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HomeMy WebLinkAboutAgenda - 12-20-94 - Contract CRAFT# 3 for Discussion Purposes Only /z/'y/py INSTALLMENT PURCHASE CONTRACT THIS INSTALLMENT PURCHASE CONTRACT, dated as of the _th day of January, 1995 (this "Contract") , between NationsBank of North Carolina, N.A. (the "Lender" and the "Escrow Depository") and the COUNTY OF ORANGE, NORTH CAROLINA, a political subdivision and body politic under the laws of the State of North Carolina (the "County" ) . WITNESSETH: WHEREAS, the County is a political subdivision and body politic under and by virtue of the Constitution and laws of the State of North Carolina; and WHEREAS, the County has the power, pursuant to Section 160A-20 of the General Statutes of North Carolina, to enter into contracts to finance the acquisition of real property, or the construction of improvements thereon; and WHEREAS, the Lender desires to advance certain funds in an amount up to $9 , 600, 000 . 00 (the "Financing Proceeds") , to enable the County to finance the construction of an elementary school in Carrboro, North Carolina (the "Improvements" ) and the County desires to obtain said advance from the Lender pursuant to the terms and conditions hereinafter set forth; and WHEREAS, the County and The Chapel Hill-Carrboro City Board of Education, a body corporate which has general control and supervision of all matters pertaining to the public schools in the Chapel Hill-Carrboro City Schools, its respective school administrative unit (the "Board of Education") have agreed to cooperate in a plan for the acquisition, construction, equipping and financing of the Property (as hereinafter defined) and have entered into an Agreement Concerning the Acquisition, Construction and Equipping of Improvements for the Chapel Hill-Carrboro City Schools, dated as of January _, 1995 (the "Agreement") , and have also entered into a Lease, dated as of January 1995 (the "Lease") , of the Property by the County to the Board of Education; and WHEREAS, the obligation of the County to make Installment Payments (as hereinafter defined) shall constitute a limited obligation payable solely from currently budgeted appropriations of the County and shall not constitute a pledge of the faith and credit of the County within the meaning of any constitutional debt limitation; and WHEREAS, no deficiency judgment may be rendered against the County in any action for breach of a contractual obligation under this Contract, and the taxing power of the County is not and may not be pledged in any way directly or indirectly or contingently to secure any moneys due hereunder; and WHEREAS, the obligation of the County to make the Installment Payments pursuant to this Contract shall be secured by the Deed of Trust (as hereinafter defined) ; and WHEREAS, the Lender and the County each have duly authorized the execution and delivery of this Contract and the Deed of Trust; NOW, THEREFORE, for and in consideration of the premises and of the covenants hereinafter contained, and other valuable consideration, the parties hereto agree as follows : SECTION 1. DEFINITIONS For purposes of this Contract, in addition to any other terms defined herein, wherever used the following terms shall have the definitions set forth below: 1. 1 "Tax Certificate" means the Tax Certificate, in substantially the form of Exhibit A attached hereto and incorporated herein by reference, delivered by the County at the time of execution of this Contract . 1 .2 "Deed of Trust" means the Deed of Trust and Security Agreement, of even date herewith, from the County to a trustee for the benefit of the Lender, encumbering the Property as security for the County' s obligations to Lender for the repayment of the Financing Proceeds advanced by Lender pursuant to this Contract . 1.3 "Installment Payments" means those payments made by the County to the Lender as described in Section 3 . 1 of this Contract. 1.4 "Maturity Date" means July 15, 2009 . 1.5 "Permitted Encumbrances" means any lien or encumbrance appearing as an exception to coverage on the policy of title insurance covering the Site (as hereinafter defined) which is issued contemporaneously herewith, any lien for taxes not yet due, and any lien otherwise permitted by the Lender to exist from time to time. 1. 6 "Plans and Specifications" refers to the plans and specifications for the Improvements prepared by the County' s or the Board of Education' s architect and/or engineer. 1. 7 "Property" means the Site (as described on Exhibit B) , the Improvements and any and all repairs thereto and replacements thereof, and all rights, appurtences, easements, privileges, remainders and reversions appertaining thereto. It is expressly provided, however, that mobile or modular classrooms located on the Site at any time shall not be a part of the Property and shall not be subject to the lien of the Deed of Trust . 2 SECTION 2 . ADVANCE OF FINANCING PROCEEDS 2 . 1 Advances by Lender. Subject to the terms and conditions of this Contract, Lender hereby agrees to advance to the County an aggregate amount of up to NINE MILLION, SIX HUNDRED THOUSAND AND NO/100 DOLLARS ($9 , 600, 000 . 00) , representing the above-referenced Financing Proceeds . The Financing Proceeds shall be used solely for the purpose of constructing the Improvements . Interest shall accrue on the total amount of the advanced Financing Proceeds outstanding from time to time at a fixed rate of 5 .710, based upon a year having 365 days (or 366 days, as the case may be) , for the actual number of days in any interest calculation period, and shall be paid in accordance with the provisions of Section 3 below. 2 .2 Security Instrument. All advances made by Lender to or for the benefit of the County under this Contract will be secured by the Deed of Trust, which shall constitute a first priority lien on the Property and a first priority security interest in any and all fixtures, if any, used in connection with the operation of the Property. SECTION 3 . INSTALLMENT PAYMENTS 3 .1 Amounts and Times of Installment Payments. The County shall repay the Financing Proceeds in equal semi-annual installments of principal and interest (herein the "Installment Payments" ) in an amount sufficient to fully amortize the repayment of same over a period of fifteen years, in the amount of $480, 650 . 00 each, with the first such Installment Payment being due and payable on July 15, 1995 . If not sooner paid, all remaining principal and interest shall be due and payable by the County on the Maturity Date. Each installment shall be deemed to be an Installment Payment and such Installment Payments shall be sufficient in the aggregate to repay the Financing Proceeds together with interest thereon. 3 .2 Place of Payments . All payments required to be made to the Lender hereunder shall be made at the Lender' s principal office or as may be otherwise directed by the Lender or its assignee. 3 .3 Late Charges . Should the County fail to pay any Installment Payment or any other sum required to be paid to the Lender within fifteen (15) days after the due date thereof, the County shall pay a late charge equal to four percent (4%) of the delinquent Installment Payment. 3 .4 Abatement of Installment Payments . There will be no abatement or reduction of the Installment Payments by the County for any reason, including, but not limited to, any defense, 3 recoupment, setoff, counterclaim, or any claim (real or imaginary) arising out of or related to any defects, damages, malfunctions, breakdowns or infirmities of or to the Property. The County assumes and shall bear the entire risk of loss and damage to the Property from any cause whatsoever, it being the intention of the parties that the Installment Payments shall be made in all events unless the obligation to make such Installment Payments is terminated as otherwise provided herein. 3 .5 Prepayment of Installment Payments . If the County has performed all of the terms and conditions of this Contract, it shall have the option to prepay the principal component of the remaining Installment Payments, in full or in part, in such order of the due dates thereof as the County shall determine, at any time, at a prepayment price equal to 100 percent (100%) of the principal amount thereof, plus interest accrued thereon to the date of prepayment, upon thirty (30) days' prior written notice to the Lender. 3 . 6 Installment Payment Adjustment. The County acknowledges that the Lender is providing the Financing Proceeds at the rate set forth herein based on the premise that interest received under this Contract is exempt from taxation to the Lender and based on other state and federal laws in effect as of the date hereof. If, as a result of any action or failure to take any action by the County, the income received by the Lender shall be deemed to be taxable income to the Lender by any governmental agency (herein an "Event of Taxability") , then Lender shall have the option to either (i) declare the principal component of the remaining Installment Payments immediately due and payable or (ii) adjust the amount of the remaining Installment Payments to provide for the payment of interest by the County at a taxable rate which will preserve the Lender' s after-tax economic yield. In such event, the County agrees, to the extent permitted by law, to indemnify and hold harmless the Lender from any cost and expense incurred as a result of the loss of the tax-exempt status of the obligation created by this Contract, specifically including, without limitation, all administrative expenses arising in connection with the amendment of the Lender' s tax returns . The Lender' s after-tax yield prior to and after an Event of Taxability shall be as reasonably calculated by the firm of certified public accountants regularly employed by the Lender, and such calculations, in the absence of manifest error, shall be binding on the parties hereto. SECTION 4 . PROCEDURE FOR ADVANCES 4 .1 Disbursement of Proceeds. The Lender will disburse the Financing Proceeds in proportion to the progress of construction of the Improvements, as such costs are incurred. Disbursements shall be made by wiring or depositing the same to an account of the County or the Board of Education (if so directed by the County) , or 4 at the Lender' s election, by the issuance of one or more checks payable to the County or the Board of Education, the general contractor, any subcontractors or materialmen, or any one or more of them. As a condition to its obligation to make each disbursement of Financing Proceeds, the Lender may require satisfactory evidence of the payment of all debts owing contractors, engineers, architects and materialmen for labor done or professional design or surveying services, or material furnished pursuant to any contract with respect to the Improvements. 4 .2 Use of Financing Proceeds. The Financing Proceeds are to be used only for the direct and indirect costs of the Improvements, which shall be constructed pursuant to a construction contract submitted to the Lender. The County shall furnish copies of any changes in the said construction contract or the plans and specifications for the Improvements to the Lender. 4 . 3 Requests for Disbursements . Each request for disburse- ments for work performed under the construction contract shall be accompanied by (a) a written request by the County or the Board of Education stating the amount of the request and (b) a certificate by the County' s or the Board of Education' s architect or engineer as to the costs incurred, with copies of invoices to be paid by the County or the Board of Education with the proceeds of such disbursement. 4 .4 Construction of Improvements. The County will cause the Improvements to be constructed in a timely manner in accordance with the terms of the construction contract, the Plans and Specifications, and all building and zoning codes in effect with respect to the Improvements . The County will keep, or will cause to be kept, the Property free from all liens for services, labor and materials until the Loan has been paid in full . The County will also cause the general contractor to comply, to the fullest extent possible with respect to the construction contract, with the notice provisions of N.C.G.S. § 44A-23 . The Lender shall have the rights, during construction, to inspect the Property and the Improvements. SECTION 5 . RESPONSIBILITIES OF THE COUNTY 5 . 1 Care and Use. The County shall cause the Improvements to be constructed in accordance with the Plans and Specifications and thereafter use the Property in compliance with all applicable laws and regulations, and, at its sole cost and expense, service, repair and maintain the Property so as to keep the Property in good condition, repair, appearance and working order for the purposes intended, ordinary wear and tear excepted, and shall replace any part of the Property as may from time to time become worn out, lost, stolen, destroyed or damaged or unfit for use; provided, however, that nothing contained in this section shall require the 5 making of any repair or replacement to or of, or the continued maintenance of, any particular part of the Property which would not be required in the exercise of sound business judgment. Any and all additions to or replacements of the Improvements and all parts thereof shall constitute accessions to the Property and shall be subject to all the terms and conditions of this Contract and included in the term "Property" as used in this Contract . 5 .2 Inspection. The Lender shall have the right upon reasonable prior notice to the County or the Board of Education, as may be applicable, to enter into and upon and inspect the Property during normal business hours . 5 .3 Utilities . The County shall pay or cause to be paid all charges for gas, water, steam, electricity, light, heat or power, telephone or other utility service furnished to or used on or in connection with the Property. There shall be no abatement of the Installment Payments on account of interruption of any such services. 5 . 4 Taxes . The County agrees to pay or cause to be paid when due any and all taxes relating to the Property and the County' s obligations hereunder, including but not limited to, all license or registration fees, gross receipts tax, sales and use tax, if applicable, license fees, documentary stamp taxes, rental taxes, assessments, charges, ad valorem taxes, excise taxes, and all other taxes, licenses and charges imposed on the ownership, possession or use of the Property by any governmental body or agency, together with any interest and penalties, other than taxes on or measured by the net income of the Lender. 5 . 5 Alterations . Without the prior written consent of the Lender, which consent shall not be unreasonably withheld, the County shall not make or permit to be made any alterations, modifications or attachments to the Property which cannot be removed without materially damaging the economic value of the Property. 5 . 6 Insurance. The County shall maintain or cause to be maintained, at its sole cost and expense, insurance on the Property, covering such risks and in such amounts and with such deductibles as are described in Exhibit C attached hereto and incorporated herein by reference, with such insurance companies as shall be satisfactory to the Lender. All insurance for loss or damage shall name the Lender as an additional insured and shall provide that losses, if any, shall be payable to the County, the Board of Education and the Lender, as their interests may appear. Evidence or certificates of all required insurance shall be provided to the Lender. The County shall pay or cause to be paid the premiums therefor and deliver to the Lender the policies of insurance or duplicates thereof or other evidence satisfactory to 6 the Lender of such insurance coverage. Each insurer shall also agree by endorsement upon the policy or policies issued by it that (a) it will give thirty (30) days prior written notice to the Lender of cancellation, non-renewal or material modification of such policy, and (b) the coverage of the Lender shall not be terminated, reduced or affected in any manner, regardless of any breach or violation by the County or the Board of Education, as the case may be, of any warranties, declarations or conditions of such insurance policy or policies, other than a failure to pay premiums when due following the giving of notice as provided above. The proceeds of such insurance, at the option of Lender, shall be applied (a) toward the replacement, restoration or repair of the Property, or (b) toward the prepayment of the obligations of the County hereunder, including, but not limited to, the Installment Payments . The County or the Board of Education, as the case may be, shall make claim for, receive payment of, and execute all documents, checks or drafts received in payment of loss or damage under any such insurance policy. 5 . 7 Performance by the Lender of the County' s Responsibilities . Any performance required of the County or the Board of Education, as the case may be, or any payments required to be made by the County or the Board of Education may, if not timely performed or paid, be performed or paid by the Lender, and, in that event, the Lender shall be immediately reimbursed by the County or the Board of Education, as the case may be, for these payments and for any costs and expenses, legal or otherwise, associated with the payments or other performance by the Lender, with interest thereon at a rate equal to eight percent (80) per annum. 5 . 8 Financial Statements. The County agrees that it will furnish the Lender at such reasonable times as the Lender shall request current financial statements (including, without limitation, the County' s annual budget as submitted or approved) , and permit the Lender or its agents and representatives to inspect the County' s books and records and make extracts therefrom. The County represents and warrants to the Lender that all financial statements which have been delivered to the Lender fairly and accurately reflect the County' s financial condition and there has been no material adverse change in the County' s financial condition as reflected in the financial statements since the date thereof . 5 .9 Reports . The County agrees that it will furnish to the Lender monthly, and at such other times as may be reasonably requested by Lender, a report from the County' s architect with respect to the status of the construction of the Improvements (addressing the percentage of completion and compliance with the Plans and Specifications) , in form and content reasonably satisfactory to Lender. 7 SECTION 6 . PROPERTY 6 . 1 Title. The County has good and valid title to the Property, free and clear of any liens, claims or security interests of any party whatsoever, other than the Deed of Trust, the Lease and the Permitted Encumbrances. 6 . 2 Availability of Utilities . All utility services necessary for the construction of the Improvements and the operation thereof for their intended purpose are presently available, or will be available when needed, through presently existing public or unencumbered private easements or rights-of-way (which would inure to the benefit of Lender or other purchaser of the Property in the event of the foreclosure of or sale under the power contained in the Deed of Trust) at the boundaries of the Property, including but not limited to, water supply, storm and sanitary sewer, electric and telephone facilities . 6 . 3 Security Agreement. To secure all obligations of the County hereunder, the County hereby grants to the Lender a security interest in any and all of the County' s right, title and interest in and to any fixtures incorporated, or to be incorporated, or used in connection with the operation of, the Property, and all substitutions and replacements thereto, and any and all proceeds thereof, including without limitation, the proceeds of insurance thereon. The County agrees to execute and deliver all documents and instruments necessary or appropriate to perfect or maintain the security interest granted hereby and to maintain the Lender' s security interest in the collateral described in this Section 6 . 3 . The County or the Board of Education may install on or locate in the Property any personal property and, to the extent that such personal property does not constitute a fixture, the Lender shall have no security interest therein. 6 .4 Assignment of Leases . To further secure all obligations of the County hereunder, the County hereby grants, conveys, transfers and assigns to the Lender, and grants to the Lender a security interest in, all of the County' s right, title, and interest in and to the Lease and any other lease or leases now existing or hereafter made for all or any part of the Property, together with all rents, income, profits, revenues, proceeds, and royalties due and becoming due therefrom. The County agrees to execute and deliver all documents, instruments and financing statements necessary or appropriate to perfect or maintain the security interest granted hereby. 6 .5 Liens. The County shall not directly or indirectly create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, security interest, encumbrance or claim on or with respect to the Property, or any interest therein, except for the lien and security interest of the Lender therein under this 8 Contract, the Deed of Trust, the Lease, the Permitted Encumbrances, or in accordance with Section 11. 1 of this Contract . The County shall promptly, at its own expense, take such action as may be necessary to duly discharge any such mortgage, pledge, lien, security interest, charge, encumbrance or claim if the same shall arise at any time. The County shall reimburse the Lender for any expense incurred by it in order to discharge or remove any such mortgage, pledge, lien, security interest, charge, encumbrance or claim. SECTION 7 . WARRANTIES AND REPRESENTATIONS OF THE COUNTY. The County warrants and represents to the Lender (all such representations and warranties being continuing) that : (a) The County is a duly organized and validly existing political subdivision or agency of the State of North Carolina within the meaning of Section 103 of the Internal Revenue Code of 1986, as amended (the "Code" ) and the related regulations and rulings and under the laws of the State of North Carolina, and has all powers necessary to enter into the transactions contemplated by this Contract and to carry out its obligations hereunder; (b) This Contract and all other documents relating hereto and the performance of the County' s obligations hereunder and thereunder have been duly and validly authorized, executed and delivered by the County and approved under all laws, regulations and procedures applicable to the County, including, but not limited to, compliance with public bidding requirements, and, assuming due authorization, execution and delivery thereof by the other parties thereto, constitute valid, legal and binding obligations of the County, enforceable in accordance with their respective terms, subject to bankruptcy, insolvency and other laws affecting the enforcement of creditors' rights generally and such principles of equity as a court having jurisdiction may impose; (c) No approval or consent is required from any governmental authority with respect to the entering into or performance by the County of this Contract, other than the approval of the Local Government Commission, and the transactions contemplated hereby or if any such approval is required it has been duly obtained; (d) There is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body pending or, to the best of the County' s knowledge, threatened, against or affecting the County challenging the validity or enforceability of this Contract 9 and all other documents relating hereto and the performance of the County' s obligations hereunder and thereunder, and compliance with the provisions hereof, under the circumstances contemplated hereby, does not and will not in any material respect conflict with, constitute on the part of the County a breach of or default under, or result in the creation of a lien on any property of the County (except as contemplated herein) , pursuant to any agreement or other instrument to which the County is a party, or any existing law, regulation, court order or consent decree to which the County is subject; (e) The obligation created by this Contract is not a "private activity bond" as defined in Section 141 of the Code; (f) The resolutions relating to the performance by the County of this Contract and the transactions contemplated hereby, substantially in the form of Exhibit D attached hereto, have been duly adopted, are in full force and effect, and have not been in any respect modified, revoked or rescinded. SECTION 8 . TAX COVENANTS AND REPRESENTATIONS The County covenants that it will not take any action, or fail to take any action, if any such action or failure to take action would adversely affect the exclusion from gross income of the interest portion of the obligation created by this Contract under Section 103 of the Code. The County will not directly or indirectly use or permit the use of any Financing Proceeds or any funds of the County, or take or omit to take any action that would cause the obligation created by this Contract to be an "arbitrage bond" within the meaning of Section 148 (a) of the Code. To that end, the County has executed the Tax Certificate and will comply with all requirements of Section 148 of the Code to the extent applicable to the obligation created by this Contract. Without limiting the generality of the foregoing, the County agrees that there shall be paid from time to time all amounts required to be rebated to the United States of America pursuant to Section 148 (f) of the Code and any temporary, proposed or final Treasury Regulations as may be applicable to the obligation created by this Contract from time to time. This covenant shall survive the payment in full of all obligations under this Contract . Notwithstanding any provision of this Section, if the County shall provide to the Lender an opinion of nationally recognized bond counsel to the effect that any action required under this Section is no longer required, or to the effect that some further action is required, to maintain the exclusion from gross income of the interest on the obligation created by this Contract pursuant to 10 Section 103 of the Code, the Lender may rely conclusively on such opinion in complying with the provisions hereof . SECTION 9 . INDEMNIFICATION To the extent permitted by law, the County hereby agrees to indemnify, protect and save the Lender and the North Carolina Local Government Commission, their officers, directors, members and employees, harmless from all liability, obligations, losses, claims, damages, actions, suits, proceedings, costs and expenses, including attorneys' fees, arising out of, connected with, or resulting directly or indirectly from the Property or the transactions contemplated by this Contract, other than any claim arising out of the acts or omissions constituting negligence or wilful misconduct of the Lender or its officers or agents . The indemnification arising under this Section shall continue in full force and effect notwithstanding the payment in full of all obligations under this Contract. SECTION 10 . DEFAULT AND REMEDIES 10 . 1 Definition of Event of Default. The County shall be deemed to be in default hereunder upon the happening of any of the following events of default (each, an "Event of Default" ) : (a) The County shall fail to make any Installment Payment or pay any sum hereunder when due; or (b) The County shall fail to perform or observe any other term, condition or covenant of this Contract on its part to be observed or performed, or shall breach any warranty by the County herein contained, other than as referred to in subsection (e) of this Section 10 .1, for a period of ten (10) days after written notice, specifying such failure or breach and requesting that it be remedied, has been given to the County by the Lender, except that if such failure or breach can be remedied but not within such ten (10) day period and if the County has taken all action reasonably possible to remedy such failure or breach within such ten (10) day period, such failure or breach shall not become an Event of Default for so long as the County shall diligently proceed to remedy the same in accordance with and subject to any reasonable directions or reasonable limitations of time established by the Lender; or (c) Proceedings under any bankruptcy, insolvency, reorganization or similar litigation shall be instituted by or against the County, or a receiver, custodian or similar officer shall be appointed for the County or any of its property, and such proceedings or appointments shall not be vacated or fully stayed after the institution or occurrence thereof; or 11 (d) Any warranty, representation or statement made by the County in this Contract is found to be incorrect or misleading in any material respect on the date made; or (e) Any lien, charge or other encumbrance is filed against the Property, other than a Permitted Encumbrance or in accordance with Section 11. 1; or (f) Any insurance carrier cancels any insurance on the Property without the County's first providing replacement coverage meeting the requirements of the Lender and Section 5 . 6 hereof; or (g) The Property or any substantial, part thereof is abused, illegally used, misused, destroyed or damaged beyond repair. (h) Construction of the Improvements shall cease and not be resumed within thirty (30) business days, except to the extent that said cessation is as the result of force majeure, or shall be abandoned; or (i) Any of the materials, fixtures, machinery, equipment, articles and/or personal property used in the construction of the Improvements or the appurtances thereto, or to be used in the operation thereof, or any work performed in connection with the construction of the Improvements, shall not substantially conform with the Plans and Specifications as approved by Lender and such nonconformity shall not be cured or corrected within a period of thirty (30) days after notice thereof is received by the County from Lender, or, if such nonconformity cannot reasonably be cured within thirty (30) days, it shall not be an Event of Default if the County has commenced curing such nonconformity within said thirty (30) day period and is, in the reasonable opinion of Lender, diligently prosecuting such cure to completion. 10 .2 Remedies on Default. Upon occurrence of any Event of Default, the Lender may exercise any one or more of the following remedies as the Lender in its sole discretion shall elect: (a) Declare the entire amount of the principal portion of the Installment Payments immediately due and payable without notice or demand to the County, together with accrued interest thereon; (b) Proceed by appropriate court action to enforce performance by the County of any covenant of this Contract with which it has failed to comply (other than a failure to pay Installment Payments or any other payments hereunder) or to recover for the breach thereof; 12 (c) Institute foreclosure proceedings against the Property or exercise any other right provided to Lender under the Deed of Trust; (d) Terminate this Contract and use, operate, lease or hold the Property as the Lender in its sole discretion may decide; (e) To enter into possession of the Property and to perform or cause to be performed any and all work and labor necessary to complete the Improvements in substantial accordance with the Plans and Specifications, with such modifications thereto as Lender shall deem to be necessary or desirable. Lender is specifically authorized to advance for the account of the County and use any portion of the Financing Proceeds that has not previously been disbursed to the extent deemed necessary by Lender to complete construction of the Improvements in substantial accordance with the Plans and Specifications. All such advances shall be repaid in accordance with the requirements of this Contract for payment of Installment Payments. If the completion of the Improvements requires a larger sum than the remaining undisbursed portion of the Financing Proceeds, the Lender may disburse additional funds to the extent reasonably necessary to complete the Improvements in accordance with the Plans and Specifications . All of the funds disbursed by Lender in accordance with the terms of this subsection shall be deemed to have been disbursed to the County (if permitted under G.S . § 160A-20) and shall be evidenced by this Contract and secured by the Deed of Trust. Any additional funds disbursed by Lender beyond the amount of the Financing Proceeds shall bear interest at the rate set forth in this Contract and shall be repayable in full on the Maturity Date as an increase in the Installment Payment due on such date. (f) Notify all tenants under any leases that the Lender will thereafter collect all rents directly and not through the County. Notwithstanding any other provisions herein, it is the intent of the parties hereto to comply with North Carolina General Statutes Section 160A-20 . No deficiency judgment may be entered against the County in favor of the Lender in violation of Section 160A-20, including, without limitation, any deficiency judgment for amounts that may be owed hereunder when the sale of all or any portion of the Property is insufficient to produce enough money to pay in full all remaining obligations under this Contract. 10 .3 Further Remedies. A termination hereunder shall occur only upon notice by the Lender to the County. All remedies of the Lender are cumulative and may be exercised concurrently or 13 separately. The exercise of any one remedy shall not be deemed an election of such remedy or preclude the exercise of any other remedy. SECTION 11 . ASSIGNMENT 11. 1 Assignment By the County. The County agrees not to sell, assign, lease, sublease, pledge or otherwise encumber or suffer a lien or encumbrance upon or against any interest in this Contract or the Property (except for the lien and security interest of the Lender therein under this Contract, the Deed of Trust, the Lease, and the Permitted Encumbrances) without the Lender' s prior written consent, which shall not be unreasonably withheld. The County' s interest herein may not be assigned or transferred by operation of law. It is expressly provided, however, that the County' s interest herein may be assigned to the Board of Education, in accordance with the terms of and to the extent set forth in the Agreement; provided, that such assignment shall not release or discharge the County from any obligation under this Contract and the County shall remain primarily obligated to the Lender for performance of this Contract. The County further agrees not to make any change, amendment or modification to the Agreement, or to waive, release or discharge the Board of Education from compliance with any term or condition thereof, except with the prior written consent of the Lender. 11.2 Assignment By the Lender. The Lender may, at any time and from time to time, assign all or any part of its interest in the Property or this Contract, including without limitation, the Lender' s rights to receive the Installment Payments and any additional payments due and to become due hereunder. Any assignment made pursuant to this subsection shall be made in accordance with all applicable federal and state securities and other laws . In addition, any assignment by any party to an entity other than a bank, insurance company, investment company or similar financial institution shall be subject to the prior approval of the North Carolina Local Government Commission. The County agrees that this Contract may become part of a pool of obligations at the Lender' s or its assignee' s option. The Lender or its assignees may assign or reassign either the entire pool or any partial interest herein. Notwithstanding the foregoing, no assignment or reassignment of the Lender' s interest in the Property or this Contract shall be effective unless and until the County shall receive a duplicate original counterpart of the document by which such assignment or reassignment is made disclosing the name and address of each such assignee. The County covenants and agrees with the Lender and each subsequent assignee of the Lender to maintain for the full term of this Contract a written record of each such assignment or reassignment. 14 After the giving of notice described above to the County, the County shall thereafter make all payments in accordance with the notice to the assignee named therein and shall, if so requested, acknowledge such assignment in writing but such acknowledgement shall in no way be deemed necessary to make the assignment effective. SECTION 12 . LIMITED OBLIGATION OF THE COUNTY. NO PROVISION OF THIS CONTRACT SHALL BE CONSTRUED OR INTERPRETED AS CREATING A PLEDGE OF THE FAITH AND CREDIT OF THE COUNTY WITHIN THE MEANING OF ANY CONSTITUTIONAL DEBT LIMITATION. NO PROVISION OF THIS CONTRACT SHALL BE CONSTRUED OR INTERPRETED AS CREATING A DELEGATION OF GOVERNMENTAL POWERS NOR AS A DONATION BY OR A LENDING OF THE CREDIT OF THE COUNTY WITHIN THE MEANING OF THE CONSTITUTION OF THE STATE OF NORTH CAROLINA. THIS CONTRACT SHALL NOT DIRECTLY OR INDIRECTLY OR CONTINGENTLY OBLIGATE THE COUNTY TO MAKE ANY PAYMENTS BEYOND THOSE APPROPRIATED IN THE SOLE DISCRETION OF THE COUNTY FOR ANY FISCAL YEAR IN WHICH THIS CONTRACT SHALL BE IN EFFECT. NO DEFICIENCY JUDGMENT MAY BE RENDERED AGAINST THE COUNTY IN ANY ACTION FOR BREACH OF A CONTRACTUAL OBLIGATION UNDER THIS CONTRACT AND THE TAXING POWER OF THE COUNTY IS NOT AND MAY NOT BE PLEDGED DIRECTLY OR INDIRECTLY OR CONTINGENTLY TO SECURE ANY MONEYS DUE UNDER THIS CONTRACT. No provision of this Contract shall be construed to pledge or to create a lien on any class or source of the County' s moneys, nor shall any provision of this Contract restrict the future issuance of any of the County' s bonds or obligations payable from any class or source of the County' s moneys . To the extent of any conflict between this Section and any other provision of this Contract, this Section shall take priority. SECTION 13 . MISCELLANEOUS 13 . 1 Waiver. No covenant or condition of this Contract can be waived except by the written consent of the Lender. Any failure of the Lender to require strict performance by the County or any waiver by the Lender of any terms, covenants or agreements herein shall not be construed as a waiver of any other breach of the same or any other term, covenant or agreement herein. 13 .2 Severabilitv. In the event any portion of this Contract shall be determined to be invalid under any applicable law, such provision shall be deemed void and the remainder of this Contract shall continue in full force and effect. 13 .3 Governing Law. This Contract shall be construed, interpreted and enforced in accordance with the laws of the State of North Carolina. 15 13 .4 Notices . Any and all notices, requests, demands, and other communications given under or in connection with this Contract shall be effective only if in writing and either personally delivered or mailed by registered or certified mail, postage prepaid, return receipt requested, addressed as follows : If to the Lender, address to: NationsBank of North Carolina, N.A. Commercial Loan Department P.O. Box Chapel Hill, NC Attention: Ms . Stephanie Leo Assistant Vice President If to the County, address to: County of Orange, North Carolina P.O. Box 8181 Hillsborough, North Carolina 27278 Attention: Mr. Kenneth T. Chavious Finance Director 13 .5 Section Headings . All section headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provision of this Contract. 13 . 6 Entire Agreement. This Contract, together with the schedules hereto, constitutes the entire agreement between the parties and this Contract shall not be modified, amended, altered or changed except by written agreement signed by the parties . 13 . 7 Binding Effect . Subject to the specific provisions of this Contract, this Contract shall be binding upon and inure to the benefit of the parties and their respective successors and assigns . 13 . 8 Time. Time is of the essence of this Contract and each and all of its provisions . 13 .9 Execution in Counterparts . This Contract may be executed in any number of counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 16 IN WITNESS WHEREOF, the parties hereto have caused this Contract to be executed as of the day and year first above written. NATIONSBANK OF NORTH CAROLINA, N.A. By: Vice President COUNTY OF ORANGE, NORTH CAROLINA ATTEST: By: Chair, Board of Commissioners County Clerk [SEAL] This instrument has been pre-audited in the manner required by the Local Government Budget and Fiscal Control Act. Finance Officer Approved as to form: County Attorney 17 EXHIBIT A TAX CERTIFICATE [To be supplied] EXHIBIT B LEGAL DESCRIPTION OF THE REAL PROPERTY ON WHICH THE IMPROVEMENTS ARE TO BE LOCATED (THE "SITE" ) [To be supplied] 19 EXHIBIT C Insurance Requirements The County shall obtain such insurance or evidence of insurance as Lender may reasonably require, including, but not limited to, the following: 1. Builder' s Risk Insurance. Builder' s risk insurance with standard non-contributing mortgagee clauses and standard waiver of subrogation clauses, such insurance to be in such amounts and form and by such companies as shall be approved by Lender, certificates of which policies (together with appropriate endorsements thereto, evidence of payment of premiums thereon and written agreement by the insurer or insurers therein to give Lender thirty (30) days' prior written notice of intention to cancel or modify) shall be promptly delivered to Lender, said insurance coverage to be kept in full force and effect at all times until the insurance described in the following subparagraphs is obtained. 2 . Hazard Insurance. Fire and extended coverage insurance, and such other hazard insurance as Lender may require with standard non-contributing mortgagee clauses and standard waiver of subrogation clauses, such insurance to be in such amounts and form and by such companies as shall be approved by Lender, the certificates or originals of which policies (together with appropriate endorsements thereto, evidence of payment of premiums thereon and written agreement.. by the insurer or insurers therein to give Lender thirty (30) days' prior written notice of intention to cancel or modify) shall be promptly delivered to Lender upon completion of construction of the Improvements and before any portion of the Property is occupied by the County or any tenant of the County or any other person or entity, with such insurance to be kept in full force and effect at all times thereafter until the repayment in full of the Financing Proceeds . 3 . Public Liability and Worker' s Compensation Insurance. A certificate from an insurance company indicating that the County and the general contractor employed by the County in connection with the construction of the Improvements are covered by public liability and worker' s compensation insurance to the satisfaction of Lender. EXHIBIT D CERTIFICATE OF RESOLUTIONS [To be supplied]