OPTION AGREEMENT

 

                                                                  EXHIBIT 10.7.1

                                OPTION AGREEMENT
                                   (A Option)

       This Option Agreement ("Agreement"), made and entered into as of March
31, 1995, is by and between Titan Resources, L.P., a Texas limited partnership
(the "Partnership"), and [See Schedule I attached hereto] (the "Optionee").

                                  WITNESSETH:

       WHEREAS, in connection with the initial capitalization of the
Partnership, an Option Plan ("Plan") was adopted effective as of March 31, 1995
("Plan Date") for certain officers and management level employees of the
Partnership or the general partner of the Partnership ("General Partner");

       WHEREAS, the Optionee is an officer and/or management level employee of
the Partnership or the General Partner eligible to participate in the Plan and
the President of the General Partner, as administrator of the Plan, has
determined that the Partnership should recognize the potential contributions
that the Optionee may make to the success of the Partnership by granting him an
option to purchase interests in the Partnership (the "Units") pursuant to the
Plan and upon the terms set forth herein;

       NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the Partnership and Optionee
hereby agree as follows:

       1.  Certain Definitions.  Terms used in this Agreement and not otherwise
defined shall have the respective meanings assigned to such terms in the Plan;
and the following terms shall have the following meanings:

              "Expiration Date" means 6:00 P.M., Midland, Texas time, on 
       March 31, 2001.

              "Initial Buy-In Price" means the initial aggregate cash
       contributions made by the Limited Partners to the Partnership pursuant
       to and as required by the first sentence of Article III, Section 3.1(b),
       of the Partnership Agreement.

              "Initial Buy-In Price per Unit" means the amount determined by
       dividing (i) Initial Buy-In Price, by (ii) the total number of Units
       outstanding on the date on which the Initial Buy-In Price was received
       by the Partnership.

       2.  Grant of Option.  Subject to the terms and conditions hereinafter
set forth, the Partnership hereby irrevocably grants to the Optionee the right
and option (the "Option") to purchase [see Schedule I attached hereto]  Units 
of the Partnership, subject to adjustment in accordance with the provisions of 
Section 7 of this Agreement.

       3.     Option Price.  The price to be paid by Optionee to the
Partnership for each Unit purchased pursuant to the exercise of this Option
("Option Price") shall be that amount determined by multiplying: (i) the
Initial Buy-In Price per Unit, times (ii) (1.10)n, where "n" is the number of
anniversaries of the Plan Date which have occurred as of the date of purchase
of such Unit (with a partial year being expressed as a decimal determined by
dividing the number of days which have passed since the most recent anniversary
by 365); provided, however, that the Option Price shall be subject to
adjustment in accordance with the provisions of Section 7 of this Agreement.

       4.     Vesting of Right to Exercise Option.

       (a)    Except as otherwise provided in this Agreement, the right to
exercise this Option shall vest as to one- third of the total Units which may
be purchased hereunder on March 31, 1996, shall vest with respect to an
additional one-third of the total Units which may be purchased hereunder on
March 31, 1997 and shall be fully vested on March 31, 1998.  From and after
each date of vesting, Optionee may exercise this Option, subject to the terms
and conditions set forth herein, to purchase all or any portion of the Units
for which Optionee's rights have vested.

       (b)    To the extent Optionee does not purchase all or any part of the
Units at the times this Option becomes exercisable, the Optionee has the right
cumulatively thereafter to purchase any Units not so purchased and such right
shall continue until this Option terminates or expires.

       (c)    If Optionee's employment by the General Partner or the
Partnership is terminated on account of fraud or dishonesty or other acts which
the Board has determined are materially detrimental to the interests of the
Partnership, the Option shall automatically terminate as of the date of such
termination.

       (d)    If Optionee's employment by the General Partner or the
Partnership is terminated voluntarily by Optionee or by action of the General
Partner or the Partnership for reasons other than as specified in subsection
(c), this Option may be exercised, but only (i) within three months after such
termination (if otherwise prior to the date of expiration of this Option), and
not thereafter, and (ii) to purchase the number of Units, if any, that could be
purchased upon exercise of this Option at the date of termination of Optionee's
employment.  For purposes of this subsection (d), if this Option shall not have
fully vested as of the date of termination of Optionee's employment, then a
ratable portion of the number of Units which would have become purchasable upon
the next vesting date shall be deemed to have vested as of the date of such
termination (determined by multiplying the number of Units that vest on the
next vesting date by a fraction with a numerator equal to the number of full
months which have then elapsed since the last vesting date and a denominator of
12, and rounding to the closest whole number).

       (e)    In the event of Optionee's death or disability, this Option shall
remain outstanding and may be exercised by the person who acquires this Option
by will or the laws of descent and distribution, or by Optionee, as the case
may be, but only (i) within the one year period following the date of death or
disability (if otherwise prior to the date of expiration of this Option), and
not thereafter, and (ii) to purchase the number of Units that were subject to
purchase upon exercise of this Option at the time of such death or disability.

       5.     Restrictions on Exercise.  The right to exercise the Option shall
be subject to the following restrictions:

       (a)    Vesting.  Optionee shall have no right to exercise this Option to
purchase any Units for which Optionee's rights have not yet vested in
accordance with Section 4.

       (b)    No Fractional Units.  The Option may be exercised only with
respect to full Units.

       (c)    Compliance with Law.  The Option may not be exercised in whole or
in part, and no Units shall be issued nor certificates representing such Units
(if any) delivered pursuant to any exercise of the Option, if any requisite
approval or consent of any governmental authority of any kind having
jurisdiction over the exercise of options or the issuance and sale of Units
shall not have been obtained or if such exercise or issuance would violate any
applicable law.

       (d)    Exercise by Optionee.  The Option shall only be exercisable by
the Optionee and by any transferee who has received such Option pursuant to
Section 4(e) or who has been approved by the General Partner pursuant to
Section 9.

       6.     Exercise of Option.  Subject to the other terms and provisions of
this Agreement, the Option shall be exercisable by written notice timely given
to the Partnership by the Optionee, which notice (a) shall state the number of
Units that the Optionee then desires to purchase, and (b) shall be accompanied
by payment in full of the Option Price for each of such Units, which such
payment shall be made (i) in cash, (ii) by delivery of Optionee's secured
promissory note in the form attached hereto as Attachment I, or (iii) a
combination of (i) or (ii).  The Partnership shall be entitled to require the
Optionee to deliver to the Partnership such documents as the Partnership in its
discretion shall deem necessary to confirm that (i) such exercise and the
Partnership's issuance and sale of such Units are in compliance with the
requirements of any applicable laws (including, but not limited to, the
Securities Act of 1933 and the Texas Securities Act) and (ii) the Optionee
shall be bound by and comply with all of the terms and provisions of the
Partnership Agreement.

       7.     Recapitalization or Reorganization; Adjustments.

       (a)    The existence of this Option shall not affect in any way the
right or power of the Partnership to make or authorize any adjustment,
recapitalization, reorganization or other change in the Partnership's capital
structure or its business (including, without limitation, any reorganization of
the Partnership into a corporation or other business entity), any merger or
consolidation of the Partnership, any issuance of additional Partnership
Securities with priority over Units or otherwise affecting Units or the rights
thereof, the dissolution or liquidation of the Partnership or any sale, lease,
exchange or other disposition of all or any part of its assets or business or
any other partnership act or proceeding.

       (b)    If (i) the Partnership merges, consolidates or reconstitutes with
or into any other entity (including, without limitation, any reorganization of
the Partnership into a corporation or other business entity), (ii) the
Partnership sells, leases or exchanges or agrees to sell, lease or exchange all
or substantially all of its assets to any other person or entity, or (iii) the
Partnership is to be dissolved and liquidated (each such event is referred to
herein as a "Fundamental

Change"), the Partnership shall make or cause to be made lawful and adequate
provision whereby, upon the due exercise of the Option after the effective date
of such Fundamental Change, the Optionee shall be entitled to purchase under
this Option, in lieu of the number of Units as to which this Option shall then
be exercisable, the number and class of Units or other securities or property
to which the Optionee would have been entitled pursuant to the terms of the
Fundamental Change if, immediately prior to any such Fundamental Change,
Optionee had been the holder of record of the number of Units as to which this
Option is then exercisable.

       (c)    If the Partnership subdivides its outstanding Units into a
greater number of Units, the Option Price in effect immediately prior to such
subdivision shall be proportionately reduced, and the number of Units then
subject to the Option shall be proportionately increased.  Conversely, if the
outstanding number of Units of the Partnership are combined into a smaller
number of Units, the Option Price in effect immediately prior to such
combination shall be proportionately increased, and the number of Units then
subject to the Option shall be proportionately reduced.

       8.     Termination of Option.  The Option shall terminate upon the first
to occur of the (i) the Expiration Date, or (ii) the date on which Optionee
purchases, or in writing surrenders his right to purchase, all Units or other
securities then subject to the Option.

       9.     Restriction on Transfer of Option.  The Option may not be sold,
assigned, hypothecated or transferred, except (i) by will or by the laws of
descent and distribution, or (ii) with the prior written consent of the General
Partner (authorized by a vote or consent of its Board).  Any attempted transfer
of the Option in violation of this provision shall be void and of no effect
whatsoever.

       10.    Rights as a Limited Partner.  Optionee shall have no rights as a
Limited Partner of the Partnership with respect to any Units covered by the
Option until the exercise of the Option.

       11.    Additional Documents.  The Partnership and the Optionee will,
upon request of the other party, promptly execute and deliver all additional
documents, and take all such further action, reasonably deemed by such party to
be necessary, appropriate or desirable to complete and evidence the sale,
assignment and transfer of the Units pursuant to this Agreement.

       12.    Representations, Warranties and Covenants of Optionee.

       (a)    The Optionee acknowledges that neither the Option nor the Units
covered thereby have been registered under the Securities Act of 1933 (the
"1933 Act") or the Texas Securities Act (the "Texas Act") on the grounds that
the issuance of the Option is, and the sale of any Units pursuant to the
exercise of the Option will be, exempt from registration under one or more
provisions of each of such acts.  The Optionee further understands that in
determining the availability and applicability of such exemptions and in
executing and delivering this Agreement and issuing and delivering any Units
upon exercise of the Option, the Partnership has relied and will rely upon the
representations, warranties and covenants made by the Optionee herein and in
any other documents which he may hereafter deliver to the Partnership.
Accordingly, the Optionee represents and warrants to and covenants and agrees
with the Partnership as follows:

              (i)    the Optionee is acquiring and will hold the Option, and
       will acquire and hold all securities which he acquires upon exercise of
       the Option, for his own account for investment and not with a view to
       any sale or distribution of all or any part thereof; and

              (ii)   the Optionee will hold all securities acquired by him upon
       exercise of the Option, as well as any and all other securities issued
       in respect thereof, subject to all applicable provisions of the
       Partnership Agreement, the 1933 Act, the Texas Act and all rules and
       regulations promulgated under each of such Acts, and will not at any
       time make any sale, transfer, pledge or other disposition or encumbrance
       of any of such securities in violation of the Partnership Agreement or
       in the absence of an effective registration statement for such
       securities under the Act, the Texas Act and any other applicable state
       securities laws or an applicable exemption from the registration
       requirements of the Act, the Texas Act any other applicable state
       securities laws.

       (b)    The Optionee agrees (i) that the certificates representing the
Units or other securities purchased under this Option may bear such legend or
legends as the Partnership deems appropriate in order to assure compliance with
applicable securities laws, (ii) that the Partnership may refuse to register
the transfer of the Units or other securities purchased under this Option on
the transfer records of the Partnership if such proposed transfer would in the
opinion of counsel satisfactory to the Partnership constitute a violation of
any applicable securities laws, (iii) that the Partnership may give related
instructions to its transfer agent, if any, to stop registration of the
transfer of the Units or other securities purchased under this Option, and (iv)
that the Units or other securities acquired upon exercise of this Option shall
be subject, in all respects, to the Limited Partnership Agreement.

       (c)    Optionee acknowledges that the value of the Option over its life
will be speculative and uncertain, that there is no market for the Option or
the Units or other securities that may be acquired upon exercise of the Option
and it is unlikely that any market will develop, and consequently, the Optionee
may ultimately realize no value from the Option.

       13.    Notices.  All notices required or permitted to be given hereunder
shall be in writing and shall be deemed to have been given on the earlier of
the date of receipt by the party to whom the notice is given or five (5) days
after being mailed by certified or registered United States mail, postage
prepaid, addressed to the appropriate party at the address shown beside such
party's signature below or at such other address as such party shall have
theretofore designated by written notice given to the other party.

       14.    Entirety and Modification.  This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes any and all prior agreements, whether written or oral, between
such parties relating to such subject matter.  No modification, alteration,
amendment or supplement to this Agreement shall be valid or effective unless
the same is in writing and signed by the party against whom it is sought to be
enforced.

       15.    Severability.  If any provision of this Agreement is held to be
unenforceable, this Agreement shall be considered divisible, and such provision
shall be deemed inoperative to the extent it is unenforceable, nd in all other
respects this Agreement shall remain in full force and effect; provided,
however, that if any such provision may be made enforceable by limitation

thereof, then such provision shall be deemed to be so limited and shall be
enforceable to the maximum extent permitted by applicable law.

       16.    Gender.  Words used in this Agreement which refer to Optionee and
denote the male gender shall also be deemed to include the female gender or the
neuter gender when appropriate.

       17.    Headings.  The headings of the various sections and subsections
of this Agreement have been inserted for convenient reference only and shall
not be construed to enlarge, diminish or otherwise change the express
provisions hereof.

       18.    GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (REGARDLESS OF THE LAWS THAT
MIGHT OTHERWISE GOVERN UNDER APPLICABLE TEXAS PRINCIPLES OF CONFLICTS OF LAW).

       19.    Counterparts.  This Agreement may be signed in counterparts, each
of which shall be deemed an original and all of which shall constitute one and
the same agreement.

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

                             TITAN RESOURCES, L.P.

                             By:    Titan Resources I, Inc., its general partner

500 West Texas               By 
Suite 500                      -------------------------------------------------
Midland, Texas  79701
                               
                             [THE OPTIONEE]

                             [See Schedule I attached hereto]   
- ---------------------------  ---------------------------------------------------

                                   
- ---------------------------
       [Address]

                                   SCHEDULE 1

Number of Units Name Option Type Subject to Option - ---- ----------- ----------------- Jack D. Hightower A Option 839,706 Jack D. Hightower A Option 839,706 Separate Property George G. Staley A Option 973,529 Thomas H. Moore A Option 210,071 Dan P. Colwell A Option 195,954 Rodney C. Woodard A Option 195,954 John L. Benfatti A Option 60,395

Basic Info X:

Name: OPTION AGREEMENT
Type: Option Agreement
Date: Oct. 11, 1996
Company: TITAN EXPLORATION INC
State: Delaware

Other info:

Date:

  • March 31 , 1995
  • March 31 , 2001
  • March 31 , 1996
  • March 31 , 1997
  • March 31 , 1998

Organization:

  • Transfer of Option
  • Covenants of Optionee
  • Limited Partnership Agreement
  • Titan Resources I , Inc.

Location:

  • P.M.
  • United States
  • L.P.
  • West Texas
  • Midland

Person:

  • Optionee
  • Jack D. Hightower
  • George G. Staley
  • Thomas H. Moore
  • Dan P. Colwell
  • Rodney C. Woodard
  • John L. Benfatti