Exhibit 10.22

Chaparral Energy, L.L.C.

SECOND AMENDED & RESTATED PHANTOM STOCK PLAN

December 31, 2008

 

1. Purpose

Chaparral Energy, L.L.C. (“Chaparral Energy”) is an operating subsidiary of
Chaparral Energy, Inc. (“CEI”), a Delaware corporation, successor by merger to
Chaparral, L.L.C., an Oklahoma limited liability company. The purpose of the
Chaparral Energy Phantom Stock Plan (the “Plan”) is to provide deferred
compensation to certain key employees (the “Participants”) of Chaparral Energy.
Such deferred compensation will be based upon the award of Phantom Stock to the
Participants. The value of the Phantom Stock will be based on the Fair Market
Value (“FMV”) of CEI and its subsidiary entities (collectively the “Company”).

After the applicable vesting period, unless vested earlier as provided in the
Plan, the Participant will receive the value of the Phantom Stock as of the
Vesting Date (hereinafter defined), adjusted for the change in value of the
Stock from the Award Date to the Vesting Date. The Plan is intended to benefit
the Company by creating increased incentives for, and aiding in the retention
of, the Participants who will be largely responsible for the growth and
profitability of the Company. Participants performing exceptional service for
Chaparral Energy may receive multiple awards of Phantom Stock. This “Second
Amended & Restated Phantom Stock Plan” supersedes the prior Plan, and is
intended to comply with recent changes in the Internal Revenue Code of 1986 as
amended (the “Code”), under Code Section 409A. For the purposes of the Plan,
Phantom Units (under the Plan dated January 1, 2004) are synonymous with and
represent equivalent value to Phantom Stock (under this Plan dated January 1,
2008).

 

2. Administration

The Plan shall be administered by the Plan Committee (the “Committee”) of
Chaparral Energy. This Committee will be comprised of three individuals: 1) the
Chief Executive Officer (“CEO”) of CEI or his appointed representative, 2) an
officer of CEI as appointed by the CEO of CEI, and 3) a representative of the
Human Resources Department of Chaparral Energy as appointed by the CEO of CEI.

Subject to the provisions of the Plan and the approval of the Board of Directors
of CEI (the “Board”), the Committee shall have exclusive power to select the
Participants to be awarded Phantom Stock, to determine the number of shares of
Phantom Stock to be awarded to each Participant selected, and to determine the
time or times when Phantom Stock will be awarded. Only persons employed on a
salaried, full-time (working 32 hours per week or more) basis will be eligible
to become Participants. No Participant may be granted, in the aggregate, more
than five percent (5%) of the maximum number of shares of Phantom Stock
available for award, as described in Section 3, under the Plan.

The Committee shall have authority, subject to the final approval of the Board,
to implement and interpret the Plan, to adopt and revise rules and regulations
relating to the Plan, to determine the conditions subject to which any awards
may be made or payable, and to make any other determinations which it believes
necessary or advisable for the administration of the Plan. Determinations by the
Committee shall be made by majority vote and thereupon, shall be final and
binding on all parties (including the Company, Participants, other employees,
etc.) with respect to all matters relating to the Plan. Certifications under the
Plan shall be consummated by the signatures of two Committee members.

 

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3. Maximum Awards

Phantom Stock may be awarded at the discretion of the Committee up to an
aggregate maximum valuation of all outstanding Phantom Stock of two percent
(2%) of the FMV of the Company (as defined in Section 8 of this Plan). Phantom
Stock may not be awarded anytime the aggregate maximum valuation percentage has
been reached or exceeded. Subject to this aggregate maximum, if any Phantom
Stock awarded under the Plan is paid, forfeited or cancelled, such Phantom Stock
may again be awarded under the Plan. Phantom Stock may be awarded only with
Award Dates of January 1 and July 1 of any year, with the earliest Award Date
being January 1, 2004. “Award Date” is defined as the date that the Plan takes
effect with regard to individual Phantom Stock awards.

 

4. Phantom Stock Accounts

Phantom Stock awarded to a Participant shall be credited to a Phantom Stock
Account (the “Account”) established and maintained for such Participant. The
Account of each Participant shall be the record of Phantom Stock awarded to the
Participant under the Plan and any adjustments which are made pursuant to
Section 9 of this Plan. The Account is solely for accounting purposes; no
segregation of Company assets in support of the Plan will be made or required.
Each share of Phantom Stock shall be valued, in the manner provided in
Section 8, as of the Award Date thereof and thereafter as required for reporting
or redemption purposes.

Beginning January 1, 2005, each award of Phantom Stock under the Plan, and its
value as of the Award Date, shall be communicated by the Committee in writing to
the Participant within 120 days after the Award Date. Further, the Committee
will notify each Participant of the value of his or her individual Account as of
December 31st of each year. This notification will be made by April 30 of the
following year, or within 30 days after the Company’s receipt of its audited
year-end financial statements, whichever is the later.

 

5. Vesting and Payment of Phantom Stock

“Vesting Date” is defined as the date on which a Participant becomes entitled to
payment of a benefit under this Plan, pursuant to which the vested portion of
the Phantom Stock within his or her Account shall become payable to such
Participant, subject to the provisions of the Plan. “Vesting Period” is defined
as the time period between the Award Date and the Vesting Date. Awarded and
outstanding Phantom Stock will vest and be paid according to the following
schedule:

(a) Unless vesting occurs earlier under this Section 5, Phantom Stock awarded to
a Participant shall vest on the fifth anniversary of the Award Date and shall be
paid in a lump sum within the 120-day period immediately following the Vesting
Date.

(b) Notwithstanding Section 5(a) above, Phantom Stock shall vest on a pro-rata
basis in the event of the Participant’s termination of employment with Chaparral
Energy due to death, disability, retirement, or termination by Chaparral Energy
without cause. Payment of the pro-rata vested portion of the Participant’s
Phantom Stock shall be made in a lump sum within the 90-day period following the
Participant’s termination of employment if the Company is a private entity (i.e.
prior to ownership in CEI being traded on a public securities exchange), or
immediately upon termination of employment if the Company is a public entity
(i.e. ownership in CEI is traded on a public securities exchange). Pro-rata
calculation will be accomplished by dividing the number of years elapsed from
the Award Date to the date of vesting (to a maximum of five years) by five, and
then multiplying the number of shares of Phantom Stock in the award by the
result. For example, if 100 shares of Phantom Stock were awarded two and
one-half years prior to the Vesting Date caused by a termination event under
this Section 5(b), 50 shares of Phantom Stock (2.5 years divided by 5 years
times 100 shares) will vest on the Vesting

 

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Date. Phantom Stock which does not vest hereunder will be forfeited to Chaparral
Energy, and the Participant shall have no further rights with regard to the
forfeited Stock. Further, a Participant will be considered disabled if, in the
sole determination of the Committee, such Participant is subject to a physical
or mental condition which renders or is expected to render the Participant
unable to perform his or her usual duties for Chaparral Energy. A Participant
will be considered retired if the Participant’s full-time employment with
Chaparral Energy terminates at or after the date the Participant attains the age
of 65 years.

(c) Notwithstanding Section 5(a) and 5(b) above, if CEI undergoes a “Change of
Control” event whereby there is the occurrence of any one of the following:

(i) the consummation of any transaction (including without limitation, any
merger, consolidation, tender offer, or exchange offer) the result of which is
that any individual or person (as such term is used in the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder
(the “1934 Act”), other than an underwriter temporarily holding securities
pursuant to an offering of such securities, becomes the beneficial owner (as
such term is used in the 1934 Act), directly or indirectly, of securities of CEI
representing more than 50% of the combined voting power of CEI’s then
outstanding securities; or

(ii) the sale, lease, transfer, conveyance or other disposition (including by
merger or consolidation) in one or a series of related transactions, of more
than 50% of the total fair market value of all of the assets of CEI to an
unrelated person; or

(iii) the adoption of a plan relating to the liquidation or dissolution of CEI,

then a “Section 5(c) Event” will be deemed to have occurred and all unvested
Phantom Stock within each Participant’s Account will vest and will be paid in a
lump sum as of such date; provided that such “Section 5(c) Event” is a change of
control as defined under Code Section 409A and the accompanying regulations.

(d) Notwithstanding Sections 5(a), 5(b), and 5(c) above, to the extent that such
action would not violate the requirements of Code Section 409A, the Board may,
at any time and from time to time, cause the immediate vesting of any or all
unvested Phantom Stock awarded under the Plan (a “Section 5(d) Event”) and pay
such amounts in a lump sum within 90 days of such “Section 5(d) Event”.

 

6. Medium of Payment of Phantom Stock/6 Month Delay

Payment to a Participant of the value of the vested portion of the Participant’s
Phantom Stock shall be made in cash or, if the Company is a public entity at the
Vesting Date and if approved by the Board, fifty percent (50%) in cash and fifty
percent (50%) in an equivalent value of Common Stock in CEI. A Participant will
not be entitled to receive any earnings or interest on the value of his Phantom
Stock with respect to the period between the Vesting Date and the receipt of
payment under the Plan.

Without limiting the scope of the preceding provisions of this Section 6, to the
extent that at any time prescribed under Code Section 409A and regulations or
other regulatory guidance issued thereunder, the Participant is a key employee,
as defined in Code Section 416(i) without regard to paragraph 5 thereof, except
to the extent permitted under Code Section 409A and regulations or other
regulatory guidance issued thereunder, no distribution or payment that is
subject to Code Section 409A shall be made under this Plan on account of the
Participant’s separation from service, as defined in Code Section 409A and the
regulation s or other regulatory guidance issued thereunder, with the Company
(at any time when the Participant is deemed

 

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under Code Section 409A and regulations or other regulatory guidance issued
thereunder, and any stock of the Company is publicly traded on an established
securities market or otherwise) before the date that is the first day of the
month that occurs six months after the date of the Participant’s separation from
service (of, if earlier, the date of death of the Participant or any other date
permitted under Code Section 409A and regulations or other regulatory guidance
issued thereunder).

 

7. Forfeiture of Unvested Phantom Stock

All rights to unvested Phantom Stock held hereunder by a Participant will be
discontinued and forfeited to Chaparral Energy, and there will be no further
obligation of Chaparral Energy to such Participant, if any of the following
circumstances occur:

 

  (i) The Participant is discharged from employment with Chaparral Energy for
cause, or

 

  (ii) The Participant performs acts of willful malfeasance or gross negligence
in a matter of material importance to the Company, or

 

  (iii) The Participant voluntarily resigns from employment with Chaparral
Energy, or

 

  (iv) The Participant’s employment with Chaparral Energy becomes less than
full-time and is expected to remain less than full-time for a substantial period
of time, or

 

  (v) The Participant requests in writing that his or her Phantom Stock be
canceled.

The Committee shall have sole discretion with respect to the application of the
provisions of this Section 7, and such exercise of discretion shall be
conclusive and binding upon the Participant, and all other persons, provided
that such discretion does not violate Code Section 409A.

 

8. Valuation of Phantom Stock

For the purpose of issuance, notification, and payment of Phantom Stock, the FMV
of the Company as a private entity will be determined as of:

(a) For purposes of payment under Section 5(a), in the case of an Award Date of
January 1, FMV is determined as of the December 31st which immediately precedes
such Vesting Date.

(b) For purposes of payment under Section 5(a), in the case of an Award Date of
July 1, FMV is determined as of the June 30th which immediately precedes such
Vesting Date.

(c) For purposes of payment under Section 5(b), FMV is determined as of the most
recent December 31st or June 30th which immediately precedes the Participant’s
termination of employment,

(d) For purposes of payment under a Section 5(c) and/or Section 5(d) Event, the
valuation of the Company will be determined as of the date of the occurrence of
the event.

The value of one share of Phantom Stock will be equivalent to the value of
1.754% (0.01754) of one share of Common Stock in CEI (which means one share of
Common Stock in CEI is equivalent in value to 57.0125 shares of Phantom Stock).
This conversion number is derived by dividing the 877,000 shares of outstanding
Common Stock of CEI as of January 1, 2007, by the 50,000,000 Membership Units of
the former Chaparral, L.L.C. The value of one share of Common Stock is defined
as the FMV of the Company divided by the total number of outstanding shares of
Common Stock of CEI.

 

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The FMV of the Company will be equivalent to its calculated equity as determined
by the adjusted book value approach. This approach defines equity as the
Company’s total asset value less its total liabilities, with both assets and
liabilities being adjusted to FMV. The calendar year-end audited financial
statements of the Company will serve as the basis for the adjusted balance sheet
for the valuation period ending December 31 in any year, and the second quarter
financial statements of the Company as filed with U.S. Securities and Exchange
Commission (the “SEC”), the Company’s Form 10-Q, or if the Company is not
subject to the filing requirements of the 1934 Act, then its internal financial
statements as prepared in accordance with generally accepted accounting
principles consistent with the most recent audited financial statements of the
Company and after review by the Company’s independent auditor will serve as the
basis for the adjusted balance sheet for the valuation period ending June 30 in
any year.

It is anticipated that the primary adjustment required to the assets will be
adjusting the value of the proved oil and gas properties, as shown on the
financial statements, to their FMV. The FMV of the oil and gas properties will
be based on internal reserve reports at Nymex forward pricing with cash flows
discounted at 10% (“Pv10”). The Pv10 valuation of individual report categories
will be further discounted by the following percentages: PDP – 0%, PDNP – 30%,
PUD:DR (Drilling) – 50%, PUD:WF (Water flood) – 50%, and PUD:CO2 – 50%. The sum
of the various reserve report discounted values will then represent the FMV of
the oil and gas properties.

From time to time, other adjustments to asset values may be required. These
adjustments will be listed separately with sufficient detail to support the
adjustment. With regard to liabilities, and for purposes of the Plan, Phantom
Stock, Preferred Stock, and any securities having similar features will be
considered to be a liability. Adjustments as approved by the Committee will be
final.

 

9. Changes in Capital and Company Structure

In the event of any change in the value of individual outstanding shares of
Common Stock of CEI by reason of an issuance of additional shares of Common
Stock, dividends, recapitalization, reclassification, reorganization, or similar
transaction, the Committee shall proportionately adjust, as necessary and in an
equitable manner, the number and/or value of shares of Phantom Stock held by
Participants under the Plan in order to maintain the fair value of each
Participant’s Account.

The existence of Phantom Stock shall not affect in any way the right or power of
the Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company’s capital
structure or its business; any merger or consolidation of the Company; any issue
of bonds, debentures, preferred or prior preference stock ahead of or affecting
the Phantom Stock or the rights thereof; the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding, whether of a similar character or
otherwise.

 

10. Issuance and Non-transferability

Phantom Stock may be evidenced in such a manner as the Committee shall deem
appropriate. Any certificates representing the Phantom Stock awarded hereunder
shall be issued in the name of the Participant pursuant to the terms of the Plan
as of the Award Date. Phantom Stock awarded under the Plan, and any rights and
privileges pertaining thereto, may not be transferred, assigned, pledged or
hypothecated in any manner, by operation of law or otherwise, other than by the
written designation of a Designated Beneficiary, and shall not be subject to
execution, attachment or similar process.

 

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11. Payments on Death of Participant

In the event of Participant’s death, payments due under the Plan shall be made
to the Designated Beneficiary as designated in writing by the Participant. If a
properly executed Designated Beneficiary form is not in existence on the death
of a Participant, or if the Designated Beneficiary has predeceased the
Participant or is not in existence, then the amount due the deceased Participant
shall be paid to the Personal Representative of the deceased Participant’s
estate.

 

12. Taxes

Chaparral Energy shall have the right to deduct from all amounts paid in cash
pursuant to the Plan any taxes or other deductions required by law to be
withheld with respect to such awards. In the case of amounts paid in Common
Stock of CEI, the Participant shall be required to pay to Chaparral Energy the
amount of any taxes which Chaparral Energy is required to withhold with respect
to such Common Stock.

The Company makes no commitment or guarantee to Participant that any federal or
state tax treatment will apply or be available to any person eligible for
benefits under this Award.

 

13. Voting and Distribution Rights

Participants shall not be entitled to any voting rights, dividends, or any other
rights or privileges associated with ownership of Common Stock in CEI.

 

14. General Provisions

(a) No employee or other person shall have any claim or right to a Phantom Stock
award under the Plan. The awarding of Phantom Stock is at the sole discretion of
the Committee, as approved by the Board. Neither the Plan nor any action taken
hereunder shall be construed as giving any employee any right to be retained in
the employ of Chaparral Energy.

(b) The Plan shall at all times be entirely unfunded and no provision shall at
any time be made with respect to segregating assets of the Company for payment
of any benefits hereunder. No Participant or other person shall have any
interest in any particular assets of the Company by reason of the right to
receive a benefit under the Plan and any such Participant or other person shall
have only the rights of a general unsecured creditor of the Company with respect
to any rights under the Plan.

(c) Participant acknowledges and agrees that he will enter into such written
representations, warranties and agreements and execute such documents as the
Company may reasonably request in order to comply with the securities law or any
other applicable laws, rules or regulations, or with this document or the terms
of the Plan.

(d) Except when otherwise required by the context, any masculine terminology in
this document shall include the feminine, and any singular terminology shall
include the plural.

(e) In the event that any provision of this Plan shall be held illegal, invalid,
or unenforceable for any reason, such provision shall be fully severable and
shall not affect the remaining provisions of this Plan, and the Plan shall be
construed and enforced as if the illegal, invalid, or unenforceable provision
had never been included herein.

(f) The Plan is intended to qualify as a “bonus program” that is not a “plan”
covered by ERISA because the Plan provides for payment of benefits to
Participants as bonuses for work performed and does not systematically defer
payment of benefits to the termination of covered employment or beyond or so as
to provide retirement income to Participants.

 

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(g) The Plan shall be construed in accordance with the laws of the State of
Delaware to the extent that federal law does not supersede and preempt Delaware
law.

 

15. Amendment of the Plan

The Committee, with the approval of the Board, may alter, amend, or cancel the
Plan at any time or from time to time. However, any alterations or amendments to
the Plan must be consistent with the spirit of the Plan, and may not
retroactively reduce the total value of the Phantom Stock in a Participant’s
Account without the written consent of the affected Participant.

 

16. Effectiveness and Term of Plan

The effective date of the Second Amended and Restated Plan shall be December 31,
2008. Unless sooner amended by the Committee, no Phantom Stock shall be granted
pursuant to the Plan after January 1, 2014.

 

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Approved this 31st day of December, 2008, by the Board of Directors of CEI:

 

/s/ Mark A. Fischer

Mark A. Fischer, Chairman

/s/ Charles A. Fischer

Charles A. Fischer, Director

/s/ Joseph O. Evans

Joseph O. Evans, Director

 

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Chaparral Energy, L.L.C.

Phantom Stock Plan

Acceptance by Participant

The undersigned is a Participant under the Second Amended and Restated Phantom
Stock Plan dated December 31, 2008, and hereby acknowledges that Participant has
read the Plan, understands the Plan and accepts the terms and conditions of the
Plan. The Plan is not a guarantee of continued employment nor is there any
guarantee of future Awards or earnings on any Awards made.

Participant hereby acknowledges that this Plan, including its contents and his
or her level of participation in the Plan, is to be kept strictly confidential.
Information regarding the Plan shall not be disclosed by the Participant to
other parties except to family members, the beneficiary, or professional
consultants for the purpose of investment, tax, and estate planning purposes, or
as may be required by judicial order or decree. Violation of this provision may
result in disciplinary action up to and including forfeiture of unvested Phantom
Stock (as allowed for in Section 7 of the Plan) or termination of employment
with cause.

In the event of Participant’s death during the term of this Plan, the Designated
Beneficiary (pursuant to Section 11 of the Plan) is hereby designated by the
Participant to be:

 

Beneficiary Name:    ______________________________     
______________________________      ______________________________   
Beneficiary Address: ___________________________________
Beneficiary City, State: _________________________________

Executed this ____ day of _________, 20___, by:

Participant Name: _________________________________

Participant Signature: ______________________________

Witness: ________________________________________

Witness: ________________________________________

 

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