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                                                                   EXHIBIT 10.1

                                CONTRACT OF SALE

         This Agreement is entered into by and between THOUSAND TRAILS, INC., a
Delaware corporation ("Seller"), and SILVERLEAF RESORTS, INC., a Texas
corporation ("Purchaser").

                                  WITNESSETH:

         FOR AND IN CONSIDERATION of the promises, undertakings, and mutual
covenants of the parties herein set forth, Seller hereby agrees to sell and
Purchaser hereby agrees to purchase and pay for all that certain property
hereinafter described in accordance with the following terms and conditions:

                                  ARTICLE I

                                  PROPERTY

         The conveyance by Seller to Purchaser shall include the following
described tracts or parcels of land, together with all and singular the rights
and appurtenances pertaining to such land including any right, title and
interest of Seller in and to adjacent strips or gores, streets, alleys, or
rights-of-way and all rights of ingress and egress thereto:

                 Those certain tracts of land located at 19320 West San Luis
         Pass Road, Galveston, Galveston County, Texas, commonly known as "The
         Galveston Island Preserve", containing approximately 98.475 acres,
         more or less, and being more particularly described in Exhibit "A"
         attached hereto and made a part hereof for all purposes.

Hereafter the aforesaid real property is referred to as the "Land."

         The conveyance by Seller to Purchaser shall also include all buildings
and other improvements on the Land, including specifically, without limitation,
all campsites, recreational and community facilities, comfort centers, lakes
and parks located thereon (the foregoing property is herein referred to
collectively as the "Improvements").

         The conveyance by Seller to Purchaser shall also include all fixtures
and personal property, tangible or intangible, of any kind whatsoever owned by
Seller and used in connection with the Land and/or Improvements, including but
not limited to, the following items:

                 a.       All machinery, equipment, fixtures, furniture and
         other personal property of every kind and character owned by Seller
         and located on or used in connection with the operation of the Land
         and Improvements but excluding any recreational vehicle trailers;
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                 b.       If and to the extent owned by Seller, the name "The
         Galveston Island Preserve," as used in the ownership or operation of
         the Land and Improvements;

                 c.       All licenses, franchises and permits used in or
         relating to the ownership, occupancy or operation of the resort being
         operated by Seller on the Land including, in particular, any water
         permits or other utility permits, but not including any reciprocal use
         rights to other lands owned by Seller; and

                 d.       Any developer's, declarant's, or owner's interests
         under any operating agreements or reciprocal easement agreements or
         other similar agreements affecting and/or benefiting the Land.

The foregoing items are hereinafter collectively referred to as the "Resort
Assets."

         Hereinafter all property being conveyed to Purchaser by Seller
pursuant to this Contract including the Land, the Improvements and the Resort
Assets are sometimes referred to collectively as the "Subject Property."

                                   ARTICLE II

                                 PURCHASE PRICE

         The purchase price to be paid by Purchaser to Seller for the Subject
Property shall be the sum of Four Hundred Eighty Thousand and No/100 Dollars
($480,000.00). The purchase price shall be payable all in cash at the closing.

                                  ARTICLE III

                                 EARNEST MONEY

         Within two (2) business days after final execution of this Contract by
all parties hereto, Purchaser shall deliver Purchaser's check in the amount of
Twenty Thousand and No/100 Dollars ($20,000.00) to Safeco Land Title of Dallas,
5220 Renaissance Tower, 1201 Elm Street, Dallas, Texas 75270, Attn: Bobbie
Irwin (the "Title Company"). The Title Company shall immediately cash the
earnest money check and deposit the proceeds thereof in an interest bearing
account, the earnings from which shall accrue to the benefit of Purchaser
(hereinafter the proceeds of the earnest money check shall be referred to as
the "earnest money"). If Purchaser does not terminate this Contract during the
Inspection Period (as defined in Article VI hereinbelow), then, within two (2)
business days after the expiration of the Inspection Period, the Title Company
shall immediately disburse the entire $20,000.00 earnest money deposit to



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Seller; upon such disbursement the $20,000.00 earnest money deposit shall be
non-refundable to the Purchaser except in the event of a default by Seller
hereunder, but, if this Contract closes, then the entire $20,000.00 earnest
money deposit shall be applied in partial satisfaction of the purchase price
payable at closing.

         In the event that this Contract is not closed, then the earnest money
shall be disbursed in the manner provided for elsewhere herein. Notwithstanding
the foregoing or anything to the contrary contained elsewhere in this Contract,
it is understood and agreed that One Hundred Dollars ($100.00) of the earnest
money shall in all events be delivered to Seller as valuable consideration for
the Inspection Period described in Article VI hereinbelow and the execution of
this Contract by Seller.

                                   ARTICLE IV

                PRE-CLOSING OBLIGATIONS OF SELLER AND PURCHASER

         Within thirty (30) days from the date of execution of this Contract,
Seller shall furnish to Purchaser, each of the following (a-e) (collectively,
the "Due Diligence Items"):

                 a.      Copy of the most recent appraisal of the Subject
         Property that is in the possession of Seller, if any;

                 b.       Copies of all licenses, permits, applications,
         authorizations, certificates of occupancy, governmental approvals and
         other entitlements relating to the Subject Property and the operation
         thereof in the possession of Seller, if any, including, in particular,
         copies of all permits relating to utilities;

                 c.       A schedule of all current or pending litigation with
         respect to the Subject Property or any part thereof, if any, together
         with a brief description of each proceeding;

                 d.       An accurate and complete schedule reflecting with
         respect to the resort being operated by Seller at the Subject Property
         for the calendar year ending immediately preceding the date of this
         Contract: (i) ad valorem taxes, (ii) expenses incurred for such period
         for water, electricity, natural gas and other utility charges, and
         (iii) all other income or expenses of operation of the resort being
         operated on the Land by Seller. Said operating schedule shall be
         accompanied by Seller's statement that said operating schedule is
         true, complete and correct as of the date provided; and

                          e.      All information of any kind whatsoever in the
         possession of Seller concerning possible development of the Subject
         Property including, but not limited to, any and all plans for the
         development of the Subject Property, any engineering studies of the
         Subject Property, any information relating to obtaining the approval
         of local governing bodies for the development of the Subject Property,
         any information as to when construction on the Subject Property may
         commence, any information regarding present or future zoning of the
         Subject Property, and any information concerning the availability of
         utilities.





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         During the Inspection Period (defined hereinbelow), Purchaser, at its
sole cost and expense, shall obtain and deliver to Seller copies of the
following (collectively, the "Purchaser Due Diligence Items"):

                 f.       A current commitment (the "Title Commitment") for the
         issuance of an owner's policy of title insurance to the Purchaser from
         the Title Company, together with good and legible copies of all
         documents constituting exceptions to Seller's title as reflected in
         the Title Commitment;

                 g.       Updated survey of the Land included within the
         Subject Property dated subsequent to the date of execution of the
         Contract and prepared by a licensed professional engineer or surveyor
         acceptable to Purchaser, which survey shall: (a) include a metes and
         bounds legal description of the Land; (b) accurately show all
         improvements, encroachments and uses and accurately show all easements
         and encumbrances visible or listed on the Title Commitment
         (identifying each by recording reference if applicable); (c) recite
         the number of gross acres included within the Land; (d) state whether
         any portion of the Land lies within a flood zone, or flood prone area
         or is designated as "wetlands," and identify the exact number of
         square feet, if any, that lies within a flood zone or flood prone area
         or is designated as "wetlands"; and (e) contain a certificate
         verifying that the survey was made on the ground, that the survey is
         correct, that there are no improvements, encroachments, easements,
         uses or encumbrances except as shown on the survey plat, that the area
         represented for the Land has been certified by the surveyor as being
         correct, that no portion of the Land lies within any flood zone or
         flood prone area, except as indicated thereon, and that the Land has
         access to public streets as indicated thereon. Unless otherwise agreed
         by Seller and Purchaser, the metes and bounds description contained in
         the Survey shall be the legal description employed in the documents of
         conveyance of the Subject Property provided that the Title Company
         accepts such description; and

                 h.       A Phase I Environmental Report for the Subject
         Property.

                                   ARTICLE V

                            TITLE INSPECTION PERIOD

         Purchaser shall have a period of time commencing on the date of
execution of this Contract and expiring on the date of expiration of the
Inspection Period (as defined hereinbelow) within which to review and approve
the status of Seller's title to the Subject Property (the "Title Review
Period"). If the information to be provided to or obtained by Purchaser
pursuant to the provisions of Article IV.a.-e. hereinabove reflects or
discloses any defect, exception or other matter affecting the Subject Property
("Title Defects") that is unacceptable to Purchaser, then prior to the
expiration of the Title Review Period Purchaser shall provide Seller with
written notice of Purchaser's objections. Seller may, at its sole option, elect
to cure or remove the objections raised by Purchaser; provided, however, that
Seller shall have no obligation to do so. Should Seller elect to attempt to
cure or remove the objections, Seller shall have ten (10) days





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from the date of Purchaser's written notice of objections (the "Cure Period")
in which to accomplish the cure. In the event Seller either elects not to cure
or remove the objections or is unable to accomplish the cure prior to the
expiration of the Cure Period, then Seller shall so notify Purchaser in writing
specifying which objections Seller does not intend to cure, and then Purchaser
shall be entitled, as Purchaser's sole and exclusive remedies, either to
terminate this Agreement by providing written notice of termination to Seller
within ten (10) days from the date on which Purchaser receives Seller's no-cure
notice or waive the objections and close this transaction as otherwise
contemplated herein. If Purchaser shall fail to notify Seller in writing of any
objections to the state of Seller's title to the Subject Property as shown by
the Survey and Title Commitment, then Purchaser shall be deemed to have no
objections to the state of Seller's title to the Subject Property as shown by
the Survey and Title Commitment, and any exceptions to Seller's title which
have not been objected to by Purchaser and which are shown on the Survey or
described in the Title Commitment shall be considered to be "Permitted
Exceptions." It is further understood and agreed that any Title Defects which
have been objected to by Purchaser and which are subsequently waived by
Purchaser shall be Permitted Exceptions.

                                   ARTICLE VI

                               INSPECTION PERIOD

         Purchaser, at Purchaser's sole expense, shall have the right to
conduct a feasibility, environmental, engineering and physical study of the
Subject Property for a period of time commencing on the date of execution of
this Contract and expiring sixty (60) days from the date on which Purchaser
receives the last of the due diligence items to be provided to Purchaser by
Seller pursuant to Article IV.a.-e. hereinabove (the "Inspection Period").
Purchaser and Purchaser's duly authorized agents or representatives shall be
permitted to enter upon the Subject Property at all reasonable times during the
Inspection Period in order to conduct engineering studies, soil tests and any
other inspections and/or tests that Purchaser may deem necessary or advisable;
provided, however, that no drilling or other ground penetrations or physical
sampling in any building shall be done without Seller's prior written consent,
which consent shall not be unreasonably withheld or delayed. Purchaser further
agrees to indemnify and hold Seller





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harmless from any claims or damages, including reasonable attorneys' fees,
resulting from Purchaser's inspection of the Subject Property. In the event
that the review and/or inspection conducted by this paragraph shows any fact,
matter or condition to exist with respect to the Subject Property that is
unacceptable to Purchaser, in Purchaser's sole discretion, or if for any reason
Purchaser determines that purchase of the Subject Property is not feasible,
then Purchaser shall be entitled, as Purchaser's sole remedy, to cancel this
Contract by providing written notice of cancellation to Seller prior to the
expiration of the Inspection Period. If Purchaser shall provide written notice
of cancellation prior to the expiration of the Inspection Period, then this
Contract shall be cancelled, all earnest money (less $100.00) shall be
immediately returned to Purchaser by the Title Company, and thereafter neither
Seller nor Purchaser shall have any continuing obligations one unto the other.
If no notice of cancellation is provided by Purchaser prior to the expiration
of the Inspection Period, then this Contract shall remain in full force and
effect.
                                  ARTICLE VII

                 REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLER

         Seller represents and warrants to Purchaser that at closing Seller
will have good and indefeasible fee simple title to the Subject Property free
and clear of all liens, encumbrances, covenants, restrictions, rights-of-way,
easements, and any other matters affecting title to the Subject Property except
for the Permitted Exceptions, and at closing, Seller or its subsidiaries will
be in a position to convey the Subject Property to Purchaser (free and clear of
all liens, encumbrances, and other such matters affecting title except for the
Permitted Exceptions).

                 Seller further covenants and agrees with Purchaser that, from
the date hereof until the closing, neither Seller nor its subsidiaries shall
sell, assign, or convey any right, title, or interest whatsoever in or to the
Subject Property, or create or permit to exist any lien, security interest,
easement, encumbrance, charge, or condition affecting the Subject Property
(other than the Permitted Exceptions) without promptly discharging the same
prior to closing.

         Seller hereby further represents and warrants to Purchaser, to the
best of Seller's knowledge, as follows:





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                 a.       There are no actions, suits, or proceedings pending
         or, to the best of Seller's knowledge, threatened against Seller or
         otherwise affecting any portion of the Subject Property, at law or in
         equity, or before or by any federal, state, municipal, or other
         governmental court, department, commission, board, bureau, agency, or
         instrumentality, domestic or foreign;

                 b.       The execution by Seller of this Contract and the
         consummation by Seller of the sale contemplated hereby have been duly
         authorized, and do not, and, at the closing date, will not, result in
         a breach of any of the terms or provisions of, or constitute a default
         under any indenture, agreement, instrument, or obligation to which
         Seller is a party or by which the Subject Property or any portion
         thereof is bound, and do not, and at the closing date will not,
         constitute a violation of any regulation affecting the Subject
         Property;

                 c.       Seller has not received any notice of any violation
         of any ordinance, regulation, law, or statute of any governmental
         agency pertaining to the Subject Property or any portion thereof;

                 d.       The Subject Property and the current operation
         thereof comply in all material respects with all laws, regulations,
         ordinances, rules, orders and other requirements of all governmental
         authorities having jurisdiction over the Subject Property or affecting
         all or any part thereof or bearing on its construction or operation,
         and with all private covenants or restrictions;

                 e.       From the date of execution of this Contract through
         the date of closing, Seller shall continue to maintain the Subject
         Property in its present condition, subject to ordinary wear and tear
         and Article XV hereof, and shall continue to manage the Subject
         Property in the same manner as it is currently being managed; Seller
         shall not remove any fixtures, equipment, furnishings or other
         personal property from the Subject Property unless replaced with items
         of equal or greater quality and quantity, nor shall Seller in any
         manner neglect the Subject Property;

                 f.       That, at closing, there will be no unpaid bills,
         claims, or liens in connection with any construction or repair of the
         Subject Property except for ones which will be paid in the ordinary
         course of business or which have been bonded around or the payment of
         which has otherwise been adequately provided for to the complete
         satisfaction of Purchaser; and

                 g.       That, at closing, the Subject Property will be
         conveyed to Purchaser free and clear of any use rights of Seller's
         members.

         All of the foregoing representations and warranties of Seller are made
by Seller both as of the date hereof and as of the date of the closing
hereunder. Notwithstanding the foregoing or anything to the contrary contained
herein, it is understood and agreed that the representations and warranties set
forth hereinabove shall survive the closing of this Contract only for a period
of two (2) years following the closing date, but not thereafter, and Seller
shall have no liability of any kind whatsoever for any breach thereof except to
the extent a claim is asserted against Seller within such two (2) year period.

         Purchaser agrees that, having had the opportunity to inspect the
Subject Property for defects and having had the right to terminate this
Contract in the event any defects are found,





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Purchaser will accept at closing the Subject Property in an "as is, where is"
condition, and, except for the representations and warranties set forth
hereinabove, Seller shall not be required to give any further representations
or warranties at closing with respect to the condition of the Subject Property
or the income that may be generated by the Subject Property.

                                  ARTICLE VIII

                        CONDITIONS PRECEDENT TO CLOSING

         The obligation of Purchaser to close this Contract shall, at the
option of Purchaser, be subject to the following conditions precedent:

                 a.       All of the representations, warranties and agreements
         of Seller set forth in this Contract shall be true and correct in all
         material respects as of the date hereof and at closing, and Seller
         shall not have on or prior to closing, failed to meet, comply with or
         perform in any material respect any conditions or agreements on
         Seller's part as required by the terms of this Contract;

                 b.       There shall be no change in the matters reflected in
         the Title Commitment, and there shall not exist any encumbrance or
         title defect affecting the Subject Property not described in the Title
         Commitment except for the Permitted Exceptions;

                 c.       There shall be no changes in the matters reflected in
         the Survey, and there shall not exist any easement, right-of-way,
         encroachment, waterway, pond, flood plain, conflict or protrusion with
         respect to the Subject Property not shown on the Survey; and

                 d.       No material and substantial change shall have
         occurred with respect to the Subject Property which would in any way
         affect the findings made in the inspection of the Subject Property
         described in Article VI hereinabove.

         If any such condition is not fully satisfied by closing, Purchaser may
terminate this Contract by written notice to Seller whereupon this Contract
shall be cancelled, the earnest money deposit (less $100.00) shall be returned
to Purchaser and thereafter neither Seller nor Purchaser shall have any
continuing obligations one unto the other.

                                   ARTICLE IX

                                    CLOSING

         The closing hereunder shall take place at the offices of the Title
Company. The closing shall occur on or before thirty (30) days from the date of
expiration of the Inspection Period. Purchaser shall notify Seller at least
five (5) days in advance of the exact time and date of closing.





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                                   ARTICLE X

                        SELLER'S OBLIGATIONS AT CLOSING

         At the closing, Seller shall do the following:

                 a.       Deliver, or cause its subsidiary to deliver, to
         Purchaser a deed covering the Subject Property, duly signed and
         acknowledged by Seller, or its subsidiary, which deed shall be in form
         reasonably acceptable to Purchaser for recording and shall convey to
         Purchaser good and marketable title to the Subject Property, free and
         clear of all liens, rights-of-way, easements, and other matters
         affecting title to the Subject Property, except for the Permitted
         Exceptions.

                 b.       Deliver a bill of sale and a blanket assignment in
         form reasonably acceptable to Purchaser, duly executed and
         acknowledged by Seller or its subsidiary, conveying and/or assigning
         to Purchaser the Resort Assets.

                 c.       Deliver such evidence or other documents that may be
         reasonably required by the Title Company evidencing the status and
         capacity of Seller and the authority of the person or persons who are
         executing the various documents on behalf of Seller in connection with
         the sale of the Subject Property.

                 d.       Deliver a non-withholding statement that will satisfy
         the requirements of Section 1445 of the Internal Revenue Code so that
         Purchaser is not required to withhold any portion of the purchase
         price for payment to the Internal Revenue Service.

                 e.       Deliver to Purchaser any other documents or items
         necessary or convenient in the reasonable judgment of Purchaser to
         carry out the intent of the parties under this Contract.

                                   ARTICLE XI

                       PURCHASER'S OBLIGATIONS AT CLOSING

         At the closing, Purchaser shall deliver to Seller the purchase price
in cash.

                                  ARTICLE XII

                             COSTS AND ADJUSTMENTS

         At closing, the following items shall be adjusted or prorated between
Seller and Purchaser:

                 a.       Ad valorem taxes for the Subject Property for the
         current calendar year shall be prorated as of the date of closing, and
         Seller shall pay to Purchaser in cash at closing Seller's pro rata
         portion of such taxes. Seller's pro rata portion of such taxes shall
         be based upon taxes actually assessed for the current calendar year
         or, if for any reason such taxes for the Subject Property have not
         been actually assessed, such proration shall be based upon the amount
         of such taxes for the immediately preceding calendar year, and
         adjusted by cash settlement when exact amounts are available. However,
         anything herein to the contrary notwithstanding, any tax abatement or
         refund for a period of time prior to closing shall belong to Seller.





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                 b.       All other closing costs, including but not limited
         to, recording and escrow fees shall be divided equally between Seller
         and Purchaser; provided, however, that Seller and Purchaser shall each
         be responsible for the fees and expenses of their respective
         attorneys.

         Seller agrees to indemnify and hold Purchaser harmless of and from any
and all liabilities, claims, demands, suits, and judgments, of any kind or
nature (except those items which under the terms of this Contract specifically
become the obligation of Purchaser), brought by third parties and based on
events occurring on or before the date of closing and which are in any way
related to the ownership, maintenance, or operation of the Subject Property,
and all expenses related thereto, including, but not limited to, court costs
and attorneys' fees.

         Purchaser agrees to indemnify and hold Seller harmless of and from any
and all liabilities, claims, demands, suits, and judgments, of any kind or
nature, brought by third parties and based on events occurring subsequent to
the date of closing and which are in any way related to the ownership,
maintenance or operation of the Subject Property, and all expenses related
thereto, including, but not limited to, court costs and attorneys' fees.

         Notwithstanding anything to the contrary contained herein, the
indemnities set forth in this Article XII shall survive the closing hereunder.

                                  ARTICLE XIII

                               ENTRY ON PROPERTY

         Purchaser, Purchaser's agents, employees, servants, or nominees, are
hereby granted the right to enter upon the Subject Property at any time prior
to closing for the purpose of inspecting the Subject Property and conducting
such engineering and mechanical tests as Purchaser may deem necessary or
advisable, any such inspections and tests to be made at Purchaser's sole
expense. Purchaser agrees to indemnify and hold Seller harmless from and
against any and all losses, damages, costs, or expenses incurred by Seller as a
result of any inspections or tests made by Purchaser.





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                                  ARTICLE XIV

                             POSSESSION OF PROPERTY

         Possession of the Property free and clear of all uses and
encroachments, except the Permitted Exceptions, shall be delivered to Purchaser
at closing.

                                   ARTICLE XV

                     DAMAGE OR DESTRUCTION PRIOR TO CLOSING

         In the event that the Subject Property should be damaged by any
casualty prior to closing, then if the cost of repairing such damage, as
estimated by an architect or contractor retained pursuant to the mutual
agreement of Seller and Purchaser, is:

                 a.       Less than Fifty Thousand Dollars ($50,000.00), then
         at Purchaser's option, either (i) the Seller shall repair such damage
         as promptly as is reasonably possible, restoring the damaged property
         at least to its condition immediately prior to such damage; and, in
         the event such repairs have not been completed prior to closing, then
         the closing shall nevertheless proceed as scheduled, and Purchaser may
         have the Title Company withhold from Seller the funds necessary to
         make such repairs until Seller has repaired such damage pursuant to
         the provisions hereof, at which time such funds shall be distributed
         to Seller or (ii) Purchaser may take an assignment of Seller's
         insurance proceeds and repair such damage itself;

or if said cost is:

                 b.       greater than Fifty Thousand Dollars ($50,000.00),
         then, at Purchaser's election, Seller shall pay to Purchaser, at
         closing, all insurance proceeds payable for such damage, and the sale
         shall be closed without Seller's repairing such damage, or, if
         Purchaser does not elect to accept such insurance proceeds, then
         either Seller or Purchaser may elect to terminate this Contract, in
         which case the earnest money (less $ 100.00) shall be returned to
         Purchaser and thereafter neither party shall have any further
         obligations one unto the other. Purchaser acknowledges that the
         deductible in Seller's insurance policy is $250,000 or more.

                                  ARTICLE XVI

                                    NOTICES

                 All notices, demands, or other communications of any type
given by the Seller to the Purchaser, or by the Purchaser to the Seller,
whether required by this Contract or in any way related to the transaction
contracted for herein, shall be void and of no effect unless given in
accordance with the provisions of this paragraph. All notices shall be in
writing and delivered to the person to whom the notice is directed, either in
person, by facsimile transmission, or by United States Mail, as a registered or
certified item, return receipt requested. Notices delivered





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by mail shall be deemed given when deposited in a post office or other
depository under the care or custody of the United States Postal Service,
enclosed in a wrapper with proper postage affixed, addressed as follows:

         Seller:                  Thousand Trails, Inc.
                                  2711 LBJ Freeway, Suite 200
                                  Dallas, Texas 75234
                                  Attn: Kenneth E. Hendrycy, Vice President
                                  Telephone No.: (972) 243-2228
                                  Facsimile No.: (972) 488-5030

         Purchaser:               Silverleaf Resorts, Inc.
                                  1221 Riverbend Drive
                                  Suite 120
                                  Dallas, Texas 75247
                                  Attn: Robert E. Mead
                                  Telephone No.: (214) 631-1166
                                  Facsimile No.: (214) 905-0514

         With Required Copy to:   Meadows, Owens, Collier, Reed, Cousins & Blau,
                                           L.L.P.
                                  3700 NationsBank Plaza
                                  901 Main Street
                                  Dallas, Texas 75202
                                  Attn: George R. Bedell, Esq.
                                  Telephone No.: (214) 749-2448
                                  Facsimile No.: (214) 747-3732


                                 ARTICLE XVIII

                                    REMEDIES

         In the event that Seller fails to timely comply with all conditions,
covenants and obligations of Seller hereunder, such failure shall be an event
of default and Purchaser shall have the option (i) to terminate this Contract
by providing written notice thereof to Seller, in which event the earnest money
(less $100.00) shall be returned immediately to Purchaser and the parties
hereto shall have no further liabilities or obligations one unto the other;
(ii) to waive any defect or requirement and close this Contract; or (iii) to
sue Seller for specific performance. Except as otherwise set forth herein, in
no event shall Purchaser have the right to sue Seller for damages.

         In the event that Purchaser fails to timely comply with all
conditions, covenants, and obligations Purchaser has hereunder, such failure
shall be an event of default, and Seller's sole remedy shall be to receive the
earnest money. The earnest money is agreed upon by and between the Seller and
Purchaser as liquidated damages due to the difficulty and inconvenience





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of ascertaining and measuring actual damages, and the uncertainty thereof, and
no other damages, rights, or remedies shall in any case be collectible,
enforceable, or available to the Seller other than in this paragraph defined,
and Seller shall accept the earnest money as Seller's total damages and relief.

                                 ARTICLE XVIII

                                   ASSIGNMENT

         Purchaser shall not, without Seller's prior written consent, assign
this Contract. Notwithstanding the foregoing, the consent of Seller need not be
obtained for an assignment of this Contract made in connection with the merger,
consolidation or a combination of Purchaser into or with any other corporation
or entity, whether by operation of law or otherwise; however, Purchaser agrees
to furnish Seller with prior written notice thereof, and provided further that
any such assignee must abide by the covenants appearing in this Contract.

                                  ARTICLE XIX

                       INTERPRETATION AND APPLICABLE LAW

         This Agreement shall be construed and interpreted in accordance with
the laws of the State of Texas. Where required for proper interpretation, words
in the singular shall include the plural; the masculine gender shall include
the neuter and the feminine, and vice versa. The terms "successors and assigns"
shall include the heirs, administrators, executors, successors, and assigns, as
applicable, of any party hereto.

                                   ARTICLE XX

                                   AMENDMENT

         This Contract may not be modified or amended, except by an agreement
in writing signed by the Seller and the Purchaser. The parties may waive any
of the conditions contained herein or any of the obligations of the other party
hereunder, but any such waiver shall be effective only if in writing and signed
by the party waiving such conditions and obligations.





                                      -13-

<PAGE>   14
                                     ARTICLE XXI

                                      AUTHORITY

         Each person executing this Contract warrants and represents that he is
fully authorized to do so.

                                     ARTICLE XXII

                                   ATTORNEYS' FEES

         In the event it becomes necessary for either party to file a suit to
enforce this Contract or any provisions contained herein, the prevailing party
shall be entitled to recover, in addition to all other remedies or damages,
reasonable attorneys' fees and costs of court incurred in such suit.

                                    ARTICLE XXIII

                                 DESCRIPTIVE HEADINGS

         The descriptive headings of the several paragraphs contained in this
Contract are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.

                                  ARTICLE XXIV

                                ENTIRE AGREEMENT

         This Contract (and the items to be furnished in accordance herewith)
constitutes the entire agreement between the parties pertaining to the subject
matter hereof and supersedes all prior and contemporaneous agreements and
understandings of the parties in connection therewith. No representation,
warranty, covenant, agreement, or condition not expressed in this Contract
shall be binding upon the parties hereto or shall affect or be effective to
interpret, change, or restrict the provisions of this Contract.





                                      -14-



<PAGE>   15
                                  ARTICLE XXV

                            MULTIPLE ORIGINALS ONLY

         Numerous copies of this Contract may be executed by the parties
hereto.  Each such executed copy shall have the full force and effect of an
original executed instrument.

                                  ARTICLE XXVI

                                   ACCEPTANCE

         Seller shall have until 5:00 o'clock p.m., July 23, 1997, to execute
and return a fully executed original of this Contract to Purchaser, otherwise
this Contract shall become null and void. Time is of the essence of this
Contract. The date of execution of this Contract by Seller shall be the date of
execution of this Contract. If the final date of any period falls upon a
Saturday, Sunday, or legal holiday under the laws of the State of Texas, then
in such event the expiration date of such period shall be extended to the next
day which is not a Saturday, Sunday, or legal holiday under the laws of the
State of Texas.

                                 ARTICLE XXVII

                             REAL ESTATE COMMISSION

         Seller represents and warrants to Purchaser that Seller has not
contacted or entered into any agreement with any real estate broker, agent,
finder, or any other party in connection with this transaction, and that Seller
has not taken any action which would result in any real estate broker's,
finder's, or other fees or commissions being due and payable to any other party
with respect to the transaction contemplated hereby. Purchaser hereby
represents and warrants to Seller that Purchaser has not contracted or entered
into any agreement with any real estate broker, agent, finder, or any other
party in connection with this transaction, and that Purchaser has not taken any
action which would result in any real estate broker's, finder's, or other fees
or commissions being due or payable to any other party with respect to the
transaction contemplated hereby. Each party hereby indemnifies and agrees to
hold the other party harmless from any loss, liability, damage, cost, or
expense (including reasonable attorneys' fees) resulting to the other party by
reason of a breach of the representation and warranty made by such party





                                      -15-


<PAGE>   16
herein. Notwithstanding anything to the contrary contained herein, the
indemnities set forth in this Article XXVII shall survive the closing.

         EXECUTED on this the 23rd day of July, 1997.

                                  SELLER:

                                  THOUSAND TRAILS, INC., a Delaware corporation

                                  By: /s/ KENNETH A. HENDRYCY
                                      --------------------------
                                  Name: Kenneth A. Hendrycy
                                  Its:  Vice President

                  EXECUTED on this the 22nd day of July, 1997.

                                  PURCHASER:

                                  SILVERLEAF RESORTS, INC., a Texas corporation

                                  By: /s/ ROBERT E. MEAD
                                      -------------------------- 
                                  Name: Robert E. Mead
                                  Its:  Chief Executive Officer

RECEIPT OF EARNEST MONEY AND ONE (1) EXECUTED COUNTERPART OF THIS CONTRACT IS
HEREBY ACKNOWLEDGED:

TITLE COMPANY:

SAFECO LAND TITLE OF DALLAS

By: /s/ BOBBIE G. IRWIN
    -----------------------
Name: Bobbie G. Irwin
Its:  Vice President





                                      -16-
<PAGE>   17
                                        EXHIBIT "A"


THE SURFACE ONLY OF ALL THAT PARCEL OF LAND IN THE WEST ONE-HALF (1/2) OF THAT
CERTAIN TRACT OR PARCEL OF LAND OUT OF DIVISION FOUR (4) IN SECTION ELEVEN
(11) OF THE HALL AND JONES SURVEY OF GALVESTON ISLAND. IN GALVESTON COUNTY,
TEXAS, DESCRIBED IN DEED OF RECORD IN VOLUME 315, PAGE 849, IN THE OFFICE OF
THE COUNTY CLERK OF GALVESTON COUNTY, TEXAS THAT LIES NORTH OF THE SAN LUIS
PASS ROAD AND BEING THE WEST 698 FEET OF THE EAST 1396 FEET, BOTH MEASURED
PERPENDICULAR, OF DIVISION FOUR (4) IN SECTION ELEVEN (11), OF THE HALL
AND JONES SURVEY OF GALVESTON ISLAND, IN GALVESTON COUNTY, TEXAS, THAT LIES
NORTH OF THE SAN LUIS PASS ROAD, AND BEING THAT SAME TRACT OF LAND PARTITIONED
TO E. R. MICHAELIS BY PARTITION DEED OF RECORD IN VOLUME 2301, PAGE 39, IN THE
OFFICE OF THE COUNTY CLERK OF GALVESTON COUNTY, TEXAS.