WQ0039842_Final Permit_20181120

NORTH CAROLINA
ROY COOPED, EyMmnmental Quality
cavww
MICHAEL S. REGAN
SM Mtarp•
LINDA► CULPEPP€R
Interft Dir ecmr
November 20, 2018
J. KIRBY LAFORCE — VP OF DEVELOPMENT
MERITAGE HOMES OF THE CAROLINAS, INC.
3005 CARRINGTON MILL BOULEVARD, SUITE 100
MORRISVILLE, NORTH CAROLINA 27560
Subject: Permit No. WQ0039842
Twelve Oaks Conjunctive
Utilization System
Conjunctive Reclaimed Water
Utilization System
Wake County
Dear Mr. LaForce:
In accordance with your permit application request received March 1, 2018, and subsequent
additional information received June 14, 2018 and September 7, 2018, we are forwarding herewith Permit
No. WQ0039842 dated November 20, 2018, to Meritage Homes of the Carolinas, Inc. for the construction
only of the subject conjunctive reclaimed water utilization.
This permit shall be effective from the date of issuance until June 30, 2024, and shall be subject to
the conditions and limitations as specified therein. Please pay particular attention to the monitoring
requirements listed in Attachment B. Failure to establish an adequate system for collecting and maintaining
the required operational information shall result in future compliance problems.
If any parts, requirements or limitations contained in this permit are unacceptable, the Permittee
has the right to request an adjudicatory hearing upon written request within 30 days following receipt of
this permit. This request shall be in the form of a written petition, conforming to Chapter 150B of the North
Carolina General Statutes, and filed with the Office of Administrative Hearings at 6714 Mail Service
Center, Raleigh, NC 27699-6714. Unless such demands are made, this permit shall be final and binding.
North Carolina Department of Environmental Quality I Division of Water Resources I Non -Discharge Branch
512 North Salisbury Street 11617 Mail Service Center I Raleigh, North Carolina 27699-1617
919.807.6332

Mr. J. Kirby LaForce
November 20, 2018
Page 2 of 2
One set of approved plans and specifications is being forwarded to you. If you need additional
information concerning this permit, please contact Tessa Monday at [phone] or
tessa.mondayr—i ncdenngov.
Sincerely,
nda Culpepper, Interim Director
V Division of Water Resources
cc: Wake County Health Department (Electronic Copy)
Raleigh Regional Office, Water Quality Regional Operations Section (Electronic Copy)
Thomas Spaulding, PE — Spaulding and Norris (Electronic Copy)
James Lastinger ([e-mail]) — Corps of Engineers (Electronic Copy)
Laserfiche File (Electronic Copy)
Digital Permit Archive (Electronic Copy)
Central Files

NORTH CAROLINA
ENVIRONMENTAL MANAGEMENT COMMISSION
DEPARTMENT OF ENVIRONMENTAL QUALITY
RALEIGH
CONJUNCTIVE RECLAIMED WATER UTILIZATION SYSTEM PERMIT
In accordance with the provisions of Article 21 of Chapter 143, General Statutes of North Carolina as
amended, and other applicable Laws, Rules and Regulations
PERMISSION IS HEREBY GRANTED TO
Meritage Homes of the Carolinas, Inc.
Wake County
FOR THE
construction only of a conjunctive reclaimed water utilization system consisting of. a 5.98 acre spray
irrigation area with heads rated from 0.42 to 2.86 gallons per minute (GPM)); a 40.44 acre of drip irrigation
area with emitters rated at 0.01 GPM; and all associated piping, valves, controls, and appurtenances
Field
Number of
Residences'
Total Area (ac)
Wetted Area
ac
Shrub - Drip
Area (ac)
Turf - Spray
Area (ac)
1
29
8.05
6.45
6.05
0.40
2
122
19.94
13.22
10.47
2.74
3
146
19.81
11.77
10.67
1.10
4
72
11.64
7.68
6.34
1.34
5
76
11.50
7.31
6.91
0.40
Total
445
70.94
46.42
40.44
5.98
1 Each residence/lot has a 2,400 square foot (ft2) coverage area for house and driveway.
to serve the Twelve Oaks Conjunctive Utilization System, with no discharge of wastes to surface waters,
pursuant to the application received March 1, 2018, and subsequent additional information received by the
Division of Water Resources, and in conformity with the project plans, specifications, and other supporting
data subsequently filed and approved by the Department of Environmental Quality and considered a part
of this permit.
This permit shall be effective from the date of issuance until June 30, 2024, and shall be subject to the
following specified conditions and limitations:
WQ0039842 Version 1.0 Shell Version 180711 Page 1 of 8

I. SCHEDULES
Upon completion of construction of the new reclaimed water utilization facilities, a certification
(attached) shall be submitted from a licensed North Carolina Professional Engineer certifying that the
permitted facility has been installed in accordance with this permit, Division approved plans and
specifications, and other supporting documentation, including the location of all monitoring wells as
applicable. If this proiect is to be completed in phases and partially certified the Permittee shall retain
the resi2onsibility to track further construction approved under the same permit, and shall provide a
final certificate of completion once the entire proeect has been complete . Mail the Certification to the
Division of Water Resources, Non -Discharge Branch, 1617 Mail Service Center, Raleigh, NC 27699-
1617 or Non-Dischar e.Re orts .ncdenr. ov. [15A NCAC 02T .0116]
The Utley Creek WWTP Reclaimed Water System (Permit No. WQ0032289) reclaimed water may
only be utilized for the local program delegated activities or distributed to the approved user
sites/facilities listed in Attachment B of Permit No. WQ0032289. Prior to operation of this facility,
verification shall be provided to the Division that Permit No. WQ0032289 allows for distribution of
reclaimed water to the subject facility. [15A NCAC 02T .0108(b)(2)]
3. Prior to operation, the Permittee shall submit a permit modification with the easement(s) allowing for
the irrigation of reclaimed water on Fields 1, 2, 3, 4, and 5. [15A NCAC 02T .0108(b)(2)]
4. No later than six months prior to the expiration of this permit, the Permittee shall request renewal of
this permit on official Division forms. Upon receipt of the request, the Division will review the
adequacy of the facilities described therein, and if warranted, will renew the permit for such period of
time and under such conditions and limitations as it may deem appropriate. Please note Rule 15A
NCAC 02T .0105(d) requires an updated site map to be submitted with the permit renewal application.
[15A NCAC 02U .0106, 02U .0109]
II. PERFORMANCE STANDARDS
The subject reclaimed water facilities shall be effectively maintained and operated at all times so there
is no discharge to surface waters, nor any contravention of groundwater or surface water standards. In
the event the facilities fail to perform satisfactorily, including the creation of nuisance conditions due
to improper operation and maintenance, or failure of the utilization areas to adequately assimilate the
reclaimed water, the Permittee shall take immediate corrective actions including Division required
actions, such as the construction of additional or replacement reclaimed water utilization facilities or
cessation of reclaimed water utilization activities. [G.S. 143-215.1, 143-213.3(a)]
2. This permit shall not relieve the Permittee of their responsibility for damages to groundwater or surface
water resulting from the operation of this facility. [ 15A NCAC 02B .0200, 02L .0100]
3. Reclaimed water may only be utilized at the sites listed in Attachment B. [G.S. 143-215.1]
4. The Operational Agreement (attached) between the Permittee and the Environmental Management
Commission is incorporated herein by reference and shall be a condition of this permit. Noncompliance
with the terms of the Operational Agreement shall subject the Permittee to all sanctions provided by
North Carolina General Statutes § 143-215.6A to § 143-215.6C for violation of or failure to act in
accordance with the terms and conditions of this permit. [ 15A NCAC 02T .0115]
5. The reclaimed water irrigation system shall be connected to a rain or moisture sensor, which shall
indicate when utilization is not appropriate in accordance with Conditions IIIA. and 111.5. ofthis permit.
[ 15A NCAC 02T .0108(b)(1)]
WQ0039842 Version 1.0 Shell Version 180711 Page 2 of 8

6. The following shall be requirements for the reclaimed water utilization facilities:
a. All reclaimed water valves, storage facilities and outlets shall be tagged or labeled to warn the
public or employees that reclaimed water is not intended for drinking. Where appropriate, such
warning shall inform the public or employees to avoid contact with reclaimed water.
b. All reclaimed water piping, valves, outlets and other appurtenances shall be color -coded, taped or
otherwise marked to identify the source of the water as being reclaimed water.
i. All reclaimed water piping and appurtenances shall be either colored purple (i.e., Pantone 522)
and embossed or integrally stamped or marked "CAUTION: RECLAIMED WATER — DO
NOT DRINK" or be installed with a purple (i.e., Pantone 522) identification tape or
polyethylene vinyl wrap. The warning shall be stamped on opposite sides of the pipe and
repeated every three feet or less.
ii. Identification tape shall be at least three inches wide and have white or black lettering on purple
(i.e., Pantone 522) field stating "CAUTION: RECLAIMED WATER — DO NOT DRINK."
Identification tape shall be installed on reclaimed water pipelines in a visible manner, fastened
at least every 10 feet to each pipe length and run continuously the entire length of the pipe.
iii. Existing underground distribution systems retrofitted for the purpose of distributing reclaimed
water shall be taped or otherwise identified as noted above. This identification need not extend
the entire length of the distribution system, but shall be incorporated within 10 feet of crossing
any potable water supply line or sanitary sewer line.
c. All reclaimed water valves and outlets shall be of a type, or secured in a manner, that permits
operation by authorized personnel only.
d. Hose bibs shall be located in locked, below grade vaults that shall be labeled as being of non -
potable quality. As an alternative to the use of locked vaults with standard hose bib services, other
locking mechanisms such as hose bibs which can only be operated by a tool may be placed above
ground and labeled as non -potable water.
[15A NCAC 02U .0403]
7. No direct cross -connections shall be allowed between reclaimed water and potable water systems,
unless such connection has been approved by the Department pursuant to 15A NCAC 18C .0406. [15A
NCAC 02U .0403(f)]
8. Reclaimed water distribution lines shall be located at least 10 feet horizontally from and 18 inches
below any water line where practicable. Where these separation distances cannot be met, the piping
and integrity testing procedures shall meet water main standards in accordance with 15A NCAC 18C.
[15A NCAC 02U .0403(h)]
9. Reclaimed water distribution lines shall not be less than 100 feet from a well unless the piping and
integrity testing procedures meet water main standards in accordance with 15A NCAC 18C, but in no
case shall they be less than 25 feet from a private well or 50 feet from a public well. [ 15A NCAC 02U
.0403(i)]
10. Reclaimed water distribution lines shall be located at least two feet horizontally from and 18 inches
above any sewer line where practicable. Where these separation distances cannot be met, the piping
and integrity testing procedures shall meet water main standards in accordance with 15A NCAC 18C.
[15A NCAC 02U .04030)]
11. The compliance and review boundaries are established at the utilization area boundaries. Any
exceedance of standards at the compliance or review boundary shall require action in accordance with
15A NCAC 02L .0106. [15A NCAC 02U .0501(a)(6)]
12. The Permittee shall apply for a permit modification to establish a new compliance boundary prior to
any sale or transfer of property affecting a compliance boundary. [ 15A NCAC 02L .0107(c)]
WQ0039842 Version 1.0 Shell Version 180711 Page 3 of 8

13. No wells, excluding Division approved monitoring wells, shall be constructed within the compliance
boundary except as provided for in 15A NCAC 02L .0107(g). [ 15A NCAC 02L .0107(d)]
14. The facilities permitted herein shall be constructed according to the following setbacks:
a. The setbacks for reclaimed utilization sites shall be as follows (all distances in feet):
i. Surface waters not classified SA: 25
ii. Surface waters classified SA: 100
iii. Any well with exception to monitoring wells: 100
[15A NCAC 02U .0701]
III. OPERATION AND MAINTENANCE REQUIREMENTS
1. The reclaimed water utilization facilities shall be properly maintained and operated at all times. The
facilities shall be effectively maintained and operated as a reclaimed water system to prevent the
discharge of any reclaimed water or partially treated effluent resulting from the operation of this facility.
[15A NCAC 02T .0108(b)(1)]
2. The Permittee shall maintain an Operation and Maintenance Plan, which at a minimum shall include
the following:
a. Description of the system in sufficient detail to show what operations are necessary for the system
to function and by whom the functions will be conducted;
b. A map of all distribution lines and record drawings of all utilization systems under the Permittee's
control;
c. Description of anticipated maintenance activities;
d. Include provisions for safety measures including restriction of access to sites and equipment; and
e. Spill control provisions including response to upsets and bypasses including control, containment,
remediation, and contact information for plant personnel, emergency responders and regulatory
agencies.
[15A NCAC 02U .0801]
3. Upon the Water Pollution Control System Operators Certification Commission's (WPCSOCC)
classification of the subject non -discharge facilities, in accordance with 15A NCAC 08G .0200 the
Permittee shall designate and employ a certified operator in responsible charge (ORC) and one or more
certified operator(s) as back-up ORC(s). The ORC or their back-up shall visit the facilities in
accordance with 15A NCAC 08G .0200, and shall comply with all other conditions specified in the
previously cited rules. At the time of this permit issuance, a certified ORC is not required for
conjunctive reclaimed water users. [15A NCAC 02U .0117]
4. A suitable year round vegetative cover shall be maintained on irrigation sites at all times, such that crop
health is optimized, allows for even distribution of reclaimed water, and allows inspection of the
irrigation system. [15A NCAC 02T .0108(b)(1)]
5. Adequate measures shall be taken to prevent reclaimed water ponding in or runoff from the irrigation
sites. [15A NCAC 02T .0108(b)(1)]
6. Irrigation shall not be performed during inclement weather or when the ground is in a condition that
will cause ponding or runoff. [15A NCAC 02T .0108(b)(1)]
7. Only reclaimed water generated at Utley Creek WWTP Reclaimed Water System (Permit No.
WQ0032289) and distributed via the Twelve Oaks —Phase 9 distribution line (Permit Nos. WQ0039336
and WQ0039636) shall be utilized in accordance with this permit. [G.S. 143-215.1]
WQ0039842 Version 1.0 Shell Version 180711 Page 4 of 8

8. Public access to reclaimed water utilization sites shall be controlled during active site use. Such
controls may include the posting of signs showing the activities being conducted at each site. [15A
NCAC 02U .0501]
9. The Permittee shall provide notification to the public and/or employees about the use of reclaimed
water, and that reclaimed water is not intended for drinking. Such notification shall be provided to
employees in a language they can understand. [15A NCAC 02U .0501]
IV. MONITORING AND REPORTING REQUIREMENTS
1. Any Division required monitoring (including groundwater, plant tissue, soil and surface water analyses)
necessary to ensure groundwater and surface water protection shall be established, and an acceptable
sampling reporting schedule shall be followed. [15A NCAC 02T .0108(c)]
2. A Division certified laboratory shall conduct all laboratory analyses for the required effluent,
groundwater or surface water parameters. [ 15A NCAC 02H .0800]
3. A maintenance log shall be maintained at this facility. This log shall be maintained at the facility for a
period of no less than five years, and shall be made available to the Division upon request. At a
minimum, this log shall include:
a. Date of calibration of flow measurement device(s);
b. Date of calibration of turbidimeter;
c. Record of preventative maintenance (e.g., changing/adjusting of equipment, pump and valve
maintenance, cross connection control, testing, inspections and cleanings, etc.; and
d. Record of all unpermitted releases of reclaimed water to surface water or land surface including
date of occurrence, estimated volume of release, cause, and corrective action taken.
[15A NCAC 02T .0108(b)(1)]
4. Noncompliance Notification:
The Permittee shall report by telephone to the Raleigh Regional Office, telephone number (919) 791-
4200, as soon as possible, but in no case more than 24 hours, or on the next working day following the
occurrence or first knowledge of the occurrence of any of the following:
a. Any failure resulting in a discharge of reclaimed water directly to surface waters or any unpermitted
release of reclaimed water to land surface greater than or equal to 5,000 gallons. Unpermitted
releases less than 5,000 gallons to land surface shall be documented by the Permittee in accordance
with Condition IV.3.d. but do not require Regional Office notification.
b. Anytime self -monitoring indicates the facilities permitted herein have gone out of compliance with
the limitations contained in this permit.
c. Ponding in or runoff from the reclaimed water utilization sites.
Any emergency requiring immediate reporting (e.g., discharges to surface waters, imminent failure of
a storage structure, etc.) outside normal business hours shall be reported to the Division's Emergency
Response personnel at telephone number [phone], [phone], or [phone]. Persons
reporting such occurrences by telephone shall also file a written report in letter form within five days
following first knowledge of the occurrence. This report shall outline the actions taken or proposed to
betaken to ensure the problem does not recur. [15A NCAC 02T .0108(b)(1)]
WQ0039842 Version 1.0 Shell Version 180711 Page 5 of 8

V. INSPECTIONS
1. The Permittee shall provide adequate inspection and maintenance to ensure proper operation of the
utilization facilities. [15A NCAC 02T .0108(b)]
2. The Permittee or their designee shall inspect the utilization facilities to prevent malfunction, facility
deterioration and operator errors resulting in discharges, which may cause the release of wastes to the
environment, a threat to human health or a public nuisance. The Permittee shall maintain an inspection
log that includes, at a minimum, the date and time of inspection, observations made, and any
maintenance, repairs, or corrective actions taken. The Permittee shall maintain this inspection log for
a period of five years from the date of the inspection, and this log shall be made available to the Division
upon request. [15A NCAC 02T .0108(b)]
3. Any duly authorized Division representative may, upon presentation of credentials, enter and inspect
any property, premises or place on or related to the utilization facilities permitted herein at any
reasonable time for the purpose of determining compliance with this permit; may inspect or copy any
records required to be maintained under the terms and conditions of this permit, and may collect
groundwater, surface water or leachate samples. [G.S. 143-215.1]
VI. GENERAL CONDITIONS
1. Failure to comply with the conditions and limitations contained herein may subject the Permittee to an
enforcement action by the Division in accordance with North Carolina General Statutes 143-215.6A to
143-215.6C. [G.S. 143-215.6A to 143-215.6C]
2. This permit shall become voidable if the permitted facilities are not constructed in accordance with the
conditions of this permit, the Division approved plans and specifications, and other supporting
documentation. [ 15A NCAC 02T .0110]
3. This permit is effective only with respect to the nature and volume of wastes described in the permit
application, Division approved plans and specifications, and other supporting documentation. No
variances to applicable rules governing the construction or operation of the permitted facilities are
granted, unless specifically requested and approved in this permit pursuant to 15A NCAC 02T .0105(n).
[G.S. 142-215.1 ]
The issuance of this permit does not exempt the Permittee from complying with any and all statutes,
rules, regulations, or ordinances, which may be imposed by other jurisdictional government agencies
(e.g., local, state, and federal). Of particular concern to the Division are applicable river buffer rules in
15A NCAC 02B .0200; erosion and sedimentation control requirements in 15A NCAC Chapter 4 and
under the Division's General Permit NCGO10000; any requirements pertaining to wetlands under 15A
NCAC 02B .0200 and 02H .0500; National Pollutant Discharge Elimination System (NPDES)
requirements under 15A NCAC 02H .0100, and documentation of compliance with Article 21 Part 6
of Chapter 143 of the General Statutes. [15A NCAC 02T .0105(c)(6)]
In the event the permitted facilities change ownership or the Permittee changes their name, a written
permit modification request shall be submitted to the Division. This request shall be made on official
Division forms, and shall include appropriate property ownership documentation and other supporting
documentation as necessary. The Permittee of record shall remain fully responsible for maintaining
and operating the facilities permitted herein until a permit is issued to the new owner. [15A NCAC
02T .0104]
6. The Permittee shall retain a set of Division approved plans and specifications for the life of the facilities
permitted herein. [15A NCAC 02T .0108(b)(1)]
7. The Permittee shall maintain this permit until all permitted facilities herein are properly closed or
permitted under another permit issued by the appropriate permitting authority. [15A NCAC 02T
.01050)]
WQ0039842 Version 1.0 Shell Version 180711 Page 6 of 8

8. This permit is subject to revocation or unilateral modification upon 60 days notice from the Division
Director, in whole or part for the requirements listed in 15A NCAC 02T .0110. [ 15A NCAC 02T .0110]
9. Unless the Division Director grants a variance, expansion of the permitted facilities contained herein
shall not be granted if the Permittee exemplifies any of the criteria in 15A NCAC 02T .0120(b). [15A
NCAC 02T .0120]
10. The Permittee shall pay the annual fee within 30 days after being billed by the Division. Failure to pay
the annual fee accordingly shall be cause for the Division to revoke this permit. [15A NCAC 02T
.0105(e)(3)]
Permit issued this the 201 day of November 2018
NORTH CAROLINA ENVIRONMENTAL MANAGEMENT COMMISSION
Linda Culpepper, Interim Director
Division of Water Resources
By Authority of the Environmental Mana Jbent Commission
Permit Number WQ0039842
WQ0039842 Version 1.0 Shell Version 180711 Page 7 of 8

Permit No. WQ0039842
Meritage Homes of the Carolinas, Inc.
Twelve Oaks Conjunctive Utilization System
❑ Partial ❑ Final
Conjunctive Reclaimed Water Utilization System
November 20, 2018
Wake County
ENGINEERING CERTIFICATION
In accordance with 15A NCAC 02T .0116, I,� , as
a duly registered Professional Engineer in the State of North Carolina, having the Permittee's authorization
to ❑ periodically ❑ weekly ❑ fully observe the construction of the permitted facility, hereby state to the
best of my abilities that due care and diligence was used in the observation of the construction, such that
the facility was built within substantial compliance and intent of this permit, the Division approved plans
and specifications, and other supporting documentation.
❑ Any variation to this permit, the Division approved plans and specifications, and other supporting
documentation has been documented in the attached as -built drawings, and shall serve as the
Permittee's minor modification request to amend the permit accordingly.
Provide a brief narrative description of any variations:
Professional Engineer's Name
Engineering Firm
Mailing Address
City State Zip
Telephone E-mail NC PE Seal, Signature & Date
THE COMPLETED ENGINEERING CERTIFICATION, INCLUDING ALL SUPPORTING
INFORMATION AND MATERIALS, SHALL BE SENT TO THE FOLLOWING ADDRESS:
NORTH CAROLINA DEPARTMENT OF ENVIRONMENTAL QUALITY
DIVISION OF WATER RESOURCES
NON -DISCHARGE BRANCH
By U.S. Postal Service By Courier/Special Delive1y By Electronic Method
1617 Mail Service Center 6th Floor, Office 640n Non-Discharge.ReportsaNcdenr.Gov
Raleigh, NC 27699-1617 512 N. Salisbury St. Or
Raleigh, NC 27604 https://Edocs.Deq.Nc.Gov/Forms/Nondischarge-
Branch-Submittal-Form
WQ0039842 Version 1.0 Shell Version 180711 Page 8 of 8

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STATE OF NORTH CAROLINA
COUNW OF W e' `'s— Permit No. IAV 00 2 0 4 Z.
This AGRM3MBNT made pursuant to o.5. 143-215.1 (dl) and entered Into this i day
of
u P'Q_ tat 0 . by and between the North Carolina Environmental Management
Commission, an agency of the State of North Carolina, hereinafter known as the COMMISSION; and
ML1;\ V' %xv.�a� k Sk- - .1vL-. , a corporation/general partnership registered/licensed to do
business In the State of North Carolina, hereinafter known as the DEVELOPER.
WITNESSWH:
1. The DEVELOPER is the owner of the certain lands lying in County, upon
which it is emoting and will erect dwelling units and other improvements, said development to be known
as % 0 .u_!:' Vk%_4't (hereinafter the Development).
2. The DEVELOPER desires, to construct a wastewater collection system with pumps, wastewater treatment
works, and/or disposal facilities (hereinafter Disposal System) to provide sanitary sewage disposal to
serve the Development on said lands.
3. The DEVELOPER has applied to the COMMISSION for the issuance of a permit pursuant to O.S. 143-
215.1 to construct, maintain, and operate the Disposal System.
4. The DEVELOPER has created or shall create unit ownership in said dwellings units, other improvements
and lands through filing of a Declaration of Unit Ownership (hereinafter Declaration), pursuant to Chapter
47C of the North Carolina General Statutes.
S. The DEVELOPER has caused to be formed or will cause to be'formed at the time of filing of the
Declaration, the (Uget Owners' AU09 atlon) (hereinafter
Association), a non-profit corporation organized and existing under and by the virtue of the laws of the
State of North Carolina, for the purpose, among others, of handling the property, affairs and business of
the Development; of operating, maintaining, re -constructing and repairing the common elements of the
lands and improvements subject to unit ownership, including the Disposal System; and of collecting dues
and assessments to provide funds for such operation, maintenance, re -construction and repair.
6. The COMMISSION desires to assure that the Disposal System of the Development is properly
constructed, maintained and operated in accordance with law and permit provisions in order to protect the
quality of the waters of the State and the public interest therein.
NOW, THEREFORE, In consideration of the promises and the benefits to be derived by each of the parties
hereto, the COMMISSION and DEVELOPER do hereby mutually agree as follows:
1. The DEVELOPER shall construct the Disposal System in accordance with the permit and .plans and
specifications hereafter issued and approved by the COMMISSION, and shall thereafter properly operate
and maintain such systems and facilities in accordance with applicable permit provisions and law.
2. The DEVELOPER shall not transfer ownership and/or control of the Disposal System to the Association
until construction has been completed In accordance with the permit and approved plans, and the staff of
the Division of Water Resources has inspected and approved of the facilities. In order to change the name
of the permit holder, the DEVELOPER must request that the permit be reissued to the Association. The
request must include a copy of the Association Bylaws and Declaration.
3. The DEVELOPER shall not trans , cone Inquish r release its responsibility
for the operation and maintenanceof its permit 1has been reissued to the
DEVELOPMUs successor. N C D E Q/ D W R
FORM. DEV 11-17 14 JUN 2018 Page l of
Non -Discharge
Permitting Unit

4. The DEVELOPER shall provide in the Declaration and Association Bylaws that the Disposal System and
appurtenances thereto are part of the common elements and shall thereafter be properly maintained and
operated In conformity with law and the provisions of the permit for construction, operation, repair, and
maintenance of the system and facilities. The Declaration and Bylaws shelf identify the entire wastewater
treatment, collection and disposal system as a common element, which will receive the highest priority for
expenditures by the Association except for Federal, State, and local taxes and Insurance.
S. The DEVELOPER shall provide In the Declaration and Association Bylaws that the Disposal System will
be maintained out of the common expenses. in order to assure that there shall be fiends readily available
to repair, maintain or construct the Disposal System, beyond the routine operation and maintenance
expenses, the Declaration and Association Bylaws shall provide that a fired be created out of the common
expenses. Such #lard shall be separate f ern the routine maintenance funds allocated for the facility and
shall be part of the yearly budget.
6. in the event the common expense allocation and separate fund are not adequate for the construction,
repair, and maintenance of the Disposal System, the Declaration and Association Bylaws shall provide for
special assessments to cover such necessary costs. There shall be no limit on the amount of such
assessments, and the Declaration and Bylaws shall provide that such special assessments can be made as
necessary at any time.
7. If a wastewater collection system and wastewater treatment and/or disposal facility provided by any city,.
town, village, county, water and sewer authorities, or other unit of government shall hereinafter become
available to serve the Development, the DEVELOPER shall take such action as is necessary to cause the
existing and fifte wastewater of the Development to be accepted and discharged into said governmental
system, and shall convey or transfer as much of the Disposal System and such necessary easements as the
governmental unit may require as condition of accepting the Development's wastewater.
8. Recognizing that it would be contrary to the public interest and to the public health, safety and welfare for
the Association to enter into voluntary dissolution without having made adequate provision for the
continued proper maintenance, repair and operation of its Disposal System, the DEVELOPER shall
provide is the Association Bylaws that the Association shall not enter into voluntary dissolution without
first having transferred its said system and facilities to some person, corporation or other entity acceptable
to and approved by the COMMISSION by the issuance of a permit.
9. The agreements set forth In numbered paragraphs 1, 2, 3, 4, S, 6, 7, and 8 above shall be conditions of any
permit issued by the COMMISSION to the DEVELOPER for the construction, maintenance, repair and
operation of the Disposal System.
10. A copy of this agreement shall be filed at the Register of Deeds in the County(ies) where the Declaration
is filed and in the offices of the Secretary of State of North Carolina with the Articles of Incorporation of
the Association.
IN WITNESS WHBREOF, this agreement was executed in duplicate originals by the duly authorized
representative of the patties hereto on the day and year written as indicated by each of the parties named below:
FOR THE ENVIRONMENTAL
MANAGEMENT COMMISSION
Linda Culpepper, Interim Director
Division of Water Resources
(Date)
?4,Qvi k -i t kkOV6 4-5 & -k, Ak (gar L\c.�q,S lv�Z.
Name of D
LOPER
0201Z—
(Signatu
Print Name
Arid Title
4
(Date)
FORM. MV 11.17 Page 2 of 2

JOINT
RE AEI ED
NCDEQ/DWR
010 OCT 2018
Noll -Discharge
(12 Oaks
THIS JOINT DEVELOPMENT AND ESCROW AGREEMENT (the "Agreement")
is made effective as of the 2' `a y of June, 2017 (the "Effective Date"), by and among
MERITAGE HOMES OF THE CAROLINAS, INC., an Arizona corporation ("Meritage"), as
owner of the "Meritage Parcel" (as defined below) and in its capacity as "Contract
Administrator", and SM RALEIGH, LLC, a North Carolina limited liability company
("SMC"), for the purpose of setting forth the. agreement of such parties and to provide
instructions to each of METRO TITLE COMPANY, LLC ("Escrow Agent"). Each of Meritage
and SMC are sometimes referred to in this Agreement, individually, as an "Owner," and
collectively, as the "Owners." Each Owner and the Contract Administrator are sometimes
referred to in this Agreement, individually, as a "Party," and collectively, as the "Parties."
RECITALS
A. Each Owner owns one or more parcels of real property (each a "Parcel" and
collectively, the "Parcels" or the "Benefitted Property") located within the community under
development and commonly known as 12 Oaks Phase 9 (the "Project"), in Wake County, (the
"County"), North Carolina. The Parcel(s) owned by Meritage are more particularly described
on Exhibit "A-1" attached hereto (the "Meritage Parcel"). The Parcel(s) owned by SMC are
more particularly described on Exhibit "A-2" attached hereto (the "SMC Parcel").
B. The Owners desire that certain off -site and backbone subdivision work and
improvements and common amenities benefiting the Benefitted Property and described
on Exhibit `B" attached hereto (collectively, the "Improvements") be performed and
constructed in accordance with this Agreement.
C. The Owners desire to enter into this Agreement in order to (1) establish an orderly
plan for the design, construction, and installation of the Improvements; (2) allocate the cost of
the Improvements among the Owners; and (3) establish a mechanism for the funding of the cost
of the Improvements.
D. The Owners desire to designate Contract Administrator to act as their agent to
coordinate certain matters specified herein on behalf of the Owners.
AGREEMENT
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Parties agree as follows:
ARTICLE 1
DESIGN AND CONSTRUCTION OF IMPROVEMENTS
1.1 Coordination of Construction. Contract Administrator shall administer and
coordinate the design and construction of the Improvements and perform the functions of the
NPRALd:871622.1

Contract Administrator as provided in and subject to the terms and conditions of this Agreement.
Owners acknowledge and agree that except for the Improvements, each Owner shall be
responsible for the design, construction and installation of, and the costs and expenses related to,
any additional on -site and off -site improvements to be constructed or installed to or within such
Owner's Parcel(s), including, without limitation, any improvements shown on any improvement
plans for such Parcel and/or for any lots into which such Parcel is subdivided (a "Lot"). In
addition, each Owner shall be responsible for payment of any utility deposits and charges,
including, without limitation, any applicable hookup, tap, and license fees for all utility service to
such Owner's Parcel(s) and all Lots therein, any costs or charges for meters and utility services
and arrangement for utility service during any period of construction activity by Owner on the
Parcel(s) or Lots owned by such Owner, and the bringing of all utility lines to such Owner's on -
site improvements within such Owner's Parcel(s), including, without limitation from any
connection installed to the boundary of such Parcel as part of the Improvements in accordance
with the Plans and Specifications.
1.2 _Contracts for Work,• Percents a of Each Owner's Obligation. Contract
Administrator, on behalf of and as agent for the Owners, shall contract for all of the work and
materials comprising the Improvements. Each contract for the work and materials comprising
the Improvements, and for the design and engineering of such Improvements (each a
"Contract"), shall state that each Owner is separately liable for its "Prorated Share" (as
hereinafter defined) of the amount due under the Contract and such Owners shall be designated
as third -party beneficiaries of the Contract. The form of each Contract shall be in Contract
Administrator's customary form or another commercially reasonable form. Contract
Administrator shall provide to each Owner a copy of each Contract promptly after full execution
thereof. Contract Administrator is acting solely as the administrator under this Agreement, and
not as the general contractor with respect to the Improvements. Contract Administrator, on
behalf of the Owners, may non -exclusively assign any warranties under a Contract to the
applicable "Approving Authority" (as hereinafter defined) in connection with the dedication
and/or other conveyance of any Improvements to which such warranties relate. Each Owner
acknowledges and agrees that Contract Administrator shall have no liability whatsoever for any
of the work and materials comprising the Improvements, or any Contract therefor, and each
Owner covenants not to assert any right to seek or obtain any damages or other remedy against
Contract Administrator with respect thereto. The percentage share of all obligations and
liabilities under each Contract that are allocable to each Parcel shall be as set forth on Exhibit
"C" attached hereto (the "Prorated Share").
1.3 Plans and Specifications: Mass Grading Desi m Strateg v. The Improvements will
be constructed substantially in accordance with the plans and specifications approved by any
applicable municipality, the County and/or other applicable governmental authorities, quasi -
governmental authorities, and utility regulators and providers (each, an "Approving Authority"
and collectively, the "Approving Authorities"), and by executing this Agreement, each Owner
shall be conclusively deemed to have accepted such plans and specifications (the "Plans and
Specifications"). The Plans and Specifications shall name all Owners as parties entitled to use
and rely thereon. The mass grading design for the Benefitted Property shall not materially
benefit or disadvantage one Parcel over another Parcel.
2 Nex.v I:sTt62z.1

1.4 Right to Inspect Improvements. The Parties agree that Contract Administrator
shall have no obligation or responsibility to inspect the construction of the Improvements, nor
any liability with respect thereto, and each of the Owners shall have the right to inspect the
construction of the Improvements at any time; provided, however, such inspection shall be at the
sole risk of such inspecting Owner. If any Owner believes that the Improvements are not being
constructed in substantial conformance with the Plans and Specifications, then such Owner shall
notify the other Owner and Contract Administrator. If Contract Administrator agrees with the
notifying Owner, then Contract Administrator shall notify the applicable Contractor (as defined
in Section 2.2 below) of such fact and demand that the Contractor correct any work that is not in
substantial conformance with the Plans and Specifications. Contract Administrator shall not be
obligated to institute any legal action against such Contractor, unless all Owners agree to pursue
such legal action and pay their respective Prorated Share of the costs of such litigation. If
Contract Administrator does not agree with the notifying Owner, then the notifying Owner may
submit the matter to arbitration as provided in ARTICLE 6 below within five (5) Business Days
after receiving notice thereof from Contract Administrator. If the Owner fails to submit the
disapproved matters to arbitration in accordance with ARTICLE 6 below within said five (5)
Business Day time period, then the Owner's objection shall be deemed withdrawn.
1.5 Completion Inspection. Contract Administrator shall notify the Owners in writing
when Contract Administrator has received documentation from all Contractors engaged to
construct the Improvements stating that such Contractors have completed their work or when the
Contract Administrator otherwise believes that the Improvements have been completed, except
for minor punch list work. The notice to the Owners shall include a certification to the Contract
Administrator and the Owners from the engineer engaged with respect to the Improvements that
such Improvements have been completed in substantial conformance with the applicable Plans
and Specifications. The Owners shall have ten (10) days after receipt of such notice to inspect
the Improvements. In connection with the notice above, Contract Administrator shall specify a
date and time occurring at least five (5) days after such notice and prior to the end of such ten
(10) day period for such inspection to occur simultaneously by all Owners, and all Owners shall
use their respective commercially reasonable efforts to inspect the Improvements together at
such specified date and time. If any of the Owners believes that the Improvements have not been
completed in substantial conformance with the Improvement Plans, then such Owner shall notify
Contract Administrator and the other Owner in writing within said ten (10) day period. If
Contract Administrator does.not agree with the notifying Owner, then the notifying Owner may
submit the matter to arbitration as provided in ARTICLE 6 below within five (5) Business Days
after receiving notice thereof from Contract Administrator. If the Owner fails to submit the
disapproved matters to arbitration in accordance with ARTICLE 6 below within said five (5)
Business Day time period, then the Owner's objection shall be deemed withdrawn and the
Owners shall be deemed to agree that the Improvements have been completed in substantial
accordance with the Improvement Plans; provided, however, the foregoing shall not limit any
subsequent warranty or corrective action against any material supplier, contractor, subcontractor,
or other party to a Contract pertaining to the Improvements (other than the Contract
Administrator).
1.6 Grant of Necessary Easements. Each Owner shall grant, to the extent not
previously provided for in any recorded subdivision plat, such separate written easements, right
of entry, and/or licenses in or upon the portions of the Benefitted Property owned by such Owner
3 NPRA%1:871622.1

as are reasonably necessary for the installation and/or permanent location of the Improvements in
accordance with the Plans and Specifications and/or the performance of Contract Administrator's
responsibilities under this Agreement (and to the extent that any of the tracts to be owned by the
homeowners association for the Project have been conveyed to such homeowners association as
of the Effective Date and/or are conveyed at any time hereafter and prior to completion of the
Improvements, each of the Parties agrees to cooperate in obtaining from such homeowners
association such separate written easements, right of entry, and/or . licenses in or upon the
portions of such tracts as are reasonably necessary for the installation and/or permanent location
of the Improvements in accordance with the Plans and Specifications and/or the performance of
Contract Administrator's responsibilities under this Agreement). In addition to the foregoing,
each Owner specifically authorizes and grants to Contract Administrator and the Contractors
entering into a Contract with such Contract Administrator, and their subcontractors and
consultants, a license to enter upon the portions of the Benefitted Property owned by such Owner
as reasonably necessary to undertake and perform the construction and installation of the
Improvements. Any grant of easements, rights of entry, and/or licenses pursuant to this Section
shall in no event affect building pads or the marketability of any Lot in the Benefitted Property.
The rights under this Section 1..7 shall terminate upon the completion of all of the Improvements
and the full satisfaction of all of Contract Administrator's obligations under this Agreement.
1.7 Continuing Obli ate ions: Memorandum; Release of Memorandum. Each Parcel
shall be held, transferred, sold, conveyed, leased, occupied, and used subject to the terms,
covenants, and conditions of this Agreement, which shall run with the land and be binding upon,
benefit, and burden each portion of the Benefitted Property and all persons having or acquiring
any right, title, or interest therein. This Agreement shall be appurtenant to each portion of the
Benefitted Property. Accordingly, concurrently with the execution of this Agreement, the
Owners have executed and delivered to Escrow Agent, for recording in the Official Records of
the County, a Memorandum of this Agreement in the form of Exhibit "D-1" attached hereto (the
"Memorandum"). Upon Completion of the Improvements and payment of all amounts due
hereunder by an Owner (including, without limitation, the expiration of all warranty periods and
satisfaction of all obligations related thereto), the Memorandum shall be automatically (without
the necessity of recording any document) released of record from the Parcel(s) owned by such
Owner. Notwithstanding that the foregoing release shall be effective without the need for further
action by any Party, promptly upon request by any Owner to which such release has occurred
made on or after the date of such release, the other Owner agrees to execute, acknowledge, and
deliver to the requesting Owner for recordation with respect to the Parcel(s) owned by such
Owner, a termination of the Memorandum in the form of Exhibit "D-2" attached hereto.
1.8 Reimbursement Rip. To the extent there are any rights to payments, or credits
against otherwise payable fees, provided by any applicable Approving Authority or other entity
for reimbursement of costs related to any portion of the Improvements, then the Owners shall
allocate any such payments/credits based upon their Prorated Share applicable to such portion of
the Improvements (and shall take such further action as is reasonably requested by any Party to
effectuate this allocation).
1.9 Required Assurances. If any assurances are required for any of the Improvements
by any applicable Approving Authorities, Contract Administrator will provide the required
assurances, for and on behalf of the Owners; provided that, as a condition thereto, Contract
4 NPRAL1:871622.1

Administrator may require that each of the Owners pay to Contract Administrator an amount
equal to such Owner's Prorated Share of the assurances, and in the event any amounts are still
held by Contract Administrator after all obligations secured by the applicable assurances have
been satisfied and such assurances have been released, Contract Administrator will promptly
return such amounts to the Owner that delivered the same to Contract Administrator.
1.10 Completion of Improvements. The Owners anticipate that substantial completion
of the Improvements will be achieved in accordance with the construction schedule attached
hereto as Exhibit "B" (the "Construction Schedule'). If Contract Administrator is prevented
from commencing or completing the Work as a result of an "Unavoidable Delay" (as defined
below), then the applicable date(s) set forth in the Construction Schedule shall be extended for
the additional time directly caused by such delay. As used in this Agreement, the Work shall be
deemed substantially complete when the applicable Improvements are substantially completed
according to the Plans and Specifications as reflected in a certification to that effect by the
engineer engaged with respect to the Improvements, a copy of which certification shall be
delivered to the Owners subject only to punch list items. "Unavoidable Delay" means any delay
resulting from rain storms, inclement weather, acts of God, unavailability or shortage of labor or
materials, national emergency, fire or other casualty, natural disaster, war, riots, acts of violence,
labor strike, injunctions in connection with litigation, delays by any owners association,
governmental or quasi -governmental authority, or utility, or any other cause that is not within the
reasonable control of Contract Administrator. The financial inability of any Party hereto seeking
to claim an Unavoidable Delay shall not give rise to an Unavoidable Delay.
ARTICLE 2
BUDGET AND SELECTION OF CONTRACTORS
2.1 Initial BudF-et. Attached hereto as Exhibit "F" is an estimate of the total "Costs"
(as hereinafter defined) to design and construct the Improvements (the "Budget"). The Budget
is subject to adjustment as provided in this ARTICLE 2. To the extent that Costs for certain
components of the Improvements are identified in the Budget as "to be determined upon
completion of design" or "to be determined upon receipt of bids therefor" or other similar
notation, such amounts shall be included in a revised Budget created and distributed in
accordance with the balance of this ARTICLE 2. As used herein, the "Cost" of (a) a particular
component of the Improvements means the actual costs incurred in connection with the design,
construction, and installation of that component of the Improvements pursuant to this
Agreement, including, without limitation, engineering costs, processing and permitting fees,
labor and materials, any costs associated with obtaining easement and/or license rights from any
third -party necessary for the construction and installation of the Improvements in accordance
with the Plans and Specifications, and any other fees, costs, and expenses that are incurred in
connection with design and construction of the Improvements; and (b) the Improvements means
the aggregate Cost of each component of all of the Improvements.
2.2 Selection of Contractors. All service providers and contractors for the services
and work necessary to design, construct and install each Improvement (each a "Contractor"
and, collectively, the "Contractors") shall be selected by Contract Administrator.
NPRAL1:871622.1

2.3 Revisions of Buds. As and when final bids have been selected for all of the
Improvements in accordance with Section 2.2, Contract Administrator shall update and revise the
Budget to conform to the final bid numbers or other applicable information, and shall deliver a
copy of the revised Budget to the Owners and Escrow Agent. Said revised Budget shall be
deemed the Budget and shall supersede and replace any previously existing Budget. Within five
(5) Business Days following receipt of the Revised Budget, each Owner shall deliver to Escrow
Agent cash or other immediately available funds in the amount of its Prorated Share of any
increase in Costs reflected therein (or increase the letter of credit deposited pursuant to Section
3_2 by the amount of its Prorated Share of any increase in Costs reflected therein).
ARTICLE.3
PAYMENT AND ALLOCATION OF CONSTRUCTION COST
3.1 Cost of Design, Construction and Installation. Each Owner agrees to pay its
respective Prorated Share of the Cost of each component of the Improvements. Payment of each
Owner's Prorated Share of the Cost of the Improvements shall be made in accordance with the
provisions of this ARTICLE 3. The Owners acknowledge that Contract Administrator makes no
representations, warranties, or guaranties hereby that the Improvements actually can be designed
and constructed for the amount specified in the Budget. Each Owner has had an opportunity to
review the Budget and to determine for itself whether the Budget is sufficient to cause the
Improvements to be constructed in accordance with the.Plans and Specifications.
3.2 Fundinp, of Construction Escrow Account.
3.2.1 Initial Deposit. On or before the execution of this Agreement, each
Owner shall deposit with Escrow Agent cash or an irrevocable letter of credit in an amount equal
to its Prorated Share of the initial Budget amount.
3.2.2 Cost Overruns - Deposit of Additional Funds. Circumstances may arise
that cause the need for additional funds (a "Cost Overrun") in excess of the current Funds (as
defined below), including, but not limited to, the discovery of soil or other conditions that require
additional work outside the scope of the initial construction contracts, underestimation of
quantities, casualty loss, and defaults of Contractors or subcontractors. Any Cost Overrun shall
be satisfied by additional funds from the Owners in accordance with their respective Prorated
Share. Contract Administrator shall give notice of a Cost Overrun to the Owners promptly upon
becoming aware thereof. Within five (5) Business Days of receipt of the Cost Overrun notice,
each Owner must deliver its Prorated Share of the Cost Overrun. If an Owner objects to the Cost
Overrun, then no disbursement of the Cost Overrun shall be made during the ten (10) days
immediately following such Objection and the Owners shall attempt in good faith to resolve all
item(s) as to which objection was made within ten (10) days after receipt of the notice of
objection. If the Owners are unable to resolve the matter within said ten (10) day period, then
within five (5) Business Days after the expiration of said ten (10) day period, the Owner that
disapproved the Cost Overrun must either: (i) waive its objection, or (ii) submit the matter to
arbitration as provided in ARTICLE 6. If the matter is submitted to arbitration, no disbursement
of the amount in question shall be made until the arbitration is decided. The objecting Owner
shall have the burden of proving that the Cost Overrun is not necessary and that the
Improvements can be constructed in substantial conformance with the Plans and Specifications
6 NPRAL1:871622.1

and accepted by the applicable Approving Authorities without the additional funds for the Cost
Overrun. If an Owner fails to submit its objection to arbitration in accordance with ARTICLE 6
below within said five (5) Business Day time period, then the Cost Overrun shall be conclusively
deemed approved as to such Owner and such Owner shall thereafter be prohibited from objecting
to the Cost Overrun, including, without limitation, by means of arbitration or any other legal
action. If an Owner is in breach of its obligation in this Section to pay its Prorated Share of the
Cost Overrun, then any of the remaining Owners can pay such amount and the Owner that failed
to pay its Prorated Share shall be obligated to repay on demand the amount paid by the other
Owner(s), plus interest as provided in Section 3.3.2.6. The funds (including any letter of credit
satisfying the terms of this Agreement) deposited with Escrow Agent from time to time pursuant
to this Article 3, together with an interest earned thereon pursuant to Section 3.3.1, are
hereinafter referred to as the "Funds."
3.2.3 Use of Contingency Funds: Reallocation of Line Items.
Notwithstanding any contrary provision of this Agreement, if the actual Cost of any component
of the Improvements (after Completion of that component of the Improvements) described on a
line item on the Budget is less than the amount of the Budget line item therefor, then Contract
Administrator may, in its discretion, revise the Budget and reallocate such savings to other line
items in the Budget without the consent of the Owners. Contract. Administrator shall promptly
provide notice to the Owners regarding any such revision to the Budget and reallocation of such
savings.. Contract Administrator shall not, however, prior to Completion of a component of the
Improvements, reduce the funds allocated in the Budget to such component of the Improvement
and reallocate such reduction to any other Improvement, unless the Owners approve such
reallocation. In addition, Contract Administrator may, without the consent of the Owners,
reallocate any contingency Funds and apply such reallocated amounts to any component of the
Improvements to pay for the Costs incurred in connection with such component of the
Improvements.
3.3 Escrow Agreement. This Agreement shall constitute an escrow agreement and
instructions to Escrow Agent and the Funds shall be disbursed and dealt with by Escrow Agent
in strict accordance with the following:
3.3.1 Interest -Bearing Accounts . Escrow Agent shall deposit the Funds
deposited under this Agreement (other than payments with regard to Draw Requests that are to
be immediately disbursed) into an interest -bearing account with a federally insured and chartered
bank selected by Contract Administrator (which shall be either: JPMorgan Chase Bank, Wells
Fargo Bank, Bank of America, SunTrust Bank, or a successor to any of the foregoing). Deposits
under this Agreement (other than payments with regard to Draw Requests that are to be
immediately disbursed) shall bear interest for the Parry making the deposit.
3.3.2. Draw Procedure. Contract Administrator, acting as the Contract
Administrator and exclusive agent for and on behalf of the Owners, shall be entitled to (subject
to the provisions of this Section 3.3.2] direct Escrow Agent to deliver payment of all or any part
of the Funds at any time or from time to time, as necessary, in the reasonable judgment of
Contract Administrator, to pay to the applicable party all Costs incurred in connection with the
design, construction, and installation of the Improvements subject to the following:
7 rmxni.i:871622.1

3.3.2.1 Draw Request. Contract Administrator may request that
Escrow Agent disburse Funds from time to time upon delivery to Escrow Agent and the Owners
a draw request (a "Draw Request') accompanied by lien waivers executed by all Lien Claimants
(as hereinafter defined) for all labor and materials supplied by such Lien Claimants and covered
by such Draw Request (other than retention amounts). "Lien Claimants" means (i) contractors,
subcontractors, and material suppliers who have a written contract (direct privity) with the
Owners / Contract Administrator to perform services or supply materials in connection with the
construction of the Improvements, and (ii) any other contractor, subcontractor, or supplier that
has delivered the statutory notice to Owners in connection with the Improvements or any
component thereof, to the extent that a copy of such notice has been given to Contract
Administrator. If any lien waivers described above are not available, then Contract
Administrator shall provide such other information, documentation, or assurances reasonably
satisfactory to the Owners as may be appropriate to evidence the termination or non-existence of
any such lien rights.
3.3.2.2 Objections to Draw Requests: Payment of Draw Requests b
Escrow Agent. So long as the terms of Section 3.3.2.1 above have been satisfied, the Owners
shall have no right to delay the payment of or object to any Draw Request. If any Owner objects
to any Draw Request, that Owner must deliver to Escrow Agent, Contract Administrator, and the
other Owner written notice of its objection (specifically identifying the objectionable item(s) and
providing an explanation as to why the Owner believes such item to be inappropriate) within ten
(10) days following receipt of the Draw Request. If no written notice complying with the
immediately preceding sentence is delivered to Escrow Agent, the applicable Contract
Administrator, and all other applicable Owners within the specified ten (10) day period, then
Escrow Agent shall promptly pay all amounts reflected therein. If, within the specified ten (10)
day period, Escrow Agent and the Contract Administrator receives objections from an Owner to
disbursement of any line item amount of a Draw Request in accordance with the preceding
sentence, then Escrow Agent shall not be authorized to disburse to the payee the funds paid on
account of such disputed line item amount (but Escrow Agent shall be authorized to disburse all
other amounts and shall do so promptly following the expiration of the specified ten (10) day
period) unless and until Escrow Agent receives authorization to do so from the Owners, or until
Escrow Agent receives direction from an Arbitrator (as defined in Section 6.1.2 below). If any
Owner objects to the disbursement of any line item amount of a Draw Request, then within seven
(7) days thereafter, Contract Administrator and the Owners shall meet and in good faith attempt
to resolve all objections and provide direction to Escrow Agent to disburse mutually -acceptable
amounts to the appropriate payees, whereupon the Escrow Agent shall promptly disburse such
amounts. If all such objectionable items cannot be resolved by the Owners within such seven (7)
day period as provided in the preceding sentence, then any objecting Owner may submit the
matter to arbitration as provided in ARTICLE 6 within five (5) Business Days after the
expiration of said ten (10) day period. If no objecting Owner submits the matter within said five
(5) Business Day period, then (i) the full Draw Request, including the amount that previously
was objected to by an Owner, shall be deemed approved, whereupon the Escrow Agent shall
promptly disburse such amounts, and (ii) the objecting Owner(s) shall thereafter be prohibited
from objecting to the Draw Request, including, without limitation, by means of arbitration or any
other legal action.
NPRALI:871622.1

3.3.2.3 Final Disbursement. Upon Completion of the Improvements,
Contract Administrator shall submit to Escrow Agent and the Owners a final Draw Request,
together with a certificate of completion or its equivalent issued by the County or other
applicable Approving Authority, as applicable. Payment of the final Draw Request shall be
subject to the provisions of this Section 3.3.2. Following payment of the final Draw Request,
Escrow Agent shall disburse to each Owner any of such Owner's Funds and return any letters of
credit remaining in the escrow account.
3.3.2.4 Warranty Claims. Notwithstanding the occurrence of the Final
Disbursement pursuant to Section 3.3.2.3 above, and subject to Section 3.3.2.5 below with
respect to damages caused by a Party, with regard to any warranty claims by any applicable
Approving Authority (whether in connection with assurances provided pursuant to Section 1.9
above or otherwise) or other person or entity, each Owner will have the right to enforce the
Contracts, but, to the extent recovery is not available from a Contractor, (a) each Owner shall be
responsible for its Prorated Share of any warranty claims made by an Approving Authority or
other person or entity in connection with the Improvements, and (b) each Owner shall be solely
responsible for any warranty claims made by an Approving Authority or other person or entity in
connection with any improvements located on the Benefitted Property owned by such Owner,
other than the Improvements. Contract Administrator shall be entitled to submit Draw Requests
for such amounts in clause (a) in the same manner as set forth above.
3.3.2.5 Damage Caused_ by a Party. Any Party that damages any of the
Improvements shall be responsible for the cost of repair in addition to other amounts payable
hereunder and such Party shall pay the cost of repair upon demand from Contract Administrator
or any other Party.
3.3.2.6 Failure to Pay Amounts Due. If an Owner fails to pay an
amount due hereunder, any other Owner may do so and shall be entitled to interest at the rate
stated in this section from the date the payment is made by such Owner until the date reimbursed.
Any non -defaulting Owner that pays the amount due from a defaulting Owner shall have a lien
against the Parcel(s)/Lots (as applicable) of the defaulting Owner, as provided in the
Memorandum, which lien may be foreclosed upon in the same manner provided by law for
foreclosure of mortgages. All amounts not timely paid hereunder shall bear interest at the rate of
eighteen percent (18%) per annum until paid in full and it shall be a condition precedent to the
right of each and every Owner and such Owner's Parcel to "tie-in" to or otherwise use the
Improvements that such Owner shall have paid its Prorated Share of the Cost of the
Improvements in accordance with this Agreement. The Owners agree to accept payment and
performance of any defaulting Owner's obligations under this Agreement by any Person that has
an interest in all or any portion of the defaulting Owner's Parcel(s), including, without limitation,
any lender or optionee, as if such payment or performance were made by the defaulting Owner.
3.3.2.7 Indemnitv. Escrow Agent shall comply with the requirements
of this Section 3.3, and Escrow Agent shall indemnify, defend, and hold each Party harmless for,
from, and against any and all damages, loss, costs and expense suffered or incurred as a result of
Escrow Agent's breach in performing its obligations in accordance with the requirements of this
Section 3.3.
9 NPRALl:871622.1

3.3.2.8 Advances Made Prior to the Effective Date. Each Owner
acknowledges that prior to the Effective Date, Contract Administrator may have advanced, on
behalf of the Owners, certain moneys benefiting the Benefitted Property and pertaining to certain
of the Improvements to be constructed by third parties, and Contract Administrator shall be
entitled to reimbursement for such amounts.
3.4 Use of Funds. Funds shall be disbursed hereunder by Escrow Agent pursuant to
Draw Requests by check made payable to the party/parties identified in the Draw Request (which
shall be the party to which such payment is owed).
3.5 Form of Letter of Credit. Any letter of credit deposited by an Owner hereunder
must be issued by a lending institution that (i) is a member of the Federal Deposit Insurance
Corporation, and (ii) is JP Morgan/Chase, Wells Fargo Bank, or Bank of America, or another
bank of similar size and strength that is approved by all of the other Parties, which approval shall
not be unreasonably withheld. Each letter of credit shall have an expiration date of not earlier
than one (1) year from the Effective Date. Each letter of credit shall be in substantially the form
of Exhibit "G" attached hereto, shall be issued to the Escrow Agent, as beneficiary, and shall
permit single and partial draws. Each letter of credit shall provide that draws may be made
thereunder based solely upon presentment of the original letter of credit and a draw request
signed by a representative of Escrow Agent certifying that it is entitled to make a draw pursuant
to the terms of this Agreement. A letter of credit may be replaced at any time with a new letter
of credit meeting the requirements of this Agreement. In addition, a letter of credit may be
replaced by depositing cash with Escrow Agent at any time. Cash may be replaced by a Letter of
Credit unless such cash has been obtained as a result of a draw upon a Letter of Credit. Escrow
Agent shall make a good faith effort to provide written notice to all Parties if any letter of credit
being held by Escrow Agent is within thirty (30) days of its scheduled expiration date. If, by the
date that is fifteen (15) days prior to the scheduled expiration date of the letter of credit, such
letter of credit has not been replaced by a new letter of credit with an expiration date that is not
less than ninety (90) days later than the then -existing expiration date, Escrow Agent is hereby
irrevocably authorized and directed, unless Escrow Agent receives written notice executed by all
Parties instructing Escrow Agent otherwise, to cause the letter of credit to be presented for full
payment prior to its expiration date and to then hold all cash funds obtained as a result thereof in
the Escrow Account in accordance with the provisions of this Agreement. The Parties each
hereby fully release and relieve Escrow Agent from any and all claims and liabilities that may
arise as a result of Escrow Agent's compliance with the foregoing. Escrow Agent shall be liable
for any loss suffered or costs incurred by the parties as a result of Escrow Agent's failure to
submit a proper draw to the issuer of the letter of credit in accordance with this Agreement prior
to its expiration date or when otherwise required hereunder. Any letter of credit provided
hereunder shall, at the request of the applicable Owner, be reduced from time to time to the
extent of cash payments that are made by the Party and actually received by Escrow Agent and
to the extent reduction is consistent with such Owner's obligations hereunder. Escrow Agent
shall, and each Owner hereby authorizes Escrow Agent to, deliver to each Owner a copy of each
letter of credit deposited with Escrow Agent hereunder as and when so deposited, together with
each renewal, replacement and reduction thereof, and shall otherwise provide each Owner with a
monthly accounting of the amount of cash and Letters of Credit held by Escrow Agent under this
Agreement.
10 NPRALt:871622.1

3.6 Payrnents when a Letter of Credit has been Provided. If a Party has supplied a
letter of credit rather than a cash deposit, then upon receipt of a Draw Request or other request
for Funds due under this Agreement that Parry shall on or before the tenth (101') day thereafter
pay the amount equal to its Prorated Share of the Draw Request or such other Funds due in
immediately available funds or such other funds that are acceptable to Escrow Agent. This
payment shall be made regardless of whether an objection to the Draw Request is made. If a
Party fails to pay such amount within such time, then Escrow Agent is irrevocably authorized
and instructed, unless Escrow Agent receives written notice executed by all Owners instructing
Escrow Agent otherwise, to cause the letter of credit deposited by such Party to be presented for
full payment and to hold all cash funds obtained as a result thereof in the Escrow Account in
accordance with the provisions of this Agreement and if the Escrow Agent fails to take such
action, then the other non -defaulting Owners may do so on Escrow Agent's behalf.
ARTICLE 4
CONTRACT ADMINISTRATOR PROVISIONS
4.1 Contract Administrator. In the event that Meritage ceases to be an Owner
hereunder, then a replacement Contract Administrator shall be selected by the Owners. In
electing the replacement Contract Administrator, each eligible Owner shall be entitled to the
number of votes equal to that Owner's Prorated Share and the parry receiving the most votes
shall be elected as the replacement Contract Administrator.
4.2 Contract Administrator Default and Limited Liability. Contract Administrator
shall be in default hereunder (a "Contract Administrator's Default') in the event of any
material breach by Contract Administrator of any provision of this Agreement applicable to
Contract Administrator that is not cured within thirty (30) days after Contract Administrator has
received written notice of such breach from an Owner (a "Contract Administrator Default
Notice"); provided that if such material breach cannot reasonably be cured within thirty (30)
days, Contract Administrator shall have such additional time as is reasonably necessary to cure
such breach on condition that Contract Administrator shall have promptly commenced such cure
following its receipt of a Contract Administrator Default Notice and is thereafter diligently,
prosecuting such cure to completion. In the event of a Contract Administrator's Default,
Contract Administrator shall be liable to each Owner only for the actual out-of-pocket damages
arising directly from such Contract Administrator's Default, each Owner hereby waiving and
covenanting not to assert any right to seek or obtain any other damages (including, but not
limited to, incidental, consequential or punitive damages) resulting from a Contract
Administrator's Default. Moreover, except as specifically stated in the prior sentence, each of
the Owners waives any claims or causes of action such Owner has or might have against
Contract Administrator relating to its responsibility as Contract Administrator or otherwise under
or in connection with this Agreement. Without limiting the generality of the foregoing, each
Owner acknowledges and agrees that Contract Administrator shall have no liability whatsoever
relating to the Improvements, any work done by any contractor or any materials supplied by a
supplier pursuant to any Contract, including, without limitation, grading, soils condition,
drainage, subsurface conditions, or any other defect or conditions arising out of or related to any
work done or performed or to have been done or performed under a Contract, or any services
provided by any engineer or other consultant engaged with respect to any of the improvements,
each Owner hereby agreeing that it shall only have the right to pursue the applicable
11 NPRAL.I.871622.1

Contractor(s) respecting such claims and not Contract Administrator. This Section 4.2 shall not
limit the rights or remedies of any Party under any other agreement to which it is a party with
respect to matters covered thereby, as opposed to matters that are the subject of this Agreement,
which shall be governed by the provisions of this Agreement.
4.3 Right to Replace Contract Administrator. If there is a Contract Administrator's
Default, then in addition to the remedies provided in Section 4.2 above, an Owner may deliver
written notice (an "Assumption Notice") to Contract Administrator that identifies the Contract
Administrator's Default and confirms that the applicable cure period, if any, has expired. Within
five (5) Business Days after delivery of the Assumption Notice, the Owners shall elect a
replacement Contract Administrator, which may be an Owner, a construction affiliate of an
Owner, or a third party. In electing the replacement Contract Administrator, each eligible Owner
shall be entitled to the number of votes equal to that Owner's Prorated Share and the parry
receiving the most votes shall be elected as the replacement Contract Administrator. After
election of a replacement Contract Administrator, all of the rights, obligations, and limitations set
forth in this Agreement shall continue to apply.
ARTICLE 5
ESCROW AGENT PROVISIONS
5.1 Liabili1y. Escrow Agent shall not be liable for any action taken or omitted by it or
by any of the Parties, except for its own negligence, bad faith, recklessness, or intentional
misconduct or breach of this Agreement. Escrow Agent shall be entitled to rely upon advice of
counsel concerning legal matters and upon any document or notice delivered to it hereunder that
it reasonably believes to be genuine or to have been presented by a proper person.
5.2 Ind emni . The Owners (severally, based on their respective Prorated Share)
hereby indemnify Escrow Agent against all costs, damages, expenses, and liabilities that Escrow
Agent may incur or sustain in connection with complying with this Agreement or as a result of
any action arising therefrom, except any claims arising out of Escrow Agent's negligence, bad
faith, recklessness, intentional misconduct, or breach of this Agreement. If conflicting demands
are made upon Escrow Agent to any monies at any time held by it hereunder, then Escrow Agent
may hold said monies or any documents pertaining thereto until the right of the Parties are
determined by an appropriate arbitrator, or Escrow Agent may interplead any and all documents
held by it hereunder, pending the outcome of such arbitration, in which event, Escrow Agent
shall be relieved of any and all liability to the Parties hereunder with respect only to such monies.
ARTICLE 6
ARBITRATION
6.1 Arbitration. Except to the extent this Agreement limits the Parties' right to
arbitrate a matter, any question, dispute, or controversy arising under or in connection with this
Agreement on which the Owners cannot agree (a "Dispute") shall be resolved by mandatory
arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration
Association currently in effect (the "Rules', in accordance with and subject to the following
provisions:
12 NPRALl:971622.1

6.1.1 Dispute Notice. If any Party believes that a Dispute exists, it may
notify the other Parties thereof, which notice (a "Dispute Notice") shall identify the Dispute.
Within five (5) Business Days after giving or receiving such notice, each Party shall submit to
the others its final and best position _as to the Dispute (hereinafter referred to as a "Final
Position"), which shall remain the position of such Party throughout the arbitration process.
Notwithstanding the foregoing, the Parties may make offers in settlement at any time, but no
such proposal shall be considered by the Arbitrator. As promptly as practicable, and in any event
within thirty (30) days following the delivery of the Dispute Notice, the Parties shall meet in an
attempt to resolve the Dispute. If the Dispute cannot be resolved by the Parties at that meeting,
any Party may submit the Dispute to arbitration as hereinafter provided.
6.1.2 Anointment of Arbitrator. A single arbitrator shall be selected
according to the Rules; provided, however, that the individual selected must be recognized in the
Raleigh, North Carolina metropolitan area as having competence in the subject matter of the
Dispute. The term "Arbitrator" as used herein means and refer to the single arbitrator selected
pursuant to this Section.
6.1.3 Conduct of Arbitration. The arbitration shall be conducted in the
Raleigh, North Carolina metropolitan area. The arbitration process shall generally be conducted
by the designated Arbitrator in accordance with the Rules, but the Arbitrator shall have
discretion to vary from those Rules in light of the nature or circumstances of any particular
Dispute. In all events, unless waived by the Parties, the Arbitrator will conduct an arbitration
hearing at which the Parties and their counsel shall be present and have the opportunity to
present evidence and examine the evidence presented by each other Party. The proceedings at
the arbitration hearing shall, unless waived by the Parties, be conducted under oath and before a
court reporter. The Parties shall cooperate in good faith to permit a conclusion of the arbitration
hearing within thirty (30) days following the appointment of the Arbitrator and shall endeavor to
submit a joint statement setting forth each Dispute to be submitted to arbitration, including a
summary of each Party's Final Position on each Dispute. The Arbitrator shall make a
determination as to each Dispute in favor of the Final Position (as submitted within the first ten
(10) days following the delivery of a Dispute Notice) determined by the Arbitrator to be the most
reasonable of all Final Positions submitted by the Parties in accordance with this Agreement,
which Final Position shall be selected by the Arbitrator without alteration or compromise. In
addition, the Arbitrator shall require the unsuccessful Party/Parties to pay all reasonable costs
and fees, including attorney's fees, of the prevailing Party/Parties and costs and fees of the
Arbitrator. Notwithstanding anything implied to the contrary, the Arbitrator shall have the
authority to award any remedy or relief that a court of the State of North Carolina could order or
grant, except that the arbitrator shall have no authority to award consequential or punitive
damages under any circumstances (whether they be exemplary damages, treble damages, or any
other penalty or punitive type of damages) regardless of whether such damages may be available
under the laws of the State of North Carolina. The Parties hereby waive their right, if any, to
recover consequential and/or punitive damages against any other Party in connection with this
Agreement.
6.1.4 Standards of Conduct. With respect to all aspects of the arbitration
process contained herein the Parties will conduct themselves in a manner intended to assure the
integrity and fairness of that process. To that end, if a Dispute is submitted to arbitration, the
13 NPRALl:871622.1

Parties will not contact or communicate with the Arbitrator who was appointed as arbitrator with
respect to any Dispute either ex parte or outside of the contacts and communications
contemplated by this ARTICLE 6, and the Parties will cooperate in good faith in the production
of documentary and testimonial evidence in a prompt and efficient manner to permit the review
and evaluation thereof by the other Parties.
6.1.5 Decision. The decision of the Arbitrator with respect to any Dispute
shall be final and binding on all Parties and not subject to appeal, in the absence of fraud, and the
prevailing Party/Parties may enforce the same by application for entry of judgment in any court
of competent jurisdiction or by other procedures established by law.
6.1.6 Time of the Essence. Time is of the essence with respect to the
resolution of any disputes arising hereunder.
6.1.7 Disputes Related to Payments to. and Work Do_ nebv_ Contractors.
Notwithstanding the foregoing or any other provisions contained in this Agreement, Disputes
related to the Budget, bidding procedures, selection of Contractors, payments to Contractors, the
percentage of completion of an Improvement or whether an Improvement has been done in
accordance with Plans and Specifications shall be resolved by an independent, impartial third -
party qualified to resolve such disputes as determined by the Owners. A hearing will be held by
such arbitrator within five (5) Business Days after receipt of notice of Dispute, at which the
applicable Contract Administrator and all Owners shall be present and to which the applicable
Contract Administrator and any and all Owners may bring counsel. The arbitrator may modify
the Rules as the arbitrator deems reasonable or necessary. The arbitrator shall permit the Parties
to provide a statement and evidence as to their position. The arbitrator shall inspect the work or
Plans in question and shall make a decision as promptly as possible. The Parties acknowledge
that there is a mutual benefit in having work done as expeditiously as possible and that there is a
need for a streamlined method of making decisions described in this section so that work is not
delayed.
ARTICLE 7
MISCELLANEOUS
7.1 Notices and Communications. All notices, approvals, and other communications
provided for herein or given in connection herewith shall be validly given, made, delivered, or
served, only if in writing, and delivered personally, by facsimile, or sent by nationally recognized
overnight courier (e.g., FedEx, Airborne, UPS), to the parties at the addresses set forth on
Exhibit "H" hereto, or to such other addresses as any Party or Escrow Agent may from time to
time designate in writing and deliver in a like manner. Notices, approvals and other
communications provided for herein shall be deemed delivered upon personal delivery, upon
receipt by facsimile, or upon receipt when delivered by a nationally recognized overnight
courier, prepaid and addressed as set forth above. Notice to a Party shall not be effective or
received unless and until each required copy of such notice set forth above is received as
provided above. The inability to deliver a Notice because of a changed address of which no
Notice was given or an inoperative facsimile number for which no Notice was given of a
substitute number, or any rejection or other refusal to accept any Notice, shall be deemed.to be
the receipt of the Notice as of the date of such inability to deliver or rejection or refusal to accept.
14 NPRA a:871622.1

Any Notice to be given by any party hereto may be given by legal counsel for such party. Any
telephone numbers and email addresses set forth on Exhibit "H" are provided for convenience
only and shall not alter the manner of giving Notice set forth in this Section 7.1.
Notwithstanding the foregoing, in the event that (a) no fax number is provided for a party on
Exhibit "H", but an email address is provided for such party, then such party hereby consents to
transmission of Notice by email in lieu of by facsimile, and agrees that any Notice provided by
email shall be deemed delivered, given, and received as of the transmission by email; and
(b) neither a facsimile number nor an email address is provided for a party, then the date for
delivery shall be extended by the number of days to effectuate alternate delivery of Notice so
long as the Notice was transmitted on the date due.
7.2 Attornevs' Fees. In the event any Party finds it necessary to bring any arbitration
or other proceeding against any other Party hereto to enforce any of the terms, covenants, or
conditions hereof, the Party prevailing in any such action or other proceeding shall be paid all
reasonable costs and reasonable attorneys' fees by the non prevailing Party/Parties, and in the
event any judgment is secured by said prevailing Party, all such costs and attorneys' fees shall be
included therein, such fees to be set by the arbitrator. This provision shall survive termination or
expiration of this Agreement. With respect to reasonable attorneys' fees, Seller and Buyer
acknowledge and agree that this Agreement is a "business contract" as that term is deemed in
Section 6-21.6 of the North Carolina General Statutes and the provisions of this Agreement
regarding the payment of reasonable attorneys' fees are subject to Section 6-21.6 of the North
Carolina General Statutes. The parties also acknowledge and agree that, pursuant to Section 6-
21.6 of the North Carolina General Statutes, in any suit, action, proceeding, or arbitration with
respect to this Agreement that primarily is for the recovery of monetary damages, any award of
reasonable attorneys' fees to the prevailing party may not exceed the amount in controversy.
7.3 Further Acts. Each of the Parties hereto shall execute and deliver all such
documents and perform all such acts as reasonably necessary, from time to time, to carry out the
matters contemplated by this Agreement.
7.4 No Partnership; Third Parties. It is not intended by this Agreement to, and
nothing contained in this Agreement shall, create any owner -contractor, contractor -
subcontractor, employer -employee, partnership, joint venture, or other arrangement between or
among any or all of the Parties hereto. No term or provision of this Agreement is intended to, or
shall, be -for the benefit of any person, firm, organization, or corporation not a party hereto, and
no such other person, firm, organization, or corporation shall have any right or cause of action
hereunder.
7.5 Entire Agreement. This Agreement constitutes the entire agreement between the
parties hereto pertaining to the subject matter hereof. All prior and contemporaneous
agreements, representations, and understandings of the parties, oral or written, are hereby
superseded and merged herein. No change or addition is to be made to this Agreement except by
written amendment executed by the Parties hereto.
7.6 Good Standing: Authority. The Parties hereby represent and warrant to one
another as follows: (i) each of the Parties is duly formed and validly existing under the laws of its
state of organization; and (ii) the .individuals executing this Agreement on behalf of the
15 NPRAL1:871622. 1

respective Parties are authorized and empowered to bind the Party on whose behalf each such
individual is signing.
7.7 Governing Law. This Agreement is entered into in North Carolina and shall be
construed and interpreted under the laws of the State of North Carolina without regard to conflict
of law principles.
7.8 Severability. If any provision of this Agreement is declared void or
unenforceable, such provision shall be severed from this Agreement.
7.9 Successors and Assi Tis.
8.9.1 General. The burdens of this Agreement are binding on, and the benefits
of this Agreement shall inure to the benefit of the Parties and all of their assigns and successors -
in -interest; provided, however, that (a) no Owner may assign this Agreement or any rights or
obligations hereunder except in connection with a sale or transfer of such Owner's portion of the
Benefitted Property, and (b) except as specifically provided in this Section 7.9, no assignment
shall release a Party from its obligations hereunder unless previously approved in writing by each
of the Parties.
8.9.2 Notice of Transfer. Any Owner may, during the term of this Agreement,
convey all or a portion of the Parcel(s) owned by such Owner to another party who may or may
not be an Owner (each, a "Replacement Owner"). At such time as any Owner conveys all or a
portion of the Parcel(s) owned by such Owner (other than conveyances of "Public Lots" as
hereinafter deemed) to a Replacement Owner, the conveying Owner shall provide written notice
of the conveyance to each other Party and to Escrow Agent.
7.9.3 Assignment and Assumption. In conjunction with any conveyance of a
Parcel(s) or portion(s) thereof, the conveying Owner may assign to the Replacement Owner and
cause the Replacement Owner to assume in writing all rights, liabilities and obligations as an
Owner under this Agreement with respect to the applicable Parcel(s) or portion(s) thereof
conveyed, as if such Replacement Owner had been an original signatory hereto; provided,
however, that notwithstanding any provision in this Agreement to the contrary: (a) such
Replacement Owner shall be deemed to accept and approve (i) the Plans and Specifications as
they exist on the date of the applicable assignment and assumption; (ii) the Budget as it exists on
the date of the applicable assignment and assumption; and (iii) all bids, construction contracts,
and related agreements in effect on the date of the applicable assignment and assumption;
(b) such Replacement Owner shall be deemed to ratify and approve all Costs of the
Improvements incurred on or before the date of the applicable assignment and assumption; and
(c) any approval rights, voting rights, objection rights, and other rights and privileges provided to
the Parties under this Agreement shall apply only to the Replacement Owner as of the date of
events that arise on or after the date such Replacement Owner joins this Agreement. In
connection with (and as a condition to) any assignment described in this Section 7.9, the assignor
shall deliver to the other Parties and Escrow Agent a true and correct copy of the instrument of
assignment and assumption required pursuant to the preceding provisions of this Section. To the
extent the assignment and assumption relates to less than all of a Parcel, the Contract
Administrator shall make a good faith allocation between the conveying Owner and the
16 rrnxara:871622.1

Replacement Owner of the Prorated Share allocable to such Parcel, which allocation shall be
conclusive and binding upon the applicable parties. The Owners agree that no Funds shall be
released from the escrow account established hereunder in connection with the assignment of
any Parry's interest hereunder, it being further agreed that any adjustment, reimbursement, or
payment by and between the assignor and/or assignee as a result of the assignment transaction
shall be made directly between such parties outside the escrow hereunder, including, without
limitation, any reimbursement to the conveying Owner for payments attributable to work
previously performed under this Agreement. Any letter of credit deposited by a conveying
Owner shall be released only upon the deposit of a replacement letter of credit that satisfies the
requirements of this Agreement. A conveying Owner shall be released from its obligations with
respect to the conveyed Parcel or applicable portion thereof only so long as all of the following
conditions have been met: (i) the assignment and assumption has occurred in accordance with
this Section and the Replacement Owner has assumed all of such obligations accruing from and
after such assignment and assumption; and (ii) such Owner has paid and satisfied all Draw
Requests delivered on or prior to the occurrence of the assignment and assumption is not
otherwise then in default hereunder; and (iii) such Replacement Owner has posted all applicable
assurances hereunder (to the extent not already posted hereunder), including, without limitation,
any replacement letter of credit as provided in the immediately preceding sentence. The Owners
agree to cooperate with each other as reasonably necessary, at no out-of-pocket cost, to facilitate
an assignment and assumption in accordance with this Section 7.9.
7.9.4 Prorated Share for Conveyed Parcel(. If less than all of the Parcels
owned by an Owner are conveyed to a Replacement Owner, then upon assignment to and
assumption by a Replacement Owner of the liabilities and obligations of the conveying Owner
under this Agreement as provided above, a revised Exhibit "C" shall be distributed to all Owners
and Escrow Agent, which revised Exhibit "C" shall reflect the adjustment of Prorated Shares
between the conveying Owner and the Replacement Owner and upon such distribution shall be
deemed a part of this Agreement in place of the then prior Exhibit "C".
7.10 Estoppel Certificates. To facilitate any governmental approvals process,
financing transaction, assignment and assumption of this Agreement, or other reasonably
appropriate action by an Owner in connection with the Project, each Owner shall from time to
time within twenty (20) days following the written request of any other Owner deliver to such
persons as the other Owner may request a statement certifying that to the knowledge of the
Owner, the other Owner is not in default under this Agreement (or specifying any default) and
such other non-proprietary matters as may reasonably be requested.
7.11 Cooperation. Each Owner joining in this Agreement acknowledges that the
detailed planning, improvement, and ultimate development of the Project as a comprehensive
and integrated development requires a significant commitment of financial and other resources
on the part of the Owners. The Owners agree to cooperate with each other, and support the
efforts of Construction Administrator consistent with this Agreement as reasonably necessary
(including, among other things, executing and delivering all documents and performing all acts
as are reasonably requested by Construction Administrator) to facilitate (and, where requested,
expedite) the installation and construction of the Improvements in accordance with the Plans and
Specifications.
17 NPRAL1:E71622.1

7.12 Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same
instrument. The signature pages from one or more counterparts may be removed from such
counterparts and such signature pages all attached to a single instrument so that the signatures of
all Parties may be physically attached to a single document.
7.13 Business Days. As used herein, the term "Business Day" means a day that is not
a Saturday, Sunday, or day on which commercial banks in the State of North Carolina or the
State of Arizona are authorized or required by applicable law to close. In the event that the date
for the performance of any covenant or obligation under this Agreement shall fall on a day that is
not a Business Day, the date for performance thereof shall be extended to the next Business Day.
Similarly, in the event that the day for the performance of any covenant or obligation under this
Agreement involving Escrow Agent shall fall on a Business Day on which Escrow Agent is
closed for business to the public, the date for performance thereof shall be extended to the next
Business Day on which Escrow Agent is open for business to the public.
7.14 Exhibits. All exhibits to this Agreement are incorporated herein as a part of this
Agreement.
7.15 Effect of Memorandum on Public Lots. The Parties acknowledge that neither this
Agreement, nor, as more fully provided in the Memorandum, the Memorandum is intended to
create conditions or exceptions to title or covenants running with any Public Lot. As a result, in
order to alleviate any concern as to the effect of this Agreement and/or the Memorandum on the
status of title to any Public Lot, this Agreement and the Memorandum shall terminate without the
execution or recordation of any further document or instrument as to any Public Lot. As used
herein, the term "Public Lot" means (a) any individual lot that satisfies all of the following
requirements: (i) is the subject of a recorded subdivision plat, and (ii) has been improved with a
residence or other structure for which the proper governing authority has issued a certificate of
occupancy, and (iii) is leased (for more than a year) or sold to a third party unrelated to any
Party; or (b) any tract that has been conveyed to and accepted by a homeowners association
created in connection with the recording of a subdivision plat; or (c) any parcel that has been
dedicated to and accepted by any Approving Authority. Each Public Lot shall automatically be
released from and no longer subject to or burdened by the provisions of this Agreement and/or
the Memorandum.
Remainder of this page intentionally left blank.
Signature page(s) follows(s).
18 NPRALl:871622.1

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and
year fast above written.
OWNERS:
MERITAGE HOMES OF THE CAROLINAS,
INC., a
By:
Name:
Its:
SM RALEIGH, LLC, a North Carolina limited
liability company
By:
Name:
Its:
ACKNOWLEDGED AND AGREED TO BY ESCROW
AGENT:
METRO TITLE COMPANY, LLC
By:
Name:
Its:
I NPRAL1:871622.1

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and
year first above written.
OWNERS:
MERITAGE HOMES OF THE CAROLINAS,
INC., an Arizona corporation
By:
Name:
Its:
SM RALEIGH, LLC, a North Carolina limited
liability company
By /-
Name: ..-,e=,
Its:
ACKNOWLEDGED AND AGREED TO BY ESCROW
AGENT:
METRO TITLE COMPANY, LLC
By:
Name:
Its:
1 NPRALi:871622.1

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and
year first above written.
OWNERS:
MERITAGE HOMES OF THE CAROLINAS,
INC., a
By:
Name:
Its:
SM RALEIGH, LLC, a North Carolina limited
liability company
By:
Name:
Its:
ACKNOWLEDGED AND AGREED TO BY ESCROW
AGENT:
MIRTR n TM .F. Cnmp A wv i T .r
R
N
It;
l NMAL1:871622.1

LIST OF EXHIBITS
Exhibit "A-l" Legal Description of Meritage Parcel(s)
Exhibit "A-2" Legal Description of SMC Parcel(s)
Exhibit `B" Description of Improvements
Exhibit "C" Prorated Shares
Exhibit "D-1" Form of Memorandum of Agreement
Exhibit "D-2" Form of Termination of Memorandum
Exhibit "B" Construction Schedule
Exhibit "F" Budget
Exhibit "G" Form of Letter of Credit
Exhibit'Tr' Notice Addresses
1
NPRAL1:871622.1

EXHIBIT "A-1"
LEGAL DESCRIPTION OF MERITAGE PARCEL(S)
BEING all of Tract 2, containing approximately 58.756 acres, as shown on a plat entitled "Exempt
Subdivision Map Tracts 1-3 H&B Stephenson Family, LLC," prepared by Robinson & Plante,
P.C., and recorded in Book of Maps 2017, Pages 19-77- and j % _, Wake County
Registry.
Exhibit A-1 -Page 1
NPRAL1:871622.1

EXHIBIT "A-2"
LEGAL DESCRIPTION OF SMC PARCEL(S)
BEING all of Tract 1, containing approximately 48.193 acres, and Tract 3, containing
approximately 22.940 acres, as shown on a plat entitled "Exempt Subdivision Map Tracts 1-3
H&B Stephenson Family, LLC," prepared b Robinson & Plante, P.C., and recorded in Book of
Maps 2017, Pages �,2-'� ands-X —, Wake County Registry.
Exhibit A-2 - Page 1
NPRAL1:871622.1

EXHIBIT `°B"
DESCRIPTION OF IMPROVEMENTS
1.) Woods Creek Road Improvements
a. Necessary clearing, grading, demolition, erosion controls, and stormwater
management efforts.
b. Required curb, stone, paving, striping, signs, median, sidewalk, guardrail
installation.
c. Installation and testing of 12" Waterline backbone with stubs to residential
sections, including all valves, connections, fire hydrants, blow offs, services, and
fittings.
d. Installation and testing of storm system to facilitate drainage.
e. Installation and testing of reuse waterline backbone with stubs to residential
sections, including all valves, connections, blow offs, and fittings.
f. Required landscaping and irrigation.
g. Street light installation if required.
2.) Old Holly Springs -Apex Road Improvements
a. Necessary clearing, grading, demolition, erosion controls, and stormwater
management efforts.
b. Required curb, stone, paving, striping, signs, median, sidewalk, guardrail
installation.
c. Perform milling, tie-ins, and overlay as required to make connections and
facilitate road widening.
d. Installation and testing of 12" Waterline backbone with stubs to residential
sections, including all valves, connections, fire hydrants, blow offs, services, and
fittings.
e. Installation and testing of storm system to facilitate drainage.
f. Relocate overhead and underground utilities if required.
g. Installation and testing of reuse waterline backbone with stubs to residential
sections, including all valves, connections, blow offs, and fittings.
h. Required landscaping and irrigation.
i. Street light installation if required.
3.) Shared Sanitary Sewer Outfalls
a. Tie into existing manhole to be installed by Landeavor
b. Installation of all sanitary mainline, manholes, and laterals from existing outfall as
shown on attached Exhibit B-1.
c. Testing as required for beneficial use.
d. Blasting (if required) to facilitate installation of the sewer system.
4.) Amenities
a. Boardwalk design and installation to facilitate interparcel access with existing
Twelve Oaks.
b. Installation of parking area (approximately 68 spaces)
Exhibit B - Page 1
NPRALI:871622.1

c. Design and construction of 3500 sf +/- Clubhouse with rest rooms & concession
area.
d. Design and installation of a 4500 sf +/- pool with splash pad & lazy river
including all pool equipment, lifeguard gear, deck furnishings, and required
chemicals.
e. Procurement and installation of a tot lot / play equipment.
f. Installation of an event lawn with optional seating, benches, and trash receptacles.
g. Optional focal point installation.
h. Associated landscaping, hardscaping, and lighting installation.
i. Offshe pickleball court installation and design.
5.) Landscape and Handscape
a. Design and construction of various entry features to include lighting and dry
utility services.
b. Installation of buffer plantings and maintenance.
c. Installation of street lights for all shared infrastructure.
d. Plant and maintain street trees for Woods Creek Road and Old Holly Springs -
Apex Road as required.
e. Irrigation as required for amenities, entrance corridors, or shared roads.
6.) Mass Grading
a. Engineering design and analysis required to generate construction plans that
facilitate a balanced site.
b. Mass blasting up to 5' below the road subgrade elevation. Trench blasting for
non -shared utilities can be evaluated and performed in conjunction with mass
blasting, but will not necessarily be split on the JDA's suggested pro rata basis.
c. Geotechnical monitoring and engineering for all mass grading efforts
d. E&S including but not limited to perimeter controls, tree protection, diversion
dikes, check dams, sediment basins, and silt traps.
e. Installation of Phase 1 stormwater devices not including final conversion.
f. Stormwater devices are currently assumed to only serve either Stanley Martin or
Meritage sections, but not both builders. If mutual benefit exists for sharing
drainage areas and stormwater devices, Stanley Martin and Meritage shall split
the costs on a pro-rata basis determined by the number of lots that are served by
the stormwater device.
g. Wetland impacts and monitoring as required
h. Retaining wall design and installation (emphasis on minimizing cost, scale,
proximity to property lines, and environmental impacts).
i. Stormwater monitoring and E&S maintenance
j. Required clearing, demolition, and utility relocation.
7.) Soft Costs For Shared Infrastructure Defined Above
a. Bonds, fees, and permit costs
b. Engineering, architecture, and design
c. Environmental engineering and monitoring
d. Geotechnical engineer and monitoring
Exhibit B - Page 1
NiPRAL1:871622.1

e. HOA documents and setup
f. Bond release efforts
g. Legal fees
h. Construction survey, stakeout, and asbuilts of shared infrastructure and mass
grading.
Exhibit B - Page 1
NPRAL1:871622.1

MERITAGE: 49.12%
SMC: 50.88%
EXHIBIT "C"
PRORATED SHARES
Exhibit C - Page 1
NPRAL1:871622.1

EXHIBIT "D-1"
WHEN RECORDED, RETURN TO:
FORM OF MEMORANDUM OF JOINT DEVELOPMENT AND ESCROW
AGREEMENT AND NOTICE OF ACCESS RIGHTS
THIS MEMORANDUM OF JOINT DEVELOPMENT AND ESCROW AGREEMENT
AND NOTICE OF ACCESS RIGHTS ("Memorandum") is made and entered into as of the
day of , 201`, by and among Meritage Homes of the Carolinas, Inc., an
Arizona corporation ("Meritage"), and Stanley Martin Companies, LLC, a Maryland limited
liability company ("SMC"). Each of Meritage and SMC are sometimes referred to in this
Memorandum, individually, as an "Owner" and collectively, as the "Owners."
RECITALS
A. Each Owner owns one or more parcels of unimproved real property (each a
"Parcel" and collectively, the "Parcels" or the "Benefitted Property') located within Wake
County, (the "Conn'), North Carolina. The Parcel(s) owned by Meritage are more particularly
described on Exhibit "A-l" attached hereto and incorporated herein by this reference. The
Parcel(s) owned by SMC are more particularly described on Exhibit "A-2" attached hereto and
incorporated herein by this reference.
B. The Owners have entered into that certain Joint Development and Escrow
Agreement dated , 2016 (as the same may be amended, modified, or restated
from time to time, the "JDA"), with respect to the construction of certain improvements
benefiting the Benefitted Property and more particularly described in the JDA.
C. The JDA is intended by the Owners to run with the land and be binding upon,
benefit, and burden the Benefitted Property.
D. The Owners wish to give actual and constructive notice to all persons dealing
with the Benefitted Property of the existence of the JDA.
MEMORANDUM
1. Pursuant to the terms of the JDA and subject to certain limitations set forth
therein, each Owner is obligated to pay its "Prorated Share" (as such term is defined in the JDA)
of the "Cost" (as such term is. defined in the JDA) of each component of the "Improvements" (as
such term is defined in the JDA). Subject to and in accordance with the terms of the JDA, each
Exhibit D-1 -Page 1
NPRALi:871622.1

Owner is obligated to make certain payments and deposits so as to provide assurance of its
ability to pay its Prorated Share of the Cost of the Improvements.
2. The obligation of each Owner to pay to its Prorated Share of the Cost of the
Improvements is secured by a lien against the portion of the Benefitted Property owned by such
Owner, which lien may be foreclosed upon in the same manner provided by law for foreclosure
of mortgages.
3. Pursuant to the terms of the JDA, and subject to certain associated obligations and
the limitations set forth therein, each Owner has granted certain nonexclusive rights and licenses
to enter the portion of the Benefitted Property owned by such Owner for the purposes of
constructing the Improvements.
4. Neither this Memorandum nor the Agreement is intended to create conditions or
exceptions to title or covenants running with any "Public Lot" (as hereinafter defined). As a
result, in order to alleviate any concern as to the effect of this Memorandum or the Agreement on
the status of title to any Public Lot, this Memorandum and the Agreement shall terminate without
the execution or recordation of any further document or instrument as to any Public Lot. As used
herein, the term "Public Lot" means (a) any individual lot that satisfies all of the following: (i) is
the subject of a recorded subdivision plat, and (ii) has been improved with a residence or other
structure for which the applicable governmental authority has issued a certificate of occupancy,
and (iii) is leased (for more than a year) or sold to a third party unrelated to any Party; or (b) any
tract that has been conveyed to and accepted by a homeowners association created in connection
with the recording of a subdivision plat; or (c) any parcel that has been dedicated to and accepted
by any Approving Authority. In addition, as more fully provided in the JDA, this Memorandum
shall be automatically released (without the necessity of recording any document) with respect to
the Parcel(s) owned by an Owner upon such Owner's full satisfaction of its obligations under the
JDA, and in such event, notwithstanding that the foregoing release will be automatically
effective, the Owners are required to cause an instrument in recordable form to be executed,
acknowledged, and delivered to such Owner acknowledging the termination of this
Memorandum with respect to the Parcel(s) owned by such Owner.
5. All of the terms, conditions, and agreements contained within the JDA are fully
incorporated herein by reference as if fully set forth herein, and nothing herein shall be deemed
to modify any of such terms, conditions, and agreements (which shall control in the event of
conflict with any portion of this Memorandum).
[Balance of Page Intentionally Left Blank]
Exhibit D-1 - Page 2
NPRALl:871622.1

IN WITNESS WHEREOF, this Memorandum has been executed as of the day and year
first above written.
STATE OF
COUNTY OF
I certify that
that be voluntarily
capacity indicated:
MERITAGE HOMES OF THE CAROLINAS,
INC., an Arizona corporation
By:
Name:
Its:
personally appeared before me this day, acknowledging to me
signed the foregoing document for the purpose stated therein and in the
Witness my hand and official seal, this the
(Official Seal)
Notary Public
My commission expires:
day of _..._, 20
Exhibit D-1 - Page 3
NPRAL1:871622.1

STATE OF
COUNTY OF
I certify that
that he voluntarily signed
capacity indicated:
STANLEY MARTIN COMPANIES, LLC, a
Maryland limited liability company
By:
Name:
Its:
personally appeared before me this day, acknowledging to me
the foregoing document for the purpose stated therein and in the
Witness my hand and official seal, this the day of
(Official Seal)
Notary Public
My commission expires:
20
Exhibit D-1 -Page 4
NPRAL1:671622.1

EXHIBIT "A-1" TO MEMORANDUM OF AGREEMENT
LEGAL DESCRIPTION FOR HERITAGE PARCEL(S)
(Attached hereto)
Exhibit D-1 - Page 5
xrxnia:871622.1

EXHIBIT "A-2" TO MEMORANDUM OF AGREEMENT
LEGAL DESCRIPTION FOR SMC PARCEL(S)
(Attached hereto)
Exhibit D-1 -Page 6
NPRAL1:891622.1

EXHIBIT "D-2"
WHEN RECORDED RETURN TO:
FORM OF TERMINATION OF MEMORANDUM
. The undersigned, being the Owners, or the successors in interest thereto, under that
certain Memorandum of Joint Development and Escrow Agreement and Notice of Access Rights
dated , 201_, originally by and among Meritage Homes of the Carolinas, Inc.,
an Arizona corporation ("Meritag '), and C SMC"), recorded
_, 201� In Official Records Book Page Register of
Deeds of Wake County, North Carolina (the "Memorandum"), hereby agree and give actual
constructive notice to all persons that the Memorandum is terminated and is of no further force
or effect with respect to the certain real property more particularly described as follows:
[insert legal description]
The remaining real property, if any, described in the Memorandum shall continue to be subject to
the Memorandum, and this Termination of Memorandum does not affect the personal liability of
any person with respect to any obligations that are the subject of the Memorandum or the "JDA"
(as such term is defined in the Memorandum).
[Balance of Page Intentionally Left Blank]
Exhibit D-2 - Page 1
NiPRA I:871622.1

IN WITNESS WHEREOF, this Termination of Memorandum has been executed as of
the day and year first above written.
MERITAGE HOMES OF THE CAROLINAS,
INC., an Arizona corporation
By:
Name:
Its:
STATE OF _
COUNTY OF
I certify that personally appeared before me this day, acknowledging to me
that he voluntarily signed the foregoing document for the purpose stated therein and in the
capacity indicated:
Witness my hand and official seal, this the day of .. ..... ................. , 20
(Official Seal)
Notary Public
My commission expires:
Exhibit D-2 - Page 2
NPRAL1:871622.1

STATE OF
COUNTY OF
I certify that
that he voluntarily
capacity indicated:
STANLEY MARTIN COMPANIES, LLC, a
Maryland limited liability company
By:
Name:
Its:
personally appeared before me this day, acknowledging to me
signed the foregoing document for the purpose stated therein and in the
Witness my hand and official seal, this the
(Official Seal)
Notary Public
My commission expires:
day of _
20
Exhibit D-2 - Page 3
NPRAL1:871622.1

EXHIBIT "E"
CONSTRUCTION SCHEDULE
TO BE DETERMINED
Exhibit E - Page 1
NPRAL I :871622.1

EXHIBIT "F"
BUDGET
$19,010,937.69
Exhibit F - Page 1
NPRALI :871622.1

EXffiBIT "G"
FORM OF LETTER OF CREDIT
[issuer] - CONFIDENTIAL
DATE: _.._ , 20_
IRREVOCABLE STANDBY LETTER OF CREDIT NO.
AMOUNT:
NOT TO EXCEED U.S. $
NOT TO EXCEED
EXPIRATION:
AND /100'S U.S. DOLLARS
AT OUR COUNTERS
WE, [issuer], HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF
CREDIT NUMBER IN BENEFICIARY'S FAVOR FOR
ACCOUNT OF THE ABOVE -REFERENCED APPLICANT, IN THE AMOUNT OF
_ AND _/100 U.S. DOLLARS (U.S.
$ } AVAILABLE BY PAYMENT AGAINST DRAFT(S) DRAWN
AT SIGHT ON [issuer name and address], BEARING THE CLAUSE "DRAWN UNDER
[issuer name] IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER
Exhibit G - Page 1 NPRALI:871622 1

DATED ", ACCOMPANIED BY THE
FOLLOWING DOCUMENTS:
1. YOUR SIGNED AND DATED STATEMENT WORDED IN THE FORMAT
ATTACHED HERETO AS ATTACHMENT "A" AND INCORPORATED HEREIN BY
THIS REFERENCE; AND
2. THE ORIGINAL OF THIS LETTER OF CREDIT FOR OUR ENDORSEMENT ON
THIS LETTER OF CREDIT OF OUR PAYMENT OF SUCH DRAFT.
PARTIAL AND MULTIPLE DRAWINGS ARE PERMITTED UNDER THIS LETTER OF
CREDIT.
WE HAVE BEEN INFORMED BY .APPLICANT, BUT DO NOT INDEPENDENTLY
VERIFY THAT THIS LETTER OF CREDIT IS ISSUED IN CONNECTION WITH
BENEFICIARY ACTING AS ESCROW AGENT FOR ESCROW NUMBER
THE PRECEDING SENTENCE IS INSERTED INTO THIS LETTER OF CREDIT FOR
INFORMATION PURPOSES ONLY AND WILL NOT AFFECT, OR BECOME A PART OF,
THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT.
IF ANY INSTRUCTIONS ACCOMPANYING A DRAWING UNDER THIS LETTER OF
CREDIT REQUEST THAT PAYMENT IS TO BE MADE BY TRANSFER TO AN
ACCOUNT WITH US OR AT ANOTHER BANK, WE AND/OR SUCH OTHER BANK MAY
RELY ON AN ACCOUNT NUMBER SPECIFIED IN SUCH INSTRUCTIONS EVEN IF THE
NUMBER IDENTIFIES A PERSON OR ENTITY DIFFERENT FROM THE INTENDED
PAYEE.
THIS LETTER OF CREDIT SETS FORTH IN FULL OUR UNDERTAKING, AND SUCH
UNDERTAKING SHALL NOT IN ANY WAY BE MODIFIED, AMENDED, AMPLIFIED
OR LIMITED BY REFERENCE TO ANY DOCUMENT, INSTRUMENT OR AGREEMENT
WHATSOEVER IN THIS LETTER OF CREDIT AND ANY SUCH REFERENCE WILL NOT
BE DEEMED TO INCORPORATE INTO THIS LETTER OF CREDIT SUCH DOCUMENT,
INSTRUMENT OR AGREEMENT
IT IS A CONDITION OF THIS LETTER OF CREDIT THAT THE AMOUNT AVAILABLE
TO BE DRAWN UNDER THIS LETTER OF CREDIT SHALL BE AUTOMATICALLY
DECREASED WITHOUT AMENDMENT UPON OUR RECEIPT OF A REDUCTION
CERTIFICATE FROM YOU, IN THE FORM OF ATTACHMENT "B" TO THIS LETTER OF
CREDIT WITH THE INSTRUCTIONS IN BRACKETS THEREIN COMPLIED WITH AND
OUR RECEIPT OF SUCH REDUCTION CERTIFICATE SHALL BE TAKEN AS YOUR
AGREEMENT THAT THE LETTER OF CREDIT MAY BE REDUCED TO THE AMOUNT
INDICATED ON SUCH REDUCTION CERTIFICATE.
IT JS A FURTHER CONDITION OF THIS LETTER OF CREDIT THAT IT WILL BE
CANCELLED UPON OUR RECEIPT OF A CANCELLATION CERTIFICATE BY YOU
FROM YOU IN THE FORM OF ATTACHMENT "C" TO THIS LETTER OF CREDIT WITH
THE INSTRUCTIONS IN BRACKETS THEREIN COMPLIED WITH, TOGETHER WITH
THE ORIGINAL OF THIS LETTER OF CREDIT.
Exhibit G - Page 2 NPRALI:871622.1

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