-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A7UWo1TC7j05IWEoYj15BUnxQEZTg+g+oWBF2n64PJIpC0e0Hsssa0tJf43fJomI ZwyA9yS6kt0n79rzZEM39w== 0000930661-02-001039.txt : 20020415 0000930661-02-001039.hdr.sgml : 20020415 ACCESSION NUMBER: 0000930661-02-001039 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20020402 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MAGNUM HUNTER RESOURCES INC CENTRAL INDEX KEY: 0000854271 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 870462881 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-50607 FILM NUMBER: 02599428 BUSINESS ADDRESS: STREET 1: 600 E LAS COLINAS BLVD STREET 2: STE 1200 CITY: IVRVING STATE: TX ZIP: 75039 BUSINESS PHONE: 9724010752 MAIL ADDRESS: STREET 1: 42 600 COOK ST STREET 2: 600 EAST LAS COLINAS BLVD STE 1200 CITY: IRVING STATE: TX ZIP: 75039 FORMER COMPANY: FORMER CONFORMED NAME: MASTER VENTURES INC /NV/ DATE OF NAME CHANGE: 19901022 FORMER COMPANY: FORMER CONFORMED NAME: MAGNUM PETROLEUM INC /NV/ DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: ONEOK INC /NEW/ CENTRAL INDEX KEY: 0001039684 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION & DISTRIBUTION [4923] IRS NUMBER: 731520922 STATE OF INCORPORATION: OK FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 100 WEST 5TH ST CITY: TULSA STATE: OK ZIP: 74103 BUSINESS PHONE: 9185887000 MAIL ADDRESS: STREET 1: 100 WEST 5TH ST CITY: TULSA STATE: OK ZIP: 74103 FORMER COMPANY: FORMER CONFORMED NAME: WAI INC DATE OF NAME CHANGE: 19970519 SC 13D 1 dsc13d.txt SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. )* ----- MAGNUM HUNTER RESOURCES, INC. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock - -------------------------------------------------------------------------------- (Title of Class of Securities) 55972F20-3 - -------------------------------------------------------------------------------- (CUSIP Number) Jim Kneale, Senior Vice President, ONEOK Texas Resources, Inc. 612 North Polk, Amarillo, TX 79107, 918.588.7800 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) February 3, 1999 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the aquisition that is the subject of this Schedule 13D, and is filing this schedule because of Section 240.13d-1(e), 240.13d-1(f)or 240.13d-1(g), check the following box [ ]. Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. Section 240.13d-7(b) for other parties to whom copies are to be sent. "The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D - ---------------------- ----------------------------- CUSIP No. 55972F20-3 Page of Pages ------- ------- - ---------------------- -----------------------------
- ------------------------------------------------------------------------------------------------------------ 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) ONEOK Texas Resources, Inc. EIN: 75-2968703 - ------------------------------------------------------------------------------------------------------------ 2 CHECK THE APPROPRIATE BOX IF A MEMEMBER OF A GROUP (a) [ ] (b) [ ] - ------------------------------------------------------------------------------------------------------------ 3 SEC USE ONLY - ------------------------------------------------------------------------------------------------------------ 4 SOURCE OF FUNDS (See Instructions) WC - ------------------------------------------------------------------------------------------------------------ 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) ------------- - ------------------------------------------------------------------------------------------------------------ 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE - ------------------------------------------------------------------------------------------------------------ 7 SOLE VOTING POWER 9,598,804/13.4%* --------------------------------------------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 0 OWNED BY --------------------------------------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 9,598,804/13.4%* WITH --------------------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - ------------------------------------------------------------------------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 9,598,804* - ------------------------------------------------------------------------------------------------------------ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES SHARES (See Instructions) ------------- - ------------------------------------------------------------------------------------------------------------ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.4% - ------------------------------------------------------------------------------------------------------------ 14 TYPE OF REPORTING PERSON (See Instructions) CO - ------------------------------------------------------------------------------------------------------------
* Some of the shares are subject to restrictions on voting and sale as described in Item 5(b) hereof. Beneficial ownership is allocated as described in Item 5(a) hereof. Item 1. Security and Issuer. On February 3, 1999, ONEOK Resources Company, a Delaware corporation ("Resources"), a wholly-owned subsidiary of ONEOK, Inc. ("ONEOK"), acquired 50,000 shares of 1999 Series A 8% Convertible Preferred Stock (the "Preferred Stock") of Magnum Hunter Resources, Inc. ("Magnum Hunter"). The address of Magnum Hunter's principal executive offices is 600 East Las Colinas Boulevard, Suite 1100, Irving, TX 75039. The Preferred Stock was convertible into common stock of Magnum Hunter ("Common Stock") which, at that time, if fully converted, would have represented approximately 32% of the outstanding Common Stock of Magnum Hunter on a fully-diluted basis. The Preferred Stock had a liquidation value of $50 million. Dividends on the Preferred Stock were payable at the rate of 8% per year and were cumulative. Additional terms and conditions relating to the Preferred Stock were set forth in the Certificate of Designations 1999 Series A 8% Convertible Preferred Stock (par value $0.001 per share) filed January 29, 1999 with the Secretary of State of Nevada. As part of the Preferred Stock transaction, ONEOK acquired the right to nominate two members of the Board of Directors of Magnum Hunter. ONEOK filed a Form 8-K on December 16, 1998 announcing the proposed transaction. Magnum Hunter filed a Form 8-K on December 14, 1998 announcing the proposed transaction and filed another Form 8-K on February 11, 1999 announcing the closing of the transaction. Magnum Hunter and Resources each filed a Notification and Report Form for Certain Acquisitions and Mergers as required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended for this transaction. On January 13, 1999, the Federal Trade Commission provided written notice of early termination of the waiting period provided by Section 7A(b)(1) of the Clayton Act. The beneficial ownership of Resources in Magnum Hunter was also disclosed in Magnum Hunter's periodic reports on its Forms 10-K and in its Proxy Statements for each of the fiscal years ended December 31, 1999, December 31, 2000 and December 31, 2001. In a later unrelated transaction, pursuant to an S-3 Registration Statement filed May 24, 1999, as amended by Amendment No. 1 to that Registration Statement filed by Magnum Hunter July 13, 1999 (collectively, the "Registration Statement"), Magnum Hunter issued to all holders of its securities, for no additional consideration, a total of 10,512,149 warrants to purchase Magnum Hunter's Common Stock at $6.50 per share. The warrants were subject to the terms and conditions of a Warrant Agreement dated June 21, 1999, a copy of which was attached to the Registration Statement. As a result of the warrant offering covered by the Registration Statement, Resources received warrants granting it the right to purchase 3,174,600 shares of Magnum Hunter's Common Stock at $6.50 per share. The Registration Statement stated that Magnum Hunter issued the warrants because it believed that its Common Stock may be undervalued and it desired to reward its stockholders who maintained their ownership, and to allow the company to receive additional capital upon exercise of the warrants. By letter dated October 12, 2000, Resources notified Magnum Hunter of its intent to exercise all of the warrants held by Resources at an exercise price of $6.50 per share for a total cash consideration of $20,634,900. The exercise occurred on or about October 16, 2000. Resources received 3,174,600 shares of Magnum Hunter Common Stock as a result of the exercise of those warrants. Thus, at that time, Resources held 3,174,600 shares of Magnum Hunter Common Stock and 50,000 shares of Magnum Hunter Preferred Stock. On or about November 30, 2000, Magnum Hunter redeemed for cash 25,000 shares of the Preferred Stock held by Resources. In January of 2001, Resources converted its remaining 25,000 shares of Preferred Stock into Magnum Hunter Common Stock by surrendering the Preferred Stock certificates to Magnum Hunter with written notice of its desire to convert. No additional consideration was paid by Resources to effect such conversion. Resources received 4,761,904 shares of Magnum Hunter Common Stock as a result of such conversion, which caused Resources to then hold a total of 7,936,504 shares of Magnum Hunter Common Stock. In December of 2001, Resources transferred all of the Common Stock it held in Magnum Hunter (7,936,504 shares) to ONEOK Texas Resources, Inc, a Delaware corporation ("ONEOK Texas Resources"), a wholly-owned subsidiary of Resources. In a later unrelated transaction, pursuant to an S-3 Registration Statement filed February 12, 2002, as amended by Amendment No. 1 to that Registration Statement filed March 20, 2002, Magnum Hunter issued to all of its common stockholders, at no charge, one warrant for every five shares of Magnum Hunter common stock owned on January 10, 2002. Each warrant entitles the holder to purchase from Magnum Hunter one share of its common stock for $15.00. Each warrant will expire on March 21, 2005. As a result of that warrant offering, ONEOK Texas Resources received warrants granting it the right to purchase 1,587,300 shares of Magnum Hunter common stock at $15.00 per share. Item 2. Identity and Background The person filing this statement, ONEOK Texas Resources, is a corporation organized under the laws of the state of Delaware. Its principal offices and principal place of business are located at 612 North Polk, Amarillo, Texas 79107. The principal business of ONEOK Texas Resources is holding investments of Resources, including the Common Stock of Magnum Hunter. All of the stock of ONEOK Texas Resources is owned by Resources. Resources is a corporation organized under the laws of the state of Delaware with its principal offices and principal place of business at 100 West 5th Street, Tulsa, OK, 74103. The principal business of Resources is the exploration and production of oil and natural gas. All of the stock of Resources is owned by ONEOK, a corporation organized under the laws of the state of Oklahoma with its principal offices and principal place of business at 100 West 5th Street, Tulsa, OK, 74103. ONEOK engages in several aspects of the energy business, some of which is conducted through its subsidiaries. The company purchases, gathers, processes, transports, stores and distributes natural gas, drills for and produces oil and gas, and extracts, sells and markets natural gas liquids. It also engages in gas marketing and trading, owns and operates an electric generating plant and engages in the wholesale marketing of electricity. The name, business address and present principal occupation or employment of each officer and director of each of ONEOK Texas Resources, Resources and ONEOK are set forth in Exhibit 1 hereto and incorporated herein by reference. --------- During the last five years, none of ONEOK Texas Resources, Resources or ONEOK or, to the best of ONEOK Texas Resources' knowledge, any of their officers or directors, have been convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors). During the last five years, none of ONEOK Texas Resources, Resources or ONEOK or, to the best of ONEOK Texas Resources' knowledge, any of their officers or directors, have been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Each officer and director of each of ONEOK Texas Resources, Resources and ONEOK is a citizen of the United States. Item 3. Source and Amount of Funds or Other Considerations As further described in Item 1 above, Resources originally purchased the Preferred Stock on February 3, 1999 for $50 million in cash. The source of the funds for the purchase was working capital of Resources arising from funds advanced or contributed by ONEOK, Inc. arising from a combination of operating cash flow from ONEOK, Inc. and its subsidiaries and borrowings from a combination of commercial paper issuances, lines of credit and various public debt issuances. As further described in Item 1 above, in 1999 Resources received warrants to purchase additional Magnum Hunter Common Stock under the Registration Statement without payment of any additional consideration. Resources exercised those warrants to purchase Common Stock at an exercise price of $6.50 per share for total cash consideration of $20,634,900. Resources received 3,174,600 shares of Magnum Hunter Common Stock as a result of that transaction. The source of the funds for that transaction was working capital of Resources arising from funds advanced or contributed by ONEOK, Inc. arising from a combination of operating cash flow from ONEOK, Inc. and its subsidiaries and borrowings from a combination of commercial paper issuances, lines of credit and various public debt issuances. As further described in Item 1 above, on or about November 30, 2000, Magnum Hunter redeemed 25,000 shares of the Preferred Stock held Resources for cash. In January of 2001, Resources converted the remaining 25,000 shares of Preferred Stock it held into Common Stock of Magnum Hunter without payment of any additional consideration. All of the Magnum Hunter Common Stock held by Resources was transferred to ONEOK Texas Resources, its wholly-owned subsidiary, in December of 2001 as a capital contribution. As further described in Item 1 above, ONEOK Texas Resources received warrants from Magnum Hunter in 2002 without payment of any additional consideration. Item 4. Purpose of Transaction As described in ONEOK's Form 8-K filed December 16, 1998, and in Magnum Hunter's Form 8-K filed February 3, 1999, Resources purchased the Preferred Stock in February of 1999 as part of a strategic alliance designed to maximize natural gas production and development opportunities for both companies, to allow ONEOK to market certain of Magnum Hunter's natural gas production in the state of Oklahoma and to allow ONEOK to participate in future acquisitions of Magnum Hunter in the state of Oklahoma. Magnum Hunter stated in its Form 8-K filed February 3, 1999 that it intended to use the net proceeds from the sale of the Preferred Stock to repay senior bank indebtedness, to provide working capital for general corporate purposes and to finance acquisitions, as determined by Magnum Hunter's board of directors. The Registration Statement filed by Magnum Hunter provides that Magnum Hunter issued the warrants because it believed that its Common Stock may have been undervalued and it desired to reward its then-current stockholders who had maintained their ownership, and to allow the company to receive additional capital upon exercise of the warrants. The purpose of exercise of the warrants by Resources was to increase Resources' equity ownership in Magnum Hunter. Pursuant to a Form 8-K filed December 17, 2001, Magnum Hunter announced that on December 17, 2001, it and Prize Energy Corp. ("Prize Energy") entered into an Agreement and Plan of Merger (the "Merger Agreement") whereby Prize Energy would be merged with and into Pintail Energy, Inc., a wholly owned subsidiary of Magnum Hunter. Magnum Hunter recently announced the completion of the merger on March 15, 2002. As a result of the merger, Prize shareholders now own approximately 49% of the combined company and Magnum Hunter shareholders own approximately 51%. The merger decreased the percentage of beneficial ownership of ONEOK Texas Resources in Magnum Hunter to the percentage set forth on the cover page hereof. None of ONEOK Texas Resources, ONEOK or Resources has any current plans or proposals which relate to or would result in the actions or matters described in Item 4 of Schedule 13D. Item 5. Interests in Securities of the Issuer (a) The aggregate number of shares beneficially owned by the reporting person, including the persons described in Item 2, is 9,598,804 shares of Common Stock, representing in the aggregate approximately 13.4% of the outstanding Common Stock of Magnum Hunter. Of that total amount, ONEOK Texas Resources beneficially owns 9,523,804 shares of Common Stock (approximately 13.3%), David Kyle, an executive officer of ONEOK Texas Resources, beneficially owns 64,800 shares (less than 0.1%), and Jim Kneale, an executive officer of ONEOK Texas Resources, beneficially owns 10,200 shares (less than 0.1%). These beneficial ownership amounts include the right of ONEOK Texas Resources to acquire Common Stock within 60 days through the exercise of the warrants acquired in 2002 as described in Item 1 hereof and the right of the individuals named above to acquire Common Stock within 60 days through the exercise of stock options. (b) Each of the parties described above has the sole right to vote and the sole right to dispose of all of the Common Stock described in Item 5(a) above, subject to the restrictions on voting and sale set forth in that certain Shareholder and Voting Agreement dated as of February 3, 1999, originally entered into between Magnum Hunter and Resources, a copy of which is attached hereto as Exhibit 3, except that the warrants and options to acquire shares of --------- Magnum Hunter Common Stock held by ONEOK Texas Resources and the executive officers described above do not include the right to vote or dispose of shares of Common Stock unless and until such options or warrants are exercised and the underlying Common Stock is issued. (c) No transactions with respect to the Magnum Hunter Common Stock were effected in the prior 60 days by ONEOK Texas Resources, ONEOK or Resources or, to the best of ONEOK Texas Resources' knowledge, by any of their officers or directors, except the assignment of Common Stock of Magnum Hunter from Resources to ONEOK Texas Resources as described in Item 1 above. (d) Except as disclosed in this statement, no other person is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds of the sale of, the securities of Magnum Hunter held by ONEOK Texas Resources. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer (a) Shareholder and Voting Agreement. -------------------------------- Resources and ONEOK, Inc. (collectively for purposes of this Item 6(a), "ONEOK") entered into a Shareholder and Voting Agreement dated February 3, 1999 (the "Shareholder Agreement"), a copy of which is attached hereto as Exhibit 3 --------- relating to the Preferred Stock and common stock into which the Preferred Stock was convertible (such common stock for purposes of this Item 6(a) is referred to as the "Common Stock"). The Shareholder Agreement grants ONEOK the right to nominate two members to Magnum Hunter's Board of Directors (or at least 20% of the total members of the Board) so long as ONEOK, Inc. and its affiliates own Common Stock and Preferred Stock that aggregate to at least 20% of the outstanding Common Stock of Magnum Hunter on a fully diluted basis. The Shareholder Agreement provides that ONEOK will (i) vote up to one-third of the aggregate voting power of its Common Stock in its sole discretion, and (ii) vote the remainder of its Common Stock in the same proportions as all other shares of Magnum Hunter voting stock are voted. However, ONEOK may vote its Common Stock in it sole discretion with respect to (i) a third party change of control with respect to Magnum Hunter, (ii) any amendment to Magnum Hunter's articles of incorporation and (iii) any vote required by the exchange on which Magnum Hunter's equity securities are listed. The Shareholder Agreement provides that ONEOK will not purchase any shares of common stock of Magnum Hunter or other securities other than the Preferred Stock, except as otherwise provided in the Agreement. The Agreement grants ONEOK anti- dilution rights to purchase its pro rata share of any equity securities that Magnum Hunter proposes to issue in a registered underwritten public offering, with certain exclusions. ONEOK also has certain other rights to maintain its proportionate ownership in Magnum Hunter. The Shareholder Agreement provides that if ONEOK's ownership of Common Stock increases above 40%, then certain actions will occur which will cause ONEOK's holdings to be reduced below the 40% level. The Shareholder Agreement further provides that ONEOK will not directly or indirectly sell any shares of Preferred Stock during the one year period beginning February 3, 1999. If at any time after that one-year period ONEOK, Inc. or its affiliates desire to sell any Common Stock then, to the extent such amount of shares exceeds 10% of the then-outstanding Common Stock of Magnum Hunter on a fully-diluted basis, Magnum Hunter has a right of first purchase to acquire such excess amount of shares. ONEOK also agreed not to directly or indirectly sell any shares of Preferred Stock to a prospective transferee which together with any affiliates would become a beneficial or record owner of more than 10% of the outstanding stock of Magnum Hunter on a fully diluted basis. (b) Registration Rights Agreement. ----------------------------- Pursuant to a Registration Rights Agreement dated as of February 3, 1999 (the "Registration Rights Agreement"), between Magnum Hunter and Resources, a copy of which is attached hereto as Exhibit 4, Magnum Hunter agreed to grant to --------- Resources certain demand and piggyback registration rights relating to the registration from time to time of Magnum Hunter Common Stock obtained by Resources through the conversion of the Preferred Stock, subject to certain restrictions and conditions. On March 27, 2002, Magnum Hunter filed an Amendment No. 2 to its Form S-3 Registration Statement to register, in addition to shares held by other holders, 4,761,904 shares of Magnum Hunter Common Stock held by ONEOK Texas Resources as a result of conversion of the Preferred Stock described in Item 1 above. Item 7. Material to be Filed as Exhibits Exhibit 1 - Identity of Officers and Directors of ONEOK Texas Resources, Inc., ONEOK Resources Company and ONEOK, Inc. Exhibit 2 - Certificate of Designations of Magnum Hunter's 1999 Series A 8% Convertible Preferred Stock filed January 29, 1999 with the Secretary of State of Nevada Exhibit 3 - Shareholder and Voting Agreement dated February 3, 1999 between the Issuer, ONEOK, Inc. and Resources Exhibit 4 - Registration Rights Agreement dated February 3, 1999 between the Issuer and Resources Signature After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. ONEOK Texas Resources, Inc. By: /s/ Jim Kneale ----------------------------------------------- Jim Kneale, Senior Vice-President, Treasurer, Chief Financial Officer and Corporate Secretary Dated: April 2, 2002. EX-1 3 dex1.txt IDENTITY OF OFFICERS EXHIBIT 1 IDENTITY OF EXECUTIVE OFFICERS AND DIRECTORS 1. ONEOK Texas Resources, Inc. (Reporting Person)
Name Positions Address - ---- --------- ------- David Kyle Director, Chairman of the Board, 612 North Polk President & Chief Executive Officer Amarillo, TX 79107 James C. Kneale Director, Senior Vice President, 612 North Polk Treasurer, Chief Financial Officer Amarillo, TX 79107 & Corporate Secretary
2. ONEOK Resources Company Name Positions Address - ---- --------- ------- David L. Kyle Chairman of the Board and Chief 100 W. 5th St. Executive Officer & Director Tulsa, OK 74103 J.D. Holbird President & Director 100 W. 5th St. Tulsa, OK 74103 John A. Gaberino, Jr. Senior Vice President, General 100 W. 5th St. Counsel, Chief Legal Officer & Tulsa, OK 74103 Corporate Secretary James C. Kneale Senior Vice President, Treasurer, & 100 W. 5th St. Chief Financial Officer Tulsa, OK 74103 Edmund J. Farrell Senior Vice President - Administration 100 W. 5th St. Tulsa, OK 74103 Beverly C. Monnet Vice President, Controller, & Chief 100 W. 5th St. Accounting Officer Tulsa, OK 74103 Kenneth D. Lovell Vice President - Acquisitions & 100 W. 5th St. Exploration Tulsa, OK 74103 William Clark Vice President - Engineering & 100 W. 5th St. Southmayd Operations Tulsa, OK 74103 George W. Drake Vice President - Marketing 100 W. 5th St. Tulsa, OK 74103 3. ONEOK, Inc.
Name Positions Address - ---- --------- ------- David L. Kyle Director, Chairman of the Board, 100 W. 5th St. President & Chief Executive Officer Tulsa, OK 74103-4298 John A. Gaberino, Jr. Senior Vice President, General Counsel, Chief 100 W. 5th St. Legal Officer & Corporate Secretary Tulsa, OK 74103-4298 James C. Kneale Senior Vice President, Treasurer, and Chief 100 W. 5th St. Financial Officer Tulsa, OK 74103-4298 Edmund J. Farrell Senior Vice President - Administration 100 W. 5th St. Tulsa, OK 74103-4298 Eugene N. Dubay President - Kansas Gas Service Company 100 W. 5th St. Tulsa, OK 74103-4298 Samuel Combs, III President - Oklahoma Natural Gas Company 100 W. 5th St. Tulsa, OK 74103-4298 John W. Gibson President - Energy 100 W. 5th St. Tulsa, OK 74103-4298 J.D. Holbird President & Director 100 W. 5th St. Tulsa, OK 74103 Christopher R. Skoog President of ONEOK Energy Marketing 100 W. 5th St. And Trading Company Tulsa, OK 74103 Beverly C. Monnet Vice President, Controller, & Chief 100 W. 5th St. Accounting Officer Tulsa, OK 74103-4298
Douglas T. Lake Director 100 W. 5th St. Director, Executive Vice President & Chief Tulsa, OK 74103-4298 Strategic Officer, Western Resources, Inc. Chairman of the Board of Protection One, Inc. and Director of Guardian International, Inc. Topeka, Kansas Douglas Ann Director 100 W. 5th St. Newsom, Ph.D. Professor, Texas Christian Univ., Director, Tulsa, OK 74103-4298 Catholic Charities, Diocese of Ft. Worth Fort Worth, Texas J. C. Scott Director 100 W. 5th St. Tulsa, OK 74103-4298 John B. Dicus Director 100 W. 5th St. President & Chief Operating Officer, Tulsa, OK 74103-4298 Director, Capitol Federal Savings Bank and Capitol Federal Financial Director, Heartland Community Bankers Association, Amerus Annuity Group and, Title Midwest, Inc. and Board Chair for United Way of Greater Topeka, Kansas William M. Bell Director 100 W. 5th St. Vice Chairman - Trust & Investment Tulsa, OK 74103-4298 Management, BancFirst, Oklahoma City, Oklahoma Douglas R. Director 100 W. 5th St. Cummings Chairman of the Board, Cummings Oil Tulsa, OK 74103-4298 Company, Oklahoma City, Oklahoma Edwyna G. Director 100 W. 5th St. Anderson Tulsa, OK 74103-4298 William L. Ford Director 100 W. 5th St. President, Shawnee Milling Company Tulsa, OK 74103-4298 Shawnee, Oklahoma Bert H. Mackie Director 100 W. 5th St. President & Director, Security National Bank, Tulsa, OK 74103-4298 Enid, Oklahoma Gary D. Parker Director 100 W. 5th St. President, Moffitt, Parker & Company, Inc. Tulsa, OK 74103-4298 Director, First Muskogee Financial Corp. Muskogee, Oklahoma Pattye L. Moore Director 100 W. 5th St. President-Sonic Corp. Tulsa, OK 74103-4298
EX-2 4 dex2.txt CERTIFICATE OF DESIGNATIONS Exhibit 2 CERTIFICATE OF DESIGNATIONS 1999 SERIES A 8% CONVERTIBLE PREFERRED STOCK (Par Value $.001 Per Share) of MAGNUM HUNTER RESOURCES, INC. ---------------------------- Pursuant to Section 78.1955 of the Nevada General Corporation Law ---------------------------- We, Gary C. Evans, President and Chief Executive Officer, and Morgan F. Johnston, Vice President and Secretary, of Magnum Hunter Resources, Inc., a corporation organized and existing under the laws of the State of Nevada (the "Corporation"), DO HEREBY CERTIFY that, pursuant to the authority conferred on the Board of Directors of the Corporation by the Articles of Incorporation, as amended, of the Corporation and in accordance with Section 78.1955 of the General Corporation Law of the State of Nevada, the Board of Directors of the Corporation on January , 1999 duly adopted the following preamble and -- resolution establishing and creating a series of 50,000 shares of Preferred Stock, par value $.001 per share, of the Corporation, designated "1999 Series A 8% Convertible Preferred Stock": RESOLVED, that pursuant to the authority vested in the Board of Directors of the Corporation (the "Board of Directors") in accordance with the provisions of its Articles of Incorporation, as amended, a series of Preferred Stock, par value $.001 per share, of the Corporation is hereby created, and that the designation and number of shares thereof and the voting powers, designations, preferences, limitations, restrictions and relative rights thereof are as follows: Section 1. Designation, Number of Shares and Stated Value of 1999 Series A --------------------------------------------------------------- 8% Convertible Preferred Stock. There is hereby authorized and established a - ------------------------------ series of Preferred Stock that shall be designated as "1999 Series A 8% Convertible Preferred Stock" (hereinafter referred to as "Series A 8% Preferred"), and the number of shares constituting such series shall be 50,000. Such number of shares may be increased or decreased, but not to a number less than the number of shares of Series A 8% Preferred then issued and outstanding, by resolution adopted by the full Board of Directors. The "Stated Value" per share of the Series A 8% Preferred shall be equal to One Thousand Dollars ($1,000.00). Section 2. Definitions. In addition to the definitions set forth elsewhere ----------- herein, the following terms shall have the meanings indicated: "Affiliate" shall mean, with respect to any person, any other person that directly or indirectly controls or is controlled by or is under complete control with such person. For the purposes of this definition, "control" when used with respect to any person means the ownership of at least a majority of the issued and outstanding voting securities or capital interests of such person. 1 "Business Day" shall mean any day other than a Saturday, Sunday or a day on which banking institutions in Dallas, Texas are authorized or obligated by law or executive order to close. "Common Stock" shall mean the common stock, par value $0.002 per share, of the Corporation. "Conversion Price" shall mean the conversion price per share of Common Stock into which the Series A 8% Preferred is convertible, as such conversion price may be adjusted pursuant to the provisions hereof. The initial Conversion Price is Five Dollars and Twenty-Five Cents ($5.25). "Junior Securities" means any capital stock of the Corporation issued after the Original Issue Date and any other series of stock issued by the Corporation ranking junior as to the Series A 8% Preferred upon liquidation, dissolution or winding up of the Corporation. "Original Issue Date" shall mean the date on which shares of the Series A 8% Preferred are first issued. "Original Holders" shall mean the person or persons to whom shares of the Series A 8% Preferred are issued on the Original Issue Date and, as long as there is a direct chain of ownership by such persons or persons and their Affiliates, any Affiliate of such person or persons to whom shares of the Series A 8% Preferred are transferred. "Parity Security" means any class or series of stock issued by the Corporation ranking on a parity with the Series A 8% Preferred upon liquidation, dissolution or winding up of the Corporation. "Person" means any individual, corporation, association, partnership, joint venture, limited liability company, trust, estate, or other entity or organization, other than the Corporation, any subsidiary of the Corporation, any employee benefit plan of the Corporation or any subsidiary of the Corporation, or any entity holding shares of Common Stock for or pursuant to the terms of any such plan. "Senior Securities" means the Corporation's 1996 Series A Preferred Stock, 1993 Series A Preferred Stock and any other class or series of stock issued and outstanding as of the Original Issue Date by the Corporation ranking senior to the Series A 8% Preferred upon liquidation, dissolution or winding up of the Corporation. Section 3. Dividends and Distributions. --------------------------- (a) The holders of shares of the Series A 8% Preferred shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available therefor, cumulative cash dividends at an annual rate of eight percent (8%) of the Stated Value (the "Dividend Rate"), or Eighty and 0/100 Dollars ($80) per share per annum. Such dividends on shares of Series A 8% Preferred shall be cumulative from the date such shares are issued, whether or not in any period there shall be funds of the Corporation legally available for the payment of such dividends and whether or not such dividends are declared, and shall be payable quarterly, when, as and if declared by the Board of Directors, on February 28, May 31, August 31 and November 30 in each year (each a "Dividend Payment Date"), commencing August 31, 1999. Except for the dividend payable on August 31, 1999 (which dividend shall cover the period from the Original Issue Date through August 31, 1999, inclusive), the amount of each dividend for any full quarter shall be Twenty and 0/100 Dollars ($20) per share. Such dividends shall accrue whether or not there shall be (at the time such dividend becomes payable or at any other time) profits, surplus or other funds of the Corporation legally available for the payment of dividends. 2 (b) Dividends shall be calculated for the period from the Original Issue Date through August 31, 1999 and for any period that is not a full quarter on the basis of the time elapsed from and including the date immediately following the most recent Dividend Payment Date (or, in the case of the dividend payable on August 31, 1999, from and including the Original Issue Date) to and including the final distribution date relating to conversion or redemption or to a dissolution, liquidation or winding up of the Corporation (or, in the case of the dividend payable on August 31, 1999, to and including August 31, 1999). Dividends payable on the shares of Series A 8% Preferred for the period from the Original Issue Date through August 31, 1999 and for any period that is not a full quarter shall be calculated at the Dividend Rate on the basis of a 365-day or 366-day, as appropriate, year. (c) No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Series A 8% Preferred which are in arrears; provided, however, that in the event dividends on shares of the Series A 8% Preferred have not been paid for two consecutive quarters, interest shall accrue at a rate equal to the Dividend Rate (with interest calculated on the basis of a 365-day or 366-day, as appropriate, year) on each such unpaid dividend payment from and including the second consecutive Dividend Payment Date on which no dividend payment is made to and including the date on which such dividend payment in arrears is paid. (d) Dividends payable on each Dividend Payment Date shall be paid to record holders of the shares of Series A 8% Preferred as they appear on the books of the Corporation at the close of business on the tenth Business Day immediately preceding the respective Dividend Payment Date or on such other record date as may be fixed by the Board of Directors of the Corporation in advance of a Dividend Payment Date, provided that no such record date shall be less than ten nor more than 60 calendar days preceding such Dividend Payment Date. Dividends payable to Original Holders shall be paid by the Corporation by wire transfer in same-day funds to one account to be designated in writing by the Original Holders to the Corporation at least three days prior to any Dividend Payment Date, or by such other means mutually agreed upon by the parties. (e) So long as any shares of Series A 8% Preferred are outstanding, no dividend or other distribution, whether in liquidation or otherwise, shall be declared or paid, or set apart for payment on or in respect of, any Junior Securities, nor shall any Junior Securities be redeemed, purchased or otherwise acquired for any consideration (or any money be paid to a sinking fund or otherwise set apart for the purchase or redemption of any such Junior Securities), unless (i) the full cumulative dividends, if any, accrued on all outstanding shares of the Series A 8% Preferred shall have been paid or set apart for payment for all past dividend periods and (ii) sufficient funds shall have been set apart for the payment of the dividend for the then current dividend period with respect to the Series A 8% Preferred. Section 4. Certain Covenants and Restrictions. ---------------------------------- (a) So long as any shares of Series A 8% Preferred are outstanding; (i) The Corporation shall at all times reserve and keep available for issuance upon the conversion of the shares of Series A 8% Preferred such number of its authorized but unissued shares of Common Stock as will be sufficient to permit the conversion of all outstanding shares of Series A 8% Preferred, and all other securities and instruments convertible into shares of Common Stock, and shall take all reasonable action within its power required to increase the authorized number of shares of Common Stock necessary to permit the conversion of all such shares of Series A 8% Preferred and all other securities and instruments convertible into shares of Common Stock. (ii) The Corporation represents, warrants and agrees that all shares of Common Stock that may be issued upon exercise of the conversion rights of shares of Series A 8% Preferred will, upon issuance, be fully-paid and nonassessable. 3 (iii) The Corporation shall pay all taxes and other governmental charges (other than any income or franchise taxes) that may be imposed with respect to the issue or delivery of shares of Common Stock upon conversion of Series A 8% Preferred as provided herein. The Corporation shall not be required, however, to pay any tax or other charge imposed in connection with any transfer involved in the issue of any certificate for shares of Common Stock in any name other than that of the registered holder of the shares of the Series A 8% Preferred surrendered in connection with the conversion thereof, and in such case the Corporation shall not be required to issue or deliver any stock certificate until such tax or other charge has been paid, or it has been established to the Corporation's reasonable satisfaction that no tax or other charge is due. Section 5. Liquidation Preference. ---------------------- (a) In the event of any liquidation, dissolution or winding up of the Corporation (in connection with the bankruptcy or insolvency of the Corporation or otherwise), whether voluntary or involuntary, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of shares of any Junior Securities, the holders of the shares of Series A 8% Preferred shall be entitled to receive an amount equal to the Stated Value multiplied by the number of shares of Series A 8% Preferred held by them, plus all cumulative dividends (whether or not declared) that are accrued and unpaid thereon. To the extent the available assets are insufficient to fully satisfy such amounts, then the holders of the Series A 8% Preferred shall share ratably in such distribution in the proportion that the number of each holder's Series A 8% Preferred Shares bears to the total number of shares of Series A 8% Preferred outstanding. No further payment on account of any such liquidation, dissolution or winding up of the Corporation shall be paid to the holders of the shares of Series A 8% Preferred or the holders of any Parity Securities unless there shall be paid at the same time to the holders of the shares of Series A 8% Preferred and the holders of any Parity Securities proportionate amounts determined ratably in proportion to the full amounts to which the holders of all outstanding shares of Series A 8% Preferred and the holders of all such outstanding Parity Securities are respectively entitled with respect to such distribution. For purposes of this Section, neither a consolidation or merger of the Corporation with one or more partnerships, corporations or other entities nor a sale, lease, exchange or transfer of all or any substantial part of the Corporation's assets for cash, securities or other property shall be deemed to be a liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary. (b) After the payment of all amounts owing to the holders of stock ranking prior to the Common Stock, the holders of Common Stock shall share ratably in the distribution of the remaining available assets of the Corporation in the proportion that each holder's shares bear to the total number of shares of Common Stock outstanding. (c) Written notice of any liquidation, dissolution or winding up of the Corporation, stating the payment date or dates when and the place or places where the amounts distributable in such circumstances shall be payable, shall be given, not less than 15 days prior to any payment date stated therein, to the holders of record of the shares of Series A 8% Preferred in accordance with Section 12 hereof. Section 6. Optional Redemption by the Corporation. The outstanding shares -------------------------------------- of Series A 8% Preferred are subject to redemption in accordance with the following provisions: (a) Subject to the terms hereof, the Corporation may at its option, so long as it has sufficient funds legally available therefor, elect to redeem, in whole or in part, the outstanding shares of Series A 8% Preferred at any time after the date of issuance of such shares. (b) The redemption price per share for Series A 8% Preferred redeemed on any optional redemption date (the "Redemption Price") shall be determined as follows: 4 (i) at any time within the five-year period immediately following the Original Issue Date at that redemption price per share (the "Initial Redemption Price") equal to the sum of [A] the Stated Value and [B] an amount necessary for the holders of the Series A 8% Preferred to achieve a 20% per annum rate of return on such shares of Series A 8% Preferred from the Original Issue Date through the Redemption Date (as herein defined) inclusive of all dividends paid on such Series A 8% Preferred from the Original Issue Date through the Redemption Date; and (ii) at any time after the third anniversary of the Original Issue Date through the end of the fifth anniversary of the Original Issue Date, as an alternative to the Initial Redemption Price and at the option of the Corporation, at that redemption price per share equal to 125% of the Stated Value plus an amount equal to accrued and unpaid dividends, if any, to the date fixed for redemption, whether or not earned or declared, provided that the Common Stock has traded at a closing price of $7.875 or more for at least 20 trading days of the prior 30 trading days; and (iii) at any time after the fifth anniversary of the Original Issue Date at the following redemption prices per share (expressed as a percentage of the Stated Value) plus an amount equal to accrued and unpaid dividends, if any, to the date fixed for redemption, whether or not earned or declared: Year Price Per Share ---- --------------- Year 6 106.0% Year 7 104.5% Year 8 103.0% Year 9 101.5% Year 10 and thereafter 100.0% The Redemption Price shall be paid in cash from any source of funds legally available therefor. (c) Not less than 30 nor more than 60 days prior to the date fixed for any redemption of any shares of Series A 8% Preferred, a notice specifying the time (the "Redemption Date") and place of such redemption and the number of shares to be redeemed shall be given in accordance with Section 12 hereof to the holders of record of the shares of Series A 8% Preferred to be redeemed at their respective addresses as the same shall appear on the books of the Corporation (but no failure to mail such notice or any defect therein shall affect the validity of the proceedings for redemption except as to the holder to whom the Corporation has failed to mail such notice or except as to the holder whose notice was defective), calling upon each such holder of record to surrender to the Corporation on the Redemption Date at the place designated in such notice such holder's certificate or certificates representing the then outstanding shares of Series A 8% Preferred held by such holder being redeemed by the Corporation. On or after the Redemption Date, each holder of shares of Series A 8% Preferred called for redemption shall surrender such holder's certificate or certificates for such shares to the Corporation at the place designated in the redemption notice and shall thereupon be entitled to receive payment of the Redemption Price. From and after the Redemption Date, unless there shall have been a default in payment of the Redemption Price, all rights of the holders of Series A 8% Preferred designated for redemption (except the right to receive the Redemption Price without interest upon surrender of their certificate or certificates) shall cease with respect to such shares, and such shares shall not thereafter be transferred on the books of the Corporation or be deemed to be outstanding for any purpose whatsoever. 5 Section 7. Reacquired Shares. Any shares of Series A 8% Preferred ----------------- repurchased, redeemed, converted or otherwise acquired by the Corporation shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock, without designation as to series. Section 8. Voting Rights. ------------- (a) Except as otherwise provided in this Section or required by law or any provision of the Articles of Incorporation of the Corporation, and subject to any shareholder and voting or similar agreement existing now or hereinafter entered into by any Original Holder and the Corporation, the Original Holders (but not any other transferees or other subsequent holders of the Series A 8% Preferred) shall vote together with the shares of Common Stock as a single class at any annual or special meeting of shareholders of the Corporation, and each Original Holder shall be entitled to that number of votes equal to the number of shares of Common Stock into which the shares of Series A 8% Preferred held by such Original Holder on the record date fixed for such meeting are convertible. (b) The Corporation shall not, without the affirmative vote or consent of at least a simple majority of the shares of Series A 8% Preferred voting together as a separate class (and irrespective of whether such shares are held by the Original Holders or any transferees or subsequent holders): (i) amend, repeal or change any of the provisions of the Articles of Incorporation of the Corporation in any way which would materially and adversely affect the rights or preferences of the Series A 8% Preferred (including the Certificate of Designations relating to the Series A 8% Preferred) as a class; or (ii) authorize, create or issue, or increase the authorized or issued amount of, any class or series of stock of Senior Securities or Parity Securities, or any security convertible into or exchangeable for Senior Securities or Parity Securities (other than in connection with stock option plans in which employees, independent directors, or consultants of the Corporation are eligible to participate) or reclassify or modify any Junior Securities so as to become Parity Securities or Senior Securities. Section 9. Conversion Rights. Holders of shares of Series A 8% Preferred ----------------- shall have the right to convert from time to time, in whole or in part and without the payment of any additional consideration by the holder, any or all of such shares into Common Stock, as follows: (a) At any time, each share of Series A 8% Preferred shall be convertible at the option of the holder thereof into fully paid, non-assessable shares of Common Stock. The number of shares of Common Stock deliverable upon conversion of each share of Series A 8% Preferred shall be determined by dividing the Stated Value of such share of Series A 8% Preferred by the Conversion Price then in effect. (b) In case at any time the Corporation shall (i) subdivide the outstanding shares of Common Stock into a greater number of shares, (ii) combine the outstanding shares of Common Stock into a smaller number of shares or (iii) pay a dividend in Common Stock on its outstanding shares of Common Stock, then the Conversion Price in effect immediately prior thereto shall be multiplied by the fraction obtained: by dividing (X), which is the numerator equal to the total number of issued and outstanding shares of Common Stock immediately prior to the effectiveness of such action by the Corporation, 6 by (Y), which is the denominator that equals the actual total number of issued and outstanding shares of Common Stock immediately after such effectiveness. Such adjustment shall become effective immediately after the effective date of a subdivision, combination or stock dividend. In the event of a consolidation or merger of the Corporation with or into another corporation or entity as a result of which a greater or lesser number of shares of common stock of the surviving corporation or entity are issuable to holders of capital stock of the Corporation in respect of the number of shares of its capital stock outstanding immediately prior to such consolidation or merger, then the Conversion Price in effect immediately prior to such consolidation or merger shall be adjusted in the same manner as though there were a subdivision or combination of the outstanding shares of capital stock of the Corporation. The Corporation shall not effect any such consolidation or merger unless prior to or simultaneously with the consummation thereof the successor (if other than the Corporation) resulting from such consolidation or merger shall expressly assume, by written instrument executed and delivered (and satisfactory in form) to the Series A 8% Preferred holders, (i) the obligation to deliver to such holders such stock as, in accordance with the foregoing provisions, such holders may be entitled to purchase and (ii) all other obligations of the Corporation hereunder. (c) In the event that the Corporation proposes to take any action specified in this Section 9 which requires any adjustment of the Conversion Price, then and in each such case the Corporation shall at least 30 days prior to any such event, and within five business days after it has knowledge of any such pending transaction, provide to the Series A 8% Preferred holders written notice of the date on which the books of the Corporation shall close or a record shall be taken for such dividend or for determining rights to vote in respect of any such consolidation or merger. Such notice shall also specify, as applicable, the date on which the holders of capital stock shall be entitled thereto or the date on which the holders of capital stock shall be entitled to exchange their stock for securities deliverable upon such consolidation or merger, as the case may be. Such notice shall also state that the action in question or the record date is subject to the effectiveness of a registration statement under the Securities Act of 1933, as amended, or to a favorable vote of security holders, if either is required. Furthermore, any notice shall state the Conversion Price resulting from such adjustment and the increase or decrease, if any, in the number of shares obtainable at such price upon exercise, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. (d) The conversion of any share of Series A 8% Preferred may be effected by the holder thereof by the surrender of the certificate or certificates therefor, duly endorsed, at the principal offices of the Corporation or to such agent or agents of the Corporation as may be designated by the Board of Directors and by giving written notice to the Corporation that such holder elects to convert the same. (e) After the surrender of shares of Series A 8% Preferred for conversion, the Corporation shall (i ) as promptly as practicable issue and deliver or cause to be issued and delivered to the holder of such shares certificates representing the number of fully paid and non-assessable shares of Common Stock into which such shares of Series A 8% Preferred have been converted in accordance with the provisions of this Section and (ii) within two business days pay to the holder of such shares all accrued and unpaid dividends (whether or not earned or declared) to the date of such surrender. Subject to the following provisions of this Section, such conversion shall be deemed to have been made as of the close of business on the date on which the shares of Series A 8% Preferred shall have been surrendered for conversion in the manner herein provided, so that the rights of the holder of the shares of Series A 8% Preferred so surrendered shall cease at such time, and the person or persons entitled to receive the shares of Common Stock upon conversion thereof shall be treated for all purposes as having become the record holder or holders of such shares of Common Stock at such time; provided, however, that any such surrender on any date when the stock transfer books of the Corporation are closed shall be deemed to have been made, and shall be effective to terminate the rights of the holder or holders of the shares of Series A 8% Preferred so surrendered for conversion and to constitute the person or 7 persons entitled to receive such shares of Common Stock as the record holder or holders thereof for all purposes, at the opening of business on the next succeeding day on which such transfer books are open. (f) The Corporation shall not be required to issue fractional shares of stock upon the conversion of the Series A 8% Preferred. As to any final fraction of a share which the holder of one or more shares of Series A 8% Preferred would otherwise be entitled to receive upon conversion, the Corporation shall, in lieu of issuing any fractional share, pay the holder otherwise entitled to such fraction a sum in cash equal to the same fraction of the Conversion Price on the day of conversion. (g) In case the Corporation shall be a party to any transaction (including without limitation, a merger, consolidation, statutory share exchange, sale of all or substantially all of the Corporation's assets or recapitalization of the Common Stock), in each case as a result of which shares of Common Stock shall be converted into the right to receive stock, securities or other property (including cash or any combination thereof) (each of the foregoing transactions being referred to as a "Fundamental Change Transaction"), then the shares of Series A 8% Preferred remaining outstanding will thereafter no longer be subject to conversion into Common Stock pursuant to this Section, but instead each share shall be convertible into the kind and amount of stock and other securities and property receivable (including cash) upon the consummation of such Fundamental Change Transaction by a holder of that number of shares of Common Stock into which one share of Series A 8% Preferred was convertible immediately prior to such Fundamental Change Transaction (including an immediate adjustment of the Conversion Price if by reason of or in connection with such merger, consolidation, statutory share exchange, sale or recapitalization any securities are issued or event occurs which would, under the terms hereof, require an adjustment of the Conversion Price), assuming such holder of Series A 8% Preferred has failed to elect to have all or a part of such holder's shares redeemed or otherwise acquired. The provisions of this paragraph shall similarly apply to successive Fundamental Change Transactions. Section 10. Ranking. For purposes of dividends and the distribution of ------- assets upon liquidation, dissolution or winding up of the Corporation, (i) the Junior Securities shall rank junior to the Series A 8% Preferred and (ii) the Parity Securities shall rank on a parity with the Series A 8% Preferred. Section 11. Record Holders. The Corporation may deem and treat the record -------------- holder of any shares of Series A 8% Preferred as the true and lawful owner thereof for all purposes, and the Corporation shall not be affected by any notice to the contrary. Section 12. Notice. Except as may otherwise be provided by law or provided ------ for herein, all notices referred to herein shall be in writing, and all notices hereunder shall be deemed to have been given upon receipt, in the case of a notice of conversion given to the Corporation, or, in all other cases, upon the earlier of receipt of such notice or three Business Days after the mailing of such notices sent by Registered Mail (unless first-class mail shall be specifically permitted for such notice under the terms hereof) with postage prepaid, addressed: if to the Corporation, to its principal executive offices or to any agent of the Corporation designated as permitted hereby; or if to a holder of the Series A 8% Preferred, to such holder at the address or telecopy of such holder of the Series A 8% Preferred as listed in the stock record books of the Corporation, or to such other address or telecopy as the Corporation or holder, as the case may be, shall have designated by notice similarly given. Notices given by facsimile transmission on weekends, holidays or after 5:00 p.m. Central Time shall be deemed received on the next business day. Section 13. Successors and Transferees. Except as otherwise expressly -------------------------- provided herein, and subject to any shareholder and voting or similar agreement entered into by any Original Holders and the Corporation, the provisions applicable to shares of Series A 8% Preferred shall bind and inure to the benefit of and be enforceable by the Corporation, the respective successors to the Corporation, and by any record holder of shares of Series A 8% Preferred. 8 IN WITNESS WHEREOF, Magnum Hunter Resources, Inc. has caused its corporate seal to be hereunto affixed and this certificate to be signed by Gary C. Evans, its President and Morgan F. Johnston, its Secretary, this 29th day of January, 1999. /s/ Gary C. Evans ------------------------------------------ GARY C. EVANS President and Chief Executive Officer /s/ Morgan F. Johnston ------------------------------------------ MORGAN F. JOHNSTON Vice President and Secretary STATE OF TEXAS ) ) COUNTY OF ) This instrument was acknowledged before me on January 29, 1999, by GARY C. EVANS of MAGNUM HUNTER RESOURCES, INC., a Nevada corporation, on behalf of said corporation. /s/ Jamie E. Johnson ------------------------------------------ Jamie E. Johnson Notary Public, State of Texas Notary Public State of Texas Comm. Exp. 11-18-2002 Jamie E. Johnson ------------------------------------------ (printed name) My Commission Expires: 11-18-2002 ---------- 9 EX-3 5 dex3.txt SHAREHOLDER AND VOTING AGREEMENT Exhibit 3 Shareholder and Voting Agreement This Shareholder and Voting Agreement (this "Agreement") executed as of the 3rd day of February, 1999 by and among Magnum Hunter Resources, Inc., a Nevada corporation ("MHR"), Oneok Resources Company, a Delaware corporation ("ONEOK"), and Oneok, Inc., an Oklahoma corporation that is executing this Agreement for the limited purpose set forth in Section 6.8 hereof ("Parent"); W I T N E S S E T H: - - - - - - - - - - Whereas, MHR has agreed to issue to ONEOK, and ONEOK has agreed to purchase from MHR, $50 million of MHR's 1999 Series A 8% Convertible Preferred Stock (the "Preferred Stock"); and Whereas, in connection with MHR's issuance of the Preferred Stock to ONEOK, MHR and ONEOK desire to enter into this Agreement to set forth the rights and obligations of MHR and ONEOK with respect to ONEOK's representation on MHR's Board of Directors; voting by ONEOK of both the Preferred Stock and the common stock of MHR (the "Common Stock") into which the Preferred Stock is convertible; the purchase, sale and ownership of the Preferred Stock and Common Stock of MHR by ONEOK; and other matters; Now, Therefore, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, MHR and ONEOK do hereby agree as follows: I. Certain Definitions 1.1. Specific Definitions. For purposes of this Agreement, the following terms shall have the respective meanings ascribed thereto: (a) "Affiliate" means any corporation, partnership, business entity or other person controlling, controlled by, or under common control with, another person. (b) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (c) "Fully Diluted Basis" means, for purposes of calculating any fraction, ratio, percentage or other determination with respect to MHR's Common Stock, that number of shares of Common Stock that would be owned or outstanding after taking into account the conversion of the Preferred Stock and the conversion of MHR's 1996 Series A Preferred Stock. (d) "Group" has the meaning ascribed thereto in Section 13(d) of the Exchange Act. (e) "Indenture" means the Indenture dated as of May 29, 1997, as amended on January 27, 1999, relating to the Senior Notes among MHR, the Subsidiary Guarantors named therein and First Union National Bank of North Carolina, as trustee. (f) "Liquidation Value" means $1,000 per each share of Preferred Stock. (g) "MHR Change of Control" means (i) any direct or indirect acquisition by the ONEOK Group or persons acting as a Group with the ONEOK Group of such number of shares of Common Stock of MHR (including Preferred Stock or other securities convertible into, or exercisable or exchangeable for, such Common Stock) as would increase the aggregate ownership by the ONEOK Group and such persons to more than 40% of the outstanding voting Common Stock of MHR; (ii) the replacement of a majority of the Board of Directors of MHR over any rolling two-year period from the directors who constituted the Board at the beginning of such period with directors whose replacement shall not have been approved by a majority of the Board then still in office who either were members of the Board at the beginning of such period or whose election to the Board was previously so approved; (iii) a merger, consolidation or other business combination with respect to MHR that results in a majority of the outstanding voting securities of the surviving entity being owned by the ONEOK Group and any persons acting as a Group with the ONEOK Group; (iv) the occurrence of a "Change of Control" under the Indenture if any of the Senior Notes are then outstanding; (v) the occurrence of a "change of control" under the debt instruments governing any outstanding indebtedness of MHR; and/or (vi) the sale of all or substantially all the assets, liquidation or dissolution of MHR. (h) "MHR Takeover Event" means (i) any direct or indirect acquisition by any person or Group (other than the ONEOK Group) of such number of shares of Common Stock (or securities convertible into or exchangeable for such Common Stock) of MHR as would increase the aggregate ownership by such person or Group to more than 50% of the outstanding Common Stock of MHR; (ii) the replacement of a majority of the Board of Directors of MHR over any two-year period from the directors who constituted the applicable Board at the beginning of such period with directors whose replacement shall 2 not have been approved by a majority of such Board then still in office who either were members of that Board at the beginning of such period or whose election to such Board was previously so approved; (iii) a merger, consolidation or other business combination with respect to MHR that results in a shareholder or Group outside of the ONEOK Group becoming a majority owner of the outstanding voting securities of the surviving entity; and/or (iv) the sale of all or substantially all the assets, liquidation or dissolution of MHR. (i) "MHR Termination Default" means any of the following: (i) the failure of MHR to pay the 8% cash dividend on the Preferred Stock for two consecutive quarters (if, in each such case, ONEOK has provided MHR with written notice of such failure and the required dividend is not paid within three business days of MHR's receipt of such notice); (ii) the occurrence of an event of default under the Indenture that has resulted in the acceleration of the Senior Notes; (iii) the occurrence of an event of default under any credit facility of MHR with aggregate outstanding indebtedness of at least $25 million and such default has resulted in the acceleration of such indebtedness; (iv) any bankruptcy, insolvency, reorganization, liquidation or similar proceeding shall be instituted by, or involuntarily instituted against, MHR; provided, however, in the event of a proceeding involuntarily instituted against MHR, such proceeding shall not have been stayed within 60 days; (v) the failure of MHR to nominate ONEOK's nominees to MHR's Board of Directors or to use MHR's reasonable best efforts to facilitate their election (including without limitation the solicitation of proxies for their election) as contemplated by Article III hereof; and/or (vi) the 180th day after the occurrence of a Voting Event; unless, MHR cures the applicable default(which, in 3 the case of accelerated indebtedness under clauses (ii) and (iii), shall mean the repayment in full of such indebtedness) prior to MHR's receipt of written notice from ONEOK electing to terminate this Agreement pursuant to Section 6.1 hereof. (j) "ONEOK Group" means ONEOK and its Affiliates. (k) "ONEOK Ownership Percentage" means a fraction, determined as of the applicable date, of which (i) the numerator is the number of shares of Common Stock (including Common Stock issuable upon conversion of the Preferred Stock) owned by the ONEOK Group and (ii) the denominator is the number of shares of Common Stock of MHR issued and outstanding on a Fully Diluted Basis. (l) "Securities Act" means the Securities Act of 1933, as amended. (m) "Senior Notes" mean MHR's $140 million in original principal amount of 10% Senior Notes due 2007 that were issued under the Indenture. (n) "Third Party Change of Control" means (i) any direct or indirect acquisition by a third party or persons acting as a Group with such third party of such number of shares of Common Stock of MHR (including securities convertible into, or exercisable or exchangeable for, such Common Stock) as would increase the aggregate ownership by such third party to more than 40% of the outstanding voting Common Stock of MHR; (ii) the replacement of a majority of the Board of Directors of MHR over any rolling two-year period from the directors who constituted the Board at the beginning of such period with directors whose replacement shall not have been approved by a majority of the Board then still in office who either were members of the Board at the beginning of such period or whose election to the Board was previously so approved; (iii) a merger, consolidation or other business combination with respect to MHR that results in a majority of the outstanding voting securities of the surviving entity being owned by a third party and any persons acting as a Group with such third party; (iv) the occurrence of a "Change of Control" under the Indenture if any of the Senior Notes are then outstanding; (v) the occurrence of a "Change of Control" under any MHR senior credit facility; and/or (vi) the sale of all or substantially all the assets, liquidation or dissolution of MHR. (o) "Voting Event" means any of the "Special Voting Events" and "Limited Voting Events" enumerated in, respectively, Sections 6.2.1 and 6.2.2 of the 1996 Certificate of Designations (as defined in Section 5.12). 4 II. Representations and Warranties 2.1. Representations and Warranties of MHR. MHR represents and warrants that (i) MHR is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada; (ii) this Agreement has been duly authorized by the Board of Directors of MHR (such being all corporate action required of MHR) and constitutes the valid and binding obligation of MHR enforceable against it in accordance with its terms, except to the extent such enforceability may be limited by bankruptcy and insolvency laws and general principles of equity (including limitations on the availability of specific performance); and (iii) this Agreement does not violate any law to which MHR is subject or any contract, order or decree by which MHR is bound. 2.2. Representations and Warranties of ONEOK. ONEOK represents and warrants that (i) ONEOK is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware; (ii) this Agreement has been duly authorized by the Board of Directors of ONEOK (such being all corporate action required of ONEOK) and constitutes the valid and binding obligation of ONEOK enforceable against it in accordance with its terms, except to the extent such enforceability may be limited by bankruptcy and insolvency laws and general principles of equity (including limitations on the availability of specific performance); and (iii) this Agreement does not violate any law to which ONEOK is subject or any contract, order or decree by which ONEOK is bound. 2.3. Representations and Warranties of Parent. Parent represents and warrants that (i) Parent is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Oklahoma; (ii) this Agreement has been duly authorized by all corporate action required of Parent and constitutes the valid and binding obligation of Parent enforceable against it in accordance with its terms, except to the extent such enforceability may be limited by bankruptcy and insolvency laws and general principles of equity (including limitations on the availability of specific performance); and (iii) this Agreement does not violate any law to which Parent is subject or any contract, order or decree by which Parent is bound. III. Board Representation 3.1. Board Representation Based on Stock Ownership. ONEOK will have the right to nominate (i) two members to MHR's Board of Directors (or at least 20% of the total number of members of the Board) so long as the ONEOK Group owns Common Stock and Preferred Stock that together aggregate at least 20% of the outstanding Common Stock of MHR on a Fully Diluted Basis 5 or (ii) one member to MHR's Board of Directors (or at least 10% of the total number of members of the Board) so long as the ONEOK Group owns Common Stock and Preferred Stock that together aggregate at least 10% (but less than 20%) of the outstanding Common Stock of MHR on a Fully Diluted Basis. To exercise its right to nominate a member or members to MHR's Board of Directors, ONEOK will provide written notice to MHR of its nominee or nominees not less than 90 days prior to the date of MHR's annual meeting of shareholders (or, if directors are to be elected at a special meeting of shareholders, not later than ten days after ONEOK has been notified by MHR that a special meeting will be conducted for such purpose). MHR will use its reasonable best efforts to facilitate the election of ONEOK's nominees to MHR's Board of Directors (including without limitation the solicitation of proxies for their election). 3.2. Board Representation Following Certain Events. Notwithstanding Section 3.1 hereof, upon and after the occurrence of any MHR Termination Default , ONEOK will have the right to nominate, subject to the rights of the TCW Holders under the 1996 Certificate of Designations (as such terms are defined in Section 5.12 hereof), that total number of members of the Board of Directors of MHR (rounded down to the nearest whole director) equal to (i) the then applicable ONEOK Ownership Percentage multiplied by (ii) the then applicable number of directors constituting the entire Board (after taking all of ONEOK's nominees to such Board into account). If following an MHR Termination Default described in any of clauses (i), (ii) or (iii) of the definition thereof, such MHR Termination Default is cured (which, in the case of accelerated indebtedness under clauses (ii) and (iii), shall mean the repayment in full of such indebtedness) within 180 days after the occurrence of such MHR Termination Default, the number of ONEOK representatives on MHR's Board of Directors shall thereafter be determined in accordance with Section 3.1 hereof effective as of MHR's next annual meeting of shareholders. 3.3. Board Representation if Board Size Increased. In the event the size of MHR's Board of Directors is increased above eight members, ONEOK shall have the right to nominate such number of directors as shall cause its percentage of directors on the Board immediately after the increase in Board size to at least equal the percentage of directors to which ONEOK would be entitled (rounded down to the nearest whole director) based upon the ONEOK Ownership Percentage. In such event MHR will (i) cause its Board of Directors to fill the additional directorship or directorships to which ONEOK is entitled, until the next annual meeting of shareholders of MHR, with a director or directors designated by ONEOK and (ii) nominate ONEOK's designee or designees to such additional directorship or directorships at the next annual meeting of shareholders of MHR. 3.4. Vacancies. In the event of the death, resignation or removal of a director of MHR nominated by ONEOK, MHR will (i) cause its Board of Directors to fill the vacant directorship until the next annual meeting of shareholders of MHR with a director designated by ONEOK and (ii) nominate ONEOK's designee to fill such directorship at the next annual meeting of shareholders of MHR; provided, however, if the vacant directorship results from the removal without cause of a ONEOK designee on MHR's Board, MHR will nominate another ONEOK designee to fill such directorship at the next annual meeting of shareholders of MHR. 6 3.5. Approval of ONEOK Representatives. Any nominee of ONEOK to MHR's Board of Directors (other than executive officers of Parent on the date hereof) shall be subject to the approval of MHR, which may only withhold such approval for reasonable business reasons proffered in good faith. IV. Voting of MHR Stock 4.1. Requirement to Vote Stock. Subject to the other provisions of Article IV of this Agreement, ONEOK will, and will cause each member of the ONEOK Group to, vote all of its Common Stock and Preferred Stock at every annual and special meeting of shareholders of MHR and with respect to each matter submitted to shareholders for approval. 4.2. Partial Proportionate Voting. Except as otherwise expressly provided in Section 4.3 hereof, at each annual and special meeting of shareholders of MHR, ONEOK will, and will cause each member of the ONEOK Group to, (i) vote up to one-third of the aggregate voting power of its Common Stock and Preferred Stock of MHR in its sole discretion and (ii) vote the remainder of its Common Stock and Preferred Stock of MHR in the same proportions as all shares of voting stock of MHR other than the Common Stock and Preferred Stock owned by the ONEOK Group are voted. ONEOK will execute such proxy or proxies as MHR may from time to time reasonably request to effect the proportionate voting of ONEOK's Common Stock and Preferred Stock in the manner contemplated by this Section 4.2. 4.3. Discretionary Voting on Certain Matters. Any member of the ONEOK Group may vote all of its Common Stock and Preferred Stock in such member's discretion with respect to (i) a proposed Third Party Change of Control with respect to MHR (other than a proposed change of control initiated by one or more members of the ONEOK Group or in which any member of the ONEOK Group is participating as an acquiring party), (ii) any amendment to MHR's articles of incorporation and/or (iii) any vote required by the American Stock Exchange and/or such other national stock exchange upon which any class of MHR's equity securities are then listed. 4.4. Relationship to Certificate of Designations. The provisions of this Article IV shall not diminish the voting rights of the Preferred Stock set forth in Section 8(b) of the Certificate of Designations relating to the Preferred Stock. V. Ownership, Purchase and Sale of MHR's Stock and Senior Notes 5.1. Limitation on Purchases of Common Stock. Except as otherwise expressly provided in Sections 5.2 and 5.3 hereof, ONEOK will not, nor will ONEOK permit any member of the ONEOK Group to, purchase any shares of Common Stock of MHR or any securities other than the $50 million in Preferred Stock purchased on the date hereof that are convertible into, or exercisable or exchangeable for, Common Stock of MHR. 7 5.2. Preemptive Right in Public Offerings. In the event MHR proposes to issue any equity securities in a registered underwritten public offering (excluding securities issuable (i) pursuant to MHR's present or future option plans or other employee benefit plans of any nature whatsoever for MHR's directors, employees and consultants, (ii) in a business combination on a registration statement on Form 4 (or any successor form) under the Securities Act, (iii) pursuant to a transaction governed by Rule 145 under the Securities Act and/or (iv) as dividends or upon the conversion, exercise or exchange of other securities), then the ONEOK Group will have the preemptive right to acquire up to that number of equity securities in the public offering as would cause the ONEOK Ownership Percentage on a Fully Diluted Basis to be the same immediately following consummation of such public offering as the ONEOK Ownership Percentage on a Fully Diluted Basis immediately prior thereto (the "Preemptive Right Securities"). In the event MHR proposes to issue any equity securities in a public offering to which the ONEOK Group has the preemptive right set forth in this Section 5.2, (i) MHR will provide ONEOK with written notice at least 15 days prior to filing the applicable registration statement with the Securities and Exchange Commission and (ii) the ONEOK Group may elect to exercise its preemptive right with respect to such equity offering by providing written notice of such election to MHR within such 15-day period. If the ONEOK Group timely elects to exercise its preemptive right by providing such notice to MHR, the ONEOK Group shall have the right and obligation to purchase the Preemptive Right Securities at the public offering price at the time of, and subject to, consummation of the public equity offering. 5.3. Right to Maintain Proportionate Ownership. In the event MHR issues any voting Common Stock or preferred stock convertible into voting Common Stock, and except in those situations expressly covered by Section 5.2 hereof, (i) MHR will give written notice to ONEOK of each such stock issuance within 45 days after the end of the calendar quarter during which such issuance occurred and (ii) the ONEOK Group may, at any time during the 180-day period immediately following its receipt of such notice, purchase, at MHR's option, in the open market or from MHR such additional number of shares of its capital stock (which, if the purchase is from MHR, may at MHR's option be Preferred Stock or voting Common Stock and shall be sold at such price and terms as are mutually agreed by MHR and the ONEOK Group) as is necessary to cause the ONEOK Ownership Percentage immediately following such purchase to equal the ONEOK Ownership Percentage immediately prior to MHR's issuance of the voting Common Stock or convertible preferred stock. 5.4. Effect of Stock Ownership Exceeding 40%. If at any time the ONEOK Group's ownership of Common Stock of MHR (including Common Stock of MHR issuable upon conversion of the Preferred Stock) increases or appears to increase above 40% resulting in the ONEOK Group causing or appearing to cause a "Change of Control" under the Indenture, (i) the applicable putative stock acquisition or other transaction will for all purposes be void ab initio and of no force or effect, and MHR will instruct its stock transfer agent not to honor such putative transaction; (ii) the ONEOK Group will, within five days after the putative transaction, take all actions necessary to reduce its ownership of Common Stock of MHR (including Common Stock of MHR issuable upon conversion of the Preferred Stock) to not more than 40%; and (iii) if notwithstanding MHR's and the ONEOK Group's compliance with clauses (i) and (ii) of this sentence MHR is required to make a 8 "Change of Control Offer" under the Indenture, ONEOK will, or will cause the ONEOK Group to, make available to MHR sufficient financing upon mutually agreed terms (which terms will be no less favorable to MHR than, at MHR's option, those terms set forth in the Indenture or such terms as are commercially available) to repurchase any of the Senior Notes that are then outstanding and tendered to MHR pursuant to its "Change of Control Offer." Notwithstanding the immediately preceding sentence, if the ONEOK Group's ownership interest in MHR increases above 40% as a direct result of a repurchase of Common Stock by MHR and/or one of its Affiliates, the ONEOK Group will not be obligated to provide financing to MHR to repurchase the Senior Notes tendered to MHR. 5.5. Limitation on Purchases of Senior Notes. ONEOK will not, nor will it permit any member of the ONEOK Group to, purchase in the aggregate a principal amount of the Senior Notes that causes the ONEOK Group to own a higher percentage of the $140 million of Senior Notes originally issued than the ONEOK Ownership Percentage at the time such purchase of Senior Notes is made. 5.6. One-Year Prohibition on MHR's Stock Sales. During the one-year period commencing on the date hereof, and except as otherwise expressly provided in Section 5.4 hereof, the ONEOK Group will not directly or indirectly sell (whether directly or indirectly through any derivative or equity-linked security), pledge, hypothecate, convey or otherwise transfer any shares of the Preferred Stock. 5.7. Right of First Purchase on Subsequent Stock Sales. If at any time after the one-year period commencing on the date hereof, the ONEOK Group proposes directly or indirectly to sell (whether directly or indirectly through any derivative or equity-linked security), pledge, hypothecate, convey or otherwise transfer any shares of the Preferred Stock (or, in the event of a private placement, Common Stock issuable upon conversion of the Preferred Stock), to the extent such amount of shares exceeds 10% of the then outstanding Common Stock of MHR on a Fully Diluted Basis (the "Excess Sale Amount") during any period of 12 consecutive calendar months, MHR shall have a right of first purchase to acquire the Excess Sale Amount to be exercised by notice to ONEOK within ten days after its receipt of written notice of, and upon substantially the same terms and conditions as, the bona fide third party transaction. If MHR declines to exercise its right of first purchase and the terms of the proposed third party transaction are thereafter changed, ONEOK must again provide MHR with written notice of the proposed transaction and MHR will thereafter again have a right of first purchase to acquire the Excess Sale Amount to be exercised by notice to ONEOK within ten days after its receipt of such notice and upon substantially the same terms and conditions as the revised bona fide third party transaction. 5.8. Prohibition on Sales to Significant Shareholders. ONEOK will not, nor will it permit any member of the ONEOK Group to, directly or indirectly knowingly sell (whether directly or indirectly through any derivative or equity-linked security), pledge, hypothecate, convey or otherwise transfer any shares of the Preferred Stock (or Common Stock issuable upon conversion of the Preferred Stock) to any prospective transferee or transferees which, together with any Affiliates or persons acting as a Group therewith, would become the record or beneficial owner or owners of an amount of capital stock that exceeds 10% of the outstanding Common Stock of MHR on a Fully 9 Diluted Basis after taking such sale, pledge, hypothecation, conveyance or other transfer into account; provided, however, this Section 5.8 shall not operate so as to prohibit any transfers to members of the ONEOK Group. In fulfilling its obligations pursuant to the immediately preceding sentence, ONEOK, in connection with any transaction not constituting a public offering, shall make reasonable inquiry of, and obtain appropriate written representations from, the prospective purchaser or purchasers to determine its then-existing ownership of Common Stock of MHR (including Preferred Stock and other securities convertible into, or exercisable or exchangeable for, such Common Stock). 5.9. Standstill. ONEOK will not, nor will it permit any member of the ONEOK Group to, at any time effect an MHR Change of Control with respect to MHR unless such MHR Change of Control is approved by the holders of at least two-thirds of the outstanding voting securities of MHR other than the ONEOK Group. 5.10. Required Repurchase Upon MHR Takeover Event. At any time within 180 days after the occurrence of any MHR Takeover Event with respect to which the ONEOK Group voted all of its Common Stock and Preferred Stock against such MHR Takeover Event, ONEOK shall have the right to require MHR to purchase, upon 45 days prior written notice to MHR, any or all Preferred Stock then owned by the ONEOK Group at a purchase price equal to 108% of the Liquidation Value. 5.11. Certain Redemption Requirements. Notwithstanding anything to the contrary in the Certificate of Designations relating to the Preferred Stock, MHR agrees that, unless MHR redeems all of the Preferred Stock then held by the ONEOK Group, it shall not redeem shares of the Preferred Stock from the ONEOK Group if immediately after such redemption ONEOK would not be entitled to nominate at least one member of MHR's Board of Directors pursuant to its rights hereunder. 5.12. TCW Preferred Stock. MHR has previously issued shares of MHR's 1996 Series A Preferred Stock to certain holders (the "TCW Holders") pursuant to that certain Stock Purchase Agreement dated as of December 6, 1996 (the "TCW Stock Purchase Agreement") and the Certificate of Voting Powers, Designations, Preferences, and Relative, Participating, Optional or Other Special Rights of 1996 Series A Convertible Preferred Stock (the "1996 Certificate of Designations") relating thereto. Upon the occurrence of, or as MHR has notice of the possibility of the occurrence of, any Voting Event, or any other event which would constitute a breach of or default under the TCW Stock Purchase Agreement or the 1996 Certificate of Designations (each, a "TCW Default Event"), MHR shall immediately (i) provide written notice thereof to ONEOK and (ii) use its reasonable best efforts to take all such action as is necessary to cure or obtain from the TCW Holders the appropriate waivers of such TCW Default Event. MHR shall keep ONEOK informed as to the status and resolution of each TCW Default Event and shall use its reasonable best efforts to take all such action toward resolution of each TCW Default Event as ONEOK shall reasonably request. VI. Miscellaneous Provisions 10 6.1. Term. This Agreement will commence on the date hereof and will terminate on the first to occur of (i) an MHR Change of Control; (ii) such time as the ONEOK Group ceases to own Common Stock and Preferred Stock that together aggregate at least 10% of the outstanding Common Stock of MHR on a Fully Diluted Basis; (iii) February 3, 2014; (iv) written notice from ONEOK to MHR to terminate this Agreement following an MHR Termination Default; and (iv) the mutual agreement of MHR and ONEOK to terminate this Agreement. 6.2. Legend. The Preferred Stock and any Common Stock issued to ONEOK shall bear the following legend: THE SHARES OF STOCK OF MAGNUM HUNTER RESOURCES, INC. ("MHR") EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN VOTING AGREEMENTS, STOCK TRANSFER RESTRICTIONS AND OTHER REQUIREMENTS SET FORTH IN THE SHAREHOLDER AND VOTING AGREEMENT DATED AS OF FEBRUARY 3, 1999 AMONG MHR, ONEOK RESOURCES COMPANY AND ONEOK, INC. A COPY OF SUCH AGREEMENT MAY BE OBTAINED WITHOUT CHARGE FROM MHR AT ITS PRINCIPAL PLACE OF BUSINESS. 6.3. Construction. If any provision of this Agreement is invalid or unenforceable as written but may be rendered valid and enforceable by limitation thereof, then such provision shall be limited so as to be valid and enforceable to the maximum extent permitted by applicable law. 6.4. Specific Enforcement. Either MHR or ONEOK may specifically enforce this Agreement or any provision hereof by requesting injunctive relief from a court of competent jurisdiction without the necessity of posting bond. 6.5. Applicable Law. This Agreement will be governed by, and construed in accordance with, the laws of the State of Nevada. 6.6. Notices. Any notice required or permitted by this Agreement will be deemed sufficient if in writing and sent by certified or registered mail, return receipt requested, or hand delivered and if addressed: (i) if to MHR: Magnum Hunter Resources, Inc. 600 East Las Colinas Boulevard Suite 1200 Irving, Texas 75039 Attention: Morgan F. Johnston, Vice President and General Counsel 11 (ii) if to ONEOK or Parent: Oneok Resources Company Oneok, Inc. 100 West Fifth St. Tulsa, Oklahoma 74103 Attention: David L. Kyle, President and Chief Operating Officer Either party may change its address for notice purposes by providing notice of its new address to the other party in the manner specified above. 6.7. Amendment. This Agreement may only be amended by an instrument in writing executed by both parties hereto. 6.8. Execution by Parent. Parent in executing this Agreement for the limited purpose of assuring compliance herewith in all respects by each member of the ONEOK Group. 6.9. No Unilateral Assignment; Successors and Assigns. None of MHR, ONEOK or Parent may assign this Agreement without the express written consent of the other parties hereto; provided, however, ONEOK may transfer the Preferred Stock to any member of the ONEOK Group subject to such member complying with Section 6.10. This Agreement will be binding upon, and will inure to the benefit of, MHR, ONEOK and Parent and their respective successors and permitted assigns. 6.10. Restrictions Binding on Transferees. ONEOK will not, nor will ONEOK or Parent permit any member of the ONEOK Group to, transfer any or all of the Preferred Stock to any transferee (including any member of the ONEOK Group and any third party transferee) unless such transferee agrees in writing, in a manner reasonably satisfactory to MHR, to be bound by this Agreement. In Witness Whereof, MHR, ONEOK and Parent have executed this Agreement as of the date first set forth above. Magnum Hunter Resources, Inc. By: /s/ Gary C. Evans -------------------------------------- Gary C. Evans President and Chief Executive Officer Oneok Resources Company 12 By: /s/ David L. Kyle -------------------------------------- David L. Kyle President Oneok, Inc. By: /s/ David L. Kyle -------------------------------------- David L. Kyle President 13 EX-4 6 dex4.txt REGISTRATION RIGHTS AGREEMENT Exhibit 4 REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of February 3, --------- 1999, between ONEOK Resources Company, a Delaware corporation (the "Shareholder") and Magnum Hunter Resources, Inc., a Nevada corporation (the ----------- "Company"). ------- RECITALS A. The Company and Shareholder have entered into a Stock Purchase Agreement dated February 3, 1999 (the "Purchase Agreement"), pursuant to which the ------------------ Shareholder will purchase 50,000 newly issued shares of the Company's 1999 Series A 8% Convertible Preferred Stock, par value $.001 per share, having a liquidation value of $50,000,000.00 or $1,000.00 per share (the "Preferred Stock"). B. The parties each desire to make certain covenants and agreements concerning, among other things, the registration from time to time of the Shareholder's shares of the Common Stock obtainable upon conversion of the Preferred Stock (the "Shares") under the Securities Act of 1933, as amended (the ------ "Securities Act"). -------------- NOW, THEREFORE, in consideration of the premises and of the mutual covenants, representations, warranties and agreements contained herein, the Company and the Shareholder hereby agree as follows: ARTICLE I Certain Definitions ------------------- Section 1.1. Defined Terms. In addition to other terms defined elsewhere in ------------- this Agreement, as used in this Agreement, the following capitalized terms have the respective meanings set forth below: "Affiliate" shall mean, with respect to any Person, any other Person that --------- directly or indirectly through one or more intermediaries controls or is controlled by or is under common control with such Person. "Blackout Period" shall have the meaning assigned to such term in Section --------------- 3.1(b). "Claims" shall have the meaning assigned to such term in Section 3.6(a). ------ "Demand Period" shall have the meaning assigned to such term in Section ------------- 3.1(a). "Demand Registration" shall have the meaning assigned to such term in ------------------- Section 3.1(a). "Demand Request" shall have the meaning assigned to such term in Section -------------- 3.1(a). "Effective Period" shall have the meaning assigned to such term in Section ---------------- 3.4(a)(iii). "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. ------------ "Holder" shall mean, with respect to any shares of Common Stock, the ------ Shareholder and as long as there is a direct chain of ownership by the Shareholder and its Affiliate any Affiliate of Shareholder holding Shares; and the terms "hold", "held" and "holding" shall have meanings correlative to the foregoing. "Inspectors" shall have the meaning assigned to such term in Section ---------- 3.4(a)(iv). "Maximum Number" shall have the meaning assigned to such term in Section -------------- 3.2(b). "Other Holder" shall have the meaning assigned to such term in Section ------------ 3.2(b). "Person" shall mean any individual, corporation, company, partnership, ------ joint venture, trust, group (as such term is used in Rule 13d-5 under the Exchange Act), business association, government or political subdivision thereof, governmental body or other entity. "Piggy-Back Registration" shall have the meaning assigned to such term in ----------------------- Section 3.2(a). "Piggy-Back Request" shall have the meaning assigned to such term in ------------------ Section 3.2(a). "Preferred Stock" shall have the meaning assigned to such term in the first --------------- recital of this Agreement. "Records" shall have the meaning assigned to such term in Section ------- 3.4(a)(iv). "Registered Shares" shall have the meaning assigned to such term in Section ----------------- 3.4(a)(xviii). "Registration" shall have the meaning assigned to such term in Section ------------ 3.2(a). "Registration Expenses" shall have the meaning assigned to such term in --------------------- Section 3.5. "Rule 144" shall have the meaning assigned to such term in Section 3.8 -------- "SEC" shall mean the United States Securities and Exchange Commission or --- any other United States federal agency at the time administering the Securities Act or the Exchange Act, as applicable, whichever is the relevant statute. "Securities Act" shall have the meaning assigned to such term in the second -------------- recital to this Agreement. "Shares" shall have the meaning assigned to such term in the second recital ------ of this Agreement. Section 1.2. General. Unless the context otherwise requires, references in ------- this Agreement to any "section" or "article" shall mean a section or article of ------- ------- this Agreement, as the case may be, and the terms "hereof," "hereunder" and ------ --------- "hereto" and words of similar meaning shall mean this Agreement in its entirety ------ and not any particular provisions of this Agreement. Unless the context otherwise requires, the terms defined herein include the singular as well as the plural. Unless the context otherwise requires, each reference herein to the Securities Act, the Exchange Act or Rule 144 (or any other rule, regulation or form promulgated under either such statute) shall be deemed to mean, as of any time, such statute, rule, regulation or form as then in effect, after all amendments thereto, or, if not then in effect, any successor statute, rule, regulation or form as then in effect, after all amendments thereto. Section 1.3. Headings. The descriptive headings of the several Sections and -------- paragraphs of this Agreement are inserted for convenience only, do not constitute a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement. ARTICLE II Representations and Warranties ------------------------------ Section 2.1. Representations and Warranties of the Shareholder. The ------------------------------------------------- Shareholder hereby represents and warrants to the Company (i) that it has been duly organized and is an existing corporation in good standing under the laws of the State of Delaware; (ii) that it has all requisite corporate power and authority and has received all requisite approvals (including any necessary approval of its board of directors) to complete the transactions contemplated hereby, and (iii) that this Agreement has been duly authorized, executed and delivered by the Shareholder and constitutes a valid and binding agreement of the Shareholder enforceable against the Shareholder in accordance with its terms. Section 2.2. Representations and Warranties of the Company. The Company --------------------------------------------- hereby represents and warrants to the Shareholder (i) that the Company has been duly organized and is an existing corporation in good standing under the laws of the State of Nevada; (ii) that it has all requisite corporate power and authority, and has received all requisite approvals (including any necessary approval of its Board of Directors) to complete the transactions contemplated hereby; and (iii) this Agreement has been duly authorized, executed and delivered by the Company and constitutes a valid and binding agreement of the Company enforceable against the Company in accordance with its terms. ARTICLE III Registration Rights ------------------- Section 3. 1. Demand Registrations. -------------------- (a) At any time following the date upon which the Shareholder has converted or given the Company notice of its election to convert any or all of the Preferred Stock into shares and prior to the date on which the Company shall have obtained a written opinion of legal counsel reasonably satisfactory to the Shareholder and addressed to the Company and the Shareholder to the effect that the Shares may be publicly offered for sale in the United States by the Shareholder without restriction as to manner of sale and amount of securities sold and without registration under the Securities Act (such period, the "Demand Period"), the Shareholder shall ------------- have the unlimited right to require the Company to file a registration under the Securities Act in respect of all or a portion of the Shares by delivering to the Company written notice stating that such right is being exercised, specifying the number of Shares to be included in such registration and describing the intended method of distribution thereof (a "Demand Request"). As promptly as practicable, but in no event later than -------------- thirty (30) days after the Company receives a Demand Request, the Company shall file with the SEC and thereafter use its best efforts to cause to be declared effective promptly a registration statement (including, without limitation, by means of a shelf registration pursuant to Rule 415 under the Securities Act if so requested by Shareholder and if the Company is then eligible to use such a registration) (a "Demand Registration") providing ------------------- for the registration of such number of Shares as the Shareholder shall have demanded be registered for distribution in accordance with such intended method of distribution. The Company shall have the right and option to designate any one of the Demand Registrations be filed as a shelf registration or other successor procedure as prescribed by the SEC, as above provided as a shelf registration statement, for which the Company agrees to pay certain costs therefor pursuant to Section 3.5 below (the "Free Shelf Registration"). After completion of any Demand Registration ----------------------- designated as a shelf registration by the Company, any subsequent Demand Registrations shall not be shelf registrations unless the Company otherwise agrees. Notwithstanding the foregoing, the Company shall not be obligated to effect any Demand Registration requested pursuant to this Section 3.1 if the number of Shares then held by the Shareholder shall be less than 1% of the then outstanding Common Stock. (b) Anything in this Agreement to the contrary notwithstanding, the Company shall be entitled to postpone and delay, for a reasonable period of time, not to exceed ninety (90) days in the case of clauses (i) and (ii) below, or thirty (30) days in the case of clause (iii) below (each, a "Blackout Period"), the filing of any Demand Registration if the Company --------------- shall determine that any such filing or the offering of any Shares would (i) in the good faith judgment of the Board of Directors of the Company, unreasonably impede, delay or otherwise interfere with any pending or contemplated financing, acquisition, merger, corporate reorganization or other similar transaction involving the Company, (ii) based upon advice from the Company's investment banker or financial advisor, adversely affect any pending or contemplated offering or sale of any class of securities by the Company, or (iii) in good faith judgment of the Board require disclosure of material non-public information (other than information relating to an event described in clause (i) or (ii) of this subsection (b)) which, if disclosed at such time, would be materially harmful to the interests of the Company and its stockholders; provided, -------- however, that in the case of a Blackout Period pursuant to clause (i) above, the Blackout Period shall earlier terminate upon the completion, or abandonment of the relevant financing, acquisition, merger, corporate reorganization or other similar transaction; provided, further, in the case -------- ------- of a Blackout Period pursuant to clause (ii) above, the Blackout Period shall either terminate thirty (30) days after the completion or upon the abandonment, of the relevant securities offering or sale; and provided, -------- further, that in the case of a Blackout Period pursuant to clauses (i) or ------- (iii) above, the Company shall give written notice of its determination to postpone or delay the filing of any Demand Registration and in the case of clause (iii) above, the Blackout Period shall earlier terminate upon public disclosure by the Company or public admission by the Company of such material non-public information or such time as such material non-public information shall be publicly disclosed; and provided, further, that in the -------- ------- case of a Blackout Period pursuant to clause (i), (ii) or (iii) above, the Company shall furnish to the Shareholder a certificate of an executive officer of the Company to the effect that an event permitting a Blackout Period has occurred. Notwithstanding anything herein to the contrary, the Company shall not exercise pursuant to clause (i) or (ii) of the preceding sentence the right to postpone or delay the filing of any Demand Registration more than twice in any twelve (12) month period. Upon notice by the Company to the Shareholder of its determination that a Blackout Period exists, the Shareholder covenants that it shall keep the fact of any such notice strictly confidential, and, in the case of a Blackout Period pursuant to clauses (iii) above or Section 3.1(c) below, promptly halt any offer, sale, trading or transfer by it or any of its Affiliates of any Common Stock for the duration of the Blackout Period set forth in such notice (or until such Blackout Period shall be earlier terminated in writing by the Company) and promptly halt any use, publication, dissemination or distribution of the Demand Registration, each prospectus included therein, and any amendment or supplement thereto by it and any of its Affiliates for the duration of the Blackout Period set forth in such notice (or until such Blackout Period shall be earlier terminated in writing by the Company) and, if so directed by the Company, will deliver to the Company any copies then in such Shareholder's possession of the prospectus covering such Shares, that was in effect at the time of receipt of such notice. After the expiration of any Blackout Period and without further request from the Shareholder, the Company shall effect the filing of the relevant Demand Registration and shall use its best efforts to cause any such Demand Registration to be declared effective as promptly as practicable unless the Shareholder shall have, prior to the effective date of such Demand Registration, withdrawn in writing its initial request. (c) Anything in this Agreement to the contrary notwithstanding, in case a Demand Registration has been filed, if a transaction of the type specified in Section 3.1(b)(i) occurs other than as a result of actions taken by the Company, the Company may cause such Demand Registration to be withdrawn and its effectiveness terminated or may postpone amending or supplementing such Demand Registration for a reasonable period of time, not to exceed the Blackout Period applicable to Section 3.1(b)(i). (d) The Shareholder may withdraw a Demand Request in circumstances including, but not limited to, the following: if (i) the Company is in material breach of its obligation hereunder and has not cured such breach after having received notice thereof and a reasonable opportunity to do so or (ii) the withdrawal occurs during a Blackout Period. (e) The Company may elect to include in any registration statement filed pursuant to this Section 3.1 any Common Stock to be issued by it or held by any of its subsidiaries or by any other shareholders only to the extent such Common Stock is offered and sold pursuant to, and on the terms and subject to the conditions of, any underwriting agreement or distribution arrangements entered into or effected by the Shareholder. No securities shall be included in a Demand Registration unless the managing underwriter advises the Company in writing that inclusion of such securities will not materially and adversely affect the price or success of the Demand Registration. (f) The managing underwriter for any Demand Registration shall be selected by the Shareholder, provided that such underwriter shall be -------- reasonably satisfactory to the Company. (g) Anything in this Agreement to the contrary notwithstanding, the Company shall not be required to register any Shares pursuant to this Section 3.1 if the Shareholder had the opportunity to register Shares pursuant to Section 3.2 hereof within the 60 days immediately preceding such request, and no Shares were excluded from the offering by the managing underwriter or underwriters thereof. Section 3.2. "Piggy-Back" Registrations. ------------------------- (a) If, at any time following the date of this Agreement, the Company proposes to register any Common Stock under the Securities Act on a registration statement on Form S-1, Form S-2 or Form S-3 (or any equivalent general registration form then in effect) other than pursuant to a Demand Registration under Section 3. 1 for purposes of a primary offering, secondary offering or combined offering of such Common Stock, the Company shall give prompt written notice to the Shareholder of its intention to do so. Such notice shall specify, at a minimum, the number of shares of Common Stock so proposed to be registered, the proposed date of filing of such registration statement, any proposed means of distribution of such Common Stock, any proposed managing underwriter or underwriters of such offering and a good faith estimate by the Company of the proposed maximum offering price thereof, as such price is proposed to appear on the facing page of such registration statement. Upon the written direction of the Shareholder (a "Piggy-Back Request"), notifying the Company of the Shareholder's desire ------------------ to convert all or a portion of the Preferred Stock into shares of the Company, such notice to be given within fifteen (15) business days following the receipt by the Shareholder of any such written notice (which direction shall specify the number of Shares intended to be disposed of by the Shareholder), the Company shall include in such registration statement (a "Piggy-Back Registration" and, collectively with ----------------------- a Demand Registration, a "Registration"), subject to the provisions of ------------ Section 3.2 hereof and the registration rights originally granted to Trust Company of the West as the holder of the Company's 1996 Series A Convertible Preferred Stock (the "Existing Registration Rights"), such numbers of the Shares as shall be set forth in such Piggy-Back Request. (b) In the event that the Company proposes to register Common Stock in connection with an underwritten offering and an independent investment banking firm selected by the Company to act as managing underwriter thereof reasonably and in good faith shall have advised the Company, any holder of Common Stock intending to offer such Common Stock in a secondary offering or combined offering (each, an "Other Holder") or the Shareholder in ------------ writing that, in its opinion, the inclusion in the registration statement of some or all of the Shares sought to be registered by the Shareholder creates a substantial risk that the price per share of Common Stock that the Company or any Other Holder will derive from such registration will be materially and adversely affected or that the number of shares of Common Stock sought to be registered (including any shares of Common Stock sought to be registered at the request of the Company and any Other Holder and those sought to be registered by the Shareholder) is a greater number than can reasonably be sold or the success of the offering would otherwise be materially and adversely affected, the Company shall include in such registration statement such number of shares of Common Stock as the Company, any Other Holder and the Shareholder are so advised can be sold in such offering without such an effect (the "Maximum Number") as follows and -------------- in the following order of priority: (A) first, such number of shares of ----- Common Stock as the Company intended to be registered and sold by the Company; (B) second, in the case of a secondary offering or a combined ------ offering and if and to the extent that the number of shares of Common Stock to be registered under clause (A) is less than the Maximum Number, such number of shares of Common Stock as is required to be registered by the Existing Registration Rights; and (C) third, in the case of a secondary ----- offering or a combined offering and if and to the extent that the aggregate number of shares of Common Stock to be registered under clauses (A) and (B) is less than the Maximum Number, such number of shares of Common Stock as the Shareholder shall have intended to register which, when added to the number of shares of Common Stock to be registered under clauses (A); and (B), is less than or equal to the Maximum Number; provided that if such -------- number exceeds the Maximum Number, the shares of Common Stock of the Shareholder in excess of the amount necessary to achieve the maximum number will be excluded; and (D), fourth, to the extent that the number of shares ------ of Common Stock of the Company, the holders of the Existing Registration Rights and the Shareholder to be included in the Registration are not equal to or more than the Maximum Number, then any Other Holders may include such additional shares up to the maximum number on a pro rata basis with Other Holders desiring to participate in the Registration. (c) No Piggy-Back Registration effected under this Section 3.2 shall be deemed to have been effected pursuant to Section 3.1 hereof or shall release the Company of its obligations to effect any Demand Registration (including the Free Shelf Registration) upon request as provided under Section 3.1 hereof. (d) Notwithstanding any request under this Section 3.2, a selling Holder may elect in writing to withdraw its request for inclusion of its Shares in any registration statement provided, however, that (i) such -------- request must be made in writing prior to the earlier of the execution of the underwriting agreement or the execution of the custody agreement with respect to such registration and (ii) such withdrawal shall be irrevocable and, after making such withdrawal, a Holder shall no longer have any right to include Shares in the registration as to which such withdrawal was made. (e) If, at any time after giving written notice of its intention to register any Common Stock under Section 3.2 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 Common Stock, the Company may, at its election, give written notice of such determination to all Holders of record of Shares and (i) in the case of a determination not to register, shall be relieved of its obligation to register any Shares in connection with such abandoned registration, without prejudice, however, to the rights of Holders under Section 3.1 and (ii) in the case of a determination to delay such registration of the Company's Common Stock, shall be permitted to delay the registration of such Shares for the same period as the delay in registering such other Common Stock. (f) If, as a result of the proration provisions of this Section 3.2, any Holder shall not be entitled to include all Shares in a registration that such Holder has requested to be included, such Holder may elect to withdraw such Holder's request to include Shares in such registration or may reduce the number requested to be included. Section 3.3. Additional Agreements. --------------------- (a) Sale Without Registration. Anything in this Agreement to the ------------------------- contrary notwithstanding, if at any time the Company shall obtain a written opinion of legal counsel reasonably satisfactory to the Shareholder and addressed to the Company and the Shareholder to the effect that the Shares may be publicly offered for sale in the United States by the Shareholder without restriction as to manner of sale and amount of securities sold and without registration under the Securities Act, the Company shall no longer be obligated to file or maintain a registration statement with respect to the Shares pursuant to this Agreement. In such case, the Company shall issue to the Shareholder certificates representing the Shares without any legend restricting transfer and shall remove all stop transfer orders relating to the Shares, except for any legal or stock transfer order required by a shareholder or voting agreement to which the Shareholder is a party. (b) Registration Rights of Affiliates. Affiliates of the Shareholder --------------------------------- who become Holders of the Shares (as long as there is a direct chain of ownership by the Shareholder and its Affiliates) shall have the same rights as the Shareholder under this Agreement; provided, however, the Company shall not be obligated to file more than one Free Shelf Registration. Section 3.4. Registration Procedures. (a) In connection with each ----------------------- registration statement prepared pursuant to this Agreement, and in accordance with the intended method or methods of distribution of the Shares as described in such registration statement, the Company shall, as soon as reasonably practicable (and, in any event, subject to the terms of this Agreement, including, without limitation, Section 3. l(a), at or before the time required by applicable laws and regulations): (i) Prepare and file with the SEC a registration statement on an appropriate registration form of the SEC, with respect to such Shares, which form shall be selected by the Company with the Shareholder's reasonable consent, and use its reasonable best efforts to cause such registration statement to become effective promptly; provided that -------- before filing a registration statement or prospectus or any amendments or supplements thereto, the Company will furnish to one counsel selected by the Shareholder, and the sales or placement agent or agents, if any, for the Shares and the managing underwriter or underwriters, if any, draft copies of all such documents proposed to be filed at least four (4) days prior to such filing, which documents will be subject to the reasonable review of the Shareholder, the sales or placement agent or agents, if any, for the Shares and the managing underwriter or underwriters, if any, and their respective agents and representatives and (x) the Company will not include in any registration statement information concerning or relating to the Shareholder to which the Shareholder shall reasonably object in writing (unless the inclusion of such information is required by applicable law or the regulations of any securities exchange to which the Company may be subject), and (y) the Company will not file any Demand Registration or amendment thereto or any prospectus or any supplement thereto to which the Shareholder shall reasonably object in writing (unless the Demand Registration was theretofore filed and the filing of such amendment, prospectus or supplement is required by applicable law or the regulations of any securities exchange applicable to the Company); (ii) Furnish without charge to the Shareholder, the sales or placement agent or agents, if any, and the managing underwriter or underwriters, if any, such number of copies of such registration statement and of each amendment and supplement thereto (in each case including all exhibits), such number of copies of the summary, preliminary, final, amended or supplemented prospectuses included in such registration statement in conformity with the requirements of the Securities Act and any regulations promulgated thereunder and (upon the reasonable request by the Shareholder) any documents incorporated therein by reference and such other documents as the Shareholder may reasonably request in order to facilitate the public sale or other disposition of such Shares (the Company hereby consenting to the use in accordance with all applicable law of the prospectus or any amendment or supplement thereto by the Shareholder in connection with the offering and sale of the Shares covered by the prospectus or any amendment or supplement thereto); (iii) In respect to the Free Shelf Registration, use its reasonable best efforts to keep such registration statement effective for at least eighteen months and in respect to any other Demand Registration , use its reasonable best efforts to keep such registration statement effective for at least 180 days (the "Effective --------- Period"); prepare and file with the SEC such amendments, ------ post-effective amendments and supplements to the registration statement and the prospectus as may be necessary to maintain the effectiveness of the registration for the Effective Period and to cause the prospectus (and any amendments or supplements thereto) to be filed pursuant to Rules 424 and 430A under the Securities Act and/or any successor rules that may be adopted by the SEC, as such rules may be amended from time to time; and comply with the provisions of the Securities Act with respect to the disposition of all Shares covered by such registration statement during the Effective Period in accordance with the intended method or methods of distribution thereof, as specified in writing by the Shareholder; (iv) Except during any Blackout Period upon not less than three (3) days prior notice to the Company, make available for inspection during normal business hours by the Shareholder or by any underwriter, attorney, accountant or other agent retained by the Shareholder (collectively, the "Inspectors") financial and other records and ---------- pertinent corporate documents of the Company (collectively, the "Records"), provide the Inspectors with opportunities to discuss the ------- business of the Company with its officers and provide opportunities to discuss the business of the Company with the independent public accountants who have certified its most recent annual financial statements, in each case to the extent customary for transactions of the size and type intended, as specified by the Shareholder, but only to the extent reasonably necessary to enable the Shareholder or any underwriter retained by the Shareholder to conduct a "reasonable investigation" for purposes of Section 11(a) of the Securities Act. Records which the Company determines, in good faith, to be confidential and which it notifies the Inspectors are confidential shall not be disclosed by the Inspector unless (A) the disclosure of such Records is necessary to avoid or correct a misstatement of a material fact or omission to state a material fact in the Registration, (B) the disclosure of such Records is required by any court or governmental body with jurisdiction over the Shareholder or Inspector or (C) all of the information contained in such Records has been made generally available to the public. The Shareholder agrees that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction or by any governmental body, promptly give prior notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of those Records deemed confidential; (v) If requested by the Shareholder, promptly incorporate in a prospectus, prospectus supplement or post-effective amendment such information as the Shareholder reasonably specifies should be included therein, including, without limitation, information relating to the planned distribution of Shares, the number of Shares being sold by the Shareholder, the name and description of the Shareholder, the offering price of such Shares and any discount, commission or other compensation payable in respect of the Shares being sold, the purchase price being paid therefor to the Shareholder and information with respect to any other terms of the underwritten offering of the Shares to be sold in such offering, except to the extent that the Company is advised in a written opinion of outside counsel that the inclusion of such information is reasonably likely to violate applicable securities laws; and make all required filings of such prospectus, prospectus supplement or post-effective amendment promptly after notification of the matters to be incorporated in such prospectus, prospectus supplement or post-effective amendment; (vi) If requested by the Shareholder, use reasonable efforts to participate in and assist with a "road show" and other customary marketing efforts in connection with the sale of Shares pursuant to a Demand Registration or Piggy-Back Registration, at such times and in such manner as the Company and the Shareholder mutually may determine (and as do not unreasonably interfere with the Company's operations); (vii) Use its best efforts to register or qualify the Shares covered by a Demand Registration Statement under such other securities or "blue sky" laws of such jurisdictions in the United States as the Shareholder shall reasonably request, keep such registrations or qualifications in effect for so long as the registration statement remains in effect, and do any and all other acts and things which may be reasonably necessary to enable the Shareholder or any underwriter to consummate the public sale or other disposition of the Shares in such jurisdictions; provided, however, that in no event shall the -------- Company be required to qualify to do business as a foreign corporation in any jurisdiction where it is not so qualified; to execute or file any general consent to service of process under the laws of any jurisdiction; to take any action that would subject it to service of process in suits other than those arising out of the offer and sale of the Shares covered by the registration statement; or to subject itself to taxation in any jurisdiction where it would not otherwise be obligated to do so, but for this paragraph (vii); (viii) Use its reasonable best efforts to cause the Shares to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the Shareholder to consummate the public sale or other disposition of the Shares; (ix) Use its reasonable best efforts to cause all Shares covered by such registration statement to be approved for trading on a national interdealer quotation system or listed on the securities exchanges, if any, on which the Common Stock of the Company is then listed; (x) Promptly notify the Shareholder, at any time when a prospectus relating to any of the Shares covered by such registration statement is required to be delivered under the Securities Act, of the Company's becoming aware that 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 then existing, and, at the request of the Shareholder, promptly prepare and furnish to the Shareholder a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to the purchasers of such Shares, 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 then existing; (xi) Promptly notify the Shareholder, the sales or placement agent or agents, if any, for the Shares and the managing underwriter or underwriters, if any, thereof, after becoming aware thereof, when the registration statement or any related prospectus or any amendment or supplement has been filed, and, with respect to the registration statement or any post-effective amendment, when the same has become effective, (A) of any request by the SEC for amendments or supplements to the registration statement or the related prospectus or for additional information, (B) of the issuance by the SEC of any stop order suspending the effectiveness of the registration statement or the initiation of any proceedings for that purpose, (C) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Shares for sale in any jurisdiction or the initiation of any proceeding for such purpose or (D) within the Effective Period of the happening of any event which makes any statement in the registration statement or any post-effective amendment thereto, prospectus or any amendment or supplement thereto, or any document incorporated therein by reference untrue in any material respect or which requires the making of any changes in the registration statement or post-effective amendment thereto or any prospectus or amendment or supplement thereto so that they will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein (in light of the circumstances under which they were made) not misleading; (xii) During the Effective Period, use its best efforts to obtain the withdrawal of any order suspending the effectiveness of the registration statement or any post-effective amendment thereto; (xiii) Deliver promptly to the Shareholder, upon the Shareholder's request, copies of all correspondence between the SEC and the Company, its counsel or auditors and all memoranda relating to discussions with the SEC or its staff with respect to the registration statement and permit the Shareholder to do such investigation, with respect to information contained in or omitted from the registration statement, as is reasonably necessary. The Shareholder agrees that it will use its best efforts not to interfere unreasonably with the Company's business when conducting any such investigation; (xiv) Provide a transfer agent and registrar for all such Shares covered by such registration statement not later than the effective date of such registration statement, which transfer agent and registrar may be the Company, subject to any applicable law or regulations; (xv) Cooperate with the Shareholder and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates representing such Shares to be sold under the registration statement, which certificates shall not bear any restrictive-legends except as required by law; and, in the case of an underwritten offering, enable such Shares to be in such denominations and registered in such names as the managing underwriter or underwriters, if any, may request in writing at least two (2) business days prior to any sale of the Shares to the underwriters; (xvi) In connection with any Demand Registration, enter into such agreements (including, if the offering is an underwritten offering, an underwriting agreement) as are customary in transactions of such kind (it being recognized that certain of the below listed items may not be considered customary for the Free Shelf Registration) and take such other actions as are reasonably necessary in connection therewith in order to expedite or facilitate the disposition of such Shares; and (A) make such representations and warranties with respect to the registration statement, post-effective amendment or supplement thereto, prospectus or any amendment or supplement thereto, and documents incorporated by reference, if any, to the managing underwriter or underwriters, if any, of the Shares and, at the option of the Shareholder, make to and for the benefit of such Shareholder the representations, warranties and covenants of the Company which are being made to the underwriters, in form, substance and scope as are customarily made by the Company in connection with offerings of shares in transactions of such kind (representations and warranties by the participating holders shall also be made as are customary in agreements of that type); provided that the Company shall not be -------- required to make any representations or warranties with respect to information specifically provided by a holder for inclusion in the registration documents; (B) obtain an opinion of counsel to the Company (which counsel may be internal counsel for the Company unless the managing underwriter or underwriters shall otherwise reasonably request) in customary form and covering matters of the type customarily covered by such an opinion, addressed to such managing underwriter or underwriters, if any, and to the Shareholder and dated the date of the closing of the sale of the Shares relating thereto; (C) obtain a "comfort" letter or letters from the independent certified public accountants who have certified the Company's most recent audited financial statements that are incorporated by reference in the registration statement which is addressed to the Shareholder and the managing underwriter or underwriters, if any, and is dated the date of the prospectus used in connection with the offering of such Shares and/or the date of the closing of the sale of such Shares relating thereto, such letter or letters to be in customary form and covering such matters of the type customarily covered by "comfort" letters of such type; (D) deliver such documents and certificates as may be reasonably requested by the Shareholder and the managing underwriter or underwriters, if any, of the Shares to evidence compliance with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company; and (E) undertake such obligations relating to expense reimbursement, indemnification and contribution as provided in Sections 3.5 and 3.6 hereof, and (xvii) Comply with all applicable rules and regulations of the SEC in all material respects and generally make available to its security holders an earnings statement (which need not be audited), as soon as reasonably practicable but in no event later than ninety (90) days after the end of the period of twelve (12) months commencing on the first day of any fiscal quarter next succeeding each sale by the Shareholder of Shares which have been registered pursuant to this Agreement (the "Registered Shares") after the date hereof, which ----------------- earnings statement shall cover such twelve (12) month period and shall satisfy the provisions of Section 11(a) of the Securities Act and may be prepared in accordance with Rule 158 under the Securities Act. (b) In the event that the Company would be required, pursuant to Section 3.4(a)(xi)(D) above, to notify the Shareholder, the sales or placement agent or agents, if any, for the Shares and the managing underwriter or underwriters, if any, thereof, the Company shall, subject to the provisions of Section 3.1(b) hereof, as promptly as practicable, prepare and furnish to the Shareholder, to each placement or sales agent, if any, and to each underwriter, if any, a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to purchasers of Registered Shares, such prospectus shall not contain 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, in the light of the circumstances under which they were made, not misleading. The Shareholder agrees that, upon receipt of any notice from the Company pursuant to Section 3.4(a)(xi)(D) hereof, the Shareholder shall, and shall use its best efforts to cause any sales or placement agent or agents for the Shares and the underwriters, if any, thereof, to forthwith discontinue disposition of the Shares until such person shall have received copies of such amended or supplemented prospectus and, if so directed by the Company, to destroy or to deliver to the Company all copies, other than permanent file copies, then in its possession of the prospectus (prior to such amendment or supplement) covering such Shares as soon as practicable after the Shareholder's receipt of such notice. (c) The Shareholder shall furnish to the Company in writing such information regarding the Shareholder and its intended method of distribution of the Shares as the Company may from time to time reasonably request in writing, but only to the extent that such information is required in order for the Company to comply with its obligations under all applicable securities and other laws and to ensure that the prospectus relating to such Shares conforms to the applicable requirements of the Securities Act and the rules and regulations thereunder. The Shareholder shall notify the Company as promptly as practicable of any inaccuracy or change in information previously furnished by the Shareholder to the Company or of the occurrence of any event, in either case as a result of which any prospectus relating to the Shares contains or would contain an untrue statement of a material fact regarding the Shareholder or its intended method of distribution of such Shares or omits to state any material fact regarding the Shareholder or its intended method of distribution of such Shares required to be stated therein or necessary to make the statement therein, in light of the circumstances under which they were made, not misleading, and promptly furnish to the Company any additional information required to correct and update any previously furnished information or required so that such prospectus shall not contain, with respect to the Shareholder or the distribution of the Shares, 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, in light of the circumstances under which they were made, not misleading. (d) Each Holder agrees not to effect any public sale or distribution of any Shares, including any sale pursuant to Rule 144 under the Securities Act, and not to effect any such public sale or distribution of any other equity security of the Company or of any security convertible into or exchangeable or exercisable for any equity security of the Company (in each case, other than as part of such underwritten public offering) during the ten (10) days prior to, and during the ninety (90) day period (or such longer period as each Holder agrees with the underwriter of such offering) beginning on the consummation of any underwritten public offering of the Shares covered by a registration statement referred to in Section 3.2 to the extent such Registered Shares are being sold thereunder. (e) In the case of any registration under Section 3.1 pursuant to an underwritten offering, or in the case of a registration under Section 3.2 if the Company has determined to enter into an underwriting agreement in connection therewith, all Shares to be included in such registration shall be subject to an underwriting agreement and no person may participate in such registration unless such person agrees to sell such person's securities on the basis provided therein and completes and executes all questionnaires, indemnities, underwriting agreements and other document (other than powers of attorney) which must be executed in connection therewith, and provides such other information to the Company or the underwriter as may be necessary to register such Holder's Shares. Section 3.5. Registration Expenses. Except as otherwise provided, the --------------------- Shareholder agrees to bear and to pay, or cause to be paid promptly upon request being made therefor, all reasonable expenses incident to the Company's performance of or compliance with this Agreement, including, without limitation: (a) all registration fees payable to the SEC under the Securities Act and all fees and expenses in connection with the qualification of the Registered Shares for offering and sale under state securities or "blue sky" laws referred to in Section 3.4(a)(vii) hereof, including reasonable fees and disbursements of counsel for any placement or sales agent or underwriter in connection with such qualifications, (b) all expenses relating to the preparation, printing, distribution and reproduction of the registration statement, each prospectus included therein or prepared for distribution pursuant hereto, each amendment or supplement to the foregoing, the certificates representing the Registered Shares and all other documents relating hereto, (c) the costs and charges of any escrow agent, transfer agent, registrar, any custodian or attorney-in-fact appointed to act on behalf of the Shareholder (including, without limitation, all salaries and expenses of the Company's officers and employees performing legal or accounting duties) relating to the Registered Shares, (d) fees, disbursements and expenses of the Company's counsel and its other advisors and experts and independent certified public accountants of the Company (including the expenses of any opinions or "comfort" letters required by or incident to such performance and compliance) relating to the Registered Shares, (e) the fees and expenses incurred in connection with the listing of the Registered Shares on The American Stock Exchange and such other stock exchange or national securities exchange on which the Common Stock of the Company shall at such time be listed, (f) reasonable fees and disbursements of counsel retained by the Shareholder in connection with registration pursuant to this Agreement; provided, however, that the Shareholder shall pay all costs, fees and expenses of any special audit required as a result of the timing of the demand for the Free Shelf Registration (collectively, the "Registration Expenses"). In respect to the Free Shelf --------------------- Registration, the Company shall pay all out-of-pocket Registration Expenses except underwriter discounts and commissions applicable to the Registered Shares and to the extent that any such Registration Expenses are incurred, assumed or paid by the Shareholder, any sales or placement agent or agents for the Registered Shares and the underwriters, if any, thereof, the Company shall reimburse such person for the full amount of the Registration Expenses so incurred, assumed or paid promptly after receipt of a request therefor and (g) all expenses relating to any "road show" in connection with a Demand Registration. The Holder of the Registered Shares shall pay all underwriting discounts and commissions and any capital gains, income or transfer taxes, if any, attributable to the sale of such Registered Shares. Section 3.6. Indemnification: Contribution. ----------------------------- (a) Indemnification by the Company. The Company shall, and it hereby ------------------------------ agrees to, indemnify and hold harmless the Shareholder, its directors, officers, employees and controlling persons, if any, controlling and each person who participates as a placement or sales agent or as an underwriter in any offering or sale of the Shares, against any losses, claims, damages or liabilities to which the Shareholder or such agent or underwriter may become subject, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) (collectively, "Claims") arise out of or are based upon an untrue statement ------ or alleged untrue statement of a material fact contained in any registration statement, or any preliminary or final prospectus contained therein, or any amendment or supplement thereto, or any document incorporated by reference therein, or arise out of or are based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, and the Company shall, and it hereby agrees to, reimburse the Shareholder or any other indemnified Person such agent or underwriter for any legal or other out-of-pocket expenses reasonably incurred by them in connection with investigating or defending any such Claims; provided, however, that the -------- Company shall not be liable to any such Person in any such case to the extent that any such Claims arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, or preliminary or final prospectus, or amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by the Shareholder or any agent, underwriter or representative of the Shareholder expressly for use therein, or by the Shareholder's failure to furnish the Company, upon request, with the information with respect to the Shareholder, or any agent, underwriter or representative of the Shareholder, or the Shareholder's intended method of distribution, that is the subject of the untrue statement or omission or if the Company shall sustain the burden of proving that the Shareholder or such agent or underwriter sold securities to the person alleging such Claims without sending or giving, at or prior to the written confirmation of such sale, a copy of the applicable prospectus (excluding any documents incorporated by reference therein) or of the applicable prospectus, as then amended or supplemented (excluding any documents incorporated by reference therein), if the Company had previously furnished copies thereof to the Shareholder or such agent or underwriter, and such prospectus corrected such untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement. (b) Indemnification by the Shareholder. The Shareholder shall, and ---------------------------------- hereby agrees to (i) indemnify and hold harmless the Company, its directors, officers, employees and controlling Persons, if any, and each underwriter, its partners, officers, directors, employees and controlling persons, if any, in any offering or sale of Shares, against any Claims to which the Company, its directors, officers, employees and controlling Persons, if any, may become subject, insofar as such Claims (including any amounts paid in settlement as provided herein), arise out of or are based upon (A) an untrue statement or alleged untrue statement of a material fact contained in such registration statement, or any preliminary or final prospectus contained therein, or any amendment or supplement thereto, or any document incorporated by reference therein, or arise out of or are based upon 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, in each case only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by the Holder or such agent or underwriter (as the case may be) expressly for use therein, and/or (B) an untrue statement or alleged untrue statement or omission in a preliminary prospectus if the Company furnished copies of a final prospectus, amendment or supplement thereto that corrected such untrue statement, alleged untrue statement or omission, provided that the maximum amount for which the Shareholder should be liable under this indemnity shall not exceed the net proceeds recovered by all Holders from the sale of the Shares, and (ii) reimburse the Company for any legal or other out-of-pocket expenses reasonably incurred by the Company or any other indemnified Persons in connection with investigating or defending any such Claim. (c) Notice of Claims, Etc. Promptly after receipt by an indemnified --------------------- party under subsection (a) or (b) above of written notice of the commencement of any action or proceeding for which indemnification under subsection (a) or (b) may be requested, such indemnified party shall, without regard to whether a claim in respect thereof is to be made against an indemnifying party pursuant to the indemnification provisions of, or as contemplated by, this Section 3.6, notify such indemnifying party in writing of the commencement of such action or proceeding; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party in respect of such action or proceeding on account of the indemnification provisions of or contemplated by Section 3.6(a) or 3.6(b) hereof except to the extent the indemnifying party was materially prejudiced by such failure of the indemnified party to give such notice, and in no event shall such omission relieve the indemnifying party from any other liability it may have to such indemnified party. In case any such action or proceeding shall be brought against any indemnified party and it shall notify an indemnifying party of the commencement thereof, unless in the reasonable opinion of outside counsel to the indemnified party a conflict of interest between such indemnified and indemnifying parties may exist in respect of such claim, such indemnifying party shall be entitled to participate therein and, to the extent that it shall determine, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel selected by the indemnifying party and 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, such indemnifying party shall not be liable to such indemnified party for any legal or any other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation (unless such indemnified party reasonably objects to such assumption on the grounds that there may be defenses available to it which are different from or in addition to the defenses available to such indemnifying party, in which event the indemnified party shall have the right to control its defense and shall be reimbursed by the indemnifying party for the reasonable fees and expenses of its counsel; provided, however, under no circumstances will the indemnifying party be obligated to pay the fees and expenses of more than one separate counsel for all indemnified persons in any jurisdiction). If the indemnifying party is not entitled to, or elects not to, assume the defense of a claim, it will not be obligated to pay the fees and expenses of more than one counsel for all indemnified parties in any jurisdiction. The indemnifying party will not be subject to any liability for any settlement made without its prior written consent, which consent shall not be unreasonably withheld or delayed. No indemnifying party shall, without the prior written consent of the indemnified party, compromise or consent to entry of any judgment or enter into any settlement agreement with respect to any action or proceeding in respect of which indemnification is sought under Section 3.6(a) or (b) (whether or not the indemnified party is an actual or potential party thereto), unless such compromise, consent or settlement includes as an unconditional term thereof the giving by the claimant or plaintiff to the indemnified party of a release from all liability in respect of such claim or litigation and does not subject the indemnified party to any injunctive relief or other equitable remedy. (d) Contribution. The Shareholder and the Company agree that if, for ------------ any reason, the indemnification provisions contemplated by Sections 3.6(a) or 3.6(b) hereof are unavailable to or are insufficient to hold harmless an indemnified party in respect of any Claims referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such Claims in such proportion as is appropriate to reflect the relative fault of, and benefits derived by, the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or by such indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The relative benefit derived by the parties shall be determined by reference to the fact that the Company entered into this Agreement to induce the Shareholder to engage in the transaction in which the Shares were acquired. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 3.6(d) were determined (i) by pro --- rata allocation (even if the Shareholder or any agents for, or underwriters ---- of, the Shares, or all of them, were treated as one entity for such purpose); or (ii) by any other method of allocation which does not take into account the equitable considerations referred to in this Section 3.6(d). The amount paid or payable by an indemnified party as a result of the Claims referred to above shall be deemed to include (subject to the limitations set forth in Section 3.6(c) hereof) any legal or other fees or expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action, proceeding or claim. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (e) Beneficiaries of Indemnification. The obligations of the Company -------------------------------- under this Section 3.6 shall be in addition to any liability that it may otherwise have and shall extend, upon the same terms and conditions, to each employee, officer and director of the Shareholder and each agent and underwriter of the Shares and each person, if any, who controls the Shareholder or any such agent or underwriter within the meaning of the Securities Act; and the obligations of the Shareholder and any agents or underwriters contemplated by this Section 3.6, shall be in addition to any liability that the Shareholder or its respective agent or underwriter may otherwise have and shall extend, upon the same terms and conditions, to each employee, officer and director of the Company (including any person who, with his consent, is named in any registration statement as about to become a director of the Company) and to each person, if any, who controls the Company within the meaning of the Securities Act. Section 3.7. Underwriters. If any of the Shares are to be sold pursuant to ------------ an underwritten offering, the investment banker or bankers and the managing underwriter or underwriters thereof shall be selected by the Company except in the case of a Demand Registration, in which the managing underwriter or underwriters shall be selected by the Shareholder, provided that such managing -------- underwriter or underwriters must be of recognized national standing and reasonably acceptable to the Company. Section 3.8. Exchange Act Filings: Rule 144 ------------------------------ (a) The Company covenants to and with the Shareholder that to the extent it shall be required to do so under the Exchange Act, the Company shall timely file the reports required to be filed by it under the Exchange Act or the Securities Act (including, but not limited to, the reports under Sections 13 and 15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144 adopted by the SEC under the Securities Act and the rules and regulations adopted by the SEC thereunder) and shall take such further action as the Shareholder may reasonably request, all to the extent required from time to time to enable the Shareholder to sell Shares without registration under the Securities Act within the limitations of the exemption provided by Rule 144 under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC. Upon the request of the Shareholder, the Company shall deliver to the Shareholder a written statement as to whether it has complied with such requirements. (b) The Company covenants to make available "adequate current public information" concerning the Company within the meaning of Rule 144(c) under the Securities Act. Section 3.9. Agreement of the Shareholder. The Shareholder agrees not to, ---------------------------- and it shall cause its Affiliates not to, make any sale, transfer or other disposition of Shares except in compliance with the registration requirements of the Securities Act and the rules and regulations thereunder or in accordance with the terms of this Agreement. The Shareholder will cause any Holder to whom Shares are transferred to comply with, and agree to, the terms of this Agreement. Section 3. 10. Legends. ------- (a) Stop transfer restrictions will be given to the Company's transfer agent(s) with respect to the Shares and there will be placed on the certificates or instruments representing the Shares, and on any certificate or instrument delivered in substitution therefor, a legend stating in substance: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO SUCH REGISTRATION OR IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. (b) The Company hereby agrees that it will cause stop transfer restrictions to be released with respect to any Shares that are transferred (i) pursuant to an effective registration statement under the Securities Act, (ii) pursuant to Rule 144 under the Securities Act, (iii) in accordance with the requirements of Rule 903 or 904 of Regulation S under the Securities Act, (except for any stop transfer instructions and legends required by Regulation S); or (iv) pursuant to another exemption from the registration requirements of the Securities Act; provided, however, that in -------- the case of any transfer pursuant to clause (ii), (iii) or (iv) above, the request for transfer is accompanied by a written statement signed by the Shareholder confirming compliance with the requirements of the relevant exemption from registration; and provided, further, that in the case of any -------- ------- transfer pursuant to clauses (ii), (iii) and (iv) above, other than any transfer by the Shareholder to one or more of its direct or indirect subsidiaries, or among such subsidiaries, or by any such subsidiary to the Shareholder, the Company shall have received a written opinion of counsel reasonably satisfactory to the Company. The Company further agrees that it will cause the legend described in subsection (a) of this Section 3.10 to be removed in the event of any transfer as provided in clause (i), (ii) or (iii) above. ARTICLE IV Miscellaneous ------------- Section 4.1. Term of Agreement: Termination. The term of this Agreement ------------------------------ shall commence on the date hereof and such term and this Agreement shall terminate upon the expiration of the Demand Period. Section 4.2. Recapitalizations, Exchanges, Etc. Affecting the Shares. The ------------------------------------------------------- provisions of this Agreement shall apply to any and all shares of capital stock of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for, or in substitution of the Shares, by reason of a stock dividend, stock split, stock issuance, reverse stock split, combination, recapitalization, reclassification, merger, consolidation or otherwise. Section 4.3. Amendment. This Agreement may not be amended except by a --------- written instrument, duly executed by the Company and the Shareholder. Section 4.4. Notices. Except as otherwise provided in this Agreement, all ------- notices, requests, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand, when delivered personally or by courier, three days after being deposited in the mail (registered or certified mail, postage prepaid, return receipt requested), or when received by facsimile transmission if promptly confirmed by one of the foregoing means, as follows: If to the Shareholder: ONEOK Resources Company 100 West Fifth Street Tulsa, Oklahoma 74103 Attention: David L. Kyle, President with copy to: John R. Barker, Esq. GABLE & GOTWALS, INC. 100 West Fifth Street, Ste. 1000 Tulsa, Oklahoma 74103-4219 Phone: (918) 588-7800 Fax: (918) 588-7873 If to the Company: Magnum Hunter Resources, Inc. 600 East Las Colinas Boulevard Suite 1200 Irving, Texas 75039 Attention: Gary C. Evans, President and Chief Executive Officer Section 4.5. Integration. This Agreement and the other writings referred to ----------- herein or delivered pursuant hereto which form a part hereof contain the entire understanding of the parties with respect to its subject matter. This Agreement supersedes all prior agreements and understandings between the parties with respect to its subject matter. There are no restrictions, agreements, promises, representations, warranties, covenants or underwritings with respect to its subject matter other than those expressly set forth or referred to herein. Section 4.6. Binding Effect & Benefit. This Agreement shall inure to the ------------------------ benefit of and be binding upon the parties hereto, and their respective successors and permitted assigns. Nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto, and their respective successors and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. Section 4.7. Assignability. This Agreement shall not be assignable by any ------------- party hereto. Section 4.8. Counterparts. This Agreement may be executed by the parties ------------ hereto in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Section 4.9. Applicable Law. This Agreement shall be governed by and -------------- construed in accordance with the internal laws of the state of Oklahoma without giving effect to principles of conflicts of law. Section 4.10. Shareholder Agreement. This Agreement shall remain in effect --------------------- in accordance with its terms notwithstanding the termination or lapse in effectiveness of any other agreement between the Shareholder and the Company, including, but not limited to, the Shareholder and Voting Agreement of event date herewith. Section 4.11. Severability. In the event any one or more of the provisions ------------ outlined herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired, and such unreasonable, unlawful or unenforceable provision shall be interpreted, revised or applied in the manner that renders it lawful and enforceable to the fullest extent possible under law. ONEOK RESOURCES COMPANY, a Delaware corporation By: /s/ David L. Kyle ---------------------------------------------------- David L. Kyle, President "SHAREHOLDER" MAGNUM HUNTER RESOURCES, INC., a Nevada corporation By: /s/ Gary C. Evans ---------------------------------------------------- Gary C. Evans, President and Chief Executive Officer "COMPANY" -----END PRIVACY-ENHANCED MESSAGE-----