OPTION AGREEMENT

 

                                                                  EXHIBIT 10.8.2

                                OPTION AGREEMENT
                                   (B Option)

       This Option Agreement ("AGREEMENT"), made and entered into as of
September 30, 1996, is by and between Titan Exploration, Inc., a Delaware
corporation (the "COMPANY"), and [see Schedule I attached hereto] (the 
"OPTIONEE").

                                  WITNESSETH:

       WHEREAS, in connection with the "Reorganization" (as defined in the
Plan), an Option Plan ("PLAN") was adopted by the Company, effective as of
September 30, 1996 ("PLAN DATE"), for certain officers and management level
employees of Company and its consolidated subsidiaries, in replacement of the
Option Plan previously adopted for such persons by Titan Resources, L.P.
("PARTNERSHIP") as of March 31, 1995;

       WHEREAS, the Optionee is eligible to participate in the Plan and the
Company has authorized the grant to Optionee of an option to acquire shares of
Common Stock, par value $.01, of the Company ("SHARES") 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, Company 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:

              "Companies" means the Company and any of its wholly-owned
       subsidiaries.

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

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

              "Liquidating Transaction" means the sale of all partnership
       interests in the Partnership, the sale of all of the Shares in the
       Company or the sale of substantially all of the assets of the Company or
       the Partnership to an unrelated third party in an arms length
       transaction with the purchase price payable in cash.

              "Realized Equity Value" means, on any date, the cumulative total
       of all cash and the fair market value, as determined by the Board, of
       all other properties or securities which (i) had been distributed by the
       Partnership to its Partners before the Effective Date (excluding any
       distributions made or authorized to be made solely for the purposes of

       permitting Partners to pay their individual income tax liabilities
       resulting from their allocable share of Partnership income), (ii) has
       been distributed by the Company to holders of the Shares initially
       issued on the Effective Date (the "INITIAL SHARES"), and (ii) has not
       yet been distributed to holders of such Initial Shares, but has been
       duly authorized, by action of the Board, to be distributed to holders of
       the Initial Shares. In addition, at the sole discretion of the Board,
       Realized Equity Value may also include an additional amount consisting
       of proceeds from a Liquidating Transaction not yet distributed or
       authorized for distribution to holders of the Initial Shares or an
       amount which the Board determines would be available for distribution to
       holders of the Initial Shares if a Liquidating Transaction were assumed
       to occur as of such date (regardless of the likelihood of the occurrence
       of any such Liquidating Transaction).

              "Realized Equity Value Date" means a date on which the Board
       shall have made a determination of the Realized Equity Value.

       2.     Grant of Option.  Subject to the terms and conditions hereinafter
set forth, the Company hereby irrevocably grants to the Optionee the right and
option (the "OPTION") to purchase [see Schedule I attached hereto] Shares, 
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 Company
for each Share purchased pursuant to the exercise of this Option ("OPTION
PRICE") shall be $2.08 per share; 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 on the first Realized Equity Value Date on
which the Realized Equity Value equals or exceeds the Initial Partnership Buy-
In Price multiplied by three.  From and after such date of vesting, if any,
Optionee may exercise this Option, subject to the terms and conditions set
forth herein.

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

       (c)    If Optionee's employment by the Companies is terminated (i) for
"cause" pursuant to the terms of an employment agreement between Optionee and
any of the Companies which defines termination for "cause" or (ii) if Optionee
is not a party to an agreement described in clause (i), on account of fraud or
dishonesty or other acts which the Board has determined are materially
detrimental to the interests of the Companies, the Option shall automatically
terminate as of the date of such termination.

       (d)    If Optionee's employment by the Companies is terminated
voluntarily by Optionee or by action of the Companies 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 Shares, if any, that could be purchased upon exercise of
this Option at the date of termination of Optionee's employment.

       (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 Shares 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 Shares for which Optionee's rights have not yet vested in
accordance with Section 4.

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

       (c)    Compliance with Law.  The Option may not be exercised in whole or
in part, and no Shares shall be issued nor certificates representing such
Shares (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 Shares
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).

       6.     Exercise of Option.

       (a)    Subject to the other terms and provisions of this Agreement, the
Option shall be exercisable by written notice timely given to the Company by
the Optionee (the "EXERCISE NOTICE"), which notice (i) shall state the number
of Shares that the Optionee then desires to purchase, and (ii) shall be
accompanied by payment in full of the Option Price for each of such Shares.

       (b)    Payment of the Option Price shall be made by the following
methods, or any combination thereof:

              (i)    by cash;

              (ii)   by delivery of Optionee's secured promissory note in the
       form attached hereto as Attachment I; or

              (iii)  if the Shares are Publicly Traded at the time of exercise,
       by surrender of Shares owned by the Optionee (the "PAYMENT SHARES"), the
       aggregate Market Price of

       which shall be credited against the Option Price; provided, however,
       that in lieu of actually tendering the Payment Shares, the Optionee may
       make a constructive exchange of such Payment Shares ("CONSTRUCTIVE
       EXCHANGE") pursuant to the procedures set forth in subsection (c) of
       this Section.

       (c)    Optionee shall notify the Company in writing of any election to
pay all or a portion of the Option Price using a Constructive Exchange (which
notice may be included in the Exercise Notice).  Such notice shall specify the
number of Payment Shares to be used in the Constructive Exchange and shall
include (i) a notarized statement attesting to the number of Payment Shares, if
any, that are held by a registered securities broker for the Optionee in
"street name", and (ii) the certificate numbers for all Shares, if any,
registered in the name of Optionee.  Upon receipt of such notice and the
required information referred to in the immediately preceding sentence, the
Company shall confirm ownership of the Payment Shares by reference to Company
records.  Upon such confirmation, the Company shall treat the Payment Shares as
being constructively exchanged, and accordingly, the Company shall issue to the
Optionee a net number of Shares equal to (i) the number of Shares subject to
the option exercise for which the Constructive Exchange is being exercised,
less (ii) the number of Payment Shares.  The Optionee may elect to exercise
using a Constructive Exchange any number of times in succession, subject to
compliance with the procedures set forth herein.

       (d)    Unless the Company and Optionee shall make mutually acceptable
alternative arrangements, at the time of exercise of the Option, Optionee shall
pay to the Company any federal, state and local taxes required by law to be
paid or withheld in connection with such exercise, which payment shall be made
in cash or by delivery of Optionee's secured promissory note in the form
attached hereto as Attachment I.

       7.     Recapitalization or Reorganization; Adjustments.

       (a)    The existence of this Option shall not affect in any way the
right or power of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any
issuance of additional Company Securities with priority over Shares or
otherwise affecting Shares or the rights thereof, the dissolution or
liquidation of the Company 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 Company merges, consolidates or reconstitutes with or
into any other entity (in a situation in which the Company is not the surviving
entity), (ii) the Company 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 Company is to be dissolved and liquidated (each such event
is referred to herein as a "FUNDAMENTAL CHANGE"), the Company shall, at its
sole discretion, either (A) declare any portion of the Option which has not
then vested to be vested, so that the Optionee shall have an opportunity to
exercise the Option prior to the consummation of the Fundamental Change, or (B)
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 Shares as to which this Option shall be exercisable, the number and class of
Shares 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 Shares as to which this
Option is exercisable.

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

       8.     Termination of Option.  Unless terminated earlier pursuant to
Section 4 hereof, this 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 Shares 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 by will or by the laws of descent
and distribution.  Any attempted transfer of the Option in violation of this
provision shall be void and of no effect whatsoever.

       10.    Certain Rights Incident to Divorce.  If an interest in the Option
is required by law to be transferred to a spouse of Optionee pursuant to an
order of a court in a divorce proceeding (notwithstanding the provisions of
Section 9 hereof), Optionee shall nevertheless retain all rights with respect
to the exercise of the Option and any interest of such spouse shall be subject
to such rights of Optionee.  In addition, if it is determined that Optionee
will be required to pay any taxes attributable to the interest of the spouse in
the Option, any tax liability of Optionee which is attributable to such
spouse's interest shall be taken into account, and shall reduce such spouse's
interest in this Option.

       11.    Rights as a Shareholder.  Optionee shall have no rights as a
shareholder of the Company with respect to any Shares covered by the Option
until the exercise of the Option.

       12.    Additional Documents.  The Company 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 Shares pursuant to this Agreement.

       13.    Representations, Warranties and Covenants of Optionee.

       (a)    The Optionee acknowledges that neither the Option nor the Shares
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 Shares 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 Shares
upon exercise of the Option, the Company 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 Company.
Accordingly, the Optionee represents and warrants to and covenants and agrees
with the Company 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 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 the
       absence of an effective registration statement for such securities under
       the 1933 Act, the Texas Act and any other applicable state securities
       laws or an applicable exemption from the registration requirements of
       the 1933 Act, the Texas Act any other applicable state securities laws.

       (b)    The Optionee agrees (i) that the certificates representing the
Shares or other securities purchased under this Option may bear such legend or
legends as the Company deems appropriate in order to assure compliance with
applicable securities laws, (ii) that the Company may refuse to register the
transfer of the Shares or other securities purchased under this Option on the
transfer records of the Company unless the Company is provided with an opinion
of counsel in form and substance satisfactory to the Company confirming that
such proposed transfer would not constitute a violation of any applicable
securities laws, and (iii) that the Company may give related instructions to
its transfer agent, if any, to stop registration of the transfer of the Shares
or other securities purchased under this Option.

       (c)    Optionee acknowledges that the value of the Option over its life
will be speculative and uncertain and consequently, the Optionee may ultimately
realize no value from the Option.

       14.    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.

       15.    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.

       16.    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.

       17.    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.

       18.    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.

       19.    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).

       20.    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 EXPLORATION, INC.

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

                                           [see Schedule I attached hereto]
- -----------------------------------        -------------------------------------

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

                                   SCHEDULE 1

Number of Shares Name Option Type Subject to Option - ---- ----------- ----------------- Jack D. Hightower B Option 94,674 Jack D. Hightower B Option 94,674 Separate Property George G. Staley B Option 111,725 Thomas H. Moore B Option 24,097 Dan P. Colwell B Option 23,691 Rodney C. Woodard B Option 24,241 John L. Benfatti B Option 8,105
Susan D. Rowland B Option 1,653 Linda Nicholson B Option 551 Carol R. Farmer B Option 551 Thomas Tomerlin B Option 1,102 Carol S. Thompson B Option 275 Carolyn M. Dean B Option 275 Lisa M. Huggins B Option 275 Lawrence H. Wagner B Option 551 Karen I. LeBus B Option 275 Therese A. Cone B Option 275
Ronald L. Lechwar B Option 275

Basic Info X:

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

Other info:

Date:

  • September 30 , 1996
  • March 31 , 1995
  • March 31 , 2001

Organization:

  • Titan Exploration , Inc.
  • Partnership 's Agreement of Limited Partnership
  • Realized Equity Value
  • Transfer of Option
  • Covenants of Optionee

Location:

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

Money:

  • $ .01
  • $ 2.08

Person:

  • Optionee
  • Jack D. Hightower
  • George G. Staley
  • Thomas H. Moore
  • Dan P. Colwell
  • Rodney C. Woodard
  • John L. Benfatti
  • Susan D. Rowland
  • Linda Nicholson
  • Carol R. Farmer
  • Thomas Tomerlin
  • Carol S. Thompson
  • Carolyn M. Dean
  • Lisa M. Huggins
  • Lawrence H. Wagner
  • Karen I. LeBus
  • Therese A. Cone
  • Ronald L. Lechwar