Exhibit 10.1

COMMON STOCK PURCHASE AGREEMENT

between

CHAPARRAL ENERGY, INC.,

ALTOMA ENERGY

and

FISCHER INVESTMENTS, L.L.C.

as Sellers

and

CHESAPEAKE ENERGY CORPORATION,

as Purchaser

dated as of

September 1, 2006

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TABLE OF CONTENTS

 

           Page 1.     Purchase and Sale.    1

1.1

   Consideration    1

1.2

   Authorization    2

1.3

   Stockholders Agreement    2 2.     The Closing    2

2.1

   Closing Date    2

2.2

   Payment and Delivery    2 3.     Representations and Warranties of the
Company    3

3.1

   Organization and Existence    3

3.2

   Capitalization: Ownership of Stock: Authorization    3

3.3

   No Conflicts    4

3.4

   Authority; Enforceability    5

3.5

   Litigation; Contingencies    5

3.6

   Subsidiaries    5

3.7

   Title to Assets    6

3.8

   Consents    6

3.9

   Proprietary Rights    6

3.10

   Reports; Financial Statements    7

3.11

   Compliance with Laws; OSHA    8

3.12

   Labor Matters    8

3.13

   ERISA    8

3.14

   Environmental Matters    8

3.15

   Permits and Licenses    10

3.16

   Insurance    10

3.17

   Taxes    10

3.18

   Absence of Certain Developments    10

3.19

   Fees    11

3.20

   Investment Company    11

3.21

   Forward Looking Statements    11

3.22

   Disclosure Controls    11

3.23

   Affiliate Transactions    11

3.24

   Exempt Offering    12

3.25

   Disclosure    12

3.26    

   Acknowledgement    12 4.     Representation and Warranties of the Selling
Stockholders    12

4.1

   Ownership of SH Shares    12

4.2

   Certain Interests    12

4.3

   Authority    13

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4.4    

   Prior Obligations    13

4.5

   Litigation    13

4.6

   Consents and Approvals    13

4.7

   No Breach; Governmental Authorizations    13

4.8

   Powers of Attorney    14 5.     Representations and Warranties of the
Purchaser    14

5.1

   Organization and Existence    14

5.2

   No Conflict    14

5.3

   Authority; Enforceability    14

5.4

   Consents    15

5.5

   Investment Representations    15

5.6

   Purchaser Filings and Reports    15

5.7

   Fees    17 6.     Nature and Survival of Representations and Warranties;
Indemnity    17

6.1

   Survival of Representations and Warranties    17

6.2

   Indemnity by the Company    17

6.3

   Indemnity by the Selling Stockholders    17

6.4

   Indemnity by the Purchaser    17

6.5

   Limitation of Liability    18

6.6

   Exclusive Remedy    18 7.     Conditions Precedent    19

7.1

   Certain Actions    19

7.2

   Representations and Warranties    19

7.3

   Related Agreements    19

7.4

   Material Adverse Change; Purchaser Material Adverse Change    19

7.5

   Company Requirements    20

7.6

   Opinions of Counsel    20

7.7

   Delivery of Company Shares and Exchange Shares    20

7.8

   Evidence of Authority; Good Standing    20

7.9

   HSR Act    20 8.     Miscellaneous    20

8.1

   Financial Statements and Other Information    20

8.2

   Expenses    21

8.3

   Notices    21

8.4

   Entire Agreement; Amendments    22

8.5

   Assignment    22

8.6

   No Third Party Rights    23

8.7

   Counterparts    23

8.8

   Headings: Interpretation    23

8.9

   Governing Law    23

8.10

   Arbitration    23

 

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8.11

   Attorney Fees    24

8.12

   Severability    24

8.13    

   JOINT ACKNOWLEDGMENT    24

 

iii

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EXHIBITS

 

Exhibit A    Selling Stockholders – SH Shares Exhibit B    Form of Stockholders
Agreement Exhibit C    Form of Amended and Restated Certificate of Incorporation
Exhibit D    Form of Amended and Restated Bylaws Exhibit E    Forms of Opinions
of Counsel to the Company and Sellers Exhibit F    Form of Opinion of Purchaser

SCHEDULES

 

Schedule 3.2    Phantom Unit Plan Schedule 3.6    Subsidiaries Schedule 3.7(a)
   Liens Against Assets Schedule 3.10    Reports; Financial Statements
Schedule 3.11    Compliance With Laws; OSHA Schedule 3.13    ERISA Schedule 3.18
   Absence of Certain Developments Schedule 3.19    Brokerage Fees Schedule 5.6
   Purchaser Filings

 

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COMMON STOCK PURCHASE AGREEMENT

THIS COMMON STOCK PURCHASE AGREEMENT is entered into this 1st day of September,
2006 (“Agreement”), between CHESAPEAKE ENERGY CORPORATION, an Oklahoma
corporation (the “Purchaser”) and CHAPARRAL ENERGY, INC., a Delaware corporation
(the “Company”), ALTOMA ENERGY, an Oklahoma general partnership (“Altoma”), and
FISCHER INVESTMENTS, L.L.C. (the “Fischer” and collectively with Altoma, the
“Selling Stockholders” and collectively with Altoma and the Company, the
“Sellers”).

BACKGROUND:

A. The Sellers desire to sell on the terms and conditions set forth in this
Agreement an aggregate of 361.2903226 shares (as defined below) of the Company’s
common stock, par value $0.01 per share (the “Common Stock”), of which
131.6129032 shares are being sold by the Company and 229.6774194 shares are
being sold by the Selling Stockholders in accordance with the allocation set
forth on Exhibit A attached hereto.

B. The Purchaser desires to acquire the Shares on the terms and conditions set
forth in this Agreement;

NOW, THEREFORE, in consideration of the premises and of the representations,
warranties and covenants herein contained, the parties hereby agree as follows:

1. Purchase and Sale.

 

  1.1 Consideration. The Company hereby agrees to issue and sell to the
Purchaser 131.6129032 shares of Common Stock (together with any shares of Common
Stock issued or issuable after the date hereof and prior to the Closing in
connection with such shares pursuant to a stock split or stock dividend, the
“Company Shares”), and the Purchaser hereby agrees to purchase the Company
Shares for a per share purchase price $775,000 per current outstanding share and
an aggregate purchase price of $102,000,000 (the “Company Purchase Price”). Each
Selling Stockholder agrees to sell to the Purchaser the number of shares of
Common Stock set forth on Exhibit A for such Selling Stockholder (together with
any shares of Common Stock issued or issuable after the date hereof and prior to
the Closing in connection with such shares pursuant to a stock split or stock
dividend, the “SH Shares” and, collectively with the Company Shares, the
“Shares”), and the Purchaser hereby agrees to purchase the SH Shares for a per
share purchase price $775,000 per Share and an aggregate purchase price of
$178,000,000 (the “SH Purchase Price” and collectively with the Company Purchase
Price, the “Purchase Price”). The SH Purchase Price will be allocated among the
Selling Stockholders in accordance with Exhibit A and $40,000,000.00 of the SH
Purchase Price payable to Altoma will be paid by delivery to Altoma of the
number of shares of the Purchaser’s common stock (“CEC Stock”) determined by
dividing $40,000,000.00 by the Exchange Price (the “Exchange Shares”). The
“Exchange Price” will be determined by adding the closing price of the CEC Stock
as quoted on the New York Stock Exchange as of the close of

 

1

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     business on the third (3rd) through the twelfth (12th) business trading
days preceding the Closing Date and dividing the sum by ten (10). The Exchange
Shares portion of the SH Purchase Price will be delivered through The Depository
Trust Company or in such other manner as is mutually agreed to by the Purchaser
and Altoma. The cash portion of the Purchase Price will be payable by wire
transfer of immediately available funds at the closing of the transactions
contemplated by this Agreement and the Related Agreements (as hereinafter
defined) by the parties hereto (the “Closing”).

 

  1.2 Authorization.

 

     (a) The Company agrees that the Company Shares to be issued and sold by the
Company to the Purchaser shall be duly authorized and issued, and shall be fully
paid and nonassessable, and upon delivery to the Purchaser will vest full, valid
and legal title to the Company Shares in the Purchaser.

 

     (b) Each Selling Stockholder agrees that the SH Shares to be sold by such
Selling Stockholder to the Purchaser have been duly authorized and issued, and
are fully paid and nonassessable, and will not be subject to any fees,
encumbrances, pledges or “adverse claims” (as Section 8-102(a)(1) of the Uniform
Commercial Code of the State of Oklahoma defines that term) created by such
Selling Stockholder, and upon delivery to the Purchaser will vest full, valid
and legal title to the SH Shares in the Purchaser.

 

     (c) The Purchaser agrees that the Exchange Shares to be issued and sold by
the Purchaser to Altoma shall be duly authorized and issued, and shall be fully
paid and nonassessable, and upon delivery to Altoma will vest full, valid and
legal title to the Exchange Shares in Altoma.

 

  1.3 Stockholders Agreement. Simultaneously with the Closing of the
transactions contemplated by this Agreement, the Company, the Selling
Stockholders and the Purchaser will enter into a Stockholders Agreement in
substantially the form attached hereto as Exhibit B (the “Stockholders
Agreement”).

2. The Closing.

 

  2.1 Closing Date. The Closing shall take place at the offices of Chaparral
Energy, Inc., 701 Cedar Lake Boulevard, Oklahoma City, Oklahoma 73114 on the
later of September 22, 2006 or five (5) business days after the date all of the
conditions precedent set forth in Section 7 of this Agreement have been
satisfied (the “Closing Date”).

 

  2.2 Payment and Delivery. At the Closing: (a) the Purchaser shall pay the
Purchase Price (including the Exchange Shares) to the Sellers in accordance with
the allocations set forth in Exhibit A; (b) each Seller will deliver to the
Purchaser a certificate or certificates representing such Seller’s Shares; and
(c) all parties thereto will execute and deliver the Stockholders Agreement and
the other documents to be executed and delivered pursuant to the terms of this
Agreement (the “Related Agreements”). The certificates for Shares shall be
subject to a

 

2

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     legend restricting transfer under the Securities Act, such legend to be
substantially as follows:

 

     THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AS TO THE
AVAILABILITY OF AN EXEMPTION FROM REGISTRATION THAT SUCH REGISTRATION IS NOT
REQUIRED AND THAT ANY PROSPECTUS DELIVERY REQUIREMENTS ARE NOT APPLICABLE.

 

     THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER, VOTING AND OTHER MATTERS SET FORTH IN A STOCKHOLDERS AGREEMENT DATED
                    , 2006. A COPY OF THIS AGREEMENT IS AVAILABLE UPON REQUEST
TO THE COMPANY.

3. Representations and Warranties of the Company. As an inducement to the
Purchaser to enter into this Agreement the Company represents and warrants to
the Purchaser that:

 

  3.1 Organization and Existence. The Company is a corporation duly incorporated
and validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power to carry on its business as now
conducted and is qualified to do business in those jurisdictions where its lease
of property or the conduct of its business requires such qualification, except
where the failure to so qualify would not have a material adverse effect on the
business, operations, assets, condition (financial or other) or results of
operations of the Company or any of its subsidiaries taken as whole (a “Material
Adverse Effect”). The Company has delivered to the Purchaser complete and
correct copies of the Certificate of Incorporation and Bylaws of the Company as
in effect on the date hereof. Copies of the forms of Amended and Restated
Certificate of Incorporation and Amended and Restated Bylaws of the Company to
be in effect on the Closing Date are attached hereto as Exhibits C and D,
respectively.

 

  3.2 Capitalization: Ownership of Stock: Authorization.

 

     (a) As of the date of this Agreement, the authorized capital of the Company
consists of 2,000 shares of Common Stock and no shares of preferred stock. As of
the date of this Agreement, the Company had (a) 1,000 issued and outstanding
shares of Common Stock; (b) no shares of preferred stock outstanding; (c) no
treasury shares; and (d) no securities outstanding that may be converted into
underlying shares of Common Stock. As of June 30, 2006, the Company had granted
or was authorized to grant awards of units under the Company’s Phantom

 

3

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     Unit Plan more particularly described in Schedule 3.2 (the “Phantom Unit
Plan”). Other than the registration rights to be granted to the Purchaser in
accordance with the transactions contemplated hereby and to the other parties to
the Stockholders’ Agreement as set forth therein, the Company has not granted
any registration rights that are currently in effect, including demand or
piggy-back registration rights. Except as set forth in this Section 3.2, there
are no outstanding or authorized subscriptions, options, warrants, rights,
conversion rights, phantom rights, preemptive rights, stock appreciation rights,
calls, commitments or any other understandings or agreements entitling any
person to receive equity of the Company. Upon issuance of the Company Shares to
the Purchaser and the purchase of the SH Shares, the Purchaser will be the
record and beneficial owner of the Shares and the Shares will be duly
authorized, validly issued and outstanding, fully paid and nonassessable. As a
result of the issuance of the Company Shares, the Company is not, nor will it
become, obligated to issue any additional shares of capital stock (preferred or
common) to any officer, director, stockholder or other person.

 

     (b) As of the Closing Date, the authorized capital of the Company will
consist of 3,000,000 shares of Common Stock and 600,000 shares of preferred
stock, issuable in series (the “Preferred Stock”). After the date of this
Agreement and prior to Closing, the Company shall effect a 775-for-1 stock split
in the form of a stock dividend of 774 shares of Common Stock for each share of
Common Stock outstanding on the date of this Agreement. As of the Closing Date,
the Company will have (a) 877,000 issued and outstanding shares of Common Stock
(excluding shares of restricted stock which may be issued in exchange for units
issued under the Phantom Unit Plan); (b) no shares of Preferred Stock
outstanding; (c) no treasury shares; and (d) no securities outstanding that may
be converted into underlying shares of Common Stock. As of or after the date of
this Agreement and prior to Closing, the Company may adopt an equity incentive
plan authorizing the Company to issue awards for a number of shares of Common
Stock up to an amount equal to 5% of the fully-diluted shares of Common Stock,
based upon (i) the then-outstanding shares of Common Stock, (ii) the shares of
Common Stock to be issued by the Company pursuant to this Agreement (as set
forth on Exhibit A) and (iii) such authorized shares under the plan. A portion
of these authorized shares may be issued in exchange for units issued under the
Phantom Unit Plan. Upon consummation of the Closing of the transactions pursuant
to this Agreement, the Purchaser will own not less than 30.0% of the Common
Stock of the Company on a fully diluted basis, provided, such fully diluted
basis shall not include Common Stock which may in the future be issued in
exchange for or payment of awards outstanding under the Company’s Phantom Unit
Plan.

 

  3.3 No Conflicts. The execution and delivery of this Agreement and the Related
Agreements by the Company and performance by the Company hereunder and
thereunder, will not result in a violation or breach of any term or provision of
or constitute a default or accelerate the performance required under the
Articles of Incorporation, Bylaws or other governance documents of the Company
or any of its subsidiaries or any material indenture, mortgage, deed of trust or
other contract or agreement to which the Company or any of its subsidiaries is a
party or by

 

4

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     which their respective assets are bound, or violate any statute, rule,
regulation, order, writ, injunction or decree of any court, administrative
agency or governmental body.

 

  3.4 Authority; Enforceability. The Company has full right, power and authority
to execute and deliver this Agreement and the Related Agreements and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Related Agreements and the consummation of
the transactions contemplated hereby to be performed by the Company have been
duly and validly authorized by all necessary corporate action on the part of the
Company, and no other corporate proceedings are necessary to authorize the
execution and delivery of this Agreement and the Related Agreements by the
Company or to consummate the transactions contemplated hereby to be performed by
the Company. This Agreement and the Related Agreements constitute valid and
legally binding obligations of the Company, enforceable in accordance with their
respective terms, except as that enforcement may be limited by bankruptcy,
insolvency, moratorium or similar laws affecting the enforcement of creditors’
rights, by the availability of injunctive relief or specific performance and by
general principles of equity and, in the case of the Stockholders Agreement, any
rights to indemnity or contribution thereunder may be limited by federal and
state securities laws and public policy considerations.

 

  3.5 Litigation; Contingencies. Except as described in the Reports (as defined
below), there is no action, suit or proceeding pending or, to the knowledge of
the Company, threatened against the Company or any of its subsidiaries before
any court, agency or arbitrator that would result in any Material Adverse Effect
or that questions the validity of any action taken or to be taken pursuant to or
in connection with this Agreement or the Related Agreements.

 

  3.6 Subsidiaries. Except for the subsidiaries listed in Schedule 3.6 attached
hereto, the Company has no subsidiaries or any material equity interests in any
other corporation, partnership, limited liability company, joint venture or
other entity (excluding joint ventures, joint operating or ownership
arrangements and tax partnerships entered into in the ordinary course of
business). Except as set forth on Schedule 3.6, the Company directly or
indirectly owns one hundred percent (100%) of all of the issued and outstanding
equity capital of each of the subsidiaries listed Schedule 3.6. Each subsidiary
of the Company has been duly organized and is in good standing under the laws of
the jurisdiction of its organization, with power and authority (corporate and
other) to own its properties and conduct its business; and each subsidiary of
the Company is duly qualified to do business and is in good standing in all
other jurisdictions in which its ownership or lease of property or the conduct
of its business requires such qualification; except where the failure to be so
qualified would not reasonably be expected to individually or in the aggregate
have a Material Adverse Effect. All of the issued and outstanding capital stock
or similar equity interests of each subsidiary of the Company has been duly
authorized and validly issued and is fully paid and nonassessable; and the
capital stock or similar equity interests of each subsidiary owned by the
Company, directly or through subsidiaries, is owned free from liens,
encumbrances and defects.

 

5

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  3.7 Title to Assets. Except as otherwise set forth in Schedule 3.7(a), the
Company and its subsidiaries have good and defensible title to all properties
and assets owned by them, including, without limitation, all oil and gas
producing properties of the Company and its subsidiaries, in each case free from
liens, encumbrances and defects that would materially affect the value thereof
or materially interfere with the use made or to be made thereof by them; and the
Company and its subsidiaries hold any leased real or personal property,
including, without limitation, all oil and gas producing properties of the
Company and its subsidiaries, under valid and enforceable leases with no
exceptions that would materially interfere with the use made or to be made
thereof by them. The Company and its subsidiaries have maintained all their
tangible personal properties material to the business of the Company and its
subsidiaries, taken as a whole, in good repair, working order and operating
condition, subject to ordinary wear and tear, and all such assets are suitable
for the purposes for which they are presently being used. The Company and its
subsidiaries have all easements, rights-of-way and similar authorizations
required for the use of the real properties and all other properties and assets
owned by them and used in the conduct of the business as heretofore conducted.
No material properties or assets of the Company and its subsidiaries, or any
portion thereof, has been condemned or otherwise taken by any public authority,
and neither the Company nor any of its subsidiaries has received written notice
that any such condemnation or taking is threatened or contemplated.

 

  3.8 Consents. The Company is not required to obtain any consent from or
approval of any court, governmental entity or any other person in connection
with the execution, delivery or performance by the Company of this Agreement or
the Related Agreements and the transactions contemplated hereby and thereby,
except such filings as may be required to be made under the Hart-Scott Rodino
Act of 1976, as amended (the “HSR Act”), or with the Securities and Exchange
Commission (“SEC”) or any state or foreign “blue sky” or securities regulatory
authority. The consummation of the transactions contemplated by this Agreement
will not require the approval of any entity or person in order to prevent the
termination of any material right, privilege, license or agreement of the
Company.

 

  3.9 Proprietary Rights. The Company and its subsidiaries own or possess
adequate licenses or other valid rights to use all patents, patent rights,
trademarks, trademark rights and proprietary information used or held for use in
connection with their respective businesses as currently being conducted, except
where the failure to own or possess such licenses and other rights would not
have a Material Adverse Effect, and there are no assertions or claims
challenging the validity of any of the foregoing that would have a Material
Adverse Effect. The conduct of the Company’s and its subsidiaries’ respective
businesses as currently conducted does not conflict with any patents, patent
rights, licenses, trademarks, trademark rights, trade names, trade name rights
or copyrights of others in any way that would have a Material Adverse Effect.
There is no infringement of any proprietary right owned by or licensed by or to
the Company or any of its subsidiaries that would have a Material Adverse
Effect.

 

6

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  3.10 Reports; Financial Statements. The Company has filed certain reports,
schedules, forms, statements and other documents with the SEC as set forth in
Schedule 3.10 and had certain correspondence with the SEC and has received
certain comments with respect to such filings (all of the foregoing (including
all exhibits included therein and financial statements and schedules thereto and
documents incorporated by reference therein and all comments and correspondence
with respect thereto) being herein referred to as the “Filings”). The Company
has made available to the Purchaser true and complete copies of the Filings and
has made available to the Purchaser the audited consolidated financial
statements of the Company for the fiscal years ending December 31, 2004 and 2005
and the interim financial statements for the six (6) months ending June 30, 2006
(the “Financial Statements” and collectively with the Filings, the “Reports”).
As of their respective dates, the Filings complied in all material respects with
the requirements of the laws, rules and regulations applicable to thereto. None
of the Filings, at the time they were filed with the SEC contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective dates, the Financial Statements complied as to form in all material
respects with applicable accounting requirements and the published securities
laws, rules and regulations applicable thereto. The Financial Statements have
been prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company and its subsidiaries as
of the dates thereof and the results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). All of the Financial Statements present fairly in
all material respects the financial position and the results of operations of
the Company and its subsidiaries as of the dates and for the periods shown
therein, and to the knowledge of the Company, there has been no Material Adverse
Effect on the financial condition of the Company since June 30, 2006. Except as
disclosed in the Reports or as set forth on Schedule 3.10, neither the Company
nor any of its subsidiaries has any debt, liability or obligation, contingent or
otherwise, that would have a Material Adverse Effect. The accounting firm that
has expressed its opinion with respect to the audited Financial Statements is
independent of the Company pursuant to the standards promulgated by the SEC in
Rule 2-01 of Regulation S-X and such firm was otherwise qualified to render the
audit opinion under applicable laws. There is no transaction, arrangement or
other relationship between the Company and an unconsolidated or other
off-balance-sheet entity that is required to be disclosed by the Company in the
Reports that has not been so disclosed.

 

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  3.11 Compliance with Laws; OSHA. The Company and its subsidiaries are in
compliance with all applicable laws, ordinances, statutes, rules, regulations
and orders promulgated by any court or federal, state or local governmental body
or agency relating to its assets and business, except for such violations or
failures to comply that would not result in a Material Adverse Effect. Since
January 1, 2003, neither the Company nor any of its subsidiaries has received
any notice, citation, claim, assessment or proposed assessment alleging any
violation of any federal, state or local safety and health laws, except for any
such violations as would not result in a Material Adverse Effect.

 

  3.12 Labor Matters. There is no labor strike or labor disturbance pending or,
to the knowledge of the Company, threatened against the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries has experienced
any work stoppage or other material labor disturbance within the past three
years. Neither the Company nor any of its subsidiaries is a party to any
collective bargaining agreement with respect to its employees and, to the
knowledge of the Company, there are no current attempts to organize its
employees.

 

  3.13 ERISA. Except as set forth in Schedule 3.13, neither the Company nor any
of its subsidiaries maintains or sponsors any pension, retirement, savings,
deferred compensation or profit-sharing plan or any stock option, stock
appreciation, stock purchase, performance share, bonus or other incentive plan,
severance plan, health, group insurance or other welfare plan, or other similar
plan or any “employee benefit plan” within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), under
which the Company has any current or future obligation or liability or under
which any employee or former employee (or beneficiary of any employee or former
employee) of the Company has or may have any current or future right to benefits
on account of employment with the Company (the term “plan” shall include any
contract, agreement, policy or understanding, each such plan being hereinafter
referred to individually as a “Plan”). Each Plan intended to be qualified under
Sections 401(a) and 501(a) of the Internal Revenue Code of 1986, as amended (the
“Code”), is, and has been determined by the Internal Revenue Service to be,
qualified under Sections 401(a) and 501(a) of the Code and, since such
determination, no amendments to or failure to amend any such Plan or any other
circumstances adversely affects its tax qualified status. Neither the Company
nor any of its subsidiaries has any liability for (i) any prohibited transaction
(within the meaning of Section 4975 of the Code and Section 406 of Title I of
ERISA) or accumulated funding deficiency (within the meaning of Section 412 of
the Internal Revenue Code) with respect to any Plan or (ii) any complete or
partial withdrawal liability (within the meaning of Sections 4203 and 4205 of
ERISA, respectively), with respect to any pension benefit plan which is not a
Plan but is subject to Title IV of ERISA, to which the Company or any of its
subsidiaries makes or ever has made a contribution and in which any employee of
the Company or any subsidiary is or has ever been a participant.

 

  3.14 Environmental Matters. The Company and each of its subsidiaries have
obtained all Environmental Permits (as defined below) that are required with
respect to

 

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     their respective businesses, operations and properties, either owned or
leased, and the Company, each of it subsidiaries, and their respective
properties are in compliance with all terms and conditions of all applicable
Requirements of Environmental Law and Environmental Permits, in each case except
as would not have a Material Adverse Effect. Except as would not have a Material
Adverse Effect, there are no Environmental Claims pending or, to the knowledge
of the Company, threatened against the Company or any of its subsidiaries.
Neither the Company nor any of its subsidiaries has received any notice from any
governmental authority of any unresolved violation or liability arising under
any Requirements of Environmental Law or Environmental Permit in connection with
its assets, businesses or operations, except for any such violation or liability
as would not have a Material Adverse Effect.

 

     “Environmental Claim” means any third party (including governmental
agencies and employees) action, lawsuit, claim or proceeding (including claims
or proceedings under the Occupational Safety and Health Act or similar laws
relating to safety of employees) that seeks to impose liability for
(a) pollution or contamination of the ambient air, surface water, ground water
or land; (b) solid, gaseous or liquid waste generation, handling, treatment,
storage, disposal or transportation; (c) exposure to hazardous or toxic
substances; (d) the safety or health of employees; or (e) the transportation,
processing, distribution in commerce, use or storage of hydrocarbons or chemical
substances. An Environmental Claim includes, but is not limited to, a common law
action, as well as a proceeding to issue, modify or terminate an Environmental
Permit.

 

     “Environmental Permit” means any permit, license, approval or other
authorization under any applicable law, regulation and other requirement of the
United States or any foreign country or of any state, municipality or other
subdivision thereof relating to pollution or protection of health or the
environment, including laws, regulations or other requirements relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants or hazardous substances or toxic materials or wastes into ambient
air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transportation or handling of hydrocarbons or chemical substances, pollutants,
contaminants or hazardous or toxic materials or wastes.

 

     “Requirements of Environmental Law” means all requirements in effect on the
Closing Date imposed by any applicable law, rule, regulation or order of any
federal, foreign, state or local executive, legislative, judicial, regulatory or
administrative agency, board or authority with jurisdiction over the Company or
any of its subsidiaries or any of their respective properties or assets that
relate to (a) pollution or protection of the ambient air, surface water, ground
water or land; (b) solid, gaseous or liquid waste generation, treatment,
storage, disposal or transportation; (c) exposure to hazardous or toxic
substances; (d) the safety or health of employees; or (e) regulation of the
manufacture, processing, distribution in commerce, use or storage of
hydrocarbons or chemical substances.

 

9

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  3.15 Permits and Licenses. The Company and its subsidiaries have all licenses,
permits and other authorizations necessary for the conduct of their respective
businesses as they are currently being conducted, except where the failure to
hold any such licenses, permits or authorizations would not have a Material
Adverse Effect.

 

  3.16 Insurance. The Company and its subsidiaries maintain insurance policies
(together with all riders and amendments) relating to the assets or the
businesses of the Company and its subsidiaries with coverage limits in amounts
that the Company believes are customary in the industry. Such insurance policies
are in full force and effect and all premiums due thereon have been paid or
accrued on the books of the Company.

 

  3.17 Taxes. Each of the Company and its Subsidiaries (a) has made or filed all
foreign, federal, state and local income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes), (b) has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except immaterial items being contested in
good faith and for which the Company has made appropriate reserves on its books,
and (c) has set aside on its books provisions reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations (referred to in clause (i) above) apply. The
charges, accruals and reserves on the books of the Company in respect of taxes
for all prior fiscal periods are considered adequate by the Company, the Company
knows of no assessment for additional taxes for any of such fiscal years or any
basis therefor and there are no unpaid taxes in any material amount claimed in
writing to be due by the taxing authority of any jurisdiction, and to the
Company’s knowledge, there is no basis for any such claim. All tax returns and
reports that have been filed by the Company and its subsidiaries are complete in
all material respects. To the knowledge of the Company, no claim has been made
that the Company or any of its subsidiaries is subject to a tax in any
jurisdiction in which the Company or any of its subsidiaries has not filed a
return and that remains unpaid as of the date hereof. The Company and its
subsidiaries have withheld and paid all material amounts of taxes required to
have been withheld and paid in connection with amounts previously paid to any
employee, independent contractor, creditor, stockholder or other third party.
Neither the Company nor any of its subsidiaries has been the subject of an audit
and neither the Company not any of its subsidiaries has waived any statute of
limitations or agreed to an extension of time with respect to a tax assessment
or deficiency.

 

  3.18 Absence of Certain Developments. Since December 31, 2005, there has been
no change in the business or operations of the Company or any of its
subsidiaries that would have a Material Adverse Effect, except changes in the
ordinary course of business and changes disclosed in the Reports; and, except as
set forth in Schedule 3.18, the Company has not, directly or indirectly,
declared or paid any

 

10

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     dividend or ordered or made any other distribution on account of any shares
of any class of the capital stock of the Company. The Company has not, since
such date, directly or indirectly redeemed, purchased or otherwise acquired any
such shares or agreed to do so or set aside any sum or property for any such
purpose.

 

  3.19 Fees. Except for the fees described in Schedule 3.19, which would be paid
by the Sellers, there are no contracts, agreements or understandings between the
Company and any person that would give rise to a valid claim against the Company
or the Purchaser for investment banking fees, brokerage commission, finder’s fee
or other like payment in connection with the transactions contemplated by this
Agreement and the Related Agreements.

 

  3.20 Investment Company. The Company is not, and after giving effect to the
offering and sale of the Company Shares and the application of proceeds thereof,
will not be an “investment company” as defined in the Investment Company Act of
1940.

 

  3.21 Forward Looking Statements. The statistical and market-related data and
forward looking statements included in the Reports are based on or derived from
sources the Company believes to be reliable and accurate in all material
respects and represents the Company’s good faith estimates that are made on the
basis of data derived from such sources.

 

  3.22 Disclosure Controls. The Company has established and maintains disclosure
controls and procedures (as such term is defined in Rule 13a-15 under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”); such
disclosure controls and procedures are designed to ensure that material
information relating to the Company and its subsidiaries is made known to the
chief executive officer and chief financial officer of the Company by others
within the Company or any subsidiary, and such disclosure controls and
procedures are reasonably effective to perform the functions for which they were
established subject to the limitations of any such control system. The Company’s
auditors and the board of directors of the Company (in the absence of an audit
committee) have been advised of: (a) any significant deficiencies in the design
or operation of internal controls which could adversely affect the Company’s
ability to record, process, summarize and report financial data; and (b) any
fraud, whether or not material, that involves management or other employees who
have a role in the Company’s internal controls. Any material weaknesses in
internal controls have been identified for the Company’s auditors. The Company
and its subsidiaries are in material compliance with any provisions of the
Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations thereunder
to the extent applicable to the Company as of the date of this Agreement.
However, the Company has not been required, and has not, completed any review of
its internal control over financial reporting pursuant to Section 404 of the
Sarbanes-Oxley Act of 2002, as amended.

 

  3.23 Affiliate Transactions. There are no transactions affecting the business
of the Company or any of the Company’s subsidiaries or their respective assets
between

 

11

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     the Company or any subsidiary of the Company, and any officer, director or
other affiliates of the Company or any affiliates of any officer or director,
except as set forth in the Reports. As used in this Agreement, “affiliate”
means, with respect to any person, each other person that directly or indirectly
(through one or more intermediaries or otherwise) controls, is controlled by, or
is under common control with such person.

 

  3.24 Exempt Offering. Subject to the accuracy of the representations and
warranties of the Purchaser set forth in Section 5, the offer, sale and issuance
of the Shares pursuant to this Agreement are exempt from the registration and
prospectus delivery requirements of the Securities Act by virtue of Regulation D
thereunder and any applicable state securities laws.

 

  3.25 Disclosure. No representation or warranty of the Company set forth in
this Agreement contains, or will contain as of the Effective Time, any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein not misleading.

 

  3.26 Acknowledgement. The Company acknowledges and agrees that the Purchaser
is acting solely in the capacity of an arm’s length purchaser with respect to
the Company in connection with this Agreement and the Related Agreements and the
transactions contemplated hereby and thereby. The Company further represents to
the Purchaser that the Company’s decision to enter into this Agreement and the
Related Agreements has been based solely on the independent evaluation by the
Company and its representatives of all of the terms and conditions of the
transactions contemplated thereby.

4. Representation and Warranties of the Selling Stockholders. As an inducement
to the Purchaser to enter into this Agreement each Selling Stockholder
represents and warrants to the Purchaser as to such Selling Stockholder that:

 

  4.1 Ownership of SH Shares. Such Selling Stockholder will have on the Closing
Date good and marketable title to such Selling Stockholder’s SH Shares, free and
clear of all liens, encumbrances, charges, equities, proxies, voting trusts,
restrictions, agreements, rights of first refusal and imperfections of title
other than those imposed by the Company’s certificate of incorporation or
bylaws. Such Selling Stockholder is currently the holder of record of the SH
Shares being sold to the Purchaser, and no person or entity other than such
Selling Stockholder has: (a) any beneficial or other interest or right to
ownership or possession of such Selling Stockholder’s SH Shares; or (b) the
right to rescind, revoke, disaffirm, terminate or invalidate this Agreement or
the conveyance of such Selling Stockholder’s SH Shares.

 

  4.2 Certain Interests. Since December 31, 2005, except as disclosed in the
Reports or as set forth on Schedule 3.18, neither such Selling Stockholder nor
any relative or affiliate of such Selling Stockholder, has acquired any interest
in any of the property of the Company or its subsidiaries (except as a
Stockholder) or has entered into any business relationship with the Company or
its subsidiaries (except as an employee, officer or Stockholder).

 

12

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  4.3 Authority. Such Selling Stockholder has taken all necessary action to
authorize the execution, delivery and performance of this Agreement and has
adequate power, authority and legal right to enter into, execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby.
This Agreement is legal, valid and binding with respect to such Selling
Stockholder and is enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors’ rights, by the availability of
injunctive relief or specific performance and by general principles of equity.
On execution, delivery and performance of this Agreement in accordance with its
terms, the Buyer will receive ownership of such Selling Stockholder’s SH Shares
free of all claims, liens, encumbrances, obligations and liabilities of any kind
other than as set forth in the Stockholders’ Agreement. This Agreement has been
duly and validly authorized, executed and delivered by or on behalf such Selling
Stockholder.

 

  4.4 Prior Obligations. Such Selling Stockholder has no contractual obligation
relating to the disposition, by merger or otherwise, of all or any of the equity
securities of the Company except as contained in this Agreement.

 

  4.5 Litigation. There is no action, suit or proceeding pending or threatened
against such Selling Stockholder or such Selling Stockholder’s SH Shares and no
proceeding, investigation, charge, audit or inquiry threatened or pending before
or by any federal, state, municipal or other governmental court, department,
commission, board, bureau, agency or instrumentality which might result in an
adverse effect on such Selling Stockholder’s SH Shares.

 

  4.6 Consents and Approvals. The execution, delivery, performance and
consummation of this Agreement does not and will not: (a) violate, conflict with
or constitute a default or an event that, with notice or lapse of time or both,
would be a default, breach or violation under any term or provision of any
instrument, agreement, contract, commitment, license, promissory note,
conditional sales contract, indenture, mortgage, deed of trust, lease or other
agreement, instrument or arrangement to which such Selling Stockholder is a
party or is bound; (b) violate, conflict or constitute a breach of any statute,
regulation or judicial or administrative order, award, judgment or decree to
which such Selling Stockholder is a party or is bound; or (c) result in the
creation, imposition or continuation of any adverse claim or interest, or any
lien, encumbrance, charge, equity or restriction of any nature whatsoever, on or
affecting such Selling Stockholder’s SH Shares.

 

  4.7 No Breach; Governmental Authorizations. Neither the execution and delivery
of this Agreement nor compliance with the terms and provisions of this Agreement
by such Selling Stockholder will violate any law, statute, rule or regulation of
any governmental authority, or will on the Closing Date conflict with or result
in a breach of any of the terms, conditions or provisions of any judgment,
order,

 

13

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     injunction, decree or ruling of any court or governmental authority to
which such Selling Stockholder is subject or of any material agreement or
instrument to which such Selling Stockholder is a party or by which such Selling
Stockholder or such Selling Stockholder’s SH Shares are bound, or constitute a
material default thereunder, or result in the creation of any material lien,
charge or encumbrance upon any of such Selling Stockholder’s SH Shares or cause
any acceleration of maturity of any material obligation or loan, or give to any
Person any material interest or rights, including rights of termination,
cancellation or first refusal, in or with respect to such Selling Stockholder’s
SH Shares.

 

  4.8 Powers of Attorney. There are no outstanding powers of attorney or proxies
relating to or affecting such Selling Stockholder’s SH Shares.

5. Representations and Warranties of the Purchaser. The Purchaser represents and
warrants to the Company that:

 

  5.1 Organization and Existence. The Purchaser is a corporation duly
incorporated and validly existing and in good standing under the laws of the
State of Oklahoma and has all requisite corporate power to carry on its business
as now conducted and is qualified to do business in those jurisdictions where
its lease of property or the conduct of its business requires such
qualification, except where the failure to so qualify would not have a material
adverse effect on the business, operations, assets, condition (financial or
other) or results of operations of the Purchaser or any of its subsidiaries
taken as a whole (a “Purchaser Material Adverse Effect”).

 

  5.2 No Conflict. The execution and delivery of this Agreement and the Related
Agreements by the Purchaser, and performance by the Purchaser hereunder and
thereunder, including the issuance of the Exchange Shares, will not result in a
violation or breach of any term or provision of or constitute a default or
accelerate the performance required under the Articles of Incorporation or
Bylaws of the Purchaser or any material indenture, mortgage, deed of trust or
other contract or agreement to which the Purchaser is a party or by which its
assets are bound, or violate any order, writ, injunction or decree of any court,
administrative agency or governmental body.

 

  5.3 Authority; Enforceability. The Purchaser has full right, power and
authority to execute and deliver this Agreement and the Related Agreements and
to consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the Related Agreements and the consummation
of the transactions contemplated hereby to be performed by the Purchaser have
been duly and validly authorized by all necessary corporate action on the part
of the Purchaser, and no other corporate proceedings are necessary to authorize
the execution and delivery of this Agreement and the Related Agreements by the
Purchaser or to consummate the transactions contemplated hereby to be performed
by the Purchaser. This Agreement and the Related Agreements will constitute
valid and legally binding obligations of the Purchaser, enforceable in
accordance with their respective terms, except as that enforcement

 

14

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     may be limited by bankruptcy, insolvency, moratorium or similar laws
affecting the enforcement of creditors’ rights, by the availability of
injunctive relief or specific performance and by general principles of equity.

 

  5.4 Consents. The Purchaser is not required to obtain any consent from or
approval of any court, governmental entity or any other person in connection
with the execution, delivery or performance by it of this Agreement or the
Related Agreements and the transactions contemplated hereby, except such filings
as may be required to be made under the HSR Act. The consummation of the
transactions contemplated by this Agreement will not require the approval of any
entity or person in order to prevent the termination of any material right,
privilege, license or agreement of the Purchaser.

 

  5.5 Investment Representations. The Purchaser is an institutional “accredited
investor” within the meaning of Rule 501(a)(3) of Regulation D promulgated by
the Securities and Exchange Commission under the Securities Act with total
assets in excess of $1 billion, and (by virtue of its experience in evaluating
and investing in private placement transactions of securities in companies
similar to the Company) it is capable of evaluating the merits and risks of its
investment in the Company. The Purchaser acknowledges that it has had, or will
have prior to Closing, the opportunity to ask questions of the officers of the
Company. In reaching the conclusion that it desires to acquire the Shares, the
Purchaser has evaluated its financial resources and investment position and the
risks associated with this investment and acknowledges that it is able to bear
the economic risks of this investment. As of the date hereof, the Purchaser
represents, warrants and agrees that it is acquiring the Shares solely for its
own account, for investment, and not with a view to the distribution or resale
thereof. The Purchaser further represents that its present financial condition
is such that it is not under any present necessity or constraint to dispose of
such Shares to satisfy any existing or contemplated debt or undertaking and that
the investment is suitable for the Purchaser upon the basis of the Purchaser’s
other security holdings, financial situation and needs. The Purchaser
acknowledges and understands that it must bear the economic risk of this
investment for an indefinite period of time because the offering of the Shares
has not been registered under the Securities Act and, accordingly, the Shares
must be held indefinitely unless subsequently registered under the Securities
Act and applicable state and other securities laws or unless an exemption from
such registration is available. The Purchaser agrees that any certificates
evidencing the Shares must bear a legend restricting the transfer thereof as set
forth in Section 2.2 and that a notice may be made in the records of the Company
or to its transfer agent restricting the transfer of the Shares in a manner
consistent with the foregoing.

 

  5.6 Purchaser Filings and Reports In connection with the issuance of the
Exchange Shares, the Purchaser hereby represents and warrants to Altoma only
that:

 

     (a) The Purchaser has filed certain reports, schedules, forms, statements
and other documents with the SEC under the Exchange Act as set forth in
Schedule 5.6 (all of the foregoing, including all exhibits included therein and

 

15

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     financial statements and schedules thereto and documents incorporated by
reference therein, being herein referred to as the “Purchaser Filings”). The
Purchaser Filings and the audited consolidated financial statements of the
Purchaser for the fiscal years ending December 31, 2004 and 2005 and the interim
financial statements as of and for the three and six months ending June 30, 2006
contained in the Purchaser Filings on Form 10-K and Form 10-Q (the “Purchaser
Financial Statements”) are available to Altoma on the SEC’s web site at
www.sec.gov. As of their respective dates, the Purchaser Filings complied in all
material respects with the requirements of the laws, rules and regulations
applicable to thereto. None of the Purchaser Filings, at the time they were
filed with the SEC contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. As of their respective dates, the Purchaser Financial
Statements complied as to form in all material respects with applicable
accounting requirements and the published securities laws, rules and regulations
applicable thereto. The Purchaser Financial Statements have been prepared in
accordance with generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial
position of the Purchaser and its subsidiaries as of the dates thereof and the
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit adjustments).
Except as set forth on Schedule 5.6 or in the Purchaser Filings, all of the
financial statements present fairly in all material respects the financial
position and the results of operations of the Purchaser and its subsidiaries as
of the dates and for the periods shown therein, and to the knowledge of the
Purchaser, there has been no Purchaser Material Adverse Effect on the financial
condition of the Purchaser since June 30, 2006. Except as disclosed in the
Purchaser Filings or as set forth on Schedule 5.6, neither the Purchaser nor any
of its subsidiaries has any debt, liability or obligation, contingent or
otherwise, that would have a Purchaser Material Adverse Effect. The accounting
firm that has expressed its opinion with respect to the audited Purchaser
Financial Statements is independent of the Purchaser pursuant to the standards
promulgated by the SEC in Rule 2-01 of Regulation S-X and such firm was
otherwise qualified to render the audit opinion under applicable laws. There is
no transaction, arrangement or other relationship between the Purchaser and an
unconsolidated or other off-balance-sheet entity that is required to be
disclosed by the Purchaser in the Purchaser Filings that has not been so
disclosed.

 

     (b) Since December 31, 2005, there has been no change in the business or
operations of the Purchaser or any of its subsidiaries that would have a
Purchaser Material Adverse Effect, except changes in the ordinary course of
business and changes disclosed in the Purchaser Filings; and, except as
disclosed in the Purchaser Filings prior to the date of this Agreement, the
Purchaser has not, directly or indirectly, declared or paid any dividend or
ordered or made any other distribution on account of any shares of any class of
the capital stock of the

 

16

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     Purchaser. Except in the ordinary course of business, the Purchaser has
not, since the date of the most recent Purchaser Report, directly or indirectly
redeemed, purchased or otherwise acquired any such shares or declared or agreed
to do so or set aside any sum or property for any such purpose.

 

  5.7 Fees. There are no contracts, agreements or understandings between the
Purchaser and any person that would give rise to a valid claim against the
Sellers for investment banking fees, brokerage commission, finder’s fee or other
like payment in connection with the transactions contemplated by this Agreement
and the Related Agreements.

6. Nature and Survival of Representations and Warranties; Indemnity.

 

  6.1 Survival of Representations and Warranties. All covenants, agreements,
representations and warranties made hereunder or pursuant hereto or in
connection with the transactions contemplated hereby shall survive the Closing
for a period of one year after the date of the Closing; provided,
notwithstanding the foregoing, the representations and warranties set forth in
Sections 1.2 (Authorization), 3.4 (Authority; Enforceability), 3.19 (Fees), 4.1
(Ownership of SH Shares), 4.3 (Authority), 5.3 (Authority; Enforceability), 5.5
(Investment Representation) and 5.7 (Fees), shall survive the Closing Date
indefinitely.

 

  6.2 Indemnity by the Company. The Company shall indemnify and hold harmless
the Purchaser and the officers, directors, managers, agents, affiliates and
representatives of the Purchaser (the “Purchaser Indemnitees”) from and against,
and shall reimburse the Purchaser Indemnitees for, any loss, liability, damage
or expense, including reasonable attorneys’ fees and costs of investigation
incurred as a result thereof, that the Purchaser shall incur or suffer
(collectively, the “Purchaser Recoverable Losses”), arising out of or resulting
from (a) any misrepresentation or breach of any representation or warranty
contained in Article 3 hereof on the part of the Company, or (b) any
nonfulfillment or breach of any agreement or covenant under or pursuant to this
Agreement or the Related Agreements on the part of the Company.

 

  6.3 Indemnity by the Selling Stockholders. Each Selling Stockholder shall
indemnify and hold harmless the Purchaser the Purchaser Indemnitees from and
against, and shall reimburse the Purchaser Indemnitees for, any Purchaser
Recoverable Losses, arising out of or resulting from (a) any misrepresentation
or breach of any representation or warranty contained in Article 4 hereof on the
part of such Selling Stockholder, or (b) any nonfulfillment or breach of any
agreement or covenant under or pursuant to this Agreement or the Related
Agreements on the part of such Selling Stockholder.

 

  6.4 Indemnity by the Purchaser. The Purchaser shall indemnify and hold
harmless the Sellers and their respective officers, directors, managers, agents,
affiliates and representatives (the “Seller Indemnitees”) from and against, and
shall reimburse the Seller Indemnitees for, any loss, liability, damage or
expense, including reasonable attorneys’ fees and cost of investigation incurred
as a result thereof,

 

17

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     that the Company shall incur or suffer (collectively, the “Seller
Recoverable Losses”) arising out of or resulting from (a) any misrepresentation
or breach of any representation or warranty contained in Article 5 hereof on the
part of the Purchaser, or (b) any nonfulfillment or breach of any agreement or
covenant under or pursuant to this Agreement or the Related Agreements on the
part of the Purchaser.

 

  6.5 Limitation of Liability.

 

     (a) Notwithstanding any liability that the Company, the Selling
Stockholders or the Purchaser may incur in Sections 6.2, 6.3 and 6.4,
respectively, above: (a) the Company shall not be obligated for a Purchaser
Recoverable Loss unless and until such loss, individually, or in the aggregate,
shall exceed $5,000,000, in which case the Company shall be obligated for all
amounts in excess thereof; (b) no Selling Stockholder shall be obligated for a
Purchaser Recoverable Loss caused by such Selling Stockholder until such loss,
individually, or in the aggregate, shall exceed $5,000,000, in which case such
Selling Stockholder shall be obligated for all amounts in excess thereof; and
(c) the Purchaser shall not be obligated for a Seller Recoverable Loss, unless
and until such loss, individually, or in the aggregate, shall exceed $5,000,000,
in which case the Purchaser shall be obligated for all amounts in excess
thereof; provided, notwithstanding the foregoing, the Purchaser shall be liable
for any and all Seller Recoverable Loss related to its obligation to pay the
cash Purchase Price in full and to deliver all of the Exchange Shares at the
Closing.

 

     (b) NOTWITHSTANDING ANY PROVISION IN ANY OTHER SECTION OF THIS AGREEMENT TO
THE CONTRARY, NO PURCHASER RECOVERABLE LOSS OR SELLER RECOVERABLE LOSS WILL
INCLUDE ANY INDIRECT, CONSEQUENTIAL, EXEMPLARY, PUNITIVE OR TREBLE DAMAGE
(COLLECTIVELY, THE “EXCLUDED DAMAGES”) SUFFERED BY THE PURCHASER INDEMNITEES OR
THE SELLER INDEMNITEES. THE PURCHASER HEREBY RELEASES THE COMPANY, TO THE
FULLEST EXTENT APPLICABLE LAW PERMITS, FROM LIABILITY FOR ALL EXCLUDED DAMAGES,
AND THE COMPANY HEREBY RELEASES THE PURCHASER, TO THE FULLEST EXTENT APPLICABLE
LAW PERMITS, FROM LIABILITY FOR ALL EXCLUDED DAMAGES.

 

  6.6 Exclusive Remedy. The rights to indemnification set forth in this Article
6 shall be the sole and exclusive remedy of the Purchaser Indemnitees against
the Sellers and the Seller Indemnitees against the Purchaser, respectively
(except to the extent that the Purchaser Indemnitees or the Seller Indemnitees
may have any claim against the other party arising out of or based on fraud).

 

18

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7. Conditions Precedent. The obligation of the Purchaser hereunder to purchase
the Shares is subject to the satisfaction or waiver of each of the following
conditions:

 

  7.1 Certain Actions. No preliminary or permanent injunction or other order
will have been issued by any court of competent jurisdiction or any regulatory
body preventing consummation of the transactions contemplated by this Agreement
and no action will have been commenced or threatened against the Company, the
Selling Stockholders or the Purchaser or any of their respective affiliates,
associates, officers or directors seeking to prevent or challenge the
transactions contemplated by this Agreement or seeking damages arising from the
transactions contemplated by this Agreement.

 

  7.2 Representations and Warranties.

 

     (a) All representations and warranties of the Company and the Selling
Stockholders contained herein will be true and correct in all material respects
on and as of the Closing Date as if made on and as of the Closing Date (except
to the extent that a representation specifically speaks to an earlier date, in
which case such representation shall continue to remain true and correct as of
the Closing Date with respect to such earlier date), and the Purchaser will have
received a certificate signed by the Company and each of the Selling
Stockholders to such effect.

 

     (b) All representations and warranties of the Purchaser contained herein
will be true and correct in all material respects on and as of the Closing Date
as if made on and as of the Closing Date (except to the extent that a
representation specifically speaks to an earlier date, in which case such
representation shall continue to remain true and correct as of the Closing Date
with respect to such earlier date), and the Company and the Selling Stockholders
will have received a certificate signed by the Purchaser to such effect.

 

  7.3 Related Agreements. All of the parties thereto shall have executed and
delivered the Related Agreements.

 

  7.4 Material Adverse Change; Purchaser Material Adverse Change.

 

     (a) There shall not have occurred since the date hereof any material
adverse change in the financial condition, results of operations or business of
the Company excluding any change or effect resulting from general economic
conditions, any occurrence or condition affecting the oil and gas industry
generally or any occurrence or condition arising out of the transactions
contemplated by this Agreement or the public announcement thereof.

 

     (b) There shall not have occurred since the date hereof any material
adverse change in the financial condition, results of operations or business of
the Purchaser excluding any change or effect resulting from general economic
conditions, any occurrence or condition affecting the oil and gas industry
generally or any occurrence or condition arising out of the transactions
contemplated by this Agreement or the public announcement thereof.

 

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  7.5 Company Requirements. All statutory, regulatory, listing agency and other
requirements for the valid consummation by the Company of the transactions
contemplated by this Agreement shall have been fulfilled and all authorizations,
consents and approvals of all governmental or other authorities required to be
obtained in order to permit consummation by the Company of the transactions
contemplated by this Agreement shall have been obtained.

 

  7.6 Opinions of Counsel. The Purchaser shall have received opinions of counsel
for the Company and the Sellers as set forth on Exhibit E hereto. Altoma shall
have received opinion of counsel for the Purchaser as set forth on Exhibit F
hereto.

 

  7.7 Delivery of Company Shares and Exchange Shares.

 

     (a) The Company shall have issued and delivered the Company Shares as
directed in writing by the Purchaser and each Selling Stockholder shall have
delivered such Selling Stockholder’s SH Shares along with executed powers
separate from the certificates for such SH Shares.

 

     (b) The Purchaser shall have issued and delivered the Exchange Shares as
directed in writing by Altoma.

 

  7.8 Evidence of Authority; Good Standing.

 

     (a) The Company shall have delivered to the Purchaser a secretary’s
certificate, dated as of the Closing Date attaching certificates of good
standing for the Company as of a recent date and certifying the resolutions of
the board of directors of authorizing the Company to execute deliver and perform
the transactions contemplated by this Agreement and the Related Agreements.

 

     (b) The Purchaser shall have delivered to Altoma a secretary’s certificate,
dated as of the Closing Date attaching certificates of good standing for the
Purchaser as of a recent date and certifying the resolutions of the board of
directors of authorizing the Purchaser to execute deliver and perform the
transactions contemplated by this Agreement and the Related Agreements,
including the issuance of the Exchange Shares.

 

  7.9 HSR Act. Any applicable waiting period under the HSR Act relating to the
transactions contemplated hereby shall have expired or been terminated and all
other statutory requirements for the valid consummation by the Sellers of the
transactions contemplated by this Agreement shall have been fulfilled.

8. Miscellaneous.

 

  8.1 Financial Statements and Other Information. Upon the written request of
the Purchaser, the Company will provide to the Purchaser copies of all financial
statements and other information provided to any governmental authority, lender,
investor, partner, or Stockholder.

 

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  8.2 Expenses. Each Seller and the Purchaser will pay all costs and expenses
(including legal fees) incurred by it in connection with this Agreement and the
transactions contemplated hereby.

 

  8.3 Notices. All notices and other communications provided for or permitted
hereunder must be in writing and will be deemed delivered and received (i) if
personally delivered or if delivered by facsimile or courier service, when
actually received by the party to whom the notice or communication is sent, or
(ii) if deposited with the United States postal service (whether actually
received or not), at the close of business on the third business day next
following the day when placed in the mail, postage prepaid, certified or
registered with return receipt requested, addressed to the appropriate party or
parties at the address of that party set forth or referred to below (or at such
other address as that party may designate by written notice to each other party
in accordance herewith):

 

  (a) if to the Sellers, to:

Chaparral Energy, Inc.

701 Cedar Lake Boulevard

Oklahoma City, Oklahoma 73114

Attention: Mr. Mark Fischer

Fax No.: (405) 478-2906

with a copy (which will not constitute notice for purposes of this Agreement)
to:

Andrews Kurth LLP

600 Travis, Suite 4200

Houston, Texas 77002

Attention: Mr. David C. Buck

Fax No.: (713) 220-4285

Altoma Energy

701 Cedar Lake Boulevard

Oklahoma City, Oklahoma 73114

Attention: Mr. Charles Fischer

Fax No.: (405) 478-2906

with a copy (which will not constitute notice for purposes of this Agreement)
to:

Mock, Schwabe, Waldo, Elder, Reeves & Bryant P.L.L.C. Two

Leadership Square, 14th Floor

211 North Robinson

Oklahoma City, Oklahoma 73102

Attn: Mr. Randall D. Mock

Fax: 405-235-0333

 

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Fischer Investments, L.L.C.

701 Cedar Lake Boulevard

Oklahoma City, Oklahoma 73114

Attn: Mark A. Fischer

Fax No.: (405) 478-2906

 

     with a copy (which will not constitute notice for purposes of this
Agreement) to:

Mock, Schwabe, Waldo, Elder, Reeves & Bryant P.L.L.C. Two

Leadership Square, 14th Floor

211 North Robinson

Oklahoma City, Oklahoma 73102

Attn: Mr. Randall D. Mock

Fax: 405-235-0333

 

  (b) if to the Purchaser, to:

Chesapeake Energy Corporation

6100 North Western Avenue

Oklahoma City, Oklahoma 73118

Attention: Mr. Douglas J. Jacobson

Fax No.: (405) 879-9546

 

     with a copy (which will not constitute notice for purposes of this
Agreement) to:

Commercial Law Group, P.C.

2725 Oklahoma Tower

210 Park Avenue

Oklahoma City, Oklahoma 73102-5643

Attention: Mr. Ray Lees

Fax No.: (405) 232-5553

 

  8.4 Entire Agreement; Amendments. This Agreement, the Related Agreements, the
schedules hereto and thereto and the documents specifically referred to herein
and therein or executed contemporaneously therewith constitute the entire
agreement, understanding, representations and warranties of the parties hereto
related to the subject matter hereof and supercede all prior agreements of the
parties related to the subject matter hereof. This Agreement may be amended only
by an instrument in writing executed by each of the parties hereto.

 

  8.5 Assignment. This Agreement may be assigned at any time by the Purchaser to
a wholly owned subsidiary of the Purchaser without the prior consent of the
Sellers so long as the party to whom this Agreement is assigned (a) is an
“accredited investor” as defined in Rule 501 promulgated under the Securities
Act, (b) would constitute a “Permitted Transferee” of the Purchaser under the
Stockholders’ Agreement, and (c) agrees in writing to be bound by all terms and
conditions contained herein. No other assignment may be made by the Purchaser or
the

 

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     Sellers without the other parties’ prior written consent. Subject to the
provisions of this Section 8.5, this Agreement will inure to the benefit of and
be binding on the successors and assigns of each of the parties hereto.

 

  8.6 No Third Party Rights. Nothing in this Agreement, express or implied, is
intended to confer upon any person, other than the parties hereto and their
respective successors and assigns, any rights or remedies under or by reason of
this Agreement or to constitute such person a third party beneficiary of this
Agreement.

 

  8.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original instrument, but
all of which taken together shall constitute one and the same agreement.

 

  8.8 Headings: Interpretation. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not
limit or affect the meaning or interpretation of this Agreement. Whenever the
context requires, references in this Agreement to the singular number shall
include the plural and vice versa, and words denoting gender shall include the
masculine, feminine and neuter. This Agreement uses the words “herein,”
“hereof,” “hereto” and “hereunder” and words of similar import to refer to this
Agreement as a whole and not to any particular provision of this Agreement. As
used in this Agreement, the word “including” (and, with correlative meaning, the
word “include”) means including without limiting the generality of any
description preceding that word, and the verbs “shall” and “will” are used
interchangeably and have the same meaning.

 

  8.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Oklahoma, without regard to any
principles of conflicts of law thereof that would result in the application of
the laws of any other jurisdiction.

 

  8.10 Arbitration.

 

     (a) The parties shall attempt in good faith to resolve any dispute arising
out of or relating to this Agreement promptly by negotiation between executives
and parties who have authority to settle the controversy and who are at a higher
level of management than the persons with direct responsibility for
administration of this Agreement. Any party may give the other party written
notice of any dispute not resolved in the normal course of business. Within 15
days after delivery of the notice, the receiving party shall submit to the other
party a written response. The notice and response shall include (a) a statement
of that party’s position and a summary of arguments supporting that position,
and (b) the name and title of the executive who will represent that party and of
any other person who will accompany the executive. Within 30 days after delivery
of the initial notice, the executives of each of the parties shall meet at a
mutually acceptable time and place, and thereafter as often as they reasonably
deem necessary, to attempt to resolve the dispute. All reasonable requests for
information made by one party to

 

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     the other will be honored. All negotiations pursuant to this clause are
confidential and shall be treated as compromise and settlement negotiations for
purposes of applicable rules of evidence.

 

     (b) Any dispute arising out of or relating to this Agreement, including the
breach, termination or validity thereof, that has not been resolved by as
provided herein within 45 days after initiation, shall be submitted to binding
arbitration to be conducted in Oklahoma City, Oklahoma, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, except
that there will be one arbitrator selected by Buyer, one arbitrator selected by
the Sellers and a third arbitrator selected by those two arbitrators. The
arbitrators will be instructed and empowered to take reasonable steps to
expedite the arbitration and the arbitrators’ judgment will be final and binding
upon the parties subject solely to challenge on the grounds of fraud or gross
misconduct. Judgment upon any verdict in arbitration may be entered in any court
of competent jurisdiction. Unless otherwise expressly set forth in this
Agreement, the procedures specified in this Section 8.10 will be the sole and
exclusive procedures for the resolution of disputes and controversies between
the parties arising out of or relating to this Agreement. Notwithstanding the
foregoing, a party may seek a preliminary injunction or other provisional
judicial relief if in such party’s judgment such action is necessary to avoid
irreparable damage or to preserve the status quo.

 

     (c) Each party is required to continue to perform its obligations under
this Agreement pending final resolution of any dispute arising out of or
relating to this Agreement, unless to do so would be impossible or impractical.

 

  8.11 Attorney Fees. Without limiting the arbitrators’ right to award costs
and/or attorneys’ fees pursuant to Section 8.10 hereof, if any action at law or
in equity is brought to secure injunctive relief, enforce an arbitration award
or, subject to Section 8.10 hereof, enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees,
costs and necessary disbursements in addition to any other relief to which it
may be entitled.

 

  8.12 Severability. In case any one or more of the provisions contained in this
Agreement or any application thereof shall be invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions contained herein and other applications thereof shall not in any way
be affected or impaired thereby.

 

  8.13 JOINT ACKNOWLEDGMENT. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, this Agreement has been duly executed by the Company and by
the Purchaser by their respective officers duly authorized effective as of the
date first above written.

 

THE COMPANY: CHAPARRAL ENERGY, INC., a Delaware corporation By:  

/s/    Mark A. Fischer

  Mark A. Fischer, President and CEO THE SELLING STOCKHOLDERS: ALTOMA ENERGY, an
Oklahoma general partnership By:  

/s/    Charles A. Fischer, Jr.

  Charles A. Fischer, Jr., Managing General Partner

FISCHER INVESTMENTS, LLC, an

Oklahoma limited liability company

By:  

/s/    Mark A. Fischer

  Mark A. Fischer, Manager THE PURCHASER: CHESAPEAKE ENERGY CORPORATION, an
Oklahoma corporation By:  

/s/    Aubrey K. McClendon

  Aubrey K. McClendon, Chief Executive Officer

 

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