Disaffiliation Agreement-Sandy Plains UMC (Anson County)(UW) (01543793-2).DOCX

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DISAFFILIATION AGREEMENT PURSUANT TO ¶ 2553

This DISAFFILIATION AGREEMENT PURSUANT TO ¶ 2553 (the “Disaffiliation

Agreement”) is entered into this 31st day of March, 2023, by and between SANDY PLAINS

UNITED METHODIST CHURCH OF ANSON COUNTY, a North Carolina non-profit

religious corporation (formerly known as Sandy Plains United Methodist Church of Anson

County, Sandy Plains United Methodist Church, Sandy Plains Methodist Church, Sandy Plains

Methodist Episcopal Church South, and Sandy Plains Church) (the “Local Church”) and THE

BOARD OF TRUSTEES, WESTERN NORTH CAROLINA CONFERENCE, UNITED

METHODIST CHURCH, INC., a North Carolina non-profit corporation, on behalf of and for

THE WESTERN NORTH CAROLINA CONFERENCE OF THE UNITED METHODIST

CHURCH (collectively, the “Annual Conference”). The Local Church and the Annual

Conference are sometimes referred to herein collectively as the “Parties”, and each individually,

a “Party”.

RECITALS:

WHEREAS, the Local Church is a United Methodist church within the boundaries of

Annual Conference;

WHEREAS, the Local Church has held a church conference, in compliance with ¶¶

246.8, 248, and 2553.2-.3 of The Book of Discipline of The United Methodist Church (2016

Edition, as amended)(the “Discipline”), at which at least two-thirds (2/3) of the professing

members present at the church conference of Local Church voted to disaffiliate from The United

Methodist Church “for reasons of conscience regarding a change in the requirements and

provisions of the Book of Discipline related to the practice of homosexuality or the ordination or

marriage of self-avowed practicing homosexuals as resolved and adopted by the 2019 General

Conference, or the actions or inactions of its annual conference related to these issues which

follow.”

WHEREAS, pursuant to ¶ 2501.1 of the Discipline, Local Church holds its real and

personal, tangible and intangible property “in trust for The United Methodist Church and subject

to the provisions of its Discipline.”

WHEREAS, property subject to ¶ 2501.1 “can be released from the trust, transferred free

of trust or subordinated to the interests of creditors and other third parties only to the extent

authority is given by the Discipline.” (¶ 2501.2)

WHEREAS, ¶ 2553 provides a specific circumstance in which property subject to ¶

2501.1 can be released from the trust imposed by that paragraph.

WHEREAS, ¶ 2553.4 requires the terms and conditions of Local Church’s disaffiliation

from The United Methodist Church to be “memorialized in a binding Disaffiliation Agreement.”

WHEREAS, Local Church and Annual Conference wish to (1) resolve all matters

between them, and Local Church wishes to acquire from Annual Conference all of Annual

Conference’s interest, on behalf of The United Methodist Church, in the real and personal,

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tangible and intangible property held by Local Church and (2) comply with the requirements of ¶

2553 and Judicial Council Decision 1379.

WHEREAS, per the Discipline, The Board of Trustees, Western North Carolina

Conference, United Methodist Church, Inc., holds title to all real and personal property and

interests related thereto regarding the real and personal property of The Western North Carolina

Conference of The United Methodist Church, and has the authority to institute and settle

litigation and convey, buy, sell, and release such property and assets on behalf of The Western

North Carolina Conference of The United Methodist Church.

AGREEMENT:

NOW THEREFORE, in consideration of the foregoing and all the mutual promises and

covenants herein contained, and for other good and valuable consideration, the receipt and

sufficiency of which is hereby acknowledged, the Parties agree as follows:

ARTICLE 1

DEFINITIONS

Definitions. Unless otherwise defined, for the purposes of this Disaffiliation Agreement, the

following terms shall have the meanings indicated below:

“Bill of Sale” shall mean a bill or bills of sale in a form substantially in conformance with

the form attached as the Exhibit B hereto.

“Closing” shall mean the consummation of the transactions contemplated herein

including the payments by the Local and Church and the transfer and/or release of interest(s) in

the Real Estate and Personal Property by the Annual Conference.

“Closing Date” shall mean fifteen (15) days after the fulfillment of the conditions set out

in Section 2.1 below, or anytime thereafter by written agreement of the Parties. The Closing

Date is intended to be the same day as the Disaffiliation Date.

“Code” means the United States Internal Revenue Code of 1986, as amended.

“Deed” shall mean a quitclaim deed(s) substantially in the form set out in the attached

Exhibit C.

“Disaffiliation Date” shall mean the Closing Date and have that additional meaning set

out in Section 2.4 below.

“Financial Statements” shall have that meaning set out in Section 3.4 below.

“FIRPTA Certificate” an affidavit from the Annual Conference pursuant to Section

1445(b)(2) of the Code in the form attached hereto as Exhibit D, and on which Buyer is entitled

to rely, that Seller is not a “foreign person” within the meaning of Section 1445(f)(3) of the Code

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“Fixtures” shall mean all equipment, machinery, fixtures, and other items of real and/or

personal property, including all components thereof, now or on the Closing Date located in, on or

used in connection with, and permanently affixed to or incorporated into, the Improvements,

including, without limitation, all furnaces, boilers, heaters, electrical equipment, electronic

security equipment, heating, plumbing, lighting, ventilating, refrigerating, incineration, air and

water pollution control, waste disposal, air-cooling and air-conditioning systems and apparatus,

sprinkler systems and fire and theft protection equipment, and similar systems, all of which, to

the greatest extent permitted by law, are hereby deemed by the Parties to constitute real estate,

together with all replacements, modifications, alterations and additions thereto, but specifically

excluding all items included within the definition of Personal Property.

“Improvements” shall mean all buildings, improvements, structures and Fixtures now or

on the Closing Date located on the Real Property, including, without limitation, landscaping,

parking lots and structures, roads, drainage and all above ground and underground utility

structures, equipment systems and other so-called “infrastructure” improvements.

“Knowledge” shall mean knowledge of the Local Church or Annual Conference, as the

case may be, after reasonable inquiry or investigation.

“Land” shall mean the real property legally described on Schedule 4.7 attached hereto

and made a part hereof, and any substitutions therefor, together with all of Annual Conference’s

rights, titles, appurtenant interests, covenants, licenses, privileges and benefits thereunto

belonging, and Annual Conference’s right, title and interest in and to any easements, right-of-

way, rights of ingress or egress or other interests in, on or under any land, highway, street, road

or avenue, open or proposed, in, on, across, in front of, abutting or adjoining such real property

including, without limitation, any strips and gores adjacent to or lying between such real property

and any adjacent real property.

“Laws” shall mean all federal, state and local laws, moratoria, initiatives, referenda,

ordinances, rules, regulations, standards, orders and other governmental requirements, including,

without limitation, those relating to the environment, health and safety and disabled or

handicapped persons.

“Lease” shall mean the lease or leases described in Schedule 4.7 attached hereto and

made a part hereof.

“Personal Property” shall mean all Intangible Property and all those items of tangible

personal property described on Schedule 4.8 having a fair market value equal to or in excess of

Five Thousand and 00/100 Dollars ($5,000.00) per item, attached hereto and made a part hereof,

other than the Fixtures, now or on the Closing Date owned by the Local Church and located on

or about the Land or Improvements or used in connection with the operation thereof.

“Real Property” shall mean the Land, the Improvements and the Fixtures.

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“Subsidiary” means any corporation or other organization, whether incorporated or

unincorporated, of which at least a majority of the securities or interests having by the terms

thereof ordinary voting power to elect a majority of the board of directors or others performing

similar functions with respect to such corporation or other organization is at the time directly or

indirectly owned or controlled by the Local Church or the functional operations of the

corporation or other organization is controlled by the Local Church.

ARTICLE 2

DISAFFILATION PROCESS

2.1 Conditions Precedent to Closing. The Local Church and Annual Conference

acknowledge and agree that the obligations of the parties to effectuate the Closing on or about

the Disaffiliation Date are expressly contingent and conditional on the following:

(a) Church Conference Vote. At least two-thirds (2/3) of the professing

members present at a church conference of the Local Church must vote to disaffiliate from The

United Methodist Church “for reasons of conscience regarding a change in the requirements and

provisions of the Book of Discipline related to the practice of homosexuality or the ordination or

marriage of self-avowed practicing homosexuals as resolved and adopted by the 2019 General

Conference, or the actions or inactions of its annual conference related to these issues which

follow.” Local Church shall provide documentation, to the satisfaction of Annual Conference,

which evidences the result of the disaffiliation vote taken at the church conference. Such

documentation must be certified by an authorized officer of Local Church and shall be included

as an Exhibit A to this Disaffiliation Agreement.

(b) Annual Conference Vote. This Disaffiliation Agreement must be

“ratified by a simple majority of the members . . . present and voting” at a duly-called session of

The Western North Carolina Annual Conference of The United Methodist Church, as required by

Judicial Council Decision 1379 and ¶ 2529.1b(3) of the Discipline. The Local Church

acknowledges that the Annual Conference has no control over the voting approval of the voting

delegates and the voting approval is subject to the will and voting of the body.

Should either of the above conditions not occur, this Disaffiliation Agreement shall immediately

become null and void.

church with which it jointly owns a parsonage property must resolve the ownership of the

parsonage by one party conveying its interest to the other by agreement (on any terms to which

those parties may agree) or by process set out in the Discipline, or otherwise sell the parsonage

and divide the proceeds on a pro-rata basis.

2.2 Petition for Annual Conference Session. The Local Church acknowledges that

pursuant to the governing standing rules of the Annual Conference, petitions for consideration of

the legislative body must be submitted to the Secretary of the Annual Conference on or before

April 1 of the current Annual Conference year. The Annual Conference will make reasonable

efforts to assist the Local Church in completing the required petition, which will include this

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Disaffiliation Agreement as an attachment thereto making it subject to public review. If the

petition is not filed in a timely manner, the Parties will make good faith efforts under the

standing rules of the Annual Conference to cooperate to bring the petition to the legislative floor

for consideration by appropriate motions to suspend the standing rules for the purposes of

considering the petition.

2.3 Applicability of ¶ 2501. Local Church acknowledges and agrees that pursuant to

¶ 2501 of the Discipline, the Local Church holds all its property, real and personal, tangible and

intangible, in trust for the benefit of The United Methodist Church, including the Real Property

and Personal Property, and the Local Church will not take any actions that are inconsistent

therewith or opposing or negating the same.

2.4 Date of Disaffiliation. Should Local Church timely comply with all of its

obligations, representations, and warranties as set forth in this Disaffiliation Agreement and the

conditions in Section 2.1 above have been satisfied, Local Church’s disaffiliation from The

United Methodist Church will be effective within sixty (60) days of the affirmative vote of the

Annual Conference ratification required by Section 2.1 (b)(the “Disaffiliation Date”) or any such

other date as the Parties may agree in writing. Such Disaffiliation Date must be subsequent to the

Annual Conference’s ratification referenced in Section 2.1 (b) above.

ARTICLE 3

FINANCIAL OBLIGATIONS & MATTERS

3.1 Local Church’s Payment Obligations. At Closing or otherwise prior to or on

the Disaffiliation Date, Local Church shall pay to the Annual Conference, in a manner specified

by Annual Conference, the following:

(a) Local Church shall have the right to retain its Real Property and Personal

Property, tangible and intangible property without charge. Any costs relating to Local Church’s

retention of its property will be borne by Local Church.

(b) Any unpaid apportionments for the twelve (12) months immediately prior

to the Disaffiliation Date, as calculated by Annual Conference, totaling Two Thousand Three

Hundred Forty-Seven and 00/100 ($2,347.00)(for clarity, any amounts paid within the twelve

(12) month period set out above shall be credited to the Local Church at Closing);

Annual Conference, totaling Two Thousand Three Hundred Forty-Seven and 00/100

($2,347.00);

(d) An amount equal to Local Church’s pro rata share, as determined by

Annual Conference, of Annual Conference’s unfunded pension obligations, based on the Annual

Conference’s aggregate funding obligations as determined by the General Board of Pension and

Health Benefits using market factors similar to a commercial annuity provider, totaling Six

Thousand Eight Hundred Ten and 00/100 Dollars ($6,810.00);

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(e) Any unpaid loans (secured or unsecured) owed to the Annual Conference

or other United Methodist entities such as The United Methodist Foundation of Western North

Carolina (unless those loans are assigned or transferred per Section 3.2 below), and any

investment portfolio needs which require modifications or assignments;

(f) The aggregate amount of any and all grants awarded and paid to Local

Church by Annual Conference or any affiliate or subsidiary thereof within the prior ten (10)

years; and,

(g) All costs of the transfer of any assets involved hereunder and transactions

set out herein, as well as the legal fees of the Annual Conference incurred in connection with this

Agreement.

3.2 Other Liabilities. Local Church represents and warrants that is has no loans,

leases or other debts secured by the Real Property or Personal Property, except those matters set

out Schedule 3.2, and that if any debts exist, secured or unsecured, it shall either satisfy all of its

debts, loans, and liabilities, or assign or transfer such obligations to its new operating entity prior

to or simultaneous with Closing, and solely bear the cost thereof. Local Church must provide

sufficient documentation of the same to Annual Conference.

3.3 No Undisclosed Liabilities. Local Church has, and at the Disaffiliation Date will

have, no debts, liabilities, commitments, or obligations of any nature, absolute, accrued,

contingent or otherwise, relating to its business, other than those which (a) are fully reflected or

reserved against on the Financial Statements (defined below) or (b) have been incurred since the

date of the most recent balance sheet included in the Financial Statements in the ordinary course

of business in amounts and for terms consistent, individually and in the aggregate, with the past

practices of its business. Except as shown in the Financial Statements, the Local Church is not

directly or indirectly liable upon or with respect to (by discount, repurchase agreements or

otherwise), or obliged in any other way to provide funds in respect of, or to guarantee or assume,

any debt, obligation or dividend of any other party, except endorsements in the ordinary course

of business in connection with the deposit, in banks or other financial institutions, of items for

collection.

3.4 Financial Statements. Attached hereto as Schedule 3.4 are true and correct

copies of the following financial statements of Local Church (the “Financial Statements”): (a)

the unaudited treasurer report ending September 30, 2022. The Financial Statements as of

present fairly and accurately the financial condition, cash flow and results of operations of the

Local Church as of the respective dates thereof and for the periods therein referred to and have

been derived from and are in agreement with the books and records of the Local Church.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF LOCAL CHURCH

The Local Church represents and warrants to the Annual Conference as of the date hereof

and the Disaffiliation Date as follows:

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4.1 Organization and Qualification. Local Church is a non-profit corporation duly

organized, validly existing and in good standing under the laws of the State of North Carolina.

The Local Church, subject to the Discipline, has all requisite power and authority to own or lease

its properties and assets and to carry on its business as it is now being conducted.

4.2 Authorization; Enforceability. The Local Church has full power and authority

to execute, deliver and perform this Disaffiliation Agreement and all agreements and transactions

contemplated hereby. The execution, delivery and performance of this Disaffiliation Agreement

and all transactions contemplated hereby have been duly authorized by all corporate action

required by Local Church. This Disaffiliation Agreement has been duly and validly executed

and delivered by Local Church, and constitutes, and each of the other agreements to be executed

pursuant to the terms hereof and upon execution and delivery will constitute, legal, valid and

binding obligations of the Local Church, enforceable in accordance with their terms.

4.3 No Conflict or Violation. The execution, delivery and performance of this

Disaffiliation Agreement or any document related hereto by Local Church and the consummation

by Local Church of all of the transactions contemplated hereby or thereby, will not (with or

without the giving of notice or the lapse of time or both): (a) violate or require any consent or

approval under any applicable provision of any order, writ, injunction, decree, rule, regulation or

law; (b) require any consent under, conflict with, result in termination of, accelerate the

performance required by, result in a breach of, constitute a default under, or otherwise violate the

terms of any leases, promissory notes, loans, agreements, instruments, obligations, contributions,

gifts or endowments to which Local Church or a Subsidiary is a party or is beneficiary; (c)

require any consent or approval by, notice to or registration with any governmental authority or

any other person or entity; (d) violate any organizational documents or bylaws of Local Church;

or (e) result in the creation or imposition of any lien or encumbrance upon any of the assets of

the Local Church or accelerate any indebtedness of the Local Church, or result in the

cancellation, modification, revocation or suspension of any of the licenses, permits,

governmental authorizations or accreditations held by the Local Church.

4.4 No Entities or Subsidiaries. Except as set out on Schedule 4.4, the Local

Church has no other corporate identity and/or no Subsidiaries.

4.5 Litigation. There are no actions, proceedings or investigations pending or, to the

Knowledge of the Local Church, threatened against the Local Church or any Subsidiaries before

any court, arbitral panel, or administrative or governmental agency or administrative officer or

executive. Local Church is not subject to any order, writ, judgment, award, injunction or decree

of any court, arbitral panel, or administrative or governmental agency, that affects the assets or

operation of the Local Church, or that would or might interfere with the transactions

contemplated by this Disaffiliation Agreement.

4.6 Restriction on Funds. The Local Church, nor its Subsidiaries, are party to any

agreement, contract, loan, debt or the like, aside from the Discipline, that restricts the use or

spending of its funds.

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4.7 Real Property. Other than the Land and Real Property set on Schedule 4.7, the

Local Church nor its Subsidiaries own or lease or have any other interest in any other Land or

Real Property.

4.8 Personal Property. Other than the Personal Property set out on Schedule 4.8,

the Local Church nor its Subsidiaries own, lease, or have any other interest in any other Personal

Property.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF ANNUAL CONFERENCE

The Annual Conference represents and warrants to the Local Church as of the date hereof

and the Disaffiliation Date as follows:

5.1 Organization and Qualification. Annual Conference is a nonprofit corporation

duly organized, validly existing and in good standing under the laws of the State of North

Carolina. Annual Conference has all requisite corporate power and authority to own or lease its

properties and assets and to carry on its business as it is now being conducted.

5.2 Authorization; Enforceability. The Annual Conference has full power and

authority to execute, deliver and perform this Disaffiliation Agreement and all agreements and

transactions contemplated hereby. The execution, delivery and performance of this Agreement

and all transactions contemplated hereby have been duly authorized by all corporate action

required by the Annual Conference. This Disaffiliation Agreement has been duly and validly

executed and delivered by the Annual Conference, and constitutes, and each of the other

agreements to be executed pursuant to the terms hereof and upon execution and delivery will

constitute, legal, valid and binding obligations of the Annual Conference, enforceable in

accordance with their terms.

5.3 No Conflict or Violation. The execution, delivery and performance of this

Disaffiliation Agreement or any document related hereto by Annual Conference and the

consummation by Annual Conference of all of the transactions contemplated hereby or thereby,

will not (with or without the giving of notice or the lapse of time or both): (a) violate or require

any consent or approval under any applicable provision of any order, writ, injunction, decree,

rule, regulation or law; (b) require any consent or approval by, notice to or registration with any

governmental authority or any other person or entity; or, (c) violate any provision of the Articles

of Incorporation of Annual Conference or its Bylaws.

ARTICLE 6

CORPORATE MATTERS; PROPERTY; RELEASES

6.1 Intellectual Property. As of the Disaffiliation Date, the Local Church and

Subsidiaries shall cease all use of the terms “United Methodist” or “UMC”, the Cross & Flame

insignia, and any other intellectual property of the denomination and Annual Conference,

including the removal of all signage containing the same, and shall refrain from using any

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similarly confusing names, logos, designs, trademarks or service marks in any fashion. In

addition, the Local Church and Subsidiaries shall remove “United Methodist” or “UMC” from

any URL’s, e-mail addresses, websites, social media pages and sites, as well as the other items of

Intellectual Property noted hereunder.

6.2 Group Tax Exemption Ruling. As of the Disaffiliation Date, Local Church shall

cease to use, and also shall ensure that any Subsidiaries or affiliates of Local Church which have

been included in the group tax exemption ruling shall cease to use, any and all documentation

stating that Local Church is included in the denomination’s group tax exemption ruling

administered by the General Council on Finance and Administration of The United Methodist

Church. Local Church and any of its Subsidiaries and affiliates which have been included in the

group tax exemption ruling will be removed as of the Disaffiliation Date.

6.3 Historical Documents. Prior to the Disaffiliation Date, the Local Church will

work with the Archives for the Annual Conference to turn over originals or acceptable copies

(whether hard copy or electronic) of church archives, membership rolls, and other historical

documents related to funerals, baptisms, weddings, minutes, etc., of the Local Church for

archiving with the Annual Conference.

6.4 Cemetery. The Local Church agrees and insures that, after the Disaffiliation

Date, its cemetery and/or columbarium, will continue to be maintained in substantially the same

manner as presently maintained. In addition, Local Church will honor any and all contracts,

deeds, and agreements for burial and/or internment in its cemetery or columbarium, as well as

insuring and continued access for families and loved ones of United Methodists buried there and

for burials in unfilled graves and columbarium slots (including granting an access easement to

the Conference and members of the United Methodist Church for visitations, historical research,

and related purposes).

6.5 Conduct of Local Church Operations. From the date of this Disaffiliation

Agreement through and until the Closing, the Local Church: (a) will conduct its operations

substantially in accordance with past practice and will use commercially reasonable efforts,

subject to the foregoing, to maintain and preserve its operations and organization consistent with

past practice and efficient and economical management, (b) will not take any action that is

inconsistent with its charitable purposes under Section 501(c)(3) of the Code or that otherwise

adversely affects its tax-exempt status, and (c) will not take any action that would cause its

representations and warranties in this Disaffiliation Agreement not to remain true and correct as

of Closing, except with the prior written consent of the Annual Conference.

6.6 Organizational Transition. Local Church shall take all steps necessary to close

and/or dissolve any legal entities of the Local Church and to settle, liquidate, or transfer all assets

and obligations of such entities, or to establish any new legal entities, or to modify its current

organizing documents as needed to effectuate its disaffiliation from The United Methodist

Church, to the satisfaction of Annual Conference.

6.7 Restricted Gifts. During the period between the date of this Disaffiliation

Agreement and Closing, the Parties shall work together to identify any restrictions or change of

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control provisions in gifts, grants, endowments, restricted accounts and similar funds available or

pledged to the Local Church. The Parties shall cooperate to determine any actions that may be

necessary, including without limitation any consent or acknowledgment from the grantor of such

funds, in order that such funds, resources or pledges will not be adversely affected by the

disaffiliation of the Local Church. The Local Church, after disaffiliation, shall treat such funds

and any future bequests or other gifts received in the pre-disaffiliation name of the Local Church,

consistent with requirements of law and such donor’s direction in the written gift instrument, as

restricted for the church related operations and activities as conducted by the Local Church.

6.8 Real Property; Personal Property.

(a) On the Disaffiliation Date, Local Church will have full title and ownership

of the Real Property and Personal Property. The parties shall ensure all necessary transfers or

other transactions relating to the above properties are completed on or prior to the Disaffiliation

Date. Any costs resulting from such transfers or other transactions shall be borne by Local

Church. Annual Conference shall fully cooperate with Local Church, as needed and applicable,

to ensure that such transfers and other transactions convey all of Annual Conference’s interest –

both for itself and on behalf of The United Methodist Church – in the Real Property and Personal

Property, both tangible and intangible, of Local Church.

(b) At Closing, the Annual Conference shall deliver to the Local Church: (i)

the Deed(s) quitclaiming and releasing all interest of the Annual Conference in the Real Property

to the Local Church; (ii) the Bill of Sale conveying all the interest of the Annual Conference in

the Personal Property to the Local Church; and, (iii) a FIRPTA certificate.

6.9 AS/IS Conveyance. THE PARTIES AGREE THAT, EXCEPT AS MAY BE

EXPRESSLY SET FORTH IN THIS AGREEMENT, THE INTERESTS OF THE

ANNUAL CONFERENCE IN THE REAL PROPERTY AND PERSONAL PROPERTY

SHALL BE CONVEYED TO THE LOCAL CHURCH “AS IS, WHERE IS, WITH ALL

FAULTS”, SUCH CONVEYANCES SHALL BE WITHOUT REPRESENTATION OR

WARRANTY OF ANY KIND, EXPRESS OR IMPLIED (INCLUDING ANY

WARRANTY OF OR WITH RESPECT TO INCOME POTENTIAL, DEVELOPMENT

FEASIBILITY, POTENTIAL OR COSTS, OPERATING EXPENSES, USES,

MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE), AND THE

ANNUAL CONFERENCE DOES HEREBY DISCLAIM AND RENOUNCE ANY SUCH

REPRESENTATION OR WARRANTY, EXCEPT AS MAY BE EXPRESSLY SET

FORTH HEREIN. THE LOCAL CHURCH IS NOT RELYING, AND AGREES THAT

IT SHALL NOT RELY, UPON ANY REPRESENTATION, INDUCEMENT OR

UNPERFORMED PROMISE OF THE ANNUAL CONFERENCE EXCEPT TO THE

EXTENT SUCH INDUCEMENT, REPRESENTATION OR UNPERFORMED PROMISE

IS EXPRESSLY SET FORTH HEREIN. THE LOCAL CHURCH HAS BEEN IN SOLE

AND EXCLUSIVE POSSESSION OF THE REAL PROPERTY AND THE PERSONAL

PROPERTY AND IS FULLY AWARE OF ALL FAULTS AND MATTERS RELATING

THERETO.

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6.10 Release of Claims. Upon Closing, Annual Conference and Local Church, for

themselves and their agents, representatives, members, trustees, employees, successors,

attorneys, and assigns, hereby fully and forever covenant not to sue each other, and release and

discharge each other, and their current and former trustees, officers, representatives, employees,

and assigns, in both their official and individual capacities, from any liability for any and all

causes of action and claims, including any statutory or common law cause of action, tort or

contractual claims, any claims for attorneys’ fees, expenses and all other damages, whether

known or unknown, foreseen or unforeseen, which Annual Conference or Local Church ever

had, now has, hereafter may have or claim to have against any of the above-named entities or

persons in any way arising out of their relationship with each other. The Parties further represent

they have no pending lawsuit, charge, complaint, or other action against each other. For the

purposes of this provision, “Local Church” shall include all Subsidiaries.

6.11 Indemnification; Insurance.

(a) The Local Church shall defend, indemnify, and hold the Annual

Conference (including its officers, directors, trustees, agents, employees, members and the like)

harmless against any and all investigations, actions, claims, demands, lawsuits, loss, costs,

damages, judgments, liabilities, settlement or expenses incurred, claimed, obtained, or sustained,

including without limitation attorneys’ fees and costs, of any nature whatsoever, whether in law

or in equity, including without limitation claims relating to or allegedly relating to employment

matters, personal injuries, the Real Property, the Personal Property, contracts, agreements, loans,

Subsidiary operations or claims related thereto, or relating to the transactions contemplated in

this Disaffiliation Agreement, including the disaffiliation of the Local Church. Annual

Conference reserves the right to select counsel to defend and/or bring any such claims.

Notwithstanding the Annual Conference’s right to the choice of counsel, Local Church shall

solely be responsible for any and all attorneys’ fees, costs, and expenses relating to any and all

such actions. The Annual Conference shall promptly notify the Local Church of any claims

hereunder, and the Annual Conference shall have the sole right to control and direct all litigation

and settle any and all claims hereunder.

(b) For a period of three (3) years after the Disaffiliation Date, Local Church

shall procure and maintain a standard commercial liability insurance policy including errors and

omissions, sexual misconduct, and employment practices liability coverages with limits of

liability not less than $1,000,000 which lists the Annual Conference, its directors, officers,

trustees, agents and employees as additional insureds with coverage to the same extent and on

the same basis as Local Church. Such coverage shall contain a provision that requires a carrier

to provide the Annual Conference with a thirty (30) days written notice prior to events of

termination, cancellation or amendment.

ARTICLE 7

CLOSING, TIME, AND TERMINATION

7.1 Closing. Subject to the satisfaction or appropriate waiver of all conditions set

forth in this Disaffiliation Agreement, the Closing of the transactions contemplated shall be

effective as of the Disaffiliation Date. The Closing shall take place at the offices of Patrick,

Harper & Dixon, LLP, at 10 A.M. Eastern Time (US).

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7.2 Time Limit. Should the Local Church fail to satisfy all of its obligations set forth

herein by December 31, 2023, this Disaffiliation Agreement shall be null and void.

7.3 Termination upon Mutual Consent. This Agreement may be terminated and

the disaffiliation and the other transactions contemplated hereby may be abandoned at any time

prior to the Disaffiliation Date by the mutual written consent of the Parties.

7.4 Other Termination. This Agreement may be terminated and the transactions

contemplated hereby may be abandoned at any time prior to the Disaffiliation Date by either

Party if:

(a) prior to the Disaffiliation Date, there has been a material breach of any

representation, warranty, covenant or agreement on the part of a Party set forth in this

Agreement; provided, however, that, if such breach is curable by the breaching Party through the

exercise of its commercially reasonable efforts and for so long as the breaching Party continues

to exercise such commercially reasonable efforts (but in no event longer than thirty (30) days

after the non-breaching Party’s written notification to the breaching Party of the occurrence of

such breach), the non-breaching Party may not terminate this Agreement; or,

(b) if all the conditions set forth in this Agreement have not been satisfied or

waived on or before the Disaffiliation Date, unless such satisfaction has been frustrated or made

impossible by any act or failure to act of non-breaching Party.

7.5 Effect of Termination. In the event of termination of this Disaffiliation

Agreement, no Party hereto (or any of its trustees or officers) shall have any liability or further

obligation to the other Party to this Disaffiliation Agreement, except that nothing herein will

relieve either Party from liability for any breach of this Disaffiliation Agreement.

ARTICLE 8

MISCELLANEOUS

8.1 Severability. If any provision of this Disaffiliation Agreement or the application

of any such provision to any Party or circumstances shall be determined by any court of

competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this

Disaffiliation Agreement or the application of such provision to such Party or circumstances

other than those to which it is so determined to be invalid and unenforceable shall not be affected

thereby, and each provision hereof shall be validated and shall be enforced to the fullest extent

permitted by law.

8.2 Waiver. Any provision of this Disaffiliation Agreement may be waived prior to

the Closing if, and only if, such waiver is in writing and signed by an authorized representative

of the Party against whom the waiver is to be effective. No failure or delay by any Party in

exercising any right, power or privilege under this Disaffiliation Agreement shall operate as a

waiver thereof nor shall any single or partial exercise thereof preclude any other or further

exercise thereof or the exercise of any other right, power or privilege. Except as otherwise

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provided in this Disaffiliation Agreement, the rights and remedies herein provided shall be

cumulative and not exclusive of any rights or remedies provided by law.

8.3 Notices. All notices, requests, claims, demands and other communications

hereunder shall be in writing and shall be deemed given: (i) when delivered, if delivered

personally to the intended recipient; (ii) three (3) business days following sending by registered

or certified mail, postage prepaid; and (iii) one (1) business day following sending, if sent by

overnight delivery via a national courier service providing proof of delivery, and in each case,

addressed to a party at the following address for such party (or at such other address for a party

as shall be specified in a notice given in accordance with this Section 8.3):

If to Annual Conference: WNCC

Attn. R. Mark King

13924 Professional Center Drive

Suite 200

Huntersville, NC 28078

with a copy to: Patrick, Harper & Dixon, LLP

Post Office Box 218

Hickory, NC 28603

Attention: Gregory D. Huffman

If to Local Church: Sandy Plains United Methodist Church of Anson

County

1591 Previtte Rd

Morven, NC 28119

Attention: Lonnie L. Grose

8.4 Applicable Law. This Disaffiliation Agreement shall be governed and construed

and interpreted in accordance with the laws of the State of North Carolina, excepting only its

conflict of laws principles.

8.5 Publicity. The Parties agree that no press release or other announcement

concerning the transactions contemplated hereby shall be issued by any Party without the

advance written consent of the other Party, except as such release or announcement may be

required by law, in which case the Party making the release or announcement shall show such

release or announcement in advance to the other Party.

8.6 Assignment. This Disaffiliation Agreement may not be assigned by any Party

without the prior written consent of the other Party, such consent to be in the sole discretion of

the Party from which it is sought. Any such assignment without the consent of the other party,

whether by merger, operation of law, agreement or otherwise shall be void and a breach of this

Disaffiliation Agreement.

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8.7 Binding Effect Benefits. This Disaffiliation Agreement shall inure to the benefit

of and be binding upon the Parties hereto and their respective permitted successors and assigns;

provided, however, that nothing in this Disaffiliation Agreement shall be construed to confer any

rights, remedies, obligations or liabilities on any person other than the Parties hereto or their

respective successors and permitted assigns.

8.8 Entire Agreement. This Disaffiliation Agreement, together with the exhibits and

schedules hereto which are incorporated herein by this reference, embodies the entire agreement

and understanding of the Parties hereto and supersedes any prior agreement or understanding

between the Parties with respect to the subject matter of this Disaffiliation Agreement.

8.9 Amendment. This Disaffiliation Agreement may be amended only by a writing

duly executed by the Parties hereto.

8.10 Further Assurances. Each Party to this Disaffiliation Agreement will execute

and deliver, or cause to be executed and delivered, such additional or further transfers,

assignments, endorsements or other instruments as the other Party or its counsel may reasonably

request for the purpose of carrying out the transactions contemplated by this Disaffiliation

Agreement.

8.11 Counterparts. This Disaffiliation Agreement may be executed in one or more

counterparts (and by facsimile or portable document format (pdf) transmission), each of which

shall be deemed an original, but all of which together shall constitute one and the same

document.

8.12 Headings. Headings of the articles and sections in this Disaffiliation Agreement

are for reference purposes only and shall not be deemed to have any substantive effect.

[Signature Page Immediately Follows]

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SUPPLEMENTARY INDEX

Exhibit A-Local Church Vote Certification

Exhibit B-Bill of Sale

Exhibit C-Deed(s)

Exhibit D-FIRPTA

_______________________

Schedule 3.2-Other Liabilities

Schedule 3.4-Financial Statements

Schedule 4.3-Subsidiaries

Schedule 4.7-Leases & Land

Schedule 4.8-Personal Property

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EXHIBIT A

Local Church Certification

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EXHIBIT B

Bill of Sale

[Form]

BILL OF SALE

This Bill of Sale is made and entered into as of this ____ day of [_________], 2023 (the

"Effective Date") by and between THE BOARD OF TRUSTEES, WESTERN NORTH CAROLINA

CONFERENCE, UNITED METHODIST CHURCH, INC., a North Carolina non-profit corporation (the

"Seller") and [_______________], a North Carolina [______] (the "Buyer”).

1. PURCHASE OF EQUIPMENT AND PERSONAL PROPERTY. For valuable consideration, the sum

of $1.00, receipt of which is acknowledged, Seller agrees to quitclaim, transfer, sell, waive and release

any interest it has or may have, including as the beneficiary of any trust interest created by the provisions

of The Book of Discipline of The United Methodist Church, and Buyer agrees to accept all of Seller’s title

and interest, if any, in and to all of the properties and assets held by Sandy Plains United Methodist

Church of Anson County, and relating to the Conference’s claim for itself, or on behalf of The United

Methodist Church, of any beneficial right of any kind, including all proprietary rights and privileges of

any kind or nature, whether arising by operation of law, trust, contract, property or other means to all

tangible personal property owned as of the date of this Bill of Sale in the name of Sandy Plains United

Methodist Church of Anson County (including, without limitation, cash, bank accounts, accounts and

notes receivable, deposits, prepaid items, contents, furnishings, equipment, tools, furniture, leasehold

improvements, computer software, permits, licenses, authorizations, books, records, papers, securities,

funds, goodwill, contracts, and other intangibles (hereinafter collectively, the "Personal Property") on the

terms and conditions set forth in this Bill of Sale.

2. INSPECTION. Buyer has been in exclusive possession of the Personal Property and waives all rights

to inspect and/or reject the Personal Property or any part thereof.

3. RISK OF LOSS. The sole risk of loss arising from the Personal Property, regardless of the cause, shall

pass to Buyer upon execution hereof.

4. DISCLAIMER OF WARRANTIES. Seller hereby excludes, and Buyer waives, all express or implied

warranties with respect to the Personal Property, and further:

THERE ARE NO WARRANTIES THAT EXTEND BEYOND THE DESCRIPTION ON THE

FACE OF THIS BILL OF SALE. WITH THIS SALE, AND SELLER EXPLICITLY

DISCLAIMS ANY WARRANTY OF MERCHANTABILITY AND ANY WARRANTY OF

FITNESS FOR A PARTICULAR PURPOSE. BUYER ACKNOWLEDGES THAT IT IS

PURCHASING THE EQUIPMENT AS-IS AND WHERE LOCATED WITH NO CLAIMS OR

WARRANTIES REGARDING CONDITION OR SUITABILITY, EITHER EXPRESS OR

IMPLIED.

5. This Bill of Sale shall be construed and governed in accordance with the laws of the State of North

Carolina.

[Signature Page Immediately Follows]

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IN WITNESS WHEREOF, the Parties have caused their respective duly authorized

representative to execute and deliver this Bill of Sale.

The Board of Trustees, Western North Carolina Conference,

United Methodist Church, Inc.

By:___________________________

Eric R. Lane, President

[_______________]

By:__________________________

Print Name:______________________

Title:_____________________________

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EXHIBIT C

Deed(s)

[Form]

QUITCLAIM DEED

THIS INSTRUMENT WAS PREPARED BY:

Gregory D. Huffman

Patrick Harper & Dixon, LLP

P.O. Box 218

Hickory, NC 28603

Parcel I.D.: 638900522894

Mail after recording to: Grantee

NORTH CAROLINA

NO REVENUE ($0.00)

ANSON COUNTY

THIS QUITCLAIM DEED made this [___] day of [______], 2023, by and between THE

BOARD OF TRUSTEES, WESTERN NORTH CAROLINA CONFERENCE, UNITED

METHODIST CHURCH, INC., a North Carolina Not-For-Profit corporation, whose mailing

address is P.O. Box 2757, Huntersville, NC 28078 (“Grantor”) and [__________], a North

Carolina [__________], whose mailing address is [__________________] (“Grantee”).

The designation Grantor and Grantee as used herein shall include said parties, their heirs,

successors, and assigns, and shall include singular, plural, masculine, feminine or neuter as

required by context.

WHEREAS, Sandy Plains United Methodist Church of Anson County (formerly known as Sandy

Plains United Methodist Church of Anson County, Sandy Plains United Methodist Church,

Sandy Plains Methodist Church, Sandy Plains Methodist Episcopal Church South, and Sandy

Plains Church) was a “Local Church,” as defined by The Book of Discipline of The United

Methodist Church (2016 Edition, as amended)(the “Discipline”);

WHEREAS, pursuant to that Disaffiliation Agreement Pursuant to ¶ 2553 between Grantor and

Sandy Plains United Methodist Church of Anson County, dated [__________], 2023, Grantor

agreed to transfer all its right, title and interest in the real property set out herein to Grantee.

WITNESSETH, that the Grantor, for a valuable consideration paid by the Grantee, the receipt of

which is hereby acknowledged, has remised and released, and by these presents does remise,

release and forever quitclaim unto Grantee and its assigns all right, title, and interest of said

Grantor in and to that certain tract of land lying and being in Anson County, North Carolina, as

more particularly described:

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See the attached Exhibit A which is

incorporated by reference herein as if set out in full.

THE PREPARER OF THIS INSTRUMENT DID NOT SEARCH OR CERTIFY TITLE.

To have and to hold the aforesaid tract or parcel of land and all privileges thereunto belonging to

said Grantee and its assigns free and discharged from all right, title, claim and interest of the

Grantor or anyone claiming by, through or under them.

The property conveyed herein does not include the primary residence of the Grantor.

IN WITNESS WHEREOF, the Grantor has hereunto set their hands and seals the day

and year first above written.

[Signatures Pages Attached Separately]

Execution Version

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SIGNATURE AND ACKNOWLEDGMENT PAGE

FOR QUITCLAIM DEED

THE BOARD OF TRUSTEES, WESTERN NORTH

CAROLINA CONFERENCE, UNITED METHODIST

CHURCH, INC., a North Carolina non-profit

corporation

By:______________________________________

Eric R. Lane, President and Board Chair

State of North Carolina - County of __________

I, _________________________________, a Notary Public of the aforesaid state and county do hereby

certify that ERIC R. LANE, personally appeared before me this day and who is personally known to me

or who produced satisfactory evidence of their identity in the form of a driver’s license, and who

acknowledged that they voluntarily executed the foregoing instrument for the purposes stated therein and

that they are the President and Board Chair of The Board of Trustees, Western North Carolina

Conference, United Methodist Church, Inc., a North Carolina non-profit corporation, Grantor, and

that they, as President and Board Chair, being authorized to do so, executed the foregoing on behalf of the

corporation.

Witness my hand and Notarial stamp or seal this _____ day of [_________], 2023.

My Commission Expires: _____________________________Notary Public

___________________

_____________________________

(Affix Seal) Notary’s Printed or Typed Name

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SIGNATURE AND ACKNOWLEDGMENT PAGE

FOR QUITCLAIM DEED

THE BOARD OF TRUSTEES, WESTERN NORTH

CAROLINA CONFERENCE, UNITED METHODIST

CHURCH, INC., a North Carolina non-profit

corporation

By:______________________________________

Michelle D. Chappell, Vice President

State of North Carolina - County of __________

I, _________________________________, a Notary Public of the aforesaid state and county do hereby

certify that MICHELLE D. CHAPPELL, personally appeared before me this day and who is personally

known to me or who produced satisfactory evidence of their identity in the form of a driver’s license, and

who acknowledged that they voluntarily executed the foregoing instrument for the purposes stated therein

and that they are the Vice President of The Board of Trustees, Western North Carolina Conference,

United Methodist Church, Inc., a North Carolina non-profit corporation, Grantor, and that they, as

Vice President, being authorized to do so, executed the foregoing on behalf of the corporation.

Witness my hand and Notarial stamp or seal this _____ day of [_________], 2023.

My Commission Expires: _____________________________Notary Public

___________________

_____________________________

(Affix Seal) Notary’s Printed or Typed Name

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EXHIBIT A

PROPERTY DESCRIPTION

Physical Address(es): 1139 Cason Oldfield Rd., Morven, NC

BEING all that real property set out in those deeds recorded at the following Deed Book and

Page (all recorded in Office of the Register of Deeds for Anson County, North Carolina):

• Deed Book 47, Page 71

• Deed Book 46, Page 271

Subject to any and all conveyances by Grantee, and easements, restrictions, and rights of way of

record.

This Quitclaim Deed is given pursuant to that Disaffiliation Agreement Pursuant to ¶ 2553

between The Western North Carolina Annual Conference of The United Methodist Church and

The Board of Trustees, Western North Carolina Conference, United Methodist Church, Inc.

(collectively, the “Conference”) and Sandy Plains United Methodist Church of Anson County

(the “Local Church”) dated [________], 2023 (the “Disaffiliation Agreement”) and approved by

affirmative vote of the 2023 session of The Western North Carolina Conference of The United

Methodist Church on [________], 2023, pursuant to ¶ 2553 of The Book of Discipline of The

United Methodist Church (2016 Edition)(the “Discipline”).

Grantor, by execution of this deed, specifically releases and terminates any use restriction or trust

interest as set out in Paragraph 2501 of The Book of Discipline of The United Methodist Church

(2016 Ed., as amended) and as may be set out in any prior deeds recorded in the Registry which

requires the property to be held, kept, and maintained, in trust, as a place of divine worship of

The United Methodist Church, the Annual Conference, and members of The United Methodist

Church.

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EXHIBIT D

FIRPTA

[Form]

FIRPTA AFFIDAVIT

NON-FOREIGN STATUS

Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property

interest must withhold tax if the transferor is a foreign person. For U.S. tax purposes (including section

1445), the owner of a disregarded entity (which has legal title to a U.S. real property interest under local

law) will be the transferor of the property and not the disregarded entity. To inform the transferee that

withholding of tax is not required upon the disposition of a U.S. real property interest by The Board of

Trustees, Western North Carolina Conference, United Methodist Church, Inc., a North Carolina

non-profit corporation, as trustee for The Western North Carolina Conference of The United

Methodist Church (collectively, the “Transferor”) the undersigned hereby certifies the following on

behalf of Seller:

Transferor is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as

those terms are defined in the Internal Revenue Code and Income Tax Regulations);

Transferor is not a disregarded entity as defined in §1.1445-2(b)(2)(iii);

Transferor’s U.S. employer identification number is: 85-2944315; and

Transferor’s office address is Post Office Box 2757, Huntersville, NC 28070.

The transferee hereunder is: [__________________]

Transferor understands that this certification may be disclosed to the Internal Revenue Service by

transferee and that any false statement contained herein could be punished by fine, imprisonment or both.

The real property involved is set out on that Exhibit A attached hereto.

Under penalties of perjury I declare that I have examined this certification and to the best of my

knowledge and belief it is true, correct and complete, and I further declare that I have authority to sign

this document on behalf of Transferor.

Dated: [___________], 2023

The Board of Trustees, Western North Carolina Conference,

United Methodist Church, Inc.,

a North Carolina non-profit corporation

By: ___________________________

Name: Eric R. Lane

Its: President

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NOTICE TO TRANSFEREE (BUYER): You are required by law to retain this Certificate until the end

of the fifth tax year following the tax year in which the transfer takes place and make the Certificate

available to the Internal Revenue Service if requested to do so during that period.

Exhibit A

Property Description

Physical Address(es): 1139 Cason Oldfield Rd., Morven, NC

BEING all that real property set out in those deeds recorded at the following Deed Book and

Page (all recorded in Office of the Register of Deeds for Anson County, North Carolina):

• Deed Book 47, Page 71

• Deed Book 46, Page 271

Subject to any and all conveyances by Grantee, and easements, restrictions, and rights of way of

record.

Execution Version

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SCHEDULE 3.2

Other Liabilities

• Contracts, agreements, and rights of burial to burial plots or columbarium spaces paid for by third

parties but unused (if any), and all liabilities associated therewith

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SCHEDULE 3.4

Financial Statements

Execution Version

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Execution Version

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SCHEDULE 4.4

Entities & Subsidiaries

Entity

State of Incorporation/Organization

Sec. of State ID No.

Sandy Plains United Methodist

Church of Anson County

North Carolina

1057313

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SCHEDULE 4.7

Leases & Land

Interests in Land

County

Deed Book/Page

Acreage

Notes

Anson

47/71

1.0

Cemetery Use

Restriction

46/271

1.38

Real Estate Leases

None

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SCHEDULE 4.8

Personal Property

None.