Form 16-2

Groundwater Rights Sales Contract

[For Sale of Groundwater Rights in Place for On-Site Production
If Seller Owns Groundwater and Surface Estate]

This contract to buy and sell groundwater rights [include if applicable: and fixtures and personal property] is between Seller and Buyer as identified below and is effective on the date (“Effective Date”) of the last of the signatures by Seller and Buyer as parties to this contract and by [Title Company/Escrow Agent] to acknowledge receipt of the Earnest Money. Buyer must deliver the Earnest Money to [Title Company/Escrow Agent] and obtain a signature acknowledging receipt of the Earnest Money before the Earnest Money Deadline provided in paragraph A.1. for this contract to be effective. If the Earnest Money is paid by check and pay­ment on presentation is refused, Buyer is in default.

Seller: [include the names of all persons owning the groundwater; also include all owners of the surface of the property, if different from the owners of the groundwater]

Address:

Phone:

E-mail:

Type of entity:

Seller’s Attorney:

Law firm:

Address:

Phone:

E-mail:

Seller’s Broker:

Brokerage firm:

Address:

Phone:

E-mail:

Buyer:

Address:

Phone:

E-mail:

Type of entity:

Buyer’s Attorney:

Law firm:

Address:

Phone:

E-mail:

Buyer’s Broker:

Brokerage firm:

Address:

Phone:

E-mail:

[Title Company/Escrow Agent]: [identify title company or, if title insurance will not be obtained, identify person who will act as escrow agent]

Address:

Phone:

E-mail:

[Underwriter:]

Surveyor:

Address:

Phone:

E-mail:

Survey Category:

Groundwater Authority: [list any groundwater conservation districts or other groundwater authority with jurisdiction over the real property]

Seller’s Permit: [describe and provide all of seller’spermits, e.g., [permit title] Permit No. [number], issued and approved by [name of groundwater authority] on [date].]

Earnest Money: $[amount]

Real Property: The Real Property described in Exhibit A [include if applicable: together with the fixtures and personal property described in Exhibit A]. [Include if a survey is required under the contract: The metes-and-bounds description of the Real Property, as reflected by the Survey, will automatically be incorporated into this contract in Exhibit A and will supersede any prior Exhibit A when the Survey is approved by Seller and Buyer, and the acreage will be automatically adjusted to the acreage amount reflected by the Survey.]

Groundwater: All of the underground water, percolating water, artesian water, and any other water from any and all depths and reservoirs, formations, depths and horizons beneath the surface of the Real Property, excluding underflow or flow in a defined subterranean channel.

Groundwater Rights: (1) The legal title to the Groundwater [include if applicable: subject to the Reserved Groundwater] and the right to test, explore for, drill for, develop, withdraw, capture, or otherwise beneficially use the Groundwater; (2) the right to use the surface of the Real Property for access to and to explore for, develop, treat, produce, and transport the Groundwater; and (3) all permits, licenses, or other governmental authorizations relating to any of the foregoing. If a separate Easement Agreement is required by this contract, the Groundwater Rights include the easement rights.

Reserved Groundwater: Seller reserves the right to use the Groundwater in connection with its surface estate in the Real Property for the following purposes only: [state purposes for which the reserved groundwater may be used and any limit on the quantity of reserved groundwater that seller may use including any limit on the number of wells that seller may drill or maintain].

Excepted Groundwater: Seller excepts from the sale the rights to use the Groundwater in con­nection with prior grants or conveyances or grants to use the Groundwater affecting the conveyance.

Buyer’s Intended Use of Groundwater: [specify]

Purchase Price:

$[amount], which is determined on the basis of [describe basis for determining purchase price, e.g., $[amount] per acre of Real Property from which the Groundwater Rights are obtained] [include if applicable: and $[amount] for the personal property and fixtures].

To be determined after obtaining the hydrogeological information described in paragraph G.3. during the Inspection Period. [State the basis on which price is to be calculated, including any applicable provisions in paragraph G.3. below] [include if applicable: and $[amount] for the personal property and fixtures].

Cash portion:

Seller-financed portion (principal amount of note):

Interest rate:

Maturity date:

Payment schedule:

Third-party-financed portion:

Buyer’s Liquidated Damages: $[amount]

Seller’s Additional Liquidated Damages: $[amount]

Title Information: If Seller is not required to provide a Title Commitment and Title Policy, Seller will have the obligation to provide to Buyer, at Seller’s expense, the Title Informa­tion as defined in paragraph F.3. Buyer may have the Title Information reviewed and obtain a written opinion of title by an attorney selected by Buyer, at [Seller/Buyer]’s expense.

Title Documents: The Seller’s Permit and instruments affecting title to the Groundwater and the Real Property referenced in the [Title Commitment/Title Information] [, Survey,] and UCC Search are to be provided as part of Seller’s Records.

A.Deadlines and Other Dates

All deadlines in this contract expire at 5:00 p.m. local time where the Real Property is located. If a deadline falls on a Saturday, Sunday, or national holiday, the deadline will be extended to the next day that is not a Saturday, Sunday, or national holiday. A national holi­day is a holiday designated by the federal government. Time is of the essence.

A.1.Earnest Money Deadline: [date]

A.2.Delivery of Title Commitment: [[date]/[number] days after the Effective Date]

A.2.Delivery of Title Information: [[date]/[number] days after the Effective Date]

A.3.Delivery of Survey: No Survey is required.

A.3.Delivery of Survey: [[date]/[number] days after the Effective Date]

A.4.Delivery of UCC Search: [[date]/[number] days after the Effective Date]

A.5.Delivery of legible copies of the Title Documents: [[date]/[number] days after the Effective Date]

A.6.Delivery of Title Objections: [[date]/[number] days after delivery of the last of the [Title Commitment/Title Information], [Survey,] UCC Search, and legible copies of the Title Documents]

A.7.Delivery of Seller’s Records as specified in Exhibit C: [[date]/[number] days after the Effective Date]

A.8.End of Inspection Period: [[date]/[number] days after the Effective Date, or at the date specified if the Inspection Period is extended]

A.9.Closing Date: [[date]/[number] days after the End of the Inspection Period]

A.10.Closing Time: [time]

B.Closing Documents

B.1.At Closing, Seller will deliver the following items:

Groundwater Rights [General/Special] Warranty Deed [include if applicable: with Vendor’s Lien] (“Groundwater Rights Warranty Deed”)

Easement Agreement for Groundwater Rights as shown in Exhibit J

Release of Lien

Partial Release of Lien as to Groundwater Rights

Lienholder Consent and Subordination to Easement Agreement

Assignment of Seller’s Permit or transfer form promulgated or approved by rel­evant groundwater authority

Bill of Sale

IRS Nonforeign Person Affidavit

Evidence of Seller’s authority to close this transaction

Notices, statements, and certificates as specified in Exhibit D

Affidavit of Debts and Liens

Assignment and Assumption of Leases

Assignment and Assumption of Contracts

Tenant Estoppel Certificate

Releases of any leases or contracts affecting the Groundwater Rights that will be terminated at Closing

B.2.At Closing, Buyer will deliver the following items:

Balance of Purchase Price

Easement Agreement for Groundwater Rights

Evidence of Buyer’s authority to close this transaction

Deceptive Trade Practices Act waiver

Assignment and Assumption of Leases

Seller-financing documents

Promissory Note

Deed of Trust

Security Agreement

Financing Statement

Loan Documents required by third-party lender

Releases of any leases, contracts, or other legal interests affecting the Ground­water agreed to be terminated before or at Closing

The documents listed in this section B. are collectively known as the “Closing Docu­ments.” The Closing Documents for which forms exist in the current edition of the Texas Real Estate Forms Manual (State Bar of Texas) will be prepared using those forms.

C.Exhibits

The following are attached to and are a part of this contract:

Exhibit A—Description of the Real Property [include if applicable: and Fixtures and Personal Property]

Exhibit B—Seller’s Representations and Warranties

Exhibit C—Seller’s Records

Exhibit D—Notices, Statements, and Certificates

Exhibit E—Copies of Seller’s Permits issued by the Groundwater Authority

Exhibit F—List of Seller’s leases or other contracts affecting the Groundwater Rights or Real Property to be terminated before Closing

Exhibit G—List of Seller’s leases or other contracts affecting the Groundwater Rights or Real Property that will survive Closing

Exhibit H—Groundwater Rights Warranty Deed

[Include if applicable: Exhibit I—Seller Financing Addendum]

[Include if applicable: Exhibit J—Easement Agreement]

[Include if applicable: Exhibit K—Memorandum of Contract]

[Include if applicable: Exhibit L—Notice of Termination of Contract]

D.Purchase and Sale of Groundwater Rights

Seller agrees to sell and convey the Groundwater Rights to Buyer, and Buyer agrees to buy and pay Seller for the Groundwater Rights. The promises by Buyer and Seller stated in this contract are the consideration for the formation of this contract.

E.Interest on Earnest Money      

Buyer may direct [Title Company/Escrow Agent] to invest the Earnest Money in an interest-bearing account in a federally insured financial institution by giving notice to [Title Company/Escrow Agent] and satisfying [Title Company/Escrow Agent]’s requirements for investing the Earnest Money in an interest-bearing account. Any interest earned on the Ear­nest Money will become part of the Earnest Money.

F.Title [and Survey]

F.1.Review of Title.      The following statutory notice is provided to Buyer on behalf of the real estate licensees, if any, involved in this transaction: Buyer is advised that it should either have the abstract covering the Real Property examined by an attorney of Buyer’s own selection or be furnished with or obtain a policy of title insurance.

F.2.Title Commitment; Title Policy.      “Title Commitment” means a Commitment for Issuance of an Owner Policy of Title Insurance by Title Company, as agent for Under­writer, or directly by Underwriter, stating the condition of title to the Groundwater and the Real Property. The effective date stated in the Title Commitment must be after the Effective Date of this contract. “Title Policy” means an Owner Policy of Title Insurance issued by Title Company, as agent for Underwriter, or directly by Underwriter, in conformity with the last Title Commitment delivered to and approved by Buyer.

F.3.Title Information.      “Title Information” means an abstract of title prepared by a title insurance company or an abstract company licensed by the Texas State Board of Insur­ance, covering the period from the first conveyance of title to the Real Property out of the sov­ereignty to the Effective Date, and containing complete and legible copies of all the deeds, easements, liens, and other documents affecting title to the Real Property and the Groundwa­ter.

F.4.Survey.      “Survey” means an on-the-ground, staked plat of survey and metes-and-bounds description of the Real Property, prepared by Surveyor or another surveyor satisfactory to [Title Company/Escrow Agent], dated after the Effective Date, and certified to Seller, Buyer, [Title Company/Escrow Agent], and any other person specified by Buyer, to comply with the current standards and specifications as published by the Texas Society of Professional Surveyors for the Survey Category.

F.5.UCC Search.      “UCC Search” means written reports stating the instruments that are on file in the Texas secretary of state’s UCC records, the UCC records of any other appropriate state, and the UCC records in the jurisdiction in which the Seller is organized, showing as debtor Seller and all other owners of the Real Property and Groundwater [include if applicable: and fixtures and personal property] during the five years before the Effective Date of this contract.

F.6.Delivery of [Title Commitment/Title Information], [Survey,] UCC Search, and Title Documents.      Seller must deliver the [Title Commitment/Title Information] to Buyer and Buyer’s attorney by the deadline stated in paragraph A.2. above; the Survey, if required, by the deadline stated in paragraph A.3.; the UCC Search by the deadline stated in paragraph A.4.; and legible copies of the Title Documents by the deadline stated in paragraph A.5.

F.7.Title Objections.      Buyer has until the deadline stated in paragraph A.6. above (“Title Objection Deadline”) to review the Survey, [Title Commitment/Title Information], UCC Search, and legible copies of the Title Documents, notify Seller of Buyer’s objections to any of them, and request any additional information needed to evidence Seller’s title to the Real Property and the Groundwater (“Title Objections”). Buyer will be deemed to have approved all matters reflected by the Survey, [Title Commitment/Title Information], Title Documents, and UCC Search to which Buyer has made no Title Objection by the Title Objec­tion Deadline. The matters that Buyer either approves or is deemed to have approved are “Per­mitted Exceptions.” If Buyer notifies Seller of any Title Objections, Seller has five days from receipt of Buyer’s notice to notify Buyer whether Seller agrees to cure the Title Objections before Closing (“Cure Notice”). If Seller does not timely give its Cure Notice or timely gives its Cure Notice but does not agree to cure all the Title Objections before Closing, Buyer may, within five days after the deadline for the giving of Seller’s Cure Notice, notify Seller that either this contract is terminated or Buyer will proceed to close, subject to Seller’s obligations to resolve the items [listed in Schedule C of the Title Commitment/listed in the Title Informa­tion], remove all liquidated liens, remove all exceptions that arise by, through, or under Seller after the Effective Date, and cure only the Title Objections that Seller has agreed to cure in the Cure Notice. At or before Closing, Seller must resolve the items that are [listed in Schedule C of the Title Commitment/listed in the Title Information], remove all liquidated liens, remove all exceptions that arise by, through, or under Seller after the Effective Date of this contract, and cure the Title Objections that Seller has agreed to cure.

G.Inspection Period

G.1.Review of Seller’s Records.      Seller, at Seller’s expense, will deliver to Buyer copies of Seller’s Records specified in Exhibit C, or otherwise make those records available for Buyer’s review, by the deadline stated in paragraph A.7. above.

G.2.Entry onto Real Property.      Buyer may enter the Real Property before Closing to perform all investigations Buyer deems appropriate, at Buyer’s cost, including exploration for, drilling for, and testing of Groundwater, subject to the following conditions.

G.2.a.Buyer must deliver evidence to Seller that Buyer has liability insurance for its proposed inspection activities, with coverages and in amounts that are substantially the same as those maintained by Seller or with such lesser coverages and in such lesser amounts as are reasonably satisfactory to Seller.

G.2.b.Buyer may not interfere in any material manner with existing operations or occupants of the Real Property.

G.2.c.Buyer must notify Seller in advance of Buyer’s plans to conduct tests so that Seller may be present during the tests.

G.2.d.If the Real Property is physically altered because of Buyer’s inspections, Buyer must return the Real Property to its preinspection condition promptly after the alteration occurs.

G.2.e.Buyer must deliver to Seller copies of all inspection reports that Buyer prepares or receives from third-party consultants or contractors within three days after their preparation or receipt.

G.2.f.Buyer must abide by any other reasonable entry rules imposed by Seller.

G.3.Hydrogeological Testing.      Buyer has the right to perform investigations to estimate the quality, quantity, and sustainability of the Groundwater.

The parties agree that the Purchase Price is to be determined based on [specify basis for pricing the groundwater rights, such as average saturated foot of groundwater or some other calculation related to the estimated quality, quantity, or sustainability of the groundwater avail­able for production]. Buyer will perform investigations during the Inspection Period, at [Buyer’s/Seller’s/both parties’] expense, to estimate the quality, quantity, and sustainability of the Groundwater. Buyer and Seller will select a mutually acceptable independent hydrogeolo­gist (“Hydrogeologist”) to perform the evaluation of the Groundwater. If Seller and Buyer are not able to choose a hydrogeologist within twenty days after the Effective Date, each will select a hydrogeologist, and the two hydrogeologists selected will choose a third hydrogeolo­gist to perform the evaluation. The investigations will include such test drilling, logging, and data analysis on the Real Property [include if applicable: and on property within the region of the Real Property] as Hydrogeologist deems appropriate. If [Seller/Buyer] desires more test wells than Hydrogeologist determines is necessary, [Seller/Buyer] may cause additional test wells to be drilled and logged at [Seller/Buyer]’s expense. The data from Buyer’s investiga­tions, Seller’s logs, if applicable, and Seller’s Records will be submitted to Hydrogeologist. The parties agree to be bound by the determination of Hydrogeologist.

G.4.Appraisal of Groundwater.      Buyer has the right to have an appraisal performed of the Groundwater Rights, Seller’s Permits (if any), and the Real Property. The cost of the appraisal [will be paid at Closing by [Buyer/Seller]/will be shared at Closing by Buyer and Seller].

G.5.Adequacy of Seller’s Permit.      If a Seller’s Permit has been issued, Buyer will have the right to determine whether Seller’s Permit, on transfer to Buyer, will be adequate for Buyer’s intended use of the Groundwater, whether an alternative permit or permit amendment will be required, and the requirements of the Groundwater Authority for the transfer of Seller’s Permit. Seller will cooperate with Buyer at all times in obtaining any information and forms required from the Groundwater Authority. On Buyer’s request, Seller, at [Seller’s/Buyer’s] expense, will execute and transmit to the Groundwater Authority all necessary appli­cations, forms, and documentation required for the transfer of Seller’s Permit to Buyer, pro­vided that the transfer will not be effective until Closing. Seller will not take any action before or after Closing to oppose the transfer of Seller’s Permit to Buyer, the issuance of an amend­ment to Seller’s Permit, or other permitting sought by Buyer to enable Buyer to use the Groundwater for Buyer’s Intended Use of the Groundwater.

Buyer’s obligation to purchase the Groundwater Rights is contingent on the Groundwa­ter Authority approving, before the expiration of the Inspection Period, the Required Permit­ting (as defined below) contingent on Closing or, in the sole discretion of Buyer, providing sufficient assurance that the Groundwater Authority will issue the Required Permitting after Closing. Required Permitting means [issuance of a production permit authorizing [specify]/transfer of Seller’s Permit/transfer of Seller’s Permit and amendment of the Permit to autho­rize [specify]]. Buyer will initiate action to obtain the Required Permitting promptly after the Effective Date and diligently pursue obtaining the Required Permitting during the Inspection Period. [Include if applicable: If Buyer has been unable to obtain approval of the Required Per­mitting, or assurance satisfactory to Buyer of obtaining the Required Permitting after Closing, despite Buyer’s diligence, Buyer will have the right to extend the Inspection Period solely for the purpose of obtaining the Required Permitting for a period not to exceed [number] days, by giving Seller written notice of the extension before the termination of the Inspection Period. Buyer’s right to terminate this contract before the end of the extension period is limited to the failure to obtain, or to obtain satisfactory assurance of, the Required Permitting.]

G.6.Environmental Assessment.      Buyer has the right to conduct environmental assessments of the Real Property and Groundwater. Seller will provide, or will designate a person with knowledge of the use and condition of the Real Property and Groundwater to pro­vide, information requested by Buyer or Buyer’s agent or representative regarding the use and condition of the Real Property and Groundwater during the period of Seller’s ownership of the Property. Seller will cooperate with Buyer in obtaining and providing to Buyer, its agent, or representative information regarding the Real Property and Groundwater.

G.7.Buyer’s Right to Terminate.      Buyer may terminate this contract for any reason by notifying Seller before the end of the Inspection Period.

G.8.Buyer’s Indemnity and Release of Seller

G.8.a.Indemnity.      Buyer will indemnify, defend, and hold Seller harmless from any loss, attorney’s fees, expenses, or claims arising out of Buyer’s investigation, except those arising out of the acts or omissions of Seller and those for repair or remediation of existing conditions discovered by Buyer’s inspection. The obligations of Buyer under this provision will survive termination of this contract and Closing.

G.8.b.Release.      Buyer releases Seller and those persons acting on Seller’s behalf from all claims and causes of action (including claims for attorney’s fees and court and other costs) resulting from Buyer’s investigation of the Groundwater and Real Property.

H.Representations and Warranties

The parties’ representations stated in Exhibit B are true and correct as of the Effective Date and must be true and correct on the Closing Date. Seller will promptly notify Buyer if Seller becomes aware that any of the representations are not true and correct.

I.Condition of the Property until Closing; Cooperation; No Recording of Contract

I.1.Maintenance and Operation.      Until Closing, Seller will (a) maintain the Real Property [include if applicable: , the personal property and fixtures,] and the Groundwater Rights as they existed on the Effective Date [include if applicable: , except for reasonable wear and tear and casualty damage]; (b) use the Real Property and the Groundwater Rights in the same manner as they were used on the Effective Date; [and] (c) comply with all permits, con­tracts, laws, and regulations affecting the Real Property and the Groundwater Rights [include if applicable: ; and (d) not transfer or dispose of any of the personal property and fixtures, except to sell inventory, replace equipment, and use supplies in the normal course of operating the personal property and fixtures]. [Include if applicable: Until the end of the Inspection Period, Seller will not enter into, amend, or terminate any contract that affects the personal property and fixtures other than in the ordinary course of operating such property and will promptly give notice to Buyer of each new, amended, or terminated contract, including a copy of the contract, in sufficient time so that Buyer may consider the new information before the end of the Inspection Period. If Seller’s notice is given within three days before the end of the Inspection Period, the Inspection Period will be extended for three days.] Until the end of the Inspection Period, Seller will not (a) grant or convey any easement, lease, license, option, or other right affecting the Real Property or the Groundwater Rights, including the right to use the Groundwater; (b) enter into any lease or agreement that allows the surface of the Real Property to be mined or excavated; or (c) enter into any oil and gas lease [include if applicable: or surface use agreement or subsurface use agreement that does not comply with paragraph I.2. below]. After the end of the Inspection Period, Seller may not enter into, amend, or termi­nate any contract that affects the Groundwater, the Groundwater Rights, or the Real Property without first obtaining Buyer’s written consent.

I.2.Oil and Gas Leases.      Before and after Closing, Seller will not enter into any oil and gas lease [affecting the Real Property/or surface use agreement that allows (a) flooding of the Real Property, (b) injection into or disposal of saltwater or other substance onto the Real Property, or (c) use of Groundwater for any purpose other than drilling, completion, recom­pletion, reworking, remediation, and revegetation]. This provision will survive Closing and will be set forth in one or more of the Closing Documents.

I.3.Condemnation.      Seller will notify Buyer promptly after Seller receives notice that any part of the Real Property or Groundwater Rights has been or is threatened to be con­demned or otherwise taken by a governmental or quasi-governmental authority. Buyer may terminate this contract if the condemnation would materially affect Buyer’s intended use of the Groundwater Rights by giving notice to Seller within fifteen days after receipt of Seller’s notice to Buyer (or before Closing if Seller’s notice is received less than fifteen days before Closing). The condemnation will be deemed to materially affect Buyer’s intended use of the Groundwater Rights if [specify reason, e.g., the condemnation would result in Buyer’s not being able to produce more than [number] acre-feet of Groundwater]. If Buyer does not termi­nate this contract, (a) Buyer and Seller will each have the right to appear and defend their respective interests in the Groundwater Rights in the condemnation proceedings; (b) any award in condemnation will be assigned to Buyer to the extent necessary to compensate Buyer for the loss of or reduction in the Groundwater Rights; and (c) if the taking occurs before Closing, the description of the Real Property or Groundwater Rights will be revised to delete the portion taken.

I.4.Claims; Hearings.      Seller will notify Buyer promptly after Seller receives notice of any claim or administrative hearing that is threatened, filed, or initiated before Clos­ing that affects the Groundwater Rights.

I.5.Cooperation.      Seller will cooperate with Buyer (a) before and after Closing to transfer the applications, permits, and licenses held by Seller and used in the production of the Groundwater and to obtain any consents necessary for Buyer to withdraw or produce the Groundwater; (b) before closing, with any reasonable evaluation, inspection, or study of the Real Property or the Groundwater; and (c) in all other matters related to, or arising out of or in connection with, this contract. These provisions will survive Closing.

I.6.Casualty or Other Loss or Damage.      Until Closing has been completed and funded, Seller will bear the risk of any damage, casualty, or other loss to the Real Property or Groundwater Rights [include if applicable: and the personal property and fixtures]. If any damage, casualty, or other loss results in a material adverse change in the quality, quantity, or usability of the Groundwater, Buyer will have the right to terminate this contract. [Include if applicable: If personal property or fixtures are damaged by casualty, the portion of the pur­chase price attributable to the personal property and fixtures will be equitably reduced.]

I.7.Memorandum of Contract; Termination of Contract; No Recording of Contract.       At the request of Buyer, Seller will execute a memorandum of this contract, in a mutually acceptable form, to be recorded in the real property records of [county] County, Texas. At the time the memorandum is signed, Buyer and Seller will also sign a termination of contract in recordable form and deposit it into escrow with [Title Company/Escrow Agent]. The parties authorize [Title Company/Escrow Agent] to record the termination of contract as provided in section J. below. Neither Buyer nor Seller may file this contract in the real prop­erty records of any county. If either party records this contract, the other party may terminate this contract and record a notice of termination.

J.Termination

J.1.Disposition of Earnest Money after Termination

J.1.a.To Buyer.      If Buyer terminates this contract in accordance with any of Buyer’s rights to terminate, then unless Seller delivers notice of Seller’s objection to [Title Company/Escrow Agent]’s release of the Earnest Money to Buyer within five days after Buyer delivers Buyer’s termination notice to Seller and [Title Company/Escrow Agent], [Title Company/Escrow Agent] is authorized, without any further authorization from Seller, to deliver the Ear­nest Money to Buyer, less $100, which will be paid to Seller as consideration for the right granted by Seller to Buyer to terminate this contract. [Title Company/Escrow Agent] will record the termination of contract and return the Earnest Money to Buyer on receipt of Seller’s authorization.

J.1.b.To Seller.      If Seller terminates this contract in accordance with any of Seller’s rights to terminate, then unless Buyer delivers notice of Buyer’s objection to [Title Company/Escrow Agent]’s release of the Earnest Money to Seller within five days after Seller delivers Seller’s termination notice to Buyer and [Title Company/Escrow Agent], [Title Company/Escrow Agent] is authorized, without any further authorization from Buyer, to pay and deliver the Earnest Money to Seller and to record the termination of contract. [Title Company/Escrow Agent] will record the termination of contract and pay the Earnest Money to Seller on receipt of Buyer’s authorization.

J.2.Duties after Termination.      If this contract is terminated, Buyer will promptly return to Seller all of Seller’s Records in Buyer’s possession or control. After return of the documents and copies, neither party will have further duties or obligations to the other under this contract, except for those obligations that cannot be or were not performed before termi­nation of this contract or that expressly survive termination of this contract.

K.Closing

K.1.Closing.      This transaction will close at [Title Company/Escrow Agent]’s offices at the Closing Date and Closing Time. At Closing, the following will occur:

K.1.a.Closing Documents.      The parties will execute and deliver the Closing Docu­ments.

K.1.b.Payment of Purchase Price.      Buyer will deliver the Purchase Price and other amounts that Buyer is obligated to pay under this contract to [Title Company/Escrow Agent] in funds acceptable to [Title Company/Escrow Agent]. The Earnest Money will be applied to the Purchase Price.

K.1.c.Disbursement of Funds; Recording; Copies.      [Title Company/Escrow Agent] will be instructed to disburse the Purchase Price and other funds in accordance with this con­tract, record the deed and the other Closing Documents directed to be recorded, and distribute documents and copies in accordance with the parties’ written instructions.

K.1.d.Delivery of Originals.      Seller will deliver to Buyer the originals of Seller’s Records.

K.1.e.Possession.      Seller will deliver possession of the Groundwater Rights to Buyer, subject to the Permitted Exceptions existing at Closing and any liens and security interests created at Closing to secure financing for the Purchase Price.

K.2.Transaction Costs

K.2.a.Seller’s Costs.      Seller will pay [the basic charge for the Title Policy/the cost of providing the Title Information as specified in this contract, if not previously paid by Seller]; one-half of the escrow fee charged by [Title Company/Escrow Agent]; the costs to prepare the Groundwater Rights Warranty Deed and the Easement Agreement and addenda, if required by this contract; the costs to obtain, deliver, and record any releases of liens, lender’s consent, and subordination to Buyer’s easement rights required in connection with the sale; the costs to cure and record the documents to cure Title Objections agreed or required to be cured by Seller and to resolve matters shown in Schedule C of the Title Commitment; [include if appli­cable: Title Company’s inspection fee to delete from the Title Policy the customary exception for rights of parties in possession;] the costs to obtain the [Survey,] UCC Search[,] and certif­icates or reports of ad valorem taxes; the costs to deliver copies of the instruments described in paragraph A.5. above and Seller’s Records; any other costs expressly required to be paid by Seller in this contract; and Seller’s attorney’s fees and expenses.

K.2.b.Buyer’s Costs.      Buyer will pay one-half of the escrow fee charged by [Title Company/Escrow Agent]; the costs to obtain, deliver, and record all documents other than those to be obtained or recorded at Seller’s expense; [include if applicable: the additional pre­mium for the “survey/area and boundary deletion” in the Title Policy, if the deletion is requested by Buyer, as well as the cost of any other endorsements or modifications of the Title Policy requested by Buyer;] [include if applicable: the costs of work required by Buyer to have the Survey reflect matters other than those required under this contract except changes required for curative purposes;] the costs to obtain financing of the Purchase Price, including the incremental premium costs of the loan title policy and endorsements and deletions required by Buyer’s lender; any other costs expressly required to be paid by Buyer in this con­tract; and Buyer’s attorney’s fees and expenses.

K.2.c.Taxes, Fees, and Assessments.      At Closing, Seller will pay any ad valorem taxes and assessments, including penalties and interest (collectively, “Taxes”), in connection with the Real Property and the Groundwater that are owing for prior calendar years. Seller will pay all Taxes in connection with the Real Property and Groundwater for the current cal­endar year, if payable at the time of Closing. After Closing, Seller will continue to pay all Taxes due in connection with the Real Property (including the Reserved Groundwater) before delinquency, except that if ad valorem taxes are assessed separately against Buyer’s Ground­water Rights after Closing, Buyer will be responsible for paying such taxes and assessments if Buyer is obligated to pay such taxes under applicable law. After Closing, each party will have the right to protest taxes that the party is responsible for paying, provided that the protesting party does not allow the taxes to become delinquent. If the Real Property has been, or is at any time after Closing, the subject of special valuation and reduced tax assessments pursuant to the provisions of chapter 23, subchapter D, of the Texas Tax Code or under any other provi­sion of law, and additional taxes, penalties, or interest are assessed pursuant to Code section 23.55 or under such other provision of law, Seller will be responsible for the payment of any such taxes, penalties, and interest, including rollback taxes. If Seller fails to pay Taxes for which Seller is responsible when due, Seller authorizes Buyer to pay Taxes and on such pay­ment to (i) be subrogated to all liens held by the taxing authority against the Real Property as security for the Taxes paid, (ii) have the right to set off amounts paid against amounts owed to Seller, if any, under the terms of the Closing Documents, and (iii) seek reimbursement of amounts paid in accordance with applicable law. Buyer will have the right, but not the obliga­tion, to pay the Taxes. If Buyer pays the Taxes, at Buyer’s request Seller will promptly take the action required by section 32.06 of the Texas Tax Code to authorize a transfer of the tax lien to Buyer.

After Closing, Buyer will be responsible for paying all fees, assessments, taxes, and charges of any kind imposed by the Groundwater Authority, or any successor authority, in connection with Buyer’s use, development, pumping, or transportation of the Groundwater. Buyer will timely pay any taxes assessed by any taxing authority against any equipment or personal property of Buyer located on the Real Property and any fees or costs charged by any Groundwater Conservation District or other regulatory body for Buyer’s development, pump­ing, transportation, or use of the Groundwater.

These provisions will survive Closing and will be set out in one or more of the Closing Documents.

K.2.d.Proration of Expenses and Income.      Except as provided in paragraph K.2.c. above, all items of expense or income arising in connection with the use or operation of the Groundwater will be prorated as of the Closing Date. Seller will pay all bills and expenses that could give rise to a lien against the Real Property or Groundwater at or before Closing.

K.2.e.Brokers’ Commissions.      Buyer and Seller each indemnify and agree to defend and hold the other party harmless from any loss, attorney’s fees, and court and other costs arising out of a claim by any person or entity claiming by, through, or under the indemnitor for a broker’s or finder’s fee or commission because of this transaction or this contract, whether the claimant is disclosed to the indemnitee or not. At Closing, each party will provide the other party with a release of broker’s or appraiser’s liens from all brokers or appraisers for which each party was responsible.

K.3.Issuance of Title Policy.      Seller will cause [Title Company/Escrow Agent] to issue the Title Policy, if required, to Buyer as soon as practicable after Closing.

L.Default and Remedies

L.1.Seller’s Default; Remedies before Closing.      If Seller fails to perform any of its obligations under this contract, or if any of Seller’s representations are not true and correct as of the Effective Date or on the Closing Date or any of its warranties have been breached (“Seller’s Default”), Buyer may elect either of the following as its sole and exclusive remedy before Closing:

L.1.a.Termination; Liquidated Damages.      Buyer may terminate this contract by giv­ing notice to Seller on or before the Closing Date and Closing Time and have the Earnest Money, less the $100 as described above, returned to Buyer. If Seller’s Default occurs after Buyer has incurred costs to investigate the Real Property or Groundwater after the Effective Date and Buyer terminates this contract in accordance with the previous sentence, Seller will also pay to Buyer as liquidated damages the lesser of Buyer’s actual out-of-pocket expenses incurred to investigate the Real Property and Groundwater after the Effective Date (“Buyer’s Expenses”) or the amount of Buyer’s Liquidated Damages, within ten days after Seller’s receipt of an invoice from Buyer stating the amount of Buyer’s Expenses accompanied by rea­sonable evidence of Buyer’s Expenses.

L.1.b.Specific Performance.      Unless Seller’s Default relates to the untruth or incor­rectness of Seller’s representations for reasons not reasonably within Seller’s control, Buyer may enforce specific performance of Seller’s obligations under this contract, but any such action must be initiated, if at all, within ninety days after the breach or alleged breach of this contract. If title to the Groundwater Rights is awarded to Buyer, the conveyance will be sub­ject to the matters stated in the [Title Commitment/Title Information].

L.2.Seller’s Default; Remedies after Closing.      If Seller’s representations are not true and correct at Closing for reasons reasonably within Seller’s control and Buyer does not become aware of the untruth or incorrectness until after Closing, Buyer will have all the rights and remedies available at law or in equity. If Seller fails to perform any of its obligations under this contract that survive Closing, Buyer will have all rights and remedies available at law or in equity unless otherwise provided by the Closing Documents.

L.3.Buyer’s Default; Remedies before Closing.      If Buyer fails to perform any of its obligations under this contract (“Buyer’s Default”), Seller may terminate this contract by giv­ing notice to Buyer on or before Closing and have the Earnest Money paid to Seller. If Buyer’s Default occurs after Seller has incurred costs to perform its obligations under this contract and Seller terminates this contract in accordance with the previous sentence, Buyer will also reimburse Seller for the lesser of Seller’s actual out-of-pocket expenses incurred after the Effective Date to perform its obligations under this contract (“Seller’s Expenses”) or the amount of Seller’s Additional Liquidated Damages, within ten days after Buyer’s receipt of an invoice from Seller stating the amount of Seller’s Expenses accompanied by reasonable evidence of Seller’s Expenses. The foregoing constitute Seller’s sole and exclusive remedies for a default by Buyer before Closing.

L.4.Buyer’s Default; Remedies after Closing.      If Buyer fails to perform any of its obligations under this contract that survive Closing, Seller will have all rights and remedies available at law or in equity unless otherwise provided by the Closing Documents.

L.5.Liquidated Damages.      The parties agree that just compensation for the harm that would be caused by a default by either party cannot be accurately estimated or would be very difficult to accurately estimate and that the Earnest Money and the amounts provided above are reasonable forecasts of just compensation to the nondefaulting party for the harm that would be caused by a default.

L.6.Attorney’s Fees.      If either party retains an attorney to enforce this contract, the party prevailing in litigation is entitled to recover reasonable attorney’s fees and court and other costs.

M.Miscellaneous Provisions

M.1.Notices.      Any notice required by or permitted under this contract must be in writing. Any notice required by this contract will be deemed to be given (whether received or not) the earlier of receipt or three business days after being deposited with the United States Postal Service, postage prepaid, certified mail, return receipt requested, and addressed to the intended recipient at the address shown in this contract. Notice may also be given by regular mail, personal delivery, courier delivery, or e-mail and will be effective when received, pro­vided that (a) any notice received on a Saturday, Sunday, or national holiday will be deemed to have been received on the next day that is not a Saturday, Sunday, or national holiday; and (b) any notice received after 5:00 p.m. local time at the place of delivery on a day that is not a Saturday, Sunday, or national holiday will be deemed to have been received on the next day that is not a Saturday, Sunday, or national holiday. Any address for notice may be changed by not less than ten days’ prior written notice given as provided herein. Copies of each notice must be given by one of these methods to the attorney of the party to whom notice is given.

M.2.Entire Agreement.      This contract, its exhibits, and any Closing Documents delivered at Closing are the entire agreement of the parties concerning the sale and use of the Groundwater Rights and the use of the Reserved Groundwater and Real Property. There are no representations, warranties, agreements, or promises between the parties pertaining to the Groundwater Rights, Reserved Groundwater, Real Property, sale and use of the Groundwater Rights, or use of the Reserved Groundwater and Real Property, and neither party is relying on any statements or representations of any agent of the other party, that are not in those docu­ments.

M.3.Amendment.      This contract may be amended only by an instrument in writing signed by the parties.

M.4.Prohibition of Assignment.      Buyer may not assign this contract or any of Buyer’s rights under it without Seller’s prior written consent, and any attempted assignment is void.

M.4.Assignment.      Buyer may assign this contract and Buyer’s rights under it only to an entity in which Buyer possesses, directly or indirectly, the power to direct or cause the direction of its management and policies, whether through the ownership of voting securities or otherwise, and any other assignment is void.

M.5.Survival.      The provisions of this contract that expressly survive termination or Closing and other obligations of this contract that cannot be performed before termination of this contract or before Closing survive termination of this contract or Closing, and the legal doctrine of merger does not apply to these matters. If there is any conflict between the Closing Documents and this contract, the Closing Documents control.

M.6.Choice of Law; Venue.      This contract is to be construed under the laws of the state of Texas, without regard to choice-of-law rules of any jurisdiction. Venue is in the county in which all, or the majority, of the Real Property is located.

M.7.Waiver of Default.      It is not a waiver of default if the nondefaulting party fails to declare a default immediately or delays taking any action with respect to the default.

M.8.No Third-Party Beneficiaries.      There are no third-party beneficiaries of this contract.

M.9.Severability.      If a provision of this contract is unenforceable for any reason, to the extent the unenforceability does not destroy the basis of the bargain among the parties, the unenforceability does not affect any other provision of this contract, and this contract is to be construed as if the unenforceable provision is not a part of the contract.

M.10.Ambiguities Not to Be Construed against Party Who Drafted Contract.      The rule of construction that ambiguities in a document will be construed against the party who drafted it will not be applied in interpreting this contract.

M.11.No Special Relationship.      The parties’ relationship is an ordinary commercial relationship, and the parties do not intend to create the relationship of principal and agent, partners, joint venturers, or any other special relationship.

M.12.Counterparts.      If this contract is executed in multiple counterparts, all counter­parts taken together constitute this contract. Copies of signatures to this contract are effective as original signatures.

M.13.Confidentiality.      The parties will keep confidential this contract, this transac­tion, and all information learned in the course of this transaction, except to the extent disclo­sure is required by law or court order, to enable third parties to advise or assist Buyer to investigate the Groundwater Rights and the Real Property, or by either party to close this transaction. Remedies for violations of this provision are limited to injunctions, and no dam­ages or rescission may be sought or recovered as a result of any such violations.

M.14.Binding Effect.      This contract binds, benefits, and may be enforced by the par­ties and their respective heirs, successors, and permitted assigns.

M.15.Waiver of Consumer Rights.      Buyer waives its rights under the Texas Deceptive Trade Practices–Consumer Protection Act, section 17.41 et seq. of the Texas Business and Commerce Code, a law that gives consumers special rights and protections. After consultation with an attorney of its own selection, Buyer voluntarily consents to this waiver.

   
[Name and title of seller]
Date:

   
[Name and title of buyer]
Date:

[Title Company/Escrow Agent] acknowledges receipt of Earnest Money in the amount of $____________ and a copy of this contract executed by both Buyer and Seller.

[Name of title company/escrow agent]

By:      
     Name:
     Title:
     Date:

Exhibit A

Description of the Real Property [and Fixtures and Personal Property]

The following described fixtures and personal property: [describe fixtures and prop­erty].

Exhibit B

Seller’s Representations and Warranties

A.Seller’s Representations to Buyer

Seller represents and warrants to Buyer that the following are true and correct as of the Effective Date and will be true and correct as of the Closing Date:

A.1.Authority.      Seller is a [specify type of organization] duly organized, validly existing, and in good standing under the laws of the state of [Texas/[state]] with authority to perform its obligations under this contract. This contract is binding on Seller. This contract is, and all documents required by this contract to be executed and delivered to Buyer at Closing will be, duly authorized, executed, and delivered by Seller.

A.2.Litigation.      Seller has not received written notice and has no actual knowledge of any litigation pending or threatened against Seller that might affect the Groundwater Rights, the Real Property, [include if applicable: the fixtures and personal property,] or Seller’s ability to perform its obligations under this contract [include if applicable: , except [specify]].

A.3.Violation of Laws.      Seller has not received written notice of violation of any law, ordinance, regulation, or requirements affecting the Real Property, the Groundwater, [include if applicable: the fixtures and personal property,] or Seller’s use of the Real Property [,/or] Groundwater [include if applicable: , or fixtures and personal property] [include if appli­cable: , except [specify]].

A.4.Licenses, Permits, and Approvals.      Seller has not received written notice that any license, permit, or approval necessary to use the Real Property [,/or] the Groundwater [include if applicable: , or the fixtures and personal property] in the manner in which it is cur­rently used has expired or will not be renewed on expiration or that any material condition will be imposed in order to use such permit or license or obtain its renewal [include if applica­ble: , except [specify]].

A.5.Condemnation; Zoning; Land Use; Hazardous Materials.      Seller has not received written notice of any condemnation, zoning, or land-use proceedings affecting the Real Property [,/or] the Groundwater [include if applicable: , or the fixtures and personal prop­erty] or any written inquiries or notices by any governmental authority or third party with respect to condemnation or the presence of hazardous materials affecting the Real Property
[,/or] the Groundwater [include if applicable: , or the fixtures and personal property] [include if applicable: , except [specify]].

A.6.No Other Obligation to Sell or Restriction against Sale.      Seller has not obli­gated itself to sell all or any portion of the Real Property [,/or] the Groundwater [include if applicable: , or the fixtures and personal property] to any person other than Buyer. Seller’s performance of this contract will not cause a breach of any other agreement or obligation to which Seller is a party or to which it is bound [include if applicable: , except [specify]].

A.7.No Liens.      On the Closing Date, the Groundwater Rights [include if applicable: and the fixtures and personal property] to be conveyed under the contract will be free and clear of all liens and encumbrances of any nature not arising by, through, or under Buyer except the Permitted Exceptions or liens to which Buyer has given its consent in writing. If an Easement Agreement is executed at Closing, any lien on the surface estate permitted by Buyer will be subordinated to Buyer’s easement rights.

A.8.No Rights of Possession or Use.      There are no persons presently in possession of the Real Property [,/or] the Groundwater [include if applicable: , or the fixtures and personal property] or having any rights to possession of the Real Property [,/or] the Groundwater [include if applicable: , or the fixtures and personal property] or rights, either present or future, to explore for, use, produce, or withdraw the Groundwater other than Seller [include if applica­ble: , except [specify]].

A.9.Good Title.      Seller has good and indefeasible fee simple title to the Real Prop­erty and the Groundwater [include if applicable: , and to the fixtures and personal property,] free and clear of all mortgages, liens, licenses, encumbrances, leases, tenancies, security inter­ests, covenants, conditions, restrictions, rights-of-way, easements, judgments, and other mat­ters affecting title [include if applicable: , except [specify]].

A.10.No Bills or Claims.      There will be no unpaid bills or claims in connection with any repair or work performed or material furnished to the Real Property [include if applicable: and the fixtures and personal property] or otherwise relating to the Groundwater for the bene­fit of Seller as of the Closing Date, and all bills attributable to or affecting the Groundwater or the Real Property [include if applicable: and the fixtures and personal property] will be paid by Seller in full before Closing.

A.11.No Adverse Matters.      To the best of Seller’s knowledge, there is no (a) change contemplated in any applicable laws, ordinances, or restrictions, including the rules of the Groundwater Authority; (b) judicial or administrative action threatened or pending against the Real Property, the Groundwater, [include if applicable: the fixtures and personal property,] or Seller; (c) action by adjacent landowners pending or threatened against the Real Property, the Groundwater, [include if applicable: the fixtures and personal property,] or Seller; or (d) natu­ral or artificial condition on the Real Property [,/or] the Groundwater [include if applicable: , or relating to the fixtures and personal property] that would have a material adverse effect on the Real Property [,/or] the Groundwater [include if applicable: , or the fixtures and personal property].

A.12.Compliance with Laws.      Seller has at all times complied with and operated in compliance with all applicable federal, state, and local laws, regulations, and ordinances regarding the Real Property [,/and] the Groundwater [include if applicable: , and the fixtures and personal property,] including rules of the Groundwater Authority. Seller will promptly notify Buyer of any noncompliance notice received by Seller.

A.13.No Environmental Contamination.      Seller has not caused any environmental contamination of the Real Property or the Groundwater and has no knowledge of the existence of any environmental contamination of the Real Property or the Groundwater.

A.14.No Hazardous Substances.      No Hazardous Substances are located on the Real Property or in the Groundwater or have been released into the environment or deposited, dis­charged, placed, or disposed of at, on, under, or near the Real Property or the Groundwater or transported to or from the Real Property [include if applicable: , except for aboveground fuel storage tanks and other substances used by Seller in its routine operation of the Real Property, all of which are used and stored on the Real Property in compliance with all applicable laws, rules, and regulations]. To Seller’s knowledge, no portion of the Real Property is being used or has been used at any previous time for the generation, storage, handling, or disposal of any Hazardous Substances at, on, under, or in the Real Property or Groundwater, or any portion thereof, nor is there any actual or threatened investigation, inquiry, proceeding, litigation, or claim of any kind by any person or governmental authority relating to such matters. “Hazard­ous Substances” means, but is not limited to, any substance that is or contains (a) any “hazard­ous substance” as now defined in section 101(14) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), as amended (42 U.S.C. § 9601 et seq.), or regulations promulgated under CERCLA; (b) any “hazardous waste” as now defined in the Resource Conservation and Recovery Act (RCRA) (42 U.S.C. § 6901 et seq.) or regulations promulgated under RCRA; (c) any substance regulated by the Toxic Sub­stances Control Act (15 U.S.C. § 2601 et seq.); (d) gasoline, diesel fuel, or other petroleum hydrocarbons; (e) asbestos and asbestos-containing materials in any form, whether friable or nonfriable; (f) polychlorinated biphenyls; (g) radon gas; and (h) any additional substances or materials (whether solid, liquid, or gas) that are classified, defined, or listed as pollutants, haz­ardous wastes, hazardous substances, hazardous materials, extremely hazardous wastes, regu­lated substances, toxic substances, or words of similar meaning or regulatory effect under the foregoing statutes or any other present federal, state, or local laws, statutes, ordinances, rules, regulations, and the like or the common law or any other applicable laws relating to the Real Property. “Hazardous Substances” includes, without limitation, any substance the presence of which on the Real Property (a) requires reporting, investigation, or remediation under the stat­utes cited above or (b) causes or threatens to cause a nuisance on any portion of the Real Prop­erty or adjacent property or poses or threatens to pose a hazard to the environment or the health or safety of persons on any portion of the Real Property or adjacent property.

A.15.No Underground Storage Tanks.      To the best of Seller’s knowledge and belief, no underground storage tanks are located on the Real Property or were previously located on the Real Property and subsequently removed and filled [include if applicable: , except [specify]].

A.16.Oil, Gas, and Minerals.      To the best of Seller’s knowledge, Seller owns all the oil, gas, and other mineral rights beneath the surface of the Real Property [include if applica­ble: , except [specify]].

A.17.No Other Representations or Warranties.      Except as stated above [include if applicable: or in the notices, statements, and certificates set forth in Exhibit D] or in the Clos­ing Documents, Seller makes no representations or warranties with respect to the Real Prop­erty [,/or] the Groundwater Rights [include if applicable: , or the fixtures and personal property].

B.“As Is, Where Is”

This contract is an arm’s-length agreement between the parties. The Pur­chase Price was bargained on the basis of an “as is, where is” transaction and reflects the agreement of the parties that there are no representations or express or implied warranties, except those in this contract and the Closing Documents.

Seller disclaims all warranties and representations regarding the quan­tity, quality, or sustainability of Groundwater that can be produced from the Real Property, or the availability now or in the future of permitting necessary for Buyer to use the Groundwater  for any purpose. Seller further disclaims all warranties and representations with respect to the fitness of the Groundwater Rights and Groundwater for any particular use or purpose.

[Include if applicable: Buyer acknowledges that the local groundwater dis­trict’s rules and regulations or permitting decisions may limit the volume of Groundwater produced from the Real Property and the purpose or place of its use, as well as the location of any well, its depth, or rate of production.]

Buyer is not relying on any representations, disclosures, or express or implied warranties other than those expressly contained in this contract and the Closing Documents. Buyer is not relying on any information regarding the Groundwater or the Real Property provided by any person, other than Buyer’s own inspection and the representations and warranties contained in this con­tract and the Closing Documents.

The provisions of this section B. regarding the Real Property [,/and] the Groundwater Rights [include if applicable: , and the fixtures and personal property] [will/will not] be included in the deed [include if applicable: and bill of sale] with appropriate modification of terms as the context requires.

C.Environmental Matters

After Closing, Buyer releases Seller from liability for environmental problems affecting the property, including liability (1) under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), the Resource Conservation and Recovery Act (RCRA), the Texas Solid Waste Dis­posal Act, or the Texas Water Code; or (2) arising as the result of theories of products liability and strict liability, or under new laws or changes to existing laws enacted after the Effective Date that would otherwise impose on sellers in this type of transaction new liabilities for environmental problems affecting the property. [Include if applicable: This release applies even when the environ­mental problems affecting the property result from Seller’s own negli­gence or the negligence of Seller’s representative.]

The provisions of this section C. regarding the Real Property and Groundwater will be included in the Groundwater Rights Warranty Deed [include if applicable: and bill of sale] with appropriate modification of terms as the context requires.

D.Buyer’s Representations to Seller

Buyer represents to Seller that the following are true and correct as of the Effective Date and will be true and correct on the Closing Date:

D.1.Authority.      Buyer is a [specify type of organization] duly organized, validly existing, and in good standing under the laws of the state of [Texas/[state]] with authority to perform its obligations under this contract. This contract is binding on Buyer. This contract is, and all documents required by this contract to be executed and delivered to Seller at Closing will be, duly authorized, executed, and delivered by Buyer.

Exhibit C

Seller’s Records

To the extent that Seller has possession or control of the following items pertaining to the Real Property or Groundwater [include if applicable: and the fixtures and personal prop­erty], Seller will deliver or make the items or complete, legible, and accurate copies of them available to Buyer by the deadline stated in paragraph A.7.:

Records and Reports

governmental licenses, certificates, permits, and approvals, specifically including Seller’s Permit

all environmental reports and other information regarding the environmental condition of the Real Property or Groundwater

current tax certificate showing taxes assessed and owed against the Real Property and any tax exemption, special use, or other valuation or exemption applicable to the Real Property

records of regulatory proceedings or violations regarding the Real Property or Ground­water

any survey of all or any portion of the Real Property

abstracts of title relating to the Real Property or Groundwater

other: [specify]

Groundwater

all documents related to the use or condition of Groundwater, including:

water well logs

drilling logs

hydrogeological information and reports

information on the location of existing water wells

information on plugged wells

soil reports

production records

other: [specify]

Leases, Licenses, Agreements, and Encumbrances

all leases, licenses, agreements, and encumbrances (including all amendments and exhibits) affecting title to or use of the Real Property [,/or] Groundwater [include if applicable: , or the fixtures and personal property] that have not been recorded in the real property records of the county or counties in which the Real Property is located

Exhibit D

Notices, Statements, and Certificates

The notices, statements, and certificates (arranged by their application to particular transactions) that are listed below are [include as applicable: included in the sales contract [and]/attached for delivery to Buyer], and Buyer acknowledges receipt of the notices, state­ments, and certificates by executing this contract:

A.Consumer Notices

Notice of Cancellation.      Notice concerning the purchaser’s three-day right of rescis­sion under a contract to purchase real property if (1) the seller or the seller’s agent solicits the sale at a place other than the seller’s place of business, (2) the purchaser submits the purchase contract to the seller or the seller’s agent at a place other than the seller’s place of business, and (3) the consideration payable under the purchase contract exceeds $100; unless either
(1) the purchaser is represented by a licensed attorney, (2) the transaction is negotiated by a licensed real estate broker, or (3) the transaction is negotiated at a place other than the pur­chaser’s residence by the person who owns the property, as described in chapter 601 of the Texas Business and Commerce Code.

B.Residential Transaction Notices

B.1.Seller’s Disclosure of Property Condition.      Seller’s disclosure of the condition of residential property, described in section 5.008 of the Texas Property Code.

B.2.Notice of Membership in Property Owners’ Association.      Notice concerning the sale of single-family residential property that is subject to membership in a property own­ers’ association, described in section 5.012 of the Texas Property Code.

B.3.Seller’s Disclosure of Location of Conditions under Surface of Unimproved Real Property.      Seller’s disclosure of the location of pipelines under the surface of unim­proved property to be used for residential purposes, described in section 5.013 of the Texas Property Code. A seller of unimproved property to be used for residential purposes shall pro­vide the purchaser written notice disclosing the location of any transportation pipeline to the best of the seller’s belief and knowledge as of the date the notice is completed and signed by the seller. If the information required to be disclosed is not known by the seller, the seller shall indicate that fact in the notice. A seller is not required to give this notice if (a) the seller is obligated under the terms of the contract to furnish a title insurance commitment to the buyer before closing and (b) the buyer is entitled to terminate the contract if the buyer’s objections to title as permitted by the contract are not cured by the seller before closing.

B.4.Notice of Obligation to Pay Public Improvement District Assessment.      Seller’s disclosure that a single-family residential property is located within a public improvement dis­trict, described in section 5.014 of the Texas Property Code.

B.5.Residential Contracts for Deed.      Notice regarding the sale of property used or to be used as the purchaser’s residence if the contract does not provide for delivery of a deed from the seller to the purchaser within 180 days after the final execution of the contract.

B.6.Notice Regarding Insulation to Buyer of New Home.      Notice concerning insu­lation to be installed in a new home, described in section 460.16 of title 16 of the Code of Fed­eral Regulations.

B.7.Disclosure of Information on Lead-Based Paint and/or Lead-Based Paint Hazards.      Lead-based paint warning statement, described in section 745.100 et seq. of title 40 of the Code of Federal Regulations.

B.8.Asbestos Disclosure Notice.      Notice concerning asbestos, described in sections 1910.1001 and 1926.1101 of title 29 of the Code of Federal Regulations.

B.9.Notice Regarding Sale Subject to a Recorded Lien.      Notice to the purchaser and each lienholder required under Texas Property Code section 5.016 that property being sold will be conveyed subject to a lien.

C.Condominium Transaction Notices

C.1.Acknowledgment of Receipt of Condominium Documents.      Condominium dec­laration, bylaws, and association rules, described in section 82.156 of the Texas Property Code.

C.2.Condominium Resale Certificate.      Resale certificate from the condominium owners’ association or waiver of resale certificate, described in section 82.157 of the Texas Property Code.

D.All Real Property Transaction Notices

D.1.Storage Tanks Disclosure Provider.      Notice concerning underground storage tanks, described in section 334.9 of title 30 of the Texas Administrative Code.

D.2.Notice to Purchaser Regarding Restrictive Covenants.      Notice of deed restric­tions, described in section 212.155 of the Texas Local Government Code.

D.3.Notice to Purchaser Regarding Coastal Area Property.      Notice regarding real property located adjacent to tidally influenced, submerged lands of Texas, described in sec­tion 33.135 of the Texas Natural Resources Code.

D.4.Notice to Purchaser of Property Seaward of Gulf Intracoastal Waterway.      Notice concerning public easements to the public beach, described in section 61.025 of the Texas Natural Resources Code.

D.5.Notice Regarding Possible Liability for Additional Taxes.      Notice of additional tax liability for vacant land that has been subject to a special tax appraisal method, described in section 5.010 of the Texas Property Code.

D.6.Notice Regarding Possible Annexation.      Notice concerning the sale of prop­erty located outside the limits of a municipality that may now or later be included in the extra­territorial jurisdiction of a municipality and may now or later be subject to annexation by the municipality, described in section 5.011 of the Texas Property Code.

D.7.Notice for Unimproved Property in a Certificated Service Area of a Utility Ser­vice Provider.      Notice for property in a certificated service area of a utility service provider, described in section 13.257 of the Texas Water Code.

D.8.Utility District Notice.      Notice concerning the bonded indebtedness of, or rates to be charged by, a utility or other special district, described in section 49.452 of the Texas Water Code, with the form of notice to be used being dependent on whether the property (a) is located in whole or in part within the extraterritorial jurisdiction of one or more home-rule municipalities but is not located within the corporate boundaries of a municipality, (b) is located in whole or in part within the corporate boundaries of a municipality, or (c) is not located in whole or in part within the corporate boundaries of a municipality or the extraterri­torial jurisdiction of one or more home-rule municipalities.

D.9.Notice to Purchaser of Property Located in Certain Annexed Water Districts. Notice required by section 54.016(h)(4)(A) of the Texas Water Code when property being sold is in a water or sanitary sewer district that entered a contract with a city with a population of 1.18 million or less under which the city is permitted to set rates in the district after annex­ation that are different from rates charged other residents of the city.

D.10.Notice to Purchaser that Property Is Located within the Area of the Alignment of a Transportation Project.      Notice required under Texas Local Government Code section 232.0033 that all or part of the subdivision in which the property being sold is located is within the area of the alignment of a transportation project as shown in the final environmen­tal decision document that is applicable to a future transportation corridor identified in a con­tract between the Texas Department of Transportation and a county under Texas Transportation Code section 201.619.

D.11.Certificates of Mold Remediation.      Notice pursuant to section 1958.154 of the Texas Occupations Code, titled “Certificate of Mold Remediation; Duty of Property Owner,” requiring a property owner who sells property that has been issued a certificate of mold reme­diation pursuant to this section to deliver copies to the purchaser of each certificate of mold remediation issued for the property within the preceding five years.

D.12.Notice of Water Level Fluctuations.      Notice to purchasers of residential or commercial property adjoining an impoundment of water, including a reservoir or lake, con­structed and maintained under Texas Water Code chapter 11, that has storage capacity of at least 5,000 acre-feet at the impoundment’s normal level, provided pursuant to Texas Property Code section 5.019.

Exhibit E

Seller’s Permits

Exhibit F

Seller’s Leases and Contracts to Be Terminated

Exhibit G

Seller’s Leases and Contracts to Survive Closing

Exhibit H

Groundwater Rights Warranty Deed

Exhibit I

Seller Financing Addendum

A.Promissory Note.      The promissory note (“Note”) will be payable by Buyer (“Maker”) to the order of Seller (“Payee”) at the place designated by Payee. The Note may be prepaid in whole or in part at any time without penalty, premium, or restriction of any kind. Any prepay­ments are to be applied to the payment of the installments of principal last maturing, and inter­est will immediately cease on the prepaid principal. The lien securing payment of the Note will be inferior to any lien securing any superior note described in the contract. The Note will be payable as follows:

In one payment due [number] days after the date of the Note with interest payable [at maturity/monthly/quarterly/annually].

In [number] installments of $[amount] each [including interest/plus interest] beginning [number] days after the date of the Note and continuing at [monthly/quarterly/annual] inter­vals thereafter until [date], when the entire balance of the Note will be due and payable.

Interest only in [number] installments for the first [number] year[s] and thereafter in [number] installments of $[amount] each [including interest/plus interest] beginning [number] days after the date of the Note and continuing at [monthly/quarterly/annual] intervals thereaf­ter until [date], when the entire balance of the Note will be due and payable.

Other: [specify].

B.Deed of Trust and Security Agreement.      The deed of trust and security agreement (“Deed of Trust”) securing the Note will provide for the following:

B.1.Assumption without Consent.      The Property may be sold, transferred, or con­veyed without the consent of Payee, provided any subsequent buyer or transferee assumes in writing for the benefit of Payee the obligation to pay the Note and to perform the covenants and agreements in the Deed of Trust in accordance with the terms of those instruments. No such assumption will release Maker from any liabilities or obligations arising under the Note or Deed of Trust. Neither the creation of a subordinate lien nor a sale thereunder will be con­strued as a sale or conveyance of the Property.

B.1.Assumption with Consent.      The Property may be sold, transferred, or conveyed provided that (a) any subsequent buyer assumes in writing for the benefit of Payee the obliga­tion to pay the Note and to perform the covenants and agreements in the Deed of Trust in accordance with the terms of those instruments and (b) Maker or the subsequent buyer obtains prior written consent to such a sale from Payee. Consent will be based on the subsequent buyer’s credit history, with no change in interest rate or terms, and may not be unreasonably withheld, conditioned, or delayed. No such assumption will release Maker from any liabilities or obligations arising under the Note or Deed of Trust. If all or any part of the Property is sold, conveyed, leased for a period longer than three years, leased with an option to purchase, other­wise sold (including by contract for deed), or otherwise transferred or conveyed without prior written consent of Payee, Payee may, at Payee’s sole option, declare the outstanding principal balance of the Note plus accrued interest immediately due and payable. Any deed under threat or order of condemnation, any conveyance solely between makers, and the passage of title by reason of death of a maker or by operation of law will not be construed as a sale or convey­ance of the Property. [Neither the creation of a subordinate lien nor a sale thereunder will be construed as a sale or conveyance of the Property./The creation of a subordinate lien without the consent of Payee will be construed as a sale or conveyance of the Property, but any subse­quent sale under a subordinate lien to which Payee has consented will not be construed as a sale or conveyance of the Property.]

B.1.Prohibition against Assumption.      If all or any part of the Property is sold, transferred, or conveyed without the prior written consent of Payee, Payee may, at Payee’s sole option, declare the outstanding principal balance of the Note plus accrued interest imme­diately due and payable. Payee has no obligation to consent to any such sale or conveyance of the Property, and Payee is entitled to condition any consent on a change in the interest rate that will thereafter apply to the Note and any other change in the terms of the Note or Deed of Trust that Payee in Payee’s sole discretion deems appropriate. A lease for a period longer than three years, a lease with an option to purchase, or a contract for deed will be deemed to be a sale, transfer, or conveyance of the Property for purposes of this provision. Any deed under threat or order of condemnation, any conveyance solely between makers, and the passage of title by reason of death of a maker or by operation of law will not be construed as a sale or conveyance of the Property. The creation of a subordinate lien without the consent of Payee will be construed as a sale or conveyance of the Property, but any subsequent sale under a sub­ordinate lien to which Payee has consented will not be construed as a sale or conveyance of the Property.

B.2.Without Escrow.      Maker will furnish to Payee annually, before the taxes become delinquent, copies of tax receipts showing that all taxes on the Property have been paid. Maker will furnish to Payee annually evidence of current paid-up insurance naming Payee as an insured.

B.2.With Escrow.      Maker will, in addition to the principal and interest installments, deposit with Payee a pro rata part of the estimated annual ad valorem taxes on the Property and a pro rata part of the estimated annual insurance premiums for the improvements on the Property. These tax and insurance deposits are only estimates and may be insufficient to pay total taxes and insurance premiums. Maker must pay any deficiency within thirty days after notice from Payee. Maker’s failure to pay the deficiency will constitute a default under the Deed of Trust. If any superior lienholder on the Property is collecting escrow payments for taxes and insurance, this paragraph will be inoperative as long as payments are being made to the superior lienholder.

B.3.Cross-Default.      Any act or occurrence that would constitute a default under the terms of any lien superior to the lien securing the Note will constitute a default under the Deed of Trust securing the Note.

C.Recourse Provisions.      The Note and Deed of Trust are subject to the following provi­sions:

Full Recourse.      Maker will have full recourse liability for repayment of the principal and interest of the Note and the performance of all covenants and agreements of Maker in the Deed of Trust.

No Recourse.      Maker will not have any recourse liability for repayment of the princi­pal and interest of the Note or the performance of any covenants and agreements of Maker in the Deed of Trust. The sole remedy of Payee or other holder of the Note in the event of a default by Maker under the Note or Deed of Trust will be to foreclose the liens and security interests granted in the Deed of Trust, and Payee or other holder of the Note will not be enti­tled to any personal judgment against Maker.

Partial Recourse.      Except as set forth below, Maker will not have any recourse liabil­ity for repayment of the principal and interest of the Note or the performance of any covenants and agreements of Maker in the Deed of Trust. Except as set forth below, the sole remedy of Payee or other holder of the Note in the event of a default by Maker under the Note or Deed of Trust will be to foreclose the liens and security interests granted in the Deed of Trust, and Payee or other holder of the Note will not be entitled to any personal judgment against Maker. Maker will have full recourse liability for any loss or damage actually suffered or incurred by Payee or other holder of the Note by reason of—

1.taxes, assessments, and charges for labor, materials, or other amounts that if unpaid may create an encumbrance against the Property that accrue before foreclosure;

2.unpaid premiums for insurance required hereunder that accrue before foreclosure;

3.damage to the Property to the extent such damage would be otherwise covered by insurance required hereunder that was not maintained;

4.all rents, issues, profits, and income derived from the Property after a default occurs and not expended for debt service or operating expenses of the Property before foreclo­sure;

5.tenant security deposits for leases of the Property not forfeited by or refunded to the tenants;

6.any condemnation or insurance proceeds not paid or applied as required in the Deed of Trust;

7.damage to and depreciation of the Property beyond normal wear and tear caused by the negligence of Maker or the failure of Maker to keep the Property in good repair and condition;

8.the return of or reimbursement for personal property taken from the Property by or on behalf of Maker and not replaced with personal property of equal utility and value;

9.damages resulting from fraud or misrepresentation by Maker;

10.damages resulting from breach of any warranty of title by Maker;

11.interest on the Note from the date of default through foreclosure, payment, or set­tlement of the debt;

12.all interest on the Note during any bankruptcy proceeding of Maker and all reason­able attorney’s fees and expenses incurred as a result of Maker’s bankruptcy; and

13.all attorney’s fees and expenses incurred by Payee to collect any of the foregoing amounts.

   
Buyer/Maker

   
Seller/Payee

Exhibit J

Easement Agreement

Exhibit K

Memorandum of Contract

Exhibit L

Notice of Termination of Contract