ladies and Gentlemen: This letter is being delivered to BB&T Capital Markets, a division of Scott & Strinfellow, • LLC (the "Underwriter"), in consideration for your entering into a Contract of Purchase dated the date hereof (the "Purchase ContracP') with Orange County Public Facilities Company (the "Company") for the purchase of the above-referenced Limited Obligation Bonds, Series 2010 (the "Bonds"). Pursuant to the Purchase Contract, the Underwriter has agreed to purchase from the Company, and the Company has agreed to sell to the Underwriter the Bonds. In order to induce the Company to enter into the Purchase Contract and as consideration for the execution, delivery and sale of the Bonds by the Company and the purchase of them by the Underwriter, the undersigned, Orange County, North Carolina (the "County"), makes the representations, warranties and covenants contained in this letter. Unless the context clearly indicates otherwise, each capitalized term used in this Letter of Representation will have the meaning set forth in the Purchase Contract. 1. Approval of Official Statement. The County has heretofore authorized and approved the Preliminary Official Statement dated November 30, 2010 (the "Preliminary Official Statement") and hereby authorizes and approves the fmal Official Statement dated December _, 2010 (the "Final Official Statement," the Preliminary Official Statement and any amendments or supplements that may be authorized for use with respect to the Bonds are herein referred to collectively as the "Official Statement"). The County consents to the distribution and use of the Preliminary Official Statement and Final Official Statement by the Underwriter. The County agrees to deliver the Official Statement to the Underwriter, in such quantity as may be requested by the Underwriter no later than the earlier of (i) seven business days after • the date of the Purchase Contract or (ii) one business day prior to the Closing, in order to permit the Underwriter to comply with the Rule, and the applicable rules of the MSRB, with respect to A-1 3025651x2 15249.00084 distribution of the Official Statement. The County agrees to prepare the Official Statement, including any amendments thereto, in word-searchable PDF format as described in the MSRB's • Rule G-32 and to provide the electronic copy of the word-searchable PDF format of the Official Statement to the Underwriter no later than one business day prior to the Closing to enable the Underwriter to comply with MSRB Rule G-32. The County will take all actions and provide all information reasonably requested by the Underwriter to ensure that the Official Statement at all times during the initial offering and distribution of the Bonds does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Neither the Company nor the County will amend or supplement, or approve any amendment or supplement of, the Official Statement without the prior written consent of the Underwriter (which consent will not be unreasonably withheld); provided, however, that, if between the date of this Purchase Contract and 25 days from the end of the underwriting period, as defined below, any event occurs or any fact is disclosed which might cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the County will promptly notify the Underwriter, and, if in the opinion of the Underwriter, .such event or disclosure requires the preparation and publication of a supplement or amendment to the Official Statement, the County will supplement or amend the Official Statement in the form and manner approved by the Underwriter. For purposes of this Letter of Representation, the "end of the underwriting period" will mean the later of (i) the Closing, or (ii) the time that the Underwriter no longer retain, directly or as a member of an underwriting syndicate, an unsold • balance of the Bonds for sale to the public. Unless otherwise notified in writing by the Underwriter and the County shall treat the Closing as the "end of the underwriting period." The County represents and warrants that (a) it deems the Preliminary Official Statement final as of its date except for omitted information permitted under paragraph (b)(1) of the Rule, and (b) the Official Statement constitutes as of this date a final official statement within the meaning of paragraph (e)(3) of the Rule. 2. Representations, Warranties and Covenants of County. The County represents and warrants to and agrees with the Underwriter that: (a) the County is a political subdivision, validly organized and existing under the laws of the State of North Carolina; (b) on the date hereof and at the Closing Date, the statements and information contained in the Official Statement, except for the information contained under the captions "INTRODUCTION-Book-Entry-Only," "THE COMPANY," and "UNDERWRITING" and in Appendices D and E thereto, are and will be true, correct and complete in all material respects and do not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading; 3025651v2 15249.00084 • (c) the audited financial report of the County for the year ended June 30, 2009, included in Appendix B to the Official Statement, presents fairly the financial position of the County for the period specified, and such financial report and statements have been prepared in conformity with generally accepted accounting principles consistently applied in all material respects, except as otherwise stated in the notes thereto; (d) other than as set forth in or contemplated by the Official Statement, since June 30, 2009, there has been no material adverse change in the general affairs, financial position, results of operations or condition, financial or otherwise, of the County, and the County has not incurred liabilities that would materially affect the ability of the County to discharge its obligations under this Letter of Representation, the Deed of Trust and the Contract (collectively, the "County Documents"), direct or contingent; (e) the County has received and there remain currently in full force and effect, or will receive prior to the delivery of the Bonds, all consents, approvals, authorizations and orders of governmental or regulatory authorities that would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the County of its obligations under the County Documents; (f) at a meeting of the Board of Commissioners of the County that was duly called and at which -a quorum was present and acting throughout, the Board of Commissioners of the County duly approved the execution and delivery by the County of the County Documents; • (g) the approval, execution and delivery of the County Documents by the County and compliance with the provisions thereof and hereof, under the circumstances contemplated thereby and hereby, do not and will not conflict with, constitute a breach of or default under, or result in the creation of a lien on any property of the County (except as contemplated therein) pursuant to applicable law or any indenture, bond order, deed of trust, mortgage, agreement or other instrument to which the County is a party or by which the County is bound, or conflict with or violate any applicable law, administrative rule, regulation, judgment, court order or consent decree to which the County is subject; (h) to the best of its knowledge, after due. and reasonable investigation, there is no claim, action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental agency, or public board or body, pending or threatened (i) contesting the corporate existence or powers of the County or the titles of the off cers of the County to their respective offices, (11) seeking to prohibit, restrain or enjoin the collection of revenues by the County or the application of the proceeds of the Bonds wherein an unfavorable decision, ruling or finding would materially adversely affect the financial position of the County or the operation of its facilities or the validity or enforceability of the County Documents, (iii) contesting, questioning or affecting the validity of the County Documents, (iv) contesting in any way the completeness or accuracy of the Preliminary Official Statement or the Final Official Statement (nor, to the best knowledge of the County, is there any basis therefor), or (v) challenging the transactions contemplated by the County Documents or the Purchase Contract; • (i) the County is not in default on the payment of the principal of or interest on any indebtedness for borrowed money or under any instrument relating to such indebtedness and no 3 02565I v2 15249.00084 event has occurred and is continuing which, with the lapse of time or the giving of notice or both, • might constitute an event of default under any such instrument, and no event has occurred which with the passage of time or the giving of notice, or both, would constitute an event of default as defined in the Contract; (j) the County will furnish such information and will cooperate with the Underwriter in taking such actions as the Underwriter may reasonably request to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of any state and other jurisdictions of the United States which the Underwriter may designate; provided, however, that the County will not be required to execute a special or general consent to service of process or qualify as a foreign corporation in connection with such qualification; (k) the County will take all action and provide all information required to be taken or provided by the Company under the Purchase Contract in connection with the preparation and distribution of the Official Statement, and the terms and conditions of the Purchase Contract relating to such preparation and distribution, including without limitation the provisions of Section 2 thereof, are incorporated by reference in this Letter of Representation, mutatis mutandis; (1) on the Closing Date, the County Documents will have been duly authorized, executed and delivered and will constitute valid and binding obligations of the County enforceable in accordance with their terms (except insofar as the enforcement thereof may be limited by bankruptcy, insolvency or similar laws relating to the enforcement of creditors' rights); • (m) if, at any time prior to the later of (i) receipt of notice from the Underwriter pursuant to Section 2(b) of the Purchase Contract that Official Statements are no longer required to be delivered under the Rule (as defined in the Purchase Contract) or (ii) 90 days after the Closing, any event occurs as a result of which the Preliminary Official Statement or the Final Official Statement as then amended or supplemented might include an untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the County shall promptly notify the Underwriter thereof in writing; provided, however, that the County shall have such obligations with respect to information in the Preliminary Official Statement and Final Official Statement concerning and supplied by the Company or the Underwriter only to the extent the County has actual knowledge or notice of any such event; any information supplied by the County for inclusion in any amendments or supplements to the Preliminary Official Statement or Final Official Statement will not contain any untrue or misleading statement of a material fact relating to the County or omit to state any material fact relating to the County necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and on the request of the Underwriter therefor, the County shall prepare and deliver to the Underwriter at the County's expense as many copies of an amendment or supplement which will correct any untrue. statement or omission as the Underwriter may reasonably request; (n) in the Contract the County will covenant to comply with the information reporting requirements adopted by the Securities and Exchange Commission or the Municipal Securities • Rulemaking Board with respect to obligations such as the Bonds; 3025651v2 15249.00084 • (o) the County has not been notified of any listing or the proposed listing by the Internal Revenue Service as an issuer whose arbitrage certifications may not be relied upon; and (p) any certificate signed by any official of the County and delivered to the Underwriter will be deemed to be a representation by the County to the Underwriter as to the statements made therein. 3. Indemnification. (a) To the fullest extent permitted by applicable law, the County agrees to indemnify and hold harmless the Underwriter against any and all losses, damages, expenses (including reasonable legal and other fees and expenses), liabilities or claims (or actions in respect thereof), to which the Underwriter or the other persons described in subsection (b) of this Section may become subject under any federal or state securities laws or other statutory law or at common law or otherwise, caused by or arising out of or based upon any breach (or alleged breach) by the County of any of the covenants, representations or warranties herein or any untrue statement or misleading statement or alleged untrue statement or alleged misleading statement of a material fact contained in the Official Statement or caused by any omission or alleged omission from the Official Statement of any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. (b) The indemnity provided under this Section will extend to the extent permitted by • applicable law upon the same terms and conditions to each officer, director, employee or agent of the Underwriter, and each person, if any, who controls the Underwriter within the meaning of Section 15 of the Securities Act of 1933, as amended or Section 20 of the Securities Exchange Act of 1934, as amended. Such indemnity will also extend, without limitation, to any and all expenses whatsoever reasonably incurred by any indemnified parry in connection with investigation, preparing for or defending against, or providing evidence, producing documents or taking any other reasonable action in respect of, any such loss, damage, expense, liability, or claim (or action in respect thereof), whether or not resulting in any liability, and will include the aggregate amount paid in settlement of any litigation, commenced or threatened, or of any claim whatsoever as set forth herein if such settlement is effected with the written consent of the County. (c) Within a reasonable time after an indemnified party under subsections (a) and (b) of this Section has been served with the summons or other first legal process or has received written notice of the threat of a claim in respect of which an indemnity may be claimed, such indemnified party must, if a claim for indemnity in respect thereof is to be made against the County under this Section, notify the County in writing of the commencement thereof; but the omission to so notify the County will not relieve it from any liability that it may have to any indemnified party other than pursuant to subsections (a) and (b) of this Section. The County will be entitled to participate at its own expense in the defense, and if the County so elects within a reasonable time after receipt of such notice, or if all indemnified parties seeking indemnification in such notice so direct, the County must, to the fullest extent permitted by applicable law, • assume the defense of any suit brought to enforce any such claim, and such defense will be conducted by counsel chosen promptly by the County .and reasonably satisfactory to the 3025651v2 15249.00084 indemnified party; provided, however, that, if the defendants in any such action include such an indemnified party and the County, or include more than one indemnified party, and any such • indemnified party has been advised by its counsel that there may be legal defenses available to such indemnified party that are different from or additional to those available to the County or another indemnified party, and that in the reasonable opinion of such counsel are sufficient to make it undesirable for the same counsel to represent such indemnified party and the County, or another defendant indemnified party, such indemnified party will have the right to employ separate counsel in such action (and the County will not be entitled to assume the defense thereof on behalf of such indemnified party), and in such event the reasonable fees and expenses of such counsel will, to the fullest extent permitted by applicable law, be borne by the County. Nothing contained in this subsection (c) will preclude any indemnified party, at its own expense, from retaining additional counsel to represent such party in any action with respect to which indemnity may be sought from the County hereunder. (d) If the indemnification provided for in subsections (a) and (b) of this Section is unavailable to or insufficient to hold harmless and indemnify any indemnified party in respect of any losses, damages, expenses, liabilities, or claims (or actions in respect thereof) referred to therein, then the County, to the extent permitted by applicable law, on the one hand, and the Underwriter, on the other hand, will contribute to the amount paid or payable by the indemnified party as a result of such losses, damages, expenses, liability or claims (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the County on the one hand and the Underwriter on the other hand from the offering of the Bonds. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law, or if the indemnified party failed to give the notice required under the subsection • (c) above, then the County, to the extent permitted by applicable law, on the one hand and the Underwriter on the other hand will contribute to such amount paid or payable by the indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the County on the one hand and the Underwriter on the other in connection with the statements or omissions that resulted in such losses, damages, expenses, liabilities or claims (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the County on the one hand and the Underwriter on the other hand will be deemed to be in such proportion so that the Underwriter is responsible for that portion represented by the percentage that the underwriting discount payable to the Underwriter hereunder (i.e., the excess of the aggregate public offering price for the Bonds as set forth on the cover page of the Official Statement over the price to be paid by the Underwriter to the County upon delivery of the Bonds as specified in Section 1 of the Purchase Contract). bears to the aggregate public offering price as described above, and the County is responsible for the balance. The relative fault will be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the County on the one hand or the Underwriter on the other hand and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. In the event the Underwriter has knowledge of a claim subject to the contribution provided by this subsection (d), the Underwriter agrees within a reasonable time of obtaining such knowledge, to convey notice of such claim to the County. It is agreed and understood that • if the Underwriter fails under the circumstances set forth in the preceding sentence, to convey the 3025651v2 15249.00084 • above referenced notice to the County, then the County will not be obligated to provide contribution pursuant to this subsection (d). The County and the Underwriter agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by any method of allocation that does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, damages, expenses, liabilities or claims (or actions in respect thereof) referred to in this subsection (d) will be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. (e) The indemnity and contribution provided by this Section will be in addition to any other liability that the County may otherwise have hereunder, at common law or otherwise, and is provided solely for the benefit of the Underwriter and each director, officer, employee, agent, attorney and controlling person referred to therein, and their respective successors, assigns and legal representatives, and no other person will acquire or have any right under or by virtue of such provisions of this Letter of Representation. 4. Survival of Representations, Warranties and Covenants. All representations, warranties and agreements in this Letter of Representation will survive regardless of (a) any investigation or any statement in respect thereof made by or on behalf of the Underwriter, (b) delivery of any payment by the Underwriter for the Bonds hereunder, and (c) any termination of the Purchase Contract. Binding on Successors and Assigns. This Letter of Representation will be binding upon the County and the successors and assigns of the County and inure solely to the benefit of the Underwriter and, to the extent set forth herein, any director, officer, employee, or agent of the Underwriter and, to the extent set forth herein, persons controlling the either of the Underwriter, and their respective personal representatives, successors and assigns, and no other person or firm or entity will acquire or have any right under or by virtue of this Letter of Representation. Acceptance of this Letter of Representation by the Underwriter is waived. ORANGE COUNTY NORTH CAROLINA By: County Manager • 3025651v2 15249.00084 EXHIBIT B • FORM OF SUPPLEMENTAL OPINION OF BOND COUNSEL [Letterhead of Bond Counsel] December _, 2010 BB&T Capital Markets, a division of Scott & Stringfellow, LLC Charlotte, North Carolina $ [Amount] Limited Obligation Bonds, Series 2010 Evidencing Proportionate Undivided Interests in the Rights to Receive Certain Payments Pursuant to an Installment Financing Contract Between Orange County Public Facilities Company and Orange County, North Carolina Ladies and Gentlemen: We have acted as Bond Counsel to Orange County, North Carolina (the "County ") in • connection with the execution and delivery on the date hereof of the $[Amount] Limited Obligation Bonds, Series 2010 (the "2010 Bonds "), evidencing proportionate undivided interests in rights to receive certain payments pursuant to the Installment Financing Contract dated as of December 1, 2010 (the "Contract") between the County and the Company, evidencing proportionate undivided interests in rights to receive certain payments pursuant to the Contract. The 2010 Bonds are being purchased today by BB&T Capital Markets, a division of Scott & Stringfellow, LLC (the "Underwriter "), pursuant to a Contract of Purchase dated December _, 2010 (the "Purchase Contract ") between the Company and the Underwriter. Capitalized terms used herein and not otherwise defined have the meaning given such terms in the Purchase Contract. In our capacity as Bond Counsel, we have on this date delivered our principal opinion relating to the Contract and the 2010 Bonds and the legality of the authorization and execution and delivery thereof, the tax status of the 2010 Bonds and certain other matters, which opinion may be relied upon by you to the same extent as if addressed to you. In connection with this opinion, we have examined and are familiar with originals or copies, certified or otherwise identified to our satisfaction, of various documents, certificates and opinions of counsel and the final Official Statement dated December _, 2010 with respect to the 2010 Bonds (the "O~cial Statement "), and have examined such other documents, certificates, opinions of counsel, instruments and records, and have made such investigations of law, as we have deemed necessary and appropriate as a basis for the opinions hereinafter expressed. In our examination, we have assumed the genuineness of all signatures, the legal capacity of natural • B-1 3025651v2 15249.00084 • persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies, and the authenticity of originals of such copies. As to any facts material to this opinion that we did not independently establish or verify, we have relied upon statements and representations of officers and other representatives of the County, the Company and others. On the basis of and in reliance on the foregoing, we are of the opinion that: 1. The statements in the Official Statement on the cover page and under the headings "INTRODUCTION-Security" and "-The 2010 Bonds," "THE 2010 BONDS", "SECURITY AND SOURCES OF PAYMENT FOR THE 2010 BONDS" and "CONTINUING DISCLOSURE" and in Appendix C - "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS," to the extent such statements purport to summarize certain terms of the Contract, the Deed of Trust, the Trust Agreement and the Bonds, fairly and accurately summarize such terms. The statements contained in the Official Statement under the heading "TAX TREATMENT" present fairly and accurately the matters referred to therein. 2. The 2010 Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Trust Agreement is exempt from qualification as an indenture under the Trust Indenture Act of 1939, as amended. This Opinion is furnished to you solely for your benefit and may not be used, circulated, • quoted or otherwise referred to without our prior written consent. Respectfully submitted, [ BOND COUNSEL] • B-2 3025651x2 15249.00084 EXHIBIT C • FORM OF OPINION OF COUNTY ATTORNEY [to be provided] • • C-1 3025651x2 15249.00084 • EXHIBIT D FORM OF OPINION OF COUNSEL FOR THE COMPANY [to be provided] • • D-1 3025651v2 15249.00084 SHLF draft of November 11, 2010 TRUST AGREEMENT by and between ORANGE COUNTY PUBLIC FACILITIES COMPANY and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee Dated as of December 1, 2010 Relating to the execution and delivery of [$85,000,000] Limited Obligation Bonds Series 2010 • • • • THIS TRUST AGREEMENT is dated as of December 1, 2010, is between ORANGE COUNTY PUBLIC FACILITIES COMPANY, a North Carolina nonprofit corporation (the "Company"), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association having an office in Jacksonville, Florida, as trustee (the "Trustee"), and relates to the execution and delivery of [$85,000,000] Limited Obligation Bonds.(the "2010 Bonds"). RECITALS: The Company and Orange County, North Carolina (the "County"), have entered into an Installment Financing Contract also dated as of December 1, 2010 (the "Financing Contract"). The Financing Contract provides for the Company's advance to the County of funds to be used, together with other available funds, to refinance certain existing financing obligations, to provide for the acquisition of certain equipment, and to pay financing and other related costs. The County will make "Installment Payments" under the Financing Contract in amounts sufficient to repay with interest the amount advanced under the Financing Contract. The Installment Payments in turn will be sufficient to pay the components of principal and interest represented by the 2010 Bonds. • The Company is providing for the execution and delivery of the 2010 Bonds to raise funds for the advance under the Financing Contract. The 2010 Bonds evidence proportionate and undivided interests in the Installment Payments. As security for the payment of the Bonds, the Company has agreed to assign to the Trustee, without recourse against the Company, the specific security described below. Unless the context clearly requires otherwise, capitalized terms used in this Trust Agreement 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 Trust Agreement, the parties agree as follows: ARTICLE I THE BONDS Section 1.01. Provision for 2010 Bonds. The Company will prepare and execute, and the Trustee will authenticate and deliver, 2010 Bonds in an aggregate • principal amount of [$85,000,000] evidencing proportionate and undivided ownership interests in the Installment Payments. Section 1.02. Form and Details; Payments. 2 (a) The 2010 Bonds will be dated the date of their initial delivery to the initial • purchaser thereof, and will be issuable only as fully registered Bonds in denominations of $5,000 and multiples thereof. Each 2010 Bond will be payable as to interest (a) from its date, if such 2010 Bond is authenticated prior to the Record Date preceding the first Payment Date, (b) from the succeeding Payment Date, if such 2010 Bond is authenticated between a Record Date and the succeeding Payment Date, or (c) otherwise from the Payment Date that is, or immediately precedes, the date on which such 2010 Bond is authenticated; provided, however, that if at the time of authentication of any 2010 Bond payment of interest is in default, such 2010 Bond will be payable as to interest from the date to which interest has been paid. Principal, premium, if any, and interest on all Bonds will be payable in lawful money of the United States of America. (b) The Bonds will be designated "Limited Obligation Bonds, Series 2010," and will be in substantially the form of Exhibit B, with such changes as this Trust Agreement permits or requires. The 2010 Bonds will be numbered R-1 upward for identification. The 2010 Bonds will be payable as to interest semiannually until payment on each Payment Date at the following rates (calculated on the basis of a 360-day year consisting of twelve 30-day months), and will be payable as to principal on November 1 in the following years and amounts: Principal Maturity Date Amount ($) Rate [To come] Section 1.03. Prepayment Dates and Prices. The Bonds are subject to prepayment as described in Section 3.01. Section 1.04. Delivery of 2010 Bonds. The Trustee will authenticate and deliver the 2010 Bonds when there have been filed with or delivered to it the following: (a) Original executed counterparts of this Trust Agreement, the Financing Contract and the Deed of Trust. (b) Certified copies of resolutions of the County Board and the Company's governing board, in each case approving substantially final forms of the Financing Contract and the Deed of Trust, authorizing their execution and delivery and approving the execution and. delivery of the 2010 Bonds. C7 (c) Executed 2010 Bonds in the aggregate principal amounts, bearing interest • at such rates and payable as to principal and interest at such times and in such amounts as are provided in this Trust Agreement. 3 • (d) A request and authorization, signed by any Company officer and by a County Representative, to the Trustee to authenticate and deliver the 2010 Bonds to such person or persons named therein upon payment to the Trustee with respect to the 2010 Bonds of a specified sum. (e) A certificate signed by a County Representative directing the Trustee as to the application of proceeds from the sale of 2010 Bonds. (f) An Opinion of Special Counsel to the effect that the issuance of the 2010 Bonds has been duly authorized. Section 1.05. Additional Bonds. So long as the Financing Contract remains in effect, the Company may provide for Additional Bonds to be executed and delivered under this Trust Agreement to provide funds (a) to expand or improve the Facilities, (b) to refund any Outstanding Bonds, (c) to pay financing costs or establish reserves in connection with the issuance of Additional Bonds, (d) for any other purpose that may be allowed by law from time to time, including the acquisition and construction of additional public facilities, whether or not such facilities are related to the Facilities, or (e) for any combination of such purposes. The Trustee will authenticate and deliver the Additional Bonds when there have • been filed with or delivered to it the following: (i) Certified copies of resolutions of the County Board and the Company's governing board approving the terms and conditions under which the Additional Bonds are to be issued and authorizing the execution of an amendment to the Financing Contract providing for payment of Contract Payments as required by the issuance of the Additional Bonds. (ii) An executed copy of the Financing Contract, as so amended, together with evidence satisfactory to the Trustee that the LGC has approved such amendment (if such approval is then required by law). (iii) An executed copy of an amendment or supplement to this Trust Agreement providing for the issuance of the Additional Bonds, which will set forth the payment and prepayment terms of such Additional Bonds, together with such other terms as may be appropriate. (iv) An executed copy of an appropriate amendment or supplement to the Deed of Trust, extending the benefit of the security provided to the Company (or its assignee) to secure the County's performance of its obligations under the Financing • Contract, Trust Agreement and Deed of Trust as so amended or supplemented. (v) An Opinion of Special Counsel to the effect that the issuance of such Additional Bonds is permitted under the terms of this Trust Agreement and has been duly authorized, and that the issuance of such Additional Bonds will not adversely 4 affect exclusion from gross income for federal income tax purposes to which interest • components of Installment Payments are otherwise entitled. (vi) A certificate signed by a County Representative directing the Trustee as to the application of the proceeds from the sale of the Additional Bonds. (vii), Evidence of the issuance or proposed issuance of one or more lender's title insurance policies (or an appropriate endorsement to an existing policy) in favor of the Trustee, in an aggregate face amount of insurance equal to the total amount of Outstanding Bonds plus the principal amount of the Additional Bonds then to be executed and delivered, and including the amendment or supplement to the deed of trust referenced in (iv) above as an insured instrument. The Trustee will not authenticate and deliver any such Additional Bonds if any default under this Trust Agreement or under the Financing Contract is continuing. Simultaneously with the delivery of the Additional Bonds, the proceeds (including any accrued interest) of the Additional Bonds will be applied as provided in the certificate described in (vi) above. Each of the Additional Bonds executed and delivered pursuant to this Section will evidence an assignment of a proportionate and undivided ownership interest in • Installment Payments under the Financing Contract, as amended, proportionately and ratably secured with the 2010 Bonds and all other Additional Bonds, if any, executed and delivered pursuant to this Section, without preference, priority or distinction of any Bonds over any other. No Additional Bonds will be so proportionately and ratably secured without compliance with the provisions of this Section. After the execution and delivery of any such Additional Bonds, such will be "Bonds" under this Trust Agreement and subject to all of its terms and conditions, except as may be provided in the supplement to this Trust Agreement provided for in (iii) above. ARTICLE II ADDITIONAL PROVISIONS FOR THE FORM, REGISTRATION AND EXCHANGE OF BONDS Section 2.01. Book-Entry-Only Form. (a) The Bonds will be issued by means of a book-entry system, with one certificate for each maturity of each series of the Bonds immobilized at DTC, and not available for distribution to the public. In accordance with DTC's rules and procedures, Bonds registered in the name of DTC or its • nominee may be held in custody by the Trustee in lieu of immobilization at DTC. Transfer of beneficial ownership interests in the Bonds in the principal amounts of $5,000 or any multiple thereof will be effected on the records of DTC and its participants s • pursuant to rules and procedures established by DTC and its participants. Principal, premium, if any, and interest with respect to the Bonds will be payable to DTC or its nominee as registered owner of the Bonds. Transfer of principal, premium, if any, and interest to DTC participants will be DTC's responsibility, and transfer of principal, premium, if any, and interest with respect to the Bonds to beneficial owners of the Bonds by DTC participants will be the responsibility of such participants and other nominees of beneficial owners. Neither the Trustee, the Company nor the County will be responsible or liable for such transfer of payments or for maintaining, supervising or reviewing the records maintained by DTC, its participants or persons acting through such participants. (b) If (i) DTC determines not to continue to act as securities depository for the Bonds or (ii) a County Representative so directs, the Company will arrange to discontinue the book-entry system with DTC. If the County identifies an alternate qualified securities depository to replace DTC, that depository will replace DTC and all references to DTC in this Trust Agreement will be deemed references to such alternate depository. If the County fails to identify another qualified securities depository to replace DTC, the Company will deliver fully-registered Bonds as replacements for Bonds in book-entry form. Such Bonds will be in such form as the Company, with the County's approval, may hereafter authorize. Section 2.02. Execution. The Bonds will be signed on the Company's • behalf by the manual or facsimile signature of its President or any Vice President, and the Company's seal will be impressed or imprinted on the Bonds by facsimile or otherwise and attested by the manual or facsimile signature of the Company's Secretary. or any Assistant Secretary. If any Company officer whose signature is on a Bond no longer holds that office at the time the Trustee authenticates such Bond, such Bond will nevertheless be valid. If a person signing a Bond is the proper officer on the actual date of execution, the Bond will be valid even if that person is not the proper officer on the nominal date of action. Section 2.03. Authentication. Each Bond will bear a certificate of authentication, substantially in the form set forth in Exhibit B, and no Bond will be valid until the Trustee has duly executed the certificate of authentication and inserted the authentication date thereon. The Trustee will authenticate each Bond with the signature of an authorized officer or employee, but it will not be necessary for the same person to authenticate all of the Bonds. Only such authenticated Bonds are entitled to any right or benefit under this Trust Agreement, and such certificate on any Bond issued under this Trust Agreement will be conclusive evidence that the Bond has been duly issued and is secured by the provisions of this Trust Agreement. Section 2.04. Registration and Exchange of Bonds; Persons Treated as • Owners. Bonds may be exchanged and transferred only on a register which the Trustee will establish and maintain. Upon surrender for transfer of any Bond to the Trustee, duly endorsed for transfer or accompanied by an assignment duly executed by the Owner or the Owner's duly authorized attorney, the Trustee will authenticate a new Bond or Bonds in an equal total principal amount and registered in the name of the transferee; provided, 6 however, that the Trustee is not required to exchange or register the transfer of any Bond • after the giving of notice calling such Bond for prepayment. Bonds may be exchanged for an equal total principal amount of Bonds of different but authorized denominations. The Trustee will authenticate and deliver Bonds that the Owner making the exchange is entitled to receive, bearing numbers not then Outstanding. The Trustee will deliver to the transferee any applicable notice of prepayment when it effects a transfer or exchange of any Bond after the mailing of notice calling the Bond or any portion of the Bond for prepayment. The Owner will be the absolute owner of the Bond for all purposes, and payment of principal, premium, if any, and interest will be made only to or upon the written order of the Owner or the Owner's legal representative, except that interest payments will be made to the person shown as the owner of the Bond as of the applicable Record Date. The Trustee must require the payment by an Owner requesting exchange or transfer of any tax or other governmental charge required to be paid in respect of the exchange or transfer, but must not impose any other charge. Section 2.05. Mutilated, Lost, Stolen or Destroyed Bonds. (a) If any Outstandin Bond is dams ed mutilated lost stolen or destro ed • g g y , the Company will execute, and the Trustee will authenticate and deliver, a replacement Bond, of the same tenor as the damaged, mutilated, lost, stolen or destroyed Bond, in the manner provided below. (b) Application for exchange and substitution of damaged, mutilated, lost, stolen or destroyed Bonds must be made to the Trustee. In every case, the applicant for a replacement Bond must furnish to the Company, the County and the Trustee such security or indemnity as each may require to save it harmless. In every case of loss, theft or destruction of a Bond, the applicant must also furnish to the Company, the County and the Trustee evidence to their satisfaction of the loss, theft or destruction of such Bond. In the case of damage or mutilation of a Bond, the applicant will surrender the Bond so damaged or mutilated. (c) Notwithstanding the foregoing, if any such Bond has matured, and no default is then continuing in the payment of the principal or interest with respect to such Bond, the County may authorize the payment of the same (without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a substitute Bond, provided security or indemnity is furnished as provided above in the case of a lost, stolen or destroyed Bond. • (d) The Trustee will charge the Owner of such Bond with all expenses in connection with the issuance of any substitute Bond. Every substitute Bond issued pursuant to the provisions of this Section because any Bond is lost, stolen or destroyed, • whether or not the lost, stolen or destroyed Bond may be found at any time, or may be enforceable by anyone, will be entitled to all the benefits of this Trust Agreement equally and proportionally with any and all other Bonds duly executed and delivered hereunder. Section 2.06. Cancellation. Whenever a Bond is delivered to the Trustee for cancellation (upon payment, prepayment or otherwise) or for transfer, exchange or replacement, the Trustee will promptly destroy the Bond and deliver a written certificate of such destruction to the County. Section 2.07. Temporary Bonds. Prior to the preparation of Bonds in definitive form the Company may execute, and the Trustee may authenticate and deliver, temporary Bonds in such denominations as the County may determine, but otherwise in substantially the form set forth in Exhibit B, with appropriate variations, omissions and insertions. The Company will promptly prepare, execute and deliver to the Trustee, before the first Payment Date for such Bonds, permanent Bonds in definitive form, and thereupon, upon surrender of Bonds in temporary form, the Trustee will authenticate and deliver in exchange therefor Bonds in defmitive form of the same maturity having an equal aggregate principal amount. Until exchanged for Bonds in definitive form, Bonds in temporary form will be entitled to the lien and benefit of this Trust Agreement. . Section 2.08. Non-Presentment of Bonds. (a) If any Bond is not presented for payment when the principal with respect to the same becomes due (whether at maturity, upon acceleration or call for prepayment or otherwise), all liability to the Owner thereof for the payment of such Bond will be completely discharged if funds sufficient to pay such Bond and the premium, if any, and interest due with respect thereto are held by the Trustee for such Owner's benefit, and thereupon it will be the Trustee's duty to hold such funds subject to subsection (b) below, without liability for interest thereon, for the benefit of such Owner, who will thereafter be restricted exclusively to such funds for any claim. of whatever nature under this Trust Agreement- with respect to such Bond. (b) Notwithstanding any provision of this Trust Agreement to the contrary, the Trustee will dispose of moneys held by it for the payment of principal, premium, if any, or interest with respect to Bonds left unclaimed for five years after the date the principal with respect to the same becomes due in accordance with N.C. Gen. Stat. Sec. 116B-51 or any successor provision. The Owners of such Bonds 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 the Trustee with respect to such moneys will cease. • ARTICLE III PREPAYMENT s Section 3.01. Prepayment Dates and Prices. The 2010 Bonds may not be • prepaid except as provided in this Section. (a) Optional Prepayment -The 2010 Bonds maturing on or after November 1, 2021, are subject to prepayment at the County's option, in whole or in part on any date on or after November 1, 2020, upon payment of the principal amount to be prepaid plus interest accrued to the prepayment date, without premium. (b) Optional Prepayment from Net Proceeds -- The 2010 Bonds are subject to prepayment in whole or in part on any Payment Date from Net Proceeds and other funds transferred to the Prepayment Account pursuant to Section 4.04 at a prepayment price equal to the principal amount to be prepaid plus interest accrued to the prepayment date, without premium. (c) Sinking Fund Prepayment of 2010 Bonds -- (i) The 2010 Bonds maturing on November 1, ,are required to be prepaid in part prior to maturity pursuant to the terms of the sinking fund requirements of Section 3.05 at a prepayment price equal to the principal amount to be prepaid plus interest accrued to the prepayment date, without premium. (ii) The 2010 Bonds maturing on November 1, ,are required to be prepaid in part prior to maturity pursuant to the terms of the sinking fund requirements of • Section 3.05 at a prepayment price equal to the principal amount to be prepaid plus interest accrued to the prepayment date, without premium. (d) The amendment or supplement to this Agreement providing for the issuance of Additional Bonds, as provided in Section 1.05(iii), will provide for the prepayment terms and conditions of any Additional Bonds. Section 3.02. Selection of Bonds for Prepayment. (a) If less than all of the Bonds are to be prepaid pursuant to subsections 3.01(a) or 3.01(b), they will be prepaid as among maturities in such manner as the County inay elect. (b) If less than all of the Bonds of any maturity are to be prepaid, the Trustee will select the Bonds to be prepaid by lot; provided, however, that so long as a book-entry system with DTC is used for determining beneficial ownership of Bonds, if less than all of the Bonds within a maturity are to be prepaid, DTC will determine which of the Bonds within any such maturity are to be prepaid in accordance with OTC's own rules and procedures. (c) In any case, (1) the portion of any Bond to be prepaid will be in the • principal amount of $5,000 or some multiple thereof, and (2) in selecting Bonds for prepayment, each Bond will be considered as representing that number of Bonds which is obtained by dividing the principal amount of such Bond by $5,000. If a portion of a 9 • Bond will be called for prepayment, a new Bond in principal amount equal to the unpaid portion thereof will be issued to the registered owner upon the surrender thereof. Section 3.03. Prepayment Notices. (a) The Trustee, upon being satisfactorily indemnified with respect to expenses, will send notice of prepayment no less than 30 nor more than 60 days prior to the prepayment date, by registered or certified mail, return receipt requested, as follows: (1) If DTC or its nominee is the registered owner of the Bonds, to DTC. (~) If no book-entry-only system of registration is in effect, to each of the registered owners of the Bonds at their addresses as shown on the Trustee's registration books. (3) In any case, to the Municipal Securities Rulemaking Board for posting on the "EMMA" continuing disclosure system, or any successor system. Failure to give any notice specified in (1) or (2), as applicable, or any defect therein, will not affect the validity of any proceedings for the prepayment of any Bonds with respect to which no such failure has occurred. Failure to give any notice specified in (3), or any defect therein, will not affect the validity of any proceedings for the • prepayment of any Bonds with respect to which the notice specified in (1) or (2) is correctly given. Any notice mailed as provided herein will conclusively be presumed to have been given regardless of whether actually received by any Owner. (b) (i) Any prepayment notice, except a prepayment notice in respect of a sinking fund payment date, may state that the prepayment to be effected is conditioned upon the Trustee's receipt on or prior to the prepayment date of moneys sufficient to pay the principal of and premium, if any, and interest on the Bonds to be prepaid, and that if such moneys are not so received such notice shall be of no force or effect and such Bonds shall not be required to be prepaid. If such notice contains such a condition and the Trustee does not receive moneys sufficient to pay the principal of and premium, if any, and interest on such Bonds on or prior to the prepayment date, the prepayment will not be made and the Trustee will, within a reasonable time thereafter, give notice, in a manner in which the prepayment notice was given, that such moneys were not so received and the prepayment was not made. (ii) Any prepayment notice, except a prepayment notice in respect of a sinking fund payment date, may state that the prepayment to be effected is subject to any other condition not unacceptable to the Trustee. If such notice contains any such condition and the condition is not fulfilled on or prior to the prepayment date, the prepayment will not • be made and the Trustee will, within a reasonable time thereafter, give notice, in a manner in which the prepayment notice was given, that such condition was not fulfilled and the prepayment was not made. io (c) Each prepayment notice must specify (1) the complete designation, including Series, of the Bonds to be prepaid, (2) the CUSIP numbers of the Bonds to be • prepaid, (3) the dated dates and maturity dates and the interest rates of the Bonds to be prepaid, (4) the date fixed for prepayment, (5) any conditions to the prepayment, as contemplated by subsection (b) above, (6) the principal amount of Bonds or portions thereof to be prepaid, (7) the applicable prepayment price, (8) the address of the place or places of payment, (9) the Trustee's name and telephone number, and the name of a contact person, (10) that payment of the principal amount and premium, if any, with respect to such Bonds will be made upon presentation and surrender of the Bonds to be prepaid to the Trustee, (11) that interest accrued to the date fixed for prepayment will be paid as specified in such notice, and (12) that on and after the established prepayment date interest on Bonds which have been prepaid will cease to accrue. In preparing such notices, the Trustee will take into account, to the extent applicable, any regulatory statement of any Federal or state administrative body having jurisdiction over the tax-exempt securities industry, including, without limitation, Release No. 34-23856 of the Securities and Exchange Commission or any subsequent amending or superseding release. Section 3.04. Bonds Payable on Prepayment Date; Interest Ceases To Accrue. If on or before the date fixed for prepayment funds are deposited with the Trustee to pay the principal, premium, if any, and interest accrued to the prepayment date with respect to • the Bonds called for prepayment, the Bonds or portions thereof thus called for prepayment will cease to accrue interest from and after the prepayment date, will no longer be entitled to the benefits provided by this Agreement and will not be deemed to be Outstanding under this Agreement. Section 3.05. Mandatory Sinking Fund Prepayment. The Trustee, from amounts received from or on behalf of the County, will prepay 2010 Bonds maturing on November 1, , on November 1 in years and amounts upon payment of 100% of the principal amount thereof plus interest accrued to the prepayment date, as follows: Year Amount ($) [To come] (fmal maturity) Notwithstanding the foregoing, on or before the 70th day next preceding any sinking fund payment date, the County may do either of the following: • (1) deliver to the Trustee for cancellation Term Bonds required to be prepaid on such sinking fund payment date in any aggregate principal amount desired; or i~ • (2) instruct the Trustee to apply a credit against the County's sinking fund payment obligation for any such Term Bonds that previously have been prepaid (other than through the operation of the sinking fund requirements) and canceled by the Trustee but not previously applied as a credit against any sinking fund payment obligation. The Trustee will credit against the County's sinking fund payment obligation on such sinking fund payment date the amount of such Bonds so purchased, delivered or previously prepaid as described in paragraphs (1) or (2) above. Within seven days of receipt of such amount, Term Bonds or instruction to apply a credit (as described in paragraphs (1) and (2) above), any amounts remaining in the Principal Account in excess of the amount required to fulfill the remaining required sinking fund prepayment obligation on the next sinking fund payment date will, as directed by a County Representative, either be (A) transferred to the Interest Account or (B) used to prepay Bonds as soon as practicable. ARTICLE IV PROCEEDS FUND: OTHER FUNDS AND ACCO_ UNTS • 4 O1. Creation and Use of Proceeds Fund. a The Trustee Sectton ( ) will establish a special fund designated as the "Orange County 2010 Proceeds Fund." The Trustee will keep such Fund separate and apart from all other funds and moneys held by it, and will hold and administer such Fund as provided in this Trust Agreement. Moneys in the Proceeds Fund will be expended only as described in this Section. (b) The Trustee shall deposit into the Proceeds Fund the amount specified in the certificate referenced in Section 1.04(e), any amount to be deposited therein as specified in the certificate referenced in Section 1.05(vi) and all other amounts paid to it for deposit in the Proceeds Fund. (c) The Trustee shall disburse moneys in the Proceeds Fund as specified in one or more separate certificates signed by a County Representative. In any event, the Trustee shall deposit in the Interest Account in the Payment Fund any amounts remaining in the Proceeds Fund on January 15, 2011. Section 4.02. Other Funds and Accounts. The Trustee will establish the following special funds and accounts, will keep the same separate and apart from all other funds and moneys held by it, and will hold and administer the same as provided herein: (a) Orange County 2010 Bond Payment Fund, and therein an Interest Account, a Principal Account and a Prepayment Account. 12 (b) Orange County 2010 Net Proceeds Fund. • Section 4.03. Payment Fund. (a) The Trustee will deposit in the proper account in the Payment Fund all amounts paid to it for deposit in the Payment Fund, including all amounts paid to it as the County's Installment Payments pursuant to Section 2.1 of the Financing Contract. (b) The Trustee will pay the principal of the 2010 Bonds from the Principal Account and the interest with respect to the 2010 Bonds from the Interest Account, as the same become due. (c) The Trustee shall determine, and notify the County of, the credit amounts as described in Sections 2.1(b) of the Financing Contract. (d) On the second Business Day preceding each Payment Date, the Trustee will first set aside an amount sufficient to pay the interest with respect to the Bonds becoming due and payable on such Payment Date, and then an amount sufficient to pay the principal with respect to the Bonds becoming due and payable on such Payment Date, and will transfer on the Payment Date the amounts due to DTC as registered owner of the Bonds. (e) If the amount on deposit in the Principal Account or the Interest Account is • insufficient for the purposes thereof two Business Days before any Payment Date, the Trustee will notify the County of the amount of such insufficiency and the Trustee will transfer to such Accounts such amounts as may be necessary therefor from the Prepayment Account. If the amount on deposit in the Interest Account on any Payment Date exceeds the amount payable on account of interest on the Bonds on such date, the Trustee will, as directed by a County Representative, retain such excess in the Interest Account or transfer such excess to the Principal Account to be credited against subsequent required deposits thereto. If the amount on deposit in the Principal Account on any November 1 exceeds the amount required on such date to pay principal of Bonds coming due on such date (whether by reason of maturity or mandatory redemption), then the Trustee will, as directed by a County Representative, retain such excess in the Principal Account or transfer such excess to the Interest Account to be credited against subsequent required deposits thereto. (f) The Trustee will deposit in the Prepayment Account of the Payment Fund all amounts paid to it for deposit therein, and will use such amounts within 12 months of their deposit therein, as directed by a County Representative, to pay Bonds called for • prepayment on their prepayment dates. 13 (g) The Trustee will hold amounts transferred to the Prepayment Account from • the Net Proceeds Fund pursuant to Section 4.04(b) and apply such amounts to the prepayment of Bonds pursuant to Section 3.01(b) as directed by a County Representative. The Trustee will transfer any amounts not so used within 12 months of their deposit in the Prepayment Account to the Interest Account in the Payment Fund for use on the next Payment Date to pay interest with respect to the Bonds, and pending such use will invest such funds in Permitted Investments having a yield not in excess of the Restricted Yield. Subject to retaining moneys necessary to pay Bonds that have been called for prepayment but not yet presented for payment, the Trustee will use amounts in the Prepayment Account as directed by a County Representative to make transfers to the Interest Account or the Principal Account to the extent the balances therein may be insufficient for the purposes thereof. Section 4.04. Net Proceeds Fund. (a) The Trustee will deposit in the Net Proceeds Fund (i) Net Proceeds as provided in Section 5.2(c) of the Financing Contract and (ii} any other amounts paid to it for deposit in that fund. The County will direct the investment and reinvestment of all amounts on deposit in the Net Proceeds Fund only in Permitted Investments having a yield not in excess of the Restricted Yield, to the extent • such amounts are on deposit therein on any date following the later of (A) the third anniversary of the Closing Date or (B) 30 days from the payment of such Net Proceeds to the County or the Trustee, as applicable. (b) The Trustee will disburse Net Proceeds for replacement or repair as provided in Section 5.3(c) of the Financing Contract, or transfer such proceeds to the Prepayment Account in the Payment Fund for application as provided in Section 4.03(g), in either case as directed by a County Representative as provided in Section 5.3 of the Financing Contract. (c) If the County directs the Trustee to apply amounts on deposit in the Net Proceeds Fund to the prepayment of Bonds pursuant to Section 5.3(a) or 5.3(b) of the Financing Contract, the Trustee will provide for such prepayment pursuant to Section 3.01(b) at the earliest practicable date. (d) After all principal and interest with respect to the Bonds has been paid in full, and all the Trustee's fees and expenses have been paid, or provision has been made for the payment thereof satisfactory to the Trustee, the Trustee will pay any moneys remaining in the Net Proceeds Fund to the County. • ARTICLE V SECURITY PROVISIONS Section 5.01. Security Provisions. 14 (a) Assignment of Rights under Financing Contract. The Company • transfers and absolutely assigns to the Trustee, for the benefit of the Owners and without recourse against the Company, all of the Company's rights under the Financing Contract, including, without limitation, (i) the right to receive and collect all of the Installment Payments, (ii) the right to take all actions and give all consents under the Financing Contract, and (iii) the right to exercise such rights and remedies conferred on the Company pursuant to the Financing Contract as may be necessary or convenient (A) to enforce payment of the Contract Payments and any other amounts required to be deposited in any Fund established under this Trust Agreement, or (B) otherwise to protect the Owners' interests if the County defaults under the Financing Contract. Any Installment Payments collected or received by the Company will be deemed to be held and to have been collected or received by the Company as the Trustee's agent, and if received by the Company at any time will be deposited by the Company with the Trustee within one Business Day after receipt. (b) Assignment of Rights under Deed of Trust. The Company transfers and absolutely assigns to the Trustee, for the benefit of the Owners and without recourse against the Company, all of the Company's rights as beneficiary under the Deed of Trust. (c) Assignment of Moneys and Investments. The Company absolutely assigns to the Trustee, for the benefit of the Owners and without recourse against the Company, • all moneys and investments thereof held by the Trustee in the Funds and Accounts under this Trust Agreement. The Trustee will hold all such moneys in trust and will apply the same to the purposes specified in this Trust Agreement. The foregoing assignments are absolute and not for the purpose of security. Notwithstanding the foregoing assignments, the Company will retain its rights to notices, indemnification and payment of costs under the Financing Contract and the Deed of Trust. Section 5.02. Limited Obligation. Each Bond will evidence a proportionate and undivided ownership interest in Installment Payments. The Bonds are payable solely from Installment Payments as, when and if the same are received by the Trustee, except to the extent payable from the proceeds of the Bonds, income from investments, and Net Proceeds as provided in this Trust Agreement and the Financing Contract, which Installment Payments and other moneys are pledged as provided herein to secure payment of the Bonds. ARTICLE VI • INVESTMENT OF MONEYS IN FUNDS Section 6.01. Investments Authorized. 15 (a) Subject to the further provisions of this Article VI, the Trustee will invest and reinvest moneys held by it hereunder, upon the written direction of a County Representative, in Permitted Investments. Such investments, if registrable, will be registered in the name of the Trustee or its assignee for the benefit of the Owners and held by the Trustee. If the County does not provide the Trustee with written direction as to any investment or reinvestment provided for under this Trust Agreement, the Trustee will invest or reinvest such moneys in the North Carolina Capital Management Trust (or its successor). (b) The Trustee may purchase or sell, to itself or to any affiliate, as principal or agent, investments of funds held under this Trust Agreement. The Trustee may act as purchaser or agent in the making or disposing of any investment, and may make any investment through its bond or investment department. (c) The Trustee will not be responsible or liable for any loss suffered in connection with any investment of funds made by it in accordance with this Section. (d) The County will direct the investment and reinvestment of all moneys in Permitted Investments having maturities not extending beyond the date on which the County estimates such moneys are to be needed for their intended purposes. Investments • will be considered as maturing on the date on which they are redeemable without penalty at the holder's option or the date on which the Trustee may require their repurchase without penalty pursuant to a repurchase agreement. Section 6.02. Held in Trust. The moneys and investments held by the Trustee under this Trust Agreement are irrevocably held in trust for the benefit of the Owners, and such moneys, and any income or interest earned thereon, will be expended only as provided in this Trust Agreement, and will not be subject to levy or attachment or lien by or for the benefit of any creditor of the Company, the Trustee or the County, other than the Owners. Section 6.03. Investments Part of Fund. Any income, profit or loss on the investment of moneys held by the Trustee under this Trust Agreement will be credited to the respective fund to which such moneys are credited, except as otherwise provided in this Trust Agreement. Section 6.04. Accounting. The Trustee will furnish to the County, not less frequently than monthly, an accounting of all investments made by the Trustee in all funds and accounts held by the Trustee. Such accounting may be supplied in the form of the Trustee's customary statements. The Trustee will keep accurate records of all funds • administered by it and of all Bonds paid and discharged. Section 6.05. Valuation. For the purpose of determining the amount on deposit in any Fund or Account held under this Trust Agreement, the Trustee will value all Permitted Investments credited to such Fund or Account at the market value thereof. 16 Such valuations will be made at least every six months and at such additional times as the • County may request, but in no event more frequently than monthly. Section 6.06. Disposition. The Trustee will sell, or present for redemption, and reduce to cash any Permitted Investment in a Fund or Account whenever the cash balance in such Fund or Account is insufficient for the purposes thereof. Section 6.07. Commingling of Moneys in Funds. The Trustee, upon a County Representative's approval, may commingle any of the funds held by it pursuant to this Trust Agreement with any other separate fund or funds for investment purposes only; provided, however, that the Trustee will separately account for all Funds or Accounts held by it under this Trust Agreement. Section 6.08. Tax Covenants. The County and the Company covenant with the Owners that, notwithstanding any other provision of this Trust Agreement, they will make no use or investment of the proceeds of the Bonds which will cause the Bonds to be "arbitrage bonds" or "private activity bonds" within the meaning of the Code. Section 6.09. Information Concerning Investments. The Trustee will establish and maintain written records regarding investments made under this Article VI, and will supply such information to the County at its request, including information as to: (a) purchase date; (b) purchase price; (c) information establishing that the purchase was • at a fair market value as of the purchase date (e.g., the published quoted bid by a dealer in such an investment on the purchase date); (d) any accrued interest paid; (e) face amount; (f) coupon rate; (g) periodicity of interest payments; (h) disposition price; (i) any accrued interest received; and (j) disposition date. Section 6.10.. Restricted Yield Investments. The County may direct the investment of any funds held under this Trust Agreement without regard to yield, despite any provision in this Trust Agreement directing investment with regard to the Restricted Yield, provided that prior to making such an investment, the County provides the Trustee with an Opinion of Special Counsel, in form and substance reasonably acceptable to the Trustee, to the effect that such an investment will not adversely affect any exclusion from gross income that would otherwise be applicable to interest payments on the Bonds. ARTICLE VII DISCHARGE OF TRUST AGREEMENT Section 7.01. Bonds Deemed Paid; Discharge of Trust Agreement. Any Bond will be deemed paid for all purposes of this Trust Agreement when (a) payment of • the principal, premium, if any, and interest with respect to such Bond to the due date of such amounts (whether at maturity, upon prepayment or otherwise) either (i) has been made in accordance with the terms of the Bonds or (ii) has been provided for by irrevocably depositing with the Trustee or other fiduciary in escrow (A) cash sufficient to i~ make such payment or (B) 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 or verified by a certificate or other writing, in form and substance satisfactory to the Trustee, of an Appropriate Consultant acceptable to the Trustee), and which are not subject to redemption or purchase prior to maturity at the option of anyone other than the holder, and (b) all compensation and expenses of the Trustee pertaining to each Bond in respect of which such deposit is made have been paid or provided for to the Trustee's satisfaction. When a Bond is deemed paid, it will no longer be secured by or entitled to the benefits of this Trust Agreement, and all rights to payment of such Bonds will be limited to payment from moneys or Federal Securities under (a)(ii) above, and except that it may be transferred, exchanged, registered or replaced as provided in Article II. Notwithstanding the foregoing, no deposit under clause (a)(ii) above will be made until the County has furnished the Trustee an Opinion of Special Counsel to the effect that the deposit of such cash or Federal Securities will not cause the Bonds to become "arbitrage bonds" within the meaning of the Code. Also, if the Bond is to be prepaid prior to maturity, notice of prepayment of the Bond must be given in accordance with Article III for such deposit to be deemed a payment of such Bond. If the Bond, however, is not to be paid or prepaid within the next 60 days, the County must give the Trustee, in form satisfactory to the Trustee, irrevocable instructions (A) to provide notice, as soon as • practicable, in accordance with Article II, that the deposit required by (a)(ii) above has been made with the Trustee and that the Bond is deemed to be paid under this Article and stating the maturity or prepayment date upon which moneys are to be available for the payment of the principal with respect to the Bond, and (B) to give notice of prepayment not less than 30 nor more than 60 days prior to the prepayment date for such Bond as provided in Section 3.03. When all Outstanding Bonds are deemed paid under the foregoing provisions of this Section, the Trustee shall, upon request from the County, acknowledge the discharge of the lien of this Trust Agreement and the Deed of Trust and repay any excess amounts remaining on deposit in the Funds established under this Trust Agreement to the County; provided, however, that the obligations under Article II in respect of the transfer, exchange, registration, discharge from registration and replacement of Bonds will survive the discharge of the lien of this Trust Agreement, and further provided that in the case of a deposit made under (a)(ii) above, the Bonds will continue to constitute proportionate and undivided interests in Installment Payments arising under the Financing Contract. The County and the Company agree that no deposits shall be made or accepted and no use made of any such deposit that would cause any Bonds to be treated as "arbitrage bonds" within the meaning of the Code. • Section 7.02. Application of Trust Money. The Trustee will hold in trust money or Federal Securities deposited with it pursuant to Section 7.01 and will apply the deposited money and the money paid with respect to the Federal Securities in accordance is with this Trust Agreement only to the payment of principal, premium, if any, and interest with respect to the Bonds. • ARTICLE VIII DEFAULTS; REMEDIES Section 8.01. Events of Default. An "Event of Default" is any of the following: (a) Default in the payment of the principal with respect to any Bond when the same becomes due and payable, whether at the stated maturity thereof or upon proceedings for mandatory (but not optional) prepayment. (b) Default in the payment of any installment of interest with respect to any Bond when the same becomes due and payable. (c) The occurrence of any Event of Default as defined in the Financing Contract. Section 8.02. Acceleration. If any Event of Default occurs and is continuing, then (a) the Trustee, by notice to the County, or (b) the Majority Owners, by notice to the • County and the Trustee, may declare the principal of and accrued interest with respect to the Bonds to be due and payable immediately, and such principal and interest will thereupon become and be immediately due and payable. The Trustee will immediately give notice of any acceleration to the Owners. The Trustee may rescind an acceleration and its consequences if all existing Events of Default have been cured or waived, if the rescission would not conflict with any judgment or decree. Section 8.03. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the principal or interest with respect to the Bonds or to enforce the performance of any provision of this Trust Agreement, the Bonds, the Financing Contract or the Deed of Trust. The Trustee may maintain a proceeding even if it does not possess any of the Bonds or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Owner in exercising any right or remedy accruing upon an Event of Default will not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative. Section 8.04. Waiver of Past Defaults. The Majority Owners, by notice to the • Trustee, may waive an existing Event of Default and its consequences. When an Event of Default is waived, it is cured and stops continuing, but no such waiver will extend to any subsequent or other Event of Default or impair any right consequent to it. 19 • Section 8.05. Majority's Control. The Majority Owners may, upon satisfactory indemnification of the Trustee, direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on it. The Trustee, however, may refuse to follow any direction that conflicts with law or this Trust Agreement or, subject to Section 9.01, that the Trustee determines is unduly prejudicial to the rights of other Owners or would involve the Trustee in personal liability. Section 8.06. Limitation on Suits. An Owner inay not pursue any remedy with respect to this Trust Agreement or the Bonds (except as provided in Section 8.07) unless (a) the Owner gives the Trustee notice stating that an Event of Default is continuing, (b) the Majority- Owners make a written request to the Trustee to pursue the remedy, (c) such Owner or Owners offer to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense, and (d) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity. An Owner may not use this Trust Agreement to prejudice the rights of another Owner or to obtain a preference or priority over the other Owners. Section 8.07. Rights To Receive Payment. The right of any Owner to receive • payment of principal, premium, if any, and interest with respect to a Bond, on or after the due dates expressed in the Bond, or to bring suit for the enforcement of any such payment on or after such dates, is preserved under this Trust Agreement and may not be impaired or affected without such Owner's consent. Section 8.08. Collection Suit 6y Trustee. If an Event of Default occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the County for the whole amount remaining unpaid. Section 8.09. Trustee May File Proofs of Claim. (a) The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Owners allowed in any judicial proceedings relative to the County, the Company, their creditors or their property and, unless prohibited by law or applicable regulations, may vote on behalf of the Owners in any election of a trustee in bankruptcy or other person performing similar functions. (b) If the Trustee incurs expenses or renders services in any proceedings which result from an Event of Default, or from any event or occurrence which, with the passage of time, would become an Event of Default, the expenses so incurred and compensation for services so rendered are intended to constitute expenses of administration under the • United States Bankruptcy Code or equivalent law. Section 8.10. Priorities. If the Trustee collects any money pursuant to this Article, it will deposit the same in a special account in the Payment Fund and pay out such money in the following order: ao (a) If the principal with respect to all Bonds has not become or will not have been • declared due and payable, all such moneys in the Payment Fund will be applied as follows: First, Costs and Expenses: to the payment of the costs and expenses of the Trustee and of the Owners in declaring such Event of Default, including reasonable compensation to its or their agents, attorneys and counsel; Second, Interest: to the payment to the persons entitled thereto of all installments of interest then due in the order of the maturity of such installments, and, if the amount available is not sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably, according to the amounts due thereon, to the persons entitled thereto, without any discrimination or preference; and Third, Principal: to the payment to the persons entitled thereto of the unpaid principal with respect to any Bonds which have become due, whether at maturity or by call for prepayment, in the order of their due dates, with interest on the overdue principal at a rate equal to the rate paid with respect to the Bonds, and, if the amount available will not be sufficient to pay in full all of the amounts due with respect to the Bonds on any date, together with such interest, then to the payment thereof ratably, according to the amounts of principal due on such date to the persons entitled thereto, without any • discrimination or preference. (b) If the principal with respect to all Bonds has become or been declared due and payable, all such money will be applied (i) first to pay the Trustee's fees and expenses, and then (ii) to the payment of principal and interest then due with respect to the Bonds, without preference or priority of principal or interest, or of any installment of interest over .any other installment of interest, or of any Bond over any other Bond, ratably according to the amounts due respectively for principal and interest, to the persons entitled thereto without any discrimination or privilege. (c) If the principal with respect to all Bonds has been declared due and payable and if such declaration thereafter has been rescinded and annulled under the provisions of Section 8.02, then, subject to the provisions of subsection (b) above, if the principal with respect to all Bonds later becomes due and payable or is declared due and payable, the money then remaining in and thereafter accruing to the Payment Fund will be applied in accordance with the provisions of subsection (a) above. The Trustee may fix a payment date for any payment to the Owners under this Section. Section 8.11. Undertaking for Costs. In any suit for the enforcement of any right • or remedy under this Trust Agreement or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its 21 . discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the parry litigant. This Section does not apply to a suit by the Trustee or any authorized suit by any Owner or Owners. ARTICLE IX THE TRUSTEE Section 9.01. Rights and Duties. (a) If an Event of Default has occurred and is continuing, the Trustee must exercise its rights and powers and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (b) Not later than December 1 of each year, the Trustee will notify the LGC of the principal amount of Bonds Outstanding as of the preceding June 30. (c) Except during the continuance of an Event of Default: (i) the Trustee need perform only those duties that are specifically set forth in this Trust Agreement and no other; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Trust Agreement which the Trustee actually and in good faith believes to be genuine and to have been signed or presented by the proper person. The Trustee, however, must examine the certificates and opinions to determine whether they conform to the requirements of this Trust Agreement. (d) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: (i) this paragraph does not limit the effect of subsection (a) above; (ii) the Trustee will not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 8.05; and • (iii) no provision of this Trust Agreement requires the Trustee.to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it 22 has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. • (e) Every provision of this Trust Agreement that in any way relates to the Trustee is subject to all the provisions of this Section 9.01. (f) The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity satisfactory to it against any loss, liability or expense, except that the Trustee may not require indemnity as a condition to declaring the principal and interest with respect to the Bonds to be due irrunediately under Section 8.02. No permissive right of the Trustee shall be construed as a duty. (g) The Trustee will not be liable for interest on any cash held by it except as the Trustee may agree with the County. (h) The Trustee will not be liable for any action it takes or omits to take in good faith in reliance on advice from counsel as to legal matters. (i) If an event occurs which with the giving of notice or lapse of time would be an Event of Default, and if the event is continuing and if it is known to the Trustee, the Trustee will so notify the Owners and the LGC within 15 days after such event becomes known to the Trustee. • (j) At any and all reasonable times, the Trustee and its agents will have the right to inspect the Site, the Facilities and all books and records of the Company or of the County related thereto. Notwithstanding anything in this Trust Agreement to the contrary, the Trustee and its agents will have the right to require such additional evidence, certificates or Opinions of Counsel as the Trustee may deem appropriate to establish the County's right to the withdrawal of any funds held hereunder or to require the Trustee's taking of any other action hereunder. (k) The Trustee shall not be liable for any debts contracted or for damages to persons or to property injured or damaged, or for salaries or nonfulfillment of contracts, relating to the Facilities. (1) The Trustee shall have no duty to inspect or oversee the construction or completion of the Facilities. (m) In any judicial proceeding to which the Company or the County is a party and which in the Trustee's opinion has a substantial bearing on the interests of Owners, the Trustee may intervene on the Owners' behalf, and will do so if requested in writing by the Majority Owners, and the Trustee will have a lien therefor on any and all funds any time held by it under this Trust Agreement. • (n) The Trustee may act through agents or co-trustees. 23 • Section 9.02. Trustee's Individual Rights. The Trustee in its individual or any other capacity may become the Owner or pledgee of Bonds and may otherwise deal with the Company or with the County or its affiliates with the same rights it would have if it were not Trustee. Section 9.03. Disclaimer. The Trustee makes no representation as to the validity or adequacy of this Trust Agreement or the Bonds, and the Trustee is not accountable for the County's use of the proceeds from the Bonds. Section 9.04. Eligibility. The Company will maintain a Trustee for this Trust Agreement that is a corporation organized and doing business under the laws of the United States or any state or the District of Columbia, is authorized under such laws and the laws of the State to exercise corporate trust powers, is subject to supervision or examination by the United States, any state or the District of Columbia and has a combined capital and surplus of at least $100,000,000 as set forth in its most recent published annual report of condition. Section 9.05. Resignation; Removal; Replacement. The Trustee may resign at any time by delivering notice of its resignation to the County at least 30 days prior to the effective date of the resignation. The County may remove the Trustee at any time by delivering notice of the removal to the removed Trustee at least 30 days prior to the • effective date of the removal, so long as no Event of Default is continuing at the time the County sends the notice. The Majority Owners may remove the Trustee at any time by delivering notice of the removal to the County and the removed Trustee at least 30 days prior to the effective date of the removal, and may at the same time (or at any time during the 30-day notice period) appoint a new Trustee by notice to the County and the removed Trustee. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the County shall promptly appoint a successor Trustee (except when that right is exercised by the Majority Owners as described in the preceding paragraph). No corporation will be eligible for appointment as successor Trustee unless such corporation (a) meets the requirements of Section 9.04 and (b) is approved by the LGC for service as Trustee under this Agreement. A successor Trustee will deliver a written acceptance of its appointment to the retiring Trustee and to the County. Immediately thereafter, the retiring Trustee will transfer all property held by it as Trustee to the successor Trustee; the resignation or removal of the retiring Trustee will then (but only then) become effective, and the successor Trustee will have all the rights, powers and duties of the Trustee under this Trust Agreement. • If the Trustee fails to comply with Section 9.04, the County or any Owner may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. 24 If a successor Trustee does not take office within 60 days after the retiring Trustee • resigns or is removed, the retiring Trustee, the County or the Majority Owners may petition any court of competent jurisdiction for the appointment of a successor Trustee. Section 9.06. Successor Trustee by Merger. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its assets (or, in the case of a bank or trust company, its corporate trust assets) to another corporation, the resulting, surviving or transferee corporation without any further act will be the successor Trustee. Section 9.07. Acceptance of Financing Contract Terms. By its execution of this Trust Agreement, the Trustee hereby signifies its acceptance of its responsibilities under the Financing Contract, and agrees to be bound thereby. ARTICLE X AMENDMENTS OF AND SUPPLEMENTS TO TRUST AGREEMENT, BONDS, FINANCING CONTRACT OR DEED OF TRUST Section 10.01. Without Owners' Consent. (a) The Company and the Trustee may amend or supplement this Trust Agreement or the Bonds without notice to or consent of any Owner for the following purposes: • (i) to cure any ambiguity, inconsistency or formal defect or omission; (ii) to grant to the Trustee for the benefit of the Owners additional rights, remedies, powers or authority; (iii) to subject to this Trust Agreement additional collateral or to add other agreements of the Company or the County; (iv) to modify this Trust Agreement or the Bonds to permit qualification under the Trust Indenture Act of 1939 or any similar federal statute at the time in effect, or to permit the qualification of the Bonds for sale under the securities laws of the United States or of any state of the United States; (v) to provide for Bonds in certificated, registered form pursuant to Section 2.01(b), or for the issuance of Additional Bonds; (vi) to evidence the succession of a new Trustee; or (vii) to make any other change that does not materially adversely affect the • rights of any Owner. (b) The Company may enter into, and the Trustee may consent to, any amendment of or supplement to the Financing Contract or the Deed of Trust, without 2s notice to or consent of any Owner, if the amendment or supplement is required or permitted (i) by the provisions of the Financing Contract or this Trust Agreement, (ii) to cure any ambiguity, inconsistency or formal defect or omission, (iii) in connection with any authorized amendment of or supplement to this Trust Agreement, or (iv) to make any other change that does not materially adversely affect the rights of any Owner. Section 10.02. With Owners' Consent. (a) If the preceding Section does not permit an amendment of or supplement to this Trust Agreement or the Bonds without any consent of Owners, the Company and the Trustee may enter into such amendment or supplement only with the consent of the Majority Owners. (b) If the preceding Section does not permit an amendment of or supplement to the Financing Contract or the Deed of Trust without any consent of Owners, the Company inay enter into, and the Trustee may consent to, such amendment or supplement only with the consent of the Majority Owners. (c) Without the consent of each Owner affected, however, no amendment or supplement to this Trust Agreement, the Bonds, the Financing Contract or the Deed of Trust may (i) extend the maturity of the principal or interest with respect to any Bond, (ii) reduce the principal amount of, or rate of interest on, any .Bond, (iii) effect a privilege or priority of any Bond or Bonds over any other Bond or Bonds, (iv) reduce the percentage • of the principal amount of the Bonds required for consent to such amendment or supplement, (v) impair any exclusion of interest on the Bonds from the federal gross income of the Owner of any Bond, (vi) eliminate any mandatory prepayment of the Bonds, extend the due date for any call for mandatory prepayment, reduce the prepayment price or otherwise change the prepayment terms of such Bonds, (vii) create a lien ranking prior to or on a parity with the lien of this Trust Agreement on the property pledged hereunder (except with respect to a parity pledge for the benefit of the Owners of Additional Bonds), or (viii) deprive any Owner of the lien created by this Trust Agreement on such property. In addition, if moneys or Federal Securities have been deposited or set aside with the Trustee pursuant to Article VII for the payment of Bonds and those Bonds have not in fact actually been paid in full, no amendment to the provisions of that Article may be made without the consent of the Owner of each Bond affected. Section 10.03. Procedure for Amendment with Owners' Written Consent. (a) If the consent of the Owners is required pursuant to Section 10.02 for an amendment or supplement to this Trust Agreement, the Bonds or the Financing Contract, the Trustee will establish a record date, and Owners as of such date will be the Owners • with the right to consent to such amendment or supplement. Such record date will be a date not later than five Business Days after the date the Trustee receives notice or direction from the County or the Company to solicit such consents. 26 (b) The Trustee will send, by first-class mail, a copy of such supplement or • amendment, together with a request to the Owners for their consent thereto, to each Owner at its address as set forth in the registration books maintained pursuant to Section 2.04, but failure to receive copies of such supplement or amendment and request so mailed will not affect the validity of the supplement or amendment when assented to as provided in this Section. The request mailed by the Trustee will also designate a date not more than 60 nor less than 30 days following the mailing date by which consent must be returned to be effective. (c) Such supplement or amendment will not become effective unless there are filed with the Trustee the written consent of the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding (exclusive of Bonds disqualified as provided in Section 10.04) and notices have been mailed as hereinafter in this Section provided. Each such consent will be effective only if accompanied by proof of ownership of the Bonds for which such consent is given, which proof will be such as is permitted by Section 10.10. (d) If DTC is the registered owner of the Bonds, the Trustee will take such actions as may be appropriate to solicit the consents provided for in this Section from beneficial owners in accordance with DTC's rules and regulations, as the same may be in effect from time to time. Section 10.04. Disqualified Bonds. Bonds owned or held by or for the account of • the County or the Company or by any person directly or indirectly controlling or controlled by, or under direct or indirect common control with the County or the Company (except any Bonds held in any pension or retirement fund), will not be deemed Outstanding for the purpose of any action or any calculation of Outstanding Bonds provided for in this Trust Agreement, and will not be entitled to take any action provided for in this Trust Agreement. The Trustee may (but is not required to) provide for each Owner, before such Owner's consent is deemed effective, to certify or otherwise provide evidence to establish whether the Bonds as to which such consent is given are disqualified. Notwithstanding the foregoing provisions of this Section, it is the intent of the Company, the County and the Trustee that the ownership or holding of Bonds by the Company or the County will not, by itself, give rise to an extinguishment of the Bonds or of any obligation arising under this Trust Agreement or the Financing Contract. Section 10.05. Effect of Consents. After an amendment or supplement becomes effective, it will bind every Owner. Any such consent will be binding upon and irrevocable by the Owner of the Bond giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof), unless such consent is • revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Trustee prior to the date when the Trustee has mailed the notice provided for in Section 10.09. 27 • Section 10.06. Notation on or Exchange of Bonds. If an amendment or supplement changes the terms of a Bond, the Trustee may require the Owner of such Bond to deliver it to the Trustee. The Trustee may place an appropriate notation on the Bond about the changed terms and return it to the Owner. Alternatively, if the Trustee, the Company and the County so determine, the Company, in exchange for the Bond, will execute, and the Trustee will authenticate and deliver, a new Bond that reflects the changed terms. Section 10.07. Trustee's Execution of Amendments and Supplements. The Trustee will execute and deliver any amendment or supplement to the Trust Agreement or the Bonds authorized by this Article if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee, as the Trustee may determine. If the amendment or supplement has such an adverse effect, the Trustee may, but need not, execute and deliver the same. In executing and delivering an amendment or supplement, the Trustee will be entitled to receive and (subject to Section 9.01) will be fully protected in relying on an Opinion of Counsel stating that such amendment or supplement is authorized by this Trust Agreement. Section 10.08. County's Consent Required. No amendment or supplement to this Trust Agreement, the Bonds, the Financing Contract or the Deed of Trust will • become effective unless the County delivers to the Trustee its prior written consent to the amendment or supplement. Section 10.09. LGC's Consent Required. No amendment or supplement to this Trust Agreement, the Bonds, the Financing Contract or the Deed of Trust will become effective unless the LGC delivers to the County and the Trustee its prior written consent to the amendment or supplement. Section 10.10. Notice of Amendments and Supplements. The Trustee shall cause notice of the execution of any supplement or amendment to this Agreement, the Bonds or the Contract to be mailed to the Owners. The notice will, at the Trustee's option, either (a) briefly state the nature of the amendment or supplement and that copies of it are on file with the Trustee for inspection by Owners, or (b) enclose a copy of such amendment or supplement. The Trustee shall also cause the notice provided for in the previous paragraph to be sent by first-class mail to Standard & Poor's Ratings Services, Attn: Public Finance - Document Change Notices, 55 Water Street, New York, NY 10041: Section 10.11. Owners' Consents. Any consent or other instrument required by • this Trust Agreement to be signed by Owners may be. in any number of concurrent documents and may be signed by an Owner or by the Owner's agent appointed in writing. Proof of the execution of such instrument or of the instrument appointing an agent and of the ownership of Bonds, if made in the following manner, will be conclusive for any purposes of this Trust Agreement with regard to any action taken by the Trustee. 28 (a) The fact and date of a person's signing an instrument may be proved by the • certificate of any officer in any jurisdiction who by law has power to take acknowledgments within that jurisdiction that the person signing the writing acknowledged before the officer the execution of the writing, or by an affidavit of any witness to the signing. (b) The fact of ownership of Bonds, the amount or amounts, numbers and other identification of such Bonds and the date of holding will be proved by the registration books kept pursuant to this Trust Agreement. ARTICLE XI MISCELLANEOUS Section 11.01. Notices. (a) Any communication provided for in this Trust Agreement or the Bonds must be in writing. (b) Any communication under this Agreement will be sufficiently given and deemed given when delivered by hand or on the date shown as the delivery date on a • United States Postal Service certified mail receipt, or a delivery receipt from a national commercial package delivery service, if addressed as follows: (i) if to the County, to Orange County Manager, Attention: Notice under 2010 LOBs Trust Agreement, Post Office Box 8181, Hillsborough, North Carolina 27278. (ii) if to the Company, to Orange County Public Facilities Company, Attention: Notice under 2010 LOBS Trust Agreement, c/o Orange County Manager, Post Office Box 8181, Hillsborough, North Carolina 27278. (iii) if to the Trustee, to The Bank of New York Mellon Trust Company, N.A., (c) Any communication sent under this Agreement must also be sent to the County and the Trustee, along with any other parties to which the communication may be addressed. (d) Any addressee may designate additional or different addresses for communications by notice given under this Section to each of the others. Section 11.02. Limitation of Rights. Nothing expressed or implied in this Trust • Agreement or the Bonds gives any person other than the Trustee, the Company, the County and the Owners any right, remedy or claim under or with respect to this Trust Agreement. 29 • Section 11.03. Severability. If any provision of this Trust Agreement is determined to be unenforceable, that will not affect any other provision of this Trust Agreement. Section 11.04. Non-Business Days. If a Payment Date is not a Business Day, then payment will be made on the next Business Day, and no interest will accrue for the intervening period. When any other action is provided in this Trust Agreement to be done on a day or within a time period named, and the day or the last day of the period is not a Business Day, the action may be done on the next ensuing Business Day. Section 11.05. Governing Law; Forum. The parties intend that North Carolina law will govern this Trust Agreement. To the extent permitted by law, the parties agree that any action brought with respect to this Trust Agreement will be brought in the North Carolina General Court of Justice in Orange County, North Carolina. Section 11.06. Limitation on Liability of Officers and Agents. No officer, agent or employee of the Company, the County or the LGC will be subject to any personal liability or accountability by reason of such officer's execution of this Trust Agreement, the Bonds or any other documents related to the transactions contemplated hereby. Such officers or agents will be deemed to execute such documents in their official capacities only, and not in their individual capacities. This Section will not relieve an officer, agent or employee of the County or the Company from the performance of any official duty provided by law or this Trust Agreement. Section 11.07. Records. The Trustee will keep complete and accurate records of all moneys received and disbursed by it under this Trust Agreement, which will be available for inspection by the County, the Company and any Owner, or any of their agents at any time during regular business hours upon reasonable prior notice. Section 11.08. Binding Effect. This Trust Agreement will be binding upon and inure to the benefit of and be enforceable by the parties and their respective successors and assigns. Section 11.09. Waiver of Notice. Whenever in this Trust Agreement the giving of notice is required, the giving of such notice may be waived in writing by the person entitled to receive such notice, and in any case the giving or receipt of such notice will not be a condition precedent to the validity of any action taken in reliance upon such waiver. Section 11.10. Counterparts. This Trust Agreement may be signed in several • counterparts, including separate counterparts. Each will be an original, but all of them together constitute the same instrument. Section 11.11. Definitions; Rules of Construction. Unless the context clearly requires otherwise, capitalized terms used in this Trust Agreement and not otherwise 30 defined have the meanings set forth in Exhibit A, and this Trust Agreement will be • interpreted in accordance with the rules of construction set forth in Exhibit A. Section 11.12. Third-Party Beneficiary. The parties intend that the County be third-party beneficiary of this Agreement. [The remainder of this page has been left blank intentionally.) • • 31 • IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be executed in their corporate names by their duly authorized officers, all as of the date first above written. ATTEST: (SEAL) ORANGE COUNTY PUBLIC FACILITIES COMPANY [name] [name] Secretary President THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By: • [Trust Agreement dated as of December 1, 2010] C. [name] [Title] 32 Exhibit A -- Definitions; Rules of Construction • Definitions. All capitalized terms used in this Trust Agreement and not otherwise defined will have the meanings ascribed thereto in the Financing Contract. In addition, for all purposes of this Trust Agreement, unless the context requires otherwise, the following terms will have the following meanings. "2010 Bonds" means [$85,000,000] Limited Obligation Bonds, Series 2010, issued pursuant to this Trust Agreement "Additional Bonds" means any Bonds delivered pursuant to Section 1.05. "Appropriate Consultant" has the meaning assigned in the Financing Contract. "Bonds" means, together, the 2010 Bonds and all Additional Bonds. "Business Day" means any day (a) other than a day on which banks in New York, New York, or the city to which notices to the Trustee under this Agreement are to be sent, are required or authorized to close and (b) on which the New York Stock Exchange is not closed. "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 Bonds. Reference to any specific Code provision will be deemed to include any successor provisions. "Company Representative" means the Company's President or any other person at the time designated to act on the Company's behalf in matters related to this Trust Agreement (or for any specific matters) by a written instrument furnished to the Trustee containing the specimen signature of such person and signed on the Company's behalf by any of its officers (other than the person being designated as a Company Representative). "County" means Orange County, North Carolina, or its successors. "Deed of Trust" means the Deed of Trust and Security Agreement dated as of December 1, 2010, from the County to a deed of trust trustee for the Company's benefit, as it may be duly amended or supplemented. "DTC" means The Depository Trust Company, New York, New York, or its successors as the securities depository maintaining abook-entry system for recording beneficial ownership interests in the Bonds "Event of Default" has the meaning set forth in Section 8.01. • 33 "Facilities" has the meaning ascribed to that term in the Deed of Trust, and generally includes the County .Justice Facility in Hillsborough, North Carolina, and Morris Grove Elementary School in Hillsborough, North Carolina. "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, or (b) securities or obligations evidencing direct ownership interests in specified portions (principal or interest) of obligations described in (a). "Financing Contract" means the Installment Financing Contract dated as of December 1, 2010, between the County and the Company, as it may be duly amended or supplemented. "Independent Counsel" has the meaning assigned in the Financing Contract. "Interest Account" means the account of that name in the Payment Fund established in Section 4.02. "LGC" means the North Carolina Local Government Commission, or any successor to its functions. • "Majority Owners" means, as of any date, the Owners of at least a majority in principal amount of the Bonds then Outstanding. "Mortgaged Property" has the meaning assigned to that term in the Deed of Trust. "Net Proceeds" has the meaning assigned to that term in the Financing Contract. "Net Proceeds Fund" means the Orange County 2010 Net Proceeds Fund established in Section 4.02. "Opinion of Counsel" or "Opinion of Special Counsel" means a written opinion of Independent Counsel or Special Counsel, as appropriate. "Outstanding," when used with reference to Bonds, or "Bonds Outstanding," means all Bonds which have been authenticated and delivered by the Trustee under this Trust Agreement and not yet paid, except the following: (a) Bonds canceled or purchased by or delivered to the Trustee for cancellation; (b) Bonds that have become due (at maturity or on prepayment, acceleration or • otherwise) and for the payment, including interest accrued to the due date, of which the Trustee holds sufficient moneys; (c) Bonds deemed paid in accordance with Section 7.01; and 34 (d) Bonds in lieu of which others have been authenticated under Section 2.04 • (relating to registration and exchange of Bonds) or Section 2.05 (relating to mutilated, lost, stolen, destroyed or undelivered Bonds). "Owner," when used with reference to Bonds, means the person in whose name such Bond is registered on the registration books maintained by the Trustee. "Payment .Date" means, with respect to the 2010 Bonds, each May 1 and November 1 beginning May 1, 201 1, and with respect to any Additional Bonds means the dates specified for principal and interest payments with respect to such Additional Bonds. "Payment Fund" means the Orange County 2010 Bond Payment Fund established in Section 4.02. "Permitted Investments" means such investments as from time to time are legal investments for the County's funds, as determined at the time of investment. "Prepayment Account" means the account of that name in the Payment Fund established in Section 4.02. "Principal Account" means the account of that name in the Payment Fund • established in Section 4.02. "Proceeds Fund" means the Orange County 2010 Proceeds Fund established in Section 4.01. "Record Date" means the close of business on the 15th day of the month (whether or not a Business Day) preceding a Payment Date. "Restricted Yield" means a "yield," within the meaning of Treas. Regs. Secs. 1.103-13 (c), -13 (d), 1.148-9T(a), or any successor or other provision that may be applicable, not in excess of a "yield" equal to %. "Special Counsel" means such attorney or firm of attorneys nationally recognized on the subject of municipal obligations as may be selected by the County and approved by the Trustee (which approval will not be unreasonably withheld). "State" means the State of North Carolina. "Term Bonds" means any Bonds (including the 2010 Bonds maturing November 1, ,and on November 1, )that are subject to mandatory redemption pursuant to sinking fund requirements. • "Trust Agreement" means this Trust Agreement, as it may be duly amended or supplemented. 35 • "Trustee" means the bank or trust company from time to time serving as trustee under this Trust Agreement, whether the original or a successor Trustee. Rules of Construction. Unless the context otherwise requires, (a) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles; (b) unless otherwise indicated, references to Articles, Sections and Exhibits are to the Articles, Sections and Exhibits of this Trust Agreement; (c) words importing the singular will include the plural and vice versa and words importing the masculine gender will include the feminine and neuter genders as well. (d) the headings on sections and articles are solely for convenience of reference and will not constitute a part of this Trust Agreement nor will they affect its meanings, construction or effect; (e) words importing the prepayment or calling for prepayment of Bonds will not be deemed to refer to or connote the payment of Bonds at their stated maturity; and (f) all references to the payment of Bonds are references to payment of principal of and premium, if any, and interest with respect to the Bonds. • 36 Exhibit B -Form of 2010 Bond REGISTERED Number R-X REGISTERED LIMITED OBLIGATION BOND, SERIES 2010 representing an interest in certain payments to be made under an installment financing contract with ORANGE COUNTY, NORTH CAROLINA INTEREST RATE MATURITY DATE DATED DATE CUSIP November 1, 20XX December 21, 2010 684 610 X~~ REGISTERED OWNER: *****CEDE & CO.***** PRINCIPAL AMOUNT: * * * * THOUSAND DOLLARS* * * * ****(~ 000)*** UNDER THIS BOND the registered owner, or registered assigns or legal representative, is the owner of a proportionate and undivided interest in certain payments to be made by Orange County, North Carolina (the "County"), under an Installment Financing Contract dated as of December 1, 2010 (the "Financing Contract"), between the County and Orange County Public Facilities Company (the "Company"). Principal is payable to such owner in the amount stated above on the maturity date stated above, subject to prepayment as described below, and interest is payable on each May 1 and November 1, beginning May 1, 2011 (the "Payment Dates"), at the annual interest rate stated above (calculated on the basis of a 360-day year consisting of twelve 30-day months). • • Interest is payable (a) from the Dated Date shown above, if this Bond is authenticated prior to the Record Date, as defined below, preceding May 1, 2011, (b) from the succeeding Payment Date, if this Bond is authenticated between a Record Date and the succeeding Payment Date, or (c) otherwise from the Payment Date that is, or • immediately precedes, the date on which this Bond is authenticated (unless payment of interest hereon is in default, in which case this Bond will bear interest from the date to 37 which interest has been paid). Principal and interest are payable in lawful money of the United States of America. This Bond is one of an issue of [$85,000,000] Limited Obligation Bonds, Series 2010 (the "Bonds"), of like date and tenor, except as to number, denomination, rate of interest, privilege of prepayment and maturity. The Bonds are executed and delivered under, and are equally and ratably secured by, a Trust Agreement dated as of December 1, 2010 (the "Trust Agreement"), between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"). The Company is advancing funds under the Financing Contract to provide funds to the County to be used, together with other available funds, to refmance certain existing financing obligations, to provide for the acquisition of certain equipment, and to pay financing and other related costs, as more fully described in the Trust Agreement and the Financing Contract. The County will repay the amounts advanced by making Installment Payments, as defined in and pursuant to the Financing Contract, which are designed to be sufficient in times and amounts to provide for timely payment of the Bonds. To further secure its obligations under the Financing Contract, the County has granted, for the Company's benefit, a security interest in certain public facilities, the underlying real properly and certain other property (the "Trust Property") pursuant to the Financing Contract and a Deed of Trust and Security Agreement dated as of December 1, 2010 (the • "Deed of Trust"). The Company has assigned substantially all of its rights under the Financing Contract and as beneficiary under the Deed of Trust, including its right to receive Installment Payments, to the Trustee, without recourse against the Company, for the benefit of the owners of the Bonds. The Bonds are payable solely from amounts paid by the County pursuant to the Financing Contract, except to the extent payable from the proceeds of the Bonds, income from investments, certain net insurance and condemnation awards and the proceeds of remedial action, which revenues and other moneys have been pledged as described in the Trust Agreement and the Financing Contract to secure payment of the Bonds. Neither the Bonds nor the County's obligation to make payments under the Financing Contract constitutes a pledge of the County's faith and credit within the meaning of any constitutional provision. Reference is made to the Trust Agreement and all amendments and supplements thereto for a description of the provisions, among others, with respect to the nature and extent of the security, the rights, duties and obligations of the Company and the Trustee, the rights of the Owners of the Bonds and the terms upon which the Bonds are executed, delivered and secured, to all of which provisions the owner of this Bond, by the acceptance hereof, agrees. Additional Bonds secured by an interest in the Trust Property • on a parity with the interest securing the Bonds may be issued under the terms and conditions set forth in the Trust Agreement. The Bonds are issued by means of a book-entry system, with one certificate for each maturity immobilized at The Depository Trust Company, New York, New York 38 ("DTC"), and not available for distribution to the public. Transfer of beneficial ownership • interests in the Bonds in the principal amount of $5,000 or any integral multiple thereof will be effected on the records of DTC and its participants pursuant to rules and procedures established by DTC and its participants. Principal and interest on the Bonds are payable to DTC or its nominee as registered owner of the Bonds. Neither the Trustee, the Company nor the County is responsible or liable for such transfer of ownership or payments or for maintaining, supervising or reviewing the records maintained by DTC, its participants or persons acting through such participants. If (a) DTC determines not to continue to act as securities depository for the Bonds or (b) a County Representative so elects, the Company and the Trustee will discontinue the book-entry system with DTC. If the County fails to identify another qualified securities depository to replace DTC, the Company will prepare and execute, and the Trustee will authenticate and deliver in exchange, replacement Bonds in the form of fully-registered Bonds. The Bonds may not be prepaid prior to maturity except as provided in this Bond and in the Trust Agreement. Bonds maturing on or after November 1, 2021, are subject to prepayment at the County's option in whole or in part on any date on or after November 1, 2020, upon payment of the principal amount to be prepaid plus interest accrued to the prepayment • date, without premium. The Bonds are subject to prepayment in whole or in part on any Payment Date from Net Proceeds, as defined in the Contract, credited towards the prepayment of Installment Payments under the Contract as a result of certain casualty and other losses to the Facilities, as described in the Contract, at a prepayment price equal to the principal amount to be prepaid plus interest accrued to the prepayment date, without premium. The Trustee will prepay Bonds maturing on November 1, ,upon payment of 100% of the principal amount thereof plus interest accrued to the prepayment date, on November 1 in years and amounts as follows: Year Amount ($) The Trustee will prepay Bonds maturing on November 1, ,upon payment of 100% of the principal amount thereof plus interest accrued to the prepayment date, on November 1 in years and amounts as follows: Year Amount ($) U The amount of Bonds to be prepaid on any sinking fund payment date inay be reduced in accordance with the provisions of the Trust Agreement. 39 • If less than all of the Bonds are to be prepaid, they will be prepaid in such manner as the County may elect. If less than all the Bonds of any maturity are called for prepayment, the Trustee will select the Bonds to be prepaid by lot; provided, however, . that so long as a book-entry system with DTC is used for recording beneficial ownership of Bonds, if less than all of the Bonds within a maturity are to be prepaid, DTC and its participants will determine which of the Bonds within any such maturity are to be prepaid. In any case, (1) the portion of any Bond to be prepaid will be in the principal amount of $5,000 or some multiple thereof, and (2) in selecting Bonds for prepayment, each Bond will be considered as representing that number of Bonds which is obtained by dividing the principal amount of such Bond by $5,000. If a portion of a Bond will be called for prepayment, a new Bond in principal amount equal to the unpaid portion thereof will be issued to the Owner upon the surrender thereof. The Trustee will send notice of prepayment by registered or certified mail to DTC or its nominee as the Owner of the Bonds. The Trustee will mail such notice not more than 60 days nor less than 30 days prior to the date fixed for prepayment. Neither the Trustee, the Company nor the County is responsible for sending notices of prepayment to anyone other than DTC or its nominee. If on or before the date fixed for .prepayment funds have been deposited with the Trustee to pay the principal and interest accrued to the prepayment date with respect to the Bonds called for prepayment, the Bonds or portions thereof thus called for prepayment will cease to accrue interest from and after the prepayment date, will no longer be entitled to the benefits provided by the Trust Agreement and will not be deemed to be Outstanding under the Trust Agreement. The Owner of this Bond has no right to enforce the provisions of the Trust Agreement or to institute action to enforce the covenants therein, or to take any action with respect to any event of default thereunder, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Trust Agreement. Changes to or supplements of the Trust Agreement may be made to the extent and in the circumstances permitted by the Trust Agreement. The Bonds are issuable only as fully-registered Bonds without coupons in denominations of $5,000 principal amount and any integral multiple thereof. Ownership of this Bond will be registered on the Bond Register (as defined in the Trust Agreement) to be kept for that purpose by the Trustee, which will act as Bond registrar for the Bonds. This Bond may be exchanged, and its transfer may be effected, only by the Owner hereof in person or by attorney duly authorized in writing at the aforesaid office of the Trustee, • but only in the manner, subject to the limitations and upon payment of the charges provided in the Trust Agreement, and upon surrender and cancellation of this Bond. Upon exchange or registration of such transfer a new registered Bond or Bonds of the same maturity and interest rate and of authorized denomination or denominations for the same aggregate principal amount will be issued in exchange therefor. 40 The Company and the Trustee may deem and treat the person in whose name this • Bond will be registered on the Bond Register as the absolute owner hereof for the purpose of receiving payment of or on account of principal hereof and interest due hereon and for all other purposes and neither the Company nor the Trustee will be affected by any notice to the contrary, except that interest payments will be made to the persons shown as Owners on the Trustee's registration books at the close of business on the 1 Sth day (whether or not a business day) (the "Record Date") preceding each Payment Date. All acts, conditions and things required by the Constitution and laws of the State of North Carolina to happen, exist or be performed precedent to and in the execution and delivery of this Bond have happened, exist and have been performed. This Bond will not be entitled to any benefit under the Trust Agreement or be valid or obligatory for any purpose until the Trustee will have executed the Bond of Authentication appearing hereon. IN WITNESS WHEREOF, the Company has caused this Bond to signed by its President, its seal to be affixed hereto and attested by its Secretary, and this Bond to be dated December 21, 2010. ATTEST: (SEAL) ORANGE COUNTY PUBLIC • FACILITIES COMPANY [name] [name] Secretary President CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds referred to in the within-mentioned Trust Agreement. Date of Authentication: THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By: Authorized Officer 41 • FOR VALUE transfer(s) unto ASSIGNMENT RECEIVED the undersigned hereby sell(s), assign(s) and (Please print or type transferee's name and address, including zip code) PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF TRANSFEREE: the within certificate and all rights thereunder, hereby irrevocably constituting and appointing ,Attorney, to transfer said certificate on the books kept for the registration thereof, with full power of substitution in the premises. Dated: . Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by a participant in the Securities Transfer Agent Medallion Program ("STAMP") or similar program C7 (Signature of Owner) NOTICE: The signature above must correspond with the name the Owner as it appears on the front of this certificate in every particular without alteration or enlargement or any change whatsoever. 42 • • • ~ 5 RBH Draft No. 1 10/28/10 • CONTRACT OF PURCHASE December _, 2010 Orange County Public Facilities Company Hillsborough, North Carolina $[Amount] Limited Obligation Bonds, Series 2010 Evidencing Proportionate Undivided Interests in the Rights to Receive Certain Payments Pursuant to an Installment Financing Contract Between Orange County Public Facilities Company and Orange County, North Carolina Ladies and Gentlemen: The undersigned, BB&T Capital Markets, a division of Scott & Stringfellow, LLC (the "Underwriter") offers to enter into this Contract of Purchase (this "Purchase Contract") with Orange County Public Facilities Company (the "Company") for the purchase and sale by the Underwriter of the Limited Obligation Bonds, Series 2010 (the "Bonds"), evidencing proportionate undivided interests in rights to receive certain payments pursuant to an Installment Financing Contract, dated as of December 1, 2010 (the "Contract"), between the Company and Orange County, North Carolina (the "County"). This offer is made subject to the terms and provisions of this Purchase Contract and satisfaction of each of the following conditions: (i) acceptance by the Company and (ii) delivery to the Underwriter of a Letter of Representation dated the date hereof in the form attached hereto as Exhibit A and duly executed by the County (the "Letter of Representation"). Upon satisfaction of the foregoing conditions, this Purchase Contract will be in full force and effect in accordance with its terms and will be binding on the Company and the Underwriter. If the foregoing conditions are not satisfied as provided above, this offer is subject to withdrawal by the Underwriter upon written notice delivered to the Company at any time prior to acceptance. This offer is made subject to your acceptance of this Purchase Contract on or before 5 p.m. on December _, 2010. • 3025651v2 15249.00084 All terms not otherwise defined herein shall have the same meanings as set forth in the • Contract or the Trust Agreement described below. 1. Purchase and Sale of Bonds. Upon the terms and conditions and in reliance upon the respective representations, warranties and covenants herein and in the Letter of Representation, the Underwriter hereby agrees to purchase from the Company, and the Company hereby agrees to sell to the Underwriter, all (but not less than all) of $[Amount) aggregate principal amount of the Bonds at the purchase price (the "2010 Purchase Price") of $ (equal to the par amount of the Bonds plus an original issue premium of $ and less an Underwriter's discount of $~. The Bonds will be executed and delivered pursuant to and secured by a Trust Agreement, dated as of December 1, 2010, between the Company and The Bank of New York Trust Company, N.A. (the "Trustee"), as trustee (the "Trust Agreement"), and will mature, subject to the right of prepayment, as more fully described in the Trust Agreement. The Bonds will bear interest from their date, and will have such other terms and provisions, as described in the Final Official Statement (hereinafter defined in Section 2 hereof). The Bonds are being executed and delivered to provide funds to: (a) refinance certain existing financing obligations of the County, (b) finance the acquisition of certain equipment and (c) pay certain costs incurred in connection with the issuance of the Bonds. The Contract provides for payment by the County of moneys sufficient to pay the scheduled payments with respect to the Bonds. As security for the Bonds and any Additional Bonds, the Company has assigned to the Trustee for the benefit of the registered owners of the Bonds (the "Owners") • substantially all of its rights under the Contract and certain moneys and securities held by the Trustee under the Trust Agreement. As security for its obligations under the Contract, the County has executed and delivered to the deed of trust trustee, for the benefit of the Company, a Deed of Trust and Security Agreement, dated as of December 1, 2010 (the "Deed of Trust"), granting a first lien of record on certain real property (the "Mortgaged Property"). Pursuant to the Contract, Installment Payments payable by the County thereunder will be paid directly to the Trustee. The Underwriter agrees to make a bona fide public offering of all of the.Bonds at the initial offering prices or yields set forth on the cover of the Final Official Statement. The Underwriter, however, reserves the right to change such initial offering prices or yields as the Underwriter deems necessary in connection with the marketing of the Bonds and to offer and sell the Bonds to certain dealers (including dealers depositing the Bonds into investment trusts, including investment trusts managed by the Underwriter) and others at prices lower than the initial offering prices or yields set forth in the Final Official Statement. The Underwriter also reserves the right to over-allot or effect transactions which stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in the open market and to discontinue such stabilizing, if commenced, at any time. The Underwriter will provide to Sanford Holshouser LLP, Carrboro, North Carolina ("Bond Counsel") and others such evidence of the initial public sale price of the Bonds as the Company or the County may request and will supplement such information as may be necessary to continue its accuracy. The Underwriter represents and warrants that the Bonds will be offered only pursuant to the Preliminary Official • Statement (defined below in Section 2) and the Final Official Statement and only in states where 2 3025651v2 15249.00084 • the offer and sale of the Bonds are legal, either as exempt securities, as exempt transactions or as a result of registration of the Bonds for sale in any such state. 2. Official Statement. (a) The fmal Official Statement. dated December _, 2010 relating to the Bonds (the "Final Official Statement") shall be provided for distribution, at the expense of the County, in such quantity as may be requested by the Underwriter no later than the earlier of (i) seven business days after the date of this Purchase Contract or (ii) one business day prior to the Closing (defined below), in order to permit the Underwriter to comply with Rule 15c2-12 of the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the "Rule "), and the applicable rules of the Municipal Securities Rulemaking Board (the "MSRB"), with respect to distribution of the Final Official Statement. The County shall prepare the Official Statement, including any amendments thereto, in word-searchable PDF format as described in the MSRB's Rule G-32 and shall provide the electronic copy of the word-searchable PDF format of the Official Statement to the Underwriter no later than one business day prior to the Closing to enable the Underwriter to comply with MSRB Rule G-32. (b) The Company will take ail actions and provide all information reasonably requested by the Underwriter to ensure that the Preliminary Official Statement, as hereinafter defined, and the Final Official Statement at all times during the initial offering and distribution of the Bonds do not contain any untrue statement of a material fact or omit to state a material fact • necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company will not amend or supplement, or approve any amendment or supplement of, either the Preliminary Official Statement or the Final Officlal Statement without the prior written consent of the Lnderwriter (which consent will not be unreasonably withheld); provided, however, that, if between the date of this Purchase Contract and 25 days from the end of the underwriting period, as defined below, any event occurs or any fact is disclosed of which event or fact the Company has actual knowledge which might cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Company will promptly notify the Underwriter, and, if in the opinion of the Underwriter such event or disclosure requires the preparation and publication of a supplement or amendment to the Official Statement, the Company will supplement or amend the Official Statement in form and manner approved by the Underwriter, and the County shall pay all expenses in association therewith, including reasonable attorneys' fees. For purposes of this Purchase Contract, the "end of the underwriting period "will mean the later of (i) the Closing, or (ii) the time that the Underwriter no longer retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Unless otherwise notified in writing by the Underwriter, the Company shall treat the Closing as the "end of the underwriting period." (c) The Company agrees to use all reasonable efforts to cause the County to authorize and approve the Preliminary Official Statement dated November 30, 2010 (the "Preliminary Official Statement") and the Final Official Statement (the Final Official Statement, the • Preliminary Official Statement and any amendments or supplements that may be authorized for 3025651v2 15249.00084 use with respect to the Bonds are herein referred to collectively as the "Official Statement") and • to consent to their distribution and use by the Underwriter. 3. Representations, Warranties and Covenants of the Company. The Company represents and warrants to the Underwriter that: (a) the Company is a nonprofit corporation duly created and validly existing and in good standing under the laws of the State of North Carolina and has the power and authority and all necessary licenses and permits to conduct its business as described in the Preliminary Official Statement and the Final Official Statement; (b) to the best of its knowledge, both at the time of its acceptance hereof and at the date of Closing, the statements and information contained in the Final Official Statement relating to the Company are and will be true, correct and complete in all material respects and do not and will not contain any untrue statement of a material fact or omit any statement or information which is necessary to make the statements and information therein, in the light of the circumstances under which they were made, not misleading in any material respect; provided, however, that the Company makes no representation with respect to the information in the Final Official Statement supplied by the County (including the financial and statistical information in Appendix B thereto) or the Underwriter, or any other party, if applicable, other than that it has no knowledge or notice that such information is inaccurate or misleading; (c) the Company will cooperate with the Underwriter and its counsel in taking all necessary action to qualify the Bonds for offer and sale under the securities or "Blue Sky" laws • of such jurisdictions as the Underwriter may reasonably request and authorizes the Underwriter to make any necessary filings on behalf of the Company in taking any such necessary action; provided, however, that the Company will not be required to execute a special or general consent to service of process or qualify as a foreign corporation in connection with such qualification; (d) the. execution and delivery by the Company of this Purchase Contract, the Trust Agreement and the Contract (collectively, the "Company Documents"), and the delivery of the Final Official Statement were duly approved by the Company's Board of Directors in complete conformity with the Articles of Incorporation and the Bylaws of the Company and North Carolina law; (e) the approval, execution and delivery of the Company Documents and compliance with the provisions thereof and hereof under the circumstances contemplated thereby and hereby and the approval of the Final Official Statement, do not and will not conflict with, constitute a breach of or default under, or result in the creation of a lien on any property of the Company (except as contemplated therein) pursuant to applicable law or any indenture, bond order, deed of trust, mortgage, agreement or other instrument to which the Company is a party except as described in the Final Official Statement, or conflict with or violate any applicable law, administrative rule, regulation, judgment, court order or consent decree to which the Company is subject; (f) there is no claim, action, suit, proceeding, inquiry or investigation, at law or in • equity, before or by any court, governmental agency, or public board or body, pending or, to the 4 3025 651 v2 15249.00084 • best of its knowledge, threatened (i) contesting the corporate existence or powers of the Company or the titles of the officers of the Company to their respective offices, (ii) seeking to prohibit, restrain or enjoin the collection of revenues by the Company or the application of the proceeds of the Bonds wherein an unfavorable decision, ruling or finding would materially adversely affect the financial position of the Company or the validity or enforceability of the Bonds or the Company Documents, (iii) contesting or affecting the validity of the Company Documents or (iv) contesting in any way the completeness or accuracy of the Preliminary Official Statement or the Final Official Statement (nor, to the best knowledge of the Company, is there any basis therefor); (g) the Company is not in default in the payment of the principal of or interest on any indebtedness for borrowed money or under any instrument under or subject to which any indebtedness has been incurred, and to the best of its knowledge, no event has occurred or is continuing that, with the lapse of time or the giving of notice or both, would constitute an event of default under any such agreement; (h) any certificate signed by the President or Vice President of the Company and delivered to the Underwriter will be deemed to be a representation and warranty by the Company to the Underwriter as to the statements made therein; (i) when duly executed and delivered at the Closing in accordance with the provisions of this Purchase Contract, the Company Documents will have been duly authorized, • executed and delivered by the Company and will constitute valid and binding agreements of the Company enforceable in accordance with their terms, except insofar as the enforcement thereof may be limited by bankruptcy, insolvency or similar laws relating to the enforcement of creditors' rights; and (j) when duly executed and delivered at the Closing in accordance with the provisions of this Purchase Contract, the Bonds will constitute valid and binding proportionate undivided interests in the Company's rights to receive certain Payments pursuant to the Contract enforceable in accordance with their terms. 4. Company to Use All Reasonable Efforts to Cause County to Act. The Company will use all reasonable efforts to cause the County to deliver, at the signing hereof, a Letter of Representation in the form of Exhibit A hereto, and at the Closing, a certificate signed by the County Manager of the County as set forth in Section 7(e)(iii)(12). 5. Closing. At 10:00 a.m. (New York time) on December _, 2010, or at such other time or date as has been mutually agreed on by the Company, the County and the Underwriter (the "Closing Date"), the Company will deliver, or cause to be delivered, to the Underwriter, at the offices of The Depository Trust Company ("DTC"), 55 Water Street, New York, New York 10041, or at such other place as the Underwriter, the Company and the County may mutually agree upon, the Bonds in definitive form, duly executed and authenticated and registered in the name of Cede & Co. and in such denominations as the Underwriter will have requested in writing not less than two business days before the Closing Date, together with the other • documents hereinafter mentioned; and the Underwriter will accept such delivery and pay the 5 3025651v2 15249.00084 Purchase Price of the Bonds with bank wire transfer in federal funds payable to the order of the • Trustee on behalf of the County. The activities relating to the final execution and delivery of the Bonds, the Contract, the Deed of Trust and the Trust Agreement and the payment therefor and the delivery of all certificates, opinions and other instruments described in Section 7 of this Purchase Contract shall occur at the offices of Orange County, North Carolina. The payment for the Bonds and simultaneous delivery of the Bonds to the Underwriter is herein referred to as the "Closing." The Bonds will be delivered in book-entry form as definitive registered Bonds initially as one bond for each maturity, registered in the name of Cede & Co., as nominee of DTC, as registered owner of all of the Bonds, duly executed and authenticated, with CUSIP identification numbers typed thereon. Neither the failure to type such numbers on any Bond nor any error in them will constitute cause for a failure or refusal by the Underwriter to accept delivery of the Bonds and pay the Purchase Price of the Bonds. 6. Termination of Purchase Contract. The Underwriter has the right to cancel their obligation to purchase the Bonds by notifying the County and the Company of their election to do so, if between the date hereof and the Closing Date: (a) legislation shall have been enacted or introduced by the Congress of the United States, or adopted by either House of the Congress, or enacted or introduced by the General Assembly of the State of North Carolina, or adopted by either House of the General Assembly, or shall have been reported out of committee of either the Congress or the General Assembly, or • be pending in committee of either the Congress or the General Assembly, or a decision shall have been rendered by a court of the United States, including the Tax Court of the United States, or a court of the State of North Carolina, or a ruling or an official release shall have been made or a regulation or temporary regulation shall have been proposed or made or a press release or some other form of notice or announcement shall have been issued by the Treasury Department of the United States or the Internal Revenue Service or other federal or state authority having jurisdiction over tax matters, with respect to federal or State of North Carolina taxation upon revenues or other income of the general character to be derived by the County or the Company, or upon interest received on obligations of the general character of the Bonds, or other action or events shall have transpired which would, in the reasonable judgment of the Underwriter, have the purpose or effect, directly or indirectly, of changing the federal or State of North Carolina tax consequences of any of the transactions contemplated in connection herewith; (b) there shall occur any event, which in the reasonable judgment of the Underwriter (i) would have a material and adverse affect on the market price or marketability of the Bonds, (ii) would make untrue, incorrect or incomplete in any material respect any statement or information contained in the Official Statement, or (iii) is not reflected in the Official Statement but should be reflected therein in order to make the statements and information contained therein, under the circumstances in which they were made, not materially misleading; (c) in the reasonable judgment of the Underwriter, the market price or marketability of the Bonds or the ability of the Underwriter to enforce contracts for the sale of Bonds shall have been materially adversely affected by an amendment of or supplement to the Official • Statement; 6 3025651v2 15249.00084 • (d) there shall have occurred any outbreak of hostilities or other local, national or international calamity or crisis, or a default with respect to the debt obligations of, or the institution of proceedings under the federal bankruptcy laws by or against, the County, any state of the United States or agency thereof, or any county or city located in the United States having a population of over one million persons, the effect of which on the financial markets of the United States will be such as, in the reasonable judgment of the Underwriter, makes it impracticable for the Underwriter to market the Bonds or enforce contracts for the sale of the Bonds; (e) there shall have occurred and be in force a general suspension of trading on the New York Stock Exchange or other national securities exchange, or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on the New York Stock Exchange or other national securities exchange, whether by virtue of a determination by any such exchange or by order of the Securities and Exchange Commission or any other governmental authority having jurisdiction; (f) a general banking moratorium shall have been declared by federal, State of North Carolina or State of New York authorities having jurisdiction and be in force; (g) there shall occur any material adverse change in the affairs of the County or the Company that is not disclosed in the Official Statement; • (h) there shall be established any new restriction on transactions in securities materially affecting the free market for securities (including the imposition of any limitation on interest rates) or the extension of credit by, or the charge to the net capital requirements of the Underwriter established by the New York Stock Exchange, the Securities and Exchange Commission, any other federal or state agency or the Congress of the United States, or by Executive Order; or (i) a decision of any federal or state court or a ruling or regulation (final, temporary or proposed) of the Securities and Exchange Commission or other governmental agency shall have been made or issued that would (i) make the Bonds, or securities similar to the Bonds subject to the registration requirements of the Securities Act of 1933, as amended, or (ii) require the qualification of an indenture in respect of the Bonds or any such securities under the Trust Indenture Act of 1939, as amended. 7. Conditions to Obligations of the Underwriter. The obligation of the Underwriter to purchase the Bonds is subject: (a) to the performance by the Company of its obligations to be performed hereunder at and before the Closing; (b) to the performance by the County of its obligations to be performed under the Letter of Representation at and prior to the Closing; • (c) to the accuracy of the representations and warranties of the Company herein as of the date hereof and as of the time of the Closing; 7 3025651v2 15249.06084 (d) to the accuracy of the representations and warranties of the County in the Letter of • Representation as of the date hereof and as of the time of the Closing; and (e) to the following conditions, including the delivery by the County of such documents as are enumerated herein in form and substance satisfactory to the Underwriter and Robinson, Bradshaw & Hinson, P.A., its counsel: (i) At the time of Closing; (1) the Final Official Statement, this Purchase Contract, the Contract, the Deed of Trust and the Trust Agreement are in full force and effect and have not been amended, modified or supplemented from the date hereof except as may have been agreed to in writing by the Underwriter; (2) the proceeds of the sale of each series of Bonds are deposited and applied as described in the Final Official Statement; and (3) the County has duly adopted and there are in full force and effect such resolutions as, in the opinion of Bond Counsel, shall be necessary in connection with the transactions contemplated hereby. (ii) Receipt of the Bonds, the Contract, the Deed of Trust and the Trust Agreement at or before the Closing. The terms of the Bonds, as delivered, shall in all instances be as described in the Final Official Statement. The terms of the Contract, as • delivered, shall, among other things, specify the County's and any other obligated person's undertaking to provide continuing disclosure in accordance with the Rule and Section 2(n) of the Letter of Representation. (iii) At or prior to the Closing, the Underwriter shall receive copies of the following documents: (1) Final approving opinion of Bond Counsel dated the Closing Date, in substantially the form set forth in Appendix D to the Official Statement. (2} Opinion of Bond Counsel addressed to the Underwriter and dated the Closing Date, in substantially the form attached hereto as Exhibit B. (3) An opinion of the County Attorney, dated the Closing Date, addressed to the Underwriter, in substantially the form attached hereto as Exhibit C. (4) An opinion of counsel to the Company, dated the Closing Date, addressed to the Underwriter, in substantially the form attached hereto as Exhibit D. (5) Opinion of Robinson, Bradshaw & Hinson, P.A., counsel to the Underwriter, dated the Closing Date, addressed to the Underwriter, in form • satisfactory to the Underwriter. 8 3025651v2 15249.00084 • (6) The Final Official Statement. (7) Certified copies of all resolutions of the County relating to the Bonds, the Contract and the Deed of Trust. (8) Certified copies of such documents of the Company approving the execution and delivery of the Company Documents. (9) A specimen Bond. (10) Letters from Moody's Investors Service ("Moody's") and Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies ("S&P") to the effect that the Bonds have been assigned a rating of no less than "_," and "_," respectively. (11) A certificate, in form and substance satisfactory to the Underwriter and its counsel, of the President or any duly authorized officer or official of the Company satisfactory to the Underwriter and its counsel, dated as of the Closing Date, to the effect that: (i) each of the Company's representations, warranties and covenants contained herein are true and correct as of the Closing Date; (ii) the Company Documents have been entered into by the Company and are in full force and effect; and (iii) the Bonds have been duly executed and delivered by the • Company. (12) A certificate, in form and substance satisfactory to the Underwriter and its counsel, dated the Closing Date, executed by an appropriate official of the County to the effect that (i) the representations and warranties of the County in the Letter of Representation are true and correct in all material respects as of the date of Closing, and (ii) the Contract and the Deed of Trust leave been entered into by the County and are in full force and effect. (13) Executed copies of the County's certification as to non-arbitrage and other matters relative to the tax status of the Bonds under Section 148 of the Internal Revenue Code of 1986, as amended. (14) A copy of an endorsement to a title insurance policy naming the Trustee as a beneficiary and insuring title to the real estate comprising the Mortgaged Property. (15) A copy of the Blanket Letter of Representations executed by the County to DTC with respect to the Bonds. (16) A certificate, in form and substance satisfactory to the Underwriter and its counsel, of a duly authorized officer or official of the Trustee satisfactory to the Underwriter and its counsel, dated as of the Closing Date, to the effect that: • (i) the Trust Agreement has been duly executed and delivered by the Trustee; and (ii) the Bonds have been duly authenticated by the Trustee. 9 3025651v2 15249.00084 (17) Such additional legal opinions, certificates, proceedings, • instruments and other documents as counsel to the Underwriter, Bond Counsel, or counsel to the Company or the County may reasonably request to evidence compliance by the Company or the County with legal requirements, the truth and accuracy, as of the time of Closing, of the respective representations of the Company and the County herein contained and the due performance or satisfaction by each of them at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by each of them. The Underwriter has entered into this Purchase Contract in reliance upon the respective representations, warranties and covenants of the Company and the County contained in this Purchase Contract and in the Letter of Representation. Unless excused by the Underwriter, the Underwriter's obligations under this Purchase Contract are at all times subject to the conditions set forth in this Section 7 and any other express condition contained in any other Section of this Purchase Contract. If any condition to the Underwriter's obligations is not excused or satisfied on or before the Closing Date (or in the case of events described in Section 6 above, immediately upon the occurrence of such event), the Underwriter's obligation and, except as otherwise provided in this Purchase Contract, the obligations of the Company and the County will be immediately discharged, and the Underwriter may terminate this Purchase Contract at any time. If, however, the Company is unable to satisfy the conditions to the obligations of the Underwriter contained in this Purchase Contract, or if the obligations of the Underwriter to purchase and accept delivery of the Bonds are terminated for any reason permitted by this Purchase Contract, this Purchase Contract shall terminate and neither the Underwriter nor the Company shall be under further obligation hereunder; except that the respective obligations to pay expenses, as • provided in Section 10, shall continue in full force and effect. All of the opinions, letters, certificates, instruments and other documents mentioned in this Purchase Contract will be deemed to be in compliance with the provisions of this Purchase Contract if, but only if, in the reasonable judgment of the Underwriter and counsel to the Underwriter, they are satisfactory in form and substance. The Underwriter hereby expressly reserves the right to waive any of the conditions to its obligations contained in this Purchase Contract. 8. Mutual Performance. The obligations of the Company under this Purchase Contract are subject to the performance by the Underwriter of its obligations under this Purchase Contract. 9. Continuation of Obligations. All representations, warranties and agreements of the Company shall remain operative and in full force and effect, regardless of any investigations made by or on behalf of the Underwriter, and shall survive the Closing. The obligations of the Company under Section 10 shall survive any termination of this Purchase Contract by the Underwriter pursuant to the terms hereof. 10. Expenses. .The Company will use all reasonable efforts to cause the County to pay all expenses incident to the performance of its obligations under this Purchase Contract, including, but not limited to, mailing or delivery of the Bonds, .costs of printing the Bonds, the Preliminary Official Statement and the Final Official Statement, any amendment or supplement to the Preliminary Official Statement or the Final Official Statement and this Purchase Contract, • the cost of preparation (including printing, copying and distribution) of the Contract, the Deed of 10 3025651v2 15249.00084 . Trust and the Trust Agreement, fees and disbursements of Bond Counsel, fees and disbursements of the County Attorney, fees and disbursements of Trustee's counsel, fees and disbursements of Underwriter's counsel, fees and disbursements of the Company's counsel, fees and expenses of the County's accountants, any fees charged by investment rating agencies for the rating of the Bonds, fees of the Local Government Commission and the North Carolina Municipal Council and any paying agent fees and additional miscellaneous fees and costs incurred in connection with and related to the transaction. The Underwriter shall pay all advertising expenses and blue sky expenses in connection with the public offering of the Bonds and all other expenses incurred by the Underwriter in connection with its public offering and distribution of the Bonds, including the CUSIP Service Bureau service charge for the assignment of CUSIP numbers for the Bonds, but excluding fees and disbursements of Underwriter's counsel. The Company shall not be liable for payment of any of the above expenses, fees or disbursements, nor any other expenses, fees or disbursements which are charged or shall arise as a result of the delivery of the Bonds. 11. Notices. Any notice or other communication to be given to the County under this Purchase Contract may be given by delivering the same in writing to Orange County, North Carolina, P.O. Box 1818, Hillsborough, North Carolina 27278, Attention: Financial Services Director. Any notice or other communication to be given to the Underwriter under this Purchase Contract may be given by delivering the same in writing to BB&T Capital Markets, a division of Scott & Stringfellow, LLC, 200 South College Street, Suite 750, Charlotte, North Carolina 28202. Any notice or other communication to be given to the Company under this Purchase Contract may be given by delivering the same in writing to Orange County Public Facilities Company c/o Orange County Manager, P.O. Box 1818, Hillsborough, North Carolina 27278. 12. Benefats of Purchase Contract. This Purchase Contract is made solely for the benefit of the Underwriter and the Company and their respective successors or assigns, and no other person, including any purchaser of the Bonds, shall acquire or have any right hereunder or by virtue hereof. 13. Approvals by Underwriter. The approval of the Underwriter in connection with this Purchase Contract or .any document contemplated by it will be in writing signed by the Underwriter and delivered to the Company or the County. 14. Assignment. This Purchase Contract may not be assigned by the Company without the prior written consent of the Underwriter. Any assignment for which consent is not given will be void. 15. Business Days. The term "business day" as used in this Purchase Contract will mean any day on which the New York Stock Exchange is open for business. 16. Severability. If any one or more of the provisions of this Purchase Contract is, for any reason, held to be illegal or invalid, such illegality or invalidity will not affect any other provisions of this Purchase Contract and this Purchase Contract wilt be construed and enforced • as if such illegal or invalid provisions had not been contained herein. 11 3025651v2 15249.00084 17. Governing Law. This Purchase Contract is governed by and is to be construed in • accordance with the laws of the State of North Carolina. 18. Effective Date; Counterparts. This Purchase Contract shall become effective on your acceptance hereof. This Purchase Contract may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 19. Survival of Representations and Warranties. Notwithstanding any provisions herein to the contrary, any and all representations, warranties and agreements in this Purchase Contract shall survive regardless of (a) any investigation or any statement in respect thereof made by or on behalf of the Underwriter, (b) delivery of any payment by the Underwriter for the Bonds hereunder and (c) any termination of this Purchase Contract. • [Signatures on following page] 12 3025651v2 15249.00084 • Very truly yours, BB&T CAPITAL MARKETS, A DIVISION OF SCOTT & STRINGFELLOW, LLC By: David M. Adams Managing Director Accepted and confirmed as of the date first above written: . ORANGE COUNTY PUBLIC FACILITIES COMPANY • By: [Signature page for Contract of Purchase] 3025651v2 15249.00084 • • r ~ ~J