Exhibit 10.1

CHAPARRAL ENERGY, INC.

MANAGEMENT INCENTIVE PLAN

ARTICLE I. ESTABLISHMENT AND PURPOSE

1.1 Establishment. Chaparral Energy, Inc., a Delaware corporation (“Chaparral”),
hereby establishes the Chaparral Energy, Inc. Management Incentive Plan for the
benefit of certain officers, directors, and employees of Chaparral and its
Affiliates, as set forth in this Plan.

1.2 Purpose. The purposes of this Plan are to attract and retain highly
qualified individuals to perform services for Chaparral and its Affiliates, to
further align the interests of those individuals with those of the stockholders
of Chaparral, and to more closely link compensation with the performance of
Chaparral and its Affiliates. Chaparral is committed to creating long-term
stockholder value. Chaparral’s compensation philosophy is based on the belief
that Chaparral can best create stockholder value if employees, officers, and
directors of Chaparral and its Affiliates act and are rewarded as business
owners. Chaparral believes that an equity stake through equity compensation
programs effectively aligns service provider and stockholder interests by
motivating and rewarding performance that will enhance stockholder value.

1.3 Effectiveness and Term. This Plan shall become effective on the date of its
adoption by the Board (the “Effective Date”). Unless terminated earlier by the
Board pursuant to Section 14.1, this Plan shall terminate on the tenth
anniversary of the Effective Date.

ARTICLE II. DEFINITIONS

2.1 “Affiliate” means (a) with respect to Incentive Stock Options, a “parent
corporation” or “subsidiary corporation” (as those terms are defined in
Section 424 of the Code) of Chaparral, (b) with respect to Nonqualified Stock
Options and SARs, an organization that is aggregated and treated as a single
employer with Chaparral under Section 414(b) of the Code (controlled group of
corporations) or Section 414(c) of the Code (group of trades or businesses under
common control), as applicable, but using an “at least 50 percent” rather than
an “at least 80 percent” control level and (c) with respect to other Awards, any
corporation, partnership, limited liability company, association, trust or other
organization which, directly or indirectly, controls, is controlled by, or is
under common control with, Chaparral. For purposes of the preceding sentence,
“control” (including, with correlative meanings, the terms “controlled by” and
“under common control with”), as used with respect to any entity or
organization, shall mean the possession, directly or indirectly, of the power
(i) to vote more than 50% of the securities having ordinary voting power for the
election of directors of the controlled entity or organization, or (ii) to
direct or cause the direction of the management and policies of the controlled
entity or organization, whether through the ownership of voting securities or by
contract or otherwise.

2.2 “Award” means an award granted to a Participant in the form of Options,
SARs, Restricted Stock, Restricted Stock Units, Performance Awards, Stock Awards
or Other Incentive Awards, whether granted singly or in combination.

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2.3 “Award Agreement” means a written agreement between Chaparral and a
Participant that sets forth the terms, conditions, restrictions and limitations
applicable to an Award.

2.4 “Board” means the Board of Directors of Chaparral.

2.5 “Cash Dividend Right” means a contingent right, granted in tandem with a
specific Restricted Stock Unit Award, to receive an amount in cash equal to the
cash distributions made by Chaparral with respect to a share of Common Stock
during the period such Award is outstanding.

2.6 “Cause” means, unless otherwise defined in an Employee Agreement entered
into by the Participant, any of the following: (a) a Participant’s conviction
of, or plea of nolo contendere to, any felony or to any crime or offense causing
substantial harm to the Company or involving acts of theft, fraud, embezzlement,
moral turpitude or similar conduct; (b) a Participant’s repeated intoxication by
alcohol or drugs during the performance of his duties in a manner that
materially and adversely affects the Participant’s performance of such duties;
(c) malfeasance in the conduct of the Participant’s duties, including, but not
limited to (i) willful and intentional misuse or diversion of funds or assets of
the Company, (ii) embezzlement or (iii) fraudulent or willful and material
misrepresentations or concealments on any written reports submitted to the
Company; (d) a Participant’s material violation of any provision of any
employment, nonsolicitation, noncompetition or other agreement with, or policy
of, the Company; or (e) a Participant’s material failure to perform the duties
of the Participant’s employment or material failure to follow or comply with the
reasonable and lawful written directives of the Board or senior officers of
Chaparral, in any case under clause (d) or (e) only after the Participant shall
have been informed in writing of such material failure and given a period of not
more than 30 days to remedy same.

2.7 “Change in Control” means the occurrence of a “change in the ownership” of
Chaparral, as determined in accordance with this definition. For an event to
constitute a Change in Control that is a “change in the ownership” of Chaparral
with respect to a Participant, Chaparral must be (a) the entity for whom the
Participant is providing services at the time of the Change in Control; (b) the
entity that is liable for payment in respect of an Award but only if either the
payment is attributable to the performance of service by the Participant for the
entity or there is a bona fide business purpose for the entity to be liable for
the payment and, in either case, no significant purpose of making the entity
liable for the payment is the avoidance of Federal income tax; or (c) an entity
that is a majority equityholder, meaning an equityholder owning more than 50% of
the total fair market value and total voting power, of an entity identified in
(a) or (b) or any entity in a chain of entities in which each entity is a
majority equityholder of another entity in the chain, ending in an entity
identified in (a) or (b). A “change in the ownership” of Chaparral will occur on
the date on which any one person, or more than one person acting as a group,
acquires ownership of stock of Chaparral that, together with stock held by such
person or group, constitutes more than 50% of the total fair market value or
total voting power of the stock of Chaparral, as determined in accordance with
Treasury Regulation § 1.409A-3(i)(5)(v). If a person or group is considered
either to own more than 50% of the total fair market value or total voting power
of the stock of Chaparral, or to have effective control of Chaparral within the
meaning of subparagraph (ii) of this definition, and such person or group
acquires additional stock of Chaparral, the acquisition of additional stock by
such person or group shall not be considered to cause a “change in the
ownership” of Chaparral.

 

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2.8 “Chaparral” means Chaparral Energy, Inc., a Delaware corporation, or any
successor thereto.

2.9 “Code” means the Internal Revenue Code of 1986, as amended from time to
time, including regulations thereunder and successor provisions and regulations.

2.10 “Committee” means the Compensation Committee of the Board or such other
committee of the Board as may be designated by the Board to administer the Plan,
which committee shall consist of two or more members of the Board. To the extent
that no Committee exists that has the authority to administer this Plan, the
functions of the Committee shall be exercised by the Board. If possible based on
the composition of the Board, during such time as the Common Stock is registered
under Section 12 of the Exchange Act, each member of the Committee shall be an
Outside Director; provided, however, that with respect to the application of the
Plan to Awards made to Outside Directors, the “Committee” shall be the Board. If
for any reason the appointed Committee does not meet the requirements of Rule
16b-3 or Section 162(m) of the Code (to the extent applicable), such
noncompliance with such requirements shall not affect the validity of Awards,
grants, interpretations or other actions of the Committee.

2.11 “Common Stock” means the Class A common stock of Chaparral, par value $0.01
per share, or any stock or other securities hereafter issued or issuable in
substitution or exchange for the Class A common stock.

2.12 “Company” means Chaparral or any Affiliate.

2.13 “Disability” means (a) the Participant is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months or (b) if the Company
has an accident or health plan covering its employees, the Participant is, by
reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months, receiving income replacement benefits for a period
of not less than three months under an accident or health plan covering
employees of the Company; provided, however, that with respect to Options and
SARs that are not subject to Section 409A, “Disability” shall mean disabled
within the meaning of Code Section 22(e)(3).

2.14 “Dividend Unit Right” means a contingent right, granted in tandem with a
specific Restricted Stock Unit Award, to have an additional number of Restricted
Stock Units credited to a Participant in respect of the Award equal to the
number of shares of Common Stock that could be purchased at Fair Market Value
with the amount of each cash distribution made by Chaparral with respect to a
share of Common Stock during the period such Award is outstanding.

2.15 “Effective Date” means the date this Plan becomes effective as provided in
Section 1.3.

 

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2.16 “Employee” means an employee of the Company; provided, however, that the
term “Employee” does not include an Outside Director or an individual performing
services for the Company who is treated for federal tax purposes as an
independent contractor at the time of performance of services.

2.17 “Employee Agreement” means any agreement between the Company and an
Employee containing one or more of the following agreements or covenants by the
Employee: (i) an employment agreement, (ii) an agreement by the Employee to keep
confidential certain information, (iii) an agreement or covenant to refrain from
competing with the Company, (iv) an agreement or covenant to refrain from
soliciting employees, contractors, customers, vendors or suppliers of the
Company, (v) an agreement to disclose and assign to the Company certain
intellectual property, including without limitation, ideas, inventions,
discoveries, processes, designs, methods, substances, articles, computer
programs, and improvements, or (vi) an agreement under which the Company agrees
to indemnify an Employee for an alleged action or inaction by the Employee
during the performance of his or her duties to the Company.

2.18 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

2.19 “Fair Market Value” means (a) if the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation OTC Markets Group, Nasdaq Global Select Market, Nasdaq Global Market,
Nasdaq Capital Market, NYSE MKT LLC and the New York Stock Exchange, the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or system for the date of the determination (or if there
was no quoted price for such date, then for the last preceding business day on
which there was a quoted price), as reported in The Wall Street Journal or such
other source as the Committee deems reliable; (b) if the Common Stock is
regularly quoted by a recognized securities dealer but selling prices are not
reported, the mean between the high bid and low asked prices for the Common
Stock for the date of the determination, as reported in The Wall Street Journal
or such other source as the Committee deems reliable; or (c) if the Common Stock
is not reported or quoted by any such organization, (i) with respect to
Incentive Stock Options, the fair market value of the Common Stock as determined
in good faith by the Committee within the meaning of Section 422 of the Code or
(ii) with respect to other Awards, the fair market value of the Common Stock as
determined in good faith by the Committee using a “reasonable application of a
reasonable valuation method” within the meaning of Treasury Regulation §
1.409A-1(b)(5)(iv)(B).

2.20 “Grant Date” means the date an Award is determined to be effective by the
Committee upon the grant of such Award.

2.21 “Incentive Stock Option” means an Option that is intended to meet the
requirements of Section 422(b) of the Code.

2.22 “Nonqualified Stock Option” means an Option that is not an Incentive Stock
Option.

 

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2.23 “Option” means an option to purchase shares of Common Stock granted to a
Participant pursuant to Article VII. An Option may be either an Incentive Stock
Option or a Nonqualified Stock Option, as determined by the Committee.

2.24 “Other Incentive Award” means an incentive award granted to a Participant
pursuant to Article XII.

2.25 “Outside Director” means a member of the Board who (a) meets the
independence requirements of the principal exchange or quotation system upon
which the shares of Common Stock are listed or quoted, (b) from and after the
date on which the remuneration paid pursuant to the Plan becomes subject to the
deduction limitation under Section 162(m) of the Code, qualifies as an “outside
director” under Section 162(m) of the Code, (c) qualifies as a “non-employee
director” of Chaparral under Rule 16b-3, and (d) satisfies independence criteria
under any other applicable laws or regulations relating to the issuance of
shares of Common Stock to Employees.

2.26 “Participant” means an Employee or director (including an Outside
Director), of the Company that has been granted an Award; provided, however,
that no Award that may be settled in Common Stock may be issued to a Participant
that is not a natural person.

2.27 “Performance Award” means an Award granted to a Participant pursuant to
Article XI to receive cash or Common Stock conditioned in whole or in part upon
the satisfaction of specified performance criteria.

2.28 “Permitted Transferee” shall have the meaning given such term in
Section 15.4(c).

2.29 “Plan” means the Chaparral Energy, Inc. Management Incentive Plan, as in
effect from time to time.

2.30 “Restricted Period” means the period established by the Committee with
respect to an Award of Restricted Stock or Restricted Stock Units during which
the Award remains subject to forfeiture.

2.31 “Restricted Stock” means a share of Common Stock granted to a Participant
pursuant to Article IX that is subject to such terms, conditions and
restrictions as may be determined by the Committee.

2.32 “Restricted Stock Unit” means a fictional share of Common Stock granted to
a Participant pursuant to Article X that is subject to such terms, conditions
and restrictions as may be determined by the Committee.

2.33 “Rule 16b-3” means Rule 16b-3 promulgated by the SEC under the Exchange
Act, or any successor rule or regulation that may be in effect from time to
time.

2.34 “SEC” means the United States Securities and Exchange Commission, or any
successor agency or organization.

 

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2.35 “Section 409A” means Section 409A of the Code and/or the Treasury
Regulations issued thereunder.

2.36 “Securities Act” means the Securities Act of 1933, as amended.

2.37 “Stock Appreciation Right” or “SAR” means a right granted to a Participant
pursuant to Article VIII with respect to a share of Common Stock to receive upon
exercise cash, Common Stock or a combination of cash and Common Stock, equal to
the appreciation in value of a share of Common Stock.

2.38 “Stock Award” means a share of Common Stock granted to a Participant
pursuant to Article XII that is not subject to vesting or forfeiture
restrictions.

ARTICLE III. PLAN ADMINISTRATION

3.1 Plan Administrator and Discretionary Authority. This Plan shall be
administered by the Committee. The Committee shall have total and exclusive
responsibility to control, operate, manage and administer this Plan in
accordance with its terms. The Committee shall have all the authority that may
be necessary or helpful to enable it to discharge its responsibilities with
respect to this Plan. Without limiting the generality of the preceding sentence,
the Committee shall have the exclusive right to (a) interpret this Plan and the
Award Agreements executed hereunder, (b) decide all questions concerning
eligibility for, and the amount of, Awards granted under this Plan, (c) construe
any ambiguous provision of this Plan or any Award Agreement, (d) prescribe the
form of Award Agreements, (e) correct any defect, supply any omission or
reconcile any inconsistency in this Plan or any Award Agreement, (f) issue
administrative guidelines as an aid in administering this Plan and make changes
in such guidelines as the Committee from time to time deems proper, (g) make
regulations for carrying out this Plan and make changes in such regulations as
the Committee from time to time deems proper, (h) determine whether Awards
should be granted singly or in combination, (i) to the extent permitted under
this Plan, grant waivers of Plan terms, conditions, restrictions and
limitations, (j) accelerate the exercise, vesting or payment of an Award,
(k) require Participants to hold a stated number or percentage of shares of
Common Stock acquired pursuant to an Award for a stated period, and (l) take any
and all other actions the Committee deems necessary or advisable for the proper
operation or administration of this Plan. The Committee shall have authority in
its sole discretion with respect to all matters related to the discharge of its
responsibilities and the exercise of its authority under this Plan, including
without limitation its construction of the terms of this Plan and its
determination of eligibility for participation in, and the terms of Awards
granted under, this Plan. The decisions of the Committee and its actions with
respect to this Plan shall be final, conclusive and binding on all persons
having or claiming to have any right or interest in or under this Plan,
including without limitation Participants and their respective Permitted
Transferees, estates, beneficiaries and legal representatives. In the case of an
Award intended to be eligible for the performance-based compensation exemption
under Section 162(m) of the Code, the Committee shall exercise its discretion
consistent with qualifying the Award for such exemption. In the case of an Award
intended to be exempt from or compliant with Section 409A, the Committee shall
exercise its discretion consistent with such intent.

 

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3.2 Liability; Indemnification. The Committee and each member thereof shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him or her by any officer or employee of Chaparral or any of its
subsidiaries, Chaparral’s legal counsel, independent auditors, consultants or
any other agents assisting in the administration of this Plan or grant of Awards
hereunder. Members of the Committee and any officer or employee of Chaparral or
any of its subsidiaries acting at the direction or on behalf of the Committee
shall not be personally liable for any action or determination taken or made in
good faith with respect to this Plan, and shall, to the fullest extent permitted
by law, be indemnified and held harmless by Chaparral with respect to any such
action or determination.

ARTICLE IV. SHARES SUBJECT TO THE PLAN

4.1 Available Shares.

(a) Subject to adjustment as provided in Section 4.2, the maximum number of
shares of Common Stock that shall be available for grant of Awards under this
Plan shall be 3,388,832 shares of Common Stock.

(b) The maximum aggregate number of shares of Common Stock that may be issued
pursuant to Incentive Stock Options is 3,388,832 shares. The maximum number of
shares of Common Stock that may be subject to Nonqualified Stock Options and
SARs granted under the Plan to any one Participant during a fiscal year is
3,388,832 shares. The maximum number of shares of Common Stock that may be
subject to Awards (other than Incentive Stock Options, Nonqualified Stock
Options and SARs) granted under the Plan to any one Participant during a fiscal
year is 3,388,832 shares. The limitations provided in this Section 4.1(b) shall
be subject to adjustment as provided in Section 4.2.

(c) If at any time Chaparral is not subject to the reporting requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, to comply with Rule
701 promulgated under the Securities Act, (i) the maximum number of shares of
Common Stock that shall be available for grant of Awards under this Plan during
any consecutive 12-month period shall be the greatest of (A) a number of shares
having an aggregate sales price of $1,000,000, (B) a number of shares having an
aggregate sales price equal to fifteen percent of Chaparral’s total assets,
measured on the date of Chaparral’s most recent balance sheet, or (C) a number
of shares equal to fifteen percent of Chaparral’s outstanding Common Stock,
measured on the date of the Chaparral’s most recent balance sheet, and (ii) if
the number of shares sold during any consecutive 12-month period has an
aggregate sales price exceeding $5,000,000, Chaparral will also provide each
Participant with a summary of the material terms of this Plan, information about
the risks associated with the shares, and financial statements for Chaparral,
all as required by Rule 701.

(d) Shares of Common Stock issued pursuant to this Plan may be original issue or
treasury shares or any combination of the foregoing, as the Committee, in its
sole discretion, shall from time to time determine. During the term of this
Plan, Chaparral will at all times reserve and keep available such number of
shares of Common Stock as shall be sufficient to satisfy the requirements of
this Plan. If, after reasonable efforts,

 

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which efforts shall not include registration of the Plan or Awards under the
Securities Act, Chaparral is unable to obtain authority from any applicable
regulatory body, which authorization is deemed necessary by legal counsel for
Chaparral for the lawful issuance of shares under the Plan, Chaparral shall be
relieved of any liability with respect to its failure to issue and sell the
shares for which such requisite authority was so deemed necessary unless and
until such authority is obtained.

(e) Notwithstanding any provision of this Plan to the contrary, the Board or the
Committee shall have the right to substitute or assume awards in connection with
mergers, reorganizations, separations or other transactions to which
Section 424(a) of the Code applies, provided such substitutions or assumptions
are permitted by Section 424 of the Code (or, if applicable, Section 409A) and
the regulations promulgated thereunder.

4.2 Adjustments for Recapitalizations and Reorganizations. Subject to Article
XIII, if there is any change in the number or kind of shares of Common Stock
outstanding (a) by reason of a stock dividend, spin-off, recapitalization, stock
issuance, stock split or combination or exchange of shares, (b) by reason of a
merger, reorganization or consolidation, (c) by reason of a reclassification or
change in par value or (d) by reason of any other extraordinary or unusual event
affecting the outstanding Common Stock as a class without Chaparral’s receipt of
consideration, or if the value of outstanding shares of Common Stock is reduced
as a result of a spin-off or Chaparral’s payment of an extraordinary cash
dividend, or distribution, or dividend or distribution consisting of any assets
of Chaparral other than cash, the maximum number and kind of shares of Common
Stock available for issuance under this Plan, the maximum number and kind of
shares of Common Stock for which any individual may receive Awards in any fiscal
year or under this Plan, the number and kind of shares of Common Stock covered
by outstanding Awards, and the price per share or the applicable market value or
performance target of such Awards shall be appropriately adjusted by the
Committee to reflect any increase or decrease in the number of, or change in the
kind or value of, issued shares of Common Stock to preclude, to the extent
practicable, the enlargement or dilution of rights under such Awards; provided,
however, that any fractional shares resulting from such adjustment shall be
eliminated. Notwithstanding the provisions of this Section 4.2, (i) the number
and kind of shares of Common Stock available for issuance as Incentive Stock
Options under this Plan shall be adjusted only in accordance with Sections 422
and 424 of the Code and the regulations thereunder, and (ii) outstanding Awards
and Award Agreements shall be adjusted in accordance with (A) Sections 422 and
424 of the Code and the regulations thereunder with respect to Incentive Stock
Options and (B) Section 409A with respect to Nonqualified Stock Options, SARs
and, to the extent applicable, other Awards.

4.3 Adjustments for Awards. The Committee shall have sole discretion to
determine the manner in which shares of Common Stock available for grant of
Awards under this Plan are counted. Without limiting the discretion of the
Committee under this Section 4.3, unless otherwise determined by the Committee,
the following rules shall apply for the purpose of determining the number of
shares of Common Stock available for grant of Awards under this Plan:

(a) Options, Restricted Stock and Stock Awards. The grant of Options, Restricted
Stock or Stock Awards shall reduce the number of shares of Common Stock
available for grant of Awards under this Plan by the number of shares of Common
Stock subject to such an Award.

 

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(b) SARs. The grant of SARs that may be paid or settled (i) only in Common Stock
or (ii) in either cash or Common Stock shall reduce the number of shares
available for grant of Awards under this Plan by the number of shares subject to
such an Award; provided, however, that upon the exercise of SARs, the excess of
the number of shares of Common Stock with respect to which the Award is
exercised over the number of shares of Common Stock issued upon exercise of the
Award shall again be available for grant of Awards under this Plan. The grant of
SARs that may be paid or settled only for cash shall not affect the number of
shares available for grant of Awards under this Plan.

(c) Restricted Stock Units. The grant of Restricted Stock Units (including those
credited to a Participant in respect of a Dividend Unit Right) that may be paid
or settled (i) only in Common Stock or (ii) in either cash or Common Stock shall
reduce the number of shares available for grant of Awards under this Plan by the
number of shares subject to such an Award; provided, however, that upon
settlement of the Award, the excess, if any, of the number of shares of Common
Stock that had been subject to such Award over the number of shares of Common
Stock issued upon its settlement shall again be available for grant of Awards
under this Plan. The grant of Restricted Stock Units that may be paid or settled
only for cash shall not affect the number of shares available for grant of
Awards under this Plan.

(d) Performance Awards and Other Incentive Awards. The grant of a Performance
Award or Other Incentive Award in the form of Common Stock or that may be paid
or settled (i) only in Common Stock or (ii) in either Common Stock or cash shall
reduce the number of shares available for grant of Awards under this Plan by the
number of shares subject to such an Award; provided, however, that upon
settlement of the Award, the excess, if any, of the number of shares of Common
Stock that had been subject to such Award over the number of shares of Common
Stock issued upon its settlement shall again be available for grant of Awards
under this Plan. The grant of a Performance Award or Other Incentive Award that
may be paid or settled only for cash shall not affect the number of shares
available for grant of Awards under this Plan.

(e) Cancellation, Forfeiture and Termination. If any Award referred to in
Sections 4.3(a), (b), (c) or (d) (other than an Award that may be paid or
settled only for cash) is canceled or forfeited, or terminates, expires or
lapses, for any reason, the shares then subject to such Award shall again be
available for grant of any Awards under this Plan.

(f) Payment of Exercise Price and Withholding Taxes. If shares of Common Stock
are used to pay the exercise price of an Award, the number of shares available
for grant of Awards under this Plan shall be increased by the number of shares
delivered as payment of such exercise price. If shares of Common Stock are used
to pay withholding taxes payable upon exercise, vesting or payment of an Award,
or shares of Common Stock that would be acquired upon exercise, vesting or
payment of an Award are withheld to pay withholding taxes payable upon exercise,
vesting or payment of such Award, the number of shares available for grant of
Awards under this Plan shall be increased by the number of shares delivered or
withheld as payment of such withholding taxes.

 

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ARTICLE V. ELIGIBILITY

The Committee shall select Participants from those Employees and directors
(including Outside Directors) of the Company that, in the opinion of the
Committee, are in a position to make a significant contribution to the success
of the Company. Once a Participant has been selected for an Award by the
Committee, the Committee shall determine the type and size of Award to be
granted to the Participant and shall establish in the related Award Agreement
the terms, conditions, restrictions and limitations applicable to the Award, in
addition to those set forth in this Plan and the administrative guidelines and
regulations, if any, established by the Committee.

ARTICLE VI. FORM OF AWARDS

6.1 Form of Awards. Awards may be granted under this Plan, in the Committee’s
sole discretion, in the form of Options pursuant to Article VII, SARs pursuant
to Article VIII, Restricted Stock pursuant to Article IX, Restricted Stock Units
pursuant to Article X, Performance Awards pursuant to Article XI and Stock
Awards and Other Incentive Awards pursuant to Article XII, or any combination
thereof. All Awards shall be subject to the terms, conditions, restrictions and
limitations of this Plan. The Committee may, in its sole discretion, subject any
Award to such other terms, conditions, restrictions and/or limitations
(including without limitation the time and conditions of exercise, vesting or
payment of an Award and restrictions on transferability of any shares of Common
Stock issued or delivered pursuant to an Award), provided they are not
inconsistent with the terms of this Plan. The Committee may, but is not required
to, subject an Award to such conditions as it determines are necessary or
appropriate to ensure that an Award constitutes “qualified performance based
compensation” within the meaning of Section 162(m) of the Code and the
regulations thereunder. Awards under a particular Article of this Plan need not
be uniform, and Awards under more than one Article of this Plan may be combined
in a single Award Agreement. Any combination of Awards may be granted at one
time and on more than one occasion to the same Participant. Subject to
compliance with applicable tax law (including Section 409A), an Award Agreement
may provide that a Participant may elect to defer receipt of income attributable
to the exercise or vesting of an Award.

6.2 Loans. The Committee may, in its sole discretion, approve the extension of a
loan by the Company to a Participant who is an Employee to assist the
Participant in paying the exercise price or purchase price of an Award;
provided, however, that no loan shall be made to any officer of the Company or
to any other person if the extension of such loan would violate any provision of
applicable law (including, without limitation, the Sarbanes-Oxley Act of 2002).
Any loan will be made upon such terms and conditions as the Committee shall
determine.

6.3 No Repricing or Reload Rights. Except for adjustments made pursuant to
Section 4.2, no Award may be repriced, replaced, regranted through cancellation
or otherwise modified without stockholder approval, if the effect would be to
reduce the exercise price for the shares underlying such Award. The Committee
may not cancel an outstanding Option having an exercise price that is known to
be less than the Fair Market Value of the Common Stock for the purpose of
granting a replacement Award of a different type.

 

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ARTICLE VII. OPTIONS

7.1 General. Awards may be granted in the form of Options that may be Incentive
Stock Options or Nonqualified Stock Options, or any combination of both.
Incentive Stock Options may be granted only to Employees. Notwithstanding any
provision of this Plan to the contrary, Incentive Stock Options may not be
granted under this Plan unless and until the Plan satisfies the stockholder
approval requirements of Section 422 of the Code. Subject to Article V,
Nonqualified Stock Options may be granted only to Employees and directors
(including Outside Directors) of Chaparral or a corporation or other type of
entity in a chain of corporations or other entities in which each corporation or
other entity has a “controlling interest” in another corporation or entity in
the chain, starting with Chaparral and ending with the corporation or other
entity for which the Employee or director (including an Outside Director)
performs services. For purposes of this Section 7.1, “controlling interest”
means (a) in the case of a corporation, ownership of stock possessing at least
50% of total combined voting power of all classes of stock entitled to vote of
such corporation or at least 50% of the total value of shares of all classes of
stock of such corporation; (b) in the case of a partnership, ownership of at
least 50% of the profits interest or capital interest of such partnership;
(c) in the case of a sole proprietorship, ownership of the sole proprietorship;
or (d) in the case of a trust or estate, ownership of an actuarial interest (as
defined in Treasury Regulation § 1.414(c)-2(b)(2)(ii)) of at least 50% of such
trust or estate.

7.2 Terms and Conditions of Options. An Option shall be exercisable in whole or
in such installments and at such times as may be determined by the Committee.
The price at which a share of Common Stock may be purchased upon exercise of an
Option shall be determined by the Committee, but such exercise price shall not
be less than 100% of the Fair Market Value per share of Common Stock on the
Grant Date unless, with respect to a Nonqualified Stock Option, (a) the Option
is granted through the assumption of, or in substitution for, outstanding awards
previously granted to individuals who became Employees (or other service
providers) as a result of a merger, consolidation, acquisition or other
corporate transaction involving the Company which complies with Treasury
Regulation § 1.409A-1(b)(5)(v)(D) or (b) the Option is otherwise structured to
be exempt from or compliant with Section 409A. Except as otherwise provided in
Section 7.3, the term of each Option shall be as specified by the Committee;
provided, however, that no Options shall be exercisable later than 10 years
after the Grant Date. Options may be granted with respect to Restricted Stock or
shares of Common Stock that are not Restricted Stock, as determined by the
Committee in its sole discretion.

7.3 Restrictions Relating to Incentive Stock Options.

(a) Options granted in the form of Incentive Stock Options shall, in addition to
being subject to the terms and conditions of Section 7.2, comply with
Section 422(b) of the Code. To the extent the aggregate Fair Market Value
(determined as of the dates the respective Incentive Stock Options are granted)
of Common Stock with respect to

 

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which Incentive Stock Options are exercisable for the first time by an
individual during any calendar year under all incentive stock option plans of
Chaparral and its Affiliates exceeds $100,000, such excess Incentive Stock
Options shall be treated as options that do not constitute Incentive Stock
Options. The Committee shall determine, in accordance with the applicable
provisions of the Code, which of a Participant’s Incentive Stock Options will
not constitute Incentive Stock Options because of such limitation and shall
notify the Participant of such determination as soon as practicable after such
determination. The price at which a share of Common Stock may be purchased upon
exercise of an Incentive Stock Option shall be determined by the Committee, but
such exercise price shall not be less than 100% of the Fair Market Value of a
share of Common Stock on the Grant Date. No Incentive Stock Option shall be
granted to an Employee under this Plan if, at the time such Option is granted,
such Employee owns stock possessing more than 10% of the total combined voting
power of all classes of stock of Chaparral or of its Affiliates unless (i) on
the Grant Date of such Option, the exercise price of such Option is at least
110% of the Fair Market Value of the Common Stock subject to the Option and
(ii) such Option by its terms is not exercisable after the expiration of five
years from the Grant Date of the Option.

(b) Each Participant awarded an Incentive Stock Option shall notify Chaparral in
writing immediately after the date he or she makes a disqualifying disposition
of any shares of Common Stock acquired pursuant to the exercise of such
Incentive Stock Option. A disqualifying disposition is any disposition
(including any sale) of such Common Stock before the later of (i) two years
after the Grant Date of the Incentive Stock Option or (ii) one year after the
date of exercise of the Incentive Stock Option.

7.4 Exercise of Options.

(a) Subject to the terms and conditions of this Plan, Options shall be exercised
by the delivery of a written notice of exercise to Chaparral, setting forth the
number of whole shares of Common Stock with respect to which the Option is to be
exercised, accompanied by full payment for such shares.

(b) Upon exercise of an Option, the exercise price of the Option shall be
payable to Chaparral in full either (i) in cash or an equivalent acceptable to
the Committee, (ii) in the sole discretion of the Committee and in accordance
with any applicable administrative guidelines established by the Committee,
(A) by tendering one or more previously acquired nonforfeitable, unrestricted
shares of Common Stock having an aggregate Fair Market Value at the time of
exercise equal to the total exercise price or (B) by surrendering a sufficient
portion of the shares with respect to which the Option is exercised having an
aggregate Fair Market Value at the time of exercise equal to the total exercise
price or (iii) in a combination of the forms specified in (i) or (ii) of this
subsection.

(c) During such time as the Common Stock is registered under Section 12 of the
Exchange Act, to the extent permissible under applicable law, payment of the
exercise price of an Option may also be made, in the absolute discretion of the
Committee, by delivery to Chaparral or its designated agent of an executed
irrevocable

 

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option exercise form together with irrevocable instructions to a broker-dealer
to sell or margin a sufficient portion of the shares with respect to which the
Option is exercised and deliver the sale or margin loan proceeds directly to
Chaparral to pay the exercise price and any required withholding taxes.

(d) As soon as reasonably practicable after receipt of written notification of
exercise of an Option and full payment of the exercise price and any required
withholding taxes, Chaparral shall (i) deliver to the Participant, in the
Participant’s name or the name of the Participant’s designee, a stock
certificate or certificates in an appropriate aggregate amount based upon the
number of shares of Common Stock purchased under the Option or (ii) cause to be
issued in the Participant’s name or the name of the Participant’s designee, in
book-entry form, an appropriate number of shares of Common Stock based upon the
number of shares purchased under the Option.

7.5 Termination of Employment or Service. Each Award Agreement embodying the
Award of an Option shall set forth the extent to which the Participant shall
have the right to exercise the Option following termination of the Participant’s
employment or service with the Company. Such provisions shall be determined by
the Committee in its absolute discretion, need not be uniform among all Options
granted under this Plan and may reflect distinctions based on the reasons for
termination of employment or service. In the event a Participant’s Award
Agreement embodying the Award of an Option does not set forth such termination
provisions, the following termination provisions shall apply with respect to
such Award:

(a) Termination For Cause. If the employment or service of a Participant shall
terminate for Cause, each outstanding Option held by the Participant shall
automatically terminate as of the date of such termination of employment or
service, and the right to exercise the Option shall immediately terminate.

(b) Termination By Reason of Death or Disability. In the event of a
Participant’s death or Disability while employed by or in the service of
Chaparral or an Affiliate, each outstanding Option shall remain outstanding and
may be exercised by the person who acquires the Option by will or the laws of
descent and distribution, or by the Participant, as the case may be, but only
(i) within the one year period following the date of death or Disability (if
otherwise prior to the date of expiration of the Option), and not thereafter,
and (ii) to purchase the number of shares of Common Stock, if any, that could be
purchased upon exercise of the Option at the time of death or Disability.

(c) Termination For Reasons Other Than Cause, Death or Disability. If a
Participant’s employment or service with the Company is terminated voluntarily
by the Participant or by action of Chaparral or an Affiliate for reasons other
than for Cause, an Option may be exercised, but only (i) within three months
after such termination (if otherwise prior to the date of expiration of the
Option), and not thereafter, and (ii) to purchase the number of shares of Common
Stock, if any, that could be purchased upon exercise of the Option at the date
of termination of the Participant’s employment or service.

 

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Notwithstanding the foregoing, except in the case of a Participant’s death, an
Option will not be treated as an Incentive Stock Option unless at all times
beginning on the Grant Date and ending on the day three months (one year in the
case of a Participant who is “disabled” within the meaning of Section 22(e)(3)
of the Code) before the date of exercise of the Option, the Participant is an
employee of Chaparral or a “parent corporation” or a “subsidiary corporation” of
Chaparral, as those terms are defined in Sections 424(e) and (f) of the Code,
respectively (or a corporation or a parent or subsidiary corporation of such
corporation issuing or assuming an option in a transaction to which
Section 424(a) of the Code applies).

ARTICLE VIII. STOCK APPRECIATION RIGHTS

8.1 General.

(a) The Committee may grant Awards in the form of SARs in such numbers and at
such times as it shall determine. SARs shall vest and be exercisable in whole or
in such installments and at such times as may be determined by the Committee.
The price at which SARs may be exercised shall be determined by the Committee
but shall not be less than 100% of the Fair Market Value per share of Common
Stock on the Grant Date unless (i) the SARs are granted through the assumption
of, or in substitution for, outstanding awards previously granted to individuals
who became Employees (or other service providers) as a result of a merger,
consolidation, acquisition or other corporate transaction involving the Company
which complies with Treasury Regulation § 1.409A-1(b)(5)(v)(D) or (ii) the SARs
are otherwise structured to be exempt from or compliant with Section 409A. The
term of each SAR shall be as specified by the Committee; provided, however, that
no SAR shall be exercisable later than 10 years after the Grant Date. At the
time of an Award of SARs, the Committee may, in its sole discretion, prescribe
additional terms, conditions, restrictions and limitations applicable to the
SARs, including without limitation rules pertaining to the termination of
employment or service (by reason of death, permanent and total disability, or
otherwise) of a Participant prior to exercise of the SARs, as it determines are
necessary or appropriate, provided they are not inconsistent with this Plan.

(b) Subject to Article V, SARs may be granted only to Employees and directors
(including Outside Directors) of Chaparral or a corporation or other type of
entity in a chain of corporations or other entities in which each corporation or
other entity has a “controlling interest” in another corporation or entity in
the chain, starting with Chaparral and ending with the corporation or other
entity for which the Employee or director (including an Outside Director)
performs services. For purposes of this Section 8.1(b), “controlling interest”
means (a) in the case of a corporation, ownership of stock possessing at least
50% of total combined voting power of all classes of stock entitled to vote of
such corporation or at least 50% of the total value of shares of all classes of
stock of such corporation; (b) in the case of a partnership, ownership of at
least 50% of the profits interest or capital interest of such partnership;
(c) in the case of a sole proprietorship, ownership of the sole proprietorship;
or (d) in the case of a trust or estate, ownership of an actuarial interest (as
defined in Treasury Regulation § 1.414(c)-2(b)(2)(ii)) of at least 50% of such
trust or estate.

 

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8.2 Exercise of SARs. SARs shall be exercised by the delivery of a written
notice of exercise to Chaparral, setting forth the number of whole shares of
Common Stock with respect to which the Award is being exercised. Upon the
exercise of SARs, the Participant shall be entitled to receive an amount equal
to the excess of the aggregate Fair Market Value of the shares of Common Stock
with respect to which the Award is exercised (determined as of the date of such
exercise) over the aggregate exercise price of such shares. Such amount shall be
payable to the Participant in cash or in shares of Common Stock, as provided in
the Award Agreement.

ARTICLE IX. RESTRICTED STOCK

9.1 General. Awards may be granted in the form of Restricted Stock in such
numbers and at such times as the Committee shall determine. The Committee shall
impose such terms, conditions and restrictions on Restricted Stock as it may
deem advisable, including without limitation prescribing the period over which
and the conditions upon which the Restricted Stock may become vested or be
forfeited and/or providing for vesting upon the achievement of specified
performance goals pursuant to a Performance Award. A Participant shall not be
required to make any payment for Restricted Stock unless required by the
Committee pursuant to Section 9.2.

9.2 Purchased Restricted Stock. The Committee may in its sole discretion require
a Participant to pay a stipulated purchase price for each share of Restricted
Stock.

9.3 Restricted Period. At the time an Award of Restricted Stock is granted, the
Committee shall establish a Restricted Period applicable to such Restricted
Stock. Each Award of Restricted Stock may have a different Restricted Period in
the sole discretion of the Committee.

9.4 Other Terms and Conditions. Restricted Stock shall constitute issued and
outstanding shares of Common Stock for all corporate purposes. Restricted Stock
awarded to a Participant under this Plan shall be registered in the name of the
Participant or, at the option of Chaparral, in the name of a nominee of
Chaparral, and shall be issued in book-entry form or represented by a stock
certificate. Subject to the terms and conditions of the Award Agreement, a
Participant to whom Restricted Stock has been awarded shall have the right to
receive dividends thereon during the Restricted Period and to enjoy all other
stockholder rights with respect thereto, except that (a) Chaparral shall retain
custody of any certificates evidencing the Restricted Stock during the
Restricted Period and (b) the Participant may not sell, transfer, pledge,
exchange, hypothecate or otherwise dispose of the Restricted Stock during the
Restricted Period. A breach of the terms and conditions established by the
Committee pursuant to the Award of the Restricted Stock may result in a
forfeiture of the Restricted Stock. At the time of an Award of Restricted Stock,
the Committee may, in its sole discretion, prescribe additional terms,
conditions, restrictions and limitations applicable to the Restricted Stock,
including without limitation rules pertaining to the termination of employment
or service (by reason of death, permanent and total disability, retirement,
cause or otherwise) of a Participant prior to expiration of the Restricted
Period.

 

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9.5 Miscellaneous. Nothing in this Article shall prohibit the exchange of shares
of Restricted Stock pursuant to a plan of merger or reorganization for stock or
other securities of Chaparral or another corporation that is a party to the
merger or reorganization, provided that the stock or securities so received in
exchange for shares of Restricted Stock shall, except as provided in Article
XIII, become subject to the restrictions applicable to such Restricted Stock.
Any shares of Common Stock received as a result of a stock split or stock
dividend with respect to shares of Restricted Stock shall also become subject to
the restrictions applicable to such Restricted Stock.

ARTICLE X. RESTRICTED STOCK UNITS

10.1 General. Awards may be granted in the form of Restricted Stock Units in
such numbers and at such times as the Committee shall determine. The Committee
shall impose such terms, conditions and restrictions on Restricted Stock Units
as it may deem advisable, including without limitation prescribing the period
over which and the conditions upon which a Restricted Stock Unit may become
vested or be forfeited and/or providing for vesting upon the achievement of
specified performance goals pursuant to a Performance Award. Upon the lapse of
restrictions with respect to each Restricted Stock Unit, the Participant shall
be entitled to receive one share of Common Stock or an amount of cash equal to
the Fair Market Value of one share of Common Stock, as provided in the Award
Agreement. A Participant shall not be required to make any payment for
Restricted Stock Units.

10.2 Restricted Period. At the time an Award of Restricted Stock Units is
granted, the Committee shall establish a Restricted Period applicable to such
Restricted Stock Units. Each Award of Restricted Stock Units may have a
different Restricted Period in the sole discretion of the Committee.

10.3 Cash Dividend Rights and Dividend Unit Rights. To the extent provided by
the Committee in its sole discretion, a grant of Restricted Stock Units may
include a tandem Cash Dividend Right or Dividend Unit Right grant. A grant of
Cash Dividend Rights may provide that such Cash Dividend Rights shall be paid
directly to the Participant at the time of payment of the related dividend, be
credited to a bookkeeping account subject to the same vesting and payment
provisions as the tandem Award (with or without interest in the sole discretion
of the Committee), or be subject to such other provisions or restrictions as
determined by the Committee in its sole discretion. A grant of Dividend Unit
Rights may provide that such Dividend Unit Rights shall be subject to the same
vesting and payment provisions as the tandem Award or be subject to such other
provisions and restrictions as determined by the Committee in its sole
discretion.

10.4 Other Terms and Conditions. At the time of an Award of Restricted Stock
Units, the Committee may, in its sole discretion, prescribe additional terms,
conditions, restrictions and limitations applicable to the Restricted Stock
Units, including without limitation rules pertaining to the termination of
employment or service (by reason of death, total and permanent disability,
retirement, Cause or otherwise) of a Participant prior to expiration of the
Restricted Period.

 

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ARTICLE XI. PERFORMANCE AWARDS

11.1 General. Awards may be granted in the form of Performance Awards that may
be payable in the form of cash, shares of Common Stock or any combination of
both, in such amounts and at such times as the Committee shall determine.
Performance Awards shall be conditioned upon the level of achievement of one or
more stated performance goals over a specified performance period established by
the Committee. Performance Awards may be combined with other Awards to impose
performance criteria as part of the terms of such other Awards.

11.2 Terms and Conditions. Each Award Agreement embodying a Performance Award
shall set forth (a) the amount, including a target and maximum amount if
applicable, a Participant may earn in the form of cash or shares of Common Stock
or a formula for determining such amount, (b) the performance criteria and level
of achievement versus such criteria that shall determine the amount payable or
number of shares of Common Stock to be granted, issued, retained and/or vested,
(c) the performance period over which performance is to be measured, (d) the
timing of any payments to be made, (e) restrictions on the transferability of
the Award and (f) such other terms and conditions as the Committee may determine
that are not inconsistent with this Plan.

ARTICLE XII. STOCK AWARDS AND OTHER INCENTIVE AWARDS

12.1 Stock Awards. Stock Awards may be granted to Participants upon such terms
and conditions as the Committee may determine. Shares of Common Stock issued
pursuant to Stock Awards may be issued for cash consideration or for no cash
consideration. The Committee shall determine the number of shares of Common
Stock to be issued pursuant to a Stock Award. The Committee may in its sole
discretion require a Participant to pay a stipulated purchase price for each
share of Common Stock covered by a Stock Award.

12.2 Other Incentive Awards. Other Incentive Awards may be granted in such
amounts, upon such terms and at such times as the Committee shall determine.
Other Incentive Awards may be granted based upon, payable in or otherwise
related to, in whole or in part, shares of Common Stock if the Committee, in its
sole discretion, determines that such Other Incentive Awards are consistent with
the purposes of this Plan. Each grant of an Other Incentive Award shall be
evidenced by an Award Agreement that shall specify the amount of the Other
Incentive Award and the terms, conditions, restrictions and limitations
applicable to such Award. Payment of Other Incentive Awards shall be made at
such times and in such form, which may be cash, shares of Common Stock or other
property (or any combination thereof), as established by the Committee, subject
to the terms of this Plan.

ARTICLE XIII. CHANGE IN CONTROL

13.1 Vesting of Awards. Notwithstanding any provision of this Plan to the
contrary, in the event of a Change in Control, the Committee, in its sole
discretion, may accelerate or waive any time periods, conditions or
contingencies relating to the exercise or realization of, or lapse of
restrictions under, an Award granted hereunder and then outstanding (including
treating any Performance Awards as if all performance criteria and other
conditions were achieved or fulfilled to the maximum extent possible) so that:

 

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(a) if no exercise of the Award is required, the Award may be realized in full
at the time of the occurrence of the Change in Control (the “Change Effective
Time”), or

(b) if exercise of the Award is required, the Award may be exercised in full as
of the Change Effective Time;

provided that any such action contemplated under this Section 13.1 shall be
effective only to the extent that such action will not cause any Award that is
designed to satisfy Section 409A to fail to satisfy such section.

13.2 Assumption of Awards. Upon a Change in Control where Chaparral is not the
surviving entity (or survives only as a subsidiary of another entity), unless
the Committee determines otherwise, all outstanding Options and SARs that are
not exercised at or before the Change Effective Time will be assumed by or
replaced with comparable options and rights in the surviving entity (or a parent
of the surviving entity) in accordance with Code Section 424 or Section 409A and
the Treasury Regulations and other guidance thereunder, as applicable, and other
outstanding Awards will be converted into similar awards of the surviving entity
(or a parent of the surviving entity).

13.3 Cancellation of Awards. Notwithstanding the foregoing, in the event of a
Change in Control of Chaparral, then the Committee, in its sole discretion, may,
no later than the Change Effective Time, require any Participant holding an
Award to surrender such Award in exchange for (a) with respect to each share of
Common Stock subject to an Option or SAR (whether or not vested), payment by the
Company (or a successor), in cash, of an amount equivalent to the excess of the
value of the consideration received for each share of Common Stock by holders of
Common Stock in connection with such Change in Control (the “Change in Control
Consideration”) over the exercise price or grant price per share, (b) with
respect to each share of Common Stock subject to an Award of Restricted Stock,
Restricted Stock Units or Other Incentive Awards, and related Cash Dividend
Rights and Dividend Unit Rights (if applicable), payment by the Company (or a
successor), in cash, of an amount equivalent to the value of any such Cash
Dividend Rights and Dividend Unit Rights plus the value of the Change in Control
Consideration for each share covered by the Award, assuming all restrictions or
limitations (including risks of forfeiture) have lapsed and (c) with respect to
a Performance Award, payment by the Company (or a successor), in cash, of an
amount equivalent to the value of such Award, as determined by the Committee,
taking into account, to the extent applicable, the Change in Control
Consideration, and assuming all performance criteria and other conditions to
payment of such Awards are achieved or fulfilled to the maximum extent possible.
Payments made upon a Change in Control pursuant to this Section 13.3 shall be
made no later than the Change Effective Time.

 

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ARTICLE XIV. AMENDMENT AND TERMINATION

14.1 Plan Amendment and Termination. The Board may at any time suspend,
terminate, amend or modify this Plan, in whole or in part; provided, however,
that no amendment or modification of this Plan shall become effective without
the approval of such amendment or modification by the holders of at least a
majority of the shares of Common Stock entitled to vote on such matter if
(a) such amendment or modification increases the maximum number of shares
subject to this Plan (except as provided in Article IV) or changes the
designation or class of persons eligible to receive Awards under this Plan or
(b) counsel for Chaparral determines that such approval is otherwise required by
or necessary to comply with applicable law or the listing requirements of an
exchange or association on which the Common Stock is then listed or quoted. An
amendment to this Plan generally will not require stockholder approval if it
curtails rather than expands the scope of this Plan, nor if it is made to
conform this Plan to statutory or regulatory requirements, such as, without
limitation, Section 409A. Upon termination of this Plan, the terms and
provisions of this Plan shall, notwithstanding such termination, continue to
apply to Awards granted prior to such termination. Except as otherwise provided
herein, no suspension, termination, amendment or modification of this Plan shall
adversely affect in any material way any Award previously granted under this
Plan, without the consent of the Participant (or the Permitted Transferee)
holding such Award.

14.2 Award Amendment and Cancellation. The Committee may amend the terms of any
outstanding Award granted pursuant to this Plan, but except as otherwise
provided herein, no such amendment shall adversely affect in any material way
the Participant’s (or a Permitted Transferee’s) rights under an outstanding
Award without the consent of the Participant (or the Permitted Transferee)
holding such Award. Notwithstanding the foregoing, Chaparral may amend any Award
Agreement to be exempt from Section 409A or to comply with the requirements of
Section 409A or to modify any provision that causes an Award that is intended to
be classified as an “equity instrument” under FASB Accounting Standards
Codification, Topic 718 to be classified as a liability on Chaparral’s financial
statements.

ARTICLE XV. MISCELLANEOUS

15.1 Award Agreements. After the Committee grants an Award under this Plan to a
Participant, Chaparral and the Participant shall enter into an Award Agreement
setting forth the terms, conditions, restrictions and limitations applicable to
the Award and such other matters as the Committee may determine to be
appropriate. The Committee may permit or require a Participant to defer receipt
of the payment of cash or the delivery of shares of Common Stock that would
otherwise be due to the Participant in connection with any Award; provided,
however, that any permitted deferrals shall be structured to meet the
requirements of Section 409A. The terms and provisions of the respective Award
Agreements need not be identical. All Award Agreements shall be subject to the
provisions of this Plan, and in the event of any conflict between an Award
Agreement and this Plan, the terms of this Plan shall govern. All Awards under
this Plan are intended to be structured in a manner that will either comply with
or be exempt from Section 409A.

15.2 Listing; Suspension.

(a) If and as long as the Common Stock is listed on a national securities
exchange or system sponsored by a national securities association, the issuance
of any shares of Common Stock pursuant to an Award shall be conditioned upon
such shares being listed on such exchange or system. Chaparral shall have no
obligation to issue such shares unless and until such shares are so listed, and
the right to exercise any Option or other Award with respect to such shares
shall be suspended until such listing has been effected.

 

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(b) If at any time counsel to Chaparral or its Affiliates shall be of the
opinion that any sale or delivery of shares of Common Stock pursuant to an Award
is or may in the circumstances be unlawful or result in the imposition of excise
taxes on Chaparral or its Affiliates under the laws of any applicable
jurisdiction, Chaparral or its Affiliates shall have no obligation to make such
sale or delivery, or to make any application or to effect or to maintain any
qualification or registration under the Securities Act, or otherwise, with
respect to shares of Common Stock or Awards, and the right to exercise any
Option or other Award shall be suspended until, in the opinion of such counsel,
such sale or delivery shall be lawful or will not result in the imposition of
excise taxes on Chaparral or its Affiliates.

(c) Upon termination of any period of suspension under this Section 15.2, any
Award affected by such suspension that shall not then have expired or terminated
shall be reinstated as to all shares available before such suspension and as to
shares that would otherwise have become available during the period of such
suspension, but no such suspension shall extend the term of any Award unless
otherwise determined by the Committee in its sole discretion.

15.3 Additional Conditions. Notwithstanding anything in this Plan to the
contrary (a) the Committee may, if it shall determine it necessary or desirable
in its sole discretion, at the time of grant of any Award or the issuance of any
shares of Common Stock pursuant to any Award, require the recipient of the Award
or such shares of Common Stock, as a condition to the receipt thereof, to
deliver to Chaparral a written representation of present intention to acquire
the Award or such shares of Common Stock for his own account for investment and
not for distribution, (b) the certificate for shares of Common Stock issued to a
Participant may include any legend that the Committee deems appropriate to
reflect any restrictions on transfer and (c) all certificates for shares of
Common Stock delivered under this Plan shall be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable under the
rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange or association upon which the Common Stock is
then listed or quoted, any applicable federal or state securities law, and any
applicable corporate law, and the Committee may cause a legend or legends to be
placed on any such certificates to make appropriate reference to such
restrictions.

15.4 Transferability.

(a) All Awards granted to a Participant shall be exercisable during his lifetime
only by such Participant, or if applicable, a Permitted Transferee as provided
in subsection (c) of this Section 15.4; provided, however, that in the event of
a Participant’s legal incapacity, an Award may be exercised by his guardian or
legal representative. When a Participant dies, the personal representative,
beneficiary, or other person entitled to succeed to the rights of the
Participant may acquire the rights under an Award. Any such successor must
furnish proof satisfactory to Chaparral of the successor’s entitlement to
receive the rights under an Award under the Participant’s will or under the
applicable laws of descent and distribution.

 

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(b) Except as otherwise provided in this Section 15.4, no Award shall be subject
to execution, attachment or similar process, and no Award may be sold,
transferred, pledged, exchanged, hypothecated or otherwise disposed of, other
than by will or pursuant to the applicable laws of descent and distribution. Any
attempted sale, transfer, pledge, exchange, hypothecation or other disposition
of an Award not specifically permitted by this Plan or the Award Agreement shall
be null and void and without effect.

(c) If provided in the Award Agreement, Nonqualified Stock Options may be
transferred by a Participant to a Permitted Transferee. For purposes of this
Plan, “Permitted Transferee” means (i) a member of a Participant’s immediate
family, (ii) trusts in which a person listed in (i) above has more than 50% of
the beneficial interest, (iii) a foundation in which the Participant or a person
listed in (i) above controls the management of assets, (iv) any other entity in
which the Participant or a person listed in (i) above owns more than 50% of the
voting interests, provided that in the case of the preceding clauses (i) through
(iv), no consideration is provided for the transfer and (v) any transferee
permitted under applicable securities and tax laws as determined by counsel to
Chaparral. In determining whether a person is a “Permitted Transferee,”
immediate family members shall include a Participant’s child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law or sister-in-law, including adoptive relationships.

(d) Incident to a Participant’s divorce, the Participant may request that
Chaparral agree to observe the terms of a domestic relations order which may or
may not be part of a qualified domestic relations order (as defined in Code
Section 414(p)) with respect to all or a part of one or more Awards made to the
Participant under this Plan. Chaparral’s decision regarding such a request shall
be made by the Committee, in its sole and absolute discretion, based upon the
best interests of Chaparral. The Committee’s decision need not be uniform among
Participants. As a condition of participation, a Participant agrees to hold
Chaparral harmless from any claim that may arise out of Chaparral’s observance
of the terms of any such domestic relations order.

15.5 Withholding Taxes. The Company shall be entitled to deduct from any payment
made under this Plan, regardless of the form of such payment, the amount of all
applicable income and employment taxes required by law to be withheld with
respect to such payment, may require the Participant to pay to the Company such
withholding taxes prior to and as a condition of the making of any payment or
the issuance or delivery of any shares of Common Stock under this Plan, and
shall be entitled to deduct from any other compensation payable to the
Participant any withholding obligations with respect to Awards. In accordance
with any applicable administrative guidelines it establishes, the Committee may
allow a Participant to pay the amount of taxes required by law to be withheld
from or with respect to an Award by (a) withholding shares of Common Stock from
any payment of Common Stock due as a result of such Award, or (b) permitting the
Participant to deliver to the Company previously acquired

 

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shares of Common Stock. If such tax withholding amounts are satisfied through
net settlement or previously acquired shares, the maximum number of shares of
Common Stock that may be so withheld or surrendered shall be the number of
shares of Common Stock that have an aggregate Fair Market Value on the date of
withholding or surrender equal to the aggregate amount of such tax liabilities
determined based on the greatest withholding rates for federal, state and/or
local tax purposes, including payroll taxes, that may be utilized without
creating adverse accounting treatment for the Company with respect to such
Award, as determined by the Committee. No payment shall be made and no shares of
Common Stock shall be issued pursuant to any Award unless and until the
applicable tax withholding obligations have been satisfied.

15.6 No Fractional Shares. No fractional shares of Common Stock shall be issued
or delivered pursuant to this Plan or any Award granted hereunder, provided that
the Committee in its sole discretion may round fractional shares down to the
nearest whole share or settle fractional shares in cash.

15.7 Notices. All notices required or permitted to be given or made under this
Plan or pursuant to any Award Agreement (unless provided otherwise in such Award
Agreement) shall be in writing and shall be deemed to have been duly given or
made if (a) delivered personally, (b) transmitted by first class registered or
certified United States mail, postage prepaid, return receipt requested,
(c) sent by prepaid overnight courier service or (d) sent by telecopy, facsimile
or electronic transmission, with confirmation receipt, to the person who is to
receive it at the address that such person has theretofore specified by written
notice delivered in accordance herewith. Such notices shall be effective (i) if
delivered personally or sent by courier service, upon actual receipt by the
intended recipient, (ii) if mailed, upon the earlier of five days after deposit
in the mail or the date of delivery as shown by the return receipt therefore or
(iii) if sent by telecopy, facsimile or electronic transmission, when the answer
back is received. Chaparral or a Participant may change, at any time and from
time to time, by written notice to the other, the address that it or such
Participant had theretofore specified for receiving notices. Until such address
is changed in accordance herewith, notices hereunder or under an Award Agreement
shall be delivered or sent (A) to a Participant at his address as set forth in
the records of the Company or (B) to Chaparral at the principal executive
offices of Chaparral clearly marked “Attention: Chief Financial Officer.”

15.8 Compliance with Law and Stock Exchange or Association Requirements. It is
the intent of Chaparral that Options designated Incentive Stock Options comply
with the applicable provisions of Section 422 of the Code, that Awards intended
to constitute “qualified performance-based awards” comply with the applicable
provisions of Section 162(m) of the Code, and that all Awards either be exempt
from Section 409A or, if not exempt, comply with the requirements of
Section 409A. To the extent that any legal requirement of Sections 422, 162(m)
or 409A as set forth in this Plan ceases to be required under Sections 422,
162(m) or 409A, that Plan provision shall cease to apply. Any provision of this
Plan to the contrary notwithstanding, the Committee may revoke any Award if it
is contrary to law, governmental regulation or stock exchange or association
requirements or modify an Award to bring it into compliance with any government
regulation or stock exchange or association requirements. The Committee may
agree to limit its authority under this Section 15.8.

 

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15.9 Binding Effect. The obligations of Chaparral under this Plan shall be
binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of Chaparral, or upon any
successor corporation or organization succeeding to all or substantially all of
the assets and business of Chaparral. The terms and conditions of this Plan
shall be binding upon each Participant and his Permitted Transferees, heirs,
legatees, distributees and legal representatives.

15.10 Severability. If any provision of this Plan or any Award Agreement is held
to be illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining provisions of this Plan or such agreement, as the case may
be, but such provision shall be fully severable and this Plan or such agreement,
as the case may be, shall be construed and enforced as if the illegal or invalid
provision had never been included herein or therein.

15.11 No Restriction of Corporate Action. Nothing contained in this Plan shall
be construed to prevent Chaparral or any Affiliate from taking any corporate
action (including any corporate action to suspend, terminate, amend or modify
this Plan) that is deemed by Chaparral or such Affiliate to be appropriate or in
its best interest, whether or not such action would have an adverse effect on
this Plan or any Awards made or to be made under this Plan. No Participant or
other person shall have any claim against Chaparral or any Affiliate as a result
of such action.

15.12 Clawback. The Plan and all Awards granted hereunder are subject to any
written clawback policies that Chaparral, with the approval of the Board or an
authorized committee thereof, may adopt either prior to or following the
Effective Date, including any policy adopted to conform to the Dodd-Frank Wall
Street Reform and Consumer Protection Act of 2010 and rules promulgated
thereunder by the SEC and that the Chaparral determines should apply to Awards.
Any such policy may subject a Participant’s Awards and amounts paid or realized
with respect to Awards to reduction, cancelation, forfeiture or recoupment if
certain specified events or wrongful conduct occur, including an accounting
restatement due to the Chaparral’s material noncompliance with financial
reporting regulations or other events or wrongful conduct specified in any such
clawback policy.

15.13 Governing Law. This Plan shall be governed by and construed in accordance
with the internal laws (and not the principles relating to conflicts of laws) of
the State of Delaware except as superseded by applicable federal law.

15.14 No Right, Title or Interest in Company Assets. No Participant shall have
any rights as a stockholder of Chaparral as a result of participation in this
Plan until the date of issuance of Common Stock in his name and, in the case of
Restricted Stock, unless and until such rights are granted to the Participant
pursuant to this Plan. To the extent any person acquires a right to receive
payments from the Company under this Plan, such rights shall be no greater than
the rights of an unsecured general creditor of the Company, and such person
shall not have any rights in or against any specific assets of the Company. All
Awards shall be unfunded.

15.15 Risk of Participation. Nothing contained in this Plan shall be construed
either as a guarantee by Chaparral or its Affiliates, or their respective
stockholders, directors, officers or employees, of the value of any assets of
this Plan or as an agreement by Chaparral or its Affiliates, or their respective
stockholders, directors, officers or employees, to indemnify anyone for any
losses, damages, costs or expenses resulting from participation in this Plan.

 

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15.16 No Guarantee of Tax Consequences. No person connected with this Plan in
any capacity, including without limitation Chaparral and its Affiliates and
their respective directors, officers, agents and employees, makes any
representation, commitment or guarantee that any tax treatment, including
without limitation federal, state and local income, estate and gift tax
treatment, will be applicable with respect to any Awards or payments thereunder
made to or for the benefit of a Participant under this Plan or that such tax
treatment will apply to or be available to a Participant on account of
participation in this Plan.

15.17 Continued Employment or Service. Nothing contained in this Plan or in any
Award Agreement shall confer upon any Participant the right to continue in the
employ or service of the Company, or interfere in any way with the rights of the
Company to terminate a Participant’s employment or service at any time, with or
without cause. The loss of existing or potential profit in Awards will not
constitute an element of damages in the event of termination of employment or
service for any reason, even if the termination is in violation of an obligation
of Chaparral or an Affiliate to the Participant.

15.18 Miscellaneous. Headings are given to the articles and sections of this
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction of this Plan or any
provisions hereof. The use of the masculine gender shall also include within its
meaning the feminine. Wherever the context of this Plan dictates, the use of the
singular shall also include within its meaning the plural, and vice versa.

IN WITNESS WHEREOF, this Plan has been executed on this 9th day of August, 2017.

 

CHAPARRAL ENERGY, INC. By:   /s/ K. Earl Reynolds   K. Earl Reynolds   President
and Chief Executive Officer

 

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