Document:

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                                                                    Exhibit 10.2
                                                                       (premium)

                      NONQUALIFIED STOCK OPTION AGREEMENT
                      -----------------------------------

                  1999 Incentive Plan of Pure Resources, Inc.

     This Option Agreement ("Agreement"), made and entered into effective as of
December 13, 1999, by and between Pure Resources, Inc., a Delaware corporation
(the "Company"), and [See Schedule 1 attached hereto] (the "Optionee").

                                  WITNESSETH:

     WHEREAS, the 1999 Incentive Plan of Pure Resources, Inc. (formerly named
Titan Resources Holdings, Inc.) ("Plan") was adopted by the Company, effective
as of December 13, 1999 ("Plan Date"), for the benefit of certain employees of
the Company and its subsidiaries; and

     WHEREAS, the Optionee is eligible to participate in the Plan and the
Committee has authorized the grant to Optionee of an option to purchase shares
of Common Stock, par value $0.01, 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, the 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 Subsidiaries (as defined in
          ---------
          the Plan).

          Expiration Date means 6:00 p.m., Midland, Texas time, on December 13,
          ---------------
          2009.

          Merger means the consummation of the merger of TRH, Inc. with into
          ------
          Titan pursuant to the terms of the Agreement and Plan of Merger dated
          as of December 13, 1999, by and among Union Oil Company of California,
          a California corporation, the Company, TRH, Inc., a Delaware
          corporation, and Titan.

          Premium Exercise Price means an amount equal to (a) 1.25 times the
          ----------------------
          average closing prices for a share of Titan common stock for each of
          the ten trading days prior to the consummation of the Merger, divided
          by (b) .4302314.

          Titan means Titan Exploration, Inc., a Delaware corporation.
          -----

     2.   Grant of Option. Subject to the terms, conditions and provisions of
          ---------------
the Plan and those hereinafter set forth, the Company hereby grants to Optionee
a Nonqualified Stock Option (the "Option") to purchase [See Schedule 1 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 (the "Option
Price") shall be $17.08, which is the Premium Exercise
<PAGE>

Price 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 in the manner set forth on Exhibit A, which is attached
hereto and incorporated herein by reference for all purposes.  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 Shares
for which Optionee's rights have vested.

     (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 on account of
fraud against the Company or a Subsidiary or conviction of a felony, the Option
shall automatically terminate as of the date of such termination of employment.

     (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. For purposes of this subsection (d), if this Option
shall not have fully vested as of the date of Optionee's termination of
employment by action of the Companies for reasons other than as specified in
subsection (c) (but not in the event of voluntary termination), then a ratable
portion of the number of Shares 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 Shares 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 nearest whole number).

     (e)  In the event of Optionee's termination of employment with the
Companies by reason of death or disability (within the meaning of Section
22(e)(3) of the Code), this Option may be exercised by the person who acquires
this Option by will or the laws of descent and distribution, or by Optionee (or
the Optionee's legal guardian in the event one is appointed as a result of
Optionee's disability), 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, if any, that could be purchased upon exercise of this Option
at the date of Optionee's death or disability. For purposes of this subsection
(e), 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 Shares 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 Shares 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 nearest whole number).

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

                                       2
<PAGE>

     (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 and the
Plan, 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.
Unless the Company and Optionee shall have made mutually acceptable alternative
arrangements, payment of the Option Price shall be made in cash or by surrender
of previously acquired nonforfeitable, unrestricted Shares owned by the Optionee
(the "Payment Shares") having an aggregate Fair Market Value at the time of
exercise equal to the Option Price.

     (b)  Payment of the total Option Price may also be made, in the discretion
of the Committee, by delivery to the Company or its designated agent of an
executed irrevocable option exercise form together with irrevocable instructions
to a broker-dealer to sell or margin a sufficient portion of the Shares with
respect to which the Option is exercised and deliver the sale or margin loan
proceeds directly to the Company to pay the Option Price and any required
federal, state and local taxes.

     (c)  The Committee, in its sole and absolute discretion, may approve the
extension of a loan to Optionee by the Company to assist Optionee in paying the
exercise price of an Option and/or any tax required by law to be withheld upon
exercise of the Option; provided, however, that Optionee shall be required to
pay in cash the par value of Common Stock received upon exercise of the Option.
Any loan approved by the Committee shall be made upon such terms and conditions
(including interest rate, security and terms of repayment) as may be determined
by the Committee in its discretion.

     (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.  The Company may require Optionee
to pay to the Company such taxes prior to and as a condition of the issuance or
delivery of the Shares and the Company or a Subsidiary shall be entitled to
deduct from any other compensation payable to the Participant any tax
withholding obligations with respect to the Option.

     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

                                       3
<PAGE>

structure or its business, any merger or consolidation of the Company, any
issuance of additional securities by the Company 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 corporate act or proceeding.

     (b)  If (i) the Company enters into any merger, consolidation or
recapitalization pursuant to which the persons serving as directors of the
Company immediately before such transaction cease to constitute at least 40% of
the members of the board of directors of the surviving entity (whether the
Company or another entity) following consummation of such transaction, (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"), then immediately before the consummation of the
Fundamental Change, any portion of the Option which has not then vested shall
become vested and the Company, at its discretion, shall either (x) provide to
Optionee at least 30 days' notice of such pending Fundamental Change so as to
permit Optionee to exercise the Option before consummation of such Fundamental
Change, in which case the Company need no make provision for this Option to
survive the consummation of such Fundamental Change, or (y) make or cause to be
made lawful and adequate provision whereby, upon the due exercise of this Option
after the effective date of such Fundamental Change, the Optionee shall be
entitled to purchase upon exercise of this Option, 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 before
consummation of such Fundamental Change, Optionee had been the holder of record
of the number of Shares which could be purchased upon exercise of this Option
immediately before such Fundamental Change.

     (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 or Section 5(b) 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 which is attributable to such spouse's interest shall
be taken into account, and shall reduce such spouse's interest in this Option.

                                       4
<PAGE>

     11.  Employment.  Nothing in this Agreement shall confer upon Optionee any
          ----------
right to continue in the employ of the Companies, nor shall this Agreement
interfere in any manner with the right of the Companies to terminate the
employment of Optionee with or without cause at any time.

     12.  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.

     13.  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.

     14.  Representations, Warranties and Covenants of Optionee.
          -----------------------------------------------------

     (a)  The Optionee acknowledges that the Option has not been registered
under the Securities Act of 1933 or applicable state securities laws on the
grounds that the issuance of the Option is 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
that the Optionee is acquiring and will hold the Option for his own account for
investment and not with a view to any sale or distribution of all or any part
thereof.

     (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, that there is no market for the Option and it is
unlikely that any market will develop, and consequently, the Optionee may
ultimately realize no value from the Option.

     15.  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.

     16.  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.

                                       5
<PAGE>

     17.  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, and 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.

     18.  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.

     19.  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.

     20.  Option Subject to Plan.  This Option is subject to the terms and
          ----------------------
conditions of the Plan.  In the event that (i) the Plan is not approved by the
holders of at least a majority of the shares of Common Stock in accordance with
applicable law within twelve months after the date of adoption of the Plan by
the Board or (ii) the transactions contemplated by the Agreement and Plan of
Merger dated as of December 13, 1999, by and among Union Oil Company of
California, the Company, TRH, Inc., and Titan Exploration, Inc. are not
consummated, this Option shall be null and void.

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

     21.  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
effective as of the date first set forth above.

                                   PURE RESOURCES, INC.

500 West Texas                By:_____
Suite 200                               Name:_______________________________
Midland, Texas  79701                   Title:______________________________

                                   OPTIONEE

500 West Texas                _____
Suite 200                          Name: [See Schedule 1 attached hereto]
Midland, Texas 79701

                                       6
<PAGE>

                                                                       Exhibit A
                                                                       ---------

                               VESTING SCHEDULE
                                      TO
                      NONQUALIFIED STOCK OPTION AGREEMENT

[*Other than Hightower and Staley:

     The Option shall vest and become exercisable as to one-fourth of the total
Shares which may be purchased hereunder (rounded to the nearest whole share) on
December 13, 2000, shall vest with respect to an additional one-fourth of the
total Shares which may be purchased hereunder (rounded to the nearest whole
share) on December 13, 2001, shall vest with respect to an additional one-fourth
of the total Shares which may be purchased hereunder (rounded to the nearest
whole share) on December 13, 2002, and shall be fully vested on December 13,
2003.]

[*Hightower and Staley:

     The Option shall vest and become exercisable as to one-third of the
total Shares which may be purchased hereunder (rounded to the nearest whole
share) on December 13, 2000, shall vest with respect to an additional one-third
of the total Shares which may be purchased hereunder (rounded to the nearest
whole share) on December 13, 2001, and shall be fully vested on December 13,
2002.]

                                       7
<PAGE>

                                  Schedule 1

                                Options Granted

                                     NUmber of Shares
             Name                    Subject to Options
        ---------------------        ------------------

        Jack Hightower                          500,000
        George Staley                           100,000
        Bill White                               40,000
        Jack Rathbone                            50,000
        Gary Dupriest                            75,000
        Tom Moore                                40,000
        Dan Colwell                              40,000
        Rod Woodard                              40,000
        John Benfatti                            35,000
        Susan Rowland                            35,000
        Darin Holderness                         35,000

                                       8<PAGE>

                                                                    Exhibit 4.1
                                                                    -----------

                         REGISTRATION RIGHTS AGREEMENT

     This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), made and entered
into as of May 25, 2000, by and between Pure Resources, Inc., a Delaware
corporation (the "Company"), and Jack Hightower, an individual residing in
Midland, Texas ("Owner").

          1.   Background.  On the date hereof, the Company is consummating a
               ----------
merger transaction (the "Merger") pursuant to which shares of common stock of
Titan Exploration, Inc. ("Titan Common Stock") have been converted into the
right to receive shares of the Company's common stock, par value $.01 per share
(the "Company Common Stock").  Immediately prior to the Merger, the Owner was
the holder of 4,323,182 shares of Titan Common Stock.  Upon consummation of the
Merger, the Owner now will be the holder of 1,859,968 shares of the Company
Common Stock.  Immediately prior to the Merger, the Owner had demand and piggy-
back registration rights covering all of this shares of Titan Common Stock,
pursuant to a Registration Rights Agreement dated as of September 30, 1996.
Although the issuance of shares of the Company Common Stock pursuant to the
Merger has been registered pursuant to the Company's Registration Statement on
Form S-4, the Owner's sale of his Company Common Stock is restricted pursuant to
the provisions of Rule 144 and Rule 145 promulgated under the Securities Act.
The parties hereto desire to enter into this Agreement in order to grant to the
Owner registration rights with respect to the Company Common Stock.

          2.   Registration under Securities Act, etc.
               --------------------------------------

          2.1. Registration on Request.
               -----------------------

     (a)  Concurrently with or from time to time after the date hereof, upon the
written request of one or more holders of Registrable Securities, requesting
that the Company effect the registration under the Securities Act of all or a
portion of such holders' Registrable Securities and specifying the intended
method of disposition thereof and whether or not such requested registration is
to be an underwritten offering, the parties hereto agree as follows:

          (i)  The Company will promptly give written notice of such requested
     registration to all other holders of Registrable Securities, if any;

          (ii) Promptly after providing the notice required by clause (i) of
     this Section 2.1(a), and subject to the limitations set forth in subsection
     (e) of this Section 2.1, the Company will use its best efforts to effect
     the registration under the Securities Act of:

               (A)  the Registrable Securities which the Company has been so
          requested to register by such holders, and
<PAGE>

               (B)  all other Registrable Securities which the Company has been
          requested to register by the holders thereof by written request given
          to the Company within 30 days after the giving of such written notice
          by the Company (which request shall specify the intended method of
          disposition of such Registrable Securities), all to the extent
          requisite to permit the disposition (in accordance with the intended
          methods thereof as aforesaid) of the Registrable Securities so to be
          registered.

     (b)  Registration of Other Securities.  Whenever the Company shall effect a
          --------------------------------
registration pursuant to this Section 2.1 in connection with an underwritten
offering by one or more holders of Registrable Securities, no securities other
than Registrable Securities shall be included among the securities covered by
such registration unless (i) the managing underwriter of such offering shall
have advised each holder of Registrable Securities to be covered by such
registration in writing that the inclusion of such other securities would not
adversely affect such offering or (ii) the holders of all Registrable Securities
to be covered by such registration shall have consented in writing to the
inclusion of such other securities.

     (c)  Registration Statement Form.  Registrations under this Section 2.1
          ---------------------------
shall be on such appropriate registration form of the Commission (i) as shall be
selected by the Company and as shall be reasonably acceptable to the Requisite
Holders, and (ii) as shall permit the disposition of such Registrable Securities
in accordance with the intended method or methods of disposition specified in
their request for such registration.  The Company agrees to include in any such
registration statement all information which holders of Registrable Securities
being registered shall reasonably request.

     (d)  Expenses.  The Company will pay all Registration Expenses in
          --------
connection with any registration requested pursuant to this Section 2.1. Any
Selling Expenses in connection with any registration requested under this
Section 2.1 shall be allocated among all Persons on whose behalf securities of
the Company are included in such registration, on the basis of the respective
amounts of the securities then being registered on their behalf.

     (e)  Limitations on Requested Registrations.  The Company's obligation to
          --------------------------------------
take or continue any action to effect a requested registration under this
Section 2.1 shall be subject to the following:

          (i)  The Company shall not be required to effect more than two
     registrations requested pursuant to this section 2.1; provided that, a
     registration requested pursuant to this Section 2.1 shall not be deemed to
     have been effected (A) unless a registration statement with respect thereto
     has been declared effective for a period of at least 90 days,  (B) if after
     a registration statement has become effective, such registration is
     interfered with by any stop order, injunction or other order or requirement
     of the Commission or other governmental agency or court for any reason, or
     (C) if the conditions to closing specified in the purchase agreement or
     underwriting agreement entered into in connection with such registration
     are

                                       2
<PAGE>

     not satisfied, other than as a result of the voluntary termination of such
     offering by the Requisite Holders;

          (ii)  The Company shall not be required to effect a registration
     pursuant to this Section 2.1 unless such registration has been requested by
     the holders of Registrable Securities which have an estimated aggregate
     offering price to the public of at least (A) $20,000,000, in the case of
     the first registration effected pursuant to this Section 2.1, and (B)
     $10,000,000 otherwise; and

          (iii) The Company shall not be required to effect a registration
     pursuant to this Section 2.1 during the 180 day period after a registration
     statement shall have been filed and declared effective under the Securities
     Act with respect to an underwritten public offering of any class of the
     Company's equity securities (which shall exclude a registration of
     securities with respect to an employee benefit, retirement or similar
     plan).

          (f)  Selection of Underwriters.  If a requested registration pursuant
               -------------------------
to this Section 2.1 involves an underwritten offering, the underwriter or
underwriters thereof shall be selected by the Company with the approval of the
Requisite Holders.

          (g)  Priority in Requested Registrations.  If a requested registration
               -----------------------------------
pursuant to this Section 2.1 involves an underwritten offering, and the managing
underwriter shall advise the Company in writing (with a copy to each holder of
Registrable Securities requesting registration) that, in its opinion, the number
of securities requested to be included in such registration exceeds the number
which can be sold in such offering within a price range acceptable to the
Requisite Holders, the Company will include in such registration to the extent
of the number which the Company is so advised can be sold in such offering,
Registrable Securities requested to be included in such registration, pro rata
among the holders thereof requesting such registration on the basis of the
percentage of the Registrable Securities of the Company held by the holders of
Registrable Securities which have requested that such Securities be included.
In connection with any registration as to which the provisions of this clause
(g) apply, no securities other than Registrable Securities shall be covered by
such registration.

          2.2. Incidental Registration.
               -----------------------

          (a)  Right to Include Registrable Securities.  If the Company at any
               ---------------------------------------
time proposes to register any of its securities under the Securities Act (other
than (i) in connection with a registration of any employee benefit, retirement
or similar plan, or (ii) with respect to a Rule 145 transaction, or (iii)
pursuant to Section 2.1), whether or not for sale for its own account, it will
each such time give prompt written notice to all holders of Registrable
Securities of its intention to do so and of such holders' rights under this
Section 2.2.  Upon the written request of any such holder made within 30 days
after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such holder and the
intended method of disposition thereof), the Company will use its best efforts
to effect the registration under the Securities Act of all Registrable

                                       3
<PAGE>

Securities which the Company has been so requested to register by the holders
thereof, to the extent requisite to permit the disposition (in accordance with
the intended methods thereof as aforesaid) of the Registrable Securities so to
be registered, provided that if, at any time after giving written notice of its
               --------
intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to each holder of Registrable Securities and, thereupon, (i) in
the case of a determination not to register, shall be relieved of its obligation
to register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection
therewith), without prejudice, however, to the rights of any holder or holders
of Registrable Securities entitled to do so to request that such registration be
effected as a registration under Section 2.1, and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities, for the same period as the delay in registering such
other securities.  No registration effected under this Section 2.2 shall be
deemed to have been effected pursuant to Section 2.1 or shall relieve the
Company of its obligation to effect any registration upon request under
Section 2.1. The Company will pay all Registration Expenses in connection with
each registration of Registrable Securities requested pursuant to this Section
2.2 and any Selling Expenses shall be allocated among all Persons on whose
behalf securities of the Company are included in such registration, on the basis
of the respective amounts of the securities then being registered on their
behalf. Notwithstanding the other provisions of this Agreement, (x) no holder of
Registrable Securities, other than Owner, shall have any rights under this
section if such holder holds fewer than 1,000,000 shares of Common Stock that
are Registrable Securities (adjusted for any increase or decrease in the number
of issued shares of Common Stock from a stock split, reverse stock split, stock
dividend, combination or reclassification of the common stock, or any other
increase or decrease in the number of issued shares of Common Stock effected
without consideration by the Company), such holder is not an "affiliate" of the
Company, and such shares may be sold freely by such Holder without restriction
under Rule 144(k) (or any successor provisions) without restriction and (y)
Owner shall have no such rights if he holds less than 250,000 shares of Common
Stock that are Registrable Securities (adjusted for any increase or decrease in
the number of issued shares of Common Stock from a stock split, reverse stock
split, stock dividend, combination or reclassification of the common stock, or
any other increase or decrease in the number of issued shares of Common Stock
effected without consideration by the Company), he is not an affiliate of the
Company, and his Registrable Securities may be sold freely under Rule 144(k) (or
any successor provisions) without restriction.

          (b)  Priority in Incidental Registrations.
               ------------------------------------

          (i)  If (A) a registration pursuant to this Section 2.2 involves an
     underwritten offering of the securities so being registered for sale for
     the account of a stockholder (other than the holders of Registrable
     Securities) exercising a demand registration right pursuant to another
     registration rights agreement to be distributed (on a firm commitment
     basis) by or through one or more underwriters of recognized standing under
     underwriting terms appropriate for such a transaction, and (B) the managing
     underwriter of such underwritten

                                       4
<PAGE>

     offering informs the Company and the holders of Registrable Securities in
     writing of its belief that the number of securities requested to be
     included in such registration exceeds the number that can be sold in (or
     during the time of) such offering, then the Company will include in such
     registration, to the extent of the number that the Company is so advised
     can be sold in (or during the time of) such offering: first, such
     securities proposed by the stockholder exercising the demand registration
     right to be sold for its account; second, such securities requested to be
     included pursuant to incidental registration rights in such registration by
     the holder or holders, as the case may be, including the holders of
     Registrable Securities, pro rata on the basis of the number of such
     securities so proposed to be sold by all such security holders and so
     requested to be included; and third, such securities proposed by the
     Company to be sold for its own account

          (ii) If (A) a registration pursuant to this Section 2.2 involves an
     underwritten offering of the securities so being registered for sale for
     the account of the Company, to be distributed (on a firm commitment basis)
     by or through one or more underwriters of recognized standing under
     underwriting terms appropriate for such a transaction, and (B) the managing
     underwriter of such underwritten offering shall inform the Company and the
     holders of Registrable Securities in writing of its belief that the number
     of securities requested to be included in such registration exceeds the
     number that can be sold in (or during the time of) such offering, then the
     Company will include in such registration, to the extent of the number that
     the Company is so advised can be sold in (or during the time of) such
     offering, securities proposed by the Company to be sold for its own
     account, and, such securities requested to be included pursuant to
     incidental registration rights in such registration by the holder or
     holders, as the case may be, including the holders of Registrable
     Securities, pro rata on the basis of the number of such securities so
     proposed to be sold by all such security holders and so requested to be
     included.

          2.3. Registration Procedures.  If and whenever the Company is required
               -----------------------
to use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Sections 2.1 and 2.2, the Company will
as expeditiously as possible:

          (i)  prepare and (as soon thereafter as possible or in any event no
     later than 60 days after the end of the period within which requests for
     registration may be given to the Company) file with the Commission the
     requisite registration statement to effect such registration and thereafter
     use its best efforts to cause such registration statement to become
     effective, provided that the Company may discontinue any registration of
                --------
     its securities which are not Registrable Securities (and, under the
     circumstances specified in Section 2.2(a), its securities which are
     Registrable Securities) at any time prior to the effective date of the
     registration statement relating thereto;

          (ii) prepare and file with the Commission such amendments and
     supplements to such registration statement and the prospectus used in
     connection therewith as may be necessary to keep such registration
     statement effective and to comply with the provisions of the

                                       5
<PAGE>

     Securities Act with respect to the disposition of all securities covered by
     such registration statement until such time as all of such securities have
     been disposed of in accordance with the intended methods of disposition by
     the seller or sellers thereof set forth in such registration statement;

          (iii) furnish to each seller of Registrable Securities covered by
     such registration statement such number of conformed copies of such
     registration statement and of each such amendment and supplement thereto
     (in each case including all exhibits), such number of copies of the
     prospectus contained in such registration statement (including each
     preliminary prospectus and any summary prospectus) and any other prospectus
     filed under Rule 424 under the Securities Act, in conformity with the
     requirements of the Securities Act, and such other documents, as such
     seller may reasonably request;

          (iv)  use its best efforts to register or qualify all Registrable
     Securities and other securities covered by such registration statement
     under such other securities or blue sky laws of such jurisdictions as each
     seller thereof shall reasonably request, to keep such registration or
     qualification in effect for so long as such registration statement remains
     in effect, and take any other action which may be reasonably necessary or
     advisable to enable such seller to consummate the disposition in such
     jurisdictions of the securities owned by such seller, except that the
     Company shall not for any such purpose be required to qualify generally to
     do business as a foreign corporation in any jurisdiction wherein it would
     not but for the requirements of this subdivision (iv) be obligated to be so
     qualified or to consent to general service of process in any such
     jurisdiction;

          (v)   use its best efforts to cause all Registrable Securities covered
     by such registration statement to be registered with or approved by such
     other governmental agencies or authorities as may be necessary to enable
     the seller or sellers thereof to consummate the disposition of such
     Registrable Securities;

          (vi)  furnish to each seller of Registrable Securities a signed
     counterpart, addressed to such seller (and underwriters, if any) of:

                (A) an opinion of counsel for the Company, dated the effective
          date of such registration statement (and, if such registration
          includes an underwritten public offering, dated the date of the
          closing under the underwriting agreement), reasonably satisfactory in
          form and substance to such seller, and

                (B) a "comfort" letter, dated the effective date of such
          registration statement (and, if such registration includes an
          underwritten public offering, dated the date of the closing under the
          underwriting agreement), signed by the independent public accountants
          who have certified the Company's financial statements included in such
          registration statement,

                                       6
<PAGE>

     covering substantially the same matters with respect to such registration
     statement (and the prospectus included therein) and, in the case of the
     accountants' letter, with respect to events subsequent to the date of such
     financial statements, as are customarily covered in opinions of issuer's
     counsel and in accountants' letters delivered to the underwriters in
     underwritten public offerings of securities and, in the case of the
     accountants' letter, such other financial matters, and, in the case of the
     legal opinion, such other legal matters, as such seller may reasonably
     request;

          (vii)  notify each seller of Registrable Securities covered by such
     registration statement, at any time when a prospectus relating thereto is
     required to be delivered under the Securities Act, upon discovery that, or
     upon the happening of any event as a result of which, the prospectus
     included in such registration statement, as then in effect, includes an
     untrue statement of a material fact or omits to state any material fact
     required to be stated therein or necessary to make the statements therein
     not misleading in the light of the circumstances under which they were
     made, and at the request of any such seller promptly prepare and furnish to
     such seller a reasonable number of copies of a supplement to or an
     amendment of such prospectus as may be necessary so that, as thereafter
     delivered to the purchasers of such securities, such prospectus shall not
     include an untrue statement of a material fact or omit to state a material
     fact required to be stated therein or necessary to make the statements
     therein not misleading in the light of the circumstances under which they
     were made;

          (viii) otherwise use its best efforts to comply with all applicable
     rules and regulations of the Commission, and make available to its security
     holders, as soon as reasonably practicable, an earnings statement covering
     the period of at least twelve months, but not more than eighteen months,
     beginning with the first full calendar month after the effective date of
     such registration statement, which earnings statement shall satisfy the
     provisions of Section 11(a) of the Securities Act, and will furnish to each
     such seller at least five business days prior to the filing thereof a copy
     of any amendment or supplement to such registration statement or prospectus
     and shall not file any thereof to which any such seller shall have
     reasonably objected on the grounds that such amendment or supplement does
     not comply in all material respects with the requirements of the Securities
     Act or of the rules or regulations thereunder;

          (ix)   provide and cause to be maintained a transfer agent and
     registrar for all Registrable Securities covered by such registration
     statement from and after a date not later than the effective date of such
     registration statement;

          (x)    use its best efforts to list all Registrable Securities covered
     by such registration statement on any securities exchange on which any of
     the Registrable Securities is then listed; and

                                       7
<PAGE>

          (xi)  enter into such agreements and take such other actions as the
     Requisite Holders shall reasonably request in order to expedite or
     facilitate the disposition of such Registrable Securities.

The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company such information regarding
such seller and the distribution of such securities as the Company may from time
to time reasonably request in writing.

     Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that upon receipt of any notice from the Company of the
happening of any event of the kind described in the subdivision (vii) of this
Section 2.3, such holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (vii) of this
Section 2.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.

     2.4  Underwritten Offerings.
          ----------------------

          (a)  Requested Underwritten Offerings.  If requested by the
               --------------------------------
underwriters for any underwritten offering by holders of Registrable Securities
pursuant to a registration requested under Section 2.1, the Company will enter
into an underwriting agreement with such underwriters for such offering, such
agreement to be satisfactory in substance and form to each such holder and the
underwriters and to contain such representations and warranties by the Company
and such other terms as are generally prevailing in agreements of this type,
including, without limitation, indemnities to the effect and to the extent
provided in Section 2.7.  The holders of Registrable Securities to be
distributed by such underwriters shall be parties to such underwriting agreement
and may, at their option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and for the benefit of
such holders of Registrable Securities and that any or all of the conditions
precedent to the obligations of such underwriters under such underwriting
agreement be conditions precedent to the obligations of such holders of
Registrable Securities.  Any such holder of Registrable Securities shall not be
required to make any representations or warranties to or agreements with the
Company or the underwriters other than representations, warranties or agreements
regarding such holder, such holder's Registrable Securities and such holder's
intended method of distribution and any other representation required by law.

          (b)  Incidental Underwritten Offerings.  If the Company at any time
               ---------------------------------
proposes to register any of its securities under the Securities Act as
contemplated by Section 2.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any holder
of Registrable Securities as provided in Section 2.2 and subject to the
provisions of Section 2.2(b), arrange for such underwriters to include all the
Registrable Securities

                                       8
<PAGE>

to be offered and sold by such holder among the securities to be distributed by
such underwriters. The holders of Registrable Securities to be distributed by
such underwriters shall be parties to the underwriting agreement between the
Company and such underwriters and may, at their option, require that any or all
of the representations and warranties by, and the other agreements on the part
of, the Company to and for the benefit of such underwriters shall also be made
to and for the benefit of such holders of Registrable Securities and that any or
all of the conditions precedent to the obligations of such underwriters under
such underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities. Any such holder of Registrable Securities
shall not be required to made any representations or warranties to or agreements
with the Company or the underwriters other than representations, warranties or
agreements regarding such holder, such holder's Registrable Securities and such
holder's intended method of distribution and any other representation required
by law.

          2.5. Preparation; Reasonable Investigation.  In connection with the
               -------------------------------------
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement, and their  counsel and
accountants, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
of them such access to its books and records and such opportunities to discuss
the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be necessary,
in the opinion of such holders' counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.

          2.6. Additional Rights of Owners.  If any registration statement
               ---------------------------
prepared under this Agreement refers to Owner by name or otherwise as the holder
of any securities of the Company, then Owner shall have the right to require (x)
the insertion therein of language, in form and substance satisfactory to Owner,
to the effect that the holding by Owner of such securities does not necessarily
make Owner a "controlling person" of the Company within the meaning of the
Securities Act and is not to be construed as a recommendation by Owner of the
investment quality of the Company's debt or equity securities covered thereby
and that such holding does not imply that Owner will assist in meeting any
future financial requirements of the Company, or (y) in the event that such
reference to Owner by name or otherwise is not required by the Securities Act or
any rules and regulations promulgated thereunder, the deletion of the reference
to Owner.

          2.7. Indemnification.
               ---------------

          (a)  Indemnification by the Company.  In the event of any registration
               ------------------------------
of any securities of the Company under the Securities Act, the Company will, and
hereby does, in the case of any registration statement filed pursuant to Section
2.1 or 2.2, indemnify and hold harmless the seller of any Registrable Securities
covered by such registration statement, its directors and officers, each other
Person who participates in the offering or sale of such securities and each
other Person, if any, who controls such seller within the meaning of the
Securities Act against any losses, claims,

                                       9
<PAGE>

damages or liabilities, joint or several, to which such seller or any such
director or officer or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Company will
reimburse such seller and each such director, officer, and controlling person
for any legal or any other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, liability, action or
proceeding; provided that the Company shall not be liable in any such case to
            --------
the extent that any such loss, claim, damage, liability (or action or proceeding
in respect thereof) or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the Company through an instrument duly
executed by such seller specifically stating that it is for use in the
preparation thereof and, provided further that the Company shall not be liable
                         --------
to any Person who participates as an underwriter, in the offering or sale of
Registrable Securities or any other Person, if any, who controls such
underwriter within the meaning of the Securities Act, in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of such Person's failure to send or give
a copy of the final prospectus, as the same may be then supplemented or amended,
to the Person asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written confirmation of the sale
of Registrable Securities to such Person if such statement or omission was
corrected in such final prospectus. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of such seller
or any such director, officer, underwriter or controlling person and shall
survive the transfer of such securities by such seller.

          (b)  Indemnification by the Sellers.  The Company may require, as a
               ------------------------------
condition to including any Registrable Securities in any registration statement
filed pursuant to Section 2.3, that the Company shall have received an
undertaking satisfactory to it from the prospective seller of such securities,
to indemnify and hold harmless (in the same manner and to the same extent as set
forth in subdivision (a) of this Section 2.7) the Company, each director of the
Company, each officer of the Company and each other Person, if any, who controls
the Company within the meaning of the Securities Act, with respect to any
statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such seller specifically stating
that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement.  Such indemnity shall remain in full force and effect, regardless of
any investigation made by or on behalf of the Company

                                       10
<PAGE>

or any such director, officer or controlling Person and shall survive the
transfer of such securities by such seller.

          (c)  Notices of Claims, etc.  Promptly after receipt by an indemnified
               ----------------------
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this Section 2.7, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action, provided that the failure of any indemnified party to give notice
             --------
as provided herein shall not relieve the indemnifying party of its obligations
under the preceding subdivisions of this Section 2.7, except to the extent that
the indemnifying party is actually prejudiced by such failure to give notice.
In case any such action is brought against an indemnified party, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation.  No indemnifying
party shall, without the consent of the indemnified party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.

          (d)  Other Indemnification.  Indemnification similar to that specified
               ---------------------
in the preceding subdivisions of this Section 2.7 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other qualification of
securities under any Federal or state law or regulation of any governmental
authority other than the Securities Act.

          (e)  Indemnification Payments.  The indemnification required by this
               ------------------------
Section 2.7 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.

          2.8. Adjustments Affecting Registrable Securities.  The Company will
               --------------------------------------------
not effect or permit to occur any combination or subdivision of Registrable
Securities which would adversely affect the ability of the holders of
Registrable Securities to include such Registrable Securities in any
registration of its securities contemplated by this Section 2, or the
marketability of such Registrable Securities under any such registration.

                                       11
<PAGE>

          3.   Definitions.  As used herein, unless the context otherwise
               -----------
requires, the following terms have the following respective meanings:

          Commission:  The Securities and Exchange Commission or any other
          ----------
          Federal agency at the time administering the Securities Act.

          Company:  As defined in the introductory paragraph of this Agreement.
          -------
          For purposes of this Agreement, all references to the Company shall be
          deemed to include any successor entity or transferee.

          Exchange Act:  The Securities Exchange Act of 1934, or any similar
          ------------
          Federal statute, and the rules and regulations of the Commission
          thereunder, all as the same shall be in effect at the time.  Reference
          to a particular section of the Securities Exchange Act of 1934 shall
          include a reference to the comparable section, if any, of any such
          similar Federal statute.

          Majority Holders:  At any time, the holder or holders of more than 50%
          ----------------
          (by number of shares) of all Registrable Securities then outstanding.

          Person:  A corporation, an association, a partnership, a business, an
          ------
          individual, a governmental or political subdivision thereof or a
          governmental agency.

          Registrable Securities:  any Company Common Stock owned by Owner that
          ----------------------
          Owner has acquired from the Company in the Merger or pursuant to
          exercise of stock options and rights under benefit plans or otherwise,
          and any securities issued or issuable with respect to any such Company
          Common Stock by way of distribution or in connection with any
          reorganization, recapitalization, merger, consolidation or otherwise.
          As to any particular Registrable Securities, once issued such
          securities shall cease to be Registrable Securities when (a) a
          registration statement with respect to the sale of such securities
          shall have become effective under the Securities Act and such
          securities shall have been disposed of in accordance with such
          registration statement, (b) they shall have been distributed to the
          public pursuant to Rule 144 or Rule 144A (or any successor provision)
          under the Securities Act, (c) they shall have been otherwise
          transferred, new certificates for them not bearing a legend
          restricting further transfer shall have been delivered by the Company
          and subsequent disposition of them shall not require registration or
          qualification of them under the Securities Act or any similar state
          law then in force, or (d) they shall have ceased to be outstanding.

          Registration Expenses:  All expenses incident to the Company's
          ---------------------
          performance of or compliance with Section 2.1, including, without
          limitation, all registration, filing and National Association of
          Securities Dealers fees, all fees and expenses of complying with
          securities or blue sky laws, all word processing, duplicating and
          printing expenses, messenger and delivery expenses, the fees and
          disbursements of counsel

                                       12
<PAGE>

          for the Company and of its independent public accountants, including
          the expenses of any special audits or "cold comfort" letters required
          by or incident to such performance and compliance, the fees and
          disbursements incurred by the holders of Registrable Securities to be
          registered (including the fees and disbursements of not more than one
          special counsel to the holders of such Registrable Securities),
          premiums and other costs of policies of insurance against liabilities
          arising out of the public offering of the Registrable Securities being
          registered and any fees and disbursements of underwriters customarily
          paid by issuers or sellers of securities, but excluding Selling
          Expenses, if any, provided that, in any case where Registration
          Expenses are not to be borne by the Company, such expenses shall not
          include salaries of Company personnel or general overhead expenses of
          the Company, auditing fees, premiums or other expenses relating to
          liability insurance required by underwriters of the Company or other
          expenses for the preparation of financial statements or other data
          normally prepared by the Company in the ordinary course of its
          business or which the Company would have incurred in any event.

          Requisite Holders:  With respect to any registration of Registrable
          -----------------
          Securities pursuant to Section 2.1, any holder or holders of more than
          50% (by number of shares) of the Registrable Securities to be so
          registered.

          Securities Act:  The Securities Act of 1933, or any similar Federal
          --------------
          statute, and the rules and regulations of the Commission thereunder,
          all as of the same shall be in effect at the time.  References to a
          particular section of the Securities Act of 1933 shall include a
          reference to the comparable section, if any, of any such similar
          Federal Statute.

          Selling Expenses: underwriting discounts and commissions and stock
          ----------------
          transfer taxes relating to securities registered by the Company.

          4.   Rule 144 and Rule 144A:  If the Company shall have filed a
               ----------------------
registration statement pursuant to the requirements of Section 12 of the
Exchange Act or a registration statement pursuant to the requirements of the
Securities Act, the Company will file the reports required to be filed by it
under the Securities Act and the Exchange Act and the rules and regulations
adopted by the Commission thereunder (or, if the Company is not required to file
such reports, will, upon the request of any holder of Registrable Securities,
make publicly available other information) and will take such further action as
any holder of Registrable Securities may reasonably request, all to the extent
required from time to time to enable such holder to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may
be amended from time to time or (b) any similar rule or regulation hereafter
adopted by the Commission.  Upon the request of any holder of Registrable
Securities, the Company will deliver to such holder a written statement as to
whether it has complied with such requirements.  After any sale of Registrable
Securities pursuant to this Section 4, the Company will, to the extent allowed
by law, cause any restrictive legends to be removed and any

                                       13
<PAGE>

transfer restrictions to be rescinded with respect to such Registrable
Securities. In order to permit the holders of Registrable Securities to sell the
same, if they so desire, pursuant to Rule 144A promulgated by the Commission (or
any successor to such rule), the Company will comply with all rules and
regulations of the Commission applicable in connection with use of Rule 144A (or
any successor thereto). Prospective transferees of Registrable Securities that
are Qualified Institutional Buyers (as defined in Rule 144A) which would be
purchasing such Registrable Securities in reliance upon Rule 144A may request
from the Company information regarding the business, operations and assets of
the Company. Within five business days of any such request, the Company shall
deliver to any such prospective transferee copies of annual audited and
quarterly unaudited financial statements of the Company and such other
information as may be required to be supplied by the Company for it to comply
with Rule 144A.

          5.   Amendments and Waivers.  This Agreement may be amended and the
               ----------------------
Company may take any action herein prohibited or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the Majority
Holders; provided, however, that no amendment to this Agreement that would
adversely affect the rights of a party hereto may be made without the prior
written consent of such party, with the exception that temporary waivers and
suspensions of the rights of all of the Owners pursuant to customary terms at
the request of the managing underwriter in connection with any underwritten
offering of the Company's securities, may be authorized by consent of the
Majority Holders.  Each holder of any Registrable Securities at the time or
thereafter outstanding shall be bound by any consent authorized by this Section
5, whether or not such Registrable Securities shall have been marked to indicate
such consent.

          6.   Nominees for Beneficial Owners.  In the event that any
               ------------------------------
Registrable Securities are held by a nominee for the beneficial owner thereof,
the beneficial owner thereof may, at its election, be treated as the holder of
such Registrable Securities for purposes of any request or other action by any
holder or holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of shares of Registrable Securities
held by any holder or holders of Registrable Securities contemplated by this
Agreement.  If the beneficial owner of any Registrable Securities so elects, the
Company may require assurances reasonably satisfactory to it of such owner's
beneficial ownership of such Registrable Securities.

          7.   Notices.  All communications provided for hereunder shall be sent
               -------
by first-class mail and (a) if addressed to a party other than the Company,
addressed to such party at the address set forth opposite such parties name on
the execution page hereof, or (b) if addressed to the Company, at 500 West
Texas, Suite 500, Midland, Texas 79701 or at such other address, or to the
attention of such other officer, as the Company shall have furnished to each
holder of Registrable Securities at the time outstanding; provided, however,
                                                                    -------
that any such communication to the Company may also, at the option of any of the
parties hereunder, be either delivered to the Company at its address set forth
above or to any officer of the Company.

                                       14
<PAGE>

          8.   Assignment.  Subject to the following sentence, this Agreement
               ----------
shall be binding upon and inure to the benefit of and be enforceable by the
parties hereto and their respective successors and assigns.  In addition, and
whether or not any express assignment shall have been made, the provisions of
this Agreement which are for the benefit of the parties hereto other than the
Company shall also be for the benefit of and enforceable by (subject to the
provisions respecting the minimum numbers or percentages of shares of
Registrable Securities required in order to be entitled to certain rights, or
take certain actions, contained herein) any subsequent holder of any Registrable
Securities, and only such a subsequent holder, who owns at least 1,000,000
shares of Common Stock that are Registrable Securities (adjusted for any
increase or decrease in the number of issued shares of Common Stock from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the common stock, or  any other increase or decrease in the number of issued
shares of Common Stock effected without consideration by the Company) and who is
(a) a direct assign or successor of Owner or (b) the direct assign or successor
of (i) a member of Owner's immediate family, (ii) Owner's estate, (iii) a trust
or private foundation created by Owner, (iv) a partnership or limited liability
company, of which a substantial part of the equity is owned by members of
Owner's family or trusts for the benefit of his family, or (v) is otherwise an
affiliate of Owner.

          9.   Termination.  This Agreement shall terminate when no Registrable
               -----------
Securities remain outstanding.

          10.  Descriptive Headings.  The descriptive headings of the several
               --------------------
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.

          11.  Specific Performance.  The parties hereto recognize and agree
               --------------------
that money damages may be insufficient to compensate the holders of any
Registrable Securities for breaches by the Company of the terms hereof and,
consequently, that the equitable remedy of specific performance of the terms
hereof will be available in the event of any such breach.

          12.  Governing Law.  This Agreement shall be construed and enforced in
               -------------
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Texas.

          13.  Counterparts.  This Agreement may be executed simultaneously in
               ------------
any number of counterparts, each of which shall be deemed an original, but all
such counterparts shall together constitute one and the same instrument.

<PAGE>

          IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.

                                    COMPANY:

                                    PURE RESOURCES, INC.

                                                  By: /s/ Phillip Ballard
                                                      ------------------------
                                                  Name:  Phillip Ballard
                                                  Title: Vice President

                                                  OWNER:

Address: 500 West Texas, Suite 200                /s/ Jack Hightower
         --------------------------               ----------------------------
         Midland, Texas 79701                     JACK HIGHTOWER
         --------------------------

                                      16

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