Document:

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                                                                   EXHIBIT 4.1

                               WARRANTS AGREEMENT

         This WARRANTS AGREEMENT (the "Agreement") is dated as of March 19,
2002, between Magnum Hunter Resources, Inc., a Nevada corporation (the
"Company"), and American Stock Transfer & Trust Company, a New York corporation,
as Warrants Agent (the "Warrants Agent").

                                    RECITALS

         WHEREAS, the Company proposes to issue Warrants (the "Warrants")
entitling the holders thereof to purchase an aggregate of up to 7,228,457 shares
of the Company's Common Stock, $.002 par value per share (the "Common Stock");
and

         WHEREAS, the Warrants Agent, at the request of the Company, has agreed
to act as the agent of the Company in connection with the issuance,
registration, transfer, exchange and exercise of the Warrants;

         NOW, THEREFORE, in consideration of the premises and mutual agreements
herein set forth, the parties hereto agree as follows:

                                    AGREEMENT

         1. APPOINTMENT OF WARRANTS AGENT. The Company hereby appoints the
Warrants Agent to act as agent for the Company in accordance with the
instructions hereinafter set forth; and the Warrants Agent hereby accepts such
appointment, upon the terms and conditions hereinafter set forth.

         2. AMOUNT ISSUED. Subject to the provisions of this Agreement, the
Company shall issue and distribute to holders of its Common Stock ("Record
Holders") transferable Warrants to purchase an aggregate of 7,228,457 shares of
Common Stock. The Company shall distribute to the Record Holders as of January
10, 2002 (the "Record Date") one (1) Warrant for every five (5) shares of Common
Stock held of record on the Record Date. No fractional warrants or cash in lieu
thereof will be issued or paid. The number of Warrants distributed to each
Record Holder will be rounded down to the nearest whole number. Each Warrant
shall entitle the holder thereof to purchase one share of Common Stock at a
price of $15.00 per share upon exercise of the Warrant as herein provided.

         3. FORM OF WARRANT CERTIFICATES. The Warrants shall be evidenced by
certificates (the "Warrant Certificates") to be delivered pursuant to this
Agreement in registered form only. The Warrant Certificates and the forms of
election to purchase shares of Common Stock and of assignment to be printed on
the reverse thereof shall be in substantially the form set forth in Exhibit A
hereto, together with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Agreement, and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with any law or with
any rules made pursuant thereto or with any rules of any securities exchange,
any agreement between the Company and any holder of a Warrant (a

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"Warrantholder"), or as may, consistently herewith, be determined by the
officers executing such Warrant Certificates, as evidenced by their execution of
such Warrant Certificates.

         4. EXECUTION OF WARRANT CERTIFICATES. Warrant Certificates shall be
signed on behalf of the Company by its President or any Vice President, and by
its Treasurer, Secretary or Assistant Secretary by manual signatures or by
facsimile signatures printed thereon, and shall have imprinted thereon a
facsimile of the Company's seal. Warrant Certificates shall be manually
countersigned by the Warrants Agent and shall not be valid for any purpose
unless so countersigned. In case any officer of the Company who shall have
signed any of the Warrant Certificates shall cease to be such officer of the
Company before the date of issuance of the Warrant Certificates or before
countersignature by the Warrants Agent and issue and delivery thereof, such
Warrant Certificates may nevertheless be countersigned by the Warrants Agent,
issued and delivered with the same force and effect as though the person who
signed such Warrant Certificates had not ceased to be such officer of the
Company.

         5. REGISTRATION. The Warrant Certificates shall be numbered and shall
be registered in a register (the "Warrants Register") to be maintained by the
Warrants Agent. The Company and the Warrants Agent may deem and treat the
registered holder of a Warrant Certificate as the absolute owner thereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone), for the purpose of any exercise thereof or any distribution to the
holder thereof and for all other purposes, and neither the Company nor the
Warrants Agent shall be affected by any notice to the contrary.

         6. REGISTRATION OF TRANSFERS AND EXCHANGES. Until the Close of Business
on the Expiration Date (as hereinafter defined), the Warrants Agent shall from
time to time register the transfer of any outstanding Warrant Certificates in
the Warrants Register, upon surrender of such Warrant Certificates, duly
endorsed, and, if not surrendered by or on behalf of an original holder of
Warrant Certificates or a transferee thereof, accompanied by a written
instrument or instruments of transfer in form satisfactory to the Warrants
Agent, duly signed by the registered holder or holders thereof or by the duly
appointed legal representative thereof or by a duly authorized attorney, such
signature to be "medallion" guaranteed by an "eligible guarantor institution" as
defined under Rule 17Ad-15 promulgated under the Securities Exchange Act of
1934, as amended. Upon any such registration of transfer, a new Warrant
Certificate shall be issued to the transferee.

         Warrant Certificates may be exchanged at the option of the holder or
holders thereof, when surrendered to the Warrants Agent at its offices or agency
maintained in New York, New York (or at such other offices or agencies as may be
designated by the Warrants Agent) for the purpose of exchanging, transferring
and exercising the Warrants (a "Warrants Agent's Office") or at the offices of
any successor Warrants Agent as provided in Section 18 hereof, for another
Warrant Certificate or other Warrant Certificates of like tenor and representing
in the aggregate a like number of Warrants.

         The Company shall not be required to issue any Warrant Certificate
evidencing a fraction of a Warrant or to issue fractions of shares of securities
on the exercise of the Warrants, and any fractional interest in a Warrant alone
shall be of no value whatsoever. By accepting a Warrant Certificate, the holder
thereof expressly waives any right to receive a Warrant Certificate evidencing
any fraction of a Warrant, to receive any fractional share of securities upon
exercise

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of a Warrant, or to receive any value whatsoever upon exercise of a fractional
interest in a Warrant.

         7. DURATION AND EXERCISE OF WARRANTS; EXERCISE PRICE.

                  (a) Unless the Warrants are redeemed in accordance with
         Section 14, the Warrants shall expire at (i) 5:00 p.m. New York City
         time (the "Close of Business") on March 21, 2005, subject to extension,
         in the sole discretion of the Company, in a written statement to the
         Warrants Agent and with at least thirty (30) days' prior notice to
         registered Warrantholders in the manner provided for in Section 15
         (such date of expiration being hereinafter referred to as the
         "Expiration Date"). At such time as the Warrants become exercisable,
         and thereafter until the Close of Business on the Expiration Date, the
         Warrants may be exercised on any business day. After the Close of
         Business on the Expiration Date, the Warrants will become void and of
         no value.

                  (b) Subject to the provisions of this Agreement, each Warrant
         shall entitle the holder thereof to purchase from the Company (and the
         Company shall issue and sell to such holder of a Warrant) one fully
         paid and nonassessable share of Common Stock at the price of $15.00 per
         share (the "Exercise Price").

                  (c) A Warrantholder shall exercise such Warrantholder's right
         to purchase shares of Common Stock by depositing with the Warrants
         Agent at a Warrants Agent's Office, the Warrant Certificate evidencing
         such Warrant with the form of election to purchase on the reverse
         thereof duly completed and signed by the registered holder or holders
         thereof or by the duly appointed legal representative thereof or by a
         duly authorized attorney, such signature (if not signed by or on behalf
         of an original holder of Warrants) to be guaranteed in the manner
         described in Section 6 hereof, and paying to the Warrants Agent an
         amount equal to the Exercise Price multiplied by the number of shares
         of Common Stock in respect of which the Warrants are being exercised.
         Payment shall be in lawful money of the United States of America by
         wire transfer, by official bank, certified check or personal check or
         by a postal, telegraphic or express money order made payable to the
         Warrants Agent for the account of the Company; provided, however, if
         payment is made by personal check, sufficient time must be allowed for
         the check to clear prior to the Expiration Date. If payment shall be
         made by wire transfer, such payment shall be transferred to Chase
         Manhattan Bank (ABA Number: 021 000 021 and Account Number: 610-093045)
         for the account of the Company, or such other account on behalf of the
         Company as the Warrants Agent shall hereafter direct. Once a
         Warrantholder exercises a Warrant, that exercise may not be revoked.

                  (d) Unless a Warrant Certificate (i) provides that the shares
         of Common Stock to be issued pursuant to the exercise of Warrants
         represented thereby are to be delivered directly to the holder of such
         Warrants or (ii) is submitted for the account of an "eligible guarantor
         institution," signatures on such Warrant Certificate must be guaranteed
         by an "eligible guarantor institution."

                  (e) Subject to Section 8, upon such surrender of a Warrant
         Certificate and payment of the Exercise Price, and as soon as
         practicable thereafter, the Warrants Agent, in its capacity as the
         Company's transfer agent (the "Transfer Agent"), shall requisition

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         for issuance and delivery to or upon the written order of the
         registered holder of such Warrant Certificate and in such name or names
         as such registered holder may designate, a certificate or certificates
         for the share or shares of Common Stock issuable upon the exercise of
         the Warrants. Such certificate or certificates shall be deemed to have
         been issued and any person so designated to be named therein shall be
         deemed to have become the holder of record of such share or shares of
         Common Stock upon the date of issuance thereof.

                  The Exercise Price will be deemed to have been received by the
         Warrants Agent only upon (i) clearance of any uncertified check, (ii)
         receipt by the Warrants Agent of any certified check or bank draft
         drawn upon a U.S. bank or any postal, telegraphic or express money
         order, or (iii) receipt by the Warrants Agent of any wire transfer to
         the account set forth above.

                  (f) The Warrants evidenced by a Warrant Certificate shall be
         exercisable, at the election of the registered holder thereof, either
         as an entirety or from time to time for a portion of the number of
         Warrants specified in the Warrant Certificate. If less than all of the
         Warrants evidenced by a Warrant Certificate surrendered upon the
         exercise of Warrants are exercised at any time prior to the Expiration
         Date, a new Warrant Certificate or Certificates shall be issued for the
         number of Warrants evidenced by the Warrant Certificate so surrendered
         that have not been exercised.

                  (g) The Warrants Agent shall account promptly to the Company
         with respect to Warrants exercised and concurrently pay or deliver to
         the Company all moneys and other consideration received by it upon the
         purchase of shares of Common Stock through the exercise of Warrants.

                  (h) If either the number of Warrants being exercised is not
         specified on a Warrant Certificate, or the payment delivered is not
         sufficient to pay the full aggregate Exercise Price for all shares of
         Common Stock stated to be subscribed for, the Warrantholder will be
         deemed to have exercised the maximum number of Warrants that could be
         exercised for the amount of the payment delivered by such
         Warrantholder. If the payment delivered by the Warrantholder exceeds
         the aggregate Exercise Price for the number of Warrants evidenced by
         the Warrant Certificate(s) delivered by such Warrantholder, the payment
         will be applied, until the Warrant is depleted, to subscribe for shares
         of Common Stock. Any excess payment remaining after the foregoing
         allocation will be returned to such Warrantholder as soon as
         practicable by mail, without interest or deduction for expenses.

                  (i) No issuance of shares of Common Stock upon exercise of
         Warrants shall be made unless there is a current prospectus covering
         such shares of Common Stock under an effective registration statement
         under the Securities Act of 1933, as amended (or an exemption
         therefrom), and registration or qualification of such shares of Common
         Stock (or an exemption therefrom) has been obtained from the state or
         other regulatory authorities in the jurisdiction in which such shares
         of Common Stock are sold. The Company will provide to the Warrants
         Agent written confirmation of such registration or qualification, or an
         exemption therefrom, when requested by the Warrants Agent, and the

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         determination of the Company shall be final and binding on the Warrants
         Agent and each Warrantholder.

                  (j) Notwithstanding any other provision of this Agreement to
         the contrary, no issuance of shares of Common Stock shall be made, and
         the Company is authorized to refuse to honor the exercise of any
         Warrant, if the exercise of any Warrant would result, in the opinion of
         the Company's Board of Directors upon advice of counsel, in the
         violation of law.

                  (k) All questions concerning the timeliness, validity, form
         and eligibility of any exercise of Warrants will be determined by the
         Company and such determinations will be final and binding. The Company
         may waive any defect or irregularity, or permit a defect or
         irregularity to be corrected within an amount of time as the Company
         may determine, or reject the purported exercise of any Warrant by
         reason of any defect or irregularity in the exercise. Subscriptions
         will not be deemed to have been received or accepted until all
         irregularities have been waived or cured within an amount of time
         determined in the Company's sole discretion. The Company and the
         Warrants Agent are not under any duty to notify any Warrantholder of
         any defect or irregularity in connection with the submission of Warrant
         Certificates and will not incur any liability for failure to provide
         this notification.

         8. CANCELLATION OF WARRANTS. If the Company shall purchase or otherwise
acquire Warrants, the Warrant Certificates representing such Warrants shall
thereupon be delivered to the Warrants Agent and be canceled by it and retired.
The Warrants Agent shall cancel all Warrant Certificates surrendered for
exchange, substitution, transfer or exercise in whole or in part.

         9. PAYMENT OF TAXES. The Company will pay all documentary stamp taxes
attributable to the initial issuance of Warrants and of shares of Common Stock
upon the exercise of Warrants; provided, that the Company shall not be required
to pay any tax or taxes which may be payable in respect of any transfer involved
in the issue of any Warrant Certificates or any certificates for shares of
Common Stock in a name other than the registered holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and the Company shall not be
required to issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid or adequate provision has been made for the payment
thereof.

         10. MUTILATED OR MISSING WARRANT CERTIFICATES. If any of the Warrant
Certificates shall be mutilated, lost, stolen or destroyed, the Company may in
its discretion issue, and the Warrants Agent shall deliver, in exchange and
substitution for and upon cancellation of the mutilated Warrant Certificate, or
in lieu of and substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence satisfactory to
the Company and the Warrants Agent of such loss, theft or destruction of such
Warrant Certificate and indemnity or bond, if requested, also satisfactory to
them. Applicants for such substitute Warrant Certificates shall also comply with
such other reasonable regulations and pay such other reasonable charges as the
Company or the Warrants Agent may prescribe.

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         11. RESERVATION OF SHARES OF COMMON STOCK. For the purpose of enabling
it to satisfy any obligation to issue shares of Common Stock upon exercise of
Warrants, the Company will at all times through the Close of Business on the
Expiration Date, reserve and keep available, free from preemptive rights and out
of its aggregate authorized but unissued shares of Common Stock, the number of
shares of Common Stock deliverable upon the exercise of all outstanding Warrants
and the Transfer Agent is hereby irrevocably authorized and directed at all
times to reserve such number of authorized and unissued shares of Common Stock
as shall be required for such purpose. The Warrants Agent, in its capacity as
Transfer Agent, is hereby irrevocably authorized to requisition from time to
time stock certificates issuable upon exercise of outstanding Warrants.

         Before taking any action that would cause an adjustment pursuant to
Section 13(b) reducing the Exercise Price below the then par value (if any) of
the shares of Common Stock issuable upon exercise of the Warrants, the Company
will take any corporate action that may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock at the Exercise Price as so adjusted.

         The Company covenants that all shares of Common Stock issued upon
exercise of the Warrants will, upon issuance in accordance with the terms of
this Agreement, be fully paid and nonassessable and free from all liens, charges
and security interests created by or imposed upon the Company with respect to
the issuance thereof.

         12. REGISTRATION OF WARRANTS AND SHARES OF COMMON STOCK. The Company
has filed with the SEC a registration statement on Form S-3 (the "Registration
Statement") which has been or will be declared effective. Except as set forth in
the last sentence of this Section 12, the Company will use its best efforts to
keep the Registration Statement continuously effective from the date hereof
through the Expiration Date and to keep such Registration Statement and
prospectus included therein current while any of the Warrants are outstanding.
So long as any unexpired Warrants remain outstanding, the Company will in good
faith and as expeditiously as possible endeavor to obtain and keep effective any
and all permits, consents and approvals of government agencies and authorities
and to make filings under federal and state securities acts and laws, which may
be or become necessary in connection with the issuance, sale, transfer and
delivery of the Warrant Certificates, the exercise of the Warrants and the
issuance, sale, transfer and delivery of the shares of Common Stock issued upon
exercise of Warrants. However, Warrants may not be exercised or sold by, nor may
shares of Common Stock or other securities be issued to, any registered
Warrantholder in any state or jurisdiction in which such exercise or sale would
be unlawful. Notwithstanding anything to the contrary in this Section 12, the
Company shall not be required to keep the Registration Statement, or any other
registration statement covering the shares of Common Stock issuable upon
exercise of the Warrants, or any related prospectus current if in the reasonable
judgment of the Company the discrepancy between the market price of the Common
Stock and the Exercise Price makes it extremely unlikely that the Warrants will
be exercised.

         13. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES OF COMMON STOCK
PURCHASABLE OR NUMBER OF WARRANTS.

                  (a) Except as provided in subsection (b) or (d) below, the
         Exercise Price and the number of shares of Common Stock purchasable
         upon the exercise of each Warrant

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         shall not be adjusted prior to the Expiration Date or upon exercise of
         any Warrant or Warrants.

                  (b) If the Company shall (i) pay a dividend on its shares of
         Common Stock in shares of Common Stock, (ii) subdivide its outstanding
         shares of Common Stock, (iii) combine its outstanding shares of Common
         Stock into a smaller number of shares of Common Stock or (iv)
         reclassify the Common Stock (including any such reclassification in
         connection with a consolidation or merger in which the Company is the
         continuing corporation), the number of shares of Common Stock
         purchasable upon exercise of each Warrant immediately prior thereto and
         the Exercise Price payable therefor shall be adjusted so that the
         holder of each Warrant shall be entitled upon exercise to receive, for
         the same aggregate consideration, the kind and number of shares of
         Common Stock or other securities of the Company which such holder would
         have owned or have been entitled to receive after the happening of any
         of the events described above, had such Warrant been exercised
         immediately prior to the happening of such event or any record date
         with respect thereto. An adjustment made pursuant to this subparagraph
         (b) shall become effective immediately after the effective date of such
         event retroactive to the record date, if any, for such event. In
         addition, in the event of any reclassification of the Common Stock,
         references in this Agreement to Common Stock shall thereafter be deemed
         to refer to the securities into which the Common Stock shall have been
         reclassified.

                  (c) In case of any consolidation of the Company with or merger
         of the Company into another corporation or in case of any sale or
         conveyance to another corporation of the property of the Company as an
         entirety or substantially as an entirety or the Company is a party to a
         merger or binding share exchange which reclassifies or changes its
         outstanding shares of Common Stock, the Company or such successor or
         purchasing corporation, as the case may be, shall execute with the
         Warrants Agent an agreement, in form and substance substantially
         equivalent to this Agreement, that each holder of a Warrant Certificate
         shall have the right thereafter, subject to terms and conditions
         substantially equivalent to those contained in this Agreement, upon
         payment of the Exercise Price in effect immediately prior to such
         action to purchase upon exercise of each Warrant the kind and amount of
         shares and other securities and property which such holder would have
         owned or have been entitled to receive after the happening of such
         consolidation, merger, sale or conveyance had such Warrant been
         exercised immediately prior to such action. The Company shall mail by
         first-class mail, postage prepaid, to each registered holder of a
         Warrant, notice of the execution of any such agreement. Such agreement
         shall provide for adjustments, which shall be as nearly equivalent as
         may be practicable to the adjustments provided for in this Section 13.
         The provisions of this subparagraph (c) shall similarly apply to
         successive consolidations, mergers, sales or conveyances. The Warrants
         Agent shall be under no duty or responsibility to determine the
         correctness of any provisions contained in any such agreement relating
         either to the kind or amount of shares of stock or other securities or
         property receivable upon exercise of Warrants or with respect to the
         method employed and provided therein for any adjustments and shall be
         entitled to rely upon the provisions contained in any such agreement.

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                  (d) The Company shall have the right, at any time, voluntarily
         to reduce the then current Exercise Price to such amount (the "Reduced
         Exercise Price") and for such period or periods of time which may be
         through the Close of Business on the Expiration Date (the "Reduced
         Exercise Price Period") as may be deemed appropriate by the Board of
         Directors of the Company; provided, however, any such Reduced Exercise
         Price shall be in effect for a minimum period of ten business days.
         Notice of any such Reduced Exercise Price and Reduced Exercise Price
         Period shall be given to the registered Warrantholders in the manner
         provided in Section 15 and to the Warrants Agent in the manner provided
         in Section 21. After the termination of the Reduced Exercise Price
         Period, the Exercise Price shall be such Exercise Price which would
         have been in effect, as adjusted pursuant to subsection (b) above, had
         there been no reduction in the Exercise Price pursuant to the
         provisions of this subsection (d). Any adjustment in the Exercise Price
         pursuant to subsection (b) above during the Reduced Exercise Price
         Period shall also be made in the Reduced Exercise Price in the manner
         specified in subsection (b) above.

         14. REDEMPTION.

                  (a) At any time the Company may, at its option, redeem the
         Warrants in whole or in part, for a redemption price of $0.001 per
         Warrant (subject to equitable adjustment to reflect stock splits, stock
         dividends, stock combinations, recapitalizations and like occurrences),
         on at least thirty (30) days' prior written notice to the registered
         Warrantholders. If we elect to redeem only a portion of the Warrants,
         we will make any such partial redemption by lot or on a pro-rata basis
         to all Warrantholders based on the number of Warrants they respectively
         own. In the event the Company exercises its right to redeem the
         Warrants, the Expiration Date shall be deemed to be, and the Warrants
         will be exercisable until the close of business on, the date fixed for
         redemption in such notice. If any Warrant called for redemption is not
         exercised by such time, it will cease to be exercisable and the
         registered holder thereof will be entitled only to the redemption price
         of $0.001 per Warrant.

                  (b) In case the Company shall exercise its right to redeem all
         of the Warrants, it shall give or cause to be given notice to the
         registered Warrantholders, by mailing to such registered Warrantholders
         a notice of redemption, first class, postage prepaid, at their last
         address as shall appear on the records of the Warrants Agent. Any
         notice mailed in the manner provided herein shall be conclusively
         presumed to have been duly given, whether or not the registered
         Warrantholder receives such notice.

                  (c) The notice of redemption shall specify (i) the redemption
         price, (ii) the date fixed for redemption, which shall in no event be
         less than thirty (30) days after the date of mailing of such notice,
         (iii) the place where the Warrant Certificates shall be delivered and
         the redemption price shall be paid, and (iv) that the right to exercise
         the Warrant shall terminate at 5:00 p.m. New York City time on the
         business day fixed for redemption. The date fixed for the redemption of
         the Warrants shall be the "Redemption Date" for purposes of this
         Agreement. No failure to mail such notice nor any defect therein or in
         the mailing thereof shall affect the validity of the proceedings for
         such redemption except as to a holder (A) to whom notice was not mailed
         or (B) whose notice was defective. An affidavit of the Warrants Agent
         or the Secretary or Assistant Secretary of the Company that notice of
         redemption has been mailed shall, in the absence of fraud, be prima
         facie evidence of the facts stated therein.

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                  (d) Any right to exercise a Warrant shall terminate at 5:00
         p.m. New York City time on the Redemption Date. The redemption price
         payable to the registered Warrantholders shall be mailed to such
         persons at their addresses of record.

         15. NOTICES TO WARRANTHOLDERS. If:

                  (a) the Company shall declare any dividend payable in any
         securities upon its shares of Common Stock or make any distribution
         (other than a cash dividend declared in the ordinary course) to the
         holders of its shares of Common Stock, or

                  (b) the Company shall offer to the holders of its shares of
         Common Stock any additional shares of Common Stock or securities
         convertible or exchangeable into shares of Common Stock or any right to
         subscribe for or purchase Common Stock, or

                  (c) there shall be a dissolution, liquidation or winding up of
         the Company (other than in connection with a consolidation, merger or
         sale of all or substantially all of its property, assets and business
         as an entirety), or

                  (d) the Company fixes a Reduced Exercise Price and Reduced
         Exercise Price Period,

then the Company shall cause written notice of such event to be filed with the
Warrants Agent and shall cause written notice of such event to be given to each
of the registered holders of the Warrant Certificates at such holder's address
appearing on the Warrants Register, by first-class mail, postage prepaid, such
giving of notice to be completed (i) except in the case of clause (d) above, at
least ten (10) calendar days (or twenty (20) calendar days in any case specified
in clause (c) above) prior to the date fixed as a record date or the date of
closing the transfer books for the determination of the stockholders entitled to
such dividend, distribution or subscription rights, or for the determination of
stockholders entitled to vote on such proposed dissolution, liquidation or
winding up and (2) in the case of clause (d) above, as soon as practicable after
such event. Such notice shall, as and if applicable, specify such record date or
the date of closing the transfer books, as the case may be. The failure to give
the notice required by this Section 15 or any defect therein shall not affect
the legality or validity of any dividend, distribution, right, option, warrant,
dissolution, liquidation or winding up or the vote upon or any other action
taken in connection therewith.

         16. MERGER, CONSOLIDATION OR CHANGE OF NAME OF WARRANTS AGENT. Any
corporation into which the Warrants Agent may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Warrants Agent shall be a party, or any
corporation succeeding to the shareholder services business of the Warrants
Agent, shall be the successor to the Warrants Agent hereunder without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor Warrants Agent under the provisions of Section 18.

         17. WARRANTS AGENT. The Warrants Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Warrant Certificates, by their
acceptance thereof, shall be bound:

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                  (a) The Warrants Agent shall not be responsible for any
         failure of the Company to comply with any of the covenants contained in
         this Agreement or in the Warrant Certificates to be complied with by
         the Company nor shall it at any time be under any duty or
         responsibility to any holder of a Warrant to make or cause to be made
         any adjustment in the Exercise Price or in the number of shares of
         Common Stock issuable upon exercise of any Warrants (except as
         instructed by the Company);

                  (b) The Company agrees to indemnify the Warrants Agent and
         save it harmless against any and all losses, liabilities and expenses,
         including judgments, costs and reasonable counsel fees and expenses,
         for anything done or omitted by the Warrants Agent arising out of or in
         connection with this Agreement except as a result of its gross
         negligence or bad faith;

                  (c) The Company agrees that it will perform, execute,
         acknowledge and deliver or cause to be performed, executed,
         acknowledged and delivered all such further and other acts, instruments
         and assurances as may reasonably be required by the Warrants Agent for
         the carrying out or performing of the provisions of this Agreement; and

                  (d) The Warrants Agent is hereby authorized and directed to
         accept instructions with respect to the performance of its duties
         hereunder from the Chief Executive Officer, any Vice President, the
         Treasurer or an Assistant Treasurer, the Secretary or an Assistant
         Secretary of the Company, and to apply to such officers for advice or
         instructions in connection with its duties, and shall not be liable for
         any action taken or suffered to be taken by it in good faith in
         accordance with instructions of any such officer or in good faith
         reliance upon any statement signed by any one of such officers of the
         Company with respect to any fact or matter (unless other evidence in
         respect thereof is herein specifically prescribed) which may be deemed
         to be conclusively proved and established by such signed statement.

         18. CHANGE OF WARRANTS AGENT. If the Warrants Agent shall resign (such
resignation to become effective not earlier than sixty (60) days after the
giving of written notice thereof to the Company and the registered holders of
Warrant Certificates) or shall become incapable of acting as Warrants Agent or
if the Board of Directors of the Company shall by resolution remove the Warrants
Agent (such removal to become effective not earlier than thirty (30) days after
the filing of a certified copy of such resolution with the Warrants Agent and
the giving of written notice of such removal to the registered holders of
Warrant Certificates), the Company shall appoint a successor to the Warrants
Agent. If the Company shall fail to make such appointment within a period of
thirty (30) days after such removal or after it has been so notified in writing
of such resignation or incapacity by the Warrants Agent or by the registered
holder of a Warrant Certificate (in the case of incapacity), then the registered
holder of any Warrant Certificate may apply to any court of competent
jurisdiction for the appointment of a successor to the Warrants Agent. Pending
appointment of a successor to the Warrants Agent, either by the Company or by
such a court, the duties of the Warrants Agent shall be carried out by the
Company. Any successor Warrants Agent, whether appointed by the Company or by
such a court, shall be a bank or trust company, in good standing, incorporated
under the laws of any state or of the United States of America. As soon as
practicable after appointment of the successor Warrants Agent, the Company shall
cause written notice of the change in the Warrants Agent to be given to each of
the registered holders of the Warrant Certificates at such holder's

                                       10
<PAGE>

address appearing on the Warrants Register. After appointment, the successor
Warrants Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Warrants Agent without
further act or deed. The former Warrants Agent shall deliver and transfer to the
successor Warrants Agent, the Warrants Register and any other property at the
time held by it hereunder and execute and deliver, at the expense of the
Company, any further assurance, conveyance, act or deed necessary for that
purpose. Failure to give any notice provided for in this Section 18 or any
defect therein, shall not affect the legality or validity of the removal of the
Warrants Agent or the appointment of a successor Warrants Agent, as the case may
be.

         19. WARRANTHOLDER NOT DEEMED A STOCKHOLDER. Nothing contained in this
Agreement or in any of the Warrant Certificates shall be construed as conferring
upon the holders thereof the right to vote or to receive dividends or to consent
or to receive notice as stockholders in respect of the meetings of stockholders
or for the election of directors of the Company or any other matter, or any
rights whatsoever as stockholders of the Company.

         20. DELIVERY OF PROSPECTUS. Subject to Section 12, if the Company is
required under applicable federal or state securities laws to deliver a
prospectus upon exercise of Warrants, the Company will furnish to the Warrants
Agent sufficient copies of a prospectus, and the Warrants Agent agrees that upon
the exercise of any Warrant Certificate by the holder thereof, the Warrants
Agent or, if requested by the Warrants Agent, the Company will deliver to such
holder, prior to or concurrently with the delivery of the certificate or
certificates for the shares of Common Stock issued upon such exercise, a copy of
the prospectus.

         21. NOTICES TO COMPANY AND WARRANTS AGENT. Any notice or demand
authorized by this Agreement to be given or made by the Warrants Agent or by any
registered holder of any Warrant Certificate to or on the Company shall be
sufficiently given or made if sent by mail, first-class or registered, postage
prepaid, addressed (until another address is filed in writing by the Company
with the Warrants Agent), as follows:

         Magnum Hunter Resources, Inc.
         600 East Las Colinas Blvd., Suite 1100
         Irving, Texas 75039
         Attention:  Mr. Morgan F. Johnston,
                     Vice President, General Counsel and Secretary

         If the Company shall fail to maintain such office or agency or shall
fail to give such notice of any change in the location thereof, presentation may
be made and notices and demands may be served at the principal office of the
Warrants Agent.

         Any notice pursuant to this Agreement to be given by the Company or by
any registered holder of any Warrant Certificate to the Warrants Agent shall be
sufficiently given if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing by the Warrants Agent with the
Company), as follows:

                                       11
<PAGE>

         American Stock Transfer & Trust Company
         59 Maiden Lane, Plaza Level
         New York, New York 10038
         Attention: Corporate Trust Department

         22. SUPPLEMENTS AND AMENDMENTS. The Company and the Warrants Agent may
from time to time supplement or amend this Agreement without the approval of any
holders of Warrant Certificates in order to cure any ambiguity, manifest error
or other mistake in this Agreement, or to correct or supplement any provision
contained herein that may be defective or inconsistent with any other provision
herein, or to make any other provisions in regard to matters or questions
arising hereunder that the Company and the Warrants Agent may deem necessary or
desirable and that shall not adversely affect, alter or change the interests of
the holders of the Warrants in any material respect.

         Any supplement or amendment of this Agreement which may not be made by
the Company and the Warrants Agent without the approval of holders of Warrant
Certificates pursuant to the preceding paragraph shall require the approval of
the Company, the Warrants Agent and the holders of Warrant Certificates entitled
to purchase upon exercise thereof a majority of the shares of Common Stock which
may be purchased upon the exercise of all outstanding Warrant Certificates at
the time that such amendment or supplement is to be made. Notwithstanding the
foregoing, any amendment or supplement to this Agreement which would provide for
an adjustment to either (i) the number of shares of Common Stock purchasable
upon exercise of a Warrant or (ii) the exercise price for which shares of Common
Stock are purchasable upon exercise of a Warrant, in either case, in a manner
not provided for in this Agreement and in a manner that would have a substantial
negative impact on the holders of Warrant Certificates, shall require the
consent of the holders of Warrant Certificates entitled to purchase upon
exercise thereof seventy-five percent (75%) of the shares of Common Stock which
may be purchased upon the exercise of all outstanding Warrant Certificates at
the time such amendment or supplement is to be made.

         23. SUCCESSORS. Each of the covenants and provisions of this Agreement
by or for the benefit of the Company or the Warrants Agent shall bind and inure
to the benefit of their respective successors and assigns hereunder.

         24. TERMINATION. This Agreement shall terminate at the Close of
Business on the Expiration Date or such earlier date upon which all Warrants
have been exercised, except that the Warrants Agent shall account to the Company
for cash held by it and the provisions of Section 17 shall survive such
termination. Upon termination of the Agreement, the Warrants Agent shall retain
all canceled Warrant Certificates and related documentation as required by
applicable law.

         25. GOVERNING LAW. This Agreement and each Warrant Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
Texas and for all purposes shall be construed in accordance with the internal
laws of the State of Texas without regard to principles of conflict of law or
choice of laws of the State of Texas or any other jurisdiction which would cause
the application of any laws other than of the State of Texas.

         26. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company, the
Warrants Agent and the registered

                                       12
<PAGE>

holders of the Warrant Certificates any legal or equitable right, remedy or
claim under this Agreement, and this Agreement shall be for the sole and
exclusive benefit of the Company, the Warrants Agent and the registered holders
of the Warrant Certificates.

         27. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.

         28. HEADINGS. The headings of sections of this Agreement have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.

         IN WITNESS WHEREOF the parties hereto have caused this Warrants
Agreement to be executed and delivered as of the day and year first above
written.

                                       MAGNUM HUNTER RESOURCES, INC.

                                       By: /s/ GARY C. EVANS
                                          -------------------------------------
                                          Gary C. Evans, Chairman of the Board,
                                          President and Chief Executive Officer

Attest:

By: /s/ MORGAN F. JOHNSTON
   ------------------------------------
    Morgan F. Johnston, Vice President,
    General Counsel and Secretary

                                       AMERICAN STOCK TRANSFER & TRUST COMPANY

                                        By:  /s/ HERBERT J. LEMMER
                                          -------------------------------------

                                  Name:  Herbert J. Lemmer
                                            -----------------------------------
                                     Title:   Vice President
                                             ----------------------------------

Attest:

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

                                       13
<PAGE>

                                    EXHIBIT A

                                 NO. ___________
                    COMMON STOCK PURCHASE WARRANT CERTIFICATE
                          MAGNUM HUNTER RESOURCES, INC.
               INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
           VOID (UNLESS EXTENDED) AFTER 5:00 P.M., NEW YORK CITY TIME,
                               ON MARCH 21, 2005

         THIS CERTIFIES THAT, ___________________ is the owner and registered
holder (the "Registered Holder") of _______ Common Stock Purchase Warrants (the
"Warrants"). Each Warrant entitles the Registered Holder to purchase, subject to
the terms and conditions set forth in this Warrant Certificate and the Warrants
Agreement (as hereinafter defined), one fully paid and nonassessable share of
Common Stock, par value $.002 per share (the "Common Stock"), of Magnum Hunter
Resources, Inc., a Nevada corporation (the "Company"), at any time prior to 5:00
p.m., New York City time, on March 21, 2005 (the "Expiration Date"), upon the
presentation and surrender of this Warrant Certificate with the Election to
Purchase Form on the reverse hereof duly executed, at the corporate office of
American Stock Transfer & Trust Company as Warrants Agent, or its successor (the
"Warrants Agent"), accompanied by payment of $15.00 per Warrant, subject to
adjustment (the "Warrant Price"), and any and all applicable taxes due in
connection with the exercise of the Warrant, in lawful money of the United
States of America by wire transfer or official bank, certified check or personal
check made payable to the Warrants Agent for the account of the Company;
provided, however, if payment is made by personal check, sufficient time must be
allowed for the check to clear prior to the Expiration Date.

         THIS WARRANT CERTIFICATE AND EACH WARRANT REPRESENTED HEREBY ARE ISSUED
PURSUANT TO AND ARE SUBJECT IN ALL RESPECTS TO THE TERMS AND CONDITIONS SET
FORTH IN THE WARRANTS AGREEMENT (THE "WARRANTS AGREEMENT"), DATED AS OF March
19, 2002, BY AND BETWEEN THE COMPANY AND THE WARRANTS AGENT. REFERENCE IS HEREBY
MADE TO THE WARRANTS AGREEMENT FOR A MORE COMPLETE STATEMENT OF THE RIGHTS AND
LIMITATIONS OF RIGHTS OF THE REGISTERED HOLDER HEREOF, THE RIGHTS AND DUTIES OF
THE WARRANTS AGENT AND THE RIGHTS AND OBLIGATIONS OF THE COMPANY THEREUNDER.
COPIES OF THE WARRANTS AGREEMENT ARE ON FILE AT THE OFFICE OF THE WARRANTS
AGENT.

         In the event of certain contingencies provided for in the Warrants
Agreement, the Warrant Price and the number of shares of Common Stock subject to
purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment. The Company also has the right voluntarily to reduce
the Warrant Price, which reduction shall be for a minimum period of ten business
days, as set forth in the Warrants Agreement.

         Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional shares of Common Stock will be issued. In
the case of the exercise of less than all the Warrants represented hereby, the
Company shall cancel this Warrant Certificate upon the

<PAGE>

surrender hereof and shall execute and deliver a new Warrant Certificate or
Warrant Certificates of like tenor, which the Warrants Agent shall countersign,
for the balance of such Warrants.

         This Warrant Certificate is exchangeable, upon the surrender hereof by
the Registered Holder at the corporate office of the Warrants Agent in New York,
New York, for a new Warrant Certificate or Warrant Certificates of like tenor
representing an equal aggregate number of Warrants, each of such new Warrant
Certificates to represent such number of Warrants as shall be designated by such
Registered Holder at the time of such surrender. Upon due presentment together
with any tax or other charge imposed in connection therewith, for registration
of transfer of this Warrant Certificate at such office, a new Warrant
Certificate or Warrant Certificates representing an equal aggregate number of
Warrants will be issued to the transferee in exchange therefor, subject to the
limitations provided in the Warrants Agreement.

         If this Warrant Certificate shall be surrendered for exercise within
any period during which the transfer books for the Common Stock or other
securities purchasable upon the exercise of this Warrant Certificate are closed
for any purpose, the Warrants Agent shall not be required to make delivery of
certificates for the securities purchasable upon such exercise until the date of
the reopening of such transfer books.

         No issuance of shares of Common Stock upon exercise of Warrants shall
be made unless there is a current prospectus covering such shares of Common
Stock under an effective registration statement under the Securities Act of
1933, as amended (or an exemption therefrom), and registration or qualification
of such shares of Common Stock (or an exemption therefrom) has been obtained
from the state or other regulatory authorities in the jurisdiction in which such
shares of Common Stock are sold. The Company will provide to the Warrants Agent
written confirmation of such registration or qualification, or an exemption
therefrom, when requested by the Warrants Agent, and the determination of the
Company shall be final and binding on the Warrants Agent and each Registered
Holder. No Warrant represented hereby shall be exercised or sold by a Registered
Holder in any state or other jurisdiction where such exercise would be unlawful.

         Subject to the provisions of the Warrants Agreement, this Warrant may
be redeemed at the option of the Company, in whole or in part, at a redemption
price of $0.001 per Warrant, at any time, and notice of redemption (the "Notice
of Redemption") shall be given not less than 30 days before the date fixed for
redemption, all as provided in the Warrants Agreement. On and after the date
fixed for redemption, the Registered Holder shall have no rights with respect to
this Warrant except to receive the $0.001 per Warrant upon surrender of this
Warrant Certificate.

         Prior to the exercise of any Warrant represented hereby, the Registered
Holder shall not be entitled to any rights of a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrants Agreement.

         Prior to due presentment for registration of transfer of this Warrant
Certificate, the Company and the Warrants Agent may deem and treat the
Registered Holder as the absolute owner hereof and of each Warrant represented
hereby (notwithstanding any notations of ownership or writing hereon made by
anyone other than a duly authorized officer of the

<PAGE>

Company or the Warrants Agent), for all purposes and shall not be affected by
any notice to the contrary.

         This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of Texas, without giving effect to
conflicts of laws principles.

         This Warrant Certificate is not valid unless countersigned by the
Warrants Agent.

         IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed, manually or in facsimile by two of its officers thereunto duly
authorized, and a facsimile of its corporate seal to be imprinted hereon.

         Dated: March 21, 2002

                                      MAGNUM HUNTER RESOURCES, INC.

                                       By:
                                         --------------------------------------
                                         Gary C. Evans, Chairman of the Board,
                                         President and Chief Executive Officer

ATTEST:

By:
   ----------------------------------
     Morgan F. Johnston,
     Vice President, General Counsel
     and Secretary

COUNTERSIGNED:

AMERICAN STOCK TRANSFER
& TRUST COMPANY
as Warrants Agent

By:
   ----------------------------------
     Authorized Officer

<PAGE>

                          MAGNUM HUNTER RESOURCES, INC.

         The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common

UNIF GIFT MIN ACT _____________________ Custodian ___________________ (Minor)
         under Uniform Gifts to Minors Act __________________ (State)

TEN ENT - as tenants by the entireties

JT TEN - as joint tenants with right of survivorship and not as tenants in
         common

         Additional abbreviations may also be used though not in the above list.

<PAGE>

                            ELECTION TO PURCHASE FORM

         (To be Executed by the Registered Holder in Order to Exercise Warrants
     Represented by the Warrant Certificate on the reverse hereof)

To:      MAGNUM HUNTER RESOURCES, INC.

         The undersigned Registered Holder hereby irrevocably elects to exercise
_____________ Warrants, represented by the Warrant Certificate on the reverse
hereof, and to purchase the securities issuable upon exercise of such Warrants,
and requests that certificates for such securities be issued in the name of:

         ---------------------------------------------------------------
                  (Please print or type your Name and Address)

         ---------------------------------------------------------------
                 (Please print or type your Social Security or
                       Federal Tax Identification Number)

and, if such number of Warrants shall not be all the Warrants represented by the
Warrant Certificate on the reverse hereof, that a new Warrant Certificate for
the balance of such Warrants be registered in the name of, and delivered to the
Registered Holder at the address stated below. The Registered Holder understands
and agrees that the Company may require Registered Holders to establish their
exemptions from backup withholding or to arrange for payment of backup
withholding.

Dated:
      ---------------------------------

Name of holder of the Warrant Certificate:
                                          -------------------------------------
                                                (Please Print or Type)

Address:
        -----------------------------------------------------------------------

Signature:
          ---------------------------------------------------------------------

         NOTICE:       The above signature must correspond with the name as
                       written upon the face of the Warrant Certificate on the
                       reverse hereof in every particular, without alteration
                       or enlargement or any change whatsoever, or if signed by
                       any other person the Form of Assignment hereon must be
                       duly executed and if any Warrant Certificate representing
                       Warrants not exercised is to be registered in a name
                       other than that in which the Warrant Certificate on the
                       reverse hereof is registered, the signature of the holder
                       hereto must be "medallion" guaranteed.

Signature Guaranteed:
                     ----------------------------------------------------------

<PAGE>

                                   ASSIGNMENT

              (To be Executed by the Registered Holder in Order to
         Assign Warrants Evidenced by the Attached Warrant Certificate)

  For value received, the undersigned hereby sells, assigns and transfers unto

      --------------------------------------------------------------------
              (Please Print or Type Name and Address of Assignee)

      --------------------------------------------------------------------
       (Social Security or Federal Tax Identification Number of Assignee)

      --------------------------------------------------------------------
                     (Number of Warrants being transferred)

Warrants of Magnum Hunter Resources, Inc., together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
___________________________________, as attorney to transfer said Warrants on
the books of Magnum Hunter Resources, Inc., with full power of substitution in
the premises.

Dated:
      -------------------------------

Signature of Registered Holder:
                               ------------------------------------------------

         NOTICE:       The above signature must correspond with the name as
                       written upon the face of the attached Warrant Certificate
                       in every particular, without alteration or enlargement
                       or any change whatsoever.

Signature Guaranteed:
                     ----------------------------------------------------------

SIGNATURE MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS) WITH MEMBERSHIP
IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM PURSUANT TO RULE 17Ad-15 OF
THE SECURITIES EXCHANGE ACT OF 1934.

MAGNUM - PRIZE -- Warrants Agreement<PAGE>

                                                                    EXHIBIT 10.4

                              EMPLOYMENT AGREEMENT

         THIS AGREEMENT is entered into as of the 1st day of August, 2001, by
and between Pegasus Solutions, Inc., a Delaware corporation (the "Company") and
Susan Cole (the "Executive").

         WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is essential and in the best interest of the Company and its
stockholders to enter into this Agreement to retain the services of the
Executive and to ensure Executive's continued dedication and efforts; and

         WHEREAS, in order to induce the Executive to enter into and continue
employment by the Company, the Company desires to provide the Executive with
certain benefits during the term of Executive's employment and, in the event
Executive's employment is terminated, to provide the Executive with the benefits
and payments described herein.

         NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein, it is agreed as follows:

1.       EMPLOYMENT TERM.

         The "Employment Term" shall commence on May 7, 2001 (the "Effective
Date") and shall expire on the fourth anniversary of the Effective Date provided
that such term will be automatically renewed and extended indefinitely after the
fourth anniversary of the Effective Date until terminated as provided herein, in
the event Executive remains in the employ of the Company after the fourth
anniversary of the Effective Date.

2.       EMPLOYMENT.

         (a) Subject to the provisions of Section 8 hereof, the Company agrees
to continue to employ the Executive and the Executive agrees to remain in the
employ of the Company during the Employment Term. During the Employment Term,
the Executive shall be employed as the Executive Vice President and Chief
Financial Officer of the Company. The Executive shall perform the duties,
undertake the responsibilities and exercise the authority customarily performed,
undertaken and exercised by persons situated in a similar executive capacity.
Executive shall also promote, by entertainment or otherwise, the business of the
Company.

         (b) During the Employment Term, excluding periods of vacation and sick
leave to which the Executive is entitled, the Executive agrees to devote
reasonable attention and time during usual business hours to the business and
affairs of the Company to the extent necessary to discharge the responsibilities
assigned to the Executive hereunder. The Executive may (1) serve on corporate,
civil or charitable boards or committees, (2) manage personal investments and
(3) deliver lectures and teach at educational institutions, so long as such
activities do not significantly interfere with the performance of the
Executive's responsibilities hereunder. It is expressly understood and agreed
that to the extent that any such activities have been conducted by the Executive
prior to the Effective Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the performance
of the Executive's responsibilities to the Company.

                                      -1-
<PAGE>

3.       COMPENSATION.

         (a) Base Salary. Beginning on the Effective Date, the Company agrees to
pay or cause to be paid to the Executive an annual base salary as mutually
agreed, and as may be increased from time to time by the Compensation Committee
of the Board (hereinafter referred to as the "Base Salary"). Such Base Salary
shall be payable in accordance with the Company's customary practices applicable
to its executives.

         (b) Annual Bonus. In addition to Base Salary, the Executive shall be
awarded, for each fiscal year ending during the Employment Term, an annual
discretionary bonus (the "Annual Bonus") in accordance with the terms and
conditions of the bonus plan approved by the Compensation Committee. Any actual
payment or award under such Annual Bonus plan, and the size of any payment or
award, will be in accordance with the terms of the plan. Each such Annual Bonus
shall be paid no later than the end of the third (3rd) month of the fiscal year
next following the fiscal year for which the Annual Bonus is awarded, unless the
Executive shall elect to defer the receipt of such Annual Bonus.

         (c) Supplemental Employee Retirement Plan. In addition to the Base
Salary and Annual Bonus, the Executive shall be entitled to participate in the
Company's Supplemental Employee Retirement Plan as adopted by the Company
effective January 1, 2000 and as amended thereafter provided that Executive has
agreed to such amendment. Executive shall not be subject to any amendment to the
Supplemental Employee Retirement Plan without Executive's written consent.

         (d) Stock Plans. Executive shall be entitled to participate in the
Company's Stock Option Plans, Employee Stock Purchase Plans and such other
stock-related plans as may be applicable to executives of the Company and to
receive such stock option grants and any and all other rights of participation
as may be provided therein.

         (e) Car Allowance. Executive shall be entitled to a car allowance of
Seven Hundred Fifty Dollars ($750.00) per month for each month during the term
of this Agreement.

4.       EMPLOYEE BENEFITS.

         During the Employment Term and beginning on the Effective Date, the
Executive shall be entitled to participate in all employee benefit plans,
practices and programs maintained by the Company and made available to employees
generally, including, without limitation, all pension, retirement, profit
sharing, savings, medical, hospitalization, disability, dental, life or travel
accident insurance benefit plans. Unless otherwise provided herein, the
compensation and benefits under, and the Executive's participation in, such
plans, practices and programs shall be on the same basis and terms as are
applicable to employees of the Company generally, but in no event on a basis
less favorable in terms of benefit levels and coverage than offered to other
similarly situated executives of the Company. The Company may reduce benefit
levels if such changes are part of broad-based changes in the Company's benefit
programs offered generally to all employees. Notwithstanding the foregoing,
except as otherwise set forth herein, nothing herein shall obligate the Company
to adopt such plans, practices or programs.

                                      -2-
<PAGE>

5.       EXECUTIVE BENEFITS.

         During the Employment Term, the Executive shall be entitled to
participate in all executive benefit or incentive compensation plans maintained
or established by the Company for the purpose of providing compensation and/or
benefits to executives of the Company including, but not limited to, any
supplemental retirement, salary continuation, stock option, deferred
compensation, supplemental medical or life insurance or other bonus or incentive
compensation plans; provided, however, the grant of a stock option in any year
is not guaranteed and will be dependent on the Board's evaluation of the
Executive's performance. Unless otherwise provided herein, the compensation and
benefits under, and the Executive's participation in, such plans shall be on the
same basis and terms as other similarly situated executives of the Company. No
additional compensation provided under any of such plans shall be deemed to
modify or otherwise affect the terms of this Agreement or any of the Executive's
entitlements hereunder. Notwithstanding the foregoing, except as otherwise set
forth herein, nothing herein shall obligate the Company to adopt such plans,
practices or programs.

6.       OTHER BENEFITS.

         (a) Fringe Benefits and Perquisites. During the Employment Term, the
Executive shall be entitled to all fringe benefits and perquisites generally
made available by the Company to its executives. Unless otherwise provided
herein, the fringe benefits and perquisites provided to Executive shall be on
substantially the same basis and terms as other similarly situated executives of
the Company.

         (b) Expenses. The Executive shall be entitled to receive reimbursement
of all expenses reasonably incurred by him in connection with the performance of
Executive's duties hereunder or for promoting, pursuing or otherwise furthering
the business or interests of the Company in accordance with the accounting
procedures and expense reimbursement policies of the Company as it shall adopt
from time to time.

7.       VACATION AND SICK LEAVE.

         During the Employment Term, at such reasonable times as the Board shall
in its discretion permit, the Executive shall be entitled without loss of pay,
to absent himself voluntarily from the performance of Executive's employment
under this Agreement, provided that:

         (a) The Executive shall be entitled to annual vacation in accordance
with the policies as periodically established by the Board.

         (b) The Executive shall be entitled to sick leave (without loss of pay)
in accordance with the Company's policies as in effect from time to time.

8.       TERMINATION.

         During the Employment Term, the Executive's employment hereunder may be
terminated under the following circumstances:

         (a) Cause. The Company may terminate the Executive's employment for
"Cause". A termination of employment is for "Cause" if the Executive:

                                      -3-
<PAGE>

         (1)      has been convicted of or plead guilty or no contest to a
                  felony;

         (2)      intentionally engaged in conduct which is demonstrably and
                  materially injurious to the Company, monetarily or otherwise
                  or from which Executive derives an improper material personal
                  benefit; provided, however, that no termination of the
                  Executive's employment shall be for Cause as set forth in this
                  clause (2) until:

                  (i) there shall have been delivered to the Executive a copy of
                  a written notice setting forth that the Executive was guilty
                  of the conduct set forth in this clause (2) and specifying the
                  particulars thereof in reasonable detail; and

                  (ii) the Executive shall have been provided an opportunity to
                  be heard by the Board (with the assistance of the Executive's
                  counsel if the Executive so desires). No act, nor failure to
                  act, on the Executive's part shall be considered "intentional"
                  unless Executive has acted, or failed to act, with an absence
                  of good faith and without a reasonable belief that Executive
                  action or failure to act was in the best interest of the
                  Company.

         (3)      commits gross malfeasance or intentionally fails to perform
                  the duties of the Executive's position; provided, however, the
                  Company shall first notify the Executive in writing stating
                  with reasonable specificity the action or inaction of the
                  Executive which forms the basis for such notice and the
                  Executive fails to cure such malfeasance or failure within ten
                  (10) days of the date of such notice, and

         (4)      violates any valid non-competition or non-disclosure agreement
                  or the Company's insider trading policy, if any.

         Notwithstanding anything contained in this Agreement to the contrary,
no failure to perform by the Executive after a Notice of Termination is given by
the Executive shall constitute Cause for purposes of this Agreement.

         (b) Disability. The Company may terminate the Executive's employment
after having established the Executive's Disability. For purposes of this
Agreement, "Disability" means a physical or mental infirmity which impairs the
Executive's ability to substantially perform Executive's material duties under
this Agreement which continues for a period of at least ninety (90) consecutive
days. The Executive shall be entitled to the compensation and benefits provided
for under this Agreement for any period during the Employment Term and prior to
the Termination Date (as hereinafter defined) resulting from the Executive being
unable to work due to a physical or mental infirmity and as otherwise provided
in this Agreement in connection with Disability. Notwithstanding anything
contained in this Agreement to the contrary, if prior to the Termination Date
specified in a Notice of Termination (as hereinafter defined) relating to the
Executive's Disability, the Executive is no longer under a Disability, the
Executive will be entitled to return to Executive's position with the Company as
set forth in this Agreement in which event no Disability of the Executive will
be deemed to have occurred.

         (c) Good Reason.

         (1) The Executive may terminate Executive's employment for "Good
         Reason". For purposes of this Agreement, "Good Reason" shall mean the
         occurrence of any of the events or conditions described below in
         subsections (i) through (vi) hereof:

                                      -4-
<PAGE>

                  (i) If the Executive shall cease to be the Chief Financial
                  Officer of the Company (or any successor or parent thereof) or
                  upon the assignment to the Executive of any material duties or
                  responsibilities which are inconsistent with Executive's
                  position or responsibilities; or any removal of the Executive
                  from or failure to reappoint or reelect him to any such
                  offices or positions, except during a period of Disability or
                  in connection with the termination of Executive's employment
                  for Disability, Cause, as a result of Executive's death, or by
                  the Executive other than for Good Reason;

                  (ii) A reduction in the Executive's Base Salary or any failure
                  to pay the Executive any compensation or benefits to which
                  Executive is entitled within thirty (30) days of the due date;

                  (iii) A Change of Control as hereinafter defined;

                  (iv) Any material breach by the Company of any provision of
                  this Agreement; provided, however, the Executive shall first
                  notify the Company in writing stating with reasonable
                  specificity the breach by the Company and the Company fails to
                  cure such breach within ten (10) days of the date of such
                  notice;

                  (v) Any purported termination of the Executive's employment
                  for Cause by the Company which is found by a court of
                  competent jurisdiction or an arbitrator not to comply with the
                  terms of Section 8(a); or

                  (vi) The failure of the Company to obtain an agreement,
                  reasonably satisfactory to the Executive, from any successor
                  or assign of the Company to assume and agree to perform this
                  Agreement, as contemplated in Section 13 hereof.

         (2) The Executive's right to terminate Executive's employment pursuant
         to this Section 8(c) shall not be affected by Executive's incapacity
         due to physical or mental illness.

         (d) Voluntary Termination. Upon thirty (30) days prior written notice,
either the Executive or the Company may voluntarily terminate the Executive's
employment hereunder at any time; provided, however, in the event of any such
termination by the Company, the Company shall pay to the Executive the amounts
set forth in Section 9(d) hereof.

9.       COMPENSATION UPON TERMINATION.

         Upon termination of the Executive's employment during the Employment
Term, the Executive shall be entitled to the following benefits:

         (a) If the Executive's employment with the Company shall be terminated
by the Company for Cause or by the Executive other than for Good Reason, the
Company shall pay the Executive all amounts earned and accrued through the
Termination Date but not paid as of the Termination Date, including:

         (1) the Base Salary,

                                      -5-
<PAGE>

         (2) an amount equal to the Pro Rata Bonus,

         (3) reimbursement for reasonable and necessary expenses incurred by the
         Executive on behalf of the Company during the period ending on the
         Termination Date,

         (4) vacation pay, and

         (5) sick leave (collectively, "Accrued Compensation").

         (b) If the Executive's employment with the Company shall be terminated
by the Company for Disability, the Company shall pay the Executive all amounts
earned or accrued through the Termination Date but not paid as of the
Termination Date, including the Accrued Compensation. In addition, the Executive
shall be entitled to the following:

         (1) the Base Salary and all other benefits customarily received for a
         period of one (1) year from the Termination Date resulting from such
         Disability,

         (2) an amount equal to the Pro Rata Bonus. The "Pro Rata Bonus" is an
         amount equal to the maximum bonus amount the Executive would have been
         entitled to in the fiscal year of the Termination Date multiplied by a
         fraction, the numerator of which is the number of days in such fiscal
         year through the Termination Date and the denominator of which is 365,

         (3) payments as more specifically provided by the Supplemental Employee
         Retirement Plan, and

         (4) one (1) additional year of vesting from the Termination Date of all
         stock option grants not then expired or terminated.

         (c) If the Executive's employment with the Company shall be terminated
by reason of the Executive's death, the Company shall pay the Executive all
amounts earned or accrued through the Termination Date but not paid as of the
Termination Date, including the Accrued Compensation. In addition, the Company
shall pay to the Executive's beneficiaries the following:

         (1) the Base Salary and all other benefits customarily received for a
         period of one (1) year from the date of such death,

         (2) an amount equal to the Pro Rata Bonus,

         (3) payments as more specifically provided by the Supplemental Employee
         Retirement Plan, and

         (4) one (1) additional year of vesting from the Termination Date of all
         stock option grants not then expired or terminated.

         (d) If the Executive's employment with the Company shall be terminated
by the Company voluntarily, without Cause or by the Executive for Good Reason,
the Company shall take the following actions and pay to the Executive the
following:

         (1) all Accrued Compensation and a Pro Rata Bonus,

                                      -6-
<PAGE>

         (2) the Company shall continue to pay the Executive as severance pay
         and in lieu of any further compensation (except as otherwise provided
         herein) a monthly payment for a period of twelve (12) months following
         the Termination Date (the "Monthly Payment Period") equal to the sum of
         (A) the Executive's monthly Base Salary in effect for the month
         immediately preceding the Termination Date and (B) one twelfth (1/12)
         of the Bonus, provided that if Executive has continuously performed
         pursuant to this Agreement for one (1) year from its Effective Date,
         the Monthly Payment Period shall be increased to twenty-four (24)
         months. The "Bonus" is an amount equal to the maximum bonus amount the
         Executive would have been entitled to in the fiscal year of the
         Termination Date,

         (3) during the twelve (12) month period immediately following the
         Termination Date (the "Continuation Period"), the Company shall at its
         expense continue on behalf of the Executive and Executive dependents
         and beneficiaries the life insurance, disability, medical, dental and
         hospitalization benefits provided (A) to the Executive immediately
         prior to the Notice of Termination or (B) to other similarly situated
         executives who continue in the employ of the Company during the
         Continuation Period. Notwithstanding the immediately preceding
         sentence, the coverage and benefits (including deductibles and costs)
         provided in this Section 9(d)(3) during the Continuation Period shall
         be no less favorable to the Executive and Executive dependents and
         beneficiaries, than the coverages and benefits in effect as of the
         Termination Date. The Company's obligation hereunder with respect to
         the foregoing benefits shall terminate in the event the Executive
         obtains any such benefits (regardless of level and scope of coverage)
         pursuant to a subsequent employer's benefit plans. This Section 9(d)(3)
         shall not be interpreted as to limit any benefits to which the
         Executive, Executive dependents or beneficiaries may be entitled under
         any of the Company's employee benefit plans, programs or practices
         following the Executive's termination of employment, including without
         limitation, retiree medical and life insurance benefits,

         (4) any outstanding stock options (including restricted stock and
         granted performance shares or units) granted to the Executive under any
         stock option plans or under any other incentive plan or arrangement
         shall become vested for an additional twelve (12) months after the
         Termination Date, and

         (5) the Company shall reimburse to the Executive the costs of any
         outplacement services incurred by Executive, up to a maximum amount of
         Fifteen Thousand Dollars ($15,000.00).

         (e) The amounts provided for in Sections 9(a), 9(b)(2), 9(c)(2) and
9(d)(1) shall be paid within thirty (30) days after the Executive's Termination
Date. Expenses incurred by Executive under Section 9(d)(5) shall be paid within
thirty (30) days of the receipt by the Company of a claim for reimbursement
submitted by the Executive.

         (f) The Executive hereby acknowledges that full payment and/or
performance by the Company of its obligations as set forth in Sections 9(a),
(b), (c) or (d) hereof shall be in lieu of any other remedy or cause of action
the Executive may have, either at law or in equity, as a result of the
termination of the Executive's employment pursuant to such Sections.

                                      -7-
<PAGE>

10.      DEFINITIONS.

         (a) Notice of Termination. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which indicates the specific termination
provision in this Agreement, if any, relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated. Any
purported termination by the Company or by the Executive shall be communicated
by written Notice of Termination to the other. For purposes of this Agreement,
no such purported termination of employment shall be effective without such
Notice of Termination.

         (b) Termination Date, Etc. For purposes of this Agreement, "Termination
Date" shall mean in the case of the Executive's death, Executive's date of
death, or in all other cases, the date specified in the Notice of Termination
subject to the following:

         (1) If the Executive's employment is terminated by the Company for
         Cause, the date of the Notice of Termination,

         (2) If the Executive's employment is terminated by the Company due to
         Disability, the date specified in the Notice of Termination shall be at
         least thirty (30) days from the date the Notice of Termination is given
         to the Executive, provided that the Executive shall not have returned
         to the full-time performance of Executive's duties during such period
         for at least thirty (30) days, and

         (3) If the Executive's employment is terminated for Good Reason, the
         date specified in the Notice of Termination shall be not more than
         thirty (30) days from the date the Notice of Termination is given to
         the Company.

         (c) Change In Control. For purposes of this Agreement, a "Change in
Control" shall mean any of the following events:

         (1) An acquisition of any voting securities of the Company (the "Voting
         Securities") by any "Person" (as the term person is used for purposes
         of Section 12(d) or 13(d) of the Securities Exchange Act of 1934, as
         amended (the "Exchange Act")) other than any parent, subsidiary or
         affiliate of the Company immediately after which such Person has
         "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated
         under the Exchange Act) of more than fifty percent (50%) of the
         combined voting power of the Company's then outstanding voting
         securities; provided, however, in determining whether a Change in
         Control has occurred, Voting Securities which are acquired in a
         Non-Control Acquisition (as hereinafter defined) shall not constitute
         an acquisition which would cause a Change in Control. A "Non-Control
         Acquisition" shall mean an acquisition by (i) an employee benefit plan
         (or a trust forming a part thereof) maintained by (A) the Company or
         (B) any corporation or other Person of which a majority of its voting
         power or its voting equity securities or equity interest is owned,
         directly or indirectly, by the Company (for purposes of this
         definition, a "Subsidiary") or (ii) the Company or its Subsidiaries,

         (2) The individuals who, as of the date of this Agreement is approved
         by the Board, are members of the Board (the "Incumbent Board") cease
         for any reason to constitute at least one half (1/2) of the members of
         the Board; provided, however, that if the election, or nomination for
         election of any new director was approved by a vote of the members of
         the Board as provided by the Company's Bylaws, such new director shall,
         for purposes of this Agreement, be considered as a member of the
         Incumbent Board; provided, however, that no individual shall be
         considered a member of the Incumbent Board if

                                      -8-
<PAGE>

         such individual initially assumed office as a result of either an
         actual or threatened "Election Contest" (as described in Rule 14a-11
         promulgated under the Exchange Act) or other actual or threatened
         solicitation of proxies or consents by or on behalf of a Person other
         than the Board (a "Proxy Contest") including by reason of any agreement
         intended to avoid or settle any Election Contest or Proxy Contest, or

         (3) Approval by the stockholders of the Company of:

                  (i)      A complete liquidation or dissolution of the Company,
                           or

                  (ii)     An agreement for the sale or other disposition of all
                           or substantially all of the assets of the Company to
                           any Person (other than a transfer to a Subsidiary or
                           a parent in a Non-Control Acquisition).

11.      EXCISE TAX PAYMENTS.

         In the event of a determination that a portion of any payment or
benefit to the Executive or for Executive's benefit payable or distributable
pursuant to the terms of this Agreement is or will be deemed to be an "excess
parachute payment" within the meaning of Section 280G(b)(1) of the Internal
Revenue Code of 1986, as amended, the Company shall be responsible for the
payment of any excise or similar tax assessed in connection therewith.

12.      NONCOMPETITION.

         (a) Except with the prior written consent of the Company authorized by
a resolution adopted by the Board, for the period beginning upon the date hereof
and ending on (i) in the event of the termination of the Executive's employment
by the Executive for Good Reason pursuant to Section 8(c) or by the Company
pursuant to Section 8(d) hereof and the Executive is receiving payments from the
Company pursuant to Section 9(b) or (d) hereof, the date on which the last such
payment is received; or (ii) in the event of the voluntary termination of the
Executive's employment by the Executive pursuant to Section 8(d) hereof or
termination by the Company for Cause, the date which is nine (9) months from the
Termination Date. Executive shall not directly or indirectly as owner, partner,
joint venturer, stockholder, employee, broker, agent, principal, trustee,
corporate officer, director, licensor, or in any capacity whatsoever engage in,
become substantially financially interested in, employed by or have any
connection with, any business engaged principally in the processing of
electronic hotel reservations or travel agent commissions in any country where
the Company or any of its subsidiaries is then engaged in such business;
provided, however, that Executive may own any securities of any corporation
which is engaged in such business and is publicly traded stock or securities of
such corporation.

         (b) Executive agrees that for a period of one (1) year following
termination of employment with the Company, Executive will not solicit or in any
manner encourage employees of the Company, its subsidiaries or parent to leave
its employ.

         (c) In case one or more of the terms contained in Subsections (a) or
(b) of this Section 12 shall for any reason become invalid, illegal, or
unenforceable, such invalidity, illegality or unenforceability shall not affect
any other terms herein, but such invalid, illegal or unenforceable terms shall
be deemed deleted and such deletion shall not affect the validity of the other
terms of this Section. In addition, if any one or more of the terms contained in
Subsections (a) or (b) of this Section shall for any reason be held to be
excessively broad with

                                      -9-
<PAGE>

regard to time, duration, geographic scope or activity that term shall be
construed in a manner to enable it to be enforced to the extent compatible with
applicable law.

13.      SUCCESSORS AND ASSIGNS.

         (a) This Agreement shall be binding upon and shall inure to the benefit
of the Company, its successors and assigns and the Company shall require any
successor or assign to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform if no such succession or assignment had taken place. The term "Company"
as used herein shall include such successors and assigns. The term "successors
and assigns" as used herein shall mean a corporation or other entity acquiring
all or substantially all the assets and business of the Company (including this
Agreement) whether by operation of law or otherwise.

         (b) Neither this Agreement nor any right or interest hereunder shall be
assignable or transferable by the Executive, Executive's beneficiaries or legal
representatives, except by will or by the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal personal representative.

14.      FEES AND EXPENSES.

         The Company shall pay all legal fees and related expenses (including
the costs of experts, evidence and counsel) incurred by the Executive as a
result of the breach or default by the Company of the terms hereof.

15.      NOTICE.

         For purposes of this Agreement, notice and all other communications
provided for in the Agreement (including the Notice of Termination) shall be in
writing and shall be deemed to have been duly given when personally delivered or
sent by certified mail, return receipt requested, postage prepaid, addressed to
the respective addresses last given by each party to the other, provided that
all notices to the Company shall be directed to the attention of the Board with
a copy to the Secretary of the Company. All notices and communications shall be
deemed to have been received on the earlier of the date of delivery thereof or
on the third (3rd) business day after the mailing thereof, except that notice of
change of address shall be effective only upon receipt.

16.      NON-EXCLUSIVITY OF RIGHTS.

         Nothing in this Agreement shall prevent or limit the Executive's
continuing or future participation in any benefit, bonus, incentive or other
plan or program provided by the Company or any of its subsidiaries and for which
the Executive may qualify, nor shall anything herein limit or reduce such rights
as the Executive may have under any other agreements with the Company or any of
its subsidiaries. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan or program of the Company or any of
its subsidiaries shall be payable in accordance with such plan or program,
except as explicitly modified by this Agreement.

                                      -10-
<PAGE>

17.      SETTLEMENT OF CLAIMS.

         The Company's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any circumstances, including, without limitation, any set-off
(except against amounts actually owed by the Executive to the Company as
evidenced by promissory notes, loan agreements and similar documents executed by
the Executive), counterclaim, defense, recoupment or other right which the
Company may have against the Executive or others.

18.      MISCELLANEOUS.

         No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and signed
by the Executive and the Company. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement.

19.      GOVERNING LAW.

         This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Texas without giving effect to the
conflict of law principles thereof. Subject to Section 22 of this Agreement, any
action brought by any party to this Agreement shall be brought and maintained in
a court of competent jurisdiction in Dallas County, Texas.

20.      SEVERABILITY.

         The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provisions hereof shall not affect the
validity or enforceability of the other provisions hereof.

21.      ENTIRE AGREEMENT.

         This Agreement constitutes the entire agreement between the parties
hereto and supersedes all prior agreements, if any, understandings and
arrangements, oral or written, between the parties hereto with respect to the
subject matter hereof.

22.      ARBITRATION.

         Any dispute or controversy arising out of or relating to this Agreement
shall be determined and settled by arbitration in the City of Dallas, Texas, in
accordance with the Employment Dispute Resolution Rules of the American
Arbitration Association then in effect, and judgement upon the award rendered by
the arbitrator may be entered in any court of competent jurisdiction. Such
arbitrator shall have no power to modify any of the provisions of this
Agreement, and his or her jurisdiction is limited accordingly. A party
requesting arbitration hereunder shall give ten (10) days' written notice to the
other party to request such arbitration. Unless the arbitrator decides
otherwise, the successful party in any such arbitration shall be entitled to
reasonable attorneys' fees and costs associated with such arbitration. If the
parties hereto cannot agree upon an arbitrator, then one shall be appointed by
the governing office of the American Arbitration Association. Any arbitrator so
appointed shall have extensive experience in a profession connected with the
subject matter of the dispute. Whenever any

                                      -11-
<PAGE>

action is required to be taken under this Agreement within a specified period of
time and the taking of such action is materially affected by a matter submitted
to arbitration, such period shall automatically be extended by the number of
days plus ten (10) that are taken for the determination of that matter by the
arbitrator.

         IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its Chairman of the Board or Chairman of the Compensation Committee.

PEGASUS SOLUTIONS, INC.                        EXECUTIVE:

By:                                            By:
   ------------------------------                 ------------------------------
                                                  Susan Cole
Print:
      ---------------------------

Title:
      ---------------------------

                                      -12-

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