EXHIBIT A - Form of Bonds

REGISTERED                                                                                                 REGISTERED

Number R-X

UNITED STATES OF AMERICA

STATE OF NORTH CAROLINA

Town of Chapel Hill

General Obligation Public Improvement Bond, Series 2006

INTEREST RATE	MATURITY DATE	DATED DATE	CUSIP
_______ %	May 1, ____	November 1, 2006	159 429 XXX

REGISTERED OWNER:   *****CEDE & CO.*****

PRINCIPAL AMOUNT:     **** _________ THOUSAND DOLLARS

            ($_____,000)***

THE TOWN OF CHAPEL HILL, NORTH CAROLINA (the "Town"), for value received, promises to pay to the registered owner hereof, or registered assigns or legal representative, the principal amount stated above on the maturity date stated above, subject to prior redemption as described herein, and to pay interest on this Bond semiannually on each May 1 and November 1, beginning May 1, 2007, at the annual rate stated above. Interest is payable (a) from November 1, 2006, if this Bond is authenticated prior to May 1, 2007, or (b) otherwise from the May 1 or November 1 that is, or immediately precedes, the date on which this Bond is authenticated (unless payment of interest hereon is in default, in which case this Bond will bear interest from the date to which interest has been paid). Principal and interest are payable in lawful money of the United States of America.

This Bond is one of an issue of the Town's $4,950,000 General Obligation Public Improvement Bonds, Series 2006 (the "Bonds"), of like date and tenor, except as to number, denomination, rate of interest, privilege of redemption and maturity. The Bonds are issued pursuant to a resolution adopted by the Town Council on September 27, 2006, and the Constitution and laws of the State of North Carolina, including the Local Government Bond Act. 

The Town's full faith and credit are pledged for the payment of principal of and interest on this Bond.

The Bonds are issued by means of a book-entry system, with one bond certificate for each maturity immobilized at The Depository Trust Company, New York, New York ("DTC"), and not available for distribution to the public. Transfer of beneficial ownership interests in the Bonds in the principal amount of $5,000 or any integral multiple thereof will be effected on the records of DTC and its participants pursuant to rules and procedures established by DTC and its participants.  Principal and interest on the Bonds are payable by the Town to DTC or its nominee as registered owner of the Bonds. The Town is not responsible or liable for such transfer of ownership or payments or for maintaining, supervising or reviewing the records maintained by DTC, its participants or persons acting through such participants.

Bonds maturing prior to May 1, 2017, are not subject to redemption prior to maturity.  Bonds maturing on May 1, 2017, and thereafter are redeemable, at the Town's option, from any moneys that may be made available for such purpose, in whole or in part on any date not earlier than May 1, 2016, at a redemption price of 100% of the principal amount to be prepaid, plus interest accrued to the date fixed for redemption.

If less than all of the Bonds stated to mature on different dates are called for redemption, the Bonds to be redeemed will be selected in such manner as the Town may determine. If less than all of the Bonds of any one maturity are called for redemption, the particular Bonds or portions of Bonds of such maturity to be redeemed will be selected by lot in such manner as the Town in its discretion may determine; provided, however, that the portion of each Bond to be redeemed will be in the principal amount of $5,000 or some integral multiple thereof, and that, in selecting Bonds for redemption, each Bond will be considered as representing that number of Bonds which is obtained by dividing the principal amount of such Bond by $5,000. Notwithstanding the foregoing, so long as a book-entry system with DTC is used for determining beneficial ownership of Bonds, if less than all of the Bonds within a maturity are to be redeemed, DTC and its participants will determine which of the Bonds within any such maturity are to be redeemed. If a portion of a Bond is called for redemption, a new Bond in principal amount equal to the unredeemed portion thereof will be issued to the registered owner upon the surrender thereof.

The Town will give notice of redemption by certified or registered mail to DTC or its nominee as the registered owner of the Bonds. The Town will mail such notice not more than 60 days and not less than 30 days prior to the date fixed for redemption. The Town is not responsible for sending notices of redemption to anyone other than DTC or its nominee.

If (a) DTC determines not to continue to act as securities depository for the Bonds or (b) the Town so elects, the Town will discontinue the book-entry system with DTC. If the Town fails to identify another qualified securities depository to replace DTC, the Town will deliver replacement Bonds in the form of fully-registered certificates.

The Town Finance Officer has been appointed Registrar for the Bonds.  As Registrar, the Finance Officer will maintain appropriate books and records indicating ownership of the Bonds.  The Town will treat the registered owner of this Bond as the person exclusively entitled to payment of principal and interest and the exercise of all other rights and powers of the owner, except that interest payments will be made to the person shown as owner on the Town's registration books on the 15th day of the month preceding each interest payment date.

The Town has designated the Bonds as “qualified tax-exempt obligations” for the purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended.

The Bonds are issued with the intent that North Carolina law will govern their terms.

All acts, conditions and things required by the Constitution and laws of the State of North Carolina to happen, exist or be performed precedent to and in the issuance of this Bond have happened, exist and have been performed, and the issue of Bonds of which this Bond is one, together will all other indebtedness of the Town, is within every debt and other limit prescribed by the Constitution and laws of the State of North Carolina.

IN WITNESS WHEREOF, the Town of Chapel Hill, North Carolina, has caused this Bond to signed by its Mayor, to be countersigned by its Town Clerk, its seal to be affixed hereto and this Bond to be dated November 1, 2006.

COUNTERSIGNED:	(SEAL)
[Sample only - do not sign] Clerk, Town of Chapel Hill, North Carolina		[Sample only - do not sign] Mayor, Town of Chapel Hill, North Carolina

The Bonds have been approved by

the North Carolina Local Government 

Commission in accordance with the 

Local Government Bond Act. 

[Sample only - do not sign]

T. Vance Holloman

Secretary, Local Government Commission   

ASSIGNMENT

FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s) unto

__________________________________________________________________

(Please print or type transferee’s name and address, including zip code)

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OR TRANSFEREE:

the within bond and all rights thereunder, hereby irrevocably constituting and appointing ___________________________, Attorney, to transfer said bond on the books kept for the registration thereof, with full power of substitution in the premises.

Dated: _______________________________________

Signature Guaranteed: _____________________________ NOTICE: Signature(s) must be guaranteed by a participant in the Securities Transfer Agent Medallion Program (“STAMP”) or similar program

_____________________________ (Signature of Registered Owner)              NOTICE: The signature above must correspond with the name of the registered owner as it appears on the front of this bond in every particular without alteration or enlargement or any change whatsoever.