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HomeMy WebLinkAboutItem 8-e - Nonprofit Capital Funding Loan Agreement ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: November 13, 2018 Action Agenda Item No. 8-e SUBJECT: Nonprofit Capital Funding Loan Agreement DEPARTMENT: Finance and Administrative Services ATTACHMENT(S): INFORMATION CONTACT: September 20, 2018 Abstract Nonprofit Capital Loan Agreement Template Bonnie Hammersley, (919) 245-2300 Gary Donaldson, (919) 245-2453 PURPOSE: To approve the attached Nonprofit Capital Loan Agreement Template for providing loans to Nonprofits for capital projects. BACKGROUND: On September 20, 2018 the Board of County Commissioners approved a Capital Loan Program and Funding Policy to assist Nonprofit Agencies on their respective capital campaigns. The revolving loan program will be funded with $500,000 and a part of the County’s Community Loan Fund. The Nonprofit capital loan program will be capped at $500,000 annually and no individual loan to a nonprofit entity would exceed $100,000. There would be no minimum loan threshold. The attached Nonprofit Capital Loan Agreement template will be used as the security document for providing loans to Nonprofits that meet the County capital loan criteria. Key terms of Loan Agreement: 1) Loan Amount Borrowed 2) Loans secured by Deed of Trust and Promissory Note 3) Five to ten year maturities at no interest; maturity term contingent on loan amount and useful life of asset 4) Monthly repayment schedule The proposed nonprofit capital timeline and process would be implemented parallel to the Outside Agency Operating Budget timeline and process as indicated below: October / November Outside Agency Prepares Capital Request November 30 Capital Loan Requests Due to the County Manager and Finance and Administrative Services Dec. – March Request Review & Outside Agency Presentations June Outside Agency Approval by Board July Loan Agreements Executed 1 The loan program will be administered as part of the County’s Outside Agency process with each capital loan request being submitted to the County Manager and Department of Finance and Administrative Services by the end of November. FINANCIAL IMPACT: There is no financial impact from the approval of the Nonprofit Capital Loan template. SOCIAL JUSTICE IMPACT: The following Orange County Social Justice Goal is applicable to this item: • GOAL: ENSURE ECONOMIC SELF-SUFFICIENCY The creation and preservation of infrastructure, policies, programs and funding necessary for residents to provide shelter, food, clothing and medical care for themselves and their dependents. RECOMMENDATION(S): The Manager recommends that the Board approve the use of the attached Nonprofit Loan template for the awarding loans to Nonprofits. 2 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: September 20, 2018 Action Agenda Item No. 6-b SUBJECT: Discussion on Proposed Nonprofit Capital Funding Policy and Criteria DEPARTMENT: Finance and Administrative Services ATTACHMENT(S): INFORMATION CONTACT: Power Point Presentation December 13, 2016 Agenda Abstract with Outside Agency Policy Documents Excerpt from Approved June 12, 2018 BOCC Work Session Minutes Bonnie Hammersley, (919) 245-2300 Travis Myren, (919) 245-2308 Gary Donaldson, (919) 245-2453 Paul Laughton, (919) 245-2152 PURPOSE: To discuss a proposed policy and criteria for providing loans to nonprofits for capital projects and provide direction to staff. BACKGROUND: At the June 12, 2018 BOCC meeting, a request was made to develop a County nonprofit capital funding policy and loan criteria. This request was based on a pending $100,000 capital campaign request from the Inter-Faith Council for Social Services, Inc. with funds earmarked from the County’s Social Justice Fund. The Towns of Carrboro and Chapel Hill have not indicated any capital funding for the Inter-Faith Council to date. The proposed funding source for nonprofits that meet the County loan criteria is the Community Loan Fund. The Community Loan Fund is an existing County revolving loan fund that could be expanded and capitalized further through our annual capital financing borrowings. The use of financing proceeds to capitalize a loan fund is a permissible use of proceeds under the North Carolina statutes. The Community Loan Fund was established in FY 2012-13 through appropriated General Fund balance appropriation of $100,000 to provide no interest loans for residents to obtain water and sewer connections. The loans to residents ranged from $3,500 to $10,000 with a maximum term of 10 years. The Community Loan Fund received additional funding of $200,000 in FY 2017-18 from capital financing proceeds; and there is a current balance of $282,837 earmarked for loans to residents for utility connections. Staff recommends that the nonprofit loan program be capped at $500,000 annually and no individual loan to a nonprofit entity would exceed $100,000. There would be no minimum loan threshold. If the revolving loan balance remained stagnant with no borrowers over a three year period, then staff would recommend to the Board that the loan balance be repurposed for other County capital project use through a Budget Amendment. 3 The proposed nonprofit capital timeline and process would be implemented parallel to the Outside Agency Operating Budget timeline and process as indicated below: November County Posts Applications on Websites November-January Outside Agency Prepares Applications December-January Question & Answer Sessions End of January Outside Agency Applications are Due March-May Application Review & Outside Agency Presentations June Outside Agency Approval by Board July Contracts Executed & Programs Begin Nonprofits seeking a capital loan would make a formal written loan request to the County Manager by the end of November. The Department of Finance and Administrative Services has proposed the following capital funding policy and loan criteria for consideration. Proposed capital funding policy: 1) Loans Not to Exceed $100,000 and subject to available Revolving Loan Balances 2) BOCC approved loan agreement; recourse, default and nonprofit bylaw dissolution provisions 3) Loans secured by Deed of Trust 4) Revolving loan structure to recapitalize County funding source 5) Five to ten year maturities at no interest; maturity term contingent on loan amount; and monthly repayment Proposed loan eligibility criteria: 1) Current Outside Agency recipient with three-year average score of at least 85% 2) Clean Audit opinion 3) Three years Audited Financial Statements for completion of Nonprofit Financial Capacity Review The Inter-Faith Council has met the proposed loan eligibility requirements and has a three year average score of 86% from its Outside Agency applications. Nonprofit Financial Capacity Review A review of the nonprofits audited financial statements will be used to complete the Financial Capacity Review which assists in determining the nonprofits ability to repay County loans. Key performance indicators (KPI) 1) Quick (Liquidity) Ratio, 2) Debt Ratio, 3) Expense Efficiency Ratio, and 4) Operating Reserves Ratio are often used by public, private entities and financial institutions to determine financial condition and ability to repay short and long-term obligations. 4 The below chart indicates that Inter-Faith Council has the financial capacity to repay a $100,000 County loan based on the four Financial KPI measurements. For purposes of the proposed loan eligibility criteria, a nonprofit organization that meets all four of the KPIs would successfully meet the County Nonprofit Financial Capacity Review. FINANCIAL IMPACT: The proposed Inter-Faith Council loan of $100,000 would be funded from the Social Justice Fund. The Social Justice Fund balance is currently $328,199. If the Board approves a proposed policy and criteria for subsequent loans, then the Community Loan Fund is the staff recommended funding source and would be funded up to $500,000. SOCIAL JUSTICE IMPACT: The following Orange County Social Justice Goal is applicable to this agenda item: • GOAL: ENSURE ECONOMIC SELF-SUFFICIENCY The creation and preservation of infrastructure, policies, programs and funding necessary for residents to provide shelter, food, clothing and medical care for themselves and their dependents. RECOMMENDATION(S): The Manager recommends that the Board discuss a proposed policy and criteria for providing loans to nonprofits for capital projects and provide direction to staff. NONPROFIT FINANCIAL CAPACITY REVIEW TARGET KEY PERFORMANCE INDICATOR FOCUS 1. QUICK RATIO Cash, investments, and AR 2x and higher The organization's financial capability to quickly liquidate assets to meet short-term financial obligations. Current Liabilities 2. DEBT RATIO Total Debt Not more than 15% The organization's available and unrestricted assets to meet its short-term and long-term debt obligations. Unrestricted Net Assets 3. EXPENSE EFFICIENCY RATIO Program Expenses Not less than 80%The organization's efficiency in fulfilling its mission through dedicated funds for program expenses. Total Expenses 4. OPERATING RESERVES RATIO Operating reserves Target range of 16% to 25% The organization's capability to fund expenses with reserves due to a lack or loss of operating revenues. Total Expenses IFC NONPROFIT FINANCIAL CAPACITY REVIEW TARGET KEY PERFORMANCE INDICATORS 1. QUICK RATIO Cash, investments, and AR 2x times and higher 7.9 Current Liabilities 2. DEBT RATIO Total Debt Not more than 15% 7% Unrestricted Net Assets 3. EXPENSE EFFICIENCY RATIO Program Expenses Not less than 80%81% Total Expenses 4. OPERATING RESERVES RATIO Operating reserves Target range of 16% to 25% 30% Total Expenses Source: June 30, 2017 Inter-Faith Council Audited Financial Statements 5 Proposed Nonprofit Capital Funding Policy and Criteria September 20, 2018 BOCC Regular Meeting 6 •At the June 12, 2018 BOCC Meeting Board Directed Staff to: Develop Capital Funding Policy for Nonprofits Establish Loan Eligibility Criteria for Nonprofits Determine terms for $100,000 loan to Inter-Faith Council for Social Services, Inc. No indication of funding from the Towns Identify future funding sources for Revolving Loan structure; Finance recommends Community Loan Fund Background 7 Established in FY 2012-13 with $100,000 General Fund balance appropriation Provide no interest loans for Residents to make water and sewer connections Loans range from $3,500 to $10,000 with repayment terms up to 10 years Loans secured by Deed of Trust Five Loans Outstanding; Tax Office bills each of these residential parcel owners annually FY 2017-18 additional $200,000 transferred to the fund via Budget Amendment 10 to support additional sewer connection loans Current balance in the Community Loan Fund is $282,837 Community Loan Fund 8 1)Individual Loans Not to Exceed $100,000 and subject to available Revolving Loan Balances 2)Loan Program amount capped at $500,000; no minimum amount stipulation for a nonprofit 3)BOCC approved loan agreement; recourse, default and nonprofit bylaw dissolution provisions 4)Loans secured by Deed of Trust 5)Revolving loan structure to recapitalize County funding source 6)Five to ten year maturities at no interest; maturity term contingent on loan amount; and monthly repayments 7)Nonprofits make formal written request to County Manager by November each year to coincide with Outside Agency Process and Timeline Proposed Nonprofit Capital Funding Policy 9 1) Current Outside Agency recipient with three- year average score of at least 85% 2) Clean Audit opinion 3) Three years Audited Financial Statements to complete Nonprofit Financial Capacity Review 4) IFC Outside Agency three-year average score of 86.6% and meets proposed loan eligibility requirements Proposed Nonprofit Loan Eligibility Criteria 10 Nonprofit Financial Capacity Review NONPROFIT FINANCIAL CAPACITY REVIEW TARGET KEY PERFORMANCE INDICATOR FOCUS 1. QUICK RATIO Cash, investments, and AR 2x and higher The organization's financial capability to quickly liquidate assets to meet short-term financial obligations. Current Liabilities 2. DEBT RATIO Total Debt Not more than 15% The organization's available and unrestricted assets to meet its short-term and long-term debt obligations. Unrestricted Net Assets 3. EXPENSE EFFICIENCY RATIO Program Expenses Not less than 80%The organization's efficiency in fulfilling its mission through dedicated funds for program expenses. Total Expenses 4. OPERATING RESERVES RATIO Operating reserves Target range of 16% to 25% The organization's capability to fund expenses with reserves due to a lack or loss of operating revenues. Total Expenses 11 IFC Nonprofit Financial Capacity Review IFC NONPROFIT FINANCIAL CAPACITY REVIEW TARGET KEY PERFORMANCE INDICATORS 1. QUICK RATIO Cash, investments, and AR 2x times and higher 7.9 Current Liabilities 2. DEBT RATIO Total Debt Not more than 15% 7% Unrestricted Net Assets 3. EXPENSE EFFICIENCY RATIO Program Expenses Not less than 80%81% Total Expenses 4. OPERATING RESERVES RATIO Operating reserves Target range of 16% to 25% 30% Total Expenses Source: June 30, 2017 Inter-Faith Council Audited Financial Statements 12 Outside Agency Timeline and Process November County Posts Applications on Websites November-January Outside Agency Prepares Applications December-January Question & Answer Sessions End of January Outside Agency Applications are Due March-May Application Review & Outside Agency Presentations June Outside Agency Approval by Board July Contracts Executed & Programs Begin Proposed Nonprofit Capital Funding Timeline and Process would parallel above process 13 Questions/Next Steps 14 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: December 13, 2016 Action Agenda Item No. 7-c SUBJECT: Financial Policy for Outside Agency Funding DEPARTMENT: Finance and Administrative Services ATTACHMENT(S): Attachment 1: DRAFT Outside Agency Funding Financial Policy Attachment 2: Bond Counsel Communication NOTE: THIS ITEM WAS DELAYED FROM CONSIDERATION AT THE DECEMBER 5, 2016 BOARD OF COMMISSIONERS MEETING. INFORMATION CONTACT: Bonnie Hammersley, (919) 245-2300 Gary Donaldson, (919) 245-2453 PURPOSE: To establish a financial policy for Outside Agency Funding that provides guidance on the appropriation of County funds to the non-profit community, with the scope of the policy establishing funding targets and criteria. BACKGROUND: Each year as a part of the budget process, Outside Agencies’ applications and scorecards are provided to the County Manager to assist in recommending funding decisions as part of the Manager’s Recommended Budget. The Board of County Commissioners then approves funding as part of the Budget Adoption process in June of each year. November 2016 Work Session Following a presentation and work session on November 10, 2016, the Board of County Commissioners directed staff to develop a financial policy which specifies the funding methodology for funding Outside Agencies. The following five funding scenarios were presented; 1) Percent of Budget 2) Previous Year’s Allocation as Base 3) Incremental Unit of Tax Rate 4) Dollars Per Capita 5) Fixed Dollar Amount 15 The percent of budget methodology was determined to be the most appropriate funding option for the County. The County has historically funded Outside Agencies at 1% of the County Budget (Less the Education Appropriation). The BOCC directed staff to increase the funding target from 1% to 1.2%. Based on the FY 2016-17 Approved Budget (Less the Education Appropriation), 1% equates to $1,121,467 and 1.2% equates to $1,345,761. The work session included discussion on the merits of capital funding as part of Outside Agency Funding. The general sentiment was that the financial policy be primarily for funding operating expenses, but that there may be an exception for BOCC consideration. The financial policy provides guidance for a capital funding exception (Attachment 1). FINANCIAL IMPACT: The policy will generate additional expense of approximately $200,000 based on FY2016-17 Adopted budget compared to the current 1% allocation. SOCIAL JUSTICE IMPACT: The following Orange County Social Justice Goals are applicable to this agenda item: • GOAL: FOSTER A COMMUNITY CULTURE THAT REJECTS OPPRESSION AND INEQUITY The fair treatment and meaningful involvement of all people regardless of race or color; religious or philosophical beliefs; sex, gender or sexual orientation; national origin or ethnic background; age; military service; disability; and familial, residential or economic status. • GOAL: ENSURE ECONOMIC SELF-SUFFICIENCY The creation and preservation of infrastructure, policies, programs and funding necessary for residents to provide shelter, food, clothing and medical care for themselves and their dependents. • GOAL: ENABLE FULL CIVIC PARTICIPATION Ensure that Orange County residents are able to engage government through voting and volunteering by eliminating disparities in participation and barriers to participation. RECOMMENDATION(S): The Manager recommends that the Board review and approve the Outside Agency financial policy. 16 Attachment 1 Financial Policy Outside Agency Funding Orange County provides grants to outside agencies to perform a variety of services for Orange County residents. On annual basis, the County will target 1.2% of the County’s General Fund expenditures, less the appropriation for education expenses, for the purpose of funding outside agency operations. The education appropriation includes funds allocated to fund current expenses, recurring capital, long range capital, health and safety contracts, school debt service, and funds provided to the Durham Technical Community College. The County Manager shall design an outside agency application and scoring process. This process will be used to evaluate outside agency applications and make recommendations to the Board of Orange County Commissioners on individual outside agency grant awards. A brief justification will be available to the Board of Commissioners to explain the County Manager’s recommendations. Outside agency grants shall be used to fund an agency’s operating expenses. These operating expenses may include personnel, contracted services, debt or loan payments, or other expenses related to the day to day operations of the agency. The County will not provide capital grants to outside agencies for the purpose of financing facility acquisition or construction, including contributions to capital campaigns. Exceptions to this general policy include the acquisition or construction of a facility owned or leased by the County for the purpose of providing space to outside agencies or space provided to outside agencies that were initiated by or originated as programs of County government. The Board of Commissioners may also consider capital funding request that include a repayment feature. The terms and conditions of this repayment would be approved by the Board of Commissioners in a formal agreement between the County and the outside agency. 17 SanfordHolshouser www.Sanfordholshouserlaw.com October 31, 2016 Orange County – capital funding for outside agencies There are a variety of ways in which the County could provide capital funding for outside agencies if it decided to do so. In each case, the legal basis for our approach represents a combination of the statute that allows the County to contract with private entities to carry out work that the County could carry out itself (Section 153A-449), and the statute that allows the county to enter multi-year continuing contracts for services (Section 153A-13). In many ways, these approaches mirror approaches used for affordable housing programs in which the units will be privately owned. Build a building, lease it out long-term The County would build a building for use by the agency. The County would continue to own the building. The County could either pay cash for the building or undertake an installment financing for the building (whether the financing would qualify for tax-exempt financing or would require more expensive taxable financing would have to be determined at that time). The lease could either require a cash payment or provide that the use of the building is part of the County’s consideration for the services to be provided by the agency. Matters of maintenance, taxes and insurance would also have to be resolved in connection with the lease. The construction of the building would likely be subject to the construction and bid laws otherwise applicable to County projects. As an alternative, the County could establish a nonprofit corporation of its own to undertake the financing and construction, although the lenders would still look to the County to make the loan payments, and the construction and bids laws would likely still apply. Make a restricted capital grant The County would use cash on hand to make a larger than usual grant that the agency could use for a capital expense. The performance agreement would restrict the use of the funds for the planned capital expense, and would extend for a term 18 SanfordHolshouser www.Sanfordholshouserlaw.com commensurate with the size of the grant. Because County money would be the intended source for the payment of the construction costs, the construction of the building would likely be subject to the construction and bid laws otherwise applicable to County projects. Make a multi-year grant that could be used for lease or loan payments The outside agency would contract for a capital project, and the County would enter a multi-year grant agreement that was sized to provide for the agency’s lease or loan payments related to the project. Fund a loan-loss reserve to back loans to the outside agencies. As the County has done with its business loan programs, the County could fund a loan-loss reserve to support loans incurred by the outside agencies. Considerations for all approaches The function to be served by the outside agency must be a function the County is authorized to provide directly. Each arrangement should be supported by a contract with the outside agency that specifies the work to be done by the agency. If the County uses a multi-year grant approach, then the contract should extend for the term of the grant. If the County uses a lease approach, then the performance contract should extend for the term of the lease. There should in all events be some level of proportionality between the funding from the County and the service by the agency. In undertaking any program of this sort, the County should build a strong record documenting the public benefit expected from the arrangement. To the extent the County views the project and benefitting agencies as enhancing employment and business prospects in the County, the County would be well-served to also follow the statutory procedures (including public hearings) provided for in the business incentive statutes. * * * * * * * * * * * * * * * Please let me know if you have any questions for me. Thanks, as always. 19 1 APPROVED MINUTES 1 ORANGE COUNTY BOARD OF COMMISSIONERS 2 BUDGET WORK SESSION 3 June 12, 2018 4 7:00 p.m. 5 6 The Orange County Board of Commissioners met for a budget work session on Tuesday, June 7 12, 2018 at 7 p.m. at the Whitted Human Services Center in Hillsborough, N.C. 8 9 COUNTY COMMISSIONERS PRESENT: Chair Dorosin and Commissioners Mia Burroughs, 10 Barry Jacobs, Earl McKee, Mark Marcoplos, Renee Price and Penny Rich 11 COUNTY COMMISSIONERS ABSENT: None 12 COUNTY ATTORNEYS PRESENT: None 13 COUNTY STAFF PRESENT: County Manager Bonnie Hammersley, Deputy County Manager 14 Travis Myren, and Clerk to the Board Donna Baker (All other staff members will be identified 15 appropriately below) 16 17 Chair Dorosin called the meeting to order at 7:02 p.m. 18 19 1. Discussion of the FY 2018-19 Operating Budget (PowerPoint Presentation) 20 21 • Funding Decisions on the Operating Budget Amendment List 22 • Funding Decisions on the Other Funds Budget Amendment List 23 24 Travis Myren noted the following items at the Commissioners’ places: 25 - Blue sheet: summary amendments 26 - Purple sheet: special revenue fund amendment 27 - Peach sheet: CIP amendments 28 Travis Myren made the following PowerPoint presentation: 29 30 Intent to Adopt 31 Budget Work Session 32 June 12, 2018 33 Whitted Meeting Facility 34 35 Decision Points 36 1. FY2018-19 Operating Budget 37 • Consider and Approve Amendments to the County Manager’s 38 Recommended Operating Budget (General Fund 39 • Consider and Approve Amendments to Other Funds 40 • Consider and Approve School Funding for Current Expense and 41 Deferred Maintenance for Chapel Hill-Carrboro City Schools and Orange 42 County Schools 43 44 2. FY2018-23 Capital Investment Plan (CIP) 45 • Consider and Approve CIP Amendments 46 • Accept the FY2018-23 Capital Investment Plan and Approve Capital 47 Funding for FY2018-19 48 3. FY2018-19 County Fee Schedule 49 • Consider and Approve County Fee Schedule 50 20 2 4. FY2018-19 Tax Rates 1 • Consider and Approve the Ad Valorem Tax Rate 2 • Consider and Approve the Chapel Hill-Carrboro City Schools Special 3 District Tax 4 • Consider and Approve the County Fire District Tax Rates 5 5. Break 6 6. Resolution of Intent to Adopt 7 • Consider and Approve the Resolution of Intent to Adopt the FY2018-8 19 Operating Budget at the Board of County Commissioners Regular 9 Meeting on June 19, 2018 10 11 FY2018-19 Operating Budget 12 13 • Operating Budget Amendment #1 (General Fund) Provide Funds For IFC Capital 14 Campaign 15 – Current Policy on Outside Agency Capital Funding 16 – Request is for $100,000 per Year for Three (3) Years 17 – Funding Source – Other Post Retirement Employment Benefits - $485,000 in 18 Manager’s Recommended Budget 19 – Letter from Inter-Faith Council 20 – Zero Interest Loan Program - Feasible 21 22 Chair Dorosin said he looked at the Board of County Commissioners’ (BOCC) policy, 23 and he would still support this amendment. He said he believes this would be a reasonable 24 amendment for the Board to make, and fits squarely within the scope of the County to provide 25 for, and this falls within an exception to the policy. 26 Commissioner Price reiterated Chair Dorosin’s comments, and said the Board can 27 revise the policy, if necessary, but she thinks this amendment fits within the policy as currently 28 written. 29 Commissioner Marcoplos said this is an undoubtedly worthy project, and does serve a 30 lot of people in the County. He said the policy is a bare bones statement that says the County 31 will not award capital money, and does not incorporate ways for the Board to engage with 32 projects that want some capital funding from the County. He said this particular project does not 33 need the money right now, and he proposed that the Board revisit this policy some time in the 34 fall, or at the retreat, to talk about setting up a policy that works, and can be understood by all. 35 Commissioner Rich said she fought against this policy, the last time it was discussed, as 36 she wanted to support the Rape Crisis Center in its capital funding; and, at that time, she asked 37 if exceptions could considered, and Gary Donaldson, Chief Financial Officer, said yes. She 38 read an excerpt from previous BOCC minutes, highlighting her desire to find exceptions to this 39 policy, and the BOCC voted against her request at that time. She said all of these agencies are 40 doing important work, and it is unclear to her how the Board can decide to fund one agency 41 over another. 42 Commissioner Rich said she liked the suggestion of discussing this policy further, at a 43 later date. She said she cannot support this amendment, as two similar requests were denied 44 last year, and it seems unfair to now fund this one. 45 Commissioner Jacobs said he agreed with Commissioner Rich and Commissioner 46 Marcoplos, and if the Board agreed to the request, it would be committing a lot of funding up 47 front, without ever inviting other entities to apply, regardless of the merits of IFC’s proposal. He 48 said if the BOCC is going to fund capital projects, there needs to be criteria; and if the funding 49 21 3 is above a certain cost, the Board may want to require value engineering. He asked if staff 1 would bring back talking points in the fall. 2 Commissioner McKee said this policy needs more in depth discussion, and he still has 3 concerns about how the Board controls the amount it provides. He endorsed what 4 Commissioner Marcoplos said about bringing this item back in the fall or at the Board retreat. 5 Commissioner Burroughs agreed with all that has been said. She said staff may want to 6 consider over the summer about having non-profits demonstrate that owning is better than 7 renting. She asked what would happen if the non-profit were to sell a building, in relation to the 8 amount of money invested by the County. She said she remembered the past discussion, and 9 the Board must be fair. 10 Commissioner Price said she would like to consider partnerships between the County 11 and non-profits. She said she wanted to support this in order to begin the conversation. 12 Commissioner Jacobs said if the Board is going to consider funding a kitchen, then it is 13 important to recall that the County has a policy that a certain percent of the food it serves needs 14 to be locally grown; and this may be one of the strings the County wishes to attach to any 15 funding. 16 Chair Dorosin asked Commissioner Marcoplos and Bonnie Hammersley if they had 17 talked with IFC about the ramifications of the Board not providing an answer this evening. 18 Commissioner Marcoplos said he had not spoken with IFC. 19 Bonnie Hammersley said there is a copy of an email at the Commissioners’ places from 20 Robert Dowling, Community Home Trust Executive Director. She said she spoke with him 21 about funding, as well as the possibility of an interest free loan. She said staff can continue to 22 talk with the IFC about partnering, 23 24 From: Robert Dowling [mailto:rdowling@communityhometrust.org] 25 Sent: Monday, June 11, 2018 5:31 PM 26 To: Bonnie Hammersley 27 Cc: Jackie Jenks; kevincfoy@protonmail.com 28 Subject: RE: Information Needed 29 30 Hi Bonnie, 31 32 First, I want to let you know that we are grateful for your support in trying to identify a way 33 forward. Not every County Manager would have done that. 34 We are also very grateful for Commissioner Dorosin’s willingness to assist IFC. And ideally, if 35 four commissioners will agree, we would love for the County to grant funds to FoodFirst. 36 37 However if it’s not possible to obtain approval for a grant, a zero-interest loan would be helpful. 38 But as you know Bonnie, a loan does not contribute to the $5.3MM needed to build FoodFirst. 39 40 A zero-interest loan would be useful if our financial pledges come in more slowly than we 41 expect. It would be even more useful if the County would forgive any amounts outstanding two 42 years after completion of construction. That way, IFC would not be burdened with a repayable 43 loan, even if some pledges are never collected. 44 I hope this is an adequate response for your discussion tomorrow evening. 45 Please let me know if you have questions. 46 Thank you again Bonnie for your support of FoodFirst. 47 48 Robert 49 Robert Dowling 50 22 4 Executive Director 1 Community Home Trust 2 PO Box 2315 3 Chapel Hill, NC 27515 4 919-967-1545 ext. 307 5 6 Commissioner Price asked if the IFC were going to leverage grants next year. 7 Bonnie Hammersley said she and Chair Dorosin met with the leaders of the capital 8 campaign who said the level of funding commitments needed to reach a certain level before 9 they start leveraging grants. 10 Chair Dorosin said there is the option of a zero percent loan, and if the Board were in 11 support of one, it could start with this, and could possibly convert it to grant funding, or a 12 forgivable loan, after further discussion. He said he does not want the Board’s decision to have 13 an adverse effect on the IFC tonight. 14 Commissioner McKee said a forgivable loan is the same as a grant. 15 Chair Dorosin said the Board could put some conditions on it, such as forgiving the loan 16 if IFC fails to raise the additional funding after a certain time period. He said if IFC could raise 17 the money than it would pay back the loan. 18 Commissioner McKee said he is concerned about going down that path, and if the 19 Board is going to provide a grant then that should be done from the get go. He said loans that 20 are potentially forgivable are always forgiven. He said the Board put the policy in effect, and it 21 does not need to do a work around tonight without having further discussion. He said there are 22 too many agencies that would want, and be worthy of, this same treatment. 23 Commissioner Jacobs said he would be more comfortable if staff would bring back 24 some criteria of what the zero interest loans would look like at the next BOCC meeting on 6/19. 25 He said he would be inclined to give IFC one third of what it is asking for. He said the County 26 should not go into this thinking it will waive the amount of the loan, since it makes it 27 psychologically harder for IFC to raise funds. 28 Chair Dorosin said he likes the idea of a matching grant, as opposed to outright cash 29 without conditions. 30 Commissioner Burroughs said she agreed with Commissioner Jacobs about the 31 psychological impact on fundraising when knowing a loan can be potentially forgiven. She said 32 she still supports discussing this topic further in the fall. 33 Commissioner Rich asked if any other local government entities have committed to the 34 IFC campaign. 35 Bonnie Hammersley said the Town of Chapel Hill received a request, which she thinks 36 the Town is honoring, but she will find out. 37 Jackie Jenks, IFC, thanked the Board for even considering this item, and said the IFC is 38 working with Chapel Hill on a potential funding source. 39 Commissioner Rich asked if those funds would be a grant or loan. 40 Jackie Jenks said a grant. 41 Chair Dorosin asked if the Town of Carrboro has made a commitment. 42 Jackie Jenks said IFC has not received a commitment from Carrboro, but the Town has 43 offered to waive some fees and the IFC may share its parking with the Town. 44 Chair Dorosin asked if there was a timeline in place. 45 Jackie Jenks said IFC would like to start construction a year from now, but would need 46 to have all of the funds committed in advance, and the IFC is looking to get the $5.3 million 47 secured soon. She said the IFC has surpassed the 50% mark, which was needed in order to 48 apply for some funding from various foundations. She said a loan will not help IFC reach the 49 $5.3 million required to build, but IFC would consider it as a bridge loan allowing for 50 23 5 construction to begin, and repayment to occur in years 2 and 3. She said if pledges are made, 1 but not received, IFC would ask that this portion of the loan be forgiven. 2 3 Chair Dorosin said there is consensus to review the policy in the fall, and asked if the 4 Board would accept leaving the no interest loan on the table, in order to get more information 5 from staff on the 19th. He said if the Board does not do a loan, then the $100,000 can go to the 6 reserve. 7 Bonnie Hammersley said the Board can park the monies in the social justice fund, which 8 is at $250,000 in the budget. 9 10 A motion was made by Commissioner Marcoplos, seconded by Commissioner Price to 11 revisit this policy in the fall, and to add the zero interest loan criteria item tentatively for the June 12 19th meeting. 13 14 Commissioner Price asked if Commissioner Marcoplos meant to discuss this at a work 15 session in the fall or at the retreat in January 2019. 16 Commissioner Marcoplos said the fall. 17 Commissioner Rich said the loan part sounds too open to her, and asked if the vote 18 could be split into two motions. 19 Chair Dorosin said yes, and the first vote would be to discuss the policy at a work 20 session as early as possible in the fall. 21 22 VOTE: UNANIMOUS 23 24 A motion was made by Chair Dorosin, seconded by that the Board will put aside 25 $100,000 in the social justice fund to be earmarked for a zero interest loan with staff bringing 26 back the criteria will work for the repayments and terms on June 19, 2018. 27 28 Travis Myren said the policy states that staff would negotiate the terms with the 29 applicable outside agency, but staff can bring a general framework. 30 Commissioner Rich asked if this is $100,000 over three years, or $100,000 per year, for 31 three years. 32 Chair Dorosin said he was thinking it would be $100,000 for this year. 33 Bonnie Hammersley said she would assume this would be reviewed each year. 34 Chair Dorosin said to do this for a year, have the policy discussion and then re-visit this 35 at next budget cycle as a loan or something else. 36 37 Commissioner Rich asked if this is part of the motion. 38 Chair Dorosin said yes. 39 40 Commissioner Rich said she has questions about possibly forgiving the loan. 41 Chair Dorosin said that is not part of the discussion now. 42 Commissioner Rich said the Board is talking about the loan and voting now, and asked 43 if the Board is committing to making the loan this evening. 44 Commissioner Price said no, not until next week after staff brings back information. 45 Bonnie Hammersley said moving the funds from the social justice fund would be a 46 simple budget amendment, and can be done at any time during the year. 47 Bonnie Hammersley asked if more clarification would be provided on what the Board 48 seeks from staff next week. 49 24 6 Chair Dorosin said the Board wants to know the repayment terms, when the repayment 1 starts, the number of payments, etc. 2 Bonnie Hammersley said staff would need to negotiate that with IFC, and she is not sure 3 that can be accomplished by next Thursday. 4 Commissioner Jacobs said the Board would also want default terms. He said the Board 5 may want to put funds into social justice fund until the fall, and invite the other two entities that 6 are running capital campaigns into the discussion to see if they are interested in zero interest 7 loans or grants. 8 Commissioner McKee said in his opinion the Board just voted to revisit this in the fall, 9 but is now trying to do a work around. He said the Board should vote now on an interest free 10 loan or grant, or wait until the fall to do anything at all. He said policies exist for a reason. 11 Commissioner Burroughs asked if the Board can get money out of the Other Post 12 Employment Benefits (OPEB) at anytime. 13 Bonnie Hammersley said no, the funds need to be moved into the social justice fund, if 14 the Board wishes to access them. She said once the funds go in to OPEB, the Board cannot 15 get them back out. 16 Commissioner Burroughs said she appreciates Commissioner McKee’s concerns, but 17 said putting money aside allows the possibility of taking action in the fall. 18 Chair Dorosin said the “work around” is an attempt to incorporate everyone’s comments. 19 Commissioner Burroughs said this is not a work around, but is putting money in a place 20 until the Board decides what it wants to do with the policy in the fall. 21 Commissioner Price agreed with Commissioner Burroughs. 22 Commissioner Marcoplos also agreed. 23 24 A revised motion was made by Chair Dorosin, seconded by Commissioner Rich, to 25 move the $100,000 to the social justice fund pending review of the policy change in the fall. 26 27 Commissioner McKee said he will park his reservations until then. 28 Commissioner Jacobs apologized for not paying attention to Commissioner Burroughs’ 29 earlier comments. 30 31 VOTE: UNANIMOUS 32 33 34 25 26 LOAN AND SECURITY AGREEMENT THIS Loan and Security Agreement (the "Agreement") is dated as of October 1, 2018, and is by and between , Inc., a North Carolina nonprofit corporation (the "Borrower") and the Orange County (the "County") The Borrower has applied for a loan from the County, and the County has agreed to make the loan. This Agreement sets out the terms of the loan, including the terms for payments and the security for the loan. NOW, THEREFORE, in consideration of the mutual promises set out in this Agreement, the parties agree as follows: PART ONE — AGREEMENT TO MAKE AND REPAY THE LOAN 1. The County will loan to the Borrower the sum of [$ ,000.00] (the "Loan"). The County is making this loan by giving the Borrower a check for the full amount of the loan. 2. The Borrower will repay the loan. The Borrower's obligation to repay the Loan will be represented by a promissory note (the "Note) in substantially the form of Exhibit A, which the Borrower will execute and deliver to the County in exchange for the Loan proceeds. The Note will set out the terms of repayment, including payment dates. 3. The Borrower will use the Loan for the purposes of its nonprofit business (the "Business") as described in its application to the County for this Loan. PART TWO - SECURITY FOR THE LOAN 4. To secure its obligations to the County under the Note and this Loan Agreement, Borrower grants to the County a security interest in the "Collateral" as described in Exhibit B. This Agreement is intended as, and constitutes, a security agreement within the meaning of the North Carolina Uniform Commercial Code (UCC) Financing Statement, with respect to the Collateral. The Borrower will execute and deliver to the County UCC Financing Statements and such other documents as the County may reasonably deem appropriate to secure the benefits of this Agreement. 5. To further secure the Borrower's obligations to the County under the Note and this Loan Agreement, shall execute a Deed of Trust agreement in substantially the form of Exhibit C. PART THREE - EVENTS OF DEFAULT 6. Events of Default—The happening of any of the following events shall constitute a default under this Agreement (these are the "Events of Default"): 6.1 The Borrower fails to pay when due any amounts payable under the Note; 6.2 The Borrower breaches or fails to perform or observe any term, condition or covenant of this Agreement or the Note on its part to be observed or performed; 6.3 The Borrower moves its principal place of business outside Orange County; 6.4 The Borrower sells all or substantially all of the assets of the Business; Page 1 of 6 27 LOAN AND SECURITY AGREEMENT 6.5 Any warranty, representation or statement made by the Borrower in this Agreement or otherwise to the County in connection with this Loan is found to be incorrect or misleading in any material respect; 6.6 The County believes in good faith that the prospect of the Borrower's payment or performance is impaired; 6.7 The Borrower seeks an order of relief under Federal Bankruptcy laws; 6.8 The Borrower becomes insolvent; or 6.9 A federal or state tax lien is filed against the assets of the Borrower. 7. Remedies on Default— Upon the continuation of any Event of Default, the County may, without any further demand or notice, exercise any one or more of the following remedies: 7.1 Declare the unpaid balance of the Note immediately due and payable; 7.2 Proceed by appropriate court action to enforce the Borrower's performance of the applicable covenants of this Agreement or to recover for the breach thereof; 7.3 Pursue collection under the guaranties; 7.4 Pursue enforcement of the lien of the UCC Financing Statement; and 7.5 Avail itself of all other rights and remedies available at law and in equity. 8. Further Remedies— In addition to the remedies described in paragraph 7, during the continuation of an Event of Default the County may avail itself of all the rights and remedies of a secured party under the UCC, and at its option may: 8.1 Enter upon Borrower's premises to take possession of the Collateral or to render it unusable, or require Borrower to assemble the Collateral at any place designated by County reasonably convenient to the parties; 8.2 Give notice to the Borrower before taking any action pursuant to the UCC Financing Statement by mailing such notice to the Borrower's address as shown in this Agreement, at least ten (10) days before the proposed action. 8.3 Use the proceeds of the disposition of any Collateral to pay and discharge the Borrower's obligations as set forth in this Agreement and in the Note; and 8.4 Without other notice (except as set forth below or in the other documents executed and delivered pursuant to or in connection with the making of the loan contemplated by this Agreement) or demand whatsoever to the Borrower, all of which are hereby waived (to the extent permitted by law), and without advertisement, sell at public or private sale or otherwise realize upon, the whole, or from time to time, any part of the collateral, or any interest which the Borrower may have therein. 8.5 If any automobile is part of the Collateral, the Borrower agrees that a sale by the County of such vehicle at a price based upon a recognized automobile quotation, publication or a sale at a recognized automobile wholesale auction shall be deemed "commercially reasonable." 9. Financial records after a default — At any time the Borrower is in default or a payment due under the Agreement is not made, the Borrower hereby authorizes the County to make or cause to be Page 2 of 6 28 LOAN AND SECURITY AGREEMENT made, at the Borrower's expense and in such manner and at such times as the County require, (a) inspections and audits of any books, records, and papers in custody or control of the Borrower or others, relating to the Borrower's financial or business conditions, including the making of copies thereof and extracts thereof, and (b) inspections and appraisals of any Borrower assets. Should the Borrower fail to make any payment due under the Agreement, the Borrower will furnish to the County for each one month period from the date of disbursement of the loan proceeds covered by this Agreement, and for a six month period thereafter, and semiannually thereafter (no later than 30 days following the expiration of any such period), and at such other times and in such form as the County may prescribe, the financial and operating statement of the business. 10. Costs and expenses related to remedial action - The Borrower agrees that all costs and expenses (including reasonable attorneys' fees and expenses for legal services of every kind) of, or incidental to, the custody, care, management, sale or collection of, or realization upon, any of the Collateral, or in any way relating to the enforcement or protection of the County's rights under this Agreement, shall be entitled to the benefits of this Agreement. The County may at any time apply to the payment of all such costs and expenses all monies of the Borrower or other proceeds arising from the possession or disposition of all or any portion of the Collateral. 11. Other provisions regarding remedies — The County may delay or refrain from exercising any past, present, or future right or remedy hereunder without waiving any such right or remedy. The County shall have no obligation to proceed against real or personal property in preference to the other. PART FOUR— PROMISES BY THE BORROWER 12. The Borrower agrees that it will do the following: 12.1 Operate the Business in full compliance with applicable federal, state, and local laws, including, without limitation, federal laws relating to equal employment opportunity and occupational health and safety, the North Carolina State Building Code, and local building and land use regulations. 12.2 Promptly perform all obligations of Borrower including the payment, when due, of all amounts owed to County secured by this Agreement; 12.3 Protect and properly care for the Collateral, and allow no Collateral to be misused, wasted, or allowed to deteriorate except for normal wear and tear; 12.4 Use the Collateral principally within the State of North Carolina and Orange County, and not to affix the Collateral to real property unless it is classified as a fixture hereinabove the requisite information is supplied; 12.5 Insure all Collateral against theft, loss or destruction, by policies acceptable to County and payable to both Borrower and the County as their interests may appear; that all applicable licenses and permits be obtained; that the employer ID number be provided and a privilege license be obtained; and that both property and liability insurance on the building(s) and contents be procured and maintained by the Borrower. The Borrower shall provide and maintain hazard insurance (fire and extended coverage) in an amount acceptable to the County covering all tangible Collateral. Mortgagee endorsement is to include this loan. 12.6 Pay promptly when due and if applicable any ad valorem taxes and assessments upon the Collateral; 12.7 Upon the County's request, deposit with County additional Collateral to County's satisfaction; Page 3 of 6 29 LOAN AND SECURITY AGREEMENT 12.8 That Collateral will not be changed, transferred, or otherwise disposed of or be subjected to any unpaid charge, unless the County consents in advance in writing to such change, transfer, or charge. 12.9 Upon the County's request, provide a list of buyer, commission merchants and selling agents to or through whom the Borrower intends to sell the products granted as Collateral; 12.10 Keep proper books of account in a manner satisfactory to the County; 12.11 Submit an annual financial statement reviewed or compiled by an independent public accountant within ninety (90) days of the close of the Borrower's fiscal year for the Business; 12.12 Submit a copy of its annual tax return to the County within one month of filing. The Borrower hereby authorizes all federal, state and municipal authorities to furnish reports of examinations, records, and other information relating to the condition and affairs of the business and any desired information from reports, returns, files, and records of such authorities upon request therefore by the County; 12.13 Keep and maintain books, records, and other documents relating directly to the receipt and disbursement of loan and the fulfillment of this Agreement. Each party agrees that any duly authorized representative of the County shall at all reasonable times, have access to and the right to inspect, copy, audit and examine all of the books, records and other documents relating to the loan and fulfillment of this Agreement. 13. The Borrower agrees that it will not do any of the following without the County's prior written consent: 13.1 Effect a change of ownership or control of the Business; 13.2 Consolidate or merge with any other County, unless the procedures for assignment and/or assumption are complied with; or 13.3 At any time the Borrower is in default, give any preferential treatment, make any advance, directly or indirectly controlling or affiliated with or controlled by the Borrower, or any other County, or to any officer, director, or employee of the Borrower, or of any such County; 13.4 For two years after the date of this Agreement, undertake additional debt financing without prior written consent of the County, except that this provision shall not prohibit Borrower from (a) purchase money financing of ordinary and necessary equipment or (b) credit purchases of inventory. The County's consent, when required under this provision, shall not be unreasonably withheld. 13.5 Permit or suffer to exist any other lien, security interest or encumbrance upon the Collateral, except for the existing security interest described in Exhibit D and the security interest created pursuant to this Agreement and any other agreements delivered by the Borrower pursuant to this Agreement. 13.6 Use the Collateral for any illegal purposes. 13.7 Assert a claim or defense held against the County against any assignee of this Agreement 14. The Borrower further represents to the County and acknowledges that the following things are true: 14.1 No financing statement, other than those financing statement(s) on file with the North Carolina Secretary of State at the date of execution of this Agreement and described in Exhibit D (if Page 4 of 6 30 LOAN AND SECURITY AGREEMENT applicable), covers the Collateral; there is no adverse lien or security interest in the Collateral; that Borrower has the right to transfer a security interest in the Collateral; and that the Borrower will defend the title to the Collateral and its proceeds against the claims of others 14.2 The Borrower's correct address appears below its signature to this Agreement 14.3 The County may act as attorney for Borrower in adjusting any insurance coverage and in endorsing any insurance draft and may retain for the satisfaction of the Borrower's obligation any insurance proceeds and/or unearned premium on such insurance. 14.4 All information supplied and statements made by or in support of the Borrower in its application for this credit are true and correct. 14.5 Any loss or destruction of the Collateral shall not release the Borrower from the payment and performance of its obligations under this Agreement. 14.6 The Borrower has only one place of business in North Carolina and that place of business is in Orange County. 14.7 If more than one Borrower executes this Agreement, their obligations under this Agreement shall be joint and several. PART FIVE-THE COUNTY'S POLICIES AND PROCEDURES 15. The Borrower has been given a copy of the County's Policies and Procedures, and has been given an opportunity to review the policies and procedures and ask questions about them. The Borrower will not use the loan proceeds for any purpose that the County's policies and procedures say is an improper use of the loan proceeds. 16. If at any time the Borrower has any questions about whether a particular use of the loan proceeds is permitted, or has any other questions about the policies and procedures or the terms of the loan documents (or wants to request any changes or any permission to vary the terms), Borrower will ask the County for the desired information. The Borrower recognizes that it is the Borrower's responsibility to comply with the policies and procedures and the terms of the loan documents, and it is not the County's responsibility to make sure the Borrower either understands the terms or complies with the terms. The County may take action against the Borrower if the Borrower fails to comply with the policies and procedures and the terms of the loan documents. The Borrower is entitled to rely on a waiver by the County of a requirement of the policies and procedures and the terms of the loan documents only if that waiver is in writing. PART SIX— OTHER AGREEMENTS BETWEEN THE PARTIES 17. Communication — 17.1 Any communication required or permitted by this Agreement must be in writing. 17.2 Any communication under this Agreement shall be sufficiently given and deemed given when delivered by hand or on the date shown as the date of delivery on a United States Postal Service return receipt, if addressed as follows: 17.2.1 If to the County, addressed as follows: Orange County, 200 South Cameron Street, Department of Finance and Administrative Services, Suite 257, Hillsborough, NC 27278; or, Page 5 of 6 31 LOAN AND SECURITY AGREEMENT 17.2.2 If to the Borrower, addressed to the address shown below the Borrower's signature to this Agreement. 17.3 Any addressee may designate additional or different addresses for communications by notice given under this Section to each of the others. 18. The Borrower shall not sell or assign any interest in this Agreement. 19. The parties intend to limit disclosure of confidential information and trade secrets to the fullest extent of the law. Any use of confidential information shall be for the benefit of the Borrower. Notwithstanding anything in the foregoing to the contrary, the County may disclose confidential information pursuant to any governmental, judicial, or administrative order, subpoena, discovery request, regulatory request or similar method. 20. The parties intend that North Carolina law shall govern this Agreement. If any provision of this Agreement shall be determined to be unenforceable, that shall not affect any other provision of this Agreement. If the date for making any payment or the last day for performance of any act or the exercising of any right shall not be a business day, such payment shall be made or act performed or right exercised on or before the next preceding business day. The parties agree that time is of the essence of this Agreement. 21. This Agreement, together with the documents referenced in this Agreement, constitutes the entire agreement between the Borrower and the County with respect to its general subject matter. Only a writing signed on behalf of each party may amend this Agreement. 22. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. For purposes hereof, a facsimile copy of this Agreement, including the signature pages hereto, shall be deemed to be an original. Notwithstanding the foregoing, the parties shall deliver original execution copies of this Agreement to one another as soon as practicable following execution thereof. IN WITNESS WHEREOF, the parties have duly signed, sealed and delivered this Agreement in duplicate originals as of the day and year first above written. LLC ORANGE COUNTY By: By: Executive Director Bonnie Hammersley, County Manager Exhibits: A— Form of Promissory Notes B — Description of Collateral C— Deed of Trust Certificate of Corporate Resolution and Authorization to Borrow Page 6 of 6 32 EXHIBIT A - PROMISSORY NOTE Amount: Date: $ _,000.00 July 1, 2019 FOR VALUE RECEIVED, , Inc., a North Carolina nonprofit corporation (hereafter the "Borrower") promises to pay to the order of Orange County (hereafter the "County"), the principal sum stated above. PAYMENTS; PREPAYMENT Borrower shall make its first monthly payment on 1, 2019 in the amount of$ from the date of the Promissory Note to , 2019. If not paid sooner, all unpaid principal on this Note shall be due and payable on August 1, 2029. The Borrower may prepay the outstanding principal amount at its option at any time, in whole or in part, without penalty or premium. Each monthly payment and any prepayments shall be applied first to any outstanding principal accrued to the payment date. MANNER OF PAYMENT All payments shall be made payable to "Orange County and shall either be delivered to the County at its offices at 200 South Cameron Street, Suite 257, Hillsborough, NC 27278, or sent by mail in care of Orange County Department of Finance and Administrative Services, 200 South Cameron Street, Hillsborough, NC 27278. The County, however, by written notice to the Borrower under the Loan Agreement, may designate a different address for payments. All payments shall be made in lawful money of the United States of America. NO INTEREST For the purposes of this Note, the interest rate is zero percent for all maturities through final maturity. NOTE GIVEN UNDER LOAN AND SECURITY AGREEMENT; SECURED BY DEED OF TRUST This Note is issued pursuant to, and is governed by a Loan and Security Agreement dated July 1, 2019, between the Borrower and the County (the "Loan Agreement"). Payments under this Note are further secured by a Uniform Commercial Code (UCC) Financing Statement of even date herewith made by the Borrower for the County's benefit. DEFAULT Upon the occurrence of any Event of Default described in the Loan Agreement, the County shall have all rights granted by the Loan Agreement. 1 33 EXHIBIT A - PROMISSORY NOTE EXPENSES OF COLLECTION In the event of a default under any provision of this Note (and in addition to collecting all principal, interest and other amounts due on this Note) or the North Carolina UCC financing statement, securing this Note or any violation of the Loan Agreement, the County may employ an attorney to enforce the County's rights and remedies. The Borrower agrees to pay to the County reasonable attorney's fees not exceeding a sum equal to fifteen per cent (15%) of the outstanding balance owing on the Note, plus all other reasonable expenses incurred by the County in exercising any of the County's rights and remedies upon default. COVENANTS All parties to this Note, including the maker and any sureties, endorsers or guarantors, hereby waive (to the extent permitted bylaw) protest, presentment, notice of dishonor and notice of acceleration of maturity and agree to continue to remain bound for the repayment of principal, interest and all other sums due under this Note, notwithstanding any change or changes by way of release, surrender, exchange, modification or substitution of any security for this Note or by way of any extensions of time for the payment of this Note; and all such parties waive (to the extent permitted by law) all and every kind of notice of such change or changes and agree that the same may be made without notice or consent of any of them. GOVERNING LAW The Borrower and the County intend that North Carolina law shall govern all matters related to this Note. RIGHTS CUMULATIVE The rights and remedies of the County as provided in this Note and any instrument securing this Note shall be cumulative and may be pursued singly, successively, or together against the property described in the UCC Financing Statement or any other funds, property or security held by the County for payment or security, in the sole discretion of the County. The failure to exercise any such right or remedy shall not be a waiver or release of such rights or remedies or the right to exercise any of them at another time. AMENDMENT AND MODIFICATION No waiver by the County of any of the terms and conditions of this Note shall be effective unless it is in writing and signed by the County. No modification or amendment to this Note may be made except in writing, signed by the Borrower and the County. COUNTERPARTS This Note may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. For purposes hereof, a facsimile copy of this Note, including the signature pages hereto, shall be deemed to be an original. Notwithstanding the foregoing, the parties shall deliver original execution copies of this Note to one another as soon as practicable following execution thereof. IN WITNESS WHEREOF, the Borrower has caused this Note to be signed, sealed and delivered by its duly authorized officers on the day and year first above written: 2 34 EXHIBIT A - PROMISSORY NOTE BORROWER: Inc, a North Carolina nonprofit corporation By: Executive Director 3 35 EXHIBIT B — DESCRIPTION OF COLLATERAL The "COLLATERAL" is all of the following: 1. All personal property acquired by , Inc., with funds loaned by the COUNTY pursuant to this AGREEMENT, all personal property obtained in substitution or replacement therefore, and all personal property obtained in substitution or replacement for any portion of the Mortgaged Property and all proceeds of the foregoing (collectively, the "Purchased Equipment"). This Agreement is a purchase money security agreement with respect to the Purchased Equipment. The parties expect that the Purchased Equipment will include the following: 2. All goods including but not limited to furniture and general intangibles whether now owned or hereafter acquired and wherever located. Excluding fixtures 3. Equipment, including all Accessions thereto, and all manufactures warranties, parts and tools therefore. 4. Inventory, including all returned inventory. 5. Accounts, including contract rights and health-care-insurance receivables. 6. Vehicles, including all manufacturers warranties and parts therefore. 7. Franchise Agreements. 8. General intangibles, including Payment Intangibles, copyrights, trademarks, patents, trade names, tax refunds, company records (paper and electronic), right under equipment leases, warranties software licenses. 9. To the Extent not listed above as original collateral, all proceeds (cash and non- cash) and products of the foregoing. NOTICE-Pursuant to an Agreement between debtor and secured party, debtor has agreed not to further encumber the collateral described herein. The further encumbrance of which may constitute interference with secured party's right by such encumbrance. (initial) Page 1 of 1 36 I' Prepared by and return after recording to: John Roberts Orange County Attorney's Office 200 S. Cameron Street P.O. Box 8181 Hillsborough, NC 2 72 78 STATE OF NORTH CAROLINA ) The collateral is or includes fixtures. Exhibit D ORANGE COUNTY ) Deed of Trust I i THIS DEED OF TRUST AND SECURITY AGREEMENT (this "Deed of Trust") is dated as of December , 201_, and is granted by , residents of Orange County, North Carolina (referred to interchangeably herein as the "Property Owners" and "Grantors"), to Gary Donaldson, (the 'Deed of Trust Trustee"), for the benefit of ORANGE COUNTY, a North Carolina local government(the "County' RECITALS: The County is advancing $ ,000 to , NONPROFIT CORPORATION, a North Carolina Limited Liability Company, (the NONPROFIT CORPORATION") owned and operated by the Property Owner, pursuant to a Loan and Security Agreement and Promissory Note dated of even date herewith (collectively the "Loan Documents"), by and between the Property Owner, NONPROFIT CORPORATION, and the Company. The Property Owner will use these funds, together with other available funds, to further expand the j business of ,NONPROFIT CORPORATION. As a condition to entering into the Loan Documents, the Company has required the Property Owner to secure , NONPROFIT CORPORATION's obligations under the Loan Documents by this conveyance of the "Mortgaged Property," as defined in Exhibit A. i 1 i i I 37 The Property Owner is the record owner of the Mortgaged Property. This Deed of Trust is given to secure current indebtedness under the Loan Documents of $_,000. The current scheduled date for final repayment is on or about January 1, 20_. NOW, THEREFORE, (1) in consideration of the execution and delivery by NONPROFIT CORPORATION of the Loan Documents (the terms of which are incorporated herein by reference) and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, (2) to secure the Property Owners' performance of all its covenants under this Deed of Trust and ,NONPROFIT CORPORATION's performance of its obligations under the Loan Documents, including the repayment of amounts advanced pursuant to the Loan Documents, and (3) to charge the Mortgaged Property, as defined below, with such payment and performance, the Grantors have bargained, sold, given and conveyed and does by these presents bargain, sell, give, grant and convey to the Deed of Trust Trustee, his successors and assigns forever, in trust, with power of sale,the following (collectively,the "Mortgaged Property"): The real property described in Exhibit A, and all real property hereafter acquired by the Property Owner in replacement of, or in substitution for, all or any part of such premises, together with all easements, rights, rights-of-way and appurtenances belonging to such property. TO HAVE AND TO HOLD the Mortgaged Property with all privileges and appurtenances thereunto belonging,to the Deed of Trust Trustee,his heirs and assigns forever, upon the trusts,terms and conditions and for the uses set out below, in fee simple in trust; SUBJECT,HOWEVER,to the encumbrances described in Exhibit B (the "Existing Encumbrances"); BUT THIS CONVEYANCE IS MADE UPON THIS SPECIAL TRUST: if the ,NONPROFIT CORPORATION's obligations (as defined in the Loan Documents and Promissory Note) are paid in full and the Property Owners shall comply with all of the terms, covenants and conditions of the Loan Documents and this Deed of Trust,this conveyance shall be null and void and shall be canceled of record at the Property Owners' request and cost, and title shall revest as provided by law. BUT IF,HOWEVER, THERE SHALL OCCUR AN EVENT OF DEFAULT UNDER THE LOAN AGREEMENT,then the County shall 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. 2 38 THE PROPERTY OWNERS COVENANT AND AGREE with the Deed of Trust Trustee and the County(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 payments, as and when the same shall become due and payable, of all amounts payable by NONPROFIT CORPORATION under the Loan Documents and NONPROFIT CORPORATION's timely compliance with all terms, covenants and conditions of the Loan Documents. ,NONPROFIT CORPORATION shall pay the obligations as and when the same shall become due and payable in the manner set forth in the Loan Documents, and shall comply in all respects with all of the terms, covenants, and conditions contained in the Loan Documents. 1-2 , NONPROFIT CORPORATION's Continuing Obligations. The ,NONPROFIT CORPORATION shall remain liable for full performance of all its covenants under the Loan Documents,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 the Loan Documents, whether granted to the ,NONPROFIT j CORPORATION, the Property Owners or any other person; (c) The sale or release of all or part of the Mortgaged Property or the release of the Property Owners or any party who assumes all or any part of such performance; or (d) Another party's assumption of the ,NONPROFIT CORPORATION's obligations under the Loan Documents. I 3 2. Property Owners' Other Covenants 2-1 Title Covenants. Property Owners covenant with the Deed of Trust Trustee and the County that the they are seized of and have 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 the Existing Encumbrances listed in Exhibit B, that title to the Mortgaged Property is marketable, and that the Property Owners will forever warrant and defend title to the Mortgaged Property against the claims of all persons. 2-2 Prevention of Liens. The Property Owners will not suffer any mechanic's, j materialman's, laborer's, statutory or other lien to be created and to remain outstanding upon all or any part of the Mortgaged Property. Property Owners shall pay all taxes, assessments, charges, fines and impositions attributable to the Mortgaged Property which can attain priority over this Deed of Trust. i 3 I 39 The Property Owners shall promptly discharge any lien which has priority over this Deed of Trust, unless the County agrees to subordinate this Deed of Trust to the existing lien. 2-3 Condemnation. The Property Owners shall immediately notify the County if any governmental authority shall institute, or shall notify the Property Owners of any intent to institute, any action or proceeding for the taking of, or damages to, all or any part of the Mortgaged Property or any interest therein under the power of eminent domain, or if there shall be any damage to the Mortgaged Property due to governmental action, but not resulting in a taking of any portion of the Mortgaged Property. If the Property Owners receive any proceeds arising from any such action,the Property Owners shall apply such proceeds (net of any expenses of collection) to make prepayments on the Promissory Note or for any other purpose that the County shall determine. 2-4 Insurance; Damage and Destruction. (a) The Property Owners shall keep the improvements now existing or hereafter erected on the Mortgaged Property adequately insured against loss by fire,hazards included within the term"extended coverage", and any other hazards including but not limited to earthquakes and floods. (b) The Property Owners shall immediately notify the County if: (i)the Mortgaged Property or any portion thereof is stolen or is destroyed or damaged by fire or other casualty, (ii) a material defect in the construction of the improvements shall become apparent, or (iii)title to or the use of all or any portion of the Mortgaged Property shall be lost by reason of a defect in title. Each notice shall describe generally the nature and extent of such damage, destruction or taking. (c) If the Property Owners receive any insurance proceeds arising from any circumstance described in subsection(a) above,they shall apply such proceeds (net of any expenses of collection)to make prepayments on the Promissory Note or for any other purpose that the County shall determine. 2-5 Payment of Costs and Attorney's Fees. If the Deed of Trust Trustee or the County employs an attorney to assist in the enforcement or collection of any obligations under taken by ,NONPROFIT CORPORATION pursuant to the Loan Documents, or if the Deed of Trust Trustee or the County voluntarily or otherwise shall become 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 obligations or to enforce compliance by ,NONPROFIT CORPORATION and the Mortgaged Property with any of the provisions in the Loan Documents and this Deed of Trust,respectively, the Property Owners agree to pay reasonable attorneys' fees and all of the costs that may reasonably be incurred (whether or not any suit or proceeding is commenced), and such fees and costs (together with interest at the rate of 8.00%per year) shall be secured as obligations under this Deed of Trust. 2-6 Advances for Performance of , nonprofit.NONPROFIT CORPORATIONs Obligations. If the ,NONPROFIT CORPORATION fails to perform any of its obligations under the Loan Documents and/or the Property Owners fail to 4 40 comply with the terms of this Deed of Trust, the Deed of Trust Trustee and the County are authorized, but not obligated, to perform or cause to be performed such obligations. All such expenditures,together with interest thereon at the rate of 8.00%per year, shall be secured as obligations under this Deed of Trust. 2-7 Maintenance and Repairs; Additions. (a) The Property Owners 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, replacements and renewals. (b) The Property Owners from time to time may make any additions, repairs, modifications or improvements to the Mortgaged Property that it may deem desirable and that do not materially impair the effective use, nor materially decrease the value or substantially alter the intended use, of the Mortgaged Property. All such additions, repairs, modifications and improvements within the boundaries of the site shall become a part of the Mortgaged Property. The Property Owners will do, or cause to be done, all such things as may be required by law in order fully to protect the County's security. 2-8 Environmental Warranties and Indemnification. (a) The Property Owners warrant and represent to the County as follows: (i) The Property Owners have 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 local laws as hazardous or toxic substances, (C) that any manufacturing, landfilling or chemical production has occurred on the Mortgaged Property, or(D)that there is any asbestos or other contaminant on, in or under the Mortgaged Property. a (ii) The Mortgaged Property is in compliance with all federal, State and local environmental laws and regulations. Any hazardous materials or substances kept on the Mortgaged Property will be used in the routine maintenance and operation of the Mortgaged Property and will be used in accordance with label instructions. (iii) The Property Owner will promptly notify the County 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 County copies of any citations, orders,notices or other material governmental or other communication received with respect to j any other hazardous materials, substances, wastes or other environmentally regulated substances affecting the Mortgaged Property. (b) The Property Owner and ,NONPROFIT CORPORATION shall indemnify and hold the County and the Deed of Trust Trustee harmless from and against 5 41 (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 County or the Deed of Trust Trustee as a direct or indirect result of any warranty or representation made by the Property Owners in subsection(a)being false or untrue in any material respect, or 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 County,the Property Owner or any transferee or assignee of the Property Owners or the County. (c) The Property Owners' obligations under this Section shall continue in effect notwithstanding satisfaction of the obligations or foreclosure under this Deed of Trust or delivery of a deed in lieu of foreclosure. 2-9 Use of Mortgaged Property. Unless required by applicable law or unless the County has otherwise agreed in writing,the Property Owner shall not use the Mortgaged Property for any purposes other than that for which the same was intended as of the date of this Deed of Trust. The Property Owner shall 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. 2-10 Right of Entry and Inspection. The County and its representatives and agents shall have the right to enter upon and inspect the Mortgaged Property from time to time during construction and after the completion of construction of any improvements, and the Property Owner shall cause any vendor, contractor or sub-contractor to cooperate with the County and its representatives and agents during such inspections. No right of inspection or approval granted in this Section shall be deemed to impose upon the County any duty or obligation whatsoever to undertake any inspection or to make any approval. No inspection made or approval given by the County shall be deemed to impose upon the County any duty or obligation whatsoever to identify or correct any defects in the improvements or to notify any person with respect thereto, and no liability shall be imposed upon the County, and no warranties (either express or implied) are made by the County as to the quality or fitness of any improvement, any such inspection and approval being made solely for the County's benefit. 2-11 Security Agreement. With respect to any fixtures comprising a portion of the Mortgaged Property,this Deed of Trust is made and declared to be a security agreement in favor of the County encumbering each and every item of such property included herein as a part of the Mortgaged Property, and the Property Owner grant a security interest to the County in and to all of such fixtures. The remedies for any violation of the covenants,terms and conditions of the security agreement contained in this Deed of Trust shall be (a) as prescribed herein or(b) as prescribed by general law, at the County's sole election. 2-12 Further Instruments. Upon the County's request,the Property Owner shall execute, acknowledge and deliver such further instruments reasonably necessary or desired by the County to carry out more effectively the purposes of this Deed of Trust or any other 6 42 document related to the transactions contemplated by this Deed of Trust, and 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. 2-13 Joint and Several Liability. The Property Owners' covenant and agree that the Property Owners' obligations and liability under this Deed of Trust shall be joint and several. i 3. The Deed of Trust Trustee 3-1 Deed of Trust Trustee's Liability. The Deed of Trust Trustee shall suffer no liability by virtue of[his] acceptance of this trust except such as may be incurred as a result of the Deed of Trust Trustee's failure to account for the proceeds of any sale under this Deed of Trust. 3-2 Substitute Trustees. If the Deed of Trust Trustee, or any successor, shall die, become incapable of acting or renounce [his] trust, or if for any reason the County desires to replace the Deed of Trust Trustee,then the County shall have the unqualified right to appoint one or more substitute or successor Deed of Trust Trustees by instruments filed for registration in the office of the Register of Deeds where this Deed of Trust is recorded. Any such removal or appointment may be made at any time without notice, without specifying any reason therefor and without any court approval. Any such appointee shall become 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. 4. Defaults and Remedies; Foreclosure 4-1 Set Defaults and Remedies. Upon the occurrence and continuation of an Event of Default, as defined in the Loan Documents and/or this Deed of Trust,the County may pursue i its rights and remedies as provided under the Loan Documents and this Deed of Trust, including foreclosure and sale as described in Section 4-2. i 4-2 Foreclosure; Sale under Power of Sale. (a) Right to foreclosure or sale. Upon the continuation of an Event of Default, as defined in the Loan Documents and/or in this Deed of Trust, at the County's request,the Deed of Trust Trustee shall foreclose this Deed of Trust by judicial proceedings or, at the County's j 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 shall in no way adversely affect 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 Property Owners expressly waive 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 and shall execute and deliver a proper deed or deeds to the successful purchaser at such sale. (b) Coun . 's Bid. The County may bid and become the purchaser at any sale under this Deed of Trust. In lieu of paying cash therefor,the County may make settlement for the 7 i 43 purchase price by crediting against the obligations the proceeds of sale net of sale expenses, including the Deed of Trust Trustee's commission, if any, 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) ,NONPROFIT CORPORATION and/or Property Owners' Bid. ,NONPROFIT CORPORATION and/or the Property Owner may bid for all or any part or parts of the Mortgaged Property at any foreclosure sale,but they may not bid less than an amount sufficient to provide for fall payment of the obligations unless the County otherwise consents in writing. (d) Successful Bidder's Deposit. At any such sale the Deed of Trust Trustee may, at its option, require any successful bidder (other than the County) immediately to deposit with the Deed of Trust Trustee cash or a certified check in an amount equal to all or any part of the successful bid, and notice of any such requirement need not be included in the advertisement of the notice of such sale. (e) Application of Sale Proceeds. The Deed of Trust Trustee 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 shall include a commission to the Deed of Trust Trustee equal to five 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 shall be paid to the Property Owners. 4-3 Possession of Mortgaged Property. Upon the continuation of any Event of Default,the County,to the extent permitted by law,is authorized to: (a) take possession of the Mortgaged Property, with or without legal action, (b) lease the Mortgaged Property, (c) collect all rents and profits therefrom, with or without taking possession of the Mortgaged Property, and (d) after deducting all costs of collection and administration expenses, apply the net rents and profits to the payment of necessary maintenance and insurance costs, and then, issue such order as the County in its discretion shall elect, apply such amounts to the ,NONPROFIT CORPORATION's account to reduce the obligations. The County shall be liable to account only for rents and profits it actually receives. 4-4 No Remedy Exclusive; Delay Not Waiver. All remedies under this Deed of Trust are cumulative and may be exercised concurrently or separately. The exercise of any one remedy shall not be deemed an election of such remedy or preclude the exercise of any other remedy. If any Event of Default shall occur and thereafter be waived by the other parties, such waiver shall be limited to the particular breach so waived and shall not be deemed a waiver of any other breach under this Deed of Trust. 8 44 5. Miscellaneous 5-1 Notices. (a) Any communication required or permitted by this Deed of Trust must be in writing. (b) Any communication under this Deed of Trust shall be sufficiently given and deemed given when delivered by hand or on the date shown as the date of delivery on a United States Postal Service return receipt, if addressed as follows: (i) if to the ,NONPROFIT CORPORATION,to I Hillsborough, NC 27278 (ii) if to the Deed of Trust Trustee,to Gary Donaldson Trustee Orange County Post Office Box 8181 Hillsborough,NC 27278; and, (iii) if to the County, addressed as follows: Manager, Orange County, Post Office Box 8181 Hillsborough,NC 27278; or, (c) Any communication sent to the Deed of Trust Trustee shall also be sent to the 1 NONPROFIT CORPORATION and the County. i (d) Any addressee may designate additional or different addresses for I communications by notice given under this Section to each of the others. 1 6-2 Successors; Assignments (a) This Deed of Trust shall be binding upon, inure to the benefit of, and be enforceable by the ,NONPROFIT CORPORATION, the Property Owners,the Deed of Trust Trustee and the County and their respective successors and assigns. i (b) The Property Owner shall not sell, lease,transfer or otherwise dispose of all or any part of the Mortgaged Property or any interest therein without the County's prior written consent. 1 6-3 No Marshalling. The Property Owner waive any and all rights to require marshalling of assets in connection with the exercise of any remedies provided in this Deed of i Trust or as permitted by law. 6-4 Governing Law and Venue. The Property Owner, NONPROFIT CORPORATION,the County and the Deed of Trust Trustee intend that North Carolina law shall govern this Deed of Trust. Any and all disputes between the parties shall be brought in the Superior Court of Orange County. M i 6-5 Covenants Running with the Land. All covenants contained in the Loan Documents shall run with the real estate encumbered by this Deed of Trust. 9 I i i 45 6-6 Severability. If any provision of this Deed of Trust shall be determined to be unenforceable,that shall not affect any other provision of this Deed of Trust. 6-7 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 shall not be a business day, such payment shall be made or act performed or right exercised on or before the next succeeding business day. 6-9 Amendments. This Deed of Trust shall not be changed except by a writing signed by the Property Owner, ,NONPROFIT CORPORATION,the County and the Deed of Trust Trustee. [The remainder of the this page has been left blank intentionally] 10 46 IN WITNESS WHEREOF,the Grantors have caused this instrument to be signed, sealed and delivered by duly authorized officers, as of the day and year first above written. Name Name STATE OF NORTH CAROLINA ORANGE COUNTY I , Notary Public for County, North Carolina, certify that personally came before me this day and executed the foregoing instrument for the purposes therein expressed. Witness my hand and official Notarial seal, this the day of , 2016. Official Signature of Notary Public i [SEAL] i My commission expires: i STATE OF NORTH CAROLINA ORANGE COUNTY I ,Notary Public for County, North i Carolina, certify that personally came before me this day and executed the foregoing instrument for the purposes therein expressed. a Witness my hand and official Notarial seal, this the day of , 2016. Official Signature of Notary Public i [SEAL] My commission expires: I r l 11 ' i I 47 EXHIBIT A—Mortgaged Property Description Being all of the property as recorded in Deed Book at Page Orange County Registry,North Carolina. 12 48 EXHIBIT B --Existing Encumbrances i a I i a I I i I i 13