SEVERANCE AGREEMENT
This Severance Agreement is entered into as of the 12th day of February, 1997,
by and among Chaparral Resources, Inc. ("Chaparral"), a Colorado corporation,
and Xxxxxxx X. Xxxxxxx ("Xxxxxxx"). Chaparral and Xxxxxxx are hereinafter
jointly referred to as the Parties.
For good and valuable consideration, including the promises and mutual general
releases contained herein, the Parties hereby agree as follows:
1. Approval and Effective Date This Agreement shall be effective as of February
12, 1997 ("Effective Date") and will become binding on the Parties upon its
ratification and approval by the Chaparral Board of Directors.
2. Salary and Benefits Xxxxxxx will receive his salary and unpaid vacation pay
accrued through the Effective Date. Xxxxxxx may request that Chaparral transfer
to him, in accordance with the plan's terms, the vested portion of his 401K plan
account .
3. Warrants On August 19, 1996, the Chaparral Board of Directors awarded
Xxxxxxx a cash bonus of $70,000 as recognition of past and present services to
the company; said bonus to be used solely and exclusively by Xxxxxxx to exercise
certain Warrants, granted to Xxxxxxx pursuant to the company's 1989 Stock
Warrant Plan (the "Plan"), to purchase 250,000 shares of Chaparral common stock
at an exercise price of $0.28 per share. This bonus will not become payable
until receipt of notice from Xxxxxxx, which notice may not be given and shall
not be effective until the earlier of a) completion of a sale or farmout by
Chaparral of all or a portion of its interest in the Karakuduk Oil Field
Development Project (the "Project"), or b) the date when Chaparral makes a
public disclosure of a sale or farmout of the Project. At its sole option and
discretion, Chaparral may, in lieu of making payment of such bonus to Xxxxxxx,
use all or a portion of such bonus as a direct offset to Xxxxxxx'x obligation to
make any payment due to Chaparral upon exercise of the Warrant. Anything
contained in the foregoing provisions of this paragraph to the contrary
notwithstanding, in the event Xxxxxxx has exercised and paid for the Warrant
prior to the date the bonus becomes payable, Chaparral shall pay such bonus
directly to Xxxxxxx, but only upon completion of a sale or farmout of all or a
portion of its interest in the Project,
Chaparral shall use its reasonable best efforts, consistent with its past policy
and practice, to continue to maintain the registration statement registering the
shares underlying the Warrant until the date that the Warrant is either
exercised or expires, whichever shall first occur; provided, however, that
Chaparral shall not be required to take any action or make any filing with the
Securities and Exchange Commission that, in the sole discretion of the Board of
Directors of Chaparral, is not in the best interest of the company.
Chaparral shall request the Board of Directors to amend the Plan to permit
Xxxxxxx to transfer the Warrant to a member of his family or to a trust created
by Xxxxxxx. For purposes of this Agreement, the term family shall mean a parent,
child, grandchild or spouse.
4. Office Equipment Xxxxxxx understands that Chaparral intends to sell certain
office furniture, equipment and supplies, and that if Xxxxxxx so desire, Xxxxxxx
may bid for these items. The furniture presently located in Xxxxxxx'x office
will be given to Xxxxxxx by Chaparral as well as any of the computers in his
office that Chaparral does not want.
5. Resignation Xxxxxxx will resign, as of the Effective Date, as an officer and
director of Chaparral and its subsidiaries and affiliates. A copy of Xxxxxxx'x
resignation is attached hereto.
6. General Release by Xxxxxxx Xxxxxxx, his successors, heirs and assigns (the
"Releasors") fully and forever release and discharge Chaparral, its subsidiaries
and related companies, their officers, directors, employees, shareholders,
agents, representatives, attorneys, accountants, predecessors, successors and
assigns (the "Releasees") from any and all actions, causes of action, suits,
debts, claims, promises and demands, other than those specifically stated in
this Severance Agreement, or any claim by Xxxxxxx for indemnification against
claims of others for actions or matters which occurred while Xxxxxxx was an
officer, director or employee of Chaparral and for which he would have been
entitled to indemnification by Chaparral under Chaparral's Certificate of
Incorporation, By-laws or policies as in effect on February 12, 1997, whether in
law or equity which the Releasors ever had now have or hereafter can, shall or
may have against Releasees, which are based upon or arise out of Xxxxxxx'x
employment with Chaparral, including without limitation, his service as a member
of the Board of Directors of Chaparral, as a shareholder of Chaparral, or his
execution of this Severance Agreement, other than any action, claim or
proceeding to enforce his rights under this Severance Agreement.
7. General Release by Chaparral Chaparral, its subsidiaries and related
companies, their officers, directors, employees, shareholders, agents,
representatives, attorneys, accountants, predecessors, successors and assigns
(the "Releasors") fully and forever release and discharge Xxxxxxx, his
successors, heirs or assigns (the "Releasees") from any and all actions, causes
of action, suits, debts, claims, promises and demands, other than those
specifically stated in this Severance Agreement, whether in law or equity which
the Releasors ever had now have or hereafter can, shall or may have against
Releasees, which are based upon or arise out of Xxxxxxx'x employment with
Chaparral, including without limitation, his service as a member of the Board of
Directors of Chaparral or as a shareholder of Chaparral.
8. Covenant Not to Xxx The Parties agree not to commence, directly or indirectly
cause the commencement of, or cause or attempt to cause any third party to
commence, any suit, arbitration or proceeding to enforce any claim or other
matter released under this Severance Agreement.
-2-
9 Severability If any provision of this Agreement or the application thereof to
any Party or circumstance shall be determined by any court of competent
jurisdiction to be invalid and unenforceable to any extent, the remainder of
this Agreement or the application of such provision to such Party or
circumstance, other than those as to which it was so determined to be invalid or
unenforceable, shall not be affected thereby, and each provision thereof shall
be valid and shall be enforced to the fullest extent permitted by law.
10. Applicable Law This Agreement shall be construed and enforced in accordance
with the laws of the State of Colorado, without giving effect to the provisions
or principals thereof relating to choice or conflict of laws.
11. Section Headings Section titles and headings are for descriptive purposes
only and shall not control or alter the meaning of this Agreement as set forth
in the text. Reference to the singular includes a reference to the plural and
vice versa. Reference to any gender includes a reference to all other genders.
12. Counterparts This Agreement may be executed in several counterparts, all of
which together shall constitute one agreement binding on all parties hereto
notwithstanding that all the parties have not signed the same counterpart.
IN WITNESS WHEREOF, the Parties have executed this Severance Agreement as of the
date first written above.
CHAPARRAL RESOURCES, INC. XXXXXXX X. XXXXXXX
By:/s/Xxxx X. Xxxxxxxx /s/Xxxxxxx X. Xxxxxxx
----------------------------------- --------------------------
Xxxx X. Xxxxxxxx, Chairman
Board of Directors Severance Committee
-3-
