NUTRIENT CREDIT PURCHASE AGREEMENT
This Nutrient Credit Purchase Agreement (“Agreement”) is entered into this __ day of __________ 2013, by and between:
[SELLER], an entity duly organized and existing under the laws of the State of North
Carolina, with a legal mailing address of _____________________ (“Seller”), and
[PURCHASER], an entity duly organized and existing under the laws of the State of
North Carolina, with a legal mailing address of _____________________ (“Purchaser”).
WHEREAS, regulated agricultural operators may generate Credits for sale to parties subject to or operating under other nutrient strategy rules within the Jordan Lake watershed pursuant to section 15A
NCAC 02B of the Administrative Code, and
WHEREAS, the Purchaser desires to purchase Credits (as hereinafter defined) from the Seller and the
Seller desires to sell Credits to the Purchaser on the terms and conditions set forth herein,
NOW, THEREFORE, the Purchaser and Seller hereby agree as follows:
I. DEFINITIONS
“Credit” shall mean a tradable unit of compliance that corresponds with a unit of reduction of nitrogen loading through implementation of agricultural best management practices (“BMPs”) as recognized by the Department of Environment and Natural Resources Division of Water Quality (“Division”) and the
Department of Agriculture and Consumer Services which, when approved by the Division, may be used to comply with National Pollutant Discharge Elimination System (“NPDES”) permit effluent limitations.
“Delivery Schedule” shall mean the schedule for delivery of Credits from the Seller to the Purchaser.
“Inspection and Maintenance Agreement” shall mean the agreement by and between the Seller and a qualified third-party to ensure the continued operation of BMPs by defining the frequency of inspections, the components of each BMP that need to be inspected, and the appropriate remedy for any problems that may occur, in accordance with industry standards.
“Organizational Documents” shall mean all documents which provide evidence of the organizational status of the Seller (i.e.
articles of incorporation, bylaws, operating agreements, partnership agreements, list of officers and directors, etc.).
“Payment Schedule” shall mean the schedule of payments by the Purchaser to the Seller.
“Watershed Oversight Committee” shall mean the specific Watershed Oversight Committee charged by the Division with overseeing regulated agricultural entities and nitrogen-reducing practices in the Subwatershed in which the Seller produces Credits.

II. REPRESENTATIONS AND WARRANTIES
A. Seller
The Seller is duly organized and existing under the laws of the State of North Carolina and has the power and authority to carry on its business as now conducted. The Seller has furnished correct and complete copies of its Organizational Documents to the Purchaser, included in Exhibit B. The Seller has demonstrated sufficient evidence of title to the Credits, including if applicable, legal signatures of the land owners from which the Credits may be generated.
The Seller is a regulated agricultural operator and is registered with the appropriate Local Advisory
Committee pursuant to 15A NCAC 02B .0264. All Credits sold to the Purchaser as listed on the Delivery
Schedule, attached hereto as Exhibit A, are approved by the Watershed Oversight Committee and the
Division as additional and eligible for trade, as specified in 15A NCAC 02B .0264 Section 7(b). The
Seller has provided a copy of the Division’s approval letter to the Purchaser, including the approved
Inspection and Maintenance Agreement included in Exhibit C.
No action or suit is pending or threatened against the Seller or the Credits before or by any court, administrative agency or other governmental authority, which could result in a material adverse change in the financial condition or business of the Seller, except as disclosed in Exhibit D and incorporated herein by reference. The Seller has not been adjudicated as bankrupt or insolvent or filed a voluntary petition of bankruptcy. The Seller is not delinquent in payment of any tax liabilities or other obligations to the State of North Carolina.
The Seller has not entered into a contract to sell Credits to another party, and the Credits are free and clear of all liens, encumbrances, security interests or other equitable charges.
B. Purchaser
The Purchaser is duly organized and existing under the laws of the State of North Carolina and has the power and authority to carry on its business as now conducted. The Purchaser has furnished correct and complete copies of its Organizational Documents to the Seller, included in Exhibit B.
All necessary permits, approvals and licenses from governmental authorities having jurisdiction over the system for which the Credits will be used, including but not limited to National Pollutant Discharge
Elimination System permits, have been obtained and such permits, approvals and licenses are final and in full force and effect, except as otherwise disclosed to the Seller on the List of Permits/Approvals, attached hereto as Exhibit C.
The Purchaser has met all onsite reduction requirements enumerated in 15A NCAC 02B.0265 Section
3(a)(vii) and made all reasonable efforts to obtain allocation from existing dischargers as stated in 15A
NCAC 02B.0270 Section 7(a)(ii) and (8)(a)(ii), as applicable.
No action or suit is pending or threatened against the Purchaser before or by any court, administrative agency or other governmental authority, which could result in a material adverse change in the financial condition or business of the Purchaser, except as disclosed in Exhibit D and incorporated herein by reference. The Purchaser has not been adjudicated as bankrupt or insolvent or filed a voluntary petition of bankruptcy. The Purchaser is not delinquent in payment of any tax liabilities or other obligations to the
State of North Carolina.
III. COVENANTS
A. Seller

The Seller shall provide for the implementation of the Inspection and Maintenance Agreement for the term of this Agreement. The Seller shall purchase a performance bond from a surety company for 100% of the estimated cost to implement the Inspection and Maintenance Agreement. The performance bond shall be in effect for the term of this Agreement.
The Seller shall maintain and continue the Credit-generating BMPs for the term of this Agreement in accordance with the approved Inspection and Maintenance Agreement. If the Seller involuntarily fails to properly maintain or continue the BMPs for their intended use during the term of the Agreement, the
Seller shall repair or re-implement the BMPs within 30 days.
The Seller shall deliver all Credits in accordance with the Delivery Schedule set forth in Exhibit A. The
Seller shall obtain approval on an annual basis from the Division for all credits delivered under this agreement and provide a copy of the Division’s approval letter to the Purchaser. The Seller shall take all steps necessary to monitor or supervise the generation of Credits in accordance with the Delivery
Schedule and the Seller shall be responsible for ensuring that the Seller will be able to deliver the applicable quantity of Credits for each compliance year as set forth in the Delivery Schedule.
In the event the Seller anticipates that it will not be able to make a scheduled delivery of Credits, the
Seller shall notify the Purchaser immediately. To the extent that the Seller provides a partial delivery of
Credits under the Delivery Schedule, the Seller will be entitled only to payment for the proportionate share of Credits delivered. For any Credits not delivered to the Purchaser in accordance with the Delivery
Schedule, the Seller agrees that it will owe the Purchaser a penalty in the amount of ten percent (10%) of the value of the undelivered Credits, which shall be immediately due and payable to the Purchaser. The
Purchaser shall be entitled to withhold such penalty amount from any amount due and payable to the
Seller.
All actions required to maintain the Seller’s existence as an entity duly organized and existing under the laws of the State of North Carolina shall be taken. The Seller shall not enter into any dissolution or liquidation proceedings. Control or ownership of the Credits, shall not be transferred, and no lien, encumbrance or security interest shall be created or permitted to exist in favor of any third party with respect to the Credits.
The Seller shall not take any action or incur additional debt or refinance existing debt which may jeopardize the Seller’s ability to satisfy its obligations hereunder. In the event the Seller suffers a material adverse change in its financial condition, which may jeopardize the Seller’s ability to perform its obligations, hereunder, the Seller shall notify the Purchaser immediately.
The Seller shall maintain adequate property and comprehensive general liability insurance for the term of this Agreement.
B. Purchaser
The Purchaser shall make or cause to be made all payments in accordance with the Payment Schedule set forth in Exhibit A, upon receipt of all Credits scheduled to be delivered by the Seller in accordance with the terms and conditions of this Agreement. Payment shall be provided to the Seller by check at the address set forth in Exhibit A.
In no event shall the date for payment extend beyond the date set forth in the Payment Schedule. In the event that the Purchaser fails to make payment in accordance with the Payment Schedule, such amounts shall become immediately due and payable to the Seller and any subsequent payment received from the
Purchaser will be applied first to any accrued or unpaid amounts.

The Purchaser shall demonstrate an ability to purchase Credits for the term of this Agreement either by providing a letter of credit for the full amount of the Credit purchase obligation or by purchasing a performance bond from a surety company for 100% of the amount of the Credit purchase obligation.
All actions required to maintain the Purchaser’s existence as an entity duly organized and existing under the laws of the State of North Carolina shall be taken. The Purchaser shall not enter into any dissolution or liquidation proceedings.
The Purchaser shall maintain adequate property and comprehensive general liability insurance for the term of this Agreement.
All activities shall be consistent with the Jordan Water Supply Nutrient Strategy approved by the
Environmental Management Commission and approved by the North Carolina Office of Administrative
Hearings on October 16, 2008 and November 20, 2008.
IV. REMEDIAL PROVISIONS
A. False Representation
Erroneous representation of any fact affecting a determination with respect to this Agreement and the regulations applicable to this Agreement, or any fraudulent representation with respect to this Agreement, will be considered a breach of contract and will terminate this Agreement. If the Seller is found to have falsely represented the additionality, eligibility, or approval of Credits for which it received payment from the Purchaser, the Seller must refund to the Purchaser all payments received, plus interest and liquidated damages thereon, with respect to the Agreement.
B. Indemnification
The Seller has determined the number of Credits it has or will have available for sale. The Seller assumes all risks of the implementation of BMPs and generation of Credits, and the Purchaser shall not be liable to the Seller or any other Person for the Sellers’s acts or omissions in the performance of this Agreement, except that the Purchaser shall be obligated to pay the Seller for Credits delivered to the Purchaser in accordance with the terms of this Agreement.
The Purchaser has determined the number of Credits it requires to offset nitrogen loading, and that it has met all local, state and federal requirements pertaining to the use of Credits to offset discharge. The
Purchaser assumes all risks of Credit value as offsets, and the Seller shall not be liable to the Purchaser or any other Person for the Purchaser’s acts or omissions in the performance of this Agreement, except that the Seller hall be obligated to deliver Credits to the Purchaser in accordance with the terms of this
Agreement.
C. Modification
This Agreement may be amended, but only in writing signed by all parties hereto.
D. Dispute Resolution
If a dispute between the Seller and the Purchaser cannot be settled through negotiation, the dispute will be resolved in the courts of the State of North Carolina under the laws of this State.
V. TERM
This Agreement shall commence with the date hereof and shall remain in effect for a period of ten (10) years.

LIST OF EXHIBITS
A – Delivery and Payment Schedules, Delivery and Payment Addresses
B – Organizational Documents of Purchaser and Seller
C – List of Permits and Approvals
D – Statement of Change in Financial Condition/List of Liens
IN WITNESS WHEREOF, the Purchaser and the Seller have executed this Nutrient Credit Purchase
Agreement on the date set forth below.
Attest:
________________________________
[SELLER]
________________________________
Signature
_________________
Date
[PURCHASER]
________________________________
Signature
_________________
Date
Signature
_________________
Date