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 Xxxx 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 This agreement will be effective as of February 12, 1997.
Xxxxxxx will receive his salary and unpaid vacation pay accrued through February
12, 1997. 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
3.1 On August 19, 1996, the Chaparral Board of Directors awarded Xxxxxxx a
cash bonus of $140,000 as recognition of past and present services to
the company; said bonus to be used by Xxxxxxx to exercise certain
Warrants, granted to Xxxxxxx pursuant to the company's 1989 Stock
Warrant Plan (the "Plan"), to purchase 500,000 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 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.
3.2 On or before March 15, 1997, Chaparral will cause a certificate to be
delivered to Xxxxxxx representing the warrants to purchase 100,000
shares of Chaparral common stock at an exercise price of $0.85 per
share, for a period of four (4) years from the date of such grant that
were granted to Xxxxxxx on February 12, 1997. The warrant shall be in
form and substance similar in all material respects to the Warrant
issued to Xxxxxxx under the Plan, and shall permit Xxxxxxx to assign
the warrant on terms and conditions similar to those stated in Section
3.1 above. The shares underlying these warrants will be registered by
Chaparral when it next amends its current registration statement.
3.3 On or before March 15, 1997, Chaparral will cause a certificate to be
delivered to Xxxxxxx representing the warrants to purchase 100,000
shares of Chaparral common stock at an exercise price of $1.25 per
share that were granted to Xxxxxxx on February 12, 1997. Such warrants
shall not be exercisable prior to January 1, 1998, and shall remain
exercisable for a period of four (4) years from such date. The warrant
shall be in form and substance similar in all material respects to the
Warrant issued to Xxxxxxx under the Plan, and shall permit Xxxxxxx to
assign the warrant on terms and conditions similar to those stated in
Section 3.1 above.
4. ORRI Chaparral will assign to Xxxxxxx, or to an entity controlled by Xxxxxxx,
the existing ORRI that Chaparral holds in approximately 89 xxxxx. Such
assignment shall be for a three (3) year period, at the end of which Xxxxxxx
will reassign the ORRI to Chaparral. Xxxxxxx agrees to pay ten percent (10%) of
the net revenues received from such ORRI during this three (3) year period to
Xxx Xxxxxx, and acknowledges that Chaparral has agreed to such assignment in
reliance upon Xxxxxxx'x promise to make such payment.
Xxxxxxx also agrees to execute the reassignment at the same time that the
assignment is entered into, with the understanding that such reassignment will
be held in escrow by Xxxx X. Xxxxxx, Esq. during the three year term of the
assignment.
5. Road Runner At Xxxxxxx'x request, Chaparral will assign its interest in Road
Runner, Ltd .to Xxxxxxx, or to an entity controlled by Xxxxxxx.
6. Insurance Chaparral will assign to Xxxxxxx its ownership interest in two life
insurance policies that it currently holds on Xxxxxxx'x life. The Parties
acknowledge that such policies currently have a combined cash surrender value of
approximately $32,000.
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7. Office Equipment Xxxxxxx understands that Chaparral intends to sell certain
office furniture, equipment and supplies, and that if Xxxxxxx so desires,
Xxxxxxx may bid for these items. Xxxxxxx also understand that the furniture and
equipment presently located in his office will be given to him by Chaparral.
8. Resignation Xxxxxxx will resign, as of the Effective Date, as an officer of
Chaparral and as an officer and director of its subsidiaries and affiliates. A
copy of Xxxxxxx'x resignation is attached hereto. Xxxxxxx will continue as a
director of Chaparral until the next annual shareholders meeting.
9. 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.
10. 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.
11. 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.
12. Severability If any provision of this Agreement or the application thereof
to any Party or circumstance shall be determined by any court of competent
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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.
13 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.
14. 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.
15. 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. XXXX X. XXXXXXX
By:/s/Xxxx X. Xxxxxxxx /s/Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxxx, Chairman
Board of Directors Severance Committee
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