Document:

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                                                                  EXHIBIT 10.42

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") made effective for all
purposes and in all respects as of December 31, 1998, by and among Cytoclonal
Pharmaceutics, Inc. ("Cytoclonal"), a Delaware corporation (the "Employer"),
maintaining an office at 9000 Harry Hines Boulevard, Dallas, Texas 75235, USA;
and Dr. Dorit Arad (the "Employee"), residing at 9 Burla Street, Tel Aviv,
Israel.

         WHEREAS, the Employer desires to employ the Employee by it as its
Vice President for Drug Design; and

         WHEREAS, the Employee desires to be employed by the Employer in the
aforesaid capacity; and

         WHEREAS, the Employer and the Employee desire to set forth in writing
the terms and conditions of their agreements and understandings.

         NOW, THEREFORE, in consideration of the foregoing premises, of the
mutual covenants hereinafter contained, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending legally to be bound hereby, agree as follows:

         1. EMPLOYMENT. The Employer hereby employs the Employee as its Vice
President for Drug Design, and the Employee hereby accepts such employment, on
the terms and conditions set forth in this Agreement.

         2. CONDITIONS TO EMPLOYMENT. The obligations of the Employer hereunder
shall be subject to the satisfaction by the Employee of the following condition:
The Employee hereby assigns and agrees to assign and transfer all rights, title,
interest and all proprietary rights in the Technology (as defined in Exhibit A).
The transfer of the Employee's interest and rights in the Technology is to be
evidenced by the execution and delivery of the assignment in the form attached
hereto as Exhibit B and any other document or documents that the Employer may
from time to time request to further evidence such assignment and ownership. The
Employee agrees to execute all documents necessary to effect recordal of this
assignment, including confirmatory Assignment documents to be filed in the
various countries and patent offices where patent applications are pending or
patents have issued, and any other documents that the Employer may from time to
time request to further evidence such assignment and ownership.

         3. REPRESENTATIONS RE THE TECHNOLOGY. Except for the rights and
obligations towards third parties specifically described herein, the Employee
represents and covenants to the Employer that the Employee's right, title and
interest in the Technology is free and clear, unencumbered and subject to no
liens or claims whatsoever, whether existing, contingent or threatened. To the
best of

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the Employee's knowledge and belief, Licensor's practice of the Technology shall
not result in patent infringement or trade secret misappropriation.

         4. TERM OF AGREEMENT. Employment under this Agreement shall commence on
January 4, 1999 (the "EFFECTIVE DATE"). The initial term of employment shall end
on the third anniversary of the Effective Date (the "INITIAL TERM"). The Initial
Term shall be extended for successive twelve month periods on a rolling basis
unless notice to terminate is received by either party prior to ninety days
before the termination of the then term of this Agreement. Each twelve month
period commencing on the third anniversary hereof shall be a "RENEWAL YEAR."
The Initial Term together with all Renewal Years shall be referred to as the
"TERM."

         5. DUTIES OF THE EMPLOYEE.

            A. Services to the Employer. The Employee shall serve the Employer
faithfully, diligently and to the best of her ability under the direction of the
President/Chief Executive Officer and Board of Directors of the Employer and
shall devote all of her business time, energies and skill to her duties
hereunder and to the business and affairs of the Employer and will not, directly
or indirectly, engage or participate in any other business or professional
activities during the Term. The Employee shall work from the Employee's (or its
successors and assign's) offices/laboratories located in Israel or the United
States. The Employee may, subject to the Employer's prior written consent,
accept part-time teaching and lecturing academic positions as long as such
positions do not interfere with the Employee's obligations to the Employer.

            B. Duties. The principal duties of the Employee shall be to serve as
the Employer's Vice President for Drug Design and, in such capacity, to render
such scientific research, managerial, administrative and other services as
normally are associated with and incident to such position and to render such
other services as are consistent with her position and office as the
President/Chief Executive Officer and Board of Directors of the Employer may
from time to time require. The Employee shall have such authority as normally is
associated with and incident to her position.

               During each calendar year, the Employee would be required to
spend (i) up to four consecutive months, and (ii) up to ten non-consecutive
weeks in the U.S. facilities of the Employer. The Employer would be responsible,
upon presentation by the Employee of appropriate substantiation, for all of the
Employee's reasonable out-of-pocket expenses including, but not limited to,
pre-approved accommodation and travel expenses in connection with such travel.
In the event that the Employee's stay in the U.S. is extended for more than four
consecutive months during any calendar year, the Employer would pay pre-approved
the Employee relocation expenses, provided that in no event would the Employee
be required to relocate to the U.S. for a period that exceeds 12 consecutive
months unless mutually agreed upon by the Employer and the Employee.

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         6. COMPENSATION. In consideration of the performance by the Employee
of her duties and obligations hereunder, the Employer shall pay to the Employee
and the Employee agrees to accept, as full compensation therefor, the
compensation set forth in this Agreement.

            A. Salary. The Employer agrees to pay the Employee during the term
of employment hereunder a salary (the "SALARY") at the rate of $100,000 per
annum. The Salary shall be payable in accordance with the Employer's customary
payroll practices as in effect from time to time. The Employee shall
automatically, without further action by the Employer, receive a salary increase
of 5% of her then current Salary at the beginning of each calendar year,
commencing on January 1, 2000.

            B. Common Stock. The Employer shall issue to the Employee 25,000
shares of the Employer Common Stock (hereinafter defined), in full consideration
of the assignment of the Technology.

            C. Bonus. In addition to the Salary, the Employer agrees to grant
the Employee certain bonus options (the "BONUS STOCK OPTIONS PAYMENT"), during
the Term exercisable only upon reaching the following milestones: (i) options to
acquire 10,000 shares of Common Stock, $.01 par value per share, of the Employer
("COMMON STOCK"), at an exercise price not to exceed fair market value on the
date of grant (the "BASE OPTION EXERCISE PRICE") upon filing an Investigative
New Drug Application with the Federal Food and Drug Administration ("FDA"); (ii)
options to acquire 50,000 shares of Common Stock upon successful completion of a
phase II clinical trial; and (iii) options to acquire 100,000 shares of Common
Stock upon issuance of a New Drug Application approval by the FDA. The Employer
shall pay to the Employee Bonus Payment described herein only for such product
or products that are developed using the Technology as defined in Exhibit A.
Furthermore, the Employer shall, at its discretion, grant additional special
option bonuses if the Employee makes additional discoveries.

            D. Royalty Payment.

               1. As compensation for the grant of Technology, the Employer
shall pay the Employee (and to her beneficiaries in the event of her demise) a
royalty of three (3%) percent of net revenues received by the Employer from the
sale of products that incorporate the Technology. In addition, the Employer
shall pay the Employee (and to her beneficiaries in the event of her demise) a
royalty of ten (10%) percent on net Sublicenses Fees received by the Employer
from sublicensing any portion of the Technology. Notwithstanding the foregoing,
to the extent that any claims are asserted against the Employer as a result of
the Technology or any costs are incurred in protecting or defending the
Employer's rights to the Technology, any payments required to be paid or payable
to the Employee hereunder shall be reduced by an amount or amounts equal to the
amount of any such claims and any and all costs and expenses incurred in
connection with defending against such claims and/or in enforcing the Employer's
rights thereto.

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               2. Notwithstanding the obligation to assign all inventions
developed pursuant to Section 15 of this Agreement, the Employer agrees to pay
the Employee a royalty payment for compounds developed by the Employee using the
RATIONAL DRUG DESIGN METHODOLOGY (employed in the patents referred on Exhibit A
hereto) as provided in Subsection 6 D 1 below. However, if the Employee's
RATIONAL DRUG DESIGN METHODOLOGY becomes part of the public domain so that the
free use thereof is available to others, including competitors of the Employer,
then the Employer shall compensate the Employee as per the provisions of this
Agreement concerning developments and inventions made by the Employee, but shall
not be required to pay an additional royalty as per Subsection 6 D 1.

               3. Royalty payments due as per this Subsection 6 D shall be paid
to the Employee within 45 (forty-five) days after the end of each calendar
quarter. Each payment shall be accompanied by a written royalty statement,
certified as accurate by the Employer's chief financial officer, setting forth
in as much detail as necessary the calculation of gross and net revenues.

               4. The Employer shall keep, and shall cause its sub-licensees to
keep, true and complete records in accordance with generally accepted accounting
principles on all revenues from their respective sales or other transactions of
or with relation to the Products and the Technology. Such records shall contain
sufficient detail to enable the determination of any royalty or other payment
due to the Employee hereunder. The Employee or her agent shall have access
during normal business hours to all such records of the Employer and its
sub-licensees.

               5. "NET REVENUES" shall mean the gross invoices sales price per
unit for each of the Products (as defined hereafter) billed to third parties by
the Employer or its Affiliates less, to the extent such amounts are included in
such invoiced sales price, the total of (a) credited allowances to such
independent customers for such Products which were spoiled, damaged, out-dated
or returned; (b) freight and insurance costs actually paid for transporting
Products to such customers and separately identified on the invoice or other
documentation maintained by the Employer in the ordinary course of business; (c)
ordinary and customary quantity and other trade discounts actually allowed and
taken; (d) sales, use, value added and other taxes or governmental charges
actually paid for in connection with the sale, exportation or importation of the
Products in finished packaged form and separately identified on the invoice or
other documentation maintained by the Employer in the ordinary course of
business; and (e) rebates and price reductions/adjustments, required by law,
regulations or contract, provided to managed health care organization or
federal, state and local governments, their agencies, purchasers and
reimbursers. No deductions shall be made for commissions paid to individuals
whether they be with independent sales agencies or regularly employed by the
Employer, or for cost of collections. In the case of rebates and price
reductions/adjustments required by contract as referred to in clause (e) above,
the same shall not be deductible to the extent that (i) the contract in question
is between Affiliated parties; or (ii) the price concessions in question are
given in connection with the marketing/sales of other product or products such
as in the case of "bundling" of products. Net Revenues shall include the amount
or fair market value of all consideration received by the Employer or its
Affiliates in respect of Products, whether

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such consideration is in cash, payment in kind, exchange or another form,
including but not limited to promissory notes, equity, up-front payments,
milestone payments, royalties, manufacturing contracts, distribution contracts,
sponsored research contracts, partnerships or joint ventures (individually,
"CONSIDERATION"). "SUBLICENSES FEES" shall mean any Consideration, received by
the Employer with respect to any transfer of any right, whether present, future
or contingent, to make, manufacture, use, practice, distribute, or otherwise
sell any aspect of the Technology or Products to any third party. "AFFILIATE"
shall mean any Person (as defined below) that, directly or indirectly controls,
or is controlled by or under common control with the first such Person. For the
purpose of this definition, "CONTROL" (including the terms "CONTROLLING",
"CONTROLLED BY" and "UNDER COMMON CONTROL WITH"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities or by contract or agency or
otherwise. The term "PERSON" shall mean an individual or a corporation,
association, partnership, limited liability company, joint venture,
organization, business trust or any other entity or organization.

               E. Stock Options. The Employer shall grant to the Employee 75,000
options ("BASE STOCK OPTIONS") to purchase an aggregate of 75,000 shares of
Common Stock, at an exercise price not to exceed fair market value on the date
of grant (the "BASE OPTION EXERCISE PRICE"). The Base Stock Options shall be
granted as of the date hereof and shall be issued pursuant to the Employer's
Stock Option Plan (the "PLAN") pursuant to a Stock Option Agreement dated the
date hereof between the Employer and the Employee (the "STOCK OPTION
AGREEMENT").

               F. Additional Stock Options. In addition to the Base Stock
Options, the Employee shall be eligible to receive grants of additional options
under the Plan ("ADDITIONAL STOCK OPTIONS") to purchase Common Stock.

         7. ADDITIONAL BENEFITS. In addition to the compensation referred to in
Section 6 hereof, the Employee shall be entitled to receive the following
additional benefits during the Term:

               A. Benefits/Insurance. The Employer shall provide the Employee
with such insurance and benefit plans as the Employer generally makes available
to the Employee's senior scientists, to the extent the Employee is eligible
under the terms of those plans. The Employee shall be entitled to participate in
all profit sharing, incentive, insurance benefits (including, without
limitation, life insurance plans) and other plans and arrangements made
generally available to the employees of the Employer. The Employer shall have no
responsibilities and obligation to the Employee and the Employee shall be
personally responsible for all and assume all medical, disability and other
insurance and benefit plans as mandated by Israeli law and the National Employee
Organization Agreements promulgated thereunder.

               B. Vacation. For each calendar year during the Term, the Employee
shall be entitled to four (4) weeks of paid vacation and shall otherwise enjoy
and be bound by the Employer's

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standard policies, as amended from time to time, regarding accrual and
utilization of paid vacation time. The Employee shall be entitled to all other
national holidays mandated by Israeli law.

         8. EXPENSES.

            A. The Employer agrees to reimburse the Employee up to $35,000 of
substantiated expenses incurred by the Employee in connection with the four
patent applications existing as of the date of this Agreement wherein such
reimbursement includes fees requested by the Israeli lawyers associated with the
handling of the four patent applications described in Exhibit A.

            B. The Employer agrees to reimburse the Employee up to $40,000 of
substantiated expenses incurred by the Employee prior to commencement of the
Term with respect to the Technology and this Agreement.

            C. The Employer agrees to be responsible and to bear all expenses as
of the date hereof so as to vigorously prosecute and maintain all of the patent
applications listed in Exhibit A and all patents registered on the basis
thereon, including all granted reissues, renewals and extensions of such
patents and all granted divisions, continuations and continuations-in-part or
any granted substitutions.

            D. The Employee has advised the Company that certain monies, not to
exceed $200,000, is payable to Saturi Medical Research Ltd. ("SATURI") upon the
realization of profit from the Technology, and the Employer has agreed to
assume all liability for such payments to Saturi and to indemnify the Employee
against any claim made by Saturi in relation thereto. The Employee warrants that
there are no further obligations to, or rights held by, Saturi. In the event of
any claims against the Employer or any Cytoclonal Affiliates by Saturi or any
affiliate, agent or successor in interest thereto with respect to any further
obligations (over and above the said $200,000), the Employee shall hold the
Employer and such Cytoclonal Affiliates harmless and shall indemnify such
Cytoclonal Affiliates from any and all such claims. Furthermore, the Employee
shall have the right of offset against any monies owed by it to the Employee to
satisfy any of the foregoing.

            E. The Employee hereby represents and warrants to, and agrees with,
the Employer that there are no other expenses which the Employer shall reimburse
to the Employee, or to which the Employer shall be responsible, associated with
Technology or otherwise other than the expenses referred to in subparagraphs 7A,
7B and 7D above and that the Employee shall indemnify the Employer or its
officers, directors, shareholders, affiliates or agents (collectively
"CYTOCLONAL AFFILIATES") and hold the Employer and the Cytoclonal Affiliates
harmless from any liability or costs.

         9. ESTABLISHMENT OF LAB FACILITIES. The Employer understands that a
significant portion of the research and development work, including molecular
design, could be performed in Israel. The Employer will expend up to $5,000 per
month for computer laboratory, office and

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personnel expenses incurred by the Employee on behalf of the Employer in Israel,
in accordance with an annual budget to be preapproved by the Employer. The
Employee agrees to submit to the Employer, all bills and expense statements
satisfactorily evidencing fees and expenses related to the laboratory, office
and personal expenses incurred by the Employee in Israel. In addition, the
Employer will establish a computer laboratory at its headquarters in the United
States of America.

         10. ESTABLISHMENT OF SCIENTIFIC COMMITTEE. Promptly after entering into
this Agreement, the Employer will establish a scientific committee developing a
business strategy and plan for the Employer's Drug Design program. The Employee
shall serve on the Employer's scientific committee so long as the Employee
continues to serve as the Employer's Vice President of Drug Design.

         11. TERMINATION. The Employee's employment hereunder may be terminated
prior to the expiration of the Term upon the first to occur of the following:

             A. Employee Termination for Cause. The Employee's employment
hereunder and all of the Employer's obligations hereunder (except as hereinafter
provided) may be immediately terminated by the Employer for Cause (as
hereinafter defined) by giving written notice of such termination to the
Employee. Upon termination of the Employee for Cause, then from that date
forward the Employer shall have no further obligation to the Employee except for
any unpaid and accrued portion of her then current Salary. For purposes of this
Agreement, "CAUSE" shall mean: (i) a breach by the Employee of this Agreement or
any other agreement with or for the benefit of the Employer, or any affiliate
thereof and to which the Employee is a party or by which she is bound, which is
not cured within 10 days following written notice from the Employer detailing
such breach, or which, if not curable, causes the Employer material harm; (ii)
the Employee's breach of her duty of loyalty to the Employer; (iii) any willful
disregard of lawful instructions that are issued in writing, of the Board or
President/Chief Employee Officer of the Employer that are consistent with the
Employee's position; (iv) any act of dishonesty or fraud with respect to the
Employer; or (v) the Employee's commission of an act which might be construed as
common law fraud, embezzlement or a felony, or of any tortious or unlawful act
causing material harm to the Employer's standing or reputation.

             B. Death and Disability. Except as otherwise provided in this
Agreement, the Employee's employment hereunder and all of the Employer's
obligations hereunder (except for any unpaid and accrued portion of her then
current Salary and payments or royalties to her beneficiaries as provided above)
shall have been terminated by the death of the Employee. Such employment may be
terminated by the Board of Directors of the Employer by giving two business
days' written notice of such termination to the Employee if the Employee shall
be rendered incapable by illness or any physical or mental disability from
substantially complying with the terms, conditions and provisions on her part to
be observed and performed for a period in excess of sixty (60) consecutive or
ninety (90) non-consecutive days during any twelve (12) months during the Term,
as evidenced and supported by professional medical or psychiatric opinion
(individually, a "DISABILITY"). In case of

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disability employee will continue to receive royalty payments as per the
provisions of Subsection 6D above.

             C. Employee Termination for Good Cause. The Employee may
voluntarily terminate her employment hereunder if the Employer breaches any of
its material obligations hereunder and does not cure such breach within thirty
(30) days after written notice to the Employer from the Employee detailing such
breach (any of such events being deemed to be "GOOD CAUSE"). If the Employee
shall voluntarily terminate her employment hereunder for Good Cause, the
Employer shall, as severance payment, continue to pay to the Employee monthly
installments of the Salary for the remainder of the Term and employee shall
continue to be entitled to royalty payments as per the provisions of Subsection
6D above and Bonus Stock Option Payments that would otherwise have been payable
to her, hereunder.

             D. Employee Termination Without Cause. Except as provided in
Section 11C hereof, if the Employee terminates her employment, resigns or gives
notice of her intention to terminate her employment or to resign from her
employment with the Employer during the Term hereof, such resignation shall be
deemed "EMPLOYEE TERMINATION WITHOUT CAUSE." If there is an Employee Termination
Without Cause, then the Employer, from that date forward, shall have no further
obligation to the Employee except for any unpaid and accrued portion of her then
current Salary.

         12. NO COMPETING EMPLOYMENT.

             A. During the Term hereof and (i) if employment was terminated for
Cause under Section 9A, for a period of three (3) years thereafter, or (ii) if
this agreement expires or employment is terminated for any reason other than for
Cause under Section 9A, then for a period of one (1) year thereafter (any of the
foregoing periods being referred to hereinafter as the "RESTRICTED PERIOD"),
the Employee shall not, unless she receives the prior written consent of the
Board of Directors of the Employer, directly or indirectly, whether as owner,
consultant, employee, partner, venturer, agent, through stock ownership,
investment of capital, lending of money or property, rendering of services, or
otherwise, compete with the Employer in any business in which it is engaged or
actively prepared to engage at any time during the Restricted Period (such
businesses are hereinafter referred to as the "BUSINESS"), or assist, become
interested in, or be connected with, any Person which so competes with the
Business.

             B. The restrictions imposed hereby shall apply to any geographic
area (including Israel) in which the Employer or any of its Affiliates was
engaged in the Business at any time during the Restricted Period or was actively
preparing to engage in the Business.

         13. Restriction on Passive Investments. During the Restricted Period
the Employee shall not make a Passive Investment (as defined below) which
results in the Employee beneficially owning, with the meaning of Section 13(d)
of the Securities Exchange Act of 1934, as amended, a

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greater than two percent (2%) interest in any class of securities of any Person
which has any class of securities listed on a national securities exchange or
quoted on the automated quotation system of the National Association of
Securities Dealers, Inc. (a "PUBLIC EMPLOYER") which in any way engages in
the Business, or any interest in a Person which is not a Public Employer and
which is engaged in the Business, unless the Employee shall have received the
prior written approval for such investment from the Board. Nothing herein
shall be construed as prohibiting the Employee from making any Passive
Investment in any Person which is not a Public Employer and which does not
engage in the Business. For purposes of this Agreement, the phrase "engage in
the Business," or any derivative thereof, shall refer not only to the activities
of such Public Employer or such other Person, as the case may be, but shall
also refer to the activities of any subsidiary, affiliate or joint venture
thereof. For purposes of this Agreement, a "PASSIVE INVESTMENT" shall mean an
investment in a Person which does not require the Employee to render any
services in the operations or affairs of such Person or otherwise devote in
connection therewith any significant amount of time.

         14. NO INTERFERENCE. During the Restricted Period, the Employee shall
not, whether for her own account or for the account of any other Person
intentionally solicit, endeavor to entice away from the Employer or any of its
Affiliates, hire or otherwise interfere with the relationship of the Employer or
any of its Affiliates with (a) any employee of the Employer or any of its
Affiliates who was employed during the Restricted Period or who ceased
employment with the Employer or any of its Affiliates within one (1) year prior
to the commencement of the Restricted Period, or with (b) any supplier or
customer of the Employer or any of its Affiliates who was a supplier or
customer thereof during the Restricted Period or within one (1) year prior to
the commencement of the Restricted Period.

         15. INTELLECTUAL PROPERTY AND CONFIDENTIALITY.

             A. During and following the term of this Agreement, the Employee,
as part of her duty to the Employer with without additional compensation from
the Employer other than discussed herebefore, (i) shall promptly disclose to
representatives of the Employer, whether established solely or jointly, all
ideas, inventions, copyrightable materials, discoveries, tangible research
property ("RAW DATA"), trademarks, secret processes and methods, and
improvements (collectively "INTELLECTUAL PROPERTY") invented or developed by the
Employee during the Term or within one (1) year after its termination, which are
or were related to the scope of the Employer's business or are or were related
to any work carried on by the Employer or are or were related to any problems
and projects specifically assigned to the Employee, whether or not patentable,
copyrightable, or protectable under trade secret, trademark, or proprietary
laws, and (ii) shall transfer and assign to the Employer or to any person, or
entity designated by the Employer, all of her entire right, title and interest
in and to all such ideas, inventions, copyrightable material, discoveries, Raw
Data, trademarks, secret processes and methods and improvements, and shall
execute all papers, give testimony and take whatever steps needed to obtain and
secure and enforce and protect the Employer's right thereto to all Intellectual
Property herein discussed.

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             B. The Employee recognizes that the services to be performed by
her for the Employer may require confidential information and trade secrets
concerning the operations of the Employer and its Affiliates. Accordingly, the
Employee agrees that she will not, except with the prior written consent of the
Employer's Board of Directors, or as may be required by law, directly or
indirectly, disclose during the Term or any time thereafter any secret or
confidential information that she has learned by reason of her association with
the Employer or use any such information to the detriment of the Employer so
long as such confidential information or trade secrets have not been voluntarily
disclosed by the Employer without restriction, or are not otherwise in the
public domain. If the Employee shall be required by law to disclose any such
confidential information, the Employee will, to the extent reasonably
practicable, notify and consult with the Employer prior to any such disclosure.

             C. In addition to any other rights or remedies it may have, the
Employer shall be entitled to an ex parte, temporary, preliminary and permanent
injunction enjoining or restraining the Employee from any violation or
threatened violation of any of Section 12,13, 14 or 15 hereof, and the Employee
hereby consents to the equitable jurisdiction of the courts of New York in
accordance with Section 21. The Employee's agreement as set forth in Sections
12,13, 14 or 15 shall survive the termination of the Employee's employment under
this Agreement.

         16. TAX WITHHOLDING AND DEDUCTIONS. Payments to the Employee of all
compensation contemplated under this Agreement shall be subject to all
applicable legal requirements of federal, state and local taxing authorities
with respect to the withholding of taxes (including those of Israel).
Notwithstanding any amounts withheld pursuant to the foregoing, the Employee
shall be responsible for the payment of all applicable tax liability, if any, on
all compensation paid to her under the terms of this Agreement, other than the
Employer's share of social security and similar taxes.

             The Employee agrees that the Employer shall withhold from any and
all payments required to be made to the Employee pursuant to this Agreement, all
Federal, state, local and/or other taxes which the Employer determines are
required to be withheld in accordance with applicable statutes and/or
regulations from time to time in effect. The Employer shall provide the Employee
with evidence of such withholding and payment.

         17. AMENDMENT: WAIVER. This Agreement may not be modified, amended or
waived in any manner except by an instrument in writing signed by the parties
hereto. The waiver by either party of compliance with any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any provision of this Agreement, or of any subsequent breach by such party of a
provision of this Agreement.

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         18. SEVERABILITY.

             A. The provisions of this Agreement (including particularly, but
not limited to, the provisions of Sections 12,13,14 or 15 hereof) shall be
deemed severable, and the invalidity or unenforceability of any one or more of
the provisions hereof shall not affect the validity and enforceability of the
other provisions hereof.

             B. The Employee agrees that the breach or alleged breach by the
Employer of (i) any covenant contained in another agreement between the Employer
and the Employee or (ii) any obligation owed to the Employee by the Employer,
shall not affect the validity or enforceability of the covenants and agreements
of the Employee set forth herein.

             C. Each of the provisions of Sections 12,13, 14 or 15 of this
Agreement are separate and independent obligations of the Employee without
regard to any other provision of this Agreement or any other agreement to which
the Employee is a party (whether as an employee or otherwise), and the validity,
enforceability or legality of any of such provisions shall have no effect on the
provisions of any other agreement to which the Employee is a party, regardless
of the similarity of any such other provisions to the provisions of any of
Sections 12,13, 14 or 15 hereof. Similarly, the validity, legality, or
enforceability of any provisions in any other agreement shall have no effect on
the validity, legality or enforceability of any provisions of this Agreement.

         19. NOTICES. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by courier service (with proof of service),
facsimile transmission, hand delivery or certified or registered mail (return
receipt requested and first-class postage prepaid), to her residence in the case
of the Employee, and to its principal office in the case of the Employer.
Copies of all notices or other communications given to the Employer shall be
sent also to Morrison Cohen Singer and Weinstein, LLP, 750 Lexington, New York,
NY 10022, Attn: Robert H. Cohen.

         20. NO CONFLICT. The Employee represents and warrants to the Employer
that she is not subject to, or bound by, any agreement which will prevent her
from entering into and fully performing her services in accordance herewith. The
Employee further acknowledges that the Employer has not requested her to
disclose or use for its benefit any confidential information or trade secrets
belonging to any other person or corporation and that she will not disclose or
use any confidential information or trade secrets of any other person or
corporation while performing services for the Employer in accordance with this
Agreement. The Employee further represents that the Employee's performance of
all the terms of this Agreement and any services to be rendered as an employee
of the Employer do not and shall not breach any fiduciary or other duty or any
covenant, agreement or understanding (including, without limitation, any
agreement relating to any proprietary information, knowledge or date acquired by
the Employee in confidence, trust or otherwise prior to the Employee's
employment by the Employer) to which the Employee is a party or by the terms of
which the Employee may be bound.

                                       11
<PAGE>

         21. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Texas, without giving effect to
conflicts of law principles. The courts of such state shall have
exclusive jurisdiction over all controversies arising out of or in connection
with this Agreement. The parties consent to personal jurisdiction in the courts
of New York City, New York and agree that process may be served upon them in any
such action by registered mail or personally within or without such state.

         22. BINDING EFFECT; ASSIGNMENT. This Agreement is binding on, and will
inure to the benefit of, the parties hereto and their respective heirs, legal
representatives, successors and assigns. This Agreement is not assignable by the
parties, provided, however, that the Employer may assign this Agreement or any
of its rights hereunder without the prior written consent of the Employee to any
affiliate, joint venture partner or successor.

         23. KNOWING AND VOLUNTARY AGREEMENT; JOINT PARTICIPATION IN PREPARATION
OF AGREEMENT.

             A. The Employee acknowledges that she is entering into this
Agreement knowingly and voluntarily after carefully reviewing it; that she has
had the opportunity to review it with counsel of her own choosing namely Shai
Buber, of the firm of Levine & Srinivasan; that she understands its final and
binding effect; that the only promises made to her to obtain her agreement and
signature are those stated in this Agreement; that this Agreement supersedes any
and all prior oral or written agreements between the parties; and that this
document represents the complete terms of their agreement which may not be
amended or modified except in a writing signed by the parties hereto. There are
no representations, inducements or promises not set forth herein on which either
party has relied or may rely.

             B. The parties hereto participated jointly in the negotiation and
preparation of this Agreement and each party has had the opportunity to obtain
the advice of legal counsel and to review, comment upon, and redraft it.
Accordingly, it is agreed that no rule of construction shall apply against any
party in favor of any party. This Agreement shall be construed as if the parties
jointly prepared it, and any uncertainty or ambiguity shall not be interpreted
against any one party and in favor of the other.

         24. ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties and embodies all the representations and warranties which have been
made between them with respect to the subject matter hereof. All previous
agreements or understandings between the parties hereto, whether in writing or
oral, are merged into this Agreement. This Agreement may not be changed orally,
but only by an agreement in writing signed by the party against whom enforcement
of any waiver, change, modification, extension, or discharge is sought.

         25. HEADINGS. Headings in this Agreement are for convenience only and
shall not be used to interpret or construe its provisions.

                                       12

<PAGE>
         26. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

         27. RE-ASSIGNMENT OF TECHNOLOGY. The Technology shall be automatically
re-assigned to the Employee if the Employer is declared insolvent or bankrupt
or if a receiver or trustee is appointed for part or all of the assets of the
Employer on behalf of any creditor or creditors, and the order, judgment or
decree making such appointment shall not be vacated or set aside within sixty
(60) days after the date thereof. Moreover, the Employer hereby agrees to
immediately reassign its rights in any part of the Technology which the Employer
determines as not being commercially useful or with respect to which the
Employer decides not to prosecute a patent application or maintain any patent.
The Employer shall immediately inform the Employee of any such decision.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

                                       13
<PAGE>

         IN WITNESS WHEREOF, the Employer and the Employee have duly executed
this Agreement as of the day and year first above written.

                                        CYTOCLONAL PHARMACEUTICS, INC.

                                        By: /s/ ARTHUR P. BOLLON
                                            ---------------------------------
                                            Arthur P. Bollon Ph.D.
                                            President

                                        /s/ DORIT ARAD
                                        ------------------------------------
                                        DR. DORIT ARAD

                                       14
<PAGE>

                                    EXHIBIT A
                             TO EMPLOYMENT AGREEMENT

                                   DEFINITIONS

         (A) TECHNOLOGY - Technology is defined to include all proprietary
knowledge including "Raw Data" (as defined below) that is simultaneously
herewith being transferred by the Employee to the Employer and any future
additions, enhancements, and improvements of such proprietary knowledge as
described in the four named patent applications that follow and any priority
applications thereto:

                  1.       Israel Patent Application No. 122591
                           (filed 19 December 1997) "Pharmaceutical
                           Preparation Which Compromises Inhibitors of Cysteine
                           Protease"

                  2.       PCT/IL98/00602
                           (filed 14 December 1998) "Modulators of Cysteine
                           Protease"

                  3.       (a)      Israel Patent Application No. 118657
                                    (filed 17 June 1996) "Novel Anti-Viral
                                    Compounds"

                           (b)      W09747270
                                    "Novel Antiviral Compounds"

                           (c)      AU9730461
                                    "Novel Antiviral Compounds"

                  4.       "Cysteine Protease Inhibitors"

         (B) RAW DATA - Raw Data is defined as any laboratory worksheets,
records, memoranda, notes or exact copy thereof that are the results of original
observations and activities of a study and are necessary for the reconstruction
and evaluation of the study. Raw Data includes, but is not limited to,
photographs, microfilm or microfiche copies, computer print-outs, magnetic
media, including dictated observations and recorded data from automated
instruments.

                                       15
<PAGE>

                                    EXHIBIT B

                             TO EMPLOYMENT AGREEMENT

                                       16
<PAGE>

Exhibit B
To Employment
Agreement

              PRACTITIONER'S DOCKET NO.   N/A                        PATENT
                                        ----------------------

                                        For: [X] U.S. and/or [X] Foreign Rights

                                        By: [ ] Inventor(s) or [X] Present Owner

              ASSIGNMENT OF INVENTION CONTAINED IN PCT APPLICATION

    In consideration of the payment by ASSIGNEE to ASSIGNOR of the sum of One
Dollar ($1.00), the receipt of which is hereby acknowledged, and for other good
and valuable consideration.

ASSIGNOR:                               Dorit Arad
Inventor(s) or person(s) or             ----------------------------------------
entity(ies) who own the                 (type or print name(s) of ASSIGNOR(S))
invention
                                        9 Burla Street
                                        ----------------------------------------
                                        Address

                                        Tel Aviv, Israel
                                        ----------------------------------------

                                        Israeli
                                        ----------------------------------------
                                        Nationality

(If assignment is by person or entity to whom invention was previously assigned
                and this was recorded in PTO, add the following)

    RECORDED ON                         REEL
                 ---------------------         --------------------------------

                                        FRAME
                                               --------------------------------

    hereby sells, assigns and transfers to

ASSIGNEE:

                                        Cytoclonal Pharmaceutics, Inc.
                                        ----------------------------------------
                                        (type or print name of ASSIGNEE)

                                        9000 Harry Hines Blvd.,
                                        ----------------------------------------
                                        Address

                                        Dallas, TX 75235
                                        ----------------------------------------

                                        United States of America
                                        ----------------------------------------
                                        Nationality

    and the successors, assigns, and legal representatives of the ASSIGNEE

                        (complete one of the following)

                [X] the entire right, title and interest

                [ ] an undivided _________ percent (_____%) interest for the
United States and its territorial possessions

      (Assignment of Invention Contained in PCT Application [13-23]-page 1 of 3)

                                       17

<PAGE>

Exhibit B
To Employment
Agreement

      (check the following box, if foreign rights are also to be assigned)

                [X] and in all foreign countries including all rights to claim
priority in and to any and all improvements which are disclosed in the invention
entitled:

                      (check and complete (a), (b), or (c)
and which is found in (37 C.F.R. ss. 3.21)

           (a)  [ ] PCT patient application filed on even date herewith

                    [ ] Express mail label no:
                                               --------------------------

                    [ ] Mailed:
                                -------------------------------

                    [ ] To comply with 37 C.F.R. ss 3.21 for records of this
                        assignment, I, an ASSIGNOR signing below, hereby
                        authorize and request my attorney to insert below the
                        filing date and application number when they become
                        known.

           (b)  [X] PCT application Serial No. PCT/IL98/00602  filed on
                                              ----------------
                    14.12.98
                    --------.

       (also check (c), if foreign application(s) is also being assigned)

           (c)  [X] and any legal equivalent thereof in a foreign country,
                    including the right to claim priority

and, in and to, all Letters Patent to be obtained for said invention by the
above application or any continuation, division, renewal, or substitute thereof,
and as to letters patent any re-issue or re-examination thereof.

    ASSIGNOR hereby covenants that no assignment, sale, agreement or
encumbrance has been or will be made or entered into which would conflict with
this assignment.

    ASSIGNOR further covenants that ASSIGNEE will, upon its request, be provided
promptly with all pertinent facts and documents relating to said invention and
said Letters Patent and legal equivalents as may be known and accessible to
ASSIGNOR and will testify as to the same in any interference, litigation or
proceeding related thereto and will promptly execute and deliver to ASSIGNEE or
its legal representatives any and all papers, Instruments or affidavits required
to apply for, obtain, maintain, issue and enforce said application, said
invention and said Letters Patent and said equivalents thereof which may be
necessary or desirable to carry out the purposes thereof.

    IN WITNESS WHEREOF, I/We have hereunto set hand and seal this  31.12.98
                                                                ---------------.
                                                                Date of Signing

    WARNING: Date of signing must be the same as the date of execution of the
             application if item(s) was checked above.

      (Assignment of Invention Contained in PCT Application [13-23]-page 2 of 3)

                                       18

<PAGE>

Exhibit B
To Employment
Agreement

                                          /s/ DORIT ARAD
                                        ------------------------------------
                                        Signature of ASSIGNOR(S)

                                        ------------------------------------

                                        ------------------------------------

                                        ------------------------------------

                                        ------------------------------------

                                        ------------------------------------

        if ASSIGNOR is a legal entity complete the following information

                                        ------------------------------------
                                        (type or print the name of the above
                                        person authorized to sign on behalf
                                        of ASSIGNOR)

                                        ------------------------------------
                                        Title

NOTE: No witnessing, notarization or legalization is necessary. If the
      assignment is notarized or legalized then it will only be prima facie
      evidence of execution 35 USC 281. Use next page if notarization is
      desired.

                                 [ ] Notarization or Legalization Page Added

      (Assignment of Invention Contained in PCT Application [13-23]-page 3 of 3)

                                       19

<PAGE>

Exhibit B
To Employment
Agreement

--------------------------------------------------------------------------------
[ILLEGIBLE]                        FORM 13-24                             13-193
--------------------------------------------------------------------------------

IN WITNESS WHEREOF, I/We have hereunto set hand and seal this  31.12.98.
                                                            ---------------
                                                            Date of Signing

    WARNING: Date of signing must be the same as the date of execution of the
             application if item (a) was checked above.

                                        ------------------------------------
                                        Signature of administrator(trix),
                                        executor(trix) or legal
                                        representative(s)

                                        ------------------------------------

                                        ------------------------------------

                                        [ ] Notarization or Legalization
                                        Page Added.

NOTE: No witnessing, notarization or legalization is necessary. If the
      assignment is notarized or legalized then it will only be prima facie
      evidence of execution 35 USC 281. Use next page if notarization is
      desired.

(Assignment of Invention Contained in PCT Application by Administrator(trix),
Executor(trix) or Legal Representative(s) [13-23]-page 3 of 3)

                                       20

<PAGE>

Exhibit B
To Employment
Agreement

              PRACTITIONER'S DOCKET NO.   N/A                        PATENT
                                        ----------------------

                                        FOR: [X] U.S. and/or [X] Foreign Rights

                                        By: [ ] Inventor(s) or [X] Present Owner

              ASSIGNMENT OF INVENTION CONTAINED IN PCT APPLICATION

    In consideration of the payment by ASSIGNEE to ASSIGNOR of the sum of One
Dollar $(1.00), the receipt of which is hereby acknowledged, and for other good
and valuable consideration.

ASSIGNOR:                               Dorit Arad
Inventor(s) or person(s) or             ----------------------------------------
entity(ies) who own the                 (type or print name(s) of ASSIGNOR(S))
invention
                                        9 Burla Street
                                        ----------------------------------------
                                        Address

                                        Tel Aviv, Israel
                                        ----------------------------------------

                                        Israeli
                                        ----------------------------------------
                                        Nationality

(if assignment is by person or entity to whom invention was previously assigned
                and this was recorded in PTO, add the following)

    RECORDED ON                         REEL
                 ---------------------         --------------------------------

                                        FRAME
                                               --------------------------------

    hereby sells, assigns and transfers to

ASSIGNEE:

                                        Cytoclonal Pharmaceutics, Inc.
                                        ----------------------------------------
                                        (type or print name of ASSIGNEE)

                                        9000 Harry Hines Blvd.,
                                        ----------------------------------------
                                        Address

                                        Dallas, TX 75235
                                        ----------------------------------------

                                        United States of America
                                        ----------------------------------------
                                        Nationality

    and the successors, assigns and legal representatives of the ASSIGNEE

                        (complete one of the following)

                [X] the entire right, title and interest

                [ ] an undivided _________ percent (_____%) interest for the
United States and its territorial possessions

      (Assignment of Invention Contained in PCT Application [13-23]-page 1 of 3)

                                       21

<PAGE>

Exhibit B
To Employment
Agreement

      (check the following box, if foreign rights are also to be assigned)

                [X] and in all foreign countries including all rights to claim
priority in and to any and all improvements which are disclosed in the invention
entitled:

                      (check and complete (a), (b), or (c))
and which is found in (37 C.F.R. ss. 3.21)

           (a)  [ ] PCT patent application filed on even date herewith

                    [ ] Express mail label no:
                                               --------------------------

                    [ ] Mailed:
                                -------------------------------

                    [ ] To comply with 37 C.F.R. ss. 3.21 for records of this
                        assignment, I, an ASSIGNOR signing below, hereby
                        authorize and request my attorney to insert below the
                        filing date and application number when they become
                        known.

           (b)  [X] PCT application Serial No. PCT/IL97/193 filed on 15.6.97.
                                               ------------          --------

       (also check (c), if foreign application(s) is also being assigned)

           (c)  [X] and any legal equivalent thereof in a foreign country,
                    including the right to claim priority

and, in and to, all Letters Patent to be obtained for said invention by
the above application or any continuation, division, renewal, or substitute
thereof, and as to letters patent any re-issue or re-examination thereof.

    ASSIGNOR hereby covenants that no assignment, sale, agreement or
encumbrance has been or will be made or entered into which would conflict with
this assignment;

    ASSIGNOR further covenants that ASSIGNEE will, upon its request, be provided
promptly with all pertinent facts and documents relating to said invention and
said Letters Patent and legal equivalents as may be known and accessible to
ASSIGNOR and will testify as to the same in any interference, litigation or
proceeding related thereto and will promptly execute and deliver to ASSIGNEE or
its legal representatives any and all papers, instruments or affidavits required
to apply for, obtain, maintain, issue and enforce said application, said
invention and said Letters Patent and said equivalents thereof which may be
necessary or desirable to carry out the purposes thereof.

    IN WITNESS WHEREOF, I/We have hereunto set hand and seal this  31.12.98
                                                                ---------------.
                                                                Date of Signing

    WARNING: Date of signing must be the same as the date of execution of the
             application if item (a) was checked above.

      (Assignment of Invention Contained in PCT Application [13-23]-page 2 of 3)

                                       22

<PAGE>

Exhibit B
To Employment
Agreement

--------------------------------------------------------------------------------
[ILLEGIBLE]                        FORM 13-24                             13-193
--------------------------------------------------------------------------------

IN WITNESS WHEREOF, I/We have hereunto set hand and seal this 31. 12. 98.
                                                            ---------------
                                                            Date of Signing

    WARNING: Date of signing must be the same as the date of execution of the
             application if item (a) was checked above.

                                        ------------------------------------
                                        Signature of administrator(trix),
                                        executor(trix) or legal
                                        representative(s)

                                        ------------------------------------

                                        ------------------------------------

                                        [ ] Notarization or Legalization
                                        Page Added.

NOTE: No witnessing, notarization or legalization is necessary. If the
      assignment is notarized or legalized then it will only be prima facie
      evidence of execution 35 USC 281. Use next page if notarization is
      desired.

(Assignment of Invention Contained in PCT Application by Administrator(trix),
Executor(trix) or Legal Representative(s) [13-23]-page 3 of 3)

                                       23

<PAGE>

Exhibit B
To Employment
Agreement

                                          /s/ DORIT ARAD
                                        ------------------------------------
                                        Signature of ASSIGNOR(S)

                                        ------------------------------------

                                        ------------------------------------

                                        ------------------------------------

                                        ------------------------------------

                                        ------------------------------------

        if ASSIGNOR is a legal entity complete the following information

                                        ------------------------------------
                                        (type or print the name of the above
                                        person authorized to sign on behalf
                                        of ASSIGNOR)

                                        ------------------------------------
                                        Title

NOTE: No witnessing, notarization or legalization is necessary. If the
      assignment is notarized or legalized then it will only be prima facie
      evidence of execution 35 USC 281. Use next page if notarization is
      desired.

                                 [ ] Notarization or Legalization Page Added

      (Assignment of Invention Contained in PCT Application [13-23]-page 3 of 3)

                                       24<PAGE>
                                                                     EXHIBIT 4.2

                          REGISTRATION RIGHTS AGREEMENT

         REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of February
3, 1999, between ONEOK Resources Company, a Delaware corporation (the
"Shareholder") and Magnum Hunter Resources, Inc., a Nevada corporation (the
"Company").

                                    RECITALS

         A. The Company and Shareholder have entered into a Stock Purchase
Agreement dated February 3, 1999 (the "Purchase Agreement"), pursuant to which
the Shareholder will purchase 50,000 newly issued shares of the Company's 1999
Series A 8% Convertible Preferred Stock, par value $.001 per share, having a
liquidation value of $50,000,000.00 or $1,000.00 per share (the "Preferred
Stock").

         B. The parties each desire to make certain covenants and agreements
concerning, among other things, the registration from time to time of the
Shareholder's shares of the Common Stock obtainable upon conversion of the
Preferred Stock (the "Shares") under the Securities Act of 1933, as amended (the
"Securities Act").

         NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein, the
Company and the Shareholder hereby agree as follows:

                                    ARTICLE I

                               CERTAIN DEFINITIONS

         Section 1.1. Defined Terms. In addition to other terms defined
elsewhere in this Agreement, as used in this Agreement, the following
capitalized terms have the respective meanings set forth below:

         "Affiliate" shall mean, with respect to any Person, any other Person
that directly or indirectly through one or more intermediaries controls or is
controlled by or is under common control with such Person.

         "Blackout Period" shall have the meaning assigned to such term in
Section 3.1(b).

         "Claims" shall have the meaning assigned to such term in Section
3.6(a).

         "Demand Period" shall have the meaning assigned to such term in Section
3.1(a).

         "Demand Registration" shall have the meaning assigned to such term in
Section 3.1(a).

<PAGE>

         "Demand Request" shall have the meaning assigned to such term in
Section 3.1(a).

         "Effective Period" shall have the meaning assigned to such term in
Section 3.4(a)(iii).

         "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

         "Holder" shall mean, with respect to any shares of Common Stock, the
Shareholder and as long as there is a direct chain of ownership by the
Shareholder and its Affiliate any Affiliate of Shareholder holding
Shares; and the terms "hold", "held" and "holding" shall have meanings
correlative to the foregoing.

         "Inspectors" shall have the meaning assigned to such term in Section
3.4(a)(iv).

         "Maximum Number" shall have the meaning assigned to such term in
Section 3.2(b).

         "Other Holder" shall have the meaning assigned to such term in Section
3.2(b).

         "Person" shall mean any individual, corporation, company, partnership,
joint venture, trust, group (as such term is used in Rule 13d-5 under the
Exchange Act), business association, government or political subdivision
thereof, governmental body or other entity.

         "Piggy-Back Registration" shall have the meaning assigned to such term
in Section 3.2(a).

         "Piggy-Back Request" shall have the meaning assigned to such term in
Section 3.2(a).

         "Preferred Stock" shall have the meaning assigned to such term in the
first recital of this Agreement.

         "Records" shall have the meaning assigned to such term in Section
3.4(a)(iv).

         "Registered Shares" shall have the meaning assigned to such term in
Section 3.4(a)(xviii).

         "Registration" shall have the meaning assigned to such term in Section
3.2(a).

         "Registration Expenses" shall have the meaning assigned to such term in
Section 3.5.

         "Rule 144" shall have the meaning assigned to such term in Section 3.8

         "SEC" shall mean the United States Securities and Exchange Commission
or any other United States federal agency at the time administering the
Securities Act or the Exchange Act, as applicable, whichever is the relevant
statute.

         "Securities Act" shall have the meaning assigned to such term in the
second recital to this Agreement.

<PAGE>

         "Shares" shall have the meaning assigned to such term in the second
recital of this Agreement.

         Section 1.2. General. Unless the context otherwise requires, references
in this Agreement to any "section" or "article" shall mean a section or article
of this Agreement, as the case may be, and the terms "hereof," "hereunder" and
"hereto" and words of similar meaning shall mean this Agreement in its entirety
and not any particular provisions of this Agreement. Unless the context
otherwise requires, the terms defined herein include the singular as well as the
plural.

         Unless the context otherwise requires, each reference herein to the
Securities Act, the Exchange Act or Rule 144 (or any other rule, regulation or
form promulgated under either such statute) shall be deemed to mean, as of any
time, such statute, rule, regulation or form as then in effect, after all
amendments thereto, or, if not then in effect, any successor statute, rule,
regulation or form as then in effect, after all amendments thereto.

         Section 1.3. Headings. The descriptive headings of the several Sections
and paragraphs of this Agreement are inserted for convenience only, do not
constitute a part of this Agreement and shall not affect in any way the meaning
or interpretation of this Agreement.

                                   ARTICLE II

                         Representations and Warranties

         Section 2.1. Representations and Warranties of the Shareholder. The
Shareholder hereby represents and warrants to the Company (i) that it has been
duly organized and is an existing corporation in good standing under the laws of
the State of Delaware; (ii) that it has all requisite corporate power and
authority and has received all requisite approvals (including any necessary
approval of its board of directors) to complete the transactions contemplated
hereby, and (iii) that this Agreement has been duly authorized, executed and
delivered by the Shareholder and constitutes a valid and binding agreement of
the Shareholder enforceable against the Shareholder in accordance with its
terms.

         Section 2.2. Representations and Warranties of the Company. The Company
hereby represents and warrants to the Shareholder (i) that the Company has been
duly organized and is an existing corporation in good standing under the laws of
the State of Nevada; (ii) that it has all requisite corporate power and
authority, and has received all requisite approvals (including any necessary
approval of its Board of Directors) to complete the transactions contemplated
hereby; and (iii) this Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement of the
Company enforceable against the Company in accordance with its terms.

<PAGE>

                                   ARTICLE III

                               REGISTRATION RIGHTS

         Section 3.1. Demand Registrations.

                  (a) At any time following the date upon which the Shareholder
         has converted or given the Company notice of its election to convert
         any or all of the Preferred Stock into shares and prior to the date on
         which the Company shall have obtained a written opinion of legal
         counsel reasonably satisfactory to the Shareholder and addressed to the
         Company and the Shareholder to the effect that the Shares may be
         publicly offered for sale in the United States by the Shareholder
         without restriction as to manner of sale and amount of securities sold
         and without registration under the Securities Act (such period, the
         "Demand Period"), the Shareholder shall have the unlimited right to
         require the Company to file a registration under the Securities Act in
         respect of all or a portion of the Shares by delivering to the Company
         written notice stating that such right is being exercised, specifying
         the number of Shares to be included in such registration and describing
         the intended method of distribution thereof (a "Demand Request"). As
         promptly as practicable, but in no event later than thirty (30) days
         after the Company receives a Demand Request, the Company shall file
         with the SEC and thereafter use its best efforts to cause to be
         declared effective promptly a registration statement (including,
         without limitation, by means of a shelf registration pursuant to Rule
         415 under the Securities Act if so requested by Shareholder and if the
         Company is then eligible to use such a registration) (a "Demand
         Registration") providing for the registration of such number of Shares
         as the Shareholder shall have demanded be registered for distribution
         in accordance with such intended method of distribution. The Company
         shall have the right and option to designate any one of the Demand
         Registrations be filed as a shelf registration or other successor
         procedure as prescribed by the SEC, as above provided as a shelf
         registration statement, for which the Company agrees to pay certain
         costs therefor pursuant to Section 3.5 below (the "Free Shelf
         Registration"). After completion of any Demand Registration designated
         as a shelf registration by the Company, any subsequent Demand
         Registrations shall not be shelf registrations unless the Company
         otherwise agrees. Notwithstanding the foregoing, the Company shall not
         be obligated to effect any Demand Registration requested pursuant to
         this Section 3.1 if the number of Shares then held by the Shareholder
         shall be less than 1% of the then outstanding Common Stock.

                  (b) Anything in this Agreement to the contrary
         notwithstanding, the Company shall be entitled to postpone and delay,
         for a reasonable period of time, not to exceed ninety (90) days in the
         case of clauses (i) and (ii) below, or thirty (30) days in the case of
         clause (iii) below (each, a "Blackout Period"), the filing of any
         Demand Registration if the Company shall determine that any such filing
         or the offering of any Shares would (i) in the good faith judgment of
         the Board of Directors of the Company, unreasonably impede, delay or
         otherwise interfere with any pending or contemplated financing,
         acquisition, merger, corporate reorganization or other similar
         transaction involving the Company, (ii) based upon advice from the
         Company's investment banker or financial advisor, adversely affect any
         pending or contemplated offering or sale of any class of securities by
         the Company, or (iii) in good faith judgment of the Board require
         disclosure of material non-public information (other than information
         relating to an event described in clause (i) or

<PAGE>

         (ii) of this subsection (b)) which, if disclosed at such time, would be
         materially harmful to the interests of the Company and its
         stockholders; provided, however, that in the case of a Blackout Period
         pursuant to clause (i) above, the Blackout Period shall earlier
         terminate upon the completion, or abandonment of the relevant
         financing, acquisition, merger, corporate reorganization or other
         similar transaction; provided, further, in the case of a Blackout
         Period pursuant to clause (ii) above, the Blackout Period shall either
         terminate thirty (30) days after the completion or upon the
         abandonment, of the relevant securities offering or sale; and provided,
         further, that in the case of a Blackout Period pursuant to clauses (i)
         or (iii) above, the Company shall give written notice of its
         determination to postpone or delay the filing of any Demand
         Registration and in the case of clause (iii) above, the Blackout Period
         shall earlier terminate upon public disclosure by the Company or public
         admission by the Company of such material non-public information or
         such time as such material non-public information shall be publicly
         disclosed; and provided, further, that in the case of a Blackout Period
         pursuant to clause (i), (ii) or (iii) above, the Company shall furnish
         to the Shareholder a certificate of an executive officer of the Company
         to the effect that an event permitting a Blackout Period has occurred.
         Notwithstanding anything herein to the contrary, the Company shall not
         exercise pursuant to clause (i) or (ii) of the preceding sentence the
         right to postpone or delay the filing of any Demand Registration more
         than twice in any twelve (12) month period. Upon notice by the Company
         to the Shareholder of its determination that a Blackout Period exists,
         the Shareholder covenants that it shall keep the fact of any such
         notice strictly confidential, and, in the case of a Blackout Period
         pursuant to clauses (iii) above or Section 3.1(c) below, promptly halt
         any offer, sale, trading or transfer by it or any of its Affiliates of
         any Common Stock for the duration of the Blackout Period set forth in
         such notice (or until such Blackout Period shall be earlier terminated
         in writing by the Company) and promptly halt any use, publication,
         dissemination or distribution of the Demand Registration, each
         prospectus included therein, and any amendment or supplement thereto by
         it and any of its Affiliates for the duration of the Blackout Period
         set forth in such notice (or until such Blackout Period shall be
         earlier terminated in writing by the Company) and, if so directed by
         the Company, will deliver to the Company any copies then in such
         Shareholder's possession of the prospectus covering such Shares, that
         was in effect at the time of receipt of such notice. After the
         expiration of any Blackout Period and without further request from the
         Shareholder, the Company shall effect the filing of the relevant Demand
         Registration and shall use its best efforts to cause any such Demand
         Registration to be declared effective as promptly as practicable unless
         the Shareholder shall have, prior to the effective date of such Demand
         Registration, withdrawn in writing its initial request.

                  (c) Anything in this Agreement to the contrary
         notwithstanding, in case a Demand Registration has been filed, if a
         transaction of the type specified in Section 3.1(b)(i) occurs other
         than as a result of actions taken by the Company, the Company may cause
         such Demand Registration to be withdrawn and its effectiveness
         terminated or may postpone amending or supplementing such Demand
         Registration for a reasonable period of time, not to exceed the
         Blackout Period applicable to Section 3.1(b)(i).

<PAGE>

                  (d) The Shareholder may withdraw a Demand Request in
         circumstances including, but not limited to, the following: if (i) the
         Company is in material breach of its obligation hereunder and has not
         cured such breach after having received notice thereof and a reasonable
         opportunity to do so or (ii) the withdrawal occurs during a Blackout
         Period.

                  (e) The Company may elect to include in any registration
         statement filed pursuant to this Section 3.1 any Common Stock to be
         issued by it or held by any of its subsidiaries or by any other
         shareholders only to the extent such Common Stock is offered and sold
         pursuant to, and on the terms and subject to the conditions of, any
         underwriting agreement or distribution arrangements entered into or
         effected by the Shareholder. No securities shall be included in a
         Demand Registration unless the managing underwriter advises the Company
         in writing that inclusion of such securities will not materially and
         adversely affect the price or success of the Demand Registration.

                  (f) The managing underwriter for any Demand Registration shall
         be selected by the Shareholder, provided that such underwriter shall be
         reasonably satisfactory to the Company.

                  (g) Anything in this Agreement to the contrary
         notwithstanding, the Company shall not be required to register any
         Shares pursuant to this Section 3.1 if the Shareholder had the
         opportunity to register Shares pursuant to Section 3.2 hereof within
         the 60 days immediately preceding such request, and no Shares were
         excluded from the offering by the managing underwriter or underwriters
         thereof.

         Section 3.2. "Piggy-Back" Registrations.

                  (a) If, at any time following the date of this Agreement, the
         Company proposes to register any Common Stock under the Securities Act
         on a registration statement on Form S-1, Form S-2 or Form S-3 (or any
         equivalent general registration form then in effect) other than
         pursuant to a Demand Registration under Section 3. 1 for purposes of a
         primary offering, secondary offering or combined offering of such
         Common Stock, the Company shall give prompt written notice to the
         Shareholder of its intention to do so. Such notice shall specify, at a
         minimum, the number of shares of Common Stock so proposed to be
         registered, the proposed date of filing of such registration statement,
         any proposed means of distribution of such Common Stock, any proposed
         managing underwriter or underwriters of such offering and a good faith
         estimate by the Company of the proposed maximum offering price thereof,
         as such price is proposed to appear on the facing page of such
         registration statement. Upon the written direction of the Shareholder
         (a "Piggy-Back Request"), notifying the Company of the Shareholder's
         desire to convert all or a portion of the Preferred Stock into shares
         of the Company, such notice to be given within fifteen (15) business
         days following the receipt by the Shareholder of any such written
         notice (which direction shall specify the number of Shares intended to
         be disposed of by the Shareholder), the Company shall include in such
         registration statement (a "Piggy-Back Registration" and, collectively
         with a Demand Registration, a

<PAGE>

         "Registration"), subject to the provisions of Section 3.2 hereof and
         the registration rights originally granted to Trust Company of the West
         as the holder of the Company's 1996 Series A Convertible Preferred
         Stock (the "Existing Registration Rights"), such numbers of the Shares
         as shall be set forth in such Piggy-Back Request.

                  (b) In the event that the Company proposes to register Common
         Stock in connection with an underwritten offering and an independent
         investment banking firm selected by the Company to act as managing
         underwriter thereof reasonably and in good faith shall have advised the
         Company, any holder of Common Stock intending to offer such Common
         Stock in a secondary offering or combined offering (each, an "Other
         Holder") or the Shareholder in writing that, in its opinion, the
         inclusion in the registration statement of some or all of the Shares
         sought to be registered by the Shareholder creates a substantial risk
         that the price per share of Common Stock that the Company or any Other
         Holder will derive from such registration will be materially and
         adversely affected or that the number of shares of Common Stock sought
         to be registered (including any shares of Common Stock sought to be
         registered at the request of the Company and any Other Holder and those
         sought to be registered by the Shareholder) is a greater number than
         can reasonably be sold or the success of the offering would otherwise
         be materially and adversely affected, the Company shall include in such
         registration statement such number of shares of Common Stock as the
         Company, any Other Holder and the Shareholder are so advised can be
         sold in such offering without such an effect (the "Maximum Number") as
         follows and in the following order of priority: (A) first, such number
         of shares of Common Stock as the Company intended to be registered and
         sold by the Company; (B) second, in the case of a secondary offering or
         a combined offering and if and to the extent that the number of shares
         of Common Stock to be registered under clause (A) is less than the
         Maximum Number, such number of shares of Common Stock as is required to
         be registered by the Existing Registration Rights; and (C) third, in
         the case of a secondary offering or a combined offering and if and to
         the extent that the aggregate number of shares of Common Stock to be
         registered under clauses (A) and (B) is less than the Maximum Number,
         such number of shares of Common Stock as the Shareholder shall have
         intended to register which, when added to the number of shares of
         Common Stock to be registered under clauses (A); and (B), is less than
         or equal to the Maximum Number; provided that if such number exceeds
         the Maximum Number, the shares of Common Stock of the Shareholder in
         excess of the amount necessary to achieve the maximum number will be
         excluded; and (D), fourth, to the extent that the number of shares of
         Common Stock of the Company, the holders of the Existing Registration
         Rights and the Shareholder to be included in the Registration are not
         equal to or more than the Maximum Number, then any Other Holders may
         include such additional shares up to the maximum number on a pro rata
         basis with Other Holders desiring to participate in the Registration.

                  (c) No Piggy-Back Registration effected under this Section 3.2
         shall be deemed to have been effected pursuant to Section 3.1 hereof or
         shall release the Company of its obligations to effect any Demand
         Registration (including the Free Shelf Registration) upon request as
         provided under Section 3.1 hereof.

<PAGE>

                  (d) Notwithstanding any request under this Section 3.2, a
         selling Holder may elect in writing to withdraw its request for
         inclusion of its Shares in any registration statement provided,
         however, that (i) such request must be made in writing prior to the
         earlier of the execution of the underwriting agreement or the execution
         of the custody agreement with respect to such registration and (ii)
         such withdrawal shall be irrevocable and, after making such withdrawal,
         a Holder shall no longer have any right to include Shares in the
         registration as to which such withdrawal was made.

                  (e) If, at any time after giving written notice of its
         intention to register any Common Stock under Section 3.2 and prior to
         the effective date of the registration statement filed in connection
         with such registration, the Company shall determine for any reason not
         to register or to delay registration of such Common Stock, the Company
         may, at its election, give written notice of such determination to all
         Holders of record of Shares and (i) in the case of a determination not
         to register, shall be relieved of its obligation to register any Shares
         in connection with such abandoned registration, without prejudice,
         however, to the rights of Holders under Section 3.1 and (ii) in the
         case of a determination to delay such registration of the Company's
         Common Stock, shall be permitted to delay the registration of such
         Shares for the same period as the delay in registering such other
         Common Stock.

                  (f) If, as a result of the proration provisions of this
         Section 3.2, any Holder shall not be entitled to include all Shares in
         a registration that such Holder has requested to be included, such
         Holder may elect to withdraw such Holder's request to include Shares in
         such registration or may reduce the number requested to be included.

         Section 3.3. Additional Agreements.

                  (a) Sale Without Registration. Anything in this Agreement to
         the contrary notwithstanding, if at any time the Company shall obtain a
         written opinion of legal counsel reasonably satisfactory to the
         Shareholder and addressed to the Company and the Shareholder to the
         effect that the Shares may be publicly offered for sale in the United
         States by the Shareholder without restriction as to manner of sale and
         amount of securities sold and without registration under the Securities
         Act, the Company shall no longer be obligated to file or maintain a
         registration statement with respect to the Shares pursuant to this
         Agreement. In such case, the Company shall issue to the Shareholder
         certificates representing the Shares without any legend restricting
         transfer and shall remove all stop transfer orders relating to the
         Shares, except for any legal or stock transfer order required by a
         shareholder or voting agreement to which the Shareholder is a party.

                  (b) Registration Rights of Affiliates. Affiliates of the
         Shareholder who become Holders of the Shares (as long as there is a
         direct chain of ownership by the Shareholder and its Affiliates) shall
         have the same rights as the Shareholder under this Agreement; provided,
         however, the Company shall not be obligated to file more than one Free
         Shelf Registration.

<PAGE>

         Section 3.4. Registration Procedures. (a) In connection with each
registration statement prepared pursuant to this Agreement, and in accordance
with the intended method or methods of distribution of the Shares as described
in such registration statement, the Company shall, as soon as reasonably
practicable (and, in any event, subject to the terms of this Agreement,
including, without limitation, Section 3. l(a), at or before the time required
by applicable laws and regulations):

                           (i) Prepare and file with the SEC a registration
                  statement on an appropriate registration form of the SEC, with
                  respect to such Shares, which form shall be selected by the
                  Company with the Shareholder's reasonable consent, and use its
                  reasonable best efforts to cause such registration statement
                  to become effective promptly; provided that before filing a
                  registration statement or prospectus or any amendments or
                  supplements thereto, the Company will furnish to one counsel
                  selected by the Shareholder, and the sales or placement agent
                  or agents, if any, for the Shares and the managing underwriter
                  or underwriters, if any, draft copies of all such documents
                  proposed to be filed at least four (4) days prior to such
                  filing, which documents will be subject to the reasonable
                  review of the Shareholder, the sales or placement agent or
                  agents, if any, for the Shares and the managing underwriter or
                  underwriters, if any, and their respective agents and
                  representatives and (x) the Company will not include in any
                  registration statement information concerning or relating to
                  the Shareholder to which the Shareholder shall reasonably
                  object in writing (unless the inclusion of such information is
                  required by applicable law or the regulations of any
                  securities exchange to which the Company may be subject), and
                  (y) the Company will not file any Demand Registration or
                  amendment thereto or any prospectus or any supplement thereto
                  to which the Shareholder shall reasonably object in writing
                  (unless the Demand Registration was theretofore filed and the
                  filing of such amendment, prospectus or supplement is required
                  by applicable law or the regulations of any securities
                  exchange applicable to the Company);

                           (ii) Furnish without charge to the Shareholder, the
                  sales or placement agent or agents, if any, and the managing
                  underwriter or underwriters, if any, such number of copies of
                  such registration statement and of each amendment and
                  supplement thereto (in each case including all exhibits), such
                  number of copies of the summary, preliminary, final, amended
                  or supplemented prospectuses included in such registration
                  statement in conformity with the requirements of the
                  Securities Act and any regulations promulgated thereunder and
                  (upon the reasonable request by the Shareholder) any documents
                  incorporated therein by reference and such other documents as
                  the Shareholder may reasonably request in order to facilitate
                  the public sale or other disposition of such Shares (the
                  Company hereby consenting to the use in accordance with all
                  applicable law of the prospectus or any amendment or
                  supplement thereto by the Shareholder in connection with the
                  offering and sale of the Shares covered by the prospectus or
                  any amendment or supplement thereto);

<PAGE>

                           (iii) In respect to the Free Shelf Registration, use
                  its reasonable best efforts to keep such registration
                  statement effective for at least eighteen months and in
                  respect to any other Demand Registration , use its reasonable
                  best efforts to keep such registration statement effective for
                  at least 180 days (the "Effective Period"); prepare and file
                  with the SEC such amendments, post-effective amendments and
                  supplements to the registration statement and the prospectus
                  as may be necessary to maintain the effectiveness of the
                  registration for the Effective Period and to cause the
                  prospectus (and any amendments or supplements thereto) to be
                  filed pursuant to Rules 424 and 430A under the Securities Act
                  and/or any successor rules that may be adopted by the SEC, as
                  such rules may be amended from time to time; and comply with
                  the provisions of the Securities Act with respect to the
                  disposition of all Shares covered by such registration
                  statement during the Effective Period in accordance with the
                  intended method or methods of distribution thereof, as
                  specified in writing by the Shareholder;

                           (iv) Except during any Blackout Period upon not less
                  than three (3) days prior notice to the Company, make
                  available for inspection during normal business hours by the
                  Shareholder or by any underwriter, attorney, accountant or
                  other agent retained by the Shareholder (collectively, the
                  "Inspectors") financial and other records and pertinent
                  corporate documents of the Company (collectively, the
                  "Records"), provide the Inspectors with opportunities to
                  discuss the business of the Company with its officers and
                  provide opportunities to discuss the business of the Company
                  with the independent public accountants who have certified its
                  most recent annual financial statements, in each case to the
                  extent customary for transactions of the size and type
                  intended, as specified by the Shareholder, but only to the
                  extent reasonably necessary to enable the Shareholder or any
                  underwriter retained by the Shareholder to conduct a
                  "reasonable investigation" for purposes of Section 11(a) of
                  the Securities Act. Records which the Company determines, in
                  good faith, to be confidential and which it notifies the
                  Inspectors are confidential shall not be disclosed by the
                  Inspector unless (A) the disclosure of such Records is
                  necessary to avoid or correct a misstatement of a material
                  fact or omission to state a material fact in the Registration,
                  (B) the disclosure of such Records is required by any court or
                  governmental body with jurisdiction over the Shareholder or
                  Inspector or (C) all of the information contained in such
                  Records has been made generally available to the public. The
                  Shareholder agrees that it will, upon learning that disclosure
                  of such Records is sought in a court of competent jurisdiction
                  or by any governmental body, promptly give prior notice to the
                  Company and allow the Company, at its expense, to undertake
                  appropriate action to prevent disclosure of those Records
                  deemed confidential;

                           (v) If requested by the Shareholder, promptly
                  incorporate in a prospectus, prospectus supplement or
                  post-effective amendment such information as the Shareholder
                  reasonably specifies should be included therein, including,
                  without limitation, information relating to the planned
                  distribution of Shares, the

<PAGE>

                  number of Shares being sold by the Shareholder, the name and
                  description of the Shareholder, the offering price of such
                  Shares and any discount, commission or other compensation
                  payable in respect of the Shares being sold, the purchase
                  price being paid therefor to the Shareholder and information
                  with respect to any other terms of the underwritten offering
                  of the Shares to be sold in such offering, except to the
                  extent that the Company is advised in a written opinion of
                  outside counsel that the inclusion of such information is
                  reasonably likely to violate applicable securities laws; and
                  make all required filings of such prospectus, prospectus
                  supplement or post-effective amendment promptly after
                  notification of the matters to be incorporated in such
                  prospectus, prospectus supplement or post-effective amendment;

                           (vi) If requested by the Shareholder, use reasonable
                  efforts to participate in and assist with a "road show" and
                  other customary marketing efforts in connection with the sale
                  of Shares pursuant to a Demand Registration or Piggy-Back
                  Registration, at such times and in such manner as the Company
                  and the Shareholder mutually may determine (and as do not
                  unreasonably interfere with the Company's operations);

                           (vii) Use its best efforts to register or qualify the
                  Shares covered by a Demand Registration Statement under such
                  other securities or "blue sky" laws of such jurisdictions in
                  the United States as the Shareholder shall reasonably request,
                  keep such registrations or qualifications in effect for so
                  long as the registration statement remains in effect, and do
                  any and all other acts and things which may be reasonably
                  necessary to enable the Shareholder or any underwriter to
                  consummate the public sale or other disposition of the Shares
                  in such jurisdictions; provided, however, that in no event
                  shall the Company be required to qualify to do business as a
                  foreign corporation in any jurisdiction where it is not so
                  qualified; to execute or file any general consent to service
                  of process under the laws of any jurisdiction; to take any
                  action that would subject it to service of process in suits
                  other than those arising out of the offer and sale of the
                  Shares covered by the registration statement; or to subject
                  itself to taxation in any jurisdiction where it would not
                  otherwise be obligated to do so, but for this paragraph (vii);

                           (viii) Use its reasonable best efforts to cause the
                  Shares to be registered with or approved by such other
                  governmental agencies or authorities as may be necessary to
                  enable the Shareholder to consummate the public sale or other
                  disposition of the Shares;

                           (ix) Use its reasonable best efforts to cause all
                  Shares covered by such registration statement to be approved
                  for trading on a national interdealer quotation system or
                  listed on the securities exchanges, if any, on which the
                  Common Stock of the Company is then listed;

<PAGE>

                           (x) Promptly notify the Shareholder, at any time when
                  a prospectus relating to any of the Shares covered by such
                  registration statement is required to be delivered under the
                  Securities Act, of the Company's becoming aware that the
                  prospectus included in such registration statement, as then in
                  effect, includes an untrue statement of a material fact or
                  omits to state any material fact required to be stated therein
                  or necessary to make the statements therein not misleading in
                  the light of the circumstances then existing, and, at the
                  request of the Shareholder, promptly prepare and furnish to
                  the Shareholder a reasonable number of copies of a prospectus
                  supplemented or amended so that, as thereafter delivered to
                  the purchasers of such Shares, such prospectus shall not
                  include an untrue statement of a material fact or omit to
                  state a material fact required to be stated therein or
                  necessary to make the statements therein not misleading in the
                  light of the circumstances then existing;

                           (xi) Promptly notify the Shareholder, the sales or
                  placement agent or agents, if any, for the Shares and the
                  managing underwriter or underwriters, if any, thereof, after
                  becoming aware thereof, when the registration statement or any
                  related prospectus or any amendment or supplement has been
                  filed, and, with respect to the registration statement or any
                  post-effective amendment, when the same has become effective,
                  (A) of any request by the SEC for amendments or supplements to
                  the registration statement or the related prospectus or for
                  additional information, (B) of the issuance by the SEC of any
                  stop order suspending the effectiveness of the registration
                  statement or the initiation of any proceedings for that
                  purpose, (C) of the receipt by the Company of any notification
                  with respect to the suspension of the qualification of the
                  Shares for sale in any jurisdiction or the initiation of any
                  proceeding for such purpose or (D) within the Effective Period
                  of the happening of any event which makes any statement in the
                  registration statement or any post-effective amendment
                  thereto, prospectus or any amendment or supplement thereto, or
                  any document incorporated therein by reference untrue in any
                  material respect or which requires the making of any changes
                  in the registration statement or post-effective amendment
                  thereto or any prospectus or amendment or supplement thereto
                  so that they will not contain any untrue statement of a
                  material fact or omit to state any material fact required to
                  be stated therein or necessary to make the statements therein
                  (in light of the circumstances under which they were made) not
                  misleading;

                           (xii) During the Effective Period, use its best
                  efforts to obtain the withdrawal of any order suspending the
                  effectiveness of the registration statement or any
                  post-effective amendment thereto;

                           (xiii) Deliver promptly to the Shareholder, upon the
                  Shareholder's request, copies of all correspondence between
                  the SEC and the Company, its counsel or auditors and all
                  memoranda relating to discussions with the SEC or its staff
                  with respect to the registration statement and permit the
                  Shareholder to do such investigation, with respect to
                  information contained in or omitted from the

<PAGE>

                  registration statement, as is reasonably necessary. The
                  Shareholder agrees that it will use its best efforts not to
                  interfere unreasonably with the Company's business when
                  conducting any such investigation;

                           (xiv) Provide a transfer agent and registrar for all
                  such Shares covered by such registration statement not later
                  than the effective date of such registration statement, which
                  transfer agent and registrar may be the Company, subject to
                  any applicable law or regulations;

                           (xv) Cooperate with the Shareholder and the managing
                  underwriter or underwriters, if any, to facilitate the timely
                  preparation and delivery of certificates representing such
                  Shares to be sold under the registration statement, which
                  certificates shall not bear any restrictive-legends except as
                  required by law; and, in the case of an underwritten offering,
                  enable such Shares to be in such denominations and registered
                  in such names as the managing underwriter or underwriters, if
                  any, may request in writing at least two (2) business days
                  prior to any sale of the Shares to the underwriters;

                           (xvi) In connection with any Demand Registration,
                  enter into such agreements (including, if the offering is an
                  underwritten offering, an underwriting agreement) as are
                  customary in transactions of such kind (it being recognized
                  that certain of the below listed items may not be considered
                  customary for the Free Shelf Registration) and take such other
                  actions as are reasonably necessary in connection therewith in
                  order to expedite or facilitate the disposition of such
                  Shares; and (A) make such representations and warranties with
                  respect to the registration statement, post-effective
                  amendment or supplement thereto, prospectus or any amendment
                  or supplement thereto, and documents incorporated by
                  reference, if any, to the managing underwriter or
                  underwriters, if any, of the Shares and, at the option of the
                  Shareholder, make to and for the benefit of such Shareholder
                  the representations, warranties and covenants of the Company
                  which are being made to the underwriters, in form, substance
                  and scope as are customarily made by the Company in connection
                  with offerings of shares in transactions of such kind
                  (representations and warranties by the participating holders
                  shall also be made as are customary in agreements of that
                  type); provided that the Company shall not be required to make
                  any representations or warranties with respect to information
                  specifically provided by a holder for inclusion in the
                  registration documents; (B) obtain an opinion of counsel to
                  the Company (which counsel may be internal counsel for the
                  Company unless the managing underwriter or underwriters shall
                  otherwise reasonably request) in customary form and covering
                  matters of the type customarily covered by such an opinion,
                  addressed to such managing underwriter or underwriters, if
                  any, and to the Shareholder and dated the date of the closing
                  of the sale of the Shares relating thereto; (C) obtain a
                  "comfort" letter or letters from the independent certified
                  public accountants who have certified the Company's most
                  recent audited financial statements that are incorporated by
                  reference in the registration statement which is addressed to
                  the

<PAGE>

                  Shareholder and the managing underwriter or underwriters, if
                  any, and is dated the date of the prospectus used in
                  connection with the offering of such Shares and/or the date of
                  the closing of the sale of such Shares relating thereto, such
                  letter or letters to be in customary form and covering such
                  matters of the type customarily covered by "comfort" letters
                  of such type; (D) deliver such documents and certificates as
                  may be reasonably requested by the Shareholder and the
                  managing underwriter or underwriters, if any, of the Shares to
                  evidence compliance with any customary conditions contained in
                  the underwriting agreement or other agreement entered into by
                  the Company; and (E) undertake such obligations relating to
                  expense reimbursement, indemnification and contribution as
                  provided in Sections 3.5 and 3.6 hereof, and

                           (xvii) Comply with all applicable rules and
                  regulations of the SEC in all material respects and generally
                  make available to its security holders an earnings statement
                  (which need not be audited), as soon as reasonably practicable
                  but in no event later than ninety (90) days after the end of
                  the period of twelve (12) months commencing on the first day
                  of any fiscal quarter next succeeding each sale by the
                  Shareholder of Shares which have been registered pursuant to
                  this Agreement (the "Registered Shares") after the date
                  hereof, which earnings statement shall cover such twelve (12)
                  month period and shall satisfy the provisions of Section 11(a)
                  of the Securities Act and may be prepared in accordance with
                  Rule 158 under the Securities Act.

                  (b) In the event that the Company would be required, pursuant
         to Section 3.4(a)(xi)(D) above, to notify the Shareholder, the sales or
         placement agent or agents, if any, for the Shares and the managing
         underwriter or underwriters, if any, thereof, the Company shall,
         subject to the provisions of Section 3.1(b) hereof, as promptly as
         practicable, prepare and furnish to the Shareholder, to each placement
         or sales agent, if any, and to each underwriter, if any, a reasonable
         number of copies of a prospectus supplemented or amended so that, as
         thereafter delivered to purchasers of Registered Shares, such
         prospectus shall not contain an untrue statement of a material fact or
         omit to state a material fact required to be stated therein or
         necessary to make the statements therein, in the light of the
         circumstances under which they were made, not misleading. The
         Shareholder agrees that, upon receipt of any notice from the Company
         pursuant to Section 3.4(a)(xi)(D) hereof, the Shareholder shall, and
         shall use its best efforts to cause any sales or placement agent or
         agents for the Shares and the underwriters, if any, thereof, to
         forthwith discontinue disposition of the Shares until such person shall
         have received copies of such amended or supplemented prospectus and, if
         so directed by the Company, to destroy or to deliver to the Company all
         copies, other than permanent file copies, then in its possession of the
         prospectus (prior to such amendment or supplement) covering such Shares
         as soon as practicable after the Shareholder's receipt of such notice.

                  (c) The Shareholder shall furnish to the Company in writing
         such information regarding the Shareholder and its intended method of
         distribution of the Shares as the Company may from time to time
         reasonably request in writing, but only to the extent that

<PAGE>

         such information is required in order for the Company to comply with
         its obligations under all applicable securities and other laws and to
         ensure that the prospectus relating to such Shares conforms to the
         applicable requirements of the Securities Act and the rules and
         regulations thereunder. The Shareholder shall notify the Company as
         promptly as practicable of any inaccuracy or change in information
         previously furnished by the Shareholder to the Company or of the
         occurrence of any event, in either case as a result of which any
         prospectus relating to the Shares contains or would contain an untrue
         statement of a material fact regarding the Shareholder or its intended
         method of distribution of such Shares or omits to state any material
         fact regarding the Shareholder or its intended method of distribution
         of such Shares required to be stated therein or necessary to make the
         statement therein, in light of the circumstances under which they were
         made, not misleading, and promptly furnish to the Company any
         additional information required to correct and update any previously
         furnished information or required so that such prospectus shall not
         contain, with respect to the Shareholder or the distribution of the
         Shares, an untrue statement of a material fact or omit to state a
         material fact required to be stated therein or necessary to make the
         statements therein, in light of the circumstances under which they were
         made, not misleading.

                  (d) Each Holder agrees not to effect any public sale or
         distribution of any Shares, including any sale pursuant to Rule 144
         under the Securities Act, and not to effect any such public sale or
         distribution of any other equity security of the Company or of any
         security convertible into or exchangeable or exercisable for any equity
         security of the Company (in each case, other than as part of such
         underwritten public offering) during the ten (10) days prior to, and
         during the ninety (90) day period (or such longer period as each Holder
         agrees with the underwriter of such offering) beginning on the
         consummation of any underwritten public offering of the Shares covered
         by a registration statement referred to in Section 3.2 to the extent
         such Registered Shares are being sold thereunder.

                  (e) In the case of any registration under Section 3.1 pursuant
         to an underwritten offering, or in the case of a registration under
         Section 3.2 if the Company has determined to enter into an underwriting
         agreement in connection therewith, all Shares to be included in such
         registration shall be subject to an underwriting agreement and no
         person may participate in such registration unless such person agrees
         to sell such person's securities on the basis provided therein and
         completes and executes all questionnaires, indemnities, underwriting
         agreements and other document (other than powers of attorney) which
         must be executed in connection therewith, and provides such other
         information to the Company or the underwriter as may be necessary to
         register such Holder's Shares.

         Section 3.5. Registration Expenses. Except as otherwise provided, the
Shareholder agrees to bear and to pay, or cause to be paid promptly upon request
being made therefor, all reasonable expenses incident to the Company's
performance of or compliance with this Agreement, including, without limitation:
(a) all registration fees payable to the SEC under the Securities Act and all
fees and expenses in connection with the qualification of the Registered Shares
for offering and sale under state securities or "blue sky" laws referred to in
Section 3.4(a)(vii) hereof, including reasonable fees and disbursements of
counsel for any placement or

<PAGE>

sales agent or underwriter in connection with such qualifications, (b) all
expenses relating to the preparation, printing, distribution and reproduction of
the registration statement, each prospectus included therein or prepared for
distribution pursuant hereto, each amendment or supplement to the foregoing, the
certificates representing the Registered Shares and all other documents relating
hereto, (c) the costs and charges of any escrow agent, transfer agent,
registrar, any custodian or attorney-in-fact appointed to act on behalf of the
Shareholder (including, without limitation, all salaries and expenses of the
Company's officers and employees performing legal or accounting duties) relating
to the Registered Shares, (d) fees, disbursements and expenses of the Company's
counsel and its other advisors and experts and independent certified public
accountants of the Company (including the expenses of any opinions or "comfort"
letters required by or incident to such performance and compliance) relating to
the Registered Shares, (e) the fees and expenses incurred in connection with the
listing of the Registered Shares on The American Stock Exchange and such other
stock exchange or national securities exchange on which the Common Stock of the
Company shall at such time be listed, (f) reasonable fees and disbursements of
counsel retained by the Shareholder in connection with registration pursuant to
this Agreement; provided, however, that the Shareholder shall pay all costs,
fees and expenses of any special audit required as a result of the timing of the
demand for the Free Shelf Registration (collectively, the "Registration
Expenses"). In respect to the Free Shelf Registration, the Company shall pay all
out-of-pocket Registration Expenses except underwriter discounts and commissions
applicable to the Registered Shares and to the extent that any such Registration
Expenses are incurred, assumed or paid by the Shareholder, any sales or
placement agent or agents for the Registered Shares and the underwriters, if
any, thereof, the Company shall reimburse such person for the full amount of the
Registration Expenses so incurred, assumed or paid promptly after receipt of a
request therefor and (g) all expenses relating to any "road show" in connection
with a Demand Registration. The Holder of the Registered Shares shall pay all
underwriting discounts and commissions and any capital gains, income or transfer
taxes, if any, attributable to the sale of such Registered Shares.

         Section 3.6. Indemnification: Contribution.

                  (a) Indemnification by the Company. The Company shall, and it
         hereby agrees to, indemnify and hold harmless the Shareholder, its
         directors, officers, employees and controlling persons, if any,
         controlling and each person who participates as a placement or sales
         agent or as an underwriter in any offering or sale of the Shares,
         against any losses, claims, damages or liabilities to which the
         Shareholder or such agent or underwriter may become subject, insofar as
         such losses, claims, damages or liabilities (or actions or proceedings
         in respect thereof) (collectively, "Claims") arise out of or are based
         upon an untrue statement or alleged untrue statement of a material fact
         contained in any registration statement, or any preliminary or final
         prospectus contained therein, or any amendment or supplement thereto,
         or any document incorporated by reference therein, or arise out of or
         are based upon any omission or alleged omission to state therein a
         material fact required to be stated therein or necessary to make the
         statements therein, in light of the circumstances in which they were
         made, not misleading, and the Company shall, and it hereby agrees to,
         reimburse the Shareholder or any other indemnified Person such agent or
         underwriter for any legal or other out-of-pocket expenses reasonably
         incurred by them in

<PAGE>

         connection with investigating or defending any such Claims; provided,
         however, that the Company shall not be liable to any such Person in any
         such case to the extent that any such Claims arise out of or are based
         upon an untrue statement or alleged untrue statement or omission or
         alleged omission made in such registration statement, or preliminary or
         final prospectus, or amendment or supplement thereto, in reliance upon
         and in conformity with written information furnished to the Company by
         the Shareholder or any agent, underwriter or representative of the
         Shareholder expressly for use therein, or by the Shareholder's failure
         to furnish the Company, upon request, with the information with respect
         to the Shareholder, or any agent, underwriter or representative of the
         Shareholder, or the Shareholder's intended method of distribution, that
         is the subject of the untrue statement or omission or if the Company
         shall sustain the burden of proving that the Shareholder or such agent
         or underwriter sold securities to the person alleging such Claims
         without sending or giving, at or prior to the written confirmation of
         such sale, a copy of the applicable prospectus (excluding any documents
         incorporated by reference therein) or of the applicable prospectus, as
         then amended or supplemented (excluding any documents incorporated by
         reference therein), if the Company had previously furnished copies
         thereof to the Shareholder or such agent or underwriter, and such
         prospectus corrected such untrue statement or alleged untrue statement
         or omission or alleged omission made in such registration statement.

                  (b) Indemnification by the Shareholder. The Shareholder shall,
         and hereby agrees to (i) indemnify and hold harmless the Company, its
         directors, officers, employees and controlling Persons, if any, and
         each underwriter, its partners, officers, directors, employees and
         controlling persons, if any, in any offering or sale of Shares, against
         any Claims to which the Company, its directors, officers, employees and
         controlling Persons, if any, may become subject, insofar as such Claims
         (including any amounts paid in settlement as provided herein), arise
         out of or are based upon (A) an untrue statement or alleged untrue
         statement of a material fact contained in such registration statement,
         or any preliminary or final prospectus contained therein, or any
         amendment or supplement thereto, or any document incorporated by
         reference therein, or arise out of or are based upon any omission or
         alleged omission to state therein a material fact required to be stated
         therein or necessary to make the statements therein not misleading, in
         each case only to the extent that such untrue statement or alleged
         untrue statement or omission or alleged omission was made in reliance
         upon and in conformity with written information furnished to the
         Company by the Holder or such agent or underwriter (as the case may be)
         expressly for use therein, and/or (B) an untrue statement or alleged
         untrue statement or omission in a preliminary prospectus if the Company
         furnished copies of a final prospectus, amendment or supplement thereto
         that corrected such untrue statement, alleged untrue statement or
         omission, provided that the maximum amount for which the Shareholder
         should be liable under this indemnity shall not exceed the net proceeds
         recovered by all Holders from the sale of the Shares, and (ii)
         reimburse the Company for any legal or other out-of-pocket expenses
         reasonably incurred by the Company or any other indemnified Persons in
         connection with investigating or defending any such Claim.

<PAGE>

                  (c) Notice of Claims, Etc. Promptly after receipt by an
         indemnified party under subsection (a) or (b) above of written notice
         of the commencement of any action or proceeding for which
         indemnification under subsection (a) or (b) may be requested, such
         indemnified party shall, without regard to whether a claim in respect
         thereof is to be made against an indemnifying party pursuant to the
         indemnification provisions of, or as contemplated by, this Section 3.6,
         notify such indemnifying party in writing of the commencement of such
         action or proceeding; but the omission so to notify the indemnifying
         party shall not relieve it from any liability which it may have to any
         indemnified party in respect of such action or proceeding on account of
         the indemnification provisions of or contemplated by Section 3.6(a) or
         3.6(b) hereof except to the extent the indemnifying party was
         materially prejudiced by such failure of the indemnified party to give
         such notice, and in no event shall such omission relieve the
         indemnifying party from any other liability it may have to such
         indemnified party. In case any such action or proceeding shall be
         brought against any indemnified party and it shall notify an
         indemnifying party of the commencement thereof, unless in the
         reasonable opinion of outside counsel to the indemnified party a
         conflict of interest between such indemnified and indemnifying parties
         may exist in respect of such claim, such indemnifying party shall be
         entitled to participate therein and, to the extent that it shall
         determine, jointly with any other indemnifying party similarly
         notified, to assume the defense thereof, with counsel selected by the
         indemnifying party and reasonably satisfactory to such indemnified
         party, and, after notice from the indemnifying party to such
         indemnified party of its election so to assume the defense thereof,
         such indemnifying party shall not be liable to such indemnified party
         for any legal or any other expenses subsequently incurred by such
         indemnified party in connection with the defense thereof other than
         reasonable costs of investigation (unless such indemnified party
         reasonably objects to such assumption on the grounds that there may be
         defenses available to it which are different from or in addition to the
         defenses available to such indemnifying party, in which event the
         indemnified party shall have the right to control its defense and shall
         be reimbursed by the indemnifying party for the reasonable fees and
         expenses of its counsel; provided, however, under no circumstances will
         the indemnifying party be obligated to pay the fees and expenses of
         more than one separate counsel for all indemnified persons in any
         jurisdiction). If the indemnifying party is not entitled to, or elects
         not to, assume the defense of a claim, it will not be obligated to pay
         the fees and expenses of more than one counsel for all indemnified
         parties in any jurisdiction. The indemnifying party will not be subject
         to any liability for any settlement made without its prior written
         consent, which consent shall not be unreasonably withheld or delayed.
         No indemnifying party shall, without the prior written consent of the
         indemnified party, compromise or consent to entry of any judgment or
         enter into any settlement agreement with respect to any action or
         proceeding in respect of which indemnification is sought under Section
         3.6(a) or (b) (whether or not the indemnified party is an actual or
         potential party thereto), unless such compromise, consent or settlement
         includes as an unconditional term thereof the giving by the claimant or
         plaintiff to the indemnified party of a release from all liability in
         respect of such claim or litigation and does not subject the
         indemnified party to any injunctive relief or other equitable remedy.

<PAGE>

                  (d) Contribution. The Shareholder and the Company agree that
         if, for any reason, the indemnification provisions contemplated by
         Sections 3.6(a) or 3.6(b) hereof are unavailable to or are insufficient
         to hold harmless an indemnified party in respect of any Claims referred
         to therein, then each indemnifying party shall contribute to the amount
         paid or payable by such indemnified party as a result of such Claims in
         such proportion as is appropriate to reflect the relative fault of, and
         benefits derived by, the indemnifying party and the indemnified party,
         as well as any other relevant equitable considerations. The relative
         fault of such indemnifying party and indemnified party shall be
         determined by reference to, among other things, whether the untrue or
         alleged untrue statement of a material fact or omission or alleged
         omission to state a material fact relates to information supplied by
         such indemnifying party or by such indemnified party, and the parties'
         relative intent, knowledge, access to information and opportunity to
         correct or prevent such statement or omission. The relative benefit
         derived by the parties shall be determined by reference to the fact
         that the Company entered into this Agreement to induce the Shareholder
         to engage in the transaction in which the Shares were acquired. The
         parties hereto agree that it would not be just and equitable if
         contribution pursuant to this Section 3.6(d) were determined (i) by pro
         rata allocation (even if the Shareholder or any agents for, or
         underwriters of, the Shares, or all of them, were treated as one entity
         for such purpose); or (ii) by any other method of allocation which does
         not take into account the equitable considerations referred to in this
         Section 3.6(d). The amount paid or payable by an indemnified party as a
         result of the Claims referred to above shall be deemed to include
         (subject to the limitations set forth in Section 3.6(c) hereof) any
         legal or other fees or expenses reasonably incurred by such indemnified
         party in connection with investigating or defending any such action,
         proceeding or claim. No person guilty of fraudulent misrepresentation
         (within the meaning of Section 11(f) of the Securities Act) shall be
         entitled to contribution from any person who was not guilty of such
         fraudulent misrepresentation.

                  (e) Beneficiaries of Indemnification. The obligations of the
         Company under this Section 3.6 shall be in addition to any liability
         that it may otherwise have and shall extend, upon the same terms and
         conditions, to each employee, officer and director of the Shareholder
         and each agent and underwriter of the Shares and each person, if any,
         who controls the Shareholder or any such agent or underwriter within
         the meaning of the Securities Act; and the obligations of the
         Shareholder and any agents or underwriters contemplated by this Section
         3.6, shall be in addition to any liability that the Shareholder or its
         respective agent or underwriter may otherwise have and shall extend,
         upon the same terms and conditions, to each employee, officer and
         director of the Company (including any person who, with his consent, is
         named in any registration statement as about to become a director of
         the Company) and to each person, if any, who controls the Company
         within the meaning of the Securities Act.

         Section 3.7. Underwriters. If any of the Shares are to be sold pursuant
to an underwritten offering, the investment banker or bankers and the managing
underwriter or underwriters thereof shall be selected by the Company except in
the case of a Demand Registration, in which the managing underwriter or
underwriters shall be selected by the

<PAGE>

Shareholder, provided that such managing underwriter or underwriters must be of
recognized national standing and reasonably acceptable to the Company.

         Section 3.8. Exchange Act Filings: Rule 144

                  (a) The Company covenants to and with the Shareholder that to
         the extent it shall be required to do so under the Exchange Act, the
         Company shall timely file the reports required to be filed by it under
         the Exchange Act or the Securities Act (including, but not limited to,
         the reports under Sections 13 and 15(d) of the Exchange Act referred to
         in subparagraph (c)(1) of Rule 144 adopted by the SEC under the
         Securities Act and the rules and regulations adopted by the SEC
         thereunder) and shall take such further action as the Shareholder may
         reasonably request, all to the extent required from time to time to
         enable the Shareholder to sell Shares without registration under the
         Securities Act within the limitations of the exemption provided by Rule
         144 under the Securities Act, as such Rule may be amended from time to
         time, or any similar rule or regulation hereafter adopted by the SEC.
         Upon the request of the Shareholder, the Company shall deliver to the
         Shareholder a written statement as to whether it has complied with such
         requirements.

                  (b) The Company covenants to make available "adequate current
         public information" concerning the Company within the meaning of Rule
         144(c) under the Securities Act.

         Section 3.9. Agreement of the Shareholder. The Shareholder agrees not
to, and it shall cause its Affiliates not to, make any sale, transfer or other
disposition of Shares except in compliance with the registration requirements of
the Securities Act and the rules and regulations thereunder or in accordance
with the terms of this Agreement. The Shareholder will cause any Holder to whom
Shares are transferred to comply with, and agree to, the terms of this
Agreement.

         Section 3.10. Legends.

                  (a) Stop transfer restrictions will be given to the Company's
         transfer agent(s) with respect to the Shares and there will be placed
         on the certificates or instruments representing the Shares, and on any
         certificate or instrument delivered in substitution therefor, a legend
         stating in substance:

                  THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                  REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
                  "SECURITIES ACT"), AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
                  TRANSFERRED EXCEPT PURSUANT TO SUCH REGISTRATION OR IN
                  ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION
                  REQUIREMENTS OF THE SECURITIES ACT.

<PAGE>

                  (b) The Company hereby agrees that it will cause stop transfer
         restrictions to be released with respect to any Shares that are
         transferred (i) pursuant to an effective registration statement under
         the Securities Act, (ii) pursuant to Rule 144 under the Securities Act,
         (iii) in accordance with the requirements of Rule 903 or 904 of
         Regulation S under the Securities Act, (except for any stop transfer
         instructions and legends required by Regulation S); or (iv) pursuant to
         another exemption from the registration requirements of the Securities
         Act; provided, however, that in the case of any transfer pursuant to
         clause (ii), (iii) or (iv) above, the request for transfer is
         accompanied by a written statement signed by the Shareholder confirming
         compliance with the requirements of the relevant exemption from
         registration; and provided, further, that in the case of any transfer
         pursuant to clauses (ii), (iii) and (iv) above, other than any transfer
         by the Shareholder to one or more of its direct or indirect
         subsidiaries, or among such subsidiaries, or by any such subsidiary to
         the Shareholder, the Company shall have received a written opinion of
         counsel reasonably satisfactory to the Company. The Company further
         agrees that it will cause the legend described in subsection (a) of
         this Section 3.10 to be removed in the event of any transfer as
         provided in clause (i), (ii) or (iii) above.

                                   ARTICLE IV

                                  MISCELLANEOUS

         Section 4.1. Term of Agreement: Termination. The term of this Agreement
shall commence on the date hereof and such term and this Agreement shall
terminate upon the expiration of the Demand Period.

         Section 4.2. Recapitalizations, Exchanges, Etc. Affecting the Shares.
The provisions of this Agreement shall apply to any and all shares of capital
stock of the Company or any successor or assign of the Company (whether by
merger, consolidation, sale of assets or otherwise) which may be issued in
respect of, in exchange for, or in substitution of the Shares, by reason of a
stock dividend, stock split, stock issuance, reverse stock split, combination,
recapitalization, reclassification, merger, consolidation or otherwise.

         Section 4.3. Amendment. This Agreement may not be amended except by a
written instrument, duly executed by the Company and the Shareholder.

         Section 4.4. Notices. Except as otherwise provided in this Agreement,
all notices, requests, claims, demands, waivers and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered by hand, when delivered personally or by courier, three days after
being deposited in the mail (registered or certified mail, postage prepaid,
return receipt requested), or when received by facsimile transmission if
promptly confirmed by one of the foregoing means, as follows:

<PAGE>

                           If to the Shareholder:

                           ONEOK Resources Company
                           100 West Fifth Street
                           Tulsa, Oklahoma 74103
                           Attention: David L. Kyle, President

                           with copy to:

                           John R. Barker, Esq.
                           GABLE & GOTWALS, INC.
                           100 West Fifth Street, Ste. 1000
                           Tulsa, Oklahoma 74103-4219
                           Phone: (918) 588-7800
                           Fax:     (918) 588-7873

                           If to the Company:

                           Magnum Hunter Resources, Inc.
                           600 East Las Colinas Boulevard
                           Suite 1200
                           Irving, Texas 75039
                           Attention: Gary C. Evans, President
                           and Chief Executive Officer

         Section 4.5. Integration. This Agreement and the other writings
referred to herein or delivered pursuant hereto which form a part hereof contain
the entire understanding of the parties with respect to its subject matter. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to its subject matter. There are no restrictions, agreements,
promises, representations, warranties, covenants or underwritings with respect
to its subject matter other than those expressly set forth or referred to
herein.

         Section 4.6. Binding Effect & Benefit. This Agreement shall inure to
the benefit of and be binding upon the parties hereto, and their respective
successors and permitted assigns. Nothing in this Agreement, expressed or
implied, is intended to confer on any person other than the parties hereto, and
their respective successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.

         Section 4.7. Assignability. This Agreement shall not be assignable by
any party hereto.

         Section 4.8. Counterparts. This Agreement may be executed by the
parties hereto in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.

         Section 4.9. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the state of Oklahoma without
giving effect to principles of conflicts of law.

         Section 4.10. Shareholder Agreement. This Agreement shall remain in
effect in accordance with its terms notwithstanding the termination or lapse in
effectiveness of any other

<PAGE>

agreement between the Shareholder and the Company, including, but not limited
to, the Shareholder and Voting Agreement of event date herewith.

         Section 4.11. Severability. In the event any one or more of the
provisions outlined herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired, and such
unreasonable, unlawful or unenforceable provision shall be interpreted, revised
or applied in the manner that renders it lawful and enforceable to the fullest
extent possible under law.

                          ONEOK RESOURCES COMPANY,
                          a Delaware corporation

                          By:     /s/ David L. Kyle
                             --------------------------------------------------
                              David L. Kyle, President

                                                  "SHAREHOLDER"

                          MAGNUM HUNTER RESOURCES, INC.,
                          a Nevada corporation

                          By:     /s/ Gary C. Evans
                             --------------------------------------------------
                              Gary C. Evans, President
                              and Chief Executive Officer

                                                  "COMPANY"

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