WQ0004059_Final Permit_20191022

ROY COOPER
Governor
MICHAEL S. REGAN
Secretary
LINDA CULPEPPER
Director
WILLIAM T. SMITH — PRESIDENT
SUGARLOAF UTILITY, INC.
514 DANIELS STREET — SUITE 414
RALEIGH, NORTH CAROLINA 27605
Dear Mr. Smith:
NORTH CAROLINA
Environmental Quality
October 22, 2019
Subject: Permit No. WQ0004059
Atlantic Station WWTP
High -Rate Infiltration System
Carteret County
In accordance with your permit renewal request received July 29, 2019, we are forwarding herewith
Permit No. WQ0004059 dated October 22, 2019, to Sugarloaf Utility, Inc. for the continued operation of
the subject wastewater treatment and high -rate infiltration facilities.
This permit shall be effective from the date of issuance through May 31, 2025, shall void Permit
No. WQ0004059 issued January 18, 2008, and shall be subject to the conditions and limitations therein.
The Permittee shall submit a renewal application no later than December 2, 2024.
Please pay attention to the monitoring requirements listed Attachments A, B, and C for they may
differ from the previous permit issuance. Failure to establish an adequate system for collecting and
maintaining the required operational information shall result in future compliance problems.
The Division has removed the following permit conditions since the last permit issuance dated
January 18, 2018:
➢ Old Condition I.1. — The monitoring wells on -site have been labeled.
➢ Old Condition I.3. — The subject wastewater treatment and disposal facility need not be
connected to a publically available wastewater collection system if said system becomes
available.
➢ Old Condition II.10. — A useable green area is no longer required to be maintained for
wastewater disposal.
➢ Old Condition III.3. — A suitable year round vegetative cover is not required for the rotary
infiltration system.
➢ Old Condition III.5. — High -rate infiltration may be performed during inclement weather if it
will not cause ponding or runoff.
➢ Old Condition III.10. — The rotary distribution system is not required to be raked at specific
time intervals, however the infiltration areas shall be cleaned at least once per permit cycle to
remove deposited materials that may impede the infiltration process.
.., North Carolina Department of Environmental Quality I Division of Water Resources
3�/y 512 North Salisbury Street 1 1617 Mail Service Center I Raleigh, North Carolina 27699-1617
NORTH CAROUNA �r
o�+���� /"� 919.707.9000

Mr. William T. Smith
October 22, 2019
Page 2 of 4
➢
Old Condition III.11. — The screenings removed from the wastewater treatment plant shall be
disposed of in accordance with Condition III.9.
➢
Old Condition III.13. — The application of chemicals to the infiltration fields shall be prohibited
if it violates the conditions and limitations of this permit.
➢
Old Condition III.14. — Regular maintenance of all equipment permitted herein shall be
required per Condition III.1. A log of said maintenance shall be maintained per Condition
IV.8.
➢
Old Condition 1I1.15. — All treatment facilities, including the chlorine tablets shall be of the
kind and type specified in the Plans and Specifications approved by the Division.
➢
Old Condition 1I1.18 — Per Condition III.4., the Permittee shall take measures to prevent
effluent ponding in or runoff from the infiltration sites listed in Attachment B.
➢
Old Condition IV.5.f. — Non -hydraulic parameters are not required to be tracked for the fields
in Attachment B.
➢
Old Condition VI.2. — This permit is not voidable.
The following permit conditions are new since the last permit issuance dated January 18,
2018:
➢ Condition I.1. — Requires the Wilmington Regional office to approve monitoring well MW-1A
prior to installation, and the monitoring well shall be installed within 90 days of the effective
date of this permit.
➢ Condition I.2. — Requires the Permittee to submit two original copies and one digital copy of a
site map within 90 days of completing installation of monitoring well MW-IA.
➢ Condition I.3. — Requires a Well Construction Record (Form GW-1) listing this permit number
and the appropriate monitoring well identification number to be completed for each well
constructed within 30 days of construction.
➢ Condition I.4. — Requires monitoring wells MW-1 and MW-3 to be permanently abandoned
within 60 days of the effective date of this permit. Within 30 days of abandonment, a Well
Abandonment Record (Form GW-30) shall be completed for each well abandoned.
➢ Condition II.3. — Requires groundwater monitoring wells to be constructed in accordance with
15A NCAC 02C .0108 (Standards of Construction for Wells Other than Water Supply), and
any other jurisdictional laws and regulations pertaining to well construction.
➢ Condition I1.10. — Requires the Permittee to ensure any landowner who is not the Permittee
and owns land within the compliance boundary executes and files with the Carteret County
Register of Deeds an easement running with the land.
➢ Condition II.11. — The setbacks for this facility have been corrected to reflect the date this
facility was originally permitted.
➢ Condition II1.5. — Requires irrigation equipment to be tested and calibrated once per permit
cycle rather than once per year in the previous permit issuance.

Mr. William T. Smith
October 22, 2019
Page 3 of 4
➢ Condition I1I.8. — Requires the Permittee to prohibit public access to the wastewater treatment,
storage, and infiltration facilities.
➢ Condition 111.11. — Requires Permittee to provide a water -tight seal on all treatment and storage
units, or provide two feet protection from the 100-year flood plain elevation.
➢ Condition 111.12. — Requires a protective vegetative cover to be established and maintained on
all berms, pipe runs, erosion control areas, surface water diversions, and earthen embankments.
➢ Condition 111.13. — Requires metering equipment to be tested and calibrated annually.
➢ Condition IV.9. — Requires monitoring well MW-IA to be sampled after construction, and
within three months prior to initiating high -rate infiltration operations.
➢ Condition IV.11. — Requires the Permittee to submit a Compliance Monitoring Form (GW-59)
and a Well Construction Record Form (GW-1) listing this permit number and the appropriate
monitoring well identification number for the initial sampling of MW-IA.
➢ Condition VIX — Allows this permit to be revoked or modified upon 60-day notice from the
Division Director if the criteria listed in this condition are met.
➢ Condition VI.9. — Prevents expansion of the facilities permitted herein from occurring if any
of the criteria listed in this condition are met.
➢ Condition VI.10. — Prevents this permit from being renewed if the Permittee or any affiliation
has not paid the required annual fee.
➢ Attachment A — Total Kjeldahl Nitrogen, Total Nitrogen, and Total Phosphorus have been
added as required effluent monitoring parameters in PPI 001.
➢ Attachment C — A limit of 1.5 mg/L of Total Ammonia Nitrogen has been added for the
groundwater monitoring limitations.
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. Otherwise, this permit shall be final and binding.

Mr. William T. Smith
October 22, 2019
Page 4 of 4
If you need additional information concerning this permit, please contact Ashley Kabat at (919)
707-3658 or ashley.kabat(@.ncdenr.gov.
Sincerely,
mda Culpepper, Director
Division of Water Resources
cc: Carteret County Health Department (Electronic Copy)
Wilmington Regional Office, Water Quality Regional Operations Section (Electronic Copy)
Laserfiche File (Electronic Copy)
Digital Permit Archive (Electronic Copy)
Central Files

NORTH CAROLINA
ENVIRONMENTAL MANAGEMENT COMMISSION
DEPARTMENT OF ENVIRONMENTAL QUALITY
rZA.1a0111d
HIGH -RATE INFILTRATION 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
Sugarloaf Utility, Inc.
Carteret County
FOR THE
continued operation of a 100,000 gallon per day (GPD) wastewater treatment and high -rate infiltration
facility consisting of:
an influent bar screen; a 20,000 gallon aerated flow equalization tank with dual 80 gallon per minute (GPM)
submersible pumps and high-water alarms; a flow control box; dual extended aeration package plants each
consisting of a 50,000 gallon aeration tank and a 8,333 gallon clarifier; dual 280 cubic feet per minute
(CFM) blowers with a stand-by blower of equal capacity; a 100,000 GPD tertiary filter unit including
backwash pumps and air scouring blowers; a 8,700 gallon sludge holding tank; a 2,084 gallon chlorine
contact tank with dual tablet chlorinators; an effluent flowmeter; a 5,863 gallon effluent dosing tank with
submersible pumps and high-water alarms; an on -site generator capable of powering all essential treatment
units; 0.26 acres of high -rate infiltration area containing two rotary distributers; and all associated piping,
valves, controls, and appurtenances
to serve the Atlantic Station WWTP, with no discharge of wastes to surface waters, pursuant to the
application received July 29, 2019, and in conformity with the Division -approved plans and specifications
considered a part of this permit.
This permit shall be effective from the date of issuance through May 31, 2025, shall void Permit No.
WQ0004059 issued January 18, 2008, and shall be subject to the following conditions and limitations:
I. SCHEDULES
Within 90 days of the effective date of this permit, the sludge holding tank shall be evaluated by a North
Carolina Licensed Professional Engineer and a written evaluation shall be mailed to the Division of
Water Resources, Non -Discharge Branch, 1617 Mail Service Center, Raleigh, NC 27699-1617, or Non-
')ischar e.Re ortsra7nedenr. ov. This Engineering evaluation shall report the condition of the sludge
holding tank, the timeframe in which the tank shall be replaced, and recommendations on repairing or
replacing the tank. [15A NCAC 02C .0108, 02T .0108(b)(1)(B)]
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2. The Wilmington Regional Office, telephone number [phone], shall approve monitoring well
MW-1A prior to installation, and the monitoring well shall be installed within 90 days of the effective
date of this permit. The Wilmington Regional Office shall be notified at least two business days in
advance of construction of any monitoring well. The monitoring well shall be constructed such that
the water level in the well is never above or below the screened portion of the well, and in accordance
with 15A NCAC 02C .0108. The general location and Division -approved name for each monitoring
well is on Figure I. [15A NCAC 02C .0108, 02T .0108(b)(1)(B)]
3. Within 90 days of completing installation of monitoring well MW-IA, the Permittee shall submit two
original copies and one digital copy of a site map with a scale no greater than 1-inch equals 100 feet;
however, special provisions may be granted upon prior approval for large properties. The map shall
include the following information:
a. Legend, north arrow, scale, and legible in black and white.
b. Topographic contour intervals not exceeding 10 feet or 25 percent of total site relief.
c. All habitable residences or places of assembly within 500 feet of the infiltration area.
d. Location of all wells, streams (ephemeral, intermittent, and perennial), springs, lakes, ponds,
ditches, and other surface drainage features within 500 feet of the infiltration area.
e. Location and identification of each monitoring well (identify any background/upgradient wells).
f. Latitude and longitude coordinates of each monitoring wells (decimal degrees to the sixth decimal
degree and in NAD83).
g. Location and identification of major components of the waste disposal system.
h. The perimeter of all infiltration areas with field names (named according to the approved permit)
i. Location and ownership of property boundaries within 500 feet of the infiltration area (including
road/rail right-of-ways and easements).
j. Latitude and longitude of the established horizontal control monument (decimal degrees to the sixth
decimal degree).
k. Elevation of the top of the well casing (i.e., measuring point) relative to a common datum.
1. Depth of water below the measuring point at the time the measuring point is established.
m. Delineation of the compliance and review boundaries.
n. Distance measurements verifying all setbacks are being met.
o. Stormwater drainage controls.
p. 100-year floodplain.
q. The date the map is prepared and/or revised.
r. Location of the groundwater lowering system and discharge point (if present).
Boundaries and physical features not under purview of other licensed professions shall be provided by
a Professional Surveyor. Control monuments shall be installed in such a manner and made of such
materials that the monument will not be destroyed due to activities taking place on the property. The
map and any supporting documentation shall be sent to the Division of Water Resources, Non -
Discharge Branch, 1617 Mail Service Center, Raleigh, NC 27699-1617, or Non-
[e-mail]. [15A NCAC 02C .0105(f), 02T .0108(b)(1)(B)]
4. Within 30 days of construction, a Well Construction Record (Form GW-I) listing this permit number
and the appropriate monitoring well identification number shall be completed for each well constructed,
and mailed to the Division of Water Resources, Non -Discharge Branch, 1617 Mail Service Center,
Raleigh, NC 27699-1617, or Non-DischgMe.Reports a-)ncdenr.gov. A North Carolina Certified Well
Contractor shall construct the monitoring wells according to the North Carolina Well Construction
Standards (15A NCAC 02C .0113) and local county rules. [15A NCAC 02C .0113, 02T
.0108(b)(1)(B)]
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Within 60 days of the effective date of this permit, monitoring wells MW-1 and MW-3 shall be
permanently abandoned. Within 30 days of abandonment, a Well Abandonment Record (Form GW-
30) shall be completed for each well abandoned, and mailed to the Division of Water Resources, Non -
Discharge Branch, 1617 Mail Service Center, Raleigh, NC 27699-1617, or Non-
Discharge.ReportsCa7ncdenngov. A North Carolina Certified Well Contractor shall abandon the
monitoring wells according to the North Carolina Well Construction Standards (15A NCAC 02C .0113)
and local county rules. [15A NCAC 02C .0113, 02T .0108(b)(1)(B)]
6. The Permittee shall request renewal of this permit on Division -approved forms no later than December
2, 2024. [15A NCAC 02T .0105(b), 02T .0109]
II. PERFORMANCE STANDARDS
The Permittee shall maintain and operate the subject non -discharge facilities 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 infiltration areas to assimilate the effluent, the Permittee
shall take immediate corrective actions, including Division required actions, such as the construction
of additional or replacement wastewater treatment or disposal facilities. [15A NCAC 02T
.0108(b)(1)(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 02T .0108(b)(1)(A)]
Groundwater monitoring wells shall be constructed in accordance with 15A NCAC 02C .0108
(Standards of Construction for Wells Other than Water Supply), and any other jurisdictional laws and
regulations pertaining to well construction. [15A NCAC 02C .0108]
4. Effluent quality shall not exceed the limitations specified in Attachment A. [15A NCAC 02T
.0108(b)(1)(A)]
5. Application rates, whether hydraulic, nutrient, or other pollutant, shall not exceed those specified in
Attachment B. [ 15A NCAC 02T .0108(b)(1)(A)]
6. High -rate infiltration sites permitted on or after December 30, 1983 have a compliance boundary that
is either 250 feet from the infiltration area, or 50 feet within the property boundary, whichever is closest
to the infiltration area. Any exceedance of groundwater standards at or beyond the compliance
boundary shall require corrective action. Division -approved relocation of the compliance boundary
shall be noted in Attachment B. Multiple contiguous properties under common ownership and
permitted for use as a disposal system shall be treated as a single property with regard to determination
of a compliance boundary. [15A NCAC 02L .0106(d)(2), 02L .0107(b), 02T .0105(h), G.S. 143-
215.1(i), G.S. 143-215.1(k)]
7. The review boundary is midway between the compliance boundary and the infiltration area. Any
exceedance of groundwater standards at or beyond the review boundary shall require preventative
action. [15ANCAC 02L .0106(d)(1), 02L .0108]
8. 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 (i.e., parcel subdivision). [ 15A NCAC
02L .0107(c)]
9. 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]
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10. Except as provided for in 15A NCAC 02L .0107(g), the Permittee shall ensure any landowner who is
not the Permittee and owns land within the compliance boundary shall execute and file with the Carteret
County Register of Deeds an easement running with the land containing the following items:
a. A notice of the permit and number or other description as allowed in 15A NCAC 02L .0107(f)(1);
b. Prohibits construction and operation of water supply wells within the compliance boundary; and
c. Reserves the right of the Pennittee or the State to enter the property within the compliance boundary
for purposes related to the permit.
The Director may terminate the easement when its purpose has been fulfilled or is no longer needed.
[15A NCAC 02L .0107(f)]
11. The facilities herein were permitted per the following setbacks:
a. The infiltration sites were originally permitted prior to February 14, 1991. The setbacks for
infiltration sites originally permitted or modified from October 1, 1987 to January 31, 1993 are as
follows (all distances in feet):
i. Each private or public water supply source:
100
ii. Surface waters:
100
iii. Groundwater lowering ditches:
100
iv. Surface water diversions (upslope):
100
v. Surface water diversions (downslope):
100
vi. Each well with exception of monitoring wells:
100
vii. Each property line:
1001
viii. Top of slope of embankments or cuts of two feet or more in vertical height:
100
ix. Each water line:
10
x. Each swimming pool:
100
xi. Public right of way:
50
xii. Nitrification field:
20
xiii. Each building foundation or basement:
100
xiv. Each impounded public surface water supply:
500
xv. Each public shallow ground water supply (less than 50 feet deep):
500
1 Setbacks to property lines are not applicable when the Permittee, or the entity from which the
Permittee is leasing, owns both parcels separated by the property line.
[15A NCAC 02H .0404(g), 02H .02190)(5)]
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b. The storage and treatment units were originally permitted prior to February 14, 1991. The setbacks
for storage and treatment units originally permitted or modified from October 1, 1987 to January
31, 1993 are as follows (all distances in feet):
i. Each habitable residence or place of assembly under separate ownership: 1001
ii. Each on -property residential unit if the unit is to be sold: 101
iii. Each private or public water supply source: 100
iv. Each well with exception of monitoring wells: 100
v. Each property line: 50 z
vi. Nitrification field: 20
1 Habitable residences or places of assembly under separate ownership constructed after the
facilities herein were originally permitted or subsequently modified are exempt from this
setback.
2 Setbacks to property lines are not applicable when the Permittee, or the entity from which the
Permittee is leasing, owns both parcels separated by the property line.
[15A NCAC 02H .0404(g), 02H .0219(j)(5)]
OPERATION AND MAINTENANCE REQUIREMENTS
1. The Permittee shall operate and maintain the subject facilities as anon -discharge system. [15A NCAC
02T .0700]
2. The Permittee shall maintain an Operation and Maintenance Plan, which shall include operational
functions, maintenance schedules, safety measures, and a spill response plan. [15A NCAC 02T
.0707(a)]
3. Upon the Water Pollution Control System Operators Certification Commission's (WPCSOCC)
classification of the subject non -discharge facilities, the Permittee shall designate and employ a certified
operator in responsible charge (ORC), and one or more certified operators as back-up ORCs. The ORC
or their back-up shall operate and visit the facilities as required by the WPCSOCC. [15A NCAC 02T
.0117]
4. The Permittee shall take measures to prevent effluent ponding in or runoff from the infiltration sites
listed in Attachment B. [ 15A NCAC 02T .0707(c)]
5. Infiltration equipment shall be tested and calibrated once per permit cycle. [ 15A NCAC 02T .0707(d)]
6. Only treated effluent from the Atlantic Station WWTP shall be infiltrated on the sites listed in
Attachment B. [15A NCAC 02T .0701]
7. The Permittee shall not allow vehicles or heavy machinery on the infiltration area, except during
equipment installation or maintenance activities. [ 15A NCAC 02T .0707(e)]
8. The Permittee shall prohibit public access to the wastewater treatment, storage, and infiltration
facilities. [15A NCAC 02T .0705(p)]
9. The Permittee shall dispose or utilize generated residuals in a Division -approved manner. [15A NCAC
02T .0708, 02T .1100].
10. The Permittee shall not divert or bypass untreated or partially treated wastewater from the subject
facilities. [15A NCAC 02T .0705(i)]
11. The Permittee shall provide a water -tight seal on all treatment and storage units, or provide two feet
protection from the 100-year flood plain elevation. [15A NCAC 02T .0705(l)]
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12. A protective vegetative cover shall be established and maintained on all berms, pipe runs, erosion
control areas, surface water diversions, and earthen embankments (i.e., outside toe of embankment to
maximum allowable temporary storage elevation on the inside of the embankment). Trees, shrubs, and
other woody vegetation shall not be allowed to grow on the earthen dikes or embankments. Earthen
embankments shall be kept mowed or otherwise controlled and accessible. [ 15A NCAC 02T .0707(g)]
13. Metering equipment shall be tested and calibrated annually. [15A NCAC 02T .0707(d)]
14. An automatically activated standby power source capable of powering all essential treatment units shall
be on site and operational at all times. If a generator is employed as an alternate power supply, it shall
be tested weekly by interrupting the primary power source. [15A NCAC 02T .0705(k)]
15. The infiltration areas shall be cleaned at least once per permit cycle to remove deposited materials that
may impede the infiltration process. Cleaning records shall be maintained at the facility for five years,
and shall be made available to the Division upon request. The Wilmington Regional Office, telephone
number [phone], shall be notified prior to each cleaning. [ 15A NCAC 02T .0707(h)]
IV. MONITORING AND REPORTING REQUIREMENTS
1. The Permittee shall conduct and report any Division required monitoring necessary to evaluate this
facility's impact on groundwater and surface water. [15A NCAC 02T .0108(c)]
2. A Division -certified laboratory shall conduct all analyses for the required effluent, groundwater, and
surface water parameters. [15A NCAC 02H .0800]
3. Flow through the treatment facility shall be continuously monitored, and daily flow values shall be
reported on Form NDMR. Facilities with a permitted flow less than 10,000 GPD may estimate their
flow from water usage records provided the water source is metered. [15A NCAC 02T .0105(k), 02T
.0108(c)]
4. The Permittee shall monitor the treated effluent at the frequencies and locations for the parameters
specified in Attachment A. [15A NCAC 02T .0108(c)]
5. The Permittee shall maintain records tracking the amount of effluent infiltrated. These records shall
include the following information for each infiltration site listed in Attachment B:
a. Date of infiltration;
b. Volume of effluent infiltrated;
c. Site infiltrated;
d. Length of time site is infiltrated;
e. Loading rates to each infiltration site listed in Attachment B; and
f. Weather conditions.
[15A NCAC 02T .0108(c)]
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6. Three copies of all monitoring data (as specified in Conditions IV.3. and IVA.) on Form NDMR for
each PPI and three copies of all operation and disposal records (as specified in Condition IV.5.) on
Form NDAR-2 for every site in Attachment B shall be submitted on or before the last day of the
following month. If no activities occurred during the monitoring month, monitoring reports are still
required documenting the absence of the activity. All information shall be submitted to the following
address:
Division of Water Resources
Information Processing Unit
1617 Mail Service Center
Raleigh, North Carolina 27699-1617
[15A NCAC 02T .0105(1)]
7. The Permittee shall maintain a record of all residuals removed from this facility. This record shall be
maintained for five years, and shall be made available to the Division upon request. This record shall
include:
a. Name of the residuals hauler;
b. Non -Discharge permit number authorizing the residuals disposal, or a letter from a municipality
agreeing to accept the residuals;
c. Date the residuals were hauled; and
d. Volume of residuals removed.
[15A NCAC 02T .0708(b)]
8. A maintenance log shall be kept at this facility. This log shall be maintained for five years, and shall
be made available to the Division upon request. This log shall include:
a. Date of flow measurement device calibration;
b. Date of infiltration equipment calibration;
c. Date and results of power interruption testing on alternate power supply;
d. Visual observations of the plant and plant site; and
e. Record of preventative maintenance (e.g., changing of equipment, adjustments, testing, inspections
and cleanings, etc.).
[ 15A NCAC 02T .0707(i)]
9. Monitoring well MW-IA shall be sampled after construction, and within three months prior to initiating
high -rate infiltration operations. Monitoring well MW-lA shall be sampled thereafter at the
frequencies and for the parameters specified in Attachment C. All mapVing, well construction forms,
well abandonment forms, and monitoring data shall refer to the permit number and the well
nomenclature as provided in Attachment C and Figure 1. [ 15A NCAC 02T .0105(m)]
10. Monitoring wells MW2, MW-4, MW-5, and MW-6 shall be sampled at the frequencies and for the
parameters specified in Attachment C. All mapping, well construction forms well abandonment forms
and monitoring data shall refer to the permit number and the well nomenclature as provided in
Attachment C and Figure 1. [15A NCAC 02T .0105(m)]
11. For initial sampling of monitoring well MW-1A, the Permittee shall submit a Compliance Monitoring
Form (GW-59) and a Well Construction Record Form (GW-1) listing this permit number and the
appropriate monitoring well identification number. Initial Compliance Monitoring Forms (GW-59)
without copies of the Well Construction Record Forms (GW-1) are deemed incomplete, and may be
returned to the Permittee without being processed. [15A NCAC 02T .0105(m)]
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12. Two copies of the monitoring well sampling and analysis results shall be submitted on a Compliance
Monitoring Form (GW-59), along with attached copies of laboratory analyses, on or before the last
working day of the month following the sampling month. The Compliance Monitoring Form (GW-59)
shall include this permit number, the appropriate well identification number, and one GW-59a
certification form shall be submitted with each set of sampling results. All information shall be
submitted to the following address:
Division of Water Resources
Information Processing Unit
1617 Mail Service Center
Raleigh, North Carolina 27699-1617
[ 15A NCAC 02T .0105(m)]
13. Noncompliance Notification:
The Permittee shall report to the Wilmington Regional Office, telephone number [phone],
within 24 hours of first knowledge of the following:
a. Treatment of wastes abnormal in quantity or characteristic, including the known passage of a
hazardous substance.
b. Any process unit failure (e.g., mechanical, electrical, etc.) rendering the facility incapable of
adequate wastewater treatment.
c. Any facility failure resulting in a discharge to surface waters.
d. Any time self -monitoring indicates the facility has gone out of compliance with its permit
limitations.
e. Ponding in or runoff from the infiltration sites.
Emergencies requiring reporting outside normal business hours shall call the Division's Emergency
Response personnel at telephone number [phone], [phone], or [phone]. All
noncompliance notifications shall file a written report to the Wilmington Regional Office within five
days of first knowledge of the occurrence, and this report shall outline the actions proposed or taken to
ensure the problem does not recur. [15A NCAC 02T .0108(b)(1)(A)]
V. INSPECTIONS
1. The Permittee shall perform inspections and maintenance to ensure proper operation of the wastewater
treatment and infiltration facilities. [15A NCAC 02T .07070)]
2. The Permittee shall inspect the wastewater treatment and infiltration facilities to prevent malfunctions,
facility deterioration, and operator errors that may result in discharges of wastes to the environment,
threats to human health, or public nuisances. The Permittee shall maintain an inspection log that
includes the date and time of inspection, observations made, and 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
.0707(i), 02T .07070)]
Division authorized representatives may, upon presentation of credentials, enter and inspect any
property, premises, or place related to the wastewater treatment and infiltration facilities permitted
herein at any reasonable time for determining compliance with this permit. Division authorized
representatives may inspect or copy records maintained under the terms and conditions of this permit,
and may collect groundwater, surface water, or leachate samples. [G.S. 143-215.3(a)(2)]
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VI. GENERAL CONDITIONS
1. Failure to comply with the conditions and limitations contained herein may subject the Permittee to a
Division enforcement action. [G.S. 143-215.6A, 143-215.613, 143-215.6C]
2. This permit is effective only with respect to the nature and volume of wastes described in the permit
application, and Division -approved plans and specifications. [G.S. 143-215.1(d)]
3. Unless specifically requested and approved in this permit, there are no variances to administrative codes
or general statutes governing the construction or operation of the facilities permitted herein. [15A
NCAC 02T .0105(n)]
4. The issuance of this permit does not exempt the Pennittee from complying with all statutes, rules,
regulations, or ordinances that other jurisdictional government agencies (e.g., local, state, and federal)
may require. [15A NCAC 02T .0105(c)(6)]
5. If the permitted facilities change ownership, or the Permittee changes their name, the Permittee shall
submit a permit modification request on Division -approved forms. The Permittee shall comply with
all terms and conditions of this permit until the permit is transferred to the successor -owner. [G.S. 143-
215.1(0)]
6. The Permittee shall retain a set of Division -approved plans and specifications for the life of the facilities
permitted herein. [15A NCAC 02T .0105(o)]
7. The Permittee shall maintain this permit until the proper closure of all facilities permitted herein, or
until the facilities permitted herein are permitted by another authority. [15A NCAC 02T .01050)]
8. This permit is subject to revocation or modification upon 60-day notice from the Division Director, in
whole or part for:
a. violation of any terms or conditions of this permit or Administrative Code Title 15A Subchapter
02T;
b. obtaining a permit by misrepresentation or failure to disclose all relevant facts;
c. the Permittee's refusal to allow authorized Department employees upon presentation of credentials:
i. to enter the Permittee's premises where a system is located or where any records are required
to be kept;
ii. to have access to any permit required documents and records;
iii. to inspect any monitoring equipment or method as required in this permit; or
iv. to sample any pollutants;
d. the Permittee's failure to pay the annual fee for administering and compliance monitoring; or
e. a Division determination that the conditions of this permit are in conflict with North Carolina
Administrative Code or General Statutes.
[15A NCAC 02T .0110]
WQ0004059 Version 4.0 Shell Version 180901 Page 9 of 10

9. Unless the Division Director grants a variance, expansion of the facilities permitted herein shall not
occur if any of the following apply:
a. The Permittee or any parent, subsidiary, or other affiliate of the Permittee has been convicted of
environmental crimes under G.S. 143-215.613, or under Federal law that would otherwise be
prosecuted under G.S. 143-215.6B, and all appeals of this conviction have been abandoned or
exhausted.
b. The Permittee or any parent, subsidiary, or other affiliate of the Permittee has previously abandoned
a wastewater treatment facility without properly closing the facility.
c. The Permittee or any parent, subsidiary, or other affiliate of the Permittee has not paid a civil
penalty, and all appeals of this penalty have been abandoned or exhausted.
d. The Permittee or any parent, subsidiary, or other affiliate of the Permittee is currently not compliant
with any compliance schedule in a permit, settlement agreement, or order.
e. The Permittee or any parent, subsidiary, or other affiliate of the Permittee has not paid an annual
fee.
[15A NCAC 02T .0120(b), 02T .0120(d)]
10. This permit shall not be renewed if the Permittee or any affiliation has not paid the required annual fee.
[15A NCAC 02T .0120(c)]
Permit issued this the 22°a day of October 2019
NORTH CAROLINA ENVIRONMENTAL MANAGEMENT COMMISSION
Dmda Culpepper, Director
ivision of Water Resources
By Authority of the Environmental Management Commission
Permit Number WQ0004059
WQ0004059 Version 4.0 Shell Version 180901 Page 10 of 10

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STATE OF NORTH CAROLINA
UTILITIES COMMISSION
RALEIGH
APPENDIX A
DOCKET NO. W-1154, SUB 0
BEFORE THE NORTH CAROLINA UTILITIES COMMISSION
SUGARLOAF UTILITY, INC.
is granted this
CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY
to provide sewer utility service
in
that area of Atlantic Beach, North Carolina, which is contiguous to and includes
Sugarloaf's wastewater treatment plant, including all of the area adjacent to Salter Path
Road bounded on the west by (and including) ATLANTIC STATION SHOPPING
CENTER, bounded on the east by (and including) DAYS INN AND SUITES, bounded
on the south by the Ocean Ridge Subdivision boundary, and bounded on the North by
Bogue Sound, containing approximately seventy acres, more or less.
Carteret County, North Carolina
subject to any orders, rules, regulations,
and conditions now or hereafter lawfully made
by the North Carolina Utilities Commission.
ISSUED BY ORDER OF THE COMMISSION.
This the 26th day of June , 2001.
NORTH CAROLINA UTILITIES COMMISSION
Geneva S. Thigpen, Chief Clerk

STATE OF NORTH CAROLINA
UTILITIES COMMISSION
RALEIGH
APPENDIX A
DOCKET NO. W-1154, SUB 1
BEFORE THE NORTH CAROLINA UTILITIES COMMISSION
SUGARLOAF UTILITY, INC.
is granted this
to provide sewer utility service
in
COTTAGES AT BAY RIDGE, CORAL BAY RIDGE,
AND CORAL BAY VILLAGE SUBDIVISIONS
Carteret County, North Carolina
subject to any orders, rules, regulations,
and conditions now or hereafter lawfully made
by the North Carolina Utilities Commission.
ISSUED BY ORDER OF THE COMMISSION.
This the 23rd day of July , 2001.
NORTH CAROLINA UTILITIES COMMISSION
eA61, L-Mowx\*
Gail L. Mount, Deputy Clerk

GROUND LEASE AGREEMENT
THIS GROUND LEASE AGREEMENT (hereinafter referred to as the "Lease") is made
and entered into as of the_ day of June, 2019 by and between GALAXY AB, LLC, a North
Carolina limited liability company, or assigns (hereinafter referred to as "Lessor"); and
SUGARLOAF UTILITIES, INC., a North Carolina corporation (hereinafter referred to as
"Lessee").
Statement ofPurpos
Lessor is the owner of the Leased Premises, as defined below, which Lessor has agreed to
lease to Lessee under a long-term ground lease. Lessor and Lessee have entered into this Lease in
order to document their respective understandings and obligations concerning the leasing of the
Leased Premises.
Agreement
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
hereinafter set forth, Lessor and Lessee hereby covenant, promise and agree with each other as
follows:
1. Description of Leased Premises. Lessor hereby leases and demises unto Lessee, and
Lessee hereby takes and leases from Lessor, a parcel of land located in the City of Atlantic Beach,
Carteret County, North Carolina as more particularly described on Lxhihft,�, attached hereto and
incorporated herein by reference, together with all easements, rights of way, licenses, privileges
and any other property rights appurtenant thereto (hereinafter referred to as the "Leased
Premises"). Leased Premises include any public rights of way or adjacent properties that are
required to be dedicated as public rights of way in connection with the use of the Leased Premises.
TO HAVE AND TO HOLD the Leased Premises and all privileges and appurtenances
thereto belonging unto Lessee, its successors and assigns, on the terms and conditions hereinafter
set forth.
2 Lease 'Term, Effective, Date., Renewal O tion.
(a) This Lease shall become effective as of the date first appearing above (the
"Effective Date"). The term of this Lease shall be ten (10) years (the "Term"). The Term shall
commence upon the date set forth above (the "Commencement Date"). Lessor further agrees (a)
to execute d record a written memorandum of lease, substantially in the form of i � ,
attached here and made a part hereof, contemporaneously with the execution of this Lease. From
and after the Commencement Date, Lessee shall be in full possession of the Leased Premises and
shall have all of the rights and obligations set forth in this Lease.
(b) Tenant shall have one (1) option to renew the term of the Lease for ten
(10) years, at Tenant's option, provided Tenant gives Landlord at least six (6) months prior written
notice of the exercise of such renewal option before the end of the Initial Lease Term. The Rent
RALLIH01 5927752

payable for the option period shall be the same as the rent for the Initial Lease Term.
(c) Notwithstanding anything contained herein to the contrary, Landlord
reserves the right to terminate the Lease upon thirty (30) days written notice to Tenant in the event
the Leased Premises are no longer used as a Sewer Treatment Plant.
3. Rental. Lessee agrees to pay Lessor rental for the Leased Premises annually, each
installment being due and payable in advance, on or before the first (1 st) day of each calendar year
during the Term. In the event the Term of this Lease should begin on a day other than the first day
of a calendar year, the portion of rental for the balance of that year shall be paid in advance, on the
first day of the Term, and should the initial Term end on a day other than the last day of a calendar
year, the proportionate rental for the portion of that year shall be paid on the first day of the first
calendar month of the Term.
During the Term, the rental shall be One Hundred and No/100 Dollars ($100.00) per
year.
4. Taxes and Assessments. During the Term, Lessee shall pay all taxes, assessments
and other impositions and duties levied on the property described on Exhibit A and upon any
buildings or improvements located or to be located thereon (the "Taxes"). Any such Taxes, for the
first and final years of the Term shall be prorated, if necessary, between Lessor and Lessee based
upon the Commencement Date. To the extent that the Leased Premises is part of a larger tax parcel,
then taxes shall be prorated based on the value of the land and allocated to the Leased Premises on
a per acre basis. In the event the Leased Premises are not separately assessed as of the calendar
year in which the term of this Lease commences, Lessor and Lessee shall agree upon the tax
liability of the Leased Premises for such year; provided, however, if they are unable to so agree,
written notice from the appropriate taxing authority as to the amount of Tax attributable to the
Leased Premises shall be binding upon Lessor and Lessee. Notwithstanding anything herein to the
contrary, during the period from the Possession Date until the Commencement Date, Lessee shall
pay all taxes based on the value of Lessee's buildings or improvements (but not on the value of the
land.)
Lessee hereby agrees to pay when due all such Taxes (but no more than ten (10) days prior
to the date such taxes would become past due). Lessee's failure to pay all taxes, prior to the
expiration of the grace period set forth herein, shall be an event of default hereunder.
Lessor agrees to use reasonable efforts to minimize Taxes on the Leased Premises.
Reasonable efforts shall include the obligation to seek a reduction in Taxes from the taxing
authority if the value of the Leased Premises would be considered excessive as compared to the
value of surrounding property of a comparable nature. Notwithstanding anything to the contrary
contained herein, Lessee may initiate or prosecute any proceedings permitted by law for obtaining
an abatement, reduction or withdrawal, or otherwise contesting the validity or amount, of any tax
for which Lessee is alleged to be responsible, and Lessee's failure to pay any such tax during the
prosecution of any such proceeding shall not be deemed an event of default hereunder. If required
by law, Lessee shall have the right to take such action in the name of Lessor and Lessor shall
cooperate with Lessee to the extent Lessee may require; provided, however, Lessee shall
indemnify and save Lessor harmless from and against all loss, cost, damage and expense as may
result therefrom. For purposes of computing Lessee's obligations to pay Taxes, there shall be
excluded from Taxes any income, excess profits, estate, single business, inheritance,
Fa
RALLIB01 592775 2

succession, transfer, franchise, capital or other tax assessments upon Lessor or the rent or other
sums payable under this Lease.
5. Utilities and Maintenance. Lessee shall pay all costs for the installation of utilities,
if needed, and for utilities used by Lessee on the Leased Premises and shall be responsible for all
repairs and maintenance of the landscaping, buildings and improvements on the Leased Premises.
6. Insurance. Beginning as of the Possession Date for subparagraphs (b), and (c) and
the Commencement Date for subparagraph (a) below and continuing during the entire Term,
Lessee shall., at Lessee's sole cost and expense for the mutual benefit and protection of Lessor,
Lessee and any and all mortgagees of the Leased Premises, procure and maintain or cause to be
procured and maintained in effect, the following:
(a) All-risk policy of insurance with a vandalism and malicious mischief
endorsement covering the Leased Premises and all buildings and improvements thereon in a total
amount of not less than one hundred percent (100%) of the then value of the buildings (including
a replacement rider and inflation on appreciation coverage) and improvements, including
improvements constructed by or for Lessee, but excluding any personal property or fixtures on the
Leased Premises.
(b) Comprehensive general liability insurance policy against claims for
personal injury or death and property damage occurring upon, in or about the Leased Premises, or
on, in or about adjoining sidewalks or passageways under the control of Lessee affording
protection of a limit of not less than a combined single limit of $3,000,000.00, as adjusted for
inflation every five (5) years during the Term, per occurrence with respect to personal injury or
death and property damage.
(c) Workman's compensation insurance, unemployment insurance and such
other insurance as may be required by law.
All policies of insurance and renewals thereof, shall name both Lessor and Lessee (and any
mortgagee of the Leased Premises, as appropriate) as insureds and provide for the payment of all
losses to any Mortgagee and Lessee jointly as their respective interests may appear. Any policy of
insurance required hereunder may be in the form of a "blanket" policy, provided that the coverage
thereunder must be at least equal to that which would be provided under any separate policy that
Lessee must maintain pursuant to the terms hereof. Upon written request, Lessee shall deliver to
Lessor certified copies of policies evidencing the insurance required hereunder or deliver in lieu
thereof certificates of coverage from the insurance company or companies writing said policies,
which certificate shall designate the company writing the same, the number and provisions thereof
and shall indicate on the face thereof that Lessor is a named insured under said policies. All
insurance policies shall be provided by a company or companies licensed to do business in the
State of North Carolina.
On or before fifteen (15) days prior to the expiration of any insurance policy, Lessee shall
deliver to Lessor written notification in the form of a receipt or other similar documents from the
applicable insurance company confirming that said policy or policies have been renewed, or
3
RALL R01 592775.2

deliver certificates of coverage or certified copies of the renewed or replacement insurance
policies.
7. Waiver of SuLgo ation Rights. Anything in this Lease to the contrary
notwithstanding, Lessor and Lessee each hereby waives to the extent that such waiver will not
invalidate any insurance policy maintained by Lessor or Lessee nor increase any premiums
thereon, any and all rights of recovery, claims, actions or causes of action, against the other, its
agents, members, servants, partners, shareholders, officers and employees, for any loss or damage
that may occur to the Leased Premises, or any improvements thereto, or any personal property of
such party therein, by reason of fire, the elements, and any other cause which is insured against
under the terms of the standard fire and extended coverage insurance policies referred to in this
Lease, to the extent that such loss or damage is recovered under said insurance policies, regardless
of cause or origin, including negligence of the other party hereto, its agents, members, officers,
partners, shareholders, servants or employees, and covenants that no insurer shall hold any right
of subrogation against such other party. If the respective insurers of Lessor and Lessee do not
permit such a waiver without an appropriate endorsement to such party's insurance policy, Lessor
and Lessee covenant and agree to notify the insurers of the waiver set forth herein and to secure
from each such insurer an appropriate endorsement to its respective insurance policy concerning
such waiver.
& Improvements and Use of Leased Premises. During the Term of this Lease, Lessee
shall use the Leased Premises as a Sewer Treatment Plant. Lessee shall at all times in the use of
the Leased Premises and the performance of this Lease comply with all laws, ordinances, decrees,
orders, rules and regulations of any law or authority, agency, or governmental unit having
jurisdiction over the Leased Premises or the adjacent public streets. Lessee shall be responsible for
obtaining and maintaining all governmental approvals needed for use of the Leased Premises.
Furthermore, Lessee shall make at its own expense all alterations of the Leased Premises required
by any such authority, agency or governmental unit and shall save Lessor harmless from penalties,
fines, costs, expense or damages resulting from failure to do so. Without limiting the generality of
the foregoing, Lessee shall make such arrangements for the storage and timely disposition of all
garbage and refuse generated by the use or occupancy of the Leased Premises as may be required
in order to keep the Leased Premises in a neat and orderly condition and reasonably clean and free
from rubbish, dirt, snow and ice; use reasonable efforts to not cause or permit any noxious,
disturbing or offensive odors, fumes, or gases, or any smoke, dust, steam or vapors or any loud or
disturbing noise or vibration to originate in or to be emanating from the Leased Premises; and not
do or permit any act or thing which might constitute a public or private nuisance.
Notwithstanding anything to the contrary contained herein, Lessee shall have the right to
alter, remodel, demolish and reconstruct such buildings and other improvements in order to update,
maintain or otherwise change all buildings and other improvements without the consent of Lessor.
All buildings and permanent improvements erected by Lessee shall be and remain the property of
Lessee until the termination of this Lease. Upon the termination of this Lease, any buildings and
permanent improvements erected by Lessee on the Leased Premises shall become the property of
Lessor and Lessee shall have no further ownership rights therein except as provided under the
terms of this Lease, and Lessee hereby agrees that at the time of such
4
RALLIB01 M775 2

termination of the Lease and for no additional consideration Lessee will execute such bill(s) of
sale or limited warranty deed(s) as to such buildings and permanent improvements as Lessor may
reasonably require. Notwithstanding the foregoing, any governmental approvals, licenses or other
governmental authorizations to operate an assisted living center or related business shall remain
the property of Lessee and shall not be conveyed to Lessor upon the termination of this Lease.
9 Assignment and Sublelth . Lessee shall have the free right to sublet, assign,
mortgage or otherwise transfer its interest in this Lease or possession of the Leased Premises to
any party or to delegate any duty or obligations of Lessee hereunder without Lessor's approval,
written or otherwise. Any such assignee shall expressly assume all covenants and conditions of
this Lease on the part of Lessee to observe, comply with or perform. Upon assignment or subletting
of this Lease, Lessee shall be relieved and released from any further liability under the Lease.
Lessee shall have the absolute right to sublet all or any part or parts of the Leased Premises
or both to subleases and to assign, encumber, extend or renew such subleases.
10 Hazardous Substances. Neither Lessee nor any assignee or sublessee of Lessee, nor
their respective agents or employees, shall make, store, use, treat or dispose of any hazardous
substance, toxic substance, contaminant, pollutant or asbestos, as such terms are defined under any
federal, state or local law or regulation or common law pertaining to health, safety or
environmental protection, as from time to time amended (referred to herein collectively as
"hazardous substances" and "hazardous substance laws"), on or about the Leased Premises, and
any demolition, renovation, removal or construction of any buildings, improvements, soil or
materials upon or from the Leased Premises shall be performed in strict accordance with the
requirements of said hazardous substance laws and such permits or exemptions as may be required
or available thereunder. Lessor and Lessee shall immediately notify the other of any notice or claim
received relating to a violation or potential violation of any hazardous substance laws relating to
the Leased Premises. Lessor shall, at Lessor's expense, be responsible for and take all remedial
steps as may be reasonably necessary in order to place or maintain the Leased Premises in
compliance with hazardous substance laws and shall hold Lessee harmless from any and all
liability relating thereto for anything which Lessor causes or which occurs prior to the Possession
Date or subsequent to the Lease Term. Lessee, at Lessee's expense, shall immediately take any
and all remedial steps as may be reasonably necessary in order to place or maintain the Leased
Premises in compliance with such hazardous substance laws during the Lease Term, provided,
however, Lessee shall have no such obligation should any condition occur following the
termination of the Lease or relative to any potential violation or condition which existed on the
Leased Premises prior to the Possession Date of the Lease. Lessor and Lessee shall immediately
notify the other of any notice of claim received relating to a violation or potential violation of any
hazardous substance laws relating to the Leased Premises.
Lessee hereby indemnifies and agrees to hold harmless Lessor from and against any and
all claims, liabilities, costs and expenses, including but not limited to testing and inspection fees,
attorneys' fees, engineers' fees and clean up or remedial costs, arising from or relating to claims
against Lessor and/or the Leased Premises relating to the violation or potential violation of any
hazardous substance laws to the extent caused by Lessee and/or any assignee or subtenant of
5
MLIBOI 5927752

Lessee or their respective contractors, licensees, agents, employees, guests or invitees during the
term of this Lease or arising from or relating to any construction, use or activities of said parties
on or relating to the Leased Premises. Lessor shall hold harmless Lessee for any condition existing
prior to the Possession Date or any environmental condition resulting in a violation of
environmental laws which is caused by Lessor or for which Lessor is otherwise responsible under
this paragraph 10.
Lessee shall, during the term of this Lease, have the right to store and use on the Leased
Premises construction materials, cleaning products, medical supplies and maintenance supplies
typically required for the construction, cleaning, operation and maintenance of the Leased
Premises and for the medical care which will be given at the Leased Premises, provided the storage
and use thereof shall be done in compliance with all hazardous substance laws.
Lessor represents and warrants that to the best of Lessor's knowledge without conducting
an environmental audit, no leak, spill, discharge, emission or disposal of hazardous or toxic
substances has occurred on the Leased Premises and that the soil, ground water and soil vapor on
or under the Leased Premises are free of toxic or hazardous substances as of the date hereof..
Notwithstanding anything to the contrary contained herein, the undertaking of any such
environmental audit shall not relieve Lessor from any liability to Lessee or others relating to the
environmental condition of the Leased Premises, to the extent that such condition existed prior to
the Possession Date or thereafter if caused by Lessor.
11. Lessee's Default. Lessee shall be in default under the terms of this Lease if (a)
Lessee fails to make payment of any rental installment within fifteen (15) days of written notice
of delinquency from Lessor, or (b) Lessee fails to make any other payment required under this
Lease within the time prescribed in the Lease, following written notice from Lessor and expiration
of any applicable period of grace, or if no such grace period exists, then following fifteen (15) days
written notice of delinquency from Lessor or (c) Lessee fails to perform any other material non -
monetary undertaking hereunder to be performed by it and remains in such default for more than
thirty (30) days after written notice thereof has been given by or on behalf of Lessor to Lessee,
provided, however, that in the event that such failure or default cannot reasonably be cured or
otherwise corrected within such thirty (30) day period, Lessee shall not be in default so long as
Lessee commences reasonable efforts to cure or correct such failure or default within such thirty
(30) day period and diligently prosecutes such cure or correction to completion, or (d) if at any
time during the term of this Lease there shall be filed by or against Lessee in any court pursuant to
any statute a petition in bankruptcy, a petition alleging insolvency, a petition for reorganization, a
petition for the appointment of a receiver, or a petition for any relief under the Bankruptcy Code,
or if a similar type of proceeding for relief from liability shall be filed by or for Lessee, and if any
such petition or proceeding is not dismissed within sixty (60) days after the filing thereof, Lessee
shall be in default under the terms of this Lease, or (e) a claim of lien is filed against the Leased
Premises and is not discharged or fully bonded over within sixty (60) days after such filing.
In the event of any monetary or material non -monetary default by Lessee and expiration of
any applicable cure period and subject to any cure rights of any Mortgagee, Lessor may (i) cure
such default at Lessee's cost and expense, with Lessor to be reimbursed upon demand or as
otherwise provided in the Lease for such cost and expense, together with interest thereon, (ii)
6
RALL11301 M775.2

subject to non -disturbance and attornment agreements, re-enter the Leased Premises and remove
all persons and all or any property therefrom by any suitable action or proceeding at law or
otherwise, without being liable for any prosecution therefor or damages therefrom, and repossess
and enjoy the Leased Premises, (iii) at any time relet the Leased Premises or any parts thereof, on
behalf of Lessee or in Lessor's own right, and/or (iv) terminate this Lease upon not less than sixty
(60) days written notice to Lessee.
The exercise by Lessor of any right granted herein shall not relieve Lessee from the
obligation to make all rental payments and to fulfill all other covenants required by this Lease at
the time and in the manner provided herein. If Lessor elects not to terminate this Lease, throughout
the remaining Term hereof, following an event of default and the expiration of any applicable cure
or grace period, Lessee shall pay Lessor, no later than the last day of each month during said Term,
the then current excess, if any, of the sum of the unpaid rentals and costs due Lessor resulting from
such default by Lessee over the proceeds, if any, received by Lessor from any reletting of Leased
Premises. Lessor shall not be required to take more than the minimal action required by law to
relet the Leased Premises nor to exercise any other right granted to Lessor hereunder, nor shall
Lessor be under any obligation to minimize Lessee's loss as a result of Lessee's default except as
required by law.
Upon a default by Lessee, Lessor shall have, in addition to any other remedies which it
may have under the terms hereof, the right to invoke any other remedy allowed at law or in equity
to enforce Lessor's rights or any of them. The maintenance of any action or proceeding to recover
possession of the Leased Premises or any installment or installments of rental or other monies that
may be due or become due from Lessee to Lessor shall not preclude Lessor from thereafter
instituting and maintaining subsequent actions or proceedings for the recovery of possession of the
Leased Premises or of any other monies that may be due or become due from Lessee. Any entry
or re-entry by Lessor shall not be deemed to absolve or discharge Lessee from liability hereunder
nor as a termination of the Lease.
12 Lessor's Default. If Lessor is in default in performing any of the terms or provisions
of this Lease and Lessor fails to cure such default within thirty (30) days after receipt of written
notice from Lessee stating the nature and extent of the default, Lessee shall have the rights and
remedies hereinafter set forth, which shall be distinct, separate and cumulative and, in addition to
any other rights or remedies of Lessee at law or in equity,
(a) Lessee may cure the default, and Lessor shall reimburse Lessee, on demand,
for all of Lessee's costs and expenses. Notwithstanding any cure period for Lessor's default,
Lessee may cure any default without notice to Lessor, where the failure to promptly cure such
default would, in the reasonable opinion of Lessee, create or allow to persist an emergency
condition or materially adversely affect the operation of Lessee's business.
(b) Lessee may enforce the provisions of this Lease and may enforce and
protect the rights of Lessee hereunder by a suit or suits in equity or at law for the specific
performance of any covenant or agreement contained herein, including, but not limited to, the
recovery of any damages (including, without limitation, incidental damages and consequential
damages) incurred by Lessee in connection with such default, including, but not limited to, in the
event of a termination of this Lease, the unamortized portion of the total cost of construction of
7
RALLIB01 5927752

Lessee's improvements as determined in accordance with generally accepted accounting principles
as shown on the financial statements (or, if no such financial statement exists, then the cost shown
on the books) of Lessee.
(c) Lessee shall have the right to set-off any amounts due Lessor from Lessee
under this Lease for any actual expenses or damages (including, without limitation, incidental
damages and consequential damages) incurred by Lessee in performing any of Lessor's obligations
hereunder against Rent, Taxes and any other payment by Lessee due or to become due hereunder.
Notwithstanding anything to the contrary provided herein, pending final determination of the
validity and amount of any claim of Lessee under any provisions of this Lease, Lessee may,
provided it acts reasonably and in good faith, without penalty or default, set- off the amount
claimed by Lessee against Rent, Taxes and any other payment by Lessee due or to become due
hereunder.
13. F'iNtures and Personal l'ro a Lessee shall have the right to remove, at any time,
and from time to time, from the Leased Premises all furniture, office machinery, furnishings,
equipment, inventory, trademarked items, signs and trade fixtures as Lessee may have placed in
the buildings or improvements on the Leased Premises. Subject to the provisions of this Lease,
Lessee covenants that it will not remove permanently affixed items upon termination of the Lease.
Nothing in this Lease shall require the transfer of ownership of, or allow Lessor to acquire title to,
any of Lessee's furniture, equipment, furnishings, trade fixtures and other personal property which
may from time to time be located upon or in the Leased Premises.
14. Eminent Domain. From and after the Effective Date, Lessee shall have the
following rights in the event of a taking of the entire Leased Premises or any part thereof, by reason
of any exercise of the power of eminent domain, including any transfer in lieu thereof.
(a) Total Permanent. In the event of a taking of the entire Leased Premises or,
in Lessee's discretion, a substantial portion as would render the balance of the Leased Premises
not suitable for Lessee's then current or intended use, this Lease shall terminate upon the date that
possession is surrendered to the condemning authority, at which time all rights and obligations
between the parties shall cease and Rent and other charges payable by Lessee under this Lease
shall be apportioned. The taking of any portion of the building or planned building area, fifteen
percent (15%) of the then existing parking area or planned parking area, or the loss or change of
any of the rights of access or ingress and egress as established or planned, may be, at Lessee's sole
discretion, considered it to be a total taking as would render the use of the Leased Premises not
suitable for Lessee's then current or intended use. Notwithstanding any law, statute or ordinance
or provision of this Lease which provides leasehold improvements may be or shall become the
property of Lessor at the termination of this Lease, the loss of the building and other improvements
paid for or pursuant to this Lease owned by Lessee, loss of all current and future net operating
income, the loss of Lessee's leasehold estate, and such additional relief as may be provided by law
or in equity shall be the basis of Lessee's damages against the condemning authority if a separate
claim therefor is allowable under applicable law, or the basis of Lessee's damages in claiming a
portion of the total award if only one award is made.
Et1
BALLIBOI 592775 2

(b) Partial Permanent. In the event of a taking of less than the entire Leased
Premises or, in the sole discretion of Lessee, less than a substantial portion as would render the
balance of the Leased Premises not suitable for Lessee's then current or intended use, Lessee shall
be entitled to a reduction of rent based on the pro rata share of land lost, rent then being adjusted
to the square footage remaining in the Leased Premises times the rent per square foot then
applicable under the Lease. Any award for damages as a result of condemnation of all or any part
of the Leased Premises, including the amount paid by a condemor for any property conveyed under
threat of condemnation, shall be divided between Lessor and Lessee in accordance with the terms
or conditions of any order or decision of a court or administrative body of competent jurisdiction,
provided that either party shall have the right to appeal any order or decision. Without limiting the
foregoing rights of Lessee, Lessee shall have the right to prove and obtain a portion of the
condemnation award allocable to the loss or diminution in value of Lessee's leasehold interest and
leasehold improvements (including the diminution in value of Lessee's leasehold interest resulting
from Lessee's obligation to restore the Leased Premises under the circumstances described above)
and for (i) loss or damage to Lessee's trade fixtures and other personal property, (ii) damages for
interruption of Lessee's business, (iii) expenses for relocation and moving and (iv) loss in value
derived from any reduction in the current or future net operating income of the improvements on
the Leased Premises. Lessor covenants and agrees to make no transfer, conveyance or assignment
under threat of condemnation without the consent of Lessee. Lessor further covenants and agrees
that, after Lessor's receipt of notice of any condemnation proceedings, Lessor shall promptly
notify Lessee and any Mortgagee and give Lessee and Mortgagee full opportunity to participate in
any such proceedings.
(c) Total Temporary. In the event of a taking of the entire Leased Premises or,
in the sole discretion of Lessee, a substantial portion as would render the balance of the Leased
Premises not suitable for Lessee's current or intended use, for a period of one (1) year or less, this
Lease shall toll from the time the Leased Premises is surrendered to the condemning authority and
recommence when possession is restored to Lessee. Lessee shall be entitled to the entire award
granted to the fee owner, Lessor and Lessee, except that to the extent Lessee receives
compensation, Lessor shall be entitled to be reimbursed for the direct damages caused Lessor as a
result of the tolling of the Lease. If such taking shall extend beyond one (1) year, the taking shall,
at the option of Lessee, be considered permanent and Lessee shall be entitled to all rights, damages
and awards pursuant to Section 14(a) of this Lease.
(d) Partial Temporary. In the event of a taking of less than the entire Lease
Premises or, in the sole discretion of Lessee, less than a substantial portion as would render the
balance of the Leased Premises not suitable for Lessee's use, for a period of one (1) year or less,
Lessee shall be entitled to the entire award granted to the fee owner, Lessor and Lessee. In
consideration of such entire award, Lessee shall not be entitled to any reduction of Rent or other
charges payable by Lessee under this Lease.
(e) General. Should Lessor and Lessee be unable to agree as to the division of
any singular award or the amount of any reduction of Rents or other charges payable by Lessee
under this Lease, such dispute shall be submitted for resolve to the court exercising jurisdiction of
the condemnation proceedings, each party bearing its respective costs for such
L1
RALL1801 592775;2

determination. Lessor shall not agree to any settlement in lieu of condemnation with the
condemning authority without Lessee's and any Mortgagee's prior written consent.
Lessor represents and warrants that at the Effective Date, it has no actual or constructive
knowledge of any proposed condemnation or road or access changes or impairment of the visibility
of the Leased Premises including, but not limited to, turn restrictions, barriers or medians,
overpasses, underpasses or bypasses, that would affect the Leased Premises or Lessee's proposed
use of any part of the Leased Premises. In the event that subsequent to the Effective Date, but prior
to the Commencement Date, a total or partial condemnation, either permanent or temporary, or
road or access changes or impairment to the visibility of the Leased Premises that would affect the
Leased Premises or Lessee's proposed use, is proposed by any competent authority, Lessee shall
be under no obligation to commence or continue construction of the building and other
improvements, and Rent and other charges, if any, payable by Lessee under this Lease shall abate
until such time as it can be reasonably ascertained that the Leased Premises shall not be affected
in Lessee's sole discretion. In the event the Leased Premises is so affected, Lessee shall have the
option to (i) recover all rights, damages and awards pursuant to the appropriate provisions of this
paragraph; (ii) reduce the size of the Leased Premises and thereby reduce the Rent or (iii) terminate
this Lease.
Further, notwithstanding anything herein to the contrary, Lessee and Lessor agree that all
condemnation proceeds payable to Lessee shall be payable first to any mortgagee of Lessee.
15. Casual Loss. In the event that any building, structure or improvement constructed
or located by Lessee on the Leased Premises is destroyed or substantially damaged by fire, flood,
wind or other casualty, act of God or force majeure, within the last three (3) years of the initial
term of this Lease or during any renewal term, Lessee shall have the right to terminate this Lease
upon written notice to Lessor within ninety (90) days following such casualty.
If Lessee exercises its option to terminate this Lease as provided in this Section, the
insurance proceeds payable as a result of such damage to the buildings, structures, and
improvements (but not including insurance proceeds payable to Lessee for damage to Lessee's
personal property or fixtures) shall be applied by Lessee first to the unpaid balance of any
obligation to any Mortgagee, then to the expenses of removing all debris or the unusable portions
of structures or improvements from the Leased Premises which undertaking shall be commenced
by Lessee within thirty (30) days from the effective date of termination, unless Lessee and Lessor
agree to leave the Leased Premises "as is", in which event possession of the Leased Premises shall
be immediately delivered unto Lessor. Any remaining insurance proceeds shall inure to the sole
benefit of Lessee.
16. Notices. Any notice or demand, required or permissible under the terms of this
Lease, shall be in writing and shall be deemed given by a party upon: (i) hand delivery of such
notice to the other party, (ii) one day after delivery to an express mail next -day delivery service
marked appropriately with delivery confirmed by the delivery service or (iii) the date three (3)
business days after mailing the same in the United States mail, certified, return receipt requested,
addressed to the other party at the following address or such other address as either party may
direct pursuant to this notice provision:
10
RALLIBOI 592775 2

If intended for Lessor:
LLC Galaxy AB, LLC
6125 Saddlehorn Drive
Rocky Mount, NC 27803
Attn: G. Thomas Joyner
(b) If intended for Lessee:
Sugarloaf Utility, Inc.
514 Daniels Street
Suite 414
Raleigh, NC 27605
Attn: William T. Smith
17. Mortgayze of Leased Premises. Lessee may obtain financing for the construction of
any improvements to be located on the Leased Premises and permanent financing and refinancing
thereafter and may grant its mortgagee(s) a security interest in Lessee's interest in the Leased
Premises, including buildings, improvements, fixtures, and personal property located thereon.
Nothing in this Section shall be construed as Lessor's consent to subordinate its fee simple interest
in the Leased Premises to Lessee's financing. Further, nothing in this paragraph shall affect the
property rights of Lessor upon the termination of the Lease.
Lessor and Lessee agree to provide the owner or holder of any such mortgage by Lessee (a
"Mortgage") with written notice of any defaults hereunder, and agrees that any such mortgagee (a
"Mortgagee") shall be provided the right to cure any such default of Lessee within thirty days after
the expiration of Lessee's cure period pursuant to paragraph 32.
Lessor shall not exercise any right, power or remedy with respect to any default or
termination hereunder until the expiration of any cure period provided to Lessee and/or any
Mortgagees with respect thereto.
Mortgagee may, after Lessee's default hereunder, make any payment or perform any act
required hereunder or by the Mortgage to be made or performed by Lessee with the same effect as
if made or performed by Lessee; provided that no entry by the Mortgagee upon the Leased
Premises for such purpose (by itself) shall constitute or be deemed to be an eviction of Lessee and
shall not waive or release Lessee from any obligation or default hereunder (except any obligation
or default which shall have been fully performed or corrected by such payment or performance by
a Mortgagee).
In the event (i) Lessee's interest hereunder shall be sold, assigned or otherwise transferred
pursuant to the exercise of any right, power or remedy of a Mortgagee under a Mortgage or
pursuant to judicial proceedings or Mortgagee shall have arranged for the correction
it
RALL1801 5927752

of any default hereunder by any new Lessee under the new lease referred to below, and (ii) this
Lease shall not have been terminated by reason of default pursuant to the terms hereof, then Lessor,
upon receipt of a written request therefor and upon payment by Mortgagee of all unpaid rent and
expenses (including, without limitation, actual reasonable attorneys' fees and expenses) incident
thereto, will execute and deliver a new lease to the Mortgagee or its nominee, for the remainder of
the term or any renewal term of this Lease, with the same terms as are contained herein and with
equal priority hereto. Upon the execution and delivery of such new lease, Lessor, at the expense
of the new tenant, will cooperate with the new tenant to cancel and discharge this Lease of record
and remove Lessee from the Leased Premises. If the Mortgagee shall become the Lessee under this
Lease or a new lease as provided for above, Mortgagee shall, notwithstanding any other provision
of this Lease, have the right to transfer, sell or assign its interest in this Lease or such new lease
with the consent of Lessor which shall not be unreasonably withheld; provided Mortgagee is not
then in default under any of its obligations under this Lease or such new lease. Upon such transfer,
sale or assignment and provided all rental and all other sums payable hereunder and under the new
lease to the date of such transfer, sale or assignment are paid by Mortgagee, Mortgagee shall,
notwithstanding any other provision of this Lease, be released from all further liability under this
Lease or any such new lease. Upon written request therefor and upon payment by Mortgagee of
all expenses (including, without limitation, actual reasonable attorneys' fees and expenses)
incident thereto, Lessor will execute and deliver a new lease to any such transferee or assignee for
the remainder of the Term (including renewal periods) of this Lease or any such new lease given
to such Mortgagee as provided above, with the same terms as are contained in this Lease and with
equal priority hereto. Lessee shall not terminate the Lease as a result of a default of Lessor without
the prior written consent of any Mortgagee. Lessee and Lessor shall not modify or amend this
Lease without the prior written consent of any Mortgagee.
18 Lessor's Warranties .and Coycnar►#. Lessor, for itself and its successors and
assigns, hereby represents, warrants, covenants and agrees as follows:
(a) As of the date hereof, Lessor has good and marketable title to the Leased
Premises in fee simple, free and clear of any and all liens, claims, covenants, easements,
restrictions, or encumbrances of any type or nature, except for (i) ad valorem taxes for current year
on the Leased Premises which are not yet due and payable, (ii) such easements, restrictions and
covenants currently of record in Craven County, North Carolina, and (iii) matters of zoning.
(b) Lessor has the right and authority to enter into this Lease, the execution and
delivery of this Lease have been duly authorized and performed. Lessor will warrant and defend
the title to the Leased Premises against the claims of all persons whomsoever.
(c) So long as Lessee shall not be in default under any of the material terms and
conditions of this Lease beyond any applicable cure period, Lessee shall be entitled to lawfully
and quietly hold, occupy and enjoy the Leased Premises in accordance with the terms and
provisions of this Lease without hindrance or molestation by Lessor or any person or persons
claiming under Lessor.
19 Lawful Use. Lessee and any sublessee or assignee of Lessee shall use the Leased
Premises only for legitimate, lawful purposes, in accordance with all applicable laws and
12
RALL1B01 592775 2

ordinances governing such use, the Leased Premises, or the building, structure and
improvements constructed thereon.
20 Signs. Anytime prior to the actual Possession Date and thereafter, Lessee shall have
the right to install, maintain and place on the Leased Premises such signs and other advertising
matters as Lessee may deem desirable; provided, however, that Lessee shall at all times comply
with any applicable government regulation pertaining to the installation, maintenance and
replacement of signs and other advertising matters.
21. Indemnity. Lessee assumes full responsibility for the Leased Premises and shall
indemnify, hold harmless and defend Lessor, its agents, servants and employees from and against
any and all claims, actions, damages, liabilities and reasonable expenses, including, but not limited
to, attorneys' and other professional fees and defense costs, (i) arising from any loss of life,
personal injury and/or damage to any person or property occurring in, on, or about the Leased
Premises, except to the extent that such loss, injury or damage is attributable to the negligent acts
or omissions of Lessor, or (ii) arising from any loss of life, personal injury and/or damage to any
person or property occurring outside of the Leased Premises and resulting from any act, omission,
or negligence of Lessee, its agents or employees, in whole or in part, except to the extent that such
injury or damage is attributable to the negligent acts or omissions of Lessor.
22Mechanic's Liens. If any mechanic's lien, contractor's lien or other order for the
payment of money shall be filed against the Leased Premises or any buildings or improvements
thereon or against Lessor by reason or arising out of any labor or material furnished or alleged to
have been furnished to or for Lessee at the Leased Premises or under any contract relating thereto,
then- Lessee shall within sixty (60) days after the filing of any such lien cause the same to be
canceled and discharged of record by bond or otherwise at the expense of Lessee, and Lessee shall
defend on behalf of Lessor, at Lessee's sole cost and expense, any action, suit or proceeding which
may be brought thereon or for the enforcement of such lien or order. Lessee shall pay any damages
and discharge any judgment entered thereon and shall indemnify and save harmless Lessor from
any claim or damage resulting therefrom. If Lessee fails to perform its obligations as set forth
herein during said sixty (60) day period, in addition to any other remedies available to Lessor under
this Lease or otherwise, Lessor may, at its option, discharge such lien, in which event Lessee agrees
to pay to Lessor a sum equal to the amount of the lien discharged by Lessor plus Lessor's
reasonable internal administrative cost, attorneys' fees, interest, expense and damages incurred by
Lessor. Notwithstanding anything to the contrary contained herein, so long as the lien is fully
bonded over, Lessee may initiate or prosecute any proceeding contesting the validity or amount of
any such lien or claim for which Lessee is alleged to be responsible. Lessee agrees to indemnify,
save and hold Lessor harmless from any and all loss, cost or expense, actually incurred by Lessor
in connection therewith.
23. Surrender of Premises. At the termination of this Lease, whether by limitation,
forfeiture or otherwise, Lessee shall quit, surrender and deliver to Lessor possession of the Leased
Premises with all the buildings and improvements thereon free from any liens thereon, all of which
shall become and remain the property of Lessor. If Lessee shall default in the surrender of the
Leased Premises upon expiration or termination of the Lease, Lessee's occupancy subsequent
thereto, whether or not with the consent or acquiescence of Lessor, shall be deemed to be that of
a tenancy at will and in no event shall Lessee have the right to occupy the Leased
13
RALUB01 592775 2

Premises or extend the term of this Lease for any period other than that of a tenancy at will, and
such occupancy shall be subject to all of the terms, covenants and conditions of this Lease. No
extension or renewal of the Term of this Lease shall be deemed to have occurred as a result of such
holding over by Lessee.
24. Interest on Payments. Should Lessee fail to pay any installment of rental or any
other sum payable to Lessor under the terms of this Lease within fifteen (15) days after the due
date for the payment thereof, or should Lessee fail to reimburse Lessor upon demand for any
payment made or expense incurred by Lessor to or on behalf of Lessee under the terms of this
Lease when and as required under the Lease, then such amount shall bear interest at the rate of the
prime rate of First Union National Bank from the date due until paid, or a similar interest rate of a
comparable institution as designated by Lessor.
25. Attorneys' Fees. In the event any action is brought by Lessor to recover any rent or
other amount due and unpaid hereunder or to recover possession of the Leased Premises or in the
event any action is brought by Lessor or Lessee against the other to enforce or for the breach of
any of the terms, covenants or conditions contained in this Lease, the prevailing party shall be
entitled to recover its actual reasonable attorneys' fees together with all court costs incurred.
26. Estoppel Certificates. Each party hereto agrees to execute, acknowledge and deliver
in a reasonably timely manner, from time to time upon the request of the other party, a statement
in writing certifying as to the terms, conditions and state of this Lease and such other information
relating to the Lease or the Leased Premises as may be reasonably requested by the other party.
27. Non -Disturbance and Attornment. Lessor, within thirty (30) days after the Effective
Date, will obtain from every senior landlord, mortgagee and holder of a deed of trust or mortgage
upon the Leased Premises and from any other person or entity having an interest or estate in the
Leased Premises superior to Lessor, if any, an agreement acceptable to Lessee, wherein the senior
landlord(s), mortgagee(s) and holder(s) of the deed(s) of trust or mortgage(s) and person or entity
having a superior interest or estate agree not to disturb Lessee's possession, deprive Lessee of any
rights and increase Lessee's obligations under this Lease ("Non- Disturbance and Attornment
Agreement"). Lessor shall not further mortgage or encumber the fee or the leasehold estate from
the Effective Date to the date of recording of a Memorandum of Lease unless Lessor obtains for
the benefit of Lessee a Non -Disturbance and Attornment Agreement pertaining to such further
mortgage or encumbrance. Failure of Lessor to provide Lessee with an acceptable Non -
Disturbance and Attornment Agreement pertaining to every senior lease, mortgage, deed of trust
and superior interest or estate prior to Lessee's commencement of construction or reconstruction
of the building on the Property shall be an event of default hereunder.
If requested by any tenant of Lessee, Lessor shall execute an agreement wherein Lessor
recognizes the lease between Lessee and the tenant and recognizes such tenant's rights thereunder,
and agrees that notwithstanding any default by Lessee and subsequent termination of this Lease,
such tenant's possession and right of use under its lease with Lessee in and to the premises leased
by the tenant shall not be disturbed by Lessor unless and until such tenant shall
14
RALLIB01 592775.2

breach any of the provisions in its lease with Lessee or such tenant's right to possession
hereunder shall have been terminated in accordance with the provision of its lease with Lessee.
Upon request, Lessor will grant and deliver to Lessee and/or assignees or sublessees of
Lessee, non -disturbance and attornment agreements in such form and substance as are reasonable
in order to insure Lessee, or any sublessee or assignee of Lessee, that Lessor will attorn to Lessee,
assignee or sublessee and will not disturb Lessee, assignee or sublessee unless the terms of its lease
are breached after the expiration of applicable cure periods.
28. Lessee's Pro ert and Waiver of Lessor's Lien.
(a) Any personal property, equipment, furniture, inventory, trademarked items,
signs, decorative soffit, counters, shelving, showcases, mirrors and other movable trade fixtures
installed in or on the Leased Premises by Lessee ("Lessee's Property") shall remain the property
of Lessee. Lessor agrees that Lessee shall have the right, at any time or from time to time, to
remove any and all of Lessee's Property. Lessee shall leave the Leased Premises in a neat and
clean condition, normal wear and tear excepted. Lessee shall pay before delinquency all taxes,
assessments, license fees and public charges levied, assessed or imposed upon its business
operation in the Leased Premises as well as upon Lessee's Property.
(b) From time to time, some or all of Lessee's Property may be financed or
owned by someone other than Lessee. Lessor agrees that such Lessee's Property is not Lessor's
property no matter how the same is affixed to the Leased Premises or used by Lessee and agrees
to recognize the rights of the lender or owner of Lessee's Property. Lessor waives any claim arising
by way of any Lessor's lien (whether created by statute or by contract) or otherwise with respect
to Lessee's Property and agrees to sign and deliver to any lender or secured creditor or lessor a
waiver of any lien Lessor may have on Lessee's Property if required by such lender, secured
creditor or lessor. Lessor also agrees that all of Lessee's Property that is not subject to a security
interest or leased from another shall be the property and remain the property of Lessee or Lessee's
assignee or transferee no matter how the same is affixed to the Property.
29 Leasehold Mom, -
(a) Lessee may mortgage, collaterally assign or otherwise encumber any
interest that Lessee has in this Lease or in the improvements located on the Property ("Mortgage")
as security for an indebtedness ("Debt"). Lessor shall make such changes or modifications to this
Lease, with the exception of those provisions of this Lease concerning the rent and the length of
the Term, including any extensions, as are reasonably requested by any potential Mortgagee to
facilitate the mortgaging of the leasehold estate. Lessor shall execute such instruments as may be
required by each mortgagee or collateral assignee ("Mortgagee") in order to attorn to such
mortgagee and to waive any interest in Lessee's property and/or to subordinate the right and
interest of Lessee, but not Lessor, to the lien of each Mortgage.
(b) If a Mortgagee notifies Lessor of the execution of a Mortgage and names
the place for service of notice upon Mortgagee, then, notwithstanding anything to the contrary
contained herein:
15
RALL1801 592775,2

(i) Lessor will give to any Mortgagee, simultaneously with service on
Lessee, notices of all demands made by Lessor on Lessee and no such notice to
Lessee shall be effective unless a copy is so served upon Mortgagee.
(ii) Mortgagee shall have the privilege of performing any of Lessee's
covenants, curing any defaults by Lessee, and exercising any election, oration or
privilege conferred upon Lessee by the terms of this Lease.
(iii) Lessor shall not terminate this Lease or Lessee's right of possession
for any default of Lessee if, within a period of thirty (30) days after the expiration
of the period of time within which Lessee might cure such default, such default is
cured or caused to be cured by Mortgagee or, if within a period of thirty
(30) days after the expiration of the period of time within which Lessee might
commence to eliminate the cause of such default, Mortgagee diligently commences
to eliminate the cause of such default and diligently pursue a remedy until such
default is cured.
(c) No liability for the payment of Rent or the performance of any of Lessee's
covenants and obligations of this Lease shall attach to or be imposed upon any Mortgagee, while
not in possession of the Leased Premises, all such liability being hereby expressly waived by
Lessor.
(d) No provision of this Lease which restricts the use of the Leased Premises to
less than for any lawful purpose, requires the Leased Premises to be used for a particular purpose,
inhibits free assignment or subletting or requires or implies specified times of business operation
shall be binding upon a Mortgagee in possession or its successors in interest.
30. hide rani l€cation. Lessor hereby indemnifies and holds Lessee, Lessee's nominees,
partners, members, officers, directors, agents, employees, successors and assigns harmless from
and against any and all claims, demands, liabilities, and expenses, including attorneys' fees and
litigation expenses, arising from the negligence or willful acts of Lessor or its agents, employees,
or contractors occurring on the Leased Premises, except to the extent caused by Lessee's
negligence or willful misconduct. In the event any action or proceeding shall be brought against
Lessee by reason of any such claim, Lessor, at Lessee's option, shall defend the same at Lessor's
expense by counsel selected by Lessee.
31. Miscellaneous.
(a) Any and all discussions and negotiations between Lessor and Lessee have
been merged into this Lease. No rights are conferred upon Lessor until this Lease has been
executed by Lessee. Any and all representations and agreements by either of the parties or their
agents made during negotiations prior to execution of this Lease and which representations are not
contained in this Lease shall not be binding upon either of the parties. Except as otherwise
expressly set forth in this Lease, Lessee acknowledges that Lessor has made no representations
with respect to the physical condition of the Leased Premises, the condition of any improvements
thereon, or the laws, rules, orders, zoning or building ordinances, regulations and requirements of
any authority applicable thereto, or that the Leased Premises are fit for any particular purpose.
16
RALLBOI 592775.2

(b} Lessor and Lessee represent and warrant to each other that they have not
had any dealings with any real estate brokers, finders or agents in connection with this Agreement.
Each party agrees to indemnify, defend and hold the other party harmless from any and all claims,
costs, commissions, fees or damages by any broker, finder, or other person or firm with whom the
indemnifying party has or purportedly has dealt.
(c) All terms and words used in this Lease, regardless of the number and gender
in which they are used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine or neuter, as the context or sense of this Lease
or any portion of this Lease may require, the same as if such words had been fully and properly
written in the number and gender.
(d) This Lease may be executed in any number of counterparts, each of which
when so executed and delivered shall be deemed an original, but such counterparts together shall
constitute but one and the same instrument.
(e) Whenever Lessee may deduct costs from the rent pursuant to any Section
of this Lease, such rent may be deducted from the next accruing rental payment(s) due.
( Lessor and Lessee are not and shall not be considered joint venturers nor
partners and neither shall have power to bind or obligate the other except as set forth in this Lease.
(g) If any provision of this Lease or the application thereof to any person or
circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the
application of such term or provision to persons whose circumstances are other than those as to
which it is held invalid or unenforceable, shall not be affected thereby.
(h) No modification, alteration or amendment of this Lease shall be binding
unless in writing and executed by both parties hereto.
n The headings to the Sections of this Lease are inserted only as a matter of
convenience and for reference, and in no way confine, limit or proscribe the scope or intent of any
Section of this Lease, nor in any way affect this Lease.
Q This Lease shall be binding upon and inure to the benefit of the parties, any
subtenants and their heirs, administrators, executors, successors and assigns.
(k) Time is of the essence of this Lease and each provision; provided, however,
if the final (but not any interim) date of any period set forth herein falls on a Saturday, Sunday or
legal holiday under the laws of the United States of America, the final date of such period shall be
extended to the next business day.
0) If Lessee is delayed or prevented from performing any of its obligations
under this Lease by reason of strike, lockouts, labor troubles, failure of power, riots, insurrection,
17
RALLIBOI 592775.2

war, acts of God or any other cause beyond Lessee's control, Lessee's performance shall be
excused during such period, the period of such delay or such prevention shall be deemed added to
the time period herein provided for the performance of any such obligation by Lessee, and Lessee
shall have no liability to Lessor therefor.
(m) This Lease shall be governed by and construed and interpreted in
accordance with the laws of North Carolina.
(n) Each party hereto has reviewed and revised (or requested revisions of) this
Lease, and therefore any usual rules of construction requiring that ambiguities are to be resolved
against a particular party shall not be applicable in the construction and interpretation of this
Agreement or any Exhibits hereto.
(o) Lessor acknowledges that any plans or specifications of Lessee and
Lessee's trademarks and service marks, are the sole property of Lessee, and Lessor shall not have
any rights to same.
(p) Lessor agrees that upon its execution of this Lease, neither it nor its agents
or employees (i) will initiate, encourage the initiation by others of discussions or negotiations with
third parties or respond to solicitations by third parties relating to the Leased Premises or any part
thereof, (ii) fail to immediately notify Lessee if any third party attempts to initiate any such
solicitation, discussion or negotiation with Lessor and (iii) will enter into an agreement with any
third party with respect to the Leased Premises or any part thereof.
(q) Lessor and its agents, representatives, employees, partners, officers and
directors will not disclose the subject matter or terms of the transaction contemplated by this Lease
unless prior written consent to such disclosure is obtained from Lessee, which consent may be
withheld at Lessee's sole discretion.
(r) Neither Lessor nor Lessee shall permit, allow or cause this Lease, or any
amendment hereto, to be recorded in any public registry or office of register of deeds; however,
Lessor and Lessee agree to execute a recordable memorandum of this Lease setting forth the names
of the parties, a specific legal description of the Leased Premises, the Possession Date, the Term
and any other option or right granted hereunder, but not the amount of rent or other payments
hereunder, which memorandum may be recorded at Lessee's expense in the appropriate public
records of the county or counties in which the Leased Premises is situated. In the event that the
Lease is terminated prior to the Possession Date, Lessor and Lessee shall cooperate to remove any
such memorandum from the public records.
18
KALLIB01 592775 2

IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease to be duly executed
under seal on the day and year first above written.
LESSOR:
GALAXY AB, LLC
a North Carolina limited liabilit company
By:
PrintedName:►�—
Titlea
LESSEE:
SUGARLOAF UTILITIES, INC.
a North Carolina corporation
By: - 4za!D��a. -
Printed Name:
Title:T'
19
RALLIBOI 592775.2

EXHIBIT A
Legal Description
(to be attached)
8.35+- Acres - Sugarloaf Utility Inc. Wastewater Treatment Plant, 1001 West Fort Macon Road,
Atlantic Beach, Carteret County, NC 28512; PIN 63751553224000.
cr�er�s,the cm�ri 6daty 11n'Fwitll in"nlf 1n 1'opnc
v t f� � bid iod 7
k t� : b �c pot,
���
In :Vi
co t� rl it i tmd "i15i. `!" 66�: 5='eat w4n cxbrjuiitba rod; dace VA tu-
OTMOA
d .' 9 �fi � tY Pul l
1boS tsa"dlcs (j)'.
►' l; _acl�. '4i' i 19�tt .aPb s o; tncc t�h itxrn
1Ia o`pro1g rntx tr did recta jif
1oundw
., t liet to 0 rim OC
rtul.041. Ehctic
rr tto nf� 3 i ra lIl$ ? 0V S O PO
+�`� atnc�ha bei1' $:a�� t tsr !� ousurvy v . vnt.
Om
RALL1801 M775.2

EXHIBIT B
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE (hereinafter referred to as the "Lease") is made
and entered into as of they day of June, 2019 by and between GALAXY AB, LLC, a North
Carolina limited liability company, or assigns, 6125 Saddiehorn Drive, Rocky Mount, NC
27803, (hereinafter referred to as "Lessor"); and SUGARLOAF UTILITIES, INC., a North
Carolina corporation 203 E. Whitaker Mill Road, Suite 109 Raleigh, NC 27608, (hereinafter
referred to as "Lessee").
Lessor hereby leases to Lessee for a term beginning theSday of June 2019
and continuing for a maximumperiod of twenty (20) years, including extensions and renewals, ifaig
the following property:
•
iorlymm'& otNC HISUVO 5 (90 pjbifo
� � � iacatec�,S �° 4�` 1}" �•82,'i'e�t �ronn � t FI�:i�i ��.
�tb it d 1i�►c'' `itli pr �: f "A `Bay S40*9
"db�d lts�i► fiat at° 98 +� Cartesnty it+tiiC
ihe %flo biro camas t r F mod; tfr rt w
cane t at'a�it ar�d.0 1 "' d t al'ecc rah l "
IWA
ad Wi
0.234
co
tid°udsb1 mi47 ctI-l�syi#l�
4041 fxtc it. Dooo6at'tN�
i3
P
pr
;ai . tt � x` i thcrice �tttt€i. et i i a ,v"4
the ca thcxiy ttl ' .�.
tl : i►u '' %•t�f y nt t t 0l Bi �y OR. Ao"Aiq
1~!
det+ 59,,1:�7 p
The provisions set forth in a written lease agreement between the parties dated the_
! day of June 2019 day of June 2019 are hereby incorporated in this memorandum.
This day of June 2019
(signatures follow)
21
RALLIB01 592775 2

LESSOR:
GALAXY AB, LLC
a North Carolina limited liability company
By:
Printed Name:
Title: &N.t'4 a&—
LESSEE:
SUGARLOAF UTILITIES, INC.
a North Carolina corporation
By:
_ 14 )dz -
Printed Name: �4 n , r
Title•�''� � � ���
State of North Carolina
County of IVFP L-
I, a Notary Public of the County and State aforesaid, certify that G.-- -ru
Manager of GALAXY AB, LLC, a North Carolina Limited Liability Company, personally appeared
before me this day and acknowledged the execution of the foregoing instrument on behalf of the
Limited Liability Company. Witness my hand and official stamp or seal, this 9 day of
Notary Public''
40
My Commission expires: 1 ao 3.0
j0 tip' .
State of 'C-L S' ^ '
County of V' r � a 6 e-c- c--- ,
I, a Notary Public of the County and State aforesaid, certify that Q 1:
President of Sugarloaf Utilities, Inc, a North Carolina Corporation, personally appeared
before me this day and acknowledged the execution of the foregoing instrument on behalf of the
Corporation. Witness my hand and official stamp or seal, this It day of ZSl a Dz ACj
-f NotcR ubliL'
p ...4+
My Commission expires: 1
OJT
22
*•7 ugh
RALL[B01 592775 2