Exhibit 10.28

                                  PANACO, INC.

                KEY EMPLOYEE NON-QUALIFIED STOCK OPTION AGREEMENT

     THIS NON-QUALIFIED  STOCK OPTION AGREEMENT (the "Agreement") dated the 16th
day of August,  2000 (the "Grant Date") by and between PANACO,  Inc., a Delaware
corporation (the "Company"), and ------------------------, a key employee of the
Company (the "Optionee").

     In consideration of the premises and the mutual covenants contained herein,
and intending to be legally bound hereby, the parties agree as follows:

     1. Grant of Option.  Subject to the PANACO,  Inc. Long-Term  Incentive Plan
(the "Plan") (the terms and conditions of which are incorporated by reference as
if fully set forth herein) the Company hereby grants to the Optionee,  as of the
Grant Date a stock option (the "Option") to purchase all or any portion of -----
shares of the Company's  Common Stock (the "Optioned  Shares") from time to time
during the  option  term,  on the terms and  conditions  herein  set forth.  The
granted  Option is NOT  intended  to be an  incentive  stock  option  within the
meaning of Section  422A of the Internal  Revenue Code of 1986,  as amended (the
"Code").

     2. Option Price.  The purchase price of the Optioned Shares shall be $ 1.92
per share (the  "Exercise  Price").

     3.  Term and  Exercise  of  Option.  The  Option  granted  hereunder  shall
terminate and be no longer  exercisable after six (6) years from the Grant Date.
Subject to the further  limitations and restrictions as provided in the Plan and
this  Agreement,  the Option  granted  hereunder  shall vest and be  exercisable
according to the following schedule:
<TABLE>
<CAPTION>

----------------------------------------------------------- --------------------------------------------------------
<S>                                                                             <C>
If the Optionee is employed through the following date:     The Option shall become exercisable with respect to
                                                            the following number of shares:
----------------------------------------------------------- --------------------------------------------------------

One-year anniversary of Grant Date                                               ----
----------------------------------------------------------- --------------------------------------------------------

Two-year anniversary of Grant Date                                               ----
----------------------------------------------------------- --------------------------------------------------------

Three-year anniversary of Grant Date                                             ----
----------------------------------------------------------- --------------------------------------------------------

Four-year anniversary of Grant Date                                              ----
----------------------------------------------------------- --------------------------------------------------------

Five-year anniversary of Grant Date                                              ----
----------------------------------------------------------- --------------------------------------------------------
</TABLE>

     Notwithstanding the foregoing,  in the event the Optionee's employment with
the  Company is  terminated  by the  Company  other  than for Cause (as  defined
below),  or upon the death or disability  of the  Optionee,  or upon a Change in
Control (as defined  below) this Option  shall  become  exercisable  in full and
shall  remain  exercisable  for the  duration of its term.  For purposes of this
Agreement,  "Cause"  shall  mean  termination  due to (i)  the  substantial  and
continuing  failure  of the  Optionee  to  render  services  to the  Company  in
accordance with the terms or  requirements  of his or her business  relationship
with the Company; (ii) disloyalty,  gross negligence,  willful misconduct, fraud
or breach of fiduciary duty to Company;  (iii) deliberate disregard of the rules
and policies of the Company,  or breach of an employment or other agreement with
the  Company,  which  results  in  direct  or  indirect  damage or injury to the
Company;  (iv) the  unauthorized  disclosure of any trade secret or confidential
information  of the Company;  (v) fraud or  embezzlement  committed  against the
Company;  or (vi) the Optionee's  conviction for a felony.  For purposes of this
Agreement,  "Change in Control" shall mean (i) the  consolidation of the Company
with,  or merger  of the  Company  with or into,  another  corporation  or other
business  organization  in which  the  shares of the  stock of the  Company  are
converted into or otherwise  exchanged for less than thirty percent (50%) of the
shares of a resulting  or surviving  corporation,  (ii) the closing of a sale or
conveyance of all or substantially all of the assets of the Company, or (iii) an
acquisition in a transaction or a series of related  transactions by a person or
group (as defined in Rule 13d-5(b)(1) of the Securities Act of 1934, as amended)
of more  than  thirty  percent  (30%)  of the  outstanding  voting  stock of the
Company.

     If the Optionee's  business  relationship  with the Company  terminates for
Cause (as defined  above),  vesting of the  unvested  shares  shall  immediately
cease,  this option shall terminate (may no longer be exercised)  immediately as
to any  unvested  shares and may be exercised  only as to any  Optioned  Shares,
which  are  vested  on  the  date  of  termination  of the  Optionee's  business
relationship.

     No  fractional  shares of Common Stock shall be issued upon any exercise of
this Option.

     4.  Transferability  of  Option.  In  addition  to  such  other  terms  and
conditions  included  in  the  Plan,  an  Option  requiring  exercise  shall  be
exercisable  during  an  Optionee's  lifetime  only by that  Optionee  or by the
Optionee's guardian or legal representative.  An Option requiring exercise shall
not be transferable  other than by will or the laws of descent and distribution.

     5. Adjustments.  In accordance with the Plan, if the shares of Common Stock
of the Company are  increased,  decreased,  changed  into,  or  exchanged  for a
different number or kind of shares or securities through merger,  consolidation,
combination,   exchange  of  shares,  other  reorganization,   recapitalization,
reclassification,  stock  dividend,  stock split or reverse stock split in which
the Company is the surviving entity, an appropriate and proportionate adjustment
shall be made in the number or kind of shares  allocated to any unexercised part
of the Option and to the Exercise Price.

     6. Method of  Exercise.  The Option  shall be  exercisable  only by written
notice of exercise (the "Exercise  Notice")  delivered to the Company during the
term of the Option,  which notice shall (a) state the number of shares of Common
Stock with respect to which the Option is being exercised,  (b) be signed by the
Optionee of the Option or, if the Optionee is dead, by the person  authorized to
exercise the Option,  (c) be accompanied by the Exercise Price for all shares of
Common  Sock for with the  Option  is  exercised,  and (d)  include  such  other
information,  instruments, and documents as may be required to satisfy any other
condition  to exercise  contained  in this  Agreement.  The Option  shall not be
deemed to have been exercised  unless all of the  requirements of this paragraph
have been satisfied.

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     7. Medium and Time of Payment.  The  Exercise  Price of the Option shall be
payable in full upon the exercise of the Option (a) in cash or by an  equivalent
means acceptable to the Committee,  (b) on the Committee's  prior consent,  with
shares of Common Stock owned by the Optionee  (including  shares  received  upon
exercise of the  Option)  and having a fair  market  value at least equal to the
aggregate Exercise Price payable in connection with such exercise, or (c) by any
combination  of clauses (a) or (b). If the Committee  elects to accept shares of
Common Stock in payment of all or any portion of the Exercise  Price,  then (for
purposes of payment of the Exercise Price) those shares of Common Stock shall be
deemed  to  have a cash  value  equal  to  their  aggregate  fair  market  value
determined  as of the date of the  delivery  of the  Exercise  Notice.

     8.  Plan  Governs.  Notwithstanding  anything  in  this  Agreement  to  the
contrary,  the terms of this Agreement shall be subject to the Plan.  Unless the
context clearly  implies or indicates the contrary,  a word, term or phrase used
or  defined  in the Plan is  similarly  used or  defined  for  purposes  of this
Agreement.

     9. Tax Matters. The Optionee acknowledges that upon exercise of the Options
the Company may have certain withholding obligations for income and other taxes.
It shall be a condition to the Optionee's  exercise of the option and receipt of
a stock  certificate  covering shares purchased  pursuant to the Option that the
Optionee  pay to the Company such amounts as it is required to withhold or, with
the  consent  of the  Company,  that  the  Optionee  otherwise  provide  for the
satisfaction of the Company's withholding obligation. If any such payment is not
made by the Optionee, the Company may deduct the amounts required to be withheld
from payments of any kind to which the Optionee would otherwise be entitled from
the Company.

     10. Rights of a Shareholder.  This Agreement does not constitute a contract
of  employment.  The  Optionee  shall  not be  deemed  for any  purpose  to be a
shareholder  of the Company  with  respect to any shares  covered by this Option
unless this Option shall have been  exercised and the Exercise Price paid in the
manner provided herein. No adjustment will be made for dividends or other rights
where the record date is prior to the date of  exercise  and  payment.  Upon the
exercise  of the Option and the  issuance  of the  certificate  or  certificates
evidencing  the shares of Common Stock  received,  except as otherwise  provided
herein,  the Optionee  shall have all the rights of a stockholder of the company
including  the rights to receive all  dividends or other  distributions  paid or
made with respect to such shares.

     11.  Administration.  The authority to manage and control the operation and
administration  of this  Agreement  shall be  vested in the  Committee,  and the
Committee  shall have all powers with respect to this Agreement that it has with
respect to the Plan. Any  interpretation  of this Agreement by the Committee and
any decision made by it with respect to the Agreement is final and binding.

     12.  Amendments.  This Agreement may be amended by written agreement of the
Optionee and the Company,  acting  pursuant to the authority from the Committee,
without the consent of any person.

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     13.  Severability.  The provisions of this Agreement shall be severable and
the  invalidity  or  unenforceability  of any  provision  shall not  affect  the
validity or enforceability of the other provisions hereto.

     14.  Successor and Assigns.  The terms of this  Agreement  shall be binding
upon and shall enure to the benefit of any  successors or assigns of the Company
and of the Optionee and of the Common Stock issued or issuable upon the exercise
hereof.

     15.  Governing Law. This Agreement shall be governed in accordance with the
laws of the State of Delaware.

     16.  Multiple  Counterparts.  This  Agreement  may be signed in one or more
counterparts,  each of which  shall be  deemed  to be an  original.

     IN WITNESS  WHEREOF,  the  Optionee  has executed  this  Agreement  and the
Company  has caused  this  Agreement  to be  executed  on its behalf by its duly
authorized officer effective as of the day and year first above written.


                                    PANACO, INC.

                                    Name:  -----------------------------------
                                    Title: -----------------------------------

                                    OPTIONEE:

                                    Name:  -----------------------------------
                                    Title: -----------------------------------



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