Document:

Exhibit 4.2

 

EXECUTION
VERSION

 

 

 

CIMAREX ENERGY CO.

 

AND

 

MAGNUM HUNTER RESOURCES, INC.

 

AND

 

THE SUBSIDIARY GUARANTORS PARTY
HERETO

 

AND

 

DEUTSCHE BANK TRUST COMPANY
AMERICAS,

 

as Trustee

 

 

SECOND SUPPLEMENTAL INDENTURE

 

Dated as of June 7, 2005

 

to

 

INDENTURE

 

Dated as of December 17,
2003

 

Floating Rate Convertible
Senior Notes Due 2023

 

 

 

 

TABLE
OF CONTENTS

 

	
  ARTICLE I DEFINITIONS

  	
   

  
	
   

  	
   

  
	
  ARTICLE II AMENDMENTS

  	
   

  
	
   

  	
   

  
	
  Section 2.1

  	
  Amendments to Definitions

  	
   

  
	
  Section 2.2

  	
  Amendments to Conversion of the Securities

  	
   

  
	
  Section 2.3

  	
  Amendments to Section 12.11

  	
   

  
	
  Section 2.4

  	
  Amendments to Exhibits A-1 and A-2

  	
   

  
	
  Section 2.6

  	
  Amendment to Exhibit C

  	
   

  
	
  Section 2.7

  	
  Amendments to Securities

  	
   

  
	
   

  	
   

  
	
  ARTICLE III SUCCESSOR ISSUER GUARANTY

  	
   

  
	
   

  	
   

  
	
  Section 3.1

  	
  Guarantee.

  	
   

  
	
  Section 3.2

  	
  Release of Guarantee.

  	
   

  
	
   

  	
   

  
	
  ARTICLE IV CONCERNING CNAC MERGER

  	
   

  
	
   

  	
   

  
	
  Section 4.1

  	
  Representations Concerning the CNAC Merger

  	
   

  
	
  Section 4.2

  	
  Officers’ Certificate and Opinion of
  Counsel

  	
   

  
	
   

  	
   

  
	
  ARTICLE V CONCERNING THE TRUSTEE

  	
   

  
	
   

  	
   

  
	
  Section 5.1

  	
  Terms and Conditions

  	
   

  
	
  Section 5.2

  	
  No Responsibility

  	
   

  
	
   

  	
   

  
	
  ARTICLE VI EFFECTIVE TIME; EFFECT OF
  EXECUTION AND DELIVERY

  	
   

  
	
   

  	
   

  
	
  ARTICLE VII OBLIGATIONS UNDER THE
  INDENTURE

  	
   

  
	
   

  	
   

  
	
  ARTICLE VIII MISCELLANEOUS PROVISIONS

  	
   

  
	
   

  	
   

  
	
  Section 8.1

  	
  Headings

  	
   

  
	
  Section 8.2

  	
  Rights and Obligations of the Trustee

  	
   

  
	
  Section 8.3

  	
  Successors

  	
   

  
	
  Section 8.4

  	
  Separability Clause

  	
   

  
	
  Section 8.5

  	
  Multiple Originals

  	
   

  
	
  Section 8.6

  	
  Governing Law

  	
   

  
	
  Section 8.7

  	
  Conflict with Trust Indenture Act

  	
   

  

 

i

 

SECOND SUPPLEMENTAL INDENTURE, dated as of June 7, 2005 (this “Second
Supplemental Indenture”), among CIMAREX ENERGY CO., a Delaware corporation
(the “Successor Issuer”), MAGNUM HUNTER RESOURCES, INC., a Nevada
corporation (the “Existing Issuer”) and the “Company” under the First
Amended Indenture (as defined below), MAGNUM HUNTER PRODUCTION, INC., a Texas
corporation (“MHP”), GRUY PETROLEUM MANAGEMENT CO., a Texas corporation
(“Gruy”), HUNTER GAS GATHERING, INC., a Texas corporation (“Hunter”),
TRAPMAR PROPERTIES, INC., a Texas corporation (“Trapmar”), CONMAG ENERGY
CORPORATION, a Texas corporation (“Conmag”), PINTAIL ENERGY, INC., a
Delaware corporation (“Pintail”), PRIZE OPERATING COMPANY, a Delaware
corporation (“Prize Operating”), PEC (DELAWARE), INC., a Delaware
corporation (“PEC”), PRIZE ENERGY RESOURCES, L.P., a Delaware limited
partnership (“Prize Energy”), OKLAHOMA GAS PROCESSING, INC., a Delaware
corporation (“Oklahoma Gas,” and together with MHP, Gruy, Hunter,
Trapmar, Conmag, Pintail, Prize Operating, PEC and Prize Energy, the “Existing
Subsidiary Guarantors”), and DEUTSCHE BANK TRUST COMPANY AMERICAS, a
banking corporation organized under the laws of the State of New York (herein
called the “Trustee”).

 

WITNESSETH:

 

WHEREAS, the Existing Issuer, the Existing Subsidiary Guarantors and
the Trustee are parties to an Indenture, dated as of December 17, 2003
(the “Original Indenture”), pursuant to which the Existing Issuer’s
Floating Rate Convertible Senior Notes due 2023 in the principal amount of
$125,000,000 were issued;

 

WHEREAS, the Existing Issuer, the Existing Subsidiary Guarantors, and
the Trustee have entered into a First Supplemental Indenture, dated as of June 6,
2005 (the “First Supplemental Indenture”), pursuant to which, among
other things, the Original Indenture was modified at the time and in accordance
with the terms thereof (such Original Indenture as amended and supplemented by
the First Supplemental Indenture is herein called the “First Amended
Indenture”);

 

WHEREAS, at the Second Supplemental Indenture Effective Time (as
defined in Article VI hereof), pursuant to an Agreement and Plan of
Merger, dated January 25, 2005, as amended by Amendment No. 1 dated
as of February 18, 2005 and Amendment No. 2 dated as of April 20,
2005 (the “Merger Agreement”), among the Successor Issuer, the Existing
Issuer, and Cimarex Nevada Acquisition Co., a Nevada corporation (“CNAC”),
and a wholly-owned subsidiary of Cimarex, the Existing Issuer and CNAC will
merge (the “CNAC Merger”), with the Existing Issuer being the surviving
corporation, and in connection with and upon the effectiveness of the CNAC
Merger, the Existing Issuer will become a wholly-owned subsidiary of the
Successor Issuer, and the separate existence of CNAC will cease;

 

WHEREAS, under the Merger Agreement, holders of shares of Common Stock
will receive 0.415 of a share of common stock, par value $.01 per share (the “Successor
Issuer Common Stock”), of the Successor Issuer (plus cash in lieu of any
fractional share interest) for each share of Common Stock that they own
immediately before the Effective Time (as such term is defined in the Merger
Agreement) of the CNAC Merger;

 

 

WHEREAS, the Successor Issuer desires to issue a guarantee to the
Holders of the Securities as provided in this Second Supplemental Indenture;

 

WHEREAS, the Successor Issuer, the Existing Issuer, and the Existing
Subsidiary Guarantors are entering into this Second Supplemental Indenture with
the Trustee in compliance with Sections 9.01 and 10.11 of the Indenture;

 

NOW, THEREFORE, each
party agrees as follows for the benefit of the Trustee and for the equal and
ratable benefit of the Holders of the Securities:

 

ARTICLE I

DEFINITIONS

 

Capitalized terms that are defined in this
Second Supplemental Indenture (including without limitation in the introductory
paragraph and the Recitals hereto) shall have the meanings assigned to them
herein.  Capitalized terms used in this
Second Supplemental Indenture (including without limitation in the introductory
paragraph and the Recitals hereto) that are not otherwise defined herein shall
have the meanings assigned to them in the First Amended Indenture.

 

ARTICLE II

AMENDMENTS

 

Section 2.1             Amendments
to Definitions. (a)        For all purposes of the
Indenture, this Second Supplemental Indenture and the Securities, the
definitions of the following terms set forth in Section 1.1 of the First
Amended Indenture are amended and restated to read in full as follows:

 

“Common Stock” means the common stock,
par value $.01 per share, of the Successor Issuer, as it exists at the Second
Supplemental Indenture Effective Time or any other shares of Capital Stock of
the Successor Issuer into which Common Stock shall be reclassified or changed.

 

“Common Stock Price” on any date means
the closing sale price per share (or if no closing sale price is reported, the
average of the bid and ask prices or, if more than one in either case, the
average of the average bid and the average ask prices) on such date for the
Common Stock as reported in composite transactions on the principal United
States securities exchange on which the Common Stock is traded or, if the
Common Stock is not listed on a United States national or regional securities
exchange, as reported by The NASDAQ System.

 

2

 

“Conversion Price” means $28.99 per
share of Common Stock as of the Second Supplemental Indenture Effective Time,
subject to adjustments as described in Section 10.05 hereof.

 

“Conversion Rate” means the number of
shares of Common Stock equal to $1,000 divided by the Conversion Price, which
shall be approximately 34.4971 as of the Second Supplemental Indenture
Effective Time, subject to the adjustments described in Section 10.05
hereof.

 

“Enterprise Value” means, as of any
date of calculation, an amount equal to (i) the product of (A) the
Common Stock Price on the immediately preceding Trading Day and (B) the
aggregate number of shares of Common Stock outstanding on the immediately
preceding Trading Day, plus (ii) the aggregate amount of outstanding
indebtedness of the Successor Issuer and its subsidiaries on a consolidated
basis, as determined in accordance with GAAP, on the immediately preceding
Trading Day, plus (iii) the aggregate amount recorded as outstanding
preferred stock of the Successor Issuer and its subsidiaries on a consolidated
basis, as determined in accordance with GAAP, on the immediately preceding
Trading Day, minus (iv) the aggregate amount of cash and cash equivalents
held by the Successor Issuer and its subsidiaries on a consolidated basis on
the immediately preceding Trading Day.

 

“Indenture” means this instrument as
originally executed, as supplemented and amended by the First Supplemental
Indenture and the Second Supplemental Indenture and as amended or supplemented
from time to time in accordance with the terms hereof, including the provisions
of the TIA that are deemed to be a part hereof.

 

(b)           Section 1.1
of the First Amended Indenture is amended by adding the following defined
terms:

 

“Second Supplemental Indenture” means
the Second Supplemental Indenture, dated as of June 7, 2005, among the
Successor Issuer, the Company, the Subsidiary Guarantors, and the Trustee.

 

“Second Supplemental Indenture Effective
Time” means the Second Supplemental Indenture Effective Time as defined in Article VI
thereof.

 

“Successor Issuer” means Cimarex
Energy Co., a Delaware corporation, until a successor replaces it pursuant to
the applicable provisions of this Indenture and, thereafter, shall mean such

 

3

 

successor. 
The foregoing sentence shall likewise apply to any subsequent successor
or successors.

 

(c)           For
avoidance of doubt, the terms “Company” and “Trustee” as set forth in Section 1.1
of the First Amended Indenture are not amended by this Second Supplemental
Indenture.

 

Section 2.2             Amendments
to Conversion of the Securities. (a)          Section 10.01(a)(iv)(B) of
the First Amended Indenture is amended and restated to read in full as follows:

 

(B)           a
distribution to all holders of Common Stock of evidences of Successor Issuer
indebtedness, rights or warrants to purchase or subscribe for Capital Stock or
other securities of the Successor Issuer, cash or assets, which distribution
has an aggregate value that exceeds 10% of the Successor Issuer’s Enterprise
Value on the Trading Day immediately preceding the declaration date of such
distribution;

 

(b)           Section 10.01(a)(v) of
the First Amended Indenture is amended by deleting the term “Company” and
replacing it with the term “Successor Issuer.”

 

(c)           The
second sentence of Section 10.01(c) of the First Amended Indenture is
amended by deleting the term “Company’s” and replacing it with the term “Successor
Issuer’s.”

 

(d)           Section 10.02(b) of
the First Amended Indenture is amended by deleting the references therein to
the term “Company” and replacing them with the term “Successor Issuer.”

 

(e)           Section 10.04
of the First Amended Indenture is amended by deleting the references in the
first sentence, the heading, the penultimate paragraph, and the last paragraph
thereof to the term “Company” and replacing them with the term “Successor
Issuer.”

 

(f)            Section 10.05(a) of
the First Amended Indenture is amended by deleting the term “Company” and
replacing it with the term “Successor Issuer.”

 

(g)           Section 10.05(b) of
the First Amended Indenture is amended by deleting the term “Company” and
replacing it with the term “Successor Issuer.”

 

(h)           Section 10.05(c) of
the First Amended Indenture is amended by deleting the first two references
therein to the term “Company” and replacing them with the term “Successor
Issuer.”

 

(i)            Section 10.05(d) of
the First Amended Indenture is amended by deleting references therein to the
term “Company” and replacing them with the term “Successor Issuer.”

 

(j)            Section 10.05(e) of
the First Amended Indenture is amended by deleting the reference therein to the
term “Company” and replacing it with the term “Successor Issuer.”

 

4

 

(k)           Section 10.05(f) of
the First Amended Indenture is amended by deleting the date “January 6,
1998” and replacing it with the date “February 23, 2002.”  Section 10.05(f) of the First
Amended Indenture also is amended by deleting references therein to the terms “Company’s”
and “Company” and replacing them with the terms “Successor Issuer’s” and “Successor
Issuer,” respectively.

 

(l)            Section 10.05(g) of
the First Amended Indenture is amended by deleting references therein to the
term “Company” and replacing them with the term “Successor Issuer.” Section 10.05(g) of
the First Amended Indenture also is amended by deleting the third reference
therein to the term “Board of Directors” and replacing it with the term “board
of directors of the Successor Issuer.”

 

(m)          The
first full paragraph following Section 10.05(g) of the First Amended
Indenture is amended by deleting the third, fourth and fifth references therein
to the term “Company” and replacing them with the term “Successor Issuer.”

 

(n)           The
second full paragraph following Section 10.05(g) of the First Amended
Indenture is amended by deleting the references therein to the term “Company”
and replacing them with the term “Successor Issuer.”

 

(o)           Sections
10.06 and 10.07 of the First Amended Indenture are amended by deleting
references therein to the term “Company” and replacing them with the term “Successor
Issuer.”

 

(p)           Section 10.08
of the First Amended Indenture is amended by deleting second reference therein
to the term “Company” and replacing it with the term “Successor Issuer.”

 

(q)           Section 10.10
of the First Amended Indenture is amended by deleting the first seven
references therein to the term “Company” and replacing them with the term “Successor
Issuer.”

 

(r)            Section 10.11
of the First Amended Indenture is amended by:

 

(1)           deleting
the first three references in the first sentence of the first paragraph thereof
to the term “Company” and replacing them with the term “Successor Issuer;”

 

(2)           deleting
the fourth reference in the first sentence of the first paragraph thereof to
the term “Company” and replacing it with the term “Company and the Successor
Issuer;”

 

(3)           deleting
the references in the last sentence of the first paragraph thereof to the term “Company”
and replacing them with the term “Successor Issuer;” and

 

(4)           deleting
the references in the second paragraph thereof to the term “Company” and
replacing them with the term “Company and the Successor Issuer.”

 

5

 

(s)           The
first two sentences of Section 10.14(c) of the First Amended
Indenture are amended and restated to read in full as follows:

 

The Company shall pay the Principal Return
and cash for fractional shares and the Successor Issuer shall issue and the
Company shall deliver the Net Shares, if any, as promptly as practicable after
the Conversion Date, but in no event later than four Business Days
thereafter.  Except as provided in Section 10.02(c) and
this Section 10.14(c), delivery of the Principal Return and cash in lieu
of fractional shares and the issuance and delivery of Net Shares, if any, shall
be deemed to satisfy the Company’s and the Successor Issuer’s obligation with
respect to a converted Security.

 

Section 2.3             Amendments
to Section 12.11. Section 12.11 of the First Amended Indenture is
amended by adding the following sentence thereto:

 

All agreements of the Successor Issuer in
this Indenture and the Securities shall bind its successor.

 

Section 2.4             Amendments
to Exhibits A-1 and A-2. (a)       The
first sentence in paragraph (4) of each of the Form of Reverse Side
of Note attached as Exhibits A-1 and A-2 to the First Amended
Indenture is amended and restated to read in full as follows:

 

Magnum Hunter Resources, Inc., a Nevada
corporation, issued the Securities under an Indenture, dated as of December 17,
2003, among Magnum Hunter Resources, Inc., the Subsidiary Guarantors party
thereto, and the Trustee.  Such Indenture
was supplemented and amended by the First Supplemental Indenture, dated as of June 6,
2005 (the “First Supplemental Indenture”), among Magnum Hunter Resources, Inc.,
the Subsidiary Guarantors party thereto and the Trustee and by the Second
Supplemental Indenture, dated as of June 7, 2005 (the “Second
Supplemental Indenture”), among Cimarex Energy Co., a Delaware corporation,
Magnum Hunter Resources, Inc., the Subsidiary Guarantors party thereto and
the Trustee.  Such Indenture, as
supplemented and amended by the First Supplemental Indenture and the Second
Supplemental Indenture and as it may from time to time be supplemented or
amended by one or more other indentures supplemental thereto entered into
pursuant to the applicable provisions thereof is herein referred to as the “Indenture.”

 

6

 

(b)           The
third and fourth sentences of the first paragraph of paragraph (8) of the Form of
Reverse Side of Note attached as Exhibits A-1 and A-2 to the First
Amended Indenture are amended and restated to read in full as follows:

 

The Conversion Price shall, as of the Second
Supplemental Indenture Effective Time, be $28.99.  The Conversion Rate shall, as of the Second
Supplemental Indenture Effective Time, be 34.4971.

 

Section 2.5             Amendment
to Exhibit C. The last sentence of the first paragraph of the
Guarantee attached as Exhibit C to the First Amended Indenture is amended
and restated to read in full as follows:

 

Capitalized terms used but not defined herein
shall have the meanings ascribed to them in the Indenture, dated as of December 17,
2003, among Magnum Hunter Resources, Inc., the Subsidiary Guarantors party
thereto, and Deutsche Bank Trust Company Americas, as Trustee (as supplemented
and amended by the First Supplemental Indenture, dated as of June 6, 2005,
among Magnum Hunter Resources, Inc., the Subsidiary Guarantors party
thereto and the Trustee, and the Second Supplemental Indenture, dated as of June 7,
2005, among Cimarex Energy Co., a Delaware corporation, Magnum Hunter Resources, Inc.,
the Subsidiary Guarantors party thereto, and the Trustee and as it may from
time to time be supplemented or amended by one or more other indentures
supplemental thereto entered into pursuant to the applicable provisions
thereof, the “Indenture”).

 

Section 2.6             Amendments
to Securities. (a)  The first
sentence in paragraph (4) of the reverse side of the Securities is amended
and restated to read in full as follows:

 

Magnum Hunter Resources, Inc., a Nevada
corporation, issued the Securities under an Indenture, dated as of December 17,
2003, among Magnum Hunter Resources, Inc., the Subsidiary Guarantors party
thereto, and the Trustee.  Such Indenture
was supplemented and amended by the First Supplemental Indenture, dated as of June 6,
2005 (the “First Supplemental Indenture”), among Magnum Hunter Resources, Inc.,
the Subsidiary Guarantors party thereto and the Trustee and by the Second
Supplemental Indenture, dated as of June 7, 2005 (the “Second Supplemental
Indenture”), among Cimarex Energy Co., a Delaware corporation, Magnum
Hunter Resources, Inc., the Subsidiary Guarantors party thereto and the
Trustee.  Such Indenture, as supplemented
and amended by the First Supplemental Indenture and the Second Supplemental
Indenture and as it may from time to time be supplemented or amended by one or
more other indentures supplemental thereto

 

7

 

entered into pursuant to the applicable
provisions thereof is herein referred to as the “Indenture.”

 

(b)           The
third and fourth sentences of the first paragraph of paragraph (8) of the
reverse side of the Securities are amended and restated to read in full as
follows:

 

The Conversion Price shall, as of the Second
Supplemental Indenture Effective Time, be $28.99.  The Conversion Rate shall, as of the Second
Supplemental Indenture Effective Time, be 34.4971.

 

(c)           The
first clause of the section titled “CONVERSION NOTICE” of the reverse side
of the Securities is amended and restated to read in full as follows:

 

To convert this Security into Cash and Common
Stock, check the box o

 

ARTICLE III

SUCCESSOR ISSUER GUARANTY

 

Section 3.1             Guarantee.

 

Subject to the provisions of this Article III,
the Successor Issuer hereby unconditionally and irrevocably guarantees (such
guarantee to be referred to herein as the “Guarantee”), to and for the
benefit of each Holder of a Security authenticated and delivered by the
Trustee, and to the Trustee and its successors and assigns, that (a) the
principal of, premium, if any, and interest on the Securities (including
Liquidated Damages, if any), Conversion Value, Change in Control Purchase
Price, and Purchase Price, shall be duly and punctually paid in full when due,
whether at maturity, by acceleration, upon redemption, purchase or otherwise,
and interest on the overdue principal and (to the extent permitted by law)
interest, if any, on the Securities and all other obligations of the Company to
the Holders under the Indenture and the Securities (including amounts due the
Trustee under Section 7.07 of the Indenture), in each case as they have
been and may be further amended from time to time, shall be promptly paid in
full, all in accordance with the terms hereof and thereof, and (b) in case
of any extension of time of payment or renewal of any Securities or any of such
other obligations, that the Securities and such other payment obligations will
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, whether at maturity, by acceleration or otherwise.

 

The Successor Issuer hereby further agrees
that its obligations under this Article III shall be unconditional,
irrespective of the validity, regularity or enforceability of the Securities or
the Indenture, the absence of any action to enforce the same, any waiver or
consent by any Security holder with respect to any provisions of the Indenture
or the Securities, or any modification or amendment of, or supplement of, the
Indenture or the Securities.  The
Successor Issuer hereby waives diligence, presentment, demand of payment,
filing of claims with a court in the event of insolvency or bankruptcy of the
Existing Issuer or any Subsidiary Guarantor, any

 

8

 

right to require a proceeding first against the Existing Issuer or any
Subsidiary Guarantor, protest, notice and all demands whatsoever and covenants
that its Guarantee will not be discharged except by complete performance by the
Existing Issuer of all of its obligations under the Indenture.

 

Upon making any payment with respect to the
Existing Issuer or any Subsidiary Guarantor hereunder, the Successor Issuer
shall be subrogated to the rights of the payee against the Company and each
Subsidiary Guarantor with respect to such payment; provided that the Successor
Issuer shall not enforce any payment by way of subrogation or contribution
until all obligations of the Company and the Subsidiary Guarantors under the
Indenture have been paid in full.

 

Section 3.2             Release
of Guarantee.

 

Notwithstanding anything in this Article III
to the contrary, concurrently with the payment in full of (a) the
principal amount at maturity or such other amounts as cause the Indenture to
cease to be of further effect pursuant to Section 8.01 of the Indenture
and (b) all other obligations of the Company and the Subsidiary Guarantors
under the Indenture, the Successor Issuer shall be released from and relieved
of its obligations under the Guarantee. 
Upon the delivery by the Company to the Trustee of an Officer’s
Certificate and an Opinion of Counsel to the effect that the transaction giving
rise to the release of the Guarantee was made by the Company in accordance with
the provisions of the Indenture and the Securities, the Trustee shall execute
any documents reasonably required in order to evidence the release of the
Guarantor from its obligations under the Guarantee.  If any of the obligations to pay the
principal of, premium, if any, and interest on the Securities (including
Liquidated Damages, if any), and any other payment obligations of the Company
to the Holders under the Indenture or the Securities are revived and reinstated
after the termination of the Guarantee, then all of the obligations of the
Successor Issuer under the Guarantee shall be revived and reinstated as if the
Guarantee had not been terminated until such time as such amounts on the
Securities and all other obligations of the Company under the Indenture are
paid in full, and the Successor Issuer shall enter into an amendment to the
Guarantee evidencing such revival and reinstatement.

 

ARTICLE IV

CONCERNING CNAC MERGER

 

Section 4.1             Representations
Concerning the CNAC Merger. The Existing Issuer hereby represents that it
shall be the surviving corporation in connection with the CNAC Merger and that,
immediately after giving effect to the CNAC Merger, no Event of Default and
Default shall have occurred and be continuing.

 

9

 

Section 4.2             Officers’
Certificate and Opinion of Counsel. Concurrently with the execution and
delivery of this Second Supplemental Indenture, the Existing Issuer has
delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel as
required by Sections 5.01 and 10.11 of the First Amended Indenture.

 

ARTICLE V

CONCERNING THE TRUSTEE

 

Section 5.1             Terms
and Conditions. The Trustee accepts this Second Supplemental Indenture and
agrees to perform the express duties of the Trustee upon the terms and
conditions set forth herein and in the First Amended Indenture, as modified by
this Second Supplemental Indenture.

 

Section 5.2             No
Responsibility. The Trustee makes no undertaking or representations in
respect of, and shall not be responsible in any manner whatsoever for and in
respect of, the validity or sufficiency of this Second Supplemental Indenture
or the proper authorization or the due execution hereof by the Existing Issuer
or the Subsidiary Guarantors or for or in respect of the recitals and
statements contained herein, all of which recitals and statements are made
solely by the Existing Issuer or the Subsidiary Guarantors, as the case may be.

 

ARTICLE VI

EFFECTIVE TIME; EFFECT OF EXECUTION AND DELIVERY

 

Notwithstanding the execution and delivery of
this Second Supplemental Indenture on the date hereof, the amendments to the
First Amended Indenture set forth in Article II of this Second
Supplemental Indenture shall not become effective unless and until the
Effective Time (as defined in the Merger Agreement) of the CNAC Merger occurs
(the date and time of such Effective Time is herein called the “Second
Supplemental Indenture Effective Time”). 
From and after the Second Supplemental Indenture Effective Time and
without any further notice or action on the part of the Successor Issuer, the
Existing Issuer, the Subsidiary Guarantors, the Trustee, any Holder or any
other Person, (i) the First Amended Indenture shall be deemed to be
modified in accordance with the assumption, substitution and amendments set
forth in Article II of this Second Supplemental Indenture, (ii) this
Second Supplemental Indenture shall form a part of the Indenture for all
purposes, (iii) each reference in the Indenture to “this Indenture,” “hereunder,”
“herein” or words of like import shall mean and be a reference to the
Indenture, as affected, amended and supplemented hereby, (iv) except as
expressly modified by this Second Supplemental Indenture, the First Amended
Indenture shall continue in full force and effect, (v) the Securities
shall continue to be governed by the First Amended Indenture, as modified by
this Second Supplemental Indenture and (vi) every Holder of Securities
heretofore or hereafter authenticated and delivered shall be bound by the First
Amended Indenture, as modified by this Second Supplemental Indenture.

 

10

 

ARTICLE VII

OBLIGATIONS UNDER THE INDENTURE

 

Notwithstanding anything to the contrary in
the First Amended Indenture, this Second Supplemental Indenture or the First
Amended Indenture, as modified by this Second Supplemental Indenture, (i) except
as provided in Article III of this Second Supplemental Indenture, all
obligations for payment of principal of, or premium, if any, interest,
Liquidated Damages, if any, Principal Return, Change in Control Purchase Price,
the Existing Issuer’s obligations concerning conversion of the Securities under
the Indenture, or Purchase Price due to be paid on, the Securities shall remain
solely the obligations of the Existing Issuer and (ii) any requirement to
provide notices, make announcements or file documents with the Trustee in Article 10
of the First Amended Indenture, as modified by this Second Supplemental
Indenture, shall remain the responsibility of the Existing Issuer, and, except
to the extent provided in the TIA, the Successor Issuer shall not be
responsible for such notices, announcements or filings.  The Successor Issuer has executed this Second
Supplemental Indenture only for the purpose of confirming its obligation to
issue common stock, par value $.01 per share, of the Successor Issuer upon the
conversion of Securities and to provide its Guarantee as set forth herein.

 

ARTICLE VIII

MISCELLANEOUS PROVISIONS

 

Section 8.1             Headings

 

The Article and Section headings in
this Second Supplemental Indenture are for convenience only and shall not
affect the construction of this Second Supplemental Indenture.

 

Section 8.2             Rights
and Obligations of the Trustee. All of the provisions of the First Amended
Indenture with respect to the rights, privileges, immunities, powers and duties
of the Trustee shall be applicable in respect of this Second Supplemental
Indenture as fully and with the same effect as if set forth herein in full.

 

Section 8.3             Successors.
All agreements of the Successor Issuer in this Second Supplemental Indenture
shall bind its successors.  All
agreements of the Existing Issuer and each of the Subsidiary Guarantors in this
Second Supplemental Indenture shall bind their respective successors.  All agreements of the Trustee in this Second
Supplemental Indenture shall bind its successors.

 

Section 8.4             Separability
Clause. In case any provision in this Second Supplemental Indenture shall
be invalid, illegal, or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

 

Section 8.5             Multiple
Originals. This Second Supplemental Indenture may be executed in any number
of counterparts, each of which shall be an original; but such counterparts
shall together constitute but one and the same instrument.

 

Section 8.6             Governing
Law. THIS SECOND SUPPLEMENTAL INDENTURE SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

11

 

Section 8.7             Conflict
with Trust Indenture Act. If any provision of this Second Supplemental
Indenture limits, qualifies, or conflicts with another provision which is
required to be included in this Second Supplemental Indenture by the TIA, the
required provision shall control.

 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

 

12

 

IN WITNESS WHEREOF, the parties hereto have
caused this Second Supplemental Indenture to be duly executed all as of the day
and year first above written.

 

	
   

  	
  SUCCESSOR ISSUER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CIMAREX ENERGY CO.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Paul Korus

  
	
   

  	
   

  	
  Name:

  	
  Paul Korus

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EXISTING ISSUER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MAGNUM HUNTER RESOURCES, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Richard R. Frazier

  
	
   

  	
   

  	
  Name:

  	
  Richard R. Frazier

  
	
   

  	
   

  	
  Title:

  	
  President, Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SUBSIDIARY GUARANTORS:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MAGNUM HUNTER PRODUCTION, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Richard R. Frazier

  
	
   

  	
   

  	
  Name:

  	
  Richard R. Frazier

  
	
   

  	
   

  	
  Title:

  	
  President, Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GRUY PETROLEUM MANAGEMENT CO.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Richard R. Frazier

  
	
   

  	
   

  	
  Name:

  	
  Richard R. Frazier

  
	
   

  	
   

  	
  Title:

  	
  President, Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HUNTER GAS GATHERING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Richard R. Frazier

  
	
   

  	
   

  	
  Name:

  	
  Richard R. Frazier

  
	
   

  	
   

  	
  Title:

  	
  President, Chief Executive Officer

  

 

 

	
   

  	
   

  	
  TRAPMAR PROPERTIES, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Richard R. Frazier

  
	
   

  	
   

  	
  Name:

  	
  Richard R. Frazier

  
	
   

  	
   

  	
  Title:

  	
  President, Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CONMAG ENERGY CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Richard R. Frazier

  
	
   

  	
   

  	
  Name:

  	
  Richard R. Frazier

  
	
   

  	
   

  	
  Title:

  	
  President, Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PINTAIL ENERGY, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Richard R. Frazier

  
	
   

  	
   

  	
  Name:

  	
  Richard R. Frazier

  
	
   

  	
   

  	
  Title:

  	
  President, Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PRIZE OPERATING COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Richard R. Frazier

  
	
   

  	
   

  	
  Name:

  	
  Richard R. Frazier

  
	
   

  	
   

  	
  Title:

  	
  President, Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PEC (DELAWARE), INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Richard R. Frazier

  
	
   

  	
   

  	
  Name:

  	
  Richard R. Frazier

  
	
   

  	
   

  	
  Title:

  	
  President, Chief Executive Officer

  

 

 

	
   

  	
   

  	
  PRIZE ENERGY RESOURCES, L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: Prize Operating Company,

  
	
   

  	
   

  	
  its General
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Richard R. Frazier

  
	
   

  	
   

  	
  Name:

  	
  Richard R. Frazier

  
	
   

  	
   

  	
  Title:

  	
  President, Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  OKLAHOMA GAS PROCESSING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Richard R. Frazier

  
	
   

  	
   

  	
  Name:

  	
  Richard R. Frazier

  
	
   

  	
   

  	
  Title:

  	
  President, Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TRUSTEE:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DEUTSCHE BANK TRUST COMPANY

  AMERICAS

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Irina Golovashchuk

  
	
   

  	
   

  	
  Name:

  	
  Irina Golovashchuk

  
	
   

  	
   

  	
  Title:

  	
  AssociateExhibit 10.1

 

FORM OF AMENDMENT TO EMPLOYMENT AGREEMENT

 

This
Amendment to Employment Agreement is made and entered into as of the         
day of June 2005 by and between Magnum Hunter Resources, Inc., a
Nevada corporation (“Magnum Hunter”) and its affiliate Gruy Petroleum
Management Co., a Texas corporation and a wholly-owned subsidiary of Magnum
Hunter (collectively, the “Employer”), and                                                             
(“Employee”).

 

Recitals

 

1.                                       The Employer
and Employee have previously entered into an Employment Agreement dated as of                                           ,
          , as amended (the “Agreement).

 

2.                                       The Agreement
provided that if there was a change in control of the Employer (as defined in
the Agreement), the Employee could terminate his employment under certain
specified circumstances and receive certain payments under the Agreement.

 

3.                                       The American
Jobs Creation Act of 2004 added new section 409A to the Internal Revenue
Code of 1986, as amended (the “Code”), which became effective January 1,
2005 and provides in part that a key employee of a public company will be
subject to additional taxes and penalties if payments under the Agreement are
made to the key employee earlier than six (6) months after the employee
terminates employment.  It is believed
that Employee is a key employee of Magnum Hunter for these purposes.

 

4.                                       Cimarex Energy
Co., Cimarex Nevada Acquisition Co., and Magnum Hunter have entered into that
certain Agreement and Plan of Merger among Cimarex Energy Co., Cimarex Nevada
Acquisition Co., and Magnum Hunter dated as of January 25, 2005, and the
consummation of the transactions contemplated by that agreement will constitute
a Change in Control with respect to Magnum Hunter as currently defined in the
Agreement and under new Section 409A of the Code.

 

5.                                       The Internal
Revenue Service has issued transitional guidance under Code section 409A
that permits agreements to be amended to comply with the requirements of Code section 409A.

 

6.                                       The Employer
and the Employee wish to amend the provisions of the Agreement relating to the
events upon which certain payments will be made under the Agreement with the
intent of making the payments in a manner that will not trigger the additional
taxes and penalties under Code section 409A.

 

Amendment

 

1.                                      Amendment
of Termination Events.  Section 7(a) of
the Agreement shall be amended by deleting subsection 7(a)(v).  Section 7(b) of the Agreement shall
be amended by deleting subsections 7(b)(iii) and (iv).  Section 8(c) shall be amended by
deleting the words “the termination of the Employee’s employment for the reason
specified in Section 7(a)(v)” and replacing these words with the words “a
Change in Control as described in Section 7A”.

 

2.                                      Addition
of Change in Control Payments.  A new
Section 7A shall be added to provide as follows:

 

7A.                             Change in
Control.

 

1

 

(a)                                  Any provision
of this Agreement to the contrary notwithstanding, the Employee shall become
entitled to the payments described in subsections 8(c), 8(d), and 8(e) upon
the occurrence of a “Change in Control.” 
The payment described in subsection 8(c) shall be made on or
after the day on which the “Change in Control” occurs but not later than the
day after the day on which the “Change in Control” occurs. The payments
specified in subsections 8(c), 8(d), and 8(e) shall be made without
regard to whether or not the Employee has terminated employment. The Employee
acknowledges that if the cash payment described in subsection 8(c) of
the Agreement is less than the cash payments provided for in Magnum Hunter’s
Severance Policy or Extraordinary Transaction Compensation Policy, as
applicable, the cash payment made under Section 8(c) of this
Agreement upon the “Change in Control” shall be the amount described in the
Severance Policy or the Extraordinary Transaction Compensation Policy, as
applicable.  The cash payment will be
made at the time and in the manner provided for in this Agreement.  The Employee further acknowledges that the
Employee shall not be entitled to any other benefits under either such Policy,
but Employee will be entitled to the other benefits provided under this
Agreement..

 

(b)                                 Upon the
occurrence of a Change in Control, this Agreement shall terminate and the
Employee or the Employer may terminate the Employee’s employment at any time
thereafter.

 

(c)                                  “Change in
Control” shall be defined in accordance with Treasury guidance and Regulations
related to Section 409A of the Code, including but not limited to Notice
2005-1.  Notwithstanding the
foregoing, Employer, Magnum Hunter, and Employee acknowledge and agree that the
consummation of the transactions contemplated by that certain Agreement and
Plan of Merger among Cimarex Energy Co., Cimarex Nevada Acquisition Co., and
Magnum Hunter Resources, Inc., dated as of January 25, 2005, as
amended (the “Merger Agreement”), will constitute a “Change in Control” with
respect to Magnum Hunter within the meaning of Code section 409A for
purposes of this Agreement.  In addition,
Employer, Magnum Hunter, and Employee acknowledge and agree that except as
otherwise provided in Section 7A(a) of this Agreement, the cash
payment to be made to Employee upon the consummation of the transactions
contemplated by the Merger Agreement is set forth in Section 5.16(f) of
the Company Disclosure Schedule to the Merger Agreement.

 

3.                                      Amendment
of Survival Provisions.  Section 12
of the Agreement shall be amended by deleting the reference to Section 7
and replacing it with a reference to Section 7A. Except as amended by the
preceding sentence, Section 12 shall remain in full force and effect as
provided in Section 12 following the termination of this Agreement.

 

4.                                      Intent
of the Parties.  It is the intent of
the parties that this Amendment be construed and administered in a manner that
is consistent with the requirements of Code section 409A and the
regulations and other guidance published thereunder.

 

5.                                      Effectiveness of Agreement. 
Except as modified by this Amendment, all terms and conditions of the
Agreement are unamended and shall remain in full force and effect.

 

2

 

IN WITNESS WHEREOF, the
parties have signed this Amendment on the dates set forth below their
signatures.  This Amendment may be
executed in counterparts, each of which shall be deemed an original and all of
which shall be constitute one and the same instrument, but only one of which
need be produced.

 

 

	
   

  	
  EMPLOYER:

  
	
   

  	
  GRUY PETROLEUM MANAGEMENT CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYER’S PARENT COMPANY:

  
	
   

  	
  MAGNUM HUNTER RESOURCES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
									

 

3

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