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.


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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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