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<br /> SECURITY
<br /> The payment by the County of the principal of and interest on the 2024 Bonds is limited to funds
<br /> appropriated for that purpose by the Board of Commissioners for the County in its sole discretion, except
<br /> to the extent payable from Bond proceeds, investment earnings, Net Proceeds related to casualty or
<br /> condemnation proceeds, or amounts derived from the enforcement of remedies on default.
<br /> As security for the 2024 Bonds, the Prior Bonds and any additional bonds issued under the Trust
<br /> Agreement on a parity therewith(the"Additional Bonds"and,together with the 2024 Bonds and the Prior
<br /> Bonds, the "Bonds"), the County has executed and delivered to a deed of trust trustee (the "Deed of Trust
<br /> Trustee"), for the benefit of the Trustee, a Deed of Trust dated as of June 1, 2021 (as previously
<br /> supplemented and amended, the "Existing Deed of Trust"), granting a lien of record on the sites of the
<br /> County's Whitted Building located in Hillsborough,North Carolina(the"Whitted Building"),the County's
<br /> Blackwood Farm Park located in Hillsborough, North Carolina (the "Blackwood Farm Park"), Culbreth
<br /> Middle School located in Chapel Hill, North Carolina ("Culbreth Middle School"), the Orange County
<br /> Main Library located in Hillsborough, North Carolina (the "Orange County Library"), Orange Middle
<br /> School located in Hillsborough, North Carolina ("Orange Middle School"), Hillsborough Elementary
<br /> School located in Hillsborough, North Carolina ("Hillsborough Middle School"), New Hope Elementary
<br /> School located in Chapel Hill, North Carolina ("New Hope Elementary School"), Pathways Elementary
<br /> School located in Hillsborough, North Carolina ("Pathways Elementary School"), Orange High School
<br /> located in Hillsborough,North Carolina("Orange High School"), and Ephesus Elementary School located
<br /> in Chapel Hill,North Carolina ("Ephesus Elementary School"), and the real estate improvements thereon
<br /> and appurtenances thereto, all as more particularly described in the Existing Deed of Trust (collectively,
<br /> the"Mortgaged Property"), subject only to Permitted Encumbrances(as defined in Appendix C hereto).
<br /> As security for the Bonds and in connection with the issuance of the 2024 Bonds,the County will
<br /> execute and deliver to the Deed of Trust Trustee,for the benefit of the Trustee,a Deed of Trust Supplement
<br /> #2 dated as of June 1,2024(the"Second Deed of Trust Supplement"),supplementing the Existing Deed of
<br /> Trust(as so supplemented,the"Modified Deed of Trust"),to provide that the Modified Deed of Trust shall
<br /> also secure the 2024 Bonds.
<br /> The Modified Deed of Trust authorizes future obligations evidenced by Additional Bonds as
<br /> described below, to be secured by the Modified Deed of Trust, provided that the total amount of present
<br /> and future obligations secured by the Modified Deed of Trust at any one time does not exceed$200,000,000
<br /> and such future obligations are incurred not later than 30 years from June 1,2021.
<br /> In addition, the County will grant to the Trustee a lien on and security interest in all moneys held
<br /> by the Trustee in the funds and accounts created under the Trust Agreement.
<br /> If a default occurs under the Trust Agreement,the Trustee is authorized to direct the Deed of Trust
<br /> Trustee to foreclose on the Mortgaged Property and apply the proceeds received as a result of any such
<br /> foreclosure to the payment of the amounts due to the owners of the 2024 Bonds and the Prior Bonds,subject
<br /> to the rights of the owners of any other Bonds. No assurance can be given that any such proceeds will be
<br /> sufficient to pay the principal of and the interest on the Bonds. In addition,no deficiency judgment can be
<br /> rendered against the County if the proceeds from any such foreclosure sale (together with other funds that
<br /> may be held by the Trustee under the Trust Agreement)are insufficient to pay the Bonds in full. The 2024
<br /> Bonds do not constitute a pledge of the County's faith and credit within the meaning of any constitutional
<br /> provision. See the caption"SECURITY AND SOURCES OF PAYMENT OF 2024 BONDS"herein.
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