Document:

Exhibit 10.16
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                            ASSET PURCHASE AGREEMENT

                           DATED AS OF AUGUST 12, 2005

                                     BETWEEN

                              C AND L SERVICES, LP

                                    AS SELLER

                                       AND

                            UNION DRILLING TEXAS, LP

                                    AS BUYER

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                            ASSET PURCHASE AGREEMENT
                            ------------------------

                 (U-15; BREWSTER N-95; IDECO 525; NATIONAL 110)
                 ----------------------------------------------

                  THIS ASSET PURCHASE AGREEMENT is made and entered into as of
August 12, 2005, between C AND L SERVICES, LP, a Texas limited partnership
("Seller"), and UNION DRILLING TEXAS, LP, a Texas limited partnership ("Buyer").

                              W I T N E S S E T H:
                              - - - - - - - - - -

                  WHEREAS, Buyer desires to purchase the Assets (as hereinafter
defined) from Seller; and

                  WHEREAS, Seller desires to sell the Assets to Buyer in
exchange for the payment by Buyer of the Purchase Price (as hereinafter
defined);

                  NOW, THEREFORE, for and in consideration of the mutual
benefits derived and to be derived herefrom by each party, Seller and Buyer
agree as follows:

                                    ARTICLE I

                                   DEFINITIONS
                                   -----------

         1.01   Basic Definitions. In addition to the terms defined in the
introductory paragraph of this Agreement, for purposes hereof, the following
terms shall have the meanings set forth in this Article I, unless the context
otherwise requires:

                  "Affiliate" means, as to the person specified, any person
controlling, controlled by or under common control with such person, with the
concept of control in such context meaning the possession, directly or
indirectly, of the power to direct or cause to direct or cause the direction of
the management policies of another, whether through the ownership of voting
securities, by contract, or otherwise.

                  "Agreement" means this Asset Purchase Agreement and all
schedules and exhibits attached hereto.

                  "Assets" has the meaning specified in Section 2.01.

                  "Best Efforts" means a party's best efforts in accordance with
reasonable commercial practice.

                  "Business Day" means a day on which national banks are
generally open for the transaction of business in Pittsburgh, Pennsylvania.

                  "Buyer" has the meaning specified in the preamble.

                                        1

                  "Closing" means the consummation of the sale and purchase of
the Assets as contemplated by this Agreement which shall take place on the
Closing Date.

                  "Closing Date" has the meaning specified in Section 9.01.

                  "Code" means the Internal Revenue Code of 1986, as amended,
and any successor thereto.

                  "Delivery Date" means, with respect to any Asset, the date
that Buyer has accepted the delivery of such Asset in accordance with the
provisions of Section 8.08 hereof.

                  "Final Delivery Date" means the date that Buyer has accepted
the delivery of the final installment of Assets hereunder in accordance with the
provisions of Section 8.08 hereof.

                  "Lien Release Confirmation" means a letter from Community Bank
of Cleburne (the "Bank") addressed to Buyer (i) confirming either that the
Assets are not subject to any lien or security interest in favor of the Bank or
that such Assets may be transferred by the Seller to the Buyer free and clear of
any and all liens and security interests that may exist in favor of the Bank (as
the case may be) and (ii) containing an undertaking by the Bank in favor of the
Buyer to file either an amendment or a termination (as the case may be) of any
existing financing statement that may be of record against the Seller with
respect to any of the Assets to release such Assets from such Assets from any
such record lien and security interest.

                  "Purchase Price" means the consideration specified in Section
3.01 to be paid by Buyer to Seller in connection with the sale of the Assets by
Seller to Buyer under the terms of this Agreement.

                   "Seller" has the meaning specified in the preamble.

         1.02   Additional Definitions. Other terms are elsewhere defined in
this Agreement and shall, for purposes of this Agreement, have the meanings so
specified unless the context otherwise requires. The definitions given to the
terms herein shall be applicable to both the singular and plural forms of such
terms as the context requires.

                                   ARTICLE II

                           PURCHASE AND SALE OF ASSETS
                           ---------------------------

         2.01   Assets to be Purchased. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, Seller agrees to sell,
assign, transfer, convey and, subject to Section 8.08 hereof deliver, to Buyer,
and Buyer agrees to purchase, the following (collectively, the "Assets"):

          (a)  the four land drilling rigs described on Schedule 2.01(a),
               together with all of such drilling rigs' engines, machinery, and
               fittings, and the drilling equipment, blowout preventers,
               handling tools, spare parts, supplies, tubulars and drill pipe
               relating to such drilling rigs described on Schedule 2.01(a)(i)
               (collectively, the "Rigs") and such other drilling equipment,

                                       2

               spare parts, supplies, drill pipe and/or other assets, as
               described Schedule 2.01(a)(ii) (collectively, the "Other
               Assets");

          (b)  the following tangible and intangible assets used or held for use
               in connection with the ownership, maintenance and operation of
               the Assets, to the extent assignable by law and Seller or its
               Affiliates have the right to assign and transfer such assets:

               (i)  all records to be delivered to Buyer pursuant to Section
                    2.04; and

               (ii) the certificates, licenses, permits, consents, operating
                    authorities, orders, exemptions, franchises, approvals,
                    registrations and other authorizations and applications
                    therefor specifically associated with the maintenance and
                    operation of the Assets ("Permits"); and

               (iii) all warranties relating to the Assets providing benefits to
                    the owner of the Assets.

         2.02   Risk and Expense. Seller shall bear the risks inherent in the
ownership of the Assets until the Final Delivery Date. Seller shall maintain in
full force and effect the insurance policies currently covering the Assets
through the Final Delivery Date. Should any of the Rigs (and/or components
thereof) suffer any damage between the date hereof and the Delivery Date, at the
option of the Buyer, (i) the Seller shall assign and/or pay over to Buyer any
insurance proceeds receivable and/or received (as the case may be) by Sellers
with respect to such damage, together with an amount equal to any insurance
deductible or coinsurance amount applied against such damages or (ii) Buyer
shall be entitled to deduct from the Purchase Price Balance payable on the Final
Delivery Date an amount equal to the value of the damaged Assets.

         2.03   Nonassumption of Liabilities. Buyer does not assume and shall in
no event be liable for any liabilities, debts or obligations of Seller, whether
accrued, absolute, matured, contingent or otherwise, including, without
limitation, (a) any foreign, federal, state, county, or local taxes, including,
without limitation, excise taxes, or documentary transfer taxes, which in each
case arise from the ownership of the Assets on or prior to the Final Delivery
Date or from the consummation of the transactions contemplated by this
Agreement; (b) any obligations or liabilities arising from any Environmental
Laws (as hereinafter defined) or hazardous substances, or any other obligations
or liabilities of any type relating to ownership or operation of any property
either directly or indirectly by Seller or the ownership or operation of any
business, property or assets utilized by Seller arising prior to or on the Final
Delivery Date; (c) any obligations or liabilities whatsoever which may be
imposed upon Buyer as a successor to Seller either directly or indirectly or
otherwise by any Environmental Laws; (d) any obligations or liabilities arising
out of, relating to, or in connection with any action, suit, proceeding, or
investigation pending or threatened against Seller or any of its shareholders,
officers, directors, employees, or agents; (e) any labor or employment-related
claims, obligations, or liabilities which accrue or arise from events occurring
prior to, on or after the Final Delivery Date, including, but not limited to,
any claim of obligation or liability relating to wages, employee benefits,
severance pay, workers' compensation, including insurance premiums, unemployment
insurance, breach of employment contract, wrongful discharge, employment
discrimination, or

                                       3

unfair labor practice; (f) any claims, obligations, or liabilities arising under
or relating to any alleged violation of the Worker Adjustment and Retraining
Notification Act of 1988, as amended; (g) any liabilities for fees or expenses
incident to the preparation of this Agreement or the consummation of the
transactions contemplated hereby (including, without limitation, counsel,
accountant's or finder's fees of Seller); or (h) trade payables or expenses,
debt, contracts, agreements, leases or other obligations of Seller, except to
the extent of the assignment and the assumption of the daywork drilling
contracts described in Section 2.05 below.

         2.04   Delivery of Records.

               (a)  Buyer shall be entitled to the records physically located on
                    the Rigs on the Closing Date and relevant to the Rigs
                    (and/or the components thereof) and/or on or with the Other
                    Assets on the Closing Date.

               (b)  Seller shall deliver to Buyer at the time and place of
                    delivery of the Assets, as provided in Section 8.08 below,
                    copies of any technical or operational manuals or
                    maintenance records related to the Assets.

               (c)  Seller shall be entitled to retain all originals of its
                    corporate, financial, accounting, legal, tax and audit
                    records, subject to Buyer's rights of inspection as set
                    forth in Section 8.02.

         2.05   Assignment of Daywork Drilling Contracts. Buyer agrees to accept
an assignment from Seller of the rights and obligations of Seller under the
following two existing contracts of Seller relating to the Rigs: (i) that
certain IADC Daywork Drilling Contract between Hallwood Petroleum, LLC
("Hallwood") and C and L Services, LP (BENCO Management, Inc./General Partner),
dated April 15, 2005, pursuant to which it was intended that the National 110
Rig be deployed in Reeves County, Texas (the "Hallwood Contract") and (ii) that
certain IADC Daywork Drilling Contract between Infinity Oil & Gas of Texas, Inc.
("Infinity") and C & L Services, LP or assigns, dated June 2, 2005, pursuant to
which it was intended that the U 15 Rig be deployed in the Newark East Barnett
Shale Field (the "Infinity Contract"; the Hallwood Contract and the Infinity
Contract being sometimes hereinafter collectively referred to as the "Assigned
Contracts"). Notwithstanding the foregoing, Seller acknowledges that it is the
intent of the Buyer to enter into new contracts with Hallwood and Infinity,
rather than to perform under the Assigned Contracts.

                                   ARTICLE III

                                 PURCHASE PRICE
                                 --------------

         3.01   Consideration for Assets. As consideration for the sale by
Seller to Buyer of the Assets, Buyer shall pay to Seller the sum of Eight
Million Six Hundred Fifty Thousand and No/100 Dollars ($8,650,000.00) in United
States currency (the "Purchase Price"), which Purchase Price shall be payable as
follows, subject to any reduction thereof in accordance with any provisions of
this Agreement (including, without limitation, Section 2.02 or Section 12.03
hereof):

                                       4

               (a)  Five Hundred Thousand and No/100 Dollars ($500,000.00) in
                    United States currency of the Purchase Price (the "Deposit")
                    shall be paid upon the execution by both parties of this
                    Agreement;

               (b)  Three Million Nine Hundred Thousand and No/100 Dollars
                    ($3,900,000.00) in United States currency of the Purchase
                    Price (the "Second Installment"; the Deposit, together with
                    the Second Installment, being sometimes hereinafter
                    individually referred to as an "Installment Payment" and
                    collectively as the "Installment Payments") shall be paid
                    within ten (10) days of the execution by both parties of
                    this Agreement, provided that the Buyer shall not be
                    obligated pay the Second Installment unless and until the
                    Seller shall have delivered to the Buyer the Lien Release
                    Confirmation; and

               (c)  The balance of the Purchase Price shall be paid in United
                    States currency (the "Purchase Price Balance") upon the
                    acceptance by Buyer of the delivery by Seller to Buyer of
                    the last to be delivered of the Assets, in accordance with
                    Sections 8.08 and 9.04, subject to Sections 2.02 and 12.03
                    hereof.

         3.02   Deposit and Installment Payments. The Deposit shall be
nonrefundable, unless the Seller shall breach its obligations to deliver the
Assets in accordance with the terms of this Agreement and the Buyer shall elect
to rescind this Agreement as a result of such breach, in which case, the Deposit
shall be fully refunded to Buyer, without prejudice to any other remedies that
the Buyer may have with respect to such breach. If no Assets are delivered to
Buyer hereunder solely as a result of a breach of this Agreement by Buyer, the
Deposit shall be paid to or retained by Seller, in which case, the parties agree
(i) that the amount of the Deposit (A) constitutes liquidated damages for
Buyer's breach of this Agreement and (B) is not a penalty, and (ii) the amount
of the Deposit shall be the limit of Buyer's liability for any breach of this
Agreement. In the event that the Buyer has paid the Second Installment to
Seller, but no Assets have been delivered to Buyer hereunder on or prior to
September 30, 2005, Buyer shall be entitled to a return of the Second
Installment, without prejudice to any other rights that the Buyer may have in
the event that the failure of such delivery is a result of a breach by Seller
hereunder. In the event that the Buyer has paid the Second Installment to
Seller, and Seller breaches its obligations to deliver all of the Assets to
Buyer hereunder on or before September 30, 2005, and Buyer elects to rescind
this Agreement to the extent of any Assets not delivered by Seller in accordance
with the terms of this Agreement, Buyer shall be entitled to a return of such
portion of the Second Installment, if any, as shall be equal to the amount by
which the Second Installment exceeds the value of the Assets delivered by Seller
under this Agreement, without prejudice to any other rights that the Buyer may
have in the event that the failure of such delivery is a result of a breach by
Seller. On the Final Delivery Date, the Installment Payments shall be applied
towards the Purchase Price for the Assets hereunder.

                                       5

                                   ARTICLE IV

                      REPRESENTATIONS, WARRANTIES OF SELLER
                      -------------------------------------

                  Seller represents and warrants to and agrees with Buyer that,
as of the date hereof and as of the Final Delivery Date:

         4.01   Organization and Qualification. Seller is a limited partnership
duly organized, validly existing, and in good standing under the laws of Texas,
has the full power and authority, to own, operate and lease its property and to
carry on its business as now conducted, and is duly qualified and is in good
standing in each jurisdictions in which the character of its properties and
assets currently owned or leased or the nature of its business transactions
makes such qualification necessary.

         4.02   Due Execution. The execution, delivery and performance of this
Agreement by Seller and the consummation of the transactions contemplated hereby
have been duly authorized by all requisite corporate action including the
approval by the general and limited partners of Seller. This Agreement and all
other agreements and written obligations entered into or undertaken in
connection with the transactions contemplated hereby constitute the valid and
legally binding obligations of Seller enforceable against Seller in accordance
with their respective terms.

         4.03   Legal Power and Authority. Seller has full power and authority
to enter into this Agreement and to perform all acts and to do all things
required on its part to be performed in connection with this Agreement and the
transactions contemplated hereby, and has granted full power and authority to
its appropriate officers to take all actions, to do all things and to make,
execute and deliver all documents as may be necessary or required in order to
effectuate and consummate the transactions contemplated hereby.

         4.04   No Conflicts; Assigned Contracts. The execution, delivery and
performance by Seller of this Agreement and the other documents, instruments and
agreements contemplated hereby and the consummation of the transaction
contemplated hereby and thereby will not (a) conflict with or result in a breach
of any provisions of the organizational documents of Seller, (b) result in a
material default or the creation of any lien or encumbrance or give rise to any
right of termination, cancellation or acceleration under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license, lease
or other agreement to which Seller is a party or by which it or the Assets may
be bound or affected, or (c) violate any order, writ, injunction, judgment,
decree, statute, rule or regulation applicable to Seller or any of its
properties or assets. Neither the sale by Seller nor the use by Buyer of the
Assets will infringe any United States or foreign patents or any copyright,
trademark or proprietary information rights of others. The Seller has delivered
to the Buyer true, correct and complete copies of each of the Assigned
Contracts.

         4.05   Litigation. There are no material suits, actions, proceedings or
governmental investigations or inquiries pending or, to Seller's knowledge,
threatened against Seller or the Assets that reasonably may be expected to have
a materially adverse effect on the sale by Seller of the Assets.

                                       6

         4.06   Brokers. Seller has incurred no obligation or liability,
contingent or otherwise, for brokers' or finders' fees with respect to the
matters provided for in this Agreement.

         4.07   Title to and Condition of Assets. On the date of this Agreement,
Seller lawfully owns and is lawfully possessed of good, valid, and indefeasible
title to the Assets. At the Closing, Seller shall lawfully own and be lawfully
possessed of, and shall sell, transfer and assign to Buyer, good, valid, and
indefeasible title to the Assets, free and clear of any and all mortgages,
security interests, liens, claims, debts, charges, or other encumbrances of any
kind. Seller agrees to warrant and defend the title to, and possession of, the
Assets for the benefit of Buyer against the claims and demands of all persons
claiming an interest in the Assets as of the Closing Date and/or as of the
Delivery Date, regardless of when any such claims or demands may be asserted.
Seller has not received any written notice from any governmental agency, board,
bureau, body, department or authority of any federal, state, municipal or
foreign jurisdiction, to the effect that any of the Assets is in violation of
any applicable ordinance, regulation or building, zoning, environmental or other
law in respect thereof, the violation of which will have a material adverse
effect on the ownership or use of any of such Assets. Each of the Rigs and Other
Assets delivered to Buyer in accordance with the provisions of this Agreement
shall be in at least as good condition upon such delivery as the condition that
such Assets were in when inspected by Buyer and/or Buyer's representatives prior
to the date hereof.

         4.08   Insurance. Seller has in place insurance policies of the types
and in coverage amount sufficient to fully insure any damage or casualty loss
which may arise between the date hereof and the Final Delivery Date with respect
to the Assets. Seller has previously delivered to Buyer a true and complete list
of all deductible and retention amount applicable to the Assets under such
policies. Seller does not know of any threatened termination of or material
alteration of coverage under any of such policies. All premiums payable under
all such policies have been timely paid and Seller has otherwise complied fully
with the terms and conditions of all such policies.

         4.09   Compliance with Laws. Seller has substantially complied with,
and is in substantial compliance with, all federal, state, local and foreign
statutes, laws, ordinances, regulations, rules, permits, judgments, orders or
decrees applicable to the Assets, and there does not exist, to the best of
Seller's knowledge, any basis for any claim of default under or violation of any
such statute, law, ordinance, regulation, rule, judgment, order or decree with
respect to the Assets.

         4.10   No Untrue Statement. In or in connection with the making of this
Agreement, together with the various schedules and exhibits hereto, Seller has
not made any untrue statements of a material fact or omitted to state a material
fact necessary in order to make the statements made by it herein not misleading.

         4.11   Sales Tax Exemption. To the knowledge and belief of Seller, the
conveyance of the Assets by Seller is an occasional sale under Section 151.304
of the Texas Tax Code and the rules promulgated thereunder and is thus exempt
from the imposition of the Texas sales tax.

                                       7

                                    ARTICLE V

                     REPRESENTATIONS AND WARRANTIES OF BUYER
                     ---------------------------------------

                  Buyer represents and warrants to and agrees with Seller that,
as of the date hereof and as of the Final Delivery Date:

         5.01   Organization and Qualification. Buyer is a limited partnership
duly organized, validly existing, and in good standing under the laws of Texas,
has the full power and authority, to own, operate and lease its property and to
carry on its business as now conducted, and is duly qualified and is in good
standing in each jurisdiction in which the character of its properties and
assets currently owned or leased or the nature of its business transactions
makes such qualification necessary.

         5.02   Due Execution. The execution, delivery and performance of this
Agreement by Buyer and the consummation of the transactions contemplated hereby
have been duly authorized by all requisite corporate action including the
approval by its sole general partner. This Agreement and all other agreements
and written obligations entered into or undertaken in connection with the
transactions contemplated hereby constitute the valid and legally binding
obligations of Buyer enforceable against Buyer in accordance with their
respective terms.

         5.03   Legal Power and Authority. Buyer has full power and authority to
enter into this Agreement and to perform all acts and to do all things required
on its part to be performed in connection with this Agreement and the
transactions contemplated hereby, and has granted full power and authority to
its appropriate officers to take all actions, to do all things and to make,
execute and deliver all documents as may be necessary or required in order to
effectuate and consummate the transactions contemplated hereby.

         5.04   No Conflicts. The execution, delivery and performance by Buyer
of this Agreement and the other documents, instruments and agreements
contemplated herein will not (a) conflict with or result in a breach of any
provision of the organizational documents of Buyer, (b) result in a material
default or the creation of any lien or encumbrance or give rise to any right of
termination, cancellation, or acceleration under any of the terms, conditions or
provisions of any material note, bond, mortgage, indenture, license or other
agreement to which Buyer is a party or by which it or any of its properties
assets or may be bound or affected, or (c) violate any order, writ, injunction,
judgment, decree, statute, rule or regulation applicable to Buyer or any of its
respective properties or assets.

         5.05   Litigation. There are no material suits, actions, proceedings or
governmental investigations or inquiries pending or, to Buyer's knowledge,
threatened against Buyer or its properties, assets, operations or businesses
that reasonably may be expected to have a materially adverse effect on the
purchase by Buyer of the Assets.

         5.06   Brokers. Buyer has incurred no obligation or liability,
contingent or otherwise, for brokers' or finders' fees with respect to the
matters provided for in this Agreement.

                                       8

                                   ARTICLE VI

                       CONDITIONS TO OBLIGATIONS OF SELLER
                       -----------------------------------

                  The obligations of Seller to consummate the transactions
contemplated herein are subject, at the option of Seller, to the fulfillment, on
or prior to the Closing Date, of each of the following conditions:

         6.01   Representations and Warranties. Each of the representations and
warranties of Buyer herein contained shall be true and correct (disregarding all
references to materiality contained therein) in all material respects on the
Closing Date.

         6.02   Performance. Buyer shall have performed all material
obligations, covenants, and agreements hereunder and shall have complied with
all material covenants and conditions contained in this Agreement to be
performed or complied with by Buyer at or prior to the Closing.

         6.03   Legal Prohibition. No provision of any applicable law or
regulation and no judgment, injunction, order or decree shall prohibit the
consummation of the Closing.

                                   ARTICLE VII

                       CONDITIONS TO OBLIGATIONS OF BUYER
                       ----------------------------------

                  The obligations of Buyer to consummate the transactions
contemplated herein are subject, at the option of Buyer, to the fulfillment on
or prior to the Closing Date of each of the following conditions:

         7.01   Representations and Warranties. Each of the representations and
warranties of Seller herein contained shall be true and correct (disregarding
all references to materiality contained therein) in all material respects on the
Closing Date.

         7.02   Performance. Seller shall have performed all material
obligations, covenants and agreements hereunder and shall have complied with all
material covenants and conditions contained in this Agreement to be performed or
complied with by Seller at or prior to the Closing.

         7.03   Legal Prohibition. No provision of any applicable law or
regulation and no judgment, injunction, order or decree shall prohibit the
consummation of the Closing.

         7.04   Absence of Liens. Each of the Assets shall be free and clear of
any and all mortgages, security interests, liens, claims, debts, charges, or
other encumbrances of any kind.

                                       9

                                   ARTICLE VIII

                     COVENANTS AND AGREEMENTS OF THE PARTIES
                BEFORE, RELATING TO AND SUBSEQUENT TO THE CLOSING

                Seller and Buyer hereby covenant and agree as follows:

         8.01   Expenses. Except as may be otherwise provided in this Agreement,
Seller and Buyer shall pay and discharge, or cause to be paid and discharged,
their own expenses incurred in connection with the preparation, authorization,
execution, and performance of this Agreement and the transactions contemplated
herein, including, without limitation, inspection fees and fees and expenses of
counsel, accountants and consultants. Seller shall be responsible for all costs
and expenses incurred in connection with the movement and delivery of the Assets
to Buyer's yard in Cresson, Texas.

         8.02   Access; Books and Records. Seller shall provide the officers,
employees and attorneys of Buyer reasonable access, during normal business hours
upon Buyer's reasonable prior notice to Seller, to the Assets and the records of
Seller specifically relating thereto. Seller shall cooperate fully with such
representatives of Buyer in connection with such review. If and to the extent
necessary to comply with any disclosure requirements under the Securities Act of
1933 or the Securities Exchange Act of 1934, or any rules or regulations
thereunder, or for any other reasonable business purpose, Buyer shall have the
right, at its own expense, at any time or from time to time within three (3)
years after the Final Delivery Date during reasonable business hours upon
reasonable notice to Seller to inspect, and make copies of or extracts from, any
of the records of Seller relating to the business of Seller or the Assets and
which are not provided to Buyer (the "Retained Records"). Without limiting the
generality of the foregoing, Seller shall make available to Buyer any employees
or consultants necessary or useful to the preparation of historical audited
financial statements relating to the Assets and shall use its best efforts to
cause such employees or consultants to deliver to the Buyer's auditors all
certifications, attestations and representations deemed necessary or useful for
the completion of such historical audits. None of the Retained Records in the
possession of Seller shall be destroyed prior to three (3) years after the Final
Delivery Date without the consent of Buyer, unless first reproduced by microfilm
or any other similar process. In the event that during such period Seller wishes
to destroy any of the Retained Records at any time or from time to time after
the Closing Date, Seller shall give not less than sixty (60) days notice to
Buyer and Buyer shall have the right, at its own expense, during reasonable
business hours to remove such records and keep possession of the same.

         8.03   Preservation of Assets; Certain Information. From the date
hereof and until the Delivery Date, Seller shall use its Best Efforts to
preserve, maintain and protect the Assets in at least as good condition as the
condition of such Assets upon the inspection by Buyer and/or Buyer's
representatives prior to the date hereof. Any unpatented knowledge or
information concerning Seller's products, methods or manufacturing process that
Seller may disclose to Buyer incident to the purchase of the Assets covered
under this Agreement shall, unless otherwise specifically agreed in writing, be
deemed to have been disclosed as a part of the consideration for this Agreement,
and Seller agrees not to assert any claim against Buyer by reason of Buyer's use
thereof.

                                       10

         8.04   Notices of Certain Events. Until the Final Delivery Date, Seller
will promptly notify Buyer of any action, suit, proceeding, claim or
investigation which is overtly threatened or commenced against Seller which is
not fully insured against (except standard deductible or self-retention amounts)
and which relates to or affects the Assets or this Agreement or the transactions
contemplated hereby (including, without limitation, any claim for alleged patent
infringement), and Buyer will promptly notify Seller of any action, suit,
proceeding, claim or investigation which is overtly threatened or commenced
against Buyer which is not fully insured against (except standard deductible or
self-retention amounts) and which relates to and materially and adversely
affects Buyer or its business or affects this Agreement or the transactions
contemplated hereby. Seller further agrees to promptly notify Buyer of (i) any
notice or other communication from any governmental or regulatory agency or
authority in connection with the transactions contemplated by this Agreement;
(ii) any notice or other communication from any person or entity alleging that
the consent of such person or entity is or may be required in connection with
the transactions contemplated by this Agreement; and (iii) the damage or
destruction by fire or other casualty of any Asset or part thereof or in the
event that any Asset or part thereof becomes the subject of any proceeding or,
to the knowledge of any Seller, threatened proceeding for the taking thereof or
any part thereof or of any right relating thereto by condemnation, eminent
domain or other similar governmental action.

         8.05   Actions with Respect to Closing. Seller will use its Best
Efforts to obtain the satisfaction of the conditions to Closing applicable to
Seller set forth in Article VII as soon as practicable. Buyer will use its Best
Efforts to obtain the satisfaction of the conditions to Closing applicable to
Buyer set forth in Article VI as soon as practicable.

         8.06   Public Statements. Neither the Buyer nor Seller, nor any of
their respective Affiliates, shall make any news release or other announcement
concerning the transactions contemplated hereby without first obtaining approval
from each party hereto; except that Buyer may disclose the transactions
contemplated hereby in connection any offering of its securities or as otherwise
may be required by law.

         8.07   Continued Effectiveness of Representations and Warranties.
Seller and Buyer shall each use its Best Efforts to cause the representations
and warranties made by it herein to continue to be true and correct on and as of
the each Delivery Date as if made on and as of such Delivery Date.

         8.08   Delivery of Assets. Seller, at its sole cost and expense, shall
move the Rigs and Other Assets from their current location and deliver such Rigs
and Other Assets FOB to Buyer's yard in Cresson, Texas, which delivery shall be
made in several installments, with the final delivery of all of the Assets to be
completed on or before September 30, 2005. Seller shall commence the installment
delivery of the Assets as soon as possible following the execution of this
Agreement, in accordance with a schedule to be mutually agreed between Buyer and
Seller. Each of the Rigs and Other Assets delivered to Buyer in accordance with
the provisions hereof shall be in at least as good condition upon such delivery
as the condition that such Assets were in when inspected by Buyer and/or Buyer's
representatives prior to the date hereof. Buyer shall accept delivery of any
Assets delivered by Seller to Buyer in accordance with the provisions of this
Agreement (including, without limitation, such provisions with respect to
condition of the Assets and time and place of delivery).

                                       11

         8.09   Additional Conditions to Buyer's Obligation to Accept Delivery
of Assets and Pay the Purchase Price. The obligations of the Buyer to accept
delivery of any Assets and to pay the Purchase Price for any Assets shall be
subject to (i) the continued truth and correctness of the Seller's
representations, warranties and covenants with respect to such Assets,
including, without limitation, representations, warranties and covenants with
respect to the condition of such Assets and the absence of liens with respect to
such Assets and (ii) the continued absence of any provision of any applicable
law or regulation or any judgment, injunction, order or decree that would
prohibit the consummation of the transactions contemplated under this Agreement.
In addition, the obligation of the Buyer to pay the Second Installment on or
before the tenth (10th ) day following the date hereof is subject to the
delivery by Seller to the Buyer of the Lien Release Confirmation on or prior to
such date.

                                   ARTICLE IX

                                     CLOSING
                                     -------

         9.01   Time of Closing. Subject to the satisfaction by Seller and Buyer
of the conditions set forth in Articles VII and VI, respectively, the Closing of
the transactions contemplated by this Agreement shall take place on the date
hereof (sometimes hereinafter referred to as the "Closing Date").

         9.02   Actions of Seller at the Closing. At the Closing, Seller shall:

               (a)  deliver to Buyer a duly executed Bill of Sale and General
                    Instrument of Assignment of the Assets (the "Bill of Sale")
                    in the form of Exhibit A, dated as of the Closing Date;

               (b)  deliver to Buyer any and all other affidavits, certificates,
                    documents, or agreements required by any federal, state, or
                    local governmental or administrative body or authority
                    necessary to pass title to the Assets to Buyer, together
                    with such operation manuals, engineering drawings and
                    specifications, technical documentation and copies of
                    certificates pertaining to the Assets as Seller may possess;
                    and

               (c)  execute such other documents and instruments, and take such
                    other actions, as may be necessary to carry out Seller's
                    obligations under this Agreement that are required to be
                    performed on or before the Closing Date.

         9.03   Actions of Buyer at Closing. At the Closing, Buyer shall deliver
to Seller the Deposit, by wire transfer to the account or accounts designated in
writing by Seller.

         9.04   Passage of Title; Delivery of Assets; Payment of Purchase Price
Balance. Title to the Assets will pass from Seller to Buyer at the Closing. The
Assets will be delivered by Seller to Buyer in accordance with the provisions
Section 8.08 hereof. Payment of the Purchase Price Balance (and the Second
Installment, if not previously paid by Buyer to Seller in accordance with the
provisions hereof) will be paid by Buyer to Seller on the Final Delivery Date,
subject to Section 2.02 hereof.

                                       12

         9.05   Further Assurances. Subject to the terms and provisions of this
Agreement, from time to time subsequent to the Closing Date, each party agrees
to use reasonable efforts to execute and deliver, at the reasonable request of
the other party, such additional documents and instruments as may, in the
reasonable opinion of the requesting party, be reasonably required to carry out
the intents and purposes of this Agreement and the transactions contemplated
hereby.

                                    ARTICLE X

                                      TAXES
                                      -----

         10.01  Income Taxes. Seller shall assume responsibility for, and shall
bear and pay, all income taxes, and other similar taxes on gross income, net
income, or gross receipts (including any applicable interest or penalties)
incurred or imposed by any United States or foreign taxing authority with
respect to the operation of the Assets prior to Delivery Date.

         10.02  Sales Taxes. Buyer shall assume responsibility for, and shall
bear and pay, all state and local sales and use taxes (including any applicable
interest or penalties) incurred or imposed with respect to the sale by Seller to
Buyer of the Assets pursuant to this Agreement.

         10.03  Tax Indemnities. Seller agrees to indemnify and hold harmless
Buyer and its successors and assigns from and against any and all claims,
demands, assessments, deficiencies, liabilities, costs, and expenses (including
reasonable attorneys' fees and other costs and expenses of Buyer incident to the
defense of same) that are caused by, arise out of, or result from any liability
for the payment of federal, state or local taxes (including applicable penalties
and interest) attributable to the operation of the Assets prior to the Delivery
Date for which the responsibility for payment has been allocated to Seller
pursuant to the preceding provisions of this Article X.

                                   ARTICLE XI

                                 INDEMNIFICATION
                                 ---------------

         11.02  Indemnification by Seller. In addition to the other indemnities
given by Seller to Buyer in this Agreement, Seller shall indemnify and hold
harmless Buyer and its successors and assigns from and against any and all
claims, demands, losses, damages, liabilities, costs, expenses, and deficiencies
(including, without limitation, reasonable attorneys' fees and other costs and
expenses of Buyer incident to the defense of any claim that results in
litigation, or the settlement of any claim, or the enforcement by Buyer or the
provisions of this Section 11.01) caused by, arising out of, or resulting from,
and to pay Buyer any sum that Buyer pays or becomes obligated to pay on account
of, (a) the ownership of the Assets by Seller prior to the Closing Date, (b) the
use and/or operation of the Assets prior to the Delivery Date, (c) any breach or
default in the performance by Seller of any covenant or agreement of Seller
contained in this Agreement or in any other instrument delivered by or on behalf
of Seller pursuant hereto, (d) any breach of a warranty or an inaccurate or
erroneous representation made by Seller herein or in any other instrument
delivered by or on behalf of Seller pursuant hereto, or (e) any and all actions,
suits, proceedings, claims, demands or judgments incident to any of the
foregoing. If any person shall assert a claim against Buyer or its affiliates
that, if successful, might result in a

                                       13

breach or default by Seller under this Agreement, Buyer shall give Seller prompt
written notice thereof, and Seller shall have the right to participate in the
defense thereof and to be represented, at the sole expense of Seller, by counsel
selected by it. No such claim, demand, or other matter shall be compromised or
settled by Seller or Buyer in any manner that might adversely affect the
interest of the other party without the prior written consent of such other
party (which consent shall not be unreasonably withheld).

         11.02  Indemnification by Buyer. In addition to the other indemnities
given by Buyer to Seller in this Agreement, Buyer shall indemnify and hold
harmless Seller and its successors and assigns from and against any and all
claims, demands, losses, damages, liabilities, costs, expenses, and deficiencies
(including, without limitation, reasonable attorneys' fees and other costs and
expenses of Seller incident to the defense of any claim that results in
litigation, or the settlement of any claim, or the enforcement by Seller or the
provisions of this Section 11.02) caused by, arising out of, or resulting from,
and to pay Seller any sum that Seller pays or becomes obligated to pay on
account of, (a) the ownership of the Assets by Buyer from and after the Closing
Date, (b) the use and/or operation of the Assets from and after the Delivery
Date, (c) any breach or default in the performance by Buyer of any covenant or
agreement of Buyer contained in this Agreement or in any other instrument
delivered by or on behalf of Buyer pursuant hereto, (d) any breach of a warranty
or an inaccurate or erroneous representation made by Buyer herein or in any
other instrument delivered by or on behalf of Buyer pursuant hereto, or (e) any
and all actions, suits, proceedings, claims, demands or judgments incident to
any of the foregoing. If any person shall assert a claim against Seller or its
affiliates that, if successful, might result in a breach or default by Buyer
under this Agreement, Seller shall give Buyer prompt written notice thereof, and
Buyer shall have the right to participate in the defense thereof and to be
represented, at the sole expense of Buyer, by counsel selected by it. No such
claim, demand, or other matter shall be compromised or settled by Buyer or
Seller in any manner that might adversely affect the interest of the other party
without the prior written consent of such other party (which consent shall not
be unreasonably withheld).

                                   ARTICLE XII

                                    REMEDIES
                                    --------

         12.01  Rescission. This Agreement may be rescinded (in whole or in
part) and the transactions consummated hereunder unwound and voided at any time
after the Closing and prior to the Final Delivery Date:

               (a)  by mutual written consent of Buyer and Seller;

               (b)  by Buyer, if

                    (i)  the Final Delivery Date shall not have occurred by
                         September 30, 2005 (provided that the right to rescind
                         this Agreement under this clause (i) shall not be
                         available to Buyer if Buyer's failure to fulfill any of
                         its obligations under this Agreement or its
                         misrepresentation or breach of warranty hereunder has
                         been the cause thereof); or

                                       14

                    (ii) there has been a material breach by Seller of any
                         covenant or agreement, or a material inaccuracy of any
                         representation or warranty of Seller, contained in this
                         Agreement which has rendered the satisfaction of any
                         condition to the obligations of Buyer impossible and
                         such breach or inaccuracy has not been cured by Seller
                         within five (5) Business Days after Seller's receipt of
                         notice thereof from Buyer, or waived by Buyer.

               (c)  by Seller, if

                    (i)  the Final Delivery Date shall not have occurred by
                         September 30, 2005 (provided that the right to
                         terminate this Agreement under this clause (i) shall
                         not be available to Seller if Seller's failure to
                         fulfill any of its obligations under this Agreement or
                         its misrepresentation or breach of warranty hereunder
                         has been the cause thereof); or

                    (ii) there has been a material breach by Buyer of any
                         covenant or agreement, or a material inaccuracy of any
                         representation or warranty of Buyer, contained in this
                         Agreement which has rendered the satisfaction of any
                         condition to the obligations of Seller impossible and
                         such breach or inaccuracy has not been cured by Buyer
                         within five (5) Business Days after Buyer's receipt of
                         notice thereof from Seller, or waived by Seller.

         12.02  Effect of Rescission. In the event of the rescission of this
Agreement (or any part hereof) pursuant to Section 12.01 by Buyer or Seller,
written notice thereof shall forthwith be given to the other party specifying
the provision hereof pursuant to which such rescission is made, and this
Agreement shall become void and have no effect to the extent specified in such
notice, and, except as otherwise expressly set forth herein (including, without
limitation, as provided in Section 3.02), there shall be no further liability
hereunder on the part of Buyer or Seller or any of their respective directors,
officers, employees, partners, stockholders or representatives; provided that
nothing contained in this Section 12.02 shall relieve any party from liability
for damages actually incurred (excluding consequential damages) for breach of
any covenant or agreement, or for the inaccuracy of any representation or
warranty, contained herein.

         12.03  Buyer's Right to Take Possession of and Move Assets. In the
event that the Final Delivery Date shall not have occurred on or before
September 30, 2005, other than solely as a result of any breach by Buyer of any
of its obligations hereunder, the Buyer shall have the right, at Buyer's sole
option, but at Seller's sole cost and expense, to hire any other person or
entity to move and transport any Assets that have not been delivered by Seller
to Buyer in accordance with the provisions of this Agreement (hereinafter, the
"Remaining Assets"), from the then current location thereof to Buyer's yard in
Cresson, Texas, in which case, Buyer and its representatives (inclusive of any
person or entity hired by Buyer to move and transport any Remaining Assets)
shall have the right to enter onto Seller's premises and any other place where
the Remaining Assets are then located, during normal business hours and at any
other reasonable time, to inspect and/or take possession of such Remaining
Assets for purposes of moving and

                                       15

transporting such Assets to Buyer's yard in Cresson, Texas. Buyer and/or its
representatives shall conduct itself on Seller's premises in compliance with all
applicable safety rules and regulations. Buyer shall be entitled to deduct from
the amount of the Purchase Price Balance owing by Buyer to Seller hereunder, the
aggregate amount of all of the costs and expenses incurred by Buyer in
connection with the taking possession of and moving of any Remaining Assets from
the then current location thereof to the Buyer's yard in Cresson, Texas.

         12.04  Specific Performance; Rights Cumulative. The parties hereto
shall have the right to bring an action for specific performance of this
Agreement. The rights and remedies reserved to the parties hereunder shall be
cumulative.

                                  ARTICLE XIII

                            MISCELLANEOUS PROVISIONS
                            ------------------------

         13.01  Notices. All notices required or permitted to be given hereunder
shall be in writing and shall be delivered personally, or sent by reputable
overnight courier, or mailed by certified or registered United States Mail with
postage prepaid, or sent by telecopy (provided such telecopy is confirmed by
mail in the manner previously described), addressed to the appropriate party at
the address for such party shown below or at such other address as such party
shall have theretofore designated by written notice delivered to the party
giving such notice:

                  If to Seller:
                  -------------

                  C and L Services, LP
                  2005 South Main St.
                  Cleburne, Texas   76031
                  Attn: Cody Jones and Larry Durham
                  Telephone No.:  (817) 641-5600
                  Telecopy No.:  (817) 641-6500

                  If to Buyer:
                  ------------

                  Union Drilling Texas, LP
                  South Pittsburgh Technology Park
                  3117 Washington Pike
                  Bridgeville, Pennsylvania   15017
                  Attn:  Christopher Strong
                  Telephone No.: (412) 257-9390
                  Telecopy No.:(412) 257-9392

                Any notice given in accordance herewith shall be deemed to have
been given when delivered to the addressee in person or transmitted by telecopy,
or one (1) day after such notice has been delivered to a reputable overnight
courier, or five (5) days after such notice has been deposited in the United
States Mail, as the case may be, Seller or Buyer may change the

                                       16

address to which such communications are to be directed by giving written notice
to the other parties in the manner provided in this Section 13.01.

         13.02  Entire Agreement. This Agreement, the documents, instruments and
agreements to be executed pursuant hereto, the schedules and exhibits hereto,
and the documents referred to herein, constitute the entire agreement between
the parties hereto pertaining to the subject matter hereof and supersede all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the parties pertaining to the subject matter hereof.

         13.03  Successors and Assigns. This agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. Buyer may assign its rights hereunder only to an Affiliate or
subsidiary of Buyer.

         13.04  Amendment. This Agreement may be amended only by an instrument
in writing executed by all of the parties hereto.

         13.05  Waiver. Any of the terms, covenants, representations, warranties
or conditions hereof may be waived only by a written instrument executed by or
on behalf of the party hereto waiving compliance. The failure of any party at
any time or times to require performance of any provision hereof shall in no
manner affect the right of such party at a later time to enforce the performance
of such provisions. No waiver by any party of any condition, or of any breach of
any term, covenant, representation, or warranty contained in this Agreement, in
any one or more instances, shall be deemed to be or construed as a further or
continuing waiver of any such condition or breach, or a waiver of any other
condition or of any breach of any other term, covenant, representation or
warranty.

         13.06  Captions. The captions in this Agreement are for convenience
only and shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.

         13.07  No Third-Party Beneficiaries. Nothing in this Agreement shall
entitle any party other than Buyer and Seller to any claim, cause of action,
remedy, or right of any kind.

         13.08  Governing Law. This Agreement shall be governed by the laws of
the State of Texas, without regard to conflicts of law principles.

         13.09  Severability. If any term or other provision of this Agreement
is invalid, illegal, or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any adverse manner to
any party. Upon such determination that any term or other provision is invalid,
illegal, or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.

                                       17

         13.10  Execution Counterparts. This Agreement may be executed in any
number of counterparts, and each such counterpart hereof shall be deemed to be
an original instrument, but all such counterparts together shall constitute for
all purposes one agreement.

                IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.

                                     SELLER:
                                     C AND L SERVICES, LP

                                     By   /s/CODY JONES
                                       ----------------------------------------
                                     Name:  Cody Jones
                                     Title: President

                                     BUYER:
                                     UNION DRILLING TEXAS, LP, by
                                     UNION DRILLING TEXAS GP, LLC, its
                                     General Partner

                                     By   /s/CHRISTOPHER STRONG
                                       ----------------------------------------
                                     Christopher Strong, President

                                       18

                         INDEX TO SCHEDULES AND EXHIBITS

Schedule
Number                     Description
------                     -----------

2.01(a)(i)                 Rigs (inclusive of related Assets)
2.01(a)(ii)                Other Assets

Exhibits
--------

Exhibit A                  Form of Bill of Sale

                               Schedule 2.01(a)(i)

                       Rigs (inclusive of related Assets)

                                NATIONAL 110 RIG

Components and fittings relating to a National 110 drilling rig, including
without limitation the following:

NATIONAL 110 SINGLE DRUM DRAWWORKS, 1,500-HP, LEBUS Grooved f/1-1/4" Drilling
Line, NATIONAL Make-Up & Breakout Catheads, Overrunning Clutch, Air Driller's
Console Controls, , PARKERSBURG 6032 60" Hydromatic Brakes

MAST/SUBSTRUCTURE

142'H x 21'6"W Cantilever Mast, 1,000,000# SHL, IDEAL 6-Sheave Pin Type Crown
Block, (2) Crown Stands less one lower midsection, derrick not coming complete

25'H Box on Box Substructure, including V door and steps

MUD PUMPS

Gardner Denver PZ-11 Triplex Mud Pump, Forged Steel Fluid End w/Quick Change
Valve Cover & Quick Change Cylinder Head Caps, rebuilt with 90 day warranty,
includes one set of liners and expendables

Gardner Denver PZ-11 Triplex Mud Pump, Forged Steel Fluid End w/Quick Change
Valve Cover & Quick Change Cylinder Head Caps, rebuilt with 90 day warranty,
includes one set of liners and expendables

ROTATING/TRAVELING EQUIPMENT

NATIONAL 500-Ton Block/Hook Combination new

WELL CONTROL EQUIPMENT

HYDRIL GK 12-900 5,000# Annular Blowout Preventer, used by C and L on one well

3" Choke Manifold, Skidded bad condition

RIG HOUSES

New, 10'W x 40'L Top Doghouse, Skidded, w/Lockers,

Used Doghouse

NATIONAL 110 - CONTINUED

MUD SYSTEM

1,000-Barrel Mud System, 3-Tank, Mud Agitators in Each Tank, Skidded

WATER/FUEL TANK/LUBESTER

10,000-Gallon Fuel Tank, Skidded with lubester and pumps

AUXILIARY EQUIPMENT

42"H x 60'L 2-Section Catwalk

4-Sets (8) Pipe Racks

(6) 8'W x 20'L Matting Boards

                                    U-15 RIG

Components and fittings relating to a U-15 drilling rig, including without
limitation the following:

MID-CONTINENT U-15 SINGLE DRUM DRAWWORKS, 800-HP, LEBUS Grooved f/1-1/8"
Drilling Line, FOSTER Make-Up & Breakout Catheads, Overrunning Clutch, Air
Driller's Console Controls, Crown-O-Matic, PARKERSBURG 15" Triple Hydromatic
Brake

2-Engine Compound w/Single Pedestal Pump Drive, (1) CAT D-353 Diesel Engines,
(2) QUINCY 325 Air Compressors Drawworks

MAST/SUBSTRUCTURE

LEE C. MOORE 131'H x 18'6"W Cantilever Mast, , 5-Sheave Pin Type Crown Block,
Crown Stand 300,000 SHL, Built 1952, poor condition

15'H Box on Box Substructure, V-Door, Steps, Safety Rails, Air Volume Tank, Air
Lines with built in parts room and change room

MUD PUMPS

BOMCO F-800 Triplex Mud Pump, Forged Steel Fluid End w/Quick Change Valve Cover
& Quick Change Cylinder Head Caps, Pulsation Dampener, Shear Relief Valve,
Charging Pump, Master Skidded, p/b CAT D-398 Diesel Engine

BOMCO F-800 Triplex Mud Pump, Forged Steel Fluid End w/Quick Change Valve Cover
& Quick Change Cylinder Head Caps, Pulsation Dampener, Shear Relief Valve,
Charging Pump, Master Skidded, p/b CAT D-398 Diesel Engine

ROTATING/TRAVELING EQUIPMENT

250-Ton Traveling Block/Hook Combination Soya - new

200-Ton Swivel , Skytop 65X

National 27-1/2" X 53" Rotary Table

MID-CONTINENT U-15 - continued

WELL CONTROL EQUIPMENT

Rebuilt KOOMEY 4-Station Closing Unit

3" Choke Manifold, Skidded needs re-built

RIG HOUSE

8'W x 30'L Top Doghouse, Skidded, w/Lockers, SATELLITE Automatic Driller, MARTIN
DECKER Type-D Weight Indicator, 4-Pin Drilling Recorder instrumentation all new

GENERATORS/UTILITY HOUSE

Motor Control Center/Receptacle Outlets

Voltage Panel f/Trailers

All Above Mounted in 10'W x 25'L Utility House, w/Parts Room, Change Room,
Fluorescent Lights, Skidded

MUD SYSTEM

520-Barrel Mud System, 2-Tank, , Mud Flow Troughs, Internal & External Plumbing,
(4) 5" x 6" Centrifugal Pumps p/b 75-HP Electric Motors, Skidded

MCM Linear Motion Shale Shaker new

Desander w/(2) 10" Cones new

Desilter w/(10) 5" Cones new

MID-CONTINENT U-15 - continued

HANDLING TOOLS

BJ Type C Rotary Tongs, 4" - 10-3/4"

INGERSOLL RAND 5,000#  Capacity Air Hoist

AUXILIARY EQUIPMENT

Rotary Hose

12,000' Capacity Wireline Unit

5,000' of 1-1/8" Drilling Line, Spool, Stand

42"H x 40'L Catwalk

2-Sets (4) Pipe Racks

Lubester rack with fuel pumps

New 3" x 2" water pump with electric motor on substructure

500 BBL Water Tank

                                  BREWSTER N-95

Components and fittings relating to a Brewster N-95 drilling rig, including
without limitation the following:

SKYTOP BREWSTER N-95 SINGLE DRUM DRAWWORKS, 1,200-HP, LEBUS Grooved f/1-1/4"
Drilling Line, FOSTER Make-Up & Breakout Catheads, Overrunning Clutch, Air
Driller's Console Controls, , 6032 PARKERSBURG Hydromatic Brake

MAST/SUBSTRUCTURE

142'H x 21'6"W Cantilever Mast, 750,000# SHL, 5-Sheave Pin Type Crown Block,
(2) Crown Stands

18'H Box on Box Substructure, V-Door, Steps, Safety Rails, Built-In Parts Room,
Locker Room, Air Volume Tank, Air Lines, (1) 2" x 3" Centrifugal Circulating
Pumps p/b 20-HP Electric Motors, Deadline Anchor, rewired with lights

MUD PUMPS

T-1300 Ideco (Dresser) Triplex Mud Pump, 1,600-HP, Forged Steel Fluid End
w/Quick Change Valve Cover & Quick Change Cylinder Head Caps, with one complete
set of expendables

T-1300 Ideco (IRI) Triplex Mud Pump, 1,600-HP, Forged Steel Fluid End w/Quick
Change Valve Cover & Quick Change Cylinder Head Caps, Shear Relief Valve, with
one complete set of expendables

ROTATING/TRAVELING EQUIPMENT

National 20-1/2" X 53" Rotary Table

RIG HOUSE

10'W x 40'L Top Doghouse, Skidded,  w/Lockers, 4-Pin Drilling Recorder (Reported
 to be New)

Generator and Utility House - Bare House Only

MUD SYSTEM

825-Barrel Mud System, 2-Tank, , Mud Flow Troughs, Internal & , 5" x 6"
Centrifugal Pumps p/b Electric Motors

SKYTOP BREWSTER N-95 - CONTINUED

WATER/FUEL TANK/LUBESTER

Less than 500-Barrel Water Tank, Skidded, with parts room

Lubester, rack with fuel pumps

AUXILIARY EQUIPMENT

42"H x 48'L Catwalk

3-Sets (6) Pipe Racks

New 3" X 2"water pump with electric motor

                                    IDECO 525

Components and fittings relating to an Ideco 525 drilling rig, including without
limitation the following:

IDECO H525

2-Engine Compound, p/b

MAST/SUBSTRUCTURE

131'H x 18'6"W Cantilever Mast, 440,000# SHL, IDEAL 5-Sheave, Crown Stand

12'H x 7'W Box Type Substructure, Steps, Safety Rails, Built-In Parts Room,
Locker Room, Air Volume Tank, Air Lines, 3" x 2" Centrifugal Circulating Pump,
NATIONAL Deadline Anchor Substructure andderrick newly rewired

MUD PUMPS

BOMCO F-800 Triplex Mud Pump, 800-HP, Forged Steel Fluid End w/Quick Change
Valve Cover & Quick Change Cylinder Head Caps, Pulsation Dampener, Shear Relief
Valve, Master Skidded, charge pump

BOMCO F-800 Triplex Mud Pump, 800-HP, Forged Steel Fluid End w/Quick Change
Valve Cover & Quick Change Cylinder Head Caps, Pulsation Dampener, Shear Relief
Valve, Master skidded, charge pump

ROTATING/TRAVELING EQUIPMENT

150-Ton Block/Hook Combination

150-Ton Swivel

RIG HOUSES

8'W x 30'L Top Doghouse, Skidded, w/Lockers

Generator House, w/Parts Room, Change Room, Fluorescent Lights, Heater, Skidded
with wiring

MUD SYSTEM

600-Barrel Mud System, 2-Tank, Mud Flow Troughs, Internal & External Plumbing

IDECO H525 - CONTINUED

OTHER EQUIPMENT

42"H x 48'L 2-Section Catwalk

3-Sets (6) Pipe Racks

                              Schedule 2.01(a)(ii)

                                  Other Assets

Other Assets Presently in Possession of Seller
----------------------------------------------

--------------------------------------------------------------------------------------------------------------------
       UDI             UDI
     PHOTO #          ITEM #        RIG #                            DESCRIPTION

--------------------------------------------------------------------------------------------------------------------
                                               Pipe 322 jts, 4 1/2", 16.60 few
                                               20 lb, little S135, 75% yellow,
                                               40% needs reworked, per Jackie
                                               Loveless
--------------------------------------------------------------------------------------------------------------------
                                               Pipe at Hospital Yard, 377 jts
                                               approx 11,700' 5", 19.5lb, S135
                                               Double White, Cert Paper will be
                                               sent, RK Pipe & Supply?
--------------------------------------------------------------------------------------------------------------------
     165-173           108                     Misc items, slips, elevators, hoses, valves, hammer unions,
                                               fittings, bails 3 1/2" X 11' 8"L, clutch parts, derrick stand, new
                                               steel
--------------------------------------------------------------------------------------------------------------------
     228&229                                   Fuel Trailer, 1958 w/ 1957 Heil,
                                               901530, tank 65,155lb @ 8 lb per
                                               gal= 8,144 gallon, 2004-2005 WV
                                               sticker, mfg s/n # NB189D, TITLED
--------------------------------------------------------------------------------------------------------------------
      34, 35         18 & 18A                  Stir Boxes qty 2
--------------------------------------------------------------------------------------------------------------------
     57 & 58            37                     Water Tank / Tool Rm, tank 17' 8"L X 7'H X 10'W, tool house 12'L,
                                               porch 9', skid 41'L X 10'H X 10W
--------------------------------------------------------------------------------------------------------------------
        1               1                      Sub, front side, not assigned,  6'H X 6'8" X    L
--------------------------------------------------------------------------------------------------------------------
        2               1                      Sub, rear, not assigned,  6'H X 6'8" X    L
--------------------------------------------------------------------------------------------------------------------
        3               1A                     Sub, front side, not assigned,  6'H X 6'8" X    L
--------------------------------------------------------------------------------------------------------------------
        4               1A                     Sub, rear, not assigned,  6'H X 6'8" X    L
--------------------------------------------------------------------------------------------------------------------
        5               1A                     Sub with Martin Decker anchor, tag not readable, Sheeting shows
                                               rust and dozer nicks
--------------------------------------------------------------------------------------------------------------------
        6               2                      Primed Skid maybe used for Pump Skid,   7'W X 30'L X 12"H, mud
                                               boated bottom
--------------------------------------------------------------------------------------------------------------------
        11              5                      Dog House with lights and wiring, skid 10"W X 9' 4"H X 24" 8"L,
                                               house 10W X 8'7"H X 13'4"L
--------------------------------------------------------------------------------------------------------------------
        12              5                      Dog House inside
--------------------------------------------------------------------------------------------------------------------
        20            9 & 9A                   Drill Line Spool Holders, Qty 2
--------------------------------------------------------------------------------------------------------------------
        26              12                     Lube Tank
--------------------------------------------------------------------------------------------------------------------
        59           38 & 39                   Spools 10"  3000 X 10"  5000 and        13 3/8"  3000 Both ends
                                               spacer spools
--------------------------------------------------------------------------------------------------------------------
        60           40 & 41                   Pumps # 40 & 41 needs rebuilt Harrisburg 6X8, maybe 75 hp?   Pump
                                               42 needs rebuilt Mission 6 X 8
--------------------------------------------------------------------------------------------------------------------
        61              43                     Pump Rebuilt, Mission Magnum  6 X 5, no power
--------------------------------------------------------------------------------------------------------------------
        64              46                     Choke Rack  8' X 52" X 12'L
--------------------------------------------------------------------------------------------------------------------
        65              47                     Engine Skid primed, for PZ11 ?    64"W X 13'L
--------------------------------------------------------------------------------------------------------------------
        66              48                     Hand Rails and Misc steps in weeds
--------------------------------------------------------------------------------------------------------------------
        67              49                     Accumulator Oil Tank, tank 16"W X 74"L X 4'H, skid 81" X 106"L
--------------------------------------------------------------------------------------------------------------------
        70              52                     Hose Kelley, 3 1/2" Gr D, 5,000 ends, 10,000 rubber
--------------------------------------------------------------------------------------------------------------------
        71              53                     Matt Board  9'6" X 8' X 9"T
--------------------------------------------------------------------------------------------------------------------
        72              54                     Skid, 64"W X 16'L X 10"H, engine area 86"L X 4'W
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
       UDI             UDI
     PHOTO #          ITEM #        RIG #                            DESCRIPTION

--------------------------------------------------------------------------------------------------------------------
        73              55                     Desilter yellow, Eq# 14-005
--------------------------------------------------------------------------------------------------------------------
       142              86                     Rack for Mobile Homes, qty 4, 4' X 4' 7" X 55"T     marked ABCD.
--------------------------------------------------------------------------------------------------------------------
       143              87                     Koomey 80 Accumulator BWB040-11B,  s/n 3651,  mfg 6/1982
--------------------------------------------------------------------------------------------------------------------
       144              88                     Wooley Tongs Type B
--------------------------------------------------------------------------------------------------------------------
       145             88B                     Tong Heads
--------------------------------------------------------------------------------------------------------------------
       146              89                     Junk Tub yellow
--------------------------------------------------------------------------------------------------------------------
       147              90                     Junk Tub
--------------------------------------------------------------------------------------------------------------------
       148              91                     Pump Liners 6"
--------------------------------------------------------------------------------------------------------------------
       160             102                     Wire Line Unit    Poor Condition
--------------------------------------------------------------------------------------------------------------------
       162             105                     Pipe Racks  5 pcs,  one is under Rig 6
--------------------------------------------------------------------------------------------------------------------
       163             106                     Pipe Rack
--------------------------------------------------------------------------------------------------------------------
       174             109                     Pipe Tub
--------------------------------------------------------------------------------------------------------------------
       175             110                     Pipe Tub square frame
--------------------------------------------------------------------------------------------------------------------
       176             111                     House tool & lube room, bent skid, with misc parts, ND24287 welded,
                                               40' 5"L X 107"H X 7' 10"W
--------------------------------------------------------------------------------------------------------------------
       177             112                     Fuel Tank goes on top of 111, welded 28404, stamped ND28438, tank
                                               35' 2"L X 4'H X 7' 4"W, skid 38' 7"L X 49"H X 7' 4"W
--------------------------------------------------------------------------------------------------------------------
       178             113                     Pump National K500-A,  24'L X 8' 5"W X 128"T,  3' 7" wheel 16 groove
--------------------------------------------------------------------------------------------------------------------
       179             114                     Engines twin 6-71 Detroit w/ gear box 5118275, Ratio 1:77 to 1,
                                               s/n HD9434,  4' X 8' skid
--------------------------------------------------------------------------------------------------------------------
       180             115                     Cat D353?  W/ air clutch, 4' 1"W X 14' 6"L       Core use only??
--------------------------------------------------------------------------------------------------------------------
       181             116                     Pump National K500-A,  25' 6"'L X 7' 8"W X 9'H, w/o damper,  3' 7"
                                               wheel 16 groove
--------------------------------------------------------------------------------------------------------------------
       182             116A                    Hydril Damper
--------------------------------------------------------------------------------------------------------------------
       183             117                     Pump, Oilwell 214, s/n 10940,  7' 8"W X 25' 3"L X 98"H
--------------------------------------------------------------------------------------------------------------------
       184             118                     Tool House w/ flaps, HSE 7' 6"W X 14'L, skid 93"W X 97"H, flaps 2'
                                               X 2'6"
--------------------------------------------------------------------------------------------------------------------
       185             119                     Tool House w/ Quincy A/C 325, s/n 6065628, skid 93W X 108"H X 36'
                                               2"L, skid 40'L
--------------------------------------------------------------------------------------------------------------------
       186             119A                    A/C
--------------------------------------------------------------------------------------------------------------------
       187             120                     Pipe Tub 8'W X 36'L
--------------------------------------------------------------------------------------------------------------------
       188             121                     Pipe Tub made of D.P.7' 7" X 35' 2"L
--------------------------------------------------------------------------------------------------------------------
       189             122                     Val-Con, model 30-1P30-U1R-1-1, s/n 8061,   5' 6"W X 8'L X 7'H with
                                               control box
--------------------------------------------------------------------------------------------------------------------
       190             123                     Hydromatic,   s/n 4-23,  rotor cap casting PC56046L,  bearing end
                                               caps missing on both ends
--------------------------------------------------------------------------------------------------------------------
       191             124                     Spacer Spool  10" X 3000
--------------------------------------------------------------------------------------------------------------------
       192             125                     Mud Cross  13"
--------------------------------------------------------------------------------------------------------------------
       193             126                     Change-over 3000 X 5000
--------------------------------------------------------------------------------------------------------------------
       194             127                     Air Bowl    10" X 3000
--------------------------------------------------------------------------------------------------------------------
       195             128                     Cathead Foster Model 16 LB A,  s/n 3024
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
       UDI             UDI
     PHOTO #          ITEM #        RIG #                            DESCRIPTION

--------------------------------------------------------------------------------------------------------------------
       196             129                     Stir gear box Chemineer,  15hp, model 4TA-15,  s/n 1-95374-18
--------------------------------------------------------------------------------------------------------------------
       197             129A                    Stir gear box Chemineer,    s/n ?
--------------------------------------------------------------------------------------------------------------------
       198             130                     Matthey Wireline Unit, model 15 HRC,  s/n 2328
--------------------------------------------------------------------------------------------------------------------
       199             131                     Gen Skid House framing,  9' 10"W X 134"H X 26' 9"L
--------------------------------------------------------------------------------------------------------------------
       200             132                     Pipe Rack
--------------------------------------------------------------------------------------------------------------------
       201             133                     Pipe Rack
--------------------------------------------------------------------------------------------------------------------
       202           134&135                   Pipe Rack
--------------------------------------------------------------------------------------------------------------------
       203             136                     Pipe Rack
--------------------------------------------------------------------------------------------------------------------
       204             137                     Pipe Rack
--------------------------------------------------------------------------------------------------------------------
       205             138                     Matt Board, qty 4 pcs, 10' X 10' X 7"
--------------------------------------------------------------------------------------------------------------------
       206             139                     Load Ramp,    8' 6"W X 8' 6"H X 29' 6"L
--------------------------------------------------------------------------------------------------------------------
       207             140                     Misc items, frogs, guards, mud pump parts, table bushing, rat hole
                                               digger, hose
--------------------------------------------------------------------------------------------------------------------
       250                                     Radiators new from Fuzzy Rad Co.  Borger Tx, model FZ43-2401, s/n
                                               1356 & 1357, dated 7-21-05,  PO S&W
--------------------------------------------------------------------------------------------------------------------
       255                                     Kelley, with Varco, Cody says inspected, 40' 6" overall, 4 3/4 hex,
--------------------------------------------------------------------------------------------------------------------
                        98          Rig 3      Drill Line being installed,    no photo
--------------------------------------------------------------------------------------------------------------------
    110 & 111           71          Rig 3      Dog House 7'6"W X 8'3"H X 20"L house, 26'10" skid, hand rail may
                                               not be OSHA, step maybe light
--------------------------------------------------------------------------------------------------------------------
    118 & 119           77          Rig 3      Water Tank, open top, inside coated tank 48'L X 8'H X 10'W, skid
                                               12'L, porch 9', skid 51'L X 9'4"H X 10W
--------------------------------------------------------------------------------------------------------------------
    120 & 121           78          Rig 3      Gen House, 134"H X 26'8"L X 10W, will have 2 D353 Cats w/ 325
                                               gens,  from S&W OK City
--------------------------------------------------------------------------------------------------------------------
     92 & 93            66          Rig 3      Pit, no I Beam skid, slant floor, floor replated, pit 9' 2"W X 64"H
                                               X 34'6"L, 9'4" porch, 46' overall, 2 yr. Life?
--------------------------------------------------------------------------------------------------------------------
       92A             66A          Rig 3      Welded beams line up under pumps. Could flex and bend.
--------------------------------------------------------------------------------------------------------------------
     94 & 95           66B          Rig 3      Pumps, MCM, s/n 8900 & 9899, 5X6, 75 hp, plumbing & wiring
--------------------------------------------------------------------------------------------------------------------
     99 & 100          68A          Rig 3      Cat D 398 no s/n's, S&W Okla City, air clutch 28CB525
--------------------------------------------------------------------------------------------------------------------
        18              7           Rig 3      Steps,  22'H X 43"W, outside measurement
--------------------------------------------------------------------------------------------------------------------
        29              15          Rig 3      Lot Hose & Belts,   2 of 3.5 NRP 5000 psi GR D 10000, 2 of R8VK2650
                                               12 groove, 2 of R8V2650
--------------------------------------------------------------------------------------------------------------------
        51              31          Rig 3      Choke Manifold Main Valve 697-333-10-1, 3000lb, need 2 more valves,
                                               skid 7'W X 11' 8"L
--------------------------------------------------------------------------------------------------------------------
        53              33          Rig 3      Steps, & V door assm, 88"W X 25' 8"L, steps not complete & heavy
                                               enough quality, hand rail bent
--------------------------------------------------------------------------------------------------------------------
        55              35          Rig 3      MCM Pump, New,   s/n 9885, 2X3, series 250, 20 hp, 3 phase, O Drill
                                               Co.
--------------------------------------------------------------------------------------------------------------------
        56              36          Rig 3      MCM Pump, New,   s/n 9875, 2X3, series 250, 20 hp, 3 phase, O Drill
                                               Co.
--------------------------------------------------------------------------------------------------------------------
        62              44          Rig 3      Air Winch, GFS1029991R, AT04 0046600-6, OilWorks Odessa
--------------------------------------------------------------------------------------------------------------------
        63              45          Rig 3      Desander, cones inside,  MCM Odrill
--------------------------------------------------------------------------------------------------------------------
        74              56          Rig 3      Desilter New
--------------------------------------------------------------------------------------------------------------------
        91              65          Rig 3      Pit, no I Beam skid, slant floor, Pitted Bad on inside, pit 9' 2"W X
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
       UDI             UDI
     PHOTO #          ITEM #        RIG #                            DESCRIPTION

--------------------------------------------------------------------------------------------------------------------
                                               6'H X 35'L, 10' porch, 46' overall, 2 yr. Life?
--------------------------------------------------------------------------------------------------------------------
        96              67          Rig 3      Pump, Bomco F800, s/n 403-2005, dated 2005-1,
--------------------------------------------------------------------------------------------------------------------
        97             67A          Rig 3      MCM Charge Pump 6X8 s/n 9938, washer pump MCM 3 hp 1X1.5 s/n 2034,
                                               w/ damper, Mayfield says change skid
--------------------------------------------------------------------------------------------------------------------
        98              68          Rig 3      Pump, Bomco F800, s/n A14-2005, date 05-01, MCM charge pump 6X8 s/n
                                               9970 washer pump 1X1.5 MCM 3 hp
--------------------------------------------------------------------------------------------------------------------
       101              69          Rig 3      Sub & 3 sets of steps
--------------------------------------------------------------------------------------------------------------------
       102             69A          Rig 3      Sub  27'W X 48' 3"L X 15' 4"H
--------------------------------------------------------------------------------------------------------------------
       103             69B          Rig 3      Sub tool rooms
--------------------------------------------------------------------------------------------------------------------
       104             69C          Rig 3      Sub MCM Wash Down 2X3, s/n 9894, 20hp
--------------------------------------------------------------------------------------------------------------------
       105             69D          Rig 3      Change House
--------------------------------------------------------------------------------------------------------------------
       106             69E          Rig 3      Tool House, Statel-Lite 307-237-9391 partly wired
--------------------------------------------------------------------------------------------------------------------
       107              70          Rig 3      Draw Works U-15, s/n 285
--------------------------------------------------------------------------------------------------------------------
       108             70A          Rig 3      Compound w/o engines, will have two Cat D353's
--------------------------------------------------------------------------------------------------------------------
       109             70B          Rig 3      New Valves
--------------------------------------------------------------------------------------------------------------------
       113              72          Rig 3      Cat Walk 2 piece 48W X 42"H X 24'L
--------------------------------------------------------------------------------------------------------------------
       114              73          Rig 3      Sowa Blocks
--------------------------------------------------------------------------------------------------------------------
       115              74          Rig 3      Mast with lights
--------------------------------------------------------------------------------------------------------------------
       116              75          Rig 3      Drill Line Spool Holder
--------------------------------------------------------------------------------------------------------------------
       117              76          Rig 3      Drill Line Spool Holder Blue
--------------------------------------------------------------------------------------------------------------------
       122                          Rig 3      View
--------------------------------------------------------------------------------------------------------------------
       154              97          Rig 3      Engine Cat D398 for F800 Pump, no tag or s/n #
--------------------------------------------------------------------------------------------------------------------
       157             101          Rig 3      Table,  National C-205, 20 1/2"  with bushing & double sprocket,
--------------------------------------------------------------------------------------------------------------------
      30, 31            16          Rig 4      Mud Pit tank 8'H X 10W X 31'11"L, Skid 9"H X 10W X 42'L w/ 8'
                                               Porch, slant floor rusted, gates stuck, walk one side
--------------------------------------------------------------------------------------------------------------------
      32, 33            17          Rig 4      Mud Pit tank 8'H X 10W X 40L", Skid 9"H X 10W X 42'6"L w/ 8' V
                                               Bottom no walkway
--------------------------------------------------------------------------------------------------------------------
      36, 37            19          Rig 4      Mud Pit V Bottom, Tank 79"H X 18" wall on slant X length ? Skid
                                               104"H X 10'W, Porch 10' X 10' work in process
--------------------------------------------------------------------------------------------------------------------
      39, 40                        Rig 4       Total Rig Scene
--------------------------------------------------------------------------------------------------------------------
        7               3           Rig 4      Panels in a Skidded Rack, 23 Pcs,  Rack is 5"6"H X 7' 10"W X 30' 4"L
--------------------------------------------------------------------------------------------------------------------
        8               4           Rig 4      Fuel Tank, total skid = 10'W X 9' 3"H X 44' 6"L, tank = 10'W X 8'H
                                               X   L
--------------------------------------------------------------------------------------------------------------------
        9               4           Rig 4      Fuel Tank double B/S #3 pumps & water separator, rusted cond.,
                                               Square D starters size 0&1, type S, class 8536
--------------------------------------------------------------------------------------------------------------------
        10              4           Rig 4      Fuel Tank, rear with lube storage
--------------------------------------------------------------------------------------------------------------------
        21              10          Rig 4      Stair Landing,  6' X 6' X 12H
--------------------------------------------------------------------------------------------------------------------
        22             10A          Rig 4      Stair Landing,  6' X 6' X 12' 10"H
--------------------------------------------------------------------------------------------------------------------
        23             10B          Rig 4      Stair Landing, 5'8" X 5' X 9'
--------------------------------------------------------------------------------------------------------------------
        24              11          Rig 4      Matting Board Frames, bad wood, 8'W X 15' 2"L X7"H,  9 Pcs.  11
                                               thru 11,  A,B,C,D,E,F,G,H.
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
       UDI             UDI
     PHOTO #          ITEM #        RIG #                            DESCRIPTION

--------------------------------------------------------------------------------------------------------------------
        25              11          Rig 4      Matting Board Frames, bad wood, 6'W X 11'1"L X7"H,  2 Pcs.
--------------------------------------------------------------------------------------------------------------------
        27              13          Rig 4      Derrick Part
--------------------------------------------------------------------------------------------------------------------
        28              14          Rig 4      Slide
--------------------------------------------------------------------------------------------------------------------
        38             19A          Rig 4      middle beam rusted, replated one side, floor being replated * this
                                               may need done on #16
--------------------------------------------------------------------------------------------------------------------
        41              21          Rig 4      Sub Structure 10 Pcs, s/n 781027, 600,000   58'10"L X 28'W X 25'T,
                                               no floor in lower boxes, use matt boards?
--------------------------------------------------------------------------------------------------------------------
        42              22          Rig 4      Dog House half round top, to high to measure, appx 32' skid, 30'
                                               house
--------------------------------------------------------------------------------------------------------------------
        43              23          Rig 4      Dog House flat top, to high to measure, appx 32' skid, 30' house
--------------------------------------------------------------------------------------------------------------------
        44              24          Rig 4      Rotary Clutch Beam
--------------------------------------------------------------------------------------------------------------------
        45              25          Rig 4      Misc Guards
--------------------------------------------------------------------------------------------------------------------
        46              26          Rig 4      Martin Decker Anchor in Sub #'s as follows 121, 2501, 100,000
                                               150,000     3-973-435
--------------------------------------------------------------------------------------------------------------------
        47              27          Rig 4      Tool Storage Left box Sub
--------------------------------------------------------------------------------------------------------------------
        48              28          Rig 4      Tool Storage Right box Sub
--------------------------------------------------------------------------------------------------------------------
        49              29          Rig 4      Gardener Denver PZ11, w/ motor mount, stamped 743851, 8'W X
                                               18'8"L?? 202PZL029, 18 316841, 94, API 7
--------------------------------------------------------------------------------------------------------------------
        50              30          Rig 4      Gardener Denver PZ11, w/o motor mount, no s/n #
--------------------------------------------------------------------------------------------------------------------
       150              93          Rig 4      Hydromatic   s/n 49105? Stamped 30325001,  casting PC56090-1R
--------------------------------------------------------------------------------------------------------------------
       152              95          Rig 4      Hydril BOP, GK 12-900,  the Double is still at Houston
--------------------------------------------------------------------------------------------------------------------
       153              96          Rig 4      Block and Hook, National 500 ton, 650G500, s/n 4795N, Hook s/n
                                               4795N, 1 3/8?, looks new, loch assm rusted stuck
--------------------------------------------------------------------------------------------------------------------
       156             100          Rig 4      V-Door and steps USED bowed  5' X 31' 1"
--------------------------------------------------------------------------------------------------------------------
       161             104          Rig 4      Center Cat Walk  24' 1" X 4'W X 42"T
--------------------------------------------------------------------------------------------------------------------
       164             107          Rig 4      Raise Line  1 1/2"?
--------------------------------------------------------------------------------------------------------------------
        68              50        Rig 4 or 6   Raise Line
--------------------------------------------------------------------------------------------------------------------
    123 & 124           79          Rig 5      Dog House, crimped wall, hse 92"W X 36'L w/ 5' porch, skid skid
                                               92"W X 42' 1"L X 128 "H, new elect started
--------------------------------------------------------------------------------------------------------------------
     77 & 78            59          Rig 5      Pit, V bottom, tank 46'L X 90"H X 10W, skid 49" X 9'9"H X 10W,
                                               expanded metal 2/3 walkway, hand rails
--------------------------------------------------------------------------------------------------------------------
       81A             61A          Rig 5      Pumps from Bridges Equip, 6 mo warranty, not rebuilt, Mechanic
                                               checked out
--------------------------------------------------------------------------------------------------------------------
     83 & 84            63          Rig 5      Sub 4 pc. Box on box 26' 2"W X 40' 2"L X 19'H  with 2 locker areas,
                                               M-D anchor (sensor missing), photo85,86,87
--------------------------------------------------------------------------------------------------------------------
     85 & 86            63          Rig 5      Tool Room and Parts
--------------------------------------------------------------------------------------------------------------------
     88 & 89            64          Rig 5      Skytop N95, s/n 95-0001 on control panel, Foster 37AH67S, brake
                                               bands not centered on rims,
--------------------------------------------------------------------------------------------------------------------
        69              51          Rig 5      Rotary Table, C-Emsco T2750, s/n 3079, 27 1/2" X 54" w/ bushings &
                                               26 tooth sprocket, don't know if rebuilt
--------------------------------------------------------------------------------------------------------------------
        75              57          Rig 5      Valves & shed top
--------------------------------------------------------------------------------------------------------------------
        76           58 & 58A       Rig 5      Skid with New Pumps, MCM 5" X 6", P3604828-2, s/n 9898 & 9897, 75
                                               hp, 3 phase, skid 97"W X 160"L
--------------------------------------------------------------------------------------------------------------------
        81              61          Rig 5      Mud Pump, Ideco Dresser T1300, s/n 160, skid 6'W X 19'1"L, no
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
       UDI             UDI
     PHOTO #          ITEM #        RIG #                            DESCRIPTION

--------------------------------------------------------------------------------------------------------------------
                                               bull wheel, damper, 6" liner on skid
--------------------------------------------------------------------------------------------------------------------
        82              62          Rig 5      Mud Pump, Ideco IRI, T1300, s/n blank, skid 9'W X 19'1"L, no bull
                                               wheel, damper, No oil check plug possible water
--------------------------------------------------------------------------------------------------------------------
        87              63          Rig 5      Martin Decker Anchor in Sub w/o sensor
--------------------------------------------------------------------------------------------------------------------
        90             64A          Rig 5      cracks and holes on control panel, rusted gauges, rebuilt by Bob
                                               Haulk
--------------------------------------------------------------------------------------------------------------------
       151              94          Rig 5      Hydromatic   s/n 494761?  Maybe 19613X,  casting PC56090-1L
--------------------------------------------------------------------------------------------------------------------
     79 & 80            60          Rig 5      Pit, V bottom, skid welded,   tank 40'L X 8'H X 10'W, skid 43' 8"L
                                               X 9'9"H X 10'W, bar grate walk
--------------------------------------------------------------------------------------------------------------------
    125 & 126           80          Rig 6      Will have Ideco 525 D/W,       Sub enclosed wired & plumbed each
                                               box 7'W X 47' 8"L X 11'H, 25 total width, shows dirt or rust in
                                               some paint
--------------------------------------------------------------------------------------------------------------------
    127 & 128          80A          Rig 6      Sub w/ Parts houses built in, elect & plumbing started
--------------------------------------------------------------------------------------------------------------------
       130A            81A          Rig 6      Mast on racks w/o support show sag or bow ??
--------------------------------------------------------------------------------------------------------------------
    158 & 159          103          Rig 6      Compound w/o engines,
--------------------------------------------------------------------------------------------------------------------
        13              6           Rig 6      Gen House some lights and wiring, 3 rooms
--------------------------------------------------------------------------------------------------------------------
        14              6           Rig 6      Gen House change room with lockers w/o doors
--------------------------------------------------------------------------------------------------------------------
        15              6           Rig 6      Gen House tool room with work bench and storage, electric switch &
                                               breaker boxes
--------------------------------------------------------------------------------------------------------------------
        16              6           Rig 6      Gen House, Gen Area
--------------------------------------------------------------------------------------------------------------------
        17              6           Rig 6      Gen House rear view with connections
--------------------------------------------------------------------------------------------------------------------
       129             80B          Rig 6      Light
--------------------------------------------------------------------------------------------------------------------
       130              81          Rig 6      Mast shows (MFG 11Drilling Co welded) s/n T1710, Cody says 131'H X
                                               18' 6" leg spread,
--------------------------------------------------------------------------------------------------------------------
       132             81B          Rig 6      Mast Pin area on Thursday,      being replaced on Friday
--------------------------------------------------------------------------------------------------------------------
       133             81C          Rig 6      Mast painted area makes it look bowed, some new lighting
--------------------------------------------------------------------------------------------------------------------
       134             81D          Rig 6      Mast Crown less sheves, fast line has side play
--------------------------------------------------------------------------------------------------------------------
       135              82          Rig 6      Pump, F800 s/n A05-05, Dated 05-03,  D398 at TPS Company, skid 8'W
                                               engine area X 13'W  X 30' 4"L
--------------------------------------------------------------------------------------------------------------------
       136             82A          Rig 6      Charge Pump MCM 6X8", s/n 9971, no washer pump yet,
--------------------------------------------------------------------------------------------------------------------
       137              83          Rig 6      Pump, F800 s/n A02-2005, Dated 2005-1,  D398 at TPS Company, skid
                                               8'W engine area X 13'W  X 30' 4"L
--------------------------------------------------------------------------------------------------------------------
       138             83A          Rig 6      Charge Pump MCM 6X8", s/n 9886, no washer pump yet,
--------------------------------------------------------------------------------------------------------------------
       155              99          Rig 6      V-Door and steps NEW   88" X 20' 2"
--------------------------------------------------------------------------------------------------------------------
        54              34          Rig 6      Derrick Stand, bad steps,  8' X 6'7" X ?? High, to high to measure
--------------------------------------------------------------------------------------------------------------------
       112             71A           Rig3      Step Photo
--------------------------------------------------------------------------------------------------------------------
       218                          Rig 4      Mast Stamped 1N276, 1P276, 2N276 on flats, 142' to floor, 8 X 8 X 1
                                               1/8", million plus, section missing $53,000. Cliff Cunningham
--------------------------------------------------------------------------------------------------------------------
       218A                                    Had Mast for 10 years.  Had 110 DW since 1988 or 1989, has electro
                                               brake
--------------------------------------------------------------------------------------------------------------------
       222                          Rig 5      Mast, no stamping numbers found,  approximately 131' ?
--------------------------------------------------------------------------------------------------------------------
       230                          Rig 3      Mast, measured from the ground approx 128' ?? Might be 131' w/
                                               beef-up kit ??  Stamped s/n T2198 ??
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
       UDI             UDI
     PHOTO #          ITEM #        RIG #                            DESCRIPTION

--------------------------------------------------------------------------------------------------------------------
       239                          Rig 6      Mast, measured 129', Crown Sheves gone, at Cliff Cunninghams
--------------------------------------------------------------------------------------------------------------------
                                               Bob Hawk rebuilder of N-95
--------------------------------------------------------------------------------------------------------------------
                                               Cliff Cunningham  Mast, Block and Hook Sales,  also Rig4,
                                               940-481-2929
--------------------------------------------------------------------------------------------------------------------
                                               S & W Power Systems, Oklahoma City, Engines
--------------------------------------------------------------------------------------------------------------------
                                               Inland Machine rebuilding Ideco 525
--------------------------------------------------------------------------------------------------------------------
                                               Santo's is Mast repair Contractor
--------------------------------------------------------------------------------------------------------------------
                                               Cody says D398 s/n's are   66B8327  and 35Z00744  ??
--------------------------------------------------------------------------------------------------------------------
                                               Various new Steps
--------------------------------------------------------------------------------------------------------------------
                                               Six(6)Float Trailers
--------------------------------------------------------------------------------------------------------------------
                                               Miscellaneous new steel building material
--------------------------------------------------------------------------------------------------------------------
                                               Raising lines for National 110
--------------------------------------------------------------------------------------------------------------------
                                               All items relating to rotary drilling rigs and/or rotary
                                               drilling rig operations that are currently being held at the
                                               primary yard of C and L Services, LP located in Cleburne, Texas, as
                                               well as all items associated with rotary drilling rigs currently
                                               being held at the secondary yard of C and L Services, LP known as
                                               the Hospital Yard located in Cleburne, Texas
--------------------------------------------------------------------------------------------------------------------

Other Assets Pending Delivery to C and L Facility (as of August 11, 2005)
-----------------------------------------------------------------------

o    Drawworks for Ideco 525 in Oklahoma being rebuilt at Inland
o    Two Cat 398 Engines, Parts paid for in Houston - Noted for Rig #6 pumps
o    Three Engine Compound, in Kilgore, TX - Noted for Rig #4
o    Skytop 9SX Swivel, Rebuilt in OKC - Noted for Rig #4
o    Oilwell 27.5" Rotary Table, in Houston - Noted for Rig #4
o    Tool House in Witcha Falls - Unassigned
o    Cont. Emsco Block and Hook, in Odessa - Noted for Rig #5
o    13 5/8" Double Ram BOP, in Houston - Noted for Rig #4
o    5 1/4" Kelly with Varco bushings, rebuilt, in Kilgore - Noted for Rig #4
o    One Cat 353 Engine - Noted for Rig #3
o    Two new pit agitators - Unassigned
o    New Hydril Pump seat and liner puller - unassigned
o    Two Kato 300kw Generator sets with D353 Cat engines, at S&W in OKC - Noted
     for Rig #3
o    Crown Section for Ideco 525 Derrick
o    Quincy 390 air compressor at Oilworks shop for Rig #3

                                    Exhibit A
                              Form of Bill of Sale

                       GENERAL BILL OF SALE AND ASSIGNMENT
                       -----------------------------------

                  GENERAL BILL OF SALE AND ASSIGNMENT, effective as of 12:01
a.m. on August 12, 2005, from C AND L SERVICES, LP, a Texas limited partnership
("Seller"), to UNION DRILLING TEXAS, LP, a Texas limited partnership ("Buyer").

                                    RECITALS
                                    --------

         1.   Seller is executing and delivering this General Bill of Sale and
Assignment to Buyer for the purpose of selling, assigning, transferring, and
delivering to, and vesting in, the Buyer all right, title and interest of the
Seller in and to the "Assets" (as defined in the Asset Purchase Agreement dated
as of the date hereof, by and between Seller and Buyer).

                                    AGREEMENT
                                    ---------

         Section 1.   In consideration of the premises and of other good and
valuable consideration, receipt of which is hereby acknowledged, Seller by these
presents does sell, assign, transfer, and deliver to, and vest in Buyer, its
successors and assigns forever, good and marketable title and all of Seller's
right, title, and interest, legal and equitable, in and to each and every one of
the Assets.

         TO HAVE AND TO HOLD all of the Assets unto Buyer, its successors and
assigns forever; and Seller does for itself, and its successors and assigns,
covenant and agree with Buyer to WARRANT AND DEFEND the title of the aforesaid
Assets against all and every person and persons whomsoever.

         Section 2.   Seller hereby constitutes and appoints Buyer, its
successors and assigns the true and lawful attorney and attorneys of Seller with
full power of substitution in its

name and stead, but on behalf and for the benefit of Buyer, its successors and
assigns, to demand and receive any and all of the Assets sold, transferred and
assigned to Buyer this instrument and to give receipts and releases for and in
respect of the same or any part thereof, to endorse any claim or right of any
kind in respect thereof and to do all acts and things in relation to the Assets,
which Buyer, its successors and assigns may deem desirable, Seller hereby
declaring that the foregoing powers are coupled with an interest and are not
revocable and shall not be revoked by Seller or its successors or assigns for
any reason whatsoever.

         Section 3.   Seller, for itself, its successors and assigns, hereby
covenants and agrees that, at any time and from time to time forthwith upon the
written request of Buyer, Seller will, at its expense, do, execute, acknowledge,
and deliver or cause to be done, executed, acknowledged, or delivered, all and
every such further acts, deeds, assignments, transfers, conveyances, powers of
attorney, and assurances as may be reasonably required by Buyer in order to
sell, assign, transfer, and convey to, and vest in, Buyer, its successors and
assigns, or to aid and assist Buyer in reducing to possession and use any or all
of the Assets assigned to Buyer.

         Section 4.   Nothing herein expressed or implied is intended or shall
be construed to confer upon or give to any person or entity, other than Seller
and Buyer, and their respective successors and assigns, any rights or remedies
by reason of this General Bill of Sale and Assignment.

         Section 5.   This General Bill of Sale and Assignment is executed by,
and shall be binding upon, Seller, its successors and assigns, for the uses and
purposes above set forth and referred to, as of the effective date thereof.

         IN WITNESS WHEREOF, Seller has caused this General Bill of Sale and
Assignment to be signed as of the date set forth above.

                                            C AND L SERVICES, LP

                                            By:  /s/CODY JONES
                                               ---------------------------------
                                                  Name:  Cody Jones
                                                  Title: PresidentDR. JOHNNY EASMON, PROF. DR. GOTTFRIED HEINISCH, DR. GERHARD PURSTINGER,
           PROF. DR. HEINZ-HERBERT FIEBIG, PROF. DR. JOHANN HOFMANN,
               AND AUSTRIA WIRTSCHAFTSSERVICE GESELLSCHAFT M.B.H.

                                     - and -

                            VION PHARMACEUTICALS INC

         ===============================================================

                            AMENDED EXCLUSIVE LICENSE
                                    AGREEMENT

        ===============================================================

                                  CONFIDENTIAL

THIS LICENSE AGREEMENT is made as of the 30th day of June 2005

BETWEEN:
(1)      DR. JOHNNY EASMON, PROF. DR. GOTTFRIED HEINISCH, DR. GERHARD
         PURSTINGER, Institute of Pharmacy, University of Innsbruck, Innrain
         52a, A-6020 Innsbruck, Austria, PROF. DR. HEINZ-HERBERT FIEBIG, Am
         Flughafen 12, D-79108 Freiburg, Germany, PROF. DR. JOHANN HOFMANN,
         Institute of Medical Chemistry and Biochemistry, University of
         Innsbruck, Fritz-Pregl-Strasse 3, A-6020 Innsbruck, Austria, and
         AUSTRIA WIRTSCHAFTSSERVICE GESELLSCHAFT M.B.H., Ungargasse 37, A-1030
         Vienna, Austria (collectively called "LICENSOR"); and

(2)      VION PHARMACEUTICALS INC. a Delaware company whose principal place of
         business is at Four Science Park, New Haven, Connecticut 06511 United
         States of America ("VION")

WHEREAS:

(A)      LICENSOR and VION entered into a research collaboration agreement ("the
         Research Collaboration Agreement") concerning a programme of research
         to evaluate certain Thiosemicarbazones (TSCs); and

(B)      VION has exercised the option granted pursuant to Clause 6 of the
         Research Collaboration Agreement under amended terms and LICENSOR has
         agreed to grant a license to VION on the following terms and
         conditions.

NOW IT IS HEREBY AGREED AS FOLLOWS:

1.       DEFINITIONS AND INTERPRETATION
1.1      In this License Agreement and in the Schedules to this License
         Agreement the following words and phrases shall have the following
         meanings unless the context requires otherwise:

         "Affiliate"              means any company, partnership or other entity
                                  which directly or indirectly Controls, is
                                  Controlled by, or is under common Control
                                  with, any Party including as a subsidiary or
                                  holding company of any Party.

         "Business Day"           means a day other than a Saturday, Sunday,
                                  bank or other public holiday in Austrian
                                  and/or the United States of America.

         "Clinical Trial"         means a clinical trial conducted in accordance
                                  with recognised protocols approved by a
                                  Competent Authority

                                       -2-

                                  including CTX and DDX clinical trials or their
                                  equivalents anywhere in the World.

         "Commencement Date"      means the date first above written.

         "Competent Authority"    means any local or national agency, authority,
                                  department, inspectorate, minister, ministry
                                  official or public or statutory person
                                  (whether autonomous or not) of, or of any
                                  government of, any country having jurisdiction
                                  over this License Agreement or over any of the
                                  Parties or over the development or marketing
                                  of medicinal products including, but not
                                  limited to, the European Commission and the
                                  European Court of Justice.

         "Control"                means the ownership of more than 50% of the
                                  issued share capital or the legal power to
                                  direct or cause the direction of the general
                                  management and policies of the Party in
                                  question.

         "LICENSOR Existing       means LICENSOR's right, title and interest in
         Intellectual Property"   the LICENSOR Existing Patent Rights, LICENSOR
                                  Existing Know How and LICENSOR Existing
                                  Materials.

         "LICENSOR Existing       means the Know How relating to the subject
         Know How"                matter of the LICENSOR Existing Patent Rights,
                                  including Know How created under the Research
                                  Programme. means those Materials relating to
                                  the subject matter

         "LICENSOR Existing       of the LICENSOR Existing Patent Rights,
         Materials"               including Materials created under the Research
                                  Programme.

         "LICENSOR Existing       means the patent applications referred to in
         Patent Rights"           Schedule 1 and all Patent Rights arising from
                                  them.

         "Documents"              Means paper, notebooks, books, files, ledgers,
                                  records, tapes, discs, diskettes, CD-ROM and
                                  any other media on which Know How can be
                                  permanently stored.

                                      -3-

         "Development Plan"       Means the plan for the development of Licensed
                                  Products set out in Schedule 3 .

         "Force Majeure"          means in relation to a Party any event or
                                  circumstances which is beyond the reasonable
                                  control of that Party which event that Party
                                  could not reasonably be expected to have taken
                                  into account at the Commencement Date and
                                  which results in or causes the failure of that
                                  Party to perform any or all of its obligations
                                  under this License Agreement including act of
                                  God, lightening, fire, storm, flood,
                                  earthquake, accumulation of snow or ice, lack
                                  of water arising from weather or environmental
                                  problems, strike, lockout or other industrial
                                  disturbance, war, terrorist act, blockade,
                                  revolution, riot insurrection, civil
                                  commotion, public demonstration, sabotage, act
                                  of vandalism, prevention from or hindrance in
                                  obtaining in any way materials, energy or
                                  other supplies, explosion, fault or failure of
                                  plant or machinery, governmental restraint,
                                  act of legislature and directive or
                                  requirement of a Competent Authority governing
                                  any Party provided that lack of funds shall
                                  not be interpreted as a cause beyond the
                                  reasonable control of that Party.

         "Health Registration     means, with respect to a country in the
         Approval"                Territory, approval by the health or other
                                  Competent Authority necessary to manufacture
                                  and market a Licensed Product in the country.

         "IND Filing"             means an application made to a Competent
                                  Authority to:

                                  (i)  initiate a Clinical Trial; or

                                  (ii) permit first administration to human
                                       beings.

                                      -4-

         "Know-How"               means all technical and other information
                                  including ideas, concepts, patentable and
                                  non-patentable inventions, discoveries, data,
                                  formulae, specifications, drawings, manuals,
                                  information, , methods and processes for
                                  synthesis of chemical compounds ,
                                  instrumentation, procedures for experiments
                                  and tests including laboratory records and
                                  data analyses and results of experimentation
                                  and testing.

         "License Agreement"      means this agreement and any and all
                                  schedules, appendices and other addenda to it
                                  as may be varied from time to time in
                                  accordance with the provisions of this
                                  agreement.

         "Licensed Products"      means a product or products which, or the
                                  process of production of which, or the use of
                                  which falls within the scope of a Valid Claim
                                  in the country where the patent is issued.

         "Material"               means Documents and any chemical or biological
                                  substances including any:

                                  (i)   organic or inorganic element or
                                        compound;

                                  (ii)  drug or pro-drug;

                                  (iii) assay or reagent.

         "Net Sales"              means the invoiced amount billed for sales of
                                  Licensed Products to a Third Party (the
                                  "Customer") by VION or its Affiliates or by
                                  Sub-licensees less the following items to the
                                  extent they are paid or incurred or allowed
                                  and included in the invoice price:

                                  a) quantity, trade and/or cash discounts or
                                     rebates actually granted or accrued;

                                  b) amounts repaid or credited and allowances
                                     including cash, credit or

                                      -5-

                                     free goods allowances, given by reason of
                                     billing errors and rebates actually allowed
                                     or paid or accrued;

                                  c) amounts refunded or credited for Licensed
                                     Products which were rejected or damaged or
                                     recalled; and

                                  d) taxes, tariffs, customs duties and
                                     surcharges and other governmental charges
                                     incurred in connection with the sale,
                                     exportation or importation of Licensed
                                     Products;

                                  The transfer of Licensed Products by VION or
                                  one of its Affiliates to another Affiliate or
                                  to a Sub-licensee shall not be considered a
                                  sale. In such cases, Net Sales shall be
                                  determined based on the invoiced sale price
                                  levied by the Affiliate or Sub-licensee on the
                                  Customer, less the aforementioned deductions
                                  to the extent they are allowed, paid or
                                  accrued.

         "Parties"                means LICENSOR and VION and "Party" shall be
                                  construed as any one of them and any one of
                                  the persons and entities constituting
                                  LICENSOR.

         "Patent Rights"          means any patent applications, patents, author
                                  certificates, inventor certificates, utility
                                  models and all foreign counterparts of them
                                  and includes all divisions, renewals,
                                  continuations, continuations-in-part,
                                  extensions, reissues, substitutions,
                                  confirmations, registrations, revalidations
                                  and additions of or to them, as well as any
                                  SPC, or any like form of protection.

         "Pivotal Registration    means a Clinical Trial designed to support or
         Study"                   upon the basis of which an application for
                                  Health Registration Approval is to be made.

         "Quarter"                means the three (3) month periods commencing
                                  on 1 January, 1 April, 1 July and 1 October
                                  annually, and "Quarterly" shall be construed
                                  accordingly.

                                      -6-

         "Research Programme"     means the programme of research defined in the
                                  Research Collaboration Agreement.

        "Research Term"           means the term of the Research Programme as
                                  defined in the Research Collaboration
                                  Agreement.

         "SPC"                    means a right based on a patent pursuant to
                                  which the holder of the SPC is entitled to
                                  exclude third parties from using, making,
                                  having made, selling or otherwise disposing or
                                  offering to dispose of, importing or keeping
                                  the product to which the SPC relates, such as
                                  Supplementary Protection Certificates in
                                  Europe, and any similar right anywhere in the
                                  world.

         "Sub-license"            means a sub-license granted by VION (in
                                  accordance with Clause 2.4).

         "Sub-licensee"           means any person granted a Sub-license by
                                  VION.

         "Sub-license Royalties"  means royalty payments based on Net Sales that
                                  accrue to VION under a Sub-license.

         "Territory"              means the world.

         "Third Party"            means any entity or person other than the
                                  Parties or an Affiliate of a Party.

         "Valid Claim"            means either:

                                  a) a claim of an issued and unexpired patent
                                     included within the LICENSOR Existing
                                     Patent Rights, which claim has not been
                                     held permanently revoked, unenforceable or
                                     invalid by a decision of a court or other
                                     governmental agency of competent
                                     jurisdiction, unappealable or unappealed
                                     within the time allowed for appeal, and
                                     which has not been admitted to be invalid
                                     or unenforceable through reissue or
                                     disclaimer or otherwise; or

                                      -7-

                                  b) a claim of a pending patent application
                                     included within the LICENSOR Existing
                                     Patent Rights which claim was filed in good
                                     faith and has not been abandoned or finally
                                     disallowed without the possibility of
                                     appeal or refiling of the application.

1.2      In this License Agreement:

         1.2.1    unless the context otherwise requires, all references to a
                  particular clause or schedule shall be a reference to that
                  clause or schedule in or to this License Agreement as it may
                  be amended from time to time pursuant to this License
                  Agreement;

         1.2.2    the headings are inserted for convenience only and shall be
                  ignored in construing this License Agreement;

         1.2.3    unless the contrary intention appears, words importing the
                  masculine gender shall include the feminine and vice versa and
                  words in the singular include the plural and vice versa;

         1.2.4    unless the contrary intention appears, words denoting persons
                  shall include any individual, partnership, company,
                  corporation, joint venture, trust association, organisation or
                  other entity, in each case whether or not having separate
                  legal personality;

         1.2.5    the words "include", "included" or "including" are to be
                  construed without limitation to the generality of the
                  preceding words; and

         1.2.6    reference to any statute or regulation includes any
                  modification or re-enactment of that statute or regulation.

2.       GRANT OF LICENSE

2.1      LICENSOR hereby grants to VION an exclusive license throughout the
         Territory under the LICENSOR Existing Intellectual Property to
         research, develop, use, keep, make, have made, sell and otherwise
         dispose or offer to dispose of Licensed Products.

                                      -8-

2.2      Subject to Clause 2.3, the license granted in Clauses 2.1 shall be
         exclusive. The term of the license granted hereunder shall commence
         upon the signing hereof and shall continue for each Patent Right, on a
         country by country basis, for the term of the relevant Patent Right
         included within the LICENSOR Existing Intellectual Property.

2.3      It is acknowledged and agreed that LICENSOR shall have the right to use
         the LICENSOR Existing Intellectual Property for non-commercial research
         purposes only. For the purposes of clarification, LICENSOR shall not
         license or sublicense the LICENSOR Existing Intellectual Property to
         any other person or entity which conflicts with the license granted to
         VION hereunder.

2.4      VION shall be entitled to sublicense the rights granted in this License
         Agreement; any Sub-license entered into by VION shall;

         a)       provide that the Sub-license shall terminate automatically on
                  the expiry or termination for whatever reason of this License
                  Agreement;

         b)       provide that the Third Party with whom the Sub-license has
                  been entered into shall undertake to directly allow LICENSOR
                  the same access to the books and records as it has to VION's
                  books and records under this License Agreement.

3.       CONSIDERATION

3.1      In consideration of the rights granted under this License Agreement,
         VION shall pay (a) *** Unites States dollars (US$***) upon execution of
         this agreement and (b) *** Unites States dollars (US$***) at the time
         of the IND Filing of the first Licensed Product to fulfil all
         obligations under Clause 6.1 of the Research Collaboration and Option
         Agreement, and the following additional sums to LICENSOR:

         3.1.1    the following milestone fees in respect of each Licensed
                  Product (whether the milestone has been achieved by VION or a
                  Sub-licensee);

                  (a)       *** United States dollars (US$***) on the first IND
                            Filing; and

                  (b)       *** United States dollars (US$***) on the
                            commencement of a Phase III Clinical Trial or
                            Pivotal Registration Study; and

                  (c)       *** United States dollars (US$***) on the grant
                            of the first Health Registration Approval in any
                            country in the Territory.

         For the purposes of clarification, it is understood that for each
         Licensed Product the milestone fees paid to LICENSOR will be no more
         than $*** (whether the milestone has been achieved by VION or by a
         Sub-licensee).

                                      -9-

         3.1.2    in the case of VION's sale of Licensed Products, royalties of
                  *** of Net Sales *** in any calendar year and of *** of Net
                  Sales *** in any calendar year.

         3.1.3    in the case of a Sub-licensee's sale of Licensed Products, ***
                  of Sub-license Royalties with the limitation that the
                  royalties due to LICENSOR shall not *** of Net Sales; and

         3.1.4    any and all patent filing, maintenance and prosecution costs
                  incurred after the Commencement Date; and

         3.1.5    an annual minimum of *** United States dollars (US$***) per
                  calendar year once a Licensed Product has been approved by the
                  FDA.

4.       PAYMENT

4.1      All payments due to LICENSOR under this License Agreement shall
         (subject to written advice from LICENSOR amending the details) be made
         in United States dollars by telegraphic transfer to the account below:

         Payee: LICENSOR

         AUSTRIA WIRTSCHAFTSSERVICE Gesellschaft m.b.H
         Ungargasse 37
         A-1030 Vienna, Austria
         Account No:                42506710005
         Bank Sorting Code:         43000
         IBAN:                      AT254300042506710005
         Bank:                      Volksbank Wien AG
         Owner of Account: Austria Wirtschaftsservice

4.2      VION shall make the payments to LICENSOR:

         4.2.1    in the case of the royalties payable pursuant to Clause 3.1.2,
                  within 30 (thirty) days of the end of the Quarter in which
                  the sales of the relevant Licensed Products took place; or

         4.2.2    in the case that the licensed product is sublicensed to third
                  parties, within 30 (thirty) days from the date upon which the
                  Sub-license Royalties have been received by VION; or

         4.2.3    in the case of the milestone fees payable pursuant to Clause
                  3.1.1, within 30 (thirty) days of achieving the milestone; or

         4.2.4    in the case of annual minimums pursuant to Clause 3.1.4,
                  within 30 (thirty) days of the end of the second Quarter.

                                      -10-

4.3      Where sums are received by VION in a currency other than United States
         dollars, conversion of such currencies to United States dollars will be
         performed at the closing mid-point rate published on the last Business
         Day of the Quarter in which the sum is to be paid.

4.4      Where LICENSOR does not receive payment of any sums due to it within
         thirty (30) days of the dates set out in Clauses 3.1 or 4.2 as the case
         may be (the "Due Date"), interest shall accrue on the sum due and owing
         to LICENSOR at an annual rate of two percent (2%) above the prime rate
         quoted by The Wall Street Journal on the day said payment is due.

5.       BOOKS AND RECORDS

5.1      VION shall prepare an annual statement which shall show on a country by
         country basis for the previous calendar year all monies due to LICENSOR
         under this License Agreement. That statement shall include the dollar
         amount of Net Sales of each Licensed Product sold in each country in
         which sales occurred, and shall be submitted to LICENSOR within sixty
         (60) Business Days of 31st March of each year. If LICENSOR gives notice
         to VION within twenty (20) Business Days of the receipt of any such
         statement that it does not accept the same, that statement shall be
         certified by an independent accountant appointed by agreement between
         VION and LICENSOR or, if such agreement cannot be reached within ten
         (10) Business Days, appointed at the request of either LICENSOR or
         VION. VION shall make available to the independent accountant all books
         and records required for the purpose of that certification and the
         statements so certified shall, in the absence of manifest error, be
         final and binding between the Parties. The cost of the external
         certification (cost of the independent accountant) shall be the
         responsibility of VION if the statement is shown to have underestimated
         the monies payable to LICENSOR by more than five percent (5%) and the
         responsibility of LICENSOR otherwise. Any outstanding payments due to
         LICENSOR which are identified as a result of carrying out the
         investigation shall be paid to LICENSOR immediately. There shall be no
         more than one certification by an independent accountant in relation to
         any one annual statement.

5.2      VION shall, and shall ensure that its Sub-licensees shall, keep true
         and accurate records and books of account containing all data necessary
         for the calculation of the amounts payable by it to LICENSOR pursuant
         to this License Agreement. Such records and books of account shall be
         kept for six (6) years following the end of the calendar year to which
         they relate and shall, upon reasonable notice having been given by
         LICENSOR, be open at all reasonable times on Business Days for
         inspection under the terms of confidentiality contained in this License
         Agreement, by an independent firm of accountants appointed by agreement
         between the Parties or, if such agreement cannot be reached within ten
         (10) Business Days, appointed at the request of either LICENSOR or
         VION. The cost of any such examination shall be borne by LICENSOR, such
         examination to take place not later than six (6) years following the
         expiration of the period to which it relates and there shall be no more
         than one examination per year.

                                      -11-

6.       PERFORMANCE AND CLINICAL DEVELOPMENT

6.1      VION shall, and shall procure that its Affiliates and permitted
         Sub-licensees shall, use best endeavours to develop, make, market, sell
         and otherwise dispose of Licensed Products throughout the Territory.

6.2      VION shall carry out in a diligent manner the Development Plan
         (Schedule 3) in relation to Licensed Products at its own cost and
         expense.

7.       MANAGEMENT OF PATENT RIGHTS AND OWNERSHIP OF IMPROVEMENTS

7.1      VION shall, at its own cost, be responsible for the filing,
         prosecution, and maintenance of any patents and patent applications
         comprised within the LICENSOR Existing Patent Rights after the
         Commencement Date.

7.2      If either Party receives any notice, claim or proceedings from any
         Third Party alleging infringement of that Third Party's intellectual
         property by reason of either Party's activities in relation to this
         License Agreement or the use and exploitation of the LICENSOR Existing
         Intellectual Property, the Party receiving that notice shall forthwith
         notify the other Party of the notice, claim or proceeding.

7.3      VION shall, at its own cost, defend and enforce or shall procure the
         defence or enforcement of the rights under the LICENSOR Existing
         Intellectual Property including any interference proceedings arisen
         from any country or countries. LICENSOR shall, at VION's cost, render
         such reasonable assistance as VION reasonably requests. If VION, for
         any reason whatsoever, decides not to defend or enforce the LICENSOR
         Existing Intellectual Property or any part of it in such country or
         countries, it shall promptly notify LICENSOR and LICENSOR shall have
         the right, but not the obligation, to terminate VION's license in such
         country or countries upon thirty (30) days prior written notice to VION
         and/or to undertake proceedings on its own behalf in accordance with
         Section 7.4.

7.4      If VION decides not to, or fails to defend or enforce the relevant
         LICENSOR Existing Intellectual Property and if LICENSOR desires the
         enforcement or defence of such rights, LICENSOR, at its own cost, shall
         notify VION and VION shall, at LICENSOR's request, grant to LICENSOR
         any and all rights that would be necessary for LICENSOR to undertake
         the enforcement or defence. If VION is unable to grant such rights then
         it shall, at LICENSOR's request, grant to LICENSOR the right to conduct
         such an action in its name. VION shall provide, at LICENSOR's request,
         such reasonable assistance as LICENSOR may reasonably request in any
         such proceedings. Any monies received by LICENSOR pursuant to any
         enforcement or defence of the LICENSOR Existing Intellectual Property
         by them under this Clause 7.4 shall be solely for the benefit of
         LICENSOR.

7.5      It is the intent of the Parties to use their reasonable endeavours to
         apply for any extension to the term of protection of the LICENSOR
         Existing Intellectual Property including any

                                      -12-

         SPC or other like form of protection which is available anywhere in the
         world. Notwithstanding the foregoing, VION has the right, in its sole
         discretion, not to file, prosecute, or maintain patent applications or
         patents in any country. LICENSOR may, in its sole discretion and at its
         own expense, file, prosecute, or maintain such patent applications or
         patents in such country or countries where VION does not file,
         prosecute or maintain patents or patent applications, and may terminate
         VION's license to the Licensed Patents in such country or countries.

8.       WARRANTIES AND LIABILITY

8.1      It is agreed and understood by the Parties that VION is responsible for
         its own investigation to satisfy itself that the rights granted under
         this License Agreement can be properly and lawfully exercised by VION
         without infringing the rights of any third party, and except as
         expressly set out in Clause 8.2 and 8.3 no warranties of any kind are
         given by LICENSOR in relation to the intellectual property rights
         granted under this License Agreement or owned or controlled by any
         third party which may affect the exercise of such rights.

8.2      Each Party represents and warrants to the other Parties that:

         8.2.1    it has legal power, authority and right to enter into this
                  License Agreement and to perform its respective obligations
                  hereunder; and

         8.2.2    it is not at the Commencement Date a party to any agreement,
                  understanding with any Third Party which in any significant
                  way prevents it from fulfilling any of its material
                  obligations hereunder; and

         8.2.3    it is also agreed and understood by the Parties that LICENSOR
                  is the sole owner or the sole assignee of the LICENSOR
                  Existing Intellectual Property listed in Schedules 1, and
                  LICENSOR has the right to license the LICENSOR Existing
                  Intellectual Property to VION.

         Any breach of this Clause 8.2 shall be a material breach of this
         License Agreement.

8.3      Other than expressly set out herein, no Party gives any representation
         or warranty to any other Party that the performance of this License
         Agreement will not result in the infringement of any rights, including
         intellectual property rights, vested in a Third Party; provided that
         LICENSOR represents and warrants that it has no knowledge of any third
         party intellectual property rights reasonably likely to be infringed by
         VION's performance of the Agreement and use of the LICENSOR Existing
         Intellectual Property.

8.4      Nothing in this License Agreement shall be construed as a
         representation made or warranty given by LICENSOR in relation to the
         LICENSOR Existing Patent Rights or other LICENSOR Existing Intellectual
         Property that:

         8.4.1    any patent will issue based upon any pending patent
                  application;

                                      -13-

         8.4.2    any patent which issues will be valid.

         8.4.3    except as stated in 8.3, the use of any Licensed Intellectual
                  Property will not infringe the patent or proprietary rights of
                  any Third Party.

         Furthermore, except as stated in 8.3, LICENSOR makes no representation
         or warranty, express or implied, with respect to the LICENSOR Existing
         Intellectual Property, including any warranty of merchantability or
         fitness for a particular purpose.

8.5      No Party shall be liable to the other Party, its Affiliates or
         Sub-licensees in contract, tort, negligence, breach of statutory duty
         or otherwise for any loss, damage, cost or expense of an indirect or
         consequential nature (including any economic loss or other loss of
         turnover, profits, business or goodwill) arising out of or in
         connection with this License Agreement or the subject matter of this
         License Agreement.

8.6      VION shall be responsible for and indemnify, defend and hold harmless
         LICENSOR, and their respective officers, servants and agents against
         any and all liability, loss, damage, cost or expense (including
         reasonable attorney's fees and court and other expenses of litigation)
         arising out of or in connection with Third Party claims relating to the
         discovery, research, development, manufacture, marketing, selling and
         disposal of Licensed Products or candidate Licensed Products by VION
         its Affiliates and Sub-licensees.

8.7      In the event that LICENSOR intends to seek indemnification under Clause
         8.6, it shall promptly inform VION of a claim after receiving notice of
         the claim and shall permit VION to direct and control the defence of
         the claim and shall provide such reasonable assistance as reasonably
         requested by VION (at VION's cost) in the defence of the claim.
         Provided always that nothing in this Clause 8.7 shall permit VION to
         make any admission on behalf of, or to settle any litigation without
         the prior written consent of, LICENSOR.

9.       CONFIDENTIALITY

9.1      Each Party undertakes and agrees not at any time for any reason
         whatsoever to disclose or permit to be disclosed to any Third Party or
         otherwise make use of or permit to be made use of (except as expressly
         permitted by this License Agreement), any trade secrets or confidential
         information relating to the other Party's technology or the business
         affairs or finances of the other Party or of an Affiliate, Sub-licensee
         or of any suppliers, agents, distributors or customers of the other
         Party (the "Confidential Information") which come into its possession
         pursuant to this License Agreement.

9.2      The Parties shall ensure that only those of their and their Affiliates'
         officers and employees who have a need to know are given access to
         Confidential Information and that those who are directly concerned with
         the carrying out of this License Agreement and who have access to the
         Confidential Information of the other Party are informed of its secret
         and confidential nature.

                                      -14-

9.3      The obligations of confidence referred to in this Clause 9 shall not
         extend to any Confidential Information which:

         9.3.1    is at the time of disclosure, or thereafter becomes, generally
                  available to the public otherwise than by reason of a breach
                  by the recipient Party of the provisions of this Clause 9; or

         9.3.2    is known to the recipient Party without obligations of
                  confidence prior to its receipt from the other Party, as can
                  be shown by written record; or

         9.3.3    is subsequently disclosed to the recipient Party without
                  obligations of confidence by another party owing no such
                  obligations in respect thereof; or

         9.3.4    is required to be disclosed by any applicable law or any
                  Competent Authority to which a Party is from time to time
                  subject; or

         9.3.5    is independently developed by a servant, agent or employee of
                  the recipient Party or any other person or persons having no
                  access to the Confidential Information disclosed by a Party,
                  as demonstrated by written records.

9.4      The obligations of each Party under this Clause 9 shall survive the
         expiration or termination for whatever reason of this License Agreement
         for a period of five (5) years.

10.    TERM AND TERMINATION

10.1     This License Agreement shall become effective as of the Commencement
         Date and shall expire, on a country by country basis, when the last
         patent included within the LICENSOR Existing Intellectual Property in
         such country expires.

10.2     Either LICENSOR on the one hand or VION on the other hand ("the
         Terminating Party") shall have the right to terminate this License
         Agreement forthwith upon giving written notice of termination to VION
         on the one hand or LICENSOR on the other hand as the case may be ("the
         Defaulting Party"), upon the occurrence of any of the following events
         at any time during this License Agreement:

         10.2.1   the Defaulting Party commits a material breach of this License
                  Agreement which in the case of a breach capable of remedy
                  shall not have been remedied within thirty (30) Business Days
                  of the receipt by it of a notice identifying the breach and
                  requiring its remedy; or

         10.2.2   VION for a period of longer than ninety (90) Business Days
                  fails to make payments set out in Clause 4 and VION fails to
                  reach an agreement with LICENSOR concerning such payments
                  within thirty (30) Business Days of the receipt by it of a
                  notice identifying the delinquency.

                                      -15-

11.      CONSEQUENCES OF TERMINATION

11.1     Upon expiry of this License Agreement or in the case that VION commits
         a material breach of this Agreement:

         11.1.1   the license rights granted by LICENSOR to VION pursuant to
                  Clause 2 shall terminate;

         11.1.2   VION shall pay to LICENSOR within sixty (60) Business Days all
                  sums due to LICENSOR hereunder which have accrued prior to the
                  date of termination;

         11.1.3   VION shall return to LICENSOR, or as LICENSOR may direct, all
                  Documents which embody and pertain to LICENSOR Existing
                  Intellectual Property and associated Know How. For the sake of
                  clarity any and all data generated by VION according to the
                  Development plan shall be vested in VION; and

         11.1.4   VION shall return to LICENSOR, or at the election of LICENSOR
                  destroy, all LICENSOR Existing Materials in VION's possession
                  or under their control.

11.2     In the case that LICENSOR commits a material breach of this Agreement,
         LICENSOR shall reimburse VION within 30 (thirty) Business Days after
         receiving VION's invoice of all documentable expenses related to this
         Agreement which have accrued prior to the date of termination.

11.3     Termination or expiry of this License Agreement for whatever reason
         shall not affect the accrued rights of the Parties arising in any way
         out of this License Agreement as at the date of termination or expiry
         and in particular but without limitation the right to recover damages
         and interest, and the provisions of Clauses 5, 8, 9 and 20 shall remain
         in full force and effect.

12.      WAIVER

12.1     Neither Party shall be deemed to have waived any of its rights or
         remedies conferred by this License Agreement unless the waiver is made
         in writing and signed by a duly authorised representative of that
         Party. In particular, no delay or failure of either Party in exercising
         or enforcing any of its rights or remedies conferred by this License
         Agreement shall operate as a waiver of those rights or remedies or so
         as to preclude or impair the exercise or enforcement of those rights or
         remedies nor shall any partial exercise or enforcement of any right or
         remedy by either Party preclude or impair any other exercise or
         enforcement of that right or remedy by that Party.

13.      ENTIRE AGREEMENT/VARIATIONS

13.1     This License Agreement constitutes the entire agreement and
         understanding between the Parties and supersedes all prior oral or
         written understandings, arrangements, representations or agreements
         between them relating to the subject matter of this License

                                      -16-

         Agreement, including the Research Collaboration Agreement which is
         hereby terminated. No director, employee or agent of either Party is
         authorised to make any representation or warranty to another Party not
         contained in this License Agreement, and each Party acknowledges that
         it has not relied on any such oral or written representations or
         warranties.

13.2     No variation, amendments, modification or supplement to this License
         Agreement shall be valid unless made in writing in the English language
         and signed by a duly authorised representative of each Party.

14.      NOTICES

14.1     Any notice to be given pursuant to this License Agreement shall be in
         writing in the English language and shall be delivered by hand, or sent
         by facsimile confirmed to the address or facsimile number of the
         recipient set out below or such other address or facsimile number as a
         Party may from time to time designate by written notice to the other
         Party.

         ADDRESSES:

         LICENSOR
         AUSTRIA WIRTSCHAFTSSERVICE
         Gesellschaft m.b.H
         Ungargasse 37
         A-1030 Vienna, Austria

         PROF. DR. JOHANN HOFMANN
         Institut fur Medizinische Chemie und Biochemie
         University of Innsbruck
         Fritz-Pregl-Strasse 3
         A-6020 Innsbruck, Austria

         VION Pharmaceuticals, Inc.
         4 Science Park
         New Haven, CT 06511
         USA
         Attn: Howard B. Johnson

14.2     Any notice given pursuant to this Clause 14 shall be deemed to have
         been received:

         14.2.1   in the case of delivery by hand, when delivered; or

         14.2.2   in the case of facsimile, on acknowledgement by the recipient
                  facsimile receiving equipment on a Business Day if the
                  acknowledgement occurs before 1700 hours local time of the
                  recipient and in any other case on the following Business Day.

                                      -17-

15.      ASSIGNMENT

15.1     Subject to Clause 15.2, no Party shall without the prior written
         consent of the other Party, assign the benefit and/or burden of this
         License Agreement nor sub-contract any of its obligations hereunder
         unless otherwise permitted by the terms hereof.

15.2     LICENSOR or VION shall be entitled to assign the benefit and/or burden
         of this License Agreement to any Affiliate or its successor in
         connection with any merger, consolidation or sale or other disposal of
         its assets and/or business.

16.      FORCE MAJEURE

16.1     If a Party (the "Non-Performing Party") is unable to carry out any of
         its obligations under this License Agreement due to Force Majeure this
         License Agreement shall remain in effect but the Non-Performing Party's
         relevant obligations under this License Agreement and the relevant
         obligations of the other Party ("the Innocent Party") under this
         License Agreement shall be suspended for a period equal to the duration
         of the circumstance of Force Majeure provided that:

         16.1.1   the suspension of performance is of no greater scope than is
                  required by the Force Majeure;

         16.1.2   the Non-Performing Party gives the Innocent Party prompt
                  notice describing the circumstance of Force Majeure, including
                  the nature of the occurrence and its expected duration, and
                  continues to furnish regular reports during the period of
                  Force Majeure;

         16.1.3   the Non-Performing Party uses all reasonable efforts to remedy
                  its inability to perform and to mitigate the effects of the
                  circumstance of Force Majeure; and

         16.1.4   as soon as practicable after the event which constitutes Force
                  Majeure the Parties shall discuss how best to continue their
                  operations as far as possible in accordance with this License
                  Agreement.

16.2     If Force Majeure is continuing at the expiry of 3 months either of the
         Innocent Party may give thirty (30) Business Days written notice to
         terminate this License Agreement to the Non-Performing Party and
         termination shall occur if the Force Majeure is continuing at the end
         of that thirty (30) Business Day notice period.

17.      SEVERANCE OF TERMS

17.1     If the whole or any part of this License Agreement is or becomes or is
         declared illegal, invalid or unenforceable in any jurisdiction for any
         reason (including both by reason of the provisions of any legislation
         and also by reason of any court or Competent Authority which either has
         jurisdiction over this License Agreement or has jurisdiction over
         either or both of the Parties):

                                      -18-

         17.1.1   in the case of the illegality, invalidity or un-enforceability
                  of the whole of this License Agreement it shall terminate only
                  in relation to the jurisdiction in question; or

         17.1.2   in the case of the illegality, invalidity or un-enforceability
                  of part of this License Agreement that part shall be severed
                  from this License Agreement in the jurisdiction in question
                  and that illegality, invalidity or un-enforceability shall not
                  in any way whatsoever prejudice or affect the remaining parts
                  of this License Agreement which shall continue in full force
                  and effect.

17.2     If in the reasonable opinion of either Party any severance under this
         Clause 17 materially affects the commercial basis of this License
         Agreement, the Parties shall discuss, in good faith, ways to eliminate
         the material effect.

18.      THIS LICENSE AGREEMENT NOT TO CONSTITUTE A PARTNERSHIP

18.1     None of the provisions of this License Agreement shall be deemed to
         constitute a partnership between the Parties and no Party shall have
         any authority to bind any other Party in any way except as provided in
         this License Agreement.

19.      PUBLIC STATEMENTS

19.1     Except as provided in Clause 19.2, neither Party shall, without the
         prior written consent of the other Parties:

         19.1.1   use in advertising, publicly or otherwise, any trade-name,
                  personal name, trademark, trade device, service mark, symbol,
                  or any abbreviation, contraction or simulation thereof, owned
                  by another Party (including for the sake of clarity in
                  relation to LICENSOR); or

         19.1.2   represent, either directly or indirectly, that any product or
                  service of another Party is a product or service of the
                  representing Party or that it is made in accordance with or
                  utilises the information or documents of another Party.

19.2     The restrictions in Clause 19.1 shall not apply to the following:

         19.2.1   a press release, in a form agreed to in writing by the
                  Parties, publicly announcing this License Agreement; or

         19.2.2   use as required by any applicable law or governmental
                  regulation.

                                      -19-

20.      GOVERNING LAW AND JURISDICTION

20.1     The validity, construction and performance of this License Agreement
         shall be governed by the laws of the United Kingdom and any dispute
         relating to it shall be subject to the exclusive jurisdiction of the
         Courts of the United Kingdom.

                                      -20-

SCHEDULE 1
LICENSOR existing patents

AUSTRIAN APPLICATION

Title:            ***
Appl. No:         ***
Appl. Date:       ***

PCT APPLICATION

Title:            ***
Appl. No:         ***
Appl. Date:       ***
Publ. No:         ***

EP APPLICATION

Title:            ***
Appl. No:         ***
Appl. Date        ***
Publ. No:         ***

US APPLICATION

Title:            ***
Appl. No:         ***
Appl. Date:       ***
Publ. No:         ***

CANADIAN APPLICATION

Title:            ***
Appl. No:         ***
Appl. Date:       ***
Publ. No:         ***

*** Confidential

                                      -21-

SCHEDULE 2

INTENTIONALLY LEFT BLANK

                                      -22-

SCHEDULE 3

"Development Plan"

1.       An IND or an equivalent will be filed *** after Clinical Candidate is
         identified.

2.       Phase I clinical trials will be started *** after the IND or an
         equivalent is approved. The first Phase I clinical trial will be
         completed *** of its initiation. Completion of the final study report
         and data analysis will constitute the end of the trial. Any further
         Phase I trials will be completed *** period.

3.       Phase II clinical trials will be started *** after the completion of
         Phase I clinical trials. The first Phase II clinical trial will be
         completed *** of its initiation. Completion of the final study report
         and data analysis will constitute the end of the trial. Any further
         Phase II trials will be completed *** period.

4.       Phase III clinical trials will be started *** after an agreement is
         reached with FDA (or similar regulatory body) at the end of Phase II
         trial meeting.

                                      -23-

IN WITNESS whereof this License Agreement has been executed by duly authorised
officers of the Parties on the date first above written.

Signed by:                       /s/ Johann Hofmann                      6/13/05
                              --------------------------------------------------
                              Prof. Dr. Johann Hofmann                    Date

                                 /s/ Johnny Easmon                        6/13/0
                              --------------------------------------------------
                              Dr. Johnny Easmon,                          Date

                                 /s/ Gottfried Heinisch                  6/30/05
                              --------------------------------------------------
                              Prof. Dr. Gottfried Heinisch                Date

                                 /s/ Gerhard Purstinger                  6/13/05
                              --------------------------------------------------
                              Dr. Gerhard Purstinger                      Date

                                 /s/ Heinz Herbert Fiebig                6/17/05
                              --------------------------------------------------
                              Prof. Dr. Heinz-Herbert Fiebig              Date

For and on behalf of AUSTRIA WIRTSCHAFTSSERVICE GESELLSCHAFT M.B.H.

Signed by:                      /s/ Georg Buchtela                       6/08/05
                              --------------------------------------------------

                                                                          Date
Name:                         Georg Buchtela

Title:
                              --------------------------------------------------

Signed by:                      /s/ Berud Winter
                              --------------------------------------------------
                                                                          Date
Name:                         Berud Winter

Title:

                                      -24-

For and on behalf of VION PHARMACEUTICALS INC

Signed by:                    /s/ Howard Johnson                          6/1/05
                              --------------------------------------------------
                                                                          Date
Name:                         Howard B. Johnson

Title:                        President and Chief Financial Officer

                                      -25-

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