Exhibit 10.1

 

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SEVENTH RESTATED CREDIT AGREEMENT

DATED AS OF

OCTOBER 31, 2006

AMONG

CHAPARRAL ENERGY, INC.,

AS PARENT GUARANTOR,

CHAPARRAL ENERGY, L.L.C.,

NORAM PETROLEUM, L.L.C.,

CHAPARRAL RESOURCES, L.L.C.,

TRIUMPH TOOLS & SUPPLY, L.L.C.,

CHAPARRAL CO², L.L.C.,

CEI ACQUISITION, L.L.C.,

CEI PIPELINE, L.L.C.,

CHAPARRAL REAL ESTATE, L.L.C.,

CALUMET OIL COMPANY,

JMG OIL & GAS, LP

AND

CHAPARRAL TEXAS, L.P.,

AS BORROWERS,

JPMORGAN CHASE BANK, N.A.,

AS ADMINISTRATIVE AGENT,

FORTIS CAPITAL CORP.

AND

THE ROYAL BANK OF SCOTLAND plc,

AS SYNDICATION AGENTS,

BANK OF AMERICA, N.A.

AND

BANK OF SCOTLAND,

AS DOCUMENTATION AGENTS

AND

THE LENDERS PARTY HERETO

$750,000,000

J.P. MORGAN SECURITIES INC.

AS LEAD ARRANGER AND BOOK MANAGER

 

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TABLE OF CONTENTS

 

          Page No.    ARTICLE I       DEFINITIONS AND ACCOUNTING MATTERS   

Section 1.01

   Terms Defined Above    2

Section 1.02

   Certain Defined Terms    2

Section 1.03

   Types of Loans and Borrowings    26

Section 1.04

   Terms Generally; Rules of Construction    27

Section 1.05

   Accounting Terms and Determinations; GAAP    27    ARTICLE II       THE
CREDITS   

Section 2.01

   Commitments    27

Section 2.02

   Loans and Borrowings    28

Section 2.03

   Requests for Borrowings    29

Section 2.04

   Interest Elections    30

Section 2.05

   Funding of Borrowings    31

Section 2.06

   Changes in the Aggregate Maximum Credit Amounts    32

Section 2.07

   Borrowing Base and Conforming Borrowing Base    34

Section 2.08

   Letters of Credit    38

Section 2.09

   Reliance on Notices; Appointment of Borrower Representative    42    ARTICLE
III       PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES   

Section 3.01

   Repayment of Loans    43

Section 3.02

   Interest    43

Section 3.03

   Alternate Rate of Interest    44

Section 3.04

   Prepayments    44

Section 3.05

   Fees    46

Section 3.06

   Joint and Several Liability; Rights of Contribution    47    ARTICLE IV      
PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS.   

Section 4.01

   Payments Generally; Pro Rata Treatment; Sharing of Set-offs    49

Section 4.02

   Presumption of Payment by the Borrowers    50

Section 4.03

   Certain Deductions by the Administrative Agent    50

Section 4.04

   Disposition of Proceeds    50    ARTICLE V       INCREASED COSTS; BREAK
FUNDING PAYMENTS; TAXES; ILLEGALITY   

Section 5.01

   Increased Costs    51

Section 5.02

   Break Funding Payments    52

 

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Section 5.03

   Taxes    52

Section 5.04

   Mitigation Obligations    54

Section 5.05

   Illegality    55    ARTICLE VI       CONDITIONS PRECEDENT   

Section 6.01

   Effective Date; Initial Loans    55

Section 6.02

   Each Credit Event    58    ARTICLE VII       REPRESENTATIONS AND WARRANTIES
  

Section 7.01

   Organization; Powers    59

Section 7.02

   Authority; Enforceability    59

Section 7.03

   Approvals; No Conflicts    59

Section 7.04

   Financial Condition; No Material Adverse Change    60

Section 7.05

   Litigation    60

Section 7.06

   Environmental Matters    60

Section 7.07

   Compliance with the Laws and Agreements; No Defaults    61

Section 7.08

   Investment Company Act    62

Section 7.09

   Taxes    62

Section 7.10

   ERISA    62

Section 7.11

   Disclosure; No Material Misstatements    63

Section 7.12

   Insurance    64

Section 7.13

   Restriction on Liens    64

Section 7.14

   Subsidiaries    64

Section 7.15

   Location of Business and Offices    64

Section 7.16

   Properties; Titles, Etc.    64

Section 7.17

   Maintenance of Properties    65

Section 7.18

   Gas Imbalances, Prepayments    66

Section 7.19

   Marketing of Production    66

Section 7.20

   Swap Agreements    66

Section 7.21

   Use of Loans and Letters of Credit    66

Section 7.22

   Solvency    66    ARTICLE VIII       AFFIRMATIVE COVENANTS   

Section 8.01

   Financial Statements; Other Information    67

Section 8.02

   Notices of Material Events    69

Section 8.03

   Existence; Conduct of Business    69

Section 8.04

   Payment of Obligations    70

Section 8.05

   Performance of Obligations under Loan Documents    70

Section 8.06

   Operation and Maintenance of Properties    70

Section 8.07

   Insurance    71

Section 8.08

   Books and Records; Inspection Rights    71

Section 8.09

   Compliance with Laws    71

 

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Section 8.10

   Environmental Matters    72

Section 8.11

   Further Assurances    73

Section 8.12

   Reserve Reports    73

Section 8.13

   Title Information    75

Section 8.14

   Collateral; Additional Collateral; Guarantees; Additional Guarantors    75

Section 8.15

   ERISA Compliance    77

Section 8.16

   Permitted Additional Bond Documents    77    ARTICLE IX       NEGATIVE
COVENANTS   

Section 9.01

   Financial Covenants    78

Section 9.02

   Debt    78

Section 9.03

   Liens    80

Section 9.04

   Restricted Payments    80

Section 9.05

   Investments, Loans and Advances    80

Section 9.06

   Nature of Business    82

Section 9.07

   Limitation on Operating Leases    82

Section 9.08

   Proceeds of Notes/Loans    82

Section 9.09

   ERISA Compliance    83

Section 9.10

   Sale or Discount of Receivables    84

Section 9.11

   Mergers, Etc.    84

Section 9.12

   Sale of Properties    84

Section 9.13

   Environmental Matters    85

Section 9.14

   Transactions with Affiliates    85

Section 9.15

   Subsidiaries    85

Section 9.16

   Indebtedness and Preferred Stock    85

Section 9.17

   Negative Pledge Agreements; Dividend Restrictions    85

Section 9.18

   Swap Agreements    86

Section 9.19

   Permitted Bond Documents    86    ARTICLE X       EVENTS OF DEFAULT; REMEDIES
  

Section 10.01

   Events of Default    87

Section 10.02

   Remedies    89    ARTICLE XI       THE AGENTS   

Section 11.01

   Appointment; Powers    89

Section 11.02

   Duties and Obligations of Administrative Agent    90

Section 11.03

   Action by Administrative Agent    90

Section 11.04

   Reliance by Administrative Agent    91

Section 11.05

   Subagents    91

Section 11.06

   Resignation of Agents    91

Section 11.07

   Agents as Lenders    92

Section 11.08

   No Reliance    92

 

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Section 11.09

   Authority to Release Collateral and Liens    92

Section 11.10

   The Arranger and Agents    92

Section 11.11

   Filing of Proofs of Claim    93

Section 11.12

   Execution of Documents    93    ARTICLE XII       MISCELLANEOUS   

Section 12.01

   Notices    93

Section 12.02

   Waivers; Amendments    94

Section 12.03

   Expenses, Indemnity; Damage Waiver    95

Section 12.04

   Successors and Assigns    98

Section 12.05

   Survival; Revival; Reinstatement    101

Section 12.06

   Counterparts; Integration; Effectiveness    102

Section 12.07

   Severability    102

Section 12.08

   Right of Setoff    102

Section 12.09

   Governing Law; Jurisdiction; Consent to Service of Process    103

Section 12.10

   Headings    104

Section 12.11

   Confidentiality    104

Section 12.12

   Exculpation Provisions    104

Section 12.13

   No Third Party Beneficiaries    105

Section 12.14

   Collateral Matters; Swap Agreements    105

Section 12.15

   USA Patriot Act Notice    105

 

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ANNEXES, EXHIBITS AND SCHEDULES

 

Annex I

  

List of Maximum Credit Amounts

Exhibit A

  

Form of Note

Exhibit B

  

Form of Borrowing Request

Exhibit C

  

Form of Interest Election Request

Exhibit D

  

Form of Compliance Certificate

Exhibit E

  

Form of Assignment and Assumption

Exhibit F

  

Form of Parent Pledge Agreement

Exhibit G

  

Form of Borrower Pledge Agreement

Exhibit H

  

Form of Subsidiary Pledge Agreement

Exhibit I

  

Form of Guaranty Agreement

Exhibit J

  

Form of Certificate of Effectiveness

Exhibit K

  

Form of Maximum Credit Amount Increase Certificate

Exhibit L

  

Form of Additional Lender Certificate

Schedule 7.05

  

Litigation

Schedule 7.14

  

Subsidiaries

Schedule 7.15

  

Organizational Information

Schedule 7.16

  

Properties

Schedule 7.18

  

Gas Imbalances

Schedule 7.19

  

Marketing Contracts

Schedule 7.20

  

Swap Agreements

Schedule 9.05

  

Investments

 

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SEVENTH RESTATED CREDIT AGREEMENT

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This SEVENTH RESTATED CREDIT AGREEMENT, dated as of October 31, 2006, is among
CHAPARRAL ENERGY, INC., a Delaware corporation (“Parent”), CHAPARRAL ENERGY,
L.L.C., an Oklahoma limited liability company (“Chaparral”), NORAM PETROLEUM,
L.L.C., an Oklahoma limited liability company (“NorAm”), CHAPARRAL RESOURCES,
L.L.C., an Oklahoma limited liability company (“Resources”), TRIUMPH TOOLS &
SUPPLY, L.L.C., an Oklahoma limited liability company (“Tools”), CHAPARRAL CO2,
L.L.C., an Oklahoma limited liability company (“Chaparral CO2”), CEI
ACQUISITION, L.L.C., a Delaware limited liability company (“CEI Acquisition”),
CEI PIPELINE, L.L.C., a Texas limited liability company (“Pipeline”), CHAPARRAL
REAL ESTATE, L.L.C., an Oklahoma limited liability company (“Real Estate”),
CALUMET OIL COMPANY, an Oklahoma corporation (“Calumet”), JMG OIL & GAS, LP, an
Oklahoma limited partnership (“JMG”) and CHAPARRAL TEXAS, L.P., an Oklahoma
limited partnership (“Chaparral Texas” and, together with Chaparral, NorAm,
Resources, Tools, Chaparral CO2, CEI Acquisition, Pipeline, Real Estate, Calumet
and JMG, collectively, “Borrowers” and each individually, a “Borrower”), each of
the Lenders from time to time party hereto, JPMORGAN CHASE BANK, N.A. (in its
individual capacity, “JPMorgan”), as administrative agent for the Lenders (in
such capacity, together with its successors in such capacity, the
“Administrative Agent”), FORTIS CAPITAL CORP. and THE ROYAL BANK OF SCOTLAND
plc, as syndication agents (in such capacity, the “Syndication Agents”) and BANK
OF AMERICA, N.A. and BANK OF SCOTLAND, as documentation agents (in such
capacity, the “Documentation Agents”).

R E C I T A L S

A. The Borrowers, the Administrative Agent and the financial institutions named
and defined therein as Lenders (the “Existing Lenders”) are parties to that
certain Sixth Restated Credit Agreement dated as of June 22, 2005 (as amended,
modified or supplemented prior to the date hereof, the “Existing Credit
Agreement”), pursuant to which the Existing Lenders provided certain loans and
extensions of credit to the Borrowers (all Debt arising pursuant to the Existing
Credit Agreement is referred to herein as the “Existing Indebtedness”).

B. The parties hereto desire to amend and restate the Existing Credit Agreement
in the form of this Agreement, and to appoint JPMorgan Chase Bank, N.A. as
Administrative Agent hereunder, and the Borrowers desire to obtain Borrowings
(i) to refinance the Existing Indebtedness, and (ii) for other purposes
permitted hereunder.

C. After giving effect to the Closing Transactions and the amendment and
restatement of the Existing Credit Agreement pursuant to the terms hereof, the
Commitment of each Lender hereunder will be as set forth on Annex I.

D. NOW THEREFORE, in consideration of the mutual covenants and agreements herein
contained, and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, and subject to the satisfaction of each
condition precedent contained in Section 6.01 hereof, the satisfaction of which
shall be evidenced by the execution by the Borrower Representative and the
Administrative Agent of the Certificate of Effectiveness, the parties hereto
agree that the Existing Credit Agreement is hereby amended, renewed, extended
and restated in its entirety on (and subject to) the terms and conditions set
forth herein. It is the intention of the parties hereto that this Agreement
supersedes and replaces the Existing Credit

 

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SEVENTH RESTATED CREDIT AGREEMENT

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Agreement in its entirety; provided, that, (a) such amendment and restatement
shall operate to renew, amend, modify and extend certain of the rights and
obligations of the Borrowers under the Existing Credit Agreement and as provided
herein, but shall not act as a novation thereof, and (b) the Liens securing the
Obligations under and as defined in the Existing Credit Agreement and the
liabilities and obligations of Parent, the Borrowers and their Subsidiaries
under the Existing Credit Agreement and the Loan Documents (as therein defined
and referred to herein as the “Existing Loan Documents”) shall not be
extinguished but shall be carried forward and shall secure such obligations and
liabilities as amended, renewed, extended and restated hereby. The parties
hereto ratify and confirm each of the Existing Loan Documents entered into prior
to the Effective Date (but excluding the Existing Credit Agreement) and agree
that such Existing Loan Documents continue to be legal, valid, binding and
enforceable in accordance with their terms (except to the extent amended,
restated and superseded in their entirety in connection with the transactions
contemplated hereby), however, for all matters arising prior to the Effective
Date (including the accrual and payment of interest and fees, and matters
relating to indemnification and compliance with financial covenants), the terms
of the Existing Credit Agreement (as unmodified by this Agreement) shall control
and are hereby ratified and confirmed. Parent and the Borrowers, jointly and
severally, represent and warrant that, as of the Effective Date, there are no
claims or offsets against, or defenses or counterclaims to, their obligations
(or the obligations of any Subsidiary) under the Existing Credit Agreement or
any of the other Existing Loan Documents. The parties hereto further agree as
follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING MATTERS

Section 1.01 Terms Defined Above. As used in this Agreement, each term defined
above has the meaning indicated above.

Section 1.02 Certain Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:

“ABR”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Alternate Base Rate.

“Additional Lender” has the meaning assigned to such term in Section 2.06(c)(i).

“Additional Lender Certificate” has the meaning assigned to such term in
Section 2.06(c)(ii)(F).

“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.

“Administrative Agent” has the meaning given in the introductory paragraph.

“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.

 

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SEVENTH RESTATED CREDIT AGREEMENT

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“Affected Loans” has the meaning assigned to such term in Section 5.05.

“Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.

“Agents” means, collectively, the Administrative Agent, the Syndication Agents,
the Documentation Agents and any other agent appointed hereunder from time to
time, and “Agent” shall mean any of them, as the context requires.

“Aggregate Maximum Credit Amount” at any time shall equal the sum of the Maximum
Credit Amounts, as the same may be increased, reduced or terminated pursuant to
Section 2.06. The initial Aggregate Maximum Credit Amount of the Lenders is
$750,000,000.

“Agreement” means this Seventh Restated Credit Agreement, as the same may from
time to time be amended, modified, supplemented or restated.

“Alternate Base Rate” means, for any day, a rate per annum equal to the greater
of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on such day plus  1/2 of 1%. Any change in the Alternate Base
Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall
be effective from and including the effective date of such change in the Prime
Rate or the Federal Funds Effective Rate, respectively.

“Alternate Borrowing Base” has the meaning assigned to such term in
Section 2.07(c)(iii).

“Alternate Conforming Borrowing Base” has the meaning assigned to such term in
Section 2.07(c)(iii).

“Annualized Consolidated EBITDAX” means, for purposes of calculating the
financial ratio set forth in Section 9.01(b) for each Rolling Period ending on
or prior to September 30, 2007, Parent’s actual Consolidated EBITDAX for such
Rolling Period multiplied by the factor determined for such Rolling Period in
accordance with the table below:

 

Rolling Period Ending

   Factor

March 31, 2007

   4

June 30, 2007

   2

September 30, 2007

   1.333

 

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SEVENTH RESTATED CREDIT AGREEMENT

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“Applicable Margin” means, for any day, with respect to any ABR Loan or
Eurodollar Loan, or with respect to the Commitment Fee Rate, as the case may be,
the rate per annum set forth in the Conforming Borrowing Base Utilization Grid
below based upon the Conforming Borrowing Base Utilization Percentage then in
effect:

 

Conforming Borrowing Base Utilization Grid

Conforming Borrowing Base Utilization Percentage

  

<50%

  

³50 <75%

  

³75% <90%

  

³90% £ 100%

  

> 100%

Eurodollar Loans

   1.250%    1.500%    1.750%    2.000%    2.500%

ABR Loans

   0.000%    0.000%    0.250%    0.500%    1.000%

Commitment Fee Rate

   0.250%    0.375%    0.375%    0.375%    0.500%

Each change in the Applicable Margin shall apply during the period commencing on
the effective date of such change and ending on the date immediately preceding
the effective date of the next such change.

“Applicable Percentage” means, with respect to any Lender, the percentage of the
Aggregate Maximum Credit Amount represented by such Lender’s Maximum Credit
Amount as such percentage is set forth on Annex I.

“Approved Counterparty” means (a) any Lender or any Affiliate of a Lender, or
(b) any other Person whose long term senior unsecured debt rating at the time of
entry into the applicable Swap Agreement is A-/A3 by S&P or Moody’s (or their
equivalent) or higher.

“Approved Fund” means (a) a CLO and (b) with respect to any Lender that is a
fund which invests in bank loans and similar extensions of credit, any other
fund that invests in bank loans and similar extensions of credit and is managed
by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.

“Approved Petroleum Engineer” means an independent petroleum engineer proposed
by the Borrowers and reasonably acceptable to the Administrative Agent.

“Arranger” means J.P. Morgan Securities Inc., in its capacity as lead arranger
and book manager hereunder.

“Assessment Rate” means, for any day, the annual assessment rate in effect on
such day that is payable by a member of the Bank Insurance Fund classified as
“well-capitalized” and within supervisory subgroup “B” (or a comparable
successor risk classification) within the meaning of 12 C.F.R. Part 327 (or any
successor provision) to the Federal Deposit Insurance Corporation for insurance
by such Corporation of time deposits made in dollars at the offices of such
member in the United States of America; provided that if, as a result of any
change in any law, rule or regulation, it is no longer possible to determine the
Assessment Rate as aforesaid, then the Assessment Rate shall be such annual rate
as shall be reasonably determined by the Administrative Agent to be
representative of the cost of such insurance to the Lenders.

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by Section 12.04(b)), and accepted by the Administrative Agent, in the form of
Exhibit E or any other form approved by the Administrative Agent.

“Availability Period” means the period from and including the Effective Date to
but excluding the Termination Date.

 

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SEVENTH RESTATED CREDIT AGREEMENT

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“Board” means the Board of Governors of the Federal Reserve System of the United
States of America or any successor Governmental Authority.

“Borrower” and “Borrowers” have the meanings given in the introductory
paragraph.

“Borrower Pledge Agreement” means an agreement executed by a Borrower and being
substantially in the form of Exhibit G, pursuant to which such Borrower pledges
to the Administrative Agent, for the ratable benefit of the Lenders and any
Secured Swap Provider, all of the issued and outstanding Equity Interests owned
by such Borrower of each existing or hereafter acquired Subsidiary to secure the
Indebtedness.

“Borrower Representative” means Chaparral in its capacity as Borrower
Representative pursuant to the provisions of Section 2.09.

“Borrowing” means Loans of the same Type, made, converted or continued on the
same date and, in the case of Eurodollar Loans, as to which a single Interest
Period is in effect.

“Borrowing Base” means at any time an amount equal to the amount determined in
accordance with Section 2.07, as the same may be adjusted from time to time
pursuant to Section 8.13(c). From and after May 1, 2007, the Borrowing Base
shall be, and shall be in an amount equal to, the Conforming Borrowing Base.

“Borrowing Request” means a request by the Borrowers (or Borrower
Representative) for a Borrowing in accordance with Section 2.03.

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in Chicago, Illinois, Dallas, Texas or Oklahoma City,
Oklahoma are authorized or required by law to remain closed; and if such day
relates to a Borrowing or continuation of, a payment or prepayment of principal
of or interest on, or a conversion of or into, or the Interest Period for, a
Eurodollar Loan or a notice by the Borrowers (or Borrower Representative) with
respect to any such Borrowing or continuation, payment, prepayment, conversion
or Interest Period, any day which is also a day on which dealings in dollar
deposits are carried out in the London interbank market.

“Calumet” has the meaning given in the introductory paragraph. After giving
effect to the Calumet Acquisition, Calumet will be a Wholly-Owned Subsidiary.

“Calumet Acquisition” means the purchase by one or more of the Credit Parties of
the Calumet Interests pursuant to the Calumet Acquisition Agreement.

“Calumet Acquisition Agreement” means that certain Stock Purchase Agreement
dated as of September 16, 2006, by and among Sellers, Calumet, JMG and Parent.

“Calumet Acquisition Documents” means the Calumet Acquisition Agreement and all
agreements, assignments, conveyances, deeds, certificates and other documents
and instruments now or hereafter executed and/or delivered by, between or among
Parent, the Borrowers, Calumet, JMG and/or Sellers pursuant to the Calumet
Acquisition Agreement or in connection with the Calumet Acquisition.

 

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SEVENTH RESTATED CREDIT AGREEMENT

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“Calumet Interests” means, collectively, the “Interests” as such term is defined
in the Calumet Acquisition Agreement.

“Capital Leases” means, in respect of any Person, all leases that shall have
been, or should have been, in accordance with GAAP, recorded as capital leases
on the balance sheet of the Person liable (whether contingent or otherwise) for
the payment of rent thereunder.

“Casualty Event” means any loss, casualty or other insured damage to, or any
nationalization, taking under power of eminent domain or by condemnation or
similar proceeding of, any Property of any Credit Party having a fair market
value in excess of $5,000,000.

“CEI Acquisition” has the meaning given in the introductory paragraph.

“Certificate of Effectiveness” means a Certificate of Effectiveness in the form
of Exhibit J to be executed by Borrower Representative and the Administrative
Agent upon the satisfaction of each of the conditions precedent contained in
Section 6.01.

“Change in Control” means (a) the failure of Parent to own, directly or
indirectly, 100% of the Equity Interests of each Borrower, (b) the acquisition
of ownership, directly or indirectly, beneficially or of record, by any Person
or group (within the meaning of the Securities Exchange Act of 1934 and the
rules of the SEC thereunder as in effect on the date hereof), other than the
Designated Equityholders, of Equity Interests representing more than 35% of the
aggregate ordinary voting power for the election of directors or other
comparable governing body of Parent represented by the issued and outstanding
Equity Interests of Parent, (c) the occupation of a majority of the seats (other
than vacant seats) on the board of directors (or comparable authority) of Parent
or any Borrower by Persons who were neither (i) nominated by the board of
directors (or comparable authority) of Parent or any such Borrower nor
(ii) appointed by directors so nominated, or (d) a “change in control,” “change
of control” (or similar event) as defined in any Permitted Bond Document, but
only to the extent the occurrence of any such event gives rise to an obligation
of Parent or any other Credit Party to redeem, repay, or repurchase, or
otherwise offer to redeem, repay or repurchase, all or any portion of the
Permitted Bond Debt.

“Change in Law” means (a) the adoption of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by any Lender or any Issuing Bank (or,
for purposes of Section 5.01(b)), by any lending office of such Lender or by
such Lender’s or such Issuing Bank’s holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.

“Chaparral” has the meaning given in the introductory paragraph.

“Chaparral CO2” has the meaning given in the introductory paragraph.

“Chaparral Texas” has the meaning given in the introductory paragraph

 

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SEVENTH RESTATED CREDIT AGREEMENT

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“CLO” means any entity (whether a corporation, partnership, limited liability
company, trust or otherwise) that is engaged in making, purchasing, holding or
otherwise investing in bank loans and similar extensions of credit in the
ordinary course of its business and is administered or managed by a Lender or an
Affiliate of such Lender.

“Closing Transactions” means the transactions to occur on the Effective Date,
including, without limitation: (a) the refinancing in full, with the proceeds of
a Borrowing under this Agreement, of all Existing Indebtedness, (b) the closing
and consummation of the Calumet Acquisition in accordance with the terms, and
for the consideration, set forth in the Calumet Acquisition Agreement, and the
acquisition by Parent of the Calumet Interests, and (c) the payment of all fees
and expenses of the Administrative Agent and its Affiliates in connection with
the credit facility provided herein.

“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and any successor statute.

“Commitment” means, with respect to each Lender, the commitment of such Lender
to make Loans and to acquire participations in Letters of Credit hereunder,
expressed as an amount representing the maximum aggregate amount of such
Lender’s Credit Exposure hereunder, as such commitment may be (a) modified from
time to time pursuant to Section 2.06 and (b) modified from time to time
pursuant to assignments by or to such Lender pursuant to Section 12.04(b), and
“Commitments” means the aggregate amount of the Commitments of all the Lenders.
The amount representing each Lender’s Commitment shall at any time be the lesser
of (i) such Lender’s Maximum Credit Amount and (ii) such Lender’s Applicable
Percentage of the then effective Borrowing Base.

“Commitment Fee Rate” has the meaning, or is otherwise described as, set forth
in the definition of “Applicable Margin”.

“Conforming Borrowing Base” means at any time an amount determined in accordance
with Section 2.07 based on the Administrative Agent’s application of Conforming
Credit Criteria.

“Conforming Borrowing Base Utilization Percentage” means, as of any day, the
fraction expressed as a percentage, the numerator of which is the sum of the
Credit Exposures of the Lenders on such day, and the denominator of which is the
Conforming Borrowing Base in effect on such day.

“Conforming Credit Criteria” means the credit standards and other criteria
customarily applied by the Administrative Agent in the determination of credit
limitations for companies similar to the Borrowers.

“Consolidated Current Assets” means with respect to Parent and the Consolidated
Subsidiaries, as of any date of determination, the sum of (a) the current assets
of Parent and the Consolidated Subsidiaries at such time determined in
accordance with GAAP, plus (b) the current unused availability of the total
Commitments, minus (c) current fair values of commodity price agreements and
FASB 143 assets. Notwithstanding anything to the contrary contained

 

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herein, all calculations of Consolidated Current Assets shall be calculated,
determined and adjusted to exclude for any applicable period or date of
determination the current assets of Oklahoma Ethanol and Pointe Vista at such
time determined in accordance with GAAP.

“Consolidated Current Liabilities” means with respect to Parent and the
Consolidated Subsidiaries, as of any date of determination, the sum of the
current obligations of Parent and the Consolidated Subsidiaries at such time
determined in accordance with GAAP, excluding therefrom (i) current maturities
due on the Loan, and (ii) current fair values of commodity price agreements and
FASB 143 liabilities. Notwithstanding anything to the contrary contained herein,
all calculations of Consolidated Current Liabilities shall be calculated,
determined and adjusted to exclude for any applicable period or date of
determination the current obligations of Oklahoma Ethanol and Pointe Vista at
such time determined in accordance with GAAP.

“Consolidated EBITDAX” means with respect to Parent and the Consolidated
Subsidiaries for any applicable period: (a) Consolidated Net Income of Parent
and the Consolidated Subsidiaries for such period, plus, to the extent deducted
in the calculation of Consolidated Net Income, (b) the sum of (i) income or
franchise Taxes paid or accrued; (ii) Consolidated Net Interest Expense;
(iii) amortization, depletion and depreciation expense; (iv) any non-cash losses
or charges on any Swap Agreement, including those resulting from the
requirements of FASB 133, for that period; (v) other non-cash charges (excluding
accruals for cash expenses made in the ordinary course of business), including,
without limitation, non-cash employee compensation; and (vi) costs and expenses
associated with, and attributable to, oil and gas capital expenditures that are
expensed rather than capitalized; less, to the extent included in the
calculation of Consolidated Net Income, (c) the sum of (i) the income of any
Person (other than Wholly-Owned Subsidiaries of such Person) unless such income
is received by such Person in a cash distribution; (ii) gains or losses from
sales or other dispositions of assets (other than Hydrocarbons produced in the
normal course of business); (iii) any non-cash gains on any Swap Agreement,
including those resulting from the requirements of FASB 133, for that period;
and (iv) extraordinary or non-recurring gains, but not net of extraordinary or
non-recurring “cash” losses. Notwithstanding anything to the contrary contained
herein, all calculations of Consolidated EBITDAX shall be (A) in all respects,
acceptable to, and approved by, the Administrative Agent, (B) for any applicable
period of determination during which a Credit Party has consummated an
acquisition or disposition (to the extent permitted hereunder) of Properties,
calculated and determined on a pro forma basis as if such acquisition or
disposition was consummated on the first day of such applicable period, and
(C) calculated, determined and adjusted for any applicable period to exclude any
income, loss or other adjustments with respect to Oklahoma Ethanol and Pointe
Vista determined in accordance with GAAP, except income received pursuant to a
cash distribution shall be included in the calculation of Consolidated EBITDAX.

“Consolidated Net Income” means with respect to Parent and the Consolidated
Subsidiaries, for any period, the aggregate of the net income (or loss) of
Parent and the Consolidated Subsidiaries after allowances for taxes for such
period determined on a consolidated basis in accordance with GAAP; provided that
there shall be excluded from such net income (to the extent otherwise included
therein) the following: (a) the net income of any Person in which Parent or any
Consolidated Subsidiary has an interest, which interest does not cause the net
income of such other Person to be consolidated with the net income of Parent and

 

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the Consolidated Subsidiaries in accordance with GAAP, except to the extent of
the amount of dividends or distributions actually paid in cash during such
period by such other Person to Parent or to a Consolidated Subsidiary, as the
case may be; (b) the net income (but not loss) during such period of any
Consolidated Subsidiary to the extent that the declaration or payment of
dividends or similar distributions or transfers or loans by that Consolidated
Subsidiary is not at the time permitted by operation of the terms of its charter
or any agreement, instrument or Governmental Requirement applicable to such
Consolidated Subsidiary or is otherwise restricted or prohibited, in each case
determined in accordance with GAAP; (c) the net income (or loss) of any Person
acquired in a pooling-of-interests transaction for any period prior to the date
of such transaction; (d) any extraordinary gains or losses (excluding capital
gains or losses) during such period; (e) the cumulative effect of a change in
accounting principles; and (f) any gains or losses attributable to writeups or
writedowns of assets.

“Consolidated Net Interest Expense” means, with respect to Parent and the
Consolidated Subsidiaries for any period, the remainder of the following for
such period: (a) interest expense, minus (b) interest income.

“Consolidated Subsidiaries” means each Subsidiary of Parent (whether now
existing or hereafter created or acquired) the financial statements of which
shall be (or should have been) consolidated with the financial statements of
Parent in accordance with GAAP.

“Consolidated Total Debt” means with respect to Parent and the Consolidated
Subsidiaries for any period, all Debt of Parent and the Consolidated
Subsidiaries (other than any Non-Recourse Debt of Oklahoma Ethanol and Pointe
Vista) determined on a consolidated basis for such period.

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. For the
purposes of this definition, and without limiting the generality of the
foregoing, any Person that owns directly or indirectly 20% or more of the Equity
Interests having ordinary voting power for the election of the directors or
other governing body of a Person (other than as a limited partner of such other
Person) will be deemed to “control” such other Person. “Controlling” and
“Controlled” have meanings correlative thereto.

“Credit Exposure” means, with respect to any Lender at any time, the sum of the
outstanding principal amount of such Lender’s Loans and its LC Exposure at such
time.

“Credit Parties” means, collectively, Parent, each Borrower and each Subsidiary,
and “Credit Party” means any one of the foregoing.

“Current Ratio” means the ratio of (i) Consolidated Current Assets to
(ii) Consolidated Current Liabilities.

“Dated Assets” has the meaning assigned to such term in Section 3.06.

“Dated Liabilities” has the meaning assigned to such term in Section 3.06.

 

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“Debt” means, for any Person, the sum of the following (without duplication):
(a) all obligations of such Person for borrowed money or evidenced by bonds,
bankers’ acceptances, debentures, notes or other similar instruments; (b) all
obligations of such Person (whether contingent or otherwise) in respect of
letters of credit, surety or other bonds and similar instruments; (c) all
accounts payable and all accrued expenses, liabilities or other obligations of
such Person to pay the deferred purchase price of Property or services; (d) all
obligations under Capital Leases; (e) all obligations under Synthetic Leases;
(f) all Debt (as defined in the other clauses of this definition) of others
secured by a Lien on any Property of such Person, whether or not such Debt is
assumed by such Person; (g) all Debt (as defined in the other clauses of this
definition) of others guaranteed by such Person or in which such Person
otherwise assures a creditor against loss of the Debt (howsoever such assurance
shall be made) to the extent of the lesser of the amount of such Debt and the
maximum stated amount of such guarantee or assurance against loss; (h) all
obligations or undertakings of such Person to maintain or cause to be maintained
the financial position or covenants of others or to purchase the Debt or
Property of others; (i) all obligations to deliver commodities, goods or
services, including, without limitation, Hydrocarbons, in consideration of one
or more advance payments, other than gas balancing arrangements in the ordinary
course of business; (j) all obligations to pay for goods or services whether or
not such goods or services are actually received or utilized by such Person;
(k) any Debt of a partnership for which such Person is liable either by
agreement, by operation of law or by a Governmental Requirement but only to the
extent of such liability; (l) Disqualified Capital Stock; and (m) the
undischarged balance of any production payment created by such Person or for the
creation of which such Person directly or indirectly received payment. The Debt
of any Person shall include all obligations of such Person of the character
described above to the extent such Person remains legally liable in respect
thereof notwithstanding that any such obligation is not included as a liability
of such Person under GAAP.

“Debt Issuance Reduction Amount” means, in connection with a Mandatory
Redetermination under Section 2.07(d)(iii), an amount equal to $.30 per dollar
on the gross aggregate amount of Permitted Additional Bond Debt issued and
incurred by a Credit Party. For avoidance of doubt, and as an example only, in
the event a Credit Party incurs Permitted Additional Bond Debt in an amount
equal to $350,000,000, the “Debt Issuance Reduction Amount” will be
$105,000,000.

“Default” means any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.

“Designated Equityholders” means, collectively, Fischer Investments, LLC and
Altoma Energy, GP.

“Disqualified Capital Stock” means any Equity Interest that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event, matures or is mandatorily
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock), pursuant to a sinking fund
obligation or otherwise, or is convertible or exchangeable for Debt or
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock) at the option of the holder thereof,
in whole or in part, on or prior to the date that is one year after the earlier
of (a) the Maturity Date and (b) the date on which there are no Loans, LC
Exposure or other obligations hereunder outstanding and all of the Commitments
are terminated.

 

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“Documentation Agents” has the meaning given in the introductory paragraph.

“dollars” or “$” refers to lawful money of the United States of America.

“Domestic Subsidiary” means any Subsidiary that is organized under the laws of
the United States of America or any state thereof or the District of Columbia.

“Effective Date” means the date on which the conditions specified in
Section 6.01 are satisfied (or waived in accordance with Section 12.02), and the
Borrower Representative and the Administrative Agent have executed and delivered
the Certificate of Effectiveness, which date is set forth in the Certificate of
Effectiveness.

“Election Notice” has the meaning assigned to such term in Section 3.04(c)(ii).

“Engineering Reports” has the meaning assigned to such term in
Section 2.07(c)(i).

“Environmental Laws” means any and all Governmental Requirements pertaining in
any way to health, safety, the environment or the preservation or reclamation of
natural resources, in effect in any and all jurisdictions in which any Credit
Party is conducting or at any time has conducted business, or where any Property
of any Credit Party is located, including without limitation, the Oil Pollution
Act of 1990 (“OPA”), as amended, the Clean Air Act, as amended, the
Comprehensive Environmental, Response, Compensation, and Liability Act of 1980
(“CERCLA”), as amended, the Federal Water Pollution Control Act, as amended, the
Occupational Safety and Health Act of 1970, as amended, the Resource
Conservation and Recovery Act of 1976 (“RCRA”), as amended, the Safe Drinking
Water Act, as amended, the Toxic Substances Control Act, as amended, the
Superfund Amendments and Reauthorization Act of 1986, as amended, the Hazardous
Materials Transportation Act, as amended, and other environmental conservation
or protection Governmental Requirements. The term “oil” shall have the meaning
specified in OPA, the terms “hazardous substance” and “release” (or “threatened
release”) have the meanings specified in CERCLA, the terms “solid waste” and
“disposal” (or “disposed”) have the meanings specified in RCRA and the term “oil
and gas waste” shall have the meaning specified in Section 91.1011 of the Texas
Natural Resources Code (“Section 91.1011”); provided, however, that (a) in the
event either OPA, CERCLA, RCRA or Section 91.1011 is amended so as to broaden
the meaning of any term defined thereby, such broader meaning shall apply
subsequent to the effective date of such amendment and (b) to the extent the
laws of the state or other jurisdiction in which any Property of any Credit
Party is located establish a meaning for “oil,” “hazardous substance,”
“release,” “solid waste,” “disposal” or “oil and gas waste” which is broader
than that specified in either OPA, CERCLA, RCRA or Section 91.1011, such broader
meaning shall apply.

“Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
Equity Interest.

 

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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statutes, and all regulations and guidances promulgated
thereunder.

“ERISA Affiliate” means each trade or business (whether or not incorporated)
which together with a Borrower or a Subsidiary would be deemed to be a “single
employer” within the meaning of section 4001(b)(1) of ERISA or subsections (b),
(c), (m) or (o) of section 414 of the Code.

“ERISA Event” means (a) a “Reportable Event” described in section 4043 of ERISA,
other than a Reportable Event as to which the provisions of 30 days notice to
the PBGC is expressly waived under applicable regulations, (b) the withdrawal of
a Credit Party or any ERISA Affiliate from a Plan during a plan year in which it
was a “substantial employer” as defined in section 4001(a)(2) of ERISA, (c) the
filing of a notice of intent to terminate a Plan or the treatment of a Plan
amendment as a termination under section 4041 of ERISA, (d) the institution of
proceedings to terminate a Plan by the PBGC, (e) receipt of a notice of
withdrawal liability pursuant to Section 4202 of ERISA or (f) any other event or
condition which might constitute grounds under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan.

“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Adjusted LIBO Rate.

“Event of Default” has the meaning assigned to such term in Section 10.01.

“Excepted Liens” means: (a) Liens for Taxes, assessments or other governmental
charges or levies which are not delinquent or which are being contested in good
faith by appropriate action and for which adequate reserves have been maintained
in accordance with GAAP; (b) Liens in connection with workers’ compensation,
unemployment insurance or other social security, old age pension or public
liability obligations which are not delinquent or which are being contested in
good faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP; (c) statutory landlord’s liens, operators’,
vendors’, carriers’, warehousemen’s, repairmen’s, mechanics’, suppliers’,
workers’, materialmen’s, construction or other like Liens arising by operation
of law in the ordinary course of business or incident to the exploration,
development, operation and maintenance of Oil and Gas Properties each of which
is in respect of obligations that are not delinquent or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP; (d) contractual Liens that arise
in the ordinary course of business under operating agreements, joint venture
agreements, oil and gas partnership agreements, oil and gas leases, farm-out
agreements, division orders, contracts for the sale, transportation or exchange
of oil and natural gas, unitization and pooling declarations and agreements,
area of mutual interest agreements, overriding royalty agreements, marketing
agreements, processing agreements, net profits agreements, development
agreements, gas balancing or deferred production agreements, injection,
repressuring and recycling agreements, salt water or other disposal agreements,
seismic or other geophysical permits or agreements, and other agreements which
are usual and customary in the oil and gas business and are for claims which are
not delinquent or which are being contested in good faith by appropriate action
and for which adequate reserves have been

 

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maintained in accordance with GAAP, provided that any such Lien referred to in
this clause does not materially impair the use of the Property covered by such
Lien for the purposes for which such Property is held by any Credit Party or
materially impair the value of such Property subject thereto; (e) Liens arising
solely by virtue of any statutory or common law provision relating to banker’s
liens, rights of set-off or similar rights and remedies and burdening only
deposit accounts or other funds maintained with a creditor depository
institution, provided that no such deposit account is a dedicated cash
collateral account or is subject to restrictions against access by the depositor
in excess of those set forth by regulations promulgated by the Board and no such
deposit account is intended by any Credit Party to provide collateral to the
depository institution; (f) easements, restrictions, servitudes, permits,
conditions, covenants, exceptions or reservations in any Property of any Credit
Party for the purpose of roads, pipelines, transmission lines, transportation
lines, distribution lines for the removal of gas, oil, coal or other minerals or
timber, and other like purposes, or for the joint or common use of real estate,
rights of way, facilities and equipment, which in the aggregate do not
materially impair the use of such Property for the purposes of which such
Property is held by any Credit Party or materially impair the value of such
Property subject thereto; (g) Liens on cash or securities pledged to secure
performance of tenders, surety and appeal bonds, government contracts,
performance and return of money bonds, bids, trade contracts, leases, statutory
obligations, regulatory obligations and other obligations of a like nature
incurred in the ordinary course of business; (h) judgment and attachment Liens
not giving rise to an Event of Default, provided that any appropriate legal
proceedings which may have been duly initiated for the review of such judgment
shall not have been finally terminated or the period within which such
proceeding may be initiated shall not have expired and no action to enforce such
Lien has been commenced; (i) Liens arising from Uniform Commercial Code
financing statement filings regarding operating leases entered into by any
Credit Party in the ordinary course of business covering only the Property under
lease; and (j) Liens incurred pursuant to the Security Instruments or otherwise
created in favor of the Administrative Agent, any Lender or any Secured Swap
Provider pursuant to the Loan Documents; provided, further that Liens described
in clauses (a) through (e) shall remain “Excepted Liens” only for so long as no
action to enforce such Lien has been commenced and no intention to subordinate
the first priority Lien granted in favor of the Administrative Agent and the
Lenders is to be hereby implied or expressed by the permitted existence of such
Excepted Liens.

“Excluded Taxes” means, with respect to any Agent, any Lender, any Issuing Bank
or any other recipient of any payment to be made by or on account of any
obligation of any Credit Party hereunder or under any other Loan Document,
(a) income or franchise taxes imposed on (or measured by) its income or net
income by the United States of America or such other jurisdiction under the laws
of which such recipient is organized, or is or should be qualified to do
business, or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which any Credit Party is located and (c) in the
case of a Foreign Lender (other than an assignee pursuant to a request by any
Borrower under Section 5.04(b)), any withholding tax that is imposed on amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party
to this Agreement (or designates a new lending office) or is attributable to
such Foreign Lender’s failure to comply with Section 5.03(e), except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts with respect to such withholding tax pursuant to
Section 5.03(a) or Section 5.03(c).

 

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“Existing Credit Agreement” has the meaning given in the recitals.

“Existing Indebtedness” has the meaning given in the recitals.

“Existing Lenders” has the meaning given in the recitals.

“Existing Loan Documents” has the meaning given in the recitals.

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, New York or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.

“Financial Officer” means, for any Person, the chief financial officer,
principal accounting officer, treasurer or controller of such Person. Unless
otherwise specified, all references herein to a Financial Officer means a
Financial Officer of Borrower Representative.

“Financial Statements” means the financial statement or statements of Parent and
its Consolidated Subsidiaries referred to in Section 7.04(a).

“First Redetermination Date” means the date that the first redetermination of
the Borrowing Base becomes effective pursuant to Section 2.07(e).

“Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than that in which the Credit Parties are located. For
purposes of this definition, the United States of America, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.

“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.

“GAAP” means generally accepted accounting principles in the United States of
America as in effect from time to time subject to the terms and conditions set
forth in Section 1.05.

“Governmental Authority” means the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government over any
Borrower, any Subsidiary, any of their Properties, any Agent, any Issuing Bank
or any Lender.

 

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“Governmental Requirement” means any applicable law, statute, code, ordinance,
order, determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement,
whether now or hereinafter in effect, including, without limitation,
Environmental Laws, energy regulations and occupational, safety and health
standards or controls, of any Governmental Authority.

“Guarantors” means Parent and each Domestic Subsidiary now or hereafter created
or acquired that guarantees the Indebtedness pursuant to Section 8.14(c).

“Guaranty Agreement” means an agreement executed by the Guarantors and being
substantially in the form of Exhibit I, pursuant to which such Guarantors
unconditionally guarantee, on a joint and several basis, payment of the
Indebtedness, as the same may be amended, modified or supplemented from time to
time.

“Highest Lawful Rate” means, with respect to each Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Notes or on other
Indebtedness under laws applicable to such Lender which are presently in effect
or, to the extent allowed by law, under such applicable laws, which may
hereafter be in effect and which allow a higher maximum nonusurious interest
rate than applicable laws allow as of the date hereof.

“Hydrocarbon Interests” means all rights, titles, interests and estates now or
hereafter acquired in and to oil and gas leases, oil, gas and mineral leases, or
other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding
royalty and royalty interests, net profit interests and production payment
interests, including any reserved or residual interests of whatever nature.

“Hydrocarbons” means oil, gas, casinghead gas, drip gasoline, natural gasoline,
condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all
products refined or separated therefrom.

“Indebtedness” means any and all amounts owing or to be owing by any Credit
Party: (a) to any Agent, any Issuing Bank or any Lender under any Loan Document;
(b) to any Secured Swap Provider under any Swap Agreement including any Swap
Agreement in existence prior to the date hereof, but excluding any additional
transactions or confirmations entered into (i) after such Secured Swap Provider
ceases to be a Lender or an Affiliate of a Lender or (ii) after assignment by a
Secured Swap Provider to another Secured Swap Provider that is not a Lender or
an Affiliate of a Lender and (c) all renewals, extensions and/or rearrangements
of any of the above whether such Person (or in the case of its Affiliate, the
Person affiliated therewith) remains a Lender hereunder.

“Indemnified Taxes” means Taxes other than Excluded Taxes.

“Initial Reserve Report” means, collectively, (a) an engineering and economic
analysis of the oil and gas reserves attributable to the Oil and Gas Properties
of the Credit Parties prepared effective as of September 30, 2006, and (b) an
engineering and economic analysis of the oil and gas reserves attributable to
the Oil and Gas Properties of Calumet and JMG prepared effective as of
September 30, 2006, in each case by Borrowers internal engineers.

 

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“Interest Election Request” means a request by the Borrowers (or Borrower
Representative) to convert or continue a Borrowing in accordance with
Section 2.04.

“Interest Payment Date” means (a) with respect to any ABR Loan, the last day of
each March, June, September and December and (b) with respect to any Eurodollar
Loan, the last day of the Interest Period applicable to the Borrowing of which
such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest
Period of more than three months’ duration, each day prior to the last day of
such Interest Period that occurs at intervals of three months’ duration after
the first day of such Interest Period.

“Interest Period” means with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrowers may elect; provided, that (a) if any Interest
Period would end on a day other than a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (b) any Interest Period
pertaining to a Eurodollar Borrowing that commences on the last Business Day of
a calendar month (or on a day for which there is no numerically corresponding
day in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period. For purposes
hereof, the date of a Borrowing initially shall be the date on which such
Borrowing is made and thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.

“Interim Redetermination” means any redetermination of the Borrowing Base and
Conforming Borrowing Base under Section 2.07(b)(ii).

“Interim Redetermination Date” means the date on which a Borrowing Base and
Conforming Borrowing Base that has been redetermined pursuant to an Interim
Redetermination becomes effective as provided in Section 2.07(e).

“Investment” means, for any Person: (a) the acquisition (whether for cash,
Property, services or securities or otherwise) of Equity Interests of any other
Person or any agreement to make any such acquisition (including, without
limitation, any “short sale” or any sale of any securities at a time when such
securities are not owned by the Person entering into such short sale) or any
capital contribution to any other Person; (b) the making of any deposit with, or
advance, loan or capital contribution to, assumption of Debt of, purchase or
other acquisition of any other Debt or equity participation or interest in, or
other extension of credit to, any other Person (including the purchase of
Property from another Person subject to an understanding or agreement,
contingent or otherwise, to resell such Property to such Person); or (c) the
entering into of any guarantee of, or other contingent obligation (including the
deposit of any Equity Interests to be sold, and including the issuance of a
letter of credit for the account of such Person) with respect to, Debt or other
liability of any other Person and (without duplication) any amount committed to
be advanced, lent or extended to such other Person.

 

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“Issuing Bank” means JPMorgan and each Lender that agrees to act as an issuer of
Letters of Credit hereunder at the request of the Administrative Agent, in each
case, in its capacity as the issuer of Letters of Credit hereunder, and its
successors in such capacity as provided in Section 2.08(i). Any Issuing Bank
may, in its discretion, arrange for one or more Letters of Credit to be issued
by Affiliates of such Issuing Bank, in which case the term “Issuing Bank” shall
include any such Affiliate with respect to Letters of Credit issued by such
Affiliate.

“JMG” has the meaning given in the introductory paragraph. After giving effect
to the Calumet Acquisition, JMG will be a Wholly-Owned Subsidiary.

“JMG GP” means J.M. Graves L.L.C., an Oklahoma limited liability company, which
shall be merged into or with, or consolidated with, a Credit Party.

“JPMorgan” has the meaning given in the introductory paragraph.

“LC Commitment” at any time means $50,000,000.

“LC Disbursement” means a payment made by any Issuing Bank pursuant to a Letter
of Credit issued by such Issuing Bank.

“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of
all outstanding Letters of Credit at such time plus (b) the aggregate amount of
all LC Disbursements that have not yet been reimbursed by or on behalf of the
Borrowers at such time. The LC Exposure of any Lender at any time shall be its
Applicable Percentage of the total LC Exposure at such time.

“Lenders” means the Persons listed on Annex I, any Person that shall have become
a party hereto pursuant to an Assignment and Assumption, other than any such
Person that ceases to be a party hereto pursuant to an Assignment and
Assumption, and any Person that shall have become a party hereto as an
Additional Lender pursuant to Section 2.06(c).

“Letter of Credit” means any letter of credit issued pursuant to this Agreement.

“Letter of Credit Agreements” means all letter of credit applications and other
agreements (including any amendments, modifications or supplements thereto)
submitted by any Borrower, or entered into by any Borrower, with any Issuing
Bank relating to any Letter of Credit issued by such Issuing Bank.

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, the rate appearing on Page 3750 of the Dow Jones Market Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the “LIBO Rate” with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of

 

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$5,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.

“Lien” means any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including but not limited to (a) the lien or
security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes or (b) royalties, production payments and the like payable
out of Oil and Gas Properties. The term “Lien” shall include easements,
restrictions, servitudes, permits, conditions, covenants, encroachments,
exceptions or reservations. For the purposes of this Agreement, the Borrowers
and their Subsidiaries shall be deemed to be the owner of any Property which it
has acquired or holds subject to a conditional sale agreement, or leases under a
financing lease or other arrangement pursuant to which title to the Property has
been retained by or vested in some other Person in a transaction intended to
create a financing.

“Loan Documents” means this Agreement, the Notes, the Letter of Credit
Agreements, the Letters of Credit, the Certificate of Effectiveness, and the
Security Instruments.

“Loans” means the loans made by the Lenders to the Borrowers pursuant to this
Agreement.

“Majority Lenders” means, at any time while no Loans or LC Exposure is
outstanding, Lenders having more than fifty percent (50%) of the Aggregate
Maximum Credit Amounts; and at any time while any Loans or LC Exposure is
outstanding, Lenders holding more than fifty percent (50%) of the outstanding
aggregate principal amount of the Loans or participation interests in such
Letters of Credit (without regard to any sale by a Lender of a participation in
any Loan under Section 12.04(c)).

“Mandatory Redetermination” means any redetermination of the Borrowing Base and
Conforming Borrowing Base under Section 2.07(d).

“Mandatory Redetermination Date” means (a) February 1, 2007, (b) May 1, 2007,
and (c) the date on which a Borrowing Base and, as applicable, Conforming
Borrowing Base that has been redetermined pursuant to a Mandatory
Redetermination under Section 2.07(d)(iii) becomes effective as provided under
Section 2.07(e)(iv).

“Material Adverse Effect” means a material adverse effect on (a) the business,
operations, Property, condition (financial or otherwise) or prospects of the
Credit Parties taken as a whole, (b) the ability of any Credit Party to perform
any of its obligations under any Loan Document, (c) the validity or
enforceability of any Loan Document or (d) the rights and remedies of or
benefits available to the Administrative Agent, any other Agent, any Issuing
Bank or any Lender under any Loan Document.

 

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“Material Indebtedness” means Debt (other than the Loans and Letters of Credit),
or obligations in respect of one or more Swap Agreements, of any one or more of
the Credit Parties in an aggregate principal amount exceeding $7,500,000. For
purposes of determining Material Indebtedness, the “principal amount” of the
obligations of any Credit Party in respect of any Swap Agreement at any time
shall be the maximum aggregate amount (giving effect to any netting agreements)
that such Credit Party would be required to pay if such Swap Agreement were
terminated at such time.

“Maturity Date” means October 31, 2010.

“Maximum Credit Amount” means, as to each Lender, the amount set forth opposite
such Lender’s name on Annex I under the caption “Maximum Credit Amount,” as the
same may be (a) reduced or terminated from time to time in connection with a
reduction or termination of the Aggregate Maximum Credit Amount pursuant to
Section 2.06(b), (b) increased from time to time pursuant to Section 2.06(c), or
(c) modified from time to time pursuant to any assignment permitted by
Section 12.04(b).

“Maximum Credit Amount Increase Certificate” has the meaning assigned to such
term in Section 2.06(c)(ii)(E).

“Monthly Date” means the last day of each calendar month.

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto that
is a nationally recognized rating agency.

“Mortgaged Property” means any Property owned by any Credit Party that is
subject to the Liens existing and to exist under the terms of the Security
Instruments.

“Mortgages” means all mortgages, deeds of trust and similar documents,
instruments and agreements (and all amendments, modifications and supplements
thereof) creating, evidencing, perfecting or otherwise establishing the Liens on
Mortgaged Property to secure payment of the Indebtedness or any party thereof.
All Mortgages shall be in form and substance satisfactory to the Administrative
Agent in its sole discretion.

“Multiemployer Plan” means a Plan which is a multiemployer plan as defined in
section 3(37) or 4001 (a)(3) of ERISA.

“New Borrowing Base Notice” has the meaning assigned to such term in
Section 2.07(e).

“Non-Recourse Debt” means Debt of a Person with respect to which such Person has
no personal liability and the creditor’s recourse for payment is contractually
limited to specific assets encumbered by a Lien securing such Debt, except for
guaranties of, or liabilities for, fraud, misrepresentation or gross negligence.

“NorAm” has the meaning given in the introductory paragraph.

 

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“Notes” means the promissory notes of the Borrowers described in Section 2.02(d)
and being substantially in the form of Exhibit A, together with all amendments,
modifications, replacements, extensions and rearrangements thereof.

“Oil and Gas Properties” means (a) Hydrocarbon Interests; (b) the Properties now
or hereafter pooled or unitized with Hydrocarbon Interests; (c) all presently
existing or future unitization, pooling agreements and declarations of pooled
units and the units created thereby (including without limitation all units
created under orders, regulations and rules of any Governmental Authority) which
may affect all or any portion of the Hydrocarbon Interests; (d) all operating
agreements, contracts and other agreements, including production sharing
contracts and agreements, which relate to any of the Hydrocarbon Interests or
the production, sale, purchase, exchange or processing of Hydrocarbons from or
attributable to such Hydrocarbon Interests; (e) all Hydrocarbons in and under
and which may be produced and saved or attributable to the Hydrocarbon
Interests, including all oil in tanks, and all rents, issues, profits, proceeds,
products, revenues and other incomes from or attributable to the Hydrocarbon
Interests; (f) all tenements, hereditaments, appurtenances and Properties in any
manner appertaining, belonging, affixed or incidental to the Hydrocarbon
Interests and (g) all Properties, rights, titles, interests and estates
described or referred to above, including any and all Property, real or
personal, now owned or hereinafter acquired and situated upon, used, held for
use or useful in connection with the operating, working or development of any of
such Hydrocarbon Interests or Property (excluding drilling rigs, automotive
equipment, rental equipment or other personal Property which may be on such
premises for the purpose of drilling a well or for other similar temporary uses)
and including any and all oil wells, gas wells, injection wells or other wells,
buildings, structures, fuel separators, liquid extraction plants, plant
compressors, pumps, pumping units, field gathering systems, tanks and tank
batteries, fixtures, valves, fittings, machinery and parts, engines, boilers,
meters, apparatus, equipment, appliances, tools, implements, cables, wires,
towers, casing, tubing and rods, surface leases, rights-of-way, easements and
servitudes together with all additions, substitutions, replacements, accessions
and attachments to any and all of the foregoing.

“Oklahoma Ethanol” means Oklahoma Ethanol LLC, an Oklahoma limited liability
company.

“Oklahoma Ethanol Agreement” means that certain Agreement dated as of April 29,
2005 by and between Oklahoma Farmers Union Sustainable Energy LLC, an Oklahoma
limited liability company, and Chaparral, as amended or modified from time to
time.

“Other Taxes” means any and all present or future stamp or documentary taxes or
any other excise or Property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement and any other Loan Document.

“Parent” means Chaparral Energy, Inc., a Delaware corporation, successor by
merger to Chaparral, L.L.C.

“Parent Pledge Agreement” means an agreement executed by Parent and being
substantially in the form of Exhibit F, pursuant to which Parent pledges to the
Administrative

 

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Agent, for the ratable benefit of the Lenders and any Secured Swap Provider, all
of the issued and outstanding Equity Interests owned by Parent of each Borrower
to secure the Indebtedness.

“Participant” has the meaning set forth in Section 12.04(c)(i).

“Patriot Act” has the meaning set forth in Section 12.15.

“PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.

“Permitted 2005 Bond Debt” means Debt of Parent resulting from the single issue
of Parent’s senior unsecured notes in an aggregate outstanding principal amount
of $325,000,000, and which Debt (a) has a coupon or interest rate of eight and
one-half percent (8.5%) per annum, (b) shall not mature sooner than the date
which is one year following the earlier of (i) the Maturity Date, and (ii) the
date on which there are no Loans, LC Exposure or other obligations hereunder
outstanding and all of the Commitments are terminated, (c) is not secured by any
Properties of the Credit Parties, (d) does not provide for or otherwise require
any amortization prior to scheduled maturity, and (e) is evidenced and governed
by an indenture and related documentation containing customary terms and
conditions, including, without limitation, covenants and events of default, for
senior unsecured notes or senior subordinated notes of like tenor and amount,
each of which shall be satisfactory to the Administrative Agent in its sole
reasonable discretion.

“Permitted 2005 Bond Documents” means, collectively, the indenture, senior
unsecured notes, all guarantees of any such notes, and all other agreements,
documents or instruments executed and delivered by any Credit Party in
connection with, or pursuant to, the issuance of Permitted 2005 Bond Debt.

“Permitted Additional Bond Debt” means Debt of any Credit Party resulting from
the issue of such Credit Party’s senior unsecured notes or senior subordinated
notes in an aggregate outstanding principal amount of not greater than
$350,000,000, and which Debt (a) has a coupon or interest rate not in excess of
twelve percent (12%) per annum, (b) shall not mature sooner than the date which
is one year following the earlier of (i) the Maturity Date, and (ii) the date on
which there are no Loans, LC Exposure or other obligations hereunder outstanding
and all of the Commitments are terminated, (c) is not secured by any Properties
of the Credit Parties, (d) does not provide for or otherwise require any
amortization prior to scheduled maturity, and (e) is evidenced and governed by
an indenture and related documentation containing customary terms and
conditions, including, without limitation, covenants and events of default, for
senior unsecured notes or senior subordinated notes of like tenor and amount,
each of which shall be satisfactory to the Administrative Agent in its sole
reasonable discretion.

“Permitted Additional Bond Documents” means, collectively, the indenture, senior
unsecured notes, senior subordinated notes, all guarantees of any such notes,
and all other agreements, documents or instruments executed and delivered by any
Credit Party in connection with, or pursuant to, the issuance of the Permitted
Additional Bond Debt.

“Permitted Bond Debt” means, collectively, the Permitted 2005 Bond Debt and any
Permitted Additional Bond Debt.

 

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“Permitted Bond Documents” means, collectively, the Permitted 2005 Bond
Documents and the Permitted Additional Bond Documents.

“Permitted Immaterial Asset Sales” means, during any period when the Borrowing
Base is greater than the Conforming Borrowing Base, the sale or disposition of
Oil and Gas Properties with a fair market value of not greater than $10,000,000
in the aggregate.

“Permitted Tax Distributions” means, for any applicable tax year of Parent,
quarterly tax distributions to Parent in an amount equal to the aggregate
federal, state and local income tax liability then due and owing with respect to
the net income of the Borrowers for such tax year (calculated using the highest
federal, state and local effective marginal income tax rates applicable to an
individual) taking into account losses of the Borrowers from prior periods.

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

“Pipeline” has the meaning given in the introductory paragraph.

“Plan” means any employee pension benefit plan, as defined in section 3(2) of
ERISA, which (a) is currently or hereafter sponsored, maintained or contributed
to by the Borrower, a Subsidiary or an ERISA Affiliate or (b) was at any time
during the six calendar years preceding the date hereof, sponsored, maintained
or contributed to by a Credit Party or an ERISA Affiliate.

“Pledge Agreement” means any Parent Pledge Agreement, Borrower Pledge Agreement
or Subsidiary Pledge Agreement, and “Pledge Agreements” means all of such Pledge
Agreements.

“Pointe Vista” means Pointe Vista Development, L.L.C., an Oklahoma limited
liability company.

“Prime Rate” means the rate of interest per annum publicly announced from time
to time by JPMorgan as its prime rate in effect at its principal office in New
York City; each change in the Prime Rate shall be effective from and including
the date such change is publicly announced as being effective. Such rate is set
by the Administrative Agent as a general reference rate of interest, taking into
account such factors as the Administrative Agent may deem appropriate; it being
understood that many of the Administrative Agent’s commercial or other loans are
priced in relation to such rate, that it is not necessarily the lowest or best
rate actually charged to any customer and that the Administrative Agent may make
various commercial or other loans at rates of interest having no relationship to
such rate.

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible, including, without limitation,
cash, securities, accounts and contract rights.

“Proposed Borrowing Base” has the meaning assigned to such term in
Section 2.07(c)(i).

“Proposed Borrowing Base Notice” has the meaning assigned to such term in
Section 2.07(c)(ii).

 

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“Proposed Conforming Borrowing Base” has the meaning assigned to such term in
Section 2.07(c)(i).

“Real Estate” has the meaning given in the introductory paragraph.

“Recognized Value” means, with respect to all Oil and Gas Properties of the
Borrowers constituting proved reserves, the discounted present value of the
estimated net cash flow to be realized from the production of Hydrocarbons from
all such Oil and Gas Properties which the Administrative Agent attributes to
such Oil and Gas Properties for the purposes of the most recent redetermination
of the Borrowing Base (or for purposes of determining the initial Borrowing Base
in the event no such redetermination has occurred).

“Redemption” means with respect to any Debt, the repurchase, redemption,
prepayment, repayment or defeasance (or the segregation of funds with respect to
any of the foregoing) of such Debt. “Redeem” has the correlative meaning
thereto.

“Redetermination Date” means, with respect to any Scheduled Redetermination, any
Interim Redetermination, or any Mandatory Redetermination, the date that the
redetermined Borrowing Base and/or Conforming Borrowing Base related thereto
becomes effective pursuant to Section 2.07(e).

“Register” has the meaning assigned such term in Section 12.04(b)(iv).

“Regulation D” means Regulation D of the Board, as the same may be amended,
supplemented or replaced from time to time.

“Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors (including attorneys, accountants and experts) of such Person and such
Person’s Affiliates.

“Remedial Work” has the meaning assigned such term in Section 8.10(a).

“Required Lenders” means, at any time while no Loans or LC Exposure is
outstanding, Lenders having at least sixty-six and two-thirds percent (66 2/3%)
of the Aggregate Maximum Credit Amounts; and at any time while any Loans or LC
Exposure is outstanding, Lenders holding at least sixty-six and two-thirds
percent (66 2/3%) of the outstanding aggregate principal amount of the Loans or
participation interests in such Letters of Credit (without regard to any sale by
a Lender of a participation in any Loan under Section 12.04(c)).

“Reserve Report” means a report, in form and substance reasonably satisfactory
to the Administrative Agent, setting forth, as of each December 31st and
June 30th (and such other date in the event of an Interim Redetermination) the
oil and gas reserves attributable to the proved Oil and Gas Properties of the
Borrowers and their Subsidiaries (or as for Interim Redeterminations, the proved
Oil and Gas Properties of the Borrowers and their Subsidiaries acquired since
the last redetermination of the Borrowing Base), together with a projection of
the rate of production and future net income, taxes, operating expenses and
capital expenditures with respect thereto as of such date. Until superseded, the
Initial Reserve Report shall be considered the Reserve Report.

 

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“Resources” has the meaning given in the introductory paragraph.

“Responsible Officer” means, as to any Person, the Manager, the Chief Executive
Officer, the Chief Operating Officer, the President, any Financial Officer or
any Vice President of such Person. Unless otherwise specified, all references to
a Responsible Officer herein shall mean a Responsible Officer of Borrower
Representative.

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other Property) with respect to any Equity Interests in any Credit
Party, or any payment (whether in cash, securities or other Property), including
any sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any such Equity
Interests in any Credit Party or any option, warrant or other right to acquire
any such Equity Interests in any Credit Party.

“Rolling Period” means (a) for the fiscal quarters ending on March 31, 2007,
June 30, 2007 and September 30, 2007, the applicable period commencing on
January 1, 2007 and ending on the last day of such applicable fiscal quarter,
and (b) for the fiscal quarter ending on December 31, 2007, and for each fiscal
quarter thereafter, any period of four (4) consecutive fiscal quarters ending on
the last day of such applicable fiscal quarter.

“Scheduled Redetermination” has the meaning assigned to such term in
Section 2.07(b)(i).

“Scheduled Redetermination Date” means the date on which a Borrowing Base and/or
Conforming Borrowing Base that has been redetermined pursuant to a Scheduled
Redetermination becomes effective as provided in Section 2.07(e).

“SEC” means the U.S. Securities and Exchange Commission or any successor
Governmental Authority.

“Secured Swap Provider” means any (a) Person that is a party to a Swap Agreement
with a Borrower or any of its Subsidiaries that entered into such Swap Agreement
while such Person was a Lender or an Affiliate of a Lender, whether or not such
Person at any time ceases to be a Lender or an Affiliate of a Lender, as the
case may be, or (b) assignee of any Person described in clause (a) above so long
as such assignee is an Approved Counterparty.

“Security Instruments” means any Guaranty Agreement, any Pledge Agreement, any
Mortgage, any security agreement and any and all other agreements, instruments
or certificates now or hereafter executed and delivered by a Credit Party or any
other Person (other than Swap Agreements with the Lenders or any Affiliate of a
Lender or participation or similar agreements between any Lender and any other
lender or creditor with respect to any Indebtedness pursuant to this Agreement)
in connection with, or as security for the payment or performance of the
Indebtedness, the Notes, this Agreement, or reimbursement obligations under the
Letters of Credit, as such agreements may be amended, modified, supplemented or
restated from time to time.

“Sellers” has the meaning set forth in the Calumet Acquisition Agreement.

 

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“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill
Companies, Inc., and any successor thereto that is a nationally recognized
rating agency.

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject, with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.

“subject Borrower” has the meaning set forth in Section 3.06(b).

“Subsidiary” means: (a) any Person of which at least a majority of the
outstanding Equity Interests having by the terms thereof ordinary voting power
to elect a majority of the board of directors, managers or other governing body
of such Person (irrespective of whether or not at the time Equity Interests of
any other class or classes of such Person shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by Parent, a Borrower or one or more of their
Subsidiaries or by Parent, a Borrower and one or more of their Subsidiaries and
(b) any partnership of which a Credit Party is a general partner. Unless
otherwise indicated herein, (i) each reference to the term “Subsidiary” shall
mean a direct or indirect Subsidiary of Parent (including, without limitation,
Calumet and JMG), and (ii) none of Oklahoma Ethanol, Pointe Vista nor JMG GP
shall be deemed a “Subsidiary” of any Credit Party hereunder.

“Subsidiary Pledge Agreement” means an agreement executed by each existing and
future Subsidiary and being substantially in the form of Exhibit H, pursuant to
which such Subsidiary pledges to the Administrative Agent, for the ratable
benefit of the Lenders and any Secured Swap Provider, all of the issued and
outstanding Equity Interests owned by such Subsidiary of any other Subsidiary to
secure the Indebtedness.

“Substantial Portion” means, with respect to the Property of any Credit Party,
Property which represents more than 10% of the consolidated assets of such
Person, or Property which is responsible for more than 10% of the consolidated
net sales or of the consolidated net income of such Person, in each case, as
would be shown in the consolidated financial statements of such Person as at the
beginning of the twelve-month period ending with the month in which such
determination is made (or if financial statements have not been delivered
hereunder for that month which begins the twelve-month period, then the
financial statements delivered hereunder for the quarter ending immediately
prior to that month).

“Swap Agreement” means any agreement with respect to any swap, cap, floor,
collar, forward, future or derivative transaction or option or similar
agreement, whether exchange

 

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traded, “over-the-counter” or otherwise, involving, or settled by reference to,
one or more rates, currencies, commodities, equity or debt instruments or
securities, or economic, financial or pricing indices or measures of economic,
financial or pricing risk or value or any similar transaction or any combination
of these transactions.

“Syndication Agents” has the meaning given in the introductory paragraph.

“Synthetic Leases” means, in respect of any Person, all leases which shall have
been, or should have been, in accordance with GAAP, treated as operating leases
on the financial statements of the Person liable (whether contingently or
otherwise) for the payment of rent thereunder and which were properly treated as
indebtedness for borrowed money for purposes of U.S. federal income taxes, if
the lessee in respect thereof is obligated to either purchase for an amount in
excess of, or pay upon early termination an amount in excess of, 80% of the
residual value of the Property subject to such operating lease upon expiration
or early termination of such lease.

“Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.

“Termination Date” means the earlier of the Maturity Date and the date of
termination of the Commitments.

“Tools” has the meaning given in the introductory paragraph.

“Transactions” means, with respect to (a) the Borrowers, the execution, delivery
and performance by the Borrowers of this Agreement, each other Loan Document to
which it is a party, the borrowing of Loans, the use of the proceeds thereof and
the issuance of Letters of Credit hereunder, and the grant of Liens by the
Borrowers on Mortgaged Properties and other Properties pursuant to the Security
Instruments and (b) each Guarantor, the execution, delivery and performance by
such Guarantor of each Loan Document to which it is a party, the guaranteeing of
the Indebtedness and the other obligations under a Guaranty Agreement by such
Guarantor and such Guarantor’s grant of the security interests and provision of
collateral thereunder, and the grant of Liens by such Guarantor, as applicable,
on Mortgaged Properties and other Properties pursuant to the Security
Instruments.

“Type”, when used in reference to any Loan or Borrowing, refers to whether the
rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Alternate Base Rate or the Adjusted LIBO Rate.

“Wholly-Owned Subsidiary” means any Subsidiary of which all of the outstanding
Equity Interests (other than any directors’ qualifying shares mandated by
applicable law), on a fully-diluted basis, are owned by Parent, a Borrower or
one or more of the Wholly-Owned Subsidiaries or by Parent, a Borrower and one or
more of the Wholly-Owned Subsidiaries.

Section 1.03 Types of Loans and Borrowings. For purposes of this Agreement,
Loans and Borrowings, respectively, may be classified and referred to by Type
(e.g., a “Eurodollar Loan” or a “Eurodollar Borrowing”).

 

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Section 1.04 Terms Generally; Rules of Construction. The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation”. The word “will” shall be construed to have the same meaning and
effect as the word “shall”. Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document herein
shall be construed as referring to such agreement, instrument or other document
as from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any law shall be construed as referring to such law
as amended, modified, codified or reenacted, in whole or in part, and in effect
from time to time, (c) any reference herein to any Person shall be construed to
include such Person’s successors and assigns (subject to the restrictions
contained herein), (d) the words “herein”, “hereof” and “hereunder”, and words
of similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, (e) with respect to the
determination of any time period, the word “from” means “from and including” and
the word “to” means “to and including” and (f) any reference herein to Articles,
Sections, Annexes, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Annexes, Exhibits and Schedules to, this
Agreement. No provision of this Agreement or any other Loan Document shall be
interpreted or construed against any Person solely because such Person or its
legal representative drafted such provision.

Section 1.05 Accounting Terms and Determinations; GAAP. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Agents or the Lenders hereunder shall be
prepared, in accordance with GAAP, applied on a basis consistent with the
Financial Statements except for changes in which Parent’s independent certified
public accountants concur and which are disclosed to Administrative Agent on the
next date on which financial statements are required to be delivered to the
Lenders pursuant to Section 8.01(a); provided that, unless Parent, the Borrowers
and the Majority Lenders shall otherwise agree in writing, no such change shall
modify or affect the manner in which compliance with the covenants contained
herein is computed such that all such computations shall be conducted utilizing
financial information presented consistently with prior periods.

ARTICLE II

THE CREDITS

Section 2.01 Commitments. Subject to the terms and conditions set forth herein,
each Lender agrees to make Loans to the Borrowers during the Availability Period
in an aggregate principal amount that will not result in (a) such Lender’s
Credit Exposure exceeding such Lender’s Commitment or (b) the total Credit
Exposures exceeding the total Commitments. Within the foregoing limits and
subject to the terms and conditions set forth herein, the Borrowers may borrow,
repay and reborrow the Loans.

 

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Section 2.02 Loans and Borrowings.

(a) Borrowings; Several Obligations. Each Loan shall be made as part of a
Borrowing consisting of Loans made by the Lenders ratably in accordance with
their respective Commitments. The failure of any Lender to make any Loan
required to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Commitments are several and no Lender shall be
responsible for any other Lender’s failure to make Loans as required.

(b) Types of Loans. Subject to Section 3.03, each Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as the Borrowers may request in
accordance herewith. Each Lender at its option may make any Eurodollar Loan by
causing any domestic or foreign branch or Affiliate of such Lender to make such
Loan; provided that any exercise of such option shall not affect the joint and
several obligation of the Borrowers to repay such Loan in accordance with the
terms of this Agreement.

(c) Minimum Amounts; Limitation on Number of Borrowings. At the commencement of
each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an
aggregate amount that is an integral multiple of $1,000,000 and not less than
$3,000,000. At the time that each ABR Borrowing is made, such Borrowing shall be
in an aggregate amount that is an integral multiple of $500,000 and not less
than $1,000,000; provided that an ABR Borrowing may be in an aggregate amount
that is equal to the entire unused balance of the total Commitments or that is
required to finance the reimbursement of an LC Disbursement as contemplated by
Section 2.08(e). Borrowings of more than one Type may be outstanding at the same
time; provided that there shall not at any time be more than a total of five
(5) Eurodollar Borrowings outstanding. Notwithstanding any other provision of
this Agreement, the Borrowers shall not be entitled to request, or to elect to
convert or continue, any Borrowing if the Interest Period requested with respect
thereto would end after the Maturity Date.

(d) Notes. The Loans made by the Lenders shall be evidenced by a promissory
note, executed and delivered by the Borrowers, payable to the order of each
Lender in substantially the form of Exhibit A, dated, in the case of (i) any
Lender party hereto as of the date of this Agreement, as of the date of this
Agreement, (ii) any Lender that becomes a party hereto pursuant to an Assignment
and Assumption, as of the effective date of the Assignment and Assumption, or
(iii) any Lender that becomes a party hereto in connection with an increase in
the Aggregate Maximum Credit Amount pursuant to Section 2.06(c), as of the
effective date of such increase, payable to the order of such Lender in a
principal amount equal to its Maximum Credit Amount as in effect on such date,
and otherwise duly completed. If any Lender’s Maximum Credit Amount increases or
decreases for any reason (whether pursuant to Section 2.06(c), Section 12.04(b)
or otherwise), the Borrowers shall deliver or cause to be delivered on the
effective date of such increase or decrease, a new Note payable to the order of
such Lender in a principal amount equal to its Maximum Credit Amount after
giving effect to such increase or decrease, and otherwise duly completed, and
such Lender agrees to promptly thereafter return the previously issued Note held
by such Lender marked canceled or otherwise similarly defaced. The date, amount,
Type, interest rate and, if applicable, Interest Period of each Loan made by
each Lender, and all payments made on account of the principal thereof, shall be
recorded by such Lender on its books for its Note, and, prior to any transfer,
may be endorsed by such Lender on a schedule attached to such Note or any
continuation thereof or on any separate record

 

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maintained by such Lender. Failure to make any such notation or to attach a
schedule shall not affect any Lender’s or any Borrower’s rights or obligations
in respect of such Loans or affect the validity of such transfer by any Lender
of its Note.

Section 2.03 Requests for Borrowings. To request a Borrowing, the Borrowers (or
Borrower Representative) shall notify the Administrative Agent of such request
by telephone or by written Borrowing Request in substantially the form of
Exhibit B and signed by the Borrowers (or Borrower Representative) (a “written
Borrowing Request”): (a) in the case of a Eurodollar Borrowing, not later than
12:00 noon, Chicago, Illinois time, three Business Days before the date of the
proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 12:00
noon, Chicago, Illinois time, on the Business Day of the proposed Borrowing;
provided that no such notice shall be required for any deemed request of an ABR
Borrowing to finance the reimbursement of an LC Disbursement as provided in
Section 2.08(e). Each telephonic and written Borrowing Request shall be
irrevocable and each telephonic Borrowing Request shall be confirmed promptly by
hand delivery or telecopy to the Administrative Agent of a written Borrowing
Request. Each such telephonic and written Borrowing Request shall specify the
following information in compliance with Section 2.02:

(i) the aggregate amount of the requested Borrowing;

(ii) the date of such Borrowing, which shall be a Business Day;

(iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;

(iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by the definition of
the term “Interest Period”;

(v) the amount of the then effective Borrowing Base, the current total Credit
Exposures (without regard to the requested Borrowing) and the pro forma total
Credit Exposures (giving effect to the requested Borrowing); and

(vi) the location and number of the Borrowers’ account to which funds are to be
disbursed, which shall comply with the requirements of Section 2.05.

If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrowers shall be
deemed to have selected an Interest Period of one month’s duration. Each
Borrowing Request shall constitute a representation that the amount of the
requested Borrowing shall not cause the total Credit Exposures to exceed the
total Commitments (i.e., the lesser of the Aggregate Maximum Credit Amounts and
the then effective Borrowing Base). Promptly following receipt of a Borrowing
Request in accordance with this Section 2.03, the Administrative Agent shall
advise each Lender of the details thereof and of the amount of such Lender’s
Loan to be made as part of the requested Borrowing.

 

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Section 2.04 Interest Elections.

(a) Conversion and Continuance. Each Borrowing initially shall be of the Type
specified in the applicable Borrowing Request and, in the case of a Eurodollar
Borrowing, shall have an initial Interest Period as specified in such Borrowing
Request. Thereafter, the Borrowers may elect to convert such Borrowing to a
different Type or to continue such Borrowing and, in the case of a Eurodollar
Borrowing, may elect Interest Periods therefor, all as provided in this
Section 2.04. The Borrowers may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.

(b) Interest Election Requests. To make an election pursuant to this
Section 2.04, the Borrowers (or Borrower Representative) shall notify the
Administrative Agent of such election by telephone or by a written Interest
Election Request in substantially the form of Exhibit C and signed by the
Borrowers (or Borrower Representative) (a “written Interest Election Request”)
by the time that a Borrowing Request would be required under Section 2.03 if the
Borrowers were requesting a Borrowing of the Type resulting from such election
to be made on the effective date of such election. Each telephonic and written
Interest Election Request shall be irrevocable and each telephonic Interest
Election Request shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Interest Election Request.

(c) Information in Interest Election Requests. Each telephonic and written
Interest Election Request shall specify the following information in compliance
with Section 2.02:

(i) the Borrowing to which such Interest Election Request applies and, if
different options are being elected with respect to different portions thereof,
the portions thereof to be allocated to each resulting Borrowing (in which case
the information to be specified pursuant to Section 2.04(c)(iii) and (iv) shall
be specified for each resulting Borrowing);

(ii) the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;

(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing; and

(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period
to be applicable thereto after giving effect to such election, which shall be a
period contemplated by the definition of the term “Interest Period”.

If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrowers shall be deemed to have
selected an Interest Period of one month’s duration.

 

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(d) Notice to Lenders by the Administrative Agent. Promptly following receipt of
an Interest Election Request, the Administrative Agent shall advise each Lender
of the details thereof and of such Lender’s portion of each resulting Borrowing.

(e) Effect of Failure to Deliver Timely Interest Election Request and Events of
Default on Interest Election. If the Borrowers fail to deliver a timely Interest
Election Request with respect to a Eurodollar Borrowing prior to the end of the
Interest Period applicable thereto, then, unless such Borrowing is repaid as
provided herein, at the end of such Interest Period such Borrowing shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if
an Event of Default has occurred and is continuing: (i) no outstanding Borrowing
may be converted to or continued as a Eurodollar Borrowing (and any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective)
and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR
Borrowing at the end of the Interest Period applicable thereto.

Section 2.05 Funding of Borrowings.

(a) Funding by Lenders. Each Lender shall make each Loan to be made by it
hereunder on the proposed date thereof by wire transfer of immediately available
funds by 1:00 p.m., Chicago, Illinois time, to the account of the Administrative
Agent most recently designated by it for such purpose by notice to the Lenders.
The Administrative Agent will make such Loans available to the Borrowers by
promptly crediting the amounts so received, in like funds, to an account of the
Borrowers maintained with the Administrative Agent and designated by the
Borrowers (or Borrower Representative) in the applicable Borrowing Request;
provided that ABR Loans made to finance the reimbursement of an LC Disbursement
as provided in Section 2.08(e) shall be remitted by the Administrative Agent to
the Issuing Bank that made such LC Disbursement.

(b) Presumption of Funding by the Lenders. Unless the Administrative Agent shall
have received notice from a Lender prior to the proposed date of any Borrowing
that such Lender will not make available to the Administrative Agent such
Lender’s share of such Borrowing, the Administrative Agent may assume that such
Lender has made such share available on such date in accordance with
Section 2.05(a) and may, in reliance upon such assumption, make available to the
Borrowers a corresponding amount. In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrowers severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the Borrowers to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation or (ii) in
the case of the Borrowers, the interest rate applicable to ABR Loans. If such
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender’s Loan included in such Borrowing.

 

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Section 2.06 Changes in the Aggregate Maximum Credit Amounts.

(a) Scheduled Termination of Commitments. Unless previously terminated, the
Commitments shall terminate on the Maturity Date. If at any time the Aggregate
Maximum Credit Amounts are terminated in full or reduced to zero, then the
Commitments shall terminate on the effective date of such termination or
reduction.

(b) Optional Termination and Reduction of Aggregate Credit Amounts.

(i) The Borrowers may at any time terminate, or from time to time reduce, the
Aggregate Maximum Credit Amounts; provided that (A) each reduction of the
Aggregate Maximum Credit Amounts shall be in an amount that is an integral
multiple of $1,000,000 and not less than $10,000,000 and (B) the Borrowers shall
not terminate or reduce the Aggregate Maximum Credit Amounts if, after giving
effect to any concurrent prepayment of the Loans in accordance with
Section 3.04(c), the total Credit Exposures would exceed the total Commitments.

(ii) The Borrowers (or the Borrower Representative) shall notify the
Administrative Agent of any election to terminate or reduce the Aggregate
Maximum Credit Amounts under Section 2.06(b)(i) at least three Business Days
prior to the effective date of such termination or reduction, specifying such
election and the effective date thereof. Promptly following receipt of any
notice, the Administrative Agent shall advise the Lenders of the contents
thereof. Each notice delivered by the Borrowers (or the Borrower Representative)
pursuant to this Section 2.06(b)(ii) shall be irrevocable. Any termination or
reduction of the Aggregate Maximum Credit Amounts shall be permanent and may not
be reinstated except pursuant to Section 2.06(c). Each reduction of the
Aggregate Maximum Credit Amounts shall be made ratably among the Lenders in
accordance with each Lender’s Applicable Percentage.

(c) Optional Increase in Aggregate Maximum Credit Amount.

(i) Subject to the conditions set forth in Section 2.06(c)(ii), the Borrowers
may increase the Aggregate Maximum Credit Amount then in effect with the prior
written consent of the Administrative Agent by increasing the Maximum Credit
Amount of a Lender or by causing a Person that at such time is not a Lender to
become a Lender (an “Additional Lender”).

(ii) Any increase in the Aggregate Maximum Credit Amount shall be subject to the
following additional conditions:

(A) such increase shall not be less than $10,000,000 unless the Administrative
Agent otherwise consents, and no such increase shall be permitted if after
giving effect thereto the aggregate amount of all such increases exceeds
$250,000,000;

(B) no Default shall have occurred and be continuing at the effective date of
such increase;

 

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(C) on the effective date of such increase, no Eurodollar Borrowings shall be
outstanding or if any Eurodollar Borrowings are outstanding, then the effective
date of such increase shall be the last day of the Interest Period in respect of
such Eurodollar Borrowings unless the Borrowers pay compensation required by
Section 5.02;

(D) no Lender’s Maximum Credit Amount may be increased without the consent of
such Lender;

(E) if the Borrowers elect to increase the Aggregate Maximum Credit Amount by
increasing the Maximum Credit Amount of a Lender, the Borrower Representative
(on behalf of the Borrowers) and such Lender shall execute and deliver to the
Administrative Agent a certificate substantially in the form of Exhibit K (a
“Maximum Credit Amount Increase Certificate”); and

(F) if the Borrowers elect to increase the Aggregate Maximum Credit Amount by
causing an Additional Lender to become a party to this Agreement, then the
Borrower Representative (on behalf of the Borrowers) and such Additional Lender
shall execute and deliver to the Administrative Agent a certificate
substantially in the form of Exhibit L (an “Additional Lender Certificate”),
together with an Administrative Questionnaire and a processing and recordation
fee of $3,500, and the Borrowers shall, if requested by the Additional Lender,
deliver a Note payable to the order of such Additional Lender in a principal
amount equal to its Maximum Credit Amount, and otherwise duly completed.

(iii) Subject to acceptance and recording thereof pursuant to
Section 2.06(c)(iv), from and after the effective date specified in the Maximum
Credit Amount Increase Certificate or the Additional Lender Certificate (or if
any Eurodollar Borrowings are outstanding, then the last day of the Interest
Period in respect of such Eurodollar Borrowings, unless the Borrowers have paid
compensation required by Section 5.02): (A) the amount of the Aggregate Maximum
Credit Amount shall be increased as set forth therein, and (B) in the case of an
Additional Lender Certificate, any Additional Lender party thereto shall become
a party to this Agreement and have the rights and obligations of a Lender under
this Agreement and the other Loan Documents. In addition, the Lender or the
Additional Lender, as applicable, shall purchase a pro rata portion of the
outstanding Loans (and participation interests in Letters of Credit) of each of
the other Lenders (and such Lenders hereby agree to sell and to take all such
further action to effectuate such sale) such that each Lender (including any
Additional Lender, if applicable) shall hold its Applicable Percentage of the
outstanding Loans (and participation interests) after giving effect to the
increase in the Aggregate Maximum Credit Amount.

(iv) Upon its receipt of a duly completed Maximum Credit Amount Increase
Certificate or an Additional Lender Certificate, executed by the Borrower
Representative (on behalf of the Borrowers) and the Lender or by the Borrower
Representative (on behalf of the Borrowers) and the Additional Lender party
thereto, as

 

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applicable, the processing and recording fee referred to in Section 2.06(c)(ii),
the Administrative Questionnaire referred to in Section 2.06(c)(ii), if
applicable, and the written consent of the Administrative Agent to such increase
required by Section 2.06(c)(i), the Administrative Agent shall accept such
Maximum Credit Amount Increase Certificate or Additional Lender Certificate and
record the information contained therein in the Register required to be
maintained by the Administrative Agent pursuant to Section 12.04(b)(iv). No
increase in the Aggregate Maximum Credit Amount shall be effective for purposes
of this Agreement unless it has been recorded in the Register as provided in
this Section 2.06(c)(iv).

Section 2.07 Borrowing Base and Conforming Borrowing Base.

(a) Initial Borrowing Base and Initial Conforming Borrowing Base. For the period
from and including the Effective Date to but excluding the earlier of the First
Redetermination Date or the first Mandatory Redetermination Date, the amount of
the Borrowing Base shall be $750,000,000. The amount of the Borrowing Base shall
remain at $750,000,000 until the earlier of the First Redetermination Date or
the first Mandatory Redetermination Date in accordance with the procedures set
forth in this Section 2.07. Notwithstanding the foregoing, the Borrowing Base
may be subject to further adjustments from time to time pursuant to
Section 8.13(c). For the period from and including the Effective Date to but
excluding the earlier of the First Redetermination Date or the first Mandatory
Redetermination Date, the amount of the Conforming Borrowing Base shall be
$650,000,000. The amount of the Conforming Borrowing Base shall remain at
$650,000,000 until the earlier of the First Redetermination Date or the first
Mandatory Redetermination Date in accordance with the procedures set forth in
this Section 2.07. Notwithstanding the foregoing, the Conforming Borrowing Base
may be subject to further adjustments from time to time pursuant to
Section 8.13(c).

(b) Scheduled and Interim Redeterminations.

(i) The Borrowing Base shall be redetermined semi-annually in accordance with
this Section 2.07 (a “Scheduled Redetermination”), and, subject to
Section 2.07(e), such redetermined Borrowing Base shall become effective and
applicable to the Borrower, the Agents, each Issuing Bank and the Lenders on
May 1st (or such date promptly thereafter as reasonably practicable based on the
engineering and other information available to the Lenders) and November 1st (or
such date promptly thereafter as reasonably practicable based on the engineering
and other information available to the Lenders) of each year, commencing May 1,
2007.

(ii) The Administrative Agent may, at the direction of the Required Lenders, by
notifying the Borrowers (or the Borrower Representative) thereof, one time
during any six-month period, elect to cause the Borrowing Base and the
Conforming Borrowing Base to be redetermined between Scheduled Redeterminations
in accordance with this Section 2.07.

 

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(iii) The Borrowers may, not more than once between Scheduled Redeterminations,
elect to have the Borrowing Base and the Conforming Borrowing Base redetermined
in accordance with this Section 2.07.

(c) Scheduled and Interim Redetermination Procedure.

(i) Each Scheduled Redetermination and each Interim Redetermination shall be
effectuated as follows: upon receipt by the Administrative Agent of (A) the
Reserve Report and the certificate required to be delivered by the Borrowers (or
Borrower Representative), in the case of a Scheduled Redetermination, pursuant
to Section 8.12(a) and (c), and, in the case of an Interim Redetermination,
pursuant to Section 8.12(b) and (c), and (B) such other reports, data and
supplemental information, including, without limitation, the information
provided pursuant to Section 8.12(c), as may, from time to time, be reasonably
requested by the Required Lenders (the Reserve Report, such certificate and such
other reports, data and supplemental information being the “Engineering
Reports”), the Administrative Agent shall evaluate the information contained in
the Engineering Reports and shall, in good faith, propose (1) a new Borrowing
Base (the “Proposed Borrowing Base”) based upon such information and such other
information (including, without limitation, the status of title information with
respect to the proved Oil and Gas Properties as described in the Engineering
Reports and the existence of any other Debt) as the Administrative Agent deems
appropriate in its sole discretion and consistent with its normal oil and gas
lending criteria as it exists at the particular time, and (2) with respect to
any Interim Redetermination prior to May 1, 2007, a new Conforming Borrowing
Base (the “Proposed Conforming Borrowing Base”) based upon the Administrative
Agent’s application of Conforming Credit Criteria.

(ii) The Administrative Agent shall notify the Borrowers (or Borrower
Representative) and the Lenders of the Proposed Borrowing Base and, as
applicable, the Proposed Conforming Borrowing Base (the “Proposed Borrowing Base
Notice”):

(A) in the case of a Scheduled Redetermination (1) if the Administrative Agent
shall have received the Engineering Reports required to be delivered by the
Borrowers pursuant to Section 8.12(a) and (c) in a timely and complete manner,
then on or before April 15th (or such date promptly thereafter as reasonably
practicable) and October 15th (or such date promptly thereafter as reasonably
practicable) of such year following the date of delivery or (2) if the
Administrative Agent shall not have received the Engineering Reports required to
be delivered by the Borrowers pursuant to Section 8.12(a) and (c) in a timely
and complete manner, then promptly after the Administrative Agent has received
complete Engineering Reports from the Borrowers and has had a reasonable
opportunity to determine the Proposed Borrowing Base in accordance with
Section 2.07(c)(i), and in any event within fifteen (15) days after the
Administrative Agent has received the required Engineering Reports; and

(B) in the case of an Interim Redetermination, promptly, and in any event,
within fifteen (15) days after the Administrative Agent has received the
required Engineering Reports.

 

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(iii) Any Proposed Borrowing Base or Proposed Conforming Borrowing Base that
would increase the Borrowing Base or Proposed Conforming Borrowing Base, as
applicable, then in effect must be approved or deemed to have been approved by
all of the Lenders as provided in this Section 2.07(c)(iii); and any Proposed
Borrowing Base or Proposed Conforming Borrowing Base that would decrease or
maintain the Borrowing Base or Proposed Conforming Borrowing Base, as
applicable, then in effect must be approved or be deemed to have been approved
by the Required Lenders as provided in this Section 2.07(c)(iii). Upon receipt
of the Proposed Borrowing Base Notice, each Lender shall have fifteen (15) days
to agree with the Proposed Borrowing Base or disagree with the Proposed
Borrowing Base or, as applicable, agree with the Proposed Conforming Borrowing
Base or disagree with the Proposed Conforming Borrowing Base, by proposing an
alternate Borrowing Base (an “Alternate Borrowing Base”) or alternate Conforming
Borrowing Base (“Alternate Conforming Borrowing Base”). If at the end of such
fifteen (15) days, any Lender has not communicated its approval or disapproval
in writing to the Administrative Agent, such silence shall be deemed to be an
approval of the Proposed Borrowing Base or, as applicable, the Proposed
Conforming Borrowing Base. If, at the end of such 15-day period, all of the
Lenders, in the case of a Proposed Borrowing Base, Alternate Borrowing Base,
Proposed Conforming Borrowing Base or Alternate Conforming Borrowing Base that
would increase the Borrowing Base or, as applicable, the Proposed Conforming
Borrowing Base, then in effect, or the Required Lenders, in the case of a
Proposed Borrowing Base, Alternate Borrowing Base, Proposed Conforming Borrowing
Base or Alternate Conforming Borrowing Base that would decrease or maintain the
Borrowing Base or, as applicable, the Proposed Conforming Borrowing Base, then
in effect, have approved or deemed to have approved, as aforesaid, then the
Proposed Borrowing Base, Alternate Borrowing Base, Proposed Conforming Borrowing
Base or Alternate Conforming Borrowing Base, as applicable, shall become the new
Borrowing Base or, as applicable, the new Conforming Borrowing Base, effective
on the date specified in Section 2.07(e). If, however, at the end of such 15-day
period, all of the Lenders or the Required Lenders, as applicable, have not
approved or deemed to have approved, as aforesaid, then the Administrative Agent
shall (A) notify the Borrowers (or Borrower Representative) of the Proposed
Borrowing Base, Alternate Borrowing Base, Proposed Conforming Borrowing Base or
Alternate Conforming Borrowing Base, as applicable, and which Lenders have not
approved or been deemed to have approved of the Proposed Borrowing Base,
Alternate Borrowing Base, Proposed Conforming Borrowing Base or Alternate
Conforming Borrowing Base and (B) poll the Lenders to ascertain the highest
Borrowing Base and/or Conforming Borrowing Base then acceptable to a number of
Lenders sufficient to constitute the Required Lenders for purposes of this
Section 2.07 and, so long as such amount does not increase the Borrowing Base
and/or Conforming Borrowing Base then in effect, such amount shall become the
new Borrowing Base and/or new Conforming Borrowing Base, effective on the date
specified in Section 2.07(e). In no event shall the new approved Borrowing Base
and/or new Conforming Borrowing Base exceed the Aggregate Maximum Credit Amount.

(d) Mandatory Redetermination. In addition to other redeterminations of the
Borrowing Base and Conforming Borrowing Base provided for herein, and
notwithstanding

 

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anything to the contrary contained herein, the Borrowing Base and Conforming
Borrowing Base shall each reduce immediately and automatically (i) on
February 1, 2007 to $700,000,000 and $630,000,000, respectively, provided, that,
in the event the Borrowing Base and the Conforming Borrowing Base have
previously been reduced pursuant to the provisions of Section 2.07(d)(iii), then
the Borrowing Base and the Conforming Borrowing Base shall each reduce
immediately and automatically on February 1, 2007 to an amount equal to (A) with
respect to the Borrowing Base, $700,000,000 less any applicable Debt Issuance
Reduction Amount, and (B) with respect to the Conforming Borrowing Base,
$630,000,000 less any applicable Debt Issuance Reduction Amount, (ii) on May 1,
2007 to $610,000,000 (provided, that, in the event the Borrowing Base and the
Conforming Borrowing Base have previously been reduced pursuant to the
provisions of Section 2.07(d)(iii), then the Borrowing Base and the Conforming
Borrowing Base shall each reduce immediately and automatically on May 1, 2007 to
an amount, in each case, equal to $610,000,000 less any applicable Debt Issuance
Reduction Amount), at which time and continuing thereafter the Borrowing Base
shall be, and shall be in an amount equal to, the Conforming Borrowing Base, and
(iii) upon the consummation of the issuance of any Permitted Additional Bond
Debt by an amount, with respect to each of the Borrowing Base and Conforming
Borrowing Base, equal to the Debt Issuance Reduction Amount.

(e) Effectiveness of a Redetermined Borrowing Base and Conforming Borrowing
Base. After a redetermined Borrowing Base and/or Conforming Borrowing Base is
approved or is deemed to have been approved by all of the Lenders or the
Required Lenders, or otherwise automatically adjusted, as applicable, pursuant
to Section 2.07(c)(iii) or Section 2.07(d), the Administrative Agent shall
notify the Borrowers (or Borrower Representative) and the Lenders of the amount
of the redetermined Borrowing Base and/or Conforming Borrowing Base (the “New
Borrowing Base Notice”), and such amount shall become the new Borrowing Base
and/or new Conforming Borrowing Base, effective and applicable to the Borrowers,
the Agents, each Issuing Bank and the Lenders:

(i) in the case of a Scheduled Redetermination, (A) if the Administrative Agent
shall have received the Engineering Reports required to be delivered by the
Borrowers pursuant to Section 8.12(a) and (c) in a timely and complete manner,
then on the May 1st or November 1st, as applicable, following (or as set forth
in) such notice, or (B) if the Administrative Agent shall not have received the
Engineering Reports required to be delivered by the Borrowers pursuant to
Section 8.12(a) and (c) in a timely and complete manner, then on the Business
Day next succeeding delivery of such notice;

(ii) in the case of an Interim Redetermination, on the Business Day next
succeeding delivery of such notice;

(iii) in the case of a Mandatory Redetermination under Section 2.07(d)(i) or
Section 2.07(d)(ii), on the applicable Mandatory Redetermination Date,
regardless of the date of delivery of such notice; and

(iv) in the case of a Mandatory Redetermination under Section 2.07(d)(iii), on
the date of the consummation of the issuance of any Permitted Additional Bond
Debt, regardless of the date of delivery of such notice.

 

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Such amount shall then become the Borrowing Base and/or Conforming Borrowing
Base until the next Scheduled Redetermination Date, the next Interim
Redetermination Date, the next Mandatory Redetermination Date or the next
adjustment to the Borrowing Base and/or Conforming Borrowing Base under
Section 8.13(c), whichever occurs first. Notwithstanding the foregoing, no
Scheduled Redetermination or Interim Redetermination shall become effective
until the New Borrowing Base Notice related thereto is received by the Borrowers
(or Borrower Representative).

Section 2.08 Letters of Credit.

(a) General. Subject to the terms and conditions set forth herein, the Borrowers
(or Borrower Representative) may request any Issuing Bank to issue Letters of
Credit in dollars for its own account or for the account of any of its
Subsidiaries, in a form reasonably acceptable to the Administrative Agent and
such Issuing Bank, at any time and from time to time during the Availability
Period. In the event of any inconsistency between the terms and conditions of
this Agreement and the terms and conditions of any form of letter of credit
application or other agreement submitted by the Borrowers (or Borrower
Representative) to, or entered into by the Borrowers (or Borrower
Representative) with, an Issuing Bank relating to any Letter of Credit, the
terms and conditions of this Agreement shall control.

(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To
request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the Borrowers (or Borrower
Representative) shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Bank) to any Issuing Bank and the Administrative Agent (not less than three
(3) Business Days in advance of the requested date of issuance, amendment,
renewal or extension) a notice: (i) requesting the issuance of a Letter of
Credit or identifying the outstanding Letter of Credit issued by such Issuing
Bank to be amended, renewed or extended; (ii) specifying the date of issuance,
amendment, renewal or extension (which shall be a Business Day);
(iii) specifying the date on which such Letter of Credit is to expire (which
shall comply with Section 2.08(c)); (iv) specifying the amount of such Letter of
Credit; (v) specifying the name and address of the beneficiary thereof and such
other information as shall be necessary to prepare, amend, renew or extend such
Letter of Credit; and (vi) specifying the amount of the then effective Borrowing
Base, the current total Credit Exposures (without regard to the requested Letter
of Credit or the requested amendment, renewal or extension of an outstanding
Letter of Credit) and the pro forma total Credit Exposures (giving effect to the
requested Letter of Credit or the requested amendment, renewal or extension of
an outstanding Letter of Credit). If requested by any Issuing Bank, the
Borrowers (or Borrower Representative) shall submit a letter of credit
application on such Issuing Bank’s standard form in connection with any request
for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or
extended only if (and with respect to each notice provided by the Borrowers (or
Borrower Representative) above and any issuance, amendment, renewal or extension
of each Letter of Credit, the Borrowers shall be deemed to represent and warrant
that), after giving effect to such issuance, amendment, renewal or extension
(A) the LC Exposure shall not exceed the LC Commitment and (B) the total Credit
Exposures shall not exceed the total Commitments (i.e. the lesser of the
Aggregate Maximum Credit Amounts and the then effective Borrowing Base).

 

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(c) Expiration Date. Each Letter of Credit shall expire at or prior to the close
of business on the earlier of (i) the date one year after the date of the
issuance of such Letter of Credit (or, in the case of any renewal, which renewal
may be provided for in the initial Letter of Credit, or extension thereof, one
year after such renewal or extension) and (ii) the date that is five Business
Days prior to the Maturity Date.

(d) Participations. By the issuance of a Letter of Credit (or an amendment to an
existing Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Bank that issues such Letter of Credit or the
Lenders, each Issuing Bank that issues a Letter of Credit hereunder hereby
grants to each Lender, and each Lender hereby acquires from such Issuing Bank, a
participation in such Letter of Credit equal to such Lender’s Applicable
Percentage of the aggregate amount available to be drawn under such Letter of
Credit. In consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of any Issuing Bank that issues a Letter of Credit hereunder, such
Lender’s Applicable Percentage of each LC Disbursement made by such Issuing Bank
and not reimbursed by the Borrowers on the date due as provided in
Section 2.08(e), or of any reimbursement payment required to be refunded to the
Borrowers for any reason. Each Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this Section 2.08(d) in respect
of Letters of Credit is absolute and unconditional and shall not be affected by
any circumstance whatsoever, including any amendment, renewal or extension of
any Letter of Credit or the occurrence and continuance of a Default or reduction
or termination of the Commitments, and that each such payment shall be made
without any offset, abatement, withholding or reduction whatsoever.

(e) Reimbursement. If any Issuing Bank shall make any LC Disbursement in respect
of a Letter of Credit issued by such Issuing Bank, the Borrowers shall reimburse
such LC Disbursement by paying to the Administrative Agent an amount equal to
such LC Disbursement not later than 12:00 noon, Chicago, Illinois time, on the
date that such LC Disbursement is made, if the Borrowers (or Borrower
Representative) shall have received notice of such LC Disbursement prior to
10:00 a.m., Chicago, Illinois time, on such date, or, if such notice has not
been received by the Borrowers (or Borrower Representative) prior to such time
on such date, then not later than 12:00 noon, Chicago, Illinois time, on (i) the
Business Day that the Borrowers (or Borrower Representative) receive such
notice, if such notice is received prior to 10:00 a.m., Chicago, Illinois time,
on the day of receipt, or (ii) the Business Day immediately following the day
that the Borrowers (or Borrower Representative) receive such notice, if such
notice is not received prior to such time on the day of receipt; provided that
if such LC Disbursement is not less than $1,000,000, the Borrowers shall,
subject to the conditions to Borrowing set forth herein, be deemed to have
requested, and the Borrowers do hereby request under such circumstances, that
such payment be financed with an ABR Borrowing in an equivalent amount and, to
the extent so financed, the Borrowers’ obligation to make such payment shall be
discharged and replaced by the resulting ABR Borrowing. If the Borrowers fail to
make such payment when due, the Administrative Agent shall notify each Lender of
the applicable LC Disbursement, the payment then due from the Borrowers in
respect thereof and such Lender’s Applicable Percentage thereof. Promptly
following receipt of such notice, each Lender shall pay to the Administrative
Agent its Applicable Percentage of the payment then due from the Borrowers, in
the same manner as provided in Section 2.05 with respect to Loans made by such
Lender (and Section 2.05 shall apply, mutatis mutandis, to the payment
obligations of the Lenders), and the

 

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Administrative Agent shall promptly pay to the Issuing Bank that issued such
Letter of Credit the amounts so received by it from the Lenders. Promptly
following receipt by the Administrative Agent of any payment from the Borrowers
pursuant to this Section 2.08(e), the Administrative Agent shall distribute such
payment to the Issuing Bank that issued such Letter of Credit or, to the extent
that Lenders have made payments pursuant to this Section 2.08(e) to reimburse
such Issuing Bank, then to such Lenders and such Issuing Bank as their interests
may appear. Any payment made by a Lender pursuant to this Section 2.08(e) to
reimburse any Issuing Bank for any LC Disbursement (other than the funding of
ABR Loans as contemplated above) shall not constitute a Loan and shall not
relieve the Borrowers of their joint and several obligation to reimburse such LC
Disbursement.

(f) Obligations Absolute. The Borrowers’ obligation to reimburse LC
Disbursements as provided in Section 2.08(e) shall be joint and several,
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability of any
Letter of Credit, any Letter of Credit Agreement or this Agreement, or any term
or provision therein, (ii) any draft or other document presented under a Letter
of Credit proving to be forged, fraudulent or invalid in any respect or any
statement therein being untrue or inaccurate in any respect, (iii) payment by
any Issuing Bank under a Letter of Credit issued by such Issuing Bank against
presentation of a draft or other document that does not comply with the terms of
such Letter of Credit or any Letter of Credit Agreement, or (iv) any other event
or circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section 2.08(f), constitute a legal or
equitable discharge of, or provide a right of setoff against, any Borrower’s
obligations hereunder. Neither the Administrative Agent, the Lenders nor any
Issuing Bank, nor any of their Related Parties shall have any liability or
responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond the control of any Issuing Bank; provided that the foregoing shall
not be construed to excuse any Issuing Bank from liability to the Borrowers to
the extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrowers to the extent permitted by
applicable law) suffered by the Borrowers that are caused by such Issuing Bank’s
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. The parties
hereto expressly agree that, in the absence of gross negligence or willful
misconduct on the part of any Issuing Bank (as finally determined by a court of
competent jurisdiction), such Issuing Bank shall be deemed to have exercised all
requisite care in each such determination. In furtherance of the foregoing and
without limiting the generality thereof, the parties agree that, with respect to
documents presented which appear on their face to be in substantial compliance
with the terms of a Letter of Credit, the Issuing Bank that issued such Letter
of Credit may, in its sole discretion, either accept and make payment upon such
documents without responsibility for further investigation, regardless of any
notice or information to the contrary, or refuse to accept and make payment upon
such documents if such documents are not in strict compliance with the terms of
such Letter of Credit.

 

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(g) Disbursement Procedures. Each Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit issued by such Issuing Bank. Such Issuing Bank
shall promptly notify (prior to making any such disbursement) the Administrative
Agent and the Borrowers (or Borrower Representative) by telephone (confirmed by
telecopy) of such demand for payment and whether such Issuing Bank will make an
LC Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve the Borrowers of their joint and several
obligation to reimburse such Issuing Bank and the Lenders with respect to any
such LC Disbursement.

(h) Interim Interest. If any Issuing Bank shall make any LC Disbursement, then,
until the Borrowers shall have reimbursed such Issuing Bank for such LC
Disbursement (either with its own funds or a Borrowing under Section 2.08(e)),
the unpaid amount thereof shall bear interest, for each day from and including
the date such LC Disbursement is made to but excluding the date that the
Borrowers reimburse such LC Disbursement, at the rate per annum then applicable
to ABR Loans. Interest accrued pursuant to this Section 2.08(h) shall be for the
account of such Issuing Bank, except that interest accrued on and after the date
of payment by any Lender pursuant to Section 2.08(e) to reimburse such Issuing
Bank shall be for the account of such Lender to the extent of such payment.

(i) Replacement of an Issuing Bank. Any Issuing Bank may be replaced or resign
at any time by written agreement among the Borrowers (or Borrower
Representative), the Administrative Agent, such resigning or replaced Issuing
Bank and, in the case of a replacement, the successor Issuing Bank. The
Administrative Agent shall notify the Lenders of any such resignation or
replacement of an Issuing Bank. At the time any such resignation or replacement
shall become effective, the Borrowers shall pay all unpaid fees accrued for the
account of the resigning or replaced Issuing Bank pursuant to Section 3.05(b).
In the case of the replacement of an Issuing Bank, from and after the effective
date of such replacement, (i) the successor Issuing Bank shall have all the
rights and obligations of the replaced Issuing Bank under this Agreement with
respect to Letters of Credit to be issued thereafter and (ii) references herein
to the term “Issuing Bank” shall be deemed to refer to such successor or to any
previous Issuing Bank, or to such successor and all previous Issuing Banks, as
the context shall require. After the resignation or replacement of an Issuing
Bank hereunder, the resigning or replaced Issuing Bank shall remain a party
hereto and shall continue to have all the rights and obligations of an Issuing
Bank under this Agreement with respect to Letters of Credit issued by it prior
to such resignation or replacement, but shall not be required to issue
additional Letters of Credit.

(j) Cash Collateralization. If (i) any Event of Default shall occur and be
continuing and the Borrowers (or Borrower Representative) receive notice from
the Administrative Agent or the Majority Lenders demanding the deposit of cash
collateral pursuant to this Section 2.08(j), or (ii) the Borrowers are required
to pay to the Administrative Agent the excess attributable to an LC Exposure in
connection with any prepayment pursuant to Section 3.04(c), then the Borrowers
shall deposit, in an account with the Administrative Agent, in the name of the
Administrative Agent and for the benefit of the Lenders, an amount in cash equal
to, in the case of an Event of Default, the LC Exposure, and in the case of a
payment required by Section 3.04(c), the amount of such excess as provided in
Section 3.04(c), as of such date plus any accrued and unpaid interest thereon;
provided that the obligation to deposit such cash collateral shall become
effective immediately, and such deposit shall become immediately due

 

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and payable, without demand or other notice of any kind, upon the occurrence of
any Event of Default with respect to any Credit Party described in
Section 10.01(g) or Section 10.01(h). The Borrowers hereby grant to the
Administrative Agent, for the benefit of each Issuing Bank and the Lenders, an
exclusive first priority and continuing perfected security interest in and Lien
on such account and all cash, checks, drafts, certificates and instruments, if
any, from time to time deposited or held in such account, all deposits or wire
transfers made thereto, any and all investments purchased with funds deposited
in such account, all interest, dividends, cash, instruments, financial assets
and other Property from time to time received, receivable or otherwise payable
in respect of, or in exchange for, any or all of the foregoing, and all
proceeds, products, accessions, rents, profits, income and benefits therefrom,
and any substitutions and replacements therefor. The Borrowers’ joint and
several obligation to deposit amounts pursuant to this Section 2.08(j) shall be
absolute and unconditional, without regard to whether any beneficiary of any
such Letter of Credit has attempted to draw down all or a portion of such amount
under the terms of a Letter of Credit, and, to the fullest extent permitted by
applicable law, shall not be subject to any defense or be affected by a right of
set-off, counterclaim or recoupment which any Credit Party may now or hereafter
have against any such beneficiary, any Issuing Bank, the Administrative Agent,
the Lenders or any other Person for any reason whatsoever. Such deposit shall be
held as collateral securing the payment and performance of the Credit Parties’
obligations under this Agreement and the other Loan Documents in a “securities
account” (within the meaning of Article 8 of the Uniform Commercial Code in
effect from time to time in the State of Texas, the “UCC”) over which the
Administrative Agent shall have “control” (within the meaning of the UCC).
Notwithstanding the foregoing, the Borrowers (or Borrower Representative) may
direct the Administrative Agent and the “securities intermediary” (within the
meaning of the UCC) to invest amounts credited to the securities account, at the
Borrowers’ risk and expense, in Investments described in Section 9.05(c) through
(f). Interest or profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall be applied by the Administrative Agent to
reimburse, on a pro rata basis, each Issuing Bank for LC Disbursements for which
it has not been reimbursed and, to the extent not so applied, shall be held for
the satisfaction of the reimbursement obligations of the Borrowers for the LC
Exposure at such time or, if the maturity of the Loans has been accelerated, be
applied to satisfy other obligations of the Credit Parties under this Agreement
or the other Loan Documents. If the Borrowers are required to provide an amount
of cash collateral hereunder as a result of the occurrence of an Event of
Default, and the Borrowers are not otherwise required to pay to the
Administrative Agent the excess attributable to an LC Exposure in connection
with any prepayment pursuant to Section 3.04(c), then such amount (to the extent
not applied as aforesaid), which shall include interest or profits, if any, on
investments that may accumulate in such account as provided hereinabove, shall
be returned to the Borrowers within three Business Days after all Events of
Default have been cured or waived.

Section 2.09 Reliance on Notices; Appointment of Borrower Representative. The
Administrative Agent shall be entitled to rely upon, and shall be fully
protected in relying upon, any Borrowing Request, Interest Election Request,
request for Letter of Credit or similar notice believed by the Administrative
Agent to be genuine. The Administrative Agent may assume that each Person
executing and delivering any notice in accordance herewith was duly authorized,
unless the responsible individual acting thereon for the Administrative Agent
has actual knowledge to the contrary. Parent and each Borrower hereby designates
Chaparral as its representative and agent on its behalf for the purposes of
issuing Borrowing Requests, Interest

 

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Election Requests, giving instructions with respect to the disbursement of the
proceeds of the Loans, selecting interest rate options, requesting Letters of
Credit, giving and receiving all other notices and consents hereunder or under
any of the other Loan Documents and taking all other actions (including in
respect of compliance with covenants) on behalf of any Credit Party under the
Loan Documents. Borrower Representative hereby accepts such appointment. The
Administrative Agent and each Lender may regard any notice or other
communication pursuant to any Loan Document from Borrower Representative as a
notice or communication from all Credit Parties, and may give any notice or
communication required or permitted to be given to any Credit Party hereunder to
Borrower Representative on behalf of such Credit Party. Parent and each Borrower
agree that each notice, election, representation and warranty, covenant,
agreement and undertaking made on its behalf by Borrower Representative shall be
deemed for all purposes to have been made by such Credit Party and shall be
binding upon and enforceable against such Credit Party to the same extent as if
the same had been made directly by such Credit Party.

ARTICLE III

PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES

Section 3.01 Repayment of Loans. The Borrowers hereby unconditionally, jointly
and severally, promise to pay to the Administrative Agent for the account of
each Lender the then unpaid principal amount of each Loan on the Termination
Date.

Section 3.02 Interest.

(a) ABR Loans. The Loans comprising each ABR Borrowing shall bear interest at
the Alternate Base Rate plus the Applicable Margin, but in no event to exceed
the Highest Lawful Rate.

(b) Eurodollar Loans. The Loans comprising each Eurodollar Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Margin, but in no event to exceed the Highest
Lawful Rate.

(c) Post-Default Rate. Notwithstanding the foregoing, if any principal of or
interest on any Loan or any fee or other amount payable by any Credit Party
hereunder or under any other Loan Document is not paid when due, whether at
stated maturity, upon acceleration or otherwise, such overdue amount shall bear
interest, after as well as before judgment, at a rate per annum equal to two
percent (2%) plus the rate applicable to ABR Loans as provided in
Section 3.02(a), but in no event to exceed the Highest Lawful Rate.

(d) Interest Payment Dates. Accrued interest on each Loan shall be payable in
arrears on each Interest Payment Date for such Loan and on the Termination Date;
provided that (i) interest accrued pursuant to Section 3.02(c) shall be payable
on demand, (ii) in the event of any repayment or prepayment of any Loan (other
than an optional prepayment of an ABR Loan prior to the Termination Date),
accrued interest on the principal amount repaid or prepaid shall be payable on
the date of such repayment or prepayment, and (iii) in the event of any
conversion of any Eurodollar Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the effective
date of such conversion.

 

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(e) Interest Rate Computations. All interest hereunder shall be computed on the
basis of a year of 360 days, unless such computation would exceed the Highest
Lawful Rate, in which case interest shall be computed on the basis of a year of
365 days (or 366 days in a leap year), except that interest computed by
reference to the Alternate Base Rate at times when the Alternate Base Rate is
based on the Prime Rate shall be computed on the basis of a year of 365 days (or
366 days in a leap year), and in each case shall be payable for the actual
number of days elapsed (including the first day but excluding the last day). The
applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error, and be binding upon the parties hereto.

Section 3.03 Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a Eurodollar Borrowing:

(a) the Administrative Agent determines (which determination shall be conclusive
absent manifest error) that adequate and reasonable means do not exist for
ascertaining the Adjusted LIBO Rate or the LIBO Rate for such Interest Period;
or

(b) the Administrative Agent is advised by the Majority Lenders that the
Adjusted LIBO Rate or LIBO Rate, as applicable, for such Interest Period will
not adequately and fairly reflect the cost to such Lenders of making or
maintaining their Loans included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrowers (or
Borrower Representative) and the Lenders by telephone or telecopy as promptly as
practicable thereafter and, until the Administrative Agent notifies the
Borrowers (or Borrower Representative) and the Lenders that the circumstances
giving rise to such notice no longer exist, (i) any Interest Election Request
that requests the conversion of any Borrowing to, or continuation of any
Borrowing as, a Eurodollar Borrowing shall be ineffective, and (ii) if any
Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made
as an ABR Borrowing.

Section 3.04 Prepayments.

(a) Optional Prepayments. The Borrowers shall have the right at any time and
from time to time to prepay any Borrowing in whole or in part, subject to prior
notice in accordance with Section 3.04(b).

(b) Notice and Terms of Optional Prepayment. The Borrowers (or Borrower
Representative) shall notify the Administrative Agent by telephone (confirmed by
telecopy) of any prepayment hereunder (i) in the case of prepayment of a
Eurodollar Borrowing, not later than 12:00 noon, Chicago, Illinois time, three
Business Days before the date of prepayment, or (ii) in the case of prepayment
of an ABR Borrowing, not later than 12:00 noon, Chicago, Illinois time, on the
Business Day of prepayment. Each such notice shall be irrevocable and shall
specify the prepayment date and the principal amount of each Borrowing or
portion thereof to be prepaid. Promptly following receipt of any such notice
relating to a Borrowing, the Administrative Agent shall advise the Lenders of
the contents thereof. Each partial prepayment of any Borrowing shall be in an
amount that would be permitted in the case of an advance of a Borrowing of the
same Type as provided in Section 2.02. Each prepayment of a Borrowing shall be
applied ratably to the Loans included in the prepaid Borrowing. Prepayments
shall be accompanied by accrued interest to the extent required by Section 3.02.

 

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(c) Mandatory Prepayments.

(i) If, after giving effect to any termination or reduction of the Aggregate
Maximum Credit Amount pursuant to Section 2.06(b), the total Credit Exposures
exceeds the total Commitments, then the Borrowers shall (A) prepay the
Borrowings on the date of such termination or reduction in an aggregate
principal amount equal to such excess, and (B) if any excess remains after
prepaying all of the Borrowings as a result of an LC Exposure, pay to the
Administrative Agent on behalf of the Lenders an amount equal to such excess to
be held as cash collateral as provided in Section 2.08(j).

(ii) Upon any redetermination of or adjustment to the amount of the Borrowing
Base in accordance with Section 2.07 (other than Section 2.07(d)) or
Section 8.13(c), if the total Credit Exposures exceeds the redetermined or
adjusted Borrowing Base, then the Borrowers (or Borrower Representative) shall,
within 10 days following receipt of the New Borrowing Base Notice in accordance
with Section 2.07(e) or the date the adjustment occurs, provide written notice
(the “Election Notice”) to the Administrative Agent stating the action which the
Borrowers propose to take to remedy such excess, and the Borrowers shall
thereafter, at their option, either (A) within 30 days following the delivery of
the Election Notice, prepay the Borrowings in an aggregate principal amount
equal to such excess, (B) eliminate such excess by making six (6) consecutive
mandatory prepayments of principal on the Loan, each of which shall be in the
amount of 1/6th of the amount of such excess, commencing on the first Monthly
Date following the delivery of the Election Notice, and continuing on each
Monthly Date thereafter, (C) within 90 days following the delivery of the
Election Notice, submit (and pledge as collateral) additional Oil and Gas
Properties owned by the Borrowers for consideration in connection with the
determination of the Borrowing Base which the Administrative Agent and the
Lenders deem sufficient in their sole discretion to eliminate such excess, or
(D) within 90 days following the delivery of the Election Notice, eliminate such
excess through a combination of prepayments and submission of additional Oil and
Gas Properties as set forth in subclauses (A) and (C) above. If any excess
remains after prepaying all of the Borrowings as a result of an LC Exposure,
then the Borrowers shall pay to the Administrative Agent on behalf of the
Lenders an amount equal to such excess to be held as cash collateral as provided
in Section 2.08(j). The Borrowers shall be jointly and severally obligated to
deposit such cash collateral amount within five (5) days following its receipt
of the New Borrowing Base Notice in accordance with Section 2.07(e) or the date
the adjustment occurs; provided that all payments required to be made pursuant
to this Section 3.04(c)(ii) must be made on or prior to the Termination Date.

(iii) Upon any adjustments to the Borrowing Base pursuant to Section 2.07(d), if
the total Credit Exposures exceeds the Borrowing Base as adjusted, then the
Borrowers shall (A) prepay the Borrowings in an aggregate principal amount equal
to such excess, and (B) if any excess remains after prepaying all of the
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result of an LC Exposure, pay to the Administrative Agent on behalf of the
Lenders an amount equal to such excess to be held as cash collateral as provided
in Section 2.08(j). The Borrowers shall be jointly and severally obligated to
make such prepayment and/or deposit of cash collateral on the date the
adjustment occurs or the date it receives cash proceeds as a result of such
disposition, as applicable; provided that all payments required to be made
pursuant to this Section 3.04(c)(iii) must be made on or prior to the
Termination Date.

(iv) Each prepayment of Borrowings pursuant to this Section 3.04(c) shall be
applied, first, ratably to any ABR Borrowings then outstanding, and, second, to
any Eurodollar Borrowings then outstanding, and if more than one Eurodollar
Borrowing is then outstanding, to each such Eurodollar Borrowing in order of
priority beginning with the Eurodollar Borrowing with the least number of days
remaining in the Interest Period applicable thereto and ending with the
Eurodollar Borrowing with the most number of days remaining in the Interest
Period applicable thereto.

(v) Each prepayment of Borrowings pursuant to this Section 3.04(c) shall be
applied ratably to the Loans included in the prepaid Borrowings. Prepayments
pursuant to this Section 3.04(c) shall be accompanied by accrued interest to the
extent required by Section 3.02.

(d) No Premium or Penalty. Prepayments permitted or required under this
Section 3.04 shall be without premium or penalty, except as required under
Section 5.02.

Section 3.05 Fees.

(a) Commitment Fees. The Borrowers jointly and severally agree to pay to the
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at the applicable Commitment Fee Rate on the average daily amount
of the unused amount of the Commitment of such Lender during the period from and
including the date of this Agreement to but excluding the Termination Date.
Accrued commitment fees shall be payable in arrears on the last day of March,
June, September and December of each year and on the Termination Date,
commencing on the first such date to occur after the date hereof. All commitment
fees shall be computed on the basis of a year of 360 days, unless such
computation would exceed the Highest Lawful Rate, in which case interest shall
be computed on the basis of a year of 365 days (or 366 days in a leap year), and
shall be payable for the actual number of days elapsed (including the first day
but excluding the last day).

(b) Letter of Credit Fees. The Borrowers jointly and severally agree to pay
(i) to the Administrative Agent for the account of each Lender a participation
fee with respect to its participations in Letters of Credit, which shall equal a
percentage (being the same Applicable Margin used to determine the interest rate
applicable to Eurodollar Loans) of the stated amount of each such Letter of
Credit during the period from and including the date of this Agreement to but
excluding the later of the date on which such Lender’s Commitment terminates and
the date on which such Lender ceases to have any LC Exposure, provided that in
no event shall such fee be less than $300, (ii) to each Issuing Bank, for its
own account, a fronting fee equal to 0.125% per annum of the stated amount of
each such Letter of Credit during the period from and

 

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including the date of this Agreement to but excluding the later of the date of
termination of the Commitments and the date on which there ceases to be any LC
Exposure, and (iii) to each Issuing Bank, for its own account, its standard and
customary fees with respect to the issuance, amendment, renewal or extension of
any Letter of Credit issued by such Issuing Bank or processing of drawings
thereunder. Participation fees and fronting fees with respect to any Letter of
Credit shall be payable at the time of issuance of such Letter of Credit. Any
other fees payable to an Issuing Bank pursuant to this Section 3.05(b) shall be
payable within 10 days after demand. All participation fees and fronting fees
shall be computed on the basis of a year of 360 days, unless such computation
would exceed the Highest Lawful Rate, in which case interest shall be computed
on the basis of a year of 365 days (or 366 days in a leap year), and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).

(c) Administrative Agent Fees. The Borrowers jointly and severally agree to pay
to the Administrative Agent, for its own account, fees payable in the amounts
and at the times separately agreed upon between or among the Borrowers and the
Administrative Agent, including the fees set forth in any separate fee letter.

Section 3.06 Joint and Several Liability; Rights of Contribution.

(a) Each Borrower states and acknowledges that: (i) pursuant to this Agreement,
the Borrowers desire to utilize their borrowing potential on a combined basis to
the same extent possible if they were merged into a single corporate entity;
(ii) each Borrower has determined that it will benefit specifically and
materially from the advances of credit contemplated by this Agreement; (iii) it
is both a condition precedent to the obligations of the Administrative Agent and
the Lenders hereunder and a desire of each Borrower that each Borrower execute
and deliver to the Administrative Agent and the Lenders this Agreement; and
(iv) each Borrower has requested and bargained for the structure and terms of
and security for the Borrowings contemplated by this Agreement.

(b) Each Borrower hereby irrevocably and unconditionally: (i) agrees that it is
jointly and severally liable to the Administrative Agent and the Lenders for the
full and prompt payment and performance of the obligations of each Borrower
under this Agreement that may specify that a particular Borrower is responsible
for a given payment or performance; (ii) agrees to fully and promptly perform
all of its obligations hereunder with respect to each advance of credit
hereunder as if such advance had been made directly to it; and (iii) agrees as a
primary obligation to indemnify the Administrative Agent and each Lender, on
demand, for and against any loss incurred by the Administrative Agent or any
Lender as a result of any of the obligations of any Borrower (the “subject
Borrower”) being or becoming void, voidable, unenforceable or ineffective for
any reason whatsoever, whether or not known to the subject Borrower or any
Person, the amount of such loss being the amount which the Administrative Agent
or the Lenders (or any of them) would otherwise have been entitled to recover
from the Borrowers.

(c) It is the intent of each Borrower that the indebtedness, obligations and
liabilities hereunder of no one of them be subject to challenge on any basis
related to any federal or state law dealing with fraudulent conveyances or any
other law related to transfers for less than fair or reasonably equivalent
value. Accordingly, as of the date hereof, the liability of each Borrower under
this Section 3.06 together with all of its other liabilities to all Persons as
of the

 

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date hereof and as of any other date on which a transfer is deemed to occur by
virtue of this Agreement, calculated in amounts sufficient to pay its probable
net liabilities on its existing indebtedness as the same become absolute and
matured (“Dated Liabilities”) is and is to be, less than the amount of the
aggregate of a fair valuation of its property as of such corresponding date
(“Dated Assets”). To this end, each Borrower under this Section 3.06 (i) grants
to and recognizes in each other Borrower ratably, rights of subrogation and
contribution in the amount, if any, by which the Dated Assets of such Borrower,
but for the aggregate of subrogation and contribution in its favor recognized
herein, would exceed the Dated Liabilities of such Borrower, and
(ii) acknowledges receipt of and recognizes its right to subrogation and
contribution ratably from the other Borrowers in the amount, if any, by which
the Dated Liabilities of such Borrower, but for the aggregate of subrogation and
contribution in its favor recognized herein, would exceed the Dated Assets of
such Borrower under this Section 3.06. In recognizing the value of the Dated
Assets and the Dated Liabilities, it is understood that each Borrower will
recognize, to at least the same extent of their aggregate recognition of
liabilities hereunder, their rights to subrogation and contribution hereunder.
It is a material objective of this Section 3.06 that each Borrower recognizes
rights to subrogation and contribution rather than be deemed to be insolvent (or
in contemplation thereof) by reason of an arbitrary interpretation of its joint
and several obligations hereunder.

(d) Each Borrower agrees and acknowledges that the present structure of the
credit facilities detailed in this Agreement is based in part upon the financial
and other information presently known to the Administrative Agent and the
Lenders regarding each Borrower, the corporate or other organizational structure
of each Borrower, and the present financial condition of each Borrower. Upon or
after the occurrence of an Event of Default and so long as it is continuing,
each Borrower hereby agrees that the Majority Lenders shall have (in addition to
any other right provided for in the Loan Documents) the right, in their sole
credit judgment, to require that any or all of the following changes be made to
these credit facilities: (i) restrict loans and advances between the Borrowers,
and (ii) establish such other procedures (in consultation with the Borrowers) as
shall be reasonably deemed by the Majority Lenders to be useful in tracking
where Loans are made under this Agreement and the source of payments received by
the Lenders on such Loans.

(e) Each Borrower waives any right to require the Administrative Agent or any
Lender to proceed against any other Person, exhaust any collateral or security
for the Indebtedness, or to have any other Borrower or Credit Party joined with
such Borrower in any suit arising out of the Indebtedness, this Agreement or any
other Loan Document, or pursue any other remedy in the Administrative Agent’s or
any Lender’s power. Each Borrower further waives any and all notice of
acceptance of this Agreement and of the creation, modification, rearrangement,
renewal or extension for any period of any of the Indebtedness from time to
time. Each Borrower further waives any defense arising by reason of any
disability or other defense, other than the defense of payment, of any other
Borrower or Credit Party or by reason of the cessation from any cause whatsoever
of the liability of any other Borrower or Credit Party. Until all of the
Indebtedness shall have been paid in full, no Borrower shall have any right to
subrogation and each Borrower waives the right to enforce any remedy which the
Administrative Agent or any Lender has or may hereafter have against any other
Borrower or Credit Party, and waives any benefit of and any right to participate
in any other security whatsoever now or hereafter held by the Administrative
Agent. Each Borrower authorizes the Administrative Agent

 

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and each Lender, without notice or demand and without any reservation of rights
against such Borrower and without affecting such Borrower’s liability hereunder
or on the Indebtedness, from time to time to (i) take or hold any other Property
of any type from any other Person as security for the Indebtedness, and
exchange, enforce, waive and release any or all of such other Property;
(ii) renew, extend for any period, accelerate, modify, compromise, settle or
release any of the obligations of any other Borrower or Credit Party in respect
to any or all of the Indebtedness or other security for the Indebtedness;
(iii) waive, enforce, modify, amend or supplement any of the provisions of any
Loan Document with any Person other than such Borrower; and (iv) release or
substitute any other Borrower or Credit Party.

ARTICLE IV

PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS.

Section 4.01 Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

(a) Payments by the Borrowers. The Borrowers shall make each payment required to
be made by them hereunder (whether of principal, interest, fees or reimbursement
of LC Disbursements, or of amounts payable under Section 5.01, Section 5.02,
Section 5.03 or otherwise) prior to 12:00 noon, Chicago, Illinois time, on the
date when due, in dollars that constitute immediately available funds, without
defense, deduction, recoupment, set-off or counterclaim. Fees, once paid, shall
not be refundable under any circumstances absent manifest error (e.g., as a
result of a clerical mistake). Any amounts received after such time on any date
may, in the discretion of the Administrative Agent, be deemed to have been
received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to the Administrative Agent at
its offices specified in Section 12.01, except payments to be made directly to
an Issuing Bank as expressly provided herein and except that payments pursuant
to Section 5.01, Section 5.02, Section 5.03 and Section 12.03 shall be made
directly to the Persons entitled thereto. The Administrative Agent shall
distribute any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any
payment accruing interest, interest thereon shall be payable for the period of
such extension. All payments hereunder shall be made in dollars.

(b) Application of Insufficient Payments. If at any time insufficient funds are
received by and available to the Administrative Agent to pay fully all amounts
of principal, unreimbursed LC Disbursements, interest and fees then due
hereunder, such funds shall be applied (i) first, towards payment of interest
and fees then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of interest and fees then due to such parties, and
(ii) second, towards payment of principal and unreimbursed LC Disbursements then
due hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal and unreimbursed LC Disbursements then due to such parties.

(c) Sharing of Payments by Lenders. If any Lender shall, by exercising any right
of set-off or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any of its Loans or participations in LC
Disbursements resulting in such Lender receiving payment of a greater proportion
of the aggregate amount of its Loans and participations

 

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in LC Disbursements and accrued interest thereon than the proportion received by
any other Lender, then the Lender receiving such greater proportion shall
purchase (for cash at face value) participations in the Loans and participations
in LC Disbursements of other Lenders to the extent necessary so that the benefit
of all such payments shall be shared by the Lenders ratably in accordance with
the aggregate amount of principal of and accrued interest on their respective
Loans and participations in LC Disbursements; provided that (i) if any such
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, and (ii) the
provisions of this Section 4.01(c) shall not be construed to apply to any
payment made by the Borrowers pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements to any assignee or participant, other than to
any Credit Party or Affiliate thereof (as to which the provisions of this
Section 4.01(c) shall apply). The Borrowers consent to the foregoing and agree,
to the extent they may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against any Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such Borrower
in the amount of such participation.

Section 4.02 Presumption of Payment by the Borrowers. Unless the Administrative
Agent shall have received notice from the Borrowers (or Borrower Representative)
prior to the date on which any payment is due to the Administrative Agent for
the account of the Lenders or any Issuing Bank that the Borrowers will not make
such payment, the Administrative Agent may assume that the Borrowers have made
such payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders or such Issuing Bank, as the case may be,
the amount due. In such event, if the Borrowers have not in fact made such
payment, then each of the Lenders or such Issuing Bank, as the case may be,
severally agrees to repay to the Administrative Agent forthwith on demand the
amount so distributed to such Lender or such Issuing Bank with interest thereon,
for each day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation.

Section 4.03 Certain Deductions by the Administrative Agent. If any Lender shall
fail to make any payment required to be made by it pursuant to Section 2.05(b),
Section 2.08(d), Section 2.08(e) or Section 4.02 then the Administrative Agent
may, in its discretion (notwithstanding any contrary provision hereof), apply
any amounts thereafter received by the Administrative Agent for the account of
such Lender to satisfy such Lender’s obligations under such Sections until all
such unsatisfied obligations are fully paid.

Section 4.04 Disposition of Proceeds. The Security Instruments contain an
assignment by the Credit Parties (as applicable) unto and in favor of the
Administrative Agent for the benefit of the Lenders and Secured Swap Providers
of all of each Credit Party’s, as applicable, interest in and to production and
all proceeds attributable thereto that may be produced from or allocated to the
Mortgaged Property or, with respect to the Pledge Agreements, proceeds
attributable to the pledge of Equity Interests thereunder. The Security
Instruments further provide in general for the application of such proceeds to
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described therein and secured thereby. Notwithstanding the assignment contained
in such Security Instruments, until the occurrence of an Event of Default,
(a) the Administrative Agent and the Lenders agree that they will neither notify
the purchaser or purchasers of such production nor take any other action to
cause such proceeds attributable to such production to be remitted to the
Administrative Agent or the Lenders, but the Lenders will instead permit such
proceeds to be paid to the Borrowers and their Subsidiaries and (b) the Lenders
hereby authorize the Administrative Agent to take such actions as may be
necessary to cause such proceeds attributable to production to be paid to the
Borrowers and/or such Subsidiaries.

ARTICLE V

INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY

Section 5.01 Increased Costs.

(a) Eurodollar Changes in Law. If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Lender (except any such reserve requirement reflected in the
Adjusted LIBO Rate); or

(ii) impose on any Lender or the London interbank market any other condition
affecting this Agreement or Eurodollar Loans made by such Lender;

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to reduce the amount of any sum received or
receivable by such Lender (whether of principal, interest or otherwise), then
the Borrowers will pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.

(b) Capital Requirements. If any Lender or any Issuing Bank determines that any
Change in Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender’s or such Issuing Bank’s capital or
on the capital of such Lender’s or such Issuing Bank’s holding company, if any,
as a consequence of this Agreement or the Loans made by, or participations in
Letters of Credit held by, such Lender, or the Letters of Credit issued by such
Issuing Bank, to a level below that which such Lender or such Issuing Bank or
such Lender’s or such Issuing Bank’s holding company could have achieved but for
such Change in Law (taking into consideration such Lender’s or such Issuing
Bank’s policies and the policies of such Lender’s or such Issuing Bank’s holding
company with respect to capital adequacy), then from time to time the Borrowers
will pay to such Lender or such Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or such Issuing Bank
or such Lender’s or such Issuing Bank’s holding company for any such reduction
suffered.

(c) Certificates. A certificate of a Lender or any Issuing Bank setting forth
the amount or amounts necessary to compensate such Lender or such Issuing Bank
or its holding company, as the case may be, as specified in Section 5.01(a) or
(b) and reasonably detailed

 

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calculations therefor shall be delivered to the Borrowers (or Borrower
Representative) and shall be conclusive absent manifest error. The Borrowers
shall pay such Lender or such Issuing Bank, as the case may be, the amount shown
as due on any such certificate within 10 days after receipt thereof.

(d) Effect of Failure or Delay in Requesting Compensation. Failure or delay on
the part of any Lender or any Issuing Bank to demand compensation pursuant to
this Section 5.01 shall not constitute a waiver of such Lender’s or such Issuing
Bank’s right to demand such compensation; provided that the Borrowers shall not
be required to compensate a Lender or an Issuing Bank pursuant to this
Section 5.01 for any increased costs or reductions incurred more than 180 days
prior to the date that such Lender or such Issuing Bank, as the case may be,
notifies the Borrowers (or Borrower Representative) of the Change in Law giving
rise to such increased costs or reductions and of such Lender’s or such Issuing
Bank’s intention to claim compensation therefor; provided further that, if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then the 180-day period referred to above shall be extended to include the
period of retroactive effect thereof.

Section 5.02 Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default),
(b) the conversion of any Eurodollar Loan into an ABR Loan other than on the
last day of the Interest Period applicable thereto, (c) the failure to borrow,
convert, continue or prepay any Eurodollar Loan on the date specified in any
notice delivered pursuant hereto, or (d) the assignment of any Eurodollar Loan
other than on the last day of the Interest Period applicable thereto as a result
of a request by the Borrowers (or Borrower Representative) pursuant to
Section 5.04(b), then, in any such event, the Borrowers shall compensate each
Lender for the loss, cost and expense attributable to such event. In the case of
a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to
include an amount determined by such Lender to be the excess, if any, of (i) the
amount of interest which would have accrued on the principal amount of such Loan
had such event not occurred, at the Adjusted LIBO Rate that would have been
applicable to such Loan, for the period from the date of such event to the last
day of the then current Interest Period therefor (or, in the case of a failure
to borrow, convert or continue, for the period that would have been the Interest
Period for such Loan), over (ii) the amount of interest which would accrue on
such principal amount for such period at the interest rate which such Lender
would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the eurodollar
market. A certificate of any Lender setting forth any amount or amounts that
such Lender is entitled to receive pursuant to this Section 5.02 and reasonably
detailed calculations therefor shall be delivered to the Borrowers (or Borrower
Representative) and shall be conclusive absent manifest error. The Borrowers
shall pay such Lender the amount shown as due on any such certificate within 10
days after receipt thereof.

Section 5.03 Taxes.

(a) Payments Free of Taxes. Any and all payments by or on account of any
obligation of any Credit Party under any Loan Document shall be made free and
clear of and without deduction for any Indemnified Taxes or Other Taxes;
provided that if any Credit Party shall be required to deduct any Indemnified
Taxes or Other Taxes from such payments, then (i)

 

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the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 5.03(a)), the Agent, Lender or Issuing Bank (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Parent or such Borrower shall or shall cause such
other Credit Party to make such deductions and (iii) Parent or such Borrower
shall or shall cause such other Credit Party to pay the full amount deducted to
the relevant Governmental Authority in accordance with applicable law.

(b) Payment of Other Taxes by the Borrowers. The Borrowers shall pay any Other
Taxes to the relevant Governmental Authority in accordance with applicable law.

(c) Indemnification by the Borrowers. The Borrowers shall, jointly and
severally, indemnify each Agent, each Lender and each Issuing Bank, within 10
days after written demand therefor, for the full amount of any Indemnified Taxes
or Other Taxes paid by such Agent, such Lender or such Issuing Bank, as the case
may be, on or with respect to any payment by or on account of any obligation of
any Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section 5.03) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate of such Agent, a Lender or an Issuing Bank as to the amount of such
payment or liability under this Section 5.03 shall be delivered to the Borrowers
(or Borrower Representative) and shall be conclusive absent manifest error.

(d) Evidence of Payments. As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by a Credit Party to a Governmental Authority,
the Borrowers (or Borrower Representative) shall deliver to the Administrative
Agent the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative
Agent.

(e) Foreign Lenders. Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which a
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement or any other Loan Document shall
deliver to the Borrowers (or Borrower Representative) (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrowers (or Borrower Representative) as will
permit such payments to be made without withholding or at a reduced rate.

(f) Tax Refunds. If an Agent or a Lender determines, in its reasonable
discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Borrowers or with respect to which the
Borrowers have paid additional amounts pursuant to this Section 5.03, it shall
pay over such refund to the Borrowers (but only to the extent of indemnity
payments made, or additional amounts paid, by the Borrowers under this
Section 5.03 with respect to the Taxes or Other Taxes giving rise to such
refund), net of all out-of-pocket expenses of such Agent or such Lender and
without interest (other than any interest

 

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paid by the relevant Governmental Authority with respect to such refund);
provided, that the Borrowers, upon the request of such Agent or such Lender,
jointly and severally agree to repay the amount paid over to the Borrowers (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority) to such Agent or such Lender in the event such Agent or such Lender
is required to repay such refund to such Governmental Authority. This
Section 5.03 shall not be construed to require any Agent or any Lender to make
available its tax returns (or any other information relating to its taxes which
it deems confidential) to any Borrower or any other Person.

Section 5.04 Mitigation Obligations.

(a) Designation of Different Lending Office. If any Lender requests compensation
under Section 5.01, or if any Borrower is required to pay any additional amount
to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 5.03, then such Lender shall use reasonable efforts to
designate a different lending office for funding or booking its Loans hereunder
or to assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to
Section 5.01 or Section 5.03, as the case may be, in the future and (ii) would
not subject such Lender to any unreimbursed cost or expense and would not
otherwise be disadvantageous to such Lender. The Borrowers hereby jointly and
severally agree to pay all reasonable costs and expenses incurred by any Lender
in connection with any such designation or assignment.

(b) Replacement of Lenders. If (i) any Lender advises the Administrative Agent
that the Adjusted LIBO Rate or LIBO Rate, as applicable, will not adequately and
fairly reflect the cost to such Lender of making or maintaining its Loans
pursuant to Section 3.03, (ii) any Lender requests compensation under
Section 5.01, (iii) any Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 5.03, (iv) it becomes unlawful for any Lender to honor its obligation to
make or maintain Eurodollar Loans pursuant to Section 5.05, (v) any Lender
defaults in its obligation to fund Loans hereunder, or (vi) any Lender has not
approved (or is not deemed to have approved) an increase in the Borrowing Base
proposed by the Administrative Agent pursuant to Section 2.07(c)(iii), then the
Borrowers may, at their sole expense and effort, upon notice to such Lender and
the Administrative Agent, (A) require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained
in Section 12.04(b)), all its interests, rights and obligations under this
Agreement to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment) or (B) require such
Lender to be removed as a Lender under this Agreement and the other Loan
Documents with a corresponding reduction in the Aggregate Maximum Credit Amount
equal to the Maximum Credit Amount of such Lender; provided that (1) if a Lender
is removed as a Lender hereunder, the Borrowers have paid such Lender all
amounts due and owing under this Agreement and the other Loan Documents,
including, without limitation, all principal, accrued interest, fees and
breakage costs, (2) in the case of a required assignment of interest, the
Borrowers shall have received the prior written consent of the Administrative
Agent, which consent shall not unreasonably be withheld, (3) such Lender shall
have received payment of an amount equal to the outstanding principal of its
Loans and participations in LC Disbursements, accrued interest thereon, accrued
fees and all other amounts payable to it hereunder, from the

 

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assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrowers (in the case of all other amounts) and (4) in the case of
any such assignment resulting from a claim for compensation under Section 5.01
or payments required to be made pursuant to Section 5.03, such assignment will
result in a reduction in such compensation or payments. A Lender shall not be
required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrowers to require such assignment and delegation cease to apply.

Section 5.05 Illegality. Notwithstanding any other provision of this Agreement,
in the event that it becomes unlawful for any Lender or its applicable lending
office to honor its obligation to make or maintain Eurodollar Loans either
generally or having a particular Interest Period hereunder, then (a) such Lender
shall promptly notify the Borrowers (or Borrower Representative) and the
Administrative Agent thereof and such Lender’s obligation to make such
Eurodollar Loans shall be suspended (the “Affected Loans”) until such time as
such Lender may again make and maintain such Eurodollar Loans and (b) all
Affected Loans which would otherwise be made by such Lender shall be made
instead as ABR Loans (and, if such Lender so requests by notice to the Borrowers
(or Borrower Representative) and the Administrative Agent, all Affected Loans of
such Lender then outstanding shall be automatically converted into ABR Loans on
the date specified by such Lender in such notice) and, to the extent that
Affected Loans are so made as (or converted into) ABR Loans, all payments of
principal which would otherwise be applied to such Lender’s Affected Loans shall
be applied instead to its ABR Loans.

ARTICLE VI

CONDITIONS PRECEDENT

Section 6.01 Effective Date; Initial Loans. This Agreement, and the obligations
of the Lenders to make the initial Loans and of any Issuing Bank to issue
Letters of Credit hereunder, shall not become effective until the date on which
each of the following conditions is satisfied (or waived in accordance with
Section 12.02):

(a) The Administrative Agent, the Arranger and the Lenders shall have received
all fees and other amounts due and payable on or prior to the Effective Date,
including, to the extent invoiced, reimbursement or payment of all out-of-pocket
expenses required to be reimbursed or paid by the Borrowers hereunder.

(b) The Administrative Agent shall have received a certificate of the Secretary
or an Assistant Secretary of each Credit Party setting forth (i) resolutions of
its members, board of managers or board of directors (or comparable authority)
with respect to the authorization of each Credit Party to execute and deliver
the Loan Documents to which it is a party and to enter into the transactions
contemplated in those documents, (ii) the officers of each Credit Party (y) who
are authorized to sign the Loan Documents to which each such Credit Party is a
party and (z) who will, until replaced by another officer or officers duly
authorized for that purpose, act as its representative for the purposes of
signing documents and giving notices and other communications in connection with
this Agreement and the transactions contemplated hereby, (iii) specimen
signatures of such authorized officers, and (iv) the articles or certificate of
organization, regulations or comparable charter documents of each Credit Party,
certified as being true and complete. The Administrative Agent and the Lenders
may conclusively rely on such certificate until the Administrative Agent
receives notice in writing from the Borrowers (or Borrower Representative) to
the contrary.

 

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(c) The Administrative Agent shall have received certificates of the appropriate
State agencies with respect to the existence, qualification and good standing of
the Credit Parties.

(d) The Administrative Agent shall have received from each party hereto
counterparts (in such number as may be requested by the Administrative Agent) of
this Agreement signed on behalf of such party.

(e) The Administrative Agent shall have received duly executed Notes payable to
the order of each Lender in a principal amount equal to its Maximum Credit
Amount dated as of the date hereof.

(f) The Administrative Agent shall have received from each party thereto duly
executed counterparts (in such number as may be requested by the Administrative
Agent) of the applicable Security Instruments, together with (i) such UCC
financing statements (duly authorized) as the Administrative Agent may request
to perfect (or continue perfection of) the Liens granted pursuant to such
Security Instruments, and (ii) certificates evidencing one hundred percent
(100%) of the issued and outstanding Equity Interests of each Borrower and each
Subsidiary, as applicable, of every class (all such certificates, if any, shall
be duly endorsed or accompanied by duly executed blank stock powers). In
connection with the execution and delivery of the Security Instruments, the
Administrative Agent shall be reasonably satisfied that the Security Instruments
create first priority, perfected Liens (subject only to Excepted Liens of the
type described in clauses (a) to (d) and (f) of the definition thereof, but
subject to the provisos at the end of such definition) on at least 95% of the
total Recognized Value of the proved Oil and Gas Properties evaluated for
purposes of establishing the initial Borrowing Base.

(g) The Administrative Agent shall have received the financial statements
referred to in Section 7.04(a).

(h) The Administrative Agent shall have received opinions of special counsel to
the Borrowers and Guarantors, and, as applicable and necessary (as determined by
the Administrative Agent in its sole reasonable discretion), opinions of local
counsel, in each case, in a form reasonably acceptable to the Administrative
Agent and its counsel.

(i) The Administrative Agent shall have received a certificate of insurance
coverage of the Borrowers evidencing that the Borrowers are carrying insurance
in accordance with Section 7.12.

(j) The Administrative Agent and/or its counsel shall have received title
information as they may reasonably require setting forth the status of title to
at least 75% of the total Recognized Value of the proved Oil and Gas Properties
evaluated in the Initial Reserve Report.

 

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(k) The Administrative Agent shall be reasonably satisfied with the
environmental condition of the Oil and Gas Properties of the Credit Parties
(including, without limitation, the Oil and Gas Properties of Calumet and JMG).

(l) The Administrative Agent shall have received the Initial Reserve Report
accompanied by a certificate covering the matters described in Section 8.12(c).

(m) The Administrative Agent shall have received appropriate UCC search
certificates reflecting no prior Liens encumbering the Properties of the Credit
Parties in each jurisdiction requested by the Administrative Agent, other than
Liens permitted by Section 9.03.

(n) The Borrowers shall have entered into Swap Agreements with Approved
Counterparties (and on terms and conditions acceptable to the Administrative
Agent) and the notional volumes for which are not less than 80% of the
reasonably anticipated projected oil production from proved, developed,
producing Oil and Gas Properties (including, without limitation existing Oil and
Gas Properties and Oil and Gas Properties owned by Calumet and JMG), and which
Swap Agreements shall have a tenor from the Effective Date through December 31,
2011.

(o) Subject only to the disbursement and application of the proceeds of the
initial Borrowing, the Calumet Acquisition shall have occurred and been
consummated on the terms set forth in the Calumet Acquisition Documents, and the
Administrative Agent shall have received a copy of each material Calumet
Acquisition Document, together with a certificate of a Responsible Officer of
Borrower Representative certifying that such copies are accurate and complete
and represent the complete understanding and agreement of the parties with
respect to the subject matter thereof.

(p) The Administrative Agent shall have received such other documents as the
Administrative Agent or its special counsel may reasonably request.

All documents executed or submitted pursuant to this Section 6.01 by and on
behalf of Parent, the Borrowers or any of their Subsidiaries shall be in form
and substance satisfactory to the Administrative Agent and its counsel. The
obligations of the Lenders to make Loans and of the Issuing Bank to issue a
Letter of Credit hereunder shall not become effective unless each of the
foregoing conditions is satisfied (or waived in accordance with
Section 12.02(b)) at or prior to 2:00 p.m., Chicago, Illinois time, on
October 31, 2006. Upon satisfaction of each of the conditions set forth in this
Section 6.01, Borrower Representative and the Administrative Agent shall execute
and deliver the Certificate of Effectiveness. Upon the execution and delivery of
the Certificate of Effectiveness, the Existing Credit Agreement shall
automatically and completely be amended and restated on the terms set forth
herein without necessity of any other action of the part of any Lender, the
Administrative Agent or any Credit Party. Until the execution and delivery of
the Certificate of Effectiveness, the Existing Credit Agreement shall remain in
full force and effect in accordance with its terms. Each Lender hereby
authorizes the Administrative Agent to execute the Certificate of Effectiveness
on its behalf and acknowledges and agrees that the execution of the Certificate
of Effectiveness by the Administrative Agent shall be binding on each such
Lender.

 

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Without limiting the generality of the provisions of Section 11.04, for purposes
of determining compliance with the conditions specified in this Section 6.01,
each Lender that has signed this Agreement shall be deemed to have consented to,
approved or accepted or to be satisfied with, each document or other matter
required under this Section 6.01 to be consented to or approved by or acceptable
or satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the Effective Date specifying its objection
thereto.

Section 6.02 Each Credit Event. The obligation of each Lender to make a Loan on
the occasion of any Borrowing (including the initial funding), and of each
Issuing Bank to issue, amend, renew or extend any Letter of Credit, is subject
to the satisfaction of the following conditions:

(a) At the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default shall have occurred and be continuing.

(b) At the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no event, development or condition that has or could reasonably be
expected to have a Material Adverse Effect shall have occurred.

(c) The representations and warranties of the Credit Parties set forth in this
Agreement and in the other Loan Documents shall be true and correct on and as of
the date of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, except to the extent any such
representations and warranties are expressly limited to an earlier date, in
which case, on and as of the date of such Borrowing or the date of issuance,
amendment, renewal or extension of such Letter of Credit, as applicable, such
representations and warranties shall continue to be true and correct as of such
specified earlier date.

(d) The making of such Loan or the issuance, amendment, renewal or extension of
such Letter of Credit, as applicable, would not conflict with, or cause any
Lender or any Issuing Bank to violate or exceed, any applicable Governmental
Requirement, and no Change in Law shall have occurred, and no litigation shall
be pending or threatened, which does or, with respect to any threatened
litigation, seeks to, enjoin, prohibit or restrain, the making or repayment of
any Loan, the issuance, amendment, renewal, extension or repayment of any Letter
of Credit or any participations therein or the consummation of the transactions
contemplated by this Agreement or any other Loan Document.

(e) The receipt by the Administrative Agent of a Borrowing Request in accordance
with Section 2.03 or a request for a Letter of Credit in accordance with
Section 2.08(b), as applicable.

Each request for a Borrowing and each issuance, amendment, renewal or extension
of any Letter of Credit shall be deemed to constitute a representation and
warranty by the Borrowers on the date thereof as to the matters specified in
Section 6.02(a) through (d).

 

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ARTICLE VII

REPRESENTATIONS AND WARRANTIES

Parent and the Borrowers jointly and severally represent and warrant to the
Lenders (which representations and warranties are deemed made after giving
effect to the Calumet Acquisition) that:

Section 7.01 Organization; Powers. Each of Parent, the Borrowers and their
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority, and has all material governmental licenses, authorizations, consents
and approvals necessary, to own its assets and to carry on its business as now
conducted, and is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required, except where failure to have
such power, authority, licenses, authorizations, consents, approvals and
qualifications could not reasonably be expected to have a Material Adverse
Effect.

Section 7.02 Authority; Enforceability. The Transactions are within each Credit
Party’s corporate, limited liability company or other organizational powers and
have been duly authorized by all necessary corporate, limited liability company
or other organizational and, if required, member or stockholder action
(including, without limitation, any action required to be taken by any class of
members, managers or directors of any Credit Party or any other Person, whether
interested or disinterested, in order to ensure the due authorization of the
Transactions). Each Loan Document to which each Credit Party is a party has been
duly executed and delivered by such Credit Party and constitutes a legal, valid
and binding obligation of such Credit Party, as applicable, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.

Section 7.03 Approvals; No Conflicts. The Transactions (a) do not require any
consent or approval of, registration or filing with, or any other action by, any
Governmental Authority or any other third Person (including shareholders,
members or any class of directors, whether interested or disinterested, of any
Credit Party or any other Person), nor is any such consent, approval,
registration, filing or other action necessary for the validity or
enforceability of any Loan Document or the consummation of the transactions
contemplated thereby, except such as have been obtained or made and are in full
force and effect other than (i) the recording and filing of the Security
Instruments as required by this Agreement and (ii) those third party approvals
or consents which, if not made or obtained, would not cause a Default hereunder,
could not reasonably be expected to have a Material Adverse Effect or do not
have an adverse effect on the enforceability of the Loan Documents, (b) will not
violate any applicable law or regulation or the charter, regulations, by-laws or
other organizational documents of any Credit Party or any other Person or any
order of any Governmental Authority, (c) will not violate or result in a default
under any indenture, agreement or other instrument binding upon any Credit Party
or any other Person or its Properties (including, without limitation, any
Permitted Bond Document), or give rise to a right thereunder to require any
payment to be made by such Credit Party or such other Person and (d) will not
result in the creation or imposition of any Lien on any Property of any Credit
Party or any other Person (other than the Liens created by the Loan Documents).

 

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Section 7.04 Financial Condition; No Material Adverse Change.

(a) Parent has heretofore furnished to the Lenders (i) the audited consolidated
balance sheet and statements of income, stockholders equity and cash flows of
Parent as of and for the fiscal year ended December 31, 2005, and (ii) the
unaudited consolidated balance sheet and statements of income, stockholders
equity and cash flows of Parent as of and for the fiscal quarter ended June 30,
2006. Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of Parent and its
Consolidated Subsidiaries as of such dates and for such periods in accordance
with GAAP.

(b) Since the date of the last delivery of financial statements pursuant to
Section 8.01, (i) there has been no event, development or circumstance that has
had or could reasonably be expected to have a Material Adverse Effect and
(ii) the business of the Credit Parties has been conducted only in the ordinary
course consistent with past business practices.

(c) Except as set forth on Schedule 7.20, on the most recent financial statement
of Parent delivered pursuant to Section 8.01(a) or (b), or in a certificate
delivered pursuant to Section 8.01(d), neither Parent, any Borrower nor any
Subsidiary has any material Debt (including Disqualified Capital Stock) or any
contingent liabilities, off-balance sheet liabilities or partnerships,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments.

Section 7.05 Litigation.

(a) Except as set forth on Schedule 7.05, there are no actions, suits,
investigations or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of Parent or any Borrower,
threatened in writing against or affecting Parent, any Borrower or any
Subsidiary (i) as to which there is a reasonable possibility of an adverse
determination that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect or
(ii) that involve any Loan Document or the Transactions.

(b) Since the date of this Agreement, there has been no change in the status of
the matters disclosed in Schedule 7.05 that, individually or in the aggregate,
has resulted in, or materially increased the likelihood of, a Material Adverse
Effect.

Section 7.06 Environmental Matters. Except as covered by the “Escrow Amount” (as
defined in the Calumet Acquisition Agreement) or as could not reasonably be
expected to have a Material Adverse Effect (or with respect to (c), (d) and
(e) below, where the failure to take such actions could not be reasonably
expected to have a Material Adverse Effect):

(a) neither any Property of any Credit Party nor the operations conducted
thereon violate any order or requirement of any court or Governmental Authority
or any Environmental Laws.

(b) no Property of any Credit Party nor the operations currently conducted
thereon or, to the knowledge of Parent or any Borrower, by any prior owner or
operator of such Property or operation, are in violation of or subject to any
existing, pending or threatened action, suit, investigation, inquiry or
proceeding by or before any court or Governmental Authority or to any remedial
obligations under Environmental Laws.

 

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(c) all notices, permits, licenses, exemptions, approvals or similar
authorizations, if any, required to be obtained or filed in connection with the
operation or use of any and all Property of each Credit Party, including,
without limitation, past or present treatment, storage, disposal or release of a
hazardous substance, oil and gas waste or solid waste into the environment, have
been duly obtained or filed, and each Credit Party is in compliance with the
terms and conditions of all such notices, permits, licenses and similar
authorizations.

(d) to the knowledge of Parent or any Borrower, all hazardous substances, solid
waste and oil and gas waste, if any, generated at any and all Property of any
Credit Party have in the past been transported, treated and disposed of in
accordance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment, and all
such transport carriers and treatment and disposal facilities have been and are
operating in compliance with Environmental Laws and so as not to pose an
imminent and substantial endangerment to public health or welfare or the
environment, and are not the subject of any existing, pending or threatened
action, investigation or inquiry by any Governmental Authority in connection
with any Environmental Laws.

(e) each Credit Party has taken all steps reasonably necessary to determine and
has determined that no oil, hazardous substances, solid waste or oil and gas
waste, have been disposed of or otherwise released and there has been no
threatened release of any oil, hazardous substances, solid waste or oil and gas
waste on or to any Property of any Credit Party except in compliance with
Environmental Laws and so as not to pose an imminent and substantial
endangerment to public health or welfare or the environment.

(f) to the extent applicable, all Property of each Credit Party currently
satisfies all design, operation, and equipment requirements imposed by OPA, and
no Credit Party has any reason to believe that such Property, to the extent
subject to OPA, will not be able to maintain compliance with OPA requirements
during the term of this Agreement.

(g) no Credit Party has any known contingent liability or Remedial Work in
connection with any release or threatened release of any oil, hazardous
substance, solid waste or oil and gas waste into the environment.

Section 7.07 Compliance with the Laws and Agreements; No Defaults.

(a) Each Credit Party is in compliance with all Governmental Requirements
applicable to it or its Property and all agreements and other instruments
binding upon it or its Property, and possesses all licenses, permits,
franchises, exemptions, approvals and other governmental authorizations
necessary for the ownership of its Property and the conduct of its business,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.

(b) No Credit Party is in default nor has any event or circumstance occurred
which, but for the expiration of any applicable grace period or the giving of
notice, or both,

 

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would constitute a default or would require a Credit Party to Redeem or make any
offer to Redeem under any indenture, note, credit agreement or instrument
pursuant to which any Material Indebtedness is outstanding or by which any
Credit Party or any of their Properties is bound.

(c) No Default has occurred and is continuing.

Section 7.08 Investment Company Act. No Credit Party is an “investment company”
or a company “controlled” by an “investment company,” within the meaning of, or
subject to regulation under, the Investment Company Act of 1940, as amended.

Section 7.09 Taxes. Each Credit Party has timely filed or caused to be filed all
Tax returns (or extensions thereof) and reports required to have been filed and
has paid or caused to be paid all Taxes required to have been paid by it, except
(a) Taxes that are being contested in good faith by appropriate proceedings and
for which such Credit Party, as applicable, has set aside on its books adequate
reserves in accordance with GAAP or (b) to the extent that the failure to do so
could not reasonably be expected to result in a Material Adverse Effect. The
charges, accruals and reserves on the books of the Credit Parties in respect of
Taxes and other governmental charges are, in the reasonable opinion of Parent
and the Borrowers, adequate. No Tax Lien has been filed and, to the knowledge of
Parent or any Borrower, no claim is being asserted with respect to any such Tax
or other such governmental charge.

Section 7.10 ERISA.

(a) Each Credit Party and each ERISA Affiliate have complied in all material
respects with ERISA and, where applicable, the Code regarding each Plan.

(b) Each Plan is, and has been, maintained in substantial compliance with ERISA
and, where applicable, the Code.

(c) Except as could not reasonably be expected to result in liability in excess
of $5,000,000, no act, omission or transaction has occurred which could result
in imposition on any Credit Party or any ERISA Affiliate (whether directly or
indirectly) of (i) either a civil penalty assessed pursuant to subsections (c),
(i) or (l) of section 502 of ERISA or a tax imposed pursuant to Chapter 43 of
Subtitle D of the Code or (ii) breach of fiduciary duty liability damages under
section 409 of ERISA.

(d) No liability to the PBGC (other than for the payment of current premiums
which are not past due) by any Credit Party or any ERISA Affiliate has been or
is expected by any Credit Party or any ERISA Affiliate to be incurred with
respect to any Plan. No ERISA Event with respect to any Plan has occurred.

(e) Full payment when due has been made of all amounts which any Credit Party or
any ERISA Affiliate is required under the terms of each Plan or applicable law
to have paid as contributions to such Plan as of the date hereof, and no
accumulated funding deficiency (as defined in section 302 of ERISA and section
412 of the Code), whether or not waived, exists with respect to any Plan.

 

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(f) The actuarial present value of the benefit liabilities under each Plan which
is subject to Title IV of ERISA does not, as of the end of Parent’s most
recently ended fiscal year, exceed the current value of the assets (computed on
a plan termination basis in accordance with Title IV of ERISA) of such Plan
allocable to such benefit liabilities. The term “actuarial present value of the
benefit liabilities” shall have the meaning specified in section 4041 of ERISA.

(g) Neither any Credit Party nor any ERISA Affiliate sponsors, maintains, or
contributes to an employee welfare benefit plan, as defined in section 3(1) of
ERISA, including, without limitation, any such plan maintained to provide
benefits to former employees of such entities, that may not be terminated by any
Credit Party or any ERISA Affiliate in its sole discretion at any time without
any material liability.

(h) Neither any Credit Party nor any ERISA Affiliate sponsors, maintains or
contributes to, or has at any time in the six-year period preceding the date
hereof sponsored, maintained or contributed to, any Multiemployer Plan.

(i) Neither any Credit Party nor any ERISA Affiliate is required to provide
security under section 401(a)(29) of the Code due to a Plan amendment that
results in an increase in current liability for the Plan.

Section 7.11 Disclosure; No Material Misstatements. Parent and the Borrowers
have disclosed to the Administrative Agent and the Lenders all agreements,
instruments and corporate or other restrictions to which Parent, any Borrower or
any of their Subsidiaries is subject, and all other matters known to them, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. Taken as a whole, none of the other reports, financial
statements, certificates or other information furnished by or on behalf of
Parent, any Borrower or any Subsidiary to the Administrative Agent or any Lender
or any of their Affiliates in connection with the negotiation of this Agreement
or any other Loan Document or delivered hereunder or under any other Loan
Document (as modified or supplemented by other information so furnished) contain
material misstatements of fact or omit to state material facts necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, prospect information, geological and geophysical data and
engineering projections, Parent and the Borrowers jointly and severally
represent only that such information was prepared in good faith based upon
assumptions believed to be reasonable at the time. To the knowledge of Parent
and the Borrowers, there is no fact peculiar to Parent, any Borrower or any
Subsidiary which could reasonably be expected to have a Material Adverse Effect
or in the future is reasonably likely to have a Material Adverse Effect and
which has not been set forth in this Agreement or the Loan Documents or the
other documents, certificates and statements furnished to the Administrative
Agent or the Lenders by or on behalf of Parent, any Borrower or any Subsidiary
prior to, or on, the date hereof in connection with the transactions
contemplated hereby. There are no statements or conclusions known to Parent or
any Borrower in any Reserve Report which are based upon or include misleading
information or fail to take into account material information regarding the
matters reported therein, it being understood that projections concerning
volumes attributable to the Oil and Gas Properties and production and cost
estimates contained in each Reserve Report are necessarily based upon
professional opinions, estimates and projections and that the Credit Parties do
not warrant that such opinions, estimates and projections will ultimately prove
to have been accurate.

 

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Section 7.12 Insurance. Parent and the Borrowers have, and have caused all their
Subsidiaries to have, (a) all insurance policies sufficient for the compliance
by each of them with all material Governmental Requirements and all material
agreements and (b) insurance coverage in at least amounts and against such risk
(including, without limitation, public liability) that are usually insured
against by companies similarly situated and engaged in the same or a similar
business for the assets and operations of the Credit Parties. The Administrative
Agent and the Lenders have been named as additional insureds in respect of such
liability insurance policies and the Administrative Agent has been named as loss
payee with respect to Property loss insurance.

Section 7.13 Restriction on Liens. Neither Parent, any Borrower nor any of their
Subsidiaries is a party to any material agreement or arrangement, or subject to
any order, judgment, writ or decree, which either restricts or purports to
restrict its ability to grant Liens to the Administrative Agent and the Lenders
on or in respect of their Properties to secure the Indebtedness and the Loan
Documents.

Section 7.14 Subsidiaries. Except as set forth on Schedule 7.14, (a) the
Borrowers have no Subsidiaries, (b) each Subsidiary is a Wholly-Owned Subsidiary
and (c) none of the Borrowers nor any Subsidiary has any Foreign Subsidiaries.
Parent has no direct Wholly-Owned Subsidiaries other than the Borrowers.

Section 7.15 Location of Business and Offices. Parent’s and each Borrower’s and
Subsidiary’s jurisdiction of organization, name as listed in the public records
of its jurisdiction of organization, organizational identification number in its
jurisdiction of organization, and the location of its principal place of
business is stated on Schedule 7.15 (or as set forth in a notice delivered
pursuant to Section 8.01(i)).

Section 7.16 Properties; Titles, Etc.

(a) Except as disclosed in Schedule 7.16, each Credit Party has good and
defensible title in all material respects to the proved Oil and Gas Properties
evaluated in the most recently delivered Reserve Report (excluding, to the
extent this representation and warranty is deemed to be made after the Effective
Date, any such Oil and Gas Properties sold or transferred in compliance with
Section 9.12) and good title in all material respects to all its personal
Properties, in each case, free and clear of all Liens except Liens permitted by
Section 9.03. After giving full effect to the Excepted Liens, a Credit Party
specified as the owner owns the net interests in production attributable to the
Hydrocarbon Interests as reflected in the most recently delivered Reserve
Report, and the ownership of such Properties shall not in any material respect
obligate such Credit Party to bear the costs and expenses relating to the
maintenance, development and operations of each such Property in an amount in
excess of the working interest of each Property set forth in the most recently
delivered Reserve Report that is not offset by a corresponding proportionate
increase in such Credit Party’s net revenue interest in such Property.

 

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(b) All material leases and agreements necessary for the conduct of the business
of the Credit Parties are valid and subsisting, in full force and effect, and
there exists no default or event or circumstance which with the giving of notice
or the passage of time or both would give rise to a default under any such lease
or leases, which could reasonably be expected to result in a Material Adverse
Effect.

(c) The rights and Properties presently owned, leased or licensed by the Credit
Parties including, without limitation, all easements and rights of way, include
all rights and Properties necessary to permit the Credit Parties to conduct
their business in all material respects in the same manner as its business has
been conducted prior to the date hereof.

(d) All of the material Properties of the Credit Parties which are reasonably
necessary for the operation of their businesses are in good working condition
and are maintained in accordance with prudent business standards.

(e) Each Credit Party owns, or is licensed to use, all trademarks, tradenames,
copyrights, patents and other intellectual Property material to its business,
and the use thereof by such Credit Party does not infringe upon the rights of
any other Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. The Credit Parties either own or have valid licenses or other rights to
use all databases, geological data, geophysical data, engineering data, seismic
data, maps, interpretations and other technical information used in their
businesses as presently conducted, subject to the limitations contained in the
agreements governing the use of the same, which limitations are customary for
companies engaged in the business of the exploration and production of
Hydrocarbons, with such exceptions as could not reasonably be expected to have a
Material Adverse Effect.

Section 7.17 Maintenance of Properties. Except for such acts or failures to act
as could not be reasonably expected to have a Material Adverse Effect, the Oil
and Gas Properties (and Properties unitized therewith) have been maintained,
operated and developed in a good and workmanlike manner and in conformity with
all Government Requirements and in conformity with the provisions of all leases,
subleases or other contracts comprising a part of the Hydrocarbon Interests and
other contracts and agreements forming a part of the Oil and Gas Properties.
Specifically in connection with the foregoing, except for those as could not be
reasonably expected to have a Material Adverse Effect, (a) no Oil and Gas
Property is subject to having allowable production reduced below the full and
regular allowable (including the maximum permissible tolerance) because of any
overproduction (whether or not the same was permissible at the time) and (b) to
the knowledge of Parent and the Borrowers, none of the wells comprising a part
of the Oil and Gas Properties (or Properties unitized therewith) is deviated
from the vertical more than the maximum permitted by Government Requirements,
and such wells are, in fact, bottomed under and are producing from, and the well
bores are wholly within, the Oil and Gas Properties (or in the case of wells
located on Properties unitized therewith, such unitized Properties). All
pipelines, wells, gas processing plants, platforms and other material
improvements, fixtures and equipment owned in whole or in part by the Credit
Parties that are necessary to conduct normal operations are being maintained in
a state adequate to conduct normal operations, and with respect to such of the
foregoing that are operated by any Credit Party, in a manner consistent with any
such Credit Party’s past practices (other than those the failure of which to
maintain in accordance with this Section 7.17 could not reasonably be expect to
have a Material Adverse Effect).

 

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Section 7.18 Gas Imbalances, Prepayments. As of the date hereof, except as set
forth on Schedule 7.18 or on the most recent certificate delivered pursuant to
Section 8.12(c), on a net basis there are no gas imbalances, take or pay or
other prepayments which would require any Credit Party to deliver Hydrocarbons
produced from the Oil and Gas Properties at some future time without then or
thereafter receiving full payment therefor exceeding 50 mmcf equivalent in the
aggregate.

Section 7.19 Marketing of Production. Except for contracts listed and in effect
on the date hereof on Schedule 7.19, and thereafter either disclosed in writing
to the Administrative Agent or included in the most recently delivered Reserve
Report (with respect to all of which contracts Parent and the Borrowers jointly
and severally represent that they or their Subsidiaries are receiving a price
for all production sold thereunder which is computed substantially in accordance
with the terms of the relevant contract and are not having deliveries curtailed
substantially below the subject Property’s delivery capacity), no material
agreements exist which are not cancelable on 60 days notice or less without
penalty or detriment for the sale of production from the Credit Parties’
Hydrocarbons (including, without limitation, calls on or other rights to
purchase, production, whether or not the same are currently being exercised)
that (a) pertain to the sale of production at a fixed price and (b) have a
maturity or expiry date of longer than six (6) months from the date hereof.

Section 7.20 Swap Agreements. Schedule 7.20, as of the date hereof, and after
the date hereof, each report required to be delivered by the Borrowers pursuant
to Section 8.01(d), sets forth, a true and complete list of all Swap Agreements
of each Credit Party, the material terms thereof (including the type, term,
effective date, termination date and notional amounts or volumes), the net mark
to market value thereof (as calculated within the prior ten (10) Business Days),
all credit support agreements relating thereto (including any margin required or
supplied) and the counterparty to each such agreement.

Section 7.21 Use of Loans and Letters of Credit. The proceeds of the Loans and
the Letters of Credit shall be used to refinance existing indebtedness, to
finance the Calumet Acquisition, to provide working capital for exploration and
production, and for general corporate purposes of the Borrowers and their
Subsidiaries, including the acquisition of exploration and production
properties. No Credit Party is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose, whether
immediate, incidental or ultimate, of buying or carrying margin stock (within
the meaning of Regulation T, U or X of the Board). No part of the proceeds of
any Loan or Letter of Credit will be used for any purpose which violates the
provisions of Regulations T, U or X of the Board.

Section 7.22 Solvency. Before and after giving effect to the transactions
contemplated hereby, (a) the aggregate assets, at a fair valuation, of the
Credit Parties, taken as a whole, will exceed the aggregate Debt of the Credit
Parties on a consolidated basis, as the Debt becomes absolute and matures,
(b) each of the Credit Parties will not have incurred or intended to incur, and
will not believe that it will incur, Debt beyond its ability to pay such Debt as
such Debt becomes absolute and matures and (c) each of the Credit Parties will
not have (and will have no reason to believe that it will have thereafter)
unreasonably small capital for the conduct of its business.

 

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ARTICLE VIII

AFFIRMATIVE COVENANTS

Until the Commitments have expired or been terminated and the principal of and
interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents shall have been paid in full and all Letters of
Credit shall have expired or terminated and all LC Disbursements shall have been
reimbursed, Parent and the Borrowers jointly and severally covenant and agree
with the Lenders that:

Section 8.01 Financial Statements; Other Information. Parent and the Borrowers
(or Borrower Representative) will furnish to the Administrative Agent and each
Lender:

(a) Annual Financial Statements. As soon as available, but in any event in
accordance with then applicable law and not later than 120 days after the end of
each fiscal year of Parent, Parent’s audited consolidated balance sheet and
related statements of operations, stockholders’ equity, cash flows and volume of
production and sales attributable to production as of the end of and for such
year, setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on by a firm of independent public
accountants proposed by Parent and approved by the Administrative Agent (without
a “going concern” or like qualification or exception and without any
qualification or exception as to the scope of such audit) to the effect that
such consolidated financial statements present fairly in all material respects
the financial condition and results of operations of Parent and its Consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied.

(b) Quarterly Financial Statements. As soon as available, but in any event in
accordance with then applicable law and not later than 60 days after the end of
each of the first three fiscal quarters of each fiscal year of Parent,
commencing with the fiscal quarter ending September 30, 2006, Parent’s
consolidated balance sheet and related statements of operations, stockholders’
equity, cash flows and volume of production and sales attributable to production
as of the end of and for such fiscal quarter and the then elapsed portion of the
fiscal year, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by a Financial Officer of
Borrower Representative as presenting fairly in all material respects the
financial condition and results of operations of Parent and its Consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes.

(c) Certificate of Financial Officer — Compliance. Concurrently with any
delivery of financial statements under Section 8.01(a) or Section 8.01(b), a
certificate of a Financial Officer of Borrower Representative in substantially
the form of Exhibit D hereto (i) certifying as to whether a Default has occurred
and, if a Default has occurred, specifying the details thereof and any action
taken or proposed to be taken with respect thereto, (ii) setting forth
reasonably detailed calculations demonstrating compliance with Section 8.13(b)
and Section 9.01 (which, with respect to the financial statements delivered
under Section 8.01(b) for the fiscal

 

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quarter ending September 30, 2006, shall set forth reasonably detailed
calculations demonstrating compliance with Section 9.01 of the Existing Credit
Agreement), and (iii) stating whether any change in GAAP or in the application
thereof has occurred since the date of the audited financial statements referred
to in Section 7.04 and, if any such change has occurred, specifying the effect
of such change on the financial statements accompanying such certificate.

(d) Certificate of Financial Officer — Swap Agreements. Concurrently with the
delivery of each Reserve Report hereunder, a certificate of a Financial Officer
of Borrower Representative, in form and substance reasonably satisfactory to the
Administrative Agent, setting forth as of a recent date, a true and complete
list of all Swap Agreements of each Credit Party, the material terms thereof
(including the type, term, effective date, termination date and notional amounts
or volumes), the net mark-to-market value therefor, any new credit support
agreements relating thereto not listed on Schedule 7.20, any margin required or
supplied under any credit support document, and the counterparty to each such
agreement.

(e) SEC and Other Filings; Reports to Shareholders. Promptly after the same
become publicly available, copies of all periodic and other reports, proxy
statements and other materials filed by any Credit Party with the SEC, or with
any national securities exchange, or distributed by Parent or any Borrower to
its shareholders or equityholders generally, as the case may be, which copies
may be delivered electronically by posting such documents on the SEC website at
www.sec.gov.

(f) Notices Under Material Instruments. Promptly after the furnishing thereof,
copies of any financial statement, report or notice furnished to or by any
Person pursuant to the terms of any preferred stock designation, indenture, loan
or credit or other similar agreement, other than this Agreement and not
otherwise required to be furnished to the Lenders pursuant to any other
provision of this Section 8.01.

(g) Notice of Sales of Oil and Gas Properties. In the event any Credit Party
intends to sell, transfer, assign or otherwise dispose of any Oil or Gas
Properties or any Equity Interests in any Subsidiary of Parent or any Borrower
in accordance with Section 9.12(f), prior written notice of such disposition,
the price thereof and the anticipated date of closing.

(h) Notice of Casualty Events. Prompt written notice, and in any event within
five Business Days, of the occurrence of any Casualty Event or the commencement
of any action or proceeding that could reasonably be expected to result in a
Casualty Event.

(i) Information Regarding Borrowers and Guarantors. Prompt written notice (and
in any event within ten (10) Business Days prior thereto) of any change (i) in
any Credit Party’s corporate or organizational name or in any trade name used to
identify such Person in the conduct of its business or in the ownership of its
Properties, (ii) in the location of any Credit Party’s chief executive office or
principal place of business, (iii) in any Credit Party’s identity or corporate
or organizational structure or in the jurisdiction in which such Person is
incorporated or formed, (iv) in any Credit Party’s jurisdiction of organization
or such Person’s organizational identification number in such jurisdiction of
organization, and (v) in any Credit Party’s federal taxpayer identification
number.

 

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(j) Notices of Certain Changes. Promptly, but in any event within five
(5) Business Days after the execution thereof, copies of any amendment,
modification or supplement to the certificate or articles of organization,
regulations, any preferred stock designation or any other organic document of
any Credit Party.

(k) Permitted Bond Debt. Promptly, but in any event within two (2) Business Days
after such delivery or receipt, copies of any financial or other report or
notice delivered to, or received from, any holder of any Permitted Bond Debt (or
the notes evidencing same), which report or notice has not been delivered to
Lenders hereunder.

(l) Other Requested Information. Promptly following any request therefor, such
other information regarding the operations, business affairs and financial
condition of Parent, any Borrower or any Subsidiary (including, without
limitation, any Plan or Multiemployer Plan and any reports or other information
required to be filed under ERISA), or compliance with the terms of this
Agreement or any other Loan Document, as the Administrative Agent or any Lender
may reasonably request.

Section 8.02 Notices of Material Events. The Borrowers (or Borrower
Representative) will furnish to the Administrative Agent and each Lender prompt
written notice of the following:

(a) the occurrence of any Default and/or any non-compliance with
Section 8.13(b);

(b) the filing or commencement of, or the threat in writing of, any action,
suit, proceeding, investigation or arbitration by or before any arbitrator or
Governmental Authority against Parent, any Borrower or any Affiliate thereof not
previously disclosed in writing to the Lenders or any material adverse
development in any action, suit, proceeding, investigation or arbitration
previously disclosed to the Lenders that, if adversely determined, could
reasonably be expected to result in liability in excess of $5,000,000, after
taking into account the application of proceeds from insurance coverage;

(c) the occurrence of any ERISA Event that, alone or together with any other
ERISA Events that have occurred, could reasonably be expected to result in
liability of any Credit Party in an aggregate amount exceeding $5,000,000, after
taking into account the application of proceeds from insurance coverage; and

(d) any other development that results in, or could reasonably be expected to
result in, a Material Adverse Effect.

Each notice delivered under this Section 8.02 shall be accompanied by a
statement of a Responsible Officer of Borrower Representative setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.

Section 8.03 Existence; Conduct of Business. Parent and each Borrower will, and
will cause each other Credit Party to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business and maintain, if necessary, its qualification

 

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to do business in each other jurisdiction in which its Oil and Gas Properties
are located or the ownership of its Properties requires such qualification,
except where the failure to so qualify could not reasonably be expected to have
a Material Adverse Effect; provided that the foregoing shall not prohibit any
merger, consolidation, liquidation or dissolution permitted under Section 9.11.

Section 8.04 Payment of Obligations. Parent and each Borrower will, and will
cause each other Credit Party to, pay its obligations, including Tax liabilities
of any Credit Party before the same shall become delinquent or in default,
except where (a) the validity or amount thereof is being contested in good faith
by appropriate proceedings and such Credit Party has set aside on its books
adequate reserves with respect thereto in accordance with GAAP or (b) the
failure to make payment pending such contest could not reasonably be expected to
result in a Material Adverse Effect or result in the seizure or levy of any
material Property of any Credit Party.

Section 8.05 Performance of Obligations under Loan Documents. The Borrowers will
pay the Loans and the Notes according to the reading, tenor and effect thereof,
and Parent and each Borrower will, and will cause each other Credit Party to, do
and perform every act and discharge all of the obligations to be performed and
discharged by them under the Loan Documents, including, without limitation, this
Agreement, at the time or times and in the manner specified.

Section 8.06 Operation and Maintenance of Properties. Except, in each case,
where the failure to comply could not reasonably be expected to have a Material
Adverse Effect, Parent and each Borrower, at its own expense, will, and will
cause each other Credit Party to:

(a) operate its Oil and Gas Properties and other material Properties or cause
such Oil and Gas Properties and other material Properties to be operated in a
careful and efficient manner in accordance with the practices of the industry
and in compliance with all applicable contracts and agreements and in compliance
with all Governmental Requirements, including, without limitation, applicable
pro ration requirements and Environmental Laws, and all applicable laws, rules
and regulations of every other Governmental Authority from time to time
constituted to regulate the development and operation of its Oil and Gas
Properties and the production and sale of Hydrocarbons and other minerals
therefrom.

(b) keep and maintain all Property material to the conduct of its business in
good working order and condition, ordinary wear and tear excepted, and preserve,
maintain and keep in good repair, working order and efficiency (ordinary wear
and tear excepted) all of its material producing Oil and Gas Properties and
other material Properties, including, without limitation, all equipment,
machinery and facilities.

(c) promptly pay and discharge, or make reasonable and customary efforts to
cause to be paid and discharged, all delay rentals, royalties, expenses and
indebtedness accruing under the leases or other agreements affecting or
pertaining to its proved Oil and Gas Properties and will do all other things
necessary to keep unimpaired their rights with respect thereto and prevent any
forfeiture thereof or default thereunder.

 

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(d) promptly perform or make reasonable and customary efforts to cause to be
performed, in accordance with industry standards, the obligations required by
each and all of the assignments, deeds, leases, sub-leases, contracts and
agreements affecting its interests in its proved Oil and Gas Properties and
other material Properties.

(e) operate its Oil and Gas Properties and other material Properties or cause or
make reasonable and customary efforts to cause such Oil and Gas Properties and
other material Properties to be operated in accordance with the practices of the
industry and in material compliance with all applicable contracts and agreements
and in compliance in all material respects with all Governmental Requirements.

(f) to the extent a Credit Party is not the operator of any Property, the Credit
Parties shall not be obligated to directly perform any undertakings contemplated
by the covenants and agreements contained in this Section 8.06 which are
performable only by such operators and are beyond the control of the Credit
Parties, but shall be obligated to seek to enforce such operators’ contractual
obligations to maintain, develop and operate the Properties subject to such
operating agreements, and Parent and the Borrowers shall, and shall cause the
other Credit Parties to, use reasonable efforts to cause the operator to comply
with this Section 8.06.

Section 8.07 Insurance. Parent and each Borrower will, and will cause each other
Credit Party to, maintain, with financially sound and reputable insurance
companies, insurance in such amounts and against such risks as are customarily
maintained by companies engaged in the same or similar businesses operating in
the same or similar locations. The loss payable clauses or provisions in said
insurance policy or policies insuring any of the collateral for the Loans shall
be endorsed in favor of and made payable to the Administrative Agent as its
interests may appear and such policies shall name the Administrative Agent and
the Lenders as “additional insureds” and provide that the insurer will endeavor
to give at least 30 days prior notice of any cancellation to the Administrative
Agent.

Section 8.08 Books and Records; Inspection Rights. Parent and each Borrower
will, and will cause each other Credit Party to, keep proper books of record and
account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. Parent and each
Borrower will, and will cause each other Credit Party to, permit any
representatives designated by the Administrative Agent or any Lender, upon
reasonable prior notice, to visit and inspect its Properties, to examine and
make extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and independent accountants, all at such
reasonable times during normal business hours and as often as reasonably
requested on an individual and aggregate basis.

Section 8.09 Compliance with Laws. Parent and each Borrower will, and will cause
each other Credit Party to, comply with all laws, rules, regulations and orders
of any Governmental Authority applicable to it or its Property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. To the extent a Credit Party is
not the operator of any Property, the Credit Parties shall not be obligated to
directly perform any undertakings contemplated by the covenants and agreements
contained in this Section 8.09 which are performable only by such operators and
are

 

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beyond the control of the Credit Parties, but shall be obligated to seek to
enforce such operators’ contractual obligations to maintain, develop and operate
the Properties subject to such operating agreements, and Parent and the
Borrowers shall, and shall cause the other Credit Parties to, use reasonable
efforts to cause the operator to comply with this Section 8.09.

Section 8.10 Environmental Matters.

(a) Parent and each Borrower shall at its sole expense: (i) comply, and shall
cause its Properties and operations and each other Credit Party and each other
Credit Party’s Properties and operations to comply, with all applicable
Environmental Laws, the breach of which could be reasonably expected to have a
Material Adverse Effect; (ii) not dispose of or otherwise release, and shall
cause each other Credit Party not to dispose of or otherwise release, any oil,
oil and gas waste, hazardous substance, or solid waste on, under, about or from
any of such Credit Party’s Properties or any other Property to the extent caused
by such Credit Party’s operations except in compliance with applicable
Environmental Laws, the disposal or release of which could reasonably be
expected to have a Material Adverse Effect; (iii) timely obtain or file, and
shall cause each Credit Party to timely obtain or file, all notices, permits,
licenses, exemptions, approvals, registrations or other authorizations, if any,
required under applicable Environmental Laws to be obtained or filed in
connection with the operation or use of such Credit Party’s Properties, which
failure to obtain or file could reasonably be expected to have a Material
Adverse Effect; (iv) promptly commence and diligently prosecute to completion,
and shall cause each Subsidiary to promptly commence and diligently prosecute to
completion, any assessment, evaluation, investigation, monitoring, containment,
cleanup, removal, repair, restoration, remediation or other remedial obligations
(collectively, the “Remedial Work”) in the event any Remedial Work is required
or reasonably necessary under applicable Environmental Laws because of or in
connection with the actual or suspected past, present or future disposal or
other release of any oil, oil and gas waste, hazardous substance or solid waste
on, under, about or from any of such Credit Party’s Properties, which failure to
commence and diligently prosecute to completion could reasonably be expected to
have a Material Adverse Effect; and (v) establish and implement, and shall cause
each other Credit Party to establish and implement, such procedures as may be
necessary to continuously determine and assure that such Credit Party’s
obligations under this Section 8.10(a) are timely and fully satisfied, which
failure to establish and implement could reasonably be expected to have a
Material Adverse Effect

(b) The Borrowers (or Borrower Representative) will promptly, but in no event
later than five Business Days of the occurrence of a triggering event, notify
the Administrative Agent in writing of any threatened action, investigation or
inquiry by any Governmental Authority or any threatened demand or lawsuit by any
landowner or other third party against any Credit Party or their Properties of
which any Credit Party has knowledge in connection with any applicable
Environmental Laws (excluding routine testing and corrective action) if Parent
and the Borrowers reasonably anticipate that such action will result in
liability (whether individually or in the aggregate) in excess of $5,000,000,
not fully covered by insurance, subject to normal deductibles.

(c) Parent and each Borrower will, and will cause each other Credit Party to,
undertake reasonable environmental audits and tests upon reasonable request by
the Administrative Agent no more than once per year in the absence of any Event
of Default (or as

 

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otherwise required to be obtained by the Administrative Agent or the Lenders by
any Governmental Authority), in connection with any future acquisitions of Oil
and Gas Properties or other Properties.

(d) To the extent a Credit Party is not the operator of any Property, the Credit
Parties shall not be obligated to directly perform any undertakings contemplated
by the covenants and agreements contained in this Section 8.10 which are
performable only by such operators and are beyond the control of the Credit
Parties, but shall be obligated to seek to enforce such operators’ contractual
obligations to maintain, develop and operate the Properties subject to such
operating agreements, and Parent and the Borrowers shall, and shall cause the
other Credit Parties to, use reasonable efforts to cause the operator to comply
with this Section 8.10.

Section 8.11 Further Assurances.

(a) Parent and each Borrower at its expense will, and will cause each other
Credit Party to, promptly execute and deliver to the Administrative Agent all
such other documents, agreements and instruments reasonably requested by the
Administrative Agent to comply with, cure any defects or accomplish the
conditions precedent, covenants and agreements of Parent, any Borrower or any
Subsidiary, as the case may be, in the Loan Documents, including the Notes, or
to further evidence and more fully describe the collateral intended as security
for the Indebtedness, or to correct any omissions in this Agreement or the
Security Instruments, or to state more fully the obligations secured therein, or
to perfect, protect or preserve any Liens created pursuant to this Agreement or
any of the Security Instruments or the priority thereof, or to make any
recordings, file any notices or obtain any consents, all as may be reasonably
necessary or appropriate, in the sole discretion of the Administrative Agent, in
connection therewith.

(b) Parent and the Borrowers hereby authorize the Administrative Agent to file
one or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Mortgaged Property without the signature of
any Credit Party where permitted by law. A carbon, photographic or other
reproduction of the Security Instruments or any financing statement covering the
Mortgaged Property or any part thereof shall be sufficient as a financing
statement where permitted by law.

Section 8.12 Reserve Reports.

(a) On or before April 1st and October 1st of each year, commencing April 1,
2007, the Borrowers shall furnish to the Administrative Agent and the Lenders a
Reserve Report. The Reserve Report as of December 31st (to be furnished by
April 1st of the following year) of each year shall be prepared by (i) one or
more Approved Petroleum Engineers with respect to not less than eighty percent
(80%) of the Recognized Value of the Borrowers’ proved Oil and Gas Properties,
and (ii) the chief engineer of the Borrowers with respect to the remaining
twenty percent (20%) (or such lesser percentage as may not be covered pursuant
to clause (i) above) of the Recognized Value of the Borrowers’ proved Oil and
Gas Properties, and the June 30th Reserve Report (to be furnished by
October 1st) of each year shall be prepared by or under the supervision of the
chief engineer of the Borrowers. In each case, the chief engineer of the

 

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Borrowers shall certify that such Reserve Report is based on information that
was prepared in good faith based upon assumptions believed to be reasonable at
the time and to have been prepared in accordance with the procedures used in the
immediately preceding Reserve Report.

(b) In the event of an Interim Redetermination, the Borrowers shall furnish to
the Administrative Agent and the Lenders a Reserve Report prepared by or under
the supervision of the chief engineer of the Borrowers who shall certify such
Reserve Report to be based on information that was prepared in good faith based
upon assumptions believed to be reasonable at the time and to have been prepared
in accordance with the procedures used in the immediately preceding Reserve
Report except that the Properties covered by such report may, in the discretion
of the Borrowers, be limited to the proved Oil and Gas Properties acquired since
the last redetermination of the Borrowing Base (provided, that, in connection
with any Interim Redetermination requested by the Administrative Agent pursuant
to Section 2.07(b)(ii), the Reserve Report shall cover such additional Oil and
Gas Properties of the Borrowers as the Required Lenders may reasonably request).
For any Interim Redetermination requested by the Administrative Agent or the
Borrowers pursuant to Section 2.07(b)(ii) or Section 2.07(b)(iii), the Borrowers
shall provide such Reserve Report with an “as of” date as required by the
Administrative Agent as soon as possible, but in any event no later than
forty-five (45) days following the receipt of such request.

(c) With the delivery of each Reserve Report, the Borrowers shall provide to the
Administrative Agent and the Lenders a certificate from a Responsible Officer of
Borrower Representative certifying that to his knowledge, after reasonable
investigation, in all material respects: (i) the information contained in the
Reserve Report and any other information delivered in connection therewith is
based on information that was prepared in good faith based upon assumptions
believed to be reasonable at the time, (ii) the Credit Parties own good and
defensible title to the proved Oil and Gas Properties evaluated in such Reserve
Report and such Properties are free of all Liens except for Liens permitted by
Section 9.03, (iii) except as set forth on an exhibit to the certificate, on a
net basis there are no gas imbalances, take or pay or other prepayments in
excess of the volume specified in Section 7.18 with respect to its Oil and Gas
Properties evaluated in such Reserve Report which would require any Credit Party
to deliver Hydrocarbons either generally or produced from such Oil and Gas
Properties at some future time without then or thereafter receiving full payment
therefor, (iv) none of their proved Oil and Gas Properties have been sold since
the date of the last Borrowing Base determination except as set forth on an
exhibit to the certificate, which certificate shall list all of its proved Oil
and Gas Properties sold and in such detail as reasonably required by the
Administrative Agent, (v) attached to the certificate is a list of all marketing
agreements entered into subsequent to the later of the date hereof or the most
recently delivered Reserve Report which the Borrowers could reasonably be
expected to have been obligated to list on Schedule 7.19 had such agreement been
in effect on the date hereof and (vi) attached thereto is a schedule of the
proved Oil and Gas Properties evaluated by such Reserve Report that are
Mortgaged Properties and demonstrating the percentage of the Borrowing Base and,
as applicable, the Conforming Borrowing Base, that the value of such Mortgaged
Properties represent.

 

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Section 8.13 Title Information.

(a) As of the Effective Date, the Administrative Agent or its counsel shall have
received satisfactory title information on at least 75% of the total Recognized
Value of the proved Oil and Gas Properties evaluated in the Initial Reserve
Report. Additionally, on or before the delivery to the Administrative Agent and
the Lenders of each Reserve Report required by Section 8.12(a), the Borrowers
will deliver title information in form and substance acceptable to the
Administrative Agent covering enough of the proved Oil and Gas Properties
evaluated by such Reserve Report that were not included in the immediately
preceding Reserve Report, so that the Administrative Agent shall have received
together with title information previously delivered, satisfactory title
information on at least 75% of the total Recognized Value of the proved Oil and
Gas Properties evaluated by such Reserve Report.

(b) If the Borrowers have provided title information for additional Properties
under Section 8.13(a), the Borrowers shall, within 90 days of notice from the
Administrative Agent that title defects or exceptions exist with respect to such
additional Properties, either (i) cure any such title defects or exceptions
(including defects or exceptions as to priority) which are not permitted by
Section 9.03 raised by such information, (ii) substitute acceptable Mortgaged
Properties with no title defects or exceptions except for Excepted Liens (other
than Excepted Liens described in clauses (e), (g) and (h) of such definition)
having an equivalent value or (iii) deliver title information in form and
substance acceptable to the Administrative Agent so that they shall have
received, together with title information previously delivered, satisfactory
title information on at least 75% of the total Recognized Value of the proved
Oil and Gas Properties evaluated by such Reserve Report.

(c) If the Borrowers are unable to cure any title defect requested to be cured
within the 90-day period or the Borrowers do not comply with the requirements to
provide acceptable title information covering 75% of the total Recognized Value
of the proved Oil and Gas Properties evaluated in the most recent Reserve
Report, such default shall not be a Default, but instead the Administrative
Agent and/or the Required Lenders shall have the right to exercise the following
remedy in their sole discretion from time to time, and any failure to so
exercise this remedy at any time shall not be a waiver as to future exercise of
the remedy by any Agent or the Lenders. To the extent that the Administrative
Agent or the Required Lenders are not satisfied with title to any Mortgaged
Property after the 90-day period has elapsed, such unacceptable Mortgaged
Property shall not count towards the 75% requirement, and the Administrative
Agent may send a notice to the Borrowers (or Borrower Representative) and the
Lenders that the then outstanding Borrowing Base and, as applicable, Conforming
Borrowing Base, shall be reduced by an amount as determined by the Required
Lenders to cause the Borrowers to be in compliance with the requirement to
provide acceptable title information on 75% of the total Recognized Value of the
proved Oil and Gas Properties. This new Borrowing Base and, as applicable, new
Conforming Borrowing Base, shall become effective immediately after receipt of
such notice.

Section 8.14 Collateral; Additional Collateral; Guarantees; Additional
Guarantors.

(a) Subject to the provisions of Section 8.14(b), the Indebtedness shall, at all
times, be secured by first and prior Liens (subject only to Excepted Liens)
covering and encumbering (i) not less than 75% of the total Recognized Value of
the proved Oil and Gas

 

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Properties evaluated in the most recently completed Reserve Report (including
the Initial Reserve Report), and (ii) all of the issued and outstanding Equity
Interests owned by Parent, each Borrower and each Subsidiary of each Borrower
and each Subsidiary, as applicable; provided, that, and notwithstanding the
foregoing, the Indebtedness shall, at all times that the Borrowing Base exceeds
the Conforming Borrowing Base, be secured by first and prior Liens (subject only
to Excepted Liens) covering and encumbering not less than 95% of the total
Recognized Value of the proved Oil and Gas Properties evaluated in the most
recently completed Reserve Report (including the Initial Reserve Report),
together with the Liens covering and encumbering the Equity Interests described
in clause (ii) above.

(b) On the Effective Date, the Borrowers shall deliver to the Administrative
Agent for the ratable benefit of each Lender and Secured Swap Provider,
Mortgages and amendments to mortgages, each in form and substance acceptable to
the Administrative Agent and duly executed by the Borrowers, as applicable,
together with (i) such other assignments, conveyances, amendments, agreements
and other writings (each duly authorized and executed) as the Administrative
Agent shall deem necessary or appropriate to grant, evidence and perfect first
and prior Liens (subject only to Excepted Liens of the type described in clauses
(a) to (d) and (f) of the definition thereof, but subject to the provisos at the
end of such definition) on at least 95% of the total Recognized Value of the
proved Oil and Gas Properties evaluated in the Initial Reserve Report; and
(ii) such opinions of counsel as the Administrative Agent shall deem necessary
or appropriate with respect to the form, sufficiency and other matters regarding
such Mortgages and amendments to mortgages as the Administrative Agent shall
reasonably request. Further, in connection with each redetermination of the
Borrowing Base, the Borrowers shall review the Reserve Report and the list of
current Mortgaged Properties (as described in Section 8.12(c)(vi)) to ascertain
whether the Mortgaged Properties represent at least 75% (or at least 95% in the
event the Borrowing Base then exceeds the Conforming Borrowing Base) of the
total Recognized Value of the proved Oil and Gas Properties evaluated in the
most recently completed Reserve Report after giving effect to exploration and
production activities, acquisitions, dispositions and production. In the event
that the Mortgaged Properties do not represent at least 75% (or at least 95% in
the event the Borrowing Base then exceeds the Conforming Borrowing Base) of such
total Recognized Value, then Parent and the Borrowers shall, and shall cause the
other Credit Parties to, grant to the Administrative Agent as security for the
Indebtedness a first-priority Lien interest (subject only to Excepted Liens of
the type described in clauses (a) to (d) and (f) of the definition thereof, but
subject to the provisos at the end of such definition) on additional proved Oil
and Gas Properties not already subject to a Lien of the Security Instruments
such that after giving effect thereto, the Mortgaged Properties will represent
at least 75% (or at least 95% in the event the Borrowing Base then exceeds the
Conforming Borrowing Base) of such total Recognized Value. All such Liens will
be created and perfected by and in accordance with the provisions of mortgages,
deeds of trust, security agreements and financing statements or other Security
Instruments, all in form and substance satisfactory to the Administrative Agent
and in sufficient executed (and acknowledged where necessary or appropriate)
counterparts for recording purposes.

(c) The Indebtedness shall be fully guaranteed by Parent and each Domestic
Subsidiary (which is not otherwise a Borrower) pursuant to the Guaranty
Agreement, and Parent and the Borrowers shall cause any such applicable Domestic
Subsidiary (now existing or hereafter created or acquired (to the extent
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Administrative Agent the Guaranty Agreement. In connection with any such
guaranty, Parent and the Borrowers shall, or shall cause such Domestic
Subsidiary to, (i) execute and deliver a supplement to the Guaranty Agreement
executed by such Domestic Subsidiary, (ii) pledge all of the Equity Interests of
such Domestic Subsidiary (including, without limitation, delivery of original
stock certificates or other certificates evidencing the Equity Interests of such
Domestic Subsidiary, together with an appropriate undated stock powers for each
certificate duly executed in blank by the registered owner thereof) and
(iii) execute and deliver such other additional closing documents, certificates
and legal opinions as shall reasonably be requested by the Administrative Agent.

Section 8.15 ERISA Compliance. Except as could not reasonably be expected to
result in liability to Parent, the Borrowers and their Subsidiaries of less than
$5,000,000 individually or in the aggregate (after taking into account the
application of proceeds from insurance coverage), Parent and the Borrowers will
promptly furnish and will cause the other Credit Parties and any ERISA Affiliate
to promptly furnish to the Administrative Agent (i) promptly after the filing
thereof with the United States Secretary of Labor, the Internal Revenue Service
or the PBGC, copies of each annual and other report with respect to each Plan or
any trust created thereunder, (ii) promptly upon becoming aware of the
occurrence of any ERISA Event or of any “prohibited transaction,” as described
in section 406 of ERISA or in section 4975 of the Code, in connection with any
Plan or any trust created thereunder, a written notice signed by the President
or the principal Financial Officer, the Subsidiary or the ERISA Affiliate, as
the case may be, specifying the nature thereof, what action Parent, the
Borrowers, the other Credit Party or the ERISA Affiliate is taking or proposes
to take with respect thereto, and, when known, any action taken or proposed by
the Internal Revenue Service, the Department of Labor or the PBGC with respect
thereto, and (iii) promptly upon receipt thereof, copies of any notice of the
PBGC’s intention to terminate or to have a trustee appointed to administer any
Plan. With respect to each Plan (other than a Multiemployer Plan) except as
could not reasonably be expected to result in liability to Parent, the Borrowers
and the other Credit Parties of less than $5,000,000 individually or in the
aggregate (after taking into account the application of proceeds from insurance
coverage), Parent and each Borrower will, and will cause each other Credit Party
and ERISA Affiliate to, (A) satisfy in full and in a timely manner, without
incurring any late payment or underpayment charge or penalty and without giving
rise to any lien, all of the contribution and funding requirements of section
412 of the Code (determined without regard to subsections (d), (e), (f) and
(k) thereof) and of section 302 of ERISA (determined without regard to sections
303, 304 and 306 of ERISA), and (B) pay, or cause to be paid, to the PBGC in a
timely manner, without incurring any late payment or underpayment charge or
penalty, all premiums required pursuant to sections 4006 and 4007 of ERISA.

Section 8.16 Permitted Additional Bond Documents. Parent and the Borrowers will
promptly upon the effectiveness or issuance of any Permitted Additional Bond
Debt, provide to the Administrative Agent a true, correct and complete copy of
the indenture and related notes and guarantees executed and delivered in
connection with the issuance of any such Permitted Additional Bond Debt,
together with any other Permitted Additional Bond Document requested by the
Administrative Agent.

 

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ARTICLE IX

NEGATIVE COVENANTS

Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents have been paid in full and all Letters of
Credit have expired or terminated and all LC Disbursements shall have been
reimbursed, Parent and the Borrowers jointly and severally covenant and agree
with the Lenders that:

Section 9.01 Financial Covenants.

(a) Current Ratio. Commencing with the fiscal quarter ending December 31, 2006,
Parent will not permit, as of the last day of any fiscal quarter, the Current
Ratio to be less than 1.0 to 1.0.

(b) Consolidated Total Debt to Consolidated EBITDAX. Commencing with the fiscal
quarter ending March 31, 2007, Parent will not permit, as of the last day of any
fiscal quarter, the ratio of Consolidated Total Debt (for the fiscal quarter
ending on such date) to Consolidated EBITDAX (for each Rolling Period ending on
such date or Annualized Consolidated EBITDAX for such Rolling Period in the case
of a Rolling Period ending on or prior to September 30, 2007) to be greater than
(i) 5.00 to 1.0 for the Rolling Period ending on March 31, 2007, (ii) 4.75 to
1.0 for the Rolling Period ending on June 30, 2007, (iii) 4.50 to 1.0 for the
Rolling Period ending on September 30, 2007, (iv) 4.25 to 1.0 for the Rolling
Period ending on December 31, 2007, and (v) 4.00 to 1.0 for the Rolling Period
ending on March 31, 2008 and for each Rolling Period thereafter.

Section 9.02 Debt. Parent and the Borrowers will not, and will not permit any
other Credit Party to, incur, create, assume or suffer to exist any Debt,
except:

(a) the Notes or other Indebtedness arising under the Loan Documents or any
guaranty of or suretyship arrangement for the Notes or other Indebtedness
arising under the Loan Documents.

(b) Debt of the Credit Parties existing on the date hereof that is reflected in
the Financial Statements.

(c) accounts payable and accrued expenses, liabilities or other obligations to
pay the deferred purchase price of Property or services, from time to time
incurred in the ordinary course of business, of which no more than $5,000,000
(in the aggregate) are greater than ninety (90) days past the date of invoice or
which are being contested in good faith by appropriate action and for which
adequate reserves have been maintained in accordance with GAAP.

(d) Debt associated with worker’s compensation claims, performance, bid, surety
or similar bonds or surety obligations required by Governmental Requirements or
third parties in connection with the operation of the Oil and Gas Properties.

 

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(e) intercompany Debt between (i) any Borrower and any other Borrower, (ii) any
Borrower and any Subsidiary that has executed and delivered a Guaranty Agreement
and the Equity Interests of which have been pledged pursuant to a Pledge
Agreement, or (iii) any Subsidiary that has executed and delivered a Guaranty
Agreement and the Equity Interests of which have been pledged pursuant to a
Pledge Agreement, and any other Subsidiary that has executed and delivered a
Guaranty Agreement and the Equity Interests of which have been pledged pursuant
to a Pledge Agreement; provided that such Debt is not held, assigned,
transferred, negotiated or pledged to any Person other than a Borrower or one of
its Wholly-Owned Subsidiaries that has executed and delivered a Guaranty
Agreement and the Equity Interests of which have been pledged pursuant to a
Pledge Agreement, and, provided further, that any such Debt owed by either a
Borrower or a Guarantor shall be subordinated to the Indebtedness on terms set
forth in the Guaranty Agreement.

(f) endorsements of negotiable instruments for collection in the ordinary course
of business.

(g) Permitted Bond Debt and guarantee obligations of any Credit Party in respect
thereof; provided, that such guarantee obligations are on terms and conditions
satisfactory to the Administrative Agent in its sole discretion.

(h) Taxes, assessments or other governmental charges which are not yet due or
are being contested in good faith in accordance with Section 8.04(b).

(i) Debt (other than in connection with a loan or lending transaction) incurred
in the ordinary course of business for drilling, completing, leasing and
reworking oil, gas and CO2 wells or the treatment, distribution, transportation
or sale of production therefrom; provided, however, such Debt shall not be
deemed to refer to or include any long term debt.

(j) Debt of Real Estate obtained for purposes of (i) building expansion and the
refinancing of existing Debt related to real estate at 701 Cedar Lake Blvd.,
Oklahoma City, Oklahoma, and (ii) acquisitions of property for field offices,
limited to no more than $17,250,000, in the aggregate, secured by real estate
(and specifically no Oil and Gas Properties or other collateral of the Lenders
or Administrative Agent shall be provided by any Credit Party to secure such
Debt of Real Estate), and guarantee obligations (on terms and conditions
satisfactory to the Administrative Agent in its sole discretion) of any Credit
Party in respect thereof; provided, however, such Debt is subject to
Administrative Agent’s prior written approval of the terms and conditions of any
lease of such real estate and the final terms and conditions of the commitment
of the lender involved in the acquisition and/or expansion of such real estate.

(k) any renewals or extensions of (but not increases in) any of the foregoing.

(l) liabilities on any Swap Agreement permitted hereunder, including those
resulting from the requirements of, or compliance with, FASB 133 and FASB 143.

(m) other Debt not to exceed $30,000,000 in the aggregate at any one time
outstanding.

 

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Section 9.03 Liens. Parent and the Borrowers will not, and will not permit any
other Credit Party to, create, incur, assume or permit to exist any Lien on any
of its Properties (now owned or hereafter acquired), except:

(a) Liens securing the payment of any Indebtedness.

(b) Excepted Liens.

(c) Liens on real estate (but specifically no Oil and Gas Properties or other
collateral of the Lenders or the Administrative Agent) securing the Debt
described in Section 9.02(j).

(d) Liens on Property not constituting collateral for the Indebtedness and not
otherwise permitted by the foregoing clauses of this Section 9.03; provided that
the aggregate principal or face amount of all Debt secured under this
Section 9.03(d) shall not exceed $7,500,000.

Section 9.04 Restricted Payments. Parent and the Borrowers will not, and will
not permit any other Credit Party to, declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment, return any capital to its
stockholders, make any prepayment of Debt described in clause (a) of the
definition of “Debt” (other than permitted prepayments of Loans outstanding
under this Agreement), or make any distribution of its Property to its Equity
Interest holders, except, provided no Default or Event of Default exists on the
date any such distribution is declared or paid or prepayment made,
(a) Subsidiaries may declare and pay dividends ratably with respect to their
Equity Interests, (b) the Borrowers may make Permitted Tax Distributions, and
(c) the Borrowers may make prepayments of Debt for borrowed money with a
maturity of less than one year or otherwise in an aggregate principal amount not
to exceed $5,000,000 during any calendar year.

Section 9.05 Investments, Loans and Advances. Parent and the Borrowers will not,
and will not permit any other Credit Party to, make or permit to remain
outstanding any Investments in or to any Person, except that the foregoing
restriction shall not apply to:

(a) Investments reflected in the Financial Statements or which are disclosed to
the Lenders in Schedule 9.05.

(b) accounts receivable arising in the ordinary course of business.

(c) direct obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof, in each case
maturing within one year from the date of creation thereof.

(d) commercial paper maturing within one year from the date of creation thereof
rated in the highest grade by S&P or Moody’s.

(e) deposits maturing within one year from the date of creation thereof with,
including certificates of deposit issued by, any Lender or any office located in
the United States of any other bank or trust company which is organized under
the laws of the United States or any

 

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state thereof, has capital, surplus and undivided profits aggregating at least
$100,000,000 (as of the date of such bank or trust company’s most recent
financial reports) and has a short term deposit rating of no lower than A2 or
P2, as such rating is set forth from time to time, by S&P or Moody’s,
respectively or, in the case of any Foreign Subsidiary, a bank organized in a
jurisdiction in which the Foreign Subsidiary conducts operations having assets
in excess of $500,000,000 (or its equivalent in another currency).

(f) deposits in money market funds investing exclusively in Investments
described in Section 9.05(c), Section 9.05(d) or Section 9.05(e).

(g) Investments (i) made by any Borrower in or to any other Borrower or any
Subsidiary that has executed and delivered a Guaranty Agreement and the Equity
Interests of which have been pledged pursuant to a Pledge Agreement, and
(ii) made by any Subsidiary in or to any Borrower or any other Subsidiary that
has executed and delivered a Guaranty Agreement and the Equity Interests of
which have been pledged pursuant to a Pledge Agreement.

(h) subject to the limits in Section 9.06, Investments in direct ownership
interests in additional Oil and Gas Properties, gas gathering, processing and
transportation systems and all other assets contemplated by the permitted
business of the Borrowers and their Subsidiaries, including, without limitation,
the ownership, development and transportation of CO2 supplies, located within
the geographic boundaries of the United States of America including the outer
continental shelf thereof.

(i) entry into operating agreements, working interests, royalty interests,
mineral leases, processing agreements, farm-out agreements, contracts for the
sale, transportation or exchange of oil, natural gas and CO2, unitization
agreements, pooling arrangements, area of mutual interest agreements, production
sharing agreements or other similar or customary agreements, transactions,
properties, interests or arrangements, and Investments and expenditures in
connection therewith or pursuant thereto, in each case made or entered into in
the ordinary course of the oil and gas business, excluding, however, Investments
in other Persons; provided, however, that none of the foregoing shall involve
the incurrence of any Debt not permitted by Section 9.02.

(j) repurchase agreements of a commercial bank in the United States and Canada
if the commercial paper of such bank or of the bank holding company of which
such bank is a wholly owned subsidiary is rated in the highest rating categories
of S&P, Moody’s, or any other rating agency satisfactory to the Majority
Lenders, that are fully secured by securities described in Section 9.05(c).

(k) Investments, limited to an amount not in excess of $4,500,000 (which is in
addition to the amount permitted by Section 9.02(j) borrowed for construction)
to expand the current office building for use by the Borrowers; provided,
however, such Investment is subject to the Administrative Agent’s prior written
approval of the terms and conditions of a lease of such real estate and the
final terms and conditions of the commitment of the lender involved in the
acquisition and/or expansion of such real estate.

 

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(l) Investments arising from the endorsement of financial instruments in the
ordinary course of business.

(m) Parent’s investment in Pointe Vista in an amount not to exceed $15,000,000.

(n) Investments, not to exceed $35,000,000 in the aggregate, made by Chaparral
in Oklahoma Ethanol pursuant to the Oklahoma Ethanol Agreement.

(o) in addition to the Investments made pursuant to clause (n) of this
Section 9.05, Investments, not to exceed $5,000,000 in the aggregate, in ethanol
related transactions similar to the Investments made pursuant to clause (n) of
this Section 9.05; provided, however, that Borrowers shall have provided the
Administrative Agent with prior written notice of any such Investment, and such
Investment shall otherwise comply with the terms of this Agreement.

(p) other Investments, loans or advances not to exceed $25,000,000 in the
aggregate at any time.

Section 9.06 Nature of Business. Parent and the Borrowers will not, and will not
permit any other Credit Party to, allow any material change to be made in the
character of its business as carried on as of the date hereof.

Section 9.07 Limitation on Operating Leases. Parent and the Borrowers will not,
and will not permit any other Credit Party to, create, incur, assume or suffer
to exist any obligation for the payment of rent or hire of Property of any kind
whatsoever (real or personal but excluding Capital Leases and leases of
Hydrocarbon Interests), under leases or lease agreements which would cause the
aggregate amount of all payments made by the Credit Parties pursuant to all such
leases or lease agreements, including, without limitation, any residual payments
at the end of any lease, to exceed $10,000,000 in the aggregate during any
fiscal year; provided, however, that, the foregoing restriction shall not apply
to oil, gas and mineral leases, CO2 leases or supply agreements, or permits or
similar agreements entered into in the ordinary course of business or orders of
any Governmental Authority adjudicating the rights or pooling the interests of
the owners of oil and gas properties or lease agreements in effect as of the
date hereof.

Section 9.08 Proceeds of Notes/Loans. Parent and the Borrowers will not permit
the Loans or the proceeds of the Notes to be used for any purpose other than
those permitted by Section 7.21. Neither Parent, any Borrower nor any Person
acting on behalf of Parent or any Borrower has taken or will take any action
which might cause any of the Loan Documents to violate Regulations T, U or X or
any other regulation of the Board or to violate Section 7 of the Securities
Exchange Act of 1934 or any rule or regulation thereunder, in each case as now
in effect or as the same may hereinafter be in effect. If requested by the
Administrative Agent, Parent and the Borrowers will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form U-1 or such other form referred to
in Regulation U, Regulation T or Regulation X of the Board, as the case may be.

 

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Section 9.09 ERISA Compliance. Except as could not reasonably be expected to
result in liability to any Credit Party of less than $5,000,000 individually or
in the aggregate, Parent and the Borrowers will not, and will not permit any
other Credit Party to, at any time:

(a) engage in, or permit any ERISA Affiliate to engage in, any transaction in
connection with which any Credit Party or any ERISA Affiliate could be subjected
to either a civil penalty assessed pursuant to subsections (c), (i) or (l) of
section 502 of ERISA or a tax imposed by Chapter 43 of Subtitle D of the Code,
if either of which would have a Material Adverse Effect.

(b) terminate, or permit any ERISA Affiliate to terminate, any Plan in a manner,
or take any other action with respect to any Plan, which could reasonably be
expected to result in any liability of any Credit Party or any ERISA Affiliate
to the PBGC.

(c) fail to make, or permit any ERISA Affiliate to fail to make, full payment
when due of all amounts which, under the provisions of any Plan, agreement
relating thereto or applicable law, any Credit Party or any ERISA Affiliate is
required to pay as contributions thereto if such failure could reasonably be
expected to have a Material Adverse Effect.

(d) permit to exist, or allow any ERISA Affiliate to permit to exist, any
accumulated funding deficiency within the meaning of section 302 of ERISA or
section 412 of the Code, whether or not waived, with respect to any Plan which
exceeds $1,000,000.

(e) permit, or allow any ERISA Affiliate to permit, the actuarial present value
of the benefit liabilities under any Plan maintained by any Credit Party or any
ERISA Affiliate which is regulated under Title IV of ERISA to exceed the current
value of the assets (computed on a plan termination basis in accordance with
Title IV of ERISA) of such Plan allocable to such benefit liabilities. The term
“actuarial present value of the benefit liabilities” shall have the meaning
specified in section 4041 of ERISA.

(f) contribute to or assume an obligation to contribute to, or permit any ERISA
Affiliate to contribute to or assume an obligation to contribute to, any
Multiemployer Plan.

(g) acquire, or permit any ERISA Affiliate to acquire, an interest in any Person
that causes such Person to become an ERISA Affiliate with respect to a Credit
Party or with respect to any ERISA Affiliate of any Credit Party if such Person
sponsors, maintains or contributes to, or at any time in the six-year period
preceding such acquisition has sponsored, maintained, or contributed to, (i) any
Multiemployer Plan, or (ii) any other Plan that is subject to Title IV of ERISA
under which the actuarial present value of the benefit liabilities under such
Plan exceeds the current value of the assets (computed on a plan termination
basis in accordance with Title IV of ERISA) of such Plan allocable to such
benefit liabilities by any amount in excess of $1,000,000.

(h) incur, or permit any ERISA Affiliate to incur, a liability to or on account
of a Plan under sections 515, 4062, 4063, 4064, 4201 or 4204 of ERISA.

 

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(i) contribute to or assume an obligation to contribute to, or permit any ERISA
Affiliate to contribute to or assume an obligation to contribute to, any
employee welfare benefit plan, as defined in section 3(1) of ERISA, including,
without limitation, any such plan maintained to provide benefits to former
employees of such entities, that may not be terminated by such entities in their
sole discretion at any time without any material liability.

(j) amend, or permit any ERISA Affiliate to amend, a Plan resulting in a
material increase in current liability such that a Borrower, a Subsidiary or any
ERISA Affiliate is required to provide security to such Plan under section
401(a)(29) of the Code.

Section 9.10 Sale or Discount of Receivables. Except for receivables obtained by
any Credit Party out of the ordinary course of business or the settlement of
joint interest billing accounts in the ordinary course of business or discounts
granted to settle collection of accounts receivable or the sale of defaulted
accounts arising in the ordinary course of business in connection with the
compromise or collection thereof and not in connection with any financing
transaction, neither Parent, any Borrower nor any other Credit Party will
discount or sell (with or without recourse) to any other Person that is not a
Credit Party any of its notes receivable or accounts receivable.

Section 9.11 Mergers, Etc. Neither Parent, any Borrower nor any other Credit
Party will merge into or with or consolidate with any other Person, or sell,
lease or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its Property to any other Person (any
such transaction, a “consolidation”); provided that any Borrower may participate
in a consolidation with any other Borrower; provided further that any Subsidiary
may participate in a consolidation with a Borrower (provided that a Borrower
shall be the continuing or surviving entity) or any other Subsidiary that is a
Domestic Subsidiary (provided that if one of such parties to the consolidation
is a Foreign Subsidiary, such Domestic Subsidiary shall be the continuing or
surviving Person) and if one of such Subsidiaries is a Wholly-Owned Subsidiary,
then the surviving Person shall be a Wholly-Owned Subsidiary; provided further
that, so long as no Default or Event of Default then exists or would otherwise
result therefrom, any Borrower may merge with another Person if such Borrower is
the surviving entity in such merger.

Section 9.12 Sale of Properties. Parent and the Borrowers will not, and will not
permit any other Credit Party to, sell, assign, farm-out, convey or otherwise
transfer any property containing proved reserves constituting a portion of the
Borrowing Base except for (a) the sale, lease, transfer or other disposition of
any Oil and Gas Properties from one Borrower to another Borrower; (b) the sale
of Hydrocarbons in the ordinary course of business; (c) farmouts, sales or other
dispositions of undeveloped acreage and assignments in connection with such
transactions; (d) the sale or transfer of equipment in the ordinary course of
business or that is no longer necessary for the business of such Credit Party or
is replaced by equipment of at least comparable value and use; (e) provided no
Event of Default exists, Permitted Immaterial Asset Sales; and (f) provided no
Event of Default exists, and provided further the total Credit Exposure does not
exceed the Conforming Borrowing Base at the time of such sale or disposition,
the sale or other disposition of any Oil and Gas Property; provided that the
aggregate value (which, for purposes hereof, shall mean the value the
Administrative Agent attributes to such Oil and Gas Property for purposes of the
most recent redetermination of the Conforming Borrowing Base) of such Oil and
Gas Properties sold or disposed of pursuant to this clause (f) in any period
between Scheduled Redeterminations shall not exceed five percent (5%) of the
Conforming Borrowing Base then in effect.

 

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Section 9.13 Environmental Matters. Parent and the Borrowers will not, and will
not permit any other Credit Party to, cause or permit any of its Property to be
in violation of, or do anything or permit anything to be done which will subject
any such Property to any Remedial Work under any applicable Environmental Laws,
assuming disclosure to the applicable Governmental Authority of all relevant
facts, conditions and circumstances, if any, pertaining to such Property where
such violations or remedial obligations could reasonably be expected to have a
Material Adverse Effect.

Section 9.14 Transactions with Affiliates. Parent and the Borrowers will not,
and will not permit any other Credit Party to, enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of Property
or the rendering of any service, with any Affiliate (other than another Credit
Party) unless such transactions are otherwise permitted under this Agreement and
are upon fair and reasonable terms no less favorable to it than it would obtain
in a comparable arm’s length transaction with a Person not an Affiliate.

Section 9.15 Subsidiaries. Parent and the Borrowers will not, and will not
permit any other Credit Party to, create or acquire any additional Subsidiary
unless the Borrowers (or Borrower Representative) give prior written notice to
the Administrative Agent of such creation or acquisition and the Credit Parties
comply with Section 8.14(c). Parent and the Borrowers will not, and will not
permit any other Credit Party to, sell, assign or otherwise dispose of any
Equity Interests in any Subsidiary. Neither Parent, any Borrower nor any other
Credit Party shall have any Foreign Subsidiaries.

Section 9.16 Indebtedness and Preferred Stock. Parent and the Borrowers will
not, and will not permit any other Credit Party to, (a) issue preferred stock or
create, incur or assume any Debt, except for Debt permitted under Section 9.02,
or (b) without limiting the foregoing, incur or assume any contractual liability
or obligation for, or with respect to, any Debt of Oklahoma Ethanol or Pointe
Vista.

Section 9.17 Negative Pledge Agreements; Dividend Restrictions. Parent and the
Borrowers will not, and will not permit any other Credit Party to, create,
incur, assume or suffer to exist any contract, agreement or understanding which
in any way prohibits or restricts the granting, conveying, creation or
imposition of any Lien on any of its Property in favor of the Administrative
Agent and the Lenders or restricts any Subsidiary from paying dividends or
making distributions to any Borrower or any Guarantor, or which requires the
consent of or notice to other Persons in connection therewith; provided,
however, that the preceding restrictions will not apply to encumbrances or
restrictions arising under or by reason of (a) this Agreement or the Security
Instruments, (b) any leases or licenses or similar contracts as they affect any
Property or Lien subject to a lease or license, or (c) any restriction with
respect to a Subsidiary imposed pursuant to an agreement entered into for the
direct or indirect sale or disposition of all or substantially all the equity or
Property of such Subsidiary (or the Property that is subject to such
restriction) pending the closing of such sale or disposition.

 

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Section 9.18 Swap Agreements. Parent and the Borrowers will not, and will not
permit any other Credit Party to, enter into any Swap Agreements with any Person
other than (a) Swap Agreements in respect of commodities (i) with an Approved
Counterparty and (ii) the notional volumes for which (when aggregated with other
commodity Swap Agreements then in effect other than basis differential swaps on
volumes already hedged pursuant to other Swap Agreements) do not exceed, as of
the date such Swap Agreement is executed, 80% of the reasonably anticipated
projected production from proved, developed, producing Oil and Gas Properties
for each month during the period during which such Swap Agreement is in effect
for each of crude oil and natural gas, calculated separately, and which Swap
Agreements shall not, in any case, have a tenor of greater than five and
one-half (5.5) years, and (b) Swap Agreements in respect of interest rates with
an Approved Counterparty, the notional amounts of which (when aggregated with
all other Swap Agreements of the Credit Parties’ then in effect in respect of
interest rates) do not exceed 100% of the then outstanding principal amount of
the Credit Parties’ Debt for borrowed money, and which Swap Agreements shall
not, in any case, have a tenor of greater than five (5) years. In no event shall
any Swap Agreement to which any Credit Party is a party contain any requirement,
agreement or covenant for any Credit Party to post cash or other collateral or
margin to secure their obligations under such Swap Agreement or to cover market
exposures. Further, Parent and the Borrowers will not, and will not permit any
other Credit Party to, terminate any Swap Agreement, now existing or hereafter
arising, which has been or will be incorporated into the determination of the
Borrowing Base and, as applicable, the Conforming Borrowing Base, without the
prior written consent of the Required Lenders.

Section 9.19 Permitted Bond Documents. Parent and the Borrowers will not, and
will not permit any other Credit Party to:

(a) amend, modify or waive any covenant in any of the Permitted Bond Documents
if the effect of such amendment, modification or waiver would be to make the
terms of any such Permitted Bond Document materially more onerous to any Credit
Party.

(b) amend, modify or waive any provision of any Permitted Bond Document if the
effect of such amendment, modification or waiver (i) subjects a Credit Party to
any additional material obligation, (ii) increases the principal of any
Permitted Bond Debt or increases the rate of interest on any note evidencing any
Permitted Bond Debt to a rate in excess of 12%, (iii) accelerates the date fixed
for any payment of principal or interest on any note evidencing any Permitted
Bond Debt to a date sooner than the date which is one year following the earlier
of (A) the Maturity Date, and (B) the date on which there are no Loans, LC
Exposure or other obligations hereunder outstanding and all of the Commitments
are terminated, or (iv) would change the percentage of holders of such notes
evidencing any Permitted Bond Debt required for any such amendment, modification
or waiver from the percentage required on the date of issuance of any such notes
evidencing any Permitted Bond Debt.

 

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ARTICLE X

EVENTS OF DEFAULT; REMEDIES

Section 10.01 Events of Default. One or more of the following events shall
constitute an “Event of Default”:

(a) the Borrowers (or, as applicable, any other Credit Party) shall fail to
(i) pay any principal of any Loan or any interest on any Loan or any
reimbursement obligation in respect of any LC Disbursement or any fee or any
other amount payable under any Loan Document, when and as the same shall become
due and payable, whether at the due date thereof or at a date fixed for
prepayment thereof, by acceleration or otherwise, or (ii) observe, perform or
otherwise comply with any covenant, condition or agreement contained in
Section 8.01(a) or Section 8.01(b), and, in each case, such failure shall
continue unremedied for a period of five (5) days.

(b) any representation or warranty made or deemed made by or on behalf of
Parent, any Borrower, or any other Credit Party in or in connection with any
Loan Document or any amendment or modification of any Loan Document or waiver
under such Loan Document, or in any report, certificate, financial statement or
other document furnished pursuant to or in connection with any Loan Document or
any amendment or modification thereof or waiver thereunder, shall prove to have
been incorrect, in any material respect, when made or deemed made.

(c) Parent, any Borrower or any other Credit Party shall fail to observe or
perform any covenant, condition or agreement contained in Section 8.01 (other
than Section 8.01(a) or Section 8.01(b)), Section 8.02, Section 8.03,
Section 8.07 or in Article IX.

(d) Parent, any Borrower, or any other Credit Party shall fail to observe or
perform any covenant, condition or agreement contained in this Agreement (other
than those specified in Section 10.01(a), Section 10.01(b) or Section 10.01(c))
or any other Loan Document, and such failure shall continue unremedied for a
period of 30 days after notice thereof from the Administrative Agent to the
Borrowers (or Borrower Representative) (which notice will be given at the
request of any Lender).

(e) Parent, any Borrower, or any other Credit Party shall fail to make any
payment (whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness, when and as the same shall become due and payable.

(f) any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice, the lapse of time or both) the holder or holders
of any Material Indebtedness or any trustee or agent on its or their behalf to
cause any Material Indebtedness to become due, or to require the Redemption
thereof or any offer to Redeem to be made in respect thereof, prior to its
scheduled maturity or require Parent, any Borrower, or any other Credit Party to
make an offer in respect thereof.

(g) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of Parent, any Borrower or any other Credit Party or its debts, or of a
Substantial Portion of its Property, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect
or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for Parent, any Borrower or any other Credit
Party or for a Substantial Portion of its Property, and, in any such case, such
proceeding or petition shall continue undismissed for 60 days or an order or
decree approving or ordering any of the foregoing shall be entered.

 

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(h) Parent, any Borrower or any other Credit Party shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in Section 10.01(g), (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for Parent, any Borrower or any other Credit Party or for a
Substantial Portion of its Property, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing.

(i) Parent, any Borrower or any other Credit Party shall become unable, admit in
writing its inability, or fail generally to pay its debts as they become due.

(j) one or more final, non-appealable judgments for the payment of money in an
aggregate amount in excess of $5,000,000 (to the extent not covered by
independent third party insurance provided by insurers of the highest claims
paying rating or financial strength as to which the insurer does not dispute
coverage and is not subject to an insolvency proceeding) shall be rendered
against Parent, any Borrower, any other Credit Party or any combination thereof
and the same shall remain undischarged for a period of 60 consecutive days
during which execution shall not be effectively stayed, or any action shall be
legally taken by a judgment creditor to attach or levy upon any assets of
Parent, any Borrower or any other Credit Party to enforce any such judgment.

(k) the Loan Documents after delivery thereof shall for any reason, except to
the extent permitted by the terms thereof, cease to be in full force and effect
and valid, binding and enforceable in accordance with their terms against
Parent, a Borrower or another Credit Party party thereto or shall be repudiated,
or cease to create a valid and perfected Lien of the priority required thereby
on any of the collateral purported to be covered thereby, except to the extent
permitted by the terms of this Agreement, or Parent, any Borrower or any other
Credit Party or any of their Affiliates shall so state in writing.

(l) an ERISA Event shall have occurred that, in the opinion of the Majority
Lenders, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in liability of Parent, the Borrowers and
the other Credit Parties in an aggregate amount exceeding $5,000,000.

(m) a Change in Control shall occur.

(n) in addition to, and not in limitation of, the provisions contained in
clause (f) above, the occurrence of a default under any Permitted Bond Document,
which such default shall continue unremedied or is not waived prior to the
expiration of any applicable period of grace or cure under any Permitted Bond
Document.

 

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Section 10.02 Remedies.

(a) In the case of an Event of Default other than one described in
Section 10.01(g), Section 10.01(h) or Section 10.01(i), at any time thereafter
during the continuance of such Event of Default, the Administrative Agent shall,
at the request of the Majority Lenders, by notice to the Borrowers (or Borrower
Representative), take either or both of the following actions, at the same or
different times: (i) terminate the Commitments, and thereupon the Commitments
shall terminate immediately, and (ii) declare the Notes and the Loans then
outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to be
due and payable), and thereupon the principal of the Loans so declared to be due
and payable, together with accrued interest thereon and all fees and other
obligations of the Credit Parties accrued hereunder and under the Notes and the
other Loan Documents (including, without limitation, the payment of cash
collateral to secure the LC Exposure as provided in Section 2.08(j)), shall
become due and payable immediately, without presentment, demand, protest, notice
of intent to accelerate, notice of acceleration or other notice of any kind, all
of which are hereby waived by each Credit Party; and in case of an Event of
Default described in Section 10.01(g), Section 10.01(h) or Section 10.01(i), the
Commitments shall automatically terminate and the Notes and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
the other obligations of the Credit Parties accrued hereunder and under the
Notes and the other Loan Documents (including, without limitation, the payment
of cash collateral to secure the LC Exposure as provided in Section 2.08(j)),
shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by each Credit
Party.

(b) In the case of the occurrence of an Event of Default, the Administrative
Agent and the Lenders will have all other rights and remedies available at law
and equity.

(c) All proceeds realized from the liquidation or other disposition of
collateral or otherwise received after maturity of the Loans or the Notes,
whether by acceleration or otherwise, shall be applied: first, to reimbursement
of expenses and indemnities provided for in this Agreement and the Security
Instruments; second, to accrued interest on the Loans; third, to fees; fourth,
pro rata to (i) principal outstanding on the Loans, (ii) Indebtedness referred
to in clause (b) of the definition of Indebtedness owing to a Lender or an
Affiliate of a Lender, and (iii) serve as cash collateral to be held by the
Administrative Agent to secure the LC Exposure; fifth, to any other
Indebtedness; and any excess shall be paid to the Borrowers or as otherwise
required by any Governmental Requirement.

ARTICLE XI

THE AGENTS

Section 11.01 Appointment; Powers. Each of the Lenders and each Issuing Bank
hereby irrevocably (subject to Section 11.06) appoints the Administrative Agent
as its agent and authorizes the Administrative Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Administrative Agent
by the terms hereof and the other Loan Documents, together with such actions and
powers as are reasonably incidental thereto.

 

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Section 11.02 Duties and Obligations of Administrative Agent. The Administrative
Agent shall not have any duties or obligations except those expressly set forth
in the Loan Documents. Without limiting the generality of the foregoing, the
Administrative Agent (a) shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default has occurred and is continuing,
(b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except as provided in Section 11.03, and (c) except as
expressly set forth herein, shall not have any duty to disclose, and shall not
be liable for the failure to disclose, any information relating to any Credit
Party that is communicated to or obtained by the bank serving as an Agent or any
of its Affiliates in any capacity. The Administrative Agent shall be deemed not
to have knowledge of any Default unless and until written notice thereof is
given to it by Parent, a Borrower or a Lender, and shall not be responsible for
or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement or any other Loan
Document, (ii) the contents of any certificate, report or other document
delivered hereunder or under any other Loan Document or in connection herewith
or therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or in any other Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement, any other Loan Document or any other agreement, instrument or
document, (v) the satisfaction of any condition set forth in Article VI or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to it or as to those conditions precedent specifically required to
be to its satisfaction, (vi) the existence, value, perfection or priority of any
collateral security or the financial or other condition of the Credit Parties or
any other obligor or guarantor, or (vii) any failure by any Credit Party or any
other Person (other than itself) to perform any of its obligations hereunder or
under any other Loan Document or the performance or observance of any covenants,
agreements or other terms or conditions set forth herein or therein.

Section 11.03 Action by Administrative Agent. The Administrative Agent shall not
have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated hereby
that it is required to exercise in writing as directed by the Majority Lenders
(or such other number or percentage of the Lenders as shall be necessary under
the circumstances as provided in Section 12.02) and in all cases it shall be
fully justified in failing or refusing to act hereunder or under any other Loan
Documents unless it shall (a) receive written instructions from the Majority
Lenders or the Lenders, as applicable (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in
Section 12.02) specifying the action to be taken and (b) be indemnified to its
satisfaction by the Lenders against any and all liability and expenses which may
be incurred by it by reason of taking or continuing to take any such action. The
instructions as aforesaid and any action taken or failure to act pursuant
thereto shall be binding on all of the Lenders. If a Default has occurred and is
continuing, then the Administrative Agent shall take such action with respect to
such Default as shall be directed by the requisite Lenders in the written
instructions (with indemnities) described in this Section 11.03, provided that,
unless and until the Administrative Agent shall have received such directions,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default as it shall
deem advisable in the best interests of the Lenders. In no event, however, shall
the Administrative Agent be required to take any action which exposes the
Administrative Agent to personal liability or which is contrary to this
Agreement, the Loan Documents or applicable law. If a Default has occurred and
is continuing, the Arranger shall not

 

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have any obligation to perform any act in respect thereof. No Agent shall be
liable for any action taken or not taken by it with the consent or at the
request of the Majority Lenders or the Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 12.02), and otherwise no Agent shall be liable for any
action taken or not taken by it hereunder or under any other Loan Document or
under any other document or instrument referred to or provided for herein or
therein or in connection herewith or therewith INCLUDING ITS OWN ORDINARY
NEGLIGENCE, except for its own gross negligence or willful misconduct.

Section 11.04 Reliance by Administrative Agent. The Administrative Agent shall
be entitled to rely upon, and shall not incur any liability for relying upon,
any notice, request, certificate, consent, statement, instrument, document or
other writing believed by it to be genuine and to have been signed or sent by
the proper Person. The Administrative Agent also may rely upon any statement
made to it orally or by telephone and believed by it to be made by the proper
Person, and shall not incur any liability for relying thereon and each of the
Credit Parties, the Lenders and each Issuing Bank hereby waives the right to
dispute the Administrative Agent’s record of such statement, except in the case
of gross negligence or willful misconduct by such Agent. The Administrative
Agent may consult with legal counsel (who may be counsel for the Credit
Parties), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts. The Agents may deem and
treat the payee of any Note as the holder thereof for all purposes hereof unless
and until a written notice of the assignment or transfer thereof permitted
hereunder shall have been filed with the Administrative Agent.

Section 11.05 Subagents. The Administrative Agent may perform any and all its
duties and exercise its rights and powers by or through any one or more
sub-agents appointed by it. The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers through their
respective Related Parties. The exculpatory provisions of the preceding Sections
of this Article XI shall apply to any such sub-agent and to the Related Parties
of each Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.

Section 11.06 Resignation of Agents. Subject to the appointment and acceptance
of a successor Agent as provided in this Section 11.06, any Agent may resign at
any time by notifying the Lenders, each Issuing Bank and the Borrowers (or
Borrower Representative). Upon any such resignation, the Majority Lenders shall
have the right, in consultation with and upon the approval of the Borrowers (so
long as no Event of Default has occurred and is continuing), which approval
shall not be unreasonably withheld, to appoint a successor. If no successor
shall have been so appointed by the Majority Lenders and shall have accepted
such appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders and each
Issuing Bank, appoint a successor Agent which shall be a bank with an office in
New York, New York, or an Affiliate of any such bank. Upon the acceptance of its
appointment as Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the Borrowers to a successor Agent
shall be the same as those payable to its

 

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predecessor unless otherwise agreed between the Borrowers and such successor.
After the Agent’s resignation hereunder, the provisions of this Article XI and
Section 12.03 shall continue in effect for the benefit of such retiring Agent,
its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while it was acting as Agent.

Section 11.07 Agents as Lenders. Each bank serving as an Agent hereunder shall
have the same rights and powers in its capacity as a Lender as any other Lender
and may exercise the same as though it were not an Agent, and such bank and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with any Credit Party or other Affiliate thereof as if it were
not an Agent hereunder.

Section 11.08 No Reliance. Each Lender acknowledges that it has, independently
and without reliance upon the Administrative Agent, any other Agent or any other
Lender and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement and each
other Loan Document to which it is a party. Each Lender also acknowledges that
it will, independently and without reliance upon the Administrative Agent, any
other Agent or any other Lender and based on such documents and information as
it shall from time to time deem appropriate, continue to make its own decisions
in taking or not taking action under or based upon this Agreement, any other
Loan Document, any related agreement or any document furnished hereunder or
thereunder. The Agents shall not be required to keep themselves informed as to
the performance or observance by any Credit Party of this Agreement, the Loan
Documents or any other document referred to or provided for herein or to inspect
the Properties or books of the Credit Parties. Except for notices, reports and
other documents and information expressly required to be furnished to the
Lenders by the Administrative Agent hereunder, neither the Agents nor the
Arranger shall have any duty or responsibility to provide any Lender with any
credit or other information concerning the affairs, financial condition or
business of any Credit Party (or any of its Affiliates) which may come into the
possession of such Agent or any of its Affiliates. In this regard, each Lender
acknowledges that Vinson & Elkins L.L.P. is acting in this transaction as
special counsel to the Administrative Agent only, except to the extent otherwise
expressly stated in any legal opinion or any Loan Document. Each other party
hereto will consult with its own legal counsel to the extent that it deems
necessary in connection with the Loan Documents and the matters contemplated
therein.

Section 11.09 Authority to Release Collateral and Liens. Each Lender and each
Issuing Bank hereby authorizes the Administrative Agent to release any
collateral that is permitted to be sold or released pursuant to the terms of the
Loan Documents. Each Lender and each Issuing Bank hereby authorizes the
Administrative Agent to execute and deliver to the Borrowers (or Borrower
Representative), at the Borrowers’ sole cost and expense, any and all releases
of Liens, termination statements, assignments or other documents reasonably
requested by the Borrowers in connection with any sale or other disposition of
Property to the extent such sale or other disposition is permitted by the terms
of Section 9.12 or is otherwise authorized by the terms of the Loan Documents.

Section 11.10 The Arranger and Agents. Neither the Arranger, any Syndication
Agent, nor any Documentation Agent shall have any duties, responsibilities or
liabilities under this Agreement and the other Loan Documents other than their
duties, responsibilities and liabilities in their capacity as Lenders hereunder.

 

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Section 11.11 Filing of Proofs of Claim. In case of any Default or Event of
Default under Section 10.01(f), Section 10.01(g) or Section 10.01(h), the
Administrative Agent (regardless of whether the principal of any Loan or LC
Exposure shall then be due and payable and regardless of whether the
Administrative Agent has made any demand on any Credit Party) shall be entitled
and empowered, by intervention in such proceeding or otherwise:

(a) to (i) file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans, LC Exposure and all other
Indebtedness that is owing and unpaid and (ii) file such other documents as may
be necessary or advisable in order to have the claims of the Lenders and the
Administrative Agent (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Lenders, the Administrative Agent
and their respective agents and counsel and all other amounts due the Lenders,
the Administrative Agent under Section 3.05 and Section 12.03) allowed in such
judicial proceeding; and

(b) to collect and receive any monies or other property payable or deliverable
on any such claims and to distribute the same.

Each Lender hereby authorizes any custodian, receiver, assignee, trustee,
conservator, sequestrator or other similar official in any such judicial
proceeding: (i) to make such payments to the Administrative Agent; and (ii) if
the Administrative Agent shall consent to the making of such payments directly
to the Lenders, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Section 3.05 and Section 12.03. Nothing contained
herein shall be deemed to authorize the Administrative Agent to authorize or
consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the
Indebtedness or the rights of any Lender or to authorize the Administrative
Agent to vote in respect of the claim of any Lender in any such proceeding. Each
Lender retains its right to file and prove a claim separately.

Section 11.12 Execution of Documents. Each Lender hereby empowers and authorizes
the Administrative Agent to execute and deliver to Parent and the Borrowers (or
Borrower Representative) on their behalf the Certificate of Effectiveness, the
Security Instruments and all related agreements, documents or instruments as
shall be necessary or appropriate to effect the purposes of the Security
Instruments.

ARTICLE XII

MISCELLANEOUS

Section 12.01 Notices.

(a) Except in the case of notices and other communications expressly permitted
to be given by telephone (and subject to Section 12.01(b)), all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

(i) if to Parent or the Borrowers (or Borrower Representative), to them or it,
c/o Chaparral Energy, L.L.C., 701 Cedar Lake Blvd., Oklahoma City, Oklahoma
73114, Attention: Mark A. Fischer (Telecopy No. (405) 478-2906);

 

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(ii) if to the Administrative Agent, to it at JPMorgan Chase Bank, N.A., 1717
Main Street, 4th Floor, Mail Code TX1-2448, Dallas, Texas 75201, Attention: J.
Scott Fowler (Telecopy No. (214) 290-2332); with a copy to: JPMorgan Chase Bank,
N.A., 10 South Dearborn, 19th Floor, IL1-0010, Chicago, Illinois 60603-2003,
Attention: Leonida G. Mischke (Telecopy No. (312) 385-7096); and

(iii) if to any other Lender, in its capacity as such, or any other Lender in
its capacity as an Issuing Bank, to it at its address (or telecopy number) set
forth in its Administrative Questionnaire.

(b) Notices and other communications to the Lenders hereunder may be delivered
or furnished by electronic communications pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to Article II, Article III, Article IV and Article V unless otherwise
agreed by the Administrative Agent and the applicable Lender. The Administrative
Agent, Parent or the Borrowers (or Borrower Representative) may, in their or its
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or
communications.

(c) Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.

Section 12.02 Waivers; Amendments.

(a) No failure on the part of any Agent, any Issuing Bank or any Lender to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege, or any abandonment or discontinuance of steps to
enforce such right, power or privilege, under any of the Loan Documents shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under any of the Loan Documents preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies of the Agents, each Issuing Bank and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or any other Loan Document or consent to any
departure by any Credit Party therefrom shall in any event be effective unless
the same shall be permitted by Section 12.02(b), and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether any Agent, any Lender or any Issuing Bank may
have had notice or knowledge of such Default at the time.

 

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(b) Neither this Agreement nor any provision hereof nor any Security Instrument
nor any provision thereof may be waived, amended or modified except pursuant to
an agreement or agreements in writing entered into by Parent, the Borrowers (or
Borrower Representative) and the Majority Lenders or by Parent, the Borrowers
(or Borrower Representative) and the Administrative Agent with the consent of
the Majority Lenders; provided that no such agreement shall (i) increase the
Commitment or the Maximum Credit Amount of any Lender without the written
consent of such Lender, (ii) increase the Borrowing Base or Conforming Borrowing
Base without the written consent of each Lender, or modify Section 2.07 without
the consent of each Lender, (iii) decrease or reaffirm the Borrowing Base or
Conforming Borrowing Base without the written consent of the Required Lenders,
(iv) reduce the principal amount of any Loan or LC Disbursement or reduce the
rate of interest thereon, or reduce any fees payable hereunder, or reduce any
other Indebtedness hereunder or under any other Loan Document, without the
written consent of each Lender affected thereby, (v) postpone the scheduled date
of payment of the principal amount of any Loan or LC Disbursement, or any
interest thereon, or any fees payable hereunder, or any other Indebtedness
hereunder or under any other Loan Document, or reduce the amount of, waive or
excuse any such payment, or postpone or extend the Termination Date without the
written consent of each Lender affected thereby, (vi) change Section 4.01(b) or
Section 4.01(c) in a manner that would alter the pro rata sharing of payments
required thereby, without the written consent of each Lender, (vii) waive or
amend Section 8.14 or change the definition of the terms “Domestic Subsidiary”,
“Foreign Subsidiary” or “Subsidiary”, without the written consent of each
Lender, (viii) release any Guarantor (except as set forth in the Guaranty
Agreement), release any of the collateral (other than as provided in
Section 11.09), or reduce the percentages set forth in Section 8.14(b) to less
than the percentages set forth therein as of the date hereof, without the
written consent of each Lender, (ix) change any of the provisions of
Section 10.02(c), this Section 12.02(b) or the definition of “Majority Lenders”
or “Required Lenders” or any other provision hereof specifying the number or
percentage of Lenders required to waive, amend or modify any rights hereunder or
under any other Loan Documents or make any determination or grant any consent
hereunder or any other Loan Documents, without the written consent of each
Lender or (x) change the description of the obligations secured or guaranteed by
the Security Instruments or the priority of payments set forth in
Section 10.02(c) without the written consent of each Lender or Secured Swap
Provider adversely affected thereby, provided that the addition of a new secured
obligation shall not be deemed to adversely affect any other secured party;
provided further that no such agreement shall amend, modify or otherwise affect
the rights or duties of any Agent or any Issuing Bank hereunder or under any
other Loan Document without the prior written consent of such Agent or such
Issuing Bank, as the case may be. Notwithstanding the foregoing, any supplement
to Schedule 7.14 (Subsidiaries) shall be effective simply by delivering to the
Administrative Agent a supplemental schedule clearly marked as such and, upon
receipt, the Administrative Agent will promptly deliver a copy thereof to the
Lenders.

Section 12.03 Expenses, Indemnity; Damage Waiver.

(a) The Borrowers shall (and are jointly and severally obligated to) pay (i) all
reasonable out-of-pocket expenses incurred by the Administrative Agent and their
Affiliates,

 

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including, without limitation, the reasonable fees, charges and disbursements of
counsel, in connection with the syndication of the credit facilities provided
for herein, the preparation, negotiation, execution, delivery and administration
(both before and after the execution hereof and including advice of counsel to
the Administrative Agent as to the rights and duties of the Administrative Agent
and the Lenders with respect thereto) of this Agreement and the other Loan
Documents and any amendments, modifications or waivers of or consents related to
the provisions hereof or thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) all costs, expenses, Taxes,
assessments and other charges incurred by any Agent or any Lender in connection
with any filing, registration, recording or perfection of any security interest
contemplated by this Agreement or any Security Instrument or any other document
referred to therein, and (iii) all out-of-pocket expenses incurred by any Agent,
any Issuing Bank or any Lender, including the fees, charges and disbursements of
any counsel for any Agent, any Issuing Bank or any Lender, in connection with
the enforcement or protection of its rights in connection with this Agreement or
any other Loan Document, including its rights under this Section 12.03, or in
connection with the Loans made or Letters of Credit issued hereunder, including,
without limitation, all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans or Letters of Credit.

(b) PARENT AND THE BORROWERS SHALL (AND ARE JOINTLY AND SEVERALLY OBLIGATED TO)
INDEMNIFY THE ARRANGER, EACH AGENT, EACH ISSUING BANK AND EACH LENDER, AND EACH
RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN
“INDEMNITEE”) AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL
LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES, INCLUDING THE FEES,
CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE, INCURRED BY OR
ASSERTED AGAINST ANY INDEMNITEE ARISING OUT OF, IN CONNECTION WITH, OR AS A
RESULT OF (i) THE EXECUTION OR DELIVERY OF THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE
PERFORMANCE BY THE PARTIES HERETO OR THE PARTIES TO ANY OTHER LOAN DOCUMENT OF
THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR BY ANY OTHER LOAN DOCUMENT, (ii) THE FAILURE
OF ANY CREDIT PARTY TO COMPLY WITH THE TERMS OF ANY LOAN DOCUMENT, INCLUDING
THIS AGREEMENT, OR WITH ANY GOVERNMENTAL REQUIREMENT, (iii) ANY INACCURACY OF
ANY REPRESENTATION OR ANY BREACH OF ANY WARRANTY OR COVENANT OF ANY CREDIT PARTY
SET FORTH IN ANY OF THE LOAN DOCUMENTS OR ANY INSTRUMENTS, DOCUMENTS OR
CERTIFICATIONS DELIVERED IN CONNECTION THEREWITH, (iv) ANY LOAN OR LETTER OF
CREDIT OR THE USE OF THE PROCEEDS THEREFROM, INCLUDING, WITHOUT LIMITATION,
(A) ANY REFUSAL BY ANY ISSUING BANK TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER
OF CREDIT ISSUED BY SUCH ISSUING BANK IF THE DOCUMENTS PRESENTED IN CONNECTION
WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT,
OR (B) THE PAYMENT OF A DRAWING UNDER ANY LETTER OF CREDIT NOTWITHSTANDING THE
NON-COMPLIANCE, NON-DELIVERY OR OTHER

 

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IMPROPER PRESENTATION OF THE DOCUMENTS PRESENTED IN CONNECTION THEREWITH,
(v) THE OPERATIONS OF THE BUSINESS OF THE CREDIT PARTIES BY THE CREDIT PARTIES,
(vi) ANY ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO RECEIVE THE PROCEEDS
RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS, (vii) ANY ENVIRONMENTAL LAW
APPLICABLE TO ANY CREDIT PARTY OR ANY OF THEIR PROPERTIES, INCLUDING WITHOUT
LIMITATION, THE PRESENCE, GENERATION, STORAGE, RELEASE, THREATENED RELEASE, USE,
TRANSPORT, DISPOSAL, ARRANGEMENT OF DISPOSAL OR TREATMENT OF OIL, OIL AND GAS
WASTES, SOLID WASTES OR HAZARDOUS SUBSTANCES ON ANY OF THEIR PROPERTIES,
(viii) THE BREACH OR NON-COMPLIANCE BY ANY CREDIT PARTY WITH ANY ENVIRONMENTAL
LAW APPLICABLE TO ANY CREDIT PARTY, (ix) THE PAST OWNERSHIP BY ANY CREDIT PARTY
OF ANY OF THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES WHICH,
THOUGH LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT
LIABILITY, (x) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT, DISPOSAL,
GENERATION, THREATENED RELEASE, TRANSPORT, ARRANGEMENT FOR TRANSPORT OR
ARRANGEMENT FOR DISPOSAL OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS
SUBSTANCES ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY ANY CREDIT PARTY
OR ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM
ANY PROPERTY OWNED OR OPERATED BY ANY CREDIT PARTY, (xi) ANY ENVIRONMENTAL
LIABILITY RELATED IN ANY WAY TO ANY CREDIT PARTY, (xii) ANY OTHER ENVIRONMENTAL,
HEALTH OR SAFETY CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS, OR (xiii) ANY
ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO
ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY AND
REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO, AND SUCH INDEMNITY
SHALL EXTEND TO EACH INDEMNITEE NOTWITHSTANDING THE SOLE OR CONCURRENT
NEGLIGENCE OF EVERY KIND OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE,
WHETHER AN AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL
TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF
ONE OR MORE OF THE INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT
FAULT ON ANY ONE OR MORE OF THE INDEMNITEES; PROVIDED THAT SUCH INDEMNITY SHALL
NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS,
DAMAGES, LIABILITIES OR RELATED EXPENSES (A) ARE DETERMINED BY A COURT OF
COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE, (B) RELATE TO
CLAIMS BETWEEN OR AMONG ANY OF THE LENDERS, THE AGENT, ARRANGER OR ANY OF THEIR
SHAREHOLDERS, PARTNERS OR MEMBERS OR (C) IN RESPECT OF ANY PROPERTY FOR ANY
OCCURRENCE ARISING FROM THE ACTS OR OMISSIONS OF THE AGENT OR ANY LENDER DURING
THE PERIOD AFTER WHICH SUCH PERSON, ITS SUCCESSORS OR

 

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ASSIGNS SHALL HAVE OBTAINED POSSESSION OF SUCH PROPERTY (WHETHER BY FORECLOSURE
OR DEED IN LIEU OF FORECLOSURE, AS MORTGAGEE-IN-POSSESSION OR OTHERWISE).

(c) To the extent that the Credit Parties fail to pay any amount required to be
paid by them to any Agent or any Issuing Bank under Section 12.03(a) or (b),
each Lender severally agrees to pay to such Agent or such Issuing Bank, as the
case may be, such Lender’s Applicable Percentage (determined as of the time that
the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount; provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against such Agent or such Issuing Bank in its capacity as such.

(d) To the extent permitted by applicable law, no Credit Party shall assert, and
each Credit Party hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as a
result of, this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the Transactions, any Loan or Letter
of Credit or the use of the proceeds thereof.

(e) All amounts due under this Section 12.03 shall be payable promptly after
written demand therefor.

(f) Notwithstanding any other provisions of this Section 12.03, no transfer or
assignment of the interests or obligations of any Lender or any grant of
participations therein shall be permitted if such transfer, assignment or grant
would require the Credit Parties to file a registration statement with the SEC
or to qualify the Loans under the “Blue Sky” laws of any state.

Section 12.04 Successors and Assigns.

(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of any Issuing Bank that issues any
Letter of Credit), except that (i) no Credit Party may assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by any Credit
Party without such consent shall be null and void) and (ii) no Lender may assign
or otherwise transfer its rights or obligations hereunder except in accordance
with this Section 12.04. Nothing in this Agreement, expressed or implied, shall
be construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby (including any Affiliate of
any Issuing Bank that issues any Letter of Credit), Participants (to the extent
provided in Section 12.04(c)) and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent, each Issuing Bank and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

(b) (i) Subject to the conditions set forth in Section 12.04(b)(ii), any Lender
may assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans at the time owing to

 

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it) with the prior written consent (such consent not to be unreasonably withheld
or delayed) of: (A) the Borrowers (or Borrower Representative), provided that no
consent of the Borrowers (or Borrower Representative) shall be required for an
assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an
Event of Default has occurred and is continuing, any other assignee; and (B) the
Administrative Agent and any Issuing Bank, provided that no such consent shall
be required for an assignment to an assignee that is a Lender immediately prior
to giving effect to such assignment.

(i) Assignments shall be subject to the following additional conditions:
(A) except in the case of an assignment to a Lender or an Affiliate of a Lender
or an assignment of the entire remaining amount of the assigning Lender’s
Commitment, the amount of the Commitment of the assigning Lender subject to each
such assignment (determined as of the date the Assignment and Assumption with
respect to such assignment is delivered to the Administrative Agent) shall not
be less than $5,000,000, and the Commitments of any assigning Lender remaining a
party hereto after giving effect to the assignment shall be at least $5,000,000,
unless, in each case, the Borrowers (or Borrower Representative) and the
Administrative Agent otherwise consents, provided that no such consent of the
Borrowers (or Borrower Representative) shall be required if an Event of Default
has occurred and is continuing; (B) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement; (C) the parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Assumption,
together with a processing and recordation fee of $3,500; (D) the assignee, if
it shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire and shall deliver notice of the Assignment and
Assumption to the Borrowers (or Borrower Representative); and (E) in the case of
an assignment to a CLO, the assigning Lender shall retain the sole right to
approve any amendment, modification or waiver of any provision of this
Agreement, provided that the Assignment and Assumption between such Lender and
such CLO may provide that such Lender will not, without the consent of such CLO,
agree to any amendment, modification or waiver described in the first proviso to
Section 12.02 that affects such CLO.

(ii) Subject to Section 12.04(b)(iv) and the acceptance and recording thereof,
from and after the effective date specified in each Assignment and Assumption
the assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Section 5.01,
Section 5.02, Section 5.03 and Section 12.03). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this Section 12.04 shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
Section 12.04(c).

 

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(iii) The Administrative Agent, acting for this purpose as an agent of the
Borrowers, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Maximum Credit Amount of, and principal amount
of the Loans and LC Disbursements owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”). The entries in the Register shall be
conclusive, and the Borrowers, the Administrative Agent, each Issuing Bank and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by any Borrower, any Issuing Bank and any Lender, at
any reasonable time and from time to time upon reasonable prior notice. In
connection with any changes to the Register, if necessary, the Administrative
Agent will reflect the revisions on Annex I and forward a copy of such revised
Annex I to the Borrowers (or Borrower Representative), each Issuing Bank and
each Lender.

(iv) Upon its receipt of a duly completed Assignment and Assumption executed by
an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in Section 12.04(b) and any written
consent to such assignment required by Section 12.04(b), the Administrative
Agent shall accept such Assignment and Assumption and record the information
contained therein in the Register. No assignment shall be effective for purposes
of this Agreement unless it has been recorded in the Register as provided in
this Section 12.04(b).

(c) (i) Any Lender may, without the consent of Parent, the Borrowers, the
Administrative Agent or any Issuing Bank, sell participations to one or more
banks or other entities (a “Participant”) in all or a portion of such Lender’s
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (A) such Lender’s
obligations under this Agreement shall remain unchanged, (B) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (C) Parent, the Borrowers, the Administrative Agent, each
Issuing Bank and the other Lenders shall continue to deal solely and directly
with such Lender in connection with such Lender’s rights and obligations under
this Agreement. Any agreement or instrument pursuant to which a Lender sells
such a participation shall provide that such Lender shall retain the sole right
to enforce this Agreement and to approve any amendment, modification or waiver
of any provision of this Agreement; provided that such agreement or instrument
may provide that such Lender will not, without the consent of the Participant,
agree to any amendment, modification or waiver described in the proviso to
Section 12.02 that affects such Participant. In addition such agreement must
provide that the Participant be bound by the provisions of Section 12.03.
Subject to Section 12.04(c)(ii), Parent and the Borrowers agree that each
Participant shall be entitled to the benefits of Section 5.01, Section 5.02 and
Section 5.03 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to Section 12.04(b). To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 12.08 as
though it were a Lender, provided such Participant agrees to be subject to
Section 4.01(c) as though it were a Lender.

 

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(ii) A Participant shall not be entitled to receive any greater payment under
Section 5.01 or Section 5.03 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrowers’
(or Borrower Representative’s) prior written consent. A Participant that would
be a Foreign Lender if it were a Lender shall not be entitled to the benefits of
Section 5.03 unless the Borrowers are (or Borrower Representative is) notified
of the participation sold to such Participant and such Participant agrees, for
the benefit of the Borrowers, to comply with Section 5.03(e) as though it were a
Lender.

(d) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank, and this Section 12.04(d) shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.

Section 12.05 Survival; Revival; Reinstatement.

(a) All covenants, agreements, representations and warranties made by the Credit
Parties herein and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent, any other Agent, any Issuing Bank or any Lender may have
had notice or knowledge of any Default or incorrect representation or warranty
at the time any credit is extended hereunder, and shall continue in full force
and effect as long as the principal of or any accrued interest on any Loan or
any fee or any other amount payable under this Agreement is outstanding and
unpaid or any Letter of Credit is outstanding and so long as the Commitments
have not expired or terminated. The provisions of Section 5.01, Section 5.02,
Section 5.03 and Section 12.03 and Article XI shall survive and remain in full
force and effect regardless of the consummation of the transactions contemplated
hereby, the repayment of the Loans, the expiration or termination of the Letters
of Credit and the Commitments or the termination of this Agreement, any other
Loan Document or any provision hereof or thereof.

(b) To the extent that any payments on the Indebtedness or proceeds of any
collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law or
equitable cause, then to such extent, the Indebtedness so satisfied shall be
revived and continue as if such payment or proceeds had not been received and
the Administrative Agent’s, and the Lenders’ Liens, security interests, rights,
powers and remedies under this Agreement and each Loan Document shall continue
in full force and effect. In such event, each Loan Document shall be
automatically reinstated and the Borrowers shall, and shall cause each other
Credit Party to, take such action as may be reasonably requested by the
Administrative Agent or the Lenders to effect such reinstatement.

 

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Section 12.06 Counterparts; Integration; Effectiveness.

(a) This Agreement may be executed in counterparts (and by different parties
hereto on different counterparts), each of which shall constitute an original,
but all of which when taken together shall constitute a single contract.

(b) This Agreement, the other Loan Documents and any separate letter agreements
with respect to fees payable to the Arranger and the Administrative Agent
constitute the entire contract among the parties relating to the subject matter
hereof and thereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof and
thereof. This Agreement and the other Loan Documents represent the final
agreement among the parties hereto and thereto 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.

(c) Except as provided in Section 6.01(a), this Agreement shall become effective
when it shall have been executed by the Administrative Agent and when the
Administrative Agent shall have received counterparts hereof which, when taken
together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.

Section 12.07 Severability. Any provision of this Agreement or any other Loan
Document held to be invalid, illegal or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof or thereof; and the invalidity
of a particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.

Section 12.08 Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other obligations (of whatsoever kind, including,
without limitations obligations under Swap Agreements) at any time owing by such
Lender or Affiliate to or for the credit or the account of any Credit Party
against any of and all the obligations of any Credit Party owed to such Lender
now or hereafter existing under this Agreement or any other Loan Document,
irrespective of whether or not such Lender shall have made any demand under this
Agreement or any other Loan Document and although such obligations may be
unmatured. The rights of each Lender under this Section 12.08 are in addition to
other rights and remedies (including other rights of setoff) which such Lender
or its Affiliates may have.

 

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Section 12.09 Governing Law; Jurisdiction; Consent to Service of Process.

(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.

(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS SHALL BE
BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED STATES OF AMERICA
FOR THE NORTHERN DISTRICT OF TEXAS, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY
LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION
OF THE AFORESAID COURTS. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS. THIS
SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE AND DOES NOT PRECLUDE A PARTY FROM
OBTAINING JURISDICTION OVER ANOTHER PARTY IN ANY COURT OTHERWISE HAVING
JURISDICTION.

(c) EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE ADDRESS
SPECIFIED IN SECTION 12.01 OR SUCH OTHER ADDRESS AS IS SPECIFIED PURSUANT TO
SECTION 12.01 (OR ITS ASSIGNMENT AND ASSUMPTION), SUCH SERVICE TO BECOME
EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF A PARTY OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
ANOTHER PARTY IN ANY OTHER JURISDICTION.

(d) EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW,
ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY HERETO NOR ANY
REPRESENTATIVE OR AGENT OF COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE

 

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FOREGOING WAIVERS, AND (iv) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO
THIS AGREEMENT, THE LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED
IN THIS SECTION 12.09.

Section 12.10 Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

Section 12.11 Confidentiality. Each of the Agents, each Issuing Bank and each
Lender agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates’
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority or self-regulatory body, (c) to the extent required
by applicable laws or regulations or by any subpoena or similar legal process,
(d) to any other party to this Agreement or any other Loan Document, (e) in
connection with the exercise of any remedies hereunder or under any other Loan
Document or any suit, action or proceeding relating to this Agreement or any
other Loan Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section 12.11, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any Swap Agreement relating to any Credit Party and its
obligations, (g) with the consent of the Borrowers (or Borrower Representative)
or (h) to the extent such Information (i) becomes publicly available other than
as a result of a breach of this Section 12.11 or (ii) becomes available to any
Agent, any Issuing Bank or any Lender on a nonconfidential basis from a source
other than a Credit Party. For the purposes of this Section 12.11, “Information”
means all information received from any Credit Party relating to any Credit
Party and their businesses, other than any such information that is available to
the Administrative Agent, any Issuing Bank or any Lender on a nonconfidential
basis prior to disclosure by a Credit Party. Notwithstanding anything herein to
the contrary, any party hereto (and each employee, representative or other agent
of such party) may disclose without limitation of any kind, any information with
respect to the “tax treatment” and “tax structure” (in each case, within the
meaning of Treasury Regulation Section 1.6011-4) of the transactions
contemplated hereby and all materials of any kind (including opinions or other
tax analyses) that are provided to that party relating to such tax treatment or
tax structure; provided that with respect to any document or similar item that
in either case contains information concerning the tax treatment or tax
structure of the transactions, as well as other information, this sentence shall
only apply to such portions of the document or similar item that relate to the
tax treatment or tax structure of the transactions contemplated hereby.

Section 12.12 EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO SPECIFICALLY
AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS
AGREEMENT AND

 

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THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS AGREEMENT AND IS FULLY
INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS AND CONDITIONS OF THIS
AGREEMENT; THAT IT HAS BEEN REPRESENTED BY LEGAL COUNSEL (INTERNAL OR OTHERWISE)
OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED THE ADVICE OF ITS
ATTORNEY (INTERNAL OR OTHERWISE) IN ENTERING INTO THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY RESULT, SUBJECT TO THE TERMS HEREOF
AND THEREOF AND APPLICABLE LAW, IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN
SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS
RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT
IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD
NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT
“CONSPICUOUS.”

Section 12.13 No Third Party Beneficiaries. This Agreement, the other Loan
Documents, and the agreement of the Lenders to make Loans and each Issuing Bank
to issue, amend, renew or extend Letters of Credit hereunder are solely for the
benefit of Parent and the Borrowers, and no other Person (including, without
limitation, any Subsidiary of any Borrower, any obligor, contractor,
subcontractor, supplier or materialsman) shall have any rights, claims, remedies
or privileges hereunder or under any other Loan Document against the
Administrative Agent, any other Agent, any Issuing Bank or any Lender for any
reason whatsoever. There are no third party beneficiaries.

Section 12.14 Collateral Matters; Swap Agreements. No Lender or any Affiliate of
a Lender shall have any voting rights under any Loan Document as a result of the
existence of obligations owed to it under any Swap Agreements.

Section 12.15 USA Patriot Act Notice. Each Lender hereby notifies Parent and
each Borrower that pursuant to the requirements of the USA Patriot Act (Title
III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”),
it is required to obtain, verify and record information that identifies Parent
and each Borrower, which information includes the name and address of Parent and
each Borrower and other information that will allow such Lender to identify
Parent and each Borrower in accordance with the Patriot Act.

[SIGNATURES BEGIN NEXT PAGE]

 

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The parties hereto have caused this Agreement to be duly executed as of the day
and year first above written.

 

PARENT:     CHAPARRAL ENERGY, INC.,
a Delaware corporation      

By:

  /S/ MARK A. FISCHER         Mark A. Fischer, Chief Executive Officer and
President BORROWERS:     CHAPARRAL ENERGY, L.L.C.,,
an Oklahoma limited liability company, as a
Borrower and as Borrower Representative      

By:

  /S/ MARK A. FISCHER         Mark A. Fischer, Manager     NORAM PETROLEUM,
L.L.C.,
an Oklahoma limited liability company      

By:

  /S/ MARK A. FISCHER         Mark A. Fischer, Manager     CHAPARRAL RESOURCES,
L.L.C.,
an Oklahoma limited liability company      

By:

  /S/ MARK A. FISCHER         Mark A. Fischer, Manager     TRIUMPH TOOLS &
SUPPLY, L.L.C.,
an Oklahoma limited liability company      

By:

  /S/ MARK A. FISCHER         Mark A. Fischer, President

 

SIGNATURE PAGE - 1

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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    CHAPARRAL CO2, L.L.C.,
an Oklahoma limited liability company      

By:

  /S/ MARK A. FISCHER         Mark A. Fischer, Manager     CEI ACQUISITION,
L.L.C.,
a Delaware limited liability company      

By:

  /S/ MARK A. FISCHER         Mark A. Fischer, Manager     CEI PIPELINE, L.L.C.,
a Texas limited liability company      

By:

  /S/ MARK A. FISCHER         Mark A. Fischer, Manager     CHAPARRAL REAL
ESTATE, L.L.C.,
an Oklahoma limited liability company      

By:

  /S/ MARK A. FISCHER         Mark A. Fischer, President     CALUMET OIL
COMPANY,
an Oklahoma corporation      

By:

  /S/ JOSEPH O. EVANS         Joseph O. Evans, Executive Vice President

 

SIGNATURE PAGE - 2

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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JMG OIL & GAS, LP,
an Oklahoma limited partnership

By:

  Chaparral Energy, L.L.C.,
its sole General Partner   By:   /S/ MARK A. FISCHER         Mark A. Fischer,
Manager CHAPARRAL TEXAS, L.P.,
an Oklahoma limited partnership

By:

  Chaparral Energy, L.L.C.,
its sole General Partner   By:   /S/ MARK A. FISCHER         Mark A. Fischer,
Manager

 

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CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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ADMINISTRATIVE AGENT/LENDER:     JPMORGAN CHASE BANK, N.A.,
as Administrative Agent and a Lender      

By:

  /s/ J. Scott Fowler        

    J. Scott Fowler,

    Senior Vice President

 

SIGNATURE PAGE - 4

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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SYNDICATION AGENT/LENDER:     FORTIS CAPITAL CORP.,
as a Syndication Agent and a Lender       By:   /s/ David Montgomery       Name:
  David Montgomery       Title:   Senior Vice President       By:   /s/ Darrell
Holley       Name:   Darrell Holley       Title:   Managing Director

 

SIGNATURE PAGE - 5

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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SYNDICATION AGENT/LENDER:     THE ROYAL BANK OF SCOTLAND plc,
as a Syndication Agent and a Lender       By:   /s/ Douglas A. Whiddon      
Name:   Douglas A. Whiddon       Title:   Senior Vice President

 

SIGNATURE PAGE - 6

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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DOCUMENTATION AGENT/LENDER:     BANK OF AMERICA, N.A.,
as a Documentation Agent and a Lender       By:   /s/ Scott A. Mackey      
Name:   Scott A. Mackey       Title:   Vice President

 

SIGNATURE PAGE - 7

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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DOCUMENTATION AGENT/LENDER:     BANK OF SCOTLAND,
as a Documentation Agent and a Lender       By:   /s/ Joseph Fratus       Name:
  Joseph Fratus       Title:   First Vice President

 

SIGNATURE PAGE - 8

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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LENDER:     THE BANK OF NOVA SCOTIA,
as a Lender       By:   /s/ Nadine Bell       Name:   Nadine Bell       Title:  
Senior Manager

 

SIGNATURE PAGE - 9

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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LENDER:     BMO CAPITAL MARKETS FINANCING, INC.,
as a Lender       By:   /s/ Mary Lou Allen       Name:   Mary Lou Allen      
Title:   Vice President

 

SIGNATURE PAGE - 10

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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LENDER:     CALYON NEW YORK BRANCH,    

as a Lender

   

By:

  /S/ MICHAEL D. WILLIS       Name:    Michael D. Willis      

Title:

  Director    

By:

  /S/ TOM BYARGEON       Name:   Tom Byargeon      

Title:

  Managing Director

 

SIGNATURE PAGE - 11

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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LENDER:     COMERICA BANK,    

as a Lender

   

By:

  /s/ PETER L. SEFZIK    

Name:

  PETER L. SEFZIK    

Title:

  VICE PRESIDENT

 

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CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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LENDER:     GUARANTY BANK,    

as a Lender

   

By:

  /S/ CHRISTOPHER S. PARADA    

Name:

  CHRISTOPHER S. PARADA    

Title:

  SENIOR VICE PRESIDENT

 

SIGNATURE PAGE - 13

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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LENDER:     UNION BANK OF CALIFORNIA, N.A.,    

as a Lender

   

By:

  /S/ KIMBERLY COIL    

Name:

  KIMBERLY COIL    

Title:

  VICE PRESIDENT

 

SIGNATURE PAGE - 14

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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LENDER:     REGIONS BANK,    

as a Lender

   

By:

  /S/ MARK H. WOLF    

Name:

  MARK H. WOLF    

Title:

  SENIOR VICE PRESIDENT

 

SIGNATURE PAGE - 15

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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LENDER:     SUNTRUST BANK,    

as a Lender

   

By:

  /S/ SEAN ROCHE    

Name:

  SEAN ROCHE    

Title:

  VICE PRESIDENT

 

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CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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LENDER:     STERLING BANK,    

as a Lender

   

By:

  /S/ DAVID W. PHILLIPS    

Name:

  DAVID W. PHILLIPS    

Title:

  SENIOR VICE PRESIDENT

 

SIGNATURE PAGE - 17

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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LENDER:     COMPASS BANK,    

as a Lender

   

By:

  /S/ KATHLEEN J. BOWEN    

Name:

  KATHLEEN J. BOWEN    

Title:

  SENIOR VICE PRESIDENT

 

SIGNATURE PAGE - 18

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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LENDER:     U.S. BANK NATIONAL ASSOCIATION,    

as a Lender

   

By:

  /S/ TRACY HAMISCH    

Name:

  TRACY HAMISCH    

Title:

  ASSISTANT VICE PRESIDENT

 

SIGNATURE PAGE - 19

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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LENDER:     BANK OF OKLAHOMA, N.A.,    

as a Lender

   

By:

  /S/ JEFFREY M. HALL    

Name:

  JEFFREY M. HALL    

Title:

  ASSISTANT VICE PRESIDENT

 

SIGNATURE PAGE - 20

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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LENDER:     NATEXIS BANQUES POPULAIRES,    

as a Lender

   

By:

  /S/ DONOVAN C. BROUSSARD       Donovan C. Broussard,       Vice President &
Group Manager    

By:

  /S/ LOUIS P. LAVILLE, III       Louis P. Laville, III,       Vice President &
Group Manager

 

SIGNATURE PAGE - 21

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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ANNEX I

LIST OF MAXIMUM CREDIT AMOUNTS

 

Name of Lender

   Applicable
Percentage     Maximum Credit
Amount

JPMorgan Chase Bank, N.A.

   8.33333 %   $ 62,500,000.00

Fortis Capital Corp.

   8.00000 %   $ 60,000,000.00

The Royal Bank of Scotland plc

   8.00000 %   $ 60,000,000.00

Bank of America, N.A.

   8.00000 %   $ 60,000,000.00

Bank of Scotland

   8.00000 %   $ 60,000,000.00

The Bank of Nova Scotia

   6.00000 %   $ 45,000,000.00

BMO Capital Markets Financing, Inc.

   6.00000 %   $ 45,000,000.00

Calyon New York Branch

   6.00000 %   $ 45,000,000.00

Comerica Bank

   6.00000 %   $ 45,000,000.00

Guaranty Bank

   6.00000 %   $ 45,000,000.00

Union Bank of California, N.A.

   6.00000 %   $ 45,000,000.00

Regions Bank

   4.00000 %   $ 30,000,000.00

SunTrust Bank

   4.00000 %   $ 30,000,000.00

Sterling Bank

   3.66667 %   $ 27,500,000.00

Compass Bank

   3.33333 %   $ 25,000,000.00

U.S. Bank National Association

   3.33333 %   $ 25,000,000.00

Bank of Oklahoma, N.A.

   2.66667 %   $ 20,000,000.00

Natexis Banques Populaires

   2.66667 %   $ 20,000,000.00             

TOTAL

   100.00000 %   $ 750,000,000.00

 

Annex I

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

EXHIBIT A

FORM OF NOTE

 

$[            ]

   [            ], 20__

FOR VALUE RECEIVED, CHAPARRAL ENERGY, L.L.C., an Oklahoma limited liability
company (“Chaparral”), NORAM PETROLEUM, L.L.C., an Oklahoma limited liability
company (“NorAm”), CHAPARRAL RESOURCES, L.L.C., an Oklahoma limited liability
company (“Resources”), TRIUMPH TOOLS & SUPPLY, L.L.C., an Oklahoma limited
liability company (“Tools”), CHAPARRAL CO2, L.L.C., an Oklahoma limited
liability company (“Chaparral CO2”), CEI ACQUISITION, L.L.C., a Delaware limited
liability company (“CEI Acquisition”), CEI PIPELINE, L.L.C., a Texas limited
liability company (“Pipeline”), CHAPARRAL REAL ESTATE, L.L.C., an Oklahoma
limited liability company (“Real Estate”), CALUMET OIL COMPANY, an Oklahoma
corporation (“Calumet”), JMG OIL & GAS, LP, an Oklahoma limited partnership
(“JMG”) and CHAPARRAL TEXAS, L.P., an Oklahoma limited partnership (“Chaparral
Texas” and, together with Chaparral, NorAm, Resources, Tools, Chaparral CO2, CEI
Acquisition, Pipeline, Real Estate, Calumet and JMG, collectively, “Borrowers”
and each individually, a “Borrower”) hereby, jointly and severally, promise to
pay to the order of [            ] (the “Lender”), at the principal office of
JPMorgan Chase Bank, N.A. (the “Administrative Agent”) in Chicago, Illinois, the
principal sum of [            ] Dollars ($[            ]) (or such lesser amount
as shall equal the aggregate unpaid principal amount of the Loans made by the
Lender to the Borrowers under the Credit Agreement, as hereinafter defined), in
lawful money of the United States of America and in immediately available funds,
on the dates and in the principal amounts provided in the Credit Agreement, and
to pay interest on the unpaid principal amount of each such Loan, at such
office, in like money and funds, for the period commencing on the date of such
Loan until such Loan shall be paid in full, at the rates per annum and on the
dates provided in the Credit Agreement.

The date, amount, Type, interest rate, Interest Period and maturity of each Loan
made by the Lender to the Borrowers, and each payment made on account of the
principal thereof, shall be recorded by the Lender on its books and, prior to
any transfer of this Note, may be endorsed by the Lender on the schedules
attached hereto or any continuation thereof or on any separate record maintained
by the Lender. Failure to make any such notation or to attach a schedule shall
not affect any Lender’s or the Borrowers’ rights or obligations in respect of
such Loans or affect the validity of such transfer by any Lender of this Note.

This Note is one of the Notes referred to in the Seventh Restated Credit
Agreement, dated as of October 31, 2006, among Parent, the Borrowers, the
Administrative Agent, and the other agents and lenders signatory thereto
(including the Lender), and evidences Loans made by the Lender thereunder (such
Seventh Restated Credit Agreement as the same may be amended, supplemented,
restated or otherwise modified from time to time, the “Credit Agreement”).
Capitalized terms used in this Note have the respective meanings assigned to
them in the Credit Agreement.

This Note is issued pursuant to the Credit Agreement and is entitled to the
benefits provided for in the Credit Agreement and the other Loan Documents. The
Credit Agreement

 

Exhibit A-1

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

provides for the acceleration of the maturity of this Note upon the occurrence
of certain events, for prepayments of Loans upon the terms and conditions
specified therein and other provisions relevant to this Note.

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF TEXAS.

 

CHAPARRAL ENERGY, L.L.C.,

an Oklahoma limited liability company

By:       

    Mark A. Fischer, Manager

NORAM PETROLEUM, L.L.C.,

an Oklahoma limited liability company

By:       

    Mark A. Fischer, Manager

CHAPARRAL RESOURCES, L.L.C.,

an Oklahoma limited liability company

By:       

    Mark A. Fischer, Manager

TRIUMPH TOOLS & SUPPLY, L.L.C.,

an Oklahoma limited liability company

By:       

    Mark A. Fischer, President

CHAPARRAL CO2, L.L.C.,

an Oklahoma limited liability company

By:       

    Mark A. Fischer, Manager

 

Exhibit A-2

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

CEI ACQUISITION, L.L.C.,

a Delaware limited liability company

By:       

Mark A. Fischer, Manager

 

CEI PIPELINE, L.L.C.,

a Texas limited liability company

By:       

Mark A. Fischer, Manager

 

CHAPARRAL REAL ESTATE, L.L.C.,

an Oklahoma limited liability company

By:       

Mark A. Fischer, President

 

CALUMET OIL COMPANY,

an Oklahoma corporation

By:     

Name:

    

Title:

    

 

JMG OIL & GAS, LP,

an Oklahoma limited partnership

By:

 

Chaparral Energy, L.L.C.,

its sole General Partner

  By:         

Mark A. Fischer, Manager

 

Exhibit A-3

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

CHAPARRAL TEXAS, L.P.,

an Oklahoma limited partnership

By:  

Chaparral Energy, L.L.C.,

its sole General Partner

  By:          Mark A. Fischer, Manager

 

Exhibit A-4

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

EXHIBIT B

FORM OF BORROWING REQUEST

[            ], 20[    ]

CHAPARRAL ENERGY, L.L.C., an Oklahoma limited liability company (as a Borrower
and as Borrower Representative), pursuant to Section 2.03 of the Seventh
Restated Credit Agreement dated as of October 31, 2006 (together with all
amendments, restatements, supplements or other modifications thereto, the
“Credit Agreement”), among Parent, the Borrowers, JPMorgan Chase Bank, N.A., as
Administrative Agent and the other agents and lenders (the “Lenders”) which are
or become parties thereto (unless otherwise defined herein, each capitalized
term used herein is defined in the Credit Agreement), hereby request a Borrowing
as follows:

(i) Aggregate amount of the requested Borrowing is $[                    ];

(ii) Date of such Borrowing is [                    ], 20[    ];

(iii) Requested Borrowing is to be [an ABR Borrowing] [a Eurodollar Borrowing];

(iv) In the case of a Eurodollar Borrowing, the initial Interest Period
applicable thereto is [                    ];

(v) Amount of Borrowing Base in effect on the date hereof is
$[                    ];

(vi) Total Credit Exposures on the date hereof (i.e., outstanding principal
amount of Loans and total LC Exposure) is $[                    ]; and

(vii) Pro forma total Credit Exposures (giving effect to the requested
Borrowing) is $[                    ]; and

(viii) Location and number of the Borrowers’ (or any Borrower’s) account to
which funds are to be disbursed, which shall comply with the requirements of
Section 2.05 of the Credit Agreement, is as follows:

[                                    ]

[                                    ]

[                                    ]

[                                    ]

[                                    ]

 

Exhibit B-1

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

The undersigned certifies that he is the Manager of Borrower Representative, and
that as such he is authorized to execute this certificate on behalf of the
Borrowers. The undersigned further certifies, represents and warrants on behalf
of the Borrowers that the Borrowers are entitled to receive the requested
Borrowing under the terms and conditions of the Credit Agreement.

 

CHAPARRAL ENERGY, L.L.C., an Oklahoma limited liability company, as a Borrower
and as Borrower Representative By:        Mark A. Fischer, Manager

 

Exhibit B-2

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

EXHIBIT C

FORM OF INTEREST ELECTION REQUEST

CHAPARRAL ENERGY, L.L.C., an Oklahoma limited liability company (as a Borrower
and as Borrower Representative), pursuant to Section 2.04 of the Seventh
Restated Credit Agreement dated as of October 31, 2006 (together with all
amendments, restatements, supplements or other modifications thereto, the
“Credit Agreement”), among Parent, the Borrowers, JPMorgan Chase Bank, N.A., as
Administrative Agent and the other agents and lenders (the “Lenders”) which are
or become parties thereto (unless otherwise defined herein, each capitalized
term used herein is defined in the Credit Agreement), hereby makes an Interest
Election Request as follows:

(i) The Borrowing to which this Interest Election Request applies, and if
different options are being elected with respect to different portions thereof,
the portions thereof to be allocated to each resulting Borrowing (in which case
the information specified pursuant to (iii) and (iv) below shall be specified
for each resulting Borrowing) is [            ];

(ii) The effective date of the election made pursuant to this Interest Election
Request is [            ], 20[            ];[and]

(iii) The resulting Borrowing is to be [an ABR Borrowing] [a Eurodollar
Borrowing][; and]

(iv) [[If the resulting Borrowing is a Eurodollar Borrowing] The Interest Period
applicable to the resulting Borrowing after giving effect to such election is
[            ]].

The undersigned certifies that he is the Manager of the Borrower Representative,
and that as such he is authorized to execute this certificate on behalf of the
Borrowers. The undersigned further certifies, represents and warrants on behalf
of the Borrowers that the Borrowers are entitled to receive the requested
continuation or conversion under the terms and conditions of the Credit
Agreement.

 

CHAPARRAL ENERGY, L.L.C.,

an Oklahoma limited liability company, as a Borrower and as Borrower
Representative

By:       

Mark A. Fischer, Manager

 

Exhibit C-1

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

EXHIBIT D

FORM OF COMPLIANCE CERTIFICATE

The undersigned hereby certifies that he is the Manager of CHAPARRAL ENERGY,
L.L.C., an Oklahoma limited liability company (as a Borrower and as Borrower
Representative), and that as such he is authorized to execute this certificate
on behalf of the Borrowers. With reference to the Seventh Restated Credit
Agreement dated as of October 31, 2006 (together with all amendments,
restatements, supplements or other modifications thereto being the “Agreement”),
among Parent, the Borrowers, JPMorgan Chase Bank, N.A., as Administrative Agent
and the other agents and lenders (the “Lenders”) which are or become a party
thereto, the undersigned represents and warrants to the best of his knowledge
after reasonable inquiry as follows (each capitalized term used herein having
the same meaning given to it in the Agreement unless otherwise specified):

(a) The representations and warranties of the Credit Parties contained in
Article VII of the Agreement and in the Loan Documents and otherwise made in
writing by or on behalf of the Credit Parties pursuant to the Agreement and the
Loan Documents were true and correct when made, and are repeated at and as of
the time of delivery hereof and are true and correct in all material respects at
and as of the time of delivery hereof, except to the extent such representations
and warranties are expressly limited to an earlier date or the Majority Lenders
have expressly consented in writing to the contrary.

(b) The Credit Parties have performed and complied with all agreements and
conditions contained in the Agreement and in the Loan Documents required to be
performed or complied with by it prior to or at the time of delivery hereof [or
specify default and describe].

(c) Since             , no change has occurred, either in any case or in the
aggregate, in the condition, financial or otherwise, of any Credit Party which
could reasonably be expected to have a Material Adverse Effect [or specify
event].

(d) There exists no Default or Event of Default [or specify Default and
describe].

(e) Attached hereto are the detailed computations necessary to determine whether
the Credit Parties are in compliance with Section 9.01 and Section 8.13(b) as of
the end of the [fiscal quarter][fiscal year] ending [            ].

EXECUTED AND DELIVERED this [            ] day of [            ].

 

CHAPARRAL ENERGY, L.L.C.,

an Oklahoma limited liability company, as a Borrower and as Borrower
Representative

By:       

Mark A. Fischer, Manager

 

Exhibit D-1

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

EXHIBIT E

FORM OF ASSIGNMENT AND ASSUMPTION

Reference is made to the Seventh Restated Credit Agreement, dated as of
October 31, 2006 (as amended, restated, supplemented or otherwise modified from
time to time and in effect on the date hereof, the “Credit Agreement”), among
CHAPARRAL ENERGY, INC., a Delaware corporation, CHAPARRAL ENERGY, L.L.C., an
Oklahoma limited liability company (as a Borrower and as Borrower
Representative, “Chaparral”), NORAM PETROLEUM, L.L.C., an Oklahoma limited
liability company (“NorAm”), CHAPARRAL RESOURCES, L.L.C., an Oklahoma limited
liability company (“Resources”), TRIUMPH TOOLS & SUPPLY, L.L.C., an Oklahoma
limited liability company (“Tools”), CHAPARRAL CO2, L.L.C., an Oklahoma limited
liability company (“Chaparral CO2”), CEI ACQUISITION, L.L.C., a Delaware limited
liability company (“CEI Acquisition”), CEI PIPELINE, L.L.C., a Texas limited
liability company (“Pipeline”), CHAPARRAL REAL ESTATE, L.L.C., an Oklahoma
limited liability company (“Real Estate”), CALUMET OIL COMPANY, an Oklahoma
corporation (“Calumet”), JMG OIL & GAS, LP, an Oklahoma limited partnership
(“JMG”), and CHAPARRAL TEXAS, L.P., an Oklahoma limited partnership (“Chaparral
Texas” and, together with Chaparral, NorAm, Resources, Tools, Chaparral CO2, CEI
Acquisition, Pipeline, Real Estate, Calumet and JMG, collectively, “Borrowers”
and each individually, a “Borrower”), the Lenders and other agents named therein
and JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders. Terms
defined in the Credit Agreement are used herein with the same meanings.

The Assignor named on the reverse hereof hereby sells and assigns, without
recourse, to the Assignee named on the reverse hereof, and the Assignee hereby
purchases and assumes, without recourse, from the Assignor, effective as of the
Assignment Date set forth on the reverse hereof, the interests set forth on the
reverse hereof (the “Assigned Interest”) in the Assignor’s rights and
obligations under the Credit Agreement, including, without limitation, the
interests set forth on the reverse hereof in the Commitment of the Assignor on
the Assignment Date and Loans owing to the Assignor which are outstanding on the
Assignment Date, together with the participations in Letters of Credit and LC
Disbursements held by the Assignor on the Assignment Date, but excluding accrued
interest and fees to and excluding the Assignment Date. The Assignee hereby
acknowledges receipt of a copy of the Credit Agreement. From and after the
Assignment Date (i) the Assignee shall be a party to and be bound by the
provisions of the Credit Agreement and, to the extent of the Assigned Interest,
have the rights and obligations of a Lender thereunder and (ii) the Assignor
shall, to the extent of the Assigned Interest, relinquish its rights and be
released from its obligations under the Credit Agreement.

This Assignment and Assumption is being delivered to the Administrative Agent
(with a copy to the Borrowers) together with (i) if the Assignee is a Foreign
Lender, any documentation required to be delivered by the Assignee pursuant to
Section 5.03(e) of the Credit Agreement, duly completed and executed by the
Assignee, and (ii) if the Assignee is not already a Lender under the Credit
Agreement, an Administrative Questionnaire in the form supplied by the
Administrative Agent, duly completed by the Assignee. The [Assignee/Assignor]
shall pay the fee payable to the Administrative Agent pursuant to
Section 12.04(b) of the Credit Agreement.

This Assignment and Assumption shall be governed by and construed in accordance
with the laws of the State of Texas.

 

Exhibit E-1

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

Date of Assignment:

Legal Name of Assignor:

Legal Name of Assignee:

Assignee’s Address for Notices:

Effective Date of Assignment

(“Assignment Date”):

 

Facility

   Principal Amount
Assigned    Percentage Assigned of
Facility/Commitment
(set forth, to at least 8
decimals, as a
percentage of the
Facility and the
aggregate
Commitments of all
Lenders thereunder)

Commitment Assigned:

   $      %

Loans:

     

The terms set forth above and on the reverse side hereof are hereby agreed to:

 

[Name of Assignor], as Assignor By:      Name:      Title:     

 

[Name of Assignee], as Assignee By:      Name:      Title:     

 

Exhibit E-2

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

The undersigned hereby consent to the within assignment:1

 

CHAPARRAL ENERGY, L.L.C.,

an Oklahoma limited liability company,

as a Borrower and as Borrower Representative

   

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent and as Issuing Bank

By:          By:      Name:          Name:      Title:          Title:     

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

1 Consents to be included to the extent required by Section 12.04(b) of the
Credit Agreement.

 

Exhibit E-3

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

EXHIBIT F

FORM OF PARENT PLEDGE AGREEMENT

THIS PLEDGE AGREEMENT (this “Agreement”) is made as of                     ,
20    , by Chaparral Energy, Inc., a Delaware corporation (herein called
“Pledgor”), in favor of JPMorgan Chase Bank, N.A., as Administrative Agent for
the ratable benefit of Lenders (as defined below), and, in the case of any Swap
Agreement (as defined in the Credit Agreement), any Secured Swap Provider (as
defined in the Credit Agreement) (herein called “Pledgee”).

W I T N E S S E T H:

WHEREAS, Pledgor, the Borrowers (as defined in the Credit Agreement), JPMorgan
Chase Bank, N.A., as Administrative Agent, the other agents a party thereto, and
Lenders are parties to that certain Seventh Restated Credit Agreement (as may be
amended from time to time, the “Credit Agreement”) dated as of October 31, 2006,
pursuant to which Lenders have agreed to make loans and other extensions of
credit to Borrowers for the purposes set forth therein; and

WHEREAS, pursuant to the terms of the Credit Agreement, and as a condition
precedent to the loans and extensions of credit thereunder, Pledgor is required
to execute and deliver to Pledgee a pledge agreement granting to Pledgee, for
the benefit of Lenders and Secured Swap Providers, a security interest in the
Collateral (as defined herein); and

WHEREAS, the Board of Directors of Pledgor has determined that Pledgor’s
execution, delivery and performance of this Agreement may reasonably be expected
to benefit Pledgor, directly or indirectly, and are in the best interests of
Pledgor.

NOW, THEREFORE, in consideration of the premises and in order to induce Lenders
to extend credit under the Credit Agreement, Pledgor hereby agrees with Pledgee
as follows:

ARTICLE I

Definitions and References

Section 1.1 General Definitions. As used herein, the terms defined above shall
have the meanings indicated above, and the following terms shall have the
following meanings:

“Code” means the Uniform Commercial Code in effect in the State of Texas on the
date hereof.

“Collateral” means all property of whatever type, in which Pledgee at any time
has a security interest pursuant to Section 2.1 hereof.

“Commitment” means the agreement or commitment by Lenders to make loans, acquire
participations in Letters of Credit or otherwise extend credit to Borrowers
under the Credit Agreement, and any other agreement, commitment, statement of
terms or other document contemplating the making of loans or advances or other
extension of credit by Lenders to or for the account of any Borrower which is
now or at any time hereafter intended to be secured by the Collateral under this
Agreement.

 

Exhibit F-1

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

“Equity” means shares of capital stock or a partnership, profits, capital or
member interest, or options, warrants or any other right to substitute for or
otherwise acquire the capital stock or a partnership, profits, capital or member
interest of each Subsidiary (as defined in Section 2.1(a)) hereof.

“Lender” means any financial institution reflected on Annex I to the Credit
Agreement and its successors and assigns, and “Lenders” shall mean all Lenders.

“Obligation Documents” means the Credit Agreement, the Notes, the Letter of
Credit Agreements, the Letters of Credit and the Security Instruments now or
hereafter executed, the other Loan Documents, and all other documents and
instruments under, by reason of which, or pursuant to which any or all of the
Obligations are evidenced, governed, secured, or otherwise dealt with, and all
other agreements, certificates, and other documents, instruments and writings
heretofore or hereafter delivered in connection herewith or therewith.

“Obligations” means all present and future indebtedness, obligations and
liabilities of whatever type which are or shall be secured pursuant to
Section 2.2 hereof.

“Other Liable Party” means any Person, other than Pledgor, but including the
Borrowers and other Subsidiaries, who may now or may at any time hereafter be
primarily or secondarily liable for any of the Obligations or who may now or may
at any time hereafter have granted to Pledgee or Lenders a Lien upon any
property as security for the Obligations.

“Pledged Equity” has the meaning given it in Section 2.1(a) hereof.

Section 1.2 Other Definitions. Reference is hereby made to the Credit Agreement
for a statement of the terms thereof. All capitalized terms used in this
Agreement which are defined in the Credit Agreement and not otherwise defined
herein shall have the same meanings herein as set forth therein. All terms used
in this Agreement which are defined in the Code and not otherwise defined herein
or in the Credit Agreement shall have the same meanings herein as set forth in
the Code, except where the context otherwise requires.

Section 1.3 Exhibits. All exhibits attached to this Agreement are a part hereof
for all purposes.

Section 1.4 Amendment of Defined Instruments. Unless the context otherwise
requires or unless otherwise provided herein, references in this Agreement to a
particular agreement, instrument or document also refer to and include all
renewals, extensions, amendments, modifications, supplements or restatements of
any such agreement, instrument or document, provided that nothing contained in
this Section 1.4 shall be construed to authorize any Person to execute or enter
into any such renewal, extension, amendment, modification, supplement or
restatement.

Section 1.5 References and Titles. All references in this Agreement to Exhibits,
Articles, Sections, subsections, and other subdivisions refer to the Exhibits,
Articles, Sections, subsections and other subdivisions of this Agreement unless
expressly provided otherwise. Titles appearing at the beginning of any
subdivision are for convenience only and do not constitute any part of any such
subdivision and shall be disregarded in construing the language

 

Exhibit F-2

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

contained in this Agreement. The words “this Agreement,” “herein,” “hereof,”
“hereby,” “hereunder” and words of similar import refer to this Agreement as a
whole and not to any particular subdivision unless expressly so limited. The
phrases “this Section” and “this subsection” and similar phrases refer only to
the Sections or subsections hereof in which the phrase occurs. The word “or” is
not exclusive, and the word “including” (in all of its forms) means “including
without limitation”. Pronouns in masculine, feminine and neuter gender shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa unless the context otherwise
requires.

ARTICLE II

Security Interest

Section 2.1 Grant of Security Interest. As collateral security for all of the
Obligations, Pledgor hereby pledges and assigns to Pledgee and grants to Pledgee
a continuing security interest with at least the priority required by
Section 3.1(d)(iv) hereof for the benefit of Lenders (and any Secured Swap
Provider) in and to all of the following rights, interests and property:

(a) all of the issued and outstanding Equity of
                                                                     ,
                                                                     , and each
other Subsidiary hereafter created, acquired or designated by Pledgor
(collectively, the “Subsidiaries,” and each individually, a “Subsidiary”) now
owned or hereafter acquired by Pledgor including, without limitation, the Equity
of each Subsidiary owned by Pledgor on the date hereof (all of the foregoing
being herein sometimes called the “Pledged Equity”);

(b) any and all proceeds or other sums arising from or by virtue of, and all
dividends and distributions (cash or otherwise) payable and/or distributable
with respect to, all or any of the Pledged Equity; and

(c) all cash, securities, dividends and other property at any time and from time
to time receivable or otherwise distributed in respect of or in exchange for any
or all of the Pledged Equity and any other property substituted or exchanged
therefor.

Section 2.2 Obligations Secured. The security interest created hereby in the
Collateral constitutes continuing collateral security for all of the following
obligations, indebtedness and liabilities, whether now existing or hereafter
incurred:

(a) Credit Agreement Indebtedness. The payment by Pledgor and each Borrower, as
and when due and payable, of all amounts from time to time owing by Pledgor and
each Borrower under or in respect of the Credit Agreement, the Notes or any of
the other Obligation Documents.

(b) Renewals. All renewals, extensions, amendments, modifications, supplements,
or restatements of, or substitutions for, any of the foregoing.

(c) Performance. The due performance and observance by Pledgor, each Borrower
and their Subsidiaries of all of their other obligations from time to time
existing under or in respect of any of the Obligation Documents.

 

Exhibit F-3

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

(d) Swap Agreements. The payment and performance of any and all present or
future obligations of Pledgor, any Borrower, or any of their Subsidiaries
according to the terms of any Swap Agreement now existing or hereafter entered
into between and/or among Pledgor, any Borrower, any of its Subsidiaries, any
Pledgee, any Lender or any affiliate of any of the foregoing (including, without
limitation, any Secured Swap Provider).

ARTICLE III

Representations, Warranties and Covenants

Section 3.1 Representations and Warranties. Pledgor represents and warrants as
follows:

(a) Ownership and Liens. Pledgor has good and marketable title to the Collateral
free and clear of all Liens, encumbrances or adverse claims, except for the
security interest created by this Agreement and except as provided in
Section 3.1(d)(iv). No effective financing statement or other instrument similar
in effect covering all or any part of the Collateral is on file in any recording
office except such as have been filed in favor of Pledgee relating to this
Agreement or the other Loan Documents.

(b) No Conflicts or Consents. Neither the ownership or the intended use of the
Collateral by Pledgor, nor the grant of the security interest by Pledgor to
Pledgee herein, nor the exercise by Pledgee of its rights or remedies hereunder,
will (i) conflict with any provision of (A) any domestic or foreign law,
statute, rule or regulation, (B) the articles of organization, certificate of
formation, certificate of incorporation, articles of incorporation, charter,
bylaws, limited liability company agreement or other organizational document of
any Subsidiary, or (C) any agreement, judgment, license, order or permit
applicable to or binding upon Pledgor or any Subsidiary; or (ii) result in or
require the creation of any Lien, charge or encumbrance upon any assets or
properties of Pledgor except as expressly contemplated in the Obligation
Documents. Except as expressly contemplated in the Obligation Documents, no
consent, approval, authorization or order of, and no notice to or filing with,
any court, Governmental Authority, Subsidiary, or third party is required in
connection with the grant by Pledgor of the security interest herein, or, except
as may be required under the Code, the exercise by Pledgee of its rights and
remedies hereunder.

(c) Security Interest. Pledgor has and will have at all times full right, power
and authority to grant a security interest in the Collateral to Pledgee in the
manner provided herein, free and clear of any Lien, adverse claim, or
encumbrance (except as provided in Section 3.1(d)(iv)). This Agreement creates a
valid and binding security interest in favor of Pledgee in the Collateral
securing the Obligations. The taking possession by Pledgee (for the ratable
benefit of Lenders and Secured Swap Providers) of all certificates, instruments
and cash constituting Collateral from time to time, together with appropriate
stock powers, and the filing of the financing statements delivered concurrently
herewith by Pledgor to Pledgee will perfect, and establish the priority required
by Section 3.1(d)(iv) of, Pledgee’s security interest hereunder in the
Collateral securing the Obligations. No further or subsequent filing, recording,
registration, other public notice or other action is necessary or desirable to
perfect or otherwise continue, preserve or protect such security interest except
for continuation statements or filings as contemplated in Section 3.3(b) or
otherwise by the Code.

 

Exhibit F-4

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

(d) Pledged Equity. (i) Pledgor is the legal and beneficial owner of the Pledged
Equity; (ii) the Pledged Equity is duly authorized and issued, fully paid and
non-assessable (as applicable), and all documentary, stamp or other Taxes or
fees owing in connection with the issuance, transfer and/or pledge thereof
hereunder have been paid; (iii) no dispute, right of setoff, counterclaim or
defense exists with respect to all or any part of the Pledged Equity; (iv) the
Pledged Equity is free and clear of all Liens, options, warrants, puts, calls or
other rights of third Persons, and restrictions, other than (A) those Liens
arising under this Agreement or any other of the Loan Documents, (B) Liens for
Taxes or assessments not yet due or not yet delinquent, or, if delinquent, that
are being contested in good faith in the normal course of business by
appropriate action, as required by Section 8.04 of the Credit Agreement, and
(C) restrictions on transferability imposed by applicable state and federal
securities laws; (v) Pledgor has full right and authority to pledge the Pledged
Equity for the purposes and upon the terms set out herein; (vi) certificates (as
applicable) representing the Pledged Equity have been delivered to Pledgee,
together with a duly executed blank stock power for each certificate; and
(vii) no Subsidiary has issued, and there are not outstanding, any options,
warrants or other rights to acquire Equity of any Subsidiary.

Section 3.2 Affirmative Covenants. Unless Pledgee shall otherwise consent in
writing, Pledgor will at all times comply with the covenants contained in this
Section 3.2 from the date hereof and so long as any part of the Obligations or
Commitments is outstanding.

(a) Ownership and Liens. Pledgor will maintain good and marketable title to all
Collateral free and clear of all Liens, encumbrances or adverse claims, except
for (i) the security interest created by this Agreement, (ii) those provided in
Section 3.1(d)(iv), and (iii) the security interests and other encumbrances
expressly permitted by the Credit Agreement. Pledgor will cause to be terminated
any financing statement or other registration with respect to the Collateral,
except such as may exist or as may have been filed in favor of Pledgee. Pledgor
will defend Pledgee’s security interest in and to the Collateral against the
claims of any Person.

(b) Further Assurances. Pledgor will at any time and from time to time promptly
execute and deliver all further instruments and documents and take all further
action that may be necessary or desirable or that Pledgee may request in order
(i) to perfect and protect the security interest created or purported to be
created hereby and the priority required by Section 3.1(d)(iv) of such security
interest; (ii) to enable Pledgee to exercise and enforce its rights and remedies
hereunder in respect of the Collateral; or (iii) to otherwise effect the
purposes of this Agreement, including: (A) executing and filing such financing
or continuation statements, or amendments thereto, as may be necessary or
desirable or that Pledgee may request in order to perfect and preserve the
security interest created or purported to be created hereby, and (B) furnishing
to Pledgee from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as Pledgee may reasonably request, all in reasonable detail. Upon the
creation or acquisition by Pledgor of any Subsidiary, Pledgor and such
Subsidiary shall execute an acknowledgement to this Agreement substantially in
the form of Exhibit A hereto promptly following the acquisition or creation by
Pledgor of such Subsidiary, which confirms that the Equity of such Subsidiary
shall be included within the definition of Pledged Equity hereunder.

 

Exhibit F-5

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

(c) Delivery of Pledged Equity. All certificates, instruments and writings
evidencing the Pledged Equity shall be delivered to Pledgee on or prior to the
execution and delivery of this Agreement. All other certificates, instruments
and writings hereafter evidencing or constituting Pledged Equity shall be
delivered to Pledgee promptly upon the receipt thereof by or on behalf of
Pledgor. All Pledged Equity shall be held by or on behalf of Pledgee pursuant
hereto and shall be delivered in the same manner and with the same effect as
described in Section 2.1 hereof and Section 3.1 hereof. Upon delivery, such
Equity shall thereupon constitute “Pledged Equity” and shall be subject to the
Liens herein created, for the purposes and upon the terms and conditions set
forth in this Agreement and the other Loan Documents.

(d) Proceeds of Pledged Equity. If Pledgor shall receive, by virtue of its being
or having been an owner of any Pledged Equity, any (i) Equity (including any
certificate representing any Equity or distribution in connection with any
increase or reduction of capital, reorganization, reclassification, merger,
consolidation, sale of assets, or spinoff or split-off), promissory note or
other instrument or writing; (ii) option or right, whether as an addition to,
substitution for, or in exchange for, any Pledged Equity or otherwise;
(iii) dividends or other distributions payable in cash (except such dividends or
other distributions permitted to be retained by Pledgor pursuant to Section 4.7
hereof) or in securities or other property; or (iv) dividends or other
distributions in connection with (A) a partial or total liquidation or
dissolution or (B) a reduction of capital, capital surplus or paid-in surplus,
Pledgor shall receive the same in trust for the benefit of Pledgee, shall
segregate it from Pledgor’s other property, and shall promptly deliver it to
Pledgee in the exact form received, with any necessary endorsement or
appropriate stock powers duly executed in blank, to be held by Pledgee as
Collateral.

(e) Status of Pledged Equity. The certificates evidencing the Pledged Equity (as
applicable) shall at all times be valid and genuine and shall not be altered.
The Pledged Equity at all times shall be duly authorized, validly issued, fully
paid, and non-assessable (as applicable), shall not be issued in violation of
the pre-emptive rights of any Person or of any agreement by which Pledgor or any
Subsidiary is bound, and, except for the bylaws or other organizational
documents of any Subsidiary, shall not be subject to any restrictions or
conditions with respect to the transfer, voting or capital of any Pledged
Equity.

Section 3.3 Negative Covenants. Unless Pledgee shall otherwise consent in
writing, Pledgor will at all times comply with the covenants contained in this
Section 3.3 from the date hereof and so long as any part of the Obligations or
the Commitments is outstanding.

(a) Transfer or Encumbrance. Pledgor will not sell, assign (by operation of law
or otherwise), transfer, exchange, lease or otherwise dispose of any of the
Collateral, nor will Pledgor grant a Lien upon or execute, file or record any
financing statement or other registration with respect to the Collateral (other
than the security interests created by this Agreement), nor will Pledgor allow
any such Lien, financing statement, or other registration to exist or deliver
actual or constructive possession of the Collateral to any other Person other
than Liens in favor of Pledgee and those provided in Section 3.1(d)(iv).
Notwithstanding the foregoing, so long as no Default or Event of Default exists,
Pledgor may transfer, exchange or otherwise dispose of Pledged Equity in
connection with a merger or consolidation permitted by Section 9.11 of the
Credit Agreement. Upon any such merger or consolidation, Pledgee will, upon
Pledgor’s request and at Pledgor’s expense, promptly (i) release its security
interest in the Collateral that is being

 

Exhibit F-6

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

transferred, exchanged or disposed of in connection with such merger or
consolidation, (ii) return to Pledgor such of the Collateral that is being
transferred, exchanged or disposed of in connection with such merger or
consolidation, and (iii) execute and deliver to Pledgor such documents as
Pledgor may reasonably request to evidence Pledgee’s release of its security
interest in such Collateral.

(b) Financing Statement Filings. Pledgor recognizes that financing statements
pertaining to the Collateral have been or may be filed in the jurisdiction of
Pledgor’s organization, where Pledgor maintains any Collateral, has its records
concerning any Collateral, has its chief executive office or chief place of
business, or has its principal place of residence. Without limitation of any
other covenant herein, Pledgor will not cause or permit any change to be made in
its name, identity, corporate structure or jurisdiction of organization, or any
change to be made to a jurisdiction other than as represented in the Credit
Agreement in (i) the location of any records concerning any Collateral, or
(ii) the location of its chief executive office, chief place of business or
principal place of residence, unless Pledgor shall have notified Pledgee of such
change at least fifteen (15) days prior to the effective date of such change,
and shall have first taken all action reasonably required by Pledgee for the
purpose of further perfecting or protecting the security interest in favor of
Pledgee in the Collateral. In any notice furnished pursuant to this subsection,
Pledgor will expressly state that the notice is required by this Agreement and
contains facts that may require additional filings of financing statements or
other notices for the purposes of continuing perfection of Pledgee’s security
interest in the Collateral.

(c) Impairment of Security Interest. Pledgor will not take or fail to take any
action which would in any manner impair the enforceability of Pledgee’s security
interest in any Collateral.

(d) Restrictions on Pledged Equity. Except for the bylaws, limited liability
company agreement, regulations, partnership agreement or other charter or
organizational documents of Subsidiaries, Pledgor will not enter into any
agreement creating, or otherwise permit to exist, any restriction or condition
upon the transfer, voting or control of any Pledged Equity.

ARTICLE IV

Remedies, Powers and Authorizations

Section 4.1 Provisions Concerning the Collateral.

(a) Additional Financing Statement Filings. Pledgor hereby authorizes Pledgee to
file, without the signature of Pledgor where permitted by law, one (1) or more
financing or continuation statements, and amendments thereto, relating to the
Collateral.

(b) Power of Attorney. Pledgor hereby irrevocably appoints Pledgee as Pledgor’s
attorney-in-fact and proxy, with full authority in the place and stead of
Pledgor and in the name of Pledgor or otherwise, from time to time if an Event
of Default shall have occurred and be continuing, in Pledgee’s discretion, to
take any action (except for the exercise of any voting rights pertaining to the
Pledged Equity or any part thereof) and to execute any instrument, certificate
or notice which Pledgee may deem necessary or advisable to accomplish the
purposes of this Agreement including: (i) to request or instruct Pledgor or any
Subsidiary (and each

 

Exhibit F-7

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

registrar, transfer agent, or similar Person acting on behalf of Pledgor or any
Subsidiary) to register the Pledged Equity or transfer the Collateral to
Pledgee; (ii) to otherwise give notification to Pledgor, any Subsidiary,
registrar, transfer agent, financial intermediary, or other Person of Pledgee’s
security interests hereunder; (iii) to ask, demand, collect, sue for, recover,
compound, receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral; (iv) to receive, indorse and
collect any drafts or other instruments, documents and chattel paper; and (v) to
file any claims or take any action or institute any proceedings which Pledgee
may deem necessary or desirable for the collection of any of the Collateral or
otherwise to enforce the rights of Pledgee with respect to any of the
Collateral.

(c) Performance by Pledgee. If Pledgor fails to perform any agreement or
obligation contained herein, Pledgee may itself perform, or cause performance
of, such agreement or obligation, and the expenses of Pledgee incurred in
connection therewith shall be payable by Pledgor under Section 4.4 hereof.

(d) Collection Rights. Pledgee shall have the right at any time, if an Event of
Default shall have occurred and be continuing, to notify any or all obligors
(including any and all Subsidiaries) under any accounts or general intangibles
included among the Collateral of the assignment thereof to Pledgee and to direct
such obligors to make payment of all amounts due or to become due to Pledgor
thereunder directly to Pledgee and, upon such notification and at the expense of
Pledgor and to the extent permitted by law, to enforce collection thereof and to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the same extent as Pledgor could have done. After Pledgor receives notice
that Pledgee has given any notice referred to above in this subsection, (i) all
amounts and proceeds (including instruments and writings) received by Pledgor in
respect of such accounts or general intangibles shall be received in trust for
the benefit of Pledgee hereunder, shall be segregated from other funds of
Pledgor and shall be forthwith paid over to Pledgee in the same form as so
received (with any necessary endorsement) to be held as cash collateral and
(A) released to Pledgor upon the remedy of all Events of Default, or (B) if any
Event of Default shall have occurred and be continuing, applied as specified in
Section 4.3 hereof; and (ii) Pledgor will not adjust, settle or compromise the
amount or payment of any such account or general intangible or release wholly or
partly any account debtor or obligor thereof or allow any credit or discount
thereon.

Section 4.2 Event of Default Remedies. If an Event of Default shall have
occurred and be continuing, Pledgee may from time to time in its discretion,
without limitation and without notice except as expressly provided below:

(a) exercise in respect of the Collateral, in addition to other rights and
remedies provided for herein, under the other Obligation Documents or otherwise
available to it, all the rights and remedies of a secured party on default under
the Code (whether or not the Code applies to the affected Collateral);

(b) require Pledgor to, and Pledgor hereby agrees that it will upon request of
Pledgee forthwith, assemble all or part of the Collateral as directed by Pledgee
and make it available to Pledgee at a place to be designated by Pledgee which is
reasonably convenient to both parties;

 

Exhibit F-8

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

(c) reduce its claim to judgment against Pledgor or foreclose or otherwise
enforce, in whole or in part, the security interest created hereby by any
available judicial procedure;

(d) dispose of, at its office, on the premises of Pledgor or elsewhere, all or
any part of the Collateral, as a unit or in parcels, by public or private
proceedings, and by way of one or more contracts (it being agreed that the sale
of any part of the Collateral shall not exhaust Pledgee’s power of sale, but
sales may be made from time to time, and at any time, until all of the
Collateral has been sold or until the Obligations have been paid and performed
in full), and at any such sale it shall not be necessary to exhibit any of the
Collateral;

(e) buy (or allow any Lender to buy) the Collateral, or any part thereof, at any
public sale;

(f) buy (or allow any Lender to buy) the Collateral, or any part thereof, at any
private sale if the Collateral is of a type customarily sold in a recognized
market or is of a type which is the subject of widely distributed standard price
quotations; and

(g) apply by appropriate judicial proceedings for appointment of a receiver for
the Collateral, or any part thereof, and Pledgor hereby consents to any such
appointment.

Pledgor agrees that, to the extent notice of sale shall be required by law, at
least ten (10) days’ notice to Pledgor of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification. Pledgee shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Pledgee may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.

Section 4.3 Application of Proceeds. If any Event of Default shall have occurred
and be continuing, Pledgee may in its discretion apply any cash held by Pledgee
as Collateral, and any cash proceeds received by Pledgee in respect of any sale
of, collection from, or other realization upon all or any part of the
Collateral, in the order and manner contemplated by Article IV of the Credit
Agreement.

Section 4.4 Release and Expenses. In addition to, and not in qualification of,
any similar obligations under other Obligation Documents:

(a) Pledgor agrees to release and forever discharge Pledgee and each Lender from
and against any and all claims, losses and liabilities growing out of or
resulting from this Agreement (including enforcement of this Agreement), except
to the extent such claim, loss or liability is found in a final, non-appealable
judgment of a court of competent jurisdiction to have resulted from such
person’s gross negligence or willful misconduct. The foregoing release and
discharge shall apply whether or not such claims, losses and liabilities are in
any way or to any extent owed, in whole or in part, under any claim or theory of
strict liability or are, to any extent caused, in whole or in part, by any
negligent (but not grossly negligent or willful as found in a final,
non-appealable judgment of a court of competent jurisdiction) act or omission of
any kind by Pledgee or any Lender.

 

Exhibit F-9

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

(b) Pledgor will, and will cause each Borrower to, upon demand pay to Pledgee
the amount of any and all costs and expenses, including the reasonable fees and
disbursements of Pledgee’s counsel and of any experts and agents, which Pledgee
may incur in connection with (i) the transactions which give rise to this
Agreement; (ii) the preparation of this Agreement and the perfection and
preservation of the security interest created under this Agreement; (iii) the
administration of this Agreement; (iv) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any
Collateral; (v) the exercise or enforcement of any of the rights of Pledgee
hereunder; or (vi) the failure by Pledgor to perform or observe any of the
provisions hereof, except expenses resulting from Pledgee’s gross negligence or
willful misconduct.

Section 4.5 Non-Judicial Remedies. In granting to Pledgee the power to enforce
its rights hereunder without prior judicial process or judicial hearing, Pledgor
expressly waives, renounces and knowingly relinquishes any legal right which
might otherwise require Pledgee to enforce its rights by judicial process. In so
providing for non-judicial remedies, Pledgor recognizes and concedes that such
remedies are consistent with the usage of trade, are responsive to commercial
necessity, and are the result of a bargain at arm’s length. Nothing herein is
intended to prevent Pledgee or Pledgor from resorting to judicial process at
either party’s option.

Section 4.6 Other Recourse. Pledgor waives any right to require Pledgee or
Lenders to proceed against any other Person, exhaust any Collateral or other
security for the Obligations, or to have any Other Liable Party joined with
Pledgor in any suit arising out of the Obligations or this Agreement, or pursue
any other remedy in Pledgee’s power. Pledgor further waives any and all notice
of acceptance of this Agreement and of the creation, modification,
rearrangement, renewal or extension for any period of any of the Obligations
from time to time. Pledgor further waives any defense arising by reason of any
disability or other defense of any Other Liable Party or by reason of the
cessation from any cause whatsoever of the liability of any Other Liable Party.
Until all of the Obligations shall have been paid in full, Pledgor shall have no
right to subrogation and Pledgor waives the right to enforce any remedy which
Pledgee or any Lender has or may hereafter have against any Other Liable Party,
and waives any benefit of and any right to participate in any other security
whatsoever now or hereafter held by Pledgee. Pledgor authorizes Pledgee and each
Lender, without notice or demand and without any reservation of rights against
Pledgor and without affecting Pledgor’s liability hereunder or on the
Obligations, from time to time to (a) take or hold any other property of any
type from any other Person as security for the Obligations, and exchange,
enforce, waive and release any or all of such other property; (b) renew, extend
for any period, accelerate, modify, compromise, settle or release any of the
obligations of any Other Liable Party in respect to any or all of the
Obligations or other security for the Obligations; (c) waive, enforce, modify,
amend or supplement any of the provisions of any Obligation Document with any
Person other than Pledgor; and (d) release or substitute any Other Liable Party.

Section 4.7 Voting Rights, Dividends Etc. in Respect of Pledged Equity.

(a) So long as no Event of Default shall have occurred and be continuing Pledgor
may receive and retain any and all dividends, distributions or interest paid in
respect of the Pledged Equity; provided, however, that any and all dividends,
distributions and interest paid or payable other than in cash in respect of, and
instruments and other property received, receivable

 

Exhibit F-10

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

or otherwise distributed in respect of or in exchange for, any Pledged Equity,
shall be, and shall forthwith be delivered to Pledgee to hold as, Pledged Equity
and shall, if received by Pledgor, be received in trust for the benefit of
Pledgee, be segregated from the other property or funds of Pledgor, and be
forthwith delivered to Pledgee in the exact form received with any necessary
endorsement or appropriate stock powers duly executed in blank, to be held by
Pledgee as Collateral.

(b) If an Event of Default shall have occurred and be continuing:

(i) all rights of Pledgor to receive and retain the dividends, distributions and
interest payments which Pledgor would otherwise be authorized to receive and
retain pursuant to subsection (a)of this Section 4.7 shall automatically cease,
and all such rights shall thereupon become vested in Pledgee which shall
thereupon have the right to receive and hold as Pledged Equity such dividends,
distributions and interest payments;

(ii) without limiting the generality of the foregoing, Pledgee may at its option
exercise any and all rights of conversion, exchange, subscription or any other
rights, privileges or options pertaining to any of the Pledged Equity (except
voting rights) as if it were the absolute owner thereof, including the right to
exchange, in its discretion, any and all of the Pledged Equity upon the merger,
consolidation, reorganization, recapitalization or other adjustment of Pledgor
or any Subsidiary, or upon the exercise by Pledgor or any Subsidiary of any
right, privilege or option pertaining to any Pledged Equity, and, in connection
therewith, to deposit and deliver any and all of the Pledged Equity with any
committee, depository, transfer agent, registrar or other designated agent upon
such terms and conditions as it may determine; and

(iii) all dividends and interest payments which are received by Pledgor contrary
to the provisions of subsection (b) (i) of this Section 4.7 shall be received in
trust for the benefit of Pledgee, shall be segregated from other funds of
Pledgor, and shall be forthwith paid over to Pledgee as Pledged Equity in the
exact form received, to be held by Pledgee as Collateral.

Anything herein to the contrary notwithstanding, Pledgee may not exercise any
voting rights pertaining to the Pledged Equity, and Pledgor may at all times
exercise any and all voting rights pertaining to the Pledged Equity or any part
thereof for any purpose not inconsistent with the terms of this Agreement or any
other Obligation Document; provided, however, if an Event of Default shall have
occurred and be continuing, Pledgor will not exercise or refrain from exercising
any such right, as the case may be, if Pledgee gives notice that, in Pledgee’s
judgment, such action would cause a Material Adverse Effect with respect to the
value of the Pledged Equity or the benefits to Pledgee of its security interest
hereunder.

Section 4.8 Private Sale of Pledged Equity. Pledgor recognizes that Pledgee may
deem it impracticable to effect a public sale of all or any part of the Pledged
Equity and that Pledgee may, therefore, determine to make one or more private
sales of any such securities to a restricted group of purchasers who will be
obligated to agree, among other things, to acquire such securities for their own
account, for investment and not with a view to the distribution or resale
thereof. Pledgor acknowledges that any such private sale may be at prices and on
terms less favorable to the seller than the prices and other terms which might
have been obtained at a

 

Exhibit F-11

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

public sale and, notwithstanding the foregoing, agrees that such private sales
shall be deemed to have been made in a commercially reasonable manner and that
Pledgee shall have no obligation to delay the sale of any such securities for
the period of time necessary to permit Pledgor or any Subsidiary to register
such securities (with no obligation of either Pledgor or any Subsidiary to
accomplish such registration) for public sale under the Securities Act of 1933,
as amended (the “Securities Act”). Pledgor further acknowledges and agrees that
any offer to sell such securities which has been (a) publicly advertised on a
bona fide basis in The Wall Street Journal, national edition (to the extent that
such an offer may be so advertised without prior registration under the
Securities Act), or (b) made privately in the manner described above to not less
than fifteen (15) bona fide offerees shall be deemed to involve a “public
disposition” for the purposes of Section 9.610 of the Code (or any successor or
similar, applicable statutory provision) as then in effect in the State of
Texas, notwithstanding that such sale may not constitute a “public offering”
under the Securities Act, and that Pledgee may, in such event, bid for the
purchase of such securities.

Section 4.9 Limitation on Rights and Waivers. All rights, powers and remedies
herein conferred shall be exercisable by Pledgee only to the extent not
prohibited by applicable law; and all waivers and relinquishments of rights and
similar matters shall only be effective to the extent such waivers or
relinquishments are not prohibited by applicable law.

ARTICLE V

Miscellaneous

Section 5.1 Notices. Any notice or communication required or permitted hereunder
shall be given in writing, sent by personal delivery, by telecopy, by delivery
service with proof of delivery, or by registered or certified United States
mail, postage prepaid, addressed to the appropriate party as follows:

 

To Pledgor:   

Chaparral Energy, Inc.

701 Cedar Lake Blvd.

Oklahoma City, Oklahoma 73114

Attn: Mark A. Fischer

Fax No.:    (405) 478-2906

To Pledgee:   

JPMorgan Chase Bank, N.A., as Administrative Agent for Lenders

1717 Main Street, 4th Floor

Mail Code TX1-2448

Dallas, Texas 75201

Attn: J. Scott Fowler

Fax No.:    (214) 290-2332

or to such other address or to the attention of such other individual as
hereafter shall be designated in writing by the applicable party sent in
accordance herewith. Any such notice or communication shall be deemed to have
been given (a) in the case of personal delivery or delivery service, as of the
date of first attempted delivery at the address or in the manner provided
herein, (b) in the case of telecopy, upon receipt with confirmation (if sent
before 4:00 p.m. local time of the receiving party on a Business Day) or the
next Business Day (if sent after 4:00 p.m. of such local time or sent on a day
that is not a Business Day), or (c) in the case of registered or certified
United States mail, three (3) Business Days after deposit in the mail.

 

Exhibit F-12

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

Section 5.2 Amendments. No amendment of any provision of this Agreement shall be
effective unless it is in writing and signed by Pledgor, each Borrower, Pledgee
and Majority Lenders (or all Lenders if required pursuant to the terms of the
Credit Agreement), and no waiver of any provision of this Agreement, and no
consent to any departure by Pledgor therefrom, shall be effective unless it is
in writing and signed by Pledgee and Majority Lenders (or all Lenders if
required pursuant to the terms of the Credit Agreement), and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given and to the extent specified in such writing.

Section 5.3 Preservation of Rights. No failure on the part of Pledgee or any
Lender to exercise, and no delay in exercising, any right hereunder or under any
other Obligation Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. Neither the execution nor
the delivery of this Agreement shall in any manner impair or affect any other
security for the Obligations. The rights and remedies of Pledgee and Lenders
provided herein and in the other Obligation Documents are cumulative of and are
in addition to, and not exclusive of, any rights or remedies provided by law.
The rights of Pledgee and Lenders under any Obligation Document against any
party thereto are not conditional or contingent on any attempt by Pledgee or
Lenders to exercise any of its or their rights under any other Obligation
Document against such party or against any other Person.

Section 5.4 Unenforceability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or invalidity without
invalidating the remaining portions hereof or thereof or affecting the validity
or enforceability of such provision in any other jurisdiction.

Section 5.5 Survival of Agreements. All representations and warranties of
Pledgor herein, and all covenants and agreements herein shall survive the
execution and delivery of this Agreement, the execution and delivery of any
other Obligation Documents and the creation of the Obligations.

Section 5.6 Other Liable Party. Neither this Agreement nor the exercise by
Pledgee or any Lender or the failure of Pledgee or any Lender to exercise any
right, power or remedy conferred herein or by law shall be construed as
relieving any Other Liable Party from liability on the Obligations or any
deficiency thereon. This Agreement shall continue irrespective of the fact that
the liability of any Other Liable Party may have ceased or irrespective of the
validity or enforceability of any other Obligation Document to which Pledgor or
any Other Liable Party may be a party, and notwithstanding the reorganization,
death, incapacity or bankruptcy of any Other Liable Party, and notwithstanding
the reorganization or bankruptcy or other event or proceeding affecting any
Other Liable Party.

Section 5.7 Binding Effect and Assignment. This Agreement creates a continuing
security interest in the Collateral and (a) shall be binding on Pledgor and its
successors and permitted assigns, and (b) shall inure, together with all rights
and remedies of Pledgee hereunder,

 

Exhibit F-13

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

to the benefit of Pledgee, Lenders, Secured Swap Providers and their respective
successors, transferees and assigns. Without limiting the generality of the
foregoing, Pledgee, Lenders and Secured Swap Providers may pledge, assign or
otherwise transfer any or all of their respective rights under any or all of the
Obligation Documents to any other Person on the terms set forth in the Credit
Agreement, and such other Person shall thereupon become vested with all of the
benefits in respect thereof granted herein or otherwise. None of the rights or
duties of Pledgor hereunder may be assigned or otherwise transferred without the
prior written consent of Pledgee and Majority Lenders (or all Lenders if
required pursuant to the terms of the Credit Agreement).

Section 5.8 Termination. It is contemplated by the parties hereto that there may
be times when no Obligations are outstanding, but notwithstanding such
occurrences, this Agreement shall remain valid and shall be in full force and
effect as to subsequent outstanding Obligations. Upon the satisfaction in full
of the Obligations, upon the termination or expiration of the Credit Agreement
and any other Commitment of Lenders to extend credit to Pledgor, and upon
written request for the termination hereof delivered by Pledgor to Pledgee and
Lenders, this Agreement and the security interest created hereby shall terminate
and all rights to the Collateral shall revert to Pledgor. Pledgee will, upon
Pledgor’s request and at Pledgor’s expense, (a) return to Pledgor such of the
Collateral as shall not have been sold or otherwise disposed of or applied
pursuant to the terms hereof, and (b) execute and deliver to Pledgor such
documents as Pledgor shall reasonably request to evidence such termination.

Section 5.9 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF THE UNITED STATES
OF AMERICA.

Section 5.10 Counterparts. This Agreement may be separately executed in any
number of counterparts, all of which when so executed shall be deemed to
constitute one and the same Agreement.

Section 5.11 Loan Document. This Agreement is a “Loan Document”, as defined in
the Credit Agreement, and, except as expressly provided herein to the contrary,
this Agreement is subject to all provisions of the Credit Agreement governing
the Loan Documents.

[Signature Pages to Follow]

 

Exhibit F-14

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

IN WITNESS WHEREOF, Pledgor has executed and delivered this Agreement, as of the
date first above written.

 

CHAPARRAL ENERGY, INC.,

a Delaware corporation

By:       

Mark A. Fischer,

Chief Executive Officer and President

Each Subsidiary hereby acknowledges and consents to the pledge of the Collateral
and hereby agrees to observe and perform each and every provision of this
Agreement applicable to Subsidiary.

 

                                                                               
                        , a _________________________________________ By:     
Name:      Title:                                            
                                                                 , a
_________________________________________ By:      Name:      Title:     
                                                                               
                        , a _________________________________________ By:     
Name:      Title:     

 

Exhibit F-15

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

EXHIBIT A

PLEDGE ACKNOWLEDGEMENT

This Pledge Acknowledgement, dated                     ,          is delivered
pursuant to Section 3.2(b) of the Pledge Agreement referred to below. All
defined terms herein shall have the meanings ascribed thereto or incorporated by
reference in the Pledge Agreement. Chaparral Energy, Inc., a Delaware
corporation (“Pledgor”), hereby certifies that the representations and
warranties in Article III of the Pledge Agreement are and continue to be true
and correct as to the Pledged Equity pledged prior to the date of this Pledge
Acknowledgment and as to the Pledged Equity pledged pursuant to this Pledge
Acknowledgment. Pledgor and [INSERT NAME OF NEW SUBSIDIARY], a
                         (“Subsidiary”), agree that this Pledge Acknowledgment
may be attached to that certain Pledge Agreement, dated as of
                    , 20    , among Pledgor and JPMorgan Chase Bank, N.A., as
administrative agent (as amended, modified or supplemented from time to time,
the “Pledge Agreement”) and that the Equity of Subsidiary owned by Pledgor shall
be and become a part of the Pledged Equity referred to in said Pledge Agreement
and shall secure all Obligations referred to in said Pledge Agreement.

 

                                                                               
                        ,

a ______________________________

By:      Name:      Title:     

Acknowledged and agreed to this          day of 20     by:

 

                                                                               
                        ,

a __________________________________________

By:     

Name:     

Title:     

 

Exhibit F-16

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

EXHIBIT G

FORM OF BORROWER PLEDGE AGREEMENT

THIS PLEDGE AGREEMENT (this “Agreement”) is made as of                     ,
20    , by                                                          , a
                                                              (herein called
“Pledgor”), in favor of JPMorgan Chase Bank, N.A., as Administrative Agent for
the ratable benefit of Lenders (as defined below), and, in the case of any Swap
Agreement (as defined in the Credit Agreement), any Secured Swap Provider (as
defined in the Credit Agreement) (herein called “Pledgee”).

W I T N E S S E T H:

WHEREAS, Pledgor, as a Borrower, Parent (as defined in the Credit Agreement),
JPMorgan Chase Bank, N.A., as Administrative Agent, the other agents a party
thereto, and Lenders are parties to that certain Seventh Restated Credit
Agreement (as may be amended from time to time, the “Credit Agreement”) dated as
of October 31, 2006, pursuant to which Lenders have agreed to make loans and
other extensions of credit to Borrowers (as therein defined) for the purposes
set forth therein; and

WHEREAS, pursuant to the terms of the Credit Agreement, and as a condition
precedent to the loans and extensions of credit thereunder, Pledgor is required
to execute and deliver to Pledgee a pledge agreement granting to Pledgee, for
the benefit of Lenders and Secured Swap Providers, a security interest in the
Collateral (as defined herein); and

WHEREAS, the [Managers] of Pledgor have determined that Pledgor’s execution,
delivery and performance of this Agreement may reasonably be expected to benefit
Pledgor, directly or indirectly, and are in the best interests of Pledgor.

NOW, THEREFORE, in consideration of the premises and in order to induce Lenders
to extend credit under the Credit Agreement, Pledgor hereby agrees with Pledgee
as follows:

ARTICLE I

Definitions and References

Section 1.1 General Definitions. As used herein, the terms defined above shall
have the meanings indicated above, and the following terms shall have the
following meanings:

“Code” means the Uniform Commercial Code in effect in the State of Texas on the
date hereof.

“Collateral” means all property of whatever type, in which Pledgee at any time
has a security interest pursuant to Section 2.1 hereof.

“Commitment” means the agreement or commitment by Lenders to make loans, acquire
participations in Letters of Credit or otherwise extend credit to Borrowers
under the Credit Agreement, and any other agreement, commitment, statement of
terms or other document contemplating the making of loans or advances or other
extension of credit by Lenders to or for

 

Exhibit G-1

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

the account of any Borrower which is now or at any time hereafter intended to be
secured by the Collateral under this Agreement.

“Equity” means shares of capital stock or a partnership, profits, capital or
member interest, or options, warrants or any other right to substitute for or
otherwise acquire the capital stock or a partnership, profits, capital or member
interest of each Subsidiary (as defined in Section 2.1(a)) hereof.

“Lender” means any financial institution reflected on Annex I to the Credit
Agreement and its successors and assigns, and “Lenders” shall mean all Lenders.

“Obligation Documents” means the Credit Agreement, the Notes, the Letter of
Credit Agreements, the Letters of Credit and the Security Instruments now or
hereafter executed, the other Loan Documents, and all other documents and
instruments under, by reason of which, or pursuant to which any or all of the
Obligations are evidenced, governed, secured, or otherwise dealt with, and all
other agreements, certificates, and other documents, instruments and writings
heretofore or hereafter delivered in connection herewith or therewith.

“Obligations” means all present and future indebtedness, obligations and
liabilities of whatever type which are or shall be secured pursuant to
Section 2.2 hereof.

“Other Liable Party” means any Person, other than Pledgor, but including Parent
and the other Borrowers and Subsidiaries, who may now or may at any time
hereafter be primarily or secondarily liable for any of the Obligations or who
may now or may at any time hereafter have granted to Pledgee or Lenders a Lien
upon any property as security for the Obligations.

“Pledged Equity” has the meaning given it in Section 2.1(a) hereof.

Section 1.2 Other Definitions. Reference is hereby made to the Credit Agreement
for a statement of the terms thereof. All capitalized terms used in this
Agreement which are defined in the Credit Agreement and not otherwise defined
herein shall have the same meanings herein as set forth therein. All terms used
in this Agreement which are defined in the Code and not otherwise defined herein
or in the Credit Agreement shall have the same meanings herein as set forth in
the Code, except where the context otherwise requires.

Section 1.3 Exhibits. All exhibits attached to this Agreement are a part hereof
for all purposes.

Section 1.4 Amendment of Defined Instruments. Unless the context otherwise
requires or unless otherwise provided herein, references in this Agreement to a
particular agreement, instrument or document also refer to and include all
renewals, extensions, amendments, modifications, supplements or restatements of
any such agreement, instrument or document, provided that nothing contained in
this Section 1.4 shall be construed to authorize any Person to execute or enter
into any such renewal, extension, amendment, modification, supplement or
restatement.

Section 1.5 References and Titles. All references in this Agreement to Exhibits,
Articles, Sections, subsections, and other subdivisions refer to the Exhibits,
Articles, Sections,

 

Exhibit G-2

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

subsections and other subdivisions of this Agreement unless expressly provided
otherwise. Titles appearing at the beginning of any subdivision are for
convenience only and do not constitute any part of any such subdivision and
shall be disregarded in construing the language contained in this Agreement. The
words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder” and words of
similar import refer to this Agreement as a whole and not to any particular
subdivision unless expressly so limited. The phrases “this Section” and “this
subsection” and similar phrases refer only to the Sections or subsections hereof
in which the phrase occurs. The word “or” is not exclusive, and the word
“including” (in all of its forms) means “including without limitation”. Pronouns
in masculine, feminine and neuter gender shall be construed to include any other
gender, and words in the singular form shall be construed to include the plural
and vice versa unless the context otherwise requires.

ARTICLE II

Security Interest

Section 2.1 Grant of Security Interest. As collateral security for all of the
Obligations, Pledgor hereby pledges and assigns to Pledgee and grants to Pledgee
a continuing security interest with at least the priority required by
Section 3.1(d)(iv) hereof for the benefit of Lenders (and any Secured Swap
Provider) in and to all of the following rights, interests and property:

(a) all of the issued and outstanding Equity of
                                                                         ,
                                                     , and each other Subsidiary
hereafter created, acquired or designated by Pledgor (collectively, the
“Subsidiaries,” and each individually, a “Subsidiary”) now owned or hereafter
acquired by Pledgor including, without limitation, the Equity of each Subsidiary
owned by Pledgor on the date hereof (all of the foregoing being herein sometimes
called the “Pledged Equity”);

(b) any and all proceeds or other sums arising from or by virtue of, and all
dividends and distributions (cash or otherwise) payable and/or distributable
with respect to, all or any of the Pledged Equity; and

(c) all cash, securities, dividends and other property at any time and from time
to time receivable or otherwise distributed in respect of or in exchange for any
or all of the Pledged Equity and any other property substituted or exchanged
therefor.

Section 2.2 Obligations Secured. The security interest created hereby in the
Collateral constitutes continuing collateral security for all of the following
obligations, indebtedness and liabilities, whether now existing or hereafter
incurred:

(a) Credit Agreement Indebtedness. The payment by Pledgor, each other Borrower
and each other Credit Party, as and when due and payable, of all amounts from
time to time owing by Pledgor and each other Borrower and Credit Party under or
in respect of the Credit Agreement, the Notes or any of the other Obligation
Documents.

(b) Renewals. All renewals, extensions, amendments, modifications, supplements,
or restatements of, or substitutions for, any of the foregoing.

 

Exhibit G-3

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

(c) Performance. The due performance and observance by Pledgor, each other
Borrower and their Subsidiaries of all of their other obligations from time to
time existing under or in respect of any of the Obligation Documents.

(d) Swap Agreements. The payment and performance of any and all present or
future obligations of Pledgor, any other Borrower, or any of their Subsidiaries
according to the terms of any Swap Agreement now existing or hereafter entered
into between and/or among Pledgor, any other Borrower, any of its Subsidiaries,
any Pledgee, any Lender or any affiliate of any of the foregoing (including,
without limitation, any Secured Swap Provider).

Article III

Representations, Warranties and Covenants

Section 3.1 Representations and Warranties. Pledgor represents and warrants as
follows:

(a) Ownership and Liens. Pledgor has good and marketable title to the Collateral
free and clear of all Liens, encumbrances or adverse claims, except for the
security interest created by this Agreement and except as provided in
Section 3.1(d)(iv). No effective financing statement or other instrument similar
in effect covering all or any part of the Collateral is on file in any recording
office except such as have been filed in favor of Pledgee relating to this
Agreement or the other Loan Documents.

(b) No Conflicts or Consents. Neither the ownership or the intended use of the
Collateral by Pledgor, nor the grant of the security interest by Pledgor to
Pledgee herein, nor the exercise by Pledgee of its rights or remedies hereunder,
will (i) conflict with any provision of (A) any domestic or foreign law,
statute, rule or regulation, (B) the articles of organization, certificate of
formation, certificate of incorporation, articles of incorporation, charter,
bylaws, limited liability company agreement or other organizational document of
any Subsidiary, or (C) any agreement, judgment, license, order or permit
applicable to or binding upon Pledgor or any Subsidiary; or (ii) result in or
require the creation of any Lien, charge or encumbrance upon any assets or
properties of Pledgor except as expressly contemplated in the Obligation
Documents. Except as expressly contemplated in the Obligation Documents, no
consent, approval, authorization or order of, and no notice to or filing with,
any court, Governmental Authority, Subsidiary, or third party is required in
connection with the grant by Pledgor of the security interest herein, or, except
as may be required under the Code, the exercise by Pledgee of its rights and
remedies hereunder.

(c) Security Interest. Pledgor has and will have at all times full right, power
and authority to grant a security interest in the Collateral to Pledgee in the
manner provided herein, free and clear of any Lien, adverse claim, or
encumbrance (except as provided in Section 3.1(d)(iv)). This Agreement creates a
valid and binding security interest in favor of Pledgee in the Collateral
securing the Obligations. The taking possession by Pledgee (for the ratable
benefit of Lenders and Secured Swap Providers) of all certificates, instruments
and cash constituting Collateral from time to time, together with appropriate
stock powers, and the filing of the financing statements delivered concurrently
herewith by Pledgor to Pledgee will perfect, and establish the priority required
by Section 3.1(d)(iv) of, Pledgee’s security interest hereunder in

 

Exhibit G-4

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

the Collateral securing the Obligations. No further or subsequent filing,
recording, registration, other public notice or other action is necessary or
desirable to perfect or otherwise continue, preserve or protect such security
interest except for continuation statements or filings as contemplated in
Section 3.3(b) or otherwise by the Code.

(d) Pledged Equity. (i) Pledgor is the legal and beneficial owner of the Pledged
Equity; (ii) the Pledged Equity is duly authorized and issued, fully paid and
non-assessable (as applicable), and all documentary, stamp or other Taxes or
fees owing in connection with the issuance, transfer and/or pledge thereof
hereunder have been paid; (iii) no dispute, right of setoff, counterclaim or
defense exists with respect to all or any part of the Pledged Equity; (iv) the
Pledged Equity is free and clear of all Liens, options, warrants, puts, calls or
other rights of third Persons, and restrictions, other than (A) those Liens
arising under this Agreement or any other of the Loan Documents, (B) Liens for
Taxes or assessments not yet due or not yet delinquent, or, if delinquent, that
are being contested in good faith in the normal course of business by
appropriate action, as required by Section 8.04 of the Credit Agreement, and
(C) restrictions on transferability imposed by applicable state and federal
securities laws; (v) Pledgor has full right and authority to pledge the Pledged
Equity for the purposes and upon the terms set out herein; (vi) certificates (as
applicable) representing the Pledged Equity have been delivered to Pledgee,
together with a duly executed blank stock power for each certificate; and
(vii) no Subsidiary has issued, and there are not outstanding, any options,
warrants or other rights to acquire Equity of any Subsidiary.

Section 3.2 Affirmative Covenants. Unless Pledgee shall otherwise consent in
writing, Pledgor will at all times comply with the covenants contained in this
Section 3.2 from the date hereof and so long as any part of the Obligations or
Commitments is outstanding.

(a) Ownership and Liens. Pledgor will maintain good and marketable title to all
Collateral free and clear of all Liens, encumbrances or adverse claims, except
for (i) the security interest created by this Agreement, (ii) those provided in
Section 3.1(d)(iv), and (iii) the security interests and other encumbrances
expressly permitted by the Credit Agreement. Pledgor will cause to be terminated
any financing statement or other registration with respect to the Collateral,
except such as may exist or as may have been filed in favor of Pledgee. Pledgor
will defend Pledgee’s security interest in and to the Collateral against the
claims of any Person.

(b) Further Assurances. Pledgor will at any time and from time to time promptly
execute and deliver all further instruments and documents and take all further
action that may be necessary or desirable or that Pledgee may request in order
(i) to perfect and protect the security interest created or purported to be
created hereby and the priority required by Section 3.1(d)(iv) of such security
interest; (ii) to enable Pledgee to exercise and enforce its rights and remedies
hereunder in respect of the Collateral; or (iii) to otherwise effect the
purposes of this Agreement, including: (A) executing and filing such financing
or continuation statements, or amendments thereto, as may be necessary or
desirable or that Pledgee may request in order to perfect and preserve the
security interest created or purported to be created hereby, and (B) furnishing
to Pledgee from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as Pledgee may reasonably request, all in reasonable detail. Upon the
creation or acquisition by Pledgor of any Subsidiary, Pledgor and such
Subsidiary shall execute an acknowledgement to this Agreement substantially

 

Exhibit G-5

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

in the form of Exhibit A hereto promptly following the acquisition or creation
by Pledgor of such Subsidiary, which confirms that the Equity of such Subsidiary
shall be included within the definition of Pledged Equity hereunder.

(c) Delivery of Pledged Equity. All certificates, instruments and writings
evidencing the Pledged Equity shall be delivered to Pledgee on or prior to the
execution and delivery of this Agreement. All other certificates, instruments
and writings hereafter evidencing or constituting Pledged Equity shall be
delivered to Pledgee promptly upon the receipt thereof by or on behalf of
Pledgor. All Pledged Equity shall be held by or on behalf of Pledgee pursuant
hereto and shall be delivered in the same manner and with the same effect as
described in Section 2.1 hereof and Section 3.1 hereof. Upon delivery, such
Equity shall thereupon constitute “Pledged Equity” and shall be subject to the
Liens herein created, for the purposes and upon the terms and conditions set
forth in this Agreement and the other Loan Documents.

(d) Proceeds of Pledged Equity. If Pledgor shall receive, by virtue of its being
or having been an owner of any Pledged Equity, any (i) Equity (including any
certificate representing any Equity or distribution in connection with any
increase or reduction of capital, reorganization, reclassification, merger,
consolidation, sale of assets, or spinoff or split-off), promissory note or
other instrument or writing; (ii) option or right, whether as an addition to,
substitution for, or in exchange for, any Pledged Equity or otherwise;
(iii) dividends or other distributions payable in cash (except such dividends or
other distributions permitted to be retained by Pledgor pursuant to Section 4.7
hereof) or in securities or other property; or (iv) dividends or other
distributions in connection with (A) a partial or total liquidation or
dissolution or (B) a reduction of capital, capital surplus or paid-in surplus,
Pledgor shall receive the same in trust for the benefit of Pledgee, shall
segregate it from Pledgor’s other property, and shall promptly deliver it to
Pledgee in the exact form received, with any necessary endorsement or
appropriate stock powers duly executed in blank, to be held by Pledgee as
Collateral.

(e) Status of Pledged Equity. The certificates evidencing the Pledged Equity (as
applicable) shall at all times be valid and genuine and shall not be altered.
The Pledged Equity at all times shall be duly authorized, validly issued, fully
paid, and non-assessable (as applicable), shall not be issued in violation of
the pre-emptive rights of any Person or of any agreement by which Pledgor or any
Subsidiary is bound, and, except for the bylaws or other organizational
documents of any Subsidiary, shall not be subject to any restrictions or
conditions with respect to the transfer, voting or capital of any Pledged
Equity.

Section 3.3 Negative Covenants. Unless Pledgee shall otherwise consent in
writing, Pledgor will at all times comply with the covenants contained in this
Section 3.3 from the date hereof and so long as any part of the Obligations or
the Commitments is outstanding.

(a) Transfer or Encumbrance. Pledgor will not sell, assign (by operation of law
or otherwise), transfer, exchange, lease or otherwise dispose of any of the
Collateral, nor will Pledgor grant a Lien upon or execute, file or record any
financing statement or other registration with respect to the Collateral (other
than the security interests created by this Agreement), nor will Pledgor allow
any such Lien, financing statement, or other registration to exist or deliver
actual or constructive possession of the Collateral to any other Person other
than Liens in favor of Pledgee and those provided in Section 3.1(d)(iv).
Notwithstanding the foregoing, so long as

 

Exhibit G-6

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

no Default or Event of Default exists, Pledgor may transfer, exchange or
otherwise dispose of Pledged Equity in connection with a merger or consolidation
permitted by Section 9.11 of the Credit Agreement. Upon any such merger or
consolidation, Pledgee will, upon Pledgor’s request and at Pledgor’s expense,
promptly (i) release its security interest in the Collateral that is being
transferred, exchanged or disposed of in connection with such merger or
consolidation, (ii) return to Pledgor such of the Collateral that is being
transferred, exchanged or disposed of in connection with such merger or
consolidation, and (iii) execute and deliver to Pledgor such documents as
Pledgor may reasonably request to evidence Pledgee’s release of its security
interest in such Collateral.

(b) Financing Statement Filings. Pledgor recognizes that financing statements
pertaining to the Collateral have been or may be filed in the jurisdiction of
Pledgor’s organization, where Pledgor maintains any Collateral, has its records
concerning any Collateral, has its chief executive office or chief place of
business, or has its principal place of residence. Without limitation of any
other covenant herein, Pledgor will not cause or permit any change to be made in
its name, identity, corporate structure or jurisdiction of organization, or any
change to be made to a jurisdiction other than as represented in the Credit
Agreement in (i) the location of any records concerning any Collateral, or
(ii) the location of its chief executive office, chief place of business or
principal place of residence, unless Pledgor shall have notified Pledgee of such
change at least fifteen (15) days prior to the effective date of such change,
and shall have first taken all action reasonably required by Pledgee for the
purpose of further perfecting or protecting the security interest in favor of
Pledgee in the Collateral. In any notice furnished pursuant to this subsection,
Pledgor will expressly state that the notice is required by this Agreement and
contains facts that may require additional filings of financing statements or
other notices for the purposes of continuing perfection of Pledgee’s security
interest in the Collateral.

(c) Impairment of Security Interest. Pledgor will not take or fail to take any
action which would in any manner impair the enforceability of Pledgee’s security
interest in any Collateral.

(d) Restrictions on Pledged Equity. Except for the bylaws, limited liability
company agreement, regulations, partnership agreement or other charter or
organizational documents of Subsidiaries, Pledgor will not enter into any
agreement creating, or otherwise permit to exist, any restriction or condition
upon the transfer, voting or control of any Pledged Equity.

Article IV

Remedies, Powers and Authorizations

Section 4.1 Provisions Concerning the Collateral.

(a) Additional Financing Statement Filings. Pledgor hereby authorizes Pledgee to
file, without the signature of Pledgor where permitted by law, one (1) or more
financing or continuation statements, and amendments thereto, relating to the
Collateral.

(b) Power of Attorney. Pledgor hereby irrevocably appoints Pledgee as Pledgor’s
attorney-in-fact and proxy, with full authority in the place and stead of
Pledgor and in the name of Pledgor or otherwise, from time to time if an Event
of Default shall have occurred and be

 

Exhibit G-7

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

continuing, in Pledgee’s discretion, to take any action (except for the exercise
of any voting rights pertaining to the Pledged Equity or any part thereof) and
to execute any instrument, certificate or notice which Pledgee may deem
necessary or advisable to accomplish the purposes of this Agreement including:
(i) to request or instruct Pledgor or any Subsidiary (and each registrar,
transfer agent, or similar Person acting on behalf of Pledgor or any Subsidiary)
to register the Pledged Equity or transfer the Collateral to Pledgee; (ii) to
otherwise give notification to Pledgor, any Subsidiary, registrar, transfer
agent, financial intermediary, or other Person of Pledgee’s security interests
hereunder; (iii) to ask, demand, collect, sue for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral; (iv) to receive, indorse and collect any
drafts or other instruments, documents and chattel paper; and (v) to file any
claims or take any action or institute any proceedings which Pledgee may deem
necessary or desirable for the collection of any of the Collateral or otherwise
to enforce the rights of Pledgee with respect to any of the Collateral.

(c) Performance by Pledgee. If Pledgor fails to perform any agreement or
obligation contained herein, Pledgee may itself perform, or cause performance
of, such agreement or obligation, and the expenses of Pledgee incurred in
connection therewith shall be payable by Pledgor under Section 4.4 hereof.

(d) Collection Rights. Pledgee shall have the right at any time, if an Event of
Default shall have occurred and be continuing, to notify any or all obligors
(including any and all Subsidiaries) under any accounts or general intangibles
included among the Collateral of the assignment thereof to Pledgee and to direct
such obligors to make payment of all amounts due or to become due to Pledgor
thereunder directly to Pledgee and, upon such notification and at the expense of
Pledgor and to the extent permitted by law, to enforce collection thereof and to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the same extent as Pledgor could have done. After Pledgor receives notice
that Pledgee has given any notice referred to above in this subsection, (i) all
amounts and proceeds (including instruments and writings) received by Pledgor in
respect of such accounts or general intangibles shall be received in trust for
the benefit of Pledgee hereunder, shall be segregated from other funds of
Pledgor and shall be forthwith paid over to Pledgee in the same form as so
received (with any necessary endorsement) to be held as cash collateral and
(A) released to Pledgor upon the remedy of all Events of Default, or (B) if any
Event of Default shall have occurred and be continuing, applied as specified in
Section 4.3 hereof; and (ii) Pledgor will not adjust, settle or compromise the
amount or payment of any such account or general intangible or release wholly or
partly any account debtor or obligor thereof or allow any credit or discount
thereon.

Section 4.2 Event of Default Remedies. If an Event of Default shall have
occurred and be continuing, Pledgee may from time to time in its discretion,
without limitation and without notice except as expressly provided below:

(a) exercise in respect of the Collateral, in addition to other rights and
remedies provided for herein, under the other Obligation Documents or otherwise
available to it, all the rights and remedies of a secured party on default under
the Code (whether or not the Code applies to the affected Collateral);

 

Exhibit G-8

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

(b) require Pledgor to, and Pledgor hereby agrees that it will upon request of
Pledgee forthwith, assemble all or part of the Collateral as directed by Pledgee
and make it available to Pledgee at a place to be designated by Pledgee which is
reasonably convenient to both parties;

(c) reduce its claim to judgment against Pledgor or foreclose or otherwise
enforce, in whole or in part, the security interest created hereby by any
available judicial procedure;

(d) dispose of, at its office, on the premises of Pledgor or elsewhere, all or
any part of the Collateral, as a unit or in parcels, by public or private
proceedings, and by way of one or more contracts (it being agreed that the sale
of any part of the Collateral shall not exhaust Pledgee’s power of sale, but
sales may be made from time to time, and at any time, until all of the
Collateral has been sold or until the Obligations have been paid and performed
in full), and at any such sale it shall not be necessary to exhibit any of the
Collateral;

(e) buy (or allow any Lender to buy) the Collateral, or any part thereof, at any
public sale;

(f) buy (or allow any Lender to buy) the Collateral, or any part thereof, at any
private sale if the Collateral is of a type customarily sold in a recognized
market or is of a type which is the subject of widely distributed standard price
quotations; and

(g) apply by appropriate judicial proceedings for appointment of a receiver for
the Collateral, or any part thereof, and Pledgor hereby consents to any such
appointment.

Pledgor agrees that, to the extent notice of sale shall be required by law, at
least ten (10) days’ notice to Pledgor of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification. Pledgee shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Pledgee may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.

Section 4.3 Application of Proceeds. If any Event of Default shall have occurred
and be continuing, Pledgee may in its discretion apply any cash held by Pledgee
as Collateral, and any cash proceeds received by Pledgee in respect of any sale
of, collection from, or other realization upon all or any part of the
Collateral, in the order and manner contemplated by Article IV of the Credit
Agreement.

Section 4.4 Release and Expenses. In addition to, and not in qualification of,
any similar obligations under other Obligation Documents:

(a) Pledgor agrees to release and forever discharge Pledgee and each Lender from
and against any and all claims, losses and liabilities growing out of or
resulting from this Agreement (including enforcement of this Agreement), except
to the extent such claim, loss or liability is found in a final, non-appealable
judgment of a court of competent jurisdiction to have resulted from such
person’s gross negligence or willful misconduct. The foregoing release and
discharge shall apply whether or not such claims, losses and liabilities are in
any way or to any extent owed, in whole or in part, under any claim or theory of
strict liability or are, to any extent

 

Exhibit G-9

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

caused, in whole or in part, by any negligent (but not grossly negligent or
willful as found in a final, non-appealable judgment of a court of competent
jurisdiction) act or omission of any kind by Pledgee or any Lender.

(b) Pledgor will, and will cause each other Borrower to, upon demand pay to
Pledgee the amount of any and all costs and expenses, including the reasonable
fees and disbursements of Pledgee’s counsel and of any experts and agents, which
Pledgee may incur in connection with (i) the transactions which give rise to
this Agreement; (ii) the preparation of this Agreement and the perfection and
preservation of the security interest created under this Agreement; (iii) the
administration of this Agreement; (iv) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any
Collateral; (v) the exercise or enforcement of any of the rights of Pledgee
hereunder; or (vi) the failure by Pledgor to perform or observe any of the
provisions hereof, except expenses resulting from Pledgee’s gross negligence or
willful misconduct.

Section 4.5 Non-Judicial Remedies. In granting to Pledgee the power to enforce
its rights hereunder without prior judicial process or judicial hearing, Pledgor
expressly waives, renounces and knowingly relinquishes any legal right which
might otherwise require Pledgee to enforce its rights by judicial process. In so
providing for non-judicial remedies, Pledgor recognizes and concedes that such
remedies are consistent with the usage of trade, are responsive to commercial
necessity, and are the result of a bargain at arm’s length. Nothing herein is
intended to prevent Pledgee or Pledgor from resorting to judicial process at
either party’s option.

Section 4.6 Other Recourse. Pledgor waives any right to require Pledgee or
Lenders to proceed against any other Person, exhaust any Collateral or other
security for the Obligations, or to have any Other Liable Party joined with
Pledgor in any suit arising out of the Obligations or this Agreement, or pursue
any other remedy in Pledgee’s power. Pledgor further waives any and all notice
of acceptance of this Agreement and of the creation, modification,
rearrangement, renewal or extension for any period of any of the Obligations
from time to time. Pledgor further waives any defense arising by reason of any
disability or other defense of any Other Liable Party or by reason of the
cessation from any cause whatsoever of the liability of any Other Liable Party.
Until all of the Obligations shall have been paid in full, Pledgor shall have no
right to subrogation and Pledgor waives the right to enforce any remedy which
Pledgee or any Lender has or may hereafter have against any Other Liable Party,
and waives any benefit of and any right to participate in any other security
whatsoever now or hereafter held by Pledgee. Pledgor authorizes Pledgee and each
Lender, without notice or demand and without any reservation of rights against
Pledgor and without affecting Pledgor’s liability hereunder or on the
Obligations, from time to time to (a) take or hold any other property of any
type from any other Person as security for the Obligations, and exchange,
enforce, waive and release any or all of such other property; (b) renew, extend
for any period, accelerate, modify, compromise, settle or release any of the
obligations of any Other Liable Party in respect to any or all of the
Obligations or other security for the Obligations; (c) waive, enforce, modify,
amend or supplement any of the provisions of any Obligation Document with any
Person other than Pledgor; and (d) release or substitute any Other Liable Party.

 

Exhibit G-10

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

Section 4.7 Voting Rights, Dividends Etc. in Respect of Pledged Equity.

(a) So long as no Event of Default shall have occurred and be continuing Pledgor
may receive and retain any and all dividends, distributions or interest paid in
respect of the Pledged Equity; provided, however, that any and all dividends,
distributions and interest paid or payable other than in cash in respect of, and
instruments and other property received, receivable or otherwise distributed in
respect of or in exchange for, any Pledged Equity, shall be, and shall forthwith
be delivered to Pledgee to hold as, Pledged Equity and shall, if received by
Pledgor, be received in trust for the benefit of Pledgee, be segregated from the
other property or funds of Pledgor, and be forthwith delivered to Pledgee in the
exact form received with any necessary endorsement or appropriate stock powers
duly executed in blank, to be held by Pledgee as Collateral.

(b) If an Event of Default shall have occurred and be continuing:

(i) all rights of Pledgor to receive and retain the dividends, distributions and
interest payments which Pledgor would otherwise be authorized to receive and
retain pursuant to subsection (a) of this Section 4.7 shall automatically cease,
and all such rights shall thereupon become vested in Pledgee which shall
thereupon have the right to receive and hold as Pledged Equity such dividends,
distributions and interest payments;

(ii) without limiting the generality of the foregoing, Pledgee may at its option
exercise any and all rights of conversion, exchange, subscription or any other
rights, privileges or options pertaining to any of the Pledged Equity (except
voting rights) as if it were the absolute owner thereof, including the right to
exchange, in its discretion, any and all of the Pledged Equity upon the merger,
consolidation, reorganization, recapitalization or other adjustment of Pledgor
or any Subsidiary, or upon the exercise by Pledgor or any Subsidiary of any
right, privilege or option pertaining to any Pledged Equity, and, in connection
therewith, to deposit and deliver any and all of the Pledged Equity with any
committee, depository, transfer agent, registrar or other designated agent upon
such terms and conditions as it may determine; and

(iii) all dividends and interest payments which are received by Pledgor contrary
to the provisions of subsection (b) (i) of this Section 4.7 shall be received in
trust for the benefit of Pledgee, shall be segregated from other funds of
Pledgor, and shall be forthwith paid over to Pledgee as Pledged Equity in the
exact form received, to be held by Pledgee as Collateral.

Anything herein to the contrary notwithstanding, Pledgee may not exercise any
voting rights pertaining to the Pledged Equity, and Pledgor may at all times
exercise any and all voting rights pertaining to the Pledged Equity or any part
thereof for any purpose not inconsistent with the terms of this Agreement or any
other Obligation Document; provided, however, if an Event of Default shall have
occurred and be continuing, Pledgor will not exercise or refrain from exercising
any such right, as the case may be, if Pledgee gives notice that, in Pledgee’s
judgment, such action would cause a Material Adverse Effect with respect to the
value of the Pledged Equity or the benefits to Pledgee of its security interest
hereunder.

 

Exhibit G-11

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

Section 4.8 Private Sale of Pledged Equity. Pledgor recognizes that Pledgee may
deem it impracticable to effect a public sale of all or any part of the Pledged
Equity and that Pledgee may, therefore, determine to make one or more private
sales of any such securities to a restricted group of purchasers who will be
obligated to agree, among other things, to acquire such securities for their own
account, for investment and not with a view to the distribution or resale
thereof. Pledgor acknowledges that any such private sale may be at prices and on
terms less favorable to the seller than the prices and other terms which might
have been obtained at a public sale and, notwithstanding the foregoing, agrees
that such private sales shall be deemed to have been made in a commercially
reasonable manner and that Pledgee shall have no obligation to delay the sale of
any such securities for the period of time necessary to permit Pledgor or any
Subsidiary to register such securities (with no obligation of either Pledgor or
any Subsidiary to accomplish such registration) for public sale under the
Securities Act of 1933, as amended (the “Securities Act”). Pledgor further
acknowledges and agrees that any offer to sell such securities which has been
(a) publicly advertised on a bona fide basis in The Wall Street Journal,
national edition (to the extent that such an offer may be so advertised without
prior registration under the Securities Act), or (b) made privately in the
manner described above to not less than fifteen (15) bona fide offerees shall be
deemed to involve a “public disposition” for the purposes of Section 9.610 of
the Code (or any successor or similar, applicable statutory provision) as then
in effect in the State of Texas, notwithstanding that such sale may not
constitute a “public offering” under the Securities Act, and that Pledgee may,
in such event, bid for the purchase of such securities.

Section 4.9 Limitation on Rights and Waivers. All rights, powers and remedies
herein conferred shall be exercisable by Pledgee only to the extent not
prohibited by applicable law; and all waivers and relinquishments of rights and
similar matters shall only be effective to the extent such waivers or
relinquishments are not prohibited by applicable law.

ARTICLE V

Miscellaneous

Section 5.1 Notices. Any notice or communication required or permitted hereunder
shall be given in writing, sent by personal delivery, by telecopy, by delivery
service with proof of delivery, or by registered or certified United States
mail, postage prepaid, addressed to the appropriate party as follows:

 

To Pledgor:

   ______________________________________   

c/o Chaparral Energy, L.L.C.

701 Cedar Lake Blvd.

Oklahoma City, Oklahoma 73114

Attn: Mark A. Fischer

Fax No.: (405) 478-2906

 

Exhibit G-12

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

To Pledgee:

  

JPMorgan Chase Bank, N.A., as Administrative Agent for

    Lenders

1717 Main Street, 4th Floor

Mail Code TX1-2448

Dallas, Texas 75201

Attn: J. Scott Fowler

Fax No.: (214) 290-2332

or to such other address or to the attention of such other individual as
hereafter shall be designated in writing by the applicable party sent in
accordance herewith. Any such notice or communication shall be deemed to have
been given (a) in the case of personal delivery or delivery service, as of the
date of first attempted delivery at the address or in the manner provided
herein, (b) in the case of telecopy, upon receipt with confirmation (if sent
before 4:00 p.m. local time of the receiving party on a Business Day) or the
next Business Day (if sent after 4:00 p.m. of such local time or sent on a day
that is not a Business Day), or (c) in the case of registered or certified
United States mail, three (3) Business Days after deposit in the mail.

Section 5.2 Amendments. No amendment of any provision of this Agreement shall be
effective unless it is in writing and signed by Pledgor, each other Borrower,
Pledgee and Majority Lenders (or all Lenders if required pursuant to the terms
of the Credit Agreement), and no waiver of any provision of this Agreement, and
no consent to any departure by Pledgor therefrom, shall be effective unless it
is in writing and signed by Pledgee and Majority Lenders (or all Lenders if
required pursuant to the terms of the Credit Agreement), and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given and to the extent specified in such writing.

Section 5.3 Preservation of Rights. No failure on the part of Pledgee or any
Lender to exercise, and no delay in exercising, any right hereunder or under any
other Obligation Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. Neither the execution nor
the delivery of this Agreement shall in any manner impair or affect any other
security for the Obligations. The rights and remedies of Pledgee and Lenders
provided herein and in the other Obligation Documents are cumulative of and are
in addition to, and not exclusive of, any rights or remedies provided by law.
The rights of Pledgee and Lenders under any Obligation Document against any
party thereto are not conditional or contingent on any attempt by Pledgee or
Lenders to exercise any of its or their rights under any other Obligation
Document against such party or against any other Person.

Section 5.4 Unenforceability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or invalidity without
invalidating the remaining portions hereof or thereof or affecting the validity
or enforceability of such provision in any other jurisdiction.

Section 5.5 Survival of Agreements. All representations and warranties of
Pledgor herein, and all covenants and agreements herein shall survive the
execution and delivery of this Agreement, the execution and delivery of any
other Obligation Documents and the creation of the Obligations.

 

Exhibit G-13

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

Section 5.6 Other Liable Party. Neither this Agreement nor the exercise by
Pledgee or any Lender or the failure of Pledgee or any Lender to exercise any
right, power or remedy conferred herein or by law shall be construed as
relieving any Other Liable Party from liability on the Obligations or any
deficiency thereon. This Agreement shall continue irrespective of the fact that
the liability of any Other Liable Party may have ceased or irrespective of the
validity or enforceability of any other Obligation Document to which Pledgor or
any Other Liable Party may be a party, and notwithstanding the reorganization,
death, incapacity or bankruptcy of any Other Liable Party, and notwithstanding
the reorganization or bankruptcy or other event or proceeding affecting any
Other Liable Party.

Section 5.7 Binding Effect and Assignment. This Agreement creates a continuing
security interest in the Collateral and (a) shall be binding on Pledgor and its
successors and permitted assigns, and (b) shall inure, together with all rights
and remedies of Pledgee hereunder, to the benefit of Pledgee, Lenders, Secured
Swap Providers and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing, Pledgee, Lenders and Secured Swap
Providers may pledge, assign or otherwise transfer any or all of their
respective rights under any or all of the Obligation Documents to any other
Person on the terms set forth in the Credit Agreement, and such other Person
shall thereupon become vested with all of the benefits in respect thereof
granted herein or otherwise. None of the rights or duties of Pledgor hereunder
may be assigned or otherwise transferred without the prior written consent of
Pledgee and Majority Lenders (or all Lenders if required pursuant to the terms
of the Credit Agreement).

Section 5.8 Termination. It is contemplated by the parties hereto that there may
be times when no Obligations are outstanding, but notwithstanding such
occurrences, this Agreement shall remain valid and shall be in full force and
effect as to subsequent outstanding Obligations. Upon the satisfaction in full
of the Obligations, upon the termination or expiration of the Credit Agreement
and any other Commitment of Lenders to extend credit to Pledgor, and upon
written request for the termination hereof delivered by Pledgor to Pledgee and
Lenders, this Agreement and the security interest created hereby shall terminate
and all rights to the Collateral shall revert to Pledgor. Pledgee will, upon
Pledgor’s request and at Pledgor’s expense, (a) return to Pledgor such of the
Collateral as shall not have been sold or otherwise disposed of or applied
pursuant to the terms hereof, and (b) execute and deliver to Pledgor such
documents as Pledgor shall reasonably request to evidence such termination.

Section 5.9 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF THE UNITED STATES
OF AMERICA.

Section 5.10 Counterparts. This Agreement may be separately executed in any
number of counterparts, all of which when so executed shall be deemed to
constitute one and the same Agreement.

Section 5.11 Loan Document. This Agreement is a “Loan Document”, as defined in
the Credit Agreement, and, except as expressly provided herein to the contrary,
this Agreement is subject to all provisions of the Credit Agreement governing
the Loan Documents.

[Signature Pages to Follow]

 

Exhibit G-14

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

IN WITNESS WHEREOF, Pledgor has executed and delivered this Agreement, as of the
date first above written.

 

                                                                               
                        , a _________________________________________ By:     
Name:      Title:     

Each Subsidiary hereby acknowledges and consents to the pledge of the Collateral
and hereby agrees to observe and perform each and every provision of this
Agreement applicable to Subsidiary.

 

                                                                               
                        , a _________________________________________ By:     
Name:      Title:                                            
                                                                 , a
_________________________________________ By:      Name:      Title:     
                                                                               
                        , a _________________________________________ By:     
Name:      Title:     

 

Exhibit G-15

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

EXHIBIT A

PLEDGE ACKNOWLEDGEMENT

This Pledge Acknowledgement, dated                         ,          is
delivered pursuant to Section 3.2(b) of the Pledge Agreement referred to below.
All defined terms herein shall have the meanings ascribed thereto or
incorporated by reference in the Pledge Agreement.                         , a
                             (“Pledgor”), hereby certifies that the
representations and warranties in Article III of the Pledge Agreement are and
continue to be true and correct as to the Pledged Equity pledged prior to the
date of this Pledge Acknowledgment and as to the Pledged Equity pledged pursuant
to this Pledge Acknowledgment. Pledgor and [INSERT NAME OF NEW SUBSIDIARY], a
                         (“Subsidiary”), agree that this Pledge Acknowledgment
may be attached to that certain Pledge Agreement, dated as of
                    , 20    , among Pledgor and JPMorgan Chase Bank, N.A., as
administrative agent (as amended, modified or supplemented from time to time,
the “Pledge Agreement”) and that the Equity of Subsidiary owned by Pledgor shall
be and become a part of the Pledged Equity referred to in said Pledge Agreement
and shall secure all Obligations referred to in said Pledge Agreement.

 

                                                                               
                        , a _________________________________________ By:     
Name:      Title:     

Acknowledged and agreed to this        day of 20     by:

 

                                                                               
                        , a _________________________________________ By:     
Name:      Title:     

 

Exhibit G-16

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

EXHIBIT H

FORM OF SUBSIDIARY PLEDGE AGREEMENT

THIS PLEDGE AGREEMENT (this “Agreement”) is made as of                     ,
20    , by                                 , a                     (herein
called “Pledgor”), in favor of JPMorgan Chase Bank, N.A., as Administrative
Agent for the ratable benefit of Lenders (as defined below), and, in the case of
any Swap Agreement (as defined in the Credit Agreement), any Secured Swap
Provider (as defined in the Credit Agreement) (herein called “Pledgee”).

WITNESSETH:

WHEREAS, Borrowers (as defined in the Credit Agreement), Parent (as defined in
the Credit Agreement), JPMorgan Chase Bank, N.A., as Administrative Agent, the
other agents a party thereto, and Lenders are parties to that certain Seventh
Restated Credit Agreement (as may be amended from time to time, the “Credit
Agreement”) dated as of October 31, 2006, pursuant to which Lenders have agreed
to make loans and other extensions of credit to Borrowers for the purposes set
forth therein; and

WHEREAS, pursuant to the terms of the Credit Agreement, and as a condition
precedent to the loans and extensions of credit thereunder, Pledgor is required
to execute and deliver to Pledgee a pledge agreement granting to Pledgee, for
the benefit of Lenders and Secured Swap Providers, a security interest in the
Collateral (as defined herein); and

WHEREAS, the [Members] [Board of Directors] [Managers] of Pledgor has determined
that Pledgor’s execution, delivery and performance of this Agreement may
reasonably be expected to benefit Pledgor, directly or indirectly, and are in
the best interests of Pledgor.

NOW, THEREFORE, in consideration of the premises and in order to induce Lenders
to extend credit under the Credit Agreement, Pledgor hereby agrees with Pledgee
as follows:

ARTICLE I

Definitions and References

Section 1.1 General Definitions. As used herein, the terms defined above shall
have the meanings indicated above, and the following terms shall have the
following meanings:

“Code” means the Uniform Commercial Code in effect in the State of Texas on the
date hereof.

“Collateral” means all property of whatever type, in which Pledgee at any time
has a security interest pursuant to Section 2.1 hereof.

“Commitment” means the agreement or commitment by Lenders to make loans, acquire
participations in Letters of Credit or otherwise extend credit to Borrowers
under the Credit Agreement, and any other agreement, commitment, statement of
terms or other document contemplating the making of loans or advances or other
extension of credit by Lenders to or for the account of any Borrower which is
now or at any time hereafter intended to be secured by the Collateral under this
Agreement.

 

Exhibit H-1

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

“Equity” means shares of capital stock or a partnership, profits, capital or
member interest, or options, warrants or any other right to substitute for or
otherwise acquire the capital stock or a partnership, profits, capital or member
interest of each Subsidiary (as defined in Section 2.1(a) hereof).

“Lender” means any financial institution reflected on Annex I to the Credit
Agreement and its successors and assigns, and “Lenders” shall mean all Lenders.

“Obligation Documents” means the Credit Agreement, the Notes, the Letter of
Credit Agreements, the Letters of Credit and the Security Instruments now or
hereafter executed, the other Loan Documents, and all other documents and
instruments under, by reason of which, or pursuant to which, any or all of the
Obligations are evidenced, governed, secured, or otherwise dealt with, and all
other agreements, certificates, and other documents, instruments and writings
heretofore or hereafter delivered in connection herewith or therewith.

“Obligations” means all present and future indebtedness, obligations and
liabilities of whatever type which are or shall be secured pursuant to
Section 2.2 hereof.

“Other Liable Party” means any Person, other than Pledgor, but including Parent,
the Borrowers and Subsidiaries, who may now or may at any time hereafter be
primarily or secondarily liable for any of the Obligations or who may now or may
at any time hereafter have granted to Pledgee or Lenders a Lien upon any
property as security for the Obligations.

“Pledged Equity” has the meaning given it in Section 2.1(a) hereof.

Section 1.2 Other Definitions. Reference is hereby made to the Credit Agreement
for a statement of the terms thereof. All capitalized terms used in this
Agreement which are defined in the Credit Agreement and not otherwise defined
herein shall have the same meanings herein as set forth therein. All terms used
in this Agreement which are defined in the Code and not otherwise defined herein
or in the Credit Agreement shall have the same meanings herein as set forth in
the Code, except where the context otherwise requires.

Section 1.3 Exhibits. All exhibits attached to this Agreement are a part hereof
for all purposes.

Section 1.4 Amendment of Defined Instruments. Unless the context otherwise
requires or unless otherwise provided herein, references in this Agreement to a
particular agreement, instrument or document also refer to and include all
renewals, extensions, amendments, modifications, supplements or restatements of
any such agreement, instrument or document, provided that nothing contained in
this Section 1.4 shall be construed to authorize any Person to execute or enter
into any such renewal, extension, amendment, modification, supplement or
restatement.

Section 1.5 References and Titles. All references in this Agreement to Exhibits,
Articles, Sections, subsections, and other subdivisions refer to the Exhibits,
Articles, Sections,

 

Exhibit H-2

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

subsections and other subdivisions of this Agreement unless expressly provided
otherwise. Titles appearing at the beginning of any subdivision are for
convenience only and do not constitute any part of any such subdivision and
shall be disregarded in construing the language contained in this Agreement. The
words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder” and words of
similar import refer to this Agreement as a whole and not to any particular
subdivision unless expressly so limited. The phrases “this Section” and “this
subsection” and similar phrases refer only to the Sections or subsections hereof
in which the phrase occurs. The word “or” is not exclusive, and the word
“including” (in all of its forms) means “including without limitation”. Pronouns
in masculine, feminine and neuter gender shall be construed to include any other
gender, and words in the singular form shall be construed to include the plural
and vice versa unless the context otherwise requires.

ARTICLE II

Security Interest

Section 2.1 Grant of Security Interest. As collateral security for all of the
Obligations, Pledgor hereby pledges and assigns to Pledgee and grants to Pledgee
a continuing security interest with at least the priority required by
Section 3.1(d)(iv) hereof for the benefit of Lenders (and any Secured Swap
Provider) in and to all of the following rights, interests and property:

(a) all of the issued and outstanding Equity of                     , a
             and each other Subsidiary hereafter created, acquired or designated
by Pledgor (collectively, the “Subsidiaries,” and each individually, a
“Subsidiary”) now owned or hereafter acquired by Pledgor including, without
limitation, the Equity of each Subsidiary owned by Pledgor on the date hereof
(all of the foregoing being herein sometimes called the “Pledged Equity”);

(b) any and all proceeds or other sums arising from or by virtue of, and all
dividends and distributions (cash or otherwise) payable and/or distributable
with respect to, all or any of the Pledged Equity; and

(c) all cash, securities, dividends and other property at any time and from time
to time receivable or otherwise distributed in respect of or in exchange for any
or all of the Pledged Equity and any other property substituted or exchanged
therefor.

Section 2.2 Obligations Secured. The security interest created hereby in the
Collateral constitutes continuing collateral security for all of the following
obligations, indebtedness and liabilities, whether now existing or hereafter
incurred:

(a) Credit Agreement Indebtedness. The payment by each Borrower as and when due
and payable, of all amounts from time to time owing by each Borrower under or in
respect of the Credit Agreement, the Notes or any of the other Obligation
Documents.

(b) Renewals. All renewals, extensions, amendments, modifications, supplements,
or restatements of, or substitutions for, any of the foregoing.

 

Exhibit H-3

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

(c) Performance. The due performance and observance by Pledgor, each Borrower,
each other Credit Party and their Subsidiaries of their obligations from time to
time existing under or in respect of any of the Obligation Documents.

(d) Swap Agreements. The payment and performance of any and all present or
future obligations of Pledgor, any Borrower, any other Credit Party, or any of
their Subsidiaries according to the terms of any Swap Agreement now existing or
hereafter entered into between and/or among Pledgor, any Borrower, any other
Credit Party, any of its Subsidiaries, any Pledgee, any Lender or any affiliate
of any of the foregoing (including, without limitation, any Secured Swap
Provider).

ARTICLE III

Representations, Warranties and Covenants

Section 3.1 Representations and Warranties. Pledgor represents and warrants as
follows:

(a) Ownership and Liens. Pledgor has good and marketable title to the Collateral
free and clear of all Liens, encumbrances or adverse claims, except for the
security interest created by this Agreement and except as provided in
Section 3.1(d)(iv). No effective financing statement or other instrument similar
in effect covering all or any part of the Collateral is on file in any recording
office except such as have been filed in favor of Pledgee relating to this
Agreement or the other Loan Documents.

(b) No Conflicts or Consents. Neither the ownership or the intended use of the
Collateral by Pledgor, nor the grant of the security interest by Pledgor to
Pledgee herein, nor the exercise by Pledgee of its rights or remedies hereunder,
will (i) conflict with any provision of (A) any domestic or foreign law,
statute, rule or regulation, (B) the articles of organization, certificate of
formation, certificate of incorporation, articles of incorporation, charter,
bylaws, limited liability company agreement or other organizational document of
any Subsidiary, or (C) any agreement, judgment, license, order or permit
applicable to or binding upon Pledgor or any Subsidiary; or (ii) result in or
require the creation of any Lien, charge or encumbrance upon any assets or
properties of Pledgor except as expressly contemplated in the Obligation
Documents. Except as expressly contemplated in the Obligation Documents, no
consent, approval, authorization or order of, and no notice to or filing with,
any court, Governmental Authority, any Subsidiary, or third party is required in
connection with the grant by Pledgor of the security interest herein, or, except
as may be required under the Code, the exercise by Pledgee of its rights and
remedies hereunder.

(c) Security Interest. Pledgor has and will have at all times full right, power
and authority to grant a security interest in the Collateral to Pledgee in the
manner provided herein, free and clear of any Lien, adverse claim, or
encumbrance (except as provided in Section 3.1(d)(iv)). This Agreement creates a
valid and binding security interest in favor of Pledgee in the Collateral
securing the Obligations. The taking possession by Pledgee (for the ratable
benefit of Lenders and Secured Swap Providers) of all certificates, instruments
and cash constituting Collateral from time to time, together with appropriate
stock powers, and the filing of the financing statements delivered concurrently
herewith by Pledgor to Pledgee will perfect, and

 

Exhibit H-4

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

establish the priority required by Section 3.1(d)(iv) of, Pledgee’s security
interest hereunder in the Collateral securing the Obligations. No further or
subsequent filing, recording, registration, other public notice or other action
is necessary or desirable to perfect or otherwise continue, preserve or protect
such security interest except for continuation statements or filings as
contemplated in Section 3.3(b) or otherwise by the Code.

(d) Pledged Equity. (i) Pledgor is the legal and beneficial owner of the Pledged
Equity; (ii) the Pledged Equity is duly authorized and issued, fully paid and
non-assessable (as applicable), and all documentary, stamp or other Taxes or
fees owing in connection with the issuance, transfer and/or pledge thereof
hereunder have been paid; (iii) no dispute, right of setoff, counterclaim or
defense exists with respect to all or any part of the Pledged Equity; (iv) the
Pledged Equity is free and clear of all Liens, options, warrants, puts, calls or
other rights of third Persons, and restrictions, other than (A) those Liens
arising under this Agreement or any other of the Loan Documents, (B) Liens for
Taxes or assessments not yet due or not yet delinquent, or, if delinquent, that
are being contested in good faith in the normal course of business by
appropriate action, as required by Section 8.04 of the Credit Agreement, and
(C) restrictions on transferability imposed by applicable state and federal
securities laws; (v) Pledgor has full right and authority to pledge the Pledged
Equity for the purposes and upon the terms set out herein; (vi) certificates (as
applicable) representing the Pledged Equity have been delivered to Pledgee,
together with a duly executed blank stock power for each certificate; and
(vii) no Subsidiary has issued, and there are not outstanding, any options,
warrants or other rights to acquire Equity of any Subsidiary.

Section 3.2 Affirmative Covenants. Unless Pledgee shall otherwise consent in
writing, Pledgor will at all times comply with the covenants contained in this
Section 3.2 from the date hereof and so long as any part of the Obligations or
Commitments is outstanding.

(a) Ownership and Liens. Pledgor will maintain good and marketable title to all
Collateral free and clear of all Liens, encumbrances or adverse claims, except
for (i) the security interest created by this Agreement, (ii) those provided in
Section 3.1(d)(iv), and (iii) the security interests and other encumbrances
expressly permitted by the Credit Agreement. Pledgor will cause to be terminated
any financing statement or other registration with respect to the Collateral,
except such as may exist or as may have been filed in favor of Pledgee. Pledgor
will defend Pledgee’s security interest in and to the Collateral against the
claims of any Person.

(b) Further Assurances. Pledgor will at any time and from time to time promptly
execute and deliver all further instruments and documents and take all further
action that may be necessary or desirable or that Pledgee may request in order
(i) to perfect and protect the security interest created or purported to be
created hereby and the priority required by Section 3.1(d)(iv) of such security
interest; (ii) to enable Pledgee to exercise and enforce its rights and remedies
hereunder in respect of the Collateral; or (iii) to otherwise effect the
purposes of this Agreement, including: (A) executing and filing such financing
or continuation statements, or amendments thereto, as may be necessary or
desirable or that Pledgee may request in order to perfect and preserve the
security interest created or purported to be created hereby, and (B) furnishing
to Pledgee from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as Pledgee may reasonably request, all in reasonable detail. Upon the
creation or acquisition by Pledgor of any Subsidiary,

 

Exhibit H-5

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

Pledgor and such Subsidiary shall execute an acknowledgement to this Agreement
substantially in the form of Exhibit A hereto promptly following the acquisition
or creation by Pledgor of such Subsidiary, which confirms that the Equity of
such Subsidiary shall be included within the definition of Pledged Equity
hereunder.

(c) Delivery of Pledged Equity. All certificates, instruments and writings
evidencing the Pledged Equity shall be delivered to Pledgee on or prior to the
execution and delivery of this Agreement. All certificates, instruments and
writings hereafter evidencing or constituting Pledged Equity shall be delivered
to Pledgee promptly upon the receipt thereof by or on behalf of Pledgor. All
Pledged Equity shall be held by or on behalf of Pledgee pursuant hereto and
shall be delivered in the same manner and with the same effect as described in
Section 2.1 hereof and Section 3.1 hereof. Upon delivery, such Equity shall
thereupon constitute “Pledged Equity” and shall be subject to the Liens herein
created, for the purposes and upon the terms and conditions set forth in this
Agreement and the other Loan Documents.

(d) Proceeds of Pledged Equity. If Pledgor shall receive, by virtue of its being
or having been an owner of any Pledged Equity, any (i) Equity (including any
certificate representing any Equity or distribution in connection with any
increase or reduction of capital, reorganization, reclassification, merger,
consolidation, sale of assets, or spinoff or split-off), promissory note or
other instrument or writing; (ii) option or right, whether as an addition to,
substitution for, or in exchange for, any Pledged Equity or otherwise;
(iii) dividends or other distributions payable in cash (except such dividends or
other distributions permitted to be retained by Pledgor pursuant to Section 4.7
hereof) or in securities or other property; or (iv) dividends or other
distributions in connection with (A) a partial or total liquidation or
dissolution or (B) a reduction of capital, capital surplus or paid-in surplus,
Pledgor shall receive the same in trust for the benefit of Pledgee, shall
segregate it from Pledgor’s other property, and shall promptly deliver it to
Pledgee in the exact form received, with any necessary endorsement or
appropriate stock powers duly executed in blank, to be held by Pledgee as
Collateral.

(e) Status of Pledged Equity. The certificates evidencing the Pledged Equity (as
applicable) shall at all times be valid and genuine and shall not be altered.
The Pledged Equity at all times shall be duly authorized, validly issued, fully
paid, and non-assessable (as applicable), shall not be issued in violation of
the pre-emptive rights of any Person or of any agreement by which Pledgor or any
Subsidiary is bound, and, except for the bylaws or other organizational
documents of any Subsidiary, shall not be subject to any restrictions or
conditions with respect to the transfer, voting or capital of any Pledged
Equity.

Section 3.3 Negative Covenants. Unless Pledgee shall otherwise consent in
writing, Pledgor will at all times comply with the covenants contained in this
Section 3.3 from the date hereof and so long as any part of the Obligations or
the Commitments is outstanding.

(a) Transfer or Encumbrance. Pledgor will not sell, assign (by operation of law
or otherwise), transfer, exchange, lease or otherwise dispose of any of the
Collateral, nor will Pledgor grant a Lien upon or execute, file or record any
financing statement or other registration with respect to the Collateral (other
than the security interests created by this Agreement), nor will Pledgor allow
any such Lien, financing statement, or other registration to exist or deliver
actual or constructive possession of the Collateral to any other Person other
than Liens in favor

 

Exhibit H-6

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

of Pledgee and those provided in Section 3.1(d)(iv). Notwithstanding the
foregoing, so long as no Default or Event of Default exists, Pledgor may
transfer, exchange or otherwise dispose of Pledged Equity in connection with a
merger or consolidation permitted by Section 9.11 of the Credit Agreement. Upon
any such merger or consolidation, Pledgee will, upon Pledgor’s request and at
Pledgor’s expense, promptly (i) release its security interest in the Collateral
that is being transferred, exchanged or disposed of in connection with such
merger or consolidation, (ii) return to Pledgor such of the Collateral that is
being transferred, exchanged or disposed of in connection with such merger or
consolidation, and (iii) execute and deliver to Pledgor such documents as
Pledgor may reasonably request to evidence Pledgee’s release of its security
interest in such Collateral.

(b) Financing Statement Filings. Pledgor recognizes that financing statements
pertaining to the Collateral have been or may be filed in the jurisdiction of
Pledgor’s organization, where Pledgor maintains any Collateral, has its records
concerning any Collateral, has its chief executive office or chief place of
business, or has its principal place of residence. Without limitation of any
other covenant herein, Pledgor will not cause or permit any change to be made in
its name, identity, corporate structure or jurisdiction of organization, or any
change to be made to a jurisdiction other than as represented in the Credit
Agreement in (i) the location of any records concerning any Collateral, or
(ii) the location of its chief executive office, chief place of business or
principal place of residence, unless Pledgor shall have notified Pledgee of such
change at least fifteen (15) days prior to the effective date of such change,
and shall have first taken all action reasonably required by Pledgee for the
purpose of further perfecting or protecting the security interest in favor of
Pledgee in the Collateral. In any notice furnished pursuant to this subsection,
Pledgor will expressly state that the notice is required by this Agreement and
contains facts that may require additional filings of financing statements or
other notices for the purposes of continuing perfection of Pledgee’s security
interest in the Collateral.

(c) Impairment of Security Interest. Pledgor will not take or fail to take any
action which would in any manner impair the enforceability of Pledgee’s security
interest in any Collateral.

(d) Restrictions on Pledged Equity. Except for the bylaws, limited liability
company agreement, regulations, partnership agreement or other charter or
organizational documents of any Subsidiary, Pledgor will not enter into any
agreement creating, or otherwise permit to exist, any restriction or condition
upon the transfer, voting or control of any Pledged Equity.

ARTICLE IV

Remedies, Powers and Authorizations

Section 4.1 Provisions Concerning the Collateral.

(a) Additional Financing Statement Filings. Pledgor hereby authorizes Pledgee to
file, without the signature of Pledgor where permitted by law, one (1) or more
financing or continuation statements, and amendments thereto, relating to the
Collateral.

(b) Power of Attorney. Pledgor hereby irrevocably appoints Pledgee as Pledgor’s
attorney-in-fact and proxy, with full authority in the place and stead of
Pledgor and in the name

 

Exhibit H-7

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

of Pledgor or otherwise, from time to time if an Event of Default shall have
occurred and be continuing, in Pledgee’s discretion, to take any action (except
for the exercise of any voting rights pertaining to the Pledged Equity or any
part thereof) and to execute any instrument, certificate or notice which Pledgee
may deem necessary or advisable to accomplish the purposes of this Agreement
including: (i) to request or instruct Pledgor or any Subsidiary (and each
registrar, transfer agent, or similar Person acting on behalf of Pledgor or any
Subsidiary) to register the Pledged Equity or transfer the Collateral to
Pledgee; (ii) to otherwise give notification to Pledgor, any Subsidiary,
registrar, transfer agent, financial intermediary, or other Person of Pledgee’s
security interests hereunder; (iii) to ask, demand, collect, sue for, recover,
compound, receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral; (iv) to receive, indorse and
collect any drafts or other instruments, documents and chattel paper; and (v) to
file any claims or take any action or institute any proceedings which Pledgee
may deem necessary or desirable for the collection of any of the Collateral or
otherwise to enforce the rights of Pledgee with respect to any of the
Collateral.

(c) Performance by Pledgee. If Pledgor fails to perform any agreement or
obligation contained herein, Pledgee may itself perform, or cause performance
of, such agreement or obligation, and the expenses of Pledgee incurred in
connection therewith shall be payable by Pledgor under Section 4.4 hereof.

(d) Collection Rights. Pledgee shall have the right at any time, if an Event of
Default shall have occurred and be continuing, to notify any or all obligors
(including any and all Subsidiaries) under any accounts or general intangibles
included among the Collateral of the assignment thereof to Pledgee and to direct
such obligors to make payment of all amounts due or to become due to Pledgor
thereunder directly to Pledgee and, upon such notification and at the expense of
Pledgor or Borrowers and to the extent permitted by law, to enforce collection
thereof and to adjust, settle or compromise the amount or payment thereof, in
the same manner and to the same extent as Pledgor could have done. After Pledgor
receives notice that Pledgee has given any notice referred to above in this
subsection, (i) all amounts and proceeds (including instruments and writings)
received by Pledgor in respect of such accounts or general intangibles shall be
received in trust for the benefit of Pledgee hereunder, shall be segregated from
other funds of Pledgor and shall be forthwith paid over to Pledgee in the same
form as so received (with any necessary endorsement) to be held as cash
collateral and (A) released to Pledgor upon the remedy of all Events of Default,
or (B) if any Event of Default shall have occurred and be continuing, applied as
specified in Section 4.3 hereof; and (ii) Pledgor will not adjust, settle or
compromise the amount or payment of any such account or general intangible or
release wholly or partly any account debtor or obligor thereof (including any
Borrower) or allow any credit or discount thereon.

Section 4.2 Event of Default Remedies. If an Event of Default shall have
occurred and be continuing, Pledgee may from time to time in its discretion,
without limitation and without notice except as expressly provided below:

(a) exercise in respect of the Collateral, in addition to other rights and
remedies provided for herein, under the other Obligation Documents or otherwise
available to it, all the rights and remedies of a secured party on default under
the Code (whether or not the Code applies to the affected Collateral);

 

Exhibit H-8

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

(b) require Pledgor to, and Pledgor hereby agrees that it will upon request of
Pledgee forthwith, assemble all or part of the Collateral as directed by Pledgee
and make it available to Pledgee at a place to be designated by Pledgee which is
reasonably convenient to both parties;

(c) reduce its claim to judgment against Pledgor or foreclose or otherwise
enforce, in whole or in part, the security interest created hereby by any
available judicial procedure;

(d) dispose of, at its office, on the premises of Pledgor or elsewhere, all or
any part of the Collateral, as a unit or in parcels, by public or private
proceedings, and by way of one or more contracts (it being agreed that the sale
of any part of the Collateral shall not exhaust Pledgee’s power of sale, but
sales may be made from time to time, and at any time, until all of the
Collateral has been sold or until the Obligations have been paid and performed
in full), and at any such sale it shall not be necessary to exhibit any of the
Collateral;

(e) buy (or allow any Lender to buy) the Collateral, or any part thereof, at any
public sale;

(f) buy (or allow any Lender to buy) the Collateral, or any part thereof, at any
private sale if the Collateral is of a type customarily sold in a recognized
market or is of a type which is the subject of widely distributed standard price
quotations; and

(g) apply by appropriate judicial proceedings for appointment of a receiver for
the Collateral, or any part thereof, and Pledgor hereby consents to any such
appointment.

Pledgor agrees that, to the extent notice of sale shall be required by law, at
least ten (10) days’ notice to Pledgor of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification. Pledgee shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Pledgee may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.

Section 4.3 Application of Proceeds. If any Event of Default shall have occurred
and be continuing, Pledgee may in its discretion apply any cash held by Pledgee
as Collateral, and any cash proceeds received by Pledgee in respect of any sale
of, collection from, or other realization upon all or any part of the
Collateral, in the order and manner contemplated by Article IV of the Credit
Agreement.

Section 4.4 Release and Expenses. In addition to, and not in qualification of,
any similar obligations under other Obligation Documents:

(a) Pledgor agrees to release and forever discharge Pledgee and each Lender from
and against any and all claims, losses and liabilities growing out of or
resulting from this Agreement (including enforcement of this Agreement), except
to the extent such claim, loss or liability is found in a final, non-appealable
judgment by a court of competent jurisdiction to have

 

Exhibit H-9

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

resulted from such person’s gross negligence or willful misconduct. The
foregoing release and discharge shall apply whether or not such claims, losses
and liabilities are in any way or to any extent owed, in whole or in part, under
any claim or theory of strict liability or are, to any extent caused, in whole
or in part, by any negligent (but not grossly negligent or willful as found in a
final, non-appealable judgment by a court of competent jurisdiction) act or
omission of any kind by Pledgee or any Lender.

(b) Pledgor will, and will cause each Borrower to, upon demand pay to Pledgee
the amount of any and all costs and expenses, including the reasonable fees and
disbursements of Pledgee’s counsel and of any experts and agents, which Pledgee
may incur in connection with (i) the transactions which give rise to this
Agreement; (ii) the preparation of this Agreement and the perfection and
preservation of the security interest created under this Agreement; (iii) the
administration of this Agreement; (iv) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any
Collateral; (v) the exercise or enforcement of any of the rights of Pledgee
hereunder; or (vi) the failure by Pledgor to perform or observe any of the
provisions hereof, except expenses resulting from Pledgee’s gross negligence or
willful misconduct.

Section 4.5 Non-Judicial Remedies. In granting to Pledgee the power to enforce
its rights hereunder without prior judicial process or judicial hearing, Pledgor
expressly waives, renounces and knowingly relinquishes any legal right which
might otherwise require Pledgee to enforce its rights by judicial process. In so
providing for non-judicial remedies, Pledgor recognizes and concedes that such
remedies are consistent with the usage of trade, are responsive to commercial
necessity, and are the result of a bargain at arm’s length. Nothing herein is
intended to prevent Pledgee or Pledgor from resorting to judicial process at
either party’s option.

Section 4.6 Other Recourse. Pledgor waives any right to require Pledgee or
Lenders to proceed against any other Person, exhaust any Collateral or other
security for the Obligations, or to have any Other Liable Party joined with
Pledgor in any suit arising out of the Obligations or this Agreement, or pursue
any other remedy in Pledgee’s power. Pledgor further waives any and all notice
of acceptance of this Agreement and of the creation, modification,
rearrangement, renewal or extension for any period of any of the Obligations
from time to time. Pledgor further waives any defense arising by reason of any
disability or other defense of any Other Liable Party or by reason of the
cessation from any cause whatsoever of the liability of any Other Liable Party.
Until all of the Obligations shall have been paid in full, Pledgor shall have no
right to subrogation and Pledgor waives the right to enforce any remedy which
Pledgee or any Lender has or may hereafter have against any Other Liable Party,
and waives any benefit of and any right to participate in any other security
whatsoever now or hereafter held by Pledgee. Pledgor authorizes Pledgee and each
Lender, without notice or demand and without any reservation of rights against
Pledgor and without affecting Pledgor’s liability hereunder or on the
Obligations, from time to time to (a) take or hold any other property of any
type from any other Person as security for the Obligations, and exchange,
enforce, waive and release any or all of such other property; (b) renew, extend
for any period, accelerate, modify, compromise, settle or release any of the
obligations of any Other Liable Party in respect to any or all of the
Obligations or other security for the Obligations; (c) waive, enforce, modify,
amend or supplement any of the provisions of any Obligation Document with any
Person other than Pledgor; and (d) release or substitute any Other Liable Party.

 

Exhibit H-10

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

Section 4.7 Voting Rights, Dividends Etc. in Respect of Pledged Equity.

(a) So long as no Event of Default shall have occurred and be continuing Pledgor
may receive and retain any and all dividends, distributions or interest paid in
respect of the Pledged Equity; provided, however, that any and all dividends,
distributions and interest paid or payable other than in cash in respect of, and
instruments and other property received, receivable or otherwise distributed in
respect of or in exchange for, any Pledged Equity, shall be, and shall forthwith
be delivered to Pledgee to hold as, Pledged Equity and shall, if received by
Pledgor, be received in trust for the benefit of Pledgee, be segregated from the
other property or funds of Pledgor, and be forthwith delivered to Pledgee in the
exact form received with any necessary endorsement or appropriate stock powers
duly executed in blank, to be held by Pledgee as Collateral.

(b) If an Event of Default shall have occurred and be continuing:

(i) all rights of Pledgor to receive and retain the dividends, distributions and
interest payments which Pledgor would otherwise be authorized to receive and
retain pursuant to subsection (a) of this Section 4.7 shall automatically cease,
and all such rights shall thereupon become vested in Pledgee which shall
thereupon have the right to receive and hold as Pledged Equity such dividends,
distributions and interest payments;

(ii) without limiting the generality of the foregoing, Pledgee may at its option
exercise any and all rights of conversion, exchange, subscription or any other
rights, privileges or options pertaining to any of the Pledged Equity (except
voting rights) as if it were the absolute owner thereof, including the right to
exchange, in its discretion, any and all of the Pledged Equity upon the merger,
consolidation, reorganization, recapitalization or other adjustment of Pledgor
or any Subsidiary, or upon the exercise by Pledgor or any Subsidiary of any
right, privilege or option pertaining to any Pledged Equity, and, in connection
therewith, to deposit and deliver any and all of the Pledged Equity with any
committee, depository, transfer agent, registrar or other designated agent upon
such terms and conditions as it may determine; and

(iii) all dividends and interest payments which are received by Pledgor contrary
to the provisions of subsection (b) (i) of this Section 4.7 shall be received in
trust for the benefit of Pledgee, shall be segregated from other funds of
Pledgor, and shall be forthwith paid over to Pledgee as Pledged Equity in the
exact form received, to be held by Pledgee as Collateral.

Anything herein to the contrary notwithstanding, Pledgee may not exercise any
voting rights pertaining to the Pledged Equity, and Pledgor may at all times
exercise any and all voting rights pertaining to the Pledged Equity or any part
thereof for any purpose not inconsistent with the terms of this Agreement or any
other Obligation Document; provided, however, if an Event of Default shall have
occurred and be continuing, Pledgor will not exercise or refrain from exercising
any such right, as the case may be, if Pledgee gives notice that, in Pledgee’s
judgment, such action would cause a Material Adverse Effect with respect to the
value of the Pledged Equity or the benefits to Pledgee of its security interest
hereunder.

 

Exhibit H-11

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

Section 4.8 Private Sale of Pledged Equity. Pledgor recognizes that Pledgee may
deem it impracticable to effect a public sale of all or any part of the Pledged
Equity and that Pledgee may, therefore, determine to make one or more private
sales of any such securities to a restricted group of purchasers who will be
obligated to agree, among other things, to acquire such securities for their own
account, for investment and not with a view to the distribution or resale
thereof. Pledgor acknowledges that any such private sale may be at prices and on
terms less favorable to the seller than the prices and other terms which might
have been obtained at a public sale and, notwithstanding the foregoing, agrees
that such private sales shall be deemed to have been made in a commercially
reasonable manner and that Pledgee shall have no obligation to delay the sale of
any such securities for the period of time necessary to permit Pledgor or any
Subsidiary to register such securities (with no obligation of either Pledgor or
any Subsidiary to accomplish such registration) for public sale under the
Securities Act of 1933, as amended (the “Securities Act”). Pledgor further
acknowledges and agrees that any offer to sell such securities which has been
(a) publicly advertised on a bona fide basis in The Wall Street Journal,
national edition (to the extent that such an offer may be so advertised without
prior registration under the Securities Act), or (b) made privately in the
manner described above to not less than fifteen (15) bona fide offerees shall be
deemed to involve a “public disposition” for the purposes of Section 9.610 of
the Code (or any successor or similar, applicable statutory provision) as then
in effect in the State of Texas, notwithstanding that such sale may not
constitute a “public offering” under the Securities Act, and that Pledgee may,
in such event, bid for the purchase of such securities.

Section 4.9 Limitation on Rights and Waivers. All rights, powers and remedies
herein conferred shall be exercisable by Pledgee only to the extent not
prohibited by applicable law; and all waivers and relinquishments of rights and
similar matters shall only be effective to the extent such waivers or
relinquishments are not prohibited by applicable law.

Article V

Miscellaneous

Section 5.1 Notices. Any notice or communication required or permitted hereunder
shall be given in writing, sent by personal delivery, by telecopy, by delivery
service with proof of delivery, or by registered or certified United States
mail, postage prepaid, addressed to the appropriate party as follows:

 

To Pledgor:         

c/o Chaparral Energy, L.L.C.

701 Cedar Lake Blvd.

Oklahoma City, Oklahoma 73114

Attn: Mark A. Fischer

Fax No.:    (405) 478-2906

 

 

Exhibit H-12

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

To Pledgee:  

JPMorgan Chase Bank, N.A., as Administrative Agent for
Lenders

 

1717 Main Street, 4th Floor

Mail Code TX1-2448

Dallas, Texas 75201

Attn: J. Scott Fowler

Fax No.: (214) 290-2332

 

or to such other address or to the attention of such other individual as
hereafter shall be designated in writing by the applicable party sent in
accordance herewith. Any such notice or communication shall be deemed to have
been given (a) in the case of personal delivery or delivery service, as of the
date of first attempted delivery at the address or in the manner provided
herein, (b) in the case of telecopy, upon receipt with confirmation (if sent
before 4:00 p.m. local time of the receiving party on a Business Day) or the
next Business Day (if sent after 4:00 p.m. of such local time or sent on a day
that is not a Business Day), or (c) in the case of registered or certified
United States mail, three (3) Business Days after deposit in the mail.

Section 5.2 Amendments. No amendment of any provision of this Agreement shall be
effective unless it is in writing and signed by Pledgor, each Borrower, Pledgee
and Majority Lenders (or all Lenders if required pursuant to the terms of the
Credit Agreement), and no waiver of any provision of this Agreement, and no
consent to any departure by Pledgor therefrom, shall be effective unless it is
in writing and signed by Pledgee and Majority Lenders (or all Lenders if
required pursuant to the terms of the Credit Agreement), and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given and to the extent specified in such writing.

Section 5.3 Preservation of Rights. No failure on the part of Pledgee or any
Lender to exercise, and no delay in exercising, any right hereunder or under any
other Obligation Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. Neither the execution nor
the delivery of this Agreement shall in any manner impair or affect any other
security for the Obligations. The rights and remedies of Pledgee and Lenders
provided herein and in the other Obligation Documents are cumulative of and are
in addition to, and not exclusive of, any rights or remedies provided by law.
The rights of Pledgee and Lenders under any Obligation Document against any
party thereto are not conditional or contingent on any attempt by Pledgee or
Lenders to exercise any of its or their rights under any other Obligation
Document against such party or against any other Person.

Section 5.4 Unenforceability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or invalidity without
invalidating the remaining portions hereof or thereof or affecting the validity
or enforceability of such provision in any other jurisdiction.

Section 5.5 Survival of Agreements. All representations and warranties of
Pledgor herein, and all covenants and agreements herein shall survive the
execution and delivery of this Agreement, the execution and delivery of any
other Obligation Documents and the creation of the Obligations.

 

Exhibit H-13

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

Section 5.6 Other Liable Party. Neither this Agreement nor the exercise by
Pledgee or any Lender or the failure of Pledgee or any Lender to exercise any
right, power or remedy conferred herein or by law shall be construed as
relieving any Other Liable Party from liability on the Obligations or any
deficiency thereon. This Agreement shall continue irrespective of the fact that
the liability of any Other Liable Party may have ceased or irrespective of the
validity or enforceability of any other Obligation Document to which Pledgor or
any Other Liable Party may be a party, and notwithstanding the reorganization,
death, incapacity or bankruptcy of any Other Liable Party, and notwithstanding
the reorganization or bankruptcy or other event or proceeding affecting any
Other Liable Party.

Section 5.7 Binding Effect and Assignment. This Agreement creates a continuing
security interest in the Collateral and (a) shall be binding on Pledgor and its
successors and permitted assigns, and (b) shall inure, together with all rights
and remedies of Pledgee hereunder, to the benefit of Pledgee, Lenders, Secured
Swap Providers and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing, Pledgee, Lenders and Secured Swap
Providers may pledge, assign or otherwise transfer any or all of their
respective rights under any or all of the Obligation Documents to any other
Person on the terms set forth in the Credit Agreement, and such other Person
shall thereupon become vested with all of the benefits in respect thereof
granted herein or otherwise. None of the rights or duties of Pledgor hereunder
may be assigned or otherwise transferred without the prior written consent of
Pledgee and Majority Lenders (or all Lenders if required pursuant to the terms
of the Credit Agreement).

Section 5.8 Termination. It is contemplated by the parties hereto that there may
be times when no Obligations are outstanding, but notwithstanding such
occurrences, this Agreement shall remain valid and shall be in full force and
effect as to subsequent outstanding Obligations. Upon the satisfaction in full
of the Obligations, upon the termination or expiration of the Credit Agreement
and any other Commitment of Lenders to extend credit to Borrowers, and upon
written request for the termination hereof delivered by Pledgor to Pledgee and
Lenders, this Agreement and the security interest created hereby shall terminate
and all rights to the Collateral shall revert to Pledgor. Pledgee will, upon
Pledgor’s request and at Pledgor’s expense, (a) return to Pledgor such of the
Collateral as shall not have been sold or otherwise disposed of or applied
pursuant to the terms hereof, and (b) execute and deliver to Pledgor such
documents as Pledgor shall reasonably request to evidence such termination.

Section 5.9 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF THE UNITED STATES
OF AMERICA.

Section 5.10 Counterparts. This Agreement may be separately executed in any
number of counterparts, all of which when so executed shall be deemed to
constitute one and the same Agreement.

Section 5.11 Loan Document. This Agreement is a “Loan Document”, as defined in
the Credit Agreement, and, except as expressly provided herein to the contrary,
this Agreement is subject to all provisions of the Credit Agreement governing
the Loan Documents.

[Signature Pages to Follow]

 

Exhibit H-14

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

IN WITNESS WHEREOF, Pledgor has executed and delivered this Agreement, as of the
date first above written.

 

                                                                               
                        , a      

By:     

Name:     

Title:     

Each Subsidiary hereby acknowledges and consents to the pledge of the Collateral
and hereby agrees to observe and perform each and every provision of this
Agreement applicable to Subsidiary.

 

                                                                               
                        , a      

By:     

Name:     

Title:     

                                                                               
                        , a      

By:     

Name:     

Title:     

                                                                               
                        ,

a      

By:     

Name:     

Title:     

 

Exhibit H-15

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

EXHIBIT A

PLEDGE ACKNOWLEDGEMENT

This Pledge Acknowledgement, dated                                 ,
             is delivered pursuant to Section 3.2(b) of the Pledge Agreement
referred to below. All defined terms herein shall have the meanings ascribed
thereto or incorporated by reference in the Pledge Agreement.
                                             , a
                                                  (“Pledgor”), hereby certifies
that the representations and warranties in Article III of the Pledge Agreement
are and continue to be true and correct as to the Pledged Equity pledged prior
to the date of this Pledge Acknowledgment and as to the Pledged Equity pledged
pursuant to this Pledge Acknowledgment. Pledgor and [INSERT NAME OF NEW
SUBSIDIARY], a                                      (“Subsidiary”), agree that
this Pledge Acknowledgment may be attached to that certain Pledge Agreement,
dated as of                                 , 20        , among Pledgor and
JPMorgan Chase Bank, N.A., as administrative agent (as amended, modified or
supplemented from time to time, the “Pledge Agreement”) and that the Equity of
Subsidiary owned by Pledgor shall be and become a part of the Pledged Equity
referred to in said Pledge Agreement and shall secure all Obligations referred
to in said Pledge Agreement.

 

, a      

By:     

Name:     

Title:     

Acknowledged and agreed to this          day of 20         by:

 

,

a      

By:     

Name:     

Title:     

 

Exhibit H-16

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

EXHIBIT I

FORM OF GUARANTY AGREEMENT

THIS GUARANTY AGREEMENT (this “Guaranty”) is dated as of the          day of
                                ,             , by [Chaparral Energy, Inc., a
Delaware corporation] [Subsidiary, a                                 ]
(“Guarantor”), in favor of JPMORGAN CHASE BANK, N.A., each of the other
financial institutions from time to time party to the Credit Agreement (as
hereinafter defined) as Lenders (as defined in the Credit Agreement), and, in
the case of any Swap Agreement (as defined in the Credit Agreement), any Secured
Swap Provider (as defined in the Credit Agreement) and each of their successors
and assigns as permitted pursuant to the Credit Agreement (the Lenders, any
Secured Swap Provider and each of their successors and assigns are collectively
referred to herein as “Beneficiaries”).

W I T N E S S E T H:

WHEREAS, CHAPARRAL ENERGY, INC., a Delaware corporation, CHAPARRAL ENERGY,
L.L.C., an Oklahoma limited liability company (as a Borrower and as Borrower
Representative, “Chaparral”), NORAM PETROLEUM, L.L.C., an Oklahoma limited
liability company (“NorAm”), CHAPARRAL RESOURCES, L.L.C., an Oklahoma limited
liability company (“Resources”), TRIUMPH TOOLS & SUPPLY, L.L.C., an Oklahoma
limited liability company (“Tools”), CHAPARRAL CO2, L.L.C., an Oklahoma limited
liability company (“Chaparral CO2”), CEI ACQUISITION, L.L.C., a Delaware limited
liability company (“CEI Acquisition”), CEI PIPELINE, L.L.C., a Texas limited
liability company (“Pipeline”), CHAPARRAL REAL ESTATE, L.L.C., an Oklahoma
limited liability company (“Real Estate”), CALUMET OIL COMPANY, an Oklahoma
corporation (“Calumet”), JMG OIL & GAS, LP, an Oklahoma limited partnership
(“JMG”), and CHAPARRAL TEXAS, L.P., an Oklahoma limited partnership (“Chaparral
Texas” and, together with Chaparral, NorAm, Resources, Tools, Chaparral CO2, CEI
Acquisition, Pipeline, Real Estate, Calumet and JMG, collectively, “Borrowers”
and each individually, a “Borrower”), Lenders, JPMorgan Chase Bank, N.A., as
Administrative Agent (“Administrative Agent”) and the other agents a party to
the Credit Agreement are parties to that certain Seventh Restated Credit
Agreement (as amended, the “Credit Agreement”) dated as of October 31, 2006,
pursuant to which Lenders have made a revolving credit loan to Borrowers (unless
otherwise defined herein, all terms used herein with their initial letter
capitalized shall have the meaning given such terms in the Credit Agreement);
and

WHEREAS, Lenders have required, as a condition to extending credit under the
Credit Agreement, that Guarantor execute and deliver this Guaranty; and

WHEREAS, Guarantor has determined that valuable benefits will be derived by it
as a result of the Credit Agreement and the extension of credit made (and to be
made) by Lenders thereunder; and

WHEREAS, Guarantor has further determined that the benefits accruing to it from
the Credit Agreement exceed Guarantor’s anticipated liability under this
Guaranty.

 

Exhibit I-1

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which
are hereby acknowledged and confessed, Guarantor hereby covenants and agrees as
follows:

1. Guarantor hereby absolutely and unconditionally guarantees the prompt,
complete and full payment when due, no matter how such shall become due, of the
Indebtedness, and further guarantees that Borrowers will properly and timely
perform the Indebtedness and other obligations and liabilities of Borrowers
under the Credit Agreement, Notes and other Loan Documents. Notwithstanding any
contrary provision in this Guaranty, however, Guarantor’s maximum liability
under this Guaranty is limited, to the extent, if any, required so that its
liability is not subject to avoidance under applicable Debtor Relief Laws (as
such term is defined in Paragraph 8 hereof).

2. If Guarantor is or becomes liable for any indebtedness owing by Borrowers to
any Beneficiary by endorsement or otherwise than under this Guaranty, such
liability shall not be in any manner impaired or affected hereby, and the rights
of Beneficiaries hereunder shall be cumulative of any and all other rights that
Beneficiaries may ever have against Guarantor. The exercise by any Beneficiary
of any right or remedy hereunder or under any other instrument, at law or in
equity, shall not preclude the concurrent or subsequent exercise of any other
right or remedy.

3. In the event of default by Borrowers in payment of the Indebtedness, or any
part thereof, when such Indebtedness become due, either by its terms or as the
result of the exercise of any power to accelerate, Guarantor shall, on demand,
and without further notice of dishonor and without any notice having been given
to Guarantor previous to such demand of the acceptance by Beneficiaries of this
Guaranty, and without any notice having been given to such Guarantor previous to
such demand of the creating or incurring of such Indebtedness, pay the amount
due thereon to Beneficiaries at Administrative Agent’s office as set forth in
the Credit Agreement, and it shall not be necessary for any Beneficiary, in
order to enforce such payment by Guarantor, first, to institute suit or exhaust
its remedies against Borrowers or others liable on such Indebtedness, to have
Borrowers joined with Guarantor in any suit brought under this Guaranty or to
enforce its rights against any security which shall ever have been given to
secure such indebtedness; provided, however, that in the event any Beneficiary
elects to enforce and/or exercise any remedies it may possess with respect to
any security for the Indebtedness prior to demanding payment from Guarantor,
Guarantor shall nevertheless be obligated hereunder for any and all sums still
owing to Beneficiaries on the Indebtedness and not repaid or recovered incident
to the exercise of such remedies.

4. Notice to Guarantor of the acceptance of this Guaranty and of the making,
renewing or assignment of the Indebtedness and each item thereof, are hereby
expressly waived by Guarantor.

5. Each payment on the Indebtedness shall be deemed to have been made by
Borrowers unless express written notice is given to Lenders at the time of such
payment that such payment is made by Guarantor as specified in such notice.

6. If all or any part of the Indebtedness at any time is secured, Guarantor
agrees that Administrative Agent and/or Lenders may at any time and from time to
time, at their discretion

 

Exhibit I-2

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

and with or without valuable consideration, allow substitution or withdrawal of
collateral or other security and release collateral or other security or
compromise or settle any amount due or owing under the Credit Agreement or amend
or modify in whole or in part the Credit Agreement or any Loan Document executed
in connection with same without impairing or diminishing the Indebtedness of
Guarantor hereunder. Guarantor further agrees that if any Borrower executes in
favor of any Beneficiary any collateral agreement, mortgage or other security
instrument, the exercise by any Beneficiary of any right or remedy thereby
conferred on such Beneficiary shall be wholly discretionary with such
Beneficiary, and that the exercise or failure to exercise any such right or
remedy shall in no way impair or diminish the obligation of Guarantor hereunder.
Guarantor further agrees that Beneficiaries and Administrative Agent shall not
be liable for their failure to use diligence in the collection of the
Indebtedness or in preserving the liability of any person liable for the
Indebtedness, and Guarantor hereby waives presentment for payment, notice of
nonpayment, protest and notice thereof (including, notice of acceleration), and
diligence in bringing suits against any Person liable on the Indebtedness, or
any part thereof.

7. Guarantor agrees that Beneficiaries, in their discretion, may (i) bring suit
against all guarantors (including, without limitation, Guarantor hereunder) of
the Indebtedness jointly and severally or against any one or more of them,
(ii) compound or settle with any one or more of such guarantors for such
consideration as Beneficiaries may deem proper, and (iii) release one or more of
such guarantors from liability hereunder, and that no such action shall impair
the rights of Beneficiaries to collect the Indebtedness (or the unpaid balance
thereof) from other such guarantors of the Indebtedness, or any of them, not so
sued, settled with or released. Guarantor agrees, however, that nothing
contained in this paragraph, and no action by Beneficiaries permitted under this
paragraph, shall in any way affect or impair the rights or Indebtedness of such
guarantors among themselves.

8. Guarantor represents and warrants to each Lender that (i) Guarantor is a
corporation, limited liability company or partnership duly organized and validly
existing under the laws of the jurisdiction of its incorporation or formation;
(ii) Guarantor possesses all requisite authority and power to authorize,
execute, deliver and comply with the terms of this Guaranty; (iii) this Guaranty
has been duly authorized and approved by all necessary action on the part of
Guarantor and constitutes a valid and binding obligation of Guarantor
enforceable in accordance with its terms, except as (a) the enforcement thereof
may be limited by applicable Debtor Relief Laws, and (b) the availability of
equitable remedies may be limited by equitable principles of general
applicability; and (iv) no approval or consent of any court or governmental
entity is required for the authorization, execution, delivery or compliance with
this Guaranty which has not been obtained (and copies thereof delivered to
Lenders). As used in this Guaranty, the term “Debtor Relief Laws” means the
Bankruptcy Code of the United States of America and all other applicable
liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, suspension of payments or similar
debtor relief laws from time to time in effect affecting the rights of creditors
generally.

9. Guarantor covenants and agrees that until the Indebtedness is paid and
performed in full, except as otherwise provided in the Credit Agreement or
unless Lenders give their prior written consent to any deviation therefrom, it
will (i) at all times maintain its existence and authority to transact business
in any state or jurisdiction where Guarantor has assets and operations, except
where the failure to maintain such existence or authority would not have a

 

Exhibit I-3

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

Material Adverse Effect, (ii) promptly deliver to Lenders and to Administrative
Agent such information respecting its business affairs, assets and liabilities
as Lenders may reasonably request, and (iii) duly and punctually observe and
perform all covenants applicable to Guarantor under the Credit Agreement and the
other Loan Documents.

10. This Guaranty is for the benefit of Lenders, Secured Swap Providers, their
successors and assigns, and in the event of an assignment by Lenders or Secured
Swap Providers (or their successors or assigns) of the Indebtedness, or any part
thereof, the rights and benefits hereunder, to the extent applicable to the
Indebtedness so assigned, may be transferred with such Indebtedness. This
Guaranty is binding upon Guarantor and its successors and assigns.

11. No modification, consent, amendment or waiver of any provision of this
Guaranty, nor consent to any departure by Guarantor therefrom, shall be
effective unless the same shall be in writing and signed by the Majority Lenders
(or all Lenders if required pursuant to the Credit Agreement), and then shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on Guarantor in any case shall, of itself, entitle Guarantor
to any other or further notice or demand in similar or other circumstances. No
delay or omission by Lenders in exercising any power or right hereunder shall
impair any such right or power or be construed as a waiver thereof or any
acquiescence therein, nor shall any single or partial exercise of any such power
preclude other or further exercise thereof, or the exercise of any other right
or power hereunder. All rights and remedies of Lenders hereunder are cumulative
of each other and of every other right or remedy which Lenders may otherwise
have at law or in equity or under any other contract or document, and the
exercise of one or more rights or remedies shall not prejudice or impair the
concurrent or subsequent exercise of other rights or remedies.

12. No provision herein or in any promissory note, instrument or any other Loan
Document executed by any Borrower or Guarantor evidencing the Indebtedness shall
require the payment or permit the collection of interest in excess of the
Highest Lawful Rate. If any excess of interest in such respect is provided for
herein or in any such promissory note, instrument, or any other Loan Document,
the provisions of this paragraph shall govern, and none of the Borrowers nor
Guarantor shall be obligated to pay the amount of such interest to the extent
that it is in excess of the amount permitted by law. The intention of the
parties being to conform strictly to any applicable federal or state usury laws
now in force, all promissory notes, instruments and other Loan Documents
executed by any Borrower or Guarantor evidencing the Indebtedness shall be held
subject to reduction to the amount allowed under said usury laws as now or
hereafter construed by the courts having jurisdiction.

13. If Guarantor should breach or fail to perform any provision of this
Guaranty, Guarantor agrees to pay Beneficiaries all costs and expenses
(including court costs and reasonable attorneys fees) incurred by Beneficiaries
in the enforcement hereof.

14. (a) The liability of Guarantor under this Guaranty shall in no manner be
impaired, affected or released by the insolvency, bankruptcy, making of an
assignment for the benefit of creditors, arrangement, compensation, composition
or readjustment of any Borrower, or any proceedings affecting the status,
existence or assets of any Borrower or other similar proceedings instituted by
or against any Borrower and affecting the assets of any Borrower.

 

Exhibit I-4

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

(b) Guarantor acknowledges and agrees that any interest on any portion of the
Indebtedness which accrues after the commencement of any proceeding referred to
in clause (a) above (or, if interest on any portion of the Indebtedness ceases
to accrue by operation of law by reason of the commencement of said proceeding,
such interest as would have accrued on such portion of the Indebtedness if said
proceedings had not been commenced) shall be included in the Indebtedness
because it is the intention of Guarantor, Administrative Agent and Lenders that
the Indebtedness which is guaranteed by Guarantor pursuant to this Guaranty
should be determined without regard to any rule of law or order which may
relieve any Borrower of any portion of such Indebtedness. Guarantor will permit
any trustee in bankruptcy, receiver, debtor in possession, assignee for the
benefit of creditors or similar person to pay Beneficiaries or Administrative
Agent, or allow the claim of Beneficiaries or Administrative Agent in respect
of, any such interest accruing after the date on which such proceeding is
commenced.

(c) In the event that all or any portion of the Indebtedness is paid by any
Borrower, the obligations of Guarantor hereunder shall continue and remain in
full force and effect or be reinstated, as the case may be, in the event that
all or any part of such payment(s) are rescinded or recovered directly or
indirectly from Administrative Agent or any Beneficiary as a preference,
fraudulent transfer or otherwise, and any such payments which are so rescinded
or recovered shall constitute Indebtedness for all purposes under this Guaranty.

15. Guarantor understands and agrees that any amounts of Guarantor on account
with any Lender may, if an Event of Default shall have occurred and be
continuing, be offset to satisfy the obligations of Guarantor hereunder.

16. Guarantor hereby subordinates and makes inferior any and all indebtedness
now or at any time hereafter owed by any Borrower to Guarantor to the
Indebtedness evidenced by the Credit Agreement and agrees if an Event of Default
shall have occurred and be continuing, not to permit any Borrower to repay, or
to accept payment from any Borrower of, such indebtedness or any part thereof
without the prior written consent of Lenders.

17. During the period that Lenders have any commitment to lend under the Loan
Documents, or any amount payable under any Note remains unpaid, and throughout
any additional preferential period subsequent thereto, Guarantor hereby waives
any and all rights of subrogation to which Guarantor may otherwise be entitled
against any Borrower, or any other guarantor of the Indebtedness, as a result of
any payment made by Guarantor pursuant to this Guaranty.

18. As of the date hereof, the fair saleable value of the property of Guarantor
is greater than the total amount of liabilities (including contingent and
unliquidated liabilities) of Guarantor, and Guarantor is able to pay all of its
liabilities as such liabilities mature and Guarantor does not have unreasonably
small capital within the meaning of Section 548, Title 11, United States Code,
as amended. In computing the amount of contingent or liquidated liabilities,
such liabilities have been computed at the amount which, in light of all the
facts and circumstances existing as of the date hereof, represents the amount
that can reasonably be expected to become an actual or matured liability.

 

Exhibit I-5

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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19. If any provision of this Guaranty is held to be illegal, invalid, or
unenforceable, such provision shall be fully severable, this Guaranty shall be
construed and enforced as if such illegal, invalid, or unenforceable provision
had never comprised a part hereof, and the remaining provisions hereof shall
remain in full force and effect and shall not be affected by the illegal,
invalid, or unenforceable provision or by its severance herefrom. Furthermore,
in lieu of such illegal, invalid, or unenforceable provision there shall be
added automatically as a part of this Guaranty a provision as similar in terms
to such illegal, invalid, or unenforceable provision as may be possible and be
legal, valid and enforceable.

20. (a) Except to the extent required for the exercise of the remedies provided
in the other security instruments, Guarantor hereby irrevocably submits to the
nonexclusive jurisdiction of any Texas state or federal court over any action or
proceeding arising out of or relating to this Guaranty or any other Loan
Document, and Guarantor hereby irrevocably agrees that all claims in respect of
such action or proceeding may be heard and determined in such Texas state or
federal court. Guarantor hereby irrevocably waives, to the fullest extent
permitted by Law, any objection which it may now or hereafter have to the laying
of venue of any Litigation arising out of or in connection with this Guaranty or
any of the Loan Documents brought in district courts of Dallas County, Texas, or
in the United States District Court for the Northern District of Texas, Dallas
Division. Guarantor hereby irrevocably waives any claim that any Litigation
brought in any such court has been brought in an inconvenient forum. Guarantor
hereby irrevocably consents to the service of process out of any of the
aforementioned courts in any such Litigation by the delivery of copies thereof
by Federal Express or other nationally recognized overnight delivery service, to
Guarantor’s office c/o Chaparral Energy, L.L.C., 701 Cedar Lake Blvd., Oklahoma
City, Oklahoma 73114, Attn: Mark A. Fischer (Telecopy No. (405) 478-2906).
Guarantor irrevocably agrees that any legal proceeding against Lenders shall be
brought in the district courts of Dallas County, Texas, or in the United States
District Court for the Northern District of Texas, Dallas Division. Nothing
herein shall affect the right of Lenders to commence legal proceedings or
otherwise proceed against Guarantor in any jurisdiction or to serve process in
any manner permitted by applicable law. As used herein, the term “Litigation”
means any proceeding, claim, lawsuit or investigation (i) conducted or
threatened by or before any court or governmental department, commission, board,
bureau, agency or instrumentality of the United States or of any state,
commonwealth, nation, territory, possession, county, parish, or municipality,
whether now or hereafter constituted or existing, or (ii) pending before any
public or private arbitration board or panel.

(b) Nothing in this Paragraph 20 shall affect any right of any Lender to serve
legal process in any other manner permitted by law or affect the right of any
Lender to bring any action or proceeding against Guarantor in the courts of any
other jurisdictions.

(c) To the extent that Guarantor has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether through service or
notice, attachment prior to judgment, attachment in aid of execution, execution
or otherwise) with respect to itself or its property, Guarantor hereby
irrevocably waives such immunity in respect of its obligations under this
Guaranty and the other Loan Documents.

21. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS COLLECTIVELY REPRESENT THE FINAL
AGREEMENT BY AND AMONG LENDERS,

 

Exhibit I-6

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

ADMINISTRATIVE AGENT AND GUARANTOR AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF LENDERS, ADMINISTRATIVE
AGENT AND GUARANTOR. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG LENDERS,
ADMINISTRATIVE AGENT AND GUARANTOR.

22. GUARANTOR, FOR ITSELF, ITS SUCCESSORS AND ASSIGNS, HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ITS RIGHT TO A JURY TRIAL, IN
ANY LITIGATION ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY OR ANY OF THE
OTHER LOAN DOCUMENTS.

23. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS.

EXECUTED and effective as of the date first above written.

 

GUARANTOR:

[CHAPARRAL ENERGY, INC.] [SUBSIDIARY] By:     

Name:     

Title:     

 

Exhibit I-7

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

EXHIBIT J

FORM OF CERTIFICATE OF EFFECTIVENESS

This Certificate of Effectiveness (this “Certificate”) is executed the 31st day
of October, 2006 (the “Effective Date”) by and among Chaparral Energy, L.L.C.,
an Oklahoma limited liability company (as a Borrower and as Borrower
Representative) and JPMorgan Chase Bank, N.A., as Administrative Agent
(“Administrative Agent”) for the Lenders under and as defined in that certain
Seventh Restated Credit Agreement (the “Agreement”) dated as of October 31,
2006, by and among Borrowers, Parent, Administrative Agent, and the Lenders and
other agents named therein. This Certificate is executed pursuant to
Section 6.01 of the Agreement and is the “Certificate of Effectiveness” therein
referenced. Unless otherwise defined herein, all terms used herein with their
initial letter capitalized shall have the meaning given such terms in the
Agreement. Borrower Representative (on behalf of itself and the Borrowers) and
Administrative Agent (on behalf of itself and the Lenders) hereby acknowledge
and agree as follows:

1. Parent and Borrowers have satisfied each condition precedent to the
effectiveness of the Agreement contained in Section 6.01 of the Agreement.

2. The Agreement is effective as of October 31, 2006.

 

JPMORGAN CHASE BANK, N.A.,
as Administrative Agent for the Lenders By:        J. Scott Fowler,   Senior
Vice President

 

CHAPARRAL ENERGY, L.L.C.,
as a Borrower and as Borrower Representative By:        Mark A. Fischer,  
Manager

 

Exhibit J-1

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

EXHIBIT K

FORM OF MAXIMUM CREDIT AMOUNT INCREASE CERTIFICATE

[            ], 20[    ]

 

To:    JPMorgan Chase Bank, N.A.,    as Administrative Agent

The Borrowers, Parent, the Administrative Agent and certain Lenders and other
agents have heretofore entered into a Seventh Restated Credit Agreement, dated
as of October 31, 2006, as amended, restated, supplemented or otherwise modified
from time to time (the “Credit Agreement”). Capitalized terms not otherwise
defined herein shall have the meaning given to such terms in the Credit
Agreement.

This Maximum Credit Amount Increase Certificate is being delivered pursuant to
Section 2.06(c) of the Credit Agreement.

Please be advised that the undersigned has agreed (a) to increase its Maximum
Credit Amount under the Credit Agreement effective                         ,
20     from $[            ] to $[            ] and (b) that it shall continue to
be a party in all respects to the Credit Agreement and the other Loan Documents.

 

Very truly yours, CHAPARRAL ENERGY, L.L.C.,
as a Borrower and as Borrower Representative By:        Mark A. Fischer,  
Manager

 

Exhibit K-1

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

Accepted and Agreed: JPMORGAN CHASE BANK, N.A.,
as Administrative Agent By:      Name:      Title:     

 

Accepted and Agreed: [                                      
                                               ] By:      Name:      Title:     

 

Exhibit K-2

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

EXHIBIT L

FORM OF ADDITIONAL LENDER CERTIFICATE

[            ], 20[    ]

 

To:    JPMORGAN CHASE BANK, N.A.,    as Administrative Agent

The Borrowers, Parent, the Administrative Agent and certain Lenders and other
agents have heretofore entered into a Seventh Restated Credit Agreement, dated
as of October 31, 2006, as amended, restated, supplemented or otherwise modified
from time to time (the “Credit Agreement”). Capitalized terms not otherwise
defined herein shall have the meaning given to such terms in the Credit
Agreement.

This Additional Lender Certificate is being delivered pursuant to
Section 2.06(c) of the Credit Agreement.

Please be advised that the undersigned has agreed (a) to become a Lender under
the Credit Agreement effective [            ], 20[    ] with a Maximum Credit
Amount of $[            ] and (b) that it shall be a party in all respects to
the Credit Agreement and the other Loan Documents.

This Additional Lender Certificate is being delivered to the Administrative
Agent together with (i) if the Additional Lender is a Foreign Lender, any
documentation required to be delivered by such Additional Lender pursuant to
Section 5.03(e) of the Credit Agreement, duly completed and executed by the
Additional Lender, and (ii) an Administrative Questionnaire in the form supplied
by the Administrative Agent, duly completed by the Additional Lender. The
[Borrowers/Additional Lender] shall pay the fee payable to the Administrative
Agent pursuant to Section 2.06(c)(ii) of the Credit Agreement.

 

Very truly yours,

CHAPARRAL ENERGY, L.L.C.,
as a Borrower and as Borrower Representative By:        Mark A. Fischer,  
Manager

 

Exhibit L-1

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT

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

Accepted and Agreed: JPMORGAN CHASE BANK, N.A.,
as Administrative Agent By:      Name:      Title:     

 

Accepted and Agreed: [                                      
                                               ] By:      Name:      Title:     

 

Exhibit L-2

CHAPARRAL ENERGY, L.L.C.

SEVENTH RESTATED CREDIT AGREEMENT