(b) The Corporation will take all actions and provide all information reasonably requested by the Underwriters to ensure that the Official Statement at all times during the initial offering and distribution of the 2005 Certificates does not contain any untrue statement of a material fact necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. Neither the Corporation nor the Town will amend or supplement, or approve any amendment or supplement of, the Official Statement without the prior written consent of the Underwriters (which consent will not be unreasonably withheld); provided, however, that, if between the date of this Purchase Contract and 25 days from the end of the underwriting period, as defined below, any event occurs or any fact is disclosed which might cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Corporation or the Town, as the case may be, will promptly notify the Underwriters, and, if in the opinion of the Underwriters such event or disclosure requires the preparation and publication of a supplement or amendment to the Official Statement, the Corporation or the Town will supplement or amend the Official Statement in form and manner approved by the Underwriters. For the purposes of this Purchase Contract, unless otherwise notified by the Underwriters, the “end of the underwriting period” will mean the date 60 days after the closing.

(c) The Corporation agrees to, and agrees to cause the Town to, authorize and approve the Preliminary Official Statement dated May 3, 2005 and the Final Official Statement (the Final Official Statement, the Preliminary Official Statement and any amendments or supplements that may be authorized for use with respect to the 2005 Certificates are herein referred to collectively as the “Official Statement”), to consent to their distribution and use by the Underwriters and to authorize the execution of the Final Official Statement by a duly authorized officer of the Town.

(d) The Underwriters shall give notice to the Corporation and the Town on the date after which no participating underwriter, as such term is defined in the Rule, remains obligated to deliver Final Official Statements pursuant to paragraph (b)(4) of the Rule.

3. Representations and Warranties of the Corporation. The Corporation represents and warrants to the Underwriters that:

(a) the Corporation is a nonprofit corporation duly created and validly existing and in good standing under the laws of the State of North Carolina and has the power and authority and all necessary licenses and permits to conduct its business as described in the Preliminary Official Statement and the Official Statement;

(b) both at the time of its acceptance hereof and at the date of Closing (hereinafter defined), the statements and information contained in the Official Statement with respect to the Corporation, including the information contained under the captions “THE CORPORATION” and “LITIGATION” are and will be true, correct and complete in all material respects and do not and will not contain any untrue statement of a material fact or omit any statement or information which is necessary to make the statements and information therein, in light of the circumstances under which they were made, not misleading in any material respect;

(c) the Corporation will cooperate with the Underwriters and their counsel in taking all necessary action to qualify the 2005 Certificates for offer and sale under the securities or “Blue Sky” laws of such jurisdictions as the Underwriters may reasonably request and authorizes the Underwriters, at the Underwriters’ sole expense, to make any necessary filings on behalf of the Corporation in taking any such necessary action; provided, however, that the Corporation will not be required to execute a special or general consent to service of process or qualify as a foreign corporation in connection with such qualification;

(d) the execution and delivery by the Corporation of this Purchase Contract, the Trust Agreement, the Contract, and the Official Statement were duly approved by the Corporation’s Board of Directors in complete conformity with the Articles of Incorporation and the By Laws of the Corporation and North Carolina law;

(e) the approval, execution and delivery of this Purchase Contract, the Trust Agreement and the Contract and compliance with the provisions thereof and hereof under the circumstances contemplated thereby and hereby, do not and will not conflict with, constitute a breach of or default under, or result in the creation of a lien on any property of the Corporation (except as contemplated therein) pursuant to applicable law or any indenture, bond order, deed of trust, mortgage, agreement or other instrument to which the Corporation is a party except as described in the Official Statement, or conflict with or violate any applicable law, administrative rule, regulation, judgment, court order or consent decree to which the Corporation is subject;

(f) there is no claim, action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental agency, or public board or body, pending or, to the best of its knowledge, threatened (1) contesting the corporate existence or powers of the Corporation or the titles of the officers of the Corporation to their respective offices, (2) seeking to prohibit, restrain or enjoin the collection of revenues by the Corporation or the application of the proceeds of the 2005 Certificates wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the 2005 Certificates, the Trust Agreement, the Contract or this Purchase Contract, (3) contesting or affecting the validity of the Trust Agreement, the Contract or this Purchase Contract or (4) contesting in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement (nor, to the best knowledge of the Corporation, is there any basis therefor);

(g) the Corporation is not in default in the payment of the principal of or interest on any indebtedness for borrowed money or under any instrument under or subject to which any indebtedness has been incurred, and to the best of its knowledge, no event has occurred or is continuing that, with the lapse of time or the giving of notice or both, would constitute an event of default under any such agreement;

(h) any certificate signed by the President or Vice President of the Corporation and delivered to the Underwriters will be deemed to be a representation and warranty by the Corporation to the Underwriters as to the statements made therein;

(i) when duly executed and delivered at the Closing in accordance with the provisions of this Purchase Contract, the Trust Agreement and the Contract will have been duly authorized, executed and delivered by the Corporation and will constitute valid and binding agreements of the Corporation enforceable in accordance with their terms (except insofar as the enforcement thereof may be limited by bankruptcy, insolvency or similar laws relating to the enforcement of creditors’ rights generally or by general equitable principles); and

(j) when duly executed and delivered at the Closing in accordance with the provisions of this Purchase Contract, the 2005 Certificates will constitute valid and binding proportionate and undivided interests in the Corporation’s rights to receive Installment Payments pursuant to the Contract enforceable in accordance with their terms.

4. Corporation to Cause Town to Act. The Corporation will cause the Town to deliver, at the signing hereof, a Letter of Representation in the form of Exhibit A hereto, and at the Closing, a certificate signed by the Town Manager of the Town to the effect that:

(a) at the date of Closing, the statements and information contained in the Official Statement with respect to the affairs of the Town do not contain any untrue statement of a material fact or omit any statement or information which is necessary to make the statements and information therein, in light of the circumstances under which they were made, not misleading in any material respect;

(b) the Town is, on the date of Closing, a municipal corporation, validly organized and existing under the laws of the State of North Carolina;

(c) except as otherwise described in the Official Statement, the Town has received and there remain currently in full force and effect, or will receive prior to the delivery of the 2005 Certificates, all governmental consents and approvals that would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the Town of its obligations under the Contract and the Deed of Trust;

(d) at a meeting of the Town Council of the Town that was duly called and at which a quorum was present and acting throughout, the Town duly approved the execution and delivery by the Town of the Letter of Representation, the Contract and the Deed of Trustt;

(e) since June 30, 2004, there has been no material adverse change in the financial position, results of operations or condition, financial or otherwise, of the Town, and the Town has not incurred liabilities that would materially affect the ability of the Town to discharge its obligations under the Contract or the Deed of Trust, direct or contingent, other than as set forth in or contemplated by the Official Statement;

(f) the Town has received and there remain currently in full force and effect, or will receive prior to the delivery of the 2005 Certificates, all governmental consents and approvals that would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the Town of its obligations under the Contract and the Deed of Trust;

(g) the approval, execution and delivery of the Letter of Representation, the Contract, and the Deed of Trust by the Town and compliance with the provisions thereof, under the circumstances contemplated thereby and hereof, do not and will not conflict with, constitute a breach of or default under, or result in the creation of a lien on any property of the Town (except as contemplated therein) pursuant to applicable law or any indenture, trust agreement, bond order, deed of trust, mortgage, agreement or other instrument to which the Town is a party or by which the Town is bound, or conflict with or violate any applicable law, administrative rule, regulation, judgment, court order or consent decree to which the Town is subject;

(h) there is no claim, action, suit, proceeding, inquiry or investigation, at law or in equity before or by any court, governmental agency, or public board or body, pending or, to the best of its knowledge, threatened (1) contesting the corporate existence or powers of the Town or the titles of the officers of the Town to their respective offices, (2) seeking to prohibit, restrain or enjoin the collection of revenues by the Town or the application of the proceeds of the 2005 Certificates wherein an unfavorable decision, ruling or finding would materially adversely affect the financial position of the Town or the operation of its facilities or the validity or enforceability of the Letter of Representation, the Contract, or the Deed of Trust, (3) contesting or affecting the validity of the Letter of Representation, the Contract, or the Deed of Trust, (4) contesting in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement (nor, to the best knowledge of the Town, is there any basis therefor), (5) challenging the right of the Town to acquire, construct, and equip the Project, or (6) challenging the transactions contemplated hereby;

(i) when duly executed and delivered, the Letter of Representation, the Contract, and the Deed of Trust will constitute valid and binding obligations of the Town enforceable in accordance with their terms (except insofar as the enforcement thereof may be limited by bankruptcy, insolvency or similar laws relating to the enforcement of creditors’ rights generally or by general equitable principles);

(j) the Town is not in default on the payment of the principal of or interest on any indebtedness for borrowed money or under any instrument relating to such indebtedness and no event has occurred and is continuing which, with the lapse of time or the giving of notice or both, might constitute an event of default under any such instrument, and no event has occurred which with the passage of time or the giving of notice, or both, would constitute an event of default as defined in the Contract; and

(k) any certificate signed by any official of the Town and delivered to the Underwriters will be deemed to be a representation by the Town to the Underwriters as to the statements made therein.

5. Closing. At 10:00 a.m. (New York time) on May 26, 2005 or at such other time or date as has been mutually agreed on by the Corporation, the Town and the Underwriters (the “Closing Date”), the Corporation will deliver, or cause to be delivered, to the Underwriters, at the offices of The Depository Trust Company (“DTC”), 55 Water Street, New York, New York 10041, or at such other place as the Underwriters, the Corporation and the Town may mutually agree on, the 2005 Certificates in definitive form, duly executed and authenticated and registered in such names and in such denominations as the Underwriters will have requested in writing not less than 2 business days before the Closing Date, together with the other documents hereinafter mentioned; and the Underwriters will accept such delivery and pay the Purchase Price of the 2005 Certificates with bank wire transfer in federal funds payable to the order of the Trustee on behalf of the Town.

The activities relating to the final execution and delivery of the 2005 Certificates, the Contract, the Deed of Trust and the Trust Agreement and the payment therefor and the delivery of all certificates, opinions and other instruments described in Section 7 of this Purchase Contract shall occur at the offices of the Town, Chapel Hill, North Carolina or at such other place mutually agreeable to the parties hereto. The payment for the 2005 Certificates and simultaneous delivery of the 2005 Certificates to the Underwriters is herein referred to as the “Closing.” The 2005 Certificates will be delivered in book-entry form as definitive registered 2005 Certificates initially as one certificate for each maturity, registered in the name of Cede & Co., as nominee of DTC, as registered owner of all of the 2005 Certificates, duly executed and authenticated, with CUSIP identification numbers typed thereon. Neither the failure to type such numbers on any 2005 Certificate nor any error in them will constitute cause for a failure or refusal by the Underwriters to accept delivery of the 2005 Certificates and pay the Purchase Price of the 2005 Certificates. The 2005 Certificates will be made available for checking and packaging by the Underwriters at DTC’s facilities in New York, New York, as the Underwriters and the Trustee shall agree not less than 24 hours prior to the Closing.

6. Termination of Purchase Contract. The Underwriters have the right to cancel their obligation to purchase the 2005 Certificates based upon any one of the reasons set forth below by notifying the Town of their election to do so, if between the date hereof and the Closing Date:

(a) a tentative decision with respect to legislation shall be reached by a committee of the House of Representatives or the Senate of the Congress of the United States, or legislation is favorably reported or re-reported by such a committee or introduced, by amendment or otherwise, in or passed by the House of Representatives or the Senate, or recommended to the Congress of the United States for passage by the President of the United States or enacted or a decision by a federal court of the United States or the United States Tax Court is rendered, or a ruling, release, order, regulation or official statement by or on behalf of the United States Treasury Department, the Internal Revenue Service or other governmental agency is or proposed to be made having the purpose or effect, or any other action or event has occurred which has the purpose or effect, directly or indirectly, of adversely affecting the federal income tax consequences of owning the 2005 Certificates or of any of the transactions contemplated in connection herewith, including causing the interest portion of the Installment Payments to be included in gross income for purposes of federal income taxation, or imposing federal income taxation upon revenues or other income of the general character to be derived by or by any similar body under the Contract and the Trust Agreement or similar documents or on interest received on obligations of the general character of the 2005 Certificates, which, in the opinion of the Underwriters, materially adversely affects (i) the market price of or the marketability of the 2005 Certificates or the market generally for obligations of the general character of the 2005 Certificates or (ii) the ability of the Underwriters to enforce contracts or orders for the sale of the 2005 Certificates at the contemplated offering prices; or

(b) legislation is enacted, or actively considered for enactment with an effective date prior to the Closing, or a decision by a court of the United States is rendered, the effect of which is that the 2005 Certificates, including any underlying obligations, or the Trust Agreement, as the case may be, is not exempt from the registration, qualification or other requirements of the Securities Act of 1933, as amended and as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect; or

(c) a decision, stop order, ruling, regulation, proposed regulation or official statement by or on behalf of the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter is issued or made or any other event occurs, the effect of which is that the initial execution, delivery, offering and sale of the 2005 Certificates, including any underlying obligations, or the execution and delivery of the Trust Agreement as contemplated hereby or by the Official Statement, is or would be in violation of any provision of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect; or

(d) any event has occurred or any information has become known to the Underwriters which causes the Underwriters to reasonably believe that the Official Statement as then amended or supplemented includes an untrue statement of a material fact, or omits to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; or

(e) there occurs any outbreak or escalation of hostilities or any national or international calamity or crisis, including a financial crisis, or any escalation of activities, the effect of which on the financial markets of the United States is such as, in the reasonable judgment of the Underwriters, would materially adversely affect (i) the market price of or the marketability of the 2005 Certificates or the market generally for obligations of the general character of the 2005 Certificates or (ii) the ability of the Underwriters to enforce contracts or orders for the sale of the 2005 Certificates at the contemplated offering prices; or

(f) a decision, ruling or finding is entered by any court or governmental authority since the date of this Purchase Contract (and not reversed or appealed or otherwise set aside) which has any of the effects described in Section 2(h) of the Letter of Representation; or

(g) there is in force a general suspension of trading on the New York Stock Exchange, or minimum of maximum prices for trading fixed and in force, or maximum ranges for prices of securities required and in force on the New York Stock Exchange, whether by virtue of a determination by the New York Stock Exchange or by order of the Securities and Exchange Commission or any other governmental authority having jurisdiction, the effect of which on the financial markets of the United States is such as, in the reasonable judgment of the Underwriters, would materially adversely affect (i) the market price of or the marketability of the 2005 Certificates or the market generally for obligations of the general character of the 2005 Certificates or (ii) the ability of the Underwriters to enforce contracts or orders for the sale of the 2005 Certificates at the contemplated offering prices; or

(h) a general banking moratorium is declared by federal, New York or State authorities; or

(i) any proceeding is pending or threatened by the Securities and Exchange Commission against the Town; or

(j) additional material restrictions not in force as of the date hereof are imposed on trading in securities generally by any governmental authority or by any national securities exchange; or

(k) the New York Stock Exchange or other national securities exchange or any governmental authority, imposes, as to the 2005 Certificates or obligations of the general character of the 2005 Certificates, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, Underwriters; or

(l) federal or North Carolina legislation or a decision by a court of the United States or any action taken by the Securities and Exchange Commission or other federal or North Carolina governmental agency which, in the opinion of counsel to the Underwriters, has the effect of requiring the 2005 Certificates or any related instrument to be registered under the Securities Act of 1933, as amended, or the Investment Company Act of 1940, as amended, or requiring the Trust Agreement or any related instrument to be qualified under the Trust Indenture Act of 1939, as amended; or

(m) any material adverse change in the affairs of the Corporation or the Town making it impracticable to market the 2005 Certificates on the terms and in the manner contemplated in this Purchase Contract as determined by the reasonable judgment of the Underwriters; or

(n) a supplement or amendment made to the Official Statement subsequent to the date of this Purchase Contract which, in the reasonable judgment of the Underwriters, materially and adversely affects (i) the market price or the marketability of the 2005 Certificates or the market generally for obligations of the general character of the 2005 Certificates, or (ii) the ability of the Underwriters to enforce contracts or orders for the sale of the 2005 Certificates at the contemplated offering prices; or

(o) any default (or event which would become a default unless cured) with respect to any indebtedness of the Corporation, or proceedings under any federal or North Carolina laws instituted by or against the Corporation or the Town, in either case the effect of which, in the reasonable judgment of the Underwriters, is to materially and adversely affect (i) the market price or the marketability of the 2005 Certificates or the market generally for obligations of the general character of the 2005 Certificates, or (ii) the ability of the Underwriters to enforce contracts or orders for the sale of the 2005 Certificates at the contemplated offering prices; or

(p) any proceedings instituted under federal bankruptcy laws by or against any state of the United States or any city or town in the United States having a population over 1,000,000, the effect of which on the financial markets of the United States, in the reasonable judgment of the Underwriters, is to materially adversely affect (i) the market price or the marketability of the 2005 Certificates or the market for obligations having the general character of the 2005 Certificates, or (ii) the ability of the Underwriters to enforce contracts or orders for the sale of the 2005 Certificates at the contemplated offering prices; or

(q) the withholding of registration, exemption or clearance by the “Blue Sky” or securities authorities of any state because of a change in or new interpretation of law occurring after the date of this Purchase Contract, the effect of which, in the reasonable judgment of the Underwriters, is to materially adversely affect (i) the market price or marketability of a substantial portion of the 2005 Certificates or the market for obligations having the general character of the 2005 Certificates, or (ii) the ability of the Underwriters to enforce contracts or orders for the sale of a substantial portion of the 2005 Certificates at the contemplated offering prices.

7. Conditions to Obligations of the Underwriters. The obligation of the Underwriters to purchase the 2005 Certificates is subject:

(a) to the performance by the Corporation of its obligations to be performed hereunder at and before the Closing;

(b) to the performance by the Town of its obligations to be performed under the Letter of Representation at and prior to the Closing;

(c) to the accuracy of the representations and warranties of herein as of the date hereof and as of the time of the Closing;

(d) to the accuracy of the representations and warranties of the Town in the Letter of Representation as of the date hereof and as of the time of the Closing; and

(e) to the following conditions, including the delivery by the Town of such documents as are enumerated herein in form and substance satisfactory to Parker Poe Adams & Bernstein L.L.P., counsel to the Underwriters:

(i) At the time of Closing;

(1) the Official Statement, this Purchase Contract, the Contract, the Deed of Trust and the Trust Agreement are in full force and effect and have not been amended, modified or supplemented from the date hereof except as may have been agreed to in writing by the Underwriters;

(2) the proceeds of the sale of the 2005 Certificates are deposited and applied as described in the Official Statement; and

(3) the Town has duly adopted and there are in full force and effect such resolutions as, in the opinion of The Sanford Holshouser Law Firm, Raleigh, North Carolina (“Special Counsel”), are necessary in connection with the transactions contemplated hereby.

(ii) Receipt of the 2005 Certificates, the Contract, the Deed of Trust and the Trust Agreement at or before the Closing. The terms of the 2005 Certificates, as delivered, shall in all instances be as described in the Final Official Statement. The terms of the Contract, as delivered, shall, among other things, specify the Town’s and any other obligated person’s undertaking to provide continuing disclosure in accordance with the Rule and Section 2(n) of the Letter of Representation.

(iii) At or prior to the Closing, the Underwriters shall receive two copies of the following documents:

(1) Final approving opinion of Special Counsel dated the Closing Date, in substantially the form set forth in Exhibit C to the Official Statement.

(2) Supplemental opinion of Special Counsel addressed to the Underwriters and dated the Closing Date, in substantially the form attached hereto as Exhibit B.

(3) The opinions of Ralph D. Karpinos , Esq., Town Attorney, dated the Closing Date, addressed to the Underwriters, in form attached hereto as Exhibit C and satisfactory to the Underwriters and their Counsel.

(4) The opinions of [ ], [City], North Carolina, Counsel to the Corporation, dated the Closing Date, addressed to the Underwriters, in form attached hereto as Exhibit D and satisfactory to the Underwriters and their Counsel.

(5) Memoranda from Counsel to the Underwriters addressed to the Underwriters indicating the jurisdictions in which the 2005 Certificates may be sold in compliance with the securities or “Blue Sky” laws of such jurisdictions.

(6) An opinion of Parker Poe Adams & Bernstein L.L.P., Counsel to the Underwriters, dated the Closing Date, addressed to the Underwriters, in form satisfactory to the Underwriters.

(7) The Final Official Statement executed on behalf of the Corporation and the Town by duly authorized officers thereof.

(8) Certified copies of all resolutions of the Town relating to the [2005 Certificates], the Letter of Representation, the Contract, and the Deed of Trust.

(9) Certified copies of such documents of the Corporation approving the execution and delivery of the Contract, the Trust Agreement, the 2005 Certificates, the Final Official Statement and this Purchase Contract as may be required by Special Counsel.

(10) A specimen 2005 Certificate.

(11) Letters from Moody’s Investors Service and Standard & Poor's Ratings Services, a Division of The McGraw-Hill Companies, Inc. to the effect that the 2005 Certificates have been assigned a rating “[ ]” and "[ ]", respectively, which ratings shall be in effect as of the date of Closing.

(12) A certificate, in form and substance satisfactory to the Underwriters and their Counsel, of the President or any duly authorized officer or official of the Corporation satisfactory to the Underwriters and their Counsel, dated as of the Closing Date, to the effect that: (A) each of the Corporation’s representations, warranties and covenants contained herein are true and correct as of the Closing Date; (B) the Contract, the Trust Agreement and this Purchase Contract have been entered into by the Corporation and are in full force and effect and (C) the 2005 Certificates have been duly executed and delivered by the Corporation.

(13) A certificate, in form and substance satisfactory to the Underwriters and their counsel, dated the Closing Date, executed by an appropriate official of the Town to the effect that (A) the representations and warranties of the Town in the Letter of Representation are true and correct in all material respects as of the date of Closing and (B) the Contract and the Deed of Trust have been entered into by the Town and are in full force and effect.

(14) Executed copies of the Town’s certificate as to non-arbitrage and other matters relative to the tax status of the 2005 Certificates under Section 148 of the Internal Revenue Code of 1986, as amended.

(15) Evidence that the Deed of Trust has been duly recorded and that the Financing Statement, if any, have been duly filed with regard to the fixtures constituting a part of the Mortgaged Property.

(16) A copy of a title insurance policy issued by [ ] naming the Trustee as a beneficiary and in an amount not less than $[Amount].

(17) An executed copy of the Blanket Letter of Representations addressed to The Depository Trust Company.

(18) Such additional legal opinions, certificates, proceedings, instruments and other documents as Counsel to the Underwriters, Special Counsel, or Counsel to the Town may reasonably request to evidence compliance by the Corporation or the Town with legal requirements, the truth and accuracy, as of the time of Closing, of the respective representations of the Corporation and the Town herein contained and the due performance or satisfaction by each of them at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by each of them.

The Underwriters have entered into this Purchase Contract in reliance on the respective representations, warranties and covenants of the Corporation and the Town contained in this Purchase Contract and in the Letter of Representation. Unless excused by the Underwriters, the Underwriters’ obligations under this Purchase Contract are at all times subject to the conditions set forth in this Section 7 and any other express condition contained in any other Section of this Purchase Contract. If any condition to the Underwriters’ obligations is not excused or satisfied on or before the Closing Date (or in the case of events described in Section 6, immediately on the occurrence of such event), the Underwriters’ obligation and, except as otherwise provided in this Purchase Contract, the obligations of the Corporation and the Town will be immediately discharged, and the Underwriters may terminate this Purchase Contract at any time. If, however, the Corporation is unable to satisfy the conditions to the obligations of the Underwriters contained in this Purchase Contract, or if the obligations of the Underwriters to purchase and accept delivery of the 2005 Certificates is terminated for any reason permitted by this Purchase Contract, this Purchase Contract shall terminate and neither the Underwriters nor the Corporation shall be under further obligation hereunder; except that the respective obligations to pay expenses, as provided in Section 10, shall continue in full force and effect. All of the opinions, letters, certificates, instruments and other documents mentioned in this Purchase Contract will be deemed to be in compliance with the provisions of this Purchase Contract if, but only if, in the reasonable judgment of the Underwriters and Counsel to the Underwriters, they are satisfactory in form and substance. The Underwriters hereby expressly reserve the right to waive any of the conditions to its obligations contained in this Purchase Contract.

8. Mutual Performance. The obligations of the Corporation under this Purchase Contract are subject to the performance by the Underwriters of their obligations under this Purchase Contract.

9. Continuation of Obligations. All representations, warranties and agreements of the Corporation shall remain operative and in full force and effect, regardless of any investigations made by or on behalf of the Underwriters, or the Town and shall survive the Closing. The obligations of the Corporation under Section 10 shall survive any termination of this Purchase Contract by the Underwriters pursuant to the terms hereof.

10. Expenses. The Corporation will cause the Town to pay all expenses incident to the performance of its obligations under this Purchase Contract, including, but not limited to, mailing or delivery of the 2005 Certificates, costs of printing the 2005 Certificates, the Preliminary and Final Official Statements, any amendment or supplement to the Preliminary or Final Official Statements and this Purchase Contract, the cost of preparation (including printing, copying and distribution) of the Contract, the Deed of Trust and the Trust Agreement, fees and disbursements of Special Counsel and other counsel to the Town, fees and disbursements of Trustee’s Counsel, fees and expenses of the Town’s accountants, any fees charged by investment rating agencies for the rating of the 2005 Certificates, fees of the Local Government Commission and the North Carolina Municipal Council, fees of the Trustee and any paying agent fees and additional miscellaneous fees and costs incurred in connection with and related to the transaction.

The Underwriters shall pay all advertising expenses and blue sky expenses in connection with the public offering of the 2005 Certificates, fees and disbursements of Counsel to the Underwriters and all other expenses incurred by the Underwriters in connection with their public offering and distribution of the 2005 Certificates, including the CUSIP Service Bureau service charge for the assignment of CUSIP numbers for the 2005 Certificates.

11. Notices. Any notice or other communication to be given to the Town under this Purchase Contract may be given by delivering the same in writing to Town of Chapel Hill, 306 N. Columbia Street, Chapel Hill, North Carolina 27516, Attention: Town Manager, and a notice or other communication to be given to the Corporation under this Purchase Contract may be given by delivering the same in writing to the address set forth on page one to this Purchase Contract. Any notice or other communication to be given to the Underwriters under this Purchase Contract may be given by delivering the same in writing to Legg Mason Wood Walker, Incorporated, 4505 Country Club Road, Suite 110, Winston-Salem, North Carolina 27104.

12. Benefits of Purchase Contract. This Purchase Contract is made solely for the benefit of the Underwriters and their successors or assigns, and no other person, including any purchaser of the 2005 Certificates, shall acquire or have any right hereunder or by virtue hereof.

13. Approvals by Underwriters. The approval of the Underwriters in connection with this Purchase Contract or any document contemplated by it will be in writing signed by the Underwriters and delivered to the Corporation or the Town.

14. Assignment. This Purchase Contract may not be assigned by the Corporation or the Town without the prior written consent of the Underwriters. Any assignment for which consent is not given will be void.

15. Business Days. The term “business day” as used in this Purchase Contract means any day on which the New York Stock Exchange is open for business.

16. Severability. If any one or more of the provisions of this Purchase Contract is, for any reason, held to be illegal or invalid, such illegality or invalidity will not affect any other provisions of this Purchase Contract and this Purchase Contract will be construed and enforced as if such illegal or invalid provisions had not been contained herein.

17. Governing Law. This Purchase Contract is governed by and is to be construed in accordance with the laws of the State of North Carolina.

18. Effective Date; Counterparts. This Purchase Contract is effective on your acceptance hereof. This Purchase Contract may be simultaneously executed in several counterparts, each of which is an original and all of which constitute but one and the same instrument.

19. Survival of Representations and Warranties. Notwithstanding any provisions herein to the contrary, any and all representations, warranties and agreements in this Purchase Contract shall survive regardless of (a) any investigation or any statement in respect thereof made by or on behalf of the Underwriters, (b) delivery of any payment by the Underwriters for the 2005 Certificates hereunder and (c) any termination of this Purchase Contract.

Very truly yours,

Legg Mason Wood Walker, Incorporated, on its own behalf on and behalf of [Co-Manager]

By:

Ryan Maher

Vice President

[Signatures Continue on the Following Page]

[Counterpart Signature Page to the Contract of Purchase dated May 12, 2005 between Legg Mason Wood Walker, Incorporated and [Co-Manager] and the Town of Chapel Hill Public Facilities Corporation]

Accepted and confirmed as of

the date first above written:

Town of Chapel Hill Public Facilities Corporation

By:

[Name]

President

1. Approval of Official Statement. The Town hereby authorizes and approves the Preliminary Official Statement dated May 3, 2005 (the “Preliminary Official Statement”) and the Final Official Statement dated May 12, 2005 (the “Final Official Statement”, the Preliminary Official Statement and any amendments or supplements that may be authorized for use with respect to the 2005 Certificates are herein referred to collectively as the “Official Statement”), consents to their distribution and use by the Underwriters and authorizes the execution of the Final Official Statement by a duly authorized officer of the Town.

The Town agrees to deliver to the Underwriters, at such addresses as the Underwriters specify, as many copies of the Final Official Statement as the Underwriters reasonably request as necessary to comply with paragraph (b)(4) of Rule 15c2‑12 of the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the “Rule”) and with Rule G‑32 and all other applicable rules of the Municipal Securities Rulemaking Board. The Town agrees to deliver such Final Official Statements within seven business days after the execution hereof.

The Town will take all actions and provide all information reasonably requested by the Underwriters to ensure that the Official Statement at all times during the initial offering and distribution of the 2005 Certificates does not contain any untrue statement of a material fact necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. Neither the Corporation nor the Town will amend or supplement, or approve any amendment or supplement of, the Official Statement without the prior written consent of the Underwriters (which consent will not be unreasonably withheld); provided, however, that, if between the date of this Purchase Contract and 25 days from the end of the underwriting period, as defined below, any event occurs or any fact is disclosed which might cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Corporation or the Town, as the case may be, will promptly notify the Underwriters, and, if in the opinion of the Underwriters, such event or disclosure requires the preparation and publication of a supplement or amendment to the Official Statement, the Corporation or the Town will supplement or amend the Official Statement in the form and manner approved by the Underwriters. For the purpose of this Purchase Contract, the “end of the underwriting period” will mean the date 60 days after the Closing Date.

The Town represents and warrants that (a) it has deemed the Preliminary Official Statement final as of its date except for omitted information permitted under paragraph (b)(1) of the Rule and (b) the Official Statement constitutes as of this date a final official statement within the meaning of paragraph (e)(3) of the Rule.

2. Representations, Warranties and Covenants of Town. The Town represents and warrants to and agrees with the Underwriters that:

(a) the Town is a municipal corporation, validly organized and existing under the laws of the State of North Carolina;

(b) on the date hereof and at the Closing Date, the statements and information contained in the Official Statement (except as to the statements under the captions “INTRODUCTION--Book Entry Only System” and “UNDERWRITING” and the information in Appendices C and D), are and will be true, correct and complete in all material respects and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made therein, in light of the circumstances under which it was made, not misleading;

(c) the audited financial reports of the Town for the year ended June 30, 2004, included in Appendix A to the Official Statement, present fairly the financial position of the Town for the periods specified, and such financial reports and statements have been prepared in conformity with generally accepted accounting principles consistently applied in all material respects to the periods involved, except as otherwise stated in the notes thereto;

(d) other than as set forth in or contemplated by the Official Statement, since June 30, 2004, there has been no material adverse change in the general affairs, financial position, results of operations or condition, financial or otherwise, of the Town, and the Town has not incurred liabilities that would materially affect the ability of the Town to discharge its obligations under this Letter of Representation, the Contract and the Deed of Trust, direct or contingent;

(e) the Town has received and there remain currently in full force and effect, or will receive prior to the delivery of the 2005 Certificates, all consents, approvals, authorizations and orders of governmental or regulatory authorities that would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the Town of its obligations under this Letter of Representation, the Contract, and the Deed of Trust;

(f) at a meeting of the Town Council of the Town that was duly called and at which a quorum was present and acting throughout, the Town duly approved the execution and delivery by the Town of this Letter of Representation, the Contract, and the Deed of Trust;

(g) the approval, execution and delivery of this Letter of Representation, the Contract, and the Deed of Trust by the Town and compliance with the provisions thereof, under the circumstances contemplated thereby and hereof, do not and will not conflict with, constitute a breach of or default under, or result in the creation of a lien on any property of the Town (except as contemplated therein) pursuant to applicable law or any indenture, bond order, deed of trust, mortgage, agreement or other instrument to which the Town is a party or by which the Town is bound, or conflict with or violate any applicable law, administrative rule, regulation, judgment, court order or consent decree to which the Town is subject;

(h) to the best of its knowledge, after due and reasonable investigation, there is no claim, action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental agency, or public board or body, pending or threatened (1) contesting the corporate existence or powers of the Town or the titles of the officers of the Town to their respective offices, (2) seeking to prohibit, restrain or enjoin the collection of revenues by the Town or the application of the proceeds of the 2005 Certificates wherein an unfavorable decision, ruling or finding would materially adversely affect the financial position of the Town or the operation of its facilities or the validity or enforceability of this Letter of Representation, the Contract, or the Deed of Trust, (3) contesting, questioning or affecting the validity of this Letter of Representation, the Contract, or the Deed of Trust, or (4) contesting in any way the completeness or accuracy of the Preliminary Official Statement or the Final Official Statement (nor, to the best knowledge of the Town, is there any basis therefor);

(i) the Town is not in default on the payment of the principal of or interest on any indebtedness for borrowed money or under any instrument relating to such indebtedness and no event has occurred and is continuing which, with the lapse of time or the giving of notice or both, might constitute an event of default under any such instrument, and no event has occurred which with the passage of time or the giving of notice, or both, would constitute an event of default as defined in the Contract;

(j) the Town will furnish such information and will cooperate with the Underwriters in taking such actions as the Underwriters may reasonably request to qualify the 2005 Certificates for offer and sale under the Blue Sky or other securities laws and regulations of any state and other jurisdictions of the United States which the Underwriters may designate;

(k) the Town will take all action and provide all information required to be taken or provided by the Corporation under the Purchase Contract in connection with the preparation and distribution of the Official Statement, and the terms and conditions of the Purchase Contract relating to such preparation and distribution, including without limitation the provisions of Section 2 thereof, are incorporated by reference in this Letter of Representation, mutatis mutandis;

(l) on the Closing Date, this Letter of Representation, the Contract, and the Deed of Trust will have been duly authorized, executed and delivered and will constitute valid and binding obligations of the Town enforceable in accordance with their terms (except insofar as the enforcement thereof may be limited by bankruptcy, insolvency or similar laws relating to the enforcement of creditors’ rights generally and by general equitable principles).

(m) if, at any time prior to the earlier of (1) receipt of notice from the Underwriters pursuant to Section 2(d) of the Purchase Contract that Official Statements are no longer required to be delivered under the Rule (as defined in the Purchase Contract) or (2) 90 days after the Closing, any event occurs as a result of which the Preliminary Official Statement or the Final Official Statement as then amended or supplemented might include an untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the Town shall promptly notify the Underwriters thereof in writing; provided, however, that the Town shall have such obligations with respect to information in the Preliminary Official Statement and Final Official Statement concerning and supplied by the Underwriters only to the extent the Town has actual knowledge or notice of any such event; any information supplied by the Town for inclusion in any amendments or supplements to the Preliminary Official Statement or Final Official Statement will not contain any untrue or misleading statement of a material fact relating to the Town or omit to state any material fact relating to the Town necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and on the request of the Underwriters therefor, the Town shall prepare and deliver to the Underwriters at the Town’s expense as many copies of an amendment or supplement which will correct any untrue statement or omission as the Underwriters may reasonably request.

(n) the Town will comply with the information reporting requirements adopted by the Securities and Exchange Commission or the Municipal Securities Rulemaking Board with respect to tax-exempt obligations such as the 2005 Certificates; in particular, the Town will undertake, in accordance with the requirements of the Rule, in the Contract to provide:

(1) by not later than seven months after the end of each fiscal year, beginning with the fiscal year ending June 30, 2005, to each nationally recognized municipal securities information repository (each, a “NRMSIR”) and to the appropriate state information depository (“SID”), if any, for the State of North Carolina, in each case as designated by the SEC, the audited financial statements of the Town for the preceding fiscal year, if available, prepared in accordance with Section 159-34 of the General Statutes of North Carolina, as it may be amended from time to time, or any successor statute, or if such audited financial statements are not then available, unaudited financial statements of the Town for such fiscal year to be replaced subsequently by audited financial statements of the Town to be delivered within 15 days after such audited financial statements become available for distribution;

(2) by not later than seven months after the end of each fiscal year, beginning with the fiscal year ending June 30, 2005, to each NRMSIR and to the SID, if any, the financial and statistical data as of a date not earlier than the end of the preceding fiscal year for the type of information included in the Official Statement under the captions “THE TOWN--Debt Information” (excluding information under “--General Obligation Debt Information for Overlapping Units as of January 31, 2005”) and “--Tax Information” therein, to the extent such items are not included financial information listed above;

(3) in a timely manner to each NRMSIR or to the Municipal Securities Rulemaking Board (the “MSRB”) and to the SID, if any, notice of the occurrence of any of the events with respect to the 2005 Certificates set forth in Rule 15c2-12(b)(5)(i)(C), if material; and

(4) in a timely manner to each NRMSIR or to the MSRB and to the SID, if any, notice of the failure by the Town to provide the required annual financial information or operating data described in (1) and (2) above on or before the date specified.

3. Indemnification.

(a) To the fullest extent permitted by applicable law, the Town agrees to indemnify and hold harmless the Underwriters against any and all losses, damages, expenses (including reasonable legal and other fees and expenses), liabilities or claims (or actions in respect thereof), to which the Underwriters or the other persons described in subsection (b) of this Section may become subject under any federal or state securities laws or other statutory law or at common law or otherwise, caused by or arising out of or based upon any untrue statement or misleading statement or alleged untrue statement or alleged misleading statement of a material fact contained in the Official Statement or caused by any omission or alleged omission from the Official Statement of any material fact required to be stated therein or necessary in order to make the statement made therein, in the light of the circumstances under which they were made, not misleading.

(b) The indemnity provided under this Section will extend to the fullest extent permitted by applicable law upon the same terms and conditions to each officer, director, employee or agent of the Underwriters, and each person, if any, who controls the Underwriters within the meaning of Section 15 of the Securities Act of 1933 or Section 20 of the Securities Exchange Act of 1934. Such indemnity will also extend, without limitation, to any and all expenses whatsoever reasonably incurred by any indemnified party in connection with investigation, preparing for or defending against, or providing evidence, producing documents or taking any other reasonable action in respect of, any such loss, damage, expense, liability, or claim (or action in respect thereof), whether or not resulting in any liability, and will include the aggregate amount paid in settlement of any litigation, commenced or threatened, or of any claim whatsoever as set forth herein if such settlement is effected with the written consent of the Town.

(c) Within a reasonable time after an indemnified party under subsections (a) and (b) of this Section has been served with the summons or other first legal process or have received written notice of the threat of a claim in respect of which an indemnity may be claimed, such indemnified party must, if a claim for indemnity in respect thereof is to be made against the Town under this Section, notify the Town in writing of the commencement thereof; but the omission to so notify the Town will not relieve it from any liability that it may have to any indemnified party other than pursuant to subsections (a) and (b) of this Section. The Town will be entitled to participate at its own expense in the defense, and if the Town so elects within a reasonable time after receipt of such notice, or if all indemnified parties seeking indemnification in such notice so direct, the Town must, to the fullest extent permitted by applicable law, assume the defense of any suit brought to enforce any such claim, and such defense will be conducted by counsel chosen promptly by the Town and reasonably satisfactory to the indemnified party; provided, however, that, if the defendants in any such action include such an indemnified party and the Town, or include more than one indemnified party, and any such indemnified party has been advised by its counsel that there may be legal defenses available to such indemnified party that are different from or additional to those available to the Town or another indemnified party, and that in the reasonable opinion of such counsel are sufficient to make it undesirable for the same counsel to represent such indemnified party and the Town, or another defendant indemnified party, such indemnified party will have the right to employ separate counsel in such action (and the Town will not be entitled to assume the defense thereof on behalf of such indemnified party), and in such event the reasonable fees and expenses of such counsel will, to the fullest extent permitted by applicable law, be borne by the Town. Nothing contained in this subsection (c) will preclude any indemnified party, at its own expense, from retaining additional counsel to represent such party in any action with respect to which indemnity may be sought from the Town hereunder.

(d) If the indemnification provided for in subsections (a) and (b) of this Section is unavailable to or insufficient to hold harmless and indemnify any indemnified party in respect of any losses, damages, expenses, liabilities, or claims (or actions in respect thereof) referred to therein, then the Town, to the fullest extent permitted by applicable law, on the one hand, and the Underwriters, on the other hand, will contribute to the amount paid or payable by the indemnified party as a result of such losses, damages, expenses, liability or claims (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Town on the one hand and the Underwriters on the other hand from the offering of the 2005 Certificates. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law, or if the indemnified party failed to give the notice required under the subsection (c) above, then the Town, to the fullest extent permitted by applicable law, on the one hand and the Underwriters on the other hand will contribute to such amount paid or payable by the indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Town on the one hand and the Underwriters on the other in connection with the statements or omissions that resulted in such losses, damages, expenses, liabilities or claims (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Town on the one hand and the Underwriters on the other hand will be deemed to be in such proportion so that the Underwriters is responsible for that portion represented by the percentage that the underwriting discount payable to the Underwriters hereunder (i.e., the excess of the aggregate public offering price for the 2005 Certificates as set forth on the cover page of the Official Statement over the price to be paid by the Underwriters to the Town upon delivery of the 2005 Certificates as specified in Section 1 of the Purchase Contract) bears to the aggregate public offering price as described above, and the Town is responsible for the balance. The relative fault will be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Town on the one hand or the Underwriters on the other hand and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

If the Underwriters have knowledge of a claim subject to the contribution provided by this subsection (d), the Underwriters agree, within a reasonable time of obtaining such knowledge, to convey notice of such claim to the Town. It is agreed and understood that if the Underwriters fail, under the circumstances set forth in the preceding sentence, to convey the above referenced notice to the Town, then the Town will not be obligated to provide contribution pursuant to this subsection (d).

The Town and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by any method of allocation that does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, damages, expenses, liabilities or claims (or actions in respect thereof) referred to in this subsection (d) will be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim.

(e) The indemnity and contribution provided by this Section will be in addition to any other liability that the Town may otherwise have hereunder, at common law or otherwise, and is provided solely for the benefit of the Underwriters and each director, officer, employee, agent, attorney and controlling person referred to therein, and their respective successors, assigns and legal representatives, and no other person will acquire or have any right under or by virtue of such provisions of this Letter of Representation.

4. Survival of Representations, Warranties and Covenants. All representations, warranties and agreements in this Letter of Representation will survive regardless of (a) any investigation or any statement in respect thereof made by or on behalf of the Underwriters, (b) delivery of any payment by the Underwriters for the 2005 Certificates hereunder, and (c) any termination of the Purchase Contract.

5. Binding on Successors and Assigns. This Letter of Representation will be binding on the Town and the successors and assigns of the Town and inure solely to the benefit of the Corporation and, to the extent set forth herein, any director, officer, employee, or agent of the Corporation, and the Underwriters and, to the extent set forth herein, persons controlling the Underwriters and its personal representatives, successors and assigns, and no other person or firm or entity will acquire or have any right under or by virtue of this Letter of Representation. Acceptance of this Letter of Representation by the Corporation or the Underwriters is waived.

Town of Chapel Hill, North Carolina

By: _________________________

Town Manager

EXHIBIT D

[Letterhead of [ ]]

May 26, 2005

Town Council of the Legg Mason Wood Walker, Incorporated

Town of Chapel Hill, North Carolina Winston-Salem, North Carolina

Town of Chapel Hill Public Facilities Corporation [Co-Manager]

Chapel Hill, North Carolina

$[Amount]

Certificates of Participation

(Town of Chapel Hill Operations Center Project), Series 2005

Evidencing Proportionate Undivided

Ownership Interests in the Installment Payments

To Be Made Pursuant to an Installment Financing Contract with

TOWN OF CHAPEL HILL, NORTH CAROLINA

Ladies and Gentlemen:

We have acted as counsel to The Town of Chapel Hill Public Facilities Corporation (the "Corporation"), a nonprofit corporation organized under the Constitution and laws of the State of North Carolina, in connection with the execution and delivery by the Corporation of (1) its Certificates of Participation (Town of Chapel Hill Operations Center Project), Series 2005, in the aggregate principal amount of $[Amount] (the "2005 Certificates"), (2) an Installment Financing Contract dated as of May 1, 2005 (the "Contract"), between the Town of Chapel Hill, North Carolina (the "Town") and the Corporation, (3) a Trust Agreement dated as of May 1, 2005 (the "Trust Agreement") between the Corporation and [Trustee], as trustee (the "Trustee"), and (4) the Contract of Purchase dated May 12, 2005 (the "Purchase Contract"), between the Corporation and Legg Mason Wood Walker, Incorporated and [Co-Manager] as underwriters (collectively, the "Underwriters"). This opinion letter is delivered pursuant to Section 7(e)(iii)(4) of the Purchase Contract.

In such capacity, we have examined the following:

(i) The statutes, public records, proceedings, resolutions and documents in connection with the organization of the Corporation which we consider necessary for the purpose of this opinion;

(ii) Executed counterparts of the following documents (collectively, the "Corporation Documents"): (a) the Trust Agreement, (b) the Contract, (c) the 2005 Certificates and (d) the Purchase Contract; and

(iii) The Preliminary Official Statement dated May 3, 2005, and the Official Statement dated May 12, 2005 (together, the "Official Statement") used in connection with the sale of the 2005 Certificates.

In connection with this opinion, we also have examined originals, or copies identified to our satisfaction, of such other documents, instruments, certificates and records as we have considered appropriate in order to render our opinions contained herein. Where we have considered it appropriate, as to certain facts we have relied, without investigation or analysis of any underlying data contained therein, upon certificates or other comparable documents of public officials or other appropriate representatives of the Corporation.

In rendering the opinions set forth herein, we have assumed, among other things, the legal capacity of all natural persons, the genuineness of all signatures not signed in our presence, the authenticity of all documents submitted to us as originals, that all documents submitted to us as copies conform with the originals thereof, that the Corporation Documents fully state the agreement between the Corporation and the other parties thereto, and that the Corporation Documents constitute the legal, valid and binding obligation of the parties thereto other than the Corporation, enforceable in accordance with their respective terms.

The opinions set forth herein are limited to matters governed by the laws of the State of North Carolina and the federal laws of the United States, and no opinion is expressed herein as to the laws of any other jurisdiction. We express no opinion concerning any matter respecting or affected by any laws other than laws that a lawyer in North Carolina exercising customary professional diligence would reasonably recognize as being directly applicable to the Corporation, the 2005 Certificates or both of them.

Based upon the foregoing examination, we are of the opinion, as of the date hereof and under existing law, that:

1. The Corporation is a nonprofit corporation duly organized and validly existing in good standing under the laws of the State of North Carolina and has full power and authority to enter into and perform its obligations under the Corporation Documents and to execute and deliver the 2005 Certificates.

2. Each of the Corporation Documents has been duly authorized, executed and delivered by the Corporation and, assuming due authorization, execution and delivery thereof by the other parties thereto, each constitutes a valid and binding agreement of the Corporation enforceable in accordance with its terms, except that the enforceability of the Corporation Documents may be limited by applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity.

3. The Corporation has duly approved the Preliminary Official Statement and the Official Statement and the use thereof by the Underwriters in connection with the offering and sale of the 2005 Certificates and has duly executed the Official Statement.

4. No further consent or approval of any governmental body is required to be obtained for the sale of the 2005 Certificates to the Underwriters or the execution and delivery of the Corporation Documents by the Corporation, except that we express no opinion as to any federal or state regulatory requirements of the Underwriters or any action required under federal or state securities or Blue Sky laws in connection with the offering and sale of the 2005 Certificates by the Underwriters.

5. The execution and delivery of the Corporation Documents by the Corporation, and compliance with the provisions thereof under the circumstances contemplated thereby, and the approval of the Preliminary Official Statement and the Official Statement, (a) are within the powers of the Corporation, (b) do not and will not conflict with the Corporation's articles of incorporation or bylaws, (c) to the best of our knowledge, do not and will not in any material respect conflict with, or constitute on the part of the Corporation a breach of or default under, any indenture, deed of trust, mortgage, agreement or other instrument to which the Corporation is a party, or conflict with, violate or result in a breach of any judgment, court order or consent decree to which the Corporation is subject and (d) to the best of our knowledge, do not and will not conflict with, violate or result in a breach of any existing law, public administrative rule or regulation to which the Corporation is subject.

The opinions expressed above are subject to the following qualifications and limitations:

1. Enforcement of the Corporation Documents is subject to the effect of applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and similar laws affecting the enforcement of creditors' rights generally.

2. Enforcement of the Corporation Documents is subject to the effect of general principles of equity (regardless of whether considered in a proceeding in equity or at law) by which a court with proper jurisdiction may deny rights of specific performance, injunction, self-help, possessory remedies or other remedies.

3. Indemnification provisions in the Corporation Documents are subject to and may be rendered unenforceable by applicable law or public policy, including applicable securities law.

To the best of our knowledge after reasonable investigation, the statements contained in the Official Statement under the headings entitled "THE CORPORATION" and "LEGAL MATTERS--Litigation” (with respect to the Corporation only) are true and correct and do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make such statements, in light of the circumstances in which they are made, not misleading.

Except as disclosed in the Official Statement, to the best of our knowledge, there is no action, suit, proceeding or governmental investigation at law or in equity before, or by, any court, public board or body, pending of which the Corporation has been served with a summons and complaint or other notice of commencement, or threatened against or affecting the Corporation, challenging the validity of the Corporation Documents or contesting the power and authority of the Corporation to execute and deliver the Corporation Documents or to consummate the transactions contemplated therein.

The opinions contained herein are limited to matters arising under the laws of the State of North Carolina and the federal laws of the United States of America.

This opinion is delivered to you and for your benefit in connection with the above transaction; it may not be relied upon by you for any other purposes and may not be relied upon by, nor may copies be provided to, any other person, firm, corporation or other entity without our prior written consent.

Very truly yours,

[ ]

Skillman, NJ 08558

(i) The statutes, public records, proceedings, resolutions and documents in connection with the organization of the Corporation which we consider necessary for the purpose of this opinion;

(ii) Executed counterparts of the following documents (collectively, the "Corporation Documents"): (a) the Trust Agreement, (b) the Contract, (c) the 2005 Certificates and (d) the Purchase Contract; and

(iii) The Preliminary Official Statement dated May 3, 2005, and the Official Statement dated May 12, 2005 (together, the "Official Statement") used in connection with the sale of the 2005 Certificates.

3. The Corporation has duly approved the Preliminary Official Statement and the Official Statement and the use thereof by the Underwriters in connection with the offering and sale of the 2005 Certificates and has duly executed the Official Statement.