APPENDIX A
CHAPARRAL RESOURCES, INC.
1997 INCENTIVE STOCK PLAN
Article I. Purpose of the Plan
The Chaparral Resources, Inc., 1997 incentive Stock Plan (the "Plan") is
intended to promote the interests of Chaparral Resources, Inc. ("Company"), and
its stockholders by attracting able persons as employees, consultants or
directors and to provide incentive compensation to those employees, consultants
and directors, upon whom the responsibilities of the successful administration
and management of the Company rest, and whose present and potential
contributions to the Company are of importance. A further purpose of the Plan is
to provide such individuals with additional incentive and reward opportunities
designed to enhance the profitable growth of the Company. Accordingly, the Plan
provides for the granting of Stock Awards as provided herein.
Article 2. Effective Date and Term of Plan
The Plan shall be effective on the date the Plan is adopted by the Board,
provided the Plan is approved by the stockholders of the Company within twelve
months thereafter. Notwithstanding any provision in the Plan, no Stock Award
shall vest prior to such stockholder approval. Except with respect to Stock
Awards then outstanding, if not sooner terminated under the provisions of
Article 6 hereof, the Plan shall terminate upon and no further Stock Awards
shall be granted after the expiration of ten (10) years from the date the Plan
is approved by the stockholders of the Company.
Article 3. Administration of the Plan
3.1 Stock Awards may be granted only to individuals who are either employees,
consultants or directors of the Company. In the case of employees or
consultants, the Plan shall be administered by the Compensation Committee
("Committee") of the Board of Directors of the Company ("Board"), no member of
which shall be an employee or consultant of the Company. The Committee shall
have the authority to determine, in its sole discretion, which employees and
consultants shall receive a Stock Award, and the time or times when such Stock
Award shall be made, and to prescribe rules and regulations relating to the
Plan, and determine the terms, restrictions and provisions of the agreement
relating to each Stock Award. The Committee may correct any defect or supply an
omission or reconcile any inconsistency in the Plan or in any agreement relating
to a Stock Award in the manner and to the extent it shall deem expedient to
carry it into effect. The determinations of he Committee on the matters referred
to in this Article 3 shall be conclusive and binding on each Stock Award
recipient.
3.2 On December 31, 1997, provided the Company is producing or has produced on
or before that date not less than 3,000 barrels of crude oil and/or natural gas
liquids per day and obtained the necessary financing to permit development of
the Karakuduk Field, each director then in office shall receive, without the
exercise of the discretion of any person or persons, a Stock Award for 10,000
shares of Stock.
3.3 Each nonemployee director shall receive a Stock Award of 250 shares of Stock
for each meeting of the Board of Directors of the Company attended by such
director either in person or by telephone. Such Stock Award shall be in lieu of
any other compensation payable to such director for attendance at such meetings.
Each such director shall also be entitled to reimbursement for such director's
costs and expenses of attending such meetings.
Article 4. Shares Subject to Plan
The aggregate number of shares which may be issued pursuant to Stock Awards
granted under the Plan shall not, on the date of the grant of any Stock Award
hereunder, exceed an amount equal to one million shares of Common Stock
("Stock"). Such shares may consist of authorized but unissued shares of Stock or
previously issued shares of Stock reacquired by the Company. Any of such shares
which remain unissued and which are not subject to outstanding Stock Awards at
the termination of the Plan shall cease to be subject to the Plan, but, until
termination of the Plan, the Company shall at all times make available a
sufficient number of shares to meet the requirements of the Plan. Should any
Stock Award hereunder expire or terminate prior to its vesting in full, the
Stock theretofore subject to such Stock Award may again be subject to a Stock
Award granted under the Plan.
Article 5. Recapitalization or Reorganization
5.1 The existence of the Plan and the Stock Awards granted hereunder shall not
affect in any way the right or power of the Board or the stockholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of debt or equity securities, the
dissolution or liquidation of the Company or any sale, lease, exchange or other
disposition of all or any part of its assets or business or any other corporate
act or proceeding.
5.2 The shares with respect to which Stock Award may be granted are shares of
Stock as presently constituted, but if, and whenever, prior to the expiration of
a Stock Award theretofore granted, the Company shall effect a subdivision or
consolidation of shares of Stock or the payment of a stock dividend on Stock
without receipt of consideration by the Company, the number of shares of Stock
subject to a Stock Award (i) in the event of an increase in the number of
outstanding shares shall be proportionately increased, and (ii) in the event of
a reduction in the number of outstanding shares shall be proportionately
reduced.
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5.3 If the Company recapitalizes, reclassifies its capital stock, or otherwise
changes its capital structure (a "recapitalization"), the number and class of
shares of Stock covered by a Stock Award theretofore granted shall be adjusted
so that such Stock Award shall thereafter cover the number and class of shares
of stock and securities to which the holder of the Stock Award would have been
entitled pursuant to the terms of the recapitalization if, immediately prior to
the recapitalization, the holder had been the holder of record of the number of
shares of Stock then covered by such Stock Award.
5.4 Any adjustment provided for in Articles 5.2 and 5.3 above shall be subject
to any required stockholder action.
5.5 Except as expressly provided herein, the issuance by the Company of shares
of stock of any class or securities convertible into shares of stock of any
class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number of
shares of Stock subject to Stock Award theretofore granted or the purchase price
per share.
Article 6. Amendment or Termination of the Plan
The Board in its discretion may terminate the Plan at any time with respect to
any stock for which Stock Awards have not previously been granted. The Board
shall have the right to alter or amend the Plan or any part thereof from time to
time; provided, that no change in any Stock Award previously granted may be made
which would impair the rights of the holder thereof without the consent of such
person and provided, further, that the Board may not make any alteration or
amendment which would materially increase the benefits accruing to participants
under the Plan, increase the aggregate number of shares of Stock which may be
issued pursuant to the provisions of the Plan, change the class of individuals
eligible to receive Stock Awards under the Plan or extend the term of the Plan,
without the approval of the stockholders of the Company.
Article 7. Securities Laws
It is intended that the Plan and any grant of a Stock Award made to a person
subject to Section 16 of the Securities Exchange Act of 1934, as amended
("Securities Act"), meet all of the requirements of Rule 16b-3 promulgated under
the Securities Act, as such rule is currently in effect or as hereinafter
modified or amended ("Rule 16b-3"). If any provision of the Plan or any such
Stock Award would disqualify the Plan or such Stock Award under, or would not
otherwise comply with, Rule 16b-3, such provision or Stock Award shall be
construed or deemed amended to conform to Rule 16b-3.
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Article 8. Miscellaneous
8.1 Nothing contained in the Plan shall be confer upon any employee or
consultant any right with respect to continuation of employment with the Company
or any subsidiary or interfere in any way with the right of the Company or any
subsidiary to terminate his or her employment at any time.
8.2 The Company shall be entitled to deduct in connection with any Stock Award
made to an employee or consultant any taxes required by law to be withheld and
to require any payments required to enable it to satisfy its withholding
obligations.
8.3 Nothing contained in the Plan shall be construed to prevent the Company or
any subsidiary from taking any corporate action which is deemed by the Company
or such subsidiary to be appropriate or in it best interest, whether or not such
action would have an adverse effect on the Plan or any Stock Award made under
the Plan. No employee, consultant, beneficiary or other person shall have any
claim against the Company or any subsidiary as a result of any such action.
9.4 This Plan shall be construed in accordance with the laws of the State of
Colorado.
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