<PAGE>
 
                                                                EXHIBIT 10.7

                        AGREEMENT OF PURCHASE AND SALE

THIS AGREEMENT (the "Agreement") is executed the fourth day of January, 1996 but
is made effective as of January 1, 1996 (the "Effective Date") and is by and
between BUFFTON CORPORATION, a Delaware corporation ("Buffton") Cabo Shepherd,
Inc., a Texas corporation and a wholly owned subsidiary of Buffton ("Cabo"),
CABO TACOBAR ONE, LTD., a Texas Limited Partnership ("Seller"), CABOTACO
MANAGEMENT, L.C., a Texas Limited Liability Company, ("General Partner") and
JAMES HILLYER ("Hillyer").

WITNESSETH:

WHEREAS, Seller and Hillyer own and/or operate a restaurant and bar business
which presently is located in Shepherd Plaza, Houston, Texas and is operated
under the name, "CABO The Original 'Mix Mex' Grill" (''Seller's Business");

WHEREAS, Seller, General Partner and Hillyer desire to sell to Buffton and
Buffton desires to purchase certain assets owned by Seller, General Partner, or
Hillyer and used in Seller's Business upon the terms and subject to the
conditions of this Agreement;

WHEREAS, after the Closing, as hereinafter defined, Buffton will transfer to
CABO as a capitol contribution for 100% of the stock in CABO, all of the
Transferred Assets, as hereinafter defined, and CABO will assume the Contracts,
Leases, and Equipment Leases, as hereafter defined.

NOW, THEREFORE, in consideration of the promises, representations, warranties,
covenants and agreements contained herein, the Purchase Price and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and pursuant to the terms and subject to the conditions set forth
herein, the parties hereto hereby agree as follows:

                                   ARTICLE I
                               PURCHASE AND SALE

Section 1.1 Transfer of Assets. On the terms and subject to the conditions
hereof, at the Closing, as hereinafter defined, Seller, General Partner and/or
Hillyer shall sell, convey, transfer, assign and deliver to Buffton, as their
rights, title and interests may appear, and Buffton shall purchase and acquire
all right, title and interest of Seller, General Partner and/or Hillyer in and
to certain rights, properties and assets of Seller, General Partner and Hillyer,
wherever located, that relate to or are used in connection with Seller's
Business, and described in paragraph A through K of this Section 1.1 (all such
assets to be transferred by Seller, General Partner or Hillyer are referred to
herein collectively as, the "Transferred Assets").

A. Any and all furniture, fixtures, equipment, leasehold improvements,
furnishings, computer hardware and software, machinery, materials, supplies, and
other tangible personal property of every kind, nature and description,
including, but not limited to, all those items more particularly described on
Exhibit "l.l(A)" attached hereto and incorporated herein by reference
("Equipment");

B. Any and all know how, formulae, recipes, recipe books, proprietary
information, technological information, processes, employee handbooks, operating
manuals, training manuals, trade secrets, trademarks, trade names, commercial
symbols, trade dress, logos, designs, slogans, copyrights, patents, service
marks and business format including, but not limited to, those more

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particularly described in Exhibit "1.1(B)" attached hereto and incorporated
herein by reference, ("Intellectual Property");

C. All sales records, market studies, advertising and promotional literature,
past and present customer lists, customer history, procedures, business records,
accounting and financial records, logs, files, books, supplier lists, mailing
lists, computer and electronic data processing material, personnel records,
correspondence and any other business records ("Records");

D. The rights and incidents of interest in the contracts, permits, licenses,
consents, franchises, commitments, and other agreements described in Exhibit
"1.1(D)" attached hereto and incorporated herein by reference ("Contracts");

E. The leases of real property described in Exhibit "1.1(E)" attached hereto and
incorporated herein by reference ("Leases");

F. The equipment leases or licenses relating to personal or equipment that are
described in Exhibit "1.1 (F)" hereto and incorporated herein by reference
("Equipment Leases")

G. All raw materials, components, packaging materials, supplies, food items,
spices, and beverages, including, but not limited to, those more particularly
described in Exhibit "1.1(G)" attached hereto and incorporated herein by
reference ("inventory");

H. All pre-paid expenses, pre-paid accounts, and pre-paid assets, of each and
every kind and character, including, but not limited to, those more particularly
described on Exhibit "l.l(H)" attached hereto and incorporated herein by
reference ("Pre-paid Assets");

I. The right to use all of the current telephone numbers;

J. All other tangible and intangible assets of every kind or character, whether,
real or personal, except those specifically excluded in Section 1.2 hereof;

K. All goodwill associated with the foregoing assets.

Section 1.2 Excluded Assets. Notwithstanding any other provision of this
Agreement, nothing contained in this Agreement shall operate as a sale,
transfer, conveyance, or assignment to Buffton of any of the following assets or
liabilities ("Excluded Assets").

     A. Cash on hand as of the close of business December 31, 1995;

     B. Uncollected credit card receipts as of the close of business December
     31, 1995;

     C. A liquor license deposit in the amount not to exceed $7,000.00;

     D. All other deposits that are available to be returned to Seller, General
     Partner or Hillyer without requiring a non-refundable replacement deposit
     from Buffton; and

     E. Copies of certain of the Records necessary to prepare and file all tax
     returns and other filings.

Section 1.3 Purchase Price. In consideration of the transfer of the Transferred
Assets, Buffton shall pay to Seller, General Partner and Hillyer, and Seller,
General Partner and Hillyer shall accept from Buffton the following purchase
price, subject to any proration adjustments pursuant to

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Section 1.5 hereof, the allocation pursuant to Section 1.4 hereof, any purchase
price adjustment pursuant to Section 1.6 hereof and any adjustment pursuant to
the terms of Section 2.1(h) hereof (the "Purchase Price"):

     a. Payment of $589,000.00 in cash;

     b. Delivery to Hillyer of 375,000 shares of Buffton common stock, $.05 par
     value ("Buffton Stock''); and

     c. Delivery to Hillyer of a Buffton one year stock option in form similar
     to the stock option attached hereto as Exhibit 1.3(c), beginning at the
     Effective Date, to purchase 150,000 shares of Buffton common stock with an
     exercise price of $2.00 per share.

Section 1.4 Allocation. Seller, Hillyer, General Partner and Buffton agree to
the allocation of the purchase price among the Transferred Assets as set forth
in Exhibit 1.4 attached hereto and incorporated herein by reference (the
"Allocation"). Seller, Hillyer, General Partner and Buffton agree to timely file
or cause to be filed all federal and state tax returns and forms and that they
will be consistent with the Allocation.

Section 1.5 Prorations. Ad valorem taxes and rent shall be prorated at the
Closing and the appropriate adjustment shall be made to the Purchase Price.
Seller, Hillyer, General Partner and Buffton shall coordinate the transfer of
the utilities as soon as possible following the Closing and each party shall pay
the utility charges on its respective account with the supplier of the
utilities. Taxes shall be prorated based on the amount paid in 1994, unless the
amount of 1995 taxes is available at the Closing.

Section 1.6 Purchase Price Adjustments.

A. Inventory. The amount of cash paid as part of the Purchase Price shall be
adjusted up or down to the extent the Inventory on January 1, 1996, as
historically reflected in the balance sheets of Seller's Business, is greater
than or less than $8,000.00.

B. Cash. Starting on the Effective Date through the date hereof (the "Interim
Period"), Seller, Hillyer, or General Partner, will operate Seller's Business
for the benefit of Buffton. During the Interim Period, the cash receipts
generated by the operations of Seller's Business during the Interim Period will
be collected for the benefit of Buffton and the cash disbursements in the
ordinary course of Seller's Business will be chargeable against Buffton. To the
extent the cash receipts generated during the Interim Period exceed the cash
disbursements (for expenses incurred during the Interim Period) (the "Excess
Cash"), the cash portion of the Purchase Price shall be reduced by the amount of
the Excess Cash. To the extent the cash disbursements (for expenses generated
during the Interim Period in the ordinary course of Seller's Business, exceed
the cash receipts (for expenses incurred during the Interim Period) (the "Cash
Deficit"), then the cash portion of the Purchase Price shall be increased by
Buffton by the amount of the Cash Deficit. The parties agree to make any
necessary adjustments to the Cash Adjustment following closing.

Section 1.7 Assignment and Assumption of Contracts, Leases and Equipment Leases.
At the Closing as hereinafter defined, Seller, General Partner and/or Hillyer
shall assign and Buffton and/or Cabo shall assume the Contracts, Leases, and
Equipment Leases. Except for the Contracts, Leases, and Equipment Leases,
Buffton does not agree to assume any other obligations or liabilities of either
Seller, General Partner or Hillyer.

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Section 1.8 Assignment of Copyriahts, Trademarks and Patents. At the Closing as
hereinafter defined, Seller, General Partner and/or Hillyer shall assign to
Buffton all copyrights, trademarks and patents that relate to or are used in
connection with Seller's Business.

Section 1.9 Assignment of Downtown Lease. At the Closing, as hereinafter
defined, James Hillyer, Trustee, shall assign to Cabo, and Cabo shall assume the
Lease Agreement between Tzevair Meraia as Landlord and James Hillyer, as Tenant
dated August 23, 1995, covering all that certain 4978.492 square feet tract of
land comprising the south 49.292 feet of Lot 6, Block 44, South side Buffalo
Bayou, City of Houston, Harris County, Texas, based on Lot 6 having a width of
50.584 feet fronting Travis Street and a depth of 101.00 feet fronting on
Prairie Avenue (the "Downtown Lease").

                                  ARTICLE II
                                    CLOSING

Section 2.1 The Closing of the transaction contemplated by this Agreement shall
take place immediately following the execution of this Agreement at the offices
of McLean & Sanders, 100 Main Street, Fort Worth, TX 76102 (the "Closing"). The
Closing shall be effective for accounting and ownership purposes as of 12:01
a.m., C.S.T., on January 1, 1996. At the Closing, the parties hereto shall
perform their respective obligations set forth below, the performance of which
shall be concurrent conditions to the Closing.

(a) Execute and deliver a Bill of Sale effective January 1, 1996 transferring to
Buffton all of the Transferred Assets except the Leases, owned by Seller,
General Partner or Hillyer, which Buffton has accepted, which Bill of Sale shall
be in the form of Exhibit 2.1(a) attached hereto;

(b) Execute and deliver an Assignment and Assumption Agreement to Buffton
effective January 1, 1996 whereby Seller, General Partner and Hillyer shall
assign and Buffton shall assume the Contracts, and Equipment Leases, which
Assignment and Assumption Agreement shall be in the form of Exhibit 2.1(b)
attached hereto;

(c) Seller, General Partner and Hillyer shall execute and deliver an Assignment
of Trademarks and Powers of Attorneys in the form of the Assignment of
Trademarks and Powers of Attorneys attached hereto as Exhibit 2.1(c) attached
hereto;

(d) Seller, General Partner and/or Hillyer shall obtain and deliver to Buffton
any required third party consents to this Agreement, the Bill of Sale, the
Assignment and the Assumption Agreement, and any subsequent transfer,
assignment, or assumption between Buffton and Cabo including without limitation,
any required consent, signature or assignment from F. William Troff, and any
required consent by landlords under the Leases, which have not previously been
delivered to Buffton;

(e) Seller, General Partner and Hillyer shall deliver to Buffton possession of
Seller's Business and the Transferred Assets, including all combinations and
keys;

(f) Seller, Hillyer, or General Partner shall deliver or provide for the
delivery (to the satisfaction of Buffton) of any release of liens or executed
UCC-3s necessary to release any liens on any of the Transferred Assets;

(g) Seller, General Partner and Hillyer shall deliver to Buffton an opinion of
Charles Maynard, counsel to Seller, General Partner and Hillyer, in form and
substance consistent with the opinion attached hereto as Exhibit 2.1(g);

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(h) Attached hereto as Exhibit 2.1(h) is a list of all the trade payables and
other liabilities of Seller, General Partner and Hillyer through December 31,
1995 (the "Payables") The Purchase Price shall be reduced by an amount equal to
the Payables, and Buffton will deposit that amount with McLean & Sanders, P.C.
to pay off the Payables. McLean & Sanders shall issue checks from their trust
account to pay all of the Payables, which checks shall be mailed at the Closing.
Thereafter, Seller, General Partner and Hillyer shall deliver to Buffton a Bills
Paid Affidavit; Buffton shall, subject to any proration adjustments pursuant to
Section 1.5 hereof, and any purchase price adjustment pursuant to Section 1.6
hereof, and subject to any deductions for any amount deposited with McLean &
Sanders, P.C. to pay the Payables pursuant to Section 2.1(h) hereof, deliver the
cash portion of the Purchase Price in cash or by wire transfer to Seller;

(j) Buffton shall deliver to Hillyer the Buffton Stock;

(k) Buffton and Hillyer shall execute a Non-Qualified Stock Option Agreement in
form and content similar to the one attached hereto as Exhibit 2.1(k).

(1) Leases

(i) Downtown Lease.

(a) James Hillyer, Trustee and Cabo shall execute and deliver an Assignment and
Assumption of Downtown Lease similar to the one attached hereto as Exhibit
2.1(1)(i)(a)

(b) Seller, General Partner, Hillyer and Cabo shall execute and deliver an
Assignment and Assumption of Downtown Lease similar to the one attached hereto
as Exhibit 2.1(1)(i)(b).

(ii) Shepherd Square.

Seller, General Partner, Hillyer, F. William Troff and Buffton shall execute an
Assignment and Assumption Agreement similar to the one attached hereto as
Exhibit 2.1(1)(ii)Hillyer shall procure F. William Troff's signature on the
Assignment.

                                  ARTICLE III
                                    BUFFTON
                                     STOCK

Section 3.1 As soon as is practical after the Closing, Buffton will cause to be
filed at the expense of Buffton, a Registration Statement with the Securities
and Exchange Commission on Form S-3 or other appropriate form pursuant to the
Securities Act of 1933, as amended and use its best efforts to have the Buffton
Stock listed for trading on the American Stock Exchange. Upon filing, Buffton
will deliver to Hillyer a copy of the Form S-3 and the Additional Listing
Application. Buffton will use its best efforts to have the Form S-3 Registration
Statement become effective within sixty (60) days of the date hereof.

Section 3.2 Hillyer may not transfer or sell the Buffton Stock prior to April 1,
1996, and a legend will be placed on the stock certificates so stating.
Thereafter, Hillyer may transfer or sel1 up to 20,000 shares per week, but must
first sell the Pledged Stock (or direct Buffton to sell the Pledged Stock on
Hillyer's behalf) and use the proceeds to pay off any loan that Buffton is a
guarantor of pursuant to Article VI hereof. In addition, prior to making any
sale, Hillyer will give Buffton written notice of the proposed sale and Buffton
shall have the right to purchase the shares intended to be sold at the Closing
price on the American Stock Exchange on the day before the notice.

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                                  ARTICLE IV
                                    LIQUOR
                                    LICENSE

Section 4.1 Immediately following the execution of this Agreement, Seller and/or
Hillyer shall turn in to the Harris County Texas Alcoholic Beverage Commission
Field Office all liquor licenses or permits covering the premises upon which
Seller's Business is operated and request a letter of authority on Form 4-60 to
operate under until Cabo's permits and certificates are issued and thereafter
will renew the Form 4-60 as often as needed until Buffton or Cabo receives the
permits and certificates set forth below. In addition, Seller and Hillyer will
use their best efforts to assist Cabo in acquiring both a mixed beverage and
late hours permit, along with a food and beverage certificate from the Texas
Alcoholic Beverage Commission covering the premises upon which Seller's Business
is operated.

Section 4.2 At the Closing, Seller, General Partner and/or Hillyer shall enter
into a Lease and Management Agreement with Cabo consistent with the Lease and
Management Agreement attached hereto as Exhibit "4.2" or with such changes as
Buffton deems necessary or are required to comply with law. The Lease and
Management Agreement will cover the period between the Closing and the issuance
of a mixed beverage and late hours permit and a food and beverage certificate to
Cabo, at which point the Lease and Management Agreement shall automatically
terminate.

                                   ARTICLE V
           AREA DEVELOPMENT AGREEMENT AND UNIT FRANCHISE AGREEMENTS

Section 5.1 Concurrently with the execution hereof, Cabo and Hillyer shall enter
into the Area Development Agreement attached hereto as Exhibit "5.1" (the "Area
Development Agreement") which Area Development Agreement has attached to it, a
Unit Franchise Agreement (the "Unit Franchise Agreement") to be used pursuant to
the terms of the Area Development Agreement.



                                  ARTICLE VI
                                     LOAN

Section 6.1 Guaranty of Loan. At the request of Hillyer, within thirty (30) days
of Closing, Buffton will guarantee a two year interest only bank loan for
Hillyer in an amount not to exceed $75,000.00 which guarantee shall be on terms
satisfactory to Buffton and shall be secured by 100,000 shares of the Buffton
Stock issued to Hillyer pursuant to this Agreement (the "Pledged Stock").
Hillyer shall execute and deliver to Buffton concurrently with Buffton's
execution of its guarantee, a Stock Pledge Agreement in form and content similar
to the Stock Pledge Agreement attached hereto as Exhibit 6.1(a) (the "Stock
Pledge Agreement"), and deliver to Buffton the Pledged Stock to be held by
Buffton as security for the guarantee pursuant to the terms of the Stock Pledge
Agreement and execute and deliver to Buffton an Assignment Separate from
Certificate endorsed in blank, similar to the one attached hereto as Exhibit
6.1(b).

Section 6.2 Hillyer agrees that all proceeds received by him from the first sale
of the shares of Buffton Stock shall be applied to pay off this Loan. In the
event Hillyer should either fail to pay off this loan in a timely manner,
default under the terms of the Stock Pledge Agreement, or fail to reimburse
Buffton for any expense Buffton may incur by reason of Hillyer's failure to pay
timely on the loan, in addition to any other remedies available to Buffton

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under the Stock Pledge Agreement, at law or in equity, Buffton or Cabo shall
have the right to terminate any and all other agreements with Hillyer,
including, but not limited to, the Area Development Agreement and/or any Unit
Franchise Agreement with no further liability of Cabo or Buffton hereunder or
thereunder.

                                  ARTICLE VII
                              COVENANTS OF SELLER

Section 7.1 Pending Closing. Seller, General Partner and Hillyer covenant and
represent to Buffton and Cabo that from November 28, 1995 through the date
hereof;

a. Seller, General Partner and Hillyer have conducted Seller's Business
diligently and substantially in the same manner as historically conducted prior
to November 28, 1995;

Seller, General Partner and Hillyer have not entered into any material contracts
or committed to or engaged in any transaction that affects any of the
Transferred Assets or Seller's Business and that was not in the usual or
ordinary course of business;

c. Seller, General Partner or Hillyer have not sold or disposed of or encumbered
any of the Transferred Assets;

d. Seller, General Partner or Hillyer have not made any material capital
expenditures or entered into any material leases of capital equipment or real
estate that relate to Seller's Business or any of the Transferred Assets except
in the ordinary course of business;

e. Seller, General Partner or Hillyer have not created, assumed, incurred or
guaranteed any indebtedness for borrowed money that might affect Seller's
Business or any of the Transferred Assets;

f. Seller has not granted any material non-scheduled increase in the right of
pay of any of its employees, or granted any non-scheduled increase in the
salaries of any officer, employer or agent of Seller;

g. Seller has not amended its limited partnership agreement except to the extent
that all interests of Seller may have been transferred to Hillyer prior to
Closing;

h. Seller, General Partner and Hillyer have maintained all casualty, liability,
and hazard insurance with respect to Seller's Business, any leased real
property, and the Transferred Assets that had been historically maintained;

i. Seller, General Partner and Hillyer have maintained and repaired all leased
property, ordinary wear and tear excepted;

All bills and invoices for labor, goods, materials, and services of any kind
with respect to Seller's Business, all rental payments due, and all utility
charges relating to the period prior to the Closing have been paid or will be
paid concurrently with the Closing or as soon thereafter as possible.

Section 7.2 Discontinuance of Seller. After the Closing, General Partner and
Hillyer shall cause the names of Seller and General Partner and any assumed
names used by Seller, General Partner or Hillyer to change, and Seller, General
Partner and/or Hillyer shall cause any other related entity that uses "Cabo," or
"Tacobar" or any derivative thereof, to change its names or assumed names so
that after the change in names, neither Seller, General Partner,

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Hillyer, or any other related entity shall have any names or assumed names that
use "Cabo," "Cabotaco," "Taco bar," "Mix Mex," "Tacobar," or any derivatives
thereof in the name.

Section 7.3 Employees. Seller, General Partner and/or Hillyer shall terminate
the employment of all employees of Seller, General Partner or Hillyer that work
in Seller's Business effective at the Closing. It is understood by the parties
that Buffton intends to rehire all employees that presently work in Seller's
Business, but Buffton is not obligated to do so under the terms of this
Agreement or any other agreement. Seller, General Partner and/or Hillyer shall
be responsible for and shall pay prior to or at the Closing all wages, salaries,
medical insurance premiums, vacation, or other benefits which have accrued prior
to the Effective Date of the employees involved in the management and operation
of Seller's Business (the "Accrued Employee Benefits"), it being understood and
agreed that Seller, General Partner and Hillyer each do hereby jointly and
severally indemnify Buffton against any and all losses, costs, and liabilities
incurred by Buffton as a result of any failure to compensate such employees for
the Accrued Employee Benefits.

                                 ARTICLE VIII
                            COVENANT NOT TO COMPETE

Section 8.1 Seller, General Partner and Hillyer shall not, for a period of 10
years from the Effective Date, or as long as Hillyer is a franchisee under a
Franchise Agreement, whichever is longer, directly or indirectly, develop, own
or operate any food and beverage facility that competes with the

Cabo Concept by utilizing any of the elements that make up the Cabo Concept, as
defined in attached Exhibit 8.1 which exhibit is incorporated herein by
reference. This covenant not to compete excludes any Cabo Concept facility
franchised to Hillyer pursuant to a Unit Franchise Agreement entered into
between Buffton and Hillyer in accordance with the Area Development Agreement.

Section 8.2 Seller, General Partner and Hillyer shall not, for a period of two
years from the Effective Date, directly or indirectly, develop, own or operate:
(i) any food and beverage facility that is perceived by the public to be a
Mexican restaurant, within a four mile radius of any Cabo Concept facility owned
by Buffton, Cabo or any of their affiliates, or (ii) any food and beverage
facility, (except JJ's Roadhouse, located on Kirby Drive, Houston, Texas,
Bubba's Roadhouse, presently located in Fort Myers, Florida, and The Original
Pasta Company locations to be developed in Florida), within a two mile radius of
any Cabo Concept facility owned by Buffton, Cabo or any of their affiliates.

Section 8.3 Seller, General Partner and Hillyer agree that a breach or violation
by either Seller, General Partner or Hillyer of the covenants contained in this
Article, shall entitle either Buffton or Cabo, as a matter of right, to an
injunction issued by any court of competent jurisdiction, without the necessity
of a bond, restraining any further or continued breach or violation of these
covenants. Such right to an injunction shall be cumulative and in addition to
and not in lieu of any other remedies to which Buffton or Cabo may show
themselves justly entitled. Further, the parties to this Agreement agree that
the limitations contained in this Article with respect to geographic area
duration and scope of activity, are reasonable. However, if any court shall
determine that the geographic area, duration or scope of any restricted
activity, contained in this Article is unenforceable, then it is the intention
of the parties that such restrictive covenants set forth herein shall not
thereby be terminated, but shall be deemed amended and reformed to the extent
required in order to render it valid and enforceable. Further, the restrictions
set forth in this section are cumulative to any and all rights and protections
afforded to Buffton or Cabo by law and the

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provisions contained herein shall not be interpreted to grant to either Seller,
General Partner or Hillyer any right at the expiration of any restrictive term
that Seller, General Partner or Hillyer would not otherwise have.



                                  ARTICLE IX
                                NON-DISCLOSURE

Section 9.1 Seller, General Partner and Hillyer recognize and acknowledge that
both Buffton and Cabo have given significant consideration to Seller, General
Partner and Hillyer and made a significant investment in acquiring the
Transferred Assets. Seller, General Partner and Hillyer agree that as an
inducement to Buffton and Cabo to acquire the Transferred Assets, Seller,
General Partner and Hillyer agreed to enter into the provisions of this article.
For five (5) years following the Effective Date, neither Seller, General Partner
nor Hillyer shall, without the prior written consent of Buffton or Cabo, use or
disclose, or authorize any other person to use or disclose any Confidential
Information of Buffton or Cabo, as hereinafter defined. For purposes of this
immediately preceding sentence, persons properly entitled to such information
shall be the Board of Directors of Buffton or Cabo and such officers, employees
and agents of Buffton or Cabo or any affiliates thereof to whom such
information is furnished in the normal course of business under established
policies approved by Buffton or Cabo. For purposes of this Agreement, the term
"Confidential Information" shall mean any documents or written information that
have been stamped "CONFIDENTIAL," operating manuals, written recipes that are
proprietary to Buffton or Cabo or any of its affiliates and stamped
"CONFIDENTIAL," recipe books, concept profiles, accounting papers, work papers
and corporate records. The term "Confidential Information" shall also include
these same items relating to the Cabo Concept. The restrictions on Seller,
General Partner and Hillyer set forth in this Article shall not limit or
restrict the protection of Confidential or Proprietary Information afforded to
Buffton or Cabo, or any of their affiliates, pursuant to law, but are cumulative
to those rights. Further, the restrictions set forth herein shall not be
interpreted to grant to either Seller, General Partner or Hillyer any right at
the expiration of the five (5) year period to use, disclose or authorize a third
party to use any of the Confidential Information.

Section 9.2 In the event of a breach or threatened breach by either Seller,
General Partner or Hillyer of the provisions of this Article, Seller, General
Partner, Hillyer, Cabo and Buffton agree that the remedy at law available to
either Buffton or Cabo or any of their affiliates would be inadequate and that
either Buffton or Cabo or any of their affiliates shall be entitled to an
injunction without the necessity of posting bond therefor, restraining either
Seller, General Partner or Hillyer from disclosing, in whole or in part, any
Confidential Information or proprietary information. Nothing herein shall be
construed as prohibiting Buffton or Cabo or any of their affiliates from
pursuing any other remedies for such breach or threatened breach available at
law or in equity, including the recovery of damages from Seller, General Partner
or Hillyer. Further, the restrictions set forth in this section are cumulative
to any and all rights and protections afforded to Buffton, Cabo or any of their
affiliates, by law.

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                                   ARTICLE X
                               NON-SOLICITATION

Section 10.1 Seller, General Partner and Hillyer agree that they will not
directly or indirectly entice or solicit to hire; (i) any present or future
employees of Buffton or Cabo or any one of their affiliates or, (ii) any past
employee of Seller, General Partner or Hillyer or any affiliate of Seller,
General Partner or Hillyer who worked at Seller's Business. With respect to any
employee described in (i) or (ii) above whose employment has been voluntarily or
involuntarily terminated, Seller and Hillyer individually agree not hire said
employee for a period of six months following the termination of said employee's
employment.

                                  ARTICLE XI
                        REPRESENTATIONS AND WARRANTIES

Section 11.1 Representations and Warranties of Seller. General Partner and
Hillyer. Seller, General Partner and Hillyer hereby represent and warrant to
Buffton and Cabo, the following, which representations and warranties shall
survive and be deemed continuing following the Closing:

A. Organization and Good Standing. Seller is a limited partnership and General
Partner is a Limited Liability Company, and both are duly organized, validly
existing, and in good standing under the laws of the State of Texas and have the
partnership or corporate power and authority necessary to carry on their
business as presently conducted and to own, operate and lease the properties and
assets now owned and operated by Seller and/or General Partner, including the
Transferred Assets.

B. Authority. The execution of this Agreement by Seller, General Partner and
Hillyer and the performance of their respective obligations hereunder,
including, without limitation, the transfers, conveyances, assignments,
deliveries and other agreements to be executed pursuant hereto or in connection
herewith or contemplated hereby, are within Seller's, General Partner's and
Hillyer's powers and have been duly authorized by all necessary action, have
received all necessary approvals, have provided all required notices, all
necessary consents have been acquired or will be delivered to Buffton prior to
or at the Closing and Seller, General Partner and Hillyer have full right, power
and authority to execute and deliver this Agreement and any other agreement,
document or instrument to be executed in connection herewith to consummate the
transactions contemplated hereby. No other proceedings or actions are necessary
on the part of Seller, General Partner or Hillyer to make this Agreement, or any
other agreement, document or instrument to be executed pursuant hereto or in
connection herewith, authorized, legal, valid and binding upon Seller, Sellerts
limited partners, General Partner or Hillyer. Neither the execution or delivery
of this Agreement nor the performance of its terms including, but not limited
to, the execution of or performance under any transfers, conveyances,
assignments or other agreements to be executed pursuant hereto, in connection
herewith, or contemplated hereby, will contravene or violate:

(a) any law, ordinance or governmental rule or regulation to which Seller,
General Partner, the Transferred Assets, Seller's Business or Hillyer is
subject;

(b) any judgment, order, writ, injunction, or decree of any court or of any
governmental official, agency or instrumentality which is applicable to Seller,
General Partner, or Hillyer;

                                       10
<PAGE>
 
(c) the limited partnership agreement of Seller, including any amendments
thereto or restatements thereof;

(d) the regulations or any other organizational documents of General Partner; or

(e) the terms of any Contract, Lease or Equipment Lease.

C. Validity and Binding Nature. This Agreement is and the documents, instruments
and agreements executed and delivered by Seller, General Partner or Hillyer
pursuant to the terms hereof or in connection herewith are, when duly executed
and delivered by all parties whose execution and delivery thereof is required,
legal, valid and binding obligations of Seller, General Partner or Hillyer
enforceable against Seller, General Partner or Hillyer in accordance with and to
the extent of their respective terms.

D. Title. Seller, General Partner and/or Hillyer has, and following the Closing
Buffton will have, good and marketable title to the Transferred Assets free and
clear of any title defects, objections, mortgages, pledges, liens, security
interests, charges, restrictions, claims or encumbrances of any nature
whatsoever. Neither Seller, General Partner nor Hillyer has failed to pay or
discharge when due any liabilities of which the failure to pay or discharge has
caused or will cause any damage or risk of loss to any of the Transferred
Assets. Neither Seller, General Partner nor Hillyer have sold, assigned or
transferred to any third party any material portion of their assets or
properties used or included in Seller's Business except in the ordinary course
of business consistent with past practice. Following the Closing none of the
limited or general partners of Seller, Seller, General Partner, Hillyer or any
third parties shall have any right, title, or interest in any of the Transferred
Assets or Seller's Business.

E. Default.

(1) Neither Seller, General Partner nor Hillyer is in default under or in
violation of any provision of Sellers' Limited Partnership Agreement or in
violation of any agreement material to its business and has not received any
notice of a violation, and is not in violation, of any law, ordinance, rule,
regulation, or directive of any federal, state, county, city, or other
governmental department, bureau, agency or other body pertaining to or relating
to Seller's Business, the Transferred Assets or the operation thereof including,
but not limited to, any zoning, building, fire, or health code, any
environmental laws, or any provisions of the Americans With Disabilities Act.

(2) The execution and delivery of this Agreement or any agreement in connection
herewith, will not result in the breach of any terms, conditions or provisions
of, constitute a default of or an event which, with notice or lapse of time or
both, would constitute a default under, or result in a violation or termination,
or conflict with or give any third party the right to accelerate the performance
provided by the terms, conditions or provisions of any contract, agreement,
instrument, document, indenture, mortgage, lease, license or other agreement or
understanding, whether written or oral, to which Seller or Hillyer is a party or
by which any of the Transferred Assets are bound, or any provision of law,
regulation, judgment or order to which Seller or Hillyer is subject or by which
Seller or Hillyer or the Transferred Assets is bound or would result in the
creation or imposition of any lien, charge, restriction, security interest or
encumbrance of any nature whatsoever upon or give to any third party any
interests or rights, including rights of termination or cancellation in or with
respect to any of the Transferred Assets.

F. Third Party and Governmental Consents. No consent, authorization, approval,
order, license, certificate, or permit is required or any registration,

                                       11
<PAGE>
 
declaration or filing with any governmental authority, court, tribunal, person,
firm or agency is required to be obtained or made by or with respect to Seller
or Hillyer in connection with the execution, delivery, and performance of this
Agreement, or any other agreement to be executed in connection herewith, or the
consummation of the transaction contemplated hereby or the transfer of the
Transferred Assets to Buffton and subsequently to Cabo, other than those
acquired by Seller, General Partner or Hillyer and provided to Buffton as of the
date hereof.

G. Litigation. There are no claims, actions, suits, proceedings, arbitrations,
mediations, litigation, or governmental investigations pending or to the
knowledge of Seller, General Partner or Hillyer after due inquiry, threatened
against or affecting Seller's Business or the Transferred Assets, at law or in,
equity whether before any federal, state, municipal or other court, governmental
department, commission board, or agency or instrumentality and after due
inquiries, neither Seller, General Partner nor Hillyer knows of any factors or
circumstances which might give rise to any of the foregoing. Neither Seller,
General Partner nor Hillyer is a party to or subject to the provisions of any
judgment, order, writ, injunction, or decree of any court or of any governmental
official, agency or instrumentality which would prevent the consummation of the
transactions contemplated by this Agreement.

H. Taxes. All federal, state and local tax returns, reports and statements
(including all unemployment, compensation, social security, payroll, sales and
use, excise, privileged, property, ad valorem, franchise, license, school and/or
other tax returns, reports or statements under the laws of the United States,
any foreign country, or any state, municipal, or political subdivision thereof)
required to be filed by either Seller, General Partner, Hillyer or Seller's
Business including, but not limited to the Form 1065 for Seller's and General
Partner's years ending December 31, 1994 (the "Tax Returns") have been duly
filed on a timely basis under the statutes, rules and regulations of each
applicable jurisdiction or will be filed under valid extensions and all such tax
returns properly reflect the taxes of either Seller, General Partner, Hillyer or
Seller's Business for the respective periods covered thereby and all such taxes
have been paid. To the best of Seller's and Hillyer's knowledge, all such Tax
Returns are complete and accurate in all material respects and comply with all
laws applicable to the jurisdiction which they are filed in. As of the date
hereof and Closing, General Partner Seller, Hillyer and Seller's Business is and
will be in compliance with all state and federal laws, including, without
limitation, all laws regarding withholding for employees.

I. Financial Statements. All financial statements provided to Buffton in
connection with Buffton's due diligence and the transactions contemplated
hereby, which include, but are not limited to, the financial statements ending
1/31/95, 2/28/95, 3/31/95, 4/30/95, 5/31/95, 6/30/95, 7/31/95, 8/31/95, 9/30/95,
10/31/95 and 11/30/95, have been prepared from the books and records of Seller
and Seller's Business, are true and correct, accurately reflect the financial
condition of Seller and Seller's Business and have been applied on a consistent
basis.

J. Intellectual Property. Seller, General Partner and Hillyer make the following
representations and warranties with respect to the Intellectual Property:

a. He or it knows of no facts not disclosed to Buyer in the search heretofore
performed by Buyer's counsel, Felsman, Bradley, Gunter & Dillon, LLP, as
summarized in their letter dated December 5, 1995, attached hereto as Exhibit
ll.l(J)(a), which would impair the good and clear title of either Seller or
General Partner to the Intellectual Property or the enforcement of their rights
to use the Intellectual Property nationwide against others or that

                                       12
<PAGE>
 
their use of the Intellectual Property constitutes infringement of the rights of
any third party.

b. He or it knows of no facts not disclosed to Buyer in the search heretofore
performed by Buyer's counsel, Felsman, Bradley, Gunter & Dillon, LLP, as
summarized in their letter dated December 5, 1995, attached hereto as Exhibit
ll.l(J)(a), indicating that following the Closing, Buyer will not have good and
clear title to the Intellectual Property free and clear of any and all claims of
infringement or the rights to enforce the rights to use the Intellectual
Property nationwide against others and to enjoin any third parties use of the
Intellectual Property or that the use by Buyer of the Intellectual Property will
infringe on the rights of any third party.

c. He or it knows of no facts not disclosed to Buyer in the search heretofore
performed by Buyer's counsel, Felsman, Bradley, Gunter & Dillon, LLP, as
summarized in their letter dated December 5, 1995, attached hereto as Exhibit
ll.l(J)(a), indicating that there are uses or registrations by any third party
of any trade or service marks which are the same as or similar to any of the
Intellectual Property including any trade or service marks that include the
words "'Cabo,'" 'Mix-Max'" or a swordfish design component.

d. He or it knows of no facts not disclosed to Buyer in the search heretofore
performed by Buyer's counsel, Felsman, Bradley, Gunter & Dillon, LLP, as
summarized in their letter dated December 5, 1995, attached hereto as Exhibit
ll.l(J)(a), indicating that there are uses or registrations of trade or service
marks the same as or similar to the Intellectual Property that were discovered
by Seller, General Partner, Hillyer or their lawyers or agents in any searches
done prior to the date hereof and no such searches have been performed.

e. Copies of all letters and correspondence to and from Seller's, General
Partner's or Hillyer's counsel concerning the Intellectual Property have been
provided to Buyer.

f. Copies of all communications with any third parties known to any of them
concerning the Intellectual Property have been provided to Buyer.

g. The identification and/or copies of all communications between either Seller,
General Partner or Hillyer and any governmental agency regarding the
Intellectual Property have been provided to Buyer.

h. Any and all curative efforts by Seller, General Partner or Hillyer to secure
that free and clear title to the Intellectual Property will be vested in Buffton
after Closing.

K. Equipment. The Equipment is, and as of the Closing will be, in good operating
condition, subject to normal wear, tear and such maintenance as is usually
required for equipment of its type and age, and to the knowledge of Seller,
General Partner and/or Hillyer no particular item of Equipment is in need of
material repairs as of the date hereof.

L. Contracts.

(1) Seller, General Partner and Hillyer have supplied Buffton with a true and
correct copy of each of their respective contracts that relate to Seller's
Business or any of the Transferred Assets. There are no written or oral
contracts, agreements, commitments or understandings relating to Seller's
Business or the Transferred Assets to which Seller, General Partner or Hillyer
is a party to or to which Seller, General Partner or Hillyer is directly or
indirectly bound by or may be subject to, that has not been provided to Buffton.

                                       13
<PAGE>
 
(2) The Contracts, Equipment Leases, Leases and all other contracts are valid
and binding and shall be in full force and effect in accordance with their
terms, as of Closing. Seller, General Partner and Hillyer have performed all
their obligations required to be performed to date and are not in default or
alleged to be in default under any contract that relates to or affects Seller's
Business or any of the Transferred Assets and there exists no event, condition
or occurrence, which after notice or lapse of time or both would constitute a
default by Seller, General Paratner or Hillyer.

M. Inventory. The Inventory maintained at the Closing will be good and useable
and will be in the ordinary course of Seller's Business. The inventory reflected
on all financial statements provided to Buffton by Seller, General Partner or
Hillyer, and those used for the adjustment to the Purchase Price pursuant to
Section 1.6 hereof, shall consist of items of a quality and quantity usable or
salable in the ordinary course of business and the value at which all inventory
is carried is the lower of cost or market.

N. Representations and Warranties True - No Misleading Statements. All the
representations and warranties set forth herein or in any document to be
delivered pursuant hereto, and all statements or certificates furnished or to be
furnished to, by or pursuant hereto or in connection with the negotiation,
execution or performance of this agreement are true and correct and will survive
Closing. The representations and warranties made herein, or in any other
document specifically referred to herein, do not contain any untrue statements
of a material fact or omit to state a material fact necessary in order to make
the statements herein or therein, in light of the circumstances under which they
were made, not misleading.

O. Conduct of Seller's Business. Seller's Business is being conducted in the
ordinary course of business consistent with past practices and there has not
been any material or adverse change in Seller's Business, the financial
condition, the results of operations or prospects of Seller's Business and there
has not been any event or circumstance which would be likely to cause such a
change. Seller, General Partner and Hillyer will operate Seller's Business in
good faith and in the ordinary course of business through the Closing and there
will not be an event or circumstance that might reasonably cause a material or
adverse change in Seller's Business up and through the Closing.

P. Suppliers. Exhibit "ll.lP". sets forth a list of the ten largest suppliers to
Seller's Business as of the date hereof. There has been no adverse change in the
business relationship of Seller, General Partner, Seller's Business or Hillyer
with any of these suppliers and Seller, General Partner and Hillyer have no
reason to believe that there will be any such adverse change in the future as a
result of the consummation of the transactions contemplated by this Agreement.
In addition, neither Seller, General Partner nor Hillyer know of any facts or
circumstance which would be reasonably calculated as to give Seller, General
Partner or Hillyer a reason to believe that there will be an adverse change in
the future business relationship between Seller's Business and any supplier.

Q. Compliance with Laws. Seller, General Partner, Hillyer and Seller's Business
have each complied with and are not in violation of any law, ordinance or
governmental rule or regulation in which they or their business, operations,
assets or properties is subject and has not failed to obtain, or to adhere to
the requirements of, any license, permit or other governmental authorization
necessary to the ownership of the Transferred Assets or to the conduct of its
business, which non-compliance, violation or failure to obtain or adhere might
adversely affect the business, operations, Transferred Assets,

                                       14
<PAGE>
 
properties, prospects or condition (financial or otherwise) of Seller, General
Partner, Hillyer, or Seller's Business.

R. No Third Party Options. There are no existing agreements, options,
commitments or rights of first refusal or rights with, to or in any third party
to acquire any of the Transferred Assets or any interest therein, except for
those contracts entered into by Seller or Hillyer in the normal course of
business consistent with past practice for the sale of its products and
services, none of which are inconsistent with any provisions of this Agreement.

S. Change. Neither Seller, General Partner nor Hillyer have any current
knowledge of any change contemplated in any applicable law or any judicial or
administrative action or any action by any adjacent landowners or any natural or
artificial condition upon any leased real property, which would prevent or
render more costly Bufftons operation of Seller's Business or Buffton's use of
any of the Transferred Assets.

T. Buffton Stock. With respect to the Buffton Stock to be received by Hillyer
pursuant to the terms of this Agreement, Hillyer represents to Buffton and Cabo
the following:

i. The Buffton Stock is being acquired for the account of Hillyer and for
investment purposes only and without a view toward distribution, as that phrase
is defined under the Securities Act of 1933, as amended ("The Act"), or the
rules and regulations of the Securities and Exchange Commission (the "SEC"), of
all or any part of the Buffton Stock.

ii. Hillyer has access to the complete public information regarding the business
and finances of Buffton and has received and reviewed the contents of the
following documents:

(a) Buffton's Annual Reports on Form 10-K for 1992, 1993, 1994 and 1995;

(b) The Notice and Proxy Statement for the annual meeting of shareholders of
Buffton held March 21, 1995;

(c) Buffton's Quarterly Report on Form 10-Q for the fiscal quarters ended
December 31, 1994, March 31, 1995 and June 30, 1995;

(d) Buffton's consolidated income statement projections for the year ending
September 30, 1996;

(e) Buffton's consolidated income statement projections for the year ending
September 30, 1996 including any operations which would include the transferred
assets following the Closing and the operations of the Stockyards Hotel in Fort
Worth, Texas, which Buffton is anticipating acquiring;

(f) BFX Hospitality Group, Inc.'s consolidated income statement projections for
the year ending September 30, 1996, which include operations relating to the
Transferred Assets following the Closing and the operations related to the
Stockyards Hotel in Fort Worth, Texas which Buffton is anticipating acquiring;

(g) The organization chart for BFX Hospitality Group, Inc. setting forth
existing operations, the additions of the operations involving the Transferred
Assets following the Closing, the addition of the Stockyards Hotel assuming
Buffton acquires it, and additional food and beverage concepts;

(h) The public offering book of Current Technology, Inc., a wholly owned
subsidiary of Buffton;

                                       15
<PAGE>
 
(i) All press releases published by Buffton since October 1, 1994; and

(j) A summary term sheet on the acquisition of the Stockyards Hotel in Fort
Worth, Texas.

iii. Hillyer has such knowledge and experience in business and financial matters
that Hillyer has been able to understand and evaluate the risks and merits
acquiring and holding the Buffton Stock as provided for in this Agreement.
Hillyer has also received advice and assistance from CappelIen & Associates,
certified public accountants.

U. Due Diligence. Seller, General Partner and Hillyer have provided to Buffton
any and all information or documents responsive to Buffton's due diligence
requests, copies of which are attached hereto as Exhibit ll.l(u).

V. Transferred Assets. The Transferred Assets constitute all of the assets that
are used in or relate to Seller's Business, owned by Seller, General Partner,
and/or Hillyer, except the Excluded Assets.

W. SEC Filings. All representations, information, documents, and communications
made or furnished to Buffton or Cabo are accurate in all respects and it is
specifically acknowledged that Buffton will rely upon the representations and
warranties contained in Section ll.l(N) hereof in preparing the Securities and
Exchange Commission Form S-3 Registration Statement and Securities and Exchange
Commission Form 8-K Report (if required) and/or any other appropriate report or
document required by Federal Securities laws.

X. Payables. The Payables constitute all of the trade payables and other
liabilities through December 31, 1995.

Section 11.2 Seller's. General Partner's and Hillyer's Indemnity. Seller,
General Partner and Hillyer agree to pay on behalf of, indemnify fully, hold
harmless and defend Buffton, Cabo, and their officers, directors, and employees
(collectively the "Indemnified Parties"), from and against all demands, claims,
actions or causes of action, assessments, losses, damages, costs and other
liabilities including without limitation reasonable attorneys' and accountants'
fees, expenses, court costs, and all other out-of-pocket expenses (collectively
"Losses"), asserted against or incurred by the Indemnified Parties directly or
indirectly arising out of or in any way connected to any of the following:

A. The breach of any warranty or the inaccuracy of any representation of Seller,
General Partner or Hillyer contained herein;

B. Any breach or failure by Seller, General Partner or Hillyer to perform any of
the covenants, agreements or obligations under this Agreement or any other
agreement or instrument executed and delivered by or on behalf of Seller,
General Partner or Hillyer in connection herewith except the Area Development
Agreement, any Unit Franchise Agreement, or any Consulting Agreement all by and
between Hillyer and Cabo;

C. The assertion by any third party against Buffton or Cabo of any claim,
liability or obligation, not specifically assumed by Buffton under this
Agreement or any other agreement or instrument executed and delivered by or on
behalf of Buffton or Cabo in connection herewith, relating to or arising out of
the business, operations, or assets of Seller, General Partner or Hillyer or
Seller's Business, whether known or unknown, accrued, contingent or otherwise as
of the Closing, or any judgment, orders, decrees, claims, actions, suits or
proceedings related to Seller, General Partner, Hillyer or

                                       16
<PAGE>
 
Seller's Business, arising out of events occurring or with respect to the
operation of Seller's Business prior to the Closing.

Section 11.3 Representations and Warranties of Buffton . Buffton and Cabo hereby
represent and warrant to Seller, General Partner and Hillyer, the following:

A. Organization and Standing. Buffton and Cabo are corporations duly organized,
validly existing, and in good standing under the laws of the state of their
incorporation, and are duly qualified to do business as foreign corporations and
are in good standing in each jurisdiction where the nature and extent of their
business and property make such qualification necessary.

B. Authority. The execution of this Agreement by Buffton and Cabo, and the
delivery hereof to Seller, General Partner and Hillyer, and the consummation by
Buffton and Cabo of the transactions contemplated herein, are within their
corporate powers, have been duly authorized by all necessary corporate action
(including authorization by their Boards of Directors), have received all
necessary governmental approval (if any shall be required), and did not and will
not contravene or conflict with any provision of law or of their charters or
bylaws, and Buffton and Cabo have full right, power, and authority to execute
this Agreement and to consummate the transactions contemplated herein.

C. Validity and Binding Nature. This Agreement is, and the documents and
agreements executed and delivered by Buffton and/or Cabo, as the case may be,
pursuant to the terms hereof, when duly executed and delivered by all parties
whose execution and delivery thereof is required, will be legal, valid`' and
binding obligations of Buffton and/or Cabo, as the case may be, enforceable
against Buffton and/or Cabo, as the case may be, in accordance with their
respective terms, except to the extent that enforceability may be limited by
bankruptcy, receivership, moratorium, conservatorship, reorganization or other
laws of general application affecting the rights of creditors generally or by
general principles of equity.

D. No Default. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated herein will result in a breach of
any terms or provisions of, constitute a default, or an event which, with notice
or lapse of time or both, would constitute a default, under the Articles of
Incorporation or Bylaws of Buffton or Cabo or under any agreement or instrument
to which Buffton or Cabo is a party, or by which Buffton or Cabo may be bound.

E. Buffton Stock. The Buffton Stock, when issued and delivered, will be duly and
validly issued, fully paid and non-assessable. The Buffton Stock is the only
class of capital stock of Buffton currently issued and outstanding. The holders
of common stock of Buffton have equal rights in all respects.

The common stock of Buffton has no conversion rights or redemption privileges.
Holders of the common stock of Buffton have no preemptive or other rights to
subscribe for shares and no cumulative voting rights.

F. Third Party and Governmental Consents. No consent, authorization, approval,
order, license, certificate or permit is required or any registration,
declaration or filing with any governmental authority, court, tribunal, person,
firm, or agency is required to be obtained or made by or with respect to Buffton
or Cabo in connection with the execution, delivery and performance of this
agreement or any other agreement to be executed in connection herewith or the
consummation of the transaction contemplated hereby or the transfer of the
Transferred Assets to Buffton or subsequently to Cabo.

                                       17
<PAGE>
 
                                  ARTICLE XII
                                  ARBITRATION

Section 12.1 Necotiation, Mediation and Arbitration. The parties will attempt in
good faith to resolve any controversy or dispute arising out of or relating to
this Agreement promptly by negotiations between or among the parties. If any
party reaches the conclusion that the controversy or dispute cannot be resolved
by unassisted negotiations, such party may notify CPR Institute for Dispute
Resolution, Inc. ("CPR"), 366 Madison Avenue, New York, New York 10017
[telephone (212) 949-6490; fax (212) 949-8859], CPR will promptly designate a
mediator who is independent and impartial, CPR's decision about the identity of
the mediator will be final and binding. The parties agree to conduct at least
eight consecutive hours of mediated negotiations in Fort Worth, Texas, within 30
days after the notice is sent. If the dispute is not resolved by negotiation or
mediation within 30 days after the first notice to CPR is sent, then, upon
notice by any party to the other affected parties and to CPR, the controversy or
dispute shall be submitted to a sole arbitrator who is independent and
impartial, selected by CPR, for binding arbitration in Fort Worth, Texas, in
accordance with CPR's Rules for Non-Administered Arbitration of Business
Disputes. The arbitration shall be governed by the United States Arbitration
Act, 9 U.S.C. Sections 1-16 (or by the same principles enunciated by such Act in
the event it may not be technically applicable). The parties agree that they
will faithfully observe this Agreement and will abide by and perform any award
rendered by the arbitrator. The award or judgment of the arbitrator shall be
final and binding on all parties. No litigation or other proceeding may be
instituted in any court for the purpose of adjudicating, interpreting or
enforcing any of the rights or obligations relating to the subject matter
hereof, whether or not covered by the express terms of this Agreement, or for
the purpose of adjudicating a breach of determination of the validity of this
Agreement, or for the purpose of appealing any decision of an arbitrator, except
a proceeding instituted for the sole purpose of having the award or judgment of
an arbitrator entered and enforced. If any party becomes the subject of a
bankruptcy, receivership or other similar proceeding under the laws of the
United States of America, any state or commonwealth or any other nation or
political subdivision thereof, then, to the extent permitted or not prohibited
by applicable law, any factual or substantive legal issues arising in or during
the pendency of any such proceeding shall be subject to all of the foregoing
mandatory mediation and arbitration provisions and shall be resolved in
accordance therewith. The agreements contained herein have been given for
valuable consideration, are coupled with an interest and are not intended to be
executory contracts.

                                 ARTICLE XIII
                              GENERAL PROVISIONS

Section 13.1 Amendment. This Agreement may not be amended, modified or altered,
except pursuant to an instrument in writing signed by each of the parties
hereto.

Section 13.2 Assianment. No party to this Agreement may assign its rights or
obligations hereunder without first obtaining the written consent of the other
parties hereto.

Section 13.3 Entire Agreement. This Agreement contains the entire agreement
between the parties hereto with respect to the transaction contemplated herein
and supersedes all previous written or oral agreements, negotiations,
commitments and rights. Nothing in this Agreement shall be construed to give any
person other than the parties hereto and their respective successors and
permitted assigns any legal or equitable right, remedy or claim under this
Agreement.

                                       18
<PAGE>
 
Section 13.4 Parties Bound. This Agreement shall be binding upon and inure to
the benefit of each party hereto, and its permitted assigns and successors in
interest and all permitted assigns and successors in interest thereafter.

Section 13.5 Governing Law. This Agreement including without limitation the
interpretation, construction, validity, and enforceability herein shall be
governed by the laws of the State of Texas.

Section 13.6 Attorneys' Fees. Should any action at law or in equity including
any action for declaratory relief be brought to enforce or interpret the
provisions of this Agreement and/or any other agreement executed, delivered or
incident hereto, the prevailing parties shall be entitled to recover its
attorneys' fees from the other party or parties, which fees may be set by the
court in a trial of such action or may be enforced in a separate action brought
for that purpose, and which fees shall be in addition to any other relief which
may be awarded.

Section 13.7 Notices. Any notice, consent or other communication given hereunder
shall be in writing, including electronic facsimiles, and shall be deemed to
have been duly given when delivered either personally or by registered or
certified mail, postage prepaid, or when dispatched by electronic facsimile
transfer, confirmed in writing by mail simultaneously dispatched at the
following addresses and facsimile numbers.

Buffton and Cabo:   226 Bailey Avenue, Suite 110
                    Fort Worth, Texas 76107
                    Facsimile Number (817) 877-0420


General Partner:    3350 McCue, #2103
                    Houston, Texas 77056


Seller:             3350 McCue, #2103
                    Houston, Texas 77056


James Hillyer:      3350 McCue, #2103
                    Houston, Texas 77056



Section 13.8 Headinas and Exhibits. The headings of the various sections of
this Agreement are included solely for the convenience of reference and are not
intended to be full or accurate descriptions of the contents. Any reference to
an exhibit or exhibits shall signify that such exhibit or exhibits are
incorporated herein by reference.

Section 13.9 Counterparts. This Agreement may be executed in two or more
original counterparts, each of which may be deemed an original and all of which
together shall constitute one and the same instrument.

Section 13.10 Interpretation. Any pronoun used in this agreement shall be gender
neutral and shall be deemed to include the singular and the plural unless the
context otherwise requires.

Section 13.11 Further Assurance. Each party will execute and deliver, or cause
to be executed and delivered from and after the date hereof, such additional and
further transfers, assignments, endorsements and other instruments as any other
party reasonably may request for the purpose of carrying out this Agreement.

                                       19
<PAGE>
 
Section 13.12 Time is of the Essence. Time is of the essence in this Agreement.

IN WITNESS WHEREOF, the parties hereby have executed this Agreement as of the
day and year first above written.

SELLER:

CABO TACOBAR ONE, LTD., a
Texas Limited Partnership,by
Cabotaco Management, L.C., a
Texas Limited Liability A
Compapy, General Partner

By: /s/ James Hillyer
    ------------------
Title: Manager

GENERAL PARTNER:

CABOTACO MANAGEMENT, L.C. a Texas Limited Liability Company

By: /s/ James Hillyer
    ------------------
Title: President


JAMES HILLYER

By: /s/ James Hillyer
    -----------------


CABO:

CABO SHEPHERD, INC., a Texas Corporation

By: /s/ Robert McLean
    ------------------
Title: President


BUFFTON:

BUFFTON CORPORATION, a Delaware Corporation

By: /s/ Robert McLean
    ------------------
Title: President

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