Document:

EXHIBIT 10.14

November 1, 2002

Via Facsimile: (972) 579-6448

BANCTEC, INC.

BANCTEC UPPER-TIER HOLDING, LLC

BANCTEC INTERMEDIATE HOLDING, INC.

2701 East Grauwyler Road

Building #3

Irving, Texas 75061

Attention: Chief Financial Officer

Re:                               LOAN AND

SECURITY AGREEMENT—WAIVER, CONSENT AND AMENDMENT  RELATING TO BANCTEC RESTRUCTURING

Ladies

and Gentleman:

Reference is hereby made to that

certain Loan and Security Agreement by and among BANCTEC, INC., a Delaware

corporation (“Borrower”), the financial institution(s) listed on the

signature pages hereof, and their respective successors and Eligible Assignees

(“Lender”) and HELLER FINANCIAL, INC., a Delaware corporation (“Agent”),

as Agent for the Lender, dated as of May 30, 2001 (as amended or otherwise

modified in writing, the “Loan Agreement”).  Unless otherwise indicated, all terms used herein shall have the

same meanings as in the Loan Agreement.

Borrower has requested that Agent and

Lender consent to the consummation of the following transactions, as such transactions

are more fully described in that certain Contribution and Subscription

Agreement (the “Contribution Agreement”), dated as of November 1, 2002,

executed by Borrower, BancTec Upper-Tier Holding, LLC, a Delaware limited

liability company (“Upper-Tier Holding”), and BancTec Intermediate

Holding, Inc., a Delaware corporation (“Intermediate Holding”), and in

that certain Limited Liability Company Agreement of BancTec Upper-Tier Holding,

LLC (“Limited Liability Company Agreement”), dated as of November 1, 2002,

executed by Welsh, Carson, Anderson & Stowe VIII, L.P., WCAS Capital

Partners III, L.P., WCAS Information Partners, L.P., the other WCAS Members (as

defined in the Limited Liability Company Agreement), Convergent Equity

Partners, L.P., the Executive Members (as defined in the Limited Liability

Company Agreement), and the other Members (as defined in the Limited Liability

Company Agreement):  (a) (i) the

creation of BancTec Upper-Tier Holding, a Delaware general partnership (“Original

Partnership”), and (ii) the contribution to Original Partnership by the

WCAS Members of the Senior Subordinated Note and the Deferred Interest Notes

(as defined in the Senior Subordinated Note), and of the entirety of their

ownership interest in the capital stock of Borrower and in the warrants to

purchase capital stock of Borrower issued to them by Borrower; (b) (i) the

creation of Upper-Tier Holding, and (ii) the contribution to 

 

Upper-Tier Holding: (A) by the

WCAS Members of all of their interests in Original Partnership, (B) by

Convergent of 1,181,946 shares of Class A Common Stock, par value $.01 per

share of Borrower, and (C) by the Executive Members of $100,000 in cash, in

each case in exchange for such interest in Upper-Tier Holding as is described

in the Limited Liability Company Agreement; (c) the dissolution and termination

of Original Partnership and transfer of all of the assets of Original

Partnership to Upper-Tier Holding, whereupon Upper-Tier Holding becomes the

owner of the Senior Subordinated Note and the Deferred Interest Notes

(hereinafter, the “Subordinated Notes”) and of all the issued and

outstanding capital stock of Borrower and of warrants to purchase capital stock

of Borrower (such capital stock and warrants being hereinafter collectively

referred to as the “BancTec Stock and Warrants”); and (d) (i)

creation of an Intermediate Holding, (ii) contribution by Upper-Tier Holding to

Intermediate Holding of the BancTec Stock and Warrants and $100,000 in cash in

exchange for the issuance by Intermediate Holding to Upper-Tier Holding of 100%

of the issued and outstanding capital stock of Intermediate Holding, and (iii)

subscription by Intermediate Holding for, and issuance by Borrower to

Intermediate Holding of, 667 shares of Series A Preferred Stock of Borrower for

an aggregate subscription price of $100,000 (such transactions being

hereinafter referred to collectively as the “Proposed Transaction”), and

that Agent and Lender waive any violation of any provision of the Loan

Agreement to the extent such provision would otherwise be deemed violated

solely due to the consummation of the Proposed Transaction.

Borrower has further requested that

Agent and the Lender (a) amend the Loan Agreement to permit Borrower to make

cash dividends to Intermediate Holding (i) in an aggregate amount equal to the

actual federal and state income and franchise tax liability for any applicable

year of Intermediate Holding, Borrower and Borrower’s Subsidiaries as

determined on a consolidated basis pursuant to actually filed consolidated tax

returns of Intermediate Holding, Borrower and Borrower’s Subsidiaries, (ii) in

an amount not to exceed $200,000 during each fiscal year of Borrower to be used

to pay the administrative expenses of Intermediate Holding and Upper-Tier

Holding,  and (iii) in connection with

the purchase by Upper-Tier Holding pursuant to Section 8.05 of the Limited

Liability Company Agreement of all Interests (as defined in the Limited

Liability Company Agreement) in Upper-Tier Holding then held by a Carry Member

(as defined in the Limited Liability Company Agreement) and his affiliates or

transferees, provided that the amount of such cash dividend in connection with

such specific purchase does not exceed the Series C Principal Balance (as

defined in the Limited Liability Company Agreement) of such Carry Member, and

(b) amend the Loan Agreement to permit Borrower to file consolidated income tax

returns with Intermediate Holding, and (c) make the other agreements

hereinafter set forth.

Subject to the terms, conditions and

provisions of this letter, (a) each of Lender and Agent hereby (i) consents to

the consummation of the Proposed Transaction, and (ii) waives any violation of

the provisions of the Loan Agreement to the extent such provisions would be

deemed violated solely due to the consummation of the Proposed Transaction, and

(b) each of Agent, Lender and Borrower hereby amends the Loan Agreement and

hereby makes such other agreements as follows:

(i)            Borrower,

Agent and Lender hereby amend Section 7.5 of the Loan Agreement by deleting it

in its entirety and replacing it with the following:

2

 

“7.5         Restricted

Junior Payments.  Directly or

indirectly declare, order, pay, make or set apart any sum for any Restricted

Junior Payment, except that (a) Subsidiaries of Borrower may make Restricted

Junior Payments with respect to their common stock, (b) the Borrower may

declare and pay dividends with respect to its capital stock payable in

additional shares of its common stock, (c) the Borrower may make Restricted

Junior Payments pursuant to and in accordance with currently existing stock

option plans or other benefit plans for management or employees of the Borrower

and its Subsidiaries, (d) Borrower may make regularly scheduled interest

payments on the Senior Subordinated Note and issue and pay interest on Deferred

Interest Notes (as defined in the Senior Subordinated Note) provided that at

the time of such payment or issuance Borrower is in compliance with the Fixed

Charge Coverage Ratio specified in B of the Financial Covenants Rider, (e)

Borrower may make cash dividends to BancTec Intermediate Holding, Inc., a

Delaware corporation (‘Intermediate Holding’), up to the aggregate

amount equal to the actual federal and state income and franchise tax liability

for any applicable taxable year of Intermediate Holding, Borrower and

Borrower’s Subsidiaries as determined on a consolidated basis pursuant to

consolidated tax returns actually filed for Intermediate Holding, Borrower and

Borrower’s Subsidiaries, (f) Borrower may make cash dividends to Intermediate

Holding in an amount each fiscal year of Borrower not to exceed $200,000 to be

used to pay the administrative expenses of Intermediate Holding and of BancTec

Upper-Tier Holding, LLC, a Delaware limited liability company (‘Upper-Tier

Holding’), and (g) provided no Default or Event of Default then exists,

Borrower may make cash dividends to Intermediate Holding in connection with the

purchase by Upper-Tier Holding pursuant to Section 8.05 of the Upper-Tier

Holding LLC Agreement of all Interests (as defined in the Upper-Tier Holding

LLC Agreement) in Upper-Tier Holding then held by a ‘Carry Member’ (as defined

in the Upper-Tier Holding LLC Agreement) and his affiliates or other transferees,

provided that the amount of such cash dividend in connection with any such

specific purchase shall not exceed the Series C Principal Balance (as defined

in the Upper-Tier Holding LLC Agreement) of such Carry Member.”

(ii)           Borrower,

Agent and Lenders hereby amend Section 7.10 of the Loan Agreement by deleting

it in its entirety and replacing it with the following:

“7.10       Tax

Consolidations.  File or consent to

the filing of any consolidated income tax return with any Person other than any

of Borrower’s Subsidiaries or Intermediate Holding;  provided that in the

event Borrower files a consolidated return with Intermediate Holding or any

such other Person, Borrower’s contribution with respect to taxes as a result of

the filing of such consolidated return shall not be greater, nor the receipt of

tax benefits less, than they would have been had Borrower not filed a

consolidated return with Holdings or such other Person.”

3

 

(iii)          Borrower,

Agent and Lender hereby agree that in addition to and not in limitation of the

Events of Default presently set forth in Section 8.1 of the Loan Agreement, the

occurrence of any of the following shall also constitute an Event of Default:

                (A)          Upper-Tier Holding and/or Intermediate Holding hereafter

forms a new Subsidiary; or

                (B)           Upper-Tier Holding conducts any business other than being

the holding company for all the issued and outstanding capital stock in

Intermediate Holding and the Subordinated Notes; or

                (C)           Intermediate Holding conducts any business other than

being the holding company for all the issued and outstanding capital stock of

and of all the issued warrants to purchase capital stock of Borrower.

(iv)          Borrower,

Agent and Lender hereby amend Section 11.1 of the Loan Agreement by adding

thereto a new definition, “Upper-Tier Holding LLC Agreement,” to read in its

entirety as follows:

“‘Upper-Tier Holding LLC Agreement’

means that certain Limited Liability Company Agreement of BancTec Upper-Tier

Holding LLC, dated as of November 1, 2002, executed by WCAS, et al., as in

effect on the original date of execution thereof and as thereafter amended, to

the extent Agent has consented to such amendment.”

(v)           Borrower,

Agent and Lender hereby agree that unless otherwise required by Agent,

calculation of the covenants contained in the Financial Covenants Rider

attached to the Loan Agreement shall continue to only take into account

Borrower and its Subsidiaries (and not Intermediate Holding) and that unless

otherwise required by Agent the reporting required by the Reporting Rider

attached to the Loan Agreement shall continue to be reported on the basis of

Borrower and its Subsidiaries  (and not on the basis of Intermediate

Holding and its Subsidiaries).

Notwithstanding the foregoing, Lender’s

and Agent’s consents, waivers and agreements herein are subject to the

satisfaction of the following conditions in a manner and pursuant to

documentation satisfactory to Agent:

(a)                                  Agent

shall have received a copy of this letter, duly and validly executed by

Borrower, Upper-Tier Holding and Intermediate Holding;

(b)                                 Agent

shall have received a copy of the executed Contribution Agreement, including

all exhibits and schedules thereto, and of the executed Limited Liability

Company Agreement, including all exhibits and schedules thereto, and of all

other documentation executed and issued in connection with the Proposed

Transaction;

(c)                                  Agent

shall have received (i) a Guaranty Agreement duly executed by Upper-Tier

Holding, in favor of Agent and Lender, whereby Upper-Tier Holding guarantees

payment of the Obligations, and (ii) a Guaranty Agreement duly executed by

4

 

Intermediate

Holding, in favor of Agent and Lender, whereby Intermediate Holding guarantees

payment of the Obligations; and

(d)                                 satisfaction

of such other conditions as Agent shall reasonably require.

By execution of this letter, each of

Borrower, Upper-Tier Holding and Intermediate Holding hereby agrees for the

benefit of Agent and Lender that (a) the Loan Agreement constitutes the “Credit

Agreement” for the purpose of the Senior Subordinated Notes, (b) all

Obligations constitute “Senior Indebtedness” for purposes of the Senior

Subordinated Notes, and (c) the consummation of the Proposed Transaction does

not and shall not be deemed to constitute a “Change of Control” for purposes of

the Senior Subordinated Notes.

Each of Borrower, Upper-Tier Holding

and Intermediate Holding is hereby notified that irrespective of (a) any

waivers previously granted by Agent or Lender regarding the Loan Agreement and

the Loan Documents, (b) any previous failures or delays of Agent or Lender

in exercising any right, power or privilege under the Loan Agreement or the

Loan Documents, or (c) any previous failures or delays of Agent or Lender

in the monitoring or in the requiring of compliance by Borrower with the

duties, obligations, and agreements of Borrower in the Loan Agreement and the

Loan Documents, hereafter each of Borrower, Upper-Tier Holding and Intermediate

Holding will be expected to comply strictly with its duties, obligations and

agreements under the Loan Agreement and the Loan Documents.

Except as expressly provided above,

nothing contained in this letter or any other communication between Agent

and/or Lender and Borrower shall be a waiver of any past, present or future

violation, default or Event of Default of Borrower under the Loan Agreement or

any Loan Documents.  Similarly, each of

Agent and Lender hereby expressly reserves any rights, privileges and remedies

under the Loan Agreement and each Loan Document that Agent or Lender may have

with respect to each violation, default or Event of Default, and any failure by

Agent or Lender to exercise any right, privilege or remedy as a result of the

violation set forth above shall not directly or indirectly in any way

whatsoever either (a) impair, prejudice or otherwise adversely affect the

rights of Agent or Lender, except as set forth herein, at any time to exercise

any right, privilege or remedy in connection with the Loan Agreement or any

Loan Documents, (b) amend or alter any provision of the Loan Agreement or

any Loan Documents or any other contract or instrument, or (c) constitute

any course of dealing or other  basis

for altering any obligation of Borrower or Upper-Tier Holding or Intermediate

Holding or any rights, privilege or remedy of Agent under the Loan Agreement or

any Loan Documents or any other contract or instrument.  Nothing in this letter shall be construed to

be a consent by Agent or Lender to any prior, existing or future violations of

the Loan Agreement or any Loan Document or to any transaction involving

Borrower or Intermediate Holding or Upper-Tier Holding other than the

Proposed Transaction.

This letter and its agreement to and

acceptance by Borrower, Upper-Tier Holding and Intermediate Holding may be

executed in any number of counterparts and by different parties hereto in

separate counterparts, each of which, when so executed and delivered shall be

deemed to be an original and all of which counterparts taken together shall

constitute one and the same instrument.

5

 

Please acknowledge your agreement to

the terms and conditions of this letter by executing it in the space below and

returning it to the undersigned.

	

   

  	

  Very truly yours,

  
	

   

  	

   

  
	

   

  	

  HELLER FINANCIAL,

  INC.,

  
	

   

  	

  as Agent and Lender

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  
	

  AGREED TO AND ACCEPTED:

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

  BANCTEC, INC.

  	

   

  
	

   

  	

   

  
	

  By:

  	

   

  	

   

  
	

  Name:

  	

   

  	

   

  
	

  Title:

  	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

  BANCTEC

  UPPER-TIER UPPER-TIER HOLDING, LLC

  
	

   

  	

   

  
	

  By:

  	

   

  	

   

  
	

  Name:

  	

   

  	

   

  
	

  Title:

  	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

  BANCTEC

  INTERMEDIATE INTERMEDIATE HOLDING, INC.

  
	

   

  	

   

  
	

  By:

  	

   

  	

   

  
	

  Name:

  	

   

  	

   

  
	

  Title:

  	

   

  	

   

  

 

cc:                                 Via

Facsimile (212) 841-5725 

Reboul, MacMurray, Hewitt,

Maynard & Kristol

45 Rockefeller Plaza

New York, New York  10111

Attn:  Steven R. Rutkovsky, Esq.

                                                Via

Facsimile (312) 441-6876

Heller Financial, Inc.

500 West Monroe

Chicago, Illinois  60661

Attn:  Legal Services/HCF- BancTec, Inc.

6Exhibit 10.5

                      AMENDED & RESTATED OPTION TO PURCHASE
                      -------------------------------------

     THIS OPTION TO PURCHASE  (this  "Agreement")  is made and entered into this
17th day of October,  2002, by and between J. Phillip  Mote,  8235 Douglas Ave.,
Suite 425, Dallas, Texas 75225, and Gene P. McCutchin,  P.O. Box 802043, Dallas,
Texas 75380-2043, (jointly referred to as "Seller") and Legend Operating, LLC, a
Texas limited liability company,  2611 Cedar Springs,  Suite 201, Dallas,  Texas
75201 ("Buyer").

     NOW THEREFORE,  in  consideration  of the mutual promises set forth herein,
the parties hereby agree as follows:

                                    ARTICLE 1
                                PURCHASE AND SALE
                                -----------------

     1.1  Property.  Subject  to  the  terms,  conditions,   reservations,   and
     --------------
exceptions  specified  in this  Agreement  and  Buyer's  exercise of the Option,
Seller shall sell and Purchaser  shall  purchase as of the Effective Time all of
Seller's right,  title and interest in and to the following  assets described in
Subarticles 1.1(a) through 1.1(e) (collectively called the "Property"):

     (a)  The oil,  gas and  other  mineral  leasehold  interests  described  in
     Exhibit "A", attached hereto and made a part hereof,  insofar as such cover
     and affect  the lands and depths  described  in  Exhibit  "A"  (hereinafter
     called the "Real Property"), together with Seller's interest in any pooled,
     communitized, or unitized acreage derived by virtue of Sellers ownership of
     the Real Property;

     (b)  The wells,  equipment and facilities  located on the Real Property and
     used  directly  and  exclusively  in the  operation  of the  Real  Property
     (collectively called the "Equipment") including, but not limited to, pumps,
     platforms,  well equipment  (surface and  subsurface),  saltwater  disposal
     wells,  water wells,  lines and  facilities,  sulfur  recovery  facilities,
     compressors,   compressor  stations,   dehydration   facilities,   treating
     facilities, pipeline gathering lines, flow lines, and transportation lines,
     valves,  meters,  separators,  tanks,  tank batteries,  office quarters and
     other fixtures;

     (c)  Oil,  condensate,  natural gas, and natural gas liquids produced after
     the Effective Time,  including "line fill" and inventory below the pipeline
     connection in tanks, attributable to the Property;

     (d)  To the extent  transferable,  all contracts and agreements  concerning
     the  Property  including,  but not  limited to,  unit  agreements,  pooling
     agreements,   areas  of  mutual  interest,   farmout   agreements,   farmin
     agreements, pumping agreements,  production handling agreements,  saltwater
     disposal  agreements,  water  injection  agreements,  line  well  injection
     agreements,  road use  agreements,  operating  agreements and gas balancing
     agreements; and

     (e)  To the extent  transferable,  all surface use  agreements,  easements,
     rights-of-way,  licenses,  authorizations,  permits, and similar rights and
     interests  applicable to, or used or useful in connection  with, any or all
     of the Property.

                                        1
<PAGE>

     1.2  Excluded Data and  Interpretations.  ANY  CONFIDENTIAL  OR PROPRIETARY
     ----------------------------------------
DATA SHALL BE EXCLUDED FROM THIS PURCHASE AND SALE TRANSACTION.

     1.3  Purchase Price. Seller in consideration of $100.00 on or about May 20,
     --------------------
2002, originally granted Buyer an option, as described in Article 9, to purchase
the Property subject to the terms and conditions  herein set forth. The purchase
price  for the  Property  shall be One  Million  Two  Hundred  Thousand  Dollars
($1,200,000.00) ("the Purchase Price") payable in immediately available funds at
closing, and subject to the conditions contained in Article 8 below.

     1.4  The Closing.  Closing is  conditioned  upon Buyer being able to obtain
     -----------------
operation  of the  Property  from Mote  Resources,  Inc. as  evidenced by a duly
executed Texas Railroad Commission Form P-4.

     1.5  Assignment of the  Property.  Seller shall also convey to Buyer all of
     ---------------------------------
Seller's right,  title and interest,  if any, in and to (a) all 3-D seismic data
and tapes including the right to analyze, interpret, and use all such data as it
relates to the property and the Property and in and to (b) all Texaco, Pennzoil,
SMK,  Palm  Production  Company,  Mote  Resources,   Inc.  and  any/all  related
documents,  records, maps, seismic interpretations and data, logs, Scout tickets
and records  (the  "Records")  that relate to,  describe or affect the  Property
subject to the terms of  Sharrock's  License  Agreement.  The  assignment of the
Property  by Seller to Buyer is  subject  to the  terms  and  provisions  of all
instruments  of record in Zapata  County,  Texas,  dated prior to the  effective
date, affecting the Property. Seller, to the best of its knowledge, has provided
copies of any documents which  negatively  affect the Property and this interest
prior to closing.

     1.6  Review.  Buyer,  at his sole cost, risk and expense shall conduct such
     ------------
title review of the Property, as it deems appropriate.

     1.7  Effective  Date.  In the event Buyer exercises its Option [to purchase
     ---------------------
the] Property, the effective date of the purchase and sale of the Property shall
be the last day of the month in which the Closing occurs at 7:00 a.m. C. S. T.

     1.8  Option Period.  The Option period under the original Option would have
     -------------------
expired  August 19, 2002,  but was  extended to October 19, 2002,  and is hereby
extended to February 19, 2003. As consideration for such  accommodations,  Buyer
agrees that if the Option is exercised, that at Closing, in addition to the base
Purchase Price,  Buyer will pay an additional  $100,000.00  each to Mr. Mote and
Mr. McCutchin.

     1.9  Closing  Date.  The closing date of this  agreement  will be as agreed
     -------------------
upon between Seller and Buyer, but in no event later February 19, 2003.

     1.10 Buyer agrees to extend this offer to the other working interest owners
     ----
in the Property at a price Buyer finds  acceptable.  There is no obligation  for
the other owners to accept Buyers offer or for Buyer to revise its offer to make
it agreeable to the other owners.

                                        2
<PAGE>

                                    ARTICLE 2
                    REPRESENTATIONS AND WARRANTIES OF SELLER
                    ----------------------------------------

     2.1  Title. Seller represents the Property shall be delivered to Buyer free
     -----------
and clear of all (liens, encumbrances or creditor's claims, by through and under
Seller but not otherwise.

     2.2  Disclaimers.  Except as  expressly  set forth in Section  2.1,  Seller
     -----------------
expressly  disclaims  any and all  representations,  covenants,  or  warranties,
expressed,  implied,  or statutory,  of title or as to any other fact or matter.
Seller specifically makes no representation or warranty whatsoever regarding the
value of the Interest, the reserves, future net income, expenses,  profitability
or liabilities associated therewith,  or the future price of oil or gas produced
from the property or the results of any operations conducted on the property.

     2.3  Seller agrees to pay all JIB accounts  current through  expenses as of
     ---
the effective date of the sale  contemplated  hereby.  All  production  from the
Property and all proceeds  from the sale of  production  prior to the  Effective
Date shall be the property of Seller. Seller shall be responsible for payment of
all expenses  attributable  to the Property prior to the Effective  Date.  Buyer
shall be responsible  for payment of all expenses  attributable  to the Property
after the Effective Date.

     2.4  Seller  represents  to Buyer that as of the closing the Property  will
     ---
not be (a) the subject of any Bankruptcy Proceeding, (b) demand for development,
(c)  default  notice  under  any oil  and  gas  lease,  (d)  lien  or (e)  other
encumbrance or claim that has not been disclosed to Buyer.

     2.5  This  Agreement  has been duly  executed  and  delivered  on behalf of
     ---
Seller, and this Agreement  constitutes a legal, valid and binding obligation of
Seller,  enforceable  in accordance  with its terms,  subject,  however,  to the
effects of bankruptcy, insolvency, reorganization, moratorium and similar laws.

     2.6  Seller has all requisite power and authority, corporate and otherwise,
     ---
to carry on its business as presently  conducted,  to enter into this Agreement,
to sell the Property on the terms  described in this  Agreement,  and to perform
his/its  other  obligations  under  this  Agreement.  The  consummation  of  the
transactions contemplated by this Agreements will not violate, or be in conflict
with, any provisions of Seller's Articles of Incorporation, by-laws or governing
documents or any  agreement or instrument to which Seller is a party or by which
it is  bound,  or any  judgment,  decree,  order,  statute,  rule or  regulation
applicable to Seller.

                                    ARTICLE 3
                                     CLOSING
                                     -------

     3.1  Time and Place of Closing.  The  consummation of the purchase and sale
     -------------------------------
transactions contemplated by this agreement (the "Closing") shall, unless agreed
to otherwise by the parties, take place at the offices of Seller at 14833 Midway
Road, Suite 200, Addison, TX 75001.

     3.2  Delivery by Seller at Closing. In the event Buyer exercises its Option
     -----------------------------------
to purchase the Property, at Closing, Seller shall execute, and deliver to Buyer
an Assignment to the Property in the form attached hereto as Exhibit "B".

                                        3
<PAGE>

     3.3  Delivery by Buyer at Closing.  In the event Buyer exercises its option
     ----------------------------------
to purchase the  Property,  at Closing,  Buyer shall deliver by wire transfer to
(i) the Seller's  bank account (to be furnished by Seller to Buyer in writing at
or  before  Closing)  the  Purchase  Price,  and  (ii)  to Mr.  Mote's  and  Mr.
McCutchin's bank accounts the sum of $100,000.00 each.

     3.4  In the event  Buyer  exercises  its Option to purchase  the  Property,
     ---
Seller shall be responsible  for all taxes relating to the Property prior to the
Effective Date.  Buyer shall be responsible for all taxes (exclusive of federal,
state or local  income  taxes)  relating  to the  Property  from and  after  the
Effective Date.

     3.5  Change of Operator. Seller shall provide Buyer with executed change of
     ------------------------
operator  forms on all wells  (active or inactive)  operated by Mote  Resources,
Inc. on the property as required by the Texas Railroad  Commission,  to effect a
change of operator for the Property,  effective as of the first day of the month
following the actual Closing, subject to all applicable operating agreement.

     3.6  Notice of Sale.  Immediately after the Closing, Buyer shall notify all
     --------------------
non-operators,  oil and gas buyers,  government agencies and royalty owners that
it has  purchased  the  Property  and Seller and Buyer  shall  execute  transfer
orders.

     3.7  Copies Of Records and  Documents.  Seller shall,  at or as promptly as
     --------------------------------------
reasonably possible after the Closing,  provide Buyer, at Buyer's expense,  with
copies of records and  documents in Seller's  and/or Mote  Resources  possession
relating to the  Property  including,  but not limited to, land and lease files,
division of interest  computer  printouts,  contract files,  well files and well
logs. SELLER SHALL AT IT'S OPTION,  RETAIN ALL ORIGINAL FILES, BUT SHALL HAVE NO
OBLIGATION  T0 FURNISH  BUYER ANY DATA OR  INFORMATION  WHICH  SELLER  CONSIDERS
PROPRIETARY  OR  CONFIDENTIAL  OR WHICH SELLER  CANNOT  PROVIDE BUYER BECAUSE OF
THIRD-PARTY RESTRICTIONS ON SELLER.

                                    ARTICLE 4
                            RESPONSIBILITY FOR COST'S

     4.1  IN THE EVENT BUYER  EXERCISES ITS OPTION TO PURCHASE THE PROPERTY,  AT
     ---
CLOSING BUYER SHALL RELEASE SELLER,  BUT SELLER SHALL CONTINUE TO BE RESPONSIBLE
FOR ALL CLAIMS  RELATING TO THE  DRILLING,  OPERATING,  PRODUCTION,  AND SALE OF
HYDROCARBONS  FROM THE PROPERTY AND THE PROPER ACCOUNTING AND PAYMENT TO PARTIES
FOR THEIR INTERESTS AND ANY RETROACTIVE  PAYMENTS,  REFUNDS, OR PENALTIES TO ANY
PARTY OR ENTITY AS SUCH CLAIMS RELATE TO PERIODS  BEFORE THE  EFFECTIVE  DATE OF
CLOSING.

     BUYER  SHALL  BE  RESPONSIBLE  FOR ALL  CLAIMS  RELATING  TO THE  DRILLING,
OPERATING, PRODUCTION, AND SALE OF HYDROCARBONS FROM THE PROPERTY AND THE PROPER
ACCOUNTING  AND  PAYMENT  TO PARTIES  FOR THEIR  INTERESTS  AND ANY  RETROACTIVE
PAYMENTS,  REFUNDS, OR PENALTIES TO ANY PARTY OR ENTITY AS SUCH CLAIMS RELATE TO
PERIODS FROM AND AFTER THE EFFECTIVE DATE OF CLOSING.

                                        4

<PAGE>

                                    ARTICLE 5
                            REPRESENTATIONS OF BUYER
                            ------------------------

     5.1  Buyer represents and warrants with respect to Seller that:
     ---

     (a)  Buyer is a Limited Liability Company duly organized,  validly existing
     and in good standing under the laws of the State of Texas.

     (b)  Buyer has all requisite power and authority,  corporate and otherwise,
     to carry on its  business  as  presently  conducted,  to  enter  into  this
     Agreement,  to  purchase  the  Property  on the  terms  described  in  this
     Agreement,  and to perform it other obligations  under this Agreement.  The
     consummation of the  transactions  contemplated by this Agreements will not
     violate,  or be in conflict  with,  any  provisions of Buyer's  Articles of
     Incorporation,   by-laws  or  governing   documents  or  any  agreement  or
     instrument  to which  Buyer is a party  or by  which  it is  bound,  or any
     judgment, decree, order, statute, role or regulation applicable to Buyer.

     (c)  The  execution,  delivery and  performance  of this  Agreement and the
     transactions  contemplated  hereby have been duly and validly authorized by
     all requisite actions,  corporate and otherwise,  on the part of Buyer, its
     board of directors and shareholders.

     (d)  Buyer has incurred no liability, contingent or otherwise, for brokers'
     or  finders'  fees  relating  to  the  transactions  contemplated  by  this
     Agreement for which Seller shall have any responsibility whatsoever.

                                    ARTICLE 6
                                      TITLE
                                      -----

     6.1  Warranty of Title.  The  documents  to be executed  and  delivered  by
     -----------------------
Seller  to  Buyer,  transferring  title  to the  Property  as  required  hereby,
including the  Assignment  and Bill of Sale attached  hereto as Exhibit "B" (the
"Assignment"),  shall be subject to the Existing  Encumbrances  and, except with
respect to the Property set forth on Exhibit "A" for which Seller shall  provide
a special  warranty  of title,  shall be without  warranty  of title of any kind
whatsoever, express, implied or statutory (even as to the return of Sale Price),
but  shall  provide  full  subrogation  of  Buyer  to  all  representations  and
warranties  of  any   predecessors  of  Seller  in  title.  The  term  "Existing
Encumbrances" shall mean any of the following matters:

     (a)  the  terms,  conditions,   restrictions,   exceptions,   reservations,
     limitations and other matters contained in the agreements,  instruments and
     documents  that  create or reserve to Seller  its  interests  in any of the
     Property;

     (b)  any (i) undetermined or inchoate  liens  or  charges  constituting  or
     securing  the  payment  of  expenses  that  were  incurred   incidental  to
     maintenance,  development,  production  or operation of the Property or for
     the  purpose of  developing,  producing  or  processing  oil,  gas or other
     hydrocarbons (collectively, "Hydrocarbons") therefrom or therein, and, (ii)
     materialman's,    mechanics',   repairman's,    employees',   contractors',
     operators' or other similar liens or charges for liquidated amounts arising
     in the ordinary  course of business (x) that Seller has agreed to assume or

                                        5
<PAGE>

     pay pursuant to, the terms hereof,  (y) for which Seller is responsible for
     releasing  at  Closing,  or (z) for which Buyer has agreed to assume or pay
     pursuant to the terms hereof;

     (c)  any  liens  for  taxes  and  assessments  not yet  delinquent  or,  if
     delinquent,  that are being  contested in good faith in the ordinary course
     of business;

     (d)  any liens or security  interests created by law or reserved in oil and
     gas leases for royalty,  bonus or rental,  or created to secure  compliance
     with the terms of the agreements,  instruments and documents that create or
     reserve to Seller its interests in the Property;

     (e)  any obligations or duties  affecting the Property to any  municipality
     or public  authority  with  respect  to any  franchise,  grant,  license or
     permit,  and all  applicable  laws,  rules,  regulations  and orders of any
     governmental authority;

     (f)  any (i) easements,  rights-of-way,  servitude, permits, surface leases
     and other  rights in  respect of surface  operations,  pipelines,  grazing,
     hunting,  lodging,  canals,  ditches,  reservoirs  or the  like,  and  (ii)
     easements for streets, alleys, highways, pipelines,  telephone lines, power
     lines, railways and other similar rights-of-way,  on, over or in respect of
     Property owned or leased by Seller or over which Seller owns rights-of-way,
     easements, permits or licenses;

     (g)  all lessors' royalties,  overriding royalties,  net profits interests,
     carried interests,  production payments,  reversionary  interests and other
     burdens on or  deductions  from the  proceeds of  production  created or in
     existence  as of the  Effective  Time that do not operate to reduce the net
     revenue interest of Seller;

     (h)  required third party consents to assignments or similar agreements;

     (i)  all rights to consent by required  notices to,  filings with, or other
     actions  by any  governmental  authority  in  connection  with  the sale or
     conveyance of oil and gas leases or interests therein:

     (j)  production  sales  contracts;  division  order;  contracts  for  sale,
     purchase, exchange, refining or processing of Hydrocarbons; unitization and
     pooling  designations,   declarations,  orders  and  agreements;  operating
     agreements;  agreements of development; area of mutual interest agreements;
     gas balancing or deferred  production  agreements;  processing  agreements;
     plant  agreements;   pipeline,  gathering  and  transportation  agreements;
     injection,  repressuring and recycling agreements;  carbon dioxide purchase
     or sale  agreements;  salt water or other disposal  agreements;  Seismic or
     geophysical  permits or agreements;  and any and all other  agreements that
     are  ordinary  and  customary in the oil,  gas,  sulphur and other  mineral
     exploration,  development  or  extraction  business,  or in the business of
     processing  of gas and gas  condensate  production  for the  extraction  of
     products therefrom; and

     (k)  all  defects  and   irregularities   affecting   the  Property   which
     individually  or in the  aggregate do not operate to reduce the net revenue
     interest of Seller,  increase the proportionate share of costs and expenses
     of  leasehold  operations  attributable  to or to be borne  by the  working
     Property of Seller, or  otherwise interfere materially  with the operation,

                                        6
<PAGE>

     value or use of the Property, taken as a whole.

                                    ARTICLE 7
                              ENVIRONMENTAL MATTERS
                              ---------------------

     7.1  Buyer agrees to indemnify Seller against any  environmental  liability
     ---
arising  relative to the Property  subsequent  to the Closing.  Seller agrees to
Indemnify  Buyer  against  any  environmental  liability  arising  prior  to the
Closing.

                                    ARTICLE 8
                                    ---------

                                   (RESERVED)

                                    ARTICLE 9
                                    ---------

                                   (RESERVED)

                                   ARTICLE 10
                       PHYSICAL CONDITION OF THE PROPERTY
                       ----------------------------------

     10.1  Use of the  Property.  THE  PROPERTY HAS  BEEN  USED  FOR OIL AND GAS
     ---------------------------
DRILLING  AND  PRODUCING  OPERATIONS,  RELATED  (DISPOSAL  AND  OTHER)  OILFIELD
OPERATIONS AND THE STORAGE AND  TRANSPORTATION  OF OIL AND GAS. PHYSICAL CHANGES
IN THE LAND MAY HAVE  OCCURRED AS A RESULT OF SUCH USES.  THE PROPERTY  ALSO MAY
CONTAIN  BURIED  PIPELINES  AND  OTHER  EQUIPMENT,  WHETHER  OR NOT OF A SIMILAR
NATURE,  THE  LOCATIONS  OF WHICH MAY NOT NOW BE KNOWN BY  SELLER OR BE  READILY
APPARENT BY A PHYSICAL INSPECTION OF THE PROPERTY. BUYER UNDERSTANDS THAT SELLER
DOES NOT HAVE THE REQUISITE INFORMATION WITH WHICH TO DETERMINE THE EXACT NATURE
OR  CONDITION OF THE PROPERTY OR THE EFFECT ANY SUCH USE HAS HAD ON THE PHYSICAL
CONDITION OF THE PROPERTY.

     10.2  Buyer's Investigation and Liability.  BUYER  ACKNOWLEDGES THAT (I) IT
     ------------------------------------------
HAS BEEN AFFORDED AN  OPPORTUNITY TO (A) EXAMINE THE PROPERTY AND SUCH MATERIALS
AS  IT  HAS  REQUESTED  TO  BE  PROVIDED  TO  IT BY  SELLER,  (B)  DISCUSS  WITH
REPRESENTATIVES  OF SELLER SUCH  MATERIALS  AND THE NATURE AND  OPERATION OF THE
PROPERTY AND (C) INVESTIGATE THE CONDITION,  INCLUDING  SUBSURFACE  CONDITION OF
THE REAL PROPERTY AND THE CONDITION OF THE  EQUIPMENT,  (II) IT HAS ENTERED INTO
THIS AGREEMENT ON THE BASIS OF ITS OWN  INVESTIGATION OF THE PHYSICAL  CONDITION
OF THE PROPERTY INCLUDING  SUBSURFACE CONDITION AND (III) THE PROPERTY HAVE BEEN
USED IN THE  MANNER  AND FOR THE  PURPOSES  SET FORTH  ABOVE  AND THAT  PHYSICAL
CHANGES TO THE  PROPERTY  MAY HAVE  OCCURRED AS A RESULT OF SUCH USE AND (IV) IN
ENTERING  INTO  THIS   AGREEMENT,   BUYER  HAS  RELIED  SOLELY  ON  THE  EXPRESS
REPRESENTATIONS  (SOME OF WHICH  REPRESENTATIONS  TERMINATE  AT THE CLOSING) AND
COVENANTS OF SELLER IN THIS  AGREEMENT,  ITS  INDEPENDENT  INVESTIGATION  OF AND

                                        7
<PAGE>

JUDGMENT WITH RESPECT TO, THE EQUIPMENT AND THE OTHER PROPERTY AND THE ADVICE OF
ITS OWN  LEGAL,  TAX,  ECONOMIC,  ENVIRONMENTAL,  ENGINEERING,  GEOLOGICAL,  AND
GEOPHYSICAL   ADVISORS   AND  NOT  ON  ANY   COMMENTS  OR   STATEMENTS   OF  ANY
REPRESENTATIVES  OF, OR  CONSULTANTS  OR ADVISORS  ENGAGED BY SELLER AND (V) LOW
LEVELS OF NATURALLY OCCURRING  RADIOACTIVE MATERIAL (NORM) AND MAN-MADE MATERIAL
FIBERS (MMMF) MAY BE PRESENT AT SOME LOCATIONS.  BUYER ACKNOWLEDGES THAT NORM IS
A NATURAL PHENOMENON  ASSOCIATED WITH MANY OIL FIELDS IN THE U.S. AND THROUGHOUT
THE WORLD.  BUYER SHOULD MAKE ITS OWN DETERMINATION OF THIS PHENOMENON AND OTHER
CONDITIONS.  SELLER AND  MARKETER  DISCLAIM ANY  LIABILITY  ARISING OUT OF OR IN
CONNECTION  WITH ANY PRESENCE OF NORM OR MMMF ON THE PROPERTY AND ON THE CLOSING
DATE,  BUYER  SHALL  ASSUME THE RISK THAT THE  PROPERTY  MAY  CONTAIN  WASTES OR
CONTAMINANTS  AND THAT ADVERSE  PHYSICAL  CONDITIONS,  INCLUDING THE PRESENCE OF
WASTES OR CONTAMINANTS, MAY NOT HAVE BEEN REVEALED BY BUYER'S INVESTIGATION.  ON
THE CLOSING DATE, ALL RESPONSIBILITY AND LIABILITY RELATED TO DISPOSAL,  SPILLS,
WASTE,  OR  CONTAMINATION  ON AND BELOW THE PROPERTY SHALL BE  TRANSFERRED  FROM
SELLER TO BUYER.

                                   ARTICLE 11
                                  MISCELLANEOUS
                                  -------------

     11.1  During the Option Period, and as requested by Buyer, Seller agrees to
     ----
make  available  to Buyer in the office of the  operator,  Mote  Resources  8235
Douglas Ave.  Suite 425 Dallas  Texas 75225,  all data  including  logs,  cores,
velocity  surveys,  pressure tests on all wells drilled  and/or  operated on the
Property and documents and correspondence for Buyer to conduct its due diligence
on the  Property.  Any  copies  of said data  shall be made by Buyer at  Buyer's
expense.  If the  option is not  exercised,  all  copies  of said data  shall he
returned to the Operator within 5 business days. NO WARRANTY OF ANY KIND IS MADE
BY SELLER AS TO THE INFORMATION SO SUPPLIED OR WITH RESPECT TO INTEREST TO WHICH
THE INFORMATION  RELATES,  AND BUYER EXPRESSLY AGREES THAT ANY CONCLUSIONS DRAWN
THEREFROM SHALL BE THE RESULT OF ITS OWN INDEPENDENT REVIEW AND JUDGMENT.

     11.2  It  is understood  and agreed  by the  parties  hereto  that Seller's
     ----
access to certain Seismic Rights  ("Seismic  Rights") is subject to an Agreement
to Use Seismic 3-D Seismic Data dated  January 14, 1998  covering the  Property:
Buyer  shall  have the  same  unrestricted  access  rights,  if any,  to all 3-D
interpretations and data generated and associated with such seismic rights.

     11.3  This Agreement  shall  inure to the  benefit of and be  binding  upon
     ----
Seller and Buyer and their respective heirs, successors and assigns. However, no
assignment  by any party shall  relieve  any party of any duties or  obligations
under this Agreement.

     11.4  This Agreement constitutes the complete agreement between the parties
     ----
regarding the purchase and sale of the Property. Where applicable,  the terms of
this Agreement shall survive the Closing.

                                        8
<PAGE>

     11.5  Further Distribution.  Buyer is  acquiring  the  Property for its own
     ---------------------------
account  and not with the  intent  to make a  distribution  thereof  within  the
meaning of the Securities Act of 1933, as amended, and the rules and regulations
thereunder  or  distribution  thereof  in  violation  of  any  other  applicable
securities laws.

     11.6  Final Accounting.  As soon as reasonably  practicable  after Closing,
     -----------------------
Seller shall  prepare,  in accordance  with this  Agreement  and with  generally
accepted accounting  principles  consistently  applied,  and deliver to Buyer, a
final  accounting  statement  showing  the  proration  of credits  and  payments
obligations of Buyer and Seller. As soon as reasonably  practicable  thereafter,
Buyer shall deliver to Seller a written report containing any changes that Buyer
proposes to be made to such  statement.  The parties shall undertake to agree on
the final statement no later than ninety (90) days after Closing.

     11.7   Arbitration.   Any  dispute  arising  out  of  or  relating  to this
     -------------------
Agreement,   including  any  question  regarding  its  existence,   validity  or
termination,  which  cannot be amicably  resolved by Seller and Buyer,  shall be
settled before three (3) arbitrators, one (1) to be appointed by Seller, one (1)
to be  appointed  by Buyer  and the two so  appointed  shall  appoint  the third
arbitrator, in accordance with the Arbitration Rules of the American Arbitration
Association,  Dallas,  Texas,  and  judgment  upon  the  award  rendered  by the
arbitrators may be entered in any court having  jurisdiction  thereof. A dispute
shall be deemed to have arisen when either Seller or Buyer notifies the other in
writing to that effect.

     11.8   Seller and Buyer agree that Buyer may assign this Option to Purchase
     ----
and all rights and  obligations set forth herein to an entity to Buyers election
[, upon  written  notice to  Seller,]  at  anytime up to and  including  date of
closing as set forth herein.

     11.9   Buyer, its successors  and assigns, covenant and  agree that any and
     ----
all  assignments  of the Property made by Buyer and its  successors and assigns,
shall be subject to the terms of this agreement.

     EFFECTIVE as of the 17th day of October, 2002.

BUYER:
LEGEND OPERATING, LLC,

By: /s/ Jim Dyer
   ------------------------
   Jim Dyer, Manager

SELLER:                                     SELLER:

/s/ J. Phillip Mote                         /s/ Gene P. McCutchin
---------------------------                 ---------------------------
J. Phillip Mote                             Gene P. McCutchin

                                        9
<PAGE>

                                   EXHIBIT "A"

                     ATTACHED HERETO AND MADE A PART OF THAT
                               OPTION TO PURCHASE
                   BY AND BETWEEN LEGEND OPERATING, LLC, BUYER
                              AND J. PHILLIP MOTE,
                          AND GENE P. MCCUTCHIN, SELLER

        An undivided 57.8125% working interest, representing a 43.359375%
                     net revenue interest in the following:

                                     LEASES:

     Oil and Gas Lease from J.D.  JENNINGS to THE TEXAS COMPANY,  dated November
13, 1924, recorded in Volume 15, Page 601, Deed Records,  Zapata County,  Texas,
covering  approximately  27,558.4 acres,  more or less, out of the J.D. Jennings
Ranch, more particularly  described in that as to all rights from the surface of
the earth to a depth of 5,560 feet or the base of the Queen City Formation; and

     Oil and Gas Lease from J.D.  JENNINGS,  a single man, to THE TEXAS COMPANY,
dated November 13, 1922,  recorded in Volume 14, Page 118, Deed Records,  Zapata
County,  Texas,  covering  approximately  12,000 acres, more or less, out of the
J.D.  Jennings  Ranch, as to all rights from the surface of the earth to a depth
of 5,560 feet or the base of the Queen City Formation; and

     That  certain  Term  Assignment   dated  January  14,  1998,  tom  Pennzoil
Exploration and production  Company, to Stuart G. Sharrock,  Agent,  recorded in
Volume 588, Page 505 of the Official  Records,  Zapata County,  Texas, as to all
rights from the surface of the earth to a depth of 5,560 feet or the base of the
Queen City Formation.

                            LANDS EFFECTED BY LEASES:
                            -------------------------

     TRACT 1:  Being  8,125.4 acres,  more or less,  out of the east part of the
     -------
Edward  Davila  Survey,  A-27,  also known as the "San  Antonio  de Mira  Flores
Grant,"  Zapata  County,  Texas,  and  being  the  same  land  described  as the
following:

          Beginning  at the N.W.  corner of the Blas  Maria  tract  for  corner;
          thence S. 43 deg. 29 min. W. 1302 varas;  thence S. 47 deg. 31 min. E.
          5193  varas;  thence S. 45 deg. 5 min E. 2380  varas;  thence S. 45 W.
          2195 varas to a post; thence S. 35 E. 4000 varas to the S. line of the
          Mira Flores grant;  thence N. 54 deg. 54 min. E. 3796.5 varas;  thence
          N. 45 deg.  36 min.  W. 1236.1  varas;  thence N. 45 W. 5739.8  varas;
          thence S. 44 deg. 40 min. W. 618 varas to corner; thence S. 45 deg. 36
          min. W. 3125.7 varas to the southwest  corner of the Blas Maria grant;
          thence N. 45 deg. 21 min. W. 5145.3 varas to the place of beginning.

     TRACT 2:  Being 2,850,  more or less,  out of the west part of the  Antonio
     -------
Martinez  Gutierrez  Survey,  A-33, also known as the "Blas Maria Grant," Zapata
County, Texas, and being the same land described as the following:

                                       10
<PAGE>

          Beginning at the N.E.  corner of the Mira Flores  grant;  thence N. 45
          deg.  36 min.  E.  along  the fence and along the N. line of said Blas
          Maria grant 3125.7 varas to stone; thence S. 45 deg. 21 min. E. 5145.3
          varas to stone in the S. line of the Blas  Maria  grant;  thence S. 45
          deg.  36 min.  W.  3125.7  varas to the S.W.  corner of the Blas Maria
          grant;  thence  N. 45 deg.  21 min.  W.  5145.3  varas to the place of
          beginning.

     TRACT 3:  Being 15,941.6 acres, more or less, out of the Jose Manuel Peredo
     -------
Survey,  A-73, also known as the "Cerrito  Blanco Grant," Zapata County,  Texas,
and being the same land described as the following:

          BEGINNING at the N.E.  corner of the  Bautista  Perida  Grant;  THENCE
          North 55 deg,  East  10,714.25  vrs.  to the N.W.  corner of 1770 acre
          grant taken from said Jose Pereda  Grant;  THENCE  South 35 deg.  East
          2800 vrs. to a post, the S.W. corner of said 1770 acre grant, which is
          known as the Ranch Colorado;  THENCE North 55 degrees East 3571.4 vrs.
          to a post in the  Eastern  bdy.  line of the said Jose  Manuel  Pereda
          Grant;  THENCE  South 35 deg.  East 4200 vrs.  more or less to a stone
          being the S. W. corner of the said Jose Manuel Pereda  Grant,  and the
          said S.E.  corner of the Bautista  Pereda Grant;  THENCE North 35 deg.
          West 7000 vrs., more or less, to the place of beginning.

     TRACT 4:  Being  640.9 acres  of land,  more or less,  and being all of the
     -------
G.C. and  S.F.R.R.  Company  Survey,  A-137,  also known as Section 207,  Zapata
County, Texas, and being the same land described as the following:

          BEGINNING at the extreme  East corner of a grant called "Mira  Flores"
          for South corner of this, a post; THENCE North 45 deg. West, with line
          of said Mira Flores  survey at 955 vrs. a large coma tree marked X. 10
          vrs. to S. W. at 1250 vrs. corner; THENCE N. 45 deg. East 2467 vrs. to
          post for corner on line of said Mira Flores  Grant;  THENCE S. 45 deg.
          East 1678 vrs.  to post for  corner  on line of the  Peredena  Survey,
          granted to Manuel Pereda;  THENCE South 55 deg. West with line of said
          Pereda Survey 2505 vrs. to the beginning.

                                       11
<PAGE>

                                   EXHIBIT "B"
                         ATTACHED TO AND MADE A PART OF
                                OPTION AGREEMENT
                                DATED May __ 2002

                           ASSIGNMENT AND BILL OF SALE

STATE OF TEXAS       )
                     )
COUNTY OF ZAPATA     )

     For value  received,  MOTE RESOURCES,  INC.,  whose address is 8235 Douglas
Ave.,  Suite 425, Dallas Texas 75225,  and GENE P.  MCCUTCHIN,  whose address is
P.O. Box 802043,  Dallas,  Texas 75380-2043,  (hereinafter  called  "Assignor"),
hereby sells,  transfers,  assigns,  conveys and delivers unto LEGEND OPERATING,
LLC,  whose  address is 2611 Cedar  Springs,  Suite 201,  Dallas,  Texas  75201,
(hereinafter  called "Assignee"),  effective as of ______,  2002, 7:00 a.m., CST
(the "Effective  Time"),  all of Assignor's right,  title and interest in and to
the  assets  set forth in  subparagraphs  (i)  through  (v)  below  (hereinafter
collectively called the "Property"):

     (i)       The oil, gas and other mineral leasehold  interests  described in
               Exhibit "A" attached  hereto and made a part  hereof,  insofar as
               such  cover and affect the lands  described  in Exhibit  "A" (the
               "Real Property);

     (ii)      The wells,  equipment and facilities located on the Real Property
               and that are used  directly and  exclusively  in the operation of
               the  Real  Property   (collectively   called  the   "Equipment"),
               including,  but not limited to, pumps, platforms,  well equipment
               (surface and subsurface),  saltwater disposal wells, water wells,
               lines and facilities,  sulfur recovery  facilities,  compressors,
               compressor stations, dehydration facilities, treating facilities,
               pipeline  gathering lines, flow lines, and  transportation  lines
               (to the  extent  such  lines  are not  owned or  operated  by any
               affiliate of Assignor),  valves, meters, separators,  tanks, tank
               batteries and other fixtures;

     (iii)     Oil,  condensate,  natural gas, and natural gas liquids  produced
               after the  Effective  Time,  including  "line fill" and inventory
               below the pipeline  connection in the tanks,  attributable to the
               Property;

     (iv)      To  the  extent   transferable,   all  contracts  and  agreements
               concerning  the  Property,  including,  but not  limited  to, the
               instruments  identified  under  paragraph  "B"  below  describing
               instruments  to  which  this  Assignment  and  Bill  of  Sale  is
               delivered  "subject to", and all other unit  agreements,  pooling

                                       12
<PAGE>

               agreements, areas of mutual interest, farmout agreements,  farmin
               agreements,   saltwater  disposal  agreements,   water  injection
               agreements,  line well injection agreements, road use agreements,
               operating agreements and gas balancing agreements  concerning the
               Property; and

     (v)      To  the  extent   transferable,   all  surface  use   agreements,
               casements, rights-of-way, licenses, authorizations,  permits, and
               similar rights and interests  applicable to, or used or useful in
               connection with the Property.

TO HAVE AND TO HOLD unto Assignee, its successors and assigns forever.

THIS  ASSIGNMENT  AND  BILL OF SALE IS  MADE,  EXECUTED  AND  DELIVERED  WITHOUT
WARRANTY OF TITLE,  EXPRESS OR IMPLIED,  EXCEPT THAT ASSIGNOR SPECIALLY WARRANTS
AND AGREES TO DEFEND TITLE TO THE REAL  PROPERTY  AGAINST THE CLAIMS AND DEMANDS
OF ALL PERSONS  CLAIMING TITLE THERETO BY, THROUGH AND UNDER  ASSIGNOR,  BUT NOT
OTHERWISE,  UP TO THE ALLOCATED VALUE THEREOF,  AND WITH FULL  SUBSTITUTION  AND
SUBROGATION  OF ASSIGNEE IN AND TO ALL CLAIMS  ASSIGNOR  HAS OR MAY HAVE AGAINST
ALL PRECEDING OWNERS;  PROVIDED,  HOWEVER, THAT THIS LIMITED SPECIAL WARRANTY OF
TITLE TO THE REAL PROPERTY SHALL SURVIVE FOR A PERIOD OF TWELVE (12) MONTHS FROM
THE DATE OF THIS  ASSIGNMENT  AND BILL OF SALE.  WITHOUT  LIMITING THE FORGOING,
THIS  ASSIGNMENT AND BILL OF SALE IS WITHOUT ANY WARRANTY OR  REPRESENTATION  OF
TITLE,  EITHER EXPRESS,  IMPLIED,  STATUTORY OR OTHERWISE,  WITHOUT ANY EXPRESS,
IMPLIED,  STATUTORY  OR OTHER  WARRANTY  OR  REPRESENTATIONS  TO THE  CONDITION,
QUANTITY,  QUALITY,  FITNESS FOR A PARTICULAR  PURPOSE,  CONFORMITY TO MODELS OR
SAMPLES OF MATERIALS OR  MERCHANTABILITY  OF ANY OF THE EQUIPMENT OR ITS FITNESS
FOR ANY  PURPOSE  AND WITHOUT ANY OTHER  EXPRESS,  IMPLIED,  STATUTORY  OR OTHER
WARRANTY OR REPRESENTATION  WHATSOEVER.  ASSIGNEE SHALL HAVE INSPECTED OR WAIVED
ITS RIGHT TO INSPECT THE PROPERTY FOR ALL  PURPOSES AND  SATISFIED  ITSELF AS TO
THEIR  PHYSICAL  AND  ENVIRONMENTAL  CONDITION,  BOTH  SURFACE  AND  SUBSURFACE,
INCLUDING  BUT NOT LIMITED TO CONDITIONS  SPECIFICALLY  RELATED TO THE PRESENCE,
RELEASE OR DISPOSAL  OF  HAZARDOUS  SUBSTANCES,  AND THE  CONDITION  OF ANY WELL
CASING,  TUBING OR DOWNHOLE  EQUIPMENT.  ASSIGNEE IS RELYING SOLELY UPON ITS OWN
INSPECTION  OF THE PROPERTY  AND ASSIGNEE  SHALL ACCEPT ALL OF THE SAME IN THEIR
"AS IS, WHERE IS" CONDITION. THERE ARE NO WARRANTIES THAT EXTEND BEYOND THE FACE
OF THIS ASSIGNMENT AND BILL OF SALE. IN ADDITION,  ASSIGNOR MAKES NO WARRANTY OR
REPRESENTATION,  EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AS TO THE ACCURACY OR
COMPLETENESS  OF  ANY  DATA,  REPORTS,  RECORDS,  PROJECTIONS,   INFORMATION  OR
MATERIALS NOW,  HERETOFORE OR HEREAFTER  FURNISHED OR MADE AVAILABLE TO ASSIGNEE
IN  CONNECTION  WITH  THIS  ASSIGNMENT  AND  BILL  OF  SALE  INCLUDING,  WITHOUT
LIMITATION, ANY DESCRIPTION OF THE PROPERTY, PRICING ASSUMPTIONS,  OR QUALITY OR
QUANTITY OF HYDROCARBON  RESERVES (IF ANY)  ATTRIBUTABLE  TO THE PROPERTY OR THE
ABILITY  OR  POTENTIAL  OF  THE   PROPERTY  TO  PRODUCE   HYDROCARBONS   OR  THE

                                       13
<PAGE>

ENVIRONMENTAL  CONDITION OF THE PROPERTY OR ANY OTHER  MATTERS  CONTAINED IN THE
DATA OR ANY OTHER MATERIALS  FURNISHED OR MADE AVAILABLE TO ASSIGNEE BY ASSIGNOR
OR BY  ASSIGNOR'S  AGENTS OR  REPRESENTATIVES.  ANY AND ALL SUCH DATA,  RECORDS,
REPORTS,  PROJECTIONS,  INFORMATION AND OTHER MATERIALS FURNISHED BY ASSIGNOR OR
OTHERWISE MADE AVAILABLE TO ASSIGNEE ARE PROVIDED ASSIGNEE AS A CONVENIENCE, AND
SHALL NOT  CREATE OR GIVE RISE TO ANY  LIABILITY  OF OR  AGAINST  ASSIGNOR.  ANY
RELIANCE ON OR USE OF THE SAME SHALL BE AT  ASSIGNEE'S  SOLE RISK TO THE MAXIMUM
EXTENT PERMITTED BY LAW.

     ASSIGNEE  ACKNOWLEDGES  THAT THE  PROPERTY  HAVE  BEEN USED FOR OIL AND GAS
BILLING  AND  PRODUCING  OPERATIONS,   RELATED  (DISPOSAL  AND  OTHER)  OILFIELD
OPERATIONS, AND THE STORAGE AND TRANSPORTATION OF OIL AND GAS.

     This  Assignment  and  Bill  of  Sale  is  made  expressly  subject  to the
following:

     1.   That certain  Amended & Restated  Option  Agreement  dated October 17,
          2002, by and between Assignor and Assignee;

     2.   Term  Assignment from Pennzoil  Exploration and Production  Company to
          Stuart G.  Sharrock,  Agent,  recorded in Volume 588,  Page 505 of the
          Official Records of Zapata County, Texas;

     3.   The  agreements,  contracts and other items set forth and listed under
          the heading  "Subject  To The  Following"  on Exhibit "A" hereto,  and
          Assignee,  effective as of the Effective  Time,  assumes and agrees to
          perform any and all  obligations  of Assignor  under said  agreements,
          contracts and other items  relating to the Property  herein  assigned;
          and

     4.   Any and all other valid and existing  contracts,  easements  and other
          instruments affecting the Real Property, or any part thereof, together
          with any and all existing  royalties,  overriding  royalties and other
          interests  payable out of production  from the Real  Property,  or any
          part thereof.

     The  provisions  hereof shall bind and inure to the benefit of Assignee and
Assignor   and   their   respective   affiliates,    heirs,   devisees,    legal
representatives, successors and assigns.

                                       14
<PAGE>

     EXECUTED  this 18th day of October,  2002,  but  effective  as of the above
                    ----        -------      -
stated Effective Time.

                                               Assignor:

                                               /s/ J. Phillip Mote
                                               --------------------------------
                                               J. Phillip Mote

                                               /s/ Gene P. McCutchin
                                               --------------------------------
                                               Gene P. McCutchin

                                               Assignee:

                                               LEGEND OPERATING, LLC

                                               By: /s/ Jim Dyer
                                                  -----------------------------
                                               Name & Title  Jim Dyer - Manager
                                                           --------------------

STATE OF TEXAS     )
                   )
COUNTY OF DALLAS   )

     This  instrument  was  acknowledged  before the on the 18th day of 0ctober,
                                                            ----        -------
2002, by J. Phillip Mote.

                                              /s/ Nancy Gail Hearon
(NOTARY SEAL)                                 ---------------------------------
                                              Notary Public in and for The State
                                              of Texas

STATE OF TEXAS     )
                   )
COUNTY OF DALLAS   )

     This  instrument  was  acknowledged  before the on the 18th day of 0ctober,
                                                            ----        -------
2002, by Gene P. McCutchin.

                                              /s/ Nancy Gail Hearon
(NOTARY SEAL)                                 ---------------------------------
                                              Notary Public in and for The State
                                              of Texas

                                       15
<PAGE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00045-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00045-of-00352.parquet"}]]