Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
Agenda - 05-18-2021; 8-e - Adoption of the Final Financing Resolution Authorizing the Issuance of Installment Purchase Financing for Various CIP Projects and To Refinance Existing County Obligations
1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: May 18, 2021 Action Agenda Item No. 8-e SUBJECT: Adoption of the Final Financing Resolution Authorizing the Issuance of Installment Purchase Financing for Various Capital Investment Plan Projects and To Refinance Existing County Obligations DEPARTMENT: Finance and Administrative Services ATTACHMENT(S): INFORMATION CONTACT: Attachment 1 . Resolution in Support of Gary Donaldson, (919) 245-2453 LGC Application for Paul Laughton, (919) 245-2152 Financing Robert Jessup, (919) 933-9891 Attachment 2. Resolution Approving Financing Terms and Documents for 2021 Installment Financing Attachment 3. Deed of Trust Attachment 4. Trust Agreement Attachment 5. Escrow Agreement Attachment 6. Modification to Culbreth School Lease Attachment 7. Draft Preliminary Official Statement Attachment 8. Bond Purchase Agreement PURPOSE: To adopt the preliminary and final financing resolutions authorizing the issuance of approximately $45,000,000 in installment financing to finance capital investment projects and equipment for the fiscal year, and to refinance existing County obligations. The financing will also include amounts to pay transaction costs. BACKGROUND: At the May 4, 2021 Board Business meeting, the Board of County Commissioners conducted a public hearing and received preliminary information of capital projects and equipment financing and refinancing existing debt obligations. The Board made a preliminary determination to finance costs of these projects and equipment, and financing costs by the use of an installment financing, as authorized under Section 160A-20 of the North Carolina General Statutes. The statutes require that the County adopt a financing resolution supporting the application to the Local Government Commission (LGC) for approval of the financing. County staff has been in 2 contact with the LGC staff, and expects no issues in receiving full LGC approval. At the May 4 meeting, the Board adopted an appropriate resolution. A comment on the topic of the hearing was subsequently received within the 24-hour window for post-hearing comments, so this preliminary financing resolution is presented to the Board for adoption. If the Board adopts the final resolution approving the financing at tonight's meeting, staff expects to price the bonds and to set the final interest rates and other terms of the financing on June 3, 2021 contingent on market conditions. The closing is scheduled for June 24, 2021. FINANCIAL IMPACT: A preliminary estimate of maximum debt service applicable to the capital investment projects and equipment financing would require the highest debt service payment of $1.9 million in FY 2023 (based on current market interest rates). The tax rate equivalent for the estimated highest debt service payment is approximately $0.009 (0.9 cents). SOCIAL JUSTICE IMPACT: The following Orange County Social Justice Goal is applicable to this 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: CREATE A SAFE COMMUNITY The reduction of risks from vehicle/traffic accidents, childhood and senior injuries, gang activity, substance abuse and domestic violence. • 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. ENVIRONMENTAL IMPACT: The following Orange County Environmental Responsibility Goal impacts applicable to this item: • ENERGY EFFICIENCY AND WASTE REDUCTION Initiate policies and programs that: 1) conserve energy; 2) reduce resource consumption; 3) increase the use of recycled and renewable resources; and 4) minimize waste stream impacts on the environment. • RESULTANT IMPACT ON NATURAL RESOURCES AND AIR QUALITY Assess and where possible mitigate adverse impacts created to the natural resources of the site and adjoining area. Minimize production of greenhouse gases. RECOMMENDATION(S): The Manager recommends that the Board approve both the preliminary resolution in support of the County's LGC application and the final financing resolution, thereby approving the substantially final financing documents and authorizing County staff to complete the financing of the stated capital projects and equipment and refinancing of existing obligations. 3 FES-2021-021 Attachment 1 Resolution supporting an application to the Local Government Commission for its approval of a County financing agreement WHEREAS-- The Orange County Board of Commissioners has previously determined to carry out various public improvements and acquisitions, as identified in the County's capital improvement plan and as described in Exhibit A. The County has also been advised that the County may be able to save money at the same time by refinancing some of its outstanding loans, as described in Exhibit B. The Board has also determined to finance the costs of these projects through an installment financing, as authorized under Section 160A-20 of the North Carolina General Statutes. In an installment financing, the County's repayment obligation is secured by a mortgage-type interest in all or part of the property being financed, but not by any pledge of the County's taxing power or any specific revenue stream. In this case, the County expects to place that mortgage on the Whitted Building, Blackwood Farm Park and possibly other facilities originally financed with loans now to be refinanced. North Carolina law requires that the County's financing be approved by the North Carolina Local Government Commission (the "LGC"), a division of the North Carolina State Treasurer's office. Under the guidelines of the North Carolina Local Government Commission, this governing body must make certain findings of fact to support the County's application for the LGC's approval of the County's financing arrangements. 1. THEREFORE, BE IT RESOLVED by the Orange County Board of Commissioners, as follows: (a) The County makes a preliminary determination to finance approximately $18,700,000 to pay capital costs of public improvements and acquisitions, and in particular those described in Exhibit A. (b) In addition,the County makes a preliminary determination to finance an amount estimated as up to approximately$18,060,000 to refinance existing loans and 4 in particular those described in Exhibit B.The amount for refinancing may be reduced depending on which County loans can be efficiently refinanced. (c) The Board will determine the final amount to be financed by a later resolution. The final amount financed may be slightly lower or slightly higher than a total of $36,760,000. The final amount financed will include funds to pay financing costs and other related costs. 2. The Board of Commissioners makes the following findings of fact in support of the County's application to the LGC: (a) The proposed projects are necessary and appropriate for the County under all the circumstances. (b) The proposed installment financing is preferable to a bond issue for the same purposes. The County has no meaningful ability to issue non-voted general obligation bonds for these projects, other than the school projects. The County is in the midst of a program for issuing voter-approved bonds for school purposes and affordable housing purposes. It is appropriate for the County to balance its capital program between various types of financings. The County expects that in the current interest rate environment for municipal securities there would be no material difference in the overall financing costs between general obligation bonds and installment financings for these projects. These projects will produce no revenues that could be used to support a self-liquidating financing. (c) The estimated sums to fall due under the proposed financing contract are adequate and not excessive for the proposed purpose. The County will closely review proposed financing rates against market rates with guidance from the LGC and in consultation with the County's financial adviser. All amounts financed will reflect either approved contracts, professional estimates, or previous actual expenditures. (d) As confirmed by the County's Finance Officer, (i) the County's debt management procedures and policies are sound and in compliance with law, and (ii) the County is not in default under any of its debt service obligations. 5 (e) Although the County expects there will be tax increases associated with the County's overall capital improvement program, any tax increase directly attributable to the current proposed financing will be minimal. The County will manage the projects and its borrowing plans so as to minimize the tax impact while still allowing the projects to proceed. The County believes that the tax rate impact of this financing is reasonable under all the circumstances. Furthermore, the refinancings will result in a lower debt service burden for the County. (f) The County Attorney is of the opinion that the proposed project is authorized by law and is a purpose for which public funds of the County may be expended pursuant to the Constitution and laws of North Carolina. 3. Additionally, the Board resolves as follows: (a) The County intends that the adoption of this resolution will be a declaration of the County's official intent to reimburse project expenditures from financing proceeds. The County intends that funds that have been advanced for project costs, or which may be so advanced, from the County's general fund, or any other County fund, may be reimbursed from the financing proceeds. (b) The Board directs the Finance Officer to take all appropriate steps toward the completion of the financing, including completing an application to the LGC for its approval of the proposed financing. The Board ratifies all prior actions of County representatives in this regard. (c) This resolution takes effect immediately. 6 Exhibit A - list of projects to be financed with estimated amounts Component Estimated Cost Court Street Annex Renovations $ 188,600 Criminal Justice Resource Department Expansion/Renovation $ 205,779 Accessibility & Security Improvements $ 194,643 Government Services Annex Stormwater & Renovations $ 375,000 HVAC Projects $ 714,203 Major Plumbing Repairs $ 195,343 Justice Facility Improvements $ 43,221 Parking Lot Improvements $ 57,280 Roofing & Building Facade Improvements $ 1,130,353 Whitted Building Stormwater& Renovations $ 942,372 Link Center Remediation $ 282,377 IT Fiber Connectivity $ 302,532 ITGC Initiatives & IT Infrastructure $ 372,097 Solid Waste— Improvements &Vehicle Replacement $ 319,952 Emergency Services Vehicle Replacements $ 801,802 Sheriff vehicle replacements $ 107,104 Communication System Improvements $ 150,000 Blackwood Farm Park Construction $ 2,935,000 Parks— Renovations & Easements $ 420,486 Sportsplex— Maintenance & Repairs $ 698,304 Land Banking—Affordable Housing $ 628,313 Orange County Schools— Recurring Capital Projects $ 1,200,300 Orange County Schools—Maintenance & Improvements $ 651,586 Chapel Hill-Carrboro Schools— Recurring Capital Projects $ 1,799,700 Chapel Hill-Carrboro Schools—IT Infrastructure $ 1,519,261 Chapel Hill-Carrboro Schools—Supplemental Deferred Maintenance $ 631,740 Chapel Hill-Carrboro Schools—Various Maintenance & Improvements $ 1,808,454 Total Project Costs $ 18,675,802 7 Exhibit B - list of potential refinancings, with estimated amounts Component Estimated Cost 2014 IPC Bank of America $ 3,600,000 2014 NC DEQ Loan $ 760,000 Series 2012 Limited Obligation Bonds $ 3,805,000 2017 IFC (Sterling) $ 9,895,000 Total Loan Amounts Refinanced $ 18,060,000 8 RES-2021-032 Attachment 2 Resolution providing final approval of terms and documents for Spring 2021 installment financing for capital projects and loan refinancings Introduction The Board of Commissioners has previously determined to carry out various public improvements and acquisitions, as identified in the County's capital improvement plan and as described in Exhibit A, and to refinance some existing County loans as described in Exhibit B. The Board has determined to carry out the financings by using a single installment financing, as authorized under Section 160A-20 of the North Carolina General Statutes. In an installment financing, the County's repayment obligation is secured by a mortgage-type interest in all or part of the property being acquired or improved, but not by any pledge of the County's taxing power or any specific revenue stream. The County's financing plan also includes the use of limited obligation bonds (the "Bonds"), which represent interests in the installment payments to be made by the County that can be sold to investors. The County staff has made available to the Board the draft documents listed on Exhibit C (the "Documents"), and a draft of an official statement designed to provide information about the County and the financing to prospective investors in the bonds. These items relate to the County's carrying out the financing plan. This resolution provides the Board's final approval of the financing terms and the substantially final financing documents, and authorizes County staff to complete the financing process. BE IT THEREFORE RESOLVED by the Board of Commissioners of Orange County, North Carolina, as follows: 9 1. Determination to Proceed with Financing -- The Board confirms its decision to carry out the proposed installment financing as described above, to provide financing for new public assets and improvements as well as refinancing of existing loans. Under the financing plan, the County will receive funds from the sale of the Bonds to carry out the projects, including the refinancings. The County will pay the Bonds over time, with interest. The County will secure its repayment obligation by granting a mortgage-like interest in some or all of the property acquired or improved through the proceeds of the new borrowing and, potentially some or all of the property acquired or improved through the proceeds of the borrowings to be refinanced. In particular, the County expects that the collateral will include some or all of the following: the County's Whitted Building on West Tryon Street in Hillsborough; the County library on Margaret Lane in Hillsborough; Culbreth Middle School on Culbreth Road in Chapel Hill; and Blackwood Farm Park on NC-86 in Chapel Hill. 2. Approval of Documents;Direction to Execute Documents -- The Board approves the forms of the Documents submitted to this meeting. The Board authorizes the Chair and the County Manager, or either of them,to execute and deliver the Documents in final form. The Documents in their respective final forms must be in substantially the forms presented,with 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 that officer's approval of any changes. The Documents in final form,however,must provide for the aggregate principal amount of the Bonds to not exceed $39,000,000 and a financing term not to extend beyond December 31, 2041. Bonds related to refinancings must be payable not later than the end of the fiscal year in which the refinanced obligations are payable. The amount financed under the Documents may include amounts to pay financing expenses and other necessary and incidental costs. As indicated in the draft Documents, some of the Bonds will be issued on a taxable basis, and some on a tax- exempt basis. The true interest cost on the tax-exempt bonds must not exceed 4.00%, and the true interest cost on the taxable bonds must not exceed 1.50%. 3. Sale of Bonds; Approval of Official Statement - The Board appoints FHN Financial Capital Markets, as senior manager, and Robert W. Baird & Co. 2 10 Incorporated, as co-manager, to underwrite a public offering of the proposed limited obligation bonds. The Board approves the draft official statement submitted to this meeting as the form of the preliminary official statement pursuant to which the underwriters will offer the bonds for sale. 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 the use of the preliminary official statement and the final official statement (collectively, the "Official Statement") by the underwriters in connection with the sale 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 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 the 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. 4. Officers to Complete Closing - The Board authorizes the County Manager, the Finance Officer and all other County officers and employees to take all proper steps to complete the financing in accordance with the terms of this resolution. The Board authorizes the County Manager to hold executed copies of all financing documents authorized by this resolution in escrow on the County's behalf until the conditions for their delivery have been completed to her satisfaction,and then to release the executed documents for delivery to the appropriate persons or organizations. Without limiting the generality of the previous paragraphs, the Board specifically authorizes the County Manager (a) to approve and enter into, on behalf of the County, any additional agreements appropriate to carry out the financing plan contemplated by this resolution, and (b) to approve changes to any documents previously signed by County officers or employees, provided that the changes do not 3 11 substantially alter the intent from that expressed in the form originally signed. The County Manager's authorization of the release of any document for delivery will constitute conclusive evidence of her approval of any changes. In addition, the Board authorizes the County Manager and the Finance Officer to take all appropriate steps for the efficient and convenient carrying out of the County's on-going responsibilities with respect to the financing. This authorization includes,without limitation, contracting with third parties for reports and calculations that may be required under the Documents, this resolution or otherwise with respect to the bonds. 5. Other Financing Participants - Sanford Holshouser LLP will serve as the County's bond counsel. Davenport & Company LLC will serve as the County's financial adviser. The Bank of New York Mellon Trust Company, N.A., will serve as Trustee under the Trust Agreement referenced in Exhibit C. 6. Redemption of Prior Obligations - The Board directs the Finance Officer to make, on the County's behalf, an irrevocable call for prepayment or redemption of such of the County's existing loan and financing obligations as the Finance Officer deems beneficial to the County, including any or all of obligations described in Exhibit B. The Finance Officer shall make this call for redemption by the execution and delivery of an appropriate certificate in connection with the original delivery of the Documents. 7. Release of County Library Property - The County requests that The Bank of New York Mellon Trust Company, N.A., as Trustee, release the existing financing lien on the Orange County Library property in Hillsborough. This property currently secures an existing County financing. The County wants the existing lien released so the Library property can form part of the collateral for this 2021 financing. This will facilitate the County's plan of refinancing some existing loans. B. Additional Provisions - The Board authorizes all County officers and employees to take all further action as they may consider desirable to carry out the purposes of this resolution. In particular, the Board directs the Clerk to this Board to apply the County's seal to the final form Documents, and to attest to the application of the seal.The Board ratifies all prior actions of County officers and employees to this 4 12 end. Upon the unavailability or refusal to act of the County Manager, the Chair or the Finance Officer,any other of those officers may assume any responsibility or carry out any function assigned in this resolution. In addition, the Vice Chair or any Deputy or Assistant Clerk may carry out or exercise any rights or responsibilities assigned in this resolution to the Chair or the Clerk. The Board repeals all other Board proceedings, or parts of proceedings, in conflict with this resolution, to the extent of the conflict. This resolution takes effect immediately. 5 13 Exhibit A - list of projects to be financed with estimated amounts Component Estimated Cost Court Street Annex Renovations $ 188,600 Criminal Justice Resource Department Expansion/Renovation $ 205,779 Accessibility & Security Improvements $ 194,643 Government Services Annex Stormwater& Renovations $ 375,000 HVAC Projects $ 714,203 Major Plumbing Repairs $ 195,343 Justice Facility Improvements $ 43,221 Parking Lot Improvements $ 57,280 Roofing & Building Fagade Improvements $ 1,130,353 Whitted Building Stormwater & Renovations $ 942,372 Link Center Remediation $ 282,377 IT Fiber Connectivity $ 302,532 ITGC Initiatives & IT Infrastructure $ 372,097 Solid Waste— Improvements &Vehicle Replacement $ 319,952 Emergency Services Vehicle Replacements $ 801,802 Sheriff vehicle replacements $ 107,104 Communication System Improvements $ 150,000 Blackwood Farm Park Construction $ 2,935,000 Parks—Renovations & Easements $ 420,486 Sportsplex— Maintenance & Repairs $ 698,304 Land Banking—Affordable Housing $ 628,313 Orange County Schools— Recurring Capital Projects $ 1,200,300 Orange County Schools— Maintenance & Improvements $ 651,586 Chapel Hill-Carrboro Schools— Recurring Capital Projects $ 1,799,700 Chapel Hill-Carrboro Schools— IT Infrastructure $ 1,519,261 Chapel Hill-Carrboro Schools—Supplemental Deferred Maintenance $ 631,740 Chapel Hill-Carrboro Schools—Various Maintenance & Improvements $ 1,808,454 Total Project Costs $ 18,675,802 6 14 Exhibit B- list of potential refinancing candidates Component Estimated Cost 2014 IPC Bank of America $ 3,600,000 2014 NC DEQ Loan $ 760,000 Series 2012 Limited Obligation Bonds $ 3,805,000 2017 IFC (Sterling) $ 9,895,000 Total Loan Amounts Refinanced $ 18,060,000 7 15 Exhibit C -- Draft Documents (a) A draft dated May 4, 2021, of a Trust Agreement to be dated on or about June 1, 2021, between the County and The Bank of New York Mellon Trust Company, N.A. (the "Trustee"). The Trust Agreement provides for the advance of funds to the County, for the issuance of limited obligation bonds, for the County's obligation to repay the amounts advanced,and for the County's responsibilities for the use and care of the collateral. (b) A draft dated May 4, 2021, of a Deed of Trust to be dated on or about June 1, 2021, from the County to a deed of trust trustee for the Trustee's benefit. The Deed of Trust imposes a security interest on certain County property to secure the County's obligations under the Bonds and the other financing documents. (c) A draft dated April 21, 2021, of a Lease Modification between the County and the Chapel Hill- Carrboro Board of Education.This Lease Modification (approved by the School Board on May 6) extends the current financing lease agreement for that school so as to allow Culbreth to serve as a part of the collateral for this 2021 County bond issue. (d) A draft of a Bond Purchase Agreement to be dated on or about June 3, 2021,providing for the underwriters' obligation to purchase the bonds.The final form of this Agreement will set out the final principal amount, principal payment schedule and interest rates for the bonds, and the other terms and conditions for the underwriters' obligation to purchase the bonds. (e) A draft dated May 4, 2021, of an Escrow Agreement to be dated on or about June 1, 2021, between the County and the Trustee in the capacity of an escrow agent, which provides for the escrow agent's custody and investment of some of the new bond proceeds until those proceeds can be used to pay off some of the County's existing loans. 8 Attachment 3 16 s*h draft of May 4 Prepared by and return after recording to: Robert M. Jessup Jr. Sanford Holshouser LLP 209 Lloyd St., Suite 3SO Carrboro, NC 27S10 PINS [To come] (Whitted) [To come] (Blackwood Farm Park) 9777-99-9032 (Culbreth) 9874-OS-29S4 (Library) Brief description: Whitted Building, 300 West Tryon Street, Hillsborough Blackwood Farm Park, 421S NC-86, Hillsborough Orange County library, 137 West Margaret Lane, Hillsborough Culbreth Middle School, 22S Culbreth Road, Chape Hill STATE OF NORTH CAROLINA ) The collateral is or includes fixtures. ORANGE COUNTY ) This Deed of Trust secures future advances. THIS DEED OF TRUST AND SECURITY AGREEMENT (this "Deed of Trust") is dated as of June 1, 2021, and is granted by ORANGE COUNTY, NORTH CAROLINA, a political subdivision of the State of North Carolina (the "County"), to Robert M. Jessup Jr., as trustee (the "Deed of Trust Trustee"), for the benefit of THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. as Trustee ("BNY-M"). 17 RECITALS: The County is issuing its [$22,000,000] Limited Obligation Bonds, Series 2021A, and its [$23,000,000] Taxable Limited Obligation Bonds, Series 2021B (together, the "Bonds"). The County is issuing the Bonds under a Trust Agreement dated as of June 1, 2021 (the "Trust Agreement"), between the County and BNY-M, as trustee. The County is issuing the Bonds to provide funds, to be used together with other available funds, to acquire, construct, equip and otherwise improve a variety of County facilities and assets, to refinance a variety of existing County obligations, and to pay financing costs. To secure its obligations under the Trust Agreement and with respect to the Bonds, the County is providing for the conveyance by this Deed of Trust of the facilities described in Exhibit A (the "Pledged Facilities," as more particularly defined below), along with the real property associated with the Pledged Facilities and the other "Mortgaged Property," as defined below. The Mortgaged Property includes the property described in Exhibit B. The County is the record owner of the property described in Exhibit B. This Deed of Trust is given to secure current advances under the Trust Agreement of [$45,000,000], as well as potential future advances in the total maximum principal amount of $200,000,000. The time during which such future advances may be made is 30 years from June 1, 2021. The current scheduled date for final repayment is on or about June 1, 2041. NOW, THEREFORE, (1) in consideration of the execution and delivery of the Trust Agreement and other good and valuable consideration, the receipt and sufficiency of which the parties acknowledge, (2) to secure the County's performance of all its covenants under this Deed of Trust, the Bonds and the Trust Agreement, including the repayment of amounts advanced under the Trust Agreement, and (3) to charge the Mortgaged Property with this payment and performance, 2 18 the County sells, grants and conveys to the Deed of Trust Trustee, his successors and assigns forever, in trust, with power of sale, the following (collectively, the "Mortgaged Property"): (a) the property described in Exhibit B and any real property later 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 paragraph, and in all cases together with all easements, rights, rights-of-way and appurtenances belonging to any of that property (collectively, the "Pledged Sites"); and (b) all buildings and other improvements and fixtures (including any "Fixtures," as defined in Section 1-4) now or later attached to or used in or on those improvements or the Pledged Sites, including (i) all renewals, replacements, and additions, (ii) all articles in substitution, (iii) all building materials for construction, improvement, modification or repair of improvements upon their delivery to the Pledged Sites, and (iv) all proceeds of all the foregoing in whatever form resulting from the loss or disposition of the foregoing, including all proceeds of and unearned premiums for any insurance policies covering the Pledged Sites and the improvements, proceeds of title insurance and payments related to the exercise of condemnation or eminent domain authority, and all judgments or settlements in lieu of any of the foregoing (collectively,the "Pledged Facilities"); TO HAVE AND TO HOLD the Mortgaged Property with all privileges and appurtenances belonging thereto, to the Deed of Trust Trustee, his 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 existing encumbrances described in Exhibit C; BUT THIS CONVEYANCE IS MADE UPON THIS SPECIAL TRUST: if the County pays its "Obligations," as defined below, in full in accordance with the Trust Agreement, the Bonds and this Deed of Trust, and the County complies with all the terms, covenants and conditions of the Trust Agreement, the Bonds and this Deed of Trust, this conveyance will be null and void and will be canceled of record at the County's request and cost, and title will revest as provided by law; 3 19 BUT IF, HOWEVER, THERE OCCURS AN EVENT OF DEFAULT UNDER THE "DOCUMENTS," as defined below, then BNY-M 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 BNY-M (and their respective heirs, successors and assigns), in consideration of the foregoing, as follows: 1. Warranties of Title: Security Provided by this Deed of Trust 1-1 Warranties of Title. The County covenants with the Deed of Trust Trustee and BNY-M 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 Trust Agreement), 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) against the claims of all persons. 1-2 Security for Payment and Performance. The County is delivering this Deed of Trust (a) to secure the County's payment, as and when the same become due and payable, of all amounts payable by the County (the "Obligations") under (i) the Trust Agreement, (ii) this Deed of Trust, (iii) the Bonds, and (iv) any Additional Bonds, as defined in the Trust Agreement, as may be executed and delivered pursuant to the Trust Agreement (together, the "Documents"), and (b) to secure the County's timely and full compliance with all terms, covenants and conditions of the Documents. 1-3 Present and Future Advances. This Deed of Trust is executed to secure all the County's present and future obligations to the Trustee related to amounts advanced to the County or owed by the County under the Documents. The making of future advances is subject to the terms and conditions of the Trust Agreement and this Deed of Trust. The amount of the present obligations secured by this Agreement is [$45,000,000] and the total amount, including present and future obligations, that may be secured by this Deed of Trust at any one time is $200,000,000. The period within which future obligations may be incurred is 30 years from June 1, 2 02 1. 4 20 The provisions in this Deed of Trust for future advances are made only to facilitate the possible financing of additions or improvements to the Mortgaged Property, to refinance the present obligations or otherwise as provided for under the Trust Agreement. As of the date of this Deed of Trust there is no agreement or obligation by the County to borrow, or for any person to lend, any additional funds beyond the [$45,000,000] that constitutes the present obligations. 1-4 Security Interest in Fixtures. This Deed of Trust is intended to be a security agreement pursuant to the Uniform Commercial Code as in effect in North Carolina for the "Fixtures," as defined below. The County grants to BNY-M and the Deed of Trust Trustee a security interest in the Fixtures to secure the Obligations. Upon the occurrence of an Event of Default under this Deed of Trust or the Trust Agreement, BNY-M or the Deed of Trust Trustee is entitled to exercise all rights and remedies of a secured party under the Uniform Commercial Code as in effect in North Carolina and may proceed as to the Fixtures in the same manner as provided in this Deed of Trust for the real property. The "Fixtures" are all items of personal property attached or affixed to the Pledged Facilities in such a manner that removing the items would cause damage to the Pledged Facilities. The Fixtures may include plumbing, heating, lighting, electrical, laundry, ventilating, refrigerating, incinerating, air-conditioning, fire and theft protection and sprinkler equipment, and include all renewals and replacements and all additions, and all articles in substitution of any such property, and all proceeds of all the foregoing in whatever form. The County is not obliged to renew, repair or replace any undesirable or unnecessary Fixture. If the County determines that any Fixture has become undesirable or unnecessary, the County may remove that Fixture from the Pledged Facilities and sell, trade-in, exchange or otherwise dispose of it (in whole or in part), with an amount equivalent to the fair market value of the Fixture as removed becoming Net Proceeds and subject to the provisions of [Section 5.16] of the Trust Agreement. With respect to those items of the Mortgaged Property that are or are to become Fixtures, this Deed of Trust constitutes a financing statement filed as a fixture filing. The County agrees that the security interest in the Fixtures granted in this Section 1-4 is in addition to, and not in lieu of, any security interest in the 5 21 Fixtures acquired by real property law. The Fixtures are located on the land described on Exhibit B, and the County is the record owner of that land. Section S-1 sets forth the name and address of the County, as debtor, and BNY-M and the Deed of Trust Trustee, as secured parties. The County agrees to execute, deliver and file, or cause to be filed, in such place or places as may be requested by BNY-M or the Deed of Trust Trustee, any additional financing statements (including any continuation statements) in whatever form any party may reasonably request to evidence the security interest provided for in this Section. 1-5 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 Section 160A-20. No deficiency judgment may be entered against the County in violation of Section 160A-20. No provision of this Deed of Trust is to 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 1-2, restrict the incurrence of additional obligations secured by the Mortgaged Property. Nothing in this Section is intended to impair or prohibit foreclosure on this Deed of Trust if the Obligations are not paid when due or otherwise upon the occurrence of an Event of Default under this Deed of Trust or the Trust Agreement. To the extent of any conflict between this Section and any other provision of this Deed of Trust, this Section takes priority. 6 22 1-6 No Transfers; Provision for Releases; Grants of Easements and Similar Interests (a) The County shall not sell, transfer or encumber any interest in any Mortgaged Property, except as otherwise permitted by the Trust Agreement or this Deed of Trust. This prohibition applies whether the sale, transfer, or encumbrance is of a legal or an equitable interest, is voluntary, involuntary, by operation of law, or otherwise, and includes any encumbrance that is not a Permitted Encumbrance. BNY- M may take any action it deems appropriate to prevent or rescind any unauthorized sale, transfer or encumbrance. (b) BNY-M is required, upon the County's direction and at any time, to execute and deliver all documents necessary to effect the release of all or any portion of the Mortgaged Property from the lien of this Deed of Trust upon the County's compliance with the requirements of this Section. No consent or acknowledgment by the Deed of Trust Trustee is required for any release under this Section. (c) To obtain a release, the County must file with BNY-M a County Certificate (i) stating that (A) no Event of Default is continuing, (B) the release will not materially impair the intended use of the property remaining subject to this Deed of Trust, and (C) the release complies with the requirements of this Section, (ii) providing a copy of the proposed instrument of release, (iii) directing the execution and delivery of the instrument, and (iv) providing evidence of compliance with (v) or (vi) below. BNY-M may not release any property under this subsection (b) during the continuation of an Event of Default. (v) In the case of a proposed release of all the Mortgaged Property, the County must pay to BNY-M, or to some other fiduciary reasonably acceptable to BNY-M, an amount (A) that is sufficient to provide for the payment in full of all Bonds Outstanding and any other Obligations and (B) that is required to be used for that payment. (vi) In the case of a proposed release of a portion (but less than all) of the Mortgaged Property, the County must provide evidence to BNY-M that the appraised, taxable or insured value (and the County may provide different evidence for different portions) of that portion of the Mortgaged Property that is proposed to remain subject to the lien of this Deed of Trust will not be less than 50% of the 23 aggregate principal component of the Bonds Outstanding at the time the release is effected. (d) The County may make the following grants and dispositions, so long as the grant or disposition will not materially impair the intended use of the Pledged Facilities, and without regard to subsection (c) above. (i) The County may from time-to-time grant easements, licenses, rights-of-way and other similar rights with respect to any part of the Mortgaged Property, and the County may release similar interests, with or without consideration. (ii) The County may dispose of any undesirable or unnecessary Fixture as provided in Section 1-4. 1-7 Construction Mortgage. The parties intend that the security interest evidenced by this Deed of Trust will be a "construction mortgage" with respect to the Pledged Facilities within the meaning of Section 2S-9-334 of the North Carolina General Statutes. 2. County's Payment Obligations 2-1 Payment of Obligations; Compliance with Covenants. The County will 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 Trust Agreement and will comply in all respects with all the terms of the Documents. 2-2 Payment of Costs and Legal Fees. (a) If the Deed of Trust Trustee or BNY-M employs an attorney to assist in the enforcement or collection of any Obligations, or if the Deed of Trust Trustee or BNY-M voluntarily or otherwise becomes a party to any suit or legal proceeding (including a proceeding conducted under any state or federal bankruptcy or insolvency statute) to protect the Mortgaged Property, to protect the lien of this Deed of Trust, to enforce collection of the Obligations, or to enforce compliance by the County with any of the provisions of the Documents, then the County will pay reasonable legal fees and costs that the Deed of Trust Trustee or BNY-M may reasonably have incurred (whether or not any suit or proceeding is commenced). The County's repayment of all amounts paid for any such purpose, together with interest at the annual rate of 4.00% (calculated on 8 24 the basis of a 360-day year consisting of twelve 30-day months), is secured as an Obligation under this Deed of Trust. (b) If any suit or proceeding described in subsection (a) is adverse to the County, however, then the County has this liability for payment of fees and costs only if the Deed of Trust Trustee or BNY-M, as the case may be, is a prevailing party in the suit or proceeding. 2-3 Advances for Performance of County's Obligations. If the County fails to perform any of its obligations under the Documents, then the Deed of Trust Trustee and BNY-M are authorized, but not obligated, to perform the obligation or cause it to be performed. The County must repay any amounts paid for any such purpose. The County's repayment of all those amounts, together with interest at the annual rate of 4.00% (calculated on the basis of a 360-day year consisting of twelve 30-day months), is secured as an Obligation under this Deed of Trust. 3. The Deed of Trust Trustee 3-1 No Liability for Deed of Trust Trustee. The Deed of Trust Trustee will suffer no liability by his acceptance of this trust except as may be incurred because of any failure on his part to account for the proceeds of any sale under this Deed of Trust. 3-2 Resignation. The Deed of Trust Trustee may resign at any time by giving notice to the County and BNY-M as provided in Section 5-1. 3-3 Substitute Trustees. If any Deed of Trust Trustee dies, becomes incapable of acting or renounces the trust, or if for any reason BNY-M desires to replace any Deed of Trust Trustee, then BNY-M 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. BNY-M may make any removal or appointment at any time without notice, without specifying any reason, and without any court approval. Any 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 if that Deed of Trust Trustee had been named as the original Deed of Trust Trustee. 9 25 4. Defaults and Remedies; Foreclosure 4-1 Defaults and Remedies. During the continuation of an Event of Default under the Trust Agreement, BNY-M may pursue its rights and remedies as provided under the Trust Agreement and this Deed of Trust. 4-2 Foreclosure; Sale under Power of Sale. (a) Right to foreclosure or sale. During the continuation of an Event of Default, at BNY-M's request, the Deed of Trust Trustee must foreclose this Deed of Trust by judicial proceedings or, at BNY-M's option, the Deed of Trust Trustee must sell (and is empowered to sell) all or any part of the Mortgaged Property at public sale to the last and highest bidder for cash (free of any equity of redemption, homestead, dower, curtesy or other exemption, all of which the County expressly waives to the extent permitted by law) after compliance with applicable State laws relating to foreclosure sales under power of sale. The Deed of Trust Trustee will execute and deliver a proper deed or deeds to the successful purchaser at any sale. If only a part of the Mortgaged Property is sold, the partial sale in no way adversely affects the lien created by this Deed of Trust against the remainder. (b) BNY-M's Bid. BNY-M may bid and become the purchaser at any sale under this Deed of Trust. Instead of paying cash, BNY-M may make settlement for the purchase price by crediting against the Obligations the bid price net of sale expenses, including the Deed of Trust Trustee's commission, and after payment of any 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 those liens and assessments, as provided by law). (c) County's Bid. The County may bid for all or any part of the Mortgaged Property at any foreclosure sale. The County, however, may not bid less than an amount sufficient to provide for full payment of the Obligations, unless BNY- M consents in writing. (d) Successful bidders deposit. At any sale, the Deed of Trust Trustee may, at his option, require any successful bidder (other than BNY-M) 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. The advertised notice of sale need not include notice of this requirement. 10 26 (e) Application of sale proceeds. The Deed of Trust Trustee must apply the proceeds of any foreclosure sale in the manner and in the order prescribed by State law. The parties agree (i) that the sale expenses will include a commission to the Deed of Trust Trustee equal to one-half of one percent of the gross sales price for all services performed by the Deed of Trust Trustee under this Deed of Trust, and (ii) that any sale proceeds remaining after the prior application of the proceeds in accordance with State law, including to the payment of the Obligations, will be paid to the County. 4-3 Possession of Mortgaged Property. During the continuation of an Event of Default, upon BNY-M's demand the County must deliver possession of the Mortgaged Property to BNY-M. In addition, the County must surrender possession of the Mortgaged Property to the purchaser of the Mortgaged Property at any judicial or foreclosure sale under this Deed of Trust. During the continuation of an Event of Default, BNY-M, to the extent permitted by law, is also 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 from the Mortgaged Property, 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 all remaining amounts to the County's account and in reduction of the Obligations. BNY-M will be liable to account only for rents and profits it receives. BNY-M may take any action permitted under this Section with respect to all or any portion of the Mortgaged Property, as it may elect. 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 is not an election of that remedy as an exclusive remedy, nor does the exercise of one remedy preclude the exercise of any other remedy. If any Event of Default occurs and is later waived by the other party or parties, that waiver is limited to the default waived and does not constitute a waiver of any other default. The Deed of Trust Trustee and BNY-M may exercise every power or remedy given by this Deed of Trust from time to time as often as the Deed of Trust Trustee or BNY-M may deem expedient. 27 S. Miscellaneous 5-1 Notices. (a) Any communication provided for in this Deed of Trust must be in English and must be in writing, and "writing" includes facsimile transmission and electronic mail. (b) For the purposes of this Deed of Trust, any communication sent by facsimile transmission or electronic mail will be deemed to have been given on the date the communication is similarly acknowledged by a County Representative (in the case of the County) or other authorized representative (in the case of any other party). No such communication will be deemed given or effective without such an acknowledgment. Any electronic communication to the Trustee is subject to the provisions of[Section 9.02] of the Trust Agreement. (c) Any other communication under this Deed of Trust will be deemed given on the delivery date shown on a United States Postal Service certified mail receipt, or a delivery receipt (or similar evidence) from a national commercial package delivery service, if addressed as follows: (i) if to the County, to Orange County Manager, Re: Notice under 2021 LOBS Deed of Trust, Post Office Box 8181, Hillsborough, NC 27278 (ii) if to the Deed of Trust Trustee, to Deed of Trust Trustee, c/o The Bank of New York Mellon Trust Company, N.A., Re: Notice for 2021 Financing for Orange County (NC), 4655 Salisbury Rd., STE 300, Jacksonville, FL 32256 (iii) if to BNY-M, to The Bank of New York Mellon Trust Company, N.A., Re: Notice for 2021 Financing for Orange County (NC), 4655 Salisbury Rd., STE 300, Jacksonville, FL 32256 (iv) If to the LGC, to the North Carolina Local Government Commission, Attn: Secretary of the Commission, Re: Notice for 2021 Orange County Financing, Longleaf Building, 3200 Atlantic Ave., Raleigh, NC 27604 12 28 (d) Any addressee (including the LGC) may designate additional or different addresses for communications by notice given under this Section to each of the others. No notice need be delivered to the Deed of Trust Trustee for any notice or action to be effective. The County must send copies of any notices it sends to the Deed of Trust Trustee also to the Trustee. (e) Whenever this Deed of Trust requires the giving of a notice, the person entitled to receive the notice may waive the notice, in writing. The giving or receipt of the notice will then not be a condition to the validity of any action taken in reliance upon the waiver. 5-2 Successors; Assignments. This Deed of Trust is binding upon, will inure to the benefit of, and is enforceable by the County, the Trustee, any registered owner of Bonds (subject to the limitations in the Trust Agreement), and by the Deed of Trust Trustee, and by their respective successors and assigns. 5-3 No Marshalling. The County waives 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. 5-4 Definitions. All capitalized terms used in this Deed of Trust and not otherwise defined have the meanings ascribed to them in the Trust Agreement. 5-5 Governing Law; Forum. The County, BNY-M, and the Deed of Trust Trustee intend that North Carolina law will govern this Deed of Trust and all matters of its interpretation. To the extent permitted by law, the County, BNY-M, 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. 5-6 Limitation of Liability of Officers and Agents. No officer, agent or employee of the County, BNY-M or 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. Those officers or agents are deemed to execute documents in their official capacities only, and not in their individual capacities. This Section does not relieve any officer, agent or employee from the performance of any official duty provided by law. 13 29 5-7 Covenants Run with the Land. All covenants contained in this Deed of Trust run with the real estate encumbered by this Deed of Trust. 5-8 Further Instruments. Upon the request of BNY-M or the Deed of Trust Trustee, the County will execute, acknowledge and deliver any further instruments reasonably necessary or desired by BNY-M 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 of this Deed of Trust all or any part of the Mortgaged Property intended to be given or conveyed, whether now given or conveyed or acquired and conveyed subsequent to the date of this Deed of Trust. 5-9 Severability. If any provision of this Deed of Trust is determined to be unenforceable, that will not affect any other provision of this Deed of Trust. 5-10 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, that payment may be made, or act performed or right exercised, on or before the next succeeding Business Day. 5-11 Entire Agreement; Amendments. This Deed of Trust, together with the other Documents, constitutes the County's entire agreement with 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 XIII] of the Trust Agreement. The consent of the Deed of Trust Trustee is not required for any changes. [The remainder of this page has been left blank intentionally.] 14 30 IN WITNESS WHEREOF, the County has caused this instrument to be signed, sealed and delivered by duly authorized officers, all as of June 1, 2021. (SEAL) ORANGECOUNTY, ATTEST: NORTH CAROLINA By: Laura Jensen Bonnie B. Hammersley Clerk, Board of Commissioners County Manager STATE OF NORTH CAROLINA; ORANGE COUNTY I, a Notary Public of such County and State, certify that Laura Jensen and Bonnie B. Hammersley personally came before me this day and acknowledged that they are the Clerk of the Board of Commissioners and the County Manager, 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 Manager, sealed with its corporate seal and attested by such Clerk. WITNESS my hand and official stamp or seal, this day of June, 2021. [SEAL] Notary Public My commission expires: [Deed of Trust and Security Agreement dated as of June 1, 2021, for the benefit of The Bank of New York Mellon Trust Company, N.A., as trustee] 15 31 EXHIBIT A - Pledged Facilities Description Whitted Building, 300 West Tryon Street, Hillsborough Blackwood Farm Park, 4215 NC-86, Hillsborough Orange County library, 137 West Margaret Lane, Hillsborough Culbreth Middle School, 225 Culbreth Road, Chape Hill EXHIBIT B - Pledged Sites Description [To come] EXHIBIT C -- Existing Encumbrances 16 Attachment 4 32 s*h draft of May 4 TRUST AGREEMENT by and between Orange County, North Carolina and The Bank of New York Mellon Trust Company, N.A., as Trustee Relating to the execution and delivery of Limited Obligation Bonds, Series 2021A and Taxable Limited Obligation Refunding Bonds Series 2021B Dated as of June 1, 2021 33 THIS AGREEMENT (this "Agreement") is dated as of June 1, 2021, is between ORANGE COUNTY, NORTH CAROLINA, a North Carolina political subdivision (the "County"), 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 issuance of [$45,000,000] aggregate amount Limited Obligation Bonds (the "2021 Bonds"). Introduction The County is issuing bonds pursuant to this Agreement to provide funds to be used, together with other available funds, on a project (the "Project") (a) to acquire, construct, and equip various public facilities, assets and improvements, (b) to refinance existing County obligations, and (c) to pay financing costs, all as described in Exhibit A. In accordance with the County's authority under Section 160A-20 of the North Carolina General Statutes, the, the County will secure its obligations under this Agreement and the Bonds by a security interest in the Pledged Facilities and the Pledged Sites (each as defined in Exhibit B). This Agreement provides for the issuance of the bonds, the County's obligation to pay the bonds, the security for the bonds, the County's obligation to care for the collateral and other related matters. Unless the context clearly requires otherwise, capitalized terms used in this Agreement and not otherwise defined have the meanings set forth in Exhibit B. NOW, THEREFORE, for and in consideration of the mutual promises and covenants contained in this Agreement, the parties agree as follows: ARTICLE I THEBONDS Section 1.01. Provision for 2021 Bonds; Advance. (a) The County will issue, and the Trustee will authenticate and deliver, 2021 Bonds in an aggregate principal amount of[$45,000,000], consisting of two separate series as follows: 2 34 * $ Limited Obligation Bonds, Series 2021A (the "Series A Bonds"); and * $ Taxable Limited Obligation Refunding Bonds, Series 2021B (the "Series B Bonds"). (b) The County is receiving a total of $ (the "Amount Advanced") from the sale of the 2021 Bonds. The County will use the Amount Advanced as provided in this Agreement to pay Project Costs. Section 1.02. Bonds Constitute Installment Contracts. Each of the Bonds, together with the County's corresponding obligations under this Agreement and the Deed of Trust, constitutes a separate "installment contract" within the meaning of Section 160A-20 between the County and the owner of that Bond. The County's payment obligations, and its other obligations under this Agreement and with respect to the Bonds, are secured by the lien on the Mortgaged Property created under the Deed of Trust and by the other security provided for in this Agreement. The security for each Bond ranks on parity with the security for every other Bond. Section 1.03. Form and Details; Payments. The Series A Bonds will be numbered RA-1 upward for identification, will be designated "Limited Obligation Bonds, Series 2021A," and will be in substantially the form of Exhibit B, with any changes as this Agreement permits or requires. The Series B Bonds will be numbered RB-1 upward for identification, will be designated "Taxable Limited Obligation Refunding Bonds, Series 2021B," and will be in substantially the same form as the Series A Bonds. The 2021 Bonds are payable as to interest semiannually until payment on each Payment Date at the following rates (calculated based on a 360-day year consisting of twelve 30-day months), and are payable as to principal on December 1 in the following years and amounts: Series A Bonds Maturity Date Principal (December 1) Amount f$1 Rate ° [To come.] 3 35 Series B Bonds Maturity Date Principal (December 1). Amount f$1 Rate ° [To come.] Exhibit D shows a schedule of payments due on the 2021 Bonds for each Payment Date. Upon any redemption of any 2021 Bonds, the County will recalculate the schedule of payments to reflect the redemption and will then deliver a substitute Exhibit D to the Trustee reflecting the recalculated payment schedule. The Trustee has no responsibility to confirm any recalculated payment schedule. Section 1.04. Redemption Dates and Prices. The Bonds are subject to redemption as described in Section 2.01. Section 1.05. Delivery of 2021 Bonds. The Trustee will authenticate and deliver the 2021 Bonds when the County has filed with or delivered to the Trustee all the following items: (a) Original executed counterparts of this Agreement and the Deed of Trust (b) Certified copies of County Board resolutions approving substantially final forms of this Agreement and the Deed of Trust, authorizing their execution and delivery, and approving the issuance of the 2021 Bonds (c) Executed 2021 Bonds in the aggregate principal amounts, bearing interest at the rates, and payable as to principal and interest at the times and in the amounts as are provided in this Agreement 4 36 (d) A County Certificate directing the Trustee to authenticate and then deliver the 2021 Bonds to the person or persons named therein upon payment to the Trustee of a specified sum, and directing the Trustee as to the application of the Amount Advanced (e) An Opinion of Bond Counsel to the effect that the issuance of the 2021 Bonds has been duly authorized by all necessary authorities (f) Evidence that the LGC has approved the issuance of the 2021 Bonds Section 1.06. Additional Bonds. The County may provide for Additional Bonds to be issued under this Agreement to provide funds (a) to expand or improve the Pledged Facilities, (b) to construct further improvements to the Pledged Sites, (c) to refund any Outstanding Bonds, (d) to pay financing costs or establish reserves in connection with the issuance of Additional Bonds, (e) 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 any such facility is related to the Pledged Facilities or the Pledged Sites, or (f) for any combination of these purposes. The Trustee will authenticate and deliver Additional Bonds when the County has filed with or delivered to it all the following items: (i) Certified copies of County Board resolutions approving the terms and conditions under which the Additional Bonds are to be issued and authorizing the execution of amendments or supplements to the Deed of Trust (if necessary) and this Agreement providing for the issuance of the Additional Bonds (ii) Evidence that the LGC has approved the issuance of the Bonds and the related transactions (if that approval is then required by law) (iii) An executed copy of an amendment or supplement to this Agreement providing for the issuance of the Additional Bonds, which must set forth the payment and redemption terms of the Additional Bonds, together with other appropriate terms (iv) An executed copy of an appropriate amendment or supplement to the Deed of Trust, if necessary to extend the security of the Deed of Trust to the 5 37 County's obligations (A) under the Trust Agreement as amended or supplemented or (B) with respect to the Additional Bonds (v) A County Certificate directing the Trustee to authenticate and then deliver the Additional Bonds to the person or persons named therein upon payment to the Trustee of a specified sum, and directing the Trustee as to the application of proceeds from the sale of the Additional Bonds (vi) An Opinion of Bond Counsel to the effect (A) that the issuance of the Additional Bonds is permitted under the terms of this Agreement and has been duly authorized, and (B) that the issuance of the Additional Bonds in itself will have no adverse effect on the exemption from Federal income tax with respect to any Outstanding Bonds with respect to which any such interest is intended to be exempt (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 and including any amendment or supplement to the Deed of Trust referenced in (iv) above as an insured instrument, if necessary to increase the aggregate face amount of insurance to equal to the total amount of Outstanding Bonds plus the principal amount of the Additional Bonds then to be issued The Trustee is not required to authenticate and deliver any Additional Bonds if any Event of Default under this Agreement 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 (v) above. After the execution and delivery of any Additional Bonds, they will be "Bonds" under this Agreement and subject to all its terms and conditions, except as may be provided in the supplement to this Agreement provided for in (iii) above. ARTICLE II REDEMPTION Section 2.01. Redemption Dates and Prices. The 2021 Bonds are subject to redemption only as provided in this Section. 6 38 (a) Optional Redemption - The 2021 Bonds maturing on or after December 1, 2032, are subject to redemption at the County's option, in whole or in part on any date on or after December 1, 2031, upon payment of the principal amount to be redeemed plus interest accrued to the redemption date, without any prepayment penalty or premium. (b) Mandatory Sinking Fund Redemption -- The 2021 Bonds maturing on are required to be redeemed in part prior to maturity pursuant to the terms of the sinking fund requirements of Section 2.05 at a redemption price equal to the principal amount to be redeemed plus interest accrued to the redemption date, without any prepayment penalty or premium. The supplement to this Agreement providing for the issuance of any Additional Bonds will set out the terms and conditions for their redemption. Section 2.02. Selection of 2021 Bonds for Redemption. (a) If less than all the 2021 Bonds are to be redeemed pursuant to the provisions of subsection 2.01(a), they will be redeemed among maturities in any manner the County chooses. The County is not required to redeem Series A Bonds in preference to Series B Bonds, or vice versa, or to redeem Bonds ratably among Series. (b) If less than all of the 2021 Bonds of any maturity are to be redeemed, the Trustee must select the 2021 Bonds to be redeemed by lot; provided, however, that so long as a book-entry system with DTC is used for determining beneficial ownership of 2021 Bonds, if less than all of the 2021 Bonds within a maturity are to be redeemed, the parties agree that DTC may determine which of the 2021 Bonds within the maturity are to be redeemed in accordance with DTC's then-current rules and procedures. (c) In any case, (i) the portion of any 2021 Bond to be redeemed must be in the principal amount of $5,000 or some integral multiple thereof, and (ii) in selecting 2021 Bonds for redemption, each 2021 Bond will be considered as representing that number of 2021 Bonds which is obtained by dividing the principal amount of that 2021 Bond by $5,000. If a portion of a 2021 Bond is called for redemption, the County will prepare, and the Trustee will deliver, a new 2021 Bond of the same series in principal amount equal to the unpaid portion to the registered owner upon the surrender of the 2021 Bond. 39 Section 2.03. Redemption Notices. (a) The Trustee, at the County's direction, upon being satisfactorily indemnified with respect to expenses, and with at least two Business Days' notice, will send notice of redemption no less than 30 nor more than 60 days prior to the redemption date, as follows: (i) With respect to any 2021 Bonds being called for redemption for which DTC or its nominee is the registered owner, to DTC, in whatever manner may be provided for under DTC's standard operating rules as then in effect (and if the Trustee is unable to determine those rules, by registered or certified mail, return receipt requested); (ii) With respect to any 2021 Bonds for which no book-entry-only system of registration is in effect, to each of the registered owners of those 2021 Bonds at their addresses as shown on the Trustee's registration books, by registered or certified mail; and (iii) In any case, both (A) to the MSRB for posting on the EMMA System and (B) to the LGC. Notwithstanding anything to the contrary in this Agreement, the County acknowledges and agrees that the Trustee is not acting as the disclosure or dissemination agent for purposes of Rule 15c2-12 in connection with any notice to be posted with the MSRB via the EMMA System. Failure to give any notice specified in (i) or (ii), as applicable, or any defect in that notice, will not affect the validity of any proceedings for the redemption of any 2021 Bonds with respect to which no failure has occurred. Failure to give any notice specified in (iii), or any defect in that notice, will not affect the validity of any proceedings for the redemption of any 2021 Bonds with respect to which the notice specified in (i) or (ii) is correctly given. Any notice mailed as provided in this Agreement will conclusively be presumed to have been given regardless of whether received by any Owner. (b) Any redemption notice, except a notice given in respect of a mandatory sinking fund redemption, may state that the redemption to be effected is conditioned upon -- s 40 (i) the Trustee's receipt on or prior to the redemption date of moneys sufficient to pay the principal of and premium, if any, and interest on the 2021 Bonds to be prepaid; or (ii) any other condition not unacceptable to the Trustee. If a notice contains a condition and the Trustee either (A) does not receive moneys sufficient to pay the principal of and premium, if any, and interest on the 2021 Bonds on or prior to the redemption date, or (B) the stated condition is not fulfilled, as evidenced to the Trustee by a County Certificate, in either case on or prior to the redemption date, then redemption will not be made, and the Trustee must, within a reasonable time, give notice the same way the redemption notice was given that the moneys were not so received (or condition was not fulfilled) and the redemption was not made. (c) Each redemption notice must specify (i) the complete designation of the 2021 Bonds to be redeemed, (ii) the CUSIP numbers of the 2021 Bonds to be redeemed, (iii) the dated dates, maturity dates and interest rates of the 2021 Bonds to be redeemed, (iv) the date fixed for redemption, (v) any conditions to the redemption, as contemplated by subsection (b) above, (vi) the principal amount of 2021 Bonds or portions of Bonds to be redeemed, (vii) the applicable redemption price, (viii) the address of the place or places of payment, (ix) the Trustee's name and telephone number, and the name of a contact person, (x) that interest accrued to the date fixed for redemption will be paid as specified in the notice, and (xi) that on and after the established redemption date interest on 2021 Bonds which have been redeemed will cease to accrue. The Trustee must also include in any redemption notice any additional information provided by the County for use in the notice. Section 2.04. 2021 Bonds Payable on Redemption Date; Interest Ceases To Accrue. If on or before the date fixed for redemption funds are deposited with the Trustee to pay the principal of and interest accrued to the redemption date on 2021 Bonds called for redemption, the 2021 Bonds (or portions of 2021 Bonds) called for redemption cease to accrue interest from and after the redemption date. Thereafter, those 2021 Bonds (a) are no longer entitled to the benefits provided by this Agreement and (b) are not deemed to be Outstanding under this Agreement. 9 41 Section 2.05. Mandatory Sinking Fund Redemption. (a) The Trustee, from amounts received from or on behalf of the County, will redeem 2021 Bonds maturing on December 1, 20 , on December 1 in years and amounts upon payment of 100% of the principal amount thereof plus interest accrued to the redemption date, as follows: Year Amount ($1 [To come.] *Final maturity (b) In addition, [provisions for a second term bond if necessary] The Trustee shall take all appropriate action to withdraw funds from the Principal Account and make timely payment to the Owners of the Term Bonds subject to sinking fund redemption. (b) Notwithstanding the foregoing, on or before the 70th day next preceding any sinking fund payment date, the County may do either of the following: (i) deliver to the Trustee for cancellation Term Bonds required to be redeemed on that sinking fund payment date in any aggregate principal amount desired; or (ii) instruct the Trustee to apply a credit against the County's sinking fund payment obligation for any Term Bonds that previously have been redeemed (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 each sinking fund payment date the amount of 2021 Bonds so purchased, delivered or previously redeemed as described in paragraphs (i) or (ii) above. 10 42 (c) Within seven days of receipt of the funds, Term Bonds or instruction to apply a credit (as described in subsection (b) above), any amounts remaining in the Principal Account in excess of the amount required to fulfill the remaining required principal and sinking fund redemption obligations on the next sinking fund payment date will, as specified in a County Certificate, either be (i) transferred to the Interest Account or (ii) used to redeem 2021 Bonds as soon as practicable. In the absence of any written direction from the County, the Trustee will deposit those amounts to the Interest Account. ARTICLE III FUNDS AND ACCOUNTS Section 3.01. Creation and Use of Project Fund. The Trustee will establish a special fund designated as the "Orange County 2021 Project Fund." The Trustee will keep this Fund separate and apart from all other funds and moneys held by it, and the Trustee will hold and administer this Fund as provided in this Agreement. Moneys in the Project Fund will be expended only as described in Sections 3.02 and 3.03. The Trustee is not required to disburse any moneys from the Project Fund during the continuation of any Event of Default. Section 3.02. Deposits to Project Fund; Payment of Project Costs. (a) The Trustee will deposit into the Project Fund the amount specified in the certificate referenced in Section 1.05(d) and all other amounts paid to it for deposit in the Project Fund. This certificate may also direct the Trustee as to the further application of amounts in the Project Fund without any requirement for additional direction or requisition. (b) In addition, the Trustee will disburse moneys in the Project Fund from time to time, either to pay Project Costs directly to the County or the person indicated in the requisition to pay Project Costs or to reimburse the County for previous expenditures on Project Costs, upon the Trustee's receipt of a requisition substantially in the form of Exhibit E. The County need not submit any additional information other than the requisition. The Trustee may rely conclusively on requisitions as authorization for payments, and the Trustee has no duty or responsibility to verify any matters in the requisitions. 11 43 (c) Unless otherwise directed by the County, the Trustee will disburse moneys from the Project Fund that are due to the County by wire transfer to any bank account in the United States as a County Certificate may designate from time to time. Any electronic notice to the Trustee is subject to the provisions of Section 9.02. Section 3.03. Transfer of Unexpended Proceeds. Upon the first to occur of (a) July 1, 2024, or (b) receipt of a County Certificate stating that there are no more 2021 Project Costs to be paid from the 2021 Proceeds Fund, the Trustee will withdraw all remaining moneys in the 2021 Proceeds Fund and deposit those moneys in the Payment Fund. The Trustee will then apply those moneys to Bond payments as directed by a County Representative. In the absence of any direction from the County, the Trustee will deposit those moneys in the Interest Account and use them to pay interest on the 2021 Bonds as the same becomes due. Section 3.04. Other Funds and Accounts. The Trustee will establish the following special funds and accounts, must keep the same separate and apart from all other funds and moneys held by it, and must hold and administer the same as provided in this Agreement: (a) Orange County 2021 Bond Payment Fund, and therein an Interest Account, a Principal Account and a Redemption Account; and (b) Orange County 2021 Net Proceeds Fund. Any amendment or supplement to this Agreement providing for the issuance of Additional Bonds may create additional funds or accounts related to those Bonds. Section 3.05. Payment Fund. (a) The Trustee must 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 by the County for payments on the Bonds. (b) The County will make payments to the Trustee sufficient in times and amounts to allow the Trustee to make full and timely payment of all Bond Payments as the same become due. The County will make the payments to the Trustee not later than the 25th day of the month preceding a Payment Date. The County will make the payments in lawful money of the United States, by wire transfer or other transfer of immediately available funds to any account in the United States as the Trustee may designate to the County from time to time. 12 44 (c) Not less than 15 days prior to each Payment Date, the Trustee must determine the amounts on deposit and available to make the payments due on that Payment Date with respect to the 2021 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 11.01. The Trustee must notify the County of the available amounts not less than 10 days prior to the applicable Payment Date. The County's obligation to make payments with respect to any Payment Date is reduced by the available amounts the Trustee determines. (d) The Trustee must pay the principal of the 2021 Bonds from the Principal Account and the interest on the 2021 Bonds from the Interest Account, as the same become due. On or before each Payment Date, the Trustee must first determine if it has on hand amounts sufficient to pay the principal and interest coming due on the Bonds on the Payment Date. Then, the Trustee must set aside an amount sufficient to pay the interest on the Bonds becoming due and payable on that Payment Date, and then an amount sufficient to pay the principal on the Bonds becoming due and payable on that Payment Date. The Trustee must then 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 its purposes two Business Days before any Payment Date, the Trustee must notify the County of the amount of the insufficiency. The Trustee must then transfer the required amounts to those Accounts from any amounts as may be available in the Redemption 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 that date, the Trustee must, as directed by a County Certificate, retain the excess in the Interest Account or transfer the excess to the Principal Account to be credited against subsequent required deposits to the Principal Account. In the absence of any direction from the County, the Trustee will retain the excess in the Interest Account. If the amount on deposit in the Principal Account on any December 1 exceeds the amount required on that date to pay principal of Bonds coming due on that date (whether by reason of maturity or mandatory redemption), then the Trustee must, as directed by a County Certificate, retain the excess in the Principal Account or transfer the excess to the Interest Account to be credited against subsequent required deposits to the Interest Account. In the absence of any direction from the County, the Trustee will transfer the excess to the Interest Account. 13 45 (f) The Trustee must deposit in the Redemption Account of the Payment Fund all amounts paid to it for deposit in that Account, and must use those amounts within 12 months of their deposit to pay Bonds called for redemption on their redemption dates. (g) The Trustee must apply Net Proceeds deposited in the Redemption Account pursuant to Section 5.16 to the redemption of Bonds pursuant to Section 2.01(a) as directed by a County Representative. The Trustee must transfer any amounts not so used within 12 months of their deposit in the Redemption Account to the Interest Account for use on the next Payment Date to pay interest on the Bonds, and pending that use or in the absence of direction must invest those funds in Legal Investments having a yield not in excess of the Restricted Yield. Subject to retaining moneys necessary to pay Bonds that have been called for redemption but not yet presented for payment, the Trustee must use amounts in the Redemption Account as directed by a County Certificate to make transfers to the Interest Account or the Principal Account to the extent the balances in those Accounts may be insufficient. Section 3.06. Net Proceeds Fund. The Trustee must deposit in the Net Proceeds Fund (a) Net Proceeds as provided in Section 5.16 and (b) any other amounts paid to it for deposit in that fund. The County must direct the investment and reinvestment of all amounts on deposit in the Net Proceeds Fund only in Legal Investments having a yield not in excess of the Restricted Yield, to the extent those amounts are on deposit on any date following the later of(i) the third anniversary of the Closing Date or (ii) 30 days from the payment of those Net Proceeds to the County or the Trustee. The Trustee must disburse Net Proceeds for replacement or repair as provided in Section 5.16. ARTICLE IV SECURITY: APPROPRIATIONS: LIMITED OBLIGATION Section 4.01. Payments on the Bonds; Additional Payments. (a) The County will make full and timely payment of all Bond Payments and Additional Payments due from the County under this Agreement, subject to the limitations of 14 46 Section 160A-20 and the terms of this Agreement, and in particular the terms of Section 4.02 and Section 4.05. (b) The County must pay all Additional Payments on a timely basis directly to the person or entity to which the Additional Payments are owed in lawful money of the United States. If the County fails to pay any Additional Payment when due, the Trustee may (but is under no obligation to) pay the Additional Payment for the County's account. The County agrees to reimburse the Trustee for any Additional Payment made by the Trustee, together with interest on the amount paid at the annual rate of 4.00%. (c) The County is not entitled to any abatement or reduction of the Bond Payments or Additional Payments for any reason, including, but not limited to, any defense, recoupment, setoff, counterclaim, or any claim arising out of or related to the Pledged Sites or the Pledged Facilities. The County assumes and bears the entire risk of loss and damage to the Pledged Sites and the Pledged Facilities from any cause whatsoever. The parties intend that the County must make all payments provided for in this Agreement, unless the County's obligation to make the payments has been terminated as provided in this Agreement. Section 4.02. Appropriations. (a) The County will cause the officer who prepares the draft County budget initially submitted for County Board consideration to include in the initial proposal each year the amount of all Bond Payments and estimated Additional Payments coming due during the Fiscal Year to which the budget applies. Notwithstanding that the initial proposed budget includes an appropriation for these payments, the County Board may determine not to include the appropriation (in whole or in part) in the final County budget for any Fiscal Year, or may amend an adopted budget to reduce or delete an approved appropriation. (b) (i) If for any Fiscal Year the County adopts an annual budget that does not appropriate (for that purpose) an amount equal to the Bond Payments and estimated Additional Payments coming due during that Fiscal Year, then the County will send notice of this failure to the Trustee and the LGC within ten days after the adoption of that budget. (ii) If for any Fiscal Year the County has not adopted an annual budget that appropriates (for that purpose) an amount equal to the Bond Payments and estimated Additional Payments coming due during that Fiscal Year within 15 days 15 47 after the beginning of any Fiscal Year, then the County will send notice of this failure to the Trustee and the LGC within an additional ten days. (iii) If at any time the County amends the annual budget to reduce the amounts appropriated for Bond Payments and Additional Payments below the amounts expected to be required for the remainder of that Fiscal Year, then the County will send notice of this amendment to the Trustee and the LGC within ten days after the amendment. (iv) The County must also post a copy of any notice sent to the LGC under this Section with respect to the Bonds on the EMMA System as an event described in Section 6.03(c)(2). Section 4.03. Deed of Trust. Coincidentally with the execution and delivery of this Agreement, the County is executing and delivering the Deed of Trust. The Deed of Trust secures the County's obligations to each of the Owners, on parity with one another. Section 4.04. Money in funds and accounts. The County grants a security interest, to the Trustee for the benefit of the Owners, in all the funds and accounts held under this Agreement to secure the County's obligations under the Bonds and otherwise under this Agreement. This security interest secures the County's obligations to each of the Owners, on parity with one another. Section 4.05. Limited obligation. The Bonds are payable solely from the amounts paid by the County to the Trustee for the Bond Payments, as, when and if received by the Trustee, except to the extent payable from the proceeds of the Bonds, income from investments, Net Proceeds and other funds and property pledged as provided in this Agreement, which funds are pledged as provided in this Agreement to secure payment of the Bonds. Notwithstanding any other provision of this Agreement, the parties intend that this transaction comply with the provisions of Section 160A-20. No deficiency judgment may be entered against the County in violation of Section 160A-20. No provision of this Agreement should be interpreted as creating a pledge of the County's faith and credit within the meaning of any constitutional debt limitation. No provision of this Agreement should be construed or interpreted as an illegal delegation of governmental powers or as an improper donation or lending of 16 48 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 Agreement. No provision of this Agreement should be interpreted as pledging or creating a lien on any class or source of the County's moneys (other than Net Proceeds and the funds and accounts established pursuant to this Agreement as may be provided in this Agreement). No provision of this Agreement 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 this Agreement, the Deed of Trust and the 2021 Bonds restrict the incurrence of additional obligations secured by the Mortgaged Property). To the extent of any conflict between this Section and any other provision of this Agreement, this Section takes priority. ARTICLE V CONSTRUCTION, MAINTENANCE AND OTHER PROVISIONS RELATED TO THE PLEDGED FACILITIES Section 5.01. Construction Contracts; Changes. (a) The County will comply with the provisions of the North Carolina General Statutes and enter into the Construction Contracts. The County will cause the construction of the Pledged Facilities to be carried on continuously in accordance with the Construction Contracts and all applicable State and local laws and regulations. (b) The County will provide for the Pledged Facilities to be constructed on the Pledged Sites and will insure (i) that no portion of the Pledged Facilities encroaches upon nor overhangs any easement or right-of-way, (ii) that the Pledged Facilities will be wholly within any applicable building restriction lines, however established, and (iii) that the Pledged Facilities will not violate applicable use or other restrictions, whether imposed by law or rule or by prior conveyances. (c) The County may approve changes to the Construction Contracts in its discretion except that the County may not approve any changes that (i) increase total estimated Project Costs above the amounts previously identified and designated for the payment of those costs, or (ii) result in the use of the Mortgaged 17 49 Property for purposes substantially different from the use intended as of the Closing Date. Section 5.02. Contractors' Performance and Payment Bonds. The County shall require each contractor entering into a Construction Contract to furnish a performance bond and a separate labor and material payment bond as required by State law. The County shall provide copies of all bonds to the Trustee at the Trustee's request. Section 5.03. Cooperation. The Trustee and the County will cooperate fully with each other in filing any claim or proof of loss with respect to any bond or insurance policy described in this Agreement. Section 5.04. Care and Use. The County must use the Pledged Sites and the Pledged Facilities in a careful and proper manner. The County must keep the Mortgaged Property in good condition, repair, appearance and working order for the purposes intended. Section 5.05. Utilities. The County must pay all charges for utility services furnished to or used on or in connection with the Pledged Sites and the Pledged Facilities. Section 5.06. Risk of Loss. The County bears all risk of loss to and condemnation of the Pledged Facilities and the Pledged Sites. Upon loss, damage or condemnation of the Mortgaged Property, the County must proceed as provided in Sections 5.15 and 5.16. Section 5.07. Trustee's Performance of County's Responsibilities. The Trustee may (but is not required to) undertake any payment or performance required of the County for the insurance, maintenance or preservation of the Mortgaged Property that is not timely paid or performed by the County. The County must then reimburse the Trustee for any payments and for any associated costs and expenses, legal or otherwise, together with interest at annual rate of 4.00%, all as Additional Payments under this Agreement. Section 5.08. Compliance with Requirements. The County must 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, 18 50 whether or not any requirement necessitates structural changes or improvements or interferes 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 Trustee has otherwise agreed in writing, the County must not use the Mortgaged Property for any purposes other than that for which the same were intended as of the Closing Date. In no event may the County 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. Section 5.09. Use and Operation. (a) The County represents that the acquisition and construction of the improvements to the Pledged Facilities will be useful to the County in carrying out its required public functions. The County has an immediate need for the Pledged Facilities, and the County expects to use the Pledged Facilities throughout the Contract Term. (b) The County will be solely responsible for the operation of the Pledged Facilities and will not contract with any other person or entity for that operation. The Pledged 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 6.01(k). The County will use and operate the Financed Facilities for their intended public purposes, and for no other purpose unless required by law. (b) Notwithstanding the provisions of subsections (a) and (b), the parties acknowledge that the County intends to lease a portion of the Pledged Facilities that constitute public school facilities (the "School Facilities") to the School Board, or may otherwise provide for the School Board's use and operation of those School 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 Agreement, including obligations with respect to maintaining primary casualty insurance on the School Facilities. Notwithstanding any other provision of this Agreement 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 Agreement. No such lease or other arrangement, however, will in any way reduce the County's responsibilities with respect to the School Facilities under this Agreement. 19 51 In this Agreement, the "School Board" is The Board of Education for the Chapel Hill - Carrboro City Schools. Section 5.10. Modification of Pledged Facilities; Installation of Equipment and Machinery. The County has the right to repair, maintain and remodel the Pledged Facilities or make substitutions, additions, modifications and improvements to the Pledged Facilities, at its own cost and expense; provided, however, that any substitutions, additions, modifications and improvements must not in any way damage the Pledged Facilities or result in the use of the Pledged Facilities for purposes substantially different from those initially proposed; and provided further that the Pledged Facilities, as improved or altered, upon completion of these substitutions, additions, modifications and improvements, will be of a value not materially less than the value of the Pledged Facilities immediately prior to making those substitutions, additions, modifications and improvements. The County may also, from time to time in its sole discretion and at its own expense, install machinery, equipment and other tangible property in or on the Pledged Facilities. All that property will remain the County's sole property in which neither the Trustee nor any Bondholder will have any interest; provided, however, that any property which becomes permanently affixed to the Pledged Facilities will be subject to this Agreement and the lien and security interest arising under the Deed of Trust if the Trustee determines that the Pledged Facilities would be damaged or impaired by the removal of that machinery, equipment or other tangible property. Section 5.11. Property Damage Insurance. (a) The County must, at its own expense, acquire, carry and maintain broad form extended coverage property damage insurance with respect to the Pledged Facilities in an amount equal to the replacement cost. This insurance must include standard mortgagee coverage in favor of the Trustee. (b) (i) The County must maintain the insurance required by this Section with generally recognized responsible insurers and may carry reasonable deductible or risk-retention amounts. The County must provide copies of all policies to the Trustee upon request. (ii) In the alternative, the County may maintain the insurance required by subsection (a) above (A) by one or more blanket or umbrella insurance policies or 20 52 (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 must provide to the Trustee, upon the Trustee's request, a certificate or certificates of the respective insurers evidencing the coverage and, with respect to property insurance, stating the amount of coverage provided with respect to the Pledged Facilities (or any covered portion thereof). The County must provide to the Trustee such evidence as to the sufficiency of any such alternative program as the Trustee may reasonably request. (c) Before the County adjusts or settles any property damage loss greater than $1,000,000 with respect to the Pledged Facilities, whether or not covered by insurance, the County must first notify the Trustee of the planned adjustment or settlement and the County's planned use of insurance proceeds. (d) The Trustee is not responsible for the sufficiency or adequacy of any required insurance. The Trustee shall have no liability in accepting payment on account of any insurance or with respect to any adjustment, compromise or settlement of any loss agreed to by the County. Section 5.12. Right of Entry and Inspection. The Trustee and its representatives and agents have the right to enter upon the Pledged Sites and inspect the Pledged Facilities at any time while any Bonds are Outstanding. No right of inspection or approval granted in this Section imposes upon any party any duty or obligation whatsoever to undertake any inspection or to make any approval. No inspection or approval by any party imposes upon any party any duty or obligation whatsoever to identify or correct any defects in the Pledged Facilities or to notify any person with respect thereto. No inspection constitutes a warranty (either express or implied) by the Trustee as to the quality or fitness of any improvement. Any such inspection is solely for the benefit of the Trustee and the Bondholders, and not for the County's benefit. Section 5.13. Title. Title to the Pledged Sites and the Pledged Facilities and all additions, repairs, replacements or modifications thereto will always be in the County, subject to the lien of the Deed of Trust and to the other Permitted Encumbrances. 21 53 Section 5.14. Taxes and Encumbrances. (a) If the Mortgaged Property (or any portion) is, for any reason, deemed subject to taxation, assessments or other lawful governmental charges the County will, during the Contract Term, pay (as Additional Payments) the amount of all those taxes, assessments and governmental charges. With respect to special assessments or other charges which may be lawfully paid in installments over a period of years, the County is obligated under this Agreement only to provide for the installments that 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) to become delinquent, including any taxes levied upon the Trustee's interest in the Mortgaged Property, or on any rentals or other revenues derived from the Mortgaged Property. (b) 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 (or any portion), except Permitted Encumbrances. The County will promptly, at its own expense, take such action as may be appropriate to discharge any such mortgage, pledge, lien, charge, encumbrance or claim. (c) The County may, at its own expense and in its own name, in good faith contest any taxes or other charges and encumbrances described in this section. In the event of a contest, the County may permit the charges to remain unpaid during the period of the contest and any appeal. If, however, the Trustee notifies the County that, in the opinion of independent counsel selected by the Trustee, the security afforded pursuant to this Agreement or the Deed of Trust will be materially endangered by nonpayment of any items, then the County must promptly pay those items (but the payment will not in itself constitute a waiver of the right to continue to contest the charges). Section 5.15. Damage, Destruction or Condemnation. The County must promptly notify 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 Trustee in the Pledged Facilities, the Pledged Sites or any portion thereof, under the power of eminent domain, (c) a material defect in the construction of the Pledged Facilities becomes apparent, or (d) title to or the use of all or any portion of the Mortgaged Property is lost by reason of a defect in title. 22 54 Each notice must describe generally the nature and extent of the damage, destruction or taking. The County must provide any additional information concerning the matter as the Trustee may reasonably request. The County must file its claims under insurance coverages and claims for awards or payments in the nature of condemnation awards resulting from any damage, destruction or taking. The County must prosecute all its claims for awards or payments in good faith and with due diligence. Any Net Proceeds received by the County because of those claims will be used as provided in Section 5.16. Section 5.16. Deposit and Use of Net Proceeds. (a) 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 has no obligation to account to the Trustee or any other person or entity with respect to the use of such Net Proceeds. The County, however, acknowledges that its use of funds may be constrained by the requirements of the Code and the County's covenants and representations in Section 6.01(k). (b) 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 must cause the Net Proceeds to be paid to the Trustee for deposit and application as provided in this Section. (c) The County may elect to proceed under either part (i), (ii) or (iii) of this subsection with respect to Net Proceeds deposited with the Trustee pursuant to subsection (b). The County must notify the Trustee of its election within 60 days after the date of the deposit. (i) The County may direct the Trustee to deposit the Net Proceeds into the Redemption Account in the Bond Fund and use the Net Proceeds, together with any other available funds the County may provide in its discretion, to redeem or defease the Bonds in whole (but not in part), pursuant to Section 2.01 and Article XI, as appropriate, and as directed in a County Certificate. (ii) If the County determines that the Net Proceeds, together with any other available funds the County may provide in its discretion, will be sufficient to repair or restore that portion of the Pledged Facilities regarding which the Net Proceeds arose, then the County may direct the deposit of the Net Proceeds to the 23 55 Net Proceeds Fund and then may apply those proceeds to repair or restoration. The County must act with due diligence and in a commercially reasonable manner to provide for the repair and restoration. The Trustee will disburse Net Proceeds for the payment of such costs upon receipt of requisitions provided by the County and substantially in the form of Exhibit E. The Trustee may rely conclusively on requisitions as authorization for payments, and the Trustee has no duty or responsibility to verify any matters in the requisitions. The Trustee must not honor any requisition if an Event of Default is continuing. 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 Bond Payments because of any contribution. Any repair or replacement paid for in whole or in part out of Net Proceeds will be the County's property and will be part of the Mortgaged Property. (iii) If the County determines that the Net Proceeds and other funds will not be sufficient for the purposes described in (i) or (ii), then the County must direct the Trustee to deposit the Net Proceeds into the Redemption Account in the Bond Fund and use the Net Proceeds to prepay or defease the Bonds in whole or in part pursuant to Section 2.01 and Article XI and as directed by a County Representative. (d) Nothing in this Section creates an option in the County or any other party to provide for the early payment of Bonds not provided for in Article II. ARTICLE VI COUNTY'S WARRANTIES. REPRESENTATIONS AND COVENANTS Section 6.01. In General. The County makes the following statements of fact, with the intent and understanding that the Trustee and the Bondholders will rely on these statements in deciding to enter into this Agreement and to purchase and hold Bonds. (a) The County is a duly organized and validly existing political subdivision of the State. The County has all powers necessary to enter into the transactions contemplated by this Agreement and the Deed of Trust and to carry out its obligations under this Agreement. 24 56 (b) The County has duly and validly authorized, issued, executed and delivered this Agreement, the 2021 Bonds and the Deed of Trust. Assuming due authorization, execution and delivery by the other parties, this Agreement, the 2021 Bonds 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 and the Trustee) in accordance with their respective terms, subject to bankruptcy, insolvency and other similar laws affecting the enforcement of creditors' rights generally and applicable principles of equity. (c) The County requires no further approval or consent from any governmental authority with respect to the County's entering into or performing under this Agreement 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) (i) challenging the validity or enforceability of the Trust Agreement or the 2021 Bonds, or seeking to restrain or enjoin the issuance or delivery of the Bonds, or (ii) challenging (A) the County's organization or existence, (B) the County's issuance of the Bonds, or (C) the title to office of any County Board member or other County officer, or (iii) that otherwise would be likely (if decided adversely to the County) to have a material adverse effect on the County's ability to provide for timely payment of the Bonds. (e) The County's performance of its obligations under the Bonds, this Agreement and the Deed of Trust, and compliance with their respective provisions, under the contemplated circumstances, 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 any material lien or other encumbrance on any County property (except as contemplated in such instruments) 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. (0 No County representation, covenant or warranty in this Agreement is false or misleading in any material respect. 25 57 (g) The County is vested with fee simple title to the Pledged Sites. There are no liens or encumbrances on the Pledged Facilities or the Pledged Sites other than the existing encumbrances, as shown on Exhibit C to the Deed of Trust. (h) The County Board resolutions relating to the County's execution and delivery of this Agreement, the 2021 Bonds, the Deed of Trust and the transactions contemplated by those instruments have been duly adopted, are in full force and effect, and have not been in any respect modified, revoked or rescinded. (i) The County believes funds will be available to satisfy all its obligations under this Agreement. (j) The Pledged Facilities have been designed and will be constructed to comply with all applicable subdivision, building and zoning ordinances and regulations, and all applicable federal and State standards and requirements relating to the Pledged Facilities. (k) The County will not take or permit, or omit to take or cause to be taken, any action that would cause the Series A Bonds to be "arbitrage bonds" or "private activity bonds" within the meaning of the Code. If the County does take or permit, or take or cause to be taken, any such action, or omit to take or cause to be taken, the County must 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 of the effect of such actions. Section 6.02. County's Undertakings as to Environmental Matters. The County makes the following statements of fact, with the intent and understanding that the Trustee and the Bondholders will rely on these statements in deciding to enter into this Agreement and to purchase and own Bonds. (a) The County has no knowledge (i) that any industrial use has been made of the Mortgaged Property, (ii) that the Mortgaged Property has been used for the storage, treatment or disposal of chemicals or any Hazardous Materials, (iii) that any manufacturing, landfilling or chemical production has occurred on the Mortgaged Property, or (iv) that there is any asbestos or other contaminant on, in or under the Mortgaged Property. (b) To the County's knowledge, the Mortgaged Property complies with all federal, State and local environmental laws and regulations. The County will keep 26 58 the Mortgaged Property, and the activities at the Mortgaged Property, in compliance with all environmental laws, rules, and regulations. The County will, in a timely manner, take all lawful action necessary to maintain compliance or to remedy any lack of compliance. (c) The County will use and maintain Hazardous Materials on the Mortgaged Property only for the routine maintenance and operation of the Mortgaged Property. The County will maintain these Hazardous Materials only in appropriate quantities for these purposes, and will use them only in substantial compliance with label instructions and all State and federal environmental laws, rules and regulations. The County will not use the Mortgaged Property (A) for the manufacture, transport, process, storage, treatment or disposal of any Hazardous Materials or (B) for any industrial, manufacturing or landfilling use or for any chemical production. (d) The County will promptly send to the Trustee, upon the Trustee's request, copies of any citations, orders, notices or other material governmental or other communication received with respect to any Hazardous Materials. For the purposes of this Section, "Hazardous Materials" means any chemicals, materials, substances, wastes or other substances that are classified and regulated by any by federal, State or local laws as hazardous or toxic substances that exist on or affect the Mortgaged Property. Section 6.03. 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 MSRB: (a) by not later than seven months from the end of each of the County's Fiscal Years, beginning with the Fiscal Year that ends June 30, 2021, 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; 27 59 (b) by not later than seven months from the end of each of the County's Fiscal Years, beginning with the Fiscal Year that ends June 30, 2021, 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 in Appendix A to the final Official Statement relating to the 2021 Bonds under the captions (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 2021 Bonds: (1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on any credit enhancements reflecting financial 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 2021 Bonds, or other material events affecting the tax status of the 2021 Bonds; (7) modifications to rights of the beneficial owners of the 2021 Bonds, if material; (8) calls for redemption of 2021 Bonds (other than calls pursuant to sinking fund redemption), if material, and tender offers; 28 60 (9) defeasances; (10) release, substitution or sale of any property securing repayment of the 2021 Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar proceedings related to the County, the Trustee or any other person or entity that may at any time become legally obligated to make Bond 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; (15) Incurrence of a financial obligation (as defined below) of the County, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the County, any of which affect Bondholders, if material; and (16) Default, event of acceleration, termination event, modification of terms or other similar events under the terms of a financial obligation of the County, any of which reflect financial difficulties; and (d) in a timely manner, not in excess of ten Business Days after the occurrence of the failure, 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. "Financial obligation" means (a) a debt obligation, (b) a derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation, or (c) a guarantee of an obligation described in either clause (a) or (b). The term "financial obligation" shall not include municipal securities as to which a final official statement has been provided to the MSRB 29 61 consistent with Rule 15c2-12 of the Securities and Exchange Commission promulgated under the Securities Exchange Act of 1934, as amended. As used above, the "final Official Statement" means the Official Statement dated June , 2021, that the County has approved and authorized for use in connection with the offering and sale of the 2021 Bonds. For the purposes of the events identified in subparagraph (c)(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 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 Trustee may take action to protect and enforce the rights of all the beneficial owners of the 2021 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 2021 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 2021 Bonds. The County must 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. 30 62 The County reserves the right to modify from time to time the information to be provided, or the presentation of 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 by the Trustee, by Bond Counsel, or by the approving vote of the Majority Owners pursuant to the terms of this 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 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 principal of and interest on all the Bonds. ARTICLE VII INDEMNIFICATION To the extent permitted by law, the County will indemnify, protect and save (a) the LGC and its members and employees, and (b) the Trustee and its officers, directors, agents and employees, in all cases harmless from all liability and losses, including expenses and legal fees, expenses and costs, arising out of, connected with, or resulting directly or indirectly 31 63 (A) from the condition or use of the Mortgaged Property or the transactions contemplated by this Agreement; or (B) as a result of any warranty or representation made by the County in Section 6.02 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 Trustee, the County or any transferee or assignee of the County or the Trustee. The County has no obligation to indemnify any indemnified party for the gross negligence or intentional misconduct of the indemnified party or any of its employees or representatives. The County's obligation to provide indemnification under this Article continues even after the payment in full of all the County's obligations under this Agreement. The County's obligation extends to any Trustee even after the removal or resignation of that Trustee. The parties intend that the LGC is a third- party beneficiary of the County's obligations under this Article VII. ARTICLE VIII DISCLAIMER OF WARRANTIES The County acknowledges that the Trustee has not designed the Pledged Facilities, that the Trustee has not supplied any plans or specifications with respect thereto and that the Trustee (a) is not a manufacturer of, nor a dealer in, any of the component parts of the Financed Facilities or similar facilities, (b) has not made any recommendation, given any advice nor taken any other action with respect to (i) the choice of any supplier, vendor or designer of, or any other contractor with respect to, the Financed Facilities or any component part thereof or any property or rights relating thereto, or (ii) any action taken or to be taken with respect to the Financed Facilities or any component part thereof or any property or rights relating thereto at any stage of the construction thereof, (c) has not at any time had physical possession of the Financed Facilities, the sites on which those facilities are or will be established, or any component part 32 64 thereof or made any inspection thereof or any property or rights relating thereto, and (d) has not made any warranty or other representation, express or implied, that the Financed Facilities or any component part thereof or any property or rights relating thereto (i) will not result in or cause injury or damage to persons or property, (ii) has been or will be properly designed or will accomplish the results which the County intends therefor, or (iii) is safe in any manner or respect. THE TRUSTEE MAKES NO EXPRESS OR IMPLIED WARRANTY OR REPRESENTATION OF ANY KIND WHATSOEVER WITH RESPECT TO THE FINANCED 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 Financed Facilities to perform any function; or any other characteristic of the Financed Facilities. The County bears all risks relating to the Financed Facilities or the transactions contemplated by this Agreement or by the Deed of Trust, and the County waives the benefits of all implied warranties and representations of the Trustee. The provisions of this Article continue in effect even if the Contract Term has expired, and continue to apply with respect to any particular Trustee even after the removal or resignation of that Trustee. ARTICLE IX THE TRUSTEE Section 9.01. Rights and Duties. (a) If an Event of Default 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 that person's own affairs. (b) Except during the continuation of an Event of Default: 33 65 (i) the Trustee need perform only those duties that are specifically set forth in this Agreement and no other, and no implied covenants or obligations shall be read into this Agreement against the Trustee; (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, opinions or other writings furnished to the Trustee and conforming to the requirements of this Agreement which the Trustee actually and in good faith believes to be genuine and to have been signed or presented by the proper person. (c) The Trustee is not relieved from liability for its own negligent action, its own grossly 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 10.OS; and (iii) the Trustee will not be liable with respect to any information contained in any offering documents (except to the extent of information about the Trustee provided by the Trustee specifically for inclusion in that offering document). The Trustee has no responsibility for compliance with any state or federal securities laws in connection with the Bonds. (d) Every provision of this Agreement that in any way relates to the Trustee is subject to all the provisions of this Section 9.01. (e) Not later than August 1 of each year, the Trustee will notify the LGC and the County of the principal amount of Bonds Outstanding as of the preceding June 30, with a breakdown of Bonds by series. (f) No provision of this 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 or in the exercise of any of its rights or powers, 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 34 66 interest with respect to the Bonds to be due immediately under Section 10.02. No permissive right of the Trustee should be construed as a duty. (g) The Trustee is not liable for interest on any cash held by it except as the Trustee may agree with the County in writing. (h) If a Default is continuing and is known to the Trustee, then the Trustee must notify the Owners and the LGC within 15 days after the Default becomes known to the Trustee. The Trustee, however, will only be deemed to have knowledge of (i) defaults in payment as described in Sections 10.01(a) and (b) and (ii) defaults with respect to which the Trustee has received written notice, describing the default, from any interested party. (i) The Trustee may consult with counsel and is not liable for any action it takes or omits to take in good faith in reliance on advice from counsel as to legal matters, including but not limited to interpretation of this Agreement. (j) Notwithstanding anything in this Agreement to the contrary, the Trustee and its agents have the right to require additional evidence, certificates or opinions of counsel as to legal matters as the Trustee may deem appropriate to establish the County's right to the withdrawal of any funds held under this Agreement or to require the Trustee's taking of any other action under this Agreement. (k) The Trustee must keep complete and accurate records of all moneys received and disbursed by it under this Agreement. These records must be available for inspection by the County and any Owner, or any of their agents, at any time during regular business hours upon reasonable prior notice to the Trustee. (1) In any judicial proceeding to which 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 must do so if requested in writing by the Majority Owners, provided that the Trustee has received the indemnity provided for in subsection (f) above. (m) The Trustee may act through agents or co-trustees. 35 67 (n) The Trustee has no duty to inspect or oversee the construction or completion of any property to be acquired, constructed or improved using Bond proceeds. (o) The Trustee shall not be responsible or liable for any failure or delay in the performance of its obligations under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including, without limitation, acts of God; falling space debris; earthquakes; fire; flood; hurricanes or other storms; wars; terrorism; similar military disturbances; sabotage; epidemic; pandemic; riots; interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications services, in all cases not specific to the Trustee; accidents; acts of civil or military authority or governmental action; it being understood that the Trustee shall in all cases use commercially reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as reasonably practicable under the circumstances. (p) The Trustee may rely on, and need only rely on, notices and instructions provided by the County in the form of a County Certificate. (q) The Trustee shall not be responsible or liable for the environmental condition or any contamination of any property which secures the Bonds or is owned or leased by the County or for any diminution in value of any such property as a result of any contamination of the property by any hazardous substance, hazardous material, pollutant or contaminant. The Trustee shall not be liable for any claims by or on behalf of the County or any other person or entity arising from contamination of the property by any hazardous substance, hazardous material, pollutant or contaminant, and shall have no duty or obligation to assess the environmental condition of any such property or with respect to compliance of any such property under state or federal laws pertaining to the transport, storage, treatment or disposal of, hazardous substances, hazardous materials, pollutants, or contaminants or regulations, permits or licenses issued under such laws. Section 9.02. Communication with the Trustee. The Trustee may accept and act upon instructions, including funds transfer instructions ("Instructions") given pursuant to this Agreement and delivered using Electronic Means. If the County elects to give the Trustee Instructions using Electronic Means and the Trustee in its discretion elects to act upon those Instructions, the Trustee's understanding of the Instructions controls. 36 68 The County understands and agrees that the Trustee cannot determine the identity of the actual sender of Instructions and that the Trustee may conclusively presume that Instructions that purport to have been sent by a County Representative have in fact been sent by that County Representative. The County is responsible for ensuring that only County Representatives transmit Instructions to the Trustee, and the County is solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and authentication keys. The Trustee is not liable for any losses, costs or expenses arising directly or indirectly from the Trustee's reliance upon and compliance with Instructions that purport to have been sent by a County Representative, notwithstanding that an Instruction may conflict with or be inconsistent with another Instruction received after the Trustee's action. The County agrees: (a) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Trustee, including without limitation the risk of the Trustee's acting on unauthorized Instructions that purport to be sent by an County Representative, and the risk of interception and misuse by third parties; (b) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Trustee and that there may be more secure methods of transmitting Instructions than the method(s) selected by the County; (c) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (d) to notify the Trustee immediately upon learning of any compromise or unauthorized use of the security procedures. In this Agreement, "Electronic Means" means electronic mail, facsimile transmission or similar methods. Voice communication and delivery of signed paper documents are not "Electronic Means." Section 9.03. 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 County or its affiliates with the same rights it would have if it were not Trustee. Section 9.04. Disclaimer. The Trustee makes no representation as to the validity or adequacy of this Agreement or the Bonds, and the Trustee is not accountable for the County's use of the proceeds of the Bonds. 37 69 Section 9.05. Eligibility. The County must maintain a trustee for this Agreement. No corporation may be appointed or serve as Trustee unless (a) it is approved by the LGC for service as Trustee under this Agreement, (b) it 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, and is subject to supervision or examination by the United States, any state or the District of Columbia, and (c) it 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 9.06. 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, but the County may remove the Trustee only if 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 otherwise exists in the office of Trustee for any reason, the County must promptly appoint a successor Trustee (except when that right is exercised by the Majority Owners as described in the preceding paragraph). A successor Trustee must deliver a written acceptance of its appointment to the retiring Trustee and to the County. Immediately upon receipt of the acceptance, the retiring Trustee must transfer all property held by it as trustee to the successor Trustee; only then will the resignation or removal of the retiring Trustee become effective. The successor Trustee has all the rights, powers and duties of the Trustee under this Agreement. If the Trustee fails to meet the requirements of Section 9.05, any Owner may petition any court for the removal of the Trustee and the appointment of a successor Trustee. 38 70 If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, then the retiring Trustee, the County or the Majority Owners may petition any court for the appointment of a successor Trustee. Section 9.07. 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, then the resulting, surviving or transferee corporation without any further act will be the successor Trustee. Section 9.08. Consent to Jurisdiction and Venue. The Trustee consents to jurisdiction in the State of North Carolina and venue in Orange County for any lawsuit arising from the Trust Agreement or the Bonds, or from the related transactions contemplated by the Trust Agreement or the Bonds. ARTICLE X DEFAULTS: REMEDIES Section 10.01. Events of Default. An "Event of Default" is any of the following: (a) Default in the payment of the principal of any Bond when the same becomes due and payable, whether at the stated maturity of the Bond or upon proceedings for mandatory (but not optional) redemption. (b) Default in the payment of any interest on any Bond when the same becomes due and payable. (c) The occurrence of an Event of Nonappropriation. (d) The County breaches or fails to perform or observe any term, condition or covenant of this Agreement, the Bonds or the Deed of Trust on its part to be observed or performed, other than as referred to in the preceding subsections, including payment of any Additional Payment, for a period of 90 days after written notice specifying the failure and requesting that it be remedied has been given to the County by any person or entity, unless the Trustee agrees in writing to an extension of the 90-day period prior to its expiration; provided, however, that if the failure stated in the notice cannot reasonably be corrected within the notice period and the 39 71 County institutes corrective action within the notice period, no Event of Default will be deemed to have occurred so long as the County diligently pursues remedial action. (e) Any warranty, representation or statement made by the County in this Agreement, the Bonds or in the Deed of Trust is found to be incorrect or misleading in any material respect as of the Closing Date. (f) Any lien, charge or encumbrance (other than Permitted Encumbrances) prior to or affecting the validity of the Deed of Trust is found to exist, or proceedings are instituted to enforce any lien, charge or encumbrance against the Mortgaged Property and such lien, charge or encumbrance would be prior to the lien of the Deed of Trust. Section 10.02. Acceleration. If any Event of Default 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 must immediately give notice of any acceleration to all 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 10.03. Other Remedies. If an Event of Default is continuing, the Trustee may pursue any remedy 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 Agreement, the Bonds, or the Deed of Trust, including by foreclosure on the Mortgaged Property. 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 does 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 10.04. Waiver of Past Defaults. The Majority Owners, by notice to the Trustee, may waive an existing Event of Default and its consequences. When an 40 72 Event of Default is waived, it is cured and stops continuing, but no waiver extends to any subsequent or other Event of Default or impairs any right consequent to it. Section 10.05. Majority's Control. The Majority Owners, upon satisfactory indemnification of the Trustee, may 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 it reasonably believes conflicts with law or this 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 10.06. Limitation on Suits. An Owner may not pursue any remedy with respect to this Agreement or the Bonds (except as provided in Section 10.07) 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) that 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 Agreement to prejudice the rights of another Owner or to obtain a preference or priority over the other Owners. Section 10.07. Rights To Receive Payment. This Agreement preserves the right of any Owner to receive payment of principal, premium, if any, and interest on a Bond, on or after the due dates expressed in the Bond, or to sue for the enforcement of any such payment on or after such dates. These rights of an Owner may not be impaired or affected without that Owner's consent. Section 10.08. Collection Suit by 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 10.09. Trustee May File Proofs of Claim. (a) The Trustee may file proofs of claim and other papers or documents as may be necessary or advisable to have the claims of the Trustee and the Owners allowed in any judicial proceedings relative to the County, its creditors or its property. 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. 41 73 (b) If the Trustee incurs expenses or renders services in any proceedings resulting from any Default or Event of Default, the parties intend that the expenses incurred and compensation for services rendered will constitute expenses of administration under the United States Bankruptcy Code or any similar state or federal law. Section 10.10. Priorities. If the Trustee collects any money pursuant to this Article, it must deposit that money in a special account in the Payment Fund and pay out that money in the following order: (a) If the principal of all Bonds has not become or will not be declared due and payable, all the moneys in the Payment Fund will be applied as follows and in the following order: First, Costs and Expenses: to the payment of the costs and expenses of the Trustee and of the Owners in declaring the Event of Default and pursuing remedies under this Agreement, 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 the installments, beginning with the earliest unpaid installment. If the amount available is not sufficient to pay in full any installment or installments coming due 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. Third, Principal: to the payment to the persons entitled thereto of the unpaid principal on any Bonds which have become due, whether at maturity or by call for redemption, in the order of their due dates, beginning with the earliest unpaid installment, with interest on the overdue principal at a rate equal to the rate paid on the Bonds. If the amount available is not sufficient to pay in full all the amounts due on the Bonds on any date, together with the required interest, then to the payment thereof ratably, according to the amounts of principal due on that date to the persons entitled thereto, without any discrimination or preference. (b) If the principal of all Bonds has become or has been declared due and payable, all the money will be applied (i) first to pay the fees and expenses as described in subsection (a), and then (ii) to pay the principal and interest then due 42 74 on 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, in each of these cases to the persons entitled thereto without any discrimination or privilege. The Trustee may fix the date for any payment to Owners under this Section. Section 10.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this 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 of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable legal fees, against any party, having due regard to the merits and good faith of the claims or defenses made by the party. This Section does not apply to a suit by the Trustee or any authorized suit by any Owner. ARTICLE XI DISCHARGE OF TRUST AGREEMENT Section 11.01. Bonds Deemed Paid; Discharge of Trust Agreement. Any Bond will be deemed paid for all purposes of this Agreement when (a) payment of the principal, premium, if any, and interest on that Bond to the due date of those amounts (whether at maturity, upon redemption 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 make the payments or (B) Federal Securities maturing as to principal and interest in such amounts and at such times as will ensure, without reinvestment, the availability of sufficient moneys to make those payments 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 have been paid or provided for to the Trustee's satisfaction. The sufficiency of the deposit referenced above must be evidenced or verified by a certificate or other writing, in form and substance satisfactory to the Trustee, of a person or entity experienced in making these calculations as the County may select. 43 75 When a Bond is deemed paid as a result of a deposit as provided under (ii) above, it is no longer secured by or entitled to the benefits of this Agreement, and all rights to payment of those Bonds are limited to payment from the moneys or Federal Securities that have been deposited. Those Bonds, however, may still be transferred, exchanged, registered or replaced as provided in Article XIV, and still represent installment contracts and obligations of the County payable from that special fund. Notwithstanding the foregoing, the County may make no deposit under clause (a)(ii) above until the County has furnished the Trustee an Opinion of Bond Counsel to the effect that the deposit of cash or Federal Securities will not cause the Bonds to become "arbitrage bonds" within the meaning of the Code if the interest on those Bonds is intended to be not included in gross income for federal income tax purposes. Also, if a Bond is to be prepaid prior to maturity, notice of redemption of the Bond must be given in accordance with this Agreement or any supplement or amendment for the deposit to be deemed a payment of that Bond. If the Bond, however, is not to be paid or prepaid within the next 60 days following the deposit date, the County must give the Trustee, in form satisfactory to the Trustee, irrevocable written instructions as follows: (A) to provide notice to the Bondholders, as soon as practicable, that the County has made the deposit required by (a)(ii) above and that the Bond is deemed to be paid under this Article, and further stating the maturity or redemption 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 redemption not less than 30 nor more than 60 days prior to the redemption date for that Bond as provided in this Agreement or any supplement or amendment. When all Outstanding Bonds are deemed paid under this Section, the Trustee must, upon the County's request, acknowledge the discharge of the lien of this Agreement and repay any excess amounts remaining on deposit in the Funds established under this Agreement to the County. The County agrees that no deposit must be made or accepted, and no use made of any deposit, that would cause any Bonds to be treated as "arbitrage bonds" within the meaning of the Code if the interest on that Bond is intended to be not included in gross income for federal income tax purposes. 44 76 Section 11.02. Application of Trust Money. The Trustee must hold in trust money or Federal Securities deposited with it pursuant to Section 11.01 and must apply the deposited money and the money paid with respect to the Federal Securities in accordance with this Agreement only to the payment of principal, interest and any applicable redemption premium with respect to the affected Bonds. ARTICLE XII INVESTMENT OF MONEYS IN FUNDS Section 12.01. Investments Authorized. (a) Subject to the further provisions of this Article XII, the Trustee must invest and reinvest moneys held by it under this Agreement upon the County's written direction in Investment Obligations that are Legal Investments. All investments, if registrable, must 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 of moneys held under this Agreement, the Trustee will invest or reinvest those 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, any investments of funds held under this Agreement. The Trustee may act as purchaser or agent in the making or disposing of any investment, may make any investment through its bond or investment department or those of its affiliates, and may charge its ordinary and customary fees for those transactions. (c) The Trustee is not responsible or liable for any loss suffered in connection with any investment of funds made in accordance with this Section. The Trustee may conclusively rely on the County's investment directions as to both the suitability and legality of any investment made at the County's direction, and therefore the Trustee has no obligation or responsibility with respect to whether any particular investment is a Legal Investment or an Investment Obligation within the meaning of this Agreement. (d) The County must direct the investment and reinvestment of all moneys in Investment Obligations having maturities not extending beyond the date on 45 77 which the County estimates those 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 12.02. Held in Trust. The moneys and investments held by the Trustee under this Agreement are irrevocably held in trust for the benefit of the Owners, and those moneys, and any income or interest earned thereon, must be expended only as provided in this Agreement. To the extent permitted by law, those moneys and investments will not be subject to levy or attachment or lien by or for the benefit of any creditor of the Trustee or the County, other than the Owners. Section 12.03. Investments Part of Fund. Any income, profit or loss on the investment of moneys held by the Trustee under this Agreement must be credited to the respective fund to which those moneys are credited, except as otherwise provided in this Agreement. Section 12.04. Accounting. The Trustee must 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. These accountings may be supplied in the form of the Trustee's customary statements. The Trustee must keep accurate records of all funds administered by it and of all Bonds paid and discharged. Although the County recognizes that it may obtain a broker confirmation or written statement containing comparable information at no additional cost, the County agrees that the Trustee is not required to issue broker confirmations of investments for any month for which the Trustee delivers a monthly statement. Section 12.05. Valuation. To determine the amount on deposit in any Fund or Account held under this Agreement, the Trustee must value any investment credited to a Fund or Account at its market value. The Trustee must make these valuations annually as of each June 30, beginning June 30, 2021, and at such additional times as this Agreement may require or as the County may request. The County may not make more than one request in a calendar month. Section 12.06. Disposition. The Trustee must sell, or present for redemption, and reduce to cash any investment in a Fund or Account whenever the cash balance in the Fund or Account is insufficient for its purposes. 46 78 Section 12.07. Commingling of Moneys in Funds. The Trustee must separately account for all Funds and Accounts held by it under this Agreement. With the County's approval, however, the Trustee may commingle for investment purposes any funds held under this Agreement with any other funds. Section 12.08. Information Concerning Investments. The Trustee must establish and maintain written records regarding investments made under this Article XII and must supply the information to the County at its request. The Trustee's records must show for each investment obligation information as to: (a) purchase date; (b) purchase price; (c) any accrued interest paid; (d) face amount; (e) coupon rate; (f) periodicity of interest payments; (g) disposition price; (h) any accrued interest received; and (i) disposition date. Section 12.09. Restricted Yield Investments. The County may direct the investment of any funds held under this Agreement without regard to yield, despite any provision in this Agreement directing investment with regard to the Restricted Yield, but only if the County provides the Trustee with an Opinion of Bond Counsel, in form and substance reasonably acceptable to the Trustee, to the effect that such an investment would not adversely affect any exclusion from gross income that would otherwise be applicable to interest payments on the Bonds. ARTICLE XIII AMENDMENTS OF AND SUPPLEMENTS TO TRUST AGREEMENT, BONDS OR DEED OF TRUST Section 13.01. Without Owners' Consent. The County and the Trustee may amend or supplement this Agreement, any Bonds or the Deed of Trust without notice to or consent of any Owner for any of the following purposes, or for any combination of the following purposes: (a) to cure any ambiguity, inconsistency or formal defect or omission (b) to grant to the Trustee for the benefit of the Owners additional rights, remedies, powers or authority 47 79 (c) to subject to this Agreement additional collateral or to add other agreements of the County, including the addition of real estate or other collateral to be subject to the lien of this Agreement or the Deed of Trust (d) to permit the qualification of this Agreement under any federal or state statute, whenever enacted, and, in that connection, to add to this Agreement or any other supplemental trust agreement any other terms, conditions and provisions as may be permitted or required by the federal or state statute (e) to provide for the issuance of Additional Bonds as otherwise permitted by this Agreement (f) to provide for Bonds to be issued or exchanged for Bonds in any other form or format at that time permitted by law (g) to evidence the succession of a new Trustee, or to provide for the appointment and operation of a Bond registrar separate from the Trustee (h) to make any other change that does not materially adversely affect the rights of any Owner The Trustee may conclusively rely on a County Certificate to the effect that a proffered amendment or supplement is within the scope of this Section 13.01. At least five Business Days prior to its execution and delivery of any supplemental agreement or instrument for any of the purposes described in this Section, the Trustee shall provide for a notice of the proposed agreement or instrument to be mailed first-class, postage prepaid, to the LGC and to all Owners of Bonds at the addresses shown in the register maintained pursuant to Section 14.05. The notice must briefly set forth the nature of the proposed agreement or instrument, or include a copy, and state that copies of the proposed agreement or instrument are available to all Owners of Bonds upon written request to the County or the Trustee at addresses stated in the notice. The County must pay the expenses of any mailing and copies required under this Section. A failure on the Trustee's part to mail the notice required by this Section will not affect the validity of any supplemental agreement or instrument. 48 80 Section 13.02. With Owners' Consent. (a) If Section 13.01 does not permit an amendment of or supplement to this Agreement, any Bonds or the Deed of Trust without any consent of Owners, the County and the Trustee may enter into that amendment or supplement only with the consent of the Majority Owners. (b) Without the consent of each Owner affected, however, no amendment or supplement to this Agreement, the Deed of Trust or any Bonds may (i) extend the maturity of the principal or interest on 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 any amendment or supplement, (v) intentionally impair any exclusion of interest on the Bonds from the federal gross income of the Owner of any Bond to which that interest was intended to be entitled; (vi) change any redemption terms of those Bonds; (vii) create a lien ranking prior to or on a parity with the lien of this Agreement on the property pledged under this Agreement (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 Agreement on any property. In addition, if moneys or Federal Securities have been deposited or set aside with the Trustee pursuant to Article XI for the payment of Bonds and those Bonds have not in fact been paid in full, the parties may make no amendment to the provisions of that Article without the consent of each Owner affected. Section 13.03. Procedure for Amendment with Owners' Consent. (a) If a proposed amendment requires the consent of Owners, the Trustee must establish a record date, and Owners as of that record date will be the Owners with the right to consent to the proposed amendment or supplement. This record date must be a date not less than five nor more than 45 Business Days after the date the Trustee receives notice or direction from the County to solicit consents. (b) The Trustee shall provide for there to be mailed to the LGC and to all Owners of Bonds a copy of the proposed supplement or amendment, together with a request to the Owners for their consent. The Trustee shall send this notice by first- class mail, postage prepaid, to the Owners of Bonds at the addresses shown in the register maintained pursuant to Section 14.05, but failure to send or receive copies of the supplement or amendment and request does not affect the validity of the supplement or amendment when assented to as provided in this Section. The 49 81 request mailed by the Trustee must also designate a date not more than 180 nor less than 30 days following the mailing date, as designated by the County, by which consent must be returned to be effective. The County must pay the expenses of any mailing and copies required under this Section. (c) The proposed supplement or amendment will not become effective unless and until there are filed with the Trustee the written consent of the Owners (as of the record date) of not less than a majority in aggregate principal amount of the Bonds Outstanding as of the established record date (exclusive of Bonds disregarded from the calculation as provided in Section 13.04) and the Trustee has mailed the notices required by Section 13.09. Each consent will be effective only if accompanied by proof of ownership of the Bonds for which the consent is given as provided in Section 13.05 and given within the time designated as provided in subsection (b) above. Section 13.04. Bonds Excluded from Calculation. Bonds owned or held by or for the account of the County or by any person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the County (except any Bonds held in any pension or retirement fund), are not deemed Outstanding for any action or any calculation of Outstanding Bonds provided for in this Agreement. Similarly, Owners of those Bonds are not entitled to take any action provided for in this Agreement. If, however, all Outstanding Bonds are owned by the County or other Owners described in this paragraph, then none of the Outstanding Bonds are excluded from calculation under this paragraph. For purposes of this Section, the Trustee may assume that no Bonds are excluded from any calculation of Outstanding Bonds provided for in this Agreement except for Bonds (i) that are registered in the County's name or (ii) for which the Trustee has received written notice that the Bonds are owned or held by or for the account of the County or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the County. The County and the Trustee intend, however, that the County's ownership or holding of Bonds will not, by itself, give rise to an extinguishment of the Bonds or of any obligation arising under this Agreement. The Trustee may (but is not required to) provide for each Owner, before an Owner's consent is deemed effective, to certify or otherwise provide evidence to 50 82 establish whether the Bonds as to which the consent is given are excluded as provided in this Section. Section 13.05. Owners' Consents. Any consent or other instrument required 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 the 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 Agreement regarding any action taken by the Trustee. (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 Agreement. Section 13.06. Effect of Consents. After an amendment or supplement becomes effective, it binds every Owner. Any consent is binding upon and irrevocable by the Owner of the Bond giving the consent and on any subsequent Owner (whether or not any subsequent Owner has notice of the consent), unless the consent is revoked in writing by the Owner giving the consent, or a subsequent Owner of the same Bonds, by filing a revocation with the Trustee prior to the time when the Trustee has mailed the notice provided for in Section 13.09. Section 13.07. Trustee's Execution of Amendments and Supplements. The Trustee must 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 in its reasonable discretion. If the amendment or supplement has such an adverse effect, the Trustee may, but need not, execute and deliver it. In determining to execute and deliver an amendment or supplement, the Trustee is entitled to receive and may conclusively rely on an Opinion of Counsel to the effect (a) that the amendment or supplement is authorized by this Agreement and (b) that upon execution it will be valid and binding upon the party or parties executing it in accordance with its terms. 51 83 Section 13.08. LGC's Consent Required. No amendment or supplement to this Agreement, the Deed of Trust or the Bonds will become effective unless the LGC delivers to the County and the Trustee its prior written consent to the amendment or supplement. Section 13.09. Notice of Amendments and Supplements. The Trustee must cause notice of the execution of any supplement or amendment to this Agreement or the Bonds 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 the amendment or supplement. The County must pay the expenses of any mailing and copies required under this Section. Any failure on the Trustee's part to mail the notice required by this Section will not affect the validity of any supplemental agreement. Section 13.10. Notation on or Exchange of Bonds. If an amendment or supplement changes the terms of a Bond, the Trustee may require the Owner of that 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 and the County agree, in exchange for the Bond the County will execute, and the Trustee will authenticate and deliver, a new Bond that reflects the changed terms. ARTICLE XIV PROVISIONS FOR THE FORM, REGISTRATION AND EXCHANGE OF BONDS Section 14.01. Form and Details of Bonds. Each Series of Bonds will be dated the date of the initial delivery of those Bonds to their initial purchaser. The Bonds will be issuable only as fully registered Bonds in a minimum denomination of $5,000 and integral multiples of $5,000 above the minimum. Each Bond will be payable as to interest (a) from its date, if that Bond is authenticated prior to the Record Date preceding its first Payment Date, (b) from the succeeding Payment Date, if that 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 that Bond is authenticated; provided, however, that if at the time of authentication of a Bond any payment of interest on that Bond is in 52 84 default, then that Bond is payable as to interest from the date to which interest has been paid. Principal, interest and any redemption premium for all Bonds are payable in lawful money of the United States of America. Section 14.02. Book-Entry-Only Form. (a) All Bonds will be issued by means of a book-entry system, with one certificate for each maturity of each series of Bonds immobilized at DTC and not available for distribution to the public. Bonds registered in the name of DTC or its nominee may be held in custody by the Trustee in lieu of immobilization at DTC if permitted under DTC's rules and procedures. The parties agree that transfer of beneficial ownership interests in the Bonds in the principal amounts of $5,000 and integral multiples of $5,000 above the minimum will be effected on the records of DTC and its participants pursuant to rules and procedures established by DTC and its participants. Principal, interest and any redemption premium on the Bonds are payable to DTC or its nominee as registered owner of the Bonds. The parties agree that transfer of principal, interest and any redemption premium to DTC participants will be DTC's responsibility, and that transfer of principal, interest and any redemption premium on the Bonds to beneficial owners of the Bonds by DTC participants will be the responsibility of those participants and other nominees of beneficial owners. Neither the Trustee nor the County will be responsible or liable for transfer of payments beyond DTC or for maintaining, supervising or reviewing the records maintained by DTC, its participants, or persons acting through those participants. (b) If (i) DTC determines not to continue to act as securities depository for the Bonds or (ii) the County directs, the County and the Trustee will arrange to discontinue the book-entry system with DTC. If the County designates an alternate qualified securities depository to replace DTC, that depository will replace DTC and all references to DTC in this Agreement will be deemed references to the alternate depository. If the County does not designate another depository to replace DTC, the County must deliver fully registered Bonds as replacements for Bonds in book-entry form for the Trustee's authentication and delivery. (c) In connection with any delivery of certificated Bonds, the County or the Owner shall provide, or cause to be provided, to the Trustee all information necessary to allow the Trustee to comply with any applicate tax reporting obligations, including without limitation any cost basis reporting obligations under Section 6045 of the Internal Revenue Code. The Trustee may rely on the information 53 85 provided to it, and the Trustee has no responsibility to verify or ensure the accuracy of the information provided. Section 14.03. Execution. The Bonds must be signed on the County's behalf by the manual or facsimile signature of the presiding officer of the County Board or the County Manager, and the County's seal must be impressed or imprinted on the Bonds by facsimile or otherwise and attested by the manual or facsimile signature of the County Clerk or any Deputy or Assistant Clerk. If any County officer whose signature is on a Bond no longer holds that office at the time the Trustee authenticates the Bond, that Bond is nevertheless valid. If a person signing a Bond is the proper officer on the actual date of execution, the Bond is valid even if that person is not the proper officer on the nominal date of action. Section 14.04. Authentication. Each Bond must bear a certificate of authentication from the Trustee. No Bond will be valid until the Trustee has duly executed the certificate of authentication and inserted the authentication date on that Bond. The Trustee must authenticate each Bond with the signature of an authorized representative or employee, but it is not necessary for the same person to authenticate all the Bonds. Only Bonds authenticated as provided in this Section are entitled to any right or benefit under this Agreement. Section 14.05. Registration and Exchange of Bonds; Persons Treated as Owners. The Trustee will establish and maintain a register as to the ownership of Bonds. An Owner may exchange and transfer Bonds only through the register. Upon surrender for transfer to the Trustee of any Bond, 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. Bonds may be exchanged for an equal total principal amount of Bonds of different but authorized denominations. The Trustee must authenticate and deliver Bonds that the Owner making the exchange is entitled to receive, bearing numbers not then Outstanding. The Trustee is not required to exchange or register the transfer of any Bond after the giving of notice calling such Bond for redemption. If it does, the Trustee must deliver to the transferee any applicable redemption notice 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 redemption. 54 86 The Owner is the absolute owner of the Bond for all purposes, and payment of principal and interest will be made only to or upon the written order of the Owner or the Owner's legal representative, except that payments will be made to the persons shown as the owners 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 14.06. Mutilated, Lost, Stolen or Destroyed Bonds. (a) If any Outstanding Bond is damaged, mutilated, lost, stolen or destroyed, the County must execute, and the Trustee must 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) (i) The Owner must apply to the Trustee for exchange and substitution of damaged, mutilated, lost, stolen or destroyed Bonds. In every case, the applicant for a replacement Bond must furnish to the County and the Trustee such security or indemnity as each may reasonably require. In every case of loss, theft or destruction of a Bond, the applicant must also furnish to the County and the Trustee evidence to their reasonable satisfaction of the loss, theft or destruction. In the case of damage or mutilation of a Bond, the applicant must surrender the damaged or mutilated Bond. (ii) Notwithstanding the foregoing, if any such Bond has matured, and no default is then continuing in the payment of the principal or interest on that 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 requirements for indemnity in this Section are in addition to any requirements imposed by law, including any requirements of General Statutes Section 159-137. (d) The Trustee shall charge the Owner of such Bond with all expenses in connection with the issuance of any substitute Bond. Every substitute Bond issued 55 87 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, is entitled to all the benefits of this Agreement equally and proportionally with all other Bonds duly issued under this Agreement. Section 14.07. Cancellation. Whenever a Bond is delivered to the Trustee for cancellation (upon payment, redemption or otherwise) or for transfer, exchange or replacement, the Trustee must promptly destroy the Bond and deliver a written certificate of that destruction to the County. Section 14.08. Temporary Bonds. Prior to the preparation of Bonds in definitive form the County may execute, and the Trustee must then authenticate and deliver, temporary Bonds in any denominations as the County may determine, but otherwise in substantially the form set out in this Agreement. The County must promptly prepare, execute and deliver to the Trustee, before the first Payment Date for those 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 definitive form of the same maturity and having an equal aggregate principal amount. Until exchanged for Bonds in definitive form, Bonds in temporary form are entitled to the lien and benefit of this Agreement. Section 14.09. Non-Presentment of Bonds. (a) If any Bond is not presented for payment when the principal of that Bond becomes due (whether at maturity, upon acceleration or call for redemption or otherwise), all liability to the Owner for the payment of that Bond will be completely discharged if funds sufficient to pay the Bond and the premium, if any, and interest due on that Bond are held by the Trustee for that Owner's benefit. It is then the Trustee's duty to hold these funds subject to subsection (b) below, without liability for interest, for the benefit of the Owner. The Owner will thereafter be restricted exclusively to those funds for any claim of whatever nature under this Agreement with respect to that Bond. (b) Notwithstanding any provision of this Agreement to the contrary, the Trustee must dispose of moneys held by it for the payment of principal, premium, or interest on Bonds left unclaimed for five years after the date the principal on those Bonds becomes due in accordance with N.C. Gen. Stat. Sec. 11613-51 or any successor provision. After the disposition, the Owners of those Bonds are thereafter entitled to look only to their remedies under N.C. Gen. Stat. Chapter 116B or any successor 56 88 provision. The Trustee and the County have no further responsibility with respect to that money or for that payment. Section 14.10. Supplemental Agreements May Vary Terms. Any supplement or amendment to this Agreement may, by its express terms only, vary any of the terms and provisions of this Article with respect to any Series of Bonds. ARTICLE XV ADDITIONAL PROVISIONS Section 15.01. Notices. (a) Any communication provided for in this Agreement must be in English and must be in writing, and "writing" includes facsimile transmission and electronic mail. (b) For the purposes of this Agreement, any communication sent by facsimile transmission or electronic mail will be deemed to have been given on the date the communication is similarly acknowledged by a County Representative (in the case of the County) or other authorized representative (in the case of any other party). No such communication will be deemed given or effective without such an acknowledgment. Any such electronic communication to the Trustee is subject to the provisions of Section 9.02. (c) Any other communication under this Deed of Trust will be deemed given on the delivery date shown on a United States Postal Service certified mail receipt, or a delivery receipt (or similar evidence) from a national commercial package delivery service, if addressed as follows: (i) if to the County, to Orange County Manager, Re: Notice under 2021 LOBs Deed of Trust, Post Office Box 8181, Hillsborough, NC 27278 (ii) if to the Trustee, to The Bank of New York Mellon Trust Company, N.A., Re: Notice for 2021 Financing for Orange County (NC), 4655 Salisbury Rd., STE 300, Jacksonville, FL 32256 57 89 (iii) if to the LGC, to North Carolina Local Government Commission, Attention: Secretary, Re: Re: Notice for 2021 Orange County LOBs Financing, 3200 Atlantic Avenue, Longleaf Building, Raleigh NC 27604 (e) Any addressee may designate additional or different addresses for communications by notice given under this Section to each of the others. (f) Whenever this Agreement requires the giving of a notice, the person entitled to receive the notice may waive the notice, in writing. The giving or receipt of the notice will then not be a condition to the validity of any action taken in reliance upon the waiver. Section 15.02. Limitation of Rights. Nothing expressed or implied in this Agreement or the Bonds gives any person other than the Trustee, the County and the Owners any right, remedy or claim under or with respect to this Agreement. Section 15.03. Severability. If any provision of this Agreement is determined to be unenforceable, that does not affect any other provision of this Agreement. Section 15.04. Non-Business Days. If a Payment Date is not a Business Day, then payment may be made on the next Business Day, and no interest will accrue for the intervening period. When any other action is provided in this 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 15.05. Governing Law; Forum. The parties intend that North Carolina law will govern this Agreement, the Bonds, and all matters of their interpretation. To the extent permitted by law, the parties agree that any action brought with respect to this Agreement must be brought in the North Carolina General Court of Justice in Orange County, North Carolina. Section 15.06. Limitation on Liability of Officers and Agents. No officer, agent or employee of the County, the Trustee or the LGC is subject to any personal liability or accountability by reason of that officer's execution of this Agreement, the Bonds or any other documents related to the transactions contemplated by this Agreement. These officers or agents are deemed to execute such documents in their official capacities only, and not in their individual capacities. This Section does not 58 90 relieve any person from the performance of any official duty provided by law or by this Agreement. Section 15.07. Binding Effect. This Agreement is binding upon, inures to the benefit of and is enforceable by the parties and their respective successors and assigns. Section 15.08. Waiver of Notice. Whenever in this 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 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 15.09. Counterparts. This 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 15.10. Definitions; Rules of Interpretation. Unless the context clearly requires otherwise, capitalized terms used in this Agreement and not otherwise defined have the meanings set forth in Exhibit B, and this Agreement will be interpreted in accordance with the rules set forth in Exhibit B. [The remainder of this page has been left blank intentionally.] 59 91 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed, sealed and delivered in their corporate names by their duly authorized representatives, all as of December 1, 2021. ORANGECOUNTY, ATTEST: NORTH CAROLINA By: Laura Jensen Bonnie B. Hammersley Clerk, Board of Commissioners County Manager THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By: Printed name: Title: Exhibits: A Project description B Definitions; Rules of Interpretation C Form of the Bonds D Schedule of principal and interest payments E Form of requisition [Trust Agreement dated as of December 1, 2021] 60 92 Exhibit A - Project Description Component Expected amount ($) New money projects (see detail below) Loan refinancings (see detail below) Financing Costs TOTAL New money projects with estimated amounts Component Estimated Cost Court Street Annex Renovations $ 188,600 Criminal Justice Resource Department Expansion/Renovation $ 205,779 Accessibility&Security Improvements $ 194,643 Government Services Annex Stormwater&Renovations $ 375,000 HVAC Projects $ 714,203 Major Plumbing Repairs $ 195,343 Justice Facility Improvements $ 43,221 Parking Lot Improvements $ 57,280 Roofing& Building Fagade Improvements $ 1,130,353 Whitted Building Stormwater& Renovations $ 942,372 Link Center Remediation $ 282,377 IT Fiber Connectivity $ 302,532 ITGC Initiatives&IT Infrastructure $ 372,097 Solid Waste—Improvements&Vehicle Replacement $ 319,952 61 93 Emergency Services Vehicle Replacements $ 801,802 Sheriff vehicle replacements $ 107,104 Communication System Improvements $ 150,000 Blackwood Farm Park Construction $ 2,935,000 Parks—Renovations&Easements $ 420,486 Sportsplex—Maintenance& Repairs $ 698,304 Land Banking—Affordable Housing $ 628,313 Orange County Schools—Recurring Capital Projects $ 1,200,300 Orange County Schools—Maintenance&Improvements $ 651,586 Chapel Hill-Carrboro Schools—Recurring Capital Projects $ 1,799,700 Chapel Hill-Carrboro Schools—IT Infrastructure $ 1,519,261 Chapel Hill-Carrboro Schools—Supplemental Deferred Maintenance $ 631,740 Chapel Hill-Carrboro Schools—Various Maintenance&Improvements $ 1,808,454 Total Project Costs $ 18,675,802 Loan refinancings - County obligations that may be refinanced Component Estimated Cost 2014 IPC Bank of America $ 3,600,000 2014 NC DEQ Loan $ 760,000 Series 2012 Limited Obligation Bonds $ 3,805,000 2017 IFC (Sterling) $ 9,895,000 Total Loan Amounts Refinanced $ 18,060,000 62 94 The amounts stated above are estimates only. The County may use any portion of the Amount Advanced for any of the Financed Facilities or any of the Project Costs, subject to the County's obligation to undertake and complete those components of the project related to the Pledged Facilities and the limitation on the use of funds only for Project Costs. Components of the Project related to the Mortgaged Property include the following projects shown in the table above: • Whitted Center improvements • Blackwood Farm Park improvements 63 95 Exhibit B -- Definitions: Rules of Interpretation Definitions. For all purposes of this Agreement, unless the context requires otherwise, the following terms have the following meanings. "2021 Bonds" means the [$45,000,000] original aggregate principal amount Limited Obligation Bonds, Series 2021, issued pursuant to this Agreement. The Series A Bonds and the Series B Bonds together constitute all the 2021 Bonds. "Additional Bonds" means any Bonds delivered pursuant to Section 1.06. "Additional Payments" means the Trustee's reasonable and customary fees and expenses, any of the Trustee's expenses (including legal fees, costs and expenses) in prosecuting or defending any action or proceeding in connection with this Agreement, or any other amounts payable by the County as a result of its covenants under this Agreement, the Bonds or the Deed of Trust (together with interest that may accrue on any of the above if the County fails to pay the same, as set forth in this Agreement or in the Deed of Trust). "Amount Advanced" has the meaning assigned in Section 1.01. "Bond Counsel" means any attorney or firm of attorneys nationally recognized on the subject of municipal obligations as the County may select from time to time. "Bond Payments" means all the amounts due for payment of principal, interest and redemption premium (as applicable) on Bonds. "Bondholder," means the person in whose name a Bond is registered on the registration books maintained by the Trustee. "Bonds" means, together, the 2021 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. 64 96 "Closing Date" means the date on which this Agreement is first executed and delivered by the parties and the 2021 Bonds are delivered to their initial purchaser, which the parties expect to be on or about June 2021. "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. "Construction Contract" means any agreement between the County and any other person or entity related to any part of the construction of the Pledged Facilities, including contracts for site preparation and related work. "Contract Payments" means all Bond Payments and Additional Payments. "Contract Term" means the time beginning with the Closing Date and continuing until no Bonds are Outstanding under this Agreement. "County" means Orange County, North Carolina, or its successors. "County Board" means the County's governing board as from time to time constituted. "County Certificate" means any written document (in whatever form, however designated) executed and delivered by a County Representative. "County Representative" means the County Manager, the County's statutory finance officer, or any other person or persons at the time designated, by a written certificate furnished to the Trustee that (a) is signed on the County's behalf by the County Manager or the presiding officer of the County Board to act on the County's behalf (or to perform any specified act) under this Agreement, and (b) contains the specimen signature of the designated person. "Deed of Trust" means the Deed of Trust and Security Agreement dated as of June 1, 2021, from the County to a deed of trust trustee for the Trustee's benefit, as it may be duly amended or supplemented. "Deed of Trust Trustee" means the person or entity serving in that capacity from time to time under the Deed of Trust. 65 97 "Default" means an event or condition that, with notice or the passage of time or both, would become an Event of Default. "DTC" means The Depository Trust Company, New York, New York, or its successors as the securities depository maintaining a book-entry system for recording beneficial ownership interests in the Bonds "EMMA System" means the "EMMA" continuing disclosure system maintained by the MSRB, or any successor to its functions. "Event of Default" has the meaning set forth in Section 10.01. "Event of Nonappropriation" means a failure or refusal by the County Board to include funds for Contract Payments in the County's budget for any Fiscal Year, or any reduction or elimination of an appropriation for Contract Payments, all as further described in Section 4.02. "Federal Securities" means, to the extent the same are Legal Investments, (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), and expressly includes obligations stripped by the United States Treasury itself. "Financed Facilities" means any facilities, equipment or other assets or undertakings paid for or refinanced in whole or in part from the proceeds of Bonds, including the Pledged Facilities but also including those assets and undertakings paid for from the proceeds of loans refinanced through the issuance of the existing County obligations referenced in Exhibit A. "Financing Costs" means all professional and administrative costs related to the authorization, execution and delivery of Bonds, including printing and publication costs and legal, accounting, advisory and other fees and expenses. Financing Costs are a subset of Project Costs. "Fiscal Year" means the County's fiscal year beginning July 1, or such other fiscal year as the County may later lawfully establish, and also includes the period between the Closing Date and June 30, 2021. 66 98 "Independent Counsel" means an attorney duly admitted to the practice of law in the State as the County may select from time to time. "Interest Account" means the account of that name in the Payment Fund established in Section 3.04. "Legal Investments" means all investments as are legal investments for the County's funds, as determined at the time of investment, and "Investment Obligations" means the securities purchased as Legal Investments and held under this Agreement. "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, and generally includes the Pledged Facilities and the Pledged Sites. "MSRB" means the Municipal Securities Rulemaking Board, or any successor to its functions. "Net Proceeds" means all payments and proceeds derived from (a) claims made on account of insurance coverages required under this Agreement, (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 Pledged Facilities, as well as all judgments, settlements or other payments in lieu of any of the foregoing, but in any case reduced by the sum of all amounts (including legal fees, costs and expenses) expended by the County or the Trustee (i) to collect those gross proceeds or (ii) to remedy the event giving rise to the proceeds, all of which amounts will be paid or reimbursed from the gross proceeds. "Net Proceeds Fund" means the Orange County 2021 Net Proceeds Fund established in Section 3.04. "Opinion of Counsel" or "Opinion of Bond Counsel" means a written opinion of Independent Counsel or Bond Counsel, as appropriate. 67 99 "Outstanding," when used with reference to Bonds, or "Bonds Outstanding," means all Bonds which have been authenticated and delivered by the Trustee under this 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 redemption, 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 Article XI; and (d) Bonds in lieu of which others have been authenticated under Section 14.05 (relating to registration and exchange of Bonds) or Section 14.06 (relating to mutilated, lost, stolen, destroyed or undelivered Bonds). "Owner," when used with reference to a Bond, means the person in whose name that Bond is registered on the registration books maintained by the Trustee. "Payment Date" means, with respect to the 2021 Bonds, each June 1 and December 1 beginning December 1, 2021, and with respect to any Additional Bonds means the dates specified for principal and interest payments with respect to those Additional Bonds. "Payment Fund" means the Orange County 2021 Bond Payment Fund established in Section 3.04. "Permitted Encumbrances" means, as of any particular time, (a) the encumbrances shown on Exhibit C to the Deed of Trust, (b) liens for taxes and assessments not then delinquent, or liens which may remain unpaid pursuant to Section 5.14, (c) the Deed of Trust, (d) any lien or encumbrance made by its terms expressly subordinate to the lien of the Deed of Trust, and (e) easements and rights- of-way granted by the County pursuant to Section 1-6 of the Deed of Trust. "Pledged Facilities" has the meaning ascribed to that term in the Deed of Trust, and generally includes the County's Whitted Building, its Blackwood Farm Park, 68 100 "Pledged Sites" has the meaning ascribed to that term in the Deed of Trust, and generally includes the real property upon which the Pledged Facilities are located (or are to be constructed) and associated property. "Redemption Account" means the account of that name in the Payment Fund established in Section 3.04. "Principal Account" means the account of that name in the Payment Fund established in Section 3.04. "Project" has the meaning ascribed to that term in the recitals to this Agreement. "Project Costs" means all costs of carrying-out of the Project, including the costs of the design, planning, constructing, acquiring, installing, equipping of improvements to the Pledged Facilities, all as determine d in accordance with generally accepted accounting principles and that will not adversely affect the exclusion from gross income for federal income tax purposes of interest on Bonds to which it is intended that interest will be entitled. "Project Costs" include (a) sums required to reimburse the County or its agents for advances made for any costs otherwise described in this definition, (b) interest during the period of acquisition and construction of improvements and for up to six months thereafter, and (c) all Financing Costs and Refinancing Costs. "Project Fund" means the Orange County 2021 Project Fund established in Section 3.01. "Record Date" means the end of the calendar day on the 15th day of the month (whether or not a Business Day) preceding a Payment Date. "Refinancing Costs" means all costs related to the payment in full of the County obligations to pay principal and interest under the County obligations described in Exhibit A. Refinancing Costs are a subset of Project Costs. "Restricted Yield" means an annual "yield," within the meaning of Treas. Regs. Secs. 1.103-13(c), -13(d), 1.148-9T(a), not in excess of an annual "yield" equal to 69 101 "Rule 15c2-12" means Rule 15c2-12 promulgated by the United States Securities Exchange Commission under the Securities Act of 1934. Section 160A-20" means Section 160A-20 of the North Carolina General Statutes. "State" means the State of North Carolina. "Term Bonds" means the 2021 Bonds maturing in the years , which are subject to sinking fund redemption as provided in Section 2.01(b) and 2.05. "Trust Agreement" or "Agreement" means this Agreement, as it may be duly amended or supplemented. "Trustee" means the bank or trust company from time to time serving as trustee under this Agreement, whether the original or a successor Trustee. Rules of Interpretation. 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, and any accounting term should be understood to include any successor term or other new term with a substantially equivalent function. (b) Unless otherwise indicated, references to Articles, Sections and Exhibits are to the Articles, Sections and Exhibits of this 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, and vice versa. (d) The headings on sections and articles are solely for convenience of reference. They do not constitute a part of this Agreement nor should they affect its meanings, construction or effect. (e) Words importing the redemption or calling for redemption of Bonds should not be deemed to refer to or connote the payment of Bonds at their stated maturity. 70 102 (f) Reference to any statute or regulation should be understood to include any successor provision. (g) 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. (h) The use of the term "including" should in all cases be understood to mean "including, without limitation." (i) For any interest rate for which a basis of calculation is not specified, that interest should be calculated on the basis of a 360-day year consisting of twelve 30-day months. 71 103 Exhibit C - Form of Series A Bond REGISTERED Number R-X REGISTERED ORANGE COUNTY, NORTH CAROLINA Limited Obligation Bond, Series 2021 INTEREST RATE MATURITY DATE DATED DATE CUSIP % December 1, June , 2021 684566 XXX REGISTERED OWNER: *****CEDE & CO.***** PRINCIPAL AMOUNT: **** THOUSAND DOLLARS**** ****($ 000)*** ORANGE COUNTY, NORTH CAROLINA (the "County"), for value received, promises to pay, but solely from the sources and in the manner provided, to the registered owner hereof, or registered assigns or legal representative, the principal amount stated above on the maturity date stated above, and to pay interest on this Bond semiannually on each June 1 and December 1, beginning December 1, 2021, at the annual rate stated above. Interest is payable (a) from the Dated Date stated above, if this Bond is authenticated prior to December 1, 2021, or (b) otherwise from the June 1 or December 1 that is, or immediately precedes, the date on which this Bond is authenticated (unless payment of interest on this Bond is in default, in which case this Bond will bear interest from the date to which interest has been paid). Principal and interest are payable in lawful money of the United States of America. 72 104 This Bond is one of an issue of [$23,000,000] Limited Obligation Bonds, Series 2021A (the "Bonds"), of like date and tenor, except as to number, denomination, rate of interest, privilege of redemption and maturity. The Bonds are issued under, and are equally and ratably secured by, a Trust Agreement dated as of June 1, 2021 (the "Trust Agreement"), between the County and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"). This Bond constitutes an installment contract within the meaning of Section 160A-20 of the North Carolina General Statutes, as the same may be in effect from time to time ("Section 160A-20"), between the County and the owner (from time to time) of this Bond. The Bonds are payable solely from funds appropriated on an annual basis by the County's governing Board of Commissioners, and other funds available for the purpose of payment pursuant to the Trust Agreement, such as 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 to secure payment of the Bonds. Neither the County's faith and credit nor its taxing power is pledged to the payment of any amounts due under the Bonds. As provided for under Section 160A-20, no deficiency judgment may be rendered against the County in any action for breach of a contractual obligation under the Bonds or the Trust Agreement. To further secure its obligations under the Trust Agreement, the County has granted, for the benefit of the Trustee on behalf of the owners of the Bonds, a security interest in certain public facilities, including the underlying real property, and certain other property pursuant to the Trust Agreement and a Deed of Trust and Security Agreement dated as of June 1, 2021. Reference is made to the Trust Agreement, the Deed of Trust referenced above and all amendments and supplements for the provisions, among others, with respect to the nature and extent of the security, the rights, duties and obligations of the County 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 of this Bond, agrees. The County's $ Taxable Limited Obligation Refunding Bonds, Series 2021B, are secured by a parity interest in the property securing the Bonds. Additional Bonds secured by a parity interest in the property securing the Bonds may be issued under the terms and conditions set forth in the Trust Agreement. 73 105 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 ("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 nor the County is responsible or liable for the 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) the County so elects, the County and the Trustee will discontinue the book-entry system with DTC. If the County does not identify another qualified securities depository to replace DTC, the County 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 redeemed prior to maturity except as provided in this Bond and in the Trust Agreement. The Bonds maturing on or December 1, 2032, are subject to redemption at the County's option in whole or in part on any date on or after December 1, 2031, upon payment of the principal amount to be prepaid plus interest accrued to the redemption date, without premium. If less than all the Bonds are to be redeemed pursuant to this provision, they will be redeemed among maturities in any manner the County chooses. The Trustee will redeem Bonds maturing on December 1, 20 , upon payment of 100% of the principal amount thereof plus interest accrued to the redemption date, on December 1 in years and amounts as follows: Year Amount ($1 [To come.] 74 106 *Final maturity In addition, [second term bond, to come.] The amount of Bonds to be redeemed on any sinking fund payment date may be reduced in accordance with the provisions of the Trust Agreement. If less than all the Bonds of any maturity are called for redemption, the Trustee will select the Bonds to be redeemed 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 redeemed, DTC and its participants will determine which of the Bonds within any such maturity are to be redeemed. In any case, (1) the portion of any Bond to be prepaid will be in the principal amount of $5,000 or some integral multiple thereof, and (2) in selecting Bonds for redemption, each Bond will be considered as representing that number of Bonds which is obtained by dividing the principal amount of that Bond by $5,000. If a portion of a Bond is called for redemption, a new Bond in principal amount equal to the unpaid portion will be issued to the registered owner upon the surrender of the Bond. The Trustee will send notice of redemption to DTC or its nominee as the Owner of the Bonds as provided in the Trust Agreement. The Trustee will send the notice not more than 60 days nor less than 30 days prior to the date fixed for redemption. Neither the Trustee nor the County is responsible for sending notices of redemption to anyone other than DTC or its nominee, so long as all the Bonds to be redeemed are held in a book-entry-only form with DTC. If on or before the date fixed for redemption funds have been deposited with the Trustee to pay the principal and interest accrued to the redemption date with respect to the Bonds called for redemption, the Bonds or portions thereof thus called for redemption will cease to accrue interest from and after the redemption 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 75 107 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. Ownership of this Bond will be registered on the Bond register (as provided for 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 designated 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. The County 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 of this Bond for the purpose of receiving payment of or on account of principal of and interest due on this Bond and for all other purposes, and neither the County 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 on the Record Date, which is the end of the calendar day on the 15th day of the month (whether or not a business day) 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 and the issue of which it is a part are issued with the intent that North Carolina law will govern this Bond and all matters of its interpretation. This Bond will not be entitled to any benefit under the Trust Agreement or be valid or obligatory for any purpose until the Trustee has executed the Certificate of Authentication appearing on this Bond. [The remainder of this page has been left blank intentionally.] 76 108 IN WITNESS WHEREOF, the County has caused this instrument to be signed, sealed and delivered by duly County Representatives, as of the day and year first above written. (SEAL) ORANGECOUNTY, ATTEST: NORTH CAROLINA By: Laura Jensen Bonnie B. Hammersley Clerk, Board of Commissioners County Manager [Orange County, North Carolina $ Limited Obligation Bonds, Series 2021A] 77 109 This Bond has been approved under the provisions of Section 160A-20 and Article 8, Chapter 159 of the General Statutes of North Carolina. Sharon G. Edmundson Secretary, North Carolina Local Government Commission By [Sharon G. Edmundson or Designated Assistant] CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds referred to in the Trust Agreement dated as of December 1, 2021 (the "Trust Agreement"), between Orange County, North Carolina, and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"). Date of Authentication: The Bank of New York Mellon Trust Company, N.A., as Trustee By: Authorized Representative [Orange County, North Carolina $ Limited Obligation Bonds, Series 2021A] 78 110 ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s) unto (Please print or type transferee's name and address, including zip code) PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF TRANSFEREE: the within bond 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: (Signature of Owner) NOTICE: The signature above must NOTICE: Signature(s) must be correspond with the name the Owner as guaranteed by a participant in the it appears on the front of this certificate Securities Transfer Agent Medallion in every particular without alteration or Program ("STAMP") or similar program enlargement or any change whatsoever. 79 111 EXHIBIT D - Schedule of Payments on 2021 Bonds Principal is payable in the amounts and on the dates as shown below, subject to redemption of Bonds as provided in this Agreement. Interest is payable on the dates shown below. Each portion of the Amount Advanced will bear interest from the Closing Date until paid. Interest is calculated at the rates shown in Section 1.03. The schedule below shows the expected interest payment amounts. The County's obligation on each Payment Date is the amount shown above as the "total payment" for that date, subject to adjustment as provided in Section 3.05(c). Payment 2021A 2021 2021B 2021B Total Date Principal Interest Principal Interest Payment ($) [To come.] 80 112 Exhibit E - Form of Requisition [Date] The Bank of New York Mellon Trust Company, N.A., as Trustee Attention: Corporate Trust Regarding: Requisition under 2021 Trust Agreement for Orange County, North Carolina To the Trustee: Pursuant to the terms and conditions of the above-referenced Trust Agreement, the County authorizes and requests the disbursement of funds from the "Orange County 2021 Project Fund" (the "Project Fund") established under that Trust Agreement for the costs described below. Capitalized terms used in this requisition and not otherwise defined have the meanings ascribed in the Trust Agreement. This is requisition number from the Project Fund. Total Amount for Disbursement Payee Payee's address or wiring instructions The County makes this requisition pursuant to the following representations: 1. The County has appropriated in its current fiscal year funds sufficient to pay the Bond Payments and estimated Additional Payments due in the current fiscal year. 2. The purpose of this disbursement is for payment of Project Costs as provided for in the Trust Agreement. 81 113 3. The requested disbursement has not been subject to any previous requisition. 4. No notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the moneys payable herein to any of the persons, firms or corporations named herein has been received, or if any notice of any such lien, attachment or claim has been received, such lien, attachment or claim has been released or discharged or will be released or discharged upon payment of this requisition. S. This requisition contains no items representing payment on account of any percentage entitled to be retained on the date of this requisition. 6. No Event of Default is continuing, and no event or condition is existing which, with notice or lapse of time or both, would become an Event of Default. 7. The County has insurance in place that complies with the insurance requirements of the Trust Agreement. 8. No portion of the amounts set forth in this requisition represents amounts paid or payable as North Carolina state sales taxes. ORANGE COUNTY, NORTH CAROLINA By: !Exhibit Form Only-Do Not Sian] Title: County Representative 82 Attachment 5 114 S*H draft of May 4 ESCROW AGREEMENT This Escrow Agreement (the "Agreement") is dated as of June 1, 2021, and is between Orange County, North Carolina (the "County"), and The Bank of New York Mellon Trust Company, N.A. (the "Escrow Agent"). RECITALS: The County has contracted the obligations listed in Exhibit A (the "Prior Obligations). The County is now providing for the redemption and refunding of some of the outstanding Prior Obligations. Exhibit A specifies the portions of the Prior Obligations that are being refunded (the "Refunded Obligations"). The County will provide for a portion of the proceeds of its $ (aggregate principal amount) Limited Obligation Bonds, Series 2021A and 2021B (together, the "2021 Bonds"), to be used for this defeasance and refunding. The Escrow Agent will hold funds for the refunding pursuant to this Agreement and the provisions of a resolution adopted by the County's governing Board of Commissioners on May 17, 2021 (the "2021 Resolution"). Now, therefore, in consideration of the foregoing and of the mutual covenants in this Agreement, the County and the Escrow Agent agree as follows: SECTION 1. There is established with the Escrow Agent a special and irrevocable trust fund designated as the "Orange County 2021 Refunding Escrow Fund" (the "Escrow Fund"). The Escrow Agent will hold the Escrow Fund as a trust fund separate and apart from all other funds of the County or of the Escrow Agent. The Escrow Agent must use the funds on deposit in the Escrow Fund solely for the payment and redemption of the Refunded Obligations and for the other purposes provided for in this Agreement. SECTION 2. To secure the payment of the principal of and interest on the Refunded Obligations, the County pledges and sets over to the Escrow Agent the amounts specified in Section 3 for deposit in the Escrow Fund, in trust for the 115 benefit and security of the owners of the Refunded Obligations, subject to the terms and conditions of this Agreement. SECTION 3. (a) The Escrow Agent acknowledges receipt of $ from the County, representing a portion of the proceeds of the 2021 Bonds. The County directs the Escrow Agent to apply those proceeds as shown in the following table, and the Escrow Agent agrees to make this application: To purchase the securities shown on Exhibit B (the "Escrow Investments") $ Held in cash uninvested For a total of $ The Escrow Agent will hold the Escrow Investments and other funds described above in the Escrow Fund. Exhibit C shows the schedule of expected receipts from the Escrow Investments and required disbursements from the Escrow Fund. SECTION 4. The County represents and warrants that the Escrow Investments will earn interest and mature in such amounts and at such times as will be sufficient, together with other funds held in the Escrow Fund, to pay the remaining debt service on the Refunded Obligations through the redemption dates specified in Exhibit A. If the moneys in the Escrow Fund are insufficient for the purposes of this Agreement, the County is responsible for the timely deposit to the credit of the Escrow Fund of such additional amounts as may be required to cure the deficiency. The Escrow Agent will notify the County of any insufficiency as soon as it knows of the deficiency, but the Escrow Agent is not responsible for the County's failure to make any deposits. The Escrow Agent will make neither investments nor distributions unless and until the Escrow Agent has collected funds. 2 116 SECTION S. No substitution of the Escrow Investments is permitted. SECTION 6. The Escrow Agent will collect payments of the principal of and interest on the Escrow Investments on the respective due dates. On each payment date for the Refunded Obligations, the Escrow Agent will transfer sufficient moneys from the amounts available in the Escrow Fund for the payment of the principal and interest due on the Refunded Obligations on that date. The amounts due on the Refunded Obligations on each remaining payment date are set forth in Exhibit C. The County consents to the Escrow Agent's reliance on the dates and amounts set forth in Exhibit C. The Escrow Agent will make the payments on the DTC Obligations (as defined in Exhibit A) to The Depository Trust Company, unless the County notifies the Escrow Agent in writing that the DTC Obligations are no longer in book-entry-only form. If the DTC Obligations are converted to certificated form, the County agrees that not later than thirty days prior to the next ensuing interest payment date for the DTC Obligations, it will appoint a paying agent for the DTC Obligations and give the Escrow Agent written notice of this appointment. In that case, the Escrow Agent will make payments to the paying agent appointed by the County with respect to the DTC Obligations. The Escrow Agent will make the payment on the BOA Obligations (as defined in Exhibit A) due on August 1, 2021, in accordance with the payment instructions show on Exhibit G. The Escrow Agent will make these payments without regard to whether the owners have presented any of the Refunded Obligations to the County or otherwise. If any amounts remain in the Escrow Fund on October 1S, 2022, the Escrow Agent will promptly disburse these amounts as the County may at that time direct. SECTION 7. The Escrow Investments, moneys representing principal of and interest earned on Escrow Investments and any other funds on deposit in the Escrow Fund from time to time are hereby made subject to an express lien and trust 3 117 for the benefit of the owners of the Refunded Obligations until used and applied in accordance with this Agreement. SECTION 8. The Escrow Agent acknowledges receipt of a certified copy of the 2021 Resolution calling the Refunded Obligations for redemption, and of a copy of the Finance Officer's certificate contemplated by the 2021 Resolution related to the final call for redemption. The County confirms that it has specifically and irrevocably elected to redeem all of the Refunded Obligations as described on Exhibit A. The County irrevocably directs the Escrow Agent to, and the Escrow Agent agrees that it will, promptly after the original execution and delivery of this Escrow Agreement, provide for a notice of refunding in substantially the form of Exhibit D to be posted with the EMMA continuing disclosure system of the Municipal Securities Rulemaking Board (the "MSRB") with respect to the DTC Obligations. The County irrevocably directs the Escrow Agent to, and the Escrow Agent agrees that it will, at least thirty days but not more than sixty days before October 1, 2022, cause a redemption notice substantially in the form of Exhibit E (a) to be sent to The Depository Trust Company both (i) by registered or certified mail, postage prepaid, to Supervisor, Call Notification Department, The Depository Trust Company, 55 Water St., 50th Floor, New York NY 10041-0004, and (ii) by electronic mail to redemptionnotification@dtcc.com, and (b) to be posted with the MSRB's EMMA continuing disclosure system with respect to the DTC Obligations. The County irrevocably directs the Escrow Agent to, and the Escrow Agent agrees that it will, promptly after the original execution and delivery of this Escrow Agreement, provide for a notice of refunding in substantially the form of Exhibit F to be sent to the address shown on Exhibit F. SECTION 9. The Escrow Agent's liability to make the payments required by this Agreement with respect to the Refunded Obligations is limited to the principal of and interest received on the Escrow Investments and the other funds on deposit in the Escrow Fund. The Escrow Agent is not liable for any loss resulting from any investment made pursuant to this Agreement in compliance with the provisions of this Agreement. 4 118 This Agreement is between the County and the Escrow Agent only. The Escrow Agent's duties under this Agreement are only to the County and the owners of the Refunded Obligations. The Escrow Agent has no responsibility to the County or any other person in connection with this Agreement except for those responsibilities specifically provided in this Agreement. The Escrow Agent is not responsible for anything done or omitted to be done by it except with regard to its own negligence, willful misconduct or default in the performance of any obligation imposed on it under this Agreement. The Escrow Agent, except as specifically provided for in this Agreement, is not a party to, nor is it bound by or need it consider the terms or provisions of, any other agreement or undertaking between the County and any other person. The Escrow Agent assents to and is to give consideration only to the terms and provisions of this Agreement. Unless specifically provided in this Agreement, the Escrow Agent has no duty to determine or inquire into the happening or occurrence of any event or contingency or the County's performance or failure of performance with respect to agreements with others. The Escrow Agent's sole duty under this Agreement is to safeguard the Escrow Fund and to dispose of and deliver the same in accordance with this Agreement, as this Agreement constitutes the complete agreement and understanding by all parties to this Escrow Agreement. If, however, the Escrow Agent is called upon by the terms of this Agreement to determine the occurrence of any event or contingency, the Escrow Agent is obligated to exercise reasonable care and diligence in making the determination. In the event of error in making such a determination, the Escrow Agent will be liable for its own negligence or willful misconduct. In determining the occurrence of any event or contingency, the Escrow Agent may request from the County or any other person reasonable additional evidence as the Escrow Agent in its reasonable discretion may deem appropriate to determine any fact relating to the event or contingency, and in this connection may inquire and consult with the County, among others, at any time. The Escrow Agent may consult with legal counsel (including in-house counsel), and the opinion of counsel as to any legal matters will be full and complete authority and protection to the Escrow Agent as to any action taken or omitted by it in good faith and in accordance with that opinion. 5 119 The Escrow Agent has the right to petition any court of competent jurisdiction to resolve any dispute arising under this Agreement. If the Escrow Agent fails to account for any of the investments or funds held under this Agreement, those investments or funds will be and remain the property of the Escrow Fund in trust for the owners of the Refunded Obligations as provided in this Agreement. The funds and securities received by the Escrow Agent under this Agreement are not a banking deposit by the County. The County has no right or title with respect to these funds and securities. The funds and securities received by the Escrow Agent under this Agreement are not subject to checks or drafts drawn by the County or claims against the County by any creditor of the County, other than the owners of the Refunded Obligations. SECTION 10. The trust created under this Agreement is irrevocable. This Agreement will terminate when the Escrow Agent has made all payments as contemplated by Section 6 and the Escrow Agent has made the final report contemplated by Section 13. The Escrow Agent will thereupon be released and discharged from this Agreement, and the owners of the Refunded Obligations may then look only to the County for the payment of the Refunded Obligations. SECTION 11. The County will pay all necessary and proper fees, compensation and expenses of the Escrow Agent under this Agreement. The County agrees, to the extent permitted by law, to indemnify the Escrow Agent and hold it harmless against any liability it may incur while acting in good faith in its capacity as Escrow Agent under this Agreement, including, but not limited to, payment of any court costs and reasonable legal fees, costs and expenses. The County will pay, or provide for the payment of, these costs, from sources other than the Escrow Fund. In no event will any of those costs, charges, expenses, and indemnification give rise to any claim against the Escrow Fund. The Escrow Agent agrees that it will assert no lien against the Escrow Fund in connection with any payment owed to it. SECTION 12. The Escrow Agent agrees to perform all the duties and obligations imposed upon it by this Agreement. 6 120 The Escrow Agent may resign and thereby become discharged from the duties and obligations created by this Agreement by giving written notice to the County. This resignation will take effect only upon the County's appointment of a new escrow agent. If the County fails to appoint a successor Escrow Agent within 45 days of notice from the departing Escrow Agent, the departing Escrow Agent may apply to any court of competent jurisdiction to appoint a successor Escrow Agent. The court may thereupon appoint a successor Escrow Agent after such notice, if any, as the court may deem proper. The Escrow Agent may be removed at any time by an instrument, or concurrent instruments, in writing, executed by the owners of not less than 51% in aggregate principal amount of the unpaid Refunded Obligations, such instruments to be filed with the County, and notice in writing given by such owners to the County and (unless all of the owners of the unpaid Refunded Obligations have consented to the removal) sent not less than 60 days before the removal is to take effect. The Escrow Agent may also be removed at any time for any material breach of trust or for acting or proceeding in material violation of, or for failing to act or proceed in accordance with, any provisions of this Agreement, by any court of competent jurisdiction upon the application of the County or the owners of not less than 10% in aggregate principal amount of the unpaid Refunded Obligations. Upon the appointment of any successor escrow agent, the departing Escrow Agent will execute any agreements, assignments and other documents as may be necessary to vest in the successor escrow agent all the title, rights, duties and obligations of the Escrow Agent under this Agreement and in the Escrow Investments and other funds deposited or to be deposited or received by the Escrow Agent under this Agreement, as the County may reasonably request. Upon acceptance by the successor escrow agent of the responsibilities under this Agreement, all further title, rights, duties and obligations of the departing Escrow Agent under this Agreement cease and are discharged, except for rights or liabilities accrued to or by the County or the Escrow Agent. 121 Any company or national banking association into which the Escrow Agent may be merged or converted, or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which the Escrow Agent may be a party, or any company to which the Escrow Agent may sell or transfer all or substantially all of its municipal corporate trust business, will be the successor to the Escrow Agent without the execution or filing of any paper or further act by the successor Escrow Agent. Upon the taking of office of any successor Escrow Agent, the new Escrow Agent must promptly cause notice of its appointment and contact information (identifying this Agreement) to be posted with the MSRB's EMMA continuing disclosure system with respect to the DTC Obligations. SECTION 13. (a) On or before August 1 in each of the years 2021 and 2022, the Escrow Agent must deliver to the County (i) a report of each transaction relating to the Escrow Fund for the prior fiscal year ended June 30, and (ii) a schedule of the assets of the Escrow Fund as of the preceding July 1. (b) Then, or before November 1, 2022, the Escrow Agent must send to the County a complete statement of all transactions concerning the Escrow Fund through the final disbursement of funds from the Escrow Fund as provided for in Section 6. (c) The County will promptly send a copy of each report received under this Section to the North Carolina Local Government Commission. SECTION 14. This Agreement may be amended to (a) correct language or to cure any ambiguity or defective provisions, omission, mistake or manifest error contained in this Agreement, or (b) to provide for the deposit of additional cash or securities in the Escrow Fund. All amendments must be in writing signed by all parties to this Agreement, but no consent of any owners of Refunded Obligations is required. SECTION 15. (a) The parties intend that North Carolina law will govern this Agreement and all matters of its interpretation. 8 122 (b) This Agreement may be executed in several counterparts, all or any of such may be regarded for all purposes as one original and which will constitute and be but one and the same instrument. (c) All of the County's representations, covenants and indemnifications in this Agreement will survive this Agreement's termination. (d) This Agreement will inure to the benefit of and be binding upon the parties and their respective successors and assigns. (e) The Escrow Agent may act upon any written notice, request, waiver, consent, certificate, receipt, authorization, power of attorney, or other instrument or document which the Escrow Agent in good faith believes to be genuine and to be what it purports to be. (f) Any notice, authorization, request, or demand required or permitted to be given to the County or the Escrow Agent under this Agreement must be in writing and will be deemed on the date shown on a certified mail receipt, or a delivery receipt (or similar evidence) from a national commercial package delivery service, if addressed as follows: to the County, to Orange County, North Carolina Attention: Finance Officer Re: Notice under 2021 refunding bond escrow agreement Post Office Box 8181 Hillsborough, NC 27278 to the Escrow Agent, to The Bank of New York Mellon Trust Company Attn: Corporate Trust Division - Carolinas Unit Regarding: Notice under 2021 Escrow Agreement for Orange County, North Carolina 4655 Salisbury Road, STE 300 9 123 Jacksonville, FL 32256 Either party may change its addresses for notices by written notice of the change given under this Agreement. (g) Whenever under the terms of this Agreement the performance date of any act to be done under this Agreement falls on a day which is not a legal banking day in the State of North Carolina, and upon which the Escrow Agent is not open for business, the performance of that act on the next succeeding business day of the Escrow Agent will be in full compliance with this Agreement. Whenever time is referred to in this Agreement it will be the time recognized by the Escrow Agent (at the office specified in subsection (0 above) in the ordinary conduct of its normal business transactions. [The remainder of this page has been left blank intentionally.] 10 124 IN WITNESS WHEREOF, the parties have each caused this Agreement to be executed by duly authorized officers as of the date first above written. Orange County, North Carolina By: Gary Donaldson Finance Officer The Bank of New York Mellon Trust Company, N.A., as Escrow Agent By: Name: Title: [Escrow Agreement dated as of June 1, 2021 11 125 EXHIBIT A OBLIGATIONS BEING REDEEMED AND REFUNDED County obligations under an Installment financing contract dated as of January 1, 2014, between the County and Banc of America Public Capital Corp (the "BOA Obligations") - redeeming and refunding all outstanding principal that is payable on or after February 1, 2022. This prepayment will be made on August 1, 2021. County obligations related to the Limited Obligation Bonds, Series 2012 (the "DTC Obligations") - redeeming and refunding EXHIBIT B INITIAL ESCROW SECURITIES Security Receipts at Description* Par Amount ($) Interest Rate (%) Maturity Date Maturity ($) * All are United States Treasury Securities - State and Local Series. 12 126 EXHIBIT C OPERATION OF THE ESCROW FUND Receipts Available from Total Escrow Balance Date Cash Escrow Funds Requirement after Investment Available Payment xxxx* xxx** xxx** 8/1/2021 xxx xxxx*** 10/1/2021 4/1/2022 10/1/2022 xxxxx**** * Closing date **Initial cash deposit at closing *** Includes $ in redeemed principal **** Includes $ in redeemed principal 13 127 EXHIBIT D REFUNDING NOTICE Orange County, North Carolina Orange County Public Facilities Company Limited Obligation Bonds, Series 2012 TAKE NOTICE that Orange County, North Carolina (the "County"), has elected to redeem and will redeem on October 1, 2022, all of the outstanding Bonds of the above-referenced issue that mature on and after . These Bonds will be redeemed at a redemption price equal to the principal amount thereof. The Bonds maturing October 1 in the years 2021 and 2022 are not being refunded or defeased and will be paid in the ordinary course. The CUSIP numbers and other details of the Bonds to be redeemed are as follows: Principal Redemption Interest CUSIP Maturity Date Amount f$1 Price* Rate JOQ 100.000 100.000 100.000 *As a percentage of par. The CUSIP numbers listed above are included solely for the convenience of the Bondowners. Neither the County nor the Escrow Agent (as identified below) is 14 128 responsible for the use of the CUSIP numbers, and no representation is made as to their correctness on the securities or as indicated on any redemption notice. Interest on the Bonds will cease to accrue from and after October 1, 2022. Payment of the redemption price for the Bonds will be made on presentation and surrender of the Bonds through The Depository Trust Company. The County has deposited with the Escrow Agent United States Treasury Obligations sufficient to pay the redemption price in a timely manner. Additional notice of redemption will be provided to registered owners of the Bonds to be redeemed not less than 30 days prior to the redemption date. Persons seeking additional information may contact the undersigned Escrow Agent at [telephone number]. The Bank of New York Mellon Trust Company, N.A., as Escrow Agent Jacksonville, Florida 15 129 EXHIBIT E REDEMPTION NOTICE Orange County, North Carolina Orange County Public Facilities Company Limited Obligation Bonds, Series 2012 TAKE NOTICE that Orange County, North Carolina (the "County"), has elected to redeem and will redeem on October 1, 2022, all of the outstanding Bonds of the above-referenced issue that mature on and after . These Bonds will be redeemed at a redemption price equal to the principal amount thereof. The CUSIP numbers and other details of the Bonds to be redeemed are as follows: Principal Redemption Interest CUSIP Maturity Date Amount ($1 Price* Rate JOQ 100.000 100.000 100.000 *As a percentage of par. The CUSIP numbers listed above are included solely for the convenience of the Bondowners. Neither the County nor the Escrow Agent (as identified below) is responsible for the use of the CUSIP numbers, and no representation is made as to their correctness on the securities or as indicated on any redemption notice. 16 130 Interest on the Bonds will cease to accrue from and after October 1, 2022. The Bonds maturing October 1, 2022, have not been refunded or defeased and will be paid in the ordinary course. Payment of the redemption price for the Bonds will be made on presentation and surrender of the Bonds through The Depository Trust Company. The County has deposited with the Escrow Agent United States Treasury Obligations sufficient to pay the redemption price in a timely manner. All owners submitting their Bonds must also submit Internal Revenue Service Form W-9. Failure to provide a completed Form W-9 will result in 31% backup withholding to bondowners pursuant to the Interest and Dividend Tax Compliance Act of 1983. Form W-9 may be obtained from the Internal Revenue Service. Persons seeking additional information may contact the undersigned Escrow Agent at [telephone number]. The Bank of New York Mellon Trust Company, N.A., as Escrow Agent Jacksonville, Florida 17 131 Exhibit F Refunding and redemption notice Banc of America Public Capital Corp. Attention: Contract Administration 555 California Street San Francisco, CA 94104 TAKE NOTICE that Orange County, North Carolina, will prepay on August 1, 2022, all of its outstanding obligations under the following contract: Installment financing contract dated as of January 1, 2014, between Orange County, North Carolina, and Banc of America Public Capital Corp For additional information please contact the undersigned. s/Gary Donaldson Gary Donaldson Chief Financial Officer Orange County, North Carolina gdonaldson@orangecountync.gov 18 132 Exhibit G BOA payment instructions [To come] 19 133 Attachment 6 S*H draft of April 21 Prepared by and return after recording to: Robert M. Jessup Jr. Sam Smotherman Sanford Holshouser LLP 209 Lloyd St., Suite 350 Carrboro,NC 27510 STATE OF ) NORTH CAROLINA ) LEASE MODIFICATION ORANGE COUNTY ) Orange County PIN 9777-99-9032 THIS LEASE MODIFICATION is dated as of June 1, 2021, and is entered into by and between ORANGE COUNTY, NORTH CAROLINA, as lessor (the "County"), and THE BOARD OF EDUCATION FOR THE CHAPEL HILL — CARRBORO CITY SCHOOLS, as lessee (the "School Board"). This Modification modifies and amends the Lease dated as of January 1, 2014, and recorded at Book RB 5743, Page 518, Orange County Registry (the "Original Lease"). The County is the record owner of the property subject to the Original Lease and this Modification, and that property is more particularly described in Exhibit A. WITNESSETH: The County and the School Board have previously agreed to cooperate in a plan to finance, construct and equip improvements to Culbreth Middle School ("Culbreth"). The County has asked the School Board to modify the Original Lease to extend its term, to facilitate a refinancing transaction contemplated by the County. In connection with its refinancing, the County is entering into a Trust Agreement dated as of June 1, 2021 (the "2021 Trust Agreement"). The County is similarly entering into a Deed of Trust and Security Agreement, also dated as of June 1, 2021 (the "Deed of Trust"), to secure the County's repayment obligations under the 2021 Trust Agreement. 134 The School Board has agreed to subordinate its leasehold interest to the 2021 Deed of Trust. NOW THEREFORE, for and in consideration of the mutual promises contained in this Lease, the parties agree as follows: 1. Definition. The term "Modified Lease" means the Original Lease as modified by this Modification. All other capitalized terms used in this Modification and not otherwise defined have the meanings ascribed in the Original Lease. 2. Change to Lease Term. Section 4.2(c) of the Original Lease is hereby amended to read as follows, in order to extend the expected Lease Term. The expected end of the lease term under the Original Lease was 30 days after February 1, 2029. 4.2. Termination. The Lease Term terminates upon the earliest of the following: (a) Judicial sale of or foreclosure on the Leased Property under the 2021 Deed of Trust; (b) The occurrence of an Event of Default under the 2021 Trust Agreement or the Modified Lease and subsequent termination by the County pursuant to Section 11.1 of the Original Lease; or (c) The date that is 30 days after December 1, 2041, which is the scheduled date for the County's final payment on the 2021 Trust Agreement, except that the Lease Term ends immediately upon the termination of the 2021 Trust Agreement if the 2021 Trust Agreement is terminated following an event of default by the County under the 2021 Trust Agreement. Termination of the Lease Term terminates all the County's obligations under the Modified Lease, and terminates the School Board's rights of possession under the Modified Lease; but all other provisions of this Lease, including the receipt and disbursement of funds, shall continue until the Trust Agreement is discharged as provided therein. 3. Priority of 2021 Deed of Trust. Notwithstanding anything in the Modified Lease to the contrary, the School Board's rights to possession of the Leased Property and all its other rights under the Modified Lease are subordinate to the rights of the beneficiary under the 2021 Deed of Trust. Any judicial sale of, or foreclosure on, the Leased Property pursuant to the 2021 Deed of Trust terminates all the School Board's rights under the Modified Lease. 2 135 4. School Board's Assumption of Obligations; County's Transfer of Rights. Sections 7.1 and 7.2 of the Original Lease are hereby amended to read as follows. The purpose of these amendments is to conform the cross references to the proper references in the 2021 Trust Agreement. 7.1 Assumption of Obligations. (a) The School Board assumes the County's obligations under Trust Agreement Sections 5.04 (care and use), 5.05 (utilities), 5.08 (compliance with requirements), 5.09 (regarding use and operation), 5.11 (property damage insurance), 5.14 (payment of taxes and other governmental charges & prevention of liens), 5.16 (regarding notice of damage, repair or replacement from Net Proceeds), and 6.02 (compliance with environmental laws). The parties agree that the School Board may fulfill its requirements to maintain insurance through pooled risk and similar programs sponsored by or affiliated with the North Carolina School Boards Association, such as the North Carolina School Boards Association Insurance Trust. (b) Notwithstanding the foregoing, the County retains its rights under Article V of the Trust Agreement to direct the use of Net Proceeds. All payments of Net Proceeds are to be made to the County. 7.2. Transfer of Rights. In order to allow the School Board to carry out its obligations under Section 7.1, the County transfers its rights under Section 5.10 of the Trust Agreement (regarding maintenance, repairs and modifications of and to the Leased Property). Nothing in this Section, however, may be construed as in any way assigning or delegating to the School Board any of the County's rights or responsibilities to make decisions regarding the School Board's capital and operating budgets. 5. Confirmation of Remaining Lease Terms. Except as provided by this Agreement, the parties ratify, approve and confirm the terms of the Original Lease. [The remainder of this page has been left intentionally blank.] 3 136 IN WITNESS WHEREOF, the parties hereto have caused this Lease Modification to be executed in their corporate names by their duly authorized officers, all as of the date first above written. [SEAL] ORANGE COUNTY, ATTEST: NORTH CAROLINA By: Laura Jensen Bonnie B. Hammersley Clerk, Board of Commissioners County Manager [SEAL] THE BOARD OF EDUCATION FOR ATTEST: THE CHAPEL HILL — CARRBORO CITY SCHOOLS By: Dr. Nyah Hamlett Jillian La Serna Secretary Chair [Lease Modification dated as of June 1, 2021] 4 137 STATE OF NORTH CAROLINA; ORANGE COUNTY I, , a Notary Public of said State and County, do hereby certify that Bonnie B. Hammersley and Laura Jensen personally came before me this day and acknowledged that they are the County Manager and the Clerk to the 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 Manager, sealed with its corporate seal and attested by such Clerk. Witness my hand and official seal this day of June, 2021. Notary Public My commission expires: STATE OF NORTH CAROLINA; ORANGE COUNTY I, , a Notary Public of said State and County, do hereby certify that Jillian La Serna and Dr. Nyah Hamlett personally came before me this day and acknowledged that they are the Chair and the Secretary, respectively, of The Board of Education for the Chapel Hill — Carrboro City Schools, and that by authority duly given and as the act of such Board, the foregoing instrument was signed in the Board's name by such Chair, sealed with its corporate seal and attested by such Secretary. Witness my hand and official seal this day of June, 2021. Notary Public My commission expires: 5 138 EXHIBIT A — Site Description Tract 1 All that certain tract or parcel of land located in Chapel Hill, Orange County, North Carolina, which parcel of land is identified in the Orange County land records as PIN #9777-99-9032, and is more particularly described as being all of tract 1, containing 13.336 acres, more or less, and being the tract designated as "Bennett Heirs" on the plat recorded in plat book 214, page 741, of the Orange County Registry, to which plat reference is hereby made for a more particular description of the same. Tract 2 All that certain tract or parcel of land located in Chapel Hill, Orange County, North Carolina, which parcel of land is identified in the Orange County land records as PIN #9777-99-9032, and is more particularly described as being all of tract 2, containing 0.033 acres, more or less, a small triangular shaped parcel of land, and being the tract designated as "(H,D. Bennett Land)" on the plat recorded in plat book 214, page 743, of the Orange County Registry, to which plat reference is hereby made for a more particular description of the same. Tract 3 All that certain tract or parcel of land located in Chapel Hill, Orange County, North Carolina, which parcel of land is identified in the Orange County land records as PIN #9777-99-9032, and is more particularly described as being all of tract 3, containing 13.024 acres, more or less, and being the tract designated as "E.G. Merritt and Mrs. Alfred Brandon" on the plat recorded in plat book 215, page 128, of the Orange County Registry, to which plat reference is hereby made for a more particular description of the same. Tract 4• All that certain tract or parcel of land located in Chapel Hill, Orange County, North Carolina, which parcel of land is identified in the Orange County land records as PIN #9777-99-9032, and is more particularly described as being all of tract 4, containing 8.970 acres, more or less, and being the tract designated as "Cleveland Atwater" on the plat recorded in plat book 215, page 180, of the Orange County Registry, to which plat reference is hereby made for a more particular description of the same. 6 139 Attachment 7 s PRELIMINARY OFFICIAL STATEMENT DATED MAY 2021 � NEW ISSUE BOOK-ENTRY ONLY Ratings:Moody's: [� .= S&P: ] 2 o Fitch: ,U [bond counsel to review/update/In the opinion of Bond Counsel,under existing law and subject to conditions described under "TAX TREATMENT"herein, (1) interest on the 2021A Bonds paid by the County(a) is not includable in the recipient's gross income for federal income tax purposes and (b) is not an item of tax preference for purposes of the federal alternative minimum income tax,(2)interest on the 2021B Bonds paid by the County will not be excluded from gross income for federal income tax purposes, and (3) interest on the 2021 Bonds is exempt from current State of North Carolina income taxes. See "TAX o ° TREATMENT"herein for additional information regarding otherfederal,State and local tax consequences arisingfrom ownership or receipt of interest on the 2021 Bonds. o o ,rye ORANGE COUNTY,NORTH CAROLINA $� ]*LIMITED OBLIGATION BONDS,SERIES 2021A $[ ]*TAXABLE LIMITED OBLIGATION REFUNDING BONDS,SERIES 2021A 2N o Dated:Date of Delivery Due: October 1,as shown on the inside front cover This Official Statement has been prepared by Orange County,North Carolina(the"County")to provide information on 2 the 2021 Bond described herein. Selected information is presented on this cover page for the convenience of the user. Investors 0 o must read the entire Official Statement to obtain information essential to the making of an informed investment decision. h aSecurity: The payment by the County of the principal of and interest on the 2021 Bonds is limited to funds appropriated for that purpose by the Board of Commissioners for the County in its sole discretion, except to the extent payable from Bond proceeds, investment earnings, Net O o Proceeds related to casualty or condemnation proceeds, or amounts derived from the U enforcement of remedies on default. w As security for the 2021 Bonds and all other Bonds issued under the Trust Agreement(as such oterms are defined herein),the County will execute and deliver a deed of trust granting,among o other things,a lien of record on the Mortgaged Property subject to Permitted Encumbrances o (as such terms are defined herein). 2 n c THE OBLIGATION TO MAKE PAYMENTS WITH RESPECT TO THE 2021 BONDS IS NOT A GENERAL w ,o OBLIGATION OF THE COUNTY,AND THE TAXING POWER OF THE COUNTY IS NOT PLEDGED x DIRECTLY OR INDIRECTLY TO SECURE ANY MONIES DUE TO THE OWNERS OF THE 2021 BONDS. q See the caption"SECURITY AND SOURCES OF PAYMENT OF 2021 BONDS"herein. Redemption: The 2021 Bonds are subject to redemption as described herein. 2 � � O o purpose: Proceeds of the 2021 Bonds will be used to(1)finance the acquisition,construction,equipping 2 y ° and improvement of certain County facilities as further described herein, (2) refund the ° Refunded Obligations as defined herein and 3 a certain costs incurred in connection g ( ), OpY o with the issuance of the 2021 Bonds. O o Interest Payment Dates: April 1 and October 1 of each year,commencing October 1,2021. x4:2 ° Denomination: $5,000 or integral multiples thereof. 2 Delivery: On or about June 24,2021. Bond Counsel: Sanford Holshouser LLP � � o Wti County Attorney: John L.Roberts,Esq. o h Financial Advisor: Davenport&Company LLC Underwriters'Counsel: McGuireWoods LLP Trustee: The Bank of New York Mellon Trust Company,N.A. FHN Financial Capital Markets BAIRD � � o y o The date of this Official Statement is June 2021. U ,N ° *Preliminary,subject to change. 140 MATURITY SCHEDULE FOR 2021 BONDS* Series 2021A Bonds Due Principal Interest October 1 Amount Rate Yield CUSIP`" Series 2021B Bonds Due Principal Interest October 1 Amount Rate Yield CUSIP*' Preliminary,subject to change. "'CUSIP®is a registered trademark of the American Bankers Association. CUSIP Global Services is managed on behalf of the American Bankers Association by S&P Capital IQ. Copyright©2021 CUSIP Global Services. All rights reserved. CUSIP data herein is provided by S&P Capital IQ,a division of McGraw-Hill Financial,Inc. The CUSIP data herein is provided solely for the convenience of reference only. Neither the County nor the Underwriters are responsible for selection or use of these CUSIP numbers,and no representation is made as to their correctness on the 2021 Bonds or as indicated above. The CUSIP number for a specific maturity is subject to being changed after the issuance of the 2021 Bonds as a result of various subsequent actions including, but not limited to,a refunding in whole or in part of the 2021 Bonds. 141 IN CONNECTION WITH THIS OFFERING,FHN FINANCIAL CAPITAL MARKETS AND ROBERT W. BAIRD& CO. INCORPORATED(THE"UNDERWRITERS")MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 2021 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING,IF COMMENCED,MAY BE DISCONTINUED AT ANY TIME. No dealer, broker, salesman or other person has been authorized to give any information or to make any representation other than as contained in this Official Statement, and if given or made, such other information or representation must not be relied upon. This Official Statement does not constitute an offer to sell or the solicitation of any offer to buy,nor shall there be any sale of the 2021 Bonds by any person in any jurisdiction in which it is not lawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtained from the County and other sources that are deemed to be reliable. NEITHER THE 2021 BONDS NOR THE TRUST AGREEMENT(AS SUCH TERMS ARE DEFINED HEREIN)HAVE BEEN REGISTERED OR QUALIFIED WITH THE SECURITIES AND EXCHANGE COMMISSION BY REASON OF THE PROVISIONS OF SECTION 3(a)(2)OF THE SECURITIES ACT OF 1933,AS AMENDED AND SECTION 304(a)(4)OF THE TRUST INDENTURE ACT OF 1939,AS AMENDED. THE REGISTRATION OR QUALIFICATION OF THE 2021 BONDS OR THE TRUST AGREEMENT IN ACCORDANCE WITH APPLICABLE PROVISIONS OF SECURITIES LAW OF THE STATES IN WHICH THE 2021 BONDS HAVE BEEN REGISTERED OR QUALIFIED, IF ANY, AND THE EXEMPTION FROM REGISTRATION OR QUALIFICATION IN OTHER STATES,SHALL NOT BE REGARDED AS A RECOMMENDATION THEREOF. IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE TERMS OF THE OFFERING,INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. All quotations from and summaries and explanations of laws and documents herein do not purport to be complete,and reference is made to such laws and documents for full and complete statements of their provisions. Any statements made in this Official Statement involving estimates or matters of opinion, whether or not expressly so stated, are intended merely as estimates or opinions and not as representations of fact. THE INFORMATION AND EXPRESSIONS OF OPINION HEREIN ARE SUBJECT TO CHANGE WITHOUT NOTICE,AND NEITHER THE DELIVERY OF THIS OFFICIAL STATEMENT NOR ANY SALE OF THE 2021 BONDS SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COUNTY SINCE THE DATE HEREOF. References to web site addresses presented herein (including the appendices hereto) are for informational purposes only and may be in the form of hyperlinks solely for the reader's convenience. Unless specified otherwise, such web sites and the information or links contained therein are not intended to be active hyperlinks or incorporated into,and are not part of,this Official Statement for purposes of,and as that term is defined in,Rule 15c2-12 under the Securities Exchange Act of 1934,as amended. The information set forth herein has been obtained from sources which are believed to be reliable and is in a form deemed final by the County for the purpose of Rule 15c2-12 under the Securities Exchange Act of 1934, as amended (except for certain information permitted to be omitted under Rule 15c2-12(b)(1)). The information contained herein is subject to change after the date of this Official Statement,and this Official Statement speaks only as of its date. The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction,but the Underwriters do not guarantee the accuracy or completeness of such information. 142 ORANGE COUNTY,NORTH CAROLINA BOARD OF COMMISSIONERS Renee Price, Chair Jamezetta Bedford,Vice-Chair Mark Dorosin Amy Fowler Sally Greene Jean Hamilton Earl McKee COUNTY STAFF Bonnie B. Hammersley........................................................................................................County Manager Travis Myren........................................................................................................... Deputy County Manager Gary Donaldson.........................................................................................................Chief Financial Officer Paul Laughton..........................................................Deputy Director, Finance and Administrative Services John L. Roberts,Esq............................................................................................................County Attorney BOND COUNSEL Sanford Holshouser LLP FINANCIAL ADVISOR Davenport&Company LLC 143 TABLE OF CONTENTS Page INTRODUCTION.......................................................................................................................................1 TheCounty.....................................................................................................................................1 Purpose ...........................................................................................................................................1 Security...........................................................................................................................................1 The2021 Bonds..............................................................................................................................2 AdditionalBonds............................................................................................................................2 Book-Entry Only.............................................................................................................................2 TaxStatus .......................................................................................................................................3 Professionals...................................................................................................................................3 PotentialImpact of COVID-19.......................................................................................................3 AdditionalInformation...................................................................................................................3 THE2021 BONDS......................................................................................................................................4 Authorization..................................................................................................................................4 General ...........................................................................................................................................4 RedemptionProvisions...................................................................................................................4 SECURITY AND SOURCES OF PAYMENT OF 2021 BONDS .............................................................6 General ...........................................................................................................................................6 Payment of Bonds; Limited Obligation;Budget and Appropriations.............................................6 TrustAgreement.............................................................................................................................7 Deedof Trust..................................................................................................................................7 Enforceability..................................................................................................................................8 AdditionalBonds............................................................................................................................8 Useof Net Proceeds........................................................................................................................9 AVAILABLE SOURCES FOR PAYMENT...............................................................................................9 General ...........................................................................................................................................9 GeneralFund Revenues..................................................................................................................9 THEPLAN OF FINANCE..........................................................................................................................9 TheProjects....................................................................................................................................9 TheRefunded Obligations............................................................................................................10 TheMortgaged Property...............................................................................................................I I ESTIMATED SOURCES AND USES OF FUNDS .................................................................................12 TOTAL ANNUAL DEBT SERVICE REQUIREMENTS........................................................................13 CERTAIN RISKS OF 2021 BOND OWNERS.........................................................................................13 Insufficiency of Payments.............................................................................................................13 Riskof Nonappropriation.............................................................................................................14 Valueof Collateral........................................................................................................................14 UninsuredCasualty.......................................................................................................................14 Outstanding General Obligation Debt of the County....................................................................15 EnvironmentalRisks.....................................................................................................................15 AdditionalBonds..........................................................................................................................15 Bankruptcy....................................................................................................................................15 Cybersecurity................................................................................................................................16 ClimateChange.............................................................................................................................16 Potential Impact of COVID-19.....................................................................................................16 THECOUNTY..........................................................................................................................................17 General .........................................................................................................................................17 FinancialInformation....................................................................................................................17 i 144 TABLE OF CONTENTS (continued) Page LEGALMATTERS...................................................................................................................................17 Litigation....................................................................................................................................... 17 Opinionsof Counsel.....................................................................................................................17 TAXTREATMENT..................................................................................................................................18 Opinionof Bond Counsel.............................................................................................................18 DiscountBonds.............................................................................................................................18 PremiumBonds.............................................................................................................................19 Other Tax Consequences..............................................................................................................19 CONTINUING DISCLOSURE OBLIGATION.......................................................................................20 The County's Continuing Disclosure Compliance.......................................................................23 UNDERWRITING....................................................................................................................................23 RATINGS..................................................................................................................................................24 MISCELLANEOUS..................................................................................................................................24 Appendix A The County Appendix B Management's Discussion and Analysis and the Basic Financial Statements of Orange County,North Carolina Appendix C Summary of Principal Legal Documents Appendix D Form of Opinion of Bond Counsel Appendix E Book-Entry Only System ii 145 Orange County,North Carolina Limited Obligation Bonds, Series 2021A* Taxable Limited Obligation Refunding Bonds, Series 2021B* INTRODUCTION The purpose of this Official Statement,which includes the Appendices hereto,is to provide certain information in connection with the Orange County, North Carolina Limited Obligation Bonds, Series 2021A in the aggregate principal amount of$ * (the "2021A Bonds") and Taxable Limited Obligation Bonds, Series 2021B in the aggregate principal amount of$ * (the "2021B Bonds" and,together with the 2021A Bonds,the"2021 Bonds"). The 2021 Bonds will be issued pursuant to a Trust Agreement dated as of June 1,2021 (the"Trust Agreement"),between Orange County,North Carolina(the"County")and The Bank of New York Mellon Trust Company,N.A., as trustee (the"Trustee"). Capitalized terms used in this Official Statement, unless otherwise defined herein, have the meanings set out in Appendix C hereto under the caption"DEFINITIONS." This Introduction provides only certain limited information with respect to the contents of this Official Statement and is expressly qualified by the Official Statement as a whole. Prospective investors should review the full Official Statement and each of the documents summarized or described herein. This Official Statement speaks only as of its date, and the information contained herein is subject to change. THE COUNTY The County is a political subdivision of the State of North Carolina(the"State"). See Appendix A, "THE COUNTY,"hereto for certain information regarding the County. The County's most recent audited financial statements are contained in Appendix B hereto. PURPOSE The 2021 Bonds are being issued in order to (1)finance the acquisition, construction, equipping and improvement of certain County facilities as further described herein, (2) refinance an installment financing contract entered into between Bank of America, N.A. and the County in 2014 (the "Refunded 2014 Installment Financing Contract"), (3)refund a state revolving loan issued to the County in 2014 (the "Refunded SRL"), (4) refund the outstanding Orange County Public Facilities Company Limited Obligation Bonds, Series 2012 (the "Refunded 2012 Bonds" and, together with the Refunded 2014 Installment Financing Contract and Refunded SRL, the "Refunded Obligations"), and (5) finance certain costs incurred in connection with the execution and delivery of the 2021 Bonds. See "THE PLAN OF FINANCE"and"ESTIMATED SOURCES AND USES OF FUNDS"herein. SECURITY The payment by the County of the principal of and interest on the 2021 Bonds is limited to funds appropriated for that purpose by the Board of Commissioners for the County in its sole discretion, except to the extent payable from Bond proceeds, investment earnings, Net Proceeds related to casualty or condemnation proceeds, or amounts derived from the enforcement of remedies on default. *Preliminary,subject to change. 146 As security for the 2021 Bonds and any additional bonds issued under the Trust Agreement on a parity therewith(the"Additional Bonds"and,together with the 2021 Bonds,the"Bonds"),the County will execute and deliver to a deed of trust trustee(the"Deed of Trust Trustee"),for the benefit of the Trustee, a Deed of Trust dated as of June 1, 2021 (the "Deed of Trust"), granting a lien of record on the sites of the County's Whiffed Building located in Hillsborough,North Carolina(the"Whitted Building"),the County's Blackwood Farm Park located in Hillsborough, North Carolina (the `Blackwood Farm Park"), Culbreth Middle School located in Chapel Hill, North Carolina ("Culbreth Middle School"), the Orange County Main Library located in Hillsborough, North Carolina(the "Orange County Library"), and the real estate improvements thereon and appurtenances thereto, all as more particularly described in the Deed of Trust (collectively,the"Mortgaged Property"),subject only to Permitted Encumbrances(as defined in Appendix C hereto). The Deed of Trust authorizes future obligations evidenced by Additional Bonds as described below, to be secured by the Modified Deed of Trust,provided that the total amount of present and future obligations secured by the Modified Deed of Trust at any one time does not exceed $ and such future obligations are incurred not later than 30 years from June 1,2021. In addition, the County will grant to the Trustee a lien on and security interest in all moneys held by the Trustee in the funds and accounts created under the Trust Agreement. If a default occurs under the Trust Agreement,the Trustee is authorized to direct the Deed of Trust Trustee to foreclose on the Mortgaged Property and apply the proceeds received as a result of any such foreclosure to the payment of the amounts due to the owners of the 2021 Bonds, subject to the rights of the owners of any other Bonds.No assurance can be given that any such proceeds will be sufficient to pay the principal of and the interest on the Bonds. In addition,no deficiency judgment can be rendered against the County if the proceeds from any such foreclosure sale (together with other funds that may be held by the Trustee under the Trust Agreement) are insufficient to pay the Bonds in full. The 2021 Bonds do not constitute a pledge of the County's faith and credit within the meaning of any constitutional provision. See the caption"SECURITY AND SOURCES OF PAYMENT OF 2021 BONDS"herein. THE 2021 BONDS The 2021 Bonds will be dated as of their date of delivery. Interest is payable on April 1 and October 1 of each year,beginning October 1,2021,at the rates set forth on the inside front cover page of this Official Statement. Principal is payable, subject to redemption as described herein, on October 1 in the years and in the amounts set forth on the inside front cover page of this Official Statement. ADDITIONAL BONDS Under the conditions described in the Trust Agreement, without the approval or consent of the Owners of the then-outstanding Bonds and without notice to such Owners, Additional Bonds may be delivered and secured on parity with the 2021 Bonds to provide funds(a)to expand or improve the Pledged Facilities, (b)to construct further improvements to the Pledged Sites, (c)to refund any Outstanding Bonds, (d)to pay financing costs or establish reserves in connection with the issuance of Additional Bonds,(e) 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 those facilities are related to the Pledged Facilities or the Pledged Sites, or(f) for any combination of such purposes. BOOK-ENTRY ONLY 2 147 The 2021 Bonds will be delivered in book-entry form only without physical delivery of certificates to beneficial owners of the 2021 Bonds. Payments to beneficial owners of the 2021 Bonds will be made by The Depository Trust Company("DTC"),New York,New York,and its participants. See Appendix E, "BOOK-ENTRY ONLY SYSTEM"hereto. So long as Cede & Co. is the registered owner of the 2021 Bonds,references herein to registered owner or Owners of the 2021 Bonds means Cede& Co. and not the beneficial owners of the 2021 Bonds. TAx STATUS [In the opinion of Bond Counsel, under existing law and subject to conditions described under "TAX TREATMENT" herein, (1) interest on the 2021A Bonds paid by the County (a) is not includable in the recipient's gross income for federal income tax purposes and(b) is not an item of tax preference for purposes of the federal alternative minimum income tax,(2)interest on the 2021 B Bonds paid by the County will not be excluded from gross income for federal income tax purposes,and(3)interest on the 2021 Bonds is exempt from current State of North Carolina income taxes.] See"TAX TREATMENT." PROFESSIONALS FHN Financial Capital Markets and Robert W.Baird&Co. Incorporated(the"Underwriters")are underwriting the 2021 Bonds. The Bank of New York Mellon Trust Company,N.A. is serving as Trustee with respect to the 2021 Bonds. Davenport & Company LLC is serving as financial advisor. Sanford Holshouser LLP is serving as Bond Counsel. John L. Roberts, Esq. is the County Attorney. McGuireWoods LLP is serving as counsel to the Underwriters. POTENTIAL IMPACT OF COVID-19 The continued spread of COVID-19 has impacted and will continue to impact global financial markets, national, State, and local economies, and areas of transportation. Management of the County is closely monitoring the situation. The County cannot predict the ultimate effects of COVID-19 on (i) the financial and operating condition of the County or(ii)the investment in the 2021 Bonds. See Appendix A, "THE COUNTY—RECENT DEVELOPMENTS RELATED TO COVID-19." ADDITIONAL INFORMATION Summaries of the Trust Agreement and the Deed of Trust, including a list of definitions of certain terms, are included as Appendix C. All quotations from and summaries and explanations of the Trust Agreement and the Deed of Trust contained in this Official Statement, including in Appendix C, do not purport to be complete. Reference is made to such documents for full and complete statements of their respective provisions. Additional information and copies in reasonable quantity of the principal financing documents may be obtained from the County at 200 South Cameron Street,Hillsborough,North Carolina 27278,Attention: Chief Financial Officer. Copies of such documents can also be obtained during the offering period from FHN Financial Capital Markets at 845 Crossover Lane,Memphis,Tennessee 38117 or Robert W. Baird& Co. Incorporated at 380 Knollwood Street, Suite 440, Winston-Salem, North Carolina 27103. After the offering period, copies of such documents may be obtained from the Trustee at 10161 Centurion Parkway, Jacksonville,Florida 32256. 3 148 THE 2021 BONDS AUTHORIZATION The County is issuing the 2021 Bonds pursuant to the provisions of Section 20 of Chapter 160A of the North Carolina General Statutes and Article 8 of Chapter 159 of the North Carolina General Statutes, each as amended(collectively, the "Act"), and a resolution of the Board of Commissioners of the County adopted on May 18, 2021. Each 2021 Bond will be deemed an"installment contract"under the Act. In addition, the County's issuance of the 2021 Bonds received the approval of the North Carolina Local Government Commission (the "LGC") on June 1, 2021. The LGC is a division of the State Treasurer's office charged with general oversight of local government finance in the State of North Carolina (the "State"). LGC approval is required for substantially all bond issues and other local government financing arrangements in the State. Before approving an installment financing (which includes the financing arrangement for the 2021 Bonds), the LGC must determine, among other things, that (1) the proposed financing is necessary and expedient, (2)the financing,under the circumstances, is preferable to a general obligation or revenue bond issue for the same purpose, and (3) the sums to fall due under the proposed financing are not excessive for the local government. GENERAL Payment Terms. The 2021 Bonds will be dated their date of delivery. Interest on the 2021 Bonds is payable on each April 1 and October 1 (the "Payment Dates"), beginning October 1, 2021, at the rates set forth on the inside front cover page of this Official Statement(calculated on the basis of a 360-day year consisting of twelve 30-day months). Interest payments will be made to the person shown as the owner of the 2021 Bond as of the applicable Record Date. "Record Date"means the end of the calendar day on the 15th day of the month(whether or not a Business Day)preceding a Payment Date. Principal on the 2021 Bonds is payable on October 1 in the years and amounts set forth on the inside front cover page of this Official Statement. Payments will be effected through DTC. See Appendix E, "BOOK-ENTRY ONLY SYSTEM"hereto. Registration and Exchange. So long as DTC or its nominee is the registered owner of the 2021 Bonds, transfers and exchanges of beneficial ownership interests in the 2021 Bonds will be available only through DTC Participants and DTC Indirect Participants. See Appendix E, "BOOK-ENTRY ONLY SYSTEM" hereto. The Trust Agreement describes provisions for transfer and exchange applicable if a book-entry system is no longer in effect. These provisions generally provide that the transfer of the 2021 Bonds is registrable by the Owners thereof, and the 2021 Bonds may be exchanged for an equal aggregate, unredeemed principal amount of 2021 Bonds of the authorized denomination and of the same maturity and interest rate, only upon presentation and surrender of the 2021 Bonds to the Trustee at the principal corporate trust office of the Trustee together with an executed instrument of transfer in a form approved by the Trustee in connection with any transfer. The Trustee may require the person requesting any transfer or exchange to reimburse it for any shipping and tax or other governmental charge payable in connection therewith. REDEMPTION PROVISIONS Optional Redemption. The 2021A Bonds maturing on or after October 1, 20 are subject to redemption at the County's option,in whole or in part on any date on or after October 1,20_,upon payment of the principal amount to be redeemed plus interest accrued to the redemption date,without premium. [2021B Bonds—par call or make whole redemption?] 4 149 [Mandatory Sinking Fund Redemption. The 2021A Bonds maturing on October 1, 20, are subject to mandatory sinking fund redemption, at a redemption price equal to the principal amount to be redeemed plus accrued interest,if any,to the redemption date,without premium,on October 1,in the years and amounts as follows: Year Amount *Maturity.] Selection. If less than all of the 2021 Bonds are to be optionally redeemed as described above,the County in its discretion may elect which maturities of 2021 Bonds are to be redeemed. If less than all the 2021 Bonds of any maturity are to be redeemed,the Trustee shall select the 2021 Bonds to be redeemed by lot; provided, however, that so long as a book-entry system with DTC is used for determining beneficial ownership of 2021 Bonds, if less than all the 2021 Bonds within a maturity are to be redeemed,the parties agree that DTC may determine which of the 2021 Bonds within the maturity are to be redeemed in accordance with DTC's then-current rules and procedures. In any case, (1) the portion of any 2021 Bond to be redeemed must be in the principal amount of $5,000 or some multiple thereof, and(2) in selecting 2021 Bonds for redemption, each 2021 Bond will be considered as representing that number of 2021 Bonds which is obtained by dividing the principal amount of that 2021 Bond by$5,000. If a portion of a 2021 Bond is called for redemption, a new 2021 Bond of the same maturity in principal amount equal to the unpaid portion will be delivered to the registered owner upon the surrender of the 2021 Bond. Effect of Call for Redemption. If on or before the date fixed for redemption funds are deposited with the Trustee to pay the principal and interest accrued to the redemption date with respect to the 2021 Bonds called for redemption,the 2021 Bonds or portions of the 2021 Bonds called for redemption cease to accrue interest from and after the redemption date,and thereafter those 2021 Bonds(1)are no longer entitled to the benefits provided by the Trust Agreement and(2) are not deemed to be Outstanding under the Trust Agreement. Notice of Redemption. The Trustee, at the County's direction, upon being satisfactorily indemnified with respect to expenses and with at least two Business Days' notice, will send notice of redemption no less than 30 nor more than 60 days prior to the redemption date,as follows: (1)with respect to any 2021 Bonds being called for redemption for which DTC or its nominee is the registered owner, to DTC,in whatever manner may be provided for under DTC's standard operating rules as then in effect(and if the Trustee is unable to determine those rules, by registered or certified mail, return receipt requested); (2)with respect to any 2021 Bonds for which no book-entry only system of registration is in effect,to each of the registered owners of those 2021 Bonds at their addresses as shown on the Trustee's registration books,by registered or certified mail; and(3)in any case,both(A)to the Municipal Securities Rulemaking Board for posting on its "EMMA" continuing disclosure system, or any successor system, and (B) to the LGC. Failure to give any notice specified in(1)or(2), as applicable,or any defect in that notice,will not affect the validity of any proceedings for the redemption of any 2021 Bonds with respect to which no failure has occurred. Failure to give any notice specified in (3), or any defect in that notice, will not affect the validity of any proceedings for the redemption of any 2021 Bonds with respect to which the notice specified 5 150 in(1)or(2)is correctly given. Any notice mailed as provided in the Trust Agreement will conclusively be presumed to have been given regardless of whether received by any Owner. Notwithstanding anything in the Trust Agreement to the contrary,the only remedy for the Trustee's failure to post any notice with the EMMA system will be an action by the holders of the 2021 Bonds, as applicable, in mandamus for specific performance or similar remedy to compel performance. Any redemption notice,except a redemption notice in respect of a sinking fund payment date,may state that the redemption to be effected is conditioned upon (1) the Trustee's receipt on or prior to the redemption date of moneys sufficient to pay the principal of and premium, if any, and interest on the 2021 Bonds to be redeemed; or (2) any other condition not unacceptable to the Trustee. If a notice contains a condition and the Trustee either(i)does not receive moneys sufficient to pay the principal of and premium, if any, and interest on the 2021 Bonds on or prior to the redemption date, or(ii)the stated condition is not fulfilled,in either case on or prior to the redemption date,then redemption will not be made and the Trustee must,within a reasonable time, give notice in a manner in which the redemption notice was given that the moneys were not so received(or condition was not fulfilled)and the redemption was not made. SECURITY AND SOURCES OF PAYMENT OF 2021 BONDS GENERAL The 2021 Bonds are payable from payments to be made by the County pursuant to the Trust Agreement and from certain other moneys, including certain Net Proceeds, if any, and certain amounts realized from any sale or lease of the Mortgaged Property, which payments and other moneys have been pledged to such payment as provided in the Trust Agreement. PAYMENT OF BONDS;LIMITED OBLIGATION;BUDGET AND APPROPRIATIONS The County shall cause to be paid,when due,the principal of(whether at maturity,by acceleration, or otherwise) and the premium, if any, and interest on the Bonds at the places, on the dates and in the manner described in the Trust Agreement. The County is obligated to pay Additional Payments in amounts sufficient to pay the fees and expenses of the Trustee,taxes or other expenses required to be paid pursuant to the Trust Agreement. Additional Payments are to be paid by the County directly to the person or entity to which such Additional Payments are owed. In the Trust Agreement,the County agrees to include in the initial proposal for each of the County's annual budgets for review and consideration by the Board of Commissioners for the County, in any Fiscal Year, items for all Bond Payments and the reasonably estimated Additional Payments coming due in such Fiscal Year. Notwithstanding that the initial proposed budget includes an appropriation for Bond Payments and Additional Payments,the Board of Commissioners may determine not to include such an appropriation in the final County budget for such Fiscal Year;further,the Board of Commissioners may amend an adopted budget to reduce or delete an approved appropriation. An Event of Nonappropriation constitutes an Event of Default under the Trust Agreement, which entitles the Trustee to exercise its remedies under the Trust Agreement, including its rights to foreclose on the Mortgaged Property under the Deed of Trust. IN CONNECTION WITH THE BOND PAYMENTS AND THE ADDITIONAL PAYMENTS, THE APPROPRIATION OF FUNDS THEREFOR IS WITHIN THE SOLE DISCRETION OF THE BOARD OF COMMISSIONERS OF THE COUNTY. 6 151 TRUST AGREEMENT Under the Trust Agreement, the County will grant to the Trustee for the benefit of the Owners of the Bonds a lien on and security interest in all moneys and securities from time to time held by the Trustee under the Trust Agreement. DEED OF TRUST General. In connection with the execution and delivery of the 2021 Bonds,the County will execute and deliver the Deed of Trust as security for its obligations under the Trust Agreement granting a lien of record on the Mortgaged Property. The Deed of Trust secures the 2021 Bonds and any Additional Bonds issued under the Trust Agreement. ONLY THE SITES ON WHICH (1) THE WHITTED BUILDING, (2) BLACKWOOD FARM PARK, (3) CULBRETH MIDDLE SCHOOL,AND(4)THE ORANGE COUNTY LIBRARY ARE LOCATED WILL BE INCLUDED IN THE DEFINITION OF"MORTGAGED PROPERTY"AND, CONSEQUENTLY, SUCH REAL PROPERTY AND ANY IMPROVEMENTS THEREON WILL BE SUBJECT TO THE LIEN CREATED BY THE DEED OF TRUST. See "THE PLAN OF FINANCE"herein. The Deed of Trust authorizes future obligations evidenced by Additional Bonds executed and delivered under the Trust Agreement to be secured by the Deed of Trust,provided that the total amount of present and future obligations secured thereby at any one time does not exceed$ and such future obligations are incurred not later than 30 years from June 1,2021. The Deed of Trust will be recorded in the office of the Register of Deeds of Orange County,North Carolina,and the liens created thereby will be insured by a title insurance policy. The title insurance policy is subject to certain exceptions described therein[, including a survey exception with respect to certain portions of the Mortgaged Property]. Release of Security. The Trustee is required, upon the County's direction and at any time, to execute and deliver all documents necessary to effect the release of all or a portion of the Mortgaged Property from the lien of the Deed of Trust upon the County's compliance with the following requirements: (a) The County must file with the Trustee a certificate executed by a County Representative, (i) stating that(A)no Event of Default is continuing, (B)that the grant or release will not materially impair the intended use of the property remaining subject to the Deed of Trust and(C)the release complies with the requirements of the Deed of Trust,(ii) providing a copy of the proposed instrument of grant or release,including a complete legal description of the property to be released, (iii)providing a written application signed by a County Representative requesting such instrument be executed and delivered, and (iv) providing evidence of compliance with(b)or(c)below, and. (b) 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 the Trust Agreement and (ii)which is required to be used for such payment. (c) In connection with the release of a portion (but less than all) of the Mortgaged Property, the County must provide evidence to the Trustee that the appraised, tax or insured value of that portion of the Mortgaged Property that is proposed to remain 7 152 subject to the lien of the Deed of Trust is not less than 50% of the aggregate principal component of the Bonds Outstanding at the time the release is effected. In addition to the provisions for release described above,the County may from time to time grant easements, licenses, rights-of-way and other similar rights with respect to any part of the Mortgaged Property, and the County may release such interests, with or without consideration, and the County may dispose of any undesirable or unnecessary Fixture, so long as such grant or disposition does not materially impair the intended use of the Mortgaged Property. See"THE DEED OF TRUST—Restriction on Transfers; Releases; Grants of Easements"in Appendix C hereto. ENFORCEABILITY The enforceability of the parties' obligations under the Trust Agreement and the Deed of Trust are subject to bankruptcy, insolvency,reorganization and other laws related to or affecting the enforcement of creditors' rights generally and, to the extent that certain remedies under such instruments require or may require enforcement by a court,to such principles of equity as the court having jurisdiction may impose. NOTWITHSTANDING ANYTHING THEREIN TO THE CONTRARY,THE DELIVERY OF THE 2021 BONDS SHALL NOT BE CONSTRUED OR INTERPRETED AS CREATING A PLEDGE OF THE FAITH AND CREDIT OF THE COUNTY WITHIN THE MEANING OF ANY CONSTITUTIONAL DEBT LIMITATION. IN ADDITION,NEITHER THE 2021 BONDS NOR THE TRUST AGREEMENT DIRECTLY OR INDIRECTLY OR CONTINGENTLY OBLIGATES THE COUNTY TO MAKE ANY PAYMENTS BEYOND THOSE APPROPRIATED IN THE SOLE DISCRETION OF THE BOARD OF COMMISSIONERS FOR ANY FISCAL YEAR IN WHICH THE 2021 BONDS ARE OUTSTANDING. IF THE COUNTY FAILS TO MAKE PAYMENTS OF PRINCIPAL OF OR INTEREST ON THE BONDS, THE TRUSTEE MAY DECLARE THE ENTIRE UNPAID PRINCIPAL OF THE BONDS TO BE IMMEDIATELY DUE AND PAYABLE AND DIRECT THE DEED OF TRUST TRUSTEE TO INSTITUTE FORECLOSURE PROCEEDINGS UNDER THE DEED OF TRUST AND PROCEED IN ACCORDANCE WITH LAW TO ATTEMPT TO DISPOSE OF THE MORTGAGED PROPERTY AND APPLY THE PROCEEDS OF SUCH DISPOSITION TOWARD ANY BALANCE,OWING BY THE COUNTY ON THE BONDS.NO ASSURANCE CAN BE GIVEN THAT SUCH PROCEEDS WILL BE SUFFICIENT TO PAY ALL PRINCIPAL OF AND INTEREST ON THE BONDS.IN ADDITION,SECTION 160A-20(f)OF THE NORTH CAROLINA GENERAL STATUTES PROVIDES THAT NO DEFICIENCY JUDGMENT MAY BE RENDERED AGAINST THE COUNTY FOR BREACH OF ANY CONTRACTUAL OBLIGATION AUTHORIZED UNDER SECTION 160A-20 AND THAT THE TAXING POWER OF THE COUNTY IS NOT AND MAY NOT BE PLEDGED DIRECTLY OR INDIRECTLY TO SECURE ANY MONEYS DUE FROM THE COUNTY. See "THE TRUST AGREEMENT—Defaults and Remedies under the Trust Agreement-Acceleration"and"—Other Remedies"and"THE DEED OF TRUST— Defaults and Remedies; Foreclosure" in Appendix C hereto and the caption "CERTAIN RISKS OF 2021 BOND OWNERS"herein. ADDITIONAL BONDS Under the conditions described in the Trust Agreement, without the approval or consent of the Owners of the then Outstanding 2021 Bonds, Additional Bonds may be delivered and secured on parity with the 2021 Bonds to provide funds (a)to expand or improve the Pledged Facilities, (b)to construct further improvements to the Pledged Sites, (c)to refund any Outstanding Bonds,(d)to pay financing costs or establish reserves in connection with the issuance of Additional Bonds, (e) 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 those facilities are related to the Pledged Facilities or the Pledged Sites, or(f) for any combination of such purposes. See"THE TRUST AGREEMENT—Additional Bonds"in Appendix C hereto. 8 153 USE OF NET PROCEEDS The County must elect to use Net Proceeds and other funds available therefor,subject to provisions of the Trust Agreement,to repair and restore the Mortgaged Property or to redeem or defease the Bonds in whole (but not in part) pursuant to the optional redemption provisions described above or the defeasance provisions of the Trust Agreement, as appropriate. The County has no option to redeem the 2021 Bonds from Net Proceeds other than in accordance with the optional redemption provisions described above (which provide for no optional redemption prior to October 1,20—). AVAILABLE SOURCES FOR PAYMENT GENERAL The County may pay its obligations under the Trust Agreement from any source of funds,including revenues generated by the projects financed under the Trust Agreement and other facilities in the County, available to it in each year and appropriated therefor until maturity of the 2021 Bonds. GENERAL FUND REVENUES The County's general fund revenues for the fiscal year ended June 30, 2020 were approximately $_million and for the fiscal year ending June 30, 2021 are budgeted to be $_million. General fund revenues are derived from various sources,including property taxes(which account for approximately 72% of the general fund revenues), sales taxes,fees and charges,as well as intergovernmental revenues. For the fiscal year ended June 30,2020,the County imposed a property tax of$0.8679 per$100 of assessed value, all of which was appropriated to the General Fund by the County's Board of Commissioners. For the fiscal year ending June 30,2021,the County will impose a property tax of$ per$100 of assessed value. A rate of$0.8679 per$100 of assessed value in the fiscal year ended June 30,2020 generated approximately $_million.A rate of$_per$100 of assessed value in the fiscal year ending June 30,2021 is estimated to generate approximately$_million. The General Statutes of North Carolina permit counties to impose property taxes of up to $1.50 per$100 of assessed value for certain purposes without the requirement of a voter referendum. See Appendix B hereto for a description of the uses of the County's general fund revenues for the fiscal year ended June 30,2020. THE PLAN OF FINANCE The 2021 Bonds are being issued to provide funds to (1) finance the acquisition, construction, equipping and improvement of certain County facilities as further described below,(2)refund the Refunded Obligations as further described below, and (3)finance certain costs incurred in connection with the execution and delivery of the 2021 Bonds. THE PROJECTS A portion of the proceeds of the 2021A Bonds will be used to finance a variety of County projects. The County has adopted a practice of completing an annual financing to finance a broad range of acquisitions and improvements, so as to reduce its frequency of transactions and to handle projects that do not lend themselves conveniently to separate financings. The projects included in the current financing can be summarized, and the current estimates of the costs thereof, as follows: 9 154 Proiect Estimated Cost Court Street Annex Renovations $188,600 Criminal Justice Resource Department Expansion/Renovation 205,779 Accessibility& Security Improvements 194,643 Government Services Annex Stormwater&Renovations 375,000 HVAC Projects 714,203 Major Plumbing Repairs 195,343 Justice Facility Improvements 43,221 Parking Lot Improvements 57,280 Roofing&Building Fagade Improvements 1,130,353 Whitted Building Stormwater&Renovations 942,372 Link Center Remediation 282,377 IT Fiber Connectivity 302,532 ITGC Initiatives&IT Infrastructure 372,097 Solid Waste—Improvements&Vehicle Replacement 319,952 Emergency Services Vehicle Replacements 801,802 Sheriff vehicle replacements 107,104 Communication System Improvements 150,000 Blackwood Farm Park Construction 2,935,000 Parks—Renovations&Easements 420,486 Sportsplex—Maintenance &Repairs 698,304 Land Banking—Affordable Housing 628,313 Orange County Schools—Recurring Capital Projects 1,200,300 Orange County Schools—Maintenance&Improvements 651,586 Chapel Hill-Carrboro Schools—Recurring Capital Projects 1,799,700 Chapel Hill-Carrboro Schools—IT Infrastructure 1,519,261 Chapel Hill-Carrboro Schools—Supplemental Deferred Maintenance 631,740 Chapel Hill-Carrboro Schools—Various Maintenance&Improvements 1,808,454 Total Project Costs $18,675,802 THE REFUNDED OBLIGATIONS Refunded 2014 Installment Financing Agreement. A portion of the proceeds from the sale of the 2021A Bonds will be used to prepay amounts outstanding under the Refunded 2014 Installment Financing. [The Refunded 2014 Installment Financing Agreement is to be prepaid on the date the 2021 Bonds are issued.] The Refunded SRL. A portion of the proceeds from the sale of the 2021A Bonds will be used to prepay the Refunded SRL. The Refunded SRL is to be prepaid on the date the 2021 Bonds are issued. The Refunded 2012 Bonds. A portion of the proceeds from the sale of the 2021B Bonds will be used to refund the Refunded 2012 Bonds in accordance with the provisions of the Refunded 2012 Bonds. To accomplish the refunding of the Refunded 2012 Bonds, a portion of the proceeds from the sale of the 2021B Bonds will be deposited into an escrow fund(the "Escrow Fund")to be established pursuant to an Escrow Agreement dated as of June 1,2021,between the County and The Bank of New York Mellon Trust Company,N.A., as escrow agent(the"Escrow Agent"). Amounts deposited into the Escrow Fund will be invested in defeasance obligations (the "Escrow Securities"), the maturing principal and interest of which 10 155 will provide funds sufficient to pay,when and as due,respectively,the interest on the Refunded 2012 Bonds until October 1, 2022, and the maturing principal and redemption price of 100% of the Refunded 2012 Bonds on October 1, 2022. See "VERIFICATION" herein. The Escrow Agent will be given irrevocable instructions to call the Refunded 2012 Bonds for prepayment on October 1, 2022. The beneficial owners of the 2021 Bonds will have no rights, security or interest in and to the Escrow Fund whatsoever. The accuracy of the mathematical computations of the adequacy of the maturing principal of and interest on the Escrow Securities to pay interest on the Refunded 2012 Bonds through October 1,2022,and the principal amount of the Refunded 2012 Bonds on October 1, 2022, will be verified by Bingham Arbitrage Rebate Services, Inc. Such verification will be based, among other things, on mathematical computations supplied by the Underwriters. THE MORTGAGED PROPERTY The 2021 Bonds and any Additional Bonds will be secured by the Mortgaged Property. The Mortgaged Property includes the County's Whitted Building, Blackwood Farm Park, Culbreth Middle School and Orange County Library(all as described below),and the associated real estate. The"Mortgaged Property" is defined in the Deed of Trust to include these facilities and real estate, and any additional improvements to the facilities and real estate,but generally does not include any equipment or furnishings associated with the property. "fitted Building. The Whitted Building is a three-story building consisting of approximately square feet on an approximately _-acre site located at 300 West Tryon Street in Hillsborough, North Carolina. The Whitted Building houses certain of the County's administrative offices, Board of Commissioners' meeting space and event space. A portion of the proceeds of the 2021A Bonds will be used to make certain improvements to the Whitted Building, including . The County estimates the insured value of this building (not including the equipment associated with the building, which is generally not part of the Mortgaged Property)to be approximately$_million. Blackwood Farm Park.Blackwood Farm Park consists of approximately 152 acres of land located at 4215 N.C. Highway 86 South in Hillsborough,North Carolina. The park includes a historic farmhouse, barn,smokehouse, corncrib and other outbuildings,a picnic shelter,restrooms,4 miles of hiking trails,and fishing pond. A portion of the proceeds of the 2021A Bonds will be used to construct certain improvements at Blackwood Farm Park, including . The County estimates the insured value of this property (not including the equipment associated with the property, which is generally not part of the Mortgaged Property)to be approximately$ million. Culbreth Middle School. Culbreth Middle School is a one-story building consisting of approximately square feet on an approximately_-acre site located at 225 Culbreth Road in Chapel Hill,North Carolina. The County estimates the insured value of this building(not including the equipment associated with the building, which is generally not part of the Mortgaged Property) to be approximately $ million. Orange County Library. The Orange County Library Main Branch is a two-story building consisting of approximately square feet on an approximately -acre site located at 137 W.Margaret Lane in Hillsborough, North Carolina. The County estimates the insured value of this building (not including the equipment associated with the building, which is generally not part of the Mortgaged Property)to be approximately$ million. NO OTHER FACILITY OR IMPROVEMENT FINANCED OR REFINANCED WITH THE 2021 BONDS WILL BE INCLUDED AS PART OF THE MORTGAGED PROPERTY. 11 156 The Trust Agreement and the Deed of Trust generally allow the County to direct the release of any portion of the Mortgaged Property, in the County's discretion, so long as the taxable, appraised or insured value of the property remaining subject to the lien of the Deed of Trust following such release is at least equal to 50% of the principal amount of the Outstanding Bonds. See "THE DEED OF TRUST—No Transfers; Releases; Grants of Easements"in Appendix C hereto. ESTIMATED SOURCES AND USES OF FUNDS The County estimates the sources and uses of funds for the plan of finance to be as follows: SOURCES: Par Amount of the 2021 Bonds Net Original Issue Premium/Discount TOTAL SOURCES OF FUNDS USES: Deposit to Project Fund Refunding of 2012 Bonds Prepayment of 2014 Contract Prepayment of State Revolving Loan Costs of Issuance' TOTAL USES OF FUNDS ' Includes legal fees,underwriters'compensation,financial advisor fees,rating agency fees,fees and expenses of the Trustee and miscellaneous fees and expenses. 12 157 TOTAL ANNUAL DEBT SERVICE REQUIREMENTS The following table sets forth for each Fiscal Year of the County, the debt service required to be paid by the County under the Trust Agreement with respect to the 2021 Bonds. 2021A Bonds 2021B Bonds Fiscal Year Total Principal Total Principal (Ended June 30) and Interest and Interest Total 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 TOTAL' Note:Totals may not foot due to rounding. CERTAIN RISKS OF 2021 BOND OWNERS INSUFFICIENCY OF PAYMENTS If the County fails to pay any payments on the Bonds as the same become due or if another event of default occurs under the Trust Agreement, the Trustee may accelerate the principal with respect to the Bonds, direct the Deed of Trust Trustee to foreclose on the Mortgaged Property under the Deed of Trust, take possession of the Mortgaged Property and attempt to dispose of the Mortgaged Property. See "THE DEED OF TRUST" in Appendix C hereto. Zoning restrictions and other land use factors relating to the Mortgaged Property may limit the use of the Mortgaged Property and may affect the proceeds obtained on any disposition by the Deed of Trust Trustee. THERE CAN BE NO ASSURANCE THAT THE MONEYS AVAILABLE IN THE FUNDS AND ACCOUNTS HELD BY THE TRUSTEE AND THE PROCEEDS OF ANY SUCH DISPOSITION OF THE MORTGAGED PROPERTY WILL BE SUFFICIENT TO PROVIDE FOR THE PAYMENT OF THE PRINCIPAL AND INTEREST WITH RESPECT TO THE BONDS. SECTION 160A-20(f)OF THE GENERAL STATUTES OF NORTH CAROLINA PROVIDES THAT NO DEFICIENCY JUDGMENT MAY BE RENDERED AGAINST THE COUNTY FOR ANY AMOUNTS THAT MAY BE OWED BY THE COUNTY UNDER THE TRUST AGREEMENT,AND THE TAXING POWER OF THE COUNTY IS NOT AND MAY NOT BE PLEDGED DIRECTLY OR INDIRECTLY OR CONTINGENTLY TO SECURE ANY MONEYS OWING BY THE COUNTY UNDER THE TRUST AGREEMENT. THE 13 158 REMEDIES AFFORDED TO THE TRUSTEE AND THE OWNERS OF THE BONDS ON A DEFAULT BY THE COUNTY UNDER THE TRUST AGREEMENT ARE LIMITED TO THOSE OF A SECURED PARTY UNDER THE LAWS OF THE STATE OF NORTH CAROLINA,INCLUDING FORECLOSING ON THE DEED OF TRUST. RISK OF NONAPPROPRIATION The appropriation of moneys to make payments pursuant to the Trust Agreement is within the sole discretion of the Board of Commissioners of the County. If the Board of Commissioners fails to appropriate such moneys, the only sources of payment for the Bonds will be the moneys, if any, available in certain funds and accounts held by the Trustee under the Trust Agreement and the proceeds of any attempted foreclosure on the County's interest in the Mortgaged Property under the Deed of Trust. VALUE OF COLLATERAL The County's estimated value of the Mortgaged Property (as further described under the caption above "THE PLAN OF FINANCE — The Mortgaged Property") is at least $ million, which is approximately [_]* of the aggregate principal amount of the 2021 Bonds. This value is based in part on the County's own estimates, and the County has not commissioned or obtained any appraisals for the purpose of this valuation. The amount of proceeds received through foreclosure of the County's interest in the Mortgaged Property may be affected by a number of factors, including (1) the costs and expenses in enforcing the lien and security, (2) the condition of the Mortgaged Property, (3) the occurrence of any damage,destruction,loss or theft of the Mortgaged Property which is not repaired or replaced and for which there are not received from insurance policies or appropriated moneys from any risk management program, (4) problems relating to the paucity of alternative uses of the facilities arising from their design, zoning restrictions, use restrictions, easements and encumbrances on the Mortgaged Property and (5) environmental problems and risks with respect to the Mortgaged Property. The Trust Agreement permits the issuance of Additional Bonds without regard to the value of the Mortgaged Property, and the Deed of Trust allows for up to $ million in principal amount of Bonds to be secured thereby. To the extent that Additional Bonds are issued and no additional property is subject to the Modified Deed of Trust,the value of the collateral as a percentage of the outstanding principal amount of Bonds should be expected to decrease,which decrease may be material. NO REPRESENTATION IS MADE AS TO THE VALUE OF,OR THE AMOUNT OF PROCEEDS THAT MAY BE REALIZED FROM, THE COUNTY'S INTEREST IN THE MORTGAGED PROPERTY IN THE EVENT OF A FORECLOSURE. UNINSURED CASUALTY If all or any part of the Mortgaged Property is damaged or destroyed by any casualty or taken by any governmental authority,the County is obligated under the Trust Agreement to apply any Net Proceeds from insurance or condemnation (1)to repair, restore or rebuild the Mortgaged Property or(2)to provide for the redemption or defeasance of all, but not less than all, of the Bonds. If the County applies any Net Proceeds to repair, restore or rebuild the Mortgaged Property and such Net Proceeds are not sufficient to repair,restore or rebuild the Mortgaged Property to its condition prior to such damage,destruction or taking, then the value of the Mortgaged Property would be reduced. The Trust Agreement requires that certain insurance be maintained with respect to the Mortgaged Property. Such insurance may not,however, cover all perils to which the Mortgaged Property is subject. *Preliminary,subject to change. 14 159 OUTSTANDING GENERAL OBLIGATION DEBT OF THE COUNTY The County has issued general obligation bonds and may issue general obligation bonds and notes in the future. The County will pledge its faith and credit and taxing power to the payment of its general obligation bonds and notes to be issued. See Appendix A,"THE COUNTY—DEBT INFORMATION" attached hereto. FUNDS WHICH MAY OTHERWISE BE AVAILABLE TO PAY BOND PAYMENTS OR ADDITIONAL PAYMENTS OR TO MAKE OTHER PAYMENTS TO BE MADE BY THE COUNTY UNDER THE TRUST AGREEMENT MAY BE SUBJECT TO SUCH FAITH AND CREDIT PLEDGE BY THE COUNTY AND THEREFORE MAY BE REQUIRED TO BE APPLIED TO THE PAYMENT OF ITS GENERAL OBLIGATION INDEBTEDNESS. ENVIRONMENTAL RISKS [A Phase I environmental site assessment was performed on the site of the Whitted Building in which revealed no recognized environmental conditions.][The site of the Whiffed Building has been owned by the County since .] [A Phase I environmental site assessment was performed on the site of the Blackwood Farm Park in , which revealed no recognized environmental conditions.][The site of the Blackwood Farm Park has been owned by the County since .] [A Phase I environmental site assessment was performed on the site of Culbreth Middle School in which revealed no recognized environmental conditions.][The site of Culbreth Middle School has been owned by the County since .] [A Phase I environmental site assessment was performed on the site of the Orange County Library in , which revealed no recognized environmental conditions.][The site of the Orange County Library has been owned by the County since .] [The County is not aware of any material environmental contamination on such sites.] Undiscovered or future environmental contamination could have a material adverse effect on the value of the Mortgaged Property;however,the County is required under the Trust Agreement to undertake whatever environmental remediation may be required by law. ADDITIONAL BONDS The County may execute and deliver Additional Bonds under the Trust Agreement that are secured by the Mortgaged Property, thereby diluting the relative value of the collateral with respect to the 2021 Bonds. In addition, remedies under the Trust Agreement and the Deed of Trust are controlled by the Majority Owners. Upon issuance of the 2021 Bonds, the Owners of the 2021 Bonds will be Majority Owners,but may not continue to be the Majority Owners if Additional Bonds are issued. BANKRUPTCY Under current North Carolina law, a local governmental unit such as the County may not file for bankruptcy protection without(1)the consent of the LGC and(2)the satisfaction of the requirements of§ 109(c) of the United States Bankruptcy Code. If the County were to initiate bankruptcy proceedings with the consent of the LGC and satisfy the requirements of 11 U.S.C. § 109(c), the bankruptcy proceedings could have material and adverse effects on holders of the 2021 Bonds, including (a) delay in enforcement of their remedies, (b) subordination of their claims to claims of those supplying goods and services to the County after the initiation of bankruptcy proceedings and to the administrative expenses of bankruptcy 15 160 proceedings and (c) imposition without their consent of a plan of reorganization reducing or delaying payment of the 2021 Bonds. The effect of the other provisions of the United States Bankruptcy Code on the rights and remedies of the holders of the 2021 Bonds cannot be predicted and may be affected significantly by judicial interpretation, general principles of equity(regardless of whether considered in a proceeding in equity or at law)and considerations of public policy. CYBERSECURITY The County, like many other large public and private entities, relies on a large and complex technology environment to conduct its operations, and faces multiple cybersecurity threats including, but not limited to, hacking, phishing, viruses, malware and other attacks on its computing and other digital networks and systems (collectively, "Systems Technology"). As a recipient and provider of personal, private, or sensitive information, the County may be the target of cybersecurity incidents that could result in adverse consequences to the County and its Systems Technology,requiring a response action to mitigate the consequences. Cybersecurity incidents could result from unintentional events, or from deliberate attacks by unauthorized entities or individuals attempting to gain access to the County's System Technology for the purposes of misappropriating assets or information or causing operational disruption and damage. To mitigate the risk of business operations impact and/or damage from cybersecurity incidents or cyber- attacks,the County invests in multiple forms of cybersecurity and operational safeguards. While the County's cybersecurity and operational safeguards are periodically tested,no assurances can be given by the County that such measures will ensure against other cybersecurity threats and attacks. Cybersecurity breaches could cause material disruption to the County's finances or operations. The costs of remedying any such damage or protecting against future attacks could be substantial. Further, cybersecurity breaches could expose the County to material litigation and other legal risks, which could cause the County to incur material costs related to such legal claims or proceedings. CLIMATE CHANGE The County is susceptible to the effects of extreme weather events and natural disasters, including floods,droughts and hurricanes,and has experienced severe weather events in the past. These effects may be amplified by a prolonged global temperature increase over the next several decades(commonly referred to as"climate change"). No assurances can be given that a future extreme weather event driven by climate change will not adversely affect the operations of the County. POTENTIAL IMPACT OF COVID-19 The continued spread of COVID-19 has impacted and will continue to impact global financial markets, national, State, and local economies, and areas of transportation. Management of the County is closely monitoring the situation. The County cannot predict the ultimate effects of COVID-19 on (i) the financial and operating condition of the County or(ii)the investment in the 2021 Bonds. See Appendix A, "THE COUNTY—RECENT DEVELOPMENTS RELATED TO COVID-19." 16 161 THE COUNTY GENERAL The County is located in the north-central portion of the State. The Town of Chapel Hill is the largest municipality in the County and is the home of The University of North Carolina at Chapel Hill. See Appendix A for a description of the County. FINANCIAL INFORMATION The financial statements of the County have been audited by certified public accountants for the fiscal year ended June 30, 2020. Excerpts from the financial statements of the County for the fiscal year ended June 30, 2020 are available in Appendix B hereto. Copies of the complete financial statements containing the unqualified report of the independent certified public accountants are available in the office of Gary Donaldson, Chief Financial Officer,200 South Cameron St.,Hillsborough,North Carolina 27278. LEGAL MATTERS LITIGATION To the best of the knowledge of the County, no litigation is now pending or threatened against or affecting the County which seeks to restrain or enjoin the authorization, execution or delivery of the 2021 Bonds,the Trust Agreement or the Deed of Trust,or which contests the County's creation, organization or corporate existence, or the title of any of the present officers thereof to their respective offices or the authority or proceedings for the County's authorization, execution and delivery of the 2021 Bonds, the Trust Agreement or the Deed of Trust, or the County's authority to carry out its obligations thereunder or which would have a material adverse impact on the County's condition, financial or otherwise. OPINIONS OF COUNSEL Legal matters related to the execution, sale and delivery of the 2021 Bonds are subject to the approval of Sanford Holshouser LLP. Certain legal matters will be passed upon for the County by its counsel, John L. Roberts, Esq., and for the Underwriters by their counsel, McGuireWoods LLP. The opinion of Sanford Holshouser LLP, as Bond Counsel, substantially in the form set forth in Appendix D hereto,will be delivered at the time of the delivery of the 2021 Bonds. Bond Counsel's approving legal opinion expresses Bond Counsel's professional judgment as to the legal issues explicitly addressed in the opinion. By rendering a legal opinion, an opinion giver does not become an insurer or guarantor of that expression of professional judgment,of the transaction opined upon, or of the future performance of parties to the transaction. Additionally, the rendering of an opinion does not guarantee the outcome of any legal dispute that may arise out of the transaction, and a bond opinion is not a statement (either expressly or by implication) concerning the marketability, value or likelihood of payment of the bonds. Bond Counsel has not been engaged to investigate the County's operations or condition or the County's ability to provide for payments on the 2021 Bonds. Bond Counsel will express no opinion(1)as to the County's financial condition or its ability to provide for payments on the 2021 Bonds,or(2)as to the accuracy, completeness or fairness of any information that may have been relied on by anyone in making a decision to purchase 2021 Bonds,including this Official Statement. Bond Counsel has,however,provided the sample legal opinion form that appears as Appendix D, prepared the document summaries that appear as Appendix C,and approved the descriptions in this Official Statement of(1)the terms of the 2021 Bonds 17 162 and the financing documents and (2) its legal opinion. In this transaction, Bond Counsel serves only as bond counsel to the County. [Bond Counsel to Update] TAX TREATMENT OPINION OF BOND COUNSEL In the opinion of Sanford Holshouser LLP,Carrboro,North Carolina,Bond Counsel for the County ("Bond Counsel"), under existing law, interest on the 2021 Bonds paid by the County (1) will not be included in gross income for federal income tax purposes, (2)will not be a specific item of tax preference for purposes of the federal alternative minimum income tax, and(3)will be exempt from existing State of North Carolina income taxes. The proposed form of Bond Counsel's opinion is attached as Appendix D. Bond Counsel's opinion does not address the tax-exempt status of payments on the 2021 Bonds derived from parties other than the County(for example,payments derived from proceeds of a foreclosure on the Mortgaged Property), even if those payments are denominated as interest with respect to the 2021 Bonds. Bond Counsel will give its opinion in reliance upon certifications by County representatives and others as to certain facts relevant to the opinion. The County has covenanted to comply with the provisions of the Internal Revenue Code of 1986, as amended(the "Code"),regarding, among other matters, the use, expenditure and investment of the proceeds derived from the sale of the 2021 Bonds and the timely payment to the United States of any arbitrage profit with respect to the 2021 Bonds. The County's failure to comply with its covenants could cause interest on the 2021 Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of the 2021 Bonds. DISCOUNT BONDS The initial public offering prices of the 2021 Bonds maturing on October 1, 20_through October 1,20,inclusive (collectively,the"Discount Bonds"), are less than the amounts payable at maturity. An amount not less than the difference between the initial offering prices to the public(excluding bond houses, brokers or similar persons or organizations acting in the capacity of underwriters, placement agents, wholesalers or other intermediaries)of the Discount Bonds and the amounts payable at maturity constitutes original issue discount. Under existing federal income tax law and regulations,the original issue discount on a Discount Bond is interest not includable in the gross income of an owner who purchases such Discount Bond in the original offering at the initial public offering price thereof and holds it to maturity, and such owner will not realize taxable gain upon payment of such Discount Bond at maturity. Owners who purchase Discount Bonds at a price other than the initial offering price or who do not purchase Discount Bonds in the initial public offering should consult their tax advisors with respect to the consequences of the ownership of such Discount Bonds. An owner who purchases a Discount Bond in the initial offering at the initial offering price and holds such Discount Bond to maturity is deemed under existing federal tax laws and regulations to accrue original issue discount on a constant yield basis under Section 1288 of the Code from the date of original issue. An owner's adjusted basis in a Discount Bond is increased by accrued original issue discount for purposes of determining gain or loss on sale, exchange or other disposition of such Discount Bond. Accrued original issue discount may be taken into account as an increase in the amount of tax-exempt interest received or deemed to have been received for purposes of determining various other tax consequences of owning a Discount Bond, including in the calculation of adjusted current earnings of corporations for purposes of computing the alternative minimum tax imposed by the Code on corporations, even though there will not be a corresponding cash payment. 18 163 Bond Counsel's opinion will not address issues relating to the treatment of original issue discounts on Discount Bonds. Owners and prospective purchasers of Discount Bonds should consult their own tax advisors regarding the calculation of accrued original issue discount for federal income tax purposes and any North Carolina or other state and local tax consequences in connection with the ownership or disposition of Discount Bonds. PREMIUM BONDS The initial public offering prices of the 2021 Bonds maturing on October 1, 20_through October 1, 20_, inclusive (collectively, the "Premium Bonds"), are greater than the amounts payable at maturity. The difference between (a) the initial offering prices to the public (excluding bond houses, brokers or similar persons or organizations acting in the capacity of underwriters, placement agents, wholesalers or other intermediaries) at which a substantial amount of each maturity of the Premium Bonds is sold and(b) the principal amount payable at maturity of such Premium Bonds constitutes original issue premium. In general, an owner of a Premium Bond must amortize the bond premium over the remaining term of the Premium Bond based on the owner's yield over the remaining term of the Premium Bond,determined based on constant yield principles(in certain cases involving a Premium Bond callable prior to its stated maturity date,the amortization period and yield may be required to be determined on the basis of an earlier call date that results in the lowest yield on such Premium Bond). An owner of a Premium Bond must amortize the bond premium by offsetting the qualified stated interest allocable to each interest accrual period under the owner's regular method of accounting against the bond premium allocable to that period and subtract such bond premium from the owner's basis in such Premium Bond. If the bond premium allocable to an accrual period exceeds the qualified stated interest allocable to that accrual period, the excess is a nondeductible loss. Under certain circumstances, the owner of a Premium Bond may realize a taxable gain upon disposition of the Premium Bond even though it is sold or redeemed for an amount less than or equal to the owner's original acquisition cost. Bond Counsel's opinion will not specifically address any issues relating to the treatment of premium paid on, or attributable to,Premium Bonds. Owners and prospective purchasers of Premium Bonds should consult their own tax advisors regarding the treatment of bond premium for federal income tax purposes and any North Carolina or other state and local tax consequences in connection with receipt of bond premium or otherwise with respect to the ownership and disposition of Premium Bonds. OTHER TAX CONSEQUENCES Ownership or transfer of, or the accrual or receipt of interest on, the 2021 Bonds may result in collateral federal, State of North Carolina, and other state or local tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, certain foreign corporations doing business in the United States,certain S corporations with excess passive income, individual recipients of Social Security or Railroad Retirement benefits, taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations, taxpayers who may be eligible for the federal earned income tax credit, and taxpayers subject to franchise, estate, inheritance, gift or capital gains taxes. Owners and prospective purchasers of the 2021 Bonds should consult their tax advisors as to any such possible tax consequences. Except to the extent covered in its legal opinion,Bond Counsel expresses no opinion regarding any such collateral tax consequences. Interest on the 2021 Bonds may or may not be subject to state or local taxation in jurisdictions other than North Carolina. Owners and prospective purchasers of the 2021 Bonds should consult their own tax advisors as to the status of interest on the 2021 Bonds under the tax laws of any such jurisdiction other than North Carolina. Bond Counsel will express no opinion as to any such matters. 19 164 No assurance can be given that future legislation, including amendments to the Code or interpretations thereof, if enacted into law, or certain litigation or judicial decisions, if upheld, will not contain provisions or produce results which could, directly or indirectly, reduce the benefit of the excludability of interest on the 2021 Bonds from gross income for federal income tax purposes. The Internal Revenue Service (the "Service") has an ongoing program of auditing tax-exempt obligations to determine whether, in the view of the Service, interest on such tax-exempt obligations is includable in the gross income of the owners thereof for federal income tax purposes. No assurances can be given as to whether or not the Service will commence an audit of the 2021 Bonds. Interest paid on tax-exempt obligations, such as the 2021 Bonds, will be subject to information reporting in a manner similar to interest paid on taxable obligations. Although such reporting requirement does not, in and of itself, affect the excludability of interest with respect to the 2021 Bonds from gross income for federal income tax purposes, such reporting requirement causes the payment of interest with respect to the 2021 Bonds to be subject to backup withholding if such interest is paid to beneficial owners who (a) are not"exempt recipients," and(b) either fail to provide certain identifying information(such as the beneficial owner's taxpayer identification number) in the required manner or have been identified by the Service as having failed to report all interest and dividends required to be shown on their income tax returns. Generally, individuals are not exempt recipients, whereas corporations and certain other entities generally are exempt recipients. Amounts withheld under the backup withholding rules from a payment to a beneficial owner would be allowed as a refund or credit against such beneficial owner's federal income tax liability provided the required information is furnished to the Service. CONTINUING DISCLOSURE OBLIGATION In accordance with the requirements of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 ("Rule 15c2-12"), the County has undertaken in the Trust Agreement to provide, or cause to be provided through the Trustee, to the Municipal Securities Rulemaking Board(the"MSRB"): (1) by not later than seven months after the end of each fiscal year, beginning with the fiscal year ending June 30, 2021,the audited financial statements of the County 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 then available, unaudited financial statements of the County for such fiscal year to be replaced subsequently by audited financial statements of the County to be delivered within 15 days after such audited financial statements become available for distribution; (2) by not later than seven months after the end of each fiscal year, beginning with the fiscal year ending June 30, 2021, the financial and statistical data as of a date not earlier than the end of the preceding fiscal year for the type of information included under the captions "THE COUNTY—DEBT INFORMATION"and"—TAX INFORMATION"in Appendix A relating to the 2021 Bonds(excluding any information on overlapping or underlying debt)to the extent such items are not included in the audited financial statements referred to in(1) above; (3) 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 2021 Bonds: (a) principal and interest payment delinquencies; (b) non-payment related defaults,if material; 20 165 (c) unscheduled draws on debt service reserves reflecting financial difficulties; (d) unscheduled draws on credit enhancements reflecting financial difficulties; (e) substitution of credit or liquidity providers, or their failure to perform; (f) 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 2021A Bonds, or other material events affecting the tax status of the 2021A Bonds; (g) modifications to rights of holders of the 2021 Bonds, if material; (h) calls for redemption of 2021 Bonds (other than calls pursuant to sinking fund redemption), if material, and tender offers; (i) defeasances; (j) release, substitution, or sale of property securing repayment of the 2021 Bonds, if material; (k) rating changes; (1) bankruptcy, insolvency, receivership or similar proceedings related to the County or any other person or entity that may at any time become legally obligated to make payments on the 2021 Bonds(collectively,the"Obligated Persons"); (m) 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; (n) appointment of a successor or additional trustee or the change of name of a trustee, if material; (o) incurrence of a financial obligation of the County, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the County or any Obligated Person, any of which affect security holders, if material; and (p) default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the County,any of which reflect financial difficulties; and (4) in a timely manner, notice of a failure of the County to provide required annual financial information described in(1) or(2) above on or before the date specified. For purposes of the foregoing, "financial obligation" means a (a) debt obligation, (b) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing 21 166 or planned debt obligation,or(c)a guarantee of(a)or(b). The term"financial obligation"shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with Rule 15c2-12. For the purposes of the event identified in subparagraph(1)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 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. The County shall provide the document 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 described above by transmitting the documents referred to above to any entity and by any method authorized by the U.S. Securities and Exchange Commission. At present, Section 159-34 of the General Statutes of North Carolina requires that the County's financial statements be prepared in accordance with generally accepted accounting principles and that they be audited in accordance with generally accepted auditing standards. The County has acknowledged in the Trust Agreement that its undertaking pursuant to Rule 15c2- 12 is intended to be for the benefit of the registered owners of the 2021 Bonds and is enforceable by the Trustee or by any registered owner of the 2021 Bonds. THE RIGHT TO ENFORCE THE PROVISIONS OF THE COUNTY'S RULE 15C2-12 UNDERTAKINGS IS LIMITED TO A RIGHT TO OBTAIN SPECIFIC PERFORMANCE OF THE COUNTY'S OBLIGATIONS AND A FAILURE BY THE COUNTY TO COMPLY WITH ITS RULE 15C2-12 UNDERTAKINGS WILL NOT BE AN EVENT OF DEFAULT UNDER THE TRUST AGREEMENT AND WILL NOT RESULT IN ACCELERATION OF THE INSTALLMENT PAYMENTS. The County may modify from time to time,consistent with Rule 15c2-12,the information provided or the format of the presentation of such information,to the extent necessary or appropriate in the judgment of the County; provided that(1) 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; (2)the information to be provided, as modified,would have complied with the requirements of the Rule 15c2-12 as of the date of this Official Statement,after taking into account any amendments or interpretations of the Rule 15c2-12, as well as any changes in circumstances; and (3) any such modification does not materially impair the interest of the Owners or the beneficial owners, as determined by the Trustee or nationally recognized bond counsel or by the approving vote of the Owners of a majority in principal amount of the 2021 Bonds. Any annual financial information containing modified operating data or financial information will explain,in narrative form,the reasons for the modification and the impact of the change in the type of operating data or financial information being provided. The County's Rule 15c2-12 undertakings will terminate on payment, or provision having been made for payment in a manner consistent with the Rule 15c2-12, in full of the principal and interest with respect to the 2021 Bonds. 22 167 THE COUNTY'S CONTINUING DISCLOSURE COMPLIANCE [To be reviewed/confirmed] During the past five years, the County has not failed to comply in all material respects with the terms of its prior undertakings under Rule 15c2-12, except as described in the following paragraphs. The County had certain disclosure information that was due to be posted by January 31,2017,with respect to the fiscal year ended June 30, 2016. At that deadline, however, the County's CAFR(including its audit) for the fiscal year ended June 30, 2016, was not yet available. Prior to the deadline, the County posted certain unaudited financial statements as called for by the terms of its continuing disclosure undertakings. In this posting, however, by oversight, the County did not post its adopted budget or the supplemental financial information as required by its continuing disclosure undertakings. The County posted such required supplemental financial information in March 2017 and its adopted budget in October 2017. Additionally,for some years,while the County timely posted its annual disclosures on EMMA,such annual disclosures were not always properly linked to each of the County's CUSIP numbers. In April 2019,the County determined that it had in some circumstances inadvertently failed to post on the EMMA system information regarding its approved County budget for the fiscal year ended June 30, 2019,as required by some of the County's continuing disclosure obligations,although the County's CAFR included some budget information. Upon becoming aware of this issue, the County promptly moved to properly link the required budget information to all relevant CUSIP numbers. The County has filed notices of failure to file the items described above as required by Rule 15c2- 12,which describe the occasions of non-compliance and corrected compliance. The County is not aware of any other occasions in which it was in material noncompliance with any of its continuing disclosure undertakings.The County has not knowingly failed to comply with its prior continuing disclosure undertakings. The County believes that at this point, it has filed all the financial information that its previous commitments require,and that all required financial information is posted with regard to all relevant CUSIP numbers. UNDERWRITING The Underwriters have agreed under the terms of a Bond Purchase Agreement (the "Purchase Agreement")to purchase all of the 2021 Bonds,if any of the 2021 Bonds are to be purchased,at a purchase price equal to 100% of the principal amount of the 2021 Bonds, plus/less net original issue premium/discount of$ , less an Underwriters' discount of$ . The Underwriters' obligation to purchase the 2021 Bonds is subject to certain terms and conditions set forth in the Purchase Agreement. FHN Financial Capital Markets is a division of First Horizon Bank and First Horizon Advisors, Inc.,is a wholly owned subsidiary of First Horizon Bank. FHN Financial Capital Markets has entered into a distribution agreement with First Horizon Advisors, Inc., for the distribution of the offered Bonds at the original issue prices. Such arrangement generally provides that FHN Financial Capital Markets will share a portion of its underwriting compensation or selling concession with First Horizon Advisors,Inc. The Underwriters may offer and sell the 2021 Bonds to certain dealers(including dealers depositing the 2021 Bonds into investment trusts) and others at prices lower than the initial public offering prices stated on the inside front cover page hereof. The public offering prices may be changed from time to time by the Underwriters. 23 168 RATINGS Moody's Investors Service, Inc., S&P Global Ratings and Fitch Ratings Inc. have assigned ratings of"[_]," "[_]" and "[_]," respectively, to the 2021 Bonds. These ratings reflect only the view of such rating agencies, and an explanation of the significance of such ratings may be obtained from such rating agencies. Certain information and materials not included in this Official Statement were furnished to such rating agencies. There is no assurance that such ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely if, in the judgment of such rating agencies,circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the 2021 Bonds. MISCELLANEOUS All quotations from and summaries and explanations of the Trust Agreement and the Deed of Trust contained herein or in Appendix C hereto do not purport to be complete, and reference is made to such documents for full and complete statements of their respective provisions. The Appendices attached hereto are a part of this Official Statement. The information contained in this Official Statement has been compiled or prepared from information obtained from the County and other sources deemed to be reliable and,although not guaranteed as to completeness or accuracy, is believed to be correct as of this date. Any statements involving matters of opinion,whether or not expressly so stated, are intended as such and not as representations of fact. 24 169 APPENDIX A THE COUNTY 170 APPENDIX B MANAGEMENT'S DISCUSSION AND ANALYSIS AND THE BASIC FINANCIAL STATEMENTS OF ORANGE COUNTY,NORTH CAROLINA 171 [THIS PAGE INTENTIONALLY LEFT BLANK] 172 Management's Discussion and Analysis The Management's Discussion and Analysis of the financial activities of the County, lifted from the Comprehensive Annual Financial Report for the County for the fiscal year ended June 30, 2020, is included in this Appendix. Management's Discussion and Analysis provides an objective and easily readable short and long-term analysis of the County's financial activities based on currently known facts, decisions or conditions. Management's Discussion and Analysis is not a required part of the Basic Financial Statements but is supplementary information required by the Governmental Accounting Standards Board. The independent auditors of the County have applied certain limited procedures, which consist primarily of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, they did not audit this information and did not express an opinion on it. B-1 173 Financial Information The financial statements of the County have been audited by certified public accountants for the fiscal year ended June 30, 2020. Copies of these financial statements containing the unqualified report of the independent certified public accountant are available in the office of the Chief Financial Officer at 200 South Cameron St., Hillsborough,North Carolina 27278. The following financial statements are the Basic Financial Statements of the County, the notes thereto and certain required supplementary information, lifted from the Comprehensive Annual Financial Report of the County for the fiscal year ended June 30, 2020. B-2 174 APPENDIX C SUMMARY OF PRINCIPAL LEGAL DOCUMENTS 175 [THIS PAGE INTENTIONALLY LEFT BLANK] 176 APPENDIX D FORM OF OPINION OF BOND COUNSEL 177 [THIS PAGE INTENTIONALLY LEFT BLANK] 178 APPENDIX E BOOK-ENTRY ONLY SYSTEM 179 [THIS PAGE INTENTIONALLY LEFT BLANK] 180 APPENDIX E BOOK-ENTRY ONLY SYSTEM Beneficial ownership interests in the 2021 Bonds will be available only in a book-entry system. The actual purchasers of the 2021 Bonds (the `Beneficial Owners") will not receive physical certificates representing their interests in such 2021 Bonds purchased. So long as The Depository Trust Company ("DTC"), New York, New York, or its nominee is the registered owner of the 2021 Bonds, references in this Official Statement to the Owners of the 2021 Bonds shall mean DTC or its nominee and shall not mean the Beneficial Owners of the 2021 Bonds. The Trust Agreement contains provisions applicable to periods when DTC or its nominee is not the registered owner. The following description of DTC, its procedures and record keeping with respect to beneficial ownership interests in the 2021 Bonds, payment of interest and other payments with respect to the 2021 Bonds to DTC Participants or to beneficial owners, confirmation and transfer of beneficial ownership interests in the 2021 Bonds and/or other transactions by and between DTC,DTC Participants and beneficial owners is based on information furnished by DTC. DTC will act as securities depository for the 2021 Bonds. The 2021 Bonds will be registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered certificate in the aggregate principal amount of each maturity of the 2021 Bonds will be deposited with DTC or its designee. So long as Cede&Co. is the registered owner of the 2021 Bonds, as DTC's Partnership nominee, reference herein to the Owners or registered owners of the 2021 Bonds shall mean Cede & Co. and shall not mean the beneficial owners of the 2021 Bonds. DTC,the world's largest securities depository,is a limited-purpose trust company organized under the New York Banking Law,a"banking organization"within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a"clearing agency"registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers,banks,trust companies, clearing corporations and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust&Clearing Corporation("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation,Fixed Income Clearing Corporation and Emerging Markets Clearing Corporation as well as by the New York Stock Exchange, Inc.,the American Stock Exchange,and the National Association of Securities Dealers,Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers,banks trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly(the "Indirect Participants" and collectively with the Direct Participants, the "Participants"). DTC has a Standard&Poor's rating of AA+. The DTC rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtce.com. Purchases of 2021 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for 2021 Bonds on DTC's records. The ownership interest of each actual E-1 181 purchaser of the 2021 Bonds (the `Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants'records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction,as well as periodic statements of their holdings,from the Direct or Indirect Participants through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the 2021 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners of such 2021 Bonds. Beneficial Owners will not receive certificates representing their ownership interests in 2021 Bonds, except in the event that use of the book-entry system for such 2021 Bonds is discontinued. To facilitate subsequent transfers, all 2021 Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. or such name as may be requested by an authorized representative of DTC. The deposit of 2021 Bonds with DTC and their registration in the name of Cede&Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the identities of the actual Beneficial Owners of the 2021 Bonds;DTC's records reflect only the identity of the Direct Participants to whose accounts such 2021 Bonds are credited,which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the 2021 Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to such 2021 Bonds, such as redemptions, defaults and proposed amendments to the security documents. For example, Beneficial Owners of the 2021 Bonds may wish to ascertain that the nominee holding such 2021 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative,Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the 2021 Bonds within a maturity are being redeemed,DTC's practice is to determine by lot the amount of the interest of each Direct Participant in the 2021 Bonds of such maturity to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee)will consent or vote with respect to the 2021 Bonds unless authorized by a Direct Participant in accordance with DTC's procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Trustee as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting and voting rights to those Direct Participants to whose accounts such 2021 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Because DTC is treated as the owner of the 2021 Bonds for substantially all purposes under the Trust Agreement,Beneficial Owners may have a restricted ability to influence in a timely fashion remedial action or the giving or withholding of requested consents or other directions. In addition, because the identity of Beneficial Owners is unknown to the County, to DTC or to the Trustee, it may be difficult to transmit information of potential interest to Beneficial Owners in an effective and timely manner. Beneficial Owners should make appropriate arrangements with their broker or dealer regarding distribution of information regarding the 2021 Bonds that may be transmitted by or through DTC. Principal,premium, if any, and interest payments on the 2021 Bonds will be made to Cede&Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to E-2 182 credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Trustee, on the payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participants and not of DTC (nor its nominee), the Trustee or the County, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal,premium,if any, and interest to Cede&Co. (or such other nominee as may be requested by an authorized representative of DTC) is the Trustee's responsibility, disbursement of such payments to Direct Participants is DTC's responsibility, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. The County cannot and does not give assurance that Direct and Indirect Participants will promptly transfer payments to Beneficial Owners. DTC may discontinue providing its services as securities depository with respect to the 2021 Bonds at any time by giving reasonable notice to the County and the Trustee. Under such circumstances, in the event that a successor depository is not obtained,physical certificates representing interests in 2021 Bonds are required to be printed and delivered. The County may decide to discontinue use of the system of book- entry only transfers through DTC (or a successor securities depository). In that event,physical certificates will be printed and delivered to DTC. The County and the Trustee have no responsibility or obligation to DTC, the Direct Participants, the Indirect Participants or the Beneficial Owners with respect to(1)the accuracy of any records maintained by DTC or any Participant, or the maintenance of any records; (2)the payment by DTC or any Participant of any amount due to any Beneficial Owner in respect of the 2021 Bonds,or the sending of any amount due to any beneficial owner in respect to the 2021 Bonds or the sending of transaction statements; (3) the delivery or timeliness of delivery by DTC or any Participant of any notice to any Beneficial Owner which is required or permitted under the Trust Agreement to be given to Owners;(4)the selection of the Beneficial Owners to receive payments upon any partial redemption of the 2021 Bonds; or(5) any consent given or other action taken by DTC or its nominee as the registered owner of the 2021 Bonds, including any action taken pursuant to an omnibus proxy. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources the County believes to be reliable, but the County takes no responsibility for the accuracy thereof. E-3 183 Attachment 8 $[ 1 ORANGE COUNTY,NORTH CAROLINA LIMITED OBLIGATION BONDS, SERIES 2021A TAXABLE LIMITED OBLIGATION REFUNDING BONDS, SERIES 2021B BOND PURCHASE AGREEMENT June L], 2021 Orange County,North Carolina Hillsborough,North Carolina Ladies and Gentlemen: The undersigned,FHN Financial Capital Markets("FHN")on its own behalf and as representative of Robert W. Baird & Co. Incorporated (together, the "Underwriters"), offers to enter into the following purchase agreement (this "Bond Purchase Agreement") with Orange County, North Carolina (the "County"), which, upon the County's acceptance of this offer, will be binding upon the County and the Underwriters. This offer is made subject to the County's acceptance of this Bond Purchase Agreement, which acceptance shall be evidenced by the execution and delivery(manually or by facsimile transmission) of this Bond Purchase Agreement by a duly authorized officer of the County on or before 12:00 P.M., Eastern Time, on the date hereof. Upon such acceptance, execution and delivery, this Bond Purchase Agreement shall be in full force and effect in accordance with its terms and shall be binding upon the County and the Underwriters. Except as expressly otherwise defined herein, capitalized terms used herein shall have the same meanings as set forth in the Preliminary Official Statement(as defined below). (1) Purchase and Sale. (a) Upon the terms and conditions and based on the representations, warranties and covenants hereinafter set forth,the Underwriters hereby agree to purchase from the County, and the County hereby agrees to sell to the Underwriters, all (but not less than all) of the $[ ] aggregate principal amount of the County's Limited Obligation Bonds, Series 2021A(the"2021A Bonds") and the $r] aggregate principal amount of the County's Taxable Limited Obligation Refunding Bonds, Series 2021B (the "2021B Bonds" and, together with the 2021A Bonds, the "Bonds"), dated the date of payment for and the delivery of the Bonds (such payment and delivery being herein sometimes called the "Closing"). The purchase price for the 2021A Bonds shall be $r] (representing the principal amount of the 2021A Bonds,plus/less [net] original issue premium/discount of$[ ,and less underwriters' discount of $[ ]) and the purchase price for the 2021B Bonds shall be $[ ] (representing the principal amount of the 2021B Bonds, plus/less [net] original issue premium/discount of $[ ], and less underwriters' discount of $r]) (collectively, the "Purchase Price"). The Underwriters shall pay the Purchase Price for the Bonds on the day of the Closing by wiring$[ ], at the County's direction,to the Trustee(as defined below). (b) The Bonds shall be issued and secured under and pursuant to a Trust Agreement dated as of June 1,2021 (the"Trust Agreement"),between the County and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"). The County is authorized pursuant to Section 20 of Chapter 160A of the General Statutes of North Carolina(the"Act"),to issue the Bonds for the purpose of providing funds to the County to (i) acquire, construct, equip and otherwise improve a variety of County facilities and assets, (ii)refund the Refunded Obligations and(iii)pay certain costs incurred in connection with the sale and issuance of the Bonds. The County's issuance of the Bonds has been authorized by a resolution adopted by the Board of Commissioners of the County on May 18, 2021 (the "Approving 184 Resolution"). As security for performance of the County's obligations under the Trust Agreement, the County will execute and deliver to a deed of trust trustee (the "Deed of Trust Trustee"), for the benefit of the Trustee, a Deed of Trust dated as of June 1, 2021 (the "Deed of Trust"), granting a first lien of record on the Mortgaged Property, subject to Permitted Encumbrances. (c) The Bonds shall be dated the date of the Closing, shall mature on the dates and in the amounts, shall bear interest at the rates and shall have the terms stated in Exhibit A attached hereto. (2) Sale of All the Bonds; Offering. It shall be a condition to the County's obligation to sell and deliver the Bonds to the Underwriters,and to the obligation of the Underwriters to purchase and accept delivery of the Bonds, that the entire principal amount of the Bonds is sold and delivered by the County, and accepted and paid for by the Underwriters at the Closing. The Underwriters intend to make a bona fide public offering of all the Bonds at a price or prices not in excess of the initial public offering price or prices set forth in Exhibit A. The Bonds may be offered and sold to certain dealers (including dealers depositing such Bonds into investment trusts or mutual funds) at prices lower than such public offering prices. The Underwriters reserve the right to make such changes in such prices as the Underwriters shall deem necessary in connection with the offering of the Bonds. (3) Establishment of Issue Price. (a) FHN,on behalf of the Underwriters,agrees to assist the County in establishing the issue price of the 2021A Bonds and shall execute and deliver to the County at Closing an"issue price"or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit B, with such modifications as may be appropriate or necessary, in the reasonable judgment of FHN,the County,and Sanford Holshouser LLP("Bond Counsel"),to accurately reflect,as applicable,the sales price or prices or the initial offering price or prices to the public of the 2021 A Bonds. (b) [Except as otherwise set forth in Exhibit B attached hereto,] [t]he County will treat the first price at which 10% of each maturity of the 2021A Bonds (the "10%test") is sold to the public as the issue price of that maturity (if different interest rates apply within a maturity, each separate CUSIP number within that maturity will be subject to the 10% test). At or promptly after the execution of this Bond Purchase Agreement, FHN shall report to the County the price or prices at which the Underwriters have sold to the public each maturity of the 2021A Bonds. If at that time the 10%test has not been satisfied as to any maturity of the 2021A Bonds,FHN agrees to promptly report to the County the prices at which it sells the unsold 2021A Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date(as hereinafter defined)has occurred,until the 10%test has been satisfied as to the 2021A Bonds of that maturity or until all 2021A Bonds of that maturity have been sold to the public. (c) [FHN confirms that the Underwriters have offered the 2021A Bonds to the public on or before the date of this Bond Purchase Agreement at the offering price or prices (the "initial offering price"), or at the corresponding yield or yields, set forth in Exhibit B attached hereto, except as otherwise set forth therein. Exhibit B also sets forth, as of the date of this Bond Purchase Agreement,the maturities, if any, of the 2021A Bonds for which the 10% test has not been satisfied and for which the County and FHN, on behalf of the Underwriters, agrees that the restrictions set forth in the next sentence shall apply, which will allow the County to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the "hold-the-offering-price rule"). So long as the hold-the- offering-price rule remains applicable to any maturity of the 2021A Bonds, the Underwriters will neither offer nor sell unsold 2021A Bonds of that maturity to any person at a price that is higher than the initial -2- 185 offering price to the public during the period starting on the sale date and ending on the earlier of the following: (1) the close of the fifth(5th)business day after the sale date; or (2) the date on which the Underwriters have sold at least 10%of that maturity of the 2021A Bonds to the public at a price that is no higher than the initial offering price to the public. The Underwriters shall promptly advise the County when the Underwriters have sold 10% of that maturity of the 2021A Bonds to the public at a price that is no higher than the initial offering price to the public,if that occurs prior to the close of the fifth(5th)business day after the sale date.] (d) FHN confirms that any selling group agreement and any retail distribution agreement(to which FHN is a party)relating to the initial sale of the 2021A Bonds to the public, together with the related pricing wires, contains or will contain language obligating each underwriter, each dealer who is a member of the selling group and each broker-dealer that is a party to such retail distribution agreement, as applicable,to(A)report the prices at which it sells to the public the unsold 2021A Bonds of each maturity allotted to it until it is notified by FHN that either the 10% test has been satisfied as to the 2021A Bonds of that maturity or all 2021A Bonds of that maturity have been sold to the public and (B) comply with the hold-the-offering-price rule, if applicable, in each case if and for so long as directed by FHN. The County acknowledges that, in making the representation set forth in this subsection, FHN will rely on (i) in the event a selling group has been created in connection with the initial sale of the 2021A Bonds to the public,the agreement of each dealer who is a member of the selling group to comply with the hold-the-offering-price rule, if applicable, as set forth in a selling group agreement and the related pricing wires, and(ii) in the event that a retail distribution agreement was employed in connection with the initial sale of the 2021 A Bonds to the public,the agreement of each broker-dealer that is a party to such agreement to comply with the hold-the-offering-price rule,if applicable,as set forth in the retail distribution agreement and the related pricing wires. The County further acknowledges that the Underwriters shall not be liable for the failure of any dealer who is a member of a selling group,or of any broker-dealer that is a party to a retail distribution agreement,to comply with its corresponding agreement regarding the hold-the-offering- price rule as applicable to the 2021A Bonds. (e) The Underwriters acknowledge that sales of any 2021A Bonds to any person that is a related party to either of the Underwriters shall not constitute sales to the public for purposes of this section. Further, for purposes of this section: i. "public"means any person other than an underwriter or a related party, ii. "underwriter"means(A)any person that agrees pursuant to a written contract with the County (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the 2021A Bonds to the public and(B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A)to participate in the initial sale of the 2021A Bonds to the public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the 2021A Bonds to the public), iii. a purchaser of any of the 2021A Bonds is a"related party"to an underwriter if the underwriter and the purchaser are subject, directly or indirectly,to(i)at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of -3- 186 another),(ii)more than 50%common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or(iii)more than 50%common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other), and iv. "sale date" means the date of execution of this Bond Purchase Agreement by all parties. (4) Official Statement. The County hereby ratifies and approves the Preliminary Official Statement dated May [ 1,2021 (the"Preliminary Official Statement"),and consents to its distribution and use by the Underwriters prior to the date hereof in connection with the public offering and sale of the Bonds. The County confirms that the Preliminary Official Statement was "deemed final" by the County as of its date for purposes of Rule 15c2-12 of the United States Securities and Exchange Commission under the Securities Exchange Act of 1934 (the "Rule"). Upon acceptance of this offer, the County shall prepare a final Official Statement and shall,within the earlier of seven(7)business days following the date hereof or two business days prior to the Closing Date (as hereinafter defined), deliver to the Underwriters printed copies of such final Official Statement (such final Official Statement, together with any amendment or supplement thereto,being the"Official Statement")in sufficient quantity as may reasonably be required by the Underwriters in order to comply with the Rule and any applicable rules of the Municipal Securities Rulemaking Board(the"MSRB"). The County hereby authorizes and approves the Official Statement and consents to the use and distribution of the Official Statement by the Underwriters in connection with the public offering and sale of the Bonds. At the time of or prior to the Closing,the Underwriters will file, or cause to be filed, the Official Statement with the MSRB. In addition, the County hereby approves and authorizes the Underwriters to coordinate the printing of the Official Statement and consents to the electronic distribution of the Official Statement. (5) Representations of the County. The County hereby represents, warrants and covenants that: (a) The County is a political subdivision duly organized and validly existing under the Constitution and laws of the State of North Carolina(the"State"), and is authorized pursuant to the laws of the State, including the Act, and the Approving Resolution to issue the Bonds. (b) The County has full legal right, power and authority to (i) adopt the Approving Resolution,(ii)execute,deliver and perform its obligations under this Bond Purchase Agreement,the Trust Agreement, the Bonds, the Escrow Agreement and the Deed of Trust; (iii) issue and deliver the Bonds to the Underwriters as provided in this Bond Purchase Agreement; (iv)approve and authorize the distribution of the Preliminary Official Statement and the Official Statement; and (v) carry out and consummate all other transactions contemplated by this Bond Purchase Agreement, the Approving Resolution, the Trust Agreement,the Bonds,the Escrow Agreement,the Deed of Trust and the Official Statement. (c) The Approving Resolution has been duly adopted by the County, and the County has duly authorized all necessary action to be taken by the County for: (i) the offering, issuance, sale, and delivery of the Bonds upon the terms set forth herein and in the Official Statement, (ii) the execution and delivery by the County of the Bonds, this Bond Purchase Agreement, the Trust Agreement, the Escrow Agreement,the Deed of Trust,and the performance of its obligations under the Bonds,this Bond Purchase Agreement, the Trust Agreement, the Escrow Agreement, the Deed of Trust and any and all such other agreements and documents as may be required to be executed, delivered, and received by the County in -4- 187 order to carry out,give effect to,and consummate the transactions contemplated hereby and by the Official Statement (the Bonds, this Bond Purchase Agreement, the Trust Agreement, the Escrow Agreement, the Deed of Trust and such other agreements and documents being collectively referred to herein as the"County Documents"), and(iii)the authorization of the use and distribution of the Official Statement. (d) The Approving Resolution was duly adopted at a meeting of the Board of Commissioners of the County called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and is in full force and effect and has not been amended or repealed. (e) This Bond Purchase Agreement,the Trust Agreement,the Escrow Agreement,the Deed of Trust and any other instrument or agreement to which the County is a party in connection with the consummation of the transactions contemplated by the foregoing documents,when executed and delivered by the parties thereto, and assuming such documents are enforceable against the parties thereto other than the County,will constitute legal,valid and binding obligations of the County(subject,as to the enforcement of remedies, to the valid exercise of judicial discretion, the sovereign police powers of the State and constitutional powers of the United States of America and to any valid applicable bankruptcy, insolvency, moratorium,reorganization or other similar laws affecting the rights of creditors generally and the exercise of judicial discretion in accordance with general principles of equity). (f) When delivered to and paid for by the Underwriters at the Closing, in accordance with the provisions of this Bond Purchase Agreement,the Bonds will have been duly authorized, executed and delivered by the County and will constitute legal,valid and binding special obligations of the County, enforceable in accordance with their terms(subject,as to the enforcement of remedies,to the valid exercise of judicial discretion,the sovereign police powers of the State and constitutional powers of the United States of America and to any valid applicable bankruptcy,insolvency,moratorium,reorganization or other similar laws affecting the rights of creditors generally and the exercise of judicial discretion in accordance with general principles of equity) and will be entitled to the benefits of, and secured as provided in, the Trust Agreement. (g) The County has complied,and will at the Closing be in compliance,in all material respects,with the Approving Resolution,the Trust Agreement and the Act and all other agreements relating to projects undertaken by the County or with respect to which the County has assumed responsibility. (h) There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court,public board or body,pending or,to the knowledge of the County,threatened against or affecting the County(or,to the knowledge of the County, any meritorious basis therefor) (i) attempting to limit, enjoin or otherwise restrict or prevent the County from functioning or contesting or questioning the existence of the County or the titles of the present officers of the County to their offices or(ii)wherein an unfavorable decision,ruling or finding would(A) adversely affect the existence or powers of the County or the validity or enforceability of the Bonds, the Approving Resolution, the Trust Agreement, this Bond Purchase Agreement, the Escrow Agreement, the Deed of Trust or any agreement or instrument to which the County is a party and which is used or contemplated for use in the consummation of the transactions contemplated hereby including, without limitation, the County Documents and the Official Statement; or (B)materially adversely affect(1)the transactions contemplated by the County Documents or the Official Statement, or(2)the exemption of the interest on the 2021A Bonds from federal or State income taxation. (i) The County's adoption of the Approving Resolution,its execution and delivery of the County Documents and the Bonds, and compliance with the provisions thereof and hereof, do not and will not conflict with or constitute, on the County's part, a violation of, breach of or default under any material statute, existing law, administrative regulation, filing, decree or order, state or federal, or any -5- 188 provision of the Constitution or laws of the State, or any rule or regulation of the County, or any material indenture, mortgage, lease, deed of trust, note, resolution, or other agreement or instrument to which the County, or its properties, are subject or by which the County, or its properties, are or may be bound or, to the knowledge of the County, any order, rule or regulation of any regulatory body or court having jurisdiction over the County or its activities or properties. 0) The County is not in default in the payment of the principal of or interest on any of its indebtedness for borrowed money and is not in default in any material respect under any document or instrument under and subject to which any indebtedness for borrowed money has been incurred which default would affect materially and adversely the transactions contemplated by any of the County Documents. No event has occurred or is continuing under the provisions of any such document or instrument that,with the lapse of time or the giving of notice, or both,would constitute an event of default thereunder, which event of default would affect adversely the transactions contemplated by any of the County Documents. (k) The County is not in material breach of or in default under the Approving Resolution, any applicable law or administrative regulation of the State or the United States, or any applicable judgment or decree, or any loan agreement,note,resolution or other agreement or instrument to which the County is a party or is otherwise subject, which breach or default would in any way materially adversely affect the authorization or issuance of the Bonds and the transactions contemplated hereby, and no event has occurred and is continuing which, with the passage of time or the giving of notice or both, would constitute such a breach or default. (1) On and as of the Closing,all authorizations,consents,and approvals of,notices to, registrations or filings with,or actions in respect of any governmental body,agency,or other instrumentality or court required to be obtained, given, or taken on behalf of the County in connection with the execution, delivery and performance by the County of the County Documents,and any other agreement or instrument to which the County is a party and which has been or will be executed in connection with the consummation of the transactions contemplated by the foregoing documents,will have been obtained,given, or taken and will be in full force and effect. (m) Any certificate signed by an authorized officer of the County delivered to the Underwriters shall be deemed a representation and warranty by the County to the Underwriters as to the truth of the statements made therein. (n) The County has and will cooperate with the Underwriters and their counsel in any endeavor to qualify the Bonds for offering and sale under the securities or "Blue Sky" laws of such jurisdictions of the United States as the Underwriters may request;provided,however,that the County will not be required to execute a general or special consent to service of process or qualify to do business in connection with any qualification or determination in any jurisdiction. (o) The audited financial statements of the County for the period ended June 30,2020, present fairly the County's financial condition as of such date and the results of its operations for the respective periods set forth therein and have been prepared in accordance with generally accepted accounting principles consistently applied. There has been no material change in the financial affairs of the County since June 30,2020, except as disclosed specifically in the Official Statement. (p) If between the date of this Bond Purchase Agreement and the date 25 days after the "end of the underwriting period" for the Bonds, as defined in the Rule, any event occurs which might or would cause the Official Statement to contain any untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the -6- 189 circumstances under which they were made, not misleading, the County shall promptly provide written notice to the Underwriters thereof, and if, in the opinion of the County or the Underwriters, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the County shall at its expense supplement or amend the Official Statement in a form and in a manner approved by the Underwriters. For purposes of this Bond Purchase Agreement,the"end of the underwriting period" shall be deemed to be the Closing Date(as hereinafter defined),unless the Underwriters shall have notified the County to the contrary on or before the Closing Date. (q) If the Official Statement is supplemented or amended pursuant to subsection(p)of this Section, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such subsection)at all times subsequent thereto up to and including the Closing Date, the County shall take all steps necessary to ensure that the Official Statement as so supplemented or amended will not contain any untrue statement of a material fact or 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. (r) The information in the Preliminary Official Statement (excluding therefrom the information under the captions "INTRODUCTION—Book-Entry Only" and"UNDERWRITING" and in Appendix E, as to which no representations or warranties are made), including its attachments and appendices,at the time of acceptance hereof is correct in all material respects,and such Preliminary Official Statement does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading; and the information in the Official Statement (excluding therefrom the information under the captions "INTRODUCTION — Book-Entry Only" and "UNDERWRITING" and in Appendix E, as to which no representations or warranties are made) as of its date and as of the Closing Date, will be true and correct and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made,not misleading. (s) Between the date hereof and the Closing, the County shall not, without the prior written consent of the Underwriters, offer or issue in any material amount any bonds, notes or other obligations for borrowed money, or incur any material liabilities, direct or contingent, except in the course of normal business operations of the County or except for such borrowings as may be described in or contemplated by the Official Statement. (t) Except as described in the Official Statement,during the last five years,the County has not failed to materially comply with any previous undertaking relating to continuing disclosure of information pursuant to Rule 15c2-12. The execution and delivery of this Bond Purchase Agreement by the County shall constitute a representation by the County to the Underwriters that the representations, warranties and covenants contained in this Section 5 are true as of the date hereof, provided that no officer of the County shall be individually liable for the breach of any representation,warranty or covenant made by the County in this Section 5. (6) Closing. At 10:00 a.m.,Eastern Time, on June [_],2021, or at such other time or date as the County and the Underwriters shall mutually agree upon (the "Closing Date"), the County shall (a) deliver or cause to be delivered, through the custody of The Depository Trust Company,New York,New York("DTC"),or at such place as the County and Underwriters shall mutually agree upon, for the account of the Underwriters,the Bonds duly executed by the County in fully registered form,bearing proper CUSIP numbers, and registered in the name of Cede & Co., as nominee of DTC, which will act as securities -7- 190 depository for the Bonds; and(b)deliver or cause to be delivered,to the Underwriters at Atlanta, Georgia, or at such other place as the County and Underwriters may mutually agree upon, the documents described in Section 7(d)hereof Concurrently with the delivery of the Bonds and the documents mentioned in Section 7(d) hereof at the Closing, subject to the conditions contained herein, the Underwriters will accept such delivery and will pay the purchase price of the Bonds in the amount set forth in Section 1 hereof by wire transfer in immediately available funds to the Trustee for the account of the County. The Closing shall take place at the offices of the County. The Bonds shall be available for inspection by the Underwriters at least two business days prior to Closing. (7) Closing Conditions/Right to Cancel. The Underwriters enter into this Bond Purchase Agreement in reliance upon the County's representations and agreements herein and the performance by the County of its obligations hereunder, both as of the date hereof and as of the date of Closing. The Underwriters' obligations under this Bond Purchase Agreement are and shall be subject to the following additional conditions: (a) At the time of the Closing, the Approving Resolution, the Trust Agreement, and the Deed of Trust shall be in full force and effect and none of the Approving Resolution, the Trust Agreement, the Deed of Trust or the Official Statement shall have been amended, modified or supplemented,except as may have been approved in writing by the Underwriters,and the County shall have duly adopted, and there shall be in full force and effect, such other resolutions as, in the opinion of Bond Counsel, shall be necessary in connection with the transactions contemplated hereby. (b) The Bonds,as set forth in Section 6, shall be delivered to the Trustee to be held by the Trustee under DTC's FAST program. (c) The Underwriters shall have the right to cancel its obligation to purchase the Bonds at the time of Closing if any of the documents, certificates or opinions to be delivered to the Underwriters hereunder is not delivered at the time of Closing or if,between the date hereof and the time of Closing, one or more of the following occurs: (i) Legislation(whether or not yet introduced in Congress of the United States ("Congress")) shall be enacted or be actively considered for enactment by the Congress or recommended to the Congress by the President of the United States or favorably reported for passage to either House of Congress by any committee of such House, or a conference committee of both Houses, to which such legislation had been referred for consideration, or a decision by a federal court of the United States or the United States Tax Court shall be rendered, or an order, ruling, regulation or official statement by or on behalf of the Treasury Department of the United States or the Internal Revenue Service or other governmental agency shall be made or proposed,or a release or official statement made by the President of the United States or by the Treasury Department of the United States or the Internal Revenue Service, with respect to federal taxation upon revenues or other income of the general character to be derived by the County or upon interest received on obligations of the general character of the Bonds which in the Underwriters'judgment, materially adversely affects the market for the Bonds; or (ii) Legislation shall hereafter be enacted or actively considered for enactment or introduction, with an effective date on or prior to the Closing, or a decision by a court of the United States shall be rendered or a stop order, ruling,regulation or proposed regulation by or on behalf of the Securities and Exchange Commission or other agency having jurisdiction shall be made,to the effect that the issuance,sale and delivery of the Bonds,or any other obligations of any similar public body of the general character of the County is in violation of the Securities Act of 1933, as amended, of the Securities Exchange Act of 1934, as amended, or of the Trust Indenture -8- 191 Act of 1939, as amended or with the purpose or effect of otherwise prohibiting the issuance, sale or delivery of the Bonds, as contemplated hereby, or of obligations of the general character of the Bonds; or (iii) There shall have occurred any outbreak or escalation of hostilities or other national or international calamity or crisis, the effect of such outbreak, calamity or crisis on the financial markets of the United States being such as, in the Underwriters' judgment, would materially adversely affect the market for, or market price of,the Bonds; or (iv) There shall be in force a general suspension of trading on the New York Stock 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 whether by virtue of a determination by that Exchange or by order of the Securities and Exchange Commission or any other governmental authority having jurisdiction; or (v) A general banking moratorium shall have been declared by federal, State or New York authorities having jurisdiction,and be in force,or a major financial crisis or a material disruption in commercial banking or securities settlement or clearances services shall have occurred such as to make it, in the judgment of the Underwriters, impractical or inadvisable to proceed with the offering of the Bonds as contemplated in the Official Statement; or (vi) an event shall occur which makes untrue or incorrect in any material respect, as of the time of such event, any statement or information contained in the Official Statement or which is not reflected in the Official Statement but should be reflected therein in order to make the statements contained therein not misleading in any material respect and requires an amendment of or supplement to the Official Statement and the effect of which, in the judgment of the Underwriters, would materially adversely affect the market for the Bonds or the sale, at the contemplated offering prices(or yields),by the Underwriters of the Bonds; or (vii) any of Fitch Ratings Inc. ("Fitch"), Moody's Investors Service, Inc. ("Moody's)or S&P Global Ratings, a business unit of Standard&Poor's Financial Services LLC ("S&P") shall have taken any action to lower, suspend or withdraw their respective ratings on the Bonds and such action,in the opinion of the Underwriters,would adversely affect the market price or marketability of the Bonds. (d) At the Closing,the Underwriters shall receive the following documents: (i) Duly executed or certified copies of each of the Trust Agreement, the Escrow Agreement and Deed of Trust; (ii) The approving opinion of Bond Counsel in the form set forth in Appendix D of the Official Statement together with a supplemental opinion in form and substance satisfactory to the Underwriters, and a reliance letter addressed to the Underwriters, each of which shall be dated the Closing Date; (iii) The opinion of John L. Roberts,Esq., County Attorney,dated the Closing Date and addressed to the Underwriters and Bond Counsel in form and substance satisfactory to the Underwriters; -9- 192 (iv) An opinion of McGuireWoods LLP,as counsel to the Underwriters,dated the Closing Date and addressed to the Underwriters in form and substance satisfactory to the Underwriters; (v) A certificate, dated the Closing Date, of the duly authorized representative(s) or officer(s) of the County and in form and substance satisfactory to the Underwriters, to the effect that (A) the representations and agreements of the County herein are true and correct in all material respects as of the date of Closing; (B) there are not pending or, to such officials' knowledge, threatened legal proceedings that will materially adversely affect the transactions contemplated hereby or by the Trust Agreement, or the validity or enforceability of the Bonds,or the security therefor; (C)the financial information relating to the County provided to the Underwriters presents fairly the financial position of the County as of the date indicated therein and the results of its operations for the period specified therein and the financial statements from which such information was derived have been prepared in accordance with applicable law with respect to the period involved; (D) since June 30, 2020, there has not been any material adverse change in the financial condition of the County taken as a whole or no increase in the County's indebtedness for borrowed money, other than as disclosed in the Official Statement or otherwise disclosed in writing to the Underwriters; (E)the information contained in the Official Statement as of the Closing Date is true and correct in all material respects and did not and does not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (F) the County has complied with all agreements and satisfied all the conditions on its part required to be performed or satisfied at or prior to the Closing,other than those specified hereunder that have been waived by the Underwriters; (vi) A photocopy of the Official Statement; (vii) One counterpart original of a transcript of all proceedings taken by the County relating to the authorization and issuance of the Bonds; (viii) Specimen Bonds; (ix) A certificate, dated the date of the Closing, of the duly authorized representative(s) or officer(s)of the County,with a copy of the Approving Resolution attached,to the effect that the Approving Resolution has been duly adopted and remains in full force and effect; (x) A certificate, dated on or before the closing date, evidencing the property insurance required by the Trust Agreement; (xi) A pro forma title insurance policy or other evidence of title insurance satisfactory to the Underwriters issued by Investors Title Insurance Company,relating to the Deed of Trust and naming the Trustee as a beneficiary; (xii) Federal tax form 8038-G prepared with respect to the 2021A Bonds and ready for filing; (xiii) A tax certificate of the County in form and content reasonably satisfactory to the Underwriters; (xiv) Evidence that Moody's, S&P and Fitch have issued ratings for the Bonds of not less than"[ ],"61 T' and"[ ]",respectively; -10- 193 (xv) An executed copy of the Verification Report of Bingham Arbitrage Rebate Services,Inc.; (xvi) A defeasance opinion of Bond Counsel addressed to the Trustee and the Underwriters in form and substance satisfactory to the Underwriters; and (xvii) Such additional legal opinions, certificates,proceedings, instruments and other documents, as the Underwriters or legal counsel to the Underwriters may reasonably request to evidence compliance by the County with legal requirements relating to the issuance of the Bonds, the truth and accuracy,as of the date of Closing,of all representations contained herein and the due performance or satisfaction by the County at or prior to the date of Closing of all agreements then to be performed and all conditions then to be satisfied as contemplated under this Bond Purchase Agreement and the Trust Agreement. If the County shall be unable to satisfy the conditions to the obligations of the Underwriters contained in this Bond Purchase Agreement or if the obligations of the Underwriters shall be terminated for any reason permitted by this Bond Purchase Agreement,this Bond Purchase Agreement shall terminate and neither the County nor the Underwriters shall have any further obligations hereunder, except that Sections 9 and 10 and the representations and warranties of the County contained herein (as of the date made)will continue in full force and effect. (8) Survival. All representations,warranties and agreements of the County set forth in or made pursuant to this Bond Purchase Agreement shall remain operative and in full force and effect,regardless of any investigations made by or on behalf of the Underwriters and shall survive the delivery of and payment for the Bonds. (9) Payment of Expenses. The County shall pay, out of the proceeds of the Bonds or from its own funds, any expenses incident to the performance of the obligations of the County or the Underwriters hereunder, including but not limited to: (i)the cost of the preparation, reproduction, printing, distribution, and mailing,of the Official Statement; (ii)the fees and disbursements of Bond Counsel and counsel for the County;(iii)the fees and disbursements of any experts retained by the County or the Underwriters;(iv)fees charged by the rating agencies for the rating of the Bonds; and(v) the cost of qualifying the Bonds under the laws of such jurisdictions as the Underwriters may designate, including filing fees and fees and disbursements of counsel for the Underwriters in connection with such qualification and the preparation of Blue Sky Memoranda. If the Bonds are not delivered to the Underwriters pursuant to this Bond Purchase Agreement, the County shall pay all expenses incident to the performance of the County's and the Underwriters' obligations hereunder as provided in this Section. The Underwriters shall pay (i) any fees of the MSRB in connection with the issuance of the Bonds, (ii)the cost of obtaining CUSIP number(s) assigned for the Bonds, and (iii) the fees and disbursements of counsel for the Underwriters. (10) Indemnification. To the extent permitted by law,the County agrees to indemnify and hold harmless the Underwriters, the directors, officers, employees and agents of each Underwriter and each person who controls any Underwriter within the meaning of either the Securities Act of 1933, as amended (the "Securities Act") or the Securities Exchange Act of 1934, as amended (the "Exchange Act") against any and all losses,claims,damages or liabilities,joint or several,to which they or any of them may become subject under the Securities Act,the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities arise out of or are based -11- 194 upon any untrue statement or alleged untrue statement of a material fact (except statements pertaining to the Underwriters) contained in the Preliminary Official Statement, the Official Statement (or in any supplement or amendment thereto), or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (except omissions or alleged omissions pertaining to the Underwriters). This indemnity agreement will be in addition to any liability which the County may otherwise have. Each Underwriter severally and not jointly agrees to indemnify and hold harmless the County, and its officials, directors, officers, and employees, and each person who controls the County within the meaning of either the Securities Act or the Exchange Act, to the same extent as the foregoing indemnity from the County to each Underwriter, but only with reference to written information furnished by the Underwriters to the County or information provided by the Underwriters specifically for inclusion in the Preliminary Official Statement or the Official Statement (or in any amendment or supplement thereto). Promptly after receipt by an indemnified party of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party, notify the indemnifying parry in writing of the commencement thereof; but the failure so to notify the indemnifying parry(i)will not relieve it from liability unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying parry of substantial rights and defenses; and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation. The indemnifying party shall be entitled to appoint counsel of the indemnifying party's choice at the indemnifying party's expense to represent the indemnified party in any action for which indemnification is sought provided, however, that such counsel shall be satisfactory to the indemnified party.Notwithstanding the indemnifying parry's election to appoint counsel to represent the indemnified party in an action,the indemnified party shall have the right to employ separate counsel(including local counsel), and the indemnifying party shall bear the reasonable fees,costs and expenses of such separate counsel if(i)the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest; (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party; (iii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action; or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party.An indemnifying party will not,without the prior written consent of the indemnified parties,settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder(whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding. In the event that the indemnity provided herein is unavailable or insufficient to hold harmless an indemnified party for any reason the County and the Underwriters agree to contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending the same) to which the County and one or more of the Underwriters may be subject in such proportion as is appropriate to reflect the relative benefits received by the County on the one hand and by the Underwriters on the other from the offering. If the allocation provided by the immediately preceding sentence is unavailable for any reason, the County and the Underwriters shall contribute in such proportion as is appropriate to reflect not only such relative benefits -12- 195 but also the relative fault of the County on the one hand and of the Underwriters on the other in connection with the statements or omissions which resulted in such losses, as well as any other relevant equitable considerations. In no case shall any Underwriter(except as may be provided in any agreement among the Underwriters relating to the offering)be responsible for any amount in excess of the purchase discount or fee applicable to the Bonds purchased by such Underwriter hereunder. Benefits received by the County shall be deemed to be equal to the total net proceeds from the offering(before deducting expenses)received by it,and benefits received by the Underwriters shall be deemed to be equal to the total purchase discounts and commissions in each case set forth on the cover of the Official Statement. Relative fault shall be determined by reference to, among other things, whether any untrue or any alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information provided by the County on the one hand or the Underwriters on the other, the intent of the parties and their relative knowledge, information and opportunity to correct or prevent such untrue statement or omission. The County and the Underwriters agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph no person guilty of fraudulent misrepresentation(within the meaning of Section 11(f)of the Securities Act)shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. Each person who controls an Underwriter within the meaning of either the Securities Act or the Exchange Act and each director, officer, employee and agent of an Underwriter shall have the same rights to contribution as the Underwriter, and each person who controls the County within the meaning of either the Securities Act or the Exchange Act and each official,director,officer and employee of the County shall have the same rights to contribution as the County, subject in each case to the applicable terms and conditions of this paragraph. (11) Notices. Any notice or other communication to be given to the County under this Bond Purchase Agreement must be given in writing(not to include facsimile transmission or electronic mail) to the applicable address shown below, and any notice under this Bond Purchase Agreement to the Underwriters may be given by delivering the same in writing to FHN as follows: Orange County,North Carolina 200 South Cameron Street Hillsborough,North Carolina 27278 (Attention: County Manager) FHN Financial Capital Markets 3344 Peachtree Road, Suite 2125 Atlanta, GA 30326 (Attention: Bruce Gow, Senior Vice President) (12) Governing Law. This Bond Purchase Agreement shall be governed by and construed in accordance with the laws of the State. (13) Effectiveness. This Bond Purchase Agreement shall become effective upon the acceptance hereof by the County. (14) Arm's-Length Transaction. The County acknowledges and agrees that the purchase and sale of the Bonds pursuant to this Bond Purchase Agreement is an arm's-length commercial transaction between the County and the Underwriters, acting solely as principals and not as municipal advisors, financial advisors or agents of the County. The Underwriters have not assumed a financial advisory responsibility in favor of the County with respect to the offering of the Bonds or the process leading thereto (whether or not the Underwriters, or any affiliate of the Underwriters, has advised or is currently advising the County on other matters)or any other obligation to the County except the obligations expressly set forth -13- 196 in this Bond Purchase Agreement,it being the County's understanding that a financial advisory relationship shall not be deemed to exist when, in the course of acting as an underwriter, a broker, dealer or municipal securities dealer,a person renders advice to an issuer,including advice with respect to the structure,timing, terms and other similar matters concerning a new issue of municipal securities. The Underwriters have provided to the County prior disclosures regarding their role as underwriters, their compensation, any potential or actual material conflicts of interest,and material financial characteristics and material financial risks associated with the transaction to the extent required by MSRB rules. The Underwriters hereby notify the County that the Underwriters are not acting as Municipal Advisors (as defined in Section 15B of the Securities Exchange Act of 1934, as amended), the Underwriters are not agents of the County, and the Underwriters do not have a fiduciary duty to the County in connection with the matters contemplated by this Bond Purchase Agreement.The County has consulted its own legal,financial,and other advisors to the extent it has deemed appropriate. (15) Miscellaneous. (a) If any provision of this Bond Purchase Agreement shall be held or deemed to be or shall, in fact, be inoperative, invalid or unenforceable as applied in any particular case in any jurisdiction or jurisdictions because it conflicts with any provisions of any constitution, statute,rule or public policy, or any other reason, such circumstances shall not have the effect of rendering the provision in question inoperable or unenforceable in any other case or circumstance, or of rendering any other provision or provisions of this Bond Purchase Agreement invalid, inoperative or unenforceable to any extent whatever. (b) This Bond Purchase Agreement may be signed in any number of counterparts,each of which shall which shall be an original,but all of which shall constitute but one and the same instrument. (c) This Bond Purchase Agreement is made solely for the benefit of and is binding on the County and the Underwriters(including successors or assigns of the Underwriters)and no other person shall acquire or have any right hereunder or by virtue hereof. It is the entire agreement of the parties, superseding all prior agreements, and may not be modified except in writing signed by both of the parties hereto. (d) Under this Bond Purchase Agreement, the Underwriters are acting as principals and not as agents or fiduciaries, and the Underwriters' engagement is as independent contractors and not in any other capacity. The County agrees that it is solely responsible for making its own judgments in connection with the offering of the Bonds regardless of whether the Underwriters have or are currently advising the County on related or other matters. [Remainder of Page Intentionally Left Blank] -14- 197 Very truly yours, FHN FINANCIAL CAPITAL MARKETS, on its own behalf and on behalf of Robert W. Baird&Co. Incorporated By: Bruce Gow, Senior Vice President Approved, accepted and agreed to: ORANGE COUNTY,NORTH CAROLINA By: Bonnie B. Hammersley,County Manager [Signature Page for Bond Purchase Agreement] 198 EXHIBIT A Terms of the Bonds Principal Amounts,Interest Rates and Prices—2021A Bonds Maturity Date (October 1) Principal Amount Interest Rate Yield Price *Yield to October 1,20[ ]call date at par. Principal Amounts,Interest Rates and Prices—2021B Bonds Maturity Date (October 1) Principal Amount Interest Rate Yield Price *Yield to October 1,20[_]call date at par. Redemption Provisions A-1 199 EXHIBIT B $[ ] Orange County,North Carolina Limited Obligation Bonds, Series 2021A ISSUE PRICE CERTIFICATE The undersigned, on behalf of FHN Financial Capital Markets ("FHN"), on behalf of itself and Robert W. Baird & Co. Incorporated (together, the "Underwriting Group"), hereby certifies as set forth below with respect to the sale and issuance of the above-captioned obligations(the"Bonds"). 1. [Sale of the Bonds. As of the date of this certificate, for each Maturity of the Bonds, the first price at which at least 10%of such Maturity of the Bonds was sold to the Public is the respective price listed in Schedule A.][Sale of the General Rule Maturities. As of the date of this certificate, for each Maturity of the General Rule Maturities,the first price at which at least 10%of such Maturity of the Bonds was sold to the Public is the respective price listed in Schedule A.] 2. [Initial Offering Price of the Hold-the-Offering-Price Maturities. (a) The Underwriting Group offered the Hold-the-Offering-Price Maturities to the Public for purchase at the respective initial offering prices listed in Schedule A (the "Initial Offering Prices") on or before the Sale Date. A copy of the pricing wire or equivalent communication for the Bonds is attached to this certificate as Schedule B. (b) As set forth in the Bond Purchase Agreement, the members of the Underwriting Group have agreed in writing that, (i) for each Maturity of the Hold-the-Offering-Price Maturities, they would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity(the"hold-the-offering-price rule"),and(ii)any selling group agreement shall contain the agreement of each dealer who is a member of the selling group, and any retail distribution agreement shall contain the agreement of each broker-dealer who is a party to the retail distribution agreement, to comply with the hold-the-offering-price rule. FHN has not offered or sold any Maturity of the Bonds at a price that is higher than the respective Initial Offering Price for that Maturity of the Bonds during the Holding Period. Each of the other members of the Underwriting Group [and each selling group member] has represented that it would not offer or sell any Maturity of the Hold the-Offering-Price Maturities at a price that is higher than the respective Initial Offering Price for that Maturity of the Bonds during the Holding Period.] 3. Defined Terms. (a) [General Rule Maturities means those Maturities of the Bonds listed in Schedule A hereto as the"General Rule Maturities."] (b) [Hold-the-Offering-Price Maturities means those Maturities of the Bonds listed in Schedule A hereto as the"Hold-the-Offering-Price Maturities."] (c) [Holding Period means, with respect to a Hold-the-Offering-Price Maturity, the period starting on the Sale Date and ending on the earlier of(i) the close of the fifth business day after the Sale Date (June_, 2021), or(ii) the date on which the Underwriters have sold at least 10% of such Hold-the- Offering-Price Maturity to the Public at prices that are no higher than the Initial Offering Price for such Hold-the-Offering-Price Maturity.] B-1 200 (d) Issuer means Orange County,North Carolina. (e) Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate maturities. (f) Public means any person (including an individual, trust, estate, partnership, association, company,or corporation)other than an Underwriter or a related party to an Underwriter. The term"related party" for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (g) Sale Date means the first day on which there is a binding contract in writing for the sale of a Maturity of the Bonds. The Sale Date of the Bonds is June_, 2021. (h) Underwriter means(i)any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate)to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public). The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents FHN's interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, and by Bond Counsel in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of Internal Revenue Service Form 8038-G, and other federal income tax advice it may give to the Issuer from time to time relating to the Bonds. The representations set forth herein are not necessarily based on personal knowledge and, in certain cases, the undersigned is relying on representations made by other members of the Underwriting Group. B-2 201 FHN FINANCIAL CAPITAL MARKETS, on its own behalf and on behalf of Robert W. Baird&Co. Incorporated By: Bruce Gow, Senior Vice President Dated: June 2021 B-3 202 Schedule A Sale Prices of the [Bonds][General Rule Maturities and Initial Offering Prices of the Hold-the-Offering Price Maturities] B-4 203 [Schedule B Pricing Wire or Equivalent Communication (Attached)] B-5